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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 2, 1997
COMTREX SYSTEMS CORPORATION
---------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-l3732 22-2353604
- -------- --------------------------- ----------------
(State or (Commission File No.) (I.R.S. Employer
other juris- Identification No.)
diction of
incorporation
or organization)
102 Executive Drive
Moorestown, New Jersey 08057
----------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (609) 778-0090
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Item Five: Other Events
On October 2, 1997, the Registrant acquired from Norman Roberts
("Norman"), Shirley Roberts ("Shirley"), and Steven Roberts ("Steven"
together, with Norman and Shirley, the "Sellers") all of the issued and
outstanding capital stock (the "Stock") of Data Systems Terminals Limited, a
corporation formed and existing under the laws of England ("DSTL"), thereby
acquiring all of DSTL's assets, including its inventory, plant, equipment,
customer list, accounts receivable, cash, and intangible assets. DSTL is a
distributor of the Registrant's products in the United Kingdom, which business
the Registrant intends to continue.
The following consideration was paid by the Registrant for such
acquisition of the Stock:
(a) 400,000 restricted shares of the Common Stock of the
Registrant, par value $.00l per share, were delivered by the Registrant to
Steven. These shares of the Registrant's Common Stock are not transferrable by
Steven on or before October 2, 1999.
(b) A Subordinated Convertible Debenture, in the original
principal amount of $300,000 (the "Debenture"), was delivered by the
Registrant to Norman and Shirley. The Debenture accrues interest at the rate
of eight percent (8%) per annum, which is payable monthly. No principal is
payable pursuant to the terms of the Debenture for the first three (3) years
following its delivery. The Debenture is convertible into shares of the
Registrant's Common Stock (in blocks of 20,000 shares), at any time on or
before October 2, 2000, at the rate of $1.00 per share. The Registrant may
prepay all amounts outstanding under the
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Debenture at any time on or before October 2, 2000 if (i) the shares of the
Registrant's Common Stock have closed at $1.50, or higher, for each trading
day for a thirty (30) day period, and (ii) the Registrant has provided the
holders of the Debenture with at least sixty (60) days prior written notice of
the prepayment. Any principal outstanding on the Debenture on October 2, 2000
shall be repaid by the Registrant in twelve (12) equal quarterly installments.
The Registrant anticipates that internal funds will be utilized to make all
interest and principal payments due under the Debenture.
(c) A promissory note, in the original principal amount of
$65,000 (the "Note"), was delivered to Norman and Shirley. The Note bears
interest at the rate of six percent (6%) per annum. The outstanding principal
balance of the Note, and all interest accrued thereon, is repayable in twelve
(12) equal monthly installments, commencing on November 1, 1997. The
Registrant anticipates that internal funds will be utilized to make such
payments due under the Note.
The amount and nature of the consideration to be paid by the
Registrant to acquire the Stock was arrived at by negotiation between the
parties.
The Sellers have no material relationship with the Registrant or any
of its affiliates, directors or officers, or any associate of any director or
officer of the Registrant, except that under the terms of the Stock Purchase
Agreement, Steven shall serve as a director of the Registrant.
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Item Seven: Financial Statements and Exhibits.
(a) Financial Statements. The financial statements required to be
filed pursuant to this subsection will be supplied when available, but not
later than sixty (60) days from the date of this filing.
(b) Pro Forma Financial Statements. The pro forma financial
statements required to be filed pursuant to this subsection will be supplied
when available, but not later than sixty (60) days from the date of this
filing.
(c) Exhibits.
Exhibit 2 - Stock Purchase Agreement (Complete copies of the
various Annexes, Exhibits and Schedules to the Stock Purchase Agreement are
not being filed herewith. A brief summary of each such omitted document is
attached to the Stock Purchase Agreement. The Registrant hereby agrees to
furnish the United States Securities and Exchange Commission, upon request,
with a complete copy of each such omitted document.)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of l934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMTREX SYSTEMS CORPORATION
Dated: October 13, 1997 By:/s/ Jeffrey C. Rice
---------------------------
Jeffrey C. Rice, President
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is made as of October
2, 1997, by and between COMTREX SYSTEMS CORPORATION, a Delaware corporation
(the "Buyer"), NORMAN ROBERTS ("Norman"), SHIRLEY ROBERTS ("Shirley"), and
STEVEN ROBERTS ("Steven" and, collectively with Norman and Shirley, the
"Sellers").
RECITALS
The Sellers own all of the issued and outstanding shares (the
"Shares") of the capital stock of Data Systems Terminals Limited (Company
Number 1367328), a corporation formed and existing under the laws of England
and whose registered office is at 2 Gatwick Metro Centre, Balcombe Road,
Horley, Surrey RH6 9YA (the "Company").
The Sellers desire to sell, and the Buyer desires to purchase, the
Shares, for the consideration and on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the respective representations,
warranties and agreements hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Buyer and the Sellers, intending to be legally bound hereby, agree as
follows:
1. DEFINITIONS
For purposes of this Agreement, in addition to the terms "Buyer,"
"Norman," "Shirley," "Steven," "Sellers," "Shares," and "Company", which are
defined in the Recitals, the following terms have the meanings specified or
referred to in this Section 1:
"Accounts" -- the Company's audited financial statements for the
years ended on the Balance Sheet Date, and for the year ended on June 30,
1996.
"Accounts Receivable" -- as defined in Section 3.9 hereof.
"Act" -- the Companies Act 1985.
"Applicable Contract"-- any Contract (a) under which the Company has
or may acquire any rights, (b) under which the Company has or may become
subject to any obligation or liability, or (c) by which the Company or any of
the assets owned or used by it is or may become bound.
"Applicable Laws" -- as defined in Section 3.5(i) hereof.
"Balance Sheet Date" -- means June 30, 1997.
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"Best Efforts" -- the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such
result is achieved as expeditiously as possible.
"Business" -- the business activities and operations engaged in by
the Company at any time on or prior to the Closing Date.
"Buyer's Advisors" -- as defined in Section 5.1 hereof.
"CAA" -- the Capital Allowances Act 1990.
"CGTA" -- the Capital Gains Tax Act 1979.
"Closing" -- as defined in Section 2.3 hereof.
"Closing Date"-- the date and time as of which the Closing actually
takes place.
"Comtrex Shares" -- as defined in Section 2.2(a) hereof.
"Consent"-- any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions"-- all of the transactions contemplated by
this Agreement, including:
(a) the sale of the Shares by the Sellers to the Buyer;
(b) the performance by the Buyer and the Sellers of their
respective covenants and obligations under this Agreement; and
(c) the Buyer's acquisition and ownership of the Shares and
exercise of control over the Company.
"Contract"-- any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Copyrights" -- as defined in Section 3.22(a) hereof.
"Damages" -- as defined in Section 10.2 hereof.
"Employment Agreement(s)" -- as defined in section 2.4(a)hereof.
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"Encumbrance"-- any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right
of first refusal, or restriction of any kind, including any restriction on
use, voting, transfer, receipt of income, or exercise of any other attribute
of ownership.
"Environment"-- soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
"Environmental Complaint" -- as defined in Section 3.5(o) hereof.
"Environmental, Health, and Safety Liabilities"-- any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
any Environmental Law or Occupational Safety and Health Law and consisting of
or relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other remediation
or response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health
Law.
"Environmental Law"-- any Legal Requirement that requires or relates
to:
(a) advising appropriate authorities, employees, and/or the
public of intended or actual releases of pollutants or hazardous substances or
materials, violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction, that
could have significant impact on the Environment;
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(b) preventing or reducing to acceptable levels the release
of pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks to human
health or the Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(g) cleaning up pollutants that have been released,
preventing the threat of release, or paying the costs of such clean up or
prevention; or
(h) making responsible parties pay private parties, or
groups of them, for damages done to their health or the Environment, or
permitting self-appointed representatives of the public interest to recover
for injuries done to public assets.
"Existing Mortgage" -- as defined in Section 3.5(a) hereof.
"Facilities"-- any real property, leaseholds, or other interests
currently or formerly owned or operated by the Company and any buildings,
plants, structures, or equipment (including motor vehicles, tank cars, and
rolling stock) currently or formerly owned or operated by the Company,
including without limitation the Premises.
"Governmental Authorization"-- any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise
made available by or under the authority of any Governmental Body or pursuant
to any Legal Requirement.
"Governmental Body"-- any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(d) multi-national organization or body; or
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(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory, or
taxing authority or power of any nature.
"Hazardous Activity"-- the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in, on, under,
about, or from the Facilities or any part thereof into the Environment, and
any other act, business, operation, or thing that increases the danger, or
risk of danger, or poses an unreasonable risk of harm to persons or property
on or off the Facilities, or that may affect the value of the Facilities or
the Company.
"Hazardous Discharge" -- as defined in Section 3.5(n) hereof.
"Hazardous Materials"-- any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution
thereof, and specifically including petroleum and all derivatives thereof or
synthetic substitutes therefor and asbestos or asbestos-containing materials.
"Indemnified Persons" -- as defined in Section 10.2 hereof.
"Intellectual Property Assets" -- as defined in Section 3.22 hereof.
"Knowledge"-- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter.
A Person (other than an individual) will be deemed to have
"Knowledge" of a particular fact or other matter if any individual who is
serving, or who has at any time served, as a director, officer, partner,
executor, or trustee of such Person (or in any similar capacity) has, or at
any time had, Knowledge of such fact or other matter.
"Legal Charge" -- the legal charge over the Premises in the agreed
form to be granted by the Company to Norman and Shirley.
"Legal Requirement"-- any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution,
law, ordinance, principle of common law, regulation, statute, or treaty.
"Management Accounts" -- management accounts of the Company for the
two month period ended August 31, 1997.
"Marks" -- as defined in Section 3.22(a) hereof.
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"Note" -- as defined in Section 2.2(c) hereof.
"Occupational Safety and Health Law"-- any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry associations and
insurance companies), designed to provide safe and healthful working
conditions.
"Order"-- any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business"-- an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal day-to-day
operations of such Person;
(b) such action is not required to be authorized by the
board of directors of such Person (or by any Person or group of Persons
exercising similar authority); and
(c) such action is similar in nature and magnitude to
actions customarily taken, without any authorization by the board of directors
(or by any Person or group of Persons exercising similar authority), in the
ordinary course of the normal day-to-day operations of other Persons that are
in the same line of business as such Person.
"Organizational Documents"--(a) the Certificate of Incorporation and
Certificate of Incorporation upon Change of Name, the Memorandum and Articles
of Association of the Company; (b) the statutory books of the Company; and (c)
any amendment to any of the foregoing.
"Patents" -- as defined in Section 3.22(a) hereof.
"Person"-- any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other
entity, or Governmental Body.
"Premises" -- the land and improvements thereon located at 2 Gatwick
Centre, Balcombe Road, Horley, Surrey RH6 9YA, as more particularly described
on Exhibit A attached hereto.
"Proceeding"-- any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
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"Purchase Price" -- as defined in Section 2.2 hereof.
"Related Person"-- with respect to a particular individual:
(a) each other member of such individual's family;
(b) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual's family;
(c) any Person in which such individual or members of such
individual's family hold (individually or in the aggregate) a Material
Interest; and
(d) any Person with respect to which such individual or one
or more members of such individual's family serves as a director, officer,
partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly under
common control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a
Material Interest;
(e) any Person with respect to which such specified Person
serves as a general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause
(b) or (c).
For purposes of this definition, (a) the "family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect
beneficial ownership of voting securities or other voting interests
representing at least 20% of the outstanding voting power of a Person or
equity securities or other equity interests representing at least 20% of the
outstanding equity securities or equity interests in a Person.
"Release"-- any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
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"Representative"-- with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Restricted Customer" -- any person, firm or company who purchased,
or contracted to purchase, from the Company products of the kind referred to
in the definition of Restricted Products at any time, whether prior to or
after the Closing Date.
"Restricted Employee" -- any person employed by the Company in any
capacity at any time.
"Restricted Period" -- as defined in Section 3.27(a)(viii) hereof.
"Restricted Products" -- products of the same description or having
the same purpose or use as products processed and/or sold by the Company,
whether prior to or after the Closing Date.
"Restricted Supplier" -- any person, firm or company who sold,
supplied or contracted to sell or supply to the Company products of the kind
referred to in the definition of Restricted Products at any time, whether
prior to or after the Closing Date.
"Rights in Mask Works" -- as defined in Section 3.22(a) hereof.
"Securities Act"-- the Securities Act of 1933 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"Subordinated Debenture" -- as defined in Section 2.2(b) hereof.
"TA" -- the Income and Corporation Taxes Act 1988.
"Tax" -- any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other
fee, and any related charge or amount (including any fine, penalty, interest,
or addition to tax), imposed, assessed, or collected by or under the authority
of any Governmental Body or payable pursuant to any tax-sharing agreement or
any other Contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.
"Tax Return"-- any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment,
collection, or payment of any Tax or in connection with the administration,
implementation, or enforcement of or compliance with any Legal Requirement
relating to any Tax.
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"TCGA" -- the Taxation of Chargeable Gains Act 1992.
"Threat of Release"-- a substantial likelihood of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"Threatened"-- a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in
writing), or if any other event has occurred or any other circumstances exist,
that would lead a prudent Person to conclude that such a claim, Proceeding,
dispute, action, or other matter is likely to be asserted, commenced, taken,
or otherwise pursued in the future.
"Trade Secrets" -- as defined in Section 3.22(a) hereof.
"VAT" -- value added tax.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, on the Closing
Date, the Sellers will sell and transfer the Shares to the Buyer, and the
Buyer will purchase the Shares from the Sellers.
2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Shares shall be
satisfied as follows:
(a) The delivery by the Buyer to Steven, on the Closing
Date, of 400,000 restricted shares of the common stock of the Buyer, $.001 par
value per share (the "Comtrex Shares");
(b) The delivery by the Buyer to Norman and Shirley of a
Subordinated Convertible Debenture, dated as of the Closing Date, in the
original principal amount of $300,000 and otherwise substantially in the form
of Annex I attached hereto (the "Subordinated Debenture"); and
(c) The delivery by the Buyer to Norman and Shirley of a
promissory note, dated as of the Closing Date, in the original principal
amount of $65,000 and otherwise substantially in the form of Annex II attached
hereto (the "Note").
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2.3 CLOSING
Unless the parties shall agree otherwise in writing, or unless the
Closing Date is extended in accordance with the terms of this Agreement, the
closing (the "Closing") of the Contemplated Transactions shall be held at the
offices of the Buyer located in Moorestown, New Jersey on October 2, 1997.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) The Sellers will deliver to the Buyer:
(i) duly executed transfers in respect of the Shares
in favor of the Buyer;
(ii) the share certificate relating to the Shares
(or an indemnity for lost share certificates in a form
reasonably acceptable to the Buyer);
(iii) the statutory books of the Company written up
to date;
(iv) the common seal of the Company;
(v) certificate of incorporation and certificate of
incorporation on change of name of the Company;
(vi) all available prints of the memorandum and
articles of association of the Company;
(vii) certificates as to the balance or balances on
the banking accounts of the Company at the close of business
two (2) working days immediately prior to the Closing (which
such certificates shall also list for every bank account or
other depository account owned by the Company the account
number for each such account, the name and address of the
banking or other financial institution with whom each such
account is maintained, and the authorized signatories named
for each account);
(viii) all books of account, cheque books,
paying-in books and unused cheques of the Company;
(ix) copies of the title deeds to the Premises (for
inspection purposes);
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(x) an Employment Agreement between the Company and
each Seller, dated as of the Closing Date, and otherwise
substantially in the form of Annex III attached hereto (the
"Employment Agreements"), executed by each of the Sellers;
(xi) an Investment Agreement, dated as of the
Closing Date, and otherwise substantially in the form of
Annex IV attached hereto, executed by each of the Sellers;
(xii) evidence satisfactory to the Buyer in its
reasonable discretion that the Sellers have held a board
meeting of the Company at which:
(A) the procedure set out in sections
156-158 (inclusive) of the Act, enabling the
Company to financially assist the Buyer has been
carried out, including:
(1) an explanation to the Directors
of their responsibilities;
(2) the production of the
Directors sworn Statutory Declaration with
the Auditors Report attached; and
(3) the holding of an
Extraordinary General Meeting of the
Company at which resolutions were proposed
approving the financial assistance and the
granting by the Company of the Legal
Charge.
(B) the transfer of the Shares was
approved for registration;
(C) the existing directors and secretary
(other than Steven Roberts) delivered their written
resignations in the agreed form;
(D) all existing authorities to bankers
were amended as the Buyer directed;
(E) the accounting reference date was
changed to March 31; and
(F) appointment of the nominees of the
Buyer as directors and secretary of the Company;
and
(xiii) a Deed of Tax Indemnity in form of Annex V
attached hereto (the "Deed of Tax Indemnity").
(b) The Buyer will deliver to the Sellers:
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(i) each of the Employment Agreements, duly executed
by the Company;
(ii) the Subordinated Debenture;
(iii) the Comtrex Shares;
(iv) the Note;
(v) the Legal Charge; and
(vi) an opinion of Archer & Greiner, A Professional
Corporation, legal counsel to the Buyer, dated the Closing
Date, that the Comtrex Shares have been duly authorized and
validly issued and that the execution and delivery of the
Subordinated Debenture and the Note by the Buyer have been
duly authorized by all necessary corporate action.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller represents and warrants to the Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Schedule 3.1 attached hereto contains a complete and accurate
list of the Company's jurisdiction of incorporation and other jurisdictions in
which it is authorized to do business. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the
properties and assets that it purports to own or use, and to perform all its
obligations under the Applicable Contracts. The Company is duly qualified to
do business as a foreign corporation and is in good standing under the laws of
each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by
it, requires such qualification.
(b) The Sellers have delivered to the Buyer true, complete and
correct copies of the Company's Organizational Documents, as currently in
effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of the Sellers, enforceable against the Sellers in accordance with
its terms. Each of the Sellers has the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and to perform
his obligations under this Agreement.
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(b) Except as set forth in Schedule 3.2 attached hereto, neither the
execution and delivery of this Agreement nor the consummation or performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of
(A) any provision of the Company's Organizational Documents, or (B)
any resolution adopted by the board of directors or the stockholders
of the Company;
(ii) contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to challenge
any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which
the Company or any Seller, or any of the assets owned or used by the
Company, may be subject;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate, or modify,
any Governmental Authorization that is held by the Company or that
otherwise relates to the business of, or any of the assets owned or
used by, the Company;
(iv) cause any of the assets owned by the Company to be
reassessed or revalued by any taxing authority or other Governmental
Body;
(v) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity
or performance of, or to cancel, terminate, or modify, any Applicable
Contract; or
(vi) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by the
Company (other than pursuant to the terms and provisions of the Legal
Charge).
Except as set forth in Schedule 3.2 attached hereto, no Seller nor
the Company is or will be required to give any notice to or obtain any Consent
from any Person in connection with the execution and delivery of this
Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.3 CAPITALIZATION
The authorized equity securities of the Company consist of 10,000
ordinary shares, par value (pound)1.00 per share, of which 6,000 shares are
issued and outstanding and constitute the Shares. The Sellers are and will be
on the Closing Date the record and beneficial owners and holders of the
Shares, free and clear of all Encumbrances. Norman owns 2,600 of the Shares,
Shirley owns
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1,000 of the Shares and Steven owns 2,400 of the Shares. No legend or other
reference to any purported Encumbrance appears upon any certificate
representing any of the Shares. All of the Shares have been duly authorized
and validly issued and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of the Company. The Company does not own, nor does it have
any Contract to acquire, any equity securities or other securities of any
Person or any direct or indirect equity or ownership interest in any other
business.
3.4 BOOKS AND RECORDS
The books of account, minute books, stock record books, and other
records of the Company are complete and correct and have been maintained in
accordance with sound business practices, including the maintenance of an
adequate system of internal controls. The minute books of the Company contain
accurate and complete records of all meetings held of, and corporate action
taken by, the stockholders, the Boards of Directors, and committees of the
Boards of Directors of the Company, and no meeting of any such stockholders,
Board of Directors, or committee has been held for which minutes have not been
prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Company.
3.5 TITLE TO PREMISES; ENCUMBRANCES
(a) The Company owns good and marketable title to the Premises
(subject only to the encumbrance attached hereto as Schedule 3.5 (the
"Existing Mortgage"));
(b) There are no existing or pending litigation, claims,
condemnations, or sales in lieu thereof, contracts of sale, options to
purchase or rights of first refusal with respect to any aspect of the
Premises, nor have any such actions, suits, proceedings, claims, or other such
matters been threatened or asserted;
(c) Neither the Company nor any Seller has received notice or has any
Knowledge of any pending condemnation, liens, assessments or similar
proceedings or charges affecting the Premises by any Governmental Body;
(d) Neither the Company nor any Seller shall transfer, convey,
mortgage (except for the Existing Mortgage), encumber, lease or otherwise
assign or dispose of the Premises, or any interest therein, without the
express written consent of the Buyer, nor shall any Seller or the Company
cause, create or allow any Encumbrance, of any kind or character (except for
the Existing Mortgage), voluntarily or involuntarily, to be placed upon the
Premises, or any interest therein.
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(e) No default or breach exists under any existing indebtedness
secured by an Encumbrance against the Premises. The Company will pay all
interest and principal and all deposits and other charges payable under any
existing indebtedness secured by an Encumbrance upon the Premises and will
fully comply with all of the provisions thereof. No default or breach exists
under any existing indebtedness secured by an Encumbrance against the Premises
securing any indebtedness.
(f) The Premises has access to a public street.
(g) To the best of the Sellers' Knowledge, the Premises has never
been used and is not presently used for hazardous waste or a waste disposal
site and has no faults running through the Premises.
(h) To the best of the Sellers' Knowledge, no portion of the Premises
has the presence of asbestos.
(i) The location, construction, occupancy, operation, and use of the
Premises (including the buildings, improvements, fixtures and equipment
forming a part thereof (if any), to the best of the Company's and each
Seller's Knowledge, do not violate any applicable law, statute, ordinance,
rule, regulation, order, or determination of any Governmental Body or any
board of fire underwriters (or other body exercising similar functions), or
any restrictive covenant or deed restriction (recorded or otherwise) affecting
the Premises, including without limitation all applicable zoning ordinances
and building codes, flood disaster laws and health and environmental laws and
regulations, including, without limitation, all applicable zoning ordinances
and building codes, flood hazard area control laws, Occupational Safety and
Health Laws, and Environmental Laws (hereinafter sometimes collectively called
"Applicable Laws").
(j) Without limitation of (i) above, to the best of the Company's and
each Seller's Knowledge, the Premises and its owners or any prior owner or
operators, are not currently in violation of or subject to any existing,
pending or threatened investigation or inquiry by any governmental authority
or to any remedial obligations under any Environmental Laws, and this
representation and warranty would continue to be true and correct following
disclosure to the applicable Governmental Bodies of all relevant facts,
conditions and circumstances, if any, pertaining to the Premises.
(k) The Company has not obtained, and to the best of the Company's
and each Seller's knowledge, information and belief is not required to obtain,
and neither the Company nor either Seller has no knowledge of any reason Buyer
will be required to obtain, any permits, licenses or similar authorizations to
construct, occupy, operate, or use any buildings, improvements, fixtures, and
equipment forming a part of the Premises by reason of any Environmental Laws.
(l) Neither the Company nor any Seller has received any notice of,
and neither the Company nor any Seller knows of nor suspects, any fact(s)
which might constitute violation(s) of any Environmental Laws which relate to
the use, ownership or occupancy of the Premises, and
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is not in violation of any covenants, conditions, easements, rights of way or
restrictions affecting the Premises or any rights appurtenant thereto.
(m) Based upon the Company's and each Seller's Knowledge, except in
accordance with a valid governmental permit, license, certificate or approval,
there has been no Release into or upon (i) the air, (ii) soils or any
improvements located thereon, (iii) surface water or ground water, or (iv) the
sewer, septic system or waste treatment, storage or disposal system servicing
the Premises, of any Hazardous Material at or from the Premises (any of which
is hereafter referred to as a "Hazardous Discharge"). Sellers shall give to
Buyer immediate oral and written notice of any Hazardous Discharge of which
they have Knowledge.
(n) To the best of the Sellers' Knowledge, there has been no
complaint, order, directive, claim, citation or notice by any Governmental
Body or any other person or entity with respect to any alleged violations of
any Environmental Law or the occurrence of a Hazardous Discharge at, about or
from the Premises, or by the reason of any business thereon conducted (any of
which is hereafter referred to as an "Environmental Complaint"). Sellers shall
give to Buyer immediate oral and written notice of any Environmental Complaint
of which they have Knowledge.
(o) To the best of the Sellers' Knowledge, no underground storage
tanks, above ground storage tanks, lines, etc. exist, past or present, on the
Premises.
(p) All of the foregoing representations and warranties made by the
Sellers and the Company shall be continuing and shall be true and current for
the period from the date hereof through and as of the Closing Date with the
same force and effect as if made each day throughout such period, and all of
such representations and warranties shall survive such Closing.
3.6 FINANCIAL STATEMENTS
(a) The Accounts
(i) A true copy of the Accounts is annexed as Schedule 3.6
to this Agreement.
(ii) The Accounts:
(A) comply with the provisions of the Act and all
other relevant statutes;
(B) have been prepared in accordance with UK
generally accepted accounting practice consistently applied;
(C) are complete and accurate in all material
respects;
(D) make full provision or reserve for all actual
liabilities;
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(E) make full provision for or specifically note
(in accordance with UK generally accepted account practice)
all capital commitments and contingent liabilities;
(F) make full provision for all bad and doubtful
debts; and
(G) show a true and fair view of the state of
affairs of the Company as at the Balance Sheet Date and June
30, 1996 and of the profit or loss of the Company for the
accounting periods ended on such dates.
(ii) Full provision or reserve has been made in the Accounts
for all taxation liable to be assessed on the Company, or for which
the Company is accountable, in respect of:
(A) profits, gains or income earned, arising,
accruing or received or deemed to arise, accrue or have been
received for any purpose;
(B) transactions effected or deemed to have been
effected or any event before the Balance Sheet Date; and
(C) distributions made or deemed to have been made
down to such date provided for in the Accounts.
(iii) Full provision has been made in the Accounts for
deferred taxation in accordance with UK generally accepted accounting
practice.
(iv) The aggregate book value of plant and machinery for
which capital allowances have been claimed under Part II of the CAA
does not exceed the written-down value of the qualifying expenditure
under that Act.
(v) If each of the capital assets of the Company (other than
assets on which capital allowances are claimed but are not calculated
separately) were disposed of for a consideration equal to the book
value of that asset in or adopted for the purposes of the Accounts,
no liability to corporation tax on chargeable gains or balancing
charge under the CAA would arise (for this purpose there shall be
disregarded any relief or allowance available to the Company (other
than amounts failing to be deducted from the consideration receivable
under section 38 of the TCGA and amounts of less than (pound)2,000 in
the aggregate)).
(vi) The values placed on the current assets of the Company
in the Accounts are not in excess of their market values at the
Balance Sheet Date or June 30, 1996, as applicable, nor their market
values at the date of this Agreement.
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(vii) The stock-in-trade and work-in-progress have been
valued in the Accounts at the lower of cost and net realizable value.
Full provision has been made for all damaged, obsolete and slow
moving stock.
(viii) The results shown by the Accounts were not materially
affected by:
(A) transactions of a nature not usually undertaken
by the Company;
(B) circumstances of an extraordinary, exceptional
or non-recurring nature;
(C) charges or credits relating to prior years; or
(D) any change in the basis of accounting.
(b) The Management Accounts
(i) A true copy of the Management Accounts is annexed as
Schedule 3.6 to this Agreement.
(ii) The Management Accounts:
(A) have been prepared in accordance with UK
generally accepted management accounting practice on a basis
consistent with previous management accounts prepared by the
Company;
(B) accurately state the level of turnover and
expenditure of the Company for the period from the Balance
Sheet Date to August 31, 1997; and
(C) accurately reflect the state of affairs of the
Company as at August 31, 1997 and of the trading performance
of the Company for the period from the Balance Sheet Date to
August 31, 1997.
(c) Events since the Balance Sheet Date
(i) Since the Balance Sheet Date and except as set forth in
Schedule 3.18:
(A) the Company has carried on the Business in the
Ordinary Course of Business so as to maintain the same as a
going concern without any interruption or alteration in its
nature, scope or manner;
(B) the Company has not disposed of any assets or
assumed any material liabilities (including, but not limited
to, contingent liabilities) otherwise than in the Ordinary
Course of Business;
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(C) the Business has not been adversely affected by
any abnormal factor not affecting similar businesses;
(D) there has been no deterioration in the
financial position or prospects of the Company;
(E) the value of the Company's net assets has not
been reduced below that shown in the Accounts;
(F) none of the assets of the Company has been
transferred, leased, mortgaged, sold, encumbered or made the
subject of any dealing, option or agreement otherwise than
on the sale of finished goods in the ordinary course of
business;
(G) the Company has not acquired or agreed to
acquire any assets other than current assets acquired in the
ordinary course of business;
(H) there has been no unusual increase in the value
of the stocks of raw materials, work-in-progress and
finished goods held by the Company;
(I) the Company has not paid or declared any
dividend or other distribution of capital or income in
respect of any share capital of the Company;
(J) no loan or loan capital of the Company has been
repaid in whole or in part or has become due or liable (with
or without notice or lapse of time or both) to be declared
due or liable; and
(K) the Company has continued to pay its creditors
in the Ordinary Course of Business.
(ii) At Closing the value of the Total Shareholders' Funds (as such
term is utilized in the Accounts) of the Company shall not be less than the
value of the Total Shareholders' Funds set forth on the Company's Accounts for
the year ended June 30, 1997.
3.7 TITLE TO PROPERTIES; ENCUMBRANCES
Schedule 3.7 attached hereto contains a complete and accurate list of
all real property, leaseholds, or other interests therein owned by the
Company. The Sellers have delivered or made available to the Buyer copies of
the deeds and other instruments (as recorded) by which the Company acquired
such real property and interests, and copies of all title insurance policies,
opinions, abstracts, and surveys in the possession of the Sellers or the
Company and relating to such property or interests. The Company owns (with
good and marketable title in the case of real property, subject only to the
Existing Mortgage and the matters permitted by the following
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sentence) all the properties and assets (whether real, personal, or mixed and
whether tangible or intangible) located in the facilities owned or operated by
the Company or reflected as owned in the books and records of the Company,
including all of the properties and assets reflected in the Accounts and the
Management Accounts. All properties and assets reflected in the Accounts and
the Management Accounts are free and clear of all Encumbrances, other than
those Encumbrances reflected in the Accounts and the Management Accounts
(including without limitation the Existing Mortgage).
3.8 CONDITION AND SUFFICIENCY OF ASSETS
The buildings, plants, structures, and equipment of the Company are
structurally sound, are in good operating condition and repair, and are
adequate for the uses to which they are being put, and none of such buildings,
plants, structures, or equipment is in need of maintenance or repairs except
for ordinary, routine maintenance and repairs that are not material in nature
or cost. The building, plants, structures, and equipment of the Company are
sufficient for the continued conduct of the Company's business after the
Closing in substantially the same manner as conducted prior to the Closing.
3.9 ACCOUNTS RECEIVABLE
All accounts receivable of the Company that are reflected in the
Accounts or the Management Accounts or on the accounting records of the
Company as of the Closing Date (collectively, the "Accounts Receivable")
represent or will represent valid obligations arising from sales actually made
or services actually performed in the Ordinary Course of Business. Unless paid
prior to the Closing Date, the Accounts Receivable are or will be as of the
Closing Date current and collectible, net of the respective reserves shown in
the Accounts or the Management Accounts or on the accounting records of the
Company as of the Closing Date (which reserves are adequate and calculated
consistent with past practice and, in the case of the reserve as of the
Closing Date, will not represent a greater percentage of the Accounts
Receivable as of the Closing Date than the reserve reflected in the Management
Accounts for the Accounts Receivable reflected therein) and will not represent
a material adverse change in the composition of such Accounts Receivable in
terms of aging. Subject to such reserves, each of the Accounts Receivable
either has been or will be collected in full, without any set-off, within
ninety days after the day on which it first becomes due and payable. There is
no contest, claim, or right of set-off, other than returns in the Ordinary
Course of Business, under any Contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable.
Schedule 3.9 attached hereto contains a complete and accurate list of all
Accounts Receivable as of August 31, 1997, which list sets forth the aging of
such Accounts Receivable.
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3.10 INVENTORY
All inventory of the Company, whether or not reflected in the
Accounts or the Management Accounts, consists of a quality and quantity usable
and salable in the Ordinary Course of Business, except for obsolete items and
items of below-standard quality, all of which have been written off or written
down to net realizable value in the Accounts or the Management Accounts or on
the accounting records of the Company as of the Closing Date, as the case may
be. All inventories not written off have been priced at the lower of cost or
net realizable value on a first in, first out basis. The quantities of each
item of inventory (whether raw materials, work-in-process, or finished goods)
are not excessive, but are reasonable in the present circumstances of the
Company.
3.11 NO UNDISCLOSED LIABILITIES
The Company has no liabilities or obligations of any nature (whether
known or unknown and whether absolute, accrued, contingent, or otherwise)
except for liabilities or obligations reflected or reserved against in the
Accounts or the Management Accounts and current liabilities incurred in the
Ordinary Course of Business since the respective dates thereof.
3.12 TAXES
(a) Capital Gains
(i) In respect of any asset owned by the Company at the
Balance Sheet Date or acquired since the Balance Sheet Date:
(A) the provisions of Section 19(3) of the CGTA
and/or Sections 17 or 176 of the TCGA do not apply;
(B) no claim has been made under Sections 23, 140,
152 to 158 inclusive or 257 of the TCGA;
(C) no such asset is subject to a deemed disposal
and re-acquisition under paragraphs 16, 19 or 21 of Schedule
2 to the TCGA or the mandatory use of 6 April 1965 valuation
under that Schedule;
(D) no such asset is a wasting asset under Section
44 of the TCGA which does not qualify in full for capital
allowances under Section 47(1) of the TCGA; and
(E) no election has been made under Section 35(5)
of the TCGA.
(b) Capital Gains - Transactions Between Connected Persons
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(i) The Company does not own an unutilized capital loss to
which the provisions of Section 18(3) of the TCGA apply.
(c) Capital Gains - Chargeable Debts
(i) No capital gain chargeable to corporation tax will
accrue to the Company on the disposal of any debt owing to the
Company.
(d) Capital Gains - Appropriation to Trading Stock
(i) The Company has not made any claim or election under
Section 161(3) of the TCGA.
(e) Capital Gains - Post Balance Sheet Date
(i) No chargeable gain would arise on the disposal by the
Company of any asset acquired since the Balance Sheet Date for a
consideration equal to the consideration actually given for the
acquisition of such asset (disregarding any indexation relief).
(f) Depreciatory Transactions
(i) No loss which might accrue on the disposal by the
Company of any asset is liable to be reduced by virtue of any
depreciatory transaction within the meaning of Sections 176 and 177
of the TCGA nor is any expenditure on any share or security liable to
be reduced under Section 125 of the TCGA and no chargeable gain or
allowable loss arising on a disposal by the Company is likely to be
adjusted pursuant to the provisions of Sections 29 and 30 of the TCGA
or to fall within the provisions of Section 34 thereof relating to
value shifting.
(g) Close Companies
(i) The Company has not made (and will not be deemed to have
made) any loan or advance so as to become liable to make any payment
under Section 419 or 422 of the TA nor has the Company written off or
released or agreed to write off or release the whole or any part of
any such loan or advance.
(ii) The Company is not and has never been a close
investment-holding company within the meaning of Section 13A of the
TA.
(h) Deemed Distributions
(i) No distribution within Section 418 of the TA has been
made by the Company.
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(i) Liability For Tax Primarily Due From Another Person
(i) No transaction, omission or event has occurred in
consequence of which the company is or may be held liable for any
taxation or deprived of relief otherwise available to it or may be
otherwise held liable for any taxation primarily chargeable against
some other company or person (whether by reason of any such other
company being or having been a member of the same group of companies
or otherwise).
(ii) The Company has not since the Balance Sheet Date made
any payment in respect of taxation primarily chargeable against some
other company or person.
(j) Claims by the Company
(i) There are set out in Schedule 3.12, with express
reference to this paragraph, full details of all matters relating to
taxation in respect of which the Company (either alone or jointly
with any other person) has made, or at Closing will have an
outstanding entitlement to make:
(A) any claim (including, but not limited to, a
supplementary claim) for relief under any taxation statute;
(B) any election for one type of relief, or one
basis, system or method of taxation as opposed to another;
(C) any appeal (including, but not limited to, a
further appeal) against an assessment to taxation; or
(D) any application for the postponement of
taxation.
(ii) The Company has made no claim under Sections 24, 279 or
280 of the TCGA or Sections 242 or 584 of the TA.
(k) Non-Allowable Payments
(i) There are no rents, interest, annual payments or other
sums of income nature paid or payable by the Company or which the
Company is under an obligation to pay in the future that are or may
be wholly or partially disallowable as deductions or charges in
computing profits for the purposes of corporation tax by reason of
the provisions of Sections 74, 79, 125, 338, 339, 770, 779 to 786
(inclusive) or 787 of the TA or otherwise.
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(ii) The Company has not made any payment to or provided any
benefit or agreed to make any payment to or provide any benefit for
any present or former director, officer or employee of the Company or
a dependent of any such persons which is not allowable as a deduction
in calculating the profits of the Company for taxation purposes.
(l) Capital Allowances
(i) All expenditures which the Company has incurred or may
incur under any subsisting commitment on the provision of machinery
or plant has qualified or will qualify (if not deductible as a
trading expense of a trade carried on by the Company) for writingdown
allowances under the CAA.
(ii) The value attributed in the Accounts to each asset or
pool of assets is such that on a disposal of each such asset or pool
of assets on the Balance Sheet Date for a consideration equal to such
value or aggregate value no balancing charge would have arisen.
(iii) All capital expenditures incurred by the Company since
the Balance Sheet Date and all capital expenditure which may be
incurred by the Company under any existing contact has qualified or
will be capable of qualifying for capital allowances. Such allowances
have been or will be made in taxing the Company's trade.
(iv) There are set out in Schedule 3.12 details of all
capital allowances claimed in respect of the accounting period of the
Company ended on the Balance Sheet Date.
(v) Since the Balance Sheet Date the Company has not done or
omitted to do or agreed to do or permitted to be done any act as a
result of which the Company could be required to bring a disposal
value into account or suffer a balancing charge or be subject to
recovery of excess relief for the purpose of capital allowances under
Sections 4, 24, 87, 100 or 128 of the CAA or a withdrawal of first
year allowances or a recovery of excess relief under Sections 46 or
47 of the CAA.
(vi) The Company has not incurred any expenditure on the
provision of any capital allowance bearing asset for leasing.
(vii) No claim for capital allowances on expenditure
incurred by the Company prior to Closing on the provision of
machinery or plant which at the date of this agreement is still
leased will not may be restricted by reason of section 61(5) of the
CAA (machinery and plant on lease).
(viii) The Company has not made any election under section
37 of the CAA (short life assets) nor is it taken to have made any
such election under subsection (8)(c) thereof.
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(ix) The Company has not obtained any capital allowances
under Chapter VI Part II of the CAA (fixtures).
(x) The Company is not and is not likely to be involved in a
dispute with another person as to the entitlement of capital
allowances under section 51(7) of the CAA.
(m) Distributions
(i) No distribution within the meaning of sections 209 or
210 of the TA (other than dividends shown in its audited accounts)
has been made by the Company since 6 April 1965.
The Company is not bound to make any such distribution.
(ii) No securities (within the meaning of section 254(1) of
the TA) issued by the Company and remaining in issue at the date of
this Agreement were issued in such circumstances that the interest
payable thereon or any other payment in respect of them falls to be
treated as a distribution under section 209 of the TA.
(iii) The Company has not been concerned in any exempt
distribution within section 213 of the TA.
(iv) The Company has not received any capital distributions
to which the provisions of section 346 of the TA could apply.
(v) The Company has not issued nor agreed to issue any share
capital in the circumstances referred to in section 211(1) of the TA.
(n) Carry-forward of Losses and ACT
(i) Nothing has been done and no event or series of events
has occurred or will as a result of any contract, agreement or
arrangement entered into before the date of this agreement occur
which might cause or contribute to the disallowance of the carry
forward of losses or excess charges on income or surplus advance
corporation tax under the provisions of sections 245, 245A, 393 or
768 of the TA or the disallowance of the carry back of losses under
the provisions of sections 393A and 768A of the TA.
(o) Tax Avoidance
(i) The Company has not been engaged in or been a party to
any transaction or series of transactions or scheme or arrangement
which has resulted or could result in the avoidance of or a reduction
in a liability to taxation and to which the principle on which the
case of Furniss v Dawson was decided could apply.
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(ii) The Company has not been a party to or otherwise
involved in any transaction, scheme or arrangement to which any of
the following provisions could apply:
the TCGA: sections 29-34, 106
the TA: sections 37, 56, 116, 240(11)-(13), 395, 399,
404, 410, 710-28, 729-38, 739-46, 774-87.
the CAA: sections 42, 46, 47, 75 and 159 (4), (5) and (6)
(iii) The Company has not been a party to or otherwise
involved in any transaction to which any of the following provisions
have been or could be applied other than transactions in respect of
which all necessary clearances or consents have been obtained:
the TCGA: sections 135-139
the TA: sections 703-709, and 776
(p) Migration of Companies
(i) The Company has not without the prior consent of the
Treasury entered into or agreed to enter into any of the transactions
specified in section 765 of the TA.
(q) VAT
(i) The Company has duly registered and is a taxable person
for the purposes of VAT. It has complied with all statutory
requirements, orders, provisions, directions or conditions relating
to VAT.
(ii) The Company maintains complete, correct and up-to-date
records for the purposes of compliance with VAT legislation.
(iii) The Company is not in arrears with any payment or
returns of VAT or liable to any abnormal or non-routine payment or
any forfeiture or penalty or to the operation of any penal provision.
(iv) All input tax for which the Company has claimed credit
has been paid by the Company in respect of supplies made to it
relating to goods or services used or to be used wholly for the
purpose of the Company's business.
(v) All supplies of goods and services made by the Company
are taxable supplies for the purposes of the VATA and the Company has
not been and will not be denied credit for any input tax by reason of
the operation of section 26 of VATA.
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(vi) No supplies have been made to the Company to which the
provisions of section 8 of the VATA might apply.
(vii) The Company has not been required by the Commissioners
of Customs and Excuse to give security for VAT purposes.
(viii) The Company is not and has never been treated as a
member of a group for VAT purposes and is not and has not agreed to
become an agent, manager or factor (for purposes of section 47 of the
VATA) of any person who is not resident in the United Kingdom.
(ix) Intentionally omitted.
(x) The Company has not, during the period of 12 or 24
months respectively preceding Closing, received a surcharge liability
notice under section 59 of the VATA or a penalty liability under 64
of the VATA.
(xi) Neither the Company nor any "relevant associate" (as
defined in paragraph 3 of Schedule 10 to the VATA) has elected to
waive exemption pursuant to Schedule 10 to the VATA.
(xii) The Company does not hold any interest in any building
or work such as is referred to in Item 1(a) Group 1 Part II Schedule
9 of the VATA.
(xiii) The Company has not incurred any liability under the
provisions of paragraph 6 of Schedule 10 to the VATA and there are no
circumstances in existence at the date of this Agreement whereby the
Company would become so liable on the occurrence of any of the vents
mentioned in paragraph 5(1)(a) or 5(1)(b) of Schedule 10 to the VATA.
(xiv) There are no circumstances whereby the Company is or
could become liable to make any payment or increased payment as a
result of another person having elected or electing to waive
exemption pursuant to Schedule 10 of the VATA.
(xv) The Company owns no assets to which Part XV of the
Value Added Tax Regulations 1995 applies.
(r) Stamp Duty and Stamp Duty Reserve Tax
(i) The Company has not claimed or obtained relief from
stamp duty under section 42 of the Finance Act 1930 or sections 75-77
of the Finance Action 1986.
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(ii) The Company has not entered into any transaction,
contract or arrangement, whether verbal or written and whether made
within or outside the United Kingdom, under which it has or may
become liable to pay or to account for stamp duty or stamp duty
reserve tax and which liability remains unsatisfied.
(s) Inheritance Tax
(i) The Company has not made or received any transfers of
value within sections 94 or 99 of the Inheritance Tax Act 1984.
(ii) The Company has not been a party to associated
operations in relation to a transfer of value within the meaning of
section 268 of the Inheritance Tax Act of 1984.
(iii) There is no outstanding Inland Revenue charge under
section 237 of the Inheritance Tax Act of 1984 over the assets of or
the shares in the Company.
(iv) No person has by virtue of section 212 of the
Inheritance Tax Act 1984 any power of sale, mortgage or charge in
respect of any share in or asset of the Company.
(t) Purchase of Own Shares
(i) The Company has not purchased, redeemed or repaid nor
agreed to purchase, redeem or repay any of its own shares in
circumstances to which section 219 of the TA applies.
(u) Gains Accruing to Non-Resident Companies or Trusts
(i) There has not accrued any gain in respect of which the
Company may be liable to corporation tax on chargeable gains by
virtue of the provisions of sections 13 or 86 or Schedule 5 of the
TCGA.
(v) Offshore Funds
(i) The Company does not own and has never owned a material
interest in an offshore fund which is or has at any material time
been a non-qualifying offshore fund as defined by section 760 of the
TA.
(w) No Interest in a Controlled Foreign Company
(i) The Company does not have and has never had any interest
in a controlled foreign company as defined in section 747 of the TA.
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(x) Residence
(i) The Company is and has always been resident only in the
United Kingdom.
(y) Returns, Records and Payments
(i) The Company has maintained full, accurate and complete
records of all taxation matters where required to do so including
(but not limited to) in relation to deductions made and/or accounted
for in relation to National Insurance Graduated Pension Contributions
and sums deducted under the PAYE system.
(ii) All returns, computations and payments which should be,
or should have been, made by the Company for any taxation purpose
have been made within the requisite periods and are up-to-date,
correct and on a proper basis and none of them is, or is likely to
be, the subject of any dispute with any taxation authority.
(iii) The Company is not and has not at any time been liable
to pay any penalty or interest charged by virtue of the provisions of
the Taxes Management Act or other taxation legislation.
(iv) There is no dispute and there has not at any time been
any dispute between the Company and any taxation authority, and the
Company is not and has not at any time been the subject of any
investigation or discovery by any taxation authority and there are no
facts which are likely to give rise to any such dispute or
investigation.
(v) Schedule 3.12 gives full details of any arrangements in
relation to the Company which any taxation authority has agreed to
operate which are not based on a strict application of the relevant
legislation, and no action has been taken by or on behalf of the
Company which has had or is likely to have the result of altering,
prejudicing or in any way disturbing any such arrangement.
(vi) All payments made by the Company to employees,
ex-employees or to any other person which ought to have been made
under deduction of taxation have been so made.
(vii) The Company has duly and properly accounted to the
relevant taxation authority for all taxation deducted where required
to do so.
(viii) The Company has duly and properly accounted to the
Inland Revenue for all taxation chargeable on benefits provided for
employees and ex-employees of the Company.
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(ix) All National Insurance, Graduated Pension Contributions
and sums payable to the Inland Revenue under the PAYE system up to
the date of this agreement have been duly and properly paid.
(z) Employee Benefits
(i) Schedule 3.12 contains full details of all share option,
incentive and profit sharing schemes established by the Company.
(aa) Group of Companies
(i) The Company is not and has never been a member of a
group of companies within the meaning of section 170 of the TCGA or
sections 240, 247 or 413 of the TA.
3.13 INTENTIONALLY OMITTED
3.14 EMPLOYEES
(a) Schedule 3.14 attached hereto, contains full particulars of all
remuneration payable and other benefits provided or which the Company is bound
to provide (whether now or in the future) to each officer and employee of the
Company. This includes (but is not limited to) all profit sharing, incentive
and bonus arrangements to which the Company is a party, whether legally
binding or not. Schedule 3.14 also contains true and complete particulars in
respect of each director, officer and employee of the Company of his date of
birth and the date on which he commenced continuous employment.
(b) The Company has not entered into or become bound by any service
agreements or contracts of employment with directors, officers or employees of
the Company which cannot be terminated by 6 months' notice or less without
giving rise to any claim for damages or compensation (other than a statutory
redundancy payment).
(c) The Company has not entered into or become bound by any
consultancy or management services agreement with any other person, firm or
company.
(d) There are no agreements or other arrangements between the Company
or any trade association of which the Company is a member and any trade union
or other body or organization representing its employees.
(e) The Company is not liable to pay compensation or make payments
under the Employment Rights Act 1996 and the Sellers are not aware of:
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(i) any outstanding claim against the Company by any present
or former director, officer or employee; or
(ii) any dispute between the Company and a material number
or class of its employees,
in either case in relation to any claim for breach of contract or for
severance payments, redundancy payments, or protective awards or for
compensation for unfair dismissal and/or discrimination or for any other
liability accruing from the termination or variation of any contract of
employment or for services.
(f) No written undertaking or assurances have been given to the
employees of the Company as to the continuance, introduction, increase or
improvement of any pension rights or entitlements which the Company and/or the
Buyer would be required to implement in accordance with good industrial
relations practice (whether or not there is any legal obligation to do so).
(g) All appropriate notices have been issue under the Employment
Rights Act 1996 to all directors and all employees of the Company, and the
Company has complied with all obligations imposed on it by relevant statutes,
regulations and codes of conduct and all relevant orders and awards made under
those statutes, regulations and codes.
(h) No director or employee is remunerated on a profit sharing or
bonus or commission basis, and there are no amounts owing for reimbursement of
business expenses incurred within a period of 12 months preceding the date of
this agreement.
(i) All National Insurance and Graduated Pension Contributions and
sums payable by the Company to the Inland Revenue under the PAYE system have
been duly and properly paid. The Company has maintained proper records in
respect of all such matters. The Company has deducted all tax required by law
to be deducted from all other payments to (or treated as made to) employees
and ex-employees of the Company. The Company has accounted to the inland
Revenue for all tax so deducted together with all tax chargeable on benefits
for its employees and ex- employees.
(j) There is no liability or claim against the Company outstanding or
anticipated under:
(i) The Equal Pay Act 1970;
(ii) The Sex Discrimination Act 1975;
(iii) The Race Relations Act 1976;
(iv) The Transfer of Undertakings (Protection of Employment)
Regulations 1981;
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(v) The Wages Act 1986;
(vi) The Trade Union and Labor Relations (Consolidation) Act
1992;
(vii) The Trade Union Reform and Employment Rights Act 1993;
or
(viii) The Employment Rights Act 1996.
3.15 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Schedule 3.15 attached hereto:
(i) the Company is, and at all times has been, in full
compliance with each Legal Requirement that is or was applicable to
it or to the conduct or operation of its business or the ownership or
use of any of its assets;
(ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a
violation by the Company of, or a failure on the part of the Company
to comply with, any Legal Requirement, or (B) may give rise to any
obligation on the part of the Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature; and
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or
any other Person regarding (A) any actual, alleged, possible, or
potential violation of, or failure to comply with, any Legal
Requirement, or (B) any actual, alleged, possible, or potential
obligation on the part of the Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.
(b) Schedule 3.15 contains a complete and accurate list of each
Governmental Authorization that is held by the Company or that
otherwise relates to the business of, or to any of the assets owned
or used by, the Company. Each Governmental Authorization listed
or required to be listed in Schedule 3.15 is valid and in full
force and effect. Except as set forth in Schedule 3.15:
(i) the Company is, and at all times has been, in full
compliance with all of the terms and requirements of each
Governmental Authorization identified or required to be identified in
Schedule 3.15;
(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result
directly or indirectly in a violation of or a failure to comply with
any term or requirement of any Governmental Authorization listed or
required to be listed in Schedule 3.15, or (B) result directly or
indirectly in the revocation,
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withdrawal, suspension, cancellation, or termination of, or any
modification to, any Governmental Authorization listed or required to
be listed in Schedule 3.15;
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or
any other Person regarding (A) any actual, alleged, possible, or
potential violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (B) any actual,
proposed, possible, or potential revocation, withdrawal, suspension,
cancellation, termination of, or modification to any Governmental
Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be
listed in Schedule 3.15 have been duly filed on a timely basis with
the appropriate Governmental Bodies, and all other filings required
to have been made with respect to such Governmental Authorizations
have been duly made on a timely basis with the appropriate
Governmental Bodies.
The Governmental Authorizations listed in Schedule 3.15 collectively
constitute all of the Governmental Authorizations necessary to permit
the Company to lawfully conduct and operate its business in the
manner it currently conducts and operates such business and to permit
the Company to own and use its assets in the manner in which it
currently owns and uses such assets.
3.16 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Schedule 3.16 attached hereto, there is no
pending Proceeding:
(i) that has been commenced by or against the Company or
that otherwise relates to or may affect the business of, or any of
the assets owned or used by, the Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions.
To the Knowledge of the Sellers and the Company, (1) no such
Proceeding has been Threatened, and (2) no event has occurred or
circumstance exists that may give rise to or serve as a basis for the
commencement of any such Proceeding. The Sellers have delivered to
the Buyer copies of all pleadings, correspondence, and other
documents relating to each Proceeding listed in Schedule 3.16. The
Proceedings listed in Schedule 3.16 will not have a material adverse
effect on the business, operations, assets, condition, or prospects
of the Company.
(b) Except as set forth in Schedule 3.16:
(i) there is no Order to which the Company, or any of the
assets owned or used by the Company, is subject;
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<PAGE>
(ii) no Seller is subject to any Order that relates to the
business of, or any of the assets owned or used by, the Company; and
(iii) no officer, director, agent, or employee of the
Company is subject to any Order that prohibits such officer,
director, agent, or employee from engaging in or continuing any
conduct, activity, or practice relating to the business of the
Company.
(c) Except as set forth in Schedule 3.16:
(i) the Company is, and at all times has been, in full
compliance with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been
subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any
Order to which the Company, or any of the assets owned or used by the
Company, is subject; and
(iii) the Company has not received any notice or other
communication (whether oral or written) from any Governmental Body or
any other Person regarding any actual, alleged, possible, or
potential violation of, or failure to comply with, any term or
requirement of any Order to which the Company, or any of the assets
owned or used by the Company, is or has been subject.
3.17 INSURANCE
(a) The Sellers have delivered to the Buyer:
(i) true and complete copies of all policies of insurance to
which the Company is a party or under which the Company, or any
director of the Company, is or has been covered at any time;
(ii) true and complete copies of all pending applications for
policies of insurance; and
(iii) any statement by the auditor of the Company's
financial statements or the Company's insurance broker with regard to
the adequacy of such entity's coverage or of the reserves for claims.
(b) Schedule 3.17 attached hereto describes:
(i) any self-insurance arrangement by or affecting the
Company, including any reserves established thereunder;
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<PAGE>
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by the Company;
and
(iii) all obligations of the Company to third parties with
respect to insurance (including such obligations under leases and
service agreements) and identifies the policy under which such
coverage is provided.
(c) Except as set forth on Schedule 3.17:
(i) All policies to which the Company is a party or that
provide coverage to either Seller, the Company, or any director or
officer of the Company:
(A) are valid, outstanding, and enforceable;
(B) are issued by an insurer that is financially
sound and reputable;
(C) taken together, provide adequate insurance
coverage for the assets and the operations of the Company
for all risks normally insured against by a Person carrying
on the same business or businesses as the Company;
(D) are sufficient for compliance with all Legal
Requirements and Contracts to which the Company is a party
or by which it is bound;
(E) will continue in full force and effect
following the consummation of the Contemplated Transactions;
and
(F) do not provide for any retrospective premium
adjustment or other experienced-based liability on the part
of the Company.
(ii) No Seller or the Company has received (A) any refusal
of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other
indication that any insurance policy is no longer in full force or
effect or will not be renewed or that the issuer of any policy is not
willing or able to perform its obligations thereunder.
(iii) The Company has paid all premiums due, and has
otherwise performed all of its obligations, under each policy to
which the Company is a party or that provides coverage to the Company
or a director thereof.
(iv) The Company has given notice to the insurer of all
claims that may be insured thereby.
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3.18 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Schedule 3.18 attached hereto, since the
Balance Sheet Date, the Company has conducted its businesses only in the
Ordinary Course of Business and there has not been any:
(a) change in the Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock
of the Company; issuance of any security convertible into such capital stock;
grant of any registration rights; purchase, redemption, retirement, or other
acquisition by the Company of any shares of any such capital stock; or
declaration or payment of any dividend or other distribution or payment in
respect of shares of capital stock;
(b) amendment to the Organizational Documents of the Company;
(c) payment or increase by the Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any employees
or directors of the Company;
(e) damage to or destruction or loss of any asset or
property of the Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of the Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar agreement, or (ii) any Contract or
transaction involving a total remaining commitment by or to the Company of at
least (pound)10,000;
(g) sale (other than sales of inventory in the Ordinary
Course of Business), lease, or other disposition of any asset or property of
the Company or mortgage, pledge, or imposition of any lien or other
encumbrance on any material asset or property of the Company, including the
sale, lease, or other disposition of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a
value to the Company in excess of (pound)10,000;
(i) material change in the accounting methods used by the
Company; or
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(j) agreement, whether oral or written, by the Company to do
any of the foregoing.
3.19 CONTRACTS; NO DEFAULTS
(a) Schedule 3.19 attached hereto contains a complete and accurate
list, and the Sellers have delivered to the Buyer true and complete copies,
of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by the Company of an amount or
value in excess of (pound)10,000;
(ii) each Applicable Contract (other than those Applicable
Contracts entered into with the Buyer) that involves performance of services
or delivery of goods or materials to the Company of an amount or value in
excess of (pound)10,000;
(iii) each Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or receipts of
the Company in excess of (pound)10,000;
(iv) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property (except personal property
leases and installment and conditional sales agreements having a value per
item or aggregate payments of less than (pound)10,000 and with terms of less
than one year);
(v) each licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or other intellectual
property, including agreements with current or former employees, consultants,
or contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(vi) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee
representative of a group of employees;
(vii) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by the Company with any other Person;
(viii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of the Company or any
Related Person of the Company or limit the freedom of any Related Person of
the Company to engage in any line of business or to compete with any Person;
(ix) each Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits, other than direct
payments for goods;
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(x) each power of attorney that is currently effective and
outstanding;
(xi) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express
undertaking by the Company to be responsible for consequential damages;
(xii) each Applicable Contract for capital expenditures in
excess of (pound)10,000;
(xiii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by the Company
other than in the Ordinary Course of Business; and
(xiv) each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
(b) Schedule 3.19 sets forth reasonably complete details concerning
such Contracts, including the parties to the Contracts, the amount of the
remaining commitment of the Company under the Contracts, and the Company's
office where details relating to the Contracts are located.
(c) Except as set forth in Schedule 3.19:
(i) no Seller (and no Related Person of any Seller) has or
may acquire any rights under, and no Seller has or may become subject to any
obligation or liability under, any Contract that relates to the business of,
or any of the assets owned or used by, the Company; and
(ii) no officer, director, agent, employee, consultant, or
contractor of the Company is bound by any Contract that purports to limit the
ability of such officer, director, agent, employee, consultant, or contractor
to (A) engage in or continue any conduct, activity, or practice relating to
the business of the Company, or (B) assign to the Company or to any other
Person any rights to any invention, improvement, or discovery.
(d) Except as set forth in Schedule 3.19, each Contract identified or
required to be identified in Schedule 3.19 is in full force and effect and is
valid and enforceable in accordance with its terms.
(e) Except as set forth in Schedule 3.19:
(i) the Company is, and at all times since June 30, 1990 has
been, in full compliance with all applicable terms and requirements of each
Contract under which the Company has or had any obligation or liability or by
which the Company or any of the assets owned or used by the Company is or was
bound;
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(ii) each other Person that has or had any obligation or
liability under any Contract under which the Company has or had any rights is,
and at all times since June 30, 1990 has been, in full compliance with all
applicable terms and requirements of such Contract;
(iii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give the Company or other Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate, or modify, any Applicable
Contract; and
(iv) the Company has not given to or received from any other
Person, at any time since June 30, 1990, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible, or
potential violation or breach of, or default under, any Contract.
(f) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to the
Company under current or completed Contracts with any Person and no such
Person has made written demand for such renegotiation.
(g) The Contracts relating to the sale, design, manufacture, or
provision of products or services by the Company have been entered into in the
Ordinary Course of Business and have been entered into without the commission
of any act alone or in concert with any other Person, or any consideration
having been paid or promised, that is or would be in violation of any Legal
Requirement.
3.20 ENVIRONMENTAL MATTERS
Except as set forth in Schedule 3.20 attached hereto:
(a) The Company is, and at all times has been, in full compliance
with, and has not been and is not in violation of or liable under, any
Environmental Law. No Seller or the Company has any basis to expect, nor has
any of them or any other Person for whose conduct they are or may be held to
be responsible received, any actual or Threatened order, notice, or other
communication from (i) any Governmental Body or private citizen acting in the
public interest, or (ii) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with
respect to any of the Facilities or any other properties or assets (whether
real, personal, or mixed) in which the Sellers or the Company has had an
interest, or with respect to any property or Facility at or to which Hazardous
Materials were generated, manufactured, refined, transferred, imported, used,
or processed by the Sellers, the Company, or any other Person for whose
conduct they are or may be held responsible, or from which Hazardous Materials
have been transported, treated, stored, handled, transferred, disposed,
recycled, or received.
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(b) There are no pending or, to the Knowledge of the Sellers and the
Company, Threatened claims, Encumbrances, or other restrictions of any nature,
resulting from any Environmental, Health, and Safety Liabilities or arising
under or pursuant to any Environmental Law, with respect to or affecting any
of the Facilities or any other properties and assets (whether real, personal,
or mixed) in which the Sellers or the Company has or had an interest.
(c) No Seller nor the Company has any basis to expect, nor has any of
them or any other Person for whose conduct they are or may be held
responsible, received, any citation, directive, inquiry, notice, Order,
summons, warning, or other communication that relates to Hazardous Activity,
Hazardous Materials, or any alleged, actual, or potential violation or failure
to comply with any Environmental Law, or of any alleged, actual, or potential
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or any other
properties or assets (whether real, personal, or mixed) in which the Sellers
or the Company had an interest, or with respect to any property or Facility at
or to which Hazardous Materials were generated, manufactured, refined,
transferred, imported, used, or processed by the Sellers, the Company, or any
other Person for whose conduct they are or may be held responsible, have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(e) To the best of the Sellers' Knowledge, there are no Hazardous
Materials present on or in the Environment at the Facilities or at any
geologically or hydrologically adjoining property, including any Hazardous
Materials contained in barrels, above or underground storage tanks, landfills,
land deposits, dumps, equipment (whether moveable or fixed) or other
containers, either temporary or permanent, and deposited or located in land,
water, sumps, or any other part of the Facilities or such adjoining property,
or incorporated into any structure therein or thereon. No Seller, the Company,
any other Person for whose conduct they are or may be held responsible, nor
any other Person, has permitted or conducted, or is aware of, any Hazardous
Activity conducted with respect to the Facilities or any other properties or
assets (whether real, personal, or mixed) in which the Sellers or the Company
has or had an interest.
(f) To the best of the Sellers' Knowledge, there has been no Release
or Threat of Release, of any Hazardous Materials at or from the Facilities or
at any other locations where any Hazardous Materials were generated,
manufactured, refined, transferred, produced, imported, used, or processed
from or by the Facilities, or from or by any other properties and assets
(whether real, personal, or mixed) in which the Sellers or the Company has or
had an interest, or any geologically or hydrologically adjoining property,
whether by the Sellers, the Company, or any other Person.
(g) The Sellers have delivered to the Buyer true and complete copies
and results of any reports, studies, analyses, tests, or monitoring possessed
or initiated by the Sellers or the Company pertaining to Hazardous Materials
or Hazardous Activities in, on, or under the Facilities, or concerning
compliance by the Sellers, the Company, or any other Person for whose conduct
they are or may be held responsible, with Environmental Laws.
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3.21 INTENTIONALLY OMITTED
3.22 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets -- The term "Intellectual Property
Assets" includes:
(i) the Company's name, all fictional business names,
trading names, registered and unregistered trademarks, service marks, and
applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published works and unpublished
works (collectively, "Copyrights");
(iv) all rights in mask works (collectively, "Rights in Mask
Works"); and
(v) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process technology,
plans, drawings, and blue prints (collectively, "Trade Secrets"), owned, used,
or licensed by the Company as licensee or licensor.
(b) Agreements -- Schedule 3.22 attached hereto contains a complete
and accurate list and summary description, including any royalties paid or
received by the Company, of (i) all intellectual Property Assets owned by the
Company or utilized by the Company in the operation of the Company's business
as currently conducted, and (ii) all Contracts relating to any Intellectual
Property Assets to which the Company is a party or by which the Company is
bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with a value of less
than (pound)10,000 under which the Company is the licensee. There are no
outstanding and, to the Sellers' Knowledge, no Threatened disputes or
disagreements with respect to any such agreement.
(c) Know-How Necessary for the Business
(i) The Intellectual Property Assets described on Schedule
3.22 are all those necessary for the operation of the Company's business as it
is currently conducted. The Company is the owner of all right, title, and
interest in and to each of the Intellectual Property Assets described on
Schedule 3.22, free and clear of all liens, security interests, charges,
encumbrances, equities, and other adverse claims, and has the right to use
without payment to a third party all of the Intellectual Property Assets
described on Schedule 3.22.
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(ii) To the best of the Sellers' knowledge, no employee of
the Company has entered into any Contract that restricts or limits in any way
the scope or type of work in which the employee may be engaged or requires the
employee to transfer, assign, or disclose information concerning his work to
anyone other than the Company.
(d) Patents
(i) Schedule 3.22 contains a complete and accurate list and
summary description of all Patents owned by the Company and/or used by the
Company in the operation of its business as currently conducted. The Company
is the owner of all right, title, and interest in and to each of the Patents
listed on Schedule 3.22, free and clear of all liens, security interests,
charges, encumbrances, entities, and other adverse claims.
(ii) All of the Patents listed on Schedule 3.22 are
currently in compliance with formal legal requirements (including payment of
filing, examination, and maintenance fees and proofs of working or use), are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the Closing Date.
(iii) No Patent listed on Schedule 3.22 has been or is now
involved in any interference, reissue, reexamination, or opposition
proceeding. To the Sellers' Knowledge, there is no potentially interfering
patent or patent application of any third party.
(iv) No Patent listed on Schedule 3.22 is infringed or, to
the Sellers' Knowledge, has been challenged or threatened in any way. None of
the products manufactured and sold, nor any process or know-how used, by the
Company infringes or is alleged to infringe any patent or other proprietary
right of any other Person.
(v) All products made, used, or sold under the Patents
listed on Schedule 3.22 have been marked with the proper patent notice.
(e) Trademarks
(i) Schedule 3.22 contains a complete and accurate list and
summary description of all Marks owned by the Company and/or used by the
Company in the operation of its business as presently conducted. The Company
is the owner of all right, title, and interest in and to each of the Marks
listed on Schedule 3.22, free and clear of all liens, security interests,
charges, encumbrances, equities, and other adverse claims.
(ii) All Marks listed on Schedule 3.22 that have been
registered with the United States Patent and Trademark Office are currently in
compliance with all formal legal requirements (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications), are valid and enforceable, and are not subject to any
maintenance fees or taxes or actions falling due within ninety days after the
Closing Date.
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(iii) No Mark listed on Schedule 3.22 has been or is now
involved in any opposition, invalidation, or cancellation and, to the Sellers'
Knowledge, no such action is Threatened with the respect to any of the Marks
listed on Schedule 3.22.
(iv) To the Sellers' Knowledge, there is no potentially
interfering trademark or trademark application of any third party with respect
to any of the Marks listed on Schedule 3.22.
(v) No Mark listed on Schedule 3.22 is infringed or, to the
Sellers' Knowledge, has been challenged or threatened in any way. None of the
Marks listed on Schedule 3.22 infringes or is alleged to infringe any trade
name, trademark, or service mark of any third party.
(vi) All products and materials containing a Mark listed on
Schedule 3.22 bear the proper federal registration notice where permitted by
law.
(f) Copyrights
(i) Schedule 3.22 contains a complete and accurate list and
summary description of all Copyrights owned by the Company and/or used by the
Company in the operation of its business as presently conducted. The Company
is the owner of all right, title, and interest in and to each of the
Copyrights listed on Schedule 3.22, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse claims.
(ii) All the Copyrights listed on Schedule 3.22 have been
registered and are currently in compliance with formal legal requirements, are
valid and enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the date of Closing.
(iii) No Copyright listed on Schedule 3.22 is infringed or,
to the Sellers' Knowledge, has been challenged or threatened in any way. None
of the subject matter of any of the Copyrights listed on Schedule 3.22
infringes or is alleged to infringe any copyright of any third party or is a
derivative work based on the work of a third party.
(iv) All works encompassed by the Copyrights listed on
Schedule 3.22 have been marked with the proper copyright notice.
(g) Trade Secrets
(i) With respect to each Trade Secret, the documentation
relating to such Trade Secret is current, accurate, and sufficient in detail
and content to identify and explain it and to allow its full and proper use
without reliance on the knowledge or memory of any individual.
(ii) The Sellers and the Company have taken all reasonable
precautions to protect the secrecy, confidentiality, and value of their Trade
Secrets.
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(iii) The Company has good title and an absolute (but not
necessarily exclusive) right to use the Trade Secrets. The Trade Secrets are
not part of the public knowledge or literature, and, to the Sellers'
Knowledge, have not been used, divulged, or appropriated either for the
benefit of any Person or to the detriment of the Company. No Trade Secret is
subject to any adverse claim or has been challenged or threatened in any way.
3.23 CERTAIN PAYMENTS
(a) Neither the Company, nor any director, officer, agent, or
employee of the Company, or to the Sellers' Knowledge any other Person
associated with or acting for or on behalf of the Company, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, for or in respect of the Company or any
affiliate of the Company, or (iv) in violation of any Legal Requirement, or
(b) established or maintained any fund or asset that has not been
recorded in the books and records of the Company.
3.24 DISCLOSURE
(a) No representation or warranty of the Sellers contained in this
Agreement omits to state a material fact necessary to make the statements
herein, in light of the circumstances in which they were made, not misleading.
(b) There is no fact known to any Seller that has specific
application to a Seller or the Company and that materially adversely affects
or, as far as any Seller can reasonably foresee, materially threatens, the
assets, business, prospects, financial condition, or results of operations of
the Company that has not been set forth in this Agreement.
3.25 BROKERS OR FINDERS
Neither the Company nor any Seller, nor any or their respective
agents, have incurred any obligation or liability, contingent or otherwise,
for brokerage or finders' fees or agents' commissions or other similar payment
in connection with this Agreement.
3.26 RELATIONSHIPS WITH RELATED PERSONS
No Seller or any Related Person of the Sellers or of the Company has,
or since August 1, 1995 has had, any interest in any property (whether real,
personal, or mixed and whether tangible or intangible), used in or pertaining
to the Company's businesses. No Seller or any Related Person of the Sellers or
of the Company is, or since July 1, 1995 has owned (of record or as a
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beneficial owner) an equity interest or any other financial or profit interest
in, a Person that has (i) had business dealings or a material financial
interest in any transaction with the Company (other than business dealings or
transactions conducted in the Ordinary Course of Business with the Company at
substantially prevailing market prices and on substantially prevailing market
terms), or (ii) engaged in competition with the Company with respect to any
line of the products or services of the Company in any market presently served
by the Company. No Seller or any Related Person of the Sellers or of the
Company is a party to any Contract with, or has any claim or right against,
the Company.
3.27 INVESTMENT REPRESENTATIONS
(a) Steven understands, represents and warrants to, and agrees with,
the Buyer (all such representations and warranties being made to and for the
benefit of the Buyer and any transfer agent of the Buyer employed for that
purpose):
(i) Steven understands that no federal or state agency has
passed on or made any recommendation or endorsement of the Comtrex Shares;
(ii) Steven acknowledges that, in making a decision to
acquire the Comtrex Shares hereunder, he has relied solely upon independent
investigations made by him and not upon any representations made by the Buyer
with respect to the Buyer or the Comtrex Shares (other than any representation
made by the Buyer and contained in a document filed by the Buyer with the
United States Securities and Exchange Commission);
(iii) Steven understands that the Comtrex Shares are being
sold to him hereunder in reliance on specific exemptions from the registration
requirements of federal and state securities laws and that the Buyer is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments, and understandings of Steven set forth herein in
order to determine the applicability of such exemptions and the suitability of
Steven to acquire the Comtrex Shares;
(iv) Steven is not a U.S. Person (as defined in Regulation S
promulgated under the Securities Act) and is not an affiliate of the Buyer;
(v) No offer of the Comtrex Shares to Steven was made to
Steven in the United States;
(vi) At the time of the Closing and the delivery of the
Comtrex Shares, Steven will not be a resident of the United States;
(vii) Steven is aware that the Comtrex Shares have not been
and will not be registered under the Securities Act and may only be offered or
sold by him pursuant to registration under the Securities Act or an available
exemption therefrom;
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(viii) Steven:
(A) will not, during the period commencing on the
Closing Date and ending on the two year anniversary
of the Closing Date (the "Restricted Period"),
offer, sell or otherwise transfer, either
voluntarily or involuntarily, all or any portion of
the Comtrex Shares without the prior written
consent of the Buyer; and
(B) will, after the expiration of the Restricted
Period, offer, sell, pledge or otherwise transfer
the Comtrex Shares only pursuant to registration
under the Securities Act or an available exemption
therefrom and, in any case, in accordance with all
applicable federal, state and foreign securities
laws;
(ix) Neither Steven, nor his affiliates or any person acting
on behalf of Steven or any such affiliate has engaged, or will engage, in any
"direct selling efforts" with respect to the Comtrex Shares or any
"distribution," as each such term is used in the definition of "Distributor"
contained in Regulation S, with respect to the Comtrex Shares; and
(x) The transactions contemplated by this Agreement:
(A) have not been prearranged with a purchaser
located in the United States or who is a U.S.
Person; and
(B) are not part of a plan or scheme to evade the
registration provisions of the Securities Act.
4. INTENTIONALLY OMITTED
5. COVENANTS OF THE SELLERS PRIOR TO CLOSING DATE
5.1 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, the
Sellers will, and will cause the Company to, make all filings required by
Legal Requirements to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, the
Sellers will, and will cause the Company to, (a) cooperate with the Buyer with
respect to all filings that the Buyer elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with the Buyer in obtaining all necessary consents to the
consummation of the Contemplated Transactions.
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5.2 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
Except as expressly provided in this Agreement, the Sellers will
cause all indebtedness owed to the Company by any Seller or any Related Person
of any Seller to be paid in full prior to Closing. The Buyer acknowledges that
the outstanding loan heretofore made by the Company to Steven Roberts, which
has a present outstanding principal balance of (pound)4,463.69, will not be
repaid prior to Closing but will be repaid in full on or before June 30, 1998.
6. INTENTIONALLY OMITTED
7. INTENTIONALLY OMITTED
8. PROTECTION OF GOODWILL
(a) The Sellers recognize the paramount importance of the goodwill of
the Company to the Buyer which is reflected in the consideration paid by the
Buyer for the Shares. Accordingly, they are prepared to enter into the
commitments contained in this Section 8 to ensure that the Buyer's interest in
that goodwill is properly protected.
(b) The Sellers undertake that they shall not for a period of 24
months after Closing without the Buyer's prior written consent:
(i) carry on or be engaged, concerned or interested directly
or indirectly in any of the Restricted Activities within the United
Kingdom;
(ii) solicit or knowingly accept any order, inquiries or
business in respect of any of the Restricted Activities from any
Customer;
(iii) divert away from the Company and/or the Buyer any
orders, inquiries or business in respect of the Restricted Activities
from any Customer;
(iv) procure any advertising in any media in respect of any
of the Restricted Activities which is directed specifically at any
area within the United Kingdom;
(v) procure or induce, or endeavor to procure or induce, any
of the employees of the Company engaged in a senior or managerial
position or who have had direct contact with Customers in the course
of their duties to cease working for the Company; or
(vi) seek to interfere with the ongoing relationships
between the Company and its professional and business contacts which
have been established prior to Closing.
(c) The Sellers undertake that they shall not at any time after
Closing without the Buyer's prior written consent:
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(i) use the name "Data Systems Terminals Limited" or any
other name identical to or likely to be confused with a name used by
the Company prior to Closing in connection with the Business (and for
this purpose "name" includes a company or trading name);
(ii) hold themselves out as having any continuing connection
with the Company or the Business;
(iii) make any public announcement regarding the Company, the
Business or this transaction; or
(iv) disclose or use any trade secrets or confidential
information (other than any which is public knowledge) relating to
the Company and/or the Business which they have acquired prior to
Closing.
(d) The restrictions set out in Section 8(c) are to prevent each of
the Sellers from carrying out any of the prohibited activities on their own
behalf or jointly with or as servant, agent, manager, employee, consultant,
director or shareholder of any other person, firm, company or body.
(e) Nothing in this Section 8 is to prevent:
(i) any of the Sellers from properly performing their duties
under the Employment Agreements; or
(ii) any of the Sellers from holding for investment purposes
up to 1% of the issued share capital of a company whose shares are
dealt in or quoted on a recognized stock exchange.
(f) Each of the commitments contained in this Section 8 gives rise to
a separate obligation independent of the others.
(g) The parties consider the commitments contained in this Section 8
to be reasonable as between themselves and the public interest. If, however,
any of them are found by a court to be unreasonable and unenforceable but
would be reasonable and enforceable if certain words were deleted, then the
commitment shall apply with those words deleted.
(h) The Buyer may by written notice to the Sellers vary by one or
more stages the terms of any part of this Section 8 as it may apply to any of
them, by reducing (but not increasing) any one or more of:
(i) the period during and/or activities to which the
commitments are to apply; and
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(ii) the geographical area to which the commitments relate.
9. INTENTIONALLY OMITTED
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
All representations, warranties, covenants, and obligations in this
Agreement, and any other certificate or document delivered pursuant to this
Agreement will survive the Closing. The right to indemnification, payment of
Damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted with
respect to, or any Knowledge acquired (or capable of being acquired) at any
time, whether before or after the execution and delivery of this Agreement or
the Closing Date, with respect to the accuracy or inaccuracy of or compliance
with, any such representation, warranty, covenant, or obligation. The waiver
of any condition based on the accuracy of any representation or warranty, or
on the performance of or compliance with any covenant or obligation, will not
affect the right to indemnification, payment of Damages, or other remedy based
on such representations, warranties, covenants, and obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY THE SELLERS
The Sellers, jointly and severally, will indemnify and hold harmless
the Buyer, the Company, and their respective Representatives, stockholders,
controlling persons, and affiliates (collectively, the "Indemnified Persons")
for, and will pay to the Indemnified Persons the amount of, any loss,
liability, claim, damage (including incidental and consequential damages),
expense (including costs of investigation and defense and reasonable
attorneys' fees) or diminution of value, whether or not involving a
third-party claim (collectively, "Damages"), incurred by an Indemnified Person
or asserted against an Indemnified Person prior to the eighteen month
anniversary of the Closing Date and arising, directly or indirectly, from or
in connection with:
(a) any breach of any representation or warranty made by the Sellers
in this Agreement, or any other certificate or document delivered by the
Sellers pursuant to this Agreement;
(b) any breach by any Seller of any covenant or obligation of such
Seller contained in this Agreement; or
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with any Seller or the Company
(or any Person acting on their behalf) in connection with any of the
Contemplated Transactions.
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10.3 Notwithstanding anything to the contrary contained herein, the Sellers
shall have no liability to any Indemnified Person under this Section 10 unless
the claims made by the Indemnified Persons pursuant to this Section 10 and/or
the Deed of Tax Indemnity exceed $10,000 (U.S. Dollars) in the aggregate. In
no event shall such $10,000 threshold be used to establish what constitutes a
"material" item under this Agreement. Furthermore, the maximum aggregate
liability of the Sellers to the Indemnified Persons pursuant to this Section
10 and/or the Deed of Tax Indemnity shall not exceed $500,000 (U.S. Dollars).
Furthermore, no claim for indemnification pursuant to this Section 10 or the
Deed of Tax Indemnity may be brought by an Indemnified Person more than 18
months after the Closing Date.
The remedies provided in this Section 10.2 will not be exclusive of
or limit any other remedies that may be available to the Buyer or the other
Indemnified Persons.
11. PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party of notice of the
commencement of any Proceeding against it, such indemnified party will, if a
claim is to be made against an indemnifying party under this Agreement, give
notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying
party of any liability that it may have to any indemnified party, except to
the extent that the indemnifying party demonstrates that the defense of such
action is prejudiced by the indemnifying party's failure to give such notice.
(b) If any Proceeding referred to in Section 11(a) is brought against
an indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the
extent that it wishes (unless (i) the indemnifying party is also a party to
such Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial
capacity to defend such Proceeding and provide indemnification with respect to
such Proceeding), to assume the defense of such Proceeding with counsel
satisfactory to the indemnified party and, after notice from the indemnifying
party to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently conducts
such defense, be liable to the indemnified party under this Agreement for any
fees of other counsel or any other expenses with respect to the defense of
such Proceeding, in each case subsequently incurred by the indemnified party
in connection with the defense of such Proceeding, other than reasonable costs
of investigation. If the indemnifying party assumes the defense of a
Proceeding, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification; (ii) no compromise or settlement of such claims
may be effected by the indemnifying party without the indemnified party's
consent unless (A) there is no finding or admission of any violation of Legal
Requirements or any violation of the rights of any Person and no effect on any
other claims that may be made against the indemnified party, and (B) the sole
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relief provided is monetary damages that are paid in full by the indemnifying
party; and (iii) the indemnified party will have no liability with respect to
any compromise or settlement of such claims effected without its consent. If
notice is given to an indemnifying party of the commencement of any Proceeding
and the indemnifying party does not, within ten days after the indemnified
party's notice is given, give notice to the indemnified party of its election
to assume the defense of such Proceeding, the indemnifying party will be bound
by any determination made in such Proceeding or any compromise or settlement
effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary
damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding,
but the indemnifying party will not be bound by any determination of a
Proceeding so defended or any compromise or settlement effected without its
consent (which may not be unreasonably withheld).
(d) The Sellers hereby consent to the non-exclusive jurisdiction of
any court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Sellers with respect to such a claim anywhere in the
world.
12. INTENTIONALLY OMITTED
13. INTENTIONALLY OMITTED
14. GENERAL PROVISIONS
14.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party
to this Agreement will bear its respective expenses incurred in connection
with the preparation, execution, and performance of this Agreement and the
Contemplated Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants.
14.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this
Agreement or the Contemplated Transactions will be issued, if at all, at such
time and in such manner as the Buyer determines. Unless consented to by the
Buyer in advance or required by Legal Requirements, prior to the Closing, the
Sellers shall, and shall cause the Company to, keep this Agreement strictly
confidential and may not make any disclosure of this Agreement to any Person.
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14.3 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, the Buyer
and the Sellers will maintain in confidence, and will cause the directors,
officers, employees, agents, and advisors of the Buyer and the Company to
maintain in confidence, and not use to the detriment of another party any
written, oral, or other information obtained in confidence from another party
in connection with this Agreement or the Contemplated Transactions, unless (a)
such information is already known to such party or to others not bound by a
duty of confidentiality or such information becomes publicly available through
no fault of such party, (b) the use of such information is necessary or
appropriate in making any filing or obtaining any consent or approval required
for the consummation of the Contemplated Transactions, or (c) the furnishing
or use of such information is required by or necessary or appropriate in
connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will
return or destroy as much of such written information as the other party may
reasonably request.
14.4 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when
(a) delivered by hand (with written confirmation of receipt), (b) sent by
telecopier (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as
a party may designate by notice to the other parties):
If to Buyer:
Comtrex Systems Corporation
102 Executive Drive
Moorestown, New Jersey 08057
Attention: Jeffrey C. Rice, President
Telephone: (609) 778-0090
Fax: (609) 778-9322
With a Copy to:
James H. Carll, Esquire
Archer & Greiner, A Professional Corporation
One Centennial Square
Haddonfield, New Jersey
Telephone: (609)795-2121
Facsimile: (609)795-0574
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If to the Sellers or the Company:
Data Systems Terminals Limited
2 Gatwick Metro Centre
Balcombe Road
Horley, Surrey RH6 9YA
Attention: Steven Roberts
With a Copy to:
Justin Roche
Underwood & Co.
40 Welbeck Street
London W1M 8LN
Telephone: 0171 487 4461
Facsimile: 0171 486 8974
14.5 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such
further information, (b) to execute and deliver to each other such other
documents, and (c) to do such other acts and things, all as the other party
may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
14.6 WAIVER
The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such
right, power, or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power, or
privilege. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except in
the specific instance for which it is given; and (c) no notice to or demand on
one party will be deemed to be a waiver of any obligation of such party or of
the right of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the documents
referred to in this Agreement.
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14.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties
with respect to its subject matter and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the
party to be charged with the amendment.
14.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
No party to this Agreement may assign any of its rights under this
Agreement without the prior consent of the other parties, except that the
Buyer may assign any of its rights under this Agreement to any subsidiary of
the Buyer. Subject to the preceding sentence, this Agreement will apply to, be
binding in all respects upon, and inure to the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all
of its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
14.9 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable
by any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
14.10 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for
convenience only and will not affect its construction or interpretation. All
references to "Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
14.11 JOINT AND SEVERAL OBLIGATIONS
All covenants, agreements, undertakings, indemnitees, guarantees,
representations and warranties given by more than one person herein are,
except where expressly stated otherwise, given joint and severally.
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14.12 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
14.13 GOVERNING LAW
This Agreement will be governed by the laws of England without regard
to conflicts of laws principles.
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14.14 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement.
14.15 ATTORNEYS' FEES
In the event of any litigation arising out of this Agreement, the
prevailing party in such litigation shall be reimbursed by the non-prevailing
party for all reasonable legal fees and costs incurred in connection with such
litigation. In the event that the result of such litigation does not make
clear who the "prevailing party" is for purposes of this section the party
whose position was most closely adopted by the trier of fact be deemed the
prevailing party.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
BUYER:
COMTREX SYSTEMS CORPORATION
By:________________________________
Jeffrey C. Rice, President
SELLERS:
--------------------------
NORMAN ROBERTS
--------------------------
SHIRLEY ROBERTS
--------------------------
STEVEN ROBERTS
56
<PAGE>
ANNEX I
FORM OF CONVERTIBLE SUBORDINATED DEBENTURE
------------------------------------------
See attached.
[Attachment intentionally omitted from Form 8-K filing]
57
<PAGE>
ANNEX II
FORM OF NOTE
------------
See attached.
[Attachment intentionally omitted from Form 8-K filing]
58
<PAGE>
ANNEX III
FORM OF EMPLOYMENT AGREEMENT
----------------------------
See attached.
[Attachment intentionally omitted from Form 8-K filing]
59
<PAGE>
ANNEX IV
FORM OF INVESTMENT LETTER
-------------------------
See attached.
[Attachment intentionally omitted from Form 8-K filing]
60
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION OF THE PREMISES
---------------------------------
Unit 2, Gatwick Metro Centre,
Balcombe Road, Horley as the same is registered at HM Land Registry
under Title Number SY 581298.
61
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SCHEDULE 3.1
LIST OF LOCATIONS WHERE THE COMPANY IS
--------------------------------------
INCORPORATED OR QUALIFIED TO DO BUSINESS
----------------------------------------
United Kingdom.
62
<PAGE>
SCHEDULE 3.2
LIST OF EXCEPTIONS TO REPRESENTATIONS MADE IN
---------------------------------------------
SECTION 3.2 OF AGREEMENT
------------------------
None.
63
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SCHEDULE 3.5
DESCRIPTION OF EXISTING MORTGAGE
--------------------------------
See attached.
[Attachment intentionally omitted from Form 8-K filing]
64
<PAGE>
SCHEDULE 3.6
ACCOUNTS AND MANAGEMENT ACCOUNTS
--------------------------------
See attached.
65
<PAGE>
SCHEDULE 3.7
DESCRIPTION OF PROPERTIES
-------------------------
See Exhibit A.
66
<PAGE>
SCHEDULE 3.9
LIST AND AGING OF ACCOUNTS RECEIVABLE AS OF 8/31/97
---------------------------------------------------
See attached.
[Attachment intentionally omitted from Form 8-K filing]
67
<PAGE>
SCHEDULE 3.12
TAX-RELATED ISSUES TO BE DISCLOSED PURSUANT TO SECTION 3.12
-----------------------------------------------------------
None.
68
<PAGE>
SCHEDULE 3.14
DESCRIPTION OF EMPLOYEE BENEFIT PLANS
-------------------------------------
See attached.
[Attachment intentionally omitted from Form 8-K filing]
69
<PAGE>
SCHEDULE 3.15
LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
-----------------------------------------------
None.
70
<PAGE>
SCHEDULE 3.16
LEGAL PROCEEDINGS; ORDERS
-------------------------
None.
71
<PAGE>
SCHEDULE 3.17
DESCRIPTION OF INSURANCE
------------------------
See attached.
[Attachment intentionally omitted from Form 8-K filing]
72
<PAGE>
SCHEDULE 3.18
EXTRAORDINARY CHANGES OR EVENTS
-------------------------------
None.
73
<PAGE>
SCHEDULE 3.19
CONTRACTS
---------
See attached.
[Attachment intentionally omitted from Form 8-K filing]
74
<PAGE>
SCHEDULE 3.20
ENVIRONMENTAL MATTERS
---------------------
None.
75
<PAGE>
SCHEDULE 3.22
INTELLECTUAL PROPERTY ASSETS
----------------------------
None.
76
