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): November 7, 1996
DATAWATCH CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 0-19960 02-0405716
(State or other jurisdiction (Commission file number) (I.R.S. Employer
of incorporation or Identification No.)
organization)
234 Ballardvale Street, Wilmington, MA 01887
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (508) 988-9700
No change since last report
(Former name or address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On November 7, 1996, Datawatch Corporation (the "Company")
entered into a Share Sale and Purchase Agreement (the "Purchase
Agreement") with John F. Cave, Susan J. Cave and Michael A.
Holman (the "Sellers"). The Sellers were the holders of all of
the outstanding capital stock of Guildsoft Holdings Limited, a
corporation organized under the laws of England and Wales
("Guildsoft Holdings"), which in turn owns all of the outstanding
capital stock of Guildsoft Limited, a corporation organized under
the laws of England and Wales ("Guildsoft"). Pursuant to the
Purchase Agreement, the Company acquired all of the outstanding
capital stock of Guildsoft Holdings from the Sellers in exchange
for an aggregate of 125,000 shares (the "Shares") of the
Company's Common Stock, $.01 par value per share. Under the
terms of the Purchase Agreement, 12,500 of the Shares are being
held in escrow for any future claims that the Company may have
against Sellers for any breaches of the representations and
warranties in the Purchase Agreement and other contingent
liabilities. The purchase price and terms of the acquistion were
determined in arms-length negotiations between the parties. The
acquisition will be accounted for as a purchase business
combination. A copy of the Purchase Agreement is attached as
Exhibit 2.1 to this Current Report on Form 8-K.
Guildsoft provides software companies with muti-lingual
telesales, support and fulfillment services across Europe. Since
1993, Guildsoft has sold and provided support services for the
Company's Monarch product in Europe and has coordinated Monarch
direct mail programs and has provided telesales for the Company
in the United Kingdom, Germany, Scandinavia and Benelux.
In connection with the acquisition, each of the Sellers
entered into an employment agreement with Guildsoft and as
employees of Guildsoft the Sellers were granted stock options to
purchase an aggregate of 125,000 shares of Common Stock, $.01 par
value per share, of the Company at $7.25 per share.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
It is impracticable to provide the financial
information required by Item 7(a) of Form 8-K relating
to the acquisition at the time this report is filed.
Such required financial information will be filed as
soon as practicable, but not later than January 21,
1997.
(b) Unaudited Pro Forma Combined Financial Information.
It is impracticable to provide the pro forma financial
information required by Item 7(b) of From 8-K relating
to the acquisition at the time this report is filed.
Such required pro forma financial information will be
filed as soon as practicable, but not later than
January 21, 1997.
(c) Exhibits.
2.1 Share Sale and Purchase Agreement,
dated November 7, 1996, among Datawatch
Corporation and the individuals named on Schedule
1 contained therein, who constitute the holders of
all of the outstanding shares of capital stock of
Guildsoft Holdings Limited.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
As more fully described in Item 2 to this Current Report on
Form 8-K, on November 7, 1996, the Company issued 125,000 shares
(the "Shares") of its Common Stock, $.01 par value per share, to
John F. Cave, Susan J. Cave and Michael A. Holman (the
"Sellers"). The Shares were issued to the Sellers in exchange
for all of the outstanding capital stock of Guildsoft Holdings
Limited, a corporation organized under the laws of England and
Wales. The Shares were not registered under the Securities Act of
1933, as amended (the "Securities Act"), in reliance upon
Regulation S under the Securities Act.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
DATAWATCH CORPORATION
By:/s/Bruce R. Gardner
-----------------------
Bruce R. Gardner
Executive Vice President
Dated: November 22, 1996
EXHIBIT INDEX
Exhibit No. Description
2.1 Share Sale and Purchase Agreement, dated
November 7, 1996, among Datawatch
Corporation and the individuals named on
Schedule 1 contained therein, who
constitute the holders of all of the
outstanding shares of capital stock of
Guildsoft Holdings Limited.
EXHIBIT 2.1
DATED 7 NOVEMBER 1996
SHARE SALE AND PURCHASE AGREEMENT
relating to the entire issued share capital of
GUILDSOFT HOLDINGS LIMITED
THE VENDORS (1)
DATAWATCH CORPORATION (2)
DATED 7 NOVEMBER 1996
PARTIES
(1) The persons whose names and addresses appear in column 1 of
Schedule 1 ("the Vendors"); and
(2) Datawatch Corporation (a company incorporated under the laws of
the State of Delaware) whose principal office is at 234
Ballardvale Street, Wilmington, MA 01887, United States of
America ("the Purchaser").
INTRODUCTION
(A) The Company was incorporated in England and Wales on 13 January
1994 under the Companies Act 1985 and is registered under
number 02887429 as a private company limited by shares. It has
at the date of this Agreement an authorised share capital of
3,000 pounds divided into 3,000 ordinary shares of 1 pound each of which
all have been issued and are fully paid or credited as fully
paid and the Vendors are the legal and beneficial owners of the
Shares in the proportions shown in column 2 of Schedule 1 and
as such have the right, power and authority to sell and
transfer the Shares free from any claims, charges, liens,
encumbrances or equities with full title guarantee.
(B) The business of the Company is that of letting of a commercial
building and the business of the Subsidiary is that of the
import, purchase and sale within the United Kingdom of computer
software.
(C) The Vendors are willing to sell and the Purchaser is willing to
purchase the Shares on the terms and subject to the conditions
of this Agreement.
(D) The Vendors have delivered or arranged for the delivery to the
Purchaser of a true and up-to-date copy of the Memorandum and
Articles of Association of each of the Companies that are
annexed to this Agreement and marked "A" and of the Accounts.
OPERATIVE PROVISIONS
1 Interpretation
1.1 In this Agreement (including the Introduction and Schedules),
except where a different interpretation is necessary in the
context, the following expressions shall have the following
meanings:
the Accounts the audited balance sheet of the
Company and the balance sheet of the
Subsidiary as at the Accounts Date and
the audited profit and loss account of
the Company and the profit and loss
account of the Subsidiary for the year
ended on the Accounts Date together
with the directors' reports and other
documents required by law to be annexed
thereto together in the agreed form
the Accounts Date 30 September 1996
ACT Advance Corporation Tax
Business Day any day on which the London Stock
Exchange is open for business
Board(s) the board of directors for the time
being of the Purchaser and of either of
the Companies as specifically referred
to
CAA the Capital Allowances Act 1990
Common Stock shares of the Purchaser's common stock
at par value US$0.01
the Company Guildsoft Holdings Limited short
particulars of which are set out in
Part 1 of Schedule 2
the Company's Auditors Deloitte & Touche (Bristol) of Queen
Anne House, 69-71 Queen Square, Bristol
B5I 4JP
the Companies the Company and the Subsidiary and each
of them
Completion completion of the acquisition of the
Shares in accordance with the terms of
clause 4
Consideration the consideration referred to in clause
3
Consideration Shares the aggregate consideration of 125,000
shares of Common Stock in the Purchaser
the Deed of Covenant the deed of covenant in the agreed form
the Directors the persons specified as directors of
any of the Companies in Schedule 2 (the
expression "Director" meaning any of
them)
the Disclosure Letter a letter in the agreed form bearing the
same date as this Agreement from the
Vendors' Solicitors to the Purchaser's
Solicitors together with the documents
annexed to such letter
the Employees those persons (including directors)
whose names appear in the schedule
annexed to this Agreement and marked
'B'
Environmental Law all laws, regulations, codes of
practise or guidance notes concerning
the protection of the environment or
human health or the conditions of the
work place protection of the workplace
or the generation, transportation,
storage, use, treatment or disposal of
Materials of Environmental Concern
FSA Financial Services Act 1986
ICTA the Income and Corporation Taxes Act
1988
IHTA the Inheritance Tax Act 1984
Incidental Amount the amount of a Material of
Environmental Concern present in the
Environment which is insufficient to
cause harm or have a deleterious effect
on the Environment
Intellectual Property copyrights, trade and service marks,
trade names, rights in logos and get-
up, inventions, confidential
information, trade secrets and know-
how, registered designs, design rights,
patent, utility models, semi-conductor
topographies, all rights of whatsoever
nature in computer software and data,
all rights in plant varieties, all
rights of privacy and all intangible
rights and privileges of a nature
similar to any of the foregoing, in
every case in any part of the world and
whether or not registered; and
including all granted registrations and
all applications for registration in
respect of any of the same
Materials of
Environmental petroleum products, contaminants, chemicals,
Concern pesticides, pollutants, hazardous,
toxic or noxious, carcinogenic,
radioactive, explosive, dangerous or
harmful substances, materials or wastes
whether man-made or artificial and in
whatever form or combination
NASDAQ Nasdaq National Market
Property Option
Agreement the property option agreement in
the agreed form to be entered into at
Completion between the Company and the
Vendors (save for Michael Arthur
Holman)
Properties the properties short particulars of
which appear in Schedule 3 and
references to "the Properties" shall
extend to any part or parts thereof
the Purchaser's
Solicitors S J Berwin & Co of 222 Grays Inn
Road, London WC1X 8HB
Relief the same meaning as in the Deed of
Covenant
Restricted Activities the businesses carried on by the
Companies as at today's date as
described in paragraph (B) of the
Introduction, in the territory in which
the businesses are operated at that
date
SEC the United States Securities and
Exchange Commission
Securities Act the United States Securities Act 1933
Security Agent American Stock Transfer and Trust
Company of 40 Wall Street, New York NY,
10005, United States of America
Security Agreement the Security agreement in the agreed
form between the Vendors, the
Purchasers and the Security Agent
Security Amount 12,500 of the Consideration Shares
Security Fund the Security Amount and any other
securities or other property or cash
held by the Security Agent pursuant to
the Security Agreement
the Service Agreements the service agreements in the agreed
form to be entered into on Completion
between the Subsidiary and each of the
Vendors
the Shares the 3,000 issued ordinary shares of 1
pound each in the capital of the Company
SSAP a statement of Standard Accounting
Practice published by the former
Accounting Standards Committee or the
present Accounting Standards Board
Subsidiary Guildsoft Limited short particulars of
which are set out in Part 2 of Schedule
2, being the only subsidiary of the
Company
Taxation, Taxing
Authority the same respective meanings as
in the Deed of and Transaction Covenant
TCGA the Taxation of Chargeable Gains Act
1992
VAT Value Added Tax
VATA the Value Added Tax Act 1994
Vendors' Group all companies of which any Vendor is a
director or which he beneficially owns
or is interested in excess of 20% of
the voting share capital
the Vendors' Solicitors Foot & Bowden, 21 Derry's Cross,
Plymouth, PL1 2SW
the Warranty the warranty, representation and
undertaking given in clause 5
the Warranty Statements the statements set out in Schedule 4 as
construed in accordance with clause
5.10
1.2 All references to statutory provisions or enactments shall
include references to any amendment, modification or re-
enactment of any such provision or enactment (whether before or
after the date of this Agreement) to any previous enactment
which has been replaced or amended and to any regulation or
order made under such provision or enactment.
1.3 References to "the Companies Acts" are to the Companies Acts
1985 and 1989.
1.4 The term "holding company" shall have the meaning attributed to
it in section 736 and 736A of the Companies Act 1985 (as
amended) and a company or other entity shall be a "subsidiary"
for the purposes of this Agreement if it falls within any of
the meanings attributed to a "subsidiary" in such sections or
the meaning attributed to the term "subsidiary undertaking" in
section 258 of such Act, and the terms "subsidiaries" and
"holding companies" are to be construed accordingly.
1.5 References to those of the parties who are individuals include
references to their respective legal personal
representative(s).
1.6 References to documents "in the agreed form" are to documents
in terms agreed between the parties and signed (for the purpose
of identification only) by the Vendors' Solicitors and the
Purchaser's Solicitors.
1.7 References in this Agreement and the Schedules to the parties,
the Introduction, Schedules and clauses are references
respectively to the parties, the Introduction and Schedules to
and clauses of this Agreement.
1.8 Save where the context specifically requires otherwise, words
importing one gender shall be treated as importing any gender,
words importing individuals shall be treated as importing
corporations and vice versa, words importing the singular shall
be treated as importing the plural and vice versa, and words
importing the whole shall be treated as including a reference
to any part thereof.
1.9 Clause and paragraph headings are inserted for ease of
reference only and shall not affect construction.
1.10 Section 839 ICTA is to apply to determine whether a person is
connected with another for the purposes of this Agreement.
2 Sale and purchase of the Shares
2.1 Each of the Vendors as legal and beneficial owner and with full
title guarantee shall sell with effect from Completion the
number of the Shares set out opposite his name in column 2 of
Schedule 1 and the Purchaser relying on the representations,
warranties and undertakings herein contained shall purchase
subject to clause 2.2 all of the Shares with any dividends,
distributions and rights declared, paid, created or arising and
free from all claims, charges, liens, encumbrances, options,
rights of pre-emption or equities.
2.2 The Purchaser shall not be obliged to complete the purchase of
any of the Shares unless the purchase of all the Shares is
completed simultaneously in accordance with this Agreement.
3 Consideration and Security
3.1 In consideration of the sale of the Shares in accordance with
the terms of this Agreement, the Purchaser shall on Completion,
free of any claim, lien, option, charge, right of pre-emption
or equity or other encumbrance whatsoever and credited as fully
paid, issue to the Vendors the Consideration Shares which shall
rank equally with the issued and outstanding Common Stock as
from the date of issue and which as between the Vendors shall
be divided among them in the proportions shown in column 3 of
Schedule 1.
3.2 Notwithstanding anything in clause 3.1, the Security Amount
apportioned to each of the Vendors as shown in column 4 of
Schedule 1 shall be deposited with the Security Agent and shall
be delivered or paid by the Security Agent in whole or in part
to the Vendors (or, as the case may be, returned to the
Purchaser) in accordance with the provisions of the Security
Agreement.
3.3 Without prejudice to any claim in excess of the Security Amount
which may be pursued by the Purchaser against any and each of
the Vendors, the Purchaser may make any claims under this
Agreement or the Deed of Covenant against the Security Amount
while the Security Amount is held by the Security Agent
pursuant to the Security Agreement. The fees and expenses of
the Security Agent will be paid by the Purchaser. The value
of the Security Amount shall be the aggregate of the middle
market price of the 12,500 Consideration Shares at the close of
business Eastern Standard Time in Boston on the Business Day
preceding Completion at a per share price of US $7.25 and such
Consideration Shares shall be applied in settlement of any
claims against the Security Amount at such price in accordance
with the terms of the Security Agreement. If following a sale,
charging, disposal or dealing of the Security Amount pursuant
to clause 3.4, the Security Amount is held as cash or an
equivalent by the Security Agent, the cash shall be applied in
settlement of any claims against the Security Amount at the
same rate at a per share price of US $7.25 as if no sale,
charging, disposal or dealing had occurred, in accordance with
the terms of the Security Agreement.
3.4 During the period that the Security Amount is held by the
Security Agent, and unless and until the Security Agent is
required to deliver any of the shares of Common Stock held in
the Security Amount to the Purchaser pursuant to the terms of
this Agreement and the Security Agreement, each Vendor shall
retain title and all other attributes to the shares of Common
Stock, including without limitation the right to vote the
shares beneficially owned by such Vendor on all matters which
may come before the holders of the Purchaser's Common Stock,
and to receive any dividends paid on the shares of capital
stock represented by such shares and all other rights of
ownership save that the Vendors may not sell, charge, dispose
of or otherwise deal with such shares or all and any proceeds
from such sale, charging, disposal or dealing then forming the
Security Amount other than with the express written consent of
the Purchaser.
4 Completion
4.1 Completion shall take place at the offices of the Purchaser's
Solicitors (or any other location agreed upon by the Vendors
and the Purchaser) immediately following exchange of this
Agreement when the Vendors and the Purchaser shall procure that
the Vendors' Solicitors and the Purchaser's Solicitors shall
sign (for the purposes of identification only) the documents in
the agreed form.
4.2 At Completion the Vendors shall deliver (where appropriate as
agent for the Company or the Subsidiaries) to the Purchaser:
(a) transfers in respect of the Shares duly executed by the
registered holders thereof in favour of the Purchaser or
as it may direct;
(b) certificates for the Shares and any other documents which
may be required to give good title to the Shares and to
enable the Purchaser to procure registration of the same
in its name or as it may direct;
(c) the Deed of Covenant duly executed by the Vendors and the
Disclosure Letter;
(d) the resignation under seal of the directors of each of
the Companies (save for John Frederick Cave), all in the
agreed form;
(e) acknowledgements in the agreed form from each of the
Vendors and the Companies confirming that at and
immediately after Completion nothing is owing nor is
there any outstanding claims between each of the
Companies on the one hand and each of the Vendors and
each member of the Vendors' Groups on the other and to
the extent that there are possible claims, then these are
waived;
(f) bank statements in respect of all bank accounts operated
by the Companies drawn up to 5 November 1996;
(g) in relation to each of the Companies certificates of
incorporation, certificates of incorporation on change of
name (if applicable), common seals, statutory registers,
minute books, share certificate books, books of account
and all other books (all duly written up to date);
(h) the original lease relating to the property referred to
in Part 2 of Schedule 3;
(i) certificates for all shares in the Subsidiary;
(j) irrevocable powers of attorney in the agreed form
executed by each of the Vendors to enable the Purchaser
(during the period prior to the registration of the
transfer of the Shares) to exercise all voting and other
rights attaching to the Shares;
(k) all waivers and consents in the agreed form signed by all
members of the Companies to enable the Purchaser or its
nominee to be registered as the holder of the Shares and
the shares in the Subsidiary (each of the Vendors hereby
irrevocably waiving all and any rights of pre-emption to
which it may be entitled under any articles of
association, agreement, law or otherwise in respect of
the transfer of the Shares and the shares in the
Subsidiary delivered under this Agreement);
(l) the Property Option Agreements duly executed by each
party ;
(m) the Service Agreements duly executed by each party to
them;
(n) any power of attorney under which any document required
to be delivered under this clause 4.2 has been executed;
(o) certified copies of resolutions of each of the Companies
in the agreed form adopting new articles of association
in the agreed form;
(p) certified copies of board resolutions of each of the
Companies in the agreed form:
(i) recording acceptance of the resignation under seal
of the directors (save for John Frederick Cave) of
each of the Companies, all in the agreed form;
(ii) approving (subject only to proper stamping) the
transfers of the Shares under this Agreement;
(iii) approving the placing on the register of members of
the Company the name(s) of the transferee(s) for
registration in accordance with the share transfer
forms referred to above and authorising the issue
of appropriate share certificates;
(iv) recording the appointment of such persons as the
directors (within the maximum number permitted by
the articles of association of the relevant
company) of the Companies as the Purchaser shall
nominate;
(v) approving the execution of the Service Agreements;
and
(vii) approving the execution of the Property Option
Agreement.
(s) the Security Agreement duly executed by each party.
4.3 When the Vendors have complied with the terms of clause 4.2 the
Purchaser shall procure the delivery:
(a) forthwith to the Vendors' Solicitors in the name of the
Vendors, Common Stock certificates for the number of
shares indicated in column 3 of Schedule 1; the Vendors'
solicitors are authorised by the Vendors to receive the
Common Stock certificates on the Vendors' behalf and the
receipt of the Vendors' solicitors shall be a sufficient
discharge for the Purchasers; and
(b) to the Vendors' Solicitors of the counterpart of the Deed
of Covenant duly executed by the Purchaser; and
(c) and shall procure that the Subsidiary uses reasonable
endeavours to obtain the release of the Vendors from the
guarantees given by the Vendors to Barclays Bank plc,
copies of which are annexed to the Disclosure Letter.
5 Warranty
5.1 The Vendors hereby:
(a) acknowledge that the Purchaser has been induced to enter
into this Agreement and to purchase the Shares on the
basis of the Warranty and the agreements in the agreed
form; and
(b) jointly and severally warrant, represent and undertake to
the Purchaser that each and every Warranty Statement is
true, correct, accurate and not misleading at the date of
this Agreement subject only to:
(i) the matters in the Disclosure Letter (which for the
avoidance of doubt relates to the general and
specific disclosures referred to therein), provided
that such matters will be treated as qualifying or
limiting the application of any Warranty Statement
only to the extent that such disclosure is fair,
and
(ii) any exceptions for which express provision is made
pursuant to this Agreement.
5.2 The Warranty is a separate and independent warranty,
representation and undertaking in relation to each of the
Warranty Statements and no Warranty Statement shall be limited
by reference to any other Warranty Statement or by the other
terms of this Agreement.
5.3 No proceedings shall be commenced in respect of any claim for
breach of the Warranty, except in the case of fraud or wilful
non-disclosure and except in the case of a breach of the
Warranty Statements contained in paragraph 3 of Schedule 4 when
the limitations in this clause 5.3 shall not apply, unless:
(a) notice giving reasonable details of the claim:
(i) shall, in the case of any claim other than a claim
relating to Taxation, have been delivered to the
Vendors by the Purchaser not later than the earlier
of, 31 December 1998 or, the date which is 28 days
after the approval by the Board of the audited
accounts of the Company for the financial year of
the Company ending 30 September 1998 or (if
different) for the financial year of the Company
ending during the 1998 calendar year; and
(ii) insofar as such breach relates to Taxation, shall
have been delivered to the Vendors by the Purchaser
within six years from the end of the month
following the end of the accounting period current
at the date of Completion; and
(b) the amount of the claim when aggregated with all other
claims for breach of the Warranty and under the Deed of
Covenant exceeds 25,000 pounds in which event the whole of such
claims (and not merely the excess) may be claimed under
legal proceedings.
5.4 The total amount of the liability of the Vendors for damages
for breach of the Warranty when added to any liability under
the Deed of Covenant shall, except in the case of fraud or
wilful non-disclosure, be limited to 500,000 pounds together with the
proper and reasonable costs of recover of any damages for
breach of the Warranty incurred by or on behalf of the
Purchaser.
5.5 The Vendors shall have no liability in respect of the Warranty:
(a) to the extent that provision or reserve in respect of the
matter has been provided for in the Accounts;
(b) to the extent that such claim would not have arisen but
for a change or changes in legislation made after the
date hereof (whether relating to taxation rates of
taxation or otherwise) or the withdrawal of any extra-
statutory concession previously made by the Inland
Revenue;
(c) if such liability would not have arisen but for a
voluntary act transaction or omission of the Purchaser
and/or either of the Companies on or after Completion
other than in the ordinary or proper course of the
business.
5.6 A claim for breach of the Warranty or under the Deed of
Covenant, notified in accordance with clause 5.3 and not
satisfied, settled or withdrawn shall be unenforceable against
the Vendors on the expiry of the period of six months starting
on the day of notification of such claim unless proceedings in
respect of the same have been issued.
5.7 Without prejudice to the Purchaser's common law duty to
mitigate any loss in respect of any breach of the Warranty, to
the extent that the matter giving rise to the claim relates to
an amount recoverable under any policy of insurance (or would
have been so recoverable had the Purchaser maintained in force
policies of insurance in respect of the business and assets of
the Companies providing equal cover to those current at
Completion) and the amount is recovered and received by the
Companies. The Purchaser shall use reasonable endeavours to
recover all such sums from the insurers in question.
5.8 The Purchaser acknowledges that, save for the warranties
representations or other assurances of any description
contained in this Agreement or any other document executed
pursuant to this Agreement, it has not relied in relation to
the purchase of the Shares on any warranties representations or
other assurances of any description by the Vendors, their
employees, agents or professional advisers in relation to the
Companies or their businesses or affairs or otherwise and, save
as expressly set out in this Agreement or any document executed
pursuant to this Agreement, the Vendors shall have no liability
in respect of any other representation, warranty or promise
made prior to the date of this Agreement unless it was made
fraudulently.
5.9 If the Purchaser and/or either of the Companies becomes aware
of any claim or potential claim which (if successful) would
result in a claim in respect of the Warranty the Purchaser
shall as soon as reasonably practical notify the Vendors and
the Purchaser and shall ensure that each of the Companies will,
provide to the Vendors reasonable access to all relevant
documents and records for the purpose of investigating the
matter. On the basis that the Vendors shall fully indemnify
the Purchaser and/or either of the Companies for all reasonable
costs incurred as a result of any request, by the Vendors, the
Purchaser shall and shall ensure that the Companies will take
such action and institute such proceedings as the Vendors may
reasonably request to dispute, resist, appeal, compromise,
defend, remedy or mitigate the matter, save that the Purchaser
and/or the Companies shall at all times have the exclusive
conduct of all negotiations and proceedings. The Purchaser
shall ensure that the Companies shall not admit liability in
respect of, or compromise or settle, the matter without the
prior written consent of the Vendors (which shall not be
unreasonably withheld or delayed).
5.10 The rights and remedies of the Purchaser in respect of any
breach of the Warranty shall not be affected by Completion, by
any investigation made by or on behalf of the Purchaser into
the affairs of the Companies, or by any other event or matter
whatsoever which otherwise might have affected such rights and
remedies except a specific and duly authorised written waiver
or release.
5.11 Any information supplied by the Companies, their officers or
employees to the Vendors, their agents, representatives or
advisers in connection with, or to form the basis of, the
Warranty or a Warranty Statement or any matter covered in the
Disclosure Letter, or for any other reason, shall be deemed not
to include or have included a representation, warranty or
guarantee of its accuracy to the Vendors and shall not
constitute a defence to the Vendors to any claim made by the
Purchaser. The Vendors waive any and all claims against the
Companies, their officers or employees in respect of any
information so supplied.
5.12 For the purposes of the Warranty and the Warranty Statements
references to "the Company" shall be deemed to extend both to
the Company and the Subsidiary to the effect that each of the
Warranty Statements shall be deemed to be repeated (save where
the context otherwise requires) in respect of the Subsidiary as
if the expression "the Company" had been replaced by the name
of the Subsidiary throughout.
5.13 References to the awareness or knowledge of the Vendors in a
Warranty Statement in Schedule 4 shall only limit that Warranty
Statement by the Vendors' awareness or knowledge if each of the
Vendors has made all due and careful enquiries to ascertain if
the relevant information is true, accurate, correct and not
misleading except in those cases where it is clear from the
text of the Warranty Statement that no enquiries or only
limited enquiries have been made.
5.14 The Purchaser may without prejudice to any other right or
remedy which may be available to it require the Vendors
forthwith when called upon so to do to purchase from the
Companies any debt to which the Warranty Statement contained in
paragraph 4.7 of Schedule 4 refers and which shall not have
been recovered in full and as therein mentioned for an
immediate cash consideration equal to the full value thereof
and the Purchaser shall procure that upon receipt of such
payment in full the relevant companies shall assign such debt
to the Vendors or as they may direct.
5.15 As an inducement to the Vendors to enter into this Agreement
and consummate the transactions contemplated in it, the
Purchaser warrants to the Vendors the following:
(a) the authorised capital stock of Purchaser consists solely
of 20,000,000 shares of Common Stock, of which 8,966,321
are issued and outstanding and 1,000,000 shares of
preferred stock, none of which are issued and
outstanding. Each outstanding share of such common stock
is duly authorised, validly issued, fully-paid, non-
assessable and not issued in violation of any pre-emptive
rights. In addition on the date of Completion, the
Purchaser has outstanding options to purchase
approximately 275,209 shares of common stock. Upon the
execution of this Agreement and the issue by the
Purchaser of the Common Stock to the Vendors, the
Purchaser will have a total of 9,091,321 shares of common
stock issued and outstanding as of the date of
Completion;
(b) the Shares are being acquired solely by the Purchaser for
investment and not as nominee or agent for the benefit of
any other person or entity, and the Purchaser has no
current intention of distributing, reselling or assigning
the Shares. The Purchaser understands that the Shares
have not been registered under the Securities Act, or
under the laws of any jurisdiction, and that the Vendors
are under no obligation to register or assist the
Purchaser in registering the Shares;
(c) the Purchaser is a duly organised and validly existing
corporation under the laws of the State of Delaware and
has full corporate power to enter into this Agreement and
the related agreements and to carry out its obligations
under it and them. The execution and delivery of this
Agreement and the related agreements and the consummation
of the transactions contemplated by it and them,
including the issue of the Consideration Shares, have
been duly and validly authorised by the Purchaser's board
of directors and shareholders, as may be required by law.
No other acts or proceedings on the part of the Purchaser
will be necessary to authorise this Agreement, the
related agreements and the transactions contemplated by
it and therein. This Agreement and the related
agreements constitute valid and legally binding
obligations of the Purchaser and enforceable against the
Purchaser in accordance with their terms, except as
limited by applicable bankruptcy, insolvency,
reorganisation, moratorium or other laws of general
application relating to creditors' rights or by the
application of equitable principles when equitable
remedies are sought;
(d) the execution, delivery and performance of this Agreement
and the related agreements and the consummation of the
transactions contemplated by it and them, including the
issue of the Consideration Shares will not:
(i) violate any provision of the certificate of
incorporation or by-laws of the Purchaser;
(ii) violate any order, judgment, injunction, award or
decree of any court, arbitrator or governmental or
regulatory body against, or binding upon the
Purchaser or upon the properties or business of the
Purchaser;
(iii) violate any statute, law or regulation of any
jurisdiction applicable to the Purchaser in
connection with the transactions contemplated in
this Agreement;
(iv) violate or constitute a default under any mortgage,
indenture, deed of trust, lease, contract,
obligation, agreement, license or instrument to
which the Purchaser is a party other than in
respect of the Silicon Valley Bank for which a
waiver has been obtained;
(v) without limiting the generality of the foregoing,
provided each Vendor is not in breach or default of
clause 8 of this Agreement, violate the Securities
Act (including, without limitation, Regulation S of
the Securities Act), the securities laws of the
Commonwealth of Massachusetts, or the rules and
regulations of the National Association of
Securities Dealers, Inc.
(e) other than an approval from Silicon Valley Bank (which
has been obtained) no permits, approvals, consents,
satisfaction of waiting periods, or waivers of them from
any agencies, any jurisdiction or governmental body, or
from any other person whatsoever, are necessary to allow
the Purchaser to consummate the transactions contemplated
in this Agreement and the related agreements in
compliance with and not in breach of, all applicable
laws, rules regulations, orders or governmental or other
agency directives, or the provisions of any contract
binding upon any of the Purchaser; and
(f) upon their issue to the Vendors, the Consideration Shares
will rank equally with the Common Stock issued and
outstanding at Completion.
5.16 The Vendors hereby agree to fully indemnify and hold harmless
the Purchaser and the Companies for and against any liability
resulting from, the statutory records of the Companies not
having been accurately maintained in accordance with the Act.
The Purchaser undertakes to the Vendors that (save as required
by law or in respect of enforcement of this indemnity) it will
take no action the effect of which is to crystallise a
liability under this indemnity, and will procure (so far as it
is able as a shareholder of the Company) that neither of the
Companies does so.
6 Non-disclosure of information and restrictions
6.1 Each of the Vendors hereby agrees to keep secret and
confidential and not to use, disclose or divulge to any third
party or knowingly enable or cause any person to become aware
of any confidential information relating to either of the
Companies including but not limited to intellectual property
(whether owned or licensed by any of the Companies),
inventions, know-how, lists of customers, reports, notes,
memoranda and all other documentary records pertaining to the
Companies or their business affairs, finances, suppliers,
customers or contractual or other arrangements provided always
that the restrictions contained in this clause 6.1 shall not
apply to any confidential information which:
(a) is required to be disclosed by law jurisdiction or the
SEC or NASDAQ (provided that the Purchaser is given prior
written notice of such intended disclosure); or
(b) comes into the public domain otherwise than as a result
of its wrongful disclosure by such Vendor.
6.2 To ensure that the Purchaser receives the full benefit of the
goodwill of the business of each of the Companies, each of the
Vendors hereby represents and undertakes that (except with the
prior written consent of the Purchaser which shall not be
unreasonably withheld or delayed) he will not and will procure
that no other member of the Vendors' Group shall for a period
of three years from Completion either alone or for, together
with or as agent, officer or employee of any other person, firm
or company or through the medium of any company directly or
indirectly:
(a) solicit, interfere with or attempt to entice away from
any of the Companies any person who is at the date hereof
or was within the previous 12 months an employee or agent
of any of the Companies, or who is reasonably considered
by any of the Companies to be or have been a regular
client or customer of or supplier to the Companies on the
date of this Agreement or during the 12 months
immediately preceding the date of this Agreement; or
(b) interfere or attempt to interfere with the supply or
continued supply of goods or services to or by the
Companies; or
(c) carry on or be engaged, concerned, interested or hold
shares or other securities in any company or businesses
which compete with the Restricted Activities at the date
of this Agreement.
PROVIDED THAT nothing contained in paragraphs (a) to (c)
of this clause 6.2 shall prohibit the Vendors from
carrying out any activities at any time which are not in
competition with any part of the business then carried on
by the Companies.
6.3 Each of the restrictions contained in each paragraph of clause
6.2 is a separate and distinct restriction and is to be
construed separately from the other restrictions. Each of the
Vendors acknowledges that the restrictions are reasonable when
taken together as well as individually, that the duration,
extent and application of each restriction are no greater than
is necessary for the protection of the goodwill of the
businesses of the Companies and that the consideration paid by
the Purchaser for the Shares takes into account and provides
adequate compensation for the restraints and restrictions
imposed. Should any restriction be found to be void or
unenforceable without the deletion of some part of it or the
reduction in area or duration specified, that restriction shall
apply with such modification as may be necessary to make it
valid.
6.4 The parties agree that the benefit of the covenants and
undertakings given in this clause shall be assignable in whole
or in part by the Purchaser to and become enforceable by any of
the Companies and any subsidiary or holding company of any of
the Companies or the Purchaser which from time to time is the
holder of the Shares or of any shares of the Subsidiary or to
which any part of the business(es) of the Company and/or the
Subsidiary has been transferred.
6.5 After Completion, the Vendors shall not and shall procure that
each member of the Vendors' Groups shall not without the
Purchaser's express agreement hold himself out as being
interested in or in any way connected (other than as an
employee or a director (for so long as this is the case) or as
a matter of historic fact) with the Companies or any of them or
permit any person to hold out the Vendors or any other member
of the Vendors' Group as being so interested.
7 Use of name
The Purchaser shall be entitled from Completion to the
exclusive use of the name Guildsoft as part of the Companies'
names and in the Companies' business dealings and the Vendors
undertake not to use as a corporate or trading name or
otherwise any name, mark or logo which is or might be confused
with Guildsoft.
8 United States Securities Laws
8.1 Each Vendor warrants and covenants that:
(a) he is not a US person (as defined in Regulation S of the
Securities Act), is not located in the United States and
is not purchasing the Consideration Shares for the
account or benefit of any US person; he has not offered,
sold or entered into any transaction (eg. the purchase of
any put or sale or any call) involving the sale or
potential sale of any Common Stock (including the
Consideration Shares) in the United States or to US
persons; and he agrees that prior to the expiry of a 40-
day period commencing at Completion, he shall not offer,
sell or contract to sell, any shares of Common Stock
(including the Shares), or enter into any transaction
(eg. the purchase of any put or sale or any call)
involving the sale or potential sale of, the Common Stock
in the United States or to US persons; and
(b) he acknowledges and understands that the Consideration
Shares have not been registered under the Securities Act
and may not be offered or sold within the United States
or to US persons unless such shares are registered under
the Securities Act or an exemption from the registration
requirements of the Securities Act is available and he
agrees to comply with all applicable laws and regulations
in each jurisdiction in which he purchases, offers, sells
or delivers Consideration Shares, in all cases at his own
expense.
8.2 The Vendors acknowledge and confirm that they have not been
induced to enter into this Agreement or any of the other
documents or arrangements referred to in this Agreement by any
statement or statements of fact or opinion, other than such (if
any) as are contained in this Agreement.
9 General Provisions
9.1 Where the Vendors are expressed to be jointly and severally
liable in the event of any breach of the warranties,
representations, indemnities, covenants, agreements and
obligations of the Vendors under this Agreement the Purchaser
may release or compromise the liability of any of the Vendors
or grant to any of the Vendors time or other indulgence without
affecting the liability of any other of the Vendors.
9.2 Without prejudice to any right or remedy available to the
Purchaser pursuant to clause 5 or otherwise, the Vendors shall
be liable on an indemnity basis for all reasonable costs,
claims, expenses, property incurred by the Purchaser in
connection with any successful claim arising out of any
warranty, representation, undertaking or indemnity contained in
this Agreement (or any breach thereof) or any of the agreements
in the agreed form.
9.3 The waiver by the Purchaser of any right or breach, default or
omission by another party of any of the terms of this Agreement
or any of the agreements in the agreed form shall not take
effect unless in writing and shall not constitute a continuing
waiver of the right waived or apply to, or operate as a waiver
of, any other breach, default or omission and any forbearance
in enforcing any right shall not constitute a waiver.
9.4 The Purchaser may assign in whole or in part the benefit of
this Agreement which shall enure to the benefit of the
successors in title and assigns of the Purchaser.
9.5 No party shall divulge to any third party (other than their
respective professional advisers or insurers) the fact that
this Agreement or any of the documents in the agreed form has
been entered into or any information regarding its terms or any
matters contemplated by this transaction or make any
announcement relating to it without the prior agreement (not to
be unreasonably withheld or delayed) of the other parties
unless such announcement is required by the Inland Revenue
and/or a court of competent jurisdiction or by the SEC or
NASDAQ in which event the other parties shall be given prior
written notice of such intended announcement. Any announcement
shall in any event be made or issued only in a form approved by
the Purchaser and with the consent of the Vendors (not to be
unreasonably withheld or delayed).
9.6 The Vendors shall ensure that the Purchaser, its agents,
advisers (including legal advisers or insurers) and
representatives are given promptly on request full access to
all accounting and other records of the Companies and any other
facilities and information regarding the business, assets,
liabilities, contracts and arrangements of the Companies which
it may request and which are within the possession or the
control of the Vendors and the Vendors hereby undertake to
retain all such information in their possession and control for
a period of six years following the date hereof.
9.7 Each party shall pay its own legal, accountancy and other
costs, charges and expenses incurred in connection with this
Agreement.
9.8 This Agreement, together with any document expressly referred
to in any of its terms, contains the entire agreement between
the parties relating to the subject-matter covered. No oral
explanation or oral information given by any party shall alter
the interpretation of this Agreement.
9.9 Each of the Vendors hereby undertakes with the Purchaser at the
request of the Purchaser and at the expense of the Vendors to
do or procure to be done all such further acts and things and
execute or procure to be executed all such further deeds and
documents as may be necessary or desirable fully and
effectively to vest in the Purchaser the legal and beneficial
ownership of the Shares and the benefits of this Agreement and
the agreements entered into in the agreed form and, pending
such vesting, the Vendors shall hold such Shares and Properties
and benefits in trust for the Purchaser and shall receive all
monies in connection therewith as trustee of the Purchaser and
shall account to the Purchaser forthwith on receipt.
9.10 Any notice:
(a) must be in writing and must be given:
(i) to a company which is a party at its registered
office or to such other address as may have been
notified to the other party; and
(ii) to any individual who is a party at the address of
that individual given at the beginning of this
Agreement; and
(b) will be effectively served:
(i) on the day of receipt where any hand-delivered
letter, any telex or telefax message is received on
a Business Day before or during normal working
hours; or
(ii) on the following Business Day, where any hand-
delivered letter or, any telex or telefax message
is received either on a Business Day after normal
working hours or on any other day.
9.11 This Agreement and all documents supplemental thereto are
governed by and are to be construed in accordance with English
law.
9.12 The parties accept the non-exclusive jurisdiction of the
appropriate court of law in England in relation to all matters,
claims and disputes arising out of or in connection with this
Agreement, any of the documents in the agreed form or any
document supplemental thereto.
9.13 Any provisions of this Agreement shall, so far as they are
capable of being performed or observed, continue in full force
and effect notwithstanding Completion except in respect of
those matters already performed.
9.14 This Agreement may be executed in several counterparts (whether
original or facsimile counterparts) and upon the execution of
all such counterparts by one or more parties, each counterpart
shall be deemed to be an original hereof.
SCHEDULE 1
The Vendors
Column 1 Column 2 Column 3 Column 4
Name and Holdings of Number of Security
address shares Consideration Amount
Shares
John Frederick 1,000 ordinary 41,666 4,166
Cave of shares of 1 pound
Wentworth each
House
Dormy Avenue
Mannamead
Plymouth
Devon
PL3 5BE
Susan Jane 1,000 ordinary 41,667 4,167
Cave of shares of 1 pound
Wentworth each
House
Dormy Avenue
Mannamead
Plymouth
Devon
PL3 5BE
Michael Arthur 1,000 ordinary 41,667 4,167
Holman of shares of 1 pound
188 Victoria each
Road
St Budeaux
Plymouth
Devon
PL5 1AW
SCHEDULE 2
Part 1
Particulars of the Company
Number: 02887429
Registered Office: The Software Centre, East Way, Lee Mill
Industrial Estate, Ivybridge, Nr. Plymouth,
PL21 9PE
Authorised share capital: 3,000 ordinary shares of 1 pound each
Issued share capital: 3,000 ordinary shares of 1 pound each
Shareholders and shareholdings:
John Frederick Cave1,000 ordinary shares of 1 pound each
Susan Jane Cave 1,000 ordinary shares of 1 pound each
Michael Arthur Holman1,000 ordinary shares of 1 pound each
Directors: John Frederick Cave, Susan Jane Cave, Michael Arthur Holman
Secretary: John Frederick Cave
Auditors: Deloitte & Touche
Charge: Legal charge created on 7 April 1994
and registered on 25 April 1994 in
favour of Barclays Bank Plc over
property situate at Action House, Lee
Mill Industrial Estate, Plymouth,
Devon, PL21 9BE
Part 2
Particulars of the Subsidiary
Number: 02567531
Registered Office: The Software Centre, East Way, Lee Mill
Industrial Estate, Ivybridge, Nr. Plymouth,
PL21 9PE
Authorised share capital: 3,000 ordinary shares of 1 pound each
Issued share capital: 3,000 ordinary shares of 1 pound each
Shareholder and shareholding:
Guildsoft Holdings Limited 3,000 ordinary shares of 1 pound each
Directors: John Frederick Cave, Susan Jane Cave, Michael Arthur Holman
Secretary: John Frederick Cave
Auditors: Deloitte & Touche
Charge: Debenture created on 30 October 1991
and registered on 7 November 1991, in
favour of Barclays Bank Plc
SCHEDULE 3
The Properties
Part 1
(Description of Freehold Property)
All that freehold property, situate at Action House, Lee Mill
Industrial Estate, Plymouth, Devon, owned by Guildsoft Holdings
Limited, and registered at HM Land Registry under title number
DN: 278131
Part 2
(Description of Leasehold Property)
All that leasehold property situate at, Unit A, The Software
Centre, East Way, Lee Mill Industrial Estate, Ivy Bridge, Nr
Plymouth, Devon, PL21 9EZ which is demised to Guildsoft Limited
pursuant to a lease dated 7 April 1994
SCHEDULE 4
Warranty Statements
1 Information, formal and legal
1.1 The information contained or referred to in the Introduction
and Schedules 1, 2, 3 and 5 is true, complete and accurate and
not misleading, the Subsidiary is the only subsidiary of the
Company and in the seven years prior to Completion and at
Completion neither the Company nor the Subsidiary has had a
subsidiary or an associated company being a company which falls
to be treated as such for the purposes of SSAP1 (other than the
Subsidiary in the case of the Company).
1.2 All factual information contained or referred to in the
Disclosure Letter and the replies to preliminary enquiries
dated 27 September 1996, 14 October 1996, 15 October 1996, 18
October 1996 and 27 October 1996 from the Vendors to the
Purchaser's Solicitors and the copy documents enclosed with
those replies is true, complete and accurate in all material
respects.
1.3 All statutory, municipal, governmental, court and other
requirements applicable to the formation, continuance in
existence, creation and issue of securities have been complied
with, and so far as each of the Vendors is aware all statutory,
municipal, governmental, court and other requirements
applicable to the management, property or operations of the
Company, and all licences and consents (including planning
consents) involved or that should be involved in the carrying
on of the business of the Company, have been obtained and
complied with and there is no contemplated revocation of any
such licence or consent.
1.4 The records, statutory books and books of account of the
Company are duly entered up and maintained in accordance with
all legal requirements applicable thereto and contain true,
full and accurate records of all matters required to be dealt
with therein and all such books and all records and documents
(including, without limitation, all documents of title,
accounts, books, ledgers and contracts to which it is a party)
which all statutory, municipal, governmental, court and other
requirements applicable to are its property are in its
possession or under its control and all accounts, documents,
returns and forms required to be delivered or made to the
Registrar of Companies and any relevant foreign equivalent have
been duly and correctly delivered or made.
1.5 So far as each of the Vendors is aware, the Company has not
committed and is not liable for any criminal, illegal,
unlawful, ultra vires or unauthorised act or breach of
covenant, contract or statutory duty and there is no violation
of, or default with respect to, any statute, regulation, order,
decree or judgment of any court or central or local government
agency of the United Kingdom or any foreign country which has
or could have a material adverse effect upon the assets,
business or profitability of the Company and so far as each of
the Vendors is aware no officer or senior manager of the
Company has committed any crime (other than minor traffic
offences).
1.6 All registers required to be kept by the Company under the
provisions of the Companies Acts are true and accurate and the
copy of the Memorandum and Articles of Association of the copy
annexed to this Agreement and marked "A" (including resolutions
passed by the Company in general meeting to which Section 380
of the Companies Act 1985 applies whether or not the same have
yet been filed with the Registrar of Companies) are true and
accurate.
1.7 No resolution has been passed by the Company or any class of
its members since incorporation other than resolutions relating
to business at Annual General Meetings which was not special
business and ordinary or special resolutions, copies of which
have been filed with the Registrar of Companies.
1.8 Since the Company's incorporation it has not done any act or
thing or engaged in any activity or incurred any debts and
liabilities otherwise than in the ordinary course of the
business carried on by it at the date of this Agreement.
1.9 The Company does not trade nor has traded under any name other
than its corporate name and no action has been taken against
the Company under Section 28 of the Companies Acts.
2 Capital, distribution, contracts and liabilities
2.1 The Company has no loan capital outstanding and since the
Accounts Date no loan or share capital of the Company has been
put under option or agreed to be allotted or issued or to be
put under option and no person has the right (whether
exercisable now or in the future and whether contingent or not)
to call for the issue of any share or loan capital of the
Company.
2.2 The Company has not at any time:-
(a) repaid, redeemed or purchased or agreed to repay, redeem
or purchase any shares of any class of its share capital
or otherwise reduced or agreed to reduce its issued share
capital or any class thereof; or
(b) directly or indirectly provided any financial assistance
(as defined in section 151, Companies Act 1985) for the
purpose of the acquisition of shares of the Company or of
any holding company of the Company or for the purpose of
reducing or discharging any liability incurred in any
such acquisition whether pursuant to section 155,
Companies Act 1985 or otherwise; or
(c) capitalised or agreed to capitalise in the form of
shares, debentures or any other securities or in paying
up any amounts unpaid on any shares, debentures or other
securities any profits or reserves of any class or
description or passed or agreed to pass any resolutions
to do so.
2.3 The Company has not received or made a distribution from any
company in contravention of section 263 Companies Act 1985.
2.4 There is not outstanding any indebtedness or other liability
(of whatsoever nature, whether present or future, actual or
contingent) owing:
(a) by the Company to any member of a Vendors' Group or to
any director or former director of the Company or to any
independent contractor providing the services of any such
persons or to any person connected with the Company or
with any member of the Vendors' Group or with any such
director, former director or contractor; or
(b) to the Company by any member of the Vendors' Group or by
any such director, former director or contractor or by
any person connected with the Company or with any member
of the Vendors' Group or with any such director, former
director or contractor.
2.5 There are no existing contracts to which the Company is a party
and in which any of the Vendors or any director or shareholder
of the Company or any person connected with any of them is
interested (and for the purposes of this paragraph a person
shall be deemed to be interested in a contract in accordance
with the provisions of Section 317 of the Companies Act 1985).
2.6 The Company does not have one customer that is responsible for
in excess of 10% of the Company's turnover in any one financial
year and no material customer of or supplier to the Company is
a member of a Vendor's Group or a director, shareholder or
consultant (or independent contractor providing the services of
any such persons) of a Vendor or connected with a member of a
Vendor's Group or any such director, shareholder or consultant
(or independent contractor providing the services of any such
persons).
3 The Shares and the Company
3.1 The Shares constitute the whole of the issued and allotted
share capital of the Company and are fully paid or credited as
fully paid and there are no options over any shares or options
to subscribe shares in the Company.
3.2 The Vendors are the legal and beneficial owners of the Shares
in the proportions set opposite their names in Column 2 of
Schedule 1 and sell the Shares with full title guarantee.
3.3 There is no pledge, lien, option, warrant, charge or
encumbrance on, over or affecting any of the Shares or the
shares in the Subsidiary, no agreement to create such pledge,
lien, option, warrant, charge or encumbrance has been made and
no claim has been made that any person is entitled to any such
pledge, lien, charge or encumbrance.
4 Accounts
4.1 The Accounts have been prepared in accordance with the
applicable requirements of the Companies Acts and in accordance
with accounting principles, standards and practices which are
generally accepted in the United Kingdom, are accurate in all
material respects and give a true and fair view of the state of
affairs of the Company at the Accounts Date and of the profits
and losses for the period concerned.
4.2 The Accounts make full provisions for or, in the case of
deferred or contingent liabilities or commitments, disclose or
take into account as at the Accounts Date:
(a) all assets;
(b) all liabilities whether actual contingent or disputed;
(c) all capital commitments whether actual or contingent;
and
(d) all bad and doubtful debts.
4.3 Each of stock and work-in-progress was treated in the Accounts
in accordance with SSAP 9 except that any redundant, slow-
moving or obsolete stock was written off. The policy of
valuing stock and work-in-progress and the basis of
depreciation and amortisation used in the Accounts is the same
as was used in the audited balance sheets of the Companies for
the three previous consecutive accounting reference periods
ending on the Accounts Date and the rate of depreciation of
fixed assets used in the Accounts by the Companies for the
three consecutive accounting periods ending on the Accounts
Date is in accordance with SSAP 12.
4.4 The combined profits of the Companies for the three consecutive
periods ending on the Accounts Date as shown by the Accounts
and by the audited accounts of the Companies covering previous
periods which have been delivered to the Purchaser and the
trend of profits shown in all such accounts has not (except as
disclosed in such accounts) resulted from inconsistencies in
accounting practices or the inclusion of exceptional or
extraordinary (as defined in SSAP 6) items of income or
expenditure.
4.5 So far as each of the Vendors is aware no debt owing to any of
the Companies is subject to any set-off or counter-claim.
4.6 The profits (or losses) shown in the Accounts have not to a
material extent been affected (except as disclosed therein) by
any extraordinary or exceptional event or circumstance or by
any other factor rendering such profits unusually high or low.
4.7 None of the book debts included in the Accounts or which have
subsequently arisen have been outstanding for more than two
months from their due dates for payment and all such debts have
realised or will realise in the normal course of collection
their full value (whichever is the highest) as included in the
Accounts, or in the books of the Company.
5 Business and Trading
5.1 Since the Accounts Date:
(a) no members' resolution of the Company of any kind has
been passed other than resolutions relating to business
at annual general meetings which was not special
business;
(b) no share, loan capital or (otherwise than in the ordinary
course of business) loan has been issued or allotted or
repaid, or agreed to be issued or allotted or repaid by
the Company;
(c) the Company has not carried on its business otherwise
than in the ordinary course as regards the nature of the
same and in a prudent manner and so as to maintain it as
a going concern;
(d) the Company has not acquired or disposed of or agreed to
acquire or dispose of any business or any asset (other
than trading stock in the ordinary course of business) or
assumed or acquired any material liability (including any
contingent liability) except at a value and on terms
determined on an arm's length basis;
(e) the Company has paid its creditors in accordance with its
normal practice;
(f) the Company's business and turnover (excluding seasonal
variations) have not deteriorated or been adversely
affected to a material extent by any act or omission of
the Company or by the loss of any important employee,
customer or supplier or by any abnormal factor and none
of the Vendors is aware of any facts likely to give rise
to any such loss or factor having or likely to have such
effect;
(g) no dividend or other distribution has been declared, made
or paid to the members of the Company except as provided
for in the Accounts and all dividends or distributions
declared, made or paid by the Company have been made,
paid or declared in accordance with its Articles of
Association and the provisions of any applicable
legislation;
(h) no change has been made in the emoluments or other terms
of employment of any of the Company's employees who are
in receipt of remuneration in excess of 20,000 pounds per annum
or of any of the Directors and the Company has not paid
any bonus or special remuneration to any such employee or
any Director;
(i) no liability or contingent liability for Taxation has
arisen otherwise than as a result of trading activities
in the ordinary course of business;
(j) all amounts received by the Company have been paid into
the relevant bank account and appear in the appropriate
books of account;
(k) the Company has not repaid or become liable to repay any
loan, loan capital or other debenture by reason of its
default (and no notification has been received since the
Accounts Date that any such liability has arisen for any
other reason) or borrowed any money;
(l) no debtor has been released by the Company for less than
the book value of any debt and no debt owing to the
Company has been deferred, subordinated or written off or
has proved to be irrecoverable to any extent; and
(m) no material commission has been paid and no material
discount has been allowed by the Company at a rate or
otherwise on terms different from those upon which
commissions and discounts were paid or allowed for in the
accounting period ended on the Accounts Date.
5.2 All the Company's assets and all debts due to it which are
included in the Accounts or have otherwise been represented as
being at the Accounts Date its property or due to it or used or
held for the purposes of its business were at the Accounts Date
its absolute property and (save for those subsequently disposed
of or realised in the ordinary course of the business carried
on by it) all such assets and debts and all assets and debts
which have subsequently been acquired or arisen are now its
absolute property and none is the subject of any encumbrance
(excepting only liens arising in the normal course of trading)
or the subject of any factoring arrangement, hire-purchase,
retention of title, conditional sale or credit sale agreement.
6 Stocks, assets and insurance
6.1 The Company's stock is all (save insofar as specific provision
has been made in the Accounts) of satisfactory quality and
reasonably fit for the purpose of which it is usually sold and
so far as each of the Vendors is aware capable of being sold by
the Company in the ordinary course of its business in
accordance with its current price list without rebate,
allowance or discount and the levels of stock, trade debtors
and trade creditors are not materially different from those
which the Company normally has at this stage of its trading
year.
6.2 The Company does not own or have on lease or hire purchase any
motor vehicles.
6.3 All plant, machinery, vehicles and other equipment owned or
used by the Company are in satisfactory repair, condition and
working order having regard to their age and have been
regularly and properly maintained and none is dangerous,
inefficient or unsuitable or in need of renewal or replacement.
6.4 Maintenance contracts are in full force and effect in respect
of all assets which the Company is obliged to maintain or
repair under any leasing or similar agreement and in respect of
all assets which it is necessary to have maintained by outside
or specialist contractors.
6.5 The asset register of the Company (a copy of which is annexed
to this Agreement and marked 'D') comprises a complete and
accurate record of all plant, machinery, vehicles and equipment
owned, used or possessed by the Company (and such register or
registers accurately reflect whether such plant, machinery,
vehicles or equipment are owned or used or possessed by the
Company).
6.6 All plant, machinery, vehicles or equipment used by the Company
are the absolute property of the Company and are not subject to
any leasing, hire or hire purchase agreement or agreement for
payment on deferred terms or any similar agreement or
arrangement nor are they loaned or otherwise unavailable to the
Company.
6.7 The Company has not sold or distributed any products which so
far as each of the Vendors is aware were, are or will become
defective or which do not comply in any respect with and
express or implied warranties or representations made by any
person or with all applicable regulations, standards and
requirements and the Company does not give and has not given
express warranties, guarantees or indemnities as to the fitness
for purpose, quality or otherwise of any of its products.
6.8 There has been no exercise or purported exercise of, or any
claim for, any charge, lien, encumbrance or equity over any of
the fixed assets of the Companies which is still outstanding.
6.9 The insurance details which have been supplied to the
Purchaser's Solicitors are all the insurances of the Company
and in respect of all such insurances:
(a) all premiums have been duly paid to date;
(b) all the policies are in full force and effect and are not
voidable on account of any act, omission or non-
disclosure on the part of the insured party;
(c) particulars are contained or referred to in the
Disclosure Letter;
(d) no insurance claim is outstanding and so far as each of
the Vendors is aware there are no circumstances which
would or might give rise to any claim
(e) all policies are held in the name of the Company or the
Subsidiary (as disclosed).
7 Sale of the Shares
7.1 The Vendors have no grounds to believe that, as a result of the
acquisition of the Shares by the Purchaser:
(a) any material supplier of the Company will cease or reduce
or be entitled to cease or reduce its supplies to the
Company;
(b) any material customer of the Company will, or will be
entitled to, cease dealing with or reduce the level of
business done with the Company; and
(c) any officer or senior employee of the Company will leave
(other than as may be provided for in this Agreement).
7.2 No consent, approval, authorisation or order of any court or
government or local agency or body or any other policy is
required by any of the Vendors or the Company for the execution
or implementation of this Agreement and the agreements in the
agreed form and compliance with the terms of this Agreement and
each of the agreements in the agreed form does not and will
not:
(a) conflict with, result in the breach of or constitute a
default under any obligation by which the Company may be
bound or any provision of the Memorandum or Articles of
Association of the Company;
(b) relieve any person from any material obligation to the
Company;
(c) result in the creation, imposition, crystallisation or
enforcement of any encumbrance on any of the assets of
the Company; or
(d) result in any present or future indebtedness of the
Company becoming due, or capable of being declared due,
and payable prior to its stated maturity.
7.3 No person is entitled to receive from any of the Companies any
finder's fee, brokerage or other commission in connection with
the sale and purchase of the Shares.
8 Taxation
8.1 Full provision or reserve has been made in the Accounts for all
Taxation liable to be assessed on the Company or for which it
is or may become accountable in respect of the period ended on
the Accounts Date.
8.2 The Accounts make full provision for deferred taxation and show
the full potential liability of the Company for deferred
taxation and no transfer from or reduction in the deferred
taxation account or any other reserve in respect of deferred
taxation has been made or will be made by the Company on or
before Completion.
8.2 The Company has duly and punctually made all returns and given
or delivered all notices, accounts and information which ought
to have been made to any Taxing Authority and such returns,
notices, accounts and information are up-to-date, complete and
accurate and have been made or provided on a proper and
consistent basis.
8.3 The Company is not involved in any dispute with any Taxing
Authority concerning any matter likely to affect in any way the
liability (whether accrued, contingent or future) of it to
Taxation and the Company is not aware of any matter which may
lead to such dispute.
8.4 The Company has deducted or withheld all Taxation required to
be deducted or withheld from any payments made by the Company
and the Company has duly and punctually complied with any
obligation to account for any such Taxation deducted or
withheld to the appropriate Taxing Authority and in particular
without prejudice to the generality of the foregoing, PAYE,
national insurance contributions and interest.
8.5 The Disclosure Letter contains full details of all matters
relating to Taxation in respect of which the Company (either
alone or jointly with any other person) has, or at Completion
will have, an entitlement to make any appeal against an
assessment to or determination affecting Taxation, or to make
any application for the postponement of Taxation.
8.6 No Relief has been claimed by and/or given to the Company, or
taken into account in determining the provision for Taxation in
the Accounts, which could be withdrawn, postponed or restricted
as a result of any act, omission, or circumstance arising or
occurring at or at any time after Completion.
8.7 All clearances and consents obtained from any Taxing Authority
by the Company have been disclosed to the Purchaser in the
Disclosure Letter and were based on full and accurate
disclosure of all the facts and circumstances material to the
decision of the Taxing Authority.
8.8 The Company has duly and punctually paid all Taxation for which
it is liable.
8.9 No liability of the Company to Taxation has arisen or will
arise up to Completion save for corporation tax payable in
respect of normal trading profits earned by it or income tax
deducted under PAYE regulations or national insurance
contributions or VAT for which it is accountable to any Taxing
Authority.
8.10 The Company is a close company.
8.11 The Company has made no loan, advance, release or given
consideration or effected a transaction falling within Section
418 to 422 (inclusive) ICTA.
8.12 The Company is not and has not at any time been a close
investment holding company within the meaning of Section 13A
ICTA.
8.13 The Company is resident in the United Kingdom for Taxation
purposes and is not and never has been resident for any purpose
in any other country and does not have and has never had any
permanent establishment in any other country.
8.14 No amount of an income nature which has been paid or is payable
by the Company or which it is under an obligation entered into
before Completion to pay is wholly or partly disallowable as a
deduction, charge on income or otherwise in computing its
liability to Taxation.
8.15 There are set out in the Disclosure Letter full details of all
Reliefs available for carry forward for Taxation purposes by
the Company and the Vendors are not aware of any reason why
such Reliefs might cease to be available or might become
restricted (including by virtue of the application of Section
245, 768 or 768A ICTA).
8.16 Within the four years prior to the date of this Agreement,
there has been no major change in the nature or conduct of any
trade or business of the Company, nor have the activities of a
trade or business of the Company ceased or the scale of those
activities become small or negligible within the meaning of any
of Sections 245, 767A or 768 ICTA whether or not arising as a
result of the transfer of assets directly or indirectly by the
Company to the Vendors or to any other company under the
control of the Vendors or to a connected person of any of them,
and no arrangements exist whereby any such major change shall
occur or such activities shall cease or become small or
negligible, whether before or after Completion.
8.17 All capital expenditure incurred or to be incurred by the
Company prior to Completion has qualified and continues to
qualify for capital allowances and full disclosure in the
Disclosure Letter of all allowances made to the Company has
been made to the Purchaser and the book value of each of the
assets of the Company in or adopted for the purposes of the
Accounts does not exceed the written down value of such asset
for the purposes of CAA or where the assets form a pool for
purposes of the CAA does not exceed the pool of qualifying
expenditure.
8.18 The expenditure allowable as a deduction for the purposes of
the computation of any chargeable gain or allowable loss
attributable to any asset of the Company for the purposes of
corporation tax on chargeable gains is not less than the value
of that asset as shown in the Accounts.
8.19 There are set out in the Disclosure Letter full details of any
held over gains within Section 154 TCGA.
8.20 There is no liability to Taxation for which the Company is
liable to be assessed or to account where such Taxation is
primarily chargeable against some other person.
8.21 The Company has made no transfers of value within Section 94 or
Section 99 IHTA.
8.22 There are no circumstances whereby any power of sale, mortgage
or charge under Section 212 IHTA could be exercised in relation
to any shares in, securities of, or assets of, the Company.
8.23 None of the assets owned by or the shares in, the Company is or
is liable to be made the subject of an Inland Revenue charge
under Section 237 IHTA.
8.24 All documents in the possession of the Company or to the
production of which it is entitled and which attract stamp or
transfer duty in the United Kingdom or elsewhere have been
properly stamped.
8.25 The Company has not entered into or been a party to any schemes
or arrangements designed wholly or partly for the purpose of it
or any other person avoiding Taxation.
8.26 The Company:
(a) is registered for the purposes of VATA and has not at any
time been treated as a member or a representative member
of a group of companies for the purposes of VAT and no
application has at any time been made for it to be so
treated;
(b) has not agreed any special method of attributing
accounting or otherwise in relation to VAT with HM
Customs & Excise; or
(c) does not own any capital items which are subject to Part
XV of the Value Added Tax Regulations 1995; or
(d) does not own any land or buildings (including any
interest in or right over any land or buildings) in
respect of which it or a relevant associate of it has
made an election to waive exemption pursuant to paragraph
2 Schedule 10 VATA.
9 Employees, agents and pensions
9.1 The Employees are all the employees of any of the Companies as
at Completion and the names, current weekly wage and other
emoluments, date of birth, the date of commencement of the
respective periods deemed to be their period of continuous
employment with the Companies and job descriptions of the
Employees are as set out in the schedule annexed to this
Agreement and marked 'B'.
9.2 Annexure 'B' also includes full details of all employee share
schemes, employee share option schemes, profit related pay
schemes or other employee benefit schemes of any kind of the
Companies now in force or capable of being in force and there
are no other such schemes.
9.3 There is no liability whatsoever (whether legally binding or
not) to make any payment to or for the benefit of any of the
Employees or the wife or widow or any other relative of any of
the Employees in respect of past service or the termination of
the employment of that or any other person by way of pension
contribution, pension retirement benefit or otherwise and the
Company has no superannuation fund, retirement benefit or other
pension schemes or arrangements to provide benefits to past or
present employees or directors (or their dependants) by reason
of retirement, death, disability or sickness or otherwise.
9.4 No assurances or undertakings (whether legally binding or not)
have been given to any of the Employees as to the continuance
or introduction or increase or improvement of any retirement,
death, sickness or disability scheme.
9.5 There is no outstanding commitment (whether legally binding or
not) to increase the remuneration of any Employee.
9.6 All contracts of service or consultancy or for services with
directors or employees or consultants or independent
contractors providing the services of individual personnel of
the Company can be terminated by three months' notice or less
without giving rise to any claim for damages or compensation
(other than a statutory redundancy payment or statutory
compensation for unfair dismissal, if applicable).
9.7 Except where any provision or allowance is made in the
Accounts:
(a) no liability (actual or contingent) has been incurred in
the 12 months prior to Completion by the Company for
breach of any contract of service or consultancy, for
redundancy payments (including protective awards), for
compensation for wrongful dismissal or unfair dismissal
or loss of office or for failure to comply with any order
for the reinstatement or re-engagement of any officer or
employee; and
(b) no payment has been made or promised by the Company in
connection with the termination, suspension or variation
of any contract of service or consultancy or for services
of any present or former officer or employee.
9.8 The Company has in relation to each of the Employees and its
former employees complied in all material respects with all
material obligations imposed on it by all contracts, statutes,
orders, regulations, collective agreements, awards and codes of
conduct and practice relevant to conditions of service and to
the relations between it and the Employees and former employees
and has in all material respects maintained adequate and
suitable records regarding the service of the Employees and
former employees.
9.9 The Company has not entered into any recognition agreement with
any trades union nor has it done any act which could be
construed as an act of recognition and the Company is not
involved in and there are no present circumstances which are
likely to give rise to any industrial or trade dispute or any
dispute or negotiation regarding a claim of material importance
with any trade union or association of trade unions or
organisation or body of employees.
9.10 In the 12 months prior to Completion, the Company has not given
notice of any redundancies to the Secretary of State for
Employment or started consultations with any trade union or
unions under the provisions of Part IV of the Employment
Protection Act 1975 and the Company has not failed to comply
with any such obligations under Part IV.
10 Litigation
10.1 The Company is not and no person for whose acts and defaults it
may be vicariously liable is at present engaged whether as
plaintiff, defendant or otherwise in any legal action,
proceeding or arbitration which is either in progress, or is
threatened or is pending (other than as plaintiff in the
collection of debts arising in the ordinary course of the
business carried on by it none of which exceeds 1,000 pounds and
which do not exceed 5,000 pounds in aggregate) or is being prosecuted
for any criminal offence and no written notice of any claim in
damages or for an injunction has been received by the Company
and so far as each of the Vendors is aware no governmental or
official investigation or inquiry concerning the Company is in
progress of pending.
10.2 There are no circumstances known to any of the Vendors which
they are aware are likely to lead to any such claim or legal
action, proceeding or arbitration, prosecution, investigation
or enquiry.
10.3 No distress, execution or other process has been levied in
respect of the Company nor is there any judgment or court order
outstanding against the Company.
10.4 No act, transaction or omission has occurred as a result of
which the Companies are or may be held liable to refund in
whole or in part any investment grant (or other grant or loan
received from any governmental department or agency or any
local or other authority by virtue of any statute) or any such
grant or loan for which application has been made by them will
or may not be paid or will or may be reduced.
11 Capital commitments, unusual contracts, guarantees etc.
The Company:
(a) has no capital commitments which individually exceed
5,000 pounds or in aggregate exceed 50,000 pounds;
(b) is not a party to any contract, arrangement or commitment
(whether in respect of capital expenditure or otherwise)
which is of an unusual or abnormal nature or outside the
ordinary course of business;
(c) has not delegated any powers under a power of attorney
(other than as an incidental part of a larger
transaction) which remains in effect and has appointed
any agent under an authority which has not been revoked
and other than any ostensible or implied authorities to
directors or employees and consultants to enter into
routine contracts in the normal course of their duties;
(d) by reason of its default has not become bound, and no
person has become entitled (or with the giving of notice
and/or the issue of a certificate will become entitled)
to require it, to repay prior to its stipulated due date
any loan capital or other debenture, redeemable
preference share capital or borrowed money and no notice
has been received since the Accounts Date of such
liability having arisen for any other reason;
(e) is not a party to any agreement which is or may become
terminable or in respect of which it may be in breach as
a result of the entry into or Completion under this
Agreement;
(f) has not entered into or is bound by any guarantee or
indemnity under which any liability or contingent
liability is outstanding;
(g) is not or was not the original lessee or surety of a
lessee of any leasehold property other than the leasehold
Properties or has at any time acquired, assigned or
otherwise disposed of any other leasehold property in
such a way that it retains any residual liability;
(h) has not entered into any outstanding agreement which
requires or confers any right to require the sale
(whether for cash or otherwise) or transfer by them of
any material asset;
(i) is not party to any joint venture, consortium,
partnership or profit sharing arrangement or agreement;
(j) is not in default under any written agreement or covenant
to which it is a party, nor under any other written
obligation binding on it being a default which would have
a materially adverse affect on the Company and/or its
business; or
(k) has not, nor has agreed to, charge any of its assets or
shares.
12 Borrowings and lendings
12.1 Full details of all limits on the Companies' bank overdraft
facilities are accurately set out in the Disclosure Letter and
the total amount borrowed by each of the Companies from their
respective bankers does not exceed their respective overdraft
facilities and the Companies are not in breach of any of their
facility terms.
12.2 The Company does not have outstanding, nor has agreed to create
or issue, any loan capital, nor has it factored any of its
debts, or engaged in financing of a type which would not
require to be shown or reflected in the Accounts, or borrowed
any money which it has not repaid, except for borrowings not
exceeding the amounts shown in the Accounts.
12.3 Other than in the ordinary course of business, the Company has
not lent any money which has not been repaid, or owns the
benefit of any debt (whether or not due for payment), other
than debts which have arisen in the ordinary course of business
and the Company has not made any loan or quasi-loan contrary to
any legislation.
13 Continuation of facilities
In relation to all debentures, acceptance credits, overdrafts,
loans or other financial facilities outstanding or available to
the Companies or any of them (referred to in this Warranty
Statement as "Facilities"):
(a) none of the Facilities is dependent on the guarantee or
indemnity of, or any security provided by, any party
other than any of the Companies;
(b) none of the Facilities may according to its terms be
terminated or mature prior to their stated maturity as a
result of the acquisition of the Shares (or any of the
Shares) by the Purchaser; and
(c) the Facilities are adequate to allow the Companies to
continue trading after Completion on the same basis as
prior to Completion.
14 The Properties
14.1 The Company has a good and marketable title to and is legal and
beneficial owner of each of the Property briefly described
opposite to its name in Schedule 3. With the exception of the
said Property, the Company does not own, use or occupy any
other land or building whether under a license or otherwise.
14.2 Each of the Properties is free from all leases, tenancies,
options, licenses, mortgages, charges, liens and encumbrances
and any agreement to create any of them.
14.3 All covenants, obligations (including without limitation
statutory obligations, including those under planning and
environmental laws), restrictions and conditions affecting any
of the Properties or the Company as owner or lessee thereof
have been observed and performed and all outgoings (including
rates) have been duly paid and all the Properties are insured
to their full reinstatement value.
14.4 The replies given by the Vendors' Solicitors to enquiries
raised by the Purchaser's Solicitors in relations to the
Properties are true and accurate and not misleading.
14.5 There are no covenants, obligations, restrictions, conditions,
easements or encumbrances or statutory consents or
authorisations which are of an unusual or onerous nature or
which would affect the continued use of any of the Properties
for the purposes of the business which is currently carried on
at the Properties or the value of the Properties.
14.6 There are no compulsory purchase orders or resolutions
affecting any of the Properties or any proposal for such an
order or resolution of which the Vendors are aware.
14.7 All deeds and documents necessary to prove title to the
Properties are in the possession of the Companies and have been
or will be duly stamped and where title to any of the
Properties requires to be registered at HM Land Registry it has
been so registered with full title guarantee.
14.8 There is no actual or contingent liability on the part of the
Company in relation to any real property other than the
Property briefly described opposite its name in Schedule 3
including (without prejudice to the generality of the
foregoing) any actual or contingent liability as previous
lessee or underlesse or guarantor or surety or covenantor in
relation to any lease or underlease.
15 Environmental
15.1 So far as the Vendors are aware prior to the construction of
the buildings presently on the Properties there have never been
any substantial buildings on the Properties.
15.2 So far as the Vendors are aware the Properties have never been
used for any industrial process or the storage of Materials of
Environmental Concern.
15.3 Since its acquisition of the Properties the Company has not
used the Properties or any part thereof for any purpose other
than for offices with storage of computer equipment.
15.4 So far as the Vendors are aware there have never been any
migration or seepage of any Material of Environment Concern
from any adjoining neighbouring or nearby land or building onto
the Properties of any part thereof.
17 Insolvency
17.1 No administrator, administrative receiver, receiver, manager of
assets, liquidator or any other similar officer has ever been
appointed in respect of the whole or any part of the assets or
undertaking of the Company and no order has been made, petition
presented or resolution passed for the purpose of the making of
any order in relation to administration, administrative
receivership, receivership, liquidation, management of assets
or any other similar situation of the Company.
17.2 The Company is not insolvent nor unable to pay its debts as
they fall due (as such expression is defined in either sub-
section (1)(a) to (d) (inclusive) or sub-section (2) of Section
123 of the Insolvency Act 1986).
17.3 No voluntary arrangement (as referred to in the Insolvency Act
1986) or scheme of arrangement as regards its creditors has
been proposed by the Directors or is in operation in relation
to the Company.
17.4 The Company has not entered into any transaction nor been given
a preference to which sections 238, 239 or 423 of the
Insolvency Act 1986 apply or which may otherwise be liable to
be set aside or avoided for any reason.
18 Intellectual Property
18.1 The businesses of the Companies and the processes, data,
material and software employed by any of them and the goods,
services and software supplied by any of them in the United
Kingdom or elsewhere in the world do not infringe, use, involve
the misappropriation of, or embody the subject matter of, or
(except as set out in Part 2 of Schedule 5) require a licence
under any Intellectual Property in which any other person has
rights of any nature; and no claims have been made by any
person which, if pursued, might be in breach of or be otherwise
material to any of the warranties in this or any other part of
this paragraph 18.
18.2 Short particulars of all licences entered into by any of the
Companies in relation to Intellectual Property, and in respect
of which any of the Companies is a or the licensor, are set out
in Part 1 of Schedule 5; and in respect of which any of the
Companies is a or the licensee or otherwise a party, are set
out in Part 2 of Schedule 5.
18.3 No plant or equipment, goods, services, documentation,
software, data or other items used by any of the Companies in
the course of their respective businesses has or have been
supplied under:
(a) any agreement or arrangement which precludes its or their
sale, transfer, assignment, disposal or use by any other
person other than any which may arise by reason of
retention of title or similar clauses in the terms on
which suppliers supply products in the ordinary course of
business; or
(b) any licence or permission that may cease on any change in
the control of any of the Companies or any transfer of
the legal or beneficial interest in any shares in any of
the Companies.
18.4 No Intellectual Property in which any of the Companies has any
interest and which is, or is likely to be, material to the
business of any of the Companies is:
(a) so far as each of the Vendors is aware being infringed,
misappropriated or used without permission by any other
person; or
(b) subject to any licence, estoppel or authority or similar
right in favour of any other person, except as set out in
the agreements listed in Part 1 of Schedule 5.
18.5 All Intellectual Property which is registered in the name of
any of the Companies, or in respect of which any of the
Companies has made application for registration, is:
(a) listed and briefly described in Part 3 of Schedule 5;
(b) legally and beneficially vested in the relevant one of
the Companies; and
(c) so far as the Vendors are aware, valid and enforceable.
18.6 So far as the Vendors are aware (having made no enquiry) no
other person has registered or applied to register in any
country any invention, topography, copyright work, design,
trade or service mark or name, plant variety, trade secret or
know-how made, or claimed to be owned, by any of the Companies.
18.7 The licences, agreements and arrangements listed in Parts 1 and
2 of Schedule 5 (true, current and complete copies of each of
which have been supplied to the Purchaser) have been entered
into in the ordinary course of business, are in full force and
effect and no notice has been given on either side to terminate
any of them and no amendment made or accepted to their terms
since they were first entered into; and so far as each of the
Vendors is aware the obligations of all parties under each of
the same have been fully complied with and no disputes exist or
are anticipated in respect of any of them.
18.8 Other than to the Purchaser and to agents, employees or
professional advisers of the Purchaser and the Vendors, none of
the Companies has knowingly disclosed, or knowingly or
recklessly permitted to be disclosed, or undertaken or arranged
to disclose, to any person any of their know-how, trade
secrets, confidential information or lists of customers or
suppliers.
18.9 No claim has been made, and the Directors are not aware of the
possibility of any claim, for compensation by an employee of
any of the Companies carrying on trade in the UK under Section
40 of the Patents Act 1977 or under any comparable legislation
in any part of the world.
18.10 None of the Companies operates as a computer bureau, as that
term is defined in the Data Protection Act 1984, in the United
Kingdom or elsewhere in the world; and no notice of any kind
has been served on any of the Companies under any provision
under any part of that Act or any analogous legislation in any
part of the world. Insofar as any of the Companies is a "Data
User" under the Act or in an equivalent position under any
analogous legislation in any other country:
(a) all necessary applications for registration have been
duly made; and
(b) the details supplied to the Registrar, or other official
concerned, in relation to each application are accurate
and complete.
19 Competition
The Vendors are not aware (having made no enquiries and having
no knowledge of the detail of relevant competition law
requirements) that the Company has done anything which, or is a
member or party to any agreement or arrangement which,
contravenes or requires registration or notification under any
of the provisions of the Fair Trading Act 1973, the Restrictive
Trade Practices Acts, the Resale Prices Act 1976, the Treaty of
Rome; or the Competition Act 1980 or any other anti-trust, anti-
monopoly or anti-cartel legislation or regulation in any
country of the world in which or with which it does business.
ATTESTATIONS
Signed by the said )
JOHN FREDERICK CAVE ) /s/ John Frederick Cave
in the presence of: )
Signed by the said )
SUSAN JANE CAVE ) /s/ Susan Jane Cave
in the presence of: )
)
Signed by the said )
MICHAEL ARTHUR HOLMAN ) /s/ Michael Arthur Holman
in the presence of: )
Signed for and on behalf of )
DATAWATCH CORPORATION ) /s/ Bruce R. Gardner
in the presence of: ) BRUCE R. GARDNER,
Executive Vice President
