SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
TO
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):
March 1, 1998
PAREXEL International Corporation
(Exact Name of Registrant as Specified in Charter)
Massachusetts 0-27058 04-2776269
(State or Other (Commission (I.R.S. Employer
Jurisdiction File Number) Identification No.)
of Incorporation)
195 West Street, Waltham, Massachusetts 02154
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(781) 487-9900
The undersigned registrant hereby amends and restates
its Current Report on Form 8-K dated as of March 1, 1998
(the "Current Report") by (i) deleting Item 2 in its
entirety and adding the following Item 5 and (ii) amending
Item 7 and the Exhibit Index as set set forth on the
following pages. The amendment reflects a change in the
preliminary assessment of the significance of the
acquisition to the registrant. The Current Report was
prepared and filed based upon a review of the preliminary,
unaudited, annual financial statements for the most recently
completed fiscal year of the acquired company prepared in
accordance with United States generally accepted accounting
principles. The final, audited financial statements of the
acquired company prepared in accordance with United States
generally accepted accounting principles indicate that this
acquisition by the registrant did not meet the threshold for
filing pursuant to Item 2 and the registrant is not required
to provide the financial information required by Item 7(a)
and 7(b).
Item 5. Other Events.
On March 1, 1998, PAREXEL International Corporation
(the "Company") acquired all of the outstanding ordinary
shares of PPS Europe Ltd. ("PPS"), a corporation organized
under the laws of the United Kingdom, in exchange for
2,774,813 newly-issued shares of the Company's Common Stock,
$.01 par value per share, pursuant to a Share Acquisition
Agreement dated March 1, 1998 by and among the Company and
the former shareholders of PPS (the "Acquisition"). As a
result of the Acquisition, PPS has become a wholly-owned
operating subsidiary of the Company. In addition, A. Joseph
Eagle, Chairman and Managing Director of PPS, has been
appointed to the Board of Directors of the Company and named
President of the Company's Contract Marketing Services
Division. Also in connection with the Acquisition, the
Company has assumed outstanding employee options to purchase
ordinary shares of PPS and issued options to purchase up to
134,995 shares of the Company's Common Stock in exchange for
such outstanding options. The options to purchase shares of
the Company's Common Stock were issued under the Company's
1998 Non-Qualified, Non-Officer Stock Option Plan. Two
former shareholders of PPS dissented from the transaction
and received cash in lieu of shares of the Company's Common
Stock in an aggregate amount of $29,952.
The terms of the Acquisition and the consideration
received by the shareholders of PPS in connection therewith
were the result of arm's-length negotiations between the
representatives of the Company and the representatives of
PPS, and took into account various factors concerning the
relative valuations of the businesses and the securities of
the Company and PPS. The terms of the Acquisition are more
fully described in the Acquisition Agreement, a copy of
which is filed as Exhibit 4.5 to this Current Report on Form
8-K.
The Acquisition is not intended to qualify as a
reorganization under Section 368 of the Internal Revenue
Code of 1986, as amended. In addition, the Merger will be
accounted for as a pooling of interests.
Pursuant to the terms of a Registration Rights
Agreement, dated as of February 27, 1998 and effective as of
March 1, 1998, by and among the Company and the former PPS
shareholders listed therein (the "Registration Rights
Agreement"), the former PPS shareholders are entitled to
"shelf" resale registration rights with respect to the
shares of the Company's Common Stock issued in connection
with the Acquisition (the "Shares"). Pursuant to the
Registration Rights Agreement, the Company has agreed to use
all reasonable efforts to (i) cause a registration statement
on Form S-3 (the "Initial Registration Statement") relating
to the resale of forty percent (40%) of the Shares to be
filed no later than the 90th day following Completion (as
defined in the Acquisition Agreement); (ii) cause a
registration statement on Form S-3 (or an amendment to the
Initial Registration Statement) relating to the resale of
thirty percent (30%) of the Shares to be filed not later
than eleven months after Completion (the "Second
Registration Statement"); (iii) cause a registration
statement on Form S-3 (or an amendment to the Initial
Registration Statement or the Second Registration Statement)
relating to the resale of the remaining thirty percent (30%)
of the Shares to be filed not later than twenty-three months
after Completion (the "Third Registration Statement");
(iv) cause the Initial Registration Statement to become
effective as soon as practicable after the filing thereof
and thereafter remain effective until the earlier of (A) one
year after Completion or (B) the sale of all Shares covered
thereby; (v) cause the Second Registration Statement to
become effective as soon as practicable after the filing
thereof and thereafter remain effective until the earlier of
(A) two years after Completion or (B) the sale of all Shares
covered thereby; and (vi) cause the Third Registration
Statement to become effective as soon as practicable after
the filing thereof and thereafter remain effective until the
earlier of (A) three years after Completion or (B) the sale
of all Shares covered thereby. Notwithstanding the
foregoing, in the event that Mr. Eagle (i) ceases to be a
director of the Company within two years following
Completion and prior to the time that the Third Registration
Statement is filed because he is not re-elected by the
Company's stockholders, or (ii) ceases to be an employee of
the Company or one of its subsidiaries prior to the time
that the Third Registration Statement is filed because his
employment is terminated by the Company without "Cause" as
defined in the Acquisition Agreement, then the Company has
agreed to use all reasonable efforts to (A) promptly cause a
registration statement on Form S-3 (or an amendment to the
Initial Registration Statement or the Second Registration
Statement) to be filed relating to the resale of all of the
Shares held by the former PPS shareholders on the date Mr.
Eagle ceases to be a director or employee of the Company,
but not previously registered or sold, and (B) cause such
registration statement to become effective as soon as
practicable after the filing thereof and thereafter remain
effective until the earlier of (1) three years after
Completion or (2) the sale of all Shares covered thereby. A
copy of the Registration Rights Agreement is filed as
Exhibit 4.4 to this Current Report on Form 8-K.
For additional information concerning the Acquisition,
see the Company's press release dated March 2, 1998, a copy
of which has been filed as Exhibit 99.1 to the Company's
Current Report on Form 8-K dated March 2, 1998 and
incorporated herein by reference thereto.
* * * * * * * *
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
Exhibit No. Description
4.1 Specimen certificate representing the Common Stock
(filed as Exhibit 4.1 to Registrant's Registration
Statement on Form S-1 (File No. 33-97406) and
incorporated herein by reference).
4.2 Amended and Restated Articles of Organization
of the Registrant, as amended (filed as Exhibit 3.1
to the Registrant's Quarterly Report on Form 10-Q
for the Quarter Ended December 31, 1996 and
incorporated herein by reference).
4.3 Amended and Restated By-laws of the Registrant
(filed as Exhibit 3.2 to the Registrant's
Registration Statement on Form S-1 (File No. 333-
1188) and incorporated herein by reference).
4.4 Registration Rights Agreement dated as of February
27, 1998, by and among PAREXEL International
Corporation and the former shareholders of PPS
Europe Ltd.
4.5 Share Acquisition Agreement dated as of March 1,
1998, by and among PAREXEL International Corporation
and the former shareholders of PPS Europe Ltd.
SIGNATURES
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 hereunto duly
authorized.
PAREXEL International
Corporation
Dated: May 15, 1998 By:/s/William T. Sobo, Jr.
William T. Sobo, Jr.,
Senior Vice President,
Chief Financial Officer,
Treasurer and Clerk
Exhibit Index
Exhibit No. Description
4.1 Specimen certificate representing the Common Stock
(filed as Exhibit 4.1 to Registrant's Registration
Statement on Form S-1 (File No. 33-97406) and
incorporated herein by reference).
4.2 Amended and Restated Articles of Organization
of the Registrant, as amended (filed as Exhibit 3.1
to the Registrant's Quarterly Report on Form 10-Q
for the Quarter Ended December 31, 1996 and
incorporated herein by reference).
4.3 Amended and Restated By-laws of the Registrant
(filed as Exhibit 3.2 to the Registrant's
Registration Statement on Form S-1 (File No. 333-
1188) and incorporated herein by reference).
4.4 Registration Rights Agreement dated as of February
27, 1998, by and among PAREXEL International
Corporation and the former shareholders of PPS
Europe Ltd.
4.5 Share Acquisition Agreement dated as of March 1,
1998, by and among PAREXEL International Corporation
and the former shareholders of PPS Europe Ltd.
Exhibit 4.4
REGISTRATION RIGHTS AGREEMENT
AGREEMENT dated as of February 27, 1998 among PAREXEL
International Corporation, a Massachusetts corporation (the
"Company") and the stockholders listed on Schedule A hereto
(individually, a "Stockholder," and collectively, the
"Stockholders").
W I T N E S S E T H :
WHEREAS, pursuant to the Share Acquisition Agreement dated
as of March 1, 1998 (the "Acquisition Agreement") among the
Company, A. Joseph Eagle, Gregory S. Caswill and the other
parties named therein, the Company will acquire all of the
outstanding capital stock of PPS Europe Limited ("PPS") and PPS
will become a wholly-owned subsidiary of the Company;
WHEREAS, in connection therewith, the Stockholders will
receive shares of Common Stock of the Company (the "Shares") that
are being issued pursuant to an exemption from registration under
the Securities Act; and
WHEREAS, the Company and the Stockholders wish to set forth
certain rights and obligations with regard to the registration of
the Shares pursuant to the Securities Act;
NOW, THEREFORE, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the United States Securities
and Exchange Commission, or any other federal agency at the
time administering the Securities Act.
"Shares" shall mean the shares of Common Stock of the
Company issued to the Stockholders on even date herewith
pursuant to the Acquisition Agreement.
"Common Stock" shall mean the common stock, $.01 par
value, of the Company, as constituted as of the date of this
Agreement.
"Exchange Act" shall mean the United States Securities
Exchange Act of 1934, as amended, or any successor federal
statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Registration Expenses" shall mean the expenses so
described in Section 9.
"Securities Act" shall mean the United States
Securities Act of 1933, as amended, or any successor federal
statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean the expenses so described
in Section 8.
2. Securities Act Matters. The Stockholders acknowledge
and agree that the Shares have not been registered under the
Securities Act or under the securities laws of any state, in
reliance upon certain exemptive provisions of such statutes. The
Stockholders recognize and acknowledge that such claims of
exemption are based, in part, upon the Stockholders'
representations contained in the Acquisition Agreement and in
each Stockholder's New Owner Questionnaire. The Stockholders
further recognize and acknowledge that, because the issuance of
the Shares was not registered under federal and state laws, the
Shares are not presently eligible for public resale, and may only
be resold in the future pursuant to an effective registration
statement under the Securities Act and any applicable state
securities laws, or pursuant to a valid exemption from such
registration requirements. The Stockholders recognize and
acknowledge that Rule 144 (which facilitates routine sales of
securities in accordance with the terms and conditions of that
Rule, including a holding period requirement) is not now
available for resale of the Shares, and the Stockholders
recognize and acknowledge that, in the absence of the
availability of Rule 144, a sale pursuant to a claim of exemption
from registration under the Securities Act would require
compliance with some other exemption under the Securities Act,
which may not be available for resale of the Shares. The
Stockholders recognize and acknowledge that, except as set forth
in this Agreement, the Company is under no obligation to register
the Shares, either pursuant to the Securities Act or the
securities laws of any state.
3. Restrictive Legend. Each certificate representing
Shares shall, except as otherwise provided in this Section 3 or
in Section 4, be stamped or otherwise imprinted with a legend
substantially in the following form:
"The Securities represented hereby have not been
registered under the Securities Act of 1933, as
amended, and may not be sold, transferred or otherwise
disposed of unless registered with the Securities and
Exchange Commission of the United States and the
securities regulatory authorities of certain states or
unless an exemption from such registration is
available."
Such certificates shall not bear such legend if in the
opinion of counsel satisfactory to the Company (Breslow & Walker,
LLP shall be considered satisfactory) the securities represented
thereby may be publicly sold without registration under the
Securities Act or if such securities have been sold pursuant to
Rule 144, any other exemption under the Securities Act or an
effective registration statement.
4. Notice of Proposed Transfer. Prior to any proposed
transfer of any Shares before the expiration of the applicable
holding period set forth in Rule 144, each Stockholder shall give
written notice to the Company of his intention to effect such
transfer. Prior to any registration statement described in
Section 5 becoming effective, each such notice shall describe the
manner of the proposed transfer and, if requested by the Company,
shall be accompanied by an opinion of counsel satisfactory to the
Company to the effect that the proposed transfer may be effected
without registration under the Securities Act, whereupon the
Stockholder shall be entitled to transfer such security in
accordance with the terms of his notice. Each certificate for
Shares transferred as above provided shall bear the legend set
forth in Section 3, except that such certificate shall not bear
such legend if (i) such transfer is in accordance with the
provisions of Rule 144 (or any other rule permitting public sale
without registration under the Securities Act), or (ii) such
transfer is pursuant to a registration under the Securities Act,
or (iii) the opinion of counsel referred to above is to the
further effect that the transferee and any subsequent transferee
(other than an affiliate of the Company) would be entitled to
transfer such securities in a public sale without registration
under the Securities Act.
5. Required Registration. The Company agrees to use all
reasonable efforts to (i) cause a registration statement on Form
S-3 (the "Initial Registration Statement") or any successor form
thereto under the Securities Act relating to the resale of forty
percent (40%) of the Shares to be filed no later than the 90th
day following Completion (as defined in the Acquisition
Agreement); (ii) cause a registration statement on Form S-3 or
any successor form thereto under the Securities Act (or an
amendment to the Initial Registration Statement) relating to the
resale of thirty percent (30%) of the Shares to be filed not
later than eleven months after Completion (the "Second
Registration Statement"); (iii) cause a registration statement on
Form S-3 or any successor form thereto under the Securities Act
(or an amendment to the Initial Registration Statement or the
Second Registration Statement) relating to the resale of the
remaining thirty percent (30%) of the Shares to be filed not
later than twenty-three months after Completion (the "Third
Registration Statement"); (iv) cause the Initial Registration
Statement to become effective as soon as practicable after the
filing thereof and thereafter remain effective until the earlier
of (A) one year after Completion or (B) the sale of all Shares
covered thereby; (v) cause the Second Registration Statement to
become effective as soon as practicable after the filing thereof
and thereafter remain effective until the earlier of (A) two
years after Completion or (B) the sale of all Shares covered
thereby; and (vi) cause the Third Registration Statement to
become effective as soon as practicable after the filing thereof
and thereafter remain effective until the earlier of (A) three
years after Completion or (B) the sale of all Shares covered
thereby. In the event that any Shares registered pursuant to the
Initial Registration Statement or the Second Registration
Statement, respectively, remain unsold at the time the Second
Registration Statement or the Third Registration Statement,
respectively, is filed, then the Company agrees to use all
reasonable efforts to, at its sole option, (i) include such
unsold shares in the Second Registration Statement or the Third
Registration Statement, as applicable, or (ii) cause the Initial
Registration Statement or the Second Registration Statement, as
applicable, to remain effective until the earlier of (A) two
years (for the Initial Registration Statement) or three years
(for the Second Registration Statement), as applicable, after
Completion or (B) the sale of all Shares covered thereby.
Notwithstanding the foregoing, in the event that A. Joseph Eagle
(i) ceases to be a director of the Company within two years
following Completion and prior to the time that the Third
Registration Statement is filed because he is not re-elected by
the Company's stockholders, or (ii) ceases to be an employee of
the Company or one of its subsidiaries prior to the time that the
Third Registration Statement is filed because his employment is
terminated by the Company or such subsidiary without Cause, then
the Company shall use all reasonable efforts to (A) promptly
cause a registration statement on Form S-3 or any successor form
thereto under the Securities Act (or an amendment to the Initial
Registration Statement or the Second Registration Statement) to
be filed relating to the resale of all of the Shares held by the
Stockholders on the date Mr. Eagle ceases to be a director or
employee of the Company, but not previously registered or sold,
and (B) cause such Registration Statement to become effective as
soon as practicable after the filing thereof and thereafter
remain effective until the earlier of (1) three years after
Completion or (2) the sale of all Shares covered thereby. For
the purposes of this Section 5, "Cause" shall mean (i) the
substantial and continuing failure to render services to the
Company in accordance with assigned duties, such failure having
continued for a period of twenty days after written notice
thereof has been delivered to Mr. Eagle, (ii) the conviction or
plea of guilty of a felony, (iii) gross negligence related to the
performance of duties, (iv) material dishonesty, (v) material
breach of fiduciary duty, (vi) material breach of the terms of
this Agreement, the Acquisition Agreement, or Mr. Eagle's
Employment Agreement with the Company or one of its subsidiaries,
such breach having continued for a period of twenty days after
written notice thereof has been delivered to Mr. Eagle, or
(vii) the commission of an act of fraud or embezzlement which
results in loss, damage or injury to the Company or one of its
subsidiaries, whether directly or indirectly. Anything to the
contrary herein notwithstanding, the Company shall not be
required to take any action to cause any registration statement
to be declared effective by the Commission at any time prior to
the publication by the Company of financial results including at
least thirty (30) days' post-Completion combined operating
results of the Company and PPS (the "Pooling Restricted Period"),
and the Company may suspend sales in accordance with Section 7 at
any time under any registration statement immediately upon
written notice to the Stockholders at their last known address,
for any of the reasons and for the time periods set forth in
Section 7.
6. Registration Procedures. If and whenever the Company
is required by the provisions of Section 5 to use all reasonable
efforts to effect the registration of any Shares under the
Securities Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission such
amendments and supplements to the applicable registration
statement, and the prospectus used in connection therewith, as
may be necessary to comply with the Securities Act;
(b) furnish to the Stockholders such number of copies
of the relevant registration statement and each amendment and
supplement thereto (in each case including exhibits) and the
prospectus included therein (including each preliminary
prospectus) as they reasonably may request in order to facilitate
the public sale or other disposition of the Shares covered by
such registration statement;
(c) register or qualify the Shares covered by the
applicable registration statement under the securities or "blue
sky" laws of the jurisdictions where the Company is currently
registered or qualified or its common stock is currently
registered or qualified for resale and provide each Stockholder
with a list of such jurisdictions, provided, however, that the
Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(d) have the Shares covered by the applicable
registration statement quoted or traded on the Nasdaq National
Market or any other quotation system or exchange where the
Company's Common Stock is then quoted or traded; and
(e) promptly notify each Stockholder (at his last
known address) (i) of the effective date of the applicable
registration statement and the date when any post-effective
amendment to such registration statement becomes effective, (ii)
of any stop order or notification from the Commission or any
other jurisdiction as to the suspension of the effectiveness of
such registration statement, or (iii) of the institution and
ending of any suspension under Section 7.
7. Suspension.
(a) The rights of the Stockholders to resell the
Shares pursuant to this Agreement and the applicable registration
statement may be suspended by the Company on the occurrence of
any of the following events:
(i) the Board of Directors of the Company has
voted to conduct a public offering or the Company is holding
or has held an "organizational" or "all hands" meeting
relating to a public offering, whichever first occurs;
(ii) the Company is about to make a public
disclosure of information of a material nature;
(iii) there then exists material, non-public
information relating to the Company the disclosure of which,
in the good faith determination of its Board of Directors,
would not be in the interests of the Company or its
stockholders during that time and which the Company is not
otherwise, after consultation with counsel, obligated to
disclose; or
(iv) the Company is engaged in any activity or
transaction at any time that, in the good faith
determination of its Board of Directors, would be materially
adversely affected by the continued compliance with this
Agreement or the continued distribution of the Shares by the
Stockholders.
(b) The Company shall use all reasonable efforts to
minimize the length of any suspension:
(i) under Section 7(a)(i), to a period of thirty
(30) days, more or less, beginning on the day that notice of
a suspension is given to the Stockholders and ending on the
earlier of: (A) the date of disclosure of the public
offering, or (B) the date which is 30 days after the
beginning of the suspension, provided that during such
suspension, the Company will proceed with all reasonable
efforts to file the appropriate documentation in respect of,
and otherwise complete, such public offering as
expeditiously as practicable;
(ii) under Section 7(a)(ii), to a period of three
(3) business days, more or less;
(iii) under Section 7(a)(iii) or 7(a)(iv), if
the activity is a prospective acquisition by the Company, to
a period beginning when the notice of suspension is given to
the Stockholders and ending on the earlier of: (A) the
closing of the transaction and the making of all required
filings under the Securities Act or Exchange Act, or (B) the
date on which discussions regarding the acquisition are
terminated, or (C) the disclosure of the acquisition,
unless, despite such disclosure, the continued distribution
of the Shares by the Stockholders pursuant to the applicable
registration statement would violate the Securities Act; and
(iv) under Section 7(a)(iii) or 7(a)(iv), for any
reason other than a prospective acquisition by the Company,
to a period beginning when the notice of suspension is given
to the Stockholders and ending on the earlier of: (A) the
disclosure of the activity, or (B) the reason is no longer
operative.
(c) The period during which any registration statement
filed pursuant to Section 5 remains effective shall be extended
by any period during which resales of Shares pursuant to such
registration statement are suspended pursuant to this Section 7.
8. Expenses. All expenses incurred by the Company in
complying with Section 5, including, without limitation, all
registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for
the Company, fees and expenses incurred in connection with
complying with state securities or "blue sky" laws, fees of the
National Association of Securities Dealers, Inc., transfer taxes,
fees of transfer agents and registrars, and costs of issuance,
but excluding any Selling Expenses, are called "Registration
Expenses". All underwriting discounts (if any) and selling
commissions applicable to the sale of the Shares covered by any
registration statement, as well as all professional service fees
incurred by the Stockholders, are called "Selling Expenses".
All Selling Expenses shall be borne by the Stockholders.
The Company will pay all Registration Expenses in connection with
the preparation and filing of each registration statement. The
Company shall not be obligated to pay any Registration Expenses
in connection with the preparation and filing of any registration
statement if such registration statement is withdrawn or
abandoned for any reason at the request of the Stockholders. The
Company shall not be obligated to pay any reasonably verifiable
increase in Registration Expenses in connection with the
preparation and filing of any registration statement if such
registration statement is delayed for any reason at the request
of the Stockholders.
9. Indemnification and Contribution.
(a) In connection with the registration of the Shares
under the Securities Act pursuant to Section 5, the Company will
indemnify and hold harmless each Stockholder, each underwriter of
such Shares thereunder and each other person, if any, who
controls such Stockholder or underwriter within the meaning of
the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such Stockholder,
underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities laws or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of material
fact contained in the registration statement under which such
Shares were registered under the Securities Act pursuant to
Section 5, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto,
(ii) the omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein
not misleading or (iii) any violation by the Company or its
agents of any rule or regulation promulgated under the Securities
Act, Exchange Act or state securities laws applicable to the
Company or its agents and relating to action or inaction required
of the Company in connection with such registration, and the
Company will reimburse each such Stockholder, each such
underwriter and each such controlling person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action, as such expenses are incurred, provided,
however, that the Company will not be liable in any such case if
and to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made based
upon written information furnished by or for any such
Stockholder, any such underwriter or any such controlling person
specifically for use in the applicable registration statement.
(b) In connection with the registration of the Shares
under the Securities Act pursuant to Section 5, each Stockholder
will indemnify and hold harmless the Company, each person, if
any, who controls the Company within the meaning of the
Securities Act, each officer of the Company who signs such
registration statement, each director of the Company, each
underwriter and each person who controls any underwriter within
the meaning of the Securities Act, against all losses, claims,
damages or liabilities, joint or several, to which the Company or
such officer, director, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) the failure
of such Stockholder to comply with the provisions of Section 12
herein or (ii) any untrue statement or alleged untrue statement
of any material fact contained in the registration statement, any
preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or (iii) the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and each such officer,
director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action, as such expenses are incurred, provided,
however, that such Stockholder will be liable hereunder in any
such case if and only to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with written
information pertaining to such Stockholder, furnished by or for
such Stockholder specifically for use in the applicable
registration statement.
(c) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the
indemnifying party in writing thereof, but the omission so to
notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than
under this Section 9 and shall only relieve it from any liability
which it may have to such indemnified party under this Section 9
if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to
assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from
the indemnifying party to such indemnified party of its election
so to assume and undertake the defense thereof and the approval
by the indemnified party of the counsel chosen by the
indemnifying party, the indemnifying party shall not be liable to
such indemnified party under this Section 9 for any legal
expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs
of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and
if the interests of the indemnified party reasonably may be
deemed to conflict with the interests of the indemnifying party,
the indemnified party shall have the right to select one separate
counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as
incurred. No indemnifying party will consent to entry of
judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all
liability with respect to such claim or litigation.
(d) In order to provide for just and equitable
contribution to joint liability in any case in which either (i) a
Stockholder exercises rights under this Agreement and makes a
claim for indemnification pursuant to this Section 9 but it is
judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time
to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding
the fact that this Section 9 provides for indemnification in such
case, or (ii) contribution under the Securities Act may be
required on the part of the Stockholder in circumstances for
which indemnification is provided under this Section 9; then, and
in each such case, the Company and the Stockholders will
contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from
others) in proportion to the relative fault of the Company, on
the one hand, and the Stockholders, on the other hand; provided,
however, that, in any such case, no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 10(f)
of the Securities Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent
misrepresentation.
(e) The indemnities provided in this Section 9 shall
survive the transfer of any Shares by a Stockholder.
10. Reports Under Securities Exchange Act of 1934. With a
view to making available to each of the Stockholders the benefits
of Rule 144 promulgated under the Securities Act and any other
rule or regulation thereunder that may at any time permit any
such Stockholder to sell securities of the Company to the public
without registration, the Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in Rule 144;
(b) maintain registration of its Common Stock under
Section 12 of the Exchange Act;
(c) file in a timely manner all reports and other
documents required of the Company under the Securities Act and
the Exchange Act; and
(d) furnish to any such Stockholder, so long as the
Stockholder owns any Shares, forthwith upon request: (i) a
written statement by the Company that it has complied with the
reporting requirements of Rule 144, (ii) a copy of the most
recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company; and (iii) such
other information as may be reasonably requested in availing the
Stockholder of any rule or regulation under the Securities Act
which permits the selling of any such securities without
registration or pursuant to such form.
11. Changes in Common Stock. If, and as often as, there is
any change in the Common Stock by way of a stock split, stock
dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any
other means, appropriate adjustment shall be made in the
provisions hereof so that the rights and privileges granted
hereby shall continue with respect to the Shares as so changed.
12. Stockholder's Conduct. With respect to any sale of
Shares covered by a registration statement, each Stockholder
understands and agrees as follows:
(a) Each Stockholder will carefully review the
information concerning him contained in any registration
statement and will promptly notify the Company if such
information is not complete and accurate in all material
respects, including having properly disclosed any position,
office or other material relationship within the past three years
with the Company or its affiliates;
(b) Each Stockholder agrees to sell Shares only in the
manner set forth in (i) the applicable registration statement (or
in compliance with Section 4 hereof), (ii) the Affiliate
Agreement (as defined in the Acquisition Agreement) (if the
Stockholder is a party thereto) and (iii) Section 13;
(c) Each Stockholder agrees to comply with the anti-
manipulation rules under the Exchange Act in connection with
purchases and sales of securities of the Company during the time
any registration statement remains effective;
(d) Each Stockholder agrees to only sell Shares in a
jurisdiction after counsel for the Company has advised that such
sale is permissible under the applicable state securities or
"Blue Sky" laws;
(e) Each Stockholder agrees to comply with the
prospectus delivery requirements of the Securities Act;
(f) Each Stockholder agrees to notify the Company of
any and all planned sales and completed sales of Shares in
accordance with the terms of this Agreement; and
(g) Each Stockholder agrees to suspend sales during
the periods when sales are to be suspended pursuant to Section 7.
(h) In connection with the registration of the Shares,
each Stockholder will furnish to the Company in writing such
information requested by the Company with respect to himself and
the proposed distribution by him as shall be necessary in order
to comply with federal and applicable state securities laws.
(i) Each Stockholder hereby agrees that he will not
sell, exchange, transfer, pledge, dispose or otherwise reduce his
risk relative to any Shares owned by him during the period which
begins on the date hereof and ends at such time as the Company
publicly announces financial results covering at least thirty
days of combined operations of the Company and PPS. The Company,
at its discretion, may cause stop transfer orders to be placed
with its transfer agent with respect to the certificates
representing the Shares, provided that such stop transfer orders
are consistent with the other provisions of this Agreement.
13. Selling Procedures.
(a) Each Stockholder will notify the Company of his
intention to sell Shares under any registration statement not
less than five (5) nor more than fifteen (15) business days prior
to the expected date of such sale by faxing the "Takedown
Request" attached hereto as Exhibit A to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
High Street Tower
Boston, Massachusetts 02110
Attn: William J. Schnoor, Jr.
Phone: (617) 248-7278
Facsimile: (617) 248-7100
During this period, the Company will review the prospectus to
determine if a suspension pursuant to Section 7 is necessary or
appropriate. If the Company does not notify the Stockholder of a
suspension pursuant to Section 7, the Stockholder may conclude
the proposed sale, on the proposed date of sale, in accordance
with the Takedown Request.
(b) Each Stockholder will notify the Company of each
sale under any registration statement in accordance with the
Takedown Request within 24 hours of the sale by faxing the
"Notification of Sale" attached hereto as Exhibit B to:
Testa, Hurwitz & Thibeault, LLP
125 High Street
High Street Tower
Boston, Massachusetts 02110
Attn: William J. Schnoor, Jr.
Phone: (617) 248-7278
Facsimile: (617) 248-7100
Based on the information set forth on the Notification of Sale,
the Company will prepare or cause to be prepared the appropriate
notifications to its Transfer Agent to remove the legend
described in Section 3 from the Shares so sold.
14. Miscellaneous.
(a) All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective successors and assigns
of the parties hereto (including without limitation transferees
of any Shares, provided, that such transferee executes a
counterpart signature page to this Agreement), whether so
expressed or not.
(b) All notices and other communications which by any
provision of this Agreement are required or permitted to be given
shall be given in writing and shall be (i) mailed by first-class
or express mail, postage prepaid, (ii) sent by telex, telegram,
telecopy or other form of rapid transmission, confirmed by
mailing (by first class or express mail, postage prepaid) written
confirmation at substantially the same time as such rapid
transmission, or (iii) personally delivered to the receiving
party (which if other than an individual shall be an officer or
other responsible party of the receiving party). All such
notices and communications shall be mailed, sent or delivered as
follows:
if to the Company, to:
PAREXEL International Corporation
195 West Street
Waltham, MA 02154
Attn: William T. Sobo, Jr.
Senior Vice President and Chief
Financial Officer
Telecopy: (781) 487-9931
with a copy to:
William J. Schnoor, Jr.
Testa, Hurwitz & Thibeault, LLP
125 High Street
High Street Tower
Boston, MA 02110
Telecopy: (617) 248-7100
if to the Stockholders, to their addresses as set
forth on Schedule A hereto;
with a copy to:
Joel Walker
Breslow & Walker
767 3rd Avenue
New York, NY 10017
Telecopy: (212) 888-4955
if to any subsequent holder of Shares, to it at such
address as may have been furnished to the Company in
writing by such Stockholder;
or, in any case, at such other address or addresses as shall have
been furnished in writing to the Company (in the case of a
Stockholder) or to the Stockholders (in the case of the Company)
in accordance with the provisions of this paragraph. Notices
shall be deemed duly delivered five business days after being
sent by first class mail, postage prepaid, or two business days
after being sent via a reputable nationwide express mail service.
Notices delivered via any other means shall be deemed duly
delivered upon actual receipt by the individual for whom such
notice is intended. Any notice delivered to a party hereunder
shall be sent simultaneously, by the same means, to such party's
counsel as set forth above.
(c) This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
(d) This Agreement may be amended or modified, and
provisions hereof may be waived, with the written consent of the
Company and the holders of at least a majority of the outstanding
Shares.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(f) If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render illegal,
invalid or unenforceable any other provision of this Agreement,
and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
(g) This Agreement shall become effective upon
Completion.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
THE COMPANY:
PAREXEL International Corporation
By:/s/Barry R. Philpott
Name Barry Raymond Philpott
Title:Chief Administrative Officer
STOCKHOLDERS:
/s/Gregory Spencer Caswill
/s/Brian Harry Bulley
/s/Terence George Brightmore
/s/Paul Desmond Fitzgerald
Thomson Clive Investments Plc
/s/Charles Fitzherbert
/s/Susan Thompson
HSBC Trustee (Jersey) Limited Re:
TCA INT
/s/Martin Hibbs
/s/ Grace Le Rossignol
Clarendon Trust Company Ltd.
/s/Trevor Le Sueur
/s/Nina Elliott
Royal Bank of Scotland
/s/Andrew Martin
/s/Susan Barnes
[Each Stockholder must complete page 15 of this Agreement]
Stockholder Name:______________________________
Principal Residence Address:
Note: Non-principal residence addresses and post office boxes
cannot be accepted.
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
_______________________________________________
(Residence Telephone)
Mailing Address (if different from above):
_______________________________________________
(Number and Street)
_______________________________________________
(City, State) (Zip Code)
Citizenship:_____________________________________
Social Security or Taxpayer I.D. No.:_________________
Schedule A
to Registration Rights Agreement
Stockholder Address Phone Number Fax Number
Name
Exhibit A
to Registration Rights Agreement
TAKEDOWN REQUEST
The undersigned Stockholder intends to offer and sell to the
public Shares of PAREXEL International Corporation registered
under a certain Registration Statement on Form S-3, File No. 333-
_______.
Name, Address,
Telephone Number
Name, Address, and Facsimile Number Number Proposed
Telephone Number Number of Agent, of of Date
and Facsimile Broker-Dealer or Shares Shares of
Number of Underwriter Owned to be Sale*
Stockholder Sold
* MUST BE AT LEAST FIVE (5) AND NOT MORE THAN FIFTEEN (15)
BUSINESS DAYS AFTER THE DATE HEREOF.
Other Information:
The undersigned Stockholder agrees to provide all reasonably
necessary information and reasonably necessary materials and to
take all reasonably necessary actions as may be required in order
for PAREXEL International Corporation to comply with all
applicable securities laws.
Signature of Stockholder
Print Name
Date
ALL TAKEDOWN REQUESTS SHOULD BE FORWARDED BY FACSIMILE TO:
TESTA, HURWITZ & THIBEAULT, LLP
125 HIGH STREET
HIGH STREET TOWER
BOSTON, MASSACHUSETTS 02110
ATTN: WILLIAM J. SCHNOOR, JR.
PHONE: (617) 248-7278
FACSIMILE: (617) 248-7100
AT LEAST FIVE (5) AND NOT MORE THAN FIFTEEN (15) BUSINESS DAYS
PRIOR TO A PROPOSED SALE
Exhibit B
to Registration Rights Agreement
NOTIFICATION OF SALE
The undersigned Stockholder sold to the public Shares of
PAREXEL International Corporation registered under a certain
Registration Statement on Form S-3, File No. 333-_______, as
follows.
Name, Address,
Telephone Number
Name, Address, and Facsimile Number Number
Telephone Number Number of Agent, of of Date
and Facsimile Broker-Dealer or Shares Shares of Sale
Number of Underwriter Owned Sold
Stockholder
Other Information:
Signature of Stockholder
Print Name
Date
ALL NOTIFICATIONS OF SALE SHOULD BE FORWARDED BY FACSIMILE TO:
TESTA, HURWITZ & THIBEAULT, LLP
125 HIGH STREET
HIGH STREET TOWER
BOSTON, MASSACHUSETTS 02110
ATTN: WILLIAM J. SCHNOOR, JR.
PHONE: (617) 248-7278
FACSIMILE: (617) 248-7100
WITHIN 24 HOURS FOLLOWING A SALE
ADOF_1.DOC
EXHIBIT 4.5
DATED 1998
SHARE ACQUISITION AGREEMENT
A. JOSEPH EAGLE, GREGORY S. CASWILL AND OTHERS (1)
PAREXEL INTERNATIONAL CORPORATION (2)
190 STRAND, LONDON WC2R 1JN
TEL: 0171 379 0000 FAX: 0171 379 6854
Ref: RWE/0622405.01
CONTENTS
No Heading Page
1. DEFINITIONS 1
2. THE SHARES 13
3. REPAYMENT BY VENDORS AND THE COMPANY 13
4. COMPLETION 13
5. VENDORS WARRANTIES 16
6. PURCHASERS WARRANTIES 18
7. TAX INDEMNITIES 19
8. COMPLIANCE WITH US LAW 19
9. RESTRICTIVE COVENANTS 22
10. PENSION SCHEME 23
11. GENERAL PROVISIONS 23
12. ANNOUNCEMENTS 24
13. COSTS 25
14. NOTICES 25
15. GOVERNING LAW AND JURISDICTION 25
THE FIRST SCHEDULE: PARTICULARS OF THE VENDORS 26
THE SECOND SCHEDULE: BASIC INFORMATION CONCERNING THE COMPANY
28
THE THIRD SCHEDULE: PARTICULARS OF SUBSIDIARIES 30
THE FOURTH SCHEDULE: PROPERTY 31
THE FIFTH SCHEDULE: PROVISIONS AFFECTING THE PENSION SCHEME32
THE SIXTH SCHEDULE: VENDOR'S WARRANTIES 33
THE SEVENTH SCHEDULE: PURCHASER'S WARRANTIES 73
THE EIGHTH SCHEDULE: TAX INDEMNITIES 77
THE NINTH SCHEDULE : LIMITS ON CLAIMS UNDER VENDOR'S
WARRANTIES 85
THE TENTH SCHEDULE: LIMITS ON CLAIMS UNDER PURCHASER'S
WARRANTIES 88
THE ELEVENTH SCHEDULE: HOLDBACK 90
THIS AGREEMENT is made the day of
1998
BETWEEN:
(1) THE SEVERAL PERSONS whose names and addresses are set
out in Column (1) of the First Schedule hereto ("the
Vendors") and
(2) PAREXEL INTERNATIONAL CORPORATION (whose principal
place of business is at 195 West Street, Waltham,
Massachusetts 02154, USA ("the Purchaser")
WHEREAS
(A) PPS Europe Limited ("the Company") has an authorised
and issued share capital particulars whereof together
with other details are set out in the Second Schedule
hereto.
(B) The Vendors are the beneficial owners of or are
otherwise able to procure the transfer of the numbers
of shares of the Company specified in Column (2) of the
First Schedule hereto opposite their respective names
such numbers of shares together comprising all the
issued and allotted shares of the Company.
(C) The Vendors are desirous of selling and the Purchaser
is willing to acquire the Shares (as hereinafter
defined) on the terms and subject to the conditions
hereinafter contained.
(D) Particulars of the companies which at the date hereof
are subsidiaries of the Company are set out in the
Third Schedule.
NOW IT IS HEREBY AGREED as follows:-
1. DEFINITIONS
1.1 In this Agreement and the Schedules hereto the
following expressions shall unless the context
otherwise requires have the meanings following:-
"the Accounts" the audited balance sheet as at
the 30 November 1996 and audited
profit and loss account for the
year ended on the 30 November
1996 of each of the Company and
the Subsidiaries including in
the case of the Company the
audited consolidated balance
sheet as at such date and the
audited consolidated profit and
loss account for such period and
in each case the directors
report and notes in relation
thereto;
US GAAP Accounts the audited and consolidated
balance sheets of the Company
and the subsidiaries as of
November 30, 1997 and 1996 and
the related consolidated
statement of earnings,
shareholders equity and cash
flows for the years November
30th 1997, 1996 and 1995;
"Accounts Reliefs" means any Reliefs where the
availability of the Reliefs has
been shown as an asset in the
Accounts or has been taken into
account in computing (and so
reducing) any provision for
deferred taxation which appears
in the US GAAP Accounts or has
resulted in no provision for
deferred taxation being shown in
the US GAAP Accounts;
"Accredited Investor" a bank (as defined in Section
3(a)(2) of the Securities Act of
1933, as amended (the 'Act')) or
a savings and loan association
or other institution (as defined
in Section 3(a)(5)(A) of the
Act), whether acting in regard
to this investment in its
individual or a fiduciary
capacity;
a broker or dealer registered
pursuant to Section 15 of the
United States Securities
Exchange Act of 1934, as
amended;
an insurance company (as defined
in Section 2(13) of the Act);
an investment company registered
under the United States
Investment Company Act of 1940,
as amended;
a business development company
(as defined in Section 2(a)(48)
of the Investment Company Act of
1940, as amended;
a Small Business Development
Company licensed by the United
States Small Business
Administration under Section
301(c) or (d) of the United
States Small Business Investment
Act of 1958, as amended;
a plan established and
maintained by a United States
state, its political
subdivision, or any agency or
instrumentality of a United
States state or its political
subdivisions, for the benefit of
its employees, if the plan has
total assets in excess of
$5,000,000;
an employee benefit plan (an
"ERISA Plan") within the meaning
of Title 1 of the United States
Employee Retirement Income
Security Act of 1974, as amended
("ERISA") whose decision to
purchase the interest in the
Purchaser was made by a plan
fiduciary (as defined in Section
3(21) of ERISA), which is either
a bank, savings and loan
association, insurance company
or registered investment
adviser;
an ERISA Plan with total assets
in excess of $5,000,000 or, if a
self-directed ERISA Plan, with
investment decisions made solely
by persons that are "accredited
investors";
a private business development
company (as defined in Section
202(a)(22) of the United States
Investment Advisors Act of 1940,
as amended);
an organisation described in
Section 501(c)(3) of the United
States Internal Revenue Code of
1986, as amended, corporation,
Massachusetts or similar
business trust, or partnership,
not formed for the specific
purpose of holding the Shares of
the Company or acquiring the
Consideration Shares, with total
assets in excess of $5,000,000;
a natural person whose net worth
(either individually or jointly
with such person's spouse) at
the time of Completion exceeds
$1,000,000;
a natural person who had an
individual income in excess of
$200,000 or joint income with
such person's spouse in excess
of $300,000 in each of the last
two calendar years and who
reasonably expects to reach the
same income level in the current
calendar year;
a trust, with total assets in
excess of $5,000,000, not formed
for the specific purpose of
holding the Shares of the
Company or acquiring the
Consideration Shares, whose
purchase of the Consideration
Shares is directed by a
sophisticated person as
described in Rule 506(b)(2)(ii)
under the Act;
an entity in which all of the
equity owners fit into at least
one of the categories listed
above;
"Associate" any person or company who is a
connected person as that
expression is defined by Section
839 of the ICTA;
"the Balance Sheet Date" 30 November 1997;
"Business day" a day on which banks shall be
open in London for the conduct
of general banking business
(excluding Saturdays);
"Tax Claim" in the Eighth Schedule hereto
shall mean any claim,
assessment, notice, demand
letter or other document issued
or action taken by or on behalf
of any Taxation Authority
whereby it appears that any
member of the Group or the
Purchaser is to be or is sought
to be made subject to a
Liability to Taxation;
"the Consideration Shares" 2,774,813 Common Stock of
US$0.01 each of the Purchaser
(ranking pari passu with the
Common Stock of the Purchaser in
issue at Completion and credited
as fully paid);
"the Companies Acts" the Companies Acts 1985 and
1989, the Insolvency Act 1986,
the Business Names Act 1985, the
Criminal Justice Act 1993 and
every statutory modification or
re-enactment thereof for the
time being in force;
"Completion" completion of the obligations of
the parties hereunder in
accordance with the provisions
of Clause 4 hereof;
"the Vendors' the letter of even date herewith
Disclosure from the Vendors to the
Letter" Purchaser a copy of which is
annexed hereto;
"Encumbrance" includes any interest or equity
of any person (including,
without prejudice to the
generality of the foregoing, any
right to acquire, option or
right of pre-emption), or any
mortgage, charge, pledge, lien,
assignment, hypothecation,
security interest, title
retention or any other security
agreement or arrangement;
"Event" includes (without limitation)
any act omission, transaction or
shortfall in distributions
whether or not a member of the
Group is a party thereto and
includes Completion;
"Group" the Company together with the
Subsidiaries;
"Independent Accountant" means such person who
shall be nominated by either
party upon agreement or failing
agreement by the President for
the time being of the Institute
of Chartered Accountants;
"Industrial Property Rights" patents, trade marks,
registered designs, pending
applications for any of the
foregoing, trade or business
names and copyright and design
rights;
"Liability to Taxation"a liability to make an actual
payment of Taxation whether or
not such Taxation is also or
alternatively chargeable against
or attributable to any other
person and whether or not any
member of the Group shall or may
have any right of recovery or
reimbursement against any other
person;
"Management Accounts" the management accounts of the
Company dated February 1998 and
identified as 'version 6.0';
"Nasdaq" National Association of
Securities Dealers, Inc.
Automated Quotation System;
"New Reliefs" any Reliefs which arise to the
Company or any of the
Subsidiaries:
(a) as a result of any Event
occurring after the Balance
Sheet Date; or
(b) in respect of any period
commencing on or after the
Balance Sheet Date;
"the Property" the property or properties short
particulars whereof are set out
in the Fourth Schedule hereto
and includes any part or parts
thereof together with any
property used by any member of
the Group and a place of
business in any Relevant
Country;
"the Purchaser's Solicitors" Lawrence Graham;
"Purchaser's Warranties" those representations and
warranties made to the Vendors
contained or referred to in
Clause 6 and the Seventh
Schedule hereto;
"Registration Rights agreement in the approved terms
Agreement" between certain of the parties
hereto to be entered into at
Completion attached as appendix
hereto;
"Relevant Country" means any country in which any
member of the Group has a place
of business, including, but not
limited to the United Kingdom,
the United States of America ,
Germany and France;
"Reliefs" in the Eighth Schedule hereto
means all amounts available to
reduce either profits or
Taxation and includes (without
limitations) all losses
allowances exemptions set-offs
deductions credits and
repayments;
"SEC" the United States Securities and
Exchange Commission;
"the Service Agreements" the existing agreements
(as amended) between the Company
and Joseph Eagle, the Company
and Gregory S. Caswill, the
Company and Paul Fitzgerald and
the Company and Brian Bulley to
be entered into at Completion
attached as appendix B hereto;
"the Shares" the shares of the Company
specified in Column (2) of the
First Schedule hereto;
"the Supplemental the agreement in the approved
Agreement" terms between the Purchaser and
Joseph Eagle to be entered into
at Completion attached as
appendix 'A' hereto;
"Taxation" means:-
(a) any charge, tax,
duty, levy or liability
imposed by national or
local government or any
other person pursuant to
any statute or statutory
provision or equivalent
legislation in any country
including orders,
regulations, instruments,
bye-laws or other
subordinate legislation
made under the relevant
statute or statutory
provision or equivalent
legislation in any country
and includes (without
limitation) corporation
tax, advance corporation
tax, income tax, capital
gains tax, development land
tax, value added tax,
customs and other import
duties, national insurance
contributions, stamp duty,
capital duty, stamp duty
reserve tax, estate duty,
capital transfer tax,
inheritance tax and any
amount which any member of
the Group is liable to
account for by way of
deduction or withholding,
amounts equivalent to the
foregoing and any payment
whatsoever chargeable in
any country which any
member of the Group may be
or become bound to make to
any person as a result of
the operation of any
enactment relating to
Taxation;
(b) any capital transfer
tax or inheritance tax
which:-
(i) is at the date
hereof a charge over
any of the shares of
any member of the
Group; or
(ii) at the date
hereof gives rise to a
power of sale over the
shares of any member
of the Group; or
(iii) after the date
hereof becomes a
charge on or gives
rise to a power of
sale over any of the
shares of any member
of the Group being a
liability in respect
of additional capital
transfer tax or
inheritance tax
payable on the death
of any person within
three years or seven
years after a transfer
of value or gift and
in deciding whether a
charge on or power of
sale over any of the
shares exists at any
time the fact that any
capital transfer tax
or inheritance tax is
not yet payable or may
be paid by instalments
shall be disregarded
and such tax shall be
treated as becoming
due and a charge or
power of sale as
arising on the date of
the transfer of value
or capital
distribution in
respect of which it
becomes payable or
arises and the
provisions of IHTA
S213 shall not apply
thereto;
(c) any Taxation
assessed on the Vendors
under ICTA S776 which is
recoverable from the
Purchaser and/or any member
of the Group pursuant to
the provisions of S777(8)
of that Act to the extent
the Vendors make a claim
for recovery from the
Purchaser and/or any member
of the Group;
(d) subject to paragraph
5 of Schedule 8 any
penalties fines costs
charges interest or damages
payable in connection with
any Taxation;
(e) subject to paragraph
5 of Schedule 8 any payment
made or liability incurred
in connection with any
reasonable settlement of
any Tax Claim;
(f) all costs and
expenses reasonably
incurred by any member of
the Group or the Purchaser
in connection with any Tax
Claim to which the Tax
Indemnities relate;
"Taxation Authority" any national or local
government, authority or body
whatsoever whether of a Relevant
Country or elsewhere empowered
to impose collect or administer
Taxation;
"Tax Indemnities" the indemnities provided by
Clause 7 and the Eighth Schedule
hereto;
"Taxation Statute" any statute, enactment, law,
regulation or practice enacted
or issued or coming into force
providing for or imposing any
Taxation;
"Vendor Representative"means any person who satisfies
all of the following conditions
(a) is not an affiliate,
director, officer or other
employee of the Purchaser
or beneficial owner of 10%
or more of any class of the
equity securities or 10% or
more of the equity interest
of the Purchaser'
(b) has such knowledge
and experience in financial
and business matters that
he is capable of
evaluating, alone or
together with other Vendor
Representatives of the
Vendor, or together with
the Vendor, the merits and
risks of the prospective
investment in Purchaser;
(c) is acknowledged by
the Vendor in writing,
during the course of the
transaction, to be his
Vendor Representative in
connection with evaluating
the merits and risks of the
prospective investment in
the Purchaser; and
(d) discloses to the
Vendor in writing a
reasonable time prior to
the sale of securities of
the Purchaser to that
Vendor any material
relationship between
himself or his affiliates
and the Purchaser that then
exists, that is mutually
understood to be
contemplated, or that has
existed at any time during
the previous two years, and
any compensation received
or to be received as a
result of such
relationship.
"the Vendors' Solicitors" Thomas Eggar Verrall
Bowles;
"Vendors Warranties" those representations and
warranties made to the Purchaser
contained or referred to in
Clauses 5 and 8 and the Sixth
Schedule hereto;
"ICTA" the Income and Corporation Taxes
Act 1988;
"CAA" the Capital Allowances Act 1990;
"IHTA" the Inheritance Tax Act 1984;
"FA" Finance Act;
"TCGA" the Taxation of Chargeable Gains
Act 1992;
"VATA" the Value Added Tax Act 1994;
"TMA" the Taxes Management Act 1970.
1.2 References to the consequences of acts or transactions
effected prior to Completion shall include the combined
effect of two or more acts or transactions the first of
which shall have taken place or be deemed to have taken
place on or before the date of Completion. Reference
to the result of Events on or before Completion shall
include the combined result of two or more Events the
first of which shall have taken place or is deemed to
have taken place on or before Completion.
1.3 The expression "the Vendors" includes their respective
personal representatives.
1.4 Any document expressed to be "in the approved terms"
means in a form approved and for the purpose of
identification signed by or on behalf of the parties
hereto.
1.5 Where any Warranty or matter disclosed in the
Disclosure Letter refers to the knowledge information
awareness or belief of a Vendor, each of the Vendors
shall be deemed to have made all reasonable enquiries
into the subject matter of that Warranty or Disclosure.
1.6 The expression "Subsidiary" shall mean any subsidiary
(as defined by Section 736 of the Companies Act 1985
(as amended by the Companies Act 1989)) for the time
being of the Company having its principal place of
business in the UK or otherwise.
1.7 The expression "the Company" where used in clauses 3,
4, 5 and 7 and in the Sixth and Eighth Schedules to
this Agreement shall mean each of the Company and each
of its Subsidiaries.
1.8 References to Clauses, Sub-clauses and Schedules are
references to Clauses and Sub-clauses of this Agreement
and Schedules to this Agreement.
1.9 In this Agreement and the Schedules hereto the
masculine gender shall include the feminine and neuter,
the singular number shall include the plural and vice
versa, and references to persons shall include bodies
corporate, unincorporated associations and
partnerships.
1.10 In this Agreement words and phrases the definition of
which is contained or referred to in Part XXVI of the
Companies Act 1985 shall be construed as defined
therein.
1.11 References in this Agreement to any statute or
statutory provision shall include (except where the
context otherwise requires) any statute or statutory
provision which amends extends consolidates or replaces
the same and any statute or statutory provision which
has been amended, extended, consolidated or replaced by
the same and shall include any order, regulation,
instrument or other subordinate legislation made under
the relevant statute or statutory provision except
where and to the extent that any liability of the
Vendors under this Agreement would be created or
extended as a result of any amendment, extension,
consolidation or replacement of any statute or
statutory provision in force at Completion.
1.12 The headings in this Agreement are inserted for
convenience only and shall not affect the construction
hereof.
1.13 Reference to income or profits or gains earned accrued
or received shall include income or profits or gains
deemed to have been or treated as or regarded as earned
accrued or received for the purposes of any Taxation
Statute.
2. THE SHARES
2.1 The Vendors shall sell and the Purchaser shall acquire
with effect from Completion the Shares free from any
Encumbrance and together with all accrued benefits and
rights for the consideration described in sub-clause
2.2 below ("the Consideration").
2.2 The Consideration shall be satisfied by the allotment
and issue (subject to sub-clause 2.3 below) to the
Vendors of the Consideration Shares in the amounts set
against each of their names in column 3 of the First
Schedule.
2.3 A proportion of the Consideration Shares amounting in
aggregate to 10% of the total Consideration Shares
shall not be delivered to the Vendors on Completion but
shall be withheld by the Purchaser on the terms and
conditions set out in the Eleventh Schedule.
3. REPAYMENT BY VENDORS AND THE COMPANY
3.1 The Vendors will prior to or simultaneously with
Completion repay to the Company any sums due by the
Vendors, any Associate of the Vendors or any of them
(or by any person to whom they or any of them are or is
a trustee or personal representative) to the Company at
Completion and shall at Completion procure that neither
they nor any such person as aforesaid has any claim or
right of action against the Company (other than in
respect of current remuneration as directors or
executives) and that the Company is not in any way
obliged or indebted (other than as aforesaid) to them
or any such person and at Completion the Vendors will
confirm in writing to the Purchaser that they have so
procured.
3.2 The Vendors and/or the Company will prior to or
simultaneously with Completion repay all outstanding
debt (whether accrued due or not) other than amounts
due to trade creditors in the ordinary course of
business.
4. COMPLETION
4.1 Completion shall take place on March 1, 1998 at the
offices of the Purchaser's Solicitors or such other
offices as the parties may subsequently agree when:-
4.1.1 the Vendors shall deliver or cause to be
delivered to the Purchaser:-
(a) duly executed transfers together with the
relative share certificates in respect of
the Shares;
(b) the certificate of incorporation, all
certificates on change of name, the seal and
statutory books of the Company made up to
the date of Completion;
(c) such Title Deeds to the Property as are
available;
(d) if the Purchaser so requires an effective
waiver by each of the members of the Company
of any rights which he may have under the
Articles of Association of the Company to
have the Shares or any of them offered to
him for purchase and any other documents
necessary to substantiate the right of the
transferors of the Shares pursuant to this
Agreement to transfer the same;
(e) written confirmation pursuant to Clause 3;
and
(f) written resignation letters executed under
seal by such of the directors and
secretaries of the Company and the
Subsidiaries as the Purchaser may nominate
(if any), each such letter incorporating an
acknowledgement that the party resigning has
no claims (whether for compensation for loss
of office or termination of employment,
unpaid remuneration or otherwise howsoever)
against the Company or any of the
Subsidiaries;
(g) written resignation letter of Grant Thornton
as auditor together with a statement in
accordance with s.394 Companies Act 1985
confirming that there are no circumstances
which he considers should be brought to the
attention of the members or creditors of the
Company;
(h) signed opinions from Price Waterhouse and
Grant Thornton that transaction qualifies
for pooling of interests accounting
treatment;
(i) signed release from Lana Lisanti;
(j) signed opinion from Grant Thornton in
relation to the Accounts and US GAAP
Accounts.
(k) signed opinion from Testa, Hurwitz and
Thibeault that the Consideration Shares are
validly issued, fully paid and not
assessable.
4.1.2 the Vendors shall procure that the Directors
shall hold a meeting of the Board of the Company
at which
(a) the Directors shall appoint such persons as
the Purchaser may nominate as directors of
the Company and procure the resignation
without compensation of any nature
whatsoever of such of the Directors and
Secretary of the Company as the Purchaser
may nominate;
(b) the Directors shall vote in favour of the
registration of the Purchaser or its
nominees as members of the Company subject
to the production of duly stamped and
completed transfers;
(c) there shall be presented the written
resignation of the auditors which shall
contain a statement that there are no
circumstances connected with such
resignation which they consider should be
brought to the attention of the shareholders
or creditors of the Company and a statement
of the amount of their outstanding fees and
costs;
(d) Messrs Price Waterhouse shall be appointed
Auditors to the Company;
(e) the Directors shall approve the Service
Agreements;
4.1.3 the Vendors shall procure that the Company will
and the other persons and parties thereto shall
enter into the Service Agreements;
4.1.4 Subject to the performance by the Vendors of
their obligations in accordance with the
foregoing provisions of this Clause 4 and
subject to the provisions of Clause 2.3,
(a) the Purchaser shall allot to each of
the Vendors the number of Consideration
Shares to which he is entitled hereunder and
deliver the relative documents of title; and
(b) The Purchaser will enter into the
Supplemental Agreement with A. Joseph Eagle.
4.1.5 each of the parties will enter into the
Registration Rights Agreement.
4.2 If in any respect the provisions of sub-clauses 4.1.1,
4.1.2, 4.1.3 and 4.1.4 are not complied with on the
date for Completion set by clause 4.1 the Purchaser
may:-
4.2.1 defer Completion to a date not more than 28 days
after the date set out above (and so that the
provisions of this sub-clause shall apply to
Completion as so deferred); or
4.2.2 proceed to Completion so far as practicable
(without prejudice to its rights hereunder); or
4.2.3 rescind this Agreement.
4.3 If in any respect the provisions of sub-clause 4.1.4
are not complied with on the date for Completion set by
Clause 4.1, the Vendors may:-
4.2.1 defer Completion to a date not more than 28 days
after the date set out above (and so that the
provisions of this sub-clause shall apply to
Completion as so deferred); or
4.2.2 proceed to Completion so far as practicable
(without prejudice to its rights hereunder); or
4.2.3 rescind this Agreement.
5. VENDORS WARRANTIES
5.1 The Vendors hereby warrant and represent to the
Purchaser in the terms of the Vendors Warranties.
5.2 In particular and without prejudice to the generality
of sub-clause 5.1 the Vendors hereby warrant and
represent to the Purchaser that the recitals to this
Agreement and the Vendors Warranties are at the date
hereof true and accurate in all respects.
5.3 The Vendors Warranties shall apply (mutatis mutandis)
to the Company and to the Subsidiaries and any
references in the Sixth Schedule, the Eighth Schedule
or elsewhere in this Agreement to any statutory
provision, regulation or accounting principles applying
in England and Wales shall be deemed to include
references to any equivalent provision, regulation or
accounting principles in any Relevant Country and any
references to any governmental or administrative
authority or agency shall include references to any
equivalent governmental or administrative authority or
agency in any Relevant Country.
5.4 The Purchaser shall not be entitled to claim that any
fact renders any of the Vendors Warranties untrue or
misleading or caused them to be breached if it has been
fairly and accurately disclosed in all material
respects to the Purchaser in the Vendors' Disclosure
Letter.
5.5 The Vendors hereby covenant and undertake to the
Purchaser that, if after the date hereof it shall be
found that any matter the subject of a Vendors Warranty
was not as warranted then, notwithstanding any further
right of the Purchaser hereunder in respect of such
breach of Vendors Warranty, if the effect thereof is
that:-
5.5.1 the value of any asset belonging to the Company
is less than its value would have been had there
been no breach of Vendors Warranty; or
5.5.2 any asset represented as belonging to the
Company does not so belong; or
5.5.3 the Company has incurred or is under any
liability or contingent liability which it would
not have incurred or been under had there been
no breach of Vendors Warranty;
then the Vendors shall on demand account to the
Purchaser pursuant to the provisions of the Eleventh
Schedule for an amount equal to the amount by which the
value of the net assets of the Company are less than
they would have been had there been no such breach of
Vendors Warranty and any such settlement made by the
Vendors shall be taken into account in assessing the
damages of the Purchaser in connection with, arising
out of or resulting from any such breach of Vendors
Warranty.
5.6 No claim by the Purchaser under the provisions of this
Clause 5 shall be prejudiced nor shall the amount of
any such claim be reduced in consequence of any
information relating to the Company which may at any
time have come to the knowledge of the Purchaser or any
of its advisers (other than information contained in
the Vendor's Disclosure Letter and any annexure
thereto) and it shall not be a defence to any claim
against the Vendors that the Purchaser knew or ought to
have known or had constructive knowledge of any
information (other than information contained or
supplied as aforesaid) relating to the circumstances
giving rise to such claim.
5.7 The Vendors Warranties are separate and independent and
save as expressly provided in this Agreement or in the
Disclosure Letter shall not be limited by reference to
any other paragraph or anything in this Agreement and
such Vendors Warranties shall remain in full force and
effect notwithstanding Completion.
5.8 The Vendors undertake to indemnify the Purchaser
against any reasonable costs (including legal costs on
a solicitor and own client basis) and expenses which
the Purchaser may reasonably incur either before or
after the commencement of any action in connection
with:
5.8.1 the settlement of any claim brought on
reasonable grounds that any of the Vendors
Warranties are untrue or misleading or have been
breached;
5.8.2 any legal proceedings in which the Purchaser
claims that any of the Vendors Warranties are
untrue or misleading or have been breached and
in which judgment is given for the Purchaser; or
5.8.3 the enforcement of any such settlement or
judgment.
5.9 The Vendors undertake (in the event of any claim being
made against any of them in connection with the sale of
the Shares to the Purchaser) not to make any claim
against the Company, or a director or an employee of
the Company (other than a Vendor), on whom any of them
may have relied before agreeing to any term of this
Agreement or authorising any statement in the
Disclosure Letter but so that this shall not preclude
any Vendor from claiming against any other Vendor under
any right of contribution or indemnity to which he may
be entitled, and each Vendor hereby agrees to consent
to the grant of injunctive relief to restrain a breach
of the undertaking contained in this sub-paragraph if
requested by the Purchaser so to do.
6. PURCHASERS WARRANTIES
6.1 The Vendors have entered into this Agreement on the
faith of the Purchaser's Warranties.
6.2 In particular and without prejudice to the generality
of sub-clause 6.1 the Purchaser hereby warrants and
represents to the Vendors that the Purchaser's
Warranties are at the date hereof and will at
Completion be true and accurate in all respects.
6.3 The Vendors shall not be entitled to claim that any
fact renders any of the Purchaser's Warranties untrue
or misleading or caused them to be breached if it has
been fairly and accurately disclosed in all material
respects to the Purchaser in the Purchasers Disclosure
Letter.
6.4 The Purchaser's Warranties are separate and independent
and save as expressly provided in this Agreement or in
the Purchasers Disclosure Letter shall not be limited
by reference to any other paragraph or anything in this
Agreement and such Purchaser's Warranties shall remain
in full force and effect notwithstanding Completion.
6.5 The Purchaser undertakes to indemnify the Vendors
against any reasonable costs (including legal costs on
a solicitor and own client basis) and expenses which
the Vendors may reasonably incur either before or after
the commencement of any action in connection with:
6.5.1 the settlement of any claim brought on
reasonable grounds that any of the Purchaser's
Warranties are untrue or misleading or have been
breached;
6.5.2 any legal proceedings in which the Vendors claim
that any of the Purchaser's Warranties are
untrue or misleading or have been breached and
in which judgment is given for the Vendors; or
6.5.3 the enforcement of any such settlement or
judgment.
6.6 The Purchaser undertakes to announce promptly in
accordance with past practice results of its operations
covering the period January 1, 1998 through March 31,
1998.
7. TAX INDEMNITIES
The Vendors hereby indemnify the Purchaser in the terms
of the Eighth Schedule hereto.
8. COMPLIANCE WITH US LAW
Each Vendor severally:
8.1 warrants and represents to the Purchaser that the
Vendor:-
8.1.1 is acquiring the Consideration Shares for his
own account and not on behalf of any other
person, and the Vendor is acquiring the
Consideration Shares for investment purposes and
not with a view towards distribution and has no
present arrangement to sell the Consideration
Shares;
8.1.2 is not an officer or director of any affiliate
of the Purchaser or any of its affiliates;
8.1.3 was not organised for the specific purpose of
holding or acquiring the Consideration Shares
(if the Vendor is a corporation, trust,
partnership or other organisation).
8.1.4 is an Accredited Investor or had, immediately
prior to receipt of any information regarding
the Purchaser, such knowledge and experience
(alone or with such Vendor's Vendor
Representative, if any) in financial and
business matters as to be able to evaluate the
merits and risks of an investment in the
Purchaser.
8.1.5 is able now, and was able prior to receipt of
any information regarding the Purchaser, to bear
the economic risks of an investment in the
Company and the Purchaser.
8.2 acknowledges and agrees that the Consideration Shares
have not been registered under United States Securities
Act of 1933, as amended ("the Act"), and may not be
offered or sold unless the Consideration Shares are
registered under the Act or an exemption from the
registration requirements of the Act is available;
8.3 acknowledges that the Consideration Shares are being
offered and sold to him in reliance on specific
exemptions from the registration requirements of the
United States Federal and State securities laws and
that the Purchaser is relying upon the truth and
accuracy of the representations, warranties,
agreements, acknowledgements and understandings of the
Vendor set forth herein in order to determine the
applicability of such exemptions and the suitability of
Vendor to acquire the Consideration Shares;
8.4 acknowledges that it is his responsibility to satisfy
himself as to the full observance by this transaction
and the sale of the Consideration Shares to him of the
laws of any jurisdiction outside the United States and
that he has done so;
8.5 acknowledges that in view of the United States
Securities and Exchange Commission, the statutory basis
for the exemption claimed for the transactions would
not be present if the offer and sale of the
Consideration Shares to the Vendor is part of a plan or
scheme to evade the registration provisions of the Act
and the Vendor confirms that this transaction is not
part of any such plan or scheme;
8.6 has received and carefully reviewed (and/or the
Vendor's Vendor Representative, if any, as received and
carefully reviewed) the PPS Transaction Summary,
Prospectus dated January 27, 1998, Annual Report on
Form 10-K for the fiscal year ended June 30, 1997,
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997 and December 31, 1997, Current
Reports on Form 8-K dated October 23, 1997 and January
27, 1998, 1997 Annual Report to Stockholders; and Proxy
Statement dated October 8, 1997 and the Vendor and
Vendor's Vendor Representative, if any have had a
reasonable opportunity to ask questions of and receive
answers from the Purchaser concerning the Purchaser,
and to obtain any additional information reasonably
necessary to verify the accuracy of the information
furnished to the Vendor concerning the Purchaser and
all such questions, if any, have been answered to the
full satisfaction of the Vendor.
8.7 acknowledges that no representations or warranties have
been made to him by the Purchaser or any agent,
employee or affiliate of the Purchaser other than those
contained in Clause 6 and the Seventh Schedule and in
entering into this transaction the Vendor is not
relying upon any information, other than that contained
in this Agreement or specifically referred to in Clause
8.6, and the results of independent investigations by
the Vendor;
8.8 has not sold, exchanged, transferred, pledged, disposed
or otherwise reduced his risk relative to the
Consideration Shares during the 30 day period preceding
the date hereof;
8.9 acknowledges and agrees that this transaction is
intended to be accounted for as a pooling of interests
for financial accounting purposes, and in that regard
the Vendor hereby agrees with the Purchaser that the
Vendor will not sell, exchange, transfer, pledge,
dispose or otherwise reduce his risk in relation to the
Consideration Shares during the period which begins on
the date hereof and ends at such time as the Purchaser
publicly announces financial results covering at least
thirty days of post-Completion combined operations of
the Purchaser and the Company (the "Pooling Lock-up
Period") and the Purchaser at its discretion, may cause
stop transfer orders to be placed with its transfer
agent with respect to the Consideration Shares during
the Pooling Lock-up Period;
8.10 acknowledges and agrees that all offers and sales of
the Consideration Shares shall only be made in
compliance with (i) the Pooling Lock-up Period and (ii)
the Purchaser's insider trading and black out period
policies, as from time to time in effect and (iii)
pursuant to an effective registration statement under
the Act or pursuant to an exemption from registration
under the Act.
9. RESTRICTIVE COVENANTS
9.1 For the purpose of assuring to the Purchaser the full
benefit of the businesses and goodwill of the Company
each of A. Joseph Eagle, Gregory S Caswill, B Bulley,
and P Fitzgerald hereby undertakes by way of further
consideration for the obligations of the Purchaser
under this agreement as separate and independent
agreements that:-
9.1.1 he will not at any time after Completion
disclose to any person or himself use for any
purpose and shall use his reasonable endeavours
to prevent the publication or disclosure of, any
information concerning the confidential
business, accounts or finances of the Company or
the Subsidiaries or any of its clients or
customers transactions or affairs, which may, or
may have, come to his knowledge;
9.1.2 for a period of 2 years after Completion (save
in relation to A. Joseph Eagle for whom a 3 year
period will apply) he will not except as
hereinafter mentioned either on his own account
or in conjunction with or on behalf of any
person firm or company carry on or be engaged
concerned or interested in any trade or business
conducted in or from the United States of
America and any country within the European
Union which is similar to or competitive with
any trade or business carried on by the Company
and/or the Subsidiaries within the period of two
years prior to the date of Completion;
9.1.3 for a period of 2 years after Completion he will
not (save with the prior written consent of the
Purchaser) either on his own account or in
conjunction with or on behalf of any other
person firm or company directly or indirectly:
(a) solicit or entice away from the Company or
employ any officer manager or servant
whether or not such person would commit a
breach of his contract of employment by
reason of leaving the service of the
Company; nor
(b) solicit or accept the custom of any person
firm or corporation which during the two
years prior to the date of Completion shall
have been a customer of the Company.
Provided that nothing in this sub-clause shall preclude
or inhibit any person named in Clause 9.1 above from
carrying out his duties pursuant to a service agreement
or contract of employment between himself and the
Company.
9.2 The restrictions contained in sub-clause 9.1 are
considered reasonable by the parties but in the event
that any such restriction shall be found to be void but
would be valid if some part thereof were deleted or the
period or area of application reduced such restriction
shall apply with such modification as may be necessary
to make it valid and effective.
10. PENSION SCHEME
The provisions set out in the Fifth Schedule shall
apply.
11. GENERAL PROVISIONS
11.1 The Vendors shall (and shall procure that any other
necessary party shall) execute and do all such
documents acts and things as may be reasonably required
by the Purchaser for securing to or vesting in the
Purchaser the legal and beneficial ownership of the
Shares forthwith upon Completion in accordance with the
terms and conditions of this Agreement.
11.2 The Purchaser shall (and shall procure that any other
necessary party shall) execute and do all such
documents acts and things as may be reasonably required
by the Vendors for securing to or vesting in the
Vendors the legal and beneficial ownership of the
Consideration Shares (subject to Clause 2.3) forthwith
upon Completion in accordance with the terms and
conditions of this Agreement.
11.3 This Agreement shall not be assignable by any party
hereto without the prior written consent of the others
save by the Purchaser to any affiliate of the Purchaser
to which the Shares shall be transferred but
notwithstanding any such transfer the Purchaser shall
remain bound by the obligations contained in this
Agreement
11.4 If the benefit of this Agreement is assigned, the
liability of the Vendors shall be no greater than it
would have been if the Purchaser had remained the
owners of the Shares and had retained the benefit of
the Vendors Warranties.
11.5 The obligations of the Vendors are several and such
obligations and undertakings shall be enforceable
accordingly.
11.6 This Agreement (together with any document annexed
hereto and signed by or on behalf of the parties
hereto) constitutes the whole Agreement between the
parties hereto and no variations hereof shall be
effective unless made in writing.
11.7 The provisions of this Agreement in so far as the same
shall not have been performed at Completion shall
remain in full force and effect.
11.8 Any right of rescission conferred upon either party
hereby shall be in addition to and without prejudice to
all other rights and remedies available to it and no
exercise or failure to exercise such a right of
rescission shall constitute a waiver by that party of
any such other right or remedy.
11.9 The Purchaser may release or compromise the liability
of any of the Vendors hereunder or grant to any Vendor
time or other indulgence without affecting the
liability of any other Vendor hereunder.
11.10 None of the provisions of this Agreement which are
relevant restrictions as that term is defined by the
Restrictive Trade Practices Act 1976 shall come into
effect until the day following the day on which full
particulars of this Agreement have been furnished to
the Office of Fair Trading in accordance with the said
Act.
11.11 Any party executing this Agreement in its capacity as
trustee hereby warrants and represents to the Purchaser
that its performance of this Agreement will not
constitute a breach if any terms of the trust deed
under which he/it is appointed and that he/it is fully
empowered to perform (or procure the performance of)
each and every obligation imposed hereunder.
12. ANNOUNCEMENTS
No party to this Agreement shall make any statement or
announcement in connection with this transaction except
with the prior approval of the other party save as may
be required by law or save to the extent necessary to
comply with the requirements of the SEC or Nasdaq. A
party to this Agreement who makes a statement or
announcement necessary to comply with the requirements
of the SEC or Nasdaq shall use its reasonable
endeavours to consult with the other parties before
making that statement or announcement.
13. COSTS
The Purchaser shall pay its own costs of and incidental
to this Agreement and the sale and purchase hereby
agreed to be made and contribute one half of such costs
incurred by the Vendors such contribution to be limited
to US$100,000.
14. NOTICES
Any notice required to be given by any party hereto to
any other shall be in writing and may be served
personally or by post or by facsimile and if served by
post shall be served by prepaid registered letter sent
through the post (airmail if overseas) to the address
of the party to be served as shown in this Agreement or
such other address as may from time to time be notified
for this purpose and any notice so served shall be
deemed to have been served 48 hours after the time on
which it is posted or 96 hours after the time on which
it was posted in the case of airmail post and in
proving such service it shall be sufficient to prove
that the notice was properly addressed and posted and
that before the notice is sent by post a copy shall be
sent by facsimile to the Vendor's Solicitors for the
attention of Mr AJ Edwards. If served by facsimile,
notice shall be deemed to have been served upon
transmission of the communication to the relevant
facsimile number and production by the sending
facsimile machine of a transmission report showing that
the facsimile message has been properly received by the
facsimile number to which it was transmitted.
15. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by English law and the
parties hereby submit to the non-exclusive jurisdiction
of the English Courts.
AS WITNESS whereof this Agreement has been entered into the
day and year first above written.
THE FIRST SCHEDULE
PARTICULARS OF THE VENDORS, THEIR SHAREHOLDINGS
IN THE COMPANY AND THE CONSIDERATION
(1) (2) (3)
Names and Addresses No. of Consideration
Ordinary Shares
Shares
Clarendon Trust Company 3,474,843 1,928,408
Limited,
Portland House,
32 Hue Street,
Jersey,
HE1 4HH
Gregory Spenser Caswill 309,225 171,608
The Music Rooms,
Tanbridge Park,
Horsham,
West Sussex
RH12 1SU
Brian Harry Bulley 309,224 171,608
10 Kiln Lane,
Lindfield, Haywards Heath,
West Sussex
RH16 2SZ
Paul Desmond Fitzgerald 309,224 171,608
5 Dark Pond Trail
Wilton
CT06897
USA
HSBC Trustee (Jersey) 248,952 138,159
Limited
(re. TC Int)
1 Grenville Street,
St Helier
Jersey
Thompson Clive Investments 199,161 110,527
PLC
24 Old Bond Street
London
W1X 4JD
The Royal Bank of Scotland 149,371 82,895
Trust Company (Jersey)
Limited
71 Bath Street
St Helier
Jersey
THE SECOND SCHEDULE
BASIC INFORMATION CONCERNING THE COMPANY
A. The Company
1. Registered Number : 1488517
2. Date of incorporation : 31 March 1980
3. Address of registered : Wicker House, High Street,
office Worthing, West Sussex, BN11 1DJ
4. Authorised share : 500 pounds sterling
capital
5. Issued and fully paid : 5,000,000 Ordinary shares of
share capital 0.001908 pence each
6. Directors:
Full Names Addresses
Gregory Spenser The Music Rooms, Tanbridge
Caswill Park, Horsham, West Sussex RH12
1SU
Anthony Joseph Eagle 33 Park Crescent, Brighton,
East Sussex BN2 3HB
Brian Harry Bulley 10 Kiln Lane, Lindfield,
Haywards Heath, West Sussex
RH16 2SZ
Paul Desmond 5 Dark Pond Trail, Wilton,
Fitzgerald CT06897, USA
Richard Henry 24 Old Bond Street, London W1X
Thompson 4JD
John Vernon Burke 48 Linksway, Northwood,
Middlesex HA6 2XB
Terence George Portman House, 70 Stanford
Brightmore Avenue, Brighton BN1 6FD
7. Secretary:
Full Name
Gregory Spenser
Caswill
THE THIRD SCHEDULE
PARTICULARS OF SUBSIDIARIES
Name Date and Place Issued Held by Benefici
of Incorporation Share ally
and Registered Capital owned by
Number
Pharos 25.01.96 under 100 PPS Europe same
Healthcare the name shares Limited
Communications "Healthbase $.10 at
Inc. Communications par
Inc." in
Connecticut, USA
Health Ed 29.04.96 in 100 Pharos same
Communications Connecticut, USA shares Healthcare
Inc. $.10 at Communication
par s Inc.
Centre for 25.08.88 in New 200 PPS Europe same
Biomedical Jersey, USA shares Limited
Communication no par
Inc.
Pharos 23.11.90 in 100 1 PPS Europe same
Healthcare England pound Limited
Communications No. 2561789 sterling
Ltd shares
PPS 28.08.96 in 100 1 PPS Europe same
International England pound Limited
Communications No. 3242769 sterling
Ltd shares
Cambridge 18.06.86 in 100 1 PPS Europe same
Medical England pound Limited
Publications No. 2029013 sterling
Ltd shares
Creative 05.10.94 in 90 "A" PPS Europe same
Communications England Ord. of Limited
Solutions Ltd No. 2973798 1 pound
sterling Terrafirma same
Designs
10 "B" Limited
Ord. of
1 pound
sterling
THE FOURTH SCHEDULE
PROPERTY
Short Description of Tenure Expiry of Lease Owner if
Property Leasehold
Wicker House Leasehol May 2019 Quintain
d
Wicker Studios Leasehol May 2019 Quintain
d
Pharos House - Upper Leasehol October 2021 Domo Group
d
Pharos House - Leasehol October 2021 Domo Group
Ground d
3 Liverpool Gardens Leasehol June 2011 Hargreaves
- - Ground Floor d
3 Liverpool Gardens Leasehol June 2011 Hargreaves
- - Upper Floors d
24 Upper High Street Leasehol April 2006 Huelens
d
24a Upper High Freehold N/A N/A
Street
Chandlers Yard - Car - - Quintain
Park
Pharos Inc Office, U.S. November 2000 Robert
Putnam Avenue Bryne
Prospect Street - - -
apartment
Pharos Car Park - - Huelens
CBC, 80 West Madison U.S. December 1999 Vanguard
Avenue Enterprises
THE FIFTH SCHEDULE
PROVISIONS AFFECTING THE PENSION SCHEME
1. The Group contributes to two pension schemes on behalf
of its employees:
1.1 The PPS Europe Discretionary Pension Scheme, for
UK employees, a defined contribution scheme,
details of which are set out in the Vendor's
Disclosure Letter.
1.2 The PPS Europe Group Companies 401 (K) Plan, for
US employees, a defined contribution scheme,
details of which are set out in the Vendor's
Disclosure Letter.
2. There are no schemes other than those referred to in
paragraph 1.1 and paragraph 1.2 above to which any
members of the Group are obliged to contribute funds.
THE SIXTH SCHEDULE
VENDOR'S WARRANTIES
In this Schedule (save where the context otherwise requires)
the expression "the Company" shall mean each of the Company
and each of its Subsidiaries.
The warranties and representations referred to in Clause 5 of
the foregoing Agreement are that:-
1. CONSTITUTION OF THE COMPANY
1.1 Share Capital
The Company has an authorised and issued share capital
as set out in the Second Schedule and all its issued
shares are beneficially owned by the Vendors in the
numbers set opposite their respective names in the
second column of the First Schedule to the foregoing
agreement free from all liens charges and Encumbrances
or interests in favour of any other person.
1.2 Memorandum and Articles
The copy of the Memorandum and Articles of Association
of the Company annexed to the Disclosure Letter is true
and complete and has embodied therein or annexed
thereto a copy of every such resolution or agreement as
is referred to in Section 380 of the Companies Act
1985.
1.3 Company Resolutions
Neither the Company nor any class of its members has
passed any resolution (other than resolutions relating
to business at Annual General Meetings which was not
special business).
1.4 Options etc.
No person has the right (whether exerciseable now or in
the future and whether contingent or not) to call for
the issue of any share or loan capital of the Company
under any option or other agreement (including
conversion rights and rights of pre-emption) and no
claim has been made by any person to be entitled to any
such right.
1.5 Returns and compliance with Company Law etc.
The Company has complied with the provisions of the
Companies Acts The Financial Services Act 1986 and the
European Communities Act 1972 and all returns
particulars resolutions and other documents required
under any legislation to be delivered on behalf of the
Company to the Registrar of Companies or to any other
authority whatsoever have been properly made and
delivered.
1.6 Statutory Books
The register of members and other statutory books of
the Company have been properly kept and contain a true,
accurate and complete record of the matters which
should be dealt with therein; no notice or allegation
that any of the same is incorrect or should be
rectified has been received.
1.7 Insolvency
No order has been made or petition presented or
resolution passed for the winding up of the Company,
nor has any distress execution or other process been
levied in respect of the Company, nor is there any
unfulfilled or unsatisfied judgment or court order
outstanding against the Company.
1.8 Particulars of Subsidiaries
The particulars of the Subsidiaries set out in the
Third Schedule above are true and complete and the
shares of the Subsidiaries are held and owned as shown
in the Third Schedule free from all Encumbrances and
with all rights now or hereafter attaching thereto and
the Company has no other subsidiary.
1.9 The Shares
1.9.1 No one is entitled to receive from the Company
any finders fee, brokerage, or other commission
in connection with the purchase of shares in the
Company or any Associate company of the Company.
1.9.2 Save as provided in this Agreement no share or
loan capital has been issued or agreed to be
issued by the Company since the Balance Sheet
Date.
1.9.3 There are no agreements or arrangements in force
which provide for the present or future issue,
allotment or transfer of or grant to any person
the right (whether conditional or otherwise) to
call for the issue, allotment or transfer of any
share or loan capital of the Company (including
any option of pre-emption or conversion).
1.9.4 The Company has not adopted, agreed or resolved
to adopt any employee share option scheme,
profit sharing involving the Company's share
capital or share incentive scheme of any nature
whatsoever.
1.9.5 The Company has not redeemed or purchased any of
its shares during the preceding two years.
1.10 Capacity of Vendors
Each Vendor has full power to enter and perform this
Agreement, which when executed constitute binding
obligations on each Vendor in accordance with their
terms.
1.11 Vendors' other interests
No Vendor nor any Associate of any Vendor has any
estate, right or interest, directly or indirectly, in
any business other than that now carried on by the
Company which is or is likely to be or become
competitive with the business or the proposed business
(as at the date hereof) of the Company save as the
registered holder or beneficial owner of any class of
securities of any company if such class of securities
is listed on any recognised investment exchange (as
defined in section 207 of the Financial Services Act
1986) and in respect of which such person holds, or is
beneficially interested in, (together with his
Associates) less than five per cent. of any single
class of the securities in that company.
2. ACCOUNTS
2.1 Accounts warranty
The Accounts:-
2.1.1 have been prepared in accordance with the
requirements of the Companies Acts and all
relevant statutes and generally accepted
accountancy principles;
2.1.2 give a true and fair view of the assets and
liabilities of the Company at the 30 November
1996 and the profits of the Company for the
financial period ended on that date;
2.1.3 apply accounting policies which have been
consistently applied in the audited balance
sheet and profit and loss accounts for the three
financial years prior to the 30 November 1996
(except for intervening Statements of Standard
Accounting Practice and Financial Reporting
Standards);
2.1.4 comply with all current Statements of Standard
Accounting Practice and Financial Reporting
Standards applicable to a United Kingdom
company;
2.1.5 are not save to the extent expressly stated in
such accounts affected by any extraordinary
exceptional or non-recurring item as defined in
FRS 3;
2.1.6 properly reflect the financial position of the
Company as at the 30 November 1996.
2.2 US GAAP Accounts
The balance sheets of the Company as of the Balance
Sheet Date, and the statements of operations, cash
flows and changes in stockholders' equity of the
Company for that fiscal year then ended, as audited by
Grant Thornton, (shall be known collectively as the
Financial Statements). Each of the balance sheets
included in the Financial Statements fairly presents in
all material respects the financial position of the
Company as of its date, and the other statements
included in the Financial Statements fairly present in
all material respects the results of operations, cash
flows and stockholders equity, as the case may be, of
the Company for the periods therein set forth, in each
case in accordance with generally accepted accounting
principles in the United States consistently applied
during the periods involved except as otherwise stated
therein.
2.3 Tax Provisions
To the extent required by the Statements of Standard
Accounting Practice and the Financial Reporting
Standards applicable to a United Kingdom company
provision or reserve has been made in the Accounts for
all Taxation assessed or liable to be assessed on the
Company or for which it is accountable in respect of
income profits or gains earned accrued or received on
or before the 30 November 1996 or any event on or
before the 30 November 1996 including distributions
made down to such date or provided for in the Accounts
and proper provision has been made in the Accounts for
deferred taxation in accordance with Statement of
Standard Accounting Practice 15.
2.4 Work in progress
In the Accounts:-
2.4.1 the Company's work in progress has been valued
on a basis consistent with that adopted for the
purpose of the Company's audited accounts in
respect of the beginning and end of each of the
three last preceding accounting periods;
2.4.2 redundant or obsolete work in progress as at the
30 November 1996 has been wholly written off;
2.4.3 the value attributed to each item of the work in
progress included in the Accounts does not
exceed the lower of cost and market value as at
the Balance Sheet Date;
2.4.4 the provisions of Statement of Standard
Accounting Practice 9 have been adhered to.
2.5 Books and Records
All accounts, books, ledgers, financial and other
records of whatsoever kind of the Company:-
2.5.1 have been fully properly and accurately
maintained are in the possession of the Company
and contain due and accurate records of all
matters required to be entered into therein by
the Companies Acts;
2.5.2 do not contain or reflect any material
inaccuracies or discrepancies;
2.5.3 give and reflect a true and fair view of the
matters which ought to appear therein.
2.6 Debts
2.6.1 So far as the Vendors are aware, all debts owed
to the Company as at Completion will realise
their full face value and be good and
collectable in the ordinary course of business.
2.6.2 No amount included in the US GAAP Accounts as
owing to the Company as at the Balance Sheet
Date is now more than three months overdue nor
has any such amount been released for an amount
less than the value at which it was included in
the US GAAP Accounts nor is any such debt now
regarded by the Vendors as irrecoverable in
whole or in part.
2.6.3 The Company has not factored or discounted its
debts or agreed to do so.
2.7 Management Accounts
The Management Accounts are the most recent management
accounts produced by the Company and they do not
materially misrepresent the performance of the Company.
Such accounts use policies consistently applied in
management accounts for earlier periods and contain any
changes to reserve or accrual accounts.
3. FINANCE
3.1 Financial Position and Prospects
There has been no material deterioration in the
financial position or prospects or turnover of the
Company since the Balance Sheet Date.
3.2 Capital Commitments
There were no commitments on capital account
outstanding at the Balance Sheet Date (save as
disclosed in the Accounts) and since the said date the
Company has not entered into, or agreed to enter into,
any material capital commitments.
3.3 Borrowings
The total amount borrowed by the Company and its
Subsidiaries from its bankers does not exceed its
overdraft facilities and the total amount borrowed by
the Company and its Subsidiaries from whatsoever source
does not exceed any limitation on its borrowing
contained in the Articles of Association of, or in any
Debenture or Loan Stock Deed or other instrument
executed by, the Company or any subsidiary.
3.4 Bank accounts
A statement of the bank accounts of the Company and of
the credit or debit balances on such accounts as at a
date not more than seven days before the date hereof
has been supplied to the Purchaser. The Company has
not any other bank or deposit accounts (whether in
credit or overdrawn) not included in such statement.
Since such statement there have been no payments out of
any such accounts except for routine payments and the
balances on current account are not now substantially
different from the balances shown on such statements.
3.5 Distributions and Loan Repayments
3.5.1 Since the Balance Sheet Date no distributions of
capital or income have been declared made or
paid in respect of any share capital of the
Company and (excluding fluctuations in overdrawn
current accounts with bankers) no loan or loan
capital or preference capital of the Company has
been repaid in whole or part or has become
liable to be repaid.
3.5.2 All dividends or distributions of profits
declared, made, or paid by the Company since the
date of incorporation of the Company have been
declared, made, or paid in accordance with its
Articles of Association and the Companies Acts
or other relevant legislation.
3.6 Working Capital
The Company has sufficient working capital and cash for
the purposes of continuing to carry on its business as
projected in the budget for the Company and its
Subsidiaries for the 12 months December 1997 through to
November 1998 for that twelve month period and for the
purposes of executing, carrying out and fulfilling in
accordance with their terms all projects and
contractual obligations which have been undertaken by
the Company.
3.7 Continuance of facilities
In relation to all debentures, acceptance credits,
overdrafts, loans or other financial facilities
outstanding or available to the Company ("facilities"):-
3.7.1 the Vendors have supplied to the Purchaser in
writing full details thereof and true and
correct copies of all documents relating
thereto;
3.7.2 neither the Vendors, nor the Company, has done
anything nor are the Vendors aware of any
circumstances whereby the continuance of any
facility in full force and effect might be
affected or prejudiced or which might give rise
to any detrimental alteration in the terms or
conditions of any of the facilities;
3.7.3 none of the facilities is dependent upon the
guarantee or indemnity of or any security
provided by a third party other than the Company
or a Subsidiary;
3.7.4 no Vendor has any knowledge, information or
belief that as a result of the acquisition of
the Shares by the Purchaser or Completion any of
the facilities might be terminated or mature
prior to its stated maturity.
4. OWNERSHIP OF ASSETS
4.1 Assets
4.1.1 Except for current assets disposed of by the
Company in the ordinary course of its business
[and except for the Properties] the Company is
the owner of and has good marketable title to
all assets included in the Accounts or which
have been acquired by the Company since the
Balance Sheet Date.
4.1.2 The Company has not disposed or agreed to
dispose of any of its assets (save in the
ordinary course of its business) or granted or
agreed to grant, any Encumbrance in respect of
the whole or any part of its estate or interest
in any of the assets (including the undertaking
goodwill and uncalled capital of the Company)
included in the Accounts or acquired or agreed
to be acquired since the Balance Sheet Date.
4.1.3 Save as disclosed in the Accounts none of the
fixed assets (including the undertaking,
goodwill or uncalled capital) of the Company is
subject to any Encumbrance, or any agreement or
commitment to give or create any Encumbrance,
but the same are the sole unencumbered absolute
property of the Company.
4.1.4 Since the Balance Sheet Date, save for disposals
in the ordinary course of its business, the
assets of the Company have been in the
possession of, or under the control of the
Company.
4.2 Title Retention
The Company has not acquired or agreed to acquire any
material asset on terms that property therein does not
pass until full payment is made.
4.3 HP and Rental agreements etc.
4.3.1 The Company has not defaulted in any of the
provisions of any hire, or hire purchase, or
lease, or rental agreement, or conditional sale
agreement, or agreement for payment on deferred
terms, or bill of sale, or any trading contract
under which title to any property is retained by
another person or any arrangement similar in
effect to the foregoing.
4.3.2 The Company has observed and performed all the
terms and conditions on its part to be observed
and performed in all such agreements,
arrangements, leases, contracts and bills
referred to in paragraph 4.3.1 above.
4.4 Plant and Equipment
All vehicles and office and other equipment used in
connection with the business of the Company:-
4.4.1 are in a good and safe state of repair and
condition and are in satisfactory working order
and have been regularly and properly maintained;
4.4.2 are each capable, and will (subject to fair wear
and tear) be capable, over the period of time
during which it will be written down to a nil
value in the accounts of the Company (in
accordance with normal Accounting principles
consistently applied prior to the date hereof),
of doing the work for which it was designed
and/or purchased;
4.4.3 are not surplus to the Company's requirements;
4.4.4 are in the possession and control of, and are
the absolute property free from any Encumbrance
of, the Company save for those items held under
hire purchase or rental agreements the value of
which items in the aggregate does not exceed
20,000 pounds sterling.
4.5 Insurances
4.5.1 The policies of insurance which are maintained
by the Company afford the Company adequate cover
against such risks as are commonly covered by
insurance by companies carrying on the same type
of business as the Company.
4.5.2 The Company is now, and has at all material
times been, adequately covered against accident,
damage, injury, third party loss (including
service/product liability), loss of profits and
other risks normally covered by insurance.
4.5.3 All insurance is currently in full force and
effect and nothing has been done or omitted to
be done which could make any policy of insurance
void or voidable or which is likely to result in
an increase in premium.
4.5.4 There is no claim outstanding under any such
policy nor are the Vendors aware of any
circumstances likely to give rise to a claim.
4.5.5 The Company has paid all sums falling
due prior to Completion in respect of
premiums on all policies of insurance
maintained by the Company
5. BUSINESS OF THE COMPANY
5.1 Changes since the Balance Sheet Date
Since the Balance Sheet Date the Company:-
5.1.1 has carried on its business in the ordinary and
usual course;
5.1.2 has not entered into any transaction nor assumed
any liability nor made any payment not provided
for in the Accounts which is material and is not
in the ordinary course of its business;
5.1.3 has carried on the business without any
interruption or alteration in the nature scope
or manner of its business;
5.1.4 has not borrowed or raised any money or taken
any financial facility (except such short term
borrowings from its bankers as are disclosed in
the Disclosure Letter);
5.1.5 has paid its creditors within the times agreed
with such creditors and there are not debts
outstanding by the Company which have been due
for more than four weeks;
5.2 Licences etc.
5.2.1 All necessary licences consents permits and
authorities (public and private) have been
obtained by the Company to enable the Company to
carry on its business effectively in the places
and in the manner in which such business is now
carried on and all such licences consents
permits and authorities are valid and
subsisting.
5.2.2 The Company is not in breach of any of the terms
and conditions of any such licences or consents
and there are no factors known to the Vendors
that might in any way prejudice the continuation
or renewal of any of such licences or consents.
5.3 Breach of statutory provisions, etc.
5.3.1 Neither the Company, nor any of its officers,
agents or employees (during the course of their
duties in relation to the Company) have
committed, or omitted to do, any act or thing
the commission or omission of which is, or could
be, in contravention of any Act, Order,
Regulation, or the like in the United Kingdom or
elsewhere which is punishable by fine or other
penalty; and
5.3.2 the Company has not received any Notice of any
offence or breach of statutory duty or any other
Notice whatsoever (whether or not giving rise to
a criminal liability) under the provisions of
the Factories Act, 1961, The Office Shops and
Railway Premises Act, 1963, The Fire Precautions
Act, 1971 or The Health and Safety at Work Act,
1974 (or any Order or Regulation made
thereunder) the Wages Act 1986;
5.3.3 the Company has duly complied with all relevant
requirements of the Financial Services Act 1986
and the Data Protection Act 1984.
5.3.4 so far as the Vendors are aware, the Company has
not and nor has any of its Subsidiaries in the
last two years, as a counterparty thereto, been
a party to a transaction at an undervalue or a
preference as those expressions are used in
sections 238 and 239 respectively of the
Insolvency Act 1986;
5.4 Litigation
5.4.1 The Company is not engaged in any litigation or
arbitration proceedings.
5.4.2 So far as the Vendors are aware no litigation or
arbitration proceedings are pending or
threatened by or against the Company and there
are no circumstances likely to give rise to any
litigation or arbitration.
5.4.3 The Company is not subject to any order or
judgment given by any Court or governmental
agency and has not been a party to any
undertaking or assurance given to any Court or
governmental agency which is still in force.
5.5 Fair Trading etc.
No agreement practice or arrangement carried on by the
Company or to which the Company is a party:-
5.5.1 is or requires to be registered in accordance
with the provisions of the Restrictive Trade
Practices Acts 1976 and 1977 or contravenes the
provisions of the Resale Prices Act 1976 and the
Company is not in default or in contravention of
the provisions of any of those Acts;
5.5.2 contravenes the Trade Descriptions Acts 1968 and
1972;
5.5.3 contravenes the provisions of the Consumer
Credit Act 1974;
5.5.4 is by virtue of its terms or by virtue of any
practice for the time being carried on in
connection therewith a "Consumer Trade Practice"
within the meaning of Section 13 of the Fair
Trading Act 1973 and susceptible to or under
reference to the Consumer Protection Advisory
Committee or the subject matter of a report to
the Secretary of State or the subject matter of
an Order by the Secretary of State under the
provisions of Part II of that Act;
5.5.5 infringes Article 85 of the Treaty establishing
the European Economic Community or constitutes
an abuse of dominant position contrary to
Article 86 of the said Treaty or infringes or
contravenes any provisions of the Treaty of
Rome;
5.5.6 is prescribed or has been or may be or become
the subject of any reference enquiry or report
under the Industry Act 1975 or the Monopolies
and Mergers Act or the Competition Act 1980 or
any other anti-restrictive practice, consumer
protection or anti-monopoly anti-trust or anti-
cartel legislation in the United Kingdom or
elsewhere; or
5.5.7 in any way restricts its freedom to carry on the
whole or any part of its business in any part of
the world in such manner as it thinks fit.
5.6 Guarantees, Options, etc.
The Company is not a party to any option or pre-emption
right, or a party to any guarantee or suretyship or any
other obligation (howsoever called) to pay, purchase or
provide funds (whether by the advance of money, the
purchase of or subscription for shares or other
securities, the purchase of assets or services, or
otherwise) for the payment of, indemnity against the
consequence of default in the payment of, or otherwise
to be responsible for, any indebtedness of any other
person.
5.7 Tenders, etc.
No offer, tender, or the like not in the ordinary
course of business is outstanding which is capable of
being converted into an obligation of the Company by an
acceptance or other act of some other person.
5.8 Powers of Attorney, etc.
There are no powers of attorney given by the Company in
force (other than to the holder of an Encumbrance
solely to facilitate its enforcement) and no person, as
agent or otherwise of the Company, is entitled or
authorised to bind or commit the Company to any
obligations not in the ordinary course of the Company's
business.
5.9 Insider Contracts
5.9.1 There is not outstanding, and there has not at
any time during the last three years been
outstanding, any contract (other than a contract
of employment) or arrangement to which the
Company is a party and in which any Vendor or
any Associate of any Vendor or any director of
the Company or any Associate of any such
director is or has been interested, whether
directly or indirectly.
5.9.2 The Company is not a party to, nor have its
profits during the last three years been
affected by, any contract or arrangement which
is not of an entirely arms' length nature.
5.10 Other Party's Defaults
So far as the Vendors are aware, no party to any
agreement with or obligation to the Company is in
default thereunder being a default which would be
material in the context of the financial or trading
position of the Company nor (so far as the Vendors are
aware) are there any circumstances likely to give rise
to such a default.
5.11 Other Material contracts
The Company is not a party to nor subject to any
agreement, transaction, obligation, commitment,
understanding, arrangement or liability which:-
5.11.1 is incapable of complete performance in
accordance with its terms within six months
after the date on which it was entered into or
undertaken; or
5.11.2 is known by any Vendor to be likely to result in
a loss to the Company on completion of
performance; or
5.11.3 cannot readily be fulfilled or performed by the
Company on time and without undue or unusual
expenditure of money, effort or personnel; or
5.11.4 involves or is likely to involve obligations,
restrictions, expenditure or receipts of an
unusual, onerous or exceptional nature and not
in the ordinary course of the Company's
business; or
5.11.5 is a contract for hire or rent hire purchase or
purchase by way of credit sale or periodical
payment; or
5.11.6 is a contract with any trade union or body or
organisation representing its employees; or
5.11.7 requires an aggregate consideration payable by
the Company in excess of 30,000 pounds sterling;
or
5.11.8 involves or is likely to involve the supply of
services by or to the Company the aggregate
sales value of which will represent in excess of
ten per cent. of the turnover of the Company for
the last financial year; or
5.11.10 requires the Company to pay any
commission, finders fee, royalty or the like; or
5.11.11 is in any way otherwise than in the
ordinary and proper course of the Company's
business; or
5.11.12 would have been such an agreement or
arrangement but for its cancellation or
termination by any counter-party since the
Balance Sheet Date.
5.12 Consequence of share acquisition by the Purchaser
So far as the Vendors are aware the acquisition of the
Shares of the Company by the Purchaser or the
compliance with the terms of this Agreement will not:-
5.12.1 cause the Company to lose the benefit of any
right or privilege it presently enjoys or cause
any person who normally does business with the
Company not to continue to do so on the same
basis as previously;
5.12.2 relieve any person of any obligation to the
Company (whether contractual or otherwise) or
enable any person to determine any such
obligation or any right or benefit enjoyed by
the Company or to exercise any right whether
under an agreement with or otherwise in respect
of the Company;
5.12.3 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;
5.13 Investment Grants
No investment grant paid to the Company is liable to be
refunded in whole or in part in consequence of any
action or omission of the Company.
5.14 Sureties
No person other than the Company has given any
guarantee of or security for any overdraft loan or loan
facility granted to the Company.
5.15 Documents
All title deeds and documents to which the Company is a
party affecting the title or interest of the Company to
or in any of its assets are in the possession or under
the control of the Company and are properly stamped.
5.16 Compliance with Laws
The Company has conducted its business in all material
respects in accordance with all applicable laws and
regulations of the United Kingdom or any foreign
country and there is no violation of or default with
respect to any statute regulation order decree or
judgement of any Court or any governmental agency of
the United Kingdom or (so far as the Vendors are aware)
any foreign country which may have a material adverse
effect upon the assets or business of the Company.
5.17 DTI Grant
The Company is not under any liability to repay any
grant made to it by the Departments of Trade and
Industry or the Ministry of Technology under the
Industrial Development Act 1966 or otherwise and no
circumstances have arisen in which the Ministry of
Technology or the Departments of Trade and Industry
would or might be entitled to require the repayment of
any such grant either in whole or in part.
6. EMPLOYMENT
6.1 Directors
The particulars shown in the Second Schedule are true
and complete and no person not named therein as such is
a director or shadow director (as defined in Section
741 of the Companies Act 1985) of the Company.
6.2 Particulars of Employees
6.2.1 The particulars shown in the Schedule of
Employees annexed to the Vendor's Disclosure
Letter show all remuneration payable and other
benefits provided or which the Company is bound
to provide (whether now or in the future) to
each officer and employee of the Company or
Associate of any such person and are true and
complete and include particulars of all profit
sharing incentive and bonus arrangements to
which the Company is a party whether legally
binding on the Company or not.
6.2.2 Since the Balance Sheet Date no change has been
made in the rate of remuneration, or the
emoluments or pension benefits of any officer ex-
officer or employee of the Company and no change
has been made in the terms of engagement of any
such officer or employee, and no additional
officers or employees have been appointed.
6.2.3 No moneys or benefits other than in respect of
remuneration or emoluments of employment, are
payable to, or for the benefit of, any officer
or employee of the Company or any Associate of
any such person.
6.2.4 No present officer or employee of the Company
has given or received notice terminating his
employment except as expressly contemplated
under this Agreement.
6.3 Service Contracts
There is not outstanding any contract of service
between the Company and any of its directors officers
or employees which is not terminable by the Company
without compensation (other than any compensation
payable by statute) on three month's notice given at
any time.
6.4 Pensions
In this paragraph:
6.4.1 "the Schemes" means the two schemes described in
the Fifth Schedule.
6.4.2 Other than the Schemes there is no arrangement
to which the Company contributes or has
contributed or may become liable to contribute
under which benefits of any kind are payable to
or in respect of any of its employees or former
employees on retirement on death (whether
accidental or not) or in the event of disability
or sickness.
6.4.3 The Company is not under and will not before
Completion enter into any obligation or
agreement (whether legally binding or not) to
provide or procure the provision of benefits of
the nature of those described in paragraph 6.4.2
above in respect of any of its employees or
former employees save in accordance with the
provisions of the Schemes.
6.4.4 The Company is not making and has not made and
will not before Company make any ex gratia
payments to any employee or former employee or
to any spouse, child or dependant of any of
them.
6.4.5 Copies of all documents constituting or relating
to all of the Schemes have been supplied to the
Purchaser.
6.4.6 All contributions payable to the Schemes by the
Company and the employees up to the date of
Completion have been paid at the rate specified
in the most recent actuarial valuation in
respect of each Scheme.
6.4.7 All actuarial, consultancy, legal investment and
other fees, charges or expenses due or accrued
in respect of all of the Schemes have been paid
or will have been paid by Completion.
6.4.8 There are not in respect of any of the Schemes
or the benefits thereunder any actions, or
proceedings or claims pending or threatened
against the employer or trustees and the Company
is not aware of any fact or matter which may
give rise to any such action or claim.
6.4.9 None of the Schemes will without the consent in
writing of the Purchaser be amended or
discontinued before Completion nor without such
consent will any proposal to amend, discontinue
or exercise any discretion in relation to any of
the Schemes be communicated to any employee or
other person pending Completion.
6.4.10 Each of the Schemes has been formally approved
by the Inland Revenue and treated by them as an
exempt approved scheme under Chapter I Part XIV
of ICTA and such approval has not been withdrawn
and no action has been taken nor omission made
by the Company or the Trustees of any of the
Schemes which might lead to the withdrawal of
such approval.
6.4.11 All benefits payable under the Schemes on the
death of an employee are fully insured and each
employee has been covered for such insurance at
normal rates and on normal terms for persons in
good health.
6.4.12 No application for a "surplus payment" within
the meaning of the Pension Scheme Surpluses
(Administration) Regulations 1987 (1987 No. 352)
has been or will before Completion be made.
6.4.13 All statutory obligations upon the Company and
the Trustees in respect of the Schemes have been
complied with at all times.
6.4.14 The Company and the Trustees have complied with
all requirements imposed upon them by Article
119 of the Treaty of Rome.
6.4.15 In respect of the Schemes the Company is not
obliged to provide any employee with benefits at
a specific level and is not obliged to make or
to continue to make contributions thereof at its
current or any other rate.
6.4.19 The Company has not at any time contributed to a
small self administered pension scheme as
defined in the Retirement Benefit Schemes
(Restriction on Discretion to Approve) (Small
Self Administered Schemes) Regulations 1991.
6.5 Disputes with Employees
The Vendors are not aware of any outstanding claim
against the Company by any person who is now or has
been an officer or employee of the Company or any
dispute between the Company and a material number or
class of its employees and no payments are due by the
Company under the provisions of the Employment Rights
Act 1996.
7. INDUSTRIAL PROPERTY RIGHTS
7.1 The business of the Company as now carried on does not
and is not likely to infringe any Industrial Property
Right of any other person or give rise to a liability
to pay compensation pursuant to the Patents Act 1977 ss
40 and 41 and all licences to the Company in respect of
any such Industrial Property Rights are in full force
and effect.
7.2 The Company has not (otherwise than in the ordinary and
normal course of business) or on terms of
confidentiality disclosed or permitted to be disclosed
or undertaken or arranged to disclose to any person
other than the Purchaser any of its secret know-how,
trade secrets or confidential information.
7.3 The Company is not a party to any secrecy agreement or
agreement which restricts the use or disclosure of
confidential information.
7.4 Nothing has been done or omitted by the Company which
would enable any licensee under a licence granted by
the Company to be terminated by any other party to the
licence or which in any way constitutes a material
breach of terms of any licence.
7.5 All Industrial Property Rights used or required by the
Company in connection with its business are in full
force and effect and are vested in and beneficially
owned by or validly licensed to it.
7.6 The Company is the sole beneficial owner of the
Industrial Property Rights listed in the Disclosure
Letter and (where registration is possible) the Company
has been and is registered as proprietor, and so far as
the Vendors are aware each of those Rights is valid and
enforceable, and so far as the Vendors are aware none
of them is being used, claimed, opposed or attached by
any other person.
7.7 No right or licence has been granted to any person by
the Company to use in any manner or to do anything
which would or might otherwise infringe any of the
Industrial Property Rights referred to above; and so
far as the Vendors are aware no act has been done or
omission permitted by the Company whereby they or any
of them have ceased or will cease to be valid and
enforceable.
8. TAXATION
8.1 Administration
8.1.1 All notices, returns, computations and payments
which should be or should have been given or
made by the Company for any Taxation purpose
have been given or made within the requisite
periods and are in all material respects up-to-
date, correct and on a proper basis and none of
them is or so far as the Vendors are aware is
likely to be the subject of any dispute with the
Inland Revenue, H.M. Customs & Excise or other
Taxation or fiscal authority.
8.1.2 All particulars furnished to the Inland Revenue
or other Taxation authorities, in connection
with the application for any consent or
clearance on behalf of the Company, or affecting
the Company, within the period of 6 years before
Completion fully and accurately disclose all
facts and circumstances material for the
decision of those authorities; any consent or
clearance is valid and effective; and any
transaction, for which consent or clearance has
previously been obtained, has been carried into
effect (if at all) only in accordance with the
terms of the relative application consent or
clearance and the Company has not been a party
to or otherwise involved in any transaction
scheme or arrangement in respect of which
clearance should have been obtained but was
not.
8.1.3 There are set out in the Disclosure Letter full
details of any special arrangement (being an
arrangement which is not based on a strict and
detailed application of the relevant legislation
or on generally published statements of practice
or generally published extra statutory
concessions) operated by the Company with the
agreement of any Taxation Authority and so far
as the Vendors are aware the Company has not
taken any action which has had, or will have,
the result of altering, prejudicing or in any
way disturbing any such arrangement which it has
previously negotiated.
8.1.4 The Company has not paid or become liable to pay
any penalty or interest charged by virtue of the
provisions of TMA or any other Taxation Statute.
8.1.5 The Company has duly and punctually paid to the
Inland Revenue or other appropriate authority
all Taxation for which it is liable as a result
of any act or omission prior to Completion and
in particular:-
(a) all Taxation deductible by the Company prior
to the date hereof under Schedule E by
virtue of the PAYE regulations from time to
time in force or ICTA s.559;
(b) all advance corporation tax due in respect
of franked payments of the Company under
ICTA s.14, and s.238 and Schedule 13;
(c) all National Insurance Contributions (both
employer's and employees') due from the
Company in respect of the employees of the
Company;
(d) all Taxation required to be deducted from
any interest, annuity or other annual
payment, rent or royalty pursuant to ICTA
s.349 and 350; and
(e) all Taxation required to be deducted from
any other payments directed to be made as if
those payments were payments to which ICTA
s.349 applied.
8.1.6 The Company has duly and punctually withheld,
deducted or collected for payment (as
appropriate) all Taxation which it has become
liable to withhold deduct or collect for payment
and is under no liability to pay any penalty or
interest in connection with any Taxation at the
date of this agreement or give any security for
any such matter and the Company has if required
by law so to do accounted for all such Taxation
to the relevant Taxation Authority.
8.1.7 The Company has not at any time been the subject
of a discovery or investigation by any Taxation
Authority and so far as the Vendors are aware
there are no facts which are likely to cause a
discovery or investigation to be made.
8.1.8 The Company is not liable as lessee or agent for
any Taxation under the provisions of ICTA s.23.
8.2 Taxation claims, liabilities and reliefs
8.2.1 The Company has not made a claim under TCGA
s.24(2) (Assets lost or destroyed, or whose
value becomes negligible) or s.48 (Consideration
due after time of disposal).
8.2.2 The Company is not nor so far as the Vendors are
aware will become liable to pay, or make
reimbursement or indemnity in respect of, any
Taxation (or any amount corresponding to
Taxation) in consequence of the failure by any
other person (other than the Company or its
Subsidiaries) to discharge that Taxation or
amount within any specified period or otherwise,
where the Taxation or amount relates to a
profit, income or gain, transaction, event,
omission or circumstances arising, occurring or
deemed to arise or occur (whether wholly or
partly) prior to Completion.
8.2.3 No relief (whether by way of deduction,
reduction, set-off exemption, repayment or
allowance, or otherwise) from, against or in
respect of any Taxation has been claimed and/or
given to the Company which could or might be
effectively withdrawn, postponed, restricted or
otherwise lost as a result of any act, omission,
event or circumstance arising or occurring at
any time after Completion which is not a
deliberate act or omission, or an event or
circumstance deliberately created, by the
Company or the Purchaser after Completion for
the purpose of effecting the withdrawal,
postponement, restriction or loss.
8.3 Distributions and deductibility of payments
8.3.1 The Company has not since 5 April 1965 repaid,
or agreed to repay or redeemed or agreed to
redeem its share capital or capitalised or
agreed to capitalise in the form of redeemable
shares or debentures any profits or reserves of
any class or description.
8.3.2 No security (within the meaning of ICTA s.254(1)
(Interpretation of Part VI)) issued by the
Company and outstanding at the date of this
agreement was issued in such circumstances that
the interest payable on it, or any other payment
in respect of it, falls to be treated as a
distribution under ICTA s.209 (Meaning of
"distribution").
8.3.3 No rents, interest, annual payments or other
sums of an income nature paid or payable since
the Balance Sheet Date by the Company or which
the Company is under an obligation to pay in the
future are or will be wholly or partially
disallowable as deductions in computing profits
or as charges against profits, for the purposes
of corporation tax, by reason of the provisions
of ICTA s.74 (General rules as to deductions not
allowable) or ICTA s.75 (Expenses of Management:
Investment Companies), ICTA s.338 (Allowance of
charges on income and capital), ICTA s.770
(Sales, etc, at an undervalue or overvalue),
ICTA ss.779 to 784 (Leased assets), ICTA s.787
(Restriction of relief for payments of
interest), or ICTA s.125 (Annual payments for
non-taxable consideration).
8.3.4 The Company has not received a capital
distribution to which the provisions of TCGA
s.189 (Capital distribution of chargeable gains:
recovery of tax from shareholder) could apply.
8.3.5 The Company has not, since the Balance Sheet
Date, incurred expenditure otherwise than in the
normal course of business which will not be
wholly deductible in computing profits for
Taxation purposes, as a trading expense, as an
expense of management, as a charge on income, or
in computing income for the purposes of Schedule
A, except for expenditure on the acquisition of
an asset to be held otherwise than as stock-in-
trade, details of which are set out in the
Disclosure Letter.
8.3.6 The Company has not issued any share capital to
which the provision of ICTA s.249 could apply.
8.3.7 The Disclosure Letter contains particulars of
all elections made by the Company under ICTA
s.247 that are now in force; and the Company
has not paid any dividend without advance
corporation tax or made any payment without
deduction of income tax in the circumstances
specified in ICTA s.247(6) nor is any Taxation
Authority entitled to make any recovery from the
Company under ICTA s.247(7).
8.4 Carry forward of losses and ACT
Nothing has been done, and no event or series of events
has occurred, which [will] cause in relation to the
Company the disallowance of the carry forward or carry
back of losses excess charges or advance corporation
tax under the provisions of ICTA s.393 (Losses other
than terminal losses), ICTA s.393A (Losses set off
against profits of the same or an earlier accounting
period), ICTA s.768 (Change in ownership of company:
disallowance of trading losses), ICTA s.768A (Change in
Ownership: disallowance of carry back of trading
losses), or ICTA s.245 (Calculation etc of ACT on
change of ownership of Company) and for the purposes of
this warranty the provisions of Clause 1.2 shall not
apply.
8.5 Close Companies
8.5.1 The Company is not and has never been a close
investment holding company within the meaning of
ICTA s.13A (close investment holding companies).
8.5.2 The Company is not, nor has ever been, liable to
taxation under the provisions of ICTA ss.418 to
422 or paragraph 10 of Schedule 19, (close
companies).
8.5.3 The Company has never made any transfer of the
kind described in TCGA s.125 (transfer of assets
at undervalue).
8.5.4 The Company has never made any transfer of value
within the meaning of the IHTA otherwise than
for the purposes of, or in the course of, its
business.
8.5.4 Neither the assets owned by nor the shares of
the Company are subject to an outstanding Inland
Revenue charge as defined in IHTA s.237.
8.5.5 No circumstances exist, or but for IHTA s.204(6)
would exist, such that a power of sale could be
exercised in relation to any assets or shares of
the Company pursuant to IHTA s.212 (contingent
liability of transferee for unpaid capital
transfer tax or inheritance tax).
8.6 Groups of Companies
8.6.1 The Company and the Subsidiaries ("Group
Companies") comprise a group for the purpose of
ICTA s.402 (Group relief), and there is nothing
in ICTA s.413 or s.410 (Arrangements for
transfer of company to another group, or
consortium) which precludes any Group Company
from being regarded as a member of such group.
8.6.2 The Disclosure Letter contains particulars of
all arrangements and agreements relating to
group relief (as defined by ICTA s.402) to which
the Company is or has been a party and:-
(a) all claims by the Company for group relief
were when made and are now valid and have
been or will be allowed by way of relief
from corporation tax;
(b) the Company has not made nor is it liable to
make any payment under such arrangement or
agreement save as provided for in the [US
GAAP] Accounts; and
(c) the Company has received all payments due to
it under any such arrangement or agreement
for all surrenders of group relief made by
it.
8.6.3 The Disclosure Letter contains particulars of
all arrangements and agreements to which the
Company is or has been a party relating to the
surrender of advance corporation tax made or
received by the Company under ICTA s.240 and:-
(a) the Company has not paid nor is liable to
pay for the benefit of any advance
corporation tax which is or may become
incapable of set off against the Company's
liability to corporation tax; and
(b) the Company has received all payments due to
it under any such arrangement or agreement
for all surrenders of advance corporation
tax made by it.
8.6.4 The Company has not made or received a payment
for group relief or for the surrender of advance
corporation tax which may be liable to be
refunded in whole or in part.
8.6.5 The Company does not own any asset which was
acquired from another company which was at the
time a member of the same group of companies (as
defined in TCGA s.170 (Groups of companies:
definitions) and which owned that asset
otherwise than as trading stock within the
meaning of TCGA s.173 (Transfers within a group:
trading stock).
8.6.6 The Company has not held nor holds shares in a
company which has made any such transfer as is
referred to in TCGA s.125 (Shares in close
company transferring assets at an undervalue);
and the Company has not received any assets by
way of gift as mentioned in TCGA s.282 (Gifts:
recovery from donee).
8.6.7 The Company has no interest in any company which
is not resident in the United Kingdom and which
would be a close company if it were resident in
the United Kingdom (TCGA s.13) (non-resident
company).
8.7 Capital Allowances
8.7.1 The aggregate book value of each of the assets
of the Company, on which an entitlement to
industrial building allowances or other
allowances in respect of capital expenditure has
arisen, in or adopted for the purpose of the US
GAAP Accounts does not exceed the aggregate
residue of expenditure or written-down value
attributable to such assets for the purposes of
the CAA and the aggregate book value of plant
and machinery allocated to pool of plant and
machinery on which an entitlement to capital
allowances has arisen does not exceed the
written-down value of the qualifying expenditure
in respect of each such pool under the CAA.
8.7.2 All expenditure incurred by the Company or which
it may incur under any subsisting commitment on
the provision of machinery or plant has
qualified or will qualify (if not deductible as
a trading expense of a trade carried on by the
Company) for writing down allowances under CAA
Part II (machinery and plant).
8.7.3 Since the Balance Sheet Date nothing has
happened as a result of which there may be made
against the Company a balancing charge or any
disposal value may be brought into account under
CAA s.24 (writing down allowances and balancing
adjustments) or there may be any recovery of
excess relief within CAA ss.46 or 47 (recovery
of excess relief) or a relevant event may occur
within the meaning of CAA s.138 (scientific
research).
8.7.4 There is not, and so far as the Vendors are
aware there are no circumstances which could
give rise to, any dispute between the Company
and any other person as to the entitlement to
capital allowances under CAA ss.51 to 59
(fixtures).
8.7.5 The Company has not made any election under CAA
s.37 (short life assets) nor has been taken to
have made an election under CAA s.37(8)(c).
8.7.6 No capital expenditure incurred or to be
incurred by the Company has been deemed, under
the provisions of CAA s.159 (Time when capital
expenditure is incurred), to have been or be
incurred on a date other than that upon which
the obligation to pay the expenditure became or
becomes unconditional.
8.7.7 No election has been made by the Company under
CAA s.53 (Expenditure incurred by equipment
lessor) or CAA s.55 (Expenditure incurred by
incoming lessee: election to transfer right to
allowances) in relation to any fixtures.
8.8 Transactions not at arm's length
8.8.1 The Company has not carried out or been engaged
in, any transaction or arrangement to which the
provisions of ICTA s.770 (Sales, etc, at an
undervalue or overvalue) have been or may be
applied.
8.8.2 The Company does not own nor has agreed to
acquire any asset, or has received or agreed to
receive any services or facilities (including
without limitation the benefit of any licences
or agreements), the consideration for the
acquisition or provision of which was or will be
in excess of its market value or determined
otherwise than on an arm's length basis.
8.8.3 The Company has not disposed of or acquired any
asset in such circumstances that the provisions
of TCGA ss.17 or 19 (Disposals and acquisitions
treated as made at market value) could apply.
8.8.4 The Company has not, since the Balance Sheet
Date engaged in any transaction in respect of
which there may be substituted for any purpose
of Taxation a different consideration for the
actual consideration given or received by it.
8.9 Capital Gains
8.9.1 The book value in or adopted for the purposes of
the [US GAAP] Accounts as the value of each of
the assets of the Company on the disposal of
which a chargeable gain or allowable loss could
arise does not exceed the amount deductible
under TCGA s.38 (expenditure: general)
(excluding any indexation allowance) in respect
of each such asset.
8.9.2 No debt owed to the Company would on its
disposal give rise to a chargeable gain by
reason of TCGA s.251 (disposals otherwise than
as original creditor).
8.9.3 No benefit under any policy of assurance has
been acquired by the Company which would on its
disposal give rise to a chargeable gain by
reason of TCGA s.210 (disposals otherwise than
as original beneficial owner).
8.9.4 The Company does not have an interest in any
assets which are wasting assets within TCGA s.44
(wasting assets) and which do not qualify for
capital allowances.
8.9.5 The Company has not made nor is entitled to make
any claims under any of TCGA ss.23, 35, 152,
153, 154, 165, 172, 175, 229, 242, 243 or 247
insofar as such claims affect or would affect
the chargeable gain or allowable loss which
would arise on a disposal by the Company of any
of its assets.
8.9.6 The Company has not made any claim or election
under either of TCGA s.24 (assets lost or
destroyed) or TCGA s.161 (appropriations to or
from stock). The Company has not, since the
Balance Sheet Date, appropriated any asset
forming part of its trading stock for any other
purpose.
8.9.7 The Company has not since the Balance Sheet Date
disposed of nor acquired any asset in
circumstances such that the provisions of TCGA
s.17 (disposals and acquisitions treated as made
at market value) could apply.
8.9.8 The Company has not since the Balance Sheet Date
been a party to any depreciatory transactions
for the purpose of TCGA s.176 (transactions in a
group) or which could be treated as a
depreciatory transaction under TCGA s.177
(dividend stripping).
8.9.9 The Company has not since the Balance Sheet Date
been a party to any value shifting arrangements
under any of TCGA ss.29, 30 or 34 (value
shifting).
8.9.10 No disposal of any assets or of any interest in
assets in a territory outside the United Kingdom
has been made in respect of which any claim
under TCGA s.279 (foreign assets, delayed
remittances) has been made.
8.9.11 The Company has not made any claim under TCGA
s.48 (consideration due after time of disposal)
to pay by instalments tax on chargeable gains.
8.9.12 The Company does not have any interest in either
a controlled foreign company or an offshore fund
as defined respectively in ICTA Chapters IV and
V of Part XVII.
8.9.13 No part of the consideration given by the
Company for a new holding of shares (within the
meaning of TCGA s.126 (Application of ss.127 to
131)) will be disregarded by virtue of the
proviso to TCGA s.128(2) (Consideration given or
received by holder).
8.9.14 No asset owned by the Company has been the
subject of a deemed disposal under TCGA Schedule
2 (Assets held on 6th April 1965), so as to
restrict the extent to which the gain or loss
over the period of ownership may be apportioned
by reference to straightline growth.
8.9.15 The Company has not been a party to any election
made pursuant to the provisions of ICTA s.108.
8.9.16 There are set out in the Disclosure Letter full
details of any elections made pursuant to TCGA
s.35
8.10 Tax avoidance
8.10.1 The Company has not at any time been a party to
or otherwise involved in any transaction to
which any of the following provisions could
apply:-
(a) ICTA ss.729 to 737 (Tax avoidance:
securities);
(b) ICTA s.774 (Transactions between dealing
company and associated company);
(c) ICTA ss.779-780 (Sale and lease-back:
limitation on tax reliefs and taxation of
consideration received);
(d) ICTA ss.781-785 (Assets leased to traders
and others etc);
(e) ICTA ss.786 (Transactions associated with
loans or credit);
(f) CAA 1990 s.75 (Capital allowances: effect of
sales between connected persons, sale and
leaseback, etc);
(g) FA 1972 s.76 (Securities bought with
borrowed money);
(h) ICTA s.240 (Set-off of company's surplus
advance corporation tax against subsidiary's
liability to corporation tax);
(i) ICTA s.410 (Arrangements for transfer of
company to another group etc); s.395
(Leasing contracts and company
reconstructions); and s.116 (Partnerships
involving companies: arrangements for
transferring relief);
(j) TCGA s.106 (Disposal of shares and
securities within prescribed period of
acquisition);
(k) TCGA s.29 (Value shifting);
(l) CAA 1990 s.22 (First Year Allowances).
8.10.2 The Company has not been a party to any
transaction to which any of the following
provisions has been or could be applied other
than transactions in respect of which all
necessary consents or clearances have been
obtained:-
(a) TCGA s.139(5) Company reconstruction or
amalgamation: transfer of assets);
(b) ICTA ss.703 to 709 (Cancellation of tax
advantages from certain transactions in
securities);
(c) ICTA s.776 (Transactions in land: taxation
of capital gains);
(d) TCGA ss.135, 136 and 137 (Company
reconstructions and amalgamations);
(e) ICTA s.213 to 218 (exempt distributions);
(f) ICTA s.765 (Migration etc of companies) or
ICTA s.766 (Offences under Section 765);
(g) ICTA s.219 to 224 (Purchase of own shares).
8.11 Depreciatory transactions
No allowable loss, which may accrue on the disposal by
the Company of any asset, is likely to be reduced by
reason of the provisions of TCGA s.176 (Transactions in
a group) or TCGA s.177 (Dividend stripping) and no
chargeable gain or allowable loss arising on a disposal
is likely to be adjusted in accordance with TCGA s.30
(Value shifting: further provisions).
8.12 Overseas
8.12.1 The Company is not nor has it within the last
six years been entitled to receive any income
which is 'unremittable income' within the
meaning of ICTA s.584 (Relief for unremittable
overseas income), or made any gain to which the
provisions of TCGA s.279 (Foreign assets:
delayed remittances) could apply.
8.12.2 The Company has not ceased to be resident in the
United Kingdom other than in pursuance of a
Treasury Consent and could not and is not
considered to be resident in a territory outside
the United Kingdom.
8.13 Demergers and purchase of own shares
8.13.1 The Company has not been engaged in or been a
party to any of the transactions set out in ICTA
s.213 to 218 (Demergers) nor has it made or
received a chargeable payment as defined in ICTA
s.214(2).
8.13.2 The Company has not at any time since 15th June
1982 redeemed, repaid or purchased or agreed to
redeem, repay or purchase, any of its own
shares.
8.13.3 [The Company is and has been throughout the last
six years resident in the United Kingdom for
Taxation purposes and has throughout that period
traded only in the United Kingdom and been in
receipt only of UK source income and gains.]
8.14 Sale and leaseback of land
The Company has not since the Balance Sheet Date
entered into any transaction to which the provisions of
ICTA s.780 (Sale and lease-back: taxation of
consideration received) have been or could be applied.
8.15 Securities
The Company has not at any time since 13th March 1984
owned or issued any deep discount security within the
meaning of ICTA Schedule 4, any deep gain security
within the meaning of FA 1989 Schedule 11, any
qualifying corporate bond within the meaning of TCGA
s.116 or any relevant discounted security within the
meaning of FA 1996 Sch.13.
8.16 Capital losses
The Company has not incurred a capital loss to which
the provisions of TCGA s.18(3) and (4) (Transactions
between connected persons) are applicable.
8.17 Value Added Tax
8.17.1 The Company is not and has never been treated
for the purposes of VATA s.43 (groups of
companies) as a member of a group.
8.17.2 The Company is a registered and taxable person
for the purposes of the VATA and has complied
with and observed in all material respects the
terms of all legislation, (which expression
shall for the purposes of this sub-clause 17
include reference to all regulations, orders,
provisions, directions, conditions and notices)
relating to Value Added Tax and the Company has
maintained and obtained accounts, records,
invoices and other documents (as the case may
be) appropriate or requisite for the purposes of
Value Added Tax which are complete, correct and
up-to-date.
8.17.3 The Company:-
(a) is not, nor in the two years prior to
Completion has been, in arrears with any
payments or returns or notifications under
the legislation relating to Value Added Tax,
or liable to any forfeiture penalty,
interest or surcharge or to the operation of
any penalty, interest or surcharge
provisions contained in the same;
(b) has not in the two years prior to Completion
received a surcharge liability notice under
VATA s.59 (default surcharge) or a penalty
liability notice under VATA s.64 (persistent
misdeclarations).
(c) has not been required by HM Commissioners of
Customs & Excise to give security;
(d) is not, and has not agreed to become, an
agent, manager or factor for the purposes of
VATA s.47 (agents etc) of any person who is
not resident in the United Kingdom;
(e) has not on or prior to the date hereof, nor
will before Completion make any supplies
that are exempt supplies; and
(f) or any other company which is or has been a
member of the same group of companies as the
Company has not on or prior to the date
hereof, nor will before Completion, make any
election pursuant to VATA Schedule 10
paragraphs 2 and 3 which has or may have or
have had the effect of waiving any exemption
from Value Added Tax in relation to any
property in which the Company has or will
have before Completion any interest or any
part thereof (having regard to paragraphs
3(3) and (4) of the said Schedule 10 ) or
which may otherwise have or have had the
effect of rendering Value Added Tax payable
or chargeable in respect thereof.
(g) is not for the purposes of VATA Schedule 10
paragraph 5(5) (developers of certain non-
residential buildings etc) the developer of
any building or work in respect of which the
Company has not made an election under VATA
Schedule 10 paragraph 2(1).
8.17.4 The Company has not since the Balance Sheet Date
been, treated as having made any supply of
goods or services for the purposes of Value
Added Tax where no supply has in fact been made
by the Company, including without limitation,
deemed supplies under any of the following
provisions: VATA s.8 (supplies received from
abroad); VATA s.44 (supplies to groups); VATA
paragraph 6 of Schedule 10 (developers self
supply); Value Added Tax (Self Supply of
Construction Services) Order 1989 paragraph 3
(self supply of construction services);
8.17.5 The Company is not approved for the purposes of
the Customs Duties (Deferred Payment)
Regulations 1976 (deferral of duty on imports).
8.17.6 The Company is not the owner of any capital item
to which Part XV of the Value Added Tax
(General) Regulations 1995 (adjustments to the
deduction of input tax on capital items)
applies.
8.17.8 The Company is not the owner of, and has not
contracted to acquire, goods which are or will
become "free zone goods" for the purposes of the
Free Zone Regulations 1984.
8.17.9 The Company has not incurred, a liability to
Taxation in a country other than the United
Kingdom, the recovery of which would depend upon
the existence of and compliance with legislation
or regulations in that country.
8.17.10 The Company has not made or received any
supplies in respect of which there may be
substituted for Value Added Tax purposes a
different consideration from the actual
consideration given or received by it.
8.18 Stamp Duties
8.18.1 There is no instrument which is necessary to
establish the Company's title to any right or
asset which is liable to stamp duty in the
United Kingdom or elsewhere but which has not
been duly stamped or which would attract stamp
duty if brought within the relevant
jurisdiction.
8.18.2 The Company has complied in all respects with
the provisions of FA 1986 Part IV (stamp duty
reserve tax) and with any regulations made under
the same and the Company is not and will not
become liable to pay stamp duty reserve tax by
reference to any agreement which falls within
the terms of FA 1986 s.87(1) and which is
entered into prior to Completion.
8.18.3 The Company has not made any claim for relief or
exemption under FA 1930 s.42 (Relief from
transfer stamp duty in case of transfer of
property as between associated companies) or
under FA 1986 ss.75 to 77 (reconstructions and
acquisitions) nor of capital duty under FA 1973
Schedule 19 Part III (Stamp duty on documents
relating to chargeable transactions of capital
companies) or under any other statute and
practice statement or regulation of the Inland
Revenue or any other fiscal authority.
8.19 Employees
8.19.1 The Company has received no notifications or
notices under ICTA s.166 (benefits in kind:
notices of nil liability).
8.19.2 The Company does not operate any scheme approved
under ICTA s.202 (charities: payroll deduction
scheme) or registered under ICTA Chapter III of
Part V (profit-related pay).
8.19.3 There are set out in the Disclosure Letter full
details of all schemes under which any officer
or employee of the Company participates under
ICTA Sch.9 (approved share option and profit
sharing schemes) or is a beneficiary or
potential beneficiary of a qualifying employee
share ownership trust as defined in FA 1989
Sch.5 (employee share ownership trusts).
8.19.4 All schemes and trusts operated by the Company
for the benefit of its officers and employees
have been properly established and administered
in accordance with the rules thereof and any
relevant Taxation Statute.
8.19.5 Since the Balance Sheet Date the Company has not
received any payment to which ICTA s.601 to 603
applies (pension scheme surpluses: payments to
employers).
8.19.6 All sums payable under the existing arrangements
for remuneration of officers and employees and
rewarding persons rendering services to the
Company are deductible for the purposes of ICTA
s.74 or 75 (deductions).
8.19.7 There are set out in the Disclosure Letter full
details of any payments made by the Company in
the six years prior to Completion to which the
provisions of ICTA s.148 and/or s.188 applied or
could have applied, such details to include the
dates and amounts of the payments and the
respective ages of all officers and employees
receiving such payments at the time such
payments were made.
9. PROPERTIES
9.1 Title
9.1.1 The particulars of the Properties shown in the
Fourth Schedule are true and correct and the
owner shown therein has good title to and
exclusive occupation of each Property.
9.1.2 There is appurtenant to each Property all rights
and easements necessary for its use and
enjoyment for the Company's business.
9.1.3 The Properties comprise all the freehold and
leasehold property owned, occupied or otherwise
used in connection with its business by the
Company.
9.1.4 The Company is the legal and beneficial owner of
the Properties.
9.1.5 The Properties are only occupied by the Company
and there are no third parties on any part of
the Properties, either as licencees trespassers
or squatters in respect of the whole or any part
or parts of the Properties.
9.2 Encumbrances and Restrictions
9.2.1 The Properties are free from any mortgage,
debenture, charge, rent charge lien or any other
Encumbrance securing the repayment of monies or
other obligation or liability of either the
Company or any other party.
9.2.2 The Properties are not subject to any outgoings
other than the general rates, water rates and
insurance premiums and rent and service charges
and the rent and service charges are paid up to
the date hereof except to the extent not yet due
or payable.
9.2.3 The Properties are not subject to any
restrictive covenants, stipulations, easements,
way-leaves, licences, grants, restrictions, over-
riding interests or other such rights vested in
third parties.
9.2.4 The leases of the leasehold properties contain
no onerous covenants affecting freedom of
alienation and no right on the part of any
Landlord to terminate the Lease except in the
event of default.
9.2.5 No Property is subject to any option, right of
pre-emption or right of first refusal.
9.2.6 All the covenants restrictions and stipulations
contained in any Lease demising or affecting any
Property have been observed and performed in all
material respects and the Vendors are not aware
of any circumstance whereby the Landlord could
serve a notice on the Tenant under any such
Lease and further each Landlord has performed in
all material respects his or its covenants and
obligations pursuant to the relevant lease by
which the relevant Property was demised.
9.3 Planning
9.3.1 The use of each Property is the permitted use
for the purpose of The Town and Country Planning
Act 1971 to 1977.
9.3.2 As far as Vendors are aware compliance has been
made in all material respects with all
applicable statutory and bye-law requirements
with regard to the Properties and in particular
(but without limitation) with the requirements
as to Public Health Acts The Housing Acts, The
Highway Acts, Offices Shops and Railway Premises
Acts 1963, The Factory Acts, The London Building
Acts and it is confirmed that there are no
outstanding unobserved or unperformed
obligations with respect to the Properties
necessary to comply with the requirements of the
competent Authority exercising statutory or
delegated powers.
9.4 Adverse Orders
9.4.1 As far as Vendors are aware there are no
Compulsory Purchase Notices, Orders or
Resolutions affecting the Property nor to the
best of the knowledge and belief of the Vendors
and the Company are there any circumstances
likely to lead to any such orders being made.
9.4.2 As far as Vendors are aware there are no closing
or demolition or clearance orders enforcement
notices or stop notices affecting the Properties
nor to the best information and belief of the
Vendors and the Company are there any
circumstances likely to lead to any being made.
9.5 Condition of the Properties
9.5.1 The buildings and other structures on the
Properties are in good and substantial repair
and fit for the purposes for which they are
presently used.
9.5.2 There are no disputes with regard to the
ownership of any boundary walls and fences, any
easements, rights, means of access, covenants,
restrictions, way-leaves or licences affecting
the Properties.
9.6 Environmental Pollution
9.6.1 The Properties have not in the past been used:-
(a) for any industrial process, storage,
dumping, transit, storage, lagooning or
otherwise in relation to toxic waste;
(b) as land-fill or for any other dumping or
materials which may potentially lead to the
production of methane, carbon dioxide or any
other gaseous emissions.
9.6.2 The Vendors are not aware of any pollution of
the ground water or any aquifer beneath the
Properties of toxic waste, sewage or any other
noxious substance being a known or potential
hazard to health or otherwise.
9.6.3 The Vendors are not aware of any intention on
the part of the local authority to enter details
of the Properties under Section 143 of the
Environmental Protection Act 1990 upon any
statutory register of land which may be
contaminated.
9.6.4 The Vendors are not aware of any actual intended
or possible proceedings by an aggrieved person
under Section 82 of the Environmental Protection
Act 1990 or any equivalent legislation in
relation to any matters affecting the
Properties.
9.6.5 The Vendors have no reason for believing or
suspecting that any potential liability or
detriment arising from pollution or related
environmental matters, may attach to the owners
or occupiers of the Properties at present or at
any foreseeable future date.
9.6.6 The Vendor has supplied details of all reports,
inspections, surveys and investigations
available to the Vendor in respect of pollution
or related environmental matters affecting the
Properties.
9.7 Condition of the Properties
9.7.1 The Buildings and other structures on the
Properties are in good and substantial repair
and fit for the purpose for which they are
presently used.
9.7.2 There are no disputes with regard to the
ownership of any boundary walls and fences, any
easements, rights, means of access, covenants,
restrictions, way-leaves or licences affecting
the Properties.
10. GENERAL
10.1 Material Disclosure
The contents of the Disclosure Letter and of all
accompanying documents are true and accurate in all
material respects and clearly and accurately disclose
in all material respects every matter to which they
relate.
10.2 Loans to Vendors
There are not outstanding:-
10.2.1 any loans made by the Company to the Vendors
and/or any director of the Company and/or any
Associate of the Vendors or of any such
director;
10.2.2 any debts owing to the Company by the Vendors
and/or any director of the Company and/or
Associate of the Vendors or of any such
director;
10.2.4 any securities for any such loans or debts as
aforesaid.
10.3 Net Assets
The value of current assets less current liabilities as
at Completion is not less than their value as at the
Balance Sheet Date.
10.4 Investment, associations and branches
The Company:-
10.4.1 is not the holder or beneficial owner of and has
not agreed to acquire any class of the share or
other capital of any other company or
corporation (whether incorporated in the United
Kingdom or elsewhere) other than the
Subsidiaries;
10.4.2 is not and has not agreed to become a member of
any partnership, joint venture, consortium or
other unincorporated association;
10.4.3 has no branch outside England and no permanent
establishment (as that expression is defined in
the respective Double Taxation Relief Orders
current at the date hereof) outside the United
Kingdom.
10.5 The forecast as at February 1998 was carefully and
consistently prepared and does not include any items
that cannot reasonably be justified. There is in
existence valid documentation supporting the valuation
of 9 million pounds sterling (6 million pounds sterling
net) of current new business; of 4.4 million pounds
sterling of proposed new business; and 6 million pounds
sterling of new business opportunity.
SEVENTH SCHEDULE
PURCHASER'S WARRANTIES
The warranties and representations referred to in Clause 6 of
the foregoing Agreement are that:-
1. CONSTITUTION OF THE COMPANY
1.1 Memorandum and Articles
The copy of the amended and restated Articles of
Organisation and By-laws of the Purchaser, as currently
in effect, annexed to the Purchaser's Disclosure Letter
is true and complete.
1.2 Insolvency
No order has been made or petition presented or
resolution passed for the winding up of the Purchaser,
nor has any distress, execution or other process been
levied in respect of the Purchaser, nor is there any
unfulfilled or unsatisfied judgment or court order
outstanding against the Purchaser.
2. ORGANISATION AND EXISTENCE
The Purchaser is a corporation duly incorporated
validly existing and in good standing under the laws of
the Commonwealth of Massachusetts and has all corporate
powers and all material governmental licenses,
authorisations, consents and approvals required to
carry on its business as now conducted. The Purchaser
is duly qualified to do business as a foreign
corporation and is in good standing in each
jurisdiction in which the character of its properties
or the nature of its activities make such qualification
necessary, except where the failure to be so qualified
and in good standing would not have a material adverse
effect on its business, assets, operations, condition
(financial or other), or prospects.
3. CORPORATE AUTHORISATION
The execution, delivery and performance by the
Purchaser of this Agreement, the Registration Rights
Agreement the Supplemental Agreement and such other
agreements and documents as Purchaser is executing and
delivering in connection with the transaction
contemplated hereby and thereby (collectively
"Purchaser Agreement") and the consummation by the
Purchaser of such transaction are within the corporate
powers of the Purchaser and have been duly authorised
by all necessary corporate action on the part of the
Purchaser. The Purchaser Agreements constitute valid
and binding agreements of the Purchaser enforceable
against it in accordance with their terms.
5. GOVERNMENTAL AUTHORISATION
Except for any filings required by the SEC or by
Nasdaq, the execution, delivery and performance by the
Purchaser of the Purchaser Agreements requires no
action by or in respect of, or filing with, any United
States governmental body, agency official or authority.
6. LITIGATION
There is no action, suit, investigation or proceeding
pending against, or to the knowledge of the Purchaser
threatened against, the Purchaser before any court or
arbitrator or any governmental body, agency or official
which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions
contemplated hereby, or which could materially
adversely affect the Purchaser.
7. REPORTS AND FINANCIAL STATEMENTS
The Purchaser has previously furnished to the Vendors
copies of its (i) Annual Report on Form 10-K for the
Fiscal Year ended June 30 1997, (ii) Quarterly Report
on Form 10-Q for the Fiscal Quarter Ended September 30
1997 (iii) Quarterly Report on Form 10-Q for the Fiscal
Quarter Ended December 31 1997 (iv) Current Report on
Form 8-K dated 10/3/97 (reporting Q1 earnings); (v)
Current Report on Form 8-K dated 28 January 1998
(reporting Q2 earnings); (vi) 1997 Annual Report to
Stockholders; (vii) Proxy Statement dated October 8
1997 and (viii) Prospectus dated 27 January 1998
(collectively, the "SEC Reports"). The SEC Reports did
not when each was filed contain any untrue statements
of a material fact required to be stated therein or
omit to state a material fact necessary in order to
make the statements contained therein, in light of the
circumstances in which they were made, not misleading.
The SEC Reports complied as to form, at the time such
form, document or report was filed, in all material
respects with the applicable requirements of the US
federal securities laws and the rules and regulations
promulgated thereunder. Since July 1, 1997, the
Purchaser has filed all forms, reports and documents
with the US Securities and Exchange Commission required
to be filed by it pursuant to the US federal securities
laws and the rules and regulations promulgated
thereunder, each of which complied as to form, at the
time such form, document or report was filed, in all
material respects with the applicable requirements of
the US federal securities laws and the rules and
regulations promulgated thereunder. Since 27th January
1998 there has not been any material adverse change in
the business, results, operations, financial condition
or prospects of Purchaser.
8. FINDER'S FEES
There is no investment banker, broker, finder or other
intermediary which has been retained by or is
authorised to act on behalf of the Purchaser, who might
be entitled to any fee or commission from the Vendors
upon consummation of the transactions contemplated by
the this Agreement.
9. NON-CONTRAVENTION
The execution and delivery of the Purchaser Agreements
by the Purchaser, the performance by the Purchaser of
its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby
and thereby do not (i) contravene or conflict with the
corporate charter or bylaws of the Purchaser, (ii)
contravene or conflict with or constitute a violation
of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable
to the Purchaser; (iii) constitute a default under or
give rise to any right of termination, cancellation or
acceleration of any right or obligation of the
Purchaser or to a loss of any benefit to which the
Purchaser is entitled under any provision of any
agreement, contract or other instrument binding upon
the Purchaser or any permit held by the Purchaser or
(iv) assuming the receipt of all required consents
result in the creation or imposition of any lien on
any assets of the Purchaser.
10. STOCK
The Purchasers Common Stock is registered pursuant to
Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and is quoted on the
Nasdaq National Market System.
The Purchaser has been subject to the requirements of
Section 13 or (15(d) of the Exchange Act and has timely
filed all materials (including all reports, forms, and
any amendments thereto) required to be filed by it
under Section 13, 14 or 15(d) of the Exchange Act, for
a period of at least twelve (12) months immediately
preceding the date hereof. The Purchaser satisfies all
of the registrant requirements necessary to use Form
S-3 for registration of the Consideration Shares as at
the date hereof.
The total authorised and issued capital stock of the
Purchaser as of December 31, 1997 is accurately set
forth on the Balance Sheet of Purchaser included in its
Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1997.
11. CONSIDERATION SHARES
All of the Consideration Shares, upon delivery in
accordance with the terms of this Agreement, shall be
duly authorised, fully paid, and nonassessable, shall
have been issued in compliance with United States
federal securities laws, and shall be free and clear of
all Liens and preemptive rights.
EIGHTH SCHEDULE
TAX INDEMNITIES
1. INDEMNITY
1.1 SUBJECT as hereinafter provided the Vendors hereby
agree to provide to the Purchaser an amount equal to:-
1.1.1 any Liability to Taxation:
(i) arising as a consequence of or by reference
to one or more Events which occurred on or
before the date hereof; or
(ii) arising in respect of or by reference
to any income, profits or gains which were
earned, accrued or received on or before or
in respect of a period ended on or before
the date hereof.
1.1.2 any Liability to Taxation which would have
arisen (and in respect of which the Vendors
would have been liable under paragraph 1.1.1)
but for the setting off of an Accounts Relief or
a New Relief against that Liability to Taxation
or (as the case may be) against the income
profits or gains which would have given rise to
that Liability to Taxation;
1.1.3 any Liability to Taxation which would (on the
basis of the current rates of Taxation and
assuming income profits or gains chargeable to
Taxation of an amount equal to the Relief) have
been saved but for the loss of any Accounts
Relief;
1.1.4 any reasonable costs and expenses incurred in
connection either with any such liability or
amount as is referred to in paragraphs 1.1.1 to
1.1.3 inclusive or with any Tax Claim in respect
thereof (including investigating, assessing or
contesting the same) or in taking or defending
any action under this schedule at the request or
direction of the Vendors.
1.2 The liability of the Vendors shall be joint and
several and shall bind their respective
successors and personal representatives.
2. EXCLUSIONS
2.1 The Indemnities contained in this Schedule do not cover
any Liability to Taxation:-
2.1.1 to the extent that provision or reserve
specifically in respect thereof has been made in
the US GAAP Accounts or specifically referred to
in the notes to the US GAAP Accounts;
2.1.2 to the extent that that Liability to Taxation
was paid or discharged on or before the Balance
Sheet Date;
2.1.3 to the extent that the Tax Claim arises as a
result of the appropriate provision or reserves
in the US GAAP Accounts being insufficient by
reason of an increase in the rate of Taxation
(or a variation in the method of applying or
calculating the rate of Taxation) made after the
date hereof
2.1.4 for which the Company is or may become wholly or
primarily liable as a result of transactions in
the ordinary course of business after the
Balance Sheet Date;
2.1.5 to the extent that no actual loss is suffered by
the Company by reason that Liability to Taxation
has been made good or otherwise compensated for
at no expense to the Company by the Vendors or
any of them under any other provision of this
Agreement or by any other party;
2.1.6 to the extent that it would not have arisen but
for the fact that the treatment in future
accounts of the Company of assets or
liabilities, or of the Taxation attributable to
timing differences is different from the
treatment in the last accounts other than to the
extent that any change in accounting practice is
necessary to bring the accounts in to line with
generally accepted accounting practice;
2.1.7 to the extent that the Liability to Taxation
arises as a result of a change in the law or its
interpretation enacted or made after the date
hereof or a withdrawal or amendment, published
after that date of any extra-statutory
concessions or practice;
2.1.8 which would not have arisen but for the
voluntary act or omission of the Company or the
Purchaser (which should reasonably have been
avoided) carried our, or occurring, after the
date hereof otherwise than in the ordinary
course of business and otherwise than pursuant
to a legally binding commitment created on or
before Completion;
2.1.9 to the extent of any recovery by the Purchaser
under the Vendors Warranties in respect of, or
arising from the same Liability to Taxation.
2.1.10 if and to the extent that the Liability to
Taxation arises because the Company fails, after
due warning to act in accordance with the
reasonable instructions of the Vendors in
accordance with paragraph 5.
2.2 Without prejudice to the generality of paragraph 2.1.2
above the following shall not be regarded as being
within the ordinary course of business of a member of
the Group for the purpose of this Schedule:
2.2.1 any Taxation arising under Part XVII Income and
Corporation Taxes Act 1988 (Tax Avoidance);
2.2.2 any Taxation arising in connection with any
distribution (as defined in Part VI Income and
Corporation Taxes Act 1988) or any deemed
distribution;
2.2.3 any Taxation arising in respect of the
acquisition disposal or supply of any assets
goods services or business facilities for a
consideration deemed for Taxation purposes to be
in excess of that actually given or received;
2.2.4 any disposal or deemed disposal of chargeable
assets.
2.3 No claim for payment shall be brought by the Purchaser
in respect of this Schedule unless notice of the Tax
Claim (specifying in reasonable detail the matter which
gives rise to such a Tax Claim and the amount claimed)
is received by the Vendors within the period set out
in paragraph 1.3 of the Ninth Schedule except that in
relation to matters referred to in Clause 10 of the
Ninth Schedule to this Agreement in which case the
period shall be not later than 7 years from the date
hereof or on notification of the withdrawal of the
matter giving rise to the Tax Claim by the Inland
Revenue if earlier.
2.4 The provisions of paragraphs 1.1, 1.2, 1.3, and 1.7 of
the Ninth Schedule (Limits on claims under Vendors
Warranties) shall apply to claims under this Schedule.
3. MITIGATION
3.1 The Vendors shall be liable under the indemnities
contained in paragraphs 1 and 2 hereof notwithstanding
any Reliefs which may be available to any person
entitled to the benefit of the indemnities to set
against or otherwise mitigate any Liability to Taxation
so that the indemnities contained in this Schedule
shall take effect as though no such Reliefs were
available.
3.2 Paragraph 3.1 does not apply if, and to the extent
that, the Reliefs, rights of repayment or other rights
or claims mentioned in that paragraph arise wholly or
mainly by reason of an act or omission of the Company
before the Balance Sheet Date (unless the Relief in
question is an Accounts Relief).
3.3 If the Vendors satisfy a liability under this Schedule
to indemnify the Purchaser in respect of a Liability to
Taxation and the Company has a right of reimbursement
(including by way of indemnity) against another person
in respect of the Liability to Taxation, the Purchaser
shall procure that the Company at the expense of the
Vendors shall take all reasonable steps to enforce the
right and shall account to the Vendors for whichever is
the lesser of:-
3.3.1 any sum so recovered by the Company in respect
of that Liability to Taxation (including
interest and any repayment supplement paid by
any Taxation Authority less any Taxation
chargeable on the Company in respect of that
interest); and
3.3.2 the liability satisfied by the Vendors under
this Schedule in respect of that Liability to
Taxation.
3.4 If any provision for Taxation (not being a provision
for deferred taxation) contained in the US GAAP
Accounts shall at the request and expense of the
Vendors and to the satisfaction of the Purchaser's
Auditors prove to be an over-provision the amount so
over-provided shall be set off against the liability
(if any) of the Vendors under the provisions of this
Schedule.
4. DISPUTES AND CONDUCT OF TAX CLAIMS
4.1 If the Purchaser or the Company shall become aware of a
Tax Claim which is or may be relevant for the purposes
of this Schedule the Purchaser shall or shall procure
that the Company will as soon as reasonably practicable
give written notice thereof to the Vendors at the
address stated in accordance with Clause 14 of this
Agreement for this purpose.
4.2 The Purchaser shall procure that the Company shall
ensure that a claim for Taxation to which paragraph 4.1
applies is, so far as reasonably practicable, dealt
with separately from claims to which it does not apply
and that no Liability to Taxation arising from the
Claim is accepted or discharged prematurely. For this
purpose, a payment made by the Company to avoid
incurring interest or a penalty in respect of unpaid
Taxation shall be deemed not to be made prematurely.
4.3 If the Vendors shall indemnify and secure the Purchaser
and the Company to their reasonable satisfaction
against any liabilities, reasonable costs or expenses
which may be incurred thereby including any additional
Liability to Taxation the Purchaser shall or shall
procure that the Company will take such action as the
Vendors may reasonably request in writing to avoid
resist appeal dispute or compromise the Tax Claim (a
Tax Claim where action is so requested being
hereinafter referred to as a "Dispute") with the intent
that the conduct and costs and expenses of the Dispute
shall be delegated to and borne by the Vendors.
PROVIDED ALWAYS THAT the Purchaser shall not be obliged
to nor be required to procure that the Company shall
take any such action if having given the Vendors
written notice of the receipt of such assessment the
Purchaser has not within 15 days thereafter received
written instructions from the Vendors in accordance
with the preceding provisions of this sub-paragraph to
do so.
4.4 Notwithstanding that the conduct of a Dispute may be
dealt with in accordance with the Vendors' request
under sub-paragraph 4.2 above:
4.4.1 the Company and the Purchaser shall be kept
fully informed of all matters pertaining thereto
and shall be entitled to receive copies of all
correspondence pertaining thereto;
4.4.2 the appointment of solicitors or other
professional advisers shall be subject to the
approval of the Purchaser such approval not to
be unreasonably withheld or delayed;
4.4.3 all communications pertaining to the Dispute
which are to be transmitted to the Inland
Revenue H.M. Customs & Excise or any other
appropriate statutory or governmental authority
or body shall first be transmitted to the
Purchaser which shall be afforded a reasonable
opportunity to make comments before the
communication is transmitted;
4.4.4 the Vendors shall make no settlement or
compromise of the Dispute without the prior
approval of the Purchaser such approval not to
be unreasonably withheld or delayed.
4.5 If any dispute arises between the Vendor and the
Purchaser as to whether the Tax Claim should be at any
time be settled in full or contested in whole or in
part, it shall be resolved in accordance with the
provisions set out in the Eleventh Schedule.
5. PAYMENTS
5.1 The Vendors will settle with the Purchaser under the
provisions of this Schedule in full as follows (subject
always to the provisions of the Eleventh Schedule and
in the event that these provisions and those of the
Eleventh Schedule should conflict or otherwise be
inconsistent the latter shall prevail):
5.1.1 where a member of the Group is due to make an
actual payment of Taxation to which this
Schedule relates five days before that payment
is due;
5.1.2 in the case of the nullification cancellation or
set-off of a right to repayment of Taxation the
date on which that repayment would have been
due;
5.1.3 in the case of the loss counteraction
nullification disallowance or claw-back of any
Relief (other than a right to repayment of
Taxation) the date on which a member of the
Group is required to make an actual payment of
Taxation which it would not have been required
to make but for the loss counteraction
nullification disallowance or claw-back of that
Relief;
5.1.4 in the case of costs and expenses incurred by
the Purchaser or a member of the Group in
connection with any Liability to Taxation or any
other matter not dealt with elsewhere in this
paragraph 5 ten days after the service by the
Purchaser of a notice containing a written
demand therefor which includes reasonable
evidence of such expenses and costs being
incurred.
5.2 Where there is or has been a Dispute and the Dispute
relates to a Tax Claim where the Taxation the subject
matter thereof has to be paid before the action
requested by the Vendors in respect of the Tax Claim
can effectively be taken settlement in respect thereof
shall be made by the Vendors in full three days before
such Taxation must be paid to enable the Purchaser to
comply with the Vendors' request.
5.3 The Purchaser shall make a settlement with the Vendors
to the extent that, and on the date on which, the
Company receives a repayment of an amount paid in
respect of a Liability to Taxation under Clause 5.1. A
settlement with the Vendors under this paragraph 5.3
shall not prejudice the right of the Purchaser to
recover from the Vendors under this schedule if a
further liability to Taxation is imposed upon the
Company, whether in respect of matters to which the
settlement relates or otherwise.
5.4 For the purpose of Clause 5.3, the Company shall be
deemed to receive a repayment:
5.4.1 on the date on which the Company receives a
repayment of Taxation to which Clause 5.3
applies;
5.4.2 if and when the Company would have received the
repayment but for a Liability to Taxation in
respect of which the Company is not entitled to
be indemnified under this deed; or
5.4.3 if and when the Company would have received the
repayment had the Liability to Taxation been
discharged by a payment of Taxation;
5.5 The obligations of the Purchaser pursuant to Clauses
5.3 and 5.4 shall cease forthwith on the date
determined in accordance with the provisions of Clause
1.3 of the Ninth Schedule.
6. TAXATION OF CLAIMS
In the event of any settlement pursuant to this
Schedule (and the Eleventh Schedule) being liable to
Taxation in the hands of the Purchaser the amount of
any such Liability to Taxation shall be deemed to be
increased so as to ensure that the settlement received
by the Purchaser shall after Taxation be equal to that
which would have been received had the settlement not
been subject to Taxation.
7. INTEREST
In the event that any settlement pursuant to this
Schedule has not been received by the date for
settlement in accordance with the provisions of this
Schedule interest shall accrue in respect of the sum
unpaid at a rate of 2% above NatWest/Barclays Bank
PLC base rate for the time being in force calculated on
a daily basis.
8. TAX SAVINGS
If the Vendors have indemnified the Purchaser against a
Liability to Taxation which is in respect of advance
corporation tax, the Purchaser shall account to the
Vendors for an amount equal to any resulting reduction
in its liability to corporation tax as and when the
Company obtains the benefit of the reduction.
9. WITHHOLDING
Any settlement made by the Vendors pursuant to the
provisions of this Schedule shall be made in accordance
with, and be subject to, the provisions of the Eleventh
Schedule.
THE NINTH SCHEDULE
LIMITS ON CLAIMS UNDER VENDORS WARRANTIES
1. The Vendors shall not have any liability under or in
relation to the Vendors Warranties:-
1.1 as regards any single claim, unless the amount
of the liability thereunder exceeds $25,000;
1.2 except to the extent that the aggregate amount
of the Vendors' liability in respect of all
claims hereunder exceeds $100,000 and for this
purpose single claims excluded by Clause 1.1
above will not to be taken into account;
1.3 as regards any claim (other than a claim falling
within the provisions of paragraph 1.4 below)
unless notice in writing specifying particulars
and the amount thereof is received by the
Vendors by 3 Business Days before the earlier of
(i) the delivery by Price Waterhouse LLP of its
report on the Purchaser's financial statements
for the fiscal year ended June 30th, 1998 or
(ii) March 1, 1999;
1.4 as regards any claim to the extent that such
claim or liability arises or that the amount
thereof is increased as a result of any change
in the basis rate or method of calculation of
any Taxation or as a result of any other
legislation decision or regulation (whether or
not in relation to Taxation) or any change in or
in the interpretation of any such legislation
decision or regulation occurring or coming into
force after the date hereof;
1.5 as regards any claim, to the extent of any
amount which is recovered from insurers;
1.6 to the extent that a breach of this Agreement
also gives rise to a claim under the Tax
Indemnity and the Vendors have satisfied such
claim or vice versa.
2. The liability of the Vendors under the Vendors
Warranties shall be reduced:
2.1 by an amount of or by which Taxation for which
the Company is accountable is extinguished or
reduced as a result of the claim giving rise to
the liability;
2.2 to the extent that provision or allowance
therefore has been made in the Accounts.
3. No claim shall lie in respect of any breach of the
Vendors Warranties to the extent that the same is
capable of remedy unless the Purchaser shall first
afford the Vendors a reasonable opportunity to remedy
the breach complained of in a reasonable fashion.
4. If the Purchaser or the Company shall be in receipt of
any claim which might constitute or give rise to or
allege that there has been a breach of any of the
Vendor's Warranties or made any claim thereunder the
Purchaser shall within a reasonable period notify the
Vendors giving as full details as practicable and shall
allow the Vendors and their authorised representatives
full and free access at all reasonable times to the
books and records of the Company for the purposes of
verifying such allegation or claim and further shall
(subject to being secured to its reasonable
satisfaction against all costs and expenses incurred or
for which it may become liable) take such action as the
Vendors may reasonable request to avoid dispute resist
appeal compromise or avoid any such claim.
5. If the Vendors settle with the Purchaser or any Group
Company for an amount in respect of a breach of any
representation, warranty, indemnity or undertaking
hereunder or under the Tax Indemnity or any document
ancillary hereto or thereto:
5.1 the Purchaser shall forthwith on receipt thereof
by the Purchaser or any Group Company reimburse
to the Vendors an amount equivalent to any sum
recovered from any third party (including any
Taxation or other authority) in respect of the
amount settled by the Vendors.
5.2 the Vendors may (subject to indemnifying the
Purchaser and any relevant Group Company to
their reasonable satisfaction) require the
Purchaser and any relevant Group Company to take
all reasonable and appropriate steps to enforce
any rights against third parties; and
5.3 the Purchaser shall or shall procure that the
Company and/or the Subsidiaries shall keep the
Vendors informed of any actual or prospective
such recovery, receipt or right;
5.4 if the Purchaser is bound to reimburse any
amount under this Clause the Purchaser shall
allocate and make reimbursement to the Vendor(s)
in proportion to the amounts borne by them
individually of the original claim.
6. The aggregate liability of the Vendors in relation to
the Vendors Warranties and the Tax Indemnity shall in
any event be restricted to the value of the Holdback
Shares (as defined in the Eleventh Schedule) as at the
date of Completion. The recourse of the Purchaser in
respect of any claim under the Vendors Warranties or
the Tax Indemnity shall be limited to the exercise of
its rights under the Eleventh Schedule in respect of
the Holdback Shares.
7. The amount of any settlement made by each Vendor to the
Purchaser in respect of any claim under the Vendors
Warranties or the Tax Indemnity shall be deemed a
reduction dollar for dollar in the value of the
consideration payable to the Vendors under this
Agreement.
8. Nothing in this Ninth Schedule shall operate to limit
or exclude the liability of the Vendors for fraud or
misrepresentation (other than an innocent
misrepresentation).
9. Any settlement made by the Vendors pursuant to the
provisions of this Schedule shall be made in accordance
with, and be subject to, the provisions of the Eleventh
Schedule.
10. Any liability of the Vendors under the Vendors'
Warranties or the Tax Indemnity in respect of:-
10.1 any deductions claimed in respect of scientific
research allowances; and
10.2 any deductions claimed in respect of management
charges;
shall survive for a period of 7 years from the date
hereof and the provisions of Clause 1.3 shall be
amended to admit notification of such a claim to the
Vendors for such longer period.
THE TENTH SCHEDULE
LIMITS ON CLAIMS UNDER PURCHASER'S WARRANTIES
1. The Purchaser shall not have any liability under or in
relation to the Purchaser's Warranties:-
1.1 as regards any single claim, unless the amount
of the liability thereunder exceeds $25,000;
1.2 except to the extent that the aggregate amount
of the Purchaser's liability in respect of all
claims hereunder exceeds $100,000 and for this
purpose single claims excluded by Clause 1.1
above will not be taken into account;
1.3 as regards any claim unless notice in writing
specifying particulars and the amount thereof is
received by the Purchaser by 3 Business Days
before the earlier of (i) the delivery by Price
Waterhouse LLP of its report on the Purchaser's
financial statements for the fiscal year ended
June 30th, 1998 or (ii) March 1, 1999;
1.4 as regards any claim to the extent that such
claim or liability arises or that the amount
thereof is increased as a result of any change
in the basis rate or method of calculation of
any Taxation or as a result of any other
legislation decision or regulation (whether or
not in relation to Taxation) or any change in or
in the interpretation of any such legislation
decision or regulation occurring or coming into
force after the date hereof;
1.5 as regards any claim, to the extent of any
amount which is recovered from insurers;
2. If the Purchaser settles with the Vendor for an amount
in respect of a breach of any representation, warranty,
indemnity or undertaking hereunder or any document
ancillary hereto or thereto:
2.1 the Vendors shall forthwith on receipt thereof
by the Vendors reimburse to the Purchaser an
amount equivalent to any sum recovered from any
third party (including any Taxation or other
authority) in respect of the amount settled by
the Purchaser.
2.2 the Purchaser may (subject to indemnifying the
Vendors to their reasonable satisfaction)
require the Vendors to take all reasonable and
appropriate steps to enforce any rights against
third parties; and
2.3 the Vendors shall keep the Purchaser informed of
any actual or prospective such recovery, receipt
or right;
3. The aggregate maximum liability of the Purchaser in
relation to the Purchaser's Warranties shall not in any
event in aggregate exceed 10% of the value of the
Consideration Shares at the date of Completion and
settlement by Purchaser of any liability is to be in
the Purchaser's Common Stock only.
THE ELEVENTH SCHEDULE
HOLDBACK
1.1 On Completion, each Vendor shall be deemed to have
directed the Purchaser to withhold from delivery ten
per cent (10%) of the Consideration Shares issued to
such Vendor. The Consideration Shares withheld are
herein referred to as the "Holdback Shares". The
Holdback Shares shall be deemed to be issued to the
Vendors but held by the Purchaser subject to the terms
and conditions set out below. Holdback Shares shall be
considered as issued share capital of the Purchaser and
shall have the rights set out below.
1.2 All dividends and distributions (other than cash
dividends and distributions) made by the Purchaser with
respect to the Holdback Shares will be held by the
Purchaser with the other Holdback Shares as provided
herein as additional assets of the withholding to
satisfy any claims arising from a breach of the Vendors
Warranties or a claim under the Tax Indemnities ("a
Claim"). Cash dividends and distributions, if any,
will be made by the Purchaser to each Vendor, pro rata
according to their respective interests in the Holdback
Shares.
1.3 If a meeting or written action of shareholders of the
Purchaser occurs while the provisions of this Schedule
are still in effect, the Purchaser shall promptly send
to each Vendor copies of any notices, proxies and proxy
materials in connection with such meeting or written
action. At the time of any such meeting, the Purchaser
shall, if deemed necessary by any of the Vendors,
execute and deliver a proxy authorising each Vendor to
vote the whole number of their Holdback Shares
(eliminating any fractions).
2. The withholding of the Holdback Shares hereunder is for
the purpose of providing a source of indemnification to
the Purchaser and the other members of the Purchaser's
Group pursuant to the terms and conditions of this
Agreement, from and against all Claims.
3.1 The Holdback Shares shall be retained by the Purchaser
until the earlier to occur of (i) the delivery by Price
Waterhouse LLP of its report on the Purchaser's
financial statements for the fiscal year ended June
30th 1998 or (ii) March 1, 1999 ("the Holdback
Termination Date") when, subject to Clauses 3.2 and 3.3
below, the Holdback Shares, less the Payment Shares (as
defined below) if any, shall be distributed to the
Vendors.
3.2 The Holdback Shares shall not be distributed to a
Vendor on the Holdback Termination Date in the event
that:
(a) a Vendor has either agreed liability for a Claim
or a counsel appointed pursuant to Clause 4
below has determined the amount of a Claim and
in either case such Claim has not been satisfied
in full; and/or
(b) the Purchaser has made a Claim which is subject
to determination in accordance with Clause
4below.
3.3 Holdback Shares to a value of $500,000 as at the date
hereof shall be withheld for the period, and in respect
of the liabilities, specified in Clause 10 of the Ninth
Schedule.
4.1 If the Purchaser and/or the Company has a Claim the
Purchaser (on its own behalf and/or on the behalf of
the Company) will deliver a written notice thereof to
the Vendors pursuant to Clause 4 of the Ninth Schedule
and Clause 4 of the Eighth Schedule (a "Notice of
Claim") and setting forth the number of Holdback Shares
necessary to satisfy the claim in question, which will
be determined by dividing (x) the amount of such Claim
by (y) the value of one of the Holdback Shares on the
date of Completion (the "Payment Shares"). A good
faith failure to state correctly in a Notice of Claim
the full amount of the damage suffered by the Purchaser
and/or the Company will not prejudice their claim for
damages in respect of such Claim, and the Purchaser may
deliver an additional Notice of Claim as provided
herein with respect to any amount of damages not stated
(in good faith) in a previous Notice of Claim.
4.2 If the Vendors object (and for this purpose an
objection will only be valid if it is made by Vendor(s)
including Clarendon Trust Company Limited (or any
successor) to such Notice of Claim (whether as to
liability or the amount claimed), he/it (or his
authorised agent) will give written notice to the
Purchaser, within 7 Business Days, of receipt of such
Notice of Claim advising the Purchaser of its objection
(a "Notice of Objection"). If no Notice of Objection
is received from the Vendors by the Purchaser within
such period (and time shall be of the essence), the
Purchaser will effect payment of the amount of such
Claim as provided in Clause 5 below. If the Vendors
deliver a Notice of Objection within such period (and
time shall be of the essence), the Purchaser and the
Vendors will promptly meet and use their best
endeavours in good faith to settle the dispute. If the
Purchaser and the Vendors are able to settle the
dispute, in whole or in part, they will record such
settlement in writing and the Purchaser will effect
payment of that Claim (or other agreed amount) as
provided in Clause 5 below. If the Purchaser and
Vendors are unable to reach agreement within 10
Business Days after the delivery of the Notice of
Objection, then the dispute shall be referred to the
determination of a senior commercial counsel of at
least ten years' standing appointed by agreement
between the Vendors and the Purchaser, or (if they do
not agree within 3 Business Days) upon the application
by either party to the President for the time being of
the Law Society, whose determination shall be final.
The counsel shall be asked whether in his opinion that
Claim would on the balance of probability be likely to
succeed and the quantum of such Claim. Such opinion to
be available within 10 Business Days of submission of
argument from all parties such argument to be provided
to Counsel by all parties no later than 5 Business Days
following the day of Counsel's appointment. Time shall
be of the essence.
4.3 If the Purchaser is entitled to any damages pursuant to
the determination of counsel in accordance with Clause
4.2 above payment of the amount of such damages which
is specified in such determination will be made in the
manner prescribed in Clause 5 below. Notwithstanding
the foregoing, the Purchaser shall deliver to the
Vendors a notice specifying the amount and the
equivalent number of Payment Shares which will be
deducted from the Holdback Shares.
5. If the Purchaser is entitled pursuant to Clause 4above
to receive damages in respect of a Claim, the Purchaser
will exchange the certificate representing the Holdback
Shares for a new share certificate representing a
number of shares of the Purchaser (which will remain
Holdback Shares) equal to the number of Holdback Shares
previously held by the Purchaser less the number of
Payment Shares. The number of Holdback Shares
attributable to each Vendor will be reduced (and the
number of Payment Shares determined) pro rata (subject
to appropriate adjustment in respect of fractions) to a
Vendor's entitlement to Consideration Shares as set out
in the First Schedule.
SIGNED by G. Spencer Caswell )
in the presence of: ) /s/G. Spencer Caswell
Sarah Ball G. Spencer Caswell
SIGNED by Brian Harry Bulley )
in the presence of: ) /s/Brian Harry Bulley
Sarah Ball Brian Harry Bulley
SIGNED by Anthony Joseph Eagle )
in the presence of ) /s/Anthony Joseph Eagle
Sarah Ball Anthony Joseph Eagle
SIGNED by Paul DeSmond Fitzgerald )
in the presence of: ) /s/ Paul DeSmond Fitzgerald
Paul DeSmond Fitzgerald
SIGNED by Barry Raymond Philpott )
for and on behalf of ) /s/Barry Raymond Philpott
PAREXEL INTERNATIONAL ) Barry Raymond Philpott
CORPORATION )
in the presence of:- )
EXECUTED AS A DEED and ) /s/Charles Fitzherberg
DELIVERED by THOMPSON CLIVE ) Director/Authorised
Signatory
INVESTMENTS PLC acting by: )
/s/Susan Thompson
Company
Secretary/Authorised Signatory
THE SEAL of CLARENDON TRUST ) /s/Terence Le Sueur
COMPANY LIMITED was hereunto ) Director
affixed in the presence of: )
/s/Nina Elliot
Director/Secretary
THE SEAL of THE ROYAL BANK )
OF SCOTLAND TRUST COMPANY )
JERSEY LIMITED was hereunto affixed ) /s/Andrew
Martin
in the presence of: ) Director/Authorised
Signatory
THE SEAL
OF HSBC TRUSTEE )
(JERSEY) LIMITED was hereunto ) /s/Martin Hibbs
affixed in the presence of: ) -/Authorised Signatory
/s/Nadia Sandison
Authorised Signatory
