<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
July 21, 1998 (July 7, 1998)
Amtech Corporation d/b/a AMTC Corporation
-----------------------------------------
(Exact name of registrant as specified in its charter)
Texas 0-17995 75-2216818
----- ------- ----------
(State or other (COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION
Jurisdiction of NO.)
Incorporation)
19111 Dallas Parkway
Suite 300, Dallas, Texas 75287-3106
-----------------------------------
(Address of principal executive offices) (Zip code)
Company's telephone number, including area code:
(972) 733-6600
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 7, 1998, Amtech Corporation d/b/a AMTC Corporation (the "Company"), a
leading provider of electronic access control and security management systems,
services and products, completed the sale (the "Sale") of its Cotag
International ("Cotag") unit, a manufacturer of electronic cards and readers for
the access control and security management market, to Metric Gruppen AB
("Metric") of Solna, Sweden. The Sale consisted of the sale of all of the
assets and ordinary course of business liabilities of its Cotag unit, which
operated within Amtech Europe Limited, the Company's wholly-owned U.K.
subsidiary. The value of the transaction is between (pounds)2.5 million and an
estimated (pounds)3.4 million, payable according to the following:
. approximately (pounds)1.6 million payable at the closing of the Sale.
. (pounds)250,000 payable in December 1998.
. (pounds)700,000 payable in January 1999 (subject to offset in the event
Metric suffers losses as a result of any inaccuracy in the representations
and warranties of Amtech Europe Limited in the Sale agreement).
. up to an additional (pounds)250,000, payable in January 1999, if the revenues
of the Cotag unit for 1998 achieve (pounds)8,850,000, and a pro-rata amount
if the revenues exceed (pounds)7,589,000, but do not achieve
(pounds)8,850,000. No amounts will be paid if the revenues do not achieve
(pounds)7,589,000.
. up to an additional (pounds)350,000, payable in January 2000, if the revenues
of the Cotag unit for 1999 achieve (pounds)9,350,000 (and a pro-rata amount,
measured between (pounds)100,000 and (pounds)350,000) if the revenues exceed
(pounds)8,000,000 but do not achieve (pounds)9,350,000. No amounts will be
paid if the revenues do not achieve (pounds)8,000,000.
. an amount equal to 10% of the revenues attributable to the Cotag unit's sales
in each of 1998 and 1999 to the Company's Cardkey unit, payable in January
1999 and January 2000, respectively.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information
Pro forma condensed consolidated balance sheet
as of March 31, 1998 (unaudited)
Pro forma condensed consolidated statement of operations
for the year ended December 31, 1997 (unaudited)
Pro forma condensed consolidated statement of operations
for the three months ended March 31, 1998 (unaudited)
Notes to pro forma condensed financial statements
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The pro forma condensed consolidated balance sheet at March 31, 1998 reflects
the financial position of the Company after giving effect to the disposition of
the assets discussed in Item 2 and assumes the disposition took place on March
31, 1998. The pro forma condensed consolidated statements of operations for the
year ended December 31, 1997 and the three months ended March 31, 1998 assume
that the disposition occurred on January 1, 1997. The pro forma condensed
consolidated financial statements also give effect to the disposition of the
assets of the Company's Transportation System Group as previously reported on
Form 8-K dated June 19, 1998.
The following pro forma data are not necessarily indicative of the results
of operations which would have been reported had the disposition taken place
during those periods or which may be reported in the future. These unaudited
pro forma condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's latest annual report on Form 10-K and quarterly report on Form 10-Q.
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Amtech Corporation d/b/a AMTC Corporation
Pro Forma Condensed Consolidated Balance Sheet
March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-------------------------
Transpor-
tation
Systems Cotag
Historical Group (1) International Pro Forma
---------- ---------- ------------- ---------
(In thousands)
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 17,482 $ 18,459 $ 2,691 (2) $ 38,632
Accounts receivable, net 30,901 (15,570) (663)(2)(3) 14,668
Inventories 13,196 (7,504) (1,158)(3) 4,534
Prepaid expenses 1,006 (221) (169)(3) 616
-------- -------- -------- --------
Total current assets 62,585 (4,836) 701 58,450
Property and equipment, net 12,563 (8,143) (1,887)(3) 2,533
Intangible assets, net 6,550 -- (2,893)(3) 3,657
Other assets 5,777 (4,665) -- 1,112
-------- -------- -------- --------
$ 87,475 $(17,644) $ (4,079) $ 65,752
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 7,220 $ (3,165) $ (1,195)(3) $ 2,860
Accrued expenses 14,034 (8,680) (780)(3) 4,574
Deferred income 1,888 -- -- 1,888
-------- -------- -------- --------
Total current liabilities 23,142 (11,845) (1,975) 9,322
Preferred stock -- -- -- --
Common stock 171 -- -- 171
Additional paid-in capital 86,322 -- -- 86,322
Treasury stock, at cost (393) (10,921) -- (11,314)
Accumulated deficit (21,767) 5,122 (2,104)(2)(3) (18,749)
-------- -------- -------- --------
Total stockholders' equity 64,333 (5,799) (2,104) 56,430
-------- -------- -------- --------
$ 87,475 $(17,644) $ (4,079) $ 65,752
======== ======== ======== ========
</TABLE>
See accompanying notes to Pro Forma Condensed Financial Statements.
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<PAGE>
Amtech Corporation d/b/a AMTC Corporation
Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
--------------------------
Transpor-
tation
Systems Cotag
Historical Group (1) International Pro Forma
---------- ---------- ------------- ---------
(In thousands, except per
share data)
<S> <C> <C> <C> <C>
Sales $ 117,706 $ (50,745) $ (10,319)(4) $ 56,642
Operating costs and expenses:
Cost of sales 80,557 (40,206) (5,450)(4) 34,901
Research and development 11,332 (6,869) (1,773)(4) 2,690
Marketing, general and administrative 41,615 (12,539) (3,571)(4) 25,505
--------- --------- --------- ---------
133,504 (59,614) (10,794) 63,096
--------- --------- --------- ---------
Operating loss (15,798) 8,869 475 (6,454)
Investment income 1,133 (498) (12)(4) 623
Interest expense (65) -- -- (65)
--------- --------- --------- ---------
Loss before income taxes (14,730) 8,371 463 (5,896)
Provision for income taxes 2,887 17 (82)(4) 2,822
--------- --------- --------- ---------
Net loss $ (17,617) $ 8,354 $ 545 $ (8,718)
========= ========= ========= =========
Basic and diluted loss per share $ (1.17) $ (0.58)
========= =========
Shares used in computing basic and
diluted loss per share 15,081 15,081
========= =========
</TABLE>
See accompanying notes to Pro Forma Condensed Financial Statements.
5
<PAGE>
Amtech Corporation d/b/a AMTC Corporation
Pro Forma Condensed Consolidated Statement of Operations
For the Three Months Ended March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
-------------------------
Transpor-
tation
Systems Cotag
Historical Group (1) International Pro Forma
---------- ---------- ------------- ---------
(In thousands, except per
share data)
<S> <C> <C> <C> <C>
Sales $ 31,005 $(15,234) $ (2,490)(5) $ 13,281
Operating costs and expenses:
Cost of sales 18,171 (9,454) (1,135)(5) 7,582
Research and development 2,250 (1,444) (417)(5) 389
Marketing, general and administrative 10,406 (3,082) (873)(5) 6,451
-------- -------- -------- --------
30,827 (13,980) (2,425) 14,422
-------- -------- -------- --------
Operating income (loss) 178 (1,254) (65) (1,141)
Investment income 262 (70) -- 192
-------- -------- -------- --------
Income (loss) before income taxes 440 (1,324) (65) (949)
Provision for income taxes 81 (6) 75
-------- -------- -------- --------
Net income (loss) $ 359 $ (1,318) $ (65) $ (1,024)
======== ======== ======== ========
Basic and diluted earnings (loss) per share $ 0.02 $ (0.06)
======== ========
Shares used in computing earnings (loss) per share:
Basic 16,949 16,949
======== ========
Diluted 16,951 16,951
======== ========
</TABLE>
See accompanying notes to Pro Forma Condensed Financial Statements.
6
<PAGE>
Amtech Corporation d/b/a/ AMTC Corporation
Notes to Pro Forma Condensed Financial Statements
(1) To reflect the Company's sale of its Transportation Systems Group on June
11, 1998 to UNOVA, Inc., as previously reported on Form 8-K dated June 19,
1998.
(2) To reflect estimated proceeds, excluding any contingent payments, of
$2,691,000 cash and $1,583,000 receivable, subject to certain post-closing
adjustments, relative to the sale of the net assets of the Company's Cotag
International unit ("Cotag"), as discussed in Item 2. This transaction will
be recorded in the Company's second quarter and is not reflected in the pro
forma statements of operations.
(3) To reflect the elimination of the assets and liabilities from the sale of
Cotag as discussed in Item 2.
(4) To eliminate the operating results of Cotag for the year ended December 31,
1997.
(5) To eliminate the operating results of Cotag for the three months ended
March 31, 1998.
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(c) EXHIBITS
2.1 Sale and Purchase Agreement, dated July 6, 1998, by and among Amtech
Europe Limited, Metric Security Limited, AMTC (trading name of Amtech
Corporation) and Metric Gruppen AB.
99.1 Press Release issued by the Company on July 7, 1998 relating to the
Sale.
8
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: July 21, 1998 AMTECH CORPORATION d/b/a AMTC Corporation
By: /s/Steve M. York
--------------------------------------------
Steve M. York
Senior Vice President, Chief Financial
Officer, and Treasurer
(Principal Financial Officer and
Duly Authorized Officer)
9
<PAGE>
INDEX TO EXHIBITS
-----------------
Exhibit
Number Description
------ -----------
2.1 Sale and Purchase Agreement, dated July 6, 1998, by and among Amtech
Europe Limited, Metric Security Limited, AMTC (trading name of Amtech
Corporation) and Metric Gruppen AB
99.1 Press Release issued by the Company on July 7, 1998 relating to the
Sale.
10
<PAGE>
EXHIBIT 2.1
DATED 6 July 1998
-----------------
(1) AMTECH EUROPE LIMITED
(2) METRIC SECURITY LIMITED
(3) AMTC
(4) METRIC GRUPPEN AB
----------------------------------------------------------
SALE AND PURCHASE AGREEMENT
relating to the purchase of the Cotag Business
----------------------------------------------------------
ROWE & MAW
20 Black Friars Lane
London EC4V 6HD
Tel: 0171 248 4282
Fax: 0171 248 2009
Ref: 182/599/27887.2
<PAGE>
CONTENTS
CLAUSE SUBJECT MATTER PAGE
1. Interpretation 1
2. Sale and Purchase of the Business 9
3. Purchase Price 11
4. Completion 13
5. Current Contracts and Trade Creditors 13
6. Employees 16
7. Pensions and Related Benefits 19
8. Apportionments 19
9. Warranties 20
10. Seller's Undertaking 21
11. Post-Completion Obligations 23
12. Announcements 25
13. Guarantees 25
14. Value Added Tax 29
15. Costs 29
16. Interest on Overdue Amounts 29
17. Severability 30
18. Restrictive Trade Practices Act 30
19. Amendments, Waivers and Rights 30
20. Law and Jurisdiction 31
21. Notices 32
22. Assignment 32
SCHEDULES
1. Leasing and Rental Arrangements 34
2. The Employees
Part 1: Transferring Employees 35
Part 2: Excluded Employees 36
3. The Property
Part 1: Description of the Property 37
Part 2: Terms and Conditions of Sale of the Property 38
4. Schedule deleted 44
5. Vehicles 45
6. Registered Intellectual Property Rights 46
<PAGE>
7. Consideration Values in Respect of the Assets 49
8. Determination and Certification of Net Revenues and
Card Key Sales 50
9. Completion Arrangements
Part 1: Seller's Obligations 55
Part 2: Purchaser's Obligations 56
10. Schedule deleted 57
11. Warranties 58
12. Limitations on Claims under the Warranties 85
13. Retention 90
14. Determination and Certification of Completion Net Worth 93
15. Basis of Stock-Take 98
<PAGE>
SALE AND PURCHASE AGREEMENT
DATE:
PARTIES:
(1) AMTECH EUROPE LIMITED (registered number 1710122) whose registered office
is at Mercers Row Cambridge CB5 8EX (the "Seller");
(2) METRIC SECURITY LIMITED (registered number 1856129) whose registered office
is at Love Lane, Cirencester, Gloucestershire GL7 1YG (the "Purchaser");
(3) AMTC the trading name of AMTECH CORPORATION a corporation incorporated in
Texas, USA with limited liability whose principal place of business is at
19111 Dallas Parkway Suite 300 Dallas, Texas 75287-3106 (the "Seller's
Guarantor"); and
(4) METRIC GRUPPEN AB a corporation incorporated in Sweden with limited
liability whose principal place of business is at Box 1475, S-171 28 Solna,
Sweden ("the Purchaser's Guarantor").
BACKGROUND:
(A) The Seller owns and carries on for its own account the Business.
(B) The Seller has agreed to sell and transfer the Business as a going concern
and the Purchaser has agreed to purchase the same on the terms of this
Agreement.
(C) In consideration of the Purchaser entering into this Agreement, the
Seller's Guarantor, as a shareholder in the Seller, has agreed to guarantee
the obligations of the Seller under this Agreement.
(D) In consideration of the Seller entering into this Agreement, the
Purchaser's Guarantor, as a shareholder in the Purchaser, has agreed to
guarantee the obligations of the Purchaser under this Agreement.
IT IS NOW AGREED THAT:
1. INTERPRETATION
1.1 DEFINED TERMS
In this Agreement, the following words and expressions shall have the
following meanings:
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"ACCOUNTS" means the audited profit and loss account, balance sheet of the
Seller as at the Balance Sheet Date and any notes on or about them;
"ADVANCE RECEIPTS" means all sums received by or on behalf of the Seller
prior to the Transfer Date in respect of the Business but relating or
attributable to or paid in respect of goods, services or facilities which
remain to be delivered, performed or provided at Completion;
"AGREED FORM" means in the form agreed and initialled by or on behalf of
the parties;
"ASSETS" means the assets of the Business to be sold and transferred to the
Purchaser under this Agreement as described in Clause 2.1 (Assets Being
Sold);
"ASSET CERTIFICATION DATE" means the date upon which, pursuant to paragraph
4.6 of Schedule 14 (Determination and Certification of Completion Net
Worth), the final certificate of the Completion Net Worth shall be issued:
"AUDITORS" means Arthur Andersen;
"BALANCE SHEET DATE" means 31 December 1997;
"BUSINESS" means such part of the Seller's business as relates to the
researching into, development, design, manufacture, marketing and sale of
the Products and supply of the Services and carried on by the Cotag
division of the Seller at and from the Property;
"BUSINESS DAY" means a day (not being a Saturday or Sunday) when clearing
banks are open for business in the City of London;
"COMPANY" means Amtech Europe Limited;
"COMPLETION" means completion of the sale and purchase of the Business
under this Agreement;
"COMPLETION NET WORTH" means the sum computed in accordance with paragraph
3 of Schedule 14 (Determination and Certification of Completion Net Worth);
"COMPLETION STATEMENT" means the statement of the net assets of the
Business as at the Transfer Date to be prepared and certified in accordance
with Schedule 14 (Determination and Certification of Completion Net Worth);
"CONFIDENTIAL INFORMATION" means any business, commercial or financial
information, names of customers or suppliers or any other information of a
proprietary
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or confidential nature in relation to the Business save to the extent
comprised within the Know-how;
"CURRENT CONTRACTS" means the Customer Contracts, the Supplier Contracts,
the Equipment Contracts, the Distribution Agreements and the Intellectual
Property Contracts and all other arrangements, contracts, Warranty
Obligations and orders relating exclusively to the Business outstanding (in
whole or in part) at the Transfer Date but excluding the Leases Debts and
contracts with Employees;
"CUSTOMER CONTRACTS" means all contracts and orders for the sale or supply
by the Seller of the Products and Services entered into by the Seller in
the ordinary course of the Business and outstanding (in whole or in part)
at the Transfer Date including those listed in the Disclosure Letter;
"DEBTS" means all trade, book and other debts (including prepayments made
by the Seller in relation to the Business in respect of the period after
the Transfer Date) owing or accrued due as at the Transfer Date to the
Seller in respect of the Business (whether or not then invoiced and whether
or not then due and payable) together with the benefit of any security
therefor except for the Excluded Debts;
"DEFERRED CONSIDERATION" means the sums due (if any) to the Seller from the
Purchaser in respect of Know-how calculated in accordance with Schedule 8
(Determination and Certification of Net Revenue and Card Key Sales);
"DISCLOSURE LETTER" means the letter in the agreed form bearing the same
date as this Agreement from the Seller to the Purchaser and delivered to
the Purchaser's Solicitors before execution of this Agreement;
"DISTRIBUTION AGREEMENTS" means all sales, agency, distributorship,
franchise and other similar agreements granted to or by the Seller in the
ordinary course of the Business and in force at the Transfer Date including
those with the distributors listed in the Disclosure Letter;
"EMBEDDED PRODUCTS" means such of the Products or other products currently
being supplied by the Seller as part of the Business or supplied by it
during the last three years containing embedded micro-circuitry chips.
"EMPLOYEES" means the persons listed in Schedule 2 (The Employees);
"EQUIPMENT CONTRACTS" means all hire purchase agreements, leasing
agreements, lease purchase agreements, credit sale agreements and
agreements for conditional sale
3
<PAGE>
or sale by instalments to which any of the Assets including items of
firmware or hardware comprised in the System are subject as at the Transfer
Date, as are listed in Schedule 1 (Equipment Contracts);
"EXCLUDED EMPLOYEES" means the persons listed in Part 2 of Schedule 2
(Excluded Employees);
"EXCLUDED DEBTS" means all book and other debts or other sums owed to the
Seller as at the Transfer Date:
(a) in respect of any right to repayment of any VAT or any other tax;
(b) by any member of the Seller's Group;
(c) in respect of any rights to receive any proceeds of any insurance
policy effected by the Seller or refunds for premiums or other moneys
paid in respect of any such insurance policy;
"GOODWILL" means the goodwill of the Business including the exclusive right
on the part of the Purchaser to represent itself as carrying on the
Business in succession to the Seller and to use the name "Cotag" whether
alone or in conjunction with any other word or words, in connection with
the Business;
"INITIAL PAYMENT" means the sum of (Pounds)1,615,000 to be paid by the
Purchaser to the Seller at Completion;
"INTELLECTUAL PROPERTY" means all rights of industrial or intellectual
property including (but without limitation):
(a) letters patent, trade marks, service marks, trade names, business
names, registered designs, utility models and copyrights and
applications for any of the above and the right to apply for these or
similar rights in any country; and
(b) any inventions, discoveries, improvements, processes, formulae, trade
secrets, technology (whether patentable or not), data, drawings,
designs, specifications and technical information of all kinds;
"INTELLECTUAL PROPERTY CONTRACTS" means all contracts and licences of the
Seller or any member of the Seller's Group for the provision to or by the
Seller of any Intellectual Property used in or for the purposes of or in
connection with the Business and in force at the Transfer Date, including
the licences for the use of software or firmware comprised in the System
including those listed in the Disclosure Letter;
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"INTELLECTUAL PROPERTY RIGHTS" means all rights of the Seller or any member
of the Seller's Group at the Transfer Date in Intellectual Property used in
the Business (other than the Know-how and other than Time and Attendance
software of the Seller), including all such rights in and to software
comprised in the System which are registered rights specified in Schedule 6
(Intellectual Property Rights);
"KNOW-HOW" means any information and techniques used in the manufacture or
processing of Products including (but without limitation to) all
technology, data, drawings, designs, specifications and technical
information of all kinds;
"LEASES" means the leases of the Seller of the Property.
"LIABILITIES" means all sums owing or accrued due as at the Transfer Date
other than Trade Creditors to any person by the Seller in respect of the
Business or any of the Assets (whether or not then invoiced, assessed or
otherwise claimed and whether or not then due and payable) and all
obligations, liabilities and duties of the Seller in respect of the
Business other than those expressly assumed by the Purchaser under this
Agreement including all liabilities in respect of National Insurance, PAYE,
VAT or other taxation attributable to the Seller in respect of the
Business, the Assets or the Transferring Employees in respect of the period
up to the Transfer Date; all bank and other overdrafts and loans owing by
the Seller; all premiums or other sums owing in respect of any insurance
policies effected or maintained by the Seller; and all sums owed to any
member of the Seller's Group;
"LONDON STOCK EXCHANGE" means The London Stock Exchange Limited;
"NET REVENUES" is as defined in Schedule 8 (Determination and Certification
of Net Revenues and Card Key Sales);
"PLANT AND EQUIPMENT" means all items of plant, machinery and equipment
(whether fixed or loose) used in connection with the Business including
firmware or hardware comprised in the System save for items of plant,
machinery and equipment or items of firmware or hardware comprised in the
System leased to the Seller pursuant to the Equipment Contracts and all
stores and spares, tools, components and accessories, user manuals and
documentation relating to them;
"PRODUCTS" means the Cards and Readers, the Granta Access Control System,
the Granta-Compact, the Cameo-Plus Video Badging System and all other
products sold by the Seller forming part of the Cotag business as at the
Transfer Date but excluding, for the avoidance of doubt, any products
manufactured or produced by the Cardkey division of the Seller;
5
<PAGE>
"PROPERTY" means all those leasehold premises and land used in connection
with the Business, particulars of which are set out in Part 1 of Schedule 3
(The Property);
"PURCHASER'S ACCOUNTANTS" means Arthur Andersen;
"PURCHASER'S GROUP" means the Purchaser and any holding company of the
Purchaser or any subsidiary of the Purchaser or any such holding company;
"PURCHASER'S SOLICITORS" means Rowe & Maw of 20 Black Friars Lane, London
EC4V 6HD;
"REGULATIONS" means the Transfer of Undertakings (Protection of Employment)
Regulations 1981 (as amended);
"RETENTION" means (Pounds)700,000 being an amount to be retained by the
Purchaser out of the purchase price and to be dealt with in accordance with
Schedule 13;
"RETENTION RELEASE DATE" means 31 January 1999;
"SELLER'S ACCOUNTANTS" means Ernst & Young;
"SELLER'S GROUP" means the Seller's Guarantor and any subsidiary of the
Seller's Guarantor;
"SELLER'S SOLICITORS" means Hewitson Becke & Shaw of Shakespeare House, 42
Newmarket Road, Cambridge CB5 8EP;
"SERVICES" means the commissioning, repair or technical or support services
provided by the Seller to customers in connection with the Products;
"STOCK" means all the stock in trade, finished stocks, partly finished
stocks, work-in-progress, raw materials, stores and components of the
Business at the Transfer Date;
"SUPPLIER CONTRACTS" means all contract engagements and orders (other than
the Distribution Agreements) for the sale or supply to the Seller of goods
or services entered into by the Seller in the ordinary course of the
Business and outstanding (in whole or in part) at the Transfer Date
including those listed in the Disclosure Letter;
"SYSTEM" means the software, hardware or firmware used by the Seller solely
in connection with the Business and/or leased or licensed to the Seller
pursuant to the Equipment Contracts and/or the Intellectual Property
Contracts, and all components thereof (including any embedded micro-
circuitry chips incorporated in any of the Assets).
6
<PAGE>
"TRADE CREDITORS" means all trade and other debts, accrued charges, Advance
Receipts and other amounts owing by the Seller in connection with the
Current Contracts or the operation of the Business in the ordinary course
as at the Transfer Date and any other actual or accrued liabilities
included in the Completion Statement or pursuant to this Agreement;
"TRANSFER DATE" means 12:01am on 1 July 1998;
"TRANSFERRING EMPLOYEES" means the persons listed in Part 1 of Schedule 2
(Transferring Employees);
"VEHICLES" means the motor cars, vans, forklift trucks and other vehicles
(if any) owned by the Seller on Completion for use in the conduct of the
Business as listed in Schedule 5 (Vehicles) and all spares, tools,
components, accessories, manuals and documentation relating to them;
"WARRANTIES" means the warranties and undertakings set out in Schedule 12
(Warranties); and
"WARRANTY OBLIGATIONS" means all obligations and liabilities of the Seller
to purchasers of the Products (or other products of the Business previously
supplied by the Seller) under the terms of the Warranties given in respect
of any such products in the ordinary course of business on standard terms
of the Seller.
1.2 MEANING OF REFERENCES
In this Agreement, unless the context requires otherwise:
(a) the index and headings are included for convenience only and shall not
affect the interpretation or construction of this Agreement;
(b) a reference to the Background is to the statements about the
background to this Agreement made above and a reference to a Clause or
Schedule is to a clause of or schedule to this Agreement (as the case
may be) and a reference made in a Schedule to a Part or a Paragraph is
to a part or a paragraph of that Schedule;
(c) references to "this Agreement" include the Schedules, which form part
of this Agreement for all purposes;
(d) references to a statute or statutory provision include any re-
enactment, modification or replacement of the same made prior to the
date hereof and any
7
<PAGE>
statute or statutory provision of which it is a re-enactment or
replacement and any subordinate legislation in force under any of the
same from time to time;
(e) references to the masculine, feminine or neuter gender respectively
include the other genders, references to the singular include the
plural (and vice versa);
(f) references to a "person" include a firm, corporation, unincorporated
association, government, state or agency of state, any association or
partnership or joint venture (whether or not having a separate legal
personality);
(g) references to a document are to that document as varied, supplemented
or replaced from time to time;
(h) a reference to a date or time is a reference to that date or time in
London, England;
(i) references to any English statutory provision or English legal term
for any action, remedy, method of judicial proceeding, document, legal
status, court, official or any legal concept or thing shall in respect
of any jurisdiction other than England be deemed to include what most
nearly approximates in that jurisdiction to the English statutory
provision or English legal term;
(j) a person shall be deemed to be connected with another if that person
is connected with another within the meaning of s.839 of the Income
and Corporation Taxes Act 1988;
(k) references to writing shall include any modes of reproducing words in
a legible and non-transitory form;
(l) references to "indemnify" and to "indemnifying" any person against any
circumstance include indemnifying and keeping him harmless from all
actions, claims and proceedings from time to time made against that
person and all loss or damage and all payments, costs or expenses made
or incurred by that person as a consequence of or which would not have
arisen but for that circumstance but shall not include the cost of
management time expended in dealing with such actions, claims or
proceedings.
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1.3 NO RESTRICTIVE INTERPRETATIONS
In this Agreement general words shall not be given a restrictive
interpretation by reason of their being preceded or followed by words
indicating a particular class of acts, matters or things.
1.4 COMPANIES ACT DEFINITIONS
In this Agreement, unless the context otherwise requires, words and
expressions defined in Part XXVI Companies Act 1985 shall bear the meaning
ascribed to them in that Act and references to the Companies Act shall mean
the Companies Act 1985.
1.5 REFERENCES TO AWARENESS, ETC.
Any reference to the knowledge, information, belief or awareness of any
person shall be deemed to include any knowledge, information, belief or
awareness which the person would have if he had made all usual and
reasonable enquiries.
2. SALE AND PURCHASE OF THE BUSINESS
2.1 ASSETS BEING SOLD
Subject to the terms of this Agreement, the Seller shall sell and the
Purchaser (relying on the warranties, undertakings and indemnities
contained in this Agreement) shall purchase as at and from the Transfer
Date free from all liens, charges, equities and encumbrances the legal and
beneficial ownership of the Business as a going concern including the
following Assets, namely:
(a) the Goodwill;
(b) the Property, subject to obtaining the relevant landlord's consent to
the assignment of the leases;
(c) the Know-how;
(d) the Plant and Equipment;
(e) the Vehicles;
(f) the Stock;
(g) subject to any necessary consent of a third party, the benefit
(subject to the burden) of the Current Contracts;
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(h) the Intellectual Property Rights (subject to any licences or other
rights granted by third parties);
(i) the benefit (so far as the same can be assigned or transferred to or
held in trust for the Purchaser) of all rights and claims of the
Seller under any warranties, conditions, representations, guarantees
or indemnities in favour of the Seller in respect of the Business and
subsisting at the Transfer Date, including all the Seller's rights
against manufacturers and suppliers with respect to any goods and
materials supplied by such manufacturers and suppliers and sold to the
Purchaser pursuant to this Agreement or incorporated into any of the
Assets;
(j) all lists of customers and suppliers and all books and records
relating to the Business and the Products and Services and all sales
literature (other than any bearing the 'Amtech' name) which is used or
capable of being used in connection with the Business;
(k) all books of account and records of the Business relating to inputs
and outputs for Value Added Tax purposes as are referred to in Section
49 of the Value Added Tax Act 1994 and copies of all returns made for
Value Added Tax purposes during the period of two years ending on the
Transfer Date;
(l) the Debts and all bills, notes and securities in the possession of the
Seller relating to the Debts;
(m) the System to the extent it is not comprised in the Assets referred to
above; and
(n) all other property, rights and assets of the Seller used, enjoyed or
exercised exclusively in connection with the Business and not
otherwise specified in this Clause 2.1 and Clause 2.2.
2.2 ASSETS EXCLUDED FROM SALE
There shall be excluded from the sale and purchase of the Business and
retained by the Seller:
(a) the Liabilities;
(b) cash in hand (including cash floats held in relation to the Business
at the Transfer Date) and cash at bank (whether on current or deposit
account) relating to the Business including uncleared cheques received
up to and including the Transfer Date;
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(c) the Excluded Debts;
(d) all and any rights to use the name 'Amtech'; and
(e) the Lexus motor vehicle used by S M Evans, registration number M2 TOP.
2.3 SELLER'S COVENANT
The Seller covenants that:
(a) it has full power and the right to transfer the legal and beneficial
title to the Assets;
(b) save as specified in the Disclosure Letter, the Assets shall on
Completion be free from all claims, options, restrictions, liens,
mortgages, charges and other encumbrances (whether monetary or not) or
security interest of any kind and from all other rights exercisable by
third parties; and
(c) it will execute at its own cost and expense such documents as the
Purchaser considers necessary to transfer the legal and beneficial
ownership of the Assets to the Purchaser and secure to the Purchaser
the rights attaching thereto.
2.4 The Property shall be let upon and subject to the terms and conditions set
out or referred to in Part 2 of Schedule 3 Terms and Conditions of the
Property).
2.5 Save as specifically provided herein, the sale and purchase of each of the
Assets shall be interdependent and completed simultaneously.
2.6 Nothing in this Agreement shall pass to the Purchaser or be construed as an
acceptance by the Purchaser of any liability or obligation of the Seller
other than as expressly set out in this Agreement.
3. PURCHASE PRICE
3.1 The purchase price ("the Total Purchase Price") for the sale and purchase
of the Business and Assets shall be a sum equal to:
(a) the Completion Net Worth, less (Pounds)300,000 being a deduction
agreed between the Seller and the Purchaser;
(b) the sum of (Pounds)250,000; plus
(c) the Retention; plus
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(d) the Deferred Consideration.
3.2 The Total Purchase Price shall be satisfied by the Purchaser:
(a) as to the sum specified in 3.1(a) above, on Completion, by the payment
to the Seller of the Initial Payment and the balance, if any, on the
Asset Certification Date by the payment to the Seller in cash of an
amount equal to the amount (if any) by which the Initial Payment falls
short of the Completion Net Worth;
(b) as to the sum of (Pounds)250,000 by the payment of such an amount to
the Seller on 1 December 1998;
(c) as to the Retention, in accordance with Schedule 13 (Retention); and
(d) as to the Deferred Consideration, in accordance with Schedule 8
(Determination and Certification of Net Revenue and Card Key Sales).
3.3 IF COMPLETION NET WORTH IS LESS/MORE THAN INITIAL PAYMENT
(a) Notwithstanding any other provision of this Agreement, if the
Completion Net Worth (after subtracting the agreed deduction of
(Pounds)300,000) is less than the Initial Payment, the Seller shall be
liable to pay to the Purchaser, within seven days after the Asset
Certification Date, the full amount of the shortfall to the Purchaser,
together with interest accrued at the rate of 3% above the base rate
from time to time of Barclays Bank plc, which shall be chargeable from
Completion to the date of such reimbursement;
(b) Notwithstanding any other provision of this Agreement, if the
Completion Net Worth (after subtracting the agreed deduction of
(Pounds)300,000) is more than the Initial Payment, the Purchaser shall
be liable to pay to the Seller, within seven days of the Asset
Certification Date, the full amount of the excess to the Seller,
together with interest accrued at the rate of 3% above the base rate
of Barclays Bank plc, which shall be chargeable from Completion to the
date of such payment.
3.4 INTEREST PAYABLE
If either party retains any amount, payable pursuant to either Clause
3.2(a) or 3.3, beyond seven days after the determination of the Completion
Net Worth, interest shall accrue on that amount after such period, at the
rate of 4% above base rate from time to time of Barclays Bank plc.
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3.5 METHOD OF PAYMENT
All payments to be made pursuant to this Agreement shall be made by
banker's draft on a branch of a London clearing bank or by telegraphic
transfers to the account notified by the party due to receive the payment
to the other party not later than two days before the date of payment.
4. COMPLETION
4.1 COMPLETION
Completion shall take place immediately after the execution of this
Agreement.
4.2 SELLER'S OBLIGATIONS AT COMPLETION
At Completion, the Seller shall do those things listed in Part 1 of
Schedule 9 (Completion Arrangements).
4.3 PURCHASER'S OBLIGATIONS AT COMPLETION
At Completion, the Purchaser shall do those things listed in Part 2 of
Schedule 9 (Completion Arrangements).
4.4 TITLE TO THE ASSETS TO PASS ON DELIVERY
Ownership of all Assets (save for those Current Contracts and Intellectual
Property Rights which cannot be assigned at Completion) shall pass to the
Purchaser upon Completion notwithstanding that certain of such Assets shall
remain in the possession of the Seller.
5. CURRENT CONTRACTS AND TRADE CREDITORS
5.1 PURCHASER TO CARRY OUT CONTRACTS
The Purchaser shall after Completion (but subject to the provisions of this
Clause 5) assume the obligations under and carry out and complete for its
own account the Current Contracts to the extent that they have not been
performed prior to the Transfer Date.
5.2 SEEKING CONSENTS TO SUBSTITUTION
The Seller shall, at its own cost and at the request of the Purchaser, use
all its reasonable endeavours to procure that the other parties to the
Current Contracts shall
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consent to the substitution of the Purchaser in the place of the Seller as
a party to the relevant Current Contract with effect from the Transfer Date
(whether by contract, assignment, novation or otherwise).
5.3 IF CONSENT IS NOT FORTHCOMING
In any case where the consent referred to in Clause 5.2 shall be refused or
otherwise not obtained and until such consent shall be obtained:
(a) subject to the Purchaser complying with the provisions of Clause
5.3(b), the Seller shall hold the Current Contracts and any monies,
goods or other benefits received under the Current Contracts as agent
of and trustee for the Purchaser and shall, immediately upon receipt
of the same, account for and pay or deliver to the Purchaser without
any deduction or withholding whatsoever all such monies, goods and
other benefits; and
(b) subject to the Seller complying with the provisions of Clause 5.3(a),
the Purchaser shall indemnify the Seller against or reimburse the
Seller for any payment required to be made or other liability incurred
by the Seller in relation to the Current Contracts in respect of the
period after the Transfer Date except to the extent that the payment
or liability shall arise as a result of the failure by the Seller duly
to perform and comply with the terms of the relevant Current Contract
prior to Completion (other than pursuant to Warranty obligations).
5.4 INDEMNITY RE CURRENT CONTRACTS
The Seller shall indemnify and keep indemnified the Purchaser from any non-
performance or defective or negligent performance or other breach by the
Seller prior to Completion in relation to the Current Contracts, except in
relation to any Warranty Obligation.
5.5 SET-OFFS AND COUNTERCLAIMS
If any person, making payment after the Transfer Date of any sum pursuant
to a Current Contract (the benefit of which payment in accordance with the
terms of this Agreement is to accrue to the Purchaser), shall claim any
right of set-off or counterclaim in respect of any act or thing done or
omitted to be done by the Seller prior to the Transfer Date, the Seller
shall immediately account to the Purchaser or as it may direct, for an
amount equal to the difference between the payment which would have been
received had no such right of set-off or counterclaim been exercised or
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claimed and the payment actually received. This Clause shall however not
apply to the exercise of any right of set-off or counterclaim in respect of
Warranty Obligations.
5.6 PURCHASER TO FULFIL PRODUCT AND SERVICES GUARANTEES
The Purchaser shall fulfil as far as reasonably practicable all the
unexpired or undischarged obligations of the Seller under all warranties
and guarantees which the Seller shall have given in respect of such of the
Products and Services as are covered by such guarantees and which shall or
may require remedial works to be carried out.
5.7 NO ASSIGNMENT OF NON-ASSIGNABLE CONTRACTS
Neither this Agreement nor any action carried out in pursuance of it shall
constitute an assignment or attempted assignment of any of the Current
Contracts which are not assignable without the consent of another person if
such assignment or attempted assignment would constitute a breach of such
Current Contract except to the extent that such consent is obtained.
5.8 The Seller shall have no liability to the Purchaser under any of Clauses
5.4, 5.5 or 5.6 to the extent that the liability under the Current
Contracts is included in the Completion Statement or a provision or reserve
is made therein in respect of the amount of such liability, set-off,
counterclaim or remedial works (as the case may be).
5.9 The Purchaser shall be responsible for and shall pay or discharge the Trade
Creditors and will indemnify the Seller against all liabilities which the
Seller may suffer, sustain or incur by reason of the Purchaser failing to
comply with its obligations under Clause 5.10.
5.10 The Purchaser hereby undertakes to indemnify the Seller to keep the Seller
indemnified against any and all liabilities and obligations arising from
carrying on the Business from the Transfer Date (but without prejudice to
any claims that the Purchaser may have against the Seller for any breach of
this Agreement).
5.11 The Purchaser will promptly notify the Seller of any complaint, claim or
dispute or alleged complaint, claim or dispute received by it or any matter
or thing which, in its reasonable opinion, is likely to give rise to a
claim or alleged claim and which in each case is or would be a matter,
dispute or claim for which the Seller is or would be responsible or liable
in respect of the period prior to Completion and the Purchaser will provide
to the Seller such information and assistance as might be reasonably
requested of it by the Seller in order for it to prosecute, defend or
otherwise deal with the claim and the Seller shall indemnify the Purchaser
in respect of any costs or other liabilities
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which may be incurred by the Purchaser in connection with provision of any
such information or assistance.
5.12 All profits and receipts of the Business and all losses and outgoings
incurred or payable by the Business as from the Transfer Date shall belong
to and be paid and discharged by the Purchaser and during the period from
the Transfer Date up to Completion the Seller shall be deemed to have been
carrying on the Business as agent for the Purchaser and shall account to
the Purchaser accordingly.
6. EMPLOYEES
6.1 EXCLUDED EMPLOYEES
The Seller has notified each of the Excluded Employees that they shall
remain employees of the Seller and that their respective contracts of
employment are to be terminated at the Seller's expense after Completion.
6.2 PAYMENTS UP TO COMPLETION
(a) Without limiting Clause 8.4 (Apportionment of Periodical Charges), all
salaries and other emoluments of the Employees shall be discharged and
all Pay As You Earn tax deduction and National Insurance Contribution
regulations shall be complied with by the Seller in respect of all
periods up to and including the Transfer Date and the salaries and
wages of the Transferring Employees in respect of the period after the
Transfer Date shall be for the account of the Purchaser.
(b) For the avoidance of doubt, the three (Pounds)15,000 bonus payments to
be paid on Completion to each of G Bissell, N Rix and C Hedlund shall
fall to the account of the Seller.
(c) Further, the Seller shall indemnify and keep indemnified the Purchaser
against all claims, liabilities, losses and costs (including without
limitation legal costs) arising out of or in connection with the
employment or termination of employment of the said S M Evans.
6.3 APPLICATION OF THE REGULATIONS
The Seller and the Purchaser acknowledge and agree that the Regulations
will apply to the sale and purchase of the Business under this Agreement
and to the Transferring Employees.
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6.4 SELLER'S INDEMNITY
The Seller shall indemnify and keep indemnified the Purchaser against all
claims, liabilities, losses and costs (including without limitation legal
costs) arising out of or relating to:
(a) any breach by the Seller and any other failure to comply with its
obligations and duties prior to the Transfer Date arising out of or
relating to the employment of any of the Transferring Employees;
(b) the employment or termination of employment of any Excluded Employee
and any other employee or person engaged in the Business or by the
Seller who is not a Transferring Employee and where such liabilities
transfer or are alleged to transfer to the Purchaser pursuant to the
Regulations;
(c) any claim by a recognised trade union, works council, staff
association or other representative, person or body (whether elected
or not) in respect of the Transferring Employees arising out of the
Seller's failure to comply with its legal obligations to such union,
council, association, representative, body or person, including any
breach of Regulation 10 of the Regulations save where such claim is
attributable to any failure by the Purchaser to notify the Seller of
what measures it proposes to take with regard to the Transferring
Employees after Completion.
6.5 EMPLOYEES NOT COVERED BY THE REGULATIONS
If any contract of employment of any Transferring Employee is found or
alleged to continue with the Seller after Completion, the Purchaser agrees
that:
(a) in consultation with the Seller, it will within seven days of
discovering such a finding or allegation make to that person an offer
in writing to employ him or her under a new contract of employment to
take effect upon the termination referred to below; and
(b) such offer of employment will be on terms and conditions which when
taken as a whole do not materially differ from the terms and
conditions of employment of that person immediately before Completion
(save as to the identity of the employer and any terms relating to an
occupational pension scheme).
Upon that offer being made by the Purchaser, the Seller shall terminate the
employment of the Transferring Employee concerned and the Purchaser shall
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indemnify the Seller against all claims, liabilities, losses and expenses
arising directly or indirectly out of the employment of that Transferring
Employee from Completion until the termination of such employment.
6.6 PERSONS OTHER THAN EMPLOYEES TO WHOM THE REGULATIONS APPLY
If any contract of employment of any person who is not a Transferring
Employee is found or alleged to have effect pursuant to the Regulations
after Completion as if it was a contract of employment originally made with
the Purchaser, the Seller agrees that:
(a) in consultation with the Purchaser, it will within seven days of being
so requested by the Purchaser make to that person an offer in writing
to employ him or her under a new contract of employment to take effect
on the termination referred to below; and
(b) such offer of employment will be on terms and conditions which, when
taken as a whole do not materially differ from the terms and
conditions of employment of that person immediately before Completion.
Upon that offer being made, or at any time after the expiry of seven days
from a request by the Purchaser for the Seller to make that offer, the
Purchaser shall terminate the employment of the person concerned, and the
Seller shall indemnify the Purchaser against all claims, liabilities, costs
and expenses arising directly or indirectly out of the employment of such
person from Completion until the termination of such employment.
6.7 EMPLOYEE OBJECTIONS
If any Transferring Employee informs the Seller or the Purchaser that he or
she objects to the transfer of his employment to the Purchaser under this
Agreement pursuant to the Regulations, the Seller or the Purchaser (as the
case may be) shall notify the other forthwith and, they shall use all
reasonable endeavours to persuade such Transferring Employee to withdraw
that objection and accept employment with the Purchaser.
6.8 MUTUAL ASSISTANCE
Without prejudice to clause 6.3, the Seller and the Purchaser shall give
each other such assistance as either may reasonably require to comply with
the Regulations in relation to the Transferring Employees and in contesting
any claim by any person employed or
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engaged in the Business at or before Completion resulting from or in
connection with this Agreement.
7. PENSIONS AND RELATED BENEFITS
CLAUSE DELETED
8. APPORTIONMENTS
8.1 INDEMNITY RE LIABILITIES
The Seller shall be responsible for, discharge and indemnify and keep the
Purchaser indemnified from and against the Liabilities and all claims,
proceedings, demands, damages, costs and expenses made or incurred in
connection with them (save to the extent included in the Completion
Statement).
8.2 ADVANCE RECEIPTS
To the extent that such Advance Receipts are not included or provided for
in the Completion Statement the Advance Receipts shall belong to the
Purchaser and immediately upon demand the Seller shall pay to the Purchaser
the full amount of the Advance Receipts together with interest on that
amount at the rate of 3% per annum above the base rate of Barclays Bank plc
from time to time in force computed from Completion down to the date of
payment.
8.3 IF PURCHASER DISCHARGES LIABILITIES
If the Purchaser shall, after Completion, pay or discharge any of the
Liabilities in whole or in part and whether directly or by virtue of any
right of return, set off or counterclaim exercised or claimed by any person
in respect of sums otherwise payable to the Purchaser (whether or not by
virtue of this Agreement) or otherwise and provided that the Purchaser
shall have given to the Seller not less than three Business Days' notice of
any intention to make such payment, the Seller shall immediately pay to the
Purchaser a sum equal to the amount of the Liabilities so paid or
discharged by the Purchaser together with interest on that amount at the
rate of 3% per annum above the Base Rate of Barclays Bank plc from time to
time in force computed from the date of payment or discharge by the
Purchaser down to the date of such payment to the Purchaser by the Seller.
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8.4 APPORTIONMENT OF PERIODICAL CHARGES
To the extent that all such periodical charges and outgoings are not
included or provided for in the Completion Statement, all periodical
charges and outgoings of the Business (including but not limited to
rents, rates, gas, electricity, water and telephone charges and all
liabilities in relation to salaries, wages, accrued holiday pay,
national insurance and pension contributions and other payments
(including, without limitation, holiday pay entitlements, health
insurance, block policy premiums and season ticket loans or other
advances to or in respect of the Transferring Employees)) shall be
apportioned on a time basis so that such part of the relevant charges
attributable to the period ended on the Transfer Date shall be borne
by the Seller and such part of the relevant charges attributable to
the period commencing on the day immediately following the Transfer
Date shall be borne by the Purchaser. All rents, licence fees,
royalties and other periodical receipts of the Business shall be
apportioned between the Seller and the Purchaser on a like basis.
9. WARRANTIES
9.1 WARRANTIES TRUE AND ACCURATE
The Seller warrants and undertakes to and with the Purchaser that the
Warranties are at the date of this Agreement and as at the Transfer
Date true and accurate in all respects.
9.2 LIMITATIONS OF LIABILITY
The Warranties are subject to the matters set out in Schedule 12
(Limitations on claims under the Warranties) Provided Always that such
limitations shall not apply to any claim which arises as a consequence
of, or is delayed as a result of fraud, wilful misconduct or wilful
concealment by the Seller or any of its representatives.
9.3 WARRANTIES ARE SEPARATE AND INDEPENDENT
The Warranties shall be separate and independent and save as expressly
provided shall not be limited by reference to any other paragraph of
Schedule 11 or anything in this Agreement.
9.4 REMEDIES NOT LIMITED
The remedies of the Purchaser or the amount receivable by the
Purchaser in respect of breach of any of the Warranties shall not be
extinguished, reduced or in any way affected by Completion.
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9.5 INDEMNITY ON PATENT
The Seller shall indemnify the Purchaser and the Purchaser's Group and
keep the Purchaser and the Purchaser's Group fully and effectively
indemnified against all costs, claims, demands and expenses arising
out of any infringement or alleged infringement of US Patent 4514731
by the Purchaser and the Purchaser's Group in carrying on the Business
in relation to the subject matter of the said patent in the manner
carried on or planned to be carried on by the Seller prior to
Completion provided always that the Purchaser and the Purchaser's
Group shall:
(1) Promptly notify the Seller in writing of any allegation of such
infringement of which it has notice and will not make any
admission without the prior written consent of the Seller;
(2) Permit the Seller to conduct and/or settle all negotiations and
litigation resulting from any such allegation;
(3) At the request of the Seller afford all reasonable assistance
with such negotiations or litigation;
(4) Not take any action calculated to alert any third party to any
such infringement or possible infringement.
10. SELLER'S UNDERTAKING
10.1 For the purpose of assuring to the Purchaser the full benefit of the
Business, the Seller hereby agrees with and undertakes to the
Purchaser that:
10.1.1 during the period of two years after the date hereof it shall
not sell any products or systems manufactured by the Business
to any existing resellers of the Business in any part of the
world other than in North America, South America and Central
America except to any resellers who are existing resellers of
the Cardkey business owned by the Seller ("Cardkey") or of
Cardkey Systems Inc;
10.1.2 it shall not sell any products or systems manufactured by the
Business to any resellers in the United Kingdom during the
period of two years after the date hereof.
10.1.3 for the period of twelve months from the date hereof, it
shall not solicit or entice away from the employment of the
Purchaser any Transferring Employee who had access to any of
the Know-how or any Confidential Information or
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any confidential information relating to the Intellectual
Property Rights or who would be able to exploit the
connections of the Business;
10.1.4 it shall not make use of, for its own purposes or for the
purposes of any other person or publish or disclose to any
person any of the Know-how or any Confidential Information or
any confidential information relating to the Intellectual
Property Rights and shall procure that its employees, agents
and representatives shall not do any of such things in the
performance of their duties.
10.2 ASSOCIATED COMPANIES ALSO BOUND
10.2.1 If within the period of two years from the date hereof the
Seller shall sell Cardkey to any other person (other than
another member of the Seller's Group), the Seller shall
procure that either (a) the purchaser thereof enters into a
Deed in favour of the Purchaser agreeing to be bound by or
(b) procure that the purchaser thereof complies with, the
provisions of Clause 10.1 during the remainder of such period
and this Clause 10.2.1 as if references to the Seller were
references to such purchaser;
10.2.2. the Seller shall procure that any company, which shall be
from time to time a subsidiary or holding company of the
Seller, shall at all times comply with each of the
restrictions in Clause 10.1 so long as such restrictions
shall subsist.
10.3 REASONABLE RESTRICTIONS
The Seller acknowledges that the restrictions contained in Clause 10
are fair and reasonable restrictions having regard to the acquisition
by the Purchaser of the Goodwill and other Assets of the Business but,
in the event that any such restriction shall be found to be void but
would be valid if some part of it were deleted or the area of
operation or the period of application reduced, such restriction shall
apply with such modifications as may be necessary to make it valid and
effective.
10.4 PURCHASER'S UNDERTAKING
The Purchaser undertakes to the Seller that for the period of twelve
months from the date hereof, it shall not solicit or entice away from
the employment of the Seller or Cardkey Systems Inc any of the current
employees of Cardkey or Cardkey Systems Inc who have access to any of
the Know-how or Confidential Information or any confidential
information relating to the Intellectual Property Rights of Cardkey or
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Cardkey Systems Inc or who would be able to exploit the connections of
the businesses of Cardkey or Cardkey Systems Inc.
11. POST-COMPLETION OBLIGATIONS
11.1 ASSISTANCE BY SELLER
On and after Completion (but not in any event later than 30 September
1999), the Seller shall at its own cost:
(a) do, execute and perform all such acts, deeds, documents and
things (or procure the doing, execution or performance of them)
as the Purchaser may from time to time reasonably require for the
purpose of vesting in title to the Business and Assets (excluding
the Intellectual Property Rights) and pending such vesting the
Seller shall hold the benefit of the Business and the Assets in
trust for the Purchaser;
(b) from time to time supply to the Purchaser such information in its
possession or control as the Purchaser may reasonably require for
the purpose of implementing the provisions of this Agreement;
(c) supply to the Purchaser such information, data and particulars of
suppliers, customers and others having dealings with the Seller
in the possession or control of the Seller in connection with the
Business as shall be reasonably required by the Purchaser to
enable it to carry on the Business in the same manner as the
Seller;
(d) give to the Purchaser all reasonable assistance to enable the
Purchaser to enforce or obtain the full benefit of any rights
against third parties hereby transferred to the Purchaser.
11.2 ACCESS TO BOOKS AND RECORDS
As from Completion, the Seller and the Purchaser shall each give to
the other such reasonable access to the books, accounts, records and
returns of the other relating to or in connection with the Business as
the other may require (including the right to take copies and extracts
on reasonable advance notice) within the period of six calendar years
from the Completion Date and will during the said period keep the same
in good order. The Seller shall deliver to the Purchaser at Completion
or as soon as reasonably practicable thereafter all records required
to be preserved for any period after the transfer of the Business
hereunder in compliance with paragraph 7 of Schedule 7 to the
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Value Added Tax Act 1983 unless the Seller shall be unable to separate
such records from its own records to be retained in which event the
Seller shall apply to H.M. Customs & Excise for permission to retain
such records in accordance with Section 33(i)(b) of the said Act and
any records retained by the Seller will be made available to the
Purchaser in accordance with the above provisions of this Clause.
11.3 TRADE NAMES AND LOGOS
As from Completion, the Seller shall cease and shall procure that any
member of the Seller's Group shall cease to trade under or use in any
way the Cotag name or trade marks or use in any way any of the names
and logos used in connection with the Business or any names resembling
the same and the Seller shall give to the Purchaser such assistance as
the Purchaser may reasonably request to ensure that the Purchaser has,
after Completion, sole and undisputed rights to use all such names and
logos.
11.4 The Purchaser undertakes not to use the name 'Amtech' after Completion
or use or issue any sales literature, brochures or other document
carrying such name nor hold itself out as otherwise connected with the
Seller or the Seller's Guarantor.
11.5 The Purchaser shall allow the Seller a reasonable time after
Completion to remove any documents records or other assets of the
Seller which do not form part of the sale and purchase hereunder,
including any of the assets specifically excluded pursuant to Clause
2.2, any board minutes, registers and other corporate records of the
Seller or relating to the Seller's Guarantor, any documents or records
relating to the negotiation of this Agreement, any records relating to
employees of the Seller (other than the Transferring Employees) and
any personal assets and records of S M Evans.
11.6 The Purchaser agrees to deal with the administration of, or give to
the Seller such assistance and information as it reasonably requires
to deal with, completion of the Seller's VAT returns for the current
period, the issue of P45s to employees of the Business in connection
with the sale hereunder and accounting for PAYE and National Insurance
and other deductions from salaries of such employees for the month of
June 1998.
11.7 The Purchaser undertakes that it shall not at any time make use of,
for its own purposes or for the purposes of any other person, or
publish or disclose to any person any information in respect of any
intellectual property rights, know-how and confidential information
which belongs to the Seller but does not relate to the Business
(including any such rights, know-how and information) owned by the
Seller in
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connection with its Card Key division and shall procure that its
employees, agents and representatives shall not do any of such things
in the performance of their duties.
12. ANNOUNCEMENTS
12.1 NOTIFICATION OF CUSTOMERS AND SUPPLIES
Within 5 days after Completion the parties shall send a letter in the
Agreed Form to each customer and supplier of the Business and to such
other persons as the parties may agree announcing the purchase of the
Business by the Purchaser.
12.2 PRIOR APPROVAL OF CIRCULARS ETC.
Subject to Clause 12.3 no other public announcements, circulars or
communications relating to this Agreement or the subject matter of it
shall be made or sent by any of the parties without the prior written
approval of the other parties, such approval not to be unreasonably
withheld or delayed.
12.3 CONSULTATION PRIOR TO ANNOUNCEMENTS
If any announcement, circular or communication shall be required by
law or by any stock exchange the party making it shall use all
reasonable endeavours to consult with the other parties prior to its
despatch and shall, so far as may be reasonable, take account of the
comments of the other parties with respect to its content and the
timing and manner of its despatch.
13. GUARANTEES
13.1 THE GUARANTEE OF THE SELLER'S GUARANTOR
If the Seller shall fail to comply with any of the provisions of this
Agreement on the due date, then the Seller's Guarantor as primary
obligor guarantees that it shall (on demand by the Purchaser)
immediately perform and discharge the obligations of the Seller under
those provisions.
13.2 CONTINUING GUARANTEE
The guarantee set out in Clause 13.1:
(a) shall be a continuing guarantee and shall remain in force and
effect until the Seller shall perform and discharge all of its
obligations under this Agreement; and
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(b) shall be additional to (and not in substitution for) any other
security or guarantee which shall or may be held by the Purchaser
from time to time in respect of the obligations of the Seller
under this Agreement.
13.3 NO RELEASE
The Seller's Guarantor's liability under Clause 13.1 shall not be
affected by any concession, time, indulgence or release granted by the
Purchaser to the Seller or by any other dealing or anything else
(whether relating to the Seller, any co-guarantor or any other person)
which would, but for this Clause 13.3, operate to discharge or reduce
that liability.
13.4 INVALIDITY OF UNENFORCEABILITY OF GUARANTEE
If anything (including any legal limitation, disability or incapacity
on the part of the Seller) shall cause any of the Seller's obligations
under this Agreement and/or the guarantee set out in Clause 13.1 to be
or become invalid or unenforceable, then the Seller's Guarantor shall
perform and discharge all of the Seller's obligations under this
Agreement as if they were the primary obligations of the Seller's
Guarantor.
13.5 INDEMNITY BY SELLER'S GUARANTOR
The Seller's Guarantor shall indemnify and keep indemnified the
Purchaser against any losses, liabilities, costs and expenses
resulting from the failure of the Seller to observe any of the
provisions of this Agreement.
13.6 NO DEDUCTIONS
The Seller's Guarantor shall make any payments due from it under this
Clause 13 in full, without any deduction or withholding in respect of
any claim (whether by way of set-off, counterclaim or otherwise)
asserted from time to time by the Seller against the Purchaser under
this Agreement or in respect of anything else.
13.7 In respect of any claim against the Seller's Guarantor under this
Clause 13, the Seller's Guarantor shall (in addition to any other
rights it may have) have the same rights of defence and limitations of
liability against the Purchaser or in respect of any claim made by it,
including rights of defence, set-off or counterclaim and the rights
and limitations on its liability contained in Schedule 12, as it would
have or would be available to it if the Seller's Guarantor were party
to this Agreement in place of the Seller and shall not have any
liability to the Purchaser to that extent.
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13.8 NO FIRST DEMAND OF SELLER NECESSARY
The Purchaser may claim under the guarantee set out in Clause 13.1
without first making demand of the Seller or taking any action to
claim under or enforce any other right, security or other guarantee
which it may hold from time to time in respect of the Seller's
obligations under this Agreement.
13.9 UNCONDITIONAL AND IRREVOCABLE GUARANTEE
The Seller's Guarantor's obligations under this Clause 13, including
its guarantee under Clause 13.1, shall be unconditional and
irrevocable.
13.10 THE GUARANTEE OF THE PURCHASER'S GUARANTOR
If the Purchaser shall fail to comply with any of the provisions of
this Agreement on the due date, then the Purchaser's Guarantor as
primary obligor guarantees that it shall (on demand by the Seller)
immediately perform and discharge the obligations of the Purchaser
under those provisions.
13.11 CONTINUING GUARANTEE
The guarantee set out in Clause 13.10:
(a) shall be a continuing guarantee and shall remain in force and
effect until the Purchaser shall perform and discharge all of its
obligations under this Agreement; and
(b) shall be additional to (and not in substitution for) any other
security or guarantee which shall or may be held by the Seller
from time to time in respect of the obligations of the Purchaser
under this Agreement.
13.12 NO RELEASE
The Purchaser's Guarantor's liability under Clause 13.10 shall not be
affected by any concession, time, indulgence or release granted by the
Seller to the Purchaser or by any other dealing or anything else
(whether relating to the Purchaser, any co-guarantor or any other
person) which would, but for this Clause 13.12, operate to discharge
or reduce that liability.
13.13 INVALIDITY OF UNENFORCEABILITY OF GUARANTEE
If anything (including any legal limitation, disability or incapacity
on the part of the Purchaser) shall cause any of the Purchaser's
obligations under this Agreement and/or
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the guarantee set out in Clause 13.10 to be or become invalid or
unenforceable, then the Purchaser's Guarantor shall perform and
discharge all of the Purchaser's obligations under this Agreement as
if they were the primary obligations of the Purchaser's Guarantor.
13.14 INDEMNITY BY PURCHASER'S GUARANTOR
The Purchaser's Guarantor shall indemnify and keep indemnified the
Seller against any losses, liabilities, costs and expenses resulting
from the failure of the Purchaser to observe any of the provisions of
this Agreement.
13.15 NO DEDUCTIONS
The Purchaser's Guarantor shall make any payments due from it under
this Clause 13 in full, without any deduction or withholding in
respect of any claim (whether by way of set-off, counterclaim or
otherwise) asserted from time to time by the Purchaser against the
Seller under this Agreement or in respect of anything else.
13.16 In respect of any claim against the Purchaser's Guarantor under this
Clause 13, the Purchaser's Guarantor shall (in addition to any other
rights it may have) have the same rights of defence and limitations of
liability against the Seller or in respect of any claim made by it,
including rights of defence, set-off or counterclaim and the rights
and limitations on its liability contained in Schedule 12, as it would
have or would be available to it if the Purchaser's Guarantor were
party to this Agreement in place of the Purchaser and shall not have
any liability to the Seller to that extent.
13.17 NO FIRST DEMAND OF PURCHASER NECESSARY
The Seller may claim under the guarantee set out in Clause 13.10
without first making demand of the Purchaser or taking any action to
claim under or enforce any other right, security or other guarantee
which it may hold from time to time in respect of the Purchaser's
obligations under this Agreement.
13.18 UNCONDITIONAL AND IRREVOCABLE GUARANTEE
The Purchaser's Guarantor's obligations under this Clause 13,
including its guarantee under Clause 13.10, shall be unconditional and
irrevocable.
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14. VALUE ADDED TAX
14.1 TRANSFER AS A GOING CONCERN
The Seller and the Purchaser intend that the Business shall be
transferred to the Purchaser as a going concern with effect from the
Transfer Date.
14.2 CONTINUATION OF BUSINESS AS A GOING CONCERN
The Purchaser undertakes to the Seller that, immediately after
Completion, it shall carry on the Business as a going concern and the
Assets shall be used in the Business.
14.3 REGISTRATION FOR VAT PURPOSES
The Seller and the Purchaser warrant to each other that it:
(a) is or shall be at Completion a registered taxable person for the
purposes of the Value Added Tax Act 1994; and
(b) intends accordingly that the provisions of section 49 of the
Value Added Tax Act 1994 and regulation 5 of the Value Added Tax
(Special Provisions) Order 1995 shall apply to the transfer of
the Business and the Assets.
14.4 PRICE EXCLUSIVE OF VAT
All consideration payable under this Agreement shall be exclusive of
value added tax which shall be paid by the Purchaser at the
appropriate rate and the Seller shall upon Completion deliver to the
Purchaser appropriate tax invoices for the purposes of value added
tax.
15. COSTS
Each party shall be responsible for all the costs and expenses
incurred by it in connection with and incidental to the preparation
and completion of this Agreement and the sale and purchase under this
Agreement. The Purchaser shall be responsible for and shall pay all
registration and transfer fees and duties and stamp duty in respect of
the sale and transfer of the Assets.
16. INTEREST ON OVERDUE AMOUNTS
Save as specified otherwise herein, interest shall be payable by any
party on any money which shall not be paid by it to another party
under this Agreement by the due date for its payment. Such interest
shall accrue and be calculated on a daily basis, both before
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and after any judgment, at the rate of 4 per cent above the base rate
from time to time of Barclays Bank plc, for the period from the due
date for its payment until the date on which it shall actually be
paid. It shall be compounded quarterly and payable on demand.
17. SEVERABILITY
If any part of any provision of this Agreement shall be invalid or
unenforceable, then the remainder of such provision and all other
provisions of this Agreement shall remain valid and enforceable.
18. RESTRICTIVE TRADE PRACTICES ACT
No provision of this Agreement or of any agreement or arrangement of
which this Agreement forms part and which is subject to registration
under the Restrictive Trade Practices Act 1976 shall take effect until
the day after particulars of this Agreement or of the agreement or
arrangement of which it forms part (as the case may be) have been
furnished to the Director General of Fair Trading pursuant to the
provisions of Section 24 of that Act.
19. AMENDMENTS, WAIVERS AND RIGHTS
19.1 AMENDMENTS TO BE IN WRITING
No amendment or variation of the terms of this Agreement shall be
effective unless it shall be made or confirmed in a written document
signed by all of the parties.
19.2 WAIVERS TO BE IN WRITING
No delay in exercising or non-exercise by any party of any of its
rights under or in connection with this Agreement shall operate as a
waiver or release of that right. Rather, any such waiver or release
must be specifically granted in writing signed by the party granting
it and shall:
(a) be confined to the specific circumstances in which it is given;
(b) not affect any other enforcement of the same or any other right;
and
(c) (unless it is expressed to be irrevocable) be revocable at any
time in writing.
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19.3 RIGHTS AND REMEDIES NOT EXHAUSTIVE
The rights and remedies of each party under this Agreement shall be
cumulative and not exclusive of any rights or remedies of that party
under the general law. Each party may exercise each of its rights as
often as it shall think necessary.
19.4 This Agreement together with any documents referred to herein,
constitutes the whole agreement between the parties hereto.
19.5 No breach of this Agreement shall in any event give rise to the part
of the Purchaser to rescind or terminate this Agreement. The sole
remedy of the Purchaser in respect of any breach of this Agreement
shall be in damages and shall be subject to the limitations contained
in this Agreement.
19.6 Each of the Purchaser and the Purchaser's Guarantor irrevocably and
unconditionally waives any right it may have to claim damages and/or
to rescind this Agreement in respect of any false or misleading
statement (other than a statement made fraudulently) made to either of
them or any of their respective directors, officers, employees, agents
and advisers and upon which it relied on entering into this Agreement,
but which is not expressly set out in this Agreement.
19.7 The Purchaser acknowledges and agrees that the express terms of this
Agreement are in lieu of all warranties, conditions, terms,
undertakings and obligations implied by statute or common law all of
which are excluded to the fullest extent permitted by law.
20. LAW AND JURISDICTION
20.1 This Agreement shall be construed in accordance with English law and
the parties irrevocably submit to the non-exclusive jurisdiction of
the English courts to settle any disputes which may arise in
connection with this Agreement, provided that this Clause shall not
serve to restrict the right of any party to enforce any judgment or
award made by the English Courts in relation to this Agreement against
another party in any other jurisdiction.
20.2 Each of the Purchaser and the Purchaser's Guarantor irrevocably
appoints the Purchaser's Solicitors as its process agent to receive on
its behalf service of any process in any proceedings in England. Such
service shall be deemed complete upon delivery to the process agent
marked for the attention of reference 182/599/27887.2.
20.3 Each of the Seller and the Seller's Guarantor irrevocably appoints the
Seller's Solicitors as its process agent to receive on its behalf
service of any process in any proceedings in
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England. Such service shall be deemed complete upon delivery to the
process agent marked for the attention of J Lawrence/L Isaacs, Ref:
36253-39-1.
21. NOTICES
21.1 NOTICES TO BE IN WRITING
Any notice, claim or demand to be served under or in connection with
this Agreement shall be in writing and shall be sufficiently given or
served if delivered to the address of the relevant party stated in
this Agreement or such other address as may have been previously
notified by the relevant party to the other parties to this Agreement
for this purpose. All notices to the Seller shall be given to the
Seller's Guarantor marked for the attention of Ron Woessner.
21.2 METHODS OF GIVING NOTICE
Any such notice, claim or demand shall be delivered by hand or sent by
post (prepaid recorded or registered delivery to an address in the
United Kingdom and in the case of an address overseas by Federal
Express or other courier service) and shall be deemed to have been
given or served if delivered by hand, post or courier service, at the
time of delivery.
22. ASSIGNMENT
22.1 The Seller shall be entitled to assign all rights, benefits, powers
and authorities granted to it or for its benefit in this Agreement to
the Seller's Guarantor who shall be able to exercise all such
benefits, rights, powers and authorities as if it were named as the
Seller in this Agreement. However the Seller's Guarantor shall not be
entitled to assign any such rights, benefits, powers and authorities
assigned to it by the Seller to any other person. In the event that
the Seller ceases to be a subsidiary of the Seller's Guarantor, the
Seller shall cease to have any further obligation or liability to the
Purchaser or the Purchaser's Guarantor under the terms of this
Agreement provided that the Seller's Guarantor shall have thereupon
assumed all such obligations and liabilities, such discharge and
assumption to take place on:
(a) the date on which the Seller ceases to be such a subsidiary or,
if later, 1 July 1999; or
(b) if any claim or claims have been made by the Purchaser against
the Seller prior to the date specified in Clause 22.1(a), the
date on which all of such claims have been finally agreed,
settled, withdrawn and discharged.
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On such discharge and assumption, references to the Seller unless the
context requires otherwise shall be references to the Seller's
Guarantor.
22.2 The Purchaser shall not be entitled to assign the benefit of this
Agreement or any part thereof except with the prior written consent of
the Seller or the Seller's Guarantor save to a member of the
Purchaser's Group who, if it shall cease to be such a member, shall
cease to be able to exercise any such benefits unless it shall
forthwith re-assign any such benefit to the Purchaser's Guarantor or
another subsidiary thereof.
EXECUTION:
The parties have shown their acceptance of the terms of this Agreement by
executing it as a deed at the end of the Schedules.
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SCHEDULE 1
SCHEDULE OF LEASING AND RENTAL ARRANGEMENTS (SET OUT AT DOCUMENT 4.1) (ALL
AGREEMENTS NON-ASSIGNABLE)
Letter Anglo Group Plc to Cotag International Limited dated 29.2.1996
together with Agreement dated 22.1.1996
Agreement between Lombard Business Equipment Leasing Limited and Amtech
Europe Limited.
Agreement Zerox Finance Limited and Cotag International Limited dated
12.12.1995.
Agreement between Ikon Capital Plc and Cotag International dated
31.10.1997.
Agreement between Ikon Capital Plc and Cotag International dated
31.10.1997.
Agreement between Ikon Capital Plc and Cotag International dated 7.1.1998.
NB: There are also agreements in the name of Cardkey Systems Limited in
relation to vehicles:
M54 APW
L81 JLS
N342 UOH
N619 VOP
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SCHEDULE 2
THE EMPLOYEES
PART 1
TRANSFERRING EMPLOYEES
See List in the Agreed Terms
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PART 2
EXCLUDED EMPLOYEES
Stuart Evans
Ingrid Richardson
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SCHEDULE 3
THE PROPERTY
PART 1
DESCRIPTION OF THE PROPERTY
1. Lease of 19 Mercers Row (formally Plot 2A), Cambridge dated 17 March 1998
made between Chubb Fire Limited (1) and the Seller (2)
2. Lease of 20 Mercers Row (formally Plot 2), Cambridge dated 1 December 1987
made between Cambridge City Council (1) and Cotag International Limited
(2).
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PART 2
TERMS AND CONDITIONS OF SALE OF THE PROPERTY
1. DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS
In this Schedule, the following words and expressions mean:
"CONSENT" means the written consent of the Landlord to the transfer of
the Leases;
"TRANSFEROR" means Amtech Europe Limited;
"TRANSFEROR'S SOLICITORS" means Hewitson Becke & Shaw of Shakespeare
House, 42 Newmarket Road, Cambridge CB5 8EP (ref DMC/A51);
"LEASES" means firstly a Lease dated 1 December 1987 made between
Cambridge City Council (1) and Cotag International Limited (2) ("the
First Lease") and secondly a sub-underlease dated 17 March 1998 made
between Chubb Fire Limited (1) and Amtech Europe Limited (2) ("the
Second Lease");
"PREMISES" means the Premises known as 20 Mercers Row and 19 Mercers
Row, Cambridge as more particularly described in the First Lease and
the Second Lease respectively;
"LANDLORD" means the person entitled to the reversion expectant upon
the determination of the term of the Leases and includes any superior
Landlords;
"TRANSFEREE" means Metric Security Limited;
"TRANSFEREE'S SOLICITORS" means Rowe & Maw of 20 Black friars Lane,
London EC4V 6HD (Ref: 569/93/27887.2);
"GUARANTOR" means Metric Gruppen AB or such other person or company in
substitution therefor as approved by the Transferor (such approval not
to be unreasonably withheld or delayed);
"TRANSFERS" means transfers of the Leases in a form to be reasonably
agreed between the parties and including the provisions hereinafter
contained;
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1.2 INTERPRETATION
In this Schedule, unless the context requires otherwise, any reference
to:
(a) a "party" or "the parties" is to a party or the parties, as the
case may be, to this Agreement;
(b) a paragraph is to a paragraph of this schedule; and
(c) the masculine, feminine or neuter gender respectively includes
the other genders, references to the singular include the plural,
and vice versa, and references to persons include firms,
corporations and unincorporated associations.
2. TRANSFERS OF THE LEASES
Subject to the provisions of paragraph 3, the Transferor shall
transfer the Leases and the Transferee shall accept and execute a
counterpart of the Transfers.
3. COMPLETION
3.1 CONDITIONS FOR COMPLETION
Completion of the Transfers is conditional upon the Transferor
obtaining the Consent.
3.2 COMPLETION DATE
The Transfers of the Leases shall be completed at the offices of the
Transferor's Solicitors within five working days of the grant of the
respective Consent.
4. APPLICATION FOR CONSENT
4.1 OBLIGATION TO OBTAIN CONSENT
The Transferor shall as soon as practicable apply for and the
Transferor and the Transferee shall use their respective reasonable
endeavours to obtain the Consent.
4.2 TRANSFEREE'S OBLIGATIONS
4.2.1 The Transferee shall promptly:
(a) supply all such references, accounts and information, as the
Landlord may reasonably require in connection with the
application for the Consent; and
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(b) comply with the Landlord's lawful requirements in relation to the
application for the Consent; and
(c) sign or execute the Consent within five days of the engrossment
of the same having been submitted to the Transferee's Solicitors
and then return it to the Transferor's Solicitors.
4.2.2 If as a condition of granting Consent and in accordance with the terms
of the Leases the Landlord shall require sureties to guarantee the
performance by the Transferee of the covenants on the part of the
tenant and of the conditions and agreements contained in the Leases
then the Transferee shall procure that the Guarantor is party to and
shall execute both the Consent and the Transfer to the Transferee or
if the Landlord shall require a rent deposit in accordance with the
terms of the Leases the Transferee will on completion of the Consent
pay to the Landlord a deposit equivalent to six months' rent at the
rate reserved by the particular Lease and will execute and deliver to
the Landlord a Rent Deposit Deed in any form reasonably required by
the Landlord.
4.2.3 Subject to the Transferee complying with its obligations contained in
sub-paragraphs 4.2.1 and 4.2.2 hereof the Transferor shall use all
reasonable endeavours to obtain the Landlord's Consent to the Transfer
of the Leases but shall not be obliged to make any financial payment
to the Landlord (other than in respect of the Landlord's reasonable
and proper legal and surveyors' costs) or be obliged to commence any
proceedings for a declaration that the Landlord's Consent is being
unreasonably withheld or delayed.
4.3 GUARANTORS OBLIGATIONS
If the Guarantor is required to execute the Consent the Guarantor in
consideration of the Transferor entering this Agreement with the
Transferee Hereby Agrees with the Transferor that it will execute the
Transfer of the Leases to the Transferee containing the following
clause:
"In consideration of the aforementioned Transfer the Guarantor hereby
covenants with the Transferor that the Transferee will at all times
hereafter [but not so as to impose any liability arising after the
Transferor is released from its covenants by virtue of the provisions
of the Landlord & Tenant (Covenants) Act 1995 save in respect of any
antecedent breach]* pay the rents reserved by and will observe and
perform the covenants on the part of the tenant and the agreements and
conditions contained in the Lease and that the Guarantor will
indemnify and keep indemnified the Transferor from and against all
claims losses costs and expenses suffered by the Transferor as a
result
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of any failure by the Transferee to pay the said rents as and when due
or to observe and perform the said covenants agreements and
conditions".
(* Applicable to the Second Lease only.)
5. COVENANTS FOR TITLE
The Transferor will transfer the Premises with full title guarantee
except that the Transfer in favour of the Transferee shall contain a
provision in the following terms modifying the covenants implied into
it by statute:
"The covenants implied herein by virtue of the Law of Property
(Miscellaneous Provisions) Act 1994 ("the Act") by reason of the
Transferor transferring with the benefit of full title guarantee shall
be amended as follows:
5.1 The words "at his cost" in section 2(1)(b) of the Act shall be
substituted by the words "at the Transferee's cost"
5.2 For the purposes of Section 6(2)(a) of the Act all matters now
recorded in the registers open to public inspection are to be
considered as being within the actual knowledge of the Transferee
5.3 Section 4(1)(b) of the Act shall not apply to any covenants and
conditions contained in the Lease relating to the repair or
decoration of the Premises nor to any matter or thing disclosed
to the Transferee prior to the date hereof".
6. DEDUCTION OF TITLE
The Transferor having deduced title to the Premises to the Transferee
or to the Transferee's solicitors (as the Transferee hereby admits)
and in particular having produced to the Transferee or the
Transferee's solicitors copies of the Leases and any documentation
supplemental thereto the Transferee shall not raise any requisition or
objection thereto and shall be deemed to purchase with the full
knowledge of and subject to all matters revealed therein.
7. ENCUMBRANCES
The Premises are sold subject to and where applicable with the benefit
of the matters contained or referred to in the Leases.
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8. RESTRICTIONS
8.1 In this clause "Restrictions" means all matters affecting the Premises or
their use registered or capable of registration as local land charges and
all notices charges orders resolutions proposals or other matters
affecting the Premises or their use served or made by any local or other
competent authority or otherwise arising under any statute or regulation
or order made under any statute.
8.2 The Premises shall be demised subject to all (if any) Restrictions
(whether in existence at the date of this Agreement or arising at any
later date) Provided that at the date hereof the Transferor confirms that
it has not been notified of any agreements obligations works things or
matters which although not registered are capable of registration in the
local land charges registry.
8.3 The Transferee acknowledges that its obligations under this Agreement
shall not be affected or lessened in any way by the fact that there may be
now or subsequently exist any Restrictions or any non-compliance with any
Restrictions.
9. REPRESENTATIONS EXCLUDED
The provisions of this Agreement contain all the terms agreed between the
parties hereto and the Transferee acknowledges that this Agreement has not
been entered into in reliance wholly or partly upon any statement or
representation made by or on behalf of the Transferor save in so far as
any such statement or representation is expressly set out in this
Agreement or has been made in writing (including fax and telex) by the
Transferor's Solicitors to the Transferee's Solicitors and in that event
the making of any such statement or representation shall not obviate the
need for the Transferee to make appropriate searches and enquiries.
10. INCORPORATION OF NATIONAL CONDITIONS
The National Conditions of Sale (20th Edition) printed by The Solicitors'
Law Stationery Society plc on Form Con 14 shall be incorporated in this
Contract so far as they are not inconsistent with or varied by this
Contract but shall be subject to the following variations:
10.1 Condition 5(3) 15(2) 15(3) and 21(3)shall not apply
10.2 The final sentence of condition 11(5) shall be deleted and the
following words substituted in their place "But if the licence
cannot be obtained within sixty (60) working days of the date hereof
the Transferor may rescind this Contract by
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giving written notice to the Transferee or its Solicitors and in the
event of such rescission this Agreement shall forthwith cease and be
of no effect and upon the service of such notice the Transferee
shall cancel any entries relating to this Agreement in any
register".
10.3 Condition 6 shall be deleted and the following shall apply:
"The Transferee shall reimburse the Transferor forthwith upon
demand all rent rates duties charges assessments impositions and
outgoings (including all charges for gas electricity water
telephones or other communications equipment (including rental
and connection charges if any) consumed in or used on the
Premises and any insurance premiums payable in respect of the
Premises) which are now or prior to completion imposed upon or
payable in respect of the Premises or on the owner tenant or
occupier thereof from and including the date of this Agreement".
11. THE TRANSFERS
The Transfers to the Transferor shall contain a covenants in the following
terms:
"The Transferee covenants with the Transferor that it and its
successors in title to the Premises will henceforth during the
continuance of the term granted by the Lease *[but not so as to
impose any liability on the Transferor after the Transferor is
released from its covenants by virtue of the provisions of the
Landlord and Tenant (Covenants) Act 1995 save in respect of any
antecedent breach]* pay all rents becoming due under the Lease (as
increased subsequent to review) and observe and perform all the
covenants on the part of the lessee agreements and conditions
contained in the Lease and will at all times after the date of this
Transfer indemnify and keep indemnified the Transferor its estate
and effects from and against all proceedings costs claims and
expenses whatsoever on account of any omission to pay the rent
reserved by or any breach of any of the covenants on the part of the
lessee or the agreements and conditions contained in the Lease".
* applicable to the Second Lease only
"The Transferee covenants with the Transferor that it will within
twenty eight days after any assignment or variation of the Lease
give to the Transferor notice in writing thereof and produce to the
Transferor a certified copy of the document or documents effecting
the same any relevant licence to assign".
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SCHEDULE 4
PLANT AND EQUIPMENT
SCHEDULE DELETED
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SCHEDULE 5
VEHICLES
SCHEDULE OF MOTOR CARS OWNED AND LEASED BY
AMTECH EUROPE LIMITED IN CONNECTION WITH COTAG INTERNATIONAL
OWNED CARS
Vauxhall Cavalier H248 GDX
K426 HRW
Citroen Xantia
LEASED CARS
M54 APW
L81 JLS
N342 UOH
N619 VOP
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SCHEDULE 6
REGISTERED INTELLECTUAL PROPERTY RIGHTS
A. PATENTS
TITLE NO. COUNTRY
Programmable Tag EU0040544 Austria
Programmable Tag EU0040544 Belgium
Programmable Tag EU0040544 France
Programmable Tag EU0040544 Germany
Programmable Tag EU0040544 Italy
Programmable Tag EU0040544 Netherlands
Programmable Tag EU0040544 Sweden
Programmable Tag EU0040544 Switzerland
Coded Tag EU0098659 Belgium
Coded Tag EU0098659 France
Coded Tag EU0098659 Germany
Coded Tag EU0098659 Netherlands
Coded Tag EU0098659 Sweden
Coaxial Aerial 2195055 Great Britain
Coaxial Aerial 4922261 US
Coaxial Aerial EU0253877 Austria
Coaxial Aerial EU0253877 Belgium
Coaxial Aerial EU0253877 Switzerland
Coaxial Aerial EU0253877 Germany
Coaxial Aerial EU0253877 France
Coaxial Aerial EU0253877 Italy
Coaxial Aerial EU0253877 Netherlands
Coaxial Aerial EU0253877 Sweden
Pulse Train Encoding 628486 Australia
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TITLE NO. COUNTRY
Codable Electronic Devices 5227779 US
Presence Sensing 117633 Canada
Programmable Tag 4399437 US
Programmable Tag 81/3317 South Africa
Programmable Tag 538997 Australia
Programmable Tag 2077556 Great Britain
Programmable Tag 1173909 Canada
Programmable Tag 1730759 Japan
Coded Tag Modifications 82/5021 South Africa
Coded Tag Modifications 2102250 Great Britain
Coded Tag Modifications 2102250(HK) Hong Kong
Coded Tag 2102250(SG) Singapore
Figure of Eight Aerial 2133660 Great Britain
B. PATENT APPLICATIONS
TITLE NO. COUNTRY
Pulse Train Encoding 2-56759 Japan
Codable Electronic Devices 0387071 Europe
Coding Devices 0705468 Europe
Laminating Articles 96/22192.4 Great Britain
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C. REGISTERED DESIGN
TITLE NO. COUNTRY
Passive Tag 2056315 GB
D. TRADE MARKS
TITLE NO. COUNTRY OF REGISTRATION
CAMEO 2130722 GB
COTAG 186404 Sweden
" 1155394 GB
" 1282209 US
" 1669857 France
" 374950 Benelux
" 1030952 Germany
" 472395 Italy
COTAG 85/1753 South Africa
" A423585 Australia
GRANTA 1515168 GB
" 92438125 France
" 2097405 Germany
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SCHEDULE 7
CONSIDERATION VALUES IN RESPECT OF THE ASSETS
DESCRIPTION AMOUNT (POUNDS)
PROPERTY, comprising
- Long Leasehold 175,000
- Short Leasehold 0
PLANT AND EQUIPMENT AND VEHICLES AND THE SYSTEM
comprising:
- Plant and Machinery 295,000
- Test Equipment 56,000
- Computer Software 0
- Furniture and Fittings 31,000
- Jigs and Tools 0
- Computer Equipment 0
- Chip 0
- Vehicles 2,000 384,000
---------
DEBTS - Accounts receivable 906,000
- Prepayments 54,000 960,000
---------
STOCK 750,000
TRADE CREDITORS
- Accounts payable (473,000)
- Accruals (583,000) (1,056,000)
--------- -----------
TOTAL: 1,213,000
-----------
The amount of consideration in respect of STOCK, DEBTS and TRADE CREDITORS shall
be adjusted by reference to the amounts specified in the Completion Statement in
accordance with Schedule 14.
KNOW-HOW: the amount of consideration in respect of Know-how shall be
(Pounds)2,376,000. If the amount payable under this Agreement in respect of
Know-how is greater or less than (Pounds)2,376,000, the consideration for the
Know-how shall be increased or reduced accordingly.
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SCHEDULE 8
DETERMINATION AND CERTIFICATION OF NET REVENUES AND CARD KEY SALES
1. CALCULATION OF NET REVENUES
1.1 The Net Revenues for the 1998 and 1999 calendar years ("the Relevant
Calendar Years") shall be such sum as shall be agreed or determined
pursuant to this Schedule as the revenues derived from the Business for
each Relevant Calendar Year calculated as set out in paragraph 2
(Calculation of Net Revenues).
1.2 For the 1998 calendar year, the Purchaser will pay to the Seller by way of
Deferred Consideration the sum of (Pounds)250,000 provided that if the Net
Revenues for such Relevant Calendar Year are less than (Pounds)8,850,000
then this Deferred Consideration shall be the sum of (Pounds)X, where X =
(A / 1,261,000) x 250,000, A being the amount by which such Net Revenues
exceed (Pounds)7,589,000 (and if such Net Revenues are equal to or less
than (Pounds)7,589,000, this Deferred Consideration shall be nil).
Any payment due to the Seller from the Purchaser pursuant to this paragraph
1.2 shall be paid by the Purchaser on the Determination Date for such Net
Revenues together with interest thereon from 31 January 1999 to the date of
payment at the rate of 3% above the base rate of Barclays Bank Plc from
time to time.
1.3 For the 1999 calendar year, the Purchaser will further pay to the Seller by
way of Deferred Consideration the sum of (Pounds)350,000 provided that if
the Net Revenues for such Relevant Calendar Year are equal to or exceed
(Pounds)8,000,000 but are less than (Pounds)9,350,000 this Deferred
Consideration shall be the sum of (Pounds)100,000 plus the sum of
(Pounds)Y, where Y = (B / 1,350,000) x 250,000. B being the amount by
which such Net Revenues exceed (Pounds)8,000,000 (and if such Net Revenues
are less than (Pounds)8,000,000 this Deferred Consideration shall be nil).
Any payment due to the Seller from the Purchaser to this paragraph 1.3
shall be paid by the Purchaser on the Determination Date for such Net
Revenues together with interest thereon from 30 January 2000 until the date
of payment at the rate of 3% above the base rate of Barclays Bank Plc from
time to time.
1.4 (a) To incentivise the Seller to continue existing trading relationships
the Purchaser shall further pay to the Seller in respect of Know-how
an amount equal to ten per cent of Net Revenues of all sales by the
Purchaser to the Seller, Card Key Systems Inc and Card Key Systems
Limited made in each of the Relevant Calendar Years ("Card Key
Sales").
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(b) Any payment due to the Seller from Purchaser pursuant to this
paragraph 1.4(a) shall be paid by the Purchaser within 5 Business Days
of the Determination Date together with interest thereon from 31
January following the Relevant Calendar Year to the date of payment at
the rate of 3% above the base rate of Barclays Bank Plc from time to
time.
2. BASIS OF PREPARATION
2.1 In this Schedule "NET REVENUES" means the arms length invoiced value
(excluding any VAT):
(a) of all sales by the Purchaser or any other member of the Purchaser's
Group of the Products and the systems of the Business (including any
new or replacement products or systems or any modifications or
additions to any such Products or new or replacement products or
systems introduced or developed by the Business); and
(b) of all sales of the BEWAPASS ENTRO, the BEWAPASS P.C. system and the
BEWACARD BC615 cardreader when used with BC615 pc based software [BC
640] and any similar or replacement products or systems or
modifications or additions thereto supplied by the Purchaser or any
other member of the Purchaser's Group to any established customers
(which term in this Schedule includes any distributor or re-seller) of
the Business who are not established customers of the Purchaser; and
(c) of any amounts payable by purchasers of such products or systems under
maintenance or support contracts in respect of any such products or
systems referred to in paragraph (a) and (b) above in respect of the
relevant period;
(such sales or amounts payable being referred to in this Schedule as
"RELEVANT SALES"), but adjusted in accordance with the provisions of
paragraph 2.2.
2.2 In calculating the Net Revenues the following adjustments shall be made:
(a) where any Relevant Sales are less than an arms' length value, by
substituting an arms' length value by reference to sales to similar
customers of the same product, system or service;
(b) where the Purchaser is in breach of any of the provisions of paragraph
3 below, such adjustments as are reasonably appropriate to ensure that
the Net Revenue shall be such amount as they would have been had the
Purchaser not been in
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breach of such provisions (this being without prejudice to any other right
of action which the Seller may have in respect of such breach).
3. PROTECTION OF NET REVENUES
3.1 The Purchaser undertakes to the Seller that in the conduct of its business
it shall not do or omit to do anything which would result in the amount of
the Net Revenue not genuinely and fairly reflecting all Relevant Sales
during each Relevant Calendar Year.
3.2 Without prejudice to the generality of paragraph 3.1 above, the Purchaser
undertakes to the Seller:
(a) not to grant any discount, credit or price reduction to any customer
in relation to any Relevant Sales which is not reasonably commercially
justifiable or which is conditional on or linked to any sale of any
other product which is not a Relevant Sale;
(b) not to divert any customer or potential customer of the Business to
any business of the Purchaser or any member of the Purchaser's Group
which would not constitute a Relevant Sale;
(c) to promptly invoice all Relevant Sales in accordance with the normal
price of the Business and not to permit any such invoicing to be
delayed or deferred into any subsequent calendar year when the
Relevant Sale has taken place in the preceding calendar year, nor make
any significant change to the terms of business with customers which
would have any such effect;
(d) to maintain such invoicing and accounting procedures so as to ensure
that the Net Revenues are readily capable of being ascertained and not
mixed with any other sales of any other product or any other person
which is not a Relevant Sale;
(e) not to sell, transfer, reconstruct, merge or amalgamate the Business
without ensuring that the Net Revenues remain reasonably capable of
being ascertained and agreed in accordance with the provisions of this
Schedule.
4. PURCHASER TO ISSUE CERTIFICATE OF NET REVENUES AND CERTIFICATE OF CARD KEY
SALES
Within ten Business Days after the end of each Relevant Calendar Year, the
Purchaser shall issue a certificate of Net Revenues and a certificate of
Card Key Sales (as appropriate) to the Seller, together with a statement of
any adjustments showing the
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calculation of the Net Revenues and Card Key Sales made in accordance with
paragraph 2.2 above.
5. CONFIRMATION OF NET REVENUES
The Seller shall be entitled to verify the certificate of Net Revenues and
certificate of Card Key Sales (as appropriate) and statement of adjustments
and, if it disputes the amount of the Net Revenues or Card Key Sales (as
appropriate) specified therein, the Seller shall within 20 Business Days of
the certificate and statement of adjustments being submitted to them state
in writing that it disagrees with the certificate and statement ("a Dispute
Notice"). If the Seller shall serve any Dispute Notice then, it shall
attempt to resolve the matter in dispute with the Purchaser. Any such
resolution which enables the Net Revenues or Card Key Sales (as
appropriate) to be agreed shall be expressed in a joint certificate ("the
Joint Resolution"), signed by both the Seller and the Purchaser stating the
Net Revenues or Card Key Sales (as appropriate). If no Joint Resolution
shall be issued within 10 Business Days of the relevant Dispute Notice, the
matter shall be referred to a firm of independent chartered accountants
jointly agreed upon by the Purchaser and the Seller or (failing such
agreement) appointed, at the request of either the Purchaser or the Seller,
at any time by the President from time to time of the Institute of
Chartered Accountants in England and Wales, which firm ("the Independent
Accountants") shall then determine the matter in dispute and in the light
of the dispute determine the Net Revenues or Card Key Sales (as
appropriate). The Independent Accountants shall act as experts and not as
arbitrators and their decision shall be communicated in writing to the
Purchaser and the Seller and shall be final and binding upon the Purchaser
and the Seller and shall be communicated in any event within five days of
receipt of instructions by the Seller and the Purchaser to so determine the
Net Revenues or Card Key Sales (as appropriate).
6. COSTS TO BE BORNE BY APPOINTOR
The costs of the Independent Accountants shall be borne by as the
Independent Accountants shall determine or, in the absence of any such
determination, by the Seller and Purchaser jointly.
7. RECORDS ETC. TO BE MADE AVAILABLE
The Purchaser shall procure that all records, working papers and other
information as may be reasonably required by the Seller, Seller's
Accountants and/or the Independent Accountants for the purposes of this
Schedule shall be made available upon a request for them.
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8. MEANING OF "THE DETERMINATION DATE"
For the purposes of this Agreement "the Determination Date" in relation to
the amount of Net Revenues and/or the Card Key Sales shall mean:
(a) where no Dispute Notice is served, the date which is twenty Business
Days after the submission to the Seller of the relevant certificate
and statement pursuant to paragraph 4 above, or if the Seller confirms
it agrees with such certificate, on the date of such confirmation;
(b) if a Dispute Notice is served, the date of any Joint Resolution; or
(c) if any matter shall be referred to the Independent Accountants as
mentioned in paragraph 6 the date upon which the decision shall have
been given.
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SCHEDULE 9
COMPLETION ARRANGEMENTS
PART 1
SELLER'S OBLIGATIONS
1. ITEMS TO BE DELIVERED TO PURCHASER
The Seller shall deliver to the Purchaser:
(a) such duly executed conveyances, transfers, assignments and other
assurances as are necessary fully and effectually to vest title to the
Assets in the Purchaser, including assignments of the Intellectual
Property Rights in the agreed terms and all deeds and documents
relating to the title of the Seller to the Assets;
(b) all the Assets which are capable of passing by delivery when, by
virtue of such delivery, title to those Assets shall pass to the
Purchaser;
(c) all the Current Contracts and all books, records and other documents
to be transferred to the Purchaser under this Agreement;
(d) such evidence as the Purchaser may require of the release of the
charges and other encumbrances (if any) affecting the Assets (or any
of them) prior to Completion;
(e) a joint election in the Agreed Form relating to Know-how and
Intellectual Property Rights.
2. TAKING POSSESSION OF THE BUSINESS
The Seller shall permit the Purchaser to enter into and take possession of
the Business.
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PART 2
1. PURCHASER'S OBLIGATIONS
(a) The Purchaser shall pay to the Seller the Initial Payment;
(b) The Purchaser shall deliver to the Seller a joint election in the
Agreed Form relating to the Know-how and Intellectual Property Rights;
(c) The Purchaser shall deliver to the Seller a Deed relating to Stamp Duty
executed by the Purchaser and the Purchaser's Guarantor
(d) Security document for the obligations of the Purchaser in the Agreed
Form.
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SCHEDULE 10
PENSIONS AND RELATED BENEFITS
SCHEDULE DELETED
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SCHEDULE 11
WARRANTIES
THE PROPERTIES
1.1 DESCRIPTION
Schedule 3 contains full and accurate details of the description and
tenure of the Property, which are all the freehold and leasehold land and
premises in or in respect of which the Seller has any interest, right or
title or which are otherwise occupied or used by the Seller.
1.2 TITLE
1.2.1 LAWFUL OCCUPATION
The Seller's use or occupation of the Property is lawful and is in
accordance with its rights as owner or under any lease or licence of such
Property.
1.2.2 TITLE TO THE PROPERTY
The Seller is the absolute legal and beneficial owner of the Property and
has good and marketable title to the Property.
1.2.3 REGISTERED PROPRIETOR
The Seller is the registered proprietor with absolute title of those of
the Property required to be registered at H.M. Land Registry and save for
such Property none of the Property is registered at H.M. Land Registry or
located in an area of compulsory registration.
1.2.4 THE COMPANY HAS THE TITLE DEEDS
So far as the Seller is aware the Seller has in its possession or there
are presently held to its order all title deeds and documents necessary
to prove title to the Property (complete copies of such title deeds and
documents having been delivered to the Purchaser prior to the date
hereof).
1.2.5 PROPERTY IS FREE FROM ENCUMBRANCES
The Property is free from any lease, licence, mortgage, debenture,
charge, rent-charge, lien or any other encumbrance giving or securing any
rights to any person in relation to
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any of the Property. The Property is also free from any options or
agreements for any such encumbrances or otherwise.
1.2.6 NO COVENANTS ETC.
So far as the Seller is aware the Property is not subject to the burden
of any covenants, stipulations, restrictions, easements, quasi-easements,
profits a prendre, wayleaves, grants, licences, overriding interests or
any other third party rights.
1.2.7 NO CLAIMS OR CONTINGENT LIABILITIES
There is no outstanding monetary claim or liability contingent or
otherwise, affecting the Property.
1.2.8 NO OUTGOINGS
The Property is not subject to any outgoings other than for the usual
general rates, water rates and, in the case of leasehold property,
insurance, rent and service charge payments.
1.2.9 ALL OBLIGATIONS FULLY DISCHARGED
All and any obligations or liabilities of the Seller in relation to any
of the matters referred to in paragraphs 1.2.5 to 1.2.8 (inclusive) have
been fulfilled and discharged in full.
1.2.10 NO LAND CHARGES ETC.
The Seller has not been notified of any agreements, obligations, works,
things or matters which, although not registered, are capable of
registration in the local Land Charges Registry.
1.3 PLANNING
1.3.1 CURRENT USE IS PERMITTED USE
The current use of the Property is the permitted use for the purposes of
the Town and Country Planning Acts 1971-1990 and the Planning and
Compensation Act 1991.
1.3.2 NO DEVELOPMENT ETC. WITHOUT PERMISSION
So far as the Seller is aware no development, alterations or other works
have been carried out in relation to the Property unless all appropriate
planning permissions,
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orders and consents, building regulations consents and other permissions,
agreements, regulations, orders and liabilities have been obtained,
complied with and discharged under the provisions of the Town and Country
Planning Acts 1971-1990 the Highways Act 1980 and any other relevant
statute or bye-law.
1.3.3 NO UNUSUAL OR SHORT-TERM PERMISSION
No planning permission relating to the Property is temporary or personal
or due to terminate within five years from Completion or is subject to
onerous or unusual conditions.
1.3.4 NO PLANNING APPLICATIONS
No applications for planning permission have been made by the Seller and
refused or remain outstanding.
1.4 OBLIGATIONS AND ORDERS
1.4.1 COMPLIANCE WITH RELEVANT LAWS
The Seller has not received any notification that any relevant statutory
requirements, bye-laws and any other regulations concerning the use and
condition of the Properties have not been complied with including,
without prejudice to the generality of the foregoing, as to safety from
fire and under the Public Health Acts, the Highway Acts, the Offices
Shops and Railway Premises Act 1963, the Health and Safety at Work Act
1974, the Control of Pollution Act 1974 and the Factory Acts.
1.4.2 NO LICENCES
No use of the Properties is, or should be, the subject of a licence
whether under the Licensing Act 1964 or otherwise.
1.4.3 NO COMPULSORY PURCHASE ORDERS ETC.
The Seller has not been notified of any circumstances likely to lead to
any Compulsory purchase notices, orders or resolutions and closing,
demolition or clearance orders, enforcement notices or stop notices being
made against the property.
1.5 CONDITION OF THE PROPERTIES
1.5.1 GOOD STATE OF REPAIR
The Property and the buildings and other structures on the Property is in
a good and
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safe state of repair and fit for the purposes for which it is currently
used.
1.5.2 REPORTS DISCLOSED
Copies of all surveys, engineers' and architects' reports and other
reports as to the safety and general condition of the Property made in
respect of the Property during the ownership of the Seller, have been
disclosed to the Purchaser.
1.5.3 NO BOUNDARY DISPUTES
There are no disputes and no reason known to the Seller for any future
disputes with any third party in respect of any boundaries and boundary
walls and fences or in respect of any easements over, or any right or
means of access to, any of the Property.
1.5.4 NO SHARED OR PRIVATE ACCESS
No right of access to the Property is shared with, or subject to
determination by, any third party and the principal access is over roads
maintained by a public authority at the public expense.
1.5.5 NO STRUCTURAL DAMAGE ETC.
The Property is not particularly susceptible to flooding and is not
affected by past or present mining activity. No building or structure on
the Property has at any time been affected by any structural damage,
infestation or disease.
1.5.6 NO UNACCEPTABLE FABRIC
So far as the Seller is aware none of the buildings or structures on the
Property contains in its fabric any high alumina, cement, calcium
chloride, blue asbestos, wood-wool slats, sea-dredged aggregates or any
other substance or material which is defective or a risk to health or
safety.
1.5.7 SERVICES
The Property enjoys full and permanent access to the services of
drainage, water, electricity and gas.
1.5.8 ACCESS TO LIGHT AND AIR
The access of light and air to all windows and apertures of the Property
is enjoyed as of right.
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1.6 INSURANCE
1.6.1 Full and accurate details of the insurance policies in place in respect
of the Property have been disclosed to the Purchaser in the Disclosure
Letter.
1.6.2 The Property and all the buildings and structures and their fixtures and
fittings on the Property is insured for their full reinstatement values
plus architects' and surveyors' fees, against fire and other usual risks,
for not less than two years' loss of rent (if the Property is let) and
are adequately insured against third party and public liabilities. All
premiums have been duly paid and there are no circumstances which would
permit the insurers to avoid such policies.
1.7 LEASEHOLD PROPERTIES
1.7.1 PERFORMANCE UNDER LEASES
The Seller has not received any notification of any breach of its
obligations under the leases, on the terms of which it enjoys possession
of the Property and details of which are contained in Schedule 3 (The
Property). The Seller has obtained and observed the terms of any
licences, consents or approvals required from any Landlord or Superior
Landlord under such leases.
1.7.2 RENT REVIEWS
There are no rent reviews currently in progress in respect of any such
leases of the Property.
1.7.3 NOTICES OBSERVED
All notices or requirements given or made by the Landlord under such
leases in respect of the Property have been fully and properly observed
and performed.
1.7.4 NO RIGHT TO EXERCISE POWER OF ENTRY
There are no circumstances which would entitle any landlord or other
person to exercise any rights or powers of entry or taking possession
(whether or not any action has been taken before such rights or powers
are enforceable), or which would otherwise affect or restrict the
continued possession, enjoyment and use of the Property for their present
purpose.
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1.8 GENERAL
1.8.1 CIRCUMSTANCES AFFECTING USE OF THE PROPERTIES
Except as disclosed in the Disclosure Letter, there are no matters or
circumstances affecting the Property or its use or the activities carried
on at the Property, which would be relevant to be known by a person
proposing to purchase the same at market value, or to develop the same.
1.8.2 REPLIES TO ENQUIRIES TRUE AND ACCURATE
The information and representations contained in replies to written
enquiries raised by the Purchaser's solicitors of the Seller's solicitors
are true and accurate in all respects.
2. OTHER ASSETS
2.1 BUSINESS VESTED IN SELLER
The entire benefit of the Business is vested in the Seller absolutely.
2.2 TITLE TO THE ASSETS
Except for current Assets subsequently acquired, sold or realised in the
ordinary course of business, the Seller owned at the Balance Sheet Date
and still owns all the Assets (other than the Property) free from and
clear of any lien, charge (including without limitation any Inland
Revenue charges as defined in section 237 of the Inheritance Tax Act
1984), mortgage, hypothecation, pledge, option, hire purchase agreement,
leasing agreement, lease purchase agreement, credit sale agreement,
agreement for conditional sale or sale by instalments.
2.3 NO RESTRICTIONS OF TITLE
There are no agreements or arrangements whereby the title to any of the
Assets or any rights in the proceeds of sale of any of the Assets is or
may be reserved to the Seller of such Assets or to any third party and
there are no other encumbrances or claims of any kind (excepting only
liens arising in the ordinary course of trading or under the Equipment
Contracts).
2.4 PRODUCTS ETC. IN GOOD AND SALEABLE CONDITION
Otherwise than in the ordinary course of business the Seller has not sold
or supplied or agreed to sell or supply Products or Services upon any
terms other than those
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contained in the Seller's standard conditions of sale (a true copy of
which is attached to the Disclosure Letter).
2.5 PLANT ETC. IN GOOD WORKING ORDER
All plant, machinery, tools, moulds, prototypes, patterns, fittings,
equipment and motor vehicles agreed to be sold under this Agreement and
material to the conduct of the Business are, to the best of the knowledge
of the Seller, in reasonable working order, condition and repair having
regard to their age and normal wear and tear.
3. CURRENT CONTRACTS
3.1 NO CONTRACTS OUTSIDE ORDINARY COURSE ETC.
There does not exist in relation to the Business any contract, agreement,
commitment or arrangement remaining to be performed in whole or part or
otherwise in effect:
(a) which was entered into otherwise than in the ordinary course of the
day to day trading operations of the Business;
(b) which is of an onerous or long term nature or which cannot be
fulfilled or performed on time and without undue or unusual
expenditure of money or effort;
(c) under which the Products are to be sold or supplied to or purchased
or taken from or provided by any person solely or exclusively;
(d) for the servicing, maintenance or repair either of Products sold by
the Seller or of any of the assets agreed to be sold under this
Agreement;
(e) under which the Seller or any other person acts or is to act as
sales agent, distributor or franchisee or in any similar capacity;
or
(f) which restricts the manner or fields in which the Business is
carried on.
3.2 NO MATERIAL BREACH ETC.
There does not exist in relation to the Business any Current Contract:
(a) to which any party thereto is in material breach so as to render the
same capable of termination or give rise to any right to damages or
other compensation;
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(b) which is material and in respect of which any consent is required or
any notice has to be given or other action in order for such
contract to be assigned by the Seller to the Purchaser;
(c) which is or will become terminable or under its terms may otherwise
be adversely affected as a result of the entering into or
implementation of this Agreement;
(d) so far as the Seller is aware which is or is required to be
registered in accordance with the provisions of the Restrictive
Trade Practices Act 1976 or which contravenes the provisions of the
Resale Prices Act 1976 or infringes Articles 85 or 86 of the Treaty
of Rome or any other anti-trust legislation or any regulation or
directive issued thereunder or which has been notified to the
Commission of the European Communities for an exemption or in
respect of which an application has been made to the said Commission
for a negative clearance;
(e) so far as the Seller is aware which is by virtue of its terms or by
virtue of any practice for the time being carried on in connection
with it a consumer trade practice within the meaning of Section 13
Fair Trading Act 1973 and susceptible to or under reference to the
Consumer Protection Advisory Committee or the subject matter of a
report to or order by the Secretary of State under the provisions of
Part II of that Act; or
(f) the performance of which is guaranteed or otherwise secured by the
Seller or any other person.
3.3 NO DEFAULT UNDER EQUIPMENT CONTRACTS
The Seller is not in default under any of the Equipment Contracts such
that the owner of the relevant Asset is entitled to re-take possession
thereof.
4. FINANCIAL POSITION AND CONTINUATION OF THE BUSINESS
4.1 ACCOUNTS SHOW TRUE AND FAIR VIEW
The Accounts (true and complete copies of which are attached to the
Disclosure Letter) have been prepared in accordance with the requirements
of all relevant statutes and generally accepted United Kingdom
accountancy and show a true and fair view of the financial position of
the Business for the period ended on the Balance Sheet Date
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and in particular (but without limitation) do not overstate the profits
of the Business for that period.
4.2 BUSINESS CONDUCTED IN ORDINARY COURSE SINCE BALANCE SHEET DATE
Since the Balance Sheet Date the Seller has carried on the Business in
the ordinary and normal course and so as to maintain the same as a going
concern and without any material interruption or alteration in the
nature, scope or manner of it.
4.3 NO MATERIAL DETERIORATION SINCE BALANCE SHEET DATE
To the best of the Seller's knowledge, information and belief the trading
results of the Business up to Completion have not materially deteriorated
in comparison with those for the corresponding period in the year ended
on the Balance Sheet Date.
4.4 NO ABNORMAL FACTORS
There is no abnormal factor known to the Seller materially and adversely
affecting the Business.
4.5 NO SUBSTANTIAL REDUCTION IN TRADE WITH CUSTOMERS AND SUPPLIES
Since the Balance Sheet Date no regular or important customer or supplier
has ceased or substantially reduced or so far as the Seller is aware
indicated that it will cease or substantially reduce the volume of its
business with the Seller in relation to the Business.
4.6 ONLY THE BUSINESS CARRIED ON AT THE PROPERTY
The Business is the only business carried on at the Property, is carried
on solely by the Seller and no part thereof has been sub-contracted to
any third party or (other than pursuant to the Current Contracts) is
carried on under the agreement or consent of any third party.
4.7 NO INTEREST IN COMPETITORS
The Seller has no proprietary, equity or other interest, direct or
indirect in, or controls, any other company, firm or business which has a
close trading relationship or is in competition with the Business.
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5. EMPLOYEES
5.1 DETAILS ABOUT TRANSFERRING EMPLOYEES
Full and accurate details of the terms and conditions of employment
(whether contractual or discretionary) of the Transferring Employees are
disclosed in the Disclosure Letter, including without limitation:
(a) any written service agreement, employment contract, offer letter,
standard form of employment contract, statement of terms and
conditions of employment and staff handbook;
(b) the age, sex, hours of work and date of commencement of continuous
employment (within the meaning of the Employment Rights Act 1996) of
each Transferring Employee;
(c) particulars of all part-time or job share working arrangements;
(d) the bonus, commission and profit sharing arrangements of each
Transferring Employee;
(e) all consents by each Transferring Employee to work more than 48
hours a week;
(f) particulars of any collective agreement, arrangement and
understanding with trade unions, staff associations and other
representative bodies and elected representatives of the
Transferring Employees;
(g) disciplinary or grievance procedures, and any procedures to be
followed in the case of redundancy or dismissal, including in the
case of redundancy any redundancy scheme or formula applied by the
Seller during the three years before Completion in making payments
in excess of the statutory entitlement (whether contractual or
discretionary).
5.2 EMPLOYEES EMPLOYED IN THE BUSINESS
(a) The Transferring Employees are all employed by the Seller in the
Business and work wholly or mainly in the Business and there are no
other persons employed in any capacity in the Business other than
the Excluded Employees.
(b) The Seller has not moved any Transferring Employee into the Business
from another part of its business in the three months prior to the
date of this
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Agreement or moved any employee out of the Business into another
part of its business in the same period.
(c) None of the Transferring Employees are on secondment.
(d) There are no outstanding offers of employment in the Business, and
no person has accepted such an offer of employment or engagement but
not yet taken up the position accepted.
5.3 NO CHANGE IN EMPLOYMENT TERMS
(a) No change has been made to any term or condition of employment of
any Transferring Employee either with or without his or her consent
in connection with this Agreement or without his or her consent
within three months before Completion.
(b) The Seller has not made any representation or statement to any of
the Transferring Employees concerning employment with the Purchaser.
5.4 NO NOTICE OR TERMINATION
None of the Transferring Employees has given or received notice
terminating his or her employment and no Transferring Employee is
entitled to give such notice as a result of entering into or
implementation of this Agreement under the terms of his employment
contract.
5.5 NO OBJECTION
No notice of objection under Regulation 5(4A) of the Regulations has been
received by the Seller from any Transferring Employee and, as far as the
Seller is aware, no such notice is pending or threatened.
5.6 DISMISSALS
The Disclosure Letter contains details of all employees who have ceased
to be employed in the Business in the three months before the date of
this Agreement or who are under notice at the date of this Agreement and
the reason for such departure or intended departure.
5.7 NO GUARANTEED INCREASE
No Transferring Employee has been promised or is accustomed to receiving
any guaranteed increase in basic salary or other benefits and there is no
agreement with any
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Transferring Employee to increase his or her basic salary or any other
benefits at a date in the future.
5.8 NO SALARY OR BENEFITS IN ARREARS
There is no salary, remuneration or other benefit which any Transferring
Employee has accrued which is in arrears, unpaid or unprovided other than
basic salary for part of the current month, and there is no outstanding
undischarged liability to pay to any government or regulatory authority
any tax, national insurance contributions, or any other such charges in
respect of the Transferring Employees.
5.9 SHARE SCHEME
There are no share schemes (whether contractual or discretionary)
applicable to any of the Transferring Employees.
5.10 PENSION PROMISES
Full and accurate details of all superannuation, pension, life assurance,
death benefit, sickness or accident benefit schemes or arrangements in
respect of which the Seller has or may have any liability to contribute
or an obligation to any of Transferring Employee or their dependants are
contained in the Disclosure Letter and save for the schemes or
arrangements therein disclosed no Transferring Employee has any right to
a pension or other benefit on retirement, death or disability by way of a
funded or unfunded pension promise.
5.11 DISABILITY
Details of all Transferring Employees who are disabled within the meaning
of the Disability Discrimination Act 1995, and details of any reasonable
adjustments requested to be made by any Transferring Employee and any
adjustments made or promised by the Seller, and details of any public
funding in respect of that adjustment made available or provided to the
Seller, have been disclosed in the Disclosure Letter.
5.12 LONG-TERM ABSENCE
Full details of all Transferring Employees who are absent from work
(whether on maternity leave, unpaid leave, long-term sickness or
otherwise) have been disclosed in the Disclosure Letter.
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5.13 PERMANENT HEALTH INSURANCE
No Transferring Employee is receiving or claiming any permanent
disability benefit under any permanent health insurance scheme.
5.14 HEALTH & SAFETY
Full details of all health and safety policies and procedures, health and
safety committees, and any material complaints, recommendations,
investigations or claims relating to health and safety issues made or
undertaken in the last twelve months and affecting the Business and the
Transferring Employees have been disclosed in the Disclosure Letter.
5.15 EQUAL OPPORTUNITIES
Full details of all equal opportunities policies and procedures and any
complaints, recommendations, investigations or claims relating to sex,
race or disability discrimination or equal pay or equal treatment made or
undertaken in the last two years and affecting the Business and the
Transferring Employees have been disclosed in the Disclosure Letter.
5.16 NOTICE PERIOD
The contract of employment of each Transferring Employee may be
terminated without damages or compensation (other than that payable under
statute) by the Seller giving at any time no more than three months'
notice.
5.17 NO DISPUTES
There is no litigation, material claim or other material dispute
existing, or genuinely threatened (whether orally or in writing) between
the Seller and any of the Transferring Employees, or between the Seller
and any trade union, staff association, works council or any other
employee representative, and, as far as the Seller is aware, there are no
existing circumstances likely to give rise to any such litigation, claims
or disputes.
5.18 NO OUTSTANDING OBLIGATIONS FROM LITIGATION
There are no outstanding obligations to reinstate, re-engage, pay
compensation to or comply with any recommendation or declaration of any
Court, Industrial Tribunal, or any other tribunal in respect of any
Transferring Employee or any former employee who used to work in the
Business.
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5.19 TRADE UNIONS, EMPLOYEE REPRESENTATIVES ETC.
The Seller does not recognise any, or have any collective or other
agreement, or any understanding or arrangements (whether legally
enforceable or not) with any trade union representing any of the
Transferring Employees, and does not have any works councils, staff
associations or any other representative body (whether elected or not) of
any of the Transferring Employees.
5.20 CONSULTATION ETC.
The Seller has complied with its obligations under Regulation 10 of the
Regulations, and has complied with its obligations under Section 188 to
194 of the Trade Union and Labour Relations (Consolidation) Act 1992.
5.21 PERSONNEL RECORDS
The Seller has in its possession records regarding the employment of the
Transferring Employees, including records of all disciplinary warnings,
hearings and other such matters, which records are easily accessible and
in a form which can be passed to the Purchasers at Completion.
5.22 COMPLIANCE OF THE SELLER
The Seller has not breached in any material respect or failed to comply
with any law, agreement, regulation, order, notice, judgment, award, or
code of practice in relation to any of the Transferring Employees.
6. INTELLECTUAL PROPERTY AND COMPUTER SYSTEMS
6.1 MEANING OF "BUSINESS IPRS"
In this Warranty 6, "Business IPRs" means all Intellectual Property
Rights owned by the Seller or any member of the Seller's Group which is
either used in or required for the conduct of the Business.
6.2 REGISTERED BUSINESS IPRS
Schedule 6 gives full and accurate details of all registrations and of
all applications for registration or grant which are comprised in the
Business IPRs, including the registered proprietor of or applicant for
the same.
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6.3 OWNERSHIP
All of the Business IPRs are owned solely, legally and beneficially by
the Seller, free and clear of all security interests, liens and
encumbrances. Without limiting the foregoing, neither the Seller nor any
other member of the Seller's Group has agreed to assign any of the
Business IPRs to any other person.
6.4 PAYMENT OF FEES
The Seller has paid all application, registration and/or renewal fees due
in respect of all of the Business IPRs.
6.5 PENDING AND PROSPECTIVE APPLICATIONS
The Seller is not aware of any reason why the applications comprised in
the Business IPRs will not all proceed successfully to registration or
grant without material amendment and in the usual timescale. The Seller
is not aware of any third party rights or claims which may prevent the
protection of any of the Business IPRs by means of registration or grant.
6.6 VALIDITY
There are no agreements or arrangements with the Seller or any other
member of the Seller's Group restricting the use in the Business of
Intellectual Property which is currently used in or so far as the Seller
is aware required for the conduct of the Business. So far as the Seller
is aware, no act or omission has taken place which may give rise to the
revocation, invalidation, unenforceability or non-renewal of any of the
Business IPRs, or which might prejudice any application for the
registration or grant of any of them. All registered trade marks
comprised in the Business IPRs are in bona fide use. No claims have been
received by the Seller nor any proceedings commenced or threatened
against the Seller which impugn (or which would if successful impugn) the
validity, enforcement or subsistence of any the Business IPRs.
6.7 EMPLOYEE INVENTIONS
So far as the Seller is aware, no circumstances exist in which the owner
of the Business might be subject to a claim pursuant to Sections 40 and
41 Patents Act 1977 or any similar legislation in other jurisdictions. No
such claims have been received by or threatened against the Seller or any
other member of the Seller's Group which are outstanding.
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6.8 OWNERSHIP BY EMPLOYEES
No former or present employee of the Business has made a claim against
the Seller to own all or any part of any Intellectual Property used in
the Business.
6.9 INFRINGEMENT BY THE BUSINESS
So far as the Seller is aware, no part of the Business as currently or in
the past six years carried on by the Seller infringed, infringes or has
been alleged to infringe any Intellectual Property of any other person,
nor gave, gives or has been alleged to give rise to any obligation to pay
any royalty, remuneration or other sum relating to the use of
Intellectual Property.
6.10 INFRINGEMENT BY OTHERS
So far as the Seller is aware, no person is infringing or threatening to
infringe, or has during the six years prior to date of this Agreement
infringed or threatened to infringe, any of the Business IPRs nor any
other material Intellectual Property used in or required for the
Business. Neither the Seller nor any other member of the Seller's Group
has not made any allegation against any person to this effect.
6.11 LICENCES TO THE BUSINESS
The Disclosure Letter contains details of the terms of any licensing or
other arrangements under which the Seller or any other member of the
Seller's Group has or will have the use of any Intellectual Property used
in or required for the conduct of the Business and not owned by any of
them.
6.12 LICENCES BY THE BUSINESS
The Disclosure Letter contains details of all licences of Intellectual
Property Rights granted or agreed to be granted by the Seller or any
other member of the Seller's Group.
6.13 OTHER CONTRACTS
There are no contracts, licences, software or firmware used by the Seller
in the Business other than the Current Contracts and the System.
6.14 STATUS OF LICENCES
So far as the Seller is aware, all of the licences and other arrangements
referred to in Warranties 6.11 and 6.12 are valid and subsisting. So far
as the Seller is aware, none
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of the parties to the same has done or omitted to do anything which
constitutes or has been alleged to constitute a breach of, or permit
termination of, any of the same. So far as the Seller is aware, no notice
to terminate any of the same has been given or threatened.
6.15 CONFIDENTIAL INFORMATION OF THE BUSINESS
All confidential information used by the Seller or any other member of
the Seller's Group in the Business is in its lawful possession and under
its sole control, free of restrictions upon its use and disclosure.
Neither the Seller nor any other member of the Seller's Group has
disclosed and is obliged to disclose any confidential information
relating to or used in the Business to any person, other than pursuant to
written obligations of confidence the terms of which have been disclosed
in the Disclosure Letter. So far as the Seller is aware no such
confidential information is in the unauthorised possession or use of any
third party. So far as the Seller is aware no person to whom any
confidential information has been disclosed by the Seller or any other
member of the Seller's Group has breached or threatened to breach any
obligations of confidence or other obligations imposed on it.
6.16 CONFIDENTIAL INFORMATION OF OTHERS
No confidential information has been disclosed to the Seller or any other
member of the Seller's Group in relation to the Business, except on terms
the details of which are set out in the Disclosure Letter. Neither the
Seller nor any other member of the Seller's Group is in breach of any
obligation of confidence owed to any third party.
6.17 TRADING NAMES ETC.
There are no trading names used in relation to the Business other than
COTAG.
6.18 COMPUTER SYSTEMS USED OR SUPPLIED BY THE BUSINESS
The following provisions apply:
(a) There are in force suitable maintenance and support contracts for
all items of computer hardware (including operating systems) and
software (including programs held on silicon chips, disks and any
other media, manuals and operator guides) comprised in the computer
systems used in the Business (collectively the "System"). There is
no reason known to the Seller to believe that such maintenance and
support contracts will not be renewed by the other
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contracting party upon their expiry (if so required by the
Purchaser) upon substantially similar terms to those now applicable.
(b) The Business has not suffered any material failures or breakdowns of
the computer hardware or firmware which it used in the year
preceding the date of this Agreement, and has not suffered any
material failures or bugs in or breakdowns of its software (except
arising from operator error not based on inadequate manuals) in the
year preceding the date of this Agreement.
(c) The Business has operated and used all items of computer hardware
and firmware comprised in the System substantially in accordance
with the manufacturers recommendations including (without
limitation) any recommendations as to environmental conditions and
power supply.
(d) All computer software (including programs held on silicon chips,
disks and any other media, manuals and operator guides) and items of
computer hardware used by the Business is either one of the Assets
or held on licence the terms of which have been disclosed.
(e) There has been no material alteration, adaptation or modification of
any software or firmware comprised in the System whether with or
without the consent (where required) of the owner or manufacturers
thereof.
(f) The Seller has taken proper precautions to preserve the availability
confidentiality and integrity of the System and has had the System
reviewed on a regular basis by independent experts in the field.
(g) The Seller (after having made all reasonable enquiries) is not aware
of any case where fraud has been committed against it or the
Business by use or abuse of the System whether alone or in
conjunction with any third party.
(h) The Seller has complied with all requirements of the Data Protection
Act 1984 and in particular:
(i) has registered as a data user under that Act for all purposes
for which registration is required by the Business;
(ii) has complied with the data protection principles.
(i) The Seller has not received any notice letter or complaint alleging
in relation to the Business a breach by it of the provisions of the
Data Protection Act 1984
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and has no reason to believe that circumstances exist which may give
rise to such a notice letter or complaint.
(j) No allegation has been received by the Seller in writing that any
advertising and marketing materials produced by or on behalf of the
Seller do not comply with and have not complied with all legal
requirements in the United Kingdom. The Seller is not aware of any
grounds under which such materials could be challenged for any
reason whatsoever including, without limitation, defamation, trade
libel or any analogous law.
(k) The System and the Embedded Products are Year 2000 Compliant.
For the purposes of this paragraph 6.18(k):
"YEAR 2000 COMPLIANT" means that each of the System and the Embedded
Products are able, without modification and at no added cost to the
Purchaser, and in accordance with the British Standards Institution
definition of Year 2000 requirements, to process all date data
accurately and without error (including accepting date input,
providing date output and performing calculations on or comparisons
or manipulations of dates or portions of dates) so that neither the
performance nor functionality of the System or such Embedded
Products will be affected by dates prior to, during and after the
year 2000 and in particular (without limitation) so that:
(i) (no value for Current Date will cause any interruption in the
operation of the System or such Embedded Products;
(ii) the year 2000 is recognised as a leap year;
(iii) in all interfaces and data storage, the century in any date,
is specified either explicitly or by unambiguous algorithms or
inferencing rules and that all outputs of date information are
made without any ambiguities as to any relevant century;
(iv) date-based functionality of the System and such Embedded
Products behave and will behave consistently for dates prior
to, during and after the year 2000. The System and the
Embedded Products will manipulate all time and date related
data so as to produce the desired results for all data values
so as to represent dates correctly for the purposes for which
the same were intended and no component uses particular date
values for special meanings other than the applicable dates
themselves, for
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example, "99" signifying "no end value", a "hash" date or "end
of file" or "00" meaning "not applicable" or "beginning of
file".
"CURRENT DATE" means today's date as known to the System or such
Embedded Products (as the case may be);
"FUNCTIONALITY" means (without limitation) processes and the results
of such processes.
(l) The System is capable of supporting the Euro and shall not manifest
any material error nor suffer a diminution in performance or loss of
functionality as a result of the introduction of the Euro as a
currency in the United Kingdom or elsewhere subsequent to the
introduction of European Monetary Union and shall be capable of
processing transactions calculated in Euros separately or in
conjunction with other currencies and shall be capable of complying
with any legislative changes connected with the same whether or not
the United Kingdom is a party to European Monetary Union.
7. ENVIRONMENTAL MATTERS
7.1 DEFINITIONS
For the purposes of this Clause 7:
"Competent Authority" means any national or local government or national
or local governmental agency or any EC body or agency having regulatory
or administrative authority under Environmental Laws;
"ENVIRONMENT" means all or any of the following media namely air, water
or land including without limitation such media within buildings or other
natural or man made structures above or below ground and any living
organisms or ecosystems;
"ENVIRONMENTAL LAWS" means all or any applicable law (whether civil,
criminal or administrative), common law, statute, statutory instrument,
treaty, regulation, directive, decision, by-law, circular, code, plan,
order, notice, demand, decree, injunction, resolution or judgment which
relate to Environmental Matters and which are currently in force but
including Part IIA of the Environmental Protection Act 1990 and the
Guidance thereunder in such form as it is finally issued;
"ENVIRONMENTAL MATTERS" means any or all of the following:
(a) protection of the Environment;
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(b) pollution or contamination;
(c) the generation, manufacture, processing, handling, storage,
distribution, use, treatment, removal, transport, importation,
exportation, disposal, release, spillage, deposit, escape,
discharge, leak, emission, leaching or migration of Hazardous
Substances or Waste;
(d) exposure of any person to Hazardous Substances or Waste;
(e) the creation of any noise, vibration, radiation, common law or
statutory nuisance, or other impact on the Environment;
(f) any other matters relating to the condition, protection,
maintenance, restoration or replacement of the Environment or any
part of it arising directly or indirectly out of the manufacturing,
processing, treatment, storage, keeping, handling, use, possession,
supply, receipt, sale, purchase, import, export, transportation or
presence of Hazardous Substances or Waste;
(g) human health and safety;
(h) town and country planning.
"ENVIRONMENTAL PERMITS" means all or any authorisations, certificates,
approvals, permits, licences, or consents (and all conditions attaching
thereto) currently required under any Environmental Laws for the
operation of the Business or the occupation or use of the Property;
"HAZARDOUS SUBSTANCES" means any noxious, dangerous, hazardous, toxic or
flammable materials or substances or any mixture thereof which are or
maybe present in such quantities and concentrations as (1) may cause harm
to the Environment and/or (2) are regulated under any Environmental Law
and/or (3) may require investigation or remediation under any
Environmental Law;
"PREVIOUS OPERATORS" means persons who previously controlled or operated
all or any part of the Property;
"REMEDIAL ACTION" means
(a) removing, remedying, cleaning up, making good, modifying, restoring,
improving, abating, containing or ameliorating the presence in or
effect on the Environment, the Property or any organism (including
humans) of any Hazardous Substances or Waste, including without
limitation the removal from
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any structure of Hazardous Substances or Waste incorporated into
that structure (whether above or below ground, natural or man made
and including without limitation all pipes and tanks); and/or
(b) securing compliance of the Business with all Environmental Laws and
Environmental Permits including without limitation any and all
investigative activities, sampling, monitoring or analysing any
pollution or contamination of the Environment and obtaining expert
technical and legal advice required in relation thereto);
"WASTE" means any waste as defined in Section 75 of the Environmental
Protection Act 1990.
7.2 COMPLIANCE
The Seller has since 31 January 1995 complied with all (and the Seller
has not been notified that any Previous Operators were in breach of any)
Environmental Laws and Environmental Permits which are or have been
applicable to the conduct of all or any part of the operations of the
Business at the Property (including without limitation the occupation of
the Property).
7.3 ENVIRONMENTAL PERMITS
All Environmental Permits as are now required are valid and subsisting
and none have been suspended, revoked, cancelled, restricted, amended, or
not renewed.
7.4 WORKS
No works are or so far as the Seller is aware will be necessary to secure
compliance with or to maintain or obtain any Environmental Permits
required to carry on the Business in the same manner as it has been
carried on at Completion and all necessary or appropriate action in
connection with the application for, renewal or extension of any
necessary or appropriate Environmental Permits has been taken.
7.5 NO REVOCATION ETC.
The execution or performance of this Agreement and all other documents
contemplated herein will not and change of control of the Business will
not result in any Environmental Permits being revoked, suspended,
cancelled, varied or not renewed and all Environmental Permits are
capable of being transferred to the Purchaser without material cost or
expense.
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7.6 CONTAMINATION/POLLUTION ETC.
The Seller, in relation to operations of the Business, has since 31
January 1995 not caused or permitted, and the Seller has not become aware
of, any spillage, discharge, release, escape, deposit or emission
(whether deliberate or accidental) of any Hazardous Substances or Waste
which has resulted or may result in
(a) pollution or contamination of the Environment;
(b) a statutory nuisance;
(c) a Competent Authority in the proper exercise of its powers, duties
and functions in relation to Environmental Laws requiring the
carrying out of Remedial Action; or
(d) any liability whatsoever under Environmental Laws.
and the Seller has not become aware since 31 January 1995 of any
circumstances which may give rise to the same.
7.7 NO NOTIFICATIONS ETC.
The Seller, has not since 31 January 1995 (nor has the Seller been
notified that any Previous Operator has) received any indication, notice,
complaint, enquiry, information or communication (whether formal or
informal) from any local authority, agency, body, Competent Authority or
third party and there is no actual, pending or threatened civil, criminal
or administrative action, proceeding or suit alleging that:
(a) the Seller or, in relation to the Property, any Previous Operator,
is or might be responsible for
(i) all or any part of the cost of preventing any actual or
potential pollution or contamination, or
(ii) investigating, treating, removing, containing or otherwise
properly dealing with any Hazardous Substances or Waste
present or alleged to be present in the Environment at or on the
Properties or any adjacent or surrounding properties or which has
escaped or has been transported to any other property; and/or
(b) any Environmental Permit may be suspended, revoked, cancelled,
restricted, amended or not renewed; and/or
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(c) the Seller is or might be responsible for any illness, injury or
accident in relation to any person;
and the Seller has not become aware since 31 January 1995 of any
circumstances which may lead to the same.
8. INSURANCE
Details of the Seller's current insurances in respect of the Business are
included in the Disclosure Letter.
9. LITIGATION ETC.
Save for the collection of small debts in the ordinary course of the
Business, there are no suits, actions, legal or arbitration proceedings
or governmental investigations pending or threatened by or against the
Seller in connection with the Business and the Seller does not know of
any circumstances likely to give rise to any such suit, action or
arbitration proceedings or governmental investigation. In particular (but
without limitation), there is no written claim by any customer of the
Business or owner of the Products regarding any defect or alleged defect
in the quality or design of the Products or any of them.
10. STATUTORY REQUIREMENTS ETC.
10.1 NO BREACH OF STATUTORY REQUIREMENT
The Business has not at any time been conducted in breach of any
statutory requirements, bye-laws and regulations for the time being in
force and applicable thereto so as to materially prejudice or affect the
continued operation of the Business after Completion.
10.2 ALL CONSENTS OBTAINED
Save in relation to the Property and any Intellectual Property, all
statutory and municipal and other licences, consents, approvals and
authorisations requisite to enable the Business to be carried on in the
manner in which it is presently conducted have been obtained and are
valid and subsisting and all conditions of such licences, consents,
approvals and authorisations have been fully complied with in all
material respects and there has been no material breach thereof.
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10.3 CONSENTS ETC. NOT UNUSUAL OR ONEROUS
Such licences, consents, approvals and authorisations do not contain and
have not been granted subject to any unusual or onerous conditions or on a
temporary basis and will not be so far as the Seller is aware adversely
affected by the entry into or implementation of this Agreement.
10.4 NO THREATENED CANCELLATION OF LICENCES ETC.
No proceedings have been brought or are pending or threatened for the
cancellation of (and no objection has been made to the renewal or issue of)
any such licences, consents, approvals and authorisations and the Seller
has not been notified (either orally or in writing) by or on behalf of the
grantor thereof of any intended or contemplated refusal or revocation of
any of them or of the occurrence or existence of any event or circumstances
which is likely to lead to any such refusal or revocation.
10.5 NO ANTI-COMPETITIVE PRACTICES
The Seller is not engaged in relation to the Business in any anti-
competitive practice within the meaning of that expression in the
Competition Act 1980.
11. RECORDS AND STORAGE OF INFORMATION
11.1 RECORDS ETC. PROPERTY KEPT
All the accounts, books, ledgers and financial and other records of
whatsoever kind relating to the Business (including all invoices and other
records required for Customs or Value Added Tax purposes) have been and
will until Completion be fully and properly kept and completed with no
material omissions, inaccuracies or discrepancies contained or reflected
therein so as to enable the continued operation of the Business from
Completion.
11.2 ALL RECORDS UNDER SELLER'S CONTROL
None of the records, systems, data or information in relation to the
Business is recorded, stored, maintained, operated or otherwise wholly or
partly dependent upon or held by any means (including any electronic,
mechanical or photographic process whether computerised or not) which
(including all means of access thereto and therefrom) are not under the
exclusive ownership and direct control of the Seller.
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11.3 NO RESTRICTIONS ON ACCESS TO RECORDS
The Seller is not aware of the existence of any other circumstances which
are likely to cause the access to any such records, systems, data or
information to cease to be available or to become adversely limited.
12. DISCLOSURES AND INFORMATION SUPPLIED
12.1 INFORMATION SUPPLIED TRUE AND ACCURATE
All information contained in the Disclosure Letter and (save as specified
in the Disclosure Letter) the documents annexed thereto is true and
accurate in all respects.
12.2 WARRANTIES ACCURATE ETC.
All the Warranties shall at Completion and at the Transfer Date be
accurate, complete and correct in all respects.
13. TAX
13.1 All customs duties and value added tax due and payable before Completion to
H.M. Customs and Excise or any other Taxing Authority in respect of any of
the Assets or of the Business have been paid in full.
13.2 All documents which are required to be stamped in respect of Property have
been duly stamped.
13.3 Neither the Seller nor any relevant associate of the Seller (within the
meaning of paragraph 3(7) of Schedule 10 to the Value Added Tax Act 1994)
has made an election to waive exemption in respect of any of the Property
or Fixed Plant within the provisions of paragraphs 2 and 3 of Schedule 10.
13.4 The Seller is not (and no member of the Seller's Group is) involved in any
material dispute with the Inland Revenue, H.M. Customs and Excise or any
other Taxing Authority concerning any matter likely to materially affect
the Business or any of the Assets.
13.5 None of the Assets is a capital item the input tax on which may be subject
to adjustment in accordance with the provisions of Part XV of the Value
Added Tax Regulations 1995 (adjustments to the deduction of input tax on
capital items).
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13.6 No arrangements, practices or concessions (other than such as have been
published or apply generally) have been agreed with or are operated by any
Taxing Authority which affect or may affect the Assets or the Business.
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SCHEDULE 12
LIMITATION ON CLAIMS UNDER THE WARRANTIES
1. The Purchaser shall not be entitled to claim against the Seller under the
Warranties in respect of any matters fairly disclosed in the Disclosure
Letter.
2. The aggregate amount of the liability of the Seller under this Agreement
shall not exceed the Total Purchase Price received by the Seller hereunder
plus costs and expenses of recovery awarded to the Purchaser.
3. No liability shall attach to the Seller under the Warranties unless the
aggregate amount of such liability (excluding costs and interest) shall
exceed:
(a) for claims notified during the period from Completion until 30
September 1999, the sum of (Pounds)60,000; and
(c) for claims notified during the period from 1 October 1999 until 1
January 2001, a sum equal to twenty per cent of the Total Purchase
Price payable to the Seller by the Purchaser pursuant to the terms of
this Agreement
but in the event that such liability exceeds, during the relevant period,
the stated sum, the Seller shall be liable for the whole amount of such
liability (subject to the other provisions of this Schedule) and not merely
the excess.
4. No liability shall attach to the Seller under this Agreement in respect of
any single claim where the amount of such liability (excluding costs and
interest) in respect of that claim is less than (Pounds)1,000.
5. No claim shall be capable of being made against the Seller under this
Agreement unless written notice thereof (specifying so far as practicable
all material details of the breach or other event to which the claim shall
relate and the Purchaser's bona fide estimate of the amount claimed) shall
have been given to the Seller as soon as reasonably practicable after the
Purchaser becomes aware of circumstances that give rise to a claim and in
any event not later than 1 January 2001. Any such claim which may be made
shall (if it has not been previously satisfied, settled or withdrawn) be
deemed to be withdrawn at the expiration of 6 months from the date of
giving notice of such claim unless legal proceedings in respect thereof
have been commenced by the issuing and service of such proceedings against
the Seller and the subject matter of any such claim which shall be so
deemed withdrawn shall not be capable of being the subject of a further
claim.
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6. Payment of any claim under this Agreement shall pro tanto satisfy and
discharge any other claim under this Agreement which is capable of being
made in respect of the same subject matter.
7. No liability shall attach to the Seller in respect of a claim under this
Agreement to the extent that:
7.1 such claim arises or is increased as a consequence of a change in the law
after the date hereof,
7.2 such claim or the events giving rise to such claim arise or such claim is
increased as a result of a voluntary act, omission or transaction by or at
the request of or with the approval of the Purchaser or the Purchaser's
Guarantor or any of their respective directors, officers or employees
effected after Completion otherwise than pursuant to a legally binding
commitment of the Seller entered into before Completion and otherwise than
in the ordinary course of the Business as presently carried on:
7.3 a provision or reserve in respect thereof is made in the Accounts or the
Completion Statement or to the extent that the subject matter of the claim
was taken into account in computing the amount of any such provision or
reserve.
8. The effect of the application of paragraph 7 shall first be taken into
account for the purpose of determining whether the Seller has any liability
to the Purchaser for the purposes of paragraphs 3 and 4.
9. The Purchaser shall not be entitled to recover any sum in respect of any
claim for breach of any of the Warranties or otherwise obtain reimbursement
or restitution more than once in respect of any one breach of the
Warranties.
10. In the event that the Purchaser is entitled to recover from a third party
(whether by payment, discount, credit, relief or otherwise howsoever) any
sum in relation to any loss, liability or damage which is the subject of a
claim under this Agreement, the Purchaser shall:
10.1 notify the Seller as soon as reasonably practicable and provide such
information and assistance as the Seller may reasonably require to recover
from such third party relating to such entitlement and the action taken or
proposed to be taken by the Purchaser in respect of it;
10.2 take (at the expense of the Seller) such reasonable steps or proceedings as
the Seller may reasonably require and the Seller shall be entitled to have
conduct of any legal
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proceedings in relation thereto and shall act in accordance with any such
requirements of the Seller subject to the Purchaser being indemnified by
the Seller against all reasonable costs and expenses incurred in connection
therewith and shall keep the Seller promptly informed of the progress of
any such steps, proceedings or actions.
11. In the event of the Seller having paid to the Purchaser an amount in
respect of a claim under this Agreement and subsequent to the date of
making such payment the Purchaser recovers from a third party (whether by
payment, discount, credit, relief or otherwise howsoever) a sum which is
referable to that payment then the Purchaser shall forthwith repay to the
Seller so much of the amount paid by the third party as does not exceed the
sum paid by the Seller to the Purchaser less the reasonable costs of the
Purchaser in recovering such sum.
12. In the event that the Purchaser shall be in receipt of any claim which in
the Purchaser's reasonable opinion might constitute or give rise to a claim
under this Agreement, the Purchaser shall as soon as reasonably practicable
notify the Seller giving full details as far as practicable and shall not
settle or compromise any such claim or make any admission of liability
without the prior written consent of the Seller (such consent not to be
unreasonably withheld or delayed). The Seller shall be entitled to require
the Purchaser to take (at the expense of the Seller) such reasonable steps
or proceedings as the Seller may reasonably consider necessary in order to
mitigate any claim under this Agreement and the Seller shall be entitled to
have conduct of any legal proceedings in relation thereto provided this
does not, in the reasonable opinion of the Purchaser prejudice the Business
or Goodwill. The Purchaser being indemnified by the Seller against all
reasonable costs and expenses incurred in connection therewith shall keep
the Seller promptly informed of the progress of any such acts.
13. In relation to any claim under this Agreement or any fact, matter, event or
circumstance which may in the Purchaser's reasonable opinion give rise to a
claim the Purchaser shall allow the Seller, its advisers and its agents,
all such property, information and assistance (including access to
properties and access to books of account, and any other books or other
documents or records and the right to copy the same) as may reasonably be
required by the Seller at the Seller's cost and expense.
14. If any claim under this Agreement shall arise by reason of some liability
which, at the time the claim is notified to the Seller, is contingent only,
the Seller shall not be under any obligation to make any payment to the
Purchaser in respect of such claim until such time as the contingent
liability shall become an actual liability.
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15. Nothing herein or in the Warranties shall be deemed to relieve the
Purchaser from any common law or other duty to mitigate any loss or damage
incurred by it.
16. Any amount paid by the Seller to the Purchaser in respect of any breach of
this Agreement shall be treated as a reduction in the consideration for the
Assets.
17. Where a breach of this Agreement shall be in respect of a matter where the
Purchaser shall be insured against any loss or damage arising therefrom,
the Purchaser shall not make any claim against the Seller under this
Agreement without first procuring that the Purchaser shall make and
diligently pursue a claim against its insurers for compensation for such
loss or damage suffered and any claim against the Seller shall be limited
(in addition to all other limitations on the Seller's liability elsewhere
referred to herein) to the amount by which the amount of the loss or damage
suffered by the Purchaser as a result of such breach shall exceed the
compensation paid by the said insurers to the Purchaser.
18. The Purchaser warrants to the Seller that:
18.1 it has not relied on any representation, warranty, covenant or undertaking
of the Seller or the Seller's Guarantor or any other persons save for any
representation, warranty, covenant or undertaking expressly set out in this
Agreement or in the agreements and deeds entered into pursuant to this
Agreement. The Purchaser acknowledges that no representation, warranty,
covenant or undertaking (whether expressed or implied, statutory or
otherwise) made or alleged to have been made by or on behalf of the Seller
or the Seller's Guarantor in connection with or arising out of the sale of
the Assets and which is not expressly set out in this Agreement shall give
rise to any liability on the part of the maker or makers thereof or any
other person who might otherwise be liable in respect of the making
thereof;
18.2 the Purchaser is duly incorporated and validly existing under the laws of
England and Wales;
18.3 the Purchaser and Purchaser's Guarantor has power to enter into this
Agreement and to perform the obligations expressed to be assumed by it and
has taken all necessary corporate action to authorise the execution,
delivery and performance of this Agreement;
18.4 this Agreement has been duly executed by the Purchaser and the Purchaser's
Guarantor;
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18.5 the execution, delivery and performance of the terms of this Agreement by
the Purchaser and the Purchaser's Guarantor will not violate any provision
of:
18.5.1 any law or regulation or any order or decrees of any authority,
agency, or court binding on the Purchaser and the Purchaser's
Guarantor;
18.5.2 the Memorandum or Articles of Association or other constitutional
documents of the Purchaser and the Purchaser's Guarantor;
18.5.3 any loan stock, bond, debenture or other deed, mortgage, contract
or other undertaking or instrument to which the Purchaser is a
party;
18.6 in acquiring the Assets the Purchaser is acting as principal and not as
agent or broker for any other person.
19. The Purchaser's Guarantor warrants to the Seller and the Seller's Guarantor
that the financial information provided to them by it shows a true and fair
view of the financial position of the Purchaser's Guarantor as at 31
December 1997 and there has been no material deterioration in its financial
position since that date.
20. No liability shall attach to the Seller under this Agreement in respect of
any breach of any Environmental Laws or any Environmental Matters to the
extent that it relates to the period prior to 31 January 1995 save where it
is a breach of any of the Warranties in paragraph 7 of Schedule 11.
21. No liability shall attach to the Seller under this Agreement if the
provision for Stock or for Warranty Obligations included in the Completion
Statement proves to be insufficient.
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SCHEDULE 13
1. THE RETENTION
1.1 RETENTION AS SECURITY
The Purchaser shall be entitled to retain and deal with the Retention on
the terms and conditions referred to in this Schedule by way of security in
respect of any actual or potential breach of the Warranties.
1.2 RETENTION RELEASE DATE
Subject as provided in paragraph 1.3 below the Retention shall be released
on the Retention Release Date.
1.3 DEALING WITH THE RETENTION
(1) If a claim in respect of a breach or alleged breach of the Warranties or
any other breach or alleged breach of any of the obligations of the Seller
pursuant to this Agreement shall have been notified to the Seller in
accordance with this Agreement and:
(a) it shall have been finally decided that the Seller is liable (in whole
or in part) to the Purchaser in respect of such claim; or
(b) the Seller shall have agreed that it is liable (in whole or in part),
in respect of such claim
but the Seller has not on or before the Retention Release Date discharged
the amount so due in respect of such claim the Purchaser shall be entitled
to deduct and retain the amount so due from and against the amount of the
Retention in whole or in partial (as the case may be) satisfaction of the
liability of the Seller and any balance of the Retention shall be paid to
the Seller subject to paragraph 1.3 (2) below.
(2) If by the Retention Release Date a claim in respect of a breach or alleged
breach of the Warranties shall have been notified to the Seller but, it
shall not have been finally decided and/or the Purchaser and the Seller
shall not have agreed whether or not the Seller is liable in whole or in
part to the Purchaser in respect of any such claims then the Purchaser
shall be entitled to continue to withhold as Retention pending the
resolution or settlement of such claim(s) an amount equal to the aggregate
amount of all such outstanding claims in which event paragraph 1.3 (3)
shall apply but there shall immediately be released to the Seller the
balance (if any) of the Retention after such deductions.
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(3) If, at any time after the Retention Release Date:
(a) it shall be finally decided that the Seller is not liable (in whole or
in part) to the Purchaser in respect of any claim in respect of which
the Retention shall have been withheld in whole or in part; or
(b) the Purchaser has agreed to withdraw (in whole or in part) a claim
then to the extent that the Seller is not so liable or the claim has been
withdrawn, the Purchaser shall immediately pay to the Seller the amount so
due to the Seller from the Retention.
(4) If at any time after the Retention Release Date:
(a) it shall be finally decided that the Seller is liable (in whole or
part) to the Purchaser in respect of any claim in respect of which the
Retention is withheld in whole or in part; or
(b) the Seller shall have agreed that it is liable (in whole or in part)
in respect of such a claim
the Purchaser shall be entitled to retain the amount as due in respect of
which the Seller is liable from and against the amount of the Retention in
whole or partial (as the case may be) satisfaction of the liability of the
Seller.
1.4 COUNSEL'S OPINION
(1) In the event that the Purchaser has continued to withhold in accordance
with paragraph 1.3(2) above any part of the Retention or has withheld any
amount from any payment due under Clause 3.2 in respect of any claim
hereunder (the "WITHHELD AMOUNT") the Seller shall be entitled by notice in
writing to require the Purchaser to seek a Counsel's opinion in respect of
the relevant claim on the terms of this paragraph 1.4.
(2) Upon receipt of such notice the Purchaser shall instruct an independent and
suitably qualified barrister of at least 5 years' call (and who may be a
Queen's Counsel if appropriate) ("THE COUNSEL") to provide an opinion that
the relevant claim is a valid bona fide claim and will on the balance of
probabilities succeed and that the Withheld Amount is reasonable or, if
not, such amount as he considers is reasonable ("THE REQUISITE OPINION").
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(3) The Counsel shall be agreed between the Seller and the Purchaser within 3
Business Days of receipt of the notice under paragraph 1.4(l) (such
agreement not to be unreasonably withheld by either party) and the
Purchaser shall send to the Seller copies of the instructions to the
Counsel within 10 Business Days of such notice. The Seller shall be
entitled to comment thereon or make its own representations in writing to
the Counsel within 5 Business Days thereafter. Each of the Purchaser and
the Seller shall be entitled to produce supporting documentary evidence.
Any such instructions, comments, representations and evidence shall be
concise and copies thereof provided to each party. Thereafter the Counsel
shall be instructed to give his opinion within 5 Business Days.
(4) If the Counsel gives the Requisite Opinion and considers the Withheld
Amount to be reasonable, the Purchaser shall be entitled to retain the
Withheld Amount and the Seller shall pay the Counsel's costs. If the
Counsel gives the Requisite Opinion but specifies therein that only a
lesser amount is reasonable to be withheld, the Purchaser shall be entitled
to retain such lesser amount on the terms of this Schedule, the balance of
the Withheld Amount shall be released forthwith to the Seller and the
Seller and the Purchaser shall bear the Counsel's costs equally. If the
Counsel shall not give the Requisite Opinion, the whole of the Withheld
Amount shall be released forthwith to the Seller and the Purchaser shall
pay the Counsel's costs.
1.5 FINAL DETERMINATION OF A CLAIM
A claim shall be deemed to be finally decided if and when determined by a
court of competent jurisdiction from which there is no appeal, or from
whose judgment the Seller or the Purchaser (as the case may be) does not
appeal within the period in which an appeal may properly be brought.
1.6 NO LIMITATION
For the purposes of this paragraph:
(a) proceedings shall not be deemed to have been commenced by the
Purchaser unless they have been both issued and served on the Seller;
and
(b) the amount of the Retention shall not be regarded as imposing any
limit to the amount of any proper claims under this Agreement.
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SCHEDULE 14
DETERMINATION AND CERTIFICATION OF COMPLETION NET WORTH
1. THE COMPLETION STATEMENT
The Completion Statement shall be prepared by the Purchaser immediately
following Completion and in any event by 15 July 1998 and shall comprise a
statement of the Completion Net Worth as at the Transfer Date.
2. BASIS OF PREPARATION
Save as otherwise provided in paragraph 3 of this Schedule the Completion
Statement shall be prepared:
(a) on the basis of the historical cost convention;
(b) in a manner consistent with the procedures and policies adopted in the
preparation of the audited accounts of the Company for the period
ending on the Balance Sheet Date and, subject thereto, in accordance
with relevant Statements of Standard Accounting Practice issued by the
Accounting Standards Committee of the Institute of Chartered
Accountants in England and Wales.
(c) without taking into account any amounts arising from revaluations of
fixed assets since the Balance Sheet Date;
3. SPECIFIC VALUATIONS
3.1 The Completion Statement shall comprise a statement of the Assets and the
Trade Creditors and other items as specified in this Schedule and the
values thereof calculated in accordance with the provisions of this
paragraph 3 and, subject thereto, paragraph 2 above.
3.2 The Plant and Equipment shall include the value of software improvements
and additions.
3.3 The value to be included in respect of Goodwill or Intellectual Property
Rights shall be (Pounds)1.00.
3.4 The Purchaser shall carry out a stock-take at the Transfer Date immediately
after Completion, such stock-take to be carried out on the basis set out in
Schedule 15.
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3.5 (a) A provision shall be made in the Completion Statement in respect of
Debts totalling (Pounds)80,000. Any Debts remaining uncollected as at
31 December 1998 that remain outstanding shall be assigned for nil
consideration by the Purchaser to the Seller and, to the extent that
such uncollected Debts exceed the said provision of (Pounds)80,000,
the Seller shall be liable to the Purchaser for such excess and the
Purchaser shall be entitled to retain such excess from the Retention.
(b) To the extent that such uncollected Debts are less than the said
provision the Purchaser shall forthwith pay to the Seller the amount
of the shortfall together with interest thereon from Completion to the
date of payment at the rate of 3% above the base rate of Barclays Bank
plc.
(c) The Purchaser shall not settle or compromise or release any claim in
respect of any Debt unless it is reasonable to do so and in accordance
with such practice and to the extent that any such release or
settlement or compromise, or any set-off or counterclaim exercised by
the Debtor, is in respect of any Warranty Obligations or any act or
omission of the Purchaser, that Debt shall be treated as collected to
that extent for the purposes of this paragraph 3.5.
(d) The Purchaser shall provide to the Seller such information ,
explanations or assistance as the Seller may reasonably require to
verify the amount of the Debts collected and remaining uncollected and
to recover any part of the Debts so uncollected and assigned to it.
(e) For the period from Completion to 31 December 1998 the Purchaser shall
take reasonable steps to recover the Debts in accordance with the
usual practice of the Business.
3.6 A provision of (Pounds)53,000 shall be made in the Completion Statement in
respect of Warranty Obligations.
3.7 Annexed hereto is an estimated balance sheet of the Business as at 1st July
1998 which includes a general provision for accruals of liabilities of
(Pounds)71,000 and the Completion Statement shall include such a general
provision of (Pounds)71,000. However, the Purchaser shall not claim to
include in the Completion Statement in accordance with this Schedule any
accruals or provisions for any liability (other than (a) any account
payable in respect of the period prior to the Transfer Date, (b) any
accrual or provision set out in the said estimated balance sheet of the
Business as at 1st July 1998 and (c) any provision to be included as is
specifically referred to above in this paragraph 3)
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except to the extent that the aggregate of such claimed accruals and
provisions exceeds (Pounds)71,000.
3.8 For the avoidance of doubt, the provision for costing provisions and stock
losses of (Pounds)85,000 included in the said estimated balance sheet of
the Business as at 1st July 1988 shall not be included in the Completion
Statement (which will include the actual stock values by reference to the
stock-take) but it is acknowledged that this provision has been included
for the purposes of agreeing the amount of the Initial Payment.
3.9 No provisions shall be made for any redundancies made or to be made after
Completion or as a result of any act or omission of the Purchaser otherwise
than in the ordinary course of business after Completion.
3.10 No general provisions shall be made save as specified above.
3.11 In the event that the Completion Statement includes provision for
liability in respect of which the Purchaser is entitled to recover from any
third party, the Purchaser shall take or procure that it shall promptly
take all reasonable steps to recover in respect of that liability and, if
such recovery is made, the amount of Completion Net Worth shall be revised
accordingly by, and the Purchaser shall forthwith pay to the Seller by way
of further payment of Deferred Consideration, the amount so recovered (less
the costs of recovery) up to the amount of the provision.
4. PROCEDURE FOR DETERMINING COMPLETION NET WORTH
4.1 DELIVERY OF COMPLETION STATEMENT
The Completion Statement shall be delivered to the Seller by the Purchaser
within fifteen days of Completion.
4.2 SELLER MAY SEEK CONFIRMATION FROM SELLER'S ACCOUNTANTS
The Seller shall be entitled to verify the Completion Statement and submit
it to the Seller's Accountants for confirmation.
4.3 IF SELLER DISAGREES WITH CALCULATION
The Seller shall within fifteen Business Days of the Completion Statement
being submitted to it, either issue their confirmation of the Completion
Statement or shall state in writing (a "Dispute Notice") that they disagree
with the Completion Statement. If no Dispute Notice is given within
fifteen Business Days the Seller shall be deemed to have accepted the
Completion Statement. If the Seller shall disagree with any matter
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affecting the calculation of the Completion Net Worth then it shall attempt
to resolve the issue with the Purchaser. Any such resolution which enables
the Completion Net Worth to be agreed shall be expressed in a joint
certificate ("the Joint Resolution"), signed by both the Purchaser and the
Seller, stating the Completion Net Worth. If no Joint Resolution shall be
issued within five days of the Dispute Notice, the matter shall be referred
to a firm of independent chartered accountants jointly agreed upon between
the Purchaser and the Seller or (failing such agreement) appointed, at the
request of either the Purchaser or the Seller at any time, by the President
from time to time of the Institute of Chartered Accountants in England and
Wales, which firm ("the Independent Accountants") shall then determine the
matter in dispute and, shall determine the Completion Net Worth. The
Independent Accountants shall act as experts and not as arbitrators. Their
decision shall be communicated in writing to the Purchaser and the Seller
and shall be final and binding upon the Purchaser and the Seller.
4.4 COSTS TO BE BORNE BY APPOINTOR
The costs of the Seller's Accountants shall be borne by the Seller; the
costs of the Independent Accountants shall be borne jointly between the
parties.
4.5 RECORDS ETC. TO BE MADE AVAILABLE
The Purchaser shall procure that all records, working papers and other
information as may be reasonably required by the Seller's Accountants
and/or the Independent Accountants for the purposes of this Schedule, shall
be made available upon a request for them and shall generally render all
reasonable assistance reasonably necessary for the preparation of the
Completion Statement.
4.6 For the purposes of this Agreement, the "ASSET CERTIFICATION DATE" means:
(a) where no Dispute Notice is served the date which is 15 Business Days
after the submission to the Seller of the Completion Statement
pursuant to paragraph 4.1 above or, if the Seller confirmed it agrees
with such Certificate, on the date of such confirmation;
(b) if a Dispute Notice is served, the date of any Joint Resolution or if
any matter shall be referred to the Independent Accountant, the date
upon which their decision shall be given,
PROVIDED ALWAYS that on 31 July 1998 the Purchaser shall pay to the Seller
by way of payment on account of its obligation under Clause 3.2(a) a sum
equal to the
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amount by which the Initial Payment falls short of the Completion Net Worth
as shown in the Completion Statement delivered to the Seller pursuant to
paragraph 4.1, together with interest thereon pursuant to Clause 3.3(b),
and any such payment on account shall be deducted from any final payment to
be made on the Asset Certification Date pursuant to Clauses 3.2(a) and
3.3(b).
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SCHEDULE 15
BASIS OF STOCK-TAKE
The lower of cost calculated as below or net realisable value.
1. RAW MATERIALS
Valued at standard cost, based on December review of supplier prices.
2. WORK IN PROGRESS
2.1 EXTERNAL
Based on standard cost.
2.2 INTERNAL
(a) Materials are based on the standard cost of materials supplied to the
shop floor;
(b) Labour is based on the standard labour cost of the completed item, in
relation to the percentage completed. Percentage complete was 20% at
year end December 1997;
(c) Overheads are applied to WIP based on the YTD actual rates.
2.3 FINISHED GOODS
Valued at standard material and labour cost, plus overhead based on YTD
actual rates.
2.4 STOCK OF LAMINATED CARDS
Notwithstanding the above provisions, in relation to the stock of laminated
cards held by the Seller supplied by Cross, these stocks shall be valued as
follows:
(a) 15% of such stocks shall be valued at the book value costs;
(b) the remainder of such stocks shall be written down by 50% of the book
value cost.
In the event that any of such stocks as referred to in paragraph (b) above
are subsequently sold to or ordered by customers prior to 31 December 1998,
the Purchaser shall pay to the Seller by way of further consideration for
the Know-how an amount equal to 20% of the gross margin on any such sale
and 20% of the gross
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margin on the value of any systems or readers or other Products sold with
any such cards to the relevant customer. In respect of the period to 30
September 1998 and the three month period to 31 December 1998, the
Purchaser shall prepare and deliver to the Seller an account of any such
sales made during such period as soon as practicable and in any event
within 14 days thereafter and shall thereupon pay any amount due to the
Seller. The Purchaser shall provide to the Seller such information and
explanations as it may reasonably require to satisfy the Seller as to the
sales of such stocks during the relevant period.
99
<PAGE>
EXECUTION:
SIGNED by /s/ Ronald A. Woessner,
Authorized Signatory )
duly authorised for and on behalf )
of AMTECH EUROPE LIMITED )
Witness's signature: /s/ David P. Cook
Name (in capitals): RONALD A. WOESSNER
Address: 19111 Dallas Parkway, Suite 300
Dallas, Texas 75287
Occupation: Attorney
SIGNED by /s/ Authorized Representative )
duly authorised for and on behalf )
of METRIC SECURITY LIMITED )
Witness's signature: Catriona Hatton
Name (in capitals):
Address:
Occupation:
SIGNED AND DELIVERED as a DEED by
AMTECH CORPORATION )
/s/ Ronald A. Woessner, V.P. )
in the presence of: )
Director /s/ David P. Cook
Director/Secretary /s/ Ronald A. Woessner, Secretary
SIGNED AND DELIVERED as a DEED by
METRIC GRUPPEN AB )
/s/ Authorized Representative )
in the presence of: )
Witness Catriona Hatton
100
<PAGE>
EXHIBIT 99.1
A M T C
- -------------
[NASDAQ:AMTC] NEWS RELEASE
For immediate release
Contact: Beverly V. Fuortes
tel: (972) 733-6059
fax: (972) 733-6699
e-mail: [email protected]
web: www.stockprofiles.com/amtc
AMTC CORPORATION SELLS COTAG UNIT
AMTC (FORMERLY, AMTECH CORPORATION) CONTINUES TRANSITION
DALLAS - July 7, 1998 - AMTC Corporation (NASDAQ:AMTC), the company formerly
known as Amtech Corporation, announced today that it has sold the net assets of
its Cotag International (Cotag) unit, a manufacturer of electronic cards and
readers for the access control and security management market, to Metric Gruppen
AB (Metric) of Solna, Sweden. Metric is a leader in the access control and
electronics distribution market in the Nordic region. The value of the
transaction is between (pounds)2.5 million (approximately $4.1 million) and an
estimated total of (pounds)3.4 million (approximately $5.7 million), with the
final value of the transaction being based on the amounts of additional
installment payments, which are tied to the level and mix of Cotag revenues
achieved in 1998 and 1999. The sale closed on July 7, 1998.
Metric is acquiring the brand name and intellectual property underlying Cotag's
hands-free proximity technology; Cotag's manufacturing facility in Cambridge,
England; and the ongoing business of the unit.
Commenting on the sale, David P. Cook, chairman and chief executive officer of
AMTC, said, "Concluding the sale of Cotag continues the company's transition to
new lines of business. Cardkey Systems, the remaining business unit in the
Electronic Security Group, is a profitable business, with approximately $60
million in annual revenues." The company also said that its Electronic Security
Group will be renamed Cardkey Systems and be headed by Mike Wolpert, president.
AMTC Corporation (NASDAQ:AMTC), the company formerly known as Amtech
Corporation, is a leading provider of electronic access control and security
management systems, services, and products marketed under the Cardkey/(R)/ brand
name. On May 31, 1998, the company sold the Amtech/(R)/ name to UNOVA, Inc.
(NYSE:UNA) and is doing business under the name AMTC Corporation until a new
name is formally approved by shareholders at the annual meeting, scheduled for
August 31, 1998. AMTC's headquarters are in Dallas.
-END-
AMTC CORPORATION
19111 Dallas Parkway, Suite 300
Dallas, TX 75287-3106
