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DATED 26th MAY 2000
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(1) THE SHAREHOLDERS
(2) PHILIP CORBISHLEY
(3) TUT SYSTEMS.INC
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A G R E E M E N T
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For the sale and purchase of the entire issued share capital of Xstreamis Plc
EVERSHEDS
11-12 Queen Square
Bristol BS1 4NT
Tel: 0117 929 9555
Fax: 0117 929 2766
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CONTENTS
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Clause Page
<S> <C>
1 INTERPRETATION..................................... 1
2 SALE AND PURCHASE.................................. 5
3 CONSIDERATION...................................... 5
4 WARRANTIES......................................... 6
5 OTHER PROVISIONS RELATING TO WARRANTIES............ 13
6 RESTRICTIVE COVENANTS.............................. 16
8 ANNOUNCEMENTS...................................... 23
9 COSTS.............................................. 24
10 INTEREST........................................... 24
11 NOTICES............................................ 24
12 GENERAL............................................ 26
Schedule
1 The Vendors........................................ 29
2 Details of the Company............................. 32
3 The Property....................................... 33
4 Non-Taxation Warranties............................ 34
1 Interpretation.................................. 34
2 Schedules 1 & 2; Capital........................ 37
3 Capacity........................................ 37
4 Insiders' interests............................. 38
5 Information supplied to the Purchaser........... 38
ACCOUNTS AND RECORDS............................... 38
6 The Accounts.................................... 38
7 Profits and losses.............................. 39
8 Records......................................... 40
ASSETS............................................. 40
9 Subsidiaries.................................... 40
10 Unencumbered title; possession................. 40
11 Debtors........................................ 41
12 (not used)
13 Plant etc...................................... 41
14 Property....................................... 41
15 Intellectual Property.......................... 43
16 Millennium and Euro Compliance................. 43
EMPLOYEES.......................................... 45
17 Remuneration and employees..................... 45
CONTRACTS.......................................... 46
18 Insurance...................................... 46
</TABLE>
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<TABLE>
<S> <C>
19 Financing and working capital...................... 47
20 Material Contracts................................. 48
21 Other business matters............................. 50
COMPLIANCE; DISPUTES................................... 51
22 Company law matters................................ 51
23 General legal compliance........................... 51
24 Environmental/Health and Safety (EHS) matters...... 52
25 Fair trading....................................... 55
26 Litigation......................................... 56
27 Default............................................ 56
28 Insolvency......................................... 57
29 Events since the Accounting Date................... 57
30 Effects of the Agreement........................... 59
5 Taxation Warranties.................................... 61
31 INTERPRETATION..................................... 61
PART 2 - TAX WARRANTIES................................ 63
32 Returns, disputes and clearances................... 63
33 Penalties and interest............................. 64
34 Taxation claims, liabilities and reliefs........... 64
35 Distributions and payments......................... 65
36 Employee benefits.................................. 67
37 Close companies.................................... 68
38 Group transactions................................. 68
39 Gifts.............................................. 69
40 Tax avoidance...................................... 70
41 Base values and acquisition costs.................. 70
42 Capital gains...................................... 70
43 Capital allowances................................. 72
44 VAT: general....................................... 73
45 VAT: property transactions......................... 74
46 Stamp duty and stamp duty reserve tax.............. 75
47 Residence and offshore interests................... 75
48 The Balance Sheet.................................. 76
49 Post-Accounting Date............................... 77
50 Shares and securities.............................. 77
</TABLE>
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THIS AGREEMENT is made on 26/th/ May 2000
BETWEEN
(1) The persons whose names and addresses are set out in Part 1 of Schedule 1
("the Vendors");
(2) PHILIP CORBISHLEY of 15 High Street, Hardingstone, Northampton NN4 7BT
("the Secondary Warrantor"); and
(3) TUT SYSTEMS.INC (IRS. Employer Identification Number 94-2958543) whose
place of business is at 2495 Estand Way, Pleasant Hill, California CA 94523
USA] ("the Purchaser")
BACKGROUND
A. The Vendors wish to sell and the Purchaser wishes to buy the Shares in
exchange for the Consideration Shares and $100,000 on and subject to the
terms and conditions of this Agreement.
B. The level of Warranty that the Vendors are prepared to give to the
Purchaser differs and, accordingly:
(i) the Primary Warrantors will give only the Primary Warranties;
(ii) the Secondary Warrantor will give only the Secondary Warranties; and
(iii) the Tertiary Warrantors will only give only the Tertiary Warranties.
OPERATIVE PROVISIONS
1. INTERPRETATION
In this Agreement:
1.1 the following expressions have the following meanings unless inconsistent
with the context:
"the Act" the Companies Act 1985
<PAGE>
"Business Day" any day (other than Saturday or Sunday) on
which Clearing Banks are generally open for a
full range of banking transactions
"Clearing Bank" a bank which is a member of CHAPS Clearing
Company Limited
"the Company" Xstreamis Plc, registered number 3011154,
whose registered office is at 30 Aylesbury
Street London EC1 0ER
"Completion" the meaning ascribed to it in clause 7.4
"the Conditions" the Conditions to be satisfied prior to
Completion as set out in Clause 7.1
"the Consideration Shares" 439,137 common stock in the capital of the
Purchaser to be allotted pursuant to clause
3.1.1
"the Disclosure Letter" the letter having the same date as this
Agreement from the Vendors to the Purchaser
qualifying the Warranties and the
Supplemental Letter
"dollar" and "$" U.S dollars, being the lawful currency of the
United States of America
"Group" the Purchaser and its subsidiaries from time
to time and "Group Company" shall be
construed accordingly
"James Chapman" as detailed in Part 1 of Schedule 1
"Nasdaq" Nasdaq National Market
"the Optionholders" those holders of the Share Options as
specified in Part 2 of Schedule 1
"the Primary Warranties" the Warranties contained in Part 1 of
Schedule 4 and Part 2 of Schedule 5
<PAGE>
"the Primary Warrantors" David Nevin Birss of 12 Clevedon Road,
Tilehurst, Reading, Berkshire RG31 6RL
and Ian Moir of Quince House, Beckford,
Upper Basildon Berkshire RG8 8PB
"the Primary Warrantors' Warranty the agreement in the agreed terms
between the Settlement Agreement"
Primary Warrantors, the Purchaser and
the Vendors' Solicitor to be entered
into at Completion and relating to the
determination of any claim under the
Primary Warranties.
"the Property" the property specified in Schedule 3
each and every part of such property
"the Purchaser's Solicitors" Eversheds 11/12 Queen Square, Bristol
BS1 4NT
"the Registration Rights Agreement" the agreement in the agreed terms
between the Vendors and the Purchaser
to be entered into at Completion
relating to the registration of the
Consideration Shares with the SEC
"the Secondary Warranties" the Warranties set out in Part 2 of
Schedule 4
"the Secondary Warrantor" Phillip Corbishley of 15 High Street,
Hardingstone, Northampton NN4 7BT
"the Shares" all of the issued shares of 2.5p each
in the capital of the Company
"the Share Options" the unexercised options over unissued
Ordinary Shares of 2.5p each in the
capital of the Company issued pursuant
to the Xstreamis Plc Share Option
Scheme as specified in Part 2 of
Schedule 1
"Simon Hughes" as detailed in Part 1 of Schedule 1
"the Subsidiaries" ADSL Limited (registered number
3297693) whose registered office is at
30 Aylesbury Street, London EC1R 0ER
and Xstreamis Inc (registered in
Delaware, USA)
<PAGE>
"the Stakeholders Agreement" the agreement in the agreed terms
between the Vendors, the Purchaser and
the Vendors' Solicitor to be entered
into at Completion relating to
Completion of this Agreement
"the Supplemental Letter" the letter(s), if any, delivered prior
to Completion supplementing the
Disclosure Letter
"the Tertiary Warranties" the Warranties set out in Part 3 of
Schedule 4
"the Tertiary Warrantors" the Vendors (other than the Primary and
Secondary Warrantors)
"the Tut Options" The options to be granted to the
Optionholders by the Purchaser as
detailed in Part 2 of Schedule 1t under
the Tut Systems 1999 non-statutory
Stock Option Plan
"the Vendors' Solicitors" Masons of 30 Aylesbury Street, London
EC1 0ER
"the Warranties" the warranties, set out or referred to
in clause 4, Schedule 4 and Part 2 of
Schedule 5;
"the Warrantors" the Primary Warrantors, the Secondary
Warrantor and the Tertiary Warrantors
1.2 references to any statute or statutory provisions will, unless the context
otherwise requires, be construed as including references to any earlier
statute or the corresponding provisions of any earlier statute, whether
repealed or not, directly or indirectly amended, consolidated, extended or
replaced by such statute or provisions, or re-enacted in such statute or
provisions, and to any subsequent statute or the corresponding provisions
of any subsequent statute in force at any time prior to the date of this
Agreement directly or indirectly amending, consolidating, extending,
replacing or re-enacting the same, and will include any orders,
regulations, instruments or other subordinate legislation made under the
relevant statute or statutory provisions which are in force prior to the
date of this Agreement;
1.3 references to persons will be construed so as to include bodies corporate,
unincorporated associations and partnerships and references to any gender
include the other gender;
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1.4 references to a document being "in the agreed terms" will be construed as
references to that document in the form agreed and initialled by or on
behalf of the Vendors and the Purchaser;
1.5 save as otherwise expressly provided all covenants, agreements,
undertakings, indemnities, representations and warranties on the part of
two or more persons are given or made by such persons jointly and
severally;
1.6 references to clauses and schedules are to Clauses of and Schedules to this
Agreement, and references to paragraphs are to paragraphs in the Schedule
in which such references appear;
1.7 the Schedules form part of this Agreement and will have the same force
and effect as if expressly set out in the body of this Agreement; and
1.8 the headings to the clauses of this Agreement and to the paragraphs of the
Schedules (save for headings in Schedules 1, 2 and 3) will not affect its
construction.
2. SALE AND PURCHASE
Each of the Vendors will sell and the Purchaser will buy, the number of
Shares specified opposite that Vendor's name in Part 1 of Schedule 1.
2.1 Each Vendor (other than the Sandford childrens' Trust) sells its Shares
with full title guarantee and free from any claim, charge, lien,
encumbrance, equity or third party right. Ron Sandford and Raymond Segal as
the trustees of the Sandford Childrens' Trust sell with limited title
guarantee.
2.2 Each of the Shares will be sold and bought with all rights attached or
accruing to it including all rights to any dividends or other distributions
declared, made or paid after the execution of this Agreement.
2.3 Each of the Vendors waives all rights of pre-emption over any of the Shares
conferred by the articles of association of the Company or otherwise.
2.4 No party will be obliged to complete the sale and purchase of any of the
Shares or the surrender of the Share Options unless the Conditions have
been satisfied or waived and the sale and purchase of all the Shares, the
issue of the TUT Options in substitution for the Share Options, the issue
of the Consideration Shares, the surrender of the Share Options and the
payment referred to in Clause 3.1 are all completed simultaneously.
3. CONSIDERATION
3.1 The consideration for the sale of the Shares will be:
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3.1.1 the allotment and issue to the Vendors of 439,137 common stock of
$0.001 par value each in the capital of the Purchaser credited as
fully paid, and accordingly each of the Vendors will be entitled to
the number of Consideration Shares specified opposite that Vendor's
name in Part 1 of Schedule 1; and
3.1.2 the sum of $100,000, and each of the Vendors will be entitled to
receive the sum specified opposite that Vendor's name in Part 1 of
Schedule 1.
3.2 The Consideration Shares will rank pari passu and as a single class with
the existing common stock of $0.001 par value each in the capital of the
Purchaser, and shall carry the right to receive in full all dividends and
other distributions declared, made or paid after the date of this
Agreement.
4. WARRANTIES
4.1 The Primary Warrantors:
4.1.1 warrant to the Purchaser in the terms of the Primary Warranties,
provided however that the Purchaser will not be entitled to claim
that any fact or combination of facts constitutes a breach of any of
the Primary Warranties if and to the extent that such fact or
combination of facts has been fairly disclosed in the Disclosure
Letter;
4.1.2 agree that the Purchaser is entering into this Agreement in reliance
on each of the Primary Warranties, and that save as provided in
clause 4.1.1 no information of which the Purchaser has knowledge
(save for actual knowledge ) will prejudice any claim made by the
Purchaser in respect of the Primary Warranties or will operate to
reduce any amount recoverable in respect of any breach of any of the
Primary Warranties or will operate to prevent any claim being made
by the Purchaser for any breach by the Primary Warrantors of the
covenants implied by the Law of Property (Miscellaneous Provisions)
Act 1994;
4.1.3 warrant to the Purchaser that (save as aforesaid) all the Primary
Warranties will be fulfilled and will be true and accurate in all
respects on the date hereof and on the day of Completion and that
the Primary Warrantors shall be entitled prior to Completion to
make non-material disclosures to the Purchaser by way of the
Supplemental Disclosure Letter provided such non-material
disclosures relate only to matters, facts or circumstances over
which the Primary Warrantors have acted at all times in good faith;
<PAGE>
4.1.4 will indemnify the Purchaser against any costs or expenses
(including legal costs) which it reasonably and properly incurred,
either before or after the commencement of any action leading to a
claim (in this clause "claim" has the meaning set out in clause 4.6)
to the extent that such costs or expenses when combined with any
payment in respect of any claim do not exceed the warranty limit set
out in clause 4.6.2;
4.1.5 undertake, for themselves and not jointly and severally, to disclose
to the Purchaser as soon as he becomes aware of any such matter
anything which comes to the notice of either of them which is or may
be a breach of any of the Primary Warranties; and
4.1.6 undertake that, in the event of any claim being made against any of
them whether under the Primary Warranties or otherwise in connection
with the sale of the Shares to the Purchaser, they will not make any
claim against the Company, or against any director or employee of
the Company, on which or on whom either of them may have relied
before agreeing to any term of this Agreement or authorising any
statement in the Disclosure Letter, but so that this undertaking
will not preclude any Warrantor from claiming against any other
Warrantor under any right of contribution or indemnity to which such
Warrantors may be entitled.
4.2 Each of the Primary Warranties will be construed as a separate Warranty and
will not be limited or restricted by reference to, or inference from, the
terms of any other Warranty or any other term of this Agreement.
4.3 In this Agreement, unless otherwise specified, where any Primary Warranty
refers to the knowledge, information, belief or awareness of the Primary
Warrantors (or similar expression), each Primary Warrantor will be deemed
to have such knowledge, information, belief or awareness as such Primary
Warrantor would have obtained had such Primary Warrantor made all due and
careful enquiries into the subject matter of that Primary Warranty and it
shall not be a defence that the Primary Warrantor did not appreciate the
relevance or significance of any particular matter and the knowledge,
information, belief and awareness of either of the Primary Warrantors shall
be imputed to the other Primary Warrantor.
4.4 Subject to Clause 4.1.3, if prior to Completion it shall be found that any
of the Primary Warranties including for the avoidance of doubt, any
Warranty given pursuant to clause 4.1.3 is materially breached or
unfulfilled, the Purchaser shall be entitled by notice in writing to the
Vendors to rescind this Agreement but failure to exercise such
<PAGE>
right in respect of any breach over which the Primary Warrantors have not
acted in good faith shall not constitute a waiver of any other rights of
the Purchaser arising by reason of any breach of any of the Primary
Warranties and exercise of such right shall be without prejudice to any
other rights and remedies the Purchaser may have under or in respect of
this Agreement. (but for the avoidance of doubt where the Primary
Warrantors have acted in good faith and the Purchaser does not exercise its
right under this clause 4.4 to rescind this Agreement such failure shall
constitute a waiver of any other rights of the Purchaser arising by reason
of that breach of the Primary Warranties).
4.5 If after the execution of this Agreement and before Completion any event
shall occur (other than an event constituting or giving rise to a breach of
any of the Warranties) which affects or is likely to affect materially and
adversely the financial position or business prospects of the Company, not
being an event affecting or likely to affect generally all companies
carrying on similar businesses in the United Kingdom, the Purchaser shall
be entitled by notice in writing to the Vendors to rescind this Agreement
at any time prior to Completion but the occurrence of such an event shall
not give rise to any right to damages or compensation.
4.6 In this clause 4.6 and clause 4.7 "claim" means any claim which is
successfully brought (disregarding the provisions of this clause 4.6)
against the Primary Warrantors (or either of them) or is agreed between
the Purchaser and the Primary Warrantors in favour of the Purchaser for
breach of the Primary Warranties. Notwithstanding the foregoing provisions
of clause 4:
4.6.1 each Primary Warrantor will be under no liability to make any
payment in respect of any claim unless it:
(a) is (Pounds)10,000 (after deducting any such costs as are
referred to in clause 4.1.4) or more in respect of any single
claim; or
(b) is (when aggregated with his liability in respect of any
other claim or claims made by the Purchaser or which would
have been made but for the provision of this clause 4.6.1) in
excess of (Pounds)10,000 (after deducting any such costs as
are referred to in clause 4.1.4) in which event the Primary
Warrantor will (subject to the other provisions of this
clause 4.6) be liable for the whole amount of liability and
not merely for the excess; and
<PAGE>
4.6.2 the aggregate liability of the Primary Warrantors in respect of
all claims (by way of damages or otherwise) will be limited to
the value of $1,937,820.00 and will be subject to the terms of
the Primary Warrantors' Warranty Settlement Agreement;
4.6.3 the Primary Warrantors will be under no liability to make any
payment in respect of any claim or potential claim unless written
particulars of the claim or potential claim (giving such
reasonable details as are then available of the specific matter
in respect of which such claim or potential claim is made) are
given to the Primary Warrantors:
4.6.3.1 in the case of the Primary Warranties contained in
Schedule 4, within 12 months from the date of this
Agreement; and
4.6.3.2 in the case of the Warranties contained in Schedule 5,
within seven years from the date of this Agreement;
in either case, if the Purchaser has not commenced legal
proceedings in respect of any potential claim within 18 months of
such notice, the Purchaser shall be deemed to have waived such
potential claim in full.
4.7 Notwithstanding any other provision of this Agreement, the provisions of
clause 4.6 shall not apply to exclude or limit the liability of the Primary
Warrantors to the extent that any claim or potential claim arises by reason
of any fraud or dishonest, reckless or wilful misstatement or omission by
or on behalf of the Primary Warrantors or either of them.
Warranties from Secondary Warrantor
4.8 The Secondary Warrantor:
4.8.1 warrants to the Purchaser in the terms of the Secondary
Warranties, provided however that the Purchaser will not be
entitled to claim that any fact or combination of facts
constitutes a breach of any of the Warranties if and to the
extent that such fact or combination of facts has been fairly
disclosed in the Disclosure Letter;
4.8.2 agrees that the Purchaser is entering into this Agreement in
reliance on each of the Secondary Warranties, and that save as
provided in clause 4.8.1 no information of which the Purchaser
has knowledge ( save for actual knowledge) will prejudice any
claim made by the Purchaser in respect of the Secondary
Warranties or will operate to reduce any amount recoverable in
<PAGE>
respect of any breach of any of the Secondary Warranties or will
operate to prevent any claim being made by the Purchaser for any
breach by the Secondary Warrantor of the covenants implied by the
Law of Property (Miscellaneous Provisions) Act 1994;
4.8.3 warrants to the Purchaser that (save as aforesaid) all the
Secondary Warranties will be fulfilled and will be true and
accurate in all respects on the date hereof and on the day of
Completion and that the Secondary Warrantor shall be entitled
prior to Completion to make non-material disclosures to the
Purchaser by way of the Supplemental Letter provided such non-
material disclosures relate only to matters, facts or
circumstances over which the Secondary Warrantor has acted at all
times in good faith.
4.8.4 will indemnify the Purchaser against any costs or expenses
(including legal costs) which it reasonably and properly
incurred, either before or after the commencement of any action
leading to a claim (in this clause "claim" has the meaning set
out in clause 4.6) to the extent that such costs or expenses when
combined with any payment in respect of any claim do not exceed
the warranty limit set out in clause 4.12.2, directly or
indirectly as a result of any breach of any of the Secondary
Warranties;
4.8.5 undertakes to disclose to the Purchaser as soon as he becomes
aware of any such matter anything which comes to the notice of
him which is or may be a breach of any of the Secondary
Warranties; and
4.8.6 undertakes that, in the event of any claim being made against him
under the Secondary Warranties, he will not make any claim
against the Company, or against any director or employee of the
Company, on which or on whom he may have relied before agreeing
to any term of this Agreement or authorising any statement in the
Disclosure Letter, but so that this undertaking will not preclude
the Secondary Warrantor from claiming against any other Warrantor
under any right of contribution or indemnity to which the
Secondary Warrantor may be entitled.
4.9 Each of the Secondary Warranties will be construed as a separate Warranty
and will not be limited or restricted by reference to, or inference from,
the terms of any other Warranty or any other term of this Agreement.
4.10 In this Agreement, unless otherwise specified, where any Secondary Warranty
refers to the knowledge, information, belief or awareness of the Secondary
Warrantor (or similar expression), the Secondary Warrantor will be deemed
to have such knowledge,
<PAGE>
information, belief or awareness as the Secondary Warrantor has or should
have obtained from either (a) attending the board meetings of the Company
which he has actually attended or (b) his actual knowledge; and it shall
not be a defence that the Secondary Warrantor did not appreciate the
relevance or significance of any particular matter.
4.11 Subject to clause 4.8.3 if prior to Completion it shall be found that any
of the Secondary Warranties including, for the avoidance of doubt, any
Warranty given pursuant to clause 4.8.3 is materially breached or
unfulfilled, the Purchaser shall be entitled by notice in writing to the
Vendors to rescind this Agreement but failure to exercise such right in
respect of any breach over which the Secondary Warrantor has not acted in
good faith shall not constitute a waiver of any other rights of the
Purchaser arising by reason of any breach of any of the Secondary
Warranties and exercise of such right shall be without prejudice to any
other rights and remedies the Purchaser may have under or in respect of
this Agreement (but for the avoidance of doubt where the Secondary
Warrantor has acted in good faith and the Purchaser does not exercise its
right under this clause 4.11 to rescind this Agreement such failure shall
constitute a waiver of any other rights of the Purchaser arising by reason
of that breach of the Secondary Warranties).
4.12 In this clause 4.12 and clause 4.13 "claim" has the meaning set out in
Clause 4.6 but substituting in such definition a reference to Clause 4.12
and 4.13 in place of the reference to Clause 4.6 and 4.7 and a reference to
Secondary Warrantor in place of the reference to Primary Warrantors.
Notwithstanding the foregoing provisions of clause 4:
4.12.1 the Secondary Warrantor will be under no liability to make any
payment in respect of any claim unless it:
(a) is (Pounds)10,000 (after deducting any such costs as are
referred to in clause 4.8.4) or more in respect of any
single claim;
(b) is (when aggregated with his liability in respect of any
other claim or claims made by the Purchaser or which would
have been made but for the provisions of this clause 4.12.1)
in excess of (Pounds)10,000 (after deducting any such costs
as are referred to in clause 4.8.4) in which event the
Secondary Warrantor will (subject to the other provisions of
this clause 4.12) be liable for the whole amount of such
liability and not merely for the excess; and
<PAGE>
4.12.2 the aggregate liability of the Secondary Warrantor in respect of
all claims (by way of damages or otherwise) will be limited to
(Pounds)84,000.
4.12.3 the Secondary Warrantor will be under no liability to make any
payment in respect of any claim or potential claim unless written
particulars of the claim or potential claim (giving such
reasonable details as are then available of the specific matter
in respect of which such claim or potential claim is made) is
given to the Secondary Warrantor by 24 September 2000 and if the
Purchaser has not commenced legal proceedings in respect of any
potential claim within 18 months of such notice, the Purchaser
shall be deemed to have waived such potential claim in full.
4.13 Notwithstanding any other provision of this Agreement, the provisions in
clause 4.12 shall not apply to exclude or limit the liability of the
Secondary Warrantor to the extent that any claim or potential claim arises
by reason of any fraud or dishonest, reckless or wilful misstatement or
omission by or on behalf of the of the Secondary Warrantor.
Warranties from Tertiary Warrantors
4.14 The Tertiary Warrantors for himself (and not jointly and severally):
4.14.1 each warrants to the Purchaser in the terms of the Tertiary
Warranties, provided however that the Purchaser will not be
entitled to claim that any fact or combination of facts
constitutes a breach of any of the Warranties if and to the
extent that such fact or combination of facts has been fairly
disclosed in the Disclosure Letter;
4.14.2 agree that the Purchaser is entering into this Agreement in
reliance on each of the Tertiary Warranties.
4.15 Each of the Tertiary Warranties will be construed as a separate Warranty
and will not be limited or restricted by reference to, or inference from,
the terms of any other Warranty or any other term of this Agreement.
4.16 In this clause 4.16 and clause 4.17 "claim" has the meaning set out in
clause 4.6 but substituting in such definition a reference to clause 4.16
and 4.17 in place of the reference to clause 4.6 and a reference to
"Tertiary Warrantors" in place of the reference to "Primary Warrantors".
Notwithstanding the foregoing provisions of clause 4:
<PAGE>
4.16.1 the aggregate liability of the Tertiary Warrantors in respect of
all claims (by way of damages or otherwise) will be limited to the
value of $18,909,239$1,937,820 and the individual liability of each
Tertiary Warrantor will be limited to that value as divided pro
rata by the number of the Consideration Shares received by him as
shown in Part 1 of Schedule 1;
4.16.2 the Tertiary Warrantor will be under no liability to make any
payment in respect of any claim or potential claim unless written
particulars of the claim or potential claim (giving such reasonable
details as are then available of the specific matter in respect of
which such claim or potential claim is made) are given to the
relevant Tertiary Warrantor within 12 months from the date of this
Agreement and if the Purchaser has not commenced legal proceedings
in respect of any potential claim within 18 months of such
notice, the Purchaser shall be deemed to have waived such potential
claim in full; and
4.17 Notwithstanding any other provision of this Agreement, the provisions of
clause 4.16 shall not apply to exclude or limit the liability of the
Tertiary Warrantors to the extent that any claim or potential claim arises
by reason of any fraud by or on behalf of that Tertiary Warrantor.
5. OTHER PROVISIONS RELATING TO WARRANTIES
5.1 The Purchaser hereby confirms that it has not relied on any representation,
warranty, collateral agreement or undertaking of the Vendors (which term in
this clause 5 means the Vendors acting in any capacity including, without
limitation, as Warrantors) or any other persons save as expressly set out
in this Agreement and the Disclosure Letter.
5.2 This Agreement constitutes the entire understanding and agreement between
the parties hereto and no representation warranties collateral agreement or
undertakings expressed or implied statutory or otherwise made by or on
behalf of the Vendors in connection with or arising out of the sale of the
Shares and which are not contained in or part of this Agreement or any
agreement or side letter connected with the matters contemplated herein
shall give rise to any liability on the part of the Vendors.
5.3 The Purchaser shall reimburse to the Vendors (or to such of them as shall
have made the relevant payment) an amount equal to any sum paid by the
Vendors under any of the Warranties which is subsequently recovered by or
paid to the Purchaser or to the Group or any of them by a third party.
<PAGE>
5.4 In the event that the Purchaser or any Group Company shall be in receipt of
any claim which, in the opinion of the Purchaser, might constitute or give
rise to a breach of any of the Warranties the Purchaser shall as soon as
reasonably practicable notify the relevant Warrantors giving full details
so far as practicable.
5.5 The amount of any claim paid by the Warrantors under this Agreement shall
be deemed to constitute a reduction in the purchase price.
5.6 Where a breach of any of the Warranties shall be in respect of a matter
where the Purchaser shall be insured against loss or damage arising
therefrom the Purchaser shall not pursue any claim against the Vendors for
breach of any such Warranty without first making a claim against its
insurers for compensation for the loss or damage suffered (but the
Purchaser shall notify the Vendor with written particulars of such breach
which notification shall have the effect of postponing the time limitations
pursuant to clauses 4.6, 4.12 and 4.16 by the length of time it takes to
establish conclusively that compensation will or will not be paid by the
said insurers and the amount of any such compensation) and thereafter any
claim against the Vendors shall be limited (in addition to the limitation
on the Vendors' liability elsewhere referred to herein) to damage suffered
by the Purchaser as a result of such breach to the extent that such claim
shall exceed the compensation paid by the said insurers to the Group.
5.7 If any breach or claim arising under the Warranties shall arise by reason
of some liability of a company within the Group which at the time the
breach is notified to the relevant Warrantors is contingent only then such
Warrantors shall not be under any obligation to make payment to the Group
or the Purchaser or the company in question hereunder until such time as
the contingent liability ceases to be contingent but notice to the relevant
Warrantors will mean the time limitations pursuant to clauses 4.6, and 4.12
and 4.16 in respect of such a claim shall be extended by the period from
the date of the Purchaser giving notice of the claim to the date upon which
the contingent liability ceases to be contingent. the time limitations
5.8 The Purchaser shall take and procure that each Group Company shall take all
reasonable steps necessary to mitigate any loss in relation to any claim
against any Group Company which might constitute a breach of any of the
Warranties on becoming aware that such circumstances exist as to give rise
to a claim pursuant hereto.
5.9 No liability shall attach to the Primary Warrantors in respect of a breach
of the Warranties to the extent that:
<PAGE>
5.9.1 such claim has been or is compensated by the discharge or
ascertainment of any liability for an amount less than that shown or
provided for in the Accounts;
5.9.2 if and to the extent that any such breach or claim occurs as a
result of any increase in the rate of taxation or an alteration in
the practice and custom of the Inland Revenue or other taxation
Authority from that in force at the date hereof;
5.9.3 if and to the extent that any such breach or claim is wholly or
partially attributable to or arises from any voluntary act,
omission, transaction or arrangement of or carried out:
(a) at any time after Completion by any of the Purchaser, a Group
Company or their respective successors in title from time to
time or any subsidiary or associated company or any of the
foregoing at any time after Completion;
(b) by the Company at any time after the date hereof with the prior
written agreement of the Purchaser or, as permitted by clause
87.3, without the consent of the Purchaser.
5.9.4 allowance, provision or reserve has been made in the Accounts in
respect of the matter to which such liability relates; and
5.9.5 to the extent that any taxation for which the Company is or may be
liable to be assessed or accountable is reduced or extinguished as a
result of any such claim or liability; and
5.9.6 any losses or other allowable sums previously utilised become
available for set-off against taxation.
5.10 All amounts available for set-off or otherwise liable to be deducted
pursuant to clause 5.95.8 shall first be taken into account for the purpose
of determining the amount of loss sustained in connection with the de
minimis limits referred to in clauses 4.6 ,and 4.154.12. and 4.19.
5.11 The Purchaser shall not be entitled to claim that any fact or circumstance
constitutes a breach of any of the Warranties if such fact or circumstances
has been fairly disclosed in this Agreement, in the Accounts or in the
Disclosure Letter.
5.12 Neither the Purchaser nor any Group Company, shall be entitled to recover
any sum in respect of any claim for breach of any of the Warranties or
otherwise obtain
<PAGE>
reimbursement or restitution more than once in respect of any one breach of
the Warranties.
5.13 Nothing herein or in the Warranties contained shall be deemed to relieve
the Purchaser or any Group Company from any common law duty to mitigate any
loss or damage incurred by them.
6. RESTRICTIVE COVENANTS
6.1 For the purpose of assuring to the Purchaser the full benefit of the
Company and in consideration for the Purchaser agreeing to buy the Shares
on the terms of this Agreement, the Primary Warrantors, James Chapman and
Simon Hughes, subject to the undernoted exceptions, each (for themselves
and not jointly and severally) undertake to the Purchaser that he will not,
without the prior written consent of the Purchaser, whether directly or
indirectly and whether alone or in conjunction with, or on behalf of, any
other person and whether as principal, shareholder, director, employee,
agent, consultant, partner or otherwise:
6.1.1 with the exception of James Chapman and Simon Hughes for a period of
3 years immediately following Completion, canvass, solicit or
approach, or cause to be canvassed, solicited or approached, for
orders any person who at any time during the twelve months
immediately preceding the date of Completion is or was:
6.1.1.1 negotiating with the Company for the supply by the Company
of goods or services; or
6.1.1.2 a client or customer of the Company; or
6.1.1.3 in the habit of dealing with the Company,
where the orders relate to goods and/or services which are
competitive with those supplied by the Company at any time during
the twelve months immediately preceding the date of Completion;
6.1.2 with the exception of James Chapman and Simon Hughes for a period of
3 years immediately following Completion, deal or contract with any
person who at any time during the twelve months immediately
preceding the date of Completion is or was:
6.1.2.1 negotiating with the Company for the supply by the Company
of goods or services; or
<PAGE>
6.1.2.2 a client or customer of the Company; or
6.1.2.3 in the habit of dealing with the Company,
where the dealing or contracting relates to goods and/or services
which are competitive with or of the type those supplied by the
Company at any time during the twelve months immediately preceding
the date of Completion;
6.1.3 with the exception of James Chapman and Simon Hughes for a period of
three years immediately following Completion, interfere, or seek to
interfere, with the continuance of supplies to the Company from any
supplier who has been supplying goods and/or services to the Company
at any time during the twelve months immediately preceding the date
of Completion if such interference causes or would cause that
supplier to cease supplying, or materially reduce its supply of,
those goods and/or services to the Company;
6.1.4 for a period of three years immediately following Completion,
solicit or entice, or endeavour to solicit or entice, away from the
Company, or employ, any person employed who is or was employed in a
managerial, technical or sales capacity by, or who is or was a
consultant to, the Company at any time during the period of 1 month
immediately preceding the date of Completion;
6.1.5 within Europe for a period of 18 months immediately following
Completion, be engaged, concerned or interested in, or provide
technical, commercial or professional advice to, any other business
which supplies goods and/or services which are competitive with
products and technologies relating to the efficient traffic
management and engineering service within broadband
telecommunications platforms including but not limited to techniques
to classify and manage traffic flows but excluding, for the
avoidance of doubt, the underlying telecommunications systems
themselves; provided that this restriction does not apply to prevent
either of the Primary Warrantors, James Chapman and Simon Hughes
from being employed by the Company or the Purchaser or any member of
the Group or holding shares or other securities in any company which
are quoted, listed or otherwise dealt in on a recognised stock
exchange or other securities market and which confer not more than 3
per cent of the votes which could be cast at a general meeting of
such company; or
<PAGE>
6.1.6 use in connection with any business any name which includes the
current name of the Company or any colourable imitation of it.
6.2 The Primary Warrantors, James Chapman and Simon Hughes (for themselves and
not jointly and severally) each acknowledge that they have (or may have)
information in respect of the business and financing of the Company and its
dealings, transactions, affairs, plans and proposals, all of which
information is, or may be, secret or confidential and important to the
Company. In this clause 6 such information is called "Confidential
Information" and includes, without limitation, confidential or secret
information relating to the Company's trade secrets, know-how, ideas,
business methods, finances, prices, business plans, marketing plans,
development plans, manpower plans, sales targets, sales statistics,
customer lists, customer relationships, computer systems and computer
software. Each of the Primary Warrantors, James Chapman, and Simon Hughes
further acknowledge that the disclosure of Confidential Information
(whether directly or indirectly) to actual or potential competitors of the
Company could place it at a competitive disadvantage and may do damage
(whether financial or otherwise) to its business. Each of the Primary
Warrantors, James Chapman and Simon Hughes accordingly agree to enter into
the restrictions contained in clause 6.3.
6.3 Each of the Primary Warrantors, the Secondary Warrantor, James Chapman and
Simon Hughes (for themselves and not jointly and severally) undertake that
he will not after the date hereof:
6.3.1 disclose to any person except to those authorised by the Company to
know;
6.3.2 use for his own purposes or for any purposes other than those of the
Company; or
6.3.3 through any failure to exercise all due care and diligence cause or
permit any unauthorised disclosure of any Confidential Information,
provided that these restrictions on him will cease to apply to
information which (otherwise than through the default of such
Vendor) comes into the public domain.
6.4 The parties agree that each of the undertakings set out in this clause 6 is
separate and severable and enforceable accordingly and if any one or more
of such undertakings or part of an undertaking is held to be against the
public interest or unlawful or in any way an unreasonable restraint of
trade, the remaining undertakings or remaining part of the undertakings
will continue in full force and effect and will bind each of the Primary
Warrantors, James Chapman and Simon Hughes but not their successors in
title.
<PAGE>
7. CONDITIONS AND COMPLETION
7.1 Completion is conditional upon:
7.1.1 the demerger of EPL Limited;
7.1.2 the re-registration of the Company as a private company limited by
shares;
7.1.3 the signing of the agreement between Commerz Beteiligungs
Gesellschaft GmBH and certain Vendors terminating a Subscription and
Shareholders Agreement dated 25 September 1998 in the agreed terms.;
7.1.4 signing the Stakeholders Agreement in the agreed terms;
7.1.5 signing the Primary Warrantors' Warranty Settlement Agreement.
7.2 The parties shall use their respective best endeavours to procure that the
conditions stated in clause 7.1 are fulfilled as soon as practicable and in
any event on or before midnight 26 May 2000. In the event that the
Conditions have not been fulfilled by midnight 26 May 2000 or by such later
date as may be agreed in writing between the Vendors and the Purchaser,
this Agreement shall, save for this clause 7.2 and clause 9, thereupon
become null and void and none of the parties shall have any rights against
any other party under this Agreement except for breach of this clause 7.2
or clause 9.
7.3 The Vendors shall, so far as they are each able, procure that between the
time of the execution of this Agreement and Completion the Company will
carry on business in the ordinary course and will not do anything which is
not of a routine unimportant nature without the prior written consent of
the Purchaser such consent not to be unreasonably withheld conditioned or
delayed. The following acts by the Company and/or the Subsidiaries or any
agreement by the Company and/or the Subsidiaries to do any of the following
acts, shall, but without limitation, be deemed not to be of a routine
unimportant nature:
7.3.1 incurring any expenditure exceeding (Pounds)2,000 on capital account
or entering into any commitment to do so;
7.3.2 save for the demerger of EPL Limited disposing of any part of its
assets in the ordinary course of trading;
7.3.3 borrowing any money except under its existing overdraft facilities
from its bankers or making any payments out of or drawings on its
bank account
<PAGE>
other than payments in the ordinary course of business or to meet
obligations outstanding at the date hereof and disclosed in the
Disclosure Letter;
7.3.4 entering into any guarantee or indemnity;
7.3.5 entering into any unusual or abnormal Contract (as defined in
paragraph 1.1 of Schedule 4) or commitment;
7.3.6 granting any lease or third party right in respect of the Property
or assigning or otherwise disposing of the same (or any part
thereof);
7.3.7 making any loan;
7.3.8 entering into any leasing, hire purchase or other agreement or
arrangement for payment on deferred terms;
7.3.9 declaring, making or paying any dividend or other distribution;
7.3.10 granting any security;
7.3.11 appointing any additional director;
7.3.12 taking on new employees or terminating the employment of any
employees or making any change in the terms or conditions of
employment or pension benefits of any employees;
7.3.13 permitting any insurance to lapse or doing anything which would make
any policy of insurance void or voidable;
7.3.14 creating or issuing any class of share or loan capital;
7.3.15 making any change in its business structure or organisation; and
7.3.16 doing or omitting to do, or causing or allowing to be done or
omitted to be done, any act or thing which would result or be likely
to result in a breach of any of the Warranties at Completion.
7.4 Provided that this Agreement has not been rescinded and provided also that
the conditions stated in clause 7.1 have been satisfied or waived by
written notice, Completion of the sale and purchase of the Shares will be
completed at the offices of the Vendors' Solicitors on or before midnight
26 May 2000 ("Completion") when:
7.4.1 the Vendors will produce and deliver to the Purchaser:
<PAGE>
7.4.1.1 duly executed transfers of the Shares in favour of the
Purchaser together with all relevant share certificates (or
in the case of any lost certificate an indemnity
satisfactory to the Purchaser in relation to it) and
together also with such waivers and consents as the
Purchaser may require to enable the Purchaser to be
registered as the holders of the Shares (subject to the
said transfers being produced to the Company duly stamped);
7.4.1.2 written resignations from all directors and the secretary
of the Company and the Subsidiaries in the agreed terms;
7.4.1.3 the written resignation of Horwarth Clark Whitehill as
auditors of the Company accompanied by the statement
referred to in section 392 of the Act;
7.4.1.4 the certificate of incorporation, any certificate(s) of
incorporation on change of name, the common seal and the
statutory books and registers (all entered up to date) of
the Company and ADSL Limited;
7.4.1.5 at the offices of the Company all deeds and documents
relating to the title of the Company to the Property;
7.4.1.6 all cheque books of the Company in current use;
7.4.1.7 bank statements in respect of each account of the Company
as at the close of business on the last Business Day prior
to Completion, together in each case with a reconciliation
statement prepared by the Primary Warrantors to show the
position at Completion (listing unpresented cheques drawn
or received by the Company and standing orders payable
since the date of such bank statements);
7.4.1.8 at the offices of the Company all papers, books, records,
keys, credit cards and other property (if any) of the
Company which are in the possession or under the control of
the Vendors or any other person who resigns as an officer
of the Company in accordance with this clause 7;
7.4.1.9 duly executed powers of attorney in the agreed terms;
<PAGE>
7.4.1.10 any other documentation not referred to above but included
in the Stakeholders Agreement under the description of
Vendors' Deliverables;
7.4.2 each Vendor will:
7.4.2.1 repay, and will procure that any spouse or child of such
Vendor or any company of which such Vendor (and/or any
such spouse or child) has control (as defined in section
840 Income and Corporation Taxes Act 1988) will repay, all
amounts owed by him, her or it to the Company, whether due
for payment or not;
7.4.2.2 deliver to the Purchaser a deed in the agreed terms
acknowledging that neither such Vendor nor any such
spouse, child or company has any claim against the Company
and that there is no agreement or arrangement under which
the Company has any actual, contingent or prospective
obligation (including, but not limited to, any obligation
under any guarantee entered into by the Company) to or in
respect of any of them; and
7.4.2.3 in respect of any such agreement or arrangement as is
referred to in clause 7.4.2.2 which previously existed
deliver to the Purchaser evidence of the release or
termination of it in a form satisfactory to the
Purchaser;.
7.4.3 the Vendors will, so far as they are each able, procure that duly
convened meetings are held at which:
7.4.3.1 the transfers referred to in clause 7.4.1.1 (subject to
stamping if not previously effected) are approved for
registration in the books of the Company;
7.4.3.2 new articles of association are adopted by the Company in
the agreed terms;
7.4.3.3 persons nominated by the Purchaser are appointed as
directors of the Company and the Subsidiaries, and any
person nominated by the Purchaser is appointed as
secretary of the Company and the Subsidiaries;
7.4.3.4 all existing instructions to the bankers of the Company
are revoked and new instructions given to such bankers as
the
<PAGE>
Purchaser may nominate, in such form as the Purchaser
directs; and
7.4.3.5 the Optionholders will each produce and deliver to the
Purchaser a signed Form of Election exchanging its Share
Options for TUT Options in the agreed terms.
the Vendors will, so far as they are each able, procure that David
Birss and Ian Moir enter into side letters in respect of their
service agreements with the Company in the agreed terms; and
7.4.4 The Purchaser will satisfy the consideration as provided by Clause
3.
7.5 If in any respect the provisions of clause 7.3 or 7.4 are not complied with
by one or more of the Vendors or the Purchaser on Completion the other
party may (subject to it being ready willing and able to comply with its
obligations):
7.5.1.1 (in the case of non-compliance with clause 7.4) defer
Completion to not more than fourteen days after the date
for Completion as set by clause 7.4; or
7.5.1.2 proceed to Completion so far as practicable without
prejudice to its rights under this Agreement; or
7.5.1.3 rescind this Agreement without prejudice to any rights or
remedies available to it under this Agreement.
7.6 The Purchaser will upon Completion transfer 50% of the Shares in the
Company to one of its wholly owned US subsidiaries ("US 1") and the
remaining 50% of the Shares in the Company to another of its wholly owned
US subsidiaries ("US 2") thereafter, the Purchaser will procure that US 1
and US 2 will transfer their respective shareholdings in the Company to a
further US subsidiary ("US 3") which is owned as to 50% by US 1 and 50% by
US 2.
8. ANNOUNCEMENTS
8.1 No announcement concerning the transactions contemplated by this Agreement
or any matter ancillary to it and no disclosure of the terms of this
Agreement will (save as required by law including any law of the United
States of America or any state therein or the regulations of NASDAQ or the
City Code on Takeovers & Mergers or any law of the United Kingdom) be made
by the Vendors or the Purchasers except with the prior written approval of
the other party. Where either party is under any legal or regulatory
requirement to make any announcement it shall use its reasonable endeavours
to agree the form, wording and timing of such announcement with the
<PAGE>
other party hereto prior to such announcement being made. After Completion
the Purchaser shall not be bound by the restrictions contained in this
clause 8.1 and to the extent that any announcement is made as a result of a
requirement by law or the regulations of NASDAQ, the Vendors shall be free
to make any similar announcement.
8.2 The Vendors shall, shall so far as they are each able, at the request of
the Purchaser supply to the Purchaser all such information and reports with
regard to the Company and the Subsidiaries as they may have which is
required by the Purchaser to enable it to comply with the requirements of
the law including any law of the United States of America or any State
therein or NASDAQ regarding the transaction to which this Agreement
relates. The Purchaser shall at the request of the Vendors supply to the
Vendors all such information and reports with regard to the Purchaser and
the Group and its entering into this Agreement, in so far as it is able to
do so, as may be required by the Vendors to enable them to comply with the
requirements of the law including any law of the United Kingdom or City
Code on Takeovers and Mergers regarding the transaction to which this
Agreement relates.
9. COSTS
Each party to this Agreement will bear such party's own costs and expenses
relating to the preparation and completion of this Agreement, except where
otherwise expressly stated.
10. INTEREST
If any party becomes liable to pay to another party other any sum pursuant
to this Agreement, whether a liquidated sum or by way of damages or
otherwise, such party will be liable to pay interest on such sum from the
due date for payment at the annual rate of 3 per cent above the base
lending rate from time to time of Barclays Bank plc accruing on a daily
basis until payment is made, whether before or after any judgement.
11. NOTICES
11.1 Any demand, notice or other communication given or made under or in
connection with this Agreement will be in writing.
11.2 Any such demand, notice or other communication will, if otherwise given or
made in accordance with this clause 11, be deemed to have been duly given
or made as follows:
<PAGE>
11.2.1 if sent by prepaid first class post, on the second Business Day
after the date of posting; or
11.2.2 if delivered by hand, upon delivery at the address provided for in
this clause 11; or
11.2.3 if sent by facsimile, on the day of transmission provided that a
confirmatory copy is, on the same Business Day that the facsimile
is transmitted, sent by pre- paid first class post in the manner
provided for in this clause 11,
provided however that, if it is delivered by hand or sent by facsimile on a
day which is not a Business Day or after 4 pm Greenwich Mean Time on a
Business Day, it will instead be deemed to have been given or made on the
next Business Day.
11.3 Any such demand, notice or other communication will, in the case of service
by post or delivery by hand, be addressed (subject as provided in this
clause 11) to the recipient at the recipient's address stated in this
Agreement or at such other address as may from time to time be notified in
writing by the recipient to the sender as being the recipient's address for
service, provided that:
11.3.1 in the case of a company it may instead (at the option of the
sender) be addressed to its registered office for the time being;
and
11.3.2 if given or made to any one of the Vendors or his or her personal
representatives it will be treated as validly given if given to the
Vendor's Solicitors;
11.3.3 if given or made to the Purchaser, it will be treated as validly
given if given to the Purchaser's Solicitors.
Any demand, notice or communication will be deemed to have been given to
the personal representatives of a deceased Vendor, notwithstanding that no
grant of representation has been made in respect of such Vendor's estate,
if the notice is addressed either to the deceased Vendor by name or to the
deceased Vendor's personal representatives by title, at the Vendor's
address in accordance with the foregoing provisions of this clause 11.3 or
at such other address as may have been notified by them in writing to the
sender as being their address for service, and is otherwise served in
accordance with the foregoing provisions.
11.4 Any such demand, notice or other communication will, in the case of service
by facsimile, be sent to the recipient or to any person service on whom (in
accordance with the foregoing provisions of this clause 11) is deemed to be
service on the
<PAGE>
recipient, using a facsimile number then used by the recipient or (as the
case may be) such other person at an address which (in accordance with such
provisions) could have been used for service by post.
11.5 The provisions of this clause 11 will not apply, in the case of service
court documents, to the extent that such provisions are inconsistent with
Part 6 of the Civil Procedure Rules.
11.6 The Purchaser hereby irrevocably instructs the Purchaser's Solicitors to
act as its agent for service and to accept service on its behalf of any
proceedings that the Purchaser may issue in connection with this Agreement
and the Vendors hereby irrevocably instruct the Vendors' Solicitors to act
as its agent for service and to accept service on its behalf of any
proceedings that the Purchaser may issue in connection with this Agreement.
12. GENERAL
12.1 This Agreement (except where expressly provided to the contrary) will be
binding on and will enure for the benefit of each party's successors,
permitted assigns and personal representatives (as the case may be).
12.2 Except insofar as the same have been fully performed at Completion, each of
the agreements, covenants, obligations, warranties, indemnities and
undertakings contained in this Agreement will continue in full force and
effect notwithstanding Completion.
12.3 The parties agree that they will do all such acts and things and execute
all such documents as may reasonably be required on or subsequent to
Completion to vest in the Purchaser legal and beneficial ownership of the
Shares in accordance with this Agreement and otherwise to give effect to
its terms.
12.4 Save as expressly provided otherwise, Failure failure or delay by any party
in exercising any right or remedy under this Agreement will not in any
circumstances operate as a waiver of it, nor will any single or partial
exercise of any right or remedy in any circumstances preclude any other or
further exercise of it or the exercise of any other right or remedy.
12.5 Any waiver of any breach of, or any default under, any of the terms of this
Agreement will not be deemed a waiver of any subsequent breach or default
and will in no way affect the other terms of this Agreement.
<PAGE>
12.6 The Purchaser may release or compromise the liability of, or grant time
or any other indulgence to, any person who is a party to this Agreement
without in any way prejudicing or affecting the liability (whether joint
and several or otherwise) to the Purchaser of any other person who is a
party to this Agreement.
12.7 In the event of any claim being made against the Warrantors under the
Warranties, the Warrantors shall not plead against such claim the Statute
of Limitations Act 1980 or any other statute (present or future) directly
or indirectly consolidating, extending, replacing or re-enacting the
same, or any other rule of law relating to limitation of time in which an
action can be brought or claim made; provided that this clause 12.7 is
without prejudice to any express provision of this Agreement regarding
time limits for notifying or making claims.
12.8 Save as expressly otherwise provided, the rights and remedies expressly
provided for by this Agreement will not exclude any rights or remedies
provided by law.
12.9 This Agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, each of which so executed and delivered
will be an original, but all the counterparts will together constitute
one and the same agreement.
12.10 The formation, existence, construction, performance, validity and all
aspects whatsoever of this Agreement or of any term of this Agreement
shall be governed by English law. The English Courts shall have
jurisdiction to settle any disputes which may arise out of or in
connection with this Agreement. The jurisdiction agreement contained in
this clause 12.10 is made for the benefit of the Purchaser only, which
accordingly retains the right to bring proceedings in any other court of
competent jurisdiction. The parties agree to submit to the said
jurisdiction.
12.11 Save as provided in Clauses 12.12 and 12.13, the Purchaser may not assign
transfer or change charge this Agreement or any of its rights under it,
nor attempt to purport to do any of the same, nor sub-contract any or all
of its obligations under this Agreement.
12.12 The Purchaser shall be entitled to assign all but not some of its rights
under this Agreement to any member of its Group provided that the
Purchaser shall procure that any such company to whom it assigns any of
its rights under this Agreement shall reassign such rights to the
Purchaser immediately prior to its ceasing to be a member of the
Purchaser's Group. Any assignment made pursuant to this Clause 12.12
shall be subject to the following terms:
12.12.1 that it shall not relieve the Purchaser of any of its
obligations under this Agreement; and
<PAGE>
12.12.2 the assignee acknowledges that the other parties may continue to
deal exclusively with the Purchaser in respect of all matters
relating to this Agreement at all times unless and until the
assignee notifies all of the other parties in writing that it is
exercising its rights as assignee.
12.13 Having obtained the prior written consent of all the other parties to
this Agreement the Purchaser shall be entitled to assign all but not some
of its rights under this Agreement to a named third party provided that
following such assignment, any obligations or liabilities of any of the
other parties shall forthwith cease and determine.
<PAGE>
SCHEDULE 1
Part 1
The Vendors
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Name Number and Amount of Amount of
class of Shares Consideration Cash to be
to be sold Shares to be Received
received
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
David Birss 1,494,234 38,958 8,870
12 Cleveden Road
Tilehurst
Reading
Berkshire RG13 6RL
----------------------------------------------------------------------------------------------------------------
James Chapman 206,958 5,396 1,230
11 Folly Green
Woodcote
Nr Reading
Berkshire RG8 0ND
----------------------------------------------------------------------------------------------------------------
Alice Cheng c/o 15A Ginahgulla 577,526 15,057 3,430
Road
Bellevue Hill
Sydney
NSW 2023 Australia
----------------------------------------------------------------------------------------------------------------
Clarendon Nominees Limited 926,119 24,146 5,500
Sir Walter Raleigh House
48-50 The Esplanade
St Helier Jersey
Channel Islands
----------------------------------------------------------------------------------------------------------------
Clarendon Trust Co Limited 681,283 17,762 4,040
Sir Walter Raleigh House
48-50 The Esplanade
St Helier Jersey
Channel Islands
----------------------------------------------------------------------------------------------------------------
Commerz Beteiligungs GmbH 6,250,000 162,950 37,100
Bad Homburg vdh
Kaiserstr 16
D-60311
Frankfurt am Main
Germany
----------------------------------------------------------------------------------------------------------------
Simon Hughes 147,827 3,854 880
Mimosa House
32 Magrath Avenue
Cambridge CB4 3AH
----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Makinen Properties Limited 660,028 17,208 3,920
8/F GPI Building
30-34 Kwai Wing Road
Northern Territories
Hong Kong
----------------------------------------------------------------------------------------------------------------
Mees Pierson (Cayman) Limited 1,732,574 45,172 10,290
as trustee of Sofaer Funds / SCI
Global Hedge Fund
C/o Sofaer Capital
Management Ltd
22/F Entertainment Building
30 Queens Road Central
Hong Kong
----------------------------------------------------------------------------------------------------------------
HSBC Financial Services (Cayman) 2,262,627 58,991 13,430
Limited solely as trustee of
the Abel-Sci Venture Fund
PO Box 1109 GT, Mary Street
Grand Cayman
Caymans Island
----------------------------------------------------------------------------------------------------------------
Ian Moir 1,494,234 38,958 8,870
Quince house
Beckfords,
Upper Basildon
Berkshire
----------------------------------------------------------------------------------------------------------------
Pearl Finance Limited 165,007 4,302 980
PriceWaterhouse Coopers,
22 Colomberie
St Helier
Jersey
Channel Islands
----------------------------------------------------------------------------------------------------------------
Sandford Children's Trust 30,000 782 180
Oaklands Lane
Arkley
HERTS EN5 3JN
----------------------------------------------------------------------------------------------------------------
Raleigh Nominees Limited 214,836 5,601 1,280
Sir Walter Raleigh House
48-50 The Esplanade
St Helier, Jersey
Channel Islands
----------------------------------------------------------------------------------------------------------------
TOTAL: 16,843,253 439,137 100,000
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Part 2
The Optionholders
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Name and address of No. of Share Options Amount of TUT
Optionholder held and option price Options to be granted
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Anthony Hewlett 50,000 shares @ 25p 1304
----------------------------------------------------------------------------------------------------------
Stephen Maslen 50,000 shares @ 25p 1304
----------------------------------------------------------------------------------------------------------
Sir Ronald Mason 50,000 shares @ 25p 1304
----------------------------------------------------------------------------------------------------------
Mark Hambleton 76,678 @ 35p 1999
----------------------------------------------------------------------------------------------------------
Graham Newton 66,941 @ 35p 1745
----------------------------------------------------------------------------------------------------------
Daniel Hayes 44,000 @ (Pounds)1 1147
----------------------------------------------------------------------------------------------------------
Nicholas Lambourn 35,000 @ (Pounds)1 913
----------------------------------------------------------------------------------------------------------
Roger Orchard 18,000 @ (Pounds)1 469
----------------------------------------------------------------------------------------------------------
David Spence 26,000 @ (Pounds)1 678
----------------------------------------------------------------------------------------------------------
TOTAL: 416,619 10,863
----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 2
Details of the Company
Name of Company : Xstreamis Plc
Registered number : 3011154
Registered office : 30 Aylesbury Street, London EC1R 0ER
Date of incorporation : 18 January 1995
Place of incorporation : England and Wales
Status of Company : Private Public limited company
Authorised share capital : (Pounds)750,000 divided into 30,000,000
Ordinary shares of 2.5 pence each
Issued share capital : (Pounds)421,081.32 divided into 16,843,253
Ordinary shares of 2.5 pence each
Directors' full names : Paul Lancelot Banner
David Birss
Philip Corbishley
Jeremy Green
Anthony Michael Hewlett
Sir Ronald Mason
Ian Moir
James Powell-Tuck
Secretary's full name : Masons Secretarial Services Limited
Accounting reference date : 31 March
Auditors : Horwath Clark Whitehill
Bankers : Lloyds Bank Plc
<PAGE>
SCHEDULE 3
The Property
A Licence dated 27 November 1998 granted by Prudential Development Management
Limited and Magdalen Development Company Limited ("the Licence") to the Company
to occupy an area of floor space measuring 2015 Square feet in the building
known as Magdalen Centre, Oxford Science Park, Oxford.
Use: Developing and marketing products and technologies relating to
telecommunications systems.
<PAGE>
SCHEDULE 4
Non-Taxation Warranties
1. Interpretation
In this Schedule 4:
1.1 the following expressions have the following meanings unless inconsistent
with the context:
"the Accounting Date" 31 March 1999
"Accounting Standards" the statements of standard accounting
practice referred to in section 256 of the
Act issued by the Accounting Standards Board
or such other body as may have been
prescribed thereunder by the Secretary of
Stateat the relevant time, including, without
limitation, the statements of standard
accounting practice formerly issued by the
Accounting Standards Committee and since
adopted by the Accounting Standards Board and
any financial reporting standards issued by
the Accounting Standards Board or such other
body as aforesaid
"the Accounts" the audited accounts of the Company for the
financial year which ended on the Accounting
Date, comprising a balance sheet, a profit
and loss account, notes and directors' and
auditors' reports
"Computer Systems" all computer hardware, software,
microprocessors and firmware and any other
items that connect with any or all of them
which in each case are used in the Company's
business or are in the possession of the
Company
"Contract" any agreement or commitment whether
conditional or unconditional and whether by
deed, under hand, or oral or otherwise, and
any arrangement or understanding whether
legally binding or not
<PAGE>
"Economic and Monetary the existing system of single or unified
Union" currency known as the Euro
"EHS Law" all or any Laws from time to time with regard
to EHS Matters
"EHS Matters" all or any matters relating to the pollution
or protection of the Environment or harm to
or the protection of human health and safety
or the health of animals and plants
"EHS Permits" all or any permits, consents, licences,
approvals certificates and other
authorisations required by EHS Law for the
operation of the business of the Company or
the state or use of the Property
"EMU Entry Date" 1 January 1999 and shall also include in
addition the date or dates on which the
United Kingdom or any part of it enters into
Economic and Monetary Union
"EMU Systems" all equipment, systems, plant and machinery
used by the Company
"Environment" any air (including air within natural or man-
made structures above or below ground); water
(including territorial, coastal and inland
waters and ground water and water in drains
and sewers); and land (including the seabed
or river bed under any water), surface land
and sub-surface land
"ERA" the Employment Rights Act 1996
"Euro" the European single currency
<PAGE>
"Hazardous Substances" any matter, whether alone or in combination
with any other matter capable of causing harm
to man or any other living organism or
damaging to the Environment or public health
or welfare, including without limitation
radioactive matter, ozone depleting
substances, and genetically modified
organisms
"ICTA" Income and Corporation Taxes Act 1988
"Insider" any Vendor, any past or present director of
the Company, and/or any person who is or was
at the relevant time connected with any
Vendor or any such director
"Intellectual Property any and all patents, trade marks, service
Rights" marks, copyright, moral rights, rights in a
design, know-how, confidential information
and all or any other intellectual or
industrial property rights whether or not
registered or capable of registration and
whether subsisting in the United Kingdom or
any other part of the world together with all
or any goodwill relating or attached thereto
"Laws" all or any applicable law (whether criminal,
civil or administrative), common law,
judgement, court order, statute, statutory
instrument, regulation, directive, European
Community decision (insofar as legally
binding), bye-law, treaty, government
circular, code of practice and guidance
notes, or instruction or decision of any
competent regulatory body
"Millennium Compliance a technical audit of the Computer Systems to
Audit" ensure they are Millennium Compliant
"Millennium Compliant" the meaning set out or referred to in
paragraph 16.1
<PAGE>
1.2 a person will be deemed to be a party to a Contract if that person is, or
has agreed to become, entitled to benefit under such Contract or if that
person has obligations or liabilities or has agreed to assume obligations
or liabilities under such Contract, in each case whether as an original
party thereto or by virtue of assignment, novation or otherwise howsoever;
and
1.3 any question as to whether a person is connected with any other person will
be determined in accordance with section 839 ICTA, which will apply in
relation to the Warranties as it applies in relation to ICTA.
PART 1
Non taxation Warranties given by the Primary Warrantors
2. Schedules 1 & 2; Capital
2.1 The information contained in Schedules 1 and 2 is true, complete and
accurate in all respects.
2.2 The Shares are in issue fully paid and each of the Primary Warrantors is
the sole beneficial and registered owner of the Shares set opposite such
Primary Warrantor's name in Schedule 1 free from any encumbrance, equity or
third party right (including but not limited to any mortgage, charge,
pledge, option or lien), from any Contract to grant any of the same and
from any claim to any of the same.
2.3 The Company has not allotted or issued any share capital other than the
shares shown in Schedules 1 and 2 as being issued.
2.4 No Contract has been entered into which requires or may require the Company
to allot or issue any share or loan capital and the Company has not
allotted or issued any securities which are convertible into share or loan
capital.
2.5 The Company has no interest, and it has not at any time during the period
of the Primary Warrantors respective appointments as Directors of the
Company nor, so far as the Primary Warrantors are aware, from incorporation
until their respective appointments as Directors had any interest, in the
share capital of any body corporate.
3. Capacity
Each Primary Warrantor has full power to enter into and perform this
Agreement and this Agreement constitutes obligations binding on him in
accordance with its terms.
<PAGE>
4. Insiders' interests
4.1 There is not outstanding and there has not at any time during the period of
the Primary Warrantors' respective appointments as Directors of the Company
nor, so far as the Primary Warrantors are aware, for the 5 year period
prior to their appointment as Directors been outstanding:
4.1.1 any loan, guarantee or indemnity given by the Company in favour of
any Insider or in favour of any other person in respect of any
liability of any Insider;
4.1.2 any loan, guarantee or indemnity given by any Insider in favour of
the Company or in favour of any other person in respect of any
liability of the Company; or
4.1.3 any other Contract to which the Company is or was a party and in
which any Insider is or was interested in any way whatsoever
(excluding any Contract of employment between the Company and any
of its directors, full details of which are set out in the
Disclosure Letter).
4.2 No Insider has any interest, direct or indirect, in any trade or business
which competes or is likely to compete with the Company's business which
has arisen during the Primary Warrantors' respective appointments as
Directors of the Company nor, so far as the Primary Warrantors are aware,
for the 5 year period prior to their appointment as Directors.
5. Information supplied to the Purchaser
5.1 All written information supplied to the Purchaser or any of its advisers by
or on behalf of the Warrantors or the Company as listed in the schedule to
the Disclosure Letter is true, complete and accurate in all material
respects and is not misleading in any material respect because of any
omission or ambiguity.
ACCOUNTS AND RECORDS
6. The Accounts
6.1 The Accounts (a true copy of which is enclosed with the Disclosure Letter):
6.1.1 comply with the requirements of the Act;
6.1.2 have been prepared in accordance with the historical cost
convention, with all applicable Accounting Standards and (to the
extent that no Accounting
<PAGE>
Standard is applicable) with accounting principles and practices
generally accepted in the United Kingdom;
6.1.3 have been prepared on bases and principles which are consistent
with those used in the preparation of the audited statutory
accounts of the Company for the three financial years immediately
preceding that which ended on the Accounting Date; and
6.1.4 show a true and fair view of the state of affairs of the Company as
at the Accounting Date and of the results of the Company for the
financial year ended on that date.
6.2 Without prejudice to the generality of the provisions of paragraph 6.1, the
Accounts:
6.2.1 fully provide for all liabilities (other than contingent or
potential liabilities which are not expected to crystallise) and
fully disclose all contingent or potential liabilities which are
not expected to crystallise and all capital commitments of the
Company as at the Accounting Date;
6.2.2 correctly and accurately set forth the capital and reserves and all
the assets of the Company as at the Accounting Date and the profits
(or losses) of the Company for the financial year which ended on
the Accounting Date;
6.2.3 provide for all bad and doubtful debts as at the Accounting Date
and are not affected (except as disclosed in the Accounts) by any
extraordinary or exceptional event, circumstance or item.
6.3 True copies of the Accounts and of the audited accounts for each financial
year of the Company preceding that which ended on the Accounting Date have
been laid before the Company in general meeting and delivered to the
Registrar of Companies in compliance with the Act, and the auditors'
reports thereon were unqualified.
7. Profits and losses
The profits and losses of the Company for the three consecutive financial
years ended on the Accounting Date as shown by the Accounts (and by the
audited accounts of the Company for previous periods delivered to the
Purchaser) and the trend of profits and losses thereby shown have not
(except as therein disclosed) been affected by inconsistencies of
accounting treatment, by the inclusion of non-recurring items of income or
expenditure, by transactions entered into otherwise than on normal
<PAGE>
commercial terms or by any other factors rendering such profits or losses
for all or any of such periods exceptionally high or low.
8. Records
8.1 The accounting records of the Company comply with the provisions of
sections 221 and 222 of the Act.
8.2 The Company's records, systems and information, and the means of access
to them, are exclusively owned by it and under its direct control.
ASSETS
9. Subsidiaries
9.1 The Subsidiaries are dormant and have not traded nor incurred any
contractual or other liabilities, whether contingent or otherwise, since
incorporation.
9.2 The Subsidiaries are the only subsidiaries of the Company.
10. Unencumbered title; possession
10.1 Each asset reflected in the Accounts (save for current assets disposed of
by the Company in the ordinary course of its business since the
Accounting Date) and each asset treated as an asset of the Company and/or
used by the Company at the date of this Agreement:
10.1.1 is in the legal and beneficial ownership of the Company;
10.1.2 is free from any encumbrance, equity or third party right
(including but not limited to any mortgage, charge, pledge,
option or lien), from any Contract to grant any of the same and
from any claim to any of the same; and
10.1.3 is not (in the opinion of the Primary Warrantors) to any extent
surplus to requirements.
10.2 The Company has not agreed to acquire any material asset on terms that
the property in it does not pass until full payment is made.
10.3 Properly executed originals of all documents which the Company requires
to prove title or entitlement to any assets or rights are in the
possession of the Company.
10.4 Any assets of the Company which are not situated at the Property at
Completion are specified in the Disclosure Letter.
<PAGE>
10.5 No charge in favour of the Company is void or voidable for want of
registration.
11. Debtors
11.1 The Company has not made, or entered into any Contract to make, any loan
to, or other arrangement with, any person as a result of which it is or
may be owed any money other than trade debts incurred in the ordinary
course of business and cash at bank.
11.2 The Company is not entitled to the benefit of any debt otherwise than as
the original creditor and has not factored or discounted any debt or
agreed to do so.
12. (number not used)Stock
The stock held by the Company does not exceed a value of (Pounds)10,000.
13. Plant etc
The plant and machinery, vehicles, fixtures and fittings, furniture,
tools and other equipment used in connection with the business of the
Company:
13.1 are in a good and safe state of repair and condition and
satisfactory working order and have been maintained to a
reasonable technical standard and in accordance with safety
regulations usually observed in relation to them;
13.1 are capable and will (subject to fair wear and tear) be capable
over the periods of time during which they will be written down
to a nil value (at the rates adopted in the Accounts) of meeting
the needs for which they were designed or purchased; and
13.2 are accurately recorded in the plant register a copy of which is
enclosed with the Disclosure Letter.
14 Property
14.1 The particulars of the Property shown in Schedule 3 are true and
correct. The use of the Property for the purpose stated in
Schedule 3 corresponds to the use to which it is in fact put or
to the use to which it was last in fact put.
14.2 The Company has a no legal title to the Property or any legal
estate or interest in it other than a licence to occupy pursuant
to the Licence in Schedule 3, free from any defects. There is not
far as the Primary Warrantors are aware, in force any policy
relating to defective title or restrictive covenant indemnity.
<PAGE>
14.3 The Company is not in occupation of or entitled to any estate or
interest in any land or premises save the Property.
14.4 So far as the Primary Warrantors are aware and to the best of
their knowledge, information and belief the Property is not
affected by any of the following matters:
14.4.1 any matter which is of an unusually onerous or unusual
nature, or which conflicts with the present use of the
Property, or which would otherwise restrict its continued
occupation and enjoyment under the terms of the Licence;
14.4.2 any outstanding breach or alleged breach of covenant by
the Company or any dispute or complaint involving the
Company prior to the date of this Agreement, whether
actual or threatened, with any neighbour, tenant,
landlord or other person relating to the Property;
14.4.3 any outstanding notice, order, demand, resolution,
proposal, complaint or requirement issued or made
affecting the Company's occupation of the Property, or to
the knowledge of the Primary Warrantors intended to be
issued or made, by any local or other competent authority
or body;
14.4.4 to the best of the knowledge, information and belief of
the Primary Warrantors any outstanding requirement of any
public or other body relating to it or its use for the
purpose stated in Schedule 3; or
14.4.5 to the best of the knowledge information and belief of
the Primary Warrantors any unusual or unusually onerous
outgoings whether of a periodically recurring nature or
otherwise, and payable by the Company.
14.5 To the best of the knowledge information and belief of the
Primary Warrantors no planning permission or consent relating to
the Property has been given on a temporary basis or subject to
any unusual or unusually onerous conditions.
14.6 To the best of the knowledge information and belief of the
Primary Warrantors the use of the Property (and the use of plant
and machinery in connection with it) are the permitted user under
and comply with the provisions of all relevant legislation and
all restrictions, conditions and requirements imposed by or
pursuant to such legislation have been observed and performed.
<PAGE>
14.7 To the best of the knowledge, information and belief of the Primary
Warrantors there are appurtenant to the Property all rights and
easements necessary for its present use and enjoyment by the Company
in accordance with the terms of the Licence.
14.8 The Property is in a good and substantial state of repair and
condition and fit for the purposes for which it is presently used.
There are no uncompleted works of any description at the Property.
14.9 There is no actual or contingent liability on the part of the Company
in relation to the Property save as set out in the Licence.
15 Intellectual Property
15.1 The Company has no interest in any Intellectual Property Rights save
for the Intellectual Property Rights details of which are given in or
attached to the Disclosure Letter, all of which are (where applicable)
registered in the name of the Company and/or are otherwise
beneficially owned by it and/or are in the public domain and/or are
licensed to the Company.
15.2 To the best of the knowledge, information and belief of the Primary
Warrantors (who have not made due enquiries) the processes employed
and the products and services dealt in by the Company do not use,
embody or infringe any Intellectual Property Rights vested in any
other party or in which any other party has any interest (whether
under licence or otherwise) and do not give rise (contingently or
otherwise) to payment by the Company of any royalty or of any sum in
the nature of a royalty or to liability to pay compensation under
sections 40 and 41 Patents Act 1977 or otherwise.
15.3 The Company has not received any notice, and the Primary Warrantors
are not aware, that any person is infringing any of the Company's
Intellectual Property Rights.
15.4 The Company is not passing off any part of its business as and for the
business of any other person and, so far as the Primary Warrantors are
aware, no person is passing off its business as and for any part of
the Company's business.
16 Millennium and Euro Compliance
16.1 For the purposes of this Agreement "Millennium Compliant" means that
the Computer Systems are capable of the following functions before,
during and/or after 1 January 2000:
<PAGE>
16.1.1 responding to and processing two digit year input without
creating any ambiguity as to the century; and
16.1.2 storing and providing date output information without creating
any ambiguity as to the century.
16.2 To the best of the knowledge, information and belief of the Primary
Warrantors (who have not made due enquiries) the Computer Systems are
Millennium Compliant.
16.3 To the best of the knowledge information and belief of the Primary
Warrantors (who have not made due enquiries) the Computer Systems will
not require any remedial work and/or replacement to enable them (or
any part of them) to continue functioning accurately before, during
and/or after 1 January 2000 in the manner referred to in paragraph
16.1.
16.4 The Computer Systems and each element of them passes and to the best
of the knowledge information and belief of the Primary Warrantors (who
have not made due enquiries) will continue to pass date information
between each other (and any third parties' computer systems with which
they habitually communicate) in a way which does not, and will not,
create inaccuracies, errors or problems before, during and/or after 1
January 2000.
16.5 The Computer Systems and the EMU Systems:
16.5.1 will not require replacement or any changes to enable them to
handle conversion or redenomination of currency resulting from
Economic and Monetary Union;
16.5.2 have been modified to ensure all financial and monetary
information and all calculations resulting therefrom can be
converted and rounded from sterling to Euro and Euro to
Sterling in accordance with the rules for conversion and
rounding contained in EU Council Regulation 1103/97; and
16.5.3 are capable of operating in dual currency (and for these
purposes 'dual currency' means Sterling and Euro).
<PAGE>
EMPLOYEES
17 Remuneration and employees
17.1 Particulars of the identities, dates of commencement of employment (or
appointment to office) and terms and conditions of employment
(including remuneration and any bonus, commission or profit sharing
arrangement) of all the employees and officers of the Company are
fully and accurately set out in the Disclosure Letter, and copies of
all their written service agreements and/or their contracts of
employment or particulars of employment statements are enclosed with
the Disclosure Letter.
17.2 No change has been made since the Accounting Date in the terms of
employment of any person employed by the Company at the date of this
Agreement, and the Company is not party to any Contract to make any
such change.
17.3 There are no amounts owing to any present or former officers or
employees of the Company, other than remuneration accrued (but not yet
due for payment) in respect of the calendar month in which this
Agreement is executed or for reimbursement of business expenses
incurred during such month, and none of them is entitled to accrued
holiday pay other than in respect of the Company's current holiday
year.
17.4 All Contracts of employment between the Company and its directors and
employees are terminable by the Company without compensation (except
under the ERA) by giving the applicable minimum period of notice
specified in section 86 ERA.
17.5 No employee has been engaged by the Company since the Accounting Date
and no person employed by the Company at or since the Accounting Date
has ceased, or given or received notice to cease, to be so employed.
17.6 There is no person previously employed by the Company who now has or
may have a right to return to work or a right to be re-instated or re-
engaged by the Company under the provisions of the ERA.
17.7 The Company has not recognised, or done any act which might be
construed as recognition of, a trade union and the Company is not a
party to any collective agreement with any trade union or organisation
of workers.
<PAGE>
17.8 The Company is not involved, and has not during the 12 months prior
to the date of this Agreement been involved, in any strike, lock-out,
industrial or trade dispute or any negotiations with any trade union
or body of employees.
17.9 The Company neither has introduced nor intends to introduce any share
incentive scheme or arrangement, share option scheme or arrangement
or any other scheme or arrangement relating to the acquisition of any
interest in any shares in the Company for all or any of its directors
or employees.
17.10 There are no job share arrangements, flexitime arrangements or early
retirement schemes applicable to any employees of the Company. There
are no schemes or programmes for the employment or training of people
by the Company other than under the Company's full control.
17.11 The Company neither has introduced nor intends to introduce any short
time working scheme or any redundancy scheme under which payments
greater than those required by statute are payable.
17.12 None of the products or services supplied by the Company are produced
or provided by outworkers, agency or other self-employed persons,
contracted labour or agents.
17.13 The Company has in relation to all present and former employees
complied with all statutes, regulations, orders and codes of conduct
relating to employment and relations with employees and trade unions
and has maintained adequate and suitable records regarding the
service of each of its employees and complied with all agreements for
the time being having effect as regards such relations or the
conditions of service of its employees (whether collectively or
individually).
CONTRACTS
18 Insurance
18.1 A true copy of the Company's insurance policies are annexed to the
Disclosure Letter.
18.2 The Company is, and has at all material times been, adequately
covered against employer's liability, public liability, product
liability and professional indemnity liability.
<PAGE>
18.3 All premiums due in relation to the Company's insurances have been
paid and nothing has been done or omitted to be done which would make
any policy of insurance of the Company void or voidable or which is
likely to result in an increase in premium or which would release any
insurer from any of its obligations under any policy of insurance of
the Company.
18.4 There is no insurance claim pending or outstanding and, as far as the
Primary Warrantors are aware, there are no circumstances likely to
give rise to any such claim.
18.5 No claims have been made by employees in respect of industrial injury
in the 2 years prior to the date of this Agreement.
19 Financing and working capital
19.1 The amount borrowed by the Company from each of its bankers does not
exceed the facility agreed with each such banker and the total amount
borrowed by the Company from any source whatsoever does not exceed any
limitation on its borrowing contained in its articles of association
or in any debenture or loan stock trust deed or any other document.
19.2 The Company has not engaged in any borrowing or financing not required
to be reflected in its statutory accounts.
19.3 Full and accurate details of all overdrafts, loans or other financial
facilities outstanding or available to the Company are contained in
the Disclosure Letter; true and correct copies of all documents
relating to such facilities are enclosed with the Disclosure Letter;
nothing has been done or omitted to be done whereby the continuance of
any such facility in full force and effect might be affected or
prejudiced; and no person who provides any such facility has given any
indication that it may be withdrawn or its terms altered.
19.4 The details contained in the Disclosure Letter of the credit or debit
balances on all the bank or deposit accounts of the Company were
correct at the date stated in the Disclosure Letter and since such
date there have been no payments out of any such accounts except for
routine payments and the balances on such accounts are not now
substantially different from the balances shown in the Disclosure
Letter.
19.5 No person other than the Company has given any guarantee of or
security for any overdraft, loan or other financial facility granted
to the Company.
<PAGE>
19.6 No indebtedness of the Company is due and payable and no security over
any of the assets of the Company is now enforceable, whether by virtue
of the stated maturity date of the indebtedness having been reached or
otherwise, and the Company has not received any formal or informal
notice (whose terms have not been fully complied with and/or carried
out) from any creditor of the Company, requiring any payment to be
made and/or intimating the enforcement of any security which it may
hold over any assets of the Company.
19.7 The Company has not applied for or received any grant, subsidy,
payment or allowance from any government, authority, body or agency
(whether supra-national, national, regional or local) which may at any
time be or become repaid or repayable.
19.8 Having regard to existing bank and other facilities the Company has
sufficient working capital for the purpose of enabling it to carry on
its business in its present form and at its present level of turnover
for the foreseeable future and to perform in accordance with their
terms all Contracts which have been entered into by it.
20 Material Contracts
The Company is not, and has not since the Accounting Date been, a party to
or subject to (and the Company has not agreed in principle, or made any
offer or entered any negotiation, to enter into) any Contract which:
20.1 involves agency, distributorship, franchising, Intellectual Property
Rights licensing, marketing rights, information sharing, manufacturing
rights, consultancy, servicing, maintenance, inspection or testing;
20.2 involves partnership, joint venture, consortium, joint development,
shareholders or similar arrangements;
20.3 involves hire purchase, conditional sale, credit sale, leasing, hiring
or similar arrangements;
20.4 commits the Company to capital expenditure;
20.5 is of a long-term nature, being incapable of complete performance in
accordance with its terms within six months after the date on which it
was entered into;
<PAGE>
20.6 cannot readily be fulfilled or performed by the Company on time and
without undue or unusual expenditure of money or effort;
20.7 the Primary Warrantors believe may result in a loss to the Company;
20.8 involves or is likely to involve the receipt or payment of a price
above or below the market price ruling at the date of this Agreement
or any other obligation, restriction, expenditure or receipt of an
unusual, onerous or exceptional nature, or which is of uncertain
magnitude;
20.9 involves or is likely to involve an aggregate consideration payable
by or to the Company in excess of (Pounds)3,000;
20.10 requires the Company to pay any commission, finder's fee, royalty or
the like;
20.11 is for the supply of goods by or to the Company on a sale or return
basis or on a consignment stock basis;
20.12 is for the supply of goods and/or services by or to the Company on
terms under which retrospective or future discounts, price reductions
or other financial incentives are given by or to the Company
dependent on the level of purchases or any other factor;
20.13 is for the supply of goods and/or services by the Company which is
not on the current standard terms and conditions of supply, copies of
which are attached to the Disclosure Letter;
20.14 is for the supply of goods and/or services to the Company which is
not on the current standard terms and conditions on which the Company
buys or contracts for goods and/or services from its suppliers,
copies of which are attached to the Disclosure Letter;
20.15 involves the forward purchase or sale of any currency, commodity,
precious metal or other asset;
20.16 involves delegation of any power under a power of attorney or
authorisation of any person (as agent or otherwise) to bind or commit
the Company to any obligation;
20.17 restricts the freedom of the Company to provide or take goods or
services by such means and to and from such persons as it may from
time to time think fit;
<PAGE>
20.18 involves otherwise than in the ordinary course of business
conditions, warranties, indemnities or representations given in
connection with a sale of shares or assets, or is a guarantee or
indemnity in respect of the obligations of a third party, under which
any liability or contingent liability is outstanding;
20.19 involves the Company in any actual or contingent liability in respect
of any land or premises previously occupied by it or in which it had
any interest, including but not limited to any liability in respect
of any leasehold property at any time assigned or otherwise disposed
of by it;
20.20 includes a term which is not, or may not be, binding on the Company
to the best of the knowledge information and belief of the Warrantors
or any other party in consequence of the Unfair Terms in Consumer
Contracts Regulations 1994;
20.21 is an outstanding offer, tender or the like which if accepted may
result in a loss to the Company; or
20.22 is not on arm's length terms or is in any way otherwise than in the
ordinary and proper course of the Company's business.
21 Other business matters
21.1 During the 12 months ended on the date of this Agreement there has
been no substantial change in the basis or terms on which any person
is prepared to do business with the Company (apart from normal price
changes), and no customer which on its own accounts for more than 15%
of the Company's annual turnover (as shown in the last audited
accounts) or supplier of the Company has ceased or substantially
reduced its business with the Company, and no indication has been
received by the Company or any of the Vendors that there will or may
be any such change, cessation or reduction.
21.2 The Company does not carry on business under or use on its
letterhead, sales material, invoices or vehicles or otherwise any
name other than its own corporate name or any name specified in the
Disclosure Letter as being a name under which it does business and
there are no circumstances which might prevent the Company from
continuing to carry on business under any such name.
21.3 No code of practice has been issued by any government department,
association or similar body which relates to the Company's business.
<PAGE>
21.4 (Apart from statutory instruments) no order or notice has been made,
given or published in Europe or the United States of America affecting
the prices which may be charged for any goods or services supplied by
the Company and no notification has been received or published of any
intention to make such an order or to give such a notice.
COMPLIANCE; DISPUTES
22 Company law matters
22.1 Compliance has been made with all legal requirements in connection
with the formation of the Company and all issues and grants of shares,
debentures, notes, mortgages or other securities of the Company.
22.2 The copy of the memorandum and articles of association of the Company
enclosed with the Disclosure Letter is true and complete and has
attached to it copies of all such resolutions and agreements as have
been or ought to have been filed with the Registrar of Companies.
Neither the Company nor any class of its members has passed any other
resolution (except for resolutions relating to business at annual
general meetings which was not special business).
22.3 All returns, particulars, resolutions and other documents required to
be filed with or delivered to the Registrar of Companies by the
Company or any of its officers have been correctly and properly
prepared and so filed and delivered, and no such returns, particulars,
resolutions or other documents have been so filed or delivered during
the period of 14 days ending with the date of this Agreement.
22.4 The statutory books (including all registers and minute books) of the
Company have been properly kept and contain an accurate and complete
record of the matters which should be dealt with in those books and no
notice or allegation that any of them is incorrect or should be
rectified has been received.
22.5 None of the activities of the Company is ultra vires the Company.
23 General legal compliance
23.1 All necessary licences, consents, permits and authorities (public and
private) have been obtained by the Company to enable the Company to
carry on its business effectively in the places and in the manner in
which such business is now carried on. All such licences, consents,
permits and authorities are valid
<PAGE>
and subsisting and have been complied with in all respects and there
is no reason why any of them should be suspended, cancelled or
revoked.
23.2 All vehicles owned, leased or hired by the Company have current road
fund licences and Department of Transport test certificates (where
necessary) and, where appropriate, the Company holds current
operators' licences in respect of them.
23.3 The Company has conducted its business in accordance with all
applicable laws and regulations of the United Kingdom (including (so
far as applicable) but not limited to the Consumer Credit Act 1974 and
the Data Protection Act 1998) and of any relevant foreign country. To
the best of the knowledge information and belief of the Primary
Warrantors there is no order, decree or judgement of any court or
governmental agency of the United Kingdom or any foreign country
outstanding against the Company or which may have an adverse effect
upon the assets or business of the Company.
23.4 None of the Company's officers, agents or employees (during the course
of his duties in relation to the Company) has to the best of the
knowledge information and belief of the Primary Warrantors committed
or omitted to do any act or thing in contravention of any law, order,
regulation or the like in the United Kingdom or elsewhere for which
the Company may have a vicarious liability.
23.5 The Company has not been notified of any investigation or enquiry by,
or on behalf of, any governmental or other body in respect of the
affairs of the Company and to the best of the knowledge information
and belief of the Primary Warrantors none is pending.
24 Environmental/Health and Safety (EHS) matters
24.1 EHS Permits
24.1.1 The Company has lawfully obtained all necessary EHS Permits.
Each EHS Permit is in full force and effect and the Company
complies and has complied at all times with and can continue
to comply in the future with all conditions of each EHS
Permit.
24.1.2 True copies of EHS Permits obtained by the Company (including
any variation notices applicable thereto) are attached to the
Disclosure Letter.
<PAGE>
24.1.3 No works or abnormal costs are or will be necessary to obtain
or secure compliance with or maintain any EHS Permit or
otherwise to comply with EHS Law.
24.1.4 The Company has not received any communication in any form in
respect of any EHS Permit varying, modifying, revoking,
suspending or cancelling the same or indicating an intention
or threatening so to do and to the best of the knowledge
information and belief of the Primary Warrantors there are no
facts or circumstances which may result in any EHS Permit
being varied, modified, revoked or suspended or which may
prejudice its renewal.
24.2 Compliance with EHS Law
24.2.1 The Company and its officers, agents and employees comply and
have at all times complied with EHS Law.
24.2.2 The Company has not received any written communication to the
best of the knowledge information and belief of the Primary
Warrantors in any other form from any relevant authority from
which it appears that it may be or is alleged to be in breach
of any EHS Law, or failure to comply with which could
constitute a breach of any EHS Law, or compliance with which
could be secured by further proceedings to the best of the
knowledge information and belief of the Primary Warrantors.
There are no circumstances which might give rise to such a
communication being received and the Primary Warrantors are
not aware of any intention on the part of any such authority
to give such communication.
24.3 Liability
24.3.1 to the best of the knowledge information and belief of the
Primary Warrantors there are no facts or circumstances which
may give rise to any actual or potential liability (whether
civil or criminal) on the part of the Company in relation to
EHS Matters.
24.3.2 The Company has not received any written notice or to the best
of the knowledge information and belief of the Primary
Warrantors, intimation of any complaint or claim from any
person in respect of any EHS Matter.
<PAGE>
24.3.3 The Company is not and has not been engaged in any action,
litigation, arbitration or dispute resolution proceedings or
to the best of the knowledge information and belief of the
Primary Warrantors, subject to any investigation under EHS Law
or otherwise in relation to EHS Matters and the Primary
Warrantors are not aware of any such matters pending or being
threatened or of any circumstances or facts likely to give
rise to any such matters.
24.4 Contamination
24.4.1 All sites now or formerly owned or occupied by the Company are
to the best of the knowledge information and belief of the
Primary Warrantors, free from any Hazardous Substances which
could give rise (whether on the relevant site or elsewhere) to
any actual or potential liability on the part of the Company
under EHS Law.
24.4.2 To the best of the knowledge information and belief of the
Primary Warrantors, there are no circumstances which may
require expenditure (whether by the Company or by any other
person or authority) in cleaning up or decontaminating or
otherwise on the Property or on any sites now or formerly
owned or occupied by the Company in order to comply with EHS
Law or otherwise for the protection of the Environment.
24.5 Packaging
So far as is reasonably necessary the Company complies and has at all times
complied with the Producer Responsibility Obligations (Packaging Waste)
Regulations 1997.
24.6 Information
24.6.1 The Company has at all times supplied to the competent
authorities all information required by EHS Law to be
supplied; all such information given (whether under a legal
obligation or otherwise) was correct at the time the
information was supplied and all information contained on
public registers relating to such matters is to the best of
the knowledge information and belief of the Primary Warrantors
correct.
24.6.2 Full details of any remedial work carried out at any sites now
or formerly owned or occupied by the Company and of any
environmental assessment, audit, review or investigation
conducted by or on behalf of
<PAGE>
the Company or otherwise in relation to any such sites are
contained in or annexed to the Disclosure Letter.
25 Fair trading
25.1 No agreement, transaction, practice or arrangement carried on or
proposed to be carried on by the Company (or by any person for whose
acts or defaults the Company may be liable), whether unilaterally or
with others, or to which the Company (or any such person) is or
proposes to become a party, and no state of affairs applicable to the
Company (or any such person):
25.1.1 is or ought to be or ought to have been registered in
accordance with the provisions of the Restrictive Trade
Practices Acts 1976 and 1977 or contravenes the provisions of
the Resale Prices Act 1976 to the best of the knowledge
information and belief of the Primary Warrantors or is or has
been the subject of any enquiry, investigation or proceeding
under any such legislation;
25.1.2 is or has been the subject of an enquiry, investigation,
reference or report under the Fair Trading Act 1973 (or any
other legislation relating to monopolies or mergers) or the
Competition Act 1980;
25.1.3 infringes or falls within the scope of Article 81of the Treaty
establishing the European Union, or constitutes an abuse of
dominant position contrary to Article 82 of the said Treaty,
or infringes or falls within the scope of any regulation or
other enactment made under Article 83 of the said Treaty, or
is or has been the subject of any enquiry, investigation or
proceeding in respect of any thereof;
25.1.4 contravenes the provisions of the Trade Descriptions Act 1968,
and to the best of the knowledge information and belief of the Primary
Warrantors there are no circumstances indicating that any such enquiry,
investigation, proceeding, reference or report relating to any such matter
is likely to be made.
25.2 The Company has not made or threatened to make any complaint against
any other person to any relevant authority under any law or
legislation referred to in this paragraph 25.
25.3 The Company has not given any assurance or undertaking to the
Restrictive Practices Court, the Director General of Fair Trading, the
Secretary of State for Trade and Industry, the Commission or Court of
First Instance or Court of
<PAGE>
Justice of the European Union, or any other court, or competent
authority, and is not subject to any act, decision, regulation, order
or other instrument (statutory or otherwise) made by any of them
relating to any matter referred to in this paragraph 25.
25.4 The Company is not in default or in contravention of any article, act,
decision, regulation, order or other instrument or of any assurance or
undertaking relating to any matter referred to in this paragraph 25.
26 Litigation
26.1 Neither the Company nor to the best of the knowledge information and
belief of the Primary Warrantors any person for whose acts or defaults
the Company may be contractually or vicariously liable is involved
(whether as claimant, defendant or any other party) in any civil,
criminal, tribunal or arbitration proceedings, so far as the Primary
Warrantors are aware no such proceedings are pending or threatened by
or against the Company, and to the best of the knowledge information
and belief of the Primary Warrantors there are no facts likely to give
rise to any such proceedings.
26.2 There is no unsatisfied judgement or unfulfilled order outstanding
against the Company and the Company is not party to any undertaking or
assurance given to a court, tribunal or any other competent authority
in connection with the determination or settlement of any claim or
proceedings.
27 Default
27.1 The Company has not sold, supplied or provided any product or service
which did not, does not or will not comply fully with all applicable
laws, regulations, standards (including British and/or European
Community standards) and customers' specifications or which was, is or
to the best of the knowledge information and belief of the Primary
Warrantors, will be faulty, defective or dangerous or not in
accordance with any representation, condition, warranty or contractual
term, express or implied, given in respect of or relating to it.
27.2 The Company is not in breach of any Contract to which it is a party,
and to the best of the knowledge information and belief of the Primary
Warrantors no other party to any such Contract is in breach of it. All
agreements, rights, commitments, obligations, arrangements and
understandings to which the Company is a party are valid and
enforceable. The Primary Warrantors are not
<PAGE>
aware of any grounds for the termination, rescission, avoidance or
repudiation of any Contract by the Company or any other party to any
such Contract.
28 Insolvency
28.1 To the best of the knowledge information and belief of the Primary
Warrantors, no petition has been presented, no order has been made and
no resolution has been passed for the winding-up of the Company, no
administrative receiver, receiver and/or manager has been appointed of
the whole or any part of the property of the Company, no
administration order has been made appointing an administrator in
respect of the Company and no petition has been presented for an
administration order in respect of the Company.
28.2 No voluntary arrangement has been approved under Part I Insolvency Act
1986 and no compromise or arrangement has been sanctioned under
section 425 of the Act in respect of the Company.
28.3 No distress, execution or other process which remains undischarged has
been levied on the assets of the Company, the Company has not stopped
the payment of its debts or received a written demand pursuant to
section 123(1) (a) Insolvency Act 1986 and it is not unable to pay its
debts within the meaning of section 123 Insolvency Act 1986 nor could
it be deemed to be unable to pay its debts within the meaning of
section 123 Insolvency Act 1986.
28.4 No disqualification order has at any time been made pursuant to the
provisions of the Company Directors Disqualification Act 1986 against
any current officer or any former officer or employee of the Company.
28.5 There are no facts known to the Primary Warrantors which could give
rise to any of the events or circumstances referred to in this
paragraph 28.
29 Events since the Accounting Date
Since the Accounting Date:
29.1 there has been no reduction in the value of the net assets of the
Company determined in accordance with the same accounting policies as
those applied in the Accounts (and on the basis that each of the
assets of the Company is valued at a figure no greater than the value
attributed to it in the Accounts or, in the case of any of the said
assets acquired by the Company after the Accounting Date, at a figure
no greater than cost);
<PAGE>
29.2 the Company has not acquired, or agreed to acquire, any tangible
asset, interest in any single Intellectual Property Right or
investment having a value in excess of (Pounds)3,000 or tangible
assets, interests in Intellectual Property Rights or investments
having an aggregate value in excess of (Pounds)3,000;
29.3 the Company has not disposed of, or agreed to dispose of, any
tangible asset, interest in any single Intellectual Property Right
or investment either having a value reflected in the Accounts in
excess of (Pounds)3,000 or acquired since the Accounting Date;
29.4 no loan made by the Company which remains outstanding has become due
and payable in whole or in part to the Company;
29.5 the Company has not borrowed or raised any money or taken up any
financial facilities;
29.6 no dividend or other payment which is, or could be treated as, a
distribution for the purposes of Part VI ICTA or section 418 ICTA
has been declared, paid or made by the Company;
29.7 the trade and business of the Company has been carried on in the
ordinary and normal course;
29.8 there has been no adverse change in the financial or trading
position or prospects of the Company including, but not limited to,
any adverse change in respect of turnover, profits, margins of
profitability, liabilities (actual or contingent) or expenses
(direct or indirect) of the Company;
29.9 the Company's accounting reference date has not been changed;
29.10 the Company has not paid any costs, fees, commission or other
charges of any professional adviser, agent or other person (not
being an employee) who has not provided services to the Company, the
Company has not received any bill in respect of any of the same
which remains unpaid and no work has been carried out by any such
person for the Company (whether or not in connection with this
Agreement or the transaction effected by it) in respect of which the
Company has not received a bill;
29.11 no management or similar charge has become payable or been paid by
the Company; and
<PAGE>
29.12 no payment has been made by the Company to, or benefit conferred
(directly or indirectly) by the Company on, any of the Vendors or
any Insider, save as specified in the Disclosure Letter.
30 Effects of the Agreement
30.1 To the best of the knowledge information and belief of the Primary
Warrantors (without their having made due enquiry), the acquisition
of the Shares by the Purchaser will not, and will not be likely to,
affect the relationship between the Company and any of its
customers, suppliers or employees.
30.2 The execution of this Agreement and the observance and performance
of its provisions will not to the best of the knowledge information
and belief of the Primary Warrantors (without having made due
enquiry) and will not be likely to:
30.2.1 result in a breach of any Contract, law, regulation, order,
judgement, injunction, undertaking, decree or other like
imposition to or by which the Company is party or is bound,
or entitle any person to terminate or avoid any Contract to
which the Company is party, or have any material effect on
any such Contract;
30.2.2 result in the loss or impairment of or any default under
any licence, authorisation or consent required by the
Company for the purposes of its business;
30.2.3 result in the creation, imposition, crystallisation or
enforcement of any encumbrance whatsoever on any of the
assets of the Company; or
30.2.4 result in any present or future indebtedness of the Company
becoming due and payable, or capable of being declared due
and payable, prior to its stated maturity date or in any
financial facility of the Company being withdrawn.
30.3 There is no Contract to which the Company is party which depends on
the continuation of the connection (whether as an officer of the
Company or otherwise) of any person with the Company.
PART 2
Non Taxation Warranties given by the Secondary Warrantor
<PAGE>
The Secondary Warrantor warrants the following warranties contained in Part 1 of
Schedule 4 but substituting in such paragraphs a reference to "Secondary
Warrantor" in place of the reference to "Primary Warrantors" - paragraphs 2.1,
2.3-2.5 (inclusive), 4,5, 6.1-6.3 (inclusive), 8.2, 9, 10.1-10.3 (inclusive) and
28.1-28.4 (inclusive), 13, 14, 15, 16, 20,21, 22, 24, 25, 26, 27.
PART 3
Non Taxation Warranties given by the Tertiary Warrantors
1. The Tertiary Warrantors have full power to enter into and perform this
Agreement and this Agreement constitutes obligations binding on them in
accordance with its terms.
2. The Shares held by the Tertiary Warrantors who are Vendors are fully paid
and the Tertiary Warrantors who are Vendors are able to sell such Shares on
the basis set out in clause 2.1 of this Agreement.
<PAGE>
SCHEDULE 5
Taxation Warranties
PART 1 -
31.INTERPRETATION
31.1 Interpretation
In this Schedule 5 the following expressions have the following meanings
unless inconsistent with the context:
"ACT" advance corporation tax
"the Balance Sheet" the audited balance sheet of the
Company as at the Accounting Date
"CAA" Capital Allowances Act 1990
"FA" Finance Act
"Group Relief" the meaning given to that expression by
section 402 ICTA
"ICTA" Income and Corporation Taxes Act 1988
"IHTA" Inheritance Tax Act 1984
<PAGE>
"Taxation" (a) any tax, duty, impost or levy, past
or present, of the United Kingdom
or elsewhere, whether governmental,
state, provincial, local
governmental or municipal,
including but not limited to income
tax (including income tax required
to be deducted or withheld from or
accounted for in respect of any
payment under section 203 ICTA or
otherwise), corporation tax, ACT,
capital gains tax, inheritance tax,
VAT, customs and other import or
export duties, rates, stamp duty,
stamp duty reserve tax, national
insurance and social security
contributions; and
(b) any fine, penalty, surcharge,
interest or other imposition
relating to any tax, duty, impost
or levy mentioned in paragraph (a)
of this definition or to any
account, record, form, return or
computation required to be kept,
preserved, maintained or submitted
to any person for the purposes of
any such tax, duty, impost or levy
"Taxation Authority" any authority, whether of the United
Kingdom or elsewhere, competent to
impose, assess or collect Taxation,
including but not limited to the Board
of Inland Revenue, the Commissioners of
Customs and Excise and the Department
of Social Security
"Taxation Statute" any statute (and all regulations and
other documents having the force of law
under such statute) published, enacted,
issued or coming into force on or
before the date of this Agreement
relating to Taxation
"TCGA" Taxation of Chargeable Gains Act 1992
"TMA" Taxes Management Act 1970
"VAT" value added tax
<PAGE>
"VATA" Value Added Tax Act 1994
"VAT Group" any group of companies for the purposes
of section 43 VATA of which the Company
is or has been a member on or before
Completion;
31.2 references to any statute or statutory provisions will, unless the
context otherwise requires, be construed as including references to
any earlier statute or the corresponding provisions of any earlier
statute, whether repealed or not, directly or indirectly amended,
consolidated, extended or replaced by such statute or provisions, and
to any subsequent statute or the corresponding provisions of any
subsequent statute directly or indirectly amending, consolidating,
extending, replacing or re-enacting the same, and will include any
orders, regulations, instruments or other subordinate legislation made
under the relevant statute or statutory provisions.
PART 2 - TAX WARRANTIES
32 Returns, disputes and clearances
32.1 All notices, returns, computations, registrations and payments which
should have been made by the Company for any Taxation purpose have
been made within the requisite periods and are up-to-date, correct and
on a proper basis and none of them is, or is likely to be, the subject
of any dispute with any Taxation Authority.
32.2 The Company is not involved in any dispute with any Taxation Authority
concerning any matter likely to affect in any way the liability of the
Company to Taxation and there are no circumstances which are likely to
give rise to any such dispute to the best of the Vendors' knowledge
and belief.
32.3 The Taxation affairs of the Company have never been the subject of any
investigation or enquiry by any Taxation Authority (other than routine
questions), no Taxation Authority has indicated that it intends to
investigate the Taxation affairs of the Company and there are no
circumstances which are likely to give rise to any such investigation.
<PAGE>
32.4 The Company has punctually supplied all information requested by any
Taxation Authority for any Taxation purpose.
32.5 All particulars furnished to the Inland Revenue or any other Taxation
Authority in connection with the application for any formal written
consent or statutory clearance made on behalf of or affecting the
Company 7 years prior to Completion fully and accurately disclosed all
facts , circumstances and law material to the decision of the Inland
Revenue or such other Taxation Authority and any such consent or
clearance given remains valid and effective and any transaction for
which such consent or clearance has previously been obtained has been
carried into effect (if at all) only in accordance with the terms of
the relevant application, consent or clearance.
32.6 The Disclosure Letter contains details so far as they affect the
Company of all written concessions, arrangements and agreements
(whether formal or informal) negotiated with any Taxation Authority
and no action has been taken by or on behalf of the Company which has
had or is likely to have the result of altering, prejudicing or in any
way disturbing any such concession, arrangement or agreement.
33 Penalties and interest
33.1 The Company has not since the Accounting Date paid, and is not liable
to pay, any fine, penalty, charge, surcharge or interest charged by
virtue of any of the provisions of TMA or any other Taxation Statute
and has not since the Accounting Date become subject to any forfeiture
by virtue of any such provisions or the operation of any penal
provisions contained in any Taxation Statute.
33.2 So far as the Vendors are aware, there are no circumstances which are
likely to cause the Company to become liable to pay any fine, penalty,
charge, surcharge or interest, or become subject to any forfeiture, as
mentioned in paragraph 33.1.
34 Taxation claims, liabilities and reliefs
34.1 The Company has sufficient records to calculate the liability to
Taxation or relief arising on the disposal of any asset owned at the
Accounting Date or acquired since the Accounting Date up to Completion
and having an original acquisition cost in excess of (Pounds)1,000.
<PAGE>
34.2 The Company has duly and properly made all Taxation claims,
disclaimers, elections and surrenders and given all notices and
consents and done all other things in respect of Taxation the making,
giving or doing of which was assumed to have been made for the
purposes of the Balance Sheet, all such claims, disclaimers,
elections, surrenders, notices, consents and other things have been
accepted as valid by the relevant Taxation Authorities and none has
been revoked or otherwise withdrawn.
34.3 The Company has neither made nor is entitled to make any claim under
section 23, 24, 48, 242, 279 or 280 TCGA or section 584 ICTA.
34.4 The Company is not, and will not become, liable to pay, or make
reimbursement or indemnity in respect of, any Taxation (or amounts
corresponding to any Taxation) payable by or chargeable on or
attributable to any other person, whether in consequence of the
failure by that person to discharge that Taxation within any specified
period or otherwise, where such Taxation relates to a profit, income
or gain, transaction, event, omission or circumstance arising,
occurring or deemed to arise or occur (whether wholly or partly) on or
prior to Completion.
34.5 No relief (whether by way of deduction, reduction, set off, exemption,
repayment or allowance or otherwise) from, against or in respect of
any Taxation has been claimed by and/or given to the Company which
would or might be effectively withdrawn, postponed, restricted or
otherwise lost as a result of any act, omission, event or circumstance
arising, occurring or effected after Completion.
34.6 The Company has not received a notice under the provisions of
section 23 ICTA.
35 Distributions and payments
35.1 The Company has deducted and properly accounted to the appropriate
Taxation Authority for all amounts which it has been obliged to deduct
in respect of Taxation, has complied fully with all reporting
requirements relating to all such amounts and has (where required by
the applicable Taxation Statute) duly provided certificates of
deduction of tax to the recipients of payments from which deductions
have been made.
35.2 The Company has not at any time declared, paid or made any dividend or
other payment which is, or could be treated as, a distribution for the
purposes of Part
<PAGE>
VI ICTA or section 418 ICTA except any dividend disclosed in its
audited statutory accounts nor is it bound to make such a
distribution.
35.3 There are no securities (within the meaning of section 254(1) ICTA)
of the Company in issue or which the Company has agreed to issue any
payment in respect of which falls to be treated as a distribution for
the purposes of section 209 ICTA.
35.4 The Company has not at any time issued or agreed to issue any share
capital as paid up otherwise than by the receipt of new
consideration, after repaying any share capital, as mentioned in
section 210 ICTA.
35.5 The Company has not made or received any exempt distribution within
the meaning of section 213 ICTA, and has at no time been a relevant
company in relation to an exempt distribution for the purposes of
that section or concerned in an exempt distribution for the purposes
of section 214 ICTA.
35.6 The Company has not at any time received a capital distribution to
which section 189 TCGA could apply.
35.7 No rents, interest, annual payments or other sums exceeding in total
(Pounds)5,000 of an income nature paid or payable by the Company
since the Accounting Date, or which the Company is under an
obligation to pay, will be wholly or partially disallowable as
deductions or charges in computing the profits of the Company for the
purposes of corporation tax, whether by virtue of the provisions of
section 74, 79, 125, 338, 577, 779 to 786 (inclusive) or 787 ICTA or
otherwise.
35.8 The Company has not since the Accounting Date made any payment to, or
provided any benefit for, any present or former director, employee or
officer which is wholly or partially disallowable as a deduction in
computing the profits of the Company for the purposes of corporation
tax, and is under no obligation to make any such payment or provide
any such benefit.
35.9 The Company is not and never has been a party to any interest rate
contract or option, or currency contract or option which is or may
become a qualifying contract as described in Chapter II Part IV FA
1994.
35.10 The Company has no assets or liabilities to which Chapter II Part II
FA 1993 could apply.
35.11 The Company has not elected that any dividend it has paid be treated
as a foreign income dividend as described in Chapter VA Part VI ICTA.
<PAGE>
35.12 The Company has not paid any dividend to which section 246T ICTA has
applied.
36 Employee benefits
36.1 Without prejudice to the generality of paragraph 35.1, the Company
has properly operated the Pay As You Earn system, by making
deductions, as required by the applicable Taxation Statute, from all
payments made, or treated as made, to its directors, employees or
officers or former directors, employees or officers or any persons
required to be treated as such, and accounting to the Inland Revenue
for all Taxation so deducted and for all Taxation chargeable on the
Company on benefits provided for its directors, employees or
officers, or former directors, employees or officers.
36.2 The Company has complied with all reporting requirements, and proper
records have been maintained, relating to all payments and benefits
made or provided, or treated as made or provided, to its directors,
employees or officers or former directors, employees or officers.
36.3 Without prejudice to the generality of paragraph 32.6, the
Disclosure Letter contains full details of all dispensations granted
to the Company by the Inland Revenue under section 166 ICTA or
otherwise relating to payments and benefits made or provided, or
treated as made or provided, to its directors, employees or officers
or former directors, employees or officers or any persons required
to be treated as such, and the reporting requirements mentioned in
relation to such payments and benefits in paragraph 36.2.
36.4 The Company has complied fully with its obligations under the
provisions of sections 136(6) and 139(5) ICTA and section 85 FA
1988.
36.5 The Disclosure Letter contains full details of all share option
schemes and profit sharing schemes established by the Company
whether approved by the Inland Revenue under the provisions of
Schedule 9 ICTA or otherwise.
36.6 The Company has not established a qualifying employee share
ownership trust within the meaning of section 74 and Schedule 5 FA
1989 and no chargeable event within the meaning of section 69 FA
1989 has occurred.
36.7 The Disclosure Letter contains full details of all profit-related
pay schemes providing for the payment to any employee of the Company
of emoluments
<PAGE>
calculated by reference to profits, which have ever been registered
under Chapter III Part V ICTA.
36.8 The Company has complied with its obligations under Chapter IV Part
XIII ICTA.
36.9 The Company has complied fully with all its obligations relating to
Class 1 and Class 1A National Insurance Contributions, both primary
and secondary.
37 Close companies
The Company is not, and has never been, a close company as defined in
section 414 ICTA.
38 Group transactions
The Company has not at any time:
acquired any asset from any company which at the time of the acquisition
was a member of the same group of companies as defined in section 170 TCGA;
entered into or been otherwise involved in any transaction to which section
774 ICTA applies;
surrendered or claimed or agreed or arranged to surrender or claim (and
prior to Completion will not surrender or claim or agree or arrange to
surrender or claim) any amount by way of Group Relief pursuant to sections
402 to 413 (inclusive) ICTA and has not made or received and is not liable
to make or entitled to receive a payment for Group Relief;
surrendered or claimed or agreed or arranged to surrender or claim (and
prior to Completion will not surrender or claim or agree or arrange to
surrender or claim) any amount of ACT pursuant to section 240 ICTA and has
not made or received and is not liable to make or receive a payment for
surrender of ACT;
joined in the making of any election pursuant to section 247 ICTA or paid
any dividend without paying ACT or made any payment without deduction of
income tax in circumstances such that ACT ought to have been paid or income
tax ought to have been deducted as mentioned in section 247(6) ICTA;
been a party to any such reconstruction as is described in section 343
ICTA;
<PAGE>
been the subject of or otherwise involved in any arrangements as are
referred to in section 240(11) or 410 ICTA;
acquired an asset as trading stock from a member of the same group where
the asset did not form part of the trading stock of any trade carried on by
the other member, as mentioned in section 173(1) TCGA, or disposed of an
asset which formed part of the trading stock of any trade carried on by the
Company to another member of the same group which acquired the asset
otherwise than as trading stock of a trade carried on by the other member,
as mentioned in section 173(2) TCGA;
been, and there are no circumstances by virtue of which the Company could
be, assessed or charged to corporation tax by virtue of the provisions of
section 178(9), 179(11), 190 or 191 TCGA and is not entitled to recover or
liable to have recovered from it any sums paid pursuant to any of those
sections; or
ceased to be a member of a group of companies in such circumstances that a
profit or gain was deemed to accrue to the Company by virtue of section 178
or 179 TCGA or at a time when it held an interest in land which could have
been chargeable to Taxation under section 21 Development Land Tax Act 1976
and neither the execution of this Agreement nor Completion will result in
any profit or gain being deemed to accrue to the Company for any Taxation
purpose whether pursuant to section 178 or 179 TCGA or otherwise.
39 Gifts
39.1 There is no outstanding Inland Revenue charge (as defined in section
237 IHTA) over any asset of the Company or over any of the Shares.
39.2 There are in existence no circumstances by virtue of which any such
power as is mentioned in section 212 IHTA could be exercised in
relation to any asset of the Company or to any of the Shares or by
virtue of which any such power could be exercised but for the
provisions of section 204(6) IHTA.
39.3 The Company has not been a party to associated operations in relation
to a transfer of value within the meaning of section 268 IHTA.
39.4 The Company has not received any asset by way of gift as mentioned in
section 282 TCGA.
39.5 No expenditure incurred by the Company on the acquisition of any
shares is liable to be reduced under the provisions of section 125
TCGA.
<PAGE>
40 Tax avoidance
The Company has not entered into or been a party to any scheme, arrangement
or transaction designed partly or wholly or containing steps or stages
designed partly or wholly for the purpose of avoiding or deferring Taxation
or reducing a liability to Taxation and in particular, but without
limitation, has not entered into or been a party to any scheme, arrangement
or transaction to which the provisions of any of sections 34 to 37
(inclusive), 56 and 398, 395, 399, 703 to 709 (inclusive), 713, 714, 729 to
737 (inclusive), 770, 775, 776, 779 to 786 (inclusive), 787 and 798 ICTA
could apply.
41 Base values and acquisition costs
41.1 If each of the capital assets of the Company owned at the Accounting
Date was disposed of for a consideration equal to the book value of
that asset in, or adopted for the purpose of, the Balance Sheet, or in
the case of assets acquired since the Accounting Date, equal to the
consideration given on acquisition, no liability to corporation tax on
chargeable gains or balancing charge under the CAA would arise (and
for this purpose there will be disregarded any relief or allowance
available to the Company other than amounts falling to be deducted
from the consideration receivable under section 38 TCGA).
41.2 The Company does not own any wasting asset within the meaning of
section 44 TCGA which does not qualify in full for capital allowances
as described in section 47(1) TCGA.
42 Capital gains
The Company has not at any time:
42.1 made a claim under sections 152 to 158 (inclusive) or 175 or 247 TCGA
which affects the amount of the chargeable gain or allowable loss
which would, but for such claim, have arisen upon a disposal of any
asset or acquired any asset or any interest in any asset in
circumstances in which another company has made a claim under section
175 TCGA which affects for the purposes of the TCGA the amount or
value of the consideration given for such asset or interest;
42.2 been a party to, involved in, or connected with any disposal of assets
within the meaning of section 29 TCGA or any scheme or arrangement
such as are mentioned in section 30 TCGA;
<PAGE>
42.3 been a party to, involved in, or connected with any exchange of
securities whether or not (by virtue of section 135 TCGA) section 127
TCGA applied to the exchange;
42.4 carried out or been involved in or connected with any reorganisation
or scheme of reconstruction or amalgamation whether or not (by virtue
of section 126 or 136 TCGA) section 127 TCGA applied to such
reorganisation or scheme of reconstruction or amalgamation;
42.5 carried out or been involved in or connected with any scheme of
reconstruction or amalgamation involving a transfer of business
assets whether or not section 139 TCGA applied to the transfer;
42.6 been a party to, involved in, or connected with, any depreciatory
transaction to which section 176 TCGA applied (including any
transaction to which that section applied by virtue of section 177
TCGA);
42.7 acquired or disposed of any asset or entered into any transaction or
arrangement whatsoever otherwise than by way of bargain at arm's
length or in respect of which there may be substituted for the actual
consideration given or received by the Company a different
consideration for any Taxation purpose;
42.8 realised a loss to which section 18(3) TCGA applied;
42.9 realised a pre-entry loss or acquired any pre-entry asset as defined
in Schedule 7A TCGA;
42.10 disposed of any chargeable asset for a consideration not payable
wholly in cash on completion of the disposal;
42.11 acquired any debt (other than a debt on a security (as defined in
section 132 TCGA)) in respect of which it is not the original
creditor;
42.12 made an election under paragraph 4 Schedule 2 TCGA and no asset owned
by the Company is subject to a deemed disposal and re-acquisition
under paragraph 16, 19 or 20 Schedule 2 TCGA;
42.13 made an election under section 35(5) TCGA nor has the Company made
its first relevant disposal for the purposes of section 35(6) TCGA;
<PAGE>
42.14 acquired any policy of assurance or contract for a deferred
annuity or interest in any such policy or contract in
circumstances such that a chargeable gain could arise on disposal
under section 210 TCGA;
42.15 transferred a trade carried on by it outside the United Kingdom
through a branch or agency in circumstances such that a
chargeable gain could be deemed to arise at a date after such
transfer under section 140 TCGA;
42.16 made any claim or election under section 161(3) TCGA;
42.17 made any claim under section 253 or 254 TCGA and no chargeable
gain has arisen or is likely to arise under section 253 or 254
TCGA.
43 Capital allowances
43.1 All capital expenditure incurred by the Company since the
Accounting Date and all capital expenditure which may be incurred
by the Company under any existing contract has qualified or will
be capable of qualifying for capital allowances.
43.2 There are set out in the Disclosure Letter details of all capital
allowances claimed in respect of the accounting period of the
Company ended on the Accounting Date in respect of each asset or
pool of assets in respect of which separate computations for
capital allowances are required to be made or, as a result of any
election, are made.
43.3 Nothing has occurred since the Accounting Date as a result of
which the Company could be required to bring a disposal value
into account or suffer a balancing charge for the purpose of
capital allowances under section 4, 24, 87, 100 or 128 CAA or a
withdrawal of first year allowances or a recovery of excess
relief under section 46 or 47 CAA.
43.4 The Company has not incurred any expenditure on the provision of
any capital allowance bearing asset for leasing.
43.5 The Company has not made any election under section 37 CAA nor is
it taken to have made any such election under section 37(8)(c)
CAA.
43.6 The Company has not obtained any capital allowances under Chapter
VI Part II CAA.
<PAGE>
44 VAT: general
44.1 The Company:
44.1.1 is duly registered and is a taxable person for the
purposes of VAT and such registration is not subject to
any conditions imposed by or agreed with the Commissioners
of Customs and Excise;
44.1.2 has complied in all respects with all statutory
requirements, orders, provisions, directions or conditions
relating to value added tax;
44.1.3 maintains complete, correct and up-to-date records for the
purposes of all legislation relating to VAT and is not
subject to any condition imposed by the Commissioners of
Customs and Excise under paragraph 6 Schedule 11 VATA;
44.1.4 is not in arrears with any payment or returns under
legislation relating to VAT or excise duties, or liable to
any abnormal or non-routine payment of VAT, or any
forfeiture or penalty, or to the operation of any penal
provision;
44.1.5 has not within the two years ending on the date of this
Agreement been served with any penalty liability notice
under section 64 VATA or any surcharge liability notice
under section 59 VATA or been issued with any written
warning under section 76(2) VATA;
44.1.6 has not been required by the Commissioners of Customs and
Excise to give security under paragraph 4 Schedule 11
VATA;
44.1.7 has not been or applied for treatment as a member of a
group for VAT purposes under section 43 VATA and no
transaction has been effected in consequence of which the
Company is or may be held liable for any VAT arising from
supplies made by another company;
44.1.8 has no interest and has not at any time within the period
of ten years preceding the date of this Agreement had any
interest in any assets to which Part XV of the Value Added
Tax Regulations 1995 apply; and
44.1.9 is not, and has not agreed to become, an agent, manager or
factor for the purposes of section 47 VATA of any person
who is not resident in the United Kingdom.
<PAGE>
44.2 All supplies of goods and services made by the Company are taxable
supplies for the purposes of the VATA and the Company has not been
and will not be denied credit for any input tax by reason of the
operation of section 26 VATA or otherwise.
44.3 All goods or services supplied to the Company, or goods imported by
the Company, in respect of which the Company has claimed credit for
input tax under section 25 VATA, are used or to be used wholly for
the purposes of the Company's business.
44.4 The Company has never disposed of or acquired any business or assets
in the circumstances mentioned in section 49 VATA or Article 5 of the
Value Added Tax (Special Provisions) Order 1995.
44.5 The Company has never been registered for the purposes of VAT by
reason of its intention to make taxable supplies (within the meaning
of section 4 VATA).
44.6 There are set out in the Disclosure Letter details of all outstanding
claims made by the Company under section 22 Value Added Tax Act 1983
and section 36 VATA.
44.7 The Company has not been a party to any transaction or arrangement as
a result of which a direction has been or may be given under Schedule
9A VATA.
45 VAT: property transactions
45.1 The Company has not incurred any liability in respect of VAT (whether
to HM Customs and Excise or to any other person) by reason of the
provisions of paragraph 2(1) Schedule 10 VATA and there are no
circumstances whereby the Company could become so liable as a result
of a person making an election under that paragraph.
45.2 Neither the Company nor any relevant associate (within the meaning of
paragraph 3(7) Schedule 10 VATA) has made any election under
paragraph 2(1) Schedule 10 VATA in respect of any land in, over or in
respect of which the Company has any interest, right or licence to
occupy and the Company is not aware of any intention to make such an
election.
45.3 The Company does not own the fee simple in any building or work such
as is referred to in Item 1(a) Group 1 Schedule 9 VATA.
<PAGE>
45.4 No interest in or right over land or any licence to occupy land of
the Company constitutes or is subject to a developmental tenancy,
developmental lease or developmental licence such as is referred to
in Item 1(b) Group 1 Schedule 9 VATA.
45.5 The Company has not incurred any liability under the provisions of
paragraph 6 Schedule 10 VATA or the Value Added Tax (Self Supply of
Construction Services) Order 1989 and there are no circumstances in
existence at the date of this Agreement whereby the Company would
become so liable on the occurrence of any of the events mentioned in
paragraph 5(1)(a) or 5(1)(b) Schedule 10 VATA or paragraph 3 of the
Value Added Tax (Self Supply of Construction Services) Order 1989.
45.6 The Company has not issued any certificate such as is mentioned in
paragraph 13(4)(f) Schedule 3 FA 1989 and has not constructed any
building or work (or reconstructed any building) in circumstances in
which such a certificate could have been issued.
46 Stamp duty and stamp duty reserve tax
46.1 All documents which are liable to stamp duty and which confer any
right upon the Company have been duly stamped and no document which
confers any right upon the Company and which is outside the United
Kingdom would attract stamp duty if it were brought into the United
Kingdom and there is no liability to any penalty in respect of such
duty or circumstances which may give rise to such a penalty to the
Vendors' best knowledge and belief
46.2 The Company has never incurred or otherwise been under a liability to
stamp duty reserve tax and there are no circumstances which may
result in the Company being so liable.
46.3 Within the five years ending on the date of this Agreement, the
Company has not made any claim for relief or exemption under section
42 FA 1930 or section 75, 76 or 77 FA 1986.
47 Residence and offshore interests
47.1 The Company is and has at all times been resident in the United
Kingdom for the purposes of all Taxation Statutes and has not at any
time been resident outside the United Kingdom for the purposes of any
Taxation Statute or any double taxation arrangements.
<PAGE>
47.2 The Company is not, and has never been, a dual-resident investing
company within the meaning of section 404 ICTA.
47.3 The Company has not at any time entered into any transaction falling
within section 765 ICTA or failed to comply with the requirements of
section 765A ICTA.
47.4 The Company has not at any time been subject to Taxation in any
jurisdiction outside the United Kingdom or had a branch outside the
United Kingdom or any permanent establishment (as that expression is
defined in the respective double taxation relief orders current at
the date of this Agreement) outside the United Kingdom.
47.5 The Company does not own and has not at any time owned a material
interest in an offshore fund which is or has at any material time
been a non-qualifying offshore fund within the meaning of section 760
ICTA.
47.6 The Company does not own and has not at any time owned any interest
in a controlled foreign company within the meaning of sections 747
and 752 ICTA.
47.7 The Company is not, and has not at any time since 1 April 1985 been,
a company which has, or an associated company of a company which has,
a qualifying presence in a unitary state for the purposes of sections
812 to 814 ICTA.
47.8 The Company is not assessable and has not at any time been assessed
to tax under section 78 TMA.
47.9 The Company does not and has at no time held shares in a company
which is not resident in the United Kingdom and which would be a
close company if it were resident in the United Kingdom, in
circumstances such that a chargeable gain accruing to that other
company could be apportioned to the Company under section 13 TCGA.
48 The Balance Sheet
The Balance Sheet fully provides for all Taxation (on the basis of the
rates applicable to the financial year which ended on the Accounting Date)
liable to be assessed on or in respect of or by reference to:
48.1 the profits, gains, income and earnings (whether actual or deemed)
for any period ended on or before the Accounting Date; or
<PAGE>
48.2 any distributions (within the meaning of Part VI or section 418 ICTA)
made or deemed to be made on or before the Accounting Date; or
48.3 any other transaction entered into or deemed to be entered into on or
before the Accounting Date.
49 Post-Accounting Date
Since the Accounting Date:
49.1 the Company has not incurred and has not become liable to incur
expenditure which will not be wholly deductible in computing its
taxable profits, except for expenditure on the acquisition of an
asset to be held otherwise than as Stock and expenditure for
entertainment details of which are, in each case, set out in the
Disclosure Letter;
49.2 no event has occurred which has given rise or will or may give rise
to a liability to Taxation on the Company in respect of deemed (as
opposed to actual) income, profits or gains or which has resulted or
will or may result in the Company becoming liable to Taxation
directly or primarily chargeable against or attributable to another
person;
49.3 the Company has not entered into any transaction which has given rise
or may give rise to a Liability to Taxation on a chargeable gain; and
49.4 no event has occurred as a result of which the Company could be
required to bring a disposal value into account or suffer a balancing
charge for the purposes of capital allowances under section 4, 24,
87, 100 or 128 CAA or a withdrawal of first year allowances or a
recovery of excess relief under section 46 or 47 CAA.
50 Shares and securities
50.1 The Company has not at any time:
50.1.1 purchased or agreed to purchase, repaid or agreed to repay
or redeemed or agreed to redeem any shares of any class of
its share capital or any amount paid up on any of its
shares;
50.1.2 capitalised or agreed to capitalise in the form of
redeemable shares or debentures any profits or reserves of
any class or description or passed or agreed to pass any
resolution to do so; or
<PAGE>
50.1.3 provided capital to any company on terms whereby the company
so capitalised has in consideration of the provision of
capital issued loan stock or other securities on terms which
were otherwise than by way of a bargain made at arm's
length.
50.2 The Company does not hold or have in issue:
50.2.1 any quoted Eurobond within the meaning of section 124 ICTA;
50.2.2 any shares or securities (as defined in section 132(3)(b)
TCGA) other than the Shares;
50.2.3 any qualifying corporate bond (as defined in section 117
TCGA);
13.1.1 any deep discount security (as defined in paragraph 1 Schedule 4
ICTA);
13.1.2 any deep gain security (as defined in paragraph 1 Schedule 11 FA
1989);
13.1.3 any qualifying indexed security (as defined in paragraph 2
Schedule 11 FA 1989);
13.1.4 any qualifying convertible security (as defined in paragraph 2
Schedule 10 FA 1990);
13.1.5 any gilt-edged security falling within paragraph 20 Schedule 11 FA
1989 or any non-gilt-edged security falling within paragraph 21
Schedule 11 FA 1989;
13.1.6 any security as defined in section 710 ICTA and has not made any
transfer to which sections 711 to 728 (inclusive) ICTA could
apply; or
13.1.7 any debt which is a qualifying debt as defined in section 61 FA
1993.
SIGNED by DAVID BIRSS )
in the presence of: ) ....................................
Witness signature:.................................
Name:................................................
Address:.............................................
.......................................................
Occupation:.........................................
<PAGE>
SIGNED by JIM CHAPMAN )
in the presence of: ) ..........................
Witness signature:.......................
Name:....................................
Address:.................................
.........................................
Occupation:..............................
SIGNED by PHILIP CORBISHLEY as lawful
attorney for ALICE CHENG
in the presence of: ) ...........................
Witness signature:.......................
Name:....................................
Address:.................................
.........................................
Occupation:..............................
<PAGE>
SIGNED by PHILIP CORBISHLEY
in the presence of: ) ..........................
Witness signature:.......................
Name:....................................
Address:.................................
.........................................
Occupation:..............................
SIGNED by SIMON HUGHES
in the presence of: ) ..........................
Witness signature:.......................
Name:....................................
Address:.................................
.........................................
Occupation:..............................
SIGNED by IAN MOIR
in the presence of: ) ..........................
Witness signature:.......................
Name:....................................
Address:.................................
.........................................
Occupation:..............................
<PAGE>
SIGNED by Philip Corbishley )
duly authorised to sign for and on behalf of
CLARENDON NOMINEES LIMITED
in the presence of: ) ..........................
Witness signature:............................
Name:.........................................
Address:......................................
..............................................
Occupation:...................................
SIGNED by Philip Corbishley )
duly authorised to sign for and on behalf of
CLARENDON TRUST CO LIMITED
in the presence of: ) ..........................
Witness signature:............................
Name:.........................................
Address:......................................
..............................................
Occupation:...................................
SIGNED by
a duly authorised representative for and on behalf of
COMMERZBANK BETEILIGUNGS GESELLSCHAFF GMBH
in the presence of: ) ..........................
Witness signature:............................
Name:.........................................
Address:......................................
..............................................
<PAGE>
Occupation:...................................
SIGNED by PHILIP CORBISHLEY )
duly authorised to sign for and on behalf of
MAKINEN PROPERTIES LIMITED
in the presence of: ) ...........................
Witness signature:............................
Name:.........................................
Address:......................................
..............................................
Occupation:...................................
SIGNED by PHILIP CORBISHLEY )
duly authorised to sign for and on behalf of
MEES PIERSON (CAYMAN) LIMITED
as trustee of Sofaer Funds / SCI Global Hedge
Fund by its lawful attorney Philip Corbishley
in the presence of: ) ...........................
Witness signature:............................
Name:.........................................
Address:......................................
..............................................
Occupation:...................................
SIGNED by
a duly authorised representative for and on behalf of
HSBC FINANCIAL SERVICES (CAYMAN) LIMITED solely in its capacity as trustee of
the Abel-Sci Venture Fund
in the presence of: ) ...........................
Witness signature:............................
Name:.........................................
<PAGE>
Address:......................................
..............................................
Occupation:...................................
SIGNED by PHILIP CORBISHLEY )
duly authorised to sign for and on behalf of
PEARL FINANCE LIMITED
in the presence of: ) ...........................
Witness signature:............................
Name:.........................................
Address:......................................
..............................................
Occupation:...................................
SIGNED by PHILIP CORBISHLEY )
duly authorised to sign for and on behalf of
SANDFORD CHILDREN'S TRUST
in the presence of: ) ...........................
Witness signature:............................
Name:.........................................
Address:......................................
..............................................
Occupation:...................................
SIGNED by PHILIP CORBISHLEY )
duly authorised to sign for and on behalf of
RALEIGH NOMINEES LIMITED
in the presence of: ) ...........................
<PAGE>
Witness signature:............................
Name:.........................................
Address:......................................
..............................................
Occupation:...................................
SIGNED by )
duly authorised to sign for and on behalf of
TUT SYSTEMS.INC
in the presence of: ) ...........................
Witness signature:............................
Name:.........................................
Address:......................................
..............................................
Occupation:...................................
