<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --------- EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --------- EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File Number 0-19690
BARRA, INC.
(Exact name of registrant as specified in its charter)
California 94-2993326
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2100 Milvia Street
Berkeley, California 94704-1113
(Address, including zip code, of principal executive offices)
(510) 548-5442
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares of the registrant's Common Stock outstanding as of
September 30, 1997 was 13,439,706.
Exhibit Index is located on page 21.
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INDEX
PAGE
PART I FINANCIAL INFORMATION NUMBER
Item 1 Financial Statements: 3
Consolidated Balance Sheets as of September 30, 1997 (unaudited)
and as of March 31, 1997 3
Unaudited Consolidated Statements of Operations for the Three and
Six Months Ended September 30, 1997 and September 30, 1996 4
Unaudited Consolidated Statements of Cash Flows for the Six
Months Ended September 30, 1997 and September 30, 1996 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PAGE
PART II OTHER INFORMATION NUMBER
Item 1 Legal Proceedings 18
Item 4 Submission of Matters to a Vote of Security Holders 18
Item 5 Other Information 18
Item 6 Exhibits and Reports on Form 8-K 18
Signatures 20
Exhibit Index 21
2
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Part I
Item 1. Financial Statements.
BARRA Inc. and Subsidiaries
Consolidated Balance Sheets
As of September 30, 1997 (Unaudited) and March 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30 March 31
1997 1997
-------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $12,371,517 $25,831,118
Accounts receivable:
Trade (Less allowance for doubtful accounts of $128,022 and $135,732) 20,900,184 15,522,575
Related parties 2,860,089 3,017,164
Short-term investments 6,842,410 5,421,841
Note Receivable 3,444,168 5,419,474
Investments in municipal debt securities - available for sale 17,590,713 10,323,459
Prepaid expenses 958,692 400,187
- --------------------------------------------------------------------------------------------------------------------------
Total current assets 64,967,773 65,935,818
- --------------------------------------------------------------------------------------------------------------------------
Investments in Unconsolidated Companies 2,199,203 445,644
Furniture and Equipment:
Computer and office equipment 15,431,645 12,421,668
Furniture and fixtures 4,467,548 3,028,968
Leasehold improvements 6,259,654 2,549,737
- --------------------------------------------------------------------------------------------------------------------------
Total furniture and equipment 26,158,847 18,000,373
Less accumulated depreciation and amortization (12,267,113) (9,739,519)
- --------------------------------------------------------------------------------------------------------------------------
13,891,734 8,260,854
Deferred Tax Assets 1,303,947 1,038,374
Computer Software
(Less accumulated amortization of $732,350 and $548,263) 1,683,126 536,442
Other Assets 2,002,753 1,219,350
Goodwill
(Less accumulated amortization of $2,220,787and $1,585,124) 11,279,602 6,764,619
- --------------------------------------------------------------------------------------------------------------------------
TOTAL $97,328,138 $84,201,101
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $1,628,027 $2,748,572
Due to related party 1,366,004 707,266
Accrued expenses payable:
Accrued compensation 6,873,338 7,186,875
Accrued corporate income taxes 3,227,345 3,533,677
Other accrued expenses 5,301,709 5,761,211
Shareholder notes payable 0 239,611
Unearned revenues 19,826,115 12,427,274
- --------------------------------------------------------------------------------------------------------------------------
Total current liabilities 38,222,538 32,604,486
- --------------------------------------------------------------------------------------------------------------------------
Other Long-Term Liabilities:
Deferred tax liabilities 426,136 768,352
Shareholder notes payable 0 473,411
- --------------------------------------------------------------------------------------------------------------------------
Total other long-term liabilities 426,136 1,241,763
- --------------------------------------------------------------------------------------------------------------------------
Minority Interest in Equity of Subsidiary 2,116,211 1,981,002
Shareholders' Equity:
Preferred stock, no par; 10,000,000 shares authorized; none issued and outstanding
Common stock, no par; 40,000,000 shares authorized; 13,439,706 shares and
12,625,971 shares issued and outstanding 23,560,376 12,878,186
Retained earnings 33,378,500 35,967,057
Foreign currency translation adjustment (375,623) (471,393)
- --------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 56,563,253 48,373,850
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TOTAL $97,328,138 $84,201,101
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Accompanying Notes to the Consolidated Financial Statements
3
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BARRA Inc. and Subsidiaries
Consolidated Statements of Operations
For the Three and Six Month Periods Ended September 30, 1997 and 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended September 30, Six Months Ended September 30,
------------------------------- ------------------------------
1997 1996 1997 1996
------------------------------- ------------------------------
<S> <C> <C> <C> <C>
Operating Revenues:
Subscription and consulting fees $23,306,592 $18,327,292 $44,047,718 $36,333,031
Electronic brokerage 2,752,668 2,572,007 5,710,771 4,706,487
Asset management 5,174,933 3,574,541 8,582,166 6,361,071
------------------------------- ------------------------------
Total operating revenues 31,234,193 24,473,840 58,340,655 47,400,589
------------------------------- ------------------------------
Operating Expenses:
Cost of subscription products 1,505,545 1,669,055 3,213,089 3,559,844
Compensation and benefits 15,192,724 12,400,650 28,151,224 24,106,492
Rent expense 1,418,554 980,624 2,550,182 1,969,238
Other operating expenses 6,160,866 4,632,146 10,921,310 8,878,063
One-time acquisition charges 1,756,189 9,914,000 1,756,189
------------------------------- ------------------------------
Total operating expenses 24,277,689 21,438,664 54,749,805 40,269,826
------------------------------- ------------------------------
Interest Income & Other 616,369 324,021 1,071,439 965,365
------------------------------- ------------------------------
Income before Equity in Net Income and Loss of
Investees, Minority Interest and Income Taxes 7,572,873 3,359,197 4,662,289 8,096,128
Equity in Net Income and Loss of Investees (45,806) (103,009) (24,118) (109,117)
Minority Interest (1,193,531) 127,321 (1,782,768) 178,543
------------------------------- ------------------------------
Income before Income Taxes 6,333,536 3,383,509 2,855,403 8,165,554
Income Taxes (2,660,085) (1,447,251) (5,443,959) (3,461,094)
------------------------------- ------------------------------
Net Income (Loss) $3,673,451 $1,936,258 ($2,588,556) $4,704,460
------------------------------- ------------------------------
------------------------------- ------------------------------
Net Income (Loss) Per Share: $0.25 $0.14 ($0.20) $0.34
------------------------------- ------------------------------
------------------------------- ------------------------------
Weighted Average Common and Common Equivalent
Shares: 14,406,827 13,839,467 13,055,971 13,930,154
------------------------------- ------------------------------
------------------------------- ------------------------------
</TABLE>
See Accompanying Notes to the Consolidated Financial Statements
4
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BARRA, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Six Months Ended September 30, 1997 and 1996
(Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
September 30,
--------------------------
1997 1996
--------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income (loss) ($2,588,556) $4,704,460
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Equity in net income and loss of investees 24,118 109,117
Minority interest 1,782,768 (178,543)
Depreciation and amortization 2,044,082 1,660,822
Dividends received from investee (226,583)
Gains on marketable securities (150,000) (86,000)
One-time acquisition charges 9,914,000 448,426
Other (305,513) 275,338
Changes in:
Trade accounts receivable (6,818,060) (2,441,588)
Related parties receivable 3,147,098 (39,700)
Prepaid expenses (474,956) 194,913
Other assets (911,909) 178,394
Accounts payable, due to related party and accrued expenses (5,167,558) (98,053)
Unearned revenues 3,761,985 2,054,486
- --------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 4,257,499 6,555,489
- --------------------------------------------------------------------------------------------------------
Cash Flows from Investing Activities:
Capital expenditures (5,657,498) (2,131,370)
Short-term investments - net (1,270,569) (59,353)
Investment in municipal debt securities - available for sale (7,267,254) (6,350,000)
Acquisition of GAT and Innosearch, net of cash acquired (1,713,529)
Investments in unconsolidated companies (1,803,559) (875,000)
Repayments on note receivable 2,105,836
Dividends received from investee 226,583
Consolidation of Bond Express L.P. - cash acquired 146,742
- --------------------------------------------------------------------------------------------------------
Net cash used in investing activities (15,606,573) (9,042,398)
- --------------------------------------------------------------------------------------------------------
Cash Flows from Financing Activities:
Payments to minority shareholders (2,213,828)
Repayments on notes payable and lines of credit (713,022) (2,523,285)
Proceeds from notes payable and lines of credit 445,140
Proceeds from sale of common stock 816,323 263,526
Common stock repurchased (601,973)
- --------------------------------------------------------------------------------------------------------
Net cash used in financing activities (2,110,527) (2,416,592)
- --------------------------------------------------------------------------------------------------------
Net Decrease in Cash and Cash Equivalents (13,459,601) (4,903,501)
Cash and Cash Equivalents at Beginning of Period 25,831,118 22,493,363
- --------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period $12,371,517 $17,589,862
- --------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------
Other Cash Flow Information:
Cash paid during the period for:
Interest expense $29,264 $3,063
Income taxes $3,878,925 $2,938,615
Non-cash investing transactions during the period for:
Acquistion of GAT and Innosearch - See note 2
Exchange of equity interest in LBIC for debt $7,219,458
Consolidation of Bond Express L.P.:
Note receivable ($2,100,000)
Net assets acquired $1,139,726
Minority Interest $512,877
Goodwill $1,473,151
</TABLE>
See Accompanying Notes to the Consolidated Financial Statements
5
<PAGE>
BARRA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
BARRA, Inc. (the "Company" or "BARRA") and its wholly-owned subsidiaries. Also
included in the accompanying consolidated financial statements are the accounts
of 1) Bond Express, L.P., in which the Company determined it had controlling
financial interest beginning June 1, 1996; 2) Symphony Asset Management, LLC
(Symphony LLC"), a 50%-owned joint venture; and 3) Global Advanced Technology
Corporation ("GAT") and approximately 62% of Innosearch Corporation
("Innosearch") which the Company acquired on June 24, 1997 (see Note 2). All
significant intercompany transactions and balances have been eliminated.
Certain reclassifications have been made to prior year financial statements to
conform to current year presentation.
In the opinion of management, the accompanying unaudited consolidated financial
statements include all adjustments (consisting of normal recurring entries)
necessary to present fairly the financial position of BARRA as of September 30,
1997 and the results of its operations and cash flows for the periods presented
in conformity with generally accepted accounting principles. The results of
operations for the interim periods are not necessarily indicative of results of
operations for a full year. The March 31, 1997 consolidated balance sheet is
derived from the audited consolidated financial statements included in BARRA's
Annual Report on Form 10-K for the fiscal year ended March 31, 1997, filed with
the Securities and Exchange Commission on June 24, 1997 (the "Form 10-K"), but
does not include all disclosures required by generally accepted accounting
principles. It is suggested that these consolidated financial statements be read
in conjunction with the audited consolidated financial statements and related
notes included in the Form 10-K and Management's Discussion and Analysis of
Financial Condition and Results of Operations included in this Form 10-Q.
2. BUSINESS COMBINATION
On June 24, 1997 the Company completed the acquisition of GAT and a majority
ownership interest in Innosearch, an affiliate of GAT. GAT is a leading provider
of fixed income analytics and related consulting services. The total purchase
price of approximately $20 million included 704,589 shares of unregistered BARRA
common stock valued at approximately $10 million, liabilities assumed of
approximately $6 million, and
6
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cash and transaction costs of approximately $4 million. Under terms of the
acquisition, an additional $1 million of contingent consideration is payable
if certain conditions are met within specified time frames. The acquisition
has been accounted for as a purchase, and the results of GAT and Innosearch
are included in the accompanying consolidated financial statements from the
date of acquisition only.
The cost of the acquisition has been allocated on the basis of the estimated
fair value of assets acquired and liabilities assumed. This allocation resulted
in capitalized software of approximately $1 million, purchased in-process
technology of approximately $10 million and goodwill of approximately $5
million. As required under generally accepted accounting principles, the amount
allocated to purchased in-process technology was immediately expensed. Goodwill
from the acquisition will be amortized over 10 years.
The following summary, prepared on a pro-forma basis, combines the unaudited
consolidated results of operations as if GAT and Innosearch had been acquired
as of the beginning of the periods presented, after excluding the impact of
one-time acquisition charges:
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1997 1996
---- ----
Operating revenues $31,234,193 $26,446,990
Net income $ 3,673,451 $ 1,750,180
Net income per share $.25 $.12
SIX MONTHS ENDED SEPTEMBER 30,
------------------------------
1997 1996
---- ----
Operating revenues $60,168,655 $51,378,984
Net income $ 7,127,540 $ 4,633,432
Net income per share $.51 $.32
The pro-forma financial information is presented for informational purposes only
and is not necessarily indicative of the operating results that would have
occurred had GAT and Innosearch been acquired as of the above dates. In
addition, the pro-forma results are not intended to be a projection of future
results and do not necessarily reflect the financial impact of combining GAT and
BARRA's operations.
7
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3. NET INCOME (LOSS) PER SHARE
On August 23, 1997, the company's Board of Directors authorized a 3-for-2 stock
split payable on October 13, 1997 to stockholders of record on September 22,
1997. All references in these financial statements to average number of shares
outstanding and per share amounts have been restated to reflect the split.
Net income per share is computed using the primary weighted average number of
common shares outstanding during the period after including the effect of
dilution, if any, of the exercise of common stock options using the treasury
stock method. Net loss is computed using only the primary weighted-average
number of common shares outstanding during the period. Fully diluted income
(loss) per share is not significantly different than primary income (loss) per
share.
4. SUBSEQUENT EVENT - ACQUISITION OF THE ESTIMATE DIRECTORY AND DIRECTUS
On October 9, 1997, the Company completed the acquisition of the assets of two
businesses from Edinburgh Financial Publishing Limited ("EFP") and two of EFP's
affiliates, for up to 7.25 million pounds (approximately US$12,000,000 as of
September 30, 1997), plus the assumption of ongoing business liabilities. The
two businesses are The Estimate Directory ("TED"), a database of analysts'
earnings estimates, and Directus ("Directus"), a corporate directors equity
trading information service. The acquisition will be accounted for using the
purchase method of accounting and will likely result in a one-time write-off of
in process development costs in the quarter ended December 31, 1997.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction with the
BARRA, Inc. ("BARRA" or the "Company") unaudited financial statements and
related notes presented in this Form 10-Q. The discussion of results, causes
or trends should not be construed to imply that such results, causes or
trends will necessarily continue in the future. Each statement made in this
discussion and analysis and elsewhere in this report containing any future
verb tense or form of the words "anticipate", "estimate", "expect,"
"believe," "future" or "forward" is a forward-looking statement that may
involve a number of risk factors and uncertainties. Among other factors that
could cause actual results to differ materially are the following: business
conditions and other changes in the Company's industry; competitive factors
such as rival products and price pressures both domestically and
internationally; availability of adequate third-party data on reasonable
terms and at reasonable prices; significant delays or excessive costs
associated with product research, development and/or introduction; the loss
of a large single revenue source; the investment performance and the timing
of performance fee determination dates for the Company's asset management
subsidiary; significant changes in trading volumes on the POSIT trading
system; and fluctuations in U.S. dollar exchange rates for non-U.S.
currencies. Further information and potential risk factors that could affect
the Company's financial results are included in the Company's Form 10-K for
the fiscal year ended March 31, 1997.
A. GENERAL
Certain of the information required by this item has been previously reported
under the heading "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Form 10-K.
As discussed in Note 2 to the financial statements, on June 24, 1997, BARRA
acquired substantially all of the ownership of GAT and a majority interest in
Innosearch. The acquisition was accounted for as a purchase and the unaudited
financial information presented here reflects the results of GAT and Innosearch
only since the date of acquisition. The minority shareholder's interest in
Innosearch's net assets and results of operations has been included in minority
interest in the accompanying unaudited consolidated balance sheet and statement
of operations.
9
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As discussed in Note 4 to the financial statements, on October 9, 1997, the
Company completed the acquisition of the assets from two businesses from
Edinburgh Financial Publishing Limited ("EFP") and two of EFP's affiliates, for
up to 7.25 million pounds (approximately US$12,000,000 as of September 30,
1997), plus the assumption of ongoing business liabilities. Since the
acquisition closed subsequent to September 30, 1997, none of the purchased
assets and liabilities assumed or related revenues and expenses are reflected in
the accompanying consolidated statements of operations or financial position for
the periods ended September 30, 1997. The acquisition will be accounted for
using the purchase method of accounting and will likely result in a one-time
write-off of in-process technology costs in the quarter ended December 31, 1997.
FOREIGN CURRENCY
BARRA, as an international corporation, generates revenues from clients
throughout the world, maintains sales and representative offices world-wide and
holds certain deposits and accounts in foreign currencies. BARRA's revenues are
generated from both United States and foreign currencies. BARRA's subscriptions
in the United Kingdom and the European Community are priced in British pounds
sterling ("pounds") and European Currency Units ("ECUs"), respectively.
Additionally, BARRA's consolidated subsidiary, BARRA International (Japan), Ltd.
("BARRA Japan"), generates revenues, has expenses and has assets and liabilities
in Japanese yen. All other things being equal, weakening of the U.S. dollar has
a positive impact on profits, and strengthening of the U.S. dollar has a
negative impact. The Company has considered its exposures to foreign currency
fluctuations and to this point has decided not to engage in hedging or managing
exposures to foreign currency fluctuations through contracts for the purchase,
sale or swapping of currencies.
For the quarter ended September 30, 1997, when compared to the same quarter a
year ago, the U.S. dollar strengthened against the yen, pound and ECU - all of
which had the effect of reducing net revenues by approximately $250,000 for the
period. The impact of exchange rate changes from the same quarter a year ago
decreased net income by approximately $300,000.
Because the functional currency of BARRA Japan is the yen, the translation gains
and losses associated with the consolidation of its balance sheets at points in
time are reported as part of shareholders' equity.
10
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Under current operating arrangements in the countries in which BARRA does
business, there are no restrictions upon the flow of funds from BARRA's foreign
subsidiary to the parent company. There are currently no commitments or
requirements for material capital expenditures outside of the United States
except for the acquisition of TED and Directus.
B. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The dollar and percentage increases or decreases set forth below in this
discussion and analysis of BARRA's consolidated financial condition result from
a comparison of BARRA's balance sheet at September 30, 1997 to the balance sheet
at March 31, 1997. All amounts have been rounded to the nearest $1,000.
FINANCIAL CONDITION
Total assets increased $13,127,000 or 15.6%.
Total current assets decreased $968,000 or 1.5%. This net decrease consists
primarily of decreased cash and equivalents as a result of investing activities
completed during the period offset by increases in trade receivables from the
acquisition of GAT and asset management activities - see the accompanying
unaudited consolidated statement of cash flows for more information.
Investments in unconsolidated companies increased $1,754,000 representing two
investments: 1) 272.7 shares of Series A Convertible Preferred Stock of Data
Downlink Corporation; and 2) an additional 46,368 shares of Series C Convertible
Preferred Stock of QuoteCom, Inc.
Furniture and equipment increased $5,658,000, excluding approximately $2,500,000
in furniture and equipment acquired as part of the acquisition of GAT and
Innosearch. This increase reflects expenditures for leasehold improvements and
new office furniture associated with moving the Company's headquarters in June
1997 as well as further office expansions in the Company's San Francisco and
Connecticut locations.
Increases in computer software and goodwill of $1,147,000 and $4,515,000,
respectively, are primarily the result of purchase price allocations for the
acquisitions of GAT and Innosearch.
Total current liabilities increased $5,618,000 due to approximately $3.2 million
in unearned revenue associated with GAT product subscriptions with the remaining
increase resulting from growth in BARRA product subscriptions.
11
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Minority interest in equity of subsidiary represents minority shareholders'
interests in the net assets of Bond Express L.P., Symphony LLC and Innosearch.
Shareholders' equity in common stock increased $10,682,000 as a result of
issuing 704,589 common shares for the acquisition of GAT and Innosearch, as well
as the issuance of BARRA common stock for exercises of stock options under the
Company's Employee Stock Option Plan and shares purchased under the Employee
Stock Purchase Plan.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents, short-term investments and investment in municipal
debt securities available-for-sale totaled $36,805,000 at September 30, 1997
($24,805,000 excluding approximately $12,000,000 for the acquisition of TED and
Directus). In addition, the Company has a commitment from a bank for an
unsecured short-term line of credit of up to $5 million - of which, no amounts
have been, or are presently anticipated to be, drawn down.
BARRA believes that its cash flow from operations (including prepaid
subscription fees), together with existing cash balances, will be sufficient to
meet its cash requirements for capital expenditures and other cash needs for
ongoing business operations including the acquisition of TED and Directus. Other
than commitments described in this discussion and analysis and in the financial
statements and notes, the Company has no present binding understandings or
commitments with respect to any significant expenditures.
PRINCIPAL FINANCIAL COMMITMENTS. The Company's principal financial commitments
consist of obligations under the TED and Directus asset purchase agreement and
operating leases and contracts for the use of computer and office facilities.
C. RESULTS OF OPERATIONS
References to the dollar and percentage increases or decreases set forth below
in this discussion and analysis of BARRA's results of operations are derived
from comparisons of BARRA's consolidated statements of operations for the three
and six month periods ended September 30, 1997 and September 30, 1996. Results
of operations for the three and six month periods ended September 30, 1997
include the results of GAT and Innosearch which were acquired on June 24, 1997.
All amounts, except per share amounts, have been rounded to the nearest $1,000.
12
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NET INCOME (LOSS)
Net income for the three month period ended September 30, 1997, was $3,673,000
or $0.25 per share, compared to net income of $1,936,000 or $0.14 per share for
the same quarter a year ago. Net income for the three month period ended
September 30, 1996 included one-time acquisition charges of $1,756,000 or $.08
per share in connection the Company's acquisition of Rogers, Casey & Associates,
Inc. ("RogersCasey") in July, 1996.
Net loss for the six month period ended September 30, 1997 was $2,589,000 or
$.20 per share compared to net income of $4,704,000 or $.34 for the same period
a year ago. One time acquisition charges included in net income (loss) and per
share amounts for the six month periods ended September 30, 1997 and 1996 were
$9,914,000 or $.72 per share and $1,756,000 or $.07 per share, respectively.
OPERATING REVENUES. Total operating revenues increased $6,760,000 or 28% over
the same quarter a year ago and $10,940,066 or 23% over the same six month
period a year ago. Operating revenues from GAT and Innosearch included in the
three and six month periods ended September 30, 1997 were $2,082,000.
SUBSCRIPTION AND CONSULTING FEES consist of annual subscription fees for BARRA's
software products, revenues from other sources related to the institutional
analytics business and consulting services to pension plan sponsors and
investment managers. A summary of the components and related changes is as
follows (amounts in 000's):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 % CHANGE 1997 1996 % CHANGE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Analytics subscriptions 17,320 12,898 34 32,175 24,603 31
Other analytics related 1,262 1,275 (1) 2,298 2,614 (12)
Consulting 4,724 4,154 14 9,575 9,116 5
- -------------------------------------------------------------------------------------------------------------
TOTAL 23,306 18,327 27 44,048 36,333 21
- -------------------------------------------------------------------------------------------------------------
</TABLE>
ANALYTICS SUBSCRIPTIONS are for BARRA's software products and related updates.
The Company generally bills and collects fees on an annual basis, but recognizes
the income 1/12th per month over each year of the subscription period. The
growth in annual subscription fees continues to be generated from a combination
of obtaining new clients, increasing revenues from existing customers through
the introduction of new products
13
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and services and acquisitions. Analytics subscription revenue for the three
and six month periods ended September 30, 1997 includes $1,447,000 of GAT
product subscription revenue. For the three month period ended September 30,
1997 compared to the same quarter a year ago, annual subscription fee revenue
for the U.S (including GAT revenue for 1997) and non-U.S. markets increased
approximately 58% and 21%, respectively. Excluding the impact of the new GAT
subscription revenue, the increase was 27% for U.S. subscription revenues.
For the six month period ended September 30, 1997 compared to the same period
a year ago, annual subscription fee revenue for the U.S (including GAT
revenue for 1997) and non-U.S. markets increased approximately 42% and 23%,
respectively, approximately 26% and 23% excluding GAT revenue. Excluding
revenues from GAT, revenue growth primarily came from equity models and
related data reflecting the continued success of the BARRA Aegis System-TM-.
Various new single country and global versions of this equity analytics
system have been introduced continuously since July 1995. Fixed income
product sales also contributed, primarily to the non-US increase, as a result
of sales of the BARRA COSMOS System-TM- and the recently released COSMOS
Optimizer feature, which was introduced in January 1997. Increases in
subscription revenues continue to come most significantly from net increases
in the number of subscriptions and less significantly from changes in the
prices of subscriptions.
REVENUES FROM OTHER SOURCES RELATED TO THE INSTITUTIONAL ANALYTICS BUSINESS
include timesharing revenues, seminar revenues and other recurring fees. The
decline in the relative and absolute amounts of this component of revenue
continues to be the result of the conversion of clients from timesharing to
in-house computers for running BARRA's products and differences in the timing
of certain seminars.
CONSULTING FEES
Consulting fees consist of fixed income consulting provided by GAT; Services
to pension plan sponsors ("Sponsor Services") which are usually recurring
retainer-based fee arrangements; and consulting to money managers ("Strategic
Services"), which are usually non-recurring, project engagements that are
completed in phases. Also included in Strategic Services revenues are fees
related to consulting work done in connection with strategic transactions
involving clients. Accordingly, Strategic Services revenues are susceptible
to a large degree of variability depending on the ability to source new
projects and the unpredictable nature and significance of fees associated
with strategic transactions. Consulting fees from GAT's fixed income
consulting unit amounted to $635,000 for the three and six month periods
ended September 30, 1997. Excluding the impact of GAT consulting fees,
revenues from
14
<PAGE>
consulting services were slightly lower compared to the same periods a year
ago reflecting modest growth in these businesses offset by declines in
non-recurring strategic transaction fees and one specific BARRA custom
product development fee.
ELECTRONIC BROKERAGE
Electronic brokerage revenues increased $180,000 or 7% compared to the same
quarter a year ago and $1,004,000 or 21% compared to the same six month period a
year ago. This component of revenue consists principally of license fees from
Portfolio System for Institutional Trading ("POSIT"), which increased $83,000 or
4% compared to the same quarter a year ago and $619,000 or 14% compared to the
same six month period a year ago. BARRA's revenues from POSIT are derived from
commissions generated by the trading volume in the system. POSIT revenue
increases reflect higher trading volumes during the quarter as well as greater
usage of the system by its major participants. Revenues from Bond Express L.P.
accounted for $97,000 and $385,000 of the increase in total electronic brokerage
revenues from the same quarter and six month periods a year ago. These increases
are due in part to the inclusion of Bond Express' results of operations for only
one month in the June 30, 1996 quarter.
ASSET MANAGEMENT
Asset management revenues increased $1,601,000 or 45% compared to the same
quarter a year ago and $2,221,000 or 23% compared to the same six month period a
year ago. Asset management revenues consist of fees generated from active
management of investor accounts by Symphony LLC and fees earned by RogersCasey
asset management services from management of customized multi-manager programs.
Symphony LLC's revenues consist primarily of asset management fees which are
a fixed percentage of asset value and performance fees that are based on the
performance over a benchmark for each account. Symphony LLC's total revenues
were $4,789,000 for the current quarter compared to $3,041,000 for the same
quarter a year ago, and $7,787,000 for the six months ended September 30,
1997 compared to $5,266,000 for the same period a year ago. The increase in
total revenues for three and six month periods ended September 30, 1997
compared to the same periods a year ago was primarily the result of increases
in base fees due to growth in assets under management. As of September 30,
1997, Symphony LLC had approximately $1.9 billion under direct management. Of
the funds under direct management, approximately $1.2 billion are managed
under agreements that provide for performance fees in addition to a base
management fee.
15
<PAGE>
Performance fees included in total revenues were $1,835,000 for the current
quarter compared to $1,366,000 for the same quarter a year ago and $2,214,000
for the six months ended September 30, 1997 compared to $2,147,000 for the same
period a year ago. Performance fees are recognized only at the measurement date
for determining performance of an account, which typically is at the end of each
year of the contract. The increase in performance fee revenues is the result of
better investment performance over the pervious twelve months as compared to the
preceding twelve month measurement periods offset in part by fewer investor
account anniversaries during the current quarter and year-to-date periods as
compared to the same periods a year ago. The pattern of anniversaries can change
from quarter to quarter because of the addition, termination and re-negotiation
of account agreements. There is also, of course, no assurance that the
investment performance will continue at historical levels. It is presently
estimated that approximately 45% and 20% of the performance based funds under
management will have performance fee determination dates in the quarters ended
December 31, 1997 and March, 31, 1998, respectively.
Symphony LLC's future revenues will depend on the performance of the funds it
manages and the timing of anniversary fee determination dates for performance
based funds.
OPERATING EXPENSES. Total operating expenses, including one-time acquisition
charges of $1,756,000 in the quarter ended September 30, 1996, increased
$2,839,000 or 13% compared to the same quarter a year ago. Excluding one-time
acquisition charges, operating expenses increased $4,595,000 or 23%. For the six
month period ended September 30, 1997 compared to the same period a year ago,
total operating expenses, including one-time acquisition charges, increased
$14,479,979 or 36%. Excluding one-time acquisition charges from both periods,
total operating expenses increased $6,322,000 or 16%.
COST OF SUBSCRIPTION PRODUCTS
Cost of subscription products consists of computer access charges, data and
software acquisition expenses, BARRA's computer leasing expenses, and seminar
expenses. This component of expense decreased $164,000 or 10% compared to the
same quarter a year ago and $347,000 or 10% compared to the same six month
period a year ago. These decreases reflect lower seminar costs, which are
principally a result of timing, and lower data costs as a result of certain
non-recurring, project-related data fees included in the June, 1996 quarter.
COMPENSATION AND BENEFITS
Compensation and benefits increased $2,792,000 or 23% compared to the same
quarter a year ago and increased $4,045,000 or 17%
16
<PAGE>
compared to the same six month period a year ago. Excluding compensation and
benefit costs from the GAT acquisition of approximately $1.4 million, the
increases from the same quarter and six month periods a year ago are
primarily the result of wage increases that take effect on July 1 within each
fiscal year and a small increase in the number of employees. Increases in
group insurance and other benefits also contributed to higher costs.
OTHER OPERATING EXPENSES
Other operating expenses increased $1,529,000 or 33% compared to the same
quarter a year ago and increased $2,043,247 or 23% compared to the same six
month period ended a year ago. Other operating expenses include travel, office,
maintenance, depreciation, amortization, data costs related to non-subscription
services, marketing, advertising, outside legal and accounting services and
other corporate expenses. The increases from the same quarter and six month
periods a year ago reflects GAT expenses of approximately $700,000, and
increases in travel, foreign currency losses, advertising and marketing,
amortization of goodwill and leasehold improvements. These increases are
consistent with the general growth of BARRA's business and the move to a new
headquarters facility during the year.
ONE-TIME ACQUISITION CHARGES
One-time acquisition charges of $9,914,000 for the six month period ended
September 30, 1997 represent purchased in-process research and development in
connection with the acquisitions of GAT and Innosearch on June 24, 1997. As
required by generally accepted accounting principles, the portion of the
purchase price allocated to purchased technology was immediately expensed.
One-time acquisition charges of $1,756,000 for the quarter and six month period
ended September 30, 1996 related to the Company's acquisition of RogersCasey in
July, 1996.
INTEREST INCOME AND OTHER
Interest income and other for the three and six month periods ended September
30, 1997 increased over the same periods a year ago as a result of higher
recorded gains on short-term investments, higher average invested balances and
lower interest expense from acquired subsidiaries.
MINORITY INTEREST
Minority interest primarily represents the share of profits from Symphony LLC
that is due to the minority shareholders.
17
<PAGE>
PART II - OTHER INFORMATION
Each statement made in this Part II containing any future verb tense or any form
of the words "believe", "future", "forward", "estimate", "anticipate" or
"expect" is a forward looking statement that may involve a number of risk
factors and uncertainties. A discussion of those risk factors is located in the
first paragraph of Part I, Item 2.
ITEM 1. LEGAL PROCEEDINGS.
All information required by this item has been previously reported under the
heading "Business-Litigation" in the Form 10-K. There have been other material
developments in the legal proceedings of BARRA since the date of the Form 10-K.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. All information
required by this item has been previously reported under Part II, Item 4 in the
Company's June 30, 1997 Form 10-Q. There have been no other submission of
matters to a vote of the security holders of BARRA since the date of the
June 30, 1997 Form 10-Q.
ITEM 5. OTHER INFORMATION.
On October 9, 1997 the Company completed the acquisition of certain assets from
Edinburgh Financial Publishing Limited and its affiliates, Edinburgh Financial
Publishing (Asia), Limited and Edinburgh Financial Publishing (USA), Inc. For
further details of these transactions see Note 4 of the Notes to Consolidated
Financial Statements and Item 2 of Part I of this form.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) the following exhibits are required by Item 601 of the Regulation S-K:
Exhibit Sequential
Number Exhibit Description Page Number
- ------- ------------------- -----------
10.1 Asset Purchase Agreement, dated 22
September 8, 1996, between Edinburgh Financial
Publishing Limited, Edinburgh Financial Publishing
(Asia) Limited, Edinburgh Financial Publishing
(USA), Inc., BARRA (U.K.), Ltd., BARRA, Inc.,
Jeremy Salvesen, Angus MacDonald, BARRA
International, Ltd. and BARRA International
(Japan), Ltd.
(b) Reports on Form 8-K: None.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, BARRA has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
BARRA, Inc.
(Registrant)
Date: November 14, 1997 /s/ Andrew Rudd
-----------------------------------------
Andrew Rudd, Chairman of the Board of
Directors and Chief Executive Officer
Date: November 14, 1997 /s/ James D. Kirsner
-----------------------------------------
James D. Kirsner, Chief Financial Officer
19
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Exhibit Description Page Number
- ------ ------------------- -----------
10.1 Asset Purchase Agreement, dated 22
September 8, 1996, between Edinburgh Financial
Publishing Limited, Edinburgh Financial Publishing
(Asia) Limited, Edinburgh Financial Publishing
(USA), Inc., BARRA (U.K.), Ltd., BARRA, Inc.,
Jeremy Salvesen, Angus MacDonald, BARRA
International, Ltd. and BARRA International
(Japan), Ltd.
20
<PAGE>
EXHIBIT 10.1
21
<PAGE>
ASSET PURCHASE AGREEMENT
AMONG
EDINBURGH FINANCIAL PUBLISHING LIMITED
EDINBURGH FINANCIAL PUBLISHING (ASIA) LIMITED
EDINBURGH FINANCIAL PUBLISHING (USA) INC.
BARRA (U.K.), LTD.
BARRA, INC.
JEREMY SALVESEN AND ANGUS MACDONALD
AND
BARRA INTERNATIONAL, LTD.
BARRA INTERNATIONAL (JAPAN), LTD.
DUNDAS & WILSON CS
SOLICITORS
MADELEINE SMITH HOUSE SALTIRE COURT
6/7 BLYTHSWOOD SQUARE 20 CASTLE TERRACE
GLASGOW G2 4AD EDINBURGH EH1 2EN
- --------------------------------------------------------------------------------
22
<PAGE>
TEL: 0141 221 9880 TEL: 0131 228 8000
FAX: 0141 221 9804 FAX: 0131 228 8888
- --------------------------------------------------------------------------------
23
<PAGE>
INDEX
1. Interpretation
2. Sale and Purchase of Business and Assets
3. Purchase Price
4. Completion
5. No Assumption of Liabilities
6. Warranties
7. Access to Information
8. The Debts and Creditors
9. Post-Completion Undertaking
10. Transitional Provisions
11. Contracts
12. Apportionment
13. Creditors and Liabilities
14. Employees
15. Guarantee
16. Announcements
17. Assignation and Transfer
18. Agreement to Continue
19. Further Actions
20. Consents and Waivers
21. Severability and Recission
22. Value Added Tax
23. Costs and Stamp Duty
24. Entire Agreement and Variations
25. Disputes
26. Notices
27. Governing Law
- --------------------------------------------------------------------------------
24
<PAGE>
SCHEDULE
PART I - THE PROPERTIES
PART II - THE CONTRACTS (INCLUDING LEASING AGREEMENT BUT EXCLUDING CUSTOMER
CONTRACTS)
PART III - THE VEHICLES
PART IV - THE PLANT AND EQUIPMENT (AS AT SIGNING)
PART V - THE SPECIFIC IP
PART VI - THE SIGNING LIABILITIES
PART VII - THE PROPERTY CONDITIONS
PART VIII - THE DEBTS (31ST JULY 1997)
PART IX - THE WARRANTIES
PART X - LIST OF DOCUMENTS
PART XI - BROKERS LIST (AS AT SIGNING)
PART XII - BALANCE SHEET INSTRUCTIONS
PART XIII - (A) - BASE PERIOD BALANCE SHEET
(B) - EXECUTION BALANCE SHEET
- --------------------------------------------------------------------------------
25
<PAGE>
AGREEMENT
among
EDINBURGH FINANCIAL PUBLISHING LIMITED
incorporated in Scotland under the
Companies Acts No. 101910 and having its
registered office at 3rd Floor, 124/125
Princes Street, Edinburgh EH2 4BD
(hereinafter called "UK")
EDINBURGH FINANCIAL PUBLISHING (ASIA)
LIMITED incorporated in S.A.R. HK,
Peoples Republic of China under the No.
399597 and having its registered office
at 7th Floor, Allied Kajima Building,
138 Gloucester Road, S.A.R. HK Peoples
Republic of China (hereinafter called
"Asia")
EDINBURGH FINANCIAL PUBLISHING (USA)
INC. incorporated under the laws of the
State of New York under No. 940613000109
and having its principal place of
business at 15 Columbus Circle, New
York, NY 10023 - 7773, USA (hereinafter
called "USAV")
(UK, Asia and USAV being hereinafter
together called "the Vendors" and
individually each "Vendor")
BARRA (U.K.), LTD. incorporated in
England No. 3340126 and having its
registered office at 1 Whittington
Avenue, London EC3Y 1LE ( hereinafter
called the "Purchaser")
BARRA, INC. incorporated under the laws
of the State of California and having
its principal place of business at 2100
Milvia Street, Berkeley, CA 94704, USA
(hereinafter called "BARRA")
- --------------------------------------------------------------------------------
26
<PAGE>
JEREMY SALVESEN residing at Cardrona
House, Innerleithen, Peeblesshire EH44
6PS, (hereafter called "JS"), ANGUS
MACDONALD residing at Auchleeks,
Trinafour, Nr Pitlochry, Perthshire PH18
5UF (hereinafter called "AM")
BARRA INTERNATIONAL, LTD. incorporated
under the laws of the State of Delaware
and having its principal place of
business at 2100 Milvia Street, Berkley
CA 94704, USA (hereinafter called "BIL")
BARRA INTERNATIONAL (JAPAN), LTD.
incorporated under the laws of Japan and
having its principal place of business
at YCS Building, 11F, 5-1, Sakae-cho
Kanagawa-ku, Yokohama 221, Japan
(hereinafter called "BIJ")
WHEREAS:
(A) The Vendors carry on the Businesses (as hereinafter defined);
(B) The Vendors have agreed to sell, and the Purchaser and BIL (for the
purposes of the Singapore Property only, if included within the Assets)
have agreed to purchase, the Businesses and the Assets on the terms and
subject to the conditions of this Agreement;
(C) Various members of the Purchaser Group have agreed to offer employment to
the Transferred Employees on the terms and conditions of this Agreement;
(D) BARRA has agreed to enter into this Agreement to give the obligations on
its part contained in this Agreement;
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27
<PAGE>
(E) Each of AM and JS is a party to this Agreement solely for the purpose of
giving the undertakings relating to the protection of the Goodwill (as
hereinafter defined) set out in Clause 9;
NOW THEREFORE IT IS AGREED as follows:
1. INTERPRETATION
1.1 In this Agreement the following expressions shall, unless otherwise
specified or the context otherwise requires, have the meanings set opposite
them respectively:-
"THE ACCEPTED LIABILITIES" means those liabilities of the Vendors as at
the Effective Time accepted by the Purchaser
pursuant to the terms of Clause 12 but
expressly excluding any liabilities arising
from the UK Property and the Singapore
Property prior to the Effective Time;
"ACCOUNTS DATE" means 31st March 1997;
"THE ADVANCE RECEIPTS" means all sums received by the Vendors on or
prior to Completion in respect of the
Customer Contracts, the Third Party
Distribution Agreements, or advertising or
sponsorship revenue in relation to TED or the
Directus Publications whether relating or
attributable to or paid in respect of
products or services to be
- --------------------------------------------------------------------------------
28
<PAGE>
provided during the period before or after
Completion;
"ANNUAL ACCOUNTS" means the audited accounts of each of UK and
HK, and the unaudited accounts of USAV, each
for the accounting period ending on the
Accounts Date copies of each of which are
included in the Execution Disclosure
Documents;
"ASIA BUSINESS" means the business of distributors of TED as
carried on by Asia under certain of the Names
as at the Completion Date;
"ASSETS" means the assets as listed in Clause 2.1;
"ASSIGNATION" means an assignation of UK's Leasehold
Interest in the agreed terms subject only to
such amendments as the Landlords may, with
the consent of the Purchaser and UK impose;
"ASSIGNATION DATE" means the date falling 4 months after the
Completion Date;
"ASSOCIATED COMPANY" means in relation to any body corporate, its
subsidiary companies, its holding companies
and the subsidiaries of such holding
companies;
"AUSTRALIA EMPLOYEES" means those of the Transferred Employees who
are employed by Asia in Australia as listed
in
- --------------------------------------------------------------------------------
29
<PAGE>
Document H.1 of the Execution Disclosure
Documents;
"BACK LETTER" means a signed back letter by Rank Xerox
Limited in terms of the back letter annexed
and signed as relative to the Missives
between Rank Xerox Limited and UK dated 22,
28 and 29 July 1997;
"BACK LETTER ASSIGNATION" means an assignation of UK's interest and
benefit in and to the Back Letter in the
agreed terms;
"BASE PERIOD BALANCE SHEET" means the balance sheet of the Businesses as
at 31st December 1996 prepared in accordance
with the principles set out in Part XII, a
copy of which balance sheet is contained in
Part XIIIA;
"BASE RTBV FIGURE" means the recorded tangible net book value of
the Businesses as such net figure is derived
from the Base Period Balance Sheet and is
calculated by deducting liabilities from
assets all in accordance with and after
taking into account the instructions in Part
XII;
"BASE SRR FIGURE" means the figure which is calculated by
adding the 27th January 1997 Subscription Run
Rate for the TED Contracts and the 31st May
1997 Subscription Run Rate for the Directus
Contracts as set out in the Base SRR
Schedule;
- --------------------------------------------------------------------------------
30
<PAGE>
"BASE SRR SCHEDULE" means the schedule of Subscription Run Rates
relating to the TED Contracts as at 27th
January 1997 and of Subscription Run Rates
relating to the Directus Contracts as at 31st
May 1997 which schedule is signed as relative
to this Agreement marked "Appendix IA";
"BROKERS LIST" means the list of brokers who supply data to
the Vendors as of 3rd September 1997 in
relation to the Businesses brief details of
which are set out in Part XI of the Schedule;
"BUSINESSES" means the UK Business, the Asia Business and
the USAV Business and any of them;
"BUSINESS DAY" means a day (other than a Saturday or Sunday)
when the Scottish clearing banks are open for
business in Edinburgh;
"COMPLETION" means completion of the sale and purchase of
the Businesses and the Assets by virtue of
the performance by the Purchaser and each of
the Vendors of the obligations assumed by
them respectively under Clause 4;
"COMPLETION BALANCE SHEET" means a balance sheet in respect of the
Businesses as acquired by the Purchaser
pursuant hereto as at the Effective Time,
drawn up in accordance with the terms of
Clause 3.2;
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31
<PAGE>
"COMPLETION DATE" means the day on which Completion takes place
being such date as the parties may agree in
writing but not being a date later than 60
days after the date of execution hereof;
"COMPLETION DISCLOSURE LETTER" means a letter from the Vendors' Solicitors
addressed to the Purchaser's Solicitors, in
the agreed terms, disclosing matters for the
purpose of Clause 6.1.2 and delivered to the
Purchaser's Solicitors on behalf of the
Purchaser at Completion;
"COMPLETION SRR FIGURE" means the figure which is set out in the
Completion SRR Schedule for all Customer
Contracts;
"COMPLETION SRR SCHEDULE" means the Execution SRR Schedule updated to
the Effective Time and to be prepared by the
Purchaser in accordance with the terms of
Clause 3.2;
"COMPLETION RTBV FIGURE" means the recorded tangible net book value of
the Businesses as such net figure is derived
from the Completion Balance Sheet and
calculated by deducting liabilities from
assets all in accordance with and after
taking into account the instructions in Part
XII;
"CONFIDENTIALITY AGREEMENTS" means confidentiality agreements between the
Vendors (or such of them as employ the
relevant Transferred Employees) and each of
- --------------------------------------------------------------------------------
32
<PAGE>
the Transferred Employees, in the agreed
terms;
"CONFIDENTIAL INFORMATION" means all information which is confidential
in relation to the Businesses, including, for
the avoidance of doubt, all business,
financial, operational, customer and
marketing information and trade secrets in
relation to the Businesses or the transaction
to which this Agreement relates;
"CONSIDERATION" means the consideration for the sale and
purchase of the Businesses and the Assets in
terms of Clause 3;
"CONTRACTS" means the Other Contracts, the Customer
Contracts, the Leasing Agreements, the Third
Party Distribution Agreements, the Data
Suppliers Contracts and the Development
Agreements;
"COVENANTORS" means each of the Vendors, JS and AM and any
of them (a "Covenantor" meaning any of the
Covenantors);
"CUSTOMER CONTRACTS" means those contracts brief details of which
are set out in the Execution SRR Schedule
(save to the extent that such contracts are
terminated or not renewed by the other party
thereto prior to the Effective Time) together
with such additional contracts with
subscribers to TED, TED Solutions, the
Directus Publications
- --------------------------------------------------------------------------------
33
<PAGE>
or any of them as may be entered into by the
Vendors (or any of them) during the period
from 27th August 1997 to the Effective Time in
the ordinary and normal course of the
Businesses, all such additional contracts,
non-renewals and terminations being reflected
in the Completion SRR Schedule;
"CREDITORS" means all liabilities and obligations due and
owing by the Vendors in connection with the
Businesses as at the Effective Time other
than the Accepted Liabilities;
"DATA SUPPLIERS CONTRACTS" means those contracts listed in Part IID of
the Schedule;
"DEBTS" means all book and other debts owing to the
Vendors exclusively in connection with the
Businesses as at the Effective Time and all
rights of the Vendors in relation thereto and
the benefit of any guarantee or security in
respect thereof as such Debts will be set out
in a list to be delivered at Completion in
terms of Clause 4.4;
"DEED OF INDEMNITY" means the deed of indemnity dated the same
date as this Agreement by the Vendors in
favour of inter alia the Purchaser;
"DEVELOPMENT AGREEMENTS" means those contracts listed in Part IIA of
the Schedule;
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34
<PAGE>
"DIRECTUS BUSINESS " means the business of providing, collating,
processing, presenting and publishing
information on directors trading in shares
and securities including without limitation
the business of publishing or providing the
Directus Publications as carried on in the
United Kingdom and elsewhere together with
all rights to Intellectual Property
pertaining thereto;
"DIRECTUS CONTRACTS" means the Customer Contracts relating to
Directus Publications, which Customer
Contracts are referred to as such in the Base
SRR Schedule;
"DIRECTUS PUBLICATIONS" means "Directus", "The Inside Track",
"Equity Selector", "The Financial Media and
Analysts Directory" and "DirectNet" and such
other publications and products as may be
published, made available or issued in
connection with the Directus Business and in
all editions and in whatever form (including
electronic), wherever and whenever published,
made available or issued together with all
intellectual property rights pertaining
thereto;
"DISPUTES CLAUSE" means Clause 25;
"EFFECTIVE TIME" means 11.59 pm (UK time) on the Completion
Date;
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35
<PAGE>
"EMPLOYEE TRANSFER" means, for the purposes of the Regulations,
the purchase of the Businesses and Assets
effected by this Agreement;
"EXECUTION BALANCE SHEET" means the balance sheet of the Businesses as
at 31st July 1997 prepared in accordance with
the principles set out in Part XII, a copy of
which balance sheet is contained in Part
XIIIB;
"EXCLUDED BUSINESSES" means the businesses carried on under the
names "Xpedite" and "Financial Press Digest"
together with the book publishing business
(including the publication of The Financial
Press Digest but excluding for the avoidance
of doubt the distribution of TED) in each
case as carried on by Asia;
"EXCLUDED CONTRACTS" means (1) the arrangement between UK and Snow
Valley relating to the development of a
website on the Internet as disclosed to the
Purchaser and (2) any distribution agreement
(whether written or verbal) between any of
the Vendors in relation to the Businesses;
"EXCLUDED LIABILITIES" means the obligations of the Vendors and
others in and in relation to the leases of
the properties in Hong Kong, USA and
Australia (the addresses of each of which are
set out in Clause 4.9) the property at 14
Mohamed Sultan Road #03-01 Singapore 238963
and any obligations of the Vendors not
expressly
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36
<PAGE>
assumed by the Purchaser under or in terms of
this Agreement;
"EXECUTION DISCLOSURE DOCUMENTS" means the disclosure documents referred to in
and annexed to the Execution Disclosure
Letter;
"EXECUTION DISCLOSURE LETTER" means a letter from the Vendors' Solicitors
addressed to the Purchaser's Solicitors, in
the agreed terms, disclosing matters for the
purpose of Clause 6.1.1 and delivered to the
Purchaser's Solicitors on behalf of the
Purchaser on the date of signing this
Agreement;
"EXECUTION RTBV FIGURE" means the recorded tangible net book value of
the Businesses as such net figure is derived
from the Execution Balance Sheet and is
calculated by deducting liabilities from
assets all in accordance with and after
taking account of the instructions set out in
Part XII;
"EXECUTION SRR SCHEDULE" means the schedule of Subscription Run Rates
relating to Customer Contracts as at 27th
August 1997 containing brief details of such
Customer Contracts referred to therein (the
format of which is in the agreed terms) and
signed as relative to this Agreement marked
"Appendix IB";
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37
<PAGE>
"EXISTING REUTERS AGREEMENT" means the agreement between Reuters Limited
("Reuters") and The Estimate Directory
Limited dated 14th March 1995;
"FINALLY DETERMINED CLAIM" means any claim by the Purchaser against the
Vendors (or any of them) under or pursuant to
the terms of this Agreement (other than
Clauses 3.2, 3.3, 11.6 or 11.7) in relation
to which either (a) an agreement has been
reached between the Purchaser and the Vendors
in final settlement of such claim or (b) (in
default of such agreement) final
determination by binding arbitration or
dispute resolution in favour of the Purchaser
has been reached or an order or decree of a
court of competent jurisdiction has been
given or handed down in favour of the
Purchaser in respect of which no appeal has
been, or is capable of being made;
"FRIENDS PROVIDENT means the written consent of Friends
ASSIGNATION CONSENT" Provident Life Office to the Assignation in
the agreed terms and dated not more than
fourteen days prior to the Completion Date;
"FRIENDS PROVIDENT ASSIGNATION means the written confirmation of Friends
CONSENT CONFIRMATION" Provident Life Office dated as near as
practicable to the Completion Date and not
more than fourteen days prior to the
Completion Date:-
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38
<PAGE>
(a) that the sums payable in terms of
Clause 4 of the Friends Provident
Assignation Consent have been paid in full
(or other evidence to this effect);
(b) that the tenants under the Head Lease
are not in arrears of the rent or
otherwise in breach of the Head Lease;
(c) that a valid unconditional acceptance
has been timeously received in
implementation of Clause 7.2 of the
Friends Provident Assignation Consent
(or other evidence to this effect);
"FRIENDS' PROVIDENT LIFE OFFICE" means Friends' Provident Life Office
incorporated by Act of Parliament in the
United Kingdom with limited liability and
having its head office at Pixham End,
Dorking, Surrey, RM4 1QA or such other
person or persons as are in right of the
Landlord's interest in the Head Lease;
"FRIENDS PROVIDENT means the written consent of Friends
VARIATION CONSENT Provident Life Office to the Minute of
Variation dated 11th July 1997;
"FRIENDS PROVIDENT means evidence that the terms of Clause 9
VARIATION CONSENT of the Friends Provident Variation
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39
<PAGE>
CONFIRMATION" Consent have been implemented;
"GOODWILL" the goodwill of the Businesses including
subject always to Clause 10.2:-
(a) the exclusive right of the Purchaser or
its assignees to represent itself as
carrying on the Businesses in succession
to the Vendors; and
(b) the exclusive right to the Names;
"HEAD LEASE" means a Lease between Abbey Life Assurance
Company Limited and Rank Xerox Limited dated
Twenty ninth April Nineteen hundred and
seventy four;
"HK EMPLOYEES" means those of the Transferred Employees who
are employed by Asia in Hong Kong as listed
in Document H.1 of the Execution Disclosure
Documents;
"INITIAL CONSIDERATION" means the Consideration less the Retention
namely L6,250,000;
"INTELLECTUAL PROPERTY" means the Specific IP together with, without
prejudice to the foregoing, such of the
following as may be owned, used or enjoyed by
any Vendor in connection with the
Businesses:-
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40
<PAGE>
(a) patents, trade marks (other than those
comprised in the Specific IP), service
marks, registered designs, trade names,
business names and applications for any
of the foregoing (other than those
comprised in the Specific IP) together
with any similar or analogous rights in
any country;
(b) copyrights, design rights together with
any similar or analogous right in any
country;
(c) inventions, know-how, or confidential
knowledge available to any Vendor;
and all agreements and documentation relating
to any of the foregoing including without
limitation, drawings, blueprints, plans,
specifications, data and descriptive
materials, technical files and reports,
designs, source and object codes relating to
any software and the benefit of all research,
development and design work;
"IN THE AGREED TERMS" means with reference to any document in the
form of a draft agreed by the Vendors'
Solicitors and the Purchaser's Solicitors
and, (with the exception of the Completion
Disclosure Letter) in relation to any such
document the terms of which have to be so
agreed prior to the date hereof and
initialled
- --------------------------------------------------------------------------------
41
<PAGE>
by or on behalf of each of the parties for
the purposes of identification,;
"JAPAN EMPLOYEE" means the Transferred Employee employed by
Asia in Japan as listed in Document H.1 of
the Execution Disclosure Documents;
"KEY EMPLOYEES" means Colin Rogers, Neil Lennox and Ian
Webster;
"LANDLORDS" means Rank Xerox Limited or such other person
or persons as are in right of the Landlord's
interest in the Lease as at the Completion
Date, together with any head or superior
landlords of the UK Property.
"LEASE" means a Sub-lease between Rank Xerox Limited
and Edinburgh Financial Publishing Limited
dated 2nd October 1996 and 20th March 1997
and registered in the Books of Council and
Session as varied by the Minute of Variation
and the Back Letter;
"LEASING AGREEMENTS" means the lease credit and asset operating
agreements brief details of which are set out
in Part II B of the Schedule;
"LOCATIONS" means any of the places from which any of the
Vendors carry on any of the Businesses
including, without limitation, the UK
Property, the Singapore Property, the
properties in Hong Kong, New York and
Australia (whose
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42
<PAGE>
addresses are set out in Clause 4.9) and YCS
Building, 11F, 5-1, Sakae-cho, Kanagawa-ku,
Yokohama 221. Japan;
"MANAGEMENT ACCOUNTS" means the management accounts of the
Businesses for the period from 1st April 1997
to 30th June 1997 a copy of which comprises
Document C.26 in the Execution Disclosure
Documents;
"MINUTE OF VARIATION" means a Minute of Variation in terms of the
Minute of Variation referred to in the
Missives between Rank Xerox Limited and UK
dated 22nd 28th and 29th July 1997;
"MINUTE OF VARIATION COSTS" means a Vendor's Solicitor's cheque for the
sum of the stamp duty on the Minute of
Variation and the dues of registration
thereof in the Books of Council and Session
and for obtaining four extracts thereof
together with so far as payable Value Added
Tax on such sums;
"NAMES" means those names, together with the
respective Vendors' interest therein set out
in paragraph 1.7 of Part V;
"THE NUMBERS" means (so far as any Vendor may sell or
otherwise transfer the same and at no cost to
it) all telephone/fax numbers associated with
the Businesses (including, without
limitation, the telephone numbers 0131 473
7070 Main Phone, 0131 473 7080 Main Fax, 0131
473 7081
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43
<PAGE>
Anita's Phone, 0131 473 7082 Anita's
Fax, 0131 473 7085 TED Fax, 0131 473 7090
Sales Fax, 0131 473 7091 Mail External, 0131
473 7092 Spare Modem, 0131 473 7095 Directors
Fax, 0131 473 7099 Ted Solutions Help Line
New York 212 290 0210, New York 212 290 0209
(fax), Hong Kong 852 2869 8331, Hong Kong 852
2804 6390 (fax), Sydney 61 2 9231 0088,
Sydney 61 2 9231 0188 (fax), Singapore 65 435
0430 and Singapore 65 438 1736 (fax);
"OTHER CONTRACTS" means those contracts short details of which
are set out in Part IIE of the Schedule;
"PLANT AND EQUIPMENT" the plant and equipment used by the Vendors
in connection with the Businesses at the
Effective Time (an exhaustive list of such
items as at the date of execution hereof is
set out in Part IV) (subject to any such
items being disposed of in accordance with
Clause 4.3 and together with any other items
of plant and equipment which may be acquired
by any of the Vendors subsequent to the date
hereof and prior to the Completion Date in
accordance with Clause 4.3);
"PRE-COMPLETION LIABILITIES means a schedule of the Accepted Liabilities
SCHEDULE" (prepared as at 31st August 1997) to be
delivered to the Purchaser at Completion;
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44
<PAGE>
"PROHIBITED AREA" the whole of the World;
"PROPERTY" means the leasehold property, used by UK in
the Businesses, brief details of which are
set out in Part IA of the Schedule;
"PURCHASER GROUP" means the Purchaser, BARRA, BIL and BIJ and
"member of the Purchaser Group" shall be
construed accordingly;
"PURCHASER'S SOLICITORS" means Dundas & Wilson C.S., Madeleine Smith
House, 6/7 Blythswood Square, Glasgow G2 4AD;
"THE PUBLICATIONS" means The Estimate Directory, the Directus
Publications, TED Solutions, Dividends and
Derivatives Directory;
"RANK XEROX ASSIGNATION means the written consent of Rank Xerox
CONSENT" Limited in the agreed terms and dated not
more than fourteen days prior to the
Completion Date;
"RANK XEROX ASSIGNATION means the written confirmation of Rank Xerox
CONSENT CONFIRMATION" Limited dated as near as practicable to the
Completion Date and not more than fourteen
days prior to the Completion Date:-
(a) that the sums payable in terms of Clause
4 of the Rank Xerox Assignation Consent
have been
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45
<PAGE>
paid in full (or other evidence to this
effect);
(b) that the terms of Clauses 7.1 and 8.1 of
the Rank Xerox Assignation Consent have
been implemented in full (or other
evidence to this effect);
(c) that UK are not in arrears of rent or
otherwise in material breach of the
Lease;
(d) that a valid unconditional acceptance
has been timeously received in
implementation of Clause 8.3 of the Rank
Xerox Assignation Consent (or other
evidence to this effect);
"RANK XEROX LIMITED" means Rank Xerox Limited incorporated under
the Companies Acts and having their
Registered Office at Parkway, Marlow,
Buckinghamshire, S67 1YE or such other person
or persons as are in right of the Landlord's
interest in the Lease;
"RTBV ADJUSTMENT" has the meaning ascribed in terms of Clause
3.3;
"RECORDS" means those records, ledgers, books, lists
of customers and prospective customers (if
any) and suppliers, accounts, files,
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46
<PAGE>
correspondence, contracts, licences,
certificates, stock records, computations,
price lists, catalogues, sales literature,
specifications, designs, manuals, technical
information relating to any software,
instructional and promotional materials,
advertising, marketing and publicity material
(together with any plates, blocks, negatives
or similar material relating to them)
relating to the Businesses, terms and
conditions of business relating to the
Businesses, personnel records, payroll
records and records of National Insurance and
PAYE relating to the Transferred Employees,
and all value added tax records referred to
in Clause 22 and computer data (including
copies of all discs therefor) and other
documents relating to the Businesses and/or
the Assets, and/or the Transferred Employees
and those other records relating to the
Businesses and/or the Assets as have been
provided to the Purchaser by or on behalf of
the Vendor prior to Completion but excluding
all Retained Records;
"REGULATIONS" means the Transfer of Undertakings
(Protection of Employment) Regulations 1981
(as amended);
"RESTRICTED PERIOD" means a period of 36 months commencing on and
from the Completion Date;
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47
<PAGE>
"RETAINED RECORDS" means all accounting books, records,
vouchers, information and data (howsoever
recorded or stored) kept by the Vendors
pursuant to:-
(i) the requirements of Part VII of the
Companies Act 1985 or otherwise required
by the Vendors or their accountants to
enable them to comply with their
obligations thereunder and/or under any
applicable Statement of Standard
Accounting Practice in the United
Kingdom and any equivalent requirements
in the United States in relation to USAV
and in Hong Kong in relation to Asia;
(ii) the requirements of any legislation or
regulations relating to taxation
(including without limitation
Corporation Tax and PAYE but not Value
Added Tax);
"RETENTION" means the retention of part of the
Consideration amounting to L1,000,000 to be
dealt with pursuant to Clause 4.8;
"RETENTION FUND" means the amount for the time being standing
to the credit of the interest bearing deposit
account with Clydesdale Bank plc in the joint
names of the Purchaser's Solicitors and the
Vendors' Solicitors pursuant to Clause 4.8;
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48
<PAGE>
"THE RIGHTS AGAINST SUPPLIERS" means all the rights of the Vendors with
respect to the Assets against suppliers and
third parties (including without limitation
all rights in connection with warranties and
representations of manufacturers, suppliers
and third parties (whether under law or
otherwise) and the benefit of all sums to
which any Vendor is entitled either from
third parties or insurers in respect of
damage or injury caused to the Assets;
"SRR ADJUSTMENT" has the meaning ascribed in terms of Clause
3.4;
"SIGNING LIABILITIES" means the Accepted Liabilities as at 31st
July 1997 as detailed in Part VI;
"SINGAPORE EMPLOYEES" means those of the Transferred Employees
employed by Asia in Singapore as listed in
Document H.1 of the Execution Disclosure
Documents;
"SINGAPORE PROPERTY" means the leasehold property used by Asia in
the Businesses, brief details of which are
set out in Part 1B;
"SPECIFIC IP" means the intellectual property rights a
brief description of each of which is set out
in Part V of the Schedule (including source
and object codes relating to any software);
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49
<PAGE>
"STOCK" means the whole stocks of the Businesses
including without limitation, stocks of books
and manuals, data used in relation to the
Businesses whether written or in machine
readable form, office stock and all other
stocks and stores wherever situated owned and
employed by the Vendors and to be used by the
Vendors in connection with the Businesses at
the Effective Time including items which,
although subject to reservation of title by
sellers, are under the control of any Vendor;
"SUBSCRIPTION RUN RATE" means the aggregate of the invoice value for
each subscription for any products or
services supplied by any of the Vendors in
connection with any of the Businesses due
under the relevant Customer Contract relating
to such subscription as of the point in time
("the Measurement Time") when the
subscriptions are measured for the purpose of
this calculation, each of which subscriptions
is in existence and is not terminated as of
the Measurement Time, provided that (a) there
shall be disregarded in calculating that
amount any amount of subscription relating to
any Customer Contract to the extent that such
amount is in respect of a period in excess of
twelve months and (b) that in respect of any
Customer Contract in excess of a period of
twelve months, the period of
- --------------------------------------------------------------------------------
50
<PAGE>
twelve months to be included in the
calculation shall be the period of twelve
months during which the Measurement Time
falls and ending on the date after the
Measurement Time which is the earlier of
(i) the date of termination of the
relevant Customer Contract and (ii) the date
which is the next anniversary of the
commencement of the relevant Customer
Contract, falling after the Measurement Time;
"TED" OR "THE ESTIMATE DIRECTORY" means The Estimate Directory as published by
or made available by the Vendors and in all
editions wherever and whenever published or
made available and in all editions and in
whatever form (including electronic) together
with all intellectual property rights
pertaining thereto;
"TED CONTRACTS" means those Customer Contracts relating to
TED, which Customer Contracts are referred to
as such in the Base SRR Schedule;
"THIRD PARTY DISTRIBUTION means those contracts listed in Part IIC of
AGREEMENTS" the Schedule;
"TITLE DEEDS" means the Lease and a copy of the Head Lease
and all licences, permissions and consents
relating to the Property in the possession
of, or under the control of, UK;
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51
<PAGE>
"TRANSFERRED EMPLOYEES" means the employees of the Vendors employed
in the Businesses as at the date hereof whose
names, together with certain other details,
are set out in Document H.1 as contained in
the Execution Disclosure Documents (as such
details may be amended in accordance with
Clause 4.3);
"UK BUSINESS" the business of publishers and distributors
of TED as carried on by UK under certain of
the Names in or from the Property and
elsewhere and the Directus Business as at the
Completion Date;
"UK EMPLOYEES" means those of the Transferred Employees who
are employed by UK in the United Kingdom as
listed in Document H.1 of the Execution
Disclosure Documents;
"UK'S LEASEHOLD INTEREST" means UK's interest and real right as tenant
in and to the Lease;
"UNEARNED REVENUE" means all unearned revenues in connection
with the Businesses as at 31st December 1996
for the purposes of the Base Period Balance
Sheet, 31st July 1997 for the purposes of the
Execution Balance Sheet and the Effective
Time for the purposes of the Completion
Balance Sheet, being sums received by any of
the Vendors in connection with the Businesses
(including Advance Receipts) in the period up
to such respective dates in relation to
services
- --------------------------------------------------------------------------------
52
<PAGE>
or products which in the case of the
Base Period Balance Sheet had not been
performed or delivered at 31st December 1996,
in the case of the Execution Balance Sheet
had not been performed or delivered as at
31st July 1997 and in the case of the
Completion Balance Sheet will not have been
performed or delivered as at the Effective
Time as the same have been or will be treated
as a liability in calculating the Base RTBV
Figure, the Execution RTBV Figure and the
Completion RTBV Figure respectively;
"USAV BUSINESS" means the business of distributors of TED as
carried on by USAV under certain of the Names
as at the Completion Date;
"USAV EMPLOYEES" means those of the Transferred Employees who
are employed by USAV in the United States of
America as listed in Document H.1 of the
Execution Disclosure Documents;
"VEHICLE" means the vehicle brief particulars of which
are set out in Part III of the Schedule;
"VENDOR GROUP" means the Vendors, any holding companies of
any of the Vendors and any subsidiary of any
Vendor and any subsidiary of such holding
company from time to time and "member of the
Vendor Group" shall be construed accordingly;
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53
<PAGE>
"VENDORS' ACCOUNTANTS" means Rutherford Manson Dowds, Chartered
Accountants, 25 Melville Street, Edinburgh;
"VENDORS' REPRESENTATIVE" means JS whom failing AM;
"VENDORS' SOLICITORS" means Dickson Minto WS, 11 Walker Street,
Edinburgh, EH3 7NE;
"WARRANTIES" means the statements set out in Clause 6 and
Part IX of the Schedule;
"THE WORK IN PROGRESS" means all work in progress of the Businesses
at the Effective Time including (without
limitation) all work in progress of the
Businesses sub-contracted by any Vendor to
third parties.
1.2 In this Agreement, unless otherwise specified or the context otherwise
requires:-
(a) reference to this Agreement shall include the Recitals and the
Schedule;
(b) reference to a Clause is to a clause of this Agreement and to a
Recital is to a recital to this Agreement;
(c) reference to the Schedule or a Part thereof is to the schedule annexed
and executed as relative to this Agreement or to a Part thereof;
(d) and references to sub-clauses, paragraphs and sub-paragraphs are,
unless otherwise stated, references to sub-clauses of the Clause or
paragraphs of the sub-clause (or, as the case may be,
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54
<PAGE>
Part of the Schedule) or sub-paragraphs of the paragraph in which the
reference appears;
(e) words importing any gender shall include the other genders;
(f) words importing natural persons shall include corporations and vice
versa;
(g) words importing the singular only shall include the plural and vice
versa;
(h) words importing the whole shall be treated as including a reference to
any part thereof;
(i) any word or expression the definition of which is contained or
referred to in the Companies Act 1985 shall be construed as having the
meaning thereby attributed to it unless the context otherwise
requires; and
(j) references to any statute, regulation or part thereof shall be
construed as references thereto as amended or re-enacted or as the
application thereof is modified by other provisions before the date of
this Agreement, and shall be construed as including references to any
order, instrument, regulation or other subordinate legislation made
pursuant thereto before the date of this Agreement;
1.3 In this Agreement, where there appears a reference to any information, fact
or matter having been disclosed such reference shall be deemed to refer to
such information, facts or matters of which details are, contained in, or
annexed to, the Execution Disclosure Letter and the Completion Disclosure
Letter (as appropriate) which are of sufficient detail to
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55
<PAGE>
constitute full and fair disclosure of the relevant information, fact or
matter and the expression "disclosed" shall be interpreted accordingly;
1.4 Where any of the Warranties is qualified by the statement "so far as the
Vendors are aware" or "to the Vendors' knowledge and belief" or by any
similar statement, that statement shall unless such statement expressly
provides otherwise be construed and extended to include knowledge which is
or which ought on careful and diligent enquiry to be in the possession of
any Vendor, any holding company of any Vendor and any subsidiary of any
such companies or any of their respective directors or employees;
1.5 In construing this Agreement the ejusdem generis rule shall not apply and
accordingly the interpretation of general words shall not be restricted by
being preceded by words indicating a particular class of acts, matters or
things or being followed by particular examples;
1.6 In this Agreement the headings to Clauses and Parts of the Schedule are
inserted for convenience only and shall not affect the construction of this
Agreement;
1.7 The provisions of the Interpretation Act 1978 with respect to
interpretation and construction shall apply MUTATIS MUTANDIS;
2. SALE AND PURCHASE OF BUSINESSES AND ASSETS
2.1 Subject to the terms and conditions of this Agreement (including without
limitation Clause 2.2), the Vendors shall sell, and the Purchaser shall
purchase the Businesses as going concerns and the following assets with
effect from the Effective Time:-
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56
<PAGE>
2.1.1 the Goodwill;
2.1.2 UK's Leasehold Interest;
2.1.3 the Plant and Equipment;
2.1.4 the Stock;
2.1.5 the Records;
2.1.6 the Intellectual Property;
2.1.7 to the extent that the Vendors are entitled to sell the same, but
subject to the Warranties, the Names;
2.1.8 the Numbers;
2.1.9 the Debts;
2.1.10 the benefit (subject to the burden) of the Contracts;
2.1.11 the Work in Progress;
2.1.12 the Publications;
2.1.13 the benefit of any warranties or guarantees enforceable by the
Vendor against any third party in relation to any of the
foregoing (including without limitation the Rights Against
Suppliers) (subject to Clauses 2.2, 5 and 8);
2.1.14 all such other assets as are owned by any Vendor, used solely and
exclusively in the Businesses and located at the Locations as at
the Effective Time;
2.2 There shall be excluded from the sale and purchase of the Businesses and
the Assets:-
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57
<PAGE>
(a) the Excluded Liabilities, the Excluded Contracts, the Excluded
Businesses the Vehicle and the Singapore Property (unless, in relation
to the Singapore Property only, the provisions of Clause 2.3 apply);
(b) the Creditors; and
(c) any cash in hand or at bank (including, for the avoidance of doubt any
sums received in respect of Advance Receipts).
2.3 In the event that on or before Completion the provisions of Part VII(B) are
satisfied (all parties having used all reasonable endeavours to procure
their satisfaction) the Singapore Property shall be included within the
Assets being transferred pursuant to the terms of this Agreement, provided
that the satisfaction of the provisions of Part VII(B) shall not be a
condition precedent to Completion.
3. PURCHASE PRICE
3.1 Subject to the provisions of Clauses 3.3, 3.4, 11.6 and 11.7 the
consideration for the sale by the Vendors of the Businesses and the Assets
shall be the sum of SEVEN MILLION TWO HUNDRED AND FIFTY THOUSAND POUNDS
(L7,250,000) STERLING provided that, if any adjustment of the Consideration
is required in terms of this Agreement , the value attributed to Goodwill
in this Clause shall be deemed to be adjusted accordingly to give effect to
this on a pro rata basis in respect of each of the Businesses. The failure
to attribute a value to any of the Assets shall in no way affect any claim
which the Purchaser might make under or pursuant to the Warranties or the
calculation of the amount of such claim. Subject to the foregoing the
Consideration shall be apportioned as follows:-
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58
<PAGE>
UK BUSINESS:-
ASSET PRICE
----- -----
UK Trade Marks listed in Part V para 1 L50,000
Property L5,000
Contracts (other than Customer Contracts and L1,000
Leasing Agreements)
Rights Against Suppliers L1,000
Unallocated L2,193,000
----------
L2,250,000
----------
ASIA BUSINESS:-
---------------
ASSET PRICE
-----
Unallocated L4,500,000
----------
USA BUSINESS
ASSET PRICE
-----
Unallocated L500,000
3.2 The Purchaser and the Vendors shall each use all reasonable endeavours to
ensure that all requisite information is available in order to enable the
preparation of the Completion Balance Sheet, the Completion RTBV Figure,
the Completion SRR Figure and the Completion SRR Schedule. The Purchaser
shall prepare the Completion Balance Sheet on the basis of and taking into
account the instructions set out in Part XII, shall calculate the
Completion RTBV Figure from figures contained in the Completion Balance
Sheet, shall prepare the Completion SRR Schedule by updating the Execution
SRR Schedule to the Effective Time and shall calculate the Completion SRR
Figure from figures contained in the Completion SRR
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59
<PAGE>
Schedule, all within 60 days of Completion. The Vendors shall procure
that there is given to the Purchaser and/or its employees and advisers
access to all of the Retained Records and any other papers retained by
or under the control of the Vendors for the purposes of preparing the
Completion Balance Sheet and the Completion SRR Schedule and shall
procure that all necessary assistance is given to the Purchaser by any
of the Vendor's directors and/or employees and/or advisers to enable the
Purchaser to prepare the Completion Balance Sheet, the Completion SRR
Schedule. The Completion Balance Sheet, the Completion RTBV Figure, the
Completion SRR Figure and the Completion SRR Schedule shall thereafter
be agreed between the Purchaser and the Vendors' Representative within
30 days after presentation of the last such document to the Vendors'
Representative. The Vendors shall be given full access to all working
papers, books and records of the Purchaser in relation to the Businesses
to enable the Vendors to verify the Completion Balance Sheet, the
Completion RTBV Figure, the Completion SRR Figure and the Completion SRR
Schedule. In the event that the Vendors' Representative and the
Purchaser fail to reach agreement on the Completion Balance Sheet, the
Completion RTBV Figure, the Completion SRR Figure and the Completion SRR
Schedule within 30 days as aforesaid then (unless the Purchaser and the
Vendors' Representative agree otherwise) the matters unresolved or in
dispute shall be referred to an expert in accordance with the provisions
of the Disputes Clause.
3.3 In the event that the Completion RTBV Figure as agreed or determined
pursuant to Clause 3.2 is less than the Base RTBV Figure or in the case of
a net liability, is a greater liability, the Consideration shall be reduced
by a sum (if any) ("the RTBV Adjustment") equal to the amount by which the
Completion RTBV Figure (as agreed or determined as aforesaid) is less than
the Base RTBV Figure or in the case of a net liability, is a greater
liability, and the Vendors hereby jointly and severally undertake to
procure that an amount equal to the RTBV Adjustment shall be released
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60
<PAGE>
from the Retention Fund in accordance with Clause 4.8.2.2 and paid to the
Purchaser forthwith provided that if the RTBV Adjustment is less than
L50,000 the Consideration shall not be reduced. However if the RTBV
Adjustment is greater than or equal to L50,000 the Consideration shall be
reduced as aforesaid by the full amount of the RTBV Adjustment;
3.4 In the event that the Completion SRR Figure as agreed or determined
pursuant to Clause 3.2 is less than the Base SSR Figure, the Consideration
shall be reduced by a sum (if any) ("the SRR Adjustment") equal to a
multiple of 1.94 times the amount by which the Completion SRR Figure (as
agreed or determined as aforesaid) is less than the Base SRR Figure and the
Vendors hereby jointly and severally undertake to procure that an amount
equal to the SRR Adjustment shall be released from the Retention Fund in
accordance with Clause 4.8.2.2 and paid to the Purchaser forthwith;
3.5 The Vendors and the Purchaser agree that the Consideration is a single
price and in the event of there being any breach of the agreements,
obligations, warranties, representations or undertakings of the Vendors
contained in this Agreement any compensation payable to the Purchaser shall
reduce the Consideration accordingly.
3.6 The Purchasers and the Vendors will act in good faith in relation to the
preparation and agreement of the Completion Balance Sheet, the Completion
RTBV Figure the Completion SRR Schedule and the Completion SRR Figure.
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61
<PAGE>
4. COMPLETION
4.1 Completion of the sale and purchase of the Businesses and the Assets:-
4.1.1 shall be conditional upon the satisfaction of the following
conditions precedent to the satisfaction of the Purchaser and in
the case of Clause 4.1.1. (d) only the Vendors' Representative:-
(a) no material adverse change in the Businesses and Assets
having taken place prior to Completion;
(b) no interdict or other legal prohibition preventing
Completion taking place;
(c) no litigation, arbitration or other proceeds of a similar
nature having been commenced or being pending against the
Vendors or any of them which would, if decided in favour of
the person instituting such proceedings, be reasonably
likely to have a material adverse effect on the Businesses
and/or the Assets;
(d) the Vendors and the Purchaser having complied with the terms
of this Agreement in all material respects;
(e) none of the Key Employees having left the employment of the
Vendors or working any applicable notice period and no more
than 15 of the Transferred Employees (not including any of
the Key Employees) having left the employment of the Vendors
or having given formal notice terminating their contracts of
employment with any of the Vendors without appropriate
replacements having been found for such
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62
<PAGE>
persons (provided that the transfer of the HK Employees,
Singapore Employees, Japan Employees and USAV Employees and
related terminations pursuant to Clause 14 shall be excluded
from the operation of this sub-Clause (e) to the extent that
such employees accept the offer of employment made by the
various members of the Purchaser Group pursuant to Clause
14);
(f) the Purchaser being provided with updated lists of Plant and
Equipment and being satisfied that any additions or
deletions to the lists of Plant and Equipment are permitted
in terms of Clause 4.3;
(g) the Purchaser being satisfied with the transfer of the Data
Suppliers Contracts, the Development Agreements and the
Existing Reuters Agreement to the Purchaser (such transfer
being conditional on Completion taking place);
(h) none of the directors of UK having refused to allow the
Purchaser to contact any of the customers of the Businesses
pursuant to Clause 4.3.9;
(i) the Purchaser being satisfied regarding searches in the
appropriate registers in respect of UK's ownership of the
trade marks contained within the Specific IP;
(j) the Purchaser being reasonably satisfied with enquiries of
customers of the Businesses as set out in the Execution SRR
Schedule;
(k) the Purchaser being satisfied regarding searches in the
appropriate registers in respect of the capacity of the
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Vendors to sell the Businesses and the Assets (including
without limitation searches in the Register of Inhibitions
and Adjudications in respect of UK);
(m) the Vehicle having been transferred to Neil Lennox on terms
satisfactory to the Purchaser, acting reasonably;
(n) Peter Marks, Digita Limited and Silicon River Limited each
having entered into letters addressed to UK relating to
ownership of the intellectual property rights in and to the
Dividends and Derivatives Directory product, in the agreed
terms;
4.1.2 shall subject to Clause 6.4 take place on the Completion Date
with effect from the Effective Time at such place as the Vendors'
Representative and the Purchaser shall agree and risk, property
and title to the Businesses and the Assets (including the UK's
Leasehold Interest) shall pass to the Purchaser at the Effective
Time subject to the terms of this Agreement;
4.2.1 If the conditions set out in Clause 4.1.1 are not satisfied or
waived in accordance with Clause 4.2.2 before the date which is
60 days after the date of execution hereof either the Purchaser
or the Vendors may rescind this Agreement without any costs being
due to or by either party.
4.2.2 The Purchaser in its sole discretion may waive any of the
conditions precedent set out in Clause 4.1.1 (other than Clause
4.1.1.(d)). The Vendors in their sole discretion may waive any
non-compliance by the Purchaser with the Agreement in terms of
Clause 4.1.1(d) and the Purchaser in its sole discretion may
waive any non-compliance by any of the Vendors with the Agreement
in terms of Clause 4.1.1(d). Any such waiver by either the
Purchaser or Vendors shall
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not affect any right of action or claim which might be available
to the Purchaser or the Vendors respectively in terms of this
Agreement;
4.3 During the period between the date of this Agreement and the Completion
Date the Vendors shall carry on the Businesses in the usual and ordinary
course with a view to preserving their financial and trading position,
shall during normal business hours on receipt of reasonable notice give the
Purchaser or its agents access to the Transferred Employees for the
purposes of discussing the ongoing business of the Businesses and their
position within them and the Vendors shall not do or permit or procure to
be done anything which is outside the normal course of the Businesses
without the prior express written consent of the Purchaser and in
particular but without prejudice to the foregoing generality the Vendors
(in each case unless the prior written consent of the Purchaser is
obtained):-
4.3.1 shall not dispose of or enter into any agreement to dispose of
any of the Assets (or any interest therein) other than stocks in
the ordinary course of the Businesses, or grant or agree to grant
any option or right of pre-emption in respect of any of the
Assets;
4.3.2 shall not enter into any contracts not capable of being
terminated within three months and not expected to be performed
within such period or any contracts which are unduly onerous or
are liable to impose any abnormal liabilities on the Business or
call for the supply of goods or services to the Businesses at a
cost significantly in excess of that at which such goods or
services are obtainable at the date of this Agreement or call for
the supply of goods or services by the Businesses at prices
significantly below those pertaining at the date of this
Agreement;
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4.3.3 shall not terminate any contracts to be transferred pursuant to
this Agreement or take any action which any of the Vendors knows
or ought to be aware will constitute a breach of any such
contract or do or knowingly permit to happen any event, act or
thing so as in each case to give the other party to the contract
a right to terminate it prematurely or to result in acceleration;
4.3.4 shall not create or agree to create any mortgage, charge or other
security interest whatsoever over the Assets or any of them (save
as arising by operation of law);
4.3.5 without prejudice to the provisions of Clause 4.1.1(e), shall not
grant any service agreements in favour of any of the Transferred
Employees, employ any additional or replacement person as an
employee or make any change to the terms and conditions of
employment or rate of remuneration of any of the Transferred
Employees or terminate any Transferred Employee's employment or
pay or agree to pay any bonus or similar payment to any
Transferred Employee (provided that in the case of Transferred
Employees (other than Key Employees) the Vendors may terminate
the employment of such employees provided just cause is shown,
however in such a circumstance the Purchaser will be notified of
such occurrence forthwith);
4.3.6 shall notify the Purchaser in writing of the appointment,
dismissal, resignation or other termination of the employment of
any employee of any of the Vendors involved in the Businesses;
4.3.7 shall not make any material change to the Businesses;
4.3.8 shall not grant any guarantee in respect of any goods or products
produced by the Vendors in relation to the Businesses other than
guarantees of a nature similar to guarantees given prior to the
signing of this Agreement;
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4.3.9 shall during normal business hours on receipt of reasonable
notice allow representatives of the Purchaser to have full access
to the running of the Businesses and the records and shall use
all reasonable endeavours to procure that the said
representatives (who should be entitled to report to the
Purchaser) are aware of all material elements of the running of
the Businesses in the said period prior to the Completion Date
and are included in all material management decisions and shall
allow the Purchaser to have access to all customers of the
Businesses, provided in implementing this clause the Purchaser
shall use reasonable endeavours to minimise the disruption to the
Businesses and prior to contacting any of the said customers to
obtain the consent of any director of UK;
4.3.10 shall not incur any trade or other creditors referable to the
Businesses other than in the ordinary course of the Businesses as
carried on prior to the date of execution of this Agreement;
4.3.11 shall disclose forthwith on becoming aware of the same any matter
which arises which would constitute a breach of the Warranties or
any provision of this Clause 4.3 in each case to the Purchaser in
writing;
4.3.12 shall not enter into any new contracts with subscribers to TED,
TED Solutions or the Directus Publications other than on the
Vendors' standard terms and conditions referable to each such
publication or product.
Any breach of the provisions of this Clause 4.3 (which breach has not been
accepted by the Purchaser in writing) shall, without prejudice to any
rights available to the Purchaser hereunder, entitle the Purchaser to
rescind this agreement prior to Completion.
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4.4 At Completion the Vendors shall deliver or give or exhibit (as appropriate)
to the Purchaser:-
4.4.1 entry to and actual possession of the Property (including all
keys relating thereto and details of all security systems
utilised);
4.4.2 (with effect from the Effective Time) management and control of
the Businesses and the Assets;
4.4.3 the written consent of any chargee, security holder or other
person whose consent is required for the sale of the Businesses
or Assets or the entering into of this Agreement;
4.4.4 a certified copy of Minutes of the board of directors of each of
the Vendors in the agreed terms in connection with inter alia
Completion of the sale and purchase of the Assets and the
Businesses;
4.4.5 (to the extent not already at the Property) the Records;
4.4.6 such of the Assets as are capable of transfer by delivery;
4.4.7 assignation(s) in the agreed terms of Specific IP, assignations
in the agreed terms of each of the Data Suppliers Contracts and
the Existing Reuters Agreement, and (so far as the same are
capable of being produced at Completion (taking into account the
provisions of Clause 11)) assignations in the agreed terms of the
Third Party Distribution Agreements, assignations in the agreed
terms of each of the Development Agreements and (save to the
extent otherwise provided in this Agreement) such other
conveyances, assurances, transfers, assignations, consents or
other
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documents as the Purchaser may reasonably require which are
necessary to vest in it the Businesses and the Assets (other than
the Contracts, (excluding the Data Suppliers Contracts, the
Existing Reuters Agreement and the Development Agreements))
(provided that the Purchaser may determine in its sole discretion
that any of the foregoing shall be delivered following Completion
and the Vendors shall be bound to do so as soon as is reasonably
practicable following receipt of notice from the Purchaser);
4.4.8 (to the extent not already at the UK Property) all available
existing certificates of warranty and guarantee held by any
Vendor in relation to the Assets;
4.4.9 acknowledgements, in the agreed terms, from any third party
holding any of the Assets that it holds the relevant Asset for
the Purchaser absolutely;
4.4.10 a signed Written Resolution (or other documentation necessary in
each relevant jurisdiction) together with a letter from the
auditors of any relevant company, confirming receipt of each of
TED Ltd, The Estimate Directory Limited, Directus Limited, and
each of the three Vendors resolving to change its name to such
name as will not include the words "Estimate" or "Directory" or
"TED" or "Directus" or "Edinburgh" or "Financial" or "Publishing"
together with payment to the Purchaser of the costs of changing
such names;
4.4.11 the Title Deeds;
4.4.12 the Brokers' List updated to the Completion Date in a form and
content reasonably acceptable to the Purchaser;
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4.4.13 all documentation required to be delivered as at the Completion
Date by the Vendors to the Purchaser in terms of Part VII;
4.4.14 the contracts of employment relative to the Key Employees in the
agreed terms duly signed by the Purchaser and the Key Employees
(as appropriate);
4.4.15 a letter of non-crystallisation from any holder of any floating
charge granted by any of the Vendors in the agreed form;
4.4.16 updated list of all Plant and Equipment showing changes from the
lists delivered on execution hereof;
4.4.17 a list of the Debts as at the Effective Time containing such
details as will enable the Purchaser to perform its obligations
in terms of this Agreement;
4.4.18 a certified copy of the Confidentiality Agreements signed by each
of the Transferred Employees and the Vendors (or such of the
Vendors as is the relevant employer of such Transferred
Employees);
4.4.19 the Pre-Completion Liabilities Schedule.
4.5 Subject to Completion taking place UK shall reimburse the Purchaser in
respect of the costs of obtaining the opinions on the capacity of Asia and
USAV to enter into, inter alia, this Agreement, on demand;
4.6 Subject to compliance by the Vendors with the obligations incumbent on them
under Clause 4.3 the Purchaser in respect of satisfaction of the
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aggregate consideration for purchase of the Businesses and the Assets, (save
for the Retention which will be dealt with in accordance with Clause 4.8)
shall:-
4.6.1 pay to the Vendors' Solicitors (who are hereby irrevocably
authorised to receive the same and whose receipt therefor shall
be a sufficient discharge to the Purchaser) by electronic funds
transfer the Initial Consideration;
4.6.2 assume liability for the Accepted Liabilities (as the Purchaser
hereby so accepts) subject to the terms of this Agreement;
4.6.3 pay the Retention to an account with Clydesdale Bank plc to be
held as the Retention Fund such account to be in the joint names
of the Purchaser's Solicitors and the Vendors' Solicitors and
dealt with in accordance with Clause 4.8;
4.7 If in any respect the provisions of Clause 4.4 are not complied with on the
Completion Date then where the parties agree they may, if they all agree,
at their discretion:-
(a) defer Completion to a date to be agreed after the Completion Date
(and so that the provisions of this Clause 4.7 shall also apply
to Completion as so deferred); or
(b) proceed to Completion so far as practicable (without prejudice to
their respective rights hereunder) on the basis that any
provision of Clauses 4.4, 4.5 or 4.6 which may not have been
fully complied with at Completion shall be held over to such
future date or dates as the Purchaser and the Vendors may agree.
4.8 The following provisions shall have effect in relation to the Retention:-
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4.8.1 On the Completion Date the Purchaser shall place an amount equal
to the Retention in an interest-bearing deposit account with
Clydesdale Bank plc in the joint names of the Purchaser's
Solicitors and the Vendors' Solicitors.
4.8.2 The Retention Fund shall be applied for the purposes of:-
4.8.2.1 making payment to the Purchaser in satisfaction of any
Finally Determined Claim together with interest accrued
on the amount of each such claim and any costs awarded
by the court to the Purchaser in respect of such claim;
4.8.2.2 making payment to the Purchaser of any amount or
amounts payable pursuant to Clauses 3.3 and/or 3.4
and/or the Deed of Indemnity together with interest
accrued on each of such amounts; and
4.8.2.3 making payment to the Purchaser and/or the Vendors'
Solicitors on behalf of the Vendors of any amount or
amounts to be paid under Clauses 4.8.4 and/or 11.6
and/or 11.7 together with interest accrued on each such
amount.
4.8.3 Subject only to Clauses 4.8.2, 4.8.4 and 4.8.5, it is hereby
agreed between the Purchaser and the Vendors that on the date
("the First Retention Release Date") which is the later of (a)
the date falling 15 months after the Completion Date, and (b)
the date on which the Expert fixes any disputed amount to be
retained for estimated costs and expenses in terms of Clause
4.8.5, an amount shall be released from the Retention Fund which
amount shall comprise a sum equal to the total amount of the
Retention Fund but after deduction of all amounts (if any) to be
applied or retained pursuant to Clauses 4.8.2, 4.8.4 and 4.8.5
("the Retained Amount"). Such sum shall be released to the
Vendors' Solicitors on behalf of
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the Vendors. The Retained Amount shall remain in the Retention
Fund and be dealt with in accordance with the provisions of this
Clause 4.8 (excluding this Clause 4.8.3).
4.8.4 Subject to Clauses 4.8.2 and 4.8.5, and without prejudice to
Clause 4.8.3, on the date which is the last to occur of:-
(i) the earlier of (a) the entering into of a New Contract or
New Contracts, the revenue from which, on the application of
the formula set out in Clause 11.6.1, is sufficient to
result in the Purchaser's Release (as defined in Clause
11.6.1) being zero, and (b) 31st March 1998,
(ii) the agreement or determination of the Completion RTBV Figure
and the Completion SRR Figure and (if appropriate) the
release of the RTBV Adjustment and/or the SRR Adjustment (if
any) from the Retention Fund pursuant to Clauses 3.3 and
3.4, and
(iii) the Assignation Date;
the sum of L275,000 (under deduction of an amount equal to the
aggregate of all sums (if any) released from the Retention Fund
to the Purchaser pursuant to Clauses 3.3, 3.4, 11.6 and/or 11.7)
together with interest accrued on such net sum shall be released
from the Retention Fund to the Vendors' Solicitors.
4.8.5 The amount of any claim (together with interest accrued on the
amount of such claim pursuant to the terms of this Agreement and
an amount as agreed between the parties (or as fixed by an expert
under the Disputes Clause) as the estimated costs likely to be
awarded by a court or other appropriate forum to the Purchaser if
successful in proving its claim fully to conclusion) which
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has been intimated by the Purchaser to any Vendor under and in
terms of this Agreement which, as at the First Retention Release
Date, has not yet become a Finally Determined Claim (but in
respect of which the Purchaser has commenced legal proceedings by
way of the service of a Summons or an Initial Writ or any other
analogous proceedings against the Vendors or any of them in
respect of such claim) shall not be released from the Retention
Fund but shall remain in the Retention Fund (subject to the
proviso set out below) until such claim becomes a Finally
Determined Claim. When such claim becomes a Finally Determined
Claim an amount equal to the amount of such claim together with
interest as aforesaid and the costs awarded by the Court or other
appropriate forum to the Purchaser shall be released from the
Retention Fund to the Purchaser in satisfaction of such claim;
Provided that if such claim has not become a Finally Determined
Claim with 24 months from the date ("the Commencement Date") on
which proceedings were commenced against the Vendors (or any of
them) as a result of the deliberate and conscious failure of the
Purchaser to prosecute such claim, an amount equivalent to such
claim together with interest and the amount previously estimated
for costs shall be released from the Retention Fund to the
Vendors' Solicitors on behalf of the Vendors. If such claim has
not become a Finally Determined Claim within 36 months of the
Commencement Date for any other reason an amount equivalent to
such claim and the amount previously estimated for costs shall
be released from the Retention Fund together with interest on
such sums shall be released to the Purchaser's Solicitors on
behalf of the Purchaser except where the Vendors have a BONA
FIDE defence to any such claim in which circumstance the sums
remaining in the Retention Fund shall remain so held until
such time as the claim or claims become either a Finally
Determined Claim or is/are resolved in favour of the
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Vendors. The amount equivalent to Finally Determined Claims
shall be paid to the Purchaser forthwith upon such claims
becoming Finally Determined Claims together with interest as
aforesaid and the costs awarded by the Court or other
appropriate forum to the Purchaser with the sums remaining in
the Retention Fund thereafter being paid to the Vendors.
4.8.6 For the avoidance of doubt, none of the provisions of this Clause
4.8 shall be deemed to limit or restrict the amount of any claims
which the Purchaser may have against the Vendors pursuant to the
terms of this Agreement (subject always to the remaining
provisions of this Agreement).
4.8.7 All sums released from the Retention Fund to the Purchaser or to
the Purchaser's Solicitors on behalf of the Purchaser shall
constitute a reduction in the Consideration.
4.9 The Vendors hereby grant to the Purchaser (or such other company as BARRA
may nominate) a licence to occupy the Vendor's premises in 10F Wing On
House, 71 Des Voeux Road, Central, Hong Kong, 33 West 17th Street, 4th
Floor, New York NY10011 and Level 5, 280 George Street, Sydney, NSW 2000,
Australia for a period of fourteen days from the Completion Date to enable
the Purchaser and/or such nominee to continue the Businesses at no cost to
the Purchaser and/or such nominee provided that this licence to occupy
does not (save as provided in Clause 4.10) constitute a lease of such
properties or impose any liability on the Purchaser, BARRA or such nominee.
4.10 If the Purchaser continues to occupy any of the properties referred to in
Clause 4.9 after such period of 14 days, the Purchaser undertakes to
reimburse the relevant Vendor for the cost of such occupation calculated by
reference to floor space occupied as a proportion of total floor space
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and rental cost of such property occupied by the Vendors. In any event the
occupation of such properties by the Purchaser shall cease on the date
falling 2 months after the Completion Date.
5. NO ASSUMPTION OF LIABILITIES
5.1 Subject to this Clause 5 and Clauses 11.4, 12 and 14 and except for the
Accepted Liabilities, no member of the Purchaser Group shall assume
liability for any debts, claims or liabilities incurred or intimated to any
Vendor in relation to the Businesses or the Assets and each Vendor shall at
all times indemnify and keep the Purchaser Group fully indemnified and
shall hold the Purchaser Group harmless from and against all such debts,
claims and liabilities and all costs and expenses in relation thereto.
5.2 Notwithstanding any other provision of this Agreement, the Purchaser
undertakes to indemnify and keep indemnified the Vendors from and against
the Accepted Liabilities;
5.3 Notwithstanding any other provision of this Agreement, but subject to the
Deed of Indemnity, the Purchaser and BIL undertake to indemnify and keep
indemnified the Vendors from and against all costs, claims, liabilities and
expenses incurred by the Vendors in connection with the Properties in
respect of the period after the Effective time.
6. WARRANTIES
6.1 The Vendors jointly and severally warrant to the Purchaser Group that:-
6.1.1 subject only to the matters disclosed in the Execution Disclosure
Letter, each of the Warranties (other than any warranty set out
in Part IX which is expressed to be given only at Completion) is
true and accurate as at the date of this Agreement; and
6.1.2 to the intent that the Warranties are deemed to be repeated on
the Completion Date (and the Vendors hereby agree to such
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repetition), subject only to the matters disclosed in the
Completion Disclosure Letter, each of the Warranties is true and
accurate as at the Completion Date.
6.2 The aggregate liability of the Vendors pursuant to the Warranties shall be
limited as follows:-
6.2.1 the amount of any successful claim against any Vendor under the
Warranties once settled shall be deemed to constitute a reduction
in the price payable by the Purchaser for the Businesses and the
Assets of the settled amount;
6.2.2 the aggregate liability of the Vendors under the Warranties shall
not exceed the Consideration (less for the avoidance of doubt
(i) the amount of any reduction in the purchase price pursuant to
Clause 3 and Clause 11.6 and (ii) the amount of any Finally
Determined Claims);
6.2.3 the Vendors shall have no liability under the Warranties unless
and until the aggregate liability of the Vendors thereunder
exceeds L50,000 provided that in the event that the established
amount of such claims exceeds L50,000 the Vendors shall be liable
for the whole amount of such claims and not simply the excess
over the said limit;
6.2.4 the Vendors shall not be liable under the Warranties in respect
of any single claim where the liability in respect of that claim
does not exceed L5,000 and such liability shall be disregarded
for all purposes provided that where the aggregate value of such
claims exceeds L10,000, this limitation shall have no effect;
6.2.5 no claim shall be brought by the Purchaser Group in respect of
any breach of the Warranties unless notice in writing of such
claim has been given to any Vendor not later than the expiration
of a period
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of 12 months from Completion. The Vendors shall have
no liability under such claim (save in so far as it has not been
previously satisfied, settled or withdrawn) unless court
proceedings in respect of it have commenced by being both raised
and served on any Vendor or the Vendors' Solicitors within 24
months from Completion;
6.3 The Vendors shall have no liability in respect of the Warranties to the
extent that the circumstances, facts or events giving rise to a claim
under this Agreement are disclosed in the Execution Disclosure Letter
and/or the Completion Disclosure Letter.
6.4 In the event that there is any disclosure made either in terms of Clause
4.3.11 or in terms of the Completion Disclosure Letter which in the
reasonable opinion of the Purchaser discloses any matter which is material
to the Businesses the Purchaser shall be entitled to terminate this
Agreement on or prior to the Completion Date and this Agreement shall be of
no further force and effect save in respect of any breaches of this
Agreement prior to the date of termination.
6.5 The Purchaser confirms to the Vendors that it has negotiated this Agreement
in good faith.
6.6 The Vendors shall not be liable in respect of any claim for breach of any
of the Warranties to the extent that:-
6.6.1 the Purchaser Group has received compensation for the loss being
the subject matter of the claim including any sums received from
any policy of insurance. Provided that nothing in this Agreement
shall oblige the Purchaser Group to make any claim on any policy
of insurance which would affect the costs of such insurance or
the extent or nature of cover provided to a material extent in
each case to the group of companies of which BARRA is the holding
company as a whole. Notwithstanding that the Purchaser Group may
have been compensated by insurance in respect of any
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claims the Purchaser Group shall be entitled to include in its
claim for breach of warranties the cost of any increased premiums
resulting from making the claim under the insurance; or
6.6.2 such claim arises or is increased by any failure of the Purchaser
Group to mitigate any loss which gives rise to such claim in
accordance with Clause 6.10.
6.7 The Vendors shall not be liable in respect of any claim for breach of any
of the Warranties if, and to the extent that, a provision or liability in
respect of the specific matter giving rise to such claim has been fully
disclosed and identified in the Completion Balance Sheet and/or listed as
an Accepted Liability.
6.8 The Purchaser shall in respect of any breach of the Warranties give
notice in writing of such claim (including reasonable details of each
event, matter or default which give rise to the claim, the breach that
results and, if possible, an estimate of the amount claimed) to any
Vendor or the Vendor's solicitors.
6.9 The Purchaser admits and acknowledges that it has not entered into this
Agreement in reliance upon any warranties, representations, covenants,
undertakings, indemnities or other statements whatsoever other than those
expressly set out in this Agreement and the Purchaser acknowledges that
the Vendors have not given any such warranties, representations,
covenants, undertakings, indemnities or other statements.
6.10 The Purchaser undertakes to use all reasonable endeavours to mitigate its
loss in respect of any breach by the Vendors of any of the Warranties and
the terms of Clauses 10.1 and 13.5.
6.11 Save as expressly provided in this Agreement, the Purchaser shall not be
entitled to exercise any right of retention and any sum or amount
payable to the Vendors (or any of them) pursuant to this Agreement shall
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be paid by the Purchaser on the due date to the Vendors in full without
any retention.
6.12 The Vendors shall not be liable in respect of any claim for breach of any
of the Warranties if, and to the extent that, such claim would not have
arisen but for, or is increased by, any act after Completion carried out
or occurring at the instance of or with the written consent of the
Purchaser or any company controlled by the Purchaser or by any person or
persons controlling the Purchaser which is outwith the ordinary course of
the Businesses (as the same were carried on prior to the date of signing
of this Agreement) unless such acts are in implement of any existing
contractual obligation or commitment assumed by the Purchaser pursuant to
the terms of this Agreement.
6.13 The Vendors shall not be liable in respect of any claim for breach of any
of the Warranties where the liability which is the subject matter of such
claim is contingent only, unless and until such contingent liability
becomes an actual liability which for the avoidance of doubt may be when
such a claim becomes a Finally Determined Claim.
7. ACCESS TO INFORMATION
7.1 If and when reasonably requested by the Purchaser the Vendors shall allow
access after Completion to the Purchaser and its duly authorised
representatives at all reasonable times upon reasonable prior notice to
all such books, documents and information not delivered to the Purchaser
under this Agreement and to the Vendors' directors and the Vendors will
procure access for the Purchaser to the Vendors' advisers at reasonable
times and upon reasonable prior notice, all as the Purchaser may
reasonably require in relation to the Businesses and the Assets and/or
the Transferred Employees and/or any matter connected therewith
including, for the avoidance of doubt, the Retained Records, and afford
the
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Purchaser and its duly authorised representatives the opportunity to
take, at the Purchaser's expense, copies thereof, or extracts therefrom.
7.2 The Purchaser shall allow the Vendors access after Completion to the
Records, and the Vendors shall, at their own cost, be entitled to take
copies of any Records, but only so far as necessary to allow the Vendors
to comply with their respective statutory obligations in relation to the
preparation of (a) appropriate Corporation tax returns in respect of the
financial year to 31st March 1998, (b) VAT returns (or their equivalent
outwith the UK) and (c) statutory accounts in respect of the financial
year to 31st March 1998. Provided that the Vendors undertake to the
Purchaser Group (in so far as they are able, having regard to their
statutory disclosure obligations) to keep confidential and the Vendors
shall procure that all their advisers who have access to any information
gained pursuant to this Clause 7.2 shall keep confidential such
information gained pursuant to this Clause 7.2.
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8. THE DEBTS AND CREDITORS
8.1 With effect from the Completion Date, the Vendors shall hold the Debts in
trust for the Purchaser. During the period of 120 days from the
Completion Date ("the Relevant Period"):-
8.1.1 the Purchaser shall be appointed as agent for the Vendor and
shall use all reasonable commercial endeavours (which shall
include the periodical circulation of demand letters in
accordance with good credit control practice) to collect the
Debts substantially in accordance with the Purchaser's debt
collection procedures and practices. Any payment received from a
debtor which is not allocated to a particular debt shall be
allocated first to the earliest outstanding Debt of that debtor.
The Purchaser shall be entitled to retain for its own benefit the
proceeds of any of the Debts collected by it;
8.1.2 the Purchaser shall within thirty days of the end of this period
supply to the Vendors a statement in writing of the amount of the
Debts remaining uncollected by the Purchaser. The Vendors'
Accountants shall be given reasonable access to the Purchaser's
records of the Business for the purposes of ensuring that the
provisions of this Clause have been observed and of verifying the
statement;
8.1.3 if at the end of this period any of the Debts have not been
collected by the Purchaser (and the Purchaser has complied with
it obligations under Clause 8.1.1), the Vendors jointly and
severally undertake to pay to the Purchaser within 14 days after
delivery of the statement referred to in Clause 8.1.2 a cash sum
by way of
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electronic funds transfer equal to the nominal value of
the Debts not so collected ("the Remaining Debts");
8.1.4 subject to compliance by the Vendors with sub-clause 8.1.3, the
Vendors shall thereafter be entitled to collect the Remaining
Debts provided that the Vendors will not institute any
proceedings to collect such Debts without the prior written
consent of the Purchaser, which consent will not be unreasonably
withheld;
8.2 Each Vendor acknowledges that the Purchaser will continue to trade with
the Vendors' creditors, and undertakes to the Purchaser to apply the cash
resources resulting from the sale hereunder in the following order (save
where any Vendor validly disputes any such amounts):-
8.2.1 first, immediately such creditors fall due for payment, to
secured creditors and to preferential creditors (within the
meaning of Section 386 of and Schedule 6 to the Insolvency Act
1986) (including all amounts due to employees);
8.2.2 second, within 75 days of Completion or, if earlier, as soon as
they fall due in settlement of the liabilities to other
creditors.
8.3 If any Vendor receives from any person who is also a debtor of the
Purchaser any amounts which ought to have been paid or were intended to
be paid to the Purchaser, such Vendor shall immediately account to the
Purchaser in respect of such sum.
9. POST-COMPLETION UNDERTAKING
9.1 Each of the Covenantors undertakes to the Purchaser Group that:-
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9.1.1 he/it will not during the Restricted Period and within the
Prohibited Area either solely or jointly or in partnership or
association with or as a director, agent, consultant or
representative of or for any other person, firm or company carry
on any business competing directly or indirectly with the
Businesses, provided that nothing contained in this
Clause 9.1.1 shall preclude any Vendor from holding any shares or
loan capital comprising less than 5% of the class concerned then
in issue in any company competing with the Businesses whose shares
are listed or dealt in on a recognised investment exchange;
9.1.2 he/it will not during the Restricted Period and within the
Prohibited Area directly or indirectly knowingly canvass, solicit
or interfere with or endeavour to canvass, solicit or interfere
with, either on its own behalf or for any other person, firm,
company or other undertaking competing with the Businesses the
custom of any person, firm, company or other undertaking in
competition with any of the Businesses who at any time during the
period of twelve months prior to the Completion Date was a
customer of, or in the habit of dealing with, the Businesses;
9.1.3 he/it will not during the Restricted Period directly or
indirectly disrupt or attempt to disrupt any supply of any
products or services (including the supply of information and
data) to the Purchaser for the purposes of any of the Businesses;
9.1.4 he/it will not during the Restricted Period either on its or his
own behalf or for any other person, firm, company or other
undertaking directly or indirectly solicit or endeavour to entice
away from the Businesses any Transferred Employee;
9.1.5 he/it will not following the Completion Date, directly or
indirectly, divulge or make use of any Confidential Information
(and will use
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reasonable endeavours to procure that such Confidential
Information is not used or disclosed in any way), unless ordered
to do so by a court of competent jurisdiction or proper
regulatory authority;
9.1.6 he/it shall not following the Completion Date represent
himself/itself as being in any way connected with the Businesses;
and
9.1.7 he/it will not at any time after the Completion Date carry on any
business under any of the Names or any name similar thereto.
9.1.8 he/it will procure that UK will remain in existence as a legal
entity capable of performing its obligations in terms of this
Agreement until at least the First Retention Release Date and
Asia will remain in existence as a legal entity capable of
performing its obligations in terms of this Agreement until the
date which is at least 60 days after the Effective Time;
9.2 Each Covenantor shall promptly refer to the Purchaser all enquiries
relating to the Businesses and assign to the Purchaser (or such member of
the Purchaser Group as the Purchaser shall nominate) all orders relating
to the Businesses, including enquiries or orders for any stocks, books,
data and other products sold in connection with the Businesses, which any
Vendor may in future receive.
9.3 It is agreed that, whilst the restrictions set out in Clause 9.1 are
considered by the parties to be fair and reasonable, having regard in
particular to first, the necessity to protect the Goodwill, secrets and
customer connections of the Businesses and secondly, to the amount of the
consideration payable by the Purchaser pursuant to this Agreement, if it
should be found that any of such restrictions is void for any reason and
if by altering or deleting part of the wording or substituting shorter
periods of time or a different geographical limit or more restricted
ranges of activities
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it would not be void then there shall be made such alteration or deletion
or be substituted such less extensive periods and/or limit and/or
activities as shall render the relevant restriction valid and enforceable.
9.4 Each Vendor will render to the Purchaser Group such assistance, at the
expense of the Purchaser Group, as the Purchaser Group may reasonably
require to establish:-
9.4.1 that such restrictions are such as to come within section 21(2),
Restrictive Trade Practices Act 1976; and
9.4.2 to the Restrictive Practices Court that such restrictions are in
the public interest and valid.
10. TRANSITIONAL PROVISIONS
10.1 Having regard always to the Purchaser's duty to mitigate its loss
pursuant to Clause 6.10, if after Completion any claim or dispute arises
relating to matters pertaining to a period prior to Completion with any
person arising in connection with the Businesses or any of the Assets,
such claim or dispute shall be referred to the Purchaser for resolution
in such manner as may be determined by the Purchaser in consultation with
the Vendors (both parties acting reasonably). Each of the Purchaser and
the Vendors hereby agrees to take all action reasonably requested of it
by the other to secure the smooth transition of the Businesses and the
Assets from the Vendors to the Purchaser Group and the smooth and timeous
implementation of all other aspects of the transaction regulated by this
Agreement.
10.2 On or as soon as is practicable after Completion the Vendors will if so
requested by the Purchaser and jointly with the Purchaser arrange for the
despatch at the Purchaser's cost to all or any past and present customers
of the Businesses selected by the Purchaser of a circular in the agreed
terms announcing the sale by it of the Businesses and introducing the
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Purchaser as its successor and the Vendors shall take all such other
steps as the Purchaser may require (at the Purchaser's cost) in order
that the Purchaser may obtain the full benefit of the goodwill of the
Businesses.
10.3 Subject to the provisions of this Clause, UK hereby undertakes to
continue, for a period of up to 6 months after the Completion Date to
publish and issue (for the purposes of the Financial Services Act 1986)
to the Purchaser free of charge in respect of such publication but
without prejudice to the remaining provisions of this Clause, for
distribution by the Purchaser the publications known as "The Inside
Track" and "Equity Selector" ("the Investment Publications") in the same
manner in which it has published them prior to the Effective Time. The
Purchaser undertakes to make available to UK the staff and all other
support necessary to enable UK to perform its obligations in terms of
this Clause. UK and the Purchaser agree that all revenues from
publication of the Investment Publications shall be the property of the
Purchaser. UK shall account to the Purchaser in respect of any of such
revenues received by it (although it is agreed that the Purchaser will
invoice the same to subscribers). The Purchaser hereby undertakes to
indemnify and keep indemnified, UK from and against (a) all costs
reasonably incurred by it in connection with the issue of the Investment
Publications pursuant to the arrangements set out in this Clause after
the Effective Time and (b) all costs, claims, losses and expenses of
whatsoever nature and howsoever arising after the Effective Time which
may be incurred by UK as a result of any claim made against it by any
person which relates to the Investment Publications (or either of them),
or the contents thereof. The arrangements contained in this Clause shall
continue until such time as the Purchaser or any company nominated by it
has been admitted to membership of the Personal Investment Authority or
any successor body or other appropriate regulatory body in terms of the
Financial Services Act 1986, or until the date falling six months after
the Completion Date, whichever is first to occur.
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10.4 With effect from the date hereof the Vendors shall use all reasonable
endeavours to procure that the lease of the property at 14 Mohamed Sultan
Road, #03-01 Singapore 238963 is assigned, novated or sub-let to the
relevant Transferred Employee presently occupying such property
11. CONTRACTS
11.1 The Vendors and the Purchaser agree the following in relation to the
Contracts:-
11.1.1 The Vendors and the Purchaser shall use their respective
reasonable endeavours to obtain the consent of any third party
whose consent is required to any assignation or novation of any
Contract (other than the Customer Contracts and any of the
Contracts which have already been assigned or novated to the
Purchaser to the Purchaser's satisfaction) after Completion and
the Vendors and the Purchaser shall, subject to such consent,
effect or join in such an assignation or novation. In so far as
(a) the benefit or burden of any of the Contracts (other than the
Customer Contracts) cannot be effectively assigned to the
Purchaser except by an agreement of or novation with, or consent
or agreement to the assignation or novation from any person, firm
or company, unless and until the relevant Contract shall be
novated or assigned as aforesaid or (b) any Contract shall prove
incapable of assignation or novation, each Vendor shall hold the
benefit of the same in trust for the Purchaser and each Vendor
agrees that the Purchaser shall carry out such Contract as
sub-contractor of such Vendor on the same terms and conditions as
apply to the Contract in question and shall be entitled to
invoice and receive payment from the other party to the Contract
directly to the intent that the Vendor should receive no payment
in respect of the Contract in question in relation to the period
following Completion;
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11.1.2 In relation to the Customer Contracts, each Vendor shall hold the
benefit of the same in trust for the Purchaser and each Vendor
agrees that the Purchaser shall carry out such Customer Contract
as sub-contractor of such Vendor on the same terms and conditions
as apply to the Customer Contract in question and shall be
entitled to invoice and receive payment from the other party to
the Customer Contract directly to the intent that during the
period subsequent to Completion the Vendor should receive no
payment in respect of the Customer Contract in question in
relation to the period following Completion;
11.1.3 Without prejudice to Clause 11.4, the Purchaser shall indemnify
and keep indemnified each Vendor against all losses, claims,
costs, damages, expenses and liabilities whatsoever and howsoever
arising after Completion in relation to the acts or omissions of
the Purchaser as sub-contractor of a Vendor under Clauses 11.1.1
and 11.1.2. Each Vendor will, at the Purchaser's request, give
to the Purchaser such assistance as the Purchaser may reasonably
require to enable it to enforce any Contract against the other
party to such Contract;
11.2 Each Vendor undertakes to remit within 7 days of receipt to the Purchaser
any sums it may receive which, in terms of Clause 11.1, should have been
received by the Purchaser and to indemnify the Purchaser in respect of
any loss, claim, cost, charge or liability which it may incur as a result
of the Vendor not complying with the terms of Clause 11.1;
11.3 Each Vendor and the Purchaser shall, if the Purchaser so elects, as soon
as practicable after the Completion Date send a notice to each of the
other parties to the Contracts advising them that the benefit of the
Contracts is vested in the Purchaser.
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11.4 Notwithstanding any other provision of this Agreement, the Purchaser
undertakes to indemnify and keep indemnified the Vendors against any
cost, claim or liability incurred by any of the Vendors arising out of or
in relation to the Contracts, where such cost, claim or liability has
arisen during, or is referable to, the period after the Effective Time
provided that the Purchaser's indemnity in terms of this Clause shall not
apply to the extent that any cost, claim or liability is incurred by any
of the Vendors as a result of or in connection with:-
11.4.1 any act or omission of any of the Vendors in relation to the
performance of the Contracts prior to the Effective Time;
11.4.2 any breach or failure to perform by any of the Vendors any of the
terms of the Contracts in the period up to Completion or in
respect of the period after Completion if it ought to have been
foreseeable by the Vendors that any of such Contracts would not
be capable of being performed following Completion;
11.4.3 any matter which is a breach by any of the Vendors of any of the
warranties set out in paragraph 13 of Part IX of the Schedule.
11.5 The Vendors hereby jointly and severally undertake to indemnify and keep
indemnified the Purchaser from and against all losses, claims, costs,
damages, expenses and liabilities whatsoever and howsoever arising or
referable to the period up to the Effective Time in relation to the
Contracts or any of them.
11.6
11.6.1 Subject to the provisions of this Clause 11.6, in the event that,
subsequent to Completion, the Purchaser enters into contracts or
arrangements in connection with the Businesses (each such
contract or arrangement being hereinafter referred to in this
Clause 11.6 as a "New Contract") with (a) Reuters Limited
("Reuters") (or any of its associated companies) which is
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equivalent in nature to the arrangements currently in existence
between Reuters and UK under or pursuant to the Existing Reuters
Agreement (and any agreement entered into whereby Reuters or any
of its associated companies is provided with data equivalent in
nature to data provided under the arrangements currently in
existence and any additional data items (including full broker
data) shall be deemed to be an agreement which is equivalent in
nature to such arrangements currently in existence) and/or (b)
any of the parties listed in Clause 2.2 of the Existing Reuters
Agreement where such contract is of the type prohibited by Clause
2.2 of the Existing Reuters Agreement:-
11.6.1.1. (a) on the date which is the earlier to occur of (1)
the entering into of a New Contract or New
Contracts, the revenue from which, on the
application of the following formula is sufficient
to result in the Purchaser's Release (as
hereinafter referred to) being zero and (2) 31st
March 1998 (such date being referred to as "the
Calculation Date") an amount (if any) (to be known
as the "Purchaser's Release") shall be calculated
by reference to the following formula, and the
Purchaser's Release together with interest accrued
thereon, shall be released from the Retention Fund
to the Purchaser's Solicitors on behalf of the
Purchaser (provided that for the avoidance of
doubt and notwithstanding the calculation, the
Purchaser's Release shall not be less than zero):-
the Purchaser's Release =
(1.94 x (245,000 - A)) - (B x C) + D
-----
365
where: A equals the aggregate of (i) the
aggregate amount of revenue ("the Fixed
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Amount") expressly contracted for to be
received by the Purchaser in respect of any
New Contract during the period of 12 months
commencing on the date on which such New
Contract commenced and (ii) the aggregate
amount of revenue ("the Estimated Amount")
which the Purchaser can reasonably expect to
receive in respect of each such New Contract
in excess of the appropriate proportion of
the Fixed Amount attributable to such New
Contract during the period of 12 months
commencing on the date on which such New
Contract commenced, which Estimated Amount in
respect of such New Contract will be as
agreed between the Purchaser and the Vendors'
Representative (both parties acting
reasonably in relation to such agreement)
provided that in the event that the Purchaser
and the Vendors' Representative are unable to
agree the appropriate proportion of the
Estimated Amount attributable to any such New
Contract, the Purchaser's Release shall be
calculated on the basis of the Fixed Amount
and such proportion of the Estimated Amount
which has been agreed and the provisions of
paragraph 11.6.1.1 (b) shall thereafter
apply;
B equals the amount of revenue earned under
Generally Accepted Accounting Principles by
the Vendors and by the Purchaser in respect
of the Existing Reuters Agreement during the
period of 12 months ending on the earlier of
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(a) the date on which a new agreement is
entered into with Reuters or any of its
associated companies which is a New Contract
and (b) 13th March 1998 or the sum of
L245,000, whichever is the lesser amount;
C equals the number of days which elapse
between the Completion Date and the
Calculation Date; and
D equals the cost to the Purchaser which is
directly attributable to replacing the data
which is provided to the Vendors pursuant to
the Existing Reuters Agreement.
11.6.1.1 (b) In the event that the Purchaser and the Vendors'
Representative are unable to agree any proportion of
the Estimated Amount as set out in paragraph (a) above,
on the First Retention Release Date the formula
applicable to the Purchaser's Release shall be applied
with the intent that A equals the aggregate of the
actual amount of revenue received by the Purchaser in
respect of any New Contract during the period from the
date on which such New Contract commenced until the
First Retention Release Date, provided that (i) in the
event that the period from the date on which such New
Contract commenced to the First Retention Release Date
exceeds 12 months the applicable figure for such New
Contract shall be the amount of revenue received during
the first 12 months following the date on which such
New Contract commenced and (ii) in
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the event that the period from the date on which such New
Contract commenced to the First Retention Release Date is
less than 12 months the applicable figure for such New
Contract shall be the aggregate of (1) the amount of
revenue received during such period (after deduction of
the appropriate proportion of the Fixed Amount
attributable to such New Contract for such period)
grossed up on a pro rata basis so as to represent a
figure for the 12 month period from the date on which
such New Contract commenced and (2) the appropriate
proportion of the Fixed Amount attributable to such New
Contract. As soon as the foregoing calculation has been
carried out the resultant figure shall be deducted from
the amount of the Purchaser's Release as calculated in
accordance with Clause 11.6.1.1(a) and the balance shall
be paid as soon as practicable by the Purchaser to the
Vendors' Solicitors together with interest on such sum,
at the rate which would have accrued on such sum had it
been retained in the Retention Fund, until paid.
11.6.2 In the event that no New Contract is entered into on or before
31st March 1998 ("the End Date"), on 1st April 1998 or as soon as
practicable thereafter an amount (if any) (to be known as the
"End Release") shall be calculated by reference to the following
formula, and the End Release together with interest accrued
thereon, shall be released from the Retention Fund to the
Purchaser's Solicitors on behalf of the Purchaser (provided that
for the avoidance of doubt and notwithstanding the calculation,
the End Release shall never be less than zero):-
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the End Release = (1.94 x 245,000) - (B x C) + D
-----
365
where: B equals the amount of revenue earned under Generally
Accepted Accounting Practice by the Vendors and by the
Purchaser in respect of the Existing Reuters Agreement
during the period of 12 months ending on the End Date, or the
sum of L245,000, whichever is the lesser amount;
C equals the number of days which elapse between the
Completion Date and the End Date; and
D has the same meaning as in Clause 11.6.1.
11.6.3 The Purchaser undertakes to the Vendors that it shall use all
reasonable commercial endeavours, and shall act in good faith
with a view to agreeing and entering into a New Contract on arms'
length terms, the terms of which are (specifically in relation to
the amount of revenue payable to the Purchaser, or any of its
associated companies, in connection therewith) no less favourable
than the terms of the Existing Reuters Agreement, provided that
the Purchaser shall not be obliged to enter into any New Contract
which after such negotiations is offered on terms which would
result either in the Intellectual Property rights of the
Purchaser in any data being diminished (save through the grant
by the Purchaser of a non-exclusive licence of data) or in the
Purchaser accepting obligations (including indemnity obligations)
which are more onerous than those currently accepted by BARRA
generally in connection with similar contracts in its business.
11.6.4 The Purchaser agrees and undertakes that if any associated
company of the Purchaser enters into a contract which is a New
Contract on or before 31st March 1998 the Purchaser shall notify
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the Vendors' Representative forthwith and such contract shall be
deemed to be a New Contract for the purposes of the calculations
to be made pursuant in Clause 11.6.1.
11.7.1 The Purchaser undertakes to the Vendors that it shall use all
reasonable commercial endeavours, and shall negotiate in good
faith with the other party to each of the Third Party
Distribution Agreements (other than the Existing Reuters
Agreement), with a view to completing the assignation or, if
relevant, the novation in favour of the Purchaser (or any of its
associated companies) of each of the Third Party Distribution
Agreements on or before the Assignation Date.
11.7.2 in the event that any of the Third Party Distribution Agreements
have not been assigned or novated in favour of the Purchaser,
otherwise than as a result of the Purchaser's failure to comply
with its obligations pursuant to clause 11.7.1 on or prior to the
Assignation Date (any such Third Party Distribution Agreement
being hereinafter referred to in this Clause 11.7.2 as an
"Outstanding Contract"), as soon as practicably possible
thereafter an amount calculated by reference to the following
formula (subject to a maximum aggregate amount of L40,000)
together with interest accrued thereon, shall be released from
the Retention Fund to the Purchaser's Solicitors on behalf of the
Purchaser:-
(1.94 x A) - B
where: A equals the sum of the amounts set out in Part II C of
the Schedule opposite the details of the Outstanding Contracts;
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B equals the aggregate amount of revenue actually received by the
Purchaser in respect of the Outstanding Contracts during the
period after Completion up to (and including) the Assignation
Date;
11.7.3 In the event that any of the Third Party Distribution Agreements
have not been assigned or novated in favour of the Purchaser
prior to the Assignation Date as a result of the Purchaser's
failure to comply with its obligations pursuant to Clause 11.7.1
(any such Third Party Distribution Agreement being hereinafter
referred to in this Clause 11.7.3 as an "Exempt Contract"), the
provisions of Clauses 11.7.2 shall have effect, save that the
amount set out in Part II C of the Schedule opposite the name of
any Exempt Contract shall be excluded from the calculation of
"A", for the purposes of the formula set out in Clause 11.7.2.
11.8 Each of the Vendors and the Purchaser shall give to the other full access
to all of their/its working papers, books and records to enable the other
to verify any amounts to be included in any of the formulae set out in
Clauses 11.6 and 11.7. In addition, the Vendors and the Purchaser
undertake to act in good faith with a view to agreeing any sums to be
released from the Retention Fund (or as they may otherwise direct)
pursuant to Clause 11.6 and/or Clause 11.7.
12. APPORTIONMENT AND ACCEPTED LIABILITIES
12.1 All amounts payable or receivable in respect of the Businesses and the
Assets in respect of rates, rent, gas, water, electricity and telephone
charges shall, unless otherwise agreed, be apportioned between the
Vendors and the Purchaser as at the Effective Time on a day-to-day basis
or, in relation to amounts which are specifically referable to the extent
of use of any property, services or rights, according to the extent of
such use.
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12.2 The settlement of all amounts owing by any Vendor to the Purchaser and
vice versa under Clause 12.1 shall be settled in cash between the parties
as soon as practicably possible after, and in any event within 15
Business Days of, the Completion Date.
12.3 Where any amounts fall to be apportioned under this Agreement, each
Vendor and the Purchaser shall provide each other with full details of
the apportionments, together with supporting vouchers or similar
documentation, and in the absence of dispute the appropriate payment
shall be made by or to the Vendors forthwith. If the amount of any
apportionment is in dispute, the provisions of the Disputes Clause shall
apply for resolving the dispute and the amount determined in accordance
with that clause shall be paid within 14 days of the determination,
together with interest calculated on a daily basis (as well after as
before judgement, from the Completion Date until the date of actual
payment, at the rate of four per cent per annum above the base rate from
time to time of the Clydesdale Bank plc). The Vendors and the Purchaser
agree that a certificate signed by an authorised official of the
Clydesdale Bank plc shall be sufficient, in the absence of manifest
error, to fix and ascertain conclusively the base rate of the Clydesdale
Bank plc from time to time prevailing.
12.4 Cash received by the Vendors related to the Advance Receipts shall belong
to the Vendors and shall not be apportioned in accordance with the terms
of Clause 12.1;
12.5 The Accepted Liabilities are the liability of the Purchaser and shall not
be apportioned in accordance with the terms of Clause 12.1;
12.6 The Accepted Liabilities shall be (i) the Signing Liabilities save in so
far as the same may have been discharged prior to Completion and (ii) the
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Additional Liabilities. The Additional Liabilities shall be such
additional liabilities of the Vendors in connection with the Businesses
as the Vendors incur in the ordinary course of business of the Businesses
in the period between the date of calculation of the Signing Liabilities
and the Effective Time provided that to the extent that the Accepted
Liabilities and Unearned Revenue at the Effective Time together exceed
L2,900,000 the Purchaser shall not accept liability therefor. The
amount of the Accepted Liabilities and Unearned Revenue at the Effective
Time shall be included in the Completion Balance Sheet.
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<PAGE>
13. CREDITORS AND LIABILITIES
13.1 Except for the Accepted Liabilities, nothing in this agreement shall make
the Purchaser liable in respect of anything done or omitted to be done
prior to the Effective Time by any Vendor and the Vendors shall jointly
and severally indemnify the Purchaser in respect of any liability (which
liability shall include, without limitation, all losses, costs, claims,
expenses, damages, legal and other professional fees and expenses on a
solicitor and own client basis) which it may incur as a result of
anything so done or omitted to be done;
13.2 The Vendors shall promptly discharge the Creditors and notwithstanding
completion of the purchase of the Businesses shall be responsible for all
debts payable by and claims outstanding against it at the Effective Time
including all wages, sums payable under taxation statutes, rent and other
expenses (but excluding the Accepted Liabilities).
13.3 In addition to Clause 13.2:-
13.3.1 the Vendors shall remain liable for claims by third parties in
respect of any service supplied by any Vendor or any act or
omission of any Vendor prior to the Effective Time or arising
from defective products or parts of products produced by any
Vendor, even if the defective products or parts were sold by the
Purchaser;
13.3.2 upon becoming aware of any such claim the Vendors will promptly
give notice of it to the Purchaser and shall not take any steps
which might reasonably be expected to damage the commercial
interests of the Purchaser without prior consultation with the
Purchaser;
13.3.3 the Vendors shall indemnify the Purchaser against claims by third
parties ("Defect Claims") arising from defective products which
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may be brought against the Purchaser which relate to the products
supplied by the Vendors prior to the Effective Time
13.3.4 the Vendors shall indemnify the Purchaser against claims by third
parties in respect of the cancellation or termination (other than
a cancellation pursuant to a subscriber's right to cancel a new
subscription for TED in book format within 21 days of receiving
the first edition delivered pursuant to such new subscription) of
any of the Contracts within the terms of such Contracts where
such right of cancellation or termination arises otherwise than
as a result of any act or omission of any member of the Purchaser
Group after the Effective Time including without limitation the
refund of any monies paid to any of the Vendors in connection
with such Contracts.
provided that the Vendors' liability in respect of any claims by third
parties in terms of Clause 13.3.1 and in respect of any such Defects
Claim in terms of Clause 13.3.3 shall be reduced to the extent that UK
would have had a valid claim against BARRA in respect of the subject
matter of such claim or Defects Claim under the agreement between UK and
BARRA dated 18th January 1995 but for the assignation of such agreement
to the Purchaser pursuant to this Agreement.
13.4 The liability of the Vendors under Clause 13.3.1 shall extend to any
settlement of a claim (including costs) made with the approval of the
Vendors;
13.5 Subject to the obligation of the Purchaser to mitigate its loss pursuant
to Clause 6.10 if the Purchaser considers that it is desirable to take
preventative action with a view to avoiding claims under Clause 13.3.1
the Vendors shall bear the reasonable incurred cost of that action;
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13.6 The Purchaser shall be entitled to perform the obligations of the Vendors
to meet warranty or other claims of customers arising as a result of
transactions carried out by the Vendors prior to the Effective Time,
insofar as the same are required by the Vendors' standard conditions of
sale, copies of which have been produced to the Purchaser. The Vendors
shall reimburse to the Purchaser on a monthly basis the direct costs
incurred by the Purchaser in carrying out its obligations under this
sub clause provided that the Vendors' liability in terms of this Clause
in respect of any such Defects Claim shall be reduced to the extent
that UK would have had a valid claim against BARRA in respect of the
subject matter of such Defects Claim under the agreement between UK and
BARRA dated 18th January 1995 but for the assignation of such agreement to
the Purchaser pursuant to this Agreement;
14. EMPLOYEES
14.1 UK EMPLOYEES
14.1.1 The Vendors and the Purchaser acknowledge and agree that,
pursuant to the Regulations, the contracts of employment between
each Vendor and the UK Employees (save insofar as such contracts
relate to any occupational pension scheme) will have effect after
the Effective Time as if originally made between the Purchaser
and the respective UK Employee and that the purchase of the UK
Business and the Assets in the United Kingdom is governed by the
Regulations.
14.1.2 The Vendors and the Purchaser acknowledge and agree that pursuant
to the Regulations, the Vendors shall as may be required by
regulation 10 of the Regulations inform and consult with the
trade union and/or other elected representatives of the UK
Employees long enough before the Effective Time, in compliance
with its obligations under the said regulation and the Purchaser
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shall promptly provide to the Vendors in writing and the Vendors
shall promptly provide to the Purchaser in writing such
information as shall enable the other to carry out its duties
under said regulation and each party shall enable the other to
carry out its duties under said regulation and each party
undertakes to the other to comply with its obligations under the
said regulation and the Vendors shall jointly and severally
indemnify and keep indemnified the Purchaser Group on demand by
the Purchaser Group against all costs, claims, protective awards
(other than any protective award made against the Purchaser
Group) made under regulation 11 of the Regulations, damages,
expenses, legal fees on a solicitor and own client basis or any
liabilities whatsoever and howsoever arising incurred or suffered
by the Purchaser Group by reason of any failure of the Vendors to
comply with its obligations under said regulation 10 (otherwise
than as a result of any act or omission by the Purchaser Group).
14.1.3 Upon or as soon as practicable after the Effective Time the
Vendors and the Purchaser shall jointly communicate to the UK
Employees a notice (in a form approved by the Vendors'
Representative and the Purchaser) to the effect that their
contracts of employment will take effect after the Effective Time
as specified in Clause 14.1.1.
14.2 TRANSFER NOTICE AND HK EMPLOYEES
14.2.1 As soon as practicable hereafter the parties will co-operate to
publish, in accordance with the provisions of the Transfer of
Businesses (Protection of Creditors) Ordinance (Cap 49 of the
laws of Hong Kong), a notice in the agreed form. The costs of
publishing this notice are to be borne equally by the parties.
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14.2.2 BIL shall offer employment to the HK Employees with effect from
the Effective Time on terms no less favourable than those on
which the HK Employees are employed by Asia immediately prior to
such time as such terms have been disclosed to the Purchaser by
the Vendors. Asia shall procure that any such offer which has
not been accepted by an HK Employee within seven working days of
the date of the offer shall be deemed to have lapsed.
14.2.3 Not less than seven days prior to the Completion Date Asia shall
give notice to the HK Employees (such notices to be in the agreed
terms) terminating their employment with effect from the
Effective Time and at the same time BIL shall give notice (such
notice to be in the agreed terms) to such HK Employees offering
them re-employment with BIL with effect from the Effective Time.
14.2.4 The Vendors shall co-operate with BIL in endeavouring to
encourage the HK Employees to take up employment with BIL in
accordance with such offers of re-employment.
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14.3 USAV EMPLOYEES
14.3.1 Prior to the Effective Time, USAV shall give notice to the USAV
Employees (such notices to be in the agreed terms) terminating
their employment as of the Effective Time and at the same time
BARRA shall give notice (such notice to be in the agreed terms)
to the USAV Employees offering them re-employment with BARRA with
effect from the Effective Time.
14.3.2 BARRA shall offer employment to the USAV Employees with effect
from the Effective Time on terms no less favourable than those on
which the USAV Employees are employed by USAV immediately prior
to such time, as such terms have been disclosed to the Purchaser
by the Vendors.
14.3.3 The Vendors shall co-operate with BARRA in endeavouring to
encourage the USAV Employees to take up employment with BARRA in
accordance with such offers of re-employment, including entering
into such employment agreements as may be requested by BARRA.
14.4 JAPAN EMPLOYEES
14.4.1 BIJ shall offer employment to the Japan Employee with effect from
the Effective Time on terms no less favourable than those on
which the Japan Employee is employed by Asia immediately prior to
such time as such terms have been disclosed to the Purchaser by
the Vendors.
14.4.2 Not less than seven days prior to the Completion Date Asia
shall give notice to the Japan Employee (such notice to be in the
agreed terms) terminating his employment with effect from the
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Effective Time and at the same time BIJ shall give notice (such
notice to be in the agreed terms) to such Japan Employee offering
him re-employment with BIJ with effect from the Effective Time.
14.4.3 The Vendors shall co-operate with BIJ in endeavouring to
encourage the Japan Employee to take up employment with BIJ in
accordance with such offer of re-employment.
14.5 SINGAPORE EMPLOYEES
14.5.1 BIL shall offer employment to the Singapore Employees with
effect from the Effective Time on terms no less favourable than
those on which the Singapore Employees are employed by Asia
immediately prior to such time.
14.5.2 Not less than seven days prior to the Completion Date Asia and
BIL shall jointly give to each of the Singapore Employees notice
of the transfer of the Businesses to the Purchaser and
terminating their employment (such notice to be in the agreed
terms) BIL shall offer employment to all the Singapore Employees
(such notices to be in the agreed terms).
14.5.3 The Vendors shall co-operate with BIL in endeavouring to
encourage the Singapore Employees to take up employment with BIL
in accordance with such offers of re-employment.
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14.5.3. It is acknowledged and agreed by the Purchaser and BIL that after
the date hereof and prior to the Effective Time, the remuneration
of Jeremy Slade, one of the Singapore Employees, shall be
increased by an amount sufficient to compensate him for the loss
of the benefit in kind provided by Asia in the form of the
provision of accommodation at 14 Mohamed Sultan Road, #03-01
Singapore, 238963.
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14.6 AUSTRALIA EMPLOYEES
14.6.1 BIL shall offer employment to the Australia employees with effect
from the Effective Time on terms no less favourable than those on
which the Australia Employees are employed by Asia immediately
prior to such time;
14.6.2 Not less than seven days prior to the Completion Date Asia shall
give notice to the Australia Employees (such notice to be in the
agreed terms) terminating their employment with effect from the
Effective Time and at the same time BIL shall give notice (such
notice to be in the agreed terms) to such Australia Employees
offering them re-employment with BIL with effect from the
Effective Time;
14.6.3 Asia shall co-operate with BIL in endeavouring to encourage the
Australia Employees to take up employment with BIL in accordance
with such offer of re-employment.
14.7 ALL TRANSFERRED EMPLOYEES
14.7.1 The Vendors jointly and severally undertake to procure that all
wages and salaries together with relevant pension contributions,
bonus payments (so far as the same are capable of being
apportioned as at the Effective Time), tax, national insurance
payments, and accrued holiday pay in respect of the Transferred
Employees shall be (save for holiday pay which shall be included
in the Completion Balance Sheet) apportioned between the Vendors
and the members of the Purchaser Group which are to become the
employers of the Transferred Employees or any of them as at the
Effective Time and discharged by the Vendors in respect of the
period ended on the Effective Time.
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14.7.2 Without prejudice to the generality of the indemnity contained in
Clause 14.1.2, the Vendors shall jointly and severally indemnify
and keep indemnified the Purchaser on demand by the Purchaser
Group against all costs, claims, damages, expenses, legal fees
(on a solicitor and own client basis) or any liabilities
whatsoever and howsoever arising, incurred or suffered by the
Purchaser Group by reason of or in relation to:-
(a) the termination by any Vendor before the Effective Time of
the employment of any person employed by the Vendors in
relation to the Business before the Effective Time;
(b) any claim of whatsoever nature by any person employed by the
Vendors in relation to the Businesses on or before the
Effective Time arising out of or in relation to any act or
omission by any of the Vendors in relation to such person or
otherwise in relation to such person arising out of any act
or omission or circumstance occurring or arising on or
before the Effective Time including without limitation (1)
in respect of any contract of employment of any person
employed in the UK Business or any part thereof, which act
or omission is deemed to have been done by or in relation to
the Purchaser in accordance with Regulations 5 or 6 of the
Regulations and (2) any termination of the employment of any
of the Transferred Employees by any of the Vendors pursuant
to the terms of this Clause 14 save to the extent that such
claim would not have arisen or have increased as a result of
any of the Purchaser Group not having complied with their
respective obligations to offer employment to any of the
Transferred Employees in terms of this Clause 14.;
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(c) any claim by any person (other than any of the Transferred
Employees) that his contract of employment has effect after
the Effective Time as if originally made with the
appropriate member of the Purchaser Group;
14.7.3 The Purchaser shall indemnify and keep indemnified the Vendors
(on demand by the Vendors) against all costs, claims, damages,
expenses and liabilities whatsoever and howsoever arising on or
after the Effective Time incurred or suffered by the Vendors by
reason of or in relation to any claim whatsoever by any
Transferred Employee arising out of or in relation to any act or
omission by the Purchaser Group in relation to such Transferred
Employee after the Effective Time or otherwise arising out of any
act or omission or circumstance occurring or arising after the
Effective Time in relation to such Transferred Employee and/or in
relation to the employment of any UK Employee in relation to the
Businesses after the Effective Time save for (a) any protective
awards against the Vendors or any of them made in terms of
regulation 11 of the Regulations) and any similar award made
against the Vendors in any jurisdiction outside the UK except
where such awards have been made as a result of the Purchaser
failing to provide the Vendors with information (as required in
terms of regulation 10(3) of the Regulations) sufficient to allow
the Vendors to comply with the provisions of regulation 10(2)(d)
of the Regulations and (b) any sum paid or due to be paid by any
of the Vendors under Clause 14.7.1);
14.7.4 If any contract of employment of any employee in connection with
the Vendors or the Businesses (other than the Transferred
Employees) shall have effect as if originally made between the
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Purchaser Group and such employee as a result of the provisions
of Regulation 5 of the Regulations or otherwise:-
(a) the Purchaser Group may, upon becoming aware of the
application of Regulation 5 or other provision to any such
contract, terminate such contract forthwith; and
(b) the Vendors jointly and severally undertake to indemnify and
keep indemnified the Purchaser Group against any claims,
liabilities, demands, damages and reasonable costs and
expenses of any nature where appropriate on a solicitor and
own client basis arising out of such termination or
dismissal and against any sums payable to or on behalf of
such employee in respect of his employment following the
Effective Time;
14.7.5 Without prejudice to Clause 14.7.3 following Completion the
Purchaser or such other companies as BARRA shall nominate shall
be entitled but not obliged to take advantage of the pension
arrangements established for the Transferred Employees as
disclosed to the Purchaser.
15. GUARANTEE
15.1 PURCHASER'S GUARANTEE
Subject to the provisions of Clause 15.2 and 15.3:-
15.1.1 BARRA hereby irrevocably and unconditionally guarantees to the
Vendors the due and punctual payment, discharge, performance and
observance by the Purchaser Group (other than BARRA) of all its
liabilities and obligations of whatever nature under this
Agreement (as varied extended or renewed from time to time)
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and undertakes with the Vendors that if and each time that the
Purchaser Group (other than BARRA) shall be in default under this
Agreement BARRA will on demand by the Vendors pay and discharge
all liabilities and perform and observe all obligations of the
Purchaser Group (other than BARRA) as if BARRA instead of the
Purchaser Group (other than BARRA) were expressed to be the
primary obligor, provided the Vendors first make a formal demand
on the Purchaser Group (other than BARRA), however in respect of
any further steps required to seek recovery of any such sums not
paid BARRA hereby waives any right it may have of first requiring
the Vendors to proceed against or claim payment from the
Purchaser Group (other than BARRA);
15.1.2 This guarantee is a continuing guarantee and shall remain in full
force and effect until all liabilities and obligations of the
Purchaser under this Agreement have been paid, discharged,
performed or (as the case may be) observed;
15.1.3 The Vendors may at any time without prejudice to their rights and
remedies under or in connection with this Agreement (and without
discharging or in any way affecting the liability of BARRA) grant
to the Purchaser Group (other than BARRA) or any other person,
time for the payment, discharge, performance or observance or any
other indulgence and the obligations of BARRA hereunder shall not
be affected by any act omission matter or thing whatever which
but for this provision might affect such obligations or operate
to release or otherwise exonerate BARRA;
15.2 The aggregate maximum liability of BARRA to the Vendors under and in
terms of Clause 15.1 shall be the aggregate of the Consideration and the
amount of the Accepted Liabilities.
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15.3 The liability of BARRA under and in terms of Clause 15.1 shall cease and
determine on the First Retention Release Date save to the extent that any
valid claim may have been made on BARRA under Clause 15.1 prior to or as
at that date.
16. ANNOUNCEMENTS
16.1 The Purchaser Group and the Vendors hereby acknowledge and accept that
the Vendors have a statutory obligation to consult with the Transferred
Employees prior to Completion and the Purchaser Group has an obligation
to provide information to the Vendors on their intentions regarding the
Transferred Employees to enable that consultation to take place, and the
Vendors and the Purchaser Group confirm that they respectively will
fulfil that statutory obligation. The Vendors shall at Completion make
such announcements to the employees, agents, customers and suppliers of
the Vendors as may be agreed between the Vendors and the Purchaser Group
in writing;
16.2 Subject to the provisions of Clause 16.1, none of the Purchaser Group nor
the Vendors shall make any press or media announcement or issue any press
or media statement with respect to this Agreement or any matter contained
herein without obtaining the prior written agreement of the others to the
contents thereof and the manner of its presentation and publication;
16.3 The provisions of Clause 16.2 shall not apply to any announcement or
circular required to be made or issued by the Purchaser or any member of
the Purchaser Group so as to comply with its obligations to any
regulatory authority in any jurisdiction or where any member of the
Purchaser Group is advised by its professional advisers that disclosure
is required to comply with any obligation imposed on a publicly traded
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company or to any announcement or circular permitted to be issued in
terms of the Confidentiality Agreement dated 11th November 1996 between
BARRA and UK;
17. ASSIGNATION AND TRANSFER
17.1 No party to this Agreement shall be entitled, without the prior written
consent of the others, to assign or transfer in whole or in part the
benefit and/or burden of this Agreement or any right and/or obligation
under this Agreement to any other person or company provided that the
Purchaser without the consent of the Vendors may assign this Agreement or
any right or obligation of the Purchaser hereunder to any company within
the group of companies of which the Purchaser forms part provided that if
it is intended that such company is to leave such group before the First
Retention Release Date then the Purchaser shall procure that this
Agreement or any right or obligation so held by such company will be
reassigned to another company within the said group.
17.2 This Agreement shall be binding on, and shall enure for the benefit of,
any person to whom any right and/or obligation is assigned or transferred
under and in terms of this Agreement.
18. AGREEMENT TO CONTINUE
18.1 Notwithstanding Completion, each and every right and obligation of the
parties under this Agreement shall, except in so far as fully performed
at Completion, continue in full force and effect.
18.2 Where any obligation under this Agreement is expressed to require
performance within a specified time limit that obligation shall continue
to be binding and enforceable after the expiry of that time limit if the
party
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so obliged fails to perform that obligation within that time limit
(but without prejudice to all rights and remedies available against such
party by reason of such party's failure to perform that obligation within
the time limit).
19. FURTHER ACTIONS
Notwithstanding Completion the Vendors hereby undertake to the Purchaser
to execute and do and use their respective reasonable endeavours to
procure to be executed and done by all necessary parties from time to
time at the Purchaser's request and expense all such deeds, documents,
assurances, acts and things as may be necessary or requisite for
effectually vesting the Assets and the Businesses in the Purchaser and
for giving full effect to this Agreement.
20. CONSENTS AND WAIVERS
20.1 Any consent given by a party under any provision of this Agreement shall
be effective only in the instance and for the purpose for which it is
given and the giving of any such consent in respect of any act or thing
shall not operate as a waiver of any requirement on the party to whom the
consent is given not to do that or any other act or thing at any time in
the future without such consent.
20.2 No failure on the part of either party to exercise, and no delay on its
part in exercising, any right or remedy under this Agreement will operate
as a waiver thereof, nor will any single or partial exercise of any right
or remedy preclude any other or further exercise thereof or the exercise
of any other right or remedy.
21. SEVERABILITY AND RECISSION
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21.1 If any provision of this Agreement shall to any extent be invalid, illegal
or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby
and each of the provisions of this Agreement shall be valid, legal and
enforceable to the fullest extent permitted by law.
21.2 Any right of rescission conferred upon the Purchaser by this Agreement
shall be in addition to and without prejudice to all other rights and
remedies available to it.
21.3 The Purchaser and the Vendors acknowledge and agree that they shall not
in any circumstances be entitled to rescind this Agreement after
Completion.
22. VALUE ADDED TAX
22.1 The parties hereto intend that Section 49(1) of the Value Added Taxes Act
1994 and Article 5 of the Value Added Tax (Special Provisions) Order 1995
(S.1.1995/1268) shall apply to the transfer of the Businesses and the
Assets in the United Kingdom in terms of this Agreement and accordingly:-
22.2 the Purchaser declares its intention to use the Assets in carrying on the
Businesses and that it will on completion be a taxable person for Value
Added Tax purposes;
22.3 the Vendors and the Purchaser agree to use all reasonable endeavours to
secure that the transfer of the Assets under this Agreement is treated as
neither a supply of goods nor a supply of services for the purposes of
Value Added Tax or any similar supply or sales tax or levy which may be
chargeable in any jurisdiction;
22.4 the Vendors shall deliver to the Purchaser all records of the Businesses
which are required by the Value Added Tax Act 1994 Section 49(1)(b) to
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be maintained by the Purchaser in respect of the six year period prior to
the Completion Date;
22.5 if Value Added Tax should be chargeable on the transfer under this
Agreement or any part of it then the Consideration for the purchase of
those of the Assets whose sale would be governed by the Value Added Taxes
Act 1994 will be exclusive of Value Added Tax and the Vendors will
deliver to the Purchaser within three days of it being determined that
Value Added Tax should have been so charged an appropriate Value Added
Tax invoice for the transfer of such Assets to the Purchaser;
23. COSTS AND STAMP DUTY
23.1 Save as provided in Clauses 23.2 and 23.3, the Purchaser and the Vendors
shall each pay their own costs and outlays in connection with the
preparation, execution and carrying into effect of this Agreement save as
expressly provided herein;
23.2 The Purchaser shall be responsible for payment of all stamp duty in
respect of this agreement and the carrying into effect thereof;
23.3 The Purchaser shall make a contribution of not more than L500 to the
travelling costs of the Vendors' representatives incurred in signing this
Agreement or any documentation ancillary to it outside the United
Kingdom.
24. ENTIRE AGREEMENT AND VARIATIONS
24.1 This Agreement, the Execution Disclosure Letter, the Completion
Disclosure Letter, any documents referred to in this Agreement to which
the Purchaser Group and the Vendors are parties (including the Deed of
Indemnity), assignations of goodwill by each of the Vendors in favour of
UK and the stamp duty agreement among the parties hereto, all dated of
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even date with this Agreement constitute the entire agreement between the
parties with respect to the subject matter hereof;
24.2 No variations of this Agreement shall be effective unless made in writing
and duly executed by each member of the Purchaser Group, the Vendors, JS
and AM;
25. DISPUTES
Whenever a dispute or difference shall arise between any of the parties
which is to be determined hereunder the matter will be determined by an
independent person ("the Expert") who shall be nominated by agreement
between the parties or, failing such nomination within 7 business days
after either's request to the other therefor, nominated by the President
for the time being of the Law Society of Scotland or, if he shall be
unable or unwilling to make an appointment, by the Court of Session in
Scotland. The parties shall use their respective reasonable endeavours to
procure that the Expert shall as soon as practicable after any matter has
been referred to him hereunder determine the matter in question and
notify the parties in writing of his determination. In acting hereunder
the Expert shall act as an expert and not as an arbiter and his written
determination shall be final and binding on the parties (in the absence
of clerical or manifest error becoming apparent within 14 days of their
being notified of his determination). The parties shall give the Expert
all such facilities and information as he may require for the purposes of
his determination. The costs and expenses of the Expert for so acting
shall be borne and paid in such manner as he shall direct or, if he shall
so fail to direct, by the parties in equal shares and if either of them
shall pay the whole of such fees that party shall be entitled to
immediate reimbursement of the appropriate proportion by the other.
26. NOTICES
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26.1 Any notice or other communication to be given by one party to another
under, or in connection with the matters contemplated by, this Agreement
shall be sent:--
26.1.1 if to any member of the Purchaser Group, to:-
BARRA Inc
2100 Milvia Street
Berkeley CA94704
USA
Facsimile no: (001) 510 548 4374
Attention: Chief Executive Officer and General Counsel
with a copy to Graeme Bruce (Ref: DJB73201), Dundas &
Wilson C.S.,, 6/7 Blythswood Square, Glasgow, G2 4AD
26.1.2 if to the Vendors or the Vendors' Representative, to:-
Dickson Minto
11 Walker Street
Edinburgh
EH3 7NE
Facsimile no: 0131 225 2712
Attention: David Davidson (failing whom Keith Anderson)
or in each case to such other address or facsimile number and/or marked
for such other attention as may from time to time be specified by the
relevant party to the other, by notice given in accordance with this
Clause, for the purposes of this Clause;
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26.2 Any notice or other communication to be given by one party to another,
under, or in connection with the matters contemplated by, this Agreement
shall be in writing and shall be given by letter delivered by hand or
sent by first class prepaid recorded delivery or registered post or by
facsimile, and shall be deemed to have been received:-
26.2.1 in the case of delivery by hand prior to 5 pm. on a business
day, when delivered and in any other case on the business day
following the day of delivery; or
26.2.2 in the case of first class prepaid recorded delivery or
registered post, on the second business day following the day of
posting; or
26.2.3 in the case of facsimile where the transmission occurs prior to
5 p.m. on a business day, on acknowledgement by the addressee's
facsimile receiving equipment and in any other case on the
business day following the day of acknowledgement by the
addressee's facsimile receiving equipment provided that such
notice or other communication shall be confirmed by post within
twenty four (24) hours after such facsimile transmission.
27. GOVERNING LAW
27.1 This Agreement shall be governed by and construed in accordance with the
law of Scotland.
27.2 The parties hereto submit to the non-exclusive jurisdiction of the
Scottish courts as regards any claim, dispute or matter arising out of
or relating to this Agreement and its implementation or effect.
IN WITNESS WHEREOF these presents consisting of this and the eighty preceding
pages together with the Schedule comprising thirteen parts are executed as
follows:-
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SUBSCRIBED for and on behalf of
EDINBURGH FINANCIAL PUBLISHING
LIMITED at Amsterdam on 8th
September 1997 by WILLIAM JAMES
NEIL LENNOX, Director, in the
presence of:-
Witness......................... ........................
Full Name.......................
Address.........................
................................
SUBSCRIBED for and on behalf of
EDINBURGH FINANCIAL PUBLISHING
(ASIA) LIMITED at Amsterdam on
8th September 1997 by DIANA
SPRAGUE, Director, in the
presence of:-
Witness......................... ........................
Full Name.......................
Address.........................
................................
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SUBSCRIBED for and on behalf of
EDINBURGH FINANCIAL PUBLISHING
(USA) INC. at Amsterdam on 8th
September 1997 by WILLIAM JAMES
NEIL LENNOX, Director, in the
presence of:-
Witness......................... ........................
Full Name.......................
Address.........................
................................
SUBSCRIBED for and on behalf of
BARRA (U.K.), LTD. at Amsterdam
on 8th September 1997 by:-
................................
an authorised signatory in the
presence of:-
Witness.........................
Full Name.......................
Address.........................
................................
SUBSCRIBED for and on behalf of
BARRA INC. at Amsterdam on 8th
September 1997 by:-
................................
an authorised signatory in the
presence of:-
Witness.........................
Full Name.......................
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Address.........................
................................
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123
<PAGE>
SUBSCRIBED by WILLIAM JAMES NEIL
LENNOX, duly authorised attorney
for and on behalf of ANGUS
MACDONALD at Amsterdam on 8th
September 1997 in the presence
of:-
Witness......................... ........................
Full Name.......................
Address.........................
................................
SUBSCRIBED by WILLIAM JAMES NEIL
LENNOX, duly authorised attorney
for and on behalf of JEREMY
SALVESEN at Amsterdam on 8th
September 1997 in the presence
of:-
Witness......................... ........................
Full Name.......................
Address.........................
................................
SUBSCRIBED for and on behalf of
BARRA INTERNATIONAL, LTD. at
Amsterdam on 8th September 1997 by:-
................................
an authorised signatory in the
presence of:-
Witness.........................
Full Name.......................
Address.........................
................................
SUBSCRIBED for and on behalf of
BARRA INTERNATIONAL (JAPAN), LTD.
at Amsterdam on 8th September 1997
by:-
................................
an authorised signatory in the
presence of:-
Witness.........................
Full Name.......................
Address.........................
................................
- --------------------------------------------------------------------------------
124
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AMOUNTS
TAKEN FROM THE CONSOLIDATED FINANCIAL STATEMENTS, AS OF AND FOR THE SIX MONTH
PERIOD ENDED SEPTEMBER 30, 1997 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 12371517
<SECURITIES> 24433123
<RECEIVABLES> 20900184
<ALLOWANCES> 128022
<INVENTORY> 0
<CURRENT-ASSETS> 64967773
<PP&E> 26158847
<DEPRECIATION> 12267113
<TOTAL-ASSETS> 97328138
<CURRENT-LIABILITIES> 38222538
<BONDS> 0
0
0
<COMMON> 23560376
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 97328138
<SALES> 58340655
<TOTAL-REVENUES> 58340655
<CGS> 3213089
<TOTAL-COSTS> 54749805<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2855403
<INCOME-TAX> 5443959
<INCOME-CONTINUING> (2588556)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2588556)<F1><F2>
<EPS-PRIMARY> (.20)
<EPS-DILUTED> 0
<FN>
<F1>Includes one-time acquistion charges of $9,914,000 related to the write-off of
in-process technology costs in connection with the Company's acqusition of
Global Advanced TEchnology Corporation and a majority interest in Innosearch
in June, 1997. These charges were not deductible for tax purposes.
<F2>Includes one-time acquistion charges of $9,914,999 or $.72 per share.
</FN>
</TABLE>
