All Parties Draft No 4: 21 September 2000
DATED 11 OCTOBER 2000
(1) JEFF WHITE & OTHERS
(2) VIZACOM, INC.
AGREEMENT
for the sale and purchase of the
entire issued share capital of
Intermethods Limited
Eking Manning
44 The Ropewalk
Nottingham
NG1 5EL
Tel: 0115 840 4499
Fax: 0115 840 5000
DX: 10010
26
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THIS AGREEMENT is made on 11 October 2000
PARTIES
(1) THE PERSONS whose names and addresses are set out in Schedule 1
(2) VIZACOM, INC. a Delaware corporation of Glenpointe Centre East, 300
Frank W Burr Boulevard, Teaneck, New Jersey, 07666, USA
1. Interpretation
In this Agreement:
1. the following expressions have the following meanings unless
inconsistent with the context :-
Expression Meaning
---------- -------
"the Act" The Companies Act 1985
"Business Day"
Any day (other than Saturday or Sunday)
on which Clearing Banks are open for a
full range of banking transactions
"Cash Consideration"
US$104,175 being that part of the
Consideration payable in cash pursuant
to the provisions of clause 3.2
"Clearing Bank" A bank which is a member
of CHAPS and Town Clearing Company
Limited
"Closing Price"
The 20 day average closing price of the
common stock of the Purchaser par value
$0.001 per share for the 20 trading days
ending 3 days prior to the date of
Completion
"the Company" Intermethods Limited, registered number
1450831
"Completion" Completion of the sale and purchase in
accordance with clause 8
"the Consideration" The consideration for the sale of the
Shares as stated in clause 3.1
"the Consideration Shares" The number of shares (to the nearest the
whole share) of the Common Stock of the
Purchaser par value US $0.001 per share
calculated by dividing 2,210,825 by the
Closing Price
"the Disclosure Letter"
The letter having the same date as this
Agreement from the Vendors' Solicitors
to the Purchaser's Solicitors qualifying
the Warranties "the Employment
Agreements"
The contracts of employment to be
entered into on Completion in the agreed
terms between Junction 15 Limited and
each Vendor
"the Escrow Agent" Kaufman & Moomjian, LLC
"the Escrow Agreement" The escrow agreement to be entered into
on Completion in the agreed terms
between the Purchaser, the Vendors,
Donald Laurence Stewart as stockholders'
representative and Kaufman & Moomjian,
LLC as escrow agent
"the Lock-Up Agreement(s)" The lock-up agreement to be entered into
on Completion in the agreed terms
between each Vendor and the Purchaser
setting out certain restrictions
attaching to the Consideration Shares
"NASDAQ" The NASDAQ Stock Market, Inc.
"the Property" The property specified in
Schedule 3 (and, if more than one, each
such property) and each and every part
of such property
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"the Purchaser"
Vizacom Inc. and its successors and
assigns
"the Purchaser's Group" The group of companies comprising the
Purchaser its subsidiaries any holding
company for the time being of the
Purchaser and any other subsidiaries of
any such holding company
"the Purchaser's Solicitors" Eking Manning of 44 The Ropewalk,
Nottingham, NG1 5EL "the Registration
Rights Agreement" The registration
rights agreement to be entered into on
Completion in the agreed terms between
the Purchaser and the Vendors governing
the registration rights in respect of
the Consideration Shares
"the Restricted Period" The period commencing on Completion and
ending on the third anniversary of
Completion
"the Shares" All the issued shares in the capital of
the Company
"Stockholders' Representative" Donald Laurence Stewart, being the
stockholders' representative under the
Escrow Agreement
"the Tax Covenant" The covenant set out or referred to in
clause 5 and Part II of Schedule 5 "the
Vendors"
Those persons whose names and addresses
are set out in Schedule 1 together
(where appropriate) with their
respective successors, assigns and
personal representatives (and "Vendor"
shall be construed accordingly)
"the Vendors' Solicitors" Finers Stephens Innocent of 179 Great
Portland Street, London, W1N 6LS
"the Warranties" The warranties, representations and
undertakings set out or referred to in
clause 4, Schedule 4 and Part III of
Schedule 5
1.2 reference to any statute or statutory provisions will, unless the
context otherwise requires, be construed as including references to any earlier
statute or the corresponding provisions of any earlier statute, whether repealed
or not, directly or indirectly amended, consolidated, extended or replaced by
such statute or provisions, or re-enacted in such provisions, and to any
subsequent statute or the corresponding provisions of any subsequent statute
directly or indirectly amending, consolidating, extending, replacing or
re-enacting the same, and will include any orders, regulations, instruments or
other subordinate legislation made under the relevant statute or statutory
provisions which are in force prior to Completion
1.3 references to persons will be construed so as to include bodies
corporate, unincorporated associations and partnerships
1.4 references to a document being "in the agreed terms" will be construed
as references to that document in the form agreed and initialled by or on behalf
of the Vendors and the Purchaser
1.5 all covenants, agreements, undertakings, indemnities, representations
and warranties on the part of two or more persons are given or made by such
persons jointly and severally
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1.6 references to clauses and Schedules are to clauses of and Schedules to
this Agreement, and references to paragraphs are to paragraphs in the Schedule
in which such references appear
1.7 the Schedules form part of this Agreement and will have the same force
and effect as if expressly set out in the body of this Agreement, and
1.8 words and expressions defined in the Act or in the Income and
Corporation Taxes Act 1988 shall have the same meaning where used herein
2. Sale and purchase
2.1 Each of the Vendors will sell, and the Purchaser will buy, the number
of the Shares specified opposite that Vendor's name in Schedule 1
2.2 Each of the Shares will be sold and bought with full title guarantee
free from any claim, charge, lien, encumbrance, equity or third party right, and
with all rights attached or accruing to it including all rights to any dividends
or other distributions declared, made or paid after the execution of this
Agreement
2.3 Each of the Vendors waives all rights of pre-emption over any of the
Shares conferred by the articles of association of the Company or otherwise
2.4 The Purchaser will not be obliged to complete the purchase of any of
the Shares unless the purchase of all the Shares is completed simultaneously
3. Consideration
3.1 The consideration for the sale by the Vendors of the Shares shall be
US$2,315,000 divisible between the Vendors as set out opposite each Vendor's
name in Schedule 1
3.2 The Consideration shall be satisfied:-
3.2.1 as to US$104,175 (one hundred and four thousand one hundred and
seventy five dollars) by a payment on Completion of its (pound) GB sterling
equivalent on that date (calculated at the National Westminster Bank plc
spot rate at 11.00 AM on that date for the sale by the Bank of sterling)
such payment to be made from the Purchaser to the Vendors' Solicitors by
CHAPS transfer from a Clearing Bank into the client account of the Vendors'
Solicitors nominated for this purpose or by such other method as may be
agreed between the Vendors' Solicitors and the Purchaser's Solicitors; and
3.2.2 as to US$2,210,825 (two million two hundred and ten thousand
eight hundred and twenty five dollars) wholly by the allotment and issue to
the Vendors on Completion of the Consideration Shares credited as fully
paid with any Vendors who would otherwise be entitled to a fraction of a
Consideration Share being entitled to receive from the Purchaser an amount
of cash in US Dollars (rounded to the nearest whole cent) equal to the
product of (i) such fraction multiplied by (ii) the Closing Price
3.3 Each of the Vendors will be entitled to receive the amount of the Cash
Consideration and Consideration Shares in the proportion specified opposite that
Vendor's name in Schedule 1
<PAGE>
3.4 The Vendors' Solicitors are authorised to receive the Consideration on
behalf of the Vendors and delivery to them or to the Escrow Agent pursuant to
the Escrow Agreement of the certificates for the Consideration Shares in the
name of the Vendors will be a good and sufficient discharge to the Purchaser and
the Purchaser will not be further concerned as to the application of the moneys
so paid
4. Warranties of the Vendors
4.1 The Vendors :-
4.1.1 warrant, represent and undertake to the Purchaser in the terms
of the Warranties, provided however that the Purchaser will not be entitled
to claim that any fact or combination of facts constitutes a breach of any
of the Warranties if and to the extent that such fact or combination of
facts has been fully and fairly disclosed in the Disclosure Letter;
4.1.2 agree that the Purchaser is entering into this Agreement in
reliance on each of the Warranties and agree that save as provided in
clause 4.1.1 no information of which the Purchaser has knowledge (actual or
constructive) will prejudice any claim made by the Purchaser in respect of
the Warranties or will operate to reduce any amount recoverable in respect
of any breach of any of the Warranties;
4.1.3 will indemnify the Purchaser against any reasonable costs or
expenses (including reasonable legal costs) which it may incur, either
before or after the commencement of any action, directly or indirectly as a
result of any breach of any of the Warranties;
4.1.4 undertake to disclose immediately to the Purchaser anything
which comes to the notice of any of them which is or may be a material
breach of any of the Warranties; and
4.1.5 undertake that, in the event of any claim being made against any
of them whether under the Warranties or otherwise in connection with the
sale of the Shares to the Purchaser, they will not make any claim against
the Company, or against any director or employee of the Company, on which
or on whom any of them may have relied for advice or information before
agreeing to any term of this Agreement or authorising any statement in the
Disclosure letter, but so that this undertaking will not preclude any
Vendor from claiming against any other Vendor under any right of
contribution or indemnity to which such Vendor may be entitled
<PAGE>
4.2 Without restricting the rights of the Purchaser or the ability of the
Purchaser to claim damages on any basis available to it, the Vendors undertake
to the Purchaser that in the event of any breach of the Warranty in paragraph
7.2 of Schedule 4 the Vendors will, forthwith on demand by the Purchaser, pay to
the Purchaser or the Company (as the Purchaser directs) in cash an amount equal
to the aggregate of the overdue payments constituting the breach of that
Warranty provided that, upon such payment by the Vendors, the Purchaser will, if
requested so to do, procure the assignment of such overdue debts constituting
the breach (to the extent to which sums remain outstanding in respect of them)
to the Vendors or such one or more of them as will have made payment to the
Purchaser or the Company in accordance with this clause 4.2.1 (the costs and
expenses relating to such assignment being borne by the assignee(s))
4.3 Each of the Warranties will be construed as a separate Warranty and
will not be limited or restricted by reference to, or inference from, the terms
of any other Warranty or any other term of this Agreement
4.4 In this Agreement, unless otherwise specified, where any Warranty
refers to the knowledge, information, belief or awareness of the Vendors (or
similar expression), each Vendor will be deemed to have such knowledge,
information, belief or awareness as such Vendor would have obtained had such
Vendor made all due and careful enquiries into the subject matter of that
Warranty and the knowledge, information, belief and awareness of any one of the
Vendors shall be imputed to the remaining Vendors
4.5 In this clause 4.5 and clause 4.6 "claim" means any claim which would
(disregarding the provisions of this clause 4.5) be capable of being made
against the Vendors (or any of them) for breach of the Warranties and (to the
extent so specified) under the Tax Covenant. Notwithstanding the foregoing
provisions of clause 4 :-
4.5.1 the aggregate liability of the Vendors in respect of all claims
under the Warranties and the Tax Covenant will be limited to US$104,175
plus the lower of:-
4.5.1.1 $2,210,825; and
4.5.1.2 the aggregate sum comprising the value of each
Consideration Share on the first day that a Vendor is lawfully and
contractually able to sell that Consideration Share pursuant to this
Agreement and the Lock-Up Agreements (such value being the closing
price quoted for the Purchaser's common stock on that date or on the
preceding Business Day by NASDAQ or any other applicable securities
market which is the primary market for the Purchaser's common stock);
4.5.2 save in respect of any claim or claims under the Warranty in
paragraph 7.2 of Schedule 4 the Vendors will not be under any liability to
make a payment in respect of any claim under the Warranties unless the
amount of their liability in respect of such claim is (when aggregated with
their liability in respect of any other claim or claims made by the
Purchaser or which would have been made but for the provisions of this
clause 4.5.2) in excess of US $15,000, in which event the Vendors will
(subject to the other provisions of this clause 4.5) be liable for the
whole amount of such liability and not merely for the excess;
4.5.3 the Vendors will be under no liability to make any payment in
respect of any claim under the Warranties unless :- 4.5.3.1 written
particulars of the claim (giving details of the specific matter in respect
of which such claim is made) are given to the Vendors; and 4.5.3.2 such
particulars are given within a period of seven years from the date of this
Agreement or (in the case only of any claim not arising from a third party
claim and not relating to Taxation (as defined in Schedule 5) or
environmental or pensions matters) 2 years from the date of this Agreement;
and
4.5.4 the Vendors will have no liability in respect of any claim under the
Warranties :-
4.5.4.1 to the extent to which the Purchaser or the Company is
indemnified by insurance in relation to the subject matter of the claim and
related expenses; or
4.5.4.2 to the extent that it relates to any matter provided for, or
included as a liability or disclosed, in the Accounts (as defined in
Schedule 4) of the Company; or
4.5.4.3 to the extent that it arises or is increased as a result only
of an increase in the rates of taxation, the passing of any legislation,
the making of any subordinate legislation, or a change in published Inland
Revenue practice after Completion with retrospective effect; and
4.5.5 any claim under the Warranties shall be deemed to have been
irrevocably withdrawn and lapsed (not having been previously satisfied
settled or withdrawn) if proceedings in respect of such claim have not been
issued and served on a Vendor not later than the expiry of the period of 12
months after the date on which the particulars referred to in clause 4.5.3
are first given to the Vendors in respect of such claim
4.6 Notwithstanding any other provision of this Agreement, the provisions
of clause 4.5 shall not apply to exclude or limit the liability of the Vendors
to the extent that any claim under the Warranties or the Tax Covenant arises by
reason of any fraud, dishonesty, or wilful misstatement or omission by or on
behalf of the Vendors or any of them
4.7 In the event of any claim being made against any Vendor under the
Warranties or the Tax Covenant ("Relevant Claim") that Vendor may elect (by
giving notice to the Purchaser within 3 months of the Relevant Claim being
agreed by that Vendor or being adjudicated to be payable by the Vendor to the
Purchaser) to satisfy all or part of his liability in respect of the Relevant
Claim by delivery to the Purchaser of a promissory note in the agreed terms
("the Note") in which event the following provisions shall apply:-
4.7.1 the principal amount of the Note shall be a sum equal to the
part of the Relevant Claim notified in the election. The Note shall not
carry interest unless and until the Consideration Shares referred to in
clause 4.7.2 are registered for resale under the US Securities Act of 1933
but thereafter shall carry interest at the rate provided in clause 11);
4.7.2 the restrictions in the Lock-Up Agreement signed by that Vendor
shall be immediately lifted with respect to such number of Consideration
Shares as shall have a market value on the date the Note is issued equal to
a maximum of 110% of the principal amount of the Note; and
4.7.3 the Vendor shall forthwith do execute and carry out all acts
documents and things in his power necessary or desirable to satisfy the
Note and if the Vendor fails to satisfy the Note in full the Purchaser may
then enforce the Note against the Vendor.
4.8 4.8.1 If and to the extent that any Relevant Claim is not satisfied in
full pursuant to the provisions of clause 4.7 and is not otherwise
satisfied by the Vendors within 15 Business Days of notice in writing by
the Purchaser pursuant to this clause 4.8.1, the Purchaser shall be
entitled to enforce all or any part of the Relevant Claim against and shall
have a contractual lien over the Consideration Shares for all moneys agreed
or adjudicated to be payable by the Vendors to the Purchaser under or in
respect of the Relevant Claim
<PAGE>
4.8.2 Pursuant to the provisions of clause 4.8.1, the Purchaser may
require Consideration Shares to the value of the Relevant Claim or part of
it which remains outstanding to be surrendered or transferred to it for
cancellation . For the purposes of this clause 4.8.2, the Purchaser shall
be entitled to act as attorney for any Vendor in his name and on his behalf
and in that capacity may execute any document.
4.8.3 In the event of Consideration Shares being surrendered or
transferred to the Purchaser for cancellation pursuant to this clause 8,
the Relevant Claim shall be discharged to the extent of the aggregate
market value on that date of the Consideration Shares so surrendered or
transferred.
4.8.4 For the purposes of and in connection with the Escrow Agreement,
the Vendors and the Purchaser shall as and when necessary give instructions
to the Escrow Agent and the Stockholders' Representative in order to
procure compliance with the provisions of this clause 4.8
4.9 If any one or more of the Vendors shall make any payment to the
Purchaser or the Company in respect of a Relevant Claim, the Vendors
undertake with each other that they shall forthwith make contributions to
each other to the intent and effect that the total amount of such Relevant
Claim shall be borne by them in the same proportions as they shared in the
Consideration for the Shares and the Vendors undertake to indemnify each
other accordingly
5. Tax covenant
With effect from Completion the Vendors covenant to the Purchaser as set
out in Part II of Schedule 5 and the parties agree to give effect to those
provisions
6. Warranties of the Purchaser
6.1 The Purchaser warrants, represents and undertakes to the Vendors that
save to the extent disclosed in the Purchaser's filings with the US Securities
and Exchange Commission:-
6.1.1 the Purchaser is a corporation duly incorporated and validly
existing under the laws of the State of Delaware and has full corporate
power and authority to carry on its business as it is now being conducted.
The Purchaser has prior to the execution of this agreement delivered to the
Vendors true and complete copies of the certificate of incorporation and
by-laws of the Purchaser as in effect on the date of this agreement;
6.1.2 the authorised common stock of the Purchaser consists solely of
60,000,000 (sixty million) shares of stock, par value US $0.001 per share
of which approximately 12,372,352 shares were outstanding as at 31 August
2000 . All of the Purchaser's issued and outstanding shares of capital
stock are duly authorised, validly issued, outstanding and fully paid;
<PAGE>
6.1.3 the execution and delivery by the Purchaser of this agreement
and of other documents referred to in this agreement, and the performance
by the Purchaser of its obligations under this agreement, has been duly and
validly authorised by the board of directors of the Purchaser. This
agreement has been duly and validly executed and delivered by the Purchaser
and constitutes, and upon the execution and delivery by the Purchaser of
any other document referred to in this agreement, such other document will
constitute, legal, valid and binding obligations of the Purchaser
enforceable against the Purchaser in accordance with its terms;
6.1.4 the execution and delivery by the Purchaser of this agreement
and of each other document referred to in this agreement and the
performance by the Purchaser of its obligations under this agreement and
under such other documents does not and will not conflict with or result in
a violation or breach of any of the terms, conditions or provisions of the
certificate of incorporation and by-laws of the Purchaser and, so far as
the Purchaser is aware, no consent approval or action of, filing with or
notice to any government or regulatory authority on the part of the
Purchaser is required in connection with the execution, delivery or
performance of this agreement;
6.1.5 there are no actions or proceedings pending or, so far as the
Purchaser is aware, threatened against, relating to or affecting the
Purchaser or any of its assets and properties which could reasonably be
expected to result in the issuance of an order restraining, enjoining or
otherwise prohibiting or making illegal the performance of any of the
transactions contemplated by this agreement or any other document executed
pursuant to this agreement; and
6.1.6 the Purchaser is in material compliance with all laws and orders
applicable to it and its properties and assets. The Purchaser has not
received any notification that it is in violation of any such laws or
orders and no such violation exists that would have a material adverse
effect on the Purchaser
6.2 The aggregate liability of the Purchaser in respect of all or any
claims made by the Vendors for breach of the warranties representations and
undertakings set out in this clause 6 shall be limited to and shall not
exceed US $2,315,000
<PAGE>
7. Restrictive covenants
7.1 For the purpose of assuring to the Purchaser the full benefit of
the Company and in consideration for the Purchaser agreeing to buy the
Shares on the terms of this Agreement, each of the Vendors undertakes to
the Purchaser that such Vendor will not, without the prior written consent
of the Purchaser and except as an employee of any company in the
Purchaser's Group, whether directly or indirectly and whether alone or in
conjunction with, or on behalf of, any other person and whether as
principal, shareholder, director, employee, agent, consultant, partner or
otherwise:-
7.1.1 at any time during the Restricted Period, canvass, solicit
or approach, or cause to be canvassed, solicited or approached, for
orders any person who at any time during the twelve months immediately
preceding the date of Completion is or was :-
7.1.1.1 negotiating with the Company for the supply by the
Company of goods or services; or
7.1.1.2 a client or customer of the Company; or
7.1.1.3 in the habit of dealing with the Company,
where the orders relate to goods and/or services which are
competitive with or of the type supplied by the Company at any
time during the twelve months immediately preceding the date of
Completion;
7.1.2 at any time during the Restricted Period, deal or contract
with any person who at any time during the twelve months immediately
preceding the date of Completion is or was:-
7.1.2.1 negotiating with the Company for the supply by the
Company of goods or services; or
7.1.2.2 a client or customer of the Company; or
7.1.2.3 in the habit of dealing with the Company, where the
dealing or contracting relates to goods and/or services which are
competitive with or of the type supplied by the Company at any
time during the twelve months immediately preceding the date of
Completion; 7.1.3 at any time during the Restricted Period,
interfere, or seek
<PAGE>
to interfere, with the continuance of supplies to the Company
from any supplier who has been supplying goods and/or services to
the Company at any time during the twelve months immediately
preceding the date of Completion if such interference causes or
would cause that supplier to cease supplying or materially reduce
its supply of, those goods and/or services to the Company;
7.1.4 at any time during the Restricted Period, solicit or entice, or
endeavour to solicit or entice, away from the Company, or employ, any
person employed in a managerial, supervisory, technical, sales or
administrative capacity by, or who is or was a consultant to, the Company
at Completion or at any time during the period of one month immediately
preceding the date of Completion;
7.1.5 within the United Kingdom at any time during the Restricted
Period, be engaged, concerned or interested in, or provide technical,
commercial or professional advice to, any other business which supplies
goods and/or services which are competitive with or of the type supplied by
the Company at Completion; provided that this restriction does not apply to
prevent any of the Vendors from holding shares or other securities in any
company which are quoted, listed or otherwise dealt in on a recognised
stock exchange or other securities market and which confer not more than 3%
of the votes which could be cast at a general meeting of such company;
7.1.6 within the United Kingdom at any time during the Restricted
Period, be engaged, concerned or interested in any business which has at
any time during the twelve months immediately preceding the date of
Completion supplied any goods and/or services to, or is a client or
customer of, the Company if such engagement, concern or interest causes or
would cause the supplier to cease or materially reduce its supplies to the
Company or (as the case may be) the client or customer to cease or
materially reduce its orders or contracts with the Company; or
7.1.7 at any time after Completion use in connection with any business
any name which includes the name of the Company or any colourable imitation
of it provided always that the undertakings set out in clauses 7.1.1 to
7.1.6 inclusive shall thereafter and with immediate effect, cease to apply
to any Vendor in the event of that Vendor at any time ceasing to be
employed within the Purchaser's Group in consequence of his contract of
employment being terminated by the employing company for any reason other
than "for cause" as set out in Section 9(a) of the Employment Agreements
7.2 The Purchaser and the Vendors agree that each of the undertakings set
out in clause 7.1 is separate and severable and enforceable accordingly and if
any one or more of such undertakings or part of an undertaking is held to be
against the public interest or unlawful or in any way an unreasonable restraint
of trade, the remaining undertakings or remaining part of the undertakings will
continue in full force and effect and will bind each of the Vendors
<PAGE>
7.3 Each of the Vendors acknowledges that such Vendor has information in
respect of the business and financing of the Company and their dealings,
transactions, affairs, plans and proposals, all of which information is, or may
be, secret or confidential and important to the Company. In this clause 7.3 and
in clause 7.4 such information is called "Confidential Information" and
includes, without limitation, confidential or secret information relating to the
Company's trade secrets know-how, ideas, business methods, finances, prices,
business plan, marketing plans, development plans, manpower plans, sales
targets, sales statistics, customer lists, customer relationships, computer
systems and computer software. Each of the Vendors further acknowledges that the
disclosure of Confidential Information (whether directly or indirectly) to
actual or potential competitors of the Company would place the Company at a
competitive disadvantage and would do damage (whether financial or otherwise) to
its business. Each of the Vendors accordingly agrees to enter into the
restrictions contained in clause 7.4
7.4 Each of the Vendors undertakes that such Vendor will not at any time
after Completion:-
7.4.1 disclose to any person except to those authorised by the Company
to know;
7.4.2 use for the Vendor's own purposes or for any purposes other than
those of the Company; or
7.4.3 through any failure to exercise all due care and diligence cause
or permit any unauthorised disclosure of, any Confidential Information of
the Company, provided that these restrictions on each Vendor will cease to
apply to information which (otherwise than through the default of such
Vendor) becomes available to the public generally
8. Completion
The sale and purchase of the Shares will be completed at the offices of the
Vendors' Solicitors immediately after the signing and exchange of this Agreement
when:-
8.1 the Vendors will produce and deliver to the Purchaser:-
8.1.1 duly executed transfers of the Shares in favour of the Purchaser (or
as it will direct) together with all relevant share certificates (or in the case
of any lost certificate an indemnity satisfactory to the Purchaser in relation
to it) and together also with such waivers and consents as the Purchaser may
require to enable the Purchaser and its nominee(s) to be registered as the
holders of the Shares;
<PAGE>
8.1.2 written resignations from all directors and the secretary of the
Company in the agreed terms;
8.1.3 the written resignation of M. P. Saunders & Company as auditors of
the Company accompanied by the statement required by section 394 of the Act
stating that there are no such circumstances as are mentioned in that section;
8.1.4 the certificate of incorporation, any certificate(s) of incorporation
on change of name, the common seal and the statutory books and registers (all
entered up to date) of the Company;
8.1.5 all deeds and documents relating to the title of to the Property;
8.1.6 all cheque books in current use of the Company together with all
unused cheques;
8.1.7 bank statements in respect of each account of the Company as at the
close of business on the last Business Day prior to Completion, together in each
case with a reconciliation statement prepared by the Vendors to show the
position at Completion (listing unpresented cheques drawn or received by the
Company and standing orders payable since the date of such bank statements);
8.1.8 all licences, certificates or other documents previously specified by
the Purchaser;
8.1.9 all papers, books, records, keys, credit cards and other property (if
any) of the Company which are in the possession or under the control of the
Vendors, any other person who resigns as an officer of the Company in accordance
with this clause 6 or any person connected with them;
8.1.10 duly executed voting powers of attorney in the agreed terms;
8.1.11 the Disclosure Letter duly executed by the Vendors' Solicitors;
8.1.12 the Escrow Agreement and the Registration Rights Agreement duly
executed by each Vendor together with investment representation letters in the
agreed terms duly executed by each Vendor; and
<PAGE>
8.1.13 the Employment Agreements and the Lock-Up Agreements duly executed
by each Vendor
8.2 each Vendor will :-
8.2.1 repay, and will procure that any spouse, child or parent of such
Vendor or any company ("controlled company") of which such Vendor (and/or any
such spouse, child or parent) has control (as defined in section 840 Income and
Corporation Taxes Act 1988) will repay, all amounts owed by him, her or it to
the Company, whether due for payment or not;
8.2.2 deliver to the Purchaser a deed in the agreed terms acknowledging
that neither such Vendor nor any such spouse, child, parent or controlled
company has any claim against the Company and that there is no agreement or
arrangements under which the Company has or could have any actual, contingent or
prospective obligation to or in respect of any of them (including, but not
limited to, any obligation under any guarantee entered into by the Company); and
8.2.3 in respect of any such agreement or arrangement as is referred to in
clause 8.2.2 which previously existed deliver to the Purchaser evidence of the
release or termination of it in form satisfactory to the Purchaser;
8.3 the Vendors will procure that duly convened meetings are held at
which:-
8.3.1 the transfers referred to in clause 8.1 (subject to stamping if not
previously effected) are approved for registration in the books of the Company;
8.3.2 new articles of association are adopted by the Company in the agreed
terms;
8.3.3 the resignations variously specified in clause 8.1 are accepted by
the Company;
8.3.4 Mark Leininger and Ian McCalla are appointed as additional directors
of the Company (subject to any maximum number of directors imposed by the
relevant articles of association), and David Southgate is appointed as secretary
of the Company;
8.3.5 Ernst & Young are appointed as auditors of the Company
8.3.6 all existing instructions to the bankers of the Company are revoked
and new instructions given to such bankers as the Purchaser may nominate, in
such form as the Purchaser directs; and
8.3.7 the registered office of the Company is changed to Unit 12, Wilford
Industrial Estate, Nottingham, NG11 7EP;
<PAGE>
8.4 the Vendors will procure that the Vendors and the Company will enter
into the Employment Agreements;
8.5 subject as provided in the Escrow Agreement the Purchaser will duly
allot and issue the Consideration Shares to the Vendors as provided for in
clause 3.2 and deliver to the Vendors' Solicitors:-
8.5.1 a certified copy of the resolution of the board of the Purchaser
issuing the Consideration Shares and the stock certificates for the
Consideration Shares;
8.5.2 the Lock-Up Agreements and the Registration Rights Agreement duly
executed by the Purchaser, the Employment Agreements duly executed by the
Company and the Escrow Agreement duly executed by the Purchaser and the Escrow
Agent; and
8.5.3 confirmation in the agreed terms from the compensation committee of
the Purchaser confirming the grant of stock options as nominated by the Vendors
for an aggregate of 250,000 shares of the Purchaser's common stock exercisable
subject to the terms and conditions therein specified;
1. the Purchaser will also pay the Cash Consideration as provided in
clause 3.2.1; and
2. the Purchaser will as soon as reasonably practicable after Completion
use its best endeavours to procure the release of Jeffrey Raymond
White and Tess O'Neill from the personal guarantees provided by them
as set out in the lease of the Property disclosed to the Purchaser's
Solicitors on or before Completion. If necessary, the Purchaser shall
offer to the landlord a Vizacom guarantee to procure the release of
the personal guarantees. Pending the release of such personal
guarantees, the Purchaser will indemnify Jeffrey Raymond White and
Tess O'Neill and keep them indemnified against any liability
(including costs, damages and expenses) which they may suffer under or
in relation to such personal guarantees; provided however that this
clause 8.7 shall be without prejudice to, and the indemnity so given
by the Purchaser shall not extend to any matter giving rise to, any
claim against the Vendors (or any of them) for breach of the
Warranties; and
8.8 the Vendors will use their best endevours to procure, as soon as
reasonably practicable
<PAGE>
8.8.1 and in any event within 14 days after completion, the production by M
P Saunders & Company and the delivery to the Purchaser of audited financial
statements of the Company in the agreed terms for the 12 month period ended 31
December 1999 prepared in US Dollars in accordance with US GAAP consistently
applied (or reconciled to US GAAP) and comprising profit and loss account,
balance sheet and cash flow statement
8.8.2 and in any event within 42 days after Completion, the production by
M.P Saunders and Company and the delivery to the Purchaser of unaudited interim
financial statement of the Company for the period 1 January 2000 to 30 June 2000
comprising profit and loss account, balance sheet and cash flow statements
prepared in US Dollars on the same basis as the Company's audited financial
statements referred to in clause 8.8.1 the Purchaser agrees to provide M.P
Saunders and Company with assistance from Ernst &Young for this purpose and to
pay the accountancy costs of the exercise
9. Announcements
No announcement concerning the transactions contemplated by this Agreement
or any matter ancillary to it and no disclosure of the terms of this Agreement
will (save as required by law or the regulations of NASDAQ) be made by the
Vendors or the Company except with the prior written approval of the Purchaser
10. Costs
10.1 Each party to this Agreement will bear such party's own costs and
expenses relating to the preparation and completion of this Agreement,
except where otherwise expressly stated. For the avoidance of doubt, the
Vendors shall be responsible for settling the fees of M. P. Saunders &
Company in excess of (pound)1,500 plus VAT connected with the preparation
and audit of the 12 month accounts covering the period 1 January 1999 to 31
December 1999 and the statement of adjustments necessary for those accounts
to comply with US GAAP format
10.2 Save in respect of the (pound)1,500 plus VAT referred to in
clause 10.1, the Vendors shall procure that no claim or account (for fees
brokerage commission disbursement or otherwise) in respect of the Vendors
is submitted to the Company by any broker or adviser who are or have been
advisers to or brokers for any of them or the Company and the Vendors
hereby indemnify the Purchaser accordingly
11. Interest
If any Vendor becomes liable to pay the Purchaser or the Company any sum
pursuant to this Agreement, whether a liquidated sum or by way of damages or
otherwise such Vendor will be liable to pay interest on such sum from the due
date for payment at the annual rate of 2 per cent above the base lending rate
from time to time of National Westminster Bank plc, accruing on a daily basis
until payment is made, whether before or after any judgment
<PAGE>
12. Notices
12.1 Any demand, notice or other communication to be given or made under or
in connection with this Agreement shall be in writing
12.2 Any such demand, notice or other communication shall be addressed as
provided in this clause 12 and if so addressed will be deemed to have been duly
given or made as follows :-
12.2.1 if sent by prepaid first class post within the United Kingdom,
on the second Business Day after the date of posting or if sent by prepaid
overseas mail, on the seventh Business Day after the date of posting; or
12.2.2 if communicated by facsimilie, at the time of transmission, or
12.2.3 if delivered by hand, upon delivery at the address provided for
in this clause 12, unless such delivery occurs on a day which is not a
Business Day or after 4 p.m. on a Business Day, in which case it will be
deemed to have been given or made at 9 a.m. on the next Business Day
12.3 Any such demand, notice or other communication shall be addressed
(subject as provided in this clause 12) to the recipient at the recipient's
address stated in this Agreement or at such other address as may from time to
time be notified in writing by the recipient to the sender as being the
recipient's address for service, provided however that in the case of a company
it may instead (at the option of the sender) be addressed to its registered
office for the time being
12.4 Any such demand, notice or other communication, and any service of
process, pleadings or similar documents relating to any proceeding, suit or
action arising out of or in connection with this Agreement, will be validly
given or made to the Vendors if given or made to any one of the Vendors or to
the Vendors' Solicitors
12.5 Any demand, notice or other communication will be deemed to have been
validly given if given to the personal representatives of a deceased Vendor,
notwithstanding that no grant of representation has been made in respect of such
Vendor's estate, if the notice is addressed either :-
12.5.1 to the deceased Vendor by name or
12.5.2 to the deceased Vendor's personal representatives by title at
the Vendor's address in accordance with clause 12.3 or at such other
address as may have been notified by them in writing to the sender as being
their address for service and is otherwise served in accordance with the
foregoing provisions
<PAGE>
13. General
13.1 This Agreement will be binding on and will enure for the benefit of
each party's successors, assigns and personal representatives (as the case may
be)
13.2 Except insofar as the same have been fully performed at Completion,
each of the agreements, covenants, obligations, warranties, indemnities and
undertakings contained in this Agreement will continue in full force and effect
notwithstanding Completion
13.3 The parties agree that they will do all such acts and things and
execute all such documents as may be required on or subsequent to Completion to
vest in the Purchaser legal and beneficial ownership of the Shares in accordance
with this Agreement and otherwise to give effect to its terms
13.4 Failure or delay by any party in exercising any right or remedy under
this Agreement will not in any circumstances operate as a waiver of it, nor will
any single or partial exercise of any right or remedy in any circumstances
preclude any other or further exercise of it or the exercise of any other right
or remedy
13.5 Any waiver of any breach of, or any default under, any of the terms of
this Agreement will not be deemed a waiver of any subsequent breach or default
and will in no way affect the other terms of this Agreement
13.6 The Purchaser may release or compromise the liability of, or grant
time or any other indulgence to, any person who is a party to this Agreement
without in any way prejudicing or affecting the liability (whether joint and
several or otherwise) of any other person who is a party to this Agreement
13.7 In the event of any claim being made against the Vendors under the
Warranties or Part II of Schedule 5, the Vendors shall not plead against such
claim the Statute of Limitation Act 1980 or any other statute (present or
future) directly or indirectly consolidating, extending, replacing or
re-enacting the same, or any other rule of law relating to limitation of time in
which an action can be brought or claim made; provided that this clause 13.7 is
without prejudice to any express provision of this Agreement regarding time
limits for notifying or making claims
13.8 The headings to the clauses of this Agreement and to the paragraphs of
the Schedules (save for the headings in Schedules 1, 2 and 3) will not affect
its construction
13.9 The rights and remedies expressly provided for by this Agreement will
not exclude any rights or remedies provided by law
<PAGE>
13.10 This Agreement may be executed in any number of counterparts, and by
the parties on separate counterparts, each of which so executed and delivered
will be an original, but all the counterparts will together constitute one and
the same agreement
13.11 The formation, existence, construction, performance, validity and all
aspects whatsoever of this Agreement or of any term of this Agreement shall be
governed by English law. The English Courts shall have exclusive jurisdiction to
settle any disputes which may arise out of or in connection with this Agreement
other than disputes concerning or involving the securities laws of the United
States of America
13.12 This Agreement contains the entire agreement and understanding
between the Purchaser and the Vendors concerning the transactions contemplated
by this Agreement. The Purchaser irrevocably and unconditionally waives any
right it may have to claim damages for any misrepresentation not contained in
this Agreement or breach of any warranty not contained in this Agreement unless
such representation or warranty was made fraudulently
<PAGE>
SCHEDULE 1
The Vendors
<TABLE>
<CAPTION>
Name and address Number and class Amount of Amount of Proportion of
---------------- ----------------- --------- --------- -------------
of Shares to be Notional Actual Cash the
--------------- -------- ----------- ---
sold Cash Consideration Consideration Consideration
---- ------------------ ------------- -------------
Shares
receivable
<S> <C> <C> <C> <C>
Jeffrey Raymond 2,250 ordinary US $1,041,750 US$104,175 42-41%
White shares of(pound)1
each
50 Station Road
Hampton
Middlesex
TW12 2DA
Don Stewart 1,750 ordinary US $810,250 nil 36-65%
Flat 6 shares of(pound)1
each
3 - 4 Branham
Gardens
London
SW5 0JQ
Simon Stuart 1,000 ordinary US $463,000 nil 20-94%
Forrest shares of(pound)1
each
46 Crown Dale
Upper Norwood
London
SE19 3NR
</TABLE>
<PAGE>
SCHEDULE 2
Details of the Company
<TABLE>
<S> <C>
Name of Company: Intermethods Limited
Registered Number: 1450831
Registered Office: 120 London Road, Kingston-Upon Thames
Surrey KT2 6OJ
Date of Incorporation: 26 September 1979
Place of Incorporation: England and Wales
Status of Company: Private limited company
Authorised share capital: (pound)5,000 divided into 5,000 ordinary shares of(pound)1 each
Issued share capital: (pound)5,000 divided into 5,000 ordinary shares of(pound)1 each
Directors' full names: Jeffrey Raymond White
Simon Stuart Forrest
Secretary's full name: Emily White
Accounting reference date: 30 September
Auditors: M.P. Saunders & Co.
Bankers: National Westminster Bank plc
Description of business: Software consultancy and supply
Status: The company is not and has not been at any time in the
last 10 years a Company to which the City Code on
Takeovers and Mergers applies
</TABLE>
SCHEDULE 3
The Property
<TABLE>
----------------------------------------------------------------------------------------------------------------
<S> <C>
Short particulars of the Property (stating whether freehold or
leasehold; in the case of leasehold, giving brief details of the
lease; and including short particulars of any tenancy or licence Title holder Use
affecting the title)
----------------------------------------------------------------------------------------------------------------
Leasehold Interest in office premises on ground floor 120 London Intermethods Limited Offices
Road, Kingston upon Thames under a lease dated 4 January 1989 for a term of 16
years from 25 December 1988
----------------------------------------------------------------------------------------------------------------
</TABLE>
SCHEDULE 4
Non-Taxation Warranties
1. Interpretation
In this Schedule 4 the following expressions have the
following meanings :-
Expression Meaning
"the Accounting Date" 31 December 1999
"the Accounts" The statutory accounts of
the Company for the 15 month period
which ended on the Accounting Date,
comprising in each case a balance sheet,
a profit and loss account, notes and
directors' and auditors' reports
"Contract" Any agreement, arrangement or
understanding whether legally binding or
not
"the Environmental Legislation" All statutes subordinate legislation
regulations codes of practice guidance
noted and the like from time to time in
force on or before Completion concerning
the protection of human health or the
environment or the conditions of the
work place or the generation
transportation storage treatment or
disposal of Hazardous Items including in
particular EPA 1990, Environment Act
1995, Water Resources Act 1991 and
Health and Safety at Work etc Act 1974
and all subordinate legislation
regulations codes of practice and
guidance notes made thereunder
<PAGE>
"EPA 1990"
Environmental Protection Act 1990
"Hazardous Items" Any waste (as defined in EPA 1990) of
any kind noise vibration smell fumes
smoke soot ash dust grit pollution
chemicals leachate petroleum products
ground water noxious radioactive
inflammable explosive dangerous or
offensive gasses or materials and any
other substances of whatever nature
which may cause harm to the health of
living organisms or to the environment
or to public health or welfare
"Intellectual Property Rights" Patents, trademarks, registered designs,
design rights, trade or business names,
brand names, domain names and get-up,
copyrights, know how, confidential
information software and all other
intellectual property (of whatever
nature) in any jurisdiction and any
applications for the same
"Management Accounts" The unaudited accounts of the Company
for the eight month period from 1
January 2000 to 31 August 2000
comprising a profit and loss account
2. Schedules 1 & 2; Capital
2.1 The information contained in Schedules 1 and 2 is complete and accurate
in all respects
2.2 The shares of the Company are in issue fully paid and are beneficially
owned and registered as set out in Schedules 1 and 2 free from any third party
right
2.3 No Contract has been entered into which requires or may require the
Company to allot or issue any share or loan capital
2.4 The Company has no interest in the share capital of any body corporate
3. Information supplied to purchaser
3.1 The information given in the Disclosure Letter is complete and accurate
in all respects and is not misleading because of any omission or ambiguity
<PAGE>
3.2 All information contained in any document or written communication
supplied to the Purchaser or any of its advisers by or on behalf of the Vendors
or the Company in the course of the negotiations leading to the execution of
this Agreement is complete and accurate in all respects and is not misleading
because of any omission or ambiguity
4. Capacity and authority of the Vendors
4.1 Each of the Vendors has full power and authority to enter into and
perform this Agreement and each of the other documents required to be entered
into by the Vendors pursuant to the terms of this agreement
4.2 Each of the Vendors may execute and deliver this agreement and each of
the other documents required to be executed by them pursuant to this Agreement
and perform their respective obligations under this agreement and those other
documents without requiring or obtaining the consent of any person, authority or
body
4.3 This agreement and each of the other documents required to be executed
by the Vendors pursuant to this agreement constitutes a valid and binding
obligation on the Vendors in accordance with its terms
5. Accounts and records
5.1 The Accounts :-
5.1.1 comply with the requirements of the Act and have been prepared
in accordance with all applicable accounting standards (as that term is
defined in section 256 of the Act) and (to the extent that no such
accounting standards are applicable) with the accounting principles and
practices of UK GAAP
5.1.2 have been prepared on bases and principles which are consistent
with those used in the preparation of the audited statutory accounts of the
Company for the three financial years immediately preceding that which
ended on the Accounting Date
5.1.3 show a true and fair view of the assets and liabilities
(including contingent, unquantified and disputed liabilities) of the
Company and of the state of affairs of the Company as at the Accounting
Date and of the results of the Company for the financial year ended on that
date, and
5.1.4 are not affected (except as disclosed in the Accounts) by any
extraordinary or exceptional item
<PAGE>
5.2 The accounting records of the Company are up to date and contain
complete and accurate details of all transactions of the Company and comply with
the provisions of sections 221 and 222 of the Act
5.3 The Management Accounts have been properly prepared in a manner
consistent with that adopted in the preparation of the Accounts, are not
misleading and do not overstate the profits or understate the losses of the
Company in respect of the period to which they relate
5.4 All the accounting records and systems (including without limitation
computerised accounting systems) of the Company are recorded, stored, maintained
or operated or otherwise held by the Company and are not wholly or partly
dependent on any facilities or systems which are not under the exclusive
ownership or control of the Company and the Company is licenced to use all
software necessary to enable it to continue to use its computerised records for
the foreseeable future in the same manner in which they have been used prior to
the date of this agreement and does not share any user rights in respect of such
software with any other person
6. Unencumbered title
Each asset reflected in the Accounts (save for current assets disposed of
by the Company in the ordinary course of its business since the Accounting Date)
and each asset treated as an asset of the Company and/or used by the Company:-
6.1 is in the legal and beneficial ownership of the Company, free from any
third party right and from any Contract to grant the same
6.2 is situated at the Property, and
6.3 is not to any extent surplus to requirements
7. Debtors & Work-in-Progress
7.1 The Company has not factored or discounted any debt or agreed to do so
7.2 All of the debts which are reflected in the Accounts as owing to the
Company (apart from bad and doubtful debts to the extent to which they have been
provided for in the Accounts) or which have subsequently been recorded in the
books of the Company have realised or will realise without enforcement
proceedings and within three months of Completion their full value as included
in the Accounts or in the books of the Company, and no such debt or any part of
it has been outstanding for more than two months from its due date for payment
7.3 The Company's work-in-progress is at its normal level having regard to
current orders and to orders reasonably anticipated from clients or customers of
the Company
7.4 All of the Company's work-in-progress will be fully realisable at
normal selling prices in the ordinary course of business
<PAGE>
8. Plant & Equipment
8.1 The plant and machinery, vehicles, fixtures and fittings, furniture,
tools and other equipment used in connection with the business of the Company
are in a good and safe state of repair and condition have been regularly and
properly maintained and are in satisfactory working order
1. All software and hardware used by the Company is covered by a
maintenance agreement which is fully enforceable and full disclosure
of the terms of such maintenance agreements has been made in the
Disclosure Letter
8.3 Neither the hardware nor the software owned and/or used by the Company
has been affected by any defects or faults which have caused any material
interruption to the Company's business at any time during the 12 month period
prior to the date of this Agreement
8.4 The software and hardware used by the Company in the carrying on of its
business permits the Company to do so in a proper and efficient manner, is fully
functional and there is no reason why any such software or hardware should
require modification, replacement or enhancement to permit the Company to carry
on its business in a proper and efficient manner over the 12 month period from
the date of this agreement
8.5 Each item of equipment and software program used by the Company in the
course of its business (a "Company System"):-
8.5.1 has been produced or amended in a manner which ensures that a
change of, reference to or use of a date after 31 December 1999 in the
operation of that Company System, whether alone or in conjunction with any
other Company System, will not have a material adverse affect on, nor give
rise to an increased inconvenience in, the operation of that Company
System;
8.5.2 which exchanges date information with any item of equipment or
software program under the control of a third party (a "Third Party
System") in the course of the Company's business so exchanges such date
information in a manner which ensures that the use or inclusion of any date
or dates after 31 December 1999 is consistent, clearly defined and apparent
to the user
9. Property
9.1 The particulars of the Property shown in Schedule 3 (including in the
case of registered land the class of title and title number) are true, complete
and correct. The use of the Property for the purpose stated in Schedule 3
corresponds to the use to which it is in fact put or (where the Property is not
presently in use) to the use to which it was last in fact put
<PAGE>
9.2 The Company specified in Schedule 3 as having title has a good and
marketable title to the Property for the estate or interest stated in Schedule
3, free from any defects, and has in its possession, or under its control, all
duly stamped deeds and documents which are necessary to prove title to the
Property
9.3 The Company is not in occupation of or entitled to any estate or
interest in any land or premises other than the Property
9.4 The Property is not affected by any of the following matters :-
9.4.1 any easement, reservation, covenant, restriction, agreement,
licence, franchise, mortgage, charge, encumbrance, or third party right
other than such matters contained in the lease referred to in Schedule 3
and a deed of agreement dated 18 June 1997 between MKJ Investment Company
Limited Intermethods Limited and Telewest Communication Limited
9.4.2 any notice, order, proposal, dispute or complaint relating to it
or its present use under any legislation, agreement, covenant, condition,
licence or consent, or
9.4.3 outgoings (other than uniform business rates, water charges and
other standard payments to the relevant water company), whether of a
periodically recurring nature or otherwise and whether payable by the owner
or occupier of the Property except such outgoings payable under the lease
referred to in Schedule 3
9.5 All obligations, restrictions, conditions and covenants (including any
imposed by or pursuant to any lease) affecting the Property have been observed
and performed and there are no subsisting allegations of a breach of any of the
same relating to the Property or its present use under any legislation,
agreement, covenant, condition, licence or consent by any competent authority or
other person or any circumstance which might give rise to such a breach
9.6 The Property is in a good and substantial state of repair and condition
and fit for the purposes for which it is presently used and no form of asbestos
material or any other deleterious or hazardous material was used in its
construction, extension, alteration or refurbishment and there are no
development works or fitting out works outstanding in respect of the Property
9.7 The use of the Property for the purpose stated in Schedule 3 is the
permitted user under the provisions of all relevant legislation (including,
without limitation, legislation relating to town and country planning, health
and safety, and environmental protection) and regulations made under such
legislation and is in accordance with the requirements of the local planning and
all other competent authorities and all restrictions, conditions and covenants
imposed by or pursuant to such legislation have been observed and performed and
no agreement has been entered into under section 106 Town and Country Planning
Act 1990 (or any similar statutory provision) in respect of the Property
<PAGE>
9.8 The replies given by the Vendors' Solicitors to the Purchaser's
Solicitors written enquiries concerning the Property are true and accurate in
all respects
10. Intellectual property rights
10.1 The Company has no interest in any Intellectual Property Rights
(whether registered or not) save for the Intellectual Property Rights details of
which are given in the Disclosure Letter all of which are (where applicable)
registered in the name of the Company and are beneficially owned by it
10.2 No act has been done or omitted to be done and no event has occurred
or is likely to occur which may render any Intellectual Property Rights of the
Company subject to revocation, compulsory license, cancellation or amendment or
may prevent the grant to or registration by the Company of a valid Intellectual
Property Right pursuant to any pending application
10.3 The processes employed and the products and services dealt in by the
Company do not use, embody or infringe any Intellectual Property Rights (whether
registered or not) vested in any other party and do not give rise (contingently
or otherwise) to payment by the Company of any royalty or of any other sum
10.4 No claim has been made by any third party which alleges any infringing
act or process which would fall within paragraph 10.3 or which otherwise
disputes the right of the Company to use any Intellectual Property Right and
there are no circumstances (including any act or omission to act) likely to give
rise to such a claim
10.5 There exists no actual or threatened infringement by any third party
of any Intellectual Property Right held or used by the Company (including misuse
of confidential information) or any event likely to constitute such an
infringement nor has the Company acquiesced in the unathorised use by any third
party of any such Intellectual Property Right
10.6 The Company is not passing off any part of its business as and for the
business of any other person and, so far as the Vendors are aware, no person is
passing off its business as and for part of the Company's business
10.7 No claims have been made or threatened by employees or ex-employees of
the Company to receive any payment or right in respect of any Intellectual
Property Right used by the Company nor are there any circumstances likely to
give rise to such a claim
10.8 Details of all licences granted to or by the Company in respect of
Intellectual Property Rights are set out in the Disclosure Letter including
details of any limit as to time or right of termination affecting the use of the
Intellectual Property Rights
<PAGE>
10.9 The Company is not in default under any licence, sub-licence or
assignment granted to it in respect of any Intellectual Property Right used by
the Company and no Intellectual Property Right owned or used by the Company and
no licence of Intellectual Property Right of which the Company has the benefit
will be lost, or rendered liable to any right of termination or cessation by any
third party, by virtue of the performance of the terms of this agreement
10.10 Where information of a confidential nature has been developed or
acquired by the Company for the purposes of its business at any time prior to
the date of this Agreement, such information (except insofar as it has fallen
into the public domain through no fault of a member of the Company) has been
kept strictly confidential and has not been disclosed otherwise than subject to
an obligation of confidentiality being imposed on the person to whom the
information was disclosed. The Vendors are not aware of any breach of such
confidentiality obligations by any third party
11. Employees
11.1 Full particulars of the identities, date of birth, date of
commencement of employment (or appointment to office) and terms and conditions
of employment (including remuneration and any bonus, commission, share
incentives or profit sharing arrangement) of all the employees and officers of
the Company are enclosed with the Disclosure Letter
11.2 The terms of the engagements of all directors and employees of the
Company are such that they may be terminated at not more than the minimum period
of notice required by statute and without any liability for payment of
compensation damages or otherwise other than payments provided for by employment
legislation
11.3 No change has been made since the Accounting Date in the terms of
employment of any person currently employed by the Company, and the Company is
not party to any Contract to make any such change
11.4 There are no amounts owing to any present or former officers or
employees of the Company and none of them is entitled to accrued holiday pay
other than in respect of the Company's current holiday year
11.5 No employee has been engaged by the Company since the Accounting Date
and no person employed by the Company at or since the Accounting Date has
ceased, or given or received notice to cease, to be so employed
11.6 No dispute has arisen between the Company and a material number or
category of its employees and there are no present circumstances known which are
likely to give rise to any such dispute and there is no contract agreement or
arrangement between the Company and any trade union or other body representing
employees of the Company
<PAGE>
11.7 The Company has maintained adequate and suitable records regarding the
service of each of its employees and complied with all agreements for the time
being relating to them
12. Pensions
12.1 There is not and has never been in existence, and no proposal has been
announced to establish, any retirement, death or disability benefit scheme
obligation or arrangement (whether legally enforceable or not) for the benefit
of any present or former officers or employees of the Company or their
dependants
12.2 No undertaking or assurance has been given as to the continuance or
introduction, or increase or improvement of any pension rights or entitlements
which the Company would be required to implement in accordance with good
industrial relations practice, whether or not there is any legal obligation to
do so
13. Insurance
13.1 All assets of the Company of an insurable nature are, and have at all
material times been, insured in amounts equal to their full replacement or
reinstatement value against fire and other risks normally insured against by
persons carrying on the same classes of business as the Company. The Company is,
and has at all material times been, adequately covered against employer's
liability, public liability, product liability and professional indemnity
liability
13.2 All premiums due in relation to the Company's insurances have been
paid, and nothing has been knowingly done or omitted to be done which would make
any policy of insurance of the Company void or voidable or which is likely to
result in an increase in premium or which would release any insurer from any of
its obligations under any policy of insurance of the Company
13.3 There is no insurance claim pending or outstanding by or against the
Company and, as far as the Vendors are aware, there are no circumstances likely
to give rise to any such claim
13.4 All insurances effected by the Company are renewable annually and not
on any longer term contract
13.5 Full particulars of all the Company's insurances are given in the
Disclosure Letter
<PAGE>
14. Financial and working capital
14.1 Full and accurate details of all overdrafts, loans or other financial
facilities outstanding or available to the Company are contained in the
Disclosure Letter, and so far as the Vendors are aware no person who provides
any such facility has given any indication that it may be withdrawn or its terms
altered
14.2 The details contained in the Disclosure Letter of the credit or debit
balances on all the bank or deposit accounts of the Company were correct at the
date stated in the Disclosure Letter and since such date there have been no
payments out of any such accounts except for routine payments and the balances
on such accounts are not now substantially different from the balances shown in
the Disclosure Letter
14.3 No person other than the Company has given any guarantee of or
security for any overdraft loan or loan facility granted to the Company
14.4 The Company has, since the Accounting Date, paid its creditors in
accordance with their respective credit terms
14.5 Having regard to existing bank and other facilities the Company has
sufficient working capital to enable it to perform in accordance with their
terms all Contracts which have been entered into by it
15. Material contracts
The Company is not, and has not since the Accounting Date been, a party to
or subject to any Contract which :-
15.1 involves agency, distributorship, franchising, marketing rights,
information sharing, manufacturing rights, servicing or maintenance
15.2 involves partnership, joint venture, consortium or similar
arrangements
15.3 involves hire purchase, conditional sale, credit sale, leasing, hiring
or similar arrangements
15.4 commits the Company to capital expenditure
15.5 is incapable of complete performance in accordance with its terms
within six months after the date on which it was entered into
15.6 cannot readily be fulfilled or performed by the Company on time and
without undue or unusual expenditure of money or effort
15.7 is for the supply of goods and/or services by or to the Company on
terms under which retrospective or future discounts, price reductions or other
financial incentives are given by or to the Company dependent on the level of
purchases or any other factor
15.8 involves warranties, indemnities or representations given in
connection with a sale of shares or assets, or is a guarantee or indemnity in
respect of the obligations of a third party, under which any liability or
contingent liability is outstanding
<PAGE>
15.9 involves the Company in any residual liability in respect of any
property at any time assigned or otherwise disposed of by it
15.10 is not on arm's length terms or is in any way otherwise than in the
ordinary and proper course of the Company's business
15.11 any other party shall by reason of any change in the beneficial
ownership of the Shares be entitled to terminate earlier than it would otherwise
have been entitled to do so or which restricts the Company's ability to conduct
business
15.12 a connected person (as defined by section 346 of the Act) or an
employee is a party to or has an interest in save for the contracts of
employment disclosed
16. Other business matters
16.1 During the last 12 months there has been no substantial change in the
basis or terms on which any person is prepared to do business with the Company
(apart from normal price changes), and no substantial customer or supplier of
the Company has ceased or substantially reduced its business with the Company,
and no indication has been received by the Company or any of the Vendors that
there will or may be any such change, cessation or reduction
16.2 Save for any guarantee or warranty implied by law the Company has not
given any guarantee or warranty or made any representation in respect of goods
sold or contracted to be sold by it and has not accepted any liability or
obligation to service repair maintain take back or otherwise do or not do
anything in respect of any goods that would apply after the goods have been
delivered by it
16.3 A copy of the Company's current standard conditions of trading are
enclosed with the Disclosure Letter
16.4 The Company is not a party to any consultancy or management agreement
16.5 The Company does not use on its letterhead books circulars
advertisements or vehicles nor otherwise carry on business under any name other
than its corporate name
17. Company law matters and general compliance
17.1 Compliance has been made with all legal requirements in connection
with the formation of the Company and all issues and grants of shares or other
securities of the Company
17.2 The copy of the memorandum and articles of association of the Company
enclosed with the Disclosure Letter is true and complete
<PAGE>
17.3 All returns, particulars, resolutions and other documents required to
be filed with or delivered to the Registrar of Companies by the Company have
been properly filed, and none has been so filed or delivered within 14 days of
the date of this Agreement
17.4 The statutory books (including all registers and minute books) of the
Company have been properly kept
17.5 The Company has conducted its business in accordance with all
applicable laws and regulations of the United Kingdom and any relevant foreign
country
17.6 No agreement, practice or arrangement to which the Company is party is
or ought to be or ought to have been registered under, or infringes, the Treaty
of Rome or any employment, competition, anti-restrictive trade practice or
consumer protection legislation applicable in the United Kingdom or elsewhere
17.7 There is not pending, or in existence, any investigation or enquiry
by, or on behalf of, any governmental or other body in respect of the affairs of
the Company
17.8 The Company has obtained all licences authorisations and consents
(private or statutory) required for the carrying on of its business or in
respect of any activities processes and substances from time to time carried on
held or stored by it and copies of the same are enclosed with the Disclosure
Letter
17.9 All such licences authorisations and consents are in full force and
effect, there are no circumstances which may give rise to them being modified,
suspended or revoked or not renewed in the ordinary course and all conditions
attached to such licences authorisations and consents have in all material
respects been complied with
17.10 No substantial part of the Company's activities are operated under
the agreement or consent of a third party, nor is there any agreement (whether
or not in respect of
Intellectual Property Rights) which restricts the manner or fields in
which the
activities of the Company have been operated or in which the Purchaser
may
operate the Company's activities following Completion
18. Environmental legislation
18.1 As far as the Vendors are aware the Company has at all times complied
with the Environmental Legislation and there is nothing in on over or under the
Property the presence existence or condition of which constitutes a breach of
the Environmental Legislation nor is any manufacturing storage generation
servicing treatment disposal or other process carried on at the Property in such
a way as to amount to a breach of the same
<PAGE>
18.2 No complaints have been made by any third party (including any
employee) with regard to the Property and/or any activities processes or
substances in on over or under the Property as the result of any actual or
alleged breach of the Environmental Legislation or the presence of any Hazardous
Items and there are no circumstances which may lead to any such complaint
19. Litigation
19.1 Neither the Company nor any person for whose acts or defaults it may
be liable is engaged or involved in any capacity (whether as claimant or
defendant or otherwise) in any litigation, arbitration, prosecution or other
legal proceedings (whether civil or criminal) or in any proceedings or hearing
before any statutory or governmental body, tribunal, department, board or agency
19.2 No such proceedings are pending or so far as the Vendors are aware
threatened and the Vendors are not aware of any facts or circumstances likely to
give rise to any such proceedings
19.3 There is no unsatisfied judgment or unfulfilled order outstanding
against the Company and the Company is not party to any undertaking or assurance
given to a court, tribunal or any other person in connection with the
determination or settlement of any claim or proceedings
20. Default
20.1 The Company has not sold, supplied or provided any product or service
which did not, does not or will not comply fully with all applicable laws,
regulations or standards or which was, is or will be faulty, defective or
dangerous or not in accordance with any representation or contractual term,
express or implied, relating to it
20.2 The Company is not in breach of any Contract to which it is a party,
and no other party to any such Contract is in breach of it
21. Insolvency
21.1 No order has been made, petition presented or meeting convened for the
purpose of considering a resolution for the winding up of the Company.
21.2 No petition has been presented or made for an administration order to
be made in relation to the Company.
<PAGE>
21.3 No receiver (including, without limitation, any administrative
receiver) has been appointed in respect of the whole or any part of any of the
property, assets and/or undertaking of the Company.
21.4 No composition in satisfaction of the debts of the Company, or scheme
or arrangement of its affairs, or compromise or arrangement between it and its
creditors and/or members or any class of their creditors and/or members, has
been proposed, sanctioned or approved.
21.5 No distress, distraint, charging order, garnishee order, execution or
other process has been levied or applied for in respect of the whole or any part
of any of the property, assets and/or undertaking of the Company.
21.6 The Company is not insolvent or unable to pay its debts within the
meaning of Section 123 of the Insolvency Act or has stopped paying its debts as
they fall due.
21.7 So far as the Vendors are aware, the Company has not been party to any
transaction with any third party or parties which, in the event of any such
third party or parties going into liquidation or an administration order or a
bankruptcy order being made in relation to it or them, may constitute (in whole
or in part) a transaction at an undervalue, a preference, an invalid floating
charge or an extortionate credit transaction or part of a general assignment of
debts, or (in Scotland) an unfair preference or a gratuitous alienation, under
Section 238 to Section 245 of the Insolvency Act 1986.
21.8 All charges in favour of the Company required to be registered in
accordance with the provisions of Sections 395 and 398 of the Companies Act have
been so registered or comply with all necessary formalities as to registration
or otherwise in any foreign country.
21.9 No person who at present is, or who at any time within the last three
years was, a director or officer of the Company is, or at any material time was,
subject to any disqualification order under the Companies Act, the Insolvency
Act 1986 or the Company Directors Disqualification Act 1986.
21.10 No events or circumstances analogous to any of those referred to in
paragraphs 18.1 to 18.9 have occurred, subsist or, so far as the Vendors are
aware, are contemplated in or outside England.
21.11 No steps have been taken or are contemplated by the directors of the
Company or any of them or, so far as the Vendors are aware, by any third party,
and no circumstances exist, which may at any time hereafter lead to a result
which would if the statements contained in paragraphs 18.1 to 18.10 above were
then repeated cause them no longer to be true or accurate.
<PAGE>
21.12 No floating charge created by the Company has crystallised and, so
far as the Vendors are aware, there are no circumstances likely to cause such a
floating charge to crystallise.
22. Events since the Accounting Date
Since the Accounting Date :-
22.1 there has been no reduction in the net asset value of the Company
determined in accordance with the same accounting policies as those applied in
the Accounts (and valuing no asset at a figure greater than the value attributed
to it in the Accounts or, in the case of any asset acquired since the Accounting
Date, greater than cost)
22.2 the Company has not acquired, or agreed to acquire, any single asset
having a value in excess of (pound)2,000 or assets having an aggregate value in
excess of (pound)5,000
22.3 the Company has not disposed of, or agreed to dispose of, any asset or
incurred, or agreed to incur, any debts or liability (including contingent
liabilities) other than in the ordinary course of business
22.4 the trade and business of the Company has been carried on in the
ordinary and normal course
22.5 there has been no adverse change in the financial or trading position
or prospects of the Company
22.6 no dividend or other payment which is, or could be treated as, a
distribution for the purposes of Part VI ICTA or section 418 ICTA has been
declared, paid or made by the Company
SCHEDULE 5
Taxation
PART I - INTERPRETATION
1. Interpretation
In this Schedule 5 :-
1.1 the following expressions have the following meanings unless
inconsistent with the context :-
Expression Meaning
"the Accounting Date" The same meaning as in paragraph 1 of
Schedule 4
"ACT" Advance corporation tax
"the Auditors" The auditors for the time being of the
Company
"the Balance Sheet" The balance sheet of the Company as at
the Accounting Date and comprising part
of the Accounts
"CAA" Capital Allowances Act 1990
"Claim" Any notice, demand, assessment, letter
or other document issued or action
taken, by or on behlaf of any Taxation
Authority and the submission of any
Taxation form, return or computation
from which, in either case, it appears
to the Purchaser that the Company is or
may be subject to a Liability to
Taxation or other liability in respect
of which the Vendors are or may be
liable under paragraph 2
"Dispute" Any dispute, appeal, negotiations or
other proceedings in connection with a
Claim
"Event" Any event, fact or circumstance
whatsoever including but not limited to
:-
(a) any transaction, action or omission
(whether or not the Company is party to
it)
(b) the earning, receipt or accrual for
any Taxation purpose of any income,
profits or gains
(c) the incurring for any Taxation
purpose of any loss or expenditure
(d) the declaration, payment or making
of any dividend or other distribution
(e) the sale or purchase of the Shares
pursuant to the Agreement and
(f) Completion
"FA" Finance Act
"Group Relief" The meaning given to that expression by
section 402 ICTA
<PAGE>
"ICTA" Income and Corporation Taxes Act 1988
"IHTA" Inheritance Tax Act 1984
"Liability to Taxation" (a) Any liability of the Company to make
an actual payment of Taxation (whether
or not the Company is primarily so
liable and whether or not the Company
has any right of recovery against any
other person) and
(b) The use by the Company (in whole or
in part) of any Purchaser's Relief
(including a Purchaser's Relief
surrendered to the Company by another
company) to reduce or eliminate any
liability of the Company to make an
actual payment of Taxation (whether or
not the Company has any right of
recovery against any other person) in
respect of which the Vendors would
otherwise have been liable under
paragraph 2, and
(c) The loss by the Company (in whole or
in part) of any Purchaser's Relief
(including a Purchaser's Relief
surrendered to the Company by another
company)
"Purchaser's Relief" (a) Any relief which was treated as an
asset of the Company in the Balance
Sheet, and
(b) Any Relief which was taken into
account in computing (and so reducing or
eliminating) any provision for deferred
tax which appears in the Balance Sheet
or which would have appeared in the
Balance Sheet but for the presumed
availability of such Relief, and
(c) Any Relief which arises as a result
of any Event which has occurred or
occurs after the Accounting Date
"Relief" (a) Any relief, allowance, exemption,
set-off, deduction or credit available
from, against or in relation to Taxation
or in the computation for any Taxation
purpose of income, profits or gains, and
(b) Any right to a repayment of Taxation
<PAGE>
"Taxation"
(a) Any tax, duty, impost or levy, past
or present, of the United Kingdom or
elsewhere, whether governmental, state,
provincial, local governmental or
municipal, including but not limited to
income tax (including income tax
required to be deducted or withheld from
or accounted for in respect of any
payment under section 203 ICTA or
otherwise), corporation tax, ACT,
capital gains tax, inheritance tax, VAT,
customs and other import or export
duties, stamp duty reserve tax, national
insurance and social security
contributions, and
(b) Any fine, penalty, surcharge,
interest or other imposition relating to
any tax, duty, impost or levy mentioned
in paragraph (a) of this definition or
to any account, record, form, return or
computation required to be kept,
preserved, maintained or submitted to
any person for the purposes of any such
tax, duty, impost or levy
"Taxation Authority" Any authority, whether of the United
Kingdom or elsewhere, competent to
impost, asses or collect Taxation,
including but not limited to the Board
of Inland Revenue, the Commissioners of
Customs and Excise and the Department of
Social Security
"Taxation Statute" Any statute relating to Taxation (and
all regulations and other documents
having the force of law under such
statute) published, enacted, issued or
coming into force on or before
Completion
"TCGA" Taxation of Chargeable Gains Act 1992
"TMA" Taxes Management Act 1970
"VAT" Value added tax
"VATA" Value Added Tax Act 1994
"VAT Group" Any group of companies for the purposes
of section 43 VATA of which the Company
is or has been a member on or before
Completion
<PAGE>
1.2 references to Events include Events which are deemed to have occurred
for any Taxation purpose and references to income, profits or gains earned,
received or accrued for any Taxation purpose include income, profits or gains
which are deemed to have been earned, received or accrued for any Taxation
purpose
1.3 references to the loss of a Relief include the disallowance of a Relief
and the failure to obtain a Relief (whether as a result of the surrender of the
Relief to another company or otherwise)
1.4 any stamp duty which is charged on any document, or in the case of a
document which is outside the United Kingdom any stamp duty which would be
charged on the document if it were brought into the United Kingdom, which is
necessary to establish the title of the Company to any asset or in the
enforcement or production of which the Company is interested, and any interest,
fine or penalty relating to such stamp duty, will be deemed to be a liability of
the Company to make an actual payment of Taxation, and
1.5 references to any statute or statutory provisions will, unless the
context otherwise requires, be construed as including references to any earlier
statute or the corresponding provisions of any earlier statute, whether repealed
or not, directly or indirectly amended, consolidated, extended or replaced by
such statute or provisions, or re-enacted in such provisions, and to any
subsequent statute or the corresponding provisions of any subsequent statute
directly or indirectly amending, consolidating, extending, replacing or
re-enacting the same, and will include any orders, regulations, instruments or
other subordinate legislation made under the relevant statute or statutory
provisions
<PAGE>
PART II - TAX COVENANT
2. Covenant
Subject to the provisions of this Part II of this Schedule 5, the Vendors
covenant with the Purchaser to pay to the Purchaser an amount equal to the
amount of:-
2.1 any Liability to Taxation which has arisen or arises as a result of or
in connection with any Event which occurred on or before Completion, whether or
not such Liability to Taxation has been discharged on or before Completion, and
2.2 any Liability to Taxation which arises under section 767A ICTA, section
132 FA 1988 or section 178, 179, 189, 190 or 191 TCGA as a result of the
combined effect of two or more Events, the first of which occurred on or before
Completion, and
2.3 any Liability to Taxation which arises as a result of any Event which
occurs after Completion pursuant to a legally binding obligation (whether or not
conditional) entered into by the Company on or before Completion otherwise than
in the ordinary course of business of the Company, and
<PAGE>
2.4 any Liability to Taxation which arises as a result of any supply,
acquisition or importation made or deemed to be made after Completion for the
purposes of VAT by any member of any VAT Group other than the Company and any
other Group Member, and
2.5 any Liability to Taxation in respect of a chargeable gain which arises
as a result of the disposal after Completion of any asset acquired by the
Company on or before Completion, to the extent that such Liability to Taxation
would not have arisen if the expenditure allowable under section 38(1)(a) TCGA
in respect of the asset (ignoring any other Relief) had not been less than the
value of the asset stated in the Balance Sheet or, in the case of an asset
acquired after the Accounting Date, the cost of the asset, and
2.6 any Liability to Taxation which arises in respect of a chargeable gain
as a result of the Company ceasing after Completion to use an asset acquired on
or before Completion for the purposes of a trade, as mentioned in section
154(2)(b) TCGA, or as a result of the expiry after Completion of a period of ten
years beginning on or before Completion with the acquisition of an asset, as
mentioned in section 154(2)(c) TCGA, and
2.7 any liability of the Company to make a payment in respect of Taxation
to any person which has arisen or arises as a result of or in connection with
any Event which occurred on or before Completion, whether or not such liability
has been discharged on or before Completion, including but not limited to :-
2.7.1 any liability of the Company to make a payment in respect of
Taxation to any person under any indemnity, covenant, guarantee or charge
entered into by the Company on or before Completion, and
2.7.2 any liability of the Company to make a payment in respect of
Taxation to any person under any agreement or arrangement relating to the
surrender of Group Relief, ACT or any other Relief or to any VAT Group, in
either case entered into by the Company on or before Completion, and
2.8 any reasonable costs, fees or expenses incurred by the Company or the
Purchaser in connection with :-
2.8.1 any Liability to Taxation or other liability in respect of which
the Vendors are liable under any of paragraphs 2.1 to 2.7, or
2.8.2 any Claim or any Dispute, or
<PAGE>
2.8.3 taking or defending any action (including but not limited to
legal proceedings) under this Part II of this Schedule 5
3. Quantification
For the purposes of paragraph 2 the amount of a Liability to Taxation or a
liability of the kind mentioned in paragraph 2.7 will be determined as follows
:-
3.1 the amount of a Liability to Taxation falling within paragraph (a) of
the definition of that expression in paragraph 1.1 will be the amount of the
actual payment of Taxation which the Company is liable to make
3.2 the amount of a Liability to Taxation falling within paragraph (b) of
the definition of that expression in paragraph 1.1 will be the amount of
Taxation saved by the Company as a result of the use of the Purchaser's Relief,
and
3.3 the amount of a Liability to Taxation falling within paragraph (c) of
the definition of that expression in paragraph 1.1 will be :-
3.3.1 the amount of Taxation which would have been saved by the
Company but for the loss of the Purchaser's Relief on the basis of the
rates of Taxation current at the date of the loss, assuming for this
purpose that the Company had sufficient profits or was otherwise in a
position actually to use the Purchaser's Relief, or
3.3.2 if the Purchaser's Relief lost was a right to a repayment of
Taxation, the amount of the repayment of Taxation so lost, and
3.4 the amount of a liability of the Company to make a payment in respect
of Taxation will be the amount of the payment in respect of Taxation which the
Company is liable to make
4. Exclusions
4.1 The Vendors will not be liable under paragraph 2 in respect of a
Liability to Taxation or other liability of the Company to the extent to which
:-
4.1.1 such Liability to Taxation or other liability was discharged on
or before the Accounting Date and the discharge of such Liability to
Taxation or other liability was recognised in the Balance Sheet, or
4.1.2 provision was made in the Balance Sheet for such Liability to
Taxation or other liability, or
4.1.3 such Liability to Taxation or other liability would not have
arisen but for any Event which occurred in the ordinary course of business
of the Company after the Accounting Date and on or before Completion, or
<PAGE>
4.1.4 payment has already been made by the Vendors, either to the
Purchaser or the relevant Taxation Authority, in respect of such Liability
to Taxation or other liability under this Part II or Part III of this
Schedule 5, or
4.1.5 such Liability to Taxation or other liability would not have
arisen but for a change in legislation (including but not limited to an
increase in rates of Taxation) or in the published practice of any Taxation
Authority first enacted or announced after Completion or any decision of
the courts made after Completion which alters the generally accepted
interpretation of any legislation as at the date of this Agreement, or
4.1.6 such Liability to Taxation or other liability would not have
arisen but for a voluntary act, transaction or omission of the Company
after Completion which the Purchaser was aware or ought reasonably to have
been aware would give rise to the Liability to Taxation or other liability
in question, or
4.1.7 such claim arises or is increased as a result of the Purchaser
being in breach of its obligations under paragraph 7 of this Part II of
this Schedule 5 and such breach is incapable of remedy or is not remedied
within 21 days after the Vendors shall have given notice to the Purchaser
requiring such breach to be remedied
4.2 For the purposes of paragraph 4.1.3 none of the following will be
regarded as an Event occurring in the ordinary course of business of the Company
:-
4.2.1 any distribution (as defined in section 209 and 418 ICTA) or
deemed distribution
4.2.2 the disposal or acquisition of any asset (including trading
stock) or the supply or obtaining of any service or business facility of
any kind (including a loan of money or the letting, hiring or licensing of
any tangible or intangible property) in circumstances where the
consideration (if any) actually received or given for such disposal,
acquisition, supply or obtaining is different from the consideration deemed
to have been received or given for any Taxation purpose
4.2.3 any Event which gives rise to a Liability to Taxation in respect
of deemed (as opposed to actual) income, profits or gains
<PAGE>
4.2.4 the Company ceasing, or being deemed to cease, to be a member of
any group of companies or associated with any other company for any
Taxation purpose
4.2.5 any Event which gives rise to a Liability to Taxation under Part
XVII ICTA
4.2.6 any Event which gives rise to a Liability to Taxation primarily
chargeable against or attributable wholly or partly to or recoverable
wholly or partly from any other person
4.2.7 the disposal of any capital asset
4.2.8 any scheme, arrangement or transaction designed partly or wholly
or containing steps or stages designed partly or wholly for the purpose of
avoiding or reducing or deferring a Liability to Taxation
4.2.9 the creation, cancellation or reorganisation of any share or
loan capital of the Company
4.2.10 the failure by the Company to deduct or account for any
Taxation, or
4.2.11 any Event which gives rise to any fine, penalty, surcharge,
interest or other imposition relating to any Taxation
4.3 For the purposes of paragraph 4.1.6 neither of the following will be
regarded as a voluntary act, transaction or omission of the Company:-
4.3.1 any voluntary act, transaction or omission which is carried out
or occurs in the ordinary course of business of the Company
4.3.2 any voluntary act, transaction or omission which is carried out
or occurs pursuant to a legally binding obligation entered into by the
Company on or before Completion or is imposed on the Company by any
legislation whether coming into force before, on or after Completion
5. Deductions from payments
5.1 Except as required by law all payments by the Vendors under this Part
II of this Schedule 5 will be made free and clear of all deductions and
withholdings (whether in respect of Taxation or otherwise)
<PAGE>
5.2 If any deduction or withholding is required by law to be made from any
payment by the Vendors under this Part II of this Schedule 5 or if (ignoring any
available Relief) the Purchaser is subject to Taxation in respect of any payment
by the Vendors under this Part II of this Schedule 5, the Vendors covenant with
the Purchaser to pay to the Purchaser such additional amount as is necessary to
ensure that the net amount received and retained by the Purchaser (after taking
account of such deduction or withholding or Taxation) is equal to the amount
which it would have received and retained had the payment in question not been
subject to the deduction or withholding or Taxation
6. Due date for payment
6.1 The due date for the making of a payment by the Vendors under this Part
II of this Schedule 5 will be :-
6.1.1 the date falling five Business Days after the Purchaser has
served notice on the Vendors demanding such payment, or
6.1.2 in any case involving a liability of the Company or the
Purchaser to make an actual payment (whether or not a payment of Taxation),
the later of the date mentioned in paragraph 6.1.1 and the date falling
five clear Business Days before the last date upon which the payment is
required to be made to the person entitled to the payment (after taking
into account any postponement of the due date for payment of any Taxation
which is obtained)
6.2 If any payment required to be made by the Vendors under this Part II of
this Schedule 5 is not made by the due date, ascertained in accordance with
paragraph 6.1 then, except to the extent that the Vendors' liability under
paragraph 2 compensates the Purchaser for the late payment by virtue of the
definition of the expression "Taxation" in paragraph 1.1 extending to interest,
such payment will bear interest from the due date for payment at the annual rate
of 2 per cent above the base lending rate from time to time of National
Westminster Bank plc, accruing on a daily basis until payment is made, whether
before or after any judgment
7. Claims procedure
7.1 The Purchaser will as soon as reasonably practicable give notice of any
Claim to the Vendors and in any event within 12 Business Days of becoming aware
of such Claim, provided that the giving of such notice will not be a condition
precedent to the liability of the Vendors under paragraph 2
7.2 Provided that the Vendors indemnify the Company, the Purchaser and all
other members of the same group of companies as the Purchaser to the reasonable
satisfaction of the Purchaser against all losses and damages and secure the
Company, the Purchaser and all other members of the same group of companies as
the Purchaser to the reasonable satisfaction of the Purchaser against all
reasonable costs, and expenses (including interest on overdue Taxation) which
may be incurred thereby, the Purchaser will procure that the Company, at the
Vendors' cost and expense, takes such action and gives such information and
assistance in connection with its Taxation affairs as the Vendors may reasonably
and promptly request to dispute, appeal against, settle or compromise any Claim,
including but not limited to :-
<PAGE>
7.2.1 applying to postpone (so far as legally possible) the payment of
any Taxation, and
7.2.2 (except in the case of a Claim where any Taxation Authority
alleges dishonest or fraudulent conduct on the part of any of the Vendors,
the Company or any person acting on behalf of any of the Vendors or the
Company) allowing the Vendors to undertake, at their own cost and expense,
the conduct of the Dispute
7.3 The Vendors will not without the prior written consent of the Purchaser
take any action in relation to any Dispute conducted by them or at their
request, including but not limited to :-
7.3.1 the transmission or any communication (whether written or
otherwise) to any Taxation Authority
7.3.2 the appointment of solicitors or other professional advisers in
relation to the Dispute
7.3.3 the settlement or compromise of the relevant Claim, and
7.3.4 the agreement of any matter which is likely to affect the amount
of the relevant Claim or any future Liability to Taxation
7.4 The Purchaser may withhold its consent to the taking of any action
mentioned in paragraph 7.3 which it considers to be materially prejudicial to
the business or Taxation affairs of the Company, the Purchaser or any other
member of the same group of companies as the Purchaser or on any other
reasonable ground but otherwise its consent will not be unreasonably withheld
7.5 The Vendors will promptly and fully inform the Purchaser of all matters
relating to any Dispute conducted by or at the request of the Vendors and will
provide the Purchaser with copies of all correspondence and other documents
relating thereto
7.6 Without prejudice to the liability of the Vendors under this Part II of
this Schedule 5:-
1. the Purchaser will be entitled, at the Vendors' reasonable cost
and expense, to appoint its own solicitors and other professional
advisers in relation to any Dispute conducted by or at the
request of the Vendors, in addition to those appointed by the
Vendors
2. the Purchaser will not be obliged to procure that the Company
appeals against any assessment to or demand for Taxation unless
within ten Business Days of the Purchaser giving notice thereof
to the Vendors in accordance with paragraph 7.1 the Vendors have
given notice to the Purchaser to do so, and
<PAGE>
7.6.3 if the Vendors fail promptly (and in any event within ten
Business Days of the Purchaser giving notice requiring them to do so) to
inform the Purchaser of any action which they wish the Purchaser to procure
the Company to take under paragraph 7.2 , the Purchaser will be entitled to
procure that the Company settles or compromises any Claim on such terms as
it determines in its absolute discretion
8. Time limit
8.1 The Vendors will not be liable under paragraph 2 in respect of a
Liability to Taxation or other liability of the Company unless within seven
years after Completion the Purchaser has given notice to the Vendors of any
Claim whatsoever relating to such Liability to Taxation or other liability, or
of any Event which may give rise to such a Claim
8.2 The time limit in paragraph 8.1 will not apply in any case involving :-
8.2.1 dishonest or fraudulent conduct on the part of any of the Vendors or the
Company or any person acting on behalf of any of the Vendors or the Company, or
8.2.2 any Liability to Taxation or other liability of the Company
which arises as a result of the combined effect of two or more Events not
all of which occurred on or before Completion, in which case the time limit
in paragraph 8.1 will be deemed to be seven years after the last of such
Events to occur
9. Savings
9.1 If (at the Vendors' request and expense) the Auditors determine that
the Company has obtained a Saving, the Purchaser will as soon as reasonably
practicable thereafter repay to the Vendors the lesser of :-
9.1.1 the amount of the Saving (as determined by the Auditors), and
9.1.2 the amount paid by the Vendors under paragraph 2 in respect of
the Liability to Taxation which gave rise to the Saving less any part of
that amount previously repaid to the Vendors under any provision of this
Agreement or otherwise
9.2 If, at the request and cost of the Vendors, the Auditors shall certify
that any provision for Taxation (not being a provision for deferred taxation)
contained in the Balance Sheet is an over-provision, the value of such
over-provision shall be set against the liability of the Vendors under paragraph
2, except in so far as such over-provision is attributable to the effect of a
change in rates of taxation after the date hereof, but no deduction shall be
made from any payment which the Vendors shall be obliged to make hereunder
unless such certificate is in existence on the due date for that payment. In the
event that such a certificate is given after the Vendors have made a payment
hereunder, the Purchaser shall refund to the Vendors (without interest) any
payment made by the Vendors to the extent that such over-provision could have
been set against such payment if the certificate had been in existence on the
due date of payment. The Purchaser shall co-operate in obtaining any such
certificate if the Vendors shall so request.
<PAGE>
9.3 The Company will use any Relief which gives rise to a Saving in
priority to any other Relief available to it (including by way of surrender by
another company to it) to reduce or eliminate any liability to make an actual
payment of corporation tax
9.4 In determining whether the Company has obtained a Saving or that an
over provision exists, the Auditors will act as experts and not as arbitrators
and their determination will (in the absence of manifest error) be conclusive
and binding on the parties
10. Recovery from other persons
10.1 If the Company recovers from any other person (including any Taxation
Authority but excluding the Purchaser, any other member of the same group of
companies as the Purchaser and any officer or employee of any such company) any
amount which is referable to a Liability to Taxation or other liability of the
Company in respect of which the Vendors have made a payment under paragraph 2,
the Purchaser will repay to the Vendors the lesser of :-
10.1.1 the amount so recovered (less any losses, reasonable costs,
damages and reasonable expenses incurred by the Company, the Purchaser or
any other member of the same group of companies as the Purchaser as a
result of or in order to achieve the recovery of that amount), and
10.1.2 the amount paid by the Vendors under paragraph 2 in respect of
the Liability to Taxation or other liability in question less any part of
such amount previously repaid to the Vendors under any provision of this
Agreement or otherwise
10.2 If the Purchaser becomes aware that the Company is entitled to
recover any amount mentioned in paragraph 10.1, the Purchaser will as soon
as reasonably practicable give notice of the fact to the Vendors and
provided that the Vendors indemnify the Company, the Purchaser and all
other members of the same group of companies as the Purchaser to the
reasonable satisfaction of the Purchaser against all losses and damages and
secure the Company, the Purchaser and all other members of the same group
of companies as the Purchaser to the reasonable satisfaction of the
Purchaser against all reasonable costs and expenses which may be incurred
thereby, the Purchaser will procure that the Company, at the Vendors' cost
and expense, takes such action as the Vendors may reasonably and promptly
request to effect such recovery
<PAGE>
10.3 The action which the Vendors may request the Company to take under
paragraph 10.2 does not include:-
10.3.1 any action which the Purchaser considers to be materially
prejudicial to the business or Taxation affairs of the Company, the
Purchaser or any other member of the same group of companies as the
Purchaser or to which the Purchaser objects on any other reasonable ground;
or
10.3.2 allowing the Vendors to undertake the conduct of any action
necessary to effect recovery of the amount in question
11. General
All payments by the Vendors under this Part II of this Schedule 5 will be
treated as repayments by the Vendors of the Consideration, provided that this
paragraph 11 will not operate in any way to limit the liability of the Vendors
under this Part II of this Schedule 5
PART III - TAX WARRANTIES
12. Returns, disputes and clearances
12.1 All notices, returns, computations, registrations and payments which
should have been made by the Company for any Taxation purpose have been made
within the requisite periods and are up-to-date, correct and on a proper basis
and none of them is, or so far as the Vendors are aware, is likely to be, the
subject of any dispute with any Taxation Authority
12.2 The Company is not involved in any dispute with any Taxation Authority
concerning any matter likely to affect in any way the liability of the Company
to Taxation and so far as the Vendors are aware there are no circumstances which
are likely to give rise to any such dispute
12.3 The Taxation affairs of the Company have never been the subject of any
investigation or enquiry by any Taxation Authority (other than routine
questions), no Taxation Authority has indicated that it intends to investigate
the Taxation affairs of the Company and so far as the Vendors are aware there
are no circumstances which are likely to give rise to any such investigation
<PAGE>
12.4 The Company has punctually supplied all information requested by any
Taxation Authority for any Taxation purpose
12.5 All particulars furnished to the Inland Revenue or any other Taxation
Authority in connection with the application for any consent or clearance made
on behalf of or affecting the Company fully and accurately disclosed all facts,
circumstances and (where appropriate) law material to the decision of the Inland
Revenue or such other Taxation Authority and any such consent or clearance given
remains valid and effective and any transaction for which such consent or
clearance has previously been obtained has been carried into effect (if at all)
only in accordance with the terms of the relevant application, consent or
clearance
12.6 The Disclosure letter contains details so far as they affect the
Company of all concessions, arrangements and agreements (whether formal or
informal) negotiated with any Taxation Authority and no action has been taken by
or on behalf of the Company which has had or so far as the Vendors are aware is
likely to have the result of altering, prejudicing or in any way disturbing any
such concession, arrangement or agreement
13. Penalties and interest
13.1 The Company has not since the Accounting Date paid, and is not liable
to pay, any fine, penalty, charge, surcharge or interest charged by virtue of
any of the provisions of TMA or any other Taxation Statute and has not since the
Accounting Date become subject to any forfeiture by virtue of any such
provisions or to the operation of any penal provisions contained in any Taxation
Statute
13.2 So far as the Vendors are aware, there are no circumstances which are
likely to cause the Company to become liable to pay any fine, penalty, charge,
surcharge or interest, or become subject to any forfeiture, as mentioned in
paragraph 13.1
14. Taxation claims, liabilities and reliefs
14.1 The Company has sufficient records to calculate the liability to
Taxation or relief arising on the disposal of any asset owned at the Accounting
Date or acquired since the Accounting Date but before Completion
14.2 The Company has duly and properly made all Taxation claims,
disclaimers, elections and surrenders and given all notices and consents and
done all other things in respect of Taxation the making, giving or doing of
which was assumed to have been made for the purposes of the Balance Sheet, all
such claims, disclaimers, elections, surrenders, notices, consents and other
things have been accepted as valid by the relevant Taxation Authorities and none
has been revoked or otherwise withdrawn
14.3 The Company has neither made nor is entitled to make any claim under
section 23, 24, 48, 242, 279 or 280 TCGA or section 584 ICTA
<PAGE>
14.4 The Company is not, and will not become, liable to pay, or make
reimbursement or indemnity in respect of, any Taxation (or amounts corresponding
to any Taxation) payable by or chargeable on or attributable to any other
person, whether in consequence of the failure by that person to discharge that
Taxation within any specified period or otherwise, where such Taxation relates
to a profit, income or gain, transaction, event, omission or circumstance
arising, occurring or deemed to arise or occur (whether wholly or partly) on or
before Completion
14.5 No relief (whether by way of deduction, reduction, set off, exemption,
repayment or allowance or otherwise) from, against or in respect of any Taxation
has been claimed by and/or given to the Company which would or might be
effectively withdrawn, postponed, restricted or otherwise lost as a result of
any act, omission, event or circumstance arising, occurring or effected on or
before Completion
15. Distributions and payments
15.1 The Company has deducted and properly accounted to the appropriate
Taxation Authority for all amounts which it has been obliged to deduct in
respect of Taxation, has complied fully with all reporting requirements relating
to all such amounts and has (where required by the applicable Taxation Statute)
duly provided certificates of deduction of tax to the recipients of payments
from which deductions have been made
15.2 The Company has not at any time declared, paid or made any dividend or
other payment which is, or could be treated as, a distribution for the purposes
of Part VI ICTA or section 418 ICTA except any dividend disclosed in its audited
statutory accounts nor is it bound to make such a distribution
15.3 There are no securities (within the meaning of section 254(1) ICTA) of
the Company in issue or which the Company has agreed to issue any payment in
respect of which falls to be treated as a distribution for the purposes of
section 209 ICTA
15.4 The Company has not at any time issued or agreed to issue any share
capital as paid up otherwise than by the receipt of new consideration, after
repaying any share capital, as mentioned in section 210 ICTA
15.5 The Company has not made or received any exempt distribution within
the meaning of section 213 ICTA, and has at no time been a relevant company in
relation to an exempt distribution for the purposes of that section or concerned
in an exempt distribution for the purposes of section 214 ICTA
15.6 The Company has not at any time received a capital distribution to
which section 189 TCGA could apply
<PAGE>
15.7 No rents, interest, annual payments or other sums of an income nature
paid or payable by the Company since the Accounting Date, or which the Company
is under an obligation to pay, will be wholly or partially disallowable as
deductions or charges in computing the profits of the Company for the purposes
of corporation tax, whether by virtue of the provisions of section 74, 79, 125,
338, 577, 779 to 786 (inclusive) or 787 ICTA or otherwise
15.8 The Company has not since the Accounting Date made any payment to, or
provided any benefit for, any present or former director, employee or officer
which is wholly or partially disallowable as a deduction in computing the
profits of the Company for the purposes of corporation tax, and is under no
obligation to make any such payment or provide such benefit
15.9 The Company is not and never has been a party to any interest rate
contract or option, or currency contract or option which is or may become a
qualifying contract as described in Chapter II Part IV FA 1994
15.10 The Company has no assets or liabilities to which Chapter II Part II
FA 1993 could apply
15.11 The Company has not elected that any dividend it has paid be treated
as a foreign income dividend as described in Chapter VA Part VI ICTA
15.12 The Company has not paid any dividend to which section 246T ICTA has
applied
16. Employee benefits
16.1 Without prejudice to the generality of paragraph 15.1, the Company has
properly operated the Pay As You Earn system, by making deductions, as required
by the applicable Taxation Statute, from all payments made, or treated as made,
to its directors, employees or officers or former directors, employees or
officers or any persons required to be treated as such, and accounting to the
Inland Revenue for all Taxation so deducted and for all Taxation chargeable on
the Company on benefits provided for its directors, employees or officers, or
former directors, employees or officers
16.2 The Company has complied fully with all reporting requirements, and
proper records have been maintained, relating to all payments and benefits made
or provided, or treated as made or provided, to its directors, employees or
officers or former directors, employees or officers
16.3 Without prejudice to the generality of paragraph 12.6, the Disclosure
Letter contains full details of all notifications and dispensations granted to
the Company by the Inland Revenue under section 166 ICTA or otherwise relating
to payments and benefits made or provided, or treated as made or provided, to
its directors, employees or officers or former directors, employees or officers
or any persons required to be treated as such, and the reporting requirements in
relation to such payments and benefits as are mentioned in paragraph 16.2
<PAGE>
16.4 The Company has complied fully with its obligations under the
provisions of sections 136(6) and 139(5) ICTA and section 85 FA 1988
16.5 The Disclosure Letter contains full details of all share option
schemes and profit sharing schemes established by the Company whether approved
by the Inland Revenue under the provisions of Schedule 9 ICTA or otherwise
16.6 The Company has not established a qualifying employee share ownership
trust within the meaning of section 74 and Schedule 5 FA 1989 and no chargeable
event within the meaning of section 69 FA 1989 has occurred
16.7 The Disclosure Letter contains full details of all profit-related pay
schemes providing for the payment to any employee of the Company of emoluments
calculated by reference to profits, which have ever been registered under
Chapter III Part V ICTA
16.8 The Company has complied fully with its obligations under Chapter IV
Part XIII ICTA
16.9 The Company has complied fully with all its obligations relating to
Class 1 and Class 1A National Insurance Contributions, both primary and
secondary
17. Close companies
17.1 The Company is not, and has never been, a close company as defined in
section 414 ICTA
17.2 The Company is not, and has never been, a close investment-holding
company within the meaning of section 13A ICTA
17.3 The Company has not at any time:-
17.3.1 made any loan or advance or effected any transaction falling
within section 419, 421 or 422 ICTA or released or written off or agreed to
release or write off the whole or any part of any such loans or advances;
or
17.3.2 made a transfer of value which is or may be liable to Taxation
under the provisions of section 94 IHTA
17.4 No distribution within section 418(2) ICTA has ever been made by the
Company
<PAGE>
18. Group transactions
The Company has not at any time:-
18.1 acquired any asset from any company which at the time of the
acquisition was a member of the same group of companies as defined in section
170 TCGA;
18.2 entered into or been otherwise involved in any transaction to which
section 774 ICTA applies;
18.3 surrendered or claimed or agreed or arranged to surrender or claim
(and prior to Completion will not surrender or claim or agree or arrange to
surrender or claim) any amount by way of Group Relief pursuant to sections 402
to 413 (inclusive) ICTA and has not made or received and is not liable to make
or entitled to receive a payment for Group Relief;
18.4 surrendered or claimed or agreed or arranged to surrender or claim
(and prior to Completion will not surrender or claim or agree or arrange to
surrender or claim) any amount of ACT pursuant to section 240 ICTA and has not
made or received and is not liable to make or receive a payment for surrender of
ACT;
18.5 joined in the making of any election pursuant to section 247 ICTA or
paid any dividend without paying ACT or made any payment without deduction of
income tax in circumstances such that ACT ought to have been paid or income tax
ought to have been deducted as mentioned in section 247(6) ICTA;
18.6 been a party to any such reconstruction as is described in section 343
ICTA;
18.7 been the subject of or otherwise involved in any arrangements as are
referred to in section 240(11) or 410 ICTA;
18.8 acquired an asset as trading stock from a member of the same group
where the asset did not form part of the trading stock of any trade carried on
by the other member, as mentioned in section 173(1) TCGA, or disposed of an
asset which formed part of the trading stock of any trade carried on by the
Company to another member of the same group which acquired the asset otherwise
than as trading stock of a trade carried on by the other member, as mentioned in
section 173(2) TCGA;
18.9 been, and there are no circumstances by virtue of which the Company
could be, assessed or charged to corporation tax by virtue of the provisions of
section 178(9), 179(11), 190 or 191 TCGA and is not entitled to recover or
liable to have recovered from it any sums paid pursuant to any of those
sections; or
18.10 ceased to be a member of a group of companies in such circumstances
that a profit or gain was deemed to accrue to the Company by virtue of section
178 or 179 TCGA or at a time when it held an interest in land which could have
been chargeable to Taxation under section 21 Development Land Tax 1976 and
neither the execution of this Agreement nor Completion will result in any profit
or gain being deemed to accrue to the Company for any Taxation purpose whether
pursuant to section 178 or 179 TCGA or otherwise
<PAGE>
19. Gifts
19.1 There is no outstanding Inland Revenue charge (as defined in section
237 IHTA) over any asset of the Company or over any of the Shares
19.2 There are in existence no circumstances by virtue of which any such
power as is mentioned in section 212 IHTA could be exercised in relation to any
asset of the Company or to any of the Shares or by virtue of which any such
power could be exercised but for the provisions of section 204(6) IHTA
19.3 The Company has not been a party to associated operations in relation
to a transfer of value within the meaning of section 268 IHTA
19.4 The Company has not received any asset by way of gift as mentioned in
section 282 TCGA
19.5 No expenditure incurred by the Company on the acquisition of any
shares is liable to be reduced under the provisions of section 125 TCGA
20. Tax avoidance
The Company has not entered into or been a party to any scheme, arrangement
or transaction designed partly or wholly or containing steps or stages designed
partly or wholly for the purpose of avoiding or deferring Taxation or reducing a
liability to Taxation and in particular, but without limitation, has not entered
into or been a party to any scheme, arrangement or transaction to which the
provisions of any of sections 34 to 37 (inclusive), 56 and 398, 395, 399, 703 to
709 (inclusive), 713, 714, 729 to 737 (inclusive), 770, 775, 776, 779 to 786
(inclusive), 787 and 798 ICTA could apply
21. Base values and acquisition costs
21.1 If each of the capital assets of the Company owned at the Accounting
Date was disposed of for a consideration equal to the book value of that asset
in, or adopted for the purpose of, the Balance Sheet, or in the case of assets
acquired since the Accounting Date, equal to the consideration given on
acquisition, no liability to corporation tax on chargeable gains or balancing
charge under the CAA would arise (and for this purpose there will be disregarded
any relief or allowance available to the Company other than amounts falling to
be deducted from the consideration receivable under section 38 TCGA)
21.2 The Company does not own any wasting assets within the meaning of
section 44 TCGA which do not qualify in full for capital allowances as described
in section 47(1) TCGA
<PAGE>
22. Capital gains
The Company has not at any time:-
22.1 made a claim under sections 152 to 158 (inclusive) or 175 or 247 TCGA
which affects the amount of the chargeable gain or allowable loss which would,
but for such claim, have arisen upon a disposal of any asset or acquired any
asset or any interest in any asset in circumstances in which another company has
made a claim under section 175 TCGA which affects for the purposes of the TCGA
the amount or value of the consideration given for such asset or interest;
22.2 been a party to, involved in, or connected with any disposal of assets
within the meaning of section 29 TCGA or any scheme or arrangement such as is
mentioned in section 30 TCGA;
22.3 been a party to, involved in, or connected with any exchange of
securities whether or not (by virtue of section 135 TCGA) section 127 TCGA
applied to the exchange;
22.4 carried out or been involved in or connected with any reorganisation
or scheme of reconstruction or amalgamation whether or not (by virtue of section
126 or 136 TCGA) section 127 TCGA applied to such reorganisation or scheme of
reconstruction or amalgamation;
22.5 carried out or been involved in or connected with any scheme of
reconstruction or amalgamation involving a transfer of business assets whether
or not section 139 TCGA applied to the transfer;
22.6 been a party to, involved in, or connected with, any depreciatory
transaction to which section 176 TCGA applied (including any transaction to
which that section applied by virtue of section 177 TCGA);
22.7 acquired or disposed of any asset or entered into any transaction or
arrangement whatsoever otherwise than by way of bargain at arm's length or in
respect of which there may be substituted for the actual consideration given or
received by the Company a different consideration for any Taxation purposes;
22.8 realised a loss to which section 18(3) TCGA applied or may apply;
22.9 realised a pre-entry loss or acquired any pre-entry asset as defined
in Schedule 7A TCGA;
22.10 disposed of any chargeable asset for a consideration not payable
wholly in cash on completion of the disposal;
22.11 acquired any debt (other than a debt on a security (as defined in
section 132 TCGA)) in respect of which it is not the original creditor;
22.12 made an election under section 35(5) TCGA nor has the Company made
its first relevant disposal for the purposes of section 35(6) TCGA;
<PAGE>
22.13 acquired any policy of assurance or contract for a deferred annuity
or any interest in any such policy or contract in circumstances such that a
chargeable gain could arise on disposal under section 210 TCGA;
22.14 transferred a trade carried on by it outside the United Kingdom
through a branch or agency in circumstances such that a chargeable gain could be
deemed to arise at a date after such transfer under section 140 TCGA;
22.15 made any claim or election under section 161(3) TCGA;
22.16 made any claim under section 253 or 254 TCGA and no chargeable gain
has arisen or is likely to arise under section 253 or 254 TCGA
23. Capital allowances
23.1 All capital expenditure incurred by the Company since the Accounting
Date and all capital expenditure which may be incurred by the Company under any
existing contract has qualified or will be capable of qualifying for capital
allowances
23.2 There are set out in the Disclosure Letter details of all capital
allowances claimed in respect of the accounting period of the Company ended on
the Accounting Date in respect of each asset or pool of assets in respect of
which separate computations for capital allowances are required to be made or,
as a result of any election, are made
23.3 Nothing has occurred since the Accounting Date as a result of which
the Company could be required to bring a disposal value into account or suffer a
balancing charge for the purpose of capital allowance under section 4, 24, 87,
100 or 128 CAA or a withdrawal of first year allowances or a recovery of excess
relief under section 46 or 47 CAA
23.4 The Company has not incurred any expenditure on the provision of any
capital allowance bearing asset for leasing
23.5 The Company has not made any election under section 37 CAA nor is it
taken to have made any such election under section 37(8)(c) CAA
23.6 The Company has not obtained any capital allowances under Chapter VI
Part II CAA
24. VAT: general
24.1 The Company:-
<PAGE>
24.1.1 is duly registered and is a taxable person for the purposes of
VAT and such registration is not subject to any conditions imposed by or
agreed with the Commissioners of Customs & Excise;
24.1.2 has complied in all respects with all statutory requirements,
orders, provisions, directions or conditions relating to VAT;
24.1.3 maintains complete, correct and up-to-date records for the
purposes of all legislation relating to VAT and is not subject to any
condition imposed by the Commissioners of Customs & Excise under paragraph
6 Schedule 11 VATA;
24.1.4 is not in arrears with any payment or returns under legislation
relating to VAT or excise duties, or liable to any abnormal or non-routine
payment of VAT, or any forfeiture or penalty, or to the operation of any
penal provisions;
24.1.5 has not within the last two years been served with any penalty
liability notice under section 64 VATA or any surcharge liability notice
under section 59 VATA or been issued with any written warning under section
76(2) VATA;
24.1.6 has not been required by the Commissioners of Customs and
Excise to give security under paragraph 4 Schedule 11 VATA;
24.1.7 has not been or applied for treatment as a member of a group
for VAT purposes under section 43 VATA and no transaction has been effected
in consequence of which the Company is or may be held liable for any VAT
arising from supplies made by another company;
24.1.8 has no interest and has not at any time within the last ten
years had any interest in any assets to which Part XV of the Value Added
Tax Regulations 1995 apply; and
24.1.9 is not, and has not agreed to become, an agent, manager or
factor for the purposes of section 47 VATA of any person who is not
resident in the United Kingdom
24.2 All supplies of goods and services made by the Company are taxable
supplies for the purposes of the VATA and the Company has not been and will not
be denied credit for any input tax by reason of the operation of section 26 VATA
or otherwise
24.3 All goods or services supplied to the Company, or goods imported by
the Company, in respect of which the Company has claimed credit for input tax
under section 25 VATA, are used or to be used wholly for the purposes of the
Company's business
24.4 The Company has never disposed of or acquired any business or assets
in the circumstances mentioned in section 49 VATA or Article 5 of the Value
Added Tax (Special Provisions) Order 1995
<PAGE>
24.5 The Company has never been registered for the purposes of value added
tax by reason of its intention to make taxable supplies (within the meaning of
section 4 VATA)
24.6 There are set out in the Disclosure Letter details of all outstanding
claims made by the Company under section 22 Value Added Tax Act 1983 and section
36 VATA
25. VAT: property transactions
25.1 The Company has not incurred any liability in respect of value added
tax (whether to H.M. Customs and Excise or to any other person) by reason of the
provisions of paragraph 2(1) Schedule 10 VATA and there are no circumstances
whereby the Company could become so liable as a result of a person making an
election under that paragraph
25.2 Neither the Company nor any relevant associate (within the meaning of
paragraph 3(7) Schedule 10 VATA) has made any election under paragraph 2(1)
Schedule 10 VATA in respect of any land in, over or in respect of which the
Company has any interest, right or licence to occupy and the Company is not
aware of any intention to make such an election
25.3 The Company does not own the fee simple in any building work such as
is referred to in Item 1(a) Group 1 Schedule 9 VATA
25.4 No interest in or right over land or any licence to occupy land of the
Company constitutes or is subject to a developmental tenancy, developmental
lease or developmental licence such as is referred to in Item 1(b) Group 1
Schedule 9 VATA
25.5 The Company has not incurred any liability under the provisions of
paragraph 6 Schedule 10 VATA or the Value Added Tax (Self Supply of Construction
Services) Order 1989 and there are no circumstances in existence at the date of
this Agreement whereby the Company would become so liable on the occurrence of
any of the events mentioned in paragraph 5(1)(a) or 5(1)(b) Schedule 10 VATA or
paragraph 3 of the Value Added Tax (Self Supply of Construction Services) Order
1989
26. Stamp duty and stamp duty reserve tax
26.1 All documents which are liable to stamp duty and which confer any
right upon the Company have been duly stamped and no document which confers any
right upon the Company and which is outside the United Kingdom would attract
stamp duty if it were brought into the United Kingdom and there is no liability
to any penalty in respect of such duty or circumstances which may give rise to
such a penalty
26.2 The Company has never incurred or otherwise been under a liability to
stamp duty reserve tax and there are no circumstances which may result in the
Company being so liable
26.3 Within the last five years the Company has not made any claim for
relief or exemption under section 42 FA 1930 or section 75, 76 or 77 FA 1986
<PAGE>
27. Residence and offshore interests
27.1 The Company is and has at all times been resident in the United
Kingdom for the purposes of all Taxation Statutes and has not at any time been
resident outside the United Kingdom for the purposes of any Taxation Statute or
any double taxation arrangements
27.2 The Company is not, and has never been, a dual-resident investing
company within the meaning of section 404 ICTA
27.3 The Company has not at any time entered into any transaction falling
within section 765 ICTA or failed to comply with the requirements of section
765A ICTA
27.4 The Company has not at any time been subject to Taxation in any
jurisdiction outside the United Kingdom or had a branch outside the United
Kingdom or any permanent establishment (as that expression is defined in the
respective double taxation relief orders current at the date of this Agreement)
outside the United Kingdom
27.5 The Company does not own and has not at any time owned a material
interest in an offshore fund which is or has at any material time been a
non-qualifying offshore fund within the meaning of section 760 ICTA
27.6 The Company does not own and has not at any time owned any interest in
a controlled foreign company within the meaning of sections 747 and 752 ICTA
27.7 The Company is not, and has not at any time since 1st April 1985 been,
a company which has, or an associated company of a company which has, a
qualifying presence in a unitary state for the purposes of sections 812 to 184
ICTA
27.8 The Company does not and has at no time held shares in a company which
is not resident in the United Kingdom and which would be a close company if it
were resident in the United Kingdom, in circumstances such that a chargeable
gain accruing to that other company could be apportioned to the Company under
section 13 TCGA
28. The Balance Sheet
The Balance Sheet fully provides for all Taxation (on the basis of the
rates applicable to the financial year which ended on the Accounting Date)
liable to be assessed on or in respect of or by reference to:-
<PAGE>
28.1 the profits, gains, income and earnings (whether actual or deemed) for
any period ended on or before the Accounting Date; or
28.2 any distributions (within the meaning of Part VI or section 418 ICTA)
made or deemed to be made on or before the Accounting Date; or
28.3 any other transaction entered into or deemed to be entered into on or
before the Accounting Date
29. Post-Accounting Date
Since the Accounting Date:-
29.1 the Company has not incurred and has not become liable to incur
expenditure which will not be wholly deductible in computing its taxable
profits, except for expenditure on the acquisition of an asset to be held
otherwise than as Stock and expenditure for entertainment, details of which are,
in each case, set out in the Disclosure Letter;
29.2 no event has occurred which has given rise or will or may give rise to
a liability to Taxation on the Company in respect of deemed (as opposed to
actual) income, profits or gains or which has resulted or will or may result in
the Company becoming liable to Taxation directly or primarily chargeable against
or attributable to another person;
29.3 the Company has not entered into any transaction which has given rise
or may give rise to a Liability to Taxation on a chargeable gain; and
29.4 no event has occurred as a result of which the Company could be
required to bring a disposal value into account or suffer a balancing charge for
the purposes of capital allowances under section 4, 24, 87, 100 or 128 CAA or a
withdrawal of first year allowances or a recovery of excess relief under section
46 or 47 CAA
30. Losses and ACT
30.1 Within the last three years there has been no major change in the
nature or conduct of a trade or business carried on by the Company within the
meaning of section 245, 245A or 768 ICTA
30.2 There has at no time been a change in the ownership of the Company
(otherwise than pursuant to this Agreement) such that section 245B, 768 ICTA has
been or may be applied to deny relief in respect of any ACT or loss or losses or
excess charges or income of the Company
31. Shares and securities
31.1 The Company has not at any time:-
31.1.1 purchased or agreed to purchase, repaid or agreed to repay or
redeemed or agreed to redeem any shares of any class of its share capital
or any amount paid up on any of its shares;
<PAGE>
31.1.2 capitalised or agreed to capitalise in the form of redeemable
shares or debentures any profits or reserves of any class or description or
passed or agreed to pass any resolution to do so;
31.1.3 provided capital to any company on terms whereby the company so
capitalised has in consideration of the provision of capital issued loan
stock or other securities on terms which were otherwise than by way of a
bargain made at arm's length
31.2 The Company does not hold or have in issue:-
31.2.1 any quoted Eurobond within the meaning of section 124 ICTA;
31.2.2 any shares or securities (as defined in section 132(3)(b) TCGA)
other than the Shares;
31.2.3 any qualifying corporate bond (as defined in section 117 TCGA);
31.2.4 any deep discount security (as defined in paragraph 1 Schedule
4 ICTA);
31.2.5 any deep gain security (as defined in paragraph 1 Schedule 11
FA 1989);
31.2.6 any qualifying indexed security (as defined in paragraph 2
Schedule 11 FA 1989);
31.2.7 any qualifying convertible security (as defined in paragraph 2
Schedule 10 FA 1990);
31.2.8 any gilt-edged security falling within paragraph 20 Schedule 11
FA 1989 or any non-gilt-edged security falling within paragraph 21 Schedule
11 FA 1989;
31.2.9 any security as defined in section 710 ICTA and has not made
any transfer to which sections 711 to 728 (inclusive) ICTA could apply; or
31.2.10 any debt which is a qualifying debt as defined in section 61
FA 1993
<PAGE>
EXECUTED as a deed )
by JEFFREY RAYMOND WHITE )
in the presence of:- )
Witness's signature:
Name:
Address:
Occupation:
EXECUTED as a deed )
by DON STEWART )
in the presence of:- )
Witness's signature:
Name:
Address:
Occupation:
EXECUTED as a deed )
by SIMON STUART FORREST )
in the presence of:- )
Witness's signature:
Name:
Address:
Occupation:
EXECUTED as a deed )
by VIZACOM, INC. )
in accordance with its constitution )
the laws of the State of Delaware )
