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EXHIBIT 2.1
DATED 16TH SEPTEMBER 1997
(1) Micromuse plc
- and -
(2) Horizon Open Systems (UK) Limited
- and -
(3) Horizon Computer Services Limited
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AGREEMENT
for the sale of the systems integration
business of Micromuse plc
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Ref: (alpha) HOR.SOB.DOC
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DATED: 16TH SEPTEMBER 1997.
PARTIES:
(1) "Vendor": Micromuse plc (registered no. 2228951) whose registered office
is at Disraeli House ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
(2) "Purchaser": Horizon Open Systems (UK) Limited (registered no. 3084069)
whose registered office is at ▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
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(3) "Guarantor": Horizon Computer Services Limited (registered no. 133211)
whose registered office is at Lower Glanmire Road Cork Eire
OPERATIVE PROVISIONS:
1. Definitions
1.1 In this Agreement including the Schedules and the Appendices the following
words and expressions have the following meanings unless they are
inconsistent with the context;-
"Agreed Bundle"
the bundle of documents attached hereto in the Agreed Form
"Agreed Form"
the form agreed between the Vendor and the Purchaser on or prior to the
Effective Date and initialled for the purposes of identification by their
respective duly authorised representatives
"Assets"
the property assets and rights of the Business to be purchased by the
Purchaser as described in clause 2.1
"Auditors' Statement"
the statement to be prepared by the Purchaser's auditors in accordance
with clause 8.2
"Book Debts"
the trade debts owed to the Vendor at the Effective Date in connection
with the Business in respect of which invoices have been validly issued
and submitted by the Vendor prior to the Effective Date
"Business"
the systems integration business as carried on by the Vendor at the
Effective Date including without limitation the sale and supply of the
products from the companies listed in Appendix 6 and all related and
ancillary products consultancy and other services and training other than
the Netcool products and services sold and supplied by the Vendor as at
the Effective Date
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"Business Day"
a day on which banks in London are open for the transaction of all classes of
business (not being Saturday or Sunday)
"Completion"
completion of the sale and purchase of the Business in accordance with the
provisions of clause 7
"Consideration"
the total consideration payable pursuant to this Agreement as referred to in
clause 3.1
"Contracts"
the Customer Contracts the Maintenance Contracts the Multi Year Maintenance
Contracts and the Supply Contracts
"Creditors"
all and any amounts owed by the Vendor in connection with the Business to or in
respect of trade creditors and accrued charges trade bills payable and other
creditors in connection with the Business at the Effective Date but not
including liabilities for VAT or taxation on profits or chargeable gains
"Customer Contracts"
all the current contracts agreements and arrangements of and orders placed with
the Vendor for the supply of goods and/or services to customers of the Business
as listed in Appendix I
"Customer Lists"
the lists of customers and agents of the Business at any time during the period
from 1st October 1995 to the Effective Date being print outs (in paper or
electronic form) from the Vendor's accounts NOTES Contact and Helpdesk
databases and such other files and records of customers agents and suppliers
relating to the Business and all information relating to the marketing of the
Business but excluding books and records of the Vendor relating exclusively to
the Excluded Assets in each case as are in the possession of the Vendor or are
capable of being called for by the Vendor
"Deferred Consideration"
the sum of $250,000 (two hundred and fifty thousand US dollars)
"Disclosures"
the disclosures set out in a disclosure letter of today's date from the Vendor
to the Purchaser relating to the Warranties
"Effective Date"
the close of business on the date of this Agreement
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"Excluded Assets"
all assets relating to the Business (or otherwise) not specified in the Assets
such exclusion including without limitation:
(a) (subject to the provisions of clause 5) cash in hand or at the bank
(b) (subject to the provisions of clause 5) the Book Debts
(c) the Property
(d) all stock and fixed assets belonging to the Vendor and whether or not
previously utilized in relation to the Business
(e) the Vendor's customer magazine "Complexity" and all and any rights therein
(f) all and any rights in or to the Company's Help Desk and NOTES Contact
database software
(g) all intellectual property rights (of whatsoever nature) in or relating to
Netcool
"Excluded Employees"
the employees of the Vendor employed in the Business named in part 2 of
Appendix 4 and all other employees of the Vendor whether employed in the
Business or otherwise including without limitation all former existing and
future employees of the Vendor but excluding the Transferring Employees
"Further Consideration"
the sum of $250,000 (two hundred and fifty thousand US dollars)
"Goodwill"
the goodwill of the Vendor in relation to the Business together with the
exclusive right for the Purchaser or its assignee to represent itself as
carrying on the Business in succession to the Vendor but for the avoidance of
doubt excluding the right to use the name "Micromuse" or any derivative thereof
other than pursuant to the rights granted by clause 14
"Initial Consideration"
the sum of $500,000 (five hundred thousand US dollars)
"Liabilities"
all and any liabilities of the Business and/or the Vendor in relation to the
Business (other than the Creditors) outstanding at the Effective Date
"LSE Contract"
the contract made between the Vendor and the London Stock Exchange (pursuant to
invoice number 5569 and customer purchase order RO25431) being one of the
Maintenance Contracts
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"Maintenance Contracts"
all the current contracts agreements and arrangements (other than the Multi
Year Maintenance Contracts) of the Vendor for the supply of maintenance
services to customers of the Business as listed in Appendix 3
"Multi Year Maintenance Contracts"
all the current contracts agreements and arrangements of the Vendor for the
supply of maintenance services in excess of one year to customers of the
Business as listed in part A of Appendix 3
"Option Period"
the period of three months following the Effective Date
"Property"
the third floor mezzanine area of the Vendor's place of business at ▇▇ ▇▇▇▇▇▇
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"Purchaser's Solicitors"
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"Regulations"
the Transfer of Undertakings (Protection of Employment) Regulations 1981
"Supply Contracts"
all the current contracts agreements and arrangements of or orders placed by
the Vendor for the supply of goods and/or services from suppliers to the
Business as listed in Appendix 2
"Trade Names"
Micromuse Systems Integration and such other name or names as may be agreed by
the Vendor and the Purchaser in writing from time to time
"Transferring Employees"
the employees of the Vendor employed in the Business named in part 1 of
Appendix 4
"Turnover"
the gross sales turnover of the Purchaser and (if applicable) any wholly owned
subsidiary that is registered in England (including for the avoidance of doubt
the gross sales turnover of the Business) for the twelve month period
immediately following the Effective Date as certified determined or agreed in
accordance with clauses 2,1 or 2,3
"VAT"
value added tax
"Vendors Account"
National Westminster Bank plc ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ sort code:
60-17-11 Swift ▇▇▇▇▇▇▇▇ dollar account: 140/▇▇▇▇▇▇▇▇
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"Vendor's Solicitors"
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"Warranties"
the warranties of the Vendor contained in Schedule 4
"Warranty Claim"
any valid claim made by the Purchaser for breach of any of the
Warranties in accordance with the provisions of clause 13
1.2 Unless the context otherwise requires any reference to any statutory
provision shall be interpreted as including a reference to:-
1.2.1 any statutory amendment modification consolidation or re-enactment
(whether before or after the date of this Agreement) for the time
being in force;
1.2.2 all statutory instruments or subordinate legislation or orders made
pursuant to a statutory provision;
1.2.3 all statutory provisions of which the statutory provision is an
amendment modification consolidation or re-enactment; but shall not
include any substituted provision.
1.3 Words denoting the singular include the plural and vice versa; words
denoting any gender include all genders; words denoting persons
include corporations and vice versa.
1.4 Unless otherwise stated a reference to a clause sub-clause or Schedule
is a reference to a clause or a sub-clause of or a schedule to this
Agreement.
1.5 Clause headings are for ease of reference only and do not affect the
construction of this Agreement.
1.6 The Appendices shall form part of this Agreement.
2. Agreement for sale
2.1 Subject to the terms and conditions of this Agreement the Vendor with
full title guarantee shall sell and transfer to the Purchaser which
shall purchase and take over as at the Effective Date:-
2.1.1 the Business as a going concern; and
2.1.2 all of the following property assets and rights of the Vendor used in
the conduct of the Business:-
(a) the Goodwill;
(b) the Customer Lists; and
(c) the benefit of the Contracts
but excluding the Excluded Assets.
2.2 Save as expressly provided for in this Agreement the Purchaser shall
not assume or be deemed to assume or be responsible for any debt
obligation or liability
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whatsoever incurred or suffered by or on behalf of the Vendor in
relation to the Business or the Assets.
3. Purchase consideration
3.1 The maximum consideration for the sale by the Vendor of the Business
and the Assets shall be a sum equal to the aggregate of the Initial
Consideration and (if payable in accordance with the provisions of
this Agreement) the Deferred Consideration and the Further
Consideration and the values attributable to the Goodwill the
Customer Lists and the Contracts shall be apportioned as stated in
Schedule 1.
3.2 The consideration shall be paid as follows:
3.2.1 as to the Initial Consideration in cash at the Effective Date;
3.2.2 as to the Deferred Consideration (if payable) in cash in accordance
with clause 8;
3.2.3 as to the Further Consideration (if payable) in cash in accordance
with clause 9.
3.3 The Consideration shall be exclusive of any applicable VAT.
4. Debtors
Where any debtor included in the Book Debts which belongs to the
Vendor is a continuing debtor of the Business following the Effective
Date the Vendor shall consult with the Purchaser at least 21 days
before instituting any legal proceedings for the recovery of the same.
5. Book Debts Receivables Creditors and Liabilities
5.1.1 As regards Customer Contracts relating to the supply of products the
Vendor shall be entitled to all revenues in relation to such Customer
Contracts in respect of which the "ship date" falls on or prior to
the Effective Date and the Purchaser shall be entitled to all
revenues under such Customer Contracts in respect of which the "ship
date" falls after the Effective Date for the avoidance of doubt in
each case irrespective of the date upon which any related invoice is
issued or submitted.
5.1.2 As regards Customer Contracts relating to the provision of consultancy
services and in respect of which an invoice has not been issued or
submitted on or prior to the Effective Date all revenues in relation
to such Customer Contracts shall be for the sole account of the
Purchaser.
5.1.3 As regards Customer Contracts relating to the provision of training
services all revenues in relation to such Customer Contracts where
the services thereunder have commenced on or prior to the Effective
Date shall be retained by or belong to the Vendor and where training
services in relation to such Customer Contracts commence following
the Effective Date all revenues shall belong to the Purchaser.
5.2 If the Vendor has issued or submitted any invoices in respect of the
provision of consultancy services under any contract on or prior to
the Effective Date all revenues in relation to such contracts shall
be for the sole account of the Vendor
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but to the extent that the services thereunder are to be performed after
the Effective Date the Vendor shall sub-contract the provision of such
services to the Purchaser (which the Purchaser hereby agrees to provide) on
so far as possible the same terms (including daily charge out rates).
5.3 Entitlement to proceeds in relation to the Maintenance Contracts and the
Multi Year Maintenance Contracts shall be dealt with in accordance with the
provisions of Appendix 3.
5.4 All costs relating to Supply Contracts and any other contracts required to
be entered into for the supply of products and/or services in relation to
the Customer Contracts the Maintenance Contracts and the Multi Year
Maintenance Contracts (for which purposes the costs of any supply of
consultancy services sourced in-house shall be treated as a third party
supply at a cost of Pound Sterling 500 per day) shall be borne by and in
proportion to the entitlement of the Purchaser and/or the Vendor (as
appropriate) to revenues in relation to such Customer Contracts Maintenance
Contracts and Multi Year Maintenance Contracts and in addition the
Purchaser shall be responsible for carrying out all telephone support
services pursuant to the Maintenance Contracts and the Multi Year
Maintenance Contracts and in addition the costs of performing all
warranties and/or guarantees relating to the Customer Contracts in relation
to the supply of product or as disclosed in the Agreed Bundle.
5.5 To the extent that any payment is made to or received by the Vendor or the
Purchaser in respect of a Book Debt an invoice or other monies belonging to
or for the account of the other (as appropriate having regard to the
provisions of this clause 5) such party shall receive such payment as
trustee for and on behalf of the party entitled to such payment and shall
account to the other for the same on the Effective Date or if received
thereafter within 7 Business Days of receipt by the relevant party.
5.6 Save in relation to the costs which the Purchaser shall be responsible for
pursuant to clause 5.4 the Vendor shall promptly discharge the Creditors
and Liabilities and shall indemnify the Purchaser fully and effectively at
all times from and against all and any claims proceedings demands
liabilities and related costs and expenses on a full indemnity basis in
connection with any claim that the Liabilities and Creditors are payable by
the Purchaser.
6. Contracts
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6.1 The Purchaser shall as from the Effective Date perform the obligations of
the Vendor under the Contracts insofar as such obligations relate
exclusively to the Business in a proper and workmanlike manner and shall
indemnify and keep indemnified the Vendor against all claims liabilities
demands proceedings and related costs and expenses on a full indemnity
basis arising out of the performance
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or non-performance or as a consequence of such obligations under the
Contracts but the Purchaser shall not indemnify the Vendor in respect of
anything arising out of the performance or non-performance or as a
consequence of a breach on the part of the Vendor its employees agents
or sub-contractors prior to the Effective Date.
6.2 The Vendor shall continue to perform the obligations under the Contracts
insofar as such obligations relate to the remaining businesses of the
Vendor as carried on at the Effective Date in a proper and workmanlike
manner and shall indemnify and keep indemnified the Purchaser against
all claims liabilities demands proceedings and related costs and
expenses on a full indemnity basis arising out of the performance or
non-performance or as a consequence of such obligations under the
Contracts.
6.3.1 Save in relation to the costs which the Purchaser shall be responsible
for pursuant to clause 5.4 the Vendor shall remain liable for and shall
indemnify the Purchaser fully and effectively at all times from and
against all and any claims losses actions proceedings demands
liabilities costs and expenses on a full indemnity basis in respect of
any goods and services (or parts thereof) sold or supplied by the Vendor
its employees agents or sub-contractors which relate to the Business
arising on or prior to the Effective Date.
6.3.2 Upon becoming aware of any such claim pursuant to clause 6.3.1 insofar
as the Vendor has conduct of such claim the Vendor will promptly give
notice of it to the Purchaser and shall not take any steps which might
reasonably be expected to damage the commercial interests of the
Purchaser without prior consultation with the Purchaser.
6.4 Insofar as any of the Contracts cannot effectively be assigned to the
Purchaser without the consent of a third party or except by an agreement
of novation:-
6.4.1 the Vendor and the Purchaser shall use all reasonable endeavors to
obtain consent or to procure a novation;
6.4.2 unless and until consent is obtained or such Contracts are novated the
Vendor shall hold the same on trust for the Purchaser and the Purchaser
shall for its own benefit and to the extent that such Contracts permit
perform on behalf of the Vendor (but at the Purchaser's expense) the
obligations of the Vendor arising after the Effective Date in relation
to such Contracts in accordance with the provisions of clause 6.1.
6.5 If consent or novation is not obtained within a reasonable time period
the Vendor will co-operate with the Purchaser in any reasonable
arrangements designed to provide for the Purchaser the benefits under
such Contracts including by way of the Vendor holding such Contracts on
trust for the Purchaser and to the extent that any such arrangements
cannot be made the Purchaser shall have no further obligation to the
Vendor in respect of any such Contracts from such date.
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6.6 In addition to the foregoing but acknowledging that this clause 6.6 shall
not have any legal or binding effect of whatsoever nature on the Purchaser
the Purchaser hereby agrees to take reasonable steps to deal with the
customer queries or problems arising out of contracts or arrangements
entered into by the Vendor in relation to the Business prior to the
Effective Date (and other than the Contracts) in good faith with a view to
dealing with the queries or problems raised by such customers (if any) to
their satisfaction.
6.7 Notwithstanding anything else contained in this Agreement the Vendor
hereby agrees to continue to perform and be responsible for carrying out
all telephone support services pursuant to the LSE Contract until (and
including) 12th December 1997 and with effect from 13th December 1997 the
Purchaser shall perform and be responsible for such telephone support
services and the foregoing provisions shall then apply.
7. Completion
7.1 The sale and purchase shall be completed at the offices of the Vendor's
Solicitors immediately upon the exchange of this Agreement when all the
matters set out in this clause 7 shall be affected.
7.2 The Vendor shall deliver to the Purchaser at the Property such of the
Assets as are capable of being transferred by delivery.
7.3 The Vendor shall cause to be delivered or (if so requested by the
Purchaser) made available to the Purchaser or the Purchaser's Solicitors:-
7.3.1 such documents as are required by the Purchaser's Solicitors to complete
the sale and purchase of the Assets and vest title to the Assets in the
Purchaser including (but without limitation) an assignment of the Goodwill
Customer Lists and Contracts in the Agreed Form;
7.3.2 all its books of account payroll records and information relating to
customers and suppliers (including without limitation the Customer Lists a
list of purchasers to which outstanding quotations have been given and a
list of unfulfilled orders as at the Effective Date) and other books and
documents in each case as are in the possession of the Vendor or capable
of being called for by the Vendor which relate exclusively to the Business
and copies thereof where such books records or information also relate to
the remaining business of the Vendor or where the Vendor is required to
retain such records by law;
7.3.3 all its instructional and promotional material sales publications
advertising materials terms and conditions of sale which relate
exclusively to the Business and copies thereof where the same also relate
to the remaining business of the Vendor;
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7.3.4 a list of sales distributors identifying sales by units and the
territory served during the last twelve months and copies of all the
current agreements with the distributors;
7.3.5 all records of National Insurance and PAYE relating to all the
Transferring Employees duly completed up to the Effective Date and
copies thereof where such records also relate to the Excluded
Employees;
7.3.6 a letter from the Vendor's bankers consenting to the sale of the
Assets and releasing such Assets from any security held (in the
Agreed Form) there being no other charges or encumbrances affecting
the same;
7.4 In addition to the above on the Effective Date (and by entering into
this Agreement) the Vendor and the Purchaser hereby agree to enter
into a consultancy agreement (on the terms and conditions set out in
Schedule 3).
7.5 Upon completion of the matters referred to above the Purchaser shall
pay to the Vendor by way of bankers draft or telegraphic transfer to
the Vendor's Account the Initial Consideration.
7.6 The Purchaser shall not be obliged to complete the purchase of the
Business or any of the Assets unless the Vendor shall have complied
with all of its obligations pursuant to this clause 7.
7.7 The Purchaser may in its absolute discretion waive any requirement
contained in clauses 7.2 or 7.3 or may waive any such requirement
subject (if agreed at the time) to a condition that the Vendor gives
at the Effective Date a written undertaking to the Purchaser executed
by the Vendor or on behalf of the Vendor by the Vendor's Solicitors
in form and substance as the Purchaser requires. The Vendor shall
duly and punctually comply with any such undertaking.
8. Deferred Consideration
8.1 If (and only if) the Turnover exceeds Pound Sterling 14,000,000
(fourteen million pounds sterling) (the "Condition") then the Vendor
shall within five Business Days of the certification agreement or
determination of the Turnover in accordance with the following
provisions of this clause 8 pay the Deferred Consideration to the
Vendor by way of telegraphic transfer to the Vendor's Account. The
parties shall establish whether the Condition has been satisfied and
accordingly the Deferred Consideration is payable in accordance with
the following provisions of this clause 8.
8.2 On the first anniversary of the Effective Date the Purchaser shall
instruct its auditors for the time being to prepare as soon as
practicable (but in any event no later than 21 days following the
first anniversary of the Effective Date) a written statement
certifying the Turnover and to deliver a copy of such statement to
the Vendor and the Purchaser together with a breakdown of the
Turnover on a quarterly basis.
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8.3 Within 21 days of the receipt by the Purchaser and the Vendor ("Notice
Period") of the Auditors' Statement (time being of the essence for the
purposes of this subclause) the Purchaser and the Vendor shall have the
opportunity to serve a notice on the other of them stating that such
party disagrees with the contents of the Auditors Statement and (by
reference to the available information at such time) detailing the nature
of such disagreement. Failing service of a notice as aforesaid the
Auditors Statement shall be deemed to have been accepted by and (save in
the case of manifest error) binding upon the parties hereto.
8.4 If notice is served during the Notice Period by the Vendor or the
Purchaser in accordance with clause 8.3 the disputing party shall be
entitled to a further period of 21 days ("Further Period") in which to
inspect (which inspection in the case of the Vendor may be carried out by
accountants instructed by it) such of the Purchaser's books and records
as were used in the preparation of the Auditors' Statement provided that
access to such books and records shall be subject to the same
confidentiality obligations as contained in 15.1.2 of this Agreement.
8.5 The Vendor and the Purchaser shall acting in good faith use all
reasonable endeavours to agree within the Further Period the Turnover. If
the Vendor and the Purchaser are unable to agree the Turnover within the
Further Period such dispute shall be referred for final determination to
a firm of chartered accountants nominated jointly by the Vendor and the
Purchaser or failing such nomination within 14 days after request by
either the Vendor or the Purchaser nominated at the request of either of
them by the President for the time being of the Institute of Chartered
Accountants in England and Wales. Such accountants shall be entitled to
call for and inspect the working papers of the Purchaser's auditors and
such other documents as they may reasonably consider necessary. In making
their determination the accountants shall act as experts and not as
arbitrators their decision shall (in the absence of manifest error) be
final and binding on the parties and their fees shall be borne and paid
by the Vendor and the Purchaser in such proportions as the accountants
shall determine.
8.6 The Purchaser hereby undertakes and agrees that unless otherwise agreed
in writing by the Vendor (such agreement not to be unreasonably withheld
or delayed but if being acknowledged that any step or proposed action that
has a detrimental effect on the Turnover constitutes reasonable grounds to
object) the Purchaser will ensure that until the first anniversary of the
Effective Date:-
8.6.1 no material change in the nature of the Purchaser's business or of
the Business occurs;
8.6.2 the Purchaser does not transfer all or any material part of its assets or
undertaking to any other person company or entity;
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8.6.3 the Purchaser will carry on its business as constituted at the Effective
Date and the Business in good faith and will not act with the intention
of running down the business of the Purchaser or the Business in order
to deprive the Vendor the Deferred Consideration;
8.6.4 it shall procure that all future business of a kind currently carried on
by the Purchaser as at the Effective Date and by the Vendor in relation
to the Business as at the Effective Date shall be channelled through and
only through the Purchaser.
8.7 In order that the Vendor may monitor the Turnover the Purchaser shall
provide the Vendor within 28 days following the end of each three month
period with a copy of the Purchaser's sales reports detailing the
turnover of the Purchaser during the relevant period.
8.8 For the avoidance of doubt the Purchaser shall not be entitled to set
off or deduct all or any part of the Deferred Consideration on account
of any claim purported claim or action by the Purchaser against the
Vendor pursuant to this Agreement.
9. Further Consideration
9.1 The parties acknowledge that the Consideration hereunder has been
structured in such a way so as to reflect the level of Warranties as
well as the timetable within which the purchase hereunder has been made
and in addition by reference to the anticipated future relationship
between the parties and in particular the goodwill and co-operation
which (subject to the provisions set out below) the Purchaser expects
the Vendor to extend to the Purchaser in relation to the Business
following the sale hereunder.
9.2 Having regard to the above the Purchaser shall be entitled (but not in
any way obliged) at the expiry of the Option Period to pay the Vendor
the Further Consideration by telegraphic transfer to the Vendor's
Account.
9.3 Whilst the Purchaser shall not be obliged to pay the Further
Consideration any failure to pay the Further Consideration to the Vendor
at the expiry of the Option Period in accordance with clause 9.2 shall
(automatically and without the need to serve any notice) and
notwithstanding anything else contained in this Agreement release the
Vendor from all and any obligations to perform any services or to assist
or co-operate with the Purchaser in any way following expiry of the
Option Period save for the provision of consultancy services in
accordance with Schedule 3 and except insofar as required in order for
the Vendor to comply with its obligations undertakings and restrictions
contained this Agreement or with any statutory requirement.
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10 Transferring Employees and Excluded Employees
10.1 The Regulations shall govern the transfer of the contracts of
employment of the Transferring Employees and the Vendor warrants that
it has complied with the provisions of Regulation 10 of the
Regulations applicable to it.
10.2 The Vendor shall indemnify the Purchaser fully and effectively at all
times against all and any claims losses actions proceedings damages
compensation tribunal awards fines demands liabilities costs and
expenses on a full indemnity basis which relate to or arise from any
act or omission of the Vendor or any event occurrence or circumstance
prior to or on the Effective Date and which the Purchaser may incur or
suffer in relation to the Transferring Employees and the Excluded
Employees pursuant to the Regulations or otherwise including without
limitation in connection with any claim for unfair dismissal
redundancy sex race or disability discrimination or in connection with
any share options (vested or otherwise) granted by the Vendor to the
Transferring Employees or the Excluded Employees (whether lapsing or
otherwise before or after the Effective Date).
10.3 It is acknowledged by the parties that the employment of the Excluded
Employees named in part 2 of Appendix 4 employed in relation to the
Business will transfer to the Purchaser by virtue of the Regulations
and the Vendor shall indemnify the Purchaser fully and effectively at
all times against all and any claims losses actions proceedings
damages compensation tribunal awards fines demands liabilities costs
and expenses on a full indemnity basis which the Purchaser may suffer
or incur whether by virtue of the Regulation or otherwise and which
relate to arise from or are as a consequence of the termination of
such Excluded Employee's employment by the Vendor or the Purchaser
following the Effective Date by way of the Purchaser giving such
persons full contractual notice or pay in lieu of notice without
deduction of any kind including without limitation in connection with
any contractual or statutory claim whether for unfair dismissal
redundancy sex race or disability discrimination or otherwise and in
connection with any share options (vested or otherwise) granted by the
Vendor to the Excluded Employees (whether lapsing or otherwise before
or after the Effective Date). If and to the extent that a claim is
made against the Purchaser and such claim is covered by the indemnity
contained in this clause 10.3 the Vendor shall be entitled by way of
service of notice on the Purchaser to call for conduct of such claim
in the name of the Purchaser (but subject to consulting with the
Purchaser within a reasonable period before any steps are to be taken)
and subject further to the Vendor bearing the cost of disputing or (as
appropriate) settling any such dispute or claim in addition to the
indemnity contained in this clause 10.3.
15
10.4 The Vendor shall continue to employ Ms ▇▇▇▇▇▇ ▇▇▇▇▇ in the remaining
business of the Vendor and the Vendor shall indemnify and keep
indemnified the Purchaser against all and any claims losses actions
proceedings damages compensation tribunal awards fines demands
liabilities costs and expenses on a full indemnity basis which the
Purchaser may suffer or incur in relation to her employment or its
termination at any time whether by virtue of the Regulations or
otherwise.
10.5 All salaries and other emoluments including holiday pay tax and
national insurance payments relating to the Transferring Employees shall
be borne by the Vendor up to and including the Effective Date and by the
Purchaser following the Effective Date and all necessary apportionment's
shall be made accordingly.
10.6 The Purchaser shall indemnify the Vendor and keep the Vendor indemnified
from and against all demands actions proceedings damages compensation
tribunal awards fines costs expenses and all other liabilities on a full
indemnity basis whatsoever arising out of or connected with any claim by
any of the Transferring Employees against the Vendor which relates to any
act or omission of the Purchaser (or any other event or occurrence)
following the Effective Date.
10.7 The Purchaser shall (at the Vendor's expense) provide to the Vendor as
soon as reasonably practicable such information in writing as the Vendor
reasonably requires to carry out its duties under Regulation 10 of the
Regulations.
11. VAT
11.1 The Vendor and the Purchaser shall use all reasonable endeavours to
procure that the sale of the Business and the Assets hereunder is treated
by HM Customs and Excise as a transfer of a business as a going concern
for the purposes of the Value Added Tax ▇▇▇ ▇▇▇▇ section 49(1) and
article 5 of the Value Added Tax (Special Provisions) Order 1995.
11.2 The Vendor and the Purchaser shall agree a form of letter to be sent by
the Vendor to HM Customs and Excise seeking confirmation that the Vendor
be permitted to keep and preserve the records referred to in section 49
of the Value Added Tax ▇▇▇ ▇▇▇▇ relating to the period prior to the
Effective Date for such period as may be required by law.
11.3 The Vendor shall on reasonable notice during normal business hours make
the records referred to in clause 11.2 available to the Purchaser or its
agents for inspection and copying at the Purchaser's cost.
12 Title apportionments and facilities
12.1 The Vendor shall at the Purchaser's cost take all necessary steps and
co-operate fully with the Purchaser to ensure that it obtains the full
benefit of the Business and Assets and shall execute such documents and
take such other steps (or procure other necessary parties so to do) as
are necessary for vesting in the Purchaser all its
16
rights and interests in the Assets. The Vendor shall in the meantime hold
the legal estate in the Assets as nominee for the Purchaser.
12.2 The Vendor shall promptly give to the Purchaser and the Purchaser's
Solicitors on request all such evidence of ownership to the Assets as the
Purchaser may reasonably require.
12.3 The Purchaser shall at the Vendor's cost on reasonable notice during the
Purchaser's hours of business give to the Vendor such access to the books
and records relating to the Business which are handed over to the Purchaser
on the Effective Date as the Vendor may reasonably require in connection
with the collection of any Book Debts which belong to it pursuant to the
provisions of clause 5 or otherwise required in order to comply with any
statutory obligation.
12.4 The provisions of Schedule 2 shall apply to the licence of the Property in
favour of the Purchaser.
12.5 Subject to other provisions of this Agreement all outgoings relating to or
payable in respect of the Business up to the Effective Date shall be borne
by the Vendor and as from the Effective Date shall be borne by the
Purchaser and all royalties and other periodical payments receivable in
respect of the Business up to that time shall belong to and be payable to
the Vendor and as from that time shall belong to and be payable to the
Purchaser and such outgoings and payments receivable shall be apportioned
accordingly.
12.6 Where any amounts fall to be apportioned under this Agreement the Vendor or
the Purchaser (as the case may be) shall provide the other of them with
full details of the apportionments together with supporting vouchers or
similar documentation and in the absence of dispute the appropriate payment
shall be made by or to the relevant party forthwith. If the amount of any
apportionment is in dispute the provisions of clause 8.5 shall apply for
resolving the dispute and the amount determined in accordance with that
clause shall be paid within 14 days of the determination together with
interest calculated on a daily basis from the Effective Date until the date
of actual payment at the rate of 2 per cent. per annum above the base rate
from time to time of National Westminster Bank plc.
13. Warranties by the Vendor
------------------------
13.1 The Vendor warrants to the Purchaser that save as set out in the
Disclosures the Warranties are true and accurate in all material respects
at the date of this Agreement.
13.2 The rights and remedies of the Purchaser in respect of any breach of the
Warranties shall not be affected by completion of this Agreement by any
investigation made by or on behalf of the Purchaser into the affairs of the
Vendor by the Purchaser
17
rescinding or failing to rescind this Agreement or by any other event
or matter whatsoever except a specific and duly authorised written
waiver or release.
13.3 The Purchaser confirms that it has not already formulated and does
not as at the Effective Date contemplate making any Warranty Claim.
13.4 Where any Warranty refers to the knowledge information and belief of
the Vendor or is made so far as the Vendor is aware or other similar
qualification it undertakes that it has made all reasonable enquiry
into the subject matter of the Warranty.
13.5 Each of the Warranties shall continue in full force and effect
notwithstanding completion of this Agreement.
13.6 No failure to exercise and no delay in exercising on the part of the
Purchaser any right or remedy in respect of any Warranty shall
operate as a waiver of the right or remedy or the Warranty and a
single or partial exercise of any right or remedy shall not preclude
any other or further exercise of the right or remedy or the exercise
of any other right or remedy.
13.7 No liability shall attach to the Vendor in respect of any Warrant
Claim unless such Warranty Claim is (when aggregated with all other
Warranty Claim or Warranty Claims previously made if any) in excess
of Pound Sterling 25,000 and if the result of making any such
Warranty Claim (aggregated with any other such Warranty Claim or
Warranty Claims) would be that such sum is exceeded the Vendor shall
(subject to the other provisions hereof) be liable for the whole of
such Warranty Claim or Warranty Claims and not merely for the excess.
13.8 Claims against the Vendor shall be wholly barred and unenforceable
unless notice thereof shall have been made in writing setting out the
amount and brief particulars thereof prior to the expiry of eighteen
months from the Effective Date.
13.9 Nothing in this Agreement shall in any way restrict or limit the
general obligation of the Purchaser to mitigate any loss or damage
which it may suffer in consequence of any breach of Warranty by the
Vendor.
13.10 The Purchaser acknowledges and declares that in entering into this
Agreement it has not relied and is not relying on any warranties
representations covenants undertakings indemnities or other
statements whatsoever whether written or oral (and whether implied or
otherwise) (collectively "Representations") other than those
expressly set out or referred to in this Agreement and the Purchaser
hereby irrevocably and unconditionally waives any right it may have
to claim damages for or to rescind this Agreement by reason of any
Representation not expressly set out in this Agreement unless such
Representation was made fraudulently.
13.11 The total liability of the Vendor in respect of any claims under the
Warranties shall be limited to the amount of Consideration actually
received by the Vendor pursuant to this Agreement.
18
13.12 The Vendor shall have no liability in respect of any Warranty Claim to
the extent that such Warranty Claim or the subject matter thereof:-
(a) occurs or arises as a result of or is otherwise attributable to
an act or omission after the Effective Date by the Purchaser
otherwise in the ordinary course of business which could have
been reasonably avoided; or
(b) occurs or arises as a result of any legislation not in force at
the Effective Date or as a result of any change in legislation
made after the Effective Date which has a retrospective effect.
14. Trade Names
14.1 Subject to clause 14.3 the Purchaser shall have the exclusive right to
use the Trade Names in connection with the Business for a period of 6
months following the Effective Date provided always that the Purchaser
at all times draws clear attention to the fact that the Business is
owned by the Purchaser.
14.2 The Purchaser shall not use the name "Micromuse" or any derivative or
variation thereto in connection with the Business in any manner which
may be confused with the remaining business of the Vendor carried on
by it immediately following the Effective Date and if the Vendor
reasonably considers that the Purchaser is in breach of this
sub-clause it shall notify the Purchaser of the same and may require
the Purchaser to refrain from using the name "Micromuse" in such
manner.
14.3 If the Purchaser does not take steps to comply with the Vendor's
notice referred to in clause 14.2 within seven days of the receipt of
the same the Purchaser shall automatically and without the need to
serve any further notice cease to have the right referred to in
clause 14.1 to use the Trade Names.
14.4 Notwithstanding the provisions of this clause the Vendor shall not at
any time following the Effective Date use the Trade Names or any
derivative or variation thereto in any manner or in any combination of
words or phrases so as to infringe directly or indirectly upon the
Goodwill or the Business.
14.5 The Vendor shall not and shall not permit or enable any other third
party to use the Trade Name or any variation thereto for such time as
the Purchaser is entitled to use the Trade Name in accordance with
clause 14.1 in the United Kingdom.
15. Future activities
15.1 The Vendor covenants and undertakes with the Purchaser that:-
15.1.1 it shall during the Option Period and at its own expense co-operate
with assist and participate in the Purchaser's public relations and
marketing activities in relation to the transfer of the Business and
the Vendor shall use all reasonable endeavors to ensure the maximum
possible benefit of the Business to the Purchaser including without
limitation maintaining the level of sales turnover of the Business as
at the
19
Effective Date and by referring business where possible in
addition to the foregoing matters;
15.1.2 it shall not at any time following the Effective Date disclose to any
person firm association or company (except as required by law or
disclosure to its professional advisers) any information as to the
practice dealings management finances clients customers suppliers and
affairs of the Business and the Assets or any business of the Purchaser
carried on as at the Effective Date;
15.1.3 it shall not for a period of 2 years following the Effective Date
either on its own account or through any other person directly or
indirectly;-
(a) make any announcements of any kind do or omit to do anything
with the intention of in any way impeding or harming the
development and profitability of the Business or the Purchaser
or otherwise in bad faith;
(b) solicit entice or procure any of the Transferring Employees to
leave the employment of the Purchaser (whether or not such
Transferring Employee would be in breach of his contract of
employment);
(c) solicit interfere with entice or procure any supplier in
connection with the Business to cease or restrict any supplies
to the Purchaser;
(d) solicit interfere with or endeavour to entice away from the
Purchaser any person firm association or company who is or has
during the two years preceding the Effective Date been a client
or customer of the Vendor in relation to the Business;
(e) directly or indirectly engage in the United Kingdom and such
other countries as the Vendor carries on the Business as at the
Effective Date in any activity which competes directly or
indirectly the Business or any material part of it.
15.2 The Purchaser covenants and undertakes with the Vendor that:-
15.2.1 it shall during the Option Period refer business where possible to the
Vendor in relation to its Netcool business as carried on as at the
Effective Date;
15.2.2 it shall not at any time following the Effective Date disclose to any
person firm association or company (except as required by law or
disclosure to its professional advisors) any information as to the
practice dealings management finances clients customers suppliers and
affairs of the business of the Vendor carried on as at the Effective
Date;
15.2.3 it shall not for a period of 2 years following the Effective Date
either on its own account or through any other person directly or
indirectly solicit entice or procure any of the Excluded Employees to
leave the employment of the Vendor (whether or not such Excluded
Employee would be in breach of his contract of employment);
15.4 Subject to the provisions of clause 15.1 for the avoidance of doubt a
number of customers clients or contacts of the Vendor in relation to the
Business are also
20
customers clients or contacts of the Vendor in relation to the
Vendor's other business carried on as at the Effective Date and
following the Effective Date the Vendor may continue to supply
software developed by the Vendor and/or perform any other services
other than in relation to or competing with the Business to and/or for
such customers clients or contacts.
15.5 The Vendor and the Purchaser agree that the covenants and undertakings
contained in clauses 15.1 15.2 and 15.8 are reasonable and are entered
into for the purpose of protecting the respective goodwill and
businesses of the Vendor and the Purchaser.
15.6 Each covenant and undertaking contained in clauses 15.1 15.2 and 15.8
shall be construed as a separate covenant and undertaking and if one
or more of them is or are held to be against the public interest or
unlawful or in any way an unreasonable restraint of trade the
remaining covenants and undertakings shall continue to bind the
relevant party.
15.7 If any covenant or undertaking contained in clauses 15.1 15.2 and 15.8
were void but would be valid if the period of application were reduced
or if some part of the covenant or undertaking were deleted it shall
apply with such modification as may be necessary to make it valid.
15.8 The Vendor shall promptly refer to the Purchaser all enquiries
relating to the Business received during the Option Period including
enquiries relating to orders for any stocks spare parts accessories
other equipment and services sold or supplied in connection with the
Business.
15.9 The parties shall procure that all of its holding companies and
subsidiaries and all subsidiaries of such holding companies (as such
terms are defined in section 736 of the Companies Act 1985) and all of
their respective associated companies (as such term is defined in
section 416(1) of the Income and Corporation Taxes Act 1988) from time
to time shall comply with the covenants and undertakings contained in
this clause 15 (other than in relation to clauses 15.1.1 and 15.2.1).
16. Copyright and Information
16.1 The Vendor acknowledges that it owns certain copyright in software
written for customers of the Business and in written documents
produced by employees employed in the Business (together "Copyright").
The Vendor hereby assigns such right title and interest, in the
Copyright as it has to the Purchaser and the Copyright shall form part
of the Assets.
16.2 The Vendor shall preserve all information records and other documents
insofar as they relate to the Excluded Assets for a period of not less
than 3 years following the Effective Date and upon reasonable notice
by the Purchaser make such information records and documents available
for inspection and copying by the Purchaser or its
21
authorised agents at reasonable times during normal business hours at
the Purchaser's cost.
17. Announcements
No announcement of any kind shall be made in respect of the subject
matter of this Agreement except as specifically agreed in writing
between the Vendor and the Purchaser.
18. Costs
All expenses incurred by or on behalf of the parties including all
fees of agents representatives solicitors and accountants employed or
engaged by either of the parties in connection with the negotiation
preparation and execution of this Agreement shall be borne solely by
the party which incurred them.
19. Guarantee
In further consideration of the obligations of the Vendor
hereunder the Guarantor hereby guarantees and undertakes to the Vendor
in respect of the Purchaser that the Purchaser will pay the Deferred
Consideration (if payable) in accordance with the terms of this
Agreement in the event that the Purchaser fails to pay the same when
due.
20. Communications
20.1 All communications between the parties with respect to this Agreement
shall be delivered by hand or sent by first class post to the address
of the addressee as set out in this Agreement or to such other address
as the addressee may from time to time have notified for the purpose
of this clause or sent by facsimile transmission (with confirmation
sent by first class post within 24 hours).
20.2 Communications shall be deemed to have been received:-
20.2.1 if sent by first class post--3 business days after posting exclusive
of the day of posting;
20.2.2 if delivered by hand--on the day of delivery;
20.2.3 if sent by facsimile transmission--at the time of transmission.
20.3 Communications addressed to the Vendor shall be marked for the
attention of ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇. Communications addressed to the
Purchaser shall be marked for the attention of ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
20.4 In proving service:-
20.4.1 by delivery by hand--it shall be necessary only to produce a receipt
for the communication signed by or on behalf of the addressee;
20.4.2 by post or facsimile transmission--it shall be necessary only to prove
that the communication or letter of confirmation was contained in an
envelope which was duly addressed and posted in accordance with this
clause.
22
21. Entire agreement and Schedules
------------------------------
21.1 This Agreement and the Schedules shall constitute the entire
agreement and understanding between the parties with respect to all
matters which are referred to herein.
21.2 All the Schedules form part of this Agreement.
21.3 This Agreement shall be binding upon each party's successors and
assigns
22. Invalidity
----------
If any term or provision in this Agreement shall in whole or in
part be held to any extent to be illegal or unenforceable under any
enactment or rule of law that term or provision or part shall to
that extent be deemed not to form part of this Agreement and the
enforceability of the remainder of this Agreement shall not be
affected.
23. Proper law
----------
The construction validity and performance of this Agreement shall be
governed by the laws of England and the parties submit to the
non-exclusive jurisdiction of the High Court in London.
24. Non-Assignment
--------------
The benefits rights covenants undertaking and obligations of the
parties under this Agreement shall not be assigned charged or
mortgaged in whole or in part without the prior written consent of
the other of them.
IN WITNESS whereof the parties have duly executed this Agreement as a deed the
day and year first above written.
List of Schedules List of Appendices
----------------- ------------------
1. Consideration/Apportionment 1. Customer Contracts
2. Licence of Property Terms 2. Supply Contracts
3. Terms of consultancy 3. Maintenance Contracts and Multi
4. Warranties Year Maintenance Contracts
4. Transferring Employees (part 1) and
Excluded Employees (part 2)
5. Letter from ▇▇. ▇▇▇▇▇
6. List of companies
23
SCHEDULE 1
Consideration/apportionment
Item (if payable pursuant (if payable pursuant
---- to clause 8) to clause 9)
-------------------- --------------------
$ $ $
Goodwill: 499,998 250,000 250,000
Customer Lists: 1 -- --
Contracts: 1 -- --
------- ------- -------
Sub totals: 500,000 250,000 250,000
------- ------- -------
Total: $1,000,000
24
SCHEDULE 2
Provisions relating to the licence of the Property
1. The provisions of this Schedule 2 shall apply with respect to the
Purchaser's rights as licensee to occupy the Property during the
Option Period:-
1.1 the Vendor hereby grants a licence to the Purchaser to enter the
Property and to exclusively occupy the same as the licensee of the
Vendor in consideration of the licence fee set out below;
1.2 the Purchaser may carry on the Business from the Property for its own
account and the Vendor shall permit all of the Transferring Employees
and up to three other employees of the Purchaser to continue to
operate the Business from the Property free from interruption and
hindrance;
1.3 the Vendor shall make available to the Purchaser all normal and usual
office and reception facilities and services including telephones and
fax lines office and computer furniture equipment hardware and
software used in the Business but other than fax and photocopying
machines;
1.4 subject to paragraph 1.5 below the Vendor shall continue to be
responsible for and shall indemnify and keep indemnified the Purchaser
against all rent rates service charges water rates insurance premiums
gas electricity telephone and other outgoings of whatsoever nature;
1.5 during its occupation of the Property the Purchaser shall pay the
Vendor a licence fee of pound sterling 3,333 per month inclusive of
all contributions towards all outgoings of any nature including
without limitation all telephone charges and all the facilities
referred to in paragraph 1.3 above but exclusive of VAT and which
shall be payable monthly in advance commencing from the Effective
Date.
2. The Vendor shall retain and use the telephone number ▇▇▇▇ ▇▇▇ ▇▇▇▇
(the "Original Telephone Number") but the Vendor shall at its cost
install tie lines at the Property to enable all telephone calls the
Vendor receives on the Original Telephone Number relating to the
Business to be transferred to employees of the Purchaser located at
the Property and the Purchaser's other place of business at Hounslow.
3. The Purchaser hereby acknowledges that the licence granted to the
Purchaser pursuant to this Agreement to occupy the Property
constitutes a technical breach of the terms of lease relating to the
Property. In the event that the Vendor receives a written notification
from the landlord during the Option Period requiring the Purchaser or
the Vendor to vacate the Property:-
3.1 the Vendor shall promptly provide the Purchaser with a copy of such
notification;
3.2 the Vendor shall at its cost use all reasonable endeavours and
negotiate in good faith with the landlord to allow the Purchaser to
continue in occupation of the Property upon the
25
terms contained in this Schedule 2 and shall inform the Purchaser at all
times of the progress of and allow the Purchaser (if it so desires) to
participate in such negotiations;
3.3 if the landlord refuses permission for the Purchaser to continue to occupy
the Property during the Option Period the Purchaser shall be obliged to
vacate the Property within any time limit set by the landlord provided that
the Vendor promptly re-imburses the Purchaser;-
(a) such part of the licence fee as relates to the period during which the
Purchaser does not occupy the Property; and
(b) one half of all and any costs exceeding pound sterling 3,333 per month
which the Purchaser is required to pay by way of rental or licence fee
(as appropriate) during the remainder of the Option Period which costs
for the avoidance of doubt shall include the costs of the facilities
referred to paragraph 1.3 above.
3.4 The Purchaser having due regard to the above agrees during the licence
period not to erect any signs bearing the "Horizon" name nor to take any
steps that are likely to draw attention to the licencing arrangements hereby
agreed.
26
SCHEDULE 3
Terms of consultancy of ▇▇ ▇▇▇▇▇
1. The Vendor shall provide general consultancy services to the Purchaser upon
the terms of this Schedule 3 for a period of 6 months commencing on the
Effective Date ("consultancy period") for the purposes of ensuring the
smooth and uninterrupted transfer of the Business to the Purchaser such
services to include but not limited to liaising with customers and such
other general consultancy services as the Purchaser may reasonably require
from time to time.
2. The Vendor shall procure that ▇▇ ▇▇▇▇▇ (and only ▇▇ ▇▇▇▇▇) shall provide
the consultancy services and that he sign and deliver to the Purchaser on
the Effective Date a letter in the form contained in Appendix 5.
3. ▇▇ ▇▇▇▇▇ shall continue to be an employee of the Vendor at all times
during the consultancy period and his salary benefits and other emoluments
shall be paid by the Vendor both during and following the expiry or
termination of the consultancy period.
4. The Vendor agrees with the Purchaser that it will not terminate ▇▇ ▇▇▇▇▇'▇
employment during the consultancy period save in circumstances which
justify his summary dismissal and in such an event the Vendor shall notify
the Purchaser at least 24 hours before it summarily dismisses ▇▇ ▇▇▇▇▇ and
provide details of the reasons for such dismissal.
5. The Purchaser may terminate the consultancy period immediately if ▇▇ ▇▇▇▇▇
commits any act or makes any omission which would justify his dismissal if
he were employed by the Purchaser on its standard terms and conditions of
employment.
6. If ▇▇ ▇▇▇▇▇ ceases to be employed by the Vendor for any reason the
Purchaser may immediately terminate the consultancy period.
7. The consultancy period may be terminated by the Purchaser at any time upon
giving the Vendor not less than 1 week's prior notice.
8. During the consultancy period the Purchaser shall pay the Vendor a fee of
Pound Sterling 7,500 per month (pro rata where the consultancy period
commences expires or terminates other than at the end of a month)
exclusive of VAT payable monthly in arrears on the last day of each month
upon receipt of valid VAT invoices therefor. Such fee shall be inclusive
of all expenses incurred by the Vendor in connection with the consultancy
arrangement hereunder save for expenses incurred by ▇▇ ▇▇▇▇▇ in the proper
performance of the consultancy services hereunder which expenses have been
previously approved by the Purchaser in writing.
27
SCHEDULE 4
Warranties
1. ASSETS
1.1 Ownership of Assets
1.1.1 The Vendor has good title to all the Assets and owns absolutely all the
Assets with full title guarantee free from all encumbrances.
1.1.2 The Vendor has not disposed of or agreed to dispose of or granted or
agreed to grant any security or other encumbrance in respect of any of
the Assets that remains outstanding at the Effective Date.
1.1.3 None of the Assets is subject to and there is no agreement or
commitment to give or create any option lien or encumbrance.
1.1.4 None of the Assets has been purchased on terms that property does not
pass to the Vendor until full payment is made by it to the supplier.
1.1.5 There has been no exercise purported exercise or claim for any charge
lien encumbrance or equity over any of the Assets and there is no
dispute directly or indirectly relating to any of the Assets.
2. TRADING
2.1 Litigation
2.1.1 The Vendor is not relation to the Business engaged in any litigation or
arbitration proceedings as plaintiff or defendant except for debt
collection of sums not exceeding an aggregate of pound sterling 1,000
and there are no such proceedings pending or so far as the Vendor is
aware threatened either by or against the Vendor affecting the Business
and so far as the Vendor is aware there are no facts which are likely to
give rise to any litigation arbitration or customer disputes.
2.1.2 No threat or claim of default under any of the Contracts or any other
agreement obligation or arrangement to which the Vendor is a party
relating to the Business or the Assets has been made and is outstanding
against the Vendor and the Vendor is not aware of any circumstances
whereby any of the Contracts may be terminated or rescinded by any other
party or the terms may be worsened as against the Vendor or the
Purchaser of the Business or the Assets may be prejudiced.
2.2 Vendor's activities
2.2.1 The Vendor is entitled to enter into and carry out the provisions of
this Agreement and has full power and authority to sell the Assets to
the Purchaser without obtaining the consent of any third party.
2.2.2 Compliance with the terms of this Agreement and any document entered
into by the Vendor in accordance with it does not and will not conflict
with or result in a breach of any of the provisions of the Vendor's
Memorandum or Articles of Association.
28
2.2.3 The Vendor has at all times carried on the Business in accordance with
its Memorandum and Articles of Association for the time being in force
and so far as the Vendor is aware all other documents to which it is
currently has been a party and which relate to the Business.
2.2.4 Compliance with the terms of this Agreement does not conflict with
result in the breach of or constitute a default under the terms
conditions or provisions of any agreement or instrument to which the
Vendor is now a party relating to the Business save as regards any
Contract incorporating any prohibition or restriction on assignment
which has been disclosed in the Disclosures.
3. CONTRACTS
Disclosure of Contracts
Save as disclosed in the Disclosures the Contracts constitute all the
contracts and other engagements whether written or oral referable to
the Business to which the Vendor is now a party.
4. EMPLOYMENT
4.1 Transferring Employees
4.1.1 The Transferring Employees and the Excluded Employees listed in part 2
of Appendix 4 comprise all the persons now employed by the Vendor in
relation to the Business.
4.1.2 No Transferring Employee has given or received notice terminating his
employment and no Transferring Employee will be entitled to give
notice as a result of this Agreement other than as a consequence of
the Regulations.
4.1.3 The Vendor has not offered a contract of employment or services to any
person in connection with the Business which is to commence on or
after the Effective Date.
4.2 Terms of employment
4.2.1 True and accurate particulars of the terms and conditions of
employment of all the Transferring Employees including without
limitation ages length of service rates of remuneration notice periods
accrued holiday pay bonus profit sharing commission and discretionary
bonus arrangements are set out in Appendix 4 and/or the Disclosures.
4.2.2 Save as disclosed in the Disclosures there are no schemes in operation
by or in relation to the Vendor whereunder any Transferring Employee
is entitled to any shares or a commission or remuneration of any other
sort calculated by reference to the whole or part of the turnover
profits or sales of the Business.
4.2.3 The Vendor has properly operated the Pay As You Earn system and
deducted income tax as required by law from all payments to or treated
as made to any Transferring Employee and accounted to the Inland
Revenue for all tax so deducted and all tax chargeable on any benefits
provided to the Transferring Employees at any time by the Vendor in
accordance with applicable legislation.
29
4.2.4 The Vendor has deducted and paid all National Insurance contributions
for which it is liable in respect of the Transferring Employees.
4.2.5 There are no Transferring Employees to whom the Vendor has issued
credit cards or charge cards or provided similar facilities.
4.3 Industrial disputes and agreements
4.3.1 None of the Transferring Employees is involved in any industrial
dispute and to the best of the Vendor's knowledge information and
belief there are no circumstances which may result in any industrial
dispute involving any Transferring Employees and none of the
provisions of this Agreement including the identity of the Purchaser
may lead to any industrial dispute.
4.3.2 No liability has been incurred by the Vendor and not yet discharged
for breach of any contract of service or employment or for redundancy
payments (including without limitation protective awards) or for
damages or compensation for wrongful or unfair dismissal or otherwise
or for failure to comply with any order for reinstatement or
re-engagement of any employee engaged in connection with the
Business or for the actual or proposed termination or suspension of
employment or variation of any contract of employment or in each
cash any Transferring Employee or any Excluded Employee listed in
part 2 of Appendix 4.
4.3.3 The Vendor has in relation to each Transferring Employee complied in
all material respects with all obligations imposed on it by all
statutes regulations and codes of conduct and practice relevant
to relations between it and each Employee (including without
limitation any obligations under any health and safety legislation
or any legislation relating to the environment).
4.3.4 The Vendor has not entered into any recognition agreement with a
trade union and has not done anything which might be construed as
recognition.
4.4 Pensions
The Vendor is not under any legal or moral liability or obligation or
ex-gratis arrangement or promise to pay pensions gratuities
superannuation allowances or the like to any of the Transferring
Employees.
5. GENERAL
Material information
All written information contained in the Agreed Bundle was when given
and remains true and accurate in all material respects and the
Vendor has not withheld any information from the Purchaser of which
it has actual or constructive knowledge of which is material in the
context of the acquisition hereunder.
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Executed as a deed by Micromuse plc )
acting by two directors/director )
and secretary:- )
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Director
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------
Director/Secretary
Executed as a deed by Horizon Open )
Systems (UK) Limited acting by two )
directors/director and secretary:- )
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Director
/s/ [sig]
------------------------------
Director/Secretary
Executed as a deed by Horizon Computer )
Services Limited acting by two directors/ )
director and secretary:- )
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Director
/s/ [sig]
------------------------------
Director/Secretary
31
APPENDIX 1
Customer Contracts
This appendix consists of copies of purchase orders, order acknowledgments and
Horizon warranty listings covered under the agreement.
APPENDIX 2
Supply Contracts
This appendix consists of a listing of supply contracts covered under the
agreement.
APPENDIX 3
Maintenance Contracts and Multi Year Maintenance Contracts
This appendix consists of a listing of maintenance and multi-year maintenance
contracts to determine which invoices are payable to the purchaser.
APPENDIX 4
This appendix lists which employees are to be transferred and which employees
are to be excluded under the agreement.
APPENDIX 5
Terms of the provision of consultancy services to Horizon Open Systems (UK)
Limited
This appendix lists the terms under which Micromuse is to provide consultancy
services to Horizon Open Systems.
APPENDIX 6
This appendix lists the names of companies.
Micromuse Inc. hereby agrees to furnish supplementally a copy of any omitted
Schedule to the Commission upon request.
MICROMUSE INC.
By:
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
