DATE 24 JUNE 1999
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XXXXXXX XXXXX AND OTHERS
RADICA GOLD LIMITED
SHARE PURCHASE AGREEMENT
RELATING TO THE ACQUISITION OF THE ENTIRE
ISSUED SHARE CAPITAL OF LEDA MEDIA PRODUCTS LIMITED
CONTENTS
CLAUSE PAGE
1 Definitions and interpretation 1
2 Sale and purchase 6
3 Consideration 6
4 Completion 7
5 Warranties 8
6 Taxation 10
7 Restrictions on the Vendors 10
8 Release by the Vendors 12
9 Confidentiality 12
10 Release from Guarantees 13
11 General 15
12 Notices 17
13 Governing law and jurisdiction 18
SCHEDULES
1 The Vendors
2 The Company
3 The Subsidiaries
4 Completion Obligations of the Vendors
5 Warranties
6 Properties
7 Tax Covenant
8 Limitations on Liability
LIST OF AGREED FORM DOCUMENTS
A1 and A2 Service Agreements
B1 to B6 Letters of Resignation
C1 to C3 Vendors' Powers of Attorney
D1 and D2 Board Minutes
E Loan Notes
F Set-Off Loan Notes
G Consultancy Agreement
H Announcement
SHARE PURCHASE AGREEMENT
DATE 24 June 1999
PARTIES
1 THE PERSONS whose names and addresses are set out in Schedule 1 ("the
Vendors")
2 RADICA GOLD LIMITED (Registered No. 3777636) whose registered office is
at 00 Xxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxx XX00 0XX ("the Purchaser")
RECITALS
A The Company is a private company limited by shares. Details of the
Company are set out in Schedule 2.
B The Vendors have agreed to sell and the Purchaser has agreed to buy the
Shares on the terms and subject to the conditions of this Agreement.
AGREEMENT
1 DEFINITIONS AND INTERPRETATION
1.1 The Recitals and Schedules form part of this Agreement and have the
same force and effect as if set out in the body of this Agreement. Any
reference to this Agreement includes the Recitals and Schedules.
1.2 In this Agreement, the following words and expressions have the
following meanings:-
THE ACCOUNTS: the audited accounts of the Company and of the
Subsidiaries and the audited consolidated accounts of the Company and
Leda HK for the accounting reference period which ended on the Accounts
Date (comprising in each case a balance sheet and profit and loss
account or, as the case may be, a consolidated
balance sheet and consolidated profit and loss account, notes and
directors' and auditors' reports);
THE ACCOUNTING STANDARDS BOARD: the Accounting Standards Board in
England and Wales;
THE ACCOUNTS DATE: 31 August 1998;
THE AGREED FORM: the form agreed between and signed by or on behalf of
the Vendors and the Purchaser;
BUSINESS DAY: any day other than a Saturday, Sunday or any other day
which is a public holiday in England;
CAA 1990: Capital Allowances Xxx 0000;
THE COMPANY: Leda Media Products Limited;
THE COMPANIES ACTS: the Companies Xxx 0000, the Companies Consolidation
(Consequential Provisions) Xxx 0000, the Companies Xxx 0000 and Part V
of the Criminal Justice Xxx 0000;
COMPLETION: completion of the sale and purchase of the Shares in
accordance with this Agreement;
THE COMPLETION DATE: the date hereof;
THE CONSIDERATION: the sum referred to in Clause 3.1;
THE CONSULTANCY AGREEMENT: the consultancy agreement proposed to be
entered into between the Company and Xxxxxx Xxxxxxx being in the Agreed
Form marked "G";
THE DISCLOSURE LETTER: the letter dated the date of this Agreement from
the Vendors to the Purchaser making certain disclosures against the
Warranties;
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GROUP COMPANY: in relation to any company, any body corporate which is
from time to time a holding company of that company, a subsidiary of
that company or a subsidiary of a holding company of that company;
ICTA 1988: Income and Corporation Xxxxx Xxx 0000;
INTELLECTUAL PROPERTY: patents, xxxxx patents, utility models,
registered designs, design right, topography rights, copyright,
database right, trade marks, service marks, trade or business names,
domain names, get-up or trade dress, inventions or secret processes,
know-how and all rights or forms of protection of a similar nature or
effect subsisting anywhere in the world, including applications for any
such right;
LEDA HK: Leda Media Products (HK) Limited, being one of the
Subsidiaries;
LOAN NOTES: the US$10,945,376 floating rate guaranteed loan notes
constituted by the instrument in the Agreed Form marked "E" to be
issued by the Purchaser to Xxxxxxx Xxxxx and Xxxxxx Xxxxxxx in part
satisfaction of the Consideration;
THE MANAGEMENT ACCOUNTS: the unaudited accounts of the Company and of
the Subsidiaries for the eight month period from the Accounts Date to
30 April 1999 comprising a balance sheet and profit and loss account),
a copy of each of which is annexed to the Disclosure Letter;
THE PARTIES: the parties to this Agreement;
THE PROPERTIES: the leasehold properties of the Company and Leda HK,
details of which are given in Schedule 6;
THE PURCHASER'S SOLICITORS: Macfarlanes of 00 Xxxxxxx Xxxxxx, Xxxxxx
XX0X 0XX;
THE RESTRICTED TERRITORIES:
(a) the United Kingdom, the Channel Islands, the Isle of Man, the
Republic of Ireland, France, Germany, China, Austria, Belgium,
Xxxxx Xxxxxxxx,
0
Xxxxxx, Xxxxxxx, Xxxxx, Xxxxxxxx, Xxxxxxxxxxx, Xxxxx and
Switzerland;
(b) any other country in which the Company or the Subsidiaries is
resident or otherwise carries on business at Completion;
THE SHARES: the shares referred to in paragraph 9 of Schedule 2
comprising the entire issued share capital of the Company;
THE SERVICE AGREEMENTS: the service agreements proposed to be entered
into between the Company and each of Xxxx Xxxxxxx and Xxxxxxx Xxxxx
being in the Agreed Forms marked "A1" and "A2";
SET-OFF LOAN NOTES: the US$1,399,200 floating rate guaranteed set-off
loan notes constituted by the instrument in the Agreed Form marked "F"
to be issued by the Purchaser to Xxxxxxx Xxxxx, Xxxxxx Xxxxxxx and Xxxx
Xxxxxxx in part satisfaction of the consideration;
THE SUBSIDIARIES: the subsidiaries of the Company details of which are
set out in Schedule 3;
THE TAX COVENANT: the covenant contained in Schedule 7;
TCGA 1992: Taxation of Chargeable Gains Xxx 0000;
VATA 1994: Value Added Tax Xxx 0000;
THE VENDORS' SOLICITORS: Beachcroft Wansboroughs of 000 Xxxxxx Xxxx,
Xxxxxx XX0X 0XX; and
THE WARRANTIES: the representations and warranties set out in Schedule
5.
1.3 In this Agreement (unless the context requires otherwise):-
1.3.1 words and expressions which are defined in the Companies Acts have the
same meanings as are given to them in the Companies Acts;
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1.3.2 any question as to whether a person is connected with any other person
shall be determined in accordance with the provisions of Section 839
ICTA 1988;
1.3.3 any reference to any statute or statutory provision includes a
reference to any subordinate legislation made under that statute or
statutory provision before the date of this Agreement, to any
modification, re-enactment or extension of that statute or statutory
provision made before that date and to any former statute or statutory
provision which it consolidated or re-enacted before that date;
1.3.4 any reference to an SSAP is to a Statement of Standard Accounting
Practice adopted by the Accounting Standards Board and shall be
construed as including a reference to:
1.3.4.1 any Financial Reporting Standard issued by the Accounting
Standards Board to amend, withdraw or supersede such SSAP and
any reference to an FRS is to a Financial Reporting Standard
issued by the Accounting Standards Board; and
1.3.4.2 any Urgent Issues Task Force abstracts issued by the
Accounting Standards Board to advise on and clarify the
interpretation of SSAPs and FRSs and any reference to an UITF
abstract is to an Urgent Issues Task Force abstract issued by
the Accounting Standards Board;
1.3.5 any gender includes a reference to the other genders;
1.3.6 the singular includes a reference to the plural and vice versa;
1.3.7 any reference to a Recital, Clause or Schedule is to a Recital, Clause
or Schedule (as the case may be) of or to this Agreement;
1.3.8 "directly or indirectly" means (without limitation) either alone or
jointly with any other person, firm or body corporate and whether on
his own account or in partnership with another or others or as the
holder of any interest in or as officer, employee or agent of or
consultant to any other person, firm or body corporate; and
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1.3.9 any reference to any English legal term for any action, remedy, method
of judicial proceeding, legal document, legal status, court, official
or any legal concept or thing shall, in respect of any jurisdiction
other than England, be deemed to include what most nearly approximates
in that jurisdiction to the English legal term.
1.4 The headings in this Agreement do not form part of this Agreement or
any part thereof and do not affect its interpretation.
2 SALE AND PURCHASE
2.1 The Vendors (each as to those of the Shares specified against
his name in Schedule 1) shall sell with full title guarantee
free from all liens, charges, encumbrances and any other third
party rights and the Purchaser shall purchase the Shares with
effect from and including the Completion Date to the intent
that as from that date all rights and advantages accruing to
the Shares, including any dividends or distributions declared
or paid on the Shares after that date, shall belong to the
Purchaser.
2.2 The Purchaser shall not be obliged to complete the purchase of any of
the Shares unless the sale of all of the Shares is completed
simultaneously.
3 CONSIDERATION
3.1 The consideration for the Shares shall be the sum of US$13,992,000
(thirteen million nine hundred and ninety two thousand United States
dollars).
3.2 The Consideration shall be divided between the Vendors in proportion to
their respective holdings of the Shares (as set out in Schedule 1) but
the Purchaser shall not be concerned with such division.
3.3 The Consideration shall be satisfied as follows:-
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3.3.1 US$1,647,424 shall be paid on Completion to the Vendors in accordance
with Clause 4.1.3;
3.3.2 US$10,945,376 shall be satisfied on Completion in accordance with
Clause 4.1.4; and
3.3.3 US$1,399,200 shall be satisfied on Completion in accordance with Clause
4.1.5.
3.4 Any amount paid in respect of a breach of any of the Warranties or
under the Tax Covenant shall be deemed to give rise to a corresponding
reduction in the Consideration.
4 COMPLETION
4.1 Completion shall take place on the Completion Date at the offices of
the Purchaser's Solicitors when:-
4.1.1 the Vendors shall deliver to the Purchaser, or procure the delivery to
the Purchaser of, the documents and other items referred to in Schedule
4;
4.1.2 the Vendors and the Purchaser shall jointly procure that there shall be
held a Meeting of the Board of Directors of the Company and of Leda HK
at which there shall be duly passed Resolutions set out and contained
in Board Minutes of the Company and of Leda HK in the Agreed Forms
marked "D1" and "D2" respectively;
4.1.3 the Purchaser shall pay that part of the Consideration referred to in
Clause 3.3.1 to the Vendors' Solicitors (who are hereby authorised to
receive the same on behalf of the Vendors), by way of transfer of
funds;
4.1.4 the Purchaser shall satisfy that part of the Consideration referred to
in Clause 3.3.2 by the issue to the Vendors of the Loan Notes;
4.1.5 the Purchaser shall satisfy that part of the Consideration referred to
in Clause 3.3.3 by the issue to the Vendors of the Set-Off Loan Notes.
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4.2 The performance by the Vendors of their respective obligations under
Clause 4.1 shall be a condition precedent to the performance by the
Purchaser of its obligations under Clause 4.1 to the intent that, if
the Vendors or any of them shall fail or shall be unable to perform any
of their obligations under Clause 4.1, the Purchaser shall at its
option (and without prejudice to any other remedies or rights which it
may have against the Vendors or any of them in respect of such
non-performance) cease to be liable to perform its obligations under
Clause 4.1.
5 WARRANTIES
5.1 The Vendors represent and warrant to the Purchaser that each of the
Warranties is true and accurate in all respects and is not misleading
at the date of this Agreement.
5.2 The Warranties shall not in any respect be extinguished or affected by
Completion.
5.3 The Vendors acknowledge that the Purchaser has entered into this
Agreement in reliance on representations in the terms of the Warranties
made by the Vendors with the intention of inducing the Purchaser to
enter into this Agreement and that accordingly the Purchaser has been
induced by those representations to enter into this Agreement.
5.4 The Vendors undertake to the Purchaser that, in the event of any claim
being made against them for breach of the Warranties, they will not
make any claim against the Company or the Subsidiaries or against any
director, officer or employee of the Company or of the Subsidiaries on
which or on whom they may have relied before agreeing to any terms of
this Agreement or authorising any statement in the Disclosure Letter.
5.5 The Warranties:-
5.5.1 are qualified by reference to those matters fully, fairly and clearly
disclosed in the Disclosure Letter and not otherwise. In particular,
but without limitation, the rights and remedies of the Purchaser in
respect of the Warranties shall not be
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affected by any investigation made by or on behalf of the Purchaser
into the affairs of the Company and the Subsidiaries;
5.5.2 are separate and independent and, unless expressly provided to the
contrary, are not limited or restricted by reference to or inference
from the terms of any other provision of this Agreement or any other
Warranty;
5.5.3 where qualified by the knowledge, information, belief or awareness of
the Vendors, are deemed to include a statement that such knowledge,
information, belief or awareness has been acquired after due and
careful enquiries by the Vendors in respect of the relevant subject
matter of such Warranties; and
5.6 apply to each of the Subsidiaries as well as to the Company as if the
word "Company" was defined to mean each of the Subsidiaries and the
Company.
5.7 The liability of the Vendors in respect of any claim for breach of the
Warranties or the Tax Covenant shall be subject to the provisions of
Schedule 8 provided that the provisions of Schedule 8 shall not apply
in respect of:-
5.7.1 any claim under paragraph 2.1 (capacity), 3.1 (share ownership) or 3.2
(share and loan capital) of Schedule 5; nor
5.7.2 any claim arising out of any fraudulent or wilful non-disclosure on the
part of the Vendors.
6 TAXATION
The provisions of Schedule 7 shall have effect.
7 RESTRICTIONS ON THE VENDORS
7.1 Each of the Vendors covenants with the Purchaser with the intention of
assuring to the Purchaser the full benefit and value of the goodwill
and connections of the Company and the Subsidiaries and as a
constituent part of the agreement for the sale of the Shares that save
with the previous written consent of the Purchaser:-
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7.1.1 he will not in the Restricted Territories for the period of three years
following the Completion Date directly or indirectly in competition
with the Company or the Subsidiaries engage in business with or be in
any way interested in or connected with any concern, undertaking, firm
or body corporate which engages in or carries on within any part of the
Restricted Territories any business which competes with any business
carried on by the Company or the Subsidiaries at the Completion Date
and in particular (but without limitation) the business of the
manufacture and distribution of peripherals and accessories to the
video games and PC games market;
7.1.2 he will not in the Restricted Territories for the period of three years
following the Completion Date directly or indirectly:-
7.1.2.1 interfere with or, in competition with the Company or the
Subsidiaries in relation to any business which competes with
any business carried on by the Company or the Subsidiaries as
at the Completion Date, offer or agree to provide goods or
services of any description to, or solicit or endeavour to
entice away from the Company or the Subsidiaries the custom of
any person, firm or body corporate which, at any time during
the period of one year ending on the Completion Date, has been
a customer or client of, or in the habit of dealing with, the
Company or the Subsidiaries or which, at any time during that
period, was to his knowledge negotiating with the Company or
the Subsidiaries in relation to the provision of goods or
services by the Company or the Subsidiaries;
7.1.2.2 interfere or seek to interfere with contractual or other trade
relations between the Company or the Subsidiaries and any of
its or their respective suppliers in existence or under
negotiation at any time during the period of one year ending
on the Completion Date;
7.1.2.3 solicit the services of or endeavour to entice away from the
Company or the Subsidiaries any director, employee or
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consultant of the Company or the Subsidiaries (whether or not
such person would commit any breach of his contract of
employment or engagement by reason of leaving the service of
such company) or knowingly employ, assist in or procure the
employment by any other person, firm or body corporate of any
such person;
7.1.3 he will not at any time following the Completion Date disclose to any
person, firm or body corporate or otherwise make use or permit the use
of any trade secrets or confidential knowledge or information
concerning the business, finances or affairs of the Company or of the
Subsidiaries or of any of their respective customers, clients or
suppliers at the date of this Agreement and will use his best
endeavours to prevent the publication or disclosure of any such
secrets, knowledge or information by any third party;
7.1.4 he will not for the period of three years following the Completion Date
use or apply to register on any public register any trade or business
name used by the Company or the Subsidiaries during the period of two
years preceding the Completion Date (including in particular (but
without limitation) the names Leda, LMP and Gamester (whether alone or
in conjunction with other names)) or any name similar to those names or
likely to be confused with them.
7.2 Each of the Vendors agrees that, having regard to the facts and matters
above, the restrictions contained in Clause 7.1 are reasonable and
necessary for the protection of the legitimate interests of the
Purchaser and that, having regard to those facts and matters, those
restrictions do not work harshly on him. It is nevertheless agreed
that, if any of those restrictions shall, taken together or separately,
be held to be void or ineffective for any reason but would be held to
be valid and effective if part of its wording were deleted, that
restriction shall apply with such deletions as may be necessary to make
it valid and effective.
7.3 The restrictions contained in the sub-clauses of Clause 7.1 shall be
construed as separate and individual restrictions and shall each be
capable of being severed without prejudice to the other restrictions or
to the remaining provisions of this Agreement.
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8 RELEASE BY THE VENDORS
8.1 Each of Xxxxxxx Xxxxx and Xxxxxx Xxxxxxx confirms that he has no claim
(whether in respect of any breach of contract, compensation for loss of
office or monies due to him or on any account whatsoever) outstanding
against the Company or the Subsidiaries or against any of the directors
or employees of the Company or the Subsidiaries and that no agreement
or arrangement (including (without limitation) any contract of
employment) is outstanding under which the Company or the Subsidiaries
or any of such persons has or could have any obligation of any kind to
him. Xxxx Xxxxxxx confirms that he has no such claims save in relation
to his contract of employment which has been disclosed to the Purchaser
and is included as an annexure to the Disclosure Letter.
8.2 To the extent that any such claim or obligation exists or may exist,
each of the Vendors irrevocably and unconditionally waives such claim
or obligation and releases the Company and the Subsidiaries and any
such other persons from any liability whatsoever in respect of such
claim or obligation.
9 CONFIDENTIALITY
9.1 Subject to the provisions of Clause 9.2, no Party shall issue any press
release or publish any circular to shareholders or any other public
document or make any statement or disclosure to any person who is not a
Party (including (without limitation) any document, statement or
disclosure published, issued or made by the Vendors or any of them to
any supplier to or customer of the Company or the Subsidiaries) in each
case relating to or connected with or arising out of this Agreement or
the matters contained in it, without obtaining the previous approval of
the Purchaser (in the case of the Vendors) and Xxxxxxx Xxxxx (in the
case of the Purchaser) to its contents and the manner of its
presentation and publication or disclosure (such approval not to be
unreasonably withheld or delayed).
9.2 The provisions of Clause 9.1 do not apply to:-
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9.2.1 any announcement relating to or connected with or arising out of this
Agreement required to be made by the Purchaser by virtue of any
applicable law or regulation; and
9.2.2 the announcement in the Agreed Form marked "H".
10 RELEASE FROM GUARANTEES
The Purchaser agrees to use reasonable endeavours to procure the
release of the personal guarantee given by Xxxxxxx Xxxxx and Xxxxxx
Xxxxxxx to De Xxxx Xxxxxx Leasing and Factors (now FNN Financial
Limited) in the form attached to the Disclosure Letter, and the
Purchaser agrees to indemnify each of Xxxxxxx Xxxxx and Xxxxxx Xxxxxxx
in respect of any liability which he may incur pursuant to such
guarantee from Completion until the release of such guarantee is
obtained.
11 PENSION SCHEME
It is hereby acknowledged and declared that the Company is the
principal employer and trustee of a money purchase pension scheme with
Scottish Amicable (Policy Number 161HP302) ("the Pension Scheme"), the
beneficiaries of which are Xxxxxxx Xxxxx and Xxxxxx Xxxxx. The Parties
will procure that the Company is removed as a trustee as soon as
practicable and renounces any interest that it may have therein. Xxxxxx
Xxxxx has acknowledged in writing to the Company in a letter dated 24
June 1999 and Xxxxxxx Xxxxx hereby acknowledges and confirms the
release by each of them of the Company from all and any liability in
relation to the Pension Scheme.
12 ESCROW
12.1 In the event that the Purchaser has given notice to any Noteholder (as
defined in the Set-Off Loan Note) pursuant to the provisions of
Condition 7.1 of the Set-Off Loan Note that it wishes to exercise its
right of set-off thereunder and to the extent that any claim or claims
subject to such right of set-off ("Relevant Claim") have not been
settled or withdrawn by 31 December 2000 (being the "Maturity
13
Date" thereunder), the Purchaser shall be entitled, at its sole
discretion, to pay any amount which it is entitled to deduct from the
Principal and/or the Interest (each as defined therein) ("the Escrow
Sum") into an interest bearing deposit account held in the joint names
of the Purchaser's Solicitors and Vendors' Solicitors ("the Escrow
Account").
12.2 As soon as possible following the agreement or determination or final
adjudication of the Relevant Claim there shall be released from the
Escrow Account:-
12.2.1 to the Purchaser (or as it shall direct), a sum equal to the amount for
which the Relevant Claim shall have been agreed or determined or for
which judgment in respect of the Relevant Claim shall have been
obtained, together with a proportion of the total interest earned on
the monies standing to the credit of the Escrow Account from Completion
to the date of payment out (being that proportion which the sum
released to the Purchaser from the Escrow Account pursuant to this
sub-clause bears to the Escrow Sum); and
12.2.2 to the Vendors' Solicitors the balance of the monies standing to the
credit of the Escrow Account.
12.3 In the event that the Purchaser has not exercised its rights under 12.1
above and any Relevant Claim has not been settled or withdrawn by 30
November 2001, the Purchaser shall be obliged to place the relevant
Escrow Sum into the Escrow Account, such Escrow Sum to be dealt with in
accordance with the provisions of Clause 12.2 above and in the event
that the Purchaser shall fail to do so, then, for the purposes of
Condition 7 only, the Relevant Claim shall be deemed to have been
withdrawn.
12.4 The Parties shall give such instructions to their respective solicitors
as is necessary to give effect to the provisions of this Clause 12.
13 VENDORS' COVENANT
The Vendors hereby covenant to pay to the Purchaser an amount equal to
five times (5x) the amount (if any) by which the net asset value of the
Company
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(calculated as at 24 June 1999 by the Purchaser after Completion in
accordance with the principles referred to in paragraph 4.1.2 of
Schedule 5) is less than (pound)1,320,000 or to the extent that the
calculation of the net asset value is adjusted from that used in the
preparation of the Management Accounts to comply with the said
principles where they have not previously done so the sum of
(pound)1,230,000.
14 GENERAL
14.1.1 The Vendors shall do or procure to be done all such further acts and
things and execute or procure the execution of all such other documents
as the Purchaser may from time to time reasonably require for the
purpose of giving the Purchaser the full benefit of the provisions of
this Agreement.
14.1.2 The Purchaser shall do or procure to be done all such further acts and
things and execute or procure the execution of all such other documents
as the Vendors may from time to time reasonably require for the purpose
of giving the Vendors the full benefit of the provisions of this
Agreement.
14.2 This Agreement, and the documents referred to in it, constitutes the
entire agreement and understanding of the Parties. Each of the Parties
acknowledges and agrees that in entering into this Agreement, and the
documents referred to in it, it does not rely on, and shall have no
remedy in respect of, any statement, representation, warranty or
understanding (whether negligently or innocently made) of any person
(whether party to this Agreement or not) other than as expressly set
out in this Agreement as a Warranty. The only remedy available to it
for breach of the Warranties shall be for breach of contract under the
terms of this Agreement. Nothing in this sub-clause shall, however,
operate to limit or exclude any liability for fraud.
14.3 Each of the Vendors waives any rights of pre-emption over the Shares
conferred on him or held by him either by virtue of the Company's
Articles of Association or by express agreement or otherwise.
14.4 Each Party shall pay his or its own costs and expenses of and
incidental to this Agreement and the sale and purchase of the Shares.
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14.5 This Agreement shall, as to any of its provisions remaining to be
performed or capable of having or taking effect following Completion,
remain in full force and effect notwithstanding Completion.
14.6 Unless expressly provided otherwise, all representations, warranties,
undertakings, covenants, agreements and obligations made, given or
entered into in this Agreement by more than one person are made, given
or entered into jointly and severally.
14.7.1 Subject to Clause 14.7.2, this Agreement shall be binding upon and
enure for the benefit of the successors and assigns of the Parties
including, in the case of individuals, their respective estates after
their deaths.
14.7.2 The Parties shall not be entitled to assign their respective rights or
obligations under this Agreement without the prior written consent of
each of the other Parties PROVIDED THAT the Purchaser shall be entitled
to assign its rights and obligations to any Group Company of the
Purchaser without requiring the consent of the Vendors.
14.8.1 The failure of the Purchaser at any time or times to require
performance of any provision of this Agreement shall not affect its
right to enforce such provision at a later time.
14.8.2 No waiver by the Purchaser of any condition or of the breach of any
term, covenant, representation, warranty or undertaking contained in
this Agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or continuing
waiver of any such condition or breach or a waiver of any other
condition or of the breach of any other term, covenant, representation,
warranty or undertaking in this Agreement.
14.8.3 Any liability to the Purchaser under this Agreement may in whole or in
part be released, compounded or compromised and time or indulgence may
be given by the Purchaser in its absolute discretion as regards any
Party under such liability without in any way prejudicing or affecting
its rights against any other Party under the same or a like liability,
whether joint and several or otherwise.
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14.9 This Agreement may be amended, modified, superseded or cancelled and
any of its terms, covenants, representations, warranties, undertakings
or conditions may be waived only by an instrument in writing signed by
(or by some person duly authorised by) each of the Parties or, in the
case of a waiver, by the Party waiving compliance.
14.10 The Purchaser shall have no right to rescind this Agreement in the
event of a breach of the Warranties.
15 NOTICES
15.1 Any notice to be served in connection with this Agreement shall be in
writing and shall be delivered by hand, sent by registered mail,
recorded delivery or first-class post or transmitted by fax:-
15.1.1 in the case of the Purchaser, to its registered office for the time
being marked "For the Urgent Attention of the Secretary"; or
15.1.2 in the case of an individual, to the address set opposite his name in
Schedule 1 or to such other address as he may notify in writing for the
purposes of this Agreement to the Party serving the document.
15.2 Each of Xxxxxxx Xxxxx and Xxxxxx Xxxxxxx irrevocably appoints
Beachcroft Wansboroughs of 000 Xxxxxx Xxxx, Xxxxxx XX0X 0XX to be his
agent for service of process and notices in England.
15.3 Any such notice shall be deemed to have been served as follows:-
15.3.1 in the case of delivery by hand, on delivery;
15.3.2 in the case of service by post, on the third Business Day after the day
on which it was posted;
15.3.3 in the case of transmission by fax, on the day it is transmitted;
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15.4 Subject as provided in Clause 15.3, in proving such service it shall be
sufficient to prove that the notice was properly addressed and left at,
posted to or transmitted by fax to that address.
15.5 For the purpose of this Clause, "Business Day" shall mean any day other
than Saturday, Sunday or any other day which is a public holiday in the
place at or to which the notice is left or despatched.
16 GOVERNING LAW AND JURISDICTION
16.1 This Agreement shall be governed by and construed in accordance with
the laws of England and Wales.
16.2 The Parties submit to the non-exclusive jurisdiction of the English
Courts as regards any claim, dispute or matter arising out of or
relating to this Agreement or any of the documents to be executed
pursuant to this Agreement.
EXECUTED as a deed and delivered on the date set out at the head of this
Agreement.
18
SCHEDULE 1
THE VENDORS
1 2 3 4 5 6
SET-OFF LOAN NOTE
HOLDING OF CASH CONSIDERATION LOAN NOTE CONSIDERATION
NAME ADDRESS SHARES CONSIDERATION
Xxxxxxx Xxxxx Xxxx 0, 0xx xxxxx 35,000 US$320,000 US$8,494,960 US$979,440
00 Xxx Xxxxxxxxxx
Xxxxxxxx 0000, Xxxxxxx
Xxxxxx Xxxxxxx Condominium unit 11,000 US$320,000 US$2,450,416 US$307,824
000/000,
0xx Xxxxx Xxxx 000
Xxxx Xxxxx Condominium
000 Xxx Xxxxxx 00
Xxxxxxx-Xxxxxx
Xxxxxxxxxx
Xxxxxxxx,
Xxxxxxxx
Xxxx Xxxxxxx 00 Xxxx Xxxx 4,000 US$1,007,424 US$111,936
Xxxxxxxxx
Xxxxxxxxxxxxx
XX0 0XX
19
SCHEDULE 2
THE COMPANY
1 Registered number: 2535134
2 Date of incorporation: 28 August 1990
3 Legislation under which incorporated: England & Wales
4 Registered office address: Stonemasons House
00 Xxxxxxx Xxxxxx
Xxxxxxxx
Xxxxxxxxxxxxx XX00 0XX
5 Directors: Xxxx Xxxxxxx
Xxxxxxx Xxxxx
Xxxxxx Xxxxxxx
6 Secretary: Xxxxxx Xxxxxxx
7 Authorised share capital:
(a) Amount: (pound)50,000
(b) Number and class of shares: 50,000 ordinary shares of
(pound)1 each
8 Issued share capital:
(a) Amount: (pound)50,000
(b) Number and class of shares: 50,000 ordinary shares of
(pound)1 each
9 Issued loan capital: None
10 Charges:
Date of Date of Property
charge: registration: charged: Sums secured: Chargee:
05.03.96 07.03.96 Fixed and floating All monies FMN Financial Limited
on all assets (formerly known as De
Xxxx Xxxxxx Factors
Limited)
11 Accounting Reference Date: 31 August
12 Auditors: Ernst & Young
13 Bankers: Lloyds Bank plc/
Midland Bank plc
20
SCHEDULE 3
THE SUBSIDIARIES
PART 1 LEDA MEDIA PRODUCTS (HK) LIMITED
1 Certificate number: 595096
2 Date of incorporation: 12 February 1997
3 Legislation under which incorporated: Hong Kong
4 Registered office address: 37/F Xx Xxxxx Xxxxx,
000 Xxxxx'x Xxxx Xxxx
Xxxxxxx, Xxxx Xxxx
5 Directors: Lavinia Kit Wa Xxxx
Xxxxxxx Xxxxx
Chaparral Limited
Xxxxxx Xxxxxxx
6 Secretary: BCS Limited
7 Authorised share capital:
(a) Amount: HK$1,000
(b) Number and class of shares: 1,000 ordinary shares of
HK$1.00 each
8 Issued share capital:
(a) Amount: HK$1,000
(b) Number and class of shares 1,000 ordinary shares of
and by whom held HK$1.00 each (999 held by Leda
Media Products Limited and 1
held by Cobyrne Limited as
nominee for Leda Media Products
Limited)
9 Issued loan capital: None
10 Charges:
Date of Date of Property
charge: registration: charged: Sums secured: Chargee:
11 Accounting Reference Date: 31 August
12 Auditors: Xxxxx Xxxxxxxx
13 Bankers: HSBC
21
SCHEDULE 3
THE SUBSIDIARIES
PART 2 LMP (USA) INC.
1 Registered number: 4310064
2 Date of incorporation: 16 February 1999
3 Legislation under which incorporated: Illinois, USA
4 Registered office address: 0000 Xxxx Xxxxx,
Xxxxxxxx,
Xxxxxxxx 00000,
XXX
5 Directors: Xxxxxx Xxxxxxx
6 Secretary: Xxxx Xxxxxxx
7 Authorised share capital:
(a) Amount: US $100,000
(b) Number and class of shares: 100,000 shares of US $ 1 each
8 Issued share capital:
(a) Amount: US $ 1,000
(b) Number and class of shares 1,000 shares of US $ 1 each
and by whom held:
9 Issued loan capital: None
10 Charges: None
Date of Date of Property
charge: registration: charged: Sums secured: Chargee:
11 Accounting Reference Date: N/A
12 Auditors: N/A
13 Bankers: American National/First National of Chicago
22
SCHEDULE 4
COMPLETION OBLIGATIONS OF THE VENDORS
At Completion, the Vendors shall deliver or procure to be delivered to the
Purchaser:-
1 duly executed transfers in favour of the Purchaser or its nominee(s) in
respect of the Shares together with the certificates for the Shares;
2 any other document which may reasonably be required to give good title to
the Shares or which may be necessary to enable the Purchaser to procure
the registration of the Shares in the name of the Purchaser or its
nominee(s);
3 a copy of any power of attorney under which this Agreement, or any of the
transfers or other documents referred to in the preceding paragraphs 1
and 2 of this Schedule, is executed and evidence to the Purchaser's
satisfaction of the authority of any person signing on behalf of any
corporate entity;
4 the common seal (if any) and statutory books (including registers and
minutes books) of the Company and the Subsidiaries made up to the
Completion Date and all certificates of incorporation and certificates of
incorporation on change of name of the Company and the Subsidiaries;
5 certificates for all the issued shares of each of the Subsidiaries
registered in the name of the Company;
6 letters of resignation in the Agreed Forms marked "B1" to "B3" from
Xxxxxxx Xxxxx (as a director) and Xxxxxx Xxxxxxx (as a director and
Secretary) (in each case in relation to the Company) and a letter of
resignation in the Agreed Form marked "B4" from Xxxxxxx Xxxxx (in
relation to Leda HK) acknowledging under seal that he has no claim
against the Company or the Subsidiaries for compensation for loss of
office or otherwise;
7 a copy of a letter from Ernst & Young in the Agreed Form marked "B5"
resigning their office as Auditors of the Company and a letter from Xxxxx
Xxxxxxxx in the Agreed Form marked "B6" resigning their office as
Auditors of Leda HK with effect from Completion and accompanied by the
statement
23
required by Section 394 Companies Xxx 0000, originals of such letter to
be deposited at the registered office of the Company;
8 engrossments in duplicate of each of the Service Agreements and the
Consultancy Agreement duly executed by the relevant party;
9 powers of attorney in the Agreed Form marked "C1" to "C3" duly executed
by the Vendors for the purpose of securing the interest of the Purchaser
in the Shares pending their registration into the names of the Purchaser
and/or its nominee(s);
10 all credit cards in the name, or for the account, of the Company or of
the Subsidiaries in the possession of any officer or employee of the
relevant company resigning at Completion;
11 the documents of title to the Properties;
12 evidence to the Purchaser's satisfaction of the non-crystallisation of
any floating charges created in favour of De Xxxx Xxxxxx Leasing and
Factoring by the Company and the Subsidiaries;
13 evidence to the Purchase's satisfaction of the repayment to the Company
of all sums due to it from any Vendor or any person connected with him;
14 evidence to the Purchaser's satisfaction that Xxxxxxx Xxxxx has bought a
7-series BMW (Registration No. 69 RNM) from the Company for(pound)26,500
and that Xxxxxx Xxxxx has bought a Land Rover Discovery (Registration No.
M518 KAC) from the Company for(pound)7,000;
15 evidence to the Purchaser's satisfaction that all and any arrangements,
agreements and obligations (whether contractual or otherwise) between the
Company and/or the Subsidiaries and a company known as Eastern Mainsource
(which is registered in the British Virgin Islands) have been properly
terminated;
16 a letter of consent from Sony agreeing not to enforce its rights to
terminate the contract between it and the Company as a result of the
change of control of the
24
Company; and
17 duly executed changes of bank mandates for the Company and the
Subsidiaries.
25
SCHEDULE 5
WARRANTIES
1 DISCLOSED INFORMATION
1.1 RECITALS AND OTHER SCHEDULES
The facts set out in the Recitals and in Schedules 2 and 3 are true and
accurate in all respects.
1.2 THE DISCLOSURE LETTER
All information contained or referred to in the Disclosure Letter is
true and accurate in all material respects.
1.3 MEMORANDUM AND ARTICLES OF ASSOCIATION
The copy of the Memorandum and Articles of Association of the Company
annexed to the Disclosure Letter is true and complete, has embodied in
it or annexed to it a copy of every such resolution or agreement as is
referred to in Section 380(4) Companies Xxx 0000 and sets out in full
the rights and restrictions attaching to each class of the Company's
share capital.
1.4 STATUTORY BOOKS
The statutory books (including all registers and minute books) of the
Company have been properly kept and contain a complete and accurate
record of the matters which should be dealt with in them and no notice
or allegation that any of them is incorrect or should be rectified has
been received.
1.5 RETURNS
All returns, particulars, resolutions and other documents required
under the Companies Xxx 0000 and all other relevant legislation to be
delivered on behalf of the Company to the Registrar of Companies or to
any other relevant authority whatsoever have been duly and properly
made and delivered.
26
1.6 MATERIAL DISCLOSURE
There are no facts or circumstances relating to the Shares or to the
assets, business or affairs of the Company which have been deliberately
withheld by the Vendors and which would have a material adverse effect
on the Company or the Purchaser as a result of the Purchaser acquiring
the Shares.
2 THE VENDORS
2.1 CAPACITY
2.1.1 Each Vendor has full power to enter into and perform this Agreement and
this Agreement constitutes binding obligations of each Vendor in
accordance with its terms.
2.1.2 The execution and delivery of this Agreement by the Vendors and the
performance of and compliance with its terms and provisions will not:-
2.1.2.1 conflict with or result in a breach of, or constitute a
default under, any agreement or instrument to which any of
them or the Company is a party or by which any of them or the
Company is bound or of the Memorandum or Articles of
Association of the Company;
2.1.2.2 conflict with or result in a breach of any law, regulation,
order, writ, injunction or decree of any court or agency; or
2.1.2.3 cause the Company to lose the benefit of any right or
privilege it presently enjoys or cause any person who normally
does business with the Company not to continue to do so on the
same basis or cause any officer or senior employee to leave
and, so far as the Vendors are aware, the attitude or actions
of customers, suppliers, employees and other persons with
regard to the Company will not be prejudicially affected
thereby.
27
2.2 VENDORS' OTHER INTERESTS
No Vendor nor, so far as the Vendors are aware, any person connected
with any Vendor has any interest, direct or indirect, in any business
other than that now carried on by the Company which is or is likely to
be or become competitive with the business or any proposed business of
the Company.
3 THE SHARES AND THE COMPANY
3.1 THE SHARES
3.1.1 The Shares comprise the whole of the allotted and issued share capital
of the Company and all of the Shares are fully paid or credited as
fully paid.
3.1.2 The Shares are legally and beneficially owned by the Vendors free from
all liens, charges, equities, encumbrances or interests of any nature
whatsoever, or any agreement, arrangement or obligation to create any
of the same, in favour of any other person.
3.2 SHARE AND LOAN CAPITAL
Save only as provided in this Agreement, there are no agreements or
arrangements in force which call for the present or future creation,
allotment, issue, transfer, redemption or repayment of, or grant to any
person the right (whether exercisable now or in the future and whether
conditional or not) to call for the creation, allotment, issue,
transfer, redemption or repayment of, any share or loan capital of the
Company (including by way of option or under any right of conversion or
pre-emption).
3.3 SUBSIDIARIES AND SUBSIDIARY UNDERTAKINGS
3.3.1 The Company does not have, and never has had, any subsidiaries or
subsidiary undertakings apart from the Subsidiaries.
3.3.2 The Company is the beneficial owner of the entire issued share capital
of the Subsidiaries, free from all liens, charges, equities,
encumbrances or interests of
28
any nature whatsoever, or any agreement, arrangement or obligation to
create any of the same, in favour of any other person.
3.4 ASSOCIATED COMPANIES
The Company has no associated companies as defined in SSAP1, as amended
by FRS9.
3.5 FOREIGN BRANCHES
The Company has no branch, agency, place of business or permanent
establishment outside the United Kingdom.
3.6 COMPANIES CONTROLLED BY VENDORS
There exists no company owned or controlled (directly or indirectly) by
the Vendors or any of them or any of their connected persons which in
any way competes with the business of the Company as at the date hereof
and there exists no understanding, liability, commitment or otherwise
between any such company and the Company which remains to be satisfied
and no money is either owed to or by the Company in respect of any such
companies.
4 THE ACCOUNTS AND ACCOUNTING RECORDS
4.1 THE ACCOUNTS
The Accounts:-
4.1.1 comply with the requirements of the Companies Xxx 0000 (or, in the case
of the Subsidiaries, in accordance with any relevant law);
4.1.2 have been prepared in accordance with all applicable SSAPs, FRSs or
UITF abstracts or, where there are none, in accordance with accounting
principles generally accepted in the United Kingdom and on a basis
consistent with preceding accounting periods;
29
4.1.3 show a true and fair view of the state of affairs of the Company as at
the Accounts Date and of its profit or loss for the financial year
ended on that date;
4.1.4 save as expressly disclosed in the Accounts, are not affected by any
extraordinary, exceptional or non-recurring items;
4.1.5 properly and adequately disclose all the assets and liabilities
(whether ascertained, contingent or otherwise and whether or not
quantified or disputed) of the Company as at the Accounts Date and make
proper provision and/or reserve for all such liabilities; and
4.1.6 properly and adequately disclose all financial commitments in existence
as at the Accounts Date.
4.2 STOCK VALUATION
4.2.1 The method of valuing stock-in-trade and work-in-progress for the
Accounts was in accordance with SSAP 9 and, subject to that Standard,
was consistent in all respects with that adopted in the corresponding
audited accounts for the preceding three financial periods and has been
accepted by the Inland Revenue for taxation purposes.
4.2.2 Proper provision has been made in the Accounts in respect of dead, slow
moving, obsolete, redundant or excess stock-in-trade and/or
work-in-progress and the value attributed to the remaining
stock-in-trade and/or work-in-progress did not exceed the lower of
direct cost or net realisable value at the Accounts Date.
4.3 ACCOUNTING RECORDS
The accounting records of the Company:-
4.3.1 have at all times been properly and accurately kept and completed and
contain due and accurate records of all matters required by law to be
entered in them;
4.3.2 contain or reflect no material inaccuracies or discrepancies of any
kind; and
30
4.3.3 disclose the matters which ought to appear in them with reasonable
accuracy.
4.4 MANAGEMENT ACCOUNTS
4.4.1 The Management Accounts have been properly prepared in a manner
consistent with that adopted in the preparation of the Accounts.
4.4.2 Having regard to the purpose for which the Management Accounts have
been prepared, they are not misleading and do not overstate the profits
of the Company in respect of the period to which they relate.
5 TAXATION
5.1 DEFINITIONS
Words and expressions defined for the purposes of Schedule 9 (Tax
Covenant) shall have the same meaning for the purposes of this Part of
Schedule 5.
5.2 THE ACCOUNTS
5.2.1 All liabilities, whether actual or deferred, contingent or disputed, of
the Company for tax measured by reference to income, profits or gains
earned, accrued or received on or before the Accounts Date or arising
in respect of an event occurring or deemed to occur on or before the
Accounts Date are fully provided for or (as appropriate) disclosed in
the Accounts. All other Warranties relating to specific tax matters set
out in this Schedule are made without prejudice to the generality of
this paragraph.
5.2.2 Full provision has been made in the Accounts for deferred taxation
(calculated according to the liability method).
5.3 POSITION SINCE ACCOUNTS DATE
Since the Accounts Date:-
5.3.1 the Company has not been involved in any transaction which has given or
may give rise to a liability on the Company (or would have given rise
or might give rise to
31
such a liability but for the availability of any relief) other than
taxation in respect of normal trading income or receipts of the Company
arising from transactions entered into by it in the ordinary course of
business;
5.3.2 payments made by the Company which will not be deductible for the
purposes of corporation tax, either in computing the profits of the
Company or in computing the corporation tax chargeable on it, are not
materially greater than such payments made in the previous three
accounting periods;
5.3.3 the Company has not been involved in any transaction otherwise than on
arm's length terms;
5.3.4 no disposal has taken place or other event occurred which has given or
may give rise to a liability to taxation which, if such disposal or
event had been planned or predicted at the Accounts Date, should have
been reflected in the provision for deferred taxation contained in the
Accounts; and
5.3.5 no accounting period (as defined in Section 12 ICTA 1988) of the
Company has ended as referred to in Section 12(3) of that Act.
5.4 CONTINUING OBLIGATIONS
All sums of a revenue nature (including without limitation rents,
interest, management charges and annual payments) payable by the
Company pursuant to an obligation incurred by the Company before
Completion and which will continue to bind the company after Completion
have been and will continue to be fully deductible for the purposes of
corporation tax (or any corresponding tax on profits in any relevant
foreign jurisdiction), either in computing the profits of the Company
or in computing the corporation tax or corresponding tax chargeable on
it.
5.5 ADMINISTRATIVE MATTERS
5.5.1 The Company has not within the last six years been, nor has it been
notified that it will be, involved in any dispute with, or the subject
of any enquiry by any taxation authority (whether of the UK or
elsewhere) other than routine enquiries.
32
5.5.2 The Company has duly, and within any appropriate time limits, made all
returns, given all notices, supplied all information and maintained all
such records as are required to be made, given, supplied or maintained
by it; all such returns, notices and information were complete and
accurate in all material respects and were made or provided on the
proper basis.
5.5.3 The Company has duly paid all taxation which it has become liable to
pay and has not been notified of any liability to pay any penalty,
interest, supplement, fine, default surcharge or other payment in
connection with any claim for taxation.
5.5.4 All claims, disclaimers, elections, appeals or applications by the
Company the making of which has been taking into account in the
Accounts have been made and were and remain valid and the Company has
retained all such records and information as may be requisite to enable
any such claim to be made as a correct and complete claim.
5.5.5 No transaction in respect of which any consent or clearance from any
taxation authority was required or sought has been entered into or
carried out by the Company without such consent or clearance having
been properly obtained. Any transaction for which such consent or
clearance was obtained has been carried out in accordance with the
terms of such consent or clearance and the application in respect of
which such consent or clearance was based and at a time when such
consent or clearance was valid and effective.
5.5.6 No taxation authority has operated or agreed to operate any special
arrangement or practice (being one not based on relevant legislation or
published practice) in relation to the affairs of the Company.
5.5.7 In relation to the Company, the Disclosure Letter gives full details
of:-
assessments to tax made by any tax authority, and any such
determinations and directions under sections 41A or 41B Taxes
Management Xxx 0000, which are subject to appeal or have otherwise not
become final at the date of this Agreement.
5.6 COMPANY RESIDENCE
33
The Company is, and has at all times been, resident for taxation
purposes in the country of its incorporation and is not, and has not at
any time been, treated as resident in any other jurisdiction for any
taxation purposes (including pursuant to any double taxation
arrangement). The Company has no branch, agency, place of business or
permanent establishment outside the country of its incorporation.
5.7 DISTRIBUTIONS AND PAYMENTS
5.7.1 The Company has not since 5 April 1965:-
5.7.1.1 made any distribution or deemed distributions within the
meaning of Sections 209 or 210 ICTA 1988 (distributions and
deemed distributions) except as provided for in its audited
accounts;
5.7.1.2 issued any share capital as paid up otherwise than by the
receipt of new consideration (within the meaning of Section
254 ICTA 1988); or
5.7.1.3 redeemed, repaid or purchased, or agreed to redeem, repay or
purchase, any of its own shares.
5.7.2 No securities (within the meaning of Section 254(1) ICTA 1988) issued
by the Company and remaining in issue at the date of this Agreement
were issued in circumstances such that the interest or any other amount
payable on those securities falls to be treated as a distribution.
5.7.3 The Company has not within the period of six years preceding Completion
made or received any distribution which is an exempt distribution
within Sections 213 to 218(1) (inclusive) ICTA 1988 (demergers).
5.7.4 The Company has not elected under Sections 246A and 246B ICTA 1988 for
any dividend paid by it to be treated as a foreign income dividend for
the purposes of Chapter VA ICTA 1988, and no payment or other
distribution by the Company has been so treated pursuant to Schedule 7
Finance Xxx 0000.
34
5.8 GROUPS, TAX CONSOLIDATION ETC.
The Company is not and has not at any time been treated as a member of
a group of companies for any taxation purposes and has not been subject
to taxation on the basis that its profits or losses are consolidated
with any other company.
5.9 ACT CARRY FORWARD
5.9.1 As at 6 April 1999, the Company had no unrelieved surplus advance
corporation tax as defined in The Corporation Tax (Treatment of
Unrelieved Surplus Advance Corporation Tax) Regulations 1999 (SI
1999/358) (the "Shadow ACT Regulations").
5.10 CAPITAL GAINS
5.10.1 If each of the assets other than trading stock of the Company were
disposed of for a consideration equal to the book value of that asset
in, or adopted for the purpose of, the Accounts, no liability to
taxation in relation to any such asset would arise (disregarding for
this purpose any relief and allowances available to the Company other
than amounts falling to be deducted from consideration receivable under
Section 38 TCGA 1992).
5.10.2 No liability to taxation would arise on the disposal by the Company of
any asset other than trading stock acquired since the Accounts Date for
a consideration equal to the consideration actually given for the
acquisition.
5.11 CAPITAL LOSSES
No loss which might accrue on the disposal by the Company of any asset
is liable to be reduced or eliminated and no chargeable gain is liable
to be created or increased by virtue of any depreciatory transaction or
any reduction in value of that or any related asset for the purposes of
corporation tax on chargeable gains or any corresponding tax of any
relevant foreign jurisdiction.
35
5.12 CAPITAL EXPENDITURE
5.12.1 The Company has not since the Accounts Date done or omitted to do, or
agreed to do, or permitted to be done, any act as a result of which
there may be made a balancing charge or any disposal value may be
brought into account or any deemed trading receipt may arise under or
by virtue of any provision of CAA 1990 (or any corresponding
legislation in the UK or elsewhere), or there may be a withdrawal or
refusal of allowances or a recovery of excess relief under any such
provision.
5.12.2 If the Company disposed of each of its assets, or of any pool of assets
(that is to say all those assets expenditure relating to which would be
taken into account in computing whether a balancing charge would arise
on a disposal of any of those assets) for a consideration equal to
their book value as shown in or adopted for the purpose of the
Accounts, no balancing charge (or corresponding tax of any relevant
foreign jurisdiction) would arise in respect of any such asset or pool
of assets under any legislation relating to capital allowances (or
corresponding legislation of the relevant foreign jurisdiction).
5.12.3 The Company has not made any election under Section 37 CAA 1990 nor is
taken to have made such an election under sub-section (8)(c) CAA 1990
(election for assets to be treated as short life assets). The Company
has not incurred any expenditure on machinery or plant which is a long
life asset to which Chapter IVA, Part II CAA 1990 applies.
5.13 LOAN RELATIONSHIPS
5.13.1 The Company is not party to any loan relationship as defined in Chapter
II, Part IV Finance Xxx 0000 which may give rise to any debits or
credits for the purposes of that Chapter other than in relation to
interest, charges or expenses.
5.13.2 The Company is not a party to any loan relationship:-
5.13.2.1 where there is a connection between the parties as defined by
Section 87 Finance Xxx 0000;
36
5.13.2.2 where there has been or will be a release of the amounts
payable under the relationship;
5.13.2.3 to which the transitional provisions of Schedule 15 Finance
Xxx 0000 apply or will apply;
5.13.2.4 to which paragraph 11, Schedule 9 Finance Xxx 0000 applies or
may apply (transactions not at arm's length);
5.13.2.5 to which Sections 92 (convertible securities etc), 93
(relationships linked to the value of chargeable assets) or 94
(indexed gilt-edged securities) Finance Xxx 0000 apply.
5.13.3 The Company accounts for all its loan relationships (as defined in
Section 81 Finance Act 1996) on an authorised accruals basis and no
circumstances exist by virtue of which a balancing debit or credit may
be brought into account in an accounting period of the Company ending
after Completion pursuant to Section 89 Finance Act 1996 (inconsistent
application of accounting methods) or Section 90 Finance Act 1996
(changes of accounting method).
5.13.4 The Company is not the debtor pursuant to any loan relationship:-
5.13.4.1 to which the provisions of paragraph 2, Schedule 9 Finance Xxx
0000 (late interest) have applied; or
5.13.4.2 which has an unallowable purpose within the meaning of
paragraph 13 Schedule 9 Finance Xxx 0000 (loan relationships
for unallowable purposes).
5.13.5 The Company has not issued any relevant discounted securities (as
defined in Schedule 13 Finance Act 1996 (or any securities which would
be relevant discounted securities if the amendments to that provision
contained in clause 59 of the Finance Xxxx 1999 was enacted in the form
originally published).
37
5.14 FOREIGN EXCHANGE AND FINANCIAL INSTRUMENTS
The Company has no:-
5.14.1 qualifying assets, qualifying liabilities or currency contracts to
which the provisions of Chapter II, Part II Finance Xxx 0000 apply or
will or may apply;
5.14.2 interest rate or currency contracts or options to which the provisions
of Chapter II, Part IV Finance Xxx 0000 apply or will or may apply.
5.15 WITHHOLDINGS
The Company has made all deductions and retentions of or on account of
taxation as it was or is obliged or entitled to make and has made all
such payments of or on account of taxation as should have been made to
any taxation authority in respect of such deductions or retentions.
5.16 EMPLOYEES ETC.
5.16.1 The Company has not made any payment to, or provided any benefit for or
on behalf of, any officer or employee or ex-officer or ex-employee of
the Company which is not allowable as a deduction in calculating the
profits of the Company for taxation purposes.
5.16.2 The Company has made all payments, deductions, withholdings or
reductions as it should have made in respect of any remuneration or
benefits of any kind paid or provided to employees, sub-contractors or
workers supplied by agencies in respect of taxation, national insurance
or social security contributions, and all sums payable by the Company
to any taxation authority in respect of such amounts have been, or will
before Completion be, paid to the relevant authority within the
prescribed time limits.
5.16.3 The Company has kept proper books and records relating to the same.
5.16.4 The Disclosure Letter contains full details of all share schemes which
the Company operates or in which employees are entitled to participate,
together with copies of
38
any approvals issued by the taxation authorities in respect of such
schemes and nothing has been done to prejudice the approved status of
any such schemes.
5.17 CONTROLLED FOREIGN COMPANIES
The Subsidiaries of the Company are not and never have been controlled
foreign companies as defined in section 747(1) ICTA 1988.
5.18 VALUE ADDED TAX
5.18.1 The Company is registered for the purposes of value added tax . The
Company is not a member of a group of companies for UK or foreign value
added tax purposes and has not applied for such treatment.
5.18.2 The Company has not been required by the Commissioners of Customs and
Excise or equivalent foreign authorities to give security and no steps
have been taken for distress to be levied on any asset of the Company.
5.18.3 The Company is not in arrears with any payment or returns in respect of
value added tax. The Company has not been subject to any penalty, fine
or surcharge in respect of value added tax and has not received any
notice of any such penalty, fine or surcharge.
5.18.4 The Company has complied with and observed in all material respects the
terms of all enactments relating to value added tax or any equivalent
tax in any jurisdiction and all regulations, orders, notices,
provisions and conditions made under those enactments ("VAT
legislation").
5.18.5 The Company has maintained and obtained complete, correct and
up-to-date records, invoices and other documents (as the case may be)
appropriate or requisite for the purposes of VAT legislation and has
preserved such records, invoices and other documents in such form and
for such periods as are required by VAT legislation.
5.18.6 The Company has not since its incorporation incurred any expenditure on
capital items such that the provisions of Part XV The Value Added Tax
Regulations 1995 (capital goods scheme) may apply to the Company.
39
5.18.7 The Company obtains credit for all input tax paid or suffered by it,
apart from input tax on supplies in the case of which there is a
general prohibition on credit (such as cars and entertainment).
5.19 CLOSE COMPANIES
5.19.1 The Company is not and has at no time been a close investment holding
company as defined in Section 13A ICTA 1988.
5.19.2 The Company has not made any transfers of value within Section 94
Inheritance Tax Xxx 0000.
5.19.3 The Company has not in the last six years done anything so as to give
rise to an assessment or any charge to tax under Section 419 (as
extended by Section 422) ICTA 1988.
5.19.4 The Company has not in the last six years made a distribution within
Section 418 ICTA 1988.
5.20 INHERITANCE TAX
5.20.1 No shares in or assets of the Company were acquired by it or (as the
case may be) the Vendor in circumstances such that they continued to be
subject to any Inland Revenue charge to which they were subject
immediately before such acquisition or such that, if they had been
subject to an Inland Revenue charge immediately before such
acquisition, they would have continued to be subject to it.
5.20.2 No shares in or assets of the Company are subject to any such power of
sale, charge or mortgage as is mentioned in Section 212 Inheritance Tax
Act 1984 and there are no circumstances which might lead to such a
power arising.
5.21 SECONDARY LIABILITY
The Company is not, nor will it become, liable to pay, or make
reimbursement or indemnity in respect of, any taxation (or any amount
corresponding to taxation) in consequence of the failure by any other
person to discharge that taxation or amount within any specified period
or otherwise, where the taxation or amount relates to a
40
profit, income or gain, transaction, event, omission or circumstances
arising, occurring or deemed to arise or occur (whether wholly or
partly) before Completion.
5.22 PAYMENTS EQUIVALENT TO TAXATION
5.22.1 The Company has not entered into any indemnity, guarantee or covenant
under which the Company has agreed or can be procured to meet or pay a
sum equivalent to or by reference to another person's liability to
taxation.
5.22.2 The Company is not liable, nor has any event or omission occurred in
consequence of which the Company could at any time become liable, to
make a payment to any person as a result of the discharge by that
person of any liability of the Company to taxation incurred on or
before Completion.
5.23 CAPITAL DUTY, STAMP DUTY ETC.
5.23.1 All documents to which the Company is a party and under which the
Company has any rights or which form part of the Company's title to any
asset owned by it have been duly stamped with the correct amount of
stamp duty and any applicable stamp or other duty in respect of such
documents has been accounted for and paid and no such documents which
are outside the United Kingdom would attract stamp duty if they were
brought into the United Kingdom.
5.23.2 The Company has complied in all respects with the provisions of Part IV
Finance Xxx 0000 (stamp duty reserve tax) and with any regulations made
under it and neither it nor any nominee for it is a party to any
agreement which falls within the terms of Section 87(1) of that Act
(principal charge) and in relation to which the conditions referred to
in Section 92(1) of that Act (repayment or cancellation of tax) have
not been fulfilled.
6 ASSETS
6.1 TITLE TO ASSETS AND ENCUMBRANCES
6.1.1 Except for trading stock sold by the Company in the ordinary course of
its day to day business or for trading stock acquired subject to
retention or reservation of
41
title by the supplier or manufacturer of such trading stock as
disclosed in the Disclosure Letter, all the assets included in the
Accounts or acquired after the Accounts Date as well as all the assets
used in the Company's business:-
6.1.1.1 are legally and beneficially owned by the Company free from
any mortgage, charge, lien or other encumbrance;
6.1.1.2 are not held subject to any agreement for lease, hire, hire
purchase or sale on conditional or deferred terms; and
6.1.1.3 are in the possession or under the control of the Company.
6.1.2 In respect of any of the items referred to in the preceding paragraph
6.1.1 which are held under any agreement for lease, hire, hire purchase
or sale on conditional or deferred terms, there has been no default by
the Company in the performance or observance of any of the provisions
of such agreements.
6.2 PLANT
6.2.1 The plant and machinery, including fixed plant and machinery, and all
vehicles and office and other equipment used in connection with the
business of the Company are in good repair and condition and in
satisfactory working order having regard to their age and use, have
been regularly and properly maintained and are not surplus to the
Company's requirements.
6.2.2 So far as the Vendors are aware (having obtained such advice from
competent professional IT advisers as is reasonable in the
circumstances), in relation to hardware, software and equipment reliant
on electronic controls used in the Company's business and supplied by
the Company in the course of its business activities, none contain
embedded logic or code which will fail to recognise the year 2000 as
such, or which might fail or cause other hardware, software or
equipment to fail to perform according to specification or to the needs
of the Company's business by reason of the date change after 31
December 1999, or cannot accurately and correctly process data by
reason of a failure accurately to recognise any date or dates of any
kind.
42
6.2.3 The Company owns all tooling and intellectual property rights therein
used by or under the control of the Company.
6.3 STOCK
6.3.1 The Company's stock in trade is in good condition and is capable of
being sold by the Company in the ordinary course of its business in
accordance with its current price list without rebate or allowance to a
purchaser.
6.3.2 The Company has not sold any products to customers on the basis that
such products can be returned by any such customers to the Company in
return for complete or partial repayment.
6.4 DEBTS
6.4.1 The amount of all debts recorded in the Accounts or the books of the
Company as being due to the Company (less the amount of any specific
provision or reserve for such debts made in the Accounts or the
Management Accounts) will be received in full in the ordinary course of
business and none of those debts is subject to any counter-claim or
set-off.
6.4.2 No part of the amounts included in the Accounts or (in the case of an
amount arising after the Accounts Date) in the books of the Company as
due from debtors has been released on terms that any debtor pays less
than the full book value of his debt or has been written off or has
proved to any extent irrecoverable or is now regarded as irrecoverable.
6.5 INTELLECTUAL PROPERTY
6.5.1 In respect of the Intellectual Property listed in document 24 of the
Disclosure Bundle attached to the Disclosure Letter ("the Listed IP"):-
6.5.1.1 the Listed IP is owned absolutely by the Company free of all
liens, charges, encumbrances and licences, nor is the Company
obliged to grant any liens, charges, encumbrances or licences
in respect of it;
43
6.5.1.2 the list contains true and complete details of all patents,
trade marks, registered designs and applications for the same
owned by the Company;
6.5.1.3 to the best of the Vendors' knowledge, information and belief,
all documents necessary to establish the Company's title to
the Listed IP are in its possession and have been duly
stamped; and
6.5.1.4 to the extent that the rights in the Listed IP are
registrable, the same are registered in the name of the
Company as sole absolute owner and all payments due and all
registration and renewal formalities relating to them are
up-to-date and complete and correct.
6.5.2 To the best of the Vendors' knowledge, information and belief, the
conduct of the Company's business as now and as currently planned to be
conducted does not infringe, has not infringed and will not infringe
the rights of any third party in relation to any Intellectual Property.
6.5.3 No third party has outstanding any claim against the Company based on
such third party's Intellectual Property and there are no grounds to
anticipate that there will be such claim.
6.5.4 The Vendors have provided the Purchaser with true copies of all written
licences and other arrangements relating to Intellectual Property to
which the Company is a party or to which it is subject, and such copies
contain all the terms applicable to each such licence or arrangement.
No party to any such licence or arrangement is or has been in breach of
it. There are no licences relating to Intellectual Property to which
the Company is a party or to which it is subject which are not in
writing.
6.5.5 The Vendors have provided the Purchaser with a listing of all rights in
Intellectual Property subject to payment of renewal fees by the Company
and such listing is accurate.
44
6.5.6 The rights in Intellectual Property used or currently planned to be
used by the Company ("the Utilised IP Rights"):-
6.5.6.1 so far as the Vendors are aware, are such that no third party
may lawfully manufacture or sell those elements of the design
and function of the products made by the Company which
distinguish its products from those made or sold by its
competitors or will be able to do so;
6.5.6.2 so far as the Vendors are aware, may be fully exploited
without payment to or permission of third parties;
6.5.6.3 are not and have not been the subject of any civil, criminal,
administrative or arbitration proceedings brought by or
against the Company, nor are any such proceedings pending or,
so far as the Vendors are aware, threatened, nor, so far as
the Vendors are aware, could any such proceedings successfully
be brought against the Company and no fact or circumstance
exists which might give rise to such proceedings against the
Company, nor have any claims or threats been made against the
Company which might lead to any termination or alteration of
the Company's rights therein or to the terms on which the same
are exploited;
6.5.6.4 are not limited in time save by statute or any agreement which
has been disclosed to the Purchaser and which is included in
the annexures to the Disclosure Letter;
6.5.6.5 are not subject to conditions as to use;
6.5.6.6 are not the subject of any rights held by any third party
including employees (whether by licence or otherwise);
6.5.6.7 so far as the Vendors are aware, are not being and have not
been infringed by any third party, and there are no grounds to
anticipate that any of them will be so infringed;
45
6.5.6.8 to the extent that they comprise trade marks, are not
potentially subject to revocation for non-use;
6.5.6.9 to the extent that they comprise rights in respect of
patents:-
(i) have been protected insofar as all goods which are
protected by any such patent are (or their packaging
is) marked to show the patent numbers concerned; and
(ii) have not been exploited in such a way that an order
may be made under Section 49 Patents Xxx 0000;
6.5.6.10 to the extent that they relate to inventions capable of
protection by the grant of a patent, have not been disclosed
in such a way as to prejudice the grant of a patent;
6.5.6.11 so far as the Vendors are aware, to the extent that they or
any licence over them are subject to registration, have been
protected to the extent that any dealing with them has been
submitted for registration within six months of the date of
the dealing; and
6.5.6.12 so far as the Vendors are aware, are not potentially or
currently subject to payment to any employee of the Company or
any third party by reason of their use or by reference to
profits made or income received for goods or services
incorporating them, nor does any employee potentially or
currently have the right to payment by reason of his
contribution to their creation.
6.5.7 The Utilised IP Rights which were developed specifically for use by the
Company:-
6.5.7.1 have been developed exclusively by employees of the Company
within the course of their employment; or
46
6.5.7.2 to the extent not so developed, have been transferred
absolutely to the Company or licensed to it exclusively and
irrevocably without limit of time and not subject to
conditions as to use or transferability or as to payment, and
any moral rights capable of being exercised in relation to
them have been waived.
6.5.8 The Company has fully disclosed to the Purchaser:-
6.5.8.1 all obligations as to confidentiality imposed on the Company
in relation to its business or any equipment or information
held or used in relation to it;
6.5.8.2 all terms to which the Company is subject as to the use of
equipment or information; and
6.5.8.3 all terms to which third parties are subject by reason of
rights granted to them by the Company in connection with its
business.
6.5.9 The Company owns all the Intellectual Property rights in all chips used
in connection with the business of the Company.
6.6 PROPERTIES
6.6.1 The Properties comprise the only freehold or leasehold or other
immovable property in any part of the world in which the Company has
any interest or which are otherwise occupied or used by the Company.
6.6.2 The particulars of each of the Properties set out in Schedule 6 are
true and accurate in all respects.
6.6.3 The Company is in physical possession and actual occupation of the
whole of each of the Properties on an exclusive basis.
6.6.4 The Company is solely entitled at law and in equity to the Properties
and has a good and marketable title to them.
47
6.6.5 The Company has in its physical possession free from any lien all of
the deeds and documents necessary to prove the title of the Company to
the Properties and the title deeds and documents are all duly stamped
originals.
6.6.6 The Properties are not subject to or affected by any mortgage or charge
(whether legal or equitable, fixed or floating), debenture, lien,
pledge, security interest or other encumbrance including without
limitation any which secure the payment of monies or other obligation
or liability of any third party.
6.6.7 The Properties enjoy all rights and privileges necessary for their
continued use and enjoyment for their current use without any
restrictions or limitations.
6.6.8 The Properties are not subject to any covenants, restrictions,
stipulations, reservations, agreements or other matters of a public or
private nature which are onerous or unusual or which adversely affect
their current use or which affect their value.
6.6.9 The current use of the Properties is their permitted use under planning
legislation.
6.6.10 All necessary planning permissions and consents and approvals from all
statutory and other competent authorities in relation to the Properties
and their development have been obtained and are valid and subsisting.
6.6.11 So far as the Vendors are aware, the Properties are not affected by any
dispute of any kind.
6.6.12 So far as the Vendors are aware, all statutes, orders or regulations
affecting the Properties and their use and development have been
observed and there are no outstanding requirements or recommendations
of any competent authority.
6.6.13 No difficulty has been experienced in obtaining insurance for any of
the Properties and the current requirements of the insurers of each of
the Properties have been complied with.
48
6.6.14 In relation to the Properties which are leasehold, the Company has paid
all sums due and has observed and performed the covenants on the part
of the tenant and the conditions contained in the leases and the
obligations contained in any licence or other document supplemental to
any of the leases and has obtained all consents required in connection
with the grant of the leases.
6.6.15 The Company has no liability (whether actual, contingent or
prospective) or obligation in respect of any property whether freehold,
leasehold, licensed or occupied under an informal or undocumented
arrangement in any part of the world (other than the Properties)
including without limitation any liability or obligation to:-
6.6.15.1 perform covenants (restrictive or positive) or agreements
affecting or relating to land;
6.6.15.2 pay rent or rents, service charges, insurance premiums or
other monies or observe or perform covenants, obligations or
conditions contained in any lease, agreement for lease,
licence, deed, agreement or other document ancillary or
supplemental to a lease whether or not expressed to be so;
6.6.15.3 pay principal, interest or other monies or observe or perform
covenants or agreements contained in any mortgage, charge or
other document creating a security interest affecting any
property to which this Warranty applies;
6.6.15.4 make payments under or otherwise observe or perform any
guarantee or surety, whether as primary or secondary obligor,
or indemnity or otherwise assume any liabilities of any third
party by accepting a leasehold or in any other manner;
6.6.15.5 make payments under or otherwise observe or perform any
agreement for sale, option or right of pre-emption;
49
6.6.15.6 make payments under or otherwise observe or perform any
building contract, collateral warranty, duty of care agreement
or professional appointment.
6.7 THE ENVIRONMENT
6.7.1 No Pollution of the Environment in violation of any law relating to
protection of the Environment or at levels in excess of that permitted
under any such law has occurred at, under or from the Properties.
6.7.2 The Company has complied and continues to comply with all laws relating
to protection of the Environment and has filed all notifications
required to enable it lawfully and properly to operate its business at
and from the Properties.
6.7.3 In this paragraph 6.7, "Pollution of the Environment" and "Environment"
have the meanings given to them by the Environmental Protection Xxx
0000.
7 EMPLOYEES AND CONSULTANTS
7.1 DIRECTORS
The particulars of Directors shown in paragraph 6 of Schedule 2 and in
paragraph 6 of Schedule 3 are true and complete and no person not named
as such in that paragraph is or is held out as a director of the
Company.
7.2 PARTICULARS OF EMPLOYEES
7.2.1 The particulars shown in the Schedule of Employees annexed to the
Disclosure Letter show all remuneration payable and other benefits
provided or which the Company is bound to provide (whether now or in
the future) to each officer and employee of the Company and/or any
person connected with any such person and include true and complete
particulars of all profit sharing, incentive and bonus arrangements to
which the Company is a party, whether legally binding on the Company or
not, and no person not named in that Schedule is an employee of the
Company.
50
7.2.2 Since the Accounts Date, no change has been made in the rate of
remuneration or the emoluments or pension benefits of any officer,
ex-officer or employee of the Company and no change has been made in
the terms of engagement of any such officer or employee and no
additional officer or employee has been appointed.
7.2.3 No present officer or employee of the Company has given or received
notice terminating his employment, except as expressly contemplated
under this Agreement.
7.3 SERVICE CONTRACTS
7.3.1 There is not now outstanding any service contract between the Company
and any of its directors, officers or employees which is not terminable
by the Company without compensation (other than statutory compensation)
on one month's notice or less given at any time.
7.3.2 The attention of all employees of the Company has been drawn to such of
the terms of their employment as is required by the Employment Rights
Xxx 0000.
7.4 TRADES UNIONS
The Company is not a party to any agreement or arrangement with or
commitment to any trades union or staff association nor, to the best of
the Vendors' knowledge, information and belief, are any of its
employees members of any trades union or staff association.
7.5 DISPUTES WITH EMPLOYEES
There is no outstanding claim against the Company by any person who is
now or has been an officer or employee of the Company or any dispute
between the Company and a material number or class of its employees and
no payments are due by the Company under the provisions of the
Employment Rights Xxx 0000.
7.6 REDUNDANCIES AND TRANSFER OF BUSINESS
In the 12 months preceding the date of this Agreement, the Company has
not:-
51
7.6.1 given notice of redundancies to the relevant Secretary of State or
started consultations with a trades union under Chapter II of Part IV
of the Trade Union and Labour Relations (Consolidation) Xxx 0000 or
failed to comply with its obligations under Chapter II of Part IV of
that Act; or
7.6.2 been a party to a relevant transfer (as defined in the Transfer of
Undertakings (Protection of Employment) Regulations 1981) or failed to
comply with a duty to inform and consult a trade union under those
Regulations.
7.7 CONSULTANTS
There is not now outstanding any contract or arrangement to which the
Company is a party for the payment to any person or body of any
consultancy or like fees.
7.8 EX-GRATIA PAYMENTS
Since the Accounts Date, no ex-gratia payments have been made by the
Company to any officer or employee or former officer or employee of the
Company or to their dependants or relatives nor is the Company
considering making any such payments.
7.9 COMPLIANCE
So far as the Vendors are aware, the Company has, in relation to each
of its officers and employees (and, so far as relevant, to each of its
former officers and employees):-
7.9.1 complied with all obligations imposed on it by, and all orders and
awards made under, all statutes, ordinances, regulations, codes of
conduct and practice, collective agreements and customs and practices
relevant to the relations between it and its employees or any trades
union, or to the conditions of service of its Employees (including the
Working Time Regulations 1998);
7.9.2 complied with all recommendations made by the Advisory Conciliation and
Arbitration Service and with all awards and declarations made by the
Central
52
Arbitration Committee; and
7.9.3 maintained current, adequate and suitable records regarding the service
of each of such officers and employees.
7.10 PENSIONS
The Company:-
7.10.1 has no obligation (whether legally binding or not) to:-
7.10.1.1 pay any pension; or
7.10.1.2 make any other payment on or after retirement or death or
during periods of sickness or disability (whether of a
temporary or permanent nature); or
7.10.1.3 otherwise to provide "relevant benefits" (within the meaning
of Section 612 ICTA 1988)
to, or in respect of any person who is now or has been an officer or
employee of the Company or spouse or dependant of such officer or
employee; and
7.10.2 is not a party to or obliged to contribute to any scheme or arrangement
(including, but not limited to, a personal pension scheme as defined in
Section 630 ICTA 1988) having as its purpose or one of its purposes the
making of any such payments, or the provision of any such benefits, as
are mentioned in paragraph 7.10.1 above.
7.11 FORMER OFFICERS AND EMPLOYEES
No former officer or employee (and in particular Xxxxx Xxxxxxx) has any
claim, whether actual or contingent, against the Company in respect of
the period during which he was an officer or an employee of the Company
(as the case may be) or in respect of his termination as an officer or
employee.
53
8 LIABILITIES AND COMMITMENTS
8.1 MATERIAL CONTRACTS
The Company is not a party to or subject to any agreement, transaction,
obligation, commitment, understanding, arrangement or liability which:-
8.1.1 is incapable of complete performance in accordance with its terms
within six months after the date on which it was entered into or
undertaken;
8.1.2 is likely to result in a material loss to the Company on completion of
performance;
8.1.3 cannot readily be fulfilled or performed by the Company on time without
unusual expenditure of money and effort;
8.1.4 involves or is likely to involve obligations, restrictions, expenditure
or receipts of an unusual, onerous or exceptional nature;
8.1.5 is a forward contract relating to foreign currency (including, without
limitation, the Euro);
8.1.6 involves or is likely to involve the supply of goods by or to the
Company the aggregate sales value of which will represent more than
five per cent. of the turnover of the Company for its last financial
year;
8.1.7 is a contract for services (other than a contract for the supply of
electricity, gas or water or normal office services);
8.1.8 requires the Company to pay any commission, finders' fee, royalty or
the like;
8.1.9 in any way restricts the Company's freedom to carry on the whole or any
part of its business in any part of the world in such manner as it
thinks fit;
8.1.10 is an agreement or arrangement otherwise than by way of bargain at
arm's length; or
54
8.1.11 is in any way otherwise than in the ordinary and proper course of the
Company's business.
8.2 DEFAULTS
Neither the Company nor any other party to any agreement with the
Company is in material default under any such agreement nor (so far as
the Vendors are aware) are there any circumstances likely to give rise
to such a default.
8.3 SURETIES
No person apart from the Company has given any guarantee of or security
for any overdraft, loan or loan facility granted to the Company.
8.4 POWERS OF ATTORNEY
8.4.1 There is in force no power of attorney or other authority (express,
implied or ostensible) given by the Company to any person to enter into
any contract or commitment on its behalf other than to its employees to
enter into routine trading contracts in the usual course of their
duties.
8.4.2 The Company has not appointed any agent or distributor in respect of
any of its products or services in any part of the world.
8.5 INSIDER CONTRACTS
8.5.1 There is not outstanding, and there has not at any time during the six
years ending on the date of this Agreement been outstanding, any
agreement or arrangement to which the Company is a party and in which
any Vendor, any person beneficially interested in the Company's share
capital, any director of the Company or any person connected with any
of them is or has been interested, whether directly or indirectly.
55
8.5.2 The Company is not a party to, nor have its profits or financial
position during such period been affected by, any agreement or
arrangement which is not entirely of an arm's length nature.
8.6 DEBTS
There are no debts owing by the Company, other than debts which have
arisen in the ordinary course of business.
8.7 BORROWINGS AND MORTGAGES
8.7.1 The Company has no borrowings, and has not agreed to create any
borrowings, from its bankers or any other source and, in respect of
borrowings disclosed in the Disclosure Letter, the Company has not
exceeded any limitation on its borrowing contained in its Articles of
Association or in any debenture or loan stock deed or other instrument.
8.7.2 No option, right to acquire, mortgage, charge, pledge, lien (other than
a lien arising by operation of law in the ordinary course of business)
or other form of security or encumbrance or equity on, over or
affecting the whole or any part of the undertaking or assets of the
Company is outstanding and there is no agreement or commitment to give
or create any.
8.7.3 No part of the borrowings or loan capital of the Company is dependent
on the guarantee or indemnity of or security provided by any other
person.
8.8 THIRD PARTY INDEBTEDNESS
The Company is not subject to any option or pre-emption right or party
to any guarantee or suretyship or any other obligation (whatever
called) to pay, purchase or provide funds (whether by the advance of
money, the purchase of or subscription for shares or other securities,
the purchase of assets or services, or otherwise) for the payment of,
indemnity against the consequences of default in the payment of, or
otherwise to be responsible for, any indebtedness of any other person.
56
8.9 TENDERS ETC
No offer, tender or the like is outstanding which is capable of being
converted into an obligation of the Company by an acceptance or other
act of some other person.
8.10 TRADE WARRANTIES
8.10.1 The Company has not given any guarantee or warranty or made any
representation in respect of articles or trading stock sold or
contracted to be sold by it, save for any guarantee or warranty implied
by law and (save as aforesaid) has not accepted any liability or
obligation to service, repair, maintain, take back or otherwise do or
not do anything in respect of any articles or stock which would apply
after any such articles or stock have been delivered by it.
8.10.2 The Company has not manufactured, sold or supplied any products or
services which are or were or will become in any material respect
faulty or defective or which do not comply with any warranties or
representations expressly or impliedly made by the Company or with any
applicable regulations, standards and requirements.
8.11 LITIGATION
Neither the Company, nor any person for whose acts or defaults the
Company may be vicariously liable, is involved in any civil, criminal
or arbitration proceedings and no such proceedings are pending or
threatened by or against the Company or any such person and, so far as
the Vendors are aware, there are no facts or circumstances which are
likely to lead to any such proceedings.
8.12 EXPENSES
The Company has not paid or agreed to pay any costs of any of the
Vendors in connection with the negotiation, preparation or
implementation of the transaction contemplated by this Agreement, nor
has it agreed to indemnify any party or incurred any liability in
connection therewith on behalf of any of the Vendors.
8.13 X. XXXXXX
There are no outstanding liabilities or commitments (whether
contractual or otherwise) owing by the Company to X. Xxxxxx following
termination of a distribution agreement made between the Company and X.
Xxxxxx, and X. Xxxxxx has no claims (whether actual or contingent)
outstanding against the Company.
57
8.14 DATRIC ORIENTAL
Leda HK has assumed the benefit of all contracts entered into by Datric
Oriental, including contracts with Argos, Xxxx Xxxxx and Li and Xxxx.
9 THE COMPANY'S BUSINESS
9.1 BUSINESS SINCE THE ACCOUNTS DATE
Since the Accounts Date:-
9.1.1 the Company has carried on its business in the ordinary and usual
course and without entering into any transaction, assuming any
liability or making any payment not provided for in the Accounts which
is not in the ordinary course of its business and without any
interruption or alteration in the nature, scope or manner of its
business;
9.1.2 the Company has not borrowed or raised any money or taken any financial
facility;
9.1.3 the Company has paid its creditors in accordance with its normal
practice for payments, its normal practice being as disclosed in the
Disclosure Letter;
9.1.4 the Company has not entered into, or agreed to enter into, any capital
commitment nor has it disposed of or realised any capital assets;
9.1.5 no share or loan capital has been allotted or issued or agreed to be
allotted or issued by the Company;
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9.1.6 no distribution of capital or income has been declared, made or paid in
respect of any share capital of the Company and (excluding fluctuations
in overdrawn current accounts with bankers) no loan or loan capital or
preference capital of the Company has been repaid in whole or part or
has become liable to be repaid;
9.1.7 there has been no depletion in the net assets of the Company; and
9.1.8 there has been no material deterioration in the financial position,
turnover or prospects of the Company.
9.2 WORKING CAPITAL
The Company has sufficient working capital for the purpose of
continuing to carry on its business in its present form and at its
present level of turnover and for the purposes of executing, carrying
out and fulfilling in accordance with their terms all existing orders,
projects and contractual obligations which have been placed with, or
undertaken by, the Company.
9.3 GRANTS
During the period of six years ending on the date of this Agreement,
the Company has not applied for or received any grant or allowance from
any authority or agency.
9.4 COMPLIANCE WITH LAWS
The Company is entitled to carry on the business now carried on by it
without conflict with any valid right of any person, firm or company
and the Company has conducted its business in all material respects in
accordance with all applicable laws and regulations of the United
Kingdom or any foreign country and there is no violation of, or default
with respect to, any statute, regulation, order, decree or judgment of
any Court or any governmental agency of the United Kingdom or any
foreign country which may have a material adverse effect upon the
assets or business of the Company.
9.5 LICENCES
All necessary licences, consents, permits and authorisations (public or
private) have been obtained by the Company to enable the Company to
carry on its business effectively in the places and in the manner in
which such business is now carried on and all such licences, consents,
permits and authorisations are valid and subsisting and the Vendors
know of no reason why any of them should be suspended, cancelled or
revoked.
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9.6 INSOLVENCY
9.6.1 No order has been made and no resolution has been passed for the
winding up of the Company or for a provisional liquidator to be
appointed in respect of the Company and no petition has been presented
and no meeting has been convened for the purpose of winding up the
Company.
9.6.2 No administration order has been made and no petition for such an order
has been presented in respect of the Company.
9.6.3 No receiver (which expression shall include an administrative receiver)
has been appointed in respect of the Company or all or any of its
assets nor has any encumbrance over all or any of its assets become
enforceable.
9.6.4 The Company is not and has not admitted itself to be insolvent or
unable to pay its debts (or deemed to be unable to do so within the
meaning of Section 123 Insolvency Act 1986 or, in relation to the
Subsidiaries, applicable law) nor is it nor has it admitted itself to
be unable to pay its debts as they fall due nor has it stopped or
threatened to stop doing so.
9.6.5 No voluntary arrangement under Section 1 Insolvency Act 1986 (or, in
relation to the Subsidiaries, under applicable law) in respect of the
Company or other compromise or arrangement for the benefit of the
Company's creditors generally has been proposed or agreed.
9.6.6 The Company has not been a party to any transaction at an undervalue as
defined in Section 238 Insolvency Act 1986 (nor, in relation to the
Subsidiaries, as
60
defined in applicable legislation) nor has it given or received any
preference as defined in Section 239 Insolvency Act 1986 (nor, in
relation to the Subsidiaries, as defined in applicable legislation), in
either case within the period of two years ending on the date of this
Agreement.
9.6.7 No event analogous to the foregoing has occurred in or outside England.
9.6.8 No unsatisfied judgement is outstanding against the Company.
9.6.9 No guarantee, loan capital, borrowed money or interest is overdue for
payment and no other obligation or indebtedness is outstanding which is
substantially overdue for performance or payment.
9.6.10 The Company has not suspended or ceased or threatened to suspend or
cease to carry on all or a material part of its business.
9.6.11 No creditor of the Company has attached or taken possession of and no
distress, execution, sequestration or other process has been levied or
enforced or sued out against any asset of the Company which has not
been discharged.
9.7 FAIR TRADING
9.7.1 So far as the Vendors are aware, no agreement, practice or arrangement
carried on by the Company or to which the Company is a party or with
which the Company is concerned:-
9.7.1.1 is or requires to be registered in accordance with the
provisions of the Restrictive Trade Practices Acts 1976 and
1977 or contravenes the provisions of the Resale Prices Xxx
0000 or is or has been the subject or any enquiry,
investigation or proceeding in respect thereof;
9.7.1.2 is proscribed by or has been the subject of an enquiry,
investigation, reference or report under the Fair Trading Act
1973 (or any previous legislation relating to monopolies or
mergers) or the Competition Xxx 0000;
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9.7.1.3 infringes Article 81 of the Treaty of Rome or constitutes an
abuse of dominant position contrary to Article 82 of that
Treaty or infringes any regulation or other enactment made
under Article 83 of that Treaty or is or has been the subject
of any enquiry, investigation or proceeding in respect
thereof;
9.7.1.4 is, by virtue of its terms or by virtue of any practice for
the time being carried on in connection with it, a "consumer
trade practice" within the meaning of Section 13 Fair Trading
Act 1973 and susceptible to or under reference to the Consumer
Protection Advisory Committee or the subject of a report to
the Secretary of State for Trade and Industry or of an Order
by the Secretary of State for Trade and Industry under the
provisions of Part II of that Act; or
9.7.1.5 infringes any other competition, restrictive trade practice,
anti-trust or consumer protection law or legislation
applicable in the United Kingdom or elsewhere and not
specifically mentioned in this paragraph 9.7.
9.7.2 The Company has not given any undertaking or assurance to the
Restrictive Practices Court or the Director General of Fair Trading or
the Secretary of State for Trade and Industry or the Commission or
Court of Justice of the European Community or to any other court,
person or body and is not subject to any Act, decision, regulation,
order or other instrument made by any of them relating to any matter
referred to in this paragraph 9.7.
9.7.3 The Company is not in material default or in material contravention of
any Article, Act, decision, regulation, order or other instrument or of
any undertaking relating to any matter referred to in this paragraph
9.7.
9.8 INSURANCES
9.8.1 The Company is adequately covered against accident, damage, injury,
third party loss (including product liability) and other risks normally
insured against by
62
persons carrying on the same type of business as that carried on by the
Company and the Company has not done or omitted to do anything the
doing or omission of which would make any such policy of insurance void
or voidable or would or might result in an increase in the rate of
premiums payable under any such policy.
9.8.2 Where any of the Properties which are leasehold are insured by the
landlord under the relevant lease, the interest of the Company is noted
on the insurance policy.
9.8.3 The Schedule of Insurances annexed to the Disclosure Letter contains
full details of the insurance policies of the Company or in which it
has an interest.
9.8.4 No claim is outstanding under any of the policies referred to in
paragraph 9.8.3 and no fact or circumstance exists which might give
rise to a claim under any of those policies.
9.9 CUSTOMERS AND SUPPLIERS
9.9.1 During the period of three years ending on the date of this Agreement:-
9.9.1.1 the Company has not lost any major or substantial customer for
or supplier of all or any of its products or requirements;
9.9.1.2 no major or substantial customer has significantly reduced its
orders for all or any of the products of the Company;
9.9.1.3 there has been no substantial change (apart from normal price
changes) in the basis or terms on which any person is prepared
to enter into contracts or do business with the Company;
and no such loss, reduction or change is anticipated whether as a
result of Completion or otherwise.
9.9.2 Neither in the financial period ending on the Accounts Date nor in the
period since then has any person (together with other persons connected
with him)
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purchased from, or sold to, the Company more than ten per cent. of the
aggregate amount of all sales or purchases made by the Company during
such period and there is no person (together with other persons
connected with him) on whom the Company is substantially dependent or
the cessation of business with whom would substantially affect the
business of the Company.
9.9.3 The Company has satisfied itself after making all reasonable enquiries
that there will be no interruption to, or other adverse consequence
for, its business by reason of the failure of any person with whom it
deals in business to ensure that hardware, software or equipment
reliant on electronic controls used by that person (i) recognises the
year 2000 as such, (ii) will not fail or cause other hardware, software
or equipment to fail to perform according to specification or to the
needs of that person's business by reason of the date change after 31
December 1999 and (iii) will accurately and correctly process data
irrespective of any change in date or dates of any kind.
9.10 THE COMPANY'S ACTIVITIES, ETC.
None of the activities, contracts or rights of the Company is ultra
xxxxx, unauthorised, invalid or unenforceable or in breach of any
contract or covenant and all documents in the enforcement of which the
Company may be interested are valid and have been duly stamped.
9.11 TRANSACTIONS WITH EUROPEAN CUSTOMERS
All the Company's transactions with customers in Europe are denominated
in US dollars.
10 CONSEQUENCES OF SALE OF THE SHARES
10.1 OTHER AGREEMENTS AND OBLIGATIONS
Neither the Vendors nor the Company is a party to any agreement or
bound by any obligation the terms of which will prevent the Purchaser
from enjoying the full benefit of this Agreement.
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10.2 CHANGE OF CONTROL
There are no agreements concerning the Company which will or may be
terminated or the terms of which will or may in any way be varied as a
result of a change in the control of the Company or in the composition
of the Board of Directors of the Company.
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SCHEDULE 6
PROPERTIES
UNREGISTERED LAND
LEASEHOLD
BRIEF DESCRIPTION ESTATE OWNER DATE OF PARTIES PRESENT USE
CONVEYANCE
Xxxx 00, Xxxxxx Xxxxx, LMP Ltd 08.05.98 Xxxxx Xxxxxx Ltd (1) Warehouse
Westmill Road, Ware, Herts LMP Ltd (2)
Xxxx 00, Xxxxxx Xxxxx, LMP Ltd 31.01.97 Xxxxx Xxxxxx Ltd (1) Warehouse
Westmill Road, Ware, Herts LMP Ltd (2)
00 Xxxxxxx Xxxxxx, LMP Ltd 22.03.99 Xxxxxxx Xxxxxxx Xxxxxxx Head Office
Hertford, Herts Xxxxx (1)
LMP Ltd (2)
Office No. 2 on 2nd Floor LMP (HK) Ltd 23.03.99 LMP (HK) Ltd (1) Office
Wing on Xxxxx, Xx. 00 Xxxx Flagtop Light Industrial
Road, Kowloon Co Ltd (2)
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SCHEDULE 7
TAX COVENANT
1 DEFINITIONS
In this Schedule, unless the context requires otherwise, the following
words and expressions have the following meanings and in the event of
conflict the definitions in this Schedule shall prevail over the
definitions in Clause 1 of this Agreement:-
1.1 ACCOUNTS: the audited accounts of the Company and of the Subsidiaries
for the accounting reference period which ended on the Accounts Date
(comprising in each case a balance sheet and profit and loss account
and the notes to them);
1.2 ACCOUNTS RELIEF: any relief which appears as an asset in the Accounts
or has been taken into account in reducing or eliminating any provision
for deferred tax which appears in the Accounts (or which, but for the
presumed availability of such relief, would have appeared in the
Accounts);
1.3 EVENT: any event, act, omission or transaction (whether or not the
Company or the Subsidiaries is a party to such act, omission or
transaction) and for the avoidance of doubt includes (without
limitation) any change in the residence of any person and the death,
winding up or dissolution of any person and any reference to an event
occurring on or before a particular date shall include a reference to
any event which for tax purposes is deemed to have, or is treated or
regarded as having, occurred on or before that date;
1.4 POST-ACCOUNTS DATE RELIEF: any relief which arises as a consequence of,
or by reference to, an event occurring or deemed to occur after the
Accounts Date;
1.5 PURCHASER'S GROUP: the Purchaser, the Company and the Subsidiaries;
1.6 RELIEF: includes any relief, loss, allowance, exemption, set off,
deduction or credit in respect of any taxation or relevant to the
computation of any income, profits or gains for the purposes of any
taxation, and any right to a repayment of taxation;
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1.7 TAXATION OR TAX: all forms of taxation, imposts, duties, levies, social
security contributions and rates whether of the United Kingdom or
elsewhere including (without limitation) corporation tax, advance
corporation tax, income tax (including income tax or amounts on account
of income tax required to be deducted or withheld from or accounted for
in respect of any payment), capital gains tax, development land tax,
inheritance tax, value added tax, national insurance contributions,
capital duty, stamp duty, stamp duty reserve tax, duties of custom and
excise, petroleum revenue tax, local authority rates and charges, all
taxes, duties or charges replaced by or replacing any of them, and all
other taxes on gross or net income, profits or gains, distributions,
receipts, sales, use, occupation, franchise, value added, and personal
property, and all levies, imposts, duties, charges or withholdings of
any nature whatsoever chargeable by any tax authority, and any payment
whatsoever which the Company or the Subsidiaries may be or become bound
to make to any person as a result of the discharge by that person of
any tax which the Company or the Subsidiaries has failed to discharge;
together with all penalties, charges and interest relating to any of
the foregoing or to any late or incorrect return in respect of any of
them, and regardless of whether any such taxes, levies, duties,
imposts, charges, withholdings, penalties and interest are chargeable
directly or primarily against or attributable directly or primarily to
the Company, the Subsidiaries or any other person and of whether any
amount in respect of any of them is recoverable from any other person;
1.8 TAXATION AUTHORITY: any taxing or other authority (whether within or
outside the United Kingdom) competent to impose any taxation liability;
1.9 TAXATION CLAIM: the issue of any notice, demand, assessment, letter or
other document by or on behalf of any taxation authority or the
imposition (or any document referring to the possible imposition) of
any withholding of or on account of taxation, from which it appears
that a taxation liability will be imposed on the Company or the
Subsidiaries;
68
1.10 TAXATION LIABILITY: includes:-
1.10.1 any liability of the Company or the Subsidiaries to make or suffer an
actual payment of taxation (or amount in respect of taxation), in which
case the amount of the taxation liability shall be the amount of the
liability;
1.10.2 the loss of any Accounts relief, in which case the amount of the
taxation liability shall be equal to the amount of the taxation which
(on the basis of the rates prevailing on the date of this Agreement)
would have been saved but for such loss or, where the relevant relief
is a right to a repayment of taxation, the amount of the repayment;
1.10.3 the setting off against taxation, income, profits or gains of any
Accounts relief or any post-Accounts Date relief where, but for such
setting off, the Company or the Subsidiaries would have been subject to
a taxation liability in respect of which the Purchaser would have been
entitled to make a claim against the Vendors under this Schedule (or
would have been so entitled in the absence of any financial
restrictions on such obligation) in which case the amount of the
taxation liability shall be the amount of such claim or, where the
relevant relief is a right to a repayment of taxation, the amount of
the repayment;
1.10.4 any liability of the Company or any of the Subsidiaries to make a
payment pursuant to an indemnity, guarantee or covenant entered into
before Completion under which the Company or any Subsidiary has agreed
to meet or pay a sum equivalent to or by reference to another person's
liability to taxation, in which case the taxation liability shall be
equal to the amount of the liability.
1.11 References to income, profits or gains earned, accrued or received
include income, profits or gains deemed to have been or treated or
regarded as earned, accrued or received for tax purposes.
1.12 References to an event occurring on or before Completion include a
series or combination of two or more events, where at least one of
those events occurs before Completion and at least one of those events
occurs after Completion.
69
1.13 References to the loss of a relief or a right to any payment or other
consideration include the loss, nullification, cancellation,
non-availability, non-existence or reduction in amount of a relief or
right to any payment or other consideration.
1.14 For the avoidance of doubt, references to any taxation liability of the
Company or the Subsidiaries which results from any gains earned or
received on or before Completion or any event on or before Completion
include a reference to any taxation liability of the Company or the
Subsidiaries resulting from the sale of the Shares pursuant to this
Agreement.
1.15 For the purposes of paragraph 7 (Payment), reliefs arising from events
occurring earlier shall be taken to be used in priority to any reliefs
arising from events occurring later.
1.16 For the avoidance of doubt, references to any taxation liability in
respect of any event occurring on or before Completion do not include
any taxation liability arising pursuant to any adjustments under
section 770 or Schedule 28AA ICTA 1988 in respect of any profits or
losses of the Company or any Subsidiary accruing after Completion
notwithstanding the fact that those profits or losses may accrue under
a transaction which takes place after Completion but pursuant to a
contract entered into before Completion.
2 COVENANT
2.1 The Vendors jointly and severally covenant to pay to the Purchaser so
far as possible by way of an adjustment to the Consideration a sum
equal to:-
2.1.1 any taxation liability of the Company or the Subsidiaries arising
within paragraph 1.10.1:-
2.1.1.1 in respect of, by reference to or in consequence of any income
or profits earned, accrued or received on or before Completion
or any gains earned or received on or before Completion; or
2.1.1.2 in respect of any event occurring on or before Completion; and
70
2.1.2 any taxation liability falling within any of paragraphs 1.10.2 to
1.10.3 (inclusive); and
2.1.3 any taxation liability being a liability for capital transfer tax or
inheritance tax (not falling within paragraph 2.1.1) which:-
2.1.3.1 at Completion is a charge on, or gives rise to a power to
sell, mortgage or charge, any of the shares in or assets of
the Company or the Subsidiaries;
2.1.3.2 after Completion becomes a charge on, or gives rise to a power
to sell, mortgage or charge, any of the shares in or assets of
the Company or the Subsidiaries being a liability in respect
of capital transfer tax or inheritance tax payable as a result
of the death of any person within seven years after a transfer
of value if a charge on, or power to sell, mortgage or charge
any such shares or assets would, if the death had occurred
immediately before Completion and capital transfer tax or
inheritance tax payable as a result had not been paid, have
existed at Completion; and
2.1.3.3 arises as a result of a transfer of value occurring or being
deemed to occur on or before Completion (whether or not in
conjunction with the death of any person whenever occurring)
which increased or decreased the value of assets of the
Company or the Subsidiaries or the Vendor or any predecessor
in title to such assets or to the Shares;
2.1.4 any taxation liability of the Company or any of the Subsidiaries (not
falling within paragraph 2.1.1) which is also a taxation liability of a
person other than the Company or any Subsidiary and which is payable by
the Company or any of the Subsidiaries because that other person was at
any time before Completion a member of the same group as such other
person or otherwise connected with or related to such other person for
taxation purposes;
2.1.5 without prejudice to paragraphs 2.1.1, 2.1.2, 2.1.3 and 2.1.4, any
taxation liability which arises as a result of, or in connection with,
any of the following:
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2.1.5.1 payments by the Company or any Subsidiaries of rent to Xx
Xxxxx; or
2.1.5.2 any amounts payable under Section 419 ICTA 1988 (as extended
by Section 422 ICTA 1988 and any related penalties or
interest) in respect of loans made by the Company or any
Subsidiaries prior to Completion Xx Xxxxx or any person
connected with Xx Xxxxx (within the meaning of section 286 of
the Taxation of Chargeable Gains Act 1992); or
2.1.5.3 any liability of the Company to account for income tax or
national insurance contributions in relation to any fees paid
to Xx Xxxxxxx, or to any company of which he is a director or
of which he has control (within the meaning of section 416
ICTA 1988), in each case prior to Completion; and
2.1.6 all reasonable costs and expenses incurred by or charged against the
Purchaser or the Company or the Subsidiaries in connection with any
taxation liability referred to in paragraphs 2.1.1 to 2.1.5. Any such
costs and expenses shall include, where appropriate, a reasonable
amount in respect of management time.
2.2 In determining for the purposes of paragraph 2.1.3 whether a charge on
or power to sell, mortgage or charge any of the shares in or assets of
the Company or the Subsidiaries exists at any time, the fact that any
taxation is not yet payable or may be paid in instalments shall be
disregarded and such taxation shall be treated for the purposes of this
Schedule as becoming due or to have become due and a charge on or power
to sell, mortgage or charge as arising or having arisen on the date of
the transfer of value or other date or event on or in respect of which
it becomes payable or arises.
2.3 The provisions of Section 213 of the Inheritance Tax Act 1984 (refund
by instalments) shall not apply to any payments falling to be made
pursuant to paragraph 2.1.3.
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3 LIMITATIONS
3.1 Subject to paragraph 3.2, the covenant in paragraph 2 shall not apply
to any taxation liability to the extent that:-
3.1.1 provision or reserve in respect of such liability is made in the
Accounts;
3.1.2 the taxation liability is in respect of or by reference to income,
profits or gains earned in respect of the period, or any event
occurring, between the Accounts Date and Completion in the ordinary
course of the business of the Company or the Subsidiaries;
3.1.3 the Purchaser has made or makes recovery in respect of such taxation
liability under any other provision of this Agreement;
3.1.4 it arises as a result only of such a provision or reserve as is
mentioned in paragraph 3.1.1 being insufficient by reason of an
increase in the rates of taxation or a change in taxation law or
published practice made or announced after Completion with
retrospective effect;
3.1.5 it would not have arisen but for a change in accounting methods or
policies adopted by the Company or any of the Subsidiaries after
Completion, provided that the previous methods used by the Company or
the Subsidiary were in compliance with generally accepted accounting
principles applicable to the Company or any of its Subsidiaries;
3.1.6 it would not have arisen but for a voluntary act or omission of the
Company or any of the Subsidiaries (which could reasonably have been
avoided) carried out or occurring after the date of this Agreement,
otherwise than in the ordinary course of business or in performing any
obligation under a contractual agreement entered into on or before
Completion or in accordance with any statutory duty, which the Company
or Subsidiary or the Purchaser was, or ought to have been, aware could
give rise to a taxation liability.
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3.2 The provisions of paragraph 3.1.2 to 3.1.6 inclusive shall not apply to
any claim under paragraph 2 in respect of a taxation liability which
falls within paragraph 2.1.5.
4 OVERPROVISIONS
4.1 If the auditors for the time being of the Company or any of the
Subsidiaries (at the request and expense of the Covenantor) certify
that a Relevant Amount (as defined in paragraph 4.2) exists for the
purposes of this paragraph, paragraph 4.3 shall apply except to the
extent to which credit has been given for the Relevant Amount in
relation to any claim under the Warranties.
4.2 For the purposes of this paragraph, if a provision for taxation in the
Accounts (excluding any provision for deferred tax) is an
over-provision (except to the extent that such over-provision results
from the utilisation of an Accounts relief or a post-Accounts Date
relief), the amount of such over-provision shall be a Relevant Amount.
4.3 Where, pursuant to paragraph 4.1, this paragraph 4.3 applies to a
Relevant Amount:-
4.3.1 the Relevant Amount shall first be set-off against any payment then due
from the Covenantor under this Schedule;
4.3.2 to the extent that there is an excess, a refund shall be made to the
Covenantor of any previous payment or payments made by it under this
Schedule and not previously refunded under this sub-paragraph up to the
amount of such excess; and
4.3.3 to the extent that the excess referred to in paragraph 4.3.2 is not
exhausted under that sub-paragraph, the remainder of that excess shall
be carried forward and set-off against any future payments which become
due from the Covenantor under this Schedule.
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5 GROSSING UP
5.1 All sums payable by the Vendors to the Purchaser under this Schedule
shall be paid free and clear of all deductions or withholdings
whatsoever, save only as may be required by law. If any deductions or
withholdings are required by law to be made from any of the sums
payable under this Schedule, then (except in the case of interest
payable under paragraph 7.3) the Vendors shall be obliged to pay to the
Purchaser such sum as will, after the deduction or withholding has been
made, leave the Purchaser with the same amount as it would have been
entitled to receive in the absence of any such requirement to make a
deduction or withholding.
5.2 If the Purchaser incurs a taxation liability which results from, or is
calculated by reference to, any sum paid under this Schedule other than
interest payable under paragraph 7.3, the amount so payable shall be
increased by such amount as will ensure that, after payment of the
taxation liability, the Purchaser is left with a net sum equal to the
sum it would have received had no such taxation liability arisen.
5.3 If the Purchaser would, but for the availability of a relief, incur a
taxation liability falling within paragraph 5.2, it shall be deemed for
the purposes of that paragraph to have incurred and paid that
liability.
6 CONDUCT OF CLAIMS FOR TAXATION
6.1 If the Purchaser, the Company or any of the Subsidiaries becomes aware
of a taxation claim relevant for the purposes of this Schedule, the
Purchaser shall as soon as reasonably practicable give the Vendors
written notice containing reasonable details of that taxation claim and
shall, subject to paragraphs 6.3 and 6.4, take, or cause the Company or
the Subsidiaries to take, such action as the Vendors may reasonably
request to avoid, resist, appeal or compromise the taxation claim.
6.2 Without prejudice to the generality of paragraph 6.1, the Vendors shall
be entitled, subject to the approval of the Purchaser (such approval
not to be unreasonably withheld or delayed) and, subject to paragraph
6.3 and 6.4, to
75
instruct such solicitors and other professional advisers on behalf of
the Company or the Subsidiary as the Vendors may nominate to act for
the Company or any Subsidiary in the matter, and if so the Vendors;
6.2.1 shall ensure that no correspondence, pleading or other document is sent
or issued in connection with the taxation claim without having first
consulted the Purchaser in relation thereto, and shall promptly send
the Purchaser copies of all relevant correspondence and other written
communications and notes of relevant telephone conversations; and
6.2.2 shall obtain the Purchaser's prior written approval (not to be
unreasonably withheld) to any admission of liability in respect of, or
any settlement or compromise of, the taxation claim.
6.3 The Purchaser shall not be required to take, and shall not be required
to cause the Company or any Subsidiaries to take, any action pursuant
to paragraph 6.1 and the Vendors (or any advisers appointed by them)
shall not be entitled to take any action on behalf of the Company or
any Subsidiaries or to require the Company or the Subsidiaries to take
any action pursuant to paragraph 6.2 (including, without limitation,
the adoption of any accounting practice, procedure or methodology):-
6.3.1 if the Purchaser, the Company, or any Subsidiary reasonably considers
such action would be:-
6.3.1.1 unlawful or materially prejudicial to its dealings with any
taxation authority; or
6.3.1.2 likely to have a material adverse effect on its future
liability to taxation (including, without limitation, any
action which would cause the Company or the Subsidiaries to
incur a taxation liability after Completion which it would
otherwise have incurred before Completion); or
6.3.1.3 likely adversely to affect its business or financial
reputation, interests, goodwill, or connection;
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6.3.2 unless the Vendors indemnify and secure the Purchaser and the Company
or the Subsidiaries concerned to the Purchaser's reasonable
satisfaction against any costs, damages or expenses which may be
incurred (together with a reasonable amount in respect of management
time);
6.3.3 where such action involves an appeal against a determination by the
General or Special Commissioners or the VAT and Duties Tribunal, unless
the Vendors have obtained the opinion of leading tax counsel that there
is a reasonable prospect that the appeal will succeed;
6.3.4 if the Vendors or any of them (or the Company or Subsidiaries before
Completion) is or has been involved in a case involving fraud or wilful
default in respect of the taxation liability which is the subject
matter of the taxation claim.
6.4 If:
6.4.1 the Vendors do not request the Purchaser to take any appropriate action
within 30 days of notice to the Vendors or if no action is required to
be taken by virtue of any of the provisions of paragraph 6.3; or
6.4.2 the Vendors do not take any action on behalf of the Company or any
Subsidiaries pursuant to paragraph 6.2 within 30 days of notice to the
Vendors
the Company or Subsidiaries shall be at liberty without reference to
the Vendors to admit, compromise, settle, discharge or otherwise deal
with such taxation claim.
6.5 The Vendors' rights under this paragraph 6 (other than the right to
receive the notice referred to in paragraph 6.1) shall cease if either
Xx Xxxxxxx or Xx Xxxxx is declared bankrupt, is unable to pay his debts
as they fall due, commences negotiations with any of his creditors with
a view to the general readjustment or rescheduling of his indebtedness
or makes a general assignment for the benefit of or a composition with
his creditors.
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7 PAYMENT
7.1 Where a claim under this Schedule relates to a liability of the Company
or the Subsidiaries to make or suffer an actual payment of taxation (or
amount in respect of taxation) the Vendors shall pay the Purchaser any
amount which is required to be paid by them (including any amount
payable pursuant to paragraph 2.1.3.3) within five business days
following the date on which the Purchaser notifies the Vendors of their
liability to make such payment or, if later, five business days before
the last date on which the taxation in question would have to be paid
to the appropriate taxation authority in order to avoid incurring a
liability to interest or a charge or penalty in respect of that
taxation liability.
7.2 In any case not falling within paragraph 7.1, the Vendors shall pay the
amount which they are required to pay under this Schedule (including
any amount payable pursuant to paragraph 2.1.3.5) within five business
days of the date on which they receive notice from the Purchaser of the
amount due to be paid or, if later:
7.2.1 in any case which falls within paragraph 1.10.2 (loss of Accounts
relief), not later than the fifth business day before the day on which
the Company or the Subsidiaries concerned is due to pay any taxation
which, but for such loss, it would not have been liable to pay;
7.2.2 in a case which falls within paragraph 1.10.3 (set-off of Accounts
relief or post-Accounts Date relief), not later than the day on which
the Company or the Subsidiaries would, but for such setting off, have
been liable to pay the actual taxation liability;
7.2.3 in a case which falls within paragraph 1.10.4 (liability for indemnity,
guarantee or covenant payments), not later than the fifth business day
before the day on which the Company or Subsidiaries is due to make the
payment or repayment.
7.3 Sums not paid by the Vendors by the dates specified in paragraphs 7.1
and 7.2 shall bear interest (which shall accrue from day to day after,
as well as before, judgment) at 2 per cent. above the base rate of
Lloyds Bank plc or, in the absence of such base rate, at such similar
rate as the Purchaser may select, from the date
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following the specified date up to and including (in either case) the
date of actual payment of such sums (or the next business day if such
date of actual payment is not a business day).
8 RECOVERY
8.1 Where the Vendors have paid any amount in full discharge of a liability
under paragraph 2 in respect of any taxation liability and the Company
or any of the Subsidiaries is legally entitled to recover or by virtue
of a legal entitlement recovers from any person (other than the
Purchaser or any other member of the Purchaser's Group or any person
connected with any of them) any sum in respect of such taxation
liability, the Purchaser shall notify the Vendors of such entitlement
or recovery and, where recovery has not been effected at the date of
notification, shall (if requested by and at the expense of the Vendors
and upon the Vendors indemnifying and securing the Company, the
Subsidiaries or the Purchaser to the Purchaser's reasonable
satisfaction against all costs or expenses which may thereby be
incurred) take, or cause the Company or Subsidiaries to take, such
action as the Vendors shall reasonably request to enforce such recovery
against the person in question (keeping the Vendors fully informed of
the progress of any action taken) provided that the Purchaser shall not
be required to take any action pursuant to this paragraph which, in the
Purchaser's reasonable opinion, is likely to harm its or the Company's
or the Subsidiaries' commercial relationship (potential or actual) with
that or any other person.
8.2 The Purchaser, the Company or the Subsidiaries shall (to the extent
that the recovery is not thereby prejudiced) account to the Vendors for
any sum so recovered (including any interest paid by such person) up to
an amount not exceeding the amount paid by the Vendors under paragraph
2 in respect of the taxation liability in question (but less any tax
payable by the Company or Subsidiaries in respect of the sum recovered
or in respect of such interest or which would be payable but for the
use or set off of any relief and less the amount of all reasonable
costs and expenses in obtaining such payment including a reasonable
amount in respect of management time).
8.3 Where a payment is made, or is to be made, by the Vendors to the
Purchaser under paragraph 2 above in respect of only part of a taxation
liability and that
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taxation liability gives rise to a recovery under paragraph 8.1, the
amount recovered shall be attributed for the purposes of paragraph 8.1
to the part of the taxation liability giving rise to the Purchaser's
claim and to the part not so giving rise on a pro rata basis and,
accordingly, paragraph 8.2 shall only apply to such part of the amount
recovered as is attributed to the part of the taxation liability giving
rise to the Purchaser's claim.
9 PURCHASER'S COVENANT
9.1 The Purchaser hereby indemnifies an amount equal to any liability to
taxation (and all reasonable costs and expenses) of the Vendors
pursuant to section 767A-767C ICTA 1988 which is primarily a liability
of the Company or any Subsidiary and which the Vendors are required to
discharge by reason of the failure of the Company or any Subsidiary to
discharge that liability.
9.2 The covenants contained in paragraph 9.1 shall not apply to taxation to
the extent that the Purchaser could claim payment in respect of it
under this Schedule.
10 TAX RETURNS FOR PERIODS BEFORE AND INCLUDING COMPLETION
10.1 The Purchaser shall procure that any taxation returns that have to be
submitted by the Company or the Subsidiaries for periods commencing
before Completion shall be prepared by the relevant company in draft
and submitted by it to the Vendors, and that the Company shall consider
any comments or suggestions which the Vendors may make. The Purchaser
shall procure that the Company shall send the Vendors a copy of the
return finally submitted.
10.2 The Vendors shall afford or procure that there is afforded to the
Company or the Subsidiaries or their duly authorised agents such
information and assistance as the Purchaser or the Company or
Subsidiaries or their duly authorised agents may reasonably request for
the purpose of preparing, submitting and agreeing the taxation returns
of the Company and the Subsidiaries for all accounting periods ending
before Completion and for the accounting period beginning before and
ending after Completion.
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11 PROVISION OF INFORMATION TO VENDORS
The Purchaser shall afford or procure that there is afforded to the
Vendors or their duly authorised agents such information and assistance
as the Vendors may reasonably request to enable them to exercise their
rights and fulfil their duties under this Schedule.
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SCHEDULE 8
LIMITATIONS ON LIABILITY
1 The provisions of this Schedule shall operate to limit the liability of
the Vendors under and in respect of the provisions of Clause 5 (the
Warranties) and Tax Covenant and references in this Schedule to
"hereof", "hereunder" and to "liability hereunder" shall be construed
to refer to such liabilities as appropriate. Clause 5 (the Warranties)
and Tax Covenant respectively shall accordingly have effect subject to
and as qualified by the terms of this Schedule.
2 The Vendor shall have no liability whatsoever in respect of any claim
for breach of the Warranties unless and until the loss thereby
sustained (together with the aggregate amount of losses sustained
arising under previous claims if any) shall exceed a total sum of
US$139,920, in which event this limitation shall cease to apply and the
whole of such amounts shall be recoverable and not merely the excess
over US$139,920.
3 The aggregate liability of the Vendors in respect of all claims for
breach of the Warranties or under the Tax Covenant made on the Vendors
hereunder shall not exceed $13,992,000. The liability of each Vendor in
respect of claims for breach of the Warranties or under the Tax
Covenant made on the Vendors hereunder shall not exceed the aggregate
of the amounts set out opposite his name in columns 4,5 and 6 of
Schedule 1.
4 No claim shall be brought by the Purchaser against the Vendors in
respect of any breach of the Warranties or under the Tax Covenant
unless notice in writing of any such claim (specifying in reasonable
detail the nature of the claim (to the extent available) and, so far as
practicable, the amount claimed) has been given to the Vendors on or
before:-
4.1 in relation to matters in respect of the Warranties (other than
Warranties relating to taxation), on or prior to 31 December 2000; and
4.2 in relation to matters under the Warranties relating to taxation and
under the Tax Covenant, on or prior to the seventh anniversary of the
date of this Agreement.
5 No liability shall attach to the Vendors in respect of any claim under
the Warranties or the Tax Covenant to the extent that:-
5.1 it would not have arisen but for an act, omission or transaction of the
Purchaser, or persons deriving title under the Purchaser, or the
Company or any Subsidiary effected after Completion otherwise than in
the ordinary and proper course of the business of the Company or any
Subsidiary as at present carried on or which would not have arisen but
for any claim, election, surrender or disclaimer made or omitted to be
made or notice or consent given or omitted to be done by the Company or
any Subsidiary or the Purchaser under the provisions of any taxation
after Completion, but only to the extent that the Purchaser was aware,
or ought reasonably to have been aware, that any such act, omission or
transaction would have led to such liability arising;
5.2 specific provision or reserve in respect thereof shall have been made
in the Accounts or Management Accounts but only (for the avoidance of
any doubt) to the extent of any provision or reserve;
5.3 the breach or claim occurs wholly out of or as a result of or in
connection with any legislation not in force at Completion or as a
result of any change in legislation hereafter or any decision of the
courts altering the accepted interpretation of any law as at
Completion;
5.4 the Purchaser or the Company or any Subsidiary is entitled to claim an
indemnity under any insurance policy against any loss or damage
suffered as a result of any breach or claim or, as the case may be, in
respect of the subject matter thereof but only to the extent that the
Purchaser or the Company or any Subsidiary (as the case may be) makes
recovery under any such insurance policy; or
5.5 the breach or claim is based upon a liability which is contingent only,
unless and until such contingent liability becomes an actual liability
and is due and payable provided that this sub-clause 5.5 shall not
operate to avoid a claim made in reasonably sufficient detail in
respect of the contingent liability within the applicable time limits
specified in Clause 4 of this Schedule.
6 Any claim shall if it has not been previously satisfied, settled or
withdrawn be
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deemed to have been withdrawn and shall become fully barred and
unenforceable on the expiry of the period of six months commencing on
the date that the claim is made unless proceedings in respect thereof
shall have been commenced against the Vendors and for this purpose
proceedings shall not be deemed to have been commenced unless they
shall have been issued and served upon the Vendors.
7 The Purchaser shall not be entitled to recover damages in respect of
any claim or otherwise to obtain reimbursement or restitution more than
once in respect of any one set of circumstances giving rise to a claim
for misrepresentation or breach of the Warranties or in respect of any
claim under the Tax Covenant.
8 If the Vendors shall have paid to the Purchaser or the Company an
amount in respect of a claim for breach of the Warranties or under the
Tax Covenant and after such payment the Purchaser and/or the Company or
any Subsidiary shall recover from a third party a sum which is
referable to that payment then the Purchaser shall forthwith repay or
procure repayment by the Company or any Subsidiary to the Vendors of
such sum having deducted any costs properly incurred relating to such
recovery from such third party together with any liability to taxation
which arises in connection therewith.
9 The Purchaser shall and shall procure that the Company and each
Subsidiary shall:-
9.1 as soon as practicable after circumstances have come to its or their
notice which will or is likely to give rise to a claim give to the
Vendors by written notice details of such circumstances and claim and
thereafter keep the Vendors informed of all material developments
relating to such circumstances and claim;
9.2 not make any admission of liability, agreement or compromise with any
person, body or authority in relation thereto without prior
consultation with and agreement of the Vendors (not to be unreasonably
withheld or delayed) unless not doing so would prejudice the goodwill
of the business of the Purchaser, the Company or the Subsidiaries to a
material extent in which case the Purchaser shall be entitled to take
any action which it considers in its sole discretion to be necessary;
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9.3 if so requested by the Vendors, take all reasonable steps to avoid,
resist, appeal, compromise or defend any such claim and any
adjudication in respect thereof and for this purpose take all
appropriate proceedings in the name of the Company or any Subsidiary,
as the case may be (but subject to the Company being indemnified and
secured by the Vendors against all losses, charges, costs, damages and
expenses that may be incurred in connection therewith) unless doing so
would prejudice the goodwill of the business of the Purchaser, the
Company or the Subsidiaries to a material extent in which case the
Purchaser shall be entitled to take any action which it considers in
its sole discretion to be necessary; and
9.4 allow the Vendors and their agents reasonable access during business
hours to inspect and take copies of all necessary books and records of
the Company and the Group Companies subject always to their keeping the
same confidential other than necessary disclosures in connection with
any such action or claim PROVIDED THAT such books an records are not
subject to legal professional privilege as between the Purchaser and
any of its professional advisers.
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SIGNED as a deed by XXXXXXX ) /s/ Xxxxxxx Xxxxx
XXXXX in the presence of:- )
Witness: Signature: /s/ Xxxxxxxx Xxxxxxx
Name: Xxxxxxxx Xxxxxxx
Address:
Occupation: Solicitor
SIGNED as a deed by XXXX ) /s/ Xxxx Xxxxxxx
XXXXXXX in the presence of:- )
Witness: Signature: /s/ Xxxxxxxx Xxxxxxx
Name: Xxxxxxxx Xxxxxxx
Address:
Occupation: Solicitor
SIGNED as a deed by TREVOR ) /s/ Xxxxxx Xxxxxxx
XXXXXXX in the presence of:- )
Witness: Signature: /s/ Xxxxxxxx Xxxxxxx
Name: Xxxxxxxx Xxxxxxx
Address:
Occupation: Solicitor
86
EXECUTED as a deed of ) /s/ Xxxxxxx X. Xxxxx
RADICA GOLD LIMITED )
by its attorney X.X. Xxxxx )
