DATED 0 XXXXX 0000
XXXXX (XXXXXX XXXXXXX) LIMITED
AND
XXXX XXXXX
AND
DMDS LIMITED
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AGREEMENT FOR THE SALE OF THE SELLER'S BUSINESS AND ASSETS
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XXXXXXXXX & XXXXX
XXXXXXX HOUSE
00 XXXXXXX XXXXXX
XXXXXX X0X 0XX
h85/249321/18351v1
INDEX
NO. PAGE
1. Definitions 1
2. Agreement For Sale and Purchase 5
3. Consideration 6
4. Completion 7
5. Value Added Tax 8
6. Liabilities 8
7. Employees 8
8. Insurance 9
9. Contracts and Third Party Consents 9
10. Apportionments 10
11. Post Completion 11
12. Warranties by Seller and Xx Xxxxx 11
13. Warranties by Purchaser 12
14. Purchaser's Remedies 12
15. Conduct of Warranty Claims 13
16. Notices 14
17. Successors and Assignability 14
18. Certificate of Value 14
19. Announcements 14
20. Survival of Certain Provisions 14
21. Entire Agreement 15
22. Governing Law and Jurisdiction 15
SCHEDULE 1 Employees 16
SCHEDULE 2 Excluded Assets 17
SCHEDULE 3 The Warranties 18
THIS AGREEMENT is made 1 March 1999
BETWEEN:
(1) MIDAS (UNITED KINGDOM) LIMITED (registered number 3166228) which has its
registered office at 000 Xxx Xxxxx Xxxx, Xxxxxxxxxx, Xxxx XX0 0XX ("THE
SELLER");
(2) XXXX XXXXX also of 000 Xxx Xxxxx Xxxx, Xxxxxxxxxx, Xxxx XX0 0XX ("XX
XXXXX"); and
(3) DMDS LIMITED (registered number 3505875) whose registered office is at
Xxxxxxxx Xxxxx, Xxxxxx, XX0X 0XX ("THE PURCHASER").
WHEREAS:
(A) The Seller carries on the Business.
(B) Xx Xxxxx is the majority shareholder of the Seller.
(C) The Purchaser has agreed with the Seller with effect from the Completion
Date to purchase as a going concern the Business including (without
limitation) the undertaking and the assets referred to below, upon the
following terms.
IT IS AGREED as follows:
1. DEFINITIONS
1.1. In this Agreement unless the context otherwise requires the following
expressions shall have the following respective meanings:-
"ACCOUNTS"
the balance sheet as at the Accounts Date and the profit and loss account for
the year ended on the Accounts Date of the Seller, including all documents
required by law to be annexed to them;
"ACCOUNTS DATE"
22 February 1999;
"ACCRUALS"
all amounts received by the Seller prior to the Completion Date but in respect
of a period after the Completion Date or in respect of goods and services to be
supplied by the Seller after the Completion Date and excluding any such amounts
relating to the Excluded Assets;
"BOOK DEBTS"
the debts and other amounts owing to the Seller at the Completion Date in
respect of the
Business;
"BUSINESS"
the business carried on by the Seller at the Completion Date more particularly
described as the distribution of dental/medical products and all income derived
from the distribution of the products;
"BUSINESS INFORMATION"
all information, know-how and records (whether or not confidential and in
whatever form held) including (without limitation) all formulae, designs,
specifications, drawings, data, manuals and instructions and all customer lists,
supplier lists, sales information and all technical or other expertise and all
computer software and all accounting and VAT Records, correspondence, orders and
enquiries of the Business;
"BUSINESS RECORDS"
shall include, without limitation, all notes, correspondence, orders, inquiries,
drawings, plans, books of account and other documents and all computer disks or
tapes or other machine legible programmes or other records relating to the
Business;
"CASH FLOAT"
all cash of the Business held as xxxxx cash and cash at the bank held in the
Seller's bank accounts as at the Completion Date relating to the Business;
"COMPLETION"
completion of the sale and purchase of the Business and Sale Assets in
accordance with the terms of this Agreement;
"COMPLETION DATE"
the date of this Agreement;
"CONSIDERATION"
the consideration described in Clause 3;
"CONSIDERATION SHARES"
5000 shares of common stock of DMD;
"CONTRACTS"
the contracts and other legally enforceable engagements or arrangements of the
Seller in relation to the Business in existence on the Completion Date;
"DMD"
Dental/Medical Diagnostic Systems, Inc.;
"EMPLOYEES"
the persons employed at the Completion Date in
connection with the Business as listed in Schedule l (Employees);
"ENVIRONMENTAL LAWS"
all applicable laws, regulations, codes of practice, circulars, guidance notes
and the like whether of the United Kingdom or otherwise concerning protection of
the environment;
"EXCLUDED ASSETS"
those assets and rights of the Seller which are to be retained by the Seller
after Completion and listed in Schedule 2 (Excluded Assets);
"GOODWILL"
all the goodwill of the Seller in relation to the Business including all rights
of the Seller in and to the Intellectual Property Rights used in or for the
Business and the exclusive right for the Purchaser and its permitted assignees
to represent itself as carrying on the Business in succession to the Seller and
all trade names associated with the Business;
"INTELLECTUAL PROPERTY RIGHTS"
patents, trade marks, service marks, trade names, registered designs,
unregistered designs, copyrights (including copyright in any computer programs)
and other forms of intellectual or industrial property (whether or not
registered or registerable and for the full period thereof and all extensions
and renewals thereof and applications for registration of or otherwise in
connection with the foregoing), know-how, inventions, formulae, confidential or
secret processes and information (in each case in any part of the world), and
any other similar rights which may subsist anywhere in the world;
"LIABILITIES"
the claims, obligations, liabilities and debts of the Seller on the Completion
Date or arising prior to Completion or attributable to a period prior to
Completion which relate to the Business; "LOSSES" losses, claims, charges,
interest, fines, penalties, liabilities, costs, expenses (including legal
expenses on a solicitor and own-client basis) or damages of any nature
whatsoever and whether or not reasonably or otherwise foreseeable or avoidable;
"LOSSES"
losses, claims, charges, interest, fines, penalties, liabilities, costs,
expenses (including legal expenses on a solicitor and own-client basis) or
damages of any nature whatsoever and whether or not reasonably or otherwise
foreseeable or avoidable;
"MOVABLE PLANT AND MACHINERY"
all moveable fittings, furniture, furnishings, plant, machinery, equipment and
vehicles, computer and communication hardware, loose tools, books, stationary,
and other goods (other than the Excluded Assets) owned by the Seller and used by
or in the Business at the Completion Date;
"PURCHASER'S SOLICITORS"
Xxxxxxxxx & Xxxxx of Hanover House, 00 Xxxxxxx Xxxxxx, X0X 0XX;
"SALE ASSETS"
the property, assets and rights of the Business to be purchased by
the Purchaser listed in sub-Clauses 2.1.1 to 2.1.7;
"SELLER'S PREPAYMENTS"
all prepayments as at the Completion Date made by or on behalf of the Seller in
Connection with the Business or the Sale Assets;
"SERVICE AGREEMENT"
a service agreement between the Purchaser and Xx Xxxxx dated the date of this
Agreement;
"STOCK"
whether or not held for the purpose of resale all stocks of goods and other
stocks in trade whether or not relating exclusively to the Business wherever
located and by whomsoever held including items which although subject to
reservation of title by the suppliers of those items are under the control of
the Seller;
"TAXATION"
all forms of taxation and statutory, governmental, supra-governmental, state,
provincial, local governmental or municipal impositions, duties, contributions
and levies (including withholdings and deductions), whether domestic or foreign,
whenever imposed and all penalties, fines, charges, costs and interest relating
to any such matters and "TAX" shall be construed accordingly;
"THIRD PARTY RIGHTS"
all of the Seller's rights in connection with warranties and representations
made and obligations and liabilities undertaken by third parties in connection
with the Business or the Sale Assets;
"WARRANTIES"
the warranties and representations set out in Clause 12 and Schedule 3 and
"WARRANTY"
means any one of them;
"WARRANTY CLAIM"
a claim made by the Purchaser for breach of any one or more of the Warranties;
"VAT"
Value Added Tax;
"VATA"
the VAT Xxx 0000 and any order, regulation instrument or other subordinate
instrument under it;
"VAT RECORDS"
the records of the Business required to be kept by paragraph 6 of Schedule 11 to
VATA;
"1981 REGULATIONS"
the Transfer of Undertakings (Protection of Employment) Regulations 1981 (as
amended).
1.2. reference to Clauses, sub-Clauses, paragraphs, sub-paragraphs, parts and
Schedules are to clauses, sub-clauses, paragraphs, sub-paragraphs and
parts of, and schedules to, this Agreement;
1.3. headings to Clauses and Schedules are for convenience only and do not
affect the interpretation of this Agreement;
1.4. the Schedules to this Agreement form part of this Agreement and shall have
the same force and effect as if expressly set out in the body of this
Agreement, and any reference to this Agreement shall include the
Schedules;
1.5. words denoting the singular include the plural and vice versa;
1.6. any reference in this Agreement to the Purchaser shall include its
successors and permitted assigns.
2. AGREEMENT FOR SALE AND PURCHASE
2.1. The Seller shall sell with full title guarantee and the Purchaser shall
purchase with effect from the Completion Date, all its rights, title and
interest in free from all charges, restrictions, liens and other
encumbrances attaching to them:
2.1.1. the Business (as a going concern); and
2.1.2. the Goodwill;
2.1.3. the Moveable Plant and Machinery;
2.1.4. the Benefit of the Contracts and Third Party Rights;
2.1.5. all rights and title of the Seller in or to Intellectual Property
Rights used in or for the purpose of the Business and the Business
Information and the Business Records required for or used in
connection with the Business;
2.1.6. the Seller's Prepayments;
2.1.7. all other items (if any) of whatever nature owned by the Seller and
used in the conduct of the Business as at the Completion Date
with the intention that the Business be sold to the Purchaser as a going
concern with effect from the Completion Date.
2.2. The Purchaser shall not be obliged to complete the purchase of the
Business or any of the Sale Assets unless the purchase of the Business and
all of the Sale Assets is duly completed at the same time.
2.3. The Excluded Assets and the Liabilities shall be specifically excluded
from the sale and purchase of the Business.
3. CONSIDERATION
3.1. The Consideration for the Sale Assets shall be US$37,500 to be satisfied
by the issue to the Seller of the Consideration Shares.
3.2. The issue of the Consideration Shares shall be made subject to the
restrictions contained in the US Securities and Exchange Commission's
Regulation S, as such regulation is in effect on the Completion Date, and
otherwise in compliance with applicable US and English law. The Seller
acknowledges that it has access to all filings made by DMD under the US
Securities Exchange Act of 1934, as amended, including its Annual Report
on Form 10-KSB for the year ended December 31, 1997 and each of its
Quarterly Reports on Form 10-QSB filed with the Securities and Exchange
Commission thereafter, and that it has had access to such financial and
other information concerning DMD and the Consideration Shares as it deemed
necessary in connection with its agreement to permit Buyer to cause
payment of the Consideration to be satisfied by the issue of the
Consideration Shares, including an opportunity to ask questions of and
request information from DMD and its management. Without limiting the
generality of the foregoing the Seller acknowledges that the Consideration
Shares which may be delivered to it pursuant to this Clause 3.2 shall be
restricted securities which have not been registered under the Securities
Act of 1933, as amended, and that until the expiration of the restricted
period provided under Regulation S, an offer or sale of the Consideration
Shares shall not be made by the Seller within the United States or to, or
for the account or benefit of, a US person within the meaning of Rule
902(k) of the US Securities Act of 1933, as amended.
3.3. The Consideration shall be inclusive of VAT (if applicable).
4. COMPLETION
4.1. Completion shall take place on the Completion Date at the offices of the
Purchaser's Solicitors.
4.2. On Completion the Seller shall deliver to the Purchaser, at the principal
office of the Business, or (if so requested by the Purchaser) make
available to the Purchaser such of the Sale Assets as are capable of being
transferred by delivery, together with:
4.2.1. the Business Records;
4.2.2. all Business Information;
4.2.3. copies of all National Insurance and PAYE records completed and
up-to-date;
4.2.4. the original documents in the possession or control of the Seller
in respect of the Contracts; and
4.2.5. such documents as are reasonably required by the Purchaser to
complete the sale and purchase of the Sale Assets and vest title to
the Sale Assets in the Purchaser.
4.3. On Completion Xx Xxxxx shall deliver to the Purchaser's Solicitors the
Service Agreement duly executed by Xx Xxxxx.
4.4. If all or any of the transactions set out in Clauses 4.2 and 4..3 do not
take place as provided, the Purchaser may promptly rescind this Agreement
without prejudice to any other remedy it may have.
4.5. The Purchaser shall then deliver to Xx Xxxxx the Service Agreement duly
executed by it.
4.6. Rights in and title to the Sale Assets shall pass to the Purchaser on the
Completion Date.
4.7. Subject to Clause 9 (Contracts and Third Party Consents) the Seller shall
at Completion or as soon as practicable after Completion deliver to the
Purchaser all transfers, assignments and novations of those Sale Assets
which are not capable of being transferred by delivery, together with all
relevant documents of title.
4.8. The Seller shall (and shall use its reasonable endeavours to procure any
third party as is necessary to) after the date of this Agreement, upon
reasonable request by the Purchaser, execute and perform any further
deeds, documents and acts so requested to give full effect to the terms of
this Agreement including (without limitation) to vest in and assure to the
Purchaser whatever right, title and interest the Seller may have in the
Sale Assets and pending which shall hold such Sale Assets on trust for the
Purchaser absolutely and will dispose, transfer and deal with such Sale
Assets at such time and in such manner as the Purchaser directs.
4.9. The parties shall upon reasonable request afford to each other and to
each party's representatives such access during normal business hours
to the statutory and accounting records and all other documents
relating to the Business as are in each party's control for the
purposes of inspecting and copying the same, and neither party shall
use any such records, documents or the information contained in them
for any purpose other than for accounting, audit and tax purposes. Each
party shall keep such records, documents and information in strict
confidence.
5. VAT
The Seller and the Purchaser are of the opinion that the sale of the Sale
Assets and the transfer of the Business constitutes a transfer of a
business as a going concern for the purposes of Section 49 VATA and
Article 5 of the VAT (Special Provisions) Order 1992, and accordingly the
sale of the Sale Assets and the transfer of the Business is neither a
supply of goods nor a supply of services for the purposes of VAT.
6. LIABILITIES
6.1. Notwithstanding Completion of the Purchase of the Business, the Seller
shall be solely responsible for all the Liabilities and shall duly and
punctually pay and discharge the Liabilities and shall indemnify the
Purchaser fully and effectively from and against the Liabilities and any
and all Losses arising or accruing in respect of or in connection with any
of them.
6.2. In addition to Clause 6.1 the Seller shall remain liable and be solely
responsible for and shall indemnify the Purchaser against any and all
Losses arising after the Completion Date in respect of any activities
of the Business, including goods manufactured by or service supplied by
the Seller or any act or omission of the Seller, its employees, agents
or sub-contractors prior to the Completion Date or arising from
defective products or parts of products even if the defective products
or parts or services were sold by or supplied to the Purchaser.
6.3. The liability of the Seller under Clause 6.2 shall extend to any
settlement of a claim (including costs) made with the approval of the
Seller (such approval not to be unreasonably withheld).
6.4. If the Purchaser considers that it is desirable to take preventative
action with a view to avoiding claims under Clause 6.2 the Seller shall
bear the cost of that action.
6.5. No Liability in respect of the Business or Sale Assets shall pass to, or
be assumed by, or be construed as accepted by, the Purchaser except as
expressly set out in this Agreement.
7. EMPLOYEES
7.1. The Purchaser hereby agrees and acknowledges that the provisions of the
1981 Regulations apply to the sale of the Business and that the contracts
of employment of all the Employees shall not be terminated but shall
continue to have effect as if
originally made between each Employee and the Purchaser in accordance with the
1981 Regulations.
7.2. The Seller agrees to execute (and agrees to use reasonable endeavours to
procure that it and its directors, officers, employees and agents shall
execute promptly) such deeds, documents and agreements as the Purchaser
may reasonably require to, inter alia, change the principal employer or
trustees (or both) of any pension scheme, salary continuation, cash sum or
life assurance schemes of which any employees or directors of the Seller
may belong.
7.3. The Seller shall indemnify the Purchaser against any order to pay
compensation made pursuant to the 1981 Regulations or any other Loss it
may suffer in relation to any claim made by an Employee pursuant to the
1981 Regulations or otherwise in relation to the transfer of the Business
provided that the order is not made as a result of any act or omission of
the Purchaser after Completion (other than those deemed to have been done
by the Purchaser by reason of the 1981 Regulations).
8. INSURANCE
8.1. The Seller shall notify the Purchaser's interest to the relevant insurers
and keep in force its existing insurance policies in respect of the Sale
Assets for 30 days from Completion.
8.2. The Purchaser shall pay the relevant proportion of the insurance premiums
from Completion until the cancellation of the relevant policies or 30 days
from Completion, whichever is earlier.
9. CONTRACTS AND THIRD PARTY CONSENTS
9.1. From the Completion Date the Purchaser shall perform, fulfil and discharge
the obligations of the Seller pursuant to the Contracts (other than in
respect of any breach, act, omission or neglect by the Seller or to the
extent any liability under the Contracts had accrued due prior to the
Completion Date) and the Purchaser shall be entitled to the benefit of the
Contracts.
9.2. Subject to Clause 9.1, the Purchaser shall from the Completion Date
indemnify and keep indemnified the Seller against all actions,
proceedings, liabilities, claims, demands, losses, costs and expenses or
other liability whatsoever arising from the acts or omissions of the
Purchaser in relation to any of the Contracts on or after the Completion
Date.
9.3. All Contracts which are capable of assignment without the need for any
third party consent shall hereby be assigned.
9.4. To the extent that any of the Sale Assets are not assignable without the
consent of another party or without an agreement of novation, this
Agreement shall not constitute an assignment or an attempted assignment if
such assignment or attempted assignment would constitute a breach of that
agreement.
9.5. In the event that such consent or novation is required, the Seller and the
Purchaser shall use all reasonable endeavours to obtain any required
consent or novation as soon as reasonably practicable.
9.6. Unless and until such consent shall be forthcoming and the relevant
agreement shall have been assigned or novated the Seller shall remain
liable under such agreement as a contracting party (and will enforce at
the Purchaser's request any and all rights of the Seller against the
other party to the contract) but the Purchaser shall indemnify the
Seller in respect of it and shall perform the obligations under such
agreement as agent for the Seller who shall account to the Purchaser
for all sums received from that agreement.
9.7. If such consent or novation is not obtained, the Seller will co-operate
with the Purchaser in any reasonable arrangements designed to provide for
the Purchaser all the benefits under any of the contracts, including
enforcement of any and all rights of the Seller against the other party to
the contract arising out of the cancellation by such other party or
otherwise.
10. APPORTIONMENTS
10.1. All periodical charges and outgoings attributable to the Business
(including, but not limited to, rents, rates, gas, water, electricity,
telephone charges, licences and fees) and all liabilities in relation to
salaries, wages, accrued holiday pay, national insurance, pension
contributions, PAYE and all other payments to and in respect of the
Employees up to the Completion Date or arising in respect of a period
prior to the Completion Date shall be borne by the Seller and as from the
Completion Date shall be borne by the Purchaser. All rents and other
periodical payments receivable in respect of the Business up to the
Completion Date shall belong to and be payable to the Seller and from the
Completion Date shall belong to and be payable to the Purchaser.
10.2. Accruals shall belong to the Purchaser.
10.3. Where any amounts fall to be apportioned under this Agreement the Seller
shall provide the Purchaser with full details of the apportionments
together with supporting vouchers or similar documentation within 14 days
after the Completion Date. In the absence of dispute the appropriate
payments shall be made within 10 business days of preparation of the list
of apportionments. If the amount of any apportionment is in dispute that
dispute shall be referred for final settlement to a firm of chartered
accountants nominated jointly by the Seller and the Purchaser or failing
such nomination within 14 days after request by either the Seller or the
Purchaser nominated at the request of either of them by the President for
the time being of the Institute of Chartered Accountants in England and
Wales. The accountants shall be entitled to call for and inspect the
working papers of the Seller's auditors and such other documents as they
may reasonably consider necessary. In making their determination the
accountants shall act as experts and not as arbitrators, their decision
shall be final and binding on the parties and their fees shall be borne
and paid by the
Seller and the Purchaser in such proportions as the accountants determine.
The amount determined shall be paid within 14 days of the determination
together with interest calculated on a daily basis (as well after as
before judgment) from the Completion Date until the date of actual
payment at the rate of 4 per cent per annum above the base rate
from time to time of Barclays Bank Plc.
11. POST COMPLETION
11.1. Immediately after Completion the Seller shall wholly discontinue carrying
on the Business.
11.2. If after the Completion Date the Seller receives any enquiries or orders
from any past, present or potential client of the Business or any other
person, or any notices, correspondence or information which relate to the
Business it shall refer that person or information to the Purchaser as
soon as reasonably practicable.
11.3. The Seller shall preserve all books, documents and records relating to the
Business in respect of the period prior to the Completion Date which it
retains following Completion for a period of seven years, and shall permit
and allow, upon being given reasonable notice and during business hours,
the Purchaser and or its agents, accountants or other representatives
access to, and at its own expense, to take copies of, such books,
documents and records for any purpose in connection with or incidental to
the Business.
11.4. To the extent that any monies are received after Completion by one party
which belong to the other party, the recipient shall (subject to any
provision to the contrary contained in this Agreement) hold the same on
trust for that other party and account to that other party for the same
within five business days of receipt.
12. WARRANTIES
12.1. The Seller and Xx Xxxxx jointly and severally represent and warrant to the
Purchaser that each of the Warranties is true, accurate and complete in
all respects and not misleading.
12.2. The Seller and Xx Xxxxx acknowledge that the Warranties were given with
the intention of inducing the Purchaser to enter into this Agreement and
that the Purchaser does so in reliance on the Warranties.
12.3. Each of the Warranties is a separate and independent Warranty and shall
not be limited by reference to any other "Warranty or anything in this
Agreement.
12.4. The rights and remedies of the Purchaser in respect of any breach of the
Warranties shall not be affected by Completion; by any investigation made
(or which could have been made) by or on behalf of the Purchaser into the
affairs of the Seller; by the Purchaser failing to exercise or delaying
the exercise of any of its rights or remedies; or by any other event or
matter whatsoever except a specific and duly authorised written waiver or
release from the Purchaser.
12.5. Where any Warranty refers to the knowledge, information or belief of the
Seller and Xx Xxxxx they each undertake that they have made full enquiry
into the subject matter of the Warranty.
12.6. The amount of any successful claim under the Warranties or indemnities in
Clauses 6.1, 6.2 and 7.3 or any other amount paid by the Seller to the
Purchaser pursuant to the provisions of this Agreement shall be deemed to
constitute a reduction in the consideration for the Sale Assets.
13. WARRANTIES BY PURCHASER
The Purchaser represents to the Seller that:
(i) it has the requisite power and authority to enter into and perform
this Agreement and perform its obligations under this Agreement. The
Agreement has been duly executed by the Purchaser and constitutes
valid and binding obligations of the Purchaser;
(ii) the Consideration Shares, when issued in accordance with the
provisions of this Agreement, will be duly authorised and validly
issued and fully paid and non assessable and, assuming the accuracy of
the Warranties, will be issued in compliance with Federal Securities
laws;
(iii) all of the reports filed by DMD in connection with its obligations
under the Securities Exchange Act of 1934 as of their respective dates
complied as to form in all material respects with requirements of that
Act and the roles and regulations promulgated by the Securities and
Exchange Commission thereunder and did not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements in light of
the circumstances under which they were made, not misleading.
14. PURCHASER'S REMEDIES
14.1. The Seller and Xx Xxxxx shall fully and effectively indemnify and keep
indemnified the Purchaser against all Losses suffered directly or
indirectly by the Purchaser as a result of or in connection with any
event, circumstance or state of affairs relating to the Business or Sale
Assets which is not (whether at or after Completion) in all respects as
represented and warranted to the Purchaser under this Agreement.
14.2. The Seller and Xx Xxxxx jointly and severally undertake to disclose in
writing to the Purchaser anything which is or may constitute a Warranty
Claim or which is or may give rise to a right to indemnification under
this Agreement as soon as it comes to their notice at any time.
14.3. If any amount payable to the Purchaser by the Seller or Xx Xxxxx is
subject to Taxation, the amount to be paid to the Purchaser by the Seller
or Xx Xxxxx shall be
such so as to ensure that the net amount retained by the Purchaser after
such Taxation has been taken into account is equal to the full amount
which would be payable to the Purchaser had the amount not been subject
to Taxation.
14.4. If any Warranty Claim or indemnification claim is made, except in the case
of fraud or deliberate deception, each of the Seller and Xx Xxxxx agrees
to release any claim it may have against any director or employee of the
Business on whom it may have relied before agreeing to any terms of this
Agreement.
14.5. In the event of a Warranty Claim, without prejudice to the right of the
Purchaser to claim damages on any basis available to if (including under
Clause 14.1) or to any other right or remedy available to it, the Seller
and Xx Xxxxx (as appropriate) agree to pay on demand in cash to the
Purchaser a sum by way of damages as agreed between the Seller or Xx Xxxxx
and the Purchaser or, in default of such agreement, as determined by order
of a court of competent jurisdiction which is the higher of:
(a) an amount sufficient to put the Purchaser into the position which
would have existed if the relevant Warranties had been tree and
accurate or not misleading when given; and
(b) an amount equal to the resulting diminution in the value of the
Business and the Sale Assets.
15. CONDUCT OF WARRANTY CLAIMS
15.1. In any case where the Seller or Xx Xxxxx is or may be liable under this
Agreement to indemnify or compensate the Purchaser, the Purchaser shall
notify the Seller or Xx Xxxxx as soon as reasonably practicable in writing
of the claim or facts giving rise thereto or, in the reasonable opinion of
the Purchaser, likely to give rise to such liability.
15.2. The Purchaser shall at the request of the Seller or Xx Xxxxx take or
procure to be taken such action as the Seller may reasonably request to
avoid, dispute, resist appeal, compromise or defend any claim notified to
it by the Purchaser and any adjudication in respect thereof, and to pursue
on that Party's behalf, in the Purchaser's name, any claim that it wishes
to pursue against any third party in respect of the Business and the Sale
Assets and its right to them, including (without prejudice to the
generality of the foregoing) instructing such solicitors or other
professional advisers as that Party may nominate to act in the name of and
on behalf of the Purchaser but in accordance with the instructions of the
Seller or Xx Xxxxx (as appropriate) so that such action shall be delegated
entirely to the Seller or Xx Xxxxx but subject to the Purchaser being
indemnified by the Seller or Xx Xxxxx against all costs, damages and
expenses which may be thereby incurred.
15.3. Any sums recovered (including, without limitation, any damages or other
compensation awarded or obtained in settlement and any costs awarded) as a
result of the pursuit of any claim, whether by the Seller or Xx Xxxxx on
the Purchaser's behalf or by the Purchaser in the Seller's or Xx Xxxxx'x
name, shall be for the benefit of the
Purchaser and shall be paid to the Purchaser forthwith upon receipt. Until
such sums are paid to the Purchaser, they shall be held in trust for the
Purchaser.
16. NOTICES
16.1. A notice or other information required or authorised by this Agreement
shall be in writing, may be delivered personally or sent by first-class
prepaid post or facsimile transmission to the other party at its address
as given in this Agreement or such other address as may have been notified
and shall have been deemed to have been given:
16.1.1. if personally delivered, at the time of delivery;
16.1.2. if given by prepaid first class post, two business days after
posting;
16.1.3. if sent by facsimile transmission, on the day of transmission
provided that a confirming copy is sent by prepaid first class
post within 12 hours of transmission.
16.2. Any notice sent to the Purchaser shall simultaneously be sent to the
Purchaser's Solicitors.
17. SUCCESSORS AND ASSIGNABILITY
17.1. This Agreement shall be binding and shall ensure for the benefit of each
party's successors and assigns (as the case may be) but except as set out
in Clause 17.2 shall not be assignable by any party without the prior
written consent of the other.
17.2. The Purchaser may assign the benefit of this Agreement (including, without
limitation, the Warranties) to any successor or subsequent purchaser of
the Business or any of the Sale Assets.
18. CERTIFICATE OF VALUE
It is hereby certified that the transaction hereby effected does not form
part of a larger transaction or of a series of transactions in respect of
which the amount or value or the aggregate amount or value of the
stampable consideration exceeds (pound)60,000.
19. ANNOUNCEMENTS
No announcement of any kind shall be made by the Seller or Xx Xxxxx in
respect of the subject matter of this Agreement without the prior written
approval of the Purchaser.
20. SURVIVAL OF CERTAIN PROVISIONS
Insofar as any provision of this Agreement shall not have been performed
at Completion, it shall survive and remain in full force and effect
notwithstanding Completion.
21. ENTIRE AGREEMENT
This Agreement, the Schedules and the documents referred to in this
Agreement shall constitute the entire agreement and understanding between
the parties in relation to its subject matter. It supersedes any previous
agreement between the parties in relation to that subject matter.
22. GOVERNING LAW AND JURISDICTION
This Agreement shall be governed by and construed in accordance with the
laws of England and Wales. The parties irrevocably submit to the exclusive
jurisdiction of the Courts of England and Wales in relation to any legal
action or proceedings arising out of or in connection with this Agreement.
AS WITNESS the hands of the parties or their duly authorised representatives on
the day first before written.
SCHEDULE 1
EMPLOYEES
Xxxx Xxxxx
Ros Nahab
Xxxxx Xxxxx
SCHEDULE 2
EXCLUDED ASSETS
- the Stock;
- the Book Debts;
- the Cash Float.
SCHEDULE 3
THE WARRANTIES
PART A - GENERAL
1. INFORMATION
INFORMATION PROVIDED BY SELLER
1.1 All information provided to the Purchaser or its advisers or
representatives in response to any request of the Purchaser was when given
and remains true, complete and accurate and is not misleading because of
any omission or ambiguity or for any other reason.
1.2 The Seller has fully and accurately disclosed to the Purchaser all
matters, information and documents which are necessary to qualify the
statements made in this Agreement in order for such statements to be fair,
accurate and not misleading.
1.3 So far as the Seller is aware, there are no facts or circumstances in
relation to the Business or Sale Assets which have not been clearly and
accurately disclosed to the Purchaser and which, if disclosed, might have
been expected to affect the decision of the Purchaser to enter into this
Agreement or the Consideration payable for the Sale Assets pursuant to
Clause 3.
2. CAPACITY
The Seller has the requisite power and authority to enter into and perform
this Agreement and perform its obligations under this Agreement. The
Agreement has been duly executed by the Seller and constitutes valid and
binding obligations of the Seller.
3. ACCOUNTS
3.1 The Accounts have been prepared in accordance with the requirements of all
relevant statutes and generally accepted accounting practices. The
Accounts are true and complete in all respects and present fairly the
financial position of the Company at the Accounts Date. They contain full
provision or reserve for all liabilities and for all capital and revenue
commitments of the Seller as at the Accounts Date. The profits and losses
of the Seller shown in the Accounts were not, save as disclosed in the
Accounts or in any note accompanying them, to any material extent,
affected by any extraordinary, exceptional, unusual or non recurring
income, capital gain or expenditure or by any other factor known to the
Seller rendering any such profit or loss for such period exceptionally
high or low.
3.2 ACCOUNTING RECORDS
The accounting records of the Seller comply with the requirements of
Sections 221 and 222 of the Companies Xxx 0000, do not contain or reflect
any material inaccuracy or discrepancy and present and reflect in
accordance with generally accepted accounting principles and standards the
financial position of, and all transactions entered into by, the Seller or
to which it has been a party.
3.3 EVENTS SINCE THE ACCOUNTS DATE
Since the Accounts Date there has been no material change in:
(i) the financial or trading position or prospects of the Business;
(ii) the value or state of assets or amount or nature of liabilities as
compared with the position disclosed in the Accounts; or
(iii) in the turnover, direct or indirect expenses or the margin of
profitability of the Business as compared with the position disclosed
for the equivalent period of the last financial year.
The Seller has since the Accounts Date carried on the Business in the
ordinary course and without interruption, so as to maintain it as a going
concern and paid its creditors in the ordinary course and within the
credit periods agreed with such creditors.
Since the Accounts Date no supplier of the Business has ceased or
restricted supplies or threatened so to do, there has been no loss or
material curtailment of the Business with any customer which at any time
in the preceding financial year represented one percent or more of the
turnover of the Business and the Seller is not aware of any circumstances
likely to give rise to any of the above.
Since the Accounts Date, in relation to the Business the Seller has not:
(a) incurred or permitted to incur:
(i) material capital expenditure; or
(ii) any liability whether actual or contingent except for full value
or in the ordinary course of business;
(b) agreed or required to agree:
(i) any asset for a consideration higher than its market value at the
time of acquisition or otherwise than in the ordinary course of
business; or
(ii) any business or substantial part of it or any share or shares in
an body corporate; or
(c) disposed of or agreed to dispose of, any of its assets except in the
ordinary course of business and for full value.
4. DEBT POSITION
4.1 DEBTS OWED TO THE BUSINESS
There are no debts owing to the Business other than trade debts incurred
in the normal and usual course of business.
4.2 DEBTS OWED BY THE BUSINESS
(a) The Business does not have outstanding any borrowing or indebtedness
in the nature of borrowing, forward sale or purchase agreement or
conditional sale agreement or other transactions having the commercial
effect of a borrowing;
(b) There has not been received by the Business any notice to repay under
any agreement relating to any borrowing or indebtedness which is
repayable on demand.
(c) There are no trade debts which have been incurred by the Business
including advance payments other than the Liabilities.
5. BUSINESS RELATIONS
There is no actual or threatened loss of any customer or supplier of the
Seller, the loss of which would have an adverse effect upon the Business.
6. REGULATORY MATTERS
6.1 LICENCES
All licences, permissions, authorisations and consents (collectively
"LICENCES") required or useful for carrying on the Business effectively in
the place and in the manner in which the Business is now carried on have
been obtained and the Licences are, and will following Completion, remain
in full force and effect and there is no reason why the Licences will not
be capable of being transferred to the Buyer without the necessity for any
special arrangement or expense.
7. ASSETS
7.1 OWNERSHIP
(a) All the rights and assets necessary to carry on the Business as
presently conducted are comprised in the Sale Assets and the Seller
docs not own any assets which form part of the Sale Assets which are
not used in connection with the Business.
(b) All of the Sale Assets are the absolute property of the Seller and are
not the subject of any security interest or any assignment, charge,
lien, royalty, option, right of pre-emption, factoring agreement,
leasing agreement, hiring agreement, hire purchase agreement,
agreement for payment on deferred terms or any similar agreement or
arrangement and all the Sale Assets are in the possession or under the
control of the Seller.
(c) None of the Sale Assets are affected by any of the following matters:
(i) any dispute, notice, complaint, covenant, reservation or
restriction or condition which affects the use of such Sale
Asset;
(ii) any notice, order or demand issued by or on behalf of any public
authority requiring the discontinuance of use of any Sale Asset
or the carrying out of any works on any such Sale Asset;
and no act or omission has occurred or is likely to occur which will
or is likely to result in any Sale Asset becoming affected by any such
matter;
(d) All the Moveable Plant and Machinery:
(i) are in proper state of repair and satisfactory working order;
(ii) have been regularly and properly maintained in accordance with
standards generally followed in the industry and in accordance
with the requirements of any lease;
(iii)are adequate for the requirements of the Business as conducted
at the date of this Agreement and during the 12 months before;
(iv) would not be expected (if the sale of the Business did not take
place) to require replacement or additions at a cost in excess of
(pound)1,000 within a period of six months after the Completion
Date.
(e) All documents which in any way affect the right, title or interest of
the Seller in or to any of the Sale Assets and which attract Stamp
Duty have been fully stamped with the requisite period for stamping.
7.2 INSURANCES
(a) The Seller has made available to the Purchaser all details of the
insurances maintained by or on behalf of the Business and relating to
the Sale Assets. The insurances are in full force and effect and there
are no circumstances resulting from any act or omission of the Seller
which might lead to any liability under such insurance being avoided
by the insurers or the premiums being increased.
(b) No claim is outstanding under any such policy of insurance and there
are no circumstances resulting from any act or omission of the Seller
likely to give rise to such a claim.
8. PRODUCT LIABILITY
In relation to the Business, the Seller has not manufactured, sold or
provided any product or service which does not in every respect comply
with all applicable laws, regulations or standards or which is defective
or dangerous or not in accordance with any representation or Warranty,
express or implied, given in respect of it.
9. CONTRACTUAL MATTERS
9.1 MATERIAL CONTRACTS
(a) The Contracts listed in Schedule 1 are all the current contracts and
engagements whether written or oral relating to the Business
(excluding contracts with employees).
(b) There is not outstanding any agreement or arrangement relating to the
Business:
(i) which, by virtue of the acquisition of the Business and Sale
Assets by the Purchaser or other performance of the terms of this
Agreement, will result in any party to that Contract being
relieved of any obligation or becoming entitled to exercise any
right (including any right of termination or any right of
pre-emption or other option) or being in default under any such
Contract or losing any benefit, right or licence which it
currently enjoys; or
(ii) which involves or is likely to involve obligations or
restrictions of an unusual or exceptional nature;
(iii) which is any other agreement or arrangement having or likely to
have a material effect on the financial or trading position or
prospects of the Business.
(c) None of the Contracts contain a notification of change of ownership
clause.
(d) Compliance with the terms of this Agreement does not and will not
materially conflict with, result in a material breach of or constitute
a material default under any of the terms, conditions or provisions of
any agreement or instrument to which the Seller is now a party
relating to the Business.
9.2 DEFAULTS
No party to any of the contracts is in default under it and there are no
circumstances which might give rise to such a default, there are no
circumstances (including, for the
avoidance of doubt, acquisition of the Business and Sale Assets pursuant
to the terms of this Agreement) likely to give rise to such a default.
10. LITIGATION
(a) The Seller is not a plaintiff or defendant in or otherwise a party to
any litigation, arbitration or administrative proceedings which are in
progress or, so far as the Seller is aware, threatened or pending by
or against or concerning the Business or any of the Sale Assets.
(b) No governmental or official investigations or inquiry concerning the
Business is in progress or pending. There are no circumstances which
may give rise to any such proceeding, investigation or inquiry.
(c) The Seller has not nor any of the officers, agents or employees of the
Business (during the course of their duties in relation to the
Business) has committed or omitted to do any act or thing the
commission or omission of which is or could be in contravention of any
act, order, regulation or the like giving rise to any fine, penalty,
default proceedings or other liability in relation to the Business or
any of the Sale Assets.
11. CUSTOMERS
The Business Records contain a complete and accurate list of each of the
customers of the Business during the three years ending on the date of
this Agreement. The Seller has taken all commercially reasonable steps to
maintain the confidentiality of the customer list.
12. EMPLOYEES
12.1 A list of all Employees is set out in Schedule 1.
12.2 AGREEMENTS
There is not in existence any written or unwritten contact of employment
with any employee (or any contract for services with any person) providing
either for basic remuneration of more than (pound)20,000 per annum or for
a fixed term of service longer than one year.
12.3 COMPLIANCE
All statutes, regulations, codes of conduct, collective agreements, terms
and conditions of employment, orders and awards relevant to the conditions
of service of employees or relations with employees (or former employees,
as the case may be) or any recognised trade union have been complied with.
12.4 INCENTIVE SCHEME
There is not any share incentive scheme, share option scheme or profit
sharing, bonus, commission or other such incentive scheme for all or any
of the employees.
12.5 PAYMENTS ON TERMINATION
Except to the extent (if any) to which provision or allowances has been
made in the Accounts since the Accounts Date:
(a) no outstanding liability has been incurred for breach of any contract
of employment or for services or redundancy payments, protective
awards, compensation for wrongful dismissal or unfair dismissal or for
failure to comply with any order for the reinstatement or
re-engagement of any employee of the Business or for any other
liability accruing from the termination of any contract of employment
or for services;
(b) no gratuitous payment has been made or benefit given (or promised to
be made or given) in connection with the actual or proposed
termination or suspension of employment or variation of any contract
of employment of any present or former employee relating to the
Business;
(c) the PAYE system has been properly operated by the Seller deducting
taxation as required by law and accounting to the Inland Revenue for
all tax so deducted;
(d) all payments made by the Seller to any person which ought to have been
made under deduction of taxation have been so made and the Seller has
(where required) accounted to the proper authority for the taxation so
deducted;
(e) the Seller has paid all national insurance and graduated pension
contributions for which it is liable and has kept proper books and
records relating to the same.
13. INTELLECTUAL PROPERTY RIGHTS
13.1 All Intellectual Property Rights and licences in respect of such
rights relating to or used in connection with the Business (the
"BUSINESS INTELLECTUAL PROPERTY") are legally and beneficially owned
by the Seller and no payments are required in connection with any such
licences.
13.2 There have been no material claims, proceedings or actions and there
are no proceedings or actions pending impugning the validity or
enforceability of the Business Intellectual Property and there is no
reason why the Business Intellectual Property cannot be fully
exploited.
13.3 There have been and there are no infringements of any of the Business
Intellectual Property and none is threatened.
13.4 After Completion the Purchaser will be entitled to use all the
Intellectual Property Rights used by the Seller prior to Completion.
14. PENSIONS
There are no agreements or arrangements (whether legally enforceable or
not) for the payment of any pensions, allowances, lump sums or other like
benefits on retirement or on death or during periods of sickness or
disablement for the benefit of any of the Employees or any former
employees in the Business or for the benefit of dependants of such persons
in operation at the date of this Agreement.
15. BOOKS AND RECORDS
All the books and records of the Seller which will be delivered to the
Purchaser on Completion (including all records and invoices required for
VAT purposes):
(a) have been fully, properly and accurately kept and completed;
(b) do not contain any material inaccuracies;
(c) give a true and fair view of the financial, contractual and trading
position of the Business, its assets, liabilities, debtors, creditors
and stock in trade and all other matters which would normally be
expected to appear in them.
16. ENVIRONMENTAL MATTERS
16.1 The Business is being conducted and all assets owned or used by
or otherwise in possession of the Seller in accordance with all applicable
Environmental Laws and the Seller has never received any notification
under any Environmental Law requiring it to take or omit to take any
action.
16.2 The Seller has never been threatened with any investigation or enquiry by
any organisation, or received any compliant in connection with the
environment.
16.3 Neither the Seller nor Xx Xxxxx is aware of any circumstance which may
require expenditure, whether by the Purchaser or otherwise, on cleaning up
any land now or formerly owned or occupied by the Seller or used in
relation to the Business.
17. CONSIDERATION OF SHARES AND SECURITIES ACT ISSUES
17.1 Both the Seller and Xx Xxxxx were outside of the United States at both the
time the offer of the Consideration Shares was received and at the time
this Agreement was entered into.
17.2 Each of the Seller and Xx Xxxxx is acquiring the Consideration Shares for
investment purposes or for the purpose of selling and distributing the
Consideration Shares to
exemption from registration of such shares under Section 5 of the
Securities Act pursuant to Regulation S under the Security Act. Neither
the Seller nor Xx Xxxxx is acquiring the Consideration Shares for the
purpose of sale or distribution of the Consideration Shares in the United
States or in a manner that does not comply with the requirements of
Regulation S. Each of the Seller and Xx Xxxxx acknowledges that the
Consideration Shares to be acquired by them pursuant to this Agreement are
not registered under the Securities Act and cannot be sold or otherwise
disposed of except in compliance with the Securities Act or in reliance
upon an exemption from the Securities Act. Each of the Seller and Xx Xxxxx
acknowledges that the certificate(s) representing the Consideration Shares
shall bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT
BE OFFERED, SOLD, TRANSFERRED, PLEDGED, ASSIGNED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, REGULATIONS OR AN EXEMPTION FROM
REGISTRATION AND OTHERWISE IN ACCORDANCE WITH The TERMS OF AN
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL UNDERSIGNED OF THE
SECURITIES, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICE OF THE ISSUER."
SCHEDULE 3
PART B--TAXATIOn
1. No taxation authority has agreed to operate any special arrangement (being
an arrangement which is not based on a strict and detailed application of
the relevant legislation or on generally published statements of practice
or generally published extra-statutory concessions) in relation to the
Sale Assets or the Business.
2. All documents relating to the Sale Assets or the Business in respect of
which stamp duty is chargeable have been duly and properly stamped.
3. None of the Sale Assets are such that they are, have been or could be
subject to the capital goods scheme under VATA.
4. The Seller is a registered and taxable person for the purposes of the
VATA. The terms of all legislation, regulations, orders, provisions,
directions, conditions and notices relating to VAT arising in respect of
the Business have been complied with and observed in all material
respects. All accounts, records, invoices and other documents (as the case
may be) appropriate or requisite for the purposes of VAT arising in
respect of the Business have been maintained and obtained and are
complete, correct and up-to-date.
5. No payments or returns or notifications under the legislation,
regulations, orders, provisions, directions, conditions or notices
relating to VAT in respect of the Business are, nor have in the two years
prior to Completion been in arrears and there is not, nor has there been
in the two years prior to Completion, any forfeiture or penalty or
interest or surcharge or the operation of any penalty, interest or
surcharge provisions contained in the same in respect of the Business.
6. The Seller has not elected to waive exemption for VAT purposes, and is not
aware of any election to waive exemption made by any other person, in
respect of any land or buildings comprised in the Business.
7. None of the Sale Assets agreed to be sold under this Agreement are the
subject of any security in favour of HM Customs & Excise under paragraph
of Schedule 11 VATA or section 157 of the Customs and Excise Management
Xxx 0000.
8. The PAYE system has been properly operated and all income tax and national
insurance contributions as required from all payments to or treated as
made to Employees and all Taxation has been punctually accounted for to
the Inland Revenue and the Department of Social Security for all Taxation
deducted. All returns required by section 203 ICTA 1988 (pay as you earn),
the Social Security Contributions and Benefits Xxx 0000, the Social
Security Administration Act 1992 and the Xxxxxxx Xxxxxxx Xxx 0000
(national insurance contributions) and regulations made thereunder have
been made and are accurate and complete in all respects. All such books
and
records relating to PAYE and to national insurance contributions as are
required to be maintained and retained have been maintained and retained.
9. No officer or employee of the Seller who is engaged in the Business
participates in any scheme approved under Schedule 9 ICTA 1988 (approved
share option and profit sharing schemes) or is a beneficiary of a
qualifying employee share ownership trust as defined in Schedule 5 Finance
Xxx 0000 (employee share ownership trusts).
10. All sums payable and benefits provided under the existing arrangements for
remunerating officers and employees and rewarding persons rendering
services to the Seller in respect of the Business are deductible for the
purposes of section 74 or 75 1CTA 1988 (deductions).
11. None of the Sale Assets agreed to be sold under this Agreement are subject
to any distraint, charge, power of sale or mortgage in favour of the
Inland Revenue for the purposes of inheritance tax nor are there any
circumstances which may give rise to the same.
SIGNED by )
for and on behalf of MIDAS (UNITED )
KINGDOM) LIMITED ) /S/
in the presence of: )
SIGNED by )
XXXX XXXXX ) /S/
in the presence of: )
SIGNED by )
for and on behalf of )
DMDS LIMITED ) /S/
in the presence of: )