EXHIBIT 2.1
DATED SEPTEMBER 30, 1998
S M TECH LIMITED (1)
SPEEDLINE TECHNOLOGIES INC. (2)
QUAD SYSTEMS CORPORATION (3)
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AGREEMENT
FOR THE SALE AND PURCHASE OF THE BUSINESS
AND ASSETS OF SMTECH LIMITED
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Wragge & Co.
Birmingham
CONTENTS
CLAUSE HEADING PAGE
1 Definitions and Interpretation.............................................4
2 Sale of the Assets.........................................................15
3 Consideration..............................................................16
4 Completion Accounts........................................................17
5 Adjustment to the Purchase Price...........................................20
6 Completion.................................................................20
7 Value Added Tax............................................................22
8 Debtors and Creditors......................................................24
9 Contracts and Finance Agreements...........................................29
10 Employees.................................................................29
11 Representations and Warranties............................................31
12 Names.....................................................................36
13 Restrictive Covenants.....................................................36
14 Apportionments............................................................39
15 Capital Allowances........................................................40
16 Guarantee.................................................................40
17 Continuing effect of this Agreement.......................................42
18 Announcements.............................................................42
19 Releases, waivers etc., by the Purchaser..................................42
20 Notices...................................................................43
21 Time......................................................................44
22 Entire Agreement..........................................................45
23 Alterations...............................................................45
24 Severability..............................................................45
25 Counterparts..............................................................46
26 Payment of costs..........................................................46
27 Successors and Assigns....................................................46
28 Further Assurance.........................................................46
29 Applicable law and submission to jurisdiction.............................46
30 Address for service.......................................................47
Schedule 1...................................................................48
Schedule 2...................................................................49
Schedule 3...................................................................50
Schedule 4...................................................................51
Schedule 5...................................................................52
Schedule 6...................................................................53
Schedule 7...................................................................67
Schedule 8...................................................................68
Schedule 9...................................................................69
Schedule 10..................................................................73
Schedule 11..................................................................76
Schedule 12..................................................................77
Schedule 13..................................................................78
Schedule 14..................................................................76
THIS AGREEMENT is made on September 30, 1998
BETWEEN:
(1) SMTECH LIMITED (No. 2597925) whose registered office is at ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("THE VENDOR");
(2) SPEEDLINE TECHNOLOGIES INC. (a Delaware Corporation) whose registered
office is at ▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇ ("THE Purchaser"); and
(3) QUAD SYSTEMS CORPORATION (a Delaware Corporation) whose registered office
is at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇ ("THE
GUARANTOR")
NOW IT IS HEREBY AGREED as follows:
WHEREAS:
(A) The Vendor has agreed to sell and the Purchaser has agreed to purchase the
Assets with a view to maintaining the Business as a going concern upon the
terms and subject to the conditions contained in the following provisions
of this Agreement.
(B) The Guarantor has, at the request of the Purchaser agreed to guarantee the
due and punctual performance by the Vendor of all its obligations under
this Agreement and all other documents to be entered into by the Vendor
pursuant to this Agreement.
1 DEFINITIONS AND INTERPRETATION
In this Agreement and in the Schedules (which are part of this Agreement)
unless the context otherwise requires
1.1 the following expressions shall have the following meanings:
"THE ACCOUNTS" means the audited trading and profit and loss account of the
Vendor for the financial or accounting period ended on the Accounting Date
and the audited balance sheet of the Vendor as at the Accounting Date
together with the reports of the directors and auditors and all other notes
and memoranda attached thereto or any of them;
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"THE ACCOUNTING DATE" means 30th September 1997;
"THE ASSETS" means the Cash Balance, the Debtors, the Fixed Equipment, the
Moveable Equipment, the Stock, the Intangible Assets, the Patents, the
Trade-Marks, the Registered Designs, the benefit of the Contracts and all
other assets and rights of the Vendor in relation to the Business but
excluding the Excluded Assets;
"THE ASSUMED LIABILITIES" means the Creditors, accrued outgoings and
expenses, including accrued holiday pay, the Warranty Claims and the burden
of the Contracts but excluding the Excluded Liabilities;
"THE BAD DEBT RESERVE" means the reserve for bad debts shown in the
Completion Accounts;
"BUSINESS DAY" means a day (excluding Saturdays and Sundays) on which
clearing banks are ordinarily open for the transaction of normal banking
business in London and New York;
"THE BUSINESS" means the business of the Vendor carried on at the
Completion Date including the manufacturing, distributing and after sales
service and support of the Products;
"THE BUSINESS NAMES" means the business names "SIGMAPRINT" and "SMTECH" and
each and every name, title and logo used in connection with the Business;
"THE CASH BALANCE" means any cash in hand or at bank of the Vendor at the
Completion Date held for the purposes of the Business;
"COMPLETION" means completion of the sale and purchase of the Assets by the
performance by the parties of their respective obligations under clause 6;
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"COMPLETION ACCOUNTS" means the balance sheet and profit and loss account
of the Vendor as at the Completion Date and the notes thereto to be
prepared in accordance with clause 5;
"THE COMPLETION ACCOUNTS DATE" means the date on which the Completion
Accounts are agreed or determined pursuant to clause 4;
"THE COMPLETION DATE" means the date hereof;
"THE COMPLETION PAYMENT" means the cash sum of $2,150,000 to be paid by the
Purchaser on Completion on account of the Purchase Price;
"THE CONFIDENTIAL INFORMATION" means trade secrets and information
equivalent to them (including but not limited to formulae, processes,
methods, knowledge and know-how) in connection with the Products and
details of the customers and suppliers of the Business being customers and
suppliers exclusive to the Vendor and not customers and suppliers of other
members of the Guarantor's Group and any information concerning new
products which are being developed or proposed to be developed by the
Business and which are as at the Completion Date confidential to the Vendor
in connection with the Business;
"THE CONTRACTS" means the Customer Contracts, the Supply Contracts and the
Finance Agreements;
"CREDITORS" means the aggregate amount due to trade and other creditors of
the Vendor in relation to the Business including but not limited to accrued
charges, customers' prepayments and trade and other bills payable (whether
or not yet due and payable) at the Completion Date but excluding the
Excluded Liabilities;
"THE CUSTOMER CONTRACTS" means all of the contracts, agreements, orders,
engagements and arrangements (whether written or oral) between the Vendor
and customers of the Business for the supply of Products goods or services
by the Vendor including the Distributorship Agreements, which are
subsisting at the Completion Date;
"CUSTOMS" means HM Customs & Excise;
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"DEBTORS" means the aggregate amount due from trade and other debtors of
the Vendor in relation to the Business including but not limited to
payments in advance to suppliers of the Vendor and trade and other bills
receivable at the Completion Date;
"THE DEBTS" means the aggregate amount due or owing at the Completion
Accounts Date from trade debtors where such amounts have been invoiced by
the Vendor as shown in the Completion Accounts less the Bad Debt Reserve;
"DEVELOPED SOFTWARE" means any software developed by, or on behalf of the
Vendor and used by the Business;
"THE DISCLOSURE LETTER" means the letter of the same date as this Agreement
from the Vendor to the Purchaser disclosing certain matters in relation to
the Warranties which has been delivered to the Purchaser prior to the
execution of this Agreement;
"DISTRIBUTORSHIP AGREEMENTS" means those agreements definitively listed in
Schedule 12;
"THE EMPLOYEES" means the persons employed by the Vendor in the Business
particulars of whom are set out in Schedule 5;
"THE EXCLUDED ASSETS" means those items details of which are set out in
Part A of Schedule 4;
"THE EXCLUDED LIABILITIES" means those items details of which are set out
in Part B of Schedule 4;
"THE FIXED EQUIPMENT" means all of the plant, machinery and equipment used
in the Business which are affixed to the Property details of the principal
items of which are set out in part I of Schedule 3;
"THE FINANCE AGREEMENTS" means the leasing, hire purchase, credit sale and
other similar agreements details of which are set out in Schedule 7;
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"THE FINANCIAL INDEBTEDNESS" means all short term and long term financial
indebtedness including bank debt and any debts (other than trading debts)
owing to the Guarantor or any of the subsidiaries of the Vendor in relation
to the Business but excluding amounts arising under or pursuant to the
Finance Agreements and the list of inter-company charges set out in
Schedule 14;
"GUARANTEE" means any guarantee, indemnity, suretyship, letter of comfort
or other assurance, security or right of set-off given or undertaken by a
person to secure or support the obligations (actual or contingent) of any
third party and whether given directly or by way of counter-indemnity to
any third party who has provided a Guarantee;
"ICTA 1988" means Income and Corporation Taxes ▇▇▇ ▇▇▇▇;
"INTANGIBLE ASSETS" means all customer and supplier lists maintained by or
on behalf of the Vendor for the purpose of the Business (and/or copies of
the same) and those items listed in sub-clauses 6.1(b)(i),(ii) and (iii);
"THE INTELLECTUAL PROPERTY" means all the Intellectual Property Rights used
or owned by the Vendor in connection with the Business as at the date of
this Agreement;
"INTELLECTUAL PROPERTY RIGHTS" means patents, registered designs, trade
marks and service marks (whether registered or not) applications for the
foregoing and the right to apply therefore in any part of the world,
copyrights, design rights, and all similar property rights, including those
subsisting (in any part of the world) in inventions, designs, drawings,
performances, computer programs, semiconductor topographies, plant
varieties, confidential information, business or brand names, goodwill or
the style of presentation of goods or services and in applications for
protection thereof;
"THE MOVEABLE EQUIPMENT" means all of the moveable plant, machinery and
equipment (including but not limited to tools, furniture and fittings,
motor vehicles and spare parts) used in the Business details of the
principal items of which are set out in part II of Schedule 3;
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"THE NET ASSET VALUE" means a sum equal to the aggregate of the values of
the Assets (other than Intangible Assets and Intellectual Property) as
shown in the Completion Accounts minus a sum equal to the aggregate of the
value of the Creditors as agreed or determined pursuant to clause 4;
"THE NOMINATED ACCOUNT" means the Vendor's account numbered 1422647298 at
Corestates Bank (ABA no. ▇▇▇▇▇▇▇▇▇) or such other account or accounts as
the Vendor shall specify;
"THE OEM SUPPLY AGREEMENT" means an agreement of even date with this
Agreement between the Vendor and the Guarantor for the supply of Products
and related services following Completion;
"THE OPINION" means the opinion in the agreed form given by Messrs Ballard,
Spahr, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ in relation to the Guarantor;
"THE PATENTS" means the patents (if any) listed in Part A of Schedule 13;
"PAYE AND NIC RECORDS" means the workings sheets records and other
documents relating to the Business required to be preserved for the
purposes of the Pay As You Earn and National Insurance systems;
"THE PERMITTED ACTIVITY" means the resale to customers of the Guarantor of
products which have been supplied to the Guarantor by the Purchaser
pursuant to the OEM Supply Agreement and the ongoing product support of
such products;
"THE PRODUCTS" means those stencil printers produced or being developed by
the Business including but not limited to those products of the Business
sold under or referred to by the names, SigmaPrint 500, SigmaPrint 400,
Sigma Print 90, SigmaPrint 100 and SigmaPrint 200 and similar or like names
used when such products are sold through the Guarantor;
"PROHIBITED AREA" means the World;
"THE PROPERTY" means the leasehold property details of which are set out in
Schedule 1;
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"THE PROPERTY LICENCE" means the licence agreement in the agreed form
relating to the Property to be entered into between the Purchaser and the
Vendor on Completion;
"THE PURCHASE PRICE" means the sum of US $ (dollars) 2,900,000, subject to
adjustment pursuant to clause 5;
"THE PURCHASER'S SOLICITORS" means Messrs. Wragge & Co, of ▇▇ ▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇;
"THE REGISTERED DESIGNS" means the registered designs (if any) listed in
Part C of Schedule 13;
"THE REGULATIONS" means the Transfer of Undertakings (Protection of
Employment) Regulations 1981 as amended from time to time;
"RELEVANT BREACH" means any event, matter or circumstance which is
inconsistent with, contrary to or otherwise a breach of any of the
Warranties;
"THE RESTRICTED PRODUCTS" means:
(i) all products which are manufactured, produced, distributed or sold by
the Vendor in connection with the Business at the Completion Date
(including, without prejudice to the generality of the foregoing, the
Products); and
(ii) any other products which are of a type similar to and competing with
any of the products referred to in (i) above;
but excluding products supplied as part of the Permitted Activity;
"THE RESTRICTED SERVICES" means:
(i) all services which are supplied by the Vendor in connection with the
Business at the Completion Date (including without prejudice to the
generality of the foregoing, research and development, product design,
software design, manufacturing, field service, technical support and
supply of spare parts); and
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(ii) any other services which are of a type similar to and competing with
any of the services referred to in (i) above;
but excluding the supply of field service, technical support and
supply of spare parts in connection with the Permitted Activity;
"THE RETENTION SUM" means such part of the cash sum of $750,000 (being part
of the Purchase Price) as the Purchaser is entitled to retain and which is
payable in accordance with clause 3;
"SCHEDULE" means a schedule to this agreement;
"SECURITY INTEREST" means a mortgage, lien, pledge, charge, hypothecation
or other security interest (or an agreement or commitment to create any of
them), but excluding:
(a) any lien arising in the ordinary course of business to secure
amounts which are not material;
(b) any unpaid vendor's or supplier's lien arising in the ordinary
course of the Business to secure amounts due in respect of goods
or services sold or supplied; and
(c) liens arising by operation of law, including a banker's lien;
"SET OFF AMOUNT" means the amount of any Set Off Claim which is the subject
of a Set Off Notice being a bona fide estimate of the amount of a relevant
claim (as defined in Schedule 9);
"SET OFF CLAIM" means a claim by the Purchaser to make a deduction or
withholding from the Retention Sum pursuant to clause 11 being a relevant
claim for the purposes of Schedule 9 and for the avoidance of doubt there
may be any number of Set Off Claims in respect of the Retention Sum
provided that such claims do not in aggregate exceed $375,000;
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"SET OFF NOTICE" means a notice substantially in the form set out at
Schedule 11 in relation to any Set Off Claim and specifying a Set Off
Amount;
"SYSTEMS" means any computer hardware, software (including all Third Party
Software and Developed Software), networking equipment and infrastructure
or other equipment owned and used by the Business which are reliant upon
microchip technology;
"THE STOCK" means all raw materials, stocks, work-in-progress, finished and
partly finished goods, spare parts, fuel and other consumables relating to
the Business at the Completion Date;
"THE SUPPLY CONTRACTS" means all of the contracts, agreements, orders,
engagements and arrangements (whether written or oral) between the Vendor
and suppliers for the supply of goods or services to the Vendor in relation
to the Business or any of the Assets subsisting at the Completion Date;
"TAX" means all forms of taxes duties imposts levies and all deductions and
withholdings in relation to tax whenever created or imposed, whether in the
United Kingdom or elsewhere, including (without limitation) VAT deductions
under the PAYE system and National Insurance contributions, together with
all penalties, fines, charges, surcharges and interest in relation to tax
or to any return or information required to be provided for the purposes of
any tax;
"THIRD PARTY SOFTWARE" means any software used by the Business the
Intellectual Property in which is owned by a third party;
"THE TRADE MARKS" means the trade marks (if any) listed in Part B of
Schedule 13;
"VAT" means Value Added Tax;
"VAT RECORDS" means all records invoices and other documents relating to
the Business which are required to be preserved for the purposes of VATA
1994 and/or regulations made thereunder;
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"VATA 1994" means the Value Added Tax ▇▇▇ ▇▇▇▇;
"THE VENDOR'S SOLICITORS" means Messrs. Gouldens of ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇;
"THE WARRANTIES" the warranties, representations and undertakings contained
in clause 11 and Schedule 6;
"THE WARRANTY CLAIMS" means any claim or liability of the Vendor arising as
a result of any product warranty provisions of the Contracts relating
solely to Products manufactured in whole or in part prior to Completion,
including, for the avoidance of doubt, any claims in respect of such
provisions where the relevant Product has been sold via the Guarantor
(acting as the Vendor's agent or distributor);
"THE WARRANTY CLAIMS RESERVE" means the specific provision made in the
Completion Accounts in respect of the Warranty Claims;
"YEAR 2000 COMPLIANT" means that the Products conform to the year 2000
conformity definition in the British Standards Institution Document
reference DISC PD 2000-1.
1.2 a document expressed to be "IN THE AGREED FORM" means a document in a form
which has been agreed by the parties contemporaneously with or before the
execution of this Agreement and which has, for the purposes of
identification, been initialled by them or on their behalf;
1.3 references to a clause or schedule are to a clause of, or a schedule to,
this Agreement, references to this Agreement include its schedules and
references in a schedule or part of a schedule to a paragraph are to a
paragraph of that schedule or that part of that schedule;
1.4 references to this Agreement or any other document or to any specified
provision of this Agreement or any other document are to this Agreement,
that document or that provision as in force for the time being and as
amended from time to time in accordance with the terms of this Agreement or
that document or, as the case may be, with the agreement of the relevant
parties;
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1.5 words importing the singular include the plural and vice versa, words
importing a gender include every gender and references to persons include
corporations, partnerships and other unincorporated associations or bodies
of persons;
1.6 the contents table and the descriptive headings to clauses, schedules and
paragraphs (and summaries in parentheses of the scope of any statutory
provisions in the Tax Warranties) are inserted for convenience only, have
no legal effect and shall be ignored in the interpretation of this
Agreement;
1.7 the words and phrases "other", "including" and "in particular" shall not
limit the generality of any preceding words or be construed as being
limited to the same class as the preceding words where a wider construction
is possible;
1.8 a person is connected with another person if he is so connected within the
meaning of section 839 ICTA 1988;
1.9
(i) "enactment" means any statute or statutory provision (whether of the
United Kingdom or elsewhere), subordinate legislation (as defined by
section 21(1) Interpretation Act 1978) and any other subordinate
legislation made under any such statute or statutory provision;
(ii) a reference to any enactment shall be construed as including a
reference to:
(A) any enactment which that enactment has directly or indirectly
replaced (whether with or without modification), and
(B) that enactment as re-enacted, replaced or modified from time to
time, whether before, on or after the date hereof, provided that
this sub-clause 1.9(ii) shall not increase the liability of any
party above that which appertains at the date hereof;
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1.10
(a) "Group" means, in relation to a body corporate such body corporate and
all of its subsidiaries and holding companies for the time being;
(b) "Group Company" means a member of a Group;
(c) "subsidiary" and "holding company" have meaning given to them by
section 736 and 736A Companies ▇▇▇ ▇▇▇▇.
1.11 Where any amount is required to be converted to US Dollars for the purposes
of this Agreement such conversion shall be calculated at the rate of
exchange (sterling to dollars) quoted in the Wall Street Journal on the day
following the Completion Date.
2 SALE OF THE ASSETS
2.1 The Vendor shall sell and the Purchaser shall (relying as the Vendor hereby
acknowledges, on the representations, warranties, undertakings and
indemnities of the Vendor referred to or contained in this Agreement)
purchase from the Vendor the Assets and assume the Assumed Liabilities from
the Completion Date.
2.2 The Excluded Assets and Excluded Liabilities shall be excluded from the
sale and purchase referred to in clause 2.1.
2.3 The Vendor shall sell and transfer the Assets free from all Security
Interests and with full title guarantee.
2.4 Title to, beneficial ownership of, and any risk attaching to, the Assets
shall pass on Completion.
2.5 The Purchaser shall not be obliged to complete the purchase of any of the
Assets unless the Purchase of all the Assets is completed simultaneously.
15
2.6 Save as otherwise expressly provided in this Agreement, the Purchaser shall
have no responsibility for creditors or any other liabilities of the Vendor
in connection with the Business existing at Completion or arising by reason
of anything done or omitted to be done prior to Completion and the Vendor
will indemnify and keep the Purchaser fully and effectively indemnified (on
an after tax basis) from and against all costs, claims, losses or expenses
which the Purchaser may suffer or incur in respect thereof.
2.7 Save as otherwise expressly provided in this Agreement (save in relation to
any such matter which gives rise to a Relevant Breach) the Purchaser shall
indemnify the Vendor and keep the Vendor fully and effectively indemnified
from and against all losses, costs, claims or expenses arising out of or in
connection with the carrying on of the Business and the possession of the
Assets after Completion by the Purchaser.
3 CONSIDERATION
3.1 Subject to adjustment pursuant to clause 5, the aggregate consideration
payable for the Business and the Assets hereby agreed to be sold shall be
(and be satisfied by) the payment by the Purchaser to the Vendor of the
Purchase Price and the assumption by the Purchaser of the Assumed
Liabilities.
3.2 The Purchase Price shall be apportioned between and allocated to the Assets
and the Assumed Liabilities in the manner set out in Schedule 2.
3.3 On Completion, the Purchaser shall pay to the Vendor, on account of the
Purchase Price the Completion Payment.
3.4 Subject to clause 5 on the Completion Accounts Date the sum of $375,000
shall be released from the Retention Sum and paid by the Purchaser to the
Vendor forthwith and the Retention Sum shall be permanently reduced on a $
for $ basis.
3.5 Subject to clause 11 the remainder of the Retention Sum together with the
interest accrued thereon (following any reduction made pursuant to clauses
3.4, 11 or 14) shall on the first anniversary of Completion be released to
the Vendor
16
3.6 Pending payment the Retention Sum shall be held on the terms of this
Agreement by the Purchaser and such Retention Sum shall accrue interest for
the benefit of the Vendor at an annual rate of 6% compounded monthly.
3.7 All payments and releases of the Retention Sum shall be made in the manner
set out in clause 6.1(c).
4 COMPLETION ACCOUNTS
4.1 The Vendor and the Purchaser shall procure that on the Completion Date
there shall be a stocktaking of the Stock (which shall be attended by
representatives of the Vendor and the Purchaser) and the Purchaser shall
procure that, as soon as practicable following the Completion Date and in
any event not later than 60 days after the Completion Date, a draft of the
Completion Accounts ("DRAFT COMPLETION ACCOUNTS") shall be prepared by the
Purchaser in accordance with clause 4.2 and delivered to the Vendor.
4.2 The draft Completion Accounts shall be prepared:
(a) in a format which complies with the requirements of schedule 4 of the
Companies ▇▇▇ ▇▇▇▇; and
(b) on a historical cost basis and on a going concern basis in accordance
with the accounting principles and practices generally accepted in the
United Kingdom (UK GAAP) which are in force at the date hereof,
including all applicable statements of standard accounting practice
and financial reporting standards; and
(c) subject to sub-clauses 4.2(a) and 4.2(b), using the same accounting
principles, policies, bases and practices as were used in the
preparation of the Accounts; and
(d) notwithstanding the provisions of clauses 4.2(a), (b) and (c) in
accordance with the principles and policies set out in schedule 10;
and
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(e) so as to indicate the Net Asset Value, the Assumed Liabilities, the
Warranty Claims Reserve, the Bad Debts Reserve and the apportionments
pursuant to clause 14.1.
4.3 Unless the Vendor notifies the Purchaser in writing within 30 days after
receipt of such draft Completion Accounts that it does not accept that such
draft Completion Accounts comply with this clause 4, the Vendor shall be
deemed to have accepted such draft as complying with this clause 4.
4.4 If within the period of 30 days referred to in clause 4.3 the Vendor shall
notify the Purchaser in writing that it does not accept that the said draft
Completion Accounts comply with this clause 4 then the Vendor and the
Purchaser shall use their respective reasonable endeavours to reach
agreement upon appropriate adjustments to the said draft Completion
Accounts.
4.5 When the Vendor accepts or is deemed to accept that the said draft
Completion Accounts comply with this clause 4, then such draft Completion
Accounts shall be the Completion Accounts for the purposes of this
Agreement and shall be final and binding on the parties.
4.6 If the Vendor and the Purchaser have not resolved any such matter in
dispute within 30 days following the expiry of the period of 30 days
referred to in clause 4.4 or any other matter in dispute pursuant to
clauses 8.8 and 8.1 then either party shall be entitled to refer any matter
in dispute to such firm of independent chartered accountants as the Vendor
and the Purchaser may agree within 14 days of a request by either of them
to the other or, failing such agreement within such time, as the President
for the time being of the Institute of Chartered Accountants in England and
Wales may nominate on the application of the Vendor or the Purchaser
("INDEPENDENT ACCOUNTANTS") for determination on the following basis:
(a) the Independent Accountants shall be instructed to notify the Vendor
and the Purchaser of their determination of any such matter as soon as
possible;
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(b) the Vendor and the Purchaser shall be entitled to make written
submissions to the Independent Accountants and to have sight of and to
comment on any submissions made by the other but subject thereto the
Independent Accountants shall have power to determine the procedure to
be followed in relation to their determination;
(c) in making such submissions the Vendor and the Purchaser shall, where
appropriate, state their respective best estimates of monetary amounts
of the matters referred for determination;
(d) in making their determination the Independent Accountants shall act as
experts and not as arbitrators, their decision as to any matter
referred to them for determination shall in the absence of manifest
error be final and binding in all respects on the Vendors and the
Purchaser (but shall be without prejudice to the Purchaser's right to
claim under the Warranties or otherwise in respect of any matter);
(e) in making their determination the Independent Accountants shall state
what adjustments (if any) are to be made to the said draft Completion
Accounts in order that they shall comply with this clause 4; and
(f) the fees and expenses of the Independent Accountants shall be borne
equally between the parties.
4.7 Following Completion and until the Completion Accounts shall have been
agreed or determined, the Vendor and the Purchaser shall respectively:
(a) give or procure that the Independent Accountants are given access at
all reasonable times to all books and records of the Business which
are in the possession or under the control of the Vendor or the
Purchaser (as the case may be); and
(b) generally provide the Independent Accountants with such other
information and assistance as they may reasonably require (including
access to and assistance at reasonable times from personnel employed
by the Vendor or the Purchaser, as the case may be) in relation to the
review, agreement or determination of the Completion Accounts.
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5 ADJUSTMENT TO THE PURCHASE PRICE
5.1 If the Net Asset Value is less than US$ 2,900,000, the Purchase Price shall
be reduced by an amount equal to the shortfall such shortfall being applied
first against and shall reduce on a $1 for $1 basis the Retention Sum (the
Purchaser being entitled to payment of the same) and, to the extent that
the Retention Sum is insufficient, such amount shall be repaid to the
Purchaser forthwith on the Completion Accounts being agreed or determined.
5.2 Any reduction in the Purchase Price required to be made pursuant to this
clause 5 shall be allocated to those Assets and the Assumed Liabilities to
which such shortfall is attributed in the Completion Accounts.
6 COMPLETION
6.1 Completion shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
P.C. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ on the Completion
Date when all (but not part only unless the parties shall so agree) of the
following business shall be transacted:
(a) the Vendor shall deliver to the Purchaser or make available for
collection by the Purchaser or its authorised representatives at the
Property all of the Assets title to which is capable of passing by
delivery when title to such assets shall pass to the Purchaser;
(b) the Vendor shall deliver into the possession of the Purchaser (or as
it shall direct) the following:
(i) such documents as may be required to give good title to the
Assets and vest title to the Assets in the Purchaser;
(ii) all books of account and other financial records, payroll
records, stock and other records, information relating to
customers and suppliers (including but not limited to a list of
all of the customers of the Business during the last two years,
and a list of unfulfilled orders as at the Completion Date),
relevant computer programs and other books and documents which
relate to the Business;
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(iii) all designs and drawings, plans, instructional and promotional
material, sales publications, advertising materials, other
technical material and sales matter which relate to the Business;
(iv) a list of sales distributors, identifying sales by units and the
territory served during the last twelve months, and copies of all
the current agreements with such distributors;
(v) the PAYE and NIC Records relating to each of the Employees duly
completed and up-to-date;
(vi) the VAT Records;
(vii) all mortgages or charges over the Assets (or any of them) duly
vacated or (if the mortgages or charges also relate to other
property) duly executed release of the Assets from such mortgages
or charges together with letters of non-crystallisation in
relation to such charges;
(viii) a certified copy of the special resolution resolving to change
the name of the Vendor pursuant to clause 12;
(ix) duly executed assignments of the Intellectual Property Rights;
(x) the Opinion;
(c) the cash sums payable under this Agreement by the Purchaser, or as the
case may be the Vendor shall be paid by electronic transfer as
follows:
(i) in the case of any sums payable to the Vendor to the Nominated
Account and payment of the Completion Payment into such account
shall constitute a good discharge to the Purchaser in respect of
it;
21
(ii) in respect of any sums payable to the Purchaser, to an account to
be nominated in writing by notice from the Purchaser to the
Vendor (a copy to be provided to Fleet Bank if applicable);
(iii) in respect of the Retention Sum in accordance with clause 3;
(d) the Purchaser and the Vendor shall enter into the Property Licence.
6.2 If the Vendor shall fail to perform any obligation under this clause 6, the
Purchaser may without prejudice to its rights or remedies under this
Agreement or under the general law:
(a) defer Completion with respect to some or all of the Assets to a date
not more than twenty eight days after the Completion Date (in which
case this sub-clause 6.2(a) shall apply to Completion as so deferred);
or
(b) proceed to Completion so far as practicable (including, at the
Purchaser's option, completion of the purchase of some only of the
Assets); or
(c) determine this Agreement.
6.3 Upon determination pursuant to clause 6.2(c) this Agreement shall (save for
the provisions of clauses 16, 20, 26.1, 29 and 30) be null and void and of
no further effect;
7 VALUE ADDED TAX
7.1 All amounts expressed in this Agreement as being payable by any party
hereto are expressed exclusive of any VAT which may be chargeable thereon
and the amount of any VAT shall be payable in addition thereto.
7.2 The parties each consider that article 5 of the Value Added Tax (Special
Provisions) Order 1995 ("ARTICLE 5") applies to the purchase of the
Business and the Assets by the Purchaser so that the purchase is treated as
a transfer of a business (or part of a business) as a going concern and is
treated neither as a supply of goods nor a supply of services.
22
7.3 The parties shall each use all reasonable endeavours to persuade Customs
that Article 5 applies to the sale and purchase of the Business and the
Assets and (without limitation) the Vendor shall:
(a) promptly after execution of this Agreement, submit a written request
to Customs for a ruling that the sale and purchase hereunder
constitutes the sale of a business (or part of a business) as a going
concern within Article 5 and shall provide a copy of such application
to the Purchaser; and
(b) upon receipt of any response from Customs, inform the Purchaser of the
same (and shall provide copies of all relevant correspondence).
7.4 The Vendor shall not charge any VAT to the Purchaser in respect of the sale
and purchase of the Business and the Assets unless Customs shall first have
provided a written ruling to the effect that the Vendor is obliged to
charge VAT to the Purchaser in respect of the sale and purchase hereunder.
If Customs issue such a ruling, then:
(a) the Vendor shall promptly provide a copy of such ruling to the
Purchaser;
(b) (in accordance with the ruling received) the Vendor shall charge VAT
on the whole or (as the case may be) part of the purchase price and
issue to the Purchaser a VAT invoice for such VAT addressed to the
Purchaser; and
(c) (subject to prior receipt of such ruling and such VAT invoice) the
Purchaser shall promptly pay to the Vendor the VAT shown in the VAT
invoice.
7.5 For the avoidance of doubt, any penalty or interest incurred by the Vendor
for late payment of VAT by reason of it having been assumed that sale and
purchase of the Business and the Assets to the Purchaser fell within
Article 5 shall be borne by the Vendor.
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7.6 If the Purchaser shall have paid to the Vendor any amount in respect of a
supposed liability to VAT and Customs shall subsequently determine that the
whole or part of such supposed liability to VAT was not properly chargeable
("OVERPAID VAT"), then the Vendor shall:
(a) promptly notify the Purchaser of Customs' determination; and
(b) repay the Overpaid VAT (together with all interest relating thereto)
to the Purchaser and (if the Purchaser so requires) issue a VAT credit
note to the Purchaser in respect of the Overpaid VAT.
7.7 On Completion, the Vendor shall deliver to the Purchaser the VAT Records
and no application will be made pursuant to section 49(1)(b) VATA 1994 for
the Vendor to retain the VAT Records.
7.8 The Vendor shall (and will procure that each of its relevant associates
(within the meaning of paragraph 3(7) schedule 10 VATA) shall) not on or
after the date of this Agreement make any election pursuant to paragraph 2
schedule 10 VATA in respect of any of the Assets or the Property.
7.9 No application shall be made to transfer the Vendor's VAT registration to
the Purchaser.
8 DEBTORS AND CREDITORS
8.1 The Purchaser will be responsible for and will discharge the Creditors in
full in accordance with their credit terms and will indemnify the Vendor in
full and keep it fully indemnified against any liability if may suffer or
incur as a result of its failure to discharge the same.
8.2 If the Collection Amount is less than the amount of the Debts the Purchaser
shall forthwith notify the Vendor of the amount of the shortfall and the
Vendor shall pay to the Purchaser the difference between the Collection
Amount and the amount of the Debts. Any such payment shall be made on the
day falling after the Final Date. Provided always that if on that date the
Collection Amount or if the amount of the Debts has not been agreed or
deemed to be agreed between the Vendor and the Purchaser or determined by
the Independent Accountants then the Vendor on such day shall:
24
(a) pay to the Purchaser on account of such payment an amount equal to the
portion thereof which is not in dispute;
(b) pay to the Purchaser's Solicitors for crediting to a deposit account,
in the names of the Vendor's Solicitors and the Purchaser's Solicitors
("the Joint Account") the amount notified by the Purchaser to the
Vendor as the amount of the said shortfall less the amount paid by the
Vendor to the Purchaser pursuant to sub-paragraph (a) above.
On agreement and/or determination of the aggregate amount realised by the
Debts during the Collection Period pursuant to the provisions of this
clause 8.2 there shall be released to the Purchaser out of the principal
sum standing to the credit of the Joint Account an amount equal to the
amount by which the aggregate amount realised by the Debts during the
Collection Period falls short of the Debts less the amount of any payment
pursuant to sub-paragraph (a) above together with the interest accrued on
such proportion of the principal sum and the balance of the principal sum
standing to the credit of the Joint Account shall be released to the Vendor
together with the interest accrued thereon.
8.3 If the Collection Amount is more than the amount of the Debts the Purchaser
shall pay to the Vendor the difference between the amount calculated as
aforesaid and the amount of the Debts.
8.4 In this clause 8:
(a) "Collection Amount" means the aggregate of the amounts received by the
Purchaser in respect of the Debts during the Collection Period less
the proper and reasonable legal costs incurred by the Purchaser in
connection with any legal proceedings to collect any such Debt and for
seeking advice on whether legal proceedings will have a reasonable
chance of success provided that all cheques and other bills received
but uncleared at the close of business on the Final Date shall be
included at their full face value unless they are dishonoured on first
presentation and all cheques and other bills received before the close
of business on the Final Date but dated after that date shall not be
included;
25
(b) "Collection Period" means the period beginning on the Completion Date
and ending on the Final Date;
(c) "Final Date" means the date falling 100 days after the Completion
Date.
8.5 The Purchaser undertakes that during the Collection Period:-
(a) it will use all reasonable endeavours to collect the Debts (but so
that it will not be obliged to take any legal proceedings with a view
to such collection unless it has received legal advice that such
proceedings have a reasonable chance of success); and
(b) it will not assign dispose of or otherwise charge or hypothecate any
of the Debts otherwise than by way of floating charge.
8.6 In the event that the Collection Amount is less than the amount of the
Debts the Purchaser shall forthwith upon the making of the payments
required to be made in accordance with the provisions of clause 8.2:
(a) assign free of all liens charges and encumbrances (save those existing
at Completion) the Debts outstanding at the close of business on the
Final Date to the Vendor upon the terms that the Vendor shall have no
claim against the Purchaser (other than in respect of the obligations
of the Purchaser under this clause 8.6) in the event that any of the
Debts so assigned shall be bad in whole or in part or otherwise
uncollectable;
(b) promptly execute and deliver to the Vendor individual assignments
(prepared by the Vendor) of such Debts in such form and at such times
as the Vendor may from time to time request and at the Vendor's
expense; (c) receive as trustee for and account at monthly intervals
to the Vendor in full in respect of any of the Debts assigned to the
Vendor pursuant to sub-paragraph (a) of this clause 8.6.
26
8.7 If the Vendor shall not request the Purchaser pursuant to sub-paragraph (b)
of clause 8.6 to deliver an assignment of any of the Debts the Vendor shall
be entitled (subject to indemnifying the Purchaser to the Purchaser's
reasonable satisfaction against all costs and expenses which the Purchaser
may thereby incur) to continue or to bring legal proceedings in the
Purchaser's name to recover such Debt.
8.8 Any dispute or difference which may arise between the parties in relation
to the provisions of this clause 8 shall be determined mutatis mutandis by
the Independent Accountants in accordance with clauses 4.6 and 4.7.
8.9 Subject to clause 8.10 below the Purchaser will be responsible for and will
discharge the Warranty Claims in accordance with the terms of the Contracts
and will indemnify the Vendor in full and keep it fully indemnified against
any liability it may suffer or incur as a result of its failure to
discharge the same.
8.10 The Vendor will indemnify the Purchaser in full and keep it fully
indemnified to the extent that the Purchaser's liability in respect of the
Warranty Claims exceeds the Warranty Claims Reserve and will pay to the
Purchaser on demand an amount equal to such excess. The liability of the
Vendor in respect of claims under this clause shall not exceed US$ 500,000
minus the Warranty Claims Reserve and the Purchaser shall in the event of
any claim made under this clause provide full details thereof to the Vendor
and in the event that the amount of the claim is not agreed then the matter
shall be referred to the Independent Accountant for determination mutatis
mutandis in accordance with clause 4.6 and 4.7.
8.11 The Vendor will, indemnify the Purchaser in full and keep it fully
indemnified against all costs, losses, expenses, damages, charges,
liabilities, penalties, licence fees whatsoever (including, without
limitation any legal and other professional expenses) which the Purchaser
may incur arising out of:
27
(i) any claim made in the period up to and including 1st October 1999 by
DEK or any person claiming rights under them that the Vendor or the
Purchaser in the manufacture or modification of the Products has
infringed any Intellectual Property Rights of DEK or such person
comprised in DEK's patents numbered UK#EP0606928 and US#5,157,438;
(ii) any claim made in the period up to and including 1st October 1999 by
the owner or any person claiming rights under such owner of any Third
Party Software used in the computer systems of the Business that the
Vendor or the Purchaser has infringed any Intellectual Property
comprised in such Third Party Software,
the provisions of Schedule 9 paragraph 9 shall apply to this clause 8.11 as
if set out herein.
8.12 The Purchaser will use its reasonable endeavours, for the period referred
to in clause 8.11(i) above, to modify the design of the Products so that
they do not infringe the patents referred to in clause 8.11(i) above,
provided however, that this clause 8.11 shall in no way limit or affect the
liability of the Vendor to indemnify the Purchaser pursuant to clause 8.11
above.
8.13 The Vendor agrees to indemnify and keep indemnified the Purchaser against
all liabilities, actions, proceedings, costs, claims, damages and expenses
which the Purchaser may suffer or incur by reason of the operation of the
SM Tech Executive Pension Scheme (the "SM SCHEME") operated by Scottish
Equitable for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ but this indemnity will not extend to:
(a) employer contributions to the SM Scheme of up to 10% per annum of the
annual basic salary of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ for any period after
Completion; or
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(b) any liability, action, proceedings, costs, claims, damages, or
expenses resulting from any act or omission of the Purchaser or the
Trustees of the SM Scheme after Completion.
9 CONTRACTS AND FINANCE AGREEMENTS
9.1 The Contracts shall be dealt with as follows:
(a) all Contracts which can be assigned by the Vendor without the consent
of any third party shall be assigned to the Purchaser with effect from
the Completion Date;
(b) as from the Completion Date the Vendor shall hold the benefit of such
of the Contracts which cannot be assigned without the consent of a
third party upon trust for the Purchaser and all profit and losses
arising from them shall belong to and be borne by the Purchaser and
the Vendor will at the Purchaser's request and cost give to the
Purchaser all reasonable assistance to enable the Purchaser to enforce
the Contracts;
(c) the Vendor and the Purchaser shall each use their reasonable
endeavours to obtain all necessary consents for the assignment or
novation of each of the Contracts; and
(d) with effect from the Completion Date and subject to the Vendor
performing its obligations under this clause 9 the Purchaser shall
assume the obligations and carry out, complete and discharge all of
the obligations of the Vendor under the Contracts and shall indemnify
the Vendor from all costs, proceedings, actions, losses, charges,
interest, claims and demands arising by reason of the Purchaser's
failure to observe or perform the terms of any of the Contracts after
the Completion Date.
10 EMPLOYEES
10.1 The parties hereby acknowledge that the transaction effected by this
Agreement is a transfer of an undertaking to which the Regulations apply.
29
10.2 The contract of employment of each of the Employees shall be transferred to
the Purchaser in accordance with the Regulations with effect from the
Completion Date.
10.3 The Vendor shall be liable for and shall indemnify the Purchaser in respect
of all or any redundancy payments unfair dismissal or other compensation
(whether statutory or contractual) salaries wages commissions remuneration
Tax national insurance contributions damages costs claims deductions or
expenses which may be incurred by the Purchaser as a result of:
(a) anything done before the Completion Date by or in relation to the
Vendor in respect of the Employees or any of their contracts of
employment or being deemed to have been done by or in relation to the
Purchaser by virtue of the Regulations;
(b) any persons other than the Employees being employees of the Vendor
engaged in the Business in such a way that their employment transfers
to the Purchaser pursuant to or by virtue of the Regulations;
(c) the particulars of employment of the Employees set out in Schedule 5
being in any respect inaccurate or incorrect.
10.4 In the event that wages salaries or commissions are due to any of the
Employees after the Completion Date in respect of the period to and
including the Completion Date the same shall be paid by the Purchaser which
shall forthwith on demand be indemnified in respect thereof by the Vendor
except to the extent that such sums are provided for in the Completion
Accounts.
10.5 The Purchaser shall indemnify the Vendor against all claims, compensation,
awards, damages, fines, judgments, expenses and liability whatsoever
incurred by the Vendor in connection with the termination of employment of
any of the Employees after the Completion Date which is incurred by the
Vendor by virtue of such termination save to the extent that any such
claims, compensation, awards, damages, fines, judgments, expenses and
liability arise directly from any failure by the Vendor to comply with its
obligations under regulation 10 of the Regulations.
30
10.6 For the period of 3 months following Completion the parties agree to allow
reasonable access to such of their respective employees as the parties
shall agree (acting reasonably) in order to facilitate the preparation of
the Vendor's accounts and the consolidation accounts of the Guarantor's
Group and any accounts of the Business (as the case may be) for the period
ending 31st December 1998. Each party shall pay a fair and reasonable
proportion of all expenses (including payroll, national insurance and PAYE)
incurred by the others in complying with this clause 10.6.
11 REPRESENTATIONS AND WARRANTIES
11.1 In consideration of the Purchaser entering into this Agreement the Vendor
hereby warrants to the Purchaser:
(a) (subject to clause 11.2) in the terms set out in Schedule 6; and
(b) that any statement in Schedule 6 which is qualified as being made "so
far as the Vendor is aware" or "to the best of the knowledge,
information and belief of the Vendor" or any similar expression has
been so qualified after due diligent and careful enquiries by the
Vendor (including enquiry of the executive directors of the Vendor (to
the extent that such persons are employed or engaged in connection
with the Business)).
11.2
(a) The Warranties are qualified to the extent, but only to the extent, of
those matters fully and fairly disclosed in this Agreement or the
Disclosure Letter and for this purpose "fully and fairly disclosed"
means disclosed in such detail as to enable a reasonable purchaser to
make an informed assessment of the size and nature of the matter
concerned;
31
(b) Each of the paragraphs in Schedule 6:
(i) shall be construed as a separate and independent representation
and/or warranty; and
(ii) save as expressly otherwise provided in this Agreement, shall not
be limited by reference to any other paragraph in Schedule 6 or
by any other provision of this Agreement;
and the Purchaser shall have a separate claim and right of action in
respect of every Relevant Breach of each such representation or warranty.
11.3 The rights and remedies conferred on the Purchaser under this Agreement are
cumulative and are additional to, and not exclusive of, any rights or
remedies provided by law or otherwise available at any time to the
Purchaser in respect of any Relevant Breach (including but not limited to
the right to damages for any loss or additional loss suffered by the
Purchaser). All claims by the Purchaser for damages or compensation in
respect of any Relevant Breach shall be subject to the provisions for the
protection of the Vendor in Schedule 9.
11.4
(a) The Purchaser's right or ability to claim damages, compensation or
other relief in respect of any Relevant Breach shall not be affected
or limited, and the amount recoverable shall not be reduced, on the
grounds that the Purchaser may before Completion have had constructive
or implied knowledge of the matter giving rise to the claim; and
(b) Without prejudice to the generality of sub-clause 11.4(a) the rights
and remedies of the Purchaser shall not be affected or limited in any
way by any investigation made by or on behalf of the Purchaser into
the Business or any report on the Business prepared at the instance of
or made available to the Purchaser prior to Completion.
32
11.5 The Vendor undertakes to indemnify the Purchaser against any costs
(including legal costs on an indemnity basis), expenses and other
liabilities (together with any VAT thereon which is not recoverable by the
Purchaser) which the Purchaser may reasonably incur, either before or after
the commencement of any action, in connection with:
(a) the settlement of any claim by the Purchaser that there has been a
Relevant Breach; or
(b) any legal proceedings in which the Purchaser claims that there has
been a Relevant Breach and in which judgement is given for the
Purchaser; or
(c) the enforcement of any such settlement or judgement.
11.6 The Warranties shall not in any respect be extinguished or affected by
Completion.
11.7 In respect of any relevant claim (as defined in Schedule 9) made by the
Purchaser, the Purchaser shall be entitled to make a Set Off Claim in
respect of any Set Off Amount by serving a Set Off Notice on the Vendor,
the Guarantor, the Vendor's Solicitors and the Purchaser's Solicitors
specifying the Set Off Amount at the same time as it gives notice of the
relevant claim pursuant to Schedule 9 on or before 12 months from
Completion.
11.8 If the Purchaser serves a Set Off Notice in accordance with clause 11.7 the
Set Off Amount specified in the Set Off Notice shall be retained by the
Purchaser out of the Retention Sum until the relevant claim to which that
Set Off Notice relates has been settled, agreed or adjudicated and the
amount of the Retention Sum then payable to the Vendor in accordance with
clause 3.5 shall be reduced pending the settlement agreement or
adjudication of the relevant claim accordingly on a $1 for $1 basis.
11.9 The Vendor may, within 60 days following receipt of a Set Off Notice
require by notice in writing to the Purchaser, that the Purchaser shall
procure that the Purchaser's Solicitors instruct a counsel of not less than
ten years' call to determine by way of a written opinion as at the date of
service of the Set Off Notice:
(a) whether a relevant claim has been made in accordance with this
Agreement;
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(b) whether the relevant claim giving rise to or comprised in the Set Off
Claim is one in respect of which a prima facie case can be
established; and
(c) what part of the Set Off Amount properly equals the value of the
relevant claim,
within 15 business days after receipt by him of instructions from the
Purchaser's Solicitors. The costs of such counsel's determination shall be
borne as to half by the Purchaser and half by the Vendor.
11.10 The Purchaser shall be entitled to retain from the Retention Sum (and
forthwith upon such agreement or adjudication) any Set Off Amount (and the
Retention Sum shall be permanently reduced accordingly) to the extent
that:
(a) the relevant claim to which such Set Off Amount relates is agreed in
writing between the parties to be due to the Purchaser; or
(b) final judgement (which for the purposes of this clause 11.10 shall
mean a judgement which is not subject to appeal or has not been
appealed within the time permitted) is given in favour of the
Purchaser in respect of the relevant claim to which such Set Off
Amount relates.
11.11 If it is determined in accordance with clause 11.9 that either a relevant
claim has not been made in accordance with this Agreement or is not one in
respect of which a prima facie case can be established or that the Set Off
Amount exceeds the value of the relevant claim, then:
(a) if such determination occurs before the first anniversary of
Completion, the Purchaser shall no longer be entitled to retain in
the Retention Sum the Set Off Amount in respect of that Set Off
Claim (but without prejudice to its right to have such sum retained
in respect of any other Set Off Claim) or
(b) if such determination occurs on or after the first anniversary of
Completion, the Set Off Amount which relates to that Set Off Claim,
shall be paid forthwith to the Vendor together with interest accrued
on such sum since the first anniversary of Completion;
34
and the Vendor and Purchaser shall forthwith give instructions to this
effect to their respective Solicitors and in so doing shall deliver to them
a copy of counsel's opinion.
11.12 In the event that:
(a) a relevant claim being the subject of a Set Off Claim or any part of
that Claim is agreed in writing between the parties not to be due to
the Purchaser; or
(b) legal proceedings in respect of any relevant claim being the subject
of a Set Off Claim (which is not agreed in writing between the
parties) are not issued and served on the Vendor before 1st April 2001
or, if earlier, within six months of notice thereof first being given
to the Vendor; or
(c) final judgement (which for the purposes of this clause 11.12 shall
mean a judgement which is not subject to appeal or has not been
appealed within the time permitted) is given in favour of the Vendor
in respect of that claim
then:
(A) if such event occurs before the first anniversary of Completion,
the Purchaser shall no longer be entitled to retain in the
Retention Sum that part of the Set Off Amount which relates to
that Set Off Claim which is referable to such event (but without
prejudice to its right to have such sum retained in respect of
any other Set Off Claim); and
(B) if such event occurs on or after the first anniversary of
Completion, that part of the Set-Off Amount which relates to that
Set Off Claim which is referable to such event, shall be paid
forthwith to the Vendor from the Retention Sum together with
interest accrued on such sum since the first anniversary of
Completion;
35
and the Vendor and the Purchaser shall forthwith give instructions to
this effect to their respective solicitors.
11.13 The parties acknowledge that the purpose of this clause 11 is to determine
the basis on which funds are to be held in and/or released from the
Retention Sum and for the avoidance of doubt any retention or payment made
or determination given in accordance with this clause 11 (other than
clauses 11.10(a), 11.10(b) 11.12(a) or 11.12(c)) shall be without
prejudice to the rights and remedies of the parties in respect of the
claim or claims in relation to which any retention or payment is made or
determination given.
12 NAMES
12.1 The Vendor shall at Completion procure:
(a) that a resolution be passed changing its name to a name which does
not include the Business Names or any other name likely to cause
confusion therewith or which is phonetically similar and that such
resolution shall forthwith be submitted to the Registrar of
Companies together with the appropriate fee; and
(b) that the Business Names or any similar phrase shall no longer be
used by the Vendor as a corporate, business or trading name.
13 RESTRICTIVE COVENANTS
13.1 Subject to the provisions of this Agreement and the OEM Supply Agreement
the Guarantor hereby undertakes with the Purchaser on behalf of itself and
each member of its Group that without the prior consent in writing of the
Purchaser (such consent not to be unreasonably withheld) it will not and
will procure that each member of its Group does not directly or
indirectly, whether by itself or their respective employees or agents and
whether on its own behalf or on behalf of any other person, firm or
company or otherwise howsoever, for the period specified in clause 13.2:
36
(a) carry on, be employed or otherwise engaged, concerned or interested
in any capacity (whether for reward or otherwise) in, provide any
technical, commercial or professional advice to, or in any way
assist any business which is or is about to be engaged in the
manufacture or production of the Restricted Products or any of them
or the supply of the Restricted Services or any of them except for
field service, technical support and supply of spare parts in the
Prohibited Area in competition with the Business;
(b) solicit or entice away or endeavour to solicit or entice away from
the Business any person employed or otherwise engaged in connection
with the Business on the Completion Date, whether or not that person
would commit any breach of his contract of employment by reason of
his leaving the service of the Purchaser following Completion.
13.2 The restrictive covenants contained in clause 13.1 shall apply to the
Vendor the Guarantor and any member of the Guarantor's Group until the
earliest of:
(a) the second anniversary of the Completion Date;
(b) such date as the Purchaser may deliver notice to the Guarantor
terminating the OEM Supply Agreement or shall fail to materially
comply with its material obligations thereunder; and
(c) (in respect of a particular Restricted Product) the Purchaser
ceasing to manufacture the relevant Restricted Product which shall
thereon cease to be a Restricted Product for the purposes of this
clause 13.
13.3 The Vendor hereby undertakes with the Purchaser that it will not at any
time after Completion directly or indirectly, whether by itself, its
employees or agents or otherwise howsoever:
37
(a) engage in any trade or business or be associated with any person
firm or company engaged in any trade or business using the Business
Names or any trade name used in the Business prior to Completion or
any name incorporating the Business Names or such trade name or any
similar name or names or any colourable imitation thereof;
(b) in the course of carrying on any trade or business, claim, represent
or otherwise indicate any present association with the Business or,
for the purpose of obtaining or retaining any business or custom,
claim, represent or otherwise indicate any past association with the
Business;
(c) without the consent of the Purchaser use, whether on its own behalf
or on behalf of any third party, or divulge to any third party, any
of the Confidential Information.
13.4 Subject to clause 13.5 the Vendor and Guarantor undertake with the
Purchaser that, if the Vendor, the Guarantor or any other Group Company
shall have obtained any of the Confidential Information from any third
party under an agreement including any restriction on disclosure known to
it, neither the Vendor, the Guarantor or any other Group Company will at
any time without the consent of the Purchaser infringe that restriction.
13.5 The restrictions in sub-clause 13.3(c) shall not apply:
(a) in respect of any of the Confidential Information which is in or
becomes part of the public domain, other than through a breach of
the obligations of confidentiality set out in this Agreement; or
(b) to the extent that the Vendor, the Guarantor or any member of the
Guarantor's Group is required to disclose Confidential Information
by any applicable law, governmental order, decree, regulation,
licence or rule or pursuant to the regulations of any securities
exchange or regulatory or governmental body to which it is subject.
38
13.6 The Vendor and the Guarantor (on behalf of itself and each member of the
Guarantor's Group) agree with the Purchaser that the restrictive covenants
in clauses 13.1 to 13.4 inclusive are reasonable and necessary for the
protection of the value of the Business and the Assets and that, having
regard to that fact, those covenants do not work harshly on them.
13.7 The Vendor and the Guarantor (on behalf of itself and each member of the
Guarantor's Group) hereby undertake to the Purchaser that they will at the
request and cost of the Purchaser enter into a direct agreement or
undertaking with any member of the Purchaser's Group carrying on the
Business from time to time whereby they will accept restrictions and
provisions corresponding to the restrictions and provisions contained in
clauses 13.1 to 13.6 inclusive (or such of them as may be appropriate in
the circumstances) in relation to such products and services and such area
and for such period as such company may reasonably require for the
protection of its legitimate interests.
13.8 The Vendor and Guarantor acknowledge and agree that in addition to all
other remedies the Purchaser shall be entitled to seek injunctive or other
interim or equitable relief, including damages (or their equivalent in any
jurisdiction), which may be appropriate in the event of any breach or
anticipatory breach of this clause
14 APPORTIONMENTS
14.1 All outgoings relating to or payable in respect of the Business, the
Property or any of the other Assets up to and including the Completion
Date shall be borne by the Vendor and as from the Completion Date shall be
borne by the Purchaser and all payments receivable in respect of the
Business, the Property or any of the other Assets up to and including the
Completion Date shall belong to and be payable to the Vendor and as from
the Completion Date shall belong to and be payable to the Purchaser. Such
outgoings and payments receivable shall if necessary be apportioned
accordingly and shall be evidenced in the Completion Accounts.
39
14.2 Payment of any amount apportioned pursuant to clause 14.1 shall be made
within fourteen days after its agreement or determination in accordance
with the provisions of clause 4 and shall form part of the calculation of
Net Asset Value for the purposes of clause 5.
15 CAPITAL ALLOWANCES
15.1 The Vendor will on demand by the Purchaser sign and submit to the Inland
Revenue any claims or elections which the Purchaser reasonably requires in
order to enable the Purchaser to claim capital allowances in respect of
the Purchaser's acquisition of the Assets including (without limitation):
(a) any elections in respect of Assets which are fixtures for the
purposes of Capital Allowances ▇▇▇ ▇▇▇▇; and/or
(b) any elections in respect of the apportionment of the purchase price
payable under this Agreement.
16 GUARANTEE
16.1 In consideration of the Purchaser entering into this Agreement and the sum
of (Pound Sign) 1 (receipt of which is hereby acknowledged) the Guarantor
unconditionally guarantees to the Purchaser as principal obligor full,
prompt and complete performance by the Vendor of all its obligations and
covenants under this Agreement (as varied, extended or renewed from time
to time), including without limitation the due and punctual payment of all
sums payable now or in the future to the Purchaser by the Vendor and the
performance of all covenants under this Agreement when and as the same
shall become due for payment or performance (as the case may be).
Accordingly, the Guarantor undertakes with the Purchaser that if and each
time that the Vendor shall be in default in the payment of any sum
whatsoever or the performance of any obligations under this Agreement or
in breach of any of the Warranties the Guarantor will on demand make good
the default and pay all sums which may be payable and do all things
required as if the Guarantor instead of the Vendor were expressed to be
the primary obligor warrantor or covenantor, together with interest
thereon at the rate of 1% per annum above the base rate of Barclays Bank
Plc for the time being in force from the date on which such sums become
payable by the Vendor hereunder until payment of such sums in full.
40
16.2 This guarantee is a continuing guarantee and shall remain in force until
all obligations and covenants of the Vendor under this Agreement have been
discharged and performed in full.
16.3 The obligations of the Guarantor hereunder shall not be affected by any
act, omission, matter or thing which, but for this clause 16.3, might
operate to release or otherwise exonerate the Guarantor from its
obligations warranties or covenants hereunder or affect such obligations
or covenants including but not limited to:
(a) any time or indulgence granted to or composition with the Vendor;
(b) the taking, variation, compromise, renewal or release of or refusal
or neglect to perfect or enforce any right or remedies against the
Vendor;
(c) any legal limitation, disability, incapacity or other circumstances
relating to the Vendor or any other person or any amendment to or
variation of the terms of this Agreement or any other document or
security; or
(d) any irregularity, unenforceability or invalidity of any obligations
of the Vendor under this Agreement with the intent that the
Guarantor's obligations under this guarantee shall remain in full
force and this guarantee shall be construed accordingly as if there
were no such irregularity, unenforceability or invalidity.
16.4 The Guarantor waives any right it may have of first requiring the
Purchaser to proceed against or enforce any guarantee or security of or
claim payment from the Vendor.
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17 CONTINUING EFFECT OF THIS AGREEMENT
17.1 No restriction in this Agreement or in any other agreement or arrangement
of which it forms part which is registrable under the Restrictive Trade
Practices Act 1976 or 1977 ("the Acts") shall come into effect until the
day after particulars of this Agreement and any of the other agreement or
arrangement of which it forms part have been furnished to the Director
General of Fair Trading in accordance with the Acts, unless this Agreement
and any other agreement or arrangement of which it forms part falls within
any of the classes of non-notifiable agreements established by statutory
instrument under the Acts.
17.2 Subject to clause 17.1 all of the provisions of this Agreement shall so
far as they are capable of being performed or observed continue in full
force and effect notwithstanding Completion except in respect of those
matters then already performed and Completion shall not constitute a
waiver of any of the Purchaser's rights in relation to this Agreement.
18 ANNOUNCEMENTS
18.1 No announcements shall be made by or on behalf of any of the parties
hereto and relating to the sale and purchase hereunder without the prior
written approval of the other parties whose consent shall not unreasonably
be withheld. For the avoidance of doubt it shall be unreasonable for any
party to withhold its consent to any announcement where such announcement
is required by law or the rules of a stock exchange.
19 RELEASES, WAIVERS ETC., BY THE PURCHASER
19.1 The Purchaser may, in its discretion, in whole or in part release,
compound or compromise, or waive its rights or grant time or indulgence in
respect of, any liability to it under this Agreement.
19.2 Subject to clause 19.1, neither the single or partial exercise or
temporary or partial waiver by the Purchaser of any right, nor the failure
by the Purchaser to exercise in whole or in part any right or to insist on
the strict performance of any provision of this Agreement, nor the
discontinuance, abandonment or adverse determination of any proceedings
taken by the Purchaser to enforce any right or any such provision shall
(except for the period or to the extent covered by any such temporary or
partial waiver) operate as a waiver of, or preclude any exercise or
enforcement or (as the case may be) further or other exercise or
enforcement by the Purchaser of, that or any other right or provision.
42
19.3 All references in clause 19.2 to:
(a) any right shall include any power, right or remedy conferred by this
Agreement on, or provided by law or otherwise available to, the
Purchaser; and
(b) any failure to do something shall include any delay in doing it.
19.4 The giving by the Purchaser of any consent to any act which by the terms
of this Agreement requires such consent shall not prejudice the right of
the Purchaser to withhold or give consent to the doing of any similar act.
20 NOTICES
20.1 Except as otherwise provided in this Agreement, every notice under this
Agreement shall be in writing and shall be deemed to be duly given if it
(or the envelope containing it) identifies the party to whom it is
intended to be given as the addressee and:
(a) it is delivered by being handed personally to the addressee (or,
where the addressee is a corporation, any one of its directors or
its secretary); or
(b) it is delivered by being left in a letter box or other appropriate
place for the receipt of letters at the addressee's authorised
address; or
(c) the envelope containing the notice is properly addressed to the
addressee at his authorised address and duly posted by the recorded
delivery service (or by airmail registered post if overseas) or the
notice is duly transmitted to that address by facsimile
transmission;
43
and, in proving the giving or service of such notice, it shall be
conclusive evidence to prove that the notice was duly given within
the meaning of this clause 20.1.
20.2 A notice sent by post (or the envelope containing it) shall not be deemed
to be duly posted for the purposes of sub-clause 20.1(c) unless it is put
into the post properly stamped or with all postal or other charges in
respect of it otherwise prepaid.
20.3 For the purposes of this clause 20 the authorised address of the Vendor
shall be its registered office for the time being or (in the case of
notices transmitted by facsimile transmission) its facsimile number at
that address and the authorised address of the Purchaser shall be the
address of its registered office for the time being or (in the case of
notices transmitted by facsimile transmission) its facsimile number at
that address.
20.4 Any notice duly given within the meaning of clause 20.1 shall be deemed to
have been both given and received:
(a) if it is delivered in accordance with sub-clause 20.1(a) or 20.1(b),
on such delivery;
(b) if it is duly posted or transmitted in accordance with sub-clause
20.1(c) by any of the methods therein specified, on the second (or,
when sent airmail, fifth) business day after the day of posting or
(in the case of a notice transmitted by facsimile transmission) upon
receipt by the sender of the correct transmission report.
20.5 For the purposes of this clause 20 "notice" shall include any request,
demand, instruction, communication or other document.
21 TIME
21.1 Time shall be of the essence of this Agreement as regards any time, date
or period whether as originally fixed or as altered in any manner provided
herein.
44
22 ENTIRE AGREEMENT
22.1 This Agreement (together with all documents which are required by its
terms to be entered into by the parties or any of them and any terms of
any other documents which this Agreement expressly preserves and all other
documents which are in the agreed form and are entered into by the parties
or any of them in connection with this Agreement) sets out the entire
agreement and understanding between the parties in connection with the
sale and purchase of the Assets and other matters described in it.
23 ALTERATIONS
23.1 No purported alteration of this Agreement shall be effective unless it is
in writing, refers specifically to this Agreement and is duly executed by
each party hereto.
24 SEVERABILITY
24.1 Each provision of this Agreement is severable and distinct from the
others. The parties intend that every such provision shall be and remain
valid and enforceable to the fullest extent permitted by law. If any such
provision is or at any time becomes to any extent invalid, illegal or
unenforceable under any enactment or rule of law, it shall to that extent
be deemed not to form part of this Agreement but (except to that extent in
the case of that provision) it and all other provisions of this Agreement
shall continue in full force and effect and their validity, legality and
enforceability shall not be thereby affected or impaired, provided that
the operation of this clause would not negate the commercial intent and
purpose of the parties under this Agreement.
24.2 If any provision of this Agreement is illegal or unenforceable as a result
of any time period specified herein being in excess of that permitted by a
regulatory authority, that provision shall take effect with the
substitution of a period acceptable to the relevant regulatory authorities
subject to it not negating the commercial intent of the parties under this
Agreement.
45
25 COUNTERPARTS
25.1 This Agreement may be entered into in the form of two or more counterparts
each executed by one or more of the parties but, taken together, executed
by all and, provided that all the parties so enter into the Agreement,
each of the executed counterparts, when duly exchanged or delivered, shall
be deemed to be an original, but, taken together, they shall constitute
one instrument.
26 PAYMENT OF COSTS
26.1 Each of the parties shall be responsible for his or its respective legal
and other costs incurred in relation to the negotiation, preparation and
completion of this Agreement and all ancillary documents.
27 SUCCESSORS AND ASSIGNS
27.1 This Agreement shall be binding on and shall ensure for the benefit of the
successors in title of each party.
27.2 The Agreement may be assigned by the Vendor or the Purchaser with the
prior written consent of the other party (such consent not to be
unreasonably withheld)
28 FURTHER ASSURANCE
28.1 The Vendor shall execute or, so far as it is able, procure that any
necessary third party shall execute all such documents and/or do or, so
far as it is able, procure the doing of such acts and things as the
Purchaser shall after Completion require in order to give effect to this
Agreement and any documents entered into pursuant to it and to give to the
Purchaser the full benefit of all the provisions of this Agreement.
29 APPLICABLE LAW AND SUBMISSION TO JURISDICTION
29.1 This Agreement shall be governed by and construed in accordance with
English law and the parties hereby submit to the non-exclusive
jurisdiction of the High Court of Justice in England for the purpose of
hearing and determining any suit, action or proceedings which may arise
out of or in connection with this Agreement.
46
30 ADDRESS FOR SERVICE
30.1 The Vendor and Guarantor hereby irrevocably authorise and appoint the
Vendor's Solicitors (or such other person or persons, being a firm of
solicitors resident in England, as the Vendor and Guarantor may hereafter
as regards itself by notice in writing to all the other parties hereto
from time to time substitute) to accept on their behalf service of all
legal process arising out of or connected with this Agreement.
30.2 The Purchaser hereby irrevocably authorises and appoints the Company
Secretary of ▇▇▇▇▇▇▇ Group plc, The Adelphi, ▇-▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ (or such other person or persons, being resident in England, as
the Purchaser may hereafter as regards itself by notice in writing to all
the other parties hereto from time to time substitute) to accept on its
behalf service of all legal process arising out of or connected with this
Agreement.
30.3 Service of such process on the person for the time being authorised under
clause 30.1 or 30.2 to accept it on behalf of the relevant appointor shall
be deemed to be service of that process on that appointor.
IN WITNESS whereof this Agreement has been entered into as a Deed the day and
year first above written.
47
SCHEDULE 1
THE PROPERTY
Part I
DESCRIPTION
ADDRESS PRESENT USE
------- -----------
Middle Farm Barns Light/general industrial
Bridport Road
Fordington
Dorchester
Dorset
48
SCHEDULE 2
CONSIDERATION
CONSIDERATION
ASSET ATTRIBUTABLE (POUND SIGN)
----- -------------------------
Moveable Equipment* [ ]
Fixed Equipment* [ ]
The benefit of the Contracts 1
The Patents
The Trade Marks
The Registered Designs 1
Intangible Assets 1
The Stock* [ ]
The Debtors* [ ]
Pre-paid expenses (Clause 14.2)* [ ]
----------------
Cash* [ ]
TOTAL ASSETS* [ ]
LESS
ASSUMED LIABILITIES* [ ]
----------------
Purchase Price* [ ]
*each as determined by the Completion Accounts
49
SCHEDULE 3
THE EQUIPMENT
PART I
THE FIXED EQUIPMENT
Those items marked with a X on the attached fixed asset register.
PART II
THE MOVEABLE EQUIPMENT
Those other items on the attached fixed asset register.
50
SCHEDULE 4
PART A - EXCLUDED ASSETS
1 The Property and any leasehold improvements.
2 Any Tax assets of the Vendor including deferred Tax assets and any claims
for repayment of Tax.
3 The benefit of the agreement between the Vendor (and others) and ▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ dated 27th January 1995.
4 Goodwill
5 Intellectual Property (other than the Patents, Trade Marks and Registered
Designs)
PART B - EXCLUDED LIABILITIES
1 All liabilities of the Vendor pursuant to an agreement between the Vendor
(and others) and ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ dated 27th January 1995.
2 Tax and all Tax creditors.
3 The Financial Indebtedness.
4 Any liability (which liability will include, without limitations, all
losses, costs, claims, expenses and charges including legal and other
professional expenses) in respect of the Property.
5 Any liability of the Vendor pursuant to any oral distribution agreements
entered into by the Vendor.
51
SCHEDULE 5
EMPLOYEES
52
SCHEDULE 6
THE WARRANTIES
ASSETS
1 The Assets are the absolute legal and beneficial property of the Vendor
free from any lease, hire or hire purchase agreement, agreement for
payment on deferred terms, ▇▇▇▇ of sale or retention of title claim,
mortgage, charge, lien or other encumbrance whatsoever and are in the
possession or under the control of the Vendor and situate at the Property
and there are no agreements or arrangements restricting the freedom of the
Vendor to transfer the Assets to the Purchaser or otherwise to use or
dispose of the same as it thinks fit.
2 No Asset has been acquired on terms that property therein does not pass
until full payment is made.
3 The Assets comprise all the rights, assets and benefits whatsoever owned
or used for the purposes of operating the Business.
CONDITION
4 The Assets are in a state of good repair and in good condition (taking
into account their age and fair wear and tear excepted) and are regularly
maintained and in particular (but without limitation) all vehicles are
roadworthy and duly licensed for the purposes for which they are used.
ACCOUNTS
5 The Accounts comply with the accounting requirements of the Companies ▇▇▇
▇▇▇▇ and all other relevant legislation and have been prepared in
accordance with UK generally accepted accounting principles and practices
consistently applied.
6 The Accounts give a true and fair view of the assets liabilities
(including contingent unquantified and disputed liabilities) capital
commitments and state of affairs of the Vendor as at the Accounting Date
and of the profits and losses of the Vendor for the financial period to
which the Accounts relate and in particular (but without limitation) the
Vendor had no liabilities at the Accounting Date which were not included
in the Accounts by way of proper provision or reserve therefor.
53
7 The method of valuing stock and work-in-progress in the Accounts was the
same as that adopted in the balance sheets for the two financial periods
of the Vendor immediately preceding the financial period to which the
Accounts relate and no changes in the basis or policies of accounting have
been made by the Vendor in its audited accounts for the two financial
periods up to the Accounting Date.
8 Any slow moving stock has been appropriately and damaged redundant
obsolete or unsaleable stock has been wholly written off.
9 The profits (or losses) of the Vendor for the two accounting periods ended
on the Accounting Date as shown by the audited accounts relating to such
periods and the trend of profits (or losses) thereby shown have not
(except as therein disclosed) to a material extent been affected by any
unusual or non-recurring income or expenditure or by any other factor
known to the Vendor rendering such profits (or losses) for all or any such
period(s) exceptionally high or low.
STOCK
10 No item comprised in the Stock is damaged, redundant, obsolete or in poor
condition and all items comprised in the Stock are capable of being sold
in the ordinary course of business in accordance with the Vendor's current
price list without rebate or allowance to a Purchaser.
CONTRACTS
11 There are annexed to the Disclosure Letter true complete and up-to-date
copies of the Finance Agreements and there has been no written amendment
or addition thereto whether express or implied not contained in such
documentation.
54
12 None of the Contracts:
12.1 other than the Finance Agreements is unlikely to have been fully performed
in accordance with its terms more than six months after the date on which
it was entered into or undertaken; or
12.2 is incapable of termination by the Vendor in accordance with its terms
without payment of compensation or damages by three months' notice or
less; or
12.3 is likely to result in a loss to the Vendor upon completion of performance
or fulfilment of the Vendor's obligations thereunder; or
12.4 is incapable of being performed or fulfilled by the Vendor in accordance
with its terms without undue or unusual expenditure of money effort or
personnel; or
12.5 involves the supply to or by the Vendor of goods at fixed prices more than
three months from the date of order; or
12.6 involves payment by the Vendor by reference to fluctuations in the index
of retail prices or any other index; or
12.7 involves an aggregate expenditure by the Vendor of more than (Pound Sign)
10,000; or
12.8 is dependant upon the guarantee or security of any person; or
12.9 is incapable of assignment by the Vendor without the consent of any other
party; or
12.10 is with any person connected with (within the meaning of section 839 of
the Income and Corporation Taxes Act 1988) the Vendor or any member of the
Vendor's Group or any director or shareholder of the Vendor; or
12.11 involves any commitment to obtain or supply goods or services exclusively
from or to any person or otherwise restricts the manner or geographical
area in which the Business may be operated; or
55
12.12 involves or is likely to involve the purchase or supply of goods or
services the aggregate cost or sales value of which will represent in
excess of 15% of the turnover for the preceding financial year of the
Business ending on the Accounting Date; or
12.13 is outside the ordinary course of the Business or entered into otherwise
than at arm's length or involves the supply by or to the Vendor of goods
or services other than at full market value.
13 Neither the Vendor nor so far as the Vendor is aware is any third party in
breach of any of its obligations under the Contracts and so far as the
Vendor is aware there are no circumstances likely to give rise to any such
breach;
14 In so far as the Vendor is aware no event or omission has occurred which
would entitle the Vendor or any third party to terminate prematurely any
of the Contracts.
CONDUCT OF BUSINESS
15 The Vendor has carried on the Business exclusively for a period of at
least two years preceding the Completion Date and the Business has at all
times been carried on in the ordinary and normal course.
16 Since the Accounting Date:
16.1 there has been no material adverse change in the financial or trading
position or prospects of the Business;
16.2 the Vendor has not disposed of any assets used in connection with the
Business other than in the normal course of trading;
16.3 the Vendor has not received notice that any customer or supplier of the
Business representing more than 5% of the turnover of the Business has
ceased to trade or materially reduced the level of its trading with the
Business;
16.4 As at the Completion Date there are no amounts owing by the Vendor which
have been due for more than ten weeks;
56
17 The Vendor has obtained all licences permissions and consents required for
the carrying on of the Business and such licences permissions and consents
are in so far as the Vendor is aware in full force and effect and the
Vendor is not in so far as the Vendor is aware in breach of any of their
terms or conditions. There are disclosed in the Disclosure Letter details
of all such licences permissions and consents and in so far as the Vendor
is aware there is no reason why any of the same may be revoked or not
renewed in the ordinary course or should not be capable of being
transferred to or obtained by the Purchaser without the necessity for any
special arrangements.
LITIGATION, OFFENCES AND PROCESSES
18 Apart from normal debt collection by the Vendor there is no litigation,
arbitration, prosecution or other legal proceedings relating to the
Business or the Assets outstanding, or so far as the Vendor is aware,
pending or threatened and the Vendor is not aware of any facts or
circumstances likely to give rise to any such proceedings.
19 No injunction has been granted against the Vendor in connection with the
Business and the Vendor has given no undertaking to any court or to any
third party arising out of any legal proceedings relating to the Business
or the Assets.
20 No order has been made or petition served or resolution passed for the
winding up of the Vendor nor has any person threatened to present such a
petition or convened or threatened to convene a meeting of the Vendor to
consider a resolution to wind up the Vendor or any other resolution; no
distress execution or other process has been levied on any of the Assets
nor has any person except in the course of debt collection threatened any
such distress execution or other process; no person has appointed or
threatened to appoint a receiver of the Vendor the Business or the Assets
or any part thereof; there is no unfulfilled or unsatisfied judgement or
court order outstanding against the Vendor.
57
21 In so far as the Vendor is aware, no investigations or enquiries by or on
behalf of any governmental or other body in respect of the Vendor the
Business or any of the Assets are pending or in existence.
DEFECTIVE PRODUCTS OR SERVICES
22 The Vendor has not manufactured or sold any products or supplied any
services work or materials in connection with the Business which were or
are or will become faulty or defective in a manner not covered by the
product warranty provisions of the Contracts and there are so far as the
Vendor is aware no circumstances existing which may lead to a claim for
defective goods services work or materials or for delays in delivery or
completion of contracts or for deficiencies of design or performance which
are not Warranty Claims for the purposes of the Agreement.
EMPLOYEES
23 All of the Employees are employed by the Vendor in connection with the
Business and no other person other than the Employees is now or has been
within the six months preceding the Completion Date employed or engaged as
an independent contractor in connection with the Business.
24 The details of the Employees contained in Schedule 5 are true complete and
accurate and there are disclosed in the Disclosure Letter full and
accurate particulars of all material terms and conditions of employment of
and all remuneration payable and other benefits provided to the Employees
or their dependants or to which they are entitled (whether now or in the
future and whether legally enforceable or not) including (without
limitation) details of all profit sharing, incentive, bonus, commission or
other similar arrangements which relate to the Employees.
25 There is no outstanding commitment (whether legally binding or not) to
increase the remuneration payable or other benefits provided to any of the
Employees and no negotiations for any such increase are current.
58
26 The employment or engagement of all of the Employees may be terminated by
not more than one month's notice given at any time without liability for
payment of compensation or damages (other than compensation payable by
statute) and none of the Employees has given or received notice
terminating his employment.
27 None of the Employees so far as the Vendor is aware are members of a trade
union or any similar organisation and there is no recognised trade union,
closed shop or collective agreement of any kind relating to the Employees.
28 No dispute is subsisting between the Vendor and any Employee or former
employee of the Vendor and there are no present circumstances of which the
Vendor is aware which are likely to give rise to such a dispute. There
have been no strikes, work-to-rules, go-slows or other industrial action
by any of the Employees or former employees of the Vendor during the
period of two years immediately preceding the Completion Date.
29 The Vendor has in relation to each of the Employees complied with:
29.1 all obligations imposed on it by all statutes regulations and codes of
conduct and practice relevant to the relations between it and the
Employees or any trade union and has maintained current adequate and
suitable records regarding the service and terms and conditions of
employment of each of the Employees;
29.2 all collective agreements recognition agreements and customs and practices
for the time being dealing with such relations or the conditions of
service of the Employees; and
29.3 All relevant orders and awards made under any relevant statute regulation
or code of conduct and practice affecting the conditions of service of the
Employees;
29.4 All recommendations made by the Advisory Conciliation and Arbitration
Service and all awards and declarations made by the Central Arbitration
Committee relating to the Business.
59
BUSINESS NAME
30 The Business is not carried on and has not in the past three years been
carried on under any name other than the Business Name.
31 No person other than the Vendor has any rights in relation to the Business
Name or has required the Vendor to refrain from using such name or
attempted to prevent such use by the Vendor.
INTELLECTUAL PROPERTY
32 The Vendor has disclosed in writing to the Purchaser full details of all
the Intellectual Property and in so far as the Vendor is aware no
Intellectual Property Rights other than the Intellectual Property are
required in order to use all processes employed in the Business and to
manufacture, use and sell the Products or otherwise to carry on the
Business.
33 All the Intellectual Property Rights comprising the Intellectual Property
are legally and beneficially owned by the Vendor and all renewal or other
fees required to be paid to maintain any of the Intellectual Property
Rights that are registered are in full force and effect have been paid.
34 There are not outstanding any contracts under which the Business is
granted by or grants to any third party any Intellectual Property Rights
or licences to manufacture use or sell any product or process and except
in the ordinary course of business there has not been disclosed to any
person other than the Purchaser and the Guarantor any details of the
Intellectual Property or the Intangible Assets.
35 The conduct of the Business does not and is not in so far as the Vendor is
aware likely to infringe the Intellectual Property Rights of any other
person firm or company, nor has the Vendor become liable to make any
payment of any royalty or of any sum in the nature of any royalty to any
such person firm or company in relation to the Business.
36 In so far as the Vendor is aware, there is no unauthorised use or
infringement by any person of any Intellectual Property.
60
37 Save in the ordinary course of business or with its employees the Vendor
has not entered into any confidentiality agreement nor is subject to any
duty which restricts the free use or disclosure of any Confidential
Information.
INSURANCE
38 Copies of all the insurances maintained in respect of the Business are
attached to the Disclosure Letter.
39 Such insurances are in full force and effect and the Vendor has paid all
premiums falling due in respect thereof.
40 In so far as the Vendor is aware there are no circumstances which would or
might lead to any liability under such insurances being avoided by the
insurers or the premiums thereunder being increased.
41 There is no claim outstanding under any policy of insurance of or in
connection with the Business and in so far as the Vendor is aware there
are no circumstances likely to give rise to such a claim.
42 No insurer has refused to insure any of the Assets or has imposed
conditions for such insurance whether by the imposition of increased
premiums or otherwise.
IT SYSTEMS
43 Accurate copies of all the agreements held by the Business to use,
support, maintain and/or develop all components of the Systems (including
all licences, development agreements, software maintenance and support
agreements, hardware maintenance agreements, source code escrow agreements
and disaster recovery agreements) are attached to the Disclosure Letter.
44 The Vendor has not breached any of its obligations under any of the
agreements referred to in paragraph 48, those agreements all remain in
full force and effect as at completion and no notice has been served by
any party to terminate any of those agreements.
61
45 In so far as the Vendor is aware, the use of the Systems by the Business
does not, and the continued use of the Systems by the Business after
Completion will not, infringe the Intellectual Property Rights of any
third party.
46 The Vendor has exclusive control of the operation of the Systems and of
the storage, processing and retrieval of all data stored on the Systems
and any Intellectual Property Rights in such data are owned solely by the
Vendor.
47 All Intellectual Property Rights in the Developed Software are owned by
the Vendor and the Vendor has in its possession an up-to-date, useable and
complete copy of the source code for all Developed Software together with
copies of all programmer's commentaries and technical documentation
relating thereto.
48 The Systems have been properly maintained in accordance with the
maintenance agreements attached to the Disclosure Letter.
49 If any person providing maintenance or support services for the Third
Party Software ceases or is unable to do so by reason of breach or
insolvency on the part of such provider the Vendor has all necessary
rights to obtain the source code to the relevant software and all related
technical and other information free of charge that in so far as the
Vendor is aware are required to maintain and support that software
together with the right to use, or to allow a third party to use, the same
for the purpose of carrying out such maintenance and support.
50 The Vendor has copies of all user manuals, technical documentation and any
other documentation required to operate, maintain and support the Systems
and is fully licensed to use the same for those purposes.
51 There are in place prudent procedures to ensure internal and external
security of the Systems, including procedures for taking and storing
on-site back-up copies of computer programs and data, for preventing
introduction of viruses into the Systems and for the protection of
security of data stored on the Systems.
52 All the Products are, Year 2000 Compliant.
62
53 The Systems have not been used to hold or process data in any manner that
contravenes the Data Protection ▇▇▇ ▇▇▇▇.
BOOKS AND RECORDS
54 All the books of account, ledgers and financial and other records of
whatsoever kind which are to be delivered to the Purchaser in accordance
with this Agreement:
54.1 are held or stored under the exclusive ownership and control of the
Vendor; and
54.2 are fully properly and accurately made up kept and completed in all
respects; and
54.3 record all matters required to be entered therein; and
54.4 do not contain or reflect any material inaccuracies or discrepancies; and
CAPACITY AND OTHER ACTIVITIES
55 Each of the Vendor and the Guarantor has all requisite corporate power to
enter into and perform this Agreement and the transaction and matters
contemplated hereby and has taken all necessary action to authorise the
entry into and performance of this Agreement and the transactions and
matters contemplated hereby.
56 Each of the obligations expressed to be assumed by the Vendor and the
Guarantor under this Agreement and any agreement hereby contemplated
constitutes a valid and binding obligation on each of the Vendor and the
Guarantor respectively.
57 Neither the Vendor nor any member of the Vendor's Group nor any person
connected with the Vendor nor any member of the Vendor's Group (within the
meaning of Section 839 of the Income and Corporation Taxes Act 1988) has
any interest directly or indirectly in any business other than the
Business which is or is likely to be or become competitive with the
Business (except as the holder for investment only of securities dealt in
on a recognised stock exchange and not exceeding 5% in nominal value of
the securities of that class).
63
SPECIAL ARRANGEMENTS
58 In so far as the Vendor is aware the Vendor is not nor has it ever been a
party to or in any way connected with any agreement arrangement or
practice in connection with the Business which in any way infringes or
requires notification or registration under the Restrictive Trade
Practices Acts 1956 to 1977 the Fair Trading ▇▇▇ ▇▇▇▇ the Consumer Credit
▇▇▇ ▇▇▇▇ the Resale Prices ▇▇▇ ▇▇▇▇ the Competition ▇▇▇ ▇▇▇▇ or Articles
85 and 86 of the Treaty of Rome.
59 None of the Assets has been acquired by the Vendor other than by way of an
arm's length transaction for full market value.
60 The Vendor has not given in relation to the Business any guarantee
indemnity warranty or bond or incurred any other similar obligation or
created any security for or in respect of liabilities actual or contingent
of any other person otherwise than in the ordinary course of trading.
61 The Vendor is not nor has it ever been in connection with the Business
party to any joint venture consortium or partnership arrangement or
agreement or a member of any unincorporated association.
TAX
62 The Vendor is a taxable person for VAT purposes and is registered under
schedule 1 VATA 1994 with number586106333.
63 The VAT Records are complete accurate and up-to-date and will be delivered
to the Purchaser on Completion.
64 None of the Assets or the Property is a capital item, the input tax on
which could be subject to adjustment on accordance with the provisions of
Part XV of the Value Added Tax Regulations 1995.
65 None of the Vendor, its relevant associates (within the meaning of
paragraph 3(7) schedule 10 VATA) nor any other person has made or will
make an election under paragraph 2 schedule 10 VATA in respect of any of
the Assets or the Property.
64
66 The PAYE and NIC Records are complete accurate and up-to-date and will be
delivered to the purchaser on Completion.
67 There is no branch agent office or permanent establishment (within the
meaning of the OECD Model Double Taxation Agreement) of the Business
outside the United Kingdom.
PENSIONS
68 Other than the Group Personal Pension Plan of the Vendor operated by Sun
Life ("the GPPP") and the SM Tech Executive Pension Scheme operated by
Scottish Equitable for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("the SM Scheme") there are no
agreements or arrangements, in operation at the date hereof for the
payment of or contribution towards any pensions, allowances, lump sums
or other like benefits on retirement or on death for the benefit of any
of the Employees or for the benefit of dependants of any of the
Employees nor has any proposal to establish any such agreement or
arrangement been announced.
69 Full details of the GPPP have been given to the Purchaser in the form of:
69.1 copies of the current explanatory booklets issued to the Employees who are
members of the GPPP;
69.2 details of the Employees who are members of the GPPP.
70 In relation to the GPPP there are not at the date hereof any contributions
thereto from or in respect of Employees which have fallen due but are
unpaid
71 Each policy issued under the GPPP is approved for the purposes of Chapter
IV of Part XIV of the Taxes Act or is capable of receiving such approval
and the Vendor is not aware of any circumstances which might give the
Inland Revenue reason to withdraw or withhold such approval.
65
72 The Vendor's annual contribution to the SM Scheme for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
does not exceed ten percent of his total annual salary and all emoluments.
PROPERTY
73 The Property is not subject to any covenant, agreement, restriction,
reservation or right which would adversely affect the use and occupation
of the Property by the Purchaser pursuant to the Property Licence;
EFFECT OF SALE OF THE BUSINESS AND THE ASSETS
74 The sale of the Business or the Assets under this Agreement will not
conflict with result in a breach of or constitute a default under the
terms of any of the Contracts and to the best of the Vendor's knowledge
information and belief after Completion (whether by reason of an existing
agreement or arrangement or otherwise) and as a result of the proposed
acquisition of the Business and Assets by the Purchaser:
74.1 the Business will not lose the benefit of any right or privilege which it
presently enjoys;
74.2 none of the Employees will terminate or be entitled to terminate his
employment.
ACCURACY OF INFORMATION
75 All information which has been supplied by the Vendor or any of the
Vendor's advisers to the Purchaser or any of the Purchaser's advisers
concerning the Business or the Assets (including without limitation all
information contained or referred to in this Agreement or the Disclosure
Letter) was when supplied true and accurate in all material respects.
66
SCHEDULE 7
FINANCE AGREEMENTS
VEHICLES
MTHLY START TERMINATION
MAKE REG. CHG DATE TERMS DATE SUPPLIER
/MODEL
----------------------------------------------------------------------------------------
BMW328i N983 SPC 519.00 22/09/95 3 Yrs 21/09/98 Lombard Contract
Hire
Laguna R567 JMA 336.24 31/03/98 3 Yrs 31/03/01 Axus UK
1.8RT
Laguna P527 DJM 415.58 24/10/96 3 Yrs 23/10/99 Axus UK
2.2RT
Mtv Est
Golf P139 DUX 314.20 04/10/96 3 Yrs 04/10/01 Axus
1.8TDI
Megane R569 JMA 327.93 31/03/98 3 Yrs 31/03/01 Axus UK
1.6 Sport
Coupe
TELEPHONE SYSTEM
Norstar Modular 32 + 717.61 17/02/97 7 yrs 17/02/04 British
Various Tele-communications
Plc
FRANKING MACHINE
Postage by phone meter 201.00 15/08/98 5 Yrs 15/08/98 Pitney ▇▇▇▇▇
mailing base Finance plc
5kg scale
67
SCHEDULE 8
[Not used]
68
SCHEDULE 9
PROVISIONS FOR THE PROTECTION OF THE VENDOR
1 No claim under or in respect of the Warranties and/or clause 11 hereof (a
"RELEVANT CLAIM") may be made unless written notice detailing a ground for
liability thereunder and providing details of the claim (so far as
possible having regard to the information available to the Purchaser)
shall have been given by the Purchaser to the Vendor before 1st October
2000.
2 Any relevant claim which is validly made within the required period
aforesaid shall (unless previously settled or withdrawn) be deemed to have
been waived or withdrawn in the event that legal proceedings in respect
thereof are not issued and served on the Vendor before 1st April 2001 or,
if earlier, within six months of notice thereof first being given to the
Vendor under paragraph 1 above.
3 Time shall be of the essence for the purposes of the provisions of
paragraphs 1 and 2 of this Schedule.
4 No relevant claim may be made and the Vendor shall not be liable in
respect thereof unless the actual amount payable under any individual
claim exceeds $15,000 and in any event unless and until the aggregate
cumulative liability of the Vendor to make actual payments in respect of
all relevant claims exceeds $225,000 in which case the Vendor shall be
liable for the whole amount of such claim or claims and not just the
excess.
5 The aggregate liability of the Vendor under or in respect of all relevant
claims shall not exceed an amount equal to $14,800,000 less such sums as
the Purchase Price may be reduced pursuant to Clause 5.1.
6 No relevant claim may be made:
6.1 if it would not have arisen but for some voluntary act or omission carried
out after Completion by or on behalf of the Purchaser or any of its
successors in title to the Business or Assets or any of them where such
act or omission is carried out otherwise than in the ordinary course of
the conduct of the Business as carried on at Completion or is required to
be carried out by law or a legally binding commitment created or entered
into before Completion;
69
6.2 to the extent that the claim arises or is materially increased as a result
of any legislation not in force at Completion;
6.3 if the facts events or circumstances giving rise to the claim or otherwise
relevant thereto are fully and fairly disclosed in this Agreement
(including the Schedules hereto) or in the Disclosure Letter;
6.4 to the extent the Purchaser actually recovers an amount in respect of the
loss or damage the subject of the claim under any manufacturers' or
suppliers' warranty or guarantee or like obligation;
6.5 to the extent that the Purchaser actually recovers an amount in respect of
the loss or damage suffered under the terms of any insurance policy for
the time being in force;
6.6 to the extent that any taxation for which the Purchaser is or may be
liable is actually reduced or extinguished as a result of any such claim
or the liability to which it relates;
6.7 if full provision allowance or reserve is made in the Completion Accounts
specifically in respect of the matter to which the liability relates or if
payment or discharge thereof has been fully taken into account therein;
6.8 in respect of any liability which is contingent, unless and until such
liability becomes actual provided this paragraph shall not prevent claims
being notified in accordance with paragraph 1;
6.9 to the extent that the liability to which the claim relates is or has been
taken into account in calculating the Net Asset Value.
7 No person shall be entitled to recover any sum in respect of any relevant
claim or otherwise retain reimbursement or restitution more than once in
respect of the same loss or damage under this Agreement or otherwise.
70
8 Nothing contained in this Agreement or in any agreement entered into
pursuant hereto shall be deemed to relieve the Purchaser from any common
law duty to mitigate any loss or damage incurred by it.
9 Without prejudice to the foregoing, the Purchaser undertakes as soon as
reasonably practicable to notify the Vendor in writing of any matter which
will or may give rise to any claim hereunder against the Vendor and that
it shall at all times thereafter disclose in writing to the Vendor all
information and documents in its possession or under its control and
relating to such claim and the matters giving rise thereto. Further it
shall (i) not take any action to avoid dispute resist appeal settle
compromise or defend or otherwise deal with any such claim without the
prior written consent of the Vendor; and (ii) (subject first to being
indemnified and held harmless by the Vendor to its reasonable satisfaction
against all liability which may thereby be incurred) take such action as
the Vendor may reasonably require from time to time to assist it in
dealing with such claim or to enforce any rights it may have to recover
from any third party any sum or benefit the matter of the subject of the
claim or otherwise referable thereto provided that it shall be deemed
reasonable for the Purchaser to refuse to take such action.
10 In the event that payment is made by the Vendor in respect of a claim
hereunder or under any agreement entered into pursuant hereto the Vendor
may require the Purchaser to assign to the Vendor for no consideration all
the rights of the Purchaser (or such relevant member) to recover from any
third party any sums or other benefits in respect of the subject matter of
the claim and in any event if the Purchaser subsequently recovers or
receives from any third party a sum which is referable to the subject
matter of such claim, the Purchaser shall forthwith after the receipt of
such sum reimburse to the Vendor the net amount received after deducting
tax thereon and any costs or expenses reasonably incurred by the Purchaser
in recovering such sum or benefit from the third party concerned.
71
11 Neither the Purchaser nor the Vendor shall be liable in respect of any
representation warranties covenants agreements undertakings or other
obligations (whether express implied statutory or otherwise) which are not
contained and expressly given or assumed by it in this Agreement or any
agreement entered into pursuant hereto and the Purchaser and the Vendor
hereby confirm that they have not entered into this Agreement or any other
agreement in reliance on any such representation warranty covenant
agreement undertaking or other obligation.
12 Any payment by the Vendor under this Agreement shall, so far as possible,
be deemed to be a reduction of the Purchase Price but nothing in this
paragraph shall limit or exclude liability under this Agreement.
13 Nothing contained in this Agreement or otherwise shall entitle the
Purchaser to rescind or terminate this Agreement (i) after Completion or
(ii) at any time by reason of anything done or omitted to be done or
occurring after the date hereof.
72
SCHEDULE 10
COMPLETION ACCOUNTS POLICIES
ACCOUNTS INCLUDED IN NET ASSETS CALCULATION PURSUANT TO CLAUSE 4.2
Research and Development
Expenditures for research and development are to be expensed as incurred, except
that prototype machines capable of normal resale should be treated as trading
stock and valued at current costs or have been capitalised and depreciated over
a period of less than 2 years.
Cash and Cash Equivalents
Accounts Receivable
Accounts Receivable consist of trade receivables and intercompany receivables,
net of a provision for bad debts.
Inventories
Inventories consist of materials for use in production, labour and overhead
capitalised to the stage of completion, and stock acquired for re-sale and are
valued at the lower of cost or net realisable value. Inventories are valued net
of an allowance for slow moving and obsolete stock and net of a rotation
provision for finished machines.
Prepaid Expenses
Prepaid expenses consist of amounts disbursed or accrued which are to be
expensed in future periods.
Fixed Assets and Depreciation
All fixed assets are included except for those exceptions noted below.
Depreciation is to be provided based on depreciation policies consistent with
prior SMTech accounting practice.
73
Other Assets
Accounts Payable
Accounts Payable consist of obligations due to trade suppliers or the Guarantor
only. Any other Intercompany payables are specifically excluded save for those
services set out in Schedule 14.
The Completion Accounts will show Debts and Debtors separately.
Accrued Expenses
Accrued expenses consist of expenses incurred as of the closing date for which
no invoice has been received.
These include but are not limited to:
Warranty provision - an allowance for the warranty obligation outstanding, on
machines shipped prior to the closing date.
Payroll and holiday pay - an accrual for all obligations due to employees as of
the closing date.
Commissions - an accrual for all commissions due to distributors,
representatives and employees as of the closing date.
Other accrued expenses - all other expenses incurred as of the closing date.
Other Liabilities.
Full provision shall be made in the Completion Accounts for all liabilities for
Tax assumed by the Purchaser as part of the Assumed Liabilities, including
(without limitation) income tax under PAYE and National Insurance contributions
(including class 1A contributions) accrued as at the Completion Date.
74
ACCOUNTS EXCLUDED FROM THE NET WORTH CALCULATION
Debt
All short term and long term debt, both internal and external, is excluded,
including interest on that debt.
Fixed Assets
Excluded fixed assets include:
Leasehold Improvements
Capitalised project expenses
Immovable assets
Taxes
All tax accounts, prepaid taxes or accrued taxes are excluded.
Intangible Assets
All intangible assets are excluded. This definition includes, but is not limited
to Goodwill, Capitalised Patents or Trade Marks, and Investments in
Subsidiaries.
Leases
All leased property is excluded from this calculation. This includes, but is not
limited to leased autos, office equipment, and manufacturing equipment.
Contracts
All contracts, whether they can be considered an asset or a liability, are
excluded from this calculation.
No tax assets including (without limitation) rights to repayment of tax or
deferred tax assets shall be shown or taken into account in the Completion
Accounts.
75
SCHEDULE 11
Set Off Notice
From: The Purchaser
To: (1) The Vendor
(2) The Guarantor
(3) Wragge & Co
(4) Gouldens
This Notice is issued pursuant to the agreement for the sale of the businesses
and assets of the Vendor between the Purchaser, the Vendor, and the Guarantor,
dated September 30, 1998 ("AGREEMENT").
Terms defined in the Agreement shall, unless the context otherwise requires,
have the same meaning in this letter.
We hereby notify you that the Purchaser now claims an amount of (Pound Sign) [ ]
("A SET OFF AMOUNT") brief details of which are set out in the schedule attached
hereto and that accordingly such Set Off Amount should, in accordance with the
Agreement, be retained by the Purchaser as part of the Retention Sum until
settlement, agreement or adjudication in accordance with the terms of clause 11
of the Agreement.
Yours faithfully,
......................................................
[for and on behalf of the Purchaser]
76
SCHEDULE 12
DISTRIBUTORSHIP AGREEMENTS
PARTIES DATE
------- ----
1 SMTech Limited and WKK 1st October 1997
Distribution Limited
2 SMTech Limited and Inimar of 1st July ▇▇▇▇
▇▇▇▇▇▇▇
3 SMTech Limited and IPT of Ireland 1st July 1998
4 SMTech Limited and PB Technik 25th June 1998
AG
77
SCHEDULE 13
Part A
Patents
Part B
Trade Marks
Part C
Registered Designs
78
SCHEDULE 14
INTERCOMPANY SERVICES
79
SIGNED )
AS A DEED by S M TECH LIMITED )
acting by: ) /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Director
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Director/Secretary
SIGNED )
AS A DEED by SPEEDLINE )
TECHNOLOGIES INC. )
acting by: ) /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Authorised signatory
................................
Authorised signatory
SIGNED )
AS A DEED by QUAD SYSTEMS )
CORPORATION acting by: ) /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Authorised signatory
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------
Authorised signatory
