DATED 2000
(1) ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(2) EUROTELECOM CORPORATION LIMITED
(3) Q.TON LIMITED
SHARE PURCHASE AND SUBSCRIPTION AND SHAREHOLDERS AGREEMENT
RELATING TO AN INVESTMENT IN
Q.TON LIMITED
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Telephone: ▇▇▇▇ ▇▇▇ ▇▇▇▇
Facsimile: 0171 329 4000
E-Mail: ▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
Web Site: ▇▇▇▇://▇▇▇.▇▇▇▇▇▇▇▇▇.▇▇▇
INDEX
CLAUSE PAGE
1 INTERPRETATION 1
2 PURCHASE OF AND SUBSCRIPTION FOR SHARES 4
3 COMPLETION 5
4 MANAGEMENT 6
5 WARRANTIES AND INDEMNITY 6
6 EXISTING SHAREHOLDER'S UNDERTAKINGS 8
7 INVESTOR DIRECTOR 10
8 FUTURE TRANSACTIONS 10
9 BOARD MEETINGS AND OTHER ADMINISTRATIVE MATTERS 12
10 EXISTING SHAREHOLDER AND HER ASSOCIATE'S SHAREHOLDINGS 13
11 CONSENTS AND APPROVALS 14
12 ADHERENCE AND ASSIGNMENT 14
13 DISCLOSURE OF INFORMATION 14
14 COMPLIANCE 14
15 SUPREMACY 15
16 GENERAL 15
17 NOTICES 15
18 LAW AND JURISDICTION 16
SCHEDULE
PART 1 THE EXISTING SHAREHOLDER 17
PART 2 THE COMPANY 18
PART 3 WARRANTIES 19
PART 4 THE PROPERTIES 27
PART 5 MAIN TERMS OF SERVICE CONTRACT 28
AGREED FORM DOCUMENTS
NEW ARTICLES
RESOLUTIONS
TAX UNDERTAKING
THIS AGREEMENT IS MADE 2000
BETWEEN
(1) ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of ▇▇/▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (the "EXISTING SHAREHOLDER");
(2) EUROTELECOM CORPORATION LIMITED, a company registered in England under
number 3184949 whose registered office is at Embankment House, Acorn
Business Park, Woodseats Close, Sheffield S8 0TB (hereinafter together
with its successors and assignees whomsoever called the "INVESTOR");
and
(3) Q.TON LIMITED, a company registered in England and Wales under number
3650382 whose registered office is at Shakespeare House, ▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ (the "COMPANY").
INTRODUCTION
(A) The Company is a private company limited by shares incorporated in
England under the Companies Act 1985 further details of which are
contained in Part 2 of the Schedule.
(B) The authorised share capital of the Company is (pound)1,000,000 divided
into 1,000,000 Shares of (pound)1.00 each, 650,000 of which Shares have
been allotted and issued and are fully paid up and are held as set out
in Part 1 of the Schedule.
(C) The Existing Shareholder is the beneficial owner and registered holder
of the whole of the issued share capital of the Company.
(D) The Company carries on the business of the development and operation of
conference centre facilities (the "Business").
(E) The Existing Shareholder and the Company and the Investor have agreed
that the Investor will:-
(i) purchase 235,625 Shares from the Existing Shareholder on the
terms and subject to the conditions set out in this Agreement;
and
(ii) subscribe for 162,500 Shares.
NOW IT IS ▇▇▇▇▇▇ AGREED as follows:-
1 INTERPRETATION
1.1 In this Agreement (including the foregoing recitals), except where the
context otherwise requires, the following words and expressions shall
have the following meanings:-
A SHARES means Shares which are reclassified as "A"
ordinary shares of(pound)1.00 each in the
capital of the Company pursuant to the
Resolutions;
1
ACCOUNTS the draft audited balance sheet and profit
and loss account and the trading and profit
and loss account of the Company as at and
for the period ended on the Account Date
together with the notes thereto and the
directors' reports and the auditors' reports
included therewith;
ACCOUNTS DATE 30 October 1999;
AGREED FORM a form of words agreed between the
Parties on or prior to the date hereof and
for the purposes of identification
initialled by or on behalf of the parties;
ASSOCIATE (i) in relation to an individual, any
spouse, brother, sister or lineal
ascendant or descendant and any
company which is, or may be,
directly or indirectly, controlled
(within the meaning of Section 840
of the Taxes Act 1988) by any one
or more of the foregoing; and
(ii) in relation to a company, any
subsidiary or subsidiary
undertaking or holding company of
such company and any other
subsidiary or subsidiary
undertaking of any holding company
of such company.
B SHARES means Shares which are reclassified as "B"
ordinary shares of(pound)1.00 each in the
capital of the Company pursuant to the
Resolutions;
BOARD the board of directors of the Company as
from time constituted;
COMPLETION means the completion of the purchase of the
Sale Shares and the subscription for the
Subscription Shares in accordance with this
Agreement;
DISCLOSURE LETTER the letter of even date with this
Agreement containing disclosures to the
Warranties from the Existing Shareholder to
the Investor;
EUROTELECOM SHARES means 794,000 shares of Class A
common stock with a par value of US$0.01
each in the Capital of Eurotelecom
Communications Inc., the Investor's holding
company ("Eurotelecom");
EVENT has the meaning ascribed in the Tax
Undertaking;
GROUP together the Company and every other company
which is for the time being a subsidiary or
holding company of the Company;
GROUP COMPANY any company for the time being in the Group;
INTELLECTUAL PROPERTY such of the following as may be owned, used
or enjoyed by the Company or a Group
Company:
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patents, trademarks, service marks,
registered designs, design rights,
prototypes, trade names, business names,
domain names and applications for any of the
foregoing; the right to apply for
registration of any of the foregoing in any
part of the world; any similar or analogous
rights in any country; copyrights, design
rights or any similar or analogous rights in
any country, inventions, know-how,
confidential knowledge or experience
available to the Company; all contracts and
agreements relating to any of the foregoing
to which the Company is entitled; drawings,
blueprints, plans, specifications, data and
descriptive material, technical files and
reports, designs and the benefit of all
research, development and design work;
INVESTOR APPROVAL the approval of the Investor as referred to
in Clause 11.1;
INVESTOR DIRECTOR the director of the Company appointed to
that office by the Investor pursuant to this
Agreement and the New Articles;
LISTING the admission of all or any of the share
capital of the Company to the Official List
of The International Stock Exchange of the
United Kingdom and Republic of Ireland
Limited or the grant of permission for the
same to be traded on any alternative
securities market of such Stock Exchange or
the admission of the same to, or the grant
of permission by any like authority for the
same to be dealt in on, any other equivalent
or similar share market;
MANAGEMENT ACCOUNTS the management accounts in respect
of the Company as at 30 April 2000 and in
respect of the 6 month period commencing 1
November 1999 and ending 30 April 2000;
NEW ARTICLES the proposed new Articles of Association of
the Company (in Agreed Form);
PARTIES subject as provided in Clause 12, the
parties to this Agreement, and PARTY means
one of them;
PROPERTIES the properties owned by the Company, details
of which are set out in Part 4 of the
Schedule;
PROSPECTUS the prospectus issued by Eurotelecom in
relation to an admission to the Alternative
Investment Market and a placing on or about
29 March 2000;
RESOLUTIONS the resolutions of the Company referred to
in Clause 3.2.4;
SALE SHARES 235,625 ordinary shares of(pound)1.00 each
in the capital of the Company owned by the
Existing Shareholder;
SHARES shares in the capital of the Company (of
whatever class);
SHAREHOLDERS collectively all (or, where the context
requires, some) of the holders of Shares
from time to time;
SUBSCRIPTION SHARES 162,500 B Shares to be subscribed for by the
Investor as provided in Clause 2.3;
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TAXATION has the meaning ascribed in the Tax
Undertaking;
TAX UNDERTAKING the tax undertaking in the Agreed Form
granted by the Existing Shareholder to the
Investor;
TAXES ACT the Income and Corporation Taxes Act 1988;
WARRANTIES the undertakings, warranties and statements
contained in Clause 5 and Part 3 of the
Schedule and each and any of them.
1.2 Where clauses or paragraphs in this Agreement and Parts of the Schedule
contain the expression "to the best of the knowledge, information and
belief of the Existing Shareholder" or "so far as the Existing
Shareholder is aware" or phrases having a similar meaning or effect,
they shall be deemed to be followed by the words "having made due and
careful enquiry" in every case.
1.3 Words and expressions defined in the Companies Act 1985 (as amended by
the Companies Act 1989) shall, unless the context otherwise requires,
have the same meanings where used in this Agreement.
1.4 Headings are used in this Agreement for convenience only and shall not
affect its construction or interpretation.
1.5 In this Agreement references to Parts of the Schedule are to parts of
the schedule to this Agreement and references to Clauses are to clauses
in this Agreement and, unless otherwise specified, references to
paragraphs are to paragraphs of the clause in which such reference
appears and references to Annexures are to annexures to this Agreement.
1.6 In this Agreement reference to a person includes any legal or natural
person, partnership, trust, company, government or local authority
department or other body (whether corporate or unincorporate).
1.7 In this Agreement, unless the context does not so admit, reference to
an individual or individuals shall include his/her or their respective
executors and personal representatives.
1.8 In this Agreement, unless the context does not so admit, reference to
the singular includes a reference to the plural and vice versa and
reference to the masculine includes a reference to the feminine and
neuter.
1.9 References in this Agreement to any statute or statutory provision
shall be deemed to include reference to any statute, regulation or
statutory instrument which amends, extends, consolidates or replaces
the same (or shall have done so) and to any other regulation, statutory
instrument or other subordinate legislation made thereunder or pursuant
thereto.
2 PURCHASE OF AND SUBSCRIPTION FOR SHARES
2.1 The Existing Shareholder shall sell and the Purchaser shall purchase
the Sale Shares with full title guarantee free from any charges, liens,
encumbrances and other third party rights and with all rights attached
thereto with effect from Completion in consideration for which the
Investor shall procure the issue to the Existing Shareholder (or as she
shall direct) of the Eurotelecom Shares.
2.2 The Existing Shareholder hereby represents and warrants to the Investor
that she owns full legal and beneficial title to the Sale Shares and is
entitled to sell and transfer the Sale Shares to the Investor free of
all liens, charges, encumbrances and claims from third parties.
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2.3 The Investor warrants and represents to the Existing Shareholder that
the Eurotelecom Shares shall be validly issued credited as fully paid
and free from any encumbrance or restriction, save as set out in the
bylaws of Eurotelecom and the provisions of US securities laws as
referred to in the Prospectus (a copy of which has been provided to the
Existing Shareholder) and shall rank pari passu with the existing
issued Class A common stock in the capital of Eurotelecom.
2.4 At the Completion, the Investor shall subscribe for the Subscription
Shares at a price of (pound)4.615384615 per Share for an aggregate
subscription amount of (pound)750,000 and the Company shall allot and
issue the Subscription Shares to the Investor.
3 COMPLETION
3.1 Completion of the sale and purchase of the Sale Shares and the
subscription for the Subscription Shares shall take place at the
offices of the Investor's solicitors immediately following the
execution of this Agreement.
3.2 At Completion:
3.2.1 the Existing Shareholder shall deliver to the Investor a share
transfer in respect of the Sale Shares together with the share
certificates in respect of the Sale Shares;
3.2.2 the Investor shall procure the allotment of the Eurotelecom
Shares to the Existing Shareholder and as soon as practicable
shall deliver to her a certificate for such Eurotelecom
Shares;
3.2.3 the Investor shall pay to the Company subscription monies of
(pound)750,000 in respect of the Subscription Shares and the
Company shall allot and issue the Subscription Shares to the
Investor;
3.2.4 the Existing Shareholder and the Company shall procure that
the Resolutions shall be duly passed and such Resolutions
shall include the following:-
(i) reclassification of such of the Shares purchased and
subscribed for by the Investor pursuant to this
Agreement as B Shares;
(ii) reclassification of all other Shares as A Shares;
(iii) approval of the allotment and issue of the
Subscription Shares;
(iv) approval of the registration of the Investor as the
holder of the Sale Shares in the Register of Members
(subject to stamping of the share transfer forms);
(v) approval of the issue to the Investor of a share
certificate in respect of the Sale Shares and the
Subscription Shares;
(vi) approve the appointment of ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇ as Investor Directors;
3.2.5 the Existing Shareholder shall deliver the duly executed Tax
Undertaking to the Investor.
5
4 MANAGEMENT
4.1 The Parties agree that the Company shall continue to be managed by its
existing management personnel (including the Existing Shareholder),
subject to the direction of the Board, and that at all times all such
management personnel shall enter into written employment agreements
with the Company on terms approved by the Board.
4.2 The Existing Shareholder agrees that she shall enter into a service
contract with the Company as soon as practicable following Completion,
the main terms of which are set out in Part 5 of the Schedule.
4.3 The Investor shall procure that the Existing Shareholder shall be
appointed as a director of Eurotelecom as soon as practicable following
Completion on terms to be agreed between the parties acting reasonably,
subject to the Existing Shareholder providing a completed Directors
Questionnaire to Eurotelecom in terms which are satisfactory to
Eurotelecom.
4.4 The Parties agree that all intellectual property rights developed by
the Company in the course of its business shall be owned by and
registered to the Company.
4.5 The Parties agree that all employees engaged by the Company shall be
required to enter into employment agreements with the Company under the
terms of which, inter alia, any intellectual property rights devised,
invented or developed by any employee(s) during the course of their
employment or in the operation of the Company's business shall be
legally and beneficially owned by the Company.
5 WARRANTIES AND INDEMNITY
5.1 In consideration of the Investor agreeing to enter into this Agreement,
to purchase the Sale Shares and to subscribe for the Subscription
Shares, the Existing Shareholder hereby represents and warrants to the
Investor in the terms set out in Part 3 of the Schedule.
5.2 In consideration of the Investor agreeing to enter into this Agreement,
to purchase the Sale Shares and to subscribe for the Subscription
Shares, the Company hereby represents and warrants to the Investor in
the terms set out in Part 3 of the Schedule.
5.3 The Warranties shall be given at the date of Completion.
5.4 The Existing Shareholder and the Company acknowledge that they are
aware that the Investor, when agreeing to purchase the Sale Shares and
subscribe for the Subscription Shares is or will be relying on the
accuracy of the Warranties (save only as disclosed in the Disclosure
Letter) and on the Tax Undertaking. The Warranties and the Tax
Undertaking shall survive Completion of the purchase of the Sale Shares
and the subscription for the Subscription Shares by the Investor.
5.5 Each Warranty which is set out in a separate paragraph, or which could
be treated as a separate Warranty, shall be construed independently of
any other to the intent that the rights of the Investor under, and the
meaning given to, any one such Warranty shall not be restricted by
reference to any other Warranty.
5.6 If the Investor makes a claim against the Existing Shareholder in
relation to any breach of Warranty but, in relation to the same subject
matter, does not make (or, having made, does not succeed with), any
claim against the Company under Clause 5.2, the Existing Shareholder
shall not have or pursue any claim or third party action to join in,
claim against, seek a contribution from or otherwise claim or seek
damages or compensation from the Company or any other Group Company in
respect of any such claim and the Existing Shareholder hereby confirms
to the Investor that neither the Company nor any Group Company has
entered into or will enter into any indemnity or other agreement or
arrangement concerning the liabilities of the Existing Shareholder for
any breach of the Warranties.
6
5.7 The Existing Shareholder and the Company shall not be liable in respect
of any claim under the Warranties to the extent that the matter or
matters giving rise to such a claim are fairly disclosed in the
Disclosure Letter. The Existing Shareholder and the Company each
undertake to the Investor that any particulars of such matter or
matters are true and accurate in all material respects and are not
misleading in any material respect.
5.8 The aggregate liability of the Existing Shareholder in respect of any
breach or breaches of the Warranties and the Tax Undertaking shall be
limited to a maximum sum of (pound)750,000 ("the Maximum Amount").
5.9 Neither the Existing Shareholder nor the Company shall have any
liability under the Warranties and the Tax Undertaking unless and until
the liability thereunder exceeds (pound)35,000 and thereafter the
Existing Shareholder shall be liable for the entire amount up to the
Maximum Amount.
5.10 The Existing Shareholder and the Company shall not be liable in respect
of any claim under the Warranties or the Tax Undertaking (as the case
may be) unless the claim shall have been notified to her before the
expiry of a period of 12 months from Completion in the case of a claim
under the Warranties and 36 months from Completion in the case of a
claim under the Tax Undertaking. Any claim so notified will cease to be
recoverable if legal proceedings in respect of such claim have not been
commenced within 15 months from Completion in the case of a claim under
the Warranties and 48 months from Completion in the case of a claim
under the Tax Undertaking (unless settled, compromised or withdrawn
within such period). In this respect, legal proceedings shall include
commencement of any agreed arbitration. Notice of a claim shall include
reasonable details of the nature and substance of the claim.
5.11 No liability or increase in liability (as the case may be) shall attach
to the Existing Shareholder or the Company in respect of a claim under
this Agreement to the extent that such claim arises or is increased as
a consequence of a change in the law after the date hereof.
5.12 In the event that the Company is entitled to recover from a third party
(whether by payment, discount, credit, relief or otherwise howsoever)
any sum in relation to any loss, liability or damage which is the
subject of a claim under the Warranties or the Tax Undertaking, the
Company shall take (at the expense of the Existing Shareholder) such
reasonable steps or proceedings as she may reasonably require and shall
act in accordance with any such requirements subject to the Company
being indemnified by the Existing Shareholder against all reasonable
costs and expenses incurred in connection therewith and shall keep the
Investor promptly informed of the progress of any such steps,
proceedings or actions.
5.13 In the event of the Existing Shareholder or the Company having paid to
the Investor an amount in respect of a claim under the Warranties or
the Tax Undertaking and subsequent to the date of making such payment
the Investor recovers from a third party (whether by payment, discount,
credit, relief or otherwise howsoever) a sum which is referable to that
payment then the Investor shall as soon as reasonably practicable repay
to the Existing Shareholder or the Company of so much of the amount
paid by the third party as does not exceed the sum paid by the Existing
Shareholder or the Company to the Investor less the reasonable costs of
the Investor in recovering such sum.
5.14 If any claim under the Warranties shall arise by reason of some
liability of the Company which, at the time the claim is notified to
the Existing Shareholder, is contingent only, the Existing Shareholder
shall not be under any obligation to make any payment to the Investor
in respect of such claim until such time as the contingent liability
shall become an actual liability.
7
5.15 Nothing herein or in the Warranties shall be deemed to relieve the
Investor from any common law or other duty to mitigate any loss or
damage incurred by it.
5.16 Any amount paid by the Existing Shareholder to the Investor in respect
of any breach of the Warranties shall be treated as a reduction in the
consideration for the Sale Shares.
5.17 The Investor warrants to the Existing Shareholder that the Investor has
power to enter into this Agreement and to perform the obligations
expressed to be assumed by it and the Investor and Eurotelecom have
taken or will, as soon as reasonably practicable, take all necessary
corporate action to authorise the execution, delivery and performance
of this Agreement and the issue of the Eurotelecom Shares.
6 EXISTING SHAREHOLDER'S UNDERTAKINGS
6.1 In consideration of the Investor entering into or becoming party to
this Agreement, the Existing Shareholder undertakes to the Company (for
itself and as agent and trustee for each Group Company from time to
time) and (as a separate undertaking) to the Investor that:-
6.1.1 for so long as the Existing Shareholder is employed by the
Company or any other Group Company she will devote such time
and attention to the business of the Group as is required for
the proper performance of her duties as Chief Executive
Officer and will use her best endeavours to develop the
business and interests of the Group and will not be concerned
with any other business either which is in competition with
the Business without the prior written approval of the
Investor Director or which interferes with the proper
performance of her duties as Chief Executive Officer;
6.1.2 upon her ceasing (whether of her own volition or otherwise) to
be employed by or to be a director of any Group Company she
will not for a period of one year from the date of such
cessation (or, if she ceases to be an employee on a different
date from that on which she ceases to be a director, the later
of such dates) (the "Cessation Date"), whether on her own
account or on behalf of the person, firm or company:-
6.1.2.1 solicit (in connection with any business of a type
then carried on by the Group) interfere with or
endeavour to entice away from any Group Company any
person, firm or company who at any time during the
period of one year immediately preceding such
cessation, was either to her knowledge a material
customer, client, supplier, agent or an employee (not
being a junior employee) or consultant (by whatever
title called) of a Group Company; or
6.1.2.2 seek to disrupt or otherwise interfere with or
prejudice the continuance of the supply of goods or
services to any Group Company or the terms of any
such supply; or
6.1.2.3 carry on, engage in or be concerned or interested
either as principal or as a partner or employee of
any other person within the United Kingdom in any
business or activity which competes with the Business
or any other businesses and activities (or, if more
than one, any of them) in which any Group Company is
engaged at the date of such cessation and with which
the Existing Shareholder has had any personal
involvement;
6.1.3 she will not at any time after the Cessation Date represent
herself as still being (i) an employee or a director of or as
otherwise having any authority to act on behalf of any Group
Company or (ii) save only in respect of any shareholding in
the Company for so long as she retains the same, otherwise
interested in any Group Company or its business and affairs;
8
6.1.4 she will not at any time whilst an employee, director or
otherwise interested in the Group (save in so far as is
reasonably necessary to fulfil his duties to the Group) or at
any time thereafter, directly or indirectly use or disclose or
communicate to any person, firm or company any information
concerning the internal or external affairs, business methods,
processes, systems, inventions, plans or research and
development of the Group or those of its customers, clients or
suppliers and which may be reasonably regarded as being
confidential to the Group or to such persons (other than
information which the Existing Shareholder is required to
disclose by law or which is for the relevant time being in the
public domain other than by reason of wrongful disclosure of
the same by the Existing Shareholder) and will use her
reasonable endeavours to prevent the publication or disclosure
of any such information by any third party.
6.2 Nothing in Clause 6.1 shall prevent or restrict the Existing
Shareholder from and in continuing her existing business interests
including without limitation her involvement in the establishment
(including taking a shareholding in) and management of Project Darwin
(a proposed incubator unit in Cambridge with conference facilities,
details of which have been provided to the Investor).
6.3 The Existing Shareholder hereby acknowledges that the foregoing
undertakings and agreements by and on her part are part of the
consideration afforded to the Investor in return for its agreement to
purchase the Sale Shares and subscribe for the Subscription Shares and
that (after taking legal advice) she considers the foregoing
restrictions and agreements to be reasonable and necessary for the
protection of the legitimate commercial interests of the Investor. It
is hereby agreed that if any such undertaking or agreement is held to
be void or invalid but would not have been so held if part of the
wording were deleted or its extent reduced, then such undertaking shall
apply with such deletions or reductions as may be necessary to make the
same valid and enforceable.
6.4 The Existing Shareholder hereby warrants and undertakes to the Company
and the Investor that she is free to continue her employment with the
Company and (as the case may be) is not or will not be in breach of any
other contract of employment (whether past or now subsisting) or be
liable to any action (whether for damages, injunction, specific
performance or otherwise) relating to any such contract or be in breach
of any duty of confidence or any undertaking or arrangement relating to
any industrial or intellectual property rights or be liable to any
action (whether for damages, injunction, specific performance or
otherwise) relating to any continuous or continuing obligations under
any such contract, and that any Group Company is free to offer or
continue (as the case may be) her employment without being liable to
any other person for so offering or continuing such employment and
subsequently employing her.
6.5 The Existing Shareholder hereby agrees and accepts that if she shall
commit a material breach of the provisions of Clause 6.1 and (if such
breach is capable of remedy) if the Existing Shareholder shall fail to
remedy the same having been given notice by the Investor or the Company
so to do then, such breach shall be deemed to constitute, for the
purposes of the Existing Shareholder's contract of employment with the
Company serious misconduct on the part of the Existing Shareholder and,
accordingly, render the Existing Shareholder liable to summary
dismissal (without claim for compensation) from her employment by the
Company forthwith without liability or payment of compensation. If the
Existing Shareholder becomes liable to summary dismissal pursuant to
the foregoing provisions of this Clause then the Company shall, upon
request in writing by the Investor, forthwith dismiss the Existing
Shareholder from her employment by the Company.
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7 INVESTOR DIRECTOR
7.1 It is agreed between the Parties that the Investor shall have the right
to appoint and remove two Investor Directors (and to replace any such
persons from time to time) and to appoint alternate directors from time
to time and the Company shall reimburse the Investor Directors for all
out of pocket expenses reasonably incurred by them in connection with
the performance of their duties as directors of the Company.
8 FUTURE TRANSACTIONS
8.1 The Company hereby undertakes to the Investor that, save with Investor
Approval:-
8.1.1 save in respect of borrowings from the Company's bankers
within the limit referred to in Clause 8.1.2 below, no Group
Company shall create or issue or allow to come into being any
mortgage, charge, lien or other encumbrance (save for liens
arising in the ordinary course of business) upon the whole or
any part of its undertaking, property or other assets or
uncalled capital or revenue or create or issue any debenture
or debenture stock;
8.1.2 no Group Company shall borrow any monies or obtain any advance
or credit (other than normal trade credit) if as a result of
such borrowing, advance or credit the aggregate amount of all
borrowings by the Group (excluding existing borrowings) would
exceed (pound)25,000;
8.1.3 no Group Company shall sell, assign, factor, discount or
otherwise dispose of all or any material part of its debts or
any interest therein;
8.1.4 save to the extent provided for in any annual budget which has
been approved by the Investor Director, no Group Company shall
acquire or agree to acquire any fixed or capital asset or make
or agree to make any capital expenditure except, in any single
accounting period of the Company, for individual items not in
excess of (pound)1000, provided always also that the excess of
capital expenditure over budget does not exceed (pound)5,000
for the relevant financial year;
8.1.5 no Group Company shall increase, reduce or otherwise alter its
authorised or issued share capital or its capital structure or
grant any options or other like rights to acquire any Shares
or securities convertible into Shares or make any payment to
any person (whether or not a member) for giving up his right
to any share capital on its cancellation or extinguishment;
8.1.6 no Group Company shall establish any pension, bonus, profit
sharing or other incentive scheme or plan for directors and/or
employees;
8.1.7 no Group Company shall alter its Memorandum or Articles of
Association or, in the case of any overseas subsidiary, its
equivalent documents;
8.1.8 no Group Company shall take any steps to have any Group
Company wound up whether for the purposes of amalgamation or
reconstruction or otherwise unless a registered insolvency
practitioner shall have advised that such Group Company is
required to be wound up by reason of having become insolvent;
8.1.9 no Group Company shall sell, transfer, lease, assign or grant
any licence in respect of, or otherwise dispose of the whole
or any material part of its undertaking, property or other
assets (whether by one transaction or a series of transactions
whether related or not) other than the sale of current assets
in the ordinary course of trading;
10
8.1.10 no Group Company shall sell, transfer or otherwise dispose of
any subsidiary or associated company or any shares or any
interest therein;
8.1.11 no Group Company shall give any guarantee or indemnity other
than in the ordinary course of trading;
8.1.12 no Group Company shall make any loan or advance or provide any
credit other than:-
8.1.12.1 for the deposit of monies with a bank which is an
authorised institution under the Banking Act 1987;
8.1.12.2 normal trade credit;
8.1.12.3 loans to employees of such Group Company not
exceeding(pound)500 at any one time outstanding in
the aggregate;
8.1.13 no Group Company shall subscribe for, purchase or acquire any
shares, debentures, debenture stock, mortgages or securities
or interest in any other company, trust, partnership or other
body (in each case whether or not having separate legal
personalities);
8.1.14 no Group Company shall incorporate or otherwise set up or
acquire any subsidiary or associated company or new business
or any interest therein or, other than in the ordinary course
of business, acquire or dispose of any material assets;
8.1.15 no Group Company shall enter into any joint venture,
partnership, consortium or other similar arrangement;
8.1.16 no Group Company shall make any material change in the nature
of its business;
8.1.17 no Group Company shall enter into any contract or other
agreement or transaction or other arrangement otherwise than
in the ordinary course of trading and on an arms length basis;
8.1.18 no Group Company shall change any auditor, or its accounting
reference date or its accounting policies (save where required
to do so by any legislation or authority);
8.1.19 otherwise than at a meeting of the Board, no Group Company
shall appoint or remove any director or appoint any committee
of its board of directors or take any decisions which are
material to the Group as a whole;
8.1.20 no Group Company shall, in relation to any such senior
executive as is referred to in Clause 8.1.21 below agree to or
accept any material variation in his or her terms of
employment (including any increase in emoluments), give any
such consent (if any) as is referred to in his or her contract
of employment, waive, or agree to take no action in respect of
any material breach by any such person of his or her contract
of employment or terminate the employment of any such person;
8.1.21 no Group Company shall employ or agree to employ (i) any
senior executive (being an employee whose emoluments and
pension benefits shall be at an annual rate in excess of
(pound)50,000); or (ii) any person on terms such that such
employment may not lawfully be terminated by such Group
Company without compensation upon three months' notice or
less;
11
8.1.22 in the case of the Company or any other Group Company which is
not a wholly-owned subsidiary of the Company, declare or pay
any dividend (except out of cash resources not required for
the Company's business) or make any distribution or agree to
capitalise any reserves or apply any amount for the time being
standing to the credit of its share premium account or capital
redemption reserve for any purpose; and
8.1.23 the Company shall not appoint any merchant bank or other
adviser to advise in relation to a Listing or takeover or
agree to the terms of appointment (including remuneration) of
any such bank or other adviser.
8.2 The Existing Shareholder agrees and undertakes to the Investor that she
shall procure all business opportunities or ventures which relate to
the Company's Business which are identified or pursued by the Existing
Shareholder shall be introduced to the Company to give the Company the
opportunity to participate therein as soon as reasonably practicable
and the Parties acknowledge that it is their intention to develop
further new business opportunities within the business operations of
the Company.
8.3 Each Group Company shall insure with an insurance company of repute and
keep so insured itself and all its assets against appropriate risks to
the extent of and in accordance with good commercial practice.
9 BOARD MEETINGS AND OTHER ADMINISTRATIVE MATTERS
The Company agrees with the Investor that:-
9.1 (unless an Investor Director from time to time agrees otherwise) a
meeting of the Board shall be convened and held at least once in every
quarter or more frequently as required;
9.2 (unless an Investor Director agrees otherwise in relation to any
particular meeting), there shall be given to the Investor and each
director of the Company (including each Investor Director) reasonable
prior written notice of any meeting of the Board and every such notice
shall be accompanied by a written agenda specifying the business of
such meeting;
9.3 no business shall be transacted at any meeting of the Board save for
that specified in the agenda for such meeting unless all Directors
shall otherwise agree;
9.4 the Company shall provide to the Investor such financial and other
information concerning the Group as the Investor may from time to time
require and in that regard shall permit any officer or authorised
representative of the Investor from time to time upon reasonable prior
notice to inspect (and take copies of) such of the books, papers,
documents and other records of any Group Company as such person may
stipulate and shall in any event provide to the Investor:
9.4.1 within two weeks after the end of each month, management
accounts for the Group in respect of such month and each
preceding month during the relevant financial year, such
management accounts to contain trading and profit and loss
accounts, balance sheets, cashflow forecasts and details as to
forward forecasts be in such format as the Board may from time
to time agree;
9.4.2 within fourteen days after each meeting of the Board of or any
committee of the Board, minutes in respect of such meeting;
and
9.4.3 within seven days of the Company becoming aware of the same,
details of any litigation or arbitration or other like
proceedings being commenced or threatened against any Group
Company (other than proceedings for the recovery of debts not
in excess of (pound)5,000); and
12
9.4.4 promptly upon the same becoming available, documents
concerning transactions or events which are or may be material
to the business and affairs of the Group;
9.5 the Company shall (insofar as it is able) procure that the statutory
audited consolidated accounts of the Group are prepared and sent to
Shareholders within three months of the last day of the period to which
they relate;
9.6 the Company shall provide to the Investor and the Investor Director not
later than 30 days prior to the end of any financial year of the
Company a draft detailed operating plan and financial budget for the
Group for the next succeeding financial year and, not later than the
end of each financial year (but after consultation with and obtaining
the approval of the Investor Director (and the Investor in the case of
proposed capital expenditure)) the Board shall adopt a plan and budget
as aforesaid for the next succeeding financial year; and
9.7 following the adoption of any such plan and budget as aforesaid, save
with the prior approval of the Board, no Group Company shall (so far as
the same lies within its control) either depart from any of the general
strategies, policies or plans laid down thereby or make any material
expenditure or incur any material liabilities which are not
contemplated therein or are in excess of those contemplated thereby.
10 EXISTING SHAREHOLDER AND HER ASSOCIATE'S SHAREHOLDINGS
10.1 The Existing Shareholder hereby undertakes to the Investor that, save
with Investor Approval or as required by the New Articles or as
permitted under Clause 10.2, she will not, and shall procure that her
Associates will not, for so long as the Investor owns any "B" Shares
dispose of or agree to dispose or enter into any agreement or
arrangement (including any mortgage or charge) by virtue of which she
will or may become obliged to dispose of all or any Shares of which she
or her Associates are now or may subsequently become the registered
holder and/or beneficial owner, or of any interest therein.
10.2 The Existing Shareholder (or an Associate of the Existing Shareholder)
may make any such transfer of a Share which is permitted under the
terms of the New Articles provided that, as a pre-condition of so
doing, the Existing Shareholder shall procure that the proposed
transferee shall have undertaken in terms acceptable to the Investor in
favour of the Investor (and in such form as the Investor may reasonably
require) (i) acknowledging that he will fall to be treated as an
Associate of the Existing Shareholder for the purposes of this
Agreement and the New Articles and (ii) covenanting to be bound by the
provisions of this Agreement (including Clause 10.1 but excluding the
Warranties and Clauses 6.1.1 to 6.1.3 inclusive) to such extent as the
Investor may reasonably require.
13
11 CONSENTS AND APPROVALS
11.1 For the purposes of this Agreement the expression "Investor Approval"
means, subject as provided in Clause 11.3, the prior written consent or
approval of the Investor.
11.2 At any time when, and for so long as, there are no Investor Directors
in office as directors of the Company any reference in this Agreement
to the consent or approval of the Investor Directors shall take effect
as reference to such other persons (if any) as the Investor shall have,
by written notice to the Company, designated for this purpose or,
failing any persons being so designated, to Investor Approval.
11.3 The Investor may, by notice to the Company, delegate to an Investor
Director or such other person (if any) as they think fit, the right to
give or decline to give on behalf of the Investor consent or approval
to any matter in relation to which Investor Approval is required to be
sought under the terms of this Agreement. The Investor may, by further
notice to the Company, terminate any such delegation at any time and
for any reason.
12 ADHERENCE AND ASSIGNMENT
12.1 Notwithstanding any provision of this Agreement or the New Articles to
the contrary no allotment or transfer of any Share shall be made or
entered into or registered unless or until the proposed allottee or
transferee (as the case may be), if not already a party to this
Agreement, has entered into an agreement in terms acceptable to the
Investor in favour of the Company and the Shareholders covenanting to
be bound by the terms and conditions of this Agreement, including this
Clause but excluding the Warranties and Clauses 6.1.1 to 6.1.3
inclusive, in such manner and to such extent as the Company and the
Investor may reasonably require.
12.2 Subject as provided in Clause 12.3, the rights of each of the Parties
under this Agreement are personal and may not be assigned or otherwise
transferred save with the prior written consent of the other Parties.
12.3 If the Investor transfers any Shares to a third party in accordance
with the New Articles then the Investor may assign to such third party
all or any part of its rights under this Agreement (save for the
Warranties and the Tax Undertaking) and following any such transfer
(and subject to any compliance by the third party with Clause 12.1)
such third party shall, as from the date of such transfer, be treated
if it were also "the Investor" for all purposes of this Agreement.
13 DISCLOSURE OF INFORMATION
Save as required by law or in relation to information which is publicly
available (other than by reason of any wrongful disclosure of the
same), none of the Company, the Existing Shareholder or the Investor
shall make any announcement concerning or otherwise disclose or divulge
any information concerning the Investor's involvement with or interest
in the Company including (without limitation) any of the terms set
forth in this Agreement except to the extent otherwise agreed in
writing by all of the Parties.
14 COMPLIANCE
14.1 The Company undertakes to the Investor that it will procure that each
Group Company for the time being shall observe and perform the
provisions of this Agreement to be observed and performed by a Group
Company.
14.2 The Existing Shareholder shall, insofar as it lies within her power for
the time being, take all action necessary to ensure compliance by the
Company and each Group Company with its obligations and other
commitments both under this Agreement and the New Articles.
14
15 SUPREMACY
In the event of any conflict between the terms of this Agreement and
the New Articles then, as between the Parties hereto, the provisions of
this Agreement shall prevail and, if so required by the Investor, the
Parties shall procure that the New Articles shall be amended to such
extent as the Investor may reasonably require in order that such
conflict be removed.
16 GENERAL
16.1 Nothing contained in this Agreement shall constitute or be deemed to
constitute a partnership between the Parties hereto or any of them and
no Party shall hold himself out as an agent for any other Party save
with the prior consent of such other Party.
16.2 The Agreement represents the entire agreement between the Parties in
relation to the matters the subject matter hereof.
16.3 The rights of the Investor under this Agreement are independent,
cumulative and without prejudice to all other rights available to it
and the exercise or non-exercise of any such rights shall not prejudice
or constitute a waiver of any other rights the Investor may have
whether under this Agreement or otherwise.
16.4 The Company and the Existing Shareholder shall procure the passing of
such resolutions, execute such documents and waivers and generally do
everything further required by the Investor effectively to comply with
their obligations under this Agreement and to vest the full benefit of
this Agreement in the Investor.
16.5 Each of the Parties to this Agreement shall bear his or its own legal
costs in respect thereof.
16.6 No variation of this Agreement shall be binding on any Party hereto
unless and to the extent that the same is recorded in a written
document executed by such Party but where any such document exists and
is so signed such Party shall not allege that the same is not binding
by virtue of an absence of consideration.
17 NOTICES
17.1 Any notice given under or in connection with this Agreement shall be in
writing and signed by the Party giving notice.
17.2 The respective addresses for service of notices under this Agreement
shall be those set out at the outset of this Agreement provided however
that any Party may, by written notice to the others, substitute another
address for the service of notices on that Party hereunder.
17.3 Notices may be given by being delivered to the notice address of the
addressee (in which case the notice shall be deemed to be served at the
time of delivery) or by being sent by facsimile (in which case the
notice shall be deemed to be served upon completion of the
transmission) or by being sent by first class post (in which case the
notice shall be deemed to be served 24 hours after time of posting).
Notices deemed served after 6.00pm on any day shall be deemed served at
9.00am on the next following business day.
17.4 In proving service of any notice, it shall be sufficient to prove that
delivery was made or that the envelope containing the notice was
properly addressed and posted or that the facsimile was transmitted to
the correct number, as the case may be.
15
18 LAW AND JURISDICTION
This Agreement shall be governed by the laws of England and the Parties
hereby submit to the non-exclusive jurisdiction of the English Courts.
EXECUTED as a DEED by the Parties hereto on the day and year first before
written:-
16
SCHEDULE
PART 1
THE EXISTING SHAREHOLDER
NUMBER OF SHARES
NAME AND ADDRESS OWNED AND HELD
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 650,000
▇▇/▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Bottisham
Cambridge
▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
17
PART 2
THE COMPANY
DATE OF INCORPORATION: 15 October 1998
REGISTERED OFFICE: ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇
SHARE CAPITAL AUTHORISED: (pound)1,000,000
SHARE CAPITAL ISSUED: (pound)650,000
SHAREHOLDERS NO OF SHARES HELD
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 650,000
DIRECTORS: ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SECRETARY: ▇▇▇▇▇ ▇▇▇▇▇▇▇
ACCOUNTING REFERENCE DATE: 30 October
AUDITORS: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
MORTGAGES, DEBENTURES
AND OTHER CHARGES: Charge contained in Escrow Agreement dated 3
September 1999 in favour of The Master
Fellows and Scholars of Trinity College
Cambridge.
18
PART 3
WARRANTIES
1 INFORMATION
1.1 The information set out in the Recitals to this Agreement and in Parts
1 and 2 of the Schedule is true, complete and accurate.
1.2 All written information annexed to the Disclosure Letter are true and
complete copies of the originals.
1.3 All forecasts and projections in respect of the Company were prepared
in good faith and after careful consideration and on the basis of
assumptions which were and remain fair and realistic and neither the
Existing Shareholder nor the Company is now actually aware of any fact
or matter which will, or is likely to, result in any of such forecasts
or projections not being achieved.
2 SHARE CAPITAL
Save as created by this Agreement, there is no outstanding right to
call for the issue of any share or loan capital of any Group Company.
3 ACCOUNTS
3.1 The Accounts were prepared in accordance with applicable accounting
practice, comply with the requirements of the Companies Acts 1985 and
give a true and fair view of the financial position of the Group at the
Accounts Date and of the results for the period then ended.
3.2 The Management Accounts have been properly prepared in accordance with
applicable accounting practice and using policies consistent with those
adopted in the preparation of the Accounts and fairly reflect in all
material respects the financial position of the Group as at 30 April
2000 and for the six month period then ended.
3.3 All the accounts, books, ledgers, financial and other records, of
whatsoever kind, of the Company are in its possession and fairly
reflect the transactions of the Company in all material respects.
4 EVENTS SINCE THE ACCOUNTS DATE
4.1 Since the Accounts Date, no Group Company has entered into any
transaction or done any such act or thing as is referred to in Clause
8.1 save as expressly referred to or provided for in this Agreement and
in addition (but without prejudice to the generality of the foregoing)
each Group Company:-
4.1.1 has carried on its business as a going concern in, and only
in, the ordinary course;
4.1.2 has not incurred any liability other than in the ordinary
course of its business;
4.1.3 has not entered into (whether in the ordinary course or not)
any long term, substantial, onerous or unusual obligations or
transactions including (without limitation) any capital
commitment involving more than (pound)5,000;
19
4.1.4 has not made (or agreed to make) any change in the basis or
amount of the emoluments of or benefits for its directors or
any of its employees;
4.1.5 has not paid, declared or made (or agreed so to do) any
dividend or other distribution;
4.1.6 has not acquired or set up (or agreed so to do) any new
business, branch or subsidiary; and
4.1.7 has not borrowed any moneys except from its bankers in the
ordinary course of business and within the limits of the
facilities available to it from such bankers.
4.2 Since the Accounts Date there has not been any deterioration in the
financial position or prospects of the Group (whether in consequence of
normal trading or otherwise).
5 DEBTS
5.1 So far as the Existing Shareholder is aware, all debts now owing to the
Company are good and collectable in full in the ordinary course of
business within 60 days of the date of this Agreement.
6 ASSETS
6.1 No asset in the actual, reputed or apparent possession or ownership of
a Group Company, or which is reflected in the Accounts or in the
Management Accounts was or is being acquired on terms that title or any
security or other interest therein was reserved to any other party, or
was or is being acquired under any bill of sale, hire or hire purchase
agreement, conditional sale, credit sale, deferred payment or similar
agreement, and each such asset is (save to the extent that it has been
profitably sold in the ordinary course of normal trading) in the
beneficial ownership and sole possession and control of such Group
Company.
7 EMPLOYMENT
7.1 The individuals named in the Disclosure Letter are all of the
directors, officers and employees of the Company and their terms and
conditions of employment set out therein are true, accurate and
complete in all material respects. There is no person who has accepted
an offer of employment made by the Company whose employment has yet to
start and there are no offers of employment which have been issued and
remain open for acceptance.
7.2 There is not in existence any contract of employment with any employee
of a Group Company which cannot be terminated by three months' notice
or less without giving rise to any claim for damages or compensation
(other than a statutory redundancy payment or statutory compensation
for unfair dismissal).
7.3 No Group Company owes any amounts to, or has any outstanding
obligations in respect of, any present or former directors, employees
or shareholders of such company other than remuneration accrued during
the month in which this Agreement has been entered into.
7.4 Save to the extent (if any) to which provision or allowance has been
made in the Accounts:
7.4.1 no Group Company has any liability for breach of any contract
of service or for services, for redundancy payments,
protective awards or for compensation for wrongful dismissal
or unfair dismissal or for failure to comply with any order
for the reinstatement or re-engagement of any employee or for
any other liability accruing from the termination or variation
of any contract of employment or for services; and
20
7.4.2 no gratuitous payment has been made or promised in connection
with the actual or proposed termination or suspension of
employment or variation of any contract of employment of any
present or former director or employee.
7.5 There is no arrangement to which any Group Company contributes or may
become liable to contribute under which benefits of any kind are
payable to or in respect of any of the employees, directors or officers
or any former employee or former director or former officer of any
Group Company (or to any spouse or dependant of any of them) on
retirement, on death or in the event of disability or sickness or in
other similar circumstances.
7.6 All Intellectual Property which is or has been devised, invented or
developed by an employee of any Group Company during the course of
their employment has been assigned to and/or is solely and beneficially
owned by such Group Company and no employee of any Group Company has
acquired any rights in any Intellectual Property which has been
devised, invented or developed by such Group Company.
7.7 The Company is not and never has been a party to and has no obligation
and never has had any obligation to provide and does not participate in
or contribute to and never has participated in or contributed to any
pension scheme.
8 AUTHORITIES
8.1 So far as the Existing Shareholder is aware, each Group Company has
obtained and complied with all permits, authorities, licences and
consents (whether granted by public of private authority) necessary or
used to carry on its business effectively and without hindrance in the
manner and in the places in which its business is now carried on and
there are no circumstances known to her which are likely to lead to the
suspension, alteration or cancellation of any such permits,
authorities, licences or consents, nor is there any agreement which
restricts the fields within which it may carry on its business.
9 LITIGATION
9.1 No Group Company is engaged in, nor is any officer of any Group Company
engaged in, any legal proceedings (including litigation, arbitration,
prosecution or any hearing before any tribunal or official body). There
are no such proceedings pending or threatened and so far as the
Existing Shareholder is aware, there has been no act, omission or other
occurrence which will or is likely to give rise to any such
proceedings.
9.2 There is no judgement or order of any court, tribunal or official body
against any Group Company or any officer which has not been fully
satisfied or discharged.
10 APPLICABLE LEGISLATION
10.1 No notice has been received that any Group Company is in breach of any
legislation or regulations nor, so far as the Existing Shareholder is
aware, is any Group Company in material breach of any such legislation
or regulations.
21
11 RECORDS AND DOCUMENTS
11.1 The copies of the Memorandum and Articles of Association (having
attached thereto copies of all resolutions and agreements referred to
in Section 380 of the Companies Act 1985) of each Group Company
delivered to the Investor prior to the date hereof are true and
complete copies.
11.2 The register of members of each Group Company is correct, there has
been no notice of any proceedings to rectify the register and there are
no circumstances which might lead to any application for rectification
of the register.
11.3 Each Group Company has kept duly made up all requisite books of
account, statutory registers and records and these and all other
documents (properly stamped where necessary) belonging to or which
ought to be in the possession of each Group Company are in its
possession.
11.4 All documents requiring to be filed with the Registrar of Companies by
each Group Company have been properly made up and punctually filed.
12 INSURANCE
Details of the current insurance cover of the Company are set out in
the Disclosure Letter.
13 COMPANY AGREEMENTS
13.1 So far as the Existing Shareholder is aware, no Group Company has
committed, or omitted to do, any act or thing which could give rise to
any fine or penalty, nor is any Group Company a party to any agreement
or practice or arrangement which in whole or in part is in breach of
any legislation or regulation.
13.2 No Group Company is party to any contract, transaction, arrangement or
liability:-
13.2.1 which is outside the ordinary course of business of a company
which develops and operates conference centre facilities;
13.2.2 in respect of which such Group Company is in material default
in respect of any obligation or restriction binding upon it;
13.2.3 in respect of which such Group Company has received any notice
of any claim for misrepresentation or breach of contract; or
13.2.4 which includes a "change of control" or "change of management"
clause which might result in termination of such contract,
transaction or arrangement following completion of the
transactions recorded in this Agreement.
13.3 No Group Company is party to any contract, transaction or arrangement
for the provision of services by the Company which is of a loss-making
nature (i.e. known to be likely to result in a loss of more than
(pound)500 to such Group Company on completion or performance).
14 LOANS AND FINANCIAL FACILITIES
14.1 No Group Company has made or obtained any loans which now remain
outstanding in whole or in part.
14.2 No Group Company has any loan capital or debenture or any mortgage,
charge, lien (other than a lien arising in the ordinary course of
business) or other encumbrance over any of its assets.
22
14.3 No Group Company has any liability (present, future, ascertained or
contingent) under:-
14.3.1 any guarantee, surety, bond or similar obligation; or
14.3.2 any agreement for the hire, rent, hire purchase or purchase on
deferred terms of any asset.
15 LIABILITIES TO THE EXISTING SHAREHOLDER
15.1 No Group Company has any liability to:-
15.1.1 the Existing Shareholder apart from remuneration accrued
during the month in which this Agreement has been entered
into;
15.1.2 any Associates of the Existing Shareholder; or
15.1.3 any company of which three per cent or more of the equity
share capital is owned or controlled directly or indirectly by
the Existing Shareholder and/or her Associates.
15.2 Neither the Existing Shareholder nor any of her Associates has any
interest in any other firm, business or company which has or has had a
material or close trading relationship with or is or may be in
competition with any Group Company.
16 INSOLVENCY
16.1 No Group Company is insolvent as defined by Section 123 of the
Insolvency Act 1986 or has entered into any scheme or arrangement or
voluntary or other arrangement with any of its creditors.
16.2 No order has been made or resolution passed for the winding up of any
Group Company and there is not outstanding any petition for winding up
of a Group Company or any petition applying for an administration order
to be made in relation to a Group Company or any receivership of the
whole or any part of the undertaking or assets of a Group Company.
16.3 There are no circumstances which would entitle any person to present a
petition for the winding up of a Group Company or to present a petition
applying for an administration order to be made in relation to a Group
Company or to appoint a receiver of the whole or any part of its
undertaking or assets.
17 TAXATION
17.1 Save to the extent that specific provision has been made in the
Accounts for any liability or contingent liability to Taxation and save
for any liability to corporation tax arising in the ordinary course of
the Company's normal trading since the Accounts Date, no Group Company
has any liability or contingent liability in respect of any form of
Taxation (the deprivation or nullifying of any relief or advantage
(including the right to set past losses against future profits) or the
requirement to make any payment or the loss of the right to any
repayment by or to the Inland Revenue or any other authority being
deemed to be a liability in respect of Taxation for the purposes of
this paragraph).
17.2 Each Group Company has duly complied with its obligations to account to
the Inland Revenue and all other relevant authorities for all amounts
for which it is accountable in respect of Taxation or amounts payable
under social security legislation.
23
17.3 All returns and computations in connection with Taxation that should
have been made by each Group Company have been made correctly and on a
proper basis; no such return or computation has been or is likely to be
disputed and there are no facts known or which would on reasonable
enquiry be known to the Company or the Existing Shareholder, which may
give rise to any such dispute or to any claim for any Taxation or to
the deprivation of any relief from Taxation or advantage that would be
likely to have been available.
17.4 No Group Company has been a party to any scheme or arrangement partly
or wholly for the purpose of artificially avoiding Taxation.
17.5 Each Group Company is duly registered for VAT purposes and has in all
other respects complied with the Value Added Tax Act 1994 and all
orders, regulations, directions or conditions made or imposed
thereunder and has maintained correct and up-to-date records, invoices
and other documents appropriate or necessary for the purposes of such
legislation and is not in arrears with any payment or returns or liable
to any abnormal or non-routine payment or any forfeiture or penalty or
to the operation of any penal provision. Each Group Company is a
taxable person for the purposes of such legislation and is not treated
and has not at any time been treated as a member of a group for the
purpose thereof nor has any application for it to be so treated at any
time been made.
17.6 No rents, interest annual payments or other sums of an income nature
paid or payable by any Group Company are, or are likely to be, wholly
or partially disallowable in calculating the tax liability of such
Group Company and no contacts which could result in future
disallowances have been entered into.
17.7 The Company has notified the Inspector of Taxes of all expenditure
qualifying for plant and machinery capital allowances which it has
incurred in accordance with the requirements of FA1994 s118.
17.8 No Group Company has acquired or disposed of any asset other than at
arm's length.
17.9 The Inland Revenue (or any other authority interested in Taxation) has
not investigated any transaction entered into by any Group Company with
a view to applying TA1988 S770 (transfer pricing) and no Group Company
has been party to any transaction or arrangement to which the
provisions of that section can be applied.
17.10 Any VAT or equivalent tax for which any Group Company is required to
account in another country has been paid and all related regulatory
requirements have been satisfied.
17.11 Each Group Company has in all respects complied with the requirements
of Customs & Excise, the Department of Trade and Industry, and any
other customs authority, and no Group Company has or has reason to
expect to have, a dispute with any of such authorities.
17.12 No Group Company has ever been the subject of an investigation or
discovery by or involving any of the investigation units of the Inland
Revenue or Customs & Excise and there are no circumstances existing
which make it likely that an investigation or discovery will be made.
24
18 INTELLECTUAL PROPERTY
18.1 All Intellectual Property used or acquired by the Company in connection
with its business and/or which is necessary or required to carry on its
business (as carried on at the date hereof), is in full force and
effect and is vested in, and beneficially owned by or licensed to the
Company and no third party has claimed that use of such Intellectual
Property by the Company infringes its rights.
18.2 In relation to Intellectual Property which is owned by the Company, the
Company is the sole beneficial owner of such Intellectual Property and
(where registration is possible) the Company has been and is registered
as sole proprietor and so far as the Existing Shareholder is aware the
rights in respect of such Intellectual Property are valid, subsisting
and enforceable and no third party has made any claim or asserted any
right in respect thereof.
18.3 In respect of the Intellectual Property which is licensed to the
Company, so far as the Existing Shareholder is aware each such
agreement or licence granted is valid and subsisting and the Company
has not done anything nor is the Company aware of anything which would
cause any such licence to be terminated or to cease or which
constitutes a breach of the terms of any such agreement or licence.
18.4 The Company has not made any claim or issued any proceedings against
any third party in respect of any unauthorised use or infringement of
its Intellectual Property, nor has the Company received notice of any
claim or proceedings from any third party in respect of the any
Intellectual Property used by the Company.
19 PROPERTIES
19.1 The Properties comprise all the land and buildings owned by the Company
or used or occupied by it or in which it has any other interest, right
or liability.
19.2 The Company is in physical possession and actual occupation of the
Properties on an exclusive basis.
19.3 No notices, orders, proposals, applications, requests or schedules of
dilapidations affecting or relating to any of the Properties have been
served or made by any authority or other person or by the Company and
there are no circumstances which are likely to result in any being
served or made.
19.4 The Company has not received any notice claiming any outstanding and
unobserved or unperformed obligation of the Company with respect to the
Properties necessary to comply with the requirements (whether formal or
informal) of any competent authority exercising statutory or delegated
powers.
19.5 None of the Properties is subject to the payment of any outgoings other
than general or water rates (and in the case of leaseholds, sums
reserved by the relevant lease) and all outgoings have been duly paid
to date, and none is in dispute.
19.6 No action, claim, proceeding, demand, dispute or liability (contingent
or otherwise) in respect of any of the Properties is outstanding or
anticipated.
19.7 No dispute with any adjoining or neighbouring owner with respect to
boundary walls and fences or with respect to any easement right or
means of access to any neighbouring property or its use or occupation
is outstanding.
25
19.8 In relation to each of the Properties:-
19.8.1 each Property is held under the terms of the lease ("THE
LEASE") which is correctly summarised in Part 4 of the
Schedule and no licences or collateral assurances,
undertakings or concessions have been granted;
19.8.2 no notices have been served by the landlord in respect of any
Lease;
19.8.3 so far as the Existing Shareholder is aware the Company has
observed and performed the covenants and the conditions
contained in the Lease in all material respects, and has
received no complaint regarding any alleged breach of any of
such covenants and conditions;
19.9 The Company has not at any time:-
19.9.1 had vested in it (whether as an original tenant or undertenant
or as an assignee, transferee or otherwise) any freehold or
leasehold property other than the Properties; or
19.9.2 given any covenant or entered into any agreement, deed or
other document (whether as a tenant or undertenant or as an
assignee, transferee, guarantor or otherwise) in respect of
any freehold or leasehold property other than those disclosed
in the Disclosure Letter in respect of which any contingent or
potential liability remains with the Company.
26
PART 4
THE PROPERTIES
1. 24 and ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ more
particularly described in a Lease dated the 3rd day of April 2000 and
made between The Master Fellows and Scholars of Trinity College,
Cambridge (1) and Q Ton Limited (2) and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (3).
2. ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ more particularly
described in a lease annexed to an Agreement for Lease dated the 3rd
day of September 1999 and made between The Master Fellows and Scholars
of Trinity College Cambridge (1) Q Ton Limited (2) and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(3).
27
PART 5
MAIN TERMS OF SERVICE CONTRACT
POSITION: Chief Executive Officer
SALARY: Nil
OTHER BENEFITS: Company car appropriate to position
HOLIDAY: 20 days
WORKING HOURS: Such time as is required to properly perform her duties
28
EXECUTED as a DEED by )
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ) ...............................
)
in the presence of: )
Witness ...................................
Full name .................................
Address ...................................
EXECUTED as a DEED by )
EUROTELECOM CORPORATION )
LIMITED acting by its two duly )
authorised officers: )
...........................................
Director
...........................................
Director/Secretary
EXECUTED as a DEED by )
Q.TON LIMITED )
acting by its two duly )
authorised officers: )
...........................................
Director
...........................................
Director/Secretary
29
