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EXHIBIT 2.1
SHARE PURCHASE AGREEMENT
BY AND BETWEEN
UBICS, INC.
AND
TEKSYS INC.
MARCH 30, 2001
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TABLE OF CONTENTS
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ARTICLE I THE TRANSACTION.........................................................................................1
1.1. Sale and Purchase of Shares..........................................................................1
1.2. Consideration........................................................................................2
1.3. Payment of the Consideration:........................................................................2
1.4. Adjustment to Consideration..........................................................................3
1.5. Earn-Out.............................................................................................3
1.6. Closing Time and Place...............................................................................5
1.7. Deliveries and Proceedings at the Closing............................................................5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER...............................................................5
2.1. Corporate Existence and Power........................................................................5
2.2. Ownership and Control................................................................................6
2.3. Subsidiaries.........................................................................................6
2.4. Power, Authorization and Enforceability..............................................................6
2.5. No Violation.........................................................................................7
2.6. Financial Statements.................................................................................7
2.7. No Undisclosed Material Liabilities..................................................................7
2.8. No Material Adverse Changes..........................................................................8
2.9. Taxation.............................................................................................9
2.10. No Pending Litigation or Proceedings................................................................10
2.11. Material Contracts..................................................................................11
2.12. Contract Compliance.................................................................................12
2.13. Compliance with Laws................................................................................12
2.14. Environmental Compliance............................................................................12
2.15. Title...............................................................................................15
2.16. Transactions with Related Parties...................................................................15
2.17. Compensation Arrangements; Bank Accounts:...........................................................16
2.18. Employment..........................................................................................16
2.19. Insurance...........................................................................................18
2.20. Intellectual Property...............................................................................19
2.21. Employee Benefit Plans..............................................................................20
2.22. Finders' Fees.......................................................................................21
2.23. Other Representations Regarding Each of the Companies' Assets and Liabilities.......................21
2.24. Accurate Disclosure.................................................................................24
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................................................24
3.1. Organization and Good Standing......................................................................25
3.2. Corporate Power and Authority.......................................................................25
3.3. Due Authorization...................................................................................25
3.4. Finders' Fees.......................................................................................25
3.5. Consents and Governmental Authorization.............................................................25
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3.6. Non-Contravention..................................................................................25
3.7. Legal Proceedings..................................................................................25
ARTICLE IV CONDITIONS TO CLOSING.................................................................................25
4.1. Conditions Precedent to Obligations of Purchaser...................................................25
4.2. Conditions Precedent to Obligations of Seller......................................................27
ARTICLE V TERMINATION OF AGREEMENT...............................................................................28
5.1. Grounds for Termination............................................................................28
5.2. Effect of Termination..............................................................................28
ARTICLE VI COVENANTS.............................................................................................29
6.1. Conduct of Business of each of the Companies.......................................................29
6.2. Access to Information..............................................................................30
6.3. No Solicitation....................................................................................30
6.4. Publicity..........................................................................................30
6.5. Best Efforts; Notification.........................................................................31
6.6. Confidentiality....................................................................................31
6.7. Noncompetition and Nonsolicitation.................................................................32
6.8. Injunctive Relief..................................................................................33
ARTICLE VII INDEMNIFICATION......................................................................................33
7.1. Survival...........................................................................................33
7.2. Indemnification....................................................................................33
7.3. Claims.............................................................................................34
7.4. Notice of Third Party Claims; Assumption of Defense................................................35
7.5. Settlement or Comprise.............................................................................35
7.6. Failure of Indemnifying Person to Act..............................................................36
7.7. Installment Payment Offset.........................................................................36
ARTICLE VIII MISCELLANEOUS.......................................................................................36
8.1. Notices............................................................................................36
8.2. Succession and Assignment..........................................................................37
8.3. Costs and Expenses.................................................................................37
8.4. Public Announcements...............................................................................37
8.5. Headings...........................................................................................37
8.6. Counterparts.......................................................................................37
8.7. Amendment and Waiver...............................................................................37
8.8. Entire Agreement...................................................................................38
8.9. Governing Law......................................................................................38
8.10. Severability.......................................................................................38
8.11. Jurisdiction.......................................................................................38
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EXHIBITS
Exhibit A Form of Opinion of Seller's Counsel
Exhibit B Form of Tax Deed
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SHARE PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of March 30, 2001 (the "Agreement")
by and between UBICS, Inc., a Delaware corporation ("Purchaser"), and Teksys
Inc., a Mauritius company ("Seller").
BACKGROUND:
Seller owns all of the issued share capital of (i) European Software
Services (UK) Limited, a company registered in England and Wales as company
number 3289332 and incorporated as a private company limited by shares under the
Companies Act of 1985 ("ESS"), consisting of two (2) shares of ESS, nominal
value in GBP "(pound)" 1.00 per share ("ESS Shares"); and (ii) Oakwood Technical
Services Limited, a company registered in England and Wales as company number
3028569 and incorporated as a private company limited by shares under the
Companies Act of 1985 ("OTS"), consisting of seven (7) shares, nominal value
(pound)1.00 per share ("OTS Shares"); and (iii) Reflex I.T. Solutions Limited, a
company registered in England and Wales as company number 3674888 and
incorporated as a private company limited by shares under the Companies Act of
1985 ("Reflex"), consisting of one thousand (1,000) shares, nominal value
(pound) 1.00 per share ("Reflex Shares") (ESS, OTS and Reflex are collectively
referred to herein as the "Companies").
Seller desires to sell and transfer to Purchaser, and Purchaser desires
to purchase and acquire from Seller, the ESS Shares, the OTS Shares and the
Reflex Shares (collectively, the "Shares") pursuant to the terms and conditions
stated herein.
THEREFORE, in consideration of the premises and the mutual covenants,
agreements, representations, and warranties herein contained, the parties
hereto, intending to be legally bound, agree as follows.
ARTICLE I
THE TRANSACTION
1.1. Sale and Purchase of Shares.
(a) Sale and Purchase. At the Closing referred to in Section
1.3 below, Seller will sell, transfer, assign and deliver to Purchaser, with
full title guarantee, and Purchaser will purchase and acquire from Seller, free
and clear of all Liens (as hereinafter defined), the Shares together with all
rights now or hereafter attaching thereto, for the consideration set forth in
Section 1.2.
(b) Definition. As used in this Agreement, the term "Lien"
means (i) any lien (including any lien relating to Taxation (as that term is
defined in Section 2.9 hereof)), pledge, or negative pledge, (ii) any mortgage,
deed of trust, security interest, charge in the nature of a lien or security
interest, (iii) any title retention agreement, right of first refusal, right of
first purchase or other similar option, (iv) any conditional sale agreement,
easement, right of way, variance or other
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real estate declaration, (v) any rental, hire purchase, credit sale or other
agreement for payment on deferred terms, or (vi) any other similar transfer or
other restriction, servitude or other encumbrance.
1.2. Consideration. In consideration of the sale and transfer of the
Shares pursuant to Section 1.1 above, Purchaser shall pay (a) an aggregate
amount in cash equal to One Million Four Hundred Thousand Pounds Sterling
((pound)1,400,000) (the "Consideration") plus (b) such amounts as may be payable
pursuant to Section 1.5 hereof.
1.3. Payment of the Consideration. The Consideration shall be payable
to Seller in four (4) installments as follows:
(a) Closing Installment. At the Closing (as hereinafter
defined), Purchaser shall pay to Seller an amount equal to (pound)490,000 by
bank check in immediately available funds or by a wire transfer to the account
designated by Seller in writing prior to the Closing.
(b) Subsequent Installments. The second installment payment
shall be made to Seller on the date which is six (6) months after the Closing
Date (as hereinafter defined) in an amount equal to (pound)303,333. The third
installment payment shall be made to Seller on the first anniversary of the
Closing Date in amount equal to (pound)303,333. The fourth and final installment
payment shall be made to Seller on the date which is eighteen (18) months after
the Closing Date in amount equal to (pound)303,334. All payments under this
Section 1.3(b) shall be by bank check or by wire transfer to the account
designated by Seller in writing and shall be made by the Escrow Agent (as
hereafter defined) out of the funds deposited with it in accordance with Section
1.3(c). The third and fourth installment payments are subject to adjustment in
accordance with Sections 1.3(d) and 1.4.
(c) Escrow for Subsequent Installments. At the Closing,
Purchaser shall deposit with ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as Escrow Agent, pursuant to the
terms of a mutually agreeable Escrow Agreement among Purchaser, Seller and
Escrow Agent (the "Escrow Agreement"), the amount of (pound)606,666 (the
"Initial Escrow Funds"), representing the amount of the second installment
payment plus 50% of each of the third and fourth installment payments. On or
before the date of the third installment payment, Purchaser shall deposit with
the Escrow Agent an additional (pound)151,667 ("Purchaser's First Additional
Deposit"), and on or before the date of the fourth installment payment,
Purchaser shall deposit with the Escrow Agent the amount of (pound)151,667
("Purchaser's Second Additional Deposit"). Each of Purchaser's First Additional
Deposit and Purchaser's Second Additional Deposit shall be accompanied by a
payment of interest accrued on such amount since the Closing Date at a rate, per
annum, equal to the average rate earned by Purchaser during such period on its
cash investments. The Escrow Agreement shall provide that the Escrow Agent will
pay to Seller on the installment payment dates the following amounts, plus
interest accrued on such amounts: (i) (pound)303,333 on the second installment
payment date, (ii) (pound)151,666 plus Purchaser's First Additional Deposit on
the third installment payment date, and (iii) (pound)151,666 plus Purchaser's
Second Additional Deposit on the fourth installment payment date.
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(d) Offset. Up to the entire amount of Purchaser's First and
Second Additional Deposits pursuant to Section 1.3(c) may be offset by Seller's
indemnification obligations to Purchaser hereunder and under the Tax Deed (as
hereinafter defined).
1.4. Adjustment to Consideration. The Consideration shall be subject to
adjustment as provided in this Section 1.4 (the "Adjustment").
(a) Closing Audit. Following the Closing Date, Purchaser shall
cause ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP ("▇▇▇▇▇▇▇▇") to audit the accounts of the Companies as
of the Closing Date, and to deliver to Seller and Purchaser, within 90 days
after the Closing Date, a statement setting forth the calculation of the Working
Capital (as hereinafter defined) as of the Closing Date in accordance with GAAP
(as hereinafter defined) together with an explanation of ▇▇▇▇▇▇▇▇'▇ calculation
thereof (the "Audit Statement"). The Audit Statement shall be final and binding
on Purchaser and Seller.
(b) Payment of Adjustment. The amount of the Adjustment, if
any, shall be determined and paid as follows:
(i) if the Working Capital on the Audit Statement
exceeds the Working Capital shown on the Balance Sheets (the "Target Working
Capital Amount"), then the Adjustment shall be an amount equal to such excess,
and 50% of such Adjustment shall be added to each of the Purchaser's First and
Second Additional Deposits pursuant to Section 1.3(c); or
(ii) if the Working Capital on the Audit Statement is
less than the Target Working Capital Amount, then the Adjustment shall be an
amount equal to such difference, and 50% of such Adjustment shall be deducted
from each of the Purchaser's First and Second Additional Deposits pursuant to
Section 1.3(c).
(c) Definition. For purposes of this Section 1.4, the term
"Working Capital" means (i) the aggregate current assets (determined in
accordance with GAAP) of the Companies less (ii) the sum of (A) the aggregate
current liabilities (determined in accordance with GAAP) of the Companies plus
(B) the aggregate long- and-short-term debt of the Companies.
1.5. Earn-Out.
(a) Purchaser shall pay to Seller, as additional payment for
the Shares, such amount, if any, as may be payable in accordance with the
provisions of this Section 1.5 (the "Earn-Out Payments"). The Earn-Out Payments
shall be payable with respect to each calendar year, or portion thereof, from
the date of this Agreement until December 31, 2005 (each, an "Earn-Out Period").
The initial Earn-Out Period shall commence on the date immediately following the
Closing Date and end on December 31, 2001. The final Earn-Out Period shall end
on December 31, 2005. The amount of the Earn-Out Payment for any Earn-Out Period
shall be equal to ten percent (10%) of the amount by which EBIT exceeds Target
EBIT for such Earn-Out Period.
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(b) For purposes of this Section 1.5, the following terms
shall have the following meanings:
(i) "Annual Corporate Allocation" for an Earn-Out
Period means the amount equal to the product of (A) Purchaser's consolidated
selling, general and administrative ("SGA") expenses, multiplied by (B) a
fraction, the numerator of which is the total revenues of the Companies for the
Earn-Out Period, and the denominator of which is the total consolidated revenues
of Purchaser for the Earn-Out Period.
(ii) "EBIT" for the applicable Earn-Out Period means
the Companies' consolidated net income (excluding extraordinary gains or losses)
before taxes based on income or profits of the Companies for such Earn-Out
Period, minus the Annual Corporate Allocation (or the allocable portion thereof
for any partial fiscal year) for the corporate overhead contribution by
Purchaser for financing and accounting, legal, human resources and other
administrative services rendered by or on behalf of Purchaser for the benefit of
the Companies that are not separately invoiced to and paid by the Companies.
(iii) "Target EBIT" means (A) for the Earn-Out Period
ending December 31, 2001, $791,782; (B) for the Earn-Out Period ending December
31, 2002, $1,872,519; (C) for the Earn-Out Period ending December 31, 2003,
$3,027,506; and (D) for the Earn-Out Periods ending December 31, 2004 and 2005,
as mutually agreed to between Purchaser and Seller prior to the commencement of
each such Earn-Out Period.
(iv) "Purchaser's Auditors" means the independent
auditors of Purchaser's financial statements from time to time.
(c) Within 120 days after the end of each Earn-Out Period,
Purchaser shall cause Purchaser's Auditors to compute the EBIT for the Earn-Out
Period and provide Seller with a statement of such EBIT (the "EBIT Statement").
The computation of EBIT in the EBIT Statement shall be in British Pounds
Sterling using the exchange rate prevailing on the last day of the Earn-Out
Period. The EBIT Statement shall become final and binding upon Purchaser and
Seller unless, within 20 days following submission to Seller, Seller notifies
Purchaser of its objection thereto in writing, providing reasonable specificity
as to the basis for its objection. If Seller so notifies Purchaser of its
objection to any EBIT Statement, Seller and Purchaser shall negotiate in good
faith to resolve any differences. If, within 30 days following the receipt of
such notice by Purchaser, any of such differences have not been resolved, they
shall be resolved by an independent public accounting firm jointly chosen by
Seller and Purchaser (the "Independent Auditors") and the Independent Auditors'
special report thereon within 30 days or as promptly as reasonably practicable
thereafter. The resulting EBIT Statement, reflecting any modifications
recommended by the Independent Auditors in order for the EBIT Statement to
conform to the requirements of this Agreement, shall be final, binding and not
subject to any appeal. The fees and expenses of the Independent Auditors in
connection with any such resolution shall be paid by Seller, if the amount
payable by Purchaser to Seller in accordance with the EBIT Statement is not
modified as a result of the Independent Auditors' special report,
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or by Seller, if the amount payable by Purchaser to Seller in accordance with
the EBIT Statement is modified as a result of the Independent Auditors' special
report. The payment of the Earn-Out Payment shall be made to Seller within ten
days after the later of (i) the date that Seller and Purchaser agree on the EBIT
Statement or (ii) the date that the EBIT Statement becomes final and binding
upon the parties in accordance with this Section.
1.6. Closing Time and Place. The consummation and closing of the
transactions contemplated under this Agreement (the "Closing") will take place
on the second business day following the satisfaction of the conditions set
forth in Sections 4.1 and 4.2, or the waiver in writing thereof (to the extent
permitted by applicable law) by the party in whose favor such conditions run, at
the office of OTS in London, UK, or at such other time, date or place as
Purchaser and Seller shall mutually agree in writing. The date on which the
Closing occurs is sometimes referred to herein as the "Closing Date."
1.7. Deliveries and Proceedings at the Closing. At the Closing:
(a) Deliveries by Seller. Seller will deliver to Purchaser,
(i) free and clear of all Liens, certificates for the Shares, together with duly
executed share transfer forms relating to such Shares, and (ii) the agreements,
documents and certificates required to be delivered by Seller under Section 4.1.
(b) Deliveries by Purchaser. Purchaser will deliver to Seller
(i) the initial installment of the Consideration in accordance with Section
1.3(a), and (ii) the agreements, documents and certificates required to be
delivered by it under Section 4.2, and will deliver to the Escrow Agent the
Initial Escrow Funds in accordance with Section 1.3(c).
(c) Other Deliveries. The closing certificates and other
documents required to be delivered at the Closing pursuant to this Agreement
will be exchanged.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser, except as set forth
in the disclosure schedule delivered by Seller to Purchaser on the date hereof
(the "Disclosure Schedule"), the numbers of which correspond to the Section
numbers of this Agreement to which they refer, as follows:
2.1. Corporate Existence and Power.
(a) Each of the Companies is a corporation duly incorporated
and validly existing under the laws of England and Wales. Each of the Companies
has all requisite corporate power and authority to own or lease its properties
and assets as now owned or leased and is duly qualified to do business and is in
good standing in the jurisdictions listed in Schedule 2.1, which is each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified would not have a Material Adverse Effect (as
hereinafter delivered) on such Company.
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Each of the Companies has all governmental licenses, permits, authorizations,
consents and approvals required to carry on its business as currently conducted,
except for such governmental licenses, permits, authorizations, consents and
approvals which the failure to have obtained would not have a Material Adverse
Effect on such Company. There is no order, decree or judgment of any court or
any governmental or supranational authority or other competent authority or
agency of the United Kingdom or any foreign country ("Governmental Body")
outstanding against any of the Companies which would have a Material Adverse
Effect on such Company. As used in this Agreement, "Material Adverse Effect,"
with respect to any Person (as hereinafter defined), means a material adverse
effect or impact on the financial condition, business, properties, assets,
Liabilities (as that term is defined in Section 2.7) (including contingent
Liabilities), or results of operations of such Person. As used in this
Agreement, the term "Person" means any individual, company, corporation,
partnership, firm, joint venture, limited liability company, association, trust,
unincorporated organization or Governmental Body.
(b) The copies of each of the Companies' memorandum and
articles of association, as amended to date, have been delivered to Purchaser,
in each case certified by each of the Companies' respective Secretaries, and are
true, correct and complete and are in full force and effect as of the date
hereof and have embodied therein or annexed thereto a copy of every resolution
or agreement as is required by law to be embodied in or annexed to them, and set
out completely the rights and restrictions attaching to each class of authorized
share capital of the respective Companies.
2.2. Ownership and Control. Schedule 2.2 sets forth a correct and
complete list of (a) the authorized share capital of each Company and (b) the
number of shares of each class of share capital of each Company issued and
outstanding. All of the issued and outstanding shares of each Company are owned
by Seller and have been duly authorized and validly issued and are fully paid
and non-assessable. Except as otherwise disclosed on Schedule 2.2, there are no
outstanding (x) options, warrants, agreements and other rights for the
acquisition of the Company's share capital, (y) securities or other obligations
of the Company which are convertible into such share capital or (z) options,
sale agreements, shareholder agreements, pledges, proxies, voting trusts, powers
of attorney, restrictions on transfer or other agreements or instruments which
are binding on Seller or any of the Companies and which relate to the ownership,
voting or transfer of any of such share capital.
2.3. Subsidiaries. None of the Companies has any subsidiaries. For the
purposes of this Agreement, a "subsidiary" of an entity shall mean a
corporation, company or other entity (i) more than 50% of whose outstanding
shares or securities (representing the right to vote for the election of
directors or other managing authority) are, or (ii) which does not have
outstanding shares or securities (as may be the case in a partnership, limited
liability company, joint venture or unincorporated association), but more than
50% of whose ownership interest representing the right to make decisions for
such other entity is, now or hereafter owned or controlled, directly or
indirectly, by such entity.
2.4. Power, Authorization and Enforceability. Seller has the corporate
power and authority to own the Shares, to conduct its business as presently
conducted and to execute,
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deliver and perform this Agreement and the other Transaction Documents (as
defined in Section 4.1(k)) to which it is a party. This Agreement, the other
Transaction Documents and the transactions contemplated hereby and thereby have
been, and on the Closing Date will be, duly authorized and approved by the Board
of Directors and shareholders of Seller and no other approvals or consents are
required before Seller may duly execute, deliver and perform its obligations
under this Agreement and the other Transaction Documents to which it is a party.
This Agreement has been duly executed and delivered by Seller and constitutes
the legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting the rights
and remedies of creditors generally. Upon delivery to Purchaser at the Closing
of certificates representing the Shares in accordance herewith, Purchaser will
acquire good and valid title to such Shares, free and clear of all Liens and not
subject to any adverse claims.
2.5. No Violation. Neither Seller nor any of the Companies are a party
to, subject to or bound by any agreement or any order, decree or judgment of any
Governmental Body which would prevent the execution, delivery or performance of
this Agreement or any other Transaction Document.
2.6. Financial Statements. Seller has delivered to Purchaser the
following financial statements (the "Financial Statements"):
(i) each of the Companies' financial statements and
other financial information for the years ended December 31, 1998 and March 31,
2000 (the "Year End Financial Statements"); and
(ii) each of the Companies' financial statements
prepared for the five (5) month period ended August 31, 2000 (the "Interim
Financials").
The Financial Statements: (a) present fairly in all material
respects the financial position of each of the Companies as of the dates
thereof, and the results of its operations for the periods covered thereby and
(b) have been prepared in accordance with generally accepted accounting
principles in the United Kingdom consistently applied throughout the periods
covered thereby ("GAAP"), except as otherwise specified therein. All references
in this Agreement to the "Balance Sheet" shall mean that balance sheet of each
of the Companies as of August 31, 2000 included in the Financial Statements and
all references to the "Balance Sheet Date" shall mean August 31, 2000.
2.7. No Undisclosed Material Liabilities. None of the Companies have
any material Liabilities (as hereinafter defined) of any nature, whether
accrued, absolute, or contingent, except for Liabilities that are (a) reflected
or reserved against on the Balance Sheet, (b) incurred in the ordinary course of
business since the Balance Sheet Date, (c) incurred in connection with or as a
result of the transactions contemplated by this Agreement or (d) disclosed on
Schedule 2.7 hereto. "Liabilities" means (x) all indebtedness (whether for
borrowed money or otherwise), obligations, Damages (as defined in Section 7.2 of
this Agreement), Liens, penalties, fines, costs,
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expenses and other liabilities, whether direct or indirect, fixed or contingent
(including any loss contingency), and (y) any guarantees, surety arrangements or
endorsements (other than endorsements for deposits or collection of checks in
the ordinary course of business) with respect to any of the Liabilities
described in clause (x) of any other Person, in any case whether or not the
amount thereof is currently ascertainable.
2.8. No Material Adverse Changes. since the Balance Sheet Date, except
as indicated on Schedule 2.8 and except as otherwise contemplated by this
Agreement, there has not been:
(a) Material Adverse Effect with respect to any of the
Companies;
(b) Any damage, destruction or loss, whether or not covered by
insurance, adversely affecting the properties or business of any of the
Companies;
(c) Any declaration, setting aside or payment of a dividend or
other distribution in respect of any of the Shares, or any redemption, purchase
or other acquisition of any share capital of any of the Companies or of any
rights to purchase such share capital or convertible into or exchangeable for
such share capital;
(d) Any increase in the salaries or other compensation payable
or to become payable to, or any advance (excluding advances for business
expenses in the ordinary course) or loan to, any officer, director, employee,
agent or shareholder of any of the Companies (except normal annual merit
increases made in the ordinary course to non-officer employees), or any increase
in, or any addition to, other benefits (including without limitation any bonus,
profit sharing, severance, pension or other plan) to which any of its or their
officers, directors, employees or shareholders may be entitled, or any payments
to any pension, retirement, profit-sharing, bonus, severance or similar plan
except payments made pursuant to the compensation arrangements disclosed on
Schedule 2.17 hereto or the employee benefit arrangements disclosed on Schedule
2.21 hereto, or any other payment of any kind to or on behalf of any such
officer, director, employee or shareholder other than payment of base
compensation and reimbursement for reasonable business expenses in the ordinary
course;
(e) Any making or authorization of a capital expenditure in
excess of (pound)5,000 for any single project;
(f) Any sale, transfer or other disposition of any assets of
any of the Companies, except sales or replacements of assets in the ordinary
course of business;
(g) Any payment, discharge or satisfaction of any Liability by
any of the Companies, other than the payment, discharge or satisfaction, in the
ordinary course of business, of Liabilities shown or reflected on the Balance
Sheet or incurred in the ordinary course of business since the Balance Sheet
Date;
(h) Any change by any of the Companies in any method of
accounting or accounting practice, except for such changes as are required by
reason of a concurrent change in GAAP;
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(i) Any creation, incurrence, assumption or guarantee by any
of the Companies of any Liabilities, except in the ordinary course of business,
or any creation, incurrence, assumption or guarantee by the Companies of any
indebtedness for money borrowed in excess of (pound)5,000;
(j) any recapitalization or reorganization of any of the
Companies; or
(k) any amendment or other change (or any authorization to
make such an amendment or change) to any of the Companies' memorandum or
articles of association.
2.9. Taxation.
(a) Definitions. The following terms, as used herein, have the
following meanings:
"Taxation" means all forms of taxation, duties, imposts,
charges, withholdings, contributions, impositions and levies whatsoever and
whenever imposed and whether of the United Kingdom or elsewhere and without
prejudice to the generality of the foregoing includes:
(i) income tax, corporation tax, advance corporation
tax, petroleum revenue tax, capital gains tax, inheritance tax, stamp duty,
stamp duty reserve tax, value added tax, customs and other import duties,
national insurance and social security contributions and any payment whatsoever
which any of the Companies may or becomes legally bound to make to any person,
revenue, customs or fiscal authority or any other body or authority as a result
of any enactment relating to taxation and any other taxes, duties, levies or
imposts supplementing or replacing any of the foregoing; and
(ii) all interest, fines or penalties in respect of
an relating to any of the foregoing.
(b) The Financial Statements make full provision or reserve
for all Taxation (including deferred Taxation) which are reasonably foreseeable
to be assessed on the Companies, or for which any of the Companies may be
accountable, in respect of the period ended on the Balance Sheet Date. All
returns, notifications, computations and payments which should be, or should
have been, made or given by the Companies for any Taxation purpose were made
within the requisite periods and were up-to-date, correct and on a proper basis
and, except as disclosed on Schedule 2.9, none of them is, or is likely to be,
the subject of any dispute with the Inland Revenue or other Taxation
authorities.
(c) Each of the Companies has duly deducted and accounted for
all amounts which it has been obliged to deduct in respect of Taxation and, in
particular, has properly operated the PAYE system, by duly deducting tax from
all payments made, or treated as made, to its employees or former employees, and
accounting to the Inland Revenue for all tax so deducted and for all tax
chargeable on benefits provided for its employees or former employees.
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(d) None of the Companies is, or will become, liable to pay,
or to reimburse or indemnify any person in respect of, any Taxation (or amounts
corresponding thereto) in consequence of the failure by any other person to
discharge that Taxation within any specified period or otherwise, where such
Taxation relates to a profit, income or gain, transaction, event, omission or
circumstance arising, occurring or deemed to arise or occur (whether wholly or
partly) on or prior to the date of this Agreement.
(e) None of the Companies has, since the Balance Sheet Date,
incurred or is liable to incur after that date expenditure which will not be
wholly deductible in computing its taxable profits except for expenditure on the
acquisition of an asset to be held otherwise than as stock-in-trade, details of
which are set out in Schedule 2.9.
(f) None of the Companies has since the Balance Sheet Date,
made or agreed to make a surrender of, or claim for, group relief pursuant to
the Income and Corporation Taxes Act 1988 as amended (the "Taxes Act") Pt X Ch
IV, and none of the Companies is liable to make or entitled to receive a payment
for group relief.
(g) The execution or completion of this Agreement will not
result in any profit or gain deemed to accrue to any of the Companies for
Taxation purposes.
(h) The Companies have not in the six years ending on the date
of this Agreement carried out, or been engaged in, any transactions or
arrangement in respect of which there may be substituted for the purposes of
Taxation, a different consideration for the actual consideration given or
received by the Companies.
(i) If each of the capital assets of the Companies was
disposed of for a consideration equal to its book value in, or adopted for the
purpose of, the Financial Statements, no liability to corporation tax on
chargeable gains or balancing charge under the Capital Allowances Act 1990 would
arise.
(j) Each of the Companies has duly registered and is a taxable
person for the purposes of value added tax.
(k) None of the Companies has ever been treated as a member of
a group under Section 29 Value Added Tax ▇▇▇ ▇▇▇▇.
(l) None of the Companies has, since the Balance Sheet Date,
made a payment which is treated as a distribution for the purposes of Section
418 Taxes Act.
2.10. No Pending Litigation or Proceedings. Except as indicated on
Schedule 2.10, there are no actions, suits or proceedings pending or, to
Seller's Knowledge, threatened at law or in equity, by or before any court or
Governmental Body (a) against any of the Companies or any of the Companies'
assets or against the directors or officers of any of the Companies with respect
to their role as an officer or director of any of the Companies, or (b)
adversely affecting the Shares or Seller's rights thereto. There are presently
no outstanding judgments, decrees, injunction or orders of any court or any
Governmental Body against or adversely affecting any of the Companies or any of
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their assets or their businesses as currently conducted or adversely affecting
the Shares or any of Seller's rights thereto. As used in this Agreement, the
term "Knowledge" means, with respect to Seller, the actual knowledge after due
inquiry of the sole shareholder of Seller and of any director of any of the
Companies, and with respect to Purchaser, the actual knowledge after due inquiry
of any executive officer of Purchaser.
2.11. Material Contracts. Except as set forth on Schedule 2.11, none of
the Companies are a party to or bound by any lease, agreement, contract or
commitment, of the following types (collectively, the "Contracts"):
(a) mortgages, indentures, security agreements or other
agreements and instruments relating to the borrowing of money, the extension of
credit or the granting of Liens;
(b) employment and consulting agreements;
(c) non-compete and non-notification agreements;
(d) union or other collective bargaining agreements;
(e) licenses of patent, trademark and other intellectual
property rights with respect to which any of the Companies are either licensee
or licensor (other than licenses generally available to the public);
(f) any agreement, order or commitment for the purchase of
services, raw materials, supplies or finished products from any one supplier for
an amount in excess of (pound)5,000;
(g) any agreement, order or commitment for the sale of
products or services for more than (pound)5,000 to any single purchaser or
customer;
(h) any contract or option relating to the sale of any
material asset, other than sales in the ordinary course of business;
(i) any agreement or commitment for capital expenditures in
excess of (pound)5,000 for any single project;
(j) any sales agency, manufacturer's representative or
distributorship agreement or other distribution or commission agreement with
third parties;
(k) any partnership or joint venture agreements;
(l) any lease agreements for personal property under which it
is either lessor or lessee; or
(m) any lease agreements for real property.
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2.12. Contract Compliance. All of the Contracts referred to in
subsection (a) through subsection (m) of Section 2.11 above are in full force
and effect, and except as disclosed on Schedule 2.12, neither any of the
Companies nor, to Seller's Knowledge, any other party thereto, is in material
default under any of the terms thereof and to Seller's Knowledge no event has
occurred that with the passage of time or the giving of notice or both would
constitute such a default by any of the Companies, or to the Knowledge of
Seller, any other party under any provision thereof.
2.13. Compliance with Laws. Except as indicated on Schedule 2.13:
(a) Each of the Companies has all material governmental
licenses, permits, franchises, orders, approvals, accreditations, written
waivers and other authorizations (including, without limitation, Environmental
Permits (as defined in Section 2.14)) as are necessary in order to enable it to
own and conduct its business as currently conducted and to occupy and use its
real and personal properties without incurring any material Liability. No
licenses, registration, filing, application, notice, transfer, consent,
approval, order, qualification, waiver or other action of any kind is required
by virtue of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby to avoid the loss of any rights pertaining
to any such license, permit, franchise, order, approval, accreditation, waiver
or authorization. Each of the Companies is in compliance in all material
respects with the terms and conditions of all such licenses, permits,
franchises, orders, approvals, accreditations, waivers and authorizations.
(b) Each of the Companies has conducted and is conducting its
business in compliance in all material respects with applicable statutes,
ordinances, regulations, rules or orders or other material requirements of any
Governmental Body, the European Community and each other jurisdiction in which
it has an establishment or conducts any business (including, but not limited to,
any law, statute, ordinance, regulation, rule, order or requirement relating to
securities, properties, business, the Environment (as defined in Section 2.14),
products, advertising, sales, employment practices, discrimination, immigration,
terms and conditions of employment, wages and hours, safety, occupational health
and safety, health or welfare conditions relating to premises occupied, employee
benefits, plans and programs, product safety and liability or civil rights).
None of the Companies are now charged with or, to Seller's Knowledge, are now
under investigation with respect to any possible violation of any applicable
law, statute, ordinance, regulation, rule, order or material requirement
relating to any of the foregoing in this clause (b) in connection with the
business of such Company as currently conducted, and each of the Companies has
filed all material reports required to be filed with any Governmental Body.
2.14. Environmental Compliance.
(a) The following terms, as used herein, have the following
meanings:
"Environment" means all, or any, of the following media, namely:
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(i) land, including without limitation surface land,
sub-surface strata, seabed and river bed under water (as defined in paragraph
(ii) of this definition) and natural and man-made structures;
(ii) water (including, but not limited to, coastal
and inland waters, surface waters and ground waters and water in drains and
sewers); and
(iii) the air (and the medium of air includes but is
not limited to the air within buildings and the air within other natural or
man-made structures above or below ground).
"Environmental Circumstance" means:
(i) pollution or containment or the threat of
pollution or contamination of the Environment; or
(ii) the storage, distribution, use, treatment,
presence, removal, transport, disposal, release, emission, spillage, deposit or
discharge of Hazardous Materials or Waste; or
(iii) the exposure of any person to Hazardous
Materials or Waste; or
(iv) the creation of heat, noise, vibration,
radiation, common law or statutory nuisance or other material adverse impact on
the Environment.
"Environmental Laws" means all statutes and subordinate legislation,
all European Community regulations and directives (whether or not they have been
implemented), all common law and other national or local laws, all regulations,
orders, guidance notes, codes of conduct or practice, by-laws or directions and
all judgments, decrees, orders, instructions or awards of any court or competent
authority insofar as any of the above relate to health and safety, the pollution
or protection of the Environment or any Environmental Circumstance.
"Environmental Liabilities" means criminal or civil fines or penalties
or the costs of any Remedial Work or Third Party Claims or all other costs,
claims, actions, damages, losses, penalties, liabilities and expenses
(including, but not limited to, investigation and monitoring and professional
and legal expenses and outlays) for which Purchaser and/or any of the Companies
is liable or which Purchaser and/or any of the Companies incurs as a consequence
(direct or indirect) of the presence in the Environment of any Hazardous
Materials or Waste (save as permitted by any Permit) or any breach of
Environmental Laws which arises or has arisen or, but for Remedial Work, was
reasonably likely to have arisen or out of the carrying on of the business of
the Companies.
"Hazardous Materials" means any natural or artificial substances or
matter whether in solid or liquid form or in the form of a gas or vapor and
whether alone or in combination with
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other substances which are harmful or capable of causing harm to (i) the
Environment; (ii) man or any other living organism supported by the Environment;
or (iii) property.
"Permit" means any permit, licence, consent, authorisation,
registration, specification, approval, certificate or qualification required by
Environmental Laws for the carrying on of the business of the Companies.
"Remedial Work" means the remedying, abatement, containment or
partial containment of any Environmental Circumstance or the prevention of the
same from arising, including but not limited to the carrying out of works and/or
clean up on or in land and the reinstatement, restoration, replacement and/or
repair of any buildings, plant or machinery.
"Third Party Claim" means a claim by a person for damages or an
injunction or interdict or other relief or remedy.
"Waste" means "Directive Waste" as defined in Regulation 1(3) of the
Waste Management Licensing Regulations 1994.
(b) Permits. All Permits have been obtained and are
in full force and effect and have been obtained and maintained on the basis of
true, complete and accurate information supplied to the competent authority. No
Permits are limited in duration or are subject to unusual conditions; all
Permits are freely assignable and none of the conditions to which any Permit is
subject is personal to any of Seller and/or the Companies nor imposes
qualitative or quantitative constraints. Seller and the Companies have each
complied in all respects and at all times with the terms and conditions of all
Permits. No circumstances exist which would or might confer a right of
cancellation, revocation, suspension, variation or modification of any Permit or
might prevent or prejudice or require material expenditure for any Permit being
extended, or renewed or transferred; and all appropriate or necessary action in
connection with the renewal or extension of any Permit has been taken. Neither
the execution of this Agreement nor Closing will cause any Permit to be
cancelled, revoked, suspended, varied or modified. Insofar as any Permit will be
required by the Companies and/or Purchaser in connection with the carrying on of
the business of the Companies in substantially the same form as it is presently
carried on, the obtaining and maintaining in full force and effect of such
permit, licence, registration, authorisation or other as aforesaid will not
require any unusual expenditure by the Companies and/or Purchaser.
(c) Compliance. Each of Seller, in relation to the
business of the Companies, and the Companies has complied at all times and in
all respects with Environmental Laws. All plants and equipment used in the
business of the Companies has been operated and maintained and all procedures
and processes have been complied with and monitored at all times so as to ensure
compliance with all Environmental Laws.
(d) Environmental Circumstance. No Environmental
Circumstance has arisen in or out of the carrying on of the business of the
Companies or is in existence in the Environment which could (i) give rise to any
Environmental Liabilities; (ii) require the carrying
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out of any Remedial Work; (iii) require any interruption of the business of the
Companies; or (iv) otherwise adversely affect the business of the Companies
and/or Purchaser.
(e) Environmental Management Systems/Environmental
Policy Document. At all times the business of each of the Companies has been
carried on in accordance with such Company's internal policy
standards/environmental policy document, a true and complete copy of which has
been delivered to Purchaser.
(f) Audit. There have been no environmental audits
and/or assessments commissioned by Seller and/or the Companies for or in
relation to the business of the Companies.
(g) Notices. At no time have any of Seller or the
Companies received or have circumstances existed which could lead the Companies
and/or Purchaser to expect to receive any notice (i) alleging or intimating a
breach of the terms and/or conditions of a Permit, (ii) alleging or intimating a
breach of any Environmental Laws, or (iii) of a Third Party Claim.
2.15. Title. Except as indicated on Schedule 2.15, each of the
Companies has good and marketable title to, or the valid right to use, all of
its properties and assets, including the properties and assets reflected in the
Balance Sheet (except those disposed of in the ordinary course of business since
the Balance Sheet Date), free and clear of any Lien, except Permitted Liens.
"Permitted Liens" means (a) statutory Liens for current taxes, assessments or
other governmental charges not yet delinquent or the amount or validity of which
is being contested in good faith by appropriate proceedings; (b) mechanics',
carriers', workers', repairers' and similar Liens arising or incurred in the
ordinary course of business that are not in the aggregate material to the
current business of the Companies or the assets of the Companies; (c) zoning,
variances, easements, rights or way, entitlement and other land use laws by
Governmental Bodies; (d) Liens set forth in Schedule 2.15 hereto; (e) deposits
under workers compensation, unemployment insurance, social security or similar
laws; or (f) such other imperfections of title or Liens of which do not
individually or in the aggregate when taken together with all other such
imperfections of title or Liens which do not materially interfere with the
ownership, use, value, operation or marketability of the affected property.
2.16. Transactions with Related Parties. A "Related Party" means
Seller, any of the officers or directors of the Companies or Seller, any
Affiliate, associate or relative of Seller, the Companies, or any of their
respective officers or directors, or any business or entity in which Seller, the
Companies or any Affiliate, associate or relative of any such persons has any
direct or material indirect interest, it being understood that any interest of
1% or less in any business entity shall not be considered a "direct or material
indirect interest" for purposes of this Agreement. An "Affiliate" of a Person
means any Person which controls, is controlled by or is under common control
with such first Person.
Since the Balance Sheet Date and except as disclosed on Schedule 2.16,
no Related Party has or has had:
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(a) borrowed money from, or loaned money to any of the
Companies;
(b) any interest in any property or assets used by any of the
Companies in its business as currently conducted; or
(c) engaged in any other transaction with the Companies (other
than director or employment relationships).
2.17. Compensation Arrangements; Bank Accounts. Schedule 2.17 hereto
sets forth the following information:
(a) the names and current salaries and commissions, including
any bonuses, if applicable, of all present officers and employees of each of the
Companies together with a statement of the remuneration paid by the Companies to
each such person and to any director of the Companies, during the year ended
December 31, 2000; and
(b) the names and locations of all banks, trust companies,
savings and loan associations and other financial institutions at which each of
the Companies maintains safe deposit boxes or accounts of any nature, the names
of all persons authorized to draw thereon, make withdrawals therefrom or have
access thereto and the numbers of all such safe deposit boxes or accounts.
2.18. Employment.
(a) Schedule 2.18 sets forth a true and complete list of (i)
all directors of each of the Companies, (ii) all officers (with offices held) of
each of the Companies, and (iii) all consultants and independent contractors
retained by each of the Companies currently or during the last fiscal year who
received during the last fiscal year more than (pound)25,000 in fees or
payments. Except as disclosed on Schedule 2.18, none of the Companies are a
party to any written or oral severance, employment or consulting agreement, or
any service agreement which required fees or payments during the prior or
current fiscal year of more than (pound)25,000. Except as disclosed on Schedule
2.18, none of the Companies are a party to, and none of their employees are
subject to, any collective bargaining agreement or other union contract. None of
the Companies are a party to any agreement that would prevent the Companies or
their employees from operating the Companies' business. Each of the Companies is
in compliance in all material respects with applicable laws affecting employment
and employment practices, including terms and conditions of employment and wages
and hours, and, except as set forth on Schedule 2.18, there are no, and have not
been since January 1, 1999 any complaints against any of the Companies pending
or, to the Knowledge of Seller, threatened before any Governmental Body.
(b) The individuals named in Schedule 2.18 are all the
directors, officers and employees of the Companies. There is no person who has
accepted an offer of employment made by any of the Companies whose employment
has yet to start and there are no offers of employment which have been issued
and remain open for acceptance. The Companies have and will up to the Closing
Date have maintained all records required to be maintained by
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law (including in terms of the National Minimum Wage ▇▇▇ ▇▇▇▇ and the Working
Time Regulations 1998) with respect to its employees and will deliver these
records to Purchaser or to such person as Purchaser may direct, at the Closing
Date. Except as provided for in this Agreement, the Companies have not made any
representations or statements to any employee or any representative of an
employee in relation to this Agreement or its consequences.
(c) The terms and conditions of employment in respect of each
employee together with all facts and matters relating to their employment
including together their respective name, sex, date of birth, length of service,
date of commencement of employment, notice periods, details of numbers of hours
worked, the position held and job location, salary or wages (stating whether
overtime is contractual or discretionary), pay review date, holiday entitlement,
pension entitlement, incentives, entitlement to bonuses, commission, stock or
share options, expenses, profit sharing arrangements and any other benefits
payable whatsoever (including whether contractual or discretionary) have been
disclosed in full in Schedule 2.18 and are true, complete and accurate in all
respects. Full particulars of all employment policies (whether contractual or
otherwise) including all staff handbooks, redundancy schemes and policies,
disciplinary and grievance procedures and equal opportunities policies have been
disclosed accurately and fully in Schedule 2.18. No employee is currently bound
by a restrictive covenant entered into with a former employer or any other
business or undertaking.
(d) Since the Balance Sheet Date, except as disclosed in
Schedule 2.18, there have been no changes to the remuneration or benefits of any
kind payable or due to any employee or director or to any other of their terms
and conditions of employment or appointment and no changes have been proposed,
promised or agreed since the Balance Sheet Date or are due to be considered. All
current and pending negotiations with any employee concerning remuneration,
benefits or terms and conditions of employment have been disclosed accurately
and fully in Schedule 2.18.
(e) The Companies have paid to the Inland Revenue and any
other appropriate authority all taxes, National Insurance contributions and
other levies and charges in respect of each and all employees regarding their
employment by the Companies in the period up to and including the Closing Date.
(f) Schedule 2.18 lists each person who has ceased to be
employed by any of the Companies (other than through death or retirement at
normal retirement age) during the prior 12 months. No director or employee of
any of the Companies has given or received notice terminating his office and/or
employment and no director or employee will be entitled to resign or treat his
office and/or employment as terminated as a result of the provisions of this
Agreement. There are no facts, to the Knowledge of Seller, which might suggest
that any director or employee intends, or is likely, to terminate his office
and/or employment (otherwise than through normal retirement) within the 12 month
period following Closing.
(g) No employee is on maternity or parental leave, absent on
the grounds of disability or due to sickness lasting for more than two
consecutive weeks, absent on
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other leave of absence, absent on secondment or who has been relocated to
another company and who may have statutory or contractual right to return to
work at any of the Companies.
(h) Other than as specified in Schedule 2.18, no employee
would be entitled to any amounts exceeding the basic statutory redundancy
payment as calculated in terms of section 162 of the Employment Rights ▇▇▇ ▇▇▇▇
or to include in the calculation of his continuous employment any employment by
any other person before his employment by the Companies. No employee will become
redundant or be entitled to a redundancy or other severance payment as a result
of the terms of this Agreement.
(i) The Companies are not, and no employee or former employee
or director or former director is, involved in any existing, pending or, to the
best of Seller's Knowledge, threatened industrial dispute or dispute about his
employment or appointment nor has any of them been involved in any such dispute
in the 12 month period prior to Closing. There are no facts that might suggest
that there may be any such dispute involving any of the Companies or that any of
the provisions of this Agreement may lead to any such dispute. No employee or
director has ceased to be employed or been removed in circumstances which could
give rise to a claim for damages and/or compensation, no director or, to the
best of Seller's Knowledge, employee is contemplating leaving any of the
Companies and no employee or director is under threat of dismissal or removal.
(j) Except as set forth in Schedule 2.18, there are no
agreements, arrangements or schemes in operation by or in relation to any of the
Companies under which any employee or director is entitled to a commission,
bonus or remuneration of any kind (including any commission, bonus or
remuneration) calculated by reference in whole or in part to turnover, revenue,
profits or sales of the Companies or any of them.
(k) None of the Companies has made any loan or advance that is
outstanding to any employee or director, or any former employee or former
director.
(l) There are no employees of the Companies who are persons
not granted leave to enter or remain in the United Kingdom and who are not
entitled to work in the United Kingdom in terms of the Asylum and Immigration
▇▇▇ ▇▇▇▇.
2.19. Insurance. Schedule 2.19 contains a complete list of all policies
of insurance of which each of the Companies is the owner, insured or
beneficiary, or covering any of its property, indicating for each policy the
carrier, risks insured, the amounts of coverage, deductible, and premium rate.
With respect to each such insurance policy: (a) the policy will remain in full
force and effect on identical terms immediately following the consummation of
the transactions contemplated hereby; (b) neither the Companies nor, to Seller's
Knowledge, any other party to the policy, are in breach or default (including
with respect to the payment of premiums or the giving of notices), and no event
has occurred which, with notice or the lapse of time, would constitute such a
breach or default by the Companies, or any other party to the policy, or permit
termination, material modification, or acceleration under the policy; and (c) no
party to the policy has repudiated any provision thereof.
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2.20. Intellectual Property.
(a) Schedule 2.20 sets forth a true and complete list and a
brief description of each patent and patent application and each registration or
application for registration thereof and each trademark, service ▇▇▇▇, domain
name and copyright registration or application for trademark, service ▇▇▇▇,
domain name or copyright registration, of all intellectual property owned by
each of the Companies ("Owned Intellectual Property"), and, except with respect
to shrink wrap software and intellectual property available to the general
public, a true and complete brief description, including a description of any
license or sublicense thereof, of all intellectual property licensed or
sublicensed by any of the Companies from a third party and all intellectual
property that a third party has authorized any of the Companies to use
("Licensed Intellectual Property"). Except as otherwise described on Schedule
2.20, in each case where a registration or patent or application for
registration or patent listed on Schedule 2.20 is held by assignment, the
assignment has been duly recorded with the Governmental Body from which the
original registration issued or before which the application for registration is
pending. Except as disclosed on Schedule 2.20, the rights of each of the
Companies in or to such Owned Intellectual Property or Licensed Intellectual
Property do not conflict with or infringe on the rights of any other Person and
none of the Companies has received any claim or written notice from any Person
to such effect.
(b) Except as disclosed on Schedule 2.20: (i) each of the
Companies is the sole and exclusive owner of all the Owned Intellectual
Property, free and clear of any Lien and (ii) no claim, action, suit or inquiry,
proceeding ("Action") has been made or asserted or is pending or, to the best of
Seller's Knowledge, threatened against any of the Companies either (A) based
upon or challenging the validity and/or enforceability of any of the Owned
Intellectual Property, or seeking to deny or restrict the use by any of the
Companies of any of the Owned Intellectual Property or (B) alleging that any
services provided, or products manufactured or sold by any of the Companies are
being provided, manufactured or sold in violation of any patents or trademarks,
or any other rights of any Person. Each of the Companies owns or possesses
adequate licenses or other rights to use all Owned Intellectual Property
necessary to the conduct of its business as currently conducted. Except as
disclosed on Schedule 2.20, to Seller's Knowledge, no Person is using any
patents, copyrights, trademarks, service marks, domain names, trade names, trade
secrets or similar property that are confusingly similar to the Owned
Intellectual Property or that infringe upon the Owned Intellectual Property or
upon the rights of the Companies therein. Except as disclosed on Schedule 2.20,
the Companies have not granted any license or other right to any other Person
with respect to the Owned Intellectual Property.
(c) Without limiting the generality of the foregoing Section
2.20(b): (i) each of the Companies has duly registered the domain name of its
site on the World Wide Web (the "Company Domain Name") as set forth on Schedule
2.20 (the "Company Website"), and is the sole and exclusive owner of and
possesses all rights necessary to use the Company Domain Name; (ii) each of the
Companies has the right to operate the Company Website and to use, market,
develop, sell, license, display, distribute, publish and transmit all
information, content, software and other materials available at the Company
Website; and (iii) to Seller's Knowledge, no Company Website, each Companies'
operation thereof, the Company Domain Name or any of
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the information, content, software or other materials available at any Company
Website infringes upon, violates or constitutes a misappropriation of any
Proprietary Rights or other right of any other person or entity or of any
applicable law or regulation.
(d) If required to do so, each of the Companies was registered
under the Data Protection Act of 1994 and is registered under the Data
Protection Act of 1998, in each case as a data user in respect of the business
carried on by such Company and has complied with the Data Protection principles
set out in such Acts.
(e) Each of the Companies has made available to Purchaser
correct and complete copies of all licenses and sublicenses for Licensed
Intellectual Property set forth on Schedule 2.20 and any and all ancillary
documents pertaining thereto (including, without limitation, all amendments,
consents and evidence of commencement dates and expiration dates). With respect
to each of such licenses and sublicenses:
(i) such license or sublicense, together with all
ancillary documents delivered pursuant to the first sentence of this Section
2.20(e), is in full force and effect with respect to the Companies and, to
Seller's Knowledge, with respect to every other party thereto;
(ii) except as otherwise disclosed on Schedule 2.20,
with respect to each such license or sublicense: (A) none of the Companies have
received any notice of termination or cancellation under such license, (B) none
of the Companies have received any notice of a material breach or default under
such license or sublicense, which breach or default has not been cured, and (C)
none of the Companies have granted to any other Person any rights, adverse or
otherwise, under such license or sublicense;
(iii) except as otherwise disclosed on Schedule 2.20,
neither the Companies, nor, to Seller's Knowledge, any other party to such
license or sublicense, is in breach or default in any material respect, and to
Seller's Knowledge, no event has occurred that, with notice or lapse of time
would constitute such a breach or default or permit termination, modification or
acceleration under such license or sublicense; and
(iv) except as set forth on Schedule 2.20, no actions
have been made or asserted or are pending or, to Seller's Knowledge, threatened
against any of the Companies either (A) based upon or challenging the validity
and/or enforceability of any of the Licensed Intellectual Property, or seeking
to deny or restrict the use by any of the Companies in any material respect of
any of the Licensed Intellectual Property or (B) alleging that any Licensed
Intellectual Property is being licensed, sublicensed or used in violation of any
patents or trademarks, or any other rights of any Person.
2.21. Employee Benefit Plans.
(a) The following terms, as used herein, having the following
meanings:
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"Benefit Arrangement" means each employment, severance or
other similar contract, arrangement or policy (written or oral) and each plan or
arrangement (written or oral) providing for severance benefits, insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation, profit-sharing, bonuses, share
options, share appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits that (i) is entered into,
maintained or contributed to, as the case may be, by any of the Companies and
(ii) covers any employee or former employee of the Companies.
(b) Schedule 2.21 includes a list of each Benefit Arrangement
of the Companies, copies or descriptions of which have been made available or
furnished previously to Purchaser.
(c) Each Benefit Arrangement has been maintained in material
compliance with its terms and with the requirements prescribed by any and all
laws, statutes, orders, rules and regulations which are applicable to such
Benefit Arrangement.
(d) With respect to the employees and former employees of the
Companies, there are no employee post-retirement medical or health plans in
effect.
(e) There has been no amendment to, written interpretation of
or announcement (whether or not written) by any of the Companies relating to, or
change in employee participation or coverage under, any Benefit Arrangement that
would increase materially the expense of maintaining such Benefit Arrangement
above the level of the expense incurred in respect thereof for the fiscal year
ended prior to the date hereof.
(f) Except as disclosed on Schedule 2.21, no employee of the
Companies will become entitled to any material bonus, retirement, severance or
similar benefit or enhanced benefit solely as a result of the transactions
contemplated hereby.
2.22. Finders' Fees. Except as set forth on Schedule 2.22, there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of Seller or the Companies which might be
entitled to any fee or commission from Purchaser or the Companies upon
consummation of the transactions contemplated by this Agreement.
2.23. Other Representations Regarding Each of the Companies' Assets and
Liabilities.
(a) Accounts Receivable. All of the trade accounts receivable
and any other similar right to receive payments arising out of sales made in the
ordinary course with respect to each Company's business as currently conducted
(the "Accounts Receivable") as of the Balance Sheet Date are reflected on the
Balance Sheet. The Accounts Receivable of the Companies reflected on the Balance
Sheet, and the Accounts Receivable which are reflected in the books and records
of the Companies and which have arisen from the period from January 1, 2000
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to and including the Closing Date, (i) have arisen or will arise solely in bona
fide transactions by each of the Companies in the ordinary course of the
operation of its business as currently conducted, (ii) represent or will
represent upon their creation, valid obligations due and owing to each of the
respective Companies, except for the reserves for doubtful account reflected in
the Balance Sheet or as established on each of the Companies' books and records
in the ordinary course of the operation of each of the Companies' businesses as
currently conducted, (iii) are or will be on the Closing Date enforceable in
accordance with their terms, (iv) are or will be on the Closing Date fully
collectible (except for any reserves referred to in (ii)) and (v) are not or
will not be subject to any deduction, defense, set-off or counterclaim, subject,
in the case of clauses (iv) and (v), to normal allowances, deductions and
customary discounts consistent with past practices of the Companies. Schedule
2.23(a) attached hereto is an accurate and complete list as of the date hereof
each of the 10 largest customers with which each of the Companies conducted
business during 1999 and 2000, determined by the amount of payments made by the
customers to each of the Companies during the applicable period for goods and/or
services provided by the Companies (the "Key Customers"). Except as disclosed in
Schedule 2.23(a) attached hereto, Seller presently knows of no reason why the
terms and conditions under which the Companies presently do business with any of
the Key Customers will not continue in all material respects in accordance with
the terms and conditions in existence on the date of this Agreement with respect
to such Key Customers, and none of the Companies have received any notice that
any of the Key Customers are seeking or intend to seek to cancel, terminate,
amend, modify, revoke or supplement its current purchase arrangements with the
Companies in any material respect.
(b) Accounts Payable. All of the accounts payable of each of
the Companies as of the Balance Sheet Date are reflected on the Balance Sheet.
The accounts payable of each of the Companies reflected on the Balance Sheet,
and the accounts payable which are reflected in the books and records of each of
the Companies and which have arisen from the period from January 1, 2000 to the
date hereof, (i) have arisen or will arise solely in bona fide transactions by
the Companies in the ordinary course of the operation of the Companies' business
as currently conducted and (ii) represent upon their creation, valid obligations
due and owing by the Companies.
(c) Personal Property. Except as otherwise disclosed on
Schedule 2.23(c), all equipment, machinery, trade fixtures, tools, vehicles,
computer hardware, computer software and furniture (collectively, "Equipment")
owned or leased by the Company, is in good repair and operating condition,
reasonable wear and tear excepted, and is generally suitable for the purpose for
which it is used.
(d) Leasehold Improvements. All leasehold improvements of the
Companies are, and from the date hereof until the Closing Date will be, in
reasonably good working order, repair and condition, and include all leasehold
improvements, fixtures and appurtenances necessary for each of the Companies to
operate their respective businesses as currently conducted. Except as set forth
on Schedule 2.23(d), all of the leasehold improvements are owned by each of the
Companies, and all of the movable trade fixtures constituting part of the
leasehold improvements may be removed at any time by any of the Companies from
the
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Leased Real Property to which they are attached without giving rise to a default
by the Companies, or an obligation on the part of the Companies to compensate
the applicable landlord for any material diminution in value of the Leased Real
Property, other than the obligation to repair any damage to the Leased Real
Property caused by such removal.
(e) Warranties. Except as set forth in Schedule 2.23(e), none
of the Companies have given or made any warranties to third parties with respect
to any products sold or services performed by it, except for warranties arising
by operation of law. There are no pending or, to Seller's Knowledge, threatened
warranty claims, or legal proceedings relating to warranty claims, whether on
the basis of warranties offered by any of the Companies, warranties offered by
any manufacturer or otherwise, or any facts, events or circumstances which have
occurred, in either case which is reasonably likely to result in a material
claim, material legal proceeding or material Liability on the part of any of the
Companies.
(f) Claims. Schedule 2.23(f) attached hereto is a true and
complete summary of claims as of the date hereof under all warranties and
liability insurance policies relating to each of the Companies since January 1,
1998, other than claims that are or have been fully covered by insurance
(subject to policy deductibles). Each of the Companies is insured under policies
of insurance relating to liabilities listed in Schedule 2.23(f) attached hereto
to the extent a claim is made during the policy period subject to deductibles
and other terms summarized therein. Each of the Companies has provided notice of
all such claims to its insurance carriers and, except as set forth on Schedule
2.23(f) attached hereto, no insurance carrier has denied coverage, reserved
rights against any of the Companies or otherwise interposed any defense to
coverage with respect to any such claims which is reasonably likely to result in
a material Liability or material loss to any of the Companies.
(g) Intercompany Accounts. Set forth on Schedule 2.23(g)
hereto is an accurate and complete summary, prepared from the books and records
of each of the Companies and, if required, recorded in accordance with GAAP
consistently applied and maintained, of all intercompany transactions
(identifying each category or type of transaction, a brief description thereof,
and the amount of each category or type) since the Balance Sheet Date between
and among the Companies and their respective Affiliates, including Seller and
its Affiliates.
(h) Real Property.
(i) None of the Companies owns any real property.
(ii) Schedule 2.23(h)(ii) sets forth an accurate and
complete list and a brief description of all real property currently leased by
each of the Companies (the "Leased Real Property") and each of the Companies has
made available to Purchaser accurate and complete copies of the leases and
subleases for all such Leased Real Property, all of which are listed on Schedule
2.23(h)(ii). With respect to each such lease and sublease:
(A) it is a legal, valid, binding and
enforceable obligation of the Company which is a party thereto and, to the
Knowledge of Seller, the other party thereto,
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and is in full force and effect, and will continue in full force and effect on
identical terms immediately following the Closing;
(B) none of the Companies has violated in
any material respects the terms thereof and is not in default thereunder;
(C) to the Knowledge of Seller, no other
party thereto is in default under any such lease or sublease;
(D) no party has repudiated any provision
thereof in a writing delivered to any of the Companies; and
(E) there are no material disputes, oral
agreements, or forbearance programs in effect with respect thereto.
(iii) Except as set forth in Schedule 2.23(h)(iii),
none of the Companies have received any notice of (A) any requirements by any
insurance company that has issued a policy covering any part of each of the
Companies' Leased Real Property by any board of fire underwriters or other body
exercising similar functions, requiring any material repairs or work to be done
on any part of any of such Leased Real Property, or (B) any defects or
inadequacies in, on or about any part of any of the Companies' Leased Real
Property that would, if not corrected, result in the termination of insurance
coverage or a material increase in the cost thereof, and which, in either case,
remains outstanding.
(iv) There are no pending or, to the Knowledge of
Seller, threatened condemnation, compulsory acquisition, expropriation, or
similar proceedings that would affect all or any portion of each of the
Companies' Leased Real Property. As of the Closing Date, no material assessments
for public improvements will have been made against any of the Companies' Leased
Real Property which will not have been paid in full, except for any such
assessments the validity of which are contested in good faith by means of
appropriate proceedings. To the Knowledge of Seller, no ordinance authorizing
the improvements, the cost of which would be assessed against any of the
Companies' Leased Real Property is pending or proposed.
2.24. Accurate Disclosure. None of the information furnished or to be
furnished by Seller and the Companies to Purchaser or any of its representatives
in connection with this Agreement and the other Transaction Documents, and none
of the representations and warranties of Seller set forth herein, in any other
Transaction Document or in any certificate delivered in connection herewith or
therewith, (a) is or will be false or misleading in any material respect, (b)
contains or will contain any untrue statement of a material fact or (c) omits or
will omit any statement of material fact necessary to make the same not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
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3.1. Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.2. Corporate Power and Authority. Purchaser has full corporate power
and authority to make, execute, deliver and perform this Agreement and the
transactions contemplated hereby.
3.3. Due Authorization. The execution, delivery and performance by
Purchaser of this Agreement, and any agreement referenced herein to which
Purchaser is a party, have been duly authorized by all necessary corporate
action on the part of Purchaser, and this Agreement constitutes the legal, valid
and binding obligation of Purchaser, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting the rights and remedies of
creditors generally, provided that no representation or warranty is made as to
the availability of any equitable or other specific remedy upon any breach of
this Agreement.
3.4. Finders' Fees. There is no investment banker, broker, finder or
other intermediary which has been retained by or is authorized to act on behalf
of Purchaser which might be entitled to any fee or commission from Seller or any
of the Companies upon consummation of the transactions contemplated by this
Agreement.
3.5. Consents and Governmental Authorization. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby by Purchaser require no consent, approval or action by or in
respect of, or filing with, any third party or Governmental Body.
3.6. Non-Contravention. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated by this
Agreement and the compliance with the terms, conditions and provisions of this
Agreement by Purchaser, will not (a) contravene any provision of Purchaser's
charter or bylaws, as amended or (b) contravene or conflict with or constitute a
violation of any provision of any law, regulation, judgment, injunction, order
or decree binding upon or applicable to Purchaser.
3.7. Legal Proceedings. There is no pending or, to the Knowledge of
Purchaser, threatened action, suit, proceeding or investigation before any
court, Governmental Body, or arbitrator having jurisdiction over Purchaser or
any of its Affiliates that would have a Material Adverse Effect on Purchaser.
ARTICLE IV
CONDITIONS TO CLOSING
4.1. Conditions Precedent to Obligations of Purchaser. The obligations
of Purchaser to proceed with the Closing under this Agreement are subject to the
fulfillment prior to or at the Closing of the following conditions (any one or
more of which may be waived in whole or in part in writing by Purchaser at
Purchaser's option):
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(a) Representations and Warranties. The representations and
warranties of Seller contained in Article II shall be true and accurate on and
as of the Closing Date (except to the extent a representation or warranty speaks
specifically as of an earlier date which representation and/or warranty shall
have been true and accurate as of such earlier date) and Seller shall have
provided Purchaser with a certificate executed by a director of Seller, dated as
of the Closing Date, to such effect.
(b) Covenants. Seller shall have performed and complied in all
material respects with all of its covenants contained herein on or before the
Closing Date (to the extent required to be performed on or prior to the Closing
Date), and Purchaser shall receive a certificate to such effect signed by a
director of Seller.
(c) Opinion of Seller's Counsel. Purchaser shall have received
from counsel for Seller, an opinion dated the date of the Closing in form and
substance reasonably satisfactory to Purchaser, to the effect set forth in
Exhibit A.
(d) Required Consents. All consents and approvals of third
parties to the transactions contemplated hereby on the part of each of the
Companies and Seller which are material to each of the Companies (including,
without limitation, those disclosed on Schedule 2.4) shall have been obtained
for the consummation of the transactions contemplated hereby.
(e) Litigation. No order of any court or Governmental Body
shall be in effect which restrains or prohibits the transactions contemplated
hereby or which would limit or adversely affect Purchaser's ownership or control
of each of the Companies or the business of each of the Companies as currently
conducted, and there shall not have been threatened in writing, nor shall there
be pending, any action or proceeding by or before any court or Governmental
Body, (i) challenging any of the transactions contemplated by this Agreement or
seeking monetary relief by reason of the consummation of such transactions or
(ii) by any present or former owner of any share capital or equity interest in
any of the Companies (whether through a derivative action or otherwise) against
any of the Companies or any officer, director or shareholder of any of the
Companies in his capacity as such or (iii) which might have a Material Adverse
Effect on the Companies.
(f) Governmental Approvals. All authorizations, consents,
orders or approvals of, or declarations or filings with, or expiration or
termination without objection of waiting periods imposed by, any competent
Governmental Body, necessary for the consummation of the transactions
contemplated by this Agreement shall have been filed, occurred or been obtained.
(g) Certified Documents. Each of the Companies shall have
delivered to Purchaser at Closing a copy of its Memorandum and Articles of
Association, as amended, as certified by the Secretary or an Assistant Secretary
of each of the Companies, as appropriate.
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(h) Resignation of Directors. Certain of the directors of each
of the Companies shall have delivered resignations to Purchaser which shall be
effective as of the appointment as directors of the Companies of the persons
specified on Schedule 4.1(h).
(i) Material Adverse Effect. No event shall have occurred and
no condition shall exist which constitutes or, with the giving of notice or the
passage of time, or both, is likely to constitute, a Material Adverse Effect
upon any of the Companies.
(j) [Reserved].
(k) Other Transaction Documents. Seller and any other parties
thereto (other than Purchaser) shall have executed and delivered to Purchaser
(i) service agreements in form and substance satisfactory to Purchaser with each
of ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Hatteea and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the
"Service Agreements") (and any existing service agreements with such Person
shall be terminated), (ii) the Escrow Agreement, and (iii) the Taxation
Undertaking between Seller and Purchaser in the form of Exhibit B hereto (the
"Tax Deed", and together with this Agreement, the Escrow Agreement and the
Service Agreements, the "Transaction Documents").
4.2. Conditions Precedent to Obligations of Seller. The obligations of
Seller to proceed with the Closing hereunder are subject to the fulfillment
prior to or at the Closing of the following conditions (any one or more of which
may be waived in whole or in part in writing by Seller at Seller's option):
(a) Representations and Warranties. The representations and
warranties of Purchaser contained in Article III shall be true and accurate on
and as of the Closing Date (except to the extent a representation or warranty
speaks specifically as of an earlier date, which representation and/or warranty
shall have been true and accurate as of such earlier date) and Purchaser shall
have provided Seller with a certificate executed by Purchaser, dated as of the
Closing Date, to such effect.
(b) Covenants. Purchaser shall have performed and complied
with all of its covenants contained herein on or before the Closing Date (to the
extent required to be performed on or prior to the Closing Date), and Seller
shall receive a certificate to such effect signed by an officer of Purchaser at
or prior to the Closing Date.
(c) Required Consents. All consents and approvals of third
parties to the transactions contemplated hereby on the part of Purchaser shall
have been obtained for the consummation of the transactions contemplated hereby.
(d) Litigation. No order of any court or governmental agency
shall be in effect which restrains or prohibits the transactions contemplated
hereby or which limits or adversely affects Purchaser's ability to consummate
any of the transactions contemplated by this Agreement, and there shall not have
been threatened, nor shall there be pending, any action or proceeding by or
before any Governmental Body, challenging any of the transactions contemplated
by this Agreement or seeking monetary relief by reason of the consummation of
such transactions.
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(e) Governmental Approvals. All authorizations, consents,
orders or approvals of, or declarations or filings with, or expiration or
termination without objection of waiting periods imposed by, any competent
Governmental Body, necessary for the consummation of the transactions
contemplated by this Agreement shall have been filed, occurred or been obtained.
ARTICLE V
TERMINATION OF AGREEMENT
5.1. Grounds for Termination. This Agreement may be terminated in
writing at any time prior to the Closing:
(i) by mutual written agreement of Seller and Purchaser;
(ii) by either (i) Seller or (ii) Purchaser, if any of the
closing conditions set forth in Section 4.2 or 4.1, respectively, have not been
met on or before April 30, 2001; or
(iii) by either (i) Seller or (ii) Purchaser, if there shall
be any law or regulation that makes the consummation of the transactions
contemplated hereby illegal or otherwise prohibited or if consummation of the
transactions contemplated hereby would violate any nonappealable final order,
decree or judgment of any court or Governmental Body having competent
jurisdiction.
5.2. Effect of Termination. If this Agreement is terminated as
permitted by Section 5.1, such termination shall be without Liability of either
party (or any shareholder, director, officer, employee, agent, consultant or
representative of such party) to the other party to this Agreement; provided
that if such termination shall result from the willful failure of any party to
fulfill a condition to the performance of the obligations of another party or to
perform a covenant of this Agreement or from a willful breach by any party to
this Agreement, such party shall be fully liable for any and all Damages (as
hereinafter defined) incurred or suffered by the other parties as a result of
such failure or breach. The provisions of Sections 5.2 and 8.3 shall survive any
termination hereof pursuant to Section 5.1.
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ARTICLE VI
COVENANTS
6.1. Conduct of Business of each of the Companies. From the date hereof
until the Closing, Seller shall cause each of the Companies to operate its
business as a going concern consistent with prior practice and in the ordinary
course of business. Without limiting the generality of the foregoing, from the
date hereof until the Closing, except for transactions contemplated by this
Agreement or expressly approved in writing by Purchaser, each of the Companies
shall not:
(a) enter into or amend any employment, bonus, severance or
retirement contract or arrangement, or increase any salary or other form of
compensation payable or to become payable to any executive or employee other
than in the ordinary course of business consistent with prior practice;
(b) purchase, lease, or otherwise acquire any real estate or
any interest therein;
(c) declare, set aside, or pay any dividend or make any other
distribution with respect to any equity security;
(d) merge or consolidate with or agree to merge or consolidate
with, or purchase or agree to purchase all or substantially all of the assets
of, acquire securities of, or otherwise acquire any Person;
(e) sell, lease, or otherwise dispose of or agree to sell,
lease or otherwise dispose of any of its assets, properties, rights, or claims,
whether tangible or intangible, except in the ordinary course of business
consistent with prior practice;
(f) authorize for issuance, issue, sell, or deliver any of its
own equity securities;
(g) split, combine, or reclassify any class of equity security
or redeem or otherwise acquire, directly or indirectly, any of its equity
securities;
(h) incur any Liability other than in the ordinary course of
business consistent with prior practice;
(i) place or permit to be placed any Lien on any of its assets
or properties, other than Permitted Liens arising in the ordinary course of
business;
(j) make or authorize any amendments or changes to its
articles of association or memorandum;
(k) make any single investment in excess of (pound)5,000, in
property, plant, and equipment and other items of capital expenditure;
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(l) accelerate Accounts Receivable or delay or postpone
payment of any accounts payable or other Liability, except in the ordinary
course of business consistent with prior practice; or
(m) abandon any material part of its business
6.2. Access to Information. At all times prior to the Closing Date,
Seller shall cause the Companies to furnish to Purchaser and its employees,
counsel, accountants and other authorized representatives (a) full access during
normal business hours to its properties, books and records and personnel and (b)
upon reasonable advance notice, to the Companies' plants, properties, contracts,
commitments, books and records and Seller shall use its reasonable best efforts
to cause its representatives to furnish promptly to Purchaser such additional
financial and operating data and other information as to the Companies' business
and properties as Purchaser or its duly authorized representatives may from time
to time reasonably request.
6.3. No Solicitation. For so long as this Agreement is in effect,
Seller will not, and will cause the Companies and their respective officers,
directors, employees and investment bankers, attorneys or other agents retained
by or acting on behalf of them not to, (i) initiate, solicit or encourage,
directly or indirectly, any inquiries or the making of any proposal that
constitutes or is reasonably likely to lead to any Acquisition Proposal (as
defined below), (ii) engage in negotiations or discussions with, or furnish any
information or data to any third party relating to an Acquisition Proposal, or
(iii) enter into any agreement with respect to any Acquisition Proposal or
approve any Acquisition Proposal.
"Acquisition Proposal," shall mean any bona fide proposal, whether
in writing or otherwise made by a third party to acquire all or a material
portion of the assets of, or any material equity interest in, any of the
Companies pursuant to a merger, consolidation or other business combination,
sale of shares of capital stock, sale of assets, tender offer or exchange offer
or similar transaction involving any of the Companies including, without
limitation, any single or multi-step transaction or series of related
transactions which is structured to permit such third party to acquire any
material portion of the assets of, or any material portion of the equity
interest in, any of the Companies (other than the transactions contemplated by
this Agreement).
6.4. Publicity. The initial press releases with respect to the
execution of this Agreement shall be acceptable to Purchaser and Seller.
Thereafter, neither Purchaser nor Seller nor any of their respective Affiliates
shall issue or cause the publication of any press release or other public
announcement with respect to, this Agreement or the transactions contemplated
hereby (including, without limitation, the failure to execute this Agreement or
the failure to consummate the transactions contemplated hereby) without the
prior agreement of the other party (which shall not be unreasonably withheld or
delayed), except as may be required by law or by the Nasdaq National Market in
which case each party will use reasonable efforts to consult with the other
party prior to any such issuance.
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6.5. Best Efforts; Notification.
(a) The parties agree to use their reasonable best efforts to
take or cause to be taken and to do or cause to be done all such actions and
things as shall be necessary or advisable, or as shall be reasonably requested
by the other party, in order to consummate the transactions contemplated hereby
and by the other Transaction Documents. Without limiting the generality of the
foregoing, the parties agree to take all reasonable actions necessary in order
to obtain any consent or approval of any third party, including without
limitation any governmental entity, which is required in connection with this
Agreement or the other Transaction Documents or any of the transactions
contemplated hereby or thereby.
(b) Seller shall give prompt written notice to Purchaser of
(i) the occurrence of any Material Adverse Effect with respect to any of the
Companies, and (ii) the occurrence or failure to occur of an event that would,
or with the lapse of time would, reasonably be expected to cause any condition
to the consummation of the transactions pursuant to the Agreement not to be
satisfied.
6.6. Confidentiality.
(a) As used in this Section, the "Confidential Information" of
a party shall mean all information concerning or related to the business,
operations, financial condition or prospects of such party or any of its
Affiliates, regardless of the form in which such information appears and whether
or not such information has been reduced to a tangible form, and shall
specifically include (i) all information regarding the officers, directors,
employees, equity holders, customers, suppliers, distributors, sales
representatives and licensees of such party and its Affiliates, in each case
whether present or prospective, (ii) all inventions, discoveries, trade secrets,
processes, techniques, methods, formulae, ideas and know-how of such party and
its Affiliates and (iii) all financial statements, audit reports, budgets and
business plans or forecasts of such party and its Affiliates; provided, that the
Confidential Information of a party shall not include (A) information which is
or becomes generally known to the public through no act or omission of the other
party and (B) information which has been or hereafter is lawfully obtained by
the other party from a source other than the party to whom such Confidential
Information belongs (or any of its Affiliates or their respective officers,
directors, employees, equity holders or agents) so long as, in the case of
information obtained from a third party, such third party was or is not,
directly or indirectly, subject to an obligation of confidentiality owed to the
party to whom such Confidential Information belongs or any of its Affiliates at
the time such Confidential Information was or is disclosed to the other party.
(b) Except as otherwise permitted by subsection (c) below,
each party agrees that it will not, without the prior written consent of the
other party, disclose or use for its own benefit any Confidential Information of
the other party.
(c) Notwithstanding subsection (b) above, each of the parties
shall be permitted to:
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(i) disclose Confidential Information of the other
party to its officers, directors, employees, equity holders, lenders, agents,
accountants, attorneys and Affiliates, but only to the extent reasonably
necessary in order for such party to perform its obligations and exercise its
rights and remedies under this Agreement, and such party shall take all such
action as shall be necessary or desirable in order to ensure that each of such
Persons maintains the confidentiality of any Confidential Information that is so
disclosed;
(ii) make additional disclosures of or use for its
own benefit Confidential Information of the other party, but only if and to the
extent that such disclosures or use are specifically contemplated by this
Agreement; and
(iii) disclose Confidential Information of the other
party to the extent, but only to the extent, required by any law, rule,
regulation or decree of any Governmental Body; provided, that prior to making
any disclosure pursuant to this subparagraph, the party required to make such
disclosure (the "Disclosing Party") shall notify the other party (the "Affected
Party") of the same, and the Affected Party shall have the right to participate
with the Disclosing Party in determining the amount and type of Confidential
Information of the Affected Party, if any, which must be disclosed in order to
comply with such law, rule, regulation, order or decree.
6.7. Noncompetition and Nonsolicitation.
(a) During the period commencing on the date hereof and ending
on the expiration of four years following the date hereof (the "Term"), Seller
and its stockholders shall not, directly or indirectly, as a partner, investor,
stockholder, creditor, guarantor, advisor, officer, director, employee or
consultant, (i) own, manage, operate, join, advise, control, or otherwise engage
or participate in the business of providing information technology services in
the Restricted Area (as hereinafter defined) that would be competitive with the
services provided by any of the Companies as currently being conducted on the
date hereof (the "Business"), (ii) induce or attempt to induce any customer or
supplier of any of the Companies to reduce the business done by such supplier or
customer with the Companies, or (iii) solicit any employee of any of the
Companies to leave the employ of the Companies. Notwithstanding the foregoing,
this Agreement does not prohibit Seller from acquiring or holding the
outstanding shares of capital stock of any entity engaged in the Business if
such shares are publicly traded and Seller's ownership is less than four percent
(4%) of such outstanding shares. "Restricted Area" means England, Scotland,
Wales, the United States of America and any other country in the world where the
Companies conduct the Business.
(b) Seller acknowledges that without his covenants set forth
in this Section, Purchaser would not be willing to consummate the transactions
contemplated by the Agreements. Seller expressly agrees that the character,
duration and Restricted Area of this Section 6.7 are reasonable in light of the
circumstances as they exist on the date of this Agreement and are necessary to
protect the legitimate business interests of Purchaser because of the geographic
scope of the Companies' business.
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6.8. Injunctive Relief. Seller acknowledges and agrees that the
covenants and agreements set forth in Sections 6.6 and 6.7 are necessary to
protect the legitimate business interests of Purchaser and that any breach of
such covenants and agreements will cause immediate and irreparable harm to
Purchaser. Seller acknowledges that damages for the violation of any such
covenant or agreement will not give full and sufficient relief to Purchaser and
agrees that, in the event of any violation of any such covenant or agreement,
Purchaser shall be entitled to seek injunctive relief with respect to any such
breach, which remedy shall be in addition to any other remedy which Purchaser
may have on account of such breach, including, without limitation, the recovery
of damages from Seller. None of these remedies shall be mutually exclusive, and
all of them may be pursued concurrently and cumulatively.
ARTICLE VII
INDEMNIFICATION
7.1. Survival. The covenants, agreements, representations and
warranties of the parties hereto contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection herewith
shall survive the Closing for a period of two years; provided that any covenant,
agreement, representation or warranty in respect of which indemnity may be
sought under Section 7.2 shall survive the time at which it would otherwise
terminate pursuant to the preceding sentence, if notice of the inaccuracy or
breach thereof giving rise to such right to indemnity shall have been given to
the party against whom such indemnity may be sought prior to such time;
provided, however that such covenant, agreement, representation or warranty
shall survive until, but only for the purposes of, the resolution of such claim.
Notwithstanding the foregoing, the representations and warranties set forth in
each of Section 2.4 and Section 2.15 shall survive until the expiration of the
statute of limitations applicable to the subject matter addressed thereunder.
The covenants and agreements of Seller on the one hand, and of Purchaser on the
other hand, contained in this Agreement will survive the Closing until, by their
own respective terms, they have been fully performed. Notwithstanding anything
herein, any breach of representation or warranty contained in this Agreement
made by any party or any written information furnished by any party that was
made by such party fraudulently or with intent to defraud or mislead or with
gross negligence shall indefinitely survive the Closing.
7.2. Indemnification.
(a) Seller shall indemnify Purchaser, the Companies and their
respective officers, directors, employees, agents, and representatives (the
"Purchaser Indemnified Parties") against, and agree to hold the Purchaser
Indemnified Parties harmless from, any and all liabilities, losses, costs,
claims, damages, penalties and expenses (including reasonable attorneys' fees
and expenses and costs of investigation and litigation) ("Damages") incurred or
suffered by them relating to or arising out of or in connection with any of the
following:
(i) any breach of any representation or warranty made
by Seller in this Agreement, the other Transaction Documents or any other
document delivered at Closing; or
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38
(ii) any breach of or failure by Seller to perform
any of its covenants or obligations set out in this Agreement, the other
Transaction Documents or any other document delivered at the Closing (unless
such breach or failure was waived in writing by Purchaser); or
(iii) any failure of Seller to have good, valid and
marketable title to the Shares free and clear of all Liens; or
(iv) obligations in respect of pension or other
retirement benefits, or severance or other termination payments, with respect to
all employees of the Companies that ceased to be employees of the Companies
prior to Closing; or
(v) any claim of rights to Intellectual Property by
either of Spaced UK Limited or Visual Voyage Limited or their successors or
assigns arising from or relating to agreements between such parties and any of
the Companies made prior to Closing.
(b) Purchaser shall indemnify Seller and each of its officers,
managers, employees, representatives, agents, successors and assigns (the
"Purchaser Indemnified Parties") against, and agrees to hold each of them
harmless from, any and all Damages incurred or suffered by them relating to or
arising out of or in connection with any of the following:
(i) any breach in any representation or warranty made
by Purchaser in this Agreement, the other Transaction Documents or any other
document delivered at the Closing; or
(ii) any breach of or failure by Purchaser to perform
any of its covenants or obligations set out in this Agreement, the other
Transaction Documents or any other document delivered at the Closing (unless
such breach or failure was waived by Seller); or
(iii) obligations in respect of pension or other
retirement benefits, or severance or other termination payments, with respect to
all employees of the Companies that cease to be employees of the Companies after
the Closing.
7.3. Claims. The provisions of this Section shall be subject to Section
7.4. As soon as is reasonably practicable after becoming aware of a claim for
indemnification under this Agreement, the party claiming indemnification (the
"Indemnified Person") shall promptly give written notice to the Party or Parties
from whom indemnification is requested (the "Indemnifying Persons") of such
claim and the amount the Indemnified Person reasonably believes such Indemnified
Person will be entitled to receive hereunder from the Indemnifying Persons;
provided, however that the failure of the Indemnified Person to give notice
shall not relieve the Indemnifying Persons of their obligations under this
Section 7.3, except to the extent (if any) that the Indemnifying Persons shall
have been prejudiced thereby. If the Indemnifying Persons do not object in
writing to such indemnification claim within 30 calendar days after receiving
notice thereof, the Indemnified Person shall be entitled to recover from the
Indemnifying Person within five Business Days after such 30 day period, the
amount of such claim (but such recover shall not limit the amount of any
additional indemnification to which the Indemnified Person may be
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39
entitled pursuant to Section 7.2 or 7.3). If the Indemnifying Persons agree that
they have an indemnification obligation, but object in writing that they are
obligated to pay only a lesser amount, the Indemnified Person shall nevertheless
be entitled to recover from the Indemnifying Persons within five Business Days
of the receive of such objection, the lesser amount, without prejudice to the
Indemnified Person's claim for the difference.
7.4. Notice of Third Party Claims; Assumption of Defense. The
Indemnified Person shall give notice as promptly as is reasonably practicable to
the Indemnifying Persons of the assertion of any claim, or the commencement of
any suit, action or proceeding, by any person not a party hereto in respect of
which indemnity may be sought under this Agreement; provided, however that the
failure of the Indemnified Person to give notice shall not relieve the
Indemnifying Persons of their obligations under this Section 7.4, except to the
extent (if any) that the Indemnifying Persons shall have been prejudiced
thereby. The Indemnifying Persons may, at their own expense, participate in the
defense of any claim, suit, action or proceeding; provided, however that (i) the
Indemnifying Persons' counsel is reasonably satisfactory to the Indemnified
Person, and (ii) the Indemnifying Persons shall thereafter consult with the
Indemnified Person upon the Indemnified Person's reasonable request for such
consultation from time to time with respect to such claim, suit, action or
proceeding. If the Indemnifying Persons assume such defense, the Indemnified
Person shall have the right (but not the obligation) to participate as counsel
of record in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Persons. If, however, the
Indemnified Persons reasonably determine in their judgment that representation
by the Indemnifying Persons' counsel of both the Indemnifying Persons and the
Indemnified Person would present such counsel with a conflict of interest, then
such Indemnified Person may employ separate counsel to represent or defend it in
any such claim, action, suit or proceeding, and the Indemnifying Persons shall
pay the fees and disbursements of such separate counsel. Whether or not the
Indemnifying Persons choose to defend or prosecute any such claim, suit, action
or proceeding, all of the parties hereto shall cooperate in the defense or
prosecution thereof.
7.5. Settlement or Comprise. Any settlement or compromise made or
caused to be made by the Indemnified Person or the Indemnifying Persons, as the
case may be, of any such claim, suit, action or proceeding of the kind referred
to in Section 7.4 shall also be binding upon the Indemnifying Persons or the
Indemnified Person, as the case may be, in the same manner as if a final
judgment or decree had been entered by a court of competent jurisdiction in the
amount of such settlement or compromise; provided, however that no obligation,
restriction or Damage shall be imposed on the Indemnified Person as a result of
such settlement without its prior written consent. The party defending the claim
shall give the other party at least 30 calendar days' notice of any proposed
settlement or compromise of any claim, suit, action or proceeding it is
defending, during which time the other party may reject such proposed settlement
or compromise; provided, however that from and after such rejection, the other
party shall be obligated to assume the defense of and full and complete
liability and responsibility for such claim, suit, action or proceeding and
shall be responsible for any and all Damages in connection therewith in excess
of the amount of the proposed settlement amount.
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40
7.6. Failure of Indemnifying Person to Act. In the event that the
Indemnifying Persons do not elect to assume the defense of any claim, suit,
action or proceeding, then any failure of the Indemnified Person to defend or to
participate in the defense of any such claim, suit, action or proceeding or to
cause the same to be done, shall not relieve the Indemnifying Persons of their
obligations hereunder.
7.7. Installment Payment Offset. If UBICS is entitled to receive an
indemnification amount from Seller pursuant to this Agreement, such amount shall
be satisfied to the extent possible by (a) a reduction of up to (pound)151,750
from Purchaser's First Additional Deposit pursuant to Section 1.3(c), and then
(b) a reduction of up to (pound)151,750 from Purchaser's Second Additional
Deposit pursuant to Section 1.3(c), and then (c) at the discretion of Purchaser,
a reduction in subsequent Earn-Out Payment(s).
ARTICLE VIII
MISCELLANEOUS
8.1. Notices. All notices, requests for other communications to be
given by any party to the other parties hereunder shall be in writing and shall
be deemed to be properly given when personally delivered, telecopied or sent by
commercial courier service (such as Federal Express) or, if mailed, where
correspondence is within a single country, when sent by prepaid first class U.S.
or U.K. mail, either certified or registered, to the addresses set forth below
or to such other addresses as the parties may otherwise designate from time to
time in writing:
(a) If to Purchaser:
UBICS Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: President
With a required copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇
(b) If to the Seller, to:
Teksys, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Directors
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41
With a required copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ House
Church Street
Hungerford
Berkshire RG17 OJG
UK
Telecopier No. (1488) 683-018
DX: 47106 Hungerford
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
8.2. Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties named herein and their respective
successors and permitted assigns. No party to this Agreement may assign either
this Agreement or any of its rights, interests or obligations hereunder without
the prior written approval of the other parties hereto.
8.3. Costs and Expenses. Purchaser shall bear its own expenses
(including without limitation, investment banking, financial advisory fees,
counsel fees and accounting fees) relating to the transactions contemplated
under this Agreement. All expenses of each of the Companies and Seller relating
to the transactions contemplated under this Agreement shall be borne by Seller.
8.4. Public Announcements. The parties agree to consult with each other
before issuing any press release or making any public statement with respect to
this Agreement or the transactions contemplated hereby and, except as may be
required by applicable law, will not issue any such press release or make any
such public statement prior to such consultation.
8.5. Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
8.6. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
8.7. Amendment and Waiver. This Agreement may be amended, and Purchaser
and the Seller may, (a) extend the time for the performance of any of the
obligations of any other party, (b) waive any inaccuracies in representations by
any other party, (c) waive compliance by any other party with any of the
agreements contained herein and performance of any obligations by such other
party, and (d) waive the fulfillment of any condition that is precedent to the
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42
performance by such party of any of its obligations under this Agreement. To be
effective, any such amendment must be in writing and be signed by the Purchaser
and the Seller and any waiver must be in writing and signed by the person
waiving such right or obligation.
8.8. Entire Agreement. This Agreement and the Exhibits and Schedules
hereto, each of which is hereby incorporated herein, set forth all of the
promises, covenants, agreements, understandings, representations and warranties
between the parties hereto with respect to the subject matter hereof, and
supersede all prior and contemporaneous promises, covenants, agreements,
understandings, representations and warranties among the parties hereto or
inducements or conditions, express or implied, oral or written with respect to
the subject matter hereof.
8.9. Governing Law. This Agreement, including the validity hereof and
the rights and obligations of the parties hereunder, shall be construed in
accordance with and governed by the laws of the Commonwealth of Pennsylvania
applicable to contracts made and to be performed entirely in such state (without
giving effect to the conflicts of laws provisions thereof).
8.10. Severability. It is the intent of the parties that each provision
of this Agreement be enforced to the fullest extent permissible under the laws
and public policies of each jurisdiction in which enforcement hereof is sought.
In furtherance of the foregoing, each provision hereof shall be severable from
each other provision. If any provision of this Agreement is adjudicated by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of
the Agreement that can be given full force and effect without the invalid
provision shall continue in full force and effect and shall in no way be
impaired or invalidated.
8.11. Jurisdiction. Each of the parties hereto hereby expressly and
irrevocably submits to the non-exclusive personal jurisdiction of the United
States District Court for the Western District of Pennsylvania and to the
jurisdiction of any other competent court of the Commonwealth of Pennsylvania
(collectively, the "Pennsylvania Courts"), preserving, however, all rights of
removal to such federal court under 28 U.S.C. Section 1441, in connection with
all disputes arising out of or in connection with this Agreement and agrees not
to commence any litigation relating thereto except in such courts. If the
aforementioned courts do not have subject matter jurisdiction, then the
proceeding shall be brought in any other state or federal court located in the
Commonwealth of Pennsylvania, preserving, however, all rights of removal to such
federal court under 28 U.S.C. Section 1441. Each party hereby waives the right
to any other jurisdiction or venue for any litigation arising out of or in
connection with this Agreement to which any of them may be entitled by reason of
its present or future domicile. Notwithstanding the foregoing, each of the
parties hereto agrees that each of the other parties shall have the right to
bring any action or proceeding for enforcement of a judgment entered by the
Pennsylvania Courts in any other court or jurisdiction.
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43
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
Attest: UBICS, INC.
By: /s/ BABU SRINIVAS By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------- -------------------------------
Name: Babu Srinivas Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------- -----------------------------
Title: Vice President - Finance & Title: President & CEO
------------------------------- ----------------------------
Acting CFO
-------------------------------
Attest: TEKSYS INC.
By: /s/ ▇▇▇▇▇▇▇▇ PEERSAIB By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------- -------------------------------
Name: ▇▇▇▇▇▇▇▇ Peersaib Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------- -----------------------------
Title: Title: Director
------------------------------- ----------------------------
44
EXHIBIT A TO
EXHIBIT 2.1
EXHIBIT A
FORM OF LEGAL OPINION OF
COUNSEL TO SELLER
[Date]
UBICS, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: Teksys Inc. (the "Seller")
Dear Sirs:
(b) We are lawyers qualified to practise in Mauritius and have
acted as Mauritius legal advisers to the Seller in
connection with the sale of the whole issued share capital
of European Software Services Limited, Oakwood Technical
Services Limited and Reflex I.T. Solutions Limited (the
"Companies") by the Seller.
(c) For the purposes of giving this opinion we have examined
executed originals or copies of the following documents:
(d) a facsimile copy of the share purchase agreement with
respect to the sale of the shares in the Companies made
between the Seller and UBICS, Inc. (the "Purchaser") dated
[ ] 2001 (the "SPA"); and
(e) a facsimile copy of the deed of tax indemnity made between
the Seller and the Purchaser dated [ ] 2001 (the "Deed");
(f) a facsimile copy of the unanimous written resolutions of the
directors of the Seller dated [ ] 2001 approving the
Seller's entry into, and authorising the execution and
delivery by the Seller of the Transaction Documents (the
"Directors' Resolutions"); and
(g) a facsimile copy of the unanimous written resolutions of the
members of the Seller dated [ ] 2001 approving the Seller's
entry into, and execution of the Transaction Documents (the
"Shareholders' Resolutions')
Capitalised terms used herein but not otherwise detailed shall have the
same meanings ascribed to them in the SPA or the Deed as appropriate.
(h) We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such records,
certificates, resolutions and other documents as we have
considered necessary or appropriate as detailed below and
have carried out the following searches:
45
[Fill in]
(i) This opinion relates only to the laws of Mauritius as in
force at the date of this opinion and we express no opinion
as to the laws of any other jurisdiction. In this regard, we
note that the Documents are governed by the laws of the
Commonwealth of Pennsylvania and therefore we have assumed
that they are legal, valid, binding and enforceable under
that law.
(j) For the purposes of giving this opinion, we have also
assumed:
(k) the authenticity of all seals, or signatures and of any duty
stamp or marking and the completeness and conformity to
originals of all copy documents submitted to us;
(l) the accuracy and completeness of all corporate minutes,
resolutions and records which we have seen and the accuracy
of any and all representations of fact expressed in or
implied by the documents we have examined;
(m) that insofar as any obligation under any of the documents
referred to above is to be performed in any jurisdiction
outside Mauritius, its performance will not be illegal or
ineffective by virtue of the law of the jurisdiction; and
(n) that there are no provisions of the laws of any jurisdiction
other than those of Mauritius which would be contravened by
the execution, delivery or performance of any of the
documents referred to above.
(o) On the basis of the foregoing assumptions we are of the
opinion as follows:-
(p) The Seller is a [limited liability] company duly
incorporated and validly existing and in good standing under
the laws of Mauritius and has power to own its property and
assets, to carry on its business as contemplated by the
Transaction Documents and to enter into and perform its
obligations under the Transaction Documents.
(q) The Seller has taken all necessary corporate action to
authorise the execution and delivery of the Transaction
Documents.
(r) The Transaction Documents have been duly executed and when
delivered by the Seller, will constitute legal, valid,
binding and enforceable obligations of the Seller.
(s) Neither the execution and delivery of the Transaction
Documents nor the compliance with the terms of such
Agreements will violate the Memorandum and Articles of
Association of the Seller or violate any of the terms or
provisions of any judgement, decree or order or any statute,
rule or regulation applicable to the Seller.
46
(t) All permissions, licences, consents, registrations and other
authorisations for the time being required under the laws of
Mauritius for the validity or enforceability of the
Transaction Documents have been obtained and are in full
force and effect.
(u) It is not necessary or advisable that the Transaction
Documents be filed, registered, recorded or enrolled with
any court, public office or other authority in Mauritius or
that any stamp, documentary, registration or similar Tax or
duty be paid on or in relation to any such agreement.
(v) The choice of Pennsylvania law to govern the Transaction
Documents is a valid choice of law under the laws of
Mauritius.
(w) The submission to the non-exclusive jurisdiction of the
Pennsylvania courts by the Seller under the Transaction
Documents is valid and binding upon such party and not
subject to revocation.
(x) Any final and conclusive monetary judgement obtained against
the Seller in the Pennsylvania courts in respect of the
Transaction Documents for a definite sum may, subject as
hereinafter provided, be registered and enforced as a
judgement of the Mauritius Court.
7. The opinions set out above are subject to the following qualifications:-
(y) We express this opinion based only on the laws of Mauritius
as they are in force at the date hereof. We have made no
investigation of, and express no opinion on, the laws of the
other jurisdiction.
(z) Enforcement of claims under the Transaction Documents may be
limited by bankruptcy, insolvency, liquidation,
re-organisation and other similar laws of Mauritius of
general application relating to or affecting the rights of
creditors generally. Under the laws of Mauritius there is no
requirement for notice of an appointment of a receiver to be
filed at any public office or other place in Mauritius.
(aa) Claims under the Transaction Documents may become barred
under the laws relating to limitation of actions in
Mauritius or may be or become subject to defences of set-off
or counterclaim.
(bb) Equitable remedies such as injunctions and orders for
specific performance are discretionary and will not be
automatically granted by a court in Mauritius.
This opinion is rendered for your benefit and the benefit of your legal
counsel in connection with the transaction contemplated by the
Transaction Documents only. It may not be disclosed to or relied on by
any other party for any other purpose.
47
EXHIBIT B TO
EXHIBIT 2.1
EXHIBIT B
TAXATION UNDERTAKING
between
TEKSYS INC., a Mauritius company (the "Grantor")
and
UBICS, INC., a Delaware corporation (the "Purchaser")
INTRODUCTION
This Taxation Undertaking is granted pursuant to a Share Purchase Agreement (the
"Principal Agreement") between the Grantor and the Purchaser dated of even date
herewith relating to the sale by the Grantor to the Purchaser of the whole
issued share capital of European Software Services (UK) Limited, a company
incorporated under the Companies Acts with registered number [ ] and
having its registered office at [ ] ("ESS"), Oakwood Technical Services
Limited., a company incorporated under the Companies Acts with registered
number [ ] and having its registered office at [ ] ("OTS") and
Reflex I.T. Solutions, Limited., a company incorporated under the Companies Acts
with registered number [ ] and having its registered office at [ ]
("Reflex") (ESS, OTS and Reflex are hereinafter referred to collectively as the
"Companies").
NOW THEREFORE IT IS HEREBY AGREED as follows:-
1 DEFINITIONS AND INTERPRETATION
In this Taxation Undertaking:-
1.1 WORDS AND EXPRESSIONS DEFINED IN THE PRINCIPAL AGREEMENT SHALL,
EXCEPT WHERE OTHERWISE PROVIDED OR EXPRESSLY DEFINED BELOW, HAVE THE
SAME MEANING IN THIS TAXATION UNDERTAKING AND THOSE PROVISIONS OF THE
PRINCIPAL AGREEMENT DEALING WITH CONSTRUCTION OR INTERPRETATION
SHALL, EXCEPT WHERE OTHERWISE PROVIDED, APPLY AS IF EXPRESSLY SET OUT
HEREIN.
1.2 THE FOLLOWING EXPRESSIONS SHALL, UNLESS OTHERWISE SPECIFIED OR THE
CONTEXT OTHERWISE REQUIRES, HAVE THE MEANINGS SET OPPOSITE THEM
RESPECTIVELY:
"CLAIM" or "CLAIM FOR TAXATION" means any valid notice, demand,
assessment, letter or other document issued or action taken by or on
behalf of the Inland Revenue or Contributions Agency or Customs and
Excise or any other statutory or governmental authority or body
whatsoever in any part of the world from which it appears that a
Liability to Taxation is or will or may come to be validly imposed on
the Companies (whether or not such Liability to
48
Taxation is primarily imposed upon or payable by the Companies and
whether or not the Companies have or may have any right of relief or
reimbursement).
"EVENT" means any transaction, action or omission of any person and
any event or occurrence of whatever nature, whether or not in the
ordinary course of business, including Closing and any combination of
two or more of the foregoing.
"FINAL DETERMINATION" means in relation to a Claim for Taxation where
there is an appeal against such claim:
(a) an agreement under Section 54 of the Taxes Management ▇▇▇
▇▇▇▇ or any legislative provision having an effect similar
to the effect of that section; or
(b) a decision of a court or tribunal of competent jurisdiction
from which either no appeal lies or in respect of which no
appeal is made within the prescribed time limit.
"GROUP RELIEF" means:
(a) relief the subject of a surrender or claim pursuant to
Chapter IV of Part X of the Taxes ▇▇▇ ▇▇▇▇;
(c) advance corporation tax the subject of a surrender or claim
pursuant to section 240 of the Taxes ▇▇▇ ▇▇▇▇; and
(d) any tax refund the subject of a surrender or claim pursuant
to section 102 FA 1989.
"LIABILITY TO TAXATION" means any liability of the Companies to make
any payment of or in respect of Taxation and also means and includes:
(b) the loss or becoming unavailable or reduction in the amount
of any Relief which would otherwise have been available to
the Companies; and
(e) the loss or becoming unavailable or reduction in the amount
of, cancellation or set off of any right to repayment of
Taxation which would otherwise have been available to the
Companies; and
(f) the setting off against income, profits or gains or against
any Taxation (in either case in respect of which, but for
such setting off, the Companies would have had a Liability
to Taxation in respect of which the Grantor would have been
liable to make a payment to the Purchaser under this
Taxation Undertaking) of any Purchaser's Relief.
"PURCHASER'S RELIEF" means any Relief which arises after Closing and
not in respect of any Event occurring on or before Closing.
"RELIEF" means any relief, allowance, exemption, credit or set-off
against any Taxation, and any relief, allowance, set-off or deduction
in computing or against profits, income or gains of any description
or from any source for the purposes of any Taxation.
"REGULATIONS" means the Value Added Tax Regulations 1995.
49
"TAXATION" means all forms of taxation, duties, imposts, charges,
withholdings, contributions, impositions and levies whatsoever and
whenever imposed and whether of the United Kingdom or elsewhere and
without prejudice to the generality of the foregoing includes:
(c) income tax, corporation tax, advance corporation tax,
petroleum revenue tax, capital gains tax, inheritance tax,
stamp duty, stamp duty reserve tax, value added tax,
customs and other import duties, national insurance and
social security contributions and any payment whatsoever
which the Companies may be or become legally bound to make
to any person, revenue, customs or fiscal authority or any
other body or authority as a result of any enactment
relating to taxation and any other taxes, duties, levies or
imposts supplementing or replacing any of the foregoing;
and
(g) all interest, fines or penalties in respect of and relating
to any of the foregoing
"VAT" means value added tax.
"[ ] VAT GROUP" means the VAT group which had VAT registration
number[ ] ].
"VATA" means Value Added Tax ▇▇▇ ▇▇▇▇.
2 UNDERTAKING TO PAY
2.1 SUBJECT AS HEREINAFTER PROVIDED, THE GRANTOR HEREBY UNDERTAKES TO PAY
TO THE PURCHASER:
2.1.1 the amount of every Liability to Taxation which arises in respect of
or by reference to any income, profits or gains earned or accrued or
deemed to have been earned or accrued on or before Closing; and
2.1.2 the amount of every Liability to Taxation which arises as a
consequence of or by reference to any Event occurring or deemed to
have occurred, whether wholly or in part, on or before Closing or as
a consequence of or by reference to the combined effect of two or
more Events of which at least one occurs or is deemed to have
occurred on or before Closing, but only to the extent that the first
mentioned Event is outside the ordinary course of business of the
Companies and the second or successive Events are effected after
Closing and are inside the ordinary course of the business of the
Companies; and
2.1.3 the amount of any inheritance tax which:
2.1.3.1 is at Closing a charge on any of the shares or assets of the
Companies or gives rise to a power to sell, mortgage or charge any of
the shares or assets of the Companies; or
2.1.3.2 after Closing becomes a charge on or gives rise to a power to sell,
mortgage or charge any of the shares or assets of the Companies,
being a liability in respect of additional inheritance tax payable on
the death of any person within seven years after a transfer of value
if a charge on or a power to sell, mortgage or charge any such shares
or assets could, if the death had occurred immediately before Closing
and the inheritance tax payable as a result thereof had not been
paid, have existed at Closing; and
2.1.4 the amount of any liability of the Companies to pay for Group Relief
or to repay, in whole or in part, any payment previously made for
Group Relief to the extent that such liability is not provided for in
the Financial Statements; and
50
2.1.5 the amount of any liability of the Companies to make a payment by way
of reimbursement, recharge, indemnity, damages or management charge
connected in any way with Taxation:
2.1.5.1 in respect of or arising from any Event occurring on or before
Closing; or
2.1.5.2 arising by reference to any income, profits or gains earned, accrued
or received on or before Closing; and
2.1.6 the amount of every Liability to Taxation which arises as a
consequence of the failure by:
(a) any company
(i) which has at any time (whether before or after
Closing) been a member of a group (as defined
from time to time for any Taxation purpose) of
which any of the Companies has at any time prior
to Closing been a member; or
(ii) from which any of the Companies has received or
become entitled to receive on or before Closing
in respect of shares in that other company any
capital distribution (as defined in section
122(5)(b) of the TCGA 1992); or
(b) any trustees of an employee share ownership trust (within
the meaning of Schedule 5 to FA 1989) established by any of
the Companies before Closing or to which a sum has been
paid by any of the Companies before Closing; or
(c) any other person
to discharge Taxation within a specified period or otherwise;
provided that in the case of sub-paragraph (c) above this Clause
2.1.6 shall only apply insofar as such Taxation arises as a result of
profits earned, accrued or received or an Event occurring on or
before Closing; and
2.1.7 the amount of every Liability to Taxation which results from any of
the Companies being treated for any Taxation purpose as being before
Closing a member of a group of companies; and
2.1.8 the amount of any Liability to Taxation which arises as a result of
the application of Section 179 TCGA; and
2.1.9 all costs and expenses incurred by the Companies or the Purchaser in
relation to or resulting from any demands, actions, proceedings and
claims in respect of any Claim for Taxation or any Liability to
Taxation or in taking or defending any action under this Taxation
Undertaking.
2.2 IN DETERMINING FOR THE PURPOSES OF CLAUSE 2.1.3 WHETHER A CHARGE ON
OR POWER TO SELL, MORTGAGE OR CHARGE ANY OF THE SHARES OR ASSETS OF
THE COMPANIES EXISTS AT ANY TIME, THE FACT THAT THE INHERITANCE TAX
IS NOT YET PAYABLE OR MAY BE PAID BY INSTALLMENTS, SHALL BE
DISREGARDED, AND SUCH TAX SHALL BE TREATED AS BECOMING DUE AND A
CHARGE OR POWER TO SELL, MORTGAGE OR CHARGE AS ARISING, ON THE DATE
OF THE TRANSFER OF VALUE OR OTHER DATE OR EVENT ON OR IN RESPECT OF
WHICH IT BECOMES PAYABLE OR ARISES, AND THE PROVISIONS OF SECTION 213
IHTA SHALL NOT APPLY THERETO.
51
3 WITHHOLDINGS, TAXATION
3.1 ALL AMOUNTS PAYABLE BY THE GRANTOR TO THE PURCHASER UNDER THIS
TAXATION UNDERTAKING SHALL BE PAID WITHOUT ANY DEDUCTION,
WITHHOLDING, SET OFF OR COUNTERCLAIM WHATSOEVER EXCEPT AS REQUIRED BY
LAW. IF ANY DEDUCTION OR WITHHOLDING IS REQUIRED BY LAW TO BE MADE
FROM ANY SUCH AMOUNT THE GRANTOR SHALL PAY TO THE PURCHASER SUCH
ADDITIONAL AMOUNT OR AMOUNTS AS WILL IN AGGREGATE BE SUFFICIENT TO
ENSURE THAT AFTER ALL REQUIRED DEDUCTIONS AND WITHHOLDINGS HAVE BEEN
MADE FROM THE AMOUNTS PAID THERE SHALL BE LEFT IN THE HANDS OF THE
PURCHASER THE AMOUNT WHICH THE PURCHASER WOULD HAVE BEEN ENTITLED TO
RECEIVE FROM THE GRANTOR IN THE ABSENCE OF ANY REQUIREMENT TO MAKE A
DEDUCTION OR WITHHOLDING.
3.2 IF ANY AMOUNT PAYABLE BY THE GRANTOR TO THE PURCHASER UNDER THIS
TAXATION UNDERTAKING SHALL ITSELF BE SUBJECT TO ANY TAXATION THEN THE
AMOUNT WHICH THE GRANTOR SHALL PAY TO THE PURCHASER SHALL BE
INCREASED TO SUCH LARGER AMOUNT AS WILL ENSURE THAT AFTER PAYMENT OF
THE AMOUNT OF ALL TAXATION PAYABLE ON SUCH LARGER AMOUNT THERE SHALL
BE LEFT IN THE HANDS OF THE PURCHASER THE AMOUNT WHICH THE PURCHASER
WOULD HAVE BEEN ENTITLED TO RECEIVE FROM THE GRANTOR UNDER THIS
TAXATION UNDERTAKING IF SUCH AMOUNT WAS NOT SUBJECT TO ANY TAXATION.
4 QUANTIFICATION OF AMOUNT PAYABLE
4.1 THE AMOUNT OF A LIABILITY TO TAXATION WHICH ARISES UNDER (a) IN THE
DEFINITION OF LIABILITY TO TAXATION SHALL BE THE AMOUNT OF TAXATION
WHICH WOULD OTHERWISE HAVE BEEN SAVED BY THE RELIEF CONCERNED
CALCULATED BY, IN THE CASE OF A RELIEF WHICH IS A RELIEF, A DEDUCTION
FROM, OR OFF-SET AGAINST PROFITS, APPLYING TO THE AMOUNT OF RELIEF
LOST OR SET OFF THE RATE OF THE RELEVANT TAXATION CURRENT WHEN THE
RELIEF WOULD HAVE BEEN UTILISED HAD IT NOT BEEN LOST OR SET OFF.
4.2 THE AMOUNT OF A LIABILITY TO TAXATION WHICH ARISES UNDER (b) IN THE
DEFINITION OF LIABILITY TO TAXATION SHALL BE THE AMOUNT OF THE
REPAYMENT WHICH HAS BEEN LOST, CANCELLED OR SET OFF AS THE CASE MAY
BE.
4.3 THE AMOUNT OF A LIABILITY TO TAXATION WHICH ARISES UNDER (c) IN THE
DEFINITION OF LIABILITY TO TAXATION SHALL BE THE AMOUNT OF THE
LIABILITY TO TAXATION WHICH WOULD HAVE ARISEN BUT FOR THE SETTING OFF
OF THE PURCHASER'S RELIEF CONCERNED.
5 TIMING OF PAYMENTS
5.1 THE GRANTOR SHALL BE LIABLE TO MAKE PAYMENT TO THE PURCHASER OF
AMOUNTS PAYABLE UNDER CLAUSE 2:
5.1.1 insofar as the Companies require to make a payment to discharge a
Liability to Taxation, on the day which is the later of five business
days after demand is made therefor by the Purchaser and three
business days before the date on which that payment becomes due and
payable to the relevant Taxation authority; and
5.1.2 insofar as the Companies would have required to make a payment to
discharge a Liability to Taxation but for the fact that the Liability
to Taxation has been set off against, or reduced or otherwise
mitigated by the availability of any Relief, on the day which is the
later of five business days after demand is made therefor by the
Purchaser and three business days before the date on which payment of
the amount of the Liability to Taxation would otherwise have become
due; and
52
5.1.3 insofar as the Liability to Taxation arises under (a) in the
definition of Liability to Taxation on the day which is the later of
five business days after demand is made therefor by the Purchaser and
three business days before the date on which the Taxation that would
otherwise have been saved becomes due and payable to the relevant
Taxation authority;
5.1.4 insofar as the Liability to Taxation arises under (b) in the
definition of Liability to Taxation on the day which is the later of
five business days after demand is made therefor by the Purchaser and
five business days after the repayment of Taxation would otherwise
have been received; and
5.1.5 insofar as the Liability to Taxation arises under (c) in the
definition of Liability to Taxation, on the day which is the later of
five business days after demand is made therefor by the Purchaser and
three days before the date on which Taxation becomes due and payable
to the relevant Taxation authority which would not otherwise have
become due and payable had it not been for the said use or setting
off of the Purchasers Relief.
5.2 FOLLOWING THE FINAL DETERMINATION OF ANY CLAIM FOR TAXATION, THE
GRANTOR SHALL WITHIN FIVE BUSINESS DAYS AFTER A DEMAND THEREFOR PAY
TO THE PURCHASER SUCH AMOUNT OR FURTHER AMOUNT IN ADDITION TO THE
AMOUNTS ALREADY PAID AS MAY BE NECESSARY TO DISCHARGE IN FULL THE
LIABILITY OF THE GRANTOR UNDER THIS TAXATION UNDERTAKING.
5.3 IF ANY PAYMENT DUE TO BE MADE BY THE GRANTOR UNDER THIS TAXATION
UNDERTAKING IS NOT MADE ON THE DUE DATE FOR PAYMENT IT SHALL CARRY
INTEREST FROM THE DUE DATE FOR PAYMENT UNTIL FINAL PAYMENT IN FULL
HAS BEEN MADE AT THE RATE OF FIVE PER CENT ABOVE THE BASE RATE FOR
LENDING FROM TIME TO TIME OF [THE ROYAL BANK OF SCOTLAND PLC].
5.4 IF THE PURCHASER IS ENTITLED TO RECEIVE A PAYMENT FROM THE GRANTOR
PURSUANT TO THIS TAXATION UNDERTAKING, SUCH PAYMENT SHALL BE
SATISFIED TO THE EXTENT POSSIBLE BY AN OFFSET AGAINST FUTURE
INSTALLMENT PAYMENTS TO BE MADE BY THE PURCHASER IN ACCORDANCE WITH
THE PROVISIONS OF SECTION 1.3(c) OF THE PRINCIPAL AGREEMENT.
6 EXCLUSIONS
6.1 THE GRANTOR SHALL HAVE NO OBLIGATION TO MAKE ANY PAYMENT UNDER CLAUSE
2 IN RESPECT OF ANY LIABILITY TO TAXATION:
6.1.1 to the extent that provision in respect of that Liability to Taxation
was made in the Financial Statements; or
6.1.2 which is a Liability to Taxation for which the Companies are or may
become liable solely as a result and in respect of transactions
undertaken in the ordinary course of the business of the Companies
after the Balance Sheet Date and prior to Closing.
6.2 FOR THE PURPOSES OF CLAUSE 6.1.2, THE FOLLOWING SHALL NOT BE REGARDED
AS ARISING AS A RESULT OF OR IN RESPECT OF TRANSACTIONS UNDERTAKEN IN
THE ORDINARY COURSE OF BUSINESS:-
6.2.1 any Taxation arising under Part XVII of the Taxes ▇▇▇ ▇▇▇▇;
6.2.2 any Taxation arising in respect of any distribution or deemed
distribution;
53
6.2.3 any Taxation arising in respect of the acquisition, disposal or
supply or deemed acquisition, disposal or supply of any assets,
goods, service or business facility of any kind (including a loan of
money or the letting, hiring or licensing of any tangible or
intangible property) for a consideration deemed for Taxation purposes
to be different from that (if any) actually received, but only
insofar as such Taxation is attributable to the difference between
the consideration (if any) actually received and the consideration
deemed for Taxation purposes to have been received;
6.2.4 any Taxation arising in respect of an Event which may result in the
Companies becoming liable to pay or bear Taxation chargeable directly
or primarily against or attributable directly or primarily to another
person, firm or company (including any Taxation arising under Part
VIII of the Taxes Management Act 1970);
6.2.5 any Taxation arising as a result of a failure by any of the Companies
duly to deduct, charge, recover or account for Taxation; or
6.2.6 any amount payable to the Commissioners of Customs & Excise under
Part XV of the Regulations or for which any of the Companies is
liable to account to the Commissioners of Customs & Excise under
Regulation 105 to 110 (both inclusive) of the Regulations;
6.2.7 any of the Companies ceasing, for Taxation purposes, to be a member
of any group of companies or associated with any other company.
6.3 THE PROVISIONS OF THE PRINCIPAL AGREEMENT SHALL WHERE EXPRESSLY
STATED TO DO SO APPLY TO THIS TAXATION UNDERTAKING AS IF SET OUT IN
FULL HEREIN.
7 OVER-PROVISIONS, SAVINGS
7.1 IF WITHIN 2 YEARS FROM THE DATE HEREOF, THE AUDITORS FOR THE TIME
BEING OF THE COMPANIES SHALL CERTIFY, APPLYING THE ACCOUNTING
POLICIES, PRINCIPLES AND PRACTICES ADOPTED IN RELATION TO THE
PREPARATION OF THE ACCOUNTS (AT THE REQUEST AND EXPENSE OF THE
GRANTOR) THAT ANY PROVISION FOR TAXATION IN THE ACCOUNTS (EXCLUDING
ANY PROVISION FOR DEFERRED TAX) HAS PROVED TO BE AN OVER-PROVISION,
THEN THE AMOUNT OF SUCH OVER-PROVISION SHALL BE DEALT WITH IN
ACCORDANCE WITH CLAUSE 7.4. FOR THE AVOIDANCE OF DOUBT, IT WILL NOT
BE REGARDED AS SUCH AN OVER-PROVISION IF ANY ACTION BY THE COMPANIES
(OR ANY PERSON CONNECTED WITHIN THE MEANING OF SECTION 839 TAXES ACT
1988 WITH THE COMPANIES) AFTER CLOSING GIVES RISE TO ANY RELIEF WHICH
MAY BE USED BY THE COMPANIES SO AS TO REDUCE THE COMPANIES' LIABILITY
TO TAXATION AS STATED IN THE ACCOUNTS.
7.2 IF THE AUDITORS FOR THE TIME BEING OF THE COMPANIES SHALL CERTIFY (AT
THE REQUEST AND EXPENSE OF THE GRANTOR) THAT THE COMPANIES HAVE
OBTAINED ANY SAVING, THE AMOUNT OF THE SAVING SHALL BE DEALT WITH IN
ACCORDANCE WITH CLAUSE 7.4. FOR THE PURPOSES OF THIS CLAUSE 7.2, THE
COMPANIES SHALL NOT BE REGARDED AS OBTAINING A SAVING UNTIL THE LAST
DATE UPON WHICH IT WOULD HAVE BEEN OBLIGED TO MAKE THE ACTUAL PAYMENT
OF TAXATION FROM WHICH IT HAS BEEN RELIEVED IN ORDER TO AVOID
INCURRING ANY FINE, PENALTY OR INTEREST IN RESPECT OF UNPAID TAXATION
OR, IN THE CASE OF A SAVING CONSISTING OF A RIGHT TO REPAYMENT OF
TAXATION, THE DATE ON WHICH THE COMPANIES RECEIVE CLEARED FUNDS IN
RESPECT OF SUCH REPAYMENT.
7.3 FOR THE PURPOSES OF CLAUSE 7.2 "SAVING" MEANS:
54
(a) the reduction of any liability of the Companies to make an
actual payment of Taxation in respect of any period ending
after Closing or in respect of any Event occurring after
Closing and in respect of which the Grantor is not liable
to make a payment under Clause 2 of this Taxation
Undertaking by virtue of the set-off against such liability
or against profits of the Companies of any Relief (other
than, and after taking into account the effect of, any
Purchaser's Relief or right to repayment of Taxation
treated as an asset in, or otherwise taken into account in
preparing, the Accounts) arising wholly as a result of a
Liability to Taxation in respect of which the Grantor has
made a payment under Clause 2 of this Taxation Undertaking;
and
(b) any repayment of Taxation which the Companies obtain which
they would not have been entitled to but for the payment of
any Taxation by the Companies in respect of which the
Grantor has made a payment under Clause 2 of this Taxation
Undertaking.
7.4 WHERE IT IS PROVIDED UNDER CLAUSES 7.1 AND 7.2 THAT ANY AMOUNT (THE
"RELEVANT AMOUNT") IS TO BE DEALT WITH IN ACCORDANCE WITH THIS
CLAUSE:
7.4.1 the Relevant Amount shall first be set off against any payment then
due from the Grantor under this Taxation Undertaking;
7.4.2 to the extent that there is an excess after applying 7.4.1 above, a
refund shall be made to the Grantor of an amount equal to the lower
of:
7.4.2.1 any previous payment or payments made by the Grantor under this
Taxation Undertaking and not previously refunded under this Clause
and/or under Clause 8; and
7.4.2.2 the amount of such excess; and
7.4.3 to the extent that the excess referred to in Clause 7.4.2 is not
exhausted under that Clause, the remainder of the excess shall be
carried forward and set off against any future payment or payments
which become due from the Grantor under this Taxation Undertaking.
7.5 WHERE ANY SUCH CERTIFICATION AS IS MENTIONED IN CLAUSES 7.1 OR 7.2
ABOVE HAS BEEN MADE, THE GRANTOR OR THE PURCHASER MAY REQUEST THE
AUDITORS FOR THE TIME BEING OF THE COMPANIES TO REVIEW SUCH
CERTIFICATION IN THE LIGHT OF ALL RELEVANT CIRCUMSTANCES, INCLUDING
ANY FACTS WHICH HAVE BECOME KNOWN ONLY SINCE SUCH CERTIFICATION AND
CERTIFY WHETHER SUCH CERTIFICATION REMAINS CORRECT OR WHETHER, IN THE
LIGHT OF THOSE CIRCUMSTANCES, THE AMOUNT THAT WAS THE SUBJECT OF SUCH
CERTIFICATION SHOULD BE AMENDED.
7.6 IF THE AUDITORS CERTIFY UNDER CLAUSE 7.5 ABOVE THAT AN AMOUNT
PREVIOUSLY CERTIFIED SHOULD BE AMENDED, THAT AMENDED AMOUNT SHALL BE
SUBSTITUTED FOR THE PURPOSE OF CLAUSE 7.4 ABOVE AS THE RELEVANT
AMOUNT IN RESPECT OF THE CERTIFICATION IN QUESTION IN PLACE OF THE
AMOUNT ORIGINALLY CERTIFIED, AND SUCH ADJUSTING PAYMENT, IF ANY, AS
MAY BE REQUIRED BY VIRTUE OF THE ABOVE-MENTIONED SUBSTITUTION SHALL
BE MADE AS SOON AS PRACTICABLE BY THE GRANTOR OR (AS THE CASE MAY BE)
TO THE GRANTOR.
8 RECOVERY FROM THIRD PARTIES
8.1 IF FULL PAYMENT IS MADE BY THE GRANTOR UNDER THIS TAXATION
UNDERTAKING IN RESPECT OF A LIABILITY TO TAXATION AND THE PURCHASER
OR THE COMPANIES, AS THE CASE MAY BE, SUBSEQUENTLY RECEIVE FROM ANY
OTHER PERSON A PAYMENT OR CREDIT IN RESPECT OF THE LIABILITY
55
TO TAXATION IN QUESTION, THE PURCHASER OR THE COMPANIES, AS THE CASE
MAY BE, SHALL PAY TO THE GRANTOR AN AMOUNT EQUIVALENT EITHER TO SUCH
AMOUNT RECEIVED, EXCLUSIVE OF ANY VAT THEREON, OR TO THE AMOUNT THAT
THE PURCHASER OR THE COMPANIES HAVE ACTUALLY SAVED BY VIRTUE OF THE
RECEIPT OF THE CREDIT, TO THE EXTENT THAT THE PAYMENT TO THE GRANTOR
DOES NOT EXCEED THE PAYMENT ORIGINALLY MADE BY THE GRANTOR (LESS THE
AMOUNT OF ALL REASONABLE COSTS AND EXPENSES IN OBTAINING SUCH PAYMENT
OR CREDIT AND NET OF ANY TAXATION PAYABLE ON THE AMOUNT RECEIVED)
PROVIDED THAT THIS CLAUSE 8.1 SHALL NOT APPLY TO ANY PAYMENT OR
CREDIT WHICH HAS BEEN DEALT WITH IN ACCORDANCE WITH CLAUSES 7.1 OR
7.2 AND PROVIDED FURTHER THAT WHERE THE PURCHASER OR THE COMPANIES
RECEIVE A CREDIT, A PAYMENT SHALL NOT BE REQUIRED TO BE MADE TO THE
GRANTOR BEFORE THE DATE ON WHICH THE TAXATION THAT WOULD HAVE BEEN
PAYABLE BUT FOR THE CREDIT WOULD HAVE BEEN DUE AND PAYABLE TO THE
APPROPRIATE TAXATION AUTHORITY.
8.2 IF FULL PAYMENT IS MADE BY THE GRANTOR UNDER THIS TAXATION
UNDERTAKING IN RESPECT OF A LIABILITY TO TAXATION AND THE PURCHASER
OR THE COMPANIES ARE OR BECOME ENTITLED TO RECOVER FROM SOME OTHER
PERSON (OTHER THAN THE COMPANIES OR THE PURCHASER OR ANY PERSON
CONNECTED WITHIN THE MEANINGS OF SECTION 839 TAXES ACT 1988 WITH ANY
OF THEM) ANY SUM IN RESPECT OF THE LIABILITY TO TAXATION (OTHER THAN
BY REASON OF ANY PURCHASER'S RELIEF) THE PURCHASER, IF SO REQUIRED BY
THE GRANTOR, WILL AND WILL PROCURE THAT THE COMPANIES, WILL, AT THE
COST OF THE GRANTOR AND UPON THE GRANTOR INDEMNIFYING THE PURCHASER
AGAINST ALL COSTS WHICH MAY THEREBY BE INCURRED, TAKE ALL REASONABLE
STEPS TO ENFORCE SUCH RECOVERY (PROVIDED THAT THE COMPANIES AND THE
PURCHASER SHALL NOT BE OBLIGED TO TAKE ANY ACTION WHICH THEY
REASONABLY CONSIDER TO BE PREJUDICIAL TO THEIR INTERESTS) AND ANY
AMOUNTS SO RECOVERED BY THE PURCHASER SHALL BE DEALT WITH PURSUANT TO
CLAUSE 8.1.
9 [VAT
9.1 WHERE THE COMPANIES, IN THEIR CAPACITY AS REPRESENTATIVE MEMBER OF
THE [ ] VAT GROUP IS LIABLE TO ACCOUNT FOR ANY VAT AFTER CLOSING THEN
TO THE EXTENT THAT SUCH VAT IS ATTRIBUTABLE TO SUPPLIES (INCLUDING
SELF SUPPLIES) MADE BY OR TO OR IMPORTATIONS OR ACQUISITIONS MADE BY
[ ] UP TO AND INCLUDING CLOSING AND TO THE EXTENT THAT A PROVISION OR
RESERVE IN RESPECT OF OR REPRESENTING SUCH VAT IS NOT MADE IN THE
FINANCIAL STATEMENTS OR COMPRISED OR OTHERWISE INCLUDED IN ANY
LIABILITY PROVIDED FOR IN THE FINANCIAL STATEMENTS THE GRANTOR SHALL,
OR SHALL PROCURE THAT [ ]SHALL, PAY TO THE COMPANIES A SUM EQUAL TO
SO MUCH OF THE AMOUNT TO BE SO ACCOUNTED FOR AS IS SO ATTRIBUTABLE NO
LATER THAN FIVE DAYS BEFORE THE DATE ON WHICH THE COMPANIES ARE
LIABLE TO ACCOUNT FOR IT.
9.2 THE PROVISIONS OF THIS CLAUSE 9 SHALL OPERATE TO THE EXCLUSION OF THE
UNDERTAKING IN CLAUSE 2 INSOFAR AS THEY RELATE TO THE SAME LIABILITY
TO TAXATION AND ACCORDINGLY CLAUSE 6 SHALL NOT APPLY TO ANY MATTER TO
BE DEALT WITH UNDER THIS CLAUSE 9.
9.3 THE DEEMING PROVISIONS OF SECTION 43(1) VATA SHALL BE DISREGARDED IN
DETERMINING FOR THE PURPOSES OF THIS CLAUSE 9 WHAT SUPPLIES OR
IMPORTATIONS HAVE BEEN MADE OR ARE DEEMED TO HAVE BEEN MADE BY OR TO
ANY PERSON]
10 CONDUCT OF CLAIMS
10.1 THE PURCHASER SHALL AS SOON AS REASONABLY PRACTICABLE NOTIFY THE
GRANTOR, OR SHALL PROCURE THAT THE GRANTOR SHALL BE NOTIFIED, IN
WRITING OF ANY CLAIM FOR TAXATION WHICH COMES TO THE NOTICE OF THE
PURCHASER OR THE COMPANIES IN RESPECT OF WHICH THE PURCHASER OR THE
56
COMPANIES CONSIDER THAT THE GRANTOR IS OR MAY BECOME LIABLE TO MAKE A
PAYMENT TO THE PURCHASER UNDER THIS TAXATION UNDERTAKING.
10.2 PROVIDED THAT THE GRANTOR MEETS ALL LIABILITIES, COSTS, DAMAGES AND
EXPENSES WHICH MAY BE INCURRED IN RESPECT OF SUCH CLAIM FOR TAXATION
AND INDEMNIFIES THE PURCHASER AND THE COMPANIES IN RESPECT OF ALL
SUCH AMOUNTS THE PURCHASER SHALL PROCURE THAT THE COMPANIES WILL
(EXCEPT IN A CASE WHERE FRAUDULENT, WILFUL OR NEGLIGENT CONDUCT IS
ALLEGED BY ANY TAXATION AUTHORITY) TAKE SUCH ACTION AS THE GRANTOR
MAY REASONABLY IN WRITING REQUEST TO AVOID, RESIST OR COMPROMISE THE
CLAIM FOR TAXATION; PROVIDED THAT WHERE THE LIABILITY TO TAXATION
WHICH IS THE SUBJECT OF THE CLAIM HAS TO BE PAID BEFORE AN APPEAL CAN
BE MADE OR BEFORE ANY OTHER ACTION REQUESTED BY THE GRANTOR CAN BE
TAKEN, THE PURCHASER SHALL NOT BE OBLIGED TO PROCURE THE COMPANIES TO
TAKE ANY SUCH ACTION UNTIL THE GRANTOR SHALL HAVE PAID TO THE
PURCHASER FOR THE PURPOSE OF DISCHARGING THE LIABILITY TO TAXATION,
AN AMOUNT EQUAL TO THE SAID LIABILITY.
10.3 IN CONNECTION WITH THE CONDUCT OF ANY DISPUTE RELATING TO A CLAIM FOR
TAXATION TO WHICH THIS CLAUSE APPLIES:
10.3.1 the Grantor shall keep the Purchaser and the Companies fully informed
of all relevant matters and the Grantor shall forward or procure to
be forwarded to the Purchaser copies of all correspondence and other
written communications pertaining to the Companies;
10.3.2 the appointment by the Grantor of solicitors or other professional
advisers shall be subject to the prior approval in writing of the
Purchaser such approval not to be unreasonably withheld or delayed;
10.3.3 the Grantor shall not make any settlement or compromise of the
subject matter of the Claim nor agree any matter in the conduct of
any dispute relating thereto which is likely to affect the amount of
the resulting Liability to Taxation or the future liability of the
Companies to Taxation, without the prior approval in writing of the
Purchaser such approval not to be unreasonably withheld or delayed;
10.3.4 if any dispute arises between the Purchaser and the Grantor as to
whether the Claim for Taxation or Liability to Taxation should at any
time be settled in full or contested in whole or in part, the dispute
shall be referred for a decision to a Senior Counsel having at least
ten years experience in Taxation matters appointed by agreement
between the Purchaser and the Grantor, or failing agreement nominated
on the application of either the Grantor or the Purchaser by the
President of the Law Society of England. Such Counsel shall be asked
to advise whether, in his opinion, an appeal against the Claim for
Taxation or Liability to Taxation, would on the balance of
probabilities, be likely to succeed. If the opinion of such Counsel
is to the effect that on the balance of probabilities the appeal
would be likely to succeed then an appeal may be made if the Grantor
so decides. If the opinion of such Counsel is to the effect that on
the balance of probabilities an appeal against the Claim for Taxation
or Liability to Taxation would not succeed then the Claim for
Taxation or Liability to Taxation shall be settled as soon as
practicable. Any further dispute arising between the Grantor and the
Companies as to whether any further appeal should be pursued
following determination of an earlier appeal (whether or not in
favour of the Companies) shall be resolved in a similar manner.
10.4 THE COMPANIES SHALL BE FREE WITHOUT REFERENCE TO THE GRANTOR TO
ADMIT, COMPROMISE, SETTLE, DISCHARGE OR OTHERWISE DEAL WITH ANY CLAIM
FOR TAXATION IF THE GRANTOR DELAYS
57
UNREASONABLY IN MAKING A REQUEST UNDER CLAUSE 10.2 IN RESPECT OF THAT
CLAIM FOR TAXATION.
11 TAX RETURNS
11.1 THE GRANTOR OR ITS AGENTS SHALL BE RESPONSIBLE FOR AND HAVE CONDUCT
OF PREPARING, SUBMITTING TO AND AGREEING WITH ALL RELEVANT TAXATION
AUTHORITIES ALL TAX RETURNS AND COMPUTATIONS OF THE COMPANIES FOR ALL
ACCOUNTING PERIODS ENDING ON OR BEFORE CLOSING, SUBJECT TO ALL SUCH
RETURNS, COMPUTATIONS, DOCUMENTS AND SUBSTANTIVE CORRESPONDENCE
RELATING THERETO BEING SUBMITTED IN DRAFT FORM TO THE PURCHASER OR
ITS AGENTS FOR COMMENT AT LEAST TWENTY BUSINESS DAYS PRIOR TO THE
DATE WHICH IS THE DUE DATE FOR SUBMISSION OF SUCH RETURNS,
COMPUTATIONS, DOCUMENTS AND CORRESPONDENCE AND SUBJECT TO THE
REASONABLE COMMENTS OF THE PURCHASER OR ITS AGENTS HAVING BEEN TAKEN
INTO ACCOUNT THEREIN. IF THE GRANTOR HAS NOT RECEIVED ANY COMMENTS
WITHIN FIFTEEN BUSINESS DAYS OF RECEIPT BY THE PURCHASER, THE
PURCHASER AND ITS AGENTS SHALL BE DEEMED TO HAVE APPROVED SUCH DRAFT
DOCUMENTS. THE GRANTOR AND THE PURCHASER SHALL EACH RESPECTIVELY
AFFORD (OR PROCURE THE AFFORDANCE) TO THE OTHER OR THEIR AGENTS OF
INFORMATION AND ASSISTANCE WHICH MAY REASONABLY BE REQUIRED TO
PREPARE, SUBMIT AND AGREE ALL SUCH OUTSTANDING RETURNS AND
COMPUTATIONS.
11.2 THE PURCHASER AND ITS AGENT SHALL BE RESPONSIBLE FOR, AND HAVE
CONDUCT OF PREPARING, SUBMITTING TO AND AGREEING WITH ALL RELEVANT
TAXATION AUTHORITIES ALL TAX RETURNS AND COMPUTATIONS OF THE
COMPANIES FOR THE ACCOUNTING PERIOD CURRENT AT CLOSING.
12 GENERAL
12.1 ALL UNDERTAKINGS AND OBLIGATIONS OF THE GRANTOR ARISING FROM THIS
TAXATION UNDERTAKING ARE UNDERTAKEN BY AND SHALL BE ENFORCEABLE
AGAINST THE GRANTOR JOINTLY AND SEVERALLY.
12.2 THIS TAXATION UNDERTAKING SHALL BE BINDING ON THE GRANTOR AND ITS
SUCCESSORS AND ASSIGNS WHOMSOEVER AND, ACCORDINGLY, UNLESS THE
CONTEXT OTHERWISE REQUIRES, REFERENCES TO THE GRANTOR SHALL INCLUDE
REFERENCES TO SUCH SUCCESSORS AND ASSIGNS.
12.3 NO PARTY TO THIS TAXATION UNDERSTANDING MAY ASSIGN EITHER THIS
TAXATION UNDERSTANDING OR ANY OF ITS RIGHTS, INTERESTS OR OBLIGATIONS
HEREUNDER WITHOUT THE PRIOR WRITTEN APPROVAL OF THE PARTIES HERETO.
12.4 THE PROVISIONS OF CLAUSES [ ] OF THE PRINCIPAL AGREEMENT SHALL APPLY
TO THIS TAXATION UNDERTAKING AS IF SET OUT IN FULL HEREIN AND
REFERENCES TO THE "AGREEMENT" WERE REFERENCES TO THIS "TAXATION
UNDERTAKING".
12.5 THE CONSTRUCTION, VALIDITY AND PERFORMANCE OF THIS TAXATION
UNDERTAKING SHALL BE GOVERNED BY ENGLISH LAW AND THE JURISDICTION
SHALL BE THE HIGH COURT .
IN WITNESS WHEREOF, THE PARTIES HERETO HAVE EXECUTED THIS TAXATION
UNDERSTANDING AS OF THE DAY AND YEAR FIRST WRITTEN ABOVE.
58
Attest: UBICS, INC.
By:________________________ By:________________________
Name: Name:
Title: Title:
Attest: TEKSYS, INC.
By:________________________ By:________________________
Name: Name:
Title: Title:
