DATED 21ST DECEMBER 1998
A. ▇▇▇▇▇▇ AND OTHERS
- and -
ELEMENTS (UK) LIMITED
- and -
INTERFACE GRAPHICS LIMITED
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SHARE PURCHASE AGREEMENT
BY WAY OF DEED
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WILDE SAPTE
▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Tel. ▇▇▇▇ ▇▇▇ ▇▇▇▇
Fax. ▇▇▇▇ ▇▇▇ ▇▇▇▇
TABLE OF CONTENTS
Clause Heading Page Number
1. DEFINITIONS AND INTERPRETATION...................................1
2. SALE AND PURCHASE................................................8
3. CONDITIONS PRECEDENT.............................................9
4. INITIAL CONSIDERATION AND DEFERRED CONSIDERATION................10
5. POSITION PENDING COMPLETION.....................................12
6. COMPLETION......................................................16
7. DELIVERY TO SOLICITORS..........................................19
8. WARRANTIES......................................................19
9. MEASURE OF DAMAGES..............................................20
10. LIMITATION OF WARRANTORS' LIABILITY.............................22
11. COVENANTS OF THE COVENANTORS....................................24
12. POWER OF ATTORNEY...............................................26
13. WAIVERS.........................................................27
14. POST-COMPLETION OPERATION.......................................27
15. COSTS AND WITHHOLDINGS..........................................28
16. ASSIGNMENT......................................................28
17. ANNOUNCEMENTS...................................................28
18. JURISDICTION....................................................29
19. NOTICES.........................................................30
20. INVALIDITY......................................................30
21. FURTHER ASSURANCE...............................................30
22. ENTIRE AGREEMENT................................................31
23. TIME OF THE ESSENCE.............................................31
24. COUNTERPARTS....................................................31
SCHEDULE 1 - Part I - The External Vendors....................................33
SCHEDULE 1 - Part II - The Employee Vendors...................................34
SCHEDULE 2 - The Company......................................................36
SCHEDULE 3 - Confirmation of No Claims - Part 1 - Directors and Secretary.....37
SCHEDULE 3 - Confirmation of No Claims - Part 2 - The Vendors.................38
SCHEDULE 3 - Confirmation of No Claims - Part 3 - Auditors....................39
SCHEDULE 4 - The Warranties...................................................40
SCHEDULE 5 - The Property - Property Details..................................71
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AGREED FORM DOCUMENTS CLAUSE REFERENCE
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o Shareholders' powers of attorney Clause 6.2.1
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o Deed of Tax Covenant Clause 6.2.3
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o Disclosure Letter Clause 6.2.4
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o Certificate of Non-Crystallisation Clause 6.2.8
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o Shareholders' resolution of the Company adopting Clause 6.2.12
new articles of association
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o Board minutes of the Company Clause 6.3
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o Board resolution of the Purchaser
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o Indemnity in respect of lost share certificates Clause 6.2.2
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o Termination Agreement Clause 6.2.13
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o Vendors' Solicitors Undertaking Clause 6.2.9
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THIS DEED is made the 21st December 1998
BETWEEN:
(1) THE SEVERAL PERSONS whose names and addresses are set out in Schedule 1
(together the "VENDORS");
(2) ELEMENTS (UK) LIMITED, a company registered in England and Wales with
registered number 02888039 and having its registered office at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the "PURCHASER"); and
(3) INTERFACE GRAPHICS LIMITED, a company registered in Scotland with
registered number SC137315 and having its registered office at ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the "COMPANY")
WHEREAS:
(A) The Vendors are together the beneficial owners of the whole of the
issued and allotted share capital in the Company and each of the Vendors
is the beneficial owner of the number of shares in the Company set
against his name in Schedule 1.
(B) The Vendors have agreed to sell and the Purchaser has agreed to buy the
whole of the issued and allotted share capital in the Company on the
terms and conditions hereinafter contained.
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
In this Deed (including the Recitals and Schedules), unless the context
otherwise requires or except as otherwise expressly provided:
1.1 DEFINITIONS
"ACCOUNTS" means in relation to the Company its audited financial
statements including its balance sheet as at the Last Accounts
Date, an audited profit and loss account (including any notes
thereto) of the Company for the financial year
-1-
ended on the Last Accounts Date and all reports, accounts, and
other documents required by law to be included in or attached
thereto;
"AGREED FORM" means in a form approved by the Parties and
initialled for identification by or on behalf of the Vendors and
the Purchaser;
"BUSINESS" means the business of the Company as carried on as at
the Completion Date;
"BUSINESS DAY" means any day (other than a Saturday or a Sunday)
which is not a public or bank holiday in England or in Scotland;
"COMPANIES ACT" means the Companies ▇▇▇ ▇▇▇▇ (as amended by the
Companies Act 1989);
"COMPLETION" means the completion of the sale and purchase of the
Shares in accordance with Clause 6;
"COMPLETION DATE" means 31st January 1999 or such other date as
shall be agreed in writing between the Parties;
"CONDITIONS PRECEDENT" means the conditions set out in Clause 3;
"CONSIDERATION SHARES" means such number of Common Shares of $0.01
each in the capital of Unidigital as are admitted to NASDAQ and as
shall in aggregate have a value of (pound)131,992.05 and which
shall rank pari passu in all respects and form a class with the
existing Common Shares of Unidigital to be allotted and issued to
the Employee Vendors pursuant to Clause 6.4;
"COVENANTORS" means the External Vendors, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (all of whose addresses are set out in
Schedule 1);
"DEED OF TAX COVENANT" means a deed of covenant in the Agreed Form
to be executed by the Vendors and delivered on Completion;
"DEFERRED CONSIDERATION" means the consideration due to the Vendors
pursuant to Clauses 4.4 to 4.7 (inclusive);
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"DISCLOSURE LETTER" means the letter of even date herewith in the
Agreed Form (which may be updated by or on behalf of the Warrantors
prior to Completion) and which is to be delivered to the Purchaser
by or on behalf of the Warrantors and accepted by or on behalf of
the Purchaser respectively on the date hereof and at Completion;
"EMPLOYEE VENDORS" means the persons whose names and addresses are
set out in Schedule 1 Part II;
"ENVIRONMENTAL LAWS" means any legislation (including regulations,
codes of practice, circulars or guidance notes made thereunder)
relating to environmental matters including (without limitation):-
a) waste;
b) contaminated land;
c) discharges to land, ground and surface water and sewers;
d) emissions to air;
e) noise;
f) dangerous, hazardous and toxic substances and materials;
g) nuisance; and
h) health and safety.
"EXTERNAL VENDORS" means the persons whose names and addresses are
set out in Schedule 1 Part I;
"EXISTING FLOATING CHARGE" means the floating charge dated 25th
October 1993 granted to the Governor and Company of the Bank of
Scotland by the Company;
"FINANCIAL YEARS" means each of the financial years of the company
ending on 31st August 2000 and 31st August 2001;
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"GROUP" shall have the meaning ascribed thereto in section 262 of
the Companies ▇▇▇ ▇▇▇▇;
"INITIAL CONSIDERATION" means the consideration due to the Vendors
pursuant to Clause 4.1;
"INTELLECTUAL PROPERTY RIGHTS" has the meaning ascribed thereto in
paragraph 8.1 of Schedule 4 Part 1;
"LANDLORDS" means Knowe Properties Limited, a Company registered in
Scotland with registered number 48970, and having its registered
office at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇.
"LAST ACCOUNTS DATE" means 31st May 1998;
"LEASES" means (i) lease between the Landlords and the Company dated
25th January and 9th February and registered in the Books of Council
Session on 14th June 1994 as varied and extended by a Minute of
Variation and Extension of Lease between the Landlords and the
Company dated 7th and 23rd April 1997 as further varied by Minutes
of Variation of Lease between the Landlords and the Company dated
4th October 1998 and subsequent dates; and (ii) Lease between the
Landlords and Coda Technologies Limited constituted by missives
dated 24th and 26th August as amended by letters dated 25th and 28th
October and registered in the Books of Council Session on 3rd
November 1994 as further amended by letters of 24th May and 29th
June 1995 as assigned and varied by Minute of Assignation and
Variation between the Landlords, the Company and the said Coda
Technologies Limited dated 12th October 1998 and subsequent dates.
"LP(MP)A" means the Law of Property (Miscellaneous Provisions) ▇▇▇
▇▇▇▇;
"PROFIT" means the profit on the ordinary activities of the Company
before taxation; extraordinary items and after reasonable
management charges up to a maximum of (pound)56,000 in any of the
Financial Years for each Financial Year as shown by the audited
profit and loss account of the Company for the Financial Year
in question, such audited profit and loss account to be prepared
in accordance with the Company's standard accounting policies
and procedures; "PROPERTY" means the property short details of
which are set out in Schedule 5;
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"PURCHASER" means Elements (UK) Limited or its successors in title
and permitted assigns (as the case may be) in terms of this
Agreement;
"PURCHASER'S SOLICITORS" means Wilde Sapte of ▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇;
"SHARES" means all the shares in the capital of the Company allotted
or in issue at Completion;
"TAX" includes all present taxes, charges, imposts, duties, levies,
deductions, withholdings or fees of any kind whatsoever, or any
amount payable on account of or as security for any of the
foregoing, payable at the instance of or imposed by any statutory,
governmental, international, state, federal, provincial, local or
municipal authority, agency, body or department whatsoever or
European Community institution, in each case whether in the United
Kingdom or elsewhere, together with any penalties, additions,
fines, surcharges or interest relating thereto, and "TAXATION" and
cognate expressions shall be construed accordingly;
"TAXES ACT" means the Income and Corporation Taxes ▇▇▇ ▇▇▇▇;
"TAX WARRANTIES" means the Warranties in Part 4 of Schedule 4;
"TCGA 1992" means the Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇;
"TERMINATION AGREEMENT" means a termination agreement in the Agreed
Form to be executed by ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (1) and ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ and others (2) and the Company (3) and delivered at
Completion;
"UNIDIGITAL" means Unidigital Inc. a Delaware Corporation having its
principal place of business at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇ U.S.A.;
"UNITED KINGDOM" means England, Wales, Scotland and Northern Ireland
as defined in Schedule 1 to the Interpretation ▇▇▇ ▇▇▇▇ and includes
the territorial sea of the United Kingdom and any area designated by
Order in Council under sub-section 1(7), Continental Shelf ▇▇▇ ▇▇▇▇;
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"VAT" means value added tax as provided for in VATA 1994 and
legislation (or purported legislation and whether delegated or
otherwise) supplemental thereto and any tax similar or equivalent to
value added tax imposed by any country other than the United Kingdom
and any similar or turnover tax replacing or introduced in addition
to any of the same;
"VATA 1994" means the Value Added Tax ▇▇▇ ▇▇▇▇;
"VENDORS" means the Employee Vendors and the External Vendors or
their respective personal representatives and estates;
"VENDORS' SOLICITORS" means Messrs. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ of ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
"VENDORS' SOLICITORS' UNDERTAKING" means the undertaking in the
Agreed Form to be given by the Vendors' Solicitors at Completion;
"WARRANTIES" means the representations and warranties set out in
Schedule 4 and any other representations and warranties contained in
this Deed; and
"WARRANTORS" means:
(a) In relation to any Warranties not set out in Schedule 4 and the
Warranties numbered 2 and 3 in Schedule 4 Part I, each of the
Vendors; and
(b) in relation to the Warranties numbered 1 and 4 to 12.5
(inclusive) in Schedule 4 and the Warranties set out in Parts
2 to 4 (inclusive), ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇ (all of whose
addresses are set out in Schedule 1).
1.2 INTERPRETATION
1.2.1 any reference to the provisions of any statute or
subordinate legislation or of any rule made by a local
authority and having the effect of law shall be deemed to
include reference to the same as in force (including any
amendment or re-enactment or consolidation) at the time the
matter relating thereto occurs PROVIDED THAT the liability
of each Party shall not thereby exceed the
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amount of the liability of such Party which would have
arisen had no such amendment, re-enactment or consolidation
taken place after the date hereof;
1.2.2 any reference to a person being "connected with" another
person means (a) any person connected with such other person
(and "connected with" bears the meaning set out in section
839 of the Taxes Act); and/or (b) any company under the
control of such other person (and "control" bears the
meaning set out in section 840 of the Taxes Act);
1.2.3 words and expressions defined in the Companies Act shall
bear the same meanings herein;
1.2.4 words denoting one gender include all genders, words
denoting individuals or persons include corporations and
trusts and vice versa, words denoting the singular include
the plural and vice versa, and words denoting the whole
include a reference to any part thereof;
1.2.5 clause and paragraph headings are inserted for ease of
reference only and shall not affect construction;
1.2.6 references to Recitals, Clauses, Sub-clauses, Paragraphs,
Sub-paragraphs and Schedules are to the recitals, clauses,
sub-clauses, paragraphs, sub-paragraphs and schedules of and
to this Deed;
1.2.7 references to this Deed mean this agreement and Deed
together with its Recitals and Schedules and reference to
this Deed or any document or agreement includes references
to such document or agreement as amended, novated,
supplemented, varied or replaced from time to time with the
agreement of the Parties;
1.2.8 references to a Party means a party to this Deed and shall
include that person's permitted assigns, transferees or
successors in title in accordance with the terms of this
Deed;
1.2.9 the words "including", "include" and "in particular" shall
be construed as being by way of illustration only and shall
not be construed as limiting the generality of any foregoing
words; and
-7-
1.2.10 references to any English legal term for any action, remedy,
method of judicial proceeding, legal document, legal status,
court, official or any other legal concept shall, in respect
of any jurisdiction other than England, be deemed to include
the legal concept which most nearly approximates in that
jurisdiction to the English legal term.
2. SALE AND PURCHASE
2.1 Each of the Vendors shall sell with full title guarantee and with
effect from Completion such number of the Shares as is set out
opposite the name of the Vendor in question in Schedule 1 and the
Purchaser relying on the Warranties herein contained shall buy the
Shares together with all dividends, distributions and rights declared,
paid, created or arising after the Last Accounts Date or attaching
thereto and free from all claims, charges, liens, encumbrances,
options, equities, rights of pre-emption or other third party rights
(save for any claims, charges, liens, encumbrances, options, equities
or other third party rights arising under the Articles of Association
of the Company, this Deed or the Existing Floating Charge).
2.2 The Purchaser shall not be obliged to complete the purchase of any of
the Shares unless the purchase of all the Shares is completed
simultaneously in accordance with this Deed.
2.3 The covenants implied herein pursuant to LP(MP)A shall apply:
2.3.1 as modified or extended by the express terms of the
Warranties;
2.3.2 as if the covenant set out in section 3(1) of LP(MP)A ended
after the word "parties"; and
2.3.3 as if section 6(2)(b) of LP(MP)A did not apply
PROVIDED ALWAYS that without prejudice to the provisions of Clause 2.4
each of the Vendors shall sell such number of the Shares as are set
out opposite the name of the Vendor in question in Schedule 1 subject
to any charges or encumbrances arising under the Articles of
Association of the Company or arising pursuant to the terms of this
Deed or the Existing Floating Charge.
2.4 Each of the Vendors and the Company hereby waive all and any rights of
pre-emption or rights associated therewith to which they may be
entitled under the Articles of Association of
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the Company or under the shareholders agreement amongst ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and Henjac 207
Limited (now called Interface Graphics Limited), by agreement, by
statute or otherwise in respect of any transfer of Shares contemplated
by this Deed and, in particular, but without prejudice to the
generality of the foregoing waive any rights they may have under
Articles 3, 4, 17 to 20 inclusive and 23 of the Articles of
Association of the Company.
3. CONDITIONS PRECEDENT
3.1 Completion of the sale and purchase of the Shares shall be
conditional upon the Purchaser obtaining sufficient funding to enable
it to pay the Initial Consideration PROVIDED that in the event that
such funding shall not have been obtained at the Completion Date the
Purchaser shall pay the Vendors the sum of (pound)30,000 by way of
damages which payment shall be the Vendors' sole remedy for failure to
complete this Agreement as a result of such failure to obtain funding.
3.2 Completion of the sale and purchase of the Shares shall, in addition,
be conditional upon the following conditions having been fulfilled:
3.2.1 the repayment of all sums (if any) owing to the Company by
3.2.1.1 the Vendors or the directors of the Company or any
of them; or
3.2.1.2 by any person connected with any of the Vendors
or director of the Company or by any company
directly or indirectly controlled by such persons
or any of them; or
3.2.1.3 any partnership in which such persons or company
is a partner and whether or not such sums are due
for repayment;
3.2.2 the release of the Company (without payment of compensation)
from any debenture, charge, guarantee, cross-guarantee,
indemnity, counter-indemnity, bond, security, assurance or
other contingent liability of whatsoever nature or other
similar obligation which relates or could be made to relate
in whole or in part to debts or other liabilities or
obligations, whether actual or contingent and whether now or
hereinafter incurred, of any other person PROVIDED ALWAYS
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that this Clause 3.2.2 shall not require the release of the
Company from the Existing Floating Charge;
3.2.3 the release of the Company (without payment of compensation)
from all agreements and arrangements (other than as required
by the Purchaser) between the Company on the one hand, and
any Vendor or person connected with any of the Vendors on
the other hand PROVIDED that the provisions of this Clause
3.2.3 shall have no effect with regard to any contract of
employment between the Company and any of the Employee
Vendors; and
3.3 Each of the Vendors undertakes to use its reasonable endeavours to
ensure that the Conditions Precedent set out at Clause 3.2 are
fulfilled (to the reasonable satisfaction of the Purchaser) as soon as
reasonably practicable and, in any event, by Completion.
3.4 The Purchaser shall be entitled in its absolute discretion, by written
notice to the Vendors, to waive any or all of the Conditions Precedent
set out at Clause 3.2 either in whole or in part.
4. INITIAL CONSIDERATION AND DEFERRED CONSIDERATION
4.1 The Initial Consideration for the Shares shall be (pound)425,000
payable partly in cash and partly in monies worth in accordance with
the provisions of Clause 4.2.
4.2 The Initial Consideration set out in Clause 4.1 shall be satisfied:
4.2.1 in relation to the External Vendors and (in part) the
Employee Vendors in cash at Completion in accordance with
the provisions of Clause 6.4.1 and in the amounts set
opposite their names in Schedule 1; and
4.2.2 in relation to (in part) the Employee Vendors by the
allotment and issue to the Employee Vendors (or as they may
direct) of the Consideration Shares at Completion in
accordance with the provisions of Clause 6.4.2 and in the
proportions set opposite their names in Schedule1.
4.3 In computing the number of Consideration Shares to be allotted and
issued to the Employee Vendors pursuant to Clause 6.4 the US dollar
value attributed to each Consideration Share shall be the average of
the middle market quotations as shown by the NASDAQ index for each of
the 5 dealing days ending on the dealing day preceding the Completion
Date and the
-10-
dollar to pound sterling exchange rate shall be the average of the
Royal Bank of Scotland plc spot rate of exchange for the purchase of
pounds sterling with dollars for the five dealing days ending on the
dealing day preceding the Completion Date. Where the calculation of
the number of the Consideration Shares or the apportionment thereof
results in other than a whole number, such number shall be rounded up
to the nearest whole amount.
4.4 The Deferred Consideration shall be comprised of (a) two payments of
(pound)20,000 each, the first of which shall be paid by 31st January
2000 and the second of which shall be paid by 31st January 2001 and
which payments shall be apportioned between the Vendors pro-rata to
their entitlement to the Initial Consideration together with (b) such
payments (if any) as shall be due in accordance with Clause 4.7 and
payable in accordance with Clause 4.8.
4.5 The Purchaser shall procure that the auditors of the Company at the
end of each of the Financial Years shall, within four months of the
end of that Financial Year, be required to issue a certificate to the
Vendors and the Purchaser stating the Profit for that Financial Year.
Such certificate shall, subject to any changes proposed by the
independent accountants appointed by the Vendors pursuant to Clause
4.6 and any demonstrable error be conclusive evidence of the Profit
for that Financial Year.
4.6 The Vendors shall on demand within 10 Business Days of the issue of
the auditors certificate pursuant to Clause 4.5 be entitled to examine
or arrange for an independent accountant to examine the papers and
calculations of the auditors referred to in Clause 4.5
4.7 If the Profit for either or both of the Financial Years is greater
than (pound)60,000 then the Purchaser shall pay the Vendors an amount
equal to 50% of the amount by which the Profit for the relevant
Financial Year exceeded (pound)60,000 PROVIDED that the maximum amount
payable by the Purchaser pursuant to this Clause 4.7 in respect of
each Financial Year shall not exceed (pound)55,000 and PROVIDED
FURTHER that for the avoidance of doubt no payment shall be due in
respect of a Financial Year in which the Profit is less than
(pound)60,000
4.8 Any amounts payable pursuant to Clause 4.7 shall be paid within 20
Business Days of issue of the certificate for the relevant Financial
Year referred to in Clause 4.5 or, if later, within 20 Business Days
of the conclusion of the examination by either the Vendors or the
independent accountant pursuant to Clause 4.6 and shall be apportioned
between the Vendors pro-rata to their entitlement to the Initial
Consideration.
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5. POSITION PENDING COMPLETION
5.1 The Vendors separately and severally undertake to the Purchaser to
procure that pending Completion neither they nor the Company shall
allow or procure any act or omission which would (or would be likely
to) cause, constitute or result in a breach of any of the
representations, warranties set out or referred to in Clause 8 and
Schedule 4 which would make any of such representations, warranties
and undertakings untrue or incorrect or misleading.
5.2 Without prejudice to Clause 5.1 the Vendors separately and severally
undertake to the Purchaser that they will immediately notify the
Purchaser in writing of any matter or thing which arises or becomes
known to them after the date of this Deed and prior to Completion
which constitutes (or would with the passage of time constitute) a
material breach of any representation or warranty set out or referred
to in Clause 8 and Schedule 4 or a material breach of any of the
covenants or undertakings or obligations of the Vendors under this
Deed.
5.3 The Vendors hereby separately and severally undertake to the Purchaser
to procure that pending Completion, the Company shall carry on
business in the ordinary course as carried on prior to the date of
this Deed and shall not do anything which is not of a routine nature
or which is material in the context of the business of the Company.
5.4 Without prejudice to the generality of the undertaking contained in
Clause 5.3, the Vendors separately and severally further undertake to
the Purchaser to procure that pending Completion the Company shall
not, except with the prior written consent of the Purchaser or as
required pursuant to the terms of this Agreement:
5.4.1 make any change in its business as carried on as at the date
of this Deed which materially adversely affects its
business;
5.4.2 make any change to its trade or trade connections which
materially adversely affects its business;
5.4.3 acquire or dispose of (or agree to acquire or dispose of)
any asset exceeding (pound)1,000 in value or assets
aggregating more than (pound)5,000 in value;
5.4.4 dispose of or agree to dispose of or grant any option in
respect of any material asset or assets or any interests
therein except in the ordinary course of business;
-12-
5.4.5 remove any asset from the Property save in the ordinary
course of normal day to day business;
5.4.6 dispose of or agree to dispose of or grant any option in
respect of its business or any part of its business or
discontinue or cease to operate, or propose to discontinue
or cease to operate any part or all of its business;
5.4.7 conduct transactions other than on an arm's length basis;
5.4.8 enter into any contract or commitment other than in the
ordinary course of its business, or enter into any contract
or commitment of a long-term or unusual nature or which
involves or could involve an obligation which is material;
5.4.9 enter into, modify or agree to terminate any material
contract or incur any capital expenditure on any individual
item for an amount in excess of (pound)1,000, or in respect
of all such capital expenditure incurred between the date of
this Deed and Completion which, in aggregate, exceeds the
sum of (pound)5,000;
5.4.10 acquire (whether by subscription or purchase) any shares,
debentures, loan stock, convertible securities or similar
securities or enter into any agreement for the acquisition
(whether by subscription or purchase) of any shares,
debentures, loan stock, convertible securities or similar
securities;
5.4.11 permit or suffer any of its insurance to lapse or do
anything which would make any policy of insurance void or
voidable;
5.4.12 grant or agree to grant any lease or third party right in
respect of the Property or assign or agree to assign or
otherwise dispose or deal with the same;
5.4.13 enter into any leasing, hire purchase or other agreement or
arrangements for payment on deferred terms;
5.4.14 borrow any money over and above existing facilities from its
bank;
5.4.15 grant or issue or agree to grant or issue any mortgage,
charge, debenture or security for money or redeem or agree
to redeem any such mortgage, charge, debenture or security
or give or agree to give any guarantee or indemnity;
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5.4.16 make any loan or advance;
5.4.17 declare or pay any dividend or make any other distribution
of its assets or profits to any shareholder or other person
or repay loans to it made by any shareholder or any other
person or assign or otherwise dispose of any of its book
debts or do or suffer anything whereby its financial
position shall be rendered less favourable than at the date
hereof;
5.4.18 amend or alter its Memorandum or Articles of Association;
5.4.19 increase or reduce (including by way of redemption or
repurchase of existing securities) its authorised or issued
share capital;
5.4.20 convert, sub-divide or consolidate any of its shares;
5.4.21 allot or issue (or agree to allot or issue) any shares,
rights or options to subscribe for or acquire shares, or
grant (or agree to grant) any option in respect of any
shares, or allot or issue (or agree to allot or issue) any
securities which are convertible into shares of any class;
5.4.22 change its accounting reference date or make any changes to
the accounting policies or procedures by reference to which
the Accounts were prepared;
5.4.23 change its residence for taxation purposes;
5.4.24 institute or propose any insolvency proceedings including
the appointment of an administrator or the filing of a
petition for voluntary winding up, or any reconstruction or
amalgamation;
5.4.25 appoint or employ any new managerial or senior skilled
employee or consultant or amend the terms of employment
(including terms as to pension) of any of its present
employees or consultants;
5.4.26 institute, settle or agree to settle any legal proceedings
relating to its business (save for debt collection in the
ordinary course of its business); or
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5.4.27 incur any liabilities between itself and any of the Vendors
or any person connected with any of the Vendors save for
remuneration in the ordinary course of business at current
rates.
5.5 Each of the Vendors undertakes to the Purchaser that:
5.5.1 he shall not at any time prior to Completion
dispose or attempt to dispose of any interest in
the Shares or grant any option over, or mortgage,
charge or otherwise encumber or dispose of the
Shares or exercise or vary any of the rights
attaching to the Shares; or
5.5.2 except with the prior written consent of the
Purchaser, he shall not vote in favour of any
resolution at any general meeting of the Company.
5.6 Pending Completion the Vendors shall procure that the
Purchaser and its agents and representatives are given, upon
reasonable notice and during normal business hours, full
access to the employees and the Vendors shall upon request
furnish such information regarding the businesses and
affairs of the Company as the Purchaser may reasonably
require and the Purchaser may make such copies of such
information as it may reasonably require PROVIDED that in
the event that Completion of this Agreement shall not occur
in accordance with the provisions of Clause 6 then the
Purchaser shall at the election of the Vendors either return
all such copies to the Company or destroy all such copies.
5.7 If any material breach of any of the representations and
warranties set out or referred to in Clause 8 and Schedule 4
shall come to the notice of the Purchaser before Completion
or if there is any material breach or non-fulfilment before
Completion of any of the agreements or obligations on the
part of the Vendors (or any of them) contained in this Deed
which (being capable of remedy) is not remedied to the
reasonable satisfaction of the Purchaser prior to Completion
and such breach would give rise to a proper claim then
(without prejudice to any other right or remedy which may be
available to the Purchaser in respect thereof) the Purchaser
may in its sole discretion and without any liability
whatsoever to the Vendors elect not to complete the purchase
of the Shares.
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6. COMPLETION
6.1 Completion shall take place on the Completion Date at the offices of
the Vendor's Solicitors (or as otherwise agreed between the Parties).
6.2 At Completion the Vendors shall deliver (where appropriate as agent
for the Company) to the Purchaser:
6.2.1 duly executed (unstamped) transfers of the Shares and
powers of attorney in Agreed Form duly executed by the
registered holders thereof;
6.2.2 certificates for the Shares (or an indemnity, in Agreed
Form, for any lost certificate in respect thereof) and any
other documents (including any necessary waivers or
consents) which may be required to give good title to the
Shares and to enable the Purchaser to procure registration
of the same in its name or as it may direct;
6.2.3 the Deed of Tax Covenant duly executed by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇ ▇. ▇▇▇▇▇▇ (all of whose addresses are specified in
Schedule 1);
6.2.4 the Disclosure Letter in a form acceptable to the Purchaser
duly executed by or on behalf of the Vendors;
6.2.5 the resignations by way of deed of each of the directors
(other than those requested by the Purchaser to remain) and
the secretary of the Company substantially in the form set
out in Part 1 of Schedule 3 and confirmation by way of deed
by each of the Vendors in the form set out in Part 2 of
Schedule 3 that they have no claims against the Company;
6.2.6 cheque books in respect of all bank accounts operated by the
Company together with bank statements drawn up to the
preceding Business Day relating to such accounts and a
reconciliation of such bank statements to the cash books of
the Company;
6.2.7 the certificate of incorporation, certificate of
incorporation on change of name, common seal (if any),
statutory register, minute book, share certificate book and
all other books of the Company (all duly written up to
date);
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6.2.8 a certificate of non-crystallisation in the Agreed Form
duly executed by the Governor and Company of the Bank of
Scotland in respect of the Existing Floating Charge;
6.2.9 the Leases together with the Vendors' Solicitors'
Undertaking;
6.2.10 the resignation of the auditors of the Company in the form
set out in Part 3 of Schedule 3 together with a duplicate
thereof;
6.2.11 any power of attorney under which any document required to
be delivered under this Clause 6 has been executed;
6.2.12 certified copies of resolutions, in the Agreed Form, of the
Company adopting new Articles of Association;
6.2.13 the Termination Agreement duly executed by the parties
thereto; and
6.2.14 such evidence as the Purchaser shall reasonably require of
satisfaction of the Conditions Precedent.
6.3 The Vendors shall procure that board resolutions of the Company are
passed and the Vendors shall deliver to the Purchaser certified copies
of such board resolutions, in the Agreed Form, at Completion:
6.3.1 authorising the execution of and the performance by the
Company of its obligations under each of the documents to be
executed by it;
6.3.2 recording acceptance of the resignations referred to in
Clause 6.2.5;
6.3.3 adopting new bank mandates and changed authorities in
respect of existing bank accounts operated by the Company in
accordance with the directions of the Purchaser;
6.3.4 approving (subject only to proper stamping) the transfers of
the Shares delivered hereunder;
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6.3.5 approving (subject only to proper stamping) the placing on
the register of members of the Company of the names of the
transferees for registration in accordance with the share
transfer forms referred to above and authorising the issue
of appropriate share certificates;
6.3.6 recording the appointment of such persons as the directors
(within the maximum number permitted by the articles of
association of the relevant company), secretaries and
auditors of the Company as the Purchaser shall nominate; and
6.3.7 changing the accounting reference date of the Company to
such date as shall be permissible in accordance with the
Companies Act and as the Purchaser may direct.
6.4 Provided that the Vendors comply with all their obligations under
Clauses 6.1, 6.2 and 6.3, the Purchaser shall at Completion:
6.4.1 pay to the External Vendors and the Employee Vendors the
cash element of the Initial Consideration due pursuant to
Clause 4.2.1 by way of a banker's draft in favour of or by
telegraphic transfer to the client account of the Vendors'
Solicitors;
6.4.2 procure the allotment and issue on the Completion Date by
Unidigital of the Consideration Shares due pursuant to
Clause 4.2.2 in accordance with the terms of this Deed;
6.4.3 procure the placing on the Completion Date by Unidigital on
its register of members of the Employee Vendors;
6.4.4 deliver to the Vendors duplicates of the Deed of Tax
Covenant executed by the Purchaser; and
6.4.5 accept and sign a duplicate of the Disclosure Letter to show
its acceptance of the contents thereof.
6.5 If for any reason the provisions of any of Clauses 6.1 to 6.3 are not
fully complied with, the Party not in default (and for the purposes of
this Clause 6.5 alone the Vendor's shall constitute one "PARTY") shall
be entitled (in addition and without prejudice to any other right
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or remedy available to it) to rescind this Deed without any liability
on its part to the other Party.
6.6 Neither the Purchaser nor the Vendors shall be entitled to rescind or
otherwise terminate this Deed following Completion.
7. DELIVERY TO SOLICITORS
The solicitors to any Party are authorised to take delivery on behalf
of such Party of any items hereunder and their receipt shall be a good
discharge therefor to the Party and the solicitors to the Party making
delivery.
8. WARRANTIES
8.1 The Warrantors separately and severally represent and warrant to the
Purchaser that as at the date of this Deed and at Completion, save for
and to the extent that any relevant fact, matter, event or
circumstance is fairly and accurately disclosed in the Disclosure
Letter in respect thereof each of the Warranties is true and not
misleading and so that:
8.1.1 each Warranty shall be, and shall be construed as, a
separate representation and warranty by each of the
Warrantors to the Purchaser and (save as expressly provided
to the contrary) shall not be limited or restricted by
reference to or inference from the terms of any other
Warranty or any other terms of this Deed, the Deed of Tax
Covenant or the Disclosure Letter (other than the factual
disclosure therein);
8.1.2 to the extent that any Warranty relates to present or past
matters of fact the Warranty shall be deemed to constitute a
representation on the faith of, and in reliance upon, which
the Purchaser has entered into this Deed; and
8.1.3 the rights and remedies of the Purchaser in respect of the
Warranties and the liability of the Warrantors under the
Warranties shall not be confined to breaches discovered
before Completion, or in any way affected, modified or
discharged by (a) Completion; or (b) the constructive (but
not actual) knowledge of the Purchaser or any of its
officers, employees or advisers or by any investigations
(other than any investigation of matters reasonably apparent
from the Disclosure
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Letter, the content thereof and the documents attached
thereto) carried out by or on behalf of the Purchaser.
8.2 Where any statement in the Warranties is qualified by the expression
"to the best of the knowledge, information and belief of the
Warrantors" or "so far as the Warrantors are aware" or any similar
expression each Warrantor shall be deemed to have knowledge of:
8.2.1 where applicable, anything of which he ought reasonably to
have knowledge given his responsibilities to the Company;
and
8.2.2 anything of which he would have had knowledge had he made
reasonable enquiry of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and the other
Warrantors immediately before giving the Warranties and such
expression shall be construed as a separate warranty that
each Warrantors shall have made reasonable enquiries as to
the accuracy and completeness of that statement.
PROVIDED that no Warrantor shall be deemed to have knowledge of
anything of which any of the other Warrantors has knowledge or is
deemed to have knowledge other than in respect of knowledge imputed
pursuant to Clause 8.2.2.
9. MEASURE OF DAMAGES
9.1 Subject to the limitations set out in Clause 10 in the event of any
breach of Warranty, the Purchaser may at its option and without
prejudice to any other right or remedy which may be available to it:
9.1.1 claim for all loss suffered by it in consequence of any
document which ought to be in the possession of the Company
as at the Completion Date not having been properly stamped
whether or not the Company has a legal obligation to present
or re-present the same for stamping; and/or
9.1.2 require the Warrantors to pay to the Purchaser such sum as
is equal to the amount by which the assets of the Company
are less, or less valuable, or its liabilities greater, than
the values at which the same were included in the Accounts
or (if the Purchaser so elects) than they would have been if
the relevant Warranty had been true and correct and not
misleading.
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and so that the exercise by the Purchaser of any of the rights and
remedies set out in this Clause shall be without prejudice to the
exercise of any other of them.
9.2 Subject to the limitations set out in Clause 10 but without prejudice
to any right or remedy available to the Purchaser, the Warrantors
shall be separately and severally liable on an indemnity basis for all
reasonable costs, claims and expenses incurred by the Purchaser in
connection with any claim arising out of any breach of the Warranties,
or out of any breach of any other undertaking, indemnity, covenant,
agreement or obligation contained in this Deed in respect of which
claim any Warrantor has agreed to make payment by way of settlement or
in respect of which claim the Purchaser has obtained judgment in its
favour.
9.3 The liability of each Warrantor pursuant to this Clause 9 shall be
met:
9.3.1 firstly by reduction in any Deferred Consideration payable
to such Warrantor pursuant to Clause 4.4(a) and remaining
unpaid;
9.3.2 in the event that the reduction pursuant to Clause 9.3.1
shall be insufficient to meet the relevant Warrantor's
liability then in the case of a Warrantor who has received
Consideration Shares any remaining liability may at the
election of the relevant Warrantor be met secondly by the
transfer to the Purchaser of such number of Consideration
Shares as at the date of settlement of any such claim for
breach of Warranty are equal in value to the remaining
liability of the relevant Warrantor or by payment of a cash
amount equal to the amount of such liability; and
9.3.3 in the event that reduction, transfer or payment pursuant to
Clauses 9.3.1 and 9.3.2 shall be insufficient to meet the
relevant Warrantor's liability in the case of a Warrantor
who has received cash (whether as payment for the Initial
Consideration or as payment for the Deferred Consideration
which payment has been made at the date the liability
arises) be met thirdly by payment in cash;
PROVIDED that for the avoidance of doubt if any Warrantor entitled to
effect payment in whole or in part by the transfer to the Purchaser of
Consideration Shares shall have disposed of a number of Consideration
Shares prior to the date of settlement of any such claim for breach of
Warranty such that he has insufficient Consideration Shares to meet
the relevant portion of his liability then that portion shall be met
by a payment in cash.
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9.4 For the purposes of this Clause 9 the value of each Consideration
Share in pounds sterling as at the date of settlement of any claim for
breach of Warranty shall be calculated by reference to the average of
the middle market quotations as shown by the NASDAQ index for the
Consideration Shares for each of the 5 dealing days ending on the
dealing day preceding the date of settlement and the dollar to pound
sterling exchange rate shall be the average of the Royal Bank of
Scotland plc spot rate of exchange for the purchase of dollars with
pound sterling for the five dealing days ending on the dealing day
preceding the relevant date of settlement.
10. LIMITATION OF WARRANTORS' LIABILITY
10.1 The liability of the Warrantors under the Deed of Tax Covenant and/or
for breach of any of the Warranties shall be limited as follows:
10.1.1 no claim may be made against the Warrantors in respect of
any such liability for breach of the Warranties (other than
a liability under and/or for breach of the Tax Warranties or
the Deed of Tax Covenant) unless notice of such claim is
served on the Warrantors in writing specifying in reasonable
detail the event, matter or default which gives rise to the
claim as soon as reasonably practicable after the Purchaser
becomes aware that circumstances giving rise to such claim
have arisen and in any event before the expiration of twelve
(12) months from Completion;
10.1.2 no claim may be made against the Warrantors in respect of
any liability under and/or for breach of the Tax Warranties
or the Deed of Tax Covenant unless notice of such claim is
served on the Warrantors in writing specifying in reasonable
detail the event, matter or default which gives rise to the
claim as soon as reasonably practicable after the Purchaser
becomes aware that circumstances giving rise to such claim
have arisen in any event before the expiration of six (6)
years from Completion;
10.1.3 notwithstanding Clauses 10.1.1 and 10.1.2, no claim shall be
made or brought by the Purchaser under the Deed of Tax
Covenant and/or in respect of any breach of the Warranties
unless notice in writing of such claim (specifying in
reasonable detail the event, matter or default which gives
rise to the claim, the breach that results and the amount
claimed ) has been given to the Warrantors within one month
of the Purchaser becoming aware of the same;
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10.1.4 any claim pursuant to Clauses 10.1.1 and/or 10.1.2 shall (if
it has not been previously satisfied, settled or withdrawn)
be deemed to have been withdrawn at the expiration of a
period of six (6) months from the giving of notice in
relation thereto unless legal proceedings shall have been
both issued and served on the Warrantors in respect of such
claim;
10.1.5 the Warrantors shall not be liable to the extent that the
amount of the claim or claims against them in respect of any
such liability exceeds (or would when aggregated with the
amount of all claims in respect of any such liabilities
exceed) the amount of consideration paid by the Purchaser in
respect of the Shares of that Warrantor (including for the
avoidance of doubt any amounts paid in respect of Deferred
Consideration pursuant to Clauses 4.4 to 4.7 of this Deed);
10.1.6 the Warrantors shall not in any event be liable to the
Purchaser unless a claim or claims can be validly made
against them exceeding in aggregate the sum of (pound)30,000
but, in the event such sum is exceeded, the Warrantors shall
be liable for the entire amount thereof and not only for the
excess;
10.1.7 the Warrantors shall not in any event be liable to the
Purchaser in respect of any single claim where the liability
of such claim does not exceed (pound)7,500 and any such
claim shall be disregarded for the purposes of Clause 10.1.5
but, in the event that such sum is exceeded the Warrantors
shall be liable for the entire amount thereof and not only
for the excess;
10.1.8 the Purchaser shall promptly reimburse to the relevant
Warrantors an amount equal to any sum paid by such
Warrantors in respect of any such liability which is
subsequently recovered by the Purchaser or the Company (as
the case may be) from any third party; and
10.1.9 in relation to Tax Warranties, the provisions of Clauses 4,6
and 7 of the Deed of Tax Covenant shall apply.
10.2 The Purchaser and/or the Company shall not be entitled to recover the
same sum or for the same loss more than once in respect of any claim
under or breach of any of the Warranties or Deed of Tax Covenant and
shall not otherwise obtain reimbursement or restitution more than once
in respect of any cause of action giving rise to any breach of the
Warranties or claim under the Deed of Tax Covenant.
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10.3 Notwithstanding anything expressed or implied in this Deed to the
contrary, any payment by the Warrantors pursuant to this Deed or the
Deed of Tax Covenant shall be treated for all purposes by the Parties
as a reduction in the consideration payable for the Shares and Clause
4 shall be modified accordingly.
10.4 The Purchaser may release or compromise the liability of any of the
Warrantors hereunder or grant to any of the Warrantors time or other
indulgence without affecting the liability of any other of the
Warrantors hereunder.
10.5 The Warrantors shall not be liable for any claim which would not have
arisen but for an act or omission of the Purchaser occurring after the
Completion Date, otherwise than in the ordinary course of business.
10.6 The Warrantors shall not be liable for any claim which would not have
arisen but for legislation passed after Completion which is
retrospective in effect.
10.7 The amount of any claim shall take into account any tax benefit
accruing to the Purchaser or the Company or the amount of any relief
from or deduction available to the Purchaser or the Company in respect
of Taxation directly or specifically arising by virtue of the loss and
damage in respect of which the claim is made.
11. COVENANTS OF THE COVENANTORS
11.1 Each of the Covenantors covenants with the Purchaser and the Company
that he will not, either alone or jointly with others, whether as
principal, agent, director, shareholder, independent contractor,
employee or in any other capacity, whether directly or indirectly
through any other person, firm or company and whether for his own
benefit or that of others:
11.1.1 in the case of the External Vendors for a period of
eighteen (18) months from the date hereof and in the case of
the remaining Covenantors for a period of twelve (12) months
from the date hereof within a radius of seventy-five (75)
miles of any place from which the Business is now carried on
be engaged in or carry on or be interested in or concerned
in (except as the holder together with any connected persons
of not more than three (3) per cent. in aggregate of any
class of securities of a company which class is listed or
dealt in on a recognised stock exchange in the United
Kingdom or elsewhere) any business in competition with the
Business;
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11.1.2 for a period of two (2) years from the date hereof solicit
for a business similar to or competing with the Business or
accept the custom or business of any person, firm or company
from whom the Company has within two (2) years before the
date hereof solicited or received an order for goods or
services and who has for that purpose had dealings with such
Covenantor nor attempt to discourage any such person, firm
or company from dealing with the Company;
11.1.3 for a period of two (2) years from the date hereof solicit
or entice away any officer or employee of the Company or do
any act whereby any such officer or employee with whom such
Covenantor had a working relationship is encouraged to leave
the employ of the Company, whether or not such officer or
employee would by reason of leaving the service of the
Company commit a breach of his contract of employment;
11.1.4 at any time after the date hereof use the name Interface
Graphics or any colourable imitation thereof or any name
likely to cause confusion therewith in the minds of members
of the public for the purposes of a business similar to or
competing with the Business whether by using such name as
part of a corporate name or otherwise; or
11.1.5 at any time make use of or publish or disclose to any
person any trade secrets or confidential information
concerning the Business or affairs of the Company howsoever
acquired by him except to the extent:
11.1.5.1 required by the law of any relevant jurisdiction;
11.1.5.2 disclosed to the professional advisers, auditors
and bankers of any Covenantor on a confidential
basis;
11.1.5.3 the information has come into the public domain
through no fault of that Covenantor; or
11.1.5.4 the Purchaser has given prior written approval
to disclosure, such approval not to be
unreasonably withheld or delayed; or
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11.1.5.5 in the case of the Covenantors who are Employee
Vendors for as long as they remain within the
employment of the Company and are required so to
do in accordance with the terms of their
employment; or
11.1.6 at any time after the date hereof do or say anything
harmful to the reputation of the Business or which leads any
person, firm or company to cease to do business with the
Company on substantially equivalent terms to those
previously offered or not to engage in business with the
Company.
11.2 Each of the covenants contained in each of the Sub-clauses of Clause
11.1 shall be a separate covenant by each of the Covenantors and shall
be enforceable by the Purchaser and by the Company independently of
any right to enforce any other covenant or obligation howsoever
arising.
11.3 Each of the restrictions contained in each of the Sub-clauses of
Clause 11.1 is considered reasonable by the Parties for the legitimate
protection of the Business and goodwill of the Company, but in the
event that any such restriction shall be found to be void but would be
valid if some part thereof was deleted, such restriction shall apply
with the deletion of such words as may be required to limit such
restrictions to what is required for the legitimate protection of such
Business and goodwill.
11.4 Each of the Covenantors will provide promptly such information
within his knowledge, possession or control as the Purchaser or the
Company may reasonably require in relation to the business or
activities of any person, firm or company competing with the Business.
11.5 For the avoidance of doubt none of the covenants contained in each of
Sub-Clauses 11.1 is given by the Covenantors jointly and severally.
12. POWER OF ATTORNEY
12.1 Each of the Vendors hereby, with effect from Completion,
irrevocably and unconditionally appoints the Purchaser or any director
of the Purchaser as the Purchaser shall direct as the attorney of such
Vendor with full powers of substitution in such Vendor's name and on
behalf of such Vendor (and to the complete exclusion of any rights
such Vendor may have in such regard) lawfully to exercise all voting
and other rights and receive all benefits and entitlements which may
now or at any time hereafter attach to the Shares of which such Vendor
is the registered holder and to transfer and deal with such Shares and
such rights,
-26-
benefits and entitlements and execute such documents under hand or
under seal and do such acts and things in connection with the
foregoing as the Purchaser shall from time to time think fit in all
respects as if the Purchaser were the absolute legal and beneficial
owner thereof.
12.2 Each of the Vendors hereby undertakes to the Purchaser to ratify
everything that the Purchaser shall lawfully do or purport to do
pursuant to this Clause 12.
13. WAIVERS
13.1 Each of the Vendors hereby irrevocably waives, for the benefit of
the Purchaser and the Company, all and any rights to which he may be
entitled in respect of any misrepresentation, inaccuracy or omission
in or from any information or advice supplied or given by the Company
or by any present or former officer, employee or adviser of the
Company with a view to:
13.1.1 enabling or inducing such Vendor to give the Warranties set
out or referred to in Clause 8 and Schedule 4 or make any
statement set out in the Disclosure Letter; or
13.1.2 upon which such Vendor may have relied in agreeing to any
term of this Deed or making any statement set out in the
Disclosure Letter and each Vendor irrevocably undertakes not
to make any claim against either the Company or the
Purchaser in respect of any such matter.
13.2 The granting by any Party of any time or indulgence in respect of any
breach of any term of this Deed by the other(s) shall not be deemed a
waiver of such breach. The waiver by any Party of any breach of any
term of this Deed by the other(s) shall not prevent the subsequent
enforcement of that term (save to the extent of the express waiver in
question) and shall not be deemed a waiver of any subsequent breach.
14. POST-COMPLETION OPERATION
The provisions of this Deed shall continue in full force and effect
and be binding on the Parties in accordance with its terms
notwithstanding Completion.
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15. COSTS AND WITHHOLDINGS
15.1 Subject to Clause 3.1, the Purchaser shall bear both its own and all
of the Vendors' reasonable costs properly incurred of and incidental
to the negotiation, making and fulfilment of this Deed and the
transactions contemplated hereby PROVIDED that the Vendors shall bear
their own costs to the extent that they exceed (pound)15,000 excluding
VAT.
15.2 All sums payable to the Purchaser under this Deed shall be paid free
and clear of all deductions or withholdings whatsoever save only as
may be required by law. If any such deduction or withholding is
required by law the Vendors shall be obliged to pay such sum as will
after such deduction or withholding has been made leave the same
amount as the Purchaser would have been entitled to receive in the
absence of any such requirement to make a deduction or withholding. If
any sum payable to the Purchaser under this Deed shall otherwise be
subject to Tax in the hands of the Purchaser the same obligation to
make an increased payment shall apply in relation to such sums as if
it were a deduction or withholding required by law.
16. ASSIGNMENT
16.1 This Deed shall be binding on and enure to the benefit of the personal
representatives and estates of the Vendors.
16.2 No Party may assign in whole or in part the benefit of any provision
of this Deed save that the Purchaser may assign the benefit thereof to
a member of its Group.
17. ANNOUNCEMENTS
17.1 Subject to Clause 17.2, no announcement shall be made by any Party
relating to the transactions referred to in this Deed and no Party
shall disclose to any third party any information concerning the terms
or subject matter hereof.
17.2 Any Party may make an announcement or disclose information which would
otherwise be required hereunder to be treated as confidential if and
to the extent:
17.2.1 required by the law of any relevant jurisdiction;
-28-
17.2.2 required by any securities exchange or regulatory or
governmental body to which such Party or a member of its
Group is subject or submits, wherever situated, whether or
not the requirement for information has the force of law;
17.2.3 necessary to enable such Party to obtain the full benefit of
its rights under this Deed in accordance with the terms
hereof;
17.2.4 disclosed on a confidential basis to the professional
advisers, auditors and bankers of any Party;
17.2.5 the information has come into the public domain through no
fault of that Party; or
17.2.6 the other Parties have given prior written approval to the
disclosure, such approval not to be unreasonably withheld or
delayed,
PROVIDED THAT any such information be disclosed pursuant to Clauses
17.2.1 and 17.2.2 of this Clause shall be disclosed only after
consultation with the other Parties.
18. JURISDICTION
18.1 This Deed shall be governed by and construed in accordance with
English law.
18.2 The Parties agree that the English courts shall have non-exclusive
jurisdiction in relation to any dispute arising out of or in respect
of this Deed and that any judgment or order of an English court made
in this respect shall be conclusive and binding on them and may be
enforced against them. Nothing in this Clause 18 limits the rights of
the Parties to bring proceedings in any other court of competent
jurisdiction or concurrently in more than one jurisdiction.
18.3 Each of the Vendors hereby irrevocably appoints the Vendors'
Solicitors as his agent to accept service of notices and legal
proceedings in connection with all matters arising out of this Deed
and the transactions hereby contemplated.
-29-
19. NOTICES
19.1 Save as specifically otherwise provided in this Deed any notice, to
be given pursuant to this Deed shall be delivered by hand, sent by
prepaid post sent first class (for inland mail) or airmail (for
overseas mail) or shall be transmitted by facsimile addressed to the
Party to be served in the case of:
19.1.1 a company at its registered office for the time being; and
19.1.2 an individual to the address specified in Schedule 1
or at such other address or facsimile number in the United Kingdom as
any such Party may from time to time notify the other Parties in
writing as being their address for service hereunder.
19.2 Notices delivered by hand shall be deemed served at the time of
delivery, notices sent by post shall be deemed served on the second
Business Day (for inland mail) or the fifth Business Day (for overseas
mail) after the date of posting and any notice sent by facsimile
transmission shall be deemed served on the Business Day following the
date of transmission.
20. INVALIDITY
If any provision of this Deed is held to be invalid or unenforceable,
such a provision shall (so far as invalid or unenforceable) be given
no effect and shall be deemed to be excluded from this Deed, but
without invalidating any of the remaining provisions of this Deed. The
Parties shall use all reasonable endeavours to replace the invalid or
unenforceable provision by a valid provision, the effect of which is
as close as possible to the intended effect of the provision so
excluded.
21. FURTHER ASSURANCE
Each Party shall at the Purchaser's cost do or procure to be done all
such further acts or things, and execute or procure the execution of
all such other documents as the other may from time to time reasonably
require, whether on or after Completion, for the purpose of giving
such other Party the full benefit of all the provisions of this Deed.
-30-
22. ENTIRE AGREEMENT
22.1 This Deed, the Deed of Tax Covenant, the Disclosure Letter and all
other documents which are required by those documents to be entered
into by the parties or any of them, constitute the whole and only
agreement between the Parties relating to the subject matter hereof
and, except to the extent repeated in any of the aforesaid documents,
supersede and extinguish any prior drafts, agreements, undertakings,
representations, warranties and arrangements of any nature whatsoever,
whether or not in writing, relating thereto.
22.2 Each of the Parties acknowledges that he has not entered into this
Deed relying upon any representation or arrangements whether oral or
in writing made by any other of the Parties other than those expressly
incorporated or referred to in this Deed or such other documents as
are referred to in Clause 22.1 and accordingly, except in the case of
fraud, none of the Parties shall have any right of action against any
other Party arising out of or in connection with any such
representation or arrangement which has not been so expressly
incorporated or referred to.
22.3 No variation or amendment of this Deed shall be valid unless it refers
to this Deed is evidenced in writing and signed by or on behalf of
each of the Parties.
23. TIME OF THE ESSENCE
Any date or period mentioned in any provision of this Deed may be
extended by mutual written agreement of the Parties, but as regards
any date or period so extended, time shall be of the essence in this
Deed (unless the Parties determine otherwise on agreeing to such
extension).
24. COUNTERPARTS
This Deed may be executed in any number of counterparts each of which
when executed shall constitute an original, but all the counterparts
shall together constitute one and the same Deed.
-31-
AS WITNESS this Deed has been entered into on and is intended by the
Parties to be Delivered upon the date first stated above.
-32-
SCHEDULE 1
PART I
The EXTERNAL VENDORS
NAME OF ADDRESS OF VENDOR REGISTERED HOLDER NUMBER OF CASH
VENDOR (IF DIFFERENT FROM SHARES CONSIDERATION
VENDOR) (POUND)
▇.▇. ▇▇▇▇▇ 58 Silverknowes 9,859 47,816.62
Parkway
▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇.▇. ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 10,418 50,527.80
▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇. ▇. ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 11,792 57,191.77
▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇. ▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 8,844 42,893.82
▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇. ▇. ▇▇▇▇▇▇ The Coachouse 4,557 22,101.67
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
J. Ireland 5 Ashmeadows 9,114 44,203.34
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ & ▇▇▇▇
▇▇▇▇ ▇▇▇
-------- ----------
54,584 264,735.02
======== ==========
-33-
SCHEDULE 1
PART II
THE EMPLOYEE VENDORS
NAME OF VENDOR ADDRESS OF VENDOR REGISTERED NUMBER OF PORTION OF CASH
HOLDER SHARES CONSIDERATION CONSIDERATION
(IF DIFFERENT SHARES (POUND)
FROM VENDOR) (%)
▇▇▇▇ ▇ ▇▇▇▇▇▇ Grantshall 10,002 32.43 5,705.94
Blyth ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇,▇▇▇ ▇▇.▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 4,929 13.79 5,705.94
▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ 4,929 13.79 5,705.94
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇'▇▇▇▇▇▇ ▇/▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ 4,287 9.27 8,558.91
Gilmerton
Edinburgh
▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ 2,113 7.76
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 727 2.67
▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ 15/3 ▇▇▇▇▇▇▇▇ Place 500 0.11 2,282.37
▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
-34-
NAME OF VENDOR ADDRESS OF VENDOR REGISTERED NUMBER OF PORTION OF CASH
HOLDER SHARES CONSIDERATION CONSIDERATION
(IF DIFFERENT SHARES (POUND)
FROM VENDOR) (%)
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇/▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ 1.29
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ 0.18 313.83
▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 113 0.42
▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 13 Parkhead View 50 0.18
▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
------ ------ ---------
33,686 100 28,272.93
====== ====== =========
-35-
SCHEDULE 2
THE COMPANY
1. Date of incorporation: 24th March 1992
2. Companies Act(s) under which incorporated: 1985 and 1989
3. Registered number: SC137315
4. Registered office: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
5. Directors:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
6. Secretary: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
7. Accounting Reference Date: 31st May
8. Authorised share capital: (pound)50,000 divided
into 100,000 ordinary
shares of (pound)0.50
each
9. Issued and allotted share capital: 87,628 ordinary shares of
(pound)0.50 each all of
which have been issued
and allotted and are
fully paid or credited as
fully paid.
-36-
SCHEDULE 3
CONFIRMATION OF NO CLAIMS
PART 1
DIRECTORS AND SECRETARY
The Directors,
Interface Graphics Limited
[ ] 1998
I hereby resign my office as [director/Secretary/and as an employee] of the
above company with effect from the date upon which my resignation is accepted.
I hereby confirm that [save for accrued remuneration of not more than [ ],] I
have no claim against the above company in respect of any cause, matter or thing
including (without limitation) any claim for compensation for loss of office,
breach of contract or for redundancy or unfair dismissal and that there is not
outstanding any agreement or arrangement under which the above company has or
could have any obligation to me.
SIGNED as a Deed and Delivered by )
[ ] )
in the presence of: )
-37-
SCHEDULE 3
PART 2
THE VENDORS
The Directors,
Interface Graphics Limited
[ ] 1998
I hereby confirm that I have no claim against the above company in respect of
any cause, matter or thing and that there is not outstanding any agreement or
arrangement under which the above company has or could have any obligation to me
save pursuant to the share purchase agreement by way of deed dated [ ] 1998 and
made between A. ▇▇▇▇▇▇ and others (1) and Elements (UK) Limited (2) and
Interface Graphics Limited (3) or to any employment contract subsisting between
the Company and me.
SIGNED as a Deed and Delivered by )
[ ] )
in the presence of: )
-38-
SCHEDULE 3
PART 3
AUDITORS
The Directors,
Interface Graphics Limited
Sandport House
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
[ ] 1998
We hereby resign our office as auditors of the above company with effect from
the date hereof. We confirm that we have no claim against the said company in
respect of any cause, matter or thing. There are no circumstances connected with
our resignation which we consider should be brought to the notice of the members
or creditors of the said company.
We consent to the submission of a signed duplicate of this document to the
Registrar of Companies for filing by the said company in accordance with section
392 of the Companies ▇▇▇ ▇▇▇▇.
For and on behalf of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
(Partner)
-39-
SCHEDULE 4
THE WARRANTIES
PART 1
GENERAL
1. INFORMATION
1.1 DISCLOSURE
the text of the Disclosure Letter is true, accurate and not
misleading.
1.2 OTHER INFORMATION
The contents of the Recitals and of Schedule 1 are true and accurate.
2. THE VENDORS
2.1 The Vendor in question has obtained all applicable governmental,
statutory, regulatory, or other consents, licences, waivers or
exemptions required to empower him to enter into and to perform his
obligations under this Deed and the other documents to be executed by
him as contemplated herein and, accordingly, that Vendor has the full
legal right and power to sell and transfer all his Shares to the
Purchaser in accordance with the provisions of this Deed which,
together with the other documents to be executed by that Vendor as
contemplated herein, shall upon execution and delivery be valid and
binding upon that Vendor.
2.2 Neither the Vendor in question nor any person connected with that
Vendor:
2.2.1 is a customer or supplier of the Company;
2.2.2 owns or controls Intellectual Property Rights or land or any
other substantial asset used by the Company;
-40-
2.2.3 enjoys or has enjoyed any benefit from the Company other
than in accordance with the express terms of his employment
contract and other than in respect of dividends declared
prior to the Last Accounts Date;
2.2.4 owes money to or is owed money by the Company; or
2.2.5 has any interest in any company or partnership which carries
on business competing directly or indirectly with any
business of the Company.
3. THE SHARES
All of the Shares registered in the name of that Vendor are fully paid
or properly credited as fully paid and the Vendor in question is the
registered and beneficial owner of that number of Shares set out
opposite his name in Schedule 1 and all his Shares are free from all
security interests, options, equities, claims or other third party
rights (including rights of pre-emption) of any nature whatsoever
(save for such security interests, options, equities, claims or other
third party rights as may arise pursuant to the Articles of
Association of the Company).
4. FINANCIAL MATTERS
4.1 ACCOUNTS
4.1.1 The Accounts give a true and fair view of the state of affairs of the
Company as at the Last Accounts Date and of their results for the
financial year ended on the Last Accounts Date and there have been no
post-balance sheet events which might affect such true and fair view.
4.1.2 Without limiting the generality of Warranty 4.1.1:
(a) the Accounts either make full provision for or, as appropriate,
disclose all liabilities, whether actual, contingent,
unquantified or disputed (including financial lease commitments,
tax liabilities (including, without limitation, deferred
taxation) and pension liabilities), all capital commitments,
whether actual or contingent, and all bad or doubtful debts of
the Company as at the Last Accounts Date, in each case in
accordance with generally accepted accounting principles;
-41-
(b) the Accounts and the audited accounts of the Company for each of
its two financial periods immediately preceding its financial
period ended on the Last Accounts Date were prepared under the
historical convention, complied with the requirements of the
Companies ▇▇▇ ▇▇▇▇ (as amended) and all other relevant laws then
in force and with all statements of standard accounting practice,
financial reporting standards and other accounting standards
issued by the Accounting Standards Board and all other generally
accepted accounting principles of the United Kingdom then in
force;
(c) any slow moving stock included in the Accounts (being stock held
for a period in excess of 3 months as at the Last Accounts Date)
has been written down appropriately and any redundant, obsolete,
damaged, used or unsaleable stock and irrecoverable
work-in-progress has been wholly written off, and in no case did
the value attributed to any stock included in the Accounts exceed
the lower of cost and net realisable value as at the Last
Accounts Date;
(d) all work-in-progress valued in the Accounts was valued on a basis
excluding profit and including adequate provision for losses
which are or should reasonably have been anticipated by the
Warrantors;
(e) the method of valuing stock and work-in-progress and the basis
of depreciation and amortisation adopted in the Accounts were the
same as those adopted in the audited accounts of the Company for
each of its two financial years preceding the financial year
ended on the Last Accounts Date;
4.2 MANAGEMENT ACCOUNTS
4.2.1 The unaudited management accounts of the Company for all periods ended
after the Last Accounts Date are contained in the Disclosure Letter
and they were properly prepared in a manner consistent with that
adopted in the preparation of its management accounts for all periods
ended during the 12 months prior to the Last Accounts Date.
4.2.2 Having regard to the purpose for which such unaudited management
accounts were prepared, they are not misleading in any material
respect and neither materially overstate the value of the assets nor
materially understate the liabilities of the Company as at the dates
to which they were drawn up and do not materially overstate the
profits of the Company in respect of the periods to which they relate.
-42-
4.3 POSITION SINCE THE LAST ACCOUNTS DATE
4.3.1 Since the Last Accounts Date there has been no material adverse
change in the financial or trading position or (save to the extent
that the same would be likely to affect to a similar extent
generally all companies carrying on similar businesses to the Company
in the United Kingdom) in the trading prospects of the Company and, so
far as the Warrantors are aware no event, fact or matter has occurred
which is likely to give rise to any such change.
4.3.2 Since the Last Accounts Date:
(a) the business of the Company has been carried on in the ordinary
and usual course and the Company has not made or agreed to make
any payment other than routine payments in the ordinary and usual
course of trading;
(b) no contract, liability or commitment (whether in respect of
capital expenditure or otherwise) has been entered into by the
Company which is of a long term or unusual nature or which
involved or could involve an obligation of a material nature or
magnitude (a liability for expenditure in excess of (pound)5,000
being included as "material" for this purpose);
(c) the Company has not (whether in the ordinary and usual course of
business or otherwise) acquired or disposed of, or agreed to
acquire or dispose of, any business or any asset having a value
in excess of (pound)2,000, except as disclosed in the Disclosure
Letter;
(d) no debtor has been released by the Company on terms that such
debtor pays less than the book value of its debt and no debt in
excess of (pound)10,000 owing to the Company has been deferred,
subordinated or written off or has proved to any extent
irrecoverable;
(e) there has been no unusual increase or decrease in the level of
the stock of the Company;
(f) the business of the Company has not been affected by any abnormal
factor not affecting to a similar extent generally all companies
carrying on similar businesses to the Company in the United
Kingdom;
-43-
(g) there has been no material reduction in the cash balances of the
Company from those set out in the Accounts; and
(h) the Company has continued to pay its creditors in the ordinary
course of business.
4.4 WORKING CAPITAL
Having regard to existing bank and other financial facilities, the
Company has sufficient working capital available to it as at the
Completion Date to enable it to continue to carry on its business in
its present form and at its present level of turnover and for the
purpose of performing in accordance with their terms all orders,
projects and other obligations of the Company and discharging all
liabilities of the Company which ought properly to be discharged
during the period of 12 months after Completion.
4.5 ACCOUNTING AND OTHER RECORDS
4.5.1 The statutory books, books of account, accounting, tax, VAT and other
records of the Company:
(a) are up-to-date and have been maintained in accordance with all
applicable laws and generally accepted accounting practices on a
proper and consistent basis;
(b) comprise complete and accurate records of all information
required to be recorded therein (including, without limitation,
details of all the Company's assets, liabilities and current
transactions); and
(c) are in its possession or under its control together with all
documents of title and executed copies of all existing agreements
to which the Company is a party.
4.5.2 All the records and systems (including but not limited to computer
systems) and all data and information of the Company is recorded,
stored, maintained or operated or otherwise held by the Company and is
not wholly or partly dependent on any facilities which are not under
the exclusive ownership or control of the Company.
4.5.3 The Company is licensed to use all software necessary to enable it to
continue to use its computerised records for the foreseeable future in
the same manner in which they have been
-44-
used prior to the Completion Date and does not share any user rights
in respect of such software with any other person.
4.5.4 All accounts, documents and returns required by law to be delivered or
made by the Company to the Registrar of Companies or any other
authority have been duly and correctly delivered or made.
5. DEBT POSITION
5.1 DEBTS OWED TO THE COMPANY
5.1.1 There are no debts owing to the Company other than:
(a) those debts specified in the Disclosure Letter and
(b) trade debts incurred in the ordinary and usual course of business
which do not exceed (pound)270,000 in aggregate and none of which
exceeds (pound)25,000.
5.1.2 None of the book debts included in the Accounts as owing to the
Company have been realised for an amount less than the value at which
they were included in the Accounts. All debts owing to the Company at
Completion are the absolute property of the Company and are not the
subject of any assignment, factoring agreement or other encumbrance
and such book debts will (save insofar as a specific provision has
been made in the Accounts therefor) be good and collectable in the
ordinary course of business and in any event not later than three
months after Completion.
5.2 DEBTS OWED BY THE COMPANY
5.2.1 The Company does not have outstanding any borrowing or indebtedness
in the nature of borrowing (including, without limitation, any
indebtedness for moneys borrowed or raised under any acceptance
credit, bond, note, ▇▇▇▇ of exchange or commercial paper, finance
lease, hire purchase agreement, trade bills (other than those on terms
normally obtained), forward sale or purchase agreement or conditional
sale agreement or other transaction having the commercial effect of a
borrowing) other than as set out in the Disclosure Letter and trade
debts incurred by the Company in the ordinary and usual course of
business since the last Accounts Date which do not exceed
(pound)150,000 in aggregate and none of which exceeds (pound)15,000.
-45-
5.2.2 The Company has received no notice to repay under any agreement
relating to any borrowing or indebtedness in the nature of borrowing
which is repayable on demand.
5.2.3 There has not occurred any event of default or any other event or
circumstance which would entitle any person to call for early
repayment under any agreement relating to any borrowing or
indebtedness of the Company or to enforce any security given by the
Company (or, in either case, any event or circumstance which with the
giving of notice and/or the lapse of time and/or a relevant
determination would constitute such an event or circumstance).
6. REGULATORY MATTERS
6.1 LICENCES
6.1.1 The licences, permissions, authorisations and consents set out in the
Disclosure Letter comprise all the licences, permissions,
authorisations, consents and rights required to be granted by third
parties in order for the Company to carry on its business effectively
in the places and in the manner in which such business is now carried
on.
6.1.2 The licences, permissions, authorisations and consents set out in the
Disclosure Letter are in full force and effect, are not limited in
duration or subject to any unusual or onerous conditions and have been
complied with in all respects.
6.1.3 No act, event or omission has occurred as a result of which, and there
are no circumstances of which the Warrantors are aware which indicate
that, any of the licences, permissions, authorisations or consents set
out in the Disclosure Letter will or are likely to be revoked or not
renewed, in whole or in part, in the ordinary course of events
(whether as a result of the acquisition of the Shares by the Purchaser
or otherwise).
6.2 COMPLIANCE WITH LAWS
6.2.1 The Company has conducted its business and corporate affairs in
accordance with its Memorandum and Articles of Association and with
all applicable laws and regulations (whether of the United Kingdom or
of any other jurisdiction in which the Company has conducted its
business and/or corporate affairs).
6.2.2 There is no violation by the Company of, or default with respect to,
any statute, regulation, order, decree or judgment of any court or any
governmental or regulatory authority (whether
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of the United Kingdom or of any other jurisdiction in which the
Company has conducted its business and/or corporate affairs).
6.3 FAIR TRADING AND RESTRICTIVE PRACTICES
6.3.1 The Company is not a party to (and is not concerned in) any agreement,
arrangement, concerted practice or course of conduct which:
(a) is registrable under the provisions of the Restrictive Trade
Practices Act 1976 (as amended); or
(b) contravenes the provisions of the Resale Prices ▇▇▇ ▇▇▇▇; or
(c) amounts to an anti-competitive practice within section 2 of the
Competition ▇▇▇ ▇▇▇▇; or
(d) contravenes Article 85 and/or Article 86 of the Treaty of Rome;
or
(e) infringes the competition legislation or practice of any other
jurisdiction in which the Company has conducted its business
and/or corporate affairs.
6.3.2 The Company has received no process, notice or other communication
(formal or informal) by or on behalf of the Office of Fair Trading
(whether under the Fair Trading ▇▇▇ ▇▇▇▇, the Competition ▇▇▇ ▇▇▇▇ or
otherwise), the Monopolies and Mergers Commission, the Secretary of
State for Trade and Industry or the Commission of the European
Communities or any other authority having jurisdiction in competition
matters in relation to any aspect of the business of the Company or
any agreement, arrangement, concerted practice or course of conduct to
which the Company is, or is alleged to be, a party.
6.3.3 The Company is not involved in any practice or agreement as a result
of which it is likely to receive any such process, notice or
communication as is referred to in Warranty 6.3.2.
6.3.4 The Company is not subject to any order or judgment given by any
court or governmental or regulatory authority, or party to any
undertaking or assurance given to any such court or authority, in
relation to competition matters which is still in force.
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7. THE COMPANY'S ASSETS
7.1 OWNERSHIP
7.1.1 For the purpose of this Warranty 7.1, "assets" includes plant,
machinery, vehicles, equipment and stock but shall not include the
Property, to which the provisions of Part 2 of this Schedule shall
apply.
7.1.2 All the assets included in the Accounts of the Company or purchased
by it since the Last Accounts Date (other than assets sold in the
ordinary course of business but including all book debts owed to the
Company) are the absolute property of the Company. Those assets are
not the subject of any security interest or any assignment, equity,
option, right of pre-emption, royalty, factoring arrangement, leasing
or hiring agreement, hire purchase agreement, conditional sale or
credit sale agreement, agreement for payment on deferred terms,
agreement whereby title to those assets is reserved to the supplier or
any similar agreement or arrangement (or any obligation, including a
conditional obligation, to create or enter into any such agreement or
arrangement) except for those agreements listed in the Disclosure
Letter.
7.2 POSSESSION AND THIRD PARTY FACILITIES
7.2.1 All of the assets owned by the Company, or in respect of which the
Company has a right of use, are in the possession or under the control
of the Company.
7.2.2 Where any assets are used but not owned by the Company or any
facilities or services are provided to the Company by any third party,
there has not occurred any event of default or any other event or
circumstance which would entitle any third party to terminate any
agreement or licence in respect of the provision of such facilities or
services (or any event or circumstance which with the giving of notice
and/or the lapse of time and/or a relevant determination would
constitute such an event or circumstance).
7.3 ADEQUACY OF ASSETS
7.3.1 The assets of the Company and the facilities and services to which
the Company has a contractual right include all rights, properties,
assets, facilities and services reasonably required for the carrying
on of the business of the Company in the manner in which it is
currently carried on.
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7.3.2 The computer software used by the Company is capable of recognising
and distinguishing between year dates relating to the 20th and 21st
centuries and neither the functionality nor the performance of the
computer software will be affected by the advent of the year 2000.
7.4 CONDITION
All the fixtures, plant, machinery, equipment and vehicles owned
and/or used by the Company:
7.4.1 are in a reasonable state of repair, given the age and use
made of the relevant asset, (fair wear and tear excepted)
and have been regularly and properly maintained in
accordance with appropriate technical specifications, safety
regulations and the terms and conditions of any applicable
agreement;
7.4.2 are capable of being efficiently and properly used for the
purposes for which they were acquired or are retained; and
7.4.3 none is dangerous (if used in accordance with appropriate
instructions), inefficient, obsolete (given the age of the
relevant asset) or in need of renewal or replacement by
reason of being worn out.
7.5 MAINTENANCE CONTRACTS
Maintenance contracts are in full force and effect in respect of all
assets which the Company is obliged to maintain or repair and in
respect of all assets which it is necessary to have maintained by
outside or specialist contractors.
7.6 ASSET REGISTER
The Disclosure Letter includes a complete and accurate record of all
the plant, machinery, equipment and vehicles owned, used or possessed
by the Company.
7.7 CASH
7.7.1 Details of the cash balances of the Company as at the Completion Date
are accurately set out in the Disclosure Letter.
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7.8 INSURANCES
7.8.1 There is set out in the Disclosure Letter an accurate summary of the
insurances maintained by or covering the Company. Such insurances are
in full force and effect and, to the best of the knowledge,
information and belief of the Vendors, there are no circumstances
which might lead to any liability under such insurance being avoided
by the insurers or the premiums being increased and Completion will
not have the effect of terminating, or entitling any insurer to
terminate, cover under any such insurance.
7.8.2 No claim is outstanding by the Company under any such policy of
insurance and, to the best of the knowledge, information and belief of
the Vendors, there are no circumstances likely to give rise to such a
claim.
7.8.3 All premiums falling due in respect of such policies of insurance have
been promptly paid.
8. INTELLECTUAL PROPERTY RIGHTS
8.1 Save in respect of its name and personal computer software generally
available in the market place, the Company does not require to conduct
its Business any patents, trade marks and service marks (whether
registered or not), registered design rights, utility models,
applications for any of the foregoing and the right to apply for any
of the foregoing in any part of the world, copyright, design rights,
inventions, confidential information, trade secrets, know-how,
production data, business or trade names or the benefit of any licence
in connection with any of the foregoing ("Intellectual Property
Rights").
8.2 No notice or claim has been received by the Company which claims any
infringement by the Company of any Intellectual Property Rights.
9. CONTRACTUAL MATTERS
9.1 MATERIAL CONTRACTS
Except as specified in the Disclosure Letter, there is not outstanding
any agreement or arrangement to which the Company is a party:
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9.1.1 which, by virtue of the acquisition of the Shares by the
Purchaser or other performance of the terms of this Deed,
will result in:
(a) any third party being relieved of any obligation to the
Company or becoming entitled to exercise any right
(including any right of termination or any right of
pre-emption or other option) against the Company; or
(b) the Company being in default under any such agreement
or arrangement or losing any benefit, right or licence
which it currently enjoys or a liability or obligation
of the Company being created or increased;
9.1.2 entered into otherwise than by way of a bargain at arm's
length;
9.1.3 to which any of the provisions of section 320, 322 or 330 of
the Companies Act may apply;
9.1.4 (save for the guarantees specified in the Disclosure Letter)
which establishes any guarantee, indemnity, suretyship, form
of comfort or support (whether or not legally binding) given
by the Company in respect of the obligations or solvency of
any third party;
9.1.5 which, upon completion by the Company of its work or the
performance of its other obligations under it, is likely to
result in a loss for the Company which is not fully provided
for in the Accounts or which is either not expected to make
a normal profit margin or which involves an abnormal degree
of risk;
9.1.6 or any power of attorney given by the Company or any other
authority which would enable any person not employed by
the Company to enter into any contract or commitment on
behalf of the Company;
9.1.7 which involves or is likely to involve:
(a) expenditure by the Company in excess of (pound)5,000
outside of the ordinary and normal course of business;
or
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(b) obligations or restrictions of the Company of an
unusual or exceptional nature and not in the ordinary
and usual course of the Business;
9.1.8 which has more than three months left to run and is not
capable of being terminated by three months' notice or less
without payment of compensation or damages by the Company;
9.1.9 which is an agreement or arrangement for the supply of
consultancy or similar services to the Company;
9.1.10 in which a director of the Company or any of the Vendors or
any person connected with any of them is interested;
9.1.11 which is any other agreement or arrangement having or likely
to have a material adverse effect on the financial or
trading position or prospects of the Company; or
9.1.12 which is a bid, tender, proposal or offer which, if
accepted, would result in the Company becoming a party to
any agreement or arrangement of a kind described in
Warranties 9.1.1 to 9.1.11 above.
9.2 DEFAULTS
9.2.1 The Company is not in default under any agreement to which it is a
party and there are no circumstances likely to give rise to any such
default.
9.2.2 No party with whom the Company has entered into any agreement or
arrangement is in default under such agreement or arrangement and
there are no circumstances likely to give rise to any such default.
9.3 TRADING RELATIONSHIPS
During the 12 months preceding the Completion Date no customer of the
Company who contributed five (5) per cent. or more of annual sales of
the Company or supplier of the Company who supplied five (5) per cent.
or more of the aggregate value of all purchases by the Company has
ceased to deal with the Company or has indicated an intention to cease
to deal with the Company, either in whole or in part, and, to the best
of the knowledge,
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information and belief of the Vendors, no such person is likely to
cease to deal with the Company or deal with the Company on a reduced
level (whether as a result of the acquisition of the Shares by the
Purchaser or other performance of the terms of this Deed or for any
other reason).
9.4 PRINCIPAL CUSTOMERS AND SUPPLIERS
9.4.1 Other than as listed in the Disclosure Letter as appropriate, no
customer or supplier (including any person connected in any way with
any such customer or supplier) accounts either for more than ten (10)
per cent. of the aggregate value of all sales or for more than ten
(10) per cent. of the aggregate value of all purchases of the Company.
10. LITIGATION AND INVESTIGATIONS
10.1 LITIGATION
10.1.1 Except as plaintiff in the collection of debts arising in the
ordinary course of business (none of which exceeds (pound)5,000 and
which do not exceed (pound)10,000 in aggregate), the Company is not,
and no person for whose acts or defaults the Company is capable of
being held vicariously liable is, a plaintiff or defendant in or
otherwise a party to any litigation, arbitration or administrative
proceedings which are in progress or threatened or pending by or
against or concerning the Company or any of its assets.
10.1.2 The Company is not subject to any order or judgment given by any
court or governmental agency and is not a party to any undertaking or
assurance given to any court or governmental agency which is still in
force.
10.1.3 So far as the Warrantors are aware there are no circumstances which
are likely to give rise to any such proceeding, investigation or
inquiry as is referred to in Warranty 10.1.1 or 10.1.2.
10.2 DEFECTIVE PRODUCTS
The Company has not manufactured, sold or supplied any product or
service which is or was or will become in any material respect faulty,
defective or dangerous (unless inherently dangerous) (fair wear and
tear excepted) or which does not comply in any material respect
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with any warranties or representations expressly or impliedly made by
the Company or with all applicable laws, regulations, standards and
requirements.
11. DIRECTORS AND EMPLOYEES
11.1 The Disclosure Letter contains full details of the terms of employment
(including the name, sex, age, position held, hours of work, date of
commencement of period of continuous service, notice period, number of
days' statutory sick pay received during current calendar year,
current salary and other material benefits of each such person) of all
employees of the Company.
11.2 No assurances or undertakings (whether legally binding or not) have
been given to the employees of the Company as to the continuance or
introduction or increase or improvement of any retirement, death,
sickness or disability scheme.
11.3 No person is employed by the Company on terms which in any particular
circumstances would entitle him to a bonus or incentive payment or
commission (based on profits or turnover) or participation in a share
option or share incentive scheme.
11.4 Since the Last Accounts Date no change has been made in the basis of
emoluments or other terms of employment of any of the officers or
employees of the Company.
11.5 There is no outstanding commitment (whether legally binding or not) to
increase the remuneration of any officer or employee of the Company.
11.6 Neither the Company nor any of its employees is engaged in any
industrial or trade dispute and so far as the Warrantors are aware no
act, event or omission has occurred which is likely to give rise to
any such dispute.
11.7 The Company has complied with all provisions of the legislation
relating to statutory sick pay.
11.8 There is not outstanding any contract of service or contract for
services between the Company and any of its directors, officers or
employees which is not terminable by the Company without compensation
(other than compensation payable by statute) on one month's notice at
any time.
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11.9 There is no outstanding claim against the Company by any present or
former employee of the Company nor any dispute between the Company and
a material number or class of its employees and no payments are due by
the Company under the provisions of the Employment Rights ▇▇▇ ▇▇▇▇.
12. INSOLVENCY
12.1 No order has been made, petition presented or meeting convened for
the purpose of considering a resolution for the winding up of the
Company. No petition has been presented for an administration order to
be made in relation to the Company, and no receiver (including any
administrative receiver) has been appointed in respect of the whole or
any part of any of the Properties, assets and/or undertaking of the
Company.
12.2 No composition in satisfaction of the debts of the Company, or
scheme of arrangement of its affairs, or compromise or arrangement
between it and its creditors and/or members or any class of its
creditors and/or members, has been proposed, sanctioned or approved.
12.3 No distress, distraint, charging order, garnishee order, execution or
other process has been levied or applied for in respect of the whole
or any part of any of the Properties, assets and/or undertaking of the
Company.
12.4 The Company is not and has not been party to any transaction with any
third party or parties which, in the event of any such third party
going into liquidation or receivership or an administration order or a
bankruptcy order being made in relation to it or him, is likely to
constitute (in whole or in part) a transaction at an undervalue, a
preference, an invalid floating charge or an extortionate credit
transaction or part of a general assignment of debts, or (in Scotland)
an unfair preference or a gratuitous alienation, under sections 238 to
245 and/or sections 339 to 344 of the Insolvency Act.
12.5 All charges in favour of the Company required to be registered in
accordance with the provisions of sections 395 and 398 of the
Companies Act have been so registered or comply with all necessary
formalities as to registration or otherwise in any foreign
jurisdiction.
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THE WARRANTIES
PART 2
PROPERTY WARRANTIES
1. The Property comprises all the land and buildings owned, leased or occupied
by the Company. The Company does not use or occupy or have an interest in
any other land or buildings.
2. The Company has undisputed exclusive and actual possession of the whole of
the Property and, during the period of the Company's ownership or tenancy
of the Property there have been no disputes with adjoining proprietors or
with third parties concerning any items common to any of the Property and
to any contiguous property, access to or egress from the Property or the
title to or right to exclusive and actual possession of the Property.
3. There are no circumstances which would entitle or require any superior
landlord or any other person to exercise any right of irritancy or
forfeiture or which restrict the right of the Company to continuing
exclusive and actual possession or occupation of the Property, and without
prejudice to the generality of the foregoing, there are no third party
occupancy rights, leases or sub-leases affecting the Property.
4. The information provided by the Warrantors related to the Lease is true,
complete and accurate in all respects.
5. All deeds and documents necessary to prove the title of the Company to the
Property are in the possession of the Company or are held to the order of
the Company.
6. The Company has duly complied with all material feuing or title conditions
affecting or relating to the Property.
7. The Company has in respect of the Property complied in all respects with
all statutory requirements, planning consents, bye-laws, orders and
regulations affecting it and no notice of any breach or non-compliance by
the Company in relation to any of the foregoing matters has been received.
8. The Company has not offered or agreed to dispose of any of the Property or
any part of any of them or any interest therein and the Company has not
offered or agreed to grant any option, sub-lease, servitude or interest or
any other Encumbrance over any of the Properties
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or any part thereof or offered or agreed to acquire any other land or
buildings or any interest therein.
9. There are no outstanding liabilities in respect of the maintenance or
repair of any of the Property or of any property common to the Property and
any contiguous property nor are there are any repairs or maintenance works
proposed.
10. No buildings or other construction erected on any of the Property contains
in its fabric any Hazardous Substance or any materials or substances whose
use is not in accordance with current good building practice or with
current building standards.
11. Copies of all building contracts and of all warranties and guarantees and
of all consultants' contracts and terms of engagement relating to any
building or engineering work carried out in respect of any of the Property
in the last ten years are attached to the Disclosure Letter and there are
no outstanding defects liability periods thereunder or any outstanding or
contemplated actions, proceedings, costs, claims, damages or losses arising
thereunder or in connection therewith.
12. The current use of the Property has been duly authorised or established
under the Town & Country Planning (Scotland) Act 1997 and there are no
conditions or restrictions attached to the said use.
13. In the event that any reservation of minerals affects the Property such
reservation does not include the right to open or enter onto the surface of
the Property and adequate compensation is payable to the Company for any
damage occasioned to the Property in question as a consequence of any
operations in connection with such reserved minerals.
14. There are no outstanding actions, disputes or claims affecting the
Property.
15. There are no restrictions in the title deeds to the Property or otherwise
which would prevent the Property from being used for their existing use and
the business of the Company.
16. The Property has the benefit of all rights and services (including rights
of access from the public roadway) necessary for their full use and
enjoyment.
17. The Company has disclosed all information material to the continued
occupation and use of the Property by the Company.
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18. There are no securities, burdens, servitudes, wayleaves, overriding
interests, rights of pre-emption or redemption, options or other third
party rights or any other Encumbrances adversely affecting the Property
other than the rights reserved to the landlords under the Leases (including
Landlords' hypothec) and matters within the Warrantors knowledge.
19. All necessary consents, permissions, licences, warrants and others have
been obtained and complied with for all works carried out on the Property
and for their existing use.
20. Any alterations, improvements or additions carried out and completed to the
Property have been carried out in accordance with valid planning
permissions, building warrants, certificates of completion and all other
requisite consents and copies of all such items are in the possession of
the Company.
21. There are no orders or notices by the local authority or otherwise
affecting the Property nor to the best of the knowledge, information and
belief of the Vendors are there any present or future proposals whether in
respect of the Property or other nearby subjects which would either
adversely affect the use, value, amenity or character of the Property or
result in any charge or other liability.
22. The carriageway, footpaths, ▇▇▇▇▇, water channels and sewers ex adverso and
serving the Property have been taken over for maintenance by the relevant
public authority and there are no road widening or other road proposals
affecting the Property or any charges due in respect of them.
23. The Property complies in all respects with all relevant statutes,
subsidiary legislation and the like and in particular but without prejudice
to the generality of the foregoing meet the requirements of the Department
of Environmental Health and comply with the Offices, Shops and Railway
Premises Act 1963 and the Health and Safety at Work etc. ▇▇▇ ▇▇▇▇.
24. The Property is served by electricity, gas and water from or to the mains
supply and are directly connected to the mains sewers.
25. Either there is in existence for the Property a valid and unconditional
fire certificate issued in the Fire Precautions ▇▇▇ ▇▇▇▇ and the Property
complies with the conditions attaching to the same or alternatively, if a
fire certificate is not required for the Property, nevertheless comply with
the requirements of the Fire Precautions ▇▇▇ ▇▇▇▇ in all respects.
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26. The title to the Property contains no unduly onerous or unusual
burdens, restrictions or conditions.
27. The Property is not listed as lying within a conservation area nor as being
of architectural or historic interest nor are they the subject of a Tree
Preservation Order, Section 75 Agreement or like restriction.
28. The Property is not subject to any feuduties or other monetary ground
burdens where the cumulo or allocated proportion exceeds (pound)50 per
annum in total other than rent, service charge or other monies payable in
accordance with the Leases.
29. The Company has a valid marketable title to the Leases.
30. In relation to the Leases-
30.1.1 the rents and all other outgoings payable have been paid in
accordance with the terms of the Leases;
30.1.2 they comprise the whole documentation affecting or relating to
the tenant's interest in and to the Property and have not been
the subject of any amendment or alteration or variation either
formal or informal;
30.1.3 The Company as tenant has complied with its obligations under the
Leases and there are no outstanding claims in respect of the
Leases and in particular no notice has been served by the
landlord under the irritancy provision of any of the Leases;
30.1.4 there are no sub-leases or subsidiary rights of occupation;
30.1.5 no alterations, additions or improvements have been carried out
by the Company as tenant without the landlords' consent where
necessary;
30.1.6 the Company is not aware of any proposals by any landlord
for refurbishment or redevelopment which would give rise to a
substantial increase in the service charge or contribution to
common costs payable under the Leases; and
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30.1.7 there are no guarantees, rent deposits or similar arrangements
entered into with any landlord by way of security for the
implementation of the tenant's obligations.
31. The Company has not at any time assigned or otherwise disposed of any
interest under a lease or any land or buildings in such a way that it
retains any residual liability (contingent or otherwise) in respect
thereof.
32. There is no rent review pending or dispute outstanding as to the relevant
level of rent payable in respect of the Leases.
33.1 Neither the Company nor any of its officers, agents or employees have
committed, whether by act or omission, any breach of Environmental Laws,
and they have acted at all times in conformity with all relevant
Environmental Laws.
33.2 The Company has not received any notice, order or other communications from
any relevant authority which alleges a failure to comply with any
Environmental Laws or failure to comply with which would constitute breach
of any Environmental Laws or compliance with which could be secured by
further proceedings. To the best of the knowledge, information and belief
of the Warrantors there are no circumstances which might give rise to such
notice, order or other communication being received or of any intention on
the part of such authority to give such notice.
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THE WARRANTIES
PART 3
PENSION WARRANTIES
1. Other than The Interface Graphics Limited Retirement and Death Benefit
Scheme ("the Scheme"), there are no agreements or arrangements or
obligations or commitments (whether legally binding or otherwise) under
which the Company is required to make payment of a contribution towards or
other provision of relevant benefits (as defined in section 612 of the
Taxes Act) (including on an ex gratia basis) for the benefit of an employee
or an employee's dependants and no undertaking or assurance (whether
legally binding, written or oral) has been given by the Company to any
person as to the continuance or introduction of any scheme or arrangement,
or increase or improvement of any relevant benefits (including but not
restricted to those provided under the Scheme) other than pursuant to the
Scheme..
2. In respect of the Scheme all particulars have been disclosed to the
Purchaser including complete and accurate copies of all formal governing
documents, all explanatory booklets or announcements issued to members, any
amendments thereto.
3. In respect of the Scheme:-
3.1 the Company is not required to pay contributions or expenses;
3.2 only money purchase benefits (as defined in section 181(1) of the
Pension Schemes Act 1993) are provided;
3.3 exempt approved status for the purposes of Chapter I of Part XIV of
the Taxes Act has been obtained and there is no reason why such status
is likely to be withdrawn or cease to apply;
3.4 there is no contracting-out certificate in force to cover employments
to which the Scheme relates;
3.5 it has at all times been administered in accordance with the trusts,
powers and provisions of its governing documentation and has been
administered in accordance with all applicable UK legislation and
regulations (including but not restricted to the Pensions Act 1995);
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3.6 no reports have been made to nor has a fine or penalty been levied by
the Occupational Pensions Regulatory Authority in relation to the
Scheme nor are there any circumstances which would lead to such a fine
or penalty being levied; and
3.7 no claim has been made or threatened against the trustees or
administrator of the Scheme (including any complaint under any
internal dispute resolution procedure or to the Pensions Ombudsman and
reports to the Occupational Pensions Regulatory Authority) in respect
of any act, event, omission or other matter arising out of or in
connection with the Scheme (other than routine claims for benefits)
and there are no circumstances which may give rise to any such claim.
4. Benefits (except refunds of contributions) payable on the death of any
employee are at the date of this Agreement, insured with one or more
reputable insurance companies and all insurance premiums which have fallen
due for payment have been paid.
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THE WARRANTIES
PART 4
TAX WARRANTIES
1. ADMINISTRATION
1.1 The Company has at all times:
1.1.1 punctually paid all Tax for which it is or has been liable to
pay or account for prior to the date of this Deed and is not
liable to pay any interest or penalty in connection with any
claim for Taxation;
1.1.2 made all payments under deduction of Tax which were required by
law to have been so made and the Company has (if so required)
accounted to the appropriate authority for the amounts deducted;
and
1.1.3 properly and punctually made or provided to the appropriate
authority all returns, documents and information which the
Company has been required by law to make or provide prior to the
date of this Deed for the purposes of Taxation.
1.2 Any information that the Company has at any time supplied to the Inland
Revenue, Customs and Excise or any other Taxation authority has been
complete and true.
1.3 All returns which the Company has made for the purposes of Taxation and
which relate to a period ending on or before a date referred to in relation
to this warranty in the Disclosure Letter have been agreed by the
appropriate authority.
1.4 There is no disagreement or dispute between the Company and the Inland
Revenue or any other fiscal authority with regard to any such returns or
otherwise in connection with Taxation and, so far as the Vendors are aware,
no such disagreement or dispute is likely to occur.
1.5 The Company has not been the subject of an investigation by any Tax
authority and none of the Vendors is aware of any circumstance which will
or is likely to give rise to any such investigation.
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1.6 The Company has not taken any action which has had, or might have, the
result of prejudicing or disturbing any special arrangement details of
which are set out in the Disclosure Letter.
1.7 All particulars furnished to the Inland Revenue or any other Taxation
authority in connection with an application for a consent or clearance on
behalf of or affecting the Company made full and accurate disclosure of all
facts and circumstances which were material to be known by the authority in
question.
1.8 Any transaction for which such a consent or clearance was obtained by or on
behalf of the Company from any Taxation authority has been carried into
effect (if at all) in accordance with the terms of the consent or clearance
and the application therefor.
1.9 The Company has sufficient records to calculate any Tax liability or relief
which would arise on a disposal or realisation of any of its assets on the
date hereof.
2. VALUE ADDED TAX
2.1 The Company:
2.1.1 is registered for the purposes of VAT;
2.1.2 has complied fully with the legislation relating to VAT;
2.1.3 has maintained full and complete records and has obtained and/or
retained such invoices and other documents as are required by
such legislation; and
2.1.4 has not been required by Customs and Excise to give security for
the purposes of such legislation.
2.2 The Company has never been treated for the purposes of section 43 of VATA
1994 (groups of companies) as a member of a group of companies.
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3. PAYE AND NATIONAL INSURANCE
The Company has properly operated the Pay As You Earn System (including its
application to National Insurance Contributions), has maintained all proper
records as required in respect thereof and has complied with all its
reporting obligations to the Inland Revenue in connection with benefits
provided for employees of the Company.
4. STAMP AND CAPITAL DUTY
All documents in the possession or under the control of the Company which
are or may at any time be necessary to establish the title of the Company
to any asset or the enforceability by the Company of any right and which
are subject to stamp duty have been properly stamped; and no such documents
which are outside the United Kingdom would attract stamp duty if brought
into the United Kingdom.
5. CASE I OF SCHEDULE D
5.1 All payments of an income nature which the Company has made since the Last
Accounts Date and all such payments which the Company has bound itself to
make in the future are or will be allowable as a deduction or a charge on
income in computing the Company's profits for corporation tax purposes for
the accounting period in which the payment has been or will be made.
5.2 There has been no change in the ownership of the Company nor any major
change in the nature or conduct of any trade carried on by the Company for
the purposes of sections 245 (calculation etc. of ACT on change of
ownership of company) or 768 (change in ownership of company: disallowance
of trading losses) or 768A (change in ownership: disallowance of carry back
of trading losses) of the Taxes Act since its incorporation, nor has the
scale of the activities in any trade carried on by the Company become small
or negligible during that period.
5.3 Any unutilised and outstanding trading losses, capital losses, excess
charges on income and management expenses, unrelieved advance corporation
tax and surplus franked investment income are available to be carried
forward and utilised by the Company in accounting periods beginning on or
after the Last Accounts Date.
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6. CAPITAL GAINS
6.1 The values at which assets are included in the balance sheet in the
Accounts correspond to the base cost of such assets (disregarding any
indexation allowance which may be available pursuant to Chapter IV of Part
II of TCGA 1992) for the purposes of the provision of the Tax legislation
relating to corporation tax on chargeable gains.
6.2 If each of the capital assets of the Company were disposed of for a
consideration equal to the book value of the asset in or adopted for the
purpose of the Accounts, no liability to corporation tax on chargeable
gains and no balancing charge under the Capital Allowances Act 1990 (other
than a liability or charge which has been taken into account in computing
the provision for deferred taxation in the Accounts) would arise.
6.3 In determining any liability to corporation tax on chargeable gains for the
purposes of Warranty 6.2 any relief or allowance available to the Company,
other than deductions allowed by section 38 of TCGA 1992 (acquisition and
disposal costs etc.) or any indexation allowance provided under Chapter IV
of Part II of TCGA 1992 shall be disregarded.
6.4 The Company does not own any capital assets on the disposal of which any
allowable loss is liable to be reduced or any chargeable gain increased
under sections 176 (depreciatory transactions within a group) or 177
(dividend stripping) or section 30 (tax-free benefits) of TCGA 1992.
6.5 The Company does not own any shares on a disposal of which the allowable
expenditure is liable to be reduced under section 125 of TCGA 1992 (shares
in a close company transferring assets at an undervalue).
6.6 No capital asset owned or agreed to be acquired by the Company (other than
an asset the expenditure on which has qualified in full for capital
allowances) is a wasting asset for the purposes of section 44 of TCGA 1992
(meaning of "wasting asset").
6.7 No chargeable gain will accrue to the Company on the disposal or
satisfaction of any debt owed to the Company other than a debt on a
security.
6.8 The Company has not acquired benefits under any policy of life assurance
other than as the original beneficial owner.
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6.9 The Company has not transferred the whole or any part of any trade carried
on by it outside the United Kingdom through a branch or agency to a company
not resident in the United Kingdom in circumstances in which a charge to
Tax which would otherwise have arisen has been deferred under section 140
of TCGA 1992 (postponement of charge on transfer of assets to non-resident
company).
6.10 No unpaid corporation tax is or could become recoverable from the Company
under section 191 of TCGA 1992 (non-payment of tax by non-resident
companies) in respect of any chargeable gain accruing on or before the date
of Completion.
7. DISTRIBUTIONS
7.1 No securities of the Company in issue at the date hereof, or which the
Company has bound itself to issue, are such that any interest or other
payment in respect thereof is liable to be treated as a distribution under
section 209(2)(d) or section 209(2)(e) of the Taxes Act.
7.2 The Company has not repaid, or agreed to repay, any share capital other
than fully paid preference shares within the meaning of section 210 of the
Taxes Act (bonus issue following repayment of share capital).
7.3 The Company has not resolved or otherwise bound itself to make any future
distributions within the meaning of section 209 of the Taxes Act (meaning
of distribution).
8. CAPITAL ALLOWANCES
All capital allowances to be made to the Company in respect of capital
expenditure incurred prior to the date hereof, or to be incurred under any
subsisting commitment, will be made in taxing its trade.
9. CLOSE COMPANIES
The Company is not and never has been a close company as defined in Section
414 of the Taxes Act (close companies).
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10. MISCELLANEOUS
The Company is not the tenant under any lease which was granted at an
undervalue such that a charge might arise under section 35 of the Taxes Act
(Schedule D charge on assignment of lease granted at an undervalue) on an
assignment.
11. ANTI-AVOIDANCE
11.1 The Company is, and always has been, UK. resident for tax purposes and has
not been a party to or otherwise involved in any transaction to which
section 765 of the Taxes Act (migration etc. of companies) applied, other
than one in respect of which the prior consent of the Treasury was obtained
or to which section 765A of the Taxes Act (movements of capital between
residents of member States) applied without having duly provided the
required information to the Board of the Inland Revenue.
11.2 The Company has not been party to any transaction in respect of which it
is or could become liable to make any payments to which section 779 of the
Taxes Act (sale and lease-back: limitation on tax reliefs) could apply.
11.3 The Company has not been party to any transaction to which section 786 of
the Taxes Act (transactions associated with loans or credit) could apply.
11.4 The Company is not and never has been a dual resident company for the
purposes of section 404(4) of the Taxes Act.
12. INFORMATION
Full details of the following are contained in the records of the Company
to which the Purchaser has been granted full access:
12.1 all appeals, applications, claims, disclaimers and elections
made by the Company in relation to Taxation within the last six
(6) years;
12.2 all matters in respect of which the Company has at Completion, or
may have (whether alone, or with any other person or persons), an
outstanding entitlement
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to make any appeal, application, claim, disclaimer and/or
election in relation to Taxation;
12.3 any notice, direction, consent or clearance received by the
Company in relation to Taxation within the last six (6) years;
12.4 any special arrangements made by the Company with the Inland
Revenue, Customs & Excise or any other Taxation authority within
the last six (6) years;
12.5 any circumstances which the Warrantors are aware might entitle
the Company to make a claim for bad debt relief under section 22
of Value Added Tax Act 1983 (refund of tax in cases of bad debts)
or section 36 of VATA 1994 (bad debts);
12.6 any election to waive exemption from VAT in relation to any
property which has been made by the Company at any time, or to
which any property occupied or leased by the Company is subject;
12.7 all transactions carried out within the last five (5) years in
respect of which the Company has obtained relief from stamp duty
under section 42 of the Finance ▇▇▇ ▇▇▇▇ (relief from transfer
stamp duty in case of transfer of property as between associated
companies);
12.8 all transactions in respect of which any document has been
submitted by the Company to the Inland Revenue for adjudication
for stamp duty purposes and in respect of which the adjudication
process has not yet been completed;
12.9 all trading losses, capital losses, excess charges on income and
management expenses, unrelieved advance corporation tax and
surplus franked investment income;
12.10 all debts on a security which are owed to the Company;
12.11 full particulars of all transactions by which any capital assets
owned by the Company were acquired:
12.11.1 from a company which at the time of the acquisition was
a member of the same group of companies for the
purposes of section 170 of TCGA 1992 (groups of
companies: interpretation);
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12.11.2 otherwise than by way of a bargain at arm's length;
12.11.3 from a person who was connected with the Company within
the meaning of section 286 of TCGA 1992 (connected
persons: interpretation); or
12.11.4 on a no gain/no loss basis by virtue of section 139
of TCGA 1992 (reconstruction or amalgamation involving
transfer of business) or sections 126 to 138 of that
Act,
12.12 all surrenders or claims made by the Company for the
purposes of group relief under sections 402 to 413 of
the Taxes Act (group relief);
12.13 all surrenders of advance corporation tax by or to the
Company pursuant to section 240 of the Taxes Act
(set-off of company's surplus ACT against subsidiary's
liability to corporation tax); and
12.14 all arrangements and agreements to which the Company is
a party relating:
12.14.1 to the surrender of advance corporation tax
under section 240 of the Taxes Act (set-off
of company's surplus ACT against subsidiary's
liability to corporation tax); or
12.4.2 to group relief as defined by section 402 of
the Taxes Act (surrender of relief between
members of groups and consortia).
13. CLOSE COMPANIES
13.1 The Company is and has always been a close company as defined in
section 414 of the Taxes Act (close companies).
13.2 The Company has not made or agreed to make any such loan or
advance or released or written off any such debt as it within
sections 419 to 422 of the Taxes Act and no such loan, advance or
debt is currently outstanding.
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SCHEDULE 5
THE PROPERTY
PART 1
PROPERTY DETAILS
1. First/Top floor comprising ▇▇▇▇▇▇ ▇, ▇, ▇ ▇▇▇ ▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (Sandport House being hereinafter defined
as "the Building"
2. Part of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.
3. Part of the ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇.
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EXECUTED as a Deed by )
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in the presence of: )
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in the presence of: ) As Attorney for ▇▇▇▇▇▇ ▇▇▇▇▇▇
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EXECUTED as a Deed by )
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in the presence of: )
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ELEMENTS (UK) LIMITED )
acting by: )
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Director
▇▇▇▇ ▇▇▇▇▇▇ Secretary
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Subscribed for and on behalf of INTERFACE GRAPHICS LIMITED by ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, Director and ALISTAIR ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Director, at Edinburgh on the 21st
day of December 1998 before this witness:
Witness: ▇ ▇ ▇▇▇▇▇▇▇
Full Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
----------------------------
Director
/s/ Alistair ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------
Director
