Exhibit 2.1
Dated September 16, 1999.
XXXXXX HOLDINGS PLC
- and -
ROWECOM INC.
- and -
THE VENDORS
- and -
THE PURCHASERS
-------------------------------------------------------------
AGREEMENT
for the sale and purchase of
the subscription business and, in Canada, the
books business of the Information Services Group
of Xxxxxx Holdings PLC
-------------------------------------------------------------
ASHURST XXXXXX XXXXX
Xxxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Tel: 0000-000 0000
Fax: 0000-000 0000
CONTENTS
CLAUSE PAGE
1. INTERPRETATION........................................................................... 4
2. SALE AND PURCHASE........................................................................ 15
3. CONDITIONS............................................................................... 20
4. PERIOD TO COMPLETION..................................................................... 22
5. COMPLETION............................................................................... 24
6. COMPLETION ACCOUNTS...................................................................... 25
7. INDEBTEDNESS............................................................................. 29
8. WARRANTIES............................................................................... 30
9. PROTECTION OF GOODWILL................................................................... 31
10. ACTION AFTER COMPLETION AND UNDERTAKINGS OR PERMISSIONS BY XXXXXX........................ 33
11. LIABILITIES OF THE BUSINESS.............................................................. 36
12. RECEIVABLES.............................................................................. 37
13. CONTRACTS................................................................................ 37
14. EMPLOYEES................................................................................ 38
15. CONFIDENTIAL INFORMATION................................................................. 43
16. PURCHASER WARRANTIES..................................................................... 44
17. PENSIONS................................................................................. 46
18. ANNOUNCEMENTS............................................................................ 46
19. COSTS AND TAXES.......................................................................... 46
20. EFFECT OF THIS AGREEMENT AND COMPLETION.................................................. 47
21. ALTERNATIVE DISPUTE RESOLUTION........................................................... 47
22. FURTHER ASSURANCES....................................................................... 49
23. ENTIRE AGREEMENT......................................................................... 50
24. VARIATIONS............................................................................... 50
25. WAIVER................................................................................... 50
26. INVALIDITY AND INCONSISTENCY............................................................. 51
27. NOTICES.................................................................................. 51
28. COUNTERPARTS............................................................................. 53
29. GOVERNING LAW AND JURISDICTION........................................................... 53
30. NO ASSIGNMENT............................................................................ 53
SCHEDULE 1 Particulars relating to the Company.................................................. 55
SCHEDULE 2 Particulars relating to Subsidiaries................................................. 56
SCHEDULE 3 The Warranties....................................................................... 62
Part A - General................................................................................ 62
SCHEDULE 3 The Warranties....................................................................... 107
Part B - Jurisdiction Specific.................................................................. 107
SCHEDULE 4 Seller's Limitations on Liability.................................................... 118
SCHEDULE 5 Action Pending Completion............................................................ 124
SCHEDULE 6 The Properties....................................................................... 127
SCHEDULE 7 Pensions............................................................................. 130
SCHEDULE 8...................................................................................... 145
Proforma Completion Accounts.................................................................... 145
SCHEDULE 9...................................................................................... 146
Accounting Policies and Procedures for the Completion Accounts and/or the First Quarter
Accounts....................................................................................... 146
SCHEDULE 10..................................................................................... 150
Completion...................................................................................... 150
SCHEDULE 11..................................................................................... 156
Agreed Terms Documents.......................................................................... 156
SCHEDULE 12..................................................................................... 158
SCHEDULE 13..................................................................................... 161
Confirmation Letter............................................................................. 161
SCHEDULE 14..................................................................................... 162
Permitted Encumbrances.......................................................................... 162
SCHEDULE 15..................................................................................... 164
Registration of RoweCom Shares.................................................................. 164
SCHEDULE 16..................................................................................... 168
Assumed Liabilities............................................................................. 168
SCHEDULE 17..................................................................................... 169
Accounting Policies and Procedures for the First Quarter Accounts............................... 169
SCHEDULE 18..................................................................................... 171
Losses.......................................................................................... 171
THIS AGREEMENT is made on 1999
BETWEEN:-
(1) XXXXXX HOLDINGS PLC (No. 34273) whose registered office is at 9th Floor
(South Wing), XXX Xxxxx, Xxxxxxxx Xxxx, Xxxxxxx XX0 0XX, Xxxxxx Xxxxxxx
("Xxxxxx");
(2) ROWECOM INC. whose office is at 000 Xxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxxxxx, Xxxxxx Xxxxxx of America, a Delaware Corporation
("RoweCom");
(3) THE VENDORS (as defined below); and
(4) THE PURCHASERS (as defined below),
(together the "parties").
THE PARTIES AGREE AS FOLLOWS:-
1. INTERPRETATION
1.1 In this agreement the following words and expressions and abbreviations
have the following meanings, unless the context otherwise requires:-
"Accounts Date" means 30 September 1998;
"Advance Publisher Payment" means any advance payments made by any member
of the Xxxxxx Group or any member of the Group prior to Completion to
publishers;
"Agreed Rate" means the base rate from time to time of National
Westminster Bank Plc;
"Announcement Date" means 16 September 1999;
"Assets" means the Books and Records, Business Information, the benefit
(subject to the burden in respect of obligations to be performed and
arising after Completion) of the Contracts, Fixed Plant, Goodwill,
Intellectual Property, Loose Plant, Properties, Receivables and Stock
together with all other assets and rights and the benefit of any claims
relating to the Asset Businesses at Completion, other than the Excluded
Assets;
"Asset Businesses" means together the Canadian Business, the French
Business, the Spanish Business and the UK Business;
"Asset Vendors" means those corporate entities (other than the Share
Vendor) whose names are set out in schedule 12;
"associated company" has the meaning given to it in sections 416 et seq.
TA;
-4-
"Assumed Employees" means those employees of the Asset Businesses whose
names are listed in the document in the agreed terms headed "Assumed
Employees" together with those persons employed by the Xxxxxx Group in the
Asset Businesses between the date hereof and Completion with the consent of
RoweCom less those who resign or are dismissed or whose contract of
employment expired between the date hereof and Completion and "Assumed
Employee" means any of them;
"Assumed Liabilities" means the obligations of the Group in relation to the
trade creditors of the Asset Businesses as included in the Completion
Accounts or under the Contracts (but excluding the Excluded Liabilities) as
at Completion and the liabilities specified in schedule 16;
"Books Business" means the books business of the Information Services Group
of Xxxxxx and the Xxxxxx Group wheresoever carried on and whether carried
on separately or together;
"Books and Records" means all books and records other than those required
by law to be retained by any of the Vendors and including customer lists,
publisher information, books of account, employees and financial and tax
records, and all other records to the extent they relate to the Business as
at Completion on whatsoever medium they are stored;
"Business" means the subscription business of the Information Services
Group of Xxxxxx and the Xxxxxx Group wheresoever carried on and whether
carried on separately or together;
"Business Confidential Information" means all information relating to any
Group Company or the Business, including its operations, trade secrets or
financial or other information (including future plans and targets of any
Group Company or the Business) which is not in the public domain;
"Business Day" means a day (excluding Saturdays) on which banks generally
are open in London for the transaction of normal banking business;
"Business Information" means all information, know-how and documentation
(and on whatsoever medium they are stored) relating to the Business and
Assets as at Completion including all correspondence, promotional material,
lists of customers and suppliers, technical or computer hardware or
software manuals;
"Canadian Business" means that part of the Business and the Books Business
operating in Canada;
"Canadian Employees" means those Assumed Employees of the Canadian
Business;
"Canadian Purchaser" means the Corporate entity(ies) nominated by RoweCom
for the purpose of acquiring the Canadian Business;
"Canadian Real Property" means the real property located at 0000 Xxxxx
Xxxxxxxxx Xxxx, Xxxxxx, Xxxxxxx;
-5-
"Company" means Xxxxxx, Inc., details of which are listed in schedule 1;
"Completion" means the completion, subject to clause 3.2, of the sale and
purchase of the US Shares and the Asset Businesses in accordance with
clause 5;
"Completion Accounts" means a document in the format set out in schedule 8
setting out certain assets and liabilities on a consolidated basis of the
Group as at the Completion Date to be prepared in accordance with clause 6
and schedule 9;
"Completion Date" means the date on which Completion occurs;
"Conditions" means the conditions set out in clause 3.1;
"Consideration" means (Pounds)34,000,000 as adjusted in accordance with
clause 2.5;
"Contracts" means all contracts relating to the Asset Businesses which are
wholly or partly unperformed as at Completion and all outstanding offers by
or to the Xxxxxx Group relating to the Asset Businesses as at Completion
including those listed in the document in the agreed terms headed
"Contracts" but excluding:-
(a) contracts of employment with the Assumed Employees; and
(b) those contracts which are Excluded Assets;
"Xxxxxx'x Account" means the bank account(s) notified by Xxxxxx to RoweCom
no later than three Business Days prior to Completion;
"Xxxxxx Group" means Xxxxxx, any parent undertaking from time to time of
Xxxxxx and the subsidiary undertakings and the associated companies from
time to time of such companies (which for the avoidance of doubt shall
exclude the Group), all of them and each of them as the context admits;
"Xxxxxx Group Confidential Information" means all information relating to
the Xxxxxx Group including its operations, trade secrets or financial or
other information which is not in the public domain;
"Xxxxxx'x Solicitors" means Xxxxxx, 0 Xxxxxxx Xxxxxx, Xxxxxx XX0X 0XX;
"Disclosure Letter" means a letter of today's date together with the
attachments thereto addressed by Xxxxxx to RoweCom disclosing exceptions to
the Warranties;
"Disclosure Letters" means the Disclosure Letter and the Supplemental
Disclosure Letter;
"Due Diligence Reports" means the due diligence report prepared by
RoweCom's Solicitors and dated 15 September 1999 and the due diligence
report prepared by PricewaterhouseCoopers and dated 13 September 1999;
-6-
"EGM" means the extraordinary general meeting of Xxxxxx called for 2
October 1999 to approve the transaction contemplated by this agreement;
"Encumbrance" means any mortgage, charge (fixed or floating), pledge, lien,
hypothecation, trust, right of set off or other third party right or
interest (legal or equitable) including any right of pre-emption,
assignment by way of security, reservation of title or any other security
interest of any kind however created or arising or any other agreement or
arrangement (including a sale and repurchase arrangement) having similar
effect;
"ERA" means the Employment Rights Xxx 0000;
"Estimated First Quarter Profit Amount" means the amount of gross profit in
respect of the First Quarter to be calculated in accordance with schedule
17;
"Estimated Working Capital Amounts" means the sum of (Pounds)9,000,000 to
be allocated on a country by country basis prior to Completion in
accordance with the agreement of RoweCom and Xxxxxx where those parties
agree to act reasonably in determining the allocation;
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended;
"Excluded Assets" means cash in hand and at bank of the Asset Businesses
and those assets of the Asset Businesses listed in the document in the
agreed terms headed "Excluded Assets";
"Excluded Contract Liabilities" means all obligations and liabilities of
any Asset Vendor relating to or arising in connection with:-
(a) any breach of contract, breach of duty or which are attributable to
any act, neglect, omission, or default of any Asset Vendor prior to
Completion; or
(b) any product delivered by any Asset Vendor or any service performed by
any Asset Vendor prior to Completion;
"Excluded Liabilities" means any and all liabilities, claims, costs or
expenses of any nature whatsoever directly or indirectly related to the
Business at the Completion Date and attributable to the period prior to
Completion (but excluding the Assumed Liabilities) including, for the
avoidance of doubt:-
(a) any liabilities in respect of the Excluded Contract Liabilities;
(b) any liabilities in respect of the Retained Employees;
(c) in respect of the Asset Businesses any liabilities to Tax to the
extent those liabilities relate to any period ending on or before (but
not as a result of) Completion; and
(d) any amounts owed by any of the Asset Vendors to any third party by way
of overdraft or other borrowings;
-7-
"First Quarter" means the period following Completion to 31 December 1999
(inclusive) and "First Quarter Date" shall be 31 December 1999;
"First Quarter Accounts" means statement of the First Quarter Profit Amount
prepared in accordance with clause 6.15 and schedule 17;
"First Quarter Profit Amount" means the gross profit in respect of the
First Quarter to be calculated in accordance with clause 6.15 and schedule
17;
"First Tranche" means the RoweCom common stock being issued in partial
satisfaction of the Consideration in accordance with clause 2.4(b);
"Fixed Plant" means all of the fixed plant, machinery, equipment and
tooling used or intended for use in the Business attached or fixed to the
Properties as at Completion including those items of fixed plant listed in
the document in the agreed terms headed "Fixed Asset Register";
"Folkestone Lease" means the lease of part of the Folkestone Property to be
granted pursuant to schedule 10 in the agreed terms;
"Folkestone Property" means the freehold property known as land on the Xxxx
Xxxx xx Xxxx Xxxx Xxxx, Xxxxxxxxxx as registered at HM Land Registry under
title number K285171;
"French Bank Guarantee" means the first demand bank guarantee to be issued
at Completion at the request of Xxxxxx (or the French Vendor) by a bank of
good repute and financial standing in favour of RoweCom (or the French
Purchaser) for the total amount of the Consideration attached to the French
Business;
"French Business" means that part of the Business operating in France;
"French Business Agreement" means the agreement to be signed in French at
Completion and providing for the sale by the French Vendor and the purchase
by RoweCom (or the French Purchaser) of the French Business (but excluding
the French Real Property) and, without limitation, containing the terms and
conditions required by French laws dated 17 March 1909 and 25 June 1935;
"French Employees" means those Assumed Employees of the French Business;
"French Escrow Agreement" means the agreement to be signed in French at
Completion and providing for that part of the Consideration to be placed
into escrow account(s);
"French Lease" means the short term lease agreement in the agreed terms to
be signed in French at the date of transfer of ownership of the French Real
Property from the French Vendor to RoweCom (or the French Purchaser) and
whereby RoweCom (or the French Purchaser) will grant to the French Vendor
the temporary right to use part of the French
-8-
Real Property as from the date of transfer of the French Real Property to
RoweCom (or the French Purchaser);
"French Purchaser" means the two corporate entities nominated by RoweCom
for the purpose of acquiring the French Business;
"French Real Property" means the real estate property owned by the French
Vendor and located at Xxxx Xxxxxxxxxxxx xx xx Xxxxxxx, Xxxxxxxx-xxx-Xxxxxx
(Xxxxxxx), Xxxxxx;
"French Real Property Option" means the agreement to be signed in French at
Completion granting the French Purchaser the option to acquire the French
Real Property subject to certain terms and conditions;
"French Vendor" means Xxxxxx France S.A.;
"Goodwill" means the goodwill relating to the Business as at Completion
together with the exclusive right for RoweCom and the RoweCom Group to
represent themselves as carrying on the Business in succession to the
Vendors and together with the Trade Names;
"Group" means the Company and the Subsidiaries and the Asset Businesses and
references to a "member of the Group" or "Group Company" shall be construed
accordingly;
"Group Indebtedness" means:-
(a) all bank borrowings of the Group as at Completion;
(b) all finance lease liabilities of the Group as at Completion; and
(c) all Intra-Group Indebtedness owed by the Group to the Xxxxxx Group as
at Completion;
"Indemnities" means the indemnities or similar provisions contained in this
agreement including clauses 8.8 and 11.2;
"Initial Consideration" means the Consideration payable pursuant to clauses
2.4(a) and (b) prior to any adjustment pursuant to clause 2.5;
"Intellectual Property" means the registered and unregistered intellectual
property listed in the document in the agreed terms headed "Intellectual
Property" together with all other Intellectual Property Rights used or
owned exclusively in the Business and all rights of the Xxxxxx Group
against third parties in respect of any of the foregoing in each case as at
the date of this agreement;
"Intellectual Property Assignments" means the assignments in the agreed
terms of the registered and unregistered Intellectual Property;
"Intellectual Property Rights" means in relation to the Business any and
all patents, trade marks, trade names and signs within the scope of the
transfer, rights in designs, get-up, the
-9-
Trade Names, copyrights, topography rights (whether registered or not and
any applications to register or rights to apply for registration of any of
the foregoing), rights in inventions, Know-How, trade secrets and other
confidential information, rights in databases and all other intellectual
property rights of a similar or corresponding character which may now or in
the future subsist in any part of the world;
"Intra-Group Indebtedness" means all debts outstanding between members of
the Group, on the one hand, and members of the Xxxxxx Group, on the other
(other than Intra-Group Trading Indebtedness);
"Intra-Group Trading Indebtedness" means all debts outstanding as at
Completion between members of the Group, on the one hand, and members of
the Xxxxxx Group, on the other, in respect of intra-group trading
activities in the ordinary and usual course of trading;
"IQ Software" means the on-line information access system known as
Information Quest allowing libraries and others to obtain access to an
electronic index, abstracts and various types of publisher content
including software (object and source code) and related technology,
technical information and knowledge;
"IQ Software Licence" means the non-exclusive licence in the agreed terms
whereby RoweCom grants to Xxxxxx the right to use the IQ Software on a
perpetual, royalty-free and irrevocable basis;
"Know-How" means confidential or proprietary industrial, technical or
commercial information and techniques in any form (including paper,
electronically stored data, magnetic media, files and micro-film)
including, without limitation, drawings, data relating to inventions,
formulae, test results, reports, research reports, project reports and
testing procedures, instruction and training manuals, market forecasts,
specifications, quotations, lists and particulars of customers and
suppliers, marketing methods and procedures, show-how and advertising copy;
"London Stock Exchange" means London Stock Exchange Limited;
"Loose Plant" means the loose plant including movable plant, machinery,
equipment, desk top computers and/or computer systems, spare parts,
tooling, vehicles and furniture used or intended for use primarily in the
Business as at Completion including those items of loose plant listed in
the document in the agreed terms headed "Fixed Asset Register" and
identified therein as used or intended for use primarily in the Business;
"Management Accounts Date" means 3 April 1999;
"Oregon Lease" means the lease of the Oregon Property in the agreed terms;
"Permit" means a permit, licence, consent, approval, certificate,
qualification, specification, registration or other authorisation or a
filing of a notification report or assessment necessary in any jurisdiction
for the proper and efficient operation of the Business and, for the
avoidance of doubt, each Group Company's business, its ownership,
-10-
possession, occupation or use of an asset or the execution and performance
of this agreement;
"Properties" means the properties (excluding the Folkestone Property)
particulars of which are set out in schedule 6 and shall include where the
context so admits the individual properties comprising the Properties or
any part or parts thereof and "Property" shall be construed accordingly;
"Purchasers" means RoweCom and those members of the RoweCom Group which it
procures to purchase the US Shares or any part or number of the Asset
Businesses under this agreement whose names are set out in column 3 of
schedule 12;
"Receivables" means all amounts owed to the Vendors (other than under the
Excluded Contracts) in the ordinary course of carrying on the Asset
Businesses as at Completion;
"Regulations" means Council Directive 77/187/EEC and in respect of the UK
Employees enacted by the Transfer of Undertakings (Protection of
Employment) Regulations 1981, in respect of the French Employees enacted by
Article L-122-12 of the French Employment Code and in respect of the
Spanish Employees enacted by the Workers' Statute approved by Royal
Legislative Decree 1/1995 dated March 24, 1995;
"Regulatory Consents" means all filings deemed necessary or appropriate by
the parties hereto in respect of the proposed acquisition of any of the
Group Companies and the Asset Businesses and the Assets or any matters
arising therefrom having been made to all relevant authorities in any
jurisdiction deemed necessary or appropriate including, but not limited to,
Canada, France, Spain, the United Kingdom and the US and all appropriate
waiting and other time periods under any applicable legislation or
regulations in any jurisdictions having expired, lapsed or been terminated
and all necessary statutory or regulatory obligations in any jurisdiction
in respect of the proposed acquisition of the Group Companies and the Asset
Businesses and the Assets or any matters arising therefrom;
"Related Person" means in relation to any party its holding companies and
the subsidiary undertakings and associated companies from time to time of
such holding companies, all of them and each of them as the context admits;
"Relevant Business" means the business of acting as a serials agent for
libraries, information centres and individuals and sourcing and organising
their subscriptions whether in print or electronically but excluding:-
(a) the Books Business; and
(b) for the avoidance of doubt, the newspaper, magazine and brochure
physical distribution business carried on at any time by the Xxxxxx
Group including any business involving the sourcing or organisation of
subscriptions for newspapers, magazines and brochures which is
ancillary to the physical distribution of newspapers, magazines and
brochures;
-11-
"Retained Employees" means any persons other than the Assumed Employees who
are or have been at any time prior to Completion engaged to any extent by
the Xxxxxx Group in the Business (excluding the Group Companies);
"RoweCom Group" means RoweCom, any parent undertaking from time to time of
RoweCom and the subsidiary undertakings and associated companies from time
to time of such companies (including, for the avoidance of doubt, the Group
after Completion), all of them and each of them as the context admits;
"RoweCom Group Confidential Information" means all information relating to
the RoweCom Group including its operations, trade secrets or financial or
other information which is not in the public domain;
"RoweCom Shares" means the fully paid RoweCom common stock to be allotted
and issued to Xxxxxx in accordance with clauses 2.4(b) and (d);
"RoweCom's SEC Filings" means, RoweCom's:-
(a) registration statement on Form S-1 (Registration No. 333-68761);
(b) Quarterly Report on SEC Form 10-Q for the quarter ended March 31,
1999;
(c) Current Report on SEC Form 8-K dated June 22, 1999; and
(d) Quarterly Report on SEC Form 10-Q for the quarter ended June 30, 1999;
in each case, as filed with the SEC and (if applicable) as amended to
date;
"RoweCom's Account" means the account in the name of RoweCom, account
number 614005734 at Bank One of Columbus, OH, ABA#000000000;
"RoweCom's Solicitors" means Ashurst Xxxxxx Xxxxx of Xxxxxxxxx Xxxxx, 0
Xxxxxx Xxxxxx, Xxxxxx XX0X 0XX;
"SEC" means the United States Securities and Exchange Commission;
"Second Tranche" means the RoweCom common stock being issued in partial
satisfaction of the Consideration in accordance with clause 2.4(d);
"Securities Act" means the United States Securities Act of 1933, as
amended;
"Share Vendor" means Xxxxxx Overseas Holdings Limited details of which are
set out in schedule 12;
"Shared Services" means the services to be provided by the Group to the
Xxxxxx Group and by the Xxxxxx Group to the Group after Completion in
accordance with the letter from Xxxxxx to RoweCom dated 16 September 1999;
"Spanish Business" means that part of the Business operating in Spain;
-12-
"Spanish Business Agreement" means the notarised agreement to be signed in
Spanish before a Spanish Public Notary at Completion and providing for the
sale and purchase of all or part of the Spanish Business (including the
Spanish Real Property);
"Spanish Employees" means those Assumed Employees of the Spanish Business;
"Spanish Purchaser" means the corporate entity nominated by RoweCom for the
purpose of acquiring the Spanish Business;
"Spanish Real Property" means the leasehold of the Spanish Vendor with
respect to the offices at Edificio Santander Calle I, xxxx 12-14, Las
Xxxxx, Madrid (Europolis);
"Stock" means the stock in trade, raw materials, fuels, packing materials,
work in progress and finished goods held, acquired or produced in
connection with the Asset Businesses and which are at Completion at the
Properties or elsewhere for or with a view to sale;
"Subsidiary" means a subsidiary undertaking of the Company specified in
schedule 2 and "Subsidiaries" means all those subsidiary undertakings;
"Spanish Vendor" means Xxxxxx Espana Agencia de Ediciones, S.L.;
"Supplemental Disclosure Letter" means a letter dated the Business Day
immediately prior to the Completion Date together with any attachments
thereto addressed by Xxxxxx to RoweCom relating solely to events that have
occurred after the date of this agreement and disclosing those matters as
exceptions to the Warranties;
"TA" means the Income and Corporation Taxes Xxx 0000;
"Tax Deed" means a deed of indemnity in the agreed terms;
"Third Party Consents" means all authorisations, orders, grants, consents,
clearances, licences, permissions and approvals in any jurisdiction
including, but not limited to, Canada, France, Spain, and the US deemed
necessary or appropriate by both of the parties hereto for, or in the
United Kingdom in respect of, the proposed acquisition of any of the Group
Companies and the Asset Businesses and the Assets or any matters arising
therefrom;
"Trade Names" means the trade names used in the Business listed in the
document in the agreed terms headed "Trade Names";
"UK Business" means that part of the Business operating in the United
Kingdom;
"UK Employees" means those Assumed Employees of the UK Business;
"US Real Property" means the real estate property owned or leased by the
Company and located at 00 Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000 and
0000 Xxxxxxxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxxx, XX 00000, and 000
Xxxx 00/xx/ Xxxxxx, Xxx Xxxx, XX 00000, and 0000-0000, X-Xxxxx Xxxx,
Xxxxxx, XX 00000;
-13-
"US Shares" means all of the issued shares in the capital of Xxxxxx, Inc.;
"US" means the United States of America, its territories and possessions,
each state thereof and the District of Columbia;
"Vendors" means the Share Vendor and the Asset Vendors;
"Warranties" means the representations and warranties set out in schedule
3; and
"Working Capital Amount" means separately in relation to each Asset Vendor
and, on a consolidated basis, the Company and the Subsidiaries, the sum to
be calculated in accordance with clause 6.10 and schedule 9, together the
"Working Capital Amounts";
1.2 In this agreement unless otherwise specified, reference to:-
(a) a "subsidiary undertaking" is to be construed in accordance with
section 258 of the Companies Xxx 0000 and a "subsidiary" or "holding
company" is to be construed in accordance with section 736 of that
Act;
(b) a document in the "agreed terms" is a reference to that document in
the form approved and for the purposes of identification signed by or
on behalf of each party;
(c) "FA" followed by a stated year means the Finance Act of that year;
(d) "includes" and "including" shall mean including without limitation;
(e) a party means a party to this agreement and includes its assignees (if
any) and/or the successors in title to substantially the whole of its
undertaking;
(f) a person includes any person, individual, company, firm, corporation,
government, state or agency of a state or any undertaking (whether or
not having separate legal personality and irrespective of the
jurisdiction in or under the law of which it was incorporated or
exists);
(g) a statute or statutory instrument or accounting standard or any of
their provisions is to be construed as a reference to that statute or
statutory instrument or accounting standard or such provision as the
same may have been amended or re-enacted before the date of this
agreement;
(h) "clauses", "paragraphs" or "schedules" are to clauses and paragraphs
of and schedules to this agreement;
(i) "writing" includes any method of representing words in a legible form
(other than writing on an electronic or visual display screen) or
other writing in non-transitory form;
-14-
(j) words denoting the singular shall include the plural and vice versa
and words denoting any gender shall include all genders;
(k) any statute, statutory instrument, regulation, by-law or other
requirement of English law and to any English legal term for any
action, remedy, method of judicial proceeding, legal document, legal
status, procedure, court, official or any legal concept or doctrine or
other expression shall in respect of any jurisdiction other than
England be deemed to include that which most nearly approximates in
that jurisdiction to the English term; and
(l) the time of day is reference to time in London, England.
1.3 The schedules form part of the operative provisions of this agreement and
references to this agreement shall, unless the context otherwise requires,
include references to the schedules.
1.4 The index to and the headings and the descriptive notes in brackets
relating to provisions of taxation statutes in this agreement are for
information only and are to be ignored in construing the same.
1.5 Any question of whether a person is connected with another shall be
determined in accordance with section 839 of the TA (except that in
construing section 839 "control" has the meaning given by section 840 or
section 416 of the TA so that there is control whenever section 840 or 416
requires) which shall apply in relation to this agreement as it applies in
relation to the TA.
2. SALE AND PURCHASE
2.1 Upon the terms and subject to the conditions of this agreement and as set
out in schedules 10 and 12:-
(a) The Share Vendor shall sell as legal and beneficial owner, and RoweCom
shall purchase or procure the purchase by such other entity as is
notified by RoweCom to Xxxxxx of the US Shares with full title
guarantee with effect from Completion free from any Encumbrance
together with all accrued benefits and rights attached thereto and all
dividends declared after the Accounts Date other than dividends of
stock of Electronic Online Systems International, Inc. and Quality
Books, Inc.; and
(b) Each Asset Vendor shall sell as legal and beneficial owner (save where
Assets are subject to retention of title provisions), the Asset
Business in its jurisdiction as a going concern with effect from
Completion free from any Encumbrance (other than the Permitted
Encumbrances and/or Encumbrances pursuant to retention of title
provisions on the sale of goods arising in the ordinary course of
business) and comprising the Assets and RoweCom shall purchase or
procure the purchase by the Purchasers or such other entities as are
notified by RoweCom to Xxxxxx of each of the Asset Businesses.
2.2 The Excluded Assets and Excluded Liabilities are not included in the sale
and purchase pursuant to clause 2.1(b).
-15-
2.3 The Share Vendor waives or agrees to procure the waiver of any rights or
restrictions conferred upon it or any other person which may exist in
relation to the US Shares under the certificate of incorporation or bylaws
of the Company or otherwise.
2.4 The Consideration for such sale and purchase shall be the following amounts
and shall, subject to clause 5, be satisfied in the following manner:-
(a) (Pounds)28,500,000 (less that part of the Consideration allocated to
the French Real Property in schedule 12 whereby such consideration
shall be paid to Xxxxxx in accordance with clause 2.16) to be
satisfied in cash in pounds sterling on Completion subject to any
adjustment as provided in clause 6.10;
(b) (Pounds)1,000,000 to be satisfied by the allotment and issue to Xxxxxx
of fully paid RoweCom common stock (where the value of such stock
shall be determined on the basis of the average closing price of that
stock for the 30 days preceding the announcement of the transactions
contemplated by this agreement) on Completion subject to any
adjustment as provided by clause 6.10;
(c) (Pounds)500,000 to be satisfied in cash in pounds sterling within 30
days of the finalisation of the Completion Accounts in accordance with
clause 6 and schedule 9 subject to any adjustment as provided in
clause 6.10; and
(d) (Pounds)4,000,000 to be satisfied by the allotment and issue to Xxxxxx
of fully paid RoweCom common stock (where the value of such stock
shall be determined on the basis of the average closing price of that
stock for the period beginning 30 days up to and including the date of
the announcement and ending 30 days after the announcement of the
transactions contemplated by this agreement) within 30 days of the
finalisation of the First Quarter Accounts subject to any adjustment
in accordance with clause 6.15.
2.5 The total consideration shall be allocated between the US Shares and the
Asset Businesses and the Assets on the basis set out in schedule 12 subject
to adjustment as provided by clauses 6.10 and 6.15.
2.6 Any adjustment to the Consideration in accordance with clauses 6.10 and
6.15 is to be calculated on a global basis, then apportioned country by
country (other than to France and the US) pro rata to the purchase price
applicable to each relevant Vendor shall be allocated amongst the US Shares
and Asset Businesses and Assets on a country by country basis and in so far
as practicable all adjustments shall be made to the portion of the
Consideration allocated to the Goodwill in the relevant jurisdiction or as
otherwise agreed between RoweCom and Xxxxxx.
2.7 In order to comply with the provisions of the French Law of 17 March 1909
relating to the sale and the pledge of a business and to articles 201 and
1684 of the French Tax Code, the parties agree that at Completion, Xxxxxx
(or the French Vendor as the case may be) may either decide that:-
-16-
(a) the consideration to be paid to Xxxxxx (or the Vendors as the case may
be) by RoweCom (or the French Purchaser as the case may be), in
respect of the sale and purchase of the French Business, as set out in
schedule 12 (but excluding the Consideration for the French Real
Property), will be placed directly by RoweCom (or the French Purchaser
as the case may be) into an escrow account (the "French Escrow
Account") with the service escrow department of the Paris Bar
Association (Sequestre Juridique de l'Ordre des Avocats a la Cour
x'Xxxxx de Paris) in accordance with its standard terms and
conditions.
(b) Xxxxxx (or the French Vendor as the case may be) will provide RoweCom
(or the French Purchaser as the case may be) with a first demand bank
guarantee issued by a bank of good repute and financial standing (the
"Guarantor") in favour of RoweCom (or the French Purchaser as the case
may be), for the total amount of the consideration to be paid to
Xxxxxx (or as the case may be, the French Vendor) in relation to the
sale and the purchase of the French Business (but excluding the
Consideration to be paid for the French Real Property) and on terms
and conditions to be fully satisfactory to RoweCom or the French
Purchaser as the case may be in their absolute discretion (the "French
Bank Guarantee").
2.8 The French Escrow Account or the French Bank Guarantee, as the case may be,
will remain in full force until the later of the occurrence of the
following events:
(a) in accordance with the provisions of article 3 of the French Law of 17
March 1909 relating to the sale and the pledge of a business,
following a period of ten days reserved for claims from creditors of
the French Vendor, such ten day period beginning on the last day of
publication of the transfer of the French Business as prescribed in
article 3; or
(b) the expiration of a period of three months beginning on the date of
filing the declaration of the transfer to the French Business with the
tax authorities by the French Vendor in accordance with the provisions
of article 201 of the French Tax Code or the date the French Vendor
sends the documents evidencing the payment of all duties referred to
in article 1684 of the French Tax Code or the date of sending a letter
by the French Treasury informing the French Vendor that they will not
apply article 201 of the General Tax Code as a result of the transfer
of the French Business.
2.9 If, during the unavailability period in relation to the French Escrow
Account or as the case may be, the French Bank Guarantee and in accordance
with the provisions of article 5 of 23 of the above mentioned French Law of
17 March 1909, a creditor of the French Vendor makes a higher bid
(surenchere) than the Consideration placed into the French Escrow Account
or as the case may be, guaranteed under the French Bank Guarantee, or if
the French Escrow Account or the French Bank Guarantee, as the case may be,
appears insufficient to pay off all of the French Vendor's creditors then
Xxxxxx undertakes to RoweCom (for itself and as trustee for the French
Purchaser) to indemnify and hold indemnified RoweCom and the French
Purchaser, against any and all costs whatsoever, whether accrued,
contingent or associated, required and necessary to the extent necessary to
pay off all of the French Vendor's creditors including any such creditor
who has made a higher bid for the acquisition of the French Business.
-17-
2.10 At the end of the unavailability period referred to in paragraph 2.8
above, the French escrow holder of the French Escrow Account or as the
case may be, the Guarantor, upon first demand of RoweCom (or the French
Purchaser as the case may be), will deal with the French Escrow Account,
or as the case may be, the French Bank Guarantee, in accordance with the
terms and conditions of the French Escrow Account or the French Bank
Guarantee in the following manner:
(a) firstly, the Consideration placed into the French Escrow Account or,
as the case may be, guaranteed under the French Bank Guarantee, will
be used to pay all creditors who have made claims and who benefit
from a right to repayment by virtue of any Encumbrance on the French
Business;
(b) the balance of this Consideration will be used to pay each creditor
of the French Vendor having made a claim, and, as the case may be,
the French Treasury, by virtue of article 1684 of the French Tax
Code, or to provide for all necessary amounts set out in all claims;
and
(c) the remaining balance of this Consideration shall be paid to Xxxxxx
(or the French Vendor as the case may be).
2.11 The payment of the fees of the Sequestre Juridique de l'Ordre des Avocats
a la Cour x'Xxxxx de Paris acting as escrow holder of the French Escrow
Account, if any, will be shared equally between the parties.
2.12 In order to comply with French laws, in particular the French Law of 17
March 1909 relating to the sale and the pledge of a business and articles
201 and 1684 of the French Tax Code, the parties agree and procure to sign
at Completion the French Business Agreement and the French Escrow
Agreement or the French Bank Guarantee as the case may be, and any other
document which would be required for the sale and purchase of part or all
of the French Business to RoweCom (or the French Purchaser). The French
Business Agreement and the French Escrow Agreement or the French Bank
Guarantee, as the case may be, will reiterate those clauses of this
agreement in respect of the French Business or those clauses which are
required under French laws and which are necessary for the implementation
of this agreement within France.
2.13 Xxxxxx and any Vendor acknowledge and agree that RoweCom (or the French
Purchaser) will have full authority and discretion to provide in the
French Business Agreement for a different allocation from that set out in
schedule 12 in relation to each of the intangible and tangible assets of
the French Business between the two entities referred to as the French
Purchaser and that Xxxxxx and any Vendor will never object for any reason
whatsoever to such allocation provided that, for the avoidance of doubt,
RoweCom (or the French Purchaser) shall not be entitled to vary the
apportionment of the Consideration between the intangible and tangible
assets as set out in schedule 12.
2.14 In order to comply with those provisions of the French Law relating to the
sale and purchase of the French Real Property and in particular, the
necessity to obtain clearance of any Encumbrances on the French Real
Property before its sale and purchase to RoweCom (or the
-18-
French Purchaser), the parties agree and procure to sign at Completion the
French Real Property Option whereby the French Vendor will grant to
RoweCom or the French Purchaser, the option to buy the French Real
Property for the Consideration provided in schedule 12. The French Real
Property Option will reiterate those clauses of this agreement in respect
of the French Real Property which are required under French law or which
are necessary for the implementation of this agreement within France.
2.15 Upon complete clearance of any Encumbrance on the French Real Property,
the parties agree and procure to sign the French notarised deed agreement
which will provide for the sale and purchase of the French Real Property
by RoweCom (or the French Purchaser) at the Consideration attached to the
French Real Property set out in schedule 12. The French notarised deed
agreement will reiterate those clauses of this agreement in respect of the
French Real Property which are required under French law or which are
necessary for the implementation of this agreement within France. At the
date of execution of this notarised deed agreement, RoweCom (or the French
Purchaser) will pay to Xxxxxx (or the French Vendor) the Consideration for
the French Real Estate Property as set out in Schedule 12.
2.16 In order for the French Purchaser to be incorporated and to be registered
at the relevant Registre du Commerce et des Societes within France, the
parties agree to sign or procure that a French short term lease agreement
is signed before Completion. Pursuant to this short term lease agreement
the French Purchaser will be granted by the French Vendor, on a free
basis, the right to register its head office at the French Real Property
before Completion and to carry out its activities (and the French
Business) within the French Real Property between the Completion Date
until the execution of the French notarised deed agreement referred to in
clause 2.15, it being expressly agreed that, failing Completion taking
place as provided under clause 3.6, each party will be entitled to
terminate this short-term lease agreement subject to 30 day's prior notice
being provided by registered letter with acknowledgement of receipt.
2.17 Upon execution of the above mentioned French notarised deed agreement,
RoweCom (or the French Purchaser) undertakes to execute the French Lease
with the French Vendor. The French Lease will be expressly excluded from
the scope of the provisions of the French (Decree n)53-960 of 30 September
1953 relating to commercial lease agreements and will provide for the
general principles agreed between the parties as of the date hereof and
relating to the Shared Services between the parties. In particular, the
Lease Agreement will grant the right to the French Vendor to use, during a
maximum duration period of twelve months and under reasonable conditions,
that part of the French Real Property that will be necessary for the
French Vendor to carry out exclusively the Books Business, and will
provide for the payment by Xxxxxx (or the French Vendor) to RoweCom (or
the French Purchaser) of a monthly rent in an amount to be negotiated in
good faith between the parties, including any costs whatsoever arising
from or in respect of the use of the French Real Property by the French
Vendor and corresponding to the pro rata of that part of the French Real
Property to be occupied by the French Vendor.
2.18 In order to comply with Spanish law relating to the sale and purchase of
certain business assets, the parties agree and procure to sign at
Completion the Spanish Business Agreement in the agreed terms, and any
other document which would be required for the sale and purchase of part
or all of the Spanish Business (including the Spanish Real Property). The
-19-
Spanish Business Agreement will reiterate those clauses of this agreement
in respect of the Spanish Business which are required under Spanish laws
or necessary for the implementation of this agreement within Spain, and in
particular but without limitation, part B of schedule 3 with respect to
the Spanish Business, together with a precise and clear list and valuation
of any of the Assets transferred.
3. CONDITIONS
3.1 Completion is conditional upon the fulfilment of each of the Conditions as
follows:-
(a) the passing at the EGM (and not at any adjournment) of a resolution
to approve the sale and purchase provided for herein on the terms set
out in this agreement;
(b) all filings having been made and all or any applicable waiting and
other time periods (including extensions thereto) under the
US Xxxx-Xxxxx-Xxxxxx Anti-trust Improvements Act of 1976
(as amended) and the rules and regulations promulgated thereunder
(collectively, including such rules and regulations, the "HSR Act")
in respect of the proposed acquisition of the US Shares;
(c) the earlier of:-
(i) a notification having been made under the Investment Canada Act
(Canada) by RoweCom and confirmation being received that the
transaction is not reviewable; or
(ii) the expiry of 21 days from the certified date referred to in
paragraph 13(1)(a) of the Investment Canada Act without receipt
by RoweCom of a notice of review issued under the Investment
Canada Act; or
(iii) the waiver of this Condition by RoweCom;
(d) Xxxxxx obtaining or procuring:-
(i) the release of any guarantee, indemnity, security, bonding
liability, surety, letter of comfort or other similar
contingent liability or commitment given or entered into prior
to Completion by the Company or the Subsidiaries in relation to
obligations or liabilities of any member of the Xxxxxx Group
(past or present) other than those otherwise agreed in writing
by RoweCom prior to Completion;
(ii) the satisfaction or repayment of any debts, liabilities or
other obligations by way of borrowing (including Intra-Group
Indebtedness) of the Company or any Subsidiary other than to
the extent to which they are agreed to be provided for in the
Completion Accounts or are provided for in schedule 16; and
-20-
(iii) the release, satisfaction or removal of any and all
Encumbrances on any of the shares in any Group Company, Asset
Businesses or Assets or the assets of any Group Company other
than any Permitted Encumbrances;
(e) the delivery by Xxxxxx to RoweCom immediately prior to Completion of
a letter signed (without personal liability) by a director of Xxxxxx
(on behalf of Xxxxxx) in the form set out in schedule 13.
3.2 Both parties hereto shall use all reasonable endeavours to ensure that all
appropriate authorisations, orders, grants, consents, clearances,
licences, permissions and approvals are obtained and filings made for the
purposes of clauses 3.1(b) to 3.1(d) and shall (subject to satisfaction or
waiver in accordance with this agreement of Conditions 3.1(a), 3.1(b),
3.1(d) and 3.1(e)) proceed to Completion provided that:-
(a) as many Regulatory Consents and Third Party Consents as are capable
of being obtained have been so obtained; and
(b) if there are any jurisdictions where Regulatory Consents or Third
Party Consents are required, but are not obtained for the acquisition
by and transfer to the Purchaser of any of the Assets or US Shares in
accordance with the terms of this agreement, Completion in relation
to those Asset Businesses and/or Group Companies Assets and/or the US
Shares in such jurisdiction shall not be effected and the parties
shall:-
(i) agree to such variations to the terms of this agreement as may
be necessary to reflect the fact that Completion of some but not
all of the Group Companies or the Asset Businesses or the Assets
will occur;
(ii) use their best endeavours to obtain such authorisations, orders,
grants, consents, clearances, licences and permissions, and make
such filings as are required in order for the sale and purchase
of each of the other Group Companies and/or the Asset Businesses
and/or the Assets to take place as soon as practicable after
Completion and the parties hereby agree to enter into or procure
the entry into of any further agreements or arrangements as may
be deemed necessary in order to effect the same or to reflect
any necessary contractual arrangement to be entered into between
those members of the Group to be sold and those which will
remain within the Xxxxxx Group.
(c) If all of the Conditions (save for those compliance with which has
been waived in accordance with the terms of this agreement) have been
fulfilled other than clause 3.1(c) the parties shall proceed to
Completion except in relation to the Canadian Business where clause
3.2(b) shall apply.
3.3 Xxxxxx shall use all reasonable endeavours to procure that the Conditions
are satisfied.
3.4 RoweCom undertakes to use all reasonable endeavours to procure the
fulfilment of the Conditions set out in clause 3.1(b) to (e) by 2 October
1999. Each of the parties shall (a) comply at the earliest practical date
with any request under the HSR Act for additional
-21-
information, documents, or other material received by such party or any of
its subsidiaries from the Federal Trade Commission or the Department of
Justice or any other Governmental entity in respect of the HSR Act
filings, and (b) co-operate with the other party in connection with any
such filing and in connection with resolving any investigation or other
enquiry of any such agency or other Governmental entity with respect to
any such filing or any such transaction. Each party shall promptly inform
the other party of any communication with, and any proposed understanding,
undertaking, or agreement with, any Governmental entity regarding any such
filings or any such transaction. Neither party shall participate in any
meeting with any Governmental entity in respect of any such filings,
investigation, or other enquiry without giving the other party notice of
the meeting and, to the extent permitted by such Governmental entity, the
opportunity to attend and participate.
3.5 RoweCom may by notice in writing to Xxxxxx waive any of the Conditions
contained in clauses 3.1(b) to (e) in whole or in part; Xxxxxx may by
notice in writing to RoweCom waive the Condition contained in clause
3.1(a) in whole or in part.
3.6 If all of the Conditions (save for those compliance with which has been
waived in accordance with the terms of this agreement) have not been
fulfilled on or before 2 October 1999 either party may terminate this
agreement with effect from that date provided that if the transactions
contemplated herein have not been completed solely, due to the waiting
period or any extensions thereof under the HSR Act or under the Investment
Canada Act (Canada) not having expired or terminated then such date shall
be extended to 31 October 1999 provided further that the right to
terminate under this section shall not be available to any party whose
wilful failure to fulfil any material obligation under this clause 3 has
been the cause of or resulted in the failure to satisfy the conditions by
that date.
3.7 If this agreement terminates in accordance with clause 3.6 the obligations
of the parties shall automatically terminate save that the rights and
liabilities of the parties which have accrued prior to termination under
clauses 3.3, 3.4, 15, 18, 19, 27 and 29 shall continue to subsist.
3.8 Xxxxxx shall keep RoweCom advised of the progress towards the satisfaction
of its obligations under clause 3.3. RoweCom shall keep Xxxxxx advised of
the progress towards the satisfaction of its obligations under clause 3.4.
4. PERIOD TO COMPLETION
4.1 Xxxxxx undertakes to RoweCom to procure that each member of the Group
(including, in respect of each of the Asset Businesses, the relevant Asset
Vendor) shall unless otherwise agreed in writing by RoweCom:-
(a) operate its business and activities in their usual course and in such
a manner between today's date and the Completion Date as to ensure
that no act or event shall occur during that period which would be
reasonably expected to result in a material breach of the Warranties
upon their repetition immediately prior to Completion and will not
make or institute any material changes in its methods of purchase,
sale, management, accounting or operation during such period; and
-22-
(b) without prejudice to the generality of the foregoing, comply with
each of the undertakings set out in schedule 5,
provided that Xxxxxx shall not be liable under this clause 4.1 to the
extent that such liability has arisen as a result of any act, omission or
direction of the RoweCom Group.
4.2 If:-
(a) Xxxxxx is in material breach of any of the Warranties or there occur
circumstances, facts, matters or events from time to time subsisting
which would constitute a material breach of any of the Warranties or
would give rise to a material claim under any of the Indemnities
and/or the Tax Deed; or
(b) there shall occur any act or event between the date hereof and
Completion which would result in a material breach of any of the
Warranties were they repeated immediately prior to Completion; or
(c) there is any material breach or non-fulfilment by Xxxxxx of its
obligations hereunder,
which in any such case is incapable of remedy or, if capable of remedy, is
not remedied by Xxxxxx by the Completion Date or (if earlier) within seven
days after notice thereof from RoweCom requiring the same to be remedied
then in any such case RoweCom shall be entitled to elect by notice in
writing to Xxxxxx not to complete the purchase of the US Shares and the
Asset Businesses in accordance with clause 2.1, in which event this
agreement shall automatically terminate save that the rights and
liabilities of the parties which have accrued prior to termination under
clauses 15, 18, 19, 27 and 29 shall continue to subsist. For the purposes
of this clause 4.2, "material" means material in the context of the sale
and purchase of the Group as contemplated by this agreement when such sale
and purchase of the Group is taken as a whole.
4.3 RoweCom shall not be entitled to exercise its right to not complete under
this agreement where the right or claim arises because a customer,
employee or publisher notifies the Group or RoweCom or the Xxxxxx Group or
otherwise decides after the Announcement Date that it will cease its
business dealings or other relationship with the Group or will decrease
the level of business with the Group or change the terms on which it does
business with the Group.
4.4 Pending Completion RoweCom and any person authorised by it shall be given
full access to the Properties and to all the books and records of each
member of the Group by prior appointment during normal business hours and
without causing undue disruption to the business of the Xxxxxx Group or
the Group and the directors and employees of the Xxxxxx Group and each
member of the Group shall be instructed to give promptly all such
information and explanations as RoweCom or any such person may reasonably
request.
4.5 Xxxxxx undertakes to RoweCom that it will promptly disclose in writing to
RoweCom any matter or thing which becomes known to it after the date
hereof and prior to Completion which:-
-23-
(a) is inconsistent with any of the Warranties were they repeated at all
times prior to Completion by reference to the facts and circumstances
then subsisting; or
(b) would be likely to give rise to a claim under the Indemnities and/or
the Tax Deed.
4.6 For the avoidance of doubt, in the event that RoweCom exercises its right
to not complete the sale and purchase of the Group under clause 4.2 such
exercise of that right shall be the only remedy of RoweCom and the
Purchasers under this agreement and RoweCom shall have no other rights
under the terms of the agreement including any right to damages or
recovery of costs save in respect of fraud or fraudulent concealment.
5. COMPLETION
5.1 Completion shall, subject to clause 3.2, take place at the offices of
RoweCom's Solicitors in London on 2 October 1999 or if the Conditions are
not satisfied by that date such later date which is the second Business
Day following the Conditions being satisfied or waived in accordance with
clause 3.
5.2 In the event that any element of the Estimated Working Capital Amount is:-
(a) less than zero Xxxxxx shall procure that on Completion each Vendor
pays to the relevant Purchaser the amount necessary to satisfy any
negative portion of the Estimated Working Capital Amount specified
against that Purchaser's name in schedule 12; and
(b) greater than zero RoweCom shall procure that on Completion each
Purchaser pays to the relevant Vendor the amount specified against
that Purchaser's name in schedule 12.
5.3 On Completion each party shall, subject to clause 3.2, do those things
listed in schedule 10.
5.4 RoweCom shall not be obliged to complete the purchase of any of the US
Shares or the Asset Businesses unless Xxxxxx completes the sale of all of
the US Shares and the Asset Businesses and the payment of any sum due
under clause 5.2 simultaneously, but completion of the purchase of some US
Shares and part or some of the Asset Businesses shall not affect the
rights of RoweCom with respect to its rights to the other US Shares and
any other part or number of the Asset Businesses.
5.5 On Completion Xxxxxx and each Vendor, each for itself and as agent for all
members of the Xxxxxx Group, hereby releases each member of the Group from
any liability whatsoever (actual or contingent) to Xxxxxx or any members
of the Xxxxxx Group outstanding at Completion (other than the Intra-Group
Indebtedness and amounts owing in respect of the supply of goods in the
ordinary course of trading to the extent provided for in the Completion
Accounts).
-24-
6. COMPLETION ACCOUNTS
6.1 RoweCom and Xxxxxx shall use all reasonable endeavours to procure that,
promptly after Completion, Completion Accounts together with the statement
(the "Statement") of the Working Capital Amount, as at Completion, are
prepared in accordance with the provisions of this clause 6.
6.2 The Completion Accounts shall be prepared on the basis of the accounting
policies and procedures set out in schedule 9.
6.3 Xxxxxx shall arrange for the Completion Accounts and the Statement to be
prepared by the Group's employees with a view to such draft Completion
Accounts being delivered to RoweCom within 40 Business Days of Completion.
6.4 RoweCom shall notify Xxxxxx within 20 Business Days of receipt of such
draft Completion Accounts and the Statement whether or not it accepts them
for the purposes of this agreement.
6.5 If RoweCom notifies Xxxxxx that it does not accept such draft Completion
Accounts and Statement:-
(a) it shall, at the same time, set out in a notice in writing its
reasons in full for such non-acceptance and specify the adjustments
which, in its opinion, should be made to the draft Completion
Accounts and the Statement in order to comply with the requirements
of this agreement and deliver a copy of such notice to Xxxxxx; and
(b) the parties shall use all reasonable endeavours to meet and discuss
the objections of RoweCom and to reach agreement upon the adjustments
(if any) required to be made to the draft Completion Accounts and the
Statement.
6.6 If RoweCom is satisfied with the draft Completion Accounts and the
Statement (either as originally submitted or after adjustments agreed
between Xxxxxx and RoweCom) or if RoweCom fails to notify Xxxxxx of its
non-acceptance of the draft Completion Accounts and the Statement within
the 20 Business Day period referred to in clause 6.4, then the draft
Completion Accounts and the Statement (incorporating any agreed
adjustments) shall constitute the Completion Accounts and the Statement
for the purposes of this agreement.
6.7 If Xxxxxx and RoweCom do not reach agreement within 20 Business Days of
RoweCom's notice of non-acceptance pursuant to clause 6.5 then the matters
in dispute (and only those) shall be referred, on the application of
either party, for determination by an independent firm of internationally
recognised chartered accountants to be agreed upon by Xxxxxx and RoweCom
or, failing agreement, to be selected, on the application of either Xxxxxx
or RoweCom, by the President for the time being of the Institute of
Chartered Accountants in England and Wales or his duly appointed deputy.
The following provisions shall apply to such determination:-
(a) RoweCom and/or RoweCom's accountants and Xxxxxx and/or Xxxxxx'x
accountants shall each promptly prepare a written statement on the
matters in dispute
-25-
which (together with the relevant documents) shall be submitted to
such independent firm for determination;
(b) in giving such determination, the firm shall state what adjustments
(if any) are necessary to the draft Completion Accounts and the
Statement in respect of the matters in dispute in order to comply
with the requirements of this agreement;
(c) any such firm shall act as an expert (and not as an arbitrator) in
making any such determination which shall be final and binding on the
parties (in the absence of manifest error); and
(d) each party shall bear the costs and expenses of all counsel and other
advisers, witnesses and employees retained by it and the costs and
the expenses of the independent firm of accountants shall be borne
between Xxxxxx and RoweCom in such proportions as the firm shall in
its discretion determine or, in the absence of any such
determination, equally between Xxxxxx and RoweCom.
6.8 When Xxxxxx and RoweCom reach (or pursuant to clause 6.6 are deemed to
reach) agreement on the Completion Accounts and the Statement or when the
Completion Accounts and the Statement are finally determined at any stage
in accordance with the procedures set out in this clause 6:-
(a) the Completion Accounts and the Statement as so agreed or determined
shall be the Completion Accounts and the Statement for the purposes
of this agreement and shall be final and binding on the parties; and
(b) the Working Capital Amounts shall be as set out in the Statement.
6.9 Subject to any rule of law or any regulatory body or any provision of any
contract or arrangement entered into prior to the date of this agreement
to the contrary, Xxxxxx shall procure that each member of the Xxxxxx Group
shall, and RoweCom shall procure that each member of the Group shall,
promptly provide each other, their respective advisers, the independent
firm of chartered accountants appointed pursuant to this clause 6 to
determine the Completion Accounts and the Statement and RoweCom's
accountants and Xxxxxx'x accountants with all information (in their
respective possession or control) relating to the operations of the Xxxxxx
Group and/or the Group, as the case may be, including access at all
reasonable times to all Xxxxxx Group and Group employees, books and
records, and all co-operation and assistance, as may in any such case be
reasonably required to:-
(a) enable the production of the Completion Accounts and the Statement;
and
(b) enable any independent firm of chartered accountants appointed
pursuant to this clause 6 to determine any matters in dispute as
referred to in clause 6.7.
Xxxxxx and RoweCom hereby authorise each other, their respective advisers
and the independent firm of chartered accountants appointed pursuant to
this clause 6 to take copies of all information which they have agreed to
provide under this clause 6.9.
-26-
6.10 In relation to each Working Capital Amount (in each case the payment
being the "Final Working Capital Payment"), which is:-
(a) less than the relative Estimated Working Capital Amount, the relevant
Vendor shall pay and Xxxxxx shall procure the payment by the relevant
Vendor, failing which Xxxxxx shall itself make a payment to the
relevant Purchaser;
(b) more than the relative Estimated Working Capital Amount, the relevant
Purchaser shall pay and RoweCom shall procure the payment by the
relevant Purchaser, failing which RoweCom shall itself make a
payment, to the relevant Vendor,
of an amount equal to the difference between the relevant Working Capital
Amount and the relevant Estimated Working Capital Amount, within seven
Business Days of the agreement or determination of the Completion Accounts
(the "Final Working Capital Payment Date"), together with interest thereon
at the Agreed Rate computed from the Completion Date to the date of actual
payment thereof both dates exclusive on the basis of the actual number of
days elapsed and a 365 day year. Any payment shall be by means of
telegraphic transfer of funds to the accounts of the relevant Vendors or
Purchasers as notified to Xxxxxx or RoweCom no later than five Business
Days prior to Completion, as the case may require.
6.11 In the event that prior to the Final Working Capital Payment Date RoweCom
shall have given notice to Xxxxxx of a claim or claims under the
Warranties and/or the Indemnities and/or the Tax Deed then the following
provisions shall at the sole option of RoweCom apply to the extent that
any such claim or claims shall have been settled (in accordance with
clause 6.12) but shall not have been paid by or on behalf of Xxxxxx prior
to the Final Working Capital Payment Date, RoweCom shall be entitled to
treat its obligations hereunder to satisfy the Final Working Capital
Payment to Xxxxxx and the Vendors as being reduced pro tanto by the
amount, to the extent settled (as to liability and quantum), of such claim
or claims.
6.12 A claim shall be regarded as settled for the purposes of clause 6.11 if
either:-
(a) Xxxxxx and RoweCom (or their respective solicitors) shall so agree in
writing; or
(b) a court has awarded judgment against Xxxxxx in respect of the claim
and no right of appeal lies in respect of such judgment or the
parties are debarred whether by the passage of time or otherwise from
exercising any such right of appeal.
6.13 For the avoidance of doubt nothing contained in clause 6.11 shall
prejudice the right of RoweCom or the Purchasers to recover against Xxxxxx
otherwise than pursuant to clause 6.10 or to make any claim against Xxxxxx
under the Warranties and/or the Indemnities and/or the Tax Deed whether
before or after the Final Working Capital Payment Date whether in
accordance with the procedure specified in clause 6.10 or otherwise
provided that neither RoweCom nor the Purchasers can recover more than
once in respect of the same claim.
6.14 RoweCom shall use all reasonable endeavours to procure that, promptly
after the expiry of the First Quarter, First Quarter Accounts together
with the statement of First Quarter Profit
-00-
Xxxxxx (xxx "Xxxxx Xxxxxxx Xxxxxxxxx") are prepared on the basis of the
accounting policies and procedures set out in schedule 17. The provisions
of clauses 6.2 to 6.9 (inclusive) and clauses 6.11 to 6.13 (inclusive)
shall apply to this clause 6.14 mutatis mutandis in respect of the First
Quarter Accounts except that:-
(a) "Xxxxxx" is replaced with "RoweCom" and "RoweCom" is replaced with
"Xxxxxx" in respect of clauses 6.2 to 6.8 (inclusive);
(b) "Completion Date" and "Completion" is replaced with "First Quarter
Date";
(c) "Completion Accounts" is replaced with "First Quarter Accounts";
(d) "Statement" is replaced with "First Quarter Statement";
(e) "Working Capital Amounts" is replaced with "First Quarter Profit
Amount"; and
(f) "Final Working Capital Payment Date" is replaced with "Final First
Quarter Payment Date".
6.15 If the First Quarter Profit Amount as determined in accordance with this
clause 6 is less or more than the Estimated First Quarter Profit Amount
the value of the Second Tranche payable in accordance with clause 2.4(d)
shall be adjusted (upwards or downwards) in accordance with the following
formula:-
A x C = D
-
B
where:-
A is the First Quarter Profit Amount;
B is the Estimated First Quarter Profit Amount;
C is the Consideration (prior to any adjustment); and
D is the First Quarter Profit adjustment base figure.
If D is less than or greater than the Consideration the value of the
Second Tranche to be allotted and issued to Xxxxxx in accordance with
clause 2.4(d) shall be reduced or increased by the amount of the
difference provided that the Consideration paid to Xxxxxx shall not be
less than (Pounds)30,000,000.
6.16 During the First Quarter RoweCom will not (and shall procure that the
Purchasers and the Group or any other company in the RoweCom Group or any
associate of any such company shall not) without the prior written consent
of Xxxxxx:-
(a) sell, transfer or otherwise dispose of the Business or the Group (or
a material part of the assets of any member of the Group) whether by
a single transaction or by a series of transactions whether related
or not; or
-28-
(b) allow any member of the Group to cease to trade, to go into
receivership or administration or commence liquidation or winding-up
or suffer any similar action or process under the laws of any
jurisdiction; or
(c) materially change the nature, extent, scope or conduct of the
business of or goods dealt in or services rendered by any member of
the Group as currently carried on; or
(d) change the name of the Group provided that such restriction shall not
prevent the Group being co-branded as part of the RoweCom Group; or
(e) change the location of the principal place(s) of business of any
member of the Group; or
(f) effect any reconstruction, amalgamation, merger or consolidation of
the Group; or
(g) act or omit to act in any way with the intention of diminishing or
adversely affecting the First Quarter Profit Amount.
6.17 RoweCom shall until determination pursuant to clause 6.15 of the First
Quarter Profit Amount provide Xxxxxx on a monthly basis within 14 days of
the end of each calendar month with management accounts for the Group and
each of the Assets Businesses and the Company showing the amount of gross
profits as determined in accordance with paragraph 2 of schedule 17.
6.18 For the purposes of the definition of the First Quarter Profit Amount and
clause 6.15 all orders placed under Fedlink in relation to the Business
with any member of the Group or RoweCom or any associate of any Group
Company between Completion and 31 January 2000 shall be deemed to be
included to the extent that an equivalent order had been placed under
Fedlink by the same customer and the revenue generated by such order had
been included in the calculation of the Estimated First Quarter Profit
Amount.
6.19 In relation to the Second Tranche shares RoweCom shall issue and allot any
Second Tranche Shares to Xxxxxx (or as it shall otherwise direct) within
30 days of the determination of the First Quarter Profit Amount.
6.20 The provisions of schedule 15 shall apply in relation to the registration
of the RoweCom Shares.
6.21 To the extent necessary to ensure that a liability is only taken into
account once, an appropriate adjustment shall be made to the Working
Capital Amount or a balancing payment shall be made by RoweCom to Xxxxxx
or the French Vendor within seven days of any sum being paid to a trade
creditor that would fall to be taken into account in the Completion
Accounts or under clauses 2.9 or 2.10.
7. INDEBTEDNESS
7.1 Immediately prior to Completion, to the extent that there is any
Intra-Group Indebtedness owed:-
-29-
(a) by the Xxxxxx Group to the Company or the Subsidiaries as at
Completion, Xxxxxx shall pay or, as the case may be, repay (or
procure that the relevant member or members of the Xxxxxx Group
shall pay or, as the case may be, repay) such Intra-Group
Indebtedness by way of telegraphic transfer of funds to RoweCom's
Account for the benefit of the relevant member of the Group; and
(b) by the Group to any member of the Xxxxxx Group as at Completion,
Xxxxxx shall procure the repayment by the Company or the
Subsidiaries to any member of the Xxxxxx Group of such Intra-Group
Indebtedness by way of telegraphic transfer of funds to bank
accounts of those members.
7.2 Xxxxxx hereby irrevocably and unconditionally undertakes to pay to RoweCom
on Completion an amount, if any, equal (after allowing for all Assumed
Liabilities) to:-
(a) the aggregate amount of all bank and other similar borrowings of the
Company and Subsidiaries outstanding at Completion;
(b) the aggregate amount of all finance lease liabilities of the Group
as at Completion other than those liabilities which are set out in
schedule 16;
(c) the payment of any dividend or distribution declared and not paid in
respect of the Company and Subsidiaries prior to the Completion.
8. WARRANTIES
8.1 Xxxxxx represents and warrants to RoweCom (on behalf of itself and as
agent for the Purchasers) in the terms of the Warranties. The Warranties
shall be deemed to have been repeated immediately prior to Completion by
reference to the facts and circumstances then subsisting.
8.2 Each of the Warranties shall be construed as a separate representation and
warranty, and (unless expressly provided to the contrary) shall not be
limited by the terms of any of the other Warranties or by any other term
of this agreement.
8.3 Any information supplied by or on behalf of any member of the Group to or
on behalf of Xxxxxx or on behalf of any member of the Xxxxxx Group in
connection with the Warranties, the Disclosure Letters or otherwise in
relation to this agreement or the business and affairs of any member of
the Group shall not constitute a representation or warranty or guarantee
as to the accuracy thereof by any member of the Group and Xxxxxx
undertakes to RoweCom (on behalf of itself and as trustee of each member
of the Group and their respective directors and employees) that it will
not, and will procure that no member of the Xxxxxx Group will, bring any
and all claims which it might otherwise have against any member of the
Group (or any of their respective directors or employees in respect
thereof) and Xxxxxx undertakes to indemnify RoweCom, any member of the
Group and any of their respective directors and employees against any such
claim.
-30-
8.4 Without restricting the rights of RoweCom or the ability of RoweCom to
claim damages on any basis available to it if Xxxxxx is in breach of any
of the Warranties Xxxxxx shall pay to RoweCom on demand the amount
necessary to put the Group into the position which would have existed if
the said Warranties had not been breached. The quantum of any liability of
Xxxxxx under this clause 8.4 shall not exceed the amount calculated in
accordance with the general law as to quantum of damages for breach of
Warranties.
8.5 The liability of Xxxxxx under the Warranties and under clause 8.4 and the
Indemnities (and references in schedule 4 to the Warranties shall be
deemed to include reference to clause 8.4) shall be limited by schedule 4
if and to the extent that the limitations referred to in schedule 4 apply.
8.6 No information relating to the Group of which RoweCom has knowledge
(actual or constructive) other than that contained in or referred to in
this agreement and/or included in the Disclosure Letter and/or the Due
Diligence Reports and no investigation by or on behalf of RoweCom shall
prejudice any claim by RoweCom under the Warranties or reduce any amount
recoverable thereunder.
8.7 The parties acknowledge that RoweCom is entering into this agreement and
the other agreements referred to herein in reliance on the Warranties.
8.8 Xxxxxx acknowledges that it is the intention of RoweCom and Xxxxxx that
RoweCom acquire all the Assets and should be responsible for the Assumed
Liabilities but should not inherit or become responsible for any other
liabilities other than as agreed. Accordingly, save to the extent provided
for in the Completion Accounts and subject to those provisions of schedule
4 which are expressed to apply to this clause 8.8, Xxxxxx undertakes to
RoweCom (for itself and as trustee for each of the Purchasers and each
member of the Group) to indemnify and hold indemnified RoweCom and each of
the Purchasers and each Group Company against all liabilities whether
accrued, absolute, contingent, or otherwise (including without limitation
liabilities, as guarantor or otherwise, in respect of obligations of
others) of the Business, the Company, and/or the Subsidiaries; in each
case to the extent such liabilities exist on or prior to but not as a
result of Completion, or arise out of or relate to acts or omissions prior
to Completion; but in each case only to the extent that such liabilities
are not reflected in the Completion Accounts or are not Assumed
Liabilities or the equivalent of Assumed Liabilities of any Group Company
or any liability relating to Tax of or relating to the Company or the
Subsidiaries (which is dealt with by the Tax Deed).
8.9 For the period up until Completion Xxxxxx shall give to RoweCom all such
information and documentation relating to the Group as RoweCom shall
reasonably require to enable it to satisfy itself as to whether there has
been any breach of the Warranties.
9. PROTECTION OF GOODWILL
9.1 Xxxxxx hereby undertakes to procure that (except as otherwise agreed in
writing with RoweCom) no member of the Xxxxxx Group will either solely or
jointly with any other person (either on its own account or as the agent
of any other person):-
-31-
(a) for a period of five years (except in the case of the French Business
in which case the relevant period shall be three years) from
Completion carry on or be engaged or concerned or (except as the
holder of shares in a listed company (other than RoweCom) which
confer not more than two per cent. of the votes which can generally
be cast at a general meeting of the company) interested directly or
indirectly in the Relevant Business;
(b) for a period of five years (except in the case of the French Business
in which case the relevant period shall be three years) from
Completion solicit or accept the custom of any person in respect of
goods or services competitive with those manufactured or supplied by
any member of the Group in respect of the Relevant Business during
the period of 12 months immediately prior to Completion, such person
having been a customer of the Group in respect of such goods or
services during such period;
(c) for a period of five years (except in the case of the French Business
in which case the relevant period shall be three years) from
Completion induce, solicit or endeavour to entice to leave the
service or employment of any member of the Group, any person who
during the period of 12 months prior to Completion was an employee of
any member of the Group occupying a senior or managerial position
likely (in the opinion of RoweCom) to be:-
(i) in possession of confidential information relating to; or
(ii) able to influence the customer relationships or connections of,
any member of the Group; or
(d) use the Trade Names or any other name intended or likely to be
confused with the Trade Names.
9.2 Xxxxxx agrees that the undertakings contained in this clause 9 are
reasonable and are entered into for the purpose of protecting the goodwill
of the business of each member of the Group and that accordingly the
benefit of the undertakings may be assigned by RoweCom and its successors
in title without the consent of Xxxxxx.
9.3 Each undertaking contained in this clause 9 is and shall be construed as
separate and severable and if one or more of the undertakings is held to
be against the public interest or unlawful or in any way an unreasonable
restraint of trade or unenforceable in whole or in part for any reason the
remaining undertakings or parts thereof, as appropriate, shall continue to
bind Xxxxxx.
9.4 If any undertaking contained in this clause 9 shall be held to be void but
would be valid if deleted in part or reduced in application, such
undertaking shall apply with such deletion or modification as may be
necessary to make it valid and enforceable. Without prejudice to the
generality of the foregoing, such period (as the same may previously have
been reduced by virtue of this clause 9.4) shall take effect as if reduced
by six months until the resulting period shall be valid and enforceable.
-32-
9.5 No provision of this agreement, by virtue of which this agreement is
subject to registration (if such be the case) under the Restrictive Trade
Practices Act 1976 (unless this agreement is a non-notifiable agreement
pursuant to section 27A of that Act), shall take effect until the day
after particulars of this agreement have been furnished to the Director-
General of Fair Trading pursuant to section 24 of that Act. For this
purpose the expression "this agreement" includes any agreement or
arrangement of which this agreement forms part and which is registrable or
by virtue of which this agreement is registrable.
9.6 RoweCom hereby undertakes to procure that (except as otherwise agreed in
writing with Xxxxxx) no member of the Group or the RoweCom Group will
either solely or jointly with any other person (either on its own account
or as the agent of any other person) for a period of five years from
Completion induce, solicit or endeavour to entice to leave the service or
employment of any member of the Xxxxxx Group, any person who during the
period of 12 months prior to Completion was an employee of any member of
the Xxxxxx Group occupying a senior or managerial position likely (in the
opinion of RoweCom) to be:-
(a) in possession of confidential information relating to; or
(b) able to influence the customer relationships or connections of,
any member of the Xxxxxx Group.
10. ACTION AFTER COMPLETION AND UNDERTAKINGS OR PERMISSIONS BY XXXXXX
10.1 Forthwith after Completion, Xxxxxx shall join with RoweCom in sending out
a notice in the agreed terms to all the customers, clients or suppliers
and respective other business contacts in respect of the Business.
10.2 After Completion Xxxxxx shall promptly pass on to RoweCom all orders,
enquiries, notices, correspondence and information relating to the
Business which any member of the Xxxxxx Group may receive.
10.3 Xxxxxx shall (at its own expense) procure that the name(s) (including,
trade names and signs) of each member of the Xxxxxx Group, the name of
which include any of the Trade Names shall be changed within 30 days after
Completion so as not to include such words nor any similar words or any
words likely to be confused therewith after Completion and Xxxxxx shall
and shall procure that each such member shall from time to time after
Completion upon the request of RoweCom give any consent or confirmation
necessary for the adoption by RoweCom or any person connected with it of
any name incorporating such words.
10.4 Following Completion, Xxxxxx shall from time to time forthwith upon the
reasonable request from RoweCom at Xxxxxx'x expense do or procure the
doing of all acts and/or execute or procure the execution of all such
documents in a form reasonably satisfactory to RoweCom for the purpose of
vesting in RoweCom or as it may direct the full legal and
-33-
beneficial title to the Assets and the Business and at RoweCom's expense
otherwise giving RoweCom the full benefit of this agreement.
10.5 Each of Xxxxxx and RoweCom undertakes to the other (as trustees for the
relevant member of the RoweCom Group or the Xxxxxx Group) to procure that
each member of the Xxxxxx Group and the RoweCom Group respectively
performs in the ordinary course of business its obligations which are
partially or wholly unperformed at Completion owed to any member of the
RoweCom Group or the Xxxxxx Group in respect of ordinary trading
activities.
10.6 Xxxxxx undertakes to RoweCom to use all reasonable endeavours to procure
that the members of the Xxxxxx Group and any person or undertaking into
whose possession or ownership such books, records or documents
subsequently pass, shall preserve for a period of at least seven years
from Completion all books, records and documents of or relating to the
Group existing at Completion and which are retained by the Xxxxxx Group.
Xxxxxx undertakes to permit and allow, and to procure that the members of
the Xxxxxx Group and any person or undertaking into whose possession or
ownership such books, records or documents subsequently pass shall permit
and allow, upon reasonable notice (and in any event within seven days of
written notice being given) and during normal business hours, RoweCom
and/or the Purchasers and the officers, employees, agents and professional
advisers of RoweCom and/or the Purchasers reasonable access to such tax
and accounting books, records and documents and such other books and
records as are reasonably necessary for the Purchaser to see in connection
with the sale of the Asset Businesses and the extraction of the relevant
assets and liabilities from the Xxxxxx Group and the right to inspect the
same and make copies thereof PROVIDED THAT such access and right of
inspection may be denied in relation to any matters the subject of a
relevant claim by RoweCom or any of the Purchasers.
10.7 RoweCom undertakes to Xxxxxx to use all reasonable endeavours to procure
that the members of the RoweCom Group and any person or undertaking into
whose possession or ownership the Books and Records subsequently pass,
shall preserve for a period of at least seven years from Completion the
Books and Records. RoweCom undertakes to permit and allow, and to procure
that the members of the RoweCom Group and any person or undertaking into
whose possession or ownership the Books and Records subsequently pass
shall permit and allow, upon reasonable notice (any in any event within
seven days of written notice being given) and during normal business
hours, the Xxxxxx Group and the officers, employees, agents and
professional advisers of the Xxxxxx Group reasonable access to the Books
and Records and such other books and records as are reasonably necessary
for the Xxxxxx Group to see for audit, tax or regulatory purposes only and
the right to inspect the same and make copies thereof PROVIDED THAT such
access and right of inspection may be denied in relation to any matters
the subject of a relevant claim by Xxxxxx or any of the Vendors.
10.8 RoweCom and Xxxxxx (for itself and each relevant member of the Xxxxxx
Group) shall, at Completion, enter into the IQ Software Licence.
10.9 RoweCom and each Purchaser undertake to Xxxxxx that it shall or shall
procure that the employees of the Group shall prepare the financial
statements relating to the Group for the financial year ending 30
September 1999 and shall provide all reasonable assistance to
-34-
Xxxxxx and its accountants with regard to the audit of such financial
statements in accordance with the usual policies procedures and timetable
in relation to the preparation of the Xxxxxx Group's financial statements.
Xxxxxx and each Vendor undertake to RoweCom that it shall provide or shall
procure that all reasonable assistance is provided to RoweCom and its
accountants with regard to the preparation and audit of the 8-K filing
required by the SEC to be made within 75 days of Completion.
10.10 Xxxxxx undertakes to RoweCom (for itself and as a trustee for each member
of the RoweCom Group) that it shall indemnify and hold harmless each and
every member of the RoweCom Group from any and all costs, claims and
liabilities arising under any guarantee or indemnity given for the benefit
of the Xxxxxx Group by the Group.
10.11 Xxxxxx shall not, and shall procure that no other member of the Xxxxxx
Group shall, use, infringe or claim any right, title or interest in any of
the Intellectual Property Rights owned by the RoweCom Group after
Completion other than as permitted under or pursuant to the IQ Software
Licence, or otherwise than as required in relation to the Shared Services.
10.12 Xxxxxx shall permit RoweCom to cause a full inspection of the Canadian
Real Property to be made by municipal, building department, zoning
department, environmental department, fire department, Ministry of Health
and such other appropriate authorities as RoweCom or RoweCom's Canadian
legal counsel may consider necessary or advisable at any time and from
time to time prior to Completion in order to ensure that such properties
comply with all applicable statutes, by laws and regulations. Xxxxxx shall
provide any consents or authorisations (written or otherwise) necessary or
desirable to enable RoweCom or RoweCom's Canadian legal counsel to carry
out such investigations as they may consider necessary or advisable, as
soon as reasonably practicable after request by RoweCom therefor.
10.13 Xxxxxx hereby grants RoweCom (for itself and as trustee for each member
of the RoweCom Group):-
(a) a perpetual, royalty-free, irrevocable non-exclusive licence to use
the "Xxxxxx" name (but, for the avoidance of doubt excluding the
"Xxxxxx" domain name) in connection with the Business anywhere in the
world except in the United Kingdom; and
(b) a 12 month, royalty-free, irrevocable (for such 12 month period) non-
exclusive licence to use the "Xxxxxx" name (but, for the avoidance of
doubt excluding the "Xxxxxx" domain name) in connection with the
Business in the United Kingdom,
together in each case with the right to assign and sublease its rights
under such licences to other members of the RoweCom Group.
10.14 RoweCom and each Purchaser shall (and shall procure that the Group shall)
pay to Xxxxxx or the relevant Vendor within ten Business Days of senior
management at RoweCom or the Group being made aware that such amount has
been received, an amount equal to all sums received following Completion
in respect of the operations of the Business prior to Completion (or in
the case of the Company and the Subsidiaries which relate to any aspect
-35-
of their business) except to the extent that such sums have been taken
into account in the Completion Accounts in the calculation of the Working
Capital Amount. Xxxxxx and each Vendor shall pay to RoweCom (for itself
and on behalf of each Purchaser) within ten Business Days of senior
management at Xxxxxx being made aware that such amount has been received,
an amount equal to all sums received following Completion in respect of
the operation of the Business from and including Completion except to the
extent that such sums have been taken into account in the Completion
Accounts in the calculation of the Working Capital Amount.
10.15 RoweCom and Xxxxxx each agree to provide or to procure that the Shared
Services are provided to the other until three months' written notice is
provided by either party in accordance with clause 27 provided that such
services shall continue for a minimum of nine months from Completion.
RoweCom and Xxxxxx shall act in good faith to establish the reasonable
level of costs to be paid for by each party for the provision of the
Shared Services.
11. LIABILITIES OF THE BUSINESS
11.1 RoweCom shall:-
(a) with effect from the Completion Date assume responsibility for and
indemnify Xxxxxx against the payment or performance of the Assumed
Liabilities;
(b) without prejudice to clause 11.1(a), with effect from the Completion
Date shall pay or perform the Assumed Liabilities in accordance with
practice similar to the present performance of the relevant member of
the Xxxxxx Group in the payment, or as the case may be, the
performance of the Assumed Liabilities;
(c) procure the cancellation at Completion of those securities or
guarantees given in respect of the Assumed Liabilities by a member of
the Xxxxxx Group or by any third party, which have been expressly
specified in the Disclosure Letter and, where necessary, use all
reasonable endeavours to arrange for equivalent guarantees to be
issued to the beneficiaries. RoweCom shall indemnify Xxxxxx and the
Xxxxxx Group against any claim, liability, cost or expense incurred
by Xxxxxx or the Xxxxxx Group in respect of any such guarantee to the
extent it relates to or arises from the Assumed Liabilities or any
failure by RoweCom to comply with its obligations under this clause
11.1(c); and
(d) pay, satisfy and discharge all debts, liabilities and obligations
incurred by any member of the Xxxxxx Group in connection with the
Asset Businesses after Completion and indemnify the Xxxxxx Group
against its failure to do so.
11.2 Subject to clause 11.1 nothing in this agreement shall pass to RoweCom or
any member of the RoweCom Group or be construed as an acceptance by
RoweCom of any liability (whether accrued, absolute, contingent, known or
unknown) for anything done or omitted to be done before Completion in the
course of or in connection with the Business or the Assets.
-36-
12. RECEIVABLES
12.1 As and when required by RoweCom after Completion, each of the Asset
Vendors shall deliver or procure the delivery to RoweCom, or as it may
direct, assignments of such of the Receivables as RoweCom may specify (the
"Assigned Receivables") and each of the Asset Vendors irrevocably appoints
any director of RoweCom after Completion to act as its and their attorney
in the execution of any such assignment, such power of attorney being by
way of security to secure the relevant Asset Vendor's obligations in
connection with the sale of the Receivables.
12.2 Notwithstanding clause 12.1 Xxxxxx undertakes to hold on trust for the
benefit of RoweCom or as it may direct any payments in respect of any
Receivables received by it and to pay the same to RoweCom or as it may
direct within 5 Business Days after receipt.
12.3 In accordance with the applicable laws of the jurisdiction of the Assigned
Receivables (including Article 1690 of the French Civil Code with respect
to the Assigned Receivables in relation to the French Business), Xxxxxx
shall sign and deliver to RoweCom or as it may direct a letter in the
agreed terms from it to each of the persons from whom the Receivables are
owed requiring them to pay their respective part of the Receivables to
RoweCom or as it may direct.
12.4 In accordance with the applicable laws of the jurisdiction of the Assigned
Receivables (including Article 1527 of the Spanish Civil Code with respect
to the Assigned Receivables in relation to the Spanish Business), Xxxxxx
shall sign and deliver to RoweCom, or as it may direct, a letter in the
agreed terms from it to each of the persons from whom the Receivables are
owed requiring them to pay their respective part of the Receivables to
RoweCom or as it may direct.
13. CONTRACTS
13.1 If any of the Contracts cannot be assigned or novated to the RoweCom Group
without the consent of a third party then the parties shall use their
respective reasonable endeavours to obtain such consent.
13.2 In any case where the consent in clause 13.1 above is refused or otherwise
not obtained and until it is obtained or where any of the Contracts are
incapable of transfer to the RoweCom Group by assignment or by other
means:-
(a) Xxxxxx shall and shall procure that any relevant member of the Xxxxxx
Group shall hold such Contracts and any monies, goods or other
benefits received thereunder as trustee for RoweCom (as agent for the
RoweCom Group) and shall forthwith upon receipt of the same account
for and pay or deliver to RoweCom (or as it may direct) without any
deduction or withholding whatsoever all such monies, goods and other
benefits;
(b) RoweCom shall at its expense procure the performance of such Contracts
to the extent that they are Assumed Liabilities:-
-37-
(i) (if such sub-contracting is permissible and lawful under the
relevant Contract) as sub-contractor to the relevant member of
the Xxxxxx Group; and
(ii) where sub-contracting is not permissible, as agent for the
relevant member of the Xxxxxx Group,
and shall indemnify Xxxxxx (on behalf of itself and as trustee for the
Xxxxxx Group) against all costs, liabilities, and expenses which may
be incurred by the Xxxxxx Group as a result of any failure by RoweCom
to procure the performance of such Contracts;
(c) Xxxxxx shall, and shall procure that each member of the Xxxxxx Group
shall give all reasonable assistance to each member of the RoweCom
Group to enable it to enforce the rights of the relevant member of the
Xxxxxx Group under the Contracts and shall at all times act with
regard to the Contracts in accordance with RoweCom's reasonable
instructions from time to time; and
(d) Xxxxxx shall, and shall procure that each member of the Xxxxxx Group
shall not take any action in respect of the Contracts without the
prior written approval of RoweCom.
13.3 Nothing in this agreement shall be construed as an attempt to assign any
contract which by its terms or by law is not assignable without a third
party consent unless such consent has been given.
14. EMPLOYEES
14.1 Xxxxxx shall, and shall procure that the relevant members of the Xxxxxx
Group shall use their reasonable endeavours to retain the services of the
Assumed Employees with the intent that their contracts of employment shall
continue in force until Completion and then be transferred to the relevant
member of the RoweCom Group under the Regulations or in the case of the
Canadian Employees in accordance with the terms set out in clause 14.5
below and shall comply with all its obligations under the said contracts of
employment, under any applicable collective employees agreement (including
profit sharing plans) under statute and under any agreement with any trade
union in relation to the Asset Businesses.
14.2 RoweCom shall comply with its obligations under Regulation 10(3) of the
Regulations.
14.3 Xxxxxx shall, and shall procure that the relevant members of the Xxxxxx
Group shall, discharge and hereby undertakes to indemnify the RoweCom Group
against:-
(a) all liabilities, obligations, costs, claims and demands arising from
or in respect of any of the Retained Employees (whether for unpaid
remuneration, wrongful dismissal, unfair dismissal, redundancy, loss
of office, sex, disability or race discrimination or otherwise);
(b) all liabilities, obligations, costs, claims and demands arising from
or in respect of any of the Assumed Employees caused by any act or
omission by the Xxxxxx Group
-38-
prior to Completion (unless such liabilities, obligations, costs,
claims and demands shall arise from or in respect of any breach of
clause 14.2 or the equivalent in any other jurisdiction in which case
RoweCom shall be responsible and shall indemnify Xxxxxx accordingly;
and
(c) all liabilities, obligations, costs, claims, demands arising from or
in respect of any obligation to provide permanent health insurance
benefits to Xxx Xxxxxxx, Xxxxxxx Xxxxxxx or Xxxxxx Xxxxxx;
(d) notwithstanding any other clause of this agreement to the contrary,
all liabilities, obligations, costs, claims, demands, whatsoever,
arising from or in respect of:
(i) the dismissal of Mr Xxxx Le Strat by the French Purchaser on
economic grounds, and
(ii) the continuation of the contract of employment of
Mr Xxxx Le Strat by the French Purchaser until the term of his
notice period,
provided that the dismissal notice is sent to Mr Xxxx Le Strat by the
French Purchaser within a 30 day period following the first
preliminary meeting (entretien preable) to be held with Mr Le Strat on
28 September 1999 or any other subsequent date to be prior notified to
the French Purchaser.
Without prejudice to the provisions above, the French Purchaser shall
not offer or make, without the prior consent of Xxxxxx (or the French
Vendor), such consent being not unreasonably withheld, any payment to
Mr Xxxx Le Strat exceeding his entitlements under his contract of
employment, the in-house collective agreement (accord d'entreprise
interne) currently applicable to the French Vendor and more generally,
French Employment law, except if such payment is ordered by an
enforceable court decision against which the French Purchaser has
filed any admissible appeal (voie de recours).
14.4 If any contract of employment or collective agreement or established
customs and practice or equivalent information has not been disclosed in
writing to RoweCom, and shall have effect as if originally made between
RoweCom and any employee or a trade union as a result of the provisions of
the Regulations or otherwise by operation of law RoweCom may, upon becoming
aware of the application of the Regulations to such contract of employment
or collective agreement or established customs and practice, terminate such
contract or agreement forthwith and Xxxxxx shall (provided that RoweCom has
terminated such contract or agreement within one month of becoming aware of
it) indemnify RoweCom (on behalf of itself and as trustee for the
Purchasers) against every liability, obligation, cost, claim or demand
arising out of such termination and against any sum payable to or on behalf
of any such employee or trade union in respect of his employment and
against any liability, obligation, cost, claim or demand arising out of the
obligation of the Purchaser to give effect to such collective agreement or
established custom and practice;
-39-
14.5 The Canadian Purchaser shall offer employment, effective from Completion,
to all of those Canadian Employees, who are:-
(a) active employees of the Canadian Business; and
(b) Canadian Employees on temporary leave of absence or layoff or
disability,
(collectively the "Employees") on terms and conditions of employment
including salary, incentive, compensation, benefits, positions and
responsibilities which are substantially similar and in any event no less
favourable than those presently paid to the employees now engaged in the
Canadian Business. The Canadian Purchaser shall recognise the service of
the employees with the relevant Vendor or its predecessors up to the
Completion Date for all purposes as if such service had occurred with the
Canadian Purchaser and in giving notice to the Employees of matters
referred to in this clause as is considered reasonable in the
circumstances by the Canadian Purchaser.
14.6 Xxxxxx shall use its best efforts to obtain, or procure, that pursuant to
articles L.412-18, L.425-1, L.436-1 or any other applicable provisions of
the French Employment Code, the transfer of the legally protected French
Employees to the French Purchaser is irrevocably and unconditionally
approved in writing by the relevant French Employment inspector prior to
Completion. In the event that: (i) such approval is obtained after
Completion, any of the terms and conditions of this agreement in relation
to the Assumed Employees will apply and RoweCom (or the French Purchaser)
shall reimburse to Xxxxxx (or the French Vendor) the costs arising from
the employment of the legally protected French Employees between the
Completion Date and the day following the date of notification by the
relevant French Employment inspector to the French Vendor of the
authorisation to transfer the legally protected French Employees to
RoweCom or the French Purchaser or (ii) such approval is not obtained,
then the protected French Employees whose transfer has not been approved
by the French Employment inspector will not be transferred to the French
Purchaser, and RoweCom and the French Purchaser shall indemnify and hold
harmless the French Vendor against all liabilities, obligations, costs,
claims and demands arising in respect of such employees not being
transferred.
14.7 In respect of any employee of the relevant Asset Vendor of the Canadian
Business who does not accept RoweCom's or the relevant Purchaser's offer
of employment the Purchaser and RoweCom shall indemnify and hold harmless
Xxxxxx and the Canadian Vendor against all liabilities, obligations,
costs, claims and demands arising in respect of any employees not
accepting such offer of employment.
14.8 Xxxxxx acknowledges and agrees that, notwithstanding Completion, it shall
continue to have sole responsibility and liability for the payment of tax
pursuant to the Employer Health Tax Act (Ontario) or any similar
legislation in respect of all reimbursement paid to employees of the Group
in respect of services provided during the period up to Completion (the
"pre-closing remuneration"), whether or not the same is paid by Xxxxxx or
any member of the Xxxxxx Group or RoweCom or any member of the RoweCom
Group and whether or not before or after Completion. At the request of
Xxxxxx, RoweCom or the relevant employing member of the RoweCom Group
shall provide Xxxxxx with particulars
-40-
of all payments made by RoweCom or the relevant employing member of the
RoweCom Group.
14.9 The Purchaser of the Spanish Business shall offer employment, effective
from the Completion Date, to all of the Spanish employees of the Spanish
Business, who are active employees of the Spanish Business and all the
employees of the Spanish Business who are employees of the Business on
temporary leave of absence or layoff or disability (collectively the
"Spanish Employees") on the same terms and conditions of employment
including salary, incentive, compensation, benefits, social security
payments, positions and responsibilities that those presently paid to the
employees now engaged in the Spanish Business, subrogating in all the
rights and obligations arising from the Spanish Employee's corresponding
employment contracts and Collective Agreement, pursuant to article 44 of
the Spanish Workers' Statutes, undertaking to respect all the rights
acquired and positions consolidated by the Spanish Employees with respect
to their seniority, salary and other rights.
14.10 The Purchaser of the Spanish Business shall recognise the service of, the
employees with the Spanish Vendor or its predecessors up to the Completion
Date for all purposes as if such service had been with the Spanish
Purchaser in giving notice to the Spanish Employees of the matters
referred to in this clause as is considered reasonable in the
circumstances by the Spanish Purchaser.
14.11 Within five Business Days of the Completion Date the employment of the
Spanish Employees' with the Spanish Vendor shall be cancelled and those
employees shall be registered at the Social Security office simultaneously
as being employed by the Spanish Purchaser.
14.12 Both parties undertake to notify each employee affected, in writing, of
this agreement as set out in article 44 of the Workers Statute, for the
appropriate legal purposes, indicating the Completion Date as the date on
which the Spanish Employees will be transferred.
14.13 The salaries, wages and other company obligations arising from different
labour relations with the Spanish Employees, expressly including Social
Security contributions, incurred up to the date of this agreement, will be
borne by the Spanish Vendor in particular those which might arise from the
revision of salaries, if this is taking place at the moment at which this
agreement is signed and the negotiations with the Spanish Employees with
respect to the mentioned salary negotiations, will be carried out jointly
by the Spanish Vendor and the Spanish Purchaser. The Spanish Purchaser
will only be responsible for such costs incurred from the date of this
agreement. However, the Spanish Vendor will pay the salary, incentive,
compensation, benefits of the Spanish Employees and pay the Social
Security office the amounts corresponding to the period from the date of
this agreement and Completion Date.
14.14 Neither RoweCom nor any Purchaser of the Spanish Business shall have any
obligations to or any liability for any employee of the relevant Asset
Vendor in the Spanish Business to whom an offer of employment is not
required to be made by the relevant Purchaser pursuant to this agreement
or to any employee of the relevant Asset Vendor of the Spanish Business
who does not accept RoweCom's or the relevant Purchaser's offer of
employment.
-41-
14.15 RoweCom shall be responsible for and shall indemnify the Xxxxxx Group
from any liability arising from the US Workers' Adjustment Retraining
Notification Act, and state law equivalents, resulting from actions or
inactions of:
(a) the RoweCom Group at or after Completion; or
(b) Xxxxxx or the Group prior to Completion,
taken or omitted at the direction of any member of the RoweCom Group.
14.16 Through and after the Completion Date, Xxxxxx, the Xxxxxx Group, the
subsidiary undertakings of the Company not appearing on schedule 2,
Rowecom, the Company and the Group Companies shall act and cooperate so
as to accomplish, each at its or their own expense and only insofar as
may be lawful and reasonably feasible, the following as to those benefit
programs maintained by the Company or a Subsidiary for the benefit of any
of their employees or their eligible dependents and beneficiaries which
programs are also maintained as of the date hereof by subsidiary
undertakings of the Company not appearing on schedule 2 for the benefit
of any of their employees or their eligible dependents and beneficiaries
(the "Shared U.S. Benefit Plans"):
(a) The Xxxxxx Group (or the subsidiary undertakings of the Company not
appearing on schedule 2, as determined by Xxxxxx), shall have sole
responsibility for and authority over each Shared U.S. Benefit Plan
subsequent to the Completion Date, including the Company's 401(k)
Plan.
(b) The account balances of the employees of the Company Group as of the
Completion Date under the Company's 401(k) Plan shall be fully
vested as of the Completion Date. Such balances will be distributed
in due course following the Completion Date to such employees.
Recipients of such distributions who are eligible to and elect to
roll over the distributions may, to the extent those distributions
are paid in cash or in promissory notes of the employees, to
RoweCom's 401(k) Plan.
(c) The employees of the Group Companies shall cease to be eligible to
participate in the Shared U.S. Benefit Plans immediately after the
Completion Date.
(d) The employees of the Group Companies shall be eligible to
participate in the benefit arrangements generally applicable to
other employees of RoweCom immediately after the Completion Date
and, in the case of such arrangements as provide benefits of the
same character as those of the Shared US Benefit Plans on a basis as
transparent to the employees in aggregate as may be possible
notwithstanding the different terms of the U.S. Shared Benefit Plans
and any applicable Rowecom benefit arrangement. By way of
illustration, insurers permitting any health insurance coverage of
Rowecom which imposes an exclusion for pre-existing conditions shall
not impose that exclusion as to a condition which would not be
pre-existing condition under the comparable Shared U.S. Benefit Plan
and shall credit against any deductible or co-payment qualifying
expenses paid and incurred in any portion of applicable period
preceding the Completion Date but while the individual involved was
covered under the comparable Shared U.S. Benefit Plan.
-42-
Should any of the foregoing prove impractical, Rowecom and Xxxxxx shall
consult in good faith and attempt to agree on alternatives which as nearly
as possible carry out the intentions of the foregoing. This paragraph is
not intended to confer any rights on any third party beneficiary or to in
any way limit or constrain the authority of any of the parties mentioned
herein to modify the terms and conditions of employment of their respective
employees subsequent to the Completion Date.
15. CONFIDENTIAL INFORMATION
15.1 Xxxxxx shall:-
(a) not, and shall procure that no other member of the Xxxxxx Group (while
it remains a member) shall, use or disclose to any person Business
Confidential Information or RoweCom Group Confidential Information;
and
(b) use all reasonable endeavours to prevent the use or disclosure of
Business Confidential Information by any director, officer, employee,
adviser or agent of the Xxxxxx Group.
15.2 Clause 15.1 does not apply to the:-
(a) disclosure of Business Confidential Information to or at the written
request of the RoweCom Group;
(b) use or disclosure of Business Confidential Information or RoweCom
Group Confidential Information required to be disclosed by law,
regulation, any revenue or other authority or the London Stock
Exchange;
(c) disclosure of Business Confidential Information or RoweCom Group
Confidential Information to professional advisers for the purpose of
advising Xxxxxx;
(d) disclosure of Business Confidential Information or RoweCom Group
Confidential Information in connection with the enforcement of
Xxxxxx'x rights under this agreement or any documents entered into
pursuant to or in connection with this agreement; or
(e) Business Confidential Information or RoweCom Group Confidential
Information which is in the public domain other than by Xxxxxx'x
breach of clause 15.1.
15.3 RoweCom shall:-
(a) not, and shall procure that no other member of the RoweCom Group
(whilst it remains a member) shall, use or disclose to any person any
Xxxxxx Confidential Information; or if clause 3.7 or 4.2 applies, the
Business Confidential Information; and
-43-
(b) use all reasonable endeavours to prevent the use or disclosure of
Xxxxxx Confidential Information or, if clause 3.7 or 4.2 applies the
Business Confidential Information by any director, officer, employee,
adviser or agent of the RoweCom Group.
15.4 The provisions of clause 15.2 shall mutatis mutandis apply in relation to
clause 15.3.
15.5 In the event that clauses 3.7 or 4.2 apply RoweCom shall within 7 days
return to Xxxxxx or destroy all Xxxxxx Confidential Information and
Business Confidential Information and Xxxxxx shall return to RoweCom or
destroy all RoweCom Confidential Information.
16. PURCHASER WARRANTIES
RoweCom and each Purchaser (excluding the French Purchaser) warrant to
Xxxxxx that:-
16.1 it is duly organised and subsisting in its country of organisation and has
full corporate power to enter into this agreement and to perform the
obligations incurred by it and has taken all necessary corporate action to
authorise the entry into and performance of its obligations under this
agreement;
16.2 this agreement constitutes, and the other documents executed by RoweCom and
any Purchaser which are to be delivered at Completion will, when executed,
constitute binding obligations of RoweCom and each Purchaser in accordance
with its respective terms; and
16.3 the execution and delivery of this agreement, and the performance by
RoweCom and any Purchaser of its obligations under it, will not:-
(a) result in a breach of any provision of its constitutional documents
which breach would affect the performance by RoweCom or any Purchaser
of its obligations under this agreement; or
(b) result in a breach of any order, judgment or decree of any court,
governmental agency or regulatory body to which it is a party or by
which it is bound; or
(c) require the consent of its shareholders.
16.4 the RoweCom Shares have been duly authorised, and when issued and delivered
to Xxxxxx in accordance with this agreement, will be validly issued, fully
paid, and non-assessable and free of any Encumbrance and restrictions on
transfer, other than restrictions on transfer arising under applicable US
securities laws by reason of the fact that such shares were issued without
registration or qualification under such laws;
16.5 since 8 March 1999, RoweCom has timely filed with the SEC all forms,
reports, registration statements, and other documents required to be filed
by it;
16.6 as of their respective dates, RoweCom's SEC Filings complied in all
material respects with all applicable requirements of the Securities Act
and the Exchange Act and the rules and regulations promulgated thereunder,
and did not contain any untrue statement of a material
-44-
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and
16.7 RoweCom's financial statements (including any related notes) included in
RoweCom's SEC Filings were prepared in accordance with generally accepted
accounting principles consistently applied and present fairly in all
material respects the consolidated financial position, results of
operations, changes in stockholders' equity, and cash flows, as
applicable, of RoweCom and its consolidated subsidiaries as of the dates
and for the periods indicated; subject, in the case of unaudited interim
consolidated financial statements, to condensation, the absence of
footnote disclosure, and normal, recurring end-of-period adjustments, the
effect of which was not and will not be material.
16.8 RoweCom is not aware of any matter, circumstance or thing which is or may
constitute a breach of the Warranties, Indemnities, any other term of this
agreement or the Tax Deed and which RoweCom is aware would give RoweCom
the right to not complete this agreement, and RoweCom confirms it has no
current intention of not completing this agreement.
RoweCom warrants to Xxxxxx that:-
16.9 RoweCom is an "accredited investor" within the meaning of that term as
used in Regulation D promulgated under the Securities Act;
16.10 RoweCom will acquire the US Shares only for its own account, for
investment, and not with a view to, or for transfer in connection with,
any distribution in violation of the Securities Act or any rule or
regulation thereunder;
16.11 RoweCom has had adequate opportunity to obtain from Xxxxxx sufficient
information to evaluate the merits and risks of an investment in the US
Shares;
16.12 RoweCom has sufficient experience in business, financial, and investment
matters to be able to evaluate the merits and risks of an investment in
the US Shares and to make an informed decision with respect to such
investment;
16.13 RoweCom can afford a complete loss of its investment in the US Shares and
is able to bear the economic risk of holding the US Shares for an
indefinite period;
16.14 RoweCom understands and agrees that (a) the US Shares have not been
registered under the Securities Act, and are "restricted securities"
within the meaning of Rule 144 under the Securities Act, (b) the US Shares
cannot be sold, transferred, or otherwise disposed of unless they are
subsequently registered under the Securities Act or unless an applicable
exemption from such registration is available, (c) Xxxxxx has no
obligation to register the US Shares under the Securities Act, and (d) any
certificates representing the US Shares will bear restrictive legends
referring to the restrictions on transfer imposed by the Securities Act.
-45-
17. PENSIONS
The provisions of schedule 7 shall apply in relation to the employees of
the members of the Group.
18. ANNOUNCEMENTS
18.1 No party shall disclose the terms of this agreement nor any other agreement
referred to in this agreement (except those matters set out in the press
release in the agreed terms) and each party shall procure that each of its
Related Persons and its professional advisers shall not make any such
disclosure without the prior consent of the other party unless disclosure
is:-
(a) to its professional advisers; or
(b) required by law (including, for the avoidance of doubt, United States
securities laws) or the rules of the London Stock Exchange, the New
York Stock Exchange, the SEC or other regulatory body (the
"Requirements") or pursuant to regulatory filing with governmental
authorities or requests in connection therewith required to satisfy
the Conditions and disclosure shall then only be made by that party:-
(i) after it has taken all such steps as may be reasonable in the
circumstances to agree the contents of such announcement with the
other party before making such announcement and provided that any
such announcement shall be made only after notice to the other
party/parties except where such steps are reasonably considered
by either party to be contrary to the Requirements after prior
consultation with their respective legal counsel; and
(ii) to the person or persons and in the manner required by the
Requirements or as otherwise agreed between the parties,
provided that this clause 18.1 does not apply to announcements,
communications or circulars made or sent by RoweCom after Completion to
customers, clients or suppliers of any member of the Group to the extent
that it informs them of RoweCom's acquisition of the Business or to any
announcements containing only information which has become generally
available.
18.2 The restrictions contained in clause 18.1 shall apply without limit of time
and whether or not this agreement is terminated.
19. COSTS AND TAXES
19.1 Unless expressly otherwise provided in this agreement each of the parties
shall bear its own legal, accountancy and other costs, charges and expenses
connected with the sale and purchase of the Group. RoweCom shall be
responsible for any stamp duty payable in the United Kingdom in connection
with the sale and purchase set out in this agreement.
-46-
19.2 RoweCom shall pay (or procure the payment) all of registration tax (plus
interest and penalties) in respect of or arising from the sale of the
French Business.
19.3 RoweCom shall pay (or procure the payment) of all goods and services tax,
Quebec sales tax and provincial sales tax (plus interest and penalties)
payable in respect of or arising from the sale of the Canadian Business.
19.4 RoweCom shall pay (or procure the payment) of all registration tax (plus
interest and penalties) in respect of or arising from the sale of the
Spanish Business.
19.5 RoweCom shall indemnify and hold indemnified Xxxxxx and each of the
Vendors against any liability, claim, cost or expense which they suffer or
incur as a result of any failure by RoweCom to comply with clauses 19.2,
19.3 and 19.4.
20. EFFECT OF THIS AGREEMENT AND COMPLETION
20.1 This agreement shall be effective to create an interest in the Canadian
Real Property only if the subdivision control provisions of the Xxxxxxxx
Xxx, 0000, (Ontario) or any successor or similar legislation is complied
with by Xxxxxx on or before Completion and Xxxxxx shall proceed diligently
at its own expense to obtain any necessary consent on or before
Completion. If requested by RoweCom, Xxxxxx shall ensure that any deed or
transfer of Canadian Real Property to be delivered on Completion shall
contain the statements contemplated by sections 49(21a)(a) and (b) of the
Xxxxxxxx Xxx, 0000.
20.2 The terms of this agreement (insofar as not performed at Completion and
subject as specifically otherwise provided in this agreement) shall
continue in force after and notwithstanding Completion.
20.3 The remedies of RoweCom in respect of any breach of any of the Warranties
shall continue to subsist notwithstanding Completion.
21. ALTERNATIVE DISPUTE RESOLUTION
21.1 The parties shall attempt in good faith to resolve any dispute or
difference arising out of or relating to this agreement promptly through
negotiations between Mr. L. Xxxxxx Xxxxxx and Xx. Xxxxxxx X. Xxxx (or, in
the event that either of these persons is no longer involved in the
respective companies, those persons holding the same or similar positions
within the relevant company) or by their duly authorised representatives
who have authority to settle the same.
21.2 If the dispute or difference is not resolved as a result of such
negotiation within ten Business Days, either party may propose to the
other in writing that structured negotiations be entered into with the
assistance of a neutral adviser or mediator ("Mediator").
21.3 If the parties are unable to agree on a Mediator or if the Mediator agreed
upon is unable or unwilling to act, either party shall within ten Business
Days from the date of the proposal to appoint a Mediator or within ten
Business Days of notice to either of them that he is unable
-47-
or unwilling to act, apply to the London Centre for Dispute Resolution
("CEDR") to appoint a Mediator.
21.4 The parties shall within ten Business Days of the appointment of the
Mediator meet with him/her in order to agree a programme for the exchange
of any relevant information and the structure to be adopted for the
negotiations to be held in the City of London. If considered appropriate,
the parties may at any stage seek assistance from CEDR to provide guidance
on a suitable procedure.
21.5 Unless concluded within a written legally binding agreement all
negotiations connected with the dispute or difference shall be conducted
in confidence and without prejudice to the rights of the parties in any
future proceedings.
21.6 If the parties accept the Mediator's recommendations or otherwise reach
agreement on the resolution of the dispute or difference, such agreement
shall be reduced to writing and, once it is signed by Mr. L. Xxxxxx Xxxxxx
and Xx. Xxxxxxx X. Xxxx (or in the event that these persons are no longer
involved in the respective companies, those persons holding the same or
similar positions within the relevant company) or, by their duly
authorised representatives, shall be binding on the parties.
21.7 Failing agreement, either of the parties may invite the Mediator to
provide a non-binding but informative opinion in writing. Such opinion
shall be provided on a without prejudice basis and shall not be used in
evidence in any proceedings commenced pursuant to the terms of this
agreement without the prior written consent of both parties.
21.8 If the parties fail to reach agreement in the structured negotiations
within 20 Business Days of the Mediator being appointed, then the dispute
or difference between them shall be referred to arbitration in accordance
with clause 21.9.
21.9 If the parties fail to reach agreement in the structured negotiations in
accordance with clause 21.8, any dispute or difference arising out of or
relating to the agreement shall be referred to and determined by
arbitration in London.
(a) The arbitral tribunal shall be composed of three arbitrators
appointed as follows:-
(i) each party shall nominate an arbitrator, and the two
arbitrators so appointed shall appoint a third arbitrator who
shall act as president of the arbitral tribunal;
(ii) if either party fails to nominate an arbitrator within 20
Business Days of receiving notice of the nomination of an
arbitrator by the other party, such arbitrator shall at the
request of that party be appointed by the senior partner of
Ernst & Young;
(iii) if the two arbitrators to be nominated by the parties fail to
agree upon a third arbitrator within 20 Business Days of the
appointment of the
-48-
second arbitrator, the third arbitrator shall be appointed on
the nomination of the senior partner of Ernst & Young at the
written request of either party;
(iv) should a vacancy arise because any arbitrator dies, resigns,
refuses to act, or becomes incapable of performing his
functions, the vacancy shall be filled by the method by which
that arbitrator was originally appointed.
(b) The procedure to be followed shall be agreed by the parties or, in
default of agreement, determined by the arbitral tribunal.
(c) In the event of default by either party in respect of any procedural
order made by the arbitral tribunal, the arbitral tribunal shall have
the power to proceed with the arbitration and to deliver its award.
(d) Any award or procedural decision of the arbitral tribunal shall if
necessary be made by a majority and, in the event that no majority may
be formed, the president of the arbitral tribunal appointed in
accordance with clause 21.9(a)(i) shall make his determination as if
he were a sole arbitrator.
22. FURTHER ASSURANCES
Following Completion, Xxxxxx shall at Xxxxxx'x expense from time to time
forthwith upon request from RoweCom do or procure the doing of all acts
and/or execute or procure the execution of all such documents in a form
reasonably satisfactory to RoweCom for the purpose of vesting in:-
(a) RoweCom the full legal and beneficial title to the:-
(i) US Shares and, at RoweCom's expense, otherwise giving RoweCom
the full benefit of this agreement; and
(ii) Assets and Asset Businesses;
(iii) the Intellectual Property except where such Intellectual
Property is the subject of licences to any Group Company as at
the date hereof; and
(b) the Purchasers or any Group Company title to the Properties in
accordance with paragraph 18.3 of schedule 3 or insofar as any consent
or licence may be required by reason of the transactions set out in
this agreement or otherwise to enable any of the Properties to
continue to be vested with title as aforesaid in any Group Company
when under the ownership or control of RoweCom or other person being
entitled for the time being to the benefit of the Warranties.
-49-
23. ENTIRE AGREEMENT
23.1 Each party on behalf of itself and as agent for each of its Related
Persons acknowledges and agrees with the other party (each such party
acting on behalf of itself and as agent for each of its Related Persons)
that:-
(a) this agreement together with any other documents referred to in this
agreement (together the "Transaction Documents") constitutes the
entire and only agreement between the parties and their respective
Related Persons relating to the subject matter of the Transaction
Documents;
(b) neither it nor any of its Related Persons have been induced to enter
into any Transaction Document in reliance upon, nor have they been
given, any warranty, representation, statement, assurance, covenant,
agreement, undertaking, indemnity or commitment of any nature
whatsoever other than as are expressly set out in the Transaction
Documents and, to the extent that any of them have been, it (acting
on behalf of itself and as agent on behalf of each of its Related
Persons) unconditionally and irrevocably waives any claims, rights or
remedies which any of them might otherwise have had in relation
thereto;
PROVIDED THAT the provisions of this clause 23 shall not exclude any
liability which any of the parties or, where appropriate, their Related
Persons would otherwise have to any other party or, where appropriate, to
any other party's Related Persons or any right which any of them may have
in respect of any statements made fraudulently by any of them prior to the
execution of this agreement or any rights which any of them may have in
respect of fraudulent concealment by any of them.
24. VARIATIONS
This agreement may be varied only by a document signed by each of Xxxxxx
and RoweCom and the other parties hereby agree to any such variation.
25. WAIVER
25.1 A waiver of any term, provision or condition of, or consent granted under,
this agreement shall be effective only if given in writing and signed by
the waiving or consenting party and then only in the instance and for the
purpose for which it is given.
25.2 No failure or delay on the part of any party in exercising any right,
power or privilege under this agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power or
privilege preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
25.3 No breach of any provision of this agreement shall be waived or discharged
except with the express written consent of Xxxxxx and RoweCom.
-50-
25.4 The rights and remedies herein provided are cumulative with and not
exclusive of any rights or remedies provided by law and are consistent
with the terms and limitations set out in this agreement.
26. INVALIDITY AND INCONSISTENCY
26.1 If any provision of this agreement is or becomes invalid, illegal or
unenforceable in any respect under the law of any jurisdiction:-
(a) the validity, legality and enforceability under the law of that
jurisdiction of any other provision; and
(b) the validity, legality and enforceability under the law of any other
jurisdiction of that or any other provision,
shall not be affected or impaired in any way.
26.2 In the event of any inconsistency between the provisions of the
Transaction Documents this agreement shall prevail.
26.3 In the event of any discrepancy or dispute over or differences between the
provisions of the Transaction Documents, the parties agree that the
provisions of this agreement shall prevail.
27. NOTICES
27.1 Any notice, demand or other communication given or made under or in
connection with the matters contemplated by this agreement shall be in
writing and shall be delivered personally or sent by fax or prepaid first
class post (air mail if posted to or from a place outside the United
Kingdom):-
In the case of RoweCom to:-
000 Xxxxxxx Xxxxxx
Xxxxxxxxx
Xxxxxxxxxxxxx
Xxxxxx Xxxxxx of America
Fax: (000) 000 000-0000
Attention: Xx X. Xxxx
with a copy to both:-
Xxxxx Xxxxxx (ref.)
C/- Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Fax: (000) 000 000-0000
And
-51-
Xxxxxx Broke (file no:ROW00001/001)
C/- Ashurst Xxxxxx Xxxxx
Xxxxxxxxx Xxxxx
0 Xxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Fax: 0000-000 0000
In the case of Xxxxxx to:-
0/xx/ Xxxxx
XXX Xxxxx
Xxxxxxxx Xxxx
Xxxxxxx
Xxxxxx XX0 0XX
Fax: 0000-000 0000
Attention: Xx X. Xxxxxxx (Group Finance Director)
with a copy to:-
Xxxxxxxx Xxxxxxx
x/x Xxxxxx
0 Xxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Fax: 0171 606 3305
and shall be deemed to have been duly given or made as follows:-
(a) if personally delivered, upon delivery at the address of the relevant
party;
(b) if sent by first class post, two Business Days after the date of
posting;
(c) if sent by air mail, five Business Days after the date of posting; and
(d) if sent by fax, upon receipt, in complete readable form;
provided that if, in accordance with the above provisions, any such notice,
demand or other communication would otherwise be deemed to be given or made
after 5.00 p.m. on a Business Day such notice, demand or other
communication shall be deemed to be given or made at 9.00 a.m. on the next
Business Day.
27.2 A party may notify the other party to this agreement of a change to its
name, relevant addressee, address or fax number for the purposes of clause
27.1 provided that such notification shall only be effective on:-
(a) the date specified in the notification as the date on which the change
is to take place; or
(b) if no date is specified or the date specified is less than five
Business Days after the date on which notice is given, the date
falling five Business Days after notice of any such change has been
given.
-52-
28. COUNTERPARTS
This agreement may be executed in any number of counterparts which together
shall constitute one agreement. Any party may enter into this agreement by
executing a counterpart and this agreement shall not take effect until it
has been executed by all parties.
29. GOVERNING LAW AND JURISDICTION
29.1 This agreement (and any dispute, controversy, proceedings or claim of
whatever nature arising out of or in any way relating to this agreement or
its formation) shall be governed by and construed in accordance with
English law without regard to conflicts of law principles.
29.2 Subject to clause 21, each of the parties to this agreement irrevocably
agrees that the courts of England shall have exclusive jurisdiction to hear
and decide any suit, action or proceedings, and/or to settle any disputes,
which may arise out of or in connection with this agreement (respectively,
"Proceedings" and "Disputes") and, for these purposes, each party
irrevocably submits to the jurisdiction of the courts of England.
29.3 Each party irrevocably waives any objection which it might at any time have
to the courts of England being nominated as the forum to hear and decide
any Proceedings and to settle any Disputes and agrees not to claim that the
courts of England are not a convenient or appropriate forum for any such
Proceedings or Disputes and further irrevocably agrees that a judgment in
any Proceedings or Disputes brought in any court referred to in this clause
29 shall be conclusive and binding upon the parties and may be enforced in
the courts of any other jurisdiction.
29.4 Without prejudice to any other permitted mode of service the parties agree
that service of any writ, notice or other document ("Documents") for the
purpose of any Proceedings begun in England shall be duly served upon it if
delivered personally or sent by registered post, in the case of:-
(a) Xxxxxx to 0/xx/ Xxxxx, XXX Xxxxx, Xxxxxxxx Xxxx, Xxxxxxx, Xxxxxx XX0
0XX (marked for the attention of the Company Secretary); and
(b) RoweCom to 000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx, Xxxxxx Xxxxxx
of America (marked for the attention of Xx X. Xxxx)
or such other person and address in England and/or Wales as Xxxxxx shall
notify RoweCom in writing or vice versa from time to time.
30. NO ASSIGNMENT
Neither party may assign the benefit of this agreement without the prior
written consent of Xxxxxx and RoweCom other than any intra-group transfer
on the basis that the transferee will transfer back the benefit of this
agreement to the relevant transferor immediately it ceases to be in the
same group as the transferor.
-53-
IN WITNESS whereof this agreement has been executed on the date first above
written.
-54-
SCHEDULE 1
Particulars relating to the Company
Name: Xxxxxx, Inc.
Authorised share capital: 50,000 shares
Issued share capital: 18,092 shares
Directors: Xxxxxx X. Xxxx
Xxxxx Xxxxxxx
Secretary: Xxxx Xxxxxxx
Auditors: Deloitte & Touche
Accounting reference date: Fiscal year ends 30 September
Registered Office: The Corporation Trust Company
Corporation Trust Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx
Xxx Xxxxxx Xxxxxx
-55-
SCHEDULE 2
Particulars relating to Subsidiaries
Name: The Xxxxx Company, Inc.
Authorised share capital: 1,500 "Class A" Voting Common Shares
1,166 "Class B" Non-Voting Common Shares
8,750 9% Preferred Shares
Issued share capital: 1,500 "Class A" Voting Common Shares
1,166 "Class B" Non-Voting Common Shares
8,750 9% Preferred Shares
Directors: Xxxxxx X. Xxxx
Xxxxx Xxxxxxx
Secretary: Xxxx Xxxxxxx
Auditors: Deloitte & Touche
Accounting reference date:
Registered Office: Massachusetts
Name: Apogee Holdings, Inc.
Authorised share capital: 1,000 shares
Issued share capital: 1,000 shares
Directors: Xxxxxx X. Xxxx
Secretary: Xxxx Xxxxxxx
Auditors: Deloitte & Touche
Accounting reference date:
Registered Office: RL & F Service Corp.
Tenth and King Streets
Wilmington, Delaware 19801
New Castle County
-56-
Name: Xxxxx International Sales Corp.
Authorised share capital: 1,000 shares
Issued share capital: 1,000 shares
Directors: Xxxxxx X. Xxxx
Secretary: Xxxx Xxxxxxx
Auditors: Deloitte & Touche
Accounting reference date:
Registered Office: CITCO St. Xxxxxx, Inc.
0 Xxxxx Xxxx
Xxxxxxxxx Xxxxxx, Xx. Xxxxxx
Xxxxxx Xxxxxx Virgin Islands
Name: Nihon Xxxxx Co., Ltd.-DORMANT-NOT WHOLLY
OWNED
Authorised share capital: 80,000 shares
Issued share capital: 20,000 shares
Directors: Xxxxxx X. Xxxx
Secretary: Xxxx Xxxxxxx
Auditors: Deloitte & Touche
Accounting reference date:
Registered Office: Nishi Shinjuku, Shinjuku-ku
Tokyo, Japan
-57-
Name: Xxxxx Asia Pacific Co., Ltd.-DORMANT
Authorised share capital:
Issued share capital:
Directors: Xxxxxx X. Xxxx
Secretary: Xxxx Xxxxxxx
Auditors:
Accounting reference date:
Registered Office: Hong Kong
Name: Xxxxx Australia Pty., Ltd.-DORMANT
Authorised share capital: 100,000 "Class A" shares
100,000 "Class B" shares
100,000 "Class C" shares
100,000 "Class D" shares
100,000 "Class E" shares
100,000 "Class F" shares
100,000 "Class G" shares
100,000 Cumulative Redeemable Preferred shares
50,000 "Class H" shares
50,000 "Class I" shares
Issued share capital: 100,000 "Class A" shares
100,000 "Class B" shares
100,000 "Class C" shares
100,000 "Class D" shares
100,000 "Class E" shares
100,000 "Class F" shares
100,000 "Class G" shares
100,000 Cumulative Redeemable Preferred shares
50,000 "Class H" shares
50,000 "Class I" shares
Directors: Xxxxxx X. Xxxx
Secretary: Xxxx Xxxxxxx
Auditors: Deloitte & Touche
-58-
Accounting reference date:
Registered Office: Australian Capital Territory
Name: Xxxxx Asia Pacific Information Services-DORMANT
Authorised share capital:
Issued share capital:
Directors: Xxxxxx X. Xxxx
Secretary: Xxxx Xxxxxxx
Auditors:
Accounting reference date:
Registered Office: Hong Kong
Name: Xxxxx Informatics Pty., Ltd.-NOT WHOLLY OWNED
Authorised share capital:
Issued share capital:
Directors: Xxxxxx X. Xxxx
Secretary: Xxxx Xxxxxxx
Auditors:
Accounting reference date:
Registered Office:
The following subsidiaries of The Xxxxx Company, Inc. have been involuntarily
dissolved:
1. eBook, Inc.
2. Xxxxx Research Services, Inc.
3. Xxxxx Services International, Inc.
-59-
The following subsidiary of The Xxxxx Company, Inc. was merged into Scribe
Publisher Services, Inc., an unaffiliated company on September 27, 1994:
1. Abacis, Inc.
Name: XxXxxxxx Subscription Service Inc
Authorised share capital: 10,000 shares
Issued share capital: 4,800 shares
Directors: Xxxxxx X. Xxxx
Xxxxx Xxxxxxx
Secretary: Xxxxxxx Xxxxxxxxxx
Auditors: Deloitte & Touche
Accounting reference date: Fiscal year ends 31 August
Registered Office: Illinois
Name: The Xxxxxx Subscription Agency Inc
Authorised share capital: 100 shares
Issued share capital: 54 shares
Directors: Xxxxxx X. Xxxx
Xxxxx Xxxxxxx
Secretary: Xxxxxxx Xxxxxxxxxx
Auditors: Deloitte & Touche
Accounting reference date: Fiscal year ends 30 September
Registered Office: The Corporation Trust Company
Corporation Trust Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx
Xxx Xxxxxx Xxxxxx
-60-
Name: Xxxxxx Information Quest Inc
Authorised share capital: 1,000 shares
Issued share capital: 1,000 shares
Directors: Xxxxxx X. Xxxx
Xxxxx Xxxxxxx
Secretary: Xxx Xxxxxxxx
Auditors: Deloitte & Touche
Accounting reference date: Fiscal year ends 30 September
Registered Office: Xxxxx Xxxxxxxx
0000 Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000-0000
San Diego County
-61-
SCHEDULE 3
The Warranties
Part A - General
1. For the avoidance of doubt, in this part A, schedule 3 reference to:-
(a) the "Group" means all of the Company and Subsidiaries and the Asset
Businesses and references to a member of the Group shall be construed
accordingly; and
(b) the "Company" means each of and all of the Company and Subsidiaries
only and shall exclude the Asset Businesses and references to a Group
Company shall be construed accordingly.
Any Warranty expressed to be given "to the best of Xxxxxx'x knowledge and
belief" or "so far as Xxxxxx is aware" or otherwise qualified by reference
to the knowledge of Xxxxxx shall not be qualified in the manner stated
unless Xxxxxx has made all reasonable enquiries of the relevant directors,
employees and professional advisers of the Xxxxxx Group and of each Group
Company to establish the truth and accuracy of that Warranty. For this
purpose, "reasonable" shall be interpreted in the light of the time since
receipt by Xxxxxx of the first draft of this agreement on 31 August 1999
and the date of this agreement.
In this schedule 3 the following words have the following meanings, unless
the context otherwise requires:-
"Accounts" means the consolidated balance sheet, profit and loss account
and cash flow statement of Xxxxxx and the balance sheet, profit and loss
account and cash flow statements of Xxxxxx UK Limited and the consolidated
balance sheet, profit and loss account of the Company and Subsidiaries,
together in each case with the notes thereon, directors' report and
auditors' certificate, as at and for the financial period ended on the
Accounts Date;
"Activities" means any activity, operation or process carried out by the
Group at any property whether or not currently owned, occupied or used by
the Group;
"Claim for Tax" means any of the following:-
(a) any liability to make a payment of Tax and any claim, assessment,
demand, notice or other document issued or action taken by or on
behalf of any person, authority or body whatsoever and of whatever
country, including any Taxation Authority, which claims payment of
Tax;
(b) any non-availability or loss of or reduction of any relief (including
in particular a right to repayment);
"distribution" means a distribution as defined by sections 209 to 211
(inclusive) of the TA and section 418 of the TA;
"Environment" means any and all ecosystems, property and the media of air
(including air in buildings, natural or man-made structures, below or above
ground), water (as defined in
-62-
section 104(1) of the Water Resources Xxx 0000 and within drains and
sewers), and land (including under any water as described above and whether
above or below surface);
"Environmental Consent" means any consent, approval, permit, licence,
order, filing, authorisation, exemption, registration, permission,
reporting or notice requirement and any related agreement required under
any Environmental Law for the Properties or the Group;
"Environmental Laws" means all international, EU, national, federal, state
or local statutes, (which for the avoidance of doubt shall include section
57 and Schedule 22 of the Environment Xxx 0000 and the guidance and
regulations adopted under those provisions), bylaws, orders, regulations or
other law or subordinate legislation or common law, all orders, ordinances,
decrees or regulatory codes of practice, circulars, guidance notes and
equivalent controls concerning the protection of human health or which have
as a purpose or effect the protection or prevention of harm to the
Environment or health and safety which are binding in relation to the
Properties and/or upon the Group in the relevant jurisdiction in which the
Group has been or is or are operating (including by the export of its
products, or its waste thereto) on or before Completion;
"ERA" means the Employment Rights Xxx 0000;
"French Business Transfer Law" means the French Law dated 29 June 1935
relating to the payment of the consideration for the sale of a business;
"Hazardous Substance" means any natural or artificial substance (whether
solid, liquid, gas, noise, ion, vapour, electromagnetic or radiation, and
whether alone or in combination with any other substance) which is capable
of causing harm to or having a deleterious effect on the Environment, being
a nuisance, or which restricts the use, development, ownership or
occupation of any Properties;
"ITA" means the Inheritance Tax Xxx 0000;
"L&T Covenants Act" means the Landlord and Tenant (Covenants) Xxx 0000;
"Leases" means the leases specified in the Disclosure Letter;
"Substantial Customer" means a customer accounting for more than five per
cent. of a member of the Group's sales in the financial year ended on the
Accounts Date;
"Substantial Supplier" means a supplier accounting for more than five per
cent. of a member of the Group's purchases in the financial year ended on
the Accounts Date;
"Systems" means all plant, equipment, systems, devices and components which
contain or are controlled or monitored by computer systems, micro
processors or software;
"Tax" or "tax" means any tax, and any duty, contribution, impost, levy or
charge in the nature of tax, whether domestic or foreign, and any fine,
penalty, surcharge or interest connected therewith, including (without
prejudice to the foregoing) taxes on profits income, gains and
distributions (including any liability for any form of social security
contribution)
-63-
taxes on turnover or added value, Customs duties, transfer and stamp duties
or duties on the raising of capital, obligations to account for any tax
which has or should have been withheld from any payment and any other
payment whatsoever which the Company is or may be or become bound to make
to any person and which is or purports to be in the nature of taxation or
otherwise by reason of any taxation statutes;
"Taxation Authority" means any local, municipal, governmental, state,
federal or fiscal, revenue, customs or excise authority, body, agency or
official anywhere in the world having or purporting to have power or
authority in relation to Tax including the Inland Revenue and HM Customs
and Excise;
"Taxation Statutes" means all statutes, statutory instruments, orders,
enactments, laws, bylaws, directives and regulations, whether domestic or
foreign decrees, providing for or imposing any Tax;
"TCGA" means the Taxation of Chargeable Gains Xxx 0000;
"TMA" means the Taxes Management Xxx 0000;
"Transfer Regulations" means the Transfer of Undertakings (Protection of
Employment) Regulations 1981;
"TULR(C)A" means the Trade Union and Labour Relations (Consolidation) Xxx
0000;
"VATA" means the Value Added Tax Xxx 0000 and "VAT legislation" means VATA
and all regulations and orders made thereunder;
"Waste" means waste including anything which is discarded or which the
holder intends or is required to discard and anything which is abandoned,
unwanted or surplus irrespective of whether it is capable of being
recovered or recycled or has any value such that there is likely to be a
breach of Environmental Law or such that any investigation, treatment or
remediation of any of the Properties is or would be required or would be
undertaken by a prudent owner or occupier;
"Year 2000 Compliant" means prior to the year 2020 that when correctly
operated with the input of suitable data without being connected to a
system which is not Year 2000 Compliant or which has been rendered Year
2000 Compliant using a method which is incompatible with the Systems in
question otherwise than as a result of failure of interfaces specific to
such Systems:-
(a) neither the performance nor functionality of the Systems used in
connection with the Business is adversely affected by dates before,
during or after year 2000; and
(b) in particular in respect of the Systems used in connection with the
Business:-
(i) no value for current date causes any interruption in operation;
-64-
(ii) date-based functionality behaves consistently for dates before,
during and within not less than ten years after year 2000;
(iii) in all interfaces and data storage, the century in any date is
specified either explicitly or by unambiguous algorithms or
inferencing rules; and
(iv) year 2000 is recognised as a leap year.
In construing the meaning of this definition, regard shall be had to the
Amplification of the Definition and Rules set out in the document published
with reference number DISC PD2000-1:1998 by the part of the British
Standards Institution called DISC entitled "A Definition of Year 2000
Conformity Requirements".
2. VENDOR'S CAPACITY
2.1 Authorisations
Xxxxxx and each of the Vendors has obtained all corporate authorisations
and other than the matters set out in Conditions 3.1(b) and (c) all other
applicable and material governmental, statutory, regulatory or other
consents, licences, waivers or exemptions required to empower it to enter
into and to perform its obligations under this agreement and each document
to be executed by it at or before Completion.
2.2 Proper Execution
Xxxxxx'x obligations and the obligations of any Vendor under this agreement
and each document to be executed at or before Completion are or when the
relevant document is executed, will be enforceable in accordance with their
terms.
3. THE COMPANY, THE SHARES AND THE SUBSIDIARIES
3.1 Incorporation and Existence
Xxxxxx and the Share Vendor are limited companies incorporated under
English law and have been in continuous existence since incorporation.
Each Group Company and each of the Vendors is duly organised and subsisting
in its country of organisation and each of the Vendors has full corporate
power to own such of the US Shares and Assets (as the case may be) that are
owned by it.
3.2 The Shares
(a) The Share Vendor is the only legal and beneficial owner of the US
Shares.
(b) The Company has not allotted any shares other than the US Shares and
the US Shares are fully paid or credited as fully paid.
(c) There is no Encumbrance in relation to any of the US Shares. So far as
Xxxxxx is aware no person has claimed to be entitled to an Encumbrance
in relation to any of
-65-
the US Shares and no member of the Xxxxxx Group is under any
obligation (whether actual or contingent) to sell, charge or otherwise
dispose of any of the US Shares or any interest therein to any person.
(d) Other than this agreement, there is no agreement, arrangement or
obligation requiring the creation, allotment, issue, sale, transfer,
redemption or repayment of, or the grant to a person of the right
(conditional or not) to require the allotment, issue, sale, transfer,
redemption or repayment of, a share in the capital of the Company
(including an option or right of pre-emption or conversion).
3.3 The Subsidiaries
(a) The Company does not have any subsidiary undertakings other than the
Subsidiaries or Electronic Online Services International, Inc. and
Quality Books, Inc. Each of the Subsidiaries is a wholly-owned
subsidiary of the Company (unless otherwise indicated in schedule 2)
and each of the shares of each such company has been properly allotted
and issued and is fully paid or credited as fully paid.
(b) There is no Encumbrance in relation to any of the shares or unissued
shares in the capital of any of the Subsidiaries. So far as Xxxxxx is
aware, no person has claimed to be entitled to an Encumbrance in
relation to any of the shares of any of the Subsidiaries and the
Company is not under any obligation (whether actual or contingent) to
sell, charge or otherwise dispose of any shares in any of the
Subsidiaries or any interest therein to any person.
(c) Other than this agreement, there is no agreement, arrangement or
obligation requiring the creation, allotment, issue, sale, transfer,
redemption or repayment of, or the grant to a person of the right
(conditional or not) to require the allotment, issue, sale, transfer,
redemption or repayment of, a share in the capital of any of the
Subsidiaries (including an option or right of pre-emption or
conversion).
(d) No Group Company owns any shares or stock in the capital of nor does
it have any beneficial interest in any company other than the
Subsidiaries nor does the Company control or take part in the
management of any other company.
4. ACCOUNTS
4.1 General
(a) The Accounts show a true and fair view of the:-
(i) assets, liabilities, financial position and state of affairs at
the Accounts Date; and
(ii) the profits and losses for the financial year ended on the
Accounts Date,
of Xxxxxx and the Group Companies.
-66-
(b) The Accounts have been prepared and audited in accordance with the
standards, principles and practices specified on the face of the
Accounts applied on a consistent basis and subject thereto in
accordance with the law and Generally Accepted Accounting Standards,
Principles and Policies in the United Kingdom consistently applied.
(c) The Accounts have been prepared on a basis consistent with the basis
upon which all audited accounts of the Company have been prepared in
respect of the three years before the Accounts Date.
4.2 Liabilities
The Accounts make full provision or reserve for or disclose all material
liabilities (including all contingent or deferred liability to Tax) of the
Group whether actual, contingent or otherwise which are required by GAAS to
be disclosed.
4.3 Extraordinary and Exceptional Items
The results shown by the audited profit and loss account of the Company for
each of the three financial years of the Company and the Group ended on the
Accounts Date have not (except as disclosed in those accounts) been
affected by an extraordinary or exceptional item or by any other matter
making the profits or losses for a period covered by any of those accounts
unusually high or low.
4.4 Off Balance Sheet Financing
No member of the Group is engaged in any financing (including the incurring
of any borrowing or any indebtedness in the nature of acceptances or
acceptance credits) of a type which would not be required to be shown or
reflected in the Accounts.
4.5 Accounting and Other Records
(a) The books of account and all other records of each Group Company and
each member of the Xxxxxx Group in relation to the Asset Businesses
(including any which it may be obliged to produce under any contract
now in force) are up-to-date, in its possession and are true and
complete in all material respects in accordance with the law and
applicable standards, principles and practices generally accepted in
the United Kingdom or the applicable jurisdiction.
(b) All deeds and documents (properly stamped where stamping is necessary
for enforcement thereof) belonging to any Group Company or which ought
to be in the possession of any Group Company are in the possession of
that Group Company.
4.6 Accounting Reference Date
The accounting reference date of each member of the Group under section 224
of the Companies Xxx 0000 is, and during the last three years has always
been, 30 September.
-67-
4.7 Intra-Group Indebtedness
The Intra-Group Indebtedness figure is materially true, complete, accurate
and not misleading.
4.8 Management Accounts
The management accounts of the Group in the agreed terms have been prepared
in accordance with Xxxxxx Group accounting requirements and with due care
and attention and show with reasonable accuracy the state of affairs and
profit or loss of the Group as at and for the period in respect of which
they have been prepared but it is hereby acknowledged that they are not
prepared on a statutory basis.
5. CHANGES SINCE THE ACCOUNTS DATE
5.1 General
Except as set out in the Disclosure Letter, since the Accounts Date:-
(a) each Group Company, the Xxxxxx Group and each Vendor in relation to
the Asset Businesses has carried on its business prudently and in the
ordinary and usual course and so as to maintain the Business and each
Asset Business respectively as a going concern;
(b) there has been no material adverse change in the financial or trading
position of the Group; and
(c) there has been no material reduction in the value of those fixed
assets specified in the Accounts, to the extent still owned by each
Group Company and Vendor in relation to the Asset Businesses.
5.2 Specific
Since the Accounts Date no Group Company nor any member of the Xxxxxx Group
in relation to the Group:-
(a) has, other than in the ordinary course of trading:-
(i) disposed of, or agreed to dispose of, a material asset; or
(ii) assumed or incurred, or agreed to assume or incur, a material
liability, obligation or expense (actual or contingent);
and in the case of a disposal or agreement to dispose of a material
asset for an amount which is lower than book value or an open market
arm's length value, whichever is the higher;
-68-
(b) has acquired or agreed to acquire a material asset for an amount which
is higher than open market arm's length value;
(c) has made, or agreed to make, capital expenditure exceeding in total
(Pounds)500,000 or incurred, or agreed to incur, a commitment or
connected commitments involving capital expenditure exceeding in total
(Pounds)500,000;
(d) has had a Substantial Supplier or Substantial Customer cease or
substantially reduce its trade or has altered the terms of trade to
its disadvantage;
(e) has declared, paid or made a dividend or other distribution (including
a distribution within the meaning of the TA) except to the extent
provided in the Accounts;
(f) has passed a resolution of the shareholders of any Group Company
(except for those representing the ordinary business of an annual
general meeting or any resolution agreed to approve the transactions
contemplated in this agreement);
(g) has repaid or redeemed share or loan capital, or made (whether or not
subject to conditions) an agreement or arrangement or undertaken an
obligation to do any of those things;
(h) has repaid any sum in the nature of borrowings in advance of any due
date or made any loan or otherwise than in the ordinary course of
business incurred any indebtedness (including in each case intra-
group); and
(i) has paid nor is under an obligation to pay any service, management or
similar charges or any interest or amount in the nature of interest to
any other person or incurred any liability to make such a payment or
made any payment to any member of the Xxxxxx Group whatsoever.
6. ASSETS
6.1 Title and Condition
(a) There are no Encumbrances, nor has any Group Company nor any member of
the Xxxxxx Group in relation to the Group agreed to create any
Encumbrances, over a material part of its undertaking or assets and
each material asset used by the Group or by any Vendor in relation to
the Asset Businesses (tangible or intangible) is:-
(i) legally and beneficially owned by the relevant Group Company or,
in the case of the Asset Businesses, the relevant Vendor; and
(ii) where capable of possession, in the possession of the Group or
the relevant Vendor in relation to the Asset Businesses or under
their control (other than work-in-progress or stock on
consignment or in transit).
(b) Each Group company or the relevant Vendor in relation to the Asset
Businesses owns each asset (tangible or intangible) necessary for the
operation of their business
-69-
as currently conducted and save as provided in this agreement and
without limitation no rights (other than rights as shareholders in the
Company) relating to the Business are owned or otherwise enjoyed by or
on behalf of any member of the Xxxxxx Group.
(c) All material plant, machinery, vehicles and equipment owned or used by
the Group or any Vendor in relation to the Asset Businesses are in
reasonable condition and working order and have been regularly
maintained. So far as the Vendor is aware none is dangerous,
inefficient, out-of-date, unsuitable or in need of renewal or
replacement.
6.2 Hire Purchase and Leased Assets
Copies of any xxxx of sale or any hiring or leasing agreement, hire
purchase agreement, credit or conditional sale agreement, agreement for
payment on deferred terms or any other similar agreement to which any Group
Company or any Vendor in relation to the Asset Businesses is a party and
requiring payments in excess of (Pounds)20,000 in an annual period are
annexed to the Disclosure Letter. None of the Leased Assets used by any
Group Company or any Vendor in relation to the Asset Businesses has been
repossessed by its owner and none of the Group Company or none of the
Vendors in relation of the Asset Businesses has done any act or omission
which would entitle the owner of the Leased Assets to repossess such Leased
Assets. None of such agreements requires more than one month's notice of
termination to be given by any Group Company or any Vendor nor does it
allow termination only on terms which require any payment (other than
arrears of lease payments) by any Group Company or any Vendor.
6.3 Stock
No Group Company nor any Vendor in relation to the Asset Businesses has
supplied, or agreed to supply, goods which have been or will be, materially
defective or which fail to comply materially with their terms of sale.
6.4 Debts
None of the debts owed to any Group Company nor any Vendor in relation to
the Asset Businesses has been factored, sold or agreed to be sold by any
Group Company or any member of the Xxxxxx Group or any Vendor in relation
to the Asset Businesses.
7. INTELLECTUAL PROPERTY
7.1 General
(a) Save for Intellectual Property licensed to the Company and the Xxxxxx
Group, the Company and any Vendor in relation to the Asset Businesses
each Group Company and each Vendor in relation to the Asset Businesses
is the sole and absolute legal and beneficial owner of all
Intellectual Property used in connection with its business and which
is material in the context of their respective businesses and the
Intellectual Property listed in the document in the agreed terms
headed "Intellectual Property" is
-70-
unless otherwise indicated, registered in or applied for in the name
of the member of each Group Company or the Vendor in relation to the
Asset Businesses and is all the registered or applied for
"Intellectual Property" used by the Asset Businesses.
(b) The Intellectual Property owned by the Company is free from
Encumbrances and, in the case of confidential information, any
disclosure obligation and is subsisting.
7.2 Renewals/Maintenance
All registration and renewal fees which are due have been paid in relation
to the Intellectual Property which is registered or applied for in the name
of any Group Company or any Vendor in relation to the Asset Businesses.
All procedural steps have been taken diligently for the prosecution and
maintenance of such Intellectual Property and all reasonable steps have
been taken for the maintenance and protection of unregistered Intellectual
Property owned by each Group Company and each Vendor in relation to the
Asset Businesses which is material to the Business.
7.3 Licences
(a) The terms of all licences or future rights which have been granted by
any Group Company or other agreements or consents or undertakings
entered into by any Group Company or Xxxxxx or members of the Xxxxxx
Group relating to the Intellectual Property and which are material (or
in the case of future rights are likely to be material) in the context
of their respective businesses are set out in the Disclosure Letter.
So far as Xxxxxx is aware, there has been and is currently no material
breach nor is there any fact or matter which would or may create a
material breach of such licences or undertakings.
(b) The terms of all licences or future rights granted to any Group
Company for the purposes of the Business or to any Vendor in relation
to the Asset Businesses or other agreements or consents or
undertakings entered into by that Group Company or Xxxxxx or members
of the Xxxxxx Group relating to the Intellectual Property and which
are material (or in the case of future rights are likely to be
material) in the context of their respective businesses are set out in
the Disclosure Letter. So far as Xxxxxx is aware there has been and is
currently no material breach nor is there any fact or matter which
would or may create a material breach of such licences or
undertakings.
7.4 Infringement
(a) So far as Xxxxxx is aware, the use by any Group Company or any member
of the Xxxxxx Group of any Intellectual Property does not as used,
infringe and the processes or methods employed, services provided, the
business conducted and the products used, manufactured and dealt in or
supplied by any member of any Group Company or any member of the
Xxxxxx Group do not nor did they at the time used, manufactured, dealt
in or supplied, infringe the Intellectual Property of any other
person.
-71-
(b) No proceedings claims or complaints have been brought or so far as
Xxxxxx is aware threatened in writing by any third party or competent
authority in relation to the Intellectual Property including any
concerning title subsistence, validity or enforceability or grant of
any right or interest in such Intellectual Property.
(c) So far as Xxxxxx is aware, no third party is infringing or misusing or
threatening to infringe or misuse the Intellectual Property.
(d) No Group Company nor any member of the Xxxxxx Group is subject to any
injunction, undertaking or court order or order of any other authority
of competent jurisdiction not to use or restricting the use of any
Intellectual Property.
7.5 Scope
The Intellectual Property comprises all the Intellectual Property Rights
necessary for the operation of the Business as now conducted and so far as
Xxxxxx is aware they will not be adversely affected by the transactions
contemplated by this agreement.
7.6 Confidential Agreements
Save as disclosed, so far as Xxxxxx is aware no Group Company nor any
Vendor in relation to the Asset Businesses nor any member of the Xxxxxx
Group has entered into any confidentiality agreement or arrangement
otherwise than in the ordinary course of business or save in the ordinary
course of business is subject to any duty which materially restricts the
free use or disclosure of any information used in the Business and there is
no material breach of any such agreement or duty.
8. EFFECT OF SALE
8.1 So far as Xxxxxx is aware, neither the execution nor performance of this
agreement or any document to be executed at or before Completion pursuant
to this agreement will:-
(a) result in any Group Company or any Vendor in relation to the Asset
Businesses losing the benefit of a material Permit or a material
asset, licence, grant, subsidy, right or privilege which it enjoys at
the date of this agreement in any jurisdiction; or
(b) conflict with, or result in a breach of, or give rise to an event of
default under, or require the consent of a person under, or enable a
person to terminate a material agreement, arrangement or obligation to
which any Group Company or any Vendor in relation to the Asset
Businesses is a party where such breach, conflict or default would
have a material adverse effect on any member of the Group; or
(c) result in any Substantial Customer being entitled (and if a
Substantial Customer is so entitled, so far as Xxxxxx is aware, it
will not exercise any such entitlement) to cease dealing with any
Group Company or any Vendor in relation to the Asset Businesses or
substantially to reduce its existing level of business or to change
the terms upon which it deals with any Group Company or any Vendor in
relation to the Asset Businesses; or
-72-
(d) result in any Substantial Supplier being entitled (and if a
Substantial Supplier is so entitled, so far as Xxxxxx is aware, it
will not exercise any such entitlement) to cease supplying any Group
Company or any Vendor in relation to the Asset Businesses or
substantially to reduce its supplies to or to change the terms upon
which it supplies any Group Company or any Vendor in relation to the
Asset Businesses; or
(e) result in any officer or senior employee leaving any Group Company or
any Vendor in relation to the Asset Businesses; or
(f) make any Group Company liable to offer for sale, transfer or otherwise
dispose of or purchase or otherwise acquire any assets, including
shares held by it in other bodies corporate under their articles of
association or any agreement or arrangement.
9. CONSTITUTION
9.1 Intra Xxxxx
Each Group Company and the Share Vendor has the power to carry on its
business as now conducted and the business of the Company has at all times
been carried on intra xxxxx, and so far as Xxxxxx is aware in accordance
with their corporate interest.
9.2 Memorandum and Articles
The memorandum and articles of association (or equivalent in any
jurisdiction) of each Group Company in the form annexed to the Disclosure
Letter are true and complete in all material respects and up-to-date.
9.3 Register of Members
The register of members (or equivalent in the USA) of each Group Company
has been properly kept in all material respects and contains in all
material respects true and complete records of the matters which should be
dealt with in that register and so far as Xxxxxx is aware, no member of the
Xxxxxx Group nor any Group Company has received any notice or allegation
that any of them is incorrect or incomplete or should be rectified.
9.4 Powers of Attorney
Except as set out in the Disclosure Letter, no Group Company nor any member
of the Xxxxxx Group has executed any power of attorney or conferred on any
person other than its directors, officers and employees any authority to
enter into any transaction on behalf of or to bind any Group Company or any
member of the Xxxxxx Group in relation to the Asset Businesses in any way
and which power of attorney remains in force or was granted or conferred
within three years of the Completion Date.
-73-
9.5 Statutory Books and Filings
(a) The statutory books (or equivalent in the USA) of each Group Company
are up-to-date, in its possession or under its control and are true
and complete in all material respects in accordance with applicable
law.
(b) All resolutions, annual returns (or equivalent in the USA) and other
documents required to be delivered to the relevant company registry
(or other corporate authority in any jurisdiction) have been properly
prepared and filed and are true and complete in all material respects.
10. INSURANCE
10.1 Policies
The Disclosure Letter contains a list of each current insurance and
indemnity policy in respect of which each Group Company has an interest
(together the "Policies"). So far as Xxxxxx is aware, no act, omission or
non-disclosure by a Group Company or member of the Xxxxxx Group has been
made which will make any of the Policies invalid, unenforceable, void or
voidable. So far as Xxxxxx is aware, there are no circumstances which
might make any of the Policies void or voidable or lead any claim under the
Policies to be avoided by the insurers.
10.2 Insurance of Assets
Each insurable asset of the Group has at all material times been and is at
the date of this agreement insured to its full replacement value (with no
provision for deduction or excess) against each risk normally insured
against by a prudent person operating the types of business operated by the
Group.
10.3 Other Insurance
Each Group Company or any Vendor in relation to the Asset Businesses has at
all material times been and is at the date of this agreement adequately
insured against accident, damage, injury, third party loss (including
product liability), loss of profits and any other risk normally insured
against by a prudent person operating the types of business operated by the
Group and has at all times effected such insurances as required by law.
10.4 Claims
No claim is outstanding under any of the Policies and so far as Xxxxxx is
aware no matter exists which might give rise to a claim under any of the
Policies.
10.5 Details of Policies
The Disclosure Letter contains a summary of any and all amounts claimed
under the Policies in the 12 months prior to the date of this agreement and
such summary is accurate.
-74-
11. CONTRACTUAL MATTERS
11.1 Validity of Agreements
(a) (i) No Group Company nor Xxxxxx nor any Vendor in relation to the
Asset Businesses has any knowledge of the invalidity of, or a
ground for termination, avoidance or repudiation of, a material
agreement, arrangement or obligation in writing to which any
Group Company or any Vendor in relation to the Asset Businesses
is a party.
(i) No party with whom any Group Company or any Vendor in relation to
the Asset Businesses has entered into a material agreement,
arrangement or obligation has given notice of its intention to
terminate, or has sought to repudiate or disclaim, the agreement,
arrangement or obligation.
(b) No party with whom any Group Company or any Vendor in relation to the
Asset Businesses has entered into a material agreement or arrangement
in writing is in material breach of the agreement or arrangement. So
far as Xxxxxx is aware no matter exists which might give rise to such
breach.
(c) No Group Company nor any Vendor in relation to the Asset Businesses is
in material breach of any material agreement or arrangement in
writing. So far as Xxxxxx is aware no matter exists which might give
rise to such breach.
11.2 Standard Terms and Conditions
A copy of the standard terms and conditions of business of each Group
Company and any Vendor in relation to the Asset Businesses are annexed to
the Disclosure Letter and so far as Xxxxxx is aware no Group Company nor
any Vendor in relation to the Asset Businesses has entered into an
agreement or arrangement with a customer different from these. No Group
Company nor any Vendor in relation to the Asset Businesses has entered into
any agreements or arrangements with a customer which oblige them to supply
goods and/or services or only allows them to terminate the agreements or
arrangements on terms which are materially different from the terms upon
which those goods and/or services are supplied to the relevant Group
Company and/or Vendor.
11.3 Supply Contracts
Summarised accurate details or copies of all agreements or arrangements
with customers by any Group Company or any Vendor in relation to the Asset
Businesses which involve the supply of goods the aggregate sale value of
which will represent in excess of five per cent. of the turnover for the
financial year of any Group Company or any Vendor in relation to the Asset
Businesses ended on the Accounts Date are contained in the Disclosure
Letter and copies annexed to it. Summarised accurate details or copies of
all agreements or arrangements with Substantial Suppliers involving the
supply of goods and/or services to any Group Company or any Vendor in
relation to the Asset Businesses are contained in the Disclosure Letter and
copies annexed to it.
-75-
11.4 Material Agreements
(a) Except as set out in the Disclosure Letter no Group Company nor any
member of the Xxxxxx Group in relation to the Asset Businesses is a
party to and is liable under any material contract, transaction,
arrangement or liability which:-
(i) is of an unusual or abnormal nature, or outside the ordinary
and proper course of business;
(ii) is of a long-term nature (that is, unlikely to have been fully
performed, in accordance with its terms, more than six months
after the date on which it was entered into or undertaken);
(iii) is incapable of termination in accordance with its terms, by
any Group Company or any Vendor in relation to the Asset
Businesses, on 60 days' notice or less;
(iv) cannot readily be fulfilled or performed by any Group Company
or any Vendor in relation to the Asset Businesses on time
without undue or unusual expenditure of money or personnel;
(v) involves payment by any Group Company or any Vendor in relation
to the Asset Businesses by reference to fluctuations in the
index of retail prices, or any other index or in the rate of
exchange for any currency;
(vi) involves an aggregate outstanding expenditure or other
liability by any Group Company or any Vendor in relation to the
Asset Businesses of more than (Pounds)500,000; or
(vii) restricts its freedom to engage in any activity or business or
confines its activity or business to a particular place;
(b) Save as disclosed no Group Company or any Vendor in relation to the
Asset Businesses is a party to and is liable under:-
(i) an agreement, arrangement or obligation by which that company
is a member of a joint venture, consortium, partnership or
association (other than a bona fide trade association); or
(ii) a distributorship, agency, marketing, licensing or management
agreement or arrangement.
(c) None of the agency arrangements disclosed are incapable of termination
by any Group Company or any Vendor on less than 90 days' notice nor
would they, if so terminated, require payment by any Group Company or
any Vendor of any damages or compensation.
-76-
(d) Summarised accurate details of all and any commission payments due to
any agents under any of the disclosed agency arrangements are
contained in the Disclosure Letter.
(e) To the extent that the same are applicable to any of the disclosed
agency arrangements, each Group Company and each Vendor on the one
hand and each agent on the other have complied with their respective
obligations under Council Directive 86/653/EEC regarding self-employed
commercial agents and/or any UK or other EU Member State legislation
enacted to give effect to the same (including but not limited to the
Commercial Agents (Council Directive) Regulations 1993).
(f) Save as disclosed, no agency arrangements between any Group Company or
any Vendor and any agent have been terminated in the last year.
11.5 Contracts with Connected Persons
There is, and during the three years ending on the date of this agreement
there has been, no agreement or arrangement to which any Group Company or
any Vendor in relation to the Asset Businesses is a party and in which any
member of the Xxxxxx Group, any director or former director of any member
of the Xxxxxx Group or a person connected with any of them is or was
interested. Immediately after Completion, no Group Company or any Vendor
in relation to the Asset Businesses will owe any obligation or sum or have
any contractual or other arrangements of any sort with any member of the
Xxxxxx Group or any of its connected persons except as provided under the
terms of this agreement.
11.6 Conditions and Warranties in Respect of Goods or Services
Except for a condition or warranty implied by law or contained in its
standard terms of business or otherwise given in the usual course of
trading, no Group Company or member of the Xxxxxx Group in relation to the
Asset Businesses has given a condition or warranty in writing, in respect
of goods or services supplied or agreed to be supplied by it, or accepted
an obligation that could give rise to a liability after the goods or
services have been supplied by it.
12. INFORMATION TECHNOLOGY AND DATA PROTECTION
12.1 Adequacy of Systems
The Systems used in connection with the Group are adequate for the
immediate needs of their respective businesses, including without
limitation as to the system capacity and ability to process current peak
volumes in a timely manner.
12.2 No Systems Failures
In the 12 months prior to the date hereof no Group Company nor any Vendor
in relation to the Asset Businesses has suffered and so far as Xxxxxx is
aware no other person has suffered any failures or bugs in or breakdowns of
any System used in connection with the Business which have caused any
substantial disruption or interruption in or to its use in
-77-
connection with the Business and so far as Xxxxxx is aware there is no
existing matter which is likely to so disrupt or interrupt or affect the
use of such equipment on the same basis as it is presently used following
the acquisition by RoweCom of the Business pursuant to this agreement.
12.3 Year 2000 Compliance
Xxxxxx has taken and is taking all appropriate and timely steps in
accordance with good business practice to ensure that Systems used in
connection with the Business become Year 2000 Compliant in order to
minimise business disruption which may be brought about by the Systems used
in connection with the Business being non-Year 2000 Compliant. Xxxxxx
further warrants that to the best of its knowledge and belief its Year 2000
action plan is sufficient to ensure that the Systems used in connection
with the Business become Year 2000 Compliant and will be completed within
the anticipated time scale and within budget.
12.4 Year 2000 Compliance of Customers and Suppliers
So far as Xxxxxx is aware, Systems owned or used by any Substantial
Customers or Substantial Suppliers of any Group Company are or will become
Year 2000 Compliant.
12.5 Copyright in Technical Manuals
None of the software or technical manuals used by the Businesses has been
unlawfully copied wholly or substantially from any material in which any
Group Company or any Vendor in relation to the Asset Businesses does not
own copyright.
12.6 Ownership of Computer Systems
All Systems, excluding software, used by any Group Company and any Vendor
in relation to the Asset Businesses are owned and operated by and are under
the control of the Group Companies or the Vendors in relation to the Asset
Businesses and are not wholly or partly dependent on any facilities which
are not under the ownership, operation or control of any member of the
Group. No consents will be required to enable such systems to continue to
be used in each Asset Business and each Group Company to the same extent
and in the same manner as they have been used prior to the date hereof.
12.7 Compliance of Systems with European Regulations
The Systems used in connection with the Business are so far as Xxxxxx is
aware capable of receiving and processing data (including, without
limitation, effecting conversions between the Euro and national currencies,
calculating and producing dual and multi-currency invoices, performing
triangulation calculations and processing day-counts for the purpose of
interest rate calculations) in accordance with the provisions of Council
Regulation 1103/97 and any other relevant applicable regulation or
legislation made pursuant to the Treaty of Rome relating to the same
subject matter (together the "European Regulations") and any market
conversion that is attributable to the provisions of the European
Regulations or their subject matter.
-78-
12.8 Litigation in respect of Software
Each Group Company and each Vendor in relation to the Asset Businesses are
validly licensed to use the software used in their respective businesses
and no consents will be required to enable them to continue to use such
software to the same extent and in the same manner as they have been used
prior to the date hereof.
12.9 Data Protection Xxx 0000
Each Group Company and each Vendor in relation to the Asset Businesses
comply in full with, and have in place all necessary registrations and
procedures under, the Data Protection Act 1984 or equivalent applicable
legislation in any other country in which it operates.
12.10 Data Protection Xxx 0000
Each Group Company and each Vendor in relation to the Asset Businesses are
taking all appropriate steps in accordance with good business practice to
ensure that they will comply with the Data Protection Xxx 0000 when it
comes into force.
12.11 Disclosure of Data Protection Procedures
Xxxxxx has disclosed details of all procedures being adopted by each Group
Company and each Vendor in relation to the Asset Businesses to assess and
introduce procedures to ensure compliance with the Data Protection Xxx
0000.
12.12 Internet Presence
Save as described in the Disclosure Letter, no Group Company nor any
Vendor in relation to the Asset Businesses has any public private or
reserved presence on the world wide web, multi-party extranet, virtual
private network or similar internet based, linked system ("Internet
Presence"). The domain name(s), if any, of any Group Company or any Vendor
in relation to the Asset Businesses are currently registered with an
authorised body, are so far as Xxxxxx is aware transferable to RoweCom and
are in good standing. Save as described in the Disclosure Letter, Xxxxxx
warrants that its Internet Presence, if any, is wholly passive and
informational in nature and involves no interactivity between third
parties and each Group Company or any Vendor in relation to the Asset
Businesses including purchases, sales, leases or other commercial
transactions conducted in any degree by or through the Internet Presence.
12.13 IQ Software
With regard to the on-line information access system known as "Information
Quest" or "IQ" used by the Business and all related materials (to the
extent they are in existence) including the code therein (including source
code and machine readable data), user guide and instructions, programmers
notes, flow charts, logic diagrams and development operational and
maintenance records (the "Software"), Xxxxxx and the Vendors warrant to
Rowecom as follows:-
-79-
(a) that other than unwritten permission to use indirectly when accessing
databases in the ordinary course of the Business no member of the
Xxxxxx Group has given permission to any party (other than a member of
the Xxxxxx Group) to use the Software or any of intellectual property
rights in the Software nor are they unaware of any such unpermitted
use by any such third party;
(b) so far as Xxxxxx or the Vendors are aware the use of the Software by
Rowecom will not be subject to royalty obligations and no consents or
permissions will be required for Rowecom to continue using the
Software in the manner currently conducted further to the IQ Software
Licence;
(c) neither Xxxxxx nor the Vendors are unaware of any material defects or
operational problems with the Software as currently used;
(d) the current version of the Software is Year 2000 Compliant in all
respects; and
(e) the Software as supplied under the IQ Software Licence is all the
materials reasonably required to support and maintain the operation of
the Software as it is currently used.
13. LIABILITIES
13.1 Guarantees and Indemnities
(a) Save as disclosed in the Accounts or otherwise implied by law on the
supply of goods or services by a Vendor or a Group Company, no Group
Company is a party to and is liable (including contingently) under a
guarantee, indemnity or other agreement in writing to secure or incur
a financial or other obligation with respect to another person's
obligation.
(b) No part of the loan capital, borrowing or indebtedness in the nature
of borrowing of any Group Company is dependent on the guarantee or
indemnity of, or security provided by, another person other than a
Group Company.
13.2 Events of Default
No event has occurred or is subsisting in relation to the Group which:-
(a) constitutes an event of default, or otherwise gives rise to an
obligation to repay, or to give security under an agreement relating
to borrowing or indebtedness in the nature of borrowing (or will do so
with the giving of notice or lapse of time or both) in relation to any
Group Company;
(b) will lead to an Encumbrance except a Permitted Encumbrance constituted
or created in connection with borrowing or indebtedness in the nature
of borrowing, a guarantee, an indemnity or other obligation of any
Group Company or any member of the Xxxxxx Group in relation to the
Asset Businesses becoming enforceable (or will do so with the giving
of notice or lapse of time or both); or
-80-
(c) with the giving of notice and/or lapse of time will constitute or
result in a default or the acceleration of any obligation under any
agreement or arrangement to which any Group Company or any member of
the Xxxxxx Group in relation to the Asset Businesses is a party or by
which it or any of its properties, revenues or assets is bound.
13.3 Grants
No Group Company nor any member of the Xxxxxx Group in relation to the
Asset Businesses is liable to repay an investment or other grant or subsidy
made to it by any person (including the Department of Trade and Industry or
its predecessor). So far as Xxxxxx is aware no matter (including the
execution and performance of this agreement) exists which might entitle a
body to require repayment of the whole or part of a grant or subsidy.
14. PERMITS
14.1 Compliance with Permits
Each Group Company and each Vendor in relation to the Asset Businesses has
obtained and complied with the material terms and conditions of each Permit
(excluding the Properties at the Folkestone Property) (summarised and
materially accurate details of which are contained in the Disclosure
Letter).
14.2 Status of Permits
There are no pending or threatened proceedings relating to the suspension,
invalidity or revocation of which might in any way affect the Permits
(excluding the Properties at the Folkestone Property) and Xxxxxx is not
aware of any other reason why any of them should be suspended, threatened
or revoked or be invalid.
15. INSOLVENCY
15.1 Winding up
No order has been made, petition presented or resolution passed for the
winding up (or other process whereby any of the Asset Businesses are
terminated and the Assets are distributed amongst the creditors and/or
shareholders or other contributors) or for the appointment of a provisional
liquidator to any Group Company or any Vendor.
15.2 Administration
No administration order has been made and no petition for an administration
order has been presented in respect of any Group Company or any Vendor.
-81-
15.3 Receivership
No receiver, receiver and manager or administrative receiver or similar
official has been appointed in any jurisdiction in respect of the whole or
any part of either the business or assets of any Group Company or any
Vendor.
15.4 Compromises with creditors
(a) No voluntary arrangement under section 1 of the Insolvency Xxx 0000
has been proposed or approved in respect of any Group Company or any
Vendor.
(b) No compromise or arrangement under section 425 of the Companies Xxx
0000 has been proposed, agreed to or sanctioned in respect of any
Group Company or any Vendor.
(c) No Group Company nor any Vendor has entered into any compromise or
arrangement with its respective creditors or any class of its
respective creditors generally.
15.5 Insolvency
No Group Company nor any Vendor is unable to pay its debts within the
meaning of section 123 of the Insolvency Xxx 0000 (but for this purpose
ignoring the reference to "if it is proved to the satisfaction of the court
that" in section 123(1)(e) and 123(2)) or similar applicable laws in any
relevant jurisdiction.
15.6 Payment of Debts
No Group Company nor any Vendor has stopped paying its debts as they fall
due.
15.7 Distress etc.
No distress, execution or other process has been levied on a material asset
of any Group Company or any Vendor.
15.8 Unsatisfied Judgments
There is no unsatisfied judgment or court order outstanding against any
Group Company or any Vendor.
15.9 Striking Out
No action is being taken by the Registrar of Companies to strike any Group
Company or any Vendor off the register under section 652 of the Companies
Xxx 0000 or any other similar law in other jurisdictions.
-82-
16. LITIGATION AND COMPLIANCE WITH LAW
16.1 Litigation
(a) Except as set out in the Disclosure Letter, no Group Company nor any
member of the Xxxxxx Group, has during the six years ending on the
date of this agreement been involved, in a civil, criminal,
arbitration, administrative or other proceeding which is currently
material in the context of the Business or the Company. No civil,
criminal, arbitration, administrative or other proceeding which is
material in the context of the Business in any jurisdiction is pending
or threatened by or against any Group Company or any member of the
Xxxxxx Group in relation to the Asset Businesses.
(b) So far as Xxxxxx is aware, no matter exists which might give rise to a
civil, criminal, arbitration, administrative or other proceeding in
any jurisdiction involving any Group Company (other than as plaintiff
in the collection of debts arising in the ordinary course of business)
or any member of the Xxxxxx Group in relation to the Asset Businesses.
(c) There is no outstanding judgment, order, decree, arbitral award or
decision of a court, tribunal, arbitrator or governmental agency in
any jurisdiction against any Group Company.
16.2 Compliance with Law
Each Group Company and each Vendor in relation to the Asset Businesses has
conducted its business and dealt with its assets in all material respects
in accordance with all applicable legal and administrative requirements in
any jurisdiction in which such entity operates.
16.3 Investigations
No Group Company is or has been subject to any investigation, enquiry or
disciplinary proceeding (whether judicial, quasi-judicial or otherwise) in
any jurisdiction and so far as Xxxxxx is aware, none is pending or
threatened, and neither has it received any request for information from,
any court or governmental authority (including any national competition
authority and the Commission of the European Communities and the EFTA
Surveillance Authority) under any anti-trust or similar legislation in any
jurisdiction in which such Group Company operates. So far as Xxxxxx is
aware no matter exists which might give rise to such an investigation,
enquiry, proceeding or request for information.
16.4 Competition Law
(a) So far as Xxxxxx is aware, no Group Company is nor has it been a party
to any agreement or arrangement, which:-
(i) could reasonably be expected to give rise to an investigation by
the Office of Fair Trading or the Competition Commission under
the Fair Trading Xxx 0000;
-83-
(ii) has been or should reasonably have been required to be or is
required to be furnished to the Director General of Fair
Trading pursuant to the Restrictive Trade Practices Acts 1976
and 1977;
(iii) contravenes the provisions of the Resale Prices Xxx 0000;
(iv) contravenes the provisions of the Trade Descriptions Acts 1968
and 1972;
(v) constitutes an anti-competitive practice within the meaning of
the Competition Xxx 0000;
(vi) constitutes a breach of any relevant undertaking, order,
assurance or other measure made under the Fair Trading Xxx
0000, the Restrictive Trade Practices Acts 1976 and 1977, the
Resale Prices Xxx 0000, the Trade Descriptions Acts 1968 and
1972 or the Competition Xxx 0000;
(vii) infringes Articles 81 and/or 82 of the Treaty of Rome or their
equivalent provisions under the European Economic Area
Agreement or any other anti-trust or similar legislation in any
jurisdiction in which the Company operates; or
(viii) is registrable, unenforceable or void (whether in whole or in
part) or renders it liable to civil, criminal or administrative
proceedings by virtue of any anti-trust, anti-monopoly, anti-
cartel, consumer law or any other similar legislation in any
jurisdiction.
(b) Xxxxxx is taking all appropriate steps in accordance with good
business practice to ensure that it will comply with the Competition
Xxx 0000.
(c) No Group Company has not given an undertaking or written assurance to
any court or governmental authority (including any national
competition authority and the Commission of the European Communities
and the EFTA Surveillance Authority) under any anti-trust or similar
legislation in any jurisdiction in which that company operates.
(d) No Group Company is subject to an order, regulation or decision made
by any court or governmental authority (including any national
competition authority and the Commission of the European Communities
and the EFTA Surveillance Authority) under any anti-trust or similar
legislation in any jurisdiction in which that company operates.
(e) So far as Xxxxxx is aware, no Group Company is and has been a party to
any agreement, arrangement or concerted practice in respect of which
an application for negative clearance and/or an exemption has been
made to the Commission of the European Communities or the EFTA
Surveillance Authority.
16.5 Unlawful Payments
-84-
No Group Company has:-
(a) induced a person to enter into an agreement or arrangement with any
Group Company by means of an unlawful or immoral payment,
contribution, gift or other inducement;
(b) offered or made an unlawful or immoral payment, contribution, gift or
other inducement to a government official or employee; or
(c) directly or indirectly made an unlawful contribution to a political
activity.
All references to any Group Company in this paragraph 16 shall deemed to
include the relevant company's officers, agents and employees.
17. BROKERAGE OR COMMISSIONS
No person is entitled to receive from any Group Company or any Vendor in
relation to the Asset Businesses a finder's fee, brokerage or commission in
connection with this agreement or anything in it and no Group Company is
liable to pay to any of its directors, employees, agents or advisers any
sum whatsoever in connection with the sale of the US Shares.
18. DIRECTORS AND EMPLOYEES
18.1 Particulars of Officers
The particulars of all Assumed Employees and employees of the Group annexed
to the Disclosure Letter show the names, job title, date of commencement of
employment, date of birth and period of continuous employment (calculated
in accordance with chapter 1 of part XIV of the ERA) of every Assumed
Employee and every employee of the Group and contain details of
negotiations which have taken place in the preceding 18 months concerning
pay for all such employees.
18.2 Remuneration and Benefits
The particulars of all employees annexed to the Disclosure Letter show all
remuneration and other benefits:-
(a) actually provided; and
(b) which any Group Company or any Vendor in relation to the Asset
Businesses is bound to provide (whether now or in the future),
to each officer and employee of any Group Company and each Assumed Employee
and are true and complete and include particulars of and details of
participation in all profit sharing, incentive, bonus, commission, share
option, medical, permanent health insurance, directors' and officers'
insurance, travel, car, redundancy and other benefit schemes, arrangements
and understandings, whether legal or contractual (the "Schemes"), operated
for all or any
-85-
employees or former employees of the Group or any Assumed Employees or
their dependants whether legally binding on the Group or not.
18.3 Terms and Conditions
(a) The Disclosure Letter contains copies of all the standard terms and
conditions, staff handbooks and policies which apply to employees of
any Group Company and Assumed Employees and identifies which terms and
conditions apply to which employees.
(b) There are no terms and conditions in any contract with any director,
officer or employee of any Group Company or any Assumed Employee
pursuant to which such person will be entitled to receive any payment
or benefit or such person's rights will change as a direct consequence
of the transaction contemplated by this agreement.
(c) There are no service agreements or contracts of employment relating to
any Assumed Employee or between any Group Company and any of its
directors, officers or employees containing any provision in addition
to the matters required to be contained therein under section 1 of the
ERA.
(d) All employees of any Group Company and all Assumed Employees have
received a written statement of particulars of their employment as
required by section 1 of the ERA or relevant legislative requirements.
18.4 Operation of the Schemes
(a) The Schemes have at all times been materially operated in accordance
with their governing rules or terms and all applicable laws and all
documents which are required to be filed with any regulatory authority
have been so filed and all tax clearances and approvals necessary to
obtain favourable tax treatment for the participating companies and/or
the participants in the Schemes have been obtained and not withdrawn
and no act or omission has occurred which has or could prejudice any
such tax clearance and/or approval.
(b) Other than for payments made or to be made in accordance with the
terms of the Scheme no past or present Assumed Employee, director,
officer, employee or any dependant thereof or any other participant in
any Scheme has made any claim against any Group Company or any member
of the Xxxxxx Group in relation to the Asset Businesses in respect of
any Scheme and so far as Xxxxxx is aware no event has occurred which
could or might give rise to any such claim.
18.5 Notice Periods
The terms of employment or engagement of all employees, agents, consultants
and professional advisers of any Group Company and all Assumed Employees
are such that their employment or engagement may be terminated by not more
than twelve weeks' notice given at any time without liability for any
payment including by way of compensation or damages
-86-
(except for unfair dismissal or a statutory redundancy payment or, in
either case, the equivalent in any relevant jurisdiction).
18.6 Changes since the Accounts Date
Since the Accounts Date no Group Company nor any Vendor in relation to the
Asset Businesses has made, announced or proposed any changes to the
emoluments or benefits of or any bonus to or to any profit sharing scheme
or any other change in the conditions of employment of any of its
directors, officers or employees other than in the normal course and no
Group Company is under an obligation to make any such changes with or
without retrospective operation and no Assumed Employee is entitled to any
such changes to their emoluments, benefits, bonuses, or other terms and
conditions of employment.
18.7 Loans
There are no amounts owing or agreed to be loaned or advanced by any Group
Company to any directors, officers and employees of any Group Company or
by the Xxxxxx Group to any Assumed Employees (other than amounts
representing remuneration accrued due for the current pay period, accrued
holiday pay for the current holiday year or for reimbursement of
expenses).
18.8 Notice of Termination and Leave of Absence
(a) Except as set out in the Disclosure Letter as of the date hereof, no
director, officer or employee of any Group Company or Assumed
Employee has given or received notice to terminate his employment.
(b) There are no directors, officers or employees of any Group Company
and no Assumed Employee who are on secondment, maternity leave or
absent on grounds of disability or other leave of absence (other than
normal holidays or absence of no more than one week due to illness).
18.9 Payment up to Completion
All salaries and wages and other benefits of all employees of each Group
Company and all Assumed Employees have, to the extent due, been paid or
discharged in full.
18.10 Industrial Relations
(a) No directors, officers or employees of any Group Company and no
Assumed Employees are members of a trade union, staff association or
any other body representing workers and no such union, association or
body is recognised by any member of any Group Company or by any
member of the Xxxxxx Group in respect of any of the Assumed Employees
or Asset Businesses for the purposes of collective bargaining. The
Disclosure Letter contains a list of directors, officers, employees
and Assumed Employees who are so far as the Xxxxxx Group is aware
members of a trade union, trade union representatives or equivalent,
members of a workers' body, together with the date of expiry of their
mandate.
-87-
(b) The Disclosure Letter contains copies of and full details of all
rights and liabilities relating or pursuant to any collective
agreements (whether with a trade union, staff association or any
other body representing workers and whether legally binding or not)
concerning any Group Company or the Assumed Employees, or the Asset
Businesses.
(c) Within the three years preceding the date hereof no Group Company or
member of the Xxxxxx Group has been engaged or involved in any trade
dispute (as defined in section 218 of the TULR(C)A) with any
employee, trade union, staff association or any other body
representing workers relating to any Group Company or its employees
or any Assumed Employee and no event has occurred which could or
might give rise to any such dispute and no industrial action
involving employees of any Group Company or Assumed Employees,
official or unofficial, is now occurring or threatened nor has any
industrial relations or employment matter been referred either by the
Xxxxxx Group or any Group Company or trade union in respect of any
Assumed Employees or by any Group Company or its employees or by any
trade union staff association or any other body representing workers
to ACAS or other body with similar functions for advice, conciliation
or arbitration.
18.11 Claims by Employees
No Assumed Employee or past or present director, officer or employee of
any Group Company or any predecessor in business has brought any claim or
right of action against any Group Company or any member of the Xxxxxx
Group which is current including any claim:-
(a) in respect of any accident or injury which is not fully covered by
insurance; or
(b) for breach of any contract of services or for services or of a
collective agreement of any nature; or
(c) for loss of office or arising out of or connected with the
termination of his office or employment
and so far as Xxxxxx is aware no event or inaction has occurred which
could or might give rise to any such claim.
18.12 Enquiries and Discrimination
(a) There are no enquiries or investigations existing, pending or so far
as Xxxxxx is aware threatened affecting any Group Company in relation
to any directors, officers or employees or concerning any Assumed
Employee by the Equal Opportunities Commission, the Commission for
Racial Equality or the Health and Safety Executive or any other
bodies with similar functions or powers in relation to workers, in
any jurisdiction.
-88-
(b) There are no terms or conditions under which any Assumed Employee,
director, officer or employee of any Group Company is employed, nor
so far as Xxxxxx is aware has anything occurred or not occurred prior
to Completion that may give rise to any claim for sex discrimination,
race discrimination, age discrimination, disability discrimination or
equal pay either under domestic United Kingdom laws or the laws of
any other jurisdiction whether by such Assumed Employee director,
officer or employee or a prospective director, officer or employee or
otherwise.
18.13 Compliance with Laws
(a) Each Group Company and in respect of the Assumed Employees each
member of the Xxxxxx Group has complied in all material respects with
all relevant provisions of the Treaty of Rome, EC Directives,
statutes, regulations, codes of conduct, collective agreements, terms
and conditions of employment, orders, declarations and awards
relevant to each Assumed Employee and each Group Company's directors,
officers and employees or the relations between such Group Company
and any trade union, staff association or any other body representing
workers.
(b) There are no training schemes, arrangements or proposals, whether
past or present, in respect of which a levy may henceforth become
payable by any Group Company under the Industrial Training Act 1982
and pending Completion no such schemes, arrangements or proposals
will be established or undertaken.
18.14 Transfer Regulations
No Group Company has entered into any agreement and no event has occurred
which may involve such Group Company in the future acquiring any
undertaking or part of one such that the Transfer Regulations may apply
thereto.
18.15 Duty to Inform and Consult
So far as Xxxxxx is aware each Group Company and each member of the Xxxxxx
Group in relation to the Asset Businesses have complied with their
obligations to inform and consult with trade unions and other
representatives of workers, including on the proposals covered by this
agreement, and to send notices to the Secretary of State pursuant to their
legal obligations.
18.16 Records
Each Group Company and each Vendor in relation to the Asset Businesses has
maintained adequate and suitable records regarding the service of its
directors, officers and employees and such records comply with the
requirements of the Data Protection Xxx 0000.
-89-
18.17 Business is conducted by Employees
No Group Company nor any member of the Xxxxxx Group in relation to the
Asset Businesses has entered into any agreement or arrangement for the
management or operation of its business or any part thereof other than
with its employees.
19. PROPERTIES
19.1 All Property
The Properties comprise all the freehold and leasehold land owned, used
or occupied by and all the rights vested in each Group Company and all
agreements whereby each Group Company has any financial entitlement
relating to any land at the date hereof.
19.2 No Other Liabilities
The Group Companies have no actual or contingent obligations or
liabilities (in any capacity including as principal contracting party or
guarantor) in relation to any lease, licence or other interest in, or
agreement relating to, land apart from the Properties.
19.3 Good and Marketable Title
The Group Companies and Vendors in relation to the Asset Businesses have
good and marketable title to the Properties which title is freehold or
leasehold as indicated in schedule 6 and, unless disclosed in schedule 6,
the Group Companies and the Vendors in relation to the Asset Businesses
are solely legally and beneficially entitled to the Properties for an
unencumbered estate in possession other than the Permitted Encumbrances.
19.4 Title Deeds and Documents
Each Group Company and each Vendor in relation to the Asset Businesses
has under its control all title deeds and documents necessary to prove
its title to the Properties and the same are original documents; where
any of the Properties is leasehold the title documents include all
necessary consents for the grant and assignment of the lease,
satisfactory details of all reversioners' titles, memoranda of rent
increases where appropriate and all reversioners' consents required under
the lease; where any of the Properties are subject to leases,
underleases, agreements or licences the title documents include all
necessary consents in connection therewith and evidence of registration
of the grant of the same where appropriate.
19.5 No Adverse Rights in Course of Acquisition
No liberty, right, easement, licence or other arrangement is enjoyed or
is in the course of being acquired by or against the Properties (and none
is needed) for obtaining access to any land or for repair of any premises
or to comply with any fire regulations other than the Permitted
Encumbrances.
-90-
19.6 Adequacy of Existing Beneficial Rights
Each of the Properties has the benefit of all rights necessary for the
continued present use and enjoyment of the same such rights not being
capable of withdrawal by any person nor liable to be made subject to any
charge therefor.
19.7 No Encumbrances
Unless disclosed in schedule 6 the Properties and the title deeds thereto
are not and will not at Completion be subject to any Encumbrance or any
lease or agreement for lease other than the Permitted Encumbrances.
19.8 No Overriding Interests
The Properties are not subject to any overriding interests within the
meaning of section 70 of the Land Registration Xxx 0000.
19.9 Other Matters Adversely Affecting the Properties
There are no agreements, covenants, restrictions, exceptions, servitudes,
reservations, conditions, rights, privileges or stipulations affecting
the Properties which are of an onerous or unusual nature or which
adversely affect the value of the Properties or conflict with the user
thereof.
19.10 No Default
Each Group Company and each Vendor in relation to the Asset Businesses
has duly performed, observed and complied in all material respects with
all covenants, restrictions, exceptions, reservations, conditions,
agreements, statutory and common law requirements, by-laws, orders,
building regulations and other stipulations and regulations affecting the
Properties and the uses of the Properties including the terms of any
lease, underlease or tenancy agreement under which any part of any of the
Properties is held and the terms of any joint venture, finance or
development agreement or agreement for lease and the development and/or
uses of the Properties do not contravene the same and (without prejudice
to the generality of the foregoing) all outgoings have been paid to date
and (in the case of leasehold property) all rents and service charges
have been paid to date and no notice of any alleged breach of any of the
terms of any such lease or tenancy agreement as aforesaid has been served
on any Group Company or any Vendor in relation to the Asset Businesses.
19.11 Leasehold Properties
Each of the Properties which is leasehold is held under the lease brief
details of which are set out in schedule 6 and no licences or collateral
arrangements or concessions have been entered into or granted, each such
lease being a head lease and containing no unusual or onerous covenants
or provisions nor any rights of determination on the part of the
landlord, and there are no rent reviews which are or will at the date of
Completion be in the course of being determined.
-91-
19.12 Occupational Interests
All such leases, tenancies, licences and agreements to which the
Properties are subject are correctly summarised in the particulars
thereof set out in schedule 6 and subject thereto each Group Company or
the relevant Vendor in relation to the Asset Businesses is in exclusive
occupation of each and every part of the Properties.
19.13 Due Compliance by Occupational Tenants
Each lessee, tenant, licensee or occupier of any such lease, underlease,
tenancy, licence or agreement has in all material respects observed and
performed all covenants, obligations, conditions and restrictions therein
and no breach has been waived or acquiesced in and all rent has been paid
promptly and has not been commuted, waived or paid in advance nor have
any collateral assurances, undertakings or concessions been made or
entered into in connection therewith.
19.14 Use
The existing use of each of the Properties is only and has always been
that specified in schedule 6 and is the lawful permitted use whether
under the current Town and Country Planning legislation and in the case
of leasehold property under the terms of the lease or tenancy agreement
under which such property is held or otherwise and are not temporary uses
and all necessary consents to such existing uses have been obtained.
19.15 Development
All development carried out has been and is lawful and all necessary
consents and permissions have been or are being obtained for such
development.
19.16 Adequacy of Planning Consents
The consents and permissions referred to in paragraphs 19.14 and 19.15 of
this schedule 3 are valid subsisting and unimpeachable and are not
temporary or suspended and are also either unconditional or subject only
to conditions which have been satisfied so that nothing further remains
to be done thereunder or are not such as would be regarded as onerous by
a prudent investor in commercial property of the nature of the Properties
and no planning permission remains unimplemented (whether in whole or in
part) nor has any planning application been submitted which awaits
determination.
19.17 No Compulsory Acquisition or Enforcement Proceedings
There are no outstanding enforcement or other notices or proceedings
issued in respect of any of the Properties and there is no resolution or
proposal for compulsory acquisition by the local or any other authority
nor any outstanding order, notice or other requirement of any such
authority that affects such existing use as aforesaid or involves
expenditure in complying with it nor any other circumstances known which
may result in any such order or notice being made or served or which may
otherwise affect the Properties.
-92-
19.18 Repair and Condition
All buildings and structures comprised in the Properties are in
reasonable repair and condition (fair wear and tear excepted) and there
are no material defects therein (whether latent, inherent or otherwise);
no such buildings and structures have been the subject of flooding or
drainage defects and no substances the use of which is not now approved
by current good building practice were used in the construction of any
part thereof.
19.19 Replies to Enquiries
All disclosures and replies to enquiries and requisitions relating to the
Properties made or given by or on behalf of any member of the Xxxxxx
Group or any Group Company to RoweCom or its solicitors are now and will
at Completion be complete and correct in all material respects.
19.20 Full Disclosure
All relevant matters affecting the use or value of the Properties and
full details of all leases have been disclosed in writing to RoweCom or
its solicitors prior to the date hereof.
19.21 Accuracy of Information
All the information produced to or given in writing to RoweCom or
RoweCom's Solicitors in respect of or relating to the Properties
(including replies to enquiries and requisitions) in the course of
negotiations leading up to the execution of this agreement is materially
true and accurate and Xxxxxx is not aware of any fact, matter or thing:-
(a) which has not been disclosed to RoweCom or RoweCom's Solicitors
which makes any such information materially untrue or misleading at
the date of this agreement; or
(b) the disclosure or non-disclosure of which might affect the ability
of RoweCom or the relevant Purchaser to operate the Business at the
Property in a manner similar to that which the relevant Vendor
conducted the Business at the date of this agreement.
19.22 No Disputes
The Properties are not affected by any outstanding disputes, notices or
complaints which affect the use of the Properties for the purposes for
which they are now used or proposed to be used and there are no matters
or Encumbrances affecting the Properties and which would prevent or
impede any Group Company or any Vendor in relation to the Asset
Businesses from operating and carrying on the businesses currently
carried on at the Properties.
19.23 Local Authorities - Land Charges and Replies to Enquiries
The Properties are not affected by any matter or thing which would be
revealed by official certificates of search in the register of local land
charges or by replies to enquiries received
-93-
from the appropriate local authority or body which would adversely affect
the Properties or the value thereof or the continued uses thereof for the
existing uses indicated in schedule 6.
19.24 Folkestone Property
In relation to the Folkestone Property:
(a) the Folkestone Property comprises all the freehold and leasehold
land used or occupied by the Company in relation to the UK Business;
(b) the Company has good title to the Folkestone Property free from any
restrictions covenant or easement that would materially adversely
affect the use and enjoyment of the Folkestone Property as envisaged
by the Lease and has power to grant the Lease without the consent of
any other person;
(c) the Company is entitled to vacant possession of the Folkestone
Property which is not subject to any lease to tenancy;
(d) so far as Xxxxxx is aware the Folkestone Property is not subject to
any outstanding dispute or litigation nor has any notice been given
or received which would adversely affect the use and enjoyment of
the Folkestone Property as envisaged by the Lease; and
(e) so far as Xxxxxx is aware the Folkestone Property and its use comply
with the relevant Town and Country Planning legislation.
20. PENSIONS
All the warranties in this paragraph 20 relate to pension arrangements in
the UK Business only.
20.1 Pension arrangements disclosed
Save in respect of the Xxxxxxx Xxxxxx Group Pension Fund (the "Disclosed
Scheme") and the Xxxxxxx Xxxxxx Group Money Purchase Scheme (the
"Scheme") the Xxxxxx Group is under no obligation or commitment, nor is
it a party to any custom or practice, to pay, provide or contribute
towards any "relevant benefits" within the meaning of section 612 of the
TA to or in respect of any of the UK Employees.
20.2 Ex gratia pensions etc.
The Xxxxxx Group has not made or proposed, and will not before Completion
make or propose, any voluntary or ex gratia payments to any of the UK
Employees in respect of any relevant benefit (as defined in paragraph 1
of this schedule).
20.3 Undertakings and assurances
-94-
No undertaking or assurance (whether legally binding or not) has been
given by or will before Completion be given by the Xxxxxx Group to any
person as to the continuance, introduction, increase or improvement of
any such benefit or scheme or arrangement as is referred to in paragraph
1 of this schedule (including, for the avoidance of doubt, the Disclosed
Scheme) except with the written consent of RoweCom.
20.4 Disclosure of documents
Material details of the Disclosed Scheme have been supplied to RoweCom or
its legal advisers and copies of the following are annexed to the
Disclosure Letter:-
(a) the trust deeds and rules which currently govern the Disclosed
Scheme;
(b) any announcements to members of the Disclosed Scheme which are not
yet the subject of formal amendment to the documentation of the
Disclosed Scheme (including any individual or group announcements
made to or in respect of any present or former employee or officer
of the Xxxxxx Group);
(c) the current explanatory booklets and other explanatory literature
issued to persons who are members of the Disclosed Scheme;
(d) the name and address of the actuary to the Disclosed Scheme and the
actuary's report on the last actuarial valuation and actuary's
annual certificate for MFR purposes of the Disclosed Scheme,
together with any subsequent actuarial advice or recommendations
given in relation to any of the Disclosed Scheme;
(e) the audited accounts of the Disclosed Scheme (including the
auditors' report) for the scheme year ended 5 April 1998;
(f) a list of active members of the Disclosed Scheme with material
particulars of them relevant to their membership therein or interest
of the Disclosed Scheme and necessary to establish their
entitlements to benefits, including material particulars of any
benefit augmentations granted to them under the Disclosed Scheme;
(g) the identity of all employers participating in the Disclosed Scheme;
(h) details of the basis on which Xxxxxx and the members of the
Disclosed Scheme contribute thereto, and make payments in respect of
the expenses of administration, management and trusteeship thereof
and the rate and amount of such contributions and payments made in
the three years prior to the date of this agreement, and of the
period for which the rate and amount of such contributions have
remained at their present level;
(i) details of any discretionary benefits provided under, and
discretionary arrangements relating to, the Disclosed Scheme;
(j) any contracting out certificate issued by the Occupational Pensions
Board or Contributions Agency in relation to the Disclosed Scheme,
details of the basis on
-95-
which the Disclosed Scheme is contracted out with effect from 6
April 1997, any notification of approval of the Disclosed Scheme
given by the Pension Schemes Office of the Inland Revenue and the
latest confirmation that such approval is not affected, and any
undertakings and indemnities given to the Inland Revenue or the
Occupational Pensions Board or the Contributions Agency in relation
to the Disclosed Scheme;
(k) particulars of the assets of the Disclosed Scheme by reference to
the categories listed in schedule 3 to the Occupational Pension
Schemes (Disclosure of Information) Regulations 1996;
(l) each agreement and letter of appointment relating to the
administration of the Disclosed Scheme;
(m) each contract of insurance and any managed fund or other investment
contract with any insurance Xxxxxx Group relating to the Disclosed
Scheme which is of current effect and material particulars of the
premiums or other contributions payable under those contracts; and
(n) details of arrangements made in respect of member nominated
trustees.
Material details of the Scheme have been supplied to RoweCom or its legal
advisers, including:-
(a) the trust deeds and rules which currently govern the Scheme;
(b) the current explanatory booklets and other explanatory literature
issued to persons who are members of the Scheme;
(c) the identify of the UK employees who participate in the Scheme; and
(d) details of the current rate of contributions payable by Xxxxxx and
the UK employees to the Scheme.
20.5 Payment of contributions
All contributions and premiums which are payable by Xxxxxx under the
Disclosed Scheme and all contributions due from members of the Disclosed
Scheme have been duly made and As far as Xxxxxx is aware (having made
enquiries of Xxxxxxx X. Xxxxxx) the participating companies have
fulfilled all their material obligations under the Disclosed Scheme.
Since the date of the last actuarial valuation or schedule of
contributions no increase or decrease in the rate of contributions to the
Disclosed Scheme has occurred or been recommended.
20.6 Exempt approval
The Disclosed Scheme is an exempt approved scheme and has been with
effect from its date of commencement within the meaning of section 592(1)
of the TA and, as far as Xxxxxx is aware, there is no reason why such
approval might be withdrawn or cease to apply.
-96-
20.7 Contracting out
A contracting-out certificate under the Xxxxxxx Xxxxxxx Xxx 0000 is in
force covering the employments of all employees or officers of Xxxxxx who
are members of the Disclosed Scheme and, as far as Xxxxxx is aware, there
is no circumstance which might cause such certificate to be withdrawn or
cease to apply.
20.8 Insurance of death benefits
All lump sum death benefits which may be payable in respect of the UK
Employees under the Disclosed Scheme (other than refund of members'
contributions with interest where appropriate) are so far as Xxxxxx is
aware fully insured with an insurance company authorised to carry on
long-term insurance business under the Insurance Companies Xxx 0000.
20.9 Legal compliance
As far as Xxxxxx is aware (having made enquiries of the trustees of the
Disclosed Scheme and Xxxxxxx X. Xxxxxx) and ought reasonably to be aware
the Disclosed Scheme 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 and complied in all material
aspects with all applicable legislation and the general requirements of
trust law and as far as Xxxxxx is aware (having made enquiries of the
trustees of the Disclosed Scheme and Xxxxxxx X. Xxxxxx) and ought
reasonably to be aware:-
(a) all decisions made by the trustees of the Disclosed Scheme have been
made, in all material respects, in accordance with their powers and
duties as such trustees and all decisions and exercises of powers by
Xxxxxx under the Disclosed Scheme are, in all material respects,
valid;
(b) neither the trustees of the Disclosed Scheme nor Xxxxxx have engaged
or currently engage in any activity in relation to the Disclosed
Scheme which would require any of them to be authorised for the
purposes of the Financial Services Xxx 0000;
(c) all necessary registrations in relation to the Disclosed Scheme
(whether by the trustees thereof or by Xxxxxx) under the Data
Protection Act 1984 have been made and are effective and the
provisions of that Act have been complied with in all material
respects;
(d) in all material respects, the Disclosed Scheme has been administered
at all applicable times in accordance with the provisions of Article
141 (formerly Article 119) of the Treaty of Rome; and
(e) in all material respects, the Disclosed Scheme has been administered
at all applicable times in accordance with and complies with the
Xxxxxxxx Xxx 0000.
20.10 No claims or litigation
-97-
As far as Xxxxxx is aware (having made enquiries of the trustees of the
Disclosed Scheme and Xxxxxxx X. Xxxxxx), no claim has been made or
threatened against the trustees or administrator of the Disclosed Scheme
(including any complaint under the internal dispute resolution procedure
or to the Pensions Ombudsman or the Occupational Pensions Regulatory
Authority) in respect of any act, event, omission or other matter arising
out of or in connection with the Disclosed Scheme (other than routine
claims for benefits) and so far as Xxxxxx is aware there are no
circumstances which may give rise to any such claim.
20.11 Discretionary benefits
As far as Xxxxxx is aware (having made enquiries of the trustees of the
Disclosed Scheme and Xxxxxxx X. Xxxxxx), since the date of the last
actuarial valuation of the Disclosed Scheme no power or discretion has
been exercised to augment or improve any benefit thereunder for or in
respect of any UK Employee and no promise or announcement has been or
will before Completion be made to do so.
20.12 Access to membership
Every UK Employee who is entitled to membership of the Disclosed Scheme
has been invited to join as of the date on which he became so entitled.
20.13 Payments to companies
No payment has been or is currently proposed to be made from the
Disclosed Scheme to Xxxxxx.
20.14 Fees and expenses paid
As far as Xxxxxx is aware (having made enquiries of the trustees of the
Disclosed Scheme and Xxxxxxx X. Xxxxxx), all actuarial, consultancy,
legal and other fees and charges, and all taxation and other expenses for
which liability has arisen, in respect of the Disclosed Scheme and
whether payable by Xxxxxx or by the trustees thereof, have been paid.
20.15 Records properly maintained
As far as Xxxxxx is aware, the records regarding the UK Employees of the
Disclosed Scheme, including without prejudice to the generality of the
foregoing all books of account and trustees' minutes, have been properly
and accurately maintained and all such records are in the possession of
or under the control of the trustees of the Disclosed Scheme.
20.16 Accuracy of data
As far as Xxxxxx is aware (having made enquiries of the trustees of the
Disclosed Scheme and Xxxxxxx X. Xxxxxx), there are no material omissions
from or inaccuracies in the data supplied to RoweCom or its advisors
listing the UK Employees who are currently members of the Disclosed
Scheme.
-98-
20.17 Scheme assets
As far as Xxxxxx is aware (having made enquiries of the trustees of the
Disclosed Scheme and Xxxxxxx X. Xxxxxx), the trustees of the Disclosed
Scheme have legal title to all the assets of that scheme. None of the
assets of the Disclosed Scheme constitute "employer-related investments"
for the purposes of section 40 of the Xxxxxxxx Xxx 0000.
20.18 Regulatory matters
No reports have been made to and as far as Xxxxxx is aware (having made
enquiries of the trustees and Xxxxxxx X Xxxxxx), no fine or penalty has
been levied by the Occupational Pensions Regulatory Authority in relation
to the Disclosed Scheme.
For the purposes of these warranties, "Xxxxxx" means Xxxxxx Holdings plc
and all other participating employers in the Fund and the Scheme.
INTERNATIONAL TAX WARRANTIES
21. RETURNS
21.1 The Company has paid all Tax which it has become liable to pay and is not
under any liability to pay any penalty, interest, surcharge or fine in
connection with any Tax.
21.2 The Company has made all returns, maintained all records, supplied all
information and given all notices to any Taxation Authority as required
by law within any requisite period and all such returns, information and
notices are correct and accurate in all respects and are not the subject
of any dispute and there are no facts or circumstances likely to give
rise to or be the subject of any such dispute.
21.3 The Company has properly deducted Tax at source and paid over such Tax in
accordance with the system applicable in any relevant jurisdiction in
respect of any Income Tax "Pay as You Earn" system and has duly paid and
accounted for all national insurance, social security or like
contribution required by any relevant jurisdiction and has complied with
all its reporting obligations in connection with the benefits provided
for employees and directors in accordance with such system.
21.4 The Company is not involved in any dispute in relation to Tax and no
Taxation Authority has investigated or indicated that it intends to
investigate the Tax affairs of the Company other than under the normal
tax audit procedures of the relevant taxation authority.
21.5 The Company has duly submitted all claims, disclaimers, elections,
surrenders and applications which have been assumed to have been made for
the purposes of the Accounts.
21.6 No Taxation Authority has operated or agreed to operate any special
arrangement (being an arrangement which is not based on relevant
legislation, published practice or convention) in relation to the affairs
of the Company.
-99-
21.7 No action has been taken by the Company in respect of which any consent
or clearance from a Taxation Authority was required save in circumstances
where such consent or clearance was validly obtained and where any
conditions attaching thereto were and will, immediately following
Completion, continue to be met.
22. DISPOSAL OF ASSETS
22.1 No claim has been made for the depreciation of any asset of the Company
for Tax purposes in circumstances in which the claim is likely to be
disallowed.
22.2 The Company is not liable to pay taxation in respect of any hidden
distributions of profit in any relevant jurisdiction.
22.3 The Company has not disposed of or acquired any assets in circumstances
such that the consideration deemed to be given on such disposal or
acquisition might be adjusted by any taxation authority.
22.4 The Company has not been involved in any share for share exchange or any
scheme of reconstruction or amalgamation.
22.5 None of the assets owned by the Company at the date hereof and acquired
by the Company in the six years ending on the date hereof acquired from
any company which at the time of acquisition was a member of the same
group as the first mentioned company and which will not be a member of
the same group after Completion.
22.6 The Company has not entered into any depreciatory transaction nor been
involved in a scheme or affected by any arrangements whereby the value of
any asset has been reduced, such that the amount of any taxable gain or
allowable loss arising to the Company will be subject to adjustment by
any taxation authority.
23. LOSSES
Details of certain allowances, credits, deductions, losses and other
reliefs from Tax ("Losses" for the purpose of this warranty) available to
the Company are set out in schedule 18 and nothing has been done and no
event or series of events has occurred or will prior to Completion occur
which will cause such Losses to be disallowed in whole or in part or will
prevent the carry forward in whole or in part of such Losses.
24. STAMP DUTY AND DOCUMENTARY TAXES
24.1 All documents in the enforcement of which the Company is interested have
been duly stamped and all such duty, interest and penalties have been
duly paid.
24.2 The Company is not liable for any tax or duty on any contributions of
capital whether formal or informal.
-100-
25. ACCOUNTS
The Accounts for the Company make provision or reserve in accordance with
the requirements of any applicable accounting standards in the relevant
jurisdiction in respect of any period ended on or before the Accounts
Date for all Tax assessed or liable to be assessed on the Company or for
which it is accountable at the Accounts Date including in particular (but
without prejudice to the generality of the foregoing) Tax in respect of
property (of whatever nature) income, profits or gains held, earned,
accrued or received by or to a person on or before the Accounts Date or
by reference to any event occurring, acts done or circumstances existing
on or before that date including distributions made down to such date or
provided for in the Accounts and proper provision has been made and shown
in the Accounts for deferred taxation in accordance with generally
accepted accounting principles.
26. VALUE ADDED TAX
26.1 The Company is registered for the purposes of the VAT legislation (or the
equivalent Tax legislation in each jurisdiction where it carries on
business "relevant VAT legislation") and has made, given, obtained and
kept full, complete, correct and up to date records, invoices and other
documents appropriate or required for the purposes of the relevant VAT
legislation and, is not in arrears with any payment or returns due under
the relevant VAT legislation and has not been required by the relevant
Taxation Authority in any applicable jurisdiction to give security under
the relevant VAT legislation.
26.2 The Company is not a member of a group of companies for the purposes of
any relevant VAT legislation.
26.3 The Company has not within the last 12 months been in default in respect
of any accounting period for VAT so as to give rise to any liability for
a surcharge for default under the relevant VAT legislation.
26.4 The Company is not, nor has it agreed to become, an agent, manager or
factor of, or fiscal representative of or for, any person not resident in
its jurisdiction for the purposes of the relevant VAT legislation.
27. SUBVENTIONS
The Company is not liable to repay any Tax, credit, subvention, subsidy
or similar amount received from any Taxation Authority or other
authority, body or person whatsoever.
28. SECONDARY LIABILITY
28.1 No transaction, act, omission or event has occurred (including without
limitation the execution or implementation of this agreement) in
consequence of which the Company is or may be held liable for any Tax or
may otherwise be held liable for or to indemnify any person in respect of
any Tax which is primarily or directly chargeable against or attributable
to any person other than the Company.
-101-
28.2 No transaction, act, omission or event has occurred which has resulted or
could result in any charge, lien, security interest, encumbrance or other
third party right arising over any of the Company's assets in respect of
unpaid Tax.
29. EFFECT OF COMPLETION
The Company will not become liable to pay any Tax or lose any relief or
allowances otherwise available to it as a result of entering into this
agreement or at Completion.
30. TRANSFER PRICING
All transactions entered into by the Company have been entered into on an
arm's length basis and the consideration (if any) charged or received or
paid by the Company on all transactions entered into by it has been equal
to the consideration which might have been expected to be charged,
received or paid (as appropriate) between independent persons dealing at
arm's length and no notice or enquiry by any Taxation Authority has been
made in connection with any such transaction.
31. RESIDENCE
The Company is not liable to Tax in any jurisdiction other than the
jurisdiction in which it is incorporated nor does the Company have or has
ever had a permanent establishment in a jurisdiction other than the
jurisdiction of incorporation.
32. DISTRIBUTIONS
32.1 The Company has not, in the last six years, made a distribution except
for dividends shown in the Accounts.
32.2 The Company has not, in the previous ten years, redeemed, repaid or
purchased any of its own shares or agreed to redeem its share capital or
capitalised or agreed to capitalise in the form of redeemable shares or
debentures any profits or reserves of any kind or description.
33. TAX AVOIDANCE
The Company has not entered into nor been a party to nor otherwise been
involved in any scheme or arrangement designed wholly or mainly for the
purposes of avoiding a liability to Tax.
34. DOUBLE TAXATION
34.1 The Company has made all claims necessary to obtain relief from double
taxation under any relevant bilateral convention relation to double
taxation in respect of income, profits, gains or payments accrued in the
Accounts or made prior to the Accounts Date.
34.2 The Company is not an agent of another company for the purpose of
assessing the latter to Tax in the country of residence of the first
company.
-102-
34.3 The Company has not changed its country of residence without obtaining
the appropriate mandatory consent from the relevant Taxation Authority.
35. WITHHOLDINGS
The Company has deducted Tax from all payments made where required by
applicable legislation and accounted to the relevant taxation authority
for Tax so deducted.
36. CONTROLLED FOREIGN COMPANIES
The Company has not been liable to Tax on the undistributed profits of
any overseas subsidiary where the Company has a shareholding in excess of
ten per cent. of such subsidiary.
37. TAX SHARING
The Company is not bound by or party to any indemnity relating to Tax,
tax sharing or any tax allocation agreement in respect of which claims
would not be time barred.
38. GROUPS
The Company is not and has never been a member of a group of companies or
a fiscal consolidation or a fiscal unity for the purposes of any
corporate income Tax.
38.1 Duties etc
None of the Assets in the UK Business is liable to distraint, sale,
mortgage confiscation or forfeiture by virtue of non-payment or under
payment of any Taxation or duty or by virtue of non-compliance by the
Vendor of the UK Business with any legislation or regulation relating to
any Taxation or duty.
38.2 Capital Goods Scheme
All Assets in the UK Business Assets which are or have been subject to
the provisions of part XV of the Valued Added Tax Regulations 1995 are
listed in the Disclosure Letter and all adjustments required to be made
pursuant to the said part on or before the date hereof have been properly
made and properly declared to H M Customs and Excise.
38.3 Elections to Waive Exemption From VAT
The Vendor of the UK Business has not made any elections to waive
exemption from VAT under paragraph 2 of Schedule to the Value Added Tax
Xxx 0000 in relation to the Folkestone Property or any part of the
Property situated in the Property situated in the UK which are in force.
-103-
38.4 Capital Allowances
None of the Assets in the UK Business is leased within the meaning of
section 50 of the Capital Allowances Xxx 0000;
38.5 Stamp Duty
All documents in the possession or under the control of the Vendor in
relation to the UK Business or to the production of which the Vendor in
relation to the UK Business is entitled and which are necessary to
establish the title of the Vendor in relation to the UK Business to any
of the Assets in the UK Business and which attract stamp duty in the
United Kingdom or elsewhere which would need to be paid in order rely on
any such document before a competent court have been properly stamped,
and, if United Kingdom stamp duty has not been paid because the documents
have been executed and retained outside the United Kingdom, would not
attract United Kingdom stamp duty if brought into the United Kingdom.
39. ENVIRONMENTAL MATTERS
39.1 Consents
Each Group Company and each Vendor in relation to the Asset Businesses
has obtained and complied with the terms and conditions of all
Environmental Consents if any. All current Environmental Consents if any
remain in full force and effect. No Group Company nor any member of the
Xxxxxx Group has received any notice of and so far as Xxxxxx is aware
there are no circumstances that may lead to the revocation, modification
or suspension of, or that may prejudice or require material expenditure
for the renewal, extension, grant or transfer of, any current
Environmental Consents.
39.2 Liability
Each Group Company and each Vendor in relation to the Asset Businesses,
complies and has complied and so far as Xxxxxx is aware, the Properties,
the Folkestone Property and the Canadian Property currently comply with
all Environmental Laws and so far as Xxxxxx is aware there are no facts
or circumstances which interfere or prevent compliance with any
Environmental Laws.
There are no civil, criminal, arbitration or administrative actions,
claims, proceedings or suits pending or threatened against any Group
Company arising from or relating to Environmental Consents or
Environmental Law and so far as Xxxxxx is aware there are no
circumstances which may lead to such actions, claims, proceedings or
suits.
39.3 Notices and Complaints
No Group Company and no member of the Xxxxxx Group has received any
notice of enforcement, prohibition, improvement, remediation or other
notice of equivalent nature, or any judgment, order, decree, award,
demand or decision in respect of the Environment from any court,
tribunal, arbitrator or governmental or regulatory authority and there
have been no complaints, investigations, enquiries, requests for
information or other formal or informal
-104-
indications of any possible claims or legal actions in respect of the
Environment from any person including any neighbour, governmental or
regulatory authority, current or former employee or third party.
39.4 Contaminated Land
As far as Xxxxxx is aware there is not present on, at or under the
Properties and there is and has been no release, migration, leakage,
spill, discharge, entry, deposit or emission onto or from the Properties
of any Hazardous Substance or Waste.
39.5 House-keeping
(a) Hazardous Substances kept on the Properties or used in connection
with or produced by any Activities have been kept in tanks,
containers (in both cases surrounded by suitable bund) or proper
storage buildings, as the case may be, all of the foregoing being
appropriate for the substance stored and fit for the designated
purpose.
(b) No PCBs, asbestos, underground storage tanks or pipework or
landfills are located on the Properties which are prohibited in any
material respect under any Environmental Law.
(c) No Group Company has received, generated, handled, used, stored,
treated, transported, kept, deposited or disposed of Waste at, on or
under the Properties and has not permitted any third party to do so
nor has reasonable cause to believe that any third party has done
so.
(d) No Property is included on or referred to in any register of land
subject to contaminative use or any register of contaminated land
(whether or not publicly available) kept pursuant to any
Environmental Law and so far as Xxxxxx is aware there are no
circumstances which are likely to lead to such registration.
40. INFORMATION
40.1 The Agreement
The information set out in schedules 1, 2 and 6 of this agreement is
materially true, complete, accurate and not misleading.
41. US SECURITIES LAW
41.1 Xxxxxx is not a "U.S. person" within the meaning of that term as used in
Regulation S promulgated under the Securities Act; and is an "accredited
investor" within the meaning of that term as used in Regulation D
promulgated under the Securities Act.
41.2 Xxxxxx will acquire the RoweCom Shares only for its own account, for
investment, and not with a view to, or for transfer in connection with,
any distribution in violation of the Securities Act or any rule or
regulation thereunder.
-105-
41.3 Xxxxxx has had adequate opportunity to obtain from RoweCom sufficient
information to permit it to evaluate the merits and risks of an
investment in the RoweCom Shares.
41.4 Xxxxxx has sufficient experience in business, financial, and investment
matters to be able to evaluate the risks involved in an investment in the
RoweCom Shares and to make an informed decision with respect to such
investment.
41.5 Xxxxxx can afford a complete loss of its investment in the RoweCom Shares
and is able to bear the economic risk of holding such shares for an
indefinite period.
41.6 Xxxxxx understands and agrees that:-
(a) the RoweCom Shares have not been registered under the Securities
Act, and are "restricted securities" within the meaning of Rule 144
under the Securities Act;
(b) the RoweCom Shares cannot be sold, transferred, or otherwise
disposed of unless they are subsequently registered under the
Securities Act, or unless an applicable exemption from such
registration is available;
(c) RoweCom has no obligation to register the RoweCom Shares under the
Securities Act or unless an applicable exemption from such
registration is available; and
(d) any certificate(s) representing the RoweCom Shares will bear
restrictive legends referring to the restrictions on transfer
imposed by the Securities Act.
-106-
SCHEDULE 3
The Warranties
Part B - Jurisdiction Specific
Canada
1. GOODS AND SERVICES TAX
Xxxxxx represents and warrants that:-
(a) Xxxxx Canada Limited is registered for purposes of the Goods and
Services Tax Legislation (Canada);
(b) this agreement provides for the sale to RoweCom of all or
substantially all of the property used in the Canadian Business; and
(c) the Canadian Business is a "commercial activity" for purposes of the
Canadian Goods and Services Tax Legislation.
The parties agree to elect that no tax be payable pursuant to the Canadian
Goods and Services Tax Legislation, made jointly by the parties, in
compliance with the requirements of the applicable legislation.
2. UNION OR EMPLOYEE ASSOCIATION REPRESENTATION
Xxxxxx represents and warrants that:-
(a) with respect to the Canadian Business, neither Xxxxxx nor any other
member of the Xxxxxx Group has made any Contracts with any labour
union or employee association nor made commitments to or conducted
negotiations with any labour union or employee association with
respect to any future agreements.
(b) neither Xxxxxx nor any member of the Xxxxxx Group is aware of any
current attempts to organise or establish any labour union or employee
association with respect to any employees of the Canadian Business or
the relevant Asset Vendor.
3. EMPLOYMENT COMPLAINTS
Xxxxxx represents and warrants that:-
(a) no notice has been received by Xxxxxx or any member of the Xxxxxx
Group of any complaint filed by any of the employees against the
Canadian Business or any member of the Xxxxxx Group claiming that the
Business or the relevant Asset Vendor has violated the Employment
Standards Act (Ontario) or the Human Rights Code (Ontario) (or any
applicable employee or human rights legislation in the other
jurisdictions in which the Business is conducted or relevant Asset
Vendor operates) or of any complaints or proceedings of any kind
involving the relevant Asset Vendor
-107-
or, to Xxxxxx had the Vendor Group's knowledge, any of the employees
of any member of Business before any labour relations board.
(b) there are no outstanding orders or charges against any member of the
Xxxxxx Group under the Occupational Health and Safety Act (Ontario)
(or any applicable health and safety legislation in the other
jurisdictions in which the Business is conducted).
France
With respect to the French Business, Xxxxxx represents and warrants:
4. ASSETS
4.1 Origin of the French Business
The French Business was created by Xxxxxx France in 1925. Two subscription
businesses were purchased by Xxxxxx France. The first from Nouvelles
Messageries de la Presse Parisienne (NMPP) on 29 November 1991 for a
consideration price of 2,425,000F with respect to intangible assets, The
second from La Societe de Periodiques Specialises (SPES) on 26 April 1996,
for a consideration price of 700,000F with respect to intangible assets.
4.2 Profits and Results of the last three years
In accordance with the provisions of article 12 of the French Business
Transfer Law, the profits and results of the Asset Vendor in respect of the
French Business for the last three years of the operation of the French
Business are as follows:
-----------------------------------------------------------------------------
Year Turnover Profit before tax
(in French francs) (in French francs)
-----------------------------------------------------------------------------
1998 604,494,000 22,715,000
-----------------------------------------------------------------------------
1997 556,061,000 21,117,000
-----------------------------------------------------------------------------
1996 513,410,000 16,395,000
-----------------------------------------------------------------------------
Xxxxxx (or the French Vendor) undertakes or procures to provide for in the
French Business Transfer Agreement the amount of the turnover and of the
profits made by the French Vendor for the period from the Accounts Date
until Completion Date.
4.3 Encumbrances
The French Business is free of any Encumbrance.
5. DIRECTORS AND EMPLOYEES
5.1 The Company has not dismissed or made redundant any employee of the French
Business who may benefit or claim to be considered as an Assumed Employee.
5.2 Only the French Employees are connected with the French Business and there
is no other employee of the Asset Vendor in respect of the French Business
or of the Xxxxxx Group
-108-
who may be considered as a French Employee or to whom the Company would
have given such undertaking.
5.3 The Company does not employ any commercial agent, sales representatives
(VRP) or other persons of a similar nature.
6. PROPERTIES
The French Real Property is and has always been used and occupied by the
French Vendor for carrying out commercial activities and is not situated in
an insanitary housing block, and is not the subject of a hazard or of any
measure forbidding occupation or ordering the eviction of its occupiers.
The French Real Property is not situated in a ZAD (zone d'amenagement
differe), ZUP (zone a urbaniser en priorite), ZAC (zone d'amenagement
concerte) or other zone of land, whatever its legal nature, which is
governed by a specific legal regime which derogates from the common law.
Spain
With respect to the Spanish Business, Xxxxxx represents and warrants:
7. BUSINESS
7.1 Operation
The transfer of none of the Assets of the Spanish Business to the Spanish
Purchaser infringes in any way any of the Spanish legal provisions.
7.2 Continuity of the activity
The Spanish Vendor declares and guarantees that the legal situation is in
order with respect to all the Spanish Assets, in such a way that the
Spanish Purchaser may immediately and without suspending the continuity of
the Spanish Business, exploit the same, since the Spanish Vendor holds
legitimate possession of all the licences, consents and authorisations of
all types (administrative, tax, municipal and labour) necessary for
carrying out the Spanish Business.
8. ASSETS
8.1 Title
The Spanish Vendor holds full legal title to all the Assets of the Spanish
Business, and those Assets of the Spanish Business subject to registration
are duly registered at the corresponding public registries.
8.2 Encumbrances
The Spanish Business is free of any Encumbrance, also free of any reserve
of ownership and/or prohibition to dispose of the same, and not affected by
pre-emption rights of third
-109-
parties, and in perfect condition of use for business activities and for
the purpose intended, and comply with the descriptions made of the same.
9. DIRECTORS AND EMPLOYEES
The Spanish Vendor, in respect of the Spanish Business, is not under any
obligation of any nature whatsoever to former employees, in particular in
respect of any premature termination of contracts of employment, including
temporary contracts of employment, or contracts with travelling
representatives or for the supply of services, or for a failure to respect
any obligation whatsoever to reappoint an employee. In particular, the
Spanish Vendor has not made redundant any employee of the Spanish Business
who may benefit or claim to be considered as an Assumed Employee.
Only the Spanish Employees are connected with the Spanish Business and
there is no other employee of the Spanish Vendor in respect of the Spanish
Business or of the Xxxxxx Group who may be considered as a Spanish Employee
or to whom the Company would have given such undertaking.
The Spanish Vendor does not employ any commercial agent, sales
representatives (VRP) or other persons of a similar nature.
There are no labour claims which might affect the Spanish Purchaser filed
prior to the signing of this Agreement. Xxxxxx will compensate RoweCom for
any amount which it may be obliged to pay to any employee on the basis of
acts having occurred prior to this date.
All the employment conditions of the Spanish Employees transferred have
been fully declared to the Spanish Purchaser, including the amount and
nature of the salaries, wages and compensations, benefits, responsibilities
and positions.
10. PROPERTIES
Any and all intellectual or industrial property included in the Spanish
Business to be transferred upon Completion by means of a public deed to be
authorised by a Spanish Public Notary, are in force, their payments being
up to date.
The Spanish Vendor will transfer to the Spanish Purchaser on the Completion
the right of use of its Intellectual Property, as well as all documentation
which the Spanish Vendor holds with respect to the Intellectual Property.
11. TAXES AND SOCIAL SECURITY CONTRIBUTIONS
11.1 V.A.T.
The Spanish Vendor declares that the transfer of the Spanish Business is
subject to V.A.T. as it does not fulfil the conditions established in
Article 7 of Law 37/1992, of December 28, 1992, on Value Added Tax.
-110-
11.2 Transfer of Tax Liabilities to the Purchaser
If pursuant to Article 72 of the Ley General Tributaria (approved by Law
230/1963, dated December 28, 1963 and amendments thereto) and Articles 13
of the Reglamento General de Recaudacion (approved by Royal Decree
1684/990, of December 20 1991), the Spanish Tax Authorities would open a
disciplinary file regarding the assumption of responsibility by company
succession "sucesion de empresa" in the terms of the above-stated tax
regulations, Xxxxxx will reimburse any liabilities, costs, and expenses to
the Spanish Purchaser arising therefrom or in relation thereto.
The Spanish Vendor is up to date in its payment of all taxes and
contributions in general, Social Security contributions and other charges
of this type relating to or arising from the Spanish Business and its
activity and from the employment of the mentioned Spanish Employees,
accrued up to the date of this Agreement.
11.3 V.A.T.
The Spanish Vendor declares that the transfer of the Spanish Business is
subject to V.A.T. and, specifically, that the Spanish Vendor does not
fulfil the conditions established in Article 7 of Law 37/1992, of 28
December 1992 on Value Added Tax.
11.4 Transfer of Tax Liabilities to the Purchaser
If pursuant to article 72 of the Ley General Tributaria (approved by Law
230/1963, dated 28 December 1963 and amendments thereto) and Article 13 of
the Reglamento General de Recaudacion (approved by Royal Decree 1684/990,
of 20 December 1991), the Spanish Tax Authorities would open a disciplinary
file regarding the assumption of responsibility by company succession
"sucesion de empresa" in the terms of the above-stated Spanish tax
regulations, Xxxxxx will reimburse any liabilities, costs, and expenses to
the Spanish Purchaser arising therefrom or in relation thereto.
The Spanish Vendor is up to date in its payment of all taxes and
contributions in general, Social Security contributions and other charges
of this type relating to or arising from the Spanish Business and its
activity and from the employment of the mentioned Spanish Employees,
accrued up to the date of this Agreement.
12. ADMINISTRATIVE COMPLIANCE
All consents, licenses or authorisations necessary for the continued
exploitation and operation of the Spanish Business, including the Municipal
Opening Licence, are valid and in force, and the Spanish Vendor undertakes
to provide all the assistance which might be necessary to enable the
transfer of the same to the Spanish Purchaser.
-111-
U.S.
13. EMPLOYEE BENEFIT PLANS
13.1 Identification of Plans
Except for the arrangements disclosed to RoweCom in the Disclosure Letter
(each arrangement so disclosed being the "Employee Benefit Plan") the
Company does not now maintain or contribute to, and has not in the current
or preceding six (6) calendar years maintained or contributed to, any
pension, profit-sharing, deferred compensation, bonus, stock option, share
appreciation right, severance, group or individual health, dental, medical,
life insurance, survivor benefit, or similar plan, policy or arrangement,
whether formal or informal, written or oral, for the benefit of any
director, officer, consultant or employee, whether active or terminated, of
the Company.
13.2 Delivery of Documents
The Company shall deliver to RoweCom within three Business Days of the date
of this agreement true, correct and complete copies of each Employee
Benefit Plan, and with respect to each such Plan true, correct and complete
copies of:-
(a) any associated trust, custodial, insurance or service agreements;
(b) any annual report, actuarial report, or disclosure materials
(including specifically any summary plan descriptions) submitted to
any governmental agency or distributed to participants or
beneficiaries thereunder in the current or any of the three (3)
preceding calendar years; and
(c) the most recently received IRS determination letters and any
governmental advisory opinions or rulings.
13.3 Compliance with Terms and Law
Each Employee Benefit Plan is and has heretofore been maintained and
operated in compliance in all material respects with the terms of such Plan
and with the requirements prescribed (whether as a matter of substantive
law or as necessary to secure favourable tax treatment) by any and all
statutes, governmental or court orders, or governmental rules or
regulations in effect from time to time, including but not limited to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and
the Internal Revenue Code of 1986, as amended ("Code") and applicable to
such Plan. Each Employee Benefit Plan which is intended to qualify under
Section 401(a) of the Code and each trust or other entity intended to
qualify as a "voluntary employee benefit association" within the meaning of
Section 501(c)(9) of the Code and associated with any Employee Benefit Plan
will be expressly identified as such in the letter to RoweCom's US Counsel
to be delivered within three Business Days of the date of this agreement
and has been determined to be so qualified by the Internal Revenue Service
and nothing has occurred since the date of the last such determination as
to each which has resulted or is likely to result in the revocation of such
determination.
-112-
13.4 Absence of Certain Events and Arrangements
Except as set forth in the Disclosure Letter:
(a) there is no pending or threatened legal action, proceeding or
investigation, other than routine claims for benefits, concerning any
Employee Benefit Plan or to the best knowledge of the Company any
fiduciary or service provider thereof and, to the best knowledge of
the Company, there is no basis for any such legal action or
proceeding;
(b) no liability (contingent or otherwise) to the Pension Benefit
Guaranty Corporation ("PBGC") or any multi-employer plan has been
incurred within the current or preceding six calendar years by the
Company or any affiliate thereof or remains outstanding (other than
insurance premiums satisfied in due course);
(c) no reportable event, or event or condition which presents a material
risk of termination by the PBGC, has occurred with respect to any
retirement plan of any affiliate of the Company which is subject to
Title IV of ERISA;
(d) no Employee Benefit Plan nor any party in interest with respect
thereof, has engaged in a prohibited transaction which could subject
the Company directly or indirectly to any material liability under
Section 409 or 502(i) of ERISA or Section 4975 of the Code;
(e) no communication, report or disclosure has been made which, at the
time made, did not accurately reflect the material terms and
operations of any Employee Benefit Plan;
(f) no Employee Benefit Plan provides welfare benefits subsequent to
termination of employment to employees or their beneficiaries (except
to the extent required by applicable state insurance laws, Title I,
Part 6 of ERISA and Section 4980B of the Code);
(g) except as otherwise contemplated in this agreement, the Company has
not announced its intention, or undertaken (whether or not legally
bound) to modify or terminate any Employee Benefit Plan or adopt any
arrangement or program which, once established, would come within the
definition of an Employee Benefit Plan; and
(h) the Company has not undertaken to maintain any Employee Benefit Plan
for any period of time and each such Plan is terminable at the sole
discretion of the sponsor thereof, subject only to such constraints
as may imposed by applicable law.
13.5 Funding of Certain Plans
With respect to each Employee Benefit Plan for which a separate fund of
assets is or is required to be maintained, full payment has been made of
all amounts required of the Company, under the terms of each such Plan or
applicable law, as applied through the
-113-
Completion Date, and no accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived,
exists with respect to any such Plan. The current value of the assets of
each such Employee Benefit Plan, as of the end of the most recently ended
plan year of that Plan, equalled or exceeded the current value of all
benefits liabilities under that Plan.
13.6 Effect of Transactions
Except as disclosed in the Disclosure Letter, the execution of this
agreement and the consummation of the transactions contemplated herein
will not result in any payment (whether of severance pay or otherwise)
becoming due from or under any Employee Benefit Plan to any current or
former director, officer, consultant or employee of the Company or result
in the vesting, acceleration of payment or increases in the amount of any
benefit payable to or in respect of any such current or former director,
officer, consultant or employee.
13.7 Multi-employer & Title IV Plans
No Employee Benefit Plan is a multi-employer plan or otherwise subject to
Title IV of ERISA.
13.8 Definitions
For purposes of this section in respect of the US Employee Benefit Plans,
"multi-employer plan", "party in interest" "current value", "reportable
event" and "benefit liability" have the same meaning assigned such terms
under Sections 3, 4043(b) or 4001(a) of ERISA, and "affiliate" means any
entity which under Section 414 of the Code is treated as a single employer
with the Company.
CANADA
14. CANADIAN PENSION PLAN
14.1 Effective as of the Completion Date, the Canadian Vendor shall assign and
transfer to the Canadian Purchaser its rights, obligations and liabilities
with respect to the Pension Plan for Employees of Xxxxx Canada Ltd.,
including its related funding medium (the "Pension Plan") and the Xxxxx
Group RRSP (the "Group RRSP"). Effective as of the Completion Date, the
Canadian Purchaser shall accept such assignment and transfer and shall
assume all obligations, liabilities, duties and responsibilities required
of it as the successor sponsor of the Pension Plan and the Group RRSP
pursuant to the terms thereof and Applicable Laws.
14.2 The Canadian Vendor agrees to file or cause to be filed with the
applicable federal and provincial regulatory authorities and the funding
agent of the Pension Plan and the Group RRSP, as soon as possible after
the Completion Date, such documentation as may be required by Applicable
Laws or under the terms of the Pension Plan and the Group RRSP with
respect to the assumption of sponsorship of the Pension Plan and the Group
RRSP as provided for hereunder.
-114-
14.3 The Canadian Purchaser agrees to do all things required of it under
Applicable Laws to establish that it is a successor sponsor to the
Canadian Vendor under the terms of the Pension Plan and the Group RRSP as
provided hereunder. Without limiting the generality of the foregoing, the
Canadian Purchaser agrees to file or cause to be filed with the applicable
federal and provincial regulatory authorities and with the funding agent
of the Pension Plan and the Group RRSP, as soon as practicable following
the Completion Date, such documentation as may be required to establish
the Canadian Purchaser in such capacity.
14.4 With respect to the administration of the Pension Plan and the Group RRSP
from the Completion Date until sponsorship and effective control and
direction over the Pension Plan and the Fund has transferred to the
Canadian Purchaser, the Canadian Vendor shall direct, or cause to be
directed, the funding agent of the Pension Plan and the Group RRSP in
accordance with the instructions given to the Canadian Vendor by the
Canadian Purchaser in connection herewith and the Canadian Purchaser shall
indemnify the Canadian Vendor in respect of any claims, losses and costs
that the Canadian Vendor may incur as a result of effecting the directions
of the Canadian Purchaser in accordance with this Agreement. Upon the
transfer of sponsorship and effective control and direction over the
Pension Plan to the Canadian Purchaser, the Canadian Vendor shall not have
any obligation or liability with respect to the Pension Plan in connection
with events occurring after such transfer of control and sponsorship and
upon the transfer of sponsorship and effective control and direction over
the Group RRSP to the Canadian Purchaser, the Canadian Vendor shall not
have any obligation or liability with respect to the Group RRSP in
connection with events occurring after such transfer of control and
sponsorship.
14.5 The Canadian Vendor shall be responsible for satisfying any and all
governmental reporting and/or disclosure requirements applicable to the
Pension Plan and the Group RRSP with respect to plan years ending prior to
the Completion Date and the Canadian Purchaser shall be responsible for
satisfying any and all governmental reporting and/or disclosure
requirements applicable to the Pension Plan and the Group RRSP with
respect to plan years ending on or after the Completion Date. The Canadian
Vendor shall co-operate with the Canadian Purchaser with respect to such
reporting requirements for the plan year in which Completion occurs.
14.6 Prior to and following the Completion Date, the Canadian Vendor agrees to
use all reasonable efforts to provide the Canadian Purchaser with such
books, records and other relevant data within its control or access
relating to benefit matters with respect to the Employees as the Canadian
Purchaser shall reasonably request.
14.7 If any federal or provincial regulatory authority refuses to approve or
permit the transactions contemplated herein, the Canadian Purchaser shall
at its own cost appeal such determination until all rights of appeal are
exhausted or the parties agree in writing to abandon such appeals. The
Canadian Vendor shall, at its own cost, provide all such information and
documentation as the Canadian Purchaser may require to prosecute any such
appeal, and shall co-operate with the Canadian Purchaser for the purposes
of such appeal.
14.8 If an approval that is required to be obtained from a federal or
provincial regulatory authority in respect of the Pension Plan cannot be
obtained and all appeals therefrom are
-115-
exhausted or abandoned without obtaining the requisite approval, or if any
approval that is required to be obtained from the funding agent of the
Pension Plan and/or the Group RRSP cannot be obtained, there shall be no
assumption or assignment of the Pension Plan and/or the Group RRSP, as the
case may be, and the Canadian Vendor shall retain sponsorship of the
Pension Plan and/or the Group RRSP, as the case may be, without further
accrual of benefits under such plan or plans and the Canadian Purchaser
shall establish a registered pension plan and/or a group registered
retirement savings plan, as the case may be, effective from the Completion
Date to provide benefits in respect of the employment of Employees on and
after the Completion Date on the same terms and conditions as the Pension
Plan and/or the Group RRSP, as the case may be.
15. CANADIAN HEALTH AND WELFARE BENEFITS
15.1 Effective as of the Completion Date, the Canadian Purchaser shall
continue, establish or cause to be established health and welfare plans to
provide benefits in respect of Employees and their eligible beneficiaries
other than retirement pensions that are substantially equivalent to the
benefits and entitlements enjoyed by Employees immediately prior to the
Completion Date under the health and welfare benefit plans provided to
Employees and former Employees by the Canadian Vendor immediately prior to
the Completion Date (the "Canadian Vendor's Benefit Plans").
15.2 The Canadian Purchaser shall assume, effective from the Completion Date,
the contracts and policies and all rights and obligations thereunder,
relating to the Canadian Vendor's Benefit Plans. For greater certainty,
the Canadian Vendor shall not be responsible for any liabilities under
such contracts or policies relating to claims incurred on and after the
Completion Date.
15.3 If any contract or policy cannot be assigned to, or assumed by, the
Canadian Purchaser in whole or in part, the Canadian Vendor shall retain
responsibility and liability for all health and welfare benefit claims
relating to Employees and former Employees incurred on or prior to the
Completion Date in accordance with the terms of such contract or policy,
and the Canadian Purchaser shall be responsible for any liabilities
arising in respect of claims of Employees for health and welfare benefits
incurred on and after the Completion Date and the Canadian Purchaser shall
indemnify and save harmless the Canadian Vendor for any liabilities
arising in respect of claims incurred after the Completion Date.
15.4 For purposes hereof, the date on which a benefit claim or cost is incurred
shall be:
(a) in the case of a death claim, the date of death;
(b) in the case of a long-term disability claim, the date that the injury
or, if not an injury, the date of the diagnosis of the illness or
injury, rendering the employee eligible for long-term disability
benefits;
(c) in the case of extended health care benefits, including, without
limitation, dental and medical treatments, the date of treatment; and
-116-
(d) in the case of a claim for drug benefits, the date the prescription
is filled.
15.5 Subject to the consent of the relevant insurers, if the insured coverages
cannot be assumed by the Canadian Purchaser, then at the written request
of either of the Canadian Purchaser delivered prior to the Completion
Date, the Canadian Vendor shall extend continued coverage to Employees
under the Canadian Vendor's Benefit Plans after the Completion Date for
such period after the Completion Date that ends not later than 90 days
following the Completion Date, as the Canadian Purchaser may request, to
permit the Canadian Purchaser sufficient time to establish appropriate
replacement plans. The Canadian Purchaser shall reimburse the Canadian
Vendor for the actual cost of such continued coverage following the
Completion Date, upon presentation of an invoice therefor.
15.6 For greater certainty, the parties shall co-operate and take such actions
as may be required to ensure the continuation of the benefits provided to
Employees and shall take such action as may be required to minimize any
tax, tax penalty, loss or other cost that may be imposed in respect
thereof.
-117-
SCHEDULE 4
Seller's Limitations on Liability
1. TIME LIMIT FOR CLAIMS
1.1 Save in the case of any liability based upon fraud and including without
limitation fraudulent concealment by Xxxxxx, Xxxxxx shall not be liable in
respect of a claim under the Warranties, the Indemnities or the Tax Deed
unless written notice of such claim setting out reasonable details of the
relevant claim including details of the matter giving rise to the claim
and the amount claimed in respect thereof is served upon Xxxxxx:-
(a) in the case of a claim under the Warranties (other than the
Warranties relating to Tax), by not later than 5.00 p.m. on the day
falling 18 months after Completion;
(b) in the case of a claim under the Warranties relating to Tax or the
Indemnities or the Tax Deed in relation to Tax by not later than 5.00
p.m. on the sixth anniversary of the date of this agreement or the
day falling 90 days after the expiry of the relevant statutory
limitation period whichever is earlier;
(c) in the case of a claim under the Indemnities in relation to
Environmental Matters by not later than 5.00 p.m. on the day falling
six years after Completion; and
(d) in the case of a claim under the Indemnities not referred to in sub-
paragraph 1.1(b) or 1.1(c) above, by not later than 5.00 p.m. on the
day falling three years after Completion;
and the liability of Xxxxxx shall further determine (if such claim has not
previously been satisfied, settled or withdrawn):-
(i) where the claim is based upon what at the time of service of the
notice is a contingent liability; or
(ii) RoweCom is taking or has taken action at the request of Xxxxxx
pursuant to paragraph 5 of this schedule in connection with such
claim,
if legal proceedings in respect of such claim have not been commenced
within nine months of such claim ceasing to be contingent or RoweCom
ceasing to take such action (as the case may be) or with regard to any
other claim if legal proceedings in respect of such a claim have not been
commenced within nine months of the service of such notice served on
Xxxxxx in accordance with this paragraph 1.1 of this schedule 4. For the
purposes of this paragraph 1.1, proceedings shall not be deemed to have
been commenced unless they shall have been properly issued and validly
served upon Xxxxxx.
2. MONETARY LIMIT ON CLAIMS
2.1 Save in the case of any liability based upon fraud and including without
limitation fraudulent concealment by Xxxxxx, Xxxxxx shall not be liable in
respect of a claim under:
-118-
(a) the Indemnities or the Tax Deed unless and until the aggregate amount
of all such substantiated claims against Xxxxxx exceeds
(Pounds)100,000, and any claims under the Indemnities or the Tax Deed
shall be counted towards the (Pounds)500,000 total referred to in
paragraph 2.1(b) below; or
(b) under the Warranties unless and until the aggregate amount of all
such substantiated claims against Xxxxxx exceeds (Pounds)500,000,
in which event Xxxxxx'x liability shall be for the total amount of such
substantiated claims and shall not be limited to the excess provided that
(save in the case of fraud or fraudulent concealment) the aggregate
liability of Xxxxxx in respect of all claims under the Warranties, the
Indemnities, the Tax Deed and/or any provision of this agreement or any
document entered into pursuant to this agreement shall not in any
circumstances exceed (Pounds)30,000,000. In this paragraph 2
"substantiated" means a claim for which Xxxxxx is liable (whether on its
own, as a contributory or otherwise), and which is admitted, settled
without admission of liability, or proved or determined in a court of
competent jurisdiction.
2.2 Save in the case of fraud or fraudulent concealment by Xxxxxx, Xxxxxx
shall not be liable in respect of a claim under the Warranties, the Tax
Deed or the Indemnities, where the aggregate liability of Xxxxxx would in
respect of any one claim (but for this paragraph) have been less than
(Pounds)6,500 (and any claim shall be ignored for the purposes of
paragraph 2.1) provided that for the purposes of this paragraph 2.2 where
a claim relates to more than one event, circumstance, act or omission
which event, circumstance, act or omission would separately constitute a
breach of or give rise to a claim for breach of any of the Warranties
and/or the Indemnities and/or the Tax Deed such claim shall be treated as
a separate claim in respect of each such event, circumstance, act or
omission.
3. DISCLOSURE
3.1 Xxxxxx shall not be liable in respect of a claim under the Warranties to
the extent that the same or circumstances giving rise thereto are fairly
disclosed in the Disclosure Letters or are expressly provided for or noted
in the Accounts. Except for the general disclosures contained in section B
of the Disclosure Letter no letter, document or other communication shall
be deemed to be disclosed except and to the extent that the same is
referred to in, and a copy attached to, the Disclosure Letters. For the
avoidance of doubt, the reference to "no letter, document or other
communication... except and to the extent that the same is referred to in
..... the Disclosure Letters" shall not mean that there is disclosed the
underlying economic, market, commercial or other circumstances relating to
any such letter, document or other communication or the conduct of the
parties to any agreement included in any such letter, document or other
communication unless such circumstances or conduct is evident on the face
of such letter, document or communication or in letters, documents or
communications taken together.
3.2 No matter may be included in or referred to in the Supplemental Disclosure
Letter or any document attached thereto unless it relates solely to one or
more events occurring between the date of this agreement and Completion.
-119-
4. NO LIABILITY FOR CERTAIN EVENTS
4.1 Xxxxxx shall not be liable in respect of a claim under the Warranties or
the Indemnities to the extent that:-
(a) the claim or the events giving rise to the claim would not have
arisen but for an act, omission, arrangement or transaction carried
out at the request of or with the informed consent of RoweCom or
RoweCom Group at or prior to Completion or in accordance with the
express terms of this agreement or any other agreement to be entered
into pursuant to this agreement including, without limitation, any
liability under the US Workers Adjustment Retraining Notification Act
or state law equivalent; or
(b) the claim occurs as a result of any change in law or regulation or in
its interpretation or administration by the English courts, or by any
other fiscal, monetary or regulatory authority (whether or not having
the force of law) after Completion; or
(c) the loss or damage giving rise to the claim is recovered by the
RoweCom Group or the Group under any policy of insurance; or
(d) the claim arises or is increased as a result of any change in the
accounting policies adopted by any Group Company after the date of
this agreement save as required to conform with those of RoweCom to
the extent that RoweCom's accounting policies and principles are
generally accepted or to comply with accounting policies and
principles generally accepted in the applicable jurisdiction; or
(e) specific allowance, provision or reserve in respect of such matter
shall have been made in the Completion Accounts or it has been
specifically included in calculating creditors or specifically
deducted in calculating debtors in the Completion Accounts and (in
the case of creditors or debtors) is identified in the records of the
Group; or
(f) the claim relates to any liability which is contingent only unless
and until such contingent liability becomes an actual liability; or
(g) the claim arises because a customer, employee or publisher of the
Group first notifies the Group or RoweCom or the Xxxxxx Group or
otherwise decides after the Announcement Date that it will cease its
business dealings or other relationships with the Group or change any
terms on which it does business with the Group or will decrease the
level of business with the Group; or
(h) the claim relates to sales tax in relation to the Group's US
operations as a result of a change in policy by RoweCom in the way it
accounts for such sales tax unless that change is:
(i) legally required; or
(ii) such that the resulting policy is then consistent with the
standard in the industry; or
-120-
(iii) such change is necessitated by order of any applicable fiscal
authority.
(i) Xxxxxx may at its expense request any Group Company's auditors to
quantify any of the following amounts and such amounts shall be dealt
with as described in (ii) below:
(i) the amount of any overprovision for or overstatement of
taxation, bad or doubtful debts or contingent or other
liabilities contained in the Completion Accounts, to the extent
that such overprovision or overstatement is then certain;
(ii) the amounts in question, to the extent then agreed or finally
determined for the purpose of this clause, shall be set off
against any payments then or thereafter due from Xxxxxx;
(j) Xxxxxx shall not be liable for a claim under the Warranties to the
extent that the claim arises or is increased by any deliberate act or
omission after Completion by any member of the RoweCom Group which
was done or not done intentionally to give rise to or increase the
amount payable under the Warranties.
5. THIRD PARTIES
5.1 This paragraph 5 shall apply in circumstances where:-
(a) any claim is made against the RoweCom Group which should reasonably
be expected to give rise to a claim by RoweCom against Xxxxxx under
the Warranties and/or the Indemnities; or
(b) the RoweCom Group should reasonably be expected to be able to make
recovery from some other person of any sum in respect of any facts or
circumstances by reference to which RoweCom has or should be
reasonably expected to have a claim against Xxxxxx under the
Warranties and/or the Indemnities; or
(c) Xxxxxx has paid to RoweCom an amount in respect of a claim under the
Warranties and/or the Indemnities and subsequent to the making of
such payment RoweCom recovers from some other person a sum which is
referable to that payment.
5.2 RoweCom shall:-
(a) in the case of paragraphs 5.1(a) and 5.1(b) prior to taking any
action (other than the giving of notice pursuant to paragraph 1 of
this schedule) against Xxxxxx under the Warranties and/or the
Indemnities (and subject to RoweCom being indemnified and secured to
its reasonable satisfaction against all claims, liabilities, costs
and expenses which it may incur by reason of such action) take all
such action and give such information and assistance as Xxxxxx may
reasonably request in writing including, subject to paragraph 5.2(c),
the institution of proceedings and the instruction of professional
advisers approved in writing by Xxxxxx to act on behalf
-121-
of RoweCom or the relevant Purchaser or Group Company to avoid,
dispute, resist, compromise, defend, settle, mitigate, pursue or
appeal against any such claim against RoweCom or the relevant
Purchaser or Group Company as is referred to in paragraph 5.1(a) or
to make such recovery by RoweCom or the relevant Purchaser or Group
Company as is referred to in paragraph 5.1(b) , as the case may be;
and
(b) subject to RoweCom being indemnified and secured to its reasonable
satisfaction against all costs and expenses which may be incurred by
reason of such action, not agree, settle or compromise or make any
admission of any liability or claim to which such action is referable
without the prior written consent of Xxxxxx which consent shall not
be unreasonably withheld or delayed; and
(c) Xxxxxx shall (subject to RoweCom being secured and indemnified to its
reasonable satisfaction against all claims, liabilities, costs and
expenses) have the right at its expense of investigating (for the
purposes of conducting a claim in accordance with this paragraph
5.2(c)), pursuing, resisting and settling and otherwise conducting in
the name of the Purchasers or (as the case may be) the Company or any
Group Company any claim, action or demand or other matter likely to
give rise to any of these against or by any third party which has
given rise or is likely to give rise to a claim under the Warranties,
the Indemnities and/or the Tax Deed and to have any claim conducted
by professional advisers nominated and instructed by it for this
purpose; and
(d) in the case of paragraph 5.1(d) above only, repay to Xxxxxx an amount
equal to the amount recovered upon receipt or, if lower, the amount
paid by Xxxxxx to RoweCom less, in either case, any amount payable by
RoweCom in respect of Taxation on the amount recovered.
6. MITIGATION
RoweCom will take or procure the taking of all such reasonable steps as
are required by law in order to mitigate any claim under the Warranties,
subject to RoweCom being indemnified and secured to its reasonable
satisfaction against all reasonable costs and expenses incurred in
connection therewith.
7. OPPORTUNITY TO REMEDY
A breach of any Warranty and/or Indemnity which is capable of remedy shall
not entitle RoweCom to compensation under the Warranties and/or the
Indemnities unless Xxxxxx is given written notice of such breach in
accordance with paragraph 1 above and such breach is not remedied within
30 days after the date on which such notice is served on Xxxxxx.
8. TAX
8.1 Where a claim under the Warranties, the Indemnities or the Tax Deed
relates to a liability for Tax no payment shall be due from Xxxxxx until
such time as the Tax in question becomes legally due and payable.
-122-
8.2 In calculating the liability of Xxxxxx for any breach of the Warranties or
under the Indemnities there shall be taken into account the amount by
which the taxation for which any member of the Group is now or in the
future accountable or liable to be assessed is reduced or extinguished as
a result of the matter giving rise to such liability.
9. GENERAL
9.1 Xxxxxx shall not be liable in respect of a claim under any Warranty if and
to the extent that the loss is or has been recovered under any other
Warranty.
9.2 Xxxxxx shall not be liable under the Warranties to the extent that RoweCom
has made a recovery for the same matter under the Tax Deed and/or the
Indemnities.
9.3 Xxxxxx shall not be liable under any of the Indemnities if and to the
extent that the loss is or had been recovered under any of the Warranties
or the Tax Deed.
9.4 RoweCom shall not be entitled to recover damages or otherwise obtain
reimbursement or restitution more than once in respect of any individual
breach of the Warranties and/or Indemnities and/or claim under the Tax
Deed, but solely to the extent of any recovery thereunder.
9.5 Xxxxxx shall not be liable for breach of any of the Warranties or under
the Indemnities or the Tax Deed to the extent that the subject of the
claim has been made good or is otherwise compensated for without cost to
RoweCom or to any member of the Group.
9.6 The provisions of this schedule 4 will not be discharged or cease to have
effect or be limited in any way in consequence of any rescission or
termination by RoweCom of this agreement or in consequence of any other
provision of this agreement or any document referred to in this agreement.
9.7 Without prejudice to clause 3 (Conditions) and clause 4 no party shall
have any right to rescind this agreement.
9.8 Any payment made by Xxxxxx in respect of any claim under the Warranties,
the Indemnities or the Tax Deed shall be deemed to be a reduction in the
consideration received by Xxxxxx.
-123-
SCHEDULE 5
Action Pending Completion
Xxxxxx shall ensure that each member of the Group shall:-
1. in the case of the Company and the Subsidiaries, not create, allot, issue,
acquire, reduce, repay or redeem any share or loan capital or agree,
arrange or undertake to do any of those things, or acquire or agree to
acquire an interest in an undertaking (as defined by section 259 of the
Companies Act 1985);
2. not discontinue or cease to operate all or a material part of the
Business;
3. not acquire or dispose of, or agree to acquire or dispose of, any Asset
except in the usual course of its trade or assume or incur, or agree to
assume or incur, a material liability, obligation or expense (actual or
contingent) except in the usual course of its trade and on normal arm's
length terms;
4. in the case of the Company and the Subsidiaries, not declare, pay or make
a dividend or distribution except for a dividend of the stock of
Electronic Online Services International, Inc. and Quality Books, Inc.;
5. in the case of the Company and the Subsidiaries, not pass a shareholders'
resolution (except for any approval required in connection with the
transactions contemplated by this agreement);
6. not create, or agree to create, an Encumbrance over the US Shares, the
Business or any Asset;
7. in the case of the Company and the Subsidiaries continue each Policy (as
defined in paragraph 10.1 of schedule 3) and not do or omit to do anything
which would make a Policy void or voidable or might result in an increase
in the premium payable under a Policy or prejudice the ability to effect
equivalent insurance in the future;
8. in relation to each of the Properties:-
8.1 not apply for a Permit or implement a Permit already obtained but not
implemented;
8.2 not change its existing use;
8.3 not terminate, or give a notice to terminate, a lease, tenancy or licence;
8.4 not apply for consent to do something requiring consent under a lease,
tenancy or licence;
8.5 not grant or refuse an application by a tenant, licensee or occupier to do
something requiring its consent under a lease, tenancy or licence;
8.6 not agree a new rent or fee payable under a lease, tenancy or licence;
-124-
9. not enter into a long-term, onerous or unusual agreement, arrangement or
obligation (including an agreement, arrangement or obligation of the type
referred to in paragraph 11.6 of schedule 3);
10. not amend materially or terminate a material agreement, arrangement or
obligation to which it is a party relating to the Business;
11. save as required by law or regulation or as contemplated in this agreement
not amend materially the terms of employment or engagement of any Assumed
Employee or a director, other officer or employee of any Group Company
(except in the usual course of its business) or amend or discontinue
(wholly or partly) the applicability of the terms and conditions of any
collective employment agreement (accord d'enterprise) in force within the
Xxxxxx Group, including any profit sharing plan (accord de participation)
or provide, or agree to provide, a gratuitous payment or benefit to any
Assumed Employee or a director, officer or employee of any Group Company
(or any of their dependants) or (except in the usual course of business)
employ, engage, or terminate the employment or engagement or start the
process for terminating the employment or engagement of any Assumed
Employee or a director, other officer or employee of any Group Company
except in circumstances justifying summary dismissal, or start
negotiations with any trade unions or works' representatives or body with
a view to changing the benefits of the Assumed Employees;
12. in the case of the Company and the Subsidiaries, not give, or agree to
give, a guarantee, indemnity or other agreement to secure, or incur
financial or other obligations with respect to, another person's
obligation;
13. save as contemplated in this agreement, not amend materially or
discontinue (wholly or partly) a Disclosed Scheme (as defined in paragraph
21 of schedule 3) or plan, propose or intend to amend, discontinue (wholly
or partly), or exercise a discretion in relation to a Disclosed Scheme;
14. in the case of the Company and the Subsidiaries, not start litigation or
arbitration proceedings;
15. in the case of the Company and the Subsidiaries, except in the usual
course of its trade, not compromise, settle, release, discharge or
compound litigation or arbitration proceedings or a liability, claim,
action, demand or dispute, or waive a right in relation to litigation or
arbitration proceedings;
16. conduct the Business in all material respects in accordance with all
applicable legal and administrative requirements in any jurisdiction;
17. not enter into an agreement, arrangement or obligation (legally
enforceable or not) in which Xxxxxx, another Group Company, a director or
former director of a Group Company or a person connected with any of them
is interested;
18. not make a payment out of a bank account except where the payment is in
the usual course of its trade (including for the avoidance of doubt any
management charges payable to any members of the Xxxxxx Group which are
specified in writing in the Disclosure Letters and
-125-
expressly agreed to in writing by RoweCom) other than payments to be made
pursuant to the terms of this agreement; and
19. keep proper records and make therein true and complete entries of all its
dealings and transactions as required by law;
20. co-operate with RoweCom to:-
20.1 ensure the efficient continuation of management of the Business after
Completion; and
20.2 prepare for the introduction of RoweCom's normal working procedures in
readiness for Completion.
-126-
SCHEDULE 6
The Properties
Canada
------
Tenure Leasehold owned by Xxxxx Canada Limited
Description 0000 Xxxxxxxx, Xxxxxx
Mortgages or Charges None
Permitted uses/existing use Commercial Use
Tenure Freehold owned by Xxxxx Canada Limited
Description 0000 Xxxxx Xxxxxxxxx Xxxx
Xxxxxx
Xxxxxxx
Xxxxxx NBA 5M9
Mortgages or Charges None
Permitted uses/existing use Commercial Use
France
------
Tenure Freehold owned by Xxxxxx France SA
Description Xxx xx xx Xxxxxxx
Xxxxxxxx xxx Xxxxxx
00000 Palaiseau Cedex
Paris
Mortgages or Charges None
Permitted uses/existing use Commercial purposes/uses
-127-
Spain
-----
Tenure Leasehold owned by Xxxxxx Espana
Agencia de Ediciones, SL
Description Parque Europolis
Calle I
Xxxxxxx 0-0,
00000
Xxx Xxxxx
Xxxxxx
Xxxxx
Mortgages or Charges None
Permitted uses/existing use N/A
USA
---
Tenure Freehold owned by The Xxxxx Company Inc
Description 00 Xxxxxxxxx Xxxx
Xxxxxxxx
Xxxxxxxxxxxxx 00000
XXX
Mortgages or Charges
Permitted uses/existing use
Tenure Leasehold owned by The Xxxxx Company Inc
Description 0000 Xxxxxxxxxx Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx
XX 00000
-128-
Mortgages or Charges
Permitted uses/existing use
Tenure Leasehold owned by The Xxxxx Company Inc
Description 000 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx
XX 00000
Mortgages or Charges
Permitted uses/existing use
Tenure Equitable title owned by XxXxxxxx
Subscription Service Inc
Description 0000-0000
X. Xxxxx Xxxx
Xxxxxx
XX 00000
Mortgages or Charges
Permitted uses/existing use
-129-
SCHEDULE 7
Pensions
1. INTERPRETATION
In this schedule the following words and expressions shall unless the
context otherwise requires have the following meanings:-
"Actuarial Assumptions" means the actuarial methods and assumptions set out
in the Actuary's Letter;
"Actuary's Letter" means the form of letter appended to this schedule;
"Actuary" means a person who is a Fellow of the Institute of Actuaries or a
Fellow of the Faculty of Actuaries in Scotland;
"Adjusted Shortfall" has the meaning set out in the Actuary's Letter;
"Adjusted Transfer Amount" means the Transfer Amount adjusted by the Timing
Adjustment from and excluding the Membership Transfer Date to and excluding
the Payment Date;
"Xxxxxx'x Actuary" means Xxxx Xxxxxxx of Xxxxxxx X Xxxxxx or such other
Actuary as may be appointed by Xxxxxx for the purposes of this schedule and
notified to RoweCom;
"Xxxxxx Fund" means the Xxxxxxx Xxxxxx Group Pension Fund and where the
context so requires the trustees of that scheme;
"Xxxxxx Money Purchase Scheme" means the Xxxxxxx Xxxxxx Group Money
Purchase Scheme and where the context so requires the trustees of that
scheme;
"Xxxxxx'x Scheme" means the Xxxxxxxx Xxxxxx Xxxxxxx Fund or such other
retirement benefits scheme nominated by Xxxxxx and notified to RoweCom
before the Membership Transfer Date and which meets the further
requirements of paragraph 3 and where the context so requires the trustees
of that scheme;
"Member Employees" means the UK Employees who immediately prior to the
Completion Date are members of the Xxxxxx Fund and are accruing benefits
under the Fund. A UK Employee shall continue to be a Member Employee until
the day before the Membership Transfer Date unless such employee ceases to
accrue pension benefits under the Xxxxxx Fund before the Membership
Transfer Date whether by termination of employment, by opting out of the
Xxxxxx Fund or otherwise, in which event he shall cease to be a Member
Employee;
"Membership Transfer Date" mean 6 April 2000 or such other date as is
agreed in writing between RoweCom and Xxxxxx;
-130-
"Money Purchase Employees" means the UK Employees who immediately prior to
the Completion Date are members of the Xxxxxx Money Purchase Scheme and are
accruing benefits under the Xxxxxx Money Purchase Scheme. A UK Employee
shall continue to be a Member Employee until the day before the Membership
Transfer Date unless such employee ceases to accrue pension benefits under
the Xxxxxx Money Purchase Scheme before the Membership Transfer Date
whether by termination of employment, by opting out of the Xxxxxx Money
Purchase Scheme or otherwise, in which event he shall cease to be a Member
Employee;
"Payment Date" means the first working day which falls following the expiry
of one month following satisfaction of the last to be satisfied of the
Transfer Conditions;
"Pension Liabilities" means an amount calculated in accordance with the
Actuarial Assumptions by RoweCom's Actuary and verified by Xxxxxx'x Actuary
as being equal to:-
the share of the assets held by the Xxxxxx Fund which is attributable to
the Transferring Members calculated by RoweCom's Actuary and verified by
Xxxxxx'x Actuary as at the Membership Transfer Date.
For this purpose:-
(a) there shall be included the value of accrued rights to guaranteed
minimum pensions and Section 9(2B) Rights (but any obligation to
equalise guaranteed minimum pensions for men and women shall be
ignored);
(b) there shall be excluded:-
(i) the value of lump sum benefits payable on death in service other
than the return of members' contributions; and
(ii) pursuant to paragraph 7 the value of any money purchase benefits
as defined in section 181(1) of the 1993 Act arising from the
payment of additional voluntary contributions by Transferring
Members or from transfer credits under the Xxxxxx Fund;
"Pensionable Salary" has the meaning set out in the trust deed and rules of
the Xxxxxx Fund (or the Xxxxxx Money Purchase Scheme, as appropriate) as at
the date hereof;
"Relevant Benefits" has the meaning set out in section 612 of the TA;
"RoweCom" means RoweCom and the Purchaser of the UK Business;
"Section 9(2B) Rights" has the meaning set out in the Contracting-Out
(Transfer and Transfer Payment) Regulations 1996;
"RoweCom's Actuary" means Xxxxxx Xxxxx of PricewaterhouseCoopers or such
other Actuary as may be appointed by RoweCom for the purposes of this
schedule and notified to Xxxxxx;
-131-
"Timing Adjustment" means in respect of any period and any principal sum an
amount of interest calculated as the gross rate of return (income and
capital appreciation or depreciation) obtained on a notional portfolio of
investments split as to 80 per cent. in the FT-SE Actuaries All Share Total
Return Index and as to 20 per cent. in the FT-Actuaries Fixed Interest
Index for UK Gilts Over 15 Years with gross dividend and other gross income
assumed to be re-invested on the last day of each month with no allowance
for expenses PROVIDED THAT if either or both of the said indices shall
cease to exist during any period relevant to this schedule then Xxxxxx'x
Actuary and RoweCom's Actuary shall agree on replacement indices;
"Transfer Amount" means an amount determined by RoweCom's Actuary and
verified by Xxxxxx'x Actuary in accordance with paragraph 5 (or determined
in accordance with paragraph 9) as being the Pension Liabilities with an
adjustment for any unpaid contributions due under clause 3.2;
"Transfer Conditions" means those conditions set out in paragraph 6.4;
"Transfer Forms" means the written consents and discharges referred to in
the definition of "Transferring Members";
"Transferring Members" means:
(a) those employees of Xxxxxx who become members of Xxxxxx'x Scheme with
effect from the Membership Transfer Date pursuant to the offer of
membership referred to in paragraph 4(a); and who before the
Membership Transfer Date request or consent in writing in such form as
RoweCom and Xxxxxx agree (and within the period specified in the offer
letter) to a payment or transfer of assets being made from the Xxxxxx
Fund to Xxxxxx'x Scheme in respect of their accrued benefits so as to
acquire transfer credits under Xxxxxx'x Scheme and who in respect of
such payment or transfer have signed a discharge in the form
reasonably required by the Xxxxxx Fund for any liability to provide
any further benefits to or in respect of them under the Xxxxxx Fund;
and
(b) those members of the Xxxxxx Fund as at the Membership Transfer Date
who:
(i) ceased to be active members of the Xxxxxx Fund before the
Completion Date;
(ii) ceased to be active members of the Xxxxxx Fund during the
Transitional Period and who immediately before ceasing to be
active members were employed by Xxxxxx; or
(iii) were offered membership of Xxxxxx'x Scheme under paragraph 4(a)
but who declined such offer
and in respect of whom it is intended that a transfer will be made to
Xxxxxx'x Scheme in accordance with the provisions of Regulation 12(3)
of the Occupational
-132-
Pension Schemes (Preservation of Benefit) Regulations 1991 where a
transfer is being made without a beneficiary's consent.
"Transitional Period" means the period commencing on the Completion Date
and ending on the day immediately before the Membership Transfer Date (both
days inclusive);
"1995 Act" means the Xxxxxxxx Xxx 0000; and
"1993 Act" means the Xxxxxxx Xxxxxxx Xxx 0000.
"Guaranteed minimum pension" and "contracted-out" have the meanings given
to them in the 1993 Act.
References in this schedule to paragraphs and appendices are to paragraphs
in and appendices to this schedule.
Headings in this schedule are for ease of reference only and shall not
affect the interpretation of this schedule.
2. SUBSTITUTION OF PRINCIPAL EMPLOYER AND CHANGE OF FUND NAME
2.1 RoweCom and Xxxxxx undertake (subject to paragraph 2.2 below and provided
that the law so admits) as soon as practicable to enter into a deed in a
form to be agreed between them and the Xxxxxx Fund (Xxxxxx to use its
reasonable endeavours to procure that the Xxxxxx Fund agrees and enters
into such deed) so as to effect the substitution of RoweCom for Xxxxxx as
principal employer of the Xxxxxx Fund with effect from the Membership
Transfer Date;
2.2 RoweCom and Xxxxxx agree to use their reasonable endeavours to obtain the
agreement of the Inland Revenue to the substitution of Rowecom for Xxxxxx
referred to in paragraph 2.1 above as principal employer of the Xxxxxx Fund
as soon as practicable after Completion
2.3 RoweCom undertake to Xxxxxx that by such deed the name of the Xxxxxx Fund
shall be changed with effect from the same date to remove all reference to
the name Xxxxxxx Xxxxxx or any part thereof.
3. THE XXXXXX FUND
3.1 Xxxxxx undertakes to RoweCom that:-
(a) it will use its reasonable endeavours to procure that RoweCom may
participate as a participating employer in the Xxxxxx Fund in respect
of the Member Employees until the Membership Transfer Date subject to
the approval of the Board of Inland Revenue (which approval RoweCom
and Xxxxxx shall use their respective reasonable endeavours to
obtain);
(b) until the Membership Transfer Date it will:-
-133-
(i) use its reasonable endeavours to ensure that the Xxxxxx Fund is
and remains an exempt approved scheme under chapter I of part
XIV of the TA;
(ii) take no voluntary action without the consent of RoweCom (such
consent not to be unreasonably withheld or delayed) which would
cause the Xxxxxx Fund to terminate or be wound up in relation to
the Member Employees;
(iii) not exercise any discretion or power under the Xxxxxx Fund which
would adversely affect the Relevant Benefits of the Member
Employees under the Xxxxxx Fund without the prior written
consent of RoweCom (such consent not to be unreasonably withheld
or delayed);
save, in the cases referred to in paragraphs 2.1(b)(ii) or (iii)
above, where RoweCom is in material default in discharging its
obligations as a participating employer under the Xxxxxx Fund;
(c) it will provide to RoweCom such information as RoweCom reasonably
requests so that the provisions of paragraph 3.2 are observed
(including without limitation membership details relating to the
Member Employees).
3.2 RoweCom undertakes that it will in respect of the Transitional Period:-
(a) pay to the Xxxxxx Fund within 19 days of the end of each calendar
month the contributions due and payable in respect of such month to
the Xxxxxx Fund by and in respect of the Member Employees at the
following rates:-
5.2% of Pensionable Salary (employer contributions);
5% of Pensionable Salary (member contributions);
(b) where for whatever reason RoweCom continues to participate in the
Xxxxxx Fund after the Membership Transfer Date but does not become the
principal employer of the Xxxxxx Fund, RoweCom will continue to
contribute to the Xxxxxx Fund so long as RoweCom remains a
participating employer in the Xxxxxx Fund (for the avoidance of doubt,
RoweCom may terminate its participation in the Xxxxxx Fund at any
time) at the contribution rate set out in paragraph 3.2(a) of this
schedule or such other rate as applies to participating employers
under the Xxxxxx Fund from time to time;
(c) interest shall be payable on each payment due under paragraphs 3(a),
(b) and (i) following the date after each payment becomes due up to
and including the date when each payment is actually paid (in each
case 3% per annum (compounded monthly) above the base rate from time
to time with Barclays Bank plc);
(d) comply during the Transitional Period in all other respects with the
provisions of the Xxxxxx Fund as they relate to a participating
employer;
-134-
(e) not do or omit to do any act or thing whereby the approval of the
Xxxxxx Fund as an exempt approved scheme or its status as a
contracted-out scheme would or might be prejudiced;
(f) not exercise any right, power or discretion conferred on RoweCom by
the Xxxxxx Fund except with the prior written approval of Xxxxxx on
such terms (whether as to payment of additional contributions or
otherwise) as Xxxxxx may agree;
(g) on demand provide or procure to be provided such information as is
reasonably required by the Xxxxxx Fund for the administration of the
Xxxxxx Fund or the calculation of the Transfer Amount;
(h) not cause the Pensionable Salary of any Member Employee calculated at
the Membership Transfer Date to exceed by more than 6 per cent. the
Pensionable Salary of that Member Employee calculated as at the
Completion Date nor to exercise any power or discretion to increase
benefits or allow the payment of an early retirement pension under the
Xxxxxx Fund of any Member Employee except on such terms (whether as to
payment of additional contributions or otherwise) as Xxxxxx may agree;
(i) pay to Xxxxxx an amount in respect of administrative expenses of the
Xxxxxx Fund and costs of providing death in service benefits
attributable to Member Employees on the basis set out in the Actuary's
Letter, such payments to be made within the timescale set out in
paragraph 3.2(a) above.
3.3 RoweCom and Xxxxxx shall use their respective reasonable endeavors to
procure that such of the Member Employees as are in contracted-out
employment by reference to the Xxxxxx Fund at Completion shall continue to
be in contracted-out employment by reference to the Xxxxxx Fund during the
Transitional Period.
3.4 RoweCom agrees that Xxxxxx may in its discretion and in its own interests
exercise any powers and give any consents on behalf of RoweCom or any
member of the RoweCom Group where those powers or consents arise under the
1995 Act, and without prejudice to the foregoing generality, appoints
Xxxxxx to be its representative for the purposes of making proposals with
regard to the selection of trustees pursuant to section 17 of the 1995 Act,
consulting with the trustees regarding any statement of investment
principles pursuant to section 35 of the 1995 Act, and agreeing any
schedule of contributions pursuant to section 58 of the 0000 Xxx.
3.5 RoweCom shall within one month after Completion enter into such deed or
agreement as may be necessary in accordance with the rules of the Xxxxxx
Fund (as at the date hereof) for it to participate in the Xxxxxx Fund as a
participating Employer during the Transitional Period (such agreement to be
provided by Xxxxxx or the Xxxxxx Fund). RoweCom shall issue all notices and
make all the necessary elections and take any other steps necessary to
procure that such of the Member Employees as are in contracted-out
employment under the 1993 Act by reference to the Xxxxxx Fund shall
continue to be in such contracted-out employment and RoweCom shall issue
all notices and make all necessary elections and take any other steps
necessary to achieve this.
-135-
4. XXXXXX'X SCHEME
Xxxxxx undertakes with RoweCom that it will use its reasonable endeavours
to procure that:-
(a) on or before the Membership Transfer Date all members of the Xxxxxx
Fund who remain employees of Xxxxxx will be invited in writing to
become members of Xxxxxx'x Scheme with effect from the Membership
Transfer Date;
(b) the forms of invitation referred to in 4(a) will be submitted to
RoweCom in advance of their issue and will not be issued until RoweCom
has approved them, such approval not to be unreasonably withheld or
delayed;
(c) Xxxxxx'x Scheme will at the Payment Date, be fully approved or capable
of approval by the Board of Inland Revenue as an exempt approved
scheme under chapter I of part XIV of the 1988 Act and will be
contracted-out of the state earnings related pension scheme on a
salary-related basis under the 1993 Act, and be a scheme to which the
Xxxxxx Fund can make a transfer payment without prejudicing either the
approval of the Xxxxxx Fund as an exempt approved scheme or the
contracted-out status of the Xxxxxx Fund.
5. CALCULATION OF THE PENSION LIABILITIES
5.1 Within two months following the Membership Transfer Date RoweCom shall
procure that RoweCom's Actuary receives the information under its control
required to calculate the Pension Liabilities and the Transfer Amount and
Xxxxxx shall procure that RoweCom's Actuary receives all the other
information required to calculate the Pension Liabilities and the Transfer
Amount.
5.2 RoweCom shall procure that within two months of the receipt of full
complete and accurate information by RoweCom's Actuary RoweCom's Actuary
calculates the Pension Liabilities and the Transfer Amount and submits his
results in writing to Xxxxxx'x Actuary for verification by Xxxxxx'x Actuary
together with all such information as Xxxxxx'x Actuary may reasonably
require for the purpose of verifying RoweCom's Actuary's calculations.
Those calculations shall be deemed to be verified by Xxxxxx'x Actuary
within one month of the later of the date of receipt by Xxxxxx'x Actuary of
details of such calculations or of the further information received by him
from RoweCom or RoweCom's Actuary at his request unless Xxxxxx'x Actuary
shall within that time notify RoweCom's Actuary to the contrary.
6. PAYMENT FROM THE XXXXXX FUND
6.1 Subject to paragraph 6.3, Xxxxxx and RoweCom shall use their respective
reasonable endeavours to procure that on or before the Payment Date the
Xxxxxx Fund pays the Adjusted Transfer Amount to Xxxxxx'x Scheme. Payment
of the Adjusted Transfer Amount is to be satisfied by the transfer of such
assets as may be agreed between the Xxxxxx Fund and Xxxxxx'x Scheme and
failing any such agreement the Adjusted Transfer
-136-
Amount shall be paid in cash (subject to deduction of such realisation
expenses as shall be attributable to the sale of the assets in question by
the Xxxxxx Fund).
6.2 Xxxxxx undertakes to take no action or assist whether directly or
indirectly any person in any manner which would result in the Xxxxxx Fund
having to pay a larger amount than the Adjusted Transfer Amount to Xxxxxx'x
Scheme. Xxxxxx agrees that this undertaking extends to Xxxxxx and all other
members of the Xxxxxx Group and applies both during and after the
Transitional Period.
6.3 RoweCom shall be under no obligation in respect of the payment by the
Xxxxxx Fund of the Adjusted Transfer Amount (whether under this paragraph 5
or otherwise) unless and until the Transfer Conditions are satisfied.
6.4 The Transfer Conditions are as follows:-
(a) Xxxxxx'x Scheme is approved by the Board of Inland Revenue as an
exempt approved scheme under chapter I of part XIV of the 1988 Act or
the Board of Inland Revenue has given written approval to the transfer
of assets from the Xxxxxx Fund to Xxxxxx'x Scheme in respect of the
Transferring Members and that approval still subsists;
(b) Xxxxxx'x Scheme is a scheme capable of accepting from the Xxxxxx Fund
the liability for the provision of guaranteed minimum pensions and
Section 9(2B) Rights for and in respect of the Transferring Members;
(c) the Xxxxxx Fund has received the Transfer Forms completed and signed
by the Transferring Members;
(d) the calculations referred to in paragraph 5 have become final and
binding whether by agreement under paragraph 5 or following
determination of any dispute under paragraph 12;
(e) Xxxxxx has complied with its obligations under this schedule in all
material respects;
(f) the Xxxxxx Fund has received the following written statements and
undertakings from or on behalf of Xxxxxx'x Scheme after the conditions
in paragraph 6.4(a) to (d) above have been satisfied (together with
such documentary evidence as RoweCom for itself or the Xxxxxx Fund may
reasonably request):-
(i) that such of the Transferring Members who were offered membership
of Xxxxxx'x Scheme pursuant to paragraph 4 of this schedule as at
the and who have become members of the have been admitted to
membership of Xxxxxx'x Scheme from the Membership Transfer Date
and that insofar as any part of the Adjusted Transfer Amount
represents amounts in respect of accrued rights to guaranteed
minimum pensions and/or Section 9(2B) Rights the employments of
the Transferring Members are contracted-out by reference to
Xxxxxx'x Scheme;
-137-
(ii) that Xxxxxx'x Scheme is willing to accept the transfer from the
Xxxxxx Fund of the Adjusted Transfer Amount and to give a receipt
in such form as the Xxxxxx Fund may reasonably request;
and that those statements and undertakings remain true and effective
in all material respects.
6.5 If during the Transitional Period or at any time prior to the Payment Date
Xxxxxx has a receiver or an administrative receiver appointed over its
assets and/or undertaking or goes into liquidation Xxxxxx agrees that
RoweCom and Xxxxxx will co-operate to ensure that each Transferring Member
shall be given the opportunity to revoke any instruction given by him to
the Xxxxxx Fund on a Transfer Form (or otherwise) as regards the transfer
of a sum representing his past service rights under the Xxxxxx Fund to
Xxxxxx'x Scheme.
6.6 If the Xxxxxx Fund pays to the Xxxxxx Scheme any amount less than that due
under this Schedule and as a result RoweCom pays lesser contributions to
the Xxxxxx Fund from time to time than it would otherwise have done,
RoweCom shall from time to time pay Xxxxxx amounts equal to such savings in
contributions (at such times as the higher contributions would have been
paid).
7. ADDITIONAL VOLUNTARY CONTRIBUTIONS AND MONEY PURCHASE TRANSFER CREDITS
Any benefits in the Xxxxxx Fund in money purchase form attributable to
transfer payments received by the Xxxxxx Fund in respect of Transferring
Members or any voluntary contributions made by the Transferring Members in
respect of the Xxxxxx Fund in money purchase form and the investments or
monies representing such contributions or transfer payments and any income
derived therefrom shall be disregarded for the purposes of calculating the
Transfer Amount and the Adjusted Transfer Amount. Xxxxxx will,
nevertheless, use reasonable endeavours to procure that on or before the
Payment Date Xxxxxx'x Fund pays, transfers or procures the payment or
transfer to Xxxxxx'x Scheme of the amount of any such money purchase
benefits attributable to transfer payments or voluntary contributions of
the Transferring Members in respect of their membership of the Xxxxxx Fund
(including any such contributions payable in the Transitional Period)
together with accumulated interest or bonuses.
8. ROWECOM'S OBLIGATIONS
RoweCom undertakes to Xxxxxx (providing it becomes principal employer of
the Fund):-
(a) that on and after becoming principal employer of the Xxxxxx Fund it
shall use its reasonable endeavours to procure that the trustee board
of the Xxxxxx Fund shall remain as constituted at Completion until
such time as the Transfer Amount has been paid from the Xxxxxx Fund to
Xxxxxx'x Scheme;
(b) that should it become necessary, for any reason, for RoweCom to become
the principal employer of the Xxxxxx Fund prior to the date provided
for under this
-138-
Schedule, it shall fulfil the obligations of principal employer under
the Xxxxxx Fund in accordance with the provisions of this Schedule;
(c) that it will procure that on Xxxxxx'x cessation of participation in
the Xxxxxx Fund the actuary appointed pursuant to Section 47(1)(b)
1995 Act will issue a written determination to Xxxxxx that no debt is
treated as becoming due from Xxxxxx under Section 75(1) of the 1995
Act (if in the opinion of the actuary no such debt does become due);
(d) to provide for each Member Employee for a period of one year after the
Membership Transfer Date pension and life assurance benefits under the
Xxxxxx Fund (or such other retirement benefits arrangement as RoweCom
may decide) on the basis that prevails under the Xxxxxx Fund at the
Completion Date.
9. CESSATION OF PARTICIPATION
If for any reason it proves impossible to make a transfer payment from the
Xxxxxx Fund to the Xxxxxx Scheme within one year of the Membership Transfer
Date, paragraphs 5, 6, 7, 8 and 10 of this schedule shall cease to apply
and instead RoweCom and Xxxxxx shall as soon as practicable (provided that
the law so admits) enter into a deed of substitution to replace RoweCom by
Xxxxxx as principal employer of the Fund (upon which substitution being
effected RoweCom shall cease to participate in the Fund).
10. SHORTFALL
RoweCom's Actuary shall, as soon as practicable after the Membership
Transfer Date, calculate whether or not the Xxxxxx Fund is in Shortfall as
at the Membership Transfer Date. Xxxxxx'x Actuary shall procure that
RoweCom's Actuary receives all reasonable information requested by
RoweCom's Actuary to perform such calculation as soon as practicable.
If RoweCom's Actuary determines that the Xxxxxx Fund is in Shortfall as at
the Membership Transfer Date, Xxxxxx shall as soon as practicable pay an
amount equal to the Shortfall to RoweCom (upon which RoweCom shall pay such
amount into the Xxxxxx Fund).
11. COSTS
RoweCom shall bear the professional costs of RoweCom's Actuary and Xxxxxx
shall bear the professional costs of Xxxxxx'x Actuary in connection with
the implementation of the provisions of this schedule subject to paragraph
12.
12. DISPUTES
Any dispute of an actuarial nature between RoweCom's Actuary and Xxxxxx'x
Actuary concerning the calculation of the Pension Liabilities or the
Transfer Amount or the Adjusted Transfer Amount or any matter to be agreed
by them under the provisions of this schedule may, in the absence of an
agreement between them, at the option of either RoweCom or
-139-
Xxxxxx be referred to an independent actuary agreed by RoweCom and Xxxxxx
within 14 days of such reference being raised or, failing such agreement,
appointed by the President for the time being of the Institute of Actuaries
at the instance of the party first applying to him. Such independent
actuary shall determine any matter referred to him in accordance with the
terms of this schedule and shall act as an expert and not as an arbitrator.
His decision shall be final and binding upon the parties in the absence of
manifest error and his professional costs shall be borne equally by RoweCom
and Xxxxxx unless he shall otherwise direct.
13. ARTICLE 141 INDEMNITY
Xxxxxx agrees to indemnify RoweCom against any costs or expenses RoweCom
may at any time reasonably incur in relation to claims brought at any time
for access to retrospective membership (prior to the admission of part time
employees to membership of the Xxxxxx Fund in 1990) of the Xxxxxx Fund
under Article 141 (formerly Article 119) of the Treaty of Rome as a result
of:
(a) participating in or becoming the principal employer of the Xxxxxx
Fund; or
(b) the Xxxxxx Fund's making a transfer payment to the Xxxxxx Scheme.
14. XXXXXX MONEY PURCHASE SCHEME
14.1 Xxxxxx undertakes to RoweCom that:-
(a) it will use its reasonable endeavours to procure that RoweCom may
participate as a participating employer in the Xxxxxx Money Purchase
Scheme in respect of the Money Purchase Employees until the Membership
Transfer Date subject to the approval of the Board of Inland Revenue
(which approval RoweCom and Xxxxxx shall use their respective
reasonable endeavours to obtain);
(b) until the Membership Transfer Date it will:-
(i) use its reasonable endeavours to ensure that the Xxxxxx Money
Purchase Scheme is and remains an exempt approved scheme under
chapter I of part XIV of the TA;
(ii) take no voluntary action without the consent of RoweCom (such
consent not to be unreasonably withheld or delayed) which would
cause the Xxxxxx Money Purchase Scheme to terminate or be wound
up in relation to the Money Purchase Employees;
(iii) not exercise any discretion or power under the Xxxxxx Money
Purchase Scheme which would adversely affect the Relevant
Benefits of the Money Purchase Employees under the Xxxxxx Money
Purchase Scheme without the prior written consent of RoweCom
(such consent not to be unreasonably withheld or delayed);
-140-
save, in the cases referred to in paragraphs 14.1(b)(ii) or (iii)
above, where RoweCom is in material default in discharging its
obligations as a participating employer under the Xxxxxx Money
Purchase Scheme;
(c) it will provide to RoweCom such information as RoweCom reasonably
requests so that the provisions of paragraph 14.2 are observed
(including without limitation membership details relating to the Money
Purchase Employees).
14.2 RoweCom undertakes that it will in respect of the Transitional Period:-
(a) pay to the Xxxxxx Money Purchase Scheme within 10 days of the end of
each calendar month the contributions due and payable in respect of
such month to the Xxxxxx Money Purchase Scheme by and in respect of
the Money Purchase Employees at the following rates:-
3% of Pensionable Salary (employer contributions);
2% of Pensionable Salary (member contributions);
(b) interest shall be payable on each payment due under paragraphs 14.2(a)
and (g) following the date after each payment becomes due up to and
including the date when each payment is actually paid (in each case 3%
per annum (compounded monthly) above the base rate from time to time
with Barclays Bank plc);
(c) comply during the Transitional Period in all other respects with the
provisions of the Xxxxxx Money Purchase Scheme as they relate to a
participating employer;
(d) not do or omit to do any act or thing whereby the approval of the
Xxxxxx Money Purchase Scheme as an exempt approved scheme or its
status as a contracted-out scheme would or might be prejudiced;
(e) not exercise any right, power or discretion conferred on RoweCom by
the Xxxxxx Money Purchase Scheme except with the prior written
approval of Xxxxxx on such terms (whether as to payment of additional
contributions or otherwise) as Xxxxxx may agree;
(f) on demand provide or procure to be provided such information as is
reasonably required by the Xxxxxx Money Purchase Scheme for the
administration of the Xxxxxx Money Purchase Scheme or the calculation
of the Transfer Amount;
(g) pay to Xxxxxx an amount in respect of administrative expenses of the
Xxxxxx Money Purchase Scheme and costs of providing death in service
benefits attributable to Money Purchase Employees on the basis set out
in the Actuary's Letter, such payments to be made within the timescale
set out in paragraph 14.2(a) above.
14.3 RoweCom and Xxxxxx shall use their respective reasonable endeavors to
procure that such of the Money Purchase Employees as are in contracted-out
employment by reference to the Xxxxxx Money Purchase Scheme at Completion
shall continue to be in contracted-out
-141-
employment by reference to the Xxxxxx Money Purchase Scheme during the
Transitional Period.
14.4 RoweCom agrees that Xxxxxx may in its discretion and in its own interests
exercise any powers and give any consents on behalf of RoweCom or any
member of the RoweCom Group where those powers or consents arise under the
1995 Act, and without prejudice to the foregoing generality, appoints
Xxxxxx to be its representative for the purposes of making proposals with
regard to the selection of trustees pursuant to section 17 of the 1995 Act,
consulting with the trustees regarding any statement of investment
principles pursuant to section 35 of the 1995 Act, and agreeing any
schedule of contributions pursuant to section 58 of the 0000 Xxx.
14.5 RoweCom shall within one month after Completion enter into such deed or
agreement as may be necessary in accordance with the rules of the Xxxxxx
Money Purchase Scheme (as at the date hereof) for it to participate in the
Xxxxxx Money Purchase Scheme a participating Employer during the
Transitional Period (such agreement to be provided by Xxxxxx or the Xxxxxx
Money Purchase Scheme). RoweCom shall issue all notices and make all the
necessary elections and take any other steps necessary to procure that such
of the Money Purchase Employees as are in contracted-out employment under
the 1993 Act by reference to the Xxxxxx Money Purchase Scheme shall
continue to be in such contracted-out employment and RoweCom shall issue
all notices and make all necessary elections and take any other steps
necessary to achieve this.
-142-
APPENDIX - ACTUARY'S LETTER
"Pension Liabilities" will be calculated with an effective date of Membership
Transfer Date as:
A/B times C where
A is defined as the sum across each Transferring Members of the liability
calculated on the method and basis required by the Occupational Pension Scheme
(Minimum Funding Requirement and Actuarial Valuation Regulations 1996) except
that:
1. for members in Xxxxxx'x employment on Membership Transfer Date, the
assumption for the rate of statutory revaluation for deferred benefits
(including revaluation of Guaranteed Minimum Pensions) shall be 2% per
annum higher than in the basis referred to above (for the avoidance of
doubt, this means that all deferred benefits for such members are assumed
to be revalued at 6% per annum) as a proxy for the fact that there is no
salary escalation in the basis referred to above; and
2. that for all members mortality after retirement shall be based on actuarial
mortality tables, PA80 (C=2010); and
3. that benefits shall be assumed to be paid from age 60 for those members who
have not yet retired; and
4. pensions accrued after 6 April 1997 other than Guaranteed Minimum Pensions
shall be assumed to increase at 4% per annum in payment.
B is defined as the sum across each member of the Xxxxxx Fund of the liability
calculated on the method and basis required by the Occupational Pension Scheme
(Minimum Funding Requirement and Actuarial Valuation Regulations 1996) except
that
1. for members in RoweCom's or Xxxxxx'x employment on Membership Transfer
Date, the assumption for the rate of statutory revaluation for deferred
benefits (including revaluation of Guaranteed Minimum Pensions) shall be 2%
per annum higher than in the basis referred to above (for the avoidance of
doubt, this means that all deferred benefits for such members are assumed
to be revalued at 6% per annum) as a proxy for the fact that there is no
salary escalation in the basis referred to above; and
2. that for all members mortality after retirement shall be based on actuarial
mortality tables, PA80(C=2010); and
3. that benefits shall be assumed to be paid from age 60 for those members who
have not yet retired; and
4. pensions accrued after 6 April 1997 other than Guaranteed Minimum Pensions
shall be assumed to increase at 4% per annum in payment.
C is defined as the market value of the assets of the Xxxxxx Fund at Membership
Transfer Date.
-143-
"Shortfall" will be defined as X minus Y, if X is greater than Y or nil
otherwise where X and Y are defined below:
(X) the sum across each member of the Xxxxxx Fund who are not Transferring
Members at Membership Transfer Date of the liability calculated on the
method and basis required by the Occupational Pension Scheme (Minimum
Funding Requirement and Actuarial Valuation Regulations 1996) except that:
1. for members in RoweCom's employment on Membership Transfer Date, the
assumption for the rate of statutory revaluation for deferred benefits
(including revaluation of Guaranteed Minimum Pensions) shall be 2% per
annum higher than in the basis referred to above (for the avoidance of
doubt, this means that all deferred benefits for such members are assumed
to be revalued at 6% per annum) as a proxy for the fact that there is no
salary escalation in the basis referred to above; and
2. that for all members mortality after retirement shall be based on actuarial
mortality tables, PA80(C=2010); and
3. that benefits shall be assumed to be paid from age 60 for those members who
have not yet retired; and
4. pensions accrued after 6 April 1997 other than Guaranteed Minimum Pensions
shall be assumed to increase at 4% per annum in payment.
(Y) the market value of the assets of the Xxxxxx Fund less the Transfer Amount.
For the avoidance of doubt, appropriate asset adjustment factors shall be
applied to (A), (B) and (X) to convert the calculated amount to a market value
at the Membership Transfer Date.
"Adjusted Shortfall" is defined as the Shortfall at the Membership Transfer Date
adjusted by the Timing Adjustment to the Second Payment Date.
-144-
SCHEDULE 8
Proforma Completion Accounts
The Completion Accounts will be set out as follows on a country-by-country
basis:
Asset Businesses (Pounds) (Pounds)
Add: Trade debtors
Other debtors
Prepayments
Stocks
Advance Publisher Payments
Less: Publisher creditors
Expense creditors
Accruals
Customer advances
Deferred income
Finance lease liabilities
___________ ___________
Net working capital
The Company and its subsidiaries
Add: Cash in hand and at bank
Trade debtors
Other debtors
Prepayments
Stocks
Advance Publisher Payments
Less: Publisher creditors
Expense creditors
Accruals
Customer advances
Deferred income
Tax liabilities
___________ ___________
Net working capital
-145-
SCHEDULE 9
Accounting Policies and Procedures for the Completion Accounts and/or the First
Quarter Accounts
1. GENERAL REQUIREMENTS
The Completion Accounts will:
(a) consist of an aggregation at the Completion Date of the balance sheets
of the Company, its subsidiaries and the assets and liabilities which
are being transferred pursuant to this agreement or are those of any
member of the Group and will consist only of those items in paragraph
2 acquired relating to the Asset Businesses excluding any intercompany
balances between the Company, its subsidiaries and the Asset
Businesses;
(b) be prepared as if the Completion Date was the financial year end of
the Group;
(c) be produced in sterling and will include overseas assets and
liabilities translated at the closing mid market exchange rate quoted
in The London Financial Times for the Completion Date;
(d) not re-appraise the value of any of the assets or create any
additional liabilities of the Group as a result of the change in
ownership of the Group other than normal adjustments for post-balance
sheet events which are capable of being adjusted for under normal UK
accounting standards and practices; and
(e) be prepared in accordance with the requirements of paragraph 3.
2. BASIS OF ACCOUNTING
2.1 The Completion Accounts shall:-
(a) be prepared in accordance with the specific instructions set out in
paragraph 2.2 below ("Specific Instructions") irrespective of whether
or not the Specific Instructions are in accordance with Accounting
Standards or in accordance with the accounting principles, bases,
policies, methods or practices stated in or where not expressly
stated, applied in the preparation of the Accounts;
(b) to the extent a matter is not covered by the Specific Instructions, be
prepared in accordance with the accounting principles, bases,
policies, methods and practices applied in the Accounts;
(c) to the extent that a matter is not covered by the Specific
Instructions or by the accounting principles, bases, policies, methods
and practices stated in the Accounts, be prepared in accordance with
the requirements of the Companies Xxx 0000 and with all Accounting
Standards applicable to a United Kingdom company to the extent that
they are relevant in establishing the amount of net assets; and
-146-
(d) to the extent that a matter is not covered by paragraphs (a), (b) or
(c) above, be prepared in accordance with generally accepted
accounting practice applicable to a United Kingdom company and group.
2.2 Specific Instructions
The Asset Businesses
(a) Revenue recognition
The Completion Accounts will continue the Xxxxxx'x policy of
recognising all revenue and gross profits on contracts at the time an
order is placed with a publisher supported by an order previously
received from a customer.
(b) Bank balances and borrowings
No amount shall be included for bank balances or borrowings that are
not transferred as part of this agreement.
(c) Trade Debtors
Trade debtors will represent the outstanding balances from customers
at the Completion Date. Customers in receivership or a form of
liquidation or where there is a significant dispute, or they have
notified in writing that they are refusing to pay or where there is a
history of debt write-off anything over 12 months or where credit
notes have been issued subsequent to the Completion Date shall be
valued at NIL.
Where an order has been placed with a publisher prior to the
Completion Date supported by an order previously received from a
customer, the Completion Accounts will include as a trade debtor the
value to be invoiced to the customer less any amounts paid on account
of those orders together with the related liability to publishers.
No liability will be included in the Completion Accounts for customer
credit balances in excess of two years at the Completion Date.
(d) Other Debtors
Included and calculated in accordance with UK GAAP if realisable
within 12 months.
(e) Prepayments
Prepayments will be the relevant element of expenses paid before the
Completion Date but which give a service or benefit for a defined
period, which includes a period falling after the Completion Date.
-147-
Advance Publisher Payments means any advance payments made by any
member of the Xxxxxx Group or any member of the Group prior to
Completion to publishers.
All amounts due from publishers relating to cancelled titles or any
other reasons resulting in credit notes being issued to customers
shall be included in trade debtors, subject to the other provisions of
this paragraph.
No software costs shall be included within prepayments.
(f) Publisher Creditors
Publisher creditors are amounts owed to publishers in respect of
orders placed with publishers to the extent not paid for and accruals
for subsequent xxxxxxxx and increased prices.
(g) Expense Creditors
Expense creditors shall include liabilities for which the Group has
received an invoice from a Vendor for services performed or goods
received prior to Completion.
(h) Customer advances
The Completion Accounts will include, as a liability, provision for
any monies received from customers before the Completion Date which do
not relate to an order that has been transmitted to a publisher before
the Completion Date.
(i) Deferred income
If a customer has been invoiced for any lines for which an order has
not been transmitted to a publisher then the sales invoiced value of
those lines will be shown in the Completion Accounts as deferred
income within liabilities.
(j) Accruals
Provision shall be made for payments for staff for any work prior to
the transfer date but not paid by the transfer date e.g. basic hours
paid in arrears, overtime, lieu payments, pension payments, social
security taxes, national insurance benefits, terminations decided on
pre-Completion or by Xxxxxx, bonuses relating to Completion or pre-
Completion periods.
Provision shall be made for "discounts" to be given to subscription
customers for advance payment relating to the period prior to the
Completion Date. This will be calculated by calculating the
proportion of the discount to be given, that relates to the period
from the date of receipt of the advance payment to the Completion
Date, compared to the period from the date of receipt of the advance
payment to the normal due date for payment if no advance payment had
been received from the customer.
-148-
Provision shall be made for sick pay and holiday pay liabilities
(where holiday pay liabilities shall be calculated in accordance with
normal accounting practice historically adopted by each individual
member of the Group) and 9/12 of "13/th/ month" payments or annual
bonuses, calculated by reference to calendar years.
No amounts shall be accrued relating to ongoing services to be
provided to customers, except in respect of services performed before
the Completion Date.
(k) Finance lease liabilities
These will be calculated on each individual finance lease contract
assumed on the basis of the sum of digits methodology for spreading
interest charge over the life of the lease. Otherwise in accordance
with UK GAAP.
(l) Taxation
Full provision shall be made for employment related taxes and VAT, and
any items that relate both to pre-completion and post-completion
periods shall be apportioned pro rata as to time.
No amount shall be included relating to corporation tax, income tax,
PAYE, VAT or other employment related/operational taxes and other
taxes or duties relating to the Asset Businesses.
(m) The Company and its Subsidiaries
In addition to all the above the Completion Accounts of the Company
and its Subsidiaries (be they credit or debit balances) will also be
included.
(n) Bank Borrowings
The cash book balances of all bank accounts of the Company and the
Subsidiaries (be they credit or debit balances) will be included.
(o) Tax liabilities
The Completion Accounts will include provision for federal, state,
city and local taxes and employment taxes relating solely to pre-
Completion periods or apportioned by time in relation partly to pre-
Completion periods. No general or deferred tax balances shall be
included.
-149-
SCHEDULE 10
Completion
1. Subject to the terms and conditions of this agreement, at Completion Xxxxxx
shall:-
1.1 In respect of the Businesses (to the extent applicable in each
jurisdiction):-
(a) make available to RoweCom at the Properties:-
(i) the Books and Records and that part of the Business Information
which is in writing; and
(ii) the Loose Plant and all other Assets hereby agreed to be sold
title to which can be transferred by delivery,
with the intent that title in the Assets referred to in this clause
(a) shall pass by and upon such delivery;
(b) deliver to RoweCom:-
(i) the Intellectual Property Assignments duly executed by Xxxxxx or
a member of the Xxxxxx Group;
(ii) duly executed assignments and/or novations and consents thereto
of such of the Contracts in the agreed terms as RoweCom shall
require;
(iii) release, under seal or certificate of non-crystallisation (or as
otherwise applicable to the relevant jurisdiction) of charge of
any Encumbrance to which any of the Assets, US Shares or Asset
Businesses are subject duly executed by those entitled to the
benefit thereof provided that for the purposes of this clause
(b)(iii) only, the expression "Assets" shall not include the
Properties (in respect of which the provisions of schedule 6
apply);
(iv) a copy of the minutes of a meeting of the directors of Xxxxxx in
the agreed terms authorising the execution by Xxxxxx of this
agreement and all other documents specified herein;
(v) all vehicle registration documents issued by the Department of
Transport in respect of any motor vehicles relating to the UK
Business comprised in the Loose Plant together with all current
test certificates and all current road fund licences;
(vi) any Supplemental Disclosure Letter; and
1.2 in respect of the Group generally:-
(a) the Tax Deed duly executed by Xxxxxx;
-150-
(i) any service contracts for key employees; and
(ii) a copy of the ordinary resolution approving the sale and
purchase of the Business in accordance with this agreement,
1.3 in respect of the Canadian Business:
(a) have delivered to RoweCom evidence satisfactory to RoweCom that all
taxes to be paid by Xxxxxx or any member of the Xxxxxx Group in
respect of the Business under the Retail Sales Tax Act (Ontario) and
similar legislation in the Province of Quebec have been paid;
(b) Xxxxxx shall, as soon as possible and in any event not later than five
Business Days after the execution of this agreement, deliver to the
RoweCom's Canadian Legal Counsel the following in relation to the
Canadian Real Property to the extent that the same is in the
possession or control of Xxxxxx or any member of the Xxxxxx Group:
(i) the title deeds relating to the Canadian Real Property; and
(ii) all surveys, site plans, approved plans pursuant to which
binding permits were issued to allow development of the Canadian
Real Property, architectural and engineering specifications,
operating plans and drawings of any buildings or other
structures located on the Canadian Real Property;
(c) The parties shall waive compliance with the provisions of the Bulk
Sales Act (Ontario) or any other applicable bulk sales legislation in
respect of the purchase and sale of the Purchased Assets related to
the Canadian Business;
(d) Xxxxxx and RoweCom shall provide evidence of registration for goods
and services tax purposes of each of Xxxxx Canada Limited and the
Canadian Purchaser, together with a joint election of such parties.
RoweCom shall be responsible for all goods and services tax and
provincial sales tax payable in Canada with respect to this
transaction.
1.4 in respect of the French Business:-
(a) deliver or procure the delivery to RoweCom:-
(i) the French Business Agreement duly executed by Xxxxxx France
S.A.;
(ii) the French Escrow Agreement or the French Bank Guarantee duly
executed by Xxxxxx France S.A.;
(iii) the French Real Property Option duly executed by Xxxxxx France
S.A.;
(iv) a certified copy of the minutes of the meeting of the board of
directors and of Xxxxxx France S.A. approving the sale and
purchase of the French Business
-151-
and the French Real Property to RoweCom Group, and authorising
the execution of the French Business Agreement, the French
Escrow Agreement (or the French Bank Guarantee) and the French
Property Option and any other agreement necessary or required
to perform the sale and purchase contemplated under this
agreement and acknowledging the resignation of Messrs.
Delestaing and Coureaud as directors of the French Vendor;
(v) a certified copy of the minutes of the meeting of the workers'
committee (comite d'entreprise) of Xxxxxx France S.A. rendering
its final advice on the sale of the French Business to RoweCom
Group;
(vi) pursuant to articles L.412-18 or L.425-1 or L.436-1 of the
French Employment Code, as the case may be, a certified copy of
the letter(s) of the relevant French Employment inspector
authorising the transfer of the protected French Employees to
the Purchaser of the French Business;
(vii) pursuant to article 15 of the French Business Transfer Law, the
Books of the French Business for the last three years, together
with their inventory, duly dated and countersigned by Xxxxxx
France S.A.;
(viii) the contract of employment of any French Assumed Employee; and
(ix) a certified copy of the resignation letters of Messrs. Coureaud
and Delestaing from their position as members of the board of
directors of the French Vendor with effect from the Completion
Date at the latest.
1.5 in respect of the Spanish Business:-
(a) deliver or have delivered to RoweCom evidence satisfactory to RoweCom:
(i) that all taxes and Social Security contributions to be paid by
Xxxxxx or any member of the Xxxxxx Group in respect of the
Spanish Business have been paid;
(ii) duly formalised written authorisation, as required by the
Spanish Tax Authorities, to the Spanish Purchaser to file for a
Tax Certificate regarding the Spanish Business pursuant to
Article 13.4 of the Reglamento General de Recaudacion (approved
by Royal Decree 1684/990, of December 20 1991) to certify the
Spanish Business has no pending tax liabilities;
(iii) all vehicle registration documents issued by the General
Directorate of Transport in respect of any motor vehicles
relating to the Spanish Business together with all current test
certificates and all current insurances and other permits
relating thereto;
(iv) Xxxxxx shall, as soon as possible and in any event not later
than five Business Days after the execution of this agreement,
deliver to the RoweCom's Spanish Legal Counsel the following in
relation to the
-152-
Intellectual Property to the extent that the same is in the
possession or control of Xxxxxx or any member of the Xxxxxx
Group;
(v) that the consent of the lessor has been obtained for the
transfer of the Spanish Real Property to the Spanish Lessor.
(vi) the title deed relating to the Spanish Intellectual Property;
and the title of cancellation of the mortgage with respect
thereto; and
(b) deliver to RoweCom:
(i) A copy of the letter(s) addressed to the Spanish Employees
informing of their transfer to the Spanish Purchaser of the
Spanish Business; and
(ii) Books of the Spanish Business for the last four years, together
with their inventory, duly dated and countersigned by Xxxxxx
Espana Agencia de Ediciones S.L.
1.6 in respect of the US Shares:-
(a) deliver or procure the delivery to RoweCom of signed, written
resignations of all respective officers and directors of the Company
and its Subsidiaries;
2. Xxxxxx shall use reasonable efforts to deliver to Rowecom's U.S. Legal
Counsel the following documents in connection with the following
properties, prior to Completion, but in any event within sixty (60) days
after the signing of this agreement:
(a) 00 Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxxxx ("Westwood, MA Property")
(i) All existing surveys of the Westwood, MA Property;
(ii) The existing title insurance policy for the Westwood, MA
Property;
(iii) Any existing Phase I environmental report in connection with
the Westwood, MA Property;
(iv) Copies of any leases affecting the Westwood, MA Property (if
available);
(v) Copies of any service contracts, warranties or guarantees
affecting the Westwood, MA Property (if available); and
(vi) Copies of any structural or engineering reports prepared in
connection with the Westwood, MA Property (if available).
(b) 0000 Xxxx Xxxxx, Xxxxxx, Xxxxxxxx ("Oregon, Ill Property")
(i) All existing surveys of the Oregon, Ill Property;
-153-
(ii) Any existing Phase I environmental report in connection with
the Oregon, Ill Property;
(iii) Copies of any leases affecting the Oregon, Ill Property (if
available);
(iv) Copies of any service contracts, warranties or guarantees
affecting the Oregon, Ill Property (if available); and
(v) Copies of any structural or engineering reports prepared in
connection with the Oregon, Ill Property (if available).
3. To the extent not previously delivered and included in the Disclosure
Letter, Xxxxxx shall, as soon as practicable, but in no event later than
five (5) days after the execution of this agreement, deliver to Rowecom's
U.S. Legal Counsel the following documents in connection with the following
properties;
(a) 4425 Brookfield, Chantilly, Virginia ("Chantilly, VA Property");
(i) Copy of the lease between X.X. Xxxxx Company ("Xxxxx") and its
landlord at the Chantilly, VA Property.
(b) 0000 Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx ("Carlsbad, CA Property"); and
(i) Copy of the lease between Electronic Online Systems
International, Inc. ("EOS") and EOS' landlord.
4. Xxxxxx shall execute and/or deliver at Completion (or cause to be executed
and delivered) with respect to the Carlsbad, CA Property a sublease, in a
form reasonably acceptable to Rowecom and Xxxxxx, from EOS to Xxxxxx
Information Quest, Inc. ("DIQ").
5. At Completion:
(a) The Spanish Purchaser and the Spanish Vendor shall execute and deliver
(or procure the execution and delivery of):
(i) the duly notarised Spanish Business Agreement;
(ii) any other private or public document which may be necessary for
the valid transfer and, if applicable, registration of the
Assets of the Spanish Business in favour of the Spanish
Purchaser.
(b) RoweCom and Xxxxxx shall execute and deliver (or procure the execution
and delivery of):-
(i) the duly executed IQ Software Licence;
(ii) the duly executed Folkestone Lease;
(iii) the duly executed Oregon Lease;
-154-
(iv) the Guarantee by RoweCom in the agreed terms of the obligations
of Laverton Holding B.V. under a Licence of the non-US
intellectual property rights in the IQ Software;
(v) the duly executed lease for the US Property 0000 Xxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxxx 00000.
(c) RoweCom shall produce the duly executed performance guarantees
referred to in clause 11.1.
(d) RoweCom shall, subject to the provisions of clause 5.2, issue and
allot the First Tranche shares to Xxxxxx (or as it may otherwise
direct).
-155-
SCHEDULE 11
Agreed Terms Documents
List of Assumed Employees identifying the French Employees
List of legally protected French Employees
List of Contracts
List of Excluded Assets
Fixed Asset Register
List of registered Intellectual Property
Intellectual Property Assignments
Assignments and/or novations and consents relating to the Contracts
Xxxxxx'x Board Minutes
RoweCom's Board Minutes
Notification of Change of Ownership of Business
Letter(s) to Employees
Press Release
Accounts
Management Accounts
Lease of Folkestone UK
IQ Software Licence
Evidence from RoweCom's bankers of its working capital facility
Lease of Oregon
List of Trade Names
Tax Deed
Directors' Resignations for all US Companies
Losses
Shared Services Letter
RoweCom Guarantee
French Lease
-156-
SCHEDULE 12
Schedule 12
Consideration
Purchase Price Paid by
Allocated to Seller RoweCom Canada ULC
------------------------- ------------------------
Xxxxx Canada Limited
Land & Buildings 430,000 430,000
Furniture 180,000 180,000
DP Equipment 690,000 690,000
Vehicles 0 0
Intangibles 2,070,000
-------------------------
Total 3,370,000
Xxxxxx France S.A.
Land & Buildings 1,600,000
Furniture 125,000
DP Equipment 100,000
Vehicles 10,000
Trademark, Patent, Clientele, & Goodwill 125,000
Customer Lists, Contracts with Customers 3,040,000
-------------------------
Total 5,000,000
Xxxxxx Espana Agencia
de Ediciones
Land & Buildings 0
Furniture 16,000
DP Equipment 0
Vehicles 0
Intangibles 979,000
-------------------------
Total 995,000
Xxxxxx UK Limited
Consideration Consideration
Paid by Paid by
RoweCom France SARL RoweCom Espana SL
---------------------- --------------------
Xxxxx Canada Limited
Land & Buildings
Furniture
DP Equipment
Vehicles
Intangibles
Total
Xxxxxx France S.A.
Land & Buildings 1,600,000
Furniture 125,000
DP Equipment 100,000
Vehicles 10,000
Trademark, Patent, Clientele, & Goodwill 125,000
Customer Lists, Contracts with Customers
Total
Xxxxxx Espana Agencia
de Ediciones
Land & Buildings 0
Furniture 16,000
DP Equipment 0
Vehicles 0
Intangibles
Total
Xxxxxx UK Limited
-157-
SUPPLEMENT TO SCHEDULE 12
RoweCom, Inc
Xxxxxx Transaction
Cash Flows Summary
(in UK Pounds)
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Price Paid Adjustment Earnout
---------------------------------------------------------------------------------------------------------------------------------
At Closing Sec. 2.4(b), Sec. 2.4 Total
------------ ------------ ------------ -----
(c) (d)
--- ---
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
RoweCom Global Holdings, Ltd.
(BVI)
---------------------------------------------------------------------------------------------------------------------------------
To Xxxxxx UK,
Ltd. 3,875,000 3,160,000 7,035,000
---------------------------------------------------------------------------------------------------------------------------------
To Xxxxx Canada Limited 1,500,000 570,000 2,070,000
---------------------------------------------------------------------------------------------------------------------------------
To Xxxxxx Holdings, PLC 750,000 750,000
---------------------------------------------------------------------------------------------------------------------------------
0
---------------------------------------------------------------------------------------------------------------------------------
RoweCom UK, 0
Ltd.
---------------------------------------------------------------------------------------------------------------------------------
To Xxxxxx
France SA 3,040,000 3,040,000
---------------------------------------------------------------------------------------------------------------------------------
To Xxxxxx Espana Agencia de
Ediciones 709,000 270,000 979,000
---------------------------------------------------------------------------------------------------------------------------------
To Dawson UK,
Ltd. 600,000 600,000
---------------------------------------------------------------------------------------------------------------------------------
0
---------------------------------------------------------------------------------------------------------------------------------
0
---------------------------------------------------------------------------------------------------------------------------------
RoweCom France SARL 0
---------------------------------------------------------------------------------------------------------------------------------
-159-
---------------------------------------------------------------------------------------------------------------------------------
To Dawson 1,960,000 1,960,000
France SA
---------------------------------------------------------------------------------------------------------------------------------
0
---------------------------------------------------------------------------------------------------------------------------------
Rowe Communication Espana, S.L. 0
---------------------------------------------------------------------------------------------------------------------------------
To Dawson Espana Agencia de
Ediciones 16,000 16,000
---------------------------------------------------------------------------------------------------------------------------------
0
---------------------------------------------------------------------------------------------------------------------------------
RoweCom ULC (Canada) 0
---------------------------------------------------------------------------------------------------------------------------------
To Faxon Canada Limited 1,300,000 1,300,000
---------------------------------------------------------------------------------------------------------------------------------
0
---------------------------------------------------------------------------------------------------------------------------------
RoweCom, Inc. 0
(US)
---------------------------------------------------------------------------------------------------------------------------------
To Dawson UK,
Ltd. 14,000,000 1,500,000 15,500,000
---------------------------------------------------------------------------------------------------------------------------------
To Dawson Holdings, PLC
(IQ) 750,000 750,000
---------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------
Total 28,500,000 1,500,000 4,000,000 34,000,000
=========== =========== ========== ===========
---------------------------------------------------------------------------------------------------------------------------------
-160-
SCHEDULE 13
Confirmation Letter
RoweCom Inc.
. 1999
Dear Sirs
Purchase of the Subscriptions Business of the Dawson Group
----------------------------------------------------------
We refer to the Purchase and Sale Agreement dated 1999 between RoweCom Inc. and
Dawson Holdings plc (the "Purchase Agreement"). Words and expressions defined in
the Purchase Agreement have the same meanings in this letter. For the purposes
of this letter "material" has the same meaning as in clause 4.2 of the Purchase
Agreement.
We hereby confirm to you that:-
1. Dawson has complied in all material respects with those of its obligations
under the Purchase Agreement which it is obliged to perform prior to
Completion; and
2. None of the Warranties was untrue or inaccurate in any material respect at
or prior to the date of Completion by reference to the facts or
circumstances then subsisting.
Yours faithfully,
________________________________________
[Director] (without personal liability)
duly authorised, for and on behalf of
Dawson Holdings plc
-161-
SCHEDULE 14
Permitted Encumbrances
"Permitted Encumbrances" means in respect of the Canadian and US Real Property:
1. all reservations, limitations, provisos and conditions expressed in any
original grants from the Crown, as may be varied by statute;
2. liens and inchoate liens for realty taxes, charges, rates and assessments
and charges for utilities, in each case not yet due or in arrears;
3. undetermined or inchoate liens and charges incidental to current
construction or current operations that have not been filed or registered
in accordance with applicable law or that relate to obligations neither due
nor delinquent or that have by operation of law expired or been
extinguished;
4. any title defects, irregularities, easements or encroachments that might be
disclosed by an up-to-date plan of survey or inspection of the Canadian
Real Property and US Real Property;
5. the provisions of registered governing municipal by-laws, including
(without limitation) those relating to zoning;
6. any easements, leases, restrictions, charges or other interests or
instrument not disclosed by registered title;
7. any minor title defects, restrictive covenants that in the aggregate do not
materially affect the use, operation or marketability of the Canadian Real
Property and US Real Property;
8. any rights of expropriation, access or use, or any other similar rights
conferred or reserved by or in any statute of Canada or Ontario;
9. any registered restrictions or covenants that run with the Canadian Real
Property and US Real Property, including private deed restriction
restrictions and public or private rights-of-way, provided that they are
presently being complied with and do not materially interfere with the
present use of the Canadian Real Property and US Real Property;
10. any registered or unregistered regional, county, municipal, governmental or
other agreements, or agreements with publicly or privately regulated
utilities, provided that they are presently being complied with and do not
materially interfere with the present use of the Canadian Real Property and
US Real Property;
11. any easements for supply of domestic utility or telephone services to the
property or adjacent properties, provided that they do not materially
interfere with the present use of the Canadian Real Property and US Real
Property;
12. any easements or agreements for drainage, storm or sanitary services,
public utility lines, cable television lines, communication lines and
works, or other services or works provided
-162-
that they do not materially affect the present use of the Canadian Real
Property and US Real Property; and
13. Any registered or unregistered easements or other rights in favour of
Dawson.
-163-
SCHEDULE 15
Registration of RoweCom Shares
1. Filing of Registration Statement
As promptly as is practicable after RoweCom is eligible to register the
RoweCom Shares for resale by Dawson on SEC Form S-3 (or any successor
"short-form" registration statement, including proposed SEC Form B),
RoweCom will file a registration statement with the SEC for this purpose.
If RoweCom is not eligible to file a registration statement on Form S-3 by
March 9, 2000 (other than by reason of a failure to comply with applicable
securities laws filing requirements, which failure is caused by RoweCom's
inability to file any required financial statement or other information
with respect to the pre-Completion operations of the Group), then as
promptly as practicable (but in any event within 30 days) following such
date, RoweCom will instead file a registration statement on SEC Form S-1 or
other available form of registration statement for purposes of registering
the RoweCom Shares for resale by Dawson.
Regardless of form, the registration statement filed by RoweCom pursuant to
this Schedule 15 is referred to herein as the "Registration Statement".
2. Effectiveness of Registration Statement
Following filing of the Registration Statement, RoweCom will use its best
reasonable efforts to cause the Registration Statement to become effective
as promptly as practicable and to remain effective until the earlier of (i)
such time at which Dawson is eligible under SEC Rule 144 to sell all
remaining RoweCom Shares held by it within a 95-day period, or (ii) the
second anniversary of Completion.
3. Delay in Filing; Suspension of Sales
Notwithstanding the foregoing or any other provision of this Schedule 15,
RoweCom for not more than 90 days may delay filing the Registration
Statement if RoweCom determines in good faith that such registration might
(i) interfere with or affect the negotiation or completion of any
transaction that is being contemplated by RoweCom (regardless of whether a
final decision has been made to undertake such transaction) at the time the
right to delay is exercised, or (ii) involve initial or continuing
disclosure obligations that might not be in the best interest of RoweCom's
stockholders.
If at any time or from time to time after the Registration Statement
becomes effective, RoweCom advises Dawson that RoweCom considers it
appropriate for the Registration Statement to be amended (including
amendments to be made by filing with the SEC any document(s) that will be
incorporated into the Registration Statement), Dawson will not sell any
RoweCom Shares until RoweCom advises Dawson that the Registration Statement
has been so amended; provided, that RoweCom may not exercise this sale-
suspension right more than once in any six-month period.
-164-
RoweCom will use its best reasonable efforts to cause any such amendment to
be made as promptly as practicable (but in any event will make such
amendment within 60 days), after the date on which it advises Dawson of the
need to amend the Registration Statement.
If Dawson breaches its obligations under this Section 3, then
notwithstanding any other provision of this Schedule 15, and in addition to
any other remedies that RoweCom might have in respect of such breach,
RoweCom will not be required to indemnify or contribute to Dawson, and
Dawson will indemnify or (as applicable) contribute to RoweCom in respect
of any Damages (as defined below) arising out of or based on any untrue
statement (or alleged untrue statement) of any material fact contained in
the Registration Statement, any preliminary or final prospectus contained
therein, any amendment or supplement thereto, or any document incorporated
by reference therein, or any omission (or alleged omission) to state
therein any material fact required to be stated therein or necessary to
make the statements therein (in the case of any prospectus or amendment or
supplement thereto, in light of the circumstances in which they were made),
not misleading; but in the case of indemnification or contribution by
Dawson, only to the extent that RoweCom's Damages arise out of or are based
on such breach by Dawson.
4. Registration Expenses
RoweCom will pay all costs and expenses of effecting any registration
pursuant to this Schedule 15, including all registration and filing fees
(including NASD and stock exchange filings), costs of complying with
federal and state securities laws, printing expenses, the fees and
disbursements of its own counsel and accountants, and up to $10,000 of the
reasonable fees and expenses of one counsel for Dawson.
5. Current Public Information
RoweCom will use its best reasonable efforts to make and keep publicly
available such current public information as is necessary to enable Dawson
to resell the RoweCom Shares pursuant to SEC Rule 144.
6. Delegending of Certificates
Upon receipt of a certificate certifying (i) that Dawson has held the
RoweCom Shares for such period after which the exemption from registration
pursuant to which SEC Rule 144(k) may be available (currently two years),
and (ii) that Dawson has not been an affiliate (as defined in SEC Rule 144)
of RoweCom for such period after which such exemption may be available
(currently three months), RoweCom will remove from the stock certificates
representing the RoweCom Shares any restrictive legend relating to the
registration provisions of the Securities Act. RoweCom will also remove any
such restrictive legend upon sale of the RoweCom Shares pursuant to the
Registration Statement or pursuant to Rule 144.
7. Indemnification by RoweCom
Subject to the provisions of the final paragraph of Section 3 above,
RoweCom will indemnify Dawson and its officers, directors, employees, and
agents, and each person, if
-165-
any, who controls (within the meaning of the Securities Act) any of the
foregoing, and their respective successors and assigns, against any and all
damages, losses, claims, demands, actions, causes of action, suits,
litigations, arbitrations, liabilities, costs, and expenses, including
court costs and the reasonable fees and expenses of legal counsel
(collectively, "Damages") arising out of or based upon any untrue statement
(or alleged untrue statement) of any material fact contained in the
Registration Statement, any preliminary or final prospectus contained
therein, any amendment or supplement thereto, or any document incorporated
by reference therein, or any omission (or alleged omission) to state
therein any material fact required to be stated therein or necessary to
make the statements therein (in the case of any prospectus or amendment or
supplement thereto, in light of the circumstances in which they were made),
not misleading, or any violation by RoweCom, in connection with the
Registration Statement, of the Securities Act or any rule or regulation
promulgated thereunder; provided, however, that RoweCom will not be liable
to the extent that any such Damages arise out of or are based on any untrue
statement or omission made in reliance upon and in conformity with
information with respect to Dawson furnished to RoweCom by Dawson in
writing expressly for use in the Registration Statement.
8. Indemnification by Dawson
Without prejudice to the provisions of the final paragraph of Section 3
above, Dawson will indemnify RoweCom and its officers, directors,
employees, and agents, and each person, if any, who controls (within the
meaning of the Securities Act) any of the foregoing, and their respective
successors and assigns, against any and all Damages arising out of or based
upon any untrue statement of any material fact contained in the
Registration Statement, any preliminary or final prospectus contained
therein, any amendment or supplement thereto, or any document incorporated
by reference therein, or any omission to state therein any material fact
required to be stated therein or necessary to make the statements therein
(in the case of any prospectus or amendment or supplement thereto, in light
of the circumstances in which they were made), not misleading, but only if
and to the extent that such statements or omissions were made in reliance
upon and in conformity with information with respect to Dawson furnished to
RoweCom by Dawson in writing expressly for use in the Registration
Statement; provided, that Dawson's maximum liability in respect of the
Registration Statement will be limited to the amount of the aggregate sale
proceeds of the RoweCom Shares sold by Dawson pursuant to the Registration
Statement.
9. Indemnification Proceedings
Each party entitled to indemnification pursuant to this Schedule 15 (the
"Indemnifiee") will give notice to the party required to provide
indemnification (the "Indemnifior") promptly after the Indemnifiee acquires
actual knowledge of any claim as to which indemnity may be sought, and will
permit the Indemnifior (at his, her, or its expense) to assume the defense
of any claim or any litigation resulting therefrom with counsel reasonably
satisfactory to the Indemnifiee (it being agreed in advance that Bingham
Dana LLP or Katten Muchin & Zavis will be satisfactory); provided, that any
failure or delay by any Indemnifiee in giving such notice will relieve any
Indemnifior of his, her, or its obligations under this Schedule 15 only to
the extent, if any, that such Indemnifior is actually prejudiced; and
further provided, that the Indemnifior may so assume the defense only if it
gives written notice of such assumption to the Indemnifiee within 15 days
following its receipt of the Indemnifiee's notice pursuant
-166-
to this section. Except with the prior written consent of an Indemnifiee
(which consent will not be unreasonably withheld or delayed), no
Indemnifior, in the defense of any such claim or litigation, will consent
to entry of any judgment or enter into any settlement that does not include
the giving by the claimant or plaintiff to such Indemnifiee of a release
from all liability in respect of such claim or litigation.
Notwithstanding anything to the contrary herein, any Indemnifiee will have
the right to employ separate counsel to represent such Indemnifiee, if in
the reasonable opinion of the Indemnifiee's counsel, there exists or may
exist a material conflict of interest between the Indemnifior and the
Indemnifiee with respect to such claim or litigation, such that
representation of the Indemnifior and the Indemnifiee by the same counsel
is not appropriate, and in that case the reasonable fees and expenses of
the Indemnifiee's separate counsel will be borne by the Indemnifior.
Each of the parties will cooperate with the others in the defense of any
claim or litigation pursuant to this section and will make available to the
party assuming control of the defense thereof all such records, materials,
and information as the assuming party may reasonably request.
10. Contribution
If and to the extent that the indemnification provided for in this
Schedule 15 is unavailable to a party that would have been an Indemnifiee
in respect of any Damages referred to herein, then in lieu of indemnifying
such Indemnifiee, each party that would have been an Indemnifior hereunder
will contribute to the amount paid or payable by such Indemnifiee as a
result of such Damages in such proportion as is appropriate to reflect
their relative fault in connection with the statements or omissions (or in
the case of RoweCom, the alleged misstatements or omissions) that resulted
in such Damages. Relative fault will be determined by reference to, among
other things, whether the statement or omission (or in the case of RoweCom,
the alleged misstatement or omission) relates to information supplied by
the Indemnifior or an Indemnifiee and the parties' relative intent,
knowledge, access to information, and opportunities to correct or prevent
such statement or omission.
The parties agree that it would not be just and equitable if contribution
pursuant to this section was determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to above in this section.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
11. Precedence
In the event of any inconsistency or conflict between the provisions of
this Schedule 15 and those of any other part of this agreement, the
provisions of this Schedule 15 will supersede and control such other
inconsistent or conflicting provisions.
-167-
SCHEDULE 16
Assumed Liabilities
-168-
SCHEDULE 17
Accounting Policies and Procedures for the First Quarter Accounts
1. First Quarter Accounts
The overriding principle in the preparation of the first quarter accounts
will be to comply with the items listed below, subject thereto to adopt
bases, policies, procedures and methods consistent with those used in the
preparation of the gross profit for the quarter ending 31st December 1998,
and that the Business continues to trade on the same basis as the previous
years with its customers and subject thereto in accordance with UK GAAP.
2. Gross Profit Recognition
2.1 Sales income and gross profit will be recognised at the time an order is
sent to a publisher on behalf of a customer irrespective of the timing of
the invoice (either final, proforma or initial) being raised on the
customer.
2.2 The gross profit will be the difference between the full value invoiced to
the customer, before any discount granted under any prepayment discount
programme (where that was the practice for the relevant business in the
quarter ended 31 December 1998), and the amount paid to or to be invoiced
by the publisher.
2.3 The sales income will therefore include all amounts invoiced to customers
before the Completion Date for which orders have not been placed with the
publishers before Completion but for which orders in the First Quarter are
placed and which were shown as deferred income in the Completion Accounts.
2.4 Any release of unallocated credits will not form part of the gross profit.
2.5 Provision shall be made for credits to customers in the period in which
they fall.
2.6 The First Quarter Accounts shall include all sales income and gross profit
from customers who were Dawson customers on the Announcement Date (other
than those who formally notified the Dawson Group or RoweCom prior to the
Announcement Date that they intended to cease to be customers of the
subscriptions business of the Dawson Group) and remained customers of
RoweCom, having orders placed with publishers on their behalf in the First
Quarter, irrespective of whichever company with the enlarged RoweCom Group
places that order.
2.7 In so far as orders would have been placed in the First Quarter but were
delayed by administrative reasons, including obtaining necessary approval
under the Fedlink contract, until the end of the first quarter and were
placed by 31 January 2000, then these orders shall be treated as if they
had been placed in the first quarter to the extent that an equivalent order
had been placed under Fedlink by the same customer and the revenue
generated by such order had been included in the Estimated First Quarter
Profit Amount.
-169-
2.8 Base currency rates used with internal systems to calculate the value of
cost sales for overseas publishers' products must be the current market
rates of exchange for the day in which the order is sent.
2.9 The First Quarter Profit Amount and the gross profit for the quarter ended
31 December 1998 (the "Estimated First Quarter Profit Amount") shall be
calculated in the local currency of each of the Group Businesses. These
amounts shall be translated into sterling at the average of the average
exchange rate for the quarter ended 31 December 1998 and the average
exchange rate for the First Quarter (average exchange rate calculated as
the average of the mid-price rates published in the London Financial Times
for the relevant periods).
2.10 No account will be taken of the Books Business.
-170-
SCHEDULE 18
Losses
Federal Federal Federal
NOL R&D AMT Credit
3/31/89 $184,698
3/31/90 $ 39,005
3/31/91 $ 86,303
3/31/92 $216,711
3/31/93 $294,715
3/31/94 $ 5,272,361
9/30/94 $ 31,343
9/30/95 $12,384,244
9/30/96 $ 1,107,943
9/30/97 $ 12,609 Federal NOL addition
represents the conversion
of charitable
contributions to NOL.
9/30/98 $ 145,593 $ 41,020 Federal NOL addition
represents the conversion
of charitable
contributions to NOL.
-171-
Signed by )
for and on behalf of ) DAWSON HOLDINGS PLC
DAWSON HOLDINGS PLC )
in the presence of:- )
Signed by )
for and on behalf of ) ROWECOME INC.
ROWECOM INC. )
in the presence of:- )
Signed by )
for and on behalf of ) DAWSON FRANCE S.A.
DAWSON FRANCE S.A. )
in the presence of:- )
Signed by )
for and on behalf of ) FAXON CANADA LTD
FAXON CANADA LTD )
in the presence of:- )
Signed by )
for and on behalf of ) DAWSON ESPANA AGENCIE DE
DAWSON ESPANA AGENCIE DE EDICIONES ) EDICIONES
in the presence of:- )
-172-
Signed by )
for and on behalf of ) DAWSON U.K. LIMITED
DAWSON U.K. LIMITED )
in the presence of:- )
Signed by )
for and on behalf of ) DAWSON OVERSEAS HOLDINGS
DAWSON OVERSEAS HOLDINGS LIMITED in the ) LIMITED
presence of:- )
-173-
