Exhibit 2.12
DATED 14th SEPTEMBER 1999
-------------------------
XXXXX XXXXXX and OTHERS
and
INTERLIANT, INC.
and
INTERLIANT INTERNATIONAL, INC.
---------------------------
SHARE PURCHASE AGREEMENT
Relating to the acquisition of the entire issued
share capital of Sales Technology Limited
---------------------------
XXXXX XXX
0 Xxxxx Xxxxxxxxx
Xxxxxxx'x Xxx
Xxxxxx
XX0X 0XX
Ref: 32-14985
SHARE PURCHASE AGREEMENT
------------------------
THIS AGREEMENT is dated this 14th day of September 1999
BETWEEN:
1. THE PERSONS whose names and addresses are set out in Columns 1 and 2 of
Schedule 1 ("the Sellers")
2. INTERLIANT, INC. a Delaware corporation having an office at 0
Xxxxxxxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx, XX 00000, XXX ("Interliant")
3. INTERLIANT INTERNATIONAL, INC. a Delaware Corporation having an office at 0
Xxxxxxxxxxxxxx Xxxx aforesaid (the "Buyer")
RECITALS:
A. The Company (as defined below) is a private company limited by shares.
Details of the Company are set out in Schedule 2.
B. The Buyer is a wholly owned subsidiary of Interliant.
C. Interliant is made a party to this agreement for the sole purpose of (i)
delivering the Interliant Stock and (ii) paying the Earnout Amount if as
and when earned, all as more particularly described in clause 3.3. of this
agreement, all on behalf of the Buyer.
D. The Sellers have agreed to sell and the Buyer has agreed to buy the Shares
on the terms and subject to the conditions of this agreement.
AGREEMENT:
1 Definitions and Interpretation
1.1 The Recitals and Schedules form part of this agreement and shall have
the same force and effect as if set out in the body of this agreement.
Any reference to this agreement shall include the Recitals and
Schedules.
1.2 In this agreement, the following words and expressions shall have the
following meanings:-
"the Accounts" the consolidated audited accounts of the Company
for the accounting reference period which ended on
the Accounts Date (comprising in each case a
balance sheet and profit and loss account, notes
and directors' and auditors' reports), a copy of
which is annexed to the Disclosure Letter;
"the Accounts Date" October 31, 1998;
"the Agreed Form" the form agreed between and signed by or on behalf
of the Sellers and the Buyer, the Agreed Form
documents referred to in this agreement being
listed in Schedule 8;
"Business Day" a day, other than a Saturday or Sunday, on which
banks generally are open for business in the city
of New York
"the Buyer's Solicitors" Xxxxx Xxx of 0 Xxxxx Xxxxxxxxx, Xxxxxxx'x Xxx,
Xxxxxx XX0X 0XX;
"CAA 1990" Capital Xxxxxxxxxx Xxx 0000;
"CGA 1992" Taxation of Chargeable Gains Xxx 0000;
"Closing" closing of the sale and purchase of the Shares in
accordance with this agreement;
"Closing Balance Sheet" the unaudited consolidated balance sheet of the
Company as at the Closing Date;
"the Closing Date" the date of this agreement;
"Closing Payment" the payment for the Shares payable at Closing as
referred to in clauses 3.1 and 3.2;
"the Company" Sales Technology Limited details of which are set
out in Schedule 2;
"the Companies Acts" the Companies Xxx 0000, the Criminal Justice Xxx
0000 (insofar as it relates to insider dealing),
the Companies Consolidation (Consequential
Provisions) Xxx 0000 and the Companies Xxx 0000;
"the Consideration" the consideration for the acquisition of the
Shares, being the aggregate of the Closing Payment
and the Earnout Payment;
"Covenantors" Xxxxx Xxxxxx, Xxxxx Xxxxx and Xxxxxx Xxxxxx
"the Disclosure Letter" the letter dated the date of this agreement from
the Sellers to the Buyer making certain
disclosures against the Warranties;
"the Earnout Payment" the consideration in addition to the Closing
Payment for the Shares as referred to in clause
3.3;
"EBITDA" earnings before interest taxes depreciation and
amortisation shown in the management accounts of
the Company during the Earnout Period prepared in
accordance with US GAAP
"the Earnout Period" the twelve month period commencing January 1,
2000;
"Environmental Laws" all European Community legislation, regulations,
directives, decisions and judgments all statutes
and subordinate legislation, all regulations and
orders, all common law and other national,
international and local laws and bye-laws, all
judgements, orders, instructions or awards of any
court or competent authority and all codes of
practice and guidance notes and circulars which:-
(a) have as a purpose or effect the
protection or enhancement of the
environment and relate to the
presence, manufacturing,
processing, treatment, keeping,
handling, use, possession, supply,
receiving, sale, purchase, import,
export or transportation of
Hazardous Materials or any event,
activity, condition or phenomenon
which alone or in combination with
others is capable of causing harm
or damage to property or to man or
any other organism supported by the
environment;
(b) relate to the release, spillage,
deposit, escape, discharge, leak or
emission of Hazardous Materials;
(c) relate to the control of Waste;
(d) relate to noise, vibration,
radiation or common law or
statutory nuisance or any other
interference with the enjoyment or
use of land;
(e) relate to the use of land or the
erection, occupation or use of
buildings or other natural or man-
made structures above or below
ground; or
(f) relate to human health and safety;
"the Final Interim Earnout Payment" the sum calculated in accordance with
the formula in clause 3.3.4
"the First Interim Earnout Payment" the sum calculated in accordance with
the formula in clause 3.3.1
"Group Company" in relation to any company, any body
corporate which is from time to time a
holding company of that company, a
subsidiary of that company or a
subsidiary of a holding company of that
company
"Hazardous Material" any substance or organism which alone or
in combination with others is capable of
causing harm or damage to property or to
man or any other organism supported by
the environment or to the environment or
public health or welfare;
"ICTA" Income and Corporation Taxes Xxx 0000;
"Independent Accountant" the accountant nominated or appointed
pursuant to clause 3.6;
"Interliant Stock" shares of common stock, $0.01 par value
of Interliant
"the Loan Notes" the unsecured loan notes of the Buyer
which may be issued, pursuant to a loan
note instrument, in order to satisfy all
or any part of the Earnout Payment in
accordance with the terms of this
agreement, the principal terms of which
will be (i) repayable at any time after
six months at option of either party and
(ii) interest at LIBOR rate payable six
monthly
"Lock-Up Agreement" the agreement between each of the
Sellers and the underwriter of the
initial public offering concerning the
Interliant Stock in the Agreed Form
"the Management Accounts" The consolidated management accounts of
the Company and the Subsidiary for the
period from the Accounts Date to August
31, 1999 (comprising in each case, a
balance sheet and profit and loss
account), a copy of each of which is
annexed to the Disclosure Letter
"Net Assets" The aggregate of the assets of the
Company less the aggregate of its
liabilities as shown in the Closing
Balance Sheet;
"Net Revenue" The turnover of the Company (calculated
on an accrual basis in accordance with
US GAAP) less cost of sales of software
as shown in the unaudited profit and
loss account of the Company for each
Quarter during the Earnout Period;
"the Parties" The parties to this agreement;
"the Property" The leasehold property of the Company
details of which are given in Schedule
5;
"Quarter" Each consecutive period of three
calendar months commencing January 1,
2000;
"the Relevant Earnout Payment" The First Interim Earnout Payment, the
Second Interim Earnout Payment, the
Third Interim Earnout Payment or the
Final Interim Earnout Payment, as the
case may be
"the Relevant Earnout Payment Date" The date being no later than ten days
after the Relevant Earnout Payment is
agreed upon pursuant to clause 3.6
"the Restricted Territories" Those territories and countries in
Europe where the Company operates as at
Closing, being the United Kingdom
including Scotland and Northern Ireland
and the Republic of Ireland
"the Second Interim Earnout Payment" the sum calculated in accordance with
the formula in clause 3.3.2
"Seller Representative" the person appointed pursuant to clause
9.12, being initially Xxxxx Xxxxxx
"the Sellers' Solicitors" Field Xxxxxxx Xxxxx of The Old Coroner's
Court, 0 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxx, XX0 0XX
"the Service Agreements" the service agreements to be entered
into between the Company and each of
Xxxxx Xxxxxx and Xxxxx Xxxxx in the
Agreed Form;
"the Shares" the shares referred to in Column 3 of
Schedule 1 comprising the entire issued
share capital of the Company;
"the Subsidiary" The subsidiary of the Company, certain
details of which are set out in Part II
of Schedule 2
"the Third Interim Earnout Payment" the sum calculated in accordance with
the formula in clause 3.3.3
"Taxation" liability arising under any of the
Taxation Statutes;
"Taxation Statutes" statutes (and all regulations and
arrangements whatsoever made thereunder)
enacted (or issued coming into force or
entered into) whether before or after
the date of this agreement providing for
or imposing or relating to all forms of
taxation, duties, levies and rates
whatsoever including without
limitation:-
(a) any charge, tax, duty or levy upon
income, profits, chargeable gains
or any other property or
instruments in writing or supplies
or other transactions;
(b) income tax, corporation tax,
advance corporation tax,
withholding tax, capital gains tax,
inheritance tax, value added tax,
stamp duty, stamp duty reserve tax,
customs and other import duties,
national insurance contributions,
general rates, water rates or other
local rates;
(c) any liability for sums equivalent
to any such charge, tax, duty, levy
or rates and/or for any penalty,
fine or interest payable in
connection therewith;
(d) any law or regulation whatsoever
providing for or imposing or
otherwise relating to any charge,
tax, levy or rates (of a like or
similar nature) chargeable outside
the United Kingdom and/or for any
penalty, fine or interest payable
in connection with them;
"Tax Warranties" the Warranties in paragraph 5 of
Schedule 4 and any other Warranty so far
as it relates to Taxation;
"the Tax Deed" the tax deed to be entered into between
the Sellers and the Buyer in the Agreed
Form;
"VATA 1994" Value Added Tax Xxx 0000;
"the Warranties" the representations, warranties and
undertakings set out in Schedule 4;
"Waste" includes any substance which constitutes
a scrap material or an effluent or other
unwanted surplus substance arising from
the application of any process and any
substance or article which is or is
intended or required to be disposed of.
1.3 In this agreement (unless the context requires otherwise):-
1.3.1 words and expressions which are defined in the Companies
Acts shall have the same meanings as are ascribed to them in
the Companies Acts;
1.3.2 any question as to whether a person is connected with any
other person shall be determined in accordance with the
provisions of Section 839 ICTA;
1.3.3 any reference to any statute or statutory provision shall be
construed as including a reference to any modification,
consolidation, re-enactment or
extension of such statute or statutory provision for the
time being in force, to any subordinate legislation made
under the same and to any former statute or statutory
provision which it consolidated or re-enacted;
1.3.4 any reference to a SSAP or a FRS respectively is to a
Statement of Standard Accounting Practice published by the
Consultative Committee of Accounting Bodies of England and
Wales as amended from time to time or a Financial Reporting
Standard published by the Accounting Standards Board as
amended from time to time;
1.3.5 any gender includes a reference to all other genders;
1.3.6 the singular includes a reference to the plural and vice
versa;
1.3.7 any reference to a recital, clause or schedule is to a
recital, clause or schedule (as the case may be) of or to
this agreement;
1.3.8 "directly or indirectly" shall (without limiting the
expression) mean either alone or jointly with any other
person, firm or body corporate and whether on his own
account or in partnership with another or others or as the
holder of any interest in or as officer, employee or agent
of or consultant to any other person, firm or body
corporate; and
1.3.9 any reference to any English legal term for any action,
remedy, method of judicial proceeding, legal document, legal
status, court, official or any legal concept or thing shall,
in respect of any jurisdiction other than England, be deemed
to include what most nearly approximates in that
jurisdiction to the English legal term.
1.4 The headings contained in this agreement are for the purposes of
convenience only and do not form part of and shall not affect the
construction of this agreement or any part of it.
2 Sale and Purchase
2.1 The Sellers shall sell the Shares and the Buyer, relying on the
representations undertakings and indemnities by the Sellers in this
agreement, shall purchase those Shares set opposite the Seller's name
in Column 3 of Schedule 1 with full title guarantee free from all
liens, charges and encumbrances with effect from and including the
Closing Date so that as from that date all rights and advantages
accruing to the Shares, including any dividends or distributions
declared or paid on the Shares after that date, shall belong to the
Buyer.
2.2 The Buyer shall not be obliged to complete the purchase of any of the
Shares unless the sale of all of the Shares is completed
simultaneously.
3 Consideration and Earnout
3.1 The consideration for the Shares shall be the aggregate of the Closing
Payment (which shall be satisfied on Closing in accordance with clause
3.2) and the Earnout Payment (if any) which shall be satisfied in
accordance with clause 3.3.
3.2 The Closing Payment shall be satisfied by the allotment at Closing of
235,410 Interliant Stock, credited as fully paid in each case payable
to the Sellers in the proportions referred to in Column 4 of Schedule
1. Certificate of Interliant Stock duly issued consistent with the
foregoing will be delivered to the Sellers as soon as reasonably
practicable after said shares are listed with NASDAQ and issued by
Interliant?s stock transfer agent.
3.3 The Earnout Payment shall, subject to clause 3.8 and clause 7, be
calculated in accordance with the following formulae and satisfied in
accordance with the provisions of clauses 3.4 and 3.5:-
3.3.1 the First Interim Earnout Payment shall be the sum
calculated in accordance with the following formula:
1.5 x NR1
Where NR1 is the amount of the Net Revenue for the first
Quarter of the Earnout Period exceeding US$340,000 (three
hundred and forty thousand US Dollars) up to
a maximum Net Revenue of US$640,000 (six hundred and forty
thousand US Dollars) provided that no payment shall be made
if the EBITDA for such Quarter is a loss greater than
US$350,000
3.3.2 the Second Interim Earnout Payment shall be the sum
calculated in accordance with the following formula:
1.5 x NR2
Where NR2 is the Net Revenue for the second Quarter of the
Earnout Period exceeding US$390,000 (three hundred and
ninety thousand US Dollars) up to a maximum Net Revenue of
US$736,000 (seven hundred and thirty-six thousand US
Dollars) provided that no payment shall be made if the
EBITDA for such Quarter is less than US$380,000
In the event that a second Interim Earnout Payment is
payable as provided above and no payment was due under the
First Interim Earnout Payment the Sellers shall be entitled
to a further amount equal to the sum calculated in
accordance with the following formula:
1.5 x NR1/2
where NR1/2 is the amount of the Net Revenue for the first
two Quarters of the Earnout Period exceeding US$730,000
(seven hundred and thirty thousand US Dollars) up to a
maximum Net Revenue of US$1,376,000 (one million three
hundred and seventy-six thousand US Dollars) less the Second
Interim Earnout Payment provided that no such additional
payment shall be made if the EBITDA for the first two
Quarters of the Earnout Period is less than US$30,000
3.3.3 the Third Interim Earnout Payment shall be the sum
calculated in accordance with the following formula:
1.5 x NR3
Where NR3 is the Net Revenue for the third Quarter of the
Earnout Period exceeding US$460,000 (four hundred and sixty
thousand US Dollars) up to a maximum Net Revenue of
US$864,000 (eight hundred and sixty-four thousand US
Dollars) provided that no payment shall be made if the
EBITDA for such Quarter is less than US$500,000
In the event that a Third Interim Earnout Payment is payable
as provided above and no payment was due under the Second
Interim Earnout Payment, the Sellers shall be entitled to a
further amount equal to the sum calculated in accordance
with the following formula:
1.5 x NR2/3
where NR2/3 is the amount of the Net Revenue for the second
and third Quarters of the Earnout Period exceeding
US$850,000 (eight hundred and fifty thousand US Dollars) up
to a maximum Net Revenue of US$1,600,000 (one million six
hundred thousand US Dollars) less the Third Interim Earnout
Payment provided that no such additional payment shall be
made if the EBITDA for the second and third Quarters of the
Earnout Period is less than US$880,000
3.3.4 the Final Interim Earnout Payment shall be the sum
calculated in accordance with the following formula:
1.5 x NR4
Where NR4 is the amount of the Net Revenue for the fourth
Quarter of the Earnout Period exceeding US$510,000 (five
hundred and ten thousand US Dollars) up to a maximum Net
Revenue of US$960,000 (nine hundred and sixty thousand US
Dollars) provided that no payment shall be made if the
EBITDA for such Quarter is less than US$650,000
In the event that a Final Interim Earnout Payment is payable
as provided above and no payment was due under the Third
Interim Earnout Payment the Sellers shall be
entitled to a further amount equal to the sum calculated in
accordance with the following formula:
1.5 x NR3/4
where NR3/4 is the amount of the Net Revenue for the third
and fourth Quarters of the Earnout Period exceeding
US$970,000 (nine hundred and seventy thousand US Dollars) up
to a maximum Net Revenue of US$1,824,000 (one million eight
hundred and twenty-four thousand US Dollars) less the Final
Interim Earnout Payment provided that no such additional
payment shall be made if the EBITDA for the third and fourth
Quarters of the Earnout Period is less than US$1,150,000
and [provided further that in each of the above cases
described in clauses 3.3.1 through and including 3.3.4, if
the formula produces a negative figure, the amount of the
Earnout Payment for that Quarter shall be deemed to be zero
and] provided further that the total amount of the Earnout
Payment computed under all provisions in clauses 3.3.1
through and including 3.3.4 shall not exceed the sum of
US$2,250,000 (two million, two hundred and fifty thousand US
Dollars).
3.4 On the Relevant Earnout Payment Date the Buyer shall, subject to
clause 7, pay or cause Interliant to pay to the Sellers the Relevant
Earnout Payment which shall be satisfied, at the Buyer?s discretion,
either by (i) the issue by the Buyer at par of Loan Notes to each of
the Sellers with a nominal value equal to the cash sum otherwise
payable to such Seller in respect of the Relevant Earnout Payment,
(ii) by the allotment by Interliant of such number of Interliant
Stock, excluding fractions, credited as fully paid as shall at the
average trading price of Interliant Stock for the 10 Business Days
(being the closing trading price on each such day) ending 2 Business
Days immediately preceding the Relevant Earnout Payment Date have a
value nearest to but not less than the amount of the Relevant Earnout
Payment; or (iii) a combination of such Loan Notes and Interliant
Stock at the Buyer's discretion
3.5 Subject to the provisions of clause 7 each of the Sellers shall be
entitled to that proportion of each Relevant Earnout Payment set
against his name in Column 4 of Schedule 1
3.6 The Buyer shall prepare and deliver management accounts to the Seller
Representative in respect of each Quarter within 45 days of the end of
each Quarter and in the event that the amount of the Net Revenue
stated in the said management accounts cannot be agreed
between the Buyer and the Seller Representative within 14 days of
delivery of such management accounts to the Seller Representative, the
matter shall be referred to an Independent Accountant nominated
jointly by the Seller Representative and the Buyer or failing such
nomination at the request of either such party by the President of the
Institute of Chartered Accountants in England and Wales. The
Independent Accountant shall be instructed to render its decision
within 21 days of their nomination or appointment and shall act as an
expert and not as an arbitrator and (in the absence of manifest error)
its decision (which shall be communicated in writing to the Seller
Representative and the Buyer) shall be final and binding on the
Sellers and the Buyer. Fees and costs of the Independent Accountant
shall be borne and paid by the Sellers and the Buyer in such
proportions as the Independent Accountant shall consider appropriate.
3.7 Interliant undertakes to allot the Interliant Stock in accordance with
the provisions of this agreement and further undertakes to deliver the
stock certificates for the Interliant Stock to the Seller
Representative as soon as reasonably practicable. Delivery of such
certificates to the Seller Representative shall be deemed to discharge
the obligations of the Buyer and Interliant hereunder in relation to
such delivery.
4 Closing, Interliant Stock and Securities Matters
4.1 Closing shall take place on the Closing Date at 0 Xxxxx Xxxxxxxxx,
Xxxxxxx'x Xxx, Xxxxxx XX0X 0XX or such other place as may be agreed
between the Parties when:-
4.1.1 the Sellers shall deliver to the Buyer, or procure the
delivery to the Buyer of, the documents referred to in
Schedule 3;
4.1.2 the Sellers and the Buyer shall jointly procure that there
shall be held a meeting of the board of directors of the
Company and the Subsidiary at which there shall be duly
passed resolutions set out and contained in board minutes of
the Company and the Subsidiary in the Agreed Form;
4.2 The Buyer shall deliver to the Sellers' Solicitors a counterpart of
the Tax Deed duly executed by the Buyer.
4.3 The Sellers acknowledge and agree that:-
4.3.1 a reasonable time prior to the date of this agreement the
Sellers received from the Buyer and carefully reviewed a
copy of each SEC Filing (as hereinafter defined) as well as
a description of the Interliant Stock;
4.3.2 the Sellers had reasonable time and opportunity to ask
questions and receive answers concerning the terms and
conditions of this agreement and the transactions
contemplated hereby and to obtain any additional information
from the Buyer that was necessary for the Sellers to verify
the accuracy of each SEC Filing;
4.3.3 the Sellers will acquire the Interliant Stock as
consideration for the sale of the Shares ("the Consideration
Shares") for their own account without any view to the
distribution thereof except in accordance with the United
States Securities Act of 1933, as amended and the rules and
regulations promulgated thereunder ("Securities Act") and
all applicable state securities or "blue sky" laws;
4.3.4 such Consideration Shares may not be offered or sold in the
United States or to US Persons (as defined herein) unless
the Consideration Shares are registered under the Securities
Act and all applicable state securities and "blue sky" laws
or an exemption from the registration requirements of the
Securities Act and all applicable state securities and "blue
sky" laws is available, and hedging transactions involving
the Consideration Shares may not be conducted unless in
compliance with the Securities Act; consequently, the
Consideration Shares may need to be held indefinitely;
4.3.5 the Consideration Shares are subject to the terms and
conditions of the Lock-Up Agreement restricting the transfer
by the Sellers of the Consideration Shares for a period of
one hundred and eighty (180) days following the closing of
the Buyer?s initial public offering on July 7, 1999;
4.3.6 the Consideration Shares have not been registered under the
Securities Act on the grounds that the offering and sale
thereof contemplated by this agreement will be exempt from
registration pursuant to Regulation D and/or Regulation S
promulgated pursuant to the Securities Act, Section 4(2) of
the Securities Act and/or another exemption from the
registration requirements of the Securities Act, and the
Buyer?s reliance upon such exemption is predicated upon the
representations of the Sellers set forth herein;
4.3.7 each Seller individually represents that each has the
requisite knowledge, experience and sophistication in
financial and business matters such that they are capable of
fully and completely evaluating the merits and risks
inherent in the transactions contemplated by this agreement;
4.3.8 each of Xxxxx Xxxxxx, Xxxxxxxx Xxxxxxxx and Xxxxx Xxxxxx
individually represents that each is an "accredited
investor" as that term is defined in Rule 501(c) of
Regulation D of the Securities Act;
4.3.9 Each Seller individually represents that each is not a US
Person and that each is outside the United States on the
date hereof. For the purposes of this section 4, a US Person
is defined as:-
4.3.9.1 a natural person resident of the United States;
4.3.9.2 a partnership or corporation organised under the
laws of the United States or formed by a person or
entity described in this definition principally
for the purpose of investing in securities not
registered under the Securities Act;
4.3.9.3 an estate of which any executor or administrator
is a person or entity described in this
definition, unless an executor or administrator of
the estate who is not a person or entity described
in this definition has sole or shared investment
discretion over the assets of the estate or the
estate is governed by foreign law;
4.3.9.4 a branch or agency of a foreign entity located in
the United States;
4.3.9.5 a branch or agency of a person or entity described
in this definition that is located outside the
United States unless the agency or branch operates
for valid business purposes, is in the business of
insurance or banking and is subject to insurance
or banking regulation, respectively, in the
jurisdiction where located;
4.3.9.6 a person or entity that acquires the Consideration
Shares for any non-discretionary account held by a
dealer or other fiduciary for the benefit or
account of any person or entity described in this
definition;
4.3.9.7 a person or entity that acquires the Consideration
Shares for any discretionary account that is held
by a dealer or other fiduciary organised,
incorporated, or resident in the United States;
4.3.9.8 a person or entity that acquires the Consideration
Shares for the benefit of an account that is held
by a person or entity described in this
definition;
4.3.9.9 a trust of which any trustee is any person or
entity described in this definition;
4.3.10 Each Seller agrees to resell the Consideration Shares only
in accordance with the provisions of the applicable laws and
regulations promulgated under the Securities Act. Each
Seller also agrees to not engage in hedging transactions
with the Consideration Shares, unless such transactions
comply with the applicable provisions of the Securities Act.
4.3.11 that in connection with the Buyer's initial public offering
in July 1999, the Buyer issued 8,050,000 shares of
Interliant Stock including 1,050,000 of Interliant Stock
sold through the underwriters over-allotment option; and
4.3.12 each of the Sellers is aware and understands and agrees that
the traded price of the Interliant Stock is capable of going
up as well as down according to market conditions and the
Buyer shall not in any event be responsible howsoever for
any fluctuations in the market price of Interliant Stock
from time to time.
4.4 As used herein the term "SEC Filing" means, with respect to the Buyer
(i) the registrations statement on form S-1 (Reg. No. 333-74403), (ii)
the final prospectus pursuant to Rule 424(b) dated July 7, 1999
("Prospectus") with respect to the offering of eight million and fifty
thousand (8,050,000) shares of Interliant Stock (including the over-
allotment shares referred to in clause 4.3.9), and (iii) any reports
or documents required to be filed by the issuer under sections 13(a),
14(a) and 15(d) of the United States Securities and Exchange Act of
1934.
4.5 Each of the Sellers further acknowledges and agrees that "stop
transfer" instructions shall be placed against the Consideration
Shares on the transfer books of the Buyer's stock transfer agent until
such shares are available for resale in accordance with all applicable
law and pursuant to the Lock-Up Agreement, and that the certificates
evidencing the Consideration Shares shall bear the following legend:-
The Shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended or
under any applicable state securities laws and neither the
Shares nor any interest therein may be sold, transferred,
pledged or otherwise disposed of other than pursuant to such
registration, an exemption from registration under such Act
and the rules and regulations thereunder or Regulation S
promulgated pursuant to such Act and other than pursuant to
registration or an exemption from registration under any
applicable state securities laws. The transfer of the Shares
is also subject to the restrictions set forth in a lock-up
agreement executed by the registered owner of the Shares.
4.6 Each Seller and the Buyer agree that the Buyer will refuse to register
any transfer of the Consideration Shares not made in accordance with
the provisions of Regulation S, pursuant to registration under the
Securities Act or pursuant to an available exemption from
registration.
5 Warranties and Indemnities
5.1 The Sellers represent, warrant and undertake to the Buyer that:-
5.1.1 each of the Warranties is true and accurate in all material
respects and is not misleading at the date of this
agreement;
5.1.2 the contents of the Disclosure Letter and of all documents
referred to in or accompanying it are true, accurate and
complete in all respects and fully, clearly and accurately
disclose every matter to which they relate; and
5.1.3 there are fully and accurately disclosed in the Disclosure
Letter all matters which are necessary to qualify the
Warranties in order for the Warranties when so qualified to
be fair, accurate and not misleading.
5.2 The Warranties shall not in any respect be extinguished or affected by
Closing.
5.3 The Sellers acknowledge that the Buyer has entered into this agreement
in reliance on representations in the terms of the Warranties with the
intention of inducing the Buyer to enter into this agreement and that
accordingly the Buyer has been induced by those representations to
enter into this agreement.
5.4 The Sellers undertake to the Buyer that, in the event of any claim
being made against them for breach of the Warranties or under the Tax
Deed, they will not make any claim against the Company or against any
director, officer or employee of the Company on which or on whom they
may have relied before agreeing to any terms of this agreement or of
the Tax Deed or authorising any statement in the Disclosure Letter.
5.5 The Warranties:-
5.5.1 are qualified by reference to those matters fully, fairly
and clearly disclosed in the Disclosure Letter and not
otherwise. In particular, but without limitation, the rights
and remedies of the Buyer in respect of the Warranties shall
not be affected by any investigation made by or on behalf of
the Buyer into the affairs of the Company save as provided
in clause 5.22;
5.5.2 are separate and independent and, unless expressly provided
to the contrary, are not limited or restricted by reference
to or inference from the terms of any other provision of
this agreement or any other Warranty;
5.5.3 where qualified by the knowledge, information, belief or
awareness of the Sellers, are deemed to include a statement
that such knowledge, information, belief or awareness has
been acquired after due and diligent enquiries by the
Sellers in respect of the relevant subject matter of such
Warranties; and
5.5.4 apply to the Subsidiary as well as to the Company as if the
word "Company" was defined to mean the Subsidiary.
5.6 The Sellers shall indemnify and hereby undertake to keep indemnified
the Buyer and/or at the option of the Buyer, the Company against all
liabilities, costs, damages and expenses (including attorney's fees
and legal expenses) which may be incurred or suffered directly or
indirectly by the Buyer and/or the Company arising from, or relating
to:-
5.6.1 any breach or any violation of any of the Warranties;
5.6.2 any failure by the Sellers to perform or otherwise fulfil or
comply with any provision of this agreement; and
5.6.3 any and all liabilities of the Company and the Subsidiary
existing or accruing prior to Closing other than trade
accounts, payables and accrued expenses of the Company and
the Subsidiary as at the Closing Date which arose in the
ordinary course of business and other liabilities which are
in all such cases clearly, completely and specifically
disclosed in either the Accounts, the Management Accounts,
the Closing Balance Sheet or the Disclosure Letter. It is
therefore agreed and understood by all parties that the
Sellers? indemnity hereunder shall cover any and all
liabilities not so disclosed.
5.7 Without prejudice to the foregoing, the Sellers shall indemnify and
hereby undertake to keep indemnified the Buyer and/or at the option of
the Buyer, the Company against all liabilities, costs, damages, fines,
penalties and expenses (including attorneys? fees and legal expenses)
which may be incurred or suffered directly or indirectly by the Buyer
and/or the Company arising from or relating to:-
5.7.1 the loss or destruction of the original stamped stock
transfer forms in respect of Shares in the Subsidiary
transferred by Xxxxxxx Xxxxxxxx Xxxxxxx, Xxxxxx Xxxxxxx and
Thiba Foundation to the Company in or about December 1993;
5.7.2 the omission to file forms 88(2) and/or forms 88(3) with
Companies Registry in breach of the applicable provisions of
the Companies Act;
5.8 The Sellers further confirm, undertake and acknowledge that the said
stock transfer forms have not been endorsed, transferred, charged,
lent or deposited or dealt with in any manner affecting the absolute
title to the Shares subject to such stock transfer forms and the
Company is the person entitled to be on the Register of Members in
respect of such securities.
5.9 In the event that the Company is required to file the said forms 88(2)
and/or forms 88(3) the Sellers will make such filings without delay.
5.10 Notwithstanding anything to the contrary in this agreement the Sellers
shall not have any liability for any claim made against them:-
5.10.1 in relation to the Warranties (other than the Tax Warranties
and the Warranties in paragraphs 3.1.1, 3.1.2 and 6.6.1 to
6.6.7 of Schedule 4) unless written notification of the
claim giving such particulars of the grounds on which it is
based as are
reasonably practicable at that stage and so far as
reasonably practicable an estimate of the amount of the
claim (on a without prejudice basis) is sent to each of the
Sellers on or before the second anniversary of Closing;
5.10.2 in relation to the Tax Deed, the Tax Warranties and the
Warranties in paragraphs 3.1.1, 3.1.2 and 6.6.1 to 6.6.7 of
Schedule 4 unless written notification of the claim giving
such particulars of the grounds on which it is based as are
reasonably practicable at that stage and so far as
reasonably practicable an estimate of the amount of the
claim (on a without prejudice basis) is sent to each of the
Sellers on or before the sixth anniversary of Closing;
5.10.3 in the event that the Buyer does not issue proceedings in
respect of any claim within 12 months after notification of
the claim.
5.11 The Sellers shall not be liable for any breach of any of the
Warranties or a claim under the Tax Deed (except for a claim involving
fraud or dishonesty in which case none of the following limits shall
apply):-
5.11.1 unless and until the aggregate of all claims against the
Sellers for breach of any of the Warranties and/or Tax Deed
shall exceed the sum of 25,000 (pounds) but once exceeded
the Sellers shall be liable for the whole of the claim and
not merely the excess over 25,000 (pounds);
5.11.2 to the extent that the aggregate liability of the Sellers
for breach of any of the Warranties and/or Tax Deed
(irrespective of the number of claims) shall exceed the
consideration received pursuant to this Agreement.
5.12 The liability of the Sellers in relation to the Warranties shall not
apply in respect of:-
5.12.1 any matter fairly disclosed in the Disclosure Letter but
only to the extent of such disclosure;
5.12.2 any matter or thing done or omitted to be done prior to
Closing at the prior written request of or with the prior
written approval of the Buyer;
5.12.3 any claim that would not have arisen but for some voluntary
act or omission (which the Buyer knew or ought reasonably to
have known would give rise to a claim)
undertaken by the Buyer or any of its officers agents
successors in title on or after Closing except where such
act or omission is carried out in the ordinary course of the
business of the Company or pursuant to any legal obligation
entered into by or on behalf of the Company prior to
Closing.
5.13 In the event that the Sellers pay to the Buyer or the Company an
amount in respect of a claim for breach of any of the Warranties
and/or the Tax Deed and the Buyer or any of its Affiliates
subsequently recovers under a policy of insurance a sum which is
referable to that breach the Buyer shall pay to the Sellers (in the
proportions paid by the Sellers):-
5.13.1 an amount equal to the sum received under the insurance
policy less any reasonable out of pocket costs and expenses
incurred by the Buyer or any of its Affiliates in recovering
the same; or
5.13.2 if the resulting figure under clause 5.10.1 is greater than
the amount paid by the Sellers in respect of the relevant
claim such lesser sum as shall have been paid by the
Sellers.
5.14 No liability shall attach to the Sellers for any claim in relation to
the Warranties and/or Tax Deed to the extent that such claim arises as
a consequence of a change in any law, rule or regulation (or their
interpretation) or administrative practice of any government,
governmental department, agency or regulatory body taking effect after
the date of this Agreement.
5.15 No liability shall attach to the Sellers for any claim in relation to
the Warranties and/or Tax Deed to the extent that such a claim arises
as a result of all or any of the following (provided that the Sellers
have no knowledge of any applicable pending legislation):-
5.15.1 an increase in the rates scope or method of calculation of
taxation after the Closing Date;
5.15.2 any legislation or government regulation or any
administrative or judicial decision not in force at the date
of this Agreement;
5.15.3 the withdrawal or alteration after the date of this
Agreement of any extra statutory concession made by the
Inland Revenue (or any fiscal authority) and presently in
operation;
5.15.4 in respect of any Taxation if and to the extent the claim
would not have arisen but for the fact that the accounting
methods used or the application thereof (including without
limitation the treatment of any assets or liabilities or of
any Taxation attributable to any timing differences in the
future accounts of the Company) is different from the
treatment or application of the same utilised in preparing
the Accounts except if such different treatment or
application is required in order to conform with the
Taxation Statutes;
5.15.5 if and to the extent that provision or reserve for or in
respect of the liability and any associated penalty and
interest or other matter giving rise to such claim has been
made in the Accounts;
5.15.6 if and to the extent that such claim would not have arisen
or would have been reduced or eliminated but for the failure
or omission on the part of the Buyer or any of its
Affiliates to make any claim election surrender or
disclaimer or give notice or consent or do any other thing
under the provisions of any enactment or regulation relating
to Taxation after the Closing Date the making giving or
doing of which was taken into account in computing the
provision for taxation in the Accounts, unless the Sellers
know or ought to have known about such event and failed to
notify the Buyer.
5.16 The Sellers shall not be liable in respect of any representations
warranties covenants agreement or other obligations expressed implied
statutory or otherwise which are made or received or deemed to have
been made or received by them or either of them in relation to or in
connection with the subject matter hereof which are not contained and
expressly given or assumed by them in this Agreement or the Tax Deed.
Nothing in this clause shall, however, operate to limit or exclude any
liability for fraud.
5.17 Nothing in this agreement shall derogate from the Buyer's obligation
to mitigate any loss which it suffers in consequence of a breach of
the Warranties.
5.18 If in respect of any claim under the Warranties or under the Tax Deed
the liability of the Sellers is contingent only then the Sellers shall
not be under any obligation to make any payment to the Buyer until
such time as the liability ceases to be contingent and becomes actual.
5.19 Where the facts or circumstances could give rise to both a claim under
the Warranties and to a claim under the Tax Deed the Sellers shall not
be liable in respect of both those claims. Any amount payable under
the Tax Deed to the Buyer the Company or any of the Buyer's Affiliates
shall be reduced to the extent of that payable under the Warranties.
5.20 If any claim under this Agreement is notified and without prejudice to
its validity the Buyer shall allow the Sellers and their professional
advisers to investigate the basis for that claim, which investigation
shall not exceed three months from the date of such claim. For such
purpose the Buyer shall give all such assistance as the Sellers or
their advisers may reasonably request including access to and copies
of any relevant documents or other information in the possession of
the Buyer. The Sellers shall pay the reasonable out of pocket expenses
of the Buyer in providing or procuring such assistance.
5.21 Any amounts payable by the Sellers to the Buyer under this Agreement
shall, as far as possible, be treated as a reduction of the price
received by it under this Agreement.
5.22 The Sellers shall not be liable for any claim under the Warranties or
under the Tax Deed if and to the extent that the Buyer was actually
aware at the Closing Date based solely on the express disclosures made
in the Disclosure Letter:-
5.22.1 of the facts, matters, events or circumstances which are the
subject matter of such claim (being facts, matters, events
or circumstances unknown to the Sellers at the Closing
Date); and
5.22.2 that those facts, matters, events or circumstances amounted
or were likely to amount to a breach of any of the
Warranties or gave rise or were likely to give rise to such
claim.
5.23 The Buyer:
5.23.1 shall as soon as reasonably practicable after circumstances
have come to its notice which will give rise to a claim
under the Warranties or the Tax Deed give to the Seller's
Representative written notice (as herein provided) with
reasonable details of such circumstances and such claim as
may be known to the Buyer and will thereafter keep the
Seller Representative informed of all material developments
known to the Buyer relating to such circumstances and claim;
and
5.23.2 may, at its sole discretion, if so requested by the Seller
Representative, take or allow the Seller Representative to
take in the name of the Company reasonable steps (having
first fully consulted with the Buyer and agreed the same
with the Buyer) to avoid, resist, appeal, compromise or
defend any matter giving rise to such claim and will take or
may, at its sole discretion, allow the Seller Representative
to take in the name of the Company all reasonable
proceedings or other action in connection therewith subject
to:
(i) in the event of agreed action to be taken by the
Seller Representative, the Seller Representative
having (if so required by the Buyer) first obtained at
the Seller Representative's expense, written advice
from Counsel experienced in the relevant area of law
and approved in writing by the Buyer (after having
disclosed all relevant information and documents to
him) that it is reasonable in relation to the claim to
take the course of action proposed; and
(ii) the Seller Representative indemnifying and securing
the Company and the Buyer (to the satisfaction of the
Buyer) against all costs, charges, expenses and
interest (including additional claims for Taxation)
which may be incurred thereby.
6 Restrictions on the Covenantors
6.1 Each of the Covenantors covenants with the Buyer with the intention of
assuring to the Buyer the full benefit and value of the goodwill and
connections of the Company and the Subsidiary and as a constituent
part of the agreement for the sale of the Shares that save with the
previous written consent of the Buyer:-
6.1.1 they will not in the Restricted Territories for the period
of three years following the Closing Date directly or
indirectly deal with or engage in business with or be in any
way interested in or connected with any concern,
undertaking, firm or body corporate which engages in or
carries on within any part of the Restricted Territories any
business which competes with any business of a kind carried
on by the Company or the Subsidiary at the Closing Date;
6.1.2 they will not in the Restricted Territories for the period
of three years following the Closing Date directly or
indirectly:-
6.1.2.1 interfere with or, in competition with the Company
or the Subsidiary, offer or agree to provide goods
or services of any description to, or solicit or
endeavour to entice away from the Company or the
Subsidiary the custom of any person, firm or body
corporate which, at any time during the period of
two years ending on the Closing Date, has been a
customer or client of, or in the habit of dealing
with, the Company or the Subsidiary or which, at
any time during that period, was to his knowledge
negotiating with the Company or the Subsidiary in
relation to the provision of goods or services by
the Company or the Subsidiary;
6.1.2.2 interfere or seek to interfere with contractual or
other trade relations between the Company or the
Subsidiary and any of its or their respective
suppliers in existence or under negotiation at any
time during the period of two years ending on the
Closing Date;
6.1.2.3 solicit the services of or endeavour to entice
away from the Company or the Subsidiary any
director, employee or consultant of the Company or
the Subsidiary in an executive, technical,
managerial, director or sales capacity (whether or
not such person would commit any breach of his
contract of employment or engagement by reason of
leaving the service of such company) or knowingly
employ, assist in or procure the employment by any
other person, firm or body corporate of any such
person;
6.1.3 they will not at any time following the Closing Date
disclose to any person, firm or body corporate or otherwise
make use or permit the use of any trade secrets or
confidential knowledge or information concerning the
business, finance or affairs of the Company or the
Subsidiary or any of their respective customers, clients or
suppliers and will use their best endeavours to prevent the
publication or disclosure of any such secrets, knowledge or
information by any third party;
6.1.4 they will not at any time following the Closing Date unless
specifically authorised by the Buyer use for any purpose any
trade or business name, trade xxxx or service xxxx used by
the Company or the Subsidiary preceding the Closing Date
including in particular (but without limitation) the names
"Sales Technology" and/or, "Sales Success" (whether alone or
in conjunction with other names) or any name similar to
those names or likely to be confused with them.
6.2 Each of the Covenantors covenants with the Buyer that they will not
cause or permit any person directly or indirectly connected with them
to do any of the things set out in clause 6.1.
6.3 Each of the Covenantors agree that, having regard to the facts and
matters above, the restrictions contained in clause 6.1 are reasonable
and necessary for the protection of the legitimate interests of the
Buyer and that, having regard to those facts and matters, those
restrictions do not work harshly on them. It is nevertheless agreed
that, if any of those restrictions shall, taken together or
separately, be held to be void or ineffective for any reason but would
be held to be valid and effective if part of its wording were deleted,
that restriction shall apply with such deletions as may be necessary
to make it valid and effective.
6.4 The restrictions contained in the sub-clauses of clause 6.1 shall be
construed as separate and individual restrictions and shall each be
capable of being severed without prejudice to the other restrictions
or to the remaining provisions of this agreement.
6.5 The Parties recognise that damages alone will not be a sufficient
remedy for any breach of the provisions of clauses 6.1 and/or 6.2 and
that the remedies of injunction, specific performance or other
equitable relief, would be suitable remedies in the event of any
breach or threatened breach of such clauses.
7 Rights of Set-Off
7.1 In the event that prior to any Relevant Earnout Payment Date the Buyer
shall have given notice in accordance with this agreement of a claim
or claims in respect of any breach of any of the provisions of or
under the terms of this agreement (including without limitation any
claim in respect of the Warranties or under the Tax Deed) the
following provisions shall (if the Buyer so elects) apply:-
7.1.1 to the extent that any such claim or claims shall have been
settled but the amount due shall not have been paid to the
Buyer prior to the Relevant Earnout Payment Date, the
Sellers agree with the Buyer that the Buyer shall be
entitled to deduct from the amount of the Relevant Earnout
Payment the settled amount of such claim or claims and to
treat its obligation to pay the Relevant Earnout Payment as
being reduced pro tanto by the settled amount of such claim
or claims (in which event, for the avoidance of doubt, the
Sellers' obligations in respect of such claim or claims
shall be discharged up to the amount of such deduction);
7.1.2 to the extent that any such claim or claims shall not have
been settled or withdrawn then provided that the condition
set out in clause 7.2 is satisfied, the Sellers agree with
the Buyer that the Buyer shall be entitled to deduct from
the amount of the Relevant Earnout Payment an amount equal
to the barrister's estimate (in accordance with clause 7.2)
of the likely amount of the Buyer?s recovery in respect of
such claim or claims (the "Set-Off Amount");
7.1.3 following the settlement or withdrawal of any claim falling
within clause 7.1.2 the Buyer shall, subject to clause 7.3,
promptly pay to the Sellers the Set-Off Amount (in
accordance with the provisions of clause 3), less a sum
equal to the amount (if any) for which the claim or claims
aforesaid shall have been settled. The Sellers agree with
the Buyer that the Buyer shall be entitled to treat its
obligation to pay that amount of the Relevant Earnout
Payment as being reduced pro tanto by such amount (if any)
for which such claim or claims have been settled (in which
event, for the avoidance of doubt, the Sellers? obligations
in respect of such claim or claims shall be discharged up to
the amount of such deduction).
7.2 The condition referred to in clause 7.1.2 is that any claim or claims
falling within clause 7.1.2 shall have been referred to a barrister of
at least seven years' standing (well versed in the law relating to the
claim or claims) selected by the Buyer and the Seller Representative
(or, in default of agreement within seven days of the Buyer giving
notice to the Seller Representative, on the application of either of
the same by the President for the time being of The Law Society of
England and Wales ) and that such barrister shall have advised, on the
basis of the evidence presented to him and on the assumption that no
further evidence will be produced (i) that the claim or claims in his
opinion has or have a reasonable prospect of success and (ii) that the
amount claimed is a reasonable estimate of the likely amount which the
Buyer is likely to recover in respect of such claim or claims.
7.3 For the purpose of clause 7.2 the Buyer and the Seller Representative
shall, within seven days of his appointment, provide the barrister
instructed pursuant to such clause 7.2, with access to or copies of
all documentation and information required by him and the parties
shall at all times co-operate with him to enable him properly to
assess the claim or claims. The cost of such barrister shall be borne
by the Buyer although, if the relevant claim, when settled, results in
the Sellers being entitled under clause 7.1.3 to less than half of the
Set-Off Amount, the Sellers shall reimburse the Buyer for the amount
of such costs incurred under
clause 7.2 and the Buyer shall be entitled to reduce the payment due
under clause 7.1.3 by an amount equal to those costs.
7.4 A claim shall be regarded as settled or withdrawn for the purposes of
this clause 7 if and to the extent that either:-
7.4.1 the Seller Representative and the Buyer shall so expressly
agree in writing;
7.4.2 a court has awarded judgment in respect of the claim in
respect of which no right of appeal exists;
7.4.3 the claim has been withdrawn by the Buyer or has otherwise
been struck out, discontinued or dismissed (in which case
the claim shall, for the purposes of clause 7.11.3, be
treated as having been settled for no sum and all of the
Set-Off Amount shall be payable to the Sellers in accordance
with that clause).
7.5 For the avoidance of doubt, nothing contained in this clause 7 shall
prejudice or limit the right of the Buyer to make any claim in respect
of any such breach of the Warranties or under the Tax Deed or
otherwise under the provisions of this agreement.
8 Announcements
Subject as required by law or by the rules and regulations applicable to
NASDAQ, no announcement statement or circular in connection with the
subject matter of this agreement shall be made or issued by or on behalf of
the Sellers or the Buyer without the prior approval of the others (in the
case of the Sellers, by the Seller Representative), such approval not to be
unreasonably withheld or delayed.
9 General
9.1 The Parties shall, and shall use their respective best endeavours to
procure that any necessary third party shall, do and execute and
perform all such further deeds, documents, assurances, acts and things
as any of them may reasonably require by notice in writing to give
effect to the terms of this agreement.
9.2 This agreement and the documents referred to as being in the Agreed
Form constitute the entire agreement between the parties with respect
to the subject matter of this agreement and supersedes any prior
agreements or communications, written or oral, between the Parties.
9.3 Each Party shall pay his or its own costs and expenses of and
incidental to this agreement and the sale and purchase of the Shares.
The Sellers costs shall include any costs and expenses incurred by the
Company in connection with the transaction contemplated by this
agreement.
9.4 This agreement shall, as to any of its provisions remaining to be
performed or capable of having or taking effect following Closing,
remain in full force and effect notwithstanding Closing.
9.5 This agreement shall be binding upon and enure for the benefit of the
successors and assigns of the Parties.
9.6 The Buyer shall be entitled to assign the benefit (subject to the
burden) of this agreement to any Group Company of the Buyer and, upon
the request of the Buyer, the Sellers agree to enter into a deed of
novation on terms reasonably acceptable to the Buyer for this purpose.
The Sellers shall not be entitled to assign their respective rights or
obligations under this agreement without the previous written consent
of the Buyer.
9.7 The failure of the Buyer at any time or times to require performance
of any provision of this agreement shall not affect its right to
enforce such provision at a later time.
9.8 No waiver by the Buyer of any condition nor the breach of any term,
covenant, representation, warranty or undertaking contained in this
agreement, whether by conduct or otherwise, in any one or more
instances shall be deemed to be or construed as a further or
continuing waiver of any such condition or breach or a waiver of any
other condition or deemed to be or construed as the breach of any
other term, covenant, representation, warranty or undertaking in this
agreement.
9.9 This agreement may be amended, modified, superseded or cancelled and
any of its terms, covenants, representations, warranties, undertakings
or conditions may be waived only by an
instrument in writing signed by (or by some person duly authorised by)
all of the Parties or, in the case of a waiver, by the Party waiving
compliance.
9.10 Any liability to the Buyer under this agreement may in whole or in
part be released, compounded or compromised or time or indulgence
given by the Buyer in its absolute discretion as regards any Party
under such liability without in any way prejudicing or affecting its
rights against any other Party under the same or a like liability,
whether joint and several or otherwise.
9.11 All their obligations in this agreement, the Tax Deed and the
Warranties are joint and several on the part of Xxxxx Xxxxxx and Xxxxx
Xxxxx, and several on the part of the other Sellers, so that the
liability of each of the Sellers (other than Xx Xxxxxx and Mr Yuile)
shall not exceed an amount equal to the consideration received by each
of the Sellers (other than Xx Xxxxxx and Xx Xxxxx) pursuant to this
agreement.
9.12 The Sellers appoint and authorise the Seller Representative to give
and receive notices, and to agree to all matters and to make all
elections, decisions and determinations, on their behalf as specified
in this agreement. The Seller Representative shall initially be Xxxxx
Xxxxxx but may be changed to such other of the Sellers as a majority
in number of the Sellers may notify to the Buyer in writing provided
that the Buyer consents in writing thereto, such consent not to be
unreasonably withheld or delayed.
10 Notices
10.1 Any notices required to be given under the provisions of this
agreement shall be in writing and shall be deemed to have been duly
served if hand delivered or sent by facsimile or by first class
registered or recorded delivery post within the United Kingdom and by
registered airmail post outside the United Kingdom correctly addressed
to the relevant party's address as specified in this agreement or at
such other address as either party may designate from time to time in
accordance with this clause.
10.2 Any notice pursuant to clause 10.1 shall be deemed to have been
served:-
10.2.1 if hand delivered at the time of delivery;
10.2.2 is sent by facsimile at the Closing of transmission during
business hours at its destination or if not within business
hours at the opening of business hours at its destination on
the next business day but subject to (1) proof by the sender
that it holds a printed record confirming despatch of the
transmitted notice and (2) despatch of the notice by post in
accordance with clause 10.1 on the same day as its
transmission; or
10.2.3 if sent by post within 48 hours of posting (exclusive of the
hours of Sunday) if posted to an address within the country
of posting and 14 days of posting if posted to an address
outside the country of posting.
10.3 For the purpose of clause 10.2 "business hours" means between 09.00
and 17.30 and "business day" means a day between Monday and Friday
inclusive on which banks in the country of the addressee are open for
business.
10.4 Service of a notice in accordance with clause 10.1 on the Seller
Representative shall be deemed to be service of that notice on each of
the Sellers.
10.5 Copies of all notices to the Buyer and the Company referred to in
clause 10.1 shall be sent contemporaneously and in the same manner to
Interliant, Inc. by E-Mail (xxxxxx@xxxxxxxxxx.xxx) and by fax (number
000-000-000-0000), attention: Xxxxx X Xxxxx, General Counsel. For the
avoidance of doubt, failure to transmit a notice by E-Mail shall not
invalidate any notice.
11 Governing Law and Jurisdiction
11.1 This agreement shall be governed by and construed in accordance with
the Laws of England.
11.2 The Parties submit to the exclusive jurisdiction of the English Courts
as regards any claim, dispute or matter arising out of or relating to
this agreement or any of the documents to be executed pursuant to this
agreement.
SCHEDULE 4
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THE WARRANTIES
1 DISCLOSED INFORMATION
1.1 Recitals and other Schedules
The facts set out in the Recitals and in Schedule 1 are true and
accurate in all respects.
1.2 Memorandum and Articles of Association
The copy of the Memorandum and Articles of Association of the Company
annexed to the Disclosure Letter is true and complete, has embodied in it
or annexed to it a copy of every such resolution or agreement as is
referred to in Section 380(4) Companies Xxx 0000 and sets out in full the
rights and restrictions attaching to each class of the Company's share
capital.
1.3 Statutory books
The statutory books (including all registers and minute books) of the
Company have been properly kept and contain a complete and accurate record
of the matters which should be dealt with in them and no notice or
allegation that any of them is incorrect or should be rectified has been
received.
1.4 Returns
All returns, particulars, resolutions and other documents required under
the Companies Xxx 0000 and all other legislation to be delivered on behalf
of the Company to the Registrar of Companies or to any other authority
whatsoever have been duly and properly made and delivered.
1.5 Material disclosure
The Warranties (as modified by the Disclosure Letter) disclose all facts
and circumstances relating to the Shares and to the assets, business and
affairs of the Company material for disclosure to an intending Buyer of the
Shares and, to the best of the knowledge, information and belief of the
Sellers, there are no other facts or circumstances which render or which
might upon their disclosure render any of such facts and circumstances.
2 THE SELLERS
2.1 Capacity
2.1.1 The Sellers have full power to enter into and perform this
agreement, the Tax Deed, and any other agreement which will need
to be executed in connection with this transaction respectively
and such documents will, when executed, constitute binding
obligations of the Sellers in accordance with its terms and no
third party or governmental consents or approvals are required
other than as may be required in the United States of America in
connection with the issue of the Interliant Stock
2.1.2 The execution and delivery of the documents referred to in clause
2.1.1 by the Sellers and the performance of and compliance with
their terms and provisions will not:-
(a) conflict with or result in a breach of, or constitute a
default under, any agreement or instrument to which it
or the Company is a party or by which it or the Company
is bound or of the Memorandum or Articles of
Association of the Company;
(b) conflict with or result in a breach of any law,
regulation, order, writ, injunction, judgement or
decree of any court or agency; or
(c) cause the Company to lose the benefit of any right or
privilege it presently enjoys or cause any person who
normally does business with the Company not to continue
to do so on the same basis or so far as the Buyers are
aware cause any officer or senior employee to leave
and, so far as the Sellers are aware, the attitude or
actions of customers, suppliers, employees and other
persons with regard to the Company will not be
prejudicially affected thereby.
2.2 Sellers' other interests
Neither the Sellers nor, any person connected with the Sellers has any
interest, direct or indirect, in any business other than that now carried
on by the Company which is competitive with the business of the Company.
3 THE SHARES AND THE COMPANY
3.1 The Shares
3.1.1 The Shares comprise the whole of the allotted and issued share
capital of the Company and all of the Shares are fully paid up.
3.1.2 The Shares are beneficially owned by the Sellers free from all pre-
emption rights, liens, charges, equities, encumbrances or interests
of any nature whatsoever in favour of any other person including,
without limitation, any warranty, option or other rights to purchase
the share capital of the Company.
3.2 Share and loan capital
Save only as provided in this agreement, there are no agreements or
arrangements in force which call for the present or future allotment,
issue, sale or transfer of, or grant to any person the right (whether
exercisable now or in the future and whether conditional or not) to call
for the allotment, issue, sale or transfer of, any share or loan capital of
the Company (including by way of option or under any right of conversion or
pre-emption).
3.3 Company resolutions
Neither the Company nor any class of its members has during the period of
six years ending on the date of this agreement passed any resolution (other
than resolutions relating to business at Annual General Meetings which was
not special business).
3.4 Subsidiary and subsidiary undertakings
3.4.1 The Company does not have, and never has had, any subsidiary or
subsidiary undertakings other than the Subsidiary or any interest in
any partnership or unincorporated company or association.
3.4.2 The Company is the beneficial owner of the entire issued under
clause 7.1.3 to less than half of the Set-Off Amount, the Sellers
shall reimburse the Buyer for the amount of such costs incurred
under share capital of the Subsidiary free from all pre-emption
rights, liens, charges, equities, encumbrances or interests of any
nature whatsoever in favour of any other person.
3.5 Associated companies
The Company has no associated companies as defined in SSAP I.
3.6 Foreign Branches
The Company has no branch, agency, place of business or permanent
establishment or any substantial assets outside the United Kingdom.
4 THE ACCOUNTS AND ACCOUNTING RECORDS
4.1 The Accounts
The Accounts (a copy of which is annexed to the Disclosure Letter):-
4.1.1 comply with the requirements of the Companies Xxx 0000 as amended by
the Companies Xxx 0000;
4.1.2 have been prepared in accordance with all applicable SSAPs and FRS's
or, where there are none, in accordance with accounting principles
generally accepted in the United Kingdom and on a basis consistent
with preceding accounting periods;
4.1.3 show a true and fair view of the state of affairs of the Company as
at the Accounts Date and of its profit or loss for the financial
year ended on that date;
4.1.4 save as expressly disclosed in the Accounts, are not affected by any
extraordinary, exceptional or non-recurring items;
4.1.5 fully disclose all the assets and liabilities (whether ascertained,
contingent or otherwise and whether or not quantified or disputed)
of the Company as at the Accounts Date and make full provision
and/or reserve for all such liabilities; and
4.1.6 fully disclose all financial commitments in existence as at the
Accounts Date.
4.1.7 Full provision has been made in the Accounts in respect of dead,
slow moving, obsolete, redundant or excess stock-in-trade and/or
work-in-progress and the value attributed to the
remaining stock-in-trade and/or work-in-progress did not exceed the
lower of direct cost or net realisable value at the Accounts Date.
4.2 Accounting records
The accounting records of the Company:-
4.2.1 have at all times been fully, properly and accurately kept and
completed and contain due and accurate records of all matters
required by law to be entered in them;
4.2.2 contain or reflect no material inaccuracies or discrepancies of any
kind; and
4.2.3 give and reflect a true and fair view of the matters which ought to
appear in them.
4.3 There has been no change or event materially and adversely affecting the
business, results of, operation of or financial position of the Company
since the date to which the Management Accounts are made up to.
4.4 The Plan
4.4.1 the Business plan prepared by certain of the Sellers in conjunction
with the Buyer, a copy of which is attached as Appendix 1 ("Plan")
has been carefully and diligently prepared and:-
(a) to the best of the Seller's knowledge, information and
belief all factual information contained in it is true and
accurate in all material respects and not misleading in any
material respect;
(b) the assumptions and forecasts and opinions as to the future
prospects of the business and affairs of the Company
contained in it have been carefully considered and are
honestly believed by the Sellers to be reasonable having
regard to the information available to them and to the
market conditions currently prevailing and information
supplied to them by the Buyer;
(c) the Sellers have made all enquiries which they reasonably
believed to be necessary to ascertain all the information
and conditions which are relevant to its preparation; and
(d) as far as the Sellers are aware there is no fact, matter or
circumstance which relates to the affairs of the Company the
non-disclosure of which would render any information contained
in the Plan untrue or misleading in any material respect.
4.5 Management Accounts
4.5.1 The Management Accounts have been carefully prepared in accordance
with UK GAAP and with accounting policies consistent with those used
in preparing the Accounts and on a basis consistent with the
management accounts prepared in the preceding months. The cumulative
profits, assets and liabilities of the Company stated in the
Management Accounts have not been materially misstated and are not
materially inaccurate and the Sellers do not consider the Management
Accounts misleading.
5 TAXATION
5.1 Administrative matters
5.1.1 All computations, payments and returns which should have been made
by the Company for any fiscal purpose have been made and are up-to-
date, correct and made on a proper basis.
5.1.2 The Company has not at any time been, nor does it expect to be,
involved in any dispute with, or the subject of any enquiry by, any
branch of the Inland Revenue, H.M. Customs and Excise or other
taxation authorities other than routine enquiries of a minor nature
following the submission of computations and returns.
5.1.3 The Company has adequate records relating to past events to
calculate any liability to Taxation or relief which would arise on
any disposal, deemed disposal or realisation of any assets owned at
the Accounts Date or acquired since that date but before the Closing
Date.
5.1.4 The Company has duly and punctually paid all Taxation which it has
become liable to pay and is under no liability to pay any penalty or
interest in connection with any claim for Taxation. There are no
amounts of Taxation in respect of periods up to the Accounts Date
which remain unpaid at the date of this agreement, whether the date
for payment has passed or not.
5.1.5 The Company has submitted all claims, elections and disclaimers
which have been assumed to have been made for the purposes of the
Accounts.
5.2 Provision for Taxation in the Accounts
Full provision and reserves have been made in the Accounts in respect of
all Taxation of any description liable to be assessed on the Company or for
which it is accountable (including deferred taxation calculated according
to the liability method) for accounting periods or fiscal years ended on or
before the Accounts Date.
5.3 Base Values
If each of the capital assets of the Company were disposed of for a
consideration equal to the book value of that asset in, or adopted for the
purpose of, the Accounts, no liability to corporation tax on chargeable
gains or balancing charge under CAA 1990 would arise (and for this purpose
there shall be disregarded any relief and allowances available to the
Company other than amounts falling to be deducted from the consideration
receivable under Section 38 CGA 1992).
5.4 Replacement of business assets, etc.
The Company has not made, nor will it pending the Closing Date make, a
claim under Sections 152 to 156 (inclusive) CGA 1992 and no such claim has
been made by any other company under Section 175 CGA 1992 which affects, or
could affect, the amount or value of the consideration for the acquisition
of any asset by the Company and the provisions of Section 154 CGA 1992 do
not apply to any such claim other than as is disclosed in the Disclosure
Letter.
5.5 Close companies
The Company has not, at any time within the period of six years ending on
the date of this agreement, been a close company for the purpose of the
ICTA.
5.6 Depreciatory transactions
5.6.1 No loss which might accrue on the disposal by the Company of any
share in, or security of, any company or any other capital asset is
liable to be reduced by virtue of any depreciatory transaction
within the meaning of Sections 176 and 177 CGA 1992 and no gain is
liable to be increased or deemed to have been made on such a
disposal by virtue of such a transaction. No expenditure on any
share or security is liable to be reduced under Section 125 CGA
1992.
5.6.2 The Company has not been involved in any transaction to which
Sections 29 to 34 CGA 1992 may apply.
5.7 Chargeable gains
5.7.1 None of the Company's assets has been acquired for a consideration
in excess of its market value at the date of such acquisition or
otherwise than by way of a bargain at arm's length.
5.7.2 No liability to Taxation will arise on the disposal by the Company
of any asset acquired since the Accounts Date for a consideration
equal to that given on its acquisition. Nor has the Company been a
party to any transaction since the Accounts Date which will give
rise to a liability to corporation tax on chargeable gains.
5.8 Stamp Duty Reserve Tax, etc.
5.8.1 The Company has made all returns and paid all stamp duty reserve tax
in respect of any transaction in securities to which it has been a
party.
5.8.2 All documents to which the Company is a party and under which the
Company has any rights or which form part of the Company's title to
any asset owned by it or which the Company may need to enforce or
produce in evidence in the courts of the United Kingdom have been
duly stamped with the correct amount of Stamp Duty and (where
appropriate) adjudicated.
5.9 Tax losses and ACT carry forward
5.9.1 There has been no change of ownership of the Company nor has there
been any major change in the nature or conduct of a trade or
business carried on by the Company, in each case within the meaning
of Section 768 of the ICTA 1988 or Section 245 ICTA 1988.
5.9.2 Nothing has been done, and no event or series of events has
occurred, which might cause the disallowance of the carry forward of
losses or excess charges under the provisions of Section 393 ICTA
1988.
5.10 Value added tax
5.10.1 The Company:-
(a) has complied in all material respects with all Taxation
Statues relating to value added tax;
(b) is not in arrears with any payment or returns, or liable to
any abnormal or non-routine payment or to any forfeiture or
penalty or to the operation of any penal provision in
respect of value added tax;
(c) has not applied for treatment as a member of a group of
companies and no act or transaction has been effected in
consequence of which the Company is or may be held liable
for any value added tax chargeable against some other
company;
(d) is not and has not agreed to become an agent, manager or
factor (for the purposes of Sections 47 and 48 VATA 1994) of
any person who is not resident in the United Kingdom;
(e) has not paid any value added tax to the Commissioners of
Customs and Excise which is not tax due to them without
making a claim for the recovery of that value added tax; and
(f) has not been required by the Commissioners of Customs and
Excise to give security.
5.10.2 The Disclosure Letter contains full particulars of any claim for bad
debt relief made, or which may be made, by the Company under Section
36 VATA 1994.
5.10.3 The Company has not, within the period of one year preceding the
date of this agreement, received a surcharge liability notice under
Section 59 VATA 1994 nor has the Company submitted a VAT return or
payment later than the date prescribed for its submission.
5.10.4 The Company has not at any time received a penalty liability notice
under Section 64 Finance Xxx 0000.
5.10.5 All supplies made by the Company are taxable supplies and the
Company has not been and will not be denied credit for any input tax
by reason of the operation of Section 26 VATA 1994 and regulations
made under that Section.
5.10.6 The Company has not in the ten years preceding Closing incurred
any expenditure on capital items such that the provisions of Part
V of The Value Added Tax (General) Regulations 1985 may apply to
the Company.
5.10.7 The Disclosure Letter contains full particulars of:-
(a) any premises owned or occupied by the Company which may, at
any date within the ten years following Closing, be subject
to a `self supply' charge within paragraphs 5 and 6 of
Schedule 10 VATA 1994 in the event that the Company makes an
exempt supply;
(b) any premises owned or occupied by the Company which are
subject to an election under paragraph 2 Schedule 10 VATA
1994, whether made by the Company or by a relevant
associate;
(c) any agreement or other arrangement to which the Company is a
party whereby the Company has agreed not to waive exemption
from value added tax pursuant to Schedule 10 VATA 1994 in
relation to any land;
(d) any building or work (including any reconstruction or
enlargement or extension of a building or work) within
paragraph 5 Schedule 10 VATA 1994 in relation to which the
Company is a "developer" whether currently under
construction or where the construction was completed within
a ten year period ended on Closing.
5.11 Distributions and payments
5.11.1 No distribution within the meaning of Section 210 ICTA has been
made by the Company. The Company is not bound to make any such
distribution.
5.11.2 The Company has not made any deemed distributions within the
meaning of Section 418 ICTA.
5.11.3 The Company has not at any time redeemed, repaid or purchased, or
agreed to redeem, repay or purchase, any of its own shares.
5.12 Remuneration and benefits for employees
5.12.1 The Company has not made any payment to, or provided any benefit
for or on behalf of, any officer or employee or ex-officer or ex-
employee of the Company which is not allowable as a deduction in
calculating the profits of the Company for taxation purposes.
5.12.2 The Company has properly operated the PAYE and National Insurance
Contributions systems by making such deductions as are required
by law, from all payments made or deemed to be or treated as made
by it or on its behalf and by duly accounting to the Inland
Revenue for all sums so deducted and for all other amounts for
which it is required to account under the PAYE and National
Insurance Systems.
5.13 Transfer of overseas trade
The Company has not transferred a trade, carried on by it outside the
United Kingdom through a branch or agency, to a company not resident in the
United Kingdom in circumstances such that a chargeable gain may be deemed
to arise at a date after such transfer under Section 140 CGA 1992.
5.14 Secondary Liability
5.14.1 No transaction or event has occurred in consequence of which the
Company is or may be held liable for any taxation or deprived of
any relief or allowance otherwise available to it or may be
otherwise held liable for any taxation for which some other
company or person was primarily liable (whether by reason of any
such other company being or having been a member of the same
group of companies or otherwise).
5.14.2 There is no liability (including a contingent liability) of the
Company which arises under Section 190 CGA 1992 in respect of any
chargeable gain which has accrued or may accrue to the Company.
5.15 Anti-avoidance
The Company has not at any time been a party to or otherwise involved in:-
5.15.1 a transaction or series of transactions containing steps in
respect of which it or its advisers considered or ought to have
considered that there was a risk that the Company could be liable
to taxation under the provisions of Part XVII ICTA 1988 or as a
result of the principles enunciated by the House of Lords in
Xxxxxxx v Xxxxxx 55 TC 324; or
5.15.2 any scheme or arrangement of which the main purpose or one of the
main purposes was the avoidance of, or a reduction in liability
to, Taxation.
6 ASSETS
6.1 Title to assets and encumbrances
6.1.1 All the assets included in the Accounts or acquired after the
Accounts Date as well as all the assets used in the Company's
business and all the IP Rights (as defined in paragraph 6.5.1 of
this Schedule):-
(a) are owned by the Company with good and marketable title free
from any mortgage, charge, lien or other encumbrance;
(b) are not held subject to any agreement for lease, hire, hire
purchase or sale on conditional or deferred terms; and
(c) are in the possession or under the control of the Company.
6.1.2 In respect of any of the items referred to in the preceding
paragraph 6.1.1 which are held under any agreement for lease,
hire, hire purchase or sale on conditional or deferred terms,
there has been no default by the Company in the performance or
observance of any of the provisions of such agreements such items
are set out in the Disclosure Letter and copies of such
agreements are attached to the Disclosure Letter.
6.1.3 All the assets referred to in paragraph 6.1.1 are listed in
the Disclosure Letter.
6.2 Plant
6.2.1 The plant and machinery, including fixed plant and machinery, and
all vehicles and office and other equipment used in connection
with the business of the Company:-
(a) taking into consideration their age and fair wear and tear
are in good repair and condition and in satisfactory working
order;
(b) have been regularly and properly maintained;
(c) are in its possession and control and are its absolute
property except for those items the subject of the hire
purchase leasing or rental agreements referred to in the
Disclosure Letter;
(d) are not expected to require replacements or additions at a
cost in excess of ?3,000 within six months after Closing;
and
(e) are all capable and (subject to normal wear and tear) will
remain capable through the respective periods of time during
which they are each written down to nil value in the
accounts of the Company (in accordance with the normal
recognised accountancy principles consistently applied prior
to the date hereof) of doing the work for which they were
designed or purchased.
6.2.2 Maintenance contracts are in full force and effect in respect of
all assets of the Company which it is normal or prudent to have
maintained by independent or specialist contractors and in
respect of all assets which the Company is obliged to maintain or
repair under any leasing or similar agreement and copies of such
contracts are attached to the Disclosure Letter.
6.2.3 All the assets referred to in paragraph 6.2.2 have been regularly
maintained to a good technical standard and in accordance with
safety regulations usually observed in relation thereto and in
accordance with the terms and conditions of any applicable
leasing or similar agreement.
6.2.4 No plant, machinery, furniture, fixtures, fittings, furnishings
or other equipment located at the Property or used by the Company
in its business is owned by the Sellers or any person connected
with the Sellers.
6.2.5 Details of all new equipment contracts in the process of
installation are provided in the Disclosure Letter.
6.3 Receivables
6.3.1 The amount of all receivables recorded in the Accounts or the
books of the Company as being due to the Company (less the amount
of any specific provision or reserve for such debts made in the
Accounts) are or have been made in the ordinary course of its
business and will be
received in full in the ordinary course of business and in any
event not later than three months after the Closing Date and none
of those debts is subject to any counter-claim or set-off.
6.3.2 No part of the amounts included in the Accounts or (in the case
of an amount arising after the Accounts Date) in the books of the
Company as due from debtors has been released on terms that any
debtor pays less than the full book value of his receivable or
has been written off or has proved to any extent irrecoverable or
is now regarded as irrecoverable.
6.3.3 If any of the receivables recorded in the Accounts or the books
of the Company as being due to the Company at Closing ("the
Debts") shall not have been recovered in full within the period
of four months following the Closing Date, the Sellers shall
immediately when called upon in writing to do so by the Buyer
(and shall (if not so called upon) be entitled to) purchase the
receivables from the Company for an immediate cash consideration
equal to the full face value of the receivables and the Buyer
shall, on payment of such consideration, procure the assignment
of the receivables to the Sellers (or as they may direct)
absolutely and such payment shall operate as a discharge of the
liability of the Sellers arising by reason of the non-payment of
the receivables within the period mentioned above.
6.3.4 A complete list of the Debts is attached to the Disclosure
Letter.
6.4 Intellectual property
6.4.1 For the purposes of this sub-paragraph, the following expressions
shall have the following meanings:-
"IP Rights" rights in patents, xxxxx patents, trademarks, service
marks, registered designs, design rights, trade names, service
names, logos, formulations, know-how, trade secrets, technology,
processes, Websites, computer programmes, data files and data
bases, notes, marginalia, flow charts, diagrams and software
documentation copyright, topography rights and all other
intellectual property in respect of which exclusive rights can
exist, and including applications for any such rights;
"Third Party IP Rights" IP Rights owned otherwise than by the
Company including IP Rights owned by the Sellers;
"Confidential Information" information held subject to express
agreement or implied obligations as to confidentiality and
information of value to the Company and not generally known
outside the Company.
(a) Particulars of all IP Rights owned or used by the Company
are set out in Part l of Schedule 6 and particulars of all
Third Party IP Rights used by the Company are set out in
Part 2 of Schedule 6 including any licence granted by the
Company, and any assignment, and any information disclosed
by the Company in the last ten years in relation to such IP
Rights.
(b) The basis on which the Company uses Third Party IP Rights
has been disclosed to the Buyer in the Disclosure Letter,
including all liability for payment which may be outstanding
or may accrue after the Closing Date, and any restrictions
on use.
(c) Those products, processes and information used or owned by
the Company in respect of which it has Confidential
Information have been disclosed to the Buyer in the
Disclosure Letter with details of all the Confidential
Information and the form in which it is held. All such
products, processes and information shall remain the
property of the Company and the Sellers shall not keep any
copy or derivative materials thereof.
(d) The basis on which the Company uses Confidential Information
not owned by it is disclosed in the Disclosure Letter,
including details of all liability for payment which may be
outstanding or may accrue after the Closing Date and any
restrictions on use.
(e) The business and activities of the Company have not
required, nor do they now require, the agreement or licence
of any third party in order to avoid infringement by the
Company of any Third Party IP Rights or Confidential
Information.
(f) The Company has not been in breach of, and is not now in
breach of, and Closing will not result in any breach of any
agreements concerning Third Party IP Rights or Confidential
Information.
6.4.2 No claims (including, without limitation, any civil or criminal
actions, administrative proceedings and any other proceedings)
have been made or threatened against the Company:-
(a) by any third party concerning IP Rights or Confidential
Information;
(b) by any supplier to or employee of the Company
concerning moral rights or employee rights to
compensation regarding patents; or
(c) by way of opposition to any application by the Company
for registration of IP Rights, or seeking cancellation
of any of the Company's IP Rights, or for a licence of
right, or otherwise adversely affecting any of the
Company's IP Rights.
6.4.3 No licences or registered user agreements have been entered into
by the Company in respect of IP Rights owned by it, nor is the
Company obliged to enter into any such or to grant assignments of
any IP Rights held by it.
6.4.4 The Company has not disclosed Confidential Information to any
party except under obligations of confidentiality.
6.4.5 The Company owns or is licensed to use and is in possession of
all IP Rights and Confidential Information necessary or
customarily used in its business without the payment of any sums
to any party.
6.4.6 All computer outsourcing or shared services agreements are listed
in Schedule 6 together with their particulars.
6.4.7 All computer software used in the Company's business is
beneficially owned by the Company or is duly and validly licenced
to the Company, such licences being listed in Schedule 6. Such
licences have been paid in full.
6.4.8 The Company's IP Rights do not and have not infringed the IP
Rights of any other party and the Company has not had any notice
of any event or circumstances which could lead to such
infringement.
6.5 Property
6.5.1 The Property comprises all the property occupied or otherwise
used by the Company.
6.5.2 The Company is in physical possession and actual and exclusive
occupation of the Property.
6.5.3 The particulars of the Property set out in Schedule 5 are true
and accurate in all respects.
6.5.4 The Company has in its physical possession all of the title deeds
and documents which properly constitute title to the Property and
which are originals or properly examined abstracts. No title
deeds or documents to the Property are missing or incomplete.
6.5.5 The Property is free from and not affected by any mortgage or
charge (whether legal or equitable, specific or floating),
debenture, lien, pledge or other security interest or other
encumbrance whatsoever, including without limitation any which
secure the payment of monies or other obligation or liability of
any third party.
6.5.6 The Property is in a good state of repair and condition and will
not require material expenditure in the foreseeable future.
6.5.7 The Company has paid the rent and no notices of breaches of any
covenant have been received.
6.5.8 The Company does not have any actual or contingent liability in
respect of any freehold or leasehold property which was
previously but is not presently owned, whether under restrictive
or other covenants as original tenant or as guarantor, assignee
or otherwise, nor any liability or contingent liability for
dilapidations.
6.5.9 The Company has complied with all statutory and other
requirements whatsoever relating to pollution or protection of
the environment including emissions, releases, or discharges of
any kind whatsoever.
6.6 Environmental matters and pollution
6.6.1 The Company has at all times carried on its business in all
respects in compliance with all Environmental Laws.
6.6.2 The Company:-
(a) has all necessary licences, authorisations, approvals
and consents required by Environmental Law to enable it
lawfully to carry on its business as presently carried
on by it and all licences, authorisations, approvals
and consents are currently in full force and effect;
(b) has complied in all material respects with all such
licences, authorisations, approvals and consents
including, without limitation, any conditions,
limitations and directions imposed on such licenses,
authorisations, approvals and consents and any
subsequent amendment, alteration and order relating to
them;
(c) has taken all necessary or appropriate action in
connection with the renewal, continuation or extension
of all such licences, authorisations, approvals and
consents including, without limitation, the payment of
all sums necessary such as annual fees and application
fees; and
(d) is not required by any governmental organisation to
incur any expenses, make any investment or carry out
any improvements or other works by the terms of any
such licences, authorisations, approvals and consents
or in order to renew or maintain the same in full force
and effect.
6.6.3 So far as the Sellers are aware no event has occurred or
circumstance exists which entitles, and nothing is proposed to be
done or is likely to occur, which would entitle any licence,
authorisation, approval and consent referred to in paragraph
6.6.2.1 whether in part or in whole to be revoked, suspended,
amended, varied, withdrawn or not renewed or which would prevent
compliance with any terms of any such licence, authorisation,
approval or consent.
6.6.4 There has been no breach and there is no existing breach by the
Company or any director, secretary, manager or other similar
officer of the Company.
6.6.5 The Company has not deposited, disposed of, kept, treated,
imported, exported, transported, processed, manufactured,
collected, sorted or produced or caused or consented to the
presence of any Hazardous Material (whether or not on any of the
Properties) and to the best of the knowledge information and
belief of the Company no other person has at any time deposited,
disposed of, kept, treated, imported, exported, transported,
processed, manufactured, collected, sorted or produced or caused
or consented to the presence of any Hazardous Material on any of
the Properties.
6.6.6 The Company has not conducted any environmental inspection,
investigations, studies, audits, tests in relation to the Company
or the business carried on by the Company at the Property.
6.6.7 The Company has complied at all times with the Health and Safety
at Work etc. Xxx 0000 and all regulations relating to Health and
Safety and has not received any notice or complaint from any
employee of the Company in respect of Regulations and so far as
the Sellers are aware no circumstance exists which is likely to
place the Company in breach of Regulations.
7 EMPLOYEES AND CONSULTANTS
7.1 Directors
The particulars of directors shown in paragraph 5 of Schedule 1 and in
paragraph 5 of Schedule 2 are true and complete and no person not named as
such in that paragraph is or is held out as a director of the Company.
7.2 Particulars of employees
7.2.1 The particulars shown in the Schedule of Employees annexed to the
Disclosure Letter show all remuneration payable and other
benefits provided or which the Company or the Sellers are bound
to provide (whether now or in the future) to each officer and
employee of the Company and/or any person connected with any such
person and include true and complete particulars of all profit
sharing, incentive and bonus arrangements to which the Company is
a party, whether legally binding on the Company or not, and no
person not named in that Schedule is an employee of the Company.
7.2.2 Since the Accounts Date, no change has been made in the rate of
remuneration or the emoluments or pension benefits of any
officer, ex-officer or employee of the Company and no change has
been made in the terms of engagement of any such officer or
employee and no additional officer or employee has been
appointed.
7.2.3 No present officer or employee of the Company has given or
received notice terminating his employment.
7.2.4 The Company has not entered into any agreement or arrangement
(express or implied) for the provision of compensation on the
termination of employment of any employee of the Company beyond
the minimum required by law.
7.3 Service contracts
7.3.1 There is not now outstanding any service contract between the
Company and any of its directors, officers or employees which is
not terminable by the Company without compensation (other than
statutory compensation) on one month's notice or less given at
any time.
7.3.2 The attention of all employees of the Company has been drawn to
such of the terms of their employment as is required by the
Employment Rights Xxx 0000.
7.4 Trades unions
The Company is not a party to any agreement or arrangement with or
commitment to any trades union or staff association nor, to the best of the
Sellers' knowledge, information and belief, are any of its employees
members of any trades union or staff association.
7.5 Disputes with employees
7.5.1 There is no outstanding claim, and the Sellers have no knowledge
of any facts which would or could give rise to a claim, against
the Company by any person who is now or has been an officer or
employee of the Company or any dispute between the Company and a
material number or class of its employees and no payments are due
by the Company under the provisions of the Employment Rights Xxx
0000;
7.5.2 No employee or officer of the Company has been involved in any
accident, or any incident for which the Company may be
vicariously liable, during the last 12 months.
7.6 Consultants
There is not now outstanding any contract or arrangement to which the
Company is a party for the payment to any person or body of any consultancy
or like fees.
7.7 Ex-gratia payments
Since the Accounts Date, no ex-gratia payments have been made by the
Company to any officer or employee or former officer or employee of the
Company or to their dependants or relatives nor is the Company considering
making any such payments.
7.8 Pensions
7.8.1 The Company has no obligation (whether legally binding or not)
to:-
(a) pay any pension; or
(b) make any other payment after retirement or death or
during periods of sickness or disability (whether of a
temporary or permanent nature); or
(c) otherwise to provide "relevant benefits" (within the
meaning of Section 612 ICTA 1988)
to, or in respect of any person who is now or has been an
officer, director or employee of the Company or spouse or
dependant or other person claiming through said officer, director
or employee or employees membership of the Scheme or employment
with the Company.
8 LIABILITIES AND COMMITMENTS
8.1 Material contracts
8.1.1 The Company is not a party to or subject to any agreement,
transaction, obligation, commitment, understanding, arrangement
or liability which:-
(a) is incapable of complete performance in accordance with
its terms within six months after the date on which it
was entered into or undertaken;
(b) is likely to result in a loss to the Company on Closing
of performance;
(c) cannot readily be fulfilled or performed by the Company
on time without unusual expenditure of money and
effort;
(d) involves or is likely to involve obligations,
restrictions, expenditure or receipts of an unusual,
onerous or exceptional nature;
(e) is a forward contract relating to foreign currency;
(f) requires the Company to pay any commission, finders'
fee, royalty or the like;
(g) in any way restricts the Company's freedom to carry on
the whole or any part of its business in any part of
the world in such manner as it thinks fit;
(h) is an agreement or arrangement otherwise than by way of
bargain at arm's length;
(i) is in any way otherwise than in the ordinary and proper
course of the Company's business;
(j) is an agreement that creates a joint venture or
partnership with any other person or entity;
(k) is an agreement relating to the acquisition or disposal
of a material amount of assets (by way of merger,
consolidation, purchase, sale or otherwise) pursuant to
which the Company may have any future obligations
(including, without limitation, any indemnification
obligations).
8.1.2 All vendor and customer contracts, confidentiality agreements,
purchase and sales orders, powers of attorney, undertakings,
commitments and other agreements to which the Company is a party
and which relate in any manner to the business of the Company
and/or the relationship between the Company and its customers or
its vendors, whether written or oral, shall be referred to herein
collectively as the "Business Agreements". There is attached to
the Disclosure Letter true and complete copies of all written
Business Agreements and detailed summaries of all oral Business
Agreements, and in respect of the customers of the Company are
the only forms of agreements which have been entered into between
the Company and its customers concerning the business of the
Company. The Disclosure Letter also states the identity of such
customers to each of those agreements which are in force and
effect as of the Closing Date, together with a designation of
which form of agreement each such customer has entered into.
8.2 Defaults
Neither the Company nor any other party to any agreement with the Company
is in default under any such agreement nor (so far as the Sellers are
aware) are there any circumstances likely to give rise to such a default.
8.3 Sureties
No person apart from the Company has given any guarantee of or security
for any overdraft, loan or loan facility granted to the Company or in
connection with any trading activities of the Company.
8.4 Powers of attorney/agency
8.4.1 There is in force no power of attorney or other authority
(express, implied or ostensible) given by the Company to any
person to enter into any contract or commitment on its behalf
other than to its employees to enter into routine trading
contracts in the usual course of their duties.
8.4.2 The Company has not appointed any agent or distributor in respect
of any of its products or services in any part of the world.
8.5 Insider contracts
8.5.1 There is not outstanding, and there has not at any time during the
six years ending on the date of this agreement been outstanding,
any agreement or arrangement to which the Company is a party and
in which any Sellers, any person beneficially interested in the
Company's share capital, any director of the Company or any person
connected with any of them is or has been interested, whether
directly or indirectly.
8.5.2 The Company is not a party to, nor have its profits or financial
position during such period been affected by, any agreement or
arrangement which is not entirely of an arm's length nature.
8.6 Debts
There are no debts owing by the Company, other than debts which have
arisen in the ordinary course of business.
8.7 Borrowings and mortgages
8.7.1 The Company has no borrowings, and has not agreed to create any
borrowings, from its bankers or any other source and, in respect
of borrowings disclosed in the Disclosure Letter, the Company has
not exceeded any limitation on its borrowing contained in its
Articles of Association or in any debenture or loan stock deed or
other instrument.
8.7.2 No option, right to acquire, mortgage, charge, pledge, lien (other
than a lien arising by operation of law in the ordinary course of
business) or other form of security or encumbrance or equity on,
over or affecting the whole or any part of the undertaking or
assets of the Company is outstanding and there is no agreement or
commitment to give or create any.
8.8 Third party indebtedness
The Company is not subject to any option or pre-emption right or a party
to any guarantee or suretyship or any other obligation (whatever called)
to pay, purchase or provide funds (whether by the advance of money, the
purchase of or subscription for shares or other securities, the purchase
of assets or services, or otherwise) for the payment of, indemnity
against the consequences of default in the payment of, or otherwise to be
responsible for, any indebtedness of any other person.
8.9 Litigation
8.9.1 Neither the Company, nor any person for whose acts or defaults the
Company may be vicariously liable, is involved in any civil,
criminal or arbitration proceedings or governmental investigation
and no such proceedings or investigation are pending or threatened
by or against the Company or any such person and, so far as the
Sellers are aware, there are no facts or circumstances which are
likely to lead to any such proceedings.
8.9.2 No judgment has been obtained against the Company which has not
been satisfied.
8.9.3 Details of all claims made by or against the Company together with
all settlements in relation to any claims in the last three years
are set out in the Disclosure Letter.
9 THE COMPANY'S BUSINESS
9.1 Business since the Accounts Date
Since the Accounts Date:-
9.1.1 the Company has carried on its business in the ordinary and usual
course and without entering into any transaction, assuming any
liability or making any payment not provided for in the Accounts
which is not in the ordinary course of its business and without
any interruption or alteration in the nature, scope or manner of
its business;
9.1.2 the Company has not borrowed or raised any money or taken any
financial facility;
9.1.3 the Company has paid its creditors within the times agreed with
such creditors;
9.1.4 the Company has not entered into, or agreed to enter into, any
capital commitment nor has it disposed of or realised any capital
assets;
9.1.5 no share or loan capital has been allotted or issued or agreed to
be allotted or issued by the Company;
9.1.6 no distribution of capital or income has been declared, made or
paid in respect of any share capital of the Company and (excluding
fluctuations in overdrawn current accounts with bankers) no loan
or loan capital or preference capital of the Company has been
repaid in whole or part or has become liable to be repaid;
9.1.7 there has been no depletion in the net assets of the Company; and
9.1.8 there has been no change or event materially and adversely
affecting the business, results of, operation or financial
position including the cash and accounts receivable account,
turnover or prospects of the Company.
9.2 Grants
The Company has not applied for or received any grant or allowance from
any authority, agency or governmental organisation.
9.3 Compliance with laws
The Company is entitled to carry on the business now carried on by it
without conflict with any valid right of any person, firm or company and
the Company has conducted its business in all material respects in
accordance with all applicable laws and regulations of the United Kingdom
or any foreign country and so far as the Sellers are aware, there is no
violation of, or default with respect to, any statute, regulation, order,
decree or judgment of any Court or any governmental agency of the United
Kingdom or any foreign country.
9.4 Licences
All necessary licences, consents, permits and authorisations (public or
private) have been obtained by the Company to enable the Company to carry
on its business effectively in the places and in the manner in which such
business is now carried on and all such licences, consents, permits and
authorisations are valid and subsisting and the Sellers, after due and
careful enquiry, know of no reason why any of them should be suspended,
cancelled or revoked.
9.5 Insolvency
9.5.1 No order has been made and no resolution has been passed for the
winding up of the Company or for a provisional liquidator to be
appointed in respect of the Company and no petition has been
presented and no meeting has been convened for the purpose of
winding up the Company.
9.5.2 No administration order has been made and no petition for such an
order has been presented in respect of the Company.
9.5.3 No receiver (which expression shall include an administrative
receiver) has been appointed in respect of the Company or all or
any of its assets.
9.5.4 The Company is not insolvent or unable to pay its debts within the
meaning of Section 123 Insolvency Act 1986 nor has it stopped
paying its debts as they fall due.
9.5.5 No voluntary arrangement has been proposed under Section l
Insolvency Act 1986 in respect of the Company.
9.5.6 The Company has not been a party to any transaction at an
undervalue as defined in Section 238 Insolvency Act 1986 nor has
it given or received any preference as defined in Section 239
Insolvency Xxx 0000, in either case within the period of two years
ending on the date of this agreement.
9.5.7 No event analogous to the foregoing has occurred in or outside
England.
9.5.8 No unsatisfied judgement is outstanding against the Company.
9.5.9 No guarantee, loan capital, borrowed money or interest is overdue
for payment and no other obligation or indebtedness is outstanding
which is substantially overdue for performance or payment.
9.6 Fair trading
9.6.1 No agreement, practice or arrangement carried on by the Company or
to which the Company is a party or with which the Company is
concerned:-
(a) is or requires to be registered in accordance with the
provisions of the Restrictive Trade Practices Acts 1976
and 1977 or contravenes the provisions of the Resale
Prices Xxx 0000 or is or has been the subject or any
enquiry, investigation or proceeding in respect thereof;
(b) is proscribed by or has been the subject of an enquiry,
investigation, reference or report under the Fair Trading
Act 1973 (or any previous legislation relating to
monopolies or mergers) or the Competition Xxx 0000;
(c) infringes Article 85 of the Treaty of Rome or constitutes
an abuse of dominant position contrary to Article 86 of
that Treaty or infringes any regulation or other enactment
made under Article 87 of that Treaty or is or has been the
subject of any enquiry, investigation or proceeding in
respect thereof;
(d) is, by virtue of its terms or by virtue of any practice
for the time being carried on in connection with it, a
"consumer trade practice" within the meaning of Section 13
Fair Trading Act 1973 and susceptible to or under
reference to the Consumer Protection Advisory Committee or
the subject of a report to the Secretary of State for
Trade and Industry or of an Order by the Secretary of
State for Trade and Industry under the provisions of Part
II of that Act; or
(e) infringes any other competition, restrictive trade
practice, anti-trust or consumer protection law or
legislation applicable in the United Kingdom or elsewhere
and not specifically mentioned in this paragraph 9.7.
9.6.2 The Company is not in default or in contravention of any Article,
Act, decision, regulation, order or other instrument or of any
undertaking relating to any matter referred to in this paragraph
9.6.
9.7 Insurances
9.7.1 The Company and all its normally insurable assets are, and at all
times have been, covered to their full replacement or reinvestment
value by valid insurances containing no special or unusual terms
or conditions against all the risks (including in the case of let
property for three years' loss of rent) against which it is normal
or prudent to insure and all liabilities of the Company in respect
of the business carried on by it (including third party risks,
public and employers' liability, consequential loss liability and
loss of profits) are fully covered and the Company has paid all
premiums due and has not done or omitted to do anything the doing
or omission of which would make any such policy of insurance void
or voidable or would or might result in an increase in the rate of
premiums payable under any such policy.
9.7.2 The interest of the Company is noted on the insurance policy
relating to the Property.
9.7.3 The Schedule of Insurances annexed to the Disclosure Letter
contains full details of:-
(a) the insurance policies of the Company or in which it has
an interest;
(b) all excesses and deductibles pertaining to such policies;
(c) all claims made under such policies and provisions by the
insurer made against those policies;
9.8 The Company's activities, etc.
So far as the Sellers are aware, none of the activities, contracts or
rights of the Company is ultra xxxxx, unauthorised, invalid or
unenforceable or in breach of any contract or covenant and all documents
in the enforcement of which the Company may be interested are valid and
have been duly stamped.
10 CONSEQUENCES OF SALE OF THE SHARES
10.1 Other agreements and obligations
So far as the Sellers are aware, neither the Sellers nor the Company is a
party to any agreement or bound by any obligation the terms of which will
prevent the Buyer from enjoying the full benefit of this agreement.
10.2 Change of control
There are no agreements concerning the Company which will or may be
terminated or the terms of which will or may in any way be varied or
would otherwise require consent as a result of a change in the control of
the Company or in the composition of the board of directors of the
Company.
10.3 Finders fee
No brokers or finders fee or commission payment will be payable by the
Sellers or the Company as a result of this agreement.
11 YEAR 2000 COMPLIANCE
11.1 All information technology included in the Company's assets,
including, without limitation, in all products and services (i)
provided by the Company whether to third parties or for internal
use or (ii) to the best of the Sellers knowledge used in
combination with any information technology of its clients,
customers, suppliers or vendors, accurately processes or will
process date and time data (including but not limited to,
calculating, comparing and sequencing) from, into and between the
years 1999 and 2000 and the twentieth century and the twenty-first
century, including leap year calculations and neither performance
nor functionality of such technology will be affected by dates
prior to, during and after the year 2000.
11.2 The Company has no obligations under warranty agreements, service
agreements or otherwise to remedy any information technology defect
relating to the year 2000.
12 CUSTOMERS
There is attached to the Disclosure Letter a true and complete copy of
the Company's customer list as of the Closing Date relating to the
Company which includes, in the case of each customer, the name of the
customer, its billing and domain addresses, identity and contact
information of each relevant contact person, a statement of the monthly
or annual (as indicated) charges relating to such customer and the
Company's files regarding such Customer.
SIGNED by XXXXX XXXXXX in the presence of:- )
)
)
SIGNED by XXXXX XXXXXX duly authorised for and on )
behalf of XXXXXX AND ASSOCIATES ADVERTISING LIMITED )
in the presence of:- )
SIGNED by XXXXXXXX XXXXXXXX in the presence of:- )
SIGNED by XXXXXXXX XXXXXXXX in the presence of:- )
SIGNED by XXXXX XXXXXX in the presence of:- )
SIGNED by XXXXXX XxXXXXXXX in the presence of:- )
SIGNED by XXXXX XXXXX in the presence of:- )
SIGNED by XXXXXX XXXXXX in the presence of:- )
SIGNED by XXXXXXX X. XXXXXXX duly authorised for and )
on behalf of INTERLIANT INTERNATIONAL INC. in the )
presence of:- )
SIGNED by XXXXXXX X. XXXXXXX duly authorised for and )
on behalf of INTERLIANT, INC for the limited purpose )
set forth in the Recitals in the presence of:- )
From: Interliant International, Inc
0 Xxxxxxxxxxxxxx Xxxx
Xxxxxxxx
Xxx Xxxx
XX 00000
XXX
To: Xxxxx Xxxxxx Esq
Xxxxx Xxxxx
00 Xxxxxx Xxxx
Xxxxxxx Xxxxx
Xxxxxx
XX0 0XX
and: Xxxxx Xxxxx Esq
Xxxx 0
000 Xxxxxx Xxxxxx Xxxx
Xxxxxx
XX0 0XX
14 September 1999
Dear Sirs
Supplementing the Service Agreements entered into with each of you and Sales
Technology Limited (the "Company") we hereby agree that we will pay to you as a
further incentive under the said Service Agreements a sum equal to 50% of the
Net Revenues (as defined in the Share Purchase Agreement between you and others
and ourselves of today's date) during the calendar year 2000 in excess of
US$3,200,000 up to a maximum of Net Revenues of US$6,000,000 provided that the
EBITDA for such period exceeds US$1,190,000. Such sum shall be paid by us in
cash or Interliant, Inc. common stock (valued at its then market value) or any
combination thereof at our option. You may if you so elect, distribute a
portion of this additional compensation to other employees of the Company.
Yours faithfully
..........................................
for and on behalf of
Interliant International, Inc.
