EXHIBIT 10.1
DATED 1997
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(1) TRIDEX CORPORATION
(2) CASH BASES GROUP LIMITED
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AGREEMENT for the sale of the
whole of the issued share capital of
Cash Bases G.B. Limited
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XXXXXXX XxXXXXX
Sceptre Court
00 Xxxxx Xxxx
Xxxxxx
XX0X 0XX
Tel: 0000-000 0000
Fax: 0000-000 0000
(DLB/416133)
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INDEX
Clause Heading Page No
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1. Interpretation 8
2. Sale of Shares and purchase consideration 11
3. Completion 12
4. Warranties 15
5. Set-off rights 18
6. Release of guarantees and indemnities 19
7. Restrictive covenants 19
8. Information 20
9. General 21
10. Notices 22
11. Agent for Service 22
12. Conditions Precedent 23
13. Receivables 23
Schedule Contents Page No
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1A Part 1 - Details of the Company 25
Part 2 - Details of the Subsidiaries 26
1B Details of Management Team 33
2 Tax Deed 34
3 Warranties 47
4 Details of Property 56
5 Deferred Consideration 57
6 Escrow Account 63
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THIS AGREEMENT is made the day of May 1997
BETWEEN:
(1) TRIDEX CORPORATION a company incorporated under the laws of the State of
Connecticut whose principal place of business is at 00 Xxxxxx Xxxx,
Xxxxxxxx XX 00000 XXX ("Seller"); and
(2) CASH BASES GROUP LIMITED a company registered in England under number
3346539 whose registered office is at Xxxxxxx Xxxxxx Xxx Xxxx Xxxxxxxx
Xxxx Xxxxxx XX0 0XX ("Buyer") (which expression shall include its
successors and assigns)).
NOW IT IS HEREBY AGREED as follows:
1. Interpretation
1.1 Unless the context otherwise requires the following definitions shall
apply throughout this agreement:
"Accounts" means the audited consolidated balance sheet of the Company and
its subsidiaries as at the Accounts Date and the audited consolidated
profit and loss account of the Company and its subsidiaries for the year
ended on that date together with the notes thereto and the report of the
directors in respect of that period
"Accounts Date" means 31st December 1996
"agreed form" means a form agreed by the Seller and the Buyer and
initialled by, or on behalf of, the Seller and the Buyer
"associate" means any associate or associated company, as such terms are
respectively defined in sections 417 and 416 Taxes Act provided always
that references to an associate of the Seller shall exclude reference to
any group company
"Buyer's Solicitors" means Xxxxxxx Xxxxxx Xxxxxx (ref DLB/AL) Sceptre
Court 00 Xxxxx Xxxx Xxxxxx XX0X 0XX
"Call Option" means the option agreement to be entered into at Completion
between, inter alia, the Buyer and the Seller (in agreed form)
"Company" means Cash Bases G.B. Limited, details of which are set out in
schedule 1A part 1
"Company's Intellectual Property" means all Intellectual Property and
Materials owned, licensed to, used by or required to be used by the
Company at Completion
"Completion" means the performance by the parties of their obligations
under clause 3 and, where the context so admits, the date on which such
obligations are performed
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"Consideration Shares" means 25,397 ordinary shares of 10 xxxxx each in
the capital of the Buyer, credited as fully paid as to [10] xxxxx per
share, and having the rights and privileges and subject to the
restrictions as set out in the New Articles
"contingent liability" shall include any liability which, under good
accounting practice, would be considered to constitute a contingent
liability
"Deferred Consideration" such sum (if any), not exceeding US$750,000
(seven hundred and fifty thousand US dollars), as shall be payable
pursuant to the provisions of schedule 5
"Disclosure Letter" means a letter from the Seller to the Buyer
identifying itself as the Disclosure Letter referred to herein, and the
expression "disclosed to the Buyer" shall mean as disclosed in the
Disclosure Letter
"event" includes any act, omission, occurrence, transaction or
circumstance (including the Completion of this agreement in accordance
with its terms)
"Group Company" means a member of the group comprising the Company and its
subsidiaries
"guarantee" includes indemnity, security given for the indebtedness or
liabilities of another person, and all other forms of surety
"Incumbrance" means any mortgage, charge, pledge, lien, option,
restriction or other security interest of any kind, any option or right of
first refusal, pre-emption, forfeiture or call, any other right
exercisable by a third party, any other encumbrance (including
encumbrances imposed and rights conferred by or under any enactment) and
any other type of preferential arrangement (including, without limitation,
title transfer and retention arrangements) having a similar effect
"Instrument" means the instrument constituting the Vendor Loan Note (in
agreed form)
"Intellectual Property" means all patents, trade marks, services marks,
community trade marks, registered designs, trade names, business names,
unregistered trade and service marks, copyrights, topography rights,
design rights, Know-How, trade secrets and all other industrial or
commercial monopoly rights, intellectual property rights and rights or
forms of protection of the same or of a similar or equivalent nature or
effect which may subsist anywhere in the world whether or not registered
or capable of registration and together with all applications for
registration of and rights to apply for any of the foregoing
"Inter-Creditor Deed" means the priority deed of today's date between,
inter alia, the Seller and Lloyds Development Capital Limited
"Investor Loan Notes" means the (pounds)800,000 nominal loan notes 1997 of
the Buyer to be constituted by an instrument to be entered into by the
Buyer of today's date
"Know-How" means all information, data and methodology not at present in
the public domain and all financial, commercial, trade and business
secrets of whatever nature and in whatever form, including, without
limitation, that comprised in, derived from or relating to any Materials
"liability" includes contingent liability
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"LDCL" means Lloyds Development Capital Limited (Registered number
1107542)
"London Stock Exchange" means London Stock Exchange Limited
"Management Team" means those individuals whose names and addresses are
set out in schedule 1B
"Materials" means all drawings, diagrams, illustrations, data,
specifications, lists, programs (including object code and source code),
formulae, instructions, manuals, descriptions, plans, models, reports,
calculations and all other documents, recorded information and data
whatsoever and howsoever stored
"New Articles" means the new articles of association of the Buyer to be
adopted at or immediately prior to Completion
"Overseas Subsidiaries" means Cash Bases (Iberica) SA, Cash Bases (France)
Sarl, Cash Bases (South Africa) Pty Limited, Cash Bases (Deutschland) Gmbh
and Cash Bases Incorporated, details of which are set out in schedule 1A
part 2
"Property" means the property or properties described in schedule 4,
including the whole, or any part or parts of, and any right or interest
in, such property or properties
"Relevant Claim" means a claim made by the Buyer under the Tax Deed or in
relation to a breach of the Warranties or any other obligations of the
Seller under this agreement
"Seller's Solicitors" means Paisner & Co (ref SMR), Xxxxxxxx Xxxxx, 000
Xxxxx Xxxxxx, Xxxxxx XX0X 0XX
"Settled Liability" means a liability of the Seller in respect of a
Relevant Claim or Relevant Claims, the amount of which has been agreed in
writing between the Seller and the Buyer in final settlement of such
Relevant Claim or Relevant Claims or has been determined by binding
arbitration or an order of a court of competent jurisdiction against
which, in either case, no appeal has been made within 30 days of judgement
or is capable of being made (as appropriate)
"Shares" means all the shares in the capital of the Company issued or
allotted at Completion, as set out in schedule 1A part 1
"Stock" includes work in progress
"Taxation" means any taxation duty levy charge impost or contribution of
whatsoever nature imposed by any jurisdiction or any statutory
governmental federal state provincial municipal authority body or official
whatsoever whenever imposed and any interest surcharge penalty or fine in
relation thereto
"Taxes Act" means Income and Corporation Taxes Act 1988
"Tax Deed" means a deed in the form set out in schedule 2, duly executed
by the Seller
"TCGA" means Taxation of Chargeable Gains Xxx 0000
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"Vendor Loan Note" means the US$250,000 (two hundred and fifty thousand US
dollars) nominal unsecured loan note 2000 of the Buyer to be constituted
by the Instrument and issued to the Seller at Completion in accordance
with clause 3.4
"Warranties" means the warranties and undertakings set forth in schedule 3
and "Warranty" means any of them
"VATA" means Value Added Tax Xxx 0000.
1.2 The expressions "subsidiary" and "holding company" bear the same meanings
in this agreement as they respectively bear in the Companies Xxx 0000.
1.3 Reference in this agreement to any statutory provision shall include a
reference to that provision as amended, extended or re-enacted and to any
statutory replacement thereof (either before or after the date hereof)
from time to time and to any former statutory provision replaced (with or
without modification) by the provision referred to, and shall also include
reference to all statutory instruments and orders made pursuant to any
such statutory provision except to the extent that any statutory
provision, statutory instrument or order amended, extended, re-enacted,
replaced or made after the date hereof would extend or increase the
liability of any party under the Warranties or the Tax Deed.
1.4 Reference in this agreement to the singular includes a reference to the
plural and vice versa and reference to the masculine includes a reference
to the feminine and neuter and reference to a person shall include a
reference to any company as well as any legal or natural person.
1.5 The construction of this agreement and the schedules hereto is not to be
affected by any heading.
1.6 References in this agreement to clauses, sub-clauses and schedules are,
unless otherwise specified, references to clauses and sub-clauses of and
schedules to this agreement.
1.7 References to this agreement include a reference to each of the schedules.
2. Sale of Shares and purchase consideration
2.1 Subject to the terms of this agreement the Seller shall sell the Shares
and the Buyer shall purchase such Shares, free from all Incumbrances.
2.2 The Seller hereby covenants with the Buyer that it is the beneficial and
legal owner of the Shares and that it has full right, power and title to
sell or procure the sale of the Shares free from all Incumbrances and the
Seller hereby covenants with the Buyer that it will at its own cost and as
soon as practicable after Completion do everything reasonably required by
the Buyer to transfer to, and vest in, the Buyer (or its nominees) the
beneficial and legal ownership of such Shares.
2.3 Save as specifically provided herein, the provisions of part 1 Law of
Property (Miscellaneous Provisions) Act 1994 shall not apply to this
agreement.
2.4 Clauses 2.1 and 2.2 shall not constitute or be deemed to constitute
warranties of any nature or be construed as part of the Warranties for any
purpose and, for the avoidance of doubt, any provisions contained in this
agreement which limit or restrict or otherwise relate to the Warranties in
any way shall not apply to clause 2.1 or 2.2.
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2.5 The Buyer shall not be obliged to complete the purchase of any of the
Shares hereunder unless the sale of all of the Shares is completed
simultaneously, and if on Completion such sale is not completed due to one
or more of the Shares not being available for purchase then the Buyer
shall be entitled, but not obliged, to rescind this agreement without
liability of any kind by written notice to the Seller.
2.6 The Shares shall be sold with the benefit of all rights which attached
thereto at the date of this agreement (provided always that, for the
avoidance of doubt, the Seller shall have (and hereby irrevocably waives)
no rights to any dividend or other distribution due or accrued in respect
of the Shares for the period from the Accounts Date down to Completion).
2.7 The aggregate consideration for the sale of the Shares (to be paid or
satisfied as hereinafter provided) shall be:
2.7.1 the sum of US$5,200,000 (five million and two hundred thousand US
dollars) (the "Cash Consideration");
2.7.2 the allotment to the Seller of the Vendor Loan Notes;
2.7.3 the allotment to the Seller of the Consideration Shares; and
2.7.4 the Deferred Consideration.
3. Completion
3.1 Forthwith upon it being confirmed by the Buyer that the conditions set out
at clauses 12.1.1 and 12.1.2 have been duly satisfied, the sale and
purchase of the Shares shall be completed at the offices of the Buyer's
Solicitors.
3.2 The Seller shall procure that on or before Completion all amounts (if any)
owing to each group company at Completion:
3.2.1 by Messrs Xxxxxx and/or Xxxxxx; and
3.2.2 by the Seller and/or its associates,
shall be paid or repaid in full and shall produce to the Buyer a
certificate, signed by two directors of the Company, that such payments or
repayments have been effected or that no such amounts are owing (as
appropriate).
3.3 The Seller shall procure that on or before Completion all (if any) amounts
owing to the Seller or its associates by any group company at Completion
shall be paid or repaid to the Seller and/or its associates in full and
shall ensure that full details of the terms and amount of any such
indebtedness are set out in the Disclosure Letter.
3.4 At Completion:
3.4.1 The Seller shall deliver to (or make available to the satisfaction
of) the Buyer:
(a) definitive certificates for the Shares together with transfers
thereof duly executed by the registered holders thereof in
favour of the Buyer (or as it may direct);
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(b) such consents or documents (if any) as may reasonably be
required to give evidence of the title of the transferor to
the Shares and his or its capacity to sell or transfer such
Shares provided that any such requirement shall have been
notified to the Seller in writing not later than 3 days prior
to Completion;
(c) definitive certificates for the whole of the issued share
capital of each group company (other than the Company)
together with transfers duly executed by the registered
holders thereof in favour of the Buyer (or as it may direct)
of any shares in any group company which are not registered in
the name of another group company;
(d) written resignations of such directors of each group company
as the Buyer may request from their respective offices and
from any other offices or employments in or with each group
company;
(e) the written resignation (in duplicate) of the auditors of each
group company (to take effect from Completion) together with a
statement complying with section 394(1) Companies Xxx 0000 and
an acknowledgement that they have no claims against the
relevant group company, whether in respect of fees or
otherwise;
(f) releases in agreed form executed as a deed by the directors
referred to in sub-clause (d) above of each group company,
releasing each group company from all claims whether by way of
compensation, remuneration, redundancy payments, pension
rights or otherwise, except only for accrued remuneration and
reimbursable business expenses (if any) up to Completion;
(g) the Tax Deed;
(h) the seal, certificate of incorporation and statutory books,
duly written up to date, of each group company;
(i) statements from each of the banks at which each group company
maintains accounts of the amounts standing to the debit or
credit of such accounts at the close of business on the date
falling two business days prior to Completion;
(j) all cheque books and bank mandates of each group company and
all charge, credit or cash cards issued in the name of the
Company (if any);
(k) an irrevocable power of attorney in such form as the Buyer may
reasonably require executed by each registered holder of
Shares in favour of the Buyer appointing the Buyer to be his
lawful attorney for the purpose of receiving notices of and
attending and voting at all meetings of the members of the
Company in respect of the Shares to be transferred by such
holder hereunder from the date of Completion to the day on
which the Buyer or its nominee is entered in the register of
members of the Company as the holder of such Shares and an
irrevocable authority (in such form as the Buyer may
reasonably require) authorising:
(i) the Company to send any notices in respect of such
Shares to the Buyer during such period;
(ii) the Buyer to complete in such manner as it thinks fit
and to return proxy cards, consents to short notice and
any other documents required to be signed by the
registered holder of such Shares during such period;
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(l) the Call Option duly executed by the Seller;
(m) the Inter-Creditor Deed duly executed by the Seller.
3.4.2 the Seller shall procure that a meeting of the directors of each
group company is properly convened and held and that such meeting:
(a) duly appoints as additional directors such persons as the
Buyer shall nominate;
(b) duly appoints as auditor such person as the Buyer shall
nominate;
(c) in the case of the Company approves the registration of the
transfers of the Shares referred to in sub-clauses 3.4.1(a)
and (c) (subject to their being duly stamped); and
(d) conducts such other business as the Buyer may reasonably
require;
and that the chairman of each such meeting shall sign the minutes
thereof in agreed form.
3.4.3 Subject to the Seller having complied in all respects with its
obligations under this agreement, the Buyer shall deliver to the
Seller's Solicitors:
(a) the Cash Consideration by telegraphic transfer to the client
account of the Seller's Solicitors;
(b) definitive certificates for the Consideration Shares
(representing 10% of the issued equity share capital of the
Buyer immediately following Completion) to be issued to the
Seller in accordance with clause 2.7.3 hereof;
(c) a certificate for the Vendor Loan Notes to be issued to the
Seller in accordance with clause 2.7.2 hereof, together with a
certified copy of the Instrument duly executed and dated and
of a resolution of the board of directors of the Buyer
authorising the execution of the Instrument and the issue of
the Vendor Loan Notes;
(d) a counterpart of the Tax Deed duly executed by the Buyer; and
(e) the Call Option duly executed by the parties thereto (other
than the Seller).
3.5 Payment, and delivery of the above-mentioned certificates for the
Consideration Shares and the Vendor Loan Notes, to the Seller's Solicitors
in accordance with clause 3.4.3 shall be a complete discharge to the Buyer
who shall not be concerned with the distribution of any monies so paid, or
any certificates so delivered, to the Seller.
3.6 If in any respect the provisions of sub-clause 3.4 are not complied with
on the date set for Completion as set out in clause 3.1 hereof then the
party not in default may (at its option):
3.6.1 defer Completion to a date not more than 28 days after such date and
so that the provisions of clause 3.4 shall apply to Completion as so
deferred; or
3.6.2 proceed to Completion as far as practicable (but without prejudice
to its rights under this Agreement).
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4. Warranties
4.1 The Seller hereby represents and warrants to the Buyer, subject to the
provisions of this clause 4, in the terms of the Warranties and
acknowledges that the Buyer is entering into this agreement in reliance
upon such Warranties.
4.2 Where any Warranty or other statement contained in this agreement is
qualified by reference to the expression "so far as the Seller is aware"
or by an expression of similar import, such reference shall be deemed to
refer (only) to the actual awareness or knowledge of the Seller and its
officers, including (without limitation) Messrs Xxxx Xxxxx Xxxxxx, Xxxxxx
Xxxxxx and Xxxxxxx Xxxx and, for the avoidance of doubt, in relation to
such Warranties, the Seller shall not be required to make any enquiry of
the Management Team or (save as aforesaid) any other person or body.
4.3 The Warranties, and those other obligations of the Seller under this
agreement which when relevant to be performed shall survive Completion.
4.4 Insofar as any information supplied directly or indirectly by any group
company or its agents or advisers prior to Completion to the Seller or its
agents or advisers in connection with the Warranties and any disclosures
thereto shall or could be deemed to be a representation made by the
relevant group company to the Seller, the Seller hereby waives any and all
claims against the relevant group company in respect thereof.
4.5 The Seller undertakes that any disclosures or qualifications to the
Warranties are so expressed as to ensure that such disclosures are fair
and that insofar as the disclosures are matters of fact they are (save as
disclosed in the Disclosure Letter) true and accurate in all material
respects and not misleading in any material respect and insofar as they
are matters of opinion they are reasonably and honestly held.
4.6 Each Warranty shall be construed independently of any other to the intent
that the meaning and effectiveness of any one Warranty shall not be
restricted by reference to any other Warranty.
4.7 Where the same circumstances could give rise to a claim both for breach of
Warranty and under the Tax Deed, then:
4.7.1 the Buyer shall be entitled to claim in respect of either or both;
but
4.7.2 in calculating sums payable in respect of any breach of Warranty
account shall be taken of sums paid by the Seller under the Tax Deed
and vice versa.
4.8 Except in the case of fraud or wilful non-disclosure:
4.8.1 all liability of the Seller in relation to any claim for breach of
the Warranties or under the Tax Deed shall cease on the Expiry Date
save as regards any claim of which written notice specifying in
reasonable detail the breach or matter to which the claim relates
and the estimated amount of such claim (in both cases, by reference
to the knowledge of the Buyer at the relevant date) has been given
to the Seller by or on behalf of the Buyer prior to the Expiry Date
(the "Expiry Date" for this purpose being:
(a) in the case of any claim under the Warranties the subject
matter of which relates to Taxation or the Tax Deed, the
seventh anniversary of the date of this agreement; and
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(b) in the case of any other claim, the second anniversary of the
date of this agreement);
4.8.2 subject to sub-clause 4.16 below, any claim in respect of which
notice shall have been given in accordance with sub-clause 4.8.1
above shall be deemed to have been irrevocably withdrawn and lapsed
(not having been previously satisfied, settled or withdrawn) if
proceedings in respect of such claim have not been issued and served
on the Seller not later than nine calendar months after the date of
such notice;
4.8.3
(a) no claim shall be made in respect of any breach of the
Warranties or under the Tax Deed unless the amount thereof
exceeds(pounds)2,500;
(b) without prejudice to the provisions of sub-clause 4.8.3(a)
above, the Seller shall have no liability under any claim or
claims in respect of any breach or breaches of the Warranties
unless the total amount of such liability
exceeds(pounds)50,000 but once such aggregate liability shall
have reached that amount no minimum shall apply either to such
claims or to any subsequent claims;
4.8.4 the aggregate liability of the Seller in respect of any claims for
damages for breach of the Warranties and in respect of any claims
under the Tax Deed shall be limited to:
(a) US$5,200,000 (five million and two hundred thousand US
dollars), together with any further sum paid (or deemed paid
by way of set-off in accordance with clause 5 below) by way of
Deferred Consideration or repayment of the Vendor Loan Note;
(b) all legal and other costs of recovery incurred by or on behalf
of the Buyer in connection with any such claim which the
Seller may agree or be ordered to pay to the Buyer; and
(c) any interest or penalty, or any amount in respect of any
interest or penalty, which the Seller may agree or be ordered
to pay to the Buyer.
4.9 The following matters shall be treated as disclosed to the Buyer in
relation to the Warranties:
4.9.1 the information contained in the Disclosure Letter, but only insofar
as such information is fairly disclosed in all the circumstances;
4.9.2 the contents of this agreement;
4.9.3 the information contained in the Accounts; and
4.9.4 the information relating to the Company contained in the microfiche
of the Company's file delivered by Companies Registration Office to
the Buyer's Solicitors on 29th May 1997.
4.10 The Seller shall have no liability in respect of a claim for breach of the
Warranties to the extent that such claim, or the subject matter thereof:
4.10.1 occurs or arises as a result of or is otherwise attributable to an
act or omission after Completion, otherwise than in the ordinary
course of business, by the Buyer or any group company; or
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4.10.2 occurs or arises as a result of any legislation not in force at the
date hereof or wholly as a result of any change in legislation
(having retroactive effect) made hereafter; or
4.10.3 occurs or arises as a result of the Buyer causing the Company to
cease to trade or to be placed into liquidation so as to cause the
maximum amount of the Company's income (as defined in schedule 19
Taxes Act) for any of the financial periods of the Company ending
on or before the Accounts Date to be increased beyond the amount
which would have been applicable if either such event had not
occurred; or
4.10.4 save in the case of the Warranties set out at paragraphs 1.3, 2.1
to 2.4 (inclusive), 3.1 to 3.3 (inclusive), 7.4 and 17.1 to 17.3
(inclusive) of schedule 3 as regards which this sub-clause 4.10.4
shall not apply, is within the actual knowledge of any member of
the Management Team, the Buyer or LDCL as at Completion.
4.11 Without prejudice to the provisions of clauses 4.9 and 4.10.4, it shall
not be a defence to any claim against the Seller under the Warranties that
the Buyer ought to have known or had constructive knowledge (rather than
actual knowledge) of all or some of the circumstances giving rise to such
claim.
4.12 The Seller shall not (in the event of any claim made against it in
connection with the sale of the Shares to the Buyer) make any claim
against the Company or any group company or against any director or
employee of the Company or any group company (including, without
limitation, the Management Team) on whom they have relied before agreeing
to any term of this agreement or the Tax Deed or authorising any statement
in the Disclosure Letter.
4.13 Where the Buyer or a group company is or is likely to be entitled to
recover from some other person any sum in respect of any matter giving
rise to a claim for breach of the Warranties then the Buyer shall procure
that reasonable steps are taken to enforce such recovery and in the event
that any sum is so recovered then either the amount payable by the Seller
in respect of that claim shall be reduced by an amount equal to the sum so
recovered (less the reasonable costs and expenses of recovering the same
and any taxation payable by the Buyer or a group company as a result of
the receipt of the same) or (if an amount shall already have been paid by
the Seller or set off pursuant to clause 5 below in respect of that claim)
there shall be repaid to the Seller an amount equal to the amount so
recovered (less the reasonable costs and expenses of recovery of the same
and any taxation payable by the Buyer or a group company as a result of
receipt of the same) or (if less) the amount of such payment by the Seller
as aforesaid.
4.14 The Seller shall have no liability (or such liability shall be reduced) in
respect of any claim for breach of any of the Warranties:
4.14.1 if and to the extent that provision or reserve for or in respect of
the liability or circumstances giving rise to such claim has been
made in the Accounts;
4.14.2 if and to the extent such claim would not have arisen but for a
change of accounting policy or practice of any group company after
Completion;
4.14.3 if and to the extent that such claim is attributable to any matter
or thing done or omitted to be done on or prior to Completion by
the Seller or any group company at the written request or with the
prior written approval of the Buyer.
4.15
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4.15.1 The amount of any claim for breach of the Warranties shall take
into account the amount of any relief from Taxation arising by
virtue of the loss or damage in respect of which the claim was
made;
4.15.2 Nothing in this clause 4 shall derogate from the Buyer's obligation
to mitigate any loss which it suffers in consequence of a breach of
the Warranties.
4.16 If in respect of the subject matter of any claim under the Warranties or
under the Tax Deed the liability of the Buyer or any group company is
contingent only then the Seller shall not be under any obligation to make
any payment to the Buyer or such group company until such time as the
contingent liability ceases to be contingent and becomes actual provided
that the provisions of clause 4.8.2 shall not apply to such claim whilst
such liability remains contingent.
4.17 No claim shall lie in respect of the Warranties if and to the extent that
such breach of the Warranties has arisen in respect of any act stipulated
to be carried out by the Seller pursuant to the terms of this agreement.
4.18 Any amount payable by the Seller to the Buyer in satisfaction of any claim
made under the Warranties or under the Tax Deed shall be treated as a
reduction, by that amount, of the consideration payable hereunder.
4.19 The Buyer shall, as soon as practicable upon it or any group company
becoming aware of any matter or event ("the Matter") giving rise a claim
under the Warranties, give notice in writing to the Seller of the Matter
and the Buyer shall consult with the Seller with respect to the Matter and
the action to be taken in respect thereof and in such respect shall
provide to the Seller such information as the Seller shall reasonably
require in relation thereto. In addition, as regards any Matter, the Buyer
shall notify the Seller of any proposed compromise or settlement in
relation thereto.
5. Set-off rights
5.1 The Buyer shall be entitled (at its discretion) to set-off and deduct from
the Deferred Consideration and/or any amount payable (by way of interest
or principal) under the Vendor Loan Note the amount of any Settled
Liability in respect of a Relevant Claim or Relevant Claims provided that
the Buyer shall have first given the Seller not less than 10 days notice
in writing of its intention to exercise such entitlement and the Seller
has not paid such Settled Liability on the expiry of such 10 day period.
5.2 In addition and without prejudice to the foregoing, if and to the extent
that any amount of Settled Liability is not satisfied by way of set-off
and deduction as aforesaid pursuant to clause 5.1, the Buyer shall be
entitled (at its discretion), subject to due compliance with the Companies
Xxx 0000, to purchase from the Seller such number of Consideration Shares
held at such time by the Seller which shall have an aggregate market value
of up to the amount of the Settled Liability not satisfied pursuant to the
operation of clause 5.1, for an aggregate price equal to the market value
of such Consideration Shares, provided always that such aggregate purchase
price shall be deemed satisfied by way of set-off and deduction of an
equivalent amount against the amount of the Settled Liability (a "Buy
Back"). If the Buyer proposes to make a Buy Back as provided for by this
clause 5.2, the Buyer shall serve notice (a "Buy Back Notice") on the
Seller informing the Seller of its intention to effect a Buy Back
whereupon the Buyer and the Seller shall agree the market value of the
Consideration Shares or, in default of agreement within 14 days of receipt
of the Buy Back Notice, the market value of the Consideration Shares shall
be referred for determination to an independent firm of chartered
accountants to be appointed by agreement between the Buyer and the Seller
18
or in default of agreement by the President for the time being of the
Institute of Chartered Accountants in England and Wales.
Within 14 days of the market value of the Consideration Shares being
agreed or determined (as aforesaid), the Seller shall be obliged (and
hereby agrees) to deliver to the Buyer definitive share certificates in
respect of the relevant Consideration Shares together with transfers duly
executed by the registered holders thereof in favour of the Buyer (or as
it shall direct).
For the purposes of this clause 5.2 the market value of the Consideration
Shares shall be calculated on the basis of the value of the Company as a
going concern on the date of the Buy Back Notice without regard to whether
or not the Consideration Shares constitute a minority or non-controlling
interest.
5.3 In the event that on the date upon which any of the Deferred Consideration
is to be paid to the Seller or the principal of the Vendor Loan Notes is
to be repaid a Relevant Claim or Relevant Claims have been made but in
respect of which there is no Settled Liability, then the provisions of
schedule 5 hereto shall apply.
6. Release of Guarantees and Indemnities
The Seller shall indemnify and hold harmless each group company and the
Buyer from and against all and any liabilities which the relevant group
company or the Buyer may at any time incur in relation to any guarantee,
indemnity, undertaking or other obligation given or provided by any group
company, prior to Completion, in respect of any obligation or liability of
the Seller or any associate of the Seller.
7. Restrictive covenants
7.1 As a separate and independent stipulation and in consideration of the
purchase by the Buyer of the Shares hereunder, the Seller hereby covenants
with the Buyer that for a period of five years after Completion it will
not and will procure that any body corporate of which it has for the time
being control (within the meaning of section 840 Taxes Act) and/or any
partnership and/or business in which it may be engaged and any associate
will not either on his or its own account or in conjunction with or on
behalf of any person, firm or company:
7.1.1 carry on, engage in or be concerned or interested directly or
indirectly in any business or activity which competes directly or
indirectly with the business and activities in which any group
company is engaged at the date hereof, provided always that nothing
in this sub-clause shall prevent the Seller or any associate of the
Seller from:
(a) holding or being beneficially interested in any securities of
a company which are listed or dealt in on a regulated market
which expression shall have the meaning ascribed to it by the
Insider Dealing (Securities and Regulated Markets) Order 1994
(as amended), if the Seller neither holds nor is beneficially
interested in more than five per cent in value of all the
securities of that company; or
(b) buying, and selling or replacing cash drawers as part of an
integral point of sale system in the course of its business
7.1.2 in connection with any business or activity which competes with that
of any group company employ or offer employment to, either directly
or indirectly, any director or senior employee of any group
19
company as at the date of this agreement, whether or not the same
would involve any breach of contract by such director or senior
employee; or
7.1.3 solicit or entice, or endeavour to solicit or entice, away from any
group company or (in connection with any business or activity which
competes with that of any group company) deal with any person who is
now or has, during the two years preceding the date hereof, been a
client, customer, supplier or otherwise in the habit of dealing with
the relevant group company provided that the provisions of this
sub-clause shall not apply to prevent the Seller or any of its
associates in the ordinary course of business soliciting custom for
the sale of integrated point of sale systems which include cash
drawers.
7.2 The Seller hereby covenants with the Buyer that it will not at any time in
relation to any business which competes with the business carried on by
any group company at the date hereof, directly or indirectly use or allow
to be used (other than by the relevant group company) any trade or
corporate name used by the relevant group company at the date hereof or
any name similar thereto or which is intended or likely to be confused
therewith.
7.3 Each of the restrictive covenants and provisions set out above shall be
construed as a separate and severable undertaking.
7.4 The Seller acknowledges that it considers the said restrictive covenants
and provisions to be necessary to protect the goodwill of the business
carried on by each group company and a factor on which the consideration
payable by the Buyer is based, but if any of such covenants or provisions
are held to be void or invalid but would not have been so held if part of
the wording were deleted or its extent reduced or modified, or if the
period or area or nature of any such restriction were reduced, then such
restriction or provision shall apply with such modification as may be
necessary to make the same valid and enforceable.
7.5 If there is any provision of this agreement, or of any agreement or
arrangement of which this agreement forms part, which causes or would
cause this agreement or that agreement or arrangement to be subject to
registration under the Restrictive Trade Practices Xxx 0000, then that
provision shall not take effect until the day after particulars of this
agreement or of that agreement or arrangement (as the case may be) have
been furnished to the Director General of Fair Trading pursuant to section
24 of that Act. The parties agree that particulars of this agreement or of
any agreement or arrangement of which this agreement forms part (as the
case may be) shall be duly furnished to the Director General of Fair
Trading pursuant to section 24 of that Act and each party agrees to do all
acts and things which may reasonably be requested of it by the other
including, if necessary, executing documents, to ensure that a valid and
effective furnishing is made and that all restrictions in this agreement,
and in any agreement or arrangement of which this agreement forms part,
are fully enforceable at law.
8. Information
8.1 The Seller shall, after Completion, give to the Buyer such information
relating to each group company and its affairs under its control or in its
possession as the Buyer may reasonably require.
8.2 Neither the Seller nor the Buyer shall, at any time, divulge to any person
(except in confidence to their professional advisers) any information
relating to this agreement or the sale of the Shares without the prior
written consent of the other. This provision shall not apply to the
disclosure of any information pursuant to legislation or the requirements
of any regulated market (as defined above).
20
8.3 The Seller shall not at any time make use of or disclose any confidential
information belonging or relating to any group company or the Buyer.
9. General
9.1 The Seller shall procure the passing of such resolutions, execute such
documents and waivers and generally do everything further reasonably
required by the Buyer effectively to comply with all its obligations under
this agreement other than those contained in clause 2.2.
9.1.1 This agreement, together with the documents referred to herein,
comprises the entire agreement between the parties in relation to
the matters referred to herein and supersedes any previous agreement
or arrangement between the parties hereto or any of them in relation
to the sale of the Shares (or any of them) or any interest in the
Company and the parties acknowledge that no claim shall arise in
respect of any agreement or arrangement so superseded.
9.1.2 Save for any fraudulent or wilful misrepresentation made by one
party to the other, each of the Buyer and the Seller acknowledges
that in entering into this agreement, it has not relied on any
representation or warranties except for those contained in this
agreement or in any document referred to herein.
9.2 No delay or omission on the part of the Buyer in exercising any right,
power or privilege hereunder shall operate to impair such right, power or
privilege or be construed as a waiver thereof and no single or partial
exercise or non-exercise of any right, power or privilege shall in any
circumstances preclude any further or other exercise thereof or the
exercise of any other right, power or privilege.
9.3 The Seller by its execution of this agreement hereby waives any
pre-emption rights in respect of the Shares conferred on it under the
articles of association of the Company or otherwise.
9.4 The provisions of this agreement, insofar as the same shall not have been
performed at Completion, shall remain in full force and effect
notwithstanding Completion.
9.5 Save as otherwise specifically provided herein, any variation of this
agreement shall be binding only if it is recorded in a document signed by
or on behalf of all the parties hereto.
9.6 Any time, date or period mentioned in this agreement may be extended by
mutual agreement between the parties hereto, but as regards any time, date
or period originally fixed or any time, date or period so extended as
aforesaid, time shall be of the essence.
9.7 Each party to this agreement shall pay its own costs, charges and expenses
incurred in the preparation, completion and implementation of this
agreement and the documents referred to herein.
9.8 This agreement may be executed in any number of documents or counterparts
each in the like form, all of which taken together shall constitute one
and the same document, and any party may execute this agreement by signing
any one or more of such documents or counterparts.
9.9 This agreement shall be construed according to and governed by the law of
England and each of the parties submits to the non-exclusive jurisdiction
of the English courts.
9.10 Neither party shall be entitled to assign the benefit of the whole or any
part of this agreement without the prior written consent of the other save
that the Buyer shall be entitled to assign the benefit of the
21
Warranties and/or the Tax Deed to any subsidiary or holding company (from
time to time) of the Buyer or any subsidiary of any such holding company.
10. Notices
10.1 The respective addresses (and facsimile numbers) for service of notices
under this agreement shall be those set out below, provided always that
any party may, by written notice to the other, substitute another address
in England or facsimile number for the service of notices hereunder:
Address Buyer Seller
------- ----- ------
Postal: Ranalah Estate 00 Xxxxxx Xxxx
Xxx Xxxx Xxxxxxxx
Xxxxxxxx CT 06880
East Sussex USA
XX0 0XX
Facsimile number: 01273 512010 001 203 226 8806
10.2 Notices may be given by being delivered to the notice address of the
addressee (in which case the notice shall be deemed to be served at the
time of delivery) or by being sent by facsimile (in which case the notice
shall be deemed to be served upon transmission) or by being sent by first
class post (in which case the notice shall be deemed to be served 24 hours
after time of posting).
10.3 In proving service of any notice, it shall be sufficient to prove that
delivery was made or that the envelope containing the notice was properly
addressed and posted or that the facsimile was transmitted to the correct
number, as the case may be.
11. Agent for Service
11.1 The Seller hereby agrees that any Service Document (as defined in
sub-clause 11.7 below) may be sufficiently and effectively served on it by
service on its agent, the Seller's Solicitors whose address at the date
hereof is Xxxxxxxx Xxxxx, 000 Xxxxx Xxxxxx, Xxxxxx XX0X 0XX. Such Service
Document shall be marked for the attention of Xxxxxxx Xxxxxxxxx. Any
change of address of such agent shall be notified forthwith by the Seller
to the Buyer. Until such notification is received by the Buyer it shall
continue to be entitled to serve any Service Document on the agent at the
agent's former address.
11.2 Any Service Document served pursuant to this clause shall be deemed to
have been duly served:
11.2.1 if left at the agent's last notified address, when it is left; or
11.2.2 if sent by first class post, two business days after the date of
posting.
11.3 The above appointment of the Seller's Solicitors shall be irrevocable save
as hereinafter set out. The Seller may and, if such agent shall cease for
any reason or shall refuse to act as such, shall appoint a replacement
agent for the service of Service Documents by notice in writing to the
Buyer in accordance with clause 10 above. The notice shall contain the
address of the replacement agent (provided always that such replacement
agent has an address for service in England) and the name or position of
the person (if any) for whose attention the Service Document shall be
marked. Such appointment shall only be effective on the receipt by the
Seller of the consent in writing of the Buyer to the particular
replacement agent
22
proposed (such consent not to be unreasonably withheld or delayed).
Thereafter, this clause (including this sub-clause) shall be construed as
if the name and details of the replacement agent were substituted in
sub-clause 11.1 above for the name and details of the replaced agent
provided always that any Service Document served on the replaced agent
before the effective appointment of the replacement agent shall be validly
and properly served.
11.4 A copy of any Service Document served pursuant to this clause shall be
sent by post to the Seller at its address for the time being pursuant to
clause 10 above but no failure or delay in so doing shall prejudice the
service of such Service Document pursuant to this clause.
11.5 The service of Service Documents pursuant to this clause shall be without
prejudice to any other methods of service permitted by law.
11.6 "Service Document" means a writ, summons, order, judgment or other
document related to or in connection with any proceeding, cause, matter or
action arising out of or connected in any way with this agreement.
12. Conditions Precedent
12.1 The sale and purchase of the Shares hereunder shall be conditional upon
satisfaction of the following;
12.1.1 due compliance by the Buyer, the Company and its subsidiaries (as
appropriate) with the provisions of sections 155 to 158 Companies
Xxx 0000 insofar as any arrangements hereby contemplated
(including, without limitation, the facilities to be provided by
Barclays Bank PLC and TSB Plc) will or may amount to the provision
of financial assistance for the purposes of section 151 of such
Act; and
12.1.2 that the Buyer has, conditional only on completion of the proposed
investment by Lloyds Development Capital Limited and others and
completion of this agreement, available from Barclays Bank PLC and
TSB Plc overdraft, term loan, bridging loan and receivables
financing facilities of not less than (pounds)100,000,
(pounds)770,000, (pounds)200,000 and (pounds)900,000
(respectively), in each case on terms acceptable to the Buyer.
12/2 The Buyer shall use all reasonable endeavours to procure that the
conditions set out in clause 12.1 above are fulfilled on or before
midnight on Monday, 2nd June 1997 (or such later time and date as may be
agreed in writing between the Buyer and the Seller).
12.3 If the conditions set out in clause 12.1 above are not fulfilled on or
before the time and date specified in clause 12.2, this agreement shall
cease to have any force or effect, and neither party shall have any
liability or obligation to the other, but without prejudice to any
liability on the part of any party for any antecedent breach of the
provisions of this agreement.
13. Receivables
13.1 The Seller hereby undertakes to the Buyer to pay to the Buyer (or as it
may otherwise direct) within 14 days of written demand made upon the
Seller by the Buyer the sum of US$x in respect of the Receivables owed to
the Company by Tellermate Inc ("Tellermate")
where US$x = US$105,000 less any amount received by the Company from
Tellermate on or prior to the Payment Date in respect of payment of such
receivables
23
Provided that:
(a) the Buyer shall not be entitled to make written demand upon the
Seller as aforesaid prior to 31st August 1997;
(b) the obligations of the Seller hereunder shall lapse if no written
demand is made upon the Seller prior to 30th September 1997.
For the above purposes the expression "the Payment Date" shall mean the
date of receipt of payment by the Buyer (or as it may otherwise direct)
from the Seller under the aforesaid undertaking.
13.2 The Buyer hereby undertakes to the Seller to procure that the Company will
use its best endeavours promptly to take repossession of those of the
Company's products (being cash drawers produced for Brunos) delivered to
and currently at Tellermate's contracted warehouse in Atlanta, being those
to which part of the Receivables relate.
13.3 (a) In the event of any written demand being made upon the Seller
pursuant to sub-clause 13.1 above, the Buyer shall procure that the
Company shall assign to the Seller for the sum of $1 such part of
the Receivables as is equal to the amount paid by the Seller to the
Company pursuant to the undertaking contained in sub-clause 13.1
above.
(b) The Seller hereby agrees with the Buyer that it shall not take any
steps to recover that part of the Receivables assigned to it without
prior consultation with the Buyer.
13.4 In the event that following payment by the Seller pursuant to its
undertaking contained in sub-clause 13.1 above, the Company receives any
amount from Tellermate in payment of the Receivables the Company shall
hold such amount, not exceeding the aggregate of the amount of the said
payment by the Seller less any monies received by the Seller direct from
Tellermate, on trust for the Seller and shall forthwith transfer such sum
to the Seller.
13.5 If the Seller receives from Tellermate a sum in excess of the amount paid
by it to the Company hereunder, the Seller shall hold such excess on trust
for the Buyer and shall forthwith transfer such sum to the Buyer (or as it
may otherwise direct).
For the purposes of this clause 13 the Receivables shall mean the sum of
US$197,300 invoiced by the Company to Tellermate on 27th March 1997
(invoice number 12266).
24
SCHEDULE 1A
PART 1 - THE COMPANY
1. Name : Cash Bases G.B. Limited
2. Registered number : 1562459
3. Registered office : Xxxxxxx Xxxxxx, Xxx Xxxx,
Xxxxxxxx, Xxxx Xxxxxx XX0 0XX
4. Date of incorporation : 19th May 1981
5. Authorised share capital : (pounds)10,000 divided into 10,000
Ordinary Shares of (pounds)1 each
6. Issued share capital : Tridex Corporation - 10,000
Ordinary Shares of (pounds)1 each
7. Loan capital : None
8. Directors : Xxxx Xxxxxx Xxxxxxx
Xxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx Xxxxxxxxxx
Xxxxx Xxxx Xxxxxxxx
Xxxxxx Xxxxxx
9. Secretary : Xxxxxxx Xxxxxxx Xxxxxx
10. Accounting reference date : 31st December
11. Auditors : Price Waterhouse
12. Tax district and reference : Lewes 403/3597
13. VAT number : GB 351 0339 90
14. Mortgages and charges : 15/3/85 Mortgage, Barclays Bank plc
8/7/87 Mortgage, Barclays Bank plc
26/5/88 Mortgage, Barclays Bank plc
21/11/88 Charge, Barclays Bank plc
14/12/90 Charge, Barclays Bank plc
28/10/91 Mortgage, Barclays Bank plc
3/2/93 Charge, Barclays Bank plc
8/2/96 Charge, Barclays Bank plc
15. Subsidiaries : as per Part 2 of this schedule 1A
25
SCHEDULE 1A
PART 2 - SUBSIDIARIES
1. Name : Cash Bases Limited
2. Registered number : 3345980
3. Registered office : Xxxxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxx,
Xxxx Xxxxxx XX0 0XX
4. Date of incorporation : 7th April 1997
5. Country of incorporation : England
6. Authorised share capital : (pounds)100 divided into 100
Ordinary Shares of (pounds)1 each
7. Issued share capital : (pounds)2 divided into 2 Ordinary
Shares of (pounds)1 each held by
Cash Bases GB Limited
8. Loan capital : None
9. Directors : X X Xxxxxxx, M Xxxxxxxxxx, X X
Xxxxxxxx
10. Secretary : M D Xxxxxx
11. Accounting reference date : 31st December
12. Auditors : Price Waterhouse
13. Tax district and reference : N/A
14. VAT number : N/A
15. Mortgages and charges : None
16. Subsidiaries : None
17. Nature of business : Xxx-xxxxxxx
00
XXXXXXXX 0X
XXXX 0 - XXXXXXXXXXXX
0. Name : European Cash Drawers Limited
2. Registered number : 3192792
3. Registered office : Xxxx X Xxxxxxx Xxxxxx Xxx Xxxx
Xxxxxxxx Xxxx Xxxxxx XX00 0XX
4. Date of incorporation : 30th April 1996
5. Country of incorporation : England
6. Authorised share capital : (pounds)1,000 divided into 1,000
Ordinary Shares of (pounds)1 each
7. Issued share capital : 1,000 ordinary shares of (pounds)1
each held by Cash Bases G.B. Limited
8. Loan capital : None
9. Directors : X X Xxxxxxxxxx
XX Xxxxxxx
X X Xxxxxxxx
10. Secretary : M D Xxxxxx
11. Accounting reference date : 31st December
12. Auditors : Price Waterhouse
13. Tax district and reference : Lewes
14. VAT number : GB 675 927482
15. Mortgages and charges : None
16. Subsidiaries : None
17. Nature of business : Xxx-xxxxxxx
00
XXXXXXXX 0X
XXXX 0 - XXXXXXXXXXXX
0. Name : Cash Bases (Iberica) S.A.
2. Registered number : A-81 180234
3. Registered office : Xxxxxx 000, 00000 Xxxxxx, Xxxxx
4. Date of incorporation : 7th April 1995
5. Country of incorporation : Spain
6. Authorised share capital : 10,000,000 Pesetas divided into
10,000 Ordinary Shares of
1,000 Pesetas each
7. Issued share capital : 10,000,000 Pesetas held:
80% Cash Bases GB Limited
20% Xxxx Xxxxxxxx
8. Loan capital : None
9. Directors : XX Xxxxxxx
XX Xxxxxxxxxx
J Casaubon
10. Secretary : Xxxxxxx Sole Xxx
11. Accounting reference date : 31st December
12. Auditors : N/A
13. Tax district and reference : Madrid
14. VAT number : A 81180234
15. Mortgages and charges : None
16. Subsidiaries : None
17. Nature of business : Sales office, Cash drawers
28
SCHEDULE 1A
PART 2 - SUBSIDIARIES
1. Name : Cash Bases (France) Sarl
2. Registered number : R.C.S. Versailles B411 027 501
(97B00563)
3. Registered office : 0 Xxx xx Xxxxxx
00000 Xx Xxxxxxx en Laye
4. Date of incorporation : 6th March 1997
5. Country of incorporation : France
6. Authorised share capital : FF 100,000
7. Issued share capital : FF100,000 divided into 1,000 shares
and held by Cash Bases GB
Limited - 990 shares, European Cash
Drawers Limited - 10 shares
8. Loan capital : None
9. Directors : XX Xxxxxxx
XX Xxxxxxxxxx
10. Secretary : None
11. Accounting reference date : 31st December
12. Auditors : Xxxxxxx Xxxxxx Associates, France
13. Tax district and reference : CDI St Germain en Laye
14. VAT number : Pending
15. Mortgages and charges : None
16. Subsidiaries : None
17. Nature of business : Distribution of Cash Drawers
29
SCHEDULE 1A
PART 2 - SUBSIDIARIES
1. Name : Cash Bases (South Africa) (Pty)
Ltd
2. Registered number : 95/13752/07
3. Registered office : c/x Xxxxxxxxxx & Partners, 6th
Floor, Twin Towers (East),
Sandton City, 5th Street, Sandton
2196
4. Date of incorporation : 19th December 1995
5. Country of incorporation : South Africa
6. Authorised share capital : R 4000 divided into 4,000 shares
of R1 each
7. Issued share capital : R 100 held by Cash Bases Ltd GB
Limited - 100
8. Loan capital : None
9. Directors : XX Xxxxxxx
XX Xxxxxxxxxx
10. Secretary : None
11. Accounting reference date : 31st December
12. Auditors : Xxxxxxxxxx & Partners
13. Tax district and reference :
14. VAT number : Pending
15. Mortgages and charges : None
16. Subsidiaries : None
17. Nature of business : Sales office, Cash Drawers
30
SCHEDULE 1A
PART 2 - SUBSIDIARIES
1. Name : Cash Bases (Deutschland) Gmbh
2. Registered number : HRB 27837
3. Registered office : Werfstr 26, D40549, Xxxxxxxxxx
0. Date of incorporation : 8th January 1992
5. Country of incorporation : Germany
6. Authorised share capital : DM 100,000 divided into 1 Ordinary
Share of DM 100,000
7. Issued share capital : DM 100,000 held by Cash Bases GB
Limited
8. Loan capital : None
9. Directors : XX Xxxxxxx
XX Xxxxxx
10. Secretary : None
11. Accounting reference date : 31st December
12. Auditors : Xx Xxxxxxxx, Xxxxxxxxxx
00. Tax district and reference : Xxxxxxxxxx
00. VAT number : DE 119 427 459
15. Mortgages and charges : None
16. Subsidiaries : None
17. Nature of business : Sales office, Cash Drawers
31
SCHEDULE 1A
PART 2 - SUBSIDIARIES
1. Name : Cash Bases Incorporated
2. Registered number : TBA
3. Registered office : Corporation Trust Centre
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx
Xxx Xxxxxx Xxxxxx
Xxxxxxxx 00000
XXX
4. Date of incorporation : 27th May 1997 (to be confirmed)
5. Country of incorporation : USA
6. Authorised share capital : $30 3000 shares at $0.01
7. Issued share capital : To be issued 100% to Cash Bases
G.B. Limited
8. Loan capital : None
9. Directors : X X Xxxxxxx
X X Xxxxxxxxxx
X X Xxxxxxxx
10. Secretary : N/A
11. Accounting reference date : Not yet set
12. Auditors : N/A
13. Tax district and reference :
14. VAT number :
15. Mortgages and charges :
16. Subsidiaries :
17. Nature of business :
32
Schedule 1B
DETAILS OF THE MANAGEMENT TEAM
------------------------------
Name Address
---- -------
Xxxx Xxxxxx Xxxxxxx 00 Xxxxxxx Xxxxxx, Xxxx
Xxxx Xxxxxx XX0 0XX
Xxxxxxx Xxxxxxx Xxxxxxxxxx 00 Xxxxx Xxxx, Xxxxxxx,
Xxxx Xxxxxx XX00 0XX
Xxxxx Xxxx Xxxxxxxx Xxxxxxxxx, Xxxxxxx Xxxx, Xxxxxxxxxxxxxx,
Xxxx Xxxxxx XX0 0XX
33
SCHEDULE 2
TAX DEED
DATED 1997
--------------------------------------------------
(1) TRIDEX CORPORATION
(2) CASH BASES GROUP LIMITED
--------------------------------------------------
TAX DEED
--------------------------------------------------
XXXXXXX XxXXXXX
Sceptre Court
00 Xxxxx Xxxx
Xxxxxx
XX0X 0XX
Tel: 0000-000 0000
Fax: 0000-000 0000
(DLB/373185)
34
THIS DEED is made the day of May 1997
BETWEEN:
(1) TRIDEX CORPORATION a company incorporated under the laws of the State of
Connecticut whose principal place of business is at 00 Xxxxxx Xxxx
Xxxxxxxx XX00000 XXX (the "Covenantor"); and
(2) CASH BASES GROUP LIMITED a company registered in England under number
3346539 whose registered office is at Xxxxxxx Xxxxxx Xxx Xxxx Xxxxxxxx
Xxxx Xxxxxx XX0 0XX (the "Buyer").
RECITAL
This deed is entered into pursuant to the provisions of an agreement of even
date herewith between (1) the Covenantor and (2) the Buyer (the "Agreement")
whereby the Buyer agreed, inter alia, to acquire the entire issued share capital
of Cash Bases (GB) Limited (the "Acquired Company").
NOW THIS DEED WITNESSES as follows:
1. Definitions and interpretation
1.1 Words and expressions defined in the Agreement shall (except where the
context otherwise requires) have the same meanings wherever used herein
and those provisions of the Agreement dealing with construction or
interpretation shall (except where otherwise provided) apply as if
expressly set out herein.
1.2 In this deed the following expressions shall have the following meanings:
"Business Day" means a day (other than a Saturday) when banks are open for
the transaction of normal banking business in London
"Claim" means any claim notice demand assessment letter or other document
issued or claim made or action taken by or on behalf of any Tax Authority
from which it appears that the Company is liable or is sought to be made
liable to make any payment or any increased or further payment or any
payment on account of Taxation or is or is sought to be denied or deprived
of any Relief
"Company" means the Acquired Company and/or each of the companies whose
names are set out in Appendix 1 Part 1
"Event" means any event act transaction (including completion of the
Agreement in accordance with its terms) or omission of whatever nature and
without limitation any receipt or accrual of any income or gains, and any
distribution, failure to distribute, acquisition, disposal, transfer,
payment, loan or advance
"Management Accounts" means the unaudited management accounts of the
Company for the period from and including 1st January 1997 to 27th April
1997;
"Relief" means any relief loss allowance exemption set-off deduction right
to repayment or credit or other relief of a similar nature granted by or
available in relation to Taxation pursuant to any legislation or otherwise
35
"Tax Authority" means any fiscal revenue statutory governmental federal
state provincial municipal authority body or official thereof including
the Inland Revenue and HM Customs & Excise whether of the United Kingdom
or elsewhere
"Taxation" means any taxation duty levy charge impost or contribution of
whatever nature (whether or not the same is primarily payable by the
Company and whether or not the Company has or may have any right of
reimbursement against any other person) imposed by any Tax Authority
whenever imposed and any interest surcharge penalty or fine in relation
thereto. Provided that Value Added Tax (or the equivalent in any other
jurisdiction) and interest and penalties in respect thereof shall not
constitute Taxation for the purposes of this Deed
1.3 References to an Event on or before Completion shall be deemed to include
any combination of two or more Events only the first of which shall have
taken place or be deemed to have taken place on or before Completion
provided that that Event or those Events occurring before Completion shall
have occurred outside the ordinary course of business of the Company and
that Event or those Events occurring after Completion shall have occurred
in the ordinary course of business of the Company
1.4 Any reference to profits includes income profits or gains (including
capital gains) of any description or from any source and reference to
profits earned accrued or received includes profits which are by law
deemed to have been or treated as earned accrued or received.
1.5 Any reference to a liability for Taxation shall include not only
liabilities of the Company to make payments of or in respect of Taxation
but also:
1.5.1 the loss reduction or set-off of any Relief where such Relief has
been taken into account in computing and so reducing any provision
or accrual for Taxation which appears in the Accounts (or which but
for such Relief would have appeared in the Accounts) except for the
setting off of the relevant Relief which it has been assumed has
been or will be made when preparing the Accounts;
1.5.2 the set-off or utilisation against profits or Taxation of any Relief
which is not available before Completion and arises in respect of an
Event occurring after Completion where but for the set-off or
utilisation of such Relief the Company would have had a liability
for Taxation in respect of which the Covenantor would have been
liable to make a payment under this deed;
and in such circumstances, where the Relief is a right to repayment of
Taxation, the amount of the repayment which would otherwise have been
obtained or, in all other cases, the amount of Taxation which would have
been saved by the Relief (such amount being the amount of Taxation which
would have been saved by the Relief lost, reduced or set-off applying the
relevant rates of Taxation in force in the earliest period in respect of
which Taxation becomes payable which would not have been payable if the
Relief had not been lost, reduced or set-off) shall be treated as the
amount of the liability for Taxation as appropriate.
2. Covenant Subject as hereinafter provided the Covenantor hereby covenants
with the Buyer to pay to the Buyer an amount equal to the amount of:
2.1.1 any liability of the Company for Taxation arising as a result of an
Event occurring on or before Completion or in respect of any profits
earned accrued or received on or before Completion; and
2.1.2 any depletion or reduction in the value of the assets of the Company
or any increase in its liabilities arising as a result of any
liability of the Company to repay other than to another Company in
whole
36
or in part any payment for group relief or payment for the surrender
of surplus advance corporation tax received on or before Completion;
and
2.1.3 any reasonable costs and expenses properly incurred or payable by
the Buyer or the Company in connection with any matter in respect of
which the Covenantor has a liability to make a payment under this
deed.
3. Limitations and exclusions
The covenant given by clause 2 of this deed does not apply to any
liability for Taxation:
3.1.1 to the extent that provision or reserve in respect thereof was made
in the Accounts or the Management Accounts;
3.1.2 to the extent that such liability for Taxation arises as a result
only of any such provision or reserve being insufficient by reason
of any increase in rates of Taxation made after the date hereof with
retrospective effect;
3.1.3 for which the Company is primarily liable as a result of an Event
which has occurred in the ordinary course of the Company's business
or in the ordinary course of acquiring or disposing of capital
assets in either case since the Accounts Date provided that for the
purposes of this clause none of the following shall be regarded as
an Event which has occurred in either the ordinary course of the
Company's business or in the ordinary course of acquiring or
disposing of capital assets:
(a) any Event giving rise to a liability for Taxation under part
VIII Taxes Management Act 1970 (charges on non-residents);
(b) any Event giving rise to a liability for Taxation under part
XVII Taxes Act 1988 (tax avoidance);
(c) any distribution as defined by part VI with section 418 Taxes
Xxx 0000; or
(d) any acquisition disposal supply or deemed acquisition disposal
or supply of any assets goods service or business facility of
any kind (including a loan of money or the letting hiring or
licensing of any tangible or intangible property) for a
consideration deemed for Taxation purposes to be different
from that (if any) actually received to the extent of that
difference;
(e) any Event as a result of which the Company becomes liable to
pay or bear Taxation chargeable directly or primarily against
or attributable directly or primarily to another person firm
or company (other than any other Company);
(f) any Event in respect of which Taxation arises as a result of a
failure to deduct, recover or account for Taxation except in
relation to any liability to deduct and account for PAYE;
(g) a disposal of capital assets in circumstances where the
Company does not receive and retain the net proceeds of any
such disposal unless and until the Buyer agrees that such
proceeds need not be retained;
37
3.1.4 to the extent that the liability arises or is increased as a result
of any case decided after Completion, any increase in rates of
Taxation or imposition of new Taxation legislation or any change in
applicable law, regulation or regulatory requirements or Revenue
practice made after Completion whether with or without retrospective
effect;
3.1.5 to the extent that the liability would not have arisen but for a
disclaimer of, or election to reduce, allowances made after
Completion by a Company where such allowances were available to and
claimed by or assumed in the Accounts to be claimed by the Company
in respect of any period ended on or before the Accounts Date;
3.1.6 to the extent that the liability arises in respect of stamp duty or
stamp duty reserve tax arising by virtue of the agreement to
transfer or the completion of the transfer of the Shares;
3.1.7 to the extent that the liability would not have arisen but for or
has been increased by a failure or omission by the Company to make
any claim, election, surrender or disclaimer or give any notice or
consent or do any other thing after Completion the making giving or
doing of which was taken into account or assumed in computing the
provision for Taxation (including the provision for deferred
taxation) in the Accounts;
3.1.8 to the extent that the liability is in respect of Taxation required
to be deducted from amounts paid to employees (which in the United
Kingdom shall be taken to include amounts required to be deducted
under the Pay as You Earn scheme in section 203 Taxes Act and the
Income Tax (Employments) Regulations 1993;
3.1.9 to the extent that the liability is in respect of social security
contributions whether payable by the employer or deductible from
amounts paid to employees (which in the United Kingdom shall include
both primary and secondary National Insurance Contributions) and
Class 1A National Insurance Contributions;
3.1.10 to the extent that the liability arises or is increased by a change
in the accounting policy of a Company after Completion;
3.1.11 to the extent that the liability would not have arisen but for a
voluntary act or omission carried out or effected by the Buyer or
any person connected with the Buyer ("connected" having the meaning
given to it in section 839 Taxes Act) or a Company at any time
after Completion, other than any such act or omission:
(a) carried out or effected pursuant to a legally binding
commitment created or agreed to by the Company or the
Covenantor on or before Completion; or
(b) carried out or effected in the ordinary course of trading;
3.1.12 to the extent that any fines, penalties or interest in respect of
any Taxation are increased as a result of the failure of the Buyer
to comply with its obligations under this deed or in so far as they
result from the unreasonable delay or any default of the Buyer or a
Company after Completion;
3.1.13 to the extent that a Relief arising before the Accounts Date
available to any Company but not shown as an asset, nor otherwise
taken into account in attributing a value to any asset in the
Accounts, nor taken into account in computing the provision for
Taxation in the Accounts is or can be set-off against any such
liability;
38
3.1.14 to the extent that the liability to Taxation has been assessed by
the Inland Revenue on and has been satisfied in full by the
Covenantor provided that the Covenantor provides evidence
reasonably satisfactory to the Buyer that such liability has been
so satisfied and has been or will be thereby fully discharged;
3.1.15 to the extent that the liability arises in respect of profits not
recognised or otherwise taken into account in the Accounts for any
period prior to Completion;
3.1.16 to the extent that the liability arises as a result of the disposal
by the Company at any time before 31st December 1996 of the capital
assets described in Part 2 of Appendix 1 to this deed in respect of
which a chargeable gain of(pounds)109,717 was realised;
3.1.17 to the extent that any liability to Taxation arises as a result of
Cash Bases GmbH and/or Cash Bases Iberica S.A. being treated under
the laws of any jurisdiction other than the United Kingdom as
resident or liable for Taxation in any jurisdiction other than the
United Kingdom.
4. Notification and conduct of Claims
4.1 If the Buyer or any member of the Management Team shall become aware of a
Claim the Buyer shall as soon as reasonably practicable thereafter (and in
any case at least five days prior to the expiry of any time limit imposed
by law for the making of an appeal against the Claim) give written notice
by facsimile or post of such Claim to the Covenantor but so that the
giving of such notice shall not be a condition precedent to the liability
of the Covenantor under this deed.
4.2 Subject to the Covenantor indemnifying the Buyer to its reasonable
satisfaction in respect of any Taxation additional Taxation losses fines
penalties interest charges costs and expenses the Buyer shall and shall
procure that the relevant Company shall (subject to clauses 4.3 and 4.4
below) take such action as the Covenantor may reasonably require to
dispute resist appeal compromise or defend such Claim to the intent that
the Covenantor shall have the right to have any such action conducted by
professional advisers nominated by it provided that:
4.2.1 the Covenantor has been advised by its solicitors or other
professional advisers after disclosure of all relevant information
and documents that it is reasonable to resist such Claim in the
manner proposed by the Covenantor;
4.2.2 the appointment of lawyers or other professional advisers in the
United Kingdom shall be subject to the approval of the Buyer which
shall not be unreasonably withheld or delayed;
4.2.3 the Buyer shall be kept fully informed of all matters pertaining
thereto and shall be entitled to see copies of all relevant and
material correspondence;
4.2.4 no settlement or compromise of the Claim which is the subject of the
dispute nor any agreement of any matter in the conduct of such
dispute which is likely to adversely affect the amount thereof or
the future liability of the Company in respect of Taxation or their
relationships with any Tax Authority shall be made by the Covenantor
without the prior written approval of the Buyer (which shall not be
unreasonably withheld or delayed);
4.3 The Buyer shall not be obliged to take any action pursuant to this clause
4 which involves contesting a Claim beyond the first appellate body
(excluding the authority or body demanding the Taxation in
39
question) in the jurisdiction concerned unless the Covenantor shall have
obtained an opinion of senior counsel in the jurisdiction concerned (which
in the UK shall be a barrister of at least five year's standing
specialising in matters of Taxation) stating that it is reasonable in all
the circumstances and taking into account the amount involved to continue
to contest the Claim.
4.4 If the Covenantor or any of the officers or employees of the Company
(excluding any member of the Management Team) shall have committed acts or
omissions which constitute fraud or wilful default clause 4.2 shall not
apply or shall cease to have effect.
4.5 The Buyer agrees that it shall and shall procure that the Company shall,
copy to the Covenantor any correspondence received by it in relation to
the Claim and give to the Covenantor and the Covenantor's professional
advisers reasonable access to premises and personnel and to any relevant
assets, documents and records within their power, possession or control
for the purposes of investigating the matter and enabling the Covenantor
to take such action as is referred to in this Clause 4 and shall allow the
Covenantor and its advisers at their own expense to take copies of any of
the documents or records, and photographs of any relevant assets.
5. Savings
5.1 If the auditors of the Company shall (at the request and sole expense of
the Covenantor) certify:
5.1.1 that any provision for Taxation in the Accounts is an overprovision;
5.1.2 that any Taxation liability in respect of which the Covenantor has
made a payment under this deed has given rise to a saving of
Taxation in a Company which would not otherwise have arisen; or
5.1.3 that a Company has received payment in respect of an amount
previously written off in the accounts of a Company or in respect of
Taxation to which it was entitled as at the Accounts Date where such
entitlement was not shown as an asset in the Accounts
(in each case, a "Saving") the Buyer shall make such repayment or set off
(as is appropriate) in accordance with the following provisions of this
clause.
5.2 If the Covenantor:
5.2.1 shall have made a payment to the Buyer under this deed then the
Buyer shall pay to the Covenantor an amount equal to the lesser of
the amount of the liability in respect of which a payment was made
hereunder and the Saving;
5.2.2 shall have made no payment to the Buyer under this deed or the
amount of the Saving exceeds the amount of any such payment (an
"Excess Saving") already made, the Buyer shall set such Saving, or
Excess Saving, off against current or future liabilities of the
Covenantor arising under this deed.
5.3 Any payment to be made by the Buyer under clause 5.2 shall be made within
14 days of the auditors' certificate being deemed to have been received by
the Buyer in accordance with clause 10 (notices) of the Agreement.
5.4 If any party to this deed shall disagree with the certificate provided by
the auditors that party may refer the matter (with the consent not to be
unreasonably withheld or delayed of the other parties) to a firm of
independent chartered accountants which shall then provide a certificate
as to the amount of the Saving, if
40
any, and such certificate shall be binding on the parties in the absence
of manifest error; provided that if the parties hereto cannot agree on a
firm to be appointed they shall refer the matter to the President for the
time being of the Institute of Chartered Accountants in England and Wales
who shall nominate an independent firm whose certificate shall be binding
on the parties in the absence of manifest error.
6. Payments
6.1 Where the Company is to make any payment of or in respect of Taxation
which is required to be paid by the Covenantor pursuant to clause 2(a)
above the Covenantor shall pay to the Buyer an amount equal to the amount
of such payment five Business Days prior to the last date on which the
Taxation in question may be paid to the authority official or person
demanding the same without incurring a liability to interest or a charge
or penalty in respect of such Taxation.
6.2 Notice of the amount of the payment required to be made by the Covenantor
under clause 2(a) above (in the case of the loss reduction set-off or
utilisation of some Relief) or under clause 2(b) above shall be certified
in writing by the Buyer. If requested by and at the expense of the
Covenantor the notice of such amount shall be certified by the Buyer's
auditors. If the Covenantor does not agree with such certification then
the provisions of Clause 5.4 above shall apply with references in that
clause to "any party" and "that party" being deemed to be references to
the Covenantor and references to "the other parties" being deemed to be
references to the Buyer and references to "the Saving" being deemed to be
references to "the payment required to be made by the Covenantor under
Clause 2 above". The Covenantor shall pay such amount to the Buyer on or
before the fifth Business Day prior to the date on which Taxation is
payable which would not have been payable but for such loss, reduction or
set-off.
6.3 The costs and expenses referred to in clause 2(c) above shall be paid by
the Covenantor on the later of the date ten Business Days after the Buyer
shall have given notice in writing to the Covenantor that the Buyer or the
Company has incurred such expenses and the date on which such amount
becomes due and payable to the person demanding the sum (provided that no
payment shall be due under this clause unless the Covenantor is given
reasonable evidence of the amount payable including a copy of any relevant
invoice).
6.4 Any sum not paid under this deed on the due date for payment thereof shall
bear interest (which shall accrue from day to day after as well as before
judgment) at the rate of 2 per cent per annum above the base rate for the
time being of Lloyds Bank PLC.
7. Waiver
No delay or omission of either party in exercising any right power or
privilege hereunder shall impair such right power or privilege or be
construed as a waiver thereof and any single or partial exercise of any
such right power or privilege shall not preclude the further or subsequent
exercise of any right power or privilege. The rights and remedies of
either party provided in this deed are cumulative and not exclusive of any
rights and remedies provided by law.
8. Taxation
8.1 Subject to clause 8.2 below all payments made by the Covenantor under this
deed shall be made free of any rights of counterclaim or set-off and
without any deductions or withholdings of any nature.
8.2 If the Covenantor is required by law to make any deductions or withholding
from any payment hereunder it shall do so and the sum due from the
Covenantor in respect of such payment shall be increased to the extent
necessary to ensure that after the making of such deduction or withholding
the Buyer receives and
41
retains (free and clear of any liability in respect of any such deduction
or withholding) a net sum equal to the sum it would have received and
retained had no deduction or withholding been required to be made.
8.3 If any payment under this deed is or will be subject to Taxation in the
hands of the Buyer (other than a reduction in the base cost of the Shares)
the Covenantor shall pay to the Buyer on demand by the Buyer such
additional amount (after taking into account any Taxation payable in
respect of such amount) as will ensure that the Buyer receives and retains
a net sum equal to the sum it would have received had the payment not been
subject to Taxation. If requested by, and at the sole expense of, the
Covenantor the amount referred to above shall be certified by the Buyer's
auditors (acting as experts and not as arbitrators) and shall be
conclusive and binding on the Covenantor. For the avoidance of doubt the
Covenantor shall not be obliged to make any payment under this Clause 8.3
to any assignee if payment would not have been due to the Buyer.
9. Recovery
9.1 Where the Buyer or the Company is entitled to recover from any other
person any sum in respect of any matter to which Clause 2 relates the
Buyer shall and shall procure that the Company shall (if requested by and
at the expense of the Covenantor including an indemnity against all
losses, costs or expenses which may thereby be incurred) take reasonable
steps to enforce such recovery against the person in question provided
that the Buyer shall not be obliged to take any action which the Buyer
reasonably considers to be materially prejudicial to its business. The
Buyer shall account to the Covenantor for any sum so recovered (including
any interest paid by such person) net of Taxation (if any) on such sum up
to an amount not exceeding the related amount paid by the Covenantor under
clause 2. If the Covenantor has not yet made a payment in respect of a
liability under this deed in respect of which the Buyer or the Company has
recovered any amount from any other person the Covenantor shall not be
required to make a payment under this deed in respect of the liability to
the extent of the sum so recovered.
9.2 If the Buyer or the Company should at any time receive a repayment of tax
which arose in consequence of an Event occurring on or before the Accounts
Date then and in any such case the Buyer shall or shall procure that the
Company shall first set off any amount then owing to the Buyer under this
deed and secondly shall pay an amount equal to any excess to the
Covenantor within ten Business Days following the receipt of the repayment
9.3 If the Covenantor makes a payment under this Deed which proves to be an
overpayment then a payment equal to the amount of the overpayment shall be
repaid to the Covenantor within ten Business Days following the later of:
9.3.1 the receipt by the Buyer of the overpayment by the Covenantor; or
9.3.2 if a corresponding payment has been made by the Buyer or the Company
to any Tax Authority the receipt by the Buyer or the Company of the
repayment from such Tax Authority equal to such overpayment;
Provided that any sum not paid on the date specified in this Clause shall
bear interest (which shall accrue from day to day after as well as before
any judgment for the same) at the annual rate of 2% over the base rate for
the time being of Lloyds Bank PLC to and including the day of actual
payment (or the next Business Day if the date of actual payment is not a
Business Day) of such sums.
42
10. Tax Computations
10.1 Subject to clause 10.2 below, the Taxation computations and returns of the
Company in respect of the accounting period ending on the Accounts Date
will be submitted to the Inland Revenue in the form prepared by Price
Waterhouse prior to the date hereof and the Buyer will procure that the
Company shall duly submit such returns and computations and make all
claims and elections which it has been assumed will be made when preparing
such computations and returns.
10.2 All Taxation computations and returns of the Company which have not been
submitted to the relevant Tax Authority prior to Completion shall, if not
already in the possession of the Company, be provided in draft form by the
Covenantor to the Buyer on or as soon as reasonably practicable after
Completion and, in addition, the Covenantor shall use its reasonable
endeavours to procure that any working papers of Price Waterhouse used for
the purpose of preparing the computations and returns referred to in
clause 10.1 above are provided to the Buyer following written request by
the Buyer.
10.3 The Buyer shall have conduct of any process of agreeing such computations
and returns with such Tax Authority and during the course of any such
process shall:
10.3.1 provide the Covenantor with copies of any relevant correspondence
received from and copies of any relevant correspondence intended to
be sent to any relevant Tax Authority in relation to any such
computations and returns allowing the Covenantor a reasonable
period of time to make comments on the content of such
correspondence;
10.3.2 not compromise, settle or otherwise agree any such computations and
returns with any relevant Tax Authority without the prior written
consent of the Covenantor (such consent not to be unreasonably
withheld or delayed).
10.4 The Buyer may request the consent of the Covenantor (such consent not to
be unreasonably withheld or delayed) to any amendments that the Buyer
considers to be reasonable to any such computations and returns as are
referred to in clause 10.1 above.
10.5 The Covenantor and the Buyer shall and the Buyer shall procure that the
Company shall each respectively provide (or procure the provision of) to
the other or their duly authorised agents all information and assistance
which may reasonably be required to prepare, submit, file, agree and
finalise all outstanding Taxation computations and returns including all
claims and elections made in connection therewith.
11. Buyer Indemnity
11.1 The Buyer covenants to the Covenantor to pay to the Covenantor (for itself
and as trustee for any Relevant Person) on an after tax basis an amount
equal to any liability for Taxation for which the Covenantor is made
liable pursuant to section 767A Taxes Act in respect of corporation tax
(which for the period beginning 1st January to Completion shall be limited
to mean corporation tax arising in the ordinary course of the trading
activities of the Company) assessed on any Relevant Person for the
accounting period in which Completion falls.
11.2 For the purpose of this clause 11 "Relevant Person" means the Convenantor,
any person who has or at any time had control of the Covenantor and any
person which is, or has at any time been under the control of
43
the Covenantor or been controlled by the same person as the Covenantor
("control" being construed in accordance with section 767B(4) Taxes Act).
12. Miscellaneous
The provisions of Clauses 9.9, 9.10, 10 and 11 of the Agreement shall
apply equally to this deed as they apply to the Agreement save that
references in the Agreement to the "Seller" shall be substituted by
references to the "Covenantor".
IN WITNESS of which the parties have signed or sealed this instrument as a deed
and have delivered it upon dating it.
Signed as a deed by )
TRIDEX CORPORATION )
acting by ) director
director and )
director/secretary )
secretary/director
Signed as a deed by )
CASH BASES GROUP LIMITED )
acting by ) director
director and )
director/secretary ) secretary/director
APPENDIX
44
DETAILS OF THE ACQUIRED COMPANY AND ITS SUBSIDIARIES
PART 1
Name of Company Registered Office
--------------- -----------------
Cash Bases G.B. Limited Ranalah Estate
(no. 1562459) Xxx Xxxx
Xxxxxxxx
Xxxx Xxxxxx XX0 0XX
Cash Bases Limited Ranalah Estate
(no. 3345980) Xxx Xxxx
Xxxxxxxx
Xxxx Xxxxxx XX0 0XX
European Cash Drawers Limited Ranalah Estate
(no. 3192792) Xxx Xxxx
Xxxxxxxx
Xxxx Xxxxxx XX0 0XX
Cash Bases (Iberica) XX Xxxxxx 430
(a Spanish company - registered no X-00 000000) 00000 Xxxxxx
Xxxxx
Cash Bases (France) Sarl 8 Rue de Xxxxxx
(a French company - registered no B411 027501) 78100 St Germain en Laye
(97 B00563) France
Cash Bases (South Africa)(Pty) Ltd c/x Xxxxxxxxxx & Partners,
(a South African company registered 6th Floor
no. 95/13752/07) Twin Towers (East)
Xxxxxxx Xxxx
0xx Xxxxxx
Xxxxxxx 2/96
S. Africa
Cash Bases (Deutschland) Gmbh Werfstr 26
(a German company - registered no. HRB 27837) D40549
Dusseldorf
W. Germany
45
DETAILS OF THE CAPITAL ASSETS REFERRED TO IN CLAUSE 3(p)
PART 2
Asset 1 - 1250 LVD Shape CNC Turret Punch Press (serial no. 21383) - purchased
3/5/94.
Asset 2 - 1250 LVD Share CNC Turret Punch Press with Test Holders - purchased
30/10/92.
46
SCHEDULE 3
WARRANTIES
The Seller hereby warrants and undertakes to the Buyer as follows:
1. Information
1.1 The information set out in items 1 to 11 (inclusive) of part 1 of schedule
1 part A is true and accurate in all respects and, so far as the Seller is
aware, the information set out in the remainder of part 1 and in part 2 of
schedule 1 part A is true and accurate in all respects.
1.2 All information provided by or on behalf of the Seller or its officers,
accountants, solicitors, or other advisers, as set out on the index of
disclosure documents (in agreed form), was when given and (save as
disclosed in the Disclosure Letter) remains, as at Completion, true and
accurate in all material respects and, so far as the Seller is aware (save
as disclosed in the Disclosure Letter), there are no factors which have
not been disclosed to the Buyer which would make any such information
misleading in any material respect.
1.3 The Seller has not withheld from, or otherwise failed to disclose to, the
Buyer any information relating to the Company, its prospects and affairs
of which it is aware and which is likely to affect the willingness of a
prudent purchaser for value of the Shares to enter into or complete his
purchase or materially affect the price on which such a purchaser (acting
reasonably) would otherwise be prepared to purchase the Shares.
1.4 Neither the Seller, any of its associates or any director or officer of
any of the foregoing have taken any steps or carried out any act or
otherwise incurred any obligation or liability (of whatsoever nature) on
behalf of, in the name of or with the intention of binding any group
company.
2. Share capital
2.1 Without prejudice to the provisions of clauses 2.1 and 2.2 of this
agreement, the Seller is and will, subject only to this agreement, at
Completion be the beneficial and legal owner and registered holder of the
Shares and has and will have full right, power and title to sell or
procure the sale of such Shares free from all Incumbrances to the Buyer.
2.2 The Shares comprise the whole of the allotted and issued share capital of
the Company and all of them are fully paid up or credited as fully paid
up.
2.3 There is no outstanding right to call for the issue of any share or loan
capital of the Company.
2.4 All dividends declared or otherwise due in respect of the Shares have been
paid.
3. Accounts
3.1 The assets, liabilities, contingent liabilities, reserves and provisions
of the Company at the Accounts Date and the profits of the Company for the
accounting period ended on the Accounts Date were, in all material
respects, as shown in the Accounts.
3.2 The Accounts have been properly audited, have been prepared and presented
in accordance with accounting practice and policies generally accepted in
the United Kingdom, are consistent with the
47
practice and policies adopted by the Company during the three accounting
periods ended on the Accounts Date, comply with the requirements of the
Companies Xxx 0000, give a true and fair view of the financial position of
the Company at the Accounts Date, and in particular but without prejudice
to the generality of the foregoing, make, in accordance with the
accounting policies adopted by the Company, proper provision for (or where
appropriate make proper disclosure by way of note) all liabilities,
contingent liabilities, bad and doubtful debts, and depreciation and do
not include any unusual or extraordinary items of income or expenditure.
3.3 The consolidated profit and loss accounts, balance sheets and reports of
the directors of the Company (copies of which, signed by the Seller, have
been handed to the Buyer) covering the three financial periods ended on
the Accounts Date, give a true and fair view of the financial position and
progress of the business of the Company and its subsidiaries at the
relevant dates, and there were no unusual or non-recurring items which
materially affected such accounts.
4. Events since Accounts Date
4.1 So far as the Seller is aware, since the Accounts Date and until
Completion the Company:
4.1.1 has not incurred any liability other than in the ordinary course of
its business; and
4.1.2 has not paid, declared or made (or agreed to do so) any dividend or
other distribution (within the meaning of sections 187, 209 to 211,
254 and 418 Taxes Act).
4.2 So far as the Seller is aware and save as reflected in the unaudited
management accounts of the Company for the four month period ended 30th
April 1997, since the Accounts Date there has been no deterioration in the
financial position or prospects of the Company (whether in consequence of
normal trading or otherwise) and, so far as the Seller is aware, since the
Accounts Date neither the trading nor the profitability of the Company
show, as regards turnover, state of order book, expenses, and profit
margins, any material deterioration or downturn by comparison with the
corresponding period during the preceding year.
4.3 So far as the Seller is aware, since the Accounts Date no part of the
Company's business has been materially affected by the loss of any
customer, or of any source of supply, or by the cancellation or loss of
any order or contract or by any other abnormal factor or event nor, so far
as the Seller is aware, are there any circumstances likely to lead
thereto.
5. Assets of the Company
5.1 So far as the Seller is aware:
5.1.1 the assets of the Company are in the possession or under the control
of the Company; and
5.1.2 none of such assets has been or is subject to sequestration,
confiscation, impounding, seizure, lien (other than a lien arising
by operation of law), distraint or similar control or constraint.
6. Litigation
6.1 So far as the Seller is aware, other than debt collection in the ordinary
course of business in respect of individual debts not
exceeding (pounds)10,000:
48
6.1.1 the Company is not engaged in, and no officer or employee of the
Company is engaged (in connection with its affairs) in, any legal
proceedings (including litigation, arbitration, prosecution or any
hearing before any tribunal or official body);
6.1.2 no such proceedings are pending or threatened; and
6.1.3 there are not any facts likely to give rise to such proceedings.
6.2 So far as the Seller is aware, there is not any judgment or order of any
court, tribunal or official body against the Company which has not been
fully satisfied or discharged.
7. Company books of account, records and documents
7.1 So far as the Seller is aware:
7.1.1 the Company has kept duly made up all requisite books of account
(properly recording or reflecting, where appropriate in accordance
with accounting practice and policies generally accepted in the
United Kingdom, all assets liabilities financial transactions and
contracts of the Company), minute books, registers and records; and
7.1.2 these and all other documents (properly stamped where necessary)
belonging to or which ought to be in the possession of the Company
are in the possession of the Company.
7.2 The copies of the memorandum and articles of association of the Company
(having attached thereto copies of all resolutions and agreements referred
to in section 380(2) Companies Act 1985) delivered to the Buyer are true
and complete copies.
7.3 So far as the Seller is aware, all documents requiring to be filed with
the Registrar of Companies by the Company have been properly made up and
filed.
7.4 The register of members of the Company is correct and, so far as the
Seller is aware:
7.4.1 there has been no notice of any proceedings to rectify the register;
and
7.4.2 there are no circumstances which might lead to any application for
rectification of the register, nor will there be any such
circumstances at Completion.
8. Company agreements
8.1 So far as the Seller is aware, the Company is not party to any agreement
or arrangement which is liable to be terminated by another party on a
change of management or control of the Company.
9. Conduct of business
9.1 So far as the Seller is aware:
9.1.1 the Company has not carried on business under nor has it used on its
letter-head, advertising or documents any name other than its own
full corporate name; and
49
9.1.2 such use does not infringe any proprietary right or interest of any
other person or render the Company liable to pay any royalty or
similar sum.
9.2 So far as the Seller is aware, the Company:
9.2.1 has not entered any transaction which is ultra xxxxx or which is not
on an arms' length basis; and
9.2.2 has complied with the provisions of its memorandum and articles of
association and any debenture or trust or other deeds or agreements
to which it is a party or by which it may be bound.
9.3 So far as the Seller is aware, no event has occurred which constitutes or
which may with the passage of time or the giving of notice constitute a
breach of, or an act or event of default under, any debenture, trust deed
or other deed or agreement in relation to borrowed moneys to which the
Company is a party or by which it is bound.
9.4 So far as the Seller is aware, the Company is not:
9.4.1 a member of any partnership or unincorporated association (other
than a recognised trade association); or
9.4.2 a party to any joint venture or consortium; or
9.4.3 the holder of any shares or securities of or interest in any
corporation incorporated without limited liability or in which
liability is not limited; or
9.4.4 the owner of any branch or permanent establishment (as defined in
the relevant double taxation agreement or treaty) outside the United
Kingdom.
9.5 So far as the Seller is aware, the Company has not entered into a planning
agreement within the meaning of section 21 Industry Act 1975 or into any
other voluntary arrangement with a minister of the Crown or governmental
agency concerning the future development of the Company.
9.6 So far as the Seller is aware:
9.6.1 the Company is under no liability to repay any grant made to it by
the Department of Trade and Industry or any other governmental or
other authority; and
9.6.2 no circumstances have arisen in which the Company would or might be
required to repay any such grant, either in whole or in part.
9.7 So far as the Seller is aware, in carrying on its business the Company
does not use, nor are any of its records, controls, data, information or
systems stored, recorded, maintained, operated or in any other manner
dependent (directly or indirectly) upon, any computer hardware or software
or any other electronic, mechanical or photographic equipment, process,
system or service (whether computerised or not) which is not in the
exclusive ownership and possession (free of any licence or royalty
obligations) and under the direct control of the Company.
10. Environmental matters
10.1 For the purposes of this paragraph 10, the following phrases shall have
the following respective meanings:
50
"Environmental Laws" includes the following, each as in existence or
formally proposed at Completion:
10.1.1 all European Community, national or local statutes, codes, or other
laws (including common law) or legislation concerning health,
safety or Environmental Matters which are applicable to the
business of any group company or to the Property and all rules,
regulations, ordinances, orders, notices, codes of practice,
guidance notes and directives made thereunder; and
10.1.2 judicial and administrative interpretation of each of the foregoing
"Environmental Permits" includes, without limitation the permits,
consents, licences, certificates and other authorisations and approvals
under the Environmental Laws which are applicable in connection with the
use of the Property or the conduct of the business of each group company
at any time.
10.2 So far as the Seller is aware, since 1994, there has been no change in the
manner in which the Company has carried out its business which would
result in or would be likely to result in any breach of Environmental
Permits or Environmental Laws.
10.3 So far as the Seller is aware, no notice, demand, request for information,
complaint or order has been issued or made and no investigation or review
is current, pending or threatened by any governmental entity or other
person with regard to any alleged violation by any group company of any
Environmental Law.
10.4 So far as the Seller is aware, the Company has taken all steps required
(including, without limitation, the adoption and display of appropriate
statements of environmental, health and safety policy) in order to comply
with the recommendations set out in the environmental report prepared by
Inspectorate Environmental dated June 1994, a copy of which has been
supplied to the Buyer by the Seller.
11. Loans charges and guarantees
11.1 So far as the Seller is aware, the Company does not have any loan capital
or debenture or have any Incumbrance over any of its assets.
12. Unusual obligations
12.1 So far as the Seller is aware, there is not outstanding:
12.1.1 any contract of an unusual or onerous nature or capable of
continuing for more than six months to which the Company is a
party, or any offer, tender or quotation made or given by the
Company capable by the unilateral act of any other person of giving
rise to any such contract;
12.1.2 any agreement or arrangement under which any person has authority
to pledge the credit of the Company otherwise than within the usual
and ostensible authority of an officer or employee of the Company;
12.1.3 any power of attorney or authority (express, implied or ostensible)
given by the Company other than authority given to its officers and
employees to act in the ordinary course of their duties; or
12.1.4 any agreement or arrangement under which the Company carries on
business in partnership with any other person or under which its
business or any part of its business is managed by any person other
than its officers and employees.
51
12.2 So far as the Seller is aware, the Company has no liability (present or
future or ascertained or contingent) under:
12.2.1 any guarantee, surety, indemnity, bond or similar obligation;
12.2.2 any agreement for the hire, rent, hire purchase or purchase on
deferred terms of any asset; or
12.2.3 any warranty or representation, except a warranty or representation
implied by law in respect of a transaction entered into by the
Company in the ordinary course of its trading.
13. Brokerage
So far as the Seller is aware, the Company has not agreed to pay any fees
or to make any brokerage, commission or other payment in connection with
the sale of the Shares.
14. Liability to the Seller etc
14.1 The Company has not any trading or business relationship with or liability
to:
14.1.1 the Seller;
14.1.2 any of its associates;
14.1.3 any company of which 25 per cent or more of the equity share
capital is owned or controlled directly or indirectly by the Seller
or its associates; or
14.1.4 any officers of the Company (other than remuneration).
14.2 Neither the Seller nor its associates nor any of them has any interest in
any other firm, business or company which has or has had a material or
close trading relationship with or is in competition with the Company.
15. Entry into this agreement
The sale of the Shares and the execution and performance of this agreement
by the Seller (insofar as may be necessary) have been authorised by all
corporate and other necessary acts, and do not and will not violate any
trust deed, instrument, agreement or other arrangement.
16. Intellectual Property
So far as the Seller is aware, the Company's Intellectual Property:
16.1.1 is exclusively and absolutely vested in, beneficially owned by,
validly granted to, the Company free from any Incumbrance; and
16.1.2 insofar as capable of registration or similar or equivalent
protection, is registered or so protected in the name of the
Company, free from any Incumbrance and all steps required for its
maintenance and protection have been taken; and
52
16.1.3 does comprise all the Intellectual Property required by the Company
to carry on the Business as now constituted, or required for or in
connection with the use, application or supply of the products and
services currently produced or supplied by the Company and any
group company; and
16.1.4 is fully valid, in force and enforceable.
16.2 So far as the Seller is aware, the Company has the exclusive right to use,
exploit, disclose and derive benefit from the Company's Intellectual
Property, and no right or licence has been granted to any person to use in
any manner or to do anything which would or might otherwise infringe any
of the Company's Intellectual Property and no act has been done or omitted
to be done, which will or is likely to result in any of the Company's
Intellectual Property ceasing to be valid, in force and enforceable or
which is likely to result in the cancellation, revocation, rectification
or modification of the same. So far as the Seller is aware, all fees which
have prior to Completion become due in respect of the registration,
protection and/or maintenance of the Company's Intellectual Property have
been paid.
16.3 So far as the Seller is aware, the Company does not in carrying on its
business use any Intellectual Property under licence, or infringe any
Intellectual Property rights; and no claim against the Company in respect
of any infringement of any Intellectual Property or which challenges the
validity or the Company's ownership of or exclusive right to use, exploit,
disclose or derive benefit from any Intellectual Property has been made,
threatened or indicated.
16.4 So far as the Seller is aware, the Company is not a party to any secrecy,
confidentiality or other agreement which may restrict its use or
disclosure of any Know-How.
16.5 So far as the Seller is aware, no disclosure has been made to any third
party of any Know-How of the Company or relating to the Company save as is
necessary in the ordinary course of its normal trading or subject to valid
obligations upon the third party not to use or disclose the same.
16.6 So far as the Seller is aware, there is and has been no infringement of
any of the Company's Intellectual Property.
16.7 So far as the Seller is aware, the Company does not use, or otherwise
carry on its business under, any name other than its corporate name.
17. Insolvency
17.1 No order has been made nor has any resolution been passed for the winding
up of the Company and nor is there outstanding any petition for the
administration or the winding up of the Company or any receivership of the
whole or any part of the undertaking or assets of the Company.
17.2 There are no circumstances which would entitle any person to present a
petition for the administration or the winding up of the Company or to
appoint a receiver or administrator of the whole or any part of its
undertaking or assets.
17.3 The Company is not insolvent as defined by section 123 Insolvency Act 1986
and has not entered into any scheme of arrangement or voluntary or other
arrangement with any of its creditors.
53
18. Property
18.1 So far as the Seller is aware, the Property comprises all the land and
buildings owned, leased or occupied by the Company and, so far as the
Seller is aware, the Company does not have any liabilities as original
tenant, assignee, guarantor under an authorised guarantee agreement as
defined by the Landlord & Tenant (Covenants) Xxx 0000 or otherwise, in
respect of any premises previously owned or occupied by any person.
18.2 So far as the Seller is aware, the Company has complied, in all material
respects, with all covenants and obligations (including statutory
obligations) relating to the Property and no notices have been received by
the Company of any dispute or infringement or breach of any obligations in
relation to the Property. The Seller is not aware of any circumstances
likely to give rise to any dispute, proceedings, claim or infringement (of
whatsoever nature) in relation to the Company's interest in the Property.
18.3 So far as the Seller is aware, the Company holds the Property free from
all options, liens, charges, mortgages, disputes, encumbrances, tenancies
(including tenancies protected by statute or otherwise), adverse rights,
informal adverse arrangements and overriding interests as defined by
section 70(1) (as amended) Land Registration Xxx 0000.
18.4 So far as the Seller is aware, the Company has not granted any option or
right over the Property or disposed of, leased, charged or parted with
possession of the Property and the Property is not, as at Completion,
occupied by or shared with (whether in whole or in part) any third party.
19. Taxation
19.1 The Company is duly registered in accordance with VATA and, so far as the
Seller is aware:
19.1.1 the Company has complied in all respects with the relevant VATA
legislation; and
19.1.2 in particular, has maintained correct and up-to-date records and
made up-to-date returns.
19.2 So far as the Seller is aware, the Company has paid all Taxation that has
become due and is under no obligation to pay any penalty, interest,
surcharge or fine in connection with any Taxation.
19.3 The Company has duly submitted all claims for any relief from Taxation
which have been assumed to have been made for the purposes of the
Accounts.
19.4 So far as the Seller is aware:
19.4.1 all returns and computations in respect of Taxation of the Company
have been filed within time limits required by law and have, in all
material respects, been made correctly;
19.4.2 no such return or computation has been or is likely to be disputed
or relief withdrawn; and
19.4.3 there are no disputes with any taxing authority.
19.5 So far as the Seller is aware, the Company has not without prior consent
entered into any of the transactions specified in section 765 Taxes Act
and has not, in the six years preceding Completion, been a party to any
transaction in respect of which the Company would be liable to Taxation
under the provisions of Part XVII Taxes Act or as a result of the
principle in Xxxxxxx -x- Xxxxxx 00XX 324.
------------------
54
19.6 So far as the Seller is aware, all documents which are required to be
stamped and which form part of the title of the Company to any asset have
been duly stamped.
20. 1994 Acquisition Agreement
The Seller has not made, threatened or intimated any claim under, pursuant
to or in relation to the 1994 Acquisition Agreement (as defined in the
Disclosure Letter) and nor, so far as the Seller is aware, have any
circumstances arisen, matters occurred or information come to light which
(now or at any time following the date of the 1994 Acquisition Agreement)
give or gave rise or would have given rise (but for any saving provisions
or limitations contained in the 1994 Acquisition Agreement) to the Seller
having the right to assert or initiate any such claim.
21. Subsidiaries
21.1 The companies of which details are set out in schedule 1A part 2 comprise
all the subsidiaries of the Company, and the Company does not own any
shares, loan capital or other securities either legally or beneficially in
any other company.
21.2 The above warranties (excepting paragraph 3 of this schedule 3) shall
apply to each subsidiary of the Company as if each reference to the
Company was a reference to each such subsidiary.
21.3 As regards the Overseas Subsidiaries, in interpreting such paragraphs,
references to UK legislative provisions shall be construed as references
to the equivalent or similar legislative provisions (if any) existing in
the jurisdiction of incorporation of the relevant Overseas Subsidiary.
55
SCHEDULE 4
DETAILS OF PROPERTIES
1. Lease dated 25th March 1988 between RG Realisations Limited (1) and Cash
Bases G.B. Limited (2) in respect of premises at Xxxx X Xxx Xxxxxxxxxx
Xxxxxx, Xxxxxxxx, Xxxx Xxxxxx.
2. Lease dated 22nd January 1992 between RG Realisations Limited (1) and Cash
Bases G.B. Limited (2) in respect of premises at Unit E The Industrial
Estate, Newhaven, East Sussex.
3. Lease dated 16th November 1989 between RG Realisations Limited (1) and
Xxxxxx Xxxxxxx Xxxxxxx (trading as DIY Window Supplies) (2) in respect of
premises at Xxxx 0 Xxx Xxxxxx Xxxxxx, Xxxx Xxx, Xxxxxxxx, Xxxx Sussex.
4. Lease dated 3rd November 1989 between RG Realisations Limited (1) and Cash
Bases G.B. Limited in respect of premises at Xxxx 0, Xxxxxx Xxxxxx, Xxxx
Xxx, Xxxxxxxx, Xxxx Xxxxxx.
5. Lease dated 29th November 1989 between RG Realisations (1) and Tonerglow
Limited (2) in respect of premises at Xxxx 0, Xxxxxx Xxxxxx, Xxxx Xxx,
Xxxxxxxx, Xxxx Xxxxxx.
6. Lease dated 26th October 1989 between RG Realisations Limited (1) and
Indesit Limited (2) in respect of premises at Xxxx 0, Xxxxxx Xxxxxx, Xxxx
Xxx, Xxxxxxxx, Xxxx Xxxxxx.
7. Lease dated 1st December 1996 between RG Realisations Limited (1) and Cash
Bases G.B. Limited (2) in respect of premises at Xxxx X, Xxxxxxx Xxxxxx,
Xxxxxxxx, Xxxx Xxxxxx.
56
SCHEDULE 5
DEFERRED CONSIDERATION
1. In this schedule, the following expressions shall have the following
meanings:
"PBIT" shall mean the consolidated profit of the Group in relation to the
Business for the relevant financial year as shown by its audited accounts
in respect of such period (the "Buyer Accounts") but adjusted insofar as
necessary:
1.1.1 so as to exclude:
(a) any income or receipts of a capital or exceptional (or
non-recurring) nature;
(b) any receipts or payments in respect of group relief or advance
corporation tax;
(c) any payment in respect of or provision for corporation tax
(including advance corporation tax) (or other tax equivalent
to corporation tax in the case of any overseas company) and
any other tax (whether of the United Kingdom or otherwise)
which may be imposed on or by reference to profits, gains,
income or distributions;
(d) the effect of any material variation in the accounting bases
and principles adopted in preparing the Buyer Accounts from
the bases and principles used in the preparation of the
Accounts;
(e) all and any interest paid by the Buyer or any of its
subsidiaries in relation to bank debt, the Vendor Loan Notes,
the Investor Loan Notes, leasing/hire purchase arrangements or
in relation to any similar items or other borrowing;
(f) any payment in respect of or provision for payment of
dividends or other distributions;
(g) any expenditure or losses of a capital or exceptional (or
non-recurring) nature including, without limitation, the costs
and expenses of the Buyer in connection with:
(i) the purchase of the Company, the preparation and
completion of the subscription and shareholders
agreement between inter alia, the Management Team and
Lloyds Development Capital Limited (the "Shareholders
Agreement") and the borrowing by the Company of monies
for the purpose of the purchase of the Company and
funding the working capital requirements of the Company;
(ii) the purchase by any member of the Group, following
Completion, of any other company or business (or any
interest therein) or the entry into by any member of the
Group of any joint venture or other similar
arrangements.
(h) any remuneration (including directors' fees but excluding
bonuses) of the directors of the Group in office immediately
following Completion (but excluding any representative of LDCL
appointed from time to time) and any non-executive chairman of
the Company appointed from time to time in excess
of(pounds)213,000 in respect of the financial year ending 31
December 1998 and(pounds)225,000 in respect of the financial
year ending 31 December 1999;
57
(i) any bonuses paid to the Management Team of the Group in excess
of the bonuses to which they are entitled pursuant to their
respective service agreements as at the date hereof;
(j) any management charges to any shareholder (or its associates)
of the Company other than the monitoring fee/investor director
fees to which Lloyds Development Capital Limited are entitled
pursuant to the Shareholders Agreement (being the sum of
(pounds) 12,500 per annum index linked);
(k) any profits or losses of any business (or interest therein) or
any company acquired by any member of the Group following
Completion or arising from the disposal of the whole or any
part of any such business (or interest therein) or company or
of any joint venture (or interest therein) or similar
arrangement or (subject to paragraph 1.1.3 below) of the whole
or any substantial part of the Business;
(l) expenditure or losses incurred in relation to all and any
transactions which are not entered into by the Group on an
arms-length basis on normal commercial terms in excess of such
expenditure and losses which would have been incurred in the
event that such transactions had been entered into on an
arms-length basis and on normal commercial terms;
(m) any provision made in the Buyer Accounts in the relevant Year
if and to the extent that such provision is in excess of that
reasonably required by then existing legislation and/or
accounting practice;
(n) any amount written off against or amortised as a charge to
profits in respect of goodwill;
(o) any Sales Costs (which expression shall be given the same
meaning and categorisation as set out in the current
management accounts of the Company) in excess of the greater
of:
(i) an amount equal to ten per cent of sales; or
(ii) (pounds)972,000;
(p) the aggregate gross cost to the Group of employment or
retention (as appropriate) of model makers and external
consultants (to the extent they relate to product development)
together with engineering costs (which expression shall be
given the same meaning and categorisation as set out in the
current management accounts of the Company) in excess of an
amount equal to five per cent of sales.
1.1.2 So as to add back any amount (excluding costs) recovered from the
Seller as a consequence of a Relevant Claim or a claim pursuant to
clause 13 if and to the extent that the event or circumstances
giving rise to such claim gives rise to a reduction in PBIT in (and
only in) the relevant Year provided further that if any such
recovery is made following determination of the Buyer Accounts in
respect of the relevant Year, then the Buyer shall account to the
Seller if and to the extent that the foregoing add back provision
would have led to an increased Deferred Consideration payment
hereunder had such amount been recovered prior to the relevant date;
1.1.3 So as to take into account, on a sale of the whole or a substantial
part of the Business during Year 1 or Year 2, the PBIT which would
otherwise have been earned or realised by the Group were it not for
such disposal or part disposal (as appropriate).
58
together with such other adjustments as the parties may agree or as
the auditors of the Company may consider appropriate.
"Year 1" means the financial year of the Buyer from 1st January 1998
to 31st December 1998
"Year 2" means the financial year of the Buyer from 1st January 1999
to 31st December 1999
"Year" means Year 1 and/or Year 2 (as appropriate)
"Year 1 PBIT" means PBIT in respect of Year 1
"Year 2 PBIT" means PBIT in respect of Year 2
"Cumulative PBIT" means the cumulative level of Year 1 PBIT and Year
2 PBIT (which shall, for the avoidance of doubt, take account of any
pre-tax loss of the Group in relation (only) to the Business in Year
1 or Year 2 if applicable)
"Group" means the Buyer and its subsidiaries as at the time
immediately following Completion
"Business" means the business as carried on by the Group immediately
following Completion
2. The Buyer hereby undertakes to the Seller that from the date hereof until
31 December 1999;
2.1.1 the Business shall be conducted in good faith and that no member of
the Group will take any action which is calculated or intended
artificially to diminish the amount of Deferred Consideration;
2.1.2 its accounting reference date shall not be changed from 31 December
without the prior consent of the Seller;
3. The maximum Deferred Consideration payable in respect of the sale of the
Shares shall be the sum of US$750,000 (seven hundred and fifty thousand US
dollars), and the amount of the Deferred Consideration payable hereunder
shall be calculated in accordance with the tables set out below at
paragraphs 4 and 5 respectively by reference to the level of Year 1 PBIT
and Cumulative PBIT respectively.
4. Without prejudice to the provisions of clause 5 and schedule 6 of this
agreement, as regards Year 1, the amount (if any) of Deferred
Consideration payable by the Buyer to the Seller shall be that amount in
column (2) that appears opposite the relevant level of Year 1 PBIT in
column (1) in accordance with the table below:
59
(1) (2)
Amount of Year 1 PBIT Deferred Consideration Payable
--------------------- ------------------------------
less than (pounds)900,000 Nil
between (pounds)900,000 and(pounds)1,000,000 the sum of US$2.50 (two US dollars
and fifty cents) for each (pounds)1
of Year 1 PBIT in excess of (pounds)900,000
more than (pounds)1,000,000 US$250,000 (two hundred and fifty thousand
US dollars)
PROVIDED ALWAYS THAT in no circumstances shall the Deferred
Consideration payable in respect of Year 1 PBIT exceed the sum of
US$250,000 (two hundred and fifty thousand US dollars).
5. Without prejudice to the provisions of clause 5 and schedule 6 of this
agreement, as regards Year 2, the amount of Deferred Consideration (if
any) payable by the Buyer to the Seller shall be that amount, (but subject
always to the proviso set out below), in column (2) opposite the relevant
level of Cumulative PBIT in column (1) in accordance with the table set
out below:
(1) (2)
Amount of Cumulative PBIT Deferred Consideration Payable
------------------------- ------------------------------
less than (pounds)1,800,000 Nil
between (pounds)1,800,000 and the sum of US$1.875 (one US dollar and 87.5 cents)
(pounds)2,200,000 for each(pounds)1 of Cumulative PBIT in excess
of(pounds)1,800,000
more than(pounds)2,200,000 US$750,000 (seven hundred and fifty thousand US dollars)
LESS an amount equal to the amount (if any) paid pursuant to
paragraph 4 above.
6. The Buyer shall use all reasonable endeavours to procure that:
(a) The Buyer Accounts in respect of Year 1 and Year 2 are prepared to
audit standard by not later than 15th April following the end of the
relevant year and are audited not later than the following 31st
April;
(b) The Buyer shall procure that the Buyer's auditors shall prepare and
deliver to the Seller and the Buyer, within 14 days following the
date on which the audit report relating to the Buyer Accounts is
signed by the Buyer's auditors in respect of the relevant Year, a
copy of the said Buyer Accounts together with a copy of a
calculation showing PBIT for the relevant Year and the amount (if
any) of Deferred Consideration payable pursuant to this schedule as
a consequence (the "Certificate") and shall promptly provide to the
Seller such information relating to the relevant Buyer Accounts and
the Certificate as the Seller's accountants shall reasonably require
(provided that the Buyer shall be entitled to exclude any
confidential information which the Buyer reasonably considers
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could be used by the Seller or any of its associates for the purpose
of assisting it to carry on its or their own business or businesses
from time to time).
(c) The Certificate delivered pursuant to paragraph 6(b) above shall be
binding on the Seller and the Buyer unless within 28 days of the
delivery of the same by the Buyer's auditors, either the Buyer or
the Seller shall notify the other in writing of its or their
disagreement with the same.
(d) In the event that notice is served pursuant to paragraph 6(c) above
the Buyer and the Seller shall attempt to resolve the dispute, but
in default of agreement as to the amount of PBIT in respect of the
relevant Year within 60 days of such notice being delivered the
dispute shall be determined by an independent firm of chartered
accountants to be appointed jointly by the Buyer and the Seller or,
in default of agreement, appointed (on the application of either of
the Buyer or the Seller) by the President for the time being of the
Institute of Chartered Accountants in England and Wales. Such
independent firm of chartered accountants shall act as an expert and
not as an arbitrator and its decision shall be final and binding on
the Buyer and the Seller. The costs of such expert shall be borne
equally between the Buyer and the Seller or in such other
proportions as such expert shall determine.
(e) the Buyer and the Seller shall each use all reasonable endeavours to
assist such expert in reaching his decision as soon as practicable
and shall provide such expert with all information as such expert
may reasonably require.
7. Any amount of Deferred Consideration becoming payable pursuant to
paragraph 4 and/or 5 above shall be paid by the Buyer to the Seller within
14 days of the date on which the amount of the Deferred Consideration
relating to Year 1 PBIT or Cumulative PBIT (as the case may be) is agreed
or finally determined in accordance with paragraph 6 above.
8. The Buyer shall deliver to the Seller monthly (cumulative) unaudited
profit and loss accounts, balance sheet and cashflow figures in relation
to the Business for the period from the date hereof to 31 December 1999,
the first such management accounts to relate to the period from the date
hereof to 30 [June] 1997.
9. In the event that, prior to the end of Year 2, there is a Sale or Listing
of the Buyer, the Company or any holding company of the Buyer from time to
time, or a Business Sale and, as a consequence, Lloyds Development Capital
Limited or its associates (in the case of a Sale or Listing of the Buyer,
the Company or any holding company of the Buyer from time to time)
receives an amount or (in the event of a Business Sale or sale of the
Company) receives or would be lawfully able to receive on a voluntary
liquidation of the Company (and after allowing (without limitation) for
the redemption of all redeemable preference shares then in issue and the
payment of all other liabilities as at such date) an amount (whether by
way of dividend or otherwise) equal to the aggregate of:
9.1.1 the cost of investment (in whatsoever form) made by LDCL and/or its
associates in the Buyer; and
9.1.2 any accrued but unpaid dividends payable in respect of any shares
owned in the capital of the Buyer by LDCL and/or its associates or
any accrued but unpaid interest payable in respect of the Investor
Loan Notes
then, immediately prior to or on completion of such Sale, Business Sale or
Listing (as appropriate) the Buyer shall pay or procure payment to the
Seller, by way of telegraphic transfer to the Seller's Solicitors, of the
sum of $750,000 less any Deferred Consideration which shall have been
previously paid or which
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(but for clause 5 or schedule 6) would have been paid to the Seller in
accordance with the provisions of this Schedule.
For the purpose of this clause 9, the following terms shall have the
following meanings:
"Business Sale" the sale by Cash Bases GB Limited of the whole or substantially
the whole of the business from time to time carried out by it and
its subsidiaries
"Listing" the admission of all or any of the equity share capital of the
relevant company to the Official List of the London Stock Exchange
Limited or to trading on the Alternative Investment Market or on any
other Recognised Investment Exchange (as defined in Section 207 of
the Financial Services Act 1986)
"Sale" the acquisition of any equity share capital of the relevant company
as a result of which any person(s) (other than any member or members
of the Management Team (as such term is defined in the Sale
Agreement)) together with any persons connected or acting in
concerted with them become the beneficial owners of in excess of 50%
of the equity share capital of the relevant company;
"equity share capital" shall have the meaning ascribed to it by section 744 of the
Companies Xxx 0000;
"connected persons" or shall have the meanings ascribed
"connected with" thereto by Section 839 of the Income and Corporation Taxes Act 1988
"acting in concert" shall have the meaning ascribed to it by the City Code on Takeovers
and Mergers in force as at the date hereof
"associate" shall, in the case of LDCL, be deemed to include reference to
Xxxxxxxxx Unquoted Growth Equities Fund II
10. The provisions of this schedule shall be read subject to clause 5 and
schedule 6.
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SCHEDULE 6
Escrow Account
1.
(a) In the event that on a date (the "Payment Date") upon which an
amount of Deferred Consideration is due and payable by the Buyer to
the Seller or the Vendor Loan Notes are to be repaid, a Relevant
Claim or Relevant Claims have been made against the Seller by the
Buyer in respect of which there has not yet been any Settled
Liability agreed or determined then unless the parties have agreed
an estimate of the likely maximum quantum of all such Relevant
Claims, the amount of Deferred Consideration or of the Vendor Loan
Notes which would otherwise have been paid or repaid to the Seller
shall instead be paid by the Buyer into a joint deposit account
designated "Cash Bases Retention Account" opened in the joint names
of the Buyer's Solicitors and the Seller's Solicitors (the "Escrow
Account") and the Buyer's Solicitors and the Seller's solicitors
shall be instructed by the Buyer and the Seller to operate the
Escrow Account in the manner set out in paragraph 3 below; and
(b) the parties shall use their respective reasonable endeavours in good
faith promptly to agree the maximum likely quantum (the "estimated
liability") of such Relevant Claim or Relevant Claims and in default
of agreement in respect thereof within 28 days of the Payment Date,
the estimated liability of any Relevant Claims which shall not have
been agreed by the parties shall be referred for determination by a
barrister (or barristers) of not less than 5 years call practising
in areas relevant to the subject matter of the Relevant Claim or
Relevant Claims, such barrister(s) to be appointed by the parties
hereto or in default of agreement by the President for the time
being of the Law Society. Such barrister(s) shall act as experts and
not as arbitrators and their decision shall be final and binding
upon the parties. The cost of such barrister(s) shall be borne
equally between the parties or in such other manner as such
barrister(s) shall determine; and
(c) upon the estimated liability of all such Relevant Claims having been
agreed or determined in the manner set out above and if the
aggregate of such estimated liability is less than the amount of
principal monies in the Escrow Account, the difference between the
principal monies in the Escrow Account and such aggregate estimated
liability shall be paid to the Seller together with all interest
(less bank charges) which shall have accrued thereon.
2. If on a Payment Date an estimated liability has been agreed in respect of
which a Settled Liability shall not have been agreed or determined, then
the provisions of paragraph 1(a) above shall apply save that unless the
amount of the aggregate estimated liability is the same or exceeds the
aggregate amount of the principal monies which would otherwise have been
paid to the Seller by way of payment of Deferred Consideration or
repayment of Vendor Loan Notes, the Buyer shall pay into the Escrow
Account the amount of the aggregate estimated liability and the balance
shall be paid by the Buyer to the Seller in accordance with the provisions
of this Agreement
3. In addition to the operation of the Escrow Account in the manner set out
in paragraph 1(c) above, the Escrow Account shall be operated in the
following manner:
(a) the interest on the monies standing to the credit of the Escrow
Account from time to time shall be credited to the Escrow Account
and any payment of principal out of the Escrow Account shall
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carry the interest (net of any tax deductible by law) earned on that
principal sum in the Escrow Account to the date of payment; and
(b) in the event of a Settled Liability being agreed or determined in
respect of a Relevant Claim or Relevant Claims, there shall as soon
as practicable be released from the Escrow Account to the Buyer from
the principal sum then standing to the credit of the Escrow Account
an amount equal to such Settled Liability and the balance of the
principal sum then standing to the credit of the Escrow Account (if
any) less the aggregate of the estimated liability of all or any
other Relevant Claim(s) in respect of which there shall have been no
Settled Liability shall be released to the Seller
4. Once all the monies in the Escrow Account have been released as aforesaid
the Escrow Account shall be closed.
5. The payment of any sum to the Buyer out of the Escrow Account in or
towards the satisfaction of any Relevant Claim shall not in any way
prejudice or affect the rights or remedies of the Buyer to recover any
amount due from the Sellers pursuant to a Relevant Claim to the extent not
satisfied in full by the payment made out of the Escrow Account.
6. Each of the Buyer and the Seller undertakes with each other that during
such time as the monies remain in the Escrow Account each of them will
deal with all Relevant Claims and all matters relating thereto (including
without limitation any appeal) in a timely fashion.
7. In the event that upon a Payment Date there are any Relevent Claims in
respect of which a Settled Liability has not been agreed or determined,
the Buyer and the Seller shall on that date execute irrevocable written
instructions to the Buyer's Solicitors and the Seller's Solicitors
respectively in the form of the draft letter annexed hereto to the intent
that any monies placed in the Escrow Account are dealt with in accordance
with this schedule
Signed by )
a duly authorised director on )
behalf of TRIDEX CORPORATION )
in the presence of: )
Signed by )
a duly authorised director on )
behalf of CASH BASES GROUP LIMITED )
in the presence of: )
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