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Exhibit 2.1
DATED 15 NOVEMBER 1999
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ MATTHISSEN, QUADRANGLE TRUSTEE COMPANY,
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ AND YURI PASEA
AND
FUTURELINK CORP.
--------------------------------------------------
AGREEMENT
FOR THE SALE AND PURCHASE OF THE
ENTIRE ISSUED SHARE CAPITAL
OF
KNS HOLDINGS LIMITED
--------------------------------------------------
PAUL, HASTINGS, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
TOWER 42
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
TEL: ▇▇▇ ▇▇▇▇ ▇▇▇▇
FAX: ▇▇▇ ▇▇▇▇ ▇▇▇▇
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TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND INTERPRETATION...............................1
2. AGREEMENT TO SELL AND PURCHASE...............................6
3. CONSIDERATION................................................6
4. PRE-EMPTION RIGHTS...........................................9
5. VENDORS' AND TRUSTEES' WARRANTIES............................9
6. LIMITATIONS TO THE VENDORS' WARRANTIES......................10
6A. PURCHASER'S WARRANTIES......................................12
7. RELEASE OF GUARANTEES.......................................12
8. COMPLETION..................................................12
9. CONDUCT OF BUSINESS.........................................13
10. CONDITIONS PRECEDENT........................................14
11. TERMINATION, AMENDMENT AND SURVIVAL OF OBLIGATIONS..........16
12. RESTRICTIVE COVENANTS.......................................18
13. POST-COMPLETION EFFECT......................................19
14. SUCCESSORS AND ASSIGNS......................................19
15. INFORMATION AND CONFIDENTIALITY.............................19
16. ANNOUNCEMENTS AND PUBLICITY.................................19
17. NOTICES.....................................................20
18. SERVICE OF PROCESS..........................................21
19. FURTHER ASSURANCE...........................................21
20. WAIVERS.....................................................21
21. ENTIRE AGREEMENT............................................22
22. VARIATION...................................................22
23. COUNTERPARTS................................................22
24. APPLICABLE LAW..............................................22
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SCHEDULES
SCHEDULE 1 Particulars of the Vendors and of the Shares to be Sold
PART A and Consideration Shares to be Received by Each of Them
SCHEDULE 1 Payments Schedule
PART B
SCHEDULE 2 Particulars Concerning the Company
SCHEDULE 3 Redundant
SCHEDULE 4 General Warranties
PART A
SCHEDULE 4 Warranty and Service Agreements Relating to Year 2000
PART A.1
SCHEDULE 4 Warranties Relating to Tax
PART B
SCHEDULE 4 Property Warranties
PART C
SCHEDULE 4 Intellectual Property Warranties
PART D
SCHEDULE 4 Pensions Warranties
PART E
SCHEDULE 5 Completion Requirements
SCHEDULE 6 Tax Deed
SCHEDULE 7 Certificate as to Regulation S
SCHEDULE 8 Purchaser Warranties
SCHEDULE 9 Redundant
SCHEDULE 10 Loan Note
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AGREEMENT FOR SALE AND PURCHASE OF SHARES
DATE: 15 November 1999
PARTIES:
(1) THE PERSONS whose names and addresses are set out in Column 1 of
Schedule 1 ("Vendors"); and
(2) FUTURELINK CORP., a corporation incorporated under the laws of the
State of Delaware, whose principal place of business is at ▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser").
OPERATIVE PROVISIONS:
1. DEFINITIONS AND INTERPRETATION
1.1 In this Agreement and (save as provided in Section 1.6) in the
Schedules:
"Accounting Date" means 28 February 1999;
"Accounting Period" has the meaning ascribed
thereto in Section 12 of the
Taxes Act;
"Accounts" means the audited accounts of
the Company comprising a
balance sheet as at the
Accounting Date, a profit and
loss account for the period
which commenced on 1 March
1998 and ended on the
Accounting Date, the notes
thereto and the Directors' and
auditors' reports thereon;
"▇▇▇▇▇▇▇ Family Settlements" means those settlements of
which the Trustee Vendors are
the present trustees and which
hold the shares of Kerridge
Group Limited specified in
Section 5.6.1;
"Business Day" means any day which is not a
Saturday, a Sunday or a bank
or public holiday in England
and Wales;
"Centrix" means Centrix Networking
Limited;
"Companies Act" means the Companies ▇▇▇ ▇▇▇▇;
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"Company" means KNS Holdings Limited,
particulars relating to which
are set out in Schedule 2;
"Completion" means the completion of the
sale and purchase of the
Shares in accordance with
Section 8 and Schedule 5;
"Completion Date" means the date on or prior to
20 December 1999 (or such
later date as may be agreed to
between the parties) on which
the requirements set forth in
Schedule 5 and the conditions
set forth in Section 10 shall
have been satisfied or waived;
"Confidential Information" means confidential information
as defined in Part D of
Schedule 4;
"Connected Person" means a connected person as
defined in Section 839 of the
Taxes Act except that in
construing Section 839
"control" has the meaning
given by Section 840 or
Section 416 of the Taxes Act
so that there is control
whenever either Section 840 or
416 requires;
"Consideration Shares" means such number of the
Purchaser Shares calculated in
accordance with Section 3.3 as
are to be allotted and issued
credited as fully paid in
accordance with Section 3.2;
"Directors" means the persons listed as
directors of the Company in
Schedule 2;
"Disclosed" means fairly disclosed to the
Purchaser (and not omitting
any information which would
make such disclosure
misleading) expressly for the
purposes of this Agreement in
the Disclosure Letter;
"Disclosure Letter" means the disclosure letter of
even date herewith from the
Vendors to the Purchaser in
the agreed form, and any
supplemental disclosure letter
delivered to the Purchaser no
later than 12:00 noon (London
time) on 29 November 1999,
provided that such
supplemental disclosure letter
includes supplemental
information which would give
rise to warranty claims for
which the Vendors would,
without regard to Section
6.1.2, be liable in an
aggregate amount of
(pound)50,000 or more;
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"Employment Agreements" means the employment
agreements to be entered into
by the Purchaser or the
Company and each and every one
of the Executives and at least
80% of all other employees at
the Completion Date, in a
mutually satisfactory form;
"Escrow Agreement" means an escrow agreement
entered into by the parties to
this Agreement, in a form
satisfactory to the parties
and the Escrow Agent;
"Escrow Agent" means that escrow agent
designated by the parties
before Completion;
"Escrow Period" means the period commencing on
the Completion Date and ending
on the third anniversary of
such date;
"Executives" means Yuri Pasea, ▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇ ▇▇▇▇▇▇ whose details
are contained in Schedule 1,
Part A;
"Intellectual Property Rights" means intellectual property
rights as defined in Part D of
Schedule 4;
"KCC" means Kerridge Computer
Company Limited.
"KCC Debenture" means a debenture in mutually
satisfactory form at the
Completion securing the KCC
Loan;
"KCC Loan" means the loan monies owed to
Kerridge Computer Company
Limited by the Company;
"Lease" means the lease between Tarmac
Heavy Building Materials UK
Limited and KCC dated 9
February 1999, a copy of which
is enclosed with the
Disclosure Letter;
"Leasehold Property" means the property at ▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
comprised in title number
BK59233.
"Loan Notes" means the loan notes
substantially in the form set
out in Schedule 10 to be
issued to the Vendors on
Completion in the amounts set
out against their names in
column 4 of Schedule 1, Part
A.
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"Management Accounts" means the Company's unaudited
profit and loss account for
the period starting on the day
after the last Accounting Date
and ending on 31 October 1999
and the Company's unaudited
balance sheet as at 31 October
1999 together with related
statements of operations and
shareholders' equity for the
period starting on the day
after the last Accounting Date
and ending on 31 October 1999;
"Planning Acts" means the Town and Country
Planning ▇▇▇ ▇▇▇▇, the
Planning (Listed Buildings and
Conservation Areas) ▇▇▇ ▇▇▇▇,
the Planning (Hazardous
Substances) ▇▇▇ ▇▇▇▇ and the
Planning (Consequential
Provisions) ▇▇▇ ▇▇▇▇ as
respectively amended,
consolidated, extended or
re-enacted as at the date of
this Agreement.
"PSL" means Panic Systems Limited;
"PSL and Centrix Agreement" means the agreement to be
entered into prior to
Completion between the Company
and Kerridge Computer Company
Limited in a mutually
satisfactory form for the sale
and purchase or novation of
the Company's interests in PSL
and Centrix;
"Premises" means the leasehold property
occupied by the Company;
"Purchaser Group Company" means any company which is at
or at any time after the date
of this Agreement a subsidiary
or associated company of the
Purchaser or the holding
company of the Purchaser or a
subsidiary or associated
company of any such holding
company;
"Purchaser Shares" means shares of the common
stock, US$ 0.0001 par value
per share, of the Purchaser;
"Purchaser's Warranties" means the warranties,
representations and
undertakings set out in
Schedule 8;
"Representative" means the person specified as
such in Section 3.11;
"Shares" means the 20,571,429 ordinary
shares of one (1) ▇▇▇▇▇ each
in the capital of the Company
plus
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shares of the Company to be
issued upon exchange as
described in Section 10.2.12;
"Tax" means tax as defined in the
Tax Deed;
"Tax Deed" means a Deed substantially in
the form set out in Schedule
6;
"Taxes Act" means the Income and
Corporation Taxes ▇▇▇ ▇▇▇▇;
"Trustee Vendors" means ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ Matthissen and
Quadrangle Trustee Company;
"Vendors Group Company" means any company which is at
or before Completion a
subsidiary or associated
company of the Company or a
holding company of the Company
or a subsidiary or associated
company of any such holding
company; and
"Vendors' Warranties" means the warranties,
representations and
undertakings set out in
Schedule 4.
1.2 The Schedules are deemed to be incorporated in this Agreement, and a
reference to "this Agreement" includes a reference to the Schedules.
1.3 In this Agreement:-
1.3.1 the index and the Section headings are included for
convenience only and shall not affect the construction of
this Agreement;
1.3.2 words denoting the singular shall include the plural and
vice versa;
1.3.3 words denoting any gender shall include a reference to each
other gender; and
1.3.4 references to persons shall be deemed to include references
to natural persons, firms, partnerships, companies,
corporations, associations, organisations, foundations and
trusts (in each case whether or not having separate legal
personality);
1.3.5 a "subsidiary undertaking" or "parent undertaking" is to be
construed in accordance with Section 258 of the Companies
Act and a "subsidiary" or "holding company" is to be
construed in accordance with Section 736 of the Companies
Act;
1.3.6 an "associated company" of a company shall mean a legal
entity in which such company directly or indirectly owns or
controls at least 20% of the issued share capital and/or
voting rights.
1.4 References in this Agreement to statutory provisions shall (where the
context so admits and unless otherwise expressly provided) be construed
as references to those provisions as respectively amended,
consolidated, extended or re-enacted as at the date of this Agreement
and to the corresponding provisions of any earlier legislation (whether
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repealed or not) directly or indirectly amended, consolidated,
extended, replaced or re-enacted thereby and to any orders,
regulations, instruments or other subordinate legislation made under
the relevant statute.
1.5 Any statement qualified by the expression "to the best of the
knowledge, information and belief of the Vendors " or "so far as the
Vendors are aware" or any similar expression shall be deemed to include
an additional statement that it has been made after due, diligent and
careful enquiry by each of the Vendors of its books, accounts and
records.
1.6 If any of the words or expressions defined in Section 1.1 are also
defined in any of the Schedules then for the purposes of interpreting
that relevant Schedule such words and expressions shall have the
meaning ascribed to them in that Schedule.
2. AGREEMENT TO SELL AND PURCHASE
2.1 Each of the Vendors sells such of the Shares as are set out opposite
his name in column 2 of Schedule 1 to the Purchaser and the Purchaser
purchases the Shares in part by way of an exchange of Purchaser Shares,
in part by way of loan note and in part by way of immediate cash
consideration.
2.2 Each of the Vendors severally covenants with the Purchaser that:-
2.2.1 he has the right to sell and transfer the full legal and
beneficial interest in the Shares to the Purchaser on the
terms set out in this Agreement;
2.2.2 the Shares will be sold free from all claims, charges,
liens, encumbrances, equities and adverse rights of any
description and together with all rights attached or
accruing thereto as at and from the date of this Agreement;
and
2.2.3 he shall (and shall procure that any necessary third party
shall), at his own expense, do, execute and perform all such
further acts, Deeds, documents and things as the Purchaser
may reasonably request from time to time as being necessary
to vest any of the Shares in the Purchaser.
2.3 Nothing in this Agreement shall oblige the Purchaser to purchase some
only of the Shares unless the Vendors shall at the same time complete
the sale to the Purchaser of all of the Shares.
3. CONSIDERATION
3.1 The aggregate consideration payable by the Purchaser to the Vendors in
respect of the sale of the Shares shall be (pound)27,000,000 consisting
of:
3.1.1 (pound)4,750,000 in cash;
3.1.2 (pound)2,500,000 in Loan Notes; and
3.1.3 (pound)19,750,000 in Purchaser Shares (placed in escrow on
Completion and released in tranches thereafter in accordance
with the Escrow Agreement), as described in Section 3.3.
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3.2 Subject to Section 3A.2, the total aggregate consideration shall be
apportioned between the Vendors as set out in Columns 3, 4 and 5 of
Schedule 1, Part A, or as otherwise agreed by the Vendors and notified
to the Purchaser and the Escrow Agent by the Representative three
Business Days prior to Completion.
3.3 The number of Consideration Shares to be allotted to the Vendors
pursuant to Section 3.2 shall be such number of Purchaser Shares as
have an aggregate value (determined in accordance with Sections 3.4 and
3.5) which is as near as possible to, but not less than,
(pound)19,750,000.
3.4 For the purpose of determining the aggregate value referred to in
Section 3.3, the UK pounds sterling value of a Purchaser Share shall be
US$ 14.95, converted from US dollars to UK pounds sterling at the
applicable exchange rate as determined in accordance with Section 3.5
3.5 For the purpose of determining the applicable exchange rate at which to
convert the US Dollar value of each Purchaser Share (as calculated in
accordance with Section 3.4), the applicable exchange rate shall be the
average exchange rate as reported in the Wall Street Journal over the
15 Business Days immediately prior to the date of this Agreement.
3.6 No fraction of a Consideration Share shall be issued to the Vendors and
the number of Consideration Shares shall be adjusted accordingly to the
nearest whole number.
3.7 The Consideration Shares, on issue, shall rank pari passu in all
respects with the existing issued Purchaser Shares, except that at
Completion the Consideration Shares will not be registered under the
Securities Act of 1933, as amended.
3A. OTHER COVENANTS
3A.1 Each of the Vendors agrees that he shall deliver to the Purchaser at
Completion a certificate and undertaking in the form of Schedule 7,
appointing the Representative, and making or giving such
representations, warranties and covenants as are necessary or advisable
for the qualification of the issuance of Purchaser Shares to the
Vendors under Regulation S of the United States Securities Act of 1933,
as amended. Purchaser covenants to submit a registration statement in
accordance with the Securities Act of 1933, as amended, within 180 days
after the Completion Date, and to use all reasonable endeavours to
effect the registration before the first anniversary date of Completion
and to maintain such registration until the second anniversary date of
Completion. The Vendors acknowledge that the registration statement is
subject to the approval of the Securities and Exchange Commission.
Prior to the Completion Date, the parties will agree such terms and
conditions as to such registration as are customary in transactions of
this nature.
3A.2 The Purchaser, the Representative and the Escrow Agent at Completion
shall execute and deliver the Escrow Agreement in order to provide the
Purchaser with security for breach of any of the Vendors' Warranties
under this Agreement and to maintain an orderly
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market in the Purchaser's Shares in accordance with Section 3A.3. At
Completion, the Purchaser shall deliver to the Escrow Agent a share
certificate (issued in the respective names of the Vendors, except in
respect of the share certificate for the Trustee Vendors, a joint share
certificate shall be issued their names) for all the Consideration
Shares (the "Escrow Shares"). The Escrow Shares shall constitute all
the Consideration Shares issuable under this Agreement. The Escrow
Shares shall be held by the Escrow Agent under the Escrow Agreement
pursuant to the terms thereof. The Escrow Shares shall be held as a
trust fund and shall not be subject to any lien, attachment, trustee
process or other judicial process of any creditor of any party, and
shall be held and disbursed solely for the purposes and in accordance
with the terms of the Escrow Agreement. The Purchaser acknowledges that
at Completion the Vendors will have paid the full purchase price for
the Escrow Shares and that the Vendors are not required to pay any
further consideration for the Escrow Shares.
3A.3 Notwithstanding anything to the contrary in this Agreement and
irrespective of whether or not the Vendors would otherwise be permitted
to sell, transfer or otherwise dispose of any Consideration Shares in
accordance with Regulation S under the Securities Act of 1933, as
amended, or otherwise, the Vendors covenant and agree for the benefit
of the Purchaser that they will not sell, transfer or otherwise dispose
of any Consideration Shares other than in accordance with Regulation S
or Rule 144 of the Securities Act of 1933, as amended, or pursuant to
an effective registration statement in respect of such Consideration
Shares under the Securities Act of 1933, as amended.
3A.4 In order to administer efficiently the transactions contemplated
hereby, including the defence or settlement of any claims for which the
Vendors may be responsible pursuant to the Vendors' Warranties, and
entering into the Escrow Agreement, Colin Matthissen has agreed to his
appointment as the Representative. The Representative is hereby
authorised to take any and all action as is contemplated to be taken by
the Vendors by the terms of this Agreement. All decisions and actions
by the Representative shall be binding upon all of the Vendors and no
Vendor shall have the right to object, dissent, protest or otherwise
contest the same. By their approval of this Agreement, the Vendors
agree that:
3A.4.1 the Purchaser shall be able to rely exclusively on the
instructions and decisions of the Representative as to the
settlement of claims for breach of any of the Vendors'
Warranties, or any other actions taken by the Representative
hereunder, and no party shall have any cause of action against
the Purchaser in reliance upon the instructions or decisions
of the Representative;
3A.4.2 all actions, decisions and instructions of the Representative
shall be final, conclusive and binding upon the Vendors;
3A.4.3 the provisions of this Section 3A.4 are independent and
severable, are irrevocable, and shall be enforceable
notwithstanding any rights and remedies that any Vendor may
have in connection with the transactions contemplated by this
Agreement and the Escrow Agreement; and
3A.4.4 the provisions of this Section 3A.4 shall be binding upon the
assigns, executors, heirs, legal representatives and
successors of each Vendor, and any references in
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this Agreement to a Vendor shall mean and include the
successors to the Vendors' rights hereunder.
3A.5 The Vendors shall deliver the Management Accounts to the Purchaser not
later than 6:00pm London time on 22 November 1999.
3A.6 The Vendors shall cooperate with the Purchaser in the preparation of
SEC-compliance audited accounts of each Vendors' Group Company for the
years ended 28 February 1998 and 28 February 1999.
3A.7 The Vendors shall use all reasonable endeavours to promptly:
3A.7.1 procure an assignment of KCC's interest in the Lease to the
Company, with such Lease assignment constituting good and
marketable title to the Leasehold Property;
3A.7.2 obtain any requisite licence or licences from the landlord and
it sreversioner to such assignment, the incidental cost of
obtaining such licence or licences to be paid by the Vendors;
and subject to the Purchaser using all reasonable endeavours to assist
the Vendors to procure or obtain the above, in the event that the
Vendors are unable to do so, they shall indemnify the Company for all
damages, liabilities, legal proceedings, actions, losses, costs and
expenses (including reasonable legal and other advisors' fees) incurred
by the Company in respect of the Company's occupation of the Leasehold
Property without the benefit of such assignment. The Purchaser may not
recover any sum under this indemnity which constitutes a penalty on the
Vendors for their failure to procure or obtain the above.
4. PRE-EMPTION RIGHTS
The Vendors irrevocably waive and undertake to procure that any other
person having such rights shall by Completion have irrevocably waived
all and any rights of pre-emption or other restrictions on transfer
over or in respect of the Shares existing by virtue of the articles of
association of the Company or otherwise.
5. VENDORS' AND TRUSTEES' WARRANTIES
5.1 Each of the Vendors severally represents, warrants and undertakes to
the Purchaser for the benefit of the Purchaser and its successors in
the terms set out in Schedule 4 (provided that as among the Trustee
Vendors, their collective several representations, warranties and
undertakings shall be made jointly as among them and not among the
other Vendors) and acknowledges that the Purchaser is entering into
this Agreement in reliance on each of the Vendors' Warranties and each
of the Vendors further acknowledges that the Purchaser shall be
entitled to treat the Vendors' Warranties as conditions of this
Agreement. The Vendors' Warranties shall be deemed to be given as of
the date of this Agreement and as of the Completion Date.
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5.2 The Vendors waive and may not enforce a right which they may have in
respect of a misrepresentation, inaccuracy or omission in or from
information or advice supplied or given by the Company or a Director,
officer or employee of the Company for the purpose of assisting the
Vendors to make a representation, give a Vendors' Warranty or prepare
the Disclosure Letter; provided however, that the Vendors shall have
the right to ▇▇▇ a Director, officer or employee of the Company should
the information or advice have been fraudulently supplied, given or
withheld by such person.
5.3 Each of the Vendors' Warranties shall be separate and independent and
shall not be limited by reference to any other of the Vendors'
Warranties or (except where this Agreement expressly provides
otherwise) any other provision of this Agreement.
5.4 For the purpose of the Vendors' Warranties and elsewhere in this
Agreement where the context so admits, any reference to the Company is
deemed to include (unless the context otherwise so requires), a Vendors
Group Company.
5.5 The Vendors' Warranties are qualified by the facts and circumstances
Disclosed in the Disclosure Letter. No other knowledge relating to the
Company (actual, constructive or imputed) prevents or limits a claim
made by the Purchaser for breach of Section 5.1 and the Vendors may not
invoke the Purchaser's knowledge (actual, constructive or imputed) of a
fact or circumstance which might make or makes a warranty untrue,
inaccurate, incomplete or misleading as a defence to a claim or breach
of Section 5.1.
5.6 The Trustee Vendors jointly and severally warrant and undertake to the
Purchaser that:
5.6.1 the Trustee Vendors are as trustees the legal owners of
10,635,291 ordinary shares of (pound)0.01 each in Kerridge
Group Limited; and
5.6.2 the Trustee Vendors as such trustees have no liabilities other
than liabilities in respect of taxation on income and
liabilities in respect of professional fees.
6. LIMITATIONS TO THE VENDORS' WARRANTIES
6.1 The provisions of this Section shall operate to limit the liability of
the Vendors in respect of any claim under or in connection with the
Vendors' Warranties, the Tax Deed and the Disclosure Letter and
references to "claim" and "claims" shall be construed accordingly. The
parties agree as follows:
6.1.1 the maximum aggregate liability of the Vendors in respect of
all claims shall not exceed the total Consideration;
6.1.2 the maximum aggregate liability of each of the Vendors shall
not exceed the sum set out opposite such Vendor's name in
column (6) of Schedule 1 Part A (but so that the Trustee
Vendors shall for this purpose be deemed to be a single
Vendor);
6.1.3 Each of the Vendors shall be liable only for such proportion
of any claim against the Vendors as shall correspond to the
proportion which the sum set out opposite such Vendor's name
in column (6) of Schedule 1A bears to the sum of
(pound)27,000,000 (but so that the Trustee Vendors shall for
this purpose be deemed to be a single Vendor);
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6.1.4 no liability shall attach to the Vendors unless the aggregate
amount of all claims for which they would, in the absence of
this provision, be liable shall exceed (pound)50,000 and in
such event the Vendors shall be liable only for the excess
over such amount;
6.1.5 no liability shall attach to the Vendors in respect of any
claim unless notice has been given to the Vendors of that
claim:
6.1.5.1 for breach of Section 5.1 in respect of a Vendors'
Warranty contained in Part B of Schedule 4, on or
before the seventh anniversary of the Accounting
Date; and
6.1.5.2 for breach of Section 5.1 in respect of any other
Vendors' Warranty, on or before the third
anniversary of this Agreement.
6.1.6 The liability of the Trustee Vendors shall not exceed the
value of the assets for the time being and from time to time
held by them as trustees of the ▇▇▇▇▇▇▇ Family Settlements to
the intent that the Purchaser shall have no recourse against
the Trustee Vendors in respect of any assets owned by them
beneficially provided that:
6.1.6.1 if the Trustee Vendors shall make any distribution
of capital to any beneficiary of the ▇▇▇▇▇▇▇
Family Settlements during the Escrow Period the
Trustee Vendors shall first procure that the
recipient of such distribution shall enter into
such covenants and indemnities as the Purchaser
shall reasonably require to ensure that the
Purchaser is not prejudiced by such distribution;
and
6.1.6.2 this Section 6.1.6 shall not limit the liability
of the Trustee Vendors for any breach of Section
5.6
6.1.7 in the event that the Purchaser or the Company is entitled to
recover any sum (whether by payment, discount, credit or
otherwise) from any third party in respect of any matter for
which a claim could be made against the Vendors, the Purchaser
shall use, or procure that the Company shall use, all
reasonable endeavours to recover such sum before making the
claim, and any sum recovered will reduce the amount of the
claim; and, in the event of the recovery being delayed until
after the claim has been satisfied by the Vendors or the
Purchaser shall account to the Vendors in respect of any
amount so recovered (after deduction of all reasonable costs
and expenses of the recovery) up to the amount of the claim;
6.2 Any claim made by the Purchaser for breach of Vendors' Warranty shall
be reduced by the amount of any payment made by any of the Vendors in
respect of the same facts or circumstances pursuant to the provisions
of the Tax Deed and vice versa.
6.3 If any of the Vendors pays any sum to the Purchaser pursuant to a
claim, that part of the consideration received by such Vendor for the
sale of his Shares shall be deemed to be reduced by the amount of such
payment and the purchase price paid by the Purchaser shall also be
deemed to be reduced by such amount.
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6.4 While the Escrow Agent shall hold any Escrow shares of a Vendor
pursuant to the Escrow Agreement any claim against such Vendor shall to
the extent possible be satisfied by its release to the Purchaser of
Escrow Shares.
6.5 Any Vendor shall be entitled at his option to satisfy any claim made
against such Vendor by the Purchaser by transferring any Consideration
Shares previously released to such Vendor by the Escrow Agent to the
Purchaser.
6.6 For the purposes of Sections 6.4 and 6.5, the value of each
Consideration Share shall be determined in the manner as the value of
the Escrow Shares falls to be US$ 14.95.
6A. PURCHASER'S WARRANTIES
6A.1 The Purchaser represents, warrants and undertakes to the Vendors for
the benefit of the Vendors and their respective successors in the terms
set out in Schedule 8 and acknowledges that the Vendors are entering
into this Agreement in reliance on the Purchaser's Warranties and that
the Vendors shall be entitled to treat them as conditions of this
Agreement. The Purchaser's Warranties shall be deemed to be given as of
the date of this Agreement and as of the Completion Date.
6A.2 Each of the Purchaser's Warranties shall be separate and independent
and shall not be limited by reference to any other of the Purchaser's
Warranties or any other provision of this Agreement.
7. RELEASE OF GUARANTEES
The Vendors shall immediately prior to Completion procure the absolute
and unconditional release of the Company from all guarantees,
suretyships, encumbrances, indemnities and like undertakings of a
non-trading nature or outside the ordinary course of business of the
Company given by the Company in respect of any obligations of any
person and shall fully and effectually indemnify and keep indemnified
the Purchaser from and against any and all costs, claims, demands or
liabilities incurred or arising from any such guarantees, suretyships,
indemnities and like undertakings.
8. COMPLETION
Completion will take place in accordance with Schedule 5 at the
Company's offices at The Chestnuts, ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ on the Completion Date. The obligations of the parties under
this Agreement are subject to the fulfilment on or before the
Completion of each of the Completion requirements set out in Schedule 5
and as set forth in Section 10 hereof.
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9. CONDUCT OF BUSINESS
9.1 During the period from the date of this Agreement and continuing until
the Completion Date, except as expressly contemplated or permitted by
this Agreement or with the written consent of the Purchaser, the
Company shall carry out its business in the ordinary course consistent
with past practice. Without limiting the generality of the foregoing,
and except as previously Disclosed by the Company to the Purchaser in
writing or as otherwise contemplated by this Agreement or consented to
in writing by the Purchaser, the Company shall not:
9.1.1 declare or pay any dividends on, or make other distributions
in respect of, any Shares;
9.1.2 repurchase, redeem or otherwise acquire any Shares or any
securities convertible into or exercisable for any Shares;
9.1.3 split, combine or reclassify any Shares or issue or authorise
or propose the issuance of any other securities in respect of,
in lieu of or in substitution for Shares;
9.1.4 issue, deliver or sell, or authorise or propose the issuance,
delivery or sale of, any Shares or any securities convertible
into or exercisable for, or any rights, warrants or options to
acquire, any Shares;
9.1.5 amend its Memorandum or Articles of Association;
9.1.6 make any capital expenditures in excess of (pound)15,000 other
than those which are made in the ordinary course of business
or are necessary to maintain existing assets in good repair;
9.1.7 enter into any new line of business, except as contemplated
hereby;
9.1.8 acquire or agree to acquire, by merging or consolidating with,
or by purchasing any equity interest in or any of the assets
of, or by any other manner, any business or any corporation,
partnership, association or other business organisation or
division thereof or otherwise acquire any assets, which would
be material, individually or in the aggregate, to the Company;
9.1.9 take any action that is intended or may reasonably be expected
to result in any of the Vendors' Warranties set forth in this
Agreement being or becoming untrue, or in any of the
conditions to the Agreement not being satisfied;
9.1.10 make a material change in its methods of accounting in effect
at the Accounting Date except as required by changes in GAAP
or as concurred with by the Company's auditors;
9.1.11 except as required by applicable law adopt, amend, or
terminate any employee benefit plan or any agreement,
arrangement, plan or policy between the Company and one or
more of its current or former directors, officers or
employees, or increase in any manner the compensation, fringe
benefits or bonuses of any Director, officer or employee, nor
any payments thereto;
9.1.12 other than activities in the ordinary course of business
consistent with past practice, sell, lease, encumber, assign
or otherwise dispose of, or agree to sell, lease, encumber,
assign or otherwise dispose of, any of its material assets,
properties or other rights or agreements;
9.1.13 other than in the ordinary course of business consistent with
past practice, incur any indebtedness for borrowed money or
assume, guarantee, endorse or
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otherwise as an accommodation become responsible for the
obligations of any other individual, corporation or other
entity;
9.1.14 other than agreements in the ordinary course of business that
do not require payments by the Company in excess of
(pound) 15,000 per year per individual agreement or an
aggregate of (pound) 30,000 per year for all such agreements,
create, renew, amend or terminate or give notice of a proposed
renewal, amendment or termination of, any material contract,
agreement or lease for goods, services or office space to
which the Company is a party or by which the Company or its
properties are bound; or
9.1.15 agree to do any of the foregoing.
9.2 Notwithstanding anything contained in Section 9.1, the Vendors covenant
that prior to Completion they shall procure that the Company sells any
interest it may have by way of ownership or otherwise in Centrix and
PSL in accordance with the PSL and Centrix Agreement for an aggregate
amount equal to the aggregate amount outstanding of the loans made by
KNS Limited to PSL and Centrix and shall use the proceeds in their
entirety and all available cash of the Company to repay an equivalent
amount of the KCC Loan, together with any cash applied thereto in
accordance with the last sentence of Section 3.1.
10. CONDITIONS PRECEDENT
10.1 The respective obligation of each party to effect the Agreement shall
be subject to the satisfaction at or prior to Completion of the
following conditions:
10.1.1 No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Agreement shall
be in effect, nor shall any proceeding brought by an
administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign, seeking any
of the foregoing be pending; nor shall there by any action
taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Agreement, which
makes the consummation of the Agreement illegal.
10.1.2 All approval waivers and consents from each governmental body
necessary for consummation of or in connection with the
Agreement and the several transactions contemplated hereby, if
any, shall have been obtained.
10.1.3 The Executives and at least 80% of all other employees at the
Completion Date shall have entered into the Employment
Agreements in a mutually satisfactory form. The Employment
Agreements for employees having a per annum salary
of (pound)20,000 or more at the Completion Date shall be for a
minimum term of three years and shall contain non-competition
covenants during the term and for two years after the end of
the term or earlier termination. The Employment Agreements
will be on terms no less favourable than those to which the
Executives and the employees are currently parties.
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10.1.4 The Company shall have entered into loan and security
agreements (granting a charge over the accounts receivable
of the Company) in respect of the KCC Loan in a form
mutually satisfactory to the Purchaser and the Vendors.
10.2 The obligation of the Purchaser to effect the Agreement is also subject
to the satisfaction or waiver by the Purchaser at or prior to
Completion of the following conditions:
10.2.1 The Vendors' Warranties shall be true and correct as of the
date of this Agreement and as of the Completion Date as though
made on and as of the Completion Date. The Purchaser shall
have received a certificate signed on behalf of the Vendors by
▇▇▇▇▇ ▇▇▇▇▇▇ to that effect; provided that such certificate
may include qualifications in respect of breaches to the
Vendors' Warranties which would not in themselves result in
liability to the Vendors having regard to Section 6.1.4.
10.2.2 The Vendors shall have performed in all material respects all
obligations required to be performed by them under this
Agreement at or prior to the Completion Date, and the
Purchaser shall have received a certificate signed on behalf
of the Vendors by ▇▇▇▇▇ ▇▇▇▇▇▇ to that effect.
10.2.3 There shall not have occurred any material adverse change in
the condition (financial or otherwise), properties, assets
(including intangible assets), liabilities, business,
prospects, operations or results of operations of the Company
or any Vendors Group Company, taken as a whole.
10.2.4 The Purchaser shall have been furnished with evidence
satisfactory to it of the consent or approval of those persons
whose consent or approval shall be required in connection with
the Agreement.
10.2.5 In addition to any other instruments and documents required to
be delivered by the Vendors pursuant to this Agreement, the
Vendors shall have delivered to the Purchaser on or before the
Completion Date such certificates, instruments and
documentation as are reasonably required in the opinion of the
Purchaser's lawyers to complete the transactions contemplated
herein.
10.2.6 The Purchaser shall have been satisfied in its sole discretion
with its review of due diligence materials supplied, either
prior to or subsequent to the date hereof, to the Purchaser by
the Vendors including without limitation the working papers of
the Company's accountants in respect of their latest
preparation of the audited accounts for the Accounting Period
ending on the Accounting Date and all working and other papers
in their possession relating to the period up to the
Accounting Date and such other materials as the Purchaser
requires the Vendors to produce; provided that this condition
shall be deemed to be waived by the Purchaser if the Purchaser
shall not have delivered written notice to the Vendors that
the Purchaser does not wish to complete this Agreement
pursuant to this Section 10.2.6 by 6:00pm (London time) on 29
November 1999.
10.2.7 The Purchaser shall be satisfied that the Completion under the
PSL and Centrix Agreement has occurred in accordance with its
terms and the proceeds of sale thereunder shall have been
applied to reduce the outstanding balance of the KCC Loan.
10.2.8 The Escrow Agreement shall have been executed and delivered.
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10.2.9 KNS Limited shall be a wholly owned subsidiary of the Company
beneficially owned by the Company free of all encumbrances.
10.2.10 The KCC Loan shall not exceed 70% of the debtors balance of
the Company net of the PSL indebtedness and provisions.
10.3 The obligation of the Vendors to effect the Agreement is subject to the
satisfaction or waiver by the Vendor at or prior to Completion of the
following conditions:
10.3.1 The Purchaser's Warranties shall be true and correct as of the
date of this Agreement and as of the Completion Date as though
made on and as of the Completion Date. The Vendors shall have
received a certificate signed on behalf of the Purchaser by
its Chief Executive Officer and Chief Financial Officer to
that effect.
10.3.2 The Purchaser shall have performed in all material respects
all obligations required to be performed by it under this
Agreement at or prior to the Completion Date, and the Vendors
shall have received a certificate signed on behalf of the
Company by its Chief Executive Officer and Chief Financial
Officer to that effect.
10.3.3 There shall not have occurred any material adverse change in
the condition (financial or otherwise), properties, assets
(including intangible assets), liabilities, business,
prospects, operations or results of operations of the
Purchaser or any Purchaser Group Company, taken as a whole, it
being understood that any fluctuation in the market price of
the Purchaser Shares shall not be or be deemed to be such a
material adverse change.
10.3.4 The Vendors shall have been furnished with evidence
satisfactory to them of the consent or approval of those
persons whose consent or approval shall be required in
connection with the Agreement.
10.3.5 In addition to any other instruments and documents required to
be delivered by the Purchaser pursuant to this Agreement, the
Purchaser shall have delivered to the Vendors on or before the
Completion Date such certificates, instruments and
documentation as are reasonably required in the opinion of the
Vendors' lawyers to complete the transactions contemplated
herein.
11. TERMINATION, AMENDMENT AND SURVIVAL OF OBLIGATIONS
11.1A This Agreement may be terminated at any time prior to the Completion
Date, whether before or after approval of the matters presented in
connection with the Agreement by the Vendors:
11.1A.1 by mutual consent of the Purchaser and Vendors in a written
instrument;
11.1A.2 by either the Purchaser or the Vendors if there shall have
been a material breach of any of the warranties, covenants or
agreements set forth in this Agreement on the part of the
other party, which breach shall not have been cured within
seven (7) days following receipt by the breaching party of
written notice of such breach from the other party hereto, or
which breach, by its nature, cannot be cured prior to
Completion and which breach shall constitute a material
adverse change.
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11.1.B This Agreement may be terminated at any time after 20 December 1999 if
the Completion Date has not occurred by such date, by either the
Purchaser or the Vendors.
11.2 In the event of termination of this Agreement by either the Purchaser
or the Vendors as provided in Section 11.1A or B, this Agreement shall
forthwith become void and have no effect except that those Sections
expressly stated herein to survive termination, namely this Section
11.2 and Sections 3.11, 11.6, 15.2, 16 and 24 shall survive any
termination of this Agreement and notwithstanding anything to the
contrary contained in this Agreement, no party shall be relieved or
released from any liabilities or damages arising out of its wilful
breach of any provision of this Agreement.
11.3 At any time prior to the Completion Date, each of the parties hereto,
may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other party
hereto, (b) waive any inaccuracies in the warranties or in any document
delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions of another party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument signed on
behalf of such party, but such extension or waiver or failure to insist
on strict compliance with an obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect
to, any subsequent or other failure.
11.4 In the event that either the Purchaser or the Vendors is or are unable
to consummate the transaction as a result of its or their failure to
fulfil any of the provisions of Section 10 for reasons beyond its or
their control, it or they shall incur no liability to the other
whatsoever (whether in contract or tort). For the avoidance of doubt,
the failure of the parties to complete this Agreement by reason of the
failure to satisfy Section 10.1.3 shall be deemed beyond the control of
the parties.
11.5 If Completion takes place and there is either before or after
Completion any breach of warranty or non-fulfilment of any covenant or
agreement on the part of the Vendors contained in this Agreement, the
Vendors shall take such action as shall be required to bring the
Company into the position it would have been in if there had been no
breach of any Vendors' Warranty or non-fulfilment of any agreement on
the part of the Vendor contained in this Agreement. In the event that
the nature of the relevant breach or non-fulfilment is such that the
Vendors are unable to bring such Company into that position, or if the
Purchaser so elects, the Vendors severally (but with the Trustee
Vendors being regarded for this purpose as a single Vendor) shall
indemnify and hold harmless the Purchaser from and against and fully
reimburse the Purchaser any and all damages (including but not limited
to the amount whereby the value of the Company or any of its assets is
less than the value which such assets would have had, had the relevant
breach or non-fulfilment not occurred), liabilities, actions, legal
proceedings, losses, costs and expenses (including but not limited to
legal and other advisers' fees and expenses) incurred by the Purchaser
arising out of or resulting from any such breach of a Vendors' Warranty
or non-fulfilment of any covenant or agreement on the part of the
Vendors contained in this Agreement.
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11.6 The representations, warranties, covenants and agreements of the
parties made in this Agreement shall survive Completion and shall
terminate on the dates that the right to indemnification under such
representations, warranties, covenants or agreements terminates as
provided in Sections 6.1.3.1 and 6.1.3.2 and they shall not be affected
in any respect by any examination or investigation conducted by or on
behalf of the parties hereto and any information which any party may
receive pursuant to the schedules hereto or otherwise.
12. RESTRICTIVE COVENANTS
12.1 Each of the Vendors hereby undertakes to and covenants with the
Purchaser that he will not either on his own account or jointly with or
as manager, agent, officer, employee or otherwise on behalf of any
other person, firm or corporation directly or indirectly (and so that
each undertaking below shall be a further and separate obligation):
12.1.1 for a period of three years from the Completion Date:
12.1.1.1 carry on or be engaged, concerned, or interested
in or assist any business which competes with any
business of the Company as carried on at the
Completion Date;
12.1.1.2 canvass or solicit business, orders or custom for
goods or services supplied or provided by the
Company from any person who at any time within the
period of one (1) year preceding the Completion
Date has been a customer of or in the habit of
dealing with the Company for such goods or
services;
12.1.1.3 solicit or entice away or endeavour to solicit or
entice away from the Company any person who on the
Termination Date or within the six months prior to
the Termination Date is or was a director,
officer, employee or other servant of the Company;
12.1.1.4 induce or attempt to induce any person (including
without limitation any agent or independent
distributor) who in the six months prior to the
Termination Date has been a supplier of any goods
or services to the Company to cease to supply, or
to restrict or vary the terms of supply, to the
Company; or
12.1.1.5 do or say anything which is harmful to the
Company's reputation or which may lead a person to
cease to deal with the Company on substantially
equivalent terms to those previously offered or at
all.
12.1.2 at any time after the Completion Date use or procure the use
in connection with any business of any corporate or business
name which is identical to or likely to be confused with the
corporate name or any business name of the Company or which
might suggest a connection with the business of the Company.
12.2 The Purchaser acknowledges that certain of the Vendors are shareholders
and directors in Kerridge Group Limited ("KGL") and KCC, certain
customers and suppliers of the Company may also be customers and
suppliers of KGL and KCC, and that the Company, on the one hand, and
KGL and KCC, on the other, may to a limited extent compete. The
Purchaser agrees that such identity of customers and suppliers and/or
such limited competition shall not constitute a violation of Section
12.1 by any of the Vendors.
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13. POST-COMPLETION EFFECT
This Agreement shall remain in full force and effect after and
notwithstanding Completion in respect of all obligations, agreements,
covenants, undertakings, conditions, representations, warranties or
indemnities which have not been done, observed or performed at or prior
to Completion.
14. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and enure for the benefit of each
party's successors and shall be assignable by the Purchaser to any
Purchaser Group Company to the extent that the rights and benefits
under this Agreement shall enure for the benefit of the Purchaser's
assigns; provided that no such assignment shall alter or diminish the
Purchaser's obligations hereunder. Save as aforesaid this Agreement
shall not be assignable.
15. INFORMATION AND CONFIDENTIALITY
Each of the Vendors hereby undertakes to the Purchaser:
15.1 that he will at any time and from time to time after Completion give to
the Purchaser all such information in his possession concerning the
business, dealings, transactions or affairs of the Company as the
Purchaser may reasonably request and in particular, but without
prejudice to the generality of the foregoing, relating to claims made
or threatened against the Company and the source from and consideration
for which any assets of the Company were acquired or derived; and
15.2 that he will not, and will procure that no person under his control
will, at any time after the date hereof, take away or (directly or
indirectly) make use of, divulge or communicate to any person (except
as may be necessary to comply with any statutory obligation or order of
any court or statutory tribunal of competent jurisdiction) any
Confidential Information or trade secrets of the Company or of any
supplier, customer or other person who has or who has had dealings with
the Company, except in the ordinary course of his employment with the
Company.
16. ANNOUNCEMENTS AND PUBLICITY
Any announcement or circular or other publicity relating to this
Agreement or any termination thereof shall prior to its publication be
approved in writing by each of the Representative and the Purchaser as
to its content, form and manner of publication (such approval not to be
unreasonably withheld or delayed), save that any announcement, circular
or other publicity required to be made or issued by the Purchaser
pursuant to the regulations of rules governing the NASDAQ Stock Market
or other recognised investment exchange or by other governmental agency
or regulatory body or law may be made or issued by the Purchaser
without such approval.
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17. NOTICES
17.1 Any notice required to be given under this Agreement shall be
sufficiently given if delivered personally or if sent by first-class
recorded delivery post (express air courier service if sent overseas)
or if sent by facsimile transmission.
17.2 Any notice which is sent or despatched in accordance with this
Section 17 shall be deemed to have been received by the addressee:-
17.2.1 if delivered personally, at the time of delivery;
17.2.2 in the case of a notice sent by post (or express air courier),
two Business Days after the envelope containing the notice was
delivered to the postal authorities (or courier service);
17.2.3 in the case of a notice sent by facsimile transmission, if the
notice was sent during the normal business hours of the
addressee, on the day of transmission; otherwise on the next
following Business Day.
17.3 In proving service by post or express air courier, it shall be
necessary to prove only that the notice was sent or despatched and that
the notice was contained in an envelope properly addressed, stamped and
delivered to the postal authorities or courier service in the country
from where despatched. In proving service by facsimile transmission, it
shall be necessary to produce only a legible copy of the confirmation
of the facsimile transmission.
17.4 Any notice required to be given under this Agreement shall be sent:
17.4.1 to the Vendors c/o the Vendors' solicitors at:
▇▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇. ▇▇▇▇ ▇▇▇
Facsimile No: 01242 224223
For the attention of: ▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇ ▇▇▇▇▇
17.4.2 to the Purchaser at:
FutureLink Corp.
▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
For the attention of: ▇▇▇ ▇▇▇▇▇▇
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With a copy to:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Tower 42
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Facsimile No: 0171 628 4444
For the attention of: ▇▇▇▇▇ ▇. ▇▇▇
or to such other address or facsimile number as is notified in
writing from time to time by the Vendors (or any one of them)
or the Purchaser (as the case may be) to the other.
18. SERVICE OF PROCESS
The Purchaser hereby appoints Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, as
its agent for the service of any process in the United Kingdom. Such
appointment shall not be revocable without the prior written consent of
the Representative.
19. FURTHER ASSURANCE
The Vendors shall do, execute and perform and shall procure to be done,
executed and performed all such further acts, deeds and documents as
the Purchaser may require effectively to vest the legal and beneficial
ownership of the Shares in the Purchaser or as it directs free from all
liens, charges, options, encumbrances or adverse rights of interests of
any kind and otherwise to give to the Purchaser the full benefit of
this Agreement.
20. WAIVERS
20.1 A failure by any party to exercise and any delay, forbearance or
indulgence by any party in exercising any right, power or remedy under
this Agreement shall not operate as a waiver of that right, power or
remedy or preclude its exercise at any subsequent time or on any
subsequent occasion. The single or partial exercise of any right, power
or remedy shall not preclude any other or further exercise of that
right, power or remedy or the exercise of any other right, power or
remedy. No custom or practice of the parties at variance with the terms
of this Agreement shall constitute a waiver of the rights of any party
under this Agreement. The rights, powers and remedies provided in this
Agreement are cumulative and not exclusive of any rights, powers or
remedies provided by law.
20.2 In relation to any two or more persons who are severally liable under
this Agreement, the liability under this Agreement of any one or more
of such persons shall not be prejudiced or affected in any way by the
giving of time or any forbearance or indulgence granted by the
Purchaser to any other or others of such persons or by the release or
compromise by the Purchaser of any liability under this Agreement of
any other or others of such persons.
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21. ENTIRE AGREEMENT
This Agreement, the Disclosure Letter, the Tax Deed and all agreements
entered into between the Vendors and the Purchaser pursuant to the
terms of this Agreement together constitute the entire agreement
between the parties with respect to the subject matter of this
Agreement and supersede all prior discussions, understandings and
agreements between the parties or their agents in relation thereto.
22. VARIATION
No variation of this Agreement shall be effective unless made in
writing and signed by or on behalf of each of the parties.
23. COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, and which together shall
constitute one and the same Agreement. Unless otherwise provided in
this Agreement, this Agreement shall become effective and be dated (and
each counterpart shall be dated) on the date on which this Agreement
(or a counterpart of this Agreement) is signed by the last of the
parties to execute this Agreement or, as the case may be, a counterpart
thereof.
24. APPLICABLE LAW
This Agreement shall be governed by and construed in accordance with
English law and the parties hereby submit themselves to the
non-exclusive jurisdiction of the English Courts.
Executed by the parties:
SIGNED BY: ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------
for and on behalf of ▇▇▇▇ ▇▇▇▇▇▇▇
SIGNED BY: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------
for and on behalf of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
SIGNED BY: Colin Matthissen
-------------------------
for and on behalf of COLIN MATTHISSEN
22
26
SIGNED BY: Quadrangle Trustee Company
---------------------------
for and on behalf of QUADRANGLE TRUSTEE COMPANY
SIGNED BY: ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
for and on behalf of ▇▇▇▇▇ ▇▇▇▇▇▇▇
SIGNED BY: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------
for and on behalf of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
SIGNED BY: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
--------------------------
for and on behalf of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
SIGNED BY: ▇▇▇▇▇▇ ▇▇▇▇
--------------------------
for and on behalf of ▇▇▇▇▇▇ ▇▇▇▇
SIGNED BY: ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
for and on behalf of ▇▇▇▇ ▇▇▇▇▇▇▇▇
SIGNED BY: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
for and on behalf of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SIGNED BY: ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
for and on behalf of ▇▇▇▇▇ ▇▇▇▇▇▇
SIGNED BY: ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------
for and on behalf of ▇▇▇▇▇ ▇▇▇▇▇
23
27
SIGNED BY: Yuri Pasea
--------------------------
for and on behalf of YURI PASEA
SIGNED BY: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------
for and on behalf of FUTURELINK CORP.
24
28
SCHEDULE 1
PART A
PARTICULARS OF THE VENDORS AND OF THE SHARES TO BE SOLD
AND CONSIDERATION TO BE RECEIVED BY EACH OF THEM
(1) (2) (3) (4) (5) (6)
Name and Address Number of Cash Loan Notes Consideration Total
Shares to be Consideration Shares Consideration
Sold (pound) (pound) (pound) (pound)
1. ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, 7,302,388 1,686,141.65 963,509.53 6,934,733.05 9,584,384.23
▇▇▇▇▇ ▇▇▇▇▇▇▇ Matthissen and
Quadrangle Trustee Company as
trustee of the various family
settlements established by
▇▇▇▇ ▇▇▇▇▇▇▇
2. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, 3,332,903 769,576.55 439,758.03 3,165,100.59 4,374,435.17
▇▇▇▇▇ ▇▇▇▇▇▇▇ Matthissen and
Quadrangle Trustee Company as
trustee of various family
settlements, established by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
3. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 772,410 178,351.62 101,915.21 733,521.30 1,013,788.13
4. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ 772,410 178,351.62 101,915.21 733,521.30 1,013,788.13
5. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Monamy 772,410 178,351.62 101,915.21 733,521.30 1,013,788.13
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
6. ▇▇▇▇▇▇ ▇▇▇▇ 772,410 178,351.62 101,915.21 733,521.30 1,013,788.13
7. ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 675,069 155,875.32 89,071.60 641,081.16 886,028.08
8. ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 2,057,143 475,000 200,000 2,025,000 2,700,000
9. ▇▇▇▇▇ ▇▇▇▇▇ 2,057,143 475,000 200,000 2,025,000 2,700,000
10. Yuri Pasea 2,057,143 475,000 200,000 2,025,000 2,700,000
Total 20,571,429 4,750,000 2,500,000 19,750,000 27,000,000
The shares shown in this schedule for the Executives represent the shares that
they will hold in the Company following the exercise of their options prior to
Completion.
1A.1
29
SCHEDULE 1
PART B
PAYMENTS SCHEDULE
1B.1
30
SCHEDULE 2
PARTICULARS CONCERNING THE COMPANY
1. Registered Office: KNS Holdings Limited
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
2. Date of Incorporation: 26 November 1997
3. Registered Number: 03471603
4. Directors: ▇. ▇. ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
▇. ▇. ▇▇▇▇▇▇▇
5. Secretary: B. C. Soulby
6. Mortgages and Charges:
7. Share Capital: (pound)144,000 divided into
14,400,000 ordinary shares of
1p each
2.1
31
SCHEDULE 3
[REDUNDANT SCHEDULE]
3.1
32
SCHEDULE 4
PART A
GENERAL WARRANTIES
1 INFORMATION SUPPLIED AND CAPACITY OF VENDORS
1.1 All written information given by, or on behalf of, the Vendors or on
its behalf by the Company to the Purchaser, its advisers or agents
before or during the negotiations leading to this Agreement and all
information contained in this Agreement and all matters contained in
the Disclosure Letter are true and accurate in every respect and so far
as the Vendors are aware there is no fact or matter which has not been
Disclosed which renders any such matters or information untrue or
misleading in any material respect.
1.2 The Vendors have full power and authority to enter into and perform
this Agreement and the Vendors (as defined in the Tax Deed) have full
power and authority to enter into and perform the Tax Deed, and this
Agreement and the Tax Deed, when executed, will constitute valid and
binding obligations on the Vendors and the Vendors respectively in
accordance with the respective terms thereof.
2 ACCOUNTS AND RECORDS
2.1 The Company has at all times fully, properly and accurately maintained
all books, accounts and records of whatever kind required by law to be
maintained.
2.2 The books, accounts and records of the Company fully and accurately
record in all material respects all matters required by law to be
entered therein and accurately present and reflect in accordance with
generally accepted accounting principles and practice in the United
Kingdom the assets and liabilities (actual, prospective and contingent)
of the Company and all transactions to which it is or has been a party.
2.3 The Accounts:
2.3.1 comply with the requirements of the Companies Act and other
relevant statutes and U.K. generally accepted accounting
principles, SSAPs and FRSs and give a true and fair view of
and properly reflect the financial position of the Company as
at the Accounting Date and are not affected by any unusual or
non-recurring items;
2.3.2 fully disclose all assets and make full provision or reserve
for all assets and liabilities (whether or not quantified or
disputed) and fully provide for (or disclose by way of note)
all bad and doubtful debts and all contingent liabilities at
the Accounting Date; and
2.3.3 make adequate provision for depreciation of the fixed assets
of the Company having regard to their original cost and
estimated life in accordance with SSAP 12.
2.4 The Company has made full provision in the Accounts for all Tax liable
to be assessed on the Company or for which it is accountable in respect
of income, profits or gains earned,
4A.1
33
accrued or received on or before the Accounting Date including
distributions made down to that date.
2.5 The Management Accounts of the Company have been prepared on a proper
and consistent basis in accordance with the accounting principles and
practices adopted in the preparation of the Accounts and give a fair
view of and properly reflect the assets, liabilities, profits and
losses and financial position of the Company for the period ending on
31 October 1999.
2.6 Except as disclosed in the Accounts or Management Accounts:
2.6.1 the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation;
2.6.2 all monies set aside or held in trust by the Company for the
benefit of another person are properly accrued or so held and
are completely and accurately recorded in the books and
records of the Company and no claim can be made against the
Company in respect thereof in excess of the amounts so set
aside or held.
2.7 The Company has no material obligations or liabilities of any nature
(matured or unmatured, fixed or contingent) other than Disclosed in the
Accounts or Management Accounts and those incurred in the ordinary
course of business not required to be set out in the Accounts under
U.K. GAAP and consistent with past practice.
3 BUSINESS SINCE THE ACCOUNTING DATE
3.1 Since the Accounting Date:
3.1.1 the Company has carried on its business in the ordinary and
usual course both as regards the nature, scope and manner of
conducting the same and so as to maintain the same as a going
concern;
3.1.2 the Company has not entered into any long-term (that is to
say, incapable of performance in accordance with its terms
within six months after the date on which it was entered into
or undertaken) arrangements, commitments or contracts or
arrangements, commitments or contracts of a material nature
outside the ordinary and usual course of business of the
Company;
3.1.3 no distribution of capital or income (including for the
avoidance of doubt, any dividend) has been declared, made or
paid or agreed or resolved to be declared, made or paid by the
Company;
3.1.4 the Company has not created, allotted, issued, acquired,
repaid, redeemed or pledged share or loan capital or made an
agreement or arrangement or undertaken an obligation or
granted an option, right or privilege in respect of any of the
above;
3.1.5 no loans have been made or guarantees given by the Company and
no loan capital or loan has been or has become liable to be
repaid by the Company in whole or in part;
3.1.6 no sum has been paid or voted to any director or employee (or
ex-director or ex-employee) of the Company by way of
remuneration, benefit or otherwise in excess of the rates paid
to him by the Company at the Accounting Date and no
4A.2
34
new employment agreements have been made by the Company other
than in respect of employees listed in the corresponding
schedule to the Disclosure Letter.
3.1.7 no loans are outstanding or have been made to employees,
Directors, officers of the Company or Shareholders;
3.1.8 save for the KCC loan the Company has not borrowed, raised or
taken any money or any financial facility except in the
ordinary course of business not exceeding (pound)20,000;
3.1.9 the Company has paid its creditors within the times agreed
with such creditors and there are no debts outstanding by the
Company which have been due for more than 60 days;
3.1.10 the Company has not entered into any capital commitments or
any transaction or agreement for the acquisition, lease,
disposal, transfer, mortgage, pledge or subjection to any
encumbrance or lien of any asset or under which it has
incurred or will incur, except in the ordinary course of
business not exceeding (pound)20,000, any liabilities
(including contingent liabilities);
3.1.11 the business of the Company has not been adversely affected by
the loss of or material reduction in nor is the Company aware
of any threatened loss of or material reduction in orders from
any customer, any source of supply, contract, lease, other
agreement, certificate or licence required by the Company for
its operation or by any abnormal factor not affecting similar
businesses to a like extent;
3.1.12 the Company has not sold, assigned or transferred any
Intellectual Property Rights except in the ordinary course of
business;
3.1.13 the Company has not received nor is aware of any plans of any
key officer or employee to resign from or renegotiate his
employment arrangements with the Company;
3.1.14 none of the fixed assets of the Company shown in the Accounts,
Management Accounts and none acquired by the Company since
March 31, 1998 has been lost, damaged or destroyed;
3.1.15 there has been no material adverse change in the financial
position or trading prospects or turnover of the Company nor
so far as the Vendors are aware is any such material change
expected; and
3.1.16 there has been no change in the Company's Memorandum and
Articles of Association, no resolution of the Shareholders of
the Company has been passed and the Company has not changed
its accounting reference date.
3.2 Since the Accounting Date the Company has not engaged in any
negotiations to do any of the things described in Section 3.1.
4 TRADING AND CONTRACTUAL ARRANGEMENTS
4.1 None of the contracts or obligations entered into by the Company is
invalid, ultra ▇▇▇▇▇ the Company or exceeds the powers of the Directors
to bind the Company and the Company is not in default under any such
contracts or obligations and no event has occurred which, with the
giving of notice or passage of time or both would constitute a default
under any contract. No party with whom the Company has entered into an
agreement, arrangement or obligation has given notice of its intention
to terminate, or has
4A.3
35
sought to repudiate or disclaim any agreement, arrangement or
obligation nor has any right to do so.
4.2 Each contract is valid, binding and enforceable (subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganisation,
moratorium and other similar laws relating to or affecting creditors'
rights generally, general equitable principles (whether considered in a
proceeding in equity or at law)) and is in full force and effect, and
assuming all consents required by the terms thereof or applicable law
have been obtained, such contracts will continue to be valid, binding
and enforceable and in full force and effect immediately following the
consummation of the transactions contemplated hereby, in each case. No
event has occurred which either entitles, or would, on notice of lapse
of time or both, entitle the holder of any indebtedness for borrowed
money affecting the Company to accelerate, or which does accelerate,
the maturity of any indebtedness of the Company.
4.3 The Company is not a party to any contract, transaction, obligation,
commitment or liability which, whether by reason of its nature, term,
scope, price or otherwise is or may be material in relation to its
business, profits or assets or which:-
4.3.1 is in any way otherwise than in the ordinary course of the
Company's business;
4.3.2 is of an unusual or abnormal nature, or not fully on an arm's
length basis;
4.3.3 is of a long-term nature (that is to say incapable of
performance in accordance with its terms within six months
after the date on which it was entered into or undertaken);
4.3.4 is incapable of termination in accordance with its terms by
the Company on 60 days' notice or less; or
4.3.5 cannot readily be fulfilled or performed by the Company on
time without undue or unusual expenditure of money or effort.
4.4 No party with whom the Company has entered into an agreement or
arrangement is in material breach thereof and the Vendors are not aware
of any matter which might give rise to such a breach.
4.5 Except for the KCC Loan, no sums of whatever nature (apart from normal
business expenses) are owing by the Company to any of the Vendors or
any of the Directors or any person being a Connected Person of the
Vendors or the Directors or any of them respectively and no Vendor or
Director or Connected Person of any Vendor or Director has any cause of
action or other claim against the Company.
4.6 Except for the KCC Loan, the Company has not been a party to any
transaction to which any of the provisions of Section 320 (substantial
property transactions involving directors, etc.), 322 (liability
arising from contravention of Section 320), or 330 (general
restrictions on loans, etc. to directors and persons connected with
them) of the Companies Act may apply.
4.7 None of the Vendors, officers or Directors, nor any person being a
Connected Person in relation to any Vendor has any direct or indirect
interest with any business which has a
4A.4
36
close trading relationship with that of the Company or which is or is
likely to become competitive with the business of the Company.
4.8 There are no outstanding arrangements or understandings (whether
legally binding or not) between the Company and any person who is a
shareholder (or the beneficial owner of any interest in the Company or
in any company in which the Company is interested), or any person who
is a Connected Person of any such person, relating to the management of
the Company's business, or the appointment or removal of the Directors,
or the ownership or transfer of ownership, or the letting of any of the
assets of the Company, or the provision, supply, purchase or finance of
goods, services or other facilities to, by or from the Company or
otherwise howsoever in relation to the Company's affairs.
4.9 The Company is not and has not agreed to become bound by any debenture
or guarantee or contract for indemnity or suretyship or any like
undertaking and there is not now outstanding any guarantee or contract
for indemnity or suretyship or like undertaking given for the
accommodation of or in respect of any obligation on the part of the
Company.
4.10 No person is entitled to receive from the Company any finders' fee,
brokerage or commission in connection with the sale of the Shares to
the Purchaser.
5 ASSETS (OTHER THAN THE PREMISES)
5.1 The Company was at the Accounting Date the owner with good title to all
the assets included in the Accounts and now so owns and has in its
possession and under its control all such assets (save for current
assets subsequently disposed of in the ordinary course of its business)
and all assets acquired by it after the Accounting Date and all such
assets are the sole and absolute property of the Company free from any
charge, lien, encumbrance or equity and no other person has or claims
any rights in relation to such assets or any of them and in particular
all such assets are free from any hire-purchase, leasing or rental
agreement for payments on deferred terms or ▇▇▇▇ of sale.
5.2 In relation to any asset held by the Company which is the subject of
any hire-purchase, conditional sale, chattel leasing or retention of
title agreement or otherwise belonging to a third party, no event has
occurred which entitles or which upon intervention or notice by any
third party may entitle any such third party to repossess the asset
concerned, or terminate the agreement, or any licence in respect of the
same.
5.3 The stock in trade of the Company is in good condition and is capable
of being sold by the Company in the ordinary course of business and its
level of stock is reasonable having regard to current and anticipated
demand.
5.4 The fixed and loose plant, machinery, furniture, fixtures, fittings,
equipment, vehicles and other moveable assets used in connection with
the business of the Company are not surplus to requirements and are in
good repair and condition and satisfactory working order.
4A.5
37
5.5 All information technology presently expected to be used by the Company
or any Subsidiary on or following December 31, 1999 in the
administration and the business operations of the Company or any
Subsidiary, including, without limitation, in all products and services
(i) provided by the Company or any Subsidiary whether to third parties
or for internal use of (ii) to the best of the Company's knowledge
after reasonable investigation, used in combination with any
information technology of its clients, customers, suppliers or Vendors,
accurately processes or will process date and time data (including, but
not limited to, calculating, comparing and sequencing) from, into and
between the years 1999 and 2000 and the twentieth century and the
twenty-first century, including leap year calculations and neither
performance nor functionality of such technology will be affected by
dates prior to, during and after the year 2000. Except as set forth on
Schedule 4, Part A.1, neither the Company nor any Subsidiary has any
obligation under warranty agreements, service agreements or otherwise
to remedy any information technology defect relating to the year 2000.
5.6 The Company is not entitled to the benefit of any debt otherwise than
as the original creditor and is not and has not agreed to become a
party to any factoring or discounting arrangement.
5.7 So far as the Vendors are aware, none of the debts due as at the
Accounting Date nor any debt which has subsequently become due to the
Company (or any part of any such debt) will remain unpaid for more than
three months after the Completion Date, and every invoice issued by the
Company and debt outstanding is regarded by the Directors as fair and
fully recoverable.
6 EMPLOYEES AND AGENTS
6.1 The names of all employees of the Company together with copies of all
service contracts and contracts for services and full particulars of
the current terms of employment (including, without limitation, names,
job descriptions, annual salary rates and other compensation) of all
officers, employees, consultants and agents of the Company have been
Disclosed.
6.2 There is not now outstanding any contract of service or for services
between the Company and any of its officers, employees, consultants or
agents which is not determinable by the Company at any time on three
months' notice or less without compensation (other than under the
Employment Rights Act 1996) or any liability (other than for accrued
salary, wages, commission or pension) on the part of the Company to or
for the benefit of any person who is or has been an officer, employee,
consultant or agent of the Company.
6.3 No present officer, employee, consultant or agent of the Company has
given or received notice terminating his employment or appointment and
no such officer, employee, consultant or agent is entitled nor (so far
as any of the Vendors is aware) intends or is likely as a result of
this Agreement or Completion or otherwise to terminate his employment
or appointment with the Company.
4A.6
38
6.4 Full particulars have been Disclosed of all loans and other benefits
enjoyed by any officer, employee, consultant or agent of the Company in
relation to the affairs of the Company and of all contracts,
transactions and arrangements made or entered into by the Company and
to which any of Sections 330 to 338 of the Companies Act applies.
6.5 The Company is not under any legal liability or obligation to pay
bonuses, pensions, gratuities, superannuation, allowances or the like
to any of its past or present officers or employees or their dependants
nor is it a party to any arrangement or promise to make or in the habit
of making ex gratia or voluntary payments by way of bonus, pension,
gratuity, superannuation, allowance or the like to any such persons and
there are no schemes or arrangements for payment of retirement pension
or death benefit or similar schemes or arrangements in operation or
contemplated in relation to the Company.
6.6 Save to the extent (if any) to which provision or allowance has been
made in the Accounts, no liability has been incurred by the Company to
make any redundancy payments or any protective awards or to pay damages
or compensation for wrongful or unfair dismissal or for failure to
comply with any order for the reinstatement or re-engagement of any
employee and no gratuitous payment has been made or promised by the
Company in connection with the actual or proposed termination or
suspension of employment or variation of any contract of employment of
any present or former director or employee.
6.7 The Company has not and is not obliged to recognise any trade union or
association of trade unions or works council, staff association or any
other organisation of employees in respect of its employees or any of
them.
7 INSURANCE
7.1 Full particulars of all the Company's insurances have been Disclosed.
Such insurances are sufficient for compliance by the Company with all
requirements of law and all material agreements to which the Company is
a party. Each insurable asset of the Company is insured to its full
replacement value (with no provision for deduction or excess against
each risk normally insured against by a person operating the types of
business operated by the Company. There are no outstanding claims or
circumstances likely to give rise to a claim thereunder and nothing has
been done or omitted to be done which has made or could make any policy
of insurance void or voidable or whereby the premiums are likely to be
increased.
7.2 None of the said policies is subject to any special or unusual terms or
restrictions or to the payment of any premium in excess of the normal
rate.
7.3 The Company does not have any claim pending against any of the
insurance carriers under any insurance policies.
8 BANKING FACILITIES
There are no overdrafts, loans or other financial facilities
outstanding or available to the Company other than the KCC Loan. All of
the Company's bank and deposit accounts
4A.7
39
have been Disclosed and so far as the Vendors are aware, none of the
Vendors or the Company has done or omitted to do anything whereby the
continuance of any such facilities in full force and effect might be
materially adversely affected or prejudiced.
9 DEFECTIVE AND UNSAFE PRODUCTS/SERVICES
9.1 There are no outstanding claims against the Company in respect of
defects in quality or delays in delivery or completion of contracts or
deficiencies of design or performance of products or equipment or
otherwise relating to liability for goods or services supplied or to be
supplied by the Company and so far as the Vendors are aware no such
claims are threatened or anticipated.
9.2 The Company has no knowledge that any goods or products for which the
Company has responsibility under Section 2 of the Consumer Protection
Act 1987 ("CPA") or for which the Company assumes responsibility under
any contract of indemnity or otherwise is defective within the meaning
of Section 3 of the CPA or that the Company supplies or possesses for
supply any goods or products which are in breach of the general safety
requirement provided by Section 10 of the CPA.
10 LITIGATION
10.1 Neither the Company nor any person for whose acts or omissions it may
be vicariously liable is engaged in or subject to any civil, criminal,
arbitration, administrative or other proceedings or investigations and,
as far as any of the Vendors are aware, there are no such proceedings
pending or threatened by or against the Company or against any such
person and so far as the Vendors are aware there are no facts or
circumstances likely to give rise to any such proceedings.
10.2 There is no outstanding judgment, order, decree, arbitral award or
decision of a court, tribunal or governmental agency in any
jurisdiction against the Company or a person for whose acts or defaults
the Company may be vicariously liable.
10.3 The Company has conducted its business and dealt with its assets in all
material respects in accordance with all applicable legal and
administrative requirements in any jurisdiction.
11 INSOLVENCY
11.1 None of the Vendors is insolvent or has proposed a compromise of his
creditors generally and no order has been made, or petition presented,
or resolution passed for the winding-up of the Company and there is not
outstanding:-
11.1.1 any petition or order for the winding-up of the Company;
11.1.2 any appointment of a receiver over the whole or any part of
the undertaking or assets of the Company;
11.1.3 any petition or order for the administration of the Company;
11.1.4 any voluntary arrangement between the Company and any of its
creditors;
11.1.5 any distress or execution or other process levied in respect
of the Company, which remains undischarged; or
11.1.6 any unfulfilled or unsatisfied judgment or court order against
the Company.
4A.8
40
11.2 The Company is not deemed unable to pay its debts within the meaning of
Section123 of the Insolvency ▇▇▇ ▇▇▇▇.
11.3 No action is being taken by the Registrar of Companies to strike the
Company off the register under Section 652 of the Act.
12 LICENCES, ENVIRONMENTAL AND HEALTH AND SAFETY COMPLIANCE
12.1 All necessary licences, consents, permits and authorities (public and
private) have been obtained by the Company to enable the Company to
carry on its business effectively in the places and in the manner in
which such business is now carried on and all such licences, consents,
permits and authorities are valid and subsisting and none of the
Vendors is aware of any reason why any of them should be suspended,
cancelled or revoked or should not be renewed upon the expiry of their
existing term.
12.2 No consents, approvals, orders or authorisations of or filings or
registrations with any court, administrative agency or commission or
other governmental authority or with any third party are necessary with
respect to the Company or any of the Vendors in connection with the
execution and delivery of this Agreement or the consummation of any of
the transactions contemplated hereby.
12.3 So far as the Vendors are aware, the Company complies and has complied
at all times with all material conditions, limitations, obligations,
prohibitions and requirements contained in or imposed by any
Environmental Law and there are no facts or circumstances which may
give rise to any liability under Environmental Law. For the purposes of
this Warranty, "Environmental Law" means all applicable statutes,
statutory instruments, common law, treaties, regulations, directives,
codes of practice, circulars, guidance notes and the like and other
measures imposed by any relevant body to which the Company or the
Premises is or has been subject which relate to the pollution or
protection of the Environment or the protection of the health of
humans, animals or plants.
12.4 So far as the Vendors are aware, the Company has complied and continues
to comply with all material conditions, limitations, obligations,
prohibitions and requirements contained in any Health and Safety
Legislation and there are no facts or circumstances which may lead to
any breach of any Health and Safety Legislation. For the purposes of
this Warranty, "Health and Safety Legislation" means all applicable
statutes, statutory instruments, common law, treaties, regulations,
directives, codes of practice, guidance notes including (but without
limitation) the Fire Precautions ▇▇▇ ▇▇▇▇, the Health and Safety at
Work etc. ▇▇▇ ▇▇▇▇, the Management of Health and Safety at Work
Regulations 1992 and the Workplace (Health Safety & Welfare)
Regulations 1992 concerning the health and safety of those who work for
the Company, whether as employees or otherwise, visit the Premises or
are in any way affected by the undertaking of the Company or by persons
working for the Company.
4A.9
41
13 CHARGES
13.1 No charge in favour of the Company is void or voidable for want of
registration.
13.2 No event has occurred causing, or which upon intervention or notice by
any third party may cause, any floating charge created by the Company
to crystallise or any charge created by it to become enforceable nor
has any such crystallisation occurred or is such enforcement in
process.
14 DIRECTORS AND OFFICERS
14.1 The Directors are the only directors of the Company and no person is a
shadow director (within the meaning of Section 741 of the Companies
Act) of the Company.
14.2 No officer or Director of the Company is subject to any of the
disqualification provisions of Rule 505(b)(iii) under the
Securitisation ▇▇▇ ▇▇▇▇ or any other such proceedings nor is threatened
with any of the above.
15 CUSTOMS
The Company has acted with reasonable care to properly value and
classify, in accordance with applicable tariff laws, rules and
regulations, all goods that Company the imports or exports into or out
of the United Kingdom (the "Goods"). To Company's knowledge, there are
currently no material claims pending against the Company by the U.K.
Customs Service (or other foreign customs authorities) relating to the
valuation, classification or marketing of the Goods.
16 CAPITAL OF THE COMPANY
16.1 The authorised and issued share capital of the Company is as set out
in Schedule 2.
16.2 The Trustee Vendors are the legal owners and registered holders of the
Shares sold by them hereunder, and the Trustee Vendors hold such shares
in trust solely for the benefit of the beneficiaries of the trust of
which they serve as trustees. The remaining Vendors are the legal and
beneficial owners and registered holders of the Shares sold by them
hereunder. All such shares which have been issued in proper legal form
and are fully paid or credited as fully paid, and each of the Vendors
is entitled to sell such of the Shares as are set out opposite his name
in Column 2 of Schedule 1 free from all claims, charges, liens,
encumbrances, equities, pre-emption rights and adverse rights of any
description and together with all rights attached or accruing thereto
as at and from the Accounting Date.
16.3 There is not now outstanding any loan capital of the Company nor any
agreement, arrangement or option under which any person may now or at
any time hereafter call for the creation, allotment, issue, sale or
transfer of any loan or share capital of the Company or require any
loan or share capital of the Company to be put under option.
16.4 Full particulars have been disclosed in respect of the Company's direct
or indirect ownership, control, shares or interest in any other
company, partnership, joint venture, business, trust, association or
other venture or entity and anything in respect thereof
4A.10
42
which is or may be materially adverse to the current or future trading
or financial position of the Company.
17 MAJOR CUSTOMERS
There has been no termination or cancellation of any relationship
between the Company and any of its top 20 customers (by revenue
generated from such customers).
18 EFFECT OF AGREEMENT
So far as the Vendors are aware there are no material contracts or
arrangements, mortgages, security interests, pledges, charges or other
material rights or obligations (whether written or oral) to which the
Company is a party which will by their terms be determinable cancelled
or the performance of any obligation accelerated as a result of the
provisions of this Agreement or which will or may be terminated by
completion of this Agreement.
4A.11
43
SCHEDULE 4
PART A.1
WARRANTY AND SERVICE AGREEMENTS RELATING TO YEAR 2000
NONE.
4A.1.1
44
SCHEDULE 4
PART B
WARRANTIES RELATING TO TAX
DEFINITIONS:
In this Schedule, defined terms have the same meaning as in the Tax Deed
(Schedule 5) and:
"CAA" means the Capital ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇;
"Group" means the group comprising the Company and KNS Limited;
"TCGA" means the Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇;
"VATA" means the Value Added Tax ▇▇▇ ▇▇▇▇.
1. ADMINISTRATION AND RETURNS
1.1 Provision
The Company has no liability for Tax (whether actual, deferred or
contingent) in respect of any financial period down to and including
the Accounting Date or referable to profits (including income and
gains) made or deemed to have been made on or before the Accounting
Date which has not been provided for or disclosed in the Accounts.
1.2 Payment of Tax
The Company has duly paid all tax which it has become liable to pay and
has not in the six years ending on the date of this Agreement been
liable to pay a penalty, surcharge, fine or interest in connection with
Tax or the submission or failure to submit any returns.
4B.1
45
1.3 Interest/Penalties
The Company is under no liability to pay any interest, penalty, fine or
default surcharge in connection with any Tax nor to the best of its
knowledge information and belief as at Completion is any such liability
likely to arise.
1.4 Returns
The Company has properly and duly made all returns and supplied all
notices, accounts, computations and information for the purposes of Tax
required to have been made or supplied to any Tax Authority.
1.5 Disputes
None of the aforementioned returns, notices, accounts and information
has been or to the best of its knowledge information and belief as at
Completion is likely to be disputed by any Tax Authority or to the best
of its knowledge information and belief as at Completion will give rise
to any disallowance of relief, allowance, deduction or credit or any
assessment (including any claim for any penalty, interest, surcharge or
fine).
1.6 Investigations
The Company's affairs have not been and are not to the best of its
knowledge information and belief as at Completion likely to be the
subject of any dispute, investigation or discovery by or with any Tax
Authority.
1.7 Claims and Elections
All claims, disclaimers, elections, appeals or applications which the
Company has made or is entitled to make in respect of Tax have been
Disclosed and the particulars thereof are sufficient to enable the
Purchaser to procure that any time limit to such entitlement expiring
within six months of Completion can be met.
1.8 Clearances and Consents
1.8.1 All clearances or consents relating to Tax (including for the
avoidance of doubt clearances made pursuant to Section 765 of
the Taxes Act) obtained by or on
4B.2
46
behalf of the Company have been properly obtained on the basis
of full and accurate disclosure to the relevant Tax Authority
of all material facts and circumstances; any transaction for
which such consent or clearance was obtained has been carried
out in accordance with the terms of the relevant application
and consent or clearance; and any such consent or clearance
was and remains valid and effective.
1.8.2 All agreements, concessions or other arrangements which are
not based on a strict application of the relevant legislation
(whether formal or informal) currently subsisting which have
been made with or by any Tax Authority have been Disclosed.
1.9 Collection and Deduction of Tax
1.9.1 The Company has complied in all respects with the following
provisions of the Taxes Act and other legislation and all
regulations made under any of those provisions:
(a) Section 43 (payments of rent to a non-resident
landlord);
(b) Section 123 and Schedule 3 (collection of foreign
dividends on behalf of a UK resident);
(c) Section 339 (deduction of tax from donations to a
charity);
(d) Sections 349 and 350 (deduction of tax from interest
and annual payments);
(e) Section 524 (deduction of tax from patent receipts);
(f) Section 536 (deductions of tax from royalties);
(g) Sections 555 to 558 (deduction of tax from payments to
entertainers and sportsmen);
(h) Sections 559 to 567 (deduction of tax from payments to
sub-contractors in the construction industry);
(i) Section 582 (deduction of tax from funding bonds);
(j) Section 732 (deduction of tax by dealers in securities
buying securities cum interest);
(k) Section 737 (deduction of tax where dividends
manufactured);
4B.3
47
(l) Section 777 (deduction of tax following a Section 776
transaction in land); and
1.9.2. The Company has properly accounted for all such deductions and
retentions required of it by virtue of the above provisions.
1.9.3. Save to the extent excepted by paragraph 12.2 of Part B of
this Schedule 4, all interest, annual payments and other sums
of an income nature paid during or in respect of the six years
ending on Completion or which the Company is under an
obligation to pay in the future are to the best of its
knowledge, information and belief as at Completion wholly
allowable as deductions or charges on income in computing
profits for the purposes of corporation tax.
2. ANTI-AVOIDANCE
2.1 The Company has not at any time entered into any transaction, series of
transactions, schemes or arrangements of which the main purpose, or one
of the main purposes, was the avoidance of, or a reduction in liability
to, Tax and the Company has not at any time entered into a transaction
the main purpose of which was a commercial purpose but into which a
step or a series of steps have been inserted with a view to the
avoidance of, or a reduction in, or the mitigation of, or the deferral
of a liability to Tax, and, without prejudice to the generality of the
foregoing, to which any of the following provisions of the Taxes Act
could apply:
2.1.1 Sections 35 and 36 (assignment of lease granted at undervalue;
sale with right to conveyance);
2.1.2 Section 56 (transactions in deposits with and without
certificates or in debts);
2.1.3 Section 116 (arrangements for transferring relief);
2.1.4 Section 240 (surrender of advance corporation tax);
2.1.5 Section 341 (payments of interest etc between related
companies);
2.1.6 Section 395 (leasing contracts and company reconstructions);
2.1.7 Section 399 (dealings in commodity futures etc; withdrawal of
loss relief);
2.1.8 Section 410 (arrangements for transfer of company to another
group or consortium);
4B.4
48
2.1.9 Sections 729 and 730 (sale and repurchase of securities;
transfers of income arising on securities);
2.1.10 Sections 731 to 735 (purchase and sale of securities);
2.1.11 Section 736 and Section 737 (miscellaneous provisions relating
to securities);
2.1.12 Section 774 (transactions between dealing company and
associated company);
2.1.13 Section 779 (sale and lease-back; limitation on tax relief);
2.1.14 Section 781 (assets leased to traders and others);
2.1.15 Section 786 (transactions associated with loans or credit);
2.1.16 Sections 22, 42, 75 or 142 of the CAA (capital allowances:
effect of sales between connected persons, sale and lease-back
etc);
2.1.17 Section 106 of the TCGA (disposals of shares and securities
within prescribed period of acquisition); and
2.1.18 Sections 29 to 34 of the TCGA (value shifting).
2.2 The Company has not been a party to any transaction to which any of the
following provisions have been, or could be, applied, other than where
all necessary consents or clearances have been obtained:
2.2.1 Sections 703 to 709 (inclusive) of the Taxes Act (cancellation
of tax advantages from certain transactions in securities);
2.2.2 Sections 765 to 767 (inclusive) of the Taxes Act (migration
etc. of companies);
2.2.3 Section 776 of the Taxes Act (transactions in land; taxation
of capital gains); and
2.2.4 Sections 135 to 139 (inclusive) of the TCGA (company
reconstructions and amalgamations) in respect of or to any
transaction which the Company could be liable to Tax as a
result of the principles enunciated by the House of Lords in
the line of cases including ▇▇▇▇▇▇▇ v ▇▇▇▇▇▇, ▇▇▇▇▇▇ v White
and McGuckian v IRC.
3. CAPITAL ALLOWANCES
3.1 The Company has made no claim for capital allowances under the
provisions of the CAA or Sections 520 to 533 (inclusive) of the Taxes
Act.
4B.5
49
3.2 The Vendor is not aware of any circumstances as to why the capital
expenditure on which capital allowances have been claimed should not
continue to attract capital allowances either under the Taxes Act or
the CAA.
3.3 Details of capital allowances claimed in each of the last six years,
analysed as to industrial buildings allowances, first year allowances
and writing down allowances in respect of machinery and plant, patents
and know-how have been Disclosed.
3.4 All capital allowances made or to be made to the Company in respect of
capital expenditure incurred prior to Completion have been made in
taxing its trade.
3.5 Since the Accounting Date the Company has not done or omitted to do or
agreed to do or permitted to be done any act as a result of which there
may be a balancing charge under Sections 4, 24, 100 or 129 of the CAA,
or a withdrawal of first year allowances or recovery of excess relief
under Sections 46 and 47 of the CAA.
3.6 The Company has not made any election under Section 37 of the CAA nor
has it or could it be taken to have made such an election under
sub-Section 8(c) thereof (election for assets to be treated as
short-life assets).
3.7 The Company has not incurred any capital expenditure on the provision
of machinery or plant for leasing under Chapter V of Part II of the
CAA.
3.8 No balancing charge under the CAA would arise on the disposal of any
asset or the assets of the Company taken as a whole if each of the
assets were disposed of for a consideration equal to its book value in
or adopted for the purposes of the Accounts (and for the purposes of
this warranty "asset" shall be taken to include each and every part of
such asset).
4B.6
50
4. CLOSE COMPANIES
4.1 The Company is not and has never been a close company within the
meaning of Section 414 of the Taxes Act (close companies).
4.2 The Company has not made any distribution prior to Completion within
the meaning of Section 418 of the Taxes Act ("distribution" to include
certain expenses of close companies).
4.3 The Company is not and has never been a close investment holding
company within the meaning of Section 13A of the Taxes Act.
4.4 The Company has not made any loans or advances within the meaning of
Section 419 (as extended by Section 422) of the Taxes Act (loans to
participators etc).
4.5 No transfer of value (as defined in Section 3 of the Inheritance Tax
Act 1984) has ever been made by the Company so that the provisions of
Section 94 of the Inheritance Tax Act 1984 (charge on participators)
could not apply.
5. CORPORATION TAX ON CHARGEABLE GAINS
5.1 The Company has not made nor has it been entitled to make any claim
under any of the following provisions of the TCGA:
5.1.1 Section 23 (compensation and insurance proceeds applied to
replace or restore asset);
5.1.2 Section 24(2) (assets lost or destroyed or whose value becomes
negligible);
5.1.3 Sections 48 and 280 (consideration due after time of
disposal);
5.1.4 Sections 247 (roll-over relief on compulsory acquisition of
land);
5.1.5 Sections 152 to 154 (roll-over relief on business assets);
5.1.6 Section 161(3) (appropriation to trading stock); and
5.1.7 Sections 253 or 254.
4B.7
51
5.2 The book value of each asset of the Company as shown in or adopted for
the purposes of the Accounts is such that if an asset were disposed of
at Completion for a consideration or deemed consideration equal to its
book value no liability to Tax would be incurred and for this purpose
any relief or allowance available to the Company, other than amounts to
be deducted in calculating the amount liable to Tax, shall be
disregarded.
5.3 No assessment has been postponed under Section 279 of the TCGA (delayed
remittance of capital gain on disposal of a foreign asset).
5.4 The Company has not disposed of or acquired any asset in circumstances
such that Section 17 of the TCGA could apply (disposals and
acquisitions treated as made at market value).
5.5 The Company has not been entitled to a capital loss to which Section
18(3) and (4) of the TCGA is applicable (disposals to a connected
person).
5.6 The Company has not acquired shares as a "new holding" within the
meaning of Sections 126 to 130 of the TCGA (inclusive), as extended by
Sections 132, 135 and 136 of the TCGA.
5.7 No gain chargeable to corporation tax will accrue to the Company on the
disposal of any debt owed to the Company.
5.8 No loss which may accrue on the disposal by the Company of any asset is
liable to be reduced by virtue of any depreciatory transaction within
the meaning of Section 176 of the TCGA (transactions in a group) or
Section 177 of the TCGA (dividend stripping).
5.9 The Company has not engaged in any transactions which may hereafter
result in an adjustment being made under Sections 29, 30, 31, 32, 33 or
34 of the TCGA of the consideration received on any future disposal
(value shifting).
4B.8
52
5.10 The Company has not taken part in any transaction in respect of which
Section 176 of the TCGA could apply to reduce any allowable loss.
5.11 Full details of all assets currently owned by the Company in relation
to which a charge to Tax might at any time within the next six years
arise under Sections 178-181 (inclusive) of the TCGA (company ceasing
to be member of a group) on the sale of any company which is at the
date of this Agreement a subsidiary of the Company are (together with
the current allowable expenditure in relation to each of such assets)
Disclosed.
5.12 The Company has not been assessed and no event has occurred as a result
of which the Company is or could be liable to be assessed to
corporation tax under Section 190 of the TCGA (tax on one member
recoverable from another).
5.13 The Company has not acquired benefits under any policy of assurance
which would on disposal give rise to a chargeable gain under Section
210 of the TCGA (disposals by a person other than the original
beneficial owner).
5.14 The Company has not received any assets by way of gift and as mentioned
in Section 282 of the TCGA (recovery of tax from donee).
5.15 The Company is not nor has it been a shareholder in a company which has
made a transfer as mentioned in Section 125 of the TCGA (close company
transferring assets at an undervalue).
5.16 The Company has not made any claim or election under Section 187 of the
TCGA (postponement of gains relating to foreign trades).
5.17 The Company does not own any assets which are wasting assets within
Section 44 of the TCGA and which do not qualify for capital allowances.
4B.9
53
6. LOANS
6.1 The Company is not a party to any loan relationship within the meaning
of Section 81 of the Finance ▇▇▇ ▇▇▇▇.
6.2 The Company is not and has not been a party to any loan relationship in
circumstances where the debt has become a bad debt, has been or could
be estimated to be bad or has been released so that paragraphs 5 or 6
of Schedule 9 of the Finance ▇▇▇ ▇▇▇▇ could apply.
7. DISTRIBUTIONS
7.1 The Company has not made any distributions within the meaning of
Sections 209 and 210 of the Taxes Act except for dividends shown in its
audited accounts nor is the Company bound to make any such
distributions.
7.2 The Company has not issued any security within the meaning of Section
254 of the Taxes Act the interest or other consideration given in
respect of which falls to be taxed under Section 209.
7.3 The Company has not redeemed, repaid or purchased any of its own shares
or agreed to redeem, repay or purchase any of its own shares or
converted or agreed to convert its share capital or capitalised or
agreed to capitalise in the form of redeemable shares or debentures any
profits or reserves of any class or description.
7.4 The Company has not been a party to an exempt distribution within the
meaning of Sections 213 to 218 (inclusive) of the Taxes Act within the
last six year (demergers - exempt distributions).
7.5 The Company has not issued any share capital to which the provisions of
Section 249 of the Taxes Act (stock dividends treated as income) could
apply nor does it own any such share capital (shares carrying the right
to bonus share capital).
4B.10
54
8. EMPLOYMENT TAXES
8.1 The Company has duly paid and accounted for all sums payable to the
Inland Revenue in respect of income assessable to income tax under
Schedule E (including any sums payable in respect of benefits provided
to the Company's Directors, employees or former employees) and has
complied with all its reporting obligations in connection with all
payments to and benefits provided for the Company's Directors,
employees and former employees.
8.2 The Company has duly paid and accounted for all National Insurance
contributions required of it under the provisions of the Social
Security Contributions and Benefits ▇▇▇ ▇▇▇▇ and regulations made
thereunder.
8.3 Up to the date hereof the Company has correctly operated:-
8.3.1 a statutory sick pay scheme in accordance with the provisions
of the Social Security Contributions and Benefits ▇▇▇ ▇▇▇▇ and
the regulations made thereunder;
8.3.2 a statutory maternity pay scheme in accordance with the
provisions of the Social Security Contributions and Benefits
▇▇▇ ▇▇▇▇ and the regulations made thereunder.
8.4 No PAYE audit has been made in respect of the Company by the Inland
Revenue and no notice has been given that any such audit will or may be
made.
8.5 The Company is not and has not been a party to any arrangement which
has been, is being or may be challenged as being an abnormal pay
practice under regulation 21 of the Social Security (Contributions)
Regulations (SI 1979/591).
9. FOREIGN MATTERS
9.1 The Company is and has at all times been resident in the United Kingdom
for Tax purposes.
4B.11
55
9.2 The Company is not regarded and has never fallen to be treated for the
purposes of any double taxation relief arrangements as resident in a
territory outside of the United Kingdom and is not liable to tax on
capital gains arising on disposals of assets of descriptions specified
in any such arrangements nor is the Vendor aware of any circumstances
as to why this would be the case.
9.3 The Company has not carried out any transaction prohibited by Section
765 of the Taxes Act (migration of companies).
9.4 The Company has not carried out any transaction to which Section 765A
of the Taxes Act applies (movement of capital between residents of the
European Community).
9.5 The Company is not a person to whom Section 132(2) of the Finance ▇▇▇
▇▇▇▇ or Section 191(2) of the TCGA applies (liability of other persons
for unpaid tax of migrating companies:
non-payment of tax by non-resident companies).
9.6 The Company has not transferred a trade carried on by it outside the
United Kingdom through a branch or agency to a company not resident in
the United Kingdom in circumstances such that a chargeable gain may be
deemed to arise at a date after the transfer under Section 140 of the
TCGA (postponement of charge on transfer to a non-resident company).
9.7 The Company does not hold shares in a company which is not resident in
the United Kingdom and which would be a close company if it were
resident in the United Kingdom in circumstances such that a chargeable
gain accruing to the company not resident in the United Kingdom could
be apportioned to the Company pursuant to Section 13 of the TCGA.
9.8 The Company has not carried out nor been engaged in any transactions to
which the provisions of Section 770 of the Taxes Act (as extended by
Section 773 of the Taxes Act)
4B.12
56
(transactions at an undervalue) or Schedule 28AA (transfer pricing)
have been or may be applied.
9.9 The Company has not received notice of a direction under Section 747 of
the Taxes Act (imputations of chargeable profits of controlled foreign
companies) and no circumstances exist which would entitle the Inland
Revenue to make such a direction and apportion any profits of a
controlled foreign company to the Company.
9.10 The Company has no material interest in:
9.10.1 an offshore fund; or
9.10.2 a UK resident company or a unit trust scheme the trustees of
which are resident in the United Kingdom;
any of which is or has at any material time been a non-qualifying
offshore fund for the purposes of Sections 757 to 764 (inclusive) of
and Schedules 27 and 28 to the Taxes Act.
9.11 The Company is not a dual resident investment company within the
meaning of Section 404 of the Taxes Act.
9.12 The Company is not liable to be assessed to Tax under Sections 126 to
130 of the Finance ▇▇▇ ▇▇▇▇.
10. INHERITANCE TAX
10.1 No circumstances exist whereby any power within Section 212 of the
Inheritance Tax Act 1984 (powers to raise tax) could be exercised in
relation to any shares, securities or other assets of the Company.
10.2 There is no Inland Revenue charge outstanding for unpaid inheritance
tax as provided by Sections 237 and 238 of the Inheritance Tax Act 1984
(Inland Revenue charge for unpaid tax) over any asset of the Company or
in relation to any shares in the capital of the Company.
4B.13
57
11. LOSSES AND RELIEFS
11.1 There has been no change in the ownership of the Company or major
change in the nature or conduct of a trade or business carried on by
the Company and no event or series of events which might cause the
disallowance of the carry forward of losses or excess charges under the
provisions of Section 768 of the Taxes Act or the disallowance of the
carry forward, set-off or surrender of advance corporation tax under
the provisions of Sections ▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇ (▇▇▇▇▇▇
of ownership of company; calculation and treatment of advance
corporation tax) or restrictions on the set off of pre-entry losses
under Schedule 7A of the TCGA.
11.2 The Company has not surrendered or claimed any amount by way of group
relief under the provisions of Sections 402 to 413 (inclusive) of the
Taxes Act (group relief) or under the provisions of Section 240 of the
Taxes Act (surrender of advance corporation tax).
12. MATTERS SINCE THE ACCOUNTING DATE
Since the Accounting Date:
12.1 no Event has occurred which has given rise or may give rise to a Tax
liability on the Company other than transactions entered into in the
ordinary course of business; and
12.2 the Company has not made any payment either alone or in aggregate with
any other payments of a similar nature which exceed (pound) 10,000
which will not be deductible for the purposes of corporation tax in
computing the taxable profits of the Company.
13. STAMP DUTY AND STAMP DUTY RESERVE TAX
13.1 All documents which are required to be stamped and which are in the
possession or under control of the Company or to which the Company is a
party have been properly stamped and the appropriate stamp duty has
been paid and there is no liability for any interest or penalty in
respect of such duty and no such documents which are outside the United
Kingdom would attract stamp duty if they were brought into the United
Kingdom and no documents are presently subject to adjudication of
claims for exemption or relief.
4B.14
58
13.2 Within the period of five years ending on today's date the Company has
not made any claim for relief or exemption from stamp duty or Section
42 of the Finance ▇▇▇ ▇▇▇▇.
13.3 The Company has not had transferred to it chargeable securities (as
defined in Section 99 of the Finance Act 1986) in circumstances which
have given rise to or which may give rise to a liability for Stamp Duty
Reserve Tax nor are there any other circumstances in which the Company
may have a liability for Stamp Duty Reserve Tax.
14. VALUE ADDED TAX AND IMPORT DUTIES
14.1 The Company is a registered taxable person for the purposes of VAT and
has been duly registered at all times that it has been required to be
registered.
14.2 The Company has at all times issued correct tax invoices to all persons
properly requiring the same in respect of its taxable supplies either
by way of goods or of services and has likewise requested and received
all appropriate tax invoices from its suppliers and others and has kept
all necessary records and documents required to complete and verify its
quarterly VAT returns.
14.3 The Company has in all other respects complied with the VAT legislation
and all regulations, notices, orders, provisions, directions and
conditions relating to VAT.
14.4 The Company is not in arrears with any payments or returns under such
legislation or liable to any abnormal or non-routine payment or any
forfeiture, penalty, interest or surcharge or to the operation of a
penalty, interest or surcharge provisions contained therein.
14.5 The Company is not and has never been partially exempt for VAT
purposes.
14.6 The Company has never been required by the Commissioners of HM Customs
and Excise to give security.
4B.15
59
14.7 There is not, nor has there at any time been, in force a group or
similar election for VAT purposes in relation to the Company and the
Company has not been the subject of an application for group
registration.
14.8 The Company is not and will not become for VAT as agent, manager or
factor (for the purposes of Section 47 of the VATA) nor as VAT
representative (for the purposes of Section 48 of the VATA) of any
person who is not resident in the United Kingdom.
14.9 Full particulars of any claim for bad debt relief made or which may be
made by the Company under Part XIX of the Value Added Tax Regulations
1995 (SI 1995/2518) have been Disclosed.
14.10 The Company has not received a surcharge liability notice under Section
59 of the VATA (default surcharge) or a penalty liability notice under
Section 64 of the VAT ▇▇▇ ▇▇▇▇ (persistent misdeclaration resulting in
understatements or overclaims).
14.11 The Company and each relevant associate of the Company (within the
meaning of paragraph 3(7) of Schedule 10 to the VAT Act 1994) have not
and will not prior to Completion make an election under paragraph 2 of
Schedule 10 to the VAT ▇▇▇ ▇▇▇▇ (election to waive exemption).
14.12 The Company is not and has not at any time been liable nor has it taken
any action likely to make it liable to a self supply charge under
paragraph 6 of Schedule 10 to the VAT ▇▇▇ ▇▇▇▇ (developers of certain
non-residential buildings etc.)
14.13 No notice has been received by the Company and the Company is not aware
of anything which indicates that the grant to the Company of any
interest in or right over land or of any licence to occupy land is and
will continue to be other than an exempt supply for VAT purposes.
4B.16
60
14.14 The Company does not own any assets which are or could be subject to
the Capital Goods Adjustment Scheme pursuant to Part XV Value Added Tax
Regulations 1995 (SI 1995/2518).
14.15 The Company has complied in all respects with the Customs Legislation
and has made and maintained at the date hereof full, complete, correct
and up-to-date records and other documents appropriate or requisite for
the purposes of such legislation, has made all customs declarations in
accordance with the Customs Legislation, has at all times punctually
paid and made all payments and returns required under the VAT
legislation, has complied with the terms of any agreement reached with
HM Customs and Excise and has and has never had any goods liable to
forfeiture under Section 49 or penalties under Section 50 of the
Customs and Excise Management Control ▇▇▇ ▇▇▇▇.
14.16 For the purposes of warranty 14.15 above "the Customs Legislation"
means the Community Customs Code (EC Regulation 2913/92) and all
regulations made or imposed thereunder and any other statutes or other
provisions relating to import duties.
15. GROUP PROVISIONS
15.1 The Company has never been a member of any group other than the Group
for Tax purposes.
15.2 The Company is a member of the Group for the purposes of Section 402 of
the Taxes Act and there are no arrangements in existence within the
meaning of Section 410 of the Taxes Act which would preclude the
Company from being a member of the Group.
15.3 The provisions of Section 413(7) and (8) of the Taxes Act as
supplemented by the provisions of Schedule 18 to the Taxes Act have
been complied with and the Vendor is not aware of any reason as to why
they may apply to restrict group relief claimed.
4B.17
61
15.4 Details of all claims and surrenders for group relief and of the
surrender of advance corporation tax pursuant to Section 240 of the
Taxes Act and refunds pursuant to Section 102 of the Finance ▇▇▇ ▇▇▇▇
have been Disclosed.
15.5 The Company has not made, nor is it liable to make any payment for the
surrender of group relief or advance corporation tax.
15.6 All claims for the surrender of group relief and advance corporation
tax were valid when made and have been or will be allowed by way of
relief from corporation tax.
15.7 The Company does not own any asset which it has acquired from another
company which was at the time a member of the Group and which owned
that asset other than as trading stock within the meaning of Section
173 of the TCGA.
15.8 The Company has not ceased to be a member of a group of companies in
circumstances in which a charge under Sections 178 and 179 of the TCGA
has arisen.
15.9 The Company has made no claim under Section 175 of the TCGA
(replacement of business assets by a member of a group).
15.10 There have been Disclosed copies of all elections made pursuant to
Section 247 of the Taxes Act (claim to have dividends and interest paid
gross) and all such elections were validly made and are now in force.
15.11 The Company has not paid any dividend without advance corporation tax
or made any payment without deduction of income tax in the
circumstances specified in Section 247(6)(b) of the Taxes Act.
15.12 The provisions of Sections 245A and 245B of the Taxes Act have not and
will not apply to any advance corporation tax which has been
surrendered to the Company.
4B.18
62
15.13 No shares owned by the Company are held as trading stock.
4B.19
63
SCHEDULE 4
PART C
PROPERTY WARRANTIES
1. Save for the Leasehold Property, the Company does not own, use or
occupy any other property.
2. The Leasehold Property is held by KCC under the Lease and KCC has the
original Lease deed which constitutes a good and legally marketable
title to the Leasehold Property.
3. The Lease is an underlease.
4. Save in respect of the occupation of the Leasehold Property by the
Company, the Vendors are not aware (having made reasonable inquiry) of
any breach of the covenants and other obligations contained in the
Lease or any documents supplemental thereto on the part of KCC or the
Company.
5. All monies due to the landlord under the Lease have been paid as and
when they become due and none have been commuted or waived.
6. All consents for the purpose of the Planning Acts and building
regulations in the actual possession of the Vendors and relating to the
Leasehold Property have been Disclosed.
7. The Vendors are not actually aware of any complaint or dispute with the
Landlord and adjoining occupier or any local or other competent
authority relating to the Leasehold Property or the Lease and are not
aware of any circumstances which may give rise to such a complaint or
dispute after the date hereof.
4C.1
64
SCHEDULE 4
PART D
INTELLECTUAL PROPERTY WARRANTIES
1. Definitions
In this Part D of Schedule 4 and in Schedule 5:-
"Confidential Information" means all confidential information
relating to the Company and/or its
business, property, services,
operations, management and
administration, business and financial
affairs and/or the sale or marketing of
any of its products or services
including (without limitation) customer
names and lists, sales targets, sales
statistics, market share statistics,
market surveys and reports on research,
information relating to future business
development or planning, information
relating to litigation or legal advice
and in whatever form such information
may be recorded and on whatever media;
"Copyright Works" means all works in which copyright or
rights in the nature of copyright
subsist including, without limitation,
all manuals and other technical and
organisational documentation, drawings,
plans, blueprints, designs, design
materials, models, computer software,
data and information, and references to
Copyright Works shall be construed as
including references to each of the
Copyright Works;
"Intellectual Property" means Patents, registered and
unregistered trade marks, registered and
unregistered service marks, registered
designs, utility models (in each case
for the full period thereof and all
extensions and renewals thereof),
applications for any of the foregoing
and the right to apply for any of the
foregoing in any part of the world,
inventions, business names, trade names,
brand names, Copyright Works and rights
in the nature of copyright and design
rights (the "Base Intellectual
Property") and Confidential Information,
Know-How, get-up and any similar rights
situated in any country; and the benefit
(subject to the burden) of any and all
agreements, arrangements and licences in
connection with any of the foregoing;
4D.1
65
"Know-How" means the body of knowledge, technical
experience, expertise and skills,
technical processes, secret processes,
formulae and technical information held
by the Company and relating to its
business which is not in the public
domain at the date of this Agreement;
"Patents" means subsisting patents and all
subsisting rights of a similar nature
held in any part of the world and all
applications for patents and re-issues
of patents and divisions and
continuations of applications for
patents.
2. Warranties
2.1 The Company owns or licenses from another person all the Intellectual
Property necessary for its business as presently conducted without to
the knowledge of the Company any conflict with or infringement of the
valid rights of others and the lack of which could materially and
adversely affect the operations or condition, financial or otherwise,
of the Company, and the Company has not received any notice of
infringement upon or conflict with the asserted rights of others.
2.2 The Company has disclosed a complete list of all Base Intellectual
Property and all agreements related to and all agreements pursuant to
which the Company licenses Intellectual Property from or to a third
party.
2.3 All Intellectual Property owned by the Company is owned free and clear
of all liens, encumbrances, restrictions and, to its knowledge, adverse
claims.
2.4 All Intellectual Property licensed by the Company is the subject of a
license agreement which is legal, valid, binding and enforceable and in
full force and effect.
2.5 The consummation of the transactions contemplated hereby will not
result in the termination or impairment of the Company's ownership of,
or right to use, any Intellectual Property.
2.6 The Company has the right to use the Intellectual Property which it
owns or licenses free and clear of any rights, liens, encumbrances or
claims of others.
2.7 The Company is not aware that any of its employees is obligated under
any contract (including licenses, covenants or commitments of any
nature) or other agreement, or subject to any judgment, decree or order
of any court or administrative agency, that would interfere with the
use of his or her best efforts to promote the interests of the Company
(set out in such employee's contract of employment or implied by the
general law) or that would conflict with the Company's business.
4D.2
66
SCHEDULE 4
PART E
PENSIONS WARRANTIES
1. PENSIONS
1.1 Definitions
For the purposes of this paragraph:
"COMPANY" means KNS Holdings Limited and KNS
Limited;
"DIRECTORS" means all the directors of KNS Limited
and shall (where the context permits)
include former directors of KNS Limited;
"EMPLOYEES" means all the employees employed by KNS
Limited at Completion and shall (where
the context permits) include individuals
formerly employed by KNS Limited;
"PLAN" means the Kerridge Computer Company
Limited Retirement Benefit Scheme with
an effective date of 1 January 1981.
Sole pension arrangement
1.2 Except under the Plan, the Company has no (nor contributes to any)
agreement, arrangement or understanding (whether contractual, under
trust or otherwise and whether or not legally enforceable) which exists
for the provision of relevant benefits (as defined in Section 612 of
the Taxes Act but as if the exception contained in that definition were
included) in respect of the Employees or Directors or for any relative
or dependant of any of the Employees or Directors in connection with
which the Company is or may become legally or morally liable to make
any payment.
1.3 Save for the Plan the Company has never participated in, or contributed
to, any other pension scheme or arrangement (without limitation,
including any personal pension plan as defined in the Taxes Act).
Full benefit structure disclosed
1.4 Full details of the Plan have been given to the Purchaser in the form
of copies of all Deeds and rules governing the Plan, the current
booklet and any announcements to employees, all insurance policies and
contracts, any undertakings and indemnities given to the Inland Revenue
and all other relevant pension documents and the Plan is governed
solely by the aforementioned Deeds and rules which have been properly
and validly brought into effect. There is no obligation to provide
benefits under the Plan other than as revealed in such documents and
particulars.
4E.1
67
Inland Revenue
1.5 The Plan is an approved scheme for the purpose of Chapter I of Part XIV
of the Taxes Act and so far as the Vendors are aware there is no matter
which could lead to the withdrawal of that approval.
1.6 All taxes which have fallen due in relation to the Plan have been paid.
Contributions
1.7 Employer and employee contributions to the Plan have been paid when
they fall due. All contributions have been paid in accordance with the
payments schedule (as required by, and defined in, Section 87 of the
Pensions Act 1995).
1.8 All fees, charges and expenses of whatever nature with respect to the
Plan have been paid and no services have been rendered for which an
account or invoice has not been delivered.
Discretions and Benefit Promises
1.9 No plan, proposal or intention to amend or exercise a discretion in
relation to the Plan has been communicated to a member of the Plan.
1.10 No promise or guarantee (oral or written) has been made or given to any
member of the Plan that any particular level or amount of benefits
would be provided for and in respect of him under the Plan on his
retirement, death or leaving service.
Confirmation of membership
1.11 The Disclosure Letter contains a list of the employees who are
contributing members of the Plan with full particulars in each case
necessary to establish the current entitlements and the current
contributions payable under the Plan for and in respect of the
individual specified, and a list of all Employees and Directors who
'will become eligible to join the Plan upon the satisfaction of any
conditions of eligibility.'
Death in service benefits
1.12 All benefits payable on the death of an Employee are fully insured
under a policy effected with an insurance company and each Employee has
been covered for such insurance by such insurance company on its normal
terms for persons in good health and all insurance premiums payable
have been paid and no person has done or omitted to do anything which
has or might render any such policies of insurances void or voidable.
Litigation
1.13 No claim, action, suit or dispute (which include, without limitation,
contact with OPRA or OPAS or the Pensions Ombudsman) has been made or
threatened against the Company or the Plan trustees or administrator,
or against any person whom the Company is or may be liable or indemnify
or compensate, in connection with the Plan (other than routine claims
for benefits) and there are no circumstances which may give rise to any
such claim.
4E.2
68
1.14 The Company has not given any indemnity to any person in connection
with the Plan.
No alterations to benefits payable
1.15 Prior to Completion the employer and employee contributions to the
Plan, made in respect of any Employee or Director shall not be
increased without the prior consent of the Purchaser.
1.16 No undertaking or assurance has been given to any of the Employees or
Directors or former employees of the Company as to the continuance,
introduction, increase or improvement of any retirement, death or
disability benefits (whether or not there is any legal obligation to do
so).
Compliance
1.17 The Plan complies with, and has been administered in accordance with
all applicable legal and administrative requirements (including,
without limitation, Article 141 of the Treaty of Rome as it applies to
the eligibility of an Employee to join the Plan and the benefits
provided under the Plan and the Pensions Act 1995) and the trusts,
powers and provisions of the Plan.
1.18 The Plan has been operated at all times in accordance with the
documents constituting the same (as lawfully amended from time to time)
and all applicable laws and, without limitation to the foregoing, all
decisions made by the trustees and administrators of the Plan have been
made in accordance with their powers and duties as the trustees or
administrators respectively.
1.19 No part-time Employee or former Employee (whether part-time or not)
has either:-
(a) been excluded from membership of the Plan; or
(b) been provided with benefits under the Plan which are different
from those provided for, or in respect of, full-time Employees
or former Employees or do not comply with the requirements of
Article 141 of the Treaty of Rome.
Transfers-in
1.20 The Plan has not accepted any transfer value from a pension arrangement
("the Paying Scheme") in respect of an Employee or former Employee
where the Paying Scheme in relation to such transfer value did not
comply with the requirements of Article 141 of the Treaty of Rome
(which, for the avoidance of doubt, includes obligations in respect of
part-timers).
4E.3
69
SCHEDULE 5
COMPLETION REQUIREMENTS
1. OBLIGATIONS OF THE VENDORS
1.1 At Completion the Vendors shall deliver to the Purchaser:
1.1.1 a certificate to the effect that the Vendors have complied in
all respects with their obligations under this Agreement, and
that the Vendors' Warranties remain true, complete and
accurate in all respects and not outstanding as at the date of
Completion save as Disclosed in the Disclosure Letter;
1.1.2 a certificate, signed by the Chief Executive Officer and Chief
Financial Officer of the Company and its Auditors, stating the
amount by which the Company had repaid the KCC Loan since the
date of the Management Accounts, the sources of such payments,
effects on working capital and any amounts outstanding;
1.1.3 the PSL and Centrix Agreement duly executed by the parties
thereto;
1.1.4 the Tax Deed duly executed under seal by the parties thereto
(other than the Purchaser);
1.1.5 the audited accounts of the Company for the year ended
February 28, 1999;
1.1.6 duly executed transfers of the Shares in favour of the
Purchaser or its nominees and the share certificates in
respect of the Shares, together with any power of attorney or
other authority under which such transfers have been executed
and an indemnity in the agreed form in relation to any missing
certificates.
1.1.7 a Deed of release executed by each of the Vendors in the
agreed form releasing the Company from all claims (actual or
contingent) which he has or may have or might thereafter have
on account of or in relation to any act, matter, cause or
thing down to and inclusive of the Completion Date;
1.1.8 the statutory and other books duly written up to date, the
Certificate of Incorporation, Certificate[s] of Incorporation
on Change of Name and common seal of the Company;
1.1.9 the title Deeds relating to the Premises and all insurance
policies, premium receipts, maintenance contracts and other
documents relating to the Premises;
1.1.10 all books of account and other books and records and copies of
the memorandum and articles of association of the Company;
1.1.11 all documents of title, certificates, Deeds, licenses,
agreements and other documents relating to the Company's
Intellectual Property Rights and all manuals, drawings, plans,
documents and other materials and media on which the Company's
Know-How is recorded;
1.1.12 the Employment Agreements duly executed by each of the
Executives and at least 80% of the employees;
1.1.13 the certificate and undertaking as to Regulation "S" in the
form contained in Schedule 7 duly executed by each of the
Vendors; and
1.1.14 the Escrow Agreement executed by the Vendors.
1.2 At Completion the Vendors shall procure that:
5.1
70
1.2.1 a board meeting of the Company be held at which the Employment
Agreements shall be approved and executed by the Executives
and at least 80% of the other employees;
1.2.2 all amounts owing to the Company by any of the Vendors or any
of the Directors or any Connected Person in relation to the
Vendors, the Directors or any of them shall be repaid in full;
and
1.2.3 all the papers, books, records (in whatever medium) and all
other assets of the Company which are within the possession or
under the control of the Vendors, the Directors or any of
them, or any Connected Person of the Vendors the Directors of
any of them are delivered to the Company.
2. OBLIGATIONS OF THE PURCHASER
2.1 On Completion the Purchaser shall:
2.1.1 deliver to the Vendors a certificate of the Purchaser to the
effect that the Purchaser has completed in all respects with
its obligations under this Agreement, and that the Purchaser
Warranties remain true, complete and accurate in all respects
and not outstanding at the date of Completion;
2.1.2 deliver to the Vendors a counterpart of the Tax Deed duly
executed by the Purchaser;
2.1.3 deliver to the Vendors a counterpart of the Escrow Agreement
duly executed by the Purchaser and the Escrow Agent;
2.1.4 deliver to the Vendors the Loan Notes duly executed by the
Purchaser;
2.1.5 deliver to Kerridge Computer Company Limited a duly executed
copy of the KCC Debenture;
2.1.6 satisfy the cash consideration for the Shares as provided in
Section 3 of this Agreement by the delivery to the Vendors'
solicitors by telegraphic transfer of the sum specified in
Section 3.1.1 of this Agreement;
2.1.7 deliver the stock certificates in the names of the relevant
Vendors in respect of the relevant Consideration Shares to the
Escrow Agent;
2.1.8 deliver to the Executives' Employment Agreements duly executed
by the Purchaser or the Company.
3. To the extent that any documents referred to in this Schedule have been
executed before Completion, they shall be deemed to have taken place at
Completion in the order set out in this Schedule.
5.2
71
Schedule 6
TAX DEED
DATE 20 DECEMBER 1999
----
PARTIES
-------
(1) THE PERSONS whose names and addresses are set out in the Schedule
("Covenantors"); and
(2) FUTURELINK CORP., a corporation incorporated under the laws of the State
of Delaware, whose principal place of business is at ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Purchaser").
RECITAL
-------
Pursuant to an agreement of today's date the Purchaser has today completed the
purchase of the whole of the issued share capital of KNS Holdings Limited in
reliance (inter alia) upon the undertaking of the Covenantors to enter into this
Deed and the undertakings and covenants by the Covenantors hereinafter
contained.
NOW THIS DEED WITNESSES as follows:
-----------------------
1. DEFINITIONS AND INTERPRETATION
------------------------------
1.1 Definitions
-----------
In this Deed (including the Schedule):
6.1
72
"Accounts" means the audited consolidated profit and
loss account and balance sheet of the Company
(including the Subsidiary) as at the
Accounting Date;
"Accounting Date" means 28 February 1999;
"Agreement" means the agreement of today's date between
the Covenantors, and the Purchaser for the
sale and purchase of the Shares;
"Claim" includes any claim, assessment, notice,
demand, letter, direction, order,
counterclaim or other document issued or
made, or action taken by or on behalf of any
Tax Authority (including any action deemed to
be a self-assessment) by virtue of which the
Company has, or is alleged to have, a
liability to Tax, or from which it appears
that the Company has, or will or may have, a
liability to Tax, or from which it is sought
to impose upon the Company a liability to Tax
(whether in each case the same is primarily
payable by the Company and whether or not the
Company shall or may have any right of
reimbursement against any other person) or is
denied or sought to be denied any relief;
"Business Day" means any day which is not a Saturday, a
Sunday or a bank or public holiday in London;
"Company" means each of KNS HOLDINGS LIMITED and its
successors and assigns and the Subsidiary and
its successors and assigns, as the case may
be;
6.2
73
"Completion" means completion of the sale and purchase of
the Shares pursuant to the Agreement;
"Event" includes any event, transaction, act, or
occurrence of whatsoever nature including
omission, receipt, distribution and failure
to distribute, acquisition, disposal,
transfer, payment, loan or advance, or deemed
distribution of income, the death of any
person, the change in residence of any
person, entry into the Agreement, Completion
or the inclusion of a company within a group
of companies for any purpose;
"Group Relief" means (i) relief for trading losses and other
amounts by way of group relief under Sections
402 to 413 of the Taxes Act; (ii) the
surrender of advance corporation tax under
Section 240 of the Taxes Act; and (iii) the
surrender of tax refunds under Section 102 of
the Finance ▇▇▇ ▇▇▇▇; or, in each case, the
nearest equivalent under the laws of any
other jurisdiction;
"Relief" includes any relief, loss, allowance,
exemption, set-off, deduction or credit in
respect of any tax, or any set-off or
deduction in computing income, profits or
gains for the purposes of any Tax;
"Shares" means the 20,571,429 ordinary shares of one
▇▇▇▇▇ each in the capital of the Company plus
shares of the Company to be issued upon
exchange as described in Section 10.2.12 of
the Agreement;
"Subsidiary" means KNS Limited;
6.3
74
"Tax" means all taxes, duties, levies, imposts,
charges and withholdings of any nature
whatsoever, whether created or imposed in the
United Kingdom or elsewhere and at whatever
time created or imposed which are collected
and administered by any Tax Authority, and
includes:
(a) within the United Kingdom, income
tax, corporation tax, advance
corporation tax, capital gains tax,
value added tax, customs' duties
(including import duties, excise
duties), stamp duty reserve tax but
not stamp duty, inheritance tax,
national insurance contributions,
and any other forms of taxes,
duties, levies, imposts, charges or
withholdings similar to or
supplementing or replaced by or
replacing the foregoing or any of
them, in all cases together with all
incidental and supplemental
penalties, charges, interest, fines
and default surcharges; and
(b) outside the United Kingdom, any
liability to any taxes, levies,
duties, imposts, charges and
withholdings of any nature
whatsoever, including (without
limitation) taxes on gross or net
income, taxes on profits or gains
and taxes on receipts, sales, use,
occupation, franchise, value added,
and personal property, in all cases
together with all incidental or
supplemental penalties, charges,
interest, fines and default
surcharges and costs;
6.4
75
"Tax Authority" means any taxing or other
authority (whether within or outside the
United Kingdom) competent to impose,
administer or collect any Tax.
1.2 In this Deed:
1.2.1 references to the loss of a Relief or of a right to repayment
of Tax include references to the loss, reduction,
modification, set-off, withdrawal, nullifying or cancellation
of a Relief or of a right to repayment of Tax;
1.2.2 references to the utilisation of a Relief or of a right to
repayment of Tax include references to the utilisation or
setting-off of a Relief or of a right to repayment of Tax; and
1.2.3 references to the loss or utilisation of a Relief shall be
construed.
1.3 References to an Event occurring on or before any date or on or before
other Events shall be deemed to include any combination of two or more
Events the first of which has taken place or took place on or before
that date or on or before that other Event and shall include any Event
which is deemed for Tax purposes to have occurred prior to such date.
1.4 Words and expressions (if any) which are defined in the Agreement and
which are not expressly defined in this Deed, and rules of
interpretation which are provided for in the Agreement and which are
not otherwise expressly provided for in this Deed, shall have the same
meaning in and shall apply to this Deed and shall be deemed to be
incorporated in this Deed.
1.5 Words and expressions (if any) neither defined in this Deed nor in the
Agreement but which are defined or used in any legislation relating to
Tax which is relevant in the context shall have the same meaning in
this Deed as they have in such legislation.
6.5
76
1.6 References to income, profits or gains accrued, or being earned or
received, on or before a particular period shall include any profits
deemed for Tax purposes to have accrued, or to have been earned or
received, on or before that date or in respect of that period.
1.7 References to "income, profits or gains" shall include receipts, value
and any other criterion used in establishing the incidence of any Tax
or measure in establishing the amount of any liability to Tax.
1.8 Unless the context otherwise requires, words importing the singular
only shall include the plural and vice versa, words importing the
masculine gender only shall include the feminine gender and vice versa
and words importing natural persons only shall include corporations,
unincorporated associations and partnerships and vice versa.
1.9 Unless otherwise stated references to any Section or Schedule is a
reference to the appropriate Section of or Schedule to this Deed.
1.10 Unless otherwise expressly stated:-
1.10.1 the rule of construction known as "the ejusdem generis rule"
shall not apply in interpreting this Deed so that words or
phrases of a generally descriptive nature shall not be given a
restrictive meaning by reason only of the fact that they are
preceded by more specific words of phrases; and
1.10.2 words of a generally descriptive nature in this Deed shall not
be given a restrictive meaning by reason only of the fact that
they are followed by specific examples.
1.11 Section headings are for convenience only and accordingly shall be
disregarded in interpreting this Deed.
2. COVENANT
--------
6.6
77
2.1 Subject to Section 3, the Covenantors hereby jointly and severally
agree with the Purchaser to pay to the Purchaser an amount equal to:-
2.1.1 any liability to Tax of the Company which arises as a
consequence of or by reference to:
(a) any Event occurring on or before Completion; or
(b) any income, profits or gains accrued, or earned or
received, on or before Completion,
in each case whether or not such liability to Tax is also
chargeable against or attributable to any other person;
2.1.2 any costs and expenses incurred or payable by the Purchaser
or the Company in connection with any matter in respect of
which a claim is made under this Deed;
2.1.3 any liability to Tax of the Company which would have been
saved but for the loss of some Relief in consequence of an
Event occurring on or before Completion;
2.1.4 any liability to Tax of the Company which arises in
consequence of an Event occurring on or before Completion and
which would have been payable but for the utilisation of some
Relief or right to repayment of Tax where the Relief or right
to repayment of Tax arises in respect of an Event occurring
after Completion;
2.1.5 any liability to Tax of the Company arising in consequence of
an Event occurring after Completion and for which the Company
is liable as a result of having been a member of any group for
Tax purposes at any time before Completion;
2.1.6 any Tax which would have been repaid to the Company but for
the loss, reduction, set-off or cancellation of any right to
repayment of Tax in consequence of an Event occurring on or
before Completion;
2.1.7 (a) any liability of the Company (other than to any
other company) to repay in whole or in part any
payment for Group Relief received pursuant to an
agreement or arrangement entered into on or before
Completion; or
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78
(b) any payment which a Company fails to obtain for Group
Relief which was taken into account as an asset in
the Accounts;
2.1.8 any amount the Company is obliged to pay by way of
reimbursement, recharge, indemnity, damages or management
charge connected in any way with Tax:-
(a) in respect of or arising from any Event effected or
deemed to have been effected on or before Completion;
or
(b) by reference to any profits earned accrued or
received on or before Completion; and
2.1.9 any depletion in or reduction in value of the assets or
increase in the liabilities of the Purchaser and the Company
as a result of any inheritance tax which:-
(a) is at Completion a charge on or gives rise to a
power to sell, mortgage or charge any of the shares
or assets of the Company; or
(b) after Completion becomes a charge on or gives rise to
a power to sell, mortgage or charge any of the shares
or assets of the Company, which is a liability in
respect of inheritance tax payable as a consequence
of the death of any person (whenever occurring)
within seven years after a transfer of value,
occurring on or before Completion; or
(c) arises as a consequence of a transfer of value
occurring on or before Completion (whether or not in
conjunction with the death of any person whenever
occurring) made by or to the Company.
2.2 For avoidance of doubt, any payment made by the Company or the
Purchaser to discharge or remove any power to sell, mortgage or charge
shall give rise to a liability and notwithstanding any provision of
this Deed the Company or the Purchaser may disregard any right to pay
any Tax in instalments in discharging or removing a charge or power.
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2.3 Section 213 of the Inheritance ▇▇▇ ▇▇▇▇ shall not apply in relation
to any payments to be made by the Covenantors under this Deed.
2.4 There shall be treated as an amount of Tax which would for the purposes
of Section 2.1.3 have been saved but for the loss, reduction,
modification, setting-off or cancellation of some Relief, the amount of
Tax which would have been saved by the Relief lost, reduced, modified,
set-off or cancelled applying the relevant rates of Tax in force or
(where the rate has at the relevant time not been fixed) at the last
known rate, in the earliest period in respect of which Tax becomes
payable which would not have been payable if the Relief had not been
lost, reduced, modified, set-off or cancelled.
2.5 Any amount paid under Section 2.1 shall be treated as an adjustment to
the consideration paid by the Purchaser for the Shares under the
terms of the Agreement.
2.6 Each of the covenants contained in Section 2.1 shall be construed as
giving rise to separate and independent obligations and shall not be
restricted by the other save that (for the avoidance of doubt) any
payment by the Covenantors in respect of a liability under one covenant
shall pro tanto discharge any liability under the other so far as it
arises from the same subject matter.
2A. PURCHASER'S COUNTER-INDEMNITY
-----------------------------
2A.1 The Purchaser covenants to pay to the Covenantors by way of adjustment
to the consideration paid by the Purchaser for the sale of the Shares
under the terms of the Agreement a sum equivalent to any Tax for which
the Covenantors or any company under the control (or formerly under the
control and in respect of which the Covenantors are liable to any third
party) of the Covenantors becomes liable to pay by virtue of the
operation of Sections 767A, 767AA and 767B of the Taxes Act in
circumstances where the taxpayer company (as referred to in the said
Section 767A(1)) or the transferred
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company or an associated company (as referred to in the said
Section 767AA(1)) is the Company or the subsidiary of the Company.
2A.2 The covenant contained in Section A.1 shall:
(a) extend to any reasonable costs incurred by the Covenantors (or
such other company as is referred to in Section A.1) in
connection with the liability to pay such Tax;
(b) not apply to Tax which has been recovered under
Section 767B(2) of Taxes Act.
(c) not apply to such Tax that the Covenantors are liable for
under the provisions of this Deed.
2A.3 The Purchaser shall pay such sum as is mentioned in Section A.1 to the
Covenantors five business days before such sum is to be paid and the
provisions of Sections 6.2 and 7 shall apply, mutatis mutandis, in
respect of the aforementioned sum.
3. LIMITATIONS
-----------
3.1 Exclusions
----------
In addition to the limitations in Section 6 of the Agreement the
Covenantors shall not be liable under Section 2 to the extent that:-
3.1.1 specific provision or reserve in respect of such liability to
Tax was made in the Accounts (not being a provision or reserve
for deferred Tax); or
3.1.2 provision or reserve made in the Accounts is insufficient only
by reason of any alteration in rates of Tax or mandatory
change in accountancy practice or principles or any change in
the law introduced after Completion with retrospective effect;
or
3.1.3 the loss occasioned has been recovered pursuant to a claim
under the in the Agreement; or
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3.1.4 which would not have arisen but for a voluntary act or
transaction or omission carried out, effected or suffered by
the Company or the Purchaser after Completion unless such act
transaction or omission occurs:-
(a) in the ordinary course of the business of the
Company or the Purchaser; or
(b) pursuant to a legally binding obligation of the
Company or the Purchaser entered into prior to
Completion; or
(c) with the approval, concurrence or assistance of the
Covenantors; or
3.1.5 which would not have arisen but for a change after Completion
in the accounting policies used in the preparation of the
Company's accounts; or
3.1.6 to the extent that the liability to Tax would not have arisen
but for a failure by the Company to utilise a Relief arising
in respect of an Event occurring on or before Completion other
than a Relief taken into account in computing the Accounts if
such Relief is available to be used against any profit, gain
or Tax arising from the matters which would but for this
Section 3.1.6 have given rise to a Claim or would have been
available to be so used had it not been used against any
profit, gain or taxation arising from a matter which occurred
after Completion; or
3.1.7 to the extent that the liability to Tax arises as a result of
any action taken at the express written request of or with the
express written approval of the Purchaser or its
representatives; or
3.1.8 to the extent that the liability to Tax has been reduced or
eliminated by the valid surrender of Group Relief by a member
of the Company Group at no cost to the Company after
Completion.
3.2 Time Limits for making Claims
-----------------------------
No Claim shall be made unless notice of such Claim is given to the
Covenantors by the Purchaser within seven years from the date of this
Deed.
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3.3 OVERPROVISIONS, RELIEF, etc.
----------------------------
3.3.1 If the auditors for the time being of the Company shall
certify (at the request and expense of the Covenantors) that
any provision for Tax in the Accounts (excluding any provision
for deferred Tax) has proved to be an over-provision, then the
amount of such over-provision shall be dealt with in
accordance with Section 3.3.3. However, for the avoidance of
doubt, it will not be regarded as such an over-provision if
any action by the Company (or any person connected within the
meaning of Section 839 of the Taxes Act with the Company)
after Completion gives rise to any Relief which may be used by
the Company so as to reduce the Company's liability to Tax as
stated in the Accounts.
3.3.2 If the auditors for the time being of the Company shall
certify (at the request and expense of the Covenantors) that
any Tax liability (or Event giving rise to a liability to Tax)
which has resulted in a payment having been made or becoming
due from the Covenantors under this Deed will give rise to a
Relief for the Company which would not otherwise have arisen,
then, as and when the liability of the Company to make an
actual payment of or in respect of Tax is reduced by reason of
that Relief and after taking account of the effect of all
other Reliefs that are or become available to the Company
(including any Relief derived from a subsequent accounting
period and any Group Relief surrendered to the Company), the
amount by which that liability is so reduced shall be dealt
with in accordance with Section 3.3.3.
3.3.3 Where it is provided under Sections 3.3.1 and 3.3.2 that any
amount (the "Relevant Amount") is to be dealt with in
accordance with this sub-Section:-
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(a) the Relevant Amount shall first be set off against
any payment then due from the Covenantors under this
Deed or pursuant to a claim in respect of the Tax
Warranties; and
(b) to the extent there is an excess, a refund shall be
made to the Covenantors of any previous payment or
payments made by the Covenantors under this Deed or
in respect of the Tax Warranties and not previously
refunded under this Deed up to the amount of such
excess; and
(c) to the extent that the excess referred to in
paragraph (b) of this sub-Section is not exhausted
under that paragraph, the remainder of that excess
shall be carried forward and set-off against any
future payment or payments which become due from the
Covenantors under this Deed or in respect of the Tax
Warranties.
3.3.4 Where any such certification as is mentioned in Section 3.3.1
or 3.3.2 above has been made, the Covenantors or the Purchaser
or the Company may request the auditors for the time being of
the Company to review such certification in the light of all
relevant circumstances, including any facts which have become
known only since certification, and to certify whether such
certification remains correct or whether, in the light of
those circumstances, the amount that was the subject of such
certification should be amended.
3.3.5 If the auditors certify under Section 3.3.4 above that an
amount previously certified should be amended, that amended
amount shall be substituted for the purposes of Section 3.3.3
above as the Relevant Amount in respect of the certification
in question in place of the amount originally certified, and
such adjusting payment (if any) as may be required by virtue
of the above-mentioned substitution shall be
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made as soon as practicable by the Covenantors or (as the
case may be) to the Covenantors.
3.4 RECOVERY FROM THIRD PARTIES
---------------------------
3.4.1 Without prejudice to the Covenantors' obligations under this
Deed to make payment or otherwise, where the Covenantors have
made a payment under this Deed and the Company or the
Purchaser is entitled to recover from any third party any sum
in respect of the matter to which the payment made by the
Covenantors relates, the Purchaser shall notify the
Covenantors of the entitlement as soon as reasonably
practicable following it becoming aware of such entitlement
and without any obligation to enquire or investigate such
possible entitlement.
3.4.2 Without prejudice to the Covenantors' obligations under this
Deed to make payment or otherwise, the Purchaser shall or
shall procure that the Company and/or the Purchaser shall (at
the request and expense of the Covenantors and upon the
Covenantors indemnifying and securing the Purchaser and/or the
Company to the reasonable satisfaction of the Purchaser and/or
the Company against all costs or expenses which may thereby be
incurred) take such action as the Covenantors shall reasonably
request to enforce such recovery as is mentioned in Section
3.4.1 against the third party in question and shall account to
the Covenantors by way of the refund of the payment referred
to in Section 3.4.1 made for any sums so recovered (including
any interest or repayment supplement paid by the third party)
subject to a maximum of the amount of the payment then made by
the Covenantors under this Deed in respect of the relevant
liability for Tax.
4. CONDUCT OF CLAIMS
-----------------
4.1 In the event of the Purchaser becoming aware of any assessment which
does or may give rise to a Claim the Purchaser shall or shall procure
that the
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Company as soon as reasonably practicable give notice of such
assessment to the Covenantors PROVIDED that the giving of such notice
shall not be a condition precedent to the liability of the Covenantors
under this Deed.
4.2 If the Covenantors shall first indemnify and secure the Company and the
Purchaser to their reasonable satisfaction against any Tax, additional
Tax, losses, fines, penalties, interest, charges, damages, costs and
expenses (including the cost to the Purchaser or the Company of
executives assisting the Covenantors) the Company and the Purchaser
shall subject to Section 4.3 take such action as the Covenantors may
reasonably request to avoid, dispute, resist, appeal, compromise, or
defend such assessment (the "Covenantor's Action").
4.3 Neither the Purchaser nor the Company shall be obliged to appeal
against any assessment if, having given the Covenantors notice of the
receipt of that assessment, it has not within ten Business Days
received instructions in writing from the Covenantors in accordance
with the preceding provisions of this Section to make that appeal.
4.4 Neither the Purchaser nor the Company shall be obliged to take any
action or further action under this Section in respect of any
assessment if it appears to the Purchaser that either the Covenantor,
or the Company prior to its being in the ownership of the Purchaser,
have committed acts or omissions which may constitute fraud,
misfeasance or negligence.
4.5 Neither the Purchaser nor the Company shall be required to take any
action which either interferes with the normal course of its business
or which in its opinion is likely to prejudice its business or its
relationship with any Tax Authority or result in the Purchaser or any
Company which forms part of the Purchaser's group incurring a liability
to Tax or an increased liability to Tax.
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4.6 Neither the Purchaser nor the Company shall be obliged to take any
action pursuant to this Section 4 which includes continuing the
Covenantor's action or contesting an assessment beyond the first
appellate body (excluding the Tax Authority demanding the Tax in
question) in the jurisdiction concerned.
4.7 Neither the Purchaser nor the Company shall be obliged to take any
action under this Section 4 which involves continuing the Covenantor's
action or contesting any assessment before any court or other appellate
body (excluding the Tax Authority demanding the Tax in question) unless
the Covenantors furnishes the Purchaser with the written opinion of
leading Tax counsel to the effect that an appeal against the assessment
in question will, on the balance of probabilities, be won.
4.8 The Purchaser and the Company shall be at liberty without reference to
the Covenantors to admit, compromise, settle, discharge or otherwise
deal with any assessment after whichever is the earliest of:-
4.8.1 the Purchaser or the Company being notified by the Covenantors
that they consider the assessment should no longer be
resisted;
4.8.2 the expiry of a period of 14 Business Days following the
service of a notice by the Purchaser or the Company on the
Covenantor, requiring the Covenantors to clarify or explain
the terms of any request made under Section 4.2 during which
period no such clarification or explanation has been received
by the Purchaser or the Company; and
4.8.3 if appropriate, the expiration of any period prescribed by
applicable legislation for the making of an appeal against
either the assessment or the decision of any court or tribunal
in respect of any such assessment, as the case may be.
4.9 The Covenantors shall be bound to accept for the purposes of this Deed
any admission, compromise, settlement or discharge of any assessment
and the outcome of any proceedings relating thereto made or arrived at
in accordance with the provisions of this Section 4.
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5. TAX RETURNS
-----------
5.1 The Covenantors or their duly authorised agents shall prepare the Tax
returns of the Company for all accounting periods ended on or prior to
the Accounting Date, to the extent that the same shall not have been
prepared before Completion.
5.2 The Purchaser shall procure that the Company shall cause the returns
mentioned in Section 5.1 to be authorised, signed and submitted to the
appropriate Tax Authority without amendment or with such amendments as
the Covenantors shall agree, and shall give the Covenantors or its
agents all such assistance as may be required to agree those returns
with the appropriate Tax Authority PROVIDED THAT the Company shall not
be obliged to take any such action as is mentioned in this Section in
relation to any Tax return that is not full, true and accurate in all
material aspects.
5.3 The Covenantors or its duly authorised agents shall prepare all
documentation and deal with all matters (including correspondence)
relating to the Tax returns of the Company for all accounting periods
ended on or prior to the Accounting Date and the Purchaser shall
procure that the Company shall afford such access to their books,
accounts and records as is necessary and reasonable to enable the
Covenantors or their duly authorised agents to prepare those returns
and conduct matters relating thereto in accordance with the
Covenantor's rights under this Section.
5.4 Nothing done by the Purchaser or the Company pursuant to this Section
shall in any respect restrict or reduce any rights which the Purchaser
may have to make a Claim against the Covenantor.
6. DUE DATE FOR PAYMENT
--------------------
6.1 The Covenantors shall pass to the Purchaser any payment required to
be made by them in cleared funds:-
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6.1.1 in a case that involves an actual payment of Tax by the
Company, seven Business Days immediately before the last date
on which the Company would have had to have paid to the
relevant Tax Authority the Tax that has given rise to the
Covenantor's liability under this Deed in order to avoid
incurring a liability to interest or a charge or penalty in
respect of that Liability to Tax; or
6.1.2 in a case falling within Section 2.1.3, five Business Days
after the date on which the Covenantors has been notified by
the Purchaser that the auditors for the time being of the
Company have certified, at the request of the Purchaser, that
there is liability for a determinable amount under Section
2.4;
6.1.3 to the extent the claim under this Deed involves the loss of
any right to repayment of Tax, the date which is or would have
been the "material date" for the purposes of Sections 825 and
826 of the Taxes Act or, in the case where those Sections do
not apply to the repayment in question, the date on which such
Tax would otherwise have been repaid;
6.1.4 to the extent the claim under this Deed involves the loss of
any Relief, the seventh Business Day prior to the date on
which the Tax, which would have been saved but for such loss
becomes due and payable.
6.2 If any payment required to be made by the Covenantors under this Deed
is not made by the due date then that payment shall carry interest from
that due date until the date when the payment is actually made at the
rate of 4 per cent above the base rate from time to time of National
Westminster Bank PLC or such bank as succeeds it.
6.3 The Covenantors shall pay to the Company or the Purchaser as the case
may be any amount required to be paid by them pursuant to Section 2.1.2
on the date on which the Company or the Purchaser incurs or suffers
such costs or expenses.
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6.4 Notice of the amount of the payment required to be made by the
Covenantors under Section 6.3 and the due date for payment shall be
given in writing by the Company or the Purchaser and shall (save for
manifest error) be conclusive and binding on the Covenantors.
7. TAXES AND DEDUCTIONS FROM PAYMENTS
----------------------------------
7.1 All sums payable by the Covenantors to the Purchaser under this Deed
shall be paid free and clear of all deductions or withholdings
whatsoever, save only as may be required by law.
7.2 If any sum ("the first sum") payable by the Covenantors to the
Purchaser under this Deed shall or in the reasonable opinion of the
Purchaser be subject to Tax in the hands of the Purchaser or would have
been taxable in the hands of the Purchaser, then the Covenantors shall
pay to the Purchaser (as often as shall be necessary) such additional
sum or sums as will after such Tax (and any Tax on such additional sum
or sums) leave the Purchaser with such amount as the Purchaser would
have been left with had the first sum not been subject to Tax in the
hands of the Purchaser.
7.3 All sums payable by the Covenantors under this Deed are to be paid in
the currency or currencies appropriate to the Assessment as a result of
which the liability to make a payment of Tax has arisen.
7.4 The Purchaser may direct the Covenantors to pay to the Company any sums
due to the Purchaser under this Deed and such payment shall be treated
as a payment to the Purchaser and not a payment to the Company.
8. STAMP DUTY
----------
The Covenantors hereby jointly and severally warrant to the Purchaser
that all documents forming part of the title to any asset of a Company
or which a Company may wish to enforce or produce in evidence are duly
stamped and have where appropriate been adjudicated. The Covenantors
hereby jointly and
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severally agree that in the event of a breach of this warranty they
shall pay to the Purchaser by way of liquidated damages an amount equal
to any unpaid stamp duty and any interest or penalties payable in
respect thereof.
9. RELEASE OF COVENANTOR
---------------------
The Purchaser may release, or compromise the liability of, any
Covenantors or grant time or other indulgence to any Covenantors
without releasing or reducing the liability of any other Covenantor.
Where a liability of one or some but not all of the Covenantors under
any obligation which is both joint and several is released or
compromised, the remaining Covenantor(s) shall continue to be severally
and shall together be jointly liable in respect of that obligation.
10. ASSIGNMENT
----------
The benefit of this Deed may be assigned in whole or in part by the
Purchaser.
11. GOVERNING LAW AND JURISDICTION
------------------------------
This Deed shall be governed by and construed in all respects in
accordance with the laws of England and the parties hereby submit
themselves to the exclusive jurisdiction of the English courts for such
purpose.
12. NOTICES
-------
12.1 Any notice required to be given under this Agreement shall be
sufficiently given if delivered personally or if sent by first-class
recorded delivery post (express air courier service if sent overseas)
or if sent by facsimile transmission.
12.2 Any notice which is sent or despatched in accordance with this
Section 12 shall be deemed to have been received by the addressee:-
12.2.1 if delivered personally, at the time of delivery;
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12.2.2 in the case of a notice sent by post (or express air courier),
2 Business Days after the envelope containing the notice was
delivered to the postal authorities (or courier service);
12.2.3 in the case of a notice sent by facsimile transmission, if the
notice was sent during the normal business hours of the
addressee, on the day of transmission; otherwise on the next
following Business Day.
12.3 In proving service by post or express air courier, it shall be
necessary to prove only that the notice was sent or despatched and that
the notice was contained in an envelope properly addressed, stamped and
delivered to the postal authorities or courier service in the country
from where despatched. In proving service by facsimile transmission, it
shall be necessary to produce only a legible copy of the confirmation
of the facsimile transmission.
12.4 Any notice required to be given under this Agreement shall be sent:
12.4.1 to the Covenantors c/o the Covenantors' solicitors at:
▇▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇. ▇▇▇▇ ▇▇▇
Facsimile No: 01242 224223
For the attention of: ▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇ ▇▇▇▇▇
12.4.2 to the Purchaser at:
Futurelink Corp.
▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
For the attention of: ▇▇▇ ▇▇▇▇▇▇
With a copy to:
Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Tower 42
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▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Facsimile No: 0171 628 4444
For the attention of: ▇▇▇▇▇ ▇. ▇▇▇
or to such other address or facsimile number as is notified in
writing from time to time by the Covenantors (or any one of
them) or the Purchaser (as the case may be) to the other.
IN WITNESS whereof this Deed has been duly executed and delivered the day and
----------
year first before written.
Signed as a Deed on behalf of )
the Vendors by )
DENIS ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ) [signed: Denis ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇]
as Attorney )
EXECUTED as a Deed by
FUTURELINK CORP.
[signed: ▇▇▇ ▇▇▇▇▇▇] Signature of Director
______________________ Name of Director
______________________ Signature of Director/Secretary
______________________ Name of Director/Secretary
6.22
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THE SCHEDULE
Names and Addresses of the Covenantors
1. ▇. ▇. ▇▇▇▇▇▇▇
2. ▇. ▇▇▇▇▇▇▇
3. C. A. Matthissen
4. ▇▇▇▇ ▇▇▇▇▇▇▇▇
5. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
6. ▇. ▇. ▇▇▇▇▇▇▇
7. ▇. ▇. ▇▇▇▇▇▇▇
8. A. P. M. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
9. ▇. ▇▇▇▇
10. Yuri Pasea
11. ▇▇▇▇▇ ▇▇▇▇▇
12. ▇▇▇▇▇ ▇▇▇▇▇▇
IN WITNESS whereof this Deed has been duly executed the day and year first
before written.
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Schedule 7
CERTIFICATE AS TO REGULATION S
INVESTMENT INTENT LETTER AND
APPOINTMENT OF THE REPRESENTATIVE AGREEMENT
This Investment Intent Letter and Appointment of the
Representative Agreement (this "Agreement") dated as of December 20, 1999, is
entered into by and among the persons whose names appear on the signature pages
hereto as "Vendors" (collectively the "Vendors"), ▇▇▇▇▇ ▇▇▇▇▇▇▇ Matthissen or
the "Representative," who is also a "Vendor"), and FutureLink Corp., a Delaware
corporation ("Purchaser"). Unless otherwise defined herein, all capitalised
terms used herein shall have the meanings assigned to them in the Purchase
Agreement (as defined below).
RECITALS
A. Vendors and Representative collectively own all of the issued
and outstanding ordinary shares (the "Company Stock") of KNS Holdings Ltd., a
limited company organised under the laws of England (the "Company"), and are
"Vendors" defined in the Purchase Agreement described below.
B. Pursuant to the terms and conditions of that certain Agreement
for Sale and Purchase of Shares (the "Purchase Agreement") dated of even date
herewith by and among Purchaser and Vendors, Purchaser is acquiring all the
Company Stock.
C. In connection with the Purchase Agreement, the Vendors will be
issued shares of common stock, US$0.0001 par value, of Purchaser (the
"Purchaser's Shares") in exchange for their shares of Company Stock (and the
Purchaser's Shares issued to the Vendors are herein referred to as the
"Consideration Shares").
D. The Vendors desire to appoint ▇▇▇▇▇ ▇▇▇▇▇▇▇ Matthissen as their
"Representative" and attorney-in-fact pursuant to the terms and conditions
hereof.
E. The Vendors desire to make certain representations and
warranties to Purchaser to satisfy various U.S. securities law requirements.
AGREEMENT
NOW THEREFORE, in consideration of the respective covenants and
promises contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. APPOINTMENT OF REPRESENTATIVE. Each Vendor (other than
Representative) hereby makes, constitutes and appoints ▇▇▇▇▇ ▇▇▇▇▇▇▇ Matthissen
as his true and lawful attorney-in-fact with full power and authority to take
any and all
7.1
95
action as is contemplated to be taken by such Vendor by the terms of
the Purchase Agreement; including, without limitation, the following:
(a) to administer the defence and/or settlement of any claims for
which the Vendors may be liable to Purchaser pursuant to the Purchase Agreement;
such Vendor expressly acknowledges and agrees to such obligations set forth in
the Purchase Agreement; and
(b) to make, execute and deliver all agreements, Schedules,
exhibits and certificates required to be executed by the Vendors and delivered
to Purchaser in accordance with the terms and conditions of the Purchase
Agreement, including but not limited to the escrow agreement of even date
herewith among the Vendors, Purchaser and the escrow agent named therein (the
"Escrow Agreement"), and to act as proxy, if necessary, with respect to the
escrow shares delivered pursuant to the Escrow Agreement.
SECTION 2. ACCEPTANCE OF APPOINTMENT. Representative hereby
accepts his appointment as Representative and agrees to carry out in good faith
the responsibilities undertaken hereby and in accordance with the terms and
conditions of the Escrow Agreement and the Purchase Agreement.
SECTION 3. POWER OF ATTORNEY IRREVOCABLE, ETC. Each Vendor does
hereby ratify and confirm all that Representative shall do or cause to be done
by virtue of this Agreement. Each Vendor agrees that the power of attorney
granted hereby to Representative is a special power of attorney coupled with an
interest, is irrevocable, shall not terminate upon the death of such Vendor and
shall be effective from the date hereof until or upon termination of this
Agreement. Each Vendor hereby renounces all right to revoke the power of
attorney granted herein and to appoint another person or entity to perform the
acts of Representative, except for successors hereunder.
SECTION 4. SUCCESSOR REPRESENTATIVE. Each Vendor agrees that in
the event ▇▇▇▇▇ ▇▇▇▇▇▇▇ Matthissen ceases to act as Representative, then the
Vendors by vote or assent of Vendors holding a majority of the Consideration
Shares shall select a successor from among the remaining Vendors. If none of the
remaining Vendors will accept such appointment, then ▇▇▇▇▇ ▇▇▇▇▇▇▇ Matthissen
may select a successor who shall be such person or entity reasonably acceptable
to the remaining Vendors. Any successor to ▇▇▇▇▇ ▇▇▇▇▇▇▇ Matthissen shall have
all the rights, powers and obligations of Representative under this Agreement.
SECTION 5. COSTS. All charges, fees or other expenses or costs of
any Representative, if any, shall be borne and paid by the Vendors on a pro rata
basis in accordance with their respective Allocable Percentages as set forth on
Schedule 1 to the Purchase Agreement.
SECTION 6. LIMITATION OF LIABILITY OF REPRESENTATIVE AND
INDEMNITY. Each of the Vendors agrees that in performing any of his duties,
Representative shall not incur any liability to anyone for damages, losses or
expenses for any reason except for wilful negligence or intentional misconduct.
Without limiting the foregoing, each Vendor specifically agrees that
Representative shall be entitled to act upon advice of his counsel given with
respect to any questions relating to his duties and responsibilities as
Representative hereunder without incurring any liability to the Vendors or to
any other person. The Vendors agree to indemnify and hold harmless
Representative against and in respect of any and all losses, claims, damages,
liabilities
7.2
96
and expenses (including, without limitation, reasonable costs of
investigation, counsel and accountants' fees and disbursements) which may be
imposed upon or incurred by Representative in connection with the performance of
his duties hereunder on a pro rata basis in accordance with their respective
Allocable Percentages as set forth on Schedule 1 to the Purchase Agreement.
SECTION 7. LIMITATION OF LIABILITY OF PURCHASER AND INDEMNITY.
Each of the Vendors agrees that Purchaser shall be entitled to rely exclusively
on the instructions and decisions of the Representative as to the matters for
which the Representative has authority to act on behalf of the Vendors pursuant
to this Agreement, and no Vendor shall have any cause of action against
Purchaser in reliance upon the instructions or decisions of the Representative
in accordance with the terms and conditions set forth herein. The Vendors agree
to indemnify and hold harmless Purchaser against and in respect of any and all
losses, claims, damages, liabilities and expenses, including reasonable costs of
investigation, counsel fees and disbursements, which may be imposed upon or
incurred by Purchaser in connection with its reliance upon the instructions and
decisions of the Representative in accordance with the terms and conditions set
forth in this Agreement, on a pro rata basis in accordance with their respective
Allocable Percentages as set forth on Schedule 1 to the Purchase Agreement.
SECTION 8. SHAREHOLDER REPRESENTATIONS AND WARRANTIES. As a
condition to the receipt of the Consideration Shares, of the Vendors
represents and warrants to, and covenants with, Purchaser as follows:
(a) Such Vendor is aware of Purchaser's business
affairs and has acquired sufficient information about Purchaser to reach an
informed and knowledgeable decision to acquire the Consideration Shares. Such
Shareholder has been furnished by Purchaser with copies of the Purchaser's
filings listed in the attached Schedule and any documents which may have been
available upon request, and such Vendor has carefully read such reports and any
documents which were otherwise provided and understands and has evaluated the
risks of making an investment in the Purchaser's Shares. Such Vendor has been
afforded access to information concerning Purchaser and to its executive
officers and has been afforded the opportunity to ask questions of, and receive
answers from, Purchaser. Such Vendor has been given the opportunity to obtain
such additional information in order for such Vendor to evaluate the merits and
risks of the receipt of the Consideration Shares. Based upon such information
received, such Vendor believes such Vendor has received full and adequate
information concerning Purchaser and its proposed plan of operations.
(b) Such Vendor is generally familiar with the
semiconductor industry since such Vendor has either been employed in such
industry or has invested in business entities engaged in such industry.
(c) Such Vendor is taking the Consideration Shares for
investment for such Vendor's own account only and not with a view to, or for
resale in connection with, any unregistered "distribution" thereof within the
meaning of the Securities Act of 1933, as amended (the "Act").
(d) Vendor understands that no United States federal or
state agency has passed on, or made any recommendation or endorsement of, the
Consideration Shares.
7.3
97
(e) Vendor understands that the Consideration Shares are
being offered and sold to it in reliance on specific exemptions from or
non-application of the registration requirements of federal and state securities
laws and that Purchaser is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgements and understandings of
Vendor set forth herein in order to determine the applicability of such
exemptions and the suitability of Vendor to acquire the Consideration Shares.
(f) Purchaser is not a U.S. Person (as defined in
Regulation S promulgated under the Act) and is not and will not be an affiliate
(as defined in the Securities Exchange Act of 1934, as amended) of Purchaser.
To enable Purchaser to avoid any withholding requirements under U.S. law, Vendor
certifies under penalty of perjury that he, she or it is neither a citizen nor a
resident of the United States and that his, her or its address set forth in the
Purchase Agreement is correct.
(g) No public offer or solicitation of the Consideration
Shares was made to Vendor and no offer of the Purchaser's Shares was made to
Vendor while Vendor was present in the United States.
(h) At the time any buy order for the Consideration Shares
was originated, Vendor was located outside the United States and is outside the
United States on the date of the execution and delivery of this agreement and
will be outside the United States on the Completion Date.
(i) Vendor is aware that the Consideration Shares have not
been registered under the Act and may only be offered or sold pursuant to
registration under the Act or an available exemption therefrom and the Vendor
has not, and will not, engage in any public offering or distribution of the
Consideration Shares or engage in any hedging transaction with respect thereto,
except in accordance with the registration or exemptive provisions of the Act.
(j) Except to the extent the Consideration Shares have
been registered under the Act, Vendor (i) will not, during the period commencing
on the Completion Date and ending one year after the Completion Date
(the "Distribution Compliance Period), offer or sell or agree to sell the
Consideration Shares in the United States, to a U.S. Person or for the account
or benefit of a U.S. Person other than in accordance with Rule 903 or 904, as
applicable, of Regulation S and (ii) will, after the expiration of the
Distribution Compliance Period, offer, sell, pledge or otherwise transfer the
Consideration Shares only pursuant to registration under the Act or an available
exemption therefrom and, in any case, in accordance with applicable United
States federal and state securities laws.
(k) Vendor has been advised of, and is familiar with, has
complied, and will comply, with the offering restrictions, and any other
requirements, of Regulation S.
(l) The transactions contemplated by this Agreement (i)
have not been pre-arranged by Vendor with a Purchaser located in the United
States which is a U.S. Person, and (ii) are not part of a plan or scheme by
Vendor to evade the registration provisions of the Act.
(m) Neither Vendor nor any of his, her or its affiliates
has entered, has the intention of entering, or will during the Distribution
Compliance Period enter into, with any U.S. Person, any put option, short
position or other similar
7.4
98
instrument or position with respect to the Purchaser's Shares or participate in
any other attempt designed to hedge Vendors' risk with respect to the
Consideration Shares in any manner which does not comply with the Act.
(n) Such Vendor (individually or together with such
Vendor's investor representative who is not affiliated with Purchaser) has such
knowledge and experience in financial, tax and business matters that such Vendor
is capable of evaluating the merits and risks of receiving the Consideration
Shares and of making an informed investment decision with respect thereto.
(o) Such Vendor has determined that the Consideration
Shares are a suitable investment.
(p) If such Vendor will be a director, officer or employee
of the Purchaser or the Company following the Completion Date or have other
confidentiality obligations to Purchaser, such Vendor acknowledges receipt of
Purchaser's ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Policy and agrees to abide by its terms, and further
agrees to execute such Policy upon the request of Purchaser.
(q) The certificates representing the Consideration Shares
shall bear the following legend:
"The securities represented hereby have been issued pursuant to
Regulation S ("Regulation S") promulgated under the Securities Act
of 1933, as amended (the "1933 Act"), and have not been registered
under the 1933 Act. Unless so registered, such securities may not
be transferred, offered, hedged or sold prior to the end of the
one-year distribution compliance period prescribed by Regulation S
unless such transfer, offer, hedge or sale is made in an "offshore
transaction" and not to or for the account of or benefit of a
"U.S. Person" (as such terms are defined in Regulation S) and is
otherwise in accordance with the requirements of Regulation S.
Following expiration of any such one-year distribution compliance
period, the securities represented hereby may not be offered, sold
or otherwise transferred in the United States or to a U.S. Person
unless the securities are registered under the 1933 Act and
applicable state securities laws, or such offers, sales and
transfers are made pursuant to an available exemption from the
registration requirements of those laws."
(r) Vendor shall indemnify Purchaser against any loss,
cost or damages (including reasonable attorneys' fees and expenses) incurred as
a result of Vendor's breach of any representation, warranty, covenant or
agreement in this Agreement.
SECTION 9. MISCELLANEOUS.
(a) Amendments, Waivers and Consents. No amendment or
modification of this Agreement, nor any termination or waiver of any provision
of this Agreement or consent to any departure by any party hereto therefrom,
shall in any event be effective without the written concurrence of the parties
hereto.
(b) Notices. Notices and other communications under or in
connection with this Agreement shall be in writing and shall be deemed given (i)
if delivered personally, upon delivery, (ii) if delivered by courier, then upon
receipt, or (iii) if given by telecopy, upon confirmation of transmission by
telecopy (or, if such
7.5
99
confirmation does not occur during normal business hours on a Business Day (as
defined in the Purchase Agreement), then on the next Business Day), in each case
to the parties at the address for notice set forth on Schedule 1 to the Purchase
Agreement.
(c) Applicable Law. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with English
law and the United States federal securities laws without reference to any
choice of law rules that would require the application of the laws of any other
jurisdiction.
(d) Severability. The provisions of this Agreement are
severable, and if any Section or provision shall be held invalid or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect only such Section or provision, or part thereof,
in such jurisdiction and shall not in any manner affect such Section or
provision in any other jurisdiction, or any other Section or provision of this
Agreement in any jurisdiction.
(e) Interpretation. Time is of the essence of each
provision of this Agreement of which time is an element.
(f) Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of each of the parties hereto and their
respective successors, heirs and assigns.
(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall together constitute one and the same agreement.
(h) Purchaser's Representation. Purchaser represents and
warrants to Vendors that, since the end of its most recent third fiscal quarter,
there has been no material adverse change in the business, assets, financial
condition or results of operations of Purchaser.
[SIGNATURES APPEAR ON FOLLOWING PAGES]
7.6
100
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
For and on behalf of the Vendors
By DENIS ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
as Attorney
[signed: Denis ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇]
REPRESENTATIVE:
▇▇▇▇▇ ▇▇▇▇▇▇▇ MATTHISSEN
by his attorney
[signed: Denis ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇]
FUTURELINK CORP.
By:______________________________
An Authorised Representative
7.7
101
SCHEDULE 8
PURCHASER WARRANTIES
1. Issuance of Shares. The Consideration Shares are duly authorised, validly
issued, fully paid and non-assessable, and free from all taxes, liens, claims
and encumbrances directly or indirectly imposed or suffered by the Purchaser or
any Purchaser Group Company will be entitled to all rights and preferences
accorded to a holder of the Purchaser's Shares except that at Completion they
will not have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), shall be entitled to be traded on the same markets and
exchanges as the Purchaser's Shares are traded on, and will not be subject to
pre-emptive rights or other similar rights of stockholders of the Purchaser or
of any person or entity.
2. No Conflicts. The execution, delivery and performance of this Agreement by
the Purchaser, and the consummation by the Purchaser of transactions
contemplated hereby (including, without limitation, the issuance of the
Purchaser's Shares) will not (a) result in a violation of the Certificate of
Incorporation or By-laws or (b) conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Purchaser
or any Purchaser Group Company is a party, or result in a violation of any law,
rule, regulation, order, judgement or decree (including US federal and state
securities laws and regulations and the rules and regulations of NASDAQ)
applicable to the Purchaser or any Purchaser Group Company, or by which any
property or asset of the Purchaser or any Purchaser Group Company is bound or
affected (except for such possible conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a material adverse effect on the
Purchaser). Neither the Purchaser nor any Purchaser Group Company is in
violation of its Certificate of Incorporation or other organisational documents,
and neither the Purchaser nor any Purchaser Group Company is in default (and no
event has occurred which has not been waived which, with notice or lapse of time
or both, would put the Purchaser or any Purchaser Group Company in default)
under, nor has there occurred any event giving others (with notice or lapse of
time or both) any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Purchaser or any
Purchaser Group Company is a party, except for possible violations, defaults or
rights as would not, individually or in the aggregate, have a material adverse
effect on the Purchaser. The Purchaser is not required to obtain any consent,
authorisation or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency in order for it
to execute, deliver or perform any of its obligations under this Agreement or to
perform its obligations in accordance with the terms hereof. The Purchaser is
not in violation of the listing requirements of NASDAQ, does not know of or
anticipate any event which could be grounds for such delisting and does not
reasonably anticipate that the Purchaser's Shares will be delisted by NASDAQ for
the foreseeable future.
3. SEC Documents. Since 1 January, 1999, the Purchaser has timely filed all
reports, Schedules, forms, statements and other documents required to be filed
by it with the Securities and Exchange Commission (the "SEC") pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") (such documents being referred to
8.1
102
hereafter as the "SEC Documents"). The Purchaser has delivered to each Vendor
true and complete copies of the SEC Documents, except for exhibits, Schedules
and incorporated documents. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading None of the statements made in any such SEC Documents which is
required to be updated or amended under applicable law has not been so updated
or amended. The financial statements of the Purchaser included in the SEC
Documents have been prepared in accordance with US generally accepted accounting
principles, consistently applied, and the rules and regulations of the SEC
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they do not include footnotes or are condensed
or summary statements) and, fairly present in all material respects the
consolidated financial position of the Purchaser and any consolidated Purchaser
Group Company as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal, immaterial year-end audit adjustments). Except
as set forth in the financial statements or the notes thereto of the Purchaser
included in the SEC Documents, the Purchaser has no liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of
business consistent with past practice subsequent to the date of such financial
statements and (ii) obligations under contracts and commitments incurred in the
ordinary course of business consistent with past practice and (iii) liabilities
not required under generally accepted accounting principles to be reflected in
such financial statements, in each case of Section (i), (ii) and (iii) next
above which, individually or in the aggregate, are not material to the financial
condition, business, operations, properties, operating results or prospects of
the Purchaser and any Purchaser Group Company or to the transactions
contemplated hereby or to the Purchaser's Shares. To the extent required by the
rules of the SEC applicable thereto, the SEC Documents contain a complete and
accurate list of all material undischarged written or oral contracts,
agreements, leases or other instruments existing as of the respective date of
each such SEC Document (or such other date required by the rules of the SEC) to
which the Purchaser or any subsidiary is a party or by which the Purchaser or
any subsidiary is bound or to which any of the properties or assets of the
Purchaser or any subsidiary is subject (each a "Contract"). None of the
Purchaser, Purchaser Group Company or, to the best knowledge of the Purchaser,
any of the other parties thereto, is in breach or violation of any Contract,
which breach or violation would have a material adverse effect on the Purchaser.
No event, occurrence or condition exists which, with the lapse of time, the
giving of notice, or both, could become a default by the Purchaser or its
Subsidiary thereunder which would have a material adverse effect on the
Purchaser.
4. Disclosure. No information, statement or representation to or concerning the
Purchaser or any Purchaser Group Company set forth in this Agreement or provided
to a Vendor in connection with the transactions contemplated hereby contains an
untrue statement of a material fact. No information relating to or concerning
the Purchaser or any Purchaser Group Company set forth in any of the SEC
Documents contains a statement of material fact that was untrue as of the date
such SEC Document was filed with the SEC. The Purchaser has not omitted to state
a material fact necessary in order to make the statements and representations
made herein or
8.2
103
therein, in light of the circumstances under which they were made, not
misleading. Except for the execution and performance of this Agreement which
Purchaser does not acknowledge is material, no material fact (within the meaning
of the federal securities laws of the United States and of applicable state
securities laws) exists with respect to the Purchaser or any Purchaser Group
Company which has not been publicly disclosed.
5. No General Solicitation. Neither the Purchaser nor any distributor
participating on the Purchaser's behalf in the transactions contemplated hereby
(if any) nor any person acting for the Purchaser, or any such distributor, has
conducted any "general solicitation", as described in Rule 502(c) under
Regulation D, with respect to any of the Consideration Shares.
6. Since the date of the Purchaser's Form 10-Q for the fiscal quarter ended 30
June 1999, there has not occurred any material adverse change in the condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities, business, prospects, operations or results of operations of the
Purchaser or any Purchaser Group Company, taken as a whole, it being understood
that any fluctuation in the market price of the Purchaser Shares shall not be or
be deemed to be a material adverse change.
8.3
104
SCHEDULE 9
REDUNDANT SCHEDULE
9.1
105
SCHEDULE 10
FUTURELINK CORP.
------------------------------------------
DEED POLL CONSTITUTING
UNSECURED LOAN NOTES
------------------------------------------
PAUL, HASTINGS, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
TOWER 42
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
TEL: (▇▇▇) ▇▇▇▇ ▇▇▇▇
FAX: (▇▇▇) ▇▇▇▇ ▇▇▇▇
10.1
106
THIS DEED POLL is made on December 20, 1999
BY:
FUTURELINK CORP., a corporation incorporated under the laws of the State of
Delaware, the United States of America, whose principal place of business is at
▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "COMPANY").
WHEREAS pursuant to the terms of the Sale and Purchase Agreement the Company has
agreed to enter into a Deed constituting the Notes as herein provided.
THIS DEED WITNESSES as follows:
1. INTERPRETATION
In this Deed:
"APPLICABLE RATE" means Libor plus a margin of 1%;
"BUSINESS DAY" means any day which is not a Saturday, a Sunday or a
bank or public holiday in England and Wales;
"LIBOR" means the rate which appears on the display designated as the
British Bankers Association's Interest Settlement Rate as quoted on the
relevant page of the Dow ▇▇▇▇▇/Telerate Monitor for six month sterling
as at 11.00 am (London time) on the second Business Day preceding the
date of this Deed;
"MATURITY DATE" means the date which is six months from the date of
this Deed;
"NOTES" means the (pound) 2,500,000 unsecured loans notes constituted
by this Deed;
"NOTEHOLDER" means a person for the time being entered in the Company's
Register of Noteholders as the holder of a Note; and
"SALE AND PURCHASE AGREEMENT" means the agreement of even date relating
to the Company between (1) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇ Matthissen and Quadrangle Trust Company as trustees of the
various family settlements established by ▇▇▇▇ ▇▇▇▇▇▇▇, (2) ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ Matthissen and Quadrangle
Trustee Company as trustees of various family settlements established
by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (3) ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (4) ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇,
(5) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Monamy ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, (6) ▇▇▇▇▇▇ ▇▇▇▇, (7)
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, (8) ▇▇▇▇▇ ▇▇▇▇▇, (9) Yuri Pasea, (10) ▇▇▇▇
▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and (11) FutureLink Corp.
10.2
107
2. CONSTITUTION OF THE NOTES
2.1 The principal amount of the Notes constituted by this Deed is limited
to (pound) 2,500,000 issuable in integral multiples of (pound) 1.
2.2 The Company shall only issue the Notes in accordance with the Sale and
Purchase Agreement.
2.3 The Notes are not transferable.
3. REDEMPTION AND INTEREST
3.1 Unless previously redeemed, at the Maturity Date the Company shall pay
to the relevant Noteholder in cash and to such account details of which
shall be provided in writing by the Noteholder to the Company the
principal amount of the Note at par together with accrued interest at
the Applicable Rate up to but excluding the Maturity Date.
3.2 The Company may by notice in writing at any time prior to the Maturity
Date redeem the Note in whole or part from a Noteholder at par plus any
outstanding accrued interest at the Applicable Rate up to but excluding
the date of redemption.
3.3 The Company may only redeem Notes provided that it is undertaken
rateably amongst the Noteholders.
4. CERTIFICATES
A person on becoming a Noteholder is entitled without charge to one
certificate for the total principal amount of a Note registered in his
name.
5. GOVERNING LAW AND JURISDICTION
This Deed shall be governed by and construed in accordance with English
law and the parties hereby submit themselves to the non-exclusive
jurisdiction of the English Courts.
6. Any notice required to be given under this Agreement shall be sent:
6.1 to the Company at:
▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile no.: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
For the attention of: ▇▇▇ ▇▇▇▇▇▇
6.2 to the Noteholder at:
▇▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇. ▇▇▇▇ ▇▇▇
For the attention of: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile no.: 01242 224223
10.3
108
or to such other address or facsimile number as is notified in writing
from time to time by the Company or the Noteholder to the other.
IN WITNESS WHEREOF this Deed has been executed by the Company and is intended to
be and is hereby delivered on the date first above written.
Executed as a Deed by
FUTURELINK CORP.
By: [Signed: ▇▇▇ ▇▇▇▇▇▇]
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
--------------------------------
Title: Director, Mergers & Acquisitions
--------------------------------
109
CERTIFICATE OF LOAN NOTE
Certificate No. 1 Amount (pound)__________
FUTURELINK CORP. (THE "COMPANY")
(Incorporated under the laws of the State of Delaware)
UNSECURED LOAN NOTES
This is to certify that __________________________ is the registered holder of
(pound)__________ in principal amount of the unsecured loan notes (the "NOTES")
as constituted by a Deed poll (the "DEED") dated __________________ 1999 and
made by the Company. The Notes are issued with the benefit of and subject to the
provisions contained in the Deed and on this certificate.
Interest is payable on the Notes and the Notes are redeemable in accordance with
Section 3 of the Deed.
The Notes are not transferable.
The Notes are governed by and construed in accordance with English law and the
parties hereby submit themselves to the non-exclusive jurisdiction of the
English Courts.
Executed as a Deed
by the Company
By: _________________________
Name: _________________________
Title: _________________________
10.5
110
FUTURELINK CORP.
------------------------------------------
DEED POLL CONSTITUTING
UNSECURED LOAN NOTES MATURING ON
APRIL 6, 2000
------------------------------------------
PAUL, HASTINGS, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
TOWER 42
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
TEL: (▇▇▇) ▇▇▇▇ ▇▇▇▇
FAX: (▇▇▇) ▇▇▇▇ ▇▇▇▇
111
THIS DEED POLL is made on December 20 1999
BY:
FUTURELINK CORP., a corporation incorporated under the laws of the State of
Delaware, the United States of America, whose principal place of business is at
▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "COMPANY").
WHEREAS pursuant to the terms of the Sale and Purchase Agreement the Company has
agreed to enter into a Deed constituting the Notes as herein provided.
THIS DEED WITNESSES as follows:
1. INTERPRETATION
In this Deed:
"APPLICABLE RATE" means Libor plus a margin of 1%;
"BUSINESS DAY" means any day which is not a Saturday, a Sunday or a bank or
public holiday in England and Wales;
"LIBOR" means the rate which appears on the display designated as the
British Bankers Association's Interest Settlement Rate as quoted on the
relevant page of the Dow ▇▇▇▇▇/Telerate Monitor for three month sterling as
at 11.00 am (London time) on the second Business Day preceding the date of
this Deed;
"MATURITY DATE" means April 6, 2000;
"NOTES" means the (pound)1,654,706 unsecured loans notes constituted by
this Deed;
"NOTEHOLDER" means a person for the time being entered in the Company's
Register of Noteholders as the holder of a Note; and
"SALE AND PURCHASE AGREEMENT" means the agreement of even date relating to
the Company between (1) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇
Matthissen and Quadrangle Trust Company as trustees of the various family
settlements established by ▇▇▇▇ ▇▇▇▇▇▇▇, (2) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ Matthissen and Quadrangle Trustee Company as
trustees of various family settlements established by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (3)
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (4) ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, (5) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Monamy
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇, (6) ▇▇▇▇▇▇ ▇▇▇▇, (7) ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, (8)
▇▇▇▇▇ ▇▇▇▇▇, (9) Yuri Pasea, (10) ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
(11) FutureLink Corp.
2
112
2. CONSTITUTION OF THE NOTES
2.1 The principal amount of the Notes constituted by this Deed is limited
to(pound)1,654,706 issuable in integral multiples of(pound)1.
2.2 The Company shall only issue the Notes in accordance with the Sale and
Purchase Agreement.
2.3 The Notes are not transferable.
3. REDEMPTION AND INTEREST
3.1 Unless previously redeemed, at the Maturity Date the Company shall pay to
the relevant Noteholder in cash and to such account details of which shall
be provided in writing by the Noteholder to the Company the principal
amount of the Note at par together with accrued interest at the Applicable
Rate up to but excluding the Maturity Date.
3.2 The Company may by notice in writing at any time prior to the Maturity Date
redeem the Note in whole or part from a Noteholder at par plus any
outstanding accrued interest at the Applicable Rate up to but excluding the
date of redemption.
3.3 The Company may only redeem Notes provided that it is undertaken rateably
amongst the Noteholders.
4. CERTIFICATES
A person on becoming a Noteholder is entitled without charge to one
certificate for the total principal amount of a Note registered in his
name.
5. GOVERNING LAW AND JURISDICTION
This Deed shall be governed by and construed in accordance with English law
and the parties hereby submit themselves to the non-exclusive jurisdiction
of the English Courts.
6. Any notice required to be given under this Agreement shall be sent:
6.1 to the Company at:
▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile no.: ▇▇-▇▇▇-▇▇▇-▇▇▇▇
For the attention of: ▇▇▇ ▇▇▇▇▇▇
6.2 to the Noteholder at:
▇▇▇▇▇▇ & Co.
The Quadrangle
Imperial Square
3
113
Cheltenham
Glos. GL50 1YX
For the attention of: ▇▇▇▇▇ ▇▇▇▇▇
Facsimile no.: 01242 224223
or to such other address or facsimile number as is notified in writing from
time to time by the Company or the Noteholder to the other.
IN WITNESS WHEREOF this Deed has been executed by the Company and is intended to
be and is hereby delivered on the date first above written.
Executed as a Deed by
FUTURELINK CORP.
By: [Signed: ▇▇▇ ▇▇▇▇▇▇]
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇
--------------------------------
Title: Director, Mergers & Acquisitions
--------------------------------
4
114
CERTIFICATE OF LOAN NOTE
Certificate No. 1 Amount(pound)__________
FUTURELINK CORP. (THE "COMPANY")
(Incorporated under the laws of the State of Delaware)
UNSECURED LOAN NOTES
This is to certify that __________________________ is the registered holder of
(pound)__________ in principal amount of the unsecured loan notes (the "NOTES")
as constituted by a Deed poll (the "DEED") dated December 20 1999 and made by
the Company. The Notes are issued with the benefit of and subject to the
provisions contained in the Deed and on this certificate.
Interest is payable on the Notes and the Notes are redeemable in accordance with
Section 3 of the Deed.
The Notes are not transferable.
The Maturity Date is April 6, 2000.
The Notes are governed by and construed in accordance with English law and the
parties hereby submit themselves to the non-exclusive jurisdiction of the
English Courts.
Executed as a Deed
by the Company
By: _________________________
Name: _________________________
Title: _________________________
5