DATED 24TH SEPTEMBER 1999
AGREEMENT FOR THE
ACQUISITION OF
MORBRIA LIMITED
BY
▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ PLC
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇
City Tower
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇ ▇▇▇
Tele: 0171 638 8788
E.mail: kstenning @▇▇▇▇▇▇▇▇▇▇.▇▇▇
CONTENTS
CLAUSE PAGE
------ ----
1 INTERPRETATION 1
2 AGREEMENT FOR SALE 6
3 PURCHASE CONSIDERATION 6
4 COMPLETION 9
5 WARRANTIES AND UNDERTAKINGS 10
6 RESTRICTIVE AGREEMENT 11
7 GENERAL 12
SCHEDULE 1 14
Vendors and their Holdings
SCHEDULE 2 15
Details of the Companies and their Subsidiaries
SCHEDULE 3 16
The Properties
SCHEDULE 4 17
Warranties
SCHEDULE 5 35
Vendor Protection
SCHEDULE 6 40
Tax Deed
THIS AGREEMENT is made on 24th September 1999
BETWEEN:
1. The Several People whose Names and addresses are set out in Schedule
1 (the "Vendors"); and
2. ▇▇▇▇▇▇▇▇▇.▇▇▇.▇▇▇ PLC of ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ (the "Purchaser").
RECITALS
A. The Companies are private limited companies incorporated in England under
variously the Companies Acts 1981-1985. Further details relating to the
Companies and their subsidiary companies are set out in Schedule 2.
B. The Vendors are the registered holders of all of the Shares.
C. The Vendors are willing to sell the Shares to the Purchaser on the terms and
subject to the conditions set out in this Agreement free from Encumbrances.
D. The Vendors have made representations to the Purchaser in the terms of the
Warranties to the intent that the Purchaser should rely on such Warranties in
entering into this agreement.
THE PARTIES AGREE AS FOLLOWS
----------------------------
1. INTERPRETATION
1.1 The following provisions shall have effect for the interpretation of this
agreement.
1.2 The following words, expressions and abbreviations shall, unless the
context otherwise requires, have the following meanings:-
"AFFILIATE" means, in respect of any body corporate, a
body corporate which is its subsidiary or
holding company, or a company which is a
subsidiary of that holding company, and each
such company;
"ACTIVITIES" means any activities or operation or
process carried out by any of the
Companies at the Properties;
"AGREED FORM" means the form agreed between the parties on
or prior to the date of this agreement and
initialled for the purposes of
identification by their respective
solicitors;
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"AGREED PROPORTIONS" means in relation to the Vendors 90% in
respect of ▇▇▇▇ and 10% in respect of
▇▇ ▇▇▇▇▇▇;
"AUDITORS" means ▇▇▇▇▇ ▇▇▇▇▇ of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇;
"BASIC CONSIDERATION" means the sum of (pound)3,379,999 payable
for the Shares on Completion pursuant to
clause 3.1
"BUSINESS DAY" means a day (other than Saturday or
Sunday) on which banks generally are
open for business in London;
"CA" means the Companies ▇▇▇ ▇▇▇▇;
"CAA 90" means the Capital ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇;
"COMPLETION" means the completion of the sale and
purchase of the Shares in accordance
with Clause 5;
"COMPANY" means Morbria Limited
"COMPANIES" means collectively Morbria Limited, and
its Subsidiaries, all being
corporations organised and existing
under the laws of England and Wales,
and individually referred to as a
"Company";
"COMPLETION DATE" means the date of this Agreement;
"CONTINGENT CONSIDERATION" means (1) in the event that the Turnover
shown in the audited consolidated profit and
loss account of the Companies for the year
ending on 31st March 2000 is equal to or
exceeds the sum of(pound)3,160,000, the sum
of (pound)930,000 and (2) in the event that
the turnover shown in the audited
consolidated profit and loss account of the
Companies for the year ending on 31st March
2001 exceeds the sum of (pound)3,160,000, a
sum equal to the amount by which the said
turnover shall exceed (pound)3,160,000
multiplied by 1.77. The Contingent
Consideration shall be satisfied and payable
in the same manner as the Basic
Consideration.
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"CONVERSION RATE" means the US$ to(pound)Sterling coversion
rate which shall be the average middle
market rate shown in the Financial
Times, London edition for the last
three Business Days prior to the date
of calculation thereof.
"DIRECTOR" means a director for the time being of
any Company
"DISCLOSURE LETTER" means a letter dated as of the date of this
Agreement together with the attachments
thereto addressed by the Vendors to the
Purchaser disclosing exceptions to the
Warranties;
"DISTRIBUTION" means a distribution as defined by
sections 209 to 211 (inclusive) of the
ICTA and section 418 of the ICTA;
"EARNOUT PERIOD" means the period from the Completion
Date until 31st March 2001
"ENCUMBRANCES" means any mortgage, charge (whether fixed or
floating), pledge, lien, option security
interest or other third party right or
interest (legal or equitable) over or in
respect of the relevant asset, security or
right;
"FAIRNESS OPINION" means the written opinion of Cruttenden
▇▇▇▇ Incorporated or such other
investment banking firm as shall be
acceptable to the Purchaser (acting
reasonably) that as at the date hereof,
the Purchase Consideration (based on
all the other terms and conditions of
this Agreement) is fair and reasonable
from a financial point of view of the
shareholders of the Purchaser or that
if it is not, that such difference is
within 10% either way;
"▇▇▇▇" means ▇▇▇▇ UK Holdings Limited one of
the Vendors
"ICTA" means the Income and Corporation Taxes
▇▇▇ ▇▇▇▇;
"ITA" means the Inheritance Tax ▇▇▇ ▇▇▇▇ and any
reference thereto shall include any
enactment
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repealed or modified thereby as if
section 275 of the ITA applied in like
manner to this agreement;
"INTELLECTUAL PROPERTY" means patents, trade marks, service
marks, rights (registered or
unregistered) in any designs;
applications for any of the foregoing;
trade or business names; and copyright
(including rights in computer
software); know-how; secret formulae
and processes; lists of suppliers and
customers and other confidential and
proprietary knowledge and information;
rights protecting goodwill and
reputation; database rights and rights
under licences and consents in relation
to such things and all right or forms
of protection of a similar nature to
any of the foregoing or having
equivalent effect anywhere in the world;
"LAST ACCOUNTS DATE" means 31 March 1999;
"▇▇ ▇▇▇▇▇▇" means ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, one of the
Vendors.
"PLANNING ACTS" means the Town and Country Planning
Acts for the time being in force;
"PRINCIPAL ACCOUNTS" means the audited balance sheet as at the
Last Accounts Date and audited profit and
loss account for the year ended on the Last
Accounts Date of each Company;
"PROPERTIES" means the leasehold properties held by
The Graphic Palette Company
(Manchester) Limited described in
Schedule 3;
"PURCHASE CONSIDERATION" means together the Basic Consideration
and the Contingent Consideration.
"PURCHASER'S SOLICITORS" means ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇;
"PURCHASER'S U.S. COUNSEL" means ▇▇▇▇▇▇▇▇▇ Traurig, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇;
"SHARES" means the entire issued share capital
in the Company;
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"TAX DEED" means a deed in the form set out in
Schedule 6;
"TAXATION" means all forms of taxation including
but without limitation:-
1. any charge, tax duty or levy upon
income, profits, chargeable gains or
development value, land, any interest
in land or in any other properties, or
documents or supplies or other
transactions;
2. income tax, corporation tax, capital
gains tax, inheritance tax, value
added tax, stamp duty, stamp duty
reserve tax, capital duty, customs and
other import duties or national
insurance contributions;
3. any liability for sums equivalent to
any such charge, tax, duty, levy or
rates or for any related penalty, fine
or interest.
"TCGA" means the Taxation of Chargeable Gains
▇▇▇ ▇▇▇▇ and any reference thereto
shall include any enactment repealed or
modified thereby;
"TOWN PAGES SHARES" means ordinary share of 1p each in the
capital of the Purchaser.
"TURNOVER" means the total sum of:-
(b) the invoiced value, net of Value Added
Tax, of goods sold and services
provided to customers; and
(c) the value of short term
work-in-progress ("WIP") at the
relevant fiscal period end valued at
net realisable value, to be based on
estimated selling prices less further
costs to be incurred to completion of
such WIP
-5-
(d) the value of WIP including profit on
long term contracts identified and
valued in accordance with SSAP 9;
but less the sum total of the
following:-
(e) the values (calculated as in this
definition) at the beginning of the
fiscal period of both short term WIP
and long term contracts; and
(f) the value of invoices rendered
prior to the end of the fiscal
period but which are not
collectible in the ordinary
course of business and which do
not realise their full face value
within 90 days of the end of the
fiscal period
and excluding:-
(g) interest, insurance claims, rents or
rebates received or receivable.
"VATA" means the Value Added Tax ▇▇▇ ▇▇▇▇;
"VENDORS' SOLICITORS" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co of Derbyshire
House, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
"WARRANTIES" means the warranties, covenants and
undertakings set out in Clause 5 and
Schedule 4;
"WARRANTY CLAIM" means any claim made by the Purchaser
for breach of any of the Warranties or any
claim made by any Company under the Tax
Deed.
1.3 References to "FA" followed by a stated year means the Finance Act of that
year.
1.4 Words, expressions and abbreviations defined in the Tax Deed shall have
the same meanings in this agreement.
1.5 References to the parties hereto include the respective successors in
title to the whole of their respective undertakings and, in the case of
individuals, to their respective estates
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and personal representatives.
1.6 References to persons shall (where the context so admits) include bodies
corporate and unincorporated, associations, partnerships and individuals.
Words denoting the singular shall include the plural and words denoting
any gender shall include all genders.
1.7 References to statutes or statutory provisions include references to
orders or regulations made thereunder and reference to any statute,
provision, order or regulation include references to that statute,
provision, order or regulation as amended, modified, re-enacted or
replaced from time to time whether before or after the date hereof
(subject as otherwise expressly provided herein) and to any previous
statute, statutory provision, order or regulation amended, modified,
re-enacted or replaced by such statute, provision, order or regulation.
1.8 Headings to Sections, paragraphs and descriptive notes in brackets
relating to provisions of taxation statutes are for information only and
shall not form part of the operative provisions of this agreement and
shall be ignored in constituting the same.
1.9 References to recitals, Clauses, Schedules are to recitals to, Clauses of,
Annexures to and Schedules to this agreement. The recitals, and Schedules
form part of the operative provisions of this agreement and references to
this agreement shall, unless the context otherwise requires, include
references to the Recitals, Annexures and the Schedules.
2. AGREEMENT FOR SALE
2.1 Subject to the terms and conditions of this agreement, the Vendors shall
sell with full title guarantee and the Purchaser shall purchase the Shares
free from all liens, charges and encumbrances and with all rights
attaching to them, with effect from the date of this agreement.
3. PURCHASE CONSIDERATION
3.1 In consideration for the sale and transfer of all and not less than all of
the Shares from the Vendors to the Purchaser on the Completion Date the
Purchaser shall pay to the Vendor the sum of Three million three hundred
and seventy nine thousand eight hundred and eighty eight pounds sterling
((pound)3,379,888) (the "Basic Consideration") together with the
Contingent Consideration pursuant to clause 3.2 (together "the Purchase
Consideration"). The amount of the Basic Consideration shall be subject to
reduction (if appropriate) in the manner provided in clause 3.1.2.
3.1.1 The Basic Consideration shall be satisfied on the Completion Date by
the allotment to the Vendors in the Agreed Proportions of 857,972
Town Pages Shares which the Purchaser hereby warrants and undertakes
will be properly and lawfully issued and allotted to the Vendors
free from all Encumbrances. provided, that such 857,972 Town Pages
Shares shall be held in escrow by the Purchaser's US Counsel pending
delivery of the Fairness Opinion specified in Clause 3.1.2 below.
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3.1.2 Notwithstanding anything to the contrary contained in this Clause
3.1, if the Fairness Opinion indicates that the amount of the
Purchase Consideration is not within 10% either way of the fair
value for the purchase of the Shares subject to all the terms of
this Agreement, then the parties shall re-negotiate the amount of
Purchase Consideration in good faith bearing in mind:- (i) the
original amount of the Purchase Consideration; and (ii) the content
of the Fairness Opinion and if such agreement cannot be reached
between the parties within 14 days after receipt of the Fairness
Opinion, either the Vendors or the Purchaser may rescind this
Agreement on ten (10) days written notice to the other party (the
Vendors here counting as one party) and upon the expiry of which,
this Agreement as well as the sale of the Shares to the Purchaser
shall be deemed to be null and void, ab initio.
3.2 In addition to the Basic Consideration, not later than 90 days after the
end of each of the fiscal years ending 31 March 2000 and 31 March 2001
respectively the Purchaser shall cause to be paid to the Vendors in the
Agreed Proportions an additional amount in each case equal to relevant
amount of the Contingent Consideration. The Contingent Consideration shall
be satisfied and payable by the issue of Town Pages Shares. The price of
each Town Page Share issued in satisfaction of the Contingent
Consideration shall be calculated at the Conversion Rate and based on a
price per share of US$6.50.
3.2.1 The Purchaser hereby undertakes with the Vendor that during the
Earnout Period, unless the contrary may be approved, in writing or
directly procured or effected by the Vendors:-
(a) the Purchaser shall not take or procure to be taken by
the Companies or any other party any action which
frustrates or prevents the achieving of the best
reasonably obtainable turnover of the Companies for the
Earnout Period in either of the two periods comprising
the same provided that, for the avoidance of doubt,
nothing in this Clause shall be taken as requiring the
provision of funding by the Purchaser to any Company,
other than the working capital requirements of the
Companies which are required in order to achieve such
turnover;
(b) the business of the Companies shall be conducted on a
commercial basis and with a view to achieving realistic
budgeted profits and without material change in the method and
manner in which it has been conducted hitherto,
(c) it will continue to engage the Companies to carry out work for
it and to utilise the services of the Companies for itself
wherever possible and to procure work for the Companies from
third parties wherever possible, all such work to be at full
margin rates without discount or reduction,
(d) the Vendors will be given full access to all the information
which they
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reasonably require in relation to the Companies, and
(e) there will be no material changes to the day to day management
of the Companies save for those lawfully made in accordance
with contractual arrangements with employees.
3.3 (a) The Vendors acknowledge and agree that all the Town Pages
Shares allotted or to be allotted pursuant hereto have been or
will be acquired by the Vendors for investment purposes only
and not with a view toward the immediate distribution or
resale thereof. The Vendors further acknowledge that each of
them has had an opportunity to review the Purchaser's
prospectus dated April 30, 1999 and other publicly available
information concerning the Purchaser and ask questions of
members of the Purchaser's management concerning its business,
financial condition and prospects, prior to making a decision
to accept the Town Pages Shares. The Vendors further
acknowledge that each of them has been advised by the
Purchaser and its United States legal counsel that the Town
Pages Shares to be issued on the Completion Date have not been
registered under the United States Securities Act of 1933, as
amended (the "Securities Act") and may not be sold,
transferred, hypothecated or assigned (collectively, a
"Transfer") in the absence of a registration statement
covering such Town Pages Shares declared effective by the
United States Securities and Exchange Commission ("SEC"), or
an opinion of legal counsel reasonably acceptable to the
Purchaser to the effect that an exemption from the
registration requirement under the Securities Act shall
exist. An appropriate endorsement to this effect may be made
on the certificates evidencing the Town Pages Shares.
In addition to, and not in lieu of the foregoing, each of the
Vendors does hereby covenant and agree that for a period of one year
from the Completion Date they will not effect a Transfer of any of
the Town Pages Shares, unless such Transfer shall be part of a sale
of substantially all of the share capital or assets of Town Pages,
or a merger, consolidation or other corporate transaction with any
unaffiliated third person, firm or corporation, pursuant to which
control of the power to elect a majority of the board of directors
of Town Pages shall pass to any such unaffiliated third person, firm
or corporation (a "Sale of Control").
(b) On or before a date which shall be thirty (30) days following the
Completion Date, the Purchaser shall cause to be delivered to the
Vendors a true and complete copy of the Fairness Opinion which shall
state whether the Purchase Consideration is fair and reasonable on
the terms of this Agreement, and if not, whether it is within 10%
either way of such fair value
(c) In rendering the Fairness Opinion and in evaluating the total value
of the Town Pages Shares to be delivered on the Completion Date as
the Basic Consideration, the investment banking firm shall give
appropriate due weight to the fact that such Town Pages Shares are
unregistered and contain restrictions on Transfer pursuant to this
Agreement and the Securities Act.
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3.4 The Purchaser shall procure that the Purchaser's U.S. Counsel as escrow
agent shall deliver 857,972 Town Pages Shares to the Vendors in the Agreed
Proportions following receipt of the Fairness Opinion. In the absence of
such instructions, such escrow agent shall deliver the escrowed Town Pages
Shares as instructed so to do by an order of a court of competent
jurisdiction from which no appeal can or shall be taken.
3.5 The Purchaser warrants to the Vendors that it will not prior to the
payment of the Contingent Consideration, without the prior written consent
of the Vendor enter into any transaction which is not on arms length terms
or which is at an undervalue.
3.6 The Purchaser warrants that when issued and delivered in accordance with
the terms of this Clause 3 the Town Pages Shares shall be duly authorised,
validly issued, fully paid and non-assessable.
3.7 Notwithstanding any other provision of this Agreement ▇▇▇▇ may, subject to
the terms of this Agreement, transfer its Town Pages Shares to an
Affiliate of ▇▇▇▇, ▇▇ ▇▇▇▇▇▇ may transfer his Town Pages Shares to any
member of his immediate family or to trustees on behalf of himself or any
of them, and either of the Vendors may sell its Town Pages Shares to a
person who offers to acquire the entire issued share capital of the
Purchaser or in order to enable it to satisfy any Warranty Claim. In such
event the TownPages Shares transferred shall remain subject to the
restrictions in clause 3.3(a) and it shall be a condition of any such
transfer that the transferee shall acknowledge the same
3.8 If within 3 years from the date hereof any shares in the Company or any
material part of its undertaking (including any shares in any of the
Subsidiaries) are disposed of in any way, including (but not limited to) a
flotation, placing, sale, allotment for value or transfer), then the
Purchaser shall forthwith thereafter pay to the Vendors in cash in the
Agreed Proportions, 10% of the gain or profit enjoyed by the Purchaser
which shall be equal to the total consideration received by or on behalf
of the Purchaser less:- 3.8.1 the proportionate part of the Purchase
Consideration which is
properly attributable to such shares or assets which have been
disposed of.;
3.8.2 all other costs of whatsoever nature properly incurred by the
Purchaser in relation to the relevant part of the Companies being
disposed of; and
3.8.3 the costs and expenses properly incurred by the Purchaser in
acquiring the Shares (excluding the Purchase Consideration) and the
Proper costs of the relevant disposal.
3.9 The Purchaser shall use all reasonable endeavours to procure registration
of the Townpages Shares allotted to the Vendors pursuant hereto forthwith
after the first anniversary of the date hereof.
4. COMPLETION
4.1 Completion shall take place at the offices of the Vendors' Solicitors on
the Completion Date, when subject to Clause 4.5 all the transactions
mentioned in the following sub-Clauses shall take place.
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4.2 The Vendors shall deliver to the Purchaser:-
4.2.1 duly completed and signed transfers in favour of the Purchaser or as
it may direct in respect of the Shares together with the relative
share certificates;
4.2.2 the Tax Deed duly executed by the Vendors and the Companies;
4.2.3 the resignation of the existing auditors of each of the Companies
confirming that they have no outstanding claims of any kind and
containing a statement under CA s 394(1) that there are no such
circumstances as are mentioned in that clause;
4.2.4 the statutory books of each Company complete and up to date and
their certificate of incorporation and common seals;
4.2.5 the leases relating to the Properties;
4.2.6 the resignation of the Secretary of each of the Companies;
4.2.7 the entry into a Service Agreement in the Agreed Form between The
Graphic Palette Company ( Manchester) Limited (1) and ▇▇
▇▇▇▇▇▇ (2).
4.3 Board meetings of each Company shall be held at which:-
4.3.1 the transfers referred to in Clauses 4.2.1 or 4.2.2 (as the case may
be) shall be approved (subject to stamping);
4.3.2 the resignations referred to in Clauses 4.2.3 and 4.2.7 shall
be submitted and accepted; and
4.3.3 such persons as the Purchaser may nominate shall be appointed
additional directors and as the Secretary.
4.4 Upon completion of the matters referred to in Clauses 4.2 to 4.3 the
Purchaser shall deliver to the Purchaser's U.S Counsel as escrow agent
certificates in respect of the 857,972 Town Pages Shares to be allotted at
Completion in respect of the part of the purchase consideration referred
to in Clause 3.1.
4.5 The Purchaser may in its absolute discretion waive any requirement
contained in Clauses 4.2 to 4.3, and shall not be obliged to complete the
purchase of any of the Shares unless the purchase of all the Shares is
completed on accordance with this agreement, but may instead rescind this
agreement without prejudice to any other remedy it may have.
5. WARRANTIES AND UNDERTAKINGS BY THE VENDORS
5.1 The Vendors individually warrant to the Purchaser that subject to Schedule
5:-
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5.1.1 each of them has and will have full power and authority to enter
into and perform this agreement and the Tax Deed (as appropriate),
which constitute or when executed will constitute binding
obligations on it or them in accordance with their respective terms;
5.1.2 the Shares will at Completion constitute the whole of the issued and
allotted share capital of the Company.
5.1.3 there are and at Completion will be no encumbrances on, over or
affecting the Shares and there are and at Completion will be no
agreements or arrangements to give or create any other such
Encumbrance and no claim has been made by any person to be entitled
to any of the foregoing;
5.1.4 the Vendors will be entitled to transfer the full legal and
beneficial ownership of the Shares to the Purchaser on the terms of
this agreement without the consent of any third party;
5.1.5 the information in Schedule 2 relating to the Companies is
true and accurate in all respects;
5.1.6 The Company is the legal and beneficial holder of the whole of the
issued share capital of all the other Companies (save for the 25
ordinary shares of (pound)1 each in Centrix Communications held by
▇▇▇▇ ▇▇▇▇▇) with absolute title;
5.1.7 save as set out in the Disclosure Letter or as disclosed in
accordance with Clause 5.4, the warranties set forth in Schedule 4
are true and accurate in all material respects at the date of this
agreement;
5.1.9 the contents of the Disclosure Letter and all of the accompanying
documents fairly disclose every matter to which they relate; and
5.1.10at Completion no sums will be owed by any of ▇▇▇▇, ▇▇▇▇ Investments
Limited or Gala Consultancy Limited to any of the Companies nor will
any money be owed by any of the Companies to any of ▇▇▇▇, ▇▇▇▇
Investments Limited or Gala Consultancy Limited
5.2 Each of the Vendors jointly and severally undertakes in relation to any
Warranty which refers to knowledge, information or belief of the Vendors
or that it or he has made all reasonable enquiry into the subject matter
of that Warranty.
5.3 The rights and remedies of the Purchaser in respect of any breach of the
Warranties shall not be affected by Completion, or failing to exercise or
delaying the exercise of any right or remedy except a specific and duly
authorised written or release, and no single or partial exercise of any
right or remedy shall preclude any further or other exercise.
5.4 None of the information supplied by any Company or its professional
advisers prior to
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the date of this agreement to the Vendors or their respective agents,
representatives or advisers in connection with the Warranties and the
contents of the Disclosure Letter, or otherwise in relation to the
business or affairs of any Company, shall be deemed a representation,
warranty or guarantee of its accuracy by the Company to the Vendors, and
the Vendors waive any claim against any Company which they might otherwise
have in respect of it.
5.5 The Purchaser acknowledges that it has not been induced to enter into this
agreement by any representation or warranty other than the Warranties.
5.6 The provisions of Schedule 5 shall apply by way of limitation to and
reduction of the Vendors liability or any Warranty Claim
6. RESTRICTIVE AGREEMENT
6.1 For the purpose of assuring to the Purchaser the full benefit of the
businesses and goodwill of the Companies, each of the Vendors severally
undertakes by way of further consideration for the obligations of the
Purchaser under this agreement as separate and independent agreements that
it (in the case of ▇▇▇▇) or he (in the case of ▇▇ ▇▇▇▇▇▇), or any person,
firm or corporation controlled by any of them will not with the prior
written consent of the Purchaser:-
6.1.1 at any time after Completion disclose (save for disclosure required
by law or to professional advisers) to any person, or themselves use
for any purpose, any information concerning the business, accounts
or finances of any Company or any of its clients or customers
transactions or affairs, which may or may have come to their
knowledge which is confidential by its nature and not in the public
domain already (other than by any act of default of such Vendors);
and
6.1.2 for a period of not less than three years after Completion for his
or itstheir own account or for the account or benefit of any other
person directly or indirectly solicit, interfere with or endeavour
to entice away from any Company any person who to their knowledge is
now or has during the three years preceding the date of this
agreement been a client, customer or employee of, or in the habit of
dealing with, any Company.
6.2 For the purpose of assuring to the Purchaser the full benefit of the
businesses and goodwill of the Companies, ▇▇▇▇ undertakes by way of
further consideration for the obligations of the Purchaser under this
agreement that it, or any person, firm or corporation controlled it will
not with the prior written consent of the Purchaser for a period of one
year without the Purchaser's prior written consent either alone or jointly
with, or as manager, agent for or employee of any person, directly or
indirectly carry on or be engaged or concerned or interested in the
business of creative computer reprographics and design consulting,
including without limitation the design of internet website advertising
agents and market researchers and computer graphics, save as the holder of
up to 5% of the issued share capital of any company listed on any
recognised stock exchange.
-13-
7. GENERAL
7.1 No announcement of any kind shall be made in respect of the subject matter
of this agreement unless specifically agreed between the parties or
otherwise as is required by The American Stock Exchange, Inc.
7.2 This agreement shall be binding upon and inure for the benefit of the
successors of the parties but shall not be assignable.
7.3 Save when expressly otherwise provided, all expenses incurred by or on
behalf of the parties, including all fees or agents, representatives,
solicitors, accountants and actuaries employed by any of them in
connection with the negotiation, preparation or execution of this
agreement shall be borne solely by the party who incurred the liability
and no Company shall have any liability in respect of them.
7.4 Time shall be of the essence of this agreement, both as regards the dates
and periods specifically mentioned and as to any dates and periods which
may by agreement in writing between or on behalf of the Vendors and the
Purchaser be substituted for them.
7.5 (a) Any notice or other communication required to be given under
this agreement or in connection with the matters contemplated by it
shall, except where otherwise specifically provided, be in writing
in the English language and shall be addressed as provided in
Sub-Clause (b) and may be:
(1) personally delivered, in which case it shall be deemed to have
been given upon delivery at the relevant address; or
(2) if within the United Kingdom, sent by first class prepaid
post, in which case it shall be deemed to have been given two
Business Days after the date of posting; or
(3) sent by fax, in which case it shall be deemed to have been
given when despatched, subject to confirmation of
uninterrupted receipt by a transmission report, provide that
any notice despatched by fax after 1700 hours (at the place
where such fax is to be received) on any day shall be deemed
to have been received at 0900 on the next Business Day
(b) The addresses and other details of the parties referred to in
Sub-Clause are, subject to Sub-Clause (c),:-
For the Vendors:-
Name ▇▇▇▇ U.K. Holdings Limited c/o S.W. Sim M.L.
Laboratories plc, Innovation Court, Dates ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
and
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ at the address set out in Schedule 1;
and
c/o the Vendors' Solicitors , for the attention of
▇▇▇▇▇▇▇ ▇▇▇▇▇, Fax number ▇▇▇▇ ▇▇▇ ▇▇▇▇
-14-
For the Purchaser
Name: TownPagesNet.com.plc ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 1 HD. Fax Number ▇▇▇▇▇ ▇▇▇▇▇▇. For the
attention of the Managing Director; and
With copy to the Purchaser's Solicitor, fax number
▇▇▇▇-▇▇▇ ▇▇▇▇ attention CJW Stenning
(c) Any party to this agreement may notify the other parties to its address or
other details specified in Sub-Clause (b), provided that such notification
shall be effective only on the only on the date specified in such notice
or five Business Days after the notice is given, whichever is the later,
provided that such new address shall be in the United Kingdom.
7.6 This Agreement sets out the entire agreement and understanding between the
parties with respect to the subject matter hereof. It is agreed that
neither party has entered into this Agreement in reliance upon any
representation, warrant or undertaking of any other party which is not
expressly set out or referred to in this Agreement.
7.7 This agreement shall be governed by English law and the parties hereby
agree to submit to the exclusive jurisdiction of the English courts.
AS WITNESS the hands of the parties hereto or their duly authorised
representative the day and year first before written.
-15-
SCHEDULE 1
VENDORS' HOLDINGS OF SHARES IN THE COMPANY
------------------------------------------
Vendor's Name and Address No of Ordinary Shares of (pound)1 each
▇▇▇▇ U.K Holdings Limited 900
Whose registered office is at
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇-▇▇
▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
-16-
SCHEDULE 2
DETAILS OF THE COMPANIES
------------------------
MORBRIA LIMITED
REGISTERED OFFICE Derbyshire House,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
DIRECTORS ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
SECRETARY ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
NUMBER 2659569
THE GRAPHIC PALETTE COMPANY (MANCHESTER) LIMITED
REGISTERED OFFICE Derbyshire House aforesaid
DIRECTORS ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ Bayetto and ▇▇▇▇▇ ▇▇▇▇▇▇▇
SECRETARY ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
NUMBER 2695597
CENTRIX COMMUNICATIONS LIMITED
REGISTERED OFFICE Derbyshire House aforesaid
DIRECTORS ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and Morbria Limited
SECRETARY ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
REVIEW MARKETING AND ADVERTISING LIMITED
REGISTERED OFFICE: Derbyshire House aforesaid
DIRECTORS ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
SECRETARY ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
NUMBER 25988312
All of the Companies except for Morbria Limited are Subsidiaries of
Morbria Limited. That apart none of them have any subsidiaries
-17-
SCHEDULE 3
THE PROPERTIES
--------------
LEASEHOLD GRANTED TO THE GRAPHIC PALETTE COMPANY (MANCHESTER) LIMITED
DESCRIPTION TENURE DATE OF EXPIRY OF LEASE
Unit 1 One Empress Buildings Leasehold 12 July 2009
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇ ▇ Empress Buildings Leasehold 12 July 2009
aforesaid
Annexe & Basement
Empress Building aforesaid Leasehold 12 July 2009
-18-
SCHEDULE 4
WARRANTIES
----------
1 Constitution
2 Accounts
3 Business
4 Directors and Employees
5 Properties
6 The Companies and their Bankers
7 Accuracy of Information
8 Tax Matters
9 Intellectual Properties
10 Information Technology and Millennium Compliance
11 Pensions
CONSTITUTION
1.1 MEMORANDUM AND ARTICLES
The Memorandum and Articles of Association of each Company as filed with
Companies House are complete and accurate and have embodied therein or
annexed thereto copies of all resolutions and agreements as are referred
to in s.380 of the Companies ▇▇▇ ▇▇▇▇, and all amendments thereto (if any)
were duly and properly made.
1.2 REGISTER OF MEMBERS
The Register of Members of each Company contains true and accurate records
of the members from time to time of such Company and no Company has been
subject to any application under the Companies ▇▇▇ ▇▇▇▇ for rectification
of such register.
1.3 RETURNS
All such resolutions returns and other documents required by the Companies
▇▇▇ ▇▇▇▇ to be delivered to the Registrar of Companies in respect of each
of the Companies have been duly delivered and are true and accurate in all
material respects.
1.4 POWERS OF ATTORNEY
No Company has executed any subsisting power of attorney or conferred on
any person other than its directors, officers and employees any authority
to enter into any transaction on behalf of or to bind any Company in any
way.
1.5 SUBSIDIARIES
The details of the subsidiary companies in Schedule 2 are true and
accurate and save for such companies no Company has any subsidiary nor
does
-19-
any Company own any shares or stock in the capital of nor has any
beneficial interest in any other company nor does any Company control or
take part in the management of any other company or business organisation.
-20-
ACCOUNTS
2.1 PRINCIPAL ACCOUNTS
The Principal Accounts comply with the provisions of the Companies ▇▇▇
▇▇▇▇ as applicable and have been prepared in accordance with all relevant
statutes and with generally accepted accounting principles and practices
and give a true and fair view of all the assets and liabilities (whether
present or future, actual or contingent) and of the state of affairs,
financial position and results of each Company as at and up to the Last
Accounts Date.
2.2 ACCOUNTING POLICY
The Principal Accounts have been prepared on a basis fully consistent with
the basis upon which all audited accounts of each Company have been
prepared.
2.3 STOCK IN TRADE
The stock in trade of each of the Companies is in good condition and so
far as the Vendors are aware meets all relevant statutory, regulatory and
industry accepted standards or contractual specifications.
2.4 OFF BALANCE SHEET FINANCING
No Company or any company associated in any way with any Company has
engaged in any financing (including without prejudice to the generality of
the foregoing the incurring of any borrowing or any indebtedness in the
nature of borrowing including without limitation liabilities in the nature
of acceptances or acceptance credits) of a type of which would not be
required to be shown or reflected in the Principal Accounts.
2.5 ACCOUNTING REFERENCE DATE
Each Company has notified the Registrar of Companies 31 March as being its
accounting reference date pursuant to the Companies ▇▇▇ ▇▇▇▇.
2.6 BOOKS OF ACCOUNT
Each Company has properly kept and maintained all necessary books of
account minute books records register of members and other statutory
books, which have been inspected by the Purchaser. All such documents
contain accurate records of all material matters required to be recorded
therein and all deeds and documents (properly stamped where stamping is
necessary for enforcement thereof) belonging to each Company or which
ought to be in the possession of each Company and the common seals of each
Company are in the possession of each Company.
2.7 [None]
2.8. Save to the extent of the provision or reserve therefor contained or
reflected in the Principal
-21-
Accounts, any debts owed to any of the Companies as recorded in the
Company's books and records are good (to the best of the Vendors'
knowledge and belief) and will realise their full face value within six
months of Completion. The rights of the Companies in respect of such debts
are believed to be valid and enforceable and not subject to any defence,
right of set off or counter-claim, withholding or other deduction and no
act has been knowingly done or omission permitted by or on behalf of the
Companies whereby any of the them has ceased or might cease to be valid
and enforceable in whole or in part. No amount included in the Principal
Accounts as owing to any of the Companies at the last Accounts Date has
been released for an amount less than the value at which it was included
in the Principal Accounts or is now regarded by the Vendors as
irrecoverable in whole or in part. None of the Companies has factored or
discounted any of its debts or other receivables or agreed to do so.
3. BUSINESS
3.1 BUSINESS SINCE THE LAST ACCOUNTS DATE
Since the Last Accounts Date the business of each Company has been
conducted in the ordinary course of business.
3.2 ACQUISITION AND DISPOSAL OF ASSETS
No Company has since the Last Accounts Date acquired or agreed to acquire
any asset for a consideration which (so far as the Vendors are aware) is
higher than the market value at the time of acquisition nor has disposed
of or agreed to dispose of any asset for a consideration which is lower
than the market value or the value thereof as shown in its books at the
time of disposal.
3.3 CHARGES AND TITLE TO ASSETS
Save as registered at Companies House, no Company has created or agreed to
create or so far as the Vendors are aware, suffered to arise any
Encumbrance over any part of its undertaking or assets and each Company
has and will at Completion have a good title to all the assets included in
its Principal Accounts and to all other assets (tangible or intangible)
used for the purpose of its business at the date hereof and to all assets
acquired since the Last Accounts Date and prior to Completion.
3.4 LEASING ETC AGREEMENTS
Brief details of any hiring or leasing agreements, hire purchase
agreement, credit or conditional sale agreement, agreement for payment on
deferred terms or any other similar agreement to which any Company is a
party are contained in the Disclosure Letter and copies annexed thereto.
3.5 ONEROUS OBLIGATIONS
No Company is a party to any contract, transaction, arrangement or
liability which is material and outside the ordinary course of business of
the Company and which:-
-22-
3.5.1 is of an unusual or abnormal nature;
3.5.2 is for a fixed term of more than twelve months;
3.5.3 is of a long term nature (that is, unlikely to have been fully
performed, in accordance with its terms, more than six months
after the date on which it was entered into or undertaken);
3.5.4 is incapable of termination in accordance with its terms, by such
Company, on 60 days notice or less;
3.5.5 involves payment by the Company by reference of fluctuations in
the index of retail prices, or any other index or in the rate of
exchange for any currency;
3.5.6 involves an aggregate outstanding expenditure by any Company of
more than (pound)25,000;
3.5.7 restricts its freedom to engage in any activity or business or
confines its activity or business to a particular place.
3.6 SUPPLY CONTRACTS
All agreements or arrangements for the supply of services to or by any of
the Companies which involve or are likely to involve the supply of
services the aggregate sale value of which will represent in excess of ten
per cent of the turnover for the preceding financial year of such Company
have been disclosed to the Purchaser in writing. No Company has been
notified of, nor are the Vendors aware of, any breach of any Company's
obligations under any contract, transaction or arrangement to which it is
a party or by which it is bound.
3.7 EVENTS OF DEFAULT
3.7.1 No event has occurred or is subsisting which constitutes or
results in or would with the giving of notice and/or lapse of
time constitute or result in default or the acceleration of any
obligation under any material agreement or arrangement to which
any Company is a party or by which it or any of its properties,
revenues or assets are bound.
3.7.2 No Company is a party to any agreement or arrangement which is
capable of termination (without liability for compensation) by
any other person on a change in the management control or
shareholding of such Company or by reason of the sale of the
Shares under this agreement.
3.8 GUARANTEES ETC.
No Company has given any guarantee, indemnity, warranty or bond incurred
any other similar obligation or created any security for or in respect of
liabilities, actual or contingent, of any person other than another one of
the Companies.
3.9 OPTIONS OVER SHARES ETC.
Since the Last Accounts Date no share or loan capital has been created or
issued or agreed to be created or issued by any Company and there are no
options or other agreements outstanding which call or give any person the
right to call (whether or not subject to conditions) for the issue of any
share or loan capital of any Company, and neither of the Vendors is under
any obligation of any kind whatsoever whether actual or contingent to
sell, charge or otherwise dispose of any of such shares or any interest
therein to any other person.
-23-
3.10 LITIGATION
No Company is engaged in any litigation, arbitration, prosecution or other
legal proceedings (whether as plaintiff, defendant or third party) and
there are no such proceedings pending or (so far as the Vendor are aware)
threatened or any proceedings in respect of which any Company is liable to
indemnify any other person concerned therein. So far as the Vendors are
aware, there are no claims, facts or events which are likely to give rise
to any such proceedings and no Company is engaged in and no facts or
events exist or have occurred which are likely to cause any Company to be
involved, in proceeding or enquiries before any government or municipal
board of enquiry or commission or any other administrative body (whether
judicial quasi-judicial or otherwise) in which any judgement or decision
would or might adversely affect the business of any Company or the value
of any of its assets.
3.11 BUSINESS NAME
No Company carries on, and has in the past three years carried on, any
business under any name other than its corporate name or any derivative
thereof.
3.12 [None]
3.13 INSURANCE
3.13.1 Details of all subsisting and current insurance policies in
relation to the business and assets of the Companies are
contained in the Disclosure Letter;
3.13.2 Each Company is now, and has at all material times been covered
against accident, damage, injury, third party loss (including
product liability), loss of profits and has at all times effected
such insurance as are required by law which is still in full
force and effect;
3.13.3 So far as the Vendors are aware there are no circumstances which
might lead to any liability under such insurance being avoided by
the insurers or the premiums being materially increased and there
is no claim outstanding under any such policy nor is any Vendor
aware of any circumstances likely to give rise to a claim.
3.14 LICENCES
Each Company has all licences, permissions, and so far as the Vendors are
aware, permits, consents and authorisations required for the carrying on
of its business and no Company is in breach of the terms or conditions of
such licences, permissions, permits, consents and authorisations. So far
as the Vendors aware there are no pending or threatened proceedings which
might in any way affect such licences, permissions, permits, consents and
authorisations and there is no other reason why any of them should be
suspended, threatened or revoked or be invalid.
3.15 GRANTS
No Company has applied for nor received any financial assistance from any
supranational,
-24-
national or local agency, body or authority.
4. DIRECTORS AND EMPLOYEES
4.1 The names of the Directors and Secretary shown in Schedule 2 are true and
complete and no person not named therein is a director of any Company.
4.2 Those particulars of all officers and employees annexed to the Disclosure
Letter show all remuneration and other benefits:-
4.2.1 actually provided; nd
4.2.2 which each Company is presently bound to provide (whether now or in
the future) to each officer and employee of each Company and are true and
accurate in all material respects and include particulars of and details
of participation in all profit sharing, incentive, bonus, commission,
share option, medical insurance, permanent health insurance, directors and
officers insurance, travel, car, redundancy and other benefit schemes,
arrangements and understandings operated for all or any employees or
former employees of each Company or their dependants whether legally
binding on such Company or not.
4.3 The particulars of all employees annexed to the Disclosure Letter show the
names, job title, date of commencement of employment and date of birth.
4.4 The Disclosure Letter or the annexures thereto contains copies of all the
service agreements, standard terms and conditions, staff handbooks and
policies which apply to employees of each Company and identifies which
terms and conditions apply to which employees.
4.5 All employees of each Company have received a written statement of
particulars of their employment as required by s.1 of the Employment
Rights Acts 1996 ("ERA")
4.6 There are no training schemes, arrangements or proposals, whether past or
present, in respect of which a levy may henceforth become payable by any
Company under the Industrial Training Act 1982 (as amended) and pending
Completion no such schemes, arrangements or proposals will be established
or undertaken.
4.7 Since the Last Accounts Date no Company has made, announced or proposed
any changes to the emoluments or benefits of or any bonus to any of its
directors, offices or employees and no Company is under an obligation to
make any such changes with or without retrospective operation.
4.8 No past or present director, officer or employee currently has any claim
against any Company;
4.8.1 in respect or any accident or injury which is not fully covered by
insurance; or
4.8.2 in breach of contract of services or for services; or
4.8.3 for loss of office or arising out of or connected with the
termination of his office of employment (including any
redundancy payment)
and so far as the Vendors are aware there is no event which would or might
give rise to any such claim.
4.9 Each Company has maintained adequate and suitable records regarding the
service of directors, officers and employees and such records comply with
the requirements of the Data Protection
-25-
▇▇▇ ▇▇▇▇.
4.10 There are no amounts owing or agreed to be loaned or advanced by the
Vendors or by any Company to any directors, officers and employees of any
Company (other than amounts representing remuneration accrued due for the
current pay period, accrued holiday pay for the current holiday year or
for reimbursement of expenses).
4.11 No current, director, officer or employee of any Company has given or
received notice to terminate his or her employment.
4.12 Save in accordance with their respective contracts there are no directors,
officers or employees or any Company who are absent on grounds of
disability or other leave of secondment, maternity leave or absence.
5. PROPERTIES
5.1. TITLE
5.1.1 The Properties comprise the only Properties owned, occupied or
otherwise used in connection with their business by the Companies.
5.1.2 The Properties are occupied under lease and the terms of any such
lease permit such occupation or use.
5.1.3 The information contained in Schedule 3 as to the tenure of the
Properties, the principal terms of the leases ("the Leases") held by
The Graphic Palette Company (Manchester) Limited, are true and
accurate in all material respects.
5.2 ENCUMBRANCES
5.2.1 The Properties are free from any mortgage, debenture, charge,
rent-charge, lien or other encumbrance securing the repayment of
monies or other obligation or liability of any of the Companies or
any other person.
5.2.2 The Properties are not subject to any outgoings other than general
rates, water rates and as provided in the Leases.
5.2.3 The Properties are not subject to any restrictive covenants,
stipulations, easements, profits a prendre, wayleaves, licences,
grants, restrictions, overriding interest or other such rights
vested in third parties.
5.2.4 Where any such matters as are referred to in Clauses 5.2.1, 5.2.2
and 5.2.3 have been disclosed in the Disclosure Letter, as far as
the Vendors are aware the obligations and liabilities imposed and
arising under them have been fully observed and performed and any
payments in respect of them due and payable have been duly paid.
5.2.5 The Properties are not subject to any option, right of pre-emption
or right of first refusal
-26-
save as contained in or referred to in the Leases.
5.3 PLANNING MATTERS
5.3.1 The use of the Properties is the permitted use for the purposes of
the Planning Acts.
5.4 STATUTORY OBLIGATIONS
5.4.1 So far as the Vendors are aware, compliance has been made with all
applicable statutory and by-law requirements with respect to the
Properties and in particular (but without limitation) with the
requirements as to fire precautions and under the Public Health Acts
and the Offices, Shops and Railway Premises ▇▇▇ ▇▇▇▇.
5.4.2 There are no outstanding and unobserved or unperformed obligations
with respect to the Properties necessary to comply with the
requirements (whether formal or informal) of any competent authority
exercising statutory or delegated powers.
5.4.3 There are not in force or required to be in force any licences
whether under the Licensing Acts 1964 or otherwise which apply to
the Properties.
5.5 [None]
5.6 CONDITION OF THE PROPERTIES
5.6.1 There are no disputes with any adjoining or neighbouring owner with
respect to boundary walls and fences or with respect to any
easement, right or means of access to any of the Properties.
5.6.2 The principal means of access to all of the Properties is over
estate roads in respect of which rights, access and maintenance are
dealt with in the Leases or over roads which have been taken over by
the local or other highway authority and which have been taken over
by the local or other highway authority and which are maintainable
at the public expense and no means of access (other than the said
estate roads) to the Properties is shared with any other party nor
subject to rights of determination by any other party.
5.6.3 The Properties enjoy the main service of water, drainage,
electricity and/or gas.
5.6.4 The Properties are not located in an area or subject to
circumstances particularly susceptible to flooding.
5.7 [None]
5.8 LEASEHOLD PROPERTIES
5.8.1 The Companies have paid the rents and observed and performed the
covenants on the part of the tenant contained in the Leases, and all
such leases are valid and in full force.
-27-
5.8.2 All licences, consents and approvals required from the landlords and
any superior landlords under the Leases have been obtained and the
covenants on the part of the tenant contained in such licences,
consents and approvals have been duly performed and observed.
5.8.3 There is no rent review under the Leases currently in progress.
5.8.4 There is not outstanding and unobserved or unperformed any
obligation necessary to comply with any notice or other requirement
given by the landlord under the Leases.
5.9 TENANCIES
There are no subsisting tenancies or legally enforceable rights of
occupation of the Properties granted or subsisting in favour of any party
other than the Companies.
THE COMPANIES AND ITS BANKERS
6.1 BORROWINGS
The total amount borrowed by each Company from its bankers or any other
party does not exceed its facilities and the total amount borrowed by each
Company from whatsoever source does not exceed any limitation on its
borrowing contained in its articles of association, or in any debenture or
loan stock deed or other instrument.
6.2 CONTINUANCE OF FACILITIES
Full and accurate details of all overdrafts, loans, leases or other
financial facilities outstanding or available to each Company have been
supplied to the Purchaser and (save for entry into this agreement) neither
the Vendors nor any Company has done anything whereby the continuance of
any such facilities in full force and effect might be adversely affected
or prejudiced.
TAXATION
7.1 RETURNS
Each Company has made all returns and supplied all information and given
all notices to the Inland Revenue or other authority as reasonably
requested or required by law within any requisite period and all such
returns and information and notices are correct and accurate in all
material respects and are not the subject of any dispute and so far as the
Vendors are aware there are no facts or circumstances likely to give rise
to or be the subject of any such dispute.
7.2 DISCLOSURES
So far as the Vendors are aware, all statements and disclosures made to
any authority in connection with any provision of the taxation statutes
whatsoever were when made adequate and accurate in all material respects.
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7.3 CLEARANCES
No action has been taken by any Company in respect of which any consent or
clearance from the Inland Revenue or other authority was required save in
circumstances where such consent or clearance was validly obtained and
where any conditions attaching thereto were and will, immediately
following Completion, continue to be met.
7.4 CLAIMS AND ELECTIONS
No Company has made nor is subject to any claim or election under
any or all of the following:-
7.4.1 sections 2/9(1) to (6) of the TCGA (foreign assets: delayed
remittances);
7.4.2 section 35 of the TCGA (capital gains rebasing to 31 March 1982);
7.4.3 section 24 of the TCGA (assets of negligible value or lost or
destroyed);
7.4.4 sections 54 and 175 of the TCGA and sections 152 and 153 of the
TCGA (roll-over relief);
7.4.5 sections 2 of the ICTA (surplus franked investment income);
7.4.6 section 47 of the ICTA (Companies income)
7.4.7 sections 8, 585 or 723 of the ICTA (foreign income etc : delayed
remittances);
7.4.8 section 5 of the FA 1986 (stamp duty on reconstructions etc)
7.4.9 section 61 TCGA (appropriations to and from Stock).
7.5 PAYMENT OF TAX BY INSTALMENTS
No Company has made an election or arrangement for the payment of tax by
instalments under sections 280 and 48 of the TCGA.
PROVISION FOR AND PAYMENT OF TAX
7.6 GENERAL
The Principal Accounts make reasonable provision or reserve in respect of
any period ended on or before the Last Accounts Date for all tax assessed
or liable to be assessed on the relevant Company or for which it is
accountable at the Last Accounts Date whether or not such Company has or
may have any right of reimbursement against any other person including in
particular (but without prejudice to the generality of the foregoing) tax
in respect of Properties (of whatever nature) income, profits or gains
held, earned, accrued or received by or to any person on or before the
Last Accounts Date or by reference to any event occurring act done or
circumstances existing on or before that date including distributions made
down to such date or provided for in its Principal Accounts and reasonable
provision has been made and shown in its Principal Accounts for deferred
taxation in accordance with generally accepted accounting principles.
7.7 PAYMENT OF TAX
7.7.1 Each Company has duly and punctually paid all tax to the extent that
the same ought to have been paid and is not liable nor has it within
three years prior to the date hereof been liable to pay any penalty
or interest in connection therewith.
-29-
7.7.2 Without prejudice to clause 7.7.1 each Company has paid on the due
date:- (i) all value added tax and customs and excise duties (at
the correct tariff rate) in respect of goods or services
sold or supplied or imported;
(ii) all tax due in respect of payments made by it to any person
which ought to have been made under deduction of tax and all
such tax has been properly deducted from all such payments
made;
(iii) all advance corporation tax due in respect of dividends
and other distributions made or paid by it; and
(iv) all social security contributions (both employers and
employees) due in respect of its employees and ex-employees.
7.8 PAY AS YOU EARN
Each Company has properly operated the PAYE system and National Insurance
Contribution system deducting tax as required by law from all payments to
or treated as made to or benefits provided for its employees, ex-employees
or independent contractors (including any such payments within section 134
of the ICTA) and duly accounted to the Inland Revenue in connection with
any such payments made or benefits provided, and so far as the Vendors are
aware no PAYE audit or National Insurance or VAT audit in respect of any
Companies has been made by the Inland Revenue, Contribution Agency or H M
Customs & Excise nor has any Company been notified that any such audit
will be made and each Company has complied with all other obligations in
respect of National Insurance.
7.9 [None]
7.10 [None]
CORPORATION TAX
7.11 CHANGES IN TRADE ETC.
7.11.1 Within the period of three years ending with the date hereof
there has been no major change in the nature of any trade or
business carried on by any Company within the meaning of section
245 or 768 of ICTA.
7.11.2 There has been no cessation or discontinuance of any trade
carried on by any Company nor has the scale of activities in any
trade carried on by any Company within three years hereof become
small or negligible.
7.11.3 Prior to the execution of this agreement no change of ownership
of any Company has taken place such that either or both of
sections 245 or 768 of ICTA has or may be applied to deny relief
in respect of loss or losses of any Company or surplus advance
corporation tax.
-30-
7.12 TRADING ASSETS
In the event that any asset shown in the Principal Accounts as a fixed
asset is disposed of immediately following Completion the proceeds derived
from such asset will not be treated as a trading receipt for tax purposes.
7.13 DEDUCTIONS
No Company has made any payment or incurred any liability to make any
payment which could be disallowed as a deduction in computing the taxable
profits of any Company or as a charge on any Company's income including
(but without prejudice to the generality of the foregoing) any payment
which could be disallowed under sections 74 (general rules as to
deductions not allowable), 338-340 (allowance of charges on income),
779-789 (leased assets), section 787 (restriction of relief for payments
of interest) or section125 of the ICTA (annual payments for non-taxable
consideration).
7.14 SALES AND UNDERVALUE/OVERVALUE
All transactions entered into by any Company have been entered into on an
arms length basis and the consideration (if any) charged or received or
paid by such Company on all transactions entered into by it has been equal
to the consideration which might have been expected to be charged received
or paid (as appropriate) between independent persons dealing at arms
length and no notice or enquiry pursuant to section770 of the ICTA has
been made in connection with any of such transactions.
7.15 {None]
7.16 CHARGEABLE POLICIES
No Company is nor will become liable to tax in respect of any policy of
insurance (including any life policy or life annuity contracts) whether or
not acquired as original beneficial owner.
7.17 DEEP DISCOUNT SECURITIES
7.17.1No Company has issued or acquired any deep discount securities as
defined by paragraph 1(1) of schedule 4 of the ICTA.
7.17.2In so far as any Company has issued or acquired any deep discount
securities as defined by paragraph 1(1) of schedule 4 of the ICTA it
has issued or acquired (as the case may be) a relevant certificate
in terms of paragraph 13 of schedule 4 of the ICTA.
7.18 FOREIGN BORROWINGS
No Company has made borrowings in foreign currency whereby a liability to
tax will arise or will have arisen or a claim for tax has been made.
7.19 PENSION FUND SURPLUS
Since the Last Accounts Date no Company has received any payment to which
schedule 22 of
-31-
the ICTA applies.
CAPITAL ASSETS
7.20 CAPITAL ALLOWANCES
7.20.1No balancing charge in respect of any capital allowances claimed or
given would arise if any assets of any Company were to be realised
for a consideration equal to the amount of the book value thereof as
shown or included in the Principal Accounts.
7.20.2All necessary conditions for all capital allowances (as defined in
section 832(1) of the ICTA) claimed by any Company were at all
material times satisfied and so far as the Vendors are aware remain
satisfied and no Company has since the Last Accounts Date become
liable for any balancing charge.
7.21 FINANCE LEASES
7.21.1 No Company is nor has been the lessee under any leases of plant
or machinery save for the leases specified in the Disclosure
Letter (the "Leases");
7.21.2T he machinery or plant subject to the Leases has in the period
which is the requisite period in respect of any expenditure
thereon by an owner or lessor for the purposes of section 39(1)
of the CAA been used and only been used for a qualifying purpose
as defined by the section
7.21.3 No assets subject to the Leases have at any time been leased by
any Company or its lessees to a person who is not resident in the
UK and does not use the machinery or plant for the purposes of a
trade carried on there.
7.21.4 So far as the Vendors are aware there is no revenue
investigation, revenue enquiry or other circumstances which
dictates that any person who is or was a lessor or owner of
equipment subject to any of the Leases will or may be denied the
first year allowances and writing down allowances by reference to
which the initial rental under the Lease was calculated.
7.22 INVESTMENT GRANTS
No Company has received any investment grant or similar payment or
allowance receivable by virtue of any statute.
DISTRIBUTION
7.23 REPAYMENTS OF SHARE CAPITAL
7.23.1 No Company has at any time since its incorporation repaid or
agreed to repay or redeemed or agreed to redeem or purchase or
agreed to purchase (or made any contingent purchase contract
within the meaning of section 165 of the Companies Act 1985) in
respect of any of its issued share capital or any class thereof.
Further no
-32-
Company has after 6 April 1965 capitalised or agreed to
capitalise in the form of shares, debentures or other securities
or in paying up amounts unpaid on any shares, debentures or other
securities any profits or reserves of any class or description or
passed or agreed to be passed any resolution to do so.
7.23.2 No Company has made (and will not be deemed to have made) any
distribution within the meaning of sections 209, 210 and 236 of
ICTA since 5 April 1965 except dividends properly authorised and
shown in its Principal Accounts nor is any Company bound to make
any such distribution.
7.24 PAYMENTS TO BE TREATED AS DISTRIBUTIONS
No Company has issued any securities (within the meaning of section 254(1)
of ICTA) which remain in issue where the interest payable thereon fails to
be treated as a distribution.
CHARGEABLE GAINS
7.25 SALES AT BOOK VALUE
No chargeable gain or profit (disregarding the effects of any indexation
relief available) would arise if any assets of any Company (other than
trading stock) were to be realised for a consideration equal to the amount
of the book value thereof as shown or included in the Principal Accounts.
7.26 VALUE SHIFTING
No Company has been involved in any scheme or affected by any arrangements
whereby the value of any asset has been or will be reduced such that
sections 29 and/or 30 of TCGA might be applicable.
7.27 [None]
7.28 CHARGEABLE DEBTS
No gains chargeable to corporation tax on chargeable gains will accrue to
any Company on the disposal of any debt owing to it.
7.29 RECONSTRUCTIONS
No Company has been involved in any share for share exchange or any scheme
of reconstruction or amalgamation such as are mentioned in section135 and
136 of the TCGA or section139 of the TCGA under which shares or debentures
have been or will be issued or assets have been or will be transferred.
7.30 CORPORATE BONDS
There has been no relevant transaction to which section 117(8) of TCGA can
apply to a corporate bond held by any Company.
-33-
7.31 DEPRECIATORY TRANSACTIONS
No loss which has arisen or which may hereafter arise on a disposal by any
of the Companies of shares in or securities of any company is liable to be
reduced by virtue of the application of section176 of TCGA (transactions
in a group) or section 177 of TCGA (dividend stripping).
7.32 TRANSFERS BY WAY OF GIFT
No Company has made any such transfer of an asset at an undervalue as is
mentioned in section125 of TCGA or received any assets by way of a gift as
mentioned in section 282 of TCGA.
ANTI AVOIDANCE PROVISIONS
7.33 TAX SCHEMES
No Company has entered into nor been a party to nor otherwise involved in
any scheme or arrangement designed wholly or partly for the purpose of
avoiding or deferring tax.
7.34 TRANSACTIONS IN SECURITIES
No Company has:-
7.35.1 become liable for tax; or
7.35.2 received and will not receive or be the subject of or be
adversely affected by any claim for tax; arising under or imposed
by or resulting from the operation of sections 703-709 of ICTA
(whether alone or in conjunction with any other provisions of any
taxation statutes whatsoever) and which wholly or partly results
or arises from or is computed by reference in circumstances
existing or events occurring at any time on or before the date
hereof whether alone or in conjunction with other circumstances
arising before or after Completion.
7.35 TRANSACTIONS IN LAND
No Company has:-
7.35.1 become liable for tax; or
7.35.2 received and will not receive or be the subject of or be
adversely affected by any claim for tax;
arising under or imposed by or resulting from the operation of sections
776-778 of ICTA (whether alone or in conjunction with any other provisions
of any taxation statutes whatsoever) and which wholly or partly results or
arises from or is computed by reference to circumstances existing or
events occurring at any time on or before the date hereof whether alone or
in conjunction with other circumstances arising before or after
Completion.
7.36 SALE AND LEASE BACK OF LAND
Since 22 June 1971 no Company has entered into any transaction as is
mentioned in sections 34-37 or section 780 of ICTA.
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7.37 - 7.45 [None]
CLOSE COMPANY
7.46 Each of the Companies is a close company as defined by section 414 ICTA.
GROUPS OF COMPANIES
7.47 GROUP RELIEF
The Disclosure Letter contains particulars of all arrangements relating to
group relief under sections 402-413 of ICTA to which each Company is or
has been a party and:-
7.47.1 all claims by each Company for group relief were when made and
are now valid and have been or will be allowed by way of relief
from corporation tax;
7.47.2 no Company has made or is liable to make any payment for group
relief otherwise than in consideration for the surrender of the
group relief allowable to it by way of relief from corporation
tax;
7.47.3 each Company has received all payments due to it under any
arrangement or agreement for surrender of group relief by it;
7.47.4 no such payment exceeds or could exceed the amount permitted by
section 402(6) of ICTA;
7.47.5 there exists or existed for any period of account in respect of
which a surrender has been made or purports to have been made no
arrangements such as are specified in section 410(1)-(6) of ICTA.
7.48 [None]
7.49 INTRA-GROUP TRANSFERS
None of the Companies has acquired any asset other than trading stock from
any other company belonging at the time of acquisition to the same group
of companies as such Company within the meaning of section 170 of TCGA and
no member of any groups of companies of which that Company is or has at
any material time been the principal company (as defined in section
170(2)(b) of TCGA) has so acquired any asset.
INHERITANCE TAX
7.50 GIFTS
7.50.1 No Company is nor will become, liable to be assessed to capital
transfer tax or inheritance tax as a donor or donee of any gift
or transferor or transferee of value (actual or deemed) nor as a
result of any disposition chargeable transfer or transfer of
value (actual or deemed) made by or deemed to be made by any
other person.
7.50.2 No Company has been a party to associated operations in relation
to a transfer of value within the meaning of section 268 of ITA.
7.50.3 No asset owned by any Company is subject to any sale, mortgage or
charge by virtue of
-35-
s.212 of ITA.
7.51 [None]
VALUE ADDED TAX
7.52 VALUE ADDED TAX
7.52.1 Each of the Companies is a registered taxable person for the
purpose of the VAT legislation. No Company has at any time been
treated as a member of a group of companies for such purpose or
has made any application to be so treated. So far as the Vendors
are aware no circumstances exist whereby any Company would or
become liable for value added tax as an agent or otherwise by
virtue of section 47 of VATA.
7.52.2 Each Company has complied in all respects with the requirements
and provisions of VATA and all regulations and orders made
thereunder (the "VAT legislation") and has made and maintained
accurate and up-to-date records invoices accounts and other
documents required by or necessary for the purposes of VAT
legislation and each Company has at all times punctually paid and
made all payments and returns required thereunder.
7.52.3 without prejudice to the generality of Section 7.53.2) no Company
has:-
(i) taken part in conduct involving dishonesty as described in
section 60 of VATA;
(ii) committed any serious misdeclaration or neglect as described in
section 63 of VATA;
(iii) issued unauthorised invoices or failed to do anything
contemplated by section 67 of VATA;
(iv) failed to comply with any regulatory requirements described in
section 69 of VATA;
(v) been notified of any assessment within sections 59 and 74 of VATA
or a surcharge notice under section 59 of VATA;
(vi) made any agreement with the Commissioners of Customs and Excise
which agreement has not been put in writing as contemplated by
section 85 of VATA.
7.52.4 No Company has made any exempt supplies in consequence of which
it is or will be unable to obtain credit for all input tax paid
by it during any VAT quarter ending after the Last Accounts Date.
STAMP DUTY
7.53 STAMP DUTY AND CAPITAL DUTY
Each Company has duly paid all capital duty and loan capital duty for
which it is or has at any time been liable and all documents in the
enforcement of which it is interested and when it is its responsibility to
stamp have been duly stamped and since the Last Accounts Date no Company
has been a party to any transaction whereby it was or is or could become
liable to stamp duty reserve tax.
8. [None]
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INTELLECTUAL PROPERTY
9.1 As far as the Vendors are aware, the use by each Company of its
Intellectual Property does not infringe the rights of any third party, nor
so far as the Vendors are aware does the use by any third party infringe
upon the rights of any of the Companies.
9.2 There are no claims or proceedings in existence or threatened in respect
of the use by each Company of its Intellectual Property and there are no
circumstances likely to give rise to any such claims or proceedings.
10. INFORMATION TECHNOLOGY AND MILLENNIUM COMPLIANCE
10.1 None of the business systems forming part of each Company's Intellectual
Property has been unlawfully copied wholly or substantially from any other
material.
10.2 All the business systems, excluding software, used in the business of each
of the Companies are owned and operated by and are under the control of
the Companies and are not wholly or partly dependent on any facilities
which are not under the ownership operation or control of the Companies.
No action will (so far as the Vendors are aware), be necessary to enable
such systems to continue to be used in the business of the Companies to
the same extent and in the same manner as they have been used prior to the
date hereof.
10.3 Each Company is validly licensed to use the software used in its business
and no action will be necessary to enable it to continue to use such
software to the same extent and in the same manner as they have been used
prior to Completion.
10.4 There are no disaster recovery agreements used in the course of the
business of each Company.
10.5 The performance of the business systems used in the business of each
Company will not be adversely affected by either any changes in and to
data information used therein or any changes to inputs and other
manipulations of data solely in relation to dates from 1 January 2000 and
thereafter.
10.6 The Disclosure Letter has annexed to it copies of all computer hardware
and software maintenance agreements, all such agreements being in full
force and effect.
PENSIONS
11.1 No Company is under a legal obligation or liability and is not a party to
any ex-gratia arrangement or promise to pay pensions, gratuities,
super-annuation allowances or the like, or otherwise to provide "relevant
benefits" within the meaning of s.612 of the Income and Corporation Taxes
▇▇▇ ▇▇▇▇ to or for any of its past or present officers or employees or
their dependants; and there are no retirement benefit or pension or death
or similar schemes or arrangements in relation to or binding on any
Company or to which any Company contributes.
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SCHEDULE 5
VENDOR PROTECTION
-----------------
1. INTERPRETATION
1.1 The provisions of this Schedule 5 shall operate to limit or qualify the
liability of the Vendors under or in connection with any term of this
Agreement the Tax Deed and the Warranties or any of them ("such
liabilities") and references to "such liabilities" shall be construed
accordingly.
1.2 In the Warranties, reference to "material" shall mean material in the
context of the business of the relevant Company as a whole.
2. CAP
2.1 Notwithstanding any other provision hereof the maximum aggregate liability
of the Vendors in respect of all such liabilities shall not exceed in the
aggregate (pound)2,000,000
3. TIME LIMITS
3.1 Subject to the provisions of paragraph 3.2 of this Schedule, no claim
shall be brought against the Vendors in respect of such liabilities unless
notice in writing of any such claim (specifying in full details of the
nature of the breach and so far as is practicable the amount claimed in
respect thereof) has been given to the Vendors within twelve months of
Completion and any such claim which may have been made shall (if it has
not been previously satisfied settled or withdrawn) be deemed to have been
withdrawn on the expiration of six months from the date of the said notice
unless proceedings in respect thereof shall have been both issued and
served on the Vendors before such expiration.
3.2 No claim or claims shall be brought against the Vendors in respect of
which the subject matter relates to Taxation unless notice in writing of
any such claim (specifying full details of the nature of the claim and so
far as practicable the amount claimed in respect thereof) has been given
to the Vendors within six years of Completion and any such claim which may
have been made shall (if it has not been previously satisfied settled or
withdrawn) be deemed to have been withdrawn on the expiration of six
months from the date of the said notice unless proceedings in respect
thereof shall have been both issued and served on the Vendors before such
expiration.
4. SMALL CLAIMS AND THRESHOLD
The Vendors shall not be liable in respect of any Warranty Claim unless:
4.1 the liability of the Vendors in respect of the Warranty Claim exceeds
(pound)5,000; and
4.2 the aggregate liability of the Vendors in respect of all Warranty Claims
exceeds (pound)100,000, in which case the Vendors shall be liable for the
whole amount and not merely the excess over (pound)100,000
5. NO DOUBLE CLAIMS
5.1 Neither the Purchaser nor any of the Companies shall be entitled to
recover damages in respect of any claim for breach of this Agreement or
otherwise obtain reimbursement or restitution more than once in respect of
any one breach of any of the Warranties contained in the
-38-
Agreement notwithstanding that there may be more than one breach, and so
that for this purpose any recovery by the Purchaser shall be deemed to be
a recovery by any of them and further any recovery in respect of a claim
for breach of any of the Warranties shall satisfy any liability in respect
of the circumstances giving rise to such claim and vice versa.
6. GENERAL LIMITATIONS
6.1 The Vendors shall not have any liability in respect of such liabilities
and accordingly no claim may be brought in respect thereof if and to the
extent that any one or more of the following provisions may apply:-
6.1.1 such liabilities are wholly or partly attributable to any
voluntary act omission transaction or arrangement of the
Purchaser after the date hereof;
6.1.2 either a Company or the Purchaser is entitled to claim to be
indemnified (and then only to the extent of the indemnity)
against any loss or damage suffered by any of them under the
terms of any insurance policy for the time being in force or
which reasonably ought to have been in force;
6.1.3 such liabilities arise in connection with any fact, matter or
circumstance fairly disclosed in the Disclosure Letter or in the
schedules to this Agreement;
6.1.4 such liabilities arise in connection with any matter provided for
under the terms of this agreement or arising from the
implementation of the same;
6.1.5 either such liabilities arise in connection with any exceptions
or matters included mentioned provided for or referred to in the
Principal Accounts or the audited accounts for the two previous
accounting periods of each of the Companies or in the notes
thereto or the subject matter of the claim giving rise to such
liabilities was taken into account in computing the amount of any
such provision or reserve or is noted therein;
6.1.6 such liabilities arise wholly or partly out of as a result of or
in connection with:-
6.1.6.1 any change in the nature of the business of any Company
(or in the manner of conducting the same) after the date
hereof; or
6.1.6.2 any asset acquired or disposed of by any Company after
the date hereof; or
6.1.6.3 any statutory provision not in force at the date hereof
or any change in any statutory provision hereafter or any
decision of the Courts altering the generally accepted
interpretation of any statutory provision or the
withdrawal of any extra statutory concession previously
made by or any change in practice of the Inland Revenue
or other taxation authority or any increase in the rates
of Taxation in force at the date hereof;
6.1.6.4 the passing of any resolution (including but not limited
to a resolution for the winding up of the relevant one of
the Companies after the date hereof; or
6.1.6.5 any change in the format, matter, bases, priorities and
principles used in the preparation of the accounts of the
relevant Company from those used and adopted in the
Principal Accounts;
6.1.7 the loss or liability resulting from such liabilities is less
than the aggregate of any over-provision made in the Principal
Accounts in respect of any liability and any undervalue
-39-
of any asset recorded in the Principal Accounts.
7. PURCHASER'S COVENANT
7.1 The Purchaser hereby covenants with the Vendors that the Purchaser is not
aware of any material fact, matter or thing as may be inconsistent with
any Warranty or that may give rise to any liability on the part of the
Vendors hereunder.
8. SUBSEQUENT RECOVERY FROM THIRD PARTY
8.1 The Purchaser shall reimburse to the Vendors forthwith an amount equal to
any sum paid by the Vendors in respect of any claim for such liabilities
which is subsequently recovered by or paid to the relevant Company or the
Purchaser by any other person (including but not limited to insurance
payments) (less any reasonable costs and expenses incurred by the relevant
Company in making such recovery).
9. ASSIGNMENT OF CLAIM
9.1 Where having discharged any claim for breach of the Warranties the Vendors
request the assignment to them of any right of the Purchaser or of the
relevant Company to make recovery in whole or in part from any third
party, the Purchaser will assign at Vendors' expense or procure the
assignment to the Vendors or as they shall direct of such right and, if
the same is not legally capable of effective assignment, will, subject to
being indemnified to the reasonable satisfaction of the Purchaser pursue
such claim on behalf of the Vendors and deliver over upon receipt to the
Vendors all amounts recovered.
10. RELIEFS
10.1 Any such liabilities shall not extend to any part of the loss or damage
suffered by the Purchaser or the relevant Company to the extent that such
part shall be used or shall be capable of being used by the Purchaser or
such Company or any present or future subsidiaries of either of them to
offset in whole or in part any past present or future liability to
Taxation.
11. THIRD PARTY CLAIM
11.1 Where a Company or the Purchaser is entitled (whether by reason of
insurance or payment discount or otherwise) to recover from some other
person any sum in respect of Taxation or any other damage or liability the
subject of a claim against the Vendors under this Agreement or for which a
claim could be made hereunder (and whether before or after the Vendor has
made payment hereunder) the Purchaser shall if so required by the Vendors
and at the Vendors own cost and expense take or (as the case may require)
procure that the Company takes all steps (whether by way of a claim
against its insurers or otherwise) as the Vendors may reasonably require
to enforce such recovery and shall keep the Vendors informed to its
reasonable satisfaction of the progress of any action taken. Thereafter
any claim against the Vendors shall be limited (in addition to the
limitations on the liability of the Vendors referred to in this Schedule
5) to the amount by which the loss or damage suffered by the Purchaser as
a result of such breach shall exceed the amount (if any) so recovered or
which ought properly to be recovered. The Purchaser shall not be entitled
to make any claim in respect of such liabilities if it or the relevant
Company fails to act in accordance with the reasonable instructions of the
Vendors in conducting any claim against a third party.
12. RIGHT TO FIGHT
12.1 The Vendors shall be entitled to require the Purchaser or the relevant
Company to take all such
-40-
reasonable steps or proceedings as the Vendors may consider appropriate in
order to mitigate any claim in respect of such liabilities or in respect
of the undertakings in this Agreement and the Purchaser shall procure that
the relevant Company shall act in accordance with any such requirements
(subject to the Purchaser and/or the relevant Company being indemnified by
the Vendors against all reasonable costs and expenses incurred in
connection therewith). For the purpose of enabling the Vendors to remedy a
breach or to mitigate or otherwise determine the amount of any claim or to
decide what steps or proceedings should be taken in order to mitigate any
claim the Purchaser shall:-
12.1.1 give notice to the Vendors within fourteen days of any breach or
circumstance giving or likely to give rise to a breach coming to
its notice or to the notice of the Purchaser;
12.1.2 make or procure to be made available to the Vendors or its or his
duly authorised representatives all relevant and available
personnel, books of accounts, records and correspondence of the
relevant Company for the purpose of enabling the Vendors to
ascertain or extract any relevant information; and
12.1.3 make no admission of the fact or amount of any liability on the
part of the relevant Company or the Purchaser without the prior
written consent of the Vendors such consent not to be
unreasonably withheld or delayed.
The Purchaser shall not be entitled to make any claim in respect of a
breach of Warranty if it fails to give the said notice or to act in
accordance with the reasonable instructions of the Vendors in conducting
any dispute or negotiation in relation to the claim in accordance with
this paragraph 12.
13. RELIANCE ON STATEMENTS
13.1 No claim shall be made against the Vendors in respect of any warranty,
representation, indemnity covenant undertaking or otherwise arising out of
or in connection with the sale of the issued share capital of the Company
except where the same is expressly contained in this agreement and the
Purchaser confirms that it has not relied upon or been induced to enter
into this agreement by any warranty, representation, indemnity, covenant
or undertaking given by any person which is not expressly contained in
this agreement.
14. DUTY TO MITIGATE
14.1 Nothing in this agreement shall be deemed to relieve the Purchaser from
its common law duty to the Vendors to mitigate their loss and without
prejudice to the generality of the foregoing the Purchaser shall take and
shall do all things in its power to procure that each of the Companies
shall take all practicable and reasonable steps to avoid or mitigate any
loss or liability which may give rise to a claim under the Warranties or
this agreement.
15. DISCHARGE OF CLAIMS
15.1 In the event that the Vendors are liable to the Purchaser for a claim
under the terms of the agreement, such liability may at the election of
the Purchaser or either of the Vendors be satisfied by the payment by it
to the Purchaser of the proceeds of the sale of the Town Pages Shares or
by returning to the Purchaser certificates representing such Town Pages
Shares then retained by Vendors having a market value in the amount of
such liability together with an executed stock transfer form in favour of
such person or persons (if any) as the Purchaser may direct.
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15.2 Until such time as the Vendor shall be able to sell the Town Pages Shares
to satisfy any such liability under this agreement no proceedings may be
taken to effect recovery of any damages awarded under this agreement
15.3 The Purchaser hereby agrees that the Purchaser shall allow the Vendors
such time as is reasonably necessary either to sell sufficient of the Town
Pages Shares, or to return such number of Town Pages Shares to the
Purchaser (valued at the higher of $6.50 per share or the current market
value) in satisfaction of any liability for Warranty Claims.
16. APPORTIONMENT OF LIABILITY
16.1 For the avoidance of doubt, the liability of the Vendors for such
liabilities shall in all circumstances be shared by them in the Agreed
Proportions so that:-
16.1 Neither of them shall have any liability in excess thereof whether
to the purchaser or any other party; and
16.1.2Each Vendor shall indemnify the other in respect of the Agreed
Proportion properly payable by him or it, so that the other shall be
so indemnified in respect thereof
17. PRICE REDUCTION
17.1 Any amount payable by either of the Vendors in respect of a Warranty Claim
(whether in full or in satisfaction thereof) shall be deemed to be a pro
tanto reduction, in all respects, of the Purchase Consideration
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SCHEDULE 6
TAX DEED
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THIS DEED is made on 1999
BETWEEN:-
(1) ▇▇▇▇ U.K. HOLDINGS LIMITED whose registered office is at ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ of
Gwyndy Pant-Du, Enrys, Mold, Denbighshire SH7 4DD (the "Covenantors"); and
(2) ▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ PLC. whose registered office is at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ("the Purchaser" which expression shall include
its successors and assigns).
RECITAL
This Tax Deed is entered into pursuant to the provisions of an agreement ("the
Sale Agreement") made on even date pursuant to which the Purchaser agreed to
purchase shares in the share capital of Morbria Limited from the Covenantors.
THE PARTIES AGREE AS FOLLOWS:-
1. INTERPRETATION
8.9 Subject to Clause 1.2 and unless the context otherwise indicates, words
expression and abbreviations defined in the Sale Agreement shall have the
same meanings in this deed and any provisions of the Sale Agreement
concerning matters of construction or interpretations shall mutatis
mutandis apply to this deed.
1.2 The following words, expressions and abbreviations used in this deed
shall, unless the context otherwise requires, have the following
meanings:-
"Claim for Tax" means any of the following:-
(a) any liability to make a payment of Tax
and any claim, assessment, demand,
notice or other document issued or
action taken by or on behalf of any
person authority or body whatsoever and
of whatsoever country which claims
payment of Tax or any submission,
return or correspondence from which it
appears likely that there may be a
liability to Tax or Claim for Tax
within (b) below, or
(b) any non-availability or loss of or
reduction of any Relief (including in
particular a right to repayment) to the
extent that such Relief has been
reflected in the Net Assets of the
relevant Company as shown by the
Principal Accounts;
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"Company" shall have the same meaning as in the Sale
Agreement;
"Companies" shall be deemed to include the Companies and
any subsidiary;
"Group Relief" means any of the following:-
(a) relief surrendered or claimed pursuant
to chapter IV part X of the ICTA 1988;
(b) advance corporation tax surrendered or
claimed pursuant to s.240 of the ICTA
1988;
(c) a Transferred Tax Refund;
"Income profits or gains" includes any other measure by
reference to which Tax is computed;
"Purchaser's Relief" means any Relief to the extent that the
same either:-
(a) has been reflected in the Net Assets of
the relevant Company as shown by its
Principal Accounts; or
(b) arises in respect of periods after the
Last Accounts Date;
"Relevant Event" means every event, act, omission, default,
occurrence, circumstance, transaction,
dealing or arrangement of any kind whatsoever
done or omitted to be done by the Covenantor
or any Company or which in any way concerns
or effects any Company whether or not done or
omitted to be done by such Company or the
Covenantor;
"Relief" means any allowance, credit, exemption,
deduction or relief from, in computing
against or in respect of Tax or any right to
the repayment of Tax;
"Tax" means any tax, and any duty, impost, levy or
charge in the nature of tax, whether domestic
or foreign, and any fine, penalty or interest
connected therewith including (without
prejudice to the foregoing) corporation tax,
advance corporation tax, income tax, national
insurance and social security contribution,
capital gains tax, inheritance tax, petroleum
revenue tax, value added tax, customs excise
and import duties, stamp duty, stamp duty
reserve tax, insurance premium tax, air
passenger duty, rates and water rates and any
other payment whatsoever which any Company is
or may be or become bound to make to any
person by reason of any taxation statutes;
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"taxation statutes" means all statutes, decrees, orders and
regulations whether domestic or foreign
providing for or imposing any Tax;
"Transferred Tax Refund" means a tax refund relating to an accounting
period as defined by section 102(3) of the FA
1989 in respect of which a notice has been
given pursuant to section 102(2) of the FA
1989;
"Utilisation of a means the utilisation or set off of a
Purchaser's Relief" Purchaser's Relief available to any Company.
1.3 References to income, profits or gains being earned accrued or received
before a particular date shall include deemed income profits or gains
treated as earned accrued or received prior thereto.
1.4 The obligations and liabilities of the Covenantor under this Deed shall be
several only and each of them shall only be liable therefor in the Agreed
Proportions.
PAYMENT
2.1 Subject to Clause 2.2 each of the Covenantors hereby covenant with the
Purchaser to pay to the Purchaser in the Agreed Proportions an amount
equal to:-
(a) any liability for Tax which arises whether in whole or in
part:-
(i) in connection with or as a consequence of one or more Relevant
Events occurring or entered into on or before Completion; or
(ii) in respect of or by reference to any income profits or gains
earned, accrued or received on or before Completion; or
(iii) in consequence of the combined effect of two or more Relevant
Events of which at least one shall have occurred on or before
Completion but only in circumstances where such Claim for Tax
would not have been suffered by the relevant Companies but for
the failure of any person (other than a company falling within
the definition of "Company") for the purposes of this deed) to
discharge or pay any liability for Tax;
(iv) each and every loss in whole or in part of the right to
receive any payment for Group Relief to the extent that the
payment has been reflected in the Net Assets of the relevant
Company as shown by its Principal Accounts; and/or
(v) any liability to make any payment for Group Relief and/or any
liability to repay any repayment received for Companies Relief
to the extent that any such liability has not been reflected
in the Net Assets of the relevant Company as shown by its
Principal Accounts;
(b) all reasonable costs and expenses resulting from any of the matters
referred to in clause 2.1 (a) above
2.2 If any Claim for Tax or liability which would have otherwise given rise to
a Claim for Tax shall be reduced or avoided in consequence of any
Utilisation of a Purchaser's Relief this Deed
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shall apply as if such Purchaser's Relief had not been available so that
the amounts paid by the Covenantor hereunder shall be the amounts which
would have been payable in the absence of that or any other Purchaser's
Relief.
2.3 The covenant contained in Clause 2.1(a) shall not apply:-
(a) to any Claim for Tax to the extent that any Tax giving rise to
the same has been paid prior to the Last Accounts Date or to
the extent that provision or reserve for the liability to
which the same relates has been made in the Principal Accounts
of the relevant Company and for the purposes of this Clause
2.3(a) no provision or reserve shall be deemed to be reduced
by reason only of an increase in rates of Tax announced after
the date of the Sale Agreement;
(b) to any Claim for Tax to the extent that the same shall have arisen
in consequence of any act or transaction which could reasonably have
been avoided and which was carried out without the agreement of the
Covenantor by the Purchaser or any Company after Completion
otherwise than in the ordinary course of business of that Company as
presently carried on; or
(c) to any Claim for Tax to the extent that it arises in the ordinary
course of business of any Company after the Last Accounts Date but
on or before Completion and for this purpose, but without
limitation, the following shall not be regarded as being in the
ordinary course of business:-
(i) the declaration or payment of any dividend or the making
of any other distribution; or
(ii) any transaction entered into by a Company in the
circumstances where the consideration (if any) received
by or as the case may be, paid by a Company in respect
thereof is less than or more than the consideration
deemed to have been received or paid for Tax purposes
but to the extent only of the Claim for Tax arising in
respect of the amount by which the deemed consideration
exceeds or is less than the actual consideration; or
(iii) any Company ceasing or being deemed to cease, for Tax
purposes, to be the member of any Companies or associated with
any other company or person whether in consequence of the
entering into of the Sale Agreement or anything done under it
or otherwise; or
(iv) a Relevant Event which gives rise to a liability any Company
in respect of the income, profits or gains, whether actual or
deemed, of any non-resident person; or
(v) any other Relevant Event which gives rise to a liability to
tax on deemed (as opposed to actual) income, profits or gains.
(d) to any Claim for Tax to the extent that the same is increased as a
result of any failure by the Purchaser or a Company to comply with
its obligations under Clause 5.
2.4 In computing the amount to be paid by the Covenantor under this Deed in
respect of any Claim for Tax no account shall be taken of any Tax for
which any Company would have been liable in respect of such amount had it
in fact been paid to that Company.
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2.5 All sums payable by the Covenantor under this Deed shall be paid free and
clear of all deductions or withholding (including Tax) unless the
deduction or withholding is required by law, in which event or in the
event that the Purchaser shall incur any liability for Tax chargeable or
assessable in respect of any payment pursuant to this deed, the Covenantor
shall pay such additional amounts as shall be required to ensure that the
net amount received and retained by the Purchaser (after Tax) will equal
the full amount which would have been received and retained by it had no
such deduction or withholding been made and/or no such liability to Tax
been incurred and in applying this Clause 2.5 no account shall be taken of
the extent to which any liability for Tax may be mitigated or offset by
any Relief available to the Purchaser so that where such Relief is
available the additional amount payable hereunder shall be the amount
which would have been payable in the absence of such availability.
TIMING
3.1 Where the Covenantors become liable to make any payment pursuant to Clause
2, the due date for the making of that payment shall be:-
(a) insofar as the claim arises pursuant to Clause 2.1(a) seven
days before the day on which a payment of Tax becomes due
under or in consequence of the Claim for Tax in question or
seven days before the day on which any repayment (or increased
repayment) of Tax which but for such Claim for Tax would have
been available, would have been due and for this purpose it
shall be assumed that the repayment would have become due at
the earliest possible date;
(b) insofar as the liability arises pursuant to Clause 2.1(b) nine
months after the end of the accounting period of the Company in
relation to which the Companies Relief surrender was made or where
the liability arises as a consequence of a liability to repay any
payment received for or to make any payment for Companies Relief,
seven days before the date on which that Company is liable to repay
or pay such amounts;
(c) insofar as the claim arises pursuant to Clause 2.1(c), seven days
before the day on which the costs and expenses fall due for payment;
(d) insofar as the claim arises pursuant to Clause 2.2 the date on which
payment would have become due under sub-Clause (a) above had no
Purchaser's Relief been available and for this purpose it shall be
assumed that the Claim for Tax would have been made and all Tax
would have become due at the earliest possible date (assuming no
application for postponement).
3.2 Where but for the non-availability, loss or reduction of any Purchaser's
Relief the Company could have surrendered the same to another company by
way of Group Relief this deed and in particular Clause 3.1(a) shall apply
as if the Tax which could have been saved as a consequence of any such
surrender would have been saved by a Company but for the said
non-availability, loss or reduction and at the same time.
3.3 For the purposes hereof where Tax is due or a repayment due is lost or
reduced or a Group
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Relief Payment is lost or reduced or falls to be repaid or where, but for
a Utilisation of a Purchaser's Relief Tax would be due or costs and
expenses fall due for payment, on more than one occasion then paragraphs
(a) to (d) of Clause 3.1 shall apply separately on each such occasion.
3.4 If any sum due under Clause 2 is not paid by the Covenantor by the later
of the due date and the date seven days after the date of the demand made
therefor the same shall carry interest (from such later date until the
date of payment) at the rate of four per cent, over the base rate for the
time being of Barclays Bank Plc (or in the absence of such rate at such
equivalent rate as the Purchaser shall select) save that interest shall
not start to run in respect of any payments of Tax above until seven days
before the day on which the Company makes the payment of Tax due.
IN WITNESS WHEREOF the parties hereto have executed this Deed the day and year
before written.
EXECUTED AS A DEED BY STUART )
▇▇▇▇▇▇▇ ▇▇▇ AS THE DULY AUTHORISED )
ATTORNEY FOR ▇▇▇▇ U.K. HOLDINGS LIMITED )
IN THE PRESENCE OF:- )
EXECUTED AS DEED BY ▇▇▇▇▇▇ ▇▇▇▇ )
▇▇▇▇▇▇ IN THE PRESENCE OF )
EXECUTED AS A DEED BY TOWNPAGESNET. )
COM PLC ACTING BY )
DIRECTOR
DIRECTOR/SECRETARY
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