1
June 20, 1999
SHARE PURCHASE AGREEMENT
among
THE SHAREHOLDERS LISTED ON
SCHEDULE I ATTACHED HERETO
and
INTERNATIONAL INTEGRATION INCORPORATED R & C HOLDING COMPANY,
a wholly-owned, indirect subsidiary of
INTERNATIONAL INTEGRATION INCORPORATED
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TABLE OF CONTENTS
Section Page
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1. Purchase and Sale of the Shares.................................................................1
1.02 Further Assurances.....................................................................1
1.03 Payment for the Shares.................................................................2
1.04 Post Closing Adjustments...............................................................2
1.05 Closing................................................................................4
1.06 Shareholder Representative.............................................................5
2. Representations of the Shareholders Regarding the Shares........................................6
3. Representations of the Shareholders and the Company Regarding the Company.......................7
3.01 Organization...........................................................................7
3.02 Capitalization of the Company..........................................................8
3.03 Subsidiaries...........................................................................8
3.04 Authorization..........................................................................9
3.05 Financial Statements..................................................................10
3.06 Absence of Undisclosed Liabilities....................................................11
3.07 Litigation............................................................................11
3.08 Insurance.............................................................................12
3.10 Intangible Property...................................................................13
3.11 Leases................................................................................15
3.12 Real Estate...........................................................................15
3.13 [Intentionally omitted]...............................................................17
3.14 Accounts Receivable...................................................................17
3.15 Tax Matters...........................................................................18
3.16 Books and Records.....................................................................19
3.17 Contracts and Commitments.............................................................19
3.18 Compliance with Agreements and Laws...................................................21
3.19 Employee Relations....................................................................22
3.20 Employee Benefit Plans................................................................23
3.21 Absence of Certain Changes or Events..................................................23
3.22 Customers.............................................................................25
3.23 [Intentionally Omitted]...............................................................25
3.24 [Intentionally Omitted]...............................................................25
3.25 Prepayments and Deposits..............................................................25
3.26 Indebtedness to and from Officers, Directors and Shareholders.........................25
3.27 Banking Facilities....................................................................26
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3.28 Powers of Attorney and Suretyships....................................................26
3.29 Conflicts of Interest.................................................................26
3.30 Regulatory Approvals..................................................................27
3.31 Disclosure............................................................................27
4. Representations of the Buyer...................................................................27
4.01 Organization..........................................................................27
4.02 Capitalization........................................................................27
4.03 Authorization of Transaction..........................................................28
4.05 Reports and Financial Statements......................................................28
4.06 Absence of Material Adverse Changes...................................................29
4.07 Brokers' Fees.........................................................................29
4.08 Disclosure............................................................................29
5. Conditions to Obligations of the Buyer.........................................................30
5.01 Continued Truth of Representations and Warranties
of the Shareholders and the Company; Compliance with
Covenants and Obligations.............................................................30
5.02 Performance by the Shareholders and the Company.......................................30
5.03 Governmental Approvals................................................................30
5.04 Consent of Lenders, Lessors and Other Third Parties...................................30
5.05 Adverse Proceedings...................................................................31
5.06 Opinion of Counsel....................................................................31
5.07 Employment Contracts..................................................................31
5.08 Repayment of Indebtedness.............................................................31
5.09 Affiliate Agreements..................................................................31
5.10 Pooling Letters.......................................................................31
5.11 Agreements with Conduit Shareholders..................................................31
5.12 Agreement with Legis Trust............................................................31
5.13 Agreements with Optionholders and Holders of Loan Stock...............................32
5.14 Nasdaq Listing Application............................................................32
5.15 Escrow Agreement......................................................................32
5.16 Closing Deliveries....................................................................32
6. Conditions to Obligations of the Shareholders..................................................33
6.01 Continued Truth of Representations and Warranties
of the Buyer; Compliance with Covenants and Obligations...............................33
6.02 Corporate Proceedings.................................................................33
6.03 Governmental Approvals................................................................33
6.04 Consents of Lenders, Lessors and Other Third Parties..................................33
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6.05 Adverse Proceedings...................................................................33
6.06 Opinion of Counsel....................................................................34
6.07 Nasdaq Listing Application............................................................34
6.08 Registration Rights Agreement.........................................................34
6.09 Escrow Agreement......................................................................34
6.10 Closing Deliveries....................................................................34
7. Indemnification................................................................................35
7.01 By the Shareholders...................................................................35
7.02 Method of Asserting Claims............................................................36
7.03 Survival..............................................................................37
7.04 Limitations...........................................................................37
8. Post-Closing Agreements........................................................................37
8.01 Proprietary Information...............................................................37
8.02 No Solicitation or Hiring of Former Employees.........................................38
8.03 Non-Competition Agreement.............................................................38
9. Registration Rights............................................................................39
9.01 Registration of Shares................................................................39
9.02 Limitations on Registration Rights....................................................39
9.03 Registration Procedures...............................................................40
9.04 Requirements of Shareholders..........................................................41
9.05 Indemnification.......................................................................41
9.06 Assignment of Rights..................................................................42
9.07 Restrictions on Resale of Acquisition Shares..........................................42
10. Dispute Resolution.............................................................................43
10.01 General...............................................................................43
10.02 Consent of the Parties................................................................43
11. Brokers........................................................................................44
11.01 For the Shareholders, the Company and the Subsidiaries................................44
11.02 For the Buyer.........................................................................44
12. Notices........................................................................................44
13. Successors and Assigns.........................................................................45
14. Entire Agreement; Amendments; Attachments......................................................46
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15. Severability...................................................................................46
16. Investigation of the Parties...................................................................46
17. Expenses.......................................................................................46
18. Legal Fees.....................................................................................47
19. Governing Law..................................................................................47
20. Section Headings...............................................................................47
21. Counterparts...................................................................................47
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SHARE PURCHASE AGREEMENT
This Agreement (the "Agreement") made as of the 20th day of June, 1999 is
by and among International Integration Incorporated R&C Holding Company (the
"Buyer"), an indirect subsidiary of International Integration Incorporated, a
Delaware corporation with its principal office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇, and the shareholders (individually, a "Shareholder" and
collectively, the "Shareholders") of Reportsent Company Limited, a private
limited company incorporated in England and Wales with its registered office at
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇ ▇▇▇ and whose registered number is 2834971
(the "Company"). The Shareholders own all of the issued and outstanding share
capital of the Company.
PRELIMINARY STATEMENT
1. Each of the Shareholders owns the number of the issued and outstanding
ordinary shares and `A' ordinary shares, all of GBP1 each (collectively, the
"Shares"), of the Company set forth opposite his or its name on Schedule I
attached hereto, which Shares in the aggregate represent all of the issued and
outstanding share capital of the Company.
2. The Buyer desires to purchase, and the Shareholders desire to sell,
the Shares for the consideration set forth below, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. PURCHASE AND SALE OF THE SHARES
1.01 PURCHASE OF THE SHARES FROM THE SHAREHOLDERS. Subject to and upon
the terms and conditions of this Agreement, at the closing of the transactions
contemplated by this Agreement (the "Closing"), each Shareholder as legal and
beneficial owner shall sell, transfer, convey, assign and deliver to the Buyer,
and the Buyer shall purchase, acquire and accept from each Shareholder, all the
Shares owned by such Shareholder, as set forth opposite such Shareholder's name
on SCHEDULE I attached hereto together with all rights attaching thereto
(including all rights to dividends and other distributions declared made or
payable thereon in respect of periods commencing on or after the date hereof)
with full title guarantee for the purposes of the Law of Property (Miscellaneous
Provisions) ▇▇▇ ▇▇▇▇ of England. Each of the Shareholders hereby waives and
undertakes to procure the waiver of all pre-emption and similar rights over the
Shares or any of them to which he or any other person may be entitled under the
Articles of Association of the Company, the Shareholders' Agreement dated August
18, 1993, as modified by the deed of adherence dated November 20, 1995 (the
"Shareholders' Agreement"), or otherwise in relation to the sale and purchase of
the same hereunder. Nothing in this
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Agreement shall oblige the Buyer to buy any of the Shares or otherwise complete
this Agreement unless the sale and purchase of all the Shares is completed
simultaneously. At the Closing each Shareholder shall deliver to the Buyer
certificates evidencing the Shares owned by such Shareholder (or an indemnity in
a form required by the Buyer in the case of a missing share certificate)
accompanied by duly executed stock transfer forms for all such Shares in favor
of the Buyer (or its nominee).
1.02 FURTHER ASSURANCES. At any time and from time to time after the
Closing, at the Buyer's request and without further consideration, each of the
Shareholders shall promptly execute and deliver such instruments of sale,
transfer, conveyance, assignment and confirmation, and take all such other
action as the Buyer may reasonably request, more effectively to transfer, convey
and assign to the Buyer, and to confirm the Buyer's title to, all of the Shares
owned by such Shareholder, to put the Buyer in actual possession and operating
control of the assets, properties and business of the Company and the
Subsidiaries (as defined in Subsection 3.03 hereof), to assist the Buyer in
exercising all rights with respect thereto and to carry out the purpose and
intent of this Agreement.
1.03 PAYMENT FOR THE SHARES.
(a) In consideration for the Shares purchased hereunder, the
Buyer shall cause the issuance at Closing to the Shareholders of 2,352,269
shares in the aggregate (the "Acquisition Shares") of the Common Stock, $0.01
par value per share, of International Integration Incorporated ("i-Cube")
("i-Cube Common Stock"), subject to adjustment pursuant to Subsections 1.04 and
1.05 hereof. The Acquisition Shares shall be fully paid and free of any lien,
option, charge or other encumbrance (other than as expressly set forth in this
Agreement) and shall be issued in the manner described in paragraph (b) of this
Subsection 1.03.
(b) Within five days following the Closing and following receipt
by the Buyer of the documents referred to in Subsection 1.01, the Buyer shall
deliver:
(i) to each of the Shareholders, an aggregate number of
Acquisition Shares as is equal to 90% of the total number of Acquisition Shares
to which such Shareholder is entitled pursuant to Section 1.03(a), as set forth
opposite each Shareholders' name in Schedule I (the "Initial Shares").
(ii) to State Street Bank & Trust Company, as escrow agent
(the "Escrow Agent"), an aggregate number of Acquisition Shares as is equal to
10% of the total number of Acquisition Shares issuable pursuant to Section
1.03(a) (the "Escrow Shares"), to be held in escrow pursuant to the terms of the
Escrow Agreement attached hereto as EXHIBIT 1.03 (the "Escrow Agreement"), as a
reserve for all or part of any adjustments pursuant to
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Subsection 1.04 and to satisfy all or part of any claims for indemnity pursuant
to Section 7 hereof.
(c) At the Closing the Shareholders shall procure that a board
meeting of the Company shall be held at which (i) such persons as the Buyer may
nominate will be appointed additional directors of the Company; (ii) there shall
be submitted and accepted the resignations of the directors and secretary as
requested by the Buyer; (iii) subject only to their being duly stamped (where
applicable) the stock transfer forms of the Shares to the Buyer shall be
approved and the Buyer and its nominee(s) shall be registered as the holders of
the Company Shares and new share certificates shall be executed and issued
accordingly; and (iv) all existing instructions to banks shall be cancelled and
new instructions given in such form as the Buyer may require.
1.04 POST CLOSING ADJUSTMENTS. The Acquisition Shares issuable
pursuant hereto shall be subject to adjustment after the date of the Closing
(the "Closing Date") as follows:
(a) As promptly as possible following the Closing Date, the
Buyer shall verify the items set forth on SCHEDULE 1.04 hereto prepared as of
the Closing Date (the "Verification Statement"). In addition, following the
completion by i-Cube of the Company's consolidated financial statements as of
and for the fiscal period ended June 30, 1999, the Buyer shall have the right to
cause PricewaterhouseCoopers LLP, independent public accountants for the Buyer
(the "Buyer's Auditors"), to conduct an audit of the books and records of the
Company and the Subsidiaries as of the Closing Date. In the event such an audit
is conducted, the Buyer shall cause the Buyer's Auditors to deliver a
consolidated balance sheet of the Company and the Subsidiaries as of the Closing
Date (as corrected pursuant to Subsection 1.04(d) hereof, the "Closing Balance
Sheet") to each of the parties to this Agreement and to the Escrow Agent within
60 days after the Closing Date. The Closing Balance Sheet shall be prepared in
accordance with U.K. generally accepted accounting principles applied
consistently with the Company's past practice (to the extent that such past
practice was in accordance with U.K. generally accepted accounting principles
(except that a $-to-GBP exchange rate of 1.6 dollars to one pound shall be
used throughout) ("U.K. GAAP")), without any adjustments applicable solely as a
result of the acquisition of the Shares by the Buyer on the Closing Date or any
actions or payments related to agreements to be delivered at Closing, which, for
the avoidance of doubt, shall include any signing-on bonuses, termination
payments or finders fees, and shall be certified without qualification by the
Buyer's Auditors.
(b) The Shareholders and one firm of independent certified
accountants acting on behalf of the Shareholders (the "Shareholders' Auditors")
shall have the right to review the work papers of the Buyer and the Buyer's
Auditors utilized in preparing the Verification Statement and the Closing
Balance Sheet, and shall have full access to the books,
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records, properties and personnel of the Company and the Subsidiaries for
purposes of verifying the accuracy and fairness of the presentation of the
Verification Statement and the Closing Balance Sheet. The Shareholders shall
work in good faith and cooperate with the Buyer and the Buyer's Auditors in the
preparation of the Verification Statement and the Closing Balance Sheet and the
resolution of any dispute in connection therewith pursuant to paragraph (c)
below.
(c) The values or amounts for each item reflected on the
Verification Statement and the Closing Balance Sheet (collectively, the
"Statements") shall be binding upon the Shareholders unless the Shareholders
give written notice within 60 days after receipt of the applicable Statement, of
disagreement with any of the values or amounts shown on the applicable
Statement, specifying as to each such item in reasonable detail, the nature and
extent of such disagreement (the "Dispute Notice"). If the Buyer and the
Shareholders Representative are unable to resolve any such disagreement within
60 days after the date of the Dispute Notice, the disagreement shall be
submitted to arbitration in accordance with the provisions of Subsection 10.03
hereof. If as a result of the resolution of any disputes by agreement pursuant
to this Subsection 1.04 or by arbitration pursuant to Subsection 10.03, any
amount shown in the applicable Statement is determined to be erroneous, such
erroneous amount shall be deleted from the applicable Statement and the correct
amount shall be inserted in lieu thereof. The Statement, as so corrected, shall
constitute the applicable Statement for purposes of this Agreement.
(d) The Buyer shall pay the fees and disbursements of the
Buyer's Auditors. The fees and disbursements of the Shareholders' Auditors
incurred in the review of the Closing Balance Sheet shall be paid by the
Shareholders, in proportion to their ownership of Shares as set forth on
SCHEDULE I attached hereto. The Buyer shall under no circumstances be liable for
any fees or disbursements of the Shareholders' Auditor.
(e) Immediately upon the expiration of the 60-day period for
giving the Dispute Notice, if no Dispute Notice is given, or immediately upon
the resolution of disputes, if any, pursuant to this Subsection 1.04, the total
number of Acquisition Shares shall be adjusted as follows:
(1) If the sum of the items listed in column 1 of Schedule
1.04 hereto plus the sum of the items listed in column 2 of Schedule 1.04 hereto
is less than GBP447,828, then the aggregate amount of such difference shall
be multiplied by a dollar-to-pounds sterling conversion ratio of 1.6, then
divided by $20. The aggregate number of shares so derived will be subtracted
from 3,285,825, and to the extent the balance is less than 3,260,000, then the
difference between such balance and such 3,260,000 shares (the "Adjustment
Amount") shall be distributed to the Buyer from the Escrow Account. The items
marked by an "*" on Schedule 1.04 are agreed by the Shareholders and Buyer and
are not subject to change or adjustment.
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(2) In addition to the foregoing, if the net assets, as
reflected on the Closing Balance Sheet, is less than the net assets of the
Company and its Subsidiaries at April 30, 1999 on a consolidated basis (the "Net
Asset Deficiency"), the Buyer and the Shareholder Representative (as defined in
the Escrow Agreement) shall instruct the Escrow Agent to deliver to the Buyer,
out of the Escrow Shares, a number of Acquisition Shares as is equal to (A) the
Net Asset Deficiency, divided by (B) $20.
(3) The term "Indebtedness" is defined for Schedule 1.04 as
(A) all indebtedness for money borrowed and all other indebtedness evidenced by
notes, debentures, bonds or similar instruments (excluding convertible notes
issued by the Company to its equity partners as defined in the information
memorandum dated June 15, 1999) for the payment of which the Company or its
Subsidiaries (excluding Entropy (CMG II) Limited) is liable; (B) all capital
lease obligations; (C) all obligations issued or assumed as the deferred
purchase price of property and all conditional sale obligations and obligations
under any title retention agreement; (D) all obligations for the reimbursement
of an obligor on any letter of credit, banker's acceptance or similar credit
transaction; (E) all obligations of the sort described in the foregoing clauses
for the payment of which the Company or any Subsidiaries (excluding Entropy
(CMG) II Limited) is responsible or liable, directly or indirectly, as obligor,
guarantor or otherwise; (F) all obligations of the sort described in the
foregoing clauses secured by a lien on any property or asset of the Company or
any Subsidiaries (excluding Entropy (CMG) II Limited), calculated on a
consolidated basis and (G) net of all cash at bank for the Company and any
Subsidiaries excluding Entropy (CMG) II Limited.
1.05 CLOSING. The Closing shall take place immediately after the
signing of this Agreement at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ International,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ YAJ. The transfer of the Shares by
the Shareholders to the Buyer shall be deemed to occur at 9:00 a.m., London
Time, on the Closing Date.
1.06 SHAREHOLDER REPRESENTATIVE.
(a) In order to administer efficiently (i) the adjustment to the
number of Acquisition Shares, (ii) the waiver of any condition to the
obligations of the Shareholders to consummate the transactions contemplated
hereby, and (iii) the defense and/or settlement of any claims for which the
Shareholders may be required to indemnify the Buyer or the Company pursuant to
Section 7 hereof, the Shareholders hereby designate ▇▇▇▇▇▇ ▇▇▇▇ as their
representative (the "Shareholder Representative").
(b) The Shareholders hereby authorize the Shareholder
Representative (i) to make all decisions relating to the adjustment to the
number of Acquisition Shares, (ii) to take all action necessary in connection
with the waiver of any condition to the obligations of the
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Shareholders to consummate the transactions contemplated hereby, or the defense
and/or settlement of any claims for which the Shareholders may be required to
indemnify the Buyer or the Company pursuant to Section 7 hereof, (iii) to give
and receive all notices required to be given under this Agreement, and (iv) to
take any and all additional action as is contemplated to be taken by or on
behalf of the Shareholders by the terms of this Agreement or the Escrow
Agreement.
(c) In the event that the Shareholder Representative dies,
becomes unable to perform his responsibilities hereunder or resigns from such
position, Shareholders holding, prior to the Closing, a majority of the Shares
as set forth on SCHEDULE I attached hereto shall select another representative
to fill such vacancy and such substituted representative shall be deemed to be
the Shareholder Representative for all purposes of this Agreement.
(d) All decisions and actions by the Shareholder Representative
shall be binding upon all of the Shareholders, and no Shareholder shall have the
right to object, dissent, protest or otherwise contest the same.
(e) By their execution of this Agreement, the Shareholders agree
that:
(1) the Buyer shall be able to rely conclusively on the
instructions and decisions of the Shareholder Representative relating to the
adjustment of the number of Acquisition Shares and the settlement of any claims
for indemnification by the Buyer or the Company pursuant to Section 7 hereof or
any other actions required or permitted to be taken by the Shareholder
Representative hereunder, and no party hereunder shall have any cause of action
against the Buyer for any action taken by the Buyer in reliance upon the
instructions or decisions of the Shareholder Representative;
(2) all actions, decisions and instructions of the
Shareholder Representative shall be conclusive and binding upon all of the
Shareholders and no Shareholder shall have any cause of action against the
Shareholder Representative for any action taken, decision made or instruction
given by the Shareholder Representative under this Agreement, except for fraud
or willful breach of this Agreement by the Shareholder Representative;
(3) the provisions of this Subsection 1.06 are independent
and severable, are irrevocable and coupled with an interest and shall be
enforceable notwithstanding any rights or remedies that any Shareholder may have
in connection with the transactions contemplated by this Agreement;
(4) remedies available at law for any breach of the
provisions of this Subsection 1.06 are inadequate; therefore, the Buyer and the
Company shall be entitled to
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temporary and permanent injunctive relief without the necessity of proving
damages if either the Buyer or the Company brings an action to enforce the
provisions of this Subsection 1.06; and
(5) the provisions of this Subsection 1.06 shall be binding
upon the executors, heirs, legal representatives and successors of each
Shareholder, and any references in this Agreement to a Shareholder or the
Shareholders shall mean and include the successors to the Shareholders' rights
hereunder, whether pursuant to testamentary disposition, the laws of descent and
distribution or otherwise.
(f) All fees and expenses incurred by the Shareholder
Representative shall be paid by the Shareholders in proportion to their
ownership of Shares as set forth on SCHEDULE I attached hereto.
2. REPRESENTATIONS OF THE SHAREHOLDERS REGARDING THE SHARES
Each Shareholder severally represents and warrants to the Buyer as follows:
(a) Such Shareholder has legal and beneficial title to the
Shares and owns the Shares with full title guarantee (as defined above), free
and clear of any and all covenants, conditions, restrictions, voting trust
arrangements, liens, charges, encumbrances, options and adverse claims, equities
or rights whatsoever with full title guarantee. SCHEDULE I attached hereto sets
forth a true and correct description of all Shares owned by such Shareholder.
(b) Such Shareholder has the full right, power and authority to
enter into this Agreement and to transfer, convey and sell to the Buyer with
full title guarantee at the Closing the Shares to be sold by such Shareholder
hereunder and, upon consummation of the purchase contemplated hereby, the Buyer
will acquire from such Shareholder good and marketable title to such Shares with
full title guarantee, free and clear of all covenants, conditions, restrictions,
voting trust arrangements, liens, charges, encumbrances, options and adverse
claims or rights whatsoever.
(c) Such Shareholder is not a party to, subject to or bound by
any agreement, rights of pre-emption or any judgment, order, writ, prohibition,
injunction or decree of any court or other governmental body which would prevent
the execution or delivery of this Agreement by such Shareholder or the transfer,
conveyance and sale of the Shares to be sold by such Shareholder to the Buyer
pursuant to the terms hereof.
(d) Other than Punk, ▇▇▇▇▇▇ & Co., no broker or finder has acted
for such Shareholder in connection with this Agreement or the transactions
contemplated hereby, and no broker or finder is entitled to any brokerage or
finder's fee or other commissions in
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respect of such transactions based upon agreements, arrangements or
understandings made by or on behalf of such Shareholder. The Shareholders have
not incurred any obligation on their behalf or on behalf of the Company to Punk,
▇▇▇▇▇▇ & Co. which has not been paid.
3. REPRESENTATIONS OF THE SHAREHOLDERS REGARDING THE COMPANY
Each of the Shareholders, jointly and severally, represent and warrant
to the Buyer that:
3.01 ORGANIZATION. The Company is a private company limited by shares
duly incorporated, validly existing and in good standing under the laws of
England, and has all requisite power and authority (corporate and other) to own
its properties, to carry on its business as now being conducted, to execute and
deliver this Agreement and the agreements contemplated herein, and to consummate
the transactions contemplated hereby and thereby. The Company is duly qualified
to do business in all jurisdictions in which its ownership of property or the
character of its business requires such qualification. Certified copies of the
Certificate of Incorporation, Memorandum of Association and Articles of
Association of the Company, as amended to date, have been previously delivered
to the Buyer, are complete and correct, and no amendments have been made thereto
or have been authorized since the date thereof.
3.02 CAPITALIZATION OF THE COMPANY.
The Company's authorized share capital is GBP1,000 divided into 980 ordinary
shares and 20 `A' ordinary shares all of GBP1 each, of which 120 ordinary
shares and 20 `A' ordinary shares are issued on the date hereof and legally and
beneficially held by the Shareholders as set forth in SCHEDULE I. All such
issued shares have been and on the Closing Date will be duly and validly issued
and are, or will be on such date, fully paid. Except as set forth in SCHEDULE
3.02 attached hereto, there are not, and on the Closing Date there will not be,
outstanding (i) any options, warrants or other rights to purchase from the
Company any share capital or other equity interest of the Company; (ii) any
securities convertible into or exchangeable for shares; or (iii) any other
commitments of any kind for the issuance of additional share capital or options,
warrants or other securities of the Company.
3.03 SUBSIDIARIES.
(a) SCHEDULE 3.03 attached hereto sets forth:
(1) The name and percentage ownership by the Company of
each corporation, partnership, joint venture or other entity in which the
Company has, directly or indirectly, an equity interest representing 50% or more
of the share capital thereof or other equity
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interests therein (individually, a "Subsidiary" and, collectively, the
"Subsidiaries");
(2) the jurisdiction of incorporation, capitalization and
ownership of each Subsidiary;
(3) the names of the officers and directors of each
Subsidiary; and
(4) the jurisdictions in which each Subsidiary is qualified
or holds licenses to do business as a foreign corporation.
(b) Except as set forth in SCHEDULE 3.03 (which shall, among
other required information, name all shareholders other than the Company), the
Company owns of record and beneficially all of the issued share capital of each
of the Subsidiaries free and clear of all covenants, conditions, restrictions,
liens, charges and encumbrances.
(c) Each of the Subsidiaries is duly incorporated and the
Company's United States Subsidiary is a corporation duly organized and validly
existing and in good standing under the laws of the state or country of its
incorporation or organization and each of the Subsidiaries has all requisite
power and authority to own its properties and carry on its business as now being
conducted. Each of the Subsidiaries is duly qualified to do business (and the
United States Subsidiary is in good standing) in all jurisdictions in which its
ownership of property or the character of its business requires such
qualification. Certified copies of the Certificate of Incorporation, bylaws (or
equivalent documents) and other governing instruments of the Subsidiaries, each
as amended to date, have been previously delivered to the Buyer, are complete
and correct, and no amendments have been made thereto or have been authorized
since the date of such delivery. The Company does not own any share of or other
equity interest in any corporation, partnership or other entity, other than the
Subsidiaries. The share capital of each Subsidiary as set forth in Schedule 3.03
has been duly and validly issued and is fully paid and, where applicable,
non-assessable.
(d) Except as set forth in SCHEDULE 3.03, none of the
Subsidiaries holds share capital in its treasury, and there are not outstanding
(i) any options, warrants or other rights with respect to the share capital of
any of the Subsidiaries, (ii) any securities convertible into or exchangeable
for share capital, or (iii) any other commitments of any kind for the issuance
of additional share capital or options, warrants or other securities of any of
them.
3.04 AUTHORIZATION. The execution and delivery of this Agreement and
the agreements provided for herein, and the consummation of all transactions
contemplated hereunder and thereunder, have been duly authorized by all
requisite corporate and other action
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15
on the part of the Shareholders, the Company and the Subsidiaries. This
Agreement has been duly executed by the Shareholders. This Agreement and all
other agreements and obligations entered into and undertaken in connection with
the transactions contemplated hereby to which the Company or any of the
Shareholders is a party constitute the valid and legally binding obligations of
the Company and the Shareholders, enforceable against them in accordance with
their respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, state debtor and creditor laws, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, and to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity). The execution, delivery and performance by the
Shareholders of this Agreement and the agreements provided for herein, and the
consummation by the Shareholders of the transactions contemplated hereby and
thereby, will not, with or without the giving of notice or the passage of time
or both, (a) violate the provisions of any law, rule or regulation applicable to
the Company or any of the Shareholders; (b) violate the provisions of the
Certificate of Incorporation, Memorandum of Association or Articles of
Association of the Company; (c) violate any judgment, decree, order or award of
any court, governmental body or arbitrator; or (d) conflict with or result in
the breach or termination of any term or provision of, or constitute a default
under, or cause any acceleration under, or cause the creation of any lien,
charge or encumbrance upon the properties or assets of the Company pursuant to,
any indenture, mortgage, deed of trust or other instrument or agreement to which
the Company is a party or by which the Company or any of its properties is or
may be bound. SCHEDULE 3.04 attached hereto sets forth a true, correct and
complete list of all consents and approvals of third parties that are required
in connection with the consummation by the Company of the transactions
contemplated by this Agreement.
3.05 FINANCIAL STATEMENTS.
(a) The Shareholders have previously delivered to the Buyer the
audited balance sheet of each of the Company, Conduit Communications Limited and
Conduit Business Information Limited as of June 30, 1998 (the "Audited Balance
Sheet"), and the audited statements of operations and changes in shareholders'
equity of each of the Company, Conduit Communications Limited and Conduit
Business Information Limited for the year then ended, together with the
directors reports and other documents required by law to be annexed thereto and
the reports thereon by the auditors of the Company (collectively, the "Audited
Financial Statements"). The Shareholders have also previously delivered to the
Buyer the unaudited management accounts of Conduit Communications, Inc.'s Boston
branch and New York Branch as at June 30, 1998 and for the year then ended, the
unaudited consolidated management accounts of Conduit Communications Limited as
of April 30, 1999, and for the ten-month period then ended, and the unaudited
management accounts of the Company and Entropy (CMG) II Limited as of May 31,
1999 and for the eleven-month period then ended (together, the
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16
"Management Accounts"). The Audited Financial Statements and the Management
Accounts (collectively, the "Financial Statements") have been prepared in
accordance with U.K. generally accepted accounting principles applied
consistently with past practices and, in the case of the Audited Financial
Statements, have been certified without qualification by ▇▇▇▇▇▇▇ Wales ▇▇▇▇▇▇▇▇,
Chartered Accountants, the Company's independent public accountants, and, in the
case of the Management Accounts, have been certified by the Company's chief
financial officer. The date of the Audited Balance Sheet is hereinafter referred
to as the "Balance Sheet Date."
(b) The Financial Statements fairly present, as of their
respective dates, the financial condition, retained earnings, assets and
liabilities of the Company and the Subsidiaries and the results of operations of
the Company's and the Subsidiaries' business for the periods indicated. With
respect to contracts and commitments for the provision of services by the
Company and the Subsidiaries, the Financial Statements contain and reflect
adequate reserves, which are consistent with previous reserves taken, for all
reasonably anticipated material losses and costs and expenses. The amounts shown
as accrued for current and deferred income and other taxes in the Financial
Statements are sufficient for the payment of all accrued and unpaid federal,
state and local income taxes, interest, penalties, assessments or deficiencies
applicable to the Company or any Subsidiary, whether disputed or not, for the
applicable period then ended and periods prior thereto.
3.06 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
(a) reflected and reserved against in the Financial Statements, (b) set forth on
SCHEDULE 3.06 attached hereto, or (c) incurred in the ordinary course of
business after the date of the Financial Statements, and not material in amount,
either individually or in the aggregate, neither the Company nor any of the
Subsidiaries has any liability or obligation, secured or unsecured, whether
accrued, absolute, contingent, unasserted or otherwise, which is material to the
condition (financial or otherwise) of the assets, properties, business or
prospects of the Company and the Subsidiaries taken as a whole. For purposes of
this Subsection 3.06, "material" means any amount in excess of GBP50,000.
3.07 LITIGATION. Except as set forth on SCHEDULE 3.07 attached hereto
(a) there is no action, suit or proceeding to which the Company or any of the
Subsidiaries is a party (either as a plaintiff or defendant) pending or, to the
best knowledge of the Shareholders, threatened before any court or governmental
agency, authority, body or arbitrator and, to the best knowledge of the
Shareholders, there is no basis for any such action, suit or proceeding; (b)
neither the Company nor any of the Subsidiaries, nor, to the best knowledge of
the Shareholders, any officer, director or employee of any of the foregoing, has
been permanently or temporarily enjoined by any order, judgment or decree of any
court or any governmental agency, authority or body from engaging in or
continuing any conduct or practice in connection with the business, assets, or
properties of the Company or any of the Subsidiaries; and (c) there is not in
existence
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17
on the date hereof any order, judgment or decree of any court, tribunal or
agency enjoining or requiring the Company or any of the Subsidiaries to take any
action of any kind with respect to its business, assets or properties.
3.08 INSURANCE. SCHEDULE 3.08 attached hereto sets forth a true,
correct and complete list of all fire, theft, casualty, general liability,
workers compensation, business interruption, environmental impairment, product
liability, automobile and other insurance policies maintained by the Company or
any of the Subsidiaries and of all life insurance policies maintained on the
lives of any of their employees, specifying the type of coverage, the amount of
coverage, the premium, the insurer and the expiration date of each such policy
(collectively, the "Insurance Policies") and all claims made under such
Insurance Policies since January 1, 1998. True, correct and complete copies of
all Insurance Policies have been previously delivered by the Shareholders or the
Company to the Buyer. The Insurance Policies are in full force and effect and
are in amounts of a nature which are adequate and customary for the Company's
and the Subsidiaries' business. All premiums due on the Insurance Policies or
renewals thereof have been paid or are accrued on the Financial Statements, and
there is no default under the Insurance Policies. Except as set forth on
SCHEDULE 3.08, neither the Company nor any of the Subsidiaries has received any
notice or other communication from any issuer of the Insurance Policies since
January 1, 1998 canceling or materially amending any of the Insurance Policies,
materially increasing any deductibles or retained amounts thereunder, or
materially increasing the annual or other premiums payable thereunder, and, to
the best knowledge of the Shareholders, no such cancellation, amendment or
increase of deductibles, retainages or premiums is threatened. Except as set
forth on SCHEDULE 3.08, neither the Company nor any of the Subsidiaries has any
outstanding claims or any dispute with any insurance carrier regarding claims,
settlements or premiums and neither the Company nor any of the Subsidiaries has
failed to give any notice or present any claim under any Insurance Policy in due
and timely fashion. There are no outstanding requirements or recommendations by
any issuer of the Insurance Policies or by any governmental authority exercising
similar functions which requires or recommends any changes in the conduct of the
business of, or any repairs or other work to be done on or with respect to any
of the properties or assets of, the Company or any of the Subsidiaries.
3.09 PERSONAL PROPERTY. SCHEDULE 3.09 attached hereto sets forth (i) a
true, correct and complete list of all items of tangible personal property owned
by the Company or any of the Subsidiaries as of the date hereof having either a
net book value per unit or an estimated fair market value per unit in excess of
GBP300; or not owned by the Company or any Subsidiary but in the possession
of or used in the business of the Company or any of the Subsidiaries and having
rental payments therefor in excess of GBP250 per month or GBP3,000 per
year (collectively, the "Personal Property"); and (ii) a description of the
owner of, and any agreement relating to the use of, each item of Personal
Property not owned by the Company or a Subsidiary and the circumstances under
which such Property is used. Except as disclosed in SCHEDULE 3.09:
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18
(a) the Company or the relevant Subsidiary, as the case may be,
has good and marketable title to each item of that Personal Property which is
not leased free and clear of all liens, leases, encumbrances, claims under
bailment and storage agreements, equities, conditional sales contracts, security
interests, charges and restrictions, except for liens, if any, for personal
property taxes not due;
(b) no officer, director, Shareholder or employee of the Company
or any Subsidiary, nor any spouse, child or other relative or affiliate thereof,
owns directly or indirectly, in whole or in part, any of the Personal Property
described in SCHEDULE 3.09;
(c) each item of Personal Property not owned by the Company or a
Subsidiary is in such condition that upon the return of such property to its
owner in its present condition at the end of the relevant lease term or as
otherwise contemplated by the applicable agreement between the Company or the
relevant Subsidiary, as the case may be, and the owner or lessor thereof, the
obligations of the Company or the relevant Subsidiary, as the case may be, to
such owner or lessor will be discharged;
(d) the Personal Property is in good operating condition and
repair, normal wear and tear excepted, is currently used by either the Company
or the relevant Subsidiary in the ordinary course of its business and normal
maintenance has been consistently performed with respect to the Personal
Property; and
(e) the Company and the Subsidiaries own or otherwise have the
right to use all of the Personal Property now used in the operation of their
business or the use of which is necessary for or useful in the performance of
any material contract, letter of intent or proposal to which any of them is a
party.
3.10 INTANGIBLE PROPERTY. SCHEDULE 3.10 attached hereto sets forth:
(i) a true, correct and complete list and, where appropriate, a description of,
all items of intangible property owned by, or used or useful in connection with
the business of, the Company or any of the Subsidiaries, including, but not
limited to, trade secrets, know-how, any other confidential information of the
Company, United States, United Kingdom and other patents, trade names,
trademarks, trade name and trademark registrations, copyrights and copyright
registrations, and applications for any of the foregoing (the "Intangible
Property"); and (ii) a true, correct and complete list of all licenses or
similar agreements or arrangements to which the Company or any of the
Subsidiaries is a party, either as licensee or licensor, with respect to the
Intangible Property. Except as otherwise disclosed in SCHEDULE 3.10:
(a) so far as the Shareholders are aware, the Company or a
Subsidiary
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19
is the sole and exclusive owner of all right, title and interest in and to the
Intangible Property and all designs, permits, labels and packages used on or in
connection therewith, free and clear of all liens, security interests, charges,
encumbrances, equities or other adverse claims;
(b) so far as the Shareholders are aware, the Company or the
relevant Subsidiary has the right and authority to use, and to continue to use
after the Closing, the Intangible Property in connection with the conduct of its
business in the manner presently conducted, and such use or continuing use does
not and will not conflict with, infringe upon or violate any rights of any other
person, corporation or entity;
(c) neither the Company nor any of the Shareholders has received
notice of, or has any knowledge of any basis for, a pleading or threatened
claim, interference action or other judicial or adversarial proceeding against
the Company that any of the operations, activities, products, services or
publications of the Company or any of its customers or distributors infringes or
will infringe any patent, trademark, trade name, copyright, trade secret or
other property right of a third party, or that it is illegally or otherwise
using the trade secrets, formulae or property rights of others;
(d) there are no outstanding, nor to the best knowledge of the
Shareholders, any threatened disputes or other disagreements with respect to any
licenses or similar agreements or arrangements described in SCHEDULE 3.10 or
with respect to infringement by a third party of any of the Intangible Property;
(e) the Intangible Property owned or licensed by the Company or
the relevant Subsidiary is sufficient to conduct the Company's or the relevant
Subsidiary's business as presently conducted;
(f) no present or former officer, director, shareholder,
employee or independent contractor of the Company or any Subsidiary, nor any
spouse, child or other relative or affiliate thereof, owns directly or
indirectly, in whole or in part, any of the Intangible Property; and
(g) Neither the Company nor the relevant Subsidiary nor any
Shareholder has any knowledge that any third party is infringing, or will
threaten to infringe, upon or otherwise violate any of the Intangible Property
in which the Company or any Subsidiary has ownership rights.
3.11 LEASES. SCHEDULE 3.11 attached hereto sets forth (a) a true,
correct and complete list as of the date hereof of all leases of real property,
identifying separately each ground lease, to which the Company or any of the
Subsidiaries is a party (collectively, the
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20
"Leases"). True, correct and complete copies of all Leases and all amendments,
modifications and supplemental agreements thereto, have previously been
delivered by the Shareholders or the Company to the Buyer. The Leases are in
full force and effect, are binding and enforceable against each of the parties
thereto in accordance with their respective terms and, except as set forth on
SCHEDULE 3.11, have not been modified or amended since the date of delivery to
the Buyer. No party to any Lease has sent written notice to the other claiming
that such party is in default thereunder and that such default remains uncured.
Except as set forth on SCHEDULE 3.11, there has not occurred so far as the
Shareholders are aware any event which would constitute a material breach of or
default in the performance of any covenant, agreement or condition contained in
any Lease, nor so far as the Shareholders are aware has there occurred any event
which with the passage of time or the giving of notice or both would constitute
such a breach or material default. Neither the Company nor any of the
Subsidiaries is obligated to pay any leasing or brokerage commission relating to
any Lease and, except as set forth on SCHEDULE 3.11, will not have any
obligation to pay any leasing or brokerage commission upon the renewal of any
Lease. Except as set forth on SCHEDULE 3.11, no construction, alteration or
other leasehold improvement work with respect to any of the Leases remains to be
paid for or to be performed by the Company or any of the Subsidiaries. Except as
provided on SCHEDULE 3.11, the Financial Statements contain adequate reserves to
provide for the restoration of the property subject to the Leases at the end of
the respective Lease terms, to the extent required by the Leases. Except as
provided on SCHEDULE 3.11, there are no disputes, oral agreements, forfeiture
proceedings or forbearance programs in effect as to any Lease or Sublease.
3.12 REAL ESTATE.
(a) SCHEDULE 3.12A attached hereto contains a true, correct and
complete list of (i) the addresses and legal descriptions of all real property
owned by the Company or any Subsidiary (the "Real Estate"), and (ii) all
mortgages, charges, liens, debentures, leases, underleases or tenancies, or, to
the knowledge of the Shareholders (which shall be deemed to include any matter
of public record), any other adverse rights, conditions, privileges, easements,
quasi-easements, overriding claims, options, rights of pre-emption, covenants,
restrictions, exceptances, reservations or interests, claims and any matters or
things registered or capable of registration in any Registry affecting the Real
Estate (collectively, the "Exceptions"). On the Closing Date, the Company or the
relevant Subsidiary will have good, clear, registered and marketable title to
the Real Estate and is the beneficial and legal owner in exclusive possession of
the estates or interests in the Real Estate specified in SCHEDULE 3.12A free
from any mortgage, charge, lien, debenture, lease, underlease, tenancy adverse
right, condition, privilege, easement, quasi-easement, overriding claim, option,
right of pre-emption, covenant, restriction, exceptance, reservation or
interest, claim and any matters or things registered or capable of registration
in any Registry, free and clear of all Exceptions, other than the permitted
exceptions set forth on SCHEDULE 3.12B (the "Permitted Exceptions"), and the
Company is in a position
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21
without incurring any liabilities thereby to sell each parcel of Real Estate
with a full title guarantee for the purposes of the Law of Property
(Miscellaneous Provisions) ▇▇▇ ▇▇▇▇. There are appurtenant to each of the Real
Estate all rights and easements necessary for its current use and enjoyment
(without restriction as to time or otherwise).
(b) Copies of all material documents relating to each of the
Real Estate have been supplied to the Buyer's Solicitors prior to the date
hereof and the written replies to the written enquiries of the Buyer's
Solicitors relating to the Real Estate are true complete and accurate in all
respects.
(c) The Company does not by its use or occupation of the Real
Estate or any of them contravene any lease or other right under which it
occupies the same and/or any requirement or restriction having the force of law
and has complied with all covenants conditions restrictions statutory and other
requirements bye laws orders and regulations (including, without limitation, any
imposed by or pursuant to the Planning Acts (as defined in Section 336 of the
Town and Country Planning Act 1990) or any Building Acts or Regulations)
affecting each Real Estate, to the extent such failure materially affects the
Real Estate or the Company's use, occupation or powers of disposal of the same.
(d) No notices orders proposals applications requests or
schedules of dilapidations affecting or relating to any of the Real Estate have
been served or to the knowledge of the Shareholders made by any authority or
other person or by the Company and there are no circumstances which are likely
to result in any being served or made.
(e) There exists no dispute between the Company and the landlord
or the tenant or occupier of the Real Estate or any of them or any part thereof
or the owner or occupier of any other premises adjacent to any of the Real
Estate and the Shareholders are not aware of any circumstances which may give
rise to any such dispute.
(f) The buildings and other structures on the Real Estate are in
good and substantial repair and fit for the purpose for which they are used and,
so far as the Shareholders are aware, there is no material defect in the
construction or condition of any of the Real Estate and no dangerous or
deleterious materials have been used in the construction thereof.
(g) The Real Estate is not subject to any leasehold interest
other than in favor of Conduit Communications Limited.
(h) There is no outstanding monetary claim or liability
contingent or otherwise affecting the Real Estate and (in the case of leasehold
property) there are no rent reviews in the course of being determined or
exercisable by the landlord from a date prior to
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22
Completion.
(i) All documents necessary to prove the title of the Company to
each of the Real Estate or which relate to the Company's title to the same have
been duly registered where necessary and are now in the exclusive possession or
under the exclusive control of the Company free from any rights and interests of
any third parties.
(j) Save for the Real Estate the Company does not own occupy or
otherwise use or have any interest in any land or buildings of freehold
leasehold or other tenure and the Company has no liability (existing or
contingent) in respect of any such land or building previously owned occupied or
otherwise used by it or in which it had an interest.
(k) Except as set forth on SCHEDULE 3.12A, no work has been
performed on or materials supplied to the Real Estate within any applicable
statutory period which could give rise to mechanics or materialman's liens.
(l) There is no pending or threatened condemnation or eminent
domain proceeding with respect to the Real Estate.
(m) Except as set forth on SCHEDULE 3.12A, there are no taxes or
betterment assessments other than ordinary real estate taxes pending or payable
against the Real Estate and there are no contingencies existing under which any
assessment for real estate taxes may be retroactively filed against the Real
Estate, and there are no taxes or levies, permit fees or connection fees which
must be paid respecting existing curb cuts, sewer hookups, water-main hookups or
services of a like nature.
(n) The Real Estate is legally subdivided and consists of
separate tax lots so that it is assessed separate and apart from any other
property.
(o) Except as set forth on SCHEDULE 3.12A, all utility systems
serving the Real Estate, public or private, are in good operating condition, all
installation charges therefor have been fully paid and all service charges
therefor have been or will be paid by the Company or the relevant Subsidiary up
to and including the Closing Date. Since January 1, 1998, neither the Company
nor any of the Subsidiaries has experienced any material interruption in the
delivery of adequate quantities of any utilities (including, without limitation,
electricity, natural gas, potable water, water for cooling or similar purposes
and fuel oil) or other public services (including, without limitation, sanitary
and industrial sewer service) required in the operation of its business during
such period.
(p) Except as set forth on SCHEDULE 3.12A, the Real Estate is
not
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23
located in any special flood hazard area designated by any governmental agencies
having jurisdiction over the Real Estate (collectively, the "Governmental
Agencies").
(q) The Real Estate complies with the requirements of all
building, zoning, subdivision, health, safety, environmental, pollution control,
waste products, sewage control and all other applicable statutes, laws, codes,
ordinances, rules, orders, regulations and decrees (collectively, the
"Governmental Regulations") of any and all Governmental Agencies. The Company
and its Subsidiaries have obtained, and the Shareholders or the Company have
previously provided the Buyer with copies of, all consents, permits, licenses
and approvals required by such Governmental Regulations. Such consents, permits,
licenses and approvals are in full force and effect and have been properly and
validly issued. There is no action pending or, so far as the Shareholders are
aware, threatened by any Governmental Agencies claiming that the Real Estate
violates any Governmental Regulations or threatening to shut down the business
of the Company or any of the Subsidiaries. There have been no releases of any
chemicals, pollutants or contaminants, hazardous substances, solid wastes and
hazardous wastes, toxic materials, oil or petroleum and petroleum products into
the environment at any parcel of real property or any facility formerly or
currently owned, operated or controlled by the Company or a Subsidiary.
(r) There are no suits, petitions, notices or proceedings
pending, given or so far as the Shareholders are aware threatened by any persons
or Governmental Agencies before any court, Governmental Agencies or
instrumentalities, administrative or otherwise, which if given, commenced or
concluded would have an adverse effect on the Company's title to the Real Estate
or the operation of the business of the Company or any Subsidiary as presently
operated.
(s) Neither the Company nor any of the Subsidiaries has received
notice from any insurer of the Real Estate threatening to cancel any insurance
coverage or requiring any changes or corrective work to the Real Estate which
has not been satisfied.
(t) All of the buildings, fixtures and other improvements
located on the Real Estate are in good operating condition and repair, and the
operation thereof as presently conducted is not in violation of any applicable
building code, zoning ordinance or other law or regulation.
(u) SCHEDULE 3.12A sets forth a true, correct and complete list
of all title insurance policies, surveys engineering reports and hazardous waste
reports prepared with respect to the Real Estate since January 1, 1996, copies
of which have previously been delivered by the Shareholders or the Company to
the Buyer.
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24
(v) No employee or consultant of the Company or any Subsidiaries
occupies any Real Estate on terms other than as a licensee and on condition that
on cessation of his employment or engagement as agent or consultant (as the case
may be) by the Company or any subsidiary (for whatsoever reason) he shall vacate
such Real Estate. No such employee, agent or consultant has any security of
tenure of any Real Estate.
3.13 [Intentionally omitted].
3.14 ACCOUNTS RECEIVABLE. SCHEDULE 3.14 attached hereto sets forth a
true, correct and complete list of the accounts and notes receivable of the
Company and the Subsidiaries (the "Accounts Receivable"), including the aging
thereof as of April 30, 1999. All Accounts Receivable arose out of the sales of
services in the ordinary course of business and, so far as the Shareholders are
aware, are collectible in the face value thereof within 90 days after the date
of invoice, using normal collection procedures, net of the reserve for doubtful
accounts included in the Financial Statements, which reserve is adequate and was
calculated in accordance with generally accepted accounting principles
consistently applied.
3.15 TAX MATTERS.
(a) Except as set forth on SCHEDULE 3.15 attached hereto:
(1) Within the times and in the manner prescribed by law,
the Company and each of the Subsidiaries have filed all tax returns for
governing bodies having jurisdiction to levy taxes upon them which are required
to be filed;
(2) The Company and each of the Subsidiaries have paid all
taxes, customs duties, imposts, interest, fines, penalties, assessments and
deficiencies which have become due or which have been claimed to be due by any
relevant taxing authority, including without limitation income, corporation, Pay
As You Earn, capital gains, customs, value added, franchise, real estate, stamp,
sales and withholding taxes and other employee benefits, taxes and imports;
(3) To the best knowledge of the Shareholders, all tax
returns filed by the Company and the Subsidiaries for the taxable years ended 30
June 1994 through 30 June 1998 (and for the taxable years ended December 31,
1996 through December 31, 1998 with respect to the U.S. Subsidiary) constitute
complete and accurate representations of the respective tax liabilities of the
Company and the Subsidiaries for such years and accurately set forth all items
(to the extent required to be included or reflected in such returns) relevant to
their future tax liabilities, including the tax bases of their properties and
assets and the corporation tax returns of the Company and each Subsidiary have
been agreed with the U.K. Inland Revenue;
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25
(4) Neither the Company nor any of the Subsidiaries has
waived or extended any applicable statute of limitations relating to the
assessment of taxes;
(5) Except as set forth on SCHEDULE 3.15, no examinations
of any tax returns of the Company or any of the Subsidiaries is currently in
progress nor, to the best knowledge of the Shareholders, threatened and no
deficiencies have been asserted or assessed against either the Company or any of
the Subsidiaries as a result of any audit by any taxing authority and no such
deficiency has been proposed or threatened.
(b) SCHEDULE 3.15 attached hereto sets forth those taxable years
for which the tax returns of the Company and the Subsidiaries have been reviewed
or audited by applicable taxing authorities and those tax years for which said
tax returns have received clearances or other indications of approval from
applicable taxing authorities. To the best knowledge of the Shareholders, no
issue or issues have been raised in connection with any prior or pending review
or audit of said tax returns which the Shareholders reasonably believe may be
expected to be raised in the future by such taxing authorities in connection
with the audit or review of the tax returns of the Company or any of the
Subsidiaries.
(c) Except as set forth on SCHEDULE 3.15, each of the Company
and the Subsidiaries is a registered and taxable person for the purposes of
Value Added Tax, has complied with the requirements of the Value Added Tax ▇▇▇
▇▇▇▇ and all applicable regulations or notices made or issued thereunder, is not
in arrears with any payments or returns due, has maintained full, complete,
correct and up to date records, invoices and other documents (as the case may
be) appropriate or requisite for the purposes thereof, is not liable to any
abnormal or non-routine payment or any forfeiture or penalty or to the operation
of any penal provision and has not been required by the Commissioners of Customs
and Excise to give security.
(d) Neither the Company nor any Subsidiary is or at any time has
been or been treated as a member of a group of companies or consortium or
associated with any company for the purposes of Section 43 of the Value Added
Tax Act 1994 and no application for it to be so treated has at any time been
made.
(e) Each of the Company and the Subsidiaries has properly
operated the Pay As You Earn System and has deducted tax as required by law from
all payments from which it is required to deduct tax whether made to its
employees or ex-employees or any persons required to be treated as such and
accounted to the Inland Revenue therefor and for all tax chargeable on benefits
provided for officers and employees.
(f) Save as disclosed in the tax returns, neither the Company
nor any
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26
Subsidiary has made any payment to or provided any benefit for any officer or
employee of the Company or any Subsidiary which is not allowable as a deduction
in calculating the profits of the Company and the Subsidiaries for taxation
purposes.
(g) All National Insurance contributions (both employer's and
employee's) in respect of employees, officers of the Company and the
Subsidiaries and any person(s) who should have been treated as such for these
purposes have been duly and promptly paid.
(h) Save as disclosed in the tax returns since the Balance Sheet
Date neither the Company nor any Subsidiary has made and neither the Company nor
any Subsidiary is subject to any present or future liability to make or provide
any payment or consideration which could be disallowed as a deduction in
computing the profits of the Company and the Subsidiaries or as a charge on the
Company's or any Subsidiary's income for taxation purposes.
(i) Neither the Company nor any Subsidiary has made any
borrowings in a foreign currency such that on repayment a charge to corporation
tax might arise on any profit or gain accruing in relation or by reference to
any such repayment.
(j) On a sale of any fixed asset (including, without limitation,
machinery and plant) at the value thereof shown in the Financial Statements no
balancing charge for the purposes of the Capital Allowances Act 1990 will be
incurred which has not been taken into account for deferred tax purposes as
required by U.K. GAAP.
(k) Except to the extent there is a deferred tax provision the
book value of each of the chargeable assets for capital gains purposes of the
Company and the Subsidiaries in or adopted for the purpose of the Financial
Statements does not exceed the amount deductible pursuant to Section 38 of the
Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇ ("TCGA") and is such that on the disposal
or deemed disposal of the assets (or any of them) at that value no chargeable
gain would arise, accrue or crystallise as required by U.K. GAAP.
(l) Neither the Company nor any Subsidiary has made any disposal
which has required or would or might require any computation under Section 42 of
the TCGA.
(m) Neither the Company nor any Subsidiary has disposed of or
acquired any asset such that Section 17 of the TCGA might apply in determining
the consideration given or received on such disposal or acquisition.
(n) Neither the Company nor any Subsidiary has been a party to
or involved in any scheme effected or arrangement made whereby on a disposal of
an asset by the
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27
Company or any Subsidiary Sections 29 and 30 of the TCGA may be applicable.
(o) Neither the Company nor any Subsidiary has made any claim
under the provisions of any of Sections 247 or 152(1) or 153 of the TCGA or
Section 165 of the TCGA or Section 175 of the TCGA.
(p) Neither the Company nor any Subsidiary has been a party to
or a member of a group of companies which has undertaken any share for share
exchange or any scheme of amalgamation or reconstruction such as are mentioned
in Sections 135 or 136 of the TCGA or Section 139 of the TCGA or Section 343 of
the Taxes ▇▇▇ ▇▇▇▇.
(q) Neither the Company nor any Subsidiary at any time has been
a party to any transfer of business or chargeable assets for capital gains
purposes between any company belonging at the time of transfer to any other
company in the same group of companies as the Company and the Subsidiaries
within the meaning of Section 170 of the TCGA nor has it been the principal
company (as defined in that Section) of any group of companies a member of which
has been a party to such a transaction.
(r) Neither the Company nor any Subsidiary has made any such
transfer as is referred to in Section 125 of the TCGA or received any asset by
way of gift as mentioned in Section 282 of the TCGA.
(s) No distribution within the meaning of any of Sections 209,
210, 211 and 418 of the Taxes Act 1988 has been made or will be deemed to have
been made by the Company or any Subsidiary (except for dividends and interest
shown in the Financial Statements and the previous audited accounts of the
Company and the Subsidiaries) nor has the Company or any Subsidiary issued any
securities within the meaning of Part VI of the Taxes Act 1988 which remain in
issue and where the interest payable thereon falls to be treated as a
distribution.
(t) Except as set forth on SCHEDULE 3.15, neither the Company
nor any Subsidiary has at any time:
(i) reduced its share capital or repurchased, repaid or
redeemed shares of any class of its share capital or capitalised any profits or
reserves or share premium account in the form of, or in paying up any amounts
unpaid on, any shares, debentures or other securities or agreed or resolved to
do any of the foregoing; or
(ii) provided capital to any company on terms whereby the
company so capitalised has in consideration thereof issued shares, loan stock or
other securities where the terms of any such capitalization were otherwise than
by way of a bargain made at
-22-
28
arms' length or where the shares, loan stock or other securities acquired are
shown in the Financial Statements at a value in excess of their market value at
the time of acquisition.
(u) Neither the Company nor any Subsidiary has entered into
any transaction which has given or will or may give rise to a charge to taxation
under the provisions of the Inheritance Tax ▇▇▇ ▇▇▇▇.
(v) Neither the Company nor any Subsidiary has ever
obtained relief from stamp duty under Section 42 of the Finance ▇▇▇ ▇▇▇▇ or
Sections 75 to 77 (inclusive) of the Finance ▇▇▇ ▇▇▇▇ which has become liable to
forfeiture or may be forfeited in the future.
(w) All documents in the possession of the Company or any
of the Subsidiaries to which the Company or any Subsidiary is a party which
relate to or are necessary to prove the title of the Company or any Subsidiary
to its assets have been properly stamped and no such documents which are outside
the United Kingdom would attract stamp duty if they were brought into the United
Kingdom and all transactions to which the Company or any Subsidiary is/was a
party and relating to chargeable securities of the Company or any Subsidiary
have been completed by duly stamped documents of transfer within the meaning of
Section 87(5) of the Finance ▇▇▇ ▇▇▇▇ and neither the Company nor any Subsidiary
is liable to stamp duty reserve tax.
(x) Neither the Company nor any Subsidiary is under any
present or future liability to make and has not since the Balance Sheet Date
made or received or surrendered or purported to receive or surrender any amount
by way of group relief (under any of the provisions of Sections 402, 403 and 407
to 413 (inclusive) of the Income and Corporation ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ("▇▇▇▇▇ ▇▇▇
▇▇▇▇")) or by way of advance corporation tax (under Section 240 of the Taxes Act
1988) or made any payment for such surrender nor made any election under Section
247 of the Taxes ▇▇▇ ▇▇▇▇.
(y) Neither the Company nor any Subsidiary is under any
actual liability to taxation in respect of any other company which at any time
has been a member of the same group or consortium as the Company and the
Subsidiaries or any associated company of the Company or any Subsidiary for
taxation purposes.
(z) There are no disputes or negotiations with H.M.
Treasury or the Inland Revenue present or pending in connection with Sections
739 to 742 (inclusive) of the Taxes ▇▇▇ ▇▇▇▇ or Section 770 of the Taxes Act
1988 and neither the Company nor any Subsidiary has ever transferred part or all
of any trade carried on outside the United Kingdom to a company not resident in
the United Kingdom.
-23-
29
(aa) Each of the Company and the Subsidiaries has only ever
been resident for taxation purposes in the United Kingdom, is not chargeable to
tax or similar duties or imposts in any jurisdiction other than the United
Kingdom and has not made and is not entitled to make any claim under Part XVIII
of the Taxes Act 1988 and has never had any permanent establishment in any other
country.
(bb) Neither the Company nor any Subsidiary has entered into
or been a party to any scheme or arrangement containing pre-ordained steps and
designed wholly for the purposes of avoiding or deferring taxation and no scheme
or transaction of any nature has been carried out by or proposed in relation to
the Company or any Subsidiary which has given rise to a charge to taxation under
Part XVII of the Taxes ▇▇▇ ▇▇▇▇.
(cc) Neither the Company nor any Subsidiary has become
liable for taxation nor received nor is adversely affected by any claim for
taxation arising under or imposed by or resulting from the operation of any of
Sections 703 to 709 (inclusive) of the Taxes ▇▇▇ ▇▇▇▇ (whether alone or in
conjunction with any other provisions of any applicable tax laws or regulations)
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 the Closing.
(dd) Each of the Company and the Subsidiaries is and has at
all times since incorporation been a close company for taxation purposes.
(ee) None of the Company or any Subsidiary is a "consenting
corporation" within the meaning of Section 341(f) of the United States Internal
Revenue Code of 1986, as amended (the "Code"), and none of the assets of the
Company or any Subsidiary are subject to an election under Section 341(f) of the
Code.
(ff) Neither the Company nor any Subsidiary is a party to
any Tax allocation or sharing agreement.
(gg) To the knowledge of the Shareholders, no claim exists
by a taxing authority in any jurisdiction that the Company or any Subsidiary is,
or may be, subject to Taxes assessed by such jurisdiction for any period in
which they did not file tax returns in such jurisdiction.
-24-
30
(hh) Neither the Company nor any Subsidiary has made any
payments, or is, or shall become, obligated (under any contract entered into on
or before the Closing Date) to make any payments, that shall be nondeductible
under Section 280G of the Code (or any corresponding provision of state, local
or foreign income Tax law).
(ii) Neither the Company nor any Subsidiary is and has ever
been a member of an "affiliated group" of corporations (within the meaning of
Section 1504 of the Code).
3.16 BOOKS AND RECORDS. The corporate and statutory books, general
ledgers and books of account of the Company and the Subsidiaries, and all tax
returns filed by the Company and the Subsidiaries are in all material respects
complete and correct. The Company and each of the Subsidiaries has complied with
the provisions of the Companies Act of 1985, as amended (the "Company Act"), and
all returns, particulars, resolutions and other documents required under any
legislation to be delivered on behalf of the Company or any Subsidiary to the
Registrar of Companies have been properly (and on or before the due date) made
and delivered.
3.17 CONTRACTS AND COMMITMENTS.
(a) SCHEDULE 3.17 attached hereto contains a true, complete and
correct list and description of the following contracts and agreements, whether
written or oral (collectively, the "Contracts"):
(1) all loan agreements, indentures, mortgages and
guaranties to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or any of their property is bound;
(2) all pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, personal property leases
and lease purchase agreements to which the Company or any of the Subsidiaries is
a party or by which the Company or any of the Subsidiaries or any of their
property is bound;
(3) all contracts, agreements, commitments, purchase orders
or other understandings or arrangements to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
any of their property is bound which (A) involve payments or receipts by the
Company or any of the Subsidiaries of more than GBP100,000 in the case of
any single contract, agreement, commitment, understanding or arrangement under
which full performance (including payment) has not been rendered by all parties
thereto or (B) which may materially adversely affect the condition (financial or
otherwise) or the properties, assets, business or prospects of the Company or
any of the Subsidiaries;
-25-
31
(4) all collective bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus plans, deferred
compensation agreements, pension plans, retirement plans, employee stock option
or stock purchase plans and group life, health and accident insurance and other
employee benefit plans, agreements, arrangements or commitments to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries or any of their property is bound;
(5) all contracts, agreements or other understandings or
arrangements between the Company and any of the Subsidiaries (including, but not
limited to, any tax sharing arrangements) or between the Company and any of the
Shareholders or their affiliates;
(6) all leases, whether operating, capital or otherwise,
under which the Company or any of the Subsidiaries is lessor or lessee;
(7) all contracts, agreements or other arrangements
imposing a non-competition or non-solicitation obligation on the Company or any
of its Subsidiaries; and
(8) any other material agreements or contracts entered into
by the Company or any of the Subsidiaries.
(b) Except as set forth on SCHEDULE 3.17:
(1) each Contract is a valid and binding agreement of the
Company or the relevant Subsidiary, enforceable against the Company or the
relevant Subsidiary in accordance with its terms, and the Company or the
relevant Subsidiary does not have any knowledge that any Contract is not a valid
and binding agreement of the other parties thereto;
(2) the Company or the relevant Subsidiary has fulfilled
all material obligations required pursuant to the Contracts to have been
performed by the Company or the relevant Subsidiary, as the case may be, on its
part prior to the date hereof, and the Company or the relevant Subsidiary, as
the case may be, has no reason to believe that it will not be able to fulfill,
when due, all of its obligations under the Contracts which remain to be
performed after the date hereof;
(3) the Company or the relevant Subsidiary is not in breach
of or default under any Contract, and no event has occurred which with the
passage of time or giving of notice or both would constitute such a default,
result in a loss of rights or result in the creation of any lien, charge or
encumbrance on the assets of the Company or the relevant
-26-
32
Subsidiary thereunder or pursuant thereto;
(4) to the best knowledge of the Shareholders, there is no
existing breach or default by any other party to any Contract, and no event has
occurred which with the passage of time or giving of notice or both would
constitute a default by such other party, result in a loss of rights or result
in the creation of any lien, charge or encumbrance thereunder or pursuant
thereto;
(5) there are not and, since January 1, 1996 have not been,
any claims of a non-routine nature relating to the Company or any Subsidiary by
customers of the Company or any of the Subsidiaries under any warranties,
whether express or implied; and
(6) the Company and the Subsidiaries are not restricted by
any Contract from carrying on their business anywhere in the world.
(c) True, correct and complete copies of all Contracts have
previously been delivered by the Company or the Shareholders to the Buyer.
(d) Neither the Company nor any Subsidiary has received notice
that (and no circumstances exist which may give rise to the service of such a
notice on the Company) it has been a party to any agreement, practice or
arrangement which in whole or in part: (a) contravenes, is subject to, or
requires registration under the Restrictive Trade Practices Act 1976 and 1977;
(b) contravenes the provisions of Part IX of the Fair Trading Act 1973 (the
"Fair Trading Act"); (c) would or might result in a reference of a "consumer
trade practice" within the meaning of Section 13 of the Fair Trading Act, or be
liable to a reference to the Consumer Protection Advisory Committee under Part
II of the Fair Trading Act; (d) contravenes the provisions of the Trade
Descriptions ▇▇▇ ▇▇▇▇ and 1972; (e) contravenes Articles 85 and 86 of the Treaty
of Rome; or (f) contravenes the provisions of the Consumer Credit ▇▇▇ ▇▇▇▇.
3.18 COMPLIANCE WITH AGREEMENTS AND LAWS.
(a) So far as the Shareholders are aware, the Company and the
Subsidiaries each have all requisite licenses, permits and certificates,
including environmental, health and safety permits, from all governmental
authorities necessary to conduct their respective business and own and operate
their respective assets (collectively, the "Permits"). SCHEDULE 3.18 attached
hereto sets forth a true, correct and complete list of all such Permits, copies
of which have previously been delivered by the Company or the Shareholders to
the Buyer. So far as the Shareholders are aware, neither the Company nor any of
the Subsidiaries is in violation of any law, regulation or ordinance (including,
without limitation, laws, regulations or ordinances relating to building,
zoning, environmental, disposal of hazardous substances, land use or similar
-27-
33
matters) relating to its properties. The business of the Company and the
Subsidiaries has not violated, and on the date hereof does not violate, in any
material respect, any laws, regulations or orders (including, but not limited
to, any of the foregoing relating to employment discrimination, occupational
safety, environmental protection, hazardous waste, conservation, or corrupt
practices), the enforcement of which would have a material adverse effect on the
results of operations, condition (financial or otherwise), assets, properties
business or prospects of the Company or any of the Subsidiaries. Except as set
forth on SCHEDULE 3.18, neither the Company nor any of the Subsidiaries has had
notice or communication from any governmental (including any regulatory)
authority or otherwise of any such violation or noncompliance. The Company and
each of the Subsidiaries has complied with the provisions of the Companies Act
of 1985, as amended (the "Company Act"), and all returns, particulars,
resolutions and other documents required under any legislation to be delivered
on behalf of the Company or any Subsidiary to the Registrar of Companies have
been properly (and on or before the due date) made and delivered.
(b) Neither the Company nor any of the Subsidiaries has received
notice of any violation of any law, ruling, order, decree, regulation, permit,
or other environmental or hazardous waste requirement applicable to the Company,
any of the Subsidiaries, or any of the Real Estate, or any part thereof,
relating to health, safety, pollution, hazardous waste, environmental or other
similar matters, which has not been entirely corrected and which has or will
have a material adverse impact on the transactions contemplated herein. Neither
the Company nor any of the Subsidiaries has received notice from any
governmental authority alleging any such violation in respect to any of the Real
Estate or any part thereof.
3.19 EMPLOYEE RELATIONS.
(a) The Company and each of the Subsidiaries is in compliance
with all laws and regulations respecting employment and employment practices,
terms and conditions of employment, and wages and hours, and is not engaged in
any unfair labor practice, and there are no arrears in the payment of wages or
social security taxes.
(b) Except as set forth on SCHEDULE 3.19 attached hereto:
(1) none of the employees of the Company or the
Subsidiaries is represented by any labor union, works council, staff association
or other body representing employees;
(2) there is no unfair labor practice complaint against the
Company or any of the Subsidiaries pending before any governmental authority;
(3) there is no pending labor strike or other material
labor
-28-
34
trouble affecting the Company or any of the Subsidiaries (including, without
limitation, any organizational drive);
(4) there is no material labor grievance pending against
the Company or any of the Subsidiaries;
(5) there is no pending representation question respecting
the employees of the Company or any of the Subsidiaries;
(6) there are no pending arbitration proceedings arising
out of or under any collective bargaining agreement to which the Company or any
of the Subsidiaries is a party, or to the best knowledge of the Shareholders,
any basis for which a claim may be made under any collective bargaining
agreement to which the Company or any of the Subsidiaries is a party; and
(7) neither the Company nor any of the Subsidiaries has any
continuing obligation for health, life, medical insurance or other similar
fringe benefits to any former employee of the Company or any Subsidiary.
(c) SCHEDULE 3.19 sets forth a true, correct and complete list
of the current payroll of the Company and the Subsidiaries, including the salary
or wage rates of each of their employees and independent contractors.
(d) Except as set forth on SCHEDULE 3.19, no employee has given
notice terminating his contract of employment or is under notice of dismissal or
has made or threatened any claim in connection with or arising from his or her
employment and there is no obligation or amount due to any employee in
connection with or arising from his or her employment which is in arrears or
unsatisfied other than his or her normal salary for the part of the month
current at the Closing.
(e) Except as set forth on SCHEDULE 3.19, there are no
outstanding negotiations relating to wages, salaries, bonuses or employee
benefits of any description between the Company or any Subsidiary and any
employees.
(f) Except as set forth on SCHEDULE 3.19, the contract of
employment of each employee of the Company or any Subsidiary may be terminated
by the Company or any Subsidiary without damages or compensation (other than
that payable by statute) by giving at any time the minimum period of notice
applicable to that contract which is specified in Section 49 of the Employment
Act.
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35
3.20 EMPLOYEE BENEFIT PLANS.
(A) EMPLOYEE PLANS. SCHEDULE 3.20 attached hereto contains a
true, correct and complete list of all stock options, stock purchase plans,
pension, benefit, profit sharing, retirement, deferred compensation, welfare,
insurance, disability, health, life, medical, bonus, vacation pay, severance pay
and other similar plans, programs and agreements, whether reduced to writing or
not, relating to the Company's employees, or maintained at any time since
January 1, 1996 by the Company or by any other member (hereinafter, "Affiliate")
of any controlled group of corporations, group of trades or businesses under
common control, or affiliated service group (as defined for purposes of Section
414(b), (c) and (m), respectively, of the United States Internal Revenue Code of
1986, as amended (the "Code")) (the Employee Plans") and, except as set forth on
SCHEDULE 3.20 attached hereto, the Company has no obligations, contingent or
otherwise, past or present, under applicable law or the terms of any Employee
Plan.
(b) Neither the Company nor any Subsidiary has any continuing
obligation for health, life, medical insurance or other similar fringe benefits
or for pensions or any other form of payment to any former employee of the
Company or any Subsidiary.
(c) Except as set forth on SCHEDULE 3.20, no loans other than in
respect of season travel tickets and memberships of health clubs none of which
exceed GBP500 per annum individually have been made by the Company or any
Subsidiary to any of its employees. Neither the Company nor any Subsidiary is
indebted, directly or indirectly, to any person who is a director or shareholder
of any affiliate of the Company or any Subsidiary in any amount whatsoever other
than for salaries for services rendered or reimbursable business expenses, and
no such director, shareholder or affiliate is indebted to the Company or any
Subsidiary except for advances made to employees of the Company or any
Subsidiary in the Ordinary Course of Business to meet reimbursable business
expenses anticipated to be incurred by such obligor.
(d) There are no claims against the Company or any Subsidiary
under the Transfer of Undertakings (Protection of Employment) Regulations 1981
or the Acquired Rights Directive.
(e) Neither the Company nor any Subsidiary is under any legal
obligation nor does it have any ex-gratia arrangement nor has it promised to pay
pensions, gratuities, superannuation allowances or the like to any of the
Company's or the Subsidiaries' employees or ex-employees.
(f) All contributions due to each of the employee's individual
pension arrangements, as detailed in Section 3.20 of the Disclosure Schedule,
from the Company have
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36
been paid through the Closing or are accrued for in the Financial Statements.
(g) In this Section 3.20:
"employee" includes any director or officer of the Company
and any former director or officer of the Company whether or not he is or was
employed under a contract of employment.
"Prescribed Benefit" means any pension, lump sum, gratuity
or other like benefit or any retirement, death, redundancy, termination of
employment, incapacity, sickness, disability, accident, hospital or medical
expenses benefit or other like benefit.
"the Personal Pension Arrangements" means the personal
pension arrangements (within the meaning of Chapter IV of Part XIV of the Taxes
Act) of the following employees of the Company:
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
"the Personal Pension Schemes" means the personal pension
schemes (within the meaning of Chapter IV of Part XIV of the Taxes Act) of the
providers under which the Personal Pension Arrangements have been made.
"Scheme" means the Death in Service Scheme of Conduit
Communications Limited insured with Signa.
"Taxes Act" means the Income and Corporation Taxes ▇▇▇ ▇▇▇▇.
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37
(h) Except pursuant to the Scheme and in relation to the
Personal Pension Arrangements, neither the Company nor any Subsidiary is under
any obligation or commitment (whether legally enforceable or not) to pay,
provide or contribute towards (whether now or in the future and whether under a
scheme or arrangement or not) and neither the Company nor any Subsidiary has
paid, provided or contributed towards, any Prescribed Benefit for or in respect
of any person. Neither the Company nor any Subsidiary has given any undertaking
or assurance (whether legally enforceable or not) as to the continuance,
introduction, improvement or increase of any Prescribed Benefit or any scheme or
arrangement for the provision thereof or as to the continuance of the Personal
Pension Arrangements or the Scheme or its contributions thereto.
(i) There is attached to Schedule 3.20 all material details
relating to the Personal Pension Schemes, the Personal Pension Arrangements and
any obligations of the Company or any Subsidiary to contribute thereto including
a list of the employees of the Company and the Subsidiaries in respect of which
the Company and the Subsidiaries make payments to any of the Personal Pension
Arrangements, showing opposite his name the amount of the contributions that the
Company or any Subsidiary make, the name of the provider of the Personal Pension
Scheme and the relevant policy or reference number.
The Personal Pension Schemes and each of the Personal
Pension Arrangements are and have at all material times been approved by the
Inland Revenue under Chapter IV of Part XIV of the Taxes Act.
Each of the Personal Pension Arrangements provides only
money purchase benefits (as defined in the Pension Schemes Act 1993) for the
beneficiaries of the Personal Pension Arrangement. Neither the Shareholders nor
the Company or any Subsidiary nor any person for whom any of them may be liable
has given any promise or assurance (oral or written and whether or not
enforceable) that any benefits under any of the Personal Pension Arrangements
will be calculated wholly or partly by reference to any person's remuneration or
equate (approximately or exactly) to any particular amount.
Neither the Company nor any Subsidiary has nor can have any
liability under or in connection with any of the Personal Pension Arrangements
except to make contributions thereto as shown on the list attached to Schedule
3.20 whilst the employees concerned remain employees of Conduit Communications
Limited or until earlier exercise of any right to terminate the contributions to
all of the Personal Pension Arrangements except those of ▇▇▇▇▇ ▇▇▇▇▇▇▇ at any
time.
All contributions in respect of the Personal Pension
Arrangements payable by Conduit Communications Limited or any Subsidiary in
respect of the period prior to
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38
Closing have been paid.
(j) THE SCHEME
(1) All material details relating to the Scheme are
contained in or attached to Schedule 3.20 including, but without limitation, a
copy of the governing documentation, any communications to employees, the
insurance policy, particulars of the premiums, contributions and expenses
payable and Inland Revenue approval letter.
(2) The Scheme is an exempt approved scheme within the
meaning of Section 592 of the Taxes Act. The Scheme complies and has at all
times been operated in accordance with its governing documents and all
applicable laws regulations and requirements (including those of the Inland
Revenue).
(3) Conduit Communications Limited is the only employer
which has participated in the Scheme and has complied with its obligations
thereunder. It may terminate its liability to pay contributions to the Scheme at
any time without the consent of any person.
(4) All contributions and expenses in respect of the Scheme
in respect of the period up to the Closing have been paid.
(5) The insurance policy held by the Scheme insures its
liabilities; all premiums that have fallen due for payment under such insurance
policy is enforceable and, so far as the Shareholders are aware, there is no
ground on which the insurers might avoid liability under it.
(6) There are no disputes or proceedings which relate to
the Scheme and none pending or threatened as far as the Shareholders are aware.
3.21 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on
SCHEDULE 3.21 attached hereto, since the Balance Sheet Date, neither the Company
nor any of the Subsidiaries has entered into any transaction which is not in the
usual and ordinary course of business, and, without limiting the generality of
the foregoing, neither the Company nor any of the Subsidiaries has:
(1) incurred any material obligation or liability for
borrowed money;
(2) discharged or satisfied any lien or encumbrance or paid
any
-33-
39
obligation or liability other than current liabilities reflected in the Current
Balance Sheet;
(3) mortgaged, pledged or subjected to lien, charge or
other encumbrance any of their respective properties or assets;
(4) sold or purchased, assigned or transferred any of its
tangible assets or cancelled any debts or claims, except for inventory sold and
raw materials purchased in the ordinary course of business;
(5) made any material amendment to or termination of any
Contract or done any act or omitted to do any act which would cause the breach
of any Contract;
(6) suffered any losses of personal or real property,
whether insured or uninsured, and whether or not in the control of the Company
or the relevant Subsidiary, as the case may be, in excess of GBP10,000 in
the aggregate, or waived any rights of any value;
(7) authorized any declaration or payment of dividends by
the Company or any Subsidiary which is not wholly owned by the Company, or paid
any such dividends, or authorized any transfer of assets of any kind whatsoever
by the Company or any such Subsidiary to any of their respective Shareholders
with respect to any shares of their capital stock;
(8) received notice of any litigation or warranty claim;
(9) made any material change in the terms, status or
funding condition of any Employee Plan, as defined in Subsection 3.20 hereof;
(10) made, or committed to make, any changes in the
compensation payable to any officer, director, employee or agent of the Company
or any Subsidiary, or any bonus payment or similar arrangements made to or with
any of such officers, directors, employees or agents;
(11) incurred any capital expenditure in excess of
GBP10,000 in any instance or GBP25,000 in the aggregate;
(12) made any material alteration in the manner of keeping
the books, accounts or records of the Company or any Subsidiary, or in the
accounting practices therein reflected; or
(13) suffered any material adverse change in the
consolidated
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results of operations, condition (financial or otherwise), assets, liabilities
(whether absolute, accrued, contingent or otherwise), business or prospects of
the Company and the Subsidiaries taken as a whole.
3.22 CUSTOMERS. SCHEDULE 3.22 attached hereto sets forth a true,
correct and complete list of (a) the names of each customer of the Company and
the Subsidiaries which accounted for more than 10% of the consolidated revenues
of the Company and the Subsidiaries in the ten months ended April 30, 1999.
Except as set forth on SCHEDULE 3.22, none of the customers of either the
Company or any of the Subsidiaries has notified the Company or the relevant
Subsidiary, as the case may be, that it intends to discontinue its relationship
with the Company or the relevant Subsidiary.
3.23 [Intentionally Omitted].
3.24 [Intentionally Omitted].
3.25 PREPAYMENTS AND DEPOSITS. SCHEDULE 3.25 attached hereto sets
forth all prepayments and deposits as of May 31, 1999 which have been received
by the Company or any of the Subsidiaries from customers for services to be
performed after that date.
3.26 INDEBTEDNESS TO AND FROM OFFICERS, DIRECTORS AND SHAREHOLDERS.
Except as set forth on Schedule 3.26 attached hereto and except for intercompany
indebtedness payable among the Company and any Subsidiary or among the
Subsidiaries, neither the Company nor any of the Subsidiaries is indebted,
directly or indirectly, to any person who is an officer, director or Shareholder
of any of the foregoing entities or any affiliate of any such person in any
amount whatsoever other than for salaries for services rendered or reimbursable
business expenses, all of which have been reflected on the Current Financial
Statements, and no such officer, director, Shareholder or affiliate is indebted
to the Company or any of the Subsidiaries except for advances made to employees
of the Company or any of the Subsidiaries in the ordinary course of business to
meet reimbursable business expenses anticipated to be incurred by such obligor.
3.27 BANKING FACILITIES. SCHEDULE 3.27 attached hereto sets forth a
true, correct and complete list of:
(a) each bank, savings and loan or similar financial institution
in which the Company or any of the Subsidiaries has an account or safety deposit
box and the numbers of the accounts or safety deposit boxes maintained by the
Company or any of the Subsidiaries thereat; and
(b) the names of all persons authorized to draw on each such
account
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or to have access to any such safety deposit box facility, together with a
description of the authority (and conditions thereof, if any) of each such
person with respect thereto.
3.28 POWERS OF ATTORNEY AND SURETYSHIPS. Except as set forth on
SCHEDULE 3.28 attached hereto, neither the Company nor any of the Subsidiaries
has any general or special powers of attorney outstanding (whether as grantor or
grantee thereof) or has any obligation or liability (whether actual, accrued,
accruing, continent or otherwise) as guarantor, surety, co-signer, endorser,
co-maker, indemnitor or otherwise in respect of the obligation of any person,
corporation, partnership, joint venture, association, organization or other
entity, except as endorser or maker of checks or letters of credit,
respectively, endorsed or made in the ordinary course of business.
3.29 CONFLICTS OF INTEREST. Except as set forth on SCHEDULE 3.29
attached hereto, no officer, director or Shareholder of the Company or any
Subsidiary nor, to the best knowledge of the Shareholders, any affiliate of any
such person, now has or within the last three (3) years had, either directly or
indirectly:
(a) an equity or debt interest in any corporation, partnership,
joint venture, association, organization or other person or entity which
furnishes or sells or during such period furnished or sold services or products
to the Company or any of the Subsidiaries, or purchases or during such period
purchased from the Company or any of the Subsidiaries any goods or services, or
otherwise does nor during such period did business with the Company or any of
the Subsidiaries; or
(b) a beneficial interest in any contract, commitment or
agreement to which the Company or any of the Subsidiaries is or was a party or
under which any of them is or was obligated or bound or to which any of their
respective properties may be or may have been subject, other than stock options
and other contracts, commitments or agreements between the Company or any of the
Subsidiaries and such persons in their capacities as employees, officers or
directors of the Company or such Subsidiary.
3.30 REGULATORY APPROVALS. All consents, approvals, authorizations or
other requirements prescribed by any law, rule or regulation which must be
obtained or satisfied by the Company or any of the Subsidiaries and which are
necessary for the execution and delivery by the Shareholders and the Company of
this Agreement or any documents to be executed and delivered by the Shareholders
or the Company in connection herewith are set forth on SCHEDULE 3.30 attached
hereto and have been, or prior to the Closing Date will be, obtained and
satisfied.
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3.31 DISCLOSURE. The information concerning the Company and the
Subsidiaries set forth in this Agreement, the Exhibits and Schedules attached
hereto and any document, statement or certificate furnished or to be furnished
to the Buyer pursuant hereto, does not, so far as the Shareholders are aware,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated herein or therein or necessary to make the statements and
facts contained herein or therein, in light of the circumstances in which they
are made, not false and misleading.
4. REPRESENTATIONS OF THE BUYER
The Buyer represents and warrants to each Shareholder as follows:
4.01 ORGANIZATION. Each of the Buyer and i-Cube is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation. The Buyer is an indirect wholly-owned subsidiary of i-Cube.
4.02 CAPITALIZATION. The authorized capital stock of the Buyer
consists of 3,000 shares of common stock, $.01 par value per share, of which 100
shares were outstanding at June 18, 1999. The authorized capital stock of i-Cube
consists of 100,000,000 shares of i-Cube Common Stock, of which 16,934,349
shares were issued and outstanding and no shares were held in the treasury of
the Buyer as of May 6, 1999, and 1,000,000 shares of Preferred Stock, none of
which were outstanding at May 6, 1999. Between May 6, 1999 and the Closing, the
Company has not issued any shares of Common Stock, other than (i) approximately
90,000 shares issued to the stockholder of Tomorrow's Technology Today, Inc. in
connection with the acquisition of that company, and (ii) shares issued on the
exercise of stock options. All of the issued and outstanding shares of i-Cube
Common Stock and the Buyer's common stock are duly authorized, validly issued,
fully paid, nonassessable and free of all preemptive rights. All of the
Acquisition Shares will be, when issued in accordance with this Agreement, duly
authorized, validly issued, fully paid, nonassessable and free of all preemptive
rights.
4.03 AUTHORIZATION OF TRANSACTION. The Buyer and i-Cube have all
requisite power and authority to execute and deliver this Agreement and any
other agreements contemplated herein to which it is a party and to perform its
obligations hereunder and thereunder (to the extent party hereto or thereto).
The execution and delivery of this Agreement, the Escrow Agreement and the
Registration Rights Agreement by the Buyer and i-Cube and the performance of
this Agreement, the Escrow Agreement and the Registration Rights Agreement and
the consummation of the transactions contemplated hereby and thereby by the
Buyer and i-Cube (to the extent party thereto) have been duly and validly
authorized by all necessary corporate action on the part of the Buyer and i-Cube
(to the extent party thereto). This Agreement and all other agreements and
obligations entered into and undertaken in connection
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with the transactions contemplated hereby have been duly and validly executed
and delivered by the Buyer and i-Cube (to the extent party thereto) and
constitute the valid and binding obligations of the Buyer and i-Cube (to the
extent party thereto) enforceable against them (to the extent party thereto) in
accordance with their terms.
4.04 NONCONTRAVENTION. Neither the execution and delivery of this
Agreement, the Escrow Agreement or the Registration Rights Agreement by the
Buyer and i-Cube (to the extent party thereto), nor the consummation by the
Buyer and i-Cube (to the extent party thereto) of the transactions contemplated
hereby or thereby, will (a) conflict or violate any provision of the charter or
By-laws of the Buyer or i-Cube, (b) require on the part of the Buyer or i-Cube
any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, other than any filing, permit, authorization, consent or
approval which has been obtained or which if not obtained or made would not have
a material adverse effect on the assets, business, financial condition, results
of operations or future prospects of the Buyer or i-Cube or on the ability of
the Parties to consummate the transactions contemplated by this Agreement, (c)
conflict with, result in breach of, constitute (with or without due notice or
lapse of time or both) a default under, result in the acceleration of, create in
any party any right to accelerate, terminate, modify or cancel, or require any
notice, consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest or other arrangement to
which the Buyer or i-Cube is a party or by which it is bound or to which any of
its assets are subject, other than any conflict, breach, default, acceleration,
termination, modification or cancellation which individually or in the aggregate
would not have a material adverse effect on the assets, business, financial
condition, results of operations or future prospects of the Buyer or i-Cube or
on the ability of the Parties to consummate the transactions contemplated by
this Agreement, or (d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Buyer or any of its properties or assets.
4.05 REPORTS AND FINANCIAL STATEMENTS. i-Cube has previously furnished
to the Company complete and accurate copies, as amended or supplemented, of its
(a) Annual Report on Form 10-K for the fiscal year ended December 31, 1998, as
filed with the United States Securities and Exchange Commission (the "SEC") and
(b) all other reports filed by i-Cube under Section 13 of the Exchange Act with
the SEC since January 1, 1999 (such reports are collectively referred to herein
as the "i-Cube Reports"). The i-Cube Reports constitute all of the documents
required to be filed by i-Cube under Section 13 of the Exchange Act with the SEC
since January 1, 1999. As of their respective dates, the i-Cube Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
audited financial statements and unaudited interim financial statements of
included in the i-Cube Reports (i) comply as to form in all material respects
with applicable accounting
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requirements and the published rules and regulations of the SEC with respect
thereto, (ii) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby (except as may be indicated therein
or in the notes thereto, and in the case of quarterly financial statements, as
permitted by Form 10-Q under the Exchange Act), (iii) fairly present the
consolidated financial condition, results of operations and cash flows of the
Buyer as of the respective dates thereof and for the periods referred to
therein, and (iv) are consistent with the books and records of i-Cube. The
i-Cube Reports were timely filed.
4.06 ABSENCE OF MATERIAL ADVERSE CHANGES. Since March 31, 1999, there
has not been any material adverse change in the assets, business, financial
condition or results of operations of i-Cube and its subsidiaries, taken as a
whole, nor has there occurred any event or development which could reasonably be
foreseen to result in such a material adverse change in the future.
4.07 BROKERS' FEES. Except for fees owed to Punk, ▇▇▇▇▇▇ & Company,
neither the Buyer nor i-Cube has any liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
4.08 DISCLOSURE. No representation or warranty by the Buyer contained
in this Agreement, and no statement contained in any document, certificate or
other instrument delivered to, by or on behalf of the Buyer or i-Cube pursuant
to this Agreement, contains any untrue statement of a material fact or omits to
state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
5. CONDITIONS TO OBLIGATIONS OF THE BUYER
The obligations of the Buyer under this Agreement are subject to
the fulfillment, at the Closing Date, of the following conditions precedent,
each of which may be waived in writing in the sole discretion of the Buyer:
5.01 CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES OF THE
SHAREHOLDERS; COMPLIANCE WITH COVENANTS AND OBLIGATIONS. The representations and
warranties of the Shareholders shall be true in all material respects on and as
of the Closing Date. The Shareholders shall have performed and complied in all
material respects with all terms, conditions, covenants, obligations, agreements
and restrictions required by this Agreement to be performed or complied with by
each of them prior to or at the Closing Date, and shall have taken all corporate
and other proceedings required to be taken on the part of the Company and the
Subsidiaries to authorize or carry out this Agreement.
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5.02 [Intentionally omitted]
5.03 GOVERNMENTAL APPROVALS. All governmental agencies, departments,
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Shareholders or the Subsidiaries of the transactions
contemplated by this Agreement and the operation of the business of the Company
and the Subsidiaries by the Buyer shall have consented to, authorized, permitted
or approved such transactions.
5.04 CONSENT OF LENDERS, LESSORS AND OTHER THIRD PARTIES. The Buyer,
i-Cube, the Shareholders, the Company and the Subsidiaries shall have received
all requisite consents and approvals of all lenders, lessors and other third
parties whose consent or approval is required in order for each of such parties
to consummate the transactions contemplated by this Agreement, including without
limitation, those set forth on SCHEDULE 3.04 attached hereto.
5.05 ADVERSE PROCEEDINGS. No action or proceeding by or before any
court or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might affect
the right of the Buyer to own the Shares or to own or operate the business of
the Company and the Subsidiaries after the Closing.
5.06 OPINION OF COUNSEL. The Buyer shall have received an opinion of
▇▇ ▇▇▇▇▇▇ & Co, counsel to the Shareholders, dated as of the Closing Date, in
substantially the form attached hereto as EXHIBIT 5.06, and as to such other
matters as may be reasonably requested by the Buyer or its counsel.
5.07 EMPLOYMENT CONTRACTS. On or prior to the Closing Date, i-Cube
shall have executed employment contracts and other arrangements with the
individuals listed on SCHEDULE 5.07 attached hereto, and all other employment
contracts between Conduit Communications Limited, the Company or any of their
affiliates and such individuals shall have been terminated.
5.08 AFFILIATE AGREEMENTS. On or prior to the Closing Date, each of
the Shareholders and all other affiliates of the Company shall have entered into
an Affiliate Agreement in the form attached hereto as EXHIBIT 5.08.
5.09 POOLING LETTER. On or prior to the Closing Date, the Buyer shall
have received a letter from PricewaterhouseCoopers LLP regarding the concurrence
of such accountants with the Buyer's conclusions as to the appropriateness of
the pooling of interests
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accounting, under Accounting Principles Board Opinion No. 16 for the
transactions contemplated by this Agreement.
5.10 AGREEMENTS WITH PERSONS HAVING INTERESTS IN CONDUIT. Each of the
holders of share capital of, or of options exercisable for, or loan stock
convertible into, shares of Conduit Communications Limited shall have executed
and delivered to the Buyer a Purchase and Sale Agreement in the form attached
hereto as EXHIBIT 5.10 and shall have transferred any shares of Conduit owned by
him to the Buyer.
5.11 NASDAQ LISTING NOTIFICATION. The Acquisition Shares shall have
been authorized for listing on the Nasdaq National Market upon official notice
of issuance (provided that such notice may be filed after the closing provided
that it is filed within ten days after approval of the transactions contemplated
hereby by the Board of Directors of i-Cube).
5.12 ESCROW AGREEMENT. The Shareholders and the Escrow Agent shall
have executed and delivered the Escrow Agreement.
5.13 CLOSING DELIVERIES. The Buyer shall have received at or prior to
the Closing such documents, instruments or certificates as the Buyer may
reasonably request including, without limitation:
(a) the share certificates representing the Shares and stock
transfer forms duly executed in accordance with Subsection 1.01 of this
Agreement;
(b) a certificate of good standing from the appropriate
governmental authorities demonstrating the legal existence and good standing of
the Company and each of its Subsidiaries in its jurisdiction of incorporation
(to the extent governmental authorities of such jurisdiction issue such
certificates);
(c) certificates of the Secretary of the Company attesting to
the incumbency of the Company's officers, the authenticity of the resolutions
authorizing the transactions contemplated by this Agreement, and the
authenticity and continuing validity of the charter documents delivered pursuant
to Subsection 3.01;
(d) certificates of appropriate governmental officials in each
jurisdiction in which the Company or any Subsidiary is required to qualify to do
business as a foreign corporation as to the due qualification and good standing
(including tax) of the Company or such Subsidiary in each such jurisdiction;
(e) to the extent requested by the Buyer, written resignations
of
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members of the Company's and Subsidiaries' Board of Directors acknowledging they
have no claims against the Company, and the written resignation of ▇▇▇▇▇▇▇ Wales
▇▇▇▇▇▇▇▇ as auditors of the Company and of Conduit Communications Limited; and
(f) the original statutory records and corporate minute books of
the Company and all corporate seals.
6. CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS
The obligations of the Shareholders under this Agreement are
subject to the fulfillment, at the Closing Date, of the following conditions
precedent:
6.01 CONTINUED TRUTH OF REPRESENTATIONS AND WARRANTIES OF THE BUYER;
COMPLIANCE WITH COVENANTS AND OBLIGATIONS. The representations and warranties of
the Buyer in this Agreement shall be true on and as of the Closing Date. The
Buyer shall have performed and complied with all terms, conditions, covenants,
obligations, agreements and restrictions required by this Agreement to be
performed or complied with by it prior to or at the Closing Date.
6.02 CORPORATE PROCEEDINGS. All corporate and other proceedings
required to be taken on the part of i-Cube and its subsidiaries to authorize or
carry out this Agreement shall have been taken.
6.03 GOVERNMENTAL APPROVALS. All governmental agencies, departments,
bureaus, commissions and similar bodies, the consent, authorization or approval
of which is necessary under any applicable law, rule, order or regulation for
the consummation by the Buyer of the transactions contemplated by this Agreement
shall have consented to, authorized, permitted or approved such transactions.
6.04 CONSENTS OF LENDERS, LESSORS AND OTHER THIRD PARTIES. The Buyer
shall have received all requisite consents and approvals of all lenders, lessors
and other third parties whose consent or approval is required in order for the
Buyer to consummate the transactions contemplated by this Agreement, including,
without limitation, those set forth on SCHEDULE 4.03 attached hereto.
6.05 Employment Contracts. On or prior to the Closing Date, i-Cube
shall have executed employment contracts and other arrangements with the
individuals listed on SCHEDULE 5.07 attached hereto, and all other employment
contracts between Conduit Communications Limited, the Company or any of their
affiliates and such individuals shall have been terminated.
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6.06 ADVERSE PROCEEDINGS. No action or proceeding by or before any
court or other governmental body shall have been instituted or threatened by any
governmental body or person whatsoever which shall seek to restrain, prohibit or
invalidate the transactions contemplated by this Agreement or which might affect
the right of the Shareholders to transfer the Shares.
6.07 OPINION OF COUNSEL. The Shareholders shall have received an
opinion of ▇▇▇▇ and ▇▇▇▇ LLP, United States counsel to the Buyer, dated as of
the Closing Date, in substantially the form attached hereto as EXHIBIT 6.07.
6.08 NASDAQ LISTING NOTIFICATION. The Acquisition Shares shall have
been authorized for listing on the Nasdaq National Market upon official notice
of issuance (provided that such notice may be filed after the closing provided
that it is filed within ten days after approval of the transactions contemplated
hereby by the Board of Directors of i-Cube).
6.09 REGISTRATION RIGHTS AGREEMENT. i-Cube shall have executed and
delivered the Registration Rights Agreement in the form of EXHIBIT 6.09 hereto.
6.10 ESCROW AGREEMENT. The Buyer and the Escrow Agent shall have
executed and delivered the Escrow Agreement.
6.11 GUARANTY. i-Cube shall have delivered to the Shareholders a
guaranty of the Buyer's obligations hereunder and under the Escrow Agreement, in
form reasonably satisfactory to the Buyer.
6.12 CLOSING DELIVERIES. The Shareholders shall have received at or
prior to the Closing such documents, instruments or certificates as the
Shareholders may reasonably request including, without limitation:
(a) such certificates of the Buyer's officers and such other
documents evidencing satisfaction of the conditions specified in this Section 6
as the Shareholders shall reasonably request;
(b) a certificate of the Secretary of State of the State of
Delaware as to the legal existence and good standing of the Buyer and i-Cube in
Delaware;
(c) a certificate of the Secretary of the Buyer attesting to the
incumbency of the Buyer's officers and authenticity of the resolutions
authorizing the transactions contemplated by this Agreement; and
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(d) the Initial Shares (and the Escrow Shares shall be delivered
to the Escrow Agent) (provided that, in lieu thereof, the Buyer may deliver an
irrevocable letter of instructions to the transfer agent specifying the shares
to be issued, in form mutually acceptable to the Buyer and the Shareholders).
7. INDEMNIFICATION
7.01 BY THE SHAREHOLDERS. The Shareholders hereby indemnify and hold
harmless i-Cube, the Buyer, the Company and their affiliates from and against
all claims, damages, losses, liabilities, costs and expenses (including, without
limitation, settlement costs and any legal, accounting or other expenses for
investigating or defending any actions or threatened actions) (collectively, the
"Damages") in connection with each and all of the following:
(a) any misrepresentation or breach of any representation or
warranty made by the Shareholders in this Agreement;
(b) any breach of any covenant, agreement or obligation of the
Shareholders contained in this Agreement or any other agreement, instrument or
document contemplated by this Agreement;
(c) any misrepresentation contained in any written statement,
certificate or schedule furnished by the Shareholders or the Company pursuant to
this Agreement or in connection with the transactions contemplated by this
Agreement;
(d) any violation by the Company or its affiliates prior to the
Closing of, or any failure by the Company or its affiliates to comply prior to
the Closing with, any law, ruling, order, decree, regulation or governmental
requirement applicable to any such entity, its assets or its business, whether
or not any such violation or failure to comply has been disclosed to the Buyer;
(e) any claim relating to (i) services provided by the Company
prior to the Closing Date or (ii) the Company's or its affiliates' business or
operation prior to the Closing Date;
(f) any tax liabilities or obligations of the Company or any
affiliates arising on account of any event occurring prior to the Closing,
including without limitation, relating to or arising out of transactions with
Careline Services Limited and Entropy (CMG) II Limited or their shareholders;
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(g) any claims against, or liabilities or obligations of, the
Company or any affiliates with respect to obligations under Employee Plans
arising on account of events occurring prior to Closing (including the Personal
Pension Arrangements, the Personal Pension Scheme and the Scheme); and
(h) resulting from any claim by a Shareholder or former
shareholder or any optionholder or noteholder of the Company or any of its
Subsidiaries seeking to assert, or based upon: (i) ownership or rights to
ownership of any share capital of the Company or any Subsidiary; (ii) any rights
of a shareholder of the Company or any Subsidiary, including any option,
preemptive rights or rights to notice or to vote; (iii) any claim that his, her
or its shares of the Company or any Subsidiary were wrongfully repurchased; or
(iv) any rights under the charter documents of any such entity.
Notwithstanding the foregoing, "Damages" shall not include
any liability to the extent it is reflected as an accrual in the Financial
Statements
7.02 METHOD OF ASSERTING CLAIMS.
(a) All claims for indemnification by the Buyer, the Company and
their respective affiliates (each, an "Indemnified Person") pursuant to this
Section 7 shall be made first, in accordance with the provisions of the Escrow
Agreement, and second (to the extent no additional Escrow Shares are held in
escrow), the Shareholders shall jointly and severally indemnify the Indemnified
Persons in accordance with the provisions of this Section 7 hereof. Any such
payment shall be made promptly following the agreement of the parties as to the
amount owing, or promptly following the resolution of any disagreement with
respect thereto.
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(b) If a third party asserts that an Indemnified Person is
liable to such third party for a monetary or other obligation which may
constitute or result in Damages for which such Indemnified Person may be
entitled to indemnification pursuant to this Section 7, and such Indemnified
Person reasonably determines that it has a valid business reason to fulfill such
obligation (which such reason shall be limited to circumstances where the
Indemnified Person believes in its reasonable judgment that such matter is
material and urgent), then (i) such Indemnified Person shall be entitled to
satisfy such obligation without consent of the Shareholder Representative or any
other Shareholder, (ii) such Indemnified Person may make a claim for
indemnification pursuant to this Section 7 in accordance with the provisions of
the Escrow Agreement, and (iii) such Indemnified Person shall be reimbursed, in
accordance with the provisions of the Escrow Agreement, for any such Damages for
which it is entitled to indemnification pursuant to this Section 7 (subject to
the right of the Shareholder Representative to dispute the Indemnified Person's
entitlement to indemnification under the terms of this Section 7).
(c) The Indemnified Person shall give prompt written
notification to the Shareholder Representative of the commencement of any
action, suit or proceeding relating to a third party claim for which
indemnification pursuant to this Section 7 may be sought; provided, however,
that no delay on the part of the Indemnified Person in notifying the Shareholder
Representative shall relieve the Shareholders of any liability or obligation
hereunder except to the extent of any damage or liability caused by or arising
out of such failure. Within 20 days after delivery of such notification, the
Shareholder Representative may, upon written notice thereof to the Indemnified
Person, assume control of the defense of such action, suit or proceeding with
counsel reasonably satisfactory to the Indemnified Person, provided the
Shareholder Representative acknowledges in writing to the Indemnified Person
that any damages, fines, costs or other liabilities that may be assessed against
the Indemnified Person in connection with such action, suit or proceeding
constitute Damages for which the Indemnified Person shall be entitled to
indemnification pursuant to this Section 7. If the Shareholder Representative
does not so assume control of such defense, the Indemnified Person shall control
such defense. The party not controlling such defense may participate therein at
its own expense; provided that if the Shareholder Representative assumes control
of such defense and the Indemnified Person reasonably concludes that the
indemnifying parties and the Indemnified Person have conflicting interests or
different defenses available with respect to such action, suit or proceeding,
the reasonable fees and expenses of counsel to the Indemnified Person shall be
considered "Damages" for purposes of this Agreement. The party controlling such
defense shall keep the other party advised of the status of such action, suit or
proceeding and the defense thereof and shall consider in good faith
recommendations made by the other party with respect thereto. The Indemnified
Person shall not agree to any settlement of such action, suit or proceeding
without the prior written consent of the Shareholder Representative, which shall
not be unreasonably withheld. The Shareholder Representative shall not agree to
any settlement of
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such action, suit or proceeding without the prior written consent of the
Indemnified Person, which shall not be unreasonably withheld.
7.03 SURVIVAL. The representations and warranties and indemnities of
the Shareholders and the Buyer set forth in this Agreement shall survive the
Closing and the consummation of the transactions contemplated hereby and
continue until twelve months after the Closing Date and shall not be affected by
any examination made for or on behalf of the Buyer or the knowledge of any of
the Buyer's officers, directors, stockholders, employees or agents. If a notice
is given in accordance with the Escrow Agreement before expiration of such
period, then (notwithstanding the expiration of such time period) the
representation or warranty applicable to such claim shall survive until, but
only for purposes of, the final resolution of such claim (provided that any
claims not related to a third party claim shall terminate in three months after
the end of such twelve-month period (provided that the Shareholders have given
the Indemnified Person at least 30 days' prior written notice that such claim
shall expire) unless legal proceedings in respect of such claim shall have been
issued on and served on the Shareholders).
7.04 LIMITATIONS.
(a) Except with respect to claims based on fraud, the rights of
the Indemnified Persons under this Section 7 shall be the exclusive remedy of
the Indemnified Persons with respect to claims resulting from or relating to
this Agreement.
(b) Except with respect to claims based on fraud or as otherwise
expressly set forth in this Section, the aggregate liability of the Shareholders
pursuant to this Agreement (other than Section 8 hereof) shall not exceed
thirty-three per cent (33%) of the fair market value of the Acquisition Shares
issued pursuant to Section 1.03 above (which shall, for all purposes of this
Agreement, be valued at $20.00 per share). No claim shall be made by the
Indemnified Persons hereunder until the aggregate Damages under this Agreement
exceed $75,000, in which case the Shareholders shall be liable for amounts in
excess of that amount. Notwithstanding the foregoing, the liability of ▇▇▇▇▇
Limited, Legis Trust Limited and the ▇▇▇▇▇▇ ▇▇▇▇ 1997 Settlement on account of a
breach by such Shareholder of the representations in Section 2 and 3.04 (insofar
as they relate to each such Shareholder severally) shall be one hundred per cent
(100%) of the fair market value (being $20.00 per Share) of the Acquisition
Shares issued to each such Shareholder and the representations of such persons
in Sections 2 and 3.04 (insofar as they relate to such Shareholder severally)
shall survive indefinitely (and the $75,000 basket in the preceding sentence
shall not apply) until such time as such Shareholder delivers to the Buyer a
legal opinion of a law firm admitted to practice in the jurisdiction under which
the Shareholder is organized, to the effect that (1) the Shareholder has all
requisite power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby; (2) this Agreement and the transactions
contemplated hereby have been duly and validly
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authorized by all necessary action on the part of the Shareholder; and (3) this
Agreement and the other documents described herein to which the Shareholder is a
party have been duly and validly executed and delivered by the Shareholder. It
is expressly intended by the parties that the foregoing sentence shall be
guaranteed by the beneficiaries of such Shareholders pursuant to the guaranties
delivered at the Closing. The Shareholders covenant to obtain the foregoing
opinions as promptly as practicable.
(c) No claim (other than one relating to a claim by a third
party) may be made against a Shareholder under this Section 7 if such claim
arises from a breach which is capable of remedy unless and until the
Shareholders are given notice of such breach and such breach is not remedied
within 30 days of the date that notice is received.
(d) The Buyer shall cause i-Cube to promptly reimburse the
Shareholders for any amounts paid by the Shareholders in respect of any claim to
the extent that (i) such Shareholders have indemnified i-Cube in full for such
claim and (ii) i-Cube or its affiliates recover insurance proceeds relating to
such claim or are otherwise reimbursed for such claim by a third party. Provided
that the Shareholders have paid i-Cube in full for a claim, i-Cube undertakes to
use reasonable efforts to collect available insurance for such claim.
(e) Notwithstanding anything expressed or implied in this
Agreement to the contrary, any payment by the Shareholders (including as a
result of a return of Escrow Shares) to the Buyer pursuant to a claim or an
adjustment made pursuant to Section 1.04 shall be treated for all purposes by
the parties to this Agreement as a reduction in the consideration paid (on the
basis of $20 per Acquisition Share returned) for the Shares.
(f) No claims shall be made against any Shareholders to the
extent that a breach arises solely as a result of the adoption of legislation
after the Closing which is applied to the period prior to the Closing, if such
breach would not have arisen if such legislation had not been retroactively
applied.
(g) For any dollar of Damages incurred, the Buyer shall only be
entitled to recover one dollar of indemnification hereunder.
(h) The Buyer acknowledges that in entering into this Agreement
it is relying on the warranties and representations in this Agreement and not
upon any other warranties, undertakings or representations of any description
given by or on behalf of the Shareholders, except as contained in a writing and
contemplated by this Agreement.
(i) Except for claims based on fraud, the Buyer shall have no
right to rescind this Agreement.
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(j) Any disclosure set out in any Schedules to this Agreement
shall be deemed to be a disclosure under other Schedules, to the extent that it
is clear from such disclosure that it applies to such other Schedules.
8. POST-CLOSING AGREEMENTS
8.01 PROPRIETARY INFORMATION.
(a) Each of the Shareholders and each of their affiliates (as
such term is defined in the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder) (individually, an "Affiliate" and
collectively "Affiliates") shall hold in confidence and shall use their best
efforts to have all officers, directors and personnel who continue after the
Closing to be employed by any such Shareholder or any Affiliate thereof to hold
in confidence all knowledge and information of a secret or confidential nature
with respect to the business of the Company and the Subsidiaries and not to
disclose, publish or make use of the same without the consent of the Buyer,
except to the extent that such information shall have become public knowledge
other than by breach of this Agreement by the Shareholders or is required to be
disclosed pursuant to statute or regulation (in which case the Shareholders
shall notify the Buyer in advance and shall use reasonable efforts to minimize
such disclosure).
(b) If (i) the employment of an officer, director or other
employee of a Shareholder or any Affiliate thereof, to whom secret or
confidential knowledge or information concerning the business of the Company or
the Subsidiaries has been disclosed, is terminated and (ii) such individual is
subject to an obligation to maintain such knowledge or information in confidence
after such termination, the Shareholders shall, upon request by the Buyer, take
all reasonable steps at their expense to enforce such confidentiality obligation
in the event of an actual or threatened breach thereof. Any legal counsel
retained by any such Shareholder in connection with any such enforcement or
attempted enforcement shall be selected by such Shareholder, but shall be
subject to the approval of the Buyer, which approval shall not be unreasonably
withheld.
(c) Each Shareholder agrees that the remedy at law for any
breach of this Subsection 8.01 would be inadequate and that the Buyer shall be
entitled to injunctive relief in addition to any other remedy it may have upon
breach of any provision of this Subsection 8.01.
8.02 NO SOLICITATION OR HIRING OF FORMER EMPLOYEES. Except as provided
by law, for a period of five years after the Closing Date, no Shareholder nor
any Affiliate thereof shall (a) solicit any person who was an employee of either
i-Cube or any of its affiliates at any
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time during the term of the Shareholder's or Affiliate's term of employment with
i-Cube or its affiliates to terminate his or her employment with i-Cube (or its
affiliates, as the case may be) or to become an employee of such Shareholder or
Affiliate, or (b) hire any person who was such an employee at any time during
the term of the Shareholder's or Affiliate's employment with i-Cube or its
affiliates.
8.03 NON-COMPETITION AGREEMENT.
(a) For a period of three years after the Closing Date, no
Shareholder nor any Affiliate thereof shall, except as an officer or employee of
i-Cube and its affiliates, engage in any business competitive with the
businesses of IT consulting, digital design and computer systems implementation
as conducted by i-Cube or its affiliates at any time during the term of his
employment with i-Cube or its affiliates, in the United States or Europe or any
other country in which the Company or any of the Subsidiaries conducted its
business at any time during the term of the Shareholder's or Affiliate's
employment with i-Cube or its affiliates.
(b) The parties hereto agree that the duration and geographic
scope of the non-competition provision set forth in this Subsection 8.03 are
reasonable. In the event that any court of competent jurisdiction determines
that the duration or the geographic scope, or both, are unreasonable and that
such provision is to that extent unenforceable, the parties hereto agree that
the provision shall remain in full force and effect for the greatest time period
and in the greatest area that would not render it unenforceable. The parties
intend that this non-competition provision shall be deemed to be a series of
separate covenants, one for each and every county of each and every state of the
United States of America and each and every political subdivision of each and
every country outside the United States of America where this provision is
intended to be effective. The Shareholders agree that damages are an inadequate
remedy for any breach of this provision and that the Buyer shall, whether or not
it is pursuing any potential remedies at law, be entitled to equitable relief in
the form of preliminary and permanent injunctions without bond or other security
upon any actual or threatened breach of this non-competition provision. In the
event any person bound by this subsection 8.03 is also bound by any other
non-competition provision (including in any employment agreement between such
person and i-Cube or any affiliate) each such provision shall be applicable.
8.04 Legis Trust Limited acknowledges that, as a result of the
acquisition by the Buyer of all of the Shares of the Company, the options for
shares of the Company held by the trust will, following exercise of such options
in accordance with their terms, automatically, without any action on the part of
Legis Trust Limited or any other person, become exercisable for shares of i-Cube
Common Stock, rather than shares in the Company (provided that such options
shall be exercisable only to the extent set out in such option agreement and
provided that it is agreed that the said option agreement states that pursuant
to this Agreement Legis Trust
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Limited shall only be forced to exercise (or let lapse) options which shall have
vested (i.e. 10 shares) at the date of Closing), on the following basis: the
number of shares of i-Cube Common Stock for which the options shall be
exercisable shall be equal to the number of shares in the Company for which such
options are exercisable multiplied by the rate at which shares of the Company's
shares are being exchanged for i-Cube shares hereunder. It is further
acknowledged that such options are only exercisable on the date hereof in
respect of two-thirds of such options and shall be exercisable with respect to
all such options after 30 June 1999.
9. RESTRICTIONS ON RESALE OF ACQUISITION SHARES
(a) Each of the Shareholders hereby acknowledges his or its
understanding that the Acquisition Shares have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may not be
offered or sold in the United States or to U.S. persons (as defined in Rule 902
under the Securities Act) unless such securities are registered under the
Securities Act or an exemption from the registration requirements of the
Securities Act is available. In addition, hedging transactions involving such
securities may not be conducted unless in compliance with the Securities Act.
(b) Each of the Shareholders hereby:
(1) represents that (A) he or it is not a "U.S. person"
within the meaning of Rule 902 under the Securities Act and that he or it is not
acquiring the Acquisition Shares for the account or benefit of any U.S. person,
or (B) is an "accredited investor" as defined in Rule 501(a) under the
Securities Act and is acquiring the Acquisition Shares for his or its own
account for investment and not with a view to, or for sale in connection with,
any distribution thereof, nor with any present intention of distributing or
selling the same, and that he or it has no present or contemplated agreement
providing for the disposition thereof; and
(2) agrees to resell the Acquisition Shares only in
accordance with the provisions of Regulation S under the Securities Act,
pursuant to registration under the Securities Act or pursuant to an available
exemption from registration, and agrees not to engage in hedging transactions
with respect to the Acquisition Shares unless in compliance with the Securities
Act.
(c) Each of the certificates representing any Acquisition
Shares shall contain a legend to the effect that transfer thereof is prohibited
except in accordance with the provisions of Regulation S under the Securities
Act, pursuant to registration under the Securities Act or pursuant to an
available exemption from registration; and that hedging transactions involving
such Acquisition Shares may not be conducted unless in compliance with the
Securities Act.
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(d) The Buyer shall not be obliged to register any transferee of
the Acquisition Shares on its books or records unless such transferee acquired
the Acquisition Shares in accordance with the provisions of Regulation S under
the Securities Act, pursuant to registration under the Securities Act or
pursuant to an available exemption from registration.
10. DISPUTE RESOLUTION
10.01 GENERAL. In the event that any dispute should arise between the
parties hereto with respect to any matter covered by this Agreement, including,
without limitation, the calculation of any adjustment to the Acquisition Shares,
the parties hereto shall resolve such dispute in accordance with the procedures
set forth in this Section 10.
10.02 CONSENT OF THE PARTIES. In the event of any dispute between the
parties with respect to any matter covered by this Agreement, the parties shall
first use their best efforts to resolve such dispute among themselves. If the
parties are unable to resolve the dispute within 30 calendar days after the
commencement of efforts to resolve the dispute, the dispute will be submitted to
arbitration in accordance with Subsection 10.03 hereof.
10.03 ARBITRATION.
(a) Either the Buyer or the Shareholder Representative may
submit any matter referred to in Subsection 10.02 hereof to arbitration by
notifying the other party hereto and the Escrow Agent, in writing, of such
dispute. Within 10 days after receipt of such notice, the Buyer and the
Shareholder Representative shall designate in writing one arbitrator to resolve
the dispute; provided, that if the parties hereto cannot agree on an arbitrator
within such 10-day period, the arbitrator shall be selected by the American
Arbitration Association. The arbitrator so designated shall not be an employee,
consultant, officer, director or shareholder of any party hereto or any
Affiliate of any party to this Agreement.
(b) Within 15 days after the designation of the arbitrator, the
arbitrator, the Buyer and the Shareholder Representative shall meet, at which
time the Buyer and the Shareholder Representative shall be required to set forth
in writing all disputed issues and a proposed ruling on each such issue.
(c) The arbitrator shall set a date for a hearing, which shall
be no later than 30 days after the submission of written proposals pursuant to
paragraph (b) above, to discuss each of the issues identified by the Buyer and
the Shareholder Representative. Each such party shall have the right to be
represented by counsel. The arbitration shall be governed by the rules of the
American Arbitration Association; provided, that the arbitrator shall have sole
discretion
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with regard to the admissibility of evidence.
(d) The arbitrator shall use his best efforts to rule on each
disputed issue within 30 days after the completion of the hearings described in
paragraph (c) above. The determination of the arbitrator as to the resolution of
any dispute shall be binding and conclusive upon all parties hereto. All rulings
of the arbitrator shall be in writing and shall be delivered to the parties
hereto and the Escrow Agent.
(e) The prevailing party in any arbitration shall be entitled to
an award of reasonable attorneys' fees incurred in connection with the
arbitration. The non-prevailing party shall pay such fees, together with the
fees of the arbitrator and the costs and expenses of the arbitration.
(f) Any arbitration pursuant to this Subsection 10.03 shall be
conducted in Boston, Massachusetts. Any arbitration award may be entered in and
enforced by any court having jurisdiction thereover and the parties hereby
consent and commit themselves to the jurisdiction of the courts of the
Commonwealth of Massachusetts and the United States District Court for
Massachusetts for purposes of the enforcement of any arbitration award.
11. BROKERS
11.01 FOR THE SHAREHOLDERS, THE COMPANY AND THE SUBSIDIARIES. Each of
the Shareholders represents and warrants that no person, firm or corporation has
acted in the capacity of broker or finder on its behalf or on behalf of the
Company or any Subsidiary to bring about the negotiation of this Agreement. The
Shareholders jointly and severally agree to indemnify and hold harmless i-Cube,
the Buyer and the Company and their affiliates against any claims or liabilities
asserted against them (save for Punk, ▇▇▇▇▇▇ & Company fees not exceeding
$1,000,000, which shall be paid by i-Cube) by any person acting or claiming to
act as a broker or finder on behalf of the Shareholders, the Company or the
Subsidiaries.
11.02 FOR THE BUYER. The Buyer agrees to pay all fees, expenses and
compensation owed to any person, firm or corporation who has acted in the
capacity of broker or finder on its behalf to bring about the negotiation of
this Agreement. The Buyer agrees to indemnify and hold harmless the Shareholders
against any claims or liabilities asserted against it by any person acting or
claiming to act as a broker or finder on behalf of the Buyer.
12. NOTICES
Any notices or other communications required or permitted hereunder
shall be sufficiently given if delivered personally or sent by telecopy,
international express courier,
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registered or certified mail, postage prepaid, addressed as follows or to such
other address of which the parties may have given notice:
To the Buyer: c/o International Integration
Incorporated
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial
Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ and ▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Shareholders: c/o the Shareholder
Representative
▇▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇
Fax:
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇ & Co.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇
Fax:
Unless otherwise specified herein, such notices or other
communications shall be deemed received (a) on the date delivered, if delivered
personally, or (b) three business days after being sent, if sent by registered
or certified mail, or (c) on the date actually received if delivered by any
other means.
13. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Buyer, on the one hand, and the Shareholders, the Company and the Subsidiaries,
on the other hand, may not assign their
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respective obligations hereunder without the prior written consent of the
other party; provided, however, that the Buyer may assign this Agreement, and
its rights and obligations hereunder, to a subsidiary of the Buyer (provided
that the Shareholders' rights shall not be prejudiced or any claim be increased
thereby). Any assignment in contravention of this provision shall be void. No
assignment shall release the Buyer, the Shareholders, the Company or the
Subsidiaries from any obligation or liability under this Agreement.
14. ENTIRE AGREEMENT; AMENDMENTS; ATTACHMENTS
(a) This Agreement, all Schedules and Exhibits hereto, and all
agreements and instruments to be delivered by the parties pursuant hereto
represent the entire understanding and agreement between the parties hereto with
respect to the subject matter hereof and supersede all prior oral and written
and all contemporaneous oral negotiations, commitments and understandings
between such parties (except to the extent of any non-competition provisions in
other agreements to which a Shareholder or its affiliates is a party, which
shall also survive by its terms).
(b) If the provisions of any Schedule or Exhibit to this
Agreement are inconsistent with the provisions of this Agreement, the provisions
of the Agreement shall prevail. The Exhibits and Schedules attached hereto or to
be attached hereafter are hereby incorporated as integral parts of this
Agreement.
15. SEVERABILITY AND RTPA
Any provision of this Agreement which is invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability, without
affecting in any way the remaining provisions hereof in such jurisdiction or
rendering that or any other provision of this Agreement invalid, illegal or
unenforceable in any other jurisdiction.
Notwithstanding any other provision of this Agreement no provision by
virtue of which this Agreement or any agreement or arrangement of which it forms
part is registrable under the Restrictive Trade Practices Act 1976 and 1977
shall take effect until the day after the date upon which particulars thereof
shall have been furnished to the Director General of Fair Trading. The parties
shall use all reasonable endeavours to procure the furnishing of such
particulars as soon as possible after the signing of this Agreement and either
party may request (and the other shall support such a request) that this
Agreement or parts thereof do not thereby become open to public inspection.
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16. INVESTIGATION OF THE PARTIES
All representations and warranties contained herein which are made to
the best knowledge of a party shall require that such party make reasonable
investigation and inquiry with respect thereto to ascertain the correctness and
validity thereof.
17. EXPENSES
Except as otherwise expressly provided herein, the Buyer, on the one
hand, and the Shareholders, jointly and severally, on the other hand, will pay
all fees and expenses (including, without limitation, legal and accounting fees
and expenses) incurred by them in connection with the transactions contemplated
hereby. In no event will any of the fees or expenses incurred in connection with
this transaction by the Shareholders or the Shareholder Representative,
including, without limitation, the fees and expenses of counsel to the
Shareholders, be billed to or paid by the Company or any Subsidiary. Each
Shareholder shall be responsible for payment of all sales or transfer taxes
arising out of the conveyance of the Shares owned by such Shareholder; provided
that the Buyer shall be responsible for paying the stamp duty payable on the
transfer of the Shares.
18. LEGAL FEES
In the event that legal proceedings are commenced by the Buyer against
the Shareholders, or by the Shareholders against the Buyer, in connection with
this Agreement or the transactions contemplated hereby, the party or parties
which do not prevail in such proceedings shall pay the reasonable attorneys'
fees and other costs and expenses, including investigation costs, incurred by
the prevailing party in such proceedings.
19. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware.
20. SECTION HEADINGS
The section headings are for the convenience of the parties and in no
way alter, modify, amend, limit, or restrict the contractual obligations of the
parties.
21. COUNTERPARTS
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This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which shall be one and the
same document.
22. SHAREHOLDERS AGREEMENT
The Shareholders agree that with effect from the Closing, the
shareholders' agreement relating to the Company dated 18 August 1993 shall be
terminated with immediate effect, as modified by the deed of adherence dated 20
November 1995.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as of and on the date first above written.
(Corporate Seal) BUYER:
INTERNATIONAL INTEGRATION
INCORPORATION R&C HOLDING
COMPANY
--------------------------
By: __________________________
Secretary Title: ___________________
(Corporate Seal)
SHAREHOLDERS:
▇▇▇▇▇ LIMITED
By: _______________________
LEGIS TRUST LIMITED
By: _______________________
---------------------------
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ 1997 SETTLEMENT
By:________________________
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SCHEDULE I
Acquisition Shares
NAME OF SHAREHOLDER NO. OF SHARES INITIAL SHARES ESCROW SHARES
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