EXHIBIT 4.12
DATED 31 JULY, 2003
(1) SAND TECHNOLOGY INC.
AND
(2) CLARITYBLUE HOLDINGS LIMITED
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AGREEMENT
FOR THE SALE AND PURCHASE
OF THE ENTIRE ISSUED SHARE CAPITAL OF
CLARITYBLUE LIMITED
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THIS AGREEMENT is made on 31 July 2003
BETWEEN
(1) SAND TECHNOLOGY INC. (registered number 141012-1) a corporation
incorporated under the Canada Business Corporations Act having its
principal place of business at ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the "SELLER"); and
(2) CLARITYBLUE HOLDINGS LIMITED (registered number 4842878) whose registered
office is at Fourth Floor, City Gateway, ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (the "PURCHASER").
WHEREAS:
(A) ClarityBlue Limited (the "COMPANY") is a private company limited by shares
incorporated pursuant to the Companies Act short particulars of which are
set out in Schedule 1 having an authorised share capital of L1,000 divided
into 1,000 ordinary shares of L1 each, of which 500 ordinary shares of L1
each (the "SHARES") have been issued fully paid or credited as fully paid
(B) The Seller is legally and beneficially entitled to all the issued share
capital of the Company
(C) The Seller wishes to sell and, in reliance upon (INTER ALIA) the warranties
and undertakings set out in this agreement, the Purchaser wishes to
purchase all the issued share capital of the Company on the terms and
subject to the conditions set out in this agreement
IT IS AGREED as follows:
1. INTERPRETATION
1.1 DEFINITIONS: In this agreement:
"ACCOUNTING REQUIREMENTS" means the accounting requirements of the
Companies Act, SSAPs, FRSs, abstracts of the Urgent Issues Task Force, any
other requirement of a United Kingdom accounting body having mandatory
effect and other generally accepted accounting principles and practices in
the United Kingdom;
"ACCOUNTS" means the audited balance sheet as at the Accounts Date and
audited profit and loss account for the year ended on that date of the
Company and the audited consolidated profit and loss account for that
period and the notes and directors' report relating thereto;
"ACCOUNTS DATE" means 31 July 2002;
"AGREED FORM" means, in relation to any document, the form of that document
which has been initialled for the purpose of identification by or on behalf
of the Seller and the Purchaser;
the "BUSINESS" means the business as principally carried on by the Company
in the period of twelve months immediately prior to the date of Completion
including, without limitation, the business of consultancy and business
systems integration, with respect to customer intelligence applications for
the financial services industry, telecommunication companies and internet
service providers but shall specifically exclude, the services provided by
the Company to the Sand Clients (but only to the extent of the future
fulfilment of the Sand Client Contracts) and any consultancy or business
systems integration to (i) clients involved in healthcare, supply chain
management or to the government and/or public sector and (ii) clients
requiring an operational transaction processing system based on the Sand
Software;
"BUSINESS DAY" means any day other than a Saturday, Sunday or any day,
which is a public holiday in England;
"BUSINESS NAMES" means those business and product names listed in Part 1 of
Schedule 7;
Page 3 of 48
"CLAIM" means any claim made by the Purchaser in accordance with this
agreement seeking damages for breach of a Warranty or indemnification under
an Indemnity;
"CLAIM DATE" means the date on which the Purchaser shall notify the Seller
in writing in respect of any Claim pursuant to Clause 5;
"COMPANIES ACT" means the Companies ▇▇▇ ▇▇▇▇ (as amended);
"COMPANY DEBT" means the sum of L3,253,964 owed to the Seller by the
Company in respect of inter-company loans made by the Seller to the
Company;
"COMPANY SOFTWARE" means the Software owned by the Company as set out in
Part 5 of Schedule 7;
"COMPLETION" means completion of the sale and purchase of the Shares in
accordance with Clause 6;
"COMPLETION ACCOUNTS" means the audited balance sheet of the Company as at
the close of business on the date of Completion and the audited profit and
loss account for the period from 31 July 2002 to the date of Completion, to
be prepared in accordance with Clause 4;
"COMPLETION ACCOUNTS RETENTION" means the sum of L500,000 to be retained
from the Consideration and placed in the Retention Account pursuant to
Clause 3.2.2 and Schedule 9;
"COMPUTER SYSTEMS" means the computer systems used by or for the benefit of
the Business at the date of this Agreement, and all computer processors,
associated and peripheral equipment, computer program, technical and other
documentation and data entered into or created by the foregoing from time
to time;
"CONFIDENTIAL INFORMATION" means any and all information or data relating
to the Company or the Business, prospective business, technical processes,
know how, computer software, intellectual property or finances of the
Company whether disclosed orally, in written, magnetic or digital
(including disk or tape) or other form before or after the date of this
agreement (in whatever medium stored whether or not such information is
reduced to a tangible form or marked in writing as "confidential" and any
and all information which has been or may be derived or obtained from any
such information) which is of a confidential nature or which is not in the
public domain or has not otherwise been made generally available to the
public, including but without limitation, all business, financial,
commercial, technical, operational, organisational, legal, management and
marketing information, data and trade secrets in relation to the Business
(including but not restricted to any information regrarding the products,
assets, networks and data networks, customers, suppliers and employees of
the Business) and any information in respect of which the Company is bound
by an obligation of confidence to a third party and the Know-How;
"CONSIDERATION" means the consideration payable to the Seller as specified
in Clause 3;
"CONSULTANCY AGREEMENT" means the consultancy agreement to be entered into
at Completion between the Seller and the Company in the Agreed Form;
"DEED OF ADDENDUM" means the deed of addendum to the STSI Software Licence
Agreement to be entered into by (1) STSI, (2) the Company and (3) Sand
Ireland at Completion in the Agreed Form;
"DEED OF NON-INDEBTEDNESS" means the deed in the Agreed Form between the
Seller and the Company in respect of the release of any and all claims
which the Seller or any and all members of the Seller's Group may have
against the Company as at Completion and releasing the Company from any and
all liabilities which may be owing by the Company to the Seller or any
member of the Seller's Group, save in respect of licence and maintenance
fees which may become due and payable in respect of the sale of Sand
Software in the financial quarter ending 31 July 2003;
Page 4 of 48
"DEED OF TERMINATION" means the deed of termination in the Agreed Form
between the Seller and the Company relating to the termination of the
licence by the Company to the Seller of Segmentor;
"DEFAULT RATE" means the rate of two per cent (2%) per annum above the base
rate of Barclays Bank plc from time to time;
"DISCLOSURE LETTER" means the letter of the same date as this agreement
from the Seller to the Purchaser;
"DOMAIN NAMES" means all internet addresses listed in Part 2 of Schedule 7;
"ENCUMBRANCE" means in respect of any property, asset or right, any
interest or equity of any person (including but without limitation any
right to acquire, option or right of pre-emption) or any mortgage, charge,
pledge, lien, assignment, security interest, title retention or other
security or third party agreement or arrangement of whatsover nature over
or in that property, asset or right;
"FRSs" means the financial reporting standards established by the
Accounting Standards Board Limited;
"GERMAN DEBT" means the sum of L1,386,809 owed to the Company by Sand GmbH
in respect of inter-company loans made by the Company to Sand GmbH;
"IDEMNITIES" means the specific indemnities set out in Clause 5.15 and
each shall be an "INDEMNITY";
"INTELLECTUAL PROPERTY RIGHTS" means all patents, registered designs, Know
How (whether or not it is in writing or otherwise recorded), rights in
trade secrets and Confidential Information; registered or unregistered
trademarks, service marks and applications therefore and all other business
names, brand names, devices, logos, get up and signs (and whether or not
registered or applied for) with all the goodwill associated with or
symbolised by any of the foregoing; all other inventions (whether or not
capable of protection by patent or other form of registration); all
copyright, rights in the nature of copyright, sui generis rights, design
rights, semi-conductor topography rights, moral rights and all other like
rights in all parts of the world whether present or vested future or
contingent in any software, object code, source code, database (including
extraction rights), interface, text, drawing, design, artwork, sound
recording, film, video, photograph, mould, three dimensional artistic work
or any other material, all registrations and pending registrations relating
to any such rights and the benefit of any pending applications for any
such registrations in each case which are successful; all reversions,
extensions and renewals of such rights; and all accrued rights of action in
relation to such rights (including the right to ▇▇▇ for and recover damages
for past infringements);
"IPR ASSIGNMENT" means the means the deed of assignment of certain
Intellectual Property Rights from the Seller or members of the Seller's
Group to the Company in the Agreed Form;
"KNOW-HOW" means all unpatented technical and other information including
inventions, discoveries, designs, models, techniques, processes and
procedures, ideas, methods, concepts, formulae, specifications, flowcharts,
procedures for experiments and tests and results of experimentation and
testing; together with all common law or statutory rights protecting the
same including by any action for breach of confidence and any similar or
analogous rights to any of the foregoing whether arising or granted under
the laws of England and Wales or any other jurisdiction;
"LICENCE FEES" means the licence and maintenance fees of L1,191,694 due on
Completion from the Company to the Seller's Group in relation to the Sand
Software;
"MANAGEMENT ACCOUNTS" means the unaudited management accounts of the
Company comprising the balance sheet as at the Management Accounts Date and
the profit and loss account for the 9-month period commencing on the day
immediately following the Accounts Date and ending on the Management
Accounts Date;
Page 5 of 48
"MANAGEMENT ACCOUNTS DATE" means 30 April 2003;
"MARKETING INFORMATION" means all information relating to the marketing of
any products or services, including customer names and lists, sales
targets, sales statistics, market share statistics, marketing surveys and
reports, marketing research and any advertising or other promotional
materials;
"NET ASSETS" means the aggregate value of all fixed and current assets of
the Company less the aggregate value of all liabilities and provisions
(including provisions relating to contingent liabilities required to be
provided for pursuant to the relevant Accounting Requirements) and
excluding any re-valuation of assets subsequent to the Accounts Date in
respect of the Company as shown in the Completion Accounts as determined in
accordance with Clause 4;
"NOVATION AGREEMENTS" means the agreements in the Agreed Form between the
Sand Clients, the Company and Sand UK relating to the novation of the
Company's rights in respect of the contracts with the Sand Clients to Sand
UK with such amendments as the Seller and the Purchaser shall agree to meet
the requirements of the relevant Sand Client, such agreement not to be
unreasonably withheld or delayed;
"PROPERTIES" means the properties more particularly described in Schedule 2
to this agreement;
"PURCHASER'S ACCOUNTANTS" means Ernst & Young of ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇;
"PURCHASER'S SOLICITORS" means Davies ▇▇▇▇▇▇ of ▇▇▇▇▇▇▇▇ Court, ▇▇-▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇;
"PURCHASER WARRANTIES" means the warranties on the part of the Purchaser
contained in Clause 5.2; and Schedule 6;
"REGISTERED INTELLECTUAL PROPERTY" means all Intellectual Property Rights
registered or applied for in the name of the Company and listed in Part 3
of Schedule 7;
the "RETENTION ACCOUNT" means the interest bearing joint escrow account
opened in the name of the Purchaser's Solicitors and the Seller's
Solicitors with National Westminster Bank plc, ▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇ ▇▇▇;
"SAND CLIENTS" means DunnHumby Limited, First National Bank, First Data
Europe Limited, Invesco Plc, Lynx Express Limited, SchlumbergerSema Group
Plc and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Limited, Zurich Financial Services, Lansing Linde,
British Standards Institute and Woolworths;
"SAND CLIENT CONTRACTS" means the contracts for the provision of
maintenance and support services in connection with the Sand Software
between the Company and the Sand Clients;
"SAND STOCK OPTION PLANS" means the Seller's 1996 Stock Incentive Plan and
1996 Stock Option Plan;
"SAND SOFTWARE" means the ODBC compliant database structure and software
licensed to the Company by the Seller, which is used by the Company as the
database for its CRM and customer intelligence software solutions;
"SAND GmbH" means Sand Deutschland Technology GmbH registered in Germany
whose principal place of business is at Chilehaus ▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇,
▇-▇▇▇▇▇ ▇▇▇▇▇▇▇;
"SAND IRELAND" means Sand Technology Ireland Limited Company Number: 314731
whose registered office is at ▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇;
"SAND UK" means Sand Technology Limited, Company Number 04513443 whose
registered office is at ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇;
Page 6 of 48
"SEGMENTOR" means the software owned by the Company used for the purposes
of database analysis and predictive modelling of database data;
"SELLER" includes the successor and assigns of the Seller;
"SELLER'S ACCOUNTANTS" means Deloitte & Touche of London North, Verlulam
Point, ▇▇▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
"SELLER'S GROUP" means the Seller, its subsidiary undertakings and
associated companies from time to time, all of them and each of them as the
context admits but excluding the Company;
"SELLER'S SOLICITORS" means ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇;
"SOFTWARE" means any and all computer programs in both source and object
code form, including all modules, routines and sub-routines thereof and all
source and other preparatory materials relating thereto, including use
requirements, functional specifications and programming specifications,
ideas, principles, programming languages, algorithms, flow charts, logic,
logic diagrams, orthographic representations, file structures, coding
sheets, coding and including any manuals or other documentation relating
thereto and computer generated works identified;
"SSAPs" means the statements of standard accounting practice adopted by
the Accounting Standards Board Limited;
"STSI" means STSI Licensing LLC a limited liability company established
under the laws of the State of New Jersey, USA, having its principal place
of business of 555 Woodbridge Towers, ▇▇▇▇▇ ▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇;
"STSI SOFTWARE LICENCE AGREEMENT" means the licence and distribution
agreement relating to the Sand Analytic Server software "Nucleus" entered
into between STSI and the Company dated 10th March 1999 which was assigned
to Sand Ireland on 21 February 2001;
"TCGA 1992" means taxation of Chargeable Gains ▇▇▇ ▇▇▇▇;
"TAXATION" or "TAX" shall have the meanings prescribed in the Tax Deed;
"TAX DEED" means the Tax Deed in the Agreed Form;
"TAXES ACT 1988" means Income and Corporation Taxes ▇▇▇ ▇▇▇▇;
"UNREGISTERED INTELLECTUAL PROPERTY" means all intellectual property rights
used by the Company but not registered in the name of the Company
including, without limitation, those listed in Part 4 of Schedule 7;
"VATA 1994" means the Value Added Tax ▇▇▇ ▇▇▇▇;
"WARRANTIES" means the warranties on the part of the Seller contained in
Clause 5.1 and Schedules 3, 4 and 5;
1.2 REFERENCES: Any reference, express or implied, to an enactment includes
references to:
1.2.1 that enactment as amended, extended or applied by or under any other
enactment before or after this agreement;
1.2.2 any enactment which that enactment re-enacts (with or without
modification); and
1.2.3 any subordinate legislation made (before or after this agreement)
under any enactment, including one within (a) or (b) above.
Page 7 of 48
provided that any such enactment or subordinate legislation does not
increase the liability of the Seller under this agreement.
1.3 SELLER'S KNOWLEDGE: Where any statement is qualified by the expression "so
far as the Seller is aware" or "to the best of the Seller's knowledge,
information and belief" or any similar expression that the statement shall
be deemed to be given after having made all reasonable enquiry of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇.
1.4 CONNECTED PERSONS: A person shall be deemed to be connected with another if
that person is connected with another within the meaning of section 839 of
the Taxes ▇▇▇ ▇▇▇▇.
1.5 PERSONS: Words denoting persons shall include bodies corporate and
unincorporated associations of persons.
1.6 HEADINGS: The headings in this agreement do not affect its interpretation.
1.7 INDIVIDUALS: reference to an individual includes a reference to that
individual's legal personal representatives, successors and permitted
assigns.
1.8 OTHER REFERENCES: In this agreement a reference to:-
(a) "WRITING" or "WRITTEN" includes faxes and any non-transitory form of
visible reproduction or words but excludes electronic mail;
(b) a "SUBSIDIARY" means a subsidiary within the meaning ascribed to such
expression by sections 736 and 736A, of the Companies Act;
(c) a "SUBSIDIARY UNDERTAKING" means a subsidiary undertaking within the
meaning ascribed to such expression by section 258, of the Companies
Act;
(d) a "HOLDING COMPANY" means a holding company within the meaning
ascribed to such expression by sections 736 and 736A of the Companies
Act;
(e) "GROUP COMPANY" means, in relation to any body corporate, any holding
company of such a body or any subsidiary of a holding company of a
body; and
(f) a time of the day is to London time and references to a day are to a
period of 24 hours running from midnight.
2. SALE AND PURCHASE OF THE SHARES
2.1 SALE AND PURCHASE: On and with effect from the Completion Date, the Seller
as legal and beneficial owner and with full title guarantee shall sell and
the Purchaser shall purchase the Shares together with all rights of any
nature attaching to them.
2.2 COVENANTS: The Seller and the Purchaser covenant with one another as
follows:
2.2.1 the Seller covenants that it has the right to sell and transfer the
full legal and beneficial interest in the Shares to the Purchaser on
the terms set out in this agreement;
2.2.2 the Purchaser covenants that it has the right to purchase and acquire
the Shares from the Seller according to the terms of this agreement;
and
2.2.3 that on or after Completion each will, at its cost and expense,
execute and do (or procure to be executed and done by any other
necessary party) all such deeds, documents, acts and things as the
other party may from time to time require in order to give full
effect to this agreement.
2.3 NO ENCUMBRANCES: The Shares shall be sold free from all liens, charges,
equities and encumbrances and other rights whatsoever exercisable by third
parties.
2.4 SIMULTANEOUS PURCHASE: The Purchaser shall not be obliged to complete the
purchase of any of the Shares unless the purchase of all the Shares is
completed simultaneously in accordance with this agreement.
2.5 PRE-EMPTION RIGHTS: The Seller waives any right of pre-emption or other
restrictions in respect of the Shares whether conferred on it under the
articles of association of the Company, by statute or otherwise and agrees
to procure before Completion the irrevocable waiver of any
Page 8 of 48
such right or restriction conferred on any other person.
3. CONSIDERATION
3.1 CONSIDERATION: The consideration for the sale of the Shares shall (subject
to adjustment pursuant to Clause 4.7) be the sum of L6,021,151 (the
"CONSIDERATION"), which shall be satisfied in accordance with the
provisions of this Clause 3 and Clause 4.
3.2 INITIAL CONSIDERATION: On Completion, the Purchaser shall pay:
3.2.1 the sum of L5,521,151 (the "INITIAL CASH CONSIDERATION") to the
Seller in cash in sterling to the client account of the Seller's
Solicitors (▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Client Account at National Westminster
Bank plc, at Bristol City Branch, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇,
account number ▇▇▇▇▇▇▇▇, sort code 56 - 00 - 05) (the "SELLER'S
SOLICITORS ACCOUNT"); and
3.2.2 the Completion Accounts Retention (L500,000) to the Retention Account
to be held on the terms of Schedule 9 of this agreement.
3.3 SELLER'S SOLICITORS RECEIPT: The Seller agrees that any sums due to the
Seller pursuant to this agreement may be paid by the Purchaser to the
Seller's Solicitors, whose receipt shall constitute a full discharge of the
Purchaser's obligations to may any such payment.
4. COMPLETION ACCOUNTS
4.1 PREPARATION OF COMPLETION ACCOUNTS: Without delay following Completion, the
Purchaser shall procure the preparation of the Completion Accounts by the
Company as at the close of business on the date of Completion. The
Completion Accounts shall be submitted to the Seller's Accountants for
audit within 45 days after Completion. The Seller shall procure the
completion of the audit of the Completion Accounts by the Seller's
Accountants within 31 days of the receipt of the same from the Company and
shall thereupon deliver the audited Completion Accounts to the Purchaser
and the Purchaser's Accountants for review within a further 14 days. The
Purchaser shall pay the charges of the Purchaser's Accountants and the
Seller shall pay the charges of the Seller's Accountants in respect of the
preparation and/or audit of the Completion Accounts.
4.2 BASIS OF PREPARATION: The Completion Accounts shall be prepared using the
accounting principles and practices used in the preparation of the
Accounts.
4.3 DEEMED ACCEPTANCE: Unless within 14 days after receipt of the audited
Completion Accounts pursuant to Clause 4.1 the Purchaser or the Purchaser's
Accountants notify the Seller's Accountants in writing of any disagreement
or difference of opinion relating to the Completion Accounts, the parties
shall be deemed to have accepted such accounts as accurate.
4.4 NOTICE OF DISAGREEMENT: If within the period of 14 days referred to in
Clause 4.3 the Purchaser or the Purchaser's Accountants notify the Seller's
Accountants of any disagreement or difference of opinion relating to the
calculation of the value of the Net Assets pursuant to the Completion
Accounts ("NOTICE OF DISAGREEMENT") and if they are able to resolve such
disagreement or difference of opinion within 14 days of the Notice of
Disagreement, the parties shall be deemed to have accepted such accounts as
accurate.
4.5 INDEPENDENT ACCOUNTANT: If the Seller's Accountants and the Purchaser's
Accountants are unable to reach agreement within 14 days of the Notice of
Disagreement, the matter in dispute shall be referred to the decision of an
independent chartered accountant (the "Independent Accountant") to be
appointed (in default of nomination by agreement between the Seller and the
Purchaser) by the President for the time being of the Institute of
Chartered Accountants in England and Wales.
4.6 EXPERT: The Independent Accountant shall act as an expert and not as an
arbitrator, the Arbitration ▇▇▇ ▇▇▇▇ shall not apply and his decision shall
(in the absence of manifest error) be final and binding on the Seller and
the Purchaser for all the purposes of this agreement. The costs of the
Independent Accountant shall be apportioned between the Seller and the
Purchaser as the Independent Accountant shall decide but each party shall
be responsible for its own costs of presenting its case to the Independent
Accountant.
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4.7 VARIATION OF CONSIDERATION: If and to the extent that the value of Net
Assets (which for the avoidance of doubt shall include any negative number
or deficit) as agreed or determined in accordance with this Clause 4 is:
4.7.1 a sum LESS than L3,150,000 the amount of the Consideration shall be
reduced by an amount equal to the amount of such shortfall (the
"SHORTFALL") and the Purchaser shall be permitted to recover the
Shortfall by the set-off of such amount, from the Completion Accounts
Retention (together with interest accrued thereon) and the Seller
shall, forthwith upon agreement or determination (pursuant to this
Clause 4) that a Shortfall exists, instruct the Seller's Solicitors
to release the Completion Accounts Retention (or the appropriate
proportion thereof) (together with interest accrued thereon) to the
Purchaser. If after setting-off against the Shortfall the Completion
Accounts Retention (together with all interest accrued thereon), the
Shortfall has not been paid in full, the Seller undertakes to pay any
balance of any Shortfall that remains outstanding to the Purchaser in
cash within 5 Business Days of agreement or determination of such Net
Asset value; or
4.7.2 a sum EQUAL TO OR GREATER THAN L3,150,000, the Purchaser shall within
5 Business Days of agreement or determination (pursuant to this
Clause 4) of such Net Asset value instruct the Purchaser's Solicitors
to release from the Retention Account the amount of the Completion
Accounts Retention (together with interest accrued on such amount) to
the Seller's Solicitors.
The Seller's Solicitors are hereby irrevocably authorised to receive the
above payments and their receipt therefor shall be a sufficient discharge
to the Purchaser who shall not be concerned with the distribution thereof
to the Seller or be answerable for the loss or misapplication thereof.
4.8 DEFAULT INTEREST: If any party fails to pay any sum under or in relation to
this agreement on its due date then such defaulting party will pay interest
on it until it is paid at the Default Rate. Any default interest payable
must be paid monthly in arrears and if not paid will itself bear interest
at the Default Rate.
5. WARRANTIES AND SPECIFIC INDEMNITIES
5.1 WARRANTIES: The Seller warrants to the Purchaser at the date of this
agreement that except as fairly disclosed to the Purchaser in the
Disclosure Letter, each of the statements set out in Schedules 3, 4 and 5
is true and accurate and a matter shall be deemed to be fairly disclosed
if disclosed with sufficient particulars to enable the Purchaser to
reasonably assess the impact of the matter on the business of the Company.
5.2 PURCHASER WARRANTIES: The Purchaser warrants to the Seller that each of the
statements set out in Schedule 6 is true and accurate in all material
respects. The Purchaser is not actually aware of any matter which it
actually knows constitutes a beach of Warranty or which would with the
effluxion of time be likely to constitute a breach of Warranty (and for
such purposes, the Purchaser's actual knowledge shall be the actual
knowledge of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and/or ▇▇▇▇ ▇▇▇▇▇▇▇▇ or the actual knowledge of
the Purchaser derived specifically from the contents of the legal,
accounting and other due diligence reports prepared for it in connection
with this transaction and on the basis that the Purchaser has actually read
the said reports) and to the extent that it is proven that the Purchaser
had such actual knowledge, it shall be prevented from bringing any such
claim under the Warranties in respect of the matter to which such prior
knowledge relates.
5.3 SEPARATE WARRANTIES: Each of the Warranties and Purchaser Warranties set
out in the several paragraphs of each of Schedule 3, 4, 5 and 6 is separate
and independent and except as expressly provided to the contrary in this
agreement is not limited:
5.3.1 by reference to any other paragraph of Schedules 3, 4, 5 and 6; or
5.3.2 by anything in this agreement or, in the case of the Warranties, the
Tax Deed.
and without prejudice to the qualification of the Warranties by matters
fairly disclosed in the
Page 10 of 48
Disclosure Letter or clause 5.2, none of the Warranties shall be treated as
qualified by any actual or constructive knowledge on the part of the
Purchaser or any of its agents.
5.4 WAIVER BY SELLER: The Seller agrees with the Purchaser (as trustee for the
Company) that, save in the case of fraud, dishonesty or wilful
non-disclosure on the part of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and/or ▇▇▇▇ ▇▇▇▇▇▇▇▇ as the
case may be (whereupon it is agreed that the Seller retains any rights or
claims which it may have against ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and/or ▇▇▇▇ ▇▇▇▇▇▇▇▇ in
respect of any misrepresentation, inaccuracy or omission in or from any
information or advice supplied or given by them in connection with the
giving of the Warranties and the preparation of the Disclosure Letter), to
waive any rights or claims which it may have in respect of any
misrepresentation, inaccuracy or omission in or from any information or
advice supplied or given by the Company, its officers, employees or
advisers in connection with the giving of the Warranties and the
preparation of the Disclosure Letter.
5.5 LIMITATIONS ON LIABILITY: In the absence of fraud or dishonesty on the part
of the Seller or its agents or advisers, the liability of the Seller in
respect of the Warranties (except in relation to a Warranty relating to
Tax);
5.5.1 shall not arise except to the extent that the amount agreed or
finally determined in respect of all claims under the Warranties
exceeds L275,000 (two hundred and seventy five thousand pounds) in
which event the Seller shall be liable in respect of the full amount
of such claims and not merely for the excess PROVIDED THAT such
limitation shall not apply to any claim under those of the Warranties
contained in Schedules 3 (Title Warranties) and Schedule 5 (Tax
Warranties);
5.5.2 shall not arise in respect of any single claim under the Warranties
which does not exceed L5,000;
5.5.3 shall not exceed L9,080,000; and
5.5.4 shall terminate:
5.5.4.1 on the date six years and six months from Completion in
respect of those matters set out in Schedule 5 (Tax
Warranties); and
5.5.4.2 on the date 18 months following Completion in respect of all
Warranties contained in Schedule 4 (Commercial Warranties);
except in respect of any claim under the Warranties of which valid
notice in writing is given to the Seller in accordance with this
agreement before that date giving reasonable details of any such
claim and the Purchaser's reasonable estimate of the amount of such
claim and proceedings in respect of the same shall have been
commenced by being issued and served on the Seller within 6 months
after such date of notification,
but in relation to those Warranties set out in Schedule 3 (Title
Warranties):
(i) the limitations set out in Clauses 5.5.1 to 5.5.4 above shall
not apply; and
(ii) nothing in the Disclosure Letter shall qualify or limit their
scope.
5.6 OTHER LIMITATIONS: The Seller shall not be liable for any Claim to the
extent that such liability arises or is increased:
5.6.1 as a result of a change in the law or in the generally accepted
understanding or interpretation of any law after the date of
execution of this agreement; or
5.6.2 as a result of any change in the accounting bases, policies or
practices or in the accounting reference date of the Company (other
than in order to comply with generally accepted accounting principles
in the United Kingdom); or
5.6.3 to the extent that the claim would not have risen but for anything
voluntarily done or omitted to be done after Completion (other than
in the ordinary course of business of the Company) by the Purchaser
or the Company or any of their respective agents,
Page 11 of 48
assignees or other successors in title; or
5.6.4 it would not have arisen or would have been reduced or eliminated but
for any claim, election, surrender or disclaimer made or notice or
consent given or any other thing done after Completion by the Company
or the Purchaser or any person connected with them other than any
claim, election, surrender or disclaimer which has been assumed to
have been made for the purposes of the Completion Accounts;
5.6.5 it arises or is increased by a failure of the Purchaser or the
Company to comply with their respecive obligations under this
agreement;
5.6.6 it has been or is made good or is otherwise compensated for without
cost to the Purchaser or the Company;
5.6.7 the same is expressly provided for, contained in or noted in the
Completion Accounts;
5.6.8 it is based on a claim which is contingent only unless and until such
contingent liability becomes an actual liability and is due and
payable provided that this clause will not operate to avoid a claim
for a contingent liability where written notice is given within the
applicable time limit expressed in Clause 5.5; or
5.6.9 the loss in respect of which the Claim is made is recovered under an
insurance policy of the Company in force on the date of such loss.
5.7 NOTIFICATION: the Purchaser shall notify the Seller in writing of:
5.7.1 any claim made against it by a third party which may give rise to a
Claim; and
5.7.2 any claim the Company is entitled to bring against a third party
which claim is based on circumstances which may give rise to a Claim.
5.8 CONDUCT OF CLAIMS: Where the Purchaser or the Company has any claim against
any third party in relation to any matter in respect of which there shall
have been a Claim or where the Purchaser or the company received any claim
from a third party which may result in the Purchaser having a Claim, the
Seller shall be entitled to take any action and require the Purchaser and
the Company to take any action they may reasonably request to prosecute or
resist such claim as the case may be in the name of the Purchaser or the
Company (as appropriate) and the Purchaser shall and shall procure that the
Company shall give the Seller all co-operation access and assistance for
the purpose of considering, prosecuting or resisting as the case may be
such claim as they may reasonably require (save for legally privileged
information or which relates to the merits of any Claim against the Seller)
PROVIDED THAT:
5.8.1 the Seller shall indemnify and secure the Purchaser and the Company
to their reasonable satisfaction against all and any liability,
losses and expenses arising from any action taken by the Seller or
any action or omission which the Seller requires the Purchaser or the
Company to take or not to take (as the case may be) pursuant to this
Clause 5.8; and
5.8.2 in no circumstances shall the Purchaser or the Company be required to
take any action or omit to take any action which in their reasonable
opinion will or may have a material adverse effect on the business
and/or reputation of the Company.
5.9 ACCESS: the Purchaser shall provide and shall procure that the Company
provides to the Seller and the Seller's professional advisers reasonable
access to premises and personnel during normal business hours and to any
relevant assets, documents and records within their power, possession or
control for the purpose of investigating any Claim and enabling the Seller
to take the action referred to in Clause 5.8 (Conduct of claims) and shall
allow the Seller and their advisers to take copies of any relevant
documents or records at their expense.
5.10 NO DOUBLE RECOVERY: the liability of the Seller under the Warranties shall
be reduced if and to the extent that the loss shall have been recovered
under the Tax Deed or the Indemnities (and vice versa).
5.11 RECOVERY FROM THIRD PARTIES: If the Seller make any payment to the
Purchaser or the Company in relation to any Claim and the Purchaser or the
Company subsequently receives or is entitled to recover from a third party
(incuding any tax authority) any amount referable to or any benefit which
would not have been received but for the circumstances giving rise to the
Page 12 of 48
subject matter of such claim then the purchaser or the Company shall take
all appropriate steps to enforce that recovery (to the extent only
supported by a legal opinion of a reputable law firm or Counsel of at least
10 years post qualification), and once it has received such amount or
benefit, immediately repay or procure the repayment to the Seller of either
the amount of such receipt or if lesser the amount paid by the Seller, less
all costs reasonable incurred by the Purchaser or the Company in recovering
the same.
5.12 REMEDIAL ACTION: Where the subject matter of the Claim is capable of
remedy, the Seller shall not be liable for such Claim if the breach or
default is remedied by the Seller and at their cost within 30 days or
receipt by them of the notification of such Claim.
5.13 DUTY OF MITIGATION: Nothing in this agreement shall affect any duty, which
the Purchaser has under common law to mitigate its loss.
5.14 REDUCTION IN CONSIDERATION: Any payment made by the Seller in respect of a
breach of the Warranties or a liability under the Tax Deed shall be deemed
to be a reduction in the Consideration.
5.15 SPECIFIC INDEMNITIES: The Seller hereby agrees on demand to:
5.15.1 indemnify the Purchaser and the Company in respect of any
indebtedness of the Company to any member of the Seller's Group in
the form of borrowed monies existing as at the date of Completion,
save in respect of licence and maintenance fees which may become due
and payable in respect of the sale of Sand Software in the financial
quarter ending 31 July 2003; or
5.15.2 meet any claim by any past or present client of the Company against
the Company which arises at any time as a direct result of any
warranty or representation made prior to Completion by the Seller,
its subsidiaries, officers or employees to any client of the
Company relating to, the functionality of the Sand Software; or
5.15.3 meet any claim against the Company that arises in respect of the
Sand Clients Contracts, including without limitation, any claim
arising from the Sands Client Contract entered into with First
National Bank.
5.16 NO LIMITATIONS: For the avoidance of doubt, the limitations of liability of
the Seller set out in clauses 5.5.1, 5.5.2, 5.5.4, 5.6.1 and 5.6.2 above
shall not apply to any liability arising pursuant to clause 5.15.
6. COMPLETION AND POST COMPLETION OBLIGATIONS
6.1 COMPLETION: Completion shall take place at the offices of the Purchaser's
Solicitors immediately after the signature of this agreement.
6.2 SELLER'S OBLIGATIONS: At Completion the Seller shall procure:
6.2.1 the delivery to the Purchaser of:
i. a duly executed transfer in favour of the Purchaser or its
nominee(s) of all the Shares;
ii. the share certificate(s) representing the Shares (or an express
indemnity in a form satisfactory to the Purchaser in the case of
any found to be missing);
iii. the certificate of incorporation, common seal, minute books,
statutory registers and share certificate books of the Company
(to the extent not held by the Company);
iv. the Tax Deed duly executed by the Seller and the Company;
v. a duly executed copy of the Consultancy Agreement;
vi. the resignations of ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ as directors
and of Hillgate Secretarial Limited as the secretary of the
Company, in each case acknowledging under seal that he has no
claim against the Company whether for loss of office or
Page 13 of 48
otherwise (to the extent already not resigned at Completion);
vii. all leases and other documents relating to the Properties (to the
extent not held by the Company);
viii. to the extent not in the possession of the Company, all
licences, consents, permits and authorisations obtained by or
issued to the Company or any other person in connection with the
Business;
ix. copies of all bank mandates of the Company together with
appropriate forms to amend the mandate in respect of each bank
account maintained by the Company;
x. a duly executed copy of the Deed of Non-Indebtedness;
xi. a duly executed copy of the Deed of Addendum;
xii. a duly executed copy of the IPR Assignment, and
xiii. a duly executed copy of the Deed of Termination.
6.2.2 that a board meeting of the Company is held at which it is resolved
that:
(i) such persons as the Purchaser nominates are appointed as
additional directors and as the secretary of the Company;
(ii) its registered office is changed to ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Square, St Albans, Hertfordshire AL1 3TF;
(iii) the transfers referred to in Clause 6.2.1(i) above (subject only
to their being duly stamped) are approved for registration; and
(v) its bank mandates are revised in such manner as the Purchaser
requires.
6.3 PURCHASER'S OBLIGATIONS: Upon completion of all the matter referred to in
Clause 8.2 above the Purchaser shall:
6.3.1 pay the Initial Cash Consideration to the Seller;
6.3.2 pay the Completion Accounts Retention into the Retention Account;
6.3.3 deliver or procure delivery of duly executed counterparts of the Tax
Deed, Deed of Addendum, the Consultancy Agreement, the Deed of
Termination and the IPR Assignment;
6.3.4 procure that the Company repays the Company Debt to the Seller by
transferring an amount in pounds sterling equal to such debt to the
Seller's Solicitors Account;
6.3.5 procure that the Company make the Royalty Payment to Sand Ireland by
paying an amount in pounds sterling equal to the Royalty Payment to
the Seller's Solicitors Account;
6.4 SAND GmbH: Upon completion of the matters referred to in Clause 6.3 above
the Seller will procure repayment of the Sand GmbH Debt to the Company.
6.5 RESCISSION: If for any reason the provisions of Clause 6.2 or 6.3 above
are not fully complied with the Purchaser in the case where the Seller has
not complied with the provisions of clause 6.2 and the Seller in the case
where the Purchaser has not complied with the provisions of clause 6.3 may
elect (in addition and without prejudice to all other rights or remedies
available to it) to rescind this agreement or the fix a new date for
Completion (which shall be no later than 28 days from the date set
originally for completion).
Page 14 of 48
6.6 NOVATION AGREEMENTS: The parties undertakes with effect from Completion to
use all reasonable endeavors to procure the novation of all the Sand
Client Contracts from the Company to Sand UK and to procure execution of
the Novation Agreements in respect thereof and subject always to Clause
6.7, the parties agree that the following provisions shall apply in respect
of the Sand Client Contracts:
6.6.1 unless and until any such Sand Client Contract shall be novated in
accordance with the Novation Agreements the Purchaser shall procure
that the Company shall hold such Sand Client Contract on trust for
the Seller or Sand UK (as appropriate) and Sand UK shall become
entitled to the benefits of the Company under the Sand Client
Contracts and the Seller shall procure that Sand UK shall perform
all the obligations of the Company under such Sand Client Contract
as the Company's sub-contractor;
6.6.2 unless and until any such Sand Client Contract shall be novated the
Purchaser shall procure that the Company will (so far as it lawfully
may) give all such assistance to the Seller or Sand UK, at the
Seller's cost, as the Seller or Sand UK may reasonably require to
enable the Seller or Sand UK to enforce its rights its rights under
such Sand Client Contract and will provide access to all relevant
books, documents and other information in relation to such Sand
Client Contract as the Seller/Sand UK may reasonably require from
time to time.
6.6.3 to the extent that any payment is made to the Purchaser or the
Company in respect of the Sand Client Contracts on or after
Completion the Purchaser and/or Company shall receive the same as
trustee, shall record such payment separately in its books and shall
account to the Seller or Sand UK for the same within 10 Business Days
of receipt.
6.7 SAND CLIENT CONTRACT WITH SCHLUMBERGERSEMA GROUP PLC: The parties agree
that notwithstanding the provisions of Clause 6.6 (in particular sub-clause
6.6.3), until such time as the Sand Client Contract with SchlumbergerSema
Group plc ("SEMA") (the "SEMA CONTRACT") is novated to the Seller pursuant
to a Novation Agreeement, any and all licence fees payable by Sema
thereunder shall accrue for the benefit of the Company and any and all
maintenance fees payable by Sema thereunder shall accrue for the benefit of
the Seller and it is further agreed that on the actual date of novation of
the Sema Contract, the Seller shall pay forthwith to the Company a sum
equal to the balance of the licence fees due under the Sema Contract to the
Company but after deduction of any sum representing deferred revenue in
respect of future maintenance obligations to be assumed by the Seller under
the Sema Contract by reason of such novation. In the event of dispute as to
any sums owed pursuant to this Clause, the decison of the auditors for the
time being of the Company (acting as an expert and not an arbitrator) shall
be binding on the parties save in the event of manifest error.
6.8 ADJUSTING PAYMENTS: Forthwith upon the novation of any Sand Client Contract
(other than the Sema Contract) pursuant to Clause 6.6, the parties agree
that:
6.8.1 where any prepayment has been made by the relevant Sand Client to the
Company in respect of services to be provided under the relevant Sand
Contract after the date of novation, an amount equal to such
prepayment shall be paid by the Company to the Seller; and
6.8.2 where any licence revenue due to the Company under the relevant Sand
Contract is outstanding at the date of novation of the relevant Sand
Contract, and amount equal to such licence revenue shall be paid by
the Seller to the Company.
6.9 PARENT GUARANTEES: The Purchaser shall use all reasonable endeavors (short
of actual payment) to procure the release of any company in the Seller's
Group from any guarantee, suretyship, indemnity, bonding liability or
similar contingent liability forthwith of being notified of the same or
otherwise becoming aware of it (and for such purposes the fair disclosure
of any guarantee in the Disclosure Letter shall constitute notification of
the same on Completion) and shall indemnify each member of the Seller's
Group against all liability arising after Completion (except in relation
to facts or circumstances existing prior to Completion) in respect
thereof.
Page 15 of 48
7. PROTECTIVE COVENANTS
7.1 COVENANTS: As further consideration for the Purchaser agreeing to purchase
the Shares and with the intent of securing to the Purchaser the full
benefit and value of the goodwill and connections of the Company and as an
essential part of the agreement for the purchase and sale of the Shares,
the Seller covenants and undertakes for itself and on behalf of each of
the companies in the Seller's Group (other than the Company) to and with
the Purchaser (for itself and as trustee for the Company), that it and
each of the companies in the Seller's Group (other than the Company),
shall not, whether by itself, through its employees or agents or otherwise
and whether on its own behalf or on behalf of any person, directly or
indirectly:
7.1.1 for a period of 3 years from Completion, so as to compete with the
Business, be concerned in any business carrying on business with the
United Kingdom which is competitive or likely to be competitive with
the Business except for business carried on through those
distributors, agents, re-sellers and indirect channels specified in
Schedule 8 SAVE THAT if after the third anniversary of the date of
Completion, licence fees payable under the STSI Software Licence
Agreement (as amended by the Deed of Addendum) shall have increased
in value at the average rate of ten (10) per cent per annum for each
of the first three years following Completion, the period of this
covenant shall be increased by a further two (2) years; or
7.1.2 for a period of 3 years from Completion, appoint any distributor,
agent or re-seller of Sand Software for the uses licensed to the
Company pursuant to the STSI Software Licence Agreement (as amended
by the Deed of Addendum) for the United Kingdom, other than those
distributors, agents or re-sellers and indirect channels listed in
Schedule 8; or
7.1.3 for a period of 3 years from Completion, induce or attempt to induce
any supplier of the Company who has supplied services to the Company
during the period of up to 12 months prior to the date of Completion,
to cease to supply, or to restrict or vary the terms of supply, to
the Company; or
7.1.4 for a period of 3 years from Completion shall not solicit or entice
away or endeavour to solicit or entice away any employee of the
Company occupying a senior or managerial or software development
position and likely to be in possession of confidential information
relating to the Company or able to influence customer relationships
or connections of the Company.
7.1.5 at any time after Completion, make use of or (except as required by
law or any competent regulatory body) disclose or divulge to any
third party any information of a secret or confidential nature
relating to the business or affairs of the Company or its customers
or suppliers, unless ordered to do so by a court of competent
jursidiction; or
7.1.6 at any time after Completion, use or (insofar as it can reasonably do
so) allow to be used (except by the Company) any Business Name,
Domain Name, e-mail address or product name used by the Company at
Completion or any other name intended or likely to be confused with
such name(s) or address.
7.2 DEFINITIONS: For the purpose of Clause 7.1 above:
7.2.1 a Seller is concerned in a business if it carries it on as principal
or agent, directly or indirectly (including, without limitation,
through a director or officer or employee of the Seller or of any
member of the Seller's Group (excluding the Company)) or if:
(i) it is a partner, director, consultant or agent in, of or to any
person who carries on the business; or
(ii) it has any direct or indirect financial interest (as shareholder
or otherwise) in any person who carries on the business; or
Page 16 of 48
(iii) it is partner, director, consultant or agent in, of or to
any person who has a direct or indirect financial
interest (as shareholder or otherwise) in any person who
carried on the business
disregarding any financial interest of a person in securities which are
listed on the London Stock Exchange or traded on a recognised
investment exchange or overseas investment exchange (as such term is
defined in the Financial Services and Markets Act 2000) if that person,
the Seller and any person connected with him or them are interested in
securities which amount to less than 5 per cent. of the voting rights
(if any) attaching to the issued securities of that class; and
7.2.2 references to a Company include its successors in business.
7.3 PURCHASER COVENANTS: in consideration of the Seller agreeing to sell the
Shares to the Purchaser the Purchaser covenants with the Seller (for
itself and on behalf of Sand UK) that it will not and will procure that
its subsidiaries will not for a period of 3 years from Completion
solicit or entice away or endeavour to solicit or entice away any
employee of the Seller or Sand UK occupying a senior managerial or
software development position and likely to be in possession of
confidential information relating to the Seller or Sand UK or able to
influence customer relationships or connections of the Seller or Sand UK.
7.4 INDEPENDENCE OF UNDERTAKINGS: Each of the restrictions contained in
Clause 7.1 above shall be enforceable by the Purchaser independently of
each of the others as an entirely separable and severable undertaking.
7.5 SEVERABILITY: The parties acknowledge and agree that the above provisions
of this Clause 7 are considered by the parties to be fair and
reasonable, having regard in particular to the necessity to protect the
goodwill, secrets and customer connections of their businesses and the
amount of the consideration payable by the Purchaser pursuant to this
agreement, if it should be found by any competent court that any of such
restrictions is void or unenforceable for any reason and if by altering
or deleting part of the wording or substituting shorter periods of time
or a different geographical limit or more restricted ranges of
activities it would not be void or unenforceable, then there shall be
made such alteration or deletion or be submitted such next less
extensive periods and/or limits and/or activities as shall render the
relevant restriction valid and enforceable.
7.5 THIRD PARTY RIGHTS: The undertakings in Clause 7.1 shall be given to the
Purchaser for itself and as trustee of the Company and the undertaking
in clause 7.3 shall be given to the Seller for itself and as trustee of
Sand UK. The Company may enforce the terms of Clause 7.1 against the
Seller under the Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇ and Sand
UK may enforce the terms of clause 7.3 against the Purchaser under the
Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇.
8 ANNOUNCEMENTS
No party shall make or permit any person connected with him to make any
announcement concerning this sale and purchase or any ancillary matter
before, on or after Completion except as required by law or any
competent regulatory body or with the written approval of the other
parties, such approval not to be unreasonably withheld or delayed. The
restrictions in this Clause 8 shall apply without limit of time.
9 NOTICES
9.1 NOTICES: Any notice or other communication to be served or given under
this agreement shall be in writing and signed on behalf of the party
giving it and shall be delivered or sent by first class pre-paid
recorded delivery or registered post or by fax to the party to be served
at his address appearing in this agreement or at such other address as
it may have notified to the other parties in accordance with this clause.
SELLER
FAO ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, CA
Vice-President and Chief Executive Officer
Page 17 of 48
Sand Technology inc.
▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
WITH COPIES
FAO ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
FAX NUMBER ▇▇▇▇ ▇▇▇ ▇▇▇▇
AND
FAO ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, de ▇▇▇▇▇
▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Tel.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
PURCHASER
FAO ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
ADDRESS FOR SERVICE ▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
FAX NUMBER ▇▇▇▇▇ ▇▇▇▇▇▇
9.2 DEEMED SERVICE: Any notice or document shall be deemed to have been served:
9.2.1. if delivered by messenger, at the time of delivery as indicated
in the record of the messenger service; or
9.2.2 if posted, at 10.00am on the second business day after it was put
into the post; or
9.2.3 if sent by fax on a Business Day, at the time of transaction or if
not sent on a Business Day on the Business Day following the day of
transmission.
9.3 PROOF OF SERVICE: In proving service of a notice or document it shall be
sufficient to prove that delivery was made or that the envelope containing
the notice or document was properly addressed and posted as a prepaid first
class recorded delivery letter or that the fax message was properly
addressed and despatched as the case may be.
9.4 NO ELECTRONIC SERVICE: Any notice or communication given under this
agreement shall not be validly service if sent by e-mail.
10 GENERAL
10.1 SURVIVAL OF OBLIGATIONS: Each of the obligations, Warranties, Purchaser
Warranties, Indemnities and undertakings set out in this agreement which
is not fully performed at Completion will continue in full force and
effect after Completion.
10.2 NO ASSIGNMENT: None of the rights or obligations of the Seller under this
agreement may be assigned or transferred. None of the rights or
obligations of the Purchaser under this agreement may be assigned or
transferred without the prior written consent of the Seller, such consent
shall be deemed to be given in respect of a transfer or assignment to
(i) a company which is a member of the Purchaser's Group and for these
purposes the Purchaser's Group
Page 18 of 48
means the Purchaser, any holding company of the Purchaser, and any
subsidiary of the Purchaser or such holding company or (ii) any funder
(debt or equity) which has provided funds to the Purchaser in connection
with the acquisition contemplated hereby. Provided in the case of (i)
above, if the assignee or the transferee ceases to be a member of the
Purchaser's Group they shall re-assign or transfer the rights under this
agreement to the Purchaser.
10.3 RELEASES: Either party may release or compromise in whole or in part the
liability of the other under this agreement or grant any time or other
indulgence without affecting any other liability of the other under this
agreement.
10.4 COSTS: Each party shall pay the costs and expenses incurred by him in
connection with the entering into and completion of this agreement. The
Purchaser shall be liable in for any stamp duty payable in respect of the
transfer of the Shares to it pursuant to this agreement.
10.5 COUNTERPARTS: This agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same agreement
and any party may enter into this agreement by executing a counterpart.
10.6 THIRD PARTY RIGHTS: Except as provided in Clause 7.5 and for the indemnity
under clause 6.6, the terms of this agreement may be enforced only by a
party to it and the operation of the Contracts (Rights of Third Parties)
▇▇▇ ▇▇▇▇ is excluded.
10.7 AMENDMENT: No amendment or variation to this agreement or any of the
documents referred to in it shall be effective unless in writing and
signed by or on behalf of each of the parties.
10.8 TIME OF THE ESSENCE: Time is of the essence as regard every obligation of
any party under this agreement.
10.9 SAND STOCK OPTION: The Seller undertakes to the Purchaser to take all
actions necessary to enable all those employees of the Company as at the
date of Completion who are entitled to exercise options for Class A Common
Shares in the share capital of the Seller to continue to be so entitled to
exercise such options under the terms of the Sand Stock Option Plans
notwithstanding their ceasing to be employed by the Seller's Group
provided that such options shall lapse on such individuals ceasing to be
employees of the Purchaser or the Company (as the case may be).
10.10 ACCESS TO INFORMATION: The Seller undertakes to provide all reasonable
assistance, reasonably requested by the Purchaser for the provision of
and/or access to information (at the cost of the Purchaser) that may be
retained by the Seller and which information relates to the Company.
11 WHOLE AGREEMENT
This agreement and the documents referred to in it contain the whole
agreement between the parties relating to the transactions contemplated by
this agreement and supersede all previous agreements between the parties
relating to these transactions and the only remedies available to the
parties shall be those under this agreement. The Purchaser acknowledges
that it has entered into this agreement in reliance only upon the terms
specifically contained or incorporated in this agreement and save as
expressly set out in this agreement the Seller shall have no liability in
respect of any other representation, warranty or promise made prior to the
date of this agreement unless it was made fraudulently.
12 GOVERNING LAW
12.1 GOVERNING LAW: This agreement is governed by and shall be construed in
accordance with English law.
12.2 JURISDICTION: The Seller submits to the exclusive jurisdiction of the
English courts for all purposes relating to this agreement and irrevocably
appoints Sand UK as its agent for service of process and acknowledges and
agrees that Sand UK is duly authorised to receive the same on the Seller's
behalf.
AS WITNESS the duly authorised officer of each of the Seller and the Purchaser
on the date which appears first on page 1.
Page 19 of 48
SCHEDULE 1
PARTICULARS OF THE COMPANY
Registered number: 3644914
Registered office: ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Date and place of
incorporation: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ and Wales
Directors: ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Secretary: Hillgate Secretarial Limited
VAT number: 731919819
Accounting reference date: 31 July
Auditors: Deloitte & Touche
Page 20 of 48
SCHEDULE 2
THE PROPERTIES
Description Landlord Tenant Term Rent Rent Review Present use
------------------------------------------------------------------------------------------------------------------------------------
Underlease of Computer the Company 6 years from 28th L57,840.50 p.a. 17 March 2003, Offices
4th Floor, Associates UK (Undertenant) August 2001 (not yet taken
The Platinum Centre, Limited Expiry 11 place)
City Gateway, December 2007
St. Albans, (Ultimate
Hertfordshire Landlord under
head lease:
Allied ▇▇▇▇▇▇
Assurance plc)
------------------------------------------------------------------------------------------------------------------------------------
Underlease of Part Computer the Company 4 3/4 years, from L152,329 p.a. 17 March 2003, Offices
2nd Floor, Associates UK (Undertenant) 14th March 2003 (not yet taken
The Platinum Centre Limited Expiry 11 place)
City Gateway, December 2007
St. Albans, (Ultimate
Hertfordshire Landlord under
head lease:
Allied ▇▇▇▇▇▇
Assurance plc)
------------------------------------------------------------------------------------------------------------------------------------
17th Floor of the Cheltenham the Company 6 months from 1 L1057 per None Offices
Animation Block, Film Studios June 2003 month plus VAT
Cheltenham Film Limited Expiry 1
Studios, Arie Court December 2003
▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇
------------------------------------------------------------------------------------------------------------------------------------
Office 102, Regus (UK) the Company 1 August 2002 to Until 31 July None during initial Offices
▇▇▇▇▇▇ Business Park, Limited 31 July 2003 2003 the rent is term but if
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇ party can L1260 plus VAT agreement
Colton, Leeds terminate at 31 per month and continues then an
▇▇▇▇ ▇▇▇ July 2004 additionally L30 increase to market
each per month price
(for 2 car-
parking space)
From 1 August 2003
the rent will be
L1350 plus VAT per
month and additionally
L30 each per month
(for 2 parking spaces)
------------------------------------------------------------------------------------------------------------------------------------
Page 21 of 48
SCHEDULE 3
TITLE WARRANTIES
1 The Seller has full power and authority to enter into and perform this
agreement and the Tax Deed and this agreement and the Tax Deed when
executed will constitute binding obligations on the Seller in accordance
with their respective terms.
2 The Seller is the registered holder of and is entitled to sell and transfer
to the Purchaser the full legal and beneficial ownership of the Shares free
from all encumbrances on the terms of this agreement, without the consent
of any person.
3 The Seller is entitled to sell and transfer the Shares to the Purchaser
with full title guarantee.
4 The Shares constitute the whole of the issued and allotted share capital of
the Company and are fully paid or credited as fully paid.
5 There is not, nor is there any agreement or arrangement to create, any
encumbrance on, over or affecting any of the Shares and no claim has been
made by any person to be entitled to any of the foregoing.
Page 22 of 48
SCHEDULE 4
COMMERCIAL WARRANTIES
1 FURTHER DEFINITIONS
In this Agreement unless the context requires otherwise:
"HARDWARE" means any and all computer, telecommunications and network
equipment;
"INTELLECTUAL PROPERTY AGREEMENTS" means all agreements or arrangements
entered into by the Seller or any member of the Seller's Group (other than
the Company) relating to the Intellectual Property Rights of the Company,
all of which (if any) are listed in the Disclosure Letter;
"IT CONTRACTS" means any agreements or arrangements with third parties
relating to IT Systems or IT Services, including all hire purchase or
procurement contracts or leases of Hardware owned or used by the Company
and all licences of Software owned or used by the Company;
"IT SERVICES" means any services relating to the IT Systems or to any
other aspect of the Company's data processing or data transfer
requirements, including facilities management, bureau services, hardware
maintenance, software development or support, consultancy, source code
deposit, recovery and network services;
"IT SYSTEMS" means Hardware and/or Software owned or used by the Company
and any plant, machinery, equipment or control system in which any
computer program is embedded or used by the Company in or in connection
with the Business;
REFERENCES IN THIS SCHEDULE 4 TO THE "SELLER" SHALL BE DEEMED TO
INCLUDE REFERENCES TO ANY AND ALL MEMBERS OF THE SELLER'S GROUP OTHER
THAN THE COMPANY.
2 THE SELLER
2.1 OTHER INTERESTS
2.1.1 The Seller is not individually, collectively or with any other person or
persons interested in any way in any Intellectual Property Rights owned or
used by the Company, including, without limitation, the Company Software.
2.1.2 The Seller has no ownership in or right or licence to use the Company
Software.
2.2 LOANS AND DEBTS
There will not immediately following Completion be:
(a) any indebtedness or other liability (actual or contingent) owing by
the Seller to the Company;
(b) any indebtedness or other liability (actual or contingent) owing by
the Company to the Seller; and
(c) any guarantee or security for any such indebtedness or liability as
aforesaid.
2.3 FEES AND COMMISSIONS
Neither the Company nor the Seller has entered into any contract or
arrangement whereby any person is entitled to receive from the Company any
finder's fee, brokerage or other commission in connection with the sale
and purchase of the Shares under this agreement.
2.4 ARM'S LENGTH ARRANGEMENTS
There is not outstanding, and there has not at any time since the
Company's incorporation been outstanding, any agreement, arrangement or
understanding (whether legally enforceable or not) to which the Company is
a party and in which the Seller or former
Page 23 of 48
director of the Company (who is or was also a director of the Seller) is or
has been interested whether directly or indirectly.
3. CORPORATE
3.1 There are no agreements or arrangement in force, other than this
agreement, which grant to any person the right to call for the issue,
allotment or transfer of any share or loan capital of the Company
3.2 The register of members and other statutory books of the Company have been
properly kept and contain an accurate complete record of the matters with
which they should deal; and no notice or allegation, that any of them is
incorrect or should be rectified, has been received by the Seller or the
Company secretary.
3.3 All returns, particulars, resolutions and documents required to be filed
with the Registrar of Companies in respect of the Company have been duly
filed and were correct.
3.4 Full compliance has been made with all provisions of the Companies Act and
all other legal requirements in connection with the formation of the
Company, any allotment, issue, increase or redemption of shares or other
securities in the Company, any reduction of the authorised or issued share
capital of the Company, any amendment to the memorandum or articles of
association of the Company, the passing of any resolutions by the Company
and the payment of all dividends by the Company.
3.5 The Company does not own (and to the best of the Seller's knowledge has
never agreed to own) any shares or debentures on the capital of, nor does
it have (nor has it ever agreed to have) any beneficial interest or control
over, any other company or business.
4 ACCOUNTS
4.1 THE ACCOUNTS
4.1.1 The Accounts have been prepared in accordance with the historical
cost convention.
4.1.2 The bases and policies of accounting, adopted for the purpose of
preparing the Accounts, are the same as those adopted in preparing
the audited accounts of the Company in respect of the three last
preceding financial years.
4.1.3 The Accounts:
(a) give a true and fair view of the assets and liabilities and state
of affairs of the Company at the Accounts Date and of its
profits for the financial year ended on such date;
(b) were prepared in accordance with and comply with the requirements
of the Companies Act at the date of publication;
(c) were prepared in accordance with and comply with all Accounting
Requirements relevant at the time of their preparation;
4.2 THE MANAGEMENT ACCOUNTS
The Management Accounts have been carefully prepared on a basis consistent
with the Accounts and fairly reflect the trading position of the Company as
at their date and for the period to which they relate.
4.3 BOOKS AND RECORDS
To the best of the Seller's knowledge all the accounts, books, ledgers and
financial records of whatsoever kind of the Company (including all invoices
and other records required for VAT purposes):
(a) are in the possession of the Company;
(b) have been properly and accurately kept and completed;
(c) do not contain any material inaccuracies or discrepancies of any kind;
Page 24 of 48
and no notice or allegation that any of the same is incorrect or should be
revised has been received by the Seller.
4.4 CAPITAL COMMITMENTS AND ASSETS
Since the Accounts Date, the Seller has not required the Company to commit
to any capital commitments individually in excess of L5,000 and in
aggregate of L25,000 nor required the Company to agree to make any capital
expenditure individually in excess of L5,000 and in aggregate in excess of
L25,000, nor required the Company to incur or agree to incur any capital
commitments in such proportions.
4.5 DIVIDENDS AND DISTRIBUTIONS
4.5.1 Since the Accounts Date no dividend or other distribution (as defined
in Taxes ▇▇▇ ▇▇▇▇ Part III and section 418) has been, or is treated
as having been declared, paid or made by the Company.
4.5.2 All dividends or distributions declared, made or paid by the Company
have been declared, made or paid in accordance with the Articles of
Association of the Company and the applicable provisions of the
Companies Act.
5 TRADING
5.1 SINCE THE ACCOUNTS DATE
5.1.1 Since the Accounts Date:
(a) the Company has not declared, made or paid any dividend, bonus or
other distribution of capital or income (whether a qualifying
distribution or otherwise);
(b) the Company (including any class of its members) has not passed any
resolution whether in general meeting or otherwise;
(c) neither the Seller nor to the best of the Seller's knowledge the
Company has prejudiced the Company's goodwill by doing or omitting to
do anything;
(d) the Company has to the best of the Seller's knowledge paid its
creditors in accordance with their respective credit terms and there
are no amounts owing by the Company which have been due for more than
six weeks;
(e) the Company has carried on its business in the ordinary course;
(f) the Company has not acquired or agreed to acquire or dispose of or
agreed to dispose of any asset other than (i) in the ordinary course
of trading or (ii) for a consideration which in the case of a disposal
is less than open market value or in the case of an acquisition is
more than open market value;
(g) the Company has not assumed or incurred or agreed to assume or incur
any liability, obligation or commitment otherwise than in the
ordinary course of trading;
(h) to the best of the Seller's knowledge there has been no material
increase in the levels of debtors or creditors or in the average
collection or payment periods for debtors and creditors of the Company
as derived from the Accounts.
5.2 CONDUCT OF BUSINESS
5.2.1 The Company has at all times carried on business and conducted its
affairs in all material respects in accordance with its Memorandum and
Articles of Association.
5.2.2 To the best of the Seller's knowledge the Company is empowered and
duly qualified to carry on business in all jursidictions in which it
now carries on business.
5.2.3 The Company is conducting its business in all material respects in
accordance with all applicable laws and regulations, whether of the
United Kingdom or such other jurisdictions in which it carries out its
business at the date of Completion.
Page 25 of 48
5.3 REPORTS BY FINANCIAL OR MANAGEMENT CONSULTANTS
Neither the Seller nor the Company has commissioned any reports concerning
the Company by financial or management consultants within the period of
three years prior to the date of execution of this agreement.
5.4 MANAGEMENT AGREEMENTS
There are no arrangements or understandings (whether legally enforceable or
not) between the Company and the Seller relating to the management of the
Company's business, or the appointment or removal of directors of the
Company, or the ownership or transfer of ownership or the letting of any of
the assets of the Company, or the provision, supply or purchase of finance,
goods, services or other facilities to, by or from the Company.
5.5 LITIGATION AND DISPUTES
5.5.1 The Company is not engaged in any litigation, arbitration or criminal
proceedings, as plaintiff or defendant, and to the best of the Seller's
knowledge there are no such proceedings pending or threatened, either
by or against the Company or any person for whose acts or defaults the
Company may be vicariously liable.
5.5.2 To the best of the Seller's knowledge there is no matter or fact in
existence which might reasonably give rise to any legal proceedings or
arbitration involving the Company including any which might in the
opinion of the Seller form the basis of any criminal prosecution
against the Company.
5.5.3 There is not outstanding any injunction or order for specific performance
having been granted against the Company.
5.5.4 No order or judgement has been given by any court or governmental
agency relating to the Company which is still in force and the Company
has not given any undertaking to any court or to any third party
arising out of any legal proceedings.
5.5.5 No judgement has been executed against the Company which remains
undischarged nor is there any unfulfilled or unsatisfied decree or
other court order outstanding against the Company.
5.6 SOLVENCY AND STATUS
5.6.1 The Company has not stopped payment and is not insolvent nor unable
to pay its debts within the meaning of section 123 of the Insolvency
▇▇▇ ▇▇▇▇.
5.6.2 No order has been made or petition presented or resolution passed for
the winding-up of the Company.
5.6.3 No distress, execution or other process has been levied on any of the
Company's assets.
5.6.4 No order has been made, or applied for, and no petition has been for
the appointment of an administrator to the Company.
5.6.5 No receiver or administrative receiver has been appointed by any person
over the business or assets of the Company or any part thereof.
5.6.6 No person has taken any steps to enforce any charge or security interest
against the Company nor is the Company in default under any charge or
security interest.
5.7 POWERS OF ATTORNEY AND AUTHORITIES
5.7.1 To the best of the Seller's knowledge, no power of attorney given on
behalf of or relating to, the Company is in force.
5.7.2 To the best of the Seller's knowledge there are not outstanding any
authorities (express or implied) by which any person may enter into any
contract or commitment to do anything on behalf of the Company.
Page 26 of 48
5.8 LICENSES AND CONSENTS
5.8.1 The Company has obtained all necessary licences (including statutory
licences), permits, authorities (public and private) and consents from
any person, authority or body for the proper conduct of its business.
5.8.2 The Company is not in breach of any of the terms or conditions of any
of its licences, permits, authorities or consents; and so far as the
Seller is aware, there are no factors that might in its opinion materially
prejudice the continuation or renewal of any of such licences or consents.
5.9 UNDERTAKINGS
The Company is not a party to any undertaking or assurance given to any
court or governmental agency or regulatory authority which is still in
force.
5.10 CONTRACTS
5.10.1 The Seller has not committed the Company to any contract that is
subsisting and which is, or may be, material in relation to its
business.
5.10.2 The Company is not party to any contract, transaction, arrangement or
liability which:
(a) is outside the ordinary course of business;
(b) is for a fixed term of more than 12 months;
(c) is of a long-term nature (that is, unlikely to have been fully
performed, in accordance with its terms, more than 12 months
after the date on which it was entered into or undertaken);
(d) is incapable of termination in accordance with its terms, by the
Company, on 60 days' notice or less;
(e) involves payment by the Company by reference to fluctuations in
the index of retail prices, or any other index, or in the rate of
exchange for any currency;
(f) involves quantifiable aggregate outstanding expenditure by the
Company of more than L50,000;
(g) involves, or is likely to involve, the supply of goods or
services the aggregate sales value of which will represent in
excess of 5 per cent of the turnover for the financial year of
the Company immediately preceding Completion;
(h) is a contract for hire or rent, hire purchase or purchase by way
of credit sale or periodical payment.
5.10.3 So far as the Seller is aware, the Company is not a party to any
agreement for the supply of services or for agency.
5.10.4 The Company is not, nor has agreed to become, a member of any joint
venture, consortium, partnership or other unincorporated association
and the Company is not, nor has agreed to become, a party to any
agreement or arrangement for sharing commissions or other income.
5.10.5 To the best of the Seller's knowledge, the Company has not entered
into any transaction with any director of the Company or any connected
person of such director within the meaning of Section 346 of the
Companies Act.
5.10.6 To the best of the Seller's knowledge the Company provides maintenance
services on all sales of Company Software.
Page 27 of 48
5.11 PERFORMANCE OF CONTRACTS
5.11.1 To the best of the Seller's knowledge the terms of all contracts
of the Company have been complied with by the other parties to the
contracts in all material respects.
5.11.2 To the best of the Seller's knowledge there are no outstanding
claims, separately or in the aggregate, of material amounts, against
the Company on the part of customers or other parties in respect of
defects in quality or delays in delivery or completion of contracts or
deficiencies of design or performance or otherwise relating to
liability for goods or services sold or supplied by the Company and no
such claims are threatened or anticipated and so far as the Seller is
aware, there is no matter or fact in existence in relation to goods or
services currently sold or supplied by the Company which might rise to
the same.
5.11.3 The Seller has no knowledge of the invalidity of or grounds for
rescission, avoidance or repudiation of any agreement or other
transaction to which the Company is a party and no notice of any
intention to terminate, repudiate or disclaim any such agreement or
other transaction has been received either by the Seller or the
Company.
5.11.4 To the best of the Seller's knowledge the Company is not currently
a party to any contract under which it had failed or is failing to
comply with any deadlines or milestones.
5.12 DEFAULTS UNDER CONTRACTS
5.12.1 No threat or claim of default, under any agreement, instrument or
arrangement to which the Company is a party has been received by the
Seller or any member of the Seller's Group and to the best of the
Seller's knowledge is outstanding, against the Company.
5.12.2 To the best of the Seller's knowledge no party to any agreement
with, or under an obligation to, the Company is in default there
under, being a default which would be material in the context of the
financial or trading position of the Company; and so far as the Seller
is aware there are no circumstances likely to give rise to such a
default.
5.13 CONSUMER PROTECTION
The Company has not manufactured, sold or supplied products which are or
were or have become in any respect faulty or defective, or to the best of
the Seller's knowledge which do not comply in any respect with any
warranties or representations, expressly or impliedly made by the
Company, or with all applicable regulations, standards and requirements
in respect thereof.
5.14 DATA PROTECTION
5.14.1 To the best of the Seller's knowledge, all personal data held by
the Seller on behalf of or relating to the Company or its employees
has been held in accordance with the data protection principles and
there has been no unauthorised processing or disclosure of such
personal data by the Seller or so far as the Seller is aware by any
third party.
5.14.2 The Company and to the best of the Seller's knowledge its employees
have complied with the requirements of the Data Protection ▇▇▇ ▇▇▇▇.
5.14.3 The Company has notified itself under the Data Protection ▇▇▇ ▇▇▇▇
and any notification regulations enacted under the Act in respect of
all personal data held or processed by it, and all due and requisite
fees in respect of such registrations have been paid and to the best
of the Seller's knowledge the Company has at all times complied with
all prior data protection legislation including the Data Protection
▇▇▇ ▇▇▇▇.
5.14.4 To the best of the Seller's knowledge the details contained in
such notifications and in any entry in the register of persons who
have given notification kept by the Information Commissioner (the
"REGISTER") are correct, proper and suitable for the purpose(s) for
which the Company holds or uses the personal data which are the
subject of them, any changes in the registrable particulars have been
notified to the Information Commissioner.
5.14.5 To the best of the Seller's knowledge there are no outstanding
enforcement, information or special information notices or any other
nature or notice under the Data Protection ▇▇▇ ▇▇▇▇ or any other
relevant legislation including the Data Protection ▇▇▇ ▇▇▇▇ currently
outstanding against the Company, nor is there any outstanding appeal
against such notices. The Seller
Page 28 of 48
is not aware of any circumstances which may in its opinion give rise
to the giving of any such notices to the Company.
5.14.6 To the best of the Seller's knowledge there are no unsatisfied
requests to the Company made by data subjects in respect of personal
data held by the Company, nor any outstanding applications for
rectification, blocking, erasure or destruction of personal data.
5.14.7 To the best of the Seller's knowledge there are no outstanding
notices to the Company made by data subjects in respect of their right
to prevent processing likely to cause damage or distress or for the
purposes or direct marketing or in relation to automated decision
taking.
5.14.8 There are no outstanding claims for compensation for inaccuracy, loss
or unauthorised disclosure of personal data or contravention by the
Company of any of the requirements of the Data Protection Act 1998 nor
to the best of the Seller's knowledge is any personal data held by the
Company inaccurate in any material respect, nor has the Company to the
best of the Seller's knowledge lost or made any unauthorised
disclosure of any such data.
5.15 GUARANTEES
The Company is not responsible for the indebtedness of the Seller nor, to
the best of the Seller's knowledge of any other person, nor to the best
of the Seller's knowledge is the Company party to any option or
pre-emption right or any guarantee, suretyship or any other obligation
(whatever called) to pay, purchase or provide funds (whether by the
advance of money, the purchase of or subscription for shares or other
securities or the purchase of assets or services or otherwise) for the
payment of, or as an indemnity against the consequence of default in the
payment of, any indebtedness of any other person.
5.16 ASSETS
All the assets necessary for the conduct of the Business are legally and
beneficially owned by the Company.
6. INTELLECTUAL PROPERTY
6.1 TITLE
6.1.1 The Company is and has been at all times since the date of its creation
the sole legal and beneficial owner of the Intellectual Property
Rights specified in Schedule 7 an otherwise used in the Business free
from any Encumbrance.
6.1.2 The Intellectual Property Rights specified in Schedule 7 and otherwise
used in the Business, and the Company's right, title and interest
therein is valid and subsisting, is not the subject of any current,
pending or threatened challenge, claim or proceeding, including for
opposition, cancellation, revocation or rectification, and to the best
of the Seller's knowledge has not since the date of incorporation of
the Company been subject of any such challenge, claim or proceeding,
and there are no facts or matters which might reasonably give rise to
any such challenge, claim or proceeding.
6.1.3 To the best of the Seller's knowledge none of the Intellectual Property
Rights specified in Schedule 7 or otherwise used in the Business has
been at any time wrongfully or unlawfully acquired or used by the
Company.
6.1.4 All Know-How owned, used or exploited by the Company has been kept secret
and confidential and has not been disclosed to third parties.
6.1.5 The Seller has not received notice that any third party has asserted any
rights in or used any Intellectual Property Rights of the Company.
6.1.6 No Intellectual Property Rights specified in Schedule 7 or otherwise
used in the Business have been charged, mortgaged, licensed or otherwise
encumbered.
6.2 INTELLECTUAL PROPERTY AGREEMENTS
6.2.1 Save as disclosed in the Intellectual Property Agreements to the best of
the Seller's knowledge the Company has not entered into any agreement,
arrangement or understanding (whether legally enforceable or not) for
the licensing, or otherwise permitting the use or exploitation, of the
Intellectual Property Rights specified in Schedule 7 or
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otherwise used in the Business or which prevents, restricts or
otherwise inhibits the Company's freedom to use and exploit
such Intellectual Property Rights.
6.2.2 To the best of the Seller's knowledge the Company is not in breach
of any Intellectual Property Agreement and the Seller is not aware
of the existence of any circumstances under which the Company's
right to use any Intellectual Property Rights specified in Schedule 7
or otherwise used in the Business may be terminated.
6.3 INFRINGEMENT AND MISUSE
6.3.1 To the best of the Seller's knowledge none of the Intellectual
Property Rights specified in Schedule 7 or otherwise used in the
Business is currently being infringed, misused or used without
authorisation by any third party or has been so infringed, misused
or used without authorisation since the date of incorporation of the
Company and neither the Company nor the Seller nor to the best of the
Seller's knowledge, the Company, has received notice that any third
party has threatened any such infringement, misuse or unauthorised
use and the Seller is not aware of any allegations of the same.
6.3.2 To the best of the Seller's knowledge the Company is not engaged
in any activities which infringe or otherwise involve in the
misuse or unauthorised use of any patents, know-how, other
confidential information, registered design, copyright, database
rights, design rights, trade marks, domain names, semiconductor
topography rights, business names, moral rights, rights in the
nature of any of the aforesaid or rights in the nature of unfair
competition rights belonging to any third party or which give any
third party the right to instigate an action against the Company
for passing off.
6.4 PROTECTION
The Company has taken all reasonable steps to protect and preserve the
Intellectual Property Rights of the Company including,
but not limited to:
(a) taking all reasonable steps to preserve the confidentiality
of all Confidential Information used by the Company
including, but not limited to the Company Software;
(b) opposing any application to register any trade ▇▇▇▇ or the
use of any trade name likely to be confused with any of
the Business Names used by the Company in relation to
the goods or services in respect of which the trade names
are used by the Company; and
(c) ensuring that all Intellectual Property Rights which are
capable of being or required to be registered or recorded are
so registered or recorded.
6.5 MORAL RIGHTS
To the best of the Seller's knowledge, no moral rights as defined
in Chapter IV of the Copyright, Designs and Patents ▇▇▇ ▇▇▇▇
(as amended) have been asserted or are capable of being asserted which
could materially affect the use or value of any of the Intellectual
Property Rights of the Company and the best of the Seller's knowledge
the Company is not engaged in any activities which infringe any moral
rights belonging any third party.
6.6 IT IDENTIFICATION AND OWNERSHIP
6.6.1 Save in respect of IT Systems leased or licensed to the Company
under any contract all IT Systems and data are legally and
beneficially owned by the company, free from encumbrances, and are
not wholly or partly dependent on any facilities or services not
under the exclusive ownership and control of the Company.
6.6.2 All the IT Contracts are valid and binding and in full force and
effect. The Seller has not received notice to terminate any of the
IT Contracts nor notice that the IT Contracts (or any of them) has
been the subject of any breach or default, or of any event which
(with notice or lapse of time or both) would constitute a default,
or is liable to be terminated or otherwise adversely affected by
the Transaction contemplated by this agreement.
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6.7 COMPUTER OPERATION AND MAINTENANCE
6.7.1 To the best of the Seller's knowledge all IT Systems are in good
working order and are being properly maintained and replaced. To the
best of the Seller's knowledge no part of the It Systems has
materially failed to function at any time during the five years prior
to the date hereof. To the best of the Seller's knowledge maintenance
providers have fulfilled their obligations in all material respects
under relevant maintenance agreements in accordance with the terms
of those agreements (and those terms provide for the Software
concerned to be updated free of charge, for errors to be
corrected and for the Software to be amended to reflect changes in
the law which impact on the Software).
6.7.2 To the best of the Seller's knowledge, all IT Services are being and
have been provided in accordance with all applicable specifications.
6.7.3 The Company has full and unrestricted access to and use of the IT
systems, and no third party agreements or consents are required to
enable the Company to continue such access and use following
completion of the transaction contemplated by this agreement.
6.7.4 To the best of the Seller's knowledge the Company does not share
access to any element of the IT Systems with any third party
(including the Seller or any member of the Seller's Group)
and the Company is not obliged to enter any agreement to share
access to any element of of the IT Systems.
6.7.5 A summary of the steps the Company has taken to ensure that its
business as carried on immediately prior to Completion can continue
in the event of a failure of the IT Systems (whether due to natural
disaster, power failure or otherwise) is contained in the Disclosure
Letter.
6.7.6 To the best of the Seller's knowledge the Company is not dependent
upon access to any IT Systems belonging to third parties (other than
connection to the internet or such access which is required as a
result of maintenance and support services provided to the Company)
in order to run and maintain the IT Systems.
6.8 SOFTWARE
6.8.1 The Company has absolute title and right to and copyright in each
item of the Company Software, including source code and object code,
user and other manuals, tapes, indices, descriptive
memoranda, original listings, development working
papers, calculations and all other relevant documents,
media and confidential information free of all encumbrances and
adverse claims and to the best of the Seller's knowledge no
property rights of the Company in such Company Software have been
sold, assigned, licensed or disposed of to any party other than
by the granting of non-exclusive licences to customers of the
Business in the ordinary course of the Business.
6.8.2 All source codes, tapes, indices, descriptive memoranda, original
listings, development working papers, calculation and know-how
relating to Company Software and any other documents or media
necessary conclusively to prove ownership of the Company
Software are recorded in human readable form and are in the possession,
custody or control of the Company. The Company is not a party to any
contract requiring the Company to place in escrow, or otherwise permit
any third party to use or have access to, the source code to any of
the Company Software.
6.8.3 To the best of the Seller's knowledge, where Intellectual Property
Rights in Software are not owned by the Company, the Company is
entitled to use and, where indicated, to grant sublicences to
third parties to use the Software pursuant to licences and/or
consents granted to the Company by the owner or licensee of such
Intellectual Property Rights. To the best of the Seller's knowledge
all royalties and other payments have been paid when due and there
has been no act or default by the Company or, where appropriate,
its sub-licensees or any other person which may in the Seller's
opinion result in such licences being terminated or the Company
being unable to obtain any benefit under such licences.
6.8.4 To the best of the Seller's knowledge, the Company has not at any
time had any dispute with any person relating to proprietary or
other rights in or the Company Software. To the best of the Seller's
knowledge, all licences relating to the Company Software granted by the
Company are in full force and effect and the Seller is not aware
of any breach of any terms
Page 31 of 48
of any such licences. To the best of the Seller's knowledge the
Company has on the termination of any licence granted by it
either recovered or secured the destruction of all copies of the
Company Software in the possession, custody or control of the
licensee or other contracting party at the date of such
termination.
6.8.5 To the best of the Seller's knowledge the Company has not at any
time had any material dispute with any person relating to
the functionality, quality or fitness for purpose of the Company
Software or relating to its compliance with its specifications
or with any warranties given by the Company or any other person
relating to it.
6.9 DATA COMPLIANCE
To the best of the Seller's knowledge all of the IT
Systems are Data Compliant. "Data Compliant" means that use and
functionality, and the ability to express data and calculate in
accordance with dates and times, are unaffected by changes in
dates, including year changes and leap years.
6.10 EURO COMPLIANCE
To the best of the Seller's knowledge all IT Systems
(a) in the case of Software, have the ability accurately to
recognise, manage, accommodate and manipulate
monetary figures expressed in the denomination known as the
"Euro" (the currency adopted by the European Union for the
purposes of European monetary union"), and accurately to
convert data for this purpose (including by way
of triangulation);
(b) will comply with all legal requirements applicable to the
Euro at the date of this Agreement, such as the rules on
conversion and rounding set out in Article 235 of the
European Treaty of Maastricht (7 February 1992) and European
Union Council Regulation(EC) number 1103/97; and
(c) in the case of Hardware and the Software, are capable of
displaying and printing (and incorporating in all relevant
screen layouts) all symbols, acronyms and codes adopted by
the European Union at the date of this agreement in relation
to the Euro
7 EMPLOYMENT
7.1 SHARE SCHEMES
Details of any share options in the share capital of the Seller
held by each employee of the Company including details of the share
option scheme under which they are granted are set out in the
Disclosure Letter.
8 EFFECT OF TRANSACTION
8.1 CHANGE OF OWNERSHIP
So far as the Seller is aware, after Completion (whether by the
reason of an existing agreement or arrangement or otherwise) or as
a result of the proposed acquistion of the Shares by the Purchaser:
(a) no supplier of the Company will be entitled to cease,
supplying the Company or the substantially reduce its
supplies to the Company: and
(b) no customer of the Company will be entitled to cease, to
deal with the Company or to substantially reduce its existing
level of business with the Company.
8.2 COMPLIANCE WITH THIS AGREEMENT
So far as the Seller is aware, the acquisition of the Shares by
the Purchaser or compliance with the terms of this Agreement does not
and will not:
conflict with, or result in the breach of, or constitute a default
under, any of the terms, conditions or provisions of any
agreement or instrument to which the Company is a party, or any
provision of the Memorandum of Association or Articles of Association
of the Company or any encumbrance, lease, contract,
Page 32 of 48
order, decree, award, interdict, regulation or other
restriction or obligation of any kind or character by which or to
which any asset of the Company is bound or subject;
(b) relieve any person from any obligation to the Company or
any person to determine any such obligation, or any right or
benefit enjoyed by the Company;
(c) directly result in the creation, imposition, crystallisation
or enforcement of any encumbrance whatsoever on any of the
assets of the Company;
(d) directly result in any indebtedness of the Company becoming
due, or capable of being declared due, and payable prior to
its stated maturity;
(e) conflict with, violate or result in a breach of any law,
regulatory order, decree or with applicable to the Company.
9 INFORMATION
All factual information given by the Seller to the Purchaser,
the Purchaser's Solicitors or the Purchaser's Accountants relating
to the business, activities, affairs, or assets or liabilities
of the Company was when given and is (unless subsequently
updated) now accurate in all material respects and not in any
way misleading in any material respects.
Page 33 of 48
SCHEDULE 5
TAX WARRANTIES
1 FURTHER DEFINITIONS
In this Agreement unless the context requires otherwise:
"ACT" means advance corporation tax;
"CAA 2001" means the Capital ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇;
"FINANCE ACT" and "FA" followed by a year shall mean the Finance Act of
the year in question;
"IHTA" means the Inheritance Tax ▇▇▇ ▇▇▇▇;
"LIABILITY TO TAXATION" has the meaning ascribed in the Tax Deed;
"RELIEF" has the meaning ascribed in the Tax Deed;
"VATA" means Value Added Tax ▇▇▇ ▇▇▇▇; and
"VAT" means Value Added Tax.
2 GENERAL
2.1 The Company has not within the last six years:
(a) been the subject of an investigation by the Inland Revenue or any
other relevant tax authority; or
(b) been the subject of any discovery by the Inland Revenue or any
other relevant tax authority.
and the Sellers are not aware of any facts or matters which are likely to
or may lead to any such investigation or discovery.
2.2 To the extent required by generally accepted accounting principles, the
Accounts make provision or reserve for all Taxation for which the
Company was at the Accounts Date or at any time thereafter may have
become or may hereafter become liable to pay:
(a) on or in respect of or by reference to any profits, gains or income
of the Company for any period ended on or before the Accounts Date;
and
(b) on or in respect of any distribution paid or made by the Company on
or before the Accounts Date; and
(c) in respect of any act event, omission, transaction or other matter
which occurred or took place or was entered into on or before the
Accounts Date.
2.3 To the extent required by generally accepted accounting principles, the
Accounts make provision for deferred Tax.
2.4 The Disclosure Letter contains full details of all applications made
relating to the Company and all clearances received from the Inland
Revenue under the provisions of any of:
(a) TCGA Section 139(5) (company reconstruction or amalgamation);
(b) Taxes Act Section 215 (demergers);
(c) Taxes Act Section 225 (purchase of own shares);
(d) Taxes Act Section 707 (transactions in securities);
(e) Taxes Act Section 765 (migration of companies);
(f) Taxes Act Section 776(11) (transactions in land); and/or
Page 34 of 48
(g) TCGA Section 138 (reconstructions or amalgamations),
and any such transaction or event was carried out strictly in
accordance with the terms described in any application for the said
clearance.
3 COMPLIANCE
3.1 The Company has at all times (and will before the date of this
Agreement have) submitted to all relevant tax authorities (whether of
the United Kingdom or elsewhere) by the requisite dates all returns
which it is required by law to make together with all appropriate
claims for Reliefs and allowances, applications and computations.
3.2 All such returns, claims, applications and computations are complete,
true and accurate in all material respects, give full disclosure of
all material facts and circumstances and are not the subject of any
question or dispute and so far as the Seller is aware, are not likely
to become the subject of any question or dispute with any such tax
authority.
3.3 All payments by the Company to any person which ought to have been
made under deduction of tax have been so made and the Company has (if
required by law to do so) accounted to the relevant tax authority for
the tax so deducted.
3.4 The Company is not liable as agent or lessee for any tax liability of
another person.
3.5 No tax authority has agreed to operate any special arrangement (being
an arrangement which is not based on a strict and detailed application
of the relevant legislation or on generally published statements of
practice or generally published extra-statutory concessions) in
relation to the Company's affairs.
3.6 There are set out in the Disclosure Letter with express reference to
this paragraph full details of all matters relating to tax in respect
of which the Company (whether alone or jointly with any other person)
has an outstanding entitlement or obligation:
(a) to make any claim (including a supplementary claim) for relief
from tax;
(b) to make any appeal (including a further appeal) against an
assessment to tax;
(c) to make any application for the postponement of payment of tax; or
(d) to submit any return or provide particulars or information to any
tax authority.
3.6.2 The Company has complied with all notices served on it by any tax
authority and no such notice remains outstanding.
3.6.3 The Company has duly and punctually paid all tax which it has become
liable to pay and it has never paid or become liable to pay any
penalty, fine or surcharge in connection with tax.
3.6.4 The Company has maintained and has in its possession and under its
control all records and documentation that it is required by any tax
statute to maintain and preserve and the Company has complete and
accurate records and/or information to calculate its future) liability
to or relief from tax including, without limitation, arising on the
disposal of any asset owned by the Company at Completion or which has
been disposed of since the Accounts Date.
4 DISTRIBUTIONS
4.1 The Company has not since the Accounts Date made or agreed to make any
distribution for tax purposes.
4.2 The Company has not:
(a) been concerned in any exempt distribution within Taxes Act
Sections 213 to 218 within the period of five years preceding
Completion;
(b) issued any security now outstanding in circumstances such that
any interest or other payment payable in respect of it
constitutes a distribution for tax purposes;
(c) redeemed, repaid or repurchased or agreed to redeem, repay or
repurchase any shares of any class of its share capital or
otherwise reduced or agreed to reduce its share capital or any
class thereof; or
Page 35 of 48
(d) issued any share capital or securities as paid up other than by
receipt of new consideration within the meaning of Taxes Act
Section 254.
5 CAPITAL ALLOWANCES
5.1 No balancing charge under the capital allowances legislation would be
made on the Company if any asset or any pool of assets (that is to say
all those assets expenditure relating to which would be taken into
account in computing whether a balancing charge would arise on a
disposal of any of those assets) was disposed of by the Company for a
consideration equal to its book value as shown in or adopted for the
purpose of the Accounts.
5.2 All expenditure incurred by the Company or which it may incur under
any subsisting commitment on the provision of machinery or plant has
qualified or will qualify (if not deductible as a trading expense of a
trade carried on by the Company) for writing down allowances under the
capital allowances legislation.
5.3 So far as the Seller is aware there are no circumstances which could
give rise to, any dispute between the Company and any other person as
to the entitlement to capital allowances on any fixtures.
5.4 The Company has not made and does not require to be taken to have made
any election to have any asset treated as a short life asset within
the meaning of the capital allowances legislation.
5.5 The Company does not own any asset which is or is capable of being a
long life asset within the meaning of the capital allowances
legislation.
6 INTANGIBLE FIXED ASSETS
6.1 The tax written down value of each of the Company's intangible fixed
assets is not different from its value in or for the purposes of the
Accounts.
6.2 No credit would require to be brought into account by the Company for
tax purposes if any of its intangible fixed assets was to be realised
for a consideration equal to its value in or for the purposes of the
Accounts.
6.3 The Company has not made and so far as the Seller is aware is not
entitled to make any claim to have the cost for tax purposes of any of
its intangible fixed assets reduced by reference to the proceeds of
realisation of any other intangible fixed asset which was owned by the
Company or any other company.
6.4 The Company has never recognised a gain in respect of negative
goodwill.
7 CAPITAL GAINS
7.1 No chargeable profit or gain would arise in respect of any asset of
the Company:
7.1.1 treated as such in the Accounts if that asset were to be disposed of
for a consideration equal to its value in or for the purposes of the
Accounts;
7.1.2 acquired after the Accounts Date if that asset were to be disposed of
for a consideration equal to the consideration given for its
acquisition,
in each case disregarding any statutory right to claim any allowance
or relief other than amounts deductible under TCGA Section 38.
7.2 No debt owed to the Company would give rise to a chargeable gain on
its disposal.
7.3 No benefit under any policy of assurance has been acquired by the
Company which would give rise to a chargeable gain on its disposal.
7.4 The Company does not have an interest in any assets which are wasting
assets for the purposes of the taxation of chargeable gains and which
do not qualify for capital allowances.
7.5 The Company has not made nor is entitled to make any claims under any
of TCG Sections 152 to 157, 165, 172 or 175 insofar as such claims
affect or would effect the chargeable gain or allowable loss which
would arise on a disposal by the Company of any of its assets
Page 36 of 48
7.6 The Company has not made nor is it entitled to make any claim or
election under either of TCGA Section 24 (assets lost or destroyed) or
TCGA Section 161(3) (appropriations to or from stock). The Company has
not, since the Accounts Date, appropriated any asset forming part of its
trading stock for any other purpose.
7.7 The Company has not since the Accounts Date been a party to any
depreciatory transactions for the purpose of TCGA Section 176
(transactions in a group) or which could be treated as a depreciatory
transaction under TCGA Section 177 (dividend stripping).
7.8 The Company has not been a party to any arrangements falling within TCGA
Sections 29, 30, 31, 32, 33 or 34 (value shifting).
7.9 The Company has not made nor is entitled to make any claim under TCGA
Section 279 (relief in respect of delayed remittances or gains) or
Section 280 (consideration due after time of disposal).
7.10 No election has been made under TCGA Section 35(5) (assets held on 31
March 1982) in respect of the assets of the Company.
7.11 The Company has not disposed of or acquired any asset in circumstances
falling within TCGA Sections 17 or 19 and is not entitled to any capital
loss to which TCGA Section 18(3) applies.
7.12 No reorganisation of the share capital of the Company within the
provisions of TCGA Sections 126 to 130 has taken place.
7.13 The Company does not own any asset in respect of which TCGA Schedule 7A
(restriction on set-off of pre-entry losses) or TCGA Schedule 2 (assets
held on 6 April 1965) has or may have effect.
8 LOAN RELATIONSHIPS
8.1 The Company is and has since the Accounts Date been taxed on an
authorised accruals basis of accounting in relation to all loan
relationships which are creditor relationships for tax purposes and in
relation thereto:
(a) the accruals on which the Company is taxable are computed only by
reference to interest;
(b) if any such debt were to be repaid at its face value the Company
would not suffer any charge to tax in excess of tax on interest
accrued; and
(c) there is no connection between the Company and the debtor as
mentioned in FA 1996 Section 87.
8.2 The Company obtains and has since the Accounts Date obtained tax relief
on an authorised accruals basis of accounting in relation to all loan
relationships which are debtor relationships for taxation purposes and
in relation to each such relationship:
(a) the deduction given in computing the taxable profits of the Company
in consequence of that relationship is not less than the interest
accruing for the period concerned; and
(b) the Company would suffer no adverse tax consequences were such
debts to be repaid at face value except that the tax deduction for
interest accrued would cease.
8.3 The Company has not since the Accounts Date held or been the debtor under
any deep discount securities as defined in Taxes Act Schedule 4
paragraph 1 or any deep gain securities as defined in FA 1989 Schedule
11 paragraph 1 or any relevant discounted security as mention in FA 1996
Schedule 13.
9 GROUPS
9.1 The Company will not cease to be a member of a Tax Group as a result of
entering into or giving effect to this Agreement.
Page 37 of 48
10 LOSSES
In the three years prior to the date of this Agreement there has not
been a major change or series of changes which when taken together
constitute a major change in the nature of conduct of any trade or
business carried on by the Company (or a surrendering company) such that
it could affect the ability of the Company to utilise after Completion
trading losses and deficits arising in respect of loan relationships.
11 TAX AVOIDANCE
The Company has never:
(a) entered into, been party to or otherwise been concerned with any
transaction or event or arrangement as a result of which any
provision of Taxes Act Part XVII applied, applies or may apply; or
(b) been party to or concerned with any scheme or arrangement of which
the main purpose or one of the main purposes was the avoidance of a
liability to tax.
12 VALUE ADDED TAX
12.1 The Company is not and has never been treated for the purposes of VAT as
a member of a Tax Group.
12.2 The Company is a registered and taxable person for the purposes of the
VATA and has complied with and observed in all respects the terms of all
statutory provisions, directions, conditions, notices and agreements
with HM Customs and Excise relating to VAT. The Company has maintained
and obtained accounts, records, invoices and other documents (as the
case may be) appropriate or requisite for the purposes of VAT which are
complete, correct and up-to-date.
12.3 The Company:
(a) is not, nor in the two years prior to Completion has been, in
arrears with any payments or returns or notifications under any
statutory provisions, directions, conditions or notices relating to
VAT, or liable to any forfeiture or penalty or interest or
surcharge or to the operation of any penalty, interest or surcharge
provision;
(b) has not been required by HM Customs and Excise to give security;
(c) is not, and has not agreed to become, an agent, manager, factor or
tax representative for the purposes of VAT for any other person;
(d) has not made, and will not make prior to Completion, any supplies
that are exempt supplies; and
(e) has not received a notice directing that the value of goods
supplied by the Company is for the purposes of VAT to be taken to
be their open market value.
12.4 The Company has not since the Accounts Date been, and will not prior to
Completion be, treated as having made any supply of goods or services
for the purposes of VAT where no supply has in fact been made by the
Company.
12.5 The Company does not use any special scheme for the purposes of VAT.
12.6 The Company has never received a surcharge liability notice or a penalty
liability notice.
12.7 The Company is not required to pay amounts on account of VAT.
13 CLOSE COMPANIES
13.1 The Company is not and has never been a close company as defined in
Taxes Act Section 414.
13.2 The Company is not, nor has ever been, liable to tax under the
provisions of Taxes Act Sections 418 to 422.
Page 38 of 48
13.3 The Company has never made any transfer of the kind described in TCGA
Section 125 (transfer of assets at undervalue).
13.4 The Company has never made any transfer of value within the meaning of
IHTA.
13.5 Neither the assets owned by nor the shares of the Company are subject to
an outstanding Inland Revenue charge as defined in IHTA Section 237.
13.6 No circumstances exist, or but for IHTA Section 204(6) would exist, such
that a power of sale could be exercised in relation to any assets or
shares of the Company pursuant to IHTA Section 212 (contingent liability
of transferee for unpaid capital transfer tax or inheritance tax).
14 EMPLOYEES
14.1 The Company has properly operated the income tax pay-as-you-earn
("PAYE") system, deducting the appropriate tax and national insurance
contributions as required by law from all payments made to or treated as
made to employees or ex-employees of the Company and all sums payable to
the Inland Revenue under the PAYE system have been paid up to Completion.
14.2 The Company has received no notifications or notices under Taxes Act
Section 166 (benefits in kind; notice of nil liability).
14.3 The Company does not operate any payroll deduction scheme in respect of
payments to charity.
14.4 No officer or employee of the Company participates in any share option
scheme or share acquisition or ownership plan of any kind.
14.5 Since the Accounts Date the Company has not received any payment from a
pension scheme.
14.6 All sums payable under the existing arrangements for remunerating any
person who is or has been an officer or employee of the Company or a
dependant of any such person and for rewarding persons rendering
services to the Company are deductible in computing the profits of the
Company for tax purposes.
15 STAMP DUTY
15.1 There is no instrument which is necessary to establish the Company's
title to any right or asset which is liable to stamp duty in the United
Kingdom or elsewhere but which has not been duly stamped or which would
attract stamp duty if brought within the relevant jurisdiction.
15.2 The Company has duly paid all stamp duty and stamp duty reserve tax to
which it is, has been or to the best of the Seller's knowledge may be
made liable and there is no liability to any penalty in respect of such
duty or tax nor to the best of the Seller's knowledge are there any
circumstances or transactions to which the Company is or has been a
party which may result in the Company becoming liable to such a penalty.
15.3 No claim has been made by the Company at any time during the period of
five years up to the date of this Agreement in respect of stamp duty
relief under FA 1930 Section 42 or FA 1986 Section 75, 76 or 77.
16 INTERNATIONAL
16.1 The Company is and always has been exclusively resident in the United
Kingdom for tax purposes.
16.2 The Company is and has never ceased to be resident in the United Kingdom
for tax purposes.
16.3 The Company is not liable to tax in any jurisdiction other than the
United Kingdom.
16.4 The Company has not without the prior consent of the Treasury entered
into any of the transactions specified in Taxes Act Section 765
(migration etc. of companies).
Page 39 of 48
16.5 No income has arisen in a territory outside the United Kingdom in
respect of which any claim under Taxes Act Section 584 (unremittable
overseas income) has been made or is available to the Company.
16.6 The Company does not control any "controlled foreign company" within
the meaning of Taxes Act Section 747 in respect of which the Board of
Inland Revenue has made or would be entitled to make a direction under
that Section.
16.7 No notice under Taxes Act Section 755 has been given to the Company by
the Board of Inland Revenue.
17 INTELLECTUAL PROPERTY
17.1 The Company has not sold or agreed to sell any patent rights for a
capital sum (which would be chargeable to income) pursuant to Taxes Act
Section 524.
17.2 Since the Accounts Date the Company has not acquired or disposed of or
agreed to acquire or dispose of know-how (whether or not together with a
trade or part of trade) in connection with which Taxes Act
Section 531(1), (2), (4) or (8) apply or may apply.
18 TRANSACTIONS IN LAND
The Company has not:
(a) made any part disposal of land within TCGA Sections 242 or 243
in connection with which a claim has been made under
Section 242(2) or 242(3) as appropriate; or
(b) entered into any transaction to which the provisions of Taxes
Act Sections 34-37 (premiums, leases of undervalue etc) have or
could be applied.
Page 40 of 48
SCHEDULE 6
PURCHASER WARRANTIES
1. The Purchaser is a company duly incorporated, validly existing and in
good standing as a private limited company under English Law.
2. No resolution for the winding-up of the Purchaser has been passed, and
no order for the winding-up of the Purchaser has been made and no
petition for the winding-up of Purchaser has been presented, no order
for the appointment of an administrator of the Purchaser has been made
and no administrative receiver, receiver or liquidator for the Purchaser
has been appointed.
3. All necessary corporate actions and shareholder authorities required to
authorise the execution, delivery and performance by the Purchaser of
its obligations under this agreement have been duly taken and validly
obtained and the Purchaser has the corporate power and authority to
execute, deliver and perform its obligations under this agreement.
4. This agreement been duly authorised, executed and delivered by the
Purchaser and constitutes legal, valid, binding and enforceable
obligations of the Purchaser.
5. Neither the execution and delivery nor this performance by the Purchaser
of its obligations under this agreement does or will conflict with or
result in any breach of any of the provisions of, or constitute a
default under, the Memorandum and Articles of Association of the
Purchaser.
6. No consent, approval, authorisation or order of, and no notice to or
filing with, any governmental agency or governmental body or any court
is required to be obtained or made by the Purchaser for the transactions
contemplated under this agreement.
Page 41 of 48
SCHEDULE 7
INTELLECTUAL PROPERTY
PART 1
BUSINESS NAMES
ClarityBlue
ClarityBlue Limited
Clarity Q
PART 2
DOMAIN NAMES
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-------------------------------------------------------------------------------
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ ▇▇▇.▇▇▇▇▇▇▇-▇▇▇▇.▇▇▇
-------------------------------------------------------------------------------
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇▇ ▇▇▇.▇▇▇▇▇▇▇-▇▇▇▇.▇▇▇
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▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ ▇▇▇.▇▇▇▇▇▇▇-▇▇▇▇.▇▇
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▇▇▇.▇▇▇▇▇▇▇▇▇▇▇.▇▇ ▇▇▇.▇▇▇▇▇▇▇-▇▇▇▇.▇▇
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PART 3
REGISTERED INTELLECTUAL PROPERTY
Canada Trademark Application
1174174
Re: "CLARITYBLUE"
Filed: 16/04/2003
STATUS: Formalised
PART 4
UNREGISTERED INTELLECTUAL PROPERTY
USA Trademark Application
78/238396
Re: "CLARITYBLUE"
Filed: 16/04/2003
STATUS: Newly filed/Not yet assigned
UK Trademark Application
2313600
Re: "CLARITYBLUE"
Filed: 19/10/2002
STATUS: Examined/Objections raised.
Page 45 of 48
LOGO LOGO
LOGO LOGO
LOGO LOGO
Page 46 of 48
PART 5
COMPANY SOFTWARE
- Segmentor
- ClarityQ
- ClarityQ Select
and
The following software components, comprising:
- Extract, Transform and Load (ETL) scripts written in either Ab Initio
or Informatica
- Data Definition Language (DDL) scripts to define the necessary database
models
- UNIX Execution scripts to execute the above ETL scripts to load the
data into the above database models
For each of the following clients:
- Freeserve
- Goldfish
- Lloyds TSB Credit Cards
- Lloyds TSB BlueSky
- O2
- Orange
- Singlepoint
- T-Mobile
- Vodafone Clarify
- Vodafone Retail
- Wanadoo
together with any such software components which are currently in development
by the Company.
Page 47 of 48
SCHEDULE 8
EXISTING DISTRIBUTORS, AGENTS, RE-SELLERS AND
INDIRECT CHANNELS OF THE SAND SOFTWARE
Protagona Worldwide Limited
C.S.C. Limited
Dunnhumby Limited
Aspective Limited
▇▇▇▇▇ Group
Accenture
IBM
Any other partner with global operations
Page 48 of 48
SCHEDULE 9
RETENTION ACCOUNT TERMS
The parties have agreed that in order to assist in the administration of any
adjustment to the Consideration (pursuant to Clause 4.7) the Retention
Account will be opened into which the Purchaser shall on the Completion Date
deposit the Completion Accounts Retention. The purpose of the Completion
Accounts Retention is to assist in discharging (to such extent as is
possible) the variations in the Consideration resulting from shortfalls in
the Net Assets as provided for in Clause 4.7.
1. DEFINITIONS AND INTERPRETATION
In this Schedule the following words and expressions shall have the
following meanings:
"RELATED INTEREST": in relation to any part of the sum standing to the
credit of the Retention Account which is or is to be withdrawn in
accordance with the provisions of this Schedule 9, that portion of the
interest earned in respect of the Completion Accounts Retention as is
attributable to the sum so withdrawn or to be withdrawn accruing from
Completion net of any taxes or bank charges referred to in paragraph 5
below;
the "RETENTION AGENTS": the Seller's Solicitors and the Purchaser's
Solicitors;
the "PAYMENT DATE": shall be the date prescribed in this agreement.
2. BASIS UPON WHICH RETENTION HELD: The Retention shall be held in the
Retention Account in trust for the Purchaser and the Seller to be paid to
them in accordance with the provisions of this Schedule 9 and otherwise
on the following terms:
(a) all interest earned in respect of the Completion Accounts Retention
shall be credited to the Retention Account without any deduction;
(b) no other credit will be made to the Retention Account without the
prior written consent of the Purchaser's Solicitors and the Seller's
Solicitor; and
(c) no withdrawal will be made form the Retention Account save as
provided in clause 4 of this agreement
3. INSTRUCTIONS TO OPEN: The Purchaser and Seller shall upon execution of
this agreement instruct the Purchaser's Solicitors and the Seller's
Solicitors to open, operate and make payments out of the Retention
Account upon and subject to the provisions of this agreement on the basis
that each such firm jointly with the other firm shall receive and hold
all monies paid to them pursuant to this agreement and all monies from
time to time standing to the credit of the Retention Account, jointly as
trustees for the Purchaser and the Seller to pay the same either to the
Purchaser or to the Seller, or partly to one such party and partly to the
other such party, upon and subject only to the provisions of this
agreement.
4. PAYMENT OF TAXES AND BANK CHARGES: The Purchaser's Solicitors and the
Seller's Solicitors shall be irrevocably authorised and entitled to pay
out of the Retention Account without further authority or instruction:
(a) any taxes of whatever nature which may be payable as a matter of law
in respect of interest accrued on the amount standing from time to
time to the credit of the Retention Account; and
(b) all bank charges payable in respect of the Retention Account.
Page 49 of 48
5. NOT INTEREST WITHOUT PRINCIPAL: Neither the Purchaser nor the Seller
shall have any entitlement to interest until the due date of payment of
the principal to which it relates.
6. INSTRUCTIONS TO PAY OUT: The Purchaser and the Seller shall as and when
necessary give instructions to the Purchaser's Solicitors and the
Seller's Solicitors in the agreed form in order to procure compliance
with the provisions of clause 4 and this Schedule 9. Unless otherwise
specified in this Schedule 9, the Purchaser's Solicitors and the Sellers'
Solicitors shall not be required to take any action with respect to the
Retention Account except on the joint written instruction of the
Purchaser and the Seller in the agreed form.
7. ALTERNATIVE ARRANGEMENT: The Purchaser and the Seller agree that, if any
instructions are not given to the Purchaser's Solicitors and the Seller's
Solicitors, such firms shall be entitled to place the monies standing to
the credit of the Retention Account for such deposit period as they agree
in their sole and absolute discretion (and such firms shall have no
responsibility of whatever nature for the actual interest earned thereon)
or, if such firms cannot agree, on overnight deposit.
8. NO PAYMENT OUT: The Purchaser and the Seller agree that, except as may
otherwise be ordered by a court of competent jurisdiction, or as may be
agreed otherwise by such parties no payment or transfer of any sums
standing to the credit if the Retention Account shall be made except as
expressly provided in this agreement.
9. EXPENSES: The Purchaser and Seller undertake with each other to pay the
respective fees and expenses (including VAT) of their respective
solicitors in connection with the Retention Account.
Page 50 of 48
Signed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
duly authorised under the laws of the ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
to sign this agreement for and on behalf of and acting under the
authority of SAND TECHNOLOGY INC.
in the presence of:
(signed) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------
Signed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
for and on behalf of
CLARITYBLUE HOLDINGS LIMITED
in the presence of:
(signed) ▇▇▇▇▇▇ ▇▇▇▇▇▇
----------------------
SOLICITOR
Page 51 of 48