(1) the sellers cronin group plc share purchase agreement
TRANSCRIPT
EXECUTION VERSION
30316143
DATED 2017
(1) THE SELLERS
- AND –
(2) CRONIN GROUP PLC
____________________________________________
SHARE PURCHASE AGREEMENT
____________________________________________
Bristows LLP
100 Victoria Embankment
London EC4Y 0DH
Tel: 020 7400 8000
12244.0006
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CONTENTS
1. INTERPRETATION...................................................................................................... 1
2. SALE AND PURCHASE .............................................................................................. 8
3. CONDITIONS ............................................................................................................... 8
4. CONSIDERATION ....................................................................................................... 9
5. ORDERLY MARKETING .......................................................................................... 10
6. COMPLETION ............................................................................................................ 11
7. SELLERS’ WARRANTIES ........................................................................................ 13
8. TAX COVENANT ...................................................................................................... 14
9. LIMITATIONS ON LIABILITY AND HOLDBACK ............................................... 14
10. PURCHASER’S WARRANTIES ............................................................................... 15
11. RESTRICTIONS ON COVENANTORS .................................................................... 15
12. CONFIDENTIALITY.................................................................................................. 18
13. ASSIGNMENT ............................................................................................................ 18
14. FURTHER ASSURANCE........................................................................................... 19
15. ENTIRE AGREEMENT .............................................................................................. 20
16. SEVERANCE AND VALIDITY ................................................................................ 20
17. VARIATIONS ............................................................................................................. 21
18. REMEDIES AND WAIVERS ..................................................................................... 21
19. EFFECT OF COMPLETION ...................................................................................... 21
20. THIRD PARTY RIGHTS ............................................................................................ 21
21. COSTS AND EXPENSES ........................................................................................... 21
22. NOTICES 22
23. COUNTERPARTS ...................................................................................................... 23
24. GOVERNING LAW AND JURISDICTION .............................................................. 23
25. SELLERS’ REPRESENTATIVE ................................................................................ 23
SCHEDULE 1 25
Part 1 The Sellers ............................................................................................................. 25
Part 2 The Other Selling Shareholders ............................................................................. 26
SCHEDULE 2 DETAILS OF THE COMPANY .................................................................... 29
SCHEDULE 3 COMPLETION ARRANGEMENTS ............................................................. 30
Part 1 Sellers’ Obligations ............................................................................................... 30
Part 2 Purchaser’s Obligations ......................................................................................... 31
SCHEDULE 4 WARRANTIES .............................................................................................. 32
Part 1 Title and Capacity Warranties ............................................................................... 32
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Part 2 General Warranties ................................................................................................ 33
SCHEDULE 5 LIMITATIONS ON LIABILITY ................................................................... 42
SCHEDULE 6 PURCHASER WARRANTIES ...................................................................... 45
SCHEDULE 7 TAX COVENANT ......................................................................................... 46
SCHEDULE 8 LIMITATIONS ON LIABILITY UNDER THE PURCHASER
WARRANTIES 55
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THIS DEED is made on 2017
BETWEEN:
(1) THE SEVERAL PERSONS whose details are set out in Part 1 of Schedule 1 (The
Sellers) (together, the “Sellers”).
(2) CRONIN GROUP PLC a company incorporated in England and Wales/Scotland
with registered number 05845469 and whose registered office is at The Walbrook
Building, 25 Walbrook, London, England, EC4N 8AF (the “Purchaser”).
WHEREAS:
(A) Particulars of the Company are set out in Schedule 2.
(B) The Sellers have agreed to sell and the Purchaser has agreed to purchase the Sale
Shares (as defined in Clause 1.1 (Interpretation)) in each case on the terms and
subject to the conditions of this Agreement.
(C) In consideration of the Purchaser acquiring all the Sale Shares in the Company, the
Purchaser has agreed to issue the Consideration Shares (as defined below) to the
Sellers.
(D) On Escrow Completion, the Purchaser will make an offer to the Other Selling
Shareholders pursuant to the Offer Letter for the purchase of the number of shares in
the Company set out against their name in Part 2 of Schedule 1 (each term as defined
below).
IT IS AGREED:
1. INTERPRETATION
1.1 In this Agreement:
”Accounts Date” means 31 December 2016;
“Accounts” means the Company’s unaudited abbreviated accounts for the year ended
31 December 2016;
“Admission” means the admission of the Completion Consideration Shares to trading
on AIM as evidenced by the LSE issuing a dealing notice in accordance with rule 6 of
the AIM Rules;
“Agents” means, in relation to a person, that person’s directors, officers, employees,
advisers, agents and representatives;
“AIM” means AIM, a market operated by LSE;
“AIM Rules” means the AIM Rules for Companies published by LSE and setting out
the rules and responsibilities in relation to companies with a class of securities
admitted to AIM;
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“Affiliate” means, in relation to a Party that is not an individual, a Party’s subsidiaries
and subsidiary undertakings, any holding company or parent undertaking of that Party
and all other subsidiaries and subsidiary undertakings of any such holding company or
parent undertaking as the case may be from time to time (but, in the case of a Seller,
excluding the Company):
“Business” means the business of the Company comprising the digitisation and
application of laboratory data, including but not limited to, its use in hardware and
solutions;
“Business Day” means a day (other than a Saturday or Sunday or a public holiday)
when commercial banks are open for ordinary banking business in London;
“Business Intellectual Property” means the Intellectual Property owned, used or
held for use by the Company;
“Claim” means any claim for breach of a General Warranty or any claim under the
Tax Covenant;
“Companies Act” means the Companies Act 2006 as the same may be amended or
varied from time to time;
“Company” means Openiolabs Limited, further details of which are set out in
Schedule 2;
“Completion” means completion of the sale and purchase of the Sale Shares under
this Agreement;
“Completion Consideration Shares” shall have the meaning ascribed in Clause
4.1(a);
“Completion Date” means the day Admission occurs, or such other date as the
Parties agree in writing;
“Condition” means the conditions referred to in Clause 3 (Conditions);
“Connected Parties” means a Party’s Affiliates (in the case of a Party that is not an
individual) or Connected Persons (in the case of a Party that is an individual), as the
context requires;
“Connected Persons” means in relation to any person his spouse or former spouse,
parents and children or any of their Connected Persons or any company or other entity
in which any such person is a partner or director or has a direct or indirect interest of
20% or more;
“Consideration” means the consideration payable for the Sale Shares as set out in
Clause 4 (Consideration);
“Consideration Shares” means the Ordinary Shares to be allotted and issued to the
Sellers in accordance with Clause 4 in consideration for the sale of the Relevant Sale
Shares, comprising the Completion Consideration Shares and the Deferred
Consideration Shares;
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“Consortium Agreement” means the EU consortium agreement for the
“CoMMiTMenT” project, dated 13 June 2013, between Universitaet des Saarlandes
(the coordinator) and, among others, the Company.
“Consultants” means Alan Fournier and Fen Consultants Ltd.
“Continuing Provisions” means Clause 1 (Interpretation), Clause 9 and Schedule 5
(Limitations on Liability), Clause 12 (Confidentiality), Clause 13 (Assignment),
Clause 15.1 (Entire Agreement), Clause 16 (Severance and Validity), Clause 17
(Variations), Clause 18 (Remedies and Waivers), Clause 20 (Third Party Rights),
Clause 21 (Costs and Expenses), Clause 22 (Notices), Clause 24 (Governing Law and
Jurisdiction), all of which shall continue to apply after the termination of this
Agreement pursuant to Clause 3.4 (Conditions) or Clause 6 (Completion) without
limit in time;
“Corporate Seller” means Providence.
“Counsel” shall have the meaning ascribed to it in Clause 9.3;
“Covenantor” means each of David Cleevely, Joseph Ward Hills and Andrew
Richardson;
“Deferred Admission” means the admission of the Deferred Consideration Shares to
trading on AIM as evidenced by the LSE issuing a dealing notice in accordance with
rule 6 of the AIM Rules;
“Deferred Consideration Conditions” means the conditions set out in Clause 4.3;
“Deferred Consideration Shares” means any Ordinary Shares issued to the Sellers
in accordance with Clause 4.1(b) and to the Other Selling Shareholders in accordance
with Clause 4.2;
“Deferred Issue Price” means 5 pence per Ordinary Share;
“Deferred Release Date” means the date which is five Business Days after the date
on which both of the Deferred Consideration Conditions are satisfied but which shall
not be earlier than the second anniversary of Completion;
“Disclosed” means fairly and accurately disclosed (with sufficient details to identify
the nature and scope of the matter disclosed) in the Disclosure Letter;
“Disclosure Letter” means the letter of today’s date (incorporating a bundle of
documents) from the Sellers to the Purchaser in the agreed terms and delivered to the
Purchaser before the execution of this Agreement;
“Encumbrance” means any pledge, charge, lien, mortgage, debenture, hypothecation,
security interest, pre-emption right, option and any other encumbrance or third party
right or claim of any kind or any agreement to create any of the above;
“Escrow Completion” shall have the meaning in Clause 6.1;
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“Escrowed Documents” shall means the documents to be delivered by the parties to
the Sellers’ Solicitor and the Purchaser’s Solicitor at Escrow Completion in
accordance with Clauses 6.2 and 6.3;
“FSMA” means the Financial Services and Markets Act 2000, as amended from time
to time;
“General Warranties” means the warranties set out in Part 2 of Schedule 4;
“Intellectual Property” means patents, utility models, trade marks, service marks,
trade and business names, registered designs, design rights, copyright and
neighbouring rights, database rights, domain names, semiconductor topography rights
and rights in business information, inventions, software, trade secrets, confidential
information of all kinds and other similar proprietary rights which may subsist in any
part of the world and whether registered or not, including, where such rights are
obtained or enhanced by registration, any registration of such rights and rights to
apply for such registrations;
“Issue Price” means £0.02 per Ordinary Share;
“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 Contracts” means any material agreements, arrangements or licences relating to
IT Systems or IT Services, including all hire purchase contracts or leases of hardware
owned or used by the Company, licences of software owned or used by the Company
and other IT procurement;
“IT Systems” means hardware, software, communications networks, telephone
switchboards, microprocessors and firmware and other information technology
equipment and any other items that connect with any or all of them which in each case
are owned or used by the Company;
“Lock-In Period” shall have the meaning ascribed to it in Clause 5.1;
“Long Stop Date” means the day which is 20 Business Days from Escrow
Completion or such other date as the Sellers’ Representative and the Purchaser may
agree in writing;
“LSE” means London Stock Exchange plc;
“Management Accounts” means the Company's unaudited management accounts of
the Company, comprising a profit and loss account and balance sheet for the period
from the Accounts Date to 30 September 2017, and a balance sheet as at 30
September 2017;
“Offer Letter” means the offer in the agreed terms from the Purchaser to the Other
Selling Shareholders, for the purchase of the number of shares in the Company set out
against their name in Part 2 of Schedule 1;
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“Other Selling Shareholders” means the Shareholders whose details are set out in
Part 2 of Schedule 1;
“Officers” has the meaning given in Clause 7.4;
“Ordinary Shares” means the ordinary shares of £0.0001 each in the share capital of
the Purchaser from time to time;
“Party” means a party to this Agreement and “Parties” shall mean the parties to this
Agreement;
“Providence” means Providence Investment Company Limited, a company
incorporated in the British Virgin Islands with registered number 1063425 but whose
address for all correspondence is c/o RBC Trust Company (International) Limited of
Gaspé House, 66 - 72 Esplanade, St Helier, Jersey, JE2 3QT;
"Providence Beneficiaries" means the beneficiaries of the Providence Trust as at the
Completion Date;
"Providence Group" means:
(a) Providence; and
(b) any other body corporate, trust, unincorporated association or other legal entity:
(i) controlled jointly by the Providence Beneficiaries and/or the Providence Trust (if
and for so long as the Providence Beneficiaries remain the sole beneficiaries of the
Providence Trust); and
(ii) whose business is solely or substantially the management or holding of
investments for and on behalf of the Providence Beneficiaries (and which body
corporate, unincorporated association or other legal entity is not directly or indirectly
in competition with the business of the Company); and
(c) any person acting as nominee for any of the above persons;
"Providence Trust" means The Providence Trust, a Jersey law trust created on 6
October 1983 by declaration of trust by its then trustee, Abacus Trustees (Jersey)
Limited of La Motte Chambers, St Helier, Jersey, Channel Islands, JE1 1BJ;
“Purchaser’s Board” means the board of directors of the Purchaser;
“Purchaser’s Group” means the Purchaser, its subsidiaries and subsidiary
undertakings, any holding company or parent undertaking of the subsidiary and all
other subsidiaries and subsidiary undertakings of any such holding company or parent
undertaking as the case may be from time to time (and including, after Completion,
the Company);
“Purchaser’s Solicitors” means Bristows LLP of 100 Victoria Embankment, London
EC4Y 0DH;
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“Purchaser’s Warranties” means the warranties referred to in Clause 10
(Purchaser’s Warranties) and set out in Schedule 6 (Purchaser’s Warranties);
“Registered Intellectual Property” means patents, registered trade marks and
service marks, registered designs, domain name registrations (and applications for any
of the same), owned, used or held for use by the Company;
“Related Persons” has the meaning given in Clause 15.4;
“Relevant Sale Shares” means, in relation to a Seller, those of the Sales Shares
which are to be sold by that Seller under this Agreement;
“Sale Shares” means, in relation to a Seller, all of the shares it or he holds in the
Company as set out in column (2) of Schedule 1;
“Sellers’ Representative” means David Cleevely or such other person as shall be
made known to the parties to this Agreement in writing from time to time;
“Sellers’ Solicitors” means Keystone Law Limited of 48 Chancery Lane, London,
WC2A 1JF;
“Service Agreements” means the service agreements in the agreed terms between (i)
the Company; and (ii) each of Andrew Richardson, Joseph Ward Hills and Yi Zhou;
“Settled” means, in relation to a Claim, that: (i) the claim is an agreed final settlement
(as to liability and quantum) between the Purchaser and the Sellers’ Representative; or
(ii) the claim has been finally determined upon any judgment, order or decree of a
court of competent jurisdiction having been given in proceedings in respect of the
Claim and no right of appeal lies in respect of any judgment, order or decree, or the
parties are debarred by passage of time or otherwise from making an appeal;
“Shareholders Agreements” means the amended and restated shareholders
agreement dated 14 May 2010 and the amended and restated shareholders agreement
dated 10 March 2009 between the Company, the Sellers and the Other Selling
Shareholders;
“Shares” means the 13,262,685 ordinary shares of £0.001 each in the share capital of
the Company;
“Tax” means any form of taxation (including deferred taxation), duty, levy, charge,
withholding tax, social security or national insurance or other similar contributions,
whether created or imposed by any governmental, state, federal, local, municipal or
other body in each case in the nature of taxation and any related penalty, interest,
surcharge or fine;
“Tax Claim” has the meaning given in Schedule 7;
“Tax Covenant” means the covenant set out in Schedule 7;
“Tax Warranties” means the Warranties set out in paragraph 11 of Part 2 of
Schedule 4;
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“Title and Capacity Warranties” means the warranties set out in Part 1 of
Schedule 4;
“Transaction Documents” means this Agreement, the Disclosure Letter and the
Offer Letter “Transaction Document” shall mean any one of them;
“UK Registrar” means the registrar of companies for England and Wales; and
“Warranties” means the Title and Capacity Warranties and the General Warranties
or any of them as the context may require.
“Warrantors” means David Cleevely, Joseph Ward Hills and Andrew Richardson,
and a Warrantor shall mean any one of them.
1.2 The expression “in the agreed terms” means in the form agreed between the
Purchaser and the Sellers acting by the Sellers Representative and signed for the
purposes of identification by or on behalf of the Purchaser and the Sellers
Representative.
1.3 Any reference to “writing” or “written” means any method of reproducing words in
a legible and non-transitory form (excluding, for the avoidance of doubt, email).
1.4 References to “include” or “including” are to be construed without limitation.
1.5 References to a “company” include any company, corporation or other body
corporate wherever and however incorporated or established.
1.6 References to a “person” include any individual, company, partnership, joint venture,
firm, association, trust, governmental or regulatory authority or other body or entity
(whether or not having separate legal personality).
1.7 The expressions “body corporate”, “holding company”, “parent undertaking”,
“subsidiary” and “subsidiary undertaking” shall have the meaning given in the
Companies Act.
1.8 The table of contents and headings are inserted for convenience only and do not affect
the construction of this Agreement.
1.9 Unless the context otherwise requires, words in the singular include the plural and
vice versa and a reference to any gender includes all other genders.
1.10 References to Clauses, paragraphs and Schedules are to clauses and paragraphs of,
and schedules to, this Agreement. The Schedules form part of this Agreement.
1.11 References to any statute or statutory provision include a reference to that statute or
statutory provision as amended, consolidated or replaced from time to time (whether
before or after the date of this Agreement) and include any subordinate legislation
made under the relevant statute or statutory provision.
1.12 The expressions “ordinary course of business” or “business in the ordinary
course” mean the ordinary and usual course of business of the Company, consistent in
all respects (including nature and scope) with the prior practice of the Company.
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1.13 This Agreement shall be binding on and, notwithstanding clause13, shall be for the
benefit of the successors and personal representatives of the Parties.
2. SALE AND PURCHASE
2.1 Each Seller shall sell and the Purchaser shall purchase its Relevant Sale Shares with
all rights now or in the future attaching to them (including the right to receive all
dividends, distributions or any return of capital declared, made or paid on or after the
date of this Agreement) on the terms and subject to the conditions of this Agreement.
2.2 Each of the Sellers shall transfer legal and beneficial title to its Relevant Sale Shares
to the Purchaser and shall transfer them to the Purchaser free from all Encumbrances.
2.3 Each of the Sellers hereby waives and shall procure the waiver of any restrictions on
transfer (including all pre-emption rights) which may exist in relation to its Relevant
Sale Shares.
2.4 The Purchaser shall not be obliged to complete the purchase of any of the Shares
unless the purchase of all the Shares from the Sellers is completed simultaneously.
2.5 If and to the extent not already terminated, the parties agree to terminate the
Shareholders Agreements with effect from Completion. Each party to the
Shareholders Agreements releases and discharges the other from all claims or
demands under or in connection with the Shareholders Agreements whether arising
before or on the date of this Agreement.
3. CONDITIONS
3.1 Completion is conditional on the satisfaction (or waiver of, as the case may be) of:
(a) there having been no change, event or circumstance which has, or in the
reasonable opinion of the Purchaser is likely to have, a material adverse effect
on the financial condition or operations of the Company; and
(b) Admission,
(the “Conditions”).
3.2 The Purchaser shall use all reasonable endeavours to procure that Admission occurs.
3.3 The Sellers undertake to notify the Purchaser in writing, and the Purchaser undertakes
to notify the Sellers’ Representative in writing, of anything which will or may prevent
either of the Conditions from being satisfied on or before the Long Stop Date
immediately when it comes to its attention.
3.4 If either of the Conditions is not fulfilled or otherwise waived on or before the Long
Stop Date, the Parties shall be entitled to treat this Agreement as terminated and the
provisions of Clause 3.5 shall apply.
3.5 If this Agreement is terminated in accordance with Clauses 3.4, or 6.7 the rights and
obligations of the Parties under this Agreement shall cease save in respect of
antecedent breaches up to the date of termination and under the Continuing
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Provisions.
4. CONSIDERATION
4.1 The consideration for the sale and purchase of the Sale Shares shall be satisfied by the
allotment and issue by the Purchaser to each of the Sellers:
(a) on Completion, at the Issue Price, the number of Ordinary Shares set out
opposite their respective names in column (4) of the table at Part 1 of
Schedule 1 credited as fully paid (the “Completion Consideration Shares”);
and
(b) subject to satisfaction of the Deferred Consideration Conditions set out in
Clause 4.2 below, on the Deferred Release Date, at the Deferred Issue Price,
the number of Ordinary Shares set out opposite their respective names in
column (5) of the table at Part 1 of Schedule 1 (subject to any adjustment
made pursuant to Clause 9) credited as fully paid (the “Deferred
Consideration Shares”).
4.2 In addition to the Ordinary Shares to be issued by the Purchaser on the Deferred
Release Date in accordance with Clause 4.1(b) and Clause 4.7, subject to satisfaction
of the Deferred Consideration Conditions set out in Clause 4.3 below, the Purchaser
shall issue to the Other Selling Shareholders on the Deferred Release Date, at the
Deferred Issue Price, the number of Ordinary Shares set out opposite their respective
names in column (5) of the table at Part 2 of Schedule 1 (subject to any adjustment
made pursuant to Clause 9) credited as fully paid
4.3 The Deferred Consideration Shares shall be allotted and issued in accordance with
Clause 4.1(b), Clause 4.2 and Clause 4.7:
(a) if, at any time before the fourth anniversary of Completion (i) the middle
market quotation for the Ordinary Shares is at a price equal to or above 5
pence for a continuous period of 60 Business Days (ii); or the whole of the
ordinary share capital of the Purchaser is acquired on arm’s length terms by a
third party purchaser (who is not a Connected Party to the Buyer or any of its
shareholders) at a price equal to or above 5 pence; and
(b) provided that David Cleevely has not voluntarily resigned from the
Purchaser’s Board or has not otherwise decided to leave the Purchaser’s Board
within 24 months following Completion (which for these purposes shall
exclude: (i) his resignation owing to sickness or incapacity rendering him
incapable of performing his duties as certified by a duly qualified medical
practitioner; or (ii) his valid constructive dismissal as determined by a court or
tribunal of competent jurisdiction (of which no right of appeal exists)).
4.4 If one or both of the Deferred Consideration Conditions is not satisfied then the
parties acknowledge and agree that no deferred consideration will be payable and no
Deferred Consideration Shares shall be issued (or be required to be issued) by the
Purchaser.
4.5 The Consideration Shares shall rank pari passu in all respects with the existing
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Ordinary Shares, including:
(a) in respect of the Completion Consideration Shares, the right to receive all
dividends declared, made or paid after the Completion Date (save that they
shall not rank for any dividend or other distribution of the Purchaser declared
made, or paid by reference to a record date before the Completion Date); and
(b) in respect of the Deferred Consideration Shares, the right to receive all
dividends declared, made or paid after the Deferred Release Date (save that
they shall not rank for any dividend or other distribution of the Purchaser
declared made, or paid by reference to a record date before the Deferred
Release Date).
4.6 If prior to the Deferred Release Date, there occurs:
(a) a subdivision, consolidation or reclassification of the Ordinary Shares; or
(b) a reduction of capital (of whatever nature), or any other reduction in the
number of Ordinary Shares in issue from time to time,
then the number and issue price of Deferred Consideration Shares to be issued
pursuant to this Agreement shall be adjusted equitably to such extent (if any) as the
auditors for the time being of the Purchaser certify in writing to Sellers to be in their
opinion fair and reasonable in consequence of such event.
4.7 Subject to Clause 9, on the Deferred Release Date (as may be amended in accordance
with Clause 9.3) the Purchaser will allot to the Sellers, subject to Deferred Admission
of the same, any Deferred Consideration Shares required to be allotted to them under
this Clause 4. In the event that the Purchaser’s Ordinary Shares are still admitted to
trading on AIM, the Purchaser shall make application for the Deferred Admission of
any Deferred Consideration Shares required to be allotted to the Sellers under this
Clause 4 with effect from the earliest practicable date after the date of issue.
5. ORDERLY MARKETING
5.1 Each Seller undertakes to the Purchaser that it shall not, during the period of 12
months following Completion in the case of the Completion Consideration Shares, or
during the period of 12 months following the Deferred Release Date in the case of the
Deferred Consideration Shares (the “Lock-In Period”), sell, transfer or otherwise
dispose of, or create any Encumbrance over, any of the Consideration Shares (or any
interest in them), or enter into any agreement to do so, except in accordance with
Clause 5.2.
5.2 The restrictions in Clauses 5.1 and 5.3 shall not prevent a Seller from selling,
transferring or otherwise disposing of any Consideration Shares (or any interest in
them):
(a) in acceptance of a general offer made in accordance with the City Code on
Takeovers and Mergers by any third party for the whole of the ordinary share
capital of the Purchaser (other than any ordinary share capital owned by the
offeror or any concert party of the offeror) which has either been
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recommended by a majority of the board of directors of the Purchaser or has
become unconditional as to acceptances; or
(b) pursuant to an irrevocable commitment to accept any offer made in
accordance with the City Code on Takeovers and Mergers for the whole of the
ordinary share capital of the Purchaser (other than any ordinary share capital
owned by the offeror or any concert party of the offeror) which is
recommended by a majority of the board of directors of the Purchaser or
where the irrevocable commitment is expressed to be conditional upon such
general offer being so recommended; or
(c) where such disposal is made pursuant to an offer by the Purchaser to purchase
its own shares which is made on identical terms to all holders of ordinary
shares in the Purchaser and otherwise complies with the Companies Act 2006
and the AIM Rules; or
(d) pursuant to any scheme or reconstruction under section 110 of the Insolvency
Act 1986 in relation to the Purchaser; or
(e) pursuant to any compromise or arrangement under Part 26 of the Companies
Act 2006 which is agreed by the requisite majority of the members of the
Purchaser and sanctioned by the court; or
(f) as required by law or the rules of any applicable regulatory or governmental
organisation.
5.3 Each Seller shall be entitled to sell, transfer or otherwise dispose of the Consideration
Shares held by that Seller during the period from the first anniversary of the
Completion Date to the second anniversary of the Completion Date in the case of the
Completion Consideration Shares, or from the first anniversary of the Deferred
Release Date to the second anniversary of the Deferred Release Date in the case of the
Deferred Consideration Shares, provided that, except in accordance with Clause 5.2,
any such sale, transfer or disposal takes place through brokers nominated by the
Purchaser.
6. COMPLETION
6.1 Completion shall take place in escrow (“Escrow Completion”) immediately
following signature of this agreement being the third Business Day immediately prior
to the proposed date of Admission or at such other time as may be agreed between the
parties.
6.2 On or before Escrow Completion the Sellers shall:
(a) deliver to the Sellers’ Solicitor the documents and evidence set out in Part 1 of
Schedule 3, such documents to be held by the Sellers’ Solicitor as escrow
agents to the joint order of the Purchaser and the Sellers for the parties in
accordance with this Clause 6; and
(b) procure board meetings of the Company are held at which the matters
identified in paragraph 1 of Schedule 3 are carried out.
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6.3 On or before Escrow Completion the Purchaser shall:
(a) deliver to the Purchaser’s Solicitor the documents and evidence set out in Part
2 of Schedule 3, such documents to be held by the Purchaser’s Solicitor as
escrow agents to the joint order of the Purchaser and the Sellers for the parties
in accordance with this Clause 6; and
(b) procure that application is made for Admission with the intention that,
provided the Condition in Clause 3.1(a) is satisfied (or waived by the
Purchaser in its discretion), Admission shall occur at 8.00 a.m. London time
on the third Business Day thereafter (or otherwise as soon as practicable);
(c) issue the Offer Letter by email to the Other Selling Shareholders.
6.4 David Cleevely undertakes to the Purchaser to recommend the terms of the offer in
the Offer Letter to the Other Selling Shareholders and to co-operate with the
Purchaser to ensure that, so far as he is able, the Other Selling Shareholders receive
the Offer Letter, and in the case of any Other Selling Shareholders who choose to
accept the terms of the offer in the Offer Letter, that they return their form of
acceptance to the Purchaser as soon as possible.
6.5 The Sellers’ Solicitor and the Purchaser’s Solicitor shall hold the Escrowed
Documents in escrow to the joint order of the Purchaser and the Sellers, provided that:
(a) this Agreement has not been terminated in accordance with its terms;
(b) the Sellers have complied with their obligations under this Clause 6;
(c) the Purchaser has complied with its obligations under this Clause 6; and
(d) Admission occurs on or before the Long Stop Date,
then Completion shall automatically occur on Admission.
6.6 At Completion:
(a) the Sellers’ representative and the Purchaser shall authorise and instruct the
Sellers’ Solicitor and the Purchaser’s Solicitor to date such Escrowed
Documents as were delivered undated, release the Escrowed Documents
referred to in Clause 6.2 to the Purchaser and release the Escrowed Documents
referred to in Clause 6.3 to the Sellers;
(b) the allotment and issue of the Completion Consideration Shares to the Sellers
shall become unconditional; and
(c) the Purchaser shall deliver to each Seller a share certificate in respect of the
relevant number of Completion Consideration Shares allotted to it.
6.7 If Admission does not occur on or before the Long Stop Date or the Condition set out
in Clause 3.1(a) is not satisfied or waived by the Purchaser in its discretion then the
Escrowed Documents shall not be released and the Purchaser or the Sellers’
Representative may authorise and instruct the Sellers’ Solicitor and the Purchaser’s
30316143 13
Solicitor to return such Escrowed Documents to the parties who provided them in
accordance with Clauses 6.2 and 6.3, this Agreement shall terminate and Clause 3.5
shall apply.
6.8 As soon as practicable following Completion the Purchaser shall procure that:
(a) each Seller is registered in the register of members of the Purchaser as the
holder of the Completion Consideration Shares allotted to him; and
(b) all necessary regulatory filings are made in respect of the allotment of the
Completion Consideration Shares.
6.9 The issue of the Completion Consideration Shares in accordance with paragraph 1 of
Part 2 of Schedule 3 (Completion Arrangements) and Admission shall fully discharge
the obligations of the Purchaser under Clauses 2 (Sale and Purchase) and 4.1(a)
(Consideration) and the Purchaser shall not be concerned with the application of such
Completion Consideration Shares between the Sellers. This clause does not discharge
the Purchaser of its obligations under Clause 4.1(b) which will be satisfied by the
Purchaser issuing the Deferred Consideration Shares (if any) under Clause 4.7.
6.10 The Purchaser will procure that the Company repays the loan in the amount of
£16,000 advanced by David Cleevely to the Company on or around 13 October 2017,
within 28 days following Completion And, if and to the extent that the Company does
not have available funds to repay the loan, the Purchaser will provide such funds to
the Company to enable it to repay the loan within the said period.
7. SELLERS’ WARRANTIES
7.1 Each of the Sellers warrants to the Purchaser in respect of itself only that each of the
Title and Capacity Warranties is true and accurate in all respects and not misleading at
the date of this Agreement and at Completion.
7.2 The Warrantors jointly and severally warrant to the Purchaser that the General
Warranties are true and accurate in all respects and not misleading at the date of this
Agreement and at Completion.
7.3 The Warrantors shall not be liable under the General Warranties to the extent that the
facts which cause, or the matters giving rise to, the General Warranties to be breached
were Disclosed. The limitation on the liability of a Warrantor under the Warranties
contained in this Clause 7.3 shall not apply where there has been any fraud or
dishonesty by that Warrantor.
7.4 The Warrantors agree that the supply of any information by or on behalf of the
Company or any of its respective employees, directors, agents or officers (“Officers”)
to the Warrantors or their advisers in connection with the Warranties, the Disclosure
Letter or otherwise shall not constitute a warranty, representation or guarantee as to
the accuracy of such information in favour of the Warrantors. Each Warrantor
unconditionally and irrevocably waives all and any rights and claims that he may have
against any of the Company or the Officers on whom that Warrantor has, or may
have, relied in connection with the preparation of the Disclosure Letter, or agreeing
the terms of this Agreement, and further undertakes to the Purchaser, the Company
30316143 14
and the Officers not to make any such claims.
7.5 Each of the Warranties shall be separate and independent and (unless expressly
provided otherwise) shall not be limited by reference to any other Warranty or by
anything in this Agreement.
7.6 Warranties qualified by the knowledge, belief or awareness of the Warrantors shall be
deemed to include any knowledge, belief or awareness which the Warrantors would
have, having made all reasonable enquiries of each other and of the Consultants in
respect of the Warranties at paragraphs 7, 8, 12 and 13 of Part 2 of Schedule 4, at the
date of this Agreement.
7.7 The rights and remedies of the Purchaser in respect of any claim for breach of any
Warranty shall not be affected by Completion.
8. TAX COVENANT
The provisions of Schedule 7 apply in this Agreement in respect of Taxation.
9. LIMITATIONS ON LIABILITY AND HOLDBACK
9.1 The liability of the Warrantors in respect of Claims shall be limited as provided in
Schedule 5 (Limitations on Liability).
9.2 In the event of a Claim being Settled prior to the Deferred Release Date, the Purchaser
shall satisfy the amount owed in respect of the Claim by, and subject to the limitations
in Schedule 5, cancelling all the Sellers’ and Other Selling Shareholders’ rights to
such number of the Deferred Consideration Shares as are necessary to satisfy the
Claim in full (on the basis that for every one of the Deferred Consideration Shares
cancelled the amount paid in respect of the Claim shall be the Issue Price). If the
value of the Claim is greater than the aggregate Issue Price of all the Deferred
Consideration Shares, then all of the rights to Deferred Consideration Shares shall be
cancelled and the Warrantors shall have no further liability in respect of any Claim
pursuant to the Agreement.
9.3 In the event of a Claim being outstanding but not Settled on the Deferred Release
Date, then provided that the Purchaser has obtained a written opinion from Counsel to
the effect that the Claim in question, on the basis of information before him, has a
reasonable prospect of success, and such opinion contains the Counsel’s estimate of
the maximum amount recoverable pursuant to such Claim (the “Relevant Amount”),
then the Purchaser shall be entitled to defer the issue of such number of Deferred
Consideration Shares as are equal in value to the Relevant Amount, to such date that
the Claim is resolved, settled or withdrawn (and the Deferred Release Date shall be
deemed amended accordingly in respect of such Deferred Consideration Shares)
whereupon any amount payable in respect of the Claim shall be satisfied by the
cancellation of all the Sellers’ and Other Selling Shareholders’ rights to such number
of the Deferred Consideration Shares as are necessary to satisfy the Claim in full (on
the basis that for every one of the Deferred Consideration Shares cancelled the
amount paid in respect of the Claim shall be the Issue Price). If the amount payable
turns out to be less than the Relevant Amount, the balance (if any) of the Relevant
Amount due to the Sellers and the Other Selling Shareholders be satisfied by the issue
30316143 15
of the relevant number of Deferred Consideration Shares. For the purposes of this
Clause, “Counsel” shall mean a counsel of at least ten years standing with experience
relating to contractual disputes concerning breaches of warranty, such counsel being
agreed upon by or on behalf of the Purchaser and the Sellers’ Representative within
ten Business Days of the Sellers’ Representative being called upon to do so or, failing
agreement, appointed on the application of the Purchaser to the Chairman for the time
being of the Bar Council of England and Wales.
9.4 The Sellers irrevocably agree that any cancellation of the right to receive Deferred
Consideration Shares pursuant to this Clause 9 shall reduce the number of Deferred
Consideration Shares to be issued to each Seller and each of the Other Selling
Shareholders pro rata accordingly (and in the case of fractions of Deferred
Consideration Shares shall be rounded up to the nearest number of Deferred
Consideration Shares).
9.5 In respect of any Claim for which the release of a Relevant Amount has been deferred
in accordance with Clause 9.3, the Sellers and the Purchaser shall each use their
respective reasonable endeavours to ensure that such Claim is resolved with
reasonable speed.
9.6 The Purchaser agrees and acknowledges that its sole recourse in respect of any and all
Claims shall be the cancellation of all Sellers’ and Other Selling Shareholders’ rights
to receive Deferred Consideration Shares set out in clauses 9.2 and 9.3 and, for the
avoidance of doubt and without prejudice to its rights to bring claims under the
Warranties and Tax Covenant, that it has no direct recourse whatsoever against the
Sellers or the Other Selling Shareholders in respect thereof.
9.7 The Warrantors undertake to procure that the Consortium Agreement is maintained.
In the event of a claim for repayment under the Consortium Agreement then the
Purchaser may deduct the amount repaid in respect of such claim by cancelling the
Sellers’ and Other Selling Shareholders’ rights to such number of Deferred
Consideration Shares as are necessary to satisfy such repayment in full.
9.8 In relation to a claim under the Title and Capacity Warranties against a Seller or Other
Selling Shareholder, the Purchaser may satisfy the amount owed in respect of that
claim by cancelling all of his or its rights to such number of Deferred Consideration
Shares as are necessary to satisfy the claim up to the maximum number to which that
Seller or Other Selling Shareholder is entitled (on the basis that for every one of the
Deferred Consideration Shares cancelled the amount paid in respect of the claim shall
be the Issue Price).
10. PURCHASER’S WARRANTIES
The Purchaser warrants to each of the Sellers that each of the Purchaser’s Warranties
is true and accurate as at Escrow Completion.
11. RESTRICTIONS ON COVENANTORS
11.1 In this clause, the following words and expressions shall have the following
meanings:
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“Restricted Area”: the geographic area in which the Business (or any part of it) is
carried on as at the Termination Date or was in the preceding 12 months.
“Restricted Business”: any business which is or would be in competition with any
part of the Business, as the Business was carried on at any time prior to the
Termination Date.
“Restricted Customer”: any person who is at any time prior to the Termination Date,
a client or customer of, or in the habit of dealing with, the Company.
“Restricted Person”: any person who is at any time prior to the Termination Date,
employed or directly or indirectly engaged by the Company in a senior capacity or at
a management grade.
“Termination Date”: means:
(i) the second anniversary of Completion in relation to David Cleevely; or
(ii) the date which is 9 months following Completion in relation to Joseph
Ward Hills and/or Andrew Richardson.
11.2 Each Covenantor covenants for himself that he shall not at any time prior to the
Termination Date:
(a) in any Restricted Area, carry on or be employed, engaged, concerned or
interested in, or in any way assist, a Restricted Business; or
(b) canvass, solicit or otherwise seek the custom of any Restricted Customer with
a view to providing goods or services to that Restricted Customer in
competition with the Business (or any part of it) in the Restricted Area; or
(c) induce or attempt to induce a Restricted Customer to cease or refrain from
conducting business with, or to reduce the amount of business conducted with
or to vary adversely the terms upon which it conducts business with the
Company in the Restricted Area, or do any other thing which is reasonably
likely to have such an effect in the Restricted Area; or
(d) have any business dealings with a Restricted Customer in connection with the
provision of goods or services to that Restricted Customer in competition with
the Business (or any part of it) in the Restricted Area; or
(e) have any business dealings with, solicit, entice or attempt to entice away any
person within the Restricted Area who at any time prior to the Termination
Date is a supplier of goods or services to the Company, if such dealings,
solicitation or enticement causes such supplier to cease supplying, or reduce
its supply of goods or services to the Company in the Restricted Area, or to
vary adversely the terms upon which it conducts business with the Company
in the Restricted Area; or
(f) offer employment to, enter into a contract for the services of, or otherwise
entice or attempt to entice away from the Company, any Restricted Person; or
30316143 17
(g) procure or facilitate the making of any such offer of employment away from
the Company in relation to a Restricted Person.
11.3 Save in the normal course of his employment or engagement to the extent that such
employment or engagement continues after Completion, each Covenantor covenants
that he shall not at any time after Completion, use in the course of any business:
(a) the words “Openiolabs”;
(b) any trade or service mark, business or domain name, design or logo which, at
Completion, was or had been used by the Company in connection with the
Business; or
(c) anything which is, in the reasonable opinion of the Purchaser, capable of
confusion with such words, mark, name, design or logo.
11.4 Each Covenantor covenants that he shall not at any time after Completion, present
himself or permit himself to be presented as:
(a) connected in any capacity with the Company (save in the normal course of his
employment or engagement to the extent that such employment or engagement
continues after Completion); or
(b) interested or concerned in any way in the Shares (or any of them).
11.5 Each Covenantor covenants that he shall not at any time after Completion, knowingly
or intentionally do or say anything which is likely to be harmful to the reputation of
the Company.
11.6 The covenants in Clause 11 are intended for the benefit of, and shall be enforceable
by each of the Purchaser and the Company and apply to actions carried out by a
Covenantor in any capacity (including as shareholder, partner, director, principal,
consultant, officer, employee, agent or otherwise) and whether directly or indirectly,
on a Covenantor’s own behalf or on behalf of, or jointly with, any other person.
11.7 Nothing in Clause 11 shall prevent any Covenantor from holding for investment
purposes only:
(a) units of any authorised unit trust; or
(b) not more than 5% of any class of shares or securities of any company traded
on a recognised investment exchange (within the meaning of FSMA).
11.8 Each of the covenants in Clause 11 is a separate undertaking by each Covenantor in
relation to himself and his interests and shall be enforceable by the Purchaser and the
Company separately and independently of their right to enforce any one or more of
the other covenants contained in that clause.
11.9 The parties acknowledge that the Covenantors have confidential information relating
to the Business and the Purchaser is entitled to protect the goodwill of the Business as
a result of buying the Shares. Accordingly, each of the covenants in Clause 11 is
considered fair and reasonable by the parties.
30316143 18
11.10 The consideration for the covenants contained in Clause 11 is included in the
purchase price.
11.11 The obligations and liability of the Covenantors under this Clause 11 shall be several
and extend only to any loss or damage arising out of their own breaches.
12. CONFIDENTIALITY
12.1 Save as expressly provided in Clause 12.3, each of the Sellers jointly and severally
undertakes that it shall, and each Seller shall procure that its Connected Parties shall,
treat as confidential the provisions of the Transaction Documents, all information it
possesses relating to the Company and all information it has received or obtained
relating to the Purchaser’s Group as a result of negotiating or entering into the
Transaction Documents.
12.2 Save as expressly provided in Clause 12.3, the Purchaser shall, and shall procure that
each member of the Purchaser’s Group and its officers and employees shall, treat as
confidential the provisions of the Transaction Documents and all information it has
received or obtained relating to the Sellers and each of their Connected Parties as a
result of negotiating or entering into the Transaction Documents.
12.3 A Party may disclose, or permit the disclosure of, information which would otherwise
be confidential if and to the extent that it:
(a) is disclosed to Agents of that Party or its Connected Parties if this is
reasonably required in connection with this Agreement (and provided that
such persons are required to treat that information as confidential);
(b) is required by law or any securities exchange, regulatory or governmental
body or taxation authority;
(c) was already in the lawful possession of that Party or its Agents without any
obligation of confidentiality (as evidenced by written records); or
(d) comes into the public domain other than as a result of a breach by a Party of
this Clause 12,
provided that prior written notice of any confidential information to be disclosed
pursuant to this Clause 12 shall be given to the other Parties, which in the case of the
Seller shall mean the Sellers’ Representative.
13. ASSIGNMENT
No Party may assign, transfer, charge, declare a trust of or otherwise dispose of all or
any part of its rights and benefits under this Agreement or any other Transaction
Document (including any cause of action arising in connection with any of them) or of
any right or interest in any of them, save that:
(a) the Purchaser will be entitled to assign, transfer or charge any of its rights or
interests under or acquired under this agreement to any member of the
Purchasers Group;
30316143 19
(b) the Purchaser will be entitled to assign, transfer or charge any right, title or
interest in the Shares to any member of the Purchaser’s Group and if it does so
the assignee may enforce the obligations on the part of the Sellers under this
Agreement as if it had been named as the Purchaser; or
(c) Providence will be entitled to assign, transfer or charge any of its rights or
interests under or acquired under this agreement to any member of the
Providence Group,
provided that (i) the Purchaser or Providence (as the case may be) shall procure that
any such assignee shall re-assign such rights to the Purchaser or Providence (as the
case may be) in the event of and prior to such assignee ceasing to be a member of the
Purchasers Group or the Providence Group and (ii) in the case of any such
assignment, the amount of any liability of the Sellers that arises pursuant to this
agreement shall be limited to the liability that would have arisen had no such
assignment taken place.
14. FURTHER ASSURANCE
14.1 Insofar as it is able to do so after Completion, each of the Sellers shall from time to
time and at their own cost do, execute and deliver or procure to be done, executed and
delivered all such further acts, documents and things reasonably required by, and in a
form satisfactory to, the Purchaser in order to give full effect to this Agreement.
14.2 Each Seller appoints the Purchaser as its attorney from Completion and before the
transfer of the Relevant Sale Shares is registered in the register of members of the
Company with full power to exercise all rights in relation to its Relevant Sale Shares
as the Purchaser in its absolute discretion sees fit, including (but not limited to):
(a) receiving notice of, attending and voting at any general meeting of the
shareholders of the Company, including meetings of the members of any
particular class of shareholder, and all or any adjournments of such meetings,
or signing any resolution as registered holder of its Relevant Sale Shares;
(b) completing and returning proxy cards, consents to short notice and any other
documents required to be signed by the registered holder of its Relevant Sale
Shares;
(c) dealing with and giving directions as to any moneys, securities, benefits,
documents, notices or other communications (in whatever form) arising by
right of the Shares or received in connection with its Relevant Sale Shares
from the Company or any other person; and
(d) otherwise executing, delivering and doing all deeds, instruments and acts in
the relevant Seller’s name insofar as may be done in the relevant Seller’s
capacity as registered holder of its Relevant Sale Shares.
14.3 The Purchaser may delegate one or more of the powers conferred on it by Clause 14.2
to an officer or officers appointed for that purpose by the board of directors of the
Purchaser, by resolution or otherwise.
30316143 20
14.4 This power of attorney conferred on the Purchaser by Clause 14.2 shall be
irrevocable, save with the consent of the Purchaser, but shall expire on the date on
which the Purchaser and/or its nominee is or are entered in the Company’s register of
members as holder(s) of the Relevant Sale Shares.
14.5 Each Seller undertakes to the Purchaser as at Completion:
(a) not to exercise any rights attaching to its Relevant Sale Shares or exercisable
in such Seller’s capacity as registered holder of its Relevant Sale Shares
without the Purchaser’s prior written consent;
(b) to hold on trust for the Purchaser all dividends and other distributions received
by such Seller in respect of its Relevant Sale Shares and promptly notify the
Purchaser of anything received by such Seller in such Seller’s capacity as
registered holder of its Relevant Sale Shares;
(c) to act promptly in accordance with the Purchaser’s instructions in relation to
any rights exercisable or anything received by such Seller in such Seller’s
capacity as registered holder of its Relevant Sale Shares; and
(d) to ratify and confirm whatever the Purchaser does or purports to do in good
faith in the exercise of any power conferred by this power of attorney.
15. ENTIRE AGREEMENT
15.1 This Agreement, together with the Transaction Documents and any other documents
referred to in this Agreement, constitutes the whole agreement between the Parties
and supersedes any previous arrangements or agreements between them relating to the
sale and purchase of the Shares.
15.2 Each Party confirms that it has not entered into this Agreement or any other
Transaction Document on the basis of any representation, warranty, undertaking or
other statement whatsoever which is not expressly incorporated into this Agreement
or the relevant Transaction Document and that, to the extent permitted by law, a Party
shall have no right or remedy in relation to action taken in connection with this
Agreement or any other Transaction Document other than pursuant to this Agreement
or the relevant Transaction Document.
15.3 Save in relation to breach of this Agreement or any other Transaction Document, no
Party nor any of its Related Persons shall have any right or remedy, or make any
claim, against another Party nor any of its Related Persons in connection with the sale
and purchase of the Shares.
15.4 In this Clause 15, “Related Persons” means, in relation to a Party, its Connected
Parties and the Agents of that Party and of its Connected Parties.
15.5 Nothing in this Clause 15 shall operate to limit or exclude any liability for fraud.
16. SEVERANCE AND VALIDITY
If any provision of this Agreement is or becomes illegal, invalid or unenforceable in
any respect under the law of any jurisdiction, it shall be deemed to be severed from
30316143 21
this Agreement. The remaining provisions will remain in full force in that jurisdiction
and all provisions will continue in full force in any other jurisdiction.
17. VARIATIONS
No variation of this Agreement shall be effective unless in writing and signed by or on
behalf of the Parties save that the Purchaser may agree to vary the scope of Clause 11
with a Covenantor with the consent of that Covenantor.
18. REMEDIES AND WAIVERS
18.1 No waiver of any right under this Agreement or any other Transaction Document
shall be effective unless in writing. Unless expressly stated otherwise a waiver shall
be effective only in the circumstances for which it is given.
18.2 No delay or omission by any Party in exercising any right or remedy provided by law
or under this Agreement shall constitute a waiver of such right or remedy.
18.3 The single or partial exercise of a right or remedy under this Agreement shall not
preclude any other nor restrict any further exercise of any such right or remedy.
19. EFFECT OF COMPLETION
The provisions of this Agreement and of the other Transaction Documents which
remain to be performed following Completion shall continue in full force and effect
notwithstanding Completion.
20. THIRD PARTY RIGHTS
20.1 Stockdale Securities Limited (and any successor nominated adviser (as that term is
defined in the AIM Rules) to the Company) shall have the benefit of and be entitled to
enforce Clause 5 (Orderly Marketing) of this Agreement as if were a party hereto and
as if the undertakings set out therein were given not merely to the Purchaser but to
Stockdale Securities Limited and/or such successor nominated adviser. Save as set out
in the preceding sentence of this Clause 20.1, a person who is not a Party or its
successor shall have no right under the Contracts (Rights of Third Parties) Act 1999 to
enforce any of the terms of this Agreement, except any member of the Purchaser’s
Group may enforce any terms of this Agreement.
20.2 Other than any amendment or variation to Clause 5 which shall require the prior
written consent of Stockdale Securities Limited (and any successor nominated adviser
(as that term is defined in the AIM Rules) to the Company), the Parties may amend or
vary this Agreement in writing and signed by or on behalf of each of the Parties
without the consent of any other person.
21. COSTS AND EXPENSES
Except as provided otherwise, each Party shall pay its own costs and expenses in
connection with the negotiation, preparation and performance of this Agreement and
the other Transaction Documents.
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22. NOTICES
22.1 Any notice or other communication to be given under or in connection with this
Agreement (“Notice”) shall be in writing and signed by or on behalf of the Party
giving it. A Notice may be delivered personally or sent by prepaid recorded delivery
or international courier to the address provided in Clause 22.3, and marked for the
attention of the person specified in that Clause.
22.2 A Notice shall be deemed to have been received:
(a) at the time of delivery if delivered personally;
(b) two (2) Business Days after the time and date of posting if sent by prepaid
recorded delivery; or
(c) three (3) Business Days after the time and date of posting if sent by
international courier,
provided that if deemed receipt of any Notice occurs after 6.00 p.m. or is not on a
Business Day, deemed receipt of the Notice shall be 9.00 a.m. on the next Business
Day.
22.3 The addresses for service of Notices are:
Sellers:
Set out in column (1) of the table at Schedule 1 of Schedule 1.
Purchaser:
Name: Cronin Group PLC
Address: Cronin Group Plc
Office 3B
Centrum Building
38 Queen Street
Glasgow
G1 3DX
For the attention of: the Company Secretary
22.4 A Party shall notify the other Parties of any change to its details in Clause 22.3 in
accordance with the provisions of this Clause 22, provided that such notification shall
only be effective on the later of the date specified in the notification and five (5)
Business Days after deemed receipt.
22.5 Any Notice given to the Sellers’ Representative shall be deemed to be notice to all of
the Sellers and the rights of the Sellers in respect of such a Notice shall be exercised
or waived on behalf of them if exercised or waived by the Sellers’ Representative.
30316143 23
23. COUNTERPARTS
This Agreement may be executed in counterparts and shall be effective when each
Party has executed and delivered a counterpart. Each counterpart shall constitute an
original of this Agreement, but all the counterparts shall together constitute one and
the same instrument.
24. GOVERNING LAW AND JURISDICTION
24.1 This Agreement, including any non-contractual obligations arising out of or in
connection with this Agreement, is governed by and shall be construed in accordance
with English law.
24.2 The Parties agree that the courts of England shall have exclusive jurisdiction to hear
and determine any suit, action or proceedings arising out of or in connection with this
Agreement (including any non-contractual obligations arising out of or in connection
with this Agreement) and, for such purposes, irrevocably submit to the jurisdiction of
such courts.
25. SELLERS’ REPRESENTATIVE
25.1 Each of the Sellers designates the Sellers’ Representative to serve as the Sellers’
representative and to act on its behalf with respect to notices, consents or approvals
required to be given or accepted by the Sellers acting together and otherwise with
respect to the actions or decisions expressly identified in this Agreement to be
performed or made by the Sellers’ Representative.
25.2 Each of the Sellers irrevocably appoints the Sellers’ Representative as its agent, proxy
and attorney and gives the Sellers’ Representative full power and authority on such
Seller’s behalf to do all acts and to execute and deliver and receive all such
documents or deeds as may be required to resolve or address all matters as are
expressly contemplated by this Agreement and any other Transaction Document.
25.3 Any action taken or document executed by the Sellers’ Representative on behalf of a
Seller in connection with this Agreement shall be deemed to have been made on
behalf of such Seller and the Purchaser shall be entitled to rely upon such action or
document as being binding on such Seller without further enquiry.
25.4 The Sellers’ Representative shall have no liability to the Sellers or the Purchaser
provided that it has acted in accordance with this Clause 25 in good faith.
25.5 Each of the Sellers undertakes to ratify and confirm whatever the Sellers’
Representative does or purports to do in good faith in the exercise of any power
conferred by this Clause 25 and declares that a person who deals with the Sellers’
Representative in good faith may accept a written statement signed by the Sellers’
Representative to the effect that this power has not been revoked as conclusive
evidence of that fact.
25.6 The Sellers’ Representative may resign and be discharged from its duties and
obligations under this Agreement by giving notice and specifying a date (which date
shall be the later of the date specified in the notice and five (5) Business Days after
30316143 24
deemed receipt) on which such resignation shall take effect or be removed by the
Sellers provided, however, that until a successor Sellers’ Representative shall have
been appointed, the Sellers’ Representative shall continue to perform its duties and
obligations under this Agreement.
In Witness Whereof each Party has executed this deed, or caused this deed to be executed
by its duly authorised representatives.
30316143 25
Schedule 1
Part 1 The Sellers
(1) (2) (3) (4) (5)
Name and address
of each Seller
Number of
Ordinary
Shares at
Signing
Proportional
entitlement to
Consideration
Number of
Completion
Consideration
Shares
Number of
Deferred
Consideration
Shares
David Cleevely
8,325,250 62.77% 15,692,993 13,809,836
Mark David Richer
641,651 4.84% 1,209,504 1,064,364
Matthew Cleevely
7,165 0.05% 13,506 11,885
Providence Investment Company
Limited
1,546,196 11.66% 2,914,561 2,564,813
Andrew Richardson
436,181 3.29% 822,196 723,532
Joseph Ward Hills
436,181 3.29% 822,196 723,532
Yi Zhou
178,265 1.34% 336,027
295,704
SUB TOTAL 11,570,889 87.24% 21,810,983 19,193,666
30316143 26
Part 2 The Other Selling Shareholders
(1) (2) (3) (4) (5)
Name, registered number (if applicable)
and address
of Other Selling Shareholder
Number of
Ordinary
Shares at
Signing
Proportional
entitlement to
Consideration
Number of
Completion
Consideration
Shares
Number of
Deferred
Consideration
Shares
Adam Cleevely
11,565 0.09% 21,800
19,184
Adrian Critchlow
99,687 0.75% 187,909 165,360
Cambridge Enterprise Limited (registered number 01069886),
12,000 0.09% 22,620 19,905
Charles Chadwyck-Healey
320,255 2.41% 603,677 531,236
David Vines
201,023 1.52%
378,926
333,455
Touchstone Innovations Businesses LLP (registered number OC333709),
58,185 0.44%
109,678 96,517
Imperial Innovations Limited (registered
number 02060639),
25,000 0.19% 47,125 41,470
John Taysom
265,828 2.00% 501,083 440,953
Jonathan Milner
50,447 0.38% 95,092
83,681
30316143 27
(1) (2) (3) (4) (5)
Name, registered number (if applicable)
and address
of Other Selling Shareholder
Number of
Ordinary
Shares at
Signing
Proportional
entitlement to
Consideration
Number of
Completion
Consideration
Shares
Number of
Deferred
Consideration
Shares
Michael Marshall
114,166 0.86% 215,202 189,377
Peter Stephen Keen
176,784 1.33% 333,236
293,247
Robert Michael Brady
195,672 1.48% 368,839
324,579
Andreas Bruckbaur
1,000 0.01% 1,885
1,659
Andrew Shevchuk
6,000 0.05% 11,310
9,953
Chris Abell
1,938 0.01% 3,653
3,215
David Cummings
38,084 0.29% 71,788
63,173
David Klenerman
10,000 0.08% 18,850
16,588
Invenios Inc.
14,361 0.11% 27,070 23,822
Liming Ying
662 0.00% 1,248
1,098
30316143 28
(1) (2) (3) (4) (5)
Name, registered number (if applicable)
and address
of Other Selling Shareholder
Number of
Ordinary
Shares at
Signing
Proportional
entitlement to
Consideration
Number of
Completion
Consideration
Shares
Number of
Deferred
Consideration
Shares
Max Wilson
2,580 0.02% 4,863 4,280
Melanie Keen
9,298 0.07% 17,527
15,423
Noah Freedman
34,798 0.26% 65,594
57,723
Olivia Cleevely
10,236 0.08% 19,295
16,979
Rachel Lab
10,204 0.08% 19,234
16,926
Thomas McGuire
4,023 0.03% 7,583
6,673
Yuri Korchev
18,000 0.14% 33,930
29,858
SUBTOTAL (The Sellers + The Other
Selling Shareholders) 1,691,796 12.76% 3,189,017 2,806,334
TOTAL (The Sellers + The Other
Selling Shareholders) 13,262,685 100%
25,000,000
22,000,000
30316143 29
Schedule 2
DETAILS OF THE COMPANY
Company name : Openiolabs Limited
Company number : 04548568
Date and place of incorporation : 30 September 2002, England and Wales
Registered address : Future Business Centre, Kings Hedges Road,
Cambridge, CB4 2HY
Issued share capital : £ 13,262.685 divided into 13,262,685 ordinary shares
of £ 0.001 each
Shareholders : As set out in Part 1 and Part 2 of Schedule 1
Directors : David Douglas Cleevely
Dr. Joseph Ward Hills
Dr. Andrew James Richardson
Dr. Maxwell Mortimer Wilson
Secretary : None
Accountants : Peters Elworthy & Moore
Accounting reference date : 31 December
30316143 30
Schedule 3
COMPLETION ARRANGEMENTS
Part 1 Sellers’ Obligations
At Completion the Sellers shall:
1. Procure that a board meeting of the Company is held at which:
1.1 the sale of the Sale Shares and the sale of all other Shares pursuant to the Offer
Letter, to the Purchaser or such other person as the Purchaser may nominate be
approved and it shall be resolved that the transfer of the Shares shall be
approved for registration and (subject only to the transfers being duly stamped)
the transferee entered into the register of members;
1.2 the resignation of Maxwell Wilson as a director of the Company is accepted;
and
1.3 to the extent not previously circulated, a written resolution is circulated to the
eligible members of the Company to adopt new articles of association of the
Company.
2. Deliver to the Purchaser or the Purchaser’s Solicitors:
2.1 duly executed transfers in respect of the Sale Shares and other Shares in favour
of the Purchaser or such other person as the Purchaser may nominate;
2.2 the share certificates for the Sale Shares or an indemnity in the agreed terms
for any lost share certificates;
2.3 such waivers, consents and other documents as the Purchaser may require to
enable the Purchaser, or such other person as the Purchaser may nominate, to
be registered as holder of the Shares in accordance with the provisions of
Clause 2 (Sale and Purchase);
2.4 a copy of each power of attorney under which any document to be delivered to
the Purchaser has been executed;
2.5 a copy of the minutes of the meeting of the board of directors of the Company
referred to in paragraph 1;
2.6 a copy of the Shareholder resolution to adopt the new articles referred to in
paragraph 1.3; and
2.7 evidence to the reasonable satisfaction of the Purchaser of the conversion of
the outstanding loans (including interest) with David Cleevely and any other
loans and equivalent Shareholder consents.
30316143 31
3. Deliver to the Purchaser or such other person as the Purchaser may nominate, to the
extent not already in the possession of the Company:
3.1 the statutory books (written up to but not including the Completion Date),
certificate of incorporation (including all certificates of incorporation on
change of name (if any) and common seal (if any) of the Company;
3.2 evidence in a form satisfactory to the Purchaser as to the absence of
outstanding indebtedness or obligations owed by the Company to any of the
Sellers or their respective Connected Parties; and
3.3 evidence in a form satisfactory to the Purchaser that all change of control
provisions contained in any material contract to which the Company is a party
have been irrevocably waived.
4. The Sellers shall procure that the Service Agreements are executed by each of
Andrew Richardson, Yi Zhou and Joseph Ward Hills (as applicable).
5. The Sellers shall provide evidence in the agreed terms that the intellectual property
licence between the Company and Imperial Innovations Limited dated 16 January
2015 will be terminated upon payment by the Company of £7,500.
6. The Sellers shall deliver to the Purchaser an assignment of intellectual property to the
Company, in the agreed terms, duly executed by Alan Fournier.
7. The Sellers shall deliver to the Purchaser evidence that notice to terminate the
consulting agreement between the Company and C&P Limited has been served by the
Company.
Part 2 Purchaser’s Obligations
At Completion the Purchaser shall:
1. issue the Completion Consideration Shares to the Sellers and deliver to the Sellers’
Solicitors share certificates in respect of the Completion Consideration Shares issued
in accordance with Clause 4.1 to each of the Sellers, duly executed by the Purchaser;
2. execute and deliver to the Sellers’ Solicitors counterpart Transaction Documents to be
signed by the Purchaser;
3. deliver to the Sellers’ Solicitors a certified copy of the minutes of the meeting of the
board of directors of the Purchaser authorising: (a) the execution of this Agreement
and other Transaction Documents; (b) the allotment of the Consideration Shares to the
Sellers in the proportions set out in Part 1 of Schedule 1 (subject to the satisfaction of
the Condition and the Deferred Consideration Conditions); (c) the appointment of
David Cleevely to the Purchaser’s Board with effect from Completion; (d) the
execution of the Service Agreements; and
4. execute and deliver each of the Service Agreements.
30316143 32
Schedule 4
WARRANTIES
Part 1 Title and Capacity Warranties
1. Incorporation and Authority of Sellers
1.1 The Corporate Seller is a company or other body corporate duly incorporated and
validly existing under the laws of the jurisdiction of its incorporation.
1.2 Each of the Sellers has full power and authority to enter into and perform this
Agreement and the other Transaction Documents to which it is a party and all other
documents executed by that Seller which are to be delivered at Completion (together,
the “Documents”), each of which constitutes (when executed) legal, valid and
binding obligations of that Seller in accordance with its respective terms.
1.3 The execution, delivery and performance by the Sellers of the Documents will not
constitute a breach of any laws or regulations or result in a breach of or constitute a
default under (i) in the case of the Corporate Seller, any provision of the articles of
association of the Corporate Seller; (ii) any order, judgment or decree of any court or
governmental authority by which any of the Sellers is bound; or (iii) any agreement or
instrument to which any of the Sellers is a party or by which it is bound.
1.4 None of the Sellers is or will be required to give any notice to or make any filing with
or obtain any permit, consent, waiver or other authorisation from any governmental or
regulatory authority or other person in connection with the execution, delivery and
performance of the Documents.
1.5 The Corporate Seller is not insolvent or unable to pay its debts, and none of the
individual Sellers is bankrupt or unable to pay his debts, within the meaning of the
Insolvency Act 1986 (or under the insolvency laws of any applicable jurisdiction or
has stopped paying debts as they fall due). No order has been made, petition
presented or resolution passed for the winding up of the Corporate Seller. No
administrator or any receiver or manager has been appointed by any person in respect
of any of the Sellers or all or any of their assets and no steps have been taken to
initiate any such appointment and no voluntary arrangement has been proposed.
None of the Sellers has become subject to any analogous proceedings, appointments
or arrangements under the laws of any applicable jurisdiction.
2. Ownership of the Shares
2.1 Each of the Sellers is the sole legal and beneficial owner of all of the Shares set
opposite his or its name in the second column of Part 1 of Schedule 1 (The Sellers).
2.2 The Shares constitute the entire allotted and issued share capital of the Company and
are fully paid up and Schedule 1 accurately sets out the current ownership of Shares
and there are no other equity interests in the Company.
30316143 33
2.3 The Shares are free from all Encumbrances and there is no agreement or commitment
to give or create any Encumbrance over or affecting the Shares and no claim has been
made by any person to be entitled to any such Encumbrance.
Part 2 General Warranties
1. Company Interests
1.1 The Company does not have any subsidiaries and does not have, nor has it ever had,
any interest in the share capital of any other company.
1.2 The Company does not act or carry on business in partnership with any other person
or is a party to any joint venture agreement or any other agreement under which it is
to participate with any other person in any business.
1.3 The Company is not a member of any corporate or unincorporated body, undertaking
or association.
1.4 The Company does not have any branch, agency, place of business or permanent
establishment outside the United Kingdom.
2. Constitutional and Corporate Matters
2.1 The Company has been duly incorporated or formed and is validly existing and in
good standing under the laws of its place of incorporation or formation.
2.2 The copies of the articles of association of the Company, which have been provided to
the Purchaser or the Purchaser’s Solicitors, are complete and accurate in all respects.
2.3 All material documents required to be delivered by the Company by law to the UK
Registrar are complete and accurate in all material respects and have been delivered.
2.4 The statutory books of the Company have been properly kept, are up-to-date and
contain details of all material matters required by applicable laws to be entered in
them.
2.5 There are no agreements or commitments outstanding which call for the issue of any
shares, loan stock or debentures in or other securities of the Company or accord to any
person the right to call for the issue of any such shares, loan stock debentures or other
securities.
2.6 All information in relation to options over shares has been provided to the Purchaser
and there are no remaining options or rights to subscribe for shares that have not been
exercised.
3. Information
The written information in connection with this Agreement and the Transaction
Documents supplied by the Company to the Purchaser/Purchaser’s Solicitors for the
purposes of legal due diligence has been supplied in good faith after due and careful
enquiry.
30316143 34
4. Accounts and Management Accounts
4.1 The Accounts give a true and fair view of the assets and liabilities (including
contingent or disputed liabilities) and commitments of the Company as at the relevant
date to which they relate.
4.2 The Accounts are not affected by any material unusual or non-recurring item or by
any other factor that makes them unusual or misleading in any respect.
4.3 The accounting records of the Company are up to date and have been properly and
accurately maintained in all material respects.
4.4 The Management Accounts are accurate in all respects and fairly represent the assets
and liabilities (including contingent or disputed liabilities) and commitments and
profit or loss of the Company as at the relevant date and for the period to which they
relate.
4.5 The value attributed to work in progress and all details thereof set out in the
Management Accounts is true and accurate, and all such work in progress is capable
of and will be invoiced within 30 days.
4.6 The debts owing to the Company as reflected in the Management Accounts, and all
debts subsequently recorded in the books of the Company since the relevant date to
which they relate:
(a) have been realised or will, so far as the Warrantors are aware, within 90 days
of Completion realise in cash their full amount as included in those
Management Accounts or books;
(b) have not been outstanding (in whole or in part) for more than 60 days from its
due date for payment; and
(c) are not subject to any right of set-off or counterclaim.
5. Events Since the Accounts Date
Since the Accounts Date:
(a) the business of the Company has been conducted in the ordinary course;
(b) there has been no material adverse change in the assets and liabilities,
financial or trading position of the Company; and
(c) no dividend or other distribution has been, or has agreed to be, declared, made
or paid by the Company.
6. Liabilities
6.1 The only outstanding shareholder loan at Completion is for the amount of £16,000
payable to David Cleevely and all other shareholder loans have been discharged or
repaid in full.
30316143 35
6.2 At the date of this Agreement, other than the amount of £7,500 owing to Imperial
Innovations Limited and the loan outstanding to David Cleevely, the Company does
not have any liabilities. As far as the Warrantors are aware, as at the date of this
Agreement, the Disclosure Letter sets out all other liabilities that are anticipated to
become due and payable prior to 30 November 2017.
7. Contracts and Confidential Information
7.1 Details of all material customer and supplier contracts entered into or proposed to be
entered into by the Company have been provided to the Purchaser in writing before
the date hereof. The Company is not a party to any agency, or management
arrangements or power of attorney, contract for guarantee, indemnity or suretyship or
loan agreement or contract of a long term or onerous nature.
7.2 With respect to each of the contracts or engagements entered into by the Company:
(a) the Company has, and so far as the Warrantors are aware the other parties
thereto have, duly performed and complied with their respective material
obligations thereunder; and
(b) so far as the Warrantors are aware there are no grounds for rescission or
termination (as a result of the transactions contemplated by this Agreement or
otherwise).
7.3 No customer or client of the Company:
(a) has, during the last two (2) calendar years from the date of this Agreement,
ceased or materially reduced trading or dealing with the Company; or
(b) is anticipated to cease or materially reduce trading or dealing with the
Company.
7.4 The Company has not disclosed or permitted to be disclosed to any person the details
of any of its confidential Business Intellectual Property (including, for the avoidance
of doubt, know-how, trade secrets or any other confidential information) other than in
accordance with valid written and executed confidentiality agreements.
8. Intellectual Property
8.1 Registered Intellectual Property
(a) The Disclosure Letter contains a complete and accurate list of the Registered
Intellectual Property.
(b) All registration, renewal and other maintenance fees in respect of the
Registered Intellectual Property due on or prior to the date of this Agreement
have been paid in full and, so far as the Warrantors are aware, the Company
has taken all other reasonable steps required for the ongoing maintenance and
protection of the Registered Intellectual Property.
(c) The Company has not received any written notice that the Registered
Intellectual Property is being opposed, or that any third party is seeking its
invalidation or revocation.
30316143 36
(d) All Registered Intellectual Property is registered in the name of the Company.
8.2 Business Intellectual Property
(a) So far as the Warrantors are aware, the operation of the Company as currently
conducted, as proposed to be conducted or as reasonably contemplated by the
Company, as at the date of this Agreement, including the use of the Business
Intellectual Property, does not infringe the Intellectual Property or other rights
of any third party.
(b) The Company has not issued any notice of any legal proceedings, claims or
complaints against a third party regarding the infringement of the Business
Intellectual Property. So far as the Warrantors are aware, no third party has
infringed the Business Intellectual Property and no third party has registered
or applied to register in any country any Intellectual Property made, or
claimed to be owned, by the Company.
(c) Save in respect of the Open Source Licences (as defined below), the
Disclosure Letter contains a list of all licences (in whatever form and whether
express or implied) granted to the Company relating to the Business
Intellectual Property (the “Licences”) and a complete copy of all such licences
has been provided to the Purchaser prior to the date of this Agreement.
(d) The Disclosure Letter contains a list of all licences granted by the Company
(in whatever form and whether express or implied) relating to the Business
Intellectual Property (the “Outgoing Licences”) and a complete copy of all
such licences has been provided to the Purchaser prior to the date of this
Agreement.
(e) All royalties and other payments due under the Licences and Outgoing
Licences have been Disclosed, are ascertainable and (to the extent required)
have been paid and there have been and, so far as the Warrantors are aware,
there are no matters which would cause a breach or default under such
licences, including the acquisition of the Shares by the Purchaser, and no
disputes exist or are anticipated in respect of any such Licence or Outgoing
Licence.
(f) Any and all of the Licences and Outgoing Licences have been entered into in
the ordinary course of the Company’s business, are in full force and effect and
no notice has been given on either side to terminate any of them.
(g) The Company owns or uses, pursuant to a valid and enforceable licence, and
has taken all reasonable steps to ensure that the Company shall continue to
own or be entitled to use, all Intellectual Property that is necessary or desirable
for the conduct of the business of the Company as currently conducted, as
proposed to be conducted or as reasonably contemplated by the Company as at
the date of this Agreement.
(h) All know-how relating to the Business Intellectual Property (including all
technical information required to use, maintain, correct, upgrade and develop
the Software Products and all other products provided by the Company) is
sufficiently documented to enable its proper use without reliance on the
30316143 37
special knowledge or memory of any person (including any officer, employee,
consultant or contractor of the Company) and such documentation is in the
possession and control of the Company.
(i) There is no claim from any third party pertaining to, or any proceeding that
has been received, is pending or, threatened that challenges, the rights of the
Company in respect of any Business Intellectual Property.
8.3 IT Systems / IT Contracts / Software
(a) The Disclosure Letter contains a complete list of all material IT Systems.
(b) The Disclosure Letter contains a complete list of all material IT Contracts.
(c) The Company owns or has rights to use all IT Systems.
(d) All the IT Contracts are valid and binding and none have been the subject of
any breach or default.
(e) The Company is the legal and beneficial owner of all Intellectual Property
relating to the software owned or used by the Company and has in its sole
possession all source code relating thereto, other than those in relation to Open
Source Software used by the Company which are licensed under the licensor’s
standard terms (“Open Source Licences”). For the purposes of this
Agreement, “Open Source Software” means any software that contains,
includes, incorporates or is derived in any manner (in whole or in part) from
any software that is distributed as open source software, public source
software, shareware and/or freeware.
(f) The Company has not disclosed any of its source code, relating to the software
owned or used by the Company, to any third party and has taken all
reasonably necessary or desirable steps to maintain the confidentiality of such
source code within its organisation.
(g) So far as the Warrantors are aware any and all software which is licensed or
otherwise made available externally to third parties (“Software Products”)
does not contain any viruses, worms, Trojan horses, other contaminants or
malicious software. The Software Products comply in all material respects
with all user documentation and specifications which relate to the Software
Products and are capable of performing all tasks and functions for which they
have been developed and are free in all material respects from bugs and
defects.
(h) The Company has taken all steps reasonably necessary or desirable for the
fullest protection of all Intellectual Property relating to the software owned or
used by the Company and has not granted any rights to third parties in relation
to such Intellectual Property.
(i) The Company has at all times complied in all material respects with all
obligations of any and all Open Source Licences.
(j) None of the software owned or used by the Company contains software code
subject to any licence that would require, as a condition of use, modification
30316143 38
or distribution of such software code or disclosure of any of the Company’s,
proprietary or confidential information (including source code of the
Company’s owned software) to any third party.
(k) All Software Products have been licensed to third parties on arms-length
commercial terms and copies of all such licences have been disclosed to the
Purchaser and are contained in the Disclosure Letter.
8.4 Computer Operation and Maintenance
All IT Systems are in good working order and function in accordance with all
applicable specifications. No part of the IT Systems has materially failed to function
at any time during the two (2) years prior to the date of this Agreement.
8.5 Data Protection
For the purposes of this Warranty 8.5, “Data Protection Law” means any and all
applicable laws that implement or give legal effect to the data protection directive
(Directive 95/46/EC), the e-privacy directive (Directive 2002/58/EC, as amended by
Directive 2009/136/EC), Articles 7 and 8 of the Charter of Fundamental Rights of the
European Union, Article 8 of the European Convention on Human Rights, and any
other legislation in any applicable jurisdiction concerning the protection and/or
processing of personal data, the right to privacy, information security, and the
obligation to provide data breach notifications, and including in each case all
subordinate legislation, regulations, guidance and codes of practice. The Company
has complied in all material respects with all Data Protection Law.
9. Products Warranty
No product warranties have been provided by the Company to any customers or other
third parties, save as set out in the Company’s general terms of business (a copy of
which has been provided to the Purchaser).
10. Employees
For the purposes of this warranty 10:
“Employees” means any person employed under a contract of service with the
Company.
10.1 Copies of all signed contracts of employment (and any amendments thereto) and
policies that apply to any Employee have been Disclosed.
10.2 The particulars of the Employees Disclosed show all remuneration and other material
contractual benefits which the Company is bound to provide to each Employee.
10.3 The terms of employment or engagement of all Employees are such that their
employment or engagement may be terminated by not more than three (3) months’
notice given at any time without liability for any payment including by way of
compensation or damages (except for unfair dismissal or a statutory redundancy
payment or other statutory payment) and the Company has not entered into any
existing agreement or arrangement applicable at the date hereof or any time after this
30316143 39
Agreement for the management of the Company or any part thereof other than with
the Employees.
10.4 Since the Accounts Date, the Company has not paid or given any increase in or
improvement to the emoluments of any Employee and the Company has not made any
announcement or proposal concerning any such improvement to the emoluments with
or without retrospective operation.
10.5 The Company has not been engaged or involved in any material dispute with any
Employee and none are anticipated and no industrial action involving such
employees, official or unofficial, exists at the date hereof.
10.6 No notice given by an Employee to terminate his employment is outstanding and, so
far as the Warrantors are aware, no Employee is intending to do so.
10.7 The terms on which any person, who is not an Employee, has been engaged by the
Company to provide services to the Company have been Disclosed.
10.8 All contributions, premiums and expenses due from the Company in respect of
pension schemes and insurance benefits for the benefit of Employees including
professional fees have been paid.
10.9 The Company has complied in all material respects with its obligations in relation to
automatic enrolment under the Pensions Act 2008.
11. Tax
11.1 All computations, payments and returns which should have been made by the
Company in respect of Tax or for any fiscal purpose have and will at Completion
have been made within the requisite periods and are up to date, correct and on a
proper basis (or otherwise rectified to the satisfaction of the relevant tax authority
prior to Completion) and none of them is now the subject or so far as the Warrantors
are aware is likely to be the subject of any dispute with the relevant Tax authority and
in particular the returns in relation to Tax will not give rise to any assessment,
adjustment or set-off (including any claim for interest on unpaid Tax) by the relevant
Tax authority.
11.2 Full and proper provisions or reserve has been made in the Management Accounts for
all Tax liable to be assessed on the Company.
11.3 The Company maintains complete and accurate records and other information in
relation to Tax that meet all legal requirements in all material respects and enable its
Tax liabilities to be calculated accurately in all material respects.
11.4 The Company is not and will not become liable to make any person (including a Tax
Authority) any payment in respect of Tax which is primarily or directly chargeable
against, or attributable to, any other person.
11.5 The Company has at all times been tax resident only in the United Kingdom and does
not have a permanent establishment in any other jurisdiction.
30316143 40
11.6 The Company has not been involved in any transaction or series of transactions the
main purpose, or one of the main purposes of which, was the avoidance of Tax, no
person acting in the capacity of an Associated Person, as defined in section 44(4) of
the Criminal Finances Act 2017) of the Company has committed a tax evasion
facilitation offence under section 45 of that Act and all transactions entered into by
the Company have been made on arm’s length terms.
11.7 The Company is duly registered for VAT, has complied with all of its legal
obligations in relation to VAT and is entitled to full credit for input VAT suffered by
it.
12. Disputes
12.1 Neither the Company nor its directors, nor any person for whose acts the Company
may be vicariously liable, is engaged or involved in, or otherwise subject to any of the
following matters:
(a) any litigation, mediation, arbitration or other proceedings, or any claims,
actions or hearings before any court, tribunal or any governmental, regulatory
or similar body, or any department, board or agency (except for debt collection
in the normal course of business); or
(b) any dispute with, or any investigation, inquiry or enforcement proceedings by,
any governmental, regulatory or similar body or agency in any jurisdiction.
12.2 No notice has been served in relation to any of the proceedings referred to above by or
against the Company, any director or any person for whose acts the Company may be
vicariously liable, and so far as the Warrantors are aware there are no circumstances
likely to give rise to any such proceedings.
13. Compliance
13.1 So far as the Warrantors are aware the Company has at all times conducted its
business in accordance with, and has acted in compliance with all applicable laws and
regulations of any relevant jurisdiction.
13.2 Neither the Company nor its directors or employees (current or past), has been
convicted of an offence in relation to the business or affairs of the Company.
14. Arrangements with Connected Parties
14.1 As at Completion, there are no sums owing to the Company which are not incurred in
the ordinary course of the Company’s business including sums owing from the
Sellers, any Connected Party or any other persons (“Other Persons”) or vice versa
and, to the extent that any indebtedness to the Sellers, any Connected Party or Other
Persons existed prior to Completion, any liabilities of the Company have been validly
waived in full by the Sellers, any Connected Party or Other Persons.
14.2 No Connected Party of that Seller or any person connected with such person is
entitled to a claim of any nature against the Company or has assigned such right to
any other person.
30316143 41
14.3 The success fee due to David Cleevely pursuant to the consultancy agreement
between the Company and Cleevely & Partners Limited has been fully discharged by
the issue of Ordinary Shares to David Cleevely and such shares are included in the
Sale Shares.
30316143 42
Schedule 5
LIMITATIONS ON LIABILITY
In this Schedule 5 references to Warrantors shall, as the context requires, be deemed
include David Cleevely in his capacity as Covenantor under the Tax Covenant.
1. Limitations on Quantum
1.1 The liability of the Warrantors in respect of a Claim:
(a) shall not arise unless and until the amount of a Claim (when aggregated with
all other Claims based on the same or similar facts or in respect of the same
Warranty) exceeds £10,000, in which case the Purchaser shall be entitled to
claim the whole of such amount and not merely the excess;
(b) shall not arise unless and until the amount of all Claims (excluding any
amounts in respect of a Claim or for which the Warrantors have no liability by
virtue of paragraph 1.1 (a)), exceeds £25,000, in which case the Purchaser
shall be entitled to claim the whole of such amount and not merely the excess.
1.2 The aggregate liability of the Warrantors for all Claims shall not exceed an amount
equal to the number of all the Deferred Consideration Shares referred to in columns 5
of Part 1 (Sellers) and Part 2 (Other Selling Shareholders) of Schedule 1 multiplied by
the Deferred Issue Price; and
1.3 Any liability of the Warrantors in respect of a Claim shall only be satisfied by the
cancellation of the Sellers’ or other Selling Shareholders’ rights to Deferred
Consideration Shares and the Warrantors shall have no liability whatsoever to pay any
cash amount in respect of any Claim.
2. Time Limits
The Warrantors shall not be liable in respect of any Claim unless written notice
containing full details of such Claim is given by or on behalf of the Purchaser to the
Warrantors as soon as reasonably practicable after the Purchaser becomes aware of
the matter or circumstance giving or which may give rise to a Claim and in any event
the Warrantors shall be under no liability in respect of any Claim unless notice is
given on or before:
(a) in the case of a Tax Claim, the second anniversary of Completion; and
(b) in all other cases, the second anniversary of Completion, provided that any
such Claim shall (if not previously satisfied, settled or withdrawn) be deemed
to have been withdrawn unless legal proceedings in respect of it have been
properly issued and validly served, or the amount payable agreed between the
parties, within nine (9) months of such written notice being given to the
Warrantor.
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3. Exclusions
3.1 The Sellers shall not be liable for any claim under the General Warranties;
(a) to the extent that the matter or thing giving rise to such Claim has been
Disclosed;
(b) to the extent that a provision has been specifically made in the Accounts or
the Management Accounts for the matter giving rise to such Claim;
(c) to the extent that the liability arises or is increased as a result of any legislation
not in force or otherwise not in effect at the date of this Agreement which has
retrospective effect;
(d) which results from a change in the accounting or taxation policies or practices
of the Purchaser or Company introduced or having effect after Completion
except where:
(i) any such change is necessary to comply with generally accepted
accounting or taxation policies or practices; and
(ii) the Company did not, prior to Completion, comply with generally
accepted accounting or taxation policies or practices in force prior to
Completion;
4. Voluntary Acts
The Sellers shall not be liable for any claim under the General Warranties (other than
the Tax Warranties) arising or increased directly as a result of any voluntary act,
transaction or arrangement by the Company (including, but not limited to, a change to
accounting bases, policies, practices or methods applied of any member of the
Purchaser’s Group after the date of this Agreement,) save to the extent such act was
required under contractual commitments incurred prior to Completion or was carried
out in the ordinary course of business as carried out at Completion.
4.1 If, in respect of any matter which would give rise or has given rise to a Claim, the
Company is entitled to claim under any policy of insurance which was in place as at
Completion, the amount received in respect of such claim shall reduce to the extent
that there is an actual recovery under such policy and the Purchaser and the relevant
members of the Company shall use their reasonable endeavours to recover from their
respective insurers all such claims provided always that the Company shall not be
obliged to pursue any insurer before bringing a Claim against the Warrantor.
4.2 The Purchaser shall, at all reasonable times, make available to the Warrantors so far
as it is reasonably able and to the extent doing so will not result in the Purchaser or
the Company incurring any material disruption or cost or losing legal professional
privilege, all information and documents relating to a Claim and reasonable access on
reasonable notice to the personnel of the Purchaser and/or the Company and to
relevant premises, accounts, documents and records within the power, possession and
control of the Purchaser and/or the Company to enable the Warrantor and his
professional advisers to interview such personnel and to consider such premises,
accounts, documents and records in respect of any Claim.
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5. Duty to Mitigate
Nothing in this Agreement shall or shall be deemed to relieve the Purchasers of any
common law duty to mitigate any loss or damage incurred by it in relation to a Claim.
6. No Double Recovery
The Purchaser shall not be entitled to recover damages or obtain payment, more than
once in respect of the same loss suffered as a result of a breach of the General
Warranties.
7. Exclusion of Defendants’ Limitations
7.1 Nothing in this Schedule 5 applies to a claim under the Title and Capacity Warranties.
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Schedule 6
PURCHASER WARRANTIES
1. Incorporation and Authority
1.1 The Purchaser is a company duly incorporated and validly existing under the laws of
England and Wales and has the necessary power and authority to enter into and
perform this Agreement, the other Transaction Documents to which it is a party and
all other documents executed by it which are to be delivered at Completion.
1.2 This Agreement and the other Transaction Documents constitute (or will, when
entered into, constitute) legal, valid and binding obligations of the Purchaser
2. Share Capital
2.1 The Purchaser’s issued share capital is 525,739,933 shares of £0.0001 each and it has
authority to allot the Consideration Shares pursuant to the terms of this Agreement.
2.2 The Consideration Shares will, upon allotment, be free from all claims and
Encumbrances whatsoever and will rank pari passu in all respects with the Ordinary
Shares.
2.3 The Purchaser has no loan capital in the form of debt nor has agreed to create or issue
any such loan capital.
2.5 Neither the creation, allotment nor issue of the Consideration Shares nor the
performance of this Agreement by the Purchaser will infringe any powers or
restrictions of, or the terms of any contract, indenture, security, obligation,
commitment or arrangement binding upon the Purchaser or result in the
implementation of any right of pre-emption or any other material provision thereof.
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Schedule 7
TAX COVENANT
1. INTERPRETATION
The following definitions and rules of interpretation apply in this Tax Covenant.
1.1 Definitions:
Accounts Relief:
(a) any Relief (including the right to a repayment of Tax) that has been shown as
an asset in the Accounts or the Management Accounts; and
(b) any Relief that has been taken into account in computing (and so reducing or
eliminating) any provision for deferred Tax in the Accounts or the
Management Accounts.
Covenantor: for the purposes of this schedule only shall mean David Cleevely.
Dispute: any dispute, appeal, negotiations or other proceedings in connection with a
Tax Claim.
Event: includes (without limitation), the expiry of a period of time, the Company
becoming or ceasing to be associated with any other person for any Tax purpose or
ceasing to be or becoming resident in any country for any Tax purpose, the death or
the winding up or dissolution of any person, the earning, receipt or accrual for any
Tax purpose of any income, profit or gains, the incurring of any loss or expenditure,
and any transaction (including the execution and completion of all provisions of this
agreement), event, act or omission whatsoever, and any reference to an Event
occurring on or before a particular date shall include Events which, for Tax purposes,
are deemed to have, or are treated or regarded as having, occurred on or before that
date.
Liability for Taxation:
(a) any liability of the Company to make a payment of or in respect of Tax,
whether or not the same is primarily payable by the Company and whether or
not the Company has or may have any right of reimbursement against any
other person or persons, in which case the amount of the Liability for Taxation
shall be the amount of the actual payment;
(b) the Loss of any Accounts Relief in which case the amount of the Liability for
Taxation will be the amount of Tax which would (on the basis of Tax rates
current at the date of such Loss) have been saved but for such Loss, assuming
for this purpose that the Company had sufficient profits or was otherwise in a
position to use the Relief or where the Relief is the right to repayment of Tax,
the amount of the repayment; and
(c) the use or setting off of any Purchaser’s Relief in circumstances where, but for
such set off or use, the Company would have had a liability to make a payment
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of or in respect of Tax for which the Purchaser would have been able to make
a claim against the Covenantor under this Tax Covenant, in which case, the
amount of the Liability for Taxation shall be the amount of Tax for which the
Covenantor would have been liable but for such set off or utilisation.
Loss: includes absence, failure to obtain, non-existence, non-availability, reduction,
modification, loss, counteraction, nullification, utilisation, disallowance or clawback
for whatever reason.
Purchaser’s Relief:
(a) any Accounts Relief;
(b) any Relief which arises in connection with any Event occurring in the ordinary
course of business after the Accounts Date and before Completion, or in
connection with any Event occurring after Completion; and
(c) any Relief, whenever arising, of the Purchaser or any member of the
Purchaser’s Tax Group other than the Company.
Purchaser’s Tax Group: the Purchaser and any other company or companies which
are from time to time treated as members of the same group as, or otherwise
connected or associated in any way with, the Purchaser for any Tax purpose.
Relief: includes any loss, relief, allowance, credit, exemption or set off in respect of
Tax or any deduction in computing income, profits or gains for the purposes of Tax
and any right to a repayment of Tax.
Saving: the reduction or elimination of any liability of the Company to make an
actual payment of Tax in respect of which the Covenantor would not have been liable
under paragraph 2, by the use of any Relief arising wholly as a result of a Liability for
Taxation in respect of which the Covenantor have made a payment or otherwise fully
discharged their liability under paragraph 2 of this Tax Covenant.
Tax Claim: any assessment, notice, demand, letter or other document issued or action
taken by or on behalf of any Taxation Authority, self-assessment or other occurrence
from which it appears that the Purchaser, the Company is or may be subject to a
Liability for Taxation or other liability in respect of which the Covenantor is or may
be liable under this Tax Covenant or the Warranties contained in paragraph 11 of Part
2 to Schedule 4.
Taxation Authority: any government, state or municipality or any local, state,
federal or other fiscal, revenue, customs or excise authority, body or official
competent to impose, administer, levy, assess or collect Tax in the UK or elsewhere.
Taxation Statute: any directive, statute, enactment, law or regulation wheresoever
enacted or issued, coming into force or entered into providing for or imposing any
Tax and shall include orders, regulations, instruments, by-laws or other subordinate
legislation made under the relevant statute or statutory provision and any directive,
statute, enactment, law, order, regulation or provision which amends, extends,
consolidates or replaces the same or which has been amended, extended, consolidated
or replaced by the same.
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1.2 References to gross receipts, income, profits or gains earned, accrued or received shall
include any gross receipts, income, profits or gains deemed under the relevant
Taxation Statute to have been or treated or regarded as earned, accrued or received.
1.3 References to a repayment of Tax shall include any repayment supplement or interest
in respect of it.
1.4 Any reference to something occurring in the ordinary course of business shall not
include:
(a) anything that involves, or leads directly or indirectly to, any liability of the
Company to Tax that is, or but for an election would have been, the primary
liability of, or properly attributable to, or due from another person (other than
a member of the Purchaser’s Tax Group);
(b) anything that relates to or involves the acquisition or disposal of an asset or the
supply of services (including the lending of money, or the hiring or licensing
of tangible or intangible property) to the extent that it relates to a transaction
which is not entered into on arm’s length terms;
(c) anything that relates to or involves the making of a distribution for Tax
purposes, the creation, cancellation or re-organisation of share or loan capital,
the creation, cancellation or repayment of any connected-party debt or the
Company becoming or ceasing to be or being treated as ceasing to be a
member of a group of companies or becoming or ceasing to be associated or
connected with any other company for any Tax purposes;
(d) anything that relates to any scheme, transaction or arrangement designed
wholly or mainly or containing steps or stages designed wholly or mainly for
the purpose of avoiding or reducing or deferring a Liability for Taxation;
(e) anything that gives rise to a Liability for Taxation on deemed (as opposed to
actual) profits or to the extent that it gives rise to a Liability for Taxation on an
amount of profits greater than the difference between the sale proceeds of an
asset and the amount attributable to that asset in the Management Accounts or,
in the case of an asset acquired since the Accounts Date, the cost of that asset;
or
(f) anything that involves, or leads directly or indirectly to, a change of residence
of the Company for Tax purposes.
1.5 Unless the contrary intention appears, words and expressions defined in this
agreement have the same meaning in this Tax Covenant and any provisions in this
agreement concerning matters of construction or interpretation also apply in this Tax
Covenant.
1.6 Any stamp duty which is charged on any document, or in the case of a document
which is outside the UK, any stamp duty which would be charged on the document if
it were brought into the UK, which is necessary to establish the title of the Company
to any asset, and any interest fine or penalty relating to such stamp duty, shall be
deemed to be a liability of the Company to make an actual payment of Taxation in
30316143 49
consequence of an Event arising on the last day on which it would have been
necessary to pay such stamp duty in order to avoid any liability to interest or penalties
arising on it.
2. COVENANT
2.1 The Covenantor covenants with the Purchaser that, subject to the provisions of this
Tax Covenant, the Covenantor shall be liable to the Purchaser (in accordance with
Clause 9 of this Agreement) for an amount equal to any:
(a) Liability for Taxation resulting from or by reference to any Event occurring on
or before Completion or in respect of any gross receipts, income, profits or
gains earned, accrued or received by the Company on or before Completion,
whether or not such liability has been discharged on or before Completion;
(b) Liability for Taxation, including liability for payments in respect of Taxation,
which arises solely as a result of the relationship for Tax purposes before
Completion of the Company with any person other than a member of the
Purchaser’s Tax Group, whether arising before or after Completion;
(c) Liability for Taxation which arises at any time (being a liability for the
Company to account for income tax or National Insurance contributions) in
respect of the grant, exercise, surrender, exchange or other disposal of an
option or other right to acquire securities or in respect of any acquisition,
holding or disposal of employment-related securities (as defined for the
purposes of Part 7 of the Income Tax (Employment and Pensions) Act 2003)
where the acquisition of the security or the grant of the option or other right to
acquire the security occurred on or before Completion;
(d) Liability for Taxation that arises at any time under Part 7A of ITEPA 2003,
including any liability arising as a consequence of any payments or loans
made to, any assets made available or transferred to, or any assets earmarked,
however informally, for the benefit of, any employee or former employee of
the Company, or for the benefit of any relevant person, by an employee
benefit trust or another third party where the arrangement giving rise to the
charge was entered into before Completion;
(e) Liability for Taxation being a liability for inheritance tax which:
(i) is a liability of the Company and arises as a result of a transfer of value
occurring or being deemed to occur on or before Completion (whether
or not in conjunction with the death of any person whensoever
occurring);
(ii) has given rise at Completion to a charge on any of the Shares or assets
of the Company; or
(iii) gives rise after Completion to a charge on any of the Shares in or assets
of the Company as a result of the death of any person within seven
years of a transfer of value which occurred before Completion;
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(f) costs and expenses (including legal costs), properly and reasonably incurred
by the Purchaser or the Company or any member of the Purchaser’s Tax
Group arising from making a successful claim under this Schedule.
2.2 For the purposes of this Tax Covenant, in determining whether a charge on the shares
in or assets of the Company arises at any time or whether there is a liability for
inheritance tax, the fact that any Tax may be paid in instalments shall be disregarded
and such Tax shall be treated for the purposes of this Tax Covenant as becoming due
or to have become due and a charge as arising or having arisen on the date of the
transfer of value or other date or Event on or in respect of which it becomes payable
or arises.
2.3 The provisions of section 213 of IHTA 1984 (refund by instalments) shall be deemed
not to apply to any liability for inheritance tax within this paragraph 2.
2.4 The Purchaser agrees and acknowledges that its sole recourse in respect of any and all
claims under this Tax Covenant shall be the cancellation of the Sellers’ and Other
Selling Shareholders’ rights to receive Deferred Consideration Shares set out in
clauses 9.2 and 9.3 and, for the avoidance of doubt and without prejudice to its rights
to bring claims under the Tax Covenant, that it has no direct recourse whatsoever
against the Sellers or the Other Selling Shareholders in respect thereof.
3. EXCLUSIONS
3.1 The covenant contained in paragraph 2 above and any claim under the Tax Warranties
shall not cover any Liability for Taxation to the extent that:
(a) provision or reserve (other than a provision for deferred tax) in respect of the
liability is made in the Accounts;
(b) such Liability for Taxation was discharged on or before Completion and the
discharge of such Liability for Taxation was reflected in the Accounts;
(c) it arises as a result of a transaction in the ordinary course of business of the
Company between the Accounts Date and Completion and is not interest or a
penalty;
(d) it arises or is increased as a result only of any change in the law of Tax (other
than a change targeted specifically at countering a tax avoidance scheme)
announced and coming into force after Completion (whether relating to rates
of Tax or otherwise) or the withdrawal of any extra-statutory concession
previously made by a Taxation Authority (whether or not the change purports
to be effective retrospectively in whole or in part);
(e) it would not have arisen but for a change in accounting policies (including a
change in accounting reference date) or the accounting bases on which the
Company values its assets (other than a change made to comply with UK
GAAP applicable to the Company at Completion);
(f) the Purchaser is compensated for any such matter under any other provision of
this agreement;
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(g) there is available to the Company a Relief which is not a Purchaser’s Relief;
(h) it would not have arisen but for a voluntary act, transaction or omission of the
Company or the Purchaser or any member of the Purchaser’s Tax Group
outside the ordinary course of business after Completion and which the
Purchaser was aware or ought reasonably to have been aware would give rise
to the Liability for Taxation or other liability in question;
(i) it would not have arisen or would have been reduced or eliminated but for a
failure on the part of the Company to make any claim, election, surrender or
disclaimer or give any notice or consent or do anything after Completion the
making giving or doing of which was taken into account in preparing the
Accounts and the Purchaser was actually made aware of that fact;
(j) it arises as a consequence of the withdrawal or postponement by the Company
after Completion of any valid claim for Relief made on or before Completion;
(k) it would not have arisen but for a cessation of, or major change in the nature or
conduct of, any trade carried on by the Company, being a cessation or major
change occurring on or after Completion; or
(l) it would not have arisen but for any failure or delay by the Purchaser or the
Company in paying over to any Taxation Authority any payment previously
made by the Covenantor to the Purchaser in respect of a Tax Claim.
3.2 For the purposes of paragraph 3.1(h), an act will not be regarded as voluntary if
undertaken pursuant to a legally binding obligation entered into by the Company on
or before Completion or imposed on the Company by any legislation whether coming
into force before, on or after Completion or for the purpose of avoiding or mitigating
a penalty imposable by such legislation, or if carried out at the written request of the
Covenantor.
4. SAVINGS
If (at the Covenantor’s request and expense, and on or before the Deferred Release
Date) the auditors for the time being of the Company determine that the Company has
obtained a Saving, or can realise that Saving without prejudicing the availability of
any other Relief on or before the Deferred Release Date, the amount that would
otherwise be due under paragraph 2 above shall be reduced by the amount of that
Saving to the extent it is actually obtained or realisable before the Deferred Release
Date (less any costs incurred by the Purchaser or the Company in obtaining or
realising it).
5. CORPORATION TAX RETURNS
5.1 Subject to this paragraph 5, the Purchaser will have exclusive conduct of all Taxation
affairs of the Company after Completion.
5.2 The Purchaser will procure that the Company keeps the Covenantor fully informed of
its Tax affairs for any accounting period ended on or before Completion for which
final agreement with the relevant Tax Authority of the amount of Tax due from the
Company has not been reached. The Purchaser will not submit any substantive
30316143 52
correspondence or submit or agree any return or computation for any such period to
any Tax Authority without giving the Covenantor a reasonable opportunity to
comment and taking account any reasonable representations made by the Covenantor.
5.3 For the avoidance of doubt where any matter relating to Tax gives rise to a Tax
Claim, the provisions of paragraph 6 shall take precedence over the provisions of this
paragraph 5.
5.4 The Purchaser will procure that the Company does not amend or withdraw any return
or computation or any claim, election, surrender or consent made by it for its
accounting periods ended on or before Completion without giving the Covenantor a
reasonable opportunity to comment and taking account of any reasonable
representations made by the Covenantor.
6. CONDUCT OF TAX CLAIMS
6.1 Subject to paragraph 6.2, if the Purchaser or the Company becomes aware of a Tax
Claim, the Purchaser shall give or procure that notice in writing is given to the
Covenantor or to the Covenantor’s duly appointed agent as soon as is reasonably
practicable, provided always that the giving of such notice shall not be a condition
precedent to the Covenantor’s liability under this Tax Covenant.
6.2 If the Covenantor become aware of a Tax Claim, they shall notify the Purchaser in
writing as soon as reasonably practicable, and, on receipt of such notice, the Purchaser
shall be deemed to have given the Covenantor notice of the Tax Claim in accordance
with the provisions of paragraph 6.1.
6.3 Subject to paragraph 6.4, provided the Covenantor indemnifies the Purchaser and the
Company to the Purchaser’s reasonable satisfaction against all liabilities, costs,
damages or expenses which may reasonably and properly be incurred thereby
including any additional Liability for Taxation, the Purchaser shall take and shall
procure that the Company shall take such action as the Covenantor may reasonably
request by notice in writing given to the Purchaser to avoid, dispute, defend, resist,
appeal or compromise any Tax Claim.
6.4 Neither the Purchaser nor the Company shall be obliged to appeal or procure an
appeal against any assessment to Tax if the Purchaser, having given the Covenantor
written notice of such assessment, does not receive written notification from the
Covenantor that he wishes to exercise his rights under this paragraph within thirty
Business Days.
6.5 If:
(a) the Covenantor does not notify the Purchaser to take any action under
paragraph 6.3;
(b) the Covenantor (or the Company before Completion) has been involved in a
case involving fraudulent conduct or deliberate default in respect of the
Liability for Taxation which is the subject matter of the Dispute; or
(c) the Dispute involves an appeal to the Tax Chamber of the First-tier Tribunal
(or the equivalent tribunal of first instance in any non-UK jurisdiction), unless
30316143 53
the Covenantor has obtained the opinion of Counsel specialist in Tax matters
that there is a reasonable prospect that the appeal will succeed,
the Purchaser, or the Company shall have the conduct of the Dispute absolutely
(without prejudice to its rights under this Tax Covenant) and shall be free to pay or
settle the Tax Claim on such terms as the Purchaser or the Company may in its
absolute discretion consider fit.
6.6 Subject to paragraph 6.5, by agreement in writing between the Purchaser and the
Covenantor, the conduct of a Dispute may be delegated to the Covenantor upon such
terms as may be agreed from time to time between the Purchaser and the Covenantor
provided that, unless the Purchaser and the Covenantor specifically agree otherwise in
writing, the following terms shall be deemed to be incorporated into any such
agreement:
(a) the Purchaser shall promptly be kept fully informed of all matters pertaining to
a Dispute and shall be entitled to see and keep copies of all correspondence
and notes or other written records of telephone conversations or meetings and,
in the event that there is no written record, shall be given a report of all
telephone conversations with any Taxation Authority to the extent that it
relates to a Dispute as soon as reasonably practicable;
(b) the appointment of solicitors or other professional advisers shall be subject to
the written approval of the Purchaser, such approval not to be unreasonably
withheld or delayed;
(c) all material written communications pertaining to the Dispute which are to be
transmitted to the relevant Taxation Authority shall first be submitted to the
Purchaser for approval and shall only be finally transmitted if such approval is
given, such approval not to be unreasonably withheld or delayed; and
(d) the Covenantor shall make no settlement or compromise of the Dispute or
agree any matter in the conduct of the Dispute which is likely to affect the
amount thereof or the future liability to Tax of the Purchaser or the Company
without the prior approval of the Purchaser, such approval not to be
unreasonably withheld or delayed.
6.7 The Purchaser shall provide and shall procure that the Company provides to the
Covenantor and the Covenantor’s professional advisors reasonable access to any
relevant assets, documents and records within their power, possession or control for
the purpose of investigating the matter and enabling the Covenantor to take such
action as is referred to in this paragraph 6.
6.8 Neither the Purchaser nor the Company shall be subject to any claim by or liability to
the Covenantor for non-compliance with any of the provisions of this paragraph 6 if
the Purchaser or the Company has acted in good faith in accordance with the written
instructions of the Covenantor.
7. PURCHASER’S COVENANT
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7.1 The Purchaser covenants with the Covenantor to pay to the Covenantor within 5
Business Days of demand thereof an amount equivalent to any Tax or any amount on
account of Tax which the Covenantor are required to pay as a result of a failure by the
Company or the Purchaser to discharge that Tax.
7.2 The covenant contained in paragraph 7.1 shall:
(a) extend to any costs and expenses reasonably and properly incurred in
successfully making a claim under paragraph 7.1;
(b) not apply to Tax to the extent that the Purchaser could, disregarding any time
period for making the claim set out in paragraph 2 of Schedule 5 to this
agreement, claim payment in respect of it under paragraph 2.1 of this
Schedule, except to the extent a payment has been made pursuant to paragraph
2.1 and the Tax to which it relates was not paid by the relevant Group
Company; and
(c) not apply to Tax to the extent it has been recovered under any relevant
statutory provision (and the Covenantor shall procure that no such recovery is
sought to the extent that payment is made hereunder).
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Schedule 8
LIMITATIONS ON LIABILITY UNDER THE PURCHASER WARRANTIES
1. Limitations on Quantum
The liability of the Purchaser in respect of any claim under the Purchaser’s
Warranties, as applicable:
1.1 shall not arise unless and until the amount of such claim (when aggregated with all
other claims based on the same or similar facts or in respect of the same Purchaser
Warranty) exceeds £10,000, in which case the Sellers shall be entitled to claim the
whole of such amount and not merely the excess;
1.2 shall not arise unless and until the amount of all Claims for which they would, in the
absence of this provision be liable, exceeds £25,000 (subject to sub-paragraph (a)
above), in which case the Sellers shall be entitled to claim the whole of such amount
and not merely the excess; and
1.3 shall, in aggregate, not exceed 50% of the Deferred Consideration Shares.
2. Time Limits
The Purchaser shall not be liable in respect of any claim under the Purchaser
Warranties unless written notice containing full details of such claim is given by the
Sellers’ Representative to the Purchaser as soon as reasonably practicable after the
Sellers become aware of the matter or circumstance giving or which may give rise to
such claim and in any event the Purchaser shall be under no liability in respect of any
claim unless notice is given on or before the date which is 24 months after the date of
this Agreement, provided that any such claim shall (if not previously satisfied, settled
or withdrawn) be deemed to have been withdrawn unless legal proceedings in respect
of it have been properly issued and validly served, or the amount payable agreed
between the parties, within nine (9) months of such written notice being given by the
Sellers’ Representative.
