Exhibit 2.1
DATED 7 APRIL 1997
------------------
(1) BODYCOTE INTERNATIONAL PLC
(2) ARMOR HOLDINGS LIMITED
(3) ARMOR HOLDINGS INC
SHARE ACQUISITION AGREEMENT
RELATING TO
SUPERCRAFT (GARMENTS) LIMITED
XXXXXXX XXXXX XXXXXXXXXXX
00 XXXX XXXX
XXXXXX XX0X 0XX
TELEPHONE 0000-000 0000
CONTENTS
--------
CLAUSE OF AGREEMENT PAGE
------------------- ----
1 Definitions and interpretation 1
2 Sale of Shares 4
3 Consideration 4
4 Warranties 5
5 Announcements and confidentiality 6
6 Completion 7
7 Completion accounts 7
8 Covenants by the Xxxxxx 0
0 Xxxxxxxxx'x Xxxxxxxx 00
00 Costs 12
11 Restrictive Trade Practices Xxx 0000 12
12 Pensions 12
13 General 14
14 Notices 15
15 Applicable law and jurisdiction 15
16 Indemnity 15
SCHEDULES
---------
1 Particulars of the Vendor, the Purchaser and the Xxxxxxxxx 00
0 Particulars of the Company 18
3 Completion obligations 19
4 General Warranties 21
5 Warranties relating to Taxation 34
6 Details of the Properties and Warranties relating to 43
The Properties
7 Warranties relating to environmental matters 45
8 Deferred Consideration 46
9 Completion Accounts Principles 50
10 Vendor Limitation 52
11 Retention 55
DOCUMENTS IN THE APPROVED TERMS
-------------------------------
1 Tax Deed
2 Letter(s) of resignation
3 Board minutes of the Company
4 Power of attorney
ANNEXURES
---------
1 Accounts
2 List of Disclosure Documents
3 Warranted Information
THIS AGREEMENT is made on 7 April 1997
BETWEEN:-
(1) BODYCOTE INTERNATIONAL PLC particulars of which are set out in Part I of
Schedule 1 ("THE VENDOR");
(2) ARMOR HOLDINGS LIMITED particulars of which are set out in Part II of
Schedule 1 ("THE PURCHASER").
(3) ARMOR HOLDINGS INC particulars of which are set out in Part II of Schedule
1 ("THE GUARANTOR");
IT IS AGREED as follows:-
1. DEFINITIONS AND INTERPRETATION
----------------------------------
1.1 The following words and expressions where used in this Agreement have the
meanings given to them below:-
Accounts the audited balance sheet of the Company
as at the Accounts Date and the audited
profit and loss account of the Company
for the financial year ended on the
Accounts Date, together in each case
with the related notes, directors'
report and auditors' report a true copy
of which comprises Annexure 1;
Accounts Date 31 December 1996;
Business Day a weekday, other than a Saturday, on
which clearing banks are ordinarily open
for business in the City of London;
Companies Act the Companies Xxx 0000;
Company Supercraft (Garments) Limited, details
of which are set out in Part I of
Schedule 2;
Completion the performance of the obligations to
complete the sale and purchase of the
Shares in accordance with Schedule 3;
Completion Accounts the balance sheet of the Company as at
31 March 1997 and all attached notes to
be prepared in accordance with, and as
constituted as such under, clause 7;
Completion Date the date on which Completion occurs;
- 2 -
Consideration the consideration for the sale and
purchase of the Shares as stated in
clause 3;
Copyright the copyright and design right in all
the works and designs (as defined in the
Copyright, Designs and Patents Act 1988)
in the possession or control of or used
by the Company;
Disclosure Letter the letter of the same date as this
Agreement (including its annexures) from
the Vendor to the Purchaser containing
the disclosures to the Warranties;
EEC Treaty the Treaty establishing the European
Economic Community;
Excluded Tax any liability to PAYE and NI interest
and penalties arising out of the PAYE
investigation carried out in January
1997 save to the extent provided for in
the Accounts;
Guarantor's Group the Guarantor and its subsidiary
undertakings from time to time;
ICTA 1988 the Income and Corporation Taxes Xxx
0000;
Intellectual Property patents, trade marks, registered
designs, applications for any of the
foregoing, copyright design rights and
analogous rights, trade and business
names, rights in confidential
information howsoever arising and any
right or interest in any of the
foregoing;
Know-How inventions, discoveries, improvements,
processes, formulae, techniques,
designs, specifications, drawings,
technical information, methods, test
reports, component lists, manuals,
instructions, catalogues and information
relating to customers and suppliers;
LIBOR London Interbank Offered Rate;
London Stock Exchange London Stock Exchange Limited;
Oldham Property that freehold land known as Alliance
Mill Willow Street Mumps, Oldham more
particularly described in a transfer
between the Company and Bodycote
Developments Limited
- 3 -
dated 25 March 1997;
Property the property, details of which are set
out in Part I of Schedule 6;
Purchaser's Accountants Deloitte & Touche;
Purchaser Group Company the Purchaser or any of its subsidiaries
from time to time;
Purchaser's Solicitors Xxxxxxx Xxxxx Xxxxxxxxxxx;
Service Agreements the service agreements in the approved
terms to be entered into at Completion;
Shares the ordinary shares of (pound)1 each in
the capital of the Company to be
acquired by the Purchaser in accordance
with this Agreement;
Tax Deed the deed in the approved terms relating
to taxation to be executed at
Completion;
UK GAAP United Kingdom generally accepted
accounting principles;
Vendor Group the group of companies comprising each
holding company of the Vendor and each
subsidiary of each such holding company,
excluding the Company;
Vendor's Accountants Rawlinson, Hargreaves, Xxxxx and Wood;
Vendor's Solicitors Eversheds, Manchester;
Warranties the representations and warranties set
out in Schedules 4, 5, 6 and 7.
1.2 Where used in this Agreement the terms "SUBSIDIARY", "SUBSIDIARY
UNDERTAKING", "HOLDING COMPANY", "FINANCIAL YEAR", "DIRECTOR" and "SHADOW
DIRECTOR" shall have the meanings respectively attributed to them by the
Companies Act at the date of this Agreement; the term "RECOGNISED INVESTMENT
EXCHANGE" shall have the meaning attributed to it by Part V of the Financial
Services Xxx 0000 at the date of this Agreement; the term "CONNECTED PERSON"
shall have the meaning attributed to it by section 839 ICTA 1988 at the date of
this Agreement and the words "CONNECTED WITH" shall be construed accordingly;
the term "TAXATION" shall have the meaning attributed to "TAXATION" in the Tax
Deed; and the expression "FOR TAXATION PURPOSES" shall have the meaning
attributed to it in the Tax Deed.
1.3 A reference to any statutory provision in this Agreement:-
- 4 -
1.3.1 includes any order, instrument, plan, regulation, permission and
direction made or issued under such statutory provision or deriving
validity from it; and
1.3.2 shall be construed as a reference to such statutory provision as in
force at the Completion Date (including, for the avoidance of doubt, any
amendments made to such statutory provision that are in force at the
Completion Date); and
1.3.3 shall also be construed as a reference to any statutory provision of
which such statutory provision is a re-enactment or consolidation.
1.4 The headings in this Agreement are for convenience only and shall not
affect its meaning.
1.5 References to a clause, Schedule or paragraph are (unless otherwise stated)
to a clause of and Schedule to this Agreement and to a paragraph of the
relevant Schedule.
1.6 A document expressed to be "IN THE APPROVED TERMS" means a document, the
terms, conditions and form of which have been agreed by the parties to this
Agreement and a copy of which has been identified as such and initialled by or
on behalf of each of the parties.
1.7 A document expressed to be an "Annexure" means a document a copy of which
has been identified as such and initialled by or on behalf of each of the
parties.
1.8 Words importing one gender shall (where appropriate) include any other
gender and words importing the singular shall (where appropriate) include the
plural and vice versa.
2. SALE OF SHARES
------------------
2.1 The Vendor shall sell or procure to be sold and the Purchaser shall
purchase the Shares upon and subject to the terms and conditions of this
Agreement.
2.2 The Vendor shall procure that the Purchaser acquires good title to the
Shares free from all liens, charges, encumbrances, equities and claims
whatsoever and together with all rights now or hereafter attaching to them.
2.3 The Purchaser shall not be obliged to complete the purchase of any of the
Shares unless the purchase of all of the Shares is completed simultaneously.
3. CONSIDERATION
-----------------
3.1 The consideration for the sale and purchase of the Shares shall be the
aggregate of:-
3.1.1 the initial consideration amounting to the sum of (pound)813,500
("THE INITIAL CONSIDERATION") which shall be paid in cash by the Purchaser
to the Vendor on Completion;
3.1.2 consideration amounting to (pound)536,500 ("XXX XXXXXXXXX") which
shall be paid by the Purchaser in accordance with Schedule 11;
- 5 -
3.1.3 the deferred consideration (if any) which shall be calculated and
payable in accordance with the provisions of Schedule 8 ("THE DEFERRED
CONSIDERATION");
provided that the amount payable pursuant to clause 3.1.1 shall be adjusted by
deducting the amount, if any, by which the Company's net assets as shown in the
Completion Accounts are less than (pound)825,000 ("THE SHORTFALL"). If the net
assets as shown in the Completion Accounts exceed (pound)825,000 then the
Purchaser shall pay such excess (up to a maximum of (pound)10,000) to the
Vendor at the same time as the Vendor would have made repayment under clause
3.2.
3.2 Within 10 Business Days starting on the day after the day on which
agreement or determination of the Completion Accounts has occurred in
accordance with clause 7, if the net assets of the Company as shown in the
Completion Accounts are less than (pound)825,000, the Vendor shall repay to the
Purchaser the amount of the Shortfall.
3.3 If the Vendor fails to pay any sum due by it under clause 3.2 on the due
date for payment in accordance with the provision thereof:-
3.3.1 they shall pay interest on the sum from the due date until the date
on which their obligation to pay such sum is discharged at the rate of 3
per cent. per annum above the base rate of Bank of Scotland from time to
time (whether before or after judgement) (interest accrues and is payable
from day to day); and
3.3.2 if any such sum and interest thereon is outstanding ("THE OUTSTANDING
SHORTFALL") on the date the Deferred Consideration is due to be paid then
the Deferred Consideration shall be reduced by the amount of the
Outstanding Shortfall.
3.4 In consideration of the Vendor entering into this Agreement with the
Purchaser at the request of the Guarantor, the Guarantor hereby irrevocably and
unconditionally, as primary obligor, undertakes and guarantees the full, prompt
and complete performance by the Purchaser of its obligation to pay the Deferred
Consideration pursuant to this Agreement when the same shall become due and
undertakes with the Vendor that if the Purchaser shall default in the payment
of the Deferred Consideration under this Agreement the Guarantor shall
forthwith on demand by the Vendor pay such sum to the Vendor.
4. WARRANTIES
--------------
4.1 The Vendor, upon the execution of this Agreement, warrants and represents
to the Purchaser in the terms of the Warranties.
4.2 The Warranties are given subject only to matters fairly and accurately
disclosed in the Disclosure Letter, but no other information of which the
Purchaser has knowledge (actual or constructive) shall prejudice any claim made
by the Purchaser under the Warranties or operate to reduce any amount
recoverable.
4.3 The Warranties shall continue in full force and effect notwithstanding
Completion.
4.4 Where any statement in the Warranties is qualified by the expression "to
the best of
- 6 -
the knowledge, information and belief of the Vendor" or "so far as the Vendor
is aware" or any similar expression, the Vendor shall be deemed to have
knowledge of anything of which it has knowledge, would have had knowledge or
ought reasonably to have had knowledge had it made due and careful enquiry
immediately before giving the Warranties of the Company's directors, Xxxxx Xxxx
or Xxxxxx Xxxxxxx and the Company's auditors and solicitors.
4.5 Each of the Warranties shall be separate and independent and, save as
expressly provided, shall not be limited by reference to any other Warranty or
any other provision in this Agreement.
4.6 The Vendor undertakes not to exercise any right of counterclaim or set-off
or any other claim or right of recovery against the Company or any of its
officers or employees in relation to any claim which may be made in respect of
the Warranties or under the Tax Deed.
4.7 Save in the event of fraud or wilful non-disclosure on its part, the Vendor
shall be under no liability:-
4.7.1 for breach of any of the Warranties in Schedule 4 (other than those
in paragraphs 2.2, 4.2.4 and 4.2.5) or Schedule 6 or 7 unless written
notice of the claim has been given to the Vendor by or on behalf of the
Purchaser on or before whichever is the later of 30 April 1999 and the date
which is three calendar months after the date of the auditors' report on
the audited accounts of the Company for its financial year ending 31
December 1998; or
4.7.2 for breach of any of the Warranties in Schedule 5 or in paragraphs
4.2.4 and 4.2.5 of Schedule 4 or in respect of any claim under the Tax Deed
unless written notice of the claim has been given to the Vendor by or on
behalf of the Purchaser on or before the date which is three calendar
months after the accounting period of the Company to end six years after
the Completion Date.
and in each such case unless legal proceedings are served upon the Vendor
within 6 months after such notice of claim is given to the Vendor.
4.8 The Purchaser acknowledges that it does not enter into this Agreement in
reliance on any warranty, representation, undertaking, stipulation or agreement
other than those contained in this Agreement and all documentation to be
entered into pursuant to this Agreement including all agreed form documents,
annexures (and documents referred to therein) and for the avoidance of doubt,
the Disclosure Letter and all annexures thereto (and documents referred to
therein).
4.9 Notwithstanding any other provisions of this Agreement the liability of the
Vendor for breach of warranty hereunder shall be limited in accordance with the
provisions of Schedule 10 to the said Agreement.
5. ANNOUNCEMENTS AND CONFIDENTIALITY
-------------------------------------
5.1 No announcement relating to the subject matter of this Agreement or any
matter ancillary to this Agreement (save for the announcement already made by
the Guarantor in
- 7 -
the United States of America dated 10 February 1997) shall be made by or on
behalf of the Vendor or the Purchaser without the prior written approval of the
other provided that nothing shall prevent the Purchaser or the Vendor (or any
person on its behalf) making (so long as it has consulted with the other party
in advance so far as reasonably practicable) any announcement or disclosure
required by federal or state securities laws, or any other US or UK law, The
Stock Exchange or any other US or UK regulatory authority.
5.2 The Vendor shall keep confidential and not at any time after the date of
this Agreement disclose or make known in any way to anyone (other than the
Purchaser) or use for its own or any other person's benefit any Know-How or
confidential information relating to any of the customers, suppliers or affairs
of the businesses (including any prospective businesses planned by the Company
immediately prior to Completion) of the Company or otherwise relating to the
business of the Company.
5.3 All records, papers and documents in the possession, custody or control of
or kept or made by or on behalf of the Vendor relating to the business or
affairs of the Company and of which the Company does not have a record or copy
shall be deemed to be the property of the Company and all such items shall be
delivered to the Purchaser or as the Purchaser may direct at Completion.
6. COMPLETION
--------------
Completion shall take place at the offices of the Purchasers Solicitors
immediately after execution of this Agreement. On such date the Vendor and the
Purchaser shall each perform their respective obligations in relation to the
sale and purchase of the Shares in accordance with and as set out in Schedule
3.
7. COMPLETION ACCOUNTS
-----------------------
7.1 After Completion the Purchaser and (so far as it lies within its power) the
Vendor shall procure that the Company prepares draft Completion Accounts with
the assistance of the Vendors' Accountants.
7.2 Except as provided in Schedule 9, the Completion Accounts shall be prepared
on a basis consistent with the Accounts using the same accounting principles,
policies and practices, but subject to the same complying with the law and UK
GAAP.
7.3 The Vendor and the Purchaser shall ensure that within 60 days starting on
the day after Completion the Vendor's Accountants submit to the Vendor and the
Purchaser the draft Completion Accounts and (subject to the Vendor and the
Purchaser and the Purchaser's Accountants signing a waiver letter in the
approved terms) make available their working papers to the Vendor and the
Purchaser's Accountants and submit a report by the Vendors' Accountants
addressed to the Purchaser and the Vendor stating whether in their opinion the
draft Completion Accounts have been prepared in accordance with clause 7.2. The
Vendor and the Purchaser shall each ensure that within 15 days starting on the
day after receipt of the draft Completion Accounts ("the Prescribed Period") it
certifies whether or not it agrees with the draft Completion Accounts.
7.4 For the purposes of this Agreement, the Completion Accounts arising
following the occurrence of any of the following shall constitute the
"Completion Accounts":-
- 8 -
7.4.1 if the Purchaser and Vendor both certify their agreement with the
draft Completion Accounts produced under clause 7.3 within the Prescribed
Period, then such draft Completion Accounts; or
7.4.2 if either the Purchaser or the Vendor certifies its disagreement with
the draft Completion Accounts under clause 7.3 within the Prescribed
Period, either
(1) the Completion Accounts resulting from agreement between the
Vendor and the Purchaser; or
(2) the draft Completion Accounts as adjusted by and therefore
incorporating all those matters decided upon by the Expert
pursuant to clause 7.5; or
7.4.3 if either the Purchaser or Vendor fails to give the certificate
required by clause 7.3 (and the other party has provided such a
certificate) within the Prescribed Period, the draft Completion Accounts
produced under clause 7.3.
7.5 If within 14 days starting on the day after receipt of a certificate of
disagreement referred to in clause 7.4 the Vendor and the Purchaser have not
agreed on the Completion Accounts or the Vendor and the Purchaser have not
agreed on the amount of the consideration payable under clause 3.1.1, the
following provisions shall apply. Either party may refer the matters with which
either the Purchaser or Vendor disagrees to an independent firm of chartered
accountants agreed by the Vendor and the Purchaser or, in default of agreement
within 28 days of the date of receipt of the certificate, an independent firm
of chartered accountants nominated by the President for the time being of the
Institute of Chartered Accountants in England and Wales (the "Expert"), on the
basis that the Expert is to make a decision on the matter or matters identified
in that or those certificates of disagreement (and not agreed by the other
party) and certify his decision in writing to each of the Purchaser and the
Vendor within 28 days starting on the day after receiving the reference. In a
reference, the Expert shall act as an expert and not as an arbitrator. The
decision of the Expert shall, in the absence of fraud or manifest error, be
final and binding on the parties. The Vendor and the Purchaser shall pay the
Expert's costs as the Expert shall direct.
7.6 The costs and expenses of the Purchaser's Accountants and the Vendors'
Accountants shall be borne by the Vendor and the Purchaser respectively, and
none of such costs and expenses will be borne by the Company.
8. COVENANTS BY THE VENDOR
---------------------------
8.1 The Vendor covenants with the Purchaser and the Guarantor for the benefit
of the Guarantor's Group that it will not either on its own account or in
conjunction with or on behalf of any other person or persons, whether directly
or indirectly, for the period of:-
8.1.1 2 years from the Completion Date:-
(a) supply goods to; or
(b) provide services for;
- 9 -
any person, firm or company which was at the Completion Date, or which
during the period of twelve months prior to the Completion Date had been, a
customer of the Company where such goods or services are the same as or
compete with goods supplied or services provided by the Company to that
person, firm or company at or during the period of twelve months prior to
the Completion Date;
8.1.2 2 years from the Completion Date:-
(a) solicit; or
(b) endeavour to solicit;
the custom of any person, firm or company which was at the Completion Date,
or which during the period of twelve months prior to the Completion Date
had been, a customer of the Company for the supply of goods or the
provision of services which are the same as or compete with those supplied
or provided by the Company to that person, firm or company at or during the
period of twelve months prior to the Completion Date;
8.1.3 2 years from the Completion Date:-
(a) solicit or entice away from the Purchaser or the Company ; or
(b) endeavour to solicit or entice away from the Purchaser or the Company;
or
(c) employ or engage; or
(d) endeavour to employ or engage;
any person who was at the Completion Date, or who during the period of six
months prior to the Completion Date had been, employed by the Company
whether or not such person would commit a breach of his or her contract of
employment by reason of leaving service, save that this clause 8.1.3 shall
not apply to any individual employed by the Company in a purely secretarial
or non-managerial administrative role; and
8.1.4 2 years from the Completion Date:-
(a) carry on; or
(b) be engaged; or
(c) be concerned; or
(d) be interested;
in the UK in the business of development, production and the sale of body
armour, ballistic protections, riot gas, anti-riot products, less than
lethal munitions, narcotic identification equipment and security services
(other than as a holder of securities listed or dealt in on a recognised
investment exchange provided that such holding
- 10 -
shall not exceed one per cent. of the class of securities of which the said
holding forms part).
8.2 Each of the undertakings contained in clause 8.1 is a separate undertaking
by the Vendor in relation to itself and its interests and shall be enforceable
by the Purchaser separately and independently of its right to enforce any one
or more of the other covenants contained in clause 8.1 and in the event that
any such undertaking shall be found to be void but would be valid if some part
were deleted or the period or area of application were reduced, then such
undertaking shall apply with such modification as may be necessary to make it
valid and effective.
8.3 The Vendor shall give all such assistance and supply or procure to be
supplied all such information, documents and other papers and shall facilitate
access to such accounting books and records of the Vendor Group as the
Purchaser may reasonably request for the purpose of enabling the Purchaser and
the Company to make enquiries of and returns to taxation authorities and to
negotiate any liability the Company may have to taxation.
8.4 The Vendor or its duly authorised agents shall, at the Vendor's sole
expense, prepare drafts of the tax returns and computations for the Company for
all outstanding accounting periods ended on or prior to the Accounts Date ("the
outstanding returns"). The Purchaser will procure that the Company shall sign
or submit the outstanding returns to the relevant taxation authorities without
amendment or with such amendments as the Purchaser or the Purchaser's
Accountants may reasonably require.
8.5 If the Vendor shall indemnify and secure the Company to its reasonable
satisfaction against all losses, costs, damages and expenses (including,
without limitation, interest on overdue taxation) which may be incurred, the
Purchaser shall procure that the Company will take such action and give such
information and assistance as may be reasonably required by the Vendor to agree
the outstanding returns with the relevant taxation authorities. For the
avoidance of doubt, the actions which the Vendor may reasonably request under
this clause shall include the Company applying to postpone (so far as legally
possible) the payment of any taxation but the Vendor shall not be entitled
under this clause to request that it or its agent be allowed to take on or take
over the conduct of all or any proceedings arising in connection with the
agreement of the outstanding returns.
8.6 The Vendor shall apply on behalf of the Company to HM Customs & Excise for
the exclusion of the Company with effect from Completion from any group
registration for the purposes of value added tax of which the Company and the
Vendor Group form part ("the VAT Group"). The Vendor agrees to make such
payments as may be necessary to reimburse the Company for any credit for input
tax which arises in respect of supplies received by the Company in the period
prior to Completion.
8.7 The Purchaser shall at the Vendor's written request procure that the
Company joins in such claims for, or surrenders of, group relief (within the
meaning of section 402 ICTA 1988) for accounting periods ended on or prior to
the Accounts Date as are set out in the outstanding returns. The Vendor shall
pay to the Company surrendering group relief an amount equal to the amount of
taxation to be relieved by virtue of the utilisation of the group relief no
later than nine months after the end of the accounting period in respect of
which taxation is to be relieved by the surrendering of the group relief.
- 11 -
8.8 The Vendor shall discharge the Excluded Tax (if any) subject to the
Purchaser permitting the Vendor to conduct all negotiations with the
appropriate authorities in respect thereto (for the avoidance of doubt, the
amount of Excluded Tax that the Vendor shall be obliged to discharge shall not
be limited by any restrictions on claims that can be made pursuant to the
Warranties or the Tax Deed).
8.9 Save as specifically detailed in clause 8.8 above, the provisions of
clauses 8.3 to 8.9 are without prejudice to the provisions of the Tax Deed. To
the extent that there is any conflict between the provisions of such clauses
and the provisions of the Tax Deed, the provisions of the Tax Deed shall
prevail.
9. PURCHASER'S COVENANTS
-------------------------
9.1 The Purchaser shall procure that Xxxxxx Xxxx is entitled to remain as a
non-executive director of the Company (or, if he is unable to continue in such
office shall procure that Mr Xxxxx Xxxxx is appointed as a non-executive
director of the Company on the same terms) ("the Executive") save that the
Purchaser's obligations pursuant to this clause 9 shall cease to apply, and the
Purchaser shall be entitled to remove Xx Xxxxxx Xxxx or Mr Xxxxx Xxxxx as the
case may be, in the event that the Executive shall:-
9.1.1 Commit any act of serious misconduct;
9.1.2 Wilfully neglect or refuse, after warning, to carry out any of his
duties as a non-executive director;
9.1.3 Have a bankruptcy order made against him or shall compound with or
enter into any voluntary arrangements with his creditors;
9.1.4 Be charged with or convicted of any criminal offence (other than an
offence under the Road Traffic Acts for which a penalty of imprisonment
cannot be imposed);
9.1.5 Be disqualified from holding office in the Company or any other
company under the Insolvency Xxx 0000 or the Company Directors
Disqualification Xxx 0000 or be disqualified or disbarred from membership
of, or be subject to any serious disciplinary sanction by any professional
or other body, which undermines the confidence of the Purchaser in the
Executives continued directorship of the Company;
9.1.6 Act in any way which may in the reasonable opinion of the Purchaser
bring the Company into disrepute or discredit.
Save as aforesaid the Executive shall continue as a non-executive director
entitled to the information and other rights accorded to a non-executive
director by law and general practice until payment of the Deferred
Consideration is made or no such payment has been agreed or determined as
payable.
9.2 The Purchaser shall procure that the Company pays to the Vendor the sum of
(pound)96,281 in cash on or before 1 July 1997 in complete satisfaction of the
Company's obligations to pay such sums to the Vendor in respect of the
outstanding inter-company
- 12 -
loan from the Vendor to the Company.
10. COSTS
----------
Each party shall pay its own costs and expenses incurred in the negotiation,
preparation and execution of this Agreement and the Vendor represents and
undertakes that none of such costs and expenses have been nor will prior to
Completion be borne by the Company.
11. RESTRICTIVE TRADE PRACTICES ACT 1976
-----------------------------------------
Where this Agreement is or forms part of an agreement which is subject to
registration under the Restrictive Trade Practices Act 1976 ("RTPA"), no
restriction accepted or information provision made under that agreement shall
be given effect to or enforced until the day after particulars of the agreement
have been furnished to the Director General of Fair Trading under section 24
RTPA. If any party shall wish to furnish such particulars, the other parties
will render such co-operation and undertake such action as may reasonably be
required of them for such purpose so that particulars may be furnished as soon
as practicable following the signature of this Agreement and each of the
parties consents to the disclosure of all information so furnished. In this
clause the words and terms "agreement" and "subject to registration" shall have
the meanings respectively given to them by the RTPA and the reference to
"restrictions accepted" or "information provisions made" under the agreement
shall be to restrictions accepted or information provisions made by virtue of
which the agreement is subject to registration.
12. PENSIONS
-------------
Subject always to compliance by the Purchaser and the Company pursuant to this
clause 12:
12.1 The Vendor shall use all reasonable endeavours to procure the continued
participation of the Company in the Bodycote Group Pension Scheme ("the
Bodycote Scheme") from the Completion Date until 31 December 1997 or until such
earlier date as may be agreed in writing between the Vendor and the Purchaser
("the Transitional Period"). The Purchaser agrees that the continued
participation of the Company remains subject to the approval by the Inland
Revenue of the Bodycote Scheme as an exempt approved scheme (as defined in
section 592 of the Income and Corporation Taxes Act 1988) not being prejudiced.
12.2 The Purchaser shall procure that the Company will pay to the Bodycote
Scheme during the Transitional Period all ordinary contributions payable by and
in respect of Xxxxx Xxxxxxxxxx, Xxxxx Xxxx and Xxxxxx Xxxxxxx ("the Bodycote
Members") under the trust deed and rules currently governing the Bodycote
Scheme. The Vendor and the Purchaser agree that the rate of those contributions
shall not exceed the rate being paid by and in respect of other members of the
Bodycote Scheme from time to time during the Transitional Period.
12.3 The Vendor undertakes and shall procure that during and in respect of the
Transitional Period the Bodycote Scheme shall be maintained in full force and
effect.
12.4 If the Bodycote Members elect by notice in writing, served upon the
trustees of the
- 13 -
Bodycote Scheme not later than 31 January 1998 to take a transfer value to the
pension arrangements established by the Purchaser such transfer value shall be
the sum of:
(i) the transfer amount calculated by the actuary to the Bodycote Scheme on a
past service reserve basis as at Completion Date using the assumptions
adopted by the Bodycote Scheme in its last actuarial valuation including
making an allowance for future increases to remuneration and pension
increases; and
(ii) a sum equal to the total contributions payable by or in respect of the
Bodycote Members after deducting sums in respect of administration and
death in service insurance calculated as provided in the report on the
last actuarial valuation of the Bodycote Scheme increased by compound
interest at the base rate of Barclays Bank Plc from the date the
contribution was paid until the end of the Transitional Period.
12.5 The Purchaser undertakes that it will establish or become a party to
either a money purchase retirement benefits scheme in which the Company will
participate or a group personal pension scheme (the "Purchaser's Scheme") in
respect of the Bodycote Members with effect from the day following the end of
the Transitional Period.
12.6 With effect from such day, the Purchaser undertakes to procure that
membership of the Purchaser's Scheme shall be offered to the Bodycote Members.
12.7 The Purchaser undertakes that the Purchaser's Scheme will be capable of
accepting a transfer from the Bodycote Scheme, in accordance with the
provisions of this clause 12, in respect of the Bodycote Members who take up
the offer of membership under this clause and if any Bodycote Member exercises
his option to take a transfer value under clause 12.4 to the Purchaser's
Scheme. Such transfer value will be applied exclusively for or in relation to
the provision in the Purchaser's Scheme of Relevant Benefits (as defined in
Schedule 4) for and in respect of that Bodycote Member.
12.8 The Purchaser undertakes to contribute to the Purchaser's Scheme in
respect of Xxxxx Xxxxxxxxxx at a rate which in the opinion of an actuary
appointed by the Purchaser is likely when taken with his contributions to the
Bodycote Scheme at the Completion Date to produce benefits that are broadly
equivalent in overall value to those that would have been provided for him
under the Bodycote Scheme in relation to his future service if he had continued
to be a member of the Bodycote Scheme on the basis of the provisions in force
at the date he left that scheme.
12.9 If the Purchaser's Scheme is not a contracted-out scheme then the
Purchaser will allow Xxxxx Xxxxxxxxxx to set up an appropriate personal pension
scheme which will be capable of accepting the guaranteed minimum pensions
arising from service in the Bodycote Scheme prior to 6 April 1997 and all
benefits under the Bodycote Scheme from service after 5 April 1997 for the
Bodycote Members.
12.10 The Purchaser will procure that the Company will comply during the
Transitional Period with the provisions of the Bodycote Scheme insofar as they
apply to it as an associated employer and in particular shall:-
12.10.1 comply with all requirements of the Pensions Xxx 0000 applicable to
it
- 14 -
and nominate the principal employer of the Vendor's Scheme as the employer
capable of agreeing the Schedule of contributions and for all other
purposes of that Act;
12.10.2 not exercise any right, power or discretion conferred on the
Company as a participating employer in the Bodycote Scheme without the
prior written consent of the Vendor, such consent not to be unreasonably
withheld;
12.10.3 not increase the remuneration above 2% of Pensionable Salary (as
defined in the Bodycote Scheme Explanatory Booklet effective from 1 April
1995) per annum of any of the Bodycote Members.
12.10.4 if any of the Bodycote Members claim early retirement pensions
(following termination of their contracts of employment by the Company or
the Purchaser) the Purchaser will make such additional contributions to the
Bodycote Scheme as the Vendor, the Trustees of the Bodycote Scheme and the
Purchaser agree are required to cover the additional costs to the Bodycote
Scheme.
12.11 The Vendor and the Guarantor undertake to indemnify the Company and the
Purchaser against any liabilities, costs, claims, losses, damages and expenses
including legal and professional fees which the Purchaser or the Company may
suffer or incur in either case by reason of the Company's participation in the
Bodycote Scheme prior to 1 January 1998 as a result of, or arising under:-
12.11.1 section 75 of the Pensions Xxx 0000 or section 144 of the Xxxxxxx
Xxxxxxx Xxx 0000 and any regulations made thereunder; or
12.11.2 the infringement of any English or European Union requirement
relating to the equal treatment of men and women, other than in respect of
failure to equalise guaranteed minimum pensions.
13. GENERAL
------------
13.1 This Agreement constitutes the entire and only legally binding agreement
between the parties relating to the sale and purchase of the Shares and no
variation of this Agreement shall be effective unless made in writing signed by
or on behalf of all the parties and expressed to be such a variation.
13.2 No failure or delay by the Purchaser or time or indulgence given by it in
or before exercising any remedy or right under or in relation to this Agreement
shall operate as a waiver of the same nor shall any single or partial exercise
of any remedy or right preclude any further exercise of the same or the
exercise of any other remedy or right.
13.3 No waiver by any party of any requirement of this Agreement or of any
remedy or right under this Agreement shall have effect unless given by notice
in writing signed by such party. No waiver of any particular breach of the
provisions of this Agreement shall operate as a waiver of any repetition of
such breach.
13.4 This Agreement may be executed in two or more counterparts and execution
by each of the parties of any one of such counterparts will constitute due
execution of this
- 15 -
Agreement.
13.5 The Vendor shall and shall procure that any third party shall, do, execute
and perform all such further deeds, documents, assurances, acts and things as
may be necessary to give effect to this Agreement.
13.6 The provisions of this Agreement shall remain in full force and effect
after Completion so far as they then remain to be observed and performed.
13.7 The Vendor acknowledges that it is entering into this Agreement without
reliance on any undertaking or representation given by or on behalf of the
Purchaser other than as expressly contained in this Agreement provided that
nothing herein shall exclude the Purchaser from liability for fraudulent
misrepresentation.
14. NOTICES
------------
14.1 Any notice shall be in writing and signed by or on behalf of the person
giving it. Except in the case of personal service, any notice shall be sent or
delivered to the party to be served at the address set out in Schedule 1 and if
a person or officer is named for the purpose in Schedule 1, the notice shall be
marked for his attention. Any alteration in such details shall, to have effect,
be notified to the other parties in accordance with this clause.
14.2 Service of a notice must be effected by one of the following methods:-
14.2.1 personally on a director or the secretary of any party and shall be
treated as served at the time of such service;
14.2.2 by prepaid first class post (or by airmail if from one country to
another) and shall be treated as served on the second (or if by airmail the
fourth) Business Day after the date of posting. In proving service it shall
be sufficient to prove that the envelope containing the notice was
correctly addressed, postage paid and posted; or
14.2.3 by delivery of the notice through the letterbox of the party to be
served or by sending it by telex and shall be treated as served on the
first Business Day after the date of such delivery or sending. In proving
service by telex it shall be sufficient to prove that the telex was
preceded by the answerback code of the party to whom it was sent.
15. APPLICABLE LAW AND JURISDICTION
------------------------------------
15.1 This Agreement shall be governed by and construed in accordance with the
laws of England.
15.2 The parties irrevocably submit to the non-exclusive jurisdiction of the
Courts of England and Wales in respect of any claim, dispute or difference
arising out of or in connection with this Agreement.
16. INDEMNITY
--------------
- 16 -
16.1 The Vendor undertakes to indemnify and keep the Purchaser indemnified from
and against liability for all sums (including, without limitation, losses,
damages, costs, expenses, fines, penalties or compensation and any depletion in
or reduction in value of the Company or its assets, or increase in the
liabilities of the Company) suffered or incurred by the Company in respect of
any non-compliance with or any liability under Relevant Laws arising as a
direct or indirect result of any acts or omissions of the Company prior to the
Completion Date affecting the Oldham Property or from the presence of Hazardous
Substances in the land, soil, ground, ground water or surface water at, on or
under the Oldham Property.
For the purpose of this clause 16.1, the following definitions shall apply:-
Environmental Laws means all European Union, national, regional or
local statutes or other laws including the common
law concerning Environmental Matters, all rules,
regulations, by-laws, codes of practice,
circulars, guidance notes and notices made
thereunder and judicial and administrative
interpretation of each of the foregoing provided
that for the avoidance of doubt the provisions
relating to contaminated land contained in the
Environment Xxx 0000 and any regulations made or
guidance given under that Act shall be treated as
if they were in force on or before Completion;
Environmental Matters means all matters relating to contamination,
pollution or human health or the environment
including but not limited to those relating to
waste, discharges, emissions and releases to land,
air and water, nuisance, health and safety, and
the manufacture, use, treatment, storage,
transport or disposal of Hazardous Substances;
Hazardous Substances means chemicals, wastes, forms of energy,
radioactive substances or other polluting,
dangerous, hazardous or toxic substances;
"Relevant Laws" all Environmental Laws concerning contamination or
pollution of the land, soil, ground, ground water
or surface water at, on, under or in the vicinity
of the Oldham Property.
16.2 The Vendor shall indemnify and keep indemnified the Purchaser for itself
and as trustee for the Company against liability for all sums (including,
without limitation, losses, damages, costs, expenses, fines, penalties or
compensation) suffered or incurred by the Company or the Purchaser as a direct
or indirect result of the declaration and payment of the dividends, amounting
to (pound)614,550 in aggregate, on 25 March 1997, by the Company being unlawful
voidable or void.
AS WITNESS this Agreement has been executed as a deed by or on behalf of the
parties the day and year first before written.
- 17 -
SCHEDULE 1
----------
PART I
PARTICULARS OF THE VENDOR
-------------------------
(1) (2)
Vendor Ordinary
Shares
of (pound)1 each
-------------------------------------------------------------------------------
Bodycote International PLC 29,750
000 Xxxxxxxx,
Xxxxxxxxxx X00 0XX
For the attention of:-
Xxxxxx Xxxx
PART II
PARTICULARS OF PURCHASER
------------------------
Armor Holdings Limited (Company No. 3302926)
00000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx
Xxxxxxx 00000
For the attention of:-
Xxxxxx Xxxxxxxx
PARTICULARS OF THE GUARANTOR
----------------------------
Armor Holdings Inc
International Parkway
Xxxxxxxxxxxx
Xxxxxxx 00000
For the attention of:-
Xxxxxx Xxxxxxxx
- 18 -
SCHEDULE 2
----------
PART I
PARTICULARS OF THE COMPANY
--------------------------
Supercraft (Garments) Limited
Registered in England under no. 328076
Registered Office:- 000 Xxxxxxxx, Xxxxxxxxxx X00 0XX
Authorised capital:- (pound)45,000
Issued and fully paid up capital:- (pound)29,750
Directors:- Xxxxxx Xxxx
Xxxxx Xxxxxxxxxx
Secretary:- Xxxxx Xxxxxxxxx
Accounting reference date:- 31 December
- 19 -
SCHEDULE 3
----------
COMPLETION OBLIGATIONS
----------------------
PART I
OBLIGATIONS OF THE VENDOR
-------------------------
1. The Vendor shall deliver to the Purchaser:-
1.1 duly executed transfers of the Shares by the registered holders in favour
of the Purchaser, the share certificates and any additional documentation
necessary to establish the transferor's title to the Shares, to authorise the
executions of such transfers and to allow the transferees (subject to due
stamping) to be registered in the register of members of the Company as holders
of the Shares;
1.2 an engrossment of the Tax Deed executed by the Vendor and [the Company];
1.3 the common seal, statutory books and other record books of the Company
written-up to Completion;
1.4 statements of balances at a date not more than seven days prior to
Completion with reconciliations to the Business Day preceding the Completion
Date on all bank accounts of the Company and all current cheque books relating
to such accounts;
1.5 a resignation letter in the approved terms from Xxxxxx Xxxxxxxxx;
1.6 evidence satisfactory to the Purchaser that:-
1.6.1 all sums owed by the Company to any member of the Vendor Group or by
any member of the Vendor Group to the Company (save for the sums detailed
in clause 9.2 of this Agreement) have been repaid;
1.6.2 any guarantees granted or security or indemnities given by the
Company in respect of obligations of any member of the Vendor Group have
been released or discharged;
1.7 an unqualified letter of resignation from the auditors of the Company in
the form prescribed by section 394 Companies Act, accompanied by written
confirmation that such auditors have no claims for unpaid fees or expenses;
1.8 a power of attorney in the approved terms in respect of the rights
attaching to the Shares;
1.9 certified copies of the board minutes of the meetings of the board of
directors of the Company declaring dividends:-
1.9.1 for the year ended 31 December 1996 of(pound)150,000;
1.9.2 for the year ended 31 December 1995 of(pound)129,100; and
- 20 -
1.9.3 as an interim dividend declared during the period 31 December 1996 to
25 March 1997 of (pound)400,000;
1.10 bank mandates relating to the change in signatory of all of the Company's
bank accounts;
1.11 a certified copy of the transfer of the Oldham Property from the Company
to Bodycote Developments Limited in the approved terms.
2. The Vendor shall procure the holding of a meeting of the board of directors
of the Company, at which board resolutions in the approved terms shall be
passed.
PART II
OBLIGATIONS OF THE PURCHASER
----------------------------
The Purchaser shall, conditionally upon the implementation of the matters set
out in Part I of this Schedule:-
1. authorise the telegraphic transfer of (pound)813,500 in cleared funds to an
account specified by the Vendor, which shall discharge the Purchaser from its
obligation to pay the Initial Consideration to the Vendor;
2. authorise the telegraphic transfer of (pound)536,500 in cleared funds to the
Retention Account; and
3. deliver to the Vendor an engrossment of the Tax Deed executed by the
Purchaser;
- 21 -
SCHEDULE 4
----------
GENERAL WARRANTIES
------------------
ACCURACY OF INFORMATION
-----------------------
1.1 All written information relating to the business, activities, affairs,
assets or liabilities of the Company provided to the Purchaser or any of its
employees, officers, agents or advisers by or on behalf of the Vendor, the
Company or any of their respective employees, officers, agents or advisers in
the course of the negotiations leading to the execution of this Agreement (as
referred to in the list attached as annexure 3) was when given and is now true
and accurate in all material respects.
1.2 There is no information relating to the Company which is known to the
Vendor which renders any of the information referred to in paragraph 1.1 above
misleading.
1.3 The information contained in Part I of Schedule 1, Schedule 2 and Part I of
Schedule 6 is true and accurate in all respects and is not misleading.
CONSTITUTION OF THE COMPANY
---------------------------
2.1 The statutory books and minute books of the Company have been properly kept
and contain an accurate and complete record of the matters which should be
dealt with in those books and no notice or allegation that any of them is
incorrect or should be rectified has been received.
2.2 The Shares are beneficially owned by the Vendor, are free from all liens,
charges and encumbrances or interests in favour of or claims made by or which
could be made by any other person, are fully paid and together represent the
entire allotted and issued share capital of the Company.
2.3 The copy of the memorandum and articles of association of the Company
annexed to the Disclosure Letter is true and complete and has embodied in it or
annexed to it a copy of every such resolution or agreement as is referred to in
section 380(1) Companies Act and sets out in full the rights and restrictions
attaching to the share capital of the Company.
2.4 No person has the right (whether exercisable now or in the future and
whether contingent or not) to call for the issue or transfer of any share or
loan capital of the Company under any option or other agreement or otherwise
howsoever.
2.5 The Company has properly and punctually made all returns which it is
required to make to the Registrar of Companies, to any other governmental or
regulatory body and to any local authority.
2.6 Due compliance has been made with all the provisions of the Companies Act
and other legal requirements, in connection with the formation of the Company,
the allotment, issue, purchase and redemption of shares, debentures and other
securities in the Company, the reduction of the authorised and issued share
capital of the Company, any amendment to the memorandum or articles of
association of the Company and the passing of
- 22 -
resolutions and the payment of dividends by the Company.
2.7 The Company has at all times conducted its business intra xxxxx, has not
entered into any transaction ultra xxxxx the Company or outside of the
authority or powers of the directors of the Company and is not in breach of the
provisions of the Articles.
CAPACITY AND INTEREST OF THE VENDOR
-----------------------------------
3.1 The Vendor has the requisite power and authority to enter into and perform
this Agreement and has the requisite power and authority to enter into and
perform the Tax Deed.
3.2 The execution and delivery of and the performance by the Vendor of its
obligations under this Agreement and the Tax Deed will not:-
3.2.1 result in a breach of, or constitute a default under, any agreement,
instrument or arrangement to which the Vendor or the Company is a party or
by which the Vendor or the Company is bound; or
3.2.2 result in a breach of any order, judgement or decree of any court or
governmental agency to which the Vendor or the Company is a party or by
which the Vendor or the Company is bound; or
3.2.3 result in a breach of the rules or requirements of any professional
body, trade association or self-regulating organisation (as defined in the
Financial Services Act 1986) of which the Vendor is a member or by which
the Vendor is bound.
3.3 No indebtedness (actual or contingent) is outstanding and no contract or
arrangement exists between the Company and the Vendor or any director of the
Company or any person connected with the Vendor or such director.
3.4 Neither the Vendor nor any person connected with the Vendor has any
interest, direct or indirect, in any business which competes or has competed or
is in the future likely to compete with any business now carried on by the
Company or intends to acquire any such interest.
3.5 So far as the Vendor is aware it is not entitled to any claim of any nature
against the Company, any of its officers, employees, principal customers or
suppliers and the Vendor has not assigned to any third party the benefit of any
such claim to which it was previously entitled.
ACCOUNTS
--------
4.1 The Accounts have been prepared in accordance with UK GAAP comply with the
requirements of the Companies Act and show a true and fair view of the state of
affairs and the financial position of the Company as at the Accounts Date and
of the profits or losses of the Company for the financial year ended on the
Accounts Date.
4.2 Without prejudice to the generality of the foregoing, in the Accounts:-
- 23 -
4.2.1 depreciation of the fixed assets of the Company has been made at a
rate sufficient to write down the value of such assets to nil not later
than the end of their useful working lives and no fixed asset has
attributed to it a value exceeding its current market value at the Accounts
Date;
4.2.2 the value attributed to stock and work-in-progress does not exceed
the lower of cost and net realisable value at the Accounts Date. For the
purpose of ascertaining the net realisable value of stock at the Accounts
Date, unsaleable, defective and redundant stock and stock which had been
returned or rejected by a customer has been written down to nil;
4.2.3 proper provision, reserve or note (as appropriate) has been made for
all bad and doubtful debts, all liabilities and obligations (actual,
contingent or disputed) and all capital commitments;
4.2.4 provision or reserve (as appropriate) has been made for all taxation
liable to be assessed on the Company or for which the Company is
accountable (whether primarily or otherwise) in respect of income, profits
or gains earned, accrued or received on or before the Accounts Date or
deemed to have been or treated as earned, accrued or received for taxation
purposes and/or for any event on or before the Accounts Date, including
distributions made down to the Accounts Date or provided for in the
Accounts; and
4.2.5 proper provision or reserve (as appropriate) in accordance with UK
GAAP and all relevant Statements of Standard Accounting Practice has been
made in the Accounts for all deferred taxation of the Company.
4.3 The bases and policies of accounting of the Company adopted for the purpose
of preparing the Accounts are the same as those adopted for the purpose of
preparing the audited accounts of the Company for the three preceding
accounting periods and none of the audited accounts of the Company for the five
preceding accounting periods were qualified by the auditors.
4.4 The profits and losses of the Company shown by the Accounts and by the
audited accounts of the Company for the three preceding accounting periods and
the trend of profits and losses thereby shown have not (except as therein
disclosed) been affected to a material extent by any non-recurring,
exceptional, extraordinary or short-term item (including, but not limited to,
any pension contribution holiday or any rental or other outgoing at below
market rates) or by any other matter which has rendered such profits or losses
unusually high or low.
4.5 All books of account and other accounting records of the Company are in its
possession, made up to date and contain the information required by law and
generally accepted accounting principles.
BUSINESS SINCE THE ACCOUNTS DATE
--------------------------------
5. Since the Accounts Date:-
5.1 the Company has carried on its business in the ordinary and usual course
without any
- 24 -
interruption or alteration in the nature, scope or manner of its business;
5.2 there has been no material adverse change in the financial or trading
position or so far as the Vendor is aware prospects of the Company;
5.3 the Company has not knowingly acquired or agreed to acquire any asset for a
consideration which is higher than market value at the time of acquisition and
has not knowingly disposed of or agreed to dispose of any asset for a
consideration which is lower than market value or book value, whichever is the
higher, at the time of disposal;
5.4 the Company has not assumed or incurred any material liabilities (including
contingent liabilities) otherwise than in the ordinary and usual course of
business;
5.5 the Company has not assumed or incurred any liability, or entered into any
commitments involving capital expenditure which is still outstanding, in excess
of (pound)10,000;
5.6 there have been no unusual increases or decreases in stock levels; and
5.7 no distribution of capital or income has been declared, made or paid in
respect of any share in the capital of the Company.
BORROWINGS AND BANK FACILITIES
------------------------------
6.1 The Company has not exceeded the amount of its overdraft facility with its
bankers and is not in breach of the terms of any other loan facilities and the
total amount borrowed by the Company from whatsoever source does not exceed any
limitation on its borrowings contained in the Company's articles of association
or in any debenture or loan stock deed or any other instrument or agreement to
which the Company is a party.
6.2 Full and accurate details of all overdrafts, loans or other financial
facilities outstanding or available to the Company are contained in the
Disclosure Letter and neither the Vendor nor the Company has done or omitted to
do anything whereby the continuance of any such facilities in full force and
effect might be affected or prejudiced.
6.3 A statement of all the bank accounts of the Company and of the credit or
debit balances on such accounts as at a date not more than seven days before
the date of this Agreement is annexed to the Disclosure Letter. Since such
statement there have been no payments out of any such accounts except for
routine payments in the ordinary course of business and the balances on current
account are not now substantially different from the balances shown on such
statements.
GUARANTEES AND INDEMNITIES
--------------------------
7. There is not outstanding any guarantee, indemnity or security given by or
for the benefit of the Company.
- 25 -
DEBTORS
-------
8.1 Each debt now owed to the Company (less the amount of any specific or
general provision or reserve made in the Accounts or the Completion Accounts)
will realise its full face value and be good and collectable in the ordinary
course of business and is not subject to any counter-claim or set-off, except
to the extent of any such provision or reserve and no amount included in the
Accounts as owing to the Company at the Accounts Date has been realised for an
amount less than the value at which it was included in the Accounts or has been
released (in whole or in part) or is, so far as the Vendor is aware,
irrecoverable in whole or in part.
8.2 The Company has not granted credit terms exceeding thirty days.
CUSTOMERS AND SUPPLIERS
-----------------------
9. No material customer or supplier of or to the Company has during the last
twelve months ceased or indicated an intention to cease (or to reduce the
volume of) trading with the Company nor, so far as the Vendor is aware, is
likely so to do whether as a result of this Agreement or otherwise.
OWNERSHIP AND CONDITION OF ASSETS
---------------------------------
10.1 Except for assets disposed of by the Company in the ordinary course of
trading, the Company is the owner of all assets included in the balance sheet
of the Accounts and all assets which have been acquired by the Company since
the Accounts Date, all of which assets are in the Company's possession and
under its control and there is not now outstanding any charge, option, lien,
pledge or encumbrance (or agreement to grant any such) over the whole or any
part of the undertaking, property or assets of the Company nor any right to
acquire such.
10.2 All plant and machinery (including fixed plant and machinery), vehicles
and office equipment used by the Company in connection with its business have
been maintained and repaired as required to enable the Company to operate the
same.
10.3 The plant register kept by the Company sets out a complete and accurate
record of the material items of plant and machinery and vehicles owned by it.
10.4 The Company has not agreed to acquire any asset on terms that the property
in such asset does not pass to it until full payment is made.
INSURANCE
---------
11.1 All the assets of the Company which are of an insurable nature are at the
date hereof insured in the terms annexed to the Disclosure Letter. In respect
of all such insurances:-
11.1.1 all premiums have been duly paid to date;
11.1.2 all the policies are in force and so far as the Vendor is aware are
not voidable;
- 26 -
11.1.3 there are no special or unusual terms or restrictions and so far as
the Vendor is aware the premiums payable are not in excess of the normal
rates; and
11.1.4 no claim is outstanding and no circumstances exist which may give
rise to any claim.
GRANTS
------
12. The Company has not applied for any investment grant, employment subsidy or
other similar payment and no such grant, subsidy or payment paid or due to be
paid to the Company is liable to be refunded or withheld in whole or in part in
consequence of any action or omission of the Company.
COMPLIANCE WITH LAWS
--------------------
13. So far as the Vendor is aware neither the Company nor its officers, agents
or employees in the course of their respective duties to the Company have done
or omitted to do anything in breach of the law of the United Kingdom or of any
foreign country in which the Company conducts business.
LICENCES AND CONSENTS
---------------------
14. All licences, consents, approvals, permissions, permits and authorities
(public and private) necessary for the carrying on of the business of the
Company effectively in the places and in the manner in which such business is
now carried on have been obtained and all such licences, consents, approvals,
permissions, permits and authorities are valid and subsisting and, so far as
the Vendor is aware, there is no reason why and no facts or circumstances which
would be likely to give rise to any reason why any of them should be suspended,
cancelled or revoked or not renewed.
LITIGATION
----------
15.1 The Company is not engaged in any litigation or arbitration proceedings
and no litigation or arbitration proceedings are pending or threatened by or
against the Company, nor so far as the Vendor is aware are there any facts or
circumstances which may give rise to any litigation or arbitration proceedings
being commenced by or against the Company.
15.2 Neither the Company nor any of its officers is being prosecuted for any
criminal offence and so far as the Vendor is aware there are no such
prosecutions pending or threatened and, so far as the Vendor is aware, there
are no facts or circumstances which may give rise to any such prosecution.
15.3 No litigation or arbitration proceedings commenced by or against the
Company or which have been threatened to be so commenced have been settled or
compromised during the period of five years ending on the date of this
Agreement in respect of amounts exceeding in aggregate (pound)20,000.
15.4 The Company is not subject to any order or judgement given by any court,
governmental agency or other regulatory body adversely affecting its business
and is not a party to any undertaking or assurance given to any court,
governmental agency or other
- 27 -
regulatory body which is still in force nor so far as the Vendor is aware are
there any facts or circumstances which may result in the Company becoming
subject to any such order or judgement or being required to be a party to any
such undertaking or assurance.
15.5 There have been no investigations of, or disciplinary proceedings made
against, the Company or so far as the Vendor is aware any of its officers or
employees, so far as the Vendor is aware no such investigations or disciplinary
proceedings are currently pending or threatened and, so far as the Vendor is
aware, there are no facts or circumstances which may give rise to such
investigations or proceedings.
16. COMPETITION LAW MATTERS
---------------------------
16.1 The Company is not and has not been a party to any agreement (as defined
in the Restrictive Trade Practices Act 1976 ("the RTPA")) which has been
furnished to the Director General of Fair Trading as provided for in the RTPA
or which is or was subject to registration pursuant to the RTPA and which has
not been so furnished.
16.2 The Company has not been and is not a party to any agreement or concerted
practice which infringes Article 85 of the EEC Treaty and is not in
contravention of any regulation or other enactment made under Article 87 of the
EEC Treaty.
16.3 No action, practice or course of conduct now or previously done or carried
on by the Company and no agreement to which the Company is or was a party or
any part of any such agreement:-
16.3.1 so far as the Vendor is aware is or has been the subject of any
investigation or reference under the Competition Xxx 0000; or
16.3.2 is or was unlawful by virtue of the Resale Prices Xxx 0000; or
16.3.3 is or was an abuse of a dominant position under the EEC Treaty.
16.4 Neither the Vendor nor the Company has at any time received, nor have
either of them any grounds for believing that either may receive, any process,
notice, communication or any formal or informal request for information with
reference to any actual or proposed agreement, arrangement, concerted practice,
trading policy or practice, course of conduct or activity of the Company from
the Director General of Fair Trading, the Monopolies and Mergers Commission,
the Secretary of State for Trade and Industry, the Commission of the European
Communities, the Restrictive Practices Court or from any other person or body
(wherever situated) whose task it is to investigate, report or decide upon
matters relating to monopolies, mergers or anti-competitive agreements or
practices nor has the Company or anything done or to be done or proposed to be
done by the Company been the subject of any report, decision, order, judgement
or injunction made, taken or obtained by any of such persons or bodies, nor has
the Company given or been the subject of any undertakings or assurances given
(directly or indirectly) to any such persons or bodies.
16.5 The Company has not been party to any agreement, practice or arrangement
which, in whole or in part, contravenes the provisions of the Trade
Descriptions Acts 1968 to 1972 or the Consumer Credit Xxx 0000.
- 28 -
TRADING AND CONTRACTUAL ARRANGEMENTS
------------------------------------
17.1 The Company is not a party to:-
17.1.1 any partnership, joint venture, European Economic Interest Grouping
or consortium arrangement or agreement or any agreement for sharing
commissions or other income;
17.1.2 any agreement or arrangement which is liable to be terminated by
another party or under which rights of any person are liable to arise or be
affected as a result of any change in the control, management or
shareholders of the Company;
17.1.3 any contract of a long-term nature that is to say, unlikely to have
been fully performed, in accordance with its terms, more than twelve months
after the date on which it was entered into;
17.1.4 any agreement or arrangement of a loss making nature (that is to
say, now known to be likely to result in a loss on completion of
performance);
17.1.5 any agreement containing covenants limiting or excluding its right
to do business and/or to compete in any area or in any field or with any
person, firm or company;
17.1.6 any agreement or arrangement of an unusual or abnormal nature or
entered into otherwise than on an arm's length basis in the ordinary and
usual course of the Company's business;
17.1.7 any agreement or arrangement which cannot readily be fulfilled or
performed by the Company in accordance with its terms without undue or
unusual expenditure or effort;
17.1.8 so far as the Vendor is aware, any agreement or arrangement
suffering from any invalidity or in respect of which there are grounds for
determination, rescission, avoidance or repudiation by any other party; or
17.1.9 any agreement or arrangement which involves payment by reference to
fluctuations in the index of retail prices or any other index or in the
rate of exchange for any currency.
17.2 No offer, tender or the like given or made by the Company on or before the
date of this Agreement and still outstanding is capable of giving rise to a
contract merely by a unilateral act of another person which contract would be
otherwise than in the ordinary course of business or onerous, long term or
unusual.
TITLE DEEDS
-----------
18. All documents which in any way affect the right, title or interest of the
Company in or to any of its property, undertakings or assets and all agreements
to which the Company is a party are in the possession of the Company and are
properly stamped.
- 29 -
POWERS OF ATTORNEY
------------------
19. The Company has not given a power of attorney and no person has any
authority (express, implied or ostensible) which is still outstanding or
effective to enter into any contract or commitment or to do anything on its
behalf other than any authority to employees to enter into routine trading
contracts in the normal course of their duties and to executive directors.
INSOLVENCY
----------
20.1 No receiver or administrative receiver has been appointed of the whole or
any part of the assets or undertaking of the Company.
20.2 No administration order has been made in relation to the Company and no
petition for such an order has been presented.
20.3 No proposal for a voluntary arrangement between the Company and its
creditors (or any class of them) has been made to or is in the contemplation of
the Company.
20.4 No petition has been presented, no order has been made and no resolution
has been passed for the winding-up of the Company.
20.5 The Company has not stopped payment to its creditors nor is it insolvent
or unable to pay its debts as and when they fall due.
20.6 No unsatisfied judgement is outstanding against the Company.
OFFICERS AND EMPLOYEES
----------------------
21.1 Those persons named as such in Schedule 2 are the only directors of the
Company and the secretary of the Company respectively and the particulars set
out in Schedule 2 are true and complete.
21.2 No person is or has been a shadow director of the Company.
21.3 The particulars shown in the schedule of employees annexed to the
Disclosure Letter list all the employees of the Company, are true and accurate
and show in relation to each employee (or, if appropriate, by category or grade
of employee) and officer:-
21.3.1 date of birth and period of continuous service;
21.3.2 job title or job function and work place location if not at
Westhaughton;
21.3.3 all entitlements to cash remuneration;
21.3.4 details of entitlements to all other benefits provided by the
Company (whether on a contractual or discretionary basis);
- 30 -
21.3.5 details of any share option, profit sharing, incentive and bonus
arrangements (whether or not such arrangements are legally binding on the
Company); and
21.3.6 details of all other terms and conditions of employment (other than
as implied by statute).
21.4 Details of any Company handbook or work rules relating to any employees of
the Company (including any disciplinary or grievance procedure) have been
provided to the Purchaser.
21.5 No change in the remuneration, benefits and arrangements shown in the
schedule of employees is due or expected within twelve months from the date of
this Agreement and no request for any such change has been received.
21.6 There are no recognition, procedural or other Trade Union agreements to
which the Company is a party or which apply to any of its employees together
with details of any works council, staff association or other body representing
any of the Company's employees and details of any elected employee
representatives (for whatever purpose).
21.7 There is not outstanding any contract of service between the Company and
any of its directors, officers or employees which is not terminable by the
Company without damages or compensation (other than any compensation payable by
statute) on three month's notice given at any time.
21.8 No current employee of the Company has given notice terminating his
contract of employment or is under notice of termination from the Company and
no person has been offered employment by the Company but not yet commenced such
employment.
21.9 There are no arrangements between the Company and any of its employees or
Directors, whether contractual or otherwise, in relation to change of
ownership, severance or other payments on termination of employment.
21.10 The Vendor has complied with all its obligations to, and no amount is due
to or in respect of, any current employee or person whose employment with the
Company has been terminated within the period of one year prior to Completion
("FORMER EMPLOYEE") arising out of or in connection with:
21.10.1 any of the terms and conditions of employment of the employees and
Former Employees;
21.10.2 all its obligations under statute and otherwise concerning the
health and safety at work of such current employees and Former Employees
and so far as the Vendor is aware there are no claims threatened or pending
by any employee, Former Employee or third party in respect of any accident
or injury which are not fully covered by insurance.
21.10.3 all other statutes and regulations relevant to the employment of
the employees and Former Employees with the Vendor; and
- 31 -
21.10.4 all relevant orders and awards made in relation to the employees
and Former Employees.
21.11 There is no dispute between the Company and any current or former
employee or director trade union works council, staff association or other body
representing employees or any elected employee representatives pending or
threatened.
21.12 No employee is currently on long term sickness absence or maternity
leave.
21.13 No arrangements or adjustments have been made or are operated by the
Vendor by virtue of the provisions of the Disability Discrimination Xxx 0000 in
relation to any employee and the Vendor is not in breach of its obligations
under this Act.
21.14 The Company's Pension Scheme (named as the Bodycote Group Pension Scheme
in the Disclosure Letter) is exempt, approved or capable of exempt approval
within the meaning of section 592(1) ICTA 1988 and neither the Vendor nor the
Company is aware of any reason why such approval should be withdrawn.
INTELLECTUAL PROPERTY RIGHTS
----------------------------
22.1 There is no Intellectual Property owned by the Company or confidential
know-how relating to the business of the Company nor does the Company require
to use the Intellectual Property or confidential know-how of any third party.
22.2 So far as the Vendor is aware none of the processes, products or
activities of the business of the Company infringes any right of any other
person relating to Intellectual Property or involves the unlicensed use of
information confidential to any person or gives rise to a liability for any
royalty or similar payment.
22.3 The Company does not trade under any name other than its full corporate
name.
SUBSIDIARY UNDERTAKINGS
-----------------------
23. The Company has no and has never had any subsidiaries or subsidiary
undertakings and has never had any legal or beneficial interest in the shares
of any other company and has not agreed to acquire any such shares.
PENSIONS
24.1 In this paragraph 24 the following terms have the following meanings:
The Bodycote Scheme: The Bodycote Group Pension Scheme
The Executive Plan: Supercraft (Garments) Limited Executive
Pension Plan.
The Life Insurance Scheme: Supercraft (Garments) Limited Group Life
Insurance Scheme.
together the Executive Plan and the Life
Insurance
- 32 -
Scheme shall be referred to as the
Vendor's Scheme.
Relevant Benefits: as defined in section 612 of ICTA 1988
but with the omission of the exception
in that definition.
Relevant Person: each past and present employee, officer
and director of the Company and their
respective spouses and dependants.
Beneficiary: any person who, at the date of this
Agreement, is not a Relevant Person but
who is a beneficiary (present or
contingent) of the Vendor's Scheme.
24.2 The Company has made no agreement under which it is or may become legally
liable to provide Relevant Benefits for any Relevant Person or Beneficiary
under the Bodycote Scheme other than in respect of Xxxxx Xxxxxxxxxx, Xxxxx Xxxx
and Xxxxxx Xxxxxxx and the Bodycote Scheme Explanatory Booklet effective from 1
April 1995 sets out the total Relevant Benefits that are payable in respect of
such individuals under that scheme.
24.3 Except under the Vendor's Scheme and except for the Company's commitment
to provide Relevant Benefits under paragraph 24.2 or as provided by statute, no
agreement exists for the provision of Relevant Benefits for any Relevant Person
or Beneficiary in connection with which the Company is or may become legally
liable to make any payment and the Company is not liable to make contributions
to a personal pension scheme in respect of any Relevant Person. No legally
binding undertaking has been given to any Relevant Person that the Relevant
Benefits under the Vendor's Scheme, or any other arrangement disclosed under
this paragraph 24.3, will be improved or further Relevant Benefits introduced.
24.4 The Disclosure Letter contains or has annexed to it all relevant documents
relating to the Vendor's Scheme. The documents disclosed are valid and
effectual as at the date of this Agreement and when taken together correctly
describe all the benefits which are being paid or are payable under the
Vendor's Scheme.
24.5 The Vendor's Scheme and the Bodycote Scheme are exempt approved schemes
(as defined in section 592 of ICTA 1988) and so far as the Vendor is aware
nothing has been done or omitted which will or is likely to result in them
ceasing to have exempt approved status. The Bodycote Scheme is a contracted-out
scheme (within the meaning given in section 7(3) of the Pension Schemes Act
1993) in relation to the employments of Xxxxx Xxxxxxxxxx, Xxxxx Xxxx and Xxxxxx
Xxxxxxx and so, far as the Vendor is aware, nothing has been done or omitted
which will or may result in the Bodycote Scheme ceasing to have contracted-out
status in relation to the employment of these individuals.
24.6 So far as the Vendor is aware the Vendor's Scheme has at all times been
operated in accordance with the provisions governing it and in accordance with
all applicable laws and regulatory requirements and it has been properly
administered.
24.7 All amounts due to the Bodycote Scheme and the Vendor's Scheme from the
Company have been paid.
- 33 -
24.8 So far as the Vendor is aware there are no actions, suits or claims
pending or threatened against the Company in respect of the provision of
Relevant Benefits and there are no circumstances which are likely to give rise
to any such action, suit or claim.
24.9 No individuals entitled to become members of the Vendor's Scheme in
accordance with their contracts of employment have been excluded from
membership by the Vendor or the Company.
24.10 The liability for all lump sum death in service benefits which may become
payable under the Vendor's Scheme or the Bodycote Scheme to or in respect of
any Relevant Person or Beneficiary is fully insured with a reputable insurance
Company and all premiums due to date have been paid.
25. NET ASSETS
The net assets of the Company as at Completion are not less than net assets as
shown in the Completion Accounts.
- 34 -
SCHEDULE 5
----------
WARRANTIES RELATING TO TAXATION
-------------------------------
1. GENERAL
-----------
1.1 The Company has not carried out or been engaged in any transaction or
arrangement since the Accounts Date such that the law provides that there may
be substituted for the amount or value or the actual consideration given or
received (or to be given or received) by the Company any different amount or
value for taxation purposes.
1.2 There is set out in the Disclosure Letter with express reference to this
warranty full details of all clearances obtained in the last 6 years by or
relating to the Company pursuant to any statutory provision, statement of
practice relating to taxation or any press release issued by any taxation
authority. Any transaction for which any clearance was obtained has been
carried out only in accordance with the terms of the clearance given for that
transaction and the application upon which the clearance was based. So far as
the Vendor is aware nothing has arisen since any clearance was obtained which
would bring into question its validity.
1.3 Since the Accounts Date no accounting period of the Company has ended.
2. COMPLIANCE
--------------
2.1 The Company has made all returns, claims for relief, applications,
notifications and computations (whether physically in existence or
electronically stored) ("Returns") it is required by law to make for the
purposes of taxation. All Returns have been properly and punctually submitted
(whether physically or electronically) by the Company to all relevant taxation
authorities (whether of the United Kingdom or elsewhere) and the Returns are
complete, true and accurate, give disclosure of all material facts and
circumstances and are not the subject of any question or dispute nor so far as
the Vendor is aware are likely to become the subject of any question or dispute
with any taxation authority.
2.2 The Company has filed a corporation tax return for the period ended on the
Accounts Date.
2.3 Since the Accounts Date, the Company has not filed any amended corporation
tax return.
2.4 The Company is not a party to any special arrangement for the making of
joint amended returns (as referred to in Inland Revenue Statement of Practice
10/93).
2.5 All payments by the Company to any person which ought to have been made
under deduction of taxation have been so made and the Company has (if required
by law to do so) accounted to the relevant taxation authority for the taxation
so deducted.
2.6 The Company is not liable as agent or lessee for any taxation liability of
another person.
- 35 -
2.7 No taxation authority has agreed to operate any special arrangement (being
an arrangement which is not based on a strict and detailed application of the
relevant legislation, statements of practice or extra-statutory concessions
published in Inland Revenue guides) in relation to the Company's affairs.
2.8 The Company has complied with all notices served on it by any taxation
authority and no such notice remains outstanding.
2.9 The Company has duly and punctually paid all taxation which it has become
liable to pay.
2.10 The Company has not within the last 12 months paid or become liable to pay
any penalty, fine or surcharge in connection with taxation.
2.11 Since the Accounts Date there has been no debt outstanding to any member
of the Vendor's Group in respect of which the Company has been allowed (or it
is entitled to) a deduction in computing the profits or gains of a trade such
that if the debt were released, the amount released would be treated as a
receipt of the trade under section 94 ICTA 1988 (debts deducted and
subsequently released).
3. FOREIGN EXCHANGE AND FINANCIAL INSTRUMENTS
----------------------------------------------
3.1 The Company has never made any claims under Section 139 Finance Act 1993
(claim to defer unrealised gains) in respect of any foreign exchange gain.
3.2 The Company has never made any election to treat any qualifying assets or
qualifying liabilities as matched pursuant to the Exchange Gains and Losses
(Alternative Method of Calculation of Gain or Loss) Regulations 1994.
3.3 The Company has never made any election under the Local Currency Elections
Regulations 1994.
3.4 The Company has not since the Accounts Date entered into any qualifying
contract under Chapter II Part IV Finance Act 1994 (interest rate and currency
contracts) which remains outstanding.
3.5 Neither the Company nor the principal Company of any group of which the
Company is (or has ever been) a member has made any election under section 148
Finance Act 1994 (contracts which may become qualifying contracts).
4. DISTRIBUTIONS
-----------------
4.1 The Company has not since the Accounts Date made or agreed to make any
distributions within the meaning of section 209 ICTA 1988 (meaning of
"distribution").
4.2 The Company has not been concerned in any exempt distribution within
sections 213 to 218 ICTA 1988 (demergers) within the period of five years
preceding Completion.
4.3 The Company has not issued any security which will be outstanding at
Completion in circumstances such that any interest or other payment payable in
respect of it or any
- 36 -
part of any such interest or other payment constitutes a distribution under
section 209 ICTA 1988 (meaning of "distribution").
4.4 The Company has not in the six years prior to Completion made any repayment
of share capital to which section 210(1) ICTA 1988 (bonus issue following
repayment of share capital) might apply.
4.5 The Company has not in the six years prior to Completion issued any share
capital or securities as paid up other than by receipt of new consideration
within the meaning of section 254 ICTA 1988 (interpretation).
4.6 The Company has never made or revoked an election under section 246A ICTA
1988 (election by company paying dividend) that any dividend be a foreign
income dividend.
4.7 The Company has never treated itself as an international headquarters
company for the purposes of section 246T ICTA 1988 (liability to pay ACT
displaced).
5. CAPITAL ALLOWANCES
----------------------
5.1 The aggregate book value of each of the assets of the Company, on which an
entitlement to industrial building allowances or other allowances in respect of
capital expenditure has arisen under the Capital Xxxxxxxxxx Xxx 0000 or the
Capital Xxxxxxxxxx Xxx 0000, in or adopted for the purposes of the Accounts
does not exceed the aggregate residue of expenditure or written-down value
attributable to such assets for the purposes of those Acts and the aggregate
book value of plant and machinery allocated to a pool of plant and machinery on
which an entitlement to capital allowances has arisen under Part II Capital
Allowances Act 1990 (machinery and plant) does not exceed the written-down
value of the qualifying expenditure in respect of each such pool under that
Act.
5.2 All expenditure incurred by the Company or which it may incur under any
subsisting commitment for the provision of machinery or plant has qualified for
writing down allowances under Part II Capital Allowances Act 1990 (machinery
and plant) as a trading expense of a trade carried on by the Company.
5.3 Since the Accounts Date any claims for capital allowances which have been
made under the Capital Xxxxxxxxxx Xxx 0000 have not been withdrawn, and no
available allowances have been disclaimed.
5.4 Since the Accounts Date the Company has not done any act as a result of
which:-
5.4.1 there may be made against the Company a balancing charge under the
Capital Xxxxxxxxxx Xxx 0000 or under the Capital Xxxxxxxxxx Xxx 0000; or
5.4.2 any disposal value may be brought into account under section 24
Capital Allowances Act 1990 (writing down allowances and balancing
adjustments); or
5.4.3 there may be any recovery of excess relief within sections 46 or 00
Xxxxxxx Xxxxxxxxxx Xxx 0000 (recovery of excess relief); or
- 37 -
5.4.4 a relevant event may occur within the meaning of section 000 Xxxxxxx
Xxxxxxxxxx Xxx 0000 (scientific research).
5.5 There is not, and so far as the Vendor is aware there are no circumstances
which could give rise to, any dispute between the Company and any other person
as to the entitlement to capital allowances under sections 51 to 00 Xxxxxxx
Xxxxxxxxxx Xxx 0000 (fixtures).
5.6 The Company has not made any election under section 37 Capital Allowances
Act 1990 (short life assets) nor has been taken to have made an election under
sub-section (8)(c) of that section.
5.7 The Company has no machinery or plant which falls within the definition of
a long life asset for the purposes of section 38A Capital Allowances Xxx 0000.
6. CAPITAL GAINS
-----------------
6.1 The book value in or adopted for the purposes of the Accounts as the value
of each of the assets of the Company on the disposal of which a chargeable gain
or allowable loss could arise does not exceed the amount deductible under
section 38 Taxation of Chargeable Gains Xxx 0000 (acquisition and disposal
costs etc.) (excluding any indexation allowance) in respect of each such asset.
6.2 The Company neither has an interest in nor has issued any deep discount
security, deep gain security or qualifying convertible security as defined by
paragraph 1(1) of Schedule 4 ICTA 1988 (deep discount securities), paragraph 1
of Schedule 11, Finance Xxx 0000 (deep gain securities) or paragraph 2 of
Schedule 10, Finance Xxx 0000 (convertible securities) respectively.
6.3 No debt owed to the Company would on its disposal give rise to a chargeable
gain by reason of section 251 Taxation of Chargeable Gains Xxx 0000 (debts -
general provisions).
6.4 The Company does not have any interest in any qualifying corporate bond to
which section 116 Taxation of Chargeable Gains Xxx 0000 (reorganisations,
conversions and reconstructions) applies.
6.5 The Company does not have an interest in any assets which are wasting
assets within the meaning of section 44 Taxation of Chargeable Gains Xxx 0000
(meaning of "wasting asset") and which do not qualify for capital allowances.
6.6 The Company has not made any claim or election under either of section 24
Taxation of Chargeable Gains Xxx 0000 (disposals where assets lost or
destroyed, or become of negligible value) or section 161(3) Taxation of
Chargeable Gains Xxx 0000 (appropriations to and from stock). The Company has
not since the Accounts Date appropriated any asset forming part of its trading
stock for any other purpose.
6.7 The Company has not since the Accounts Date been a party to any
depreciatory transaction for the purpose of section 176 Taxation of Chargeable
Gains Xxx 0000 (depreciatory transactions in a group) or which could be treated
as a depreciatory transaction under section 177 Taxation of Chargeable Gains
Xxx 0000 (dividend stripping).
- 38 -
6.8 The Company has not made nor is entitled to make any claim under section
280 Taxation of Chargeable Gains Xxx 0000 (consideration payable by
instalments) to pay by instalments taxation on chargeable gains.
6.9 No election has been made under section 35(5) Taxation of Chargeable Gains
Tax 1992 (assets held on 31 March 1982) in respect of any of the assets of the
Company.
7. GROUPS OF COMPANIES
-----------------------
7.1 There is set out in the Disclosure Letter details of all surrenders,
claims, notices and agreements for surrenders or claims or the giving of
notices for:-
7.1.1 any amounts by way of group relief under the provisions of sections
402 to 413 ICTA 1988 (group relief); and
7.1.2 any amounts of advance corporation tax under the provisions of
section 240 ICTA 1988 (surplus ACT); and
7.1.3 any amounts of tax refund to be dealt with under the provisions of
section 102(2) Finance Xxx 0000 (company tax refund);
in each case where:-
7.1.4 any payment for group relief (within the meaning of section 402(6)
ICTA 1988) or for surrender of amounts of advance corporation tax (within
the meaning of section 240(8) ICTA 1988) or for a transferred tax refund
(within the meaning of section 102(7) Finance Act 1989) remains outstanding
or could be reduced or increased; or
7.1.5 the claim surrender or notice has yet to be agreed or determined by
the Inland Revenue for a specific amount.
7.2 All dividends and other payments referred to in section 247 ICTA 1988
(group income) which have been paid by the Company have been paid under an
election made under that section and all such elections are now and will up to
Completion remain valid and in force. The Company has not since the Accounts
Date made and will not up to Completion make or receive any payment of any
dividend in respect of which a notice under section 247(3) ICTA 1988 has
effect.
7.3 Since the Accounts Date the Company has not ceased to be a member of a
group of companies such that section 179 Taxation of Chargeable Gains Act 1992
(company ceasing to be member of group) has effect in relation to any asset or
property of the Company. Section 179 Taxation of Chargeable Gains Xxx 0000 will
not have effect in relation to any asset or property of the Company as a result
of this Agreement.
7.4 No tax-free benefit has ever been conferred either upon the Company or upon
any person connected with the Company within the meaning of section 30 Taxation
of Chargeable Gains Xxx 0000 (tax-free benefits).
7.6 None of the Company's assets and no relevant asset has been materially
reduced in
- 39 -
value within the meaning of section 30 Taxation of Chargeable Gains Xxx 0000
(tax-free benefits).
8. VALUE ADDED TAX
-------------------
8.1 The Company is a registered and taxable person for the purposes of the
Value Added Tax Xxx 0000 and has complied with and observed in all material
respects the terms of all statutory provisions, directions, conditions, notices
and agreements with H.M. Customs and Excise relating to value added tax. The
Company has maintained and obtained accounts, records, invoices and other
documents (as the case may be) requisite for the purposes of value added tax
which are complete, correct and up-to-date.
8.2 The Company:-
8.2.1 is not, nor in the two years prior to Completion has been, in arrears
with any payments or returns or notifications under any statutory
provisions, directions, conditions or notices relating to value added tax,
or liable to any forfeiture or penalty or interest or surcharge or to the
operation of any penalty, interest or surcharge provision;
8.2.2 has not been required by H.M. Customs and Excise to give security;
8.2.3 is not, and has not agreed to become, an agent, manager, factor or
VAT representative for the purposes of sections 47 or 48 Value Added Tax
Xxx 0000 (agents etc.) of any person who is not resident in the United
Kingdom;
8.2.4 has not made, and will not make prior to Completion, any supplies
that are exempt supplies or would be exempt supplies if supplied within the
United Kingdom; and
8.2.5 has not received a notice under paragraph 1 of Schedule 6 Value Added
Tax Xxx 0000 (valuation - special cases) directing that the value of goods
supplied by the Company be taken to be their open market value.
8.3 The Company has not since the Accounts Date been, and will not prior to
Completion be, treated as having made any supply of goods or services for the
purposes of value added tax where no supply has in fact been made by the
Company.
8.4 The Company is not approved for the purposes of the Customs Duties
(Deferred Payment) Regulations 1976 (deferral of duty on imports).
8.5 The Company has never in the two years prior to Completion received a
surcharge liability notice under section 59 Value Added Tax Act 1994 (default
surcharge) or a penalty liability notice under section 64 Value Added Tax Xxx
0000 (persistent misdeclarations).
8.6 The Company is not for the purposes of paragraph 5(5) of Schedule 10, Value
Added Tax Xxx 0000 (developers of certain non-residential buildings etc.) the
developer of any building or work in respect of which no election has been made
under paragraph 2(1) of that Schedule by the Company.
- 40 -
8.7 There is set out in the Disclosure Letter the following details of each of
the assets of the Company to which Part XV of the Value Added Tax Regulations
1995 (adjustments to the deductions of input tax on capital items) applies:-
8.7.1 a description (including in the case of land or a building or part of
a building, the nature of the tenure and the time it has to run), the date
the first interval commenced and the input tax on the capital item; and
8.7.2 the proportion of input tax for which credit has been claimed
(whether provisionally or finally in a tax year and stating which).
8.8 There is set out in the Disclosure Letter details of any land, building and
civil engineering work in which the Company has an interest and to which any of
8.8.1 to 8.8.5 below apply:-
8.8.1 an election to waive exemption under paragraph 2(1) Schedule 10 Value
Added Tax 1994 has been made in respect of the land, building or work
including the dates such elections were made and whether any elections can
be withdrawn pursuant to paragraph 3(5)(a)(i) Schedule 10 Value Added Tax
Xxx 0000;
8.8.2 the land, building or work is intended for use as a dwelling, or for
a relevant residential purpose or for a relevant charitable purpose;
8.8.3 the property is a freehold building or freehold civil engineering
work that was completed for Value Added Tax purposes less than three years
prior to the date of this Agreement;
8.8.4 the property is a building or work subject to a development or
tenancy, developmental lease or developmental licence; and
8.8.5 the property is a freehold building or freehold civil engineering
work that has not been completed for value added tax purposes.
8.9 The Company is not required to pay amounts on account of value added tax
under any order made under section 28 Value Added Tax Xxx 0000 (payments on
account).
8.10 There is set out in the Disclosure Letter details of any agreement or
arrangement regarding group registration for VAT which the Company has entered
into.
9. CLOSE COMPANIES
-------------------
9.1 The Company is not and has never been, within the six years prior to
Completion, a close company within the meaning of section 414 ICTA 1988 (close
companies).
10. EMPLOYEES
--------------
10.1 The Company has complied with sections 203 to 203L Income and Corporation
Taxes Act 1988 (pay as you earn) and the regulations made thereunder in respect
of all payments within the meaning of those sections and with the Social
Security (Contributions) Regulations 1979 in respect of all earnings which are
subject to those
- 41 -
regulations.
10.2 The expense incurred under the existing arrangements for remunerating
officers and employees and rewarding persons rendering services to the Company
is deductible for the purposes of section 74 or 75 ICTA 1988 (deductions).
10.3 The Company does not operate any scheme approved under section 202 ICTA
1988 (charities: payroll deduction scheme) or registered under Chapter III of
Part V ICTA 1988 (profit-related pay).
10.4 No officer or employee of the Company participates in any scheme approved
under Schedule 9 ICTA 1988 (approved share option and profit sharing schemes)
or is a beneficiary or potential beneficiary of a qualifying employee share
ownership trust as defined in Schedule 5 Finance Xxx 0000 (employee share
ownership trusts).
10.5 Since the Accounts Date the Company has not received any payment to which
sections 601 to 603 ICTA 1988 apply (pension scheme surpluses: payments to
employers).
10.6 Rights to acquire shares pursuant to a right conferred on a person or
opportunity offered to that person by reason of his office of employment with
the Company or any other company have not been granted to a person by the
Company or any other person, and the Company has not issued shares to which
Part III, Chapter II Finance Xxx 0000 (Unapproved Employee Share Schemes)
applies.
10.7 No remuneration for or in respect of the services of a director or an
employee has been paid to any person other than the director or employee.
11. STAMP DUTIES
-----------------
11.1 There is no instrument which is within the possession of or under the
control of the Company and which is necessary to establish the Company's title
to any right or asset which is liable to stamp duty but which has not been duly
stamped or which would attract stamp duty if brought within the relevant
jurisdiction.
11.2 The Company has complied in all respects with the provisions of Part IV,
Finance Act 1986 (stamp duty reserve tax) and with any regulations made under
the same and the Company is not and will not become liable to pay stamp duty
reserve tax by reference to any agreement which falls within the terms of
section 87(1) of that Act and is entered into after the Accounts Date and prior
to Completion.
12. INTERNATIONAL
------------------
12.1 The Company is and always has been resident only in the United Kingdom for
taxation purposes. The Company is not liable to taxation in any jurisdiction
other than the United Kingdom.
12.2 The Company has not, without the prior consent of the Treasury, entered
into any of the transactions specified in section 765 ICTA 1988 (migration etc.
of companies).
- 42 -
12.3 The Company is not the branch, agency or UK representative of a person who
is not resident in the United Kingdom.
12.4 The Company does not receive any income to which sections 61-66 Finance
Xxx 0000 (interest etc. on debts between associated companies) apply.
12.5 The Company does not have any interest in any controlled foreign company
or in any off-shore fund as defined respectively in Chapters IV and V of Part
XVII of ICTA 1988 (tax avoidance).
12.6 The Company does not have any interest in any company which is not
resident in the United Kingdom which would be a close company if it were
resident in the United Kingdom (section 13 Taxation of Chargeable Gains Xxx
0000 - attribution of gains to members of non-resident companies).
- 43 -
SCHEDULE 6
----------
PROPERTIES
----------
Part I
DETAILS OF THE PROPERTY
-----------------------
FREEHOLD PROPERTIES
The freehold land known as Industrial Mill, Xxxxxx Road, Westhaughton which is
for the purposes of identification shown edged red on the plan annexed to
Schedule 11 hereof.
PART II
-------
WARRANTIES RELATING TO THE PROPERTIES
-------------------------------------
1. The Company has not received notice of any outstanding monetary claims or
liabilities contingent or otherwise in respect of the Property.
2. The Company has not received any notice which remains outstanding in respect
of the Property from a competent authority that the requirements of the
Xxxxxxxxx Xxx 0000,xxx Offices Shops and Railway Premises Xxx 0000, the Health
and Safety at Work Xxx 0000, the Fire Precautions Xxx 0000 and any other
applicable and/or relevant statute law and/or orders directions or regulations
of any competent authority have been breached.
3. There have been no disputes of which the Vendor is aware concerning
boundaries, easements, covenants, rights, means of access or other matters
relating to the Property.
4. The Company is not actually or contingently liable as surety or as an
originating contracting party to, or assignor or assignee of, any lease or
property other than the Property.
5. The Property is not subject to any lease, tenancy, licence or other right of
occupation and/or enjoyment (nor is there any agreement to grant the same).
6. There is no person in possession or occupation of the Property (save for the
Company) and so far as the Vendor is aware no person has or claims any rights
(including security of tenure rights) or easements of any kind in respect of
the Property adverse to the estate, interest, right or title of the Company.
7. So far as the Vendor is aware there are no rights, easements, liberties,
privileges, advantages, interests, covenants, conditions, restrictions,
agreements or declarations or any outstanding notices (whether given by a
lessor, local authority or any other person, body, authority or company) or
otherwise known to the Company which adversely affect the title or the value of
the Property or conflict with the present user of the Property and the
continuance of such use, or restrict access thereto and/or which are of an
unusual or
- 44 -
unduly onerous nature.
8. All development carried out on the Property has been carried out in
accordance with the Town and Country Planning legislation and any orders,
rules, regulations, consents or permissions required to be made or given
thereunder have been obtained and any consents and permissions are subject only
to conditions which have been satisfied in all material respects.
9. So far as the Vendor is aware there are no matters or things that adversely
affect or might adversely affect either the Company's title to the Property
that should be brought to the attention of the Purchaser.
10. The replies of Eversheds to the preliminary enquiries in respect of the
Property raised by Xxxxxxx Xxxxx Xxxxxxxxxxx are true, accurate and complete in
all material respects.
11. No notice purporting to exercise the option conferred on Xxxx Xxxxxxxx
pursuant to the terms of an Option Agreement ("the Agreement") dated 31.5.1994
between Xxxxxx & Xxxxxxx Group Limited (1) and Xxxx Xxxxxxxx (2) has been
served and Xxxxxx & Xxxxxxx Group Limited have accounted to the Company in
respect of all payments made by Xxxx Xxxxxxxx pursuant to the Agreement.
- 45 -
SCHEDULE 7
----------
WARRANTIES RELATING TO ENVIRONMENTAL MATTERS
--------------------------------------------
1. No Environmental Claim has been made against the Company nor so far as the
Vendor is aware (without enquiry of any authorities) is such a Claim pending or
threatened and so far as the Vendor is actually aware (without having made
enquiries of any third parties) there are no circumstances likely to give rise
to an Environmental Claim.
2. The Company has at all times complied in all material respects with all
Environmental Laws relating to the use of the Property and the conduct of the
business of the Company.
3. There has been no spill, leakage, emission, discharge, escape or deposit
into, on, or from the Property to land, air or water (including ground water)
in any case arising from the Company's activities and, so far as the Vendor is
aware, there has been no other such spill, leakage, emission, discharge, escape
or deposit into, on, or from the Property howsoever arising, which in either
case may under Environmental Laws give rise to any third party or clean-up
liability.
DEFINITIONS
Environmental Claim means any claim, notice of violation,
prosecution, demand, action, official warning,
abatement or other order or notice relating to any
Environmental Matter and any notification or order
requiring compliance with Environmental Law;
Environmental Law means all statutes subordinate legislation, common
law and other local laws which relate to Environmental
Matters in force at the date of this Agreement
including the Environment Xxx 0000 and all guidance and
regulations thereunder; and
Environmental Matters means all matters relating to pollution or
human health or the environment by reason of waste,
discharges, emissions and releases to land, air and
water, nuisance and the manufacture, use, treatment,
storage, transport or disposal of chemicals, wastes,
forms of energy, radioactive substances or other
polluting, dangerous, hazardous or toxic substances.
Property means that property details of which are set out in
Part I of Schedule 6.
- 46 -
SCHEDULE 8
----------
EARN OUT
--------
1. The following words and expressions where used in this schedule have the
meanings given to them below:-
1997 Accounts the audited profit and loss account of the Company for
the financial year ending 31 December 1997 prepared on
the basis set out in this clause;
1997 Profit the profit, as shown by the 1997 Accounts, on ordinary
activities before taxation, interest (both income and
expense) and extraordinary items of the Company for the
year ending 31st December 1997.
2. The Deferred Consideration (if any) shall be calculated as follows:-
2.1 if 1997 Adjusted Profit is less than or equal to (pound)350,000 then the
amount of Deferred Consideration shall be nil;
2.2 if 1997 Adjusted Profit is greater than or equal to (pound)400,000 then the
amount of Deferred Consideration shall be (pound)250,000; and
2.3 if 1997 Adjusted Profit is greater than (pound)350,000 but less than
(pound)400,000 then the amount of Deferred Consideration shall be (1997
Adjusted Profit less (pound)350,000) multiplied by 5.
3. The Purchaser shall pay the Deferred Consideration (if any) in cash to the
Vendor within 30 Business Days of the date after acceptance by the Vendor,
deemed acceptance or determination (as the case may be) of the Deferred
Consideration in accordance with this Schedule.
4. The 1997 Accounts shall be prepared in accordance with the accounting
policies, principles and practices applied in the preparation of the Accounts
to the extent that the same comply with UK GAAP.
5. The Purchaser shall instruct the Purchaser's Accountants to audit the 1997
Accounts as soon as practicable after the end of that financial period and then
promptly following the preparation thereof to deliver adjust the figure for
profit on ordinary activities before taxation, interest (both income and
expenses) (for the avoidance of doubt interest accrued on the Retention Account
is not to be included as an expense in the calculation of the 1997 Adjusted
Profit) and extraordinary items by the matters referred to in clauses 6 and 12
below and by discounting the effect on that figure of the direct costs and
allocated revenue resulting from the carrying out of the orders placed with the
Company during the period from Completion to 31 December 1997 by Guarantor
Group Companies (save for the Company) ("THE 1997 ADJUSTED PROFIT") and to
deliver to the Vendor a copy of the 1997 Accounts together with a certificate
as to the 1997 Adjusted Profit ("1997 CERTIFICATE"), which certificate shall
confirm that the 1997 Adjusted Profit has been calculated in accordance with
this Schedule.
- 47 -
6. For the purposes of calculating the 1997 Adjusted Profit, if any assets held
at 31 December 1996 and at Completion are written down (other than by reason of
depreciation at the rates specified in the Accounts) in the Completion Accounts
below the value of those assets in the Accounts, then it shall be the values in
the Completion Accounts which shall be substituted for the values of those
assets in the Accounts.
7. The Vendor and the Purchaser undertakes to provide promptly to the
Purchaser's Accountants, and render or cause the provision and rendering to the
Purchaser's Accountants of, such information and assistance as the Purchaser's
Accountants may reasonably require.
8. Subject to the Vendor and the Vendor's Accountants signing a waiver letter
in the agreed form the Purchaser's Accountants shall provide all reasonable
access to the Vendor's Accountants in respect of their working papers so that
the Vendor may consider whether they agree to the calculation of the 1997
Adjusted Profit.
9. If the Vendor fails to notify the Purchaser in writing within 20 Business
Days of the date of the 1997 Certificate that it accepts the calculation of the
1997 Adjusted Profit as complying with the provisions of this Schedule, the
Vendor shall be deemed to have accepted such calculation of the 1997 Adjusted
Profit which shall then apply for all purposes of this Agreement.
10. If the Vendor notifies the Purchaser in writing within 20 Business Days of
the date of the 1997 Certificate that it does not accept the 1997 Adjusted
Profit as complying with the provisions of this Schedule ("NON-ACCEPTANCE
NOTICE") (giving with such notice or as soon as practicable thereafter
reasonable details of the reasons for non-acceptance and the items which are
contested), the Vendor and Purchaser shall meet to try to agree any differences
and if such agreement is reached within 10 Business Days of the date of the
Non-acceptance Notice then the figure representing the 1997 Adjusted Profit
shall be adjusted to reflect such agreement and the adjusted figure shall be
deemed to be the 1997 Adjusted Profit for all purposes of this Agreement.
11. In the event that the disagreement between the Purchaser and the Vendor
cannot be resolved within the time referred to in paragraph 10, such
disagreement may be referred to and the calculation of the 1997 Adjusted Profit
shall be conclusively determined (in the absence of manifest error) by an
independent firm of chartered accountants agreed by the Vendor and Purchaser
or, in the event of failure to agree upon such a firm within five Business Days
of the first party putting forward its proposed appointee, by an independent
firm of chartered accountants appointed by the President for the time being of
the Institute of Chartered Accountants in England and Wales on the application
of either the Purchaser or the Vendor. Such independent firm of chartered
accountants shall be instructed to determine the 1997 Adjusted Profit as soon
as is practicable and in any event within 30 Business Days of receiving such
instruction. The 1997 Adjusted Profit certified by such independent firm shall
then apply for all purposes of this Agreement. The fees of any such firm of
independent chartered accountants shall be borne as they shall direct or in
default of any such direction shall be borne as to 50 per cent. by the
Purchaser and 50 per cent. by the Vendor. Any firm appointed pursuant to the
provisions of this Schedule shall act as experts and not as arbitrators.
- 48 -
12 The 1997 Adjusted Profit shall be adjusted so far as necessary to take
account of the following matters:-
12.1 any profit or loss on the disposal of any fixed assets (including, without
limitation, any Intellectual Property or any interest in the Property and the
Oldham Property) shall be excluded;
12.2 the effects, including any increases or decreases in depreciation charges,
of any revaluation of any fixed assets (save that the Property shall be valued
at (pound)536,500 as at 31 December 1996 and the rates of depreciation used in
the Accounts applied thereto) as at 31 December 1997;
12.3 any management, administration or like charge made by the Purchaser shall
not be deducted and in this clause 12 only "Purchaser" shall where the context
permits be deemed to include any holding company from time to time of the
Purchaser and/or any subsidiary (other than the Company or any other Group
Member) from time to time of the Purchaser or of any such holding company;
12.4 any costs or expenses incurred in complying with any financial reporting
or other similar requirements of the Purchaser to the extent such reporting or
other similar requirements are more onerous than those to which the Company any
presently adheres shall not be deducted;
12.5 any sums paid to external accountants in respect of audit services
provided to the Company which are in excess of that charged in the Accounts
(exclusive of Value Added Tax) per annum shall not be deducted;
12.6 the fees, remuneration and pension contributions of any director or
officer of the Company nominated by the Purchaser (save where such nomination
is effected to replace any of Xxxxx Xxxxxxxxxx, Xxxxx Xxxx or Xxxxxx Xxxxxxx)
shall not be deducted;
12.7 any compensation or other payment for loss of office or employment to any
director or senior employee of the Company shall not be deducted;
12.8 in respect of any transaction between the Purchaser and the Company which
is not at arm's length, there shall be substituted terms which are at arm's
length;
12.9 any sums paid by the Vendor under its obligations to indemnify the
Purchaser and/or Company pursuant to Schedule 11 shall not be deducted.
13. If there shall occur any material adverse change voluntarily made by the
Company to the existing business operations of the Company; or
13.1 the sale or other disposal of the whole or any substantial part of the
Company's undertaking or assets;
13.2 an order being made for the winding-up of the Company or the passing of
any resolution for its winding up unless in the reasonable opinion of the
directors of the Purchaser the Company is insolvent and such action is
necessary to ensure that all directors of the Company comply with their
obligations under the Insolvency Xxx 0000;
- 49 -
13.3 the appointment of a receiver or receiver and manager or administrator
over the whole or any part of its assets or undertakings but subject to the
requirements and duties of any director under the provisions of the Insolvency
Xxx 0000;
13.4 save for any transfer, allotment or issue of any shares, or the grant of
any option or right to subscribe for shares to any Guarantor's Group company
the transfer or other disposal of the legal or any other interest in the whole
or any part of its issued share capital (apart from a nominee shareholding), or
the allotment or issue of any shares, or the grant of any option or right to
subscribe for shares, or any other alteration or reorganisation in respect of
its share capital;
Then the whole or the Deferred Consideration shall become immediately payable
regardless of the 1997 Adjusted Profits.
- 50 -
SCHEDULE 9
----------
COMPLETION ACCOUNTS PRINCIPLES
------------------------------
1. The Completion Accounts shall be prepared on a basis consistent with the
Accounts using the same accounting principles, policies and practices, but
subject to the same complying with the law and UK GAAP.
2. The following specific accounting policies will be applied in preparation of
the Completion Accounts:-
2.1 No value will be attributed in the Completion Accounts to intangible
fixed assets.
2.2 The provision in the Completion Accounts for Taxation shall be
calculated on the assumption that an accounting period ended on the
Completion Date and incorporate full provisions for all corporation tax,
advance corporation tax, deferred tax as previously calculated and income
tax liabilities of the company (including for the avoidance of doubt all
corporation tax in respect of profits arising since the Accounts Date)
other than Excluded Tax.
2.3 Save as provided in paragraphs 4(b) and (c) below tangible fixed assets
will be stated in the Completion Accounts at the value placed thereon in
the Accounts, net of depreciation charged since the Accounts Date at the
rates specified in the Accounts time apportioned up to the Accounts Date,
and will take account of additions and disposals since the Accounts Date
(tangible fixed assets acquired during the period in question being stated
in the balance sheet at a figure no greater than cost).
2.4 All stocks and work in progress will be stated at a value in accordance
with the valuation methods used in the Accounts.
2.5 The Vendor's and Purchaser's Accountants shall agree the scope and
materiality limits to be observed in the preparation of the Completion
Accounts.
3. Individual items of ancillary equipment or a group of such items bought to
function together (where such items cannot be used in isolation of one another)
acquired since the Accounts Date exceeding (individually or as a group) a cost
of (pound)1,000 shall be capitalised as fixed assets and depreciated
accordingly.
4. The calculation of net assets shall be before the payment of the
(pound)400,000 interim dividend made on 25th March 1997.
5. The calculation of net assets shall take into account:-
(a) the repayment of the inter-group non-trading loan with the Vendor of
(pound)232,985;
(b) the payment by the Company of a dividend of (pound)150,000 under group
- 51 -
election for the year ended 31 December 1996;
(c) the payment by the Company of a dividend of (pound)64,550 under group
election for the year ended 31 December 1995; and
(d) inclusion of the real property and buildings owned by the Company at
Xxxxxx Road, Westhoughton at a value of (pound)536,500.
- 52 -
SCHEDULE 10
-----------
LIMITATION OF LIABILITY
-----------------------
1. In this Schedule "Claim" means any claim which would (but for the provisions
of this Schedule) be capable of being made against the vendor in respect of any
liability for breach of the representations or warranties given under Schedules
4, 5, 6 and 7 of this Agreement.
2. Notwithstanding the provisions of this Agreement:-
2.1 the aggregate liability of the Vendor in respect of all Claims and claims
under the Tax Deed shall be limited to the (pound)2,944,535 (such limitation to
be decreased to (pound)2,408,035 on return of the Retention to the Purchaser
under Schedule 11).
2.2 the Vendor will be under no liability in respect of any claim unless the
amount of its liability in respect of such claim is (when aggregated with its
liability in respect of any other claim or claims made by the Purchaser) in
excess of (pound)20,000 in which event the Vendor will (subject to the other
provisions of this paragraph 2) be liable for the whole amount of such
liability and not merely the excess.
2.3 the Vendor will have no liability in respect of any Claim:-
2.3.1 to the extent that it arises or is increased as a result only of any
change in the law occurring after Completion or an increase in rates of
taxation after the Accounts Date or any provision or reserve in the
Accounts being insufficient by reason of any increase in the rates of
taxation after the Completion Date.
2.3.2 if it would not have arisen but for anything voluntarily done or
deliberately omitted to be done after Completion by the Purchaser or the
Company or any of their respective agents or successors in title outside
the ordinary course of business and which the Purchaser is not obliged to
do pursuant to a contractual or legal commitment incurred by the Company
prior to Completion, and which voluntary act or deliberate act or
deliberate omission could reasonably have been avoided and which the
relevant person carrying out the act ought reasonably to have been aware
would give rise to the liability giving rise to the Claim and for this
purpose he shall be deemed to have full knowledge of this Agreement;
2.3.3 to the extent that:-
2.3.3.1 provision or reserve (other than provision or reserve for
deferred taxation) specifically in respect of the liability giving
rise to the claim was made in the Accounts or Completion Accounts; or
2.3.3.2 any liability for taxation arising in the ordinary course of
business which term, for the avoidance of doubt, shall not include the
occurrences listed at clause 2.2 of the Tax Deed, of the Company after
the Accounts Date;
2.3.4 to the extent that it arises as a result of any change in the
accounting policy
- 53 -
or practice or in the accounting reference date of the Company after
Completion;
2.3.5 to the extent that the amount of the Claim corresponds to an increase
in the value of the assets of the Purchaser or the Company resulting from
the reduction in its liability to taxation.
2.4 Where the Purchaser or the Company is entitled to recover from some other
person any sum in respect of any matter or event which has or could give rise
to a Claim, the Purchaser will (or will procure that the Company will) take all
reasonable steps to recover that sum, and any sum recovered will reduce the
amount of such Claim or in the event of the recovery being delayed until after
such Claim has been satisfied by the Vendor, the lesser of the amount recovered
from the third party (less any costs and expenses of the Company or Purchaser
incurred in connection with that recovery and any taxation thereon) and the
amount paid by the Vendor to the Purchaser pursuant to the Claim, shall be
refunded by the Purchaser to the Vendor.
3. Upon the Purchaser becoming aware that matters have arisen which give rise
to a Claim, the Purchaser will:-
3.1 as soon as is reasonably practicable notify the Vendor in writing of the
potential Claim and of the matters which give rise to such Claim but, so that
the giving of such notice shall not be a condition precedent to the liability
of the Vendor and further that there shall be no such obligation on the
Purchaser if the matters likely to give rise to the Claim have come to the
attention of the Vendor.
3.2 So far as the Claim arises as a result of or in connection with a liability
to or a dispute with a third party, not to make any admission of liability,
agreement or compromise with any person, body or authority in relation to the
Claim without prior consultation with the Vendor.
3.3 Provided that it is indemnified to its satisfaction by the Vendor against
all costs expenses, liabilities, penalties and fees which may be incurred by
the Purchaser, or any Purchaser Group Company take such lawful action as the
Vendor may reasonably require to avoid, resist, contest or compromise the Claim
provided further that such action is not, or will not be, in the reasonable
opinion of the Purchaser, materially detrimental to the interests of any
Purchaser Group Company.
4. Nothing herein shall in any way diminish the Purchaser's or the Company's
common law duty to mitigate its loss.
5. If any potential Claim shall arise by reason of a liability of the Company
which is contingent only, then the Vendor shall not be under any obligation to
make any payment in respect of such Claim until such time as the contingent
liability ceases to be contingent and becomes actual.
6. The Purchaser confirms to the Vendor that it is not aware at the date of
this Agreement, after discussion with its accountants and solicitors, of any
matter or thing which in its reasonable opinion will or may give rise to any
Claim.
7. The Vendor will not be liable for any Claim to the extent that the Claim is
provided for
- 54 -
in determining the Deferred Consideration and where the 1997 Adjusted Profit is
or would (but for any provision, reserve or other charge in respect of such
subject matter) have been greater than (pound)350,000.
8. The provisions of this Schedule apply notwithstanding any other provision of
this Agreement or its Schedules or the Taxation Deed to the contrary and will
not cease to have effect in consequence of any rescission or termination by the
Purchaser of any other provisions of this Agreement.
- 55 -
SCHEDULE 11
-----------
RETENTION
---------
In this Schedule 11 the following definitions shall apply:-
PERFECTED TITLE ABSOLUTE title absolute free from any financial charge or
encumbrance or any restriction, stipulation or
covenant which would or might prevent or impede
the carrying on of the business of the Company
(other than any restriction, stipulation or
covenant specifically disclosed in the Disclosure
Letter);
IMPERFECT TITLE ABSOLUTE title absolute free from any financial charge or
encumbrance but subject to any restriction,
stipulation or covenant which would or might
prevent or impede the carrying on of the business
of the Company (other than any restriction,
stipulation or covenant specifically disclosed in
the Disclosure Letter);
PERFECTED LESSER TITLE lesser title than absolute free from any financial
charge or encumbrance or any restriction,
stipulation or covenant which would or might
prevent or impede the carrying on of the business
of the Company (other than any restriction,
stipulation or covenant specifically disclosed in
the Disclosure Letter);
IMPERFECT LESSER TITLE lesser title than absolute free from any financial
charge or encumbrance but subject to a
restriction, stipulation or covenant which would
or might prevent or impede the carrying on of the
business of the Company (other than any
restriction, stipulation or covenant specifically
disclosed in the Disclosure Letter).
1. The Retention shall on Completion be paid into an account opened in the
name of the Purchaser's and Vendor's Solicitors as stakeholder with
National Westminster Bank plc, City of London Office, PO Box 12258, 0
Xxxxxxxx Xxxxxx, Xxxxxx XX0X 0XX and operated by a joint signature mandate
("the Retention Account").
2. 2.1 The Vendor at its expense agrees to use all reasonable endeavours to
procure the registration of the Company as registered proprietor of
the Property at H M Land Registry with Perfected Title Absolute
including if necessary to do so commencing proceedings to vest the
Property in the Company pursuant to Sections 44(2)(c) and 51(1)(ii)(c)
of the Trustees Act 1925 or as otherwise proposed by the Vendor and
approved by the Purchaser such approval not to be unreasonably
withheld.
2.2 The Purchaser further agrees to take all reasonable steps necessary
and to provide all reasonable assistance regarding the vesting of the
Property in the Company and effecting such registration including
procuring the execution
- 56 -
of documents necessary for such vesting and registration.
2.3 The Purchaser agrees that the Company, and if necessary the Purchaser,
shall be a party to any proceedings necessary to achieve the vesting
of the Property in the Company and in respect of any such proceedings
to which the Company (or the Purchaser as the case may be) is a party
the Purchaser agrees that it will irrevocably and unconditionally
appoint the Vendors' Solicitors, Messrs. Eversheds of 00 Xxxxx Xxxxxx,
Xxxxxxxxxx X0 0XX (subject to acceptance of those instructions by
Eversheds) to act on its behalf and for the avoidance of doubt such
proceedings shall include any appeal or further applications that
shall be reasonably necessary to achieve the vesting of the Property
in the Company. For the avoidance of doubt, if Eversheds do not accept
instructions from the Purchaser in relation to the above matters then
the Purchaser may instruct such other persons as, in its sole
discretion, it deems necessary.
2.4 The Vendor shall indemnify, and keep indemnified the Purchaser (for
itself and as trustee for the Company) from and against:-
2.4.1 any liability (or any increase in any liability) to taxation
arising pursuant to Part II or Part XVII of ICTA 1988 or Part VI of
the Taxation of Chargeable Gains Xxx 0000 or in respect of any stamp
duty arising solely as a result of the vesting of the legal estate in
the Property in the Company, the registration of the Company as
proprietor of the Property, the transfer of the estate right and
interest (if any) of the Company in the Property pursuant to paragraph
6 of this Schedule and/or any subsequent lease back by the Vendor to
the Company of the Property upon the terms of paragraph 6.2 of this
Schedule.
2.4.2 all costs and expenses, incurred by the Purchaser or Company in
relation to the registration of the Company as proprietor of the
Property, in reviewing the terms of any restrictive covenant indemnity
policy or the Statutory Declaration and in complying with the
Company's obligation to transfer its interest in the Property to the
Vendor pursuant to paragraph 6 below.
2.5 Notwithstanding the provisions of this clause there shall be no
obligation on the Vendor to take any steps to restore Xxxxxx & Xxxxxxx
Group Limited ("THG") to the Register of Companies and the obligation
of the Vendor pursuant to this Schedule to commence proceedings shall
be limited to any other proceedings which would have a reasonable
prospect of success in achieving the vesting of a legal estate in the
Property of the Company.
2.6 The Purchaser shall not and shall procure that the Company shall not
take any steps to return THG to the Register of Companies and if it
shall be in breach of this Clause the Purchaser shall indemnify the
Vendor against all losses (including liability to Taxation) together
with reasonable and proper costs that it may incur by reason of such
breach.
2.7 The Vendor shall continue (after the issue of any such proceedings or
the
- 57 -
making of any such application) to advise the Purchaser on a regular
basis of any developments in relation thereto.
3. If, at any time prior to the expiration of the Further Registration Period
(as defined below):-
3.1 the Purchaser's Solicitors are provided with office copy entries and
filed plan which show the Company to be the registered proprietor of
all of the Property at H M Land Registry with Perfected Title
Absolute;
3.2 the Purchaser's Solicitors are provided with:-
3.2.1 office copy entries and filed plan which show the Company to be
a registered proprietor of all of the Property at H M Land
Registry with Imperfect Title Absolute; and
3.2.2 a restrictive covenant indemnity policy in favour of the
Company to the amount of (pound)536,500 and otherwise in a form
reasonably satisfactory to the Purchaser effected with Norwich
Union or other reputable insurer; or
3.3 the Purchaser's Solicitors are provided with:-
3.3.1 office copy entries and filed plan which show the Company to be
the registered proprietor of all of the Property (save for the
roadway coloured xxxxx on the plan annexed to this Schedule
("xxx Xxxxxxx")) with Perfected Title Absolute ; and
3.3.2 a Statutory Declaration in a form approved by the Purchaser
(such approval not to be unreasonably withheld) showing the
Company to have a prescriptive right of access to and egress
from the Property (excluding the Roadway) over the Roadway on
foot only or with vehicles of any description at any time of
the day or night for all purposes ("the Statutory
Declaration"); or
3.4 the Purchaser's Solicitor's are provided with:-
3.4.1 office copy entries and filed plan which show the Company to be
the registered proprietor of all the Property (save for the
Roadway) with an Imperfect Title Absolute at H M Land Registry;
3.4.2 a restrictive covenant insurance policy in favour of the
Company to the sum of (pound)536,500 in a form reasonably
satisfactory to the Purchaser effected with Norwich Union or
other reputable insurer; and
3.4.3 the Statutory Declaration; or
3.5 the Purchaser's Solicitor's are provided with office copy entries and
filed plan which show the Company to be the registered proprietor of
all of the
- 58 -
Property at H M Land Registry with a Perfected Lesser Title; or
3.6 the Purchaser's Solicitor's are provided with:-
3.6.1 office copy entries and filed plan which show the Company to be
the registered proprietor of all the Property at H M Land
Registry with an Imperfect Lesser Title; and
3.6.2 a restrictive covenant indemnity policy in favour of the
Company to the amount of (pound)536,500 in a form reasonably
satisfactory to the Purchaser effected with Norwich Union or
other reputable insurer; or
3.7 the Purchaser's Solicitor's are provided with:-
3.7.1 office copy entries and filed plan which show the Company to be
the registered proprietor of all the Property (save for the
Roadway) with a Perfected Lesser Title; and
3.7.2 the Statutory Declaration; or
3.8 the Purchaser's Solicitor's are provided with:-
3.8.1 office copy entries and filed plan which show the Company to be
the registered proprietor of all the Property (save for the
Roadway) with Imperfect Lesser Title at H M Land Registry;
3.8.2 a restrictive covenant indemnity policy in favour of the
Company to the sum of (pound)536,500 in a form reasonably
satisfactory to the Purchaser effected with Norwich Union or
other reputable insurer; and
3.8.3 the Statutory Declaration,
then for the purposes of this Schedule immediately upon the provision to
the Purchaser's Solicitors of such relevant document or documents referred
to in this Clause 3 completion of registration shall be deemed to have
occurred ("Completion of Registration").
4 4.1 The Vendor shall be entitled to receive the amount standing to the
credit of the Retention Account (less any Reduction in Value (as
defined below)), plus any accrued interest, within 3 days after the
date upon which either Completion of Registration or the agreement or
determination of the Reduction in Value (if any), whichever is the
later, occurs. Where any of paragraphs 3.5 to 3.8 apply the capital
payable to the Vendor out of the Retention Account shall be reduced by
the Reduction in Value (determined pursuant to paragraph 4.3) and the
balance paid to the Purchaser without interest.
4.2 Interest arising on the Retention Account shall be paid to the Vendor
on the usual quarter days or the earlier closing of the Retention
Account, so long
- 59 -
as the Vendor procures that the Vendor's Solicitors shall sign the
relevant bank instructions to release such sums.
4.3 If any part of the Property shall be registered at H M Land Registry
with title other than title absolute and Completion of Registration
has occurred then the Vendor shall pay to the Purchaser the sum of
(pound)25,000 for compensation for reduction in value of the Property
("the Reduction in Value").
5. If Completion of Registration shall not occur before 31 December 1997 then
the Purchaser shall be entitled to require the sums held in the Retention
Account (but not any interest arising thereon which shall belong and be
paid to the Vendor) to be paid to the Purchaser.
6. If Completion of Registration shall not be effected prior to 1 July 1998 or
such later date (which shall be prior to 31 December 1999) as the Company
shall notify in writing to the Vendor prior to 1 July 1998 ("the Long Stop
Date") the Company shall forthwith after the Long Stop Date transfer to the
Vendor and the Vendor shall accept such transfer all the estate right and
interest (if any) of the Company in the Property without any title
guarantee (the period from and including 1 January 1998 to the Long Stop
Date being "the Further Registration Period") and either:-
6.1 the Purchaser shall procure that the Property is returned to the
Vendor with vacant possession; or
6.2 if the Company fails to give vacant possession of the Property prior
to the Long Stop Date the Vendor shall grant and the Purchaser shall
procure that the Company accepts a Lease ("the Lease") of the Property
the term of which shall commence on the Long Stop Date, which shall
incorporate the following provisions:-
6.2.1 term: 99 years subject to the tenant being entitled to
terminate at not less than 6 and not more than 12 months
written notice served at any time prior to 31 December 1998 and
also being entitled to terminate on each 5th anniversary of the
commencement of the term on not less than 6 months written
notice expiring on the day before the relevant anniversary;
6.2.2 rent: shall be the sum of (pound)53,650 per annum, such rent to
be payable throughout the term of the lease without review, in
advance on the usual quarter days the first payment in respect
of the period commencing on the date of the Lease and ending on
the day before the next following quarter day to be made on the
date of the Lease and the tenant shall also discharge all rates
and other outgoings in respect of the Property;
6.2.3 alienation: assignment of part shall be prohibited. Assignment
of whole shall be permitted subject to obtaining the landlord's
prior written consent (not to be unreasonably withheld). As a
condition of assignment the tenant shall enter into an
authorised guarantee agreement of the assignees liabilities and
shall procure if reasonably
- 60 -
necessary one or more third party guarantors of such liability.
There will be no restrictions on underletting save that during
the first 21 years of the term consent of the Landlord is
required (such consent not to be unreasonably withheld);
6.2.4 alteration/redevelopment: no restrictions save for
reinstatement at the end of the term and not to do anything
which would diminish the value of the Property;
6.2.5 insurance: tenant to insure against fire and all other usual
risks in its full reinstatement value by the Company such
insurance to be in the joint names of the landlord and the
tenant. Such insurance monies to be split between the parties
in accordance with the values of their respective interests in
the Property at the relevant time.
6.2.6 repairing and decorating: tenant covenants to keep demised
premises in same condition as present as evidenced by a
schedule of condition agreed between the parties or in the
absence of agreement determined by the Expert;
6.2.7 compliance with statutory requirements: limited to covenant not
to do anything in contravention of statutory requirements;
6.2.8 the tenant to yield up in accordance with the foregoing;
6.2.9 landlord's covenants quiet enjoyment only;
6.2.10 usual rights to forfeits during first 21 years of the term,
thereafter to only arise for non-payment of rent or other
material breach of covenant; and
6.2.11 such other terms as are found in commercial leases of
industrial premises in the locality at the date hereof.
6.3 For a period of two months prior to 30 June 1998 the Vendor and the
Purchaser shall (each acting in good faith towards the other) use all
reasonable endeavours to settle the terms of the Lease incorporating
the terms referred to in paragraph 6.2 and to complete the same before
the Long Stop Date.
6.4 If after the expiry of one month of the said period during which the
negotiations for the Lease are conducted the Lease is not agreed
either the Vendor or the Purchaser shall be entitled to require that
the terms of the Lease shall be determined by an independent expert
("the Lease Expert") to be appointed on the application of either
party and in the absence of agreement by the President for the time
being of the Law Society. The Lease Expert shall not be entitled to
deviate from the terms set out in this clause 6 (but shall be entitled
to settle the precise terms and incorporate such other provisions in
relation thereto as are applicable in all the circumstances) nor shall
he compensate for any of those terms in the
- 61 -
drafting of other terms not covered by this Schedule.
6.6 Prior to the grant of the Lease the Purchaser shall pay the rates and
other outgoings and observe the terms of paragraph 6.2 (save for
paragraph 6.2.2) as if the Lease were granted to the Purchaser on
Completion and the Vendor shall procure that the Company shall be
entitled to remain in occupation (unless vacated pursuant to paragraph
6.1) as a licensee until the Lease has been granted and during such
term of occupation shall pay a rent for the licence equivalent to, and
discharged by the payment to the Vendor of, the interest credited to
the Retention Account (less any tax due thereon)
7. The Purchaser agrees not to assign transfer or otherwise part with
possession of its interest in the Property (except by transfer to the
Vendor under clause 6) until the Lease is granted to the Purchaser.
8. Pending completion of the Lease the Purchaser agrees to procure the
insurance of the Property against fire and all other usual risks in its
full reinstatement value by the Company such insurance to be in the joint
names of the Company and the Vendor but at the expense of the Company. In
the event of the Property being destroyed or damaged by any of the insured
risks the monies receivable under such policy of insurance shall belong to
the Company and such insurance monies shall be laid out in reinstating the
Property and on receipt of such insurance monies by the Purchaser, if
reinstatement is frustrated, the Vendor shall be entitled to receive a sum
equivalent to the amount of the insurance proceeds received by the
Purchaser from the Retention Account.
9. If during the Further Registration Period, Completion of Registration of
the Property shall be effected then the Purchaser shall forthwith pay to
the Vendor the sum of (pound)536,500 (plus VAT if applicable) less the
Reduction in Value (if any).
10. The Vendor shall indemnify, and keep the Purchaser indemnified from and
against all liability for all sums (including without limitation, losses,
damages, costs and expenses, fines, penalties or compensation) suffered or
incurred by the Purchaser or the Company directly or indirectly:-
10.1 as a result of any third party establishing a better title to the
Property than the Company and the Company not, therefore, having quiet
enjoyment of the Property at ant time during which it remains in
occupation of the Property prior to the grant of the Lease (and for
the avoidance of doubt such indemnity is to cover the reasonable and
proper costs and expenses of relocation of the Company); and
10.2 arising out of or in connection with the terms of an option agreement
("the Option Agreement") dated 31 May 1994 between THG (1) and Xxxx
Xxxxxxxx (2) including (but without prejudice to the generality of the
foregoing) any claim in respect of any instalments of the Option Price
(as defined in the Option Agreement) paid thereunder or any exercise
or purported exercise of the Option (as defined in the Option
Agreement) provided always that the Vendor has conduct of any such
claims or
- 62 -
counterclaims and has the ability to set-off any counterclaim against
Xx Xxxxxxxx.
11. In consideration of the Vendor entering into this Agreement with the
Purchaser at the request of the Guarantor, the Guarantor hereby irrevocably
and unconditionally, as primary obligor, undertakes and guarantees the
full, prompt and complete performance by the Purchaser of:-
11.1 its obligation to procure the transfer by the Company of its interest
in the Property to the Vendor pursuant to paragraph 6 above; and
11.2 its obligations pursuant to paragraph 7 above.
- 63 -
/s/
............................................
SIGNED for and on behalf of
BODYCOTE INTERNATIONAL PLC
/s/
............................................
SIGNED for and on behalf of
ARMOR HOLDINGS LIMITED
/s/
............................................
SIGNED for and on behalf of
ARMOR HOLDINGS INC.
