DATED September 26, 2005
(1) XXXXXXXX INDUSTRIES INC
(2) TCG GUARDIAN 2 LIMITED
------------------------
SHARE SALE AGREEMENT
------------------------
Gateley Wareing LLP
Xxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxxxxxxx X0 0XX
1 Definitions.........................................................1
2 Interpretation......................................................6
3 Sale and Purchase of Shares.........................................7
4 Consideration.......................................................7
5 Conditions..........................................................8
6 Pre-Completion Obligations..........................................10
7 Completion..........................................................12
8 Warranties..........................................................13
9 Limitations.........................................................14
10 Purchaser's Undertakings............................................15
11 Vendor's Undertakings...............................................16
12 Restrictions........................................................17
13 Announcements.......................................................19
14 Further Assurance...................................................20
15 Notices.............................................................20
16 Entire Agreement....................................................21
17 Costs...............................................................22
18 Interest............................................................22
19 Third Party Rights..................................................22
20 Counterparts........................................................22
21 General.............................................................22
22 Applicable Law......................................................23
SCHEDULE 1 - Vendor..........................................................24
SCHEDULE 2 - The Company.....................................................25
SCHEDULE 3 - Properties......................................................26
SCHEDULE 4 - Warranties......................................................27
SCHEDULE 5 - Taxation........................................................45
Part 1 - Definitions and Interpretation......................................45
Part 2 - Tax Covenant........................................................49
Part 3 - Tax Warranties......................................................61
SCHEDULE 6 - Limitations.....................................................66
SCHEDULE 7 - Adjustment of Consideration.....................................72
THIS AGREEMENT IS MADE AS A DEED ON: 2005
PARTIES:
(1) XXXXXXXX INDUSTRIES INC, a company incorporated under the laws of the
State of Delaware in the United States of America having its registered
office at 00000 Xxxx Xxxxxxxx Xxxxxxx, Xxxxx Xx Xxxxxxx XX 00000,
Xxxxxx Xxxxxx of America; and
(2) TCG GUARDIAN 2 LIMITED a company incorporated and registered in
England and Wales (number 5564065) having its registered
office at 000 Xxxxxxxxx Xxxx, Xxxxxxxx XX0 0XX.
INTRODUCTION:
(A) The Vendor is the registered holder and legal and beneficial owner of
the Shares.
(B) The Vendor has agreed to sell and the Purchaser has agreed to purchase
the Shares on and subject to the terms and conditions contained in this
Agreement.
1. Definitions
In this Agreement unless the context otherwise requires the following
definitions will apply:
"Accounts" means the audited financial
statements (including the notes
and the directors' and auditors'
reports annexed thereto) of the
Company and its Subsidiary for the
three accounting periods ended on
the Accounts Date;
"Accounts Date" means 31 December 2004;
"Acquirer" has the meaning given in Clause
12.9;
"Agreed Form" means in a form agreed
between the parties and, for the
purposes of identification only,
initialled by or on behalf of each
of them;
"Aircraft Seating Business" means the
business of manufacturing and
selling seating for aircraft as
carried on by the Company prior to
the date of this Agreement;
"Assumption Agreement" has the meaning given in Clause
12.9;
"Auditors" means Ernst & Young, LLP;
"Business Day" means any day (other than a
Saturday, Sunday or public
holiday) on which banks in the
City of London are generally open
for business;
"CA" means the Companies Xxx 0000 as
amended;
"Claim" means any claim made by the
Purchaser against the Vendor in
relation to this Agreement;
"Company" means NP Aerospace Limited,
details of which are set out in
Schedule 2;
"Completion" means completion of this Agreement
in accordance with Clause 7;
"Completion Accounts" has the meaning given in Schedule
7;
"Completion Date" means close of business on the
date that Completion occurs;
"Conditions" means the conditions set out in
Clause 5.1;
"Connected Person" has the same meaning as in section
839 of ICTA;
"Debt" has the meaning given in Schedule
7;
"Deed of Non-Compete" means a deed of non-compete in
the Agreed Form given on behalf
of the Company in respect of the
Aircraft Seating Business;
"Disclosure Letter" means the letter of the
same date as this Agreement
(together with a bundle of
documents referred to in it) from
the Vendor to the Purchaser
containing the disclosures against
the Warranties and the Tax
Warranties;
"Environment" means air, water and land, all
living organisms and natural or
man-made structures;
"Environmental Insurance Agreed means the terms of the
Terms" pollution legal liability
insurance programme in the Agreed
Form;
"Environmental Law" means any applicable statutes
subordinate legislation and other
national federal European Union
state and local laws (including
common law) rules regulations
orders notices decisions
directives ordinances judgments
or injunctions and judicial and
administrative interpretation of
each of the foregoing each as
is valid and enforceable at
Completion which relates or
applies to Environmental Matters;
"Environmental Matters" the protection of human
health, the protection and
condition of the Environment, the
condition of the workplace, the
generation, transportation,
storage, treatment, emission,
deposit and disposal of any
Hazardous Substance or Waste;
"the Firm" has the meaning given in Schedule
7;
"Freehold Property" means the freehold property owned
by the Company, details of
which are set out in part two of
Schedule 3;
"Hazardous Substances" means any natural or
artificial substance (whether
solid, liquid or gas and whether
alone or in combination with any
other substance or radiation)
capable of causing harm to any
human or other living organism or
the Environment;
"Hive Up Agreement" means the agreement
in the Agreed Form transferring
the Aircraft Seating Business to
be entered into immediately prior
to Completion and made between the
Vendor and the Company;
"ICTA" means the Income and Corporation
Taxes Xxx 0000;
"Insurance Proposal Form" means the AIG
pollution liability proposal form
which forms part of the
Environmental Insurance Agreed
Terms;
"Intellectual Property" means patents,
trademarks, service marks,
registered designs, applications
for any of them, design rights,
copyright, database rights,
inventions, confidential
information, know-how, internet
domain names and business names
(whether registerable or not) in
any country;
"Leasehold Properties" means the leasehold
properties occupied by the
Company, details of which are set
out in part one of Schedule 3;
"Management Accounts" means the unaudited
management accounts of the Company
and its Subsidiary for the period
from the Accounts Date to the
Management Accounts Date;
"Management Accounts Date" means 31 August 2005;
"Material Adverse Event" means an event
arising after the date of this
Agreement and before Completion
which has a material and adverse
effect on the assets, liabilities,
business, condition (financial or
otherwise) or operations
(including financial results of
operations) of the Company and the
Subsidiary as a whole;
"Material Liability" has the meaning given in Clause
5.9;
"Net Working Capital" has the meaning given in Schedule
7;
"OFAC" has the meaning given in paragraph
10.8 of Schedule 4;
"Other Filings" has the meaning given in Clause
5.4;
"PL Claim" has the meaning given in Schedule
6;
"Pension Scheme" means the Scottish Widows managed
NP Aerospace Group Personal
Pension Scheme;
"Previously-owned Land and Buildings" means land and
buildings that have, at any time
before the date of this agreement,
been owned (under whatever tenure)
and/or occupied and/or used by the
Company or its Subsidiary, but
which are either no longer owned,
occupied or used by the Company or
its Subsidiary, or are owned,
occupied or used by one of them
but pursuant to a different lease,
licence, transfer or conveyance;
"Product Liability" has the meaning given in paragraph
13.1 of Schedule 4;
"Prohibited Activities" means the design and manufacture
of ballistic and performance
composites for use in helmets,
body armour and personal
protection systems, light armoured
vehicles, medical systems,
armour plating and protection
systems for vehicles in the
military sector and insofar
as they relate to personal
protection and armoured vehicles
in the military sector
sub-systems and trade mouldings,
as undertaken by the Company in
the 12 months prior to Completion;
"Properties" means the Freehold Property and
the Leasehold Properties;
"Proxy Statement" has the meaning given in Clause
5.3.2;
"Purchaser" means TCG Guardian 2 Limited;
"Purchaser's Group" means, from time to time,
the Purchaser, its sole
shareholder, TCG Guardian 1
Limited or any subsidiary of the
Purchaser or TCG Guardian 1
Limited;
"Purchase Price" means (pound)30,000,000;
"Purchaser's Solicitors" means Xxxxxx & Xxxxxxx of 00
Xxxxxxxxxxx, Xxxxxx XX0X 0XX;
"Recognised Investment Exchange" has the same meaning as in section
285 of the Financial Services
and Markets Xxx 0000;
"Relevant Claim" has the meaning given in paragraph
2.1 of Schedule 6;
"Relevant Third Party Claim" has the meaning given in paragraph
7 of Schedule 6;
"SEC" means the Securities and
Exchange Commission of the United
States of America;
"Shares" means the entire issued share
capital of the Company;
"Shareholders' Meeting" has the meaning given in Clause
5.3.1;
"Subsidiary" means NP Aerospace Jordan WLL,
a company incorporated in the
Hashemite Kingdom of Jordan;
"Supplemental Disclosure Letter" means the
letter of the same date as the
Completion Date (together with a
bundle of documents referred to in
it) from the Vendor to the
Purchaser containing certain
supplemental disclosures against
the Warranties and the Tax
Warranties repeated in accordance
with Clause 8.1;
"Tax" or "Taxation" has the meaning given to it in
Schedule 5 (Taxation);
"Tax Covenant" means the covenants relating
to Tax contained in Part 2 of
Schedule 5;
"Tax Warranties" means the warranties relating
to Tax contained in Part 3 of
Schedule 5;
"Termination Date" has the meaning given in Clause
5.8;
"VAT" has the meaning given in Schedule
5 (Taxation);
"VATA" means the Value Added Tax Xxx
0000;
"Vendor" means Xxxxxxxx Industries Inc;
"Vendor's Group" means the Vendor, any
holding company or subsidiary or
subsidiary undertaking of the
Vendor and any subsidiary or
subsidiary undertaking of any
holding company of the Vendor
excluding the Company and the
Subsidiary;
"Vendor's Solicitors" means Gateley Wareing LLP of
Xxx Xxxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, X0 0XX;
"Warranties" means the warranties set out in
Schedule 4;
"Warranty Claim" means a claim for breach of
the Warranties or the Tax
Warranties; and
"Waste" means all waste, including any
unwanted or surplus substance
irrespective of whether it is
capable of being recycled or
recovered or has any value.
2. Interpretation
2.1 The headings and table of contents in this Agreement are inserted
for convenience only and shall not affect its interpretation or
construction.
2.2 References in this Agreement to Clauses and Schedules are, unless
otherwise stated, references to the Clauses of and Schedules to this
Agreement. References to paragraphs are, unless otherwise stated,
references to the paragraphs of Schedules to this Agreement.
2.3 The Schedules form part of this Agreement and shall have the same
force and effect as if expressly set out in the body of this Agreement.
2.4 References in this Agreement to statutes shall include any statutory
modification, re-enactment or extension of such statute and any orders,
regulations, instruments or other subordinate legislation made pursuant
to such statute provided that any modification, re-enactment or
extension of such statute and any orders, regulations, instruments or
other subordinate legislation made pursuant to such statute shall not
impose additional obligations on, or increase the rights of, any party
to this Agreement.
2.5 In this Agreement, references to:-
2.5.1 the masculine gender shall include the feminine and neuter and vice
versa;
2.5.2 the singular shall include the plural and vice versa; and 2.5.3
"persons" shall include bodies corporate, unincorporated associations
and partnerships.
2.6 Any reference to writing or written includes faxes and any
non transitory form of visible reproduction or words (but not e-mail).
2.7 References to "the Company" in Clauses 6.3, 8 and 12 and in paragraphs
3 and 5 of Schedule 4 shall be deemed also to include the Subsidiary
mutatis mutandis save that any deemed reference to the Subsidiary in
Clause 6.3 shall be qualified by the fact that the Company only owns
51% of the entire issued share capital of the Subsidiary and
accordingly be limited by those actions that the Company is able to
take.
2.8 None of the Warranties or Tax Warranties shall be deemed to include any
reference to the Aircraft Seating Business.
2.9 Any reference to any English legal term for any action, remedy, method
of judicial proceeding, legal document, legal status,
court, official or any legal concept shall, in respect of any
jurisdiction other than England, be deemed to include what most nearly
approximates in that jurisdiction to the English legal term provided in
each case that any such approximate legal term for any action, remedy,
method of judicial proceeding, legal document, legal status, court,
official or any legal concept does not impose additional obligations or
liabilities on any party in excess of those that would have been
imposed under the relative English legal term.
2.10 All undertakings, obligations and liabilities of the Purchaser under
this Agreement shall be deemed to be given on a joint and several basis
with the sole member of the Purchaser, TCG Guardian 1 Limited.
3. Sale and Purchase of Shares
3.1 The Vendor agrees to sell and the Purchaser agrees to purchase all the
Shares free from all encumbrances and with the benefit of all rights
and advantages attaching to them as at Completion.
3.2 The Shares shall be sold with full title guarantee and, subject to
Clause 6.4, with the benefit of all other dividends and distributions
declared, made and paid since the date of this Agreement.
3.3 Neither party shall be obliged to complete this Agreement unless the
sale and purchase of all of the Shares is completed at the same time.
3.4 The Vendor:-
3.4.1 waives any right of pre-emption over or in respect of the Shares
(or any of them) which have been conferred on it under the articles of
association of the Company; and
3.4.2 undertakes to procure that any right of pre-emption over any of the
Shares which is vested in any other persons is waived.
4. Consideration
4.1 The consideration for sale and purchase of the Shares shall be the
Purchase Price, subject to any adjustment provided for in Schedule 7.
4.2 The Purchase Price shall be paid in cash in full on Completion and,
unless the Vendor directs otherwise, shall be sent to LaSalle Bank NA,
000 X. XxXxxxx Xxxxxx, Xxxxxxx, XX 00000, being the Vendor's bank, with
account number XXXXXXXXXX, swift code XXXXXX00, ABA number 000000000
and account name Xxxxxxxx Industries, Inc.
4.3 The receipt of the Vendor will give a good discharge to the Purchaser
for the Purchase Price and the Purchaser shall not be
obliged to see to the application of such monies.
5. Conditions
5.1 Completion of the sale and purchase of the Shares is conditional upon:
5.1.1 the passing at a duly convened and held Shareholders' Meeting of a
resolution to approve the sale of the Shares; and
5.1.2 no Material Adverse Event having occurred.
5.2 The Vendor shall use its reasonable endeavours to procure the
satisfaction of the Condition set out in Clause 5.1.1.
5.3 The Vendor undertakes to the Purchaser that it shall:
5.3.1 duly call, give notice of, convene and hold a meeting of
its shareholders ("the Shareholders' Meeting"), to be held
as soon as practicable after the date of this Agreement,
for the purpose of approving the sale of the Shares and
Completion of this Agreement;
5.3.2 include in a proxy statement to be prepared on behalf of
the Vendor and sent to the Vendor's shareholders ("the
Proxy Statement"):
5.3.2.1 the recommendation of the board of the
directors of the Vendor that the
shareholders of the Vendor vote in favour
of the approval and adoption of this
Agreement; and
5.3.2.2 a statement that it is the determination
of the board of directors of the Vendor
that this Agreement is in the best
interests of, the shareholders of the
Vendor;
5.3.3 as soon as practicable after exchange of this Agreement,
prepare and file a preliminary Proxy Statement with the
SEC and respond promptly to any comments made by the SEC
with respect to the Proxy Statement (in each case with a
copy being sent to the Purchaser) and any preliminary
version thereof and cause the Proxy Statement to be mailed
to its shareholders at the earliest practicable time after
responding to all such comments to the satisfaction of the
staff of the SEC and to obtain the necessary approvals by
its shareholders of this Agreement.
5.4 The Vendor shall promptly prepare and file any other filings required
under the Exchange Act or any other Federal or state securities or
corporate laws of the United States relating to this Agreement ("the
Other Filings").
5.5 The Vendor shall as soon as reasonably practicable notify the Purchaser
of the receipt by it of any material comments from the SEC and of any
request of the SEC for material amendments or supplements to the Proxy
Statement or by the SEC or any other governmental officials with
respect to any Other Filings or for additional information if it is
reasonably likely that such receipt will have an impact upon the timing
of Completion.
5.6 At the Shareholders' Meeting the Vendor shall use reasonable endeavours
to ensure that a majority of the outstanding shares of the Vendor are
voted in favour of approval and adoption of this Agreement.
5.7 Should the Vendor or the Purchaser become aware of anything which will
or is reasonably likely to prevent the Conditions from being satisfied
it shall disclose the same to the other party as soon as reasonably
practicable and in any event before Completion and within two Business
Days of it becoming aware of the matter.
5.8 In the event that the Condition in Clause 5.1.1 is not satisfied (or
waived by the Purchaser) within 120 days of the date of this Agreement
("the Termination Date"), the Purchaser may at its option rescind this
Agreement by notice in writing to the Vendor and the Vendor shall
promptly pay (pound)2,000,000 to the Purchaser in immediately available
funds in full and final settlement of all Claims.
5.9 If:
5.9.1 the Condition in Clause 5.1.2 is not satisfied on the
Completion Date or it becomes apparent on or before
Completion that such Condition will not be satisfied on
the Completion Date; or
5.9.2 the Vendor is or would be at Completion in breach of any
of the Warranties repeated in accordance with Clause 8.1
(including any breaches disclosed in the Supplemental
Disclosure Letter) where the liability arising from such
breach is equal to or greater than (pound)300,000; or
5.9.3 the Vendor is unable to fulfil the obligations on it under
Clause 7 (where such obligations are: (i) wholly within
its control, or (ii) relate to documents to be provided to
any party providing finance to the Purchaser),
then, in any of these circumstances but no others (save in the event of
fraud), the Purchaser may at its option either rescind this Agreement
by notice in writing to the Vendor and waive its right to make any
Claim against the Vendor (save in the event of fraud) or proceed to
Completion and waive its right to make any Warranty Claim in respect of
any such Material Adverse Event and accept the Supplemental Disclosure
Letter and shall not be entitled to bring a Warranty Claim in respect
of a breach of the Warranties repeated in accordance with Clause 8.1 to
the extent that such breach is fairly disclosed in the Supplemental
Disclosure Letter.
5.10 The Vendor shall not be entitled to rescind this Agreement if during
the period between the date of this Agreement and the Completion Date
there is a Material Adverse Event or the Vendor is in breach of the
Warranties repeated in accordance with Clause 8.1.
5.11 If the Purchaser rescinds this Agreement pursuant to Clauses 5.8 or
5.9, the rights of the Vendor which have accrued prior to the date of
rescission shall continue to exist without prejudice to any other right
or remedy available to the Vendor.
5.12 If the Purchaser rescinds this Agreement pursuant to Clauses
5.8 or 5.9, Clauses 1, 2, 9, 15, 17, 19, 21 and 22 shall
survive notwithstanding such rescission.
5.13 On exchange of this Agreement, the Vendor shall deliver the signed
Disclosure Letter to the Purchaser and the Purchaser shall sign a
counterpart of the Disclosure Letter and return it to the Vendor.
6. Pre-Completion Obligations
6.1 From the date of this Agreement, the Purchaser and any persons
authorised by it, shall upon reasonable notice and during normal
business hours be allowed reasonable access to all the premises, books,
records and senior employees of the Company and the Vendor shall allow
access to the Company's senior employees and shall (at the Purchaser's
cost) procure the supply of any information reasonably required by the
Purchaser relating to the Company provided that the Vendor shall not be
obliged to supply any proprietary or confidential information which
does not relate to the Company.
6.2 The Vendor shall procure that (save only as may be necessary to give
effect to this Agreement) neither the Vendor nor any member of the
Vendor's Group shall do any act or allow any omission before Completion
which would constitute a Material Adverse Event.
6.3 In addition and without limiting the effect of Clause 6.2, the Vendor
shall so far as it is able procure that from the date
of this Agreement until Completion:
6.3.1 the business of the Company is carried on in the usual and normal
course;
6.3.2 the Company takes all reasonable steps to preserve the goodwill of its
business; and
6.3.3 (subject to the fiduciary or other legal duties of the
Company's directors) the Company shall not without the
prior consent in writing of the Purchaser (such consent
not to be unreasonably withheld or delayed):
6.3.3.1 make any alteration to its memorandum or
articles of association or any other
document or agreement establishing,
evidencing or relating to its
constitution or operation; or
6.3.3.2 alter the nature or scope of its business;
6.3.3.3 manage its business otherwise than in
accordance with its business and trading
policies and practice to date, except as
may be necessary to comply with changes
in the law; or
6.3.3.4 enter into any transaction other than on arms' length terms; or
6.3.3.5 acquire (whether by one transaction or by
a series of transactions) the whole or a
substantial or material part of the
business, undertaking or assets of any
other person; or
6.3.3.6 incur or reduce any capital expenditure in excess of (pound)50,000 other
than in the ordinary course of business; or 6.3.3.7 other than in the
ordinary course of its business, take any loans, borrowings or other
form of funding or financial facility
or assistance, or enter into any foreign
exchange contracts, interest rate swaps,
collars, guarantees or agreements or
other interest rate instruments or any
contracts relating to derivatives or
differences, or in respect of which the
financial outcome is to any extent
dependent upon future movements of an
index or rate of currency exchange or
interest, or in the future price of any
securities or commodities; or
6.3.3.8 other than in the ordinary course of its
business, grant any loans or other
financial facilities or assistance to or
any guarantees or indemnities for the
benefit of any person or create or allow
to subsist any encumbrance over the whole
or any part of its undertaking, property
or assets; or
6.3.3.9 enter into any joint venture, partnership or agreement for the sharing
of profits or assets; or
6.3.3.10 enter into any death, retirement, profit
sharing, bonus, share option, share
incentive or other scheme for the benefit
of any of its officers or employees or
make any variation (including, but
without limitation, any increase in the
rates of contribution) to any such
existing scheme or effect any key man
insurance; or
6.3.3.11 commence, compromise or discontinue any legal or arbitration
proceedings (other than routine debt collection); or 6.3.3.12
prematurely repay or prepay any loans, borrowings or other financial
facilities or assistance made available to it; or 6.3.3.13 terminate
(without cause)the employment or office of any of its directors,
officers or senior employees (here meaning an
employee whose present gross annual
remuneration exceeds (pound)40,000) or
appoint any new director, officer or
senior employee or consultant or
materially alter the terms of employment
or engagement of any director, senior
employee or consultant; or
6.3.3.14 make or permit any amendment, variation,
deletion, addition, renewal or extension
to or of, or terminate or give any notice
or intimation of termination of, any
contract or arrangement where the
aggregate amount payable or receivable by
the Company thereunder exceeds
(pound)25,000 or breach or fail to comply
with the terms of any contract or
arrangement; or
6.3.3.15 make any offer or tender, or the like,
which is capable of being converted into
an obligation of the Company in excess of
(pound)25,000 by an acceptance of any
other person; or
6.3.3.16 enter into any agreement or obligation to do anything prohibited by
Clauses 6.3.3.1 to 6.3.3.15 inclusive.
6.4 The Purchaser acknowledges that the Company is intending to declare,
make or pay a dividend or dividends to the Vendor in
the period between the date of this Agreement and the Completion Date
and that such dividend or dividends shall not be subject to Schedule 7.
The Vendor agrees to provide the Purchaser with details of any such
dividend declared, made or paid in this period.
6.5 Nothing in Clause 6.3 shall prevent the completion of the Hive Up
Agreement.
7. Completion
Completion of the sale and purchase of the Shares shall take place
at the offices of the Vendor's Solicitors as soon as reasonably
practicable, but not later than 7 Business Days after this Agreement
ceases to be subject to the Conditions. On Completion:-
7.1 the Vendor shall deliver or make available to the Purchaser:-
7.1.1 duly executed transfers of the Shares in favour of the Purchaser;
7.1.2 the certificates for the Shares (or a duly executed indemnity in
the Agreed Form in respect of any missing, lost or
destroyed certificates);
7.1.3 the common seal, certificates of incorporation, any
certificate of incorporation on change of name and
statutory books of the Company made up to the Business Day
before the Completion Date;
7.1.4 the written resignations in the Agreed Form of M T Furry
and B R Xxxxxxx as directors and B R Xxxxxxx and GW
Secretaries Limited as joint secretaries of the Company;
7.1.5 the title deeds to the Properties;
7.1.6 powers of attorney in the Agreed Form in relation to the
exercise of rights attaching to the Shares during the
period commencing on Completion and ending on the date
upon which is no later than two months after the date of
Completion;
7.1.7 evidence reasonably satisfactory to the Purchaser that the
transaction contemplated by the Hive Up Agreement has
taken place;
7.1.8 the Hive Up Agreement duly executed by the Vendor and the Company;
7.1.9 evidence reasonably satisfactory to the Purchaser that the
policy of insurance detailed in the Environmental
Insurance Agreed Terms has been put on risk, the relevant
premium has been paid and the policy document has been (or
will be) issued and is (or will be) in the possession of
the Company;
7.1.10 a deed of release and, if applicable, a form DS1 in the
Agreed Form signed by or on behalf of Lasalle National
Bank Corporation; and
7.1.11 all other documentation in the Agreed Form to which the Vendor is a
party, duly executed by the Vendor; 7.2 the Vendor shall procure that a
board meeting of the Company is held at which:- 7.2.1 such persons as the
Purchaser may nominate as directors and secretary are appointed; 7.2.2
the share transfers referred to in Clause 7.1.1 are approved, subject
only to stamping; and 7.2.3 its registered office is changed to
000 Xxxxxxxxx Xxxx, Xxxxxxxx, Xxxx Xxxxxxxx XX0 0XX; 7.3 the Purchaser
shall:- 7.3.1 deliver to the Vendor a certified copy of the minutes of a
meeting of the Purchaser's board of directors approving, inter alia,
the entry by the Purchaser into, and performance of, this Agreement and
all documents in the Agreed Form;
7.3.2 pay the Purchase Price together with any amounts owed by
the Company to the Vendor to the Vendor in accordance with
Clause 4.2;
7.3.3 pay an amount of (pound)246,989.40 (also to the account
detailed in Clause 4.2) being the amount of the premium
payable in accordance with the Environmental Insurance
Agreed Terms less (pound)100,000;
7.3.4 procure the delivery by the Company of a duly executed counterpart of
the Deed of Non-Compete; and
7.3.5 deliver to the Vendor a counterpart of the Supplemental
Disclosure Letter and all other documents in the Agreed
Form to which the Purchaser is a signatory each duly
executed by the Purchaser.
7.4 The Vendor shall deliver to the Purchaser a draft of the Supplemental
Disclosure Letter in substantially final form no less than 3 Business
Days prior to the Completion Date.
8. Warranties
8.1 The Vendor warrants to the Purchaser in the terms of the Warranties and
the Tax Warranties as at the date of this Agreement. The Vendor further
agrees to warrant in the terms of the Warranties and the Tax Warranties
immediately prior to Completion by reference to the facts and
circumstances subsisting at that time.
8.2 Where any Warranties or Tax Warranties are given subject to a
qualification by reference to the awareness, knowledge or belief of the
Vendor, they are given (unless otherwise specified) on the basis that
the Vendor has carried out all reasonable enquiries of Xxxxx Xxxxxxx,
Xxxx Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxx into the subject matter of
the Warranty or the Tax Warranty (as the case may be) and additionally
all reasonable enquiries of Xxxxxx Cheese and Xxxxxxx Xxxxx in relation
to Warranty 29 (environmental) only.
8.3 Subject to Clause 8.7, the Warranties and the Tax Warranties are given
subject to and are qualified by all facts, matters and information
fairly disclosed in the Disclosure Letter and the Warranties and the
Tax Warranties as repeated at Completion in accordance with Clause 8.1
are given subject to and are qualified by all facts, matters and
information fairly disclosed in the Disclosure Letter and in the
Supplemental Disclosure Letter.
8.4 Each of the Warranties and the Tax Warranties is intended to give
rise to a separate and independent obligation on the part
of the Vendor.
8.5 Save in the event of fraud or dishonesty the Vendor agrees with the
Purchaser to waive any right which it has in respect of any
misrepresentation, inaccuracy or omission in any information supplied
or given by the Company's employees to the Vendor in enabling it to
give the Warranties. Any of the Company's employees may (subject to the
consent of the Purchaser) enforce the terms of this Clause 8.5 subject
to and accordance with the Contracts (Rights of Third Parties) Xxx
0000, however their consent to any amendment of this Clause is not
required.
8.6 Without prejudice to Clause 8.3, the Vendor shall (i) notify the
Purchaser of any matter which is a breach of the Warranties or the Tax
Warranties, and (ii) disclose in the Supplemental Disclosure Letter,
any matter which arises after the date of this Agreement and before
Completion which is or would be a breach of the Warranties or the Tax
Warranties when repeated immediately prior to Completion but not, for
the avoidance of doubt any matter which was in existence at the date of
this Agreement.
8.7 Notwithstanding Clause 8.4, the Purchaser agrees with the Vendor that
the only Warranties to be given in relation to Environmental Matters
are those set out in paragraph 29 of Schedule 4 and the facts matters
and information fairly disclosed against each individual Warranty in
paragraphs 29.1 to 29.8 of Schedule 4 shall be such facts, matters and
information as are specifically disclosed against each individual
Warranty in paragraphs 29.1 to 29.8 of Schedule 4.
9. Limitations
The Purchaser agrees with the Vendor that all Claims shall be limited
by the provisions of Schedule 6 which shall remain in full force and
effect and applicable in all circumstances and shall not be discharged
in whole or in part by any actual or alleged breach of any term of this
Agreement.
10. Purchaser's Undertakings
10.1 The Purchaser warrants to the Vendor that it is not actually aware of
any fact, matter or circumstance that constitutes a breach of any
Warranty or Tax Warranty and which will give rise to any Claim against
the Vendor.
10.2 The Purchaser warrants to the Vendor as at the date of this Agreement
that:
10.2.1 it has the corporate power to enter into and perform this
Agreement and any other deeds and agreements to be entered
into pursuant to this Agreement;
10.2.2 this Agreement (and the agreements to be entered into
pursuant to this Agreement) should, when executed,
constitute obligations binding on the Purchaser in
accordance with their terms;
10.2.3 the signing of, and the performance by the Purchaser of
its obligations pursuant to, this Agreement (and any
agreements to be entered into pursuant to this Agreement)
should not breach any obligation under:
10.2.3.1 any material contract or agreement to which the Purchaser is a party;
or
10.2.3.2 any order, judgement, ordinance or regulation imposed by any regulatory
body or court having jurisdiction over the Purchaser; 10.2.4 no
consent, authorisation licence or approval of the shareholders of the
Purchaser or of any governmental, administrative,
judicial or regulatory body or authority is required to
authorise the execution delivery, validity, enforceability
or admissibility in evidence of this Agreement or any
other document in Agreed Form or the performance by the
Purchaser of its obligations under them.
10.3 The Purchaser agrees to warrant in the terms of the warranties set out
in Clauses 10.1 and 10.2 on the Completion Date.
10.4 The Purchaser agrees to keep safe all books and records relating to
the Company prior to Completion and to give the Vendor
and its respective representatives or advisers (including any insurer)
reasonable facilities on reasonable notice to inspect and take copies
and extracts from them at all reasonable times and at the Vendor's
expense from the date of this Agreement until the earlier of the sixth
anniversary of Completion and any time limit prescribed by law.
10.5 The Purchaser shall use all reasonable endeavours to procure that,
following Completion, the Vendor shall be released from all guarantees,
obligations and indemnities given by the Vendor and disclosed in the
Disclosure Letter in respect of any of the obligations of the Company.
The Purchaser agrees to indemnify the Vendor from and against all
losses, liabilities, claims, costs and expenses arising directly or
indirectly under such guarantees, obligations and indemnities (whether
relating to liabilities incurred prior to or after Completion under
such guarantees, obligations and indemnities).
10.6 The Purchaser acknowledges that:
10.6.1 all services provided by the Vendor to the Company
(including without limitation group insurance
arrangements) shall cease with effect from Completion; and
10.6.2 nothing in this Agreement or the documents in Agreed Form
shall be construed as conferring by implication, estoppel
or otherwise any rights or licence in any Intellectual
Property of the Vendor.
10.7 The Purchaser shall ensure that:
10.7.1 except for purely historical references, all references to
the Vendor and all links to its website are removed from
all internet web pages controlled by the Company within 5
Business Days of Completion;
10.7.2 all documents, notices or correspondence received by the
Purchaser or the Company after Completion which do not
relate to the Company are promptly passed to the Vendor;
10.7.3 it shall cease using the name or logo of the Vendor with immediate
effect following Completion;
10.7.4 it shall remove any reference to the Vendor (and/or its
name or logo) from its signage at the Properties and from
all motor vehicles within sixteen weeks of Completion;
10.7.5 it shall remove any reference to the Vendor (and/or its
name or logo) from its sales literature, brochures and
other promotional materials within eight weeks of
Completion.
11. Vendor's Undertakings
11.1 The Vendor shall use all reasonable endeavours to procure that,
following Completion, the Company shall be released from all
guarantees, obligations and indemnities given by the Company in respect
of any of the obligations of the Vendor. The Vendor agrees to indemnify
the Purchaser from and against all losses, liabilities, claims, costs
and expenses arising directly or indirectly under such guarantees,
obligations and indemnities (whether relating to liabilities incurred
prior to or after Completion under such guarantees, obligations and
indemnities).
11.2 The Vendor shall ensure that:
11.2.1 except for purely historical references, all references to
the Company and all links to its website are removed from
all internet web pages controlled by the Vendor within 5
Business Days of Completion;
11.2.2 all documents, notices or correspondence received by the
Vendor or any member of the Vendor's Group after
Completion which relate to the Company are promptly passed
to the Purchaser;
11.2.3 it shall cease using the name or logo of the Company with immediate
effect following Completion;
11.2.4 it shall remove any reference to the Company (and/or its
name or logo) from its signage at the Properties and from
all motor vehicles within sixteen weeks of Completion;
11.2.5 it shall remove any reference to the Company (and/or its
name or logo) from its sales literature, brochures and
other promotional materials within eight weeks of
Completion.
11.3 To the extent that any of the insurances of the Company (which also
cover other companies within the Vendor's Group) previously in force or
in force immediately prior to Completion allow the Company to make or
continue claims after Completion in respect of an insured period prior
to Completion, the Vendor shall use all reasonable efforts to
co-operate with the Purchaser in submitting such claims and the
Purchaser shall reimburse and indemnify the Vendor for all costs and
expenses of any nature incurred by the Vendor as a result of submitting
such claims. To the extent that the Vendor or a member of the Vendor's
Group receives any payment under any policy relating to or arising out
of any loss incurred that relates to the business of the Company or its
Subsidiary prior to Completion, any such payment shall be remitted by
such party to the Purchaser as soon as reasonably practicable after
receipt (less, in each case, the reasonable costs and expenses of the
Vendor or a member of the Vendor's Group).
11.4 The Vendor agrees to indemnify the Purchaser and the Company and hold
them harmless from and against any actions, claims, demands and
proceedings from time to time made against them and all losses,
damages, payments, costs and expenses (including reasonable legal costs
and expenses) made, suffered or incurred by them in relation to the
Aircraft Seating Business.
12. Restrictions
12.1 The Vendor undertakes to the Purchaser on behalf of itself and every
member of the Vendor's Group that it will not, without the prior
written consent of the Purchaser, for a period of two years following
Completion:-
12.1.1 carry on or be engaged, concerned or financially
interested, directly or indirectly in any Prohibited
Activities anywhere in the world; or
12.1.2 solicit or entice any of the senior employees of the
Company who were engaged in a managerial capacity or who
have had direct contact with major suppliers in the course
of their duties to cease working for the Company; or
12.1.3 knowingly interfere in the relationships between the Company and its
suppliers, customers and professional contacts.
12.2 The Vendor further undertakes to the Purchaser that neither it nor
any member of the Vendor's Group will, without the prior
written consent of the Purchaser:-
12.2.1 hold itself out as having any continuing involvement with the Company;
12.2.2 disclose or use (or authorise any third party to disclose
or use) any confidential information concerning or used by
the Company, save to the extent that disclosure of such
information is required to satisfy any obligations imposed
by law or the rules of any Recognised Investment Exchange
or is otherwise required by the Vendor to complete any
accounting, taxation or other administrative submissions
or returns; or
12.2.3 use, whether as a trade xxxx, a company name or trading
name the name "NP Aerospace" or any other name or trade
xxxx currently used by the Company in connection with its
business activities (or any other names or trade marks
which are identical to or liable to be confused with such
names).
12.3 The restrictions contained in Clauses 12.1 and 12.2 shall apply to
any action carried out by the Vendor whether on their own
behalf or jointly with any other company.
12.4 Each of the restrictions contained in Clauses 12.1 and 12.2 are to be
treated as separate obligations, independent of the others.
12.5 If, however, any of the restrictions in Clauses 12.2 and 12.3 are found
by a court to be illegal, void, invalid, unreasonable or unenforceable
under the laws of any jurisdiction then the legality, validity or
enforceability of the remainder of this Agreement in that jurisdiction
shall not be affected and this Agreement shall not be affected in any
other jurisdiction.
12.6 If any restriction or undertaking is found by any court or other
competent authority to be void or unenforceable the parties shall
negotiate in good faith to replace such void or unenforceable
restriction or undertaking with a valid provision which, as far as
possible, has the same commercial effect as that which it replaces.
12.7 Nothing in Clause 12.1 shall prevent the Vendor from:
12.7.1 continuing to trade with its existing (or future)
customers or suppliers providing that such trade is not in
relation to the Prohibited Activities;
12.7.2 placing a general recruitment advertisement which may come
to the attention (but is not specifically directed at) any
of the persons referred to in Clause 12.1.2;
12.7.3 holding shares in any company conferring not more than 5% of the
votes ordinarily to be cast at a general meeting of that
company.
12.8 The Purchaser undertakes to the Vendor on behalf of itself and every
member of the Purchaser's Group that they will not, without the prior
written consent of the Vendor disclose or use (or authorise any third
party to disclose or use) any confidential information concerning the
Vendor or any of its Connected Persons which has come into its
possession as a result of the negotiation, preparation and completion
of this Agreement, save to the extent that disclosure of such
information is required to satisfy any obligations imposed by law or
the rules of any Recognised Investment Exchange or is otherwise
required by the Purchaser to complete any accounting, taxation or other
administrative submissions or returns.
12.9 In the event that the Vendor itself is, or substantially all of the
business and assets of the Vendor are, sold to a third party at any
time within 18 months of the Completion Date, it shall be a
pre-condition to that transaction that the ultimate parent or holding
company of such third party or, if inapplicable, the third party
purchaser itself ("Acquirer") enters into a binding agreement
("Assumption Agreement") to assume all obligations of the Vendor under
this Agreement. In the event that the foregoing conditions are not
satisfied, it shall be a pre-condition to such sale that an escrow
account is set up in accordance with Clause 12.11.
12.10 In the event of a liquidation of the Vendor, it shall be a
pre-condition to any resolution for the winding up of the Vendor that
an escrow account is set up in accordance with Clause 12.11.
12.11 If Clauses 12.9 or 12.10 shall apply, the Vendor shall place and
maintain the following amounts in escrow (which shall be held in a
separately designated account opened in the joint names of the Vendor
and the Purchaser and be subject to a duly executed escrow account
instruction letter in the Agreed Form) to cover any Claims for the
following periods of time until the date which is 18 months from the
Completion Date:
12.11.1 (pound)5,000,000 commencing on the first day of the first
month after the Completion Date and ending at the expiry
of the last day of the sixth month after the Completion
Date;
12.11.2 (pound)3,000,000 commencing on the first day of the
seventh month after the Completion Date and ending at the
expiry of the last day of the twelfth month after the
Completion Date; and
12.11.3 (pound)2,000,000 commencing on the first day of the
thirteenth month after the Completion Date and ending at
the expiry of the last day of the eighteenth month after
the Completion Date.
13. Announcements
Save as required by law, the SEC or by the rules of any Recognised
Investment Exchange and save in relation to any announcement made or
sent by any institutional shareholder of the Vendor to trade press,
investors or financial institutions, no announcement relating to the
sale and purchase of the Shares shall be made by either party without
the prior written consent of the other (which shall not be unreasonably
withheld or delayed).
14. Further Assurance
The Vendor shall, at the Purchaser's cost after Completion, do or
procure the doing of such acts and things or sign all such deeds and
documents as are necessary or may be reasonably requested by the
Purchaser to transfer title to the Shares to the Purchaser pursuant to
the terms of this Agreement or otherwise to give the Purchaser the full
benefit of this Agreement, save that this obligation shall not extend
to the carrying out of any acts or things or the signing of any deeds
or documents in relation to any proceedings against the Vendor or the
payment by the Purchaser of any stamp duty in relation to the transfer
of the Shares.
15. Notices
15.1 Any notice required to be given pursuant to this Agreement shall unless
otherwise provided be in writing signed by, or on behalf, the person
issuing the notice. Notices may be served by personal delivery, prepaid
first class post (including an internationally recognised business
courier) or facsimile transmission:-
15.1.1 in the case of the Vendor, to its address as set out in
Schedule 1 or such other address for service as it may
from time to time notify to the Purchaser (with a copy in
each case to the Vendor's Solicitors (Ref: PAH) and to
Xxxxxx Xxxxxxx, Attorneys PC of Xxx Xxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxxxxx, Xxxxxxx 00000-0000 (fax number 001 317
713 3699)); and
15.1.2 in the case of the Purchaser, to its registered office for the time
being.
15.2 Notices served in accordance with Clause 15.1 shall be deemed to
have been received:-
15.2.1 if delivered personally, upon delivery;
15.2.2 if served by prepaid first class post, at the close of business on the
second Business Day after posting; and 15.2.3 if sent by fax, when
despatched, subject to confirmation of uninterrupted transmission by a
transmission report, provided
that any notice despatched by fax after 17.00 hours (at
the place where such fax is to be received) on any day
shall be deemed to have been received at 09.30 on the next
Business Day.
15.3 In proving service by post, it will be necessary to prove that the
notice was properly stamped, addressed and posted.
15.4 In this clause, "notice" shall include any request, communication,
demand, instruction but shall not apply in relation to the service of
any claim form, application notice, order, judgement or other document
relating to or in connection with any proceedings.
15.5 The Vendor appoints Gateley Wareing LLP of Xxx Xxxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx X0 0XX (Ref: PAH/41022) as its process agent to receive on
its behalf service of process in any proceedings in England. Service
upon the process agent shall be good service upon the Vendor whether or
not it is forwarded to and received by the Vendor. If for any reason
the process agent ceases to be able to act as process agent, or no
longer has an address in England, the Vendor irrevocably agrees to
appoint a substitute process agent with an address in England
acceptable to the Purchaser and to deliver to the Purchaser a copy of
the substitute process agent's acceptance of that appointment within 20
Business Days. In the event that the Vendor fails to appoint a
substitute process agent, it shall be effective service for the
Purchaser to serve the process upon the last known address in England
of the last known process agent for the Vendor notified to the
Purchaser, notwithstanding that such process agent is no longer found
at such address or has ceased to act.
16. Entire Agreement
The parties acknowledge that this Agreement has been negotiated on the
basis that:-
16.1.1 this Agreement and the related documents in the Agreed
Form contain the entire agreement and understanding of the
parties in connection with the sale and purchase of the
Shares, and supersedes and extinguishes all previous
agreements between the parties relating to such sale and
purchase;
16.1.2 this Agreement has been freely negotiated between the parties, each of
whom has received independent legal advice; and 16.1.3 it is reasonable for each
party to assume that, unless the other parties have asked for any oral
representations to be
continued within or incorporated into this Agreement and
such oral representations have been continued within or
incorporated into this Agreement, it is not relying upon
the oral representation,
and accordingly the parties agree that no party will in any respect be
responsible for any oral representations made to any other party or
their respective representatives during the course of negotiations
leading to exchange of this Agreement whether under sections 2(1) or
2(2) of the Xxxxxxxxxxxxxxxxx Xxx 0000 or otherwise, save to the extent
that they are incorporated into this Agreement or have been made
fraudulently.
16.2 No variations to this Agreement shall be effective unless made in
writing and signed by all of the parties to this Agreement.
16.3 If at any time any provision of this Agreement is or becomes unlawful,
invalid or unenforceable in any respect, then the
legality, validity and enforceability of the remaining provisions of
this Agreement shall not be impaired or affected in any way.
16.4 At Completion, the Vendor will cooperate with the Purchaser to seek to
procure that, to the extent permitted, the benefit of all
confidentiality and non-disclosure agreements and undertakings entered
into with other potential buyers and still in force and effect shall be
assigned to the Purchaser, but only to the extent that such assignment
relates to the business of the Company and its Subsidiary and is not
prevented by the terms of such agreements.
17. Costs
Each party shall bear the costs of its own financial, accounting and
legal advice in relation to the preparation, negotiation, signing and
completion of this Agreement.
18. Interest
If any moneys due under this Agreement are not paid in full on the due
date for payment, they will bear interest at a rate 2% per annum above
the base lending rate of HSBC Bank PLC from time to time in force, such
interest to be paid monthly in arrears on the last Business Day of each
month. Interest will accrue and be payable both before and after
judgment and, if not paid when due, will be compounded and itself bear
interest in accordance with this Clause 18.
19. Third Party Rights
Unless otherwise stated in this Agreement, no person, other than the
Vendor and the Purchaser, may enforce or rely upon this Agreement under
the Contracts (Rights of Third Parties) Xxx 0000.
20. Counterparts
This Agreement may be executed in any number of counterparts and by the
parties on different counterparts, each of which when executed and
delivered shall be an original. All the counterparts shall together
constitute one and the same agreement, which shall be deemed executed
when counterparts executed by all of the parties to this Agreement are
delivered.
21. General
21.1 This Agreement shall remain in full force and effect after Completion
in respect of any matters or conditions which shall not have been done,
observed or performed in full on or before Completion and the
Warranties and all other obligations given or undertaken shall, subject
to Schedule 6, continue in full force and effect notwithstanding
Completion.
21.2 Following Completion, the Purchaser agrees that a breach by the Vendor
of any of the terms of this Agreement shall not entitle the Purchaser
to rescind or repudiate this Agreement.
21.3 The benefit of this Agreement is personal to the parties and no party
may assign the benefit of this Agreement to any other person without
the prior written consent of the other party save that the Purchaser
may assign any or all of its right and benefits under this Agreement to
any lender as security for its loan or to any member of the Purchaser's
Group on the conditions that (if assigned to a member of the
Purchaser's Group):
21.3.1 any such assignee remains a member of the Purchaser's Group; and
21.3.2 before such assignee ceases to be a member of the
Purchaser's Group, the Purchaser will procure that the
benefit of this Agreement is assigned to the Purchaser or
a remaining member of the Purchaser's Group; and
21.3.3 the liability of the Vendor to the Purchaser's assignee
shall be no greater than the liability (if any) of the
Vendor to Purchaser had the assignment not taken place.
21.4 Any party may release or compromise the whole or any part of the
liability of any other party under any provision of this Agreement, or
grant to any other party time or other indulgence, without affecting
the liability of that party. No waiver by any party of, or delay in
enforcing, any of the provisions of this Agreement shall release any
other party from full performance of its remaining obligations under
this Agreement.
21.5 No failure to exercise or delay in exercising or enforcing any right,
power or remedy under this Agreement shall constitute a waiver of such
right, power or remedy. No partial exercise or enforcement or
non-exercise or non-enforcement of any right, power or remedy under
this Agreement shall in any circumstances preclude or restrict any
further or other exercise or enforcement of such right, power or remedy
or the exercise or enforcement of such right, power or remedy against
any other party.
21.6 The rights, powers and remedies provided in this Agreement are
cumulative, and not exhaustive, of any rights powers and remedies
provided by law.
22. Applicable Law
This Agreement shall be governed by and interpreted in accordance with
English Law. The parties agree to submit to the non-exclusive
jurisdiction of the English Courts in relation to any claim or matter
arising under this Agreement.
IN WITNESS of which the parties have signed this Agreement on the date set out
above.
SCHEDULE 1
Vendor
-------------------------------------------------------------------------------
(1) (2) (3)
Name and Addresses Number of Shares Sold Purchase Price ((pound))
-------------------------------------------------------------------------------
Xxxxxxxx Industries Inc. 100,000 30,000,000
00000 Xxxx Xxxxxxxx Xxxxxxx
Xxxxx Xx Xxxxxxx
Xxxxxxxxxx
Xxxxxx Xxxxxx of America
-------------------------------------------------------------------------------
TOTAL 100,000 30,000,000
SCHEDULE 2
The Company
-------------------------------------------------------------------------------
Name NP Aerospace Limited
-------------------------------------------------------------------------------
Number 3472480
-------------------------------------------------------------------------------
Date of Incorporation 27/11/1997
-------------------------------------------------------------------------------
Place of Incorporation England and Wales
-------------------------------------------------------------------------------
Registered Office Xxx Xxxxxx, Xxxxxx Xxxxxx,
Xxxxxxxxxx, X0 0XX
-------------------------------------------------------------------------------
Authorised Share Capital (pound)100,000 divided into
100,000 ordinary shares of (pound)
1 each
-------------------------------------------------------------------------------
Issued Share Capital (pound)100,000 registered as
follows:-
-------------------------------------------------------------------------------
Member No. of shares
---------------------------------
Xxxxxxxx Industries
Inc 100,000
---------------------------------
-------------------------------------------------------------------------------
Directors B R Xxxxxxx
M T Furry
R T A Medwell
X X Xxxxxxxx
-------------------------------------------------------------------------------
Secretaries GW Secretaries Limited
B R Xxxxxxx
-------------------------------------------------------------------------------
Accounting Reference Date 31/12
-------------------------------------------------------------------------------
Last Accounts Filed 31/08/2004
-------------------------------------------------------------------------------
Last Annual Return Filed 06/12/2004
-------------------------------------------------------------------------------
Auditors Ernst & Young
-------------------------------------------------------------------------------
Charges Date
Registered Document Chargee
----------- --------- -------
23/12/2004 Debenture Lasalle
Bank
National
Association
--------------------------------------------------------------------------------
SCHEDULE 3
Properties
Leasehold
---------
Description Date of Lease Present Rent Title Number
------------------------------ ----------------------- ---------------------------- -----------------------------
Warehouse premises at 16 February 2004 (pound)15,600 per annum Not applicable
Xxxxxxxxxxx Road, Foleshill, (exclusive of VAT)
Xxxxxxxx, XX0 0XX
------------------------------ ----------------------- ---------------------------- -----------------------------
Units 3 and 4 Goodlife 6 January 2005 (pound)5,200 per annum Not applicable
House, Brooklyn Road, (exclusive of VAT)
Coventry
------------------------------ ----------------------- ---------------------------- -----------------------------
Licence of Ballicom House, 30 November 2004 (pound)666.66 per month Not applicable
000 Xxxxxxxxx Xxxx, (exclusive of VAT)
Xxxxxxxx, XX0 0XX
------------------------------ ----------------------- ---------------------------- -----------------------------
Licence of Farlane House, 4 January 2005 (pound)30,000 per annum Not applicable
Xxxxxxxx Street, Coventry, (exclusive of VAT)
XX0 0XX
------------------------------ ----------------------- ---------------------------- -----------------------------
Freehold
--------
Description Title Number
--------------------------------------------------------- ---------------------
--------------------------------------------------------- ---------------------
000 Xxxxxxxxx Xxxx, Xxxxxxxx, XX0 0XX WM567469
--------------------------------------------------------- ---------------------
SCHEDULE 4
Warranties
1. Capacity
1.1 The Vendor has the corporate power to enter into and perform this
Agreement and any other deeds and agreements to be entered
into pursuant to this Agreement.
1.2 The signing of, and the performance by the Vendor of its obligations
pursuant to, this Agreement (and any agreements to be entered into
pursuant to this Agreement) should not breach any obligation under:-
1.2.1 any material contract or agreement to which the Vendor is a party; or
1.2.2 any order, judgement, ordinance or regulation imposed by any regulatory
body or court having jurisdiction over the Vendor.
2. Information
2.1 The information set out in Schedules 2 and 3 is accurate in all
material respects.
2.2 Neither the Vendor nor the Company has agreed to pay any person any
commission, bonus or like payment upon the sale of the
Shares (whether or not sold to the Purchaser).
2.3 No person, other than the Purchaser, has been provided with any
confidential information relating to the Company in relation
to the sale of the Shares.
2.4 The Vendor has not caused the Company to incur, assume or discharge any
liability, including any liability for professional costs and expenses,
in relation to the sale of the Shares.
2.5 The Vendor is not, and has not in the twelve months prior to Completion
been, involved, engaged or interested in any other company or business
that substantially competes with the operation of the Company.
3. Ownership of Shares
3.1 The Shares are fully paid or credited as fully paid and constitute the
whole of the issued share capital of the Company.
3.2 None of the Shares were allotted at a discount.
3.3 The Vendor is the legal and beneficial owners of the Shares free from
all charges, liens or encumbrances.
4. Subsidiaries and Groups
4.1 The Company is not the owner or registered holder of any share, loan
capital, interest, equity in or other security of any
body corporate (wherever incorporated) nor has it agreed to become the
owner or registered holder of any such share, loan capital, interest,
equity or other security.
4.2 The Company has never had a participating interest in any other company
or undertaking.
4.3 The Company has not since its incorporation been a subsidiary of any
body corporate (wherever incorporated).
4.4 The Company is not a party to any joint venture agreement or a
member of any partnership or unincorporated company or
association.
4.5 The Company does not have any branch, place of business or any
substantial assets outside the United Kingdom.
5. Share Capital
5.1 No shares in the capital of the Company have been issued, nor has any
transfer of shares been registered, otherwise than in
accordance with the articles of association of the Company in force at
the relevant time.
5.2 The Company has not at any time:-
5.2.1 purchased or redeemed or agreed to purchase or redeem any shares of any
class of its share capital;
5.2.2 reduced or agreed to reduce its issued share capital or any class
of its share capital; or 5.2.3 issued any shares for a consideration
payable otherwise than in cash.
5.3 No person has the right to call for the issue of any share or loan
capital of the Company under any option or other agreement.
5.4 There are no rights or pre-emption over or restrictions relating to the
transfer of the Shares which apply on the sale of the Shares to the
Purchaser other than those waived by the Vendor under this Agreement.
6. Directors
6.1 The only directors of the Company are the persons listed in Schedule 2.
6.2 No person is a shadow director of the Company.
7. Accounts and Financial Matters
7.1 The Accounts which are annexed to the Disclosure Letter:-
7.1.1 were prepared in accordance with generally accepted
accounting principles and practices in the United Kingdom,
consistently applied;
7.1.2 complied with applicable financial reporting standards
adopted or issued by The Accounting Standards Board
applicable to a United Kingdom company;
7.1.3 gave a true and fair view (save that the directors' report
gave a fair review only) of the state of affairs of the
Company as at the Accounts Date; and
7.1.4 gave a true and fair view of the profit and loss of the Company for the
financial period ended on the Accounts Date.
7.2 The Company has no known liabilities which were not adequately provided
for in the Accounts.
7.3 The Company will have no outstanding Creditors (as such term is defined
in the Hive-Up Agreement) as at the Completion Date.
8. Management Accounts
8.1 Recognising the purpose for which they were prepared and that they are
unaudited, the Management Accounts fairly present the financial
position of the Company as at the date to which they were prepared.
8.2 The Management Accounts have been prudently prepared on a basis
consistent with the management accounts prepared in the
preceding three years.
9. Business Since the Accounts Date
Since the Accounts Date:-
9.1 the business of the Company has been carried on in the ordinary course
as a going concern;
9.2 the Company has not incurred or agreed to incur any material liability
otherwise than in the ordinary course of business;
9.3 there has been no Material Adverse Event;
9.4 the Company has not incurred any material expense or made any material
payment otherwise than in the ordinary course of business;
9.5 the Company has not borrowed any money which it has not repaid,
otherwise than borrowing on overdrawn current account incurred in the
ordinary course of business within limits agreed with the Company's
bankers;
9.6 the Company has not entered into or agreed to enter into any capital
transaction as vendor, purchaser, lessor or lessee or undertaken any
transaction on its capital account or acquired or disposed of any
capital assets with a value in excess of (pound)25,000;
9.7 no real property of the Company has been (or agreed to be) transferred,
leased, mortgaged, sold, encumbered or made the subject of any dealing,
option or agreement, other than current assets purchased and sold in
the ordinary course of trading;
9.8 the Company has not paid or declared any dividend or other
distribution, whether of capital or income;
9.9 the Company has paid its creditors in accordance with its usual
practice;
9.10 no major supplier to the Company has ceased to supply it;
9.11 the Company has not acquired or agreed to acquire any real property;
9.12 there has been no increase in the rate of remuneration of the directors
and/or employees of the Company;
9.13 the Company has not dismissed or ceased to employ any of its employees
other than for cause; and
9.14 no loan to or loan capital of the Company has been repaid, in whole
or in part, or has become due and payable or liable (with or without
notice or lapse of time or both) to be declared due and payable.
10. Litigation and Compliance
10.1 Apart from routine debt collection or claims in respect of motor
vehicles which are covered by insurance, the Company is not at present
engaged, whether as claimant or defendant in any legal action,
proceedings or arbitration.
10.2 There are no circumstances of which the Vendor is currently aware
which would give rise to any legal action, proceedings or
arbitration against the Company.
10.3 The Company is not subject to any outstanding order or judgment given
by any court, tribunal or governmental agency and has not been a party
to any undertaking or assurance given to any court, tribunal or
governmental agency which is still in force.
10.4 So far as the Vendor is aware, the Company has the power and is duly
qualified to carry on business and has operated in accordance with all
applicable laws in any jurisdiction in which it trades.
10.5 The Company has not been notified in writing that it has breached any
statute, regulation, order or judgment of any court, tribunal or
governmental agency of the United Kingdom which would have a material
and adverse effect on the business of the Company.
10.6 All material licences, consents, permits and authorities have been
obtained by the Company to enable it to carry on its business in the
manner in which it is now carried on. A list of all such licences,
consents, permits and authorities is attached to the Disclosure Letter.
10.7 The Company has not been notified in writing that it is in breach of
any material licence, consent, permit or authority currently held by it
which would have a material and adverse effect on the business of the
Company.
10.8 Neither the Company nor any person for whose acts or defaults the
Company would be vicariously liable has offered or made a payment,
contribution, gift or other inducement to a government official or
employee such that the payment, contribution, gift or other inducement
would constitute a violation of the United States Foreign Corrupt
Practices Act or similar laws of any other country that prohibit
improper payments to government officials for the purposes of retaining
or obtaining contracts, financial benefits or other benefits relating
to its business operations.
10.9 The Company understands that Executive Orders issued by the President
of the United States of America, Federal regulations administered by
the U.S. Treasury Department's Office of Foreign Assets Control
("OFAC") and other federal laws prohibit, among other things, U.S.
persons or persons under the jurisdiction of the United States from
engaging in certain transactions with certain foreign countries,
territories, entities and individuals, and that the lists of prohibited
countries, territories, entities and individuals can be found on, among
other places, the OFAC website at xxx.xxxxx.xxx/xxxx. Neither the
Company nor any of its officers is, or is acting on behalf of, a
country, territory, entity or individual named on such lists, nor is
the Company or any of its officers a natural person or entity with whom
dealings are prohibited under any OFAC regulation or other applicable
federal law or acting on behalf of such a natural person or entity.
11. Material Contracts
11.1 So far as the Vendor is aware, no transaction has been effected in
consequence of which the Company is liable to refund in whole or in
part any investment or grant.
11.2 There are annexed to the Disclosure Letter copies of all material
contracts to which the Company is currently a party.
11.3 The Company is not a party to any contract with an annual value in
excess of (pound)100,000 which:-
11.3.1 is in the Vendor's opinion of an unusual, onerous or abnormal nature;
11.3.2 is outside the ordinary course of business;
11.3.3 is for a fixed term of more than six months;
11.3.4 is of a long term nature (that is unlikely to have been fully
performed in accordance with its terms within six months of
the date on which it was entered into);
11.3.5 is in the nature of a partnership, joint venture or consortium;
11.3.6 is of a loss making nature (that is known to result in a loss to the
Company on completion of the Company's obligations);
11.3.7 is a consultancy agreement;
11.3.8 includes a power of attorney granted by the Company;
11.3.9 is a contract for hire or rent, conditional sale lease, hire purchase
or purchase by way of credit sale (other than normal
trade credit) or periodical payment;
11.3.10 can be terminated as a result of the matters contemplated in this
Agreement; or
11.3.11 involves, or is reasonably likely to involve, the supply of goods or
services the aggregate sales value of which are reasonably expected to
be more than 10% of the Company's turnover for the preceding financial
year.
11.4 The Company is not in material default under any material contracts
annexed to the Disclosure Letter and, so far as the Vendor is aware, no
third party is in material default under any of these contracts.
11.5 The Company is not a party to or interested in, either directly or
indirectly, any contract nor does the Company have any
liability with or to any of:-
11.5.1 the Vendor (or its Connected Persons); or
11.5.2 any directors or managers of the Company or their Connected Persons; or
11.5.3 any person beneficially interested in the Company's share capital.
11.6 The Company has not during the last three years been a party to a
transaction to which sections 320 or 330 of CA apply.
11.7 So far as the Vendor is aware, the Company is not a party to any
agreement which is not entirely of an arm's length nature.
11.8 All costs incurred by the Company during the last twelve months have
been charged to the Company and not borne by any other member of the
Vendor's Group or any other person
12. Trading
12.1 The Company does not carry on business under licence or otherwise than
as principal.
12.2 There is no outstanding material dispute with any present or former
agent or consultant of the Company arising out of their agreement with
the Company or its termination. So far as the Vendor is aware, there
are no matters which would lead to any such material dispute.
12.3 No agent, distributor, representative, consultant or supplier (not
being an employee) is entitled to any fixed or varying payment or
credit in connection with the Company's business.
12.4 No major supplier to the Company has given written notice to the
Company that it no longer intends to deal with the Company.
12.5 During the last twelve months, the Company has not been dependent upon
any one supplier for more than 10% by value of its purchases.
13. Product Liability
13.1 There is no outstanding claim in respect of Product Liability and so
far as the Vendor is aware there are no circumstances which are likely
to give rise to any such claim. For this purpose "Product Liability"
means a liability arising out of death, personal injury or damage to
property caused by a defective product or defective services sold,
supplied or provided by the Company in the course of its business in
the three years prior to the date of this Agreement.
13.2 The Company has not manufactured, sold or supplied any product or
service which:-
13.2.1 is in any material respect, faulty or defective; or
13.2.2 does not comply with any warranty or representation made
by the Company in respect of it or with all laws,
standards and requirements applicable to it; or
13.2.3 does not comply with any customer or design specification; or
13.2.4 was sold or supplied on terms that the Company accepts an
obligation to service or repair or replace such products
after delivery.
14. Debts
14.1 No book debt owing to the Company which was included in the balance
sheet of the Accounts or which has arisen since the Accounts Date, has
been realised for less than its full face value or is now considered by
the Vendor (acting on the information provided to it) to be
irrecoverable in whole or in part. The rights of the Company in respect
of such debts are enforceable and are not subject to any defence, right
of set-off or counter-claim, withholding or other deduction and no act
has been done or omission permitted whereby any of them has ceased or
will cease to be enforceable in whole or in part.
14.2 So far as the Vendor is aware, all book debts owed to the Company at
Completion should realise their full face value in the ordinary course
of business and, in any event, within 120 days of Completion.
14.3 No book debt owed to the Company is subject to any factoring or invoice
discounting agreement.
14.4 No book debt owed to the Company has arisen otherwise than as a result
of the supply of goods and/or services by the Company
in the ordinary course of its business.
15. Ownership and Condition of Tangible Assets
15.1 All material tangible assets used by the Company are set out on an
asset register attached to the Disclosure Letter and all tangible
assets are the absolute property of the Company. None of the tangible
assets owned or used by the Company is the subject of any mortgage,
debenture, charge, lien, hypothecation, pledge or other security
interest.
15.2 All hardware and equipment owned by the Company:-
15.2.1 is in a reasonable state of repair (subject to fair wear and tear); and
15.2.2 is in the possession or control of the Company.
15.3 The Company does not use any assets which are owned by the Vendor.
15.4 There are maintenance contracts with specialist contractors in respect
of all:-
15.4.1 material tangible assets of the Company; and
15.4.2 tangible assets which the Company is obliged to maintain
or repair under any lease, hire, rental, conditional sale,
lease, hire purchase or credit sale agreement.
15.5 The assets listed in the Disclosure Letter are all the assets which are
material to the business of the Company and necessary for its
continuation in the same manner in which it was carried on by the
Vendor in the 12 months prior to Completion.
16. Stock
The stocks held by the Company are:-
16.1 are adequate in relation to its current trading requirements;
16.2 in reasonable condition and should when comprised in finished goods
be capable of being sold by the Company in the ordinary
course of its business;
16.3 not damaged, slow moving or obsolete other than in the ordinary course
of trading;
16.4 included in the books of accounts of the Company at the lower of
cost or net realisable value; and
16.5 are unlikely to realise less than their respective book value on sale
in the ordinary course of business.
17. Financial Facilities
17.1 The Disclosure Letter sets out details of all banking and other
financial facilities outstanding or available to the Company
immediately prior to Completion.
17.2 The Company is not in breach of the material terms of any of the
banking facilities currently available to it and the Company does not
have any borrowings on any account which exceed the applicable to such
account limit.
17.3 No steps for the early repayment of sums outstanding under any banking
facilities available to the Company have been taken and, so far as the
Vendor is aware, no circumstances have occurred which the Vendor is
aware would give rise to an obligation to make, or would permit any
demand for, early repayment. So far as the Vendor is aware, there are
no circumstances which would prejudice the continuation of the banking
and other financial facilities currently available to the Company.
17.4 The Company does not have outstanding, nor has it agreed to create or
issue, any loan capital.
17.5 None of the banking or other financial facilities available to the
Company is dependent on the guarantee or indemnity of, or any security
provided by, a third party.
17.6 The Company has not made a loan or quasi-loan to any person contrary to
CA.
17.7 The Company has not made a loan which remains outstanding.
18. Documents and Records
18.1 All documents and records of the Company:-
18.1.1 are in its possession or under its control; and
18.1.2 have been properly kept in all material respects.
18.2 None of the Company's record systems, controls, data or information is
recorded, stored, maintained, operated or dependent upon by any means
which are not under the exclusive ownership or direct control of the
Company.
18.3 No written notice has been received by the Vendor to the effect that
any of the statutory books of the Company is incorrect
or should be rectified.
19. Computer systems
19.1 Disaster recovery plans are in effect and are designed to ensure that,
in the event of a failure of the computer systems operated by the
Company, these computer systems can be replaced without material
disruption to the business of the Company.
19.2 The Company owns or has in its possession and control manuals, guides,
instruction books and technical documents required to operate the
Company's computer systems.
19.3 The computer systems operated by the Company have never failed for
such period of time so as to materially or adversely
interrupt the operation of the Company's business.
19.4 Other than off the shelf/mass market shrink wrap software, the Company
does not use any software under licence from a third
party.
19.5 The Company follows appropriate procedures for protecting its computer
systems from infection by software viruses and from access by
unauthorised persons.
19.6 So far as the Vendor is aware, the Company's computer systems have not:
19.6.1 been infected by any software viruses; or
19.6.2 been accessed by any unauthorised person.
19.7 The Company has possession of the source code for any software in which
it owns the copyright.
19.8 The Disclosure Letter contains a list of all domain names used by the
Company.
20. Data Protection
20.1 The Company is duly registered as a data controller under the Data
Protection Xxx 0000 and particulars of the registrations
are attached to the Disclosure Letter.
20.2 So far as the Vendor is aware the Company has complied in all material
respects with the data protection principles set out
in the Data Protection Xxx 0000.
20.3 No individual has claimed compensation from the Company under the Data
Protection Xxx 0000.
20.4 The Company's systems for storing or using personal data are not
located outside the European Economic Area.
21. Memorandum and Articles and Resolutions etc
21.1 The copy of the memorandum and articles of association of the Company
which is annexed to the Disclosure Letter is accurate
at the date of this Agreement.
21.2 The Company is carrying on its business in compliance with its
memorandum and articles of association.
21.3 The Company has not passed any elective resolution under section 379A
of CA and has complied in all material respects with sections 381A,
381B and 381C of CA in relation to all written resolutions passed by
the Company.
21.4 All returns, particulars and resolutions required by the provisions
of CA to be delivered on behalf of the Company to the
Registrar of Companies have been duly filed.
22. Employees
22.1 The Disclosure Letter contains details of the names of all of the
employees of the Company and the names, ages, dates of commencement of
employment, terms of employment or engagement and the periods of
continuous employment or engagement of all employees whose annual
salary is greater than (pound)15,000 and all directors of the Company
including details of any profit sharing, commission and bonus schemes.
22.2 The Disclosure Letter sets out the name and the date of commencement
termination and payment terms of the contract of any person engaged by
the Company either personally or through a personal services company to
carry out services.
22.3 No director or employee is wholly or partly remunerated on a profit
sharing basis.
22.4 All persons in managerial or other senior positions whose employment
is material to the operation of the business of the
Company are employed by the Company.
22.5 The Company is under no contractual or other obligation to increase the
rates of remuneration of, or make any bonus or incentive payment to,
any of its directors, employees and/or consultants at any point in the
next 6 months.
22.6 No material change has been made to the terms of employment of any of
the Company's senior employees in the last 6 months.
22.7 No negotiations for an increase in the remuneration or benefits of a
director, employee or consultant of the Company are
current or scheduled to take place within the next 6 months.
22.8 There is no person who has accepted an offer of employment or
engagement with the Company whose employment or engagement has yet to
start and there are no offers of employment or engagement which have
been issued and remain open for acceptance.
22.9 The Vendor is not aware of any claim by any past or present director or
employee or former employee of the Company threatened against the
Company in respect of an accident or injury other than any claim
reasonably likely to be covered and met by an insurance policy
maintained by the Company.
22.10 No past employee of the Company has a right to return to work or has
a right to be reinstated with or re-engaged by the Company.
22.11 The Company is not liable to make any payment to any past or present
director or former or current employee by way of damages or
compensation for loss of office or employment or for redundancy, unfair
dismissal, sexual discrimination or racial discrimination.
22.12 The Company is not nor are any of any of its directors and employees
engaged or involved in any industrial dispute in relation to the
Company and, so far as the Vendor is aware, there are no current
circumstances that would result in any such dispute.
22.13 No director or officer or employee of the Company:-
22.13.1 has given or received written notice terminating his office or
employment; or
22.13.2 is entitled to leave his office or employment as a result
of the sale of the Shares.
22.14 The Company has not given to any person any
power of attorney which is still outstanding.
22.15 No contract of service exists between the Company and any director or
employee in relation to which any relevant requirements including
section 319 of CA have not been fulfilled.
22.16 The Company does not recognise any trade union.
22.17 There are no agreements, arrangements or understandings between the
Company and a trade union or other body representing
employees.
22.18 No undertakings or assurances have been given to the directors or
employees of the Company as to the continuance, introduction, increase
or improvement of any pension rights or entitlements which the Company
would be legally required to implement.
22.19 The Company has no legal or ex-gratia arrangement or practice to pay
pensions, gratuities, superannuation, allowances or any other benefits
or sum to any person who is not an employee or former employee of the
Company.
22.20 No employee of the Company is entitled to benefits or other payments
(including payments on redundancy, retirement or termination of
employment) that exceed the required level for such benefits or
payments as set down by legislation from time to time.
22.21 Each employee of the Company can be dismissed by giving three months'
notice or less without giving rise to a claim for damages or
compensation (other than a statutory redundancy payment or statutory
compensation for unfair dismissal).
22.22 The Company is not obliged to grant any options or other rights in
respect of employment related securities under any share
ownership or share option plan.
22.23 The Company has paid to HM Revenue & Customs and any other appropriate
authority all taxes, National Insurance contributions and other levies
and charges in respect of all persons employed or engaged in the
business of the Company and accruing in the period up to and including
Completion.
22.24 No employee of the Company has transferred to the Company under a
relevant transfer (in terms of the Transfer of Undertakings (Protection
of Employment) Regulations 1981) who at any time before the relevant
transfer was a member of an occupational pension scheme.
22.25 So far as the Vendor is aware, the Company complies in all material
respects with all statutes, regulations, orders, decrees or judgments
of any court or governmental agency of competent jurisdiction in the
United Kingdom, relating to the employment of its employees and their
terms and conditions of employment.
22.26 So far as the Vendor is aware, the Company has issued all written
notices required by law to all of its employees in relation to their
terms and conditions of employment.
22.27 All employees of the Company have leave to enter and remain in the
United Kingdom and are entitled to work in the United
Kingdom in terms of the Asylum and Immigration Xxx 0000
23. Pensions
23.1 Save for the Pension Scheme, the Company has never contributed towards
or had any liability in respect of any agreement, arrangement, custom
or practice for the provision of, or payment of a contribution towards,
a pension, allowance, lump sum or similar benefit on retirement or
death ("Pension Benefits") for any employee or former employee of the
Company.
23.2 The following details of the Pension Scheme have been provided:
23.2.1 a true copy of the deed and rules of the Pension Scheme and all
amendments thereto; and
23.2.2 a true copy of the explanatory booklet issued to
members of the Pension Scheme.
23.3 No plan or proposal to amend, discontinue or exercise a discretion in
relation to the Pension Scheme has been communicated in writing to the
Company's employees during the last twelve months.
23.4 No contribution due and payable to, nor any fees in respect of, the
Pension Scheme is or are unpaid.
23.5 The Pension Scheme is approved by HM Revenue & Customs for the purposes
of Chapter 1 of Part XIV of ICTA and the Vendor is not aware of any
circumstance which would cause such approval by HM Revenue & Customs to
be cancelled or withdrawn.
23.6 So far as the Vendor is aware, there are no outstanding claims by any
member of the Pension Scheme against the Company in relation to that
person's pensions entitlement.
23.7 No employee or former employee of the Company is entitled to any
Pension Benefits that become payable before their normal retirement age
as stated in their contract of employment or the benefit scheme itself.
24. Insurance
24.1 Particulars of all material insurances maintained by the Company are
attached to the Disclosure Letter. All premiums on all such policies of
insurance have been paid in accordance with their terms.
24.2 All tangible assets of the Company capable of being insured are insured
in amounts representing the suitable replacement or reinstatement value
against all such risks as are normally insured by businesses similar to
that of the Company and the Company is, in the opinion of the Vendor,
insured against all risks and in such sums as a company, carrying on a
similar business to the Company, would insure against in such sums.
24.3 So far as the Vendor is aware, no claims have been made by the Company
on any insurance policy during the last 24 months which would have the
effect of causing next year's insurance premiums to be significantly
higher than would otherwise be the case nor, so far as the Vendor is
aware, have any circumstances occurred which have caused any such
insurances to be rescinded, vitiated or avoided.
24.4 The Company has not at any time during the last 3 years been refused
any insurance or only offered an insurance policy at a cost
substantially higher than the Vendor is aware is the normal market rate
for such insurance.
24.5 The Company has never received a written report or recommendation from
its insurer or insurance brokers the principal recommendations of which
have not been implemented in all material respects.
24.6 There is no material claim outstanding under any policy of insurances
maintained by the Company nor, so far as the Vendor is aware, are there
any circumstances which would give rise to such a claim.
24.7 A list of all claims including those under any policy deductibles are
attached to the disclosure letter.
24.8 So far as the Vendor is aware, the information provided by the Company
and contained in the Insurance Proposal Form is complete and accurate
in all material respects.
25. Intellectual Property
25.1 The Disclosure Letter contains details of all Intellectual Property
owned by the Company or licensed to it in connection with its business.
The Company does not own or use any other Intellectual Property, other
than copyright arising in the ordinary course of its business.
25.2 The Company is the sole and absolute legal and beneficial owner, free
from encumbrances, of all Intellectual Property described in the
Disclosure Letter as being owned by it.
25.3 Details of all registrations (and applications for registration) of the
Company's Intellectual Property in any territory in which the Company
trades are attached to the Disclosure Letter.
25.4 Where the Company is registered or applying to be registered as the
proprietor of any Intellectual Property, all fees, expenses, charges,
duties and other payments have been promptly paid and are up to date
and so far as the Vendor is aware there is no procedural step, payment
or other obligation which falls due to be made or performed within
three months of Completion.
25.5 The Company has not licensed or authorised any other person, firm,
company, and/or organisation to use, in any way, the Intellectual
Property owned by or licensed to the Company.
25.6 The Company has not entered into any agreement in writing for the
provision or acquisition of technical information.
25.7 So far as the Vendor is aware, none of the processes, products or
activities of the Company infringes (nor have they during
the last three years infringed) the Intellectual Property of any other
person or involves the unlicensed use of information confidential to
third parties.
25.8 So far as the Vendor is aware, none of the Intellectual Property owned,
used and/or licensed by the Company is the subject
of any claim, dispute, action, opposition or infringement.
25.9 So far as the Vendor is aware, no other person uses any of the
Intellectual Property owned by the Company.
25.10 The Company is not engaged in proceedings that concern the
infringement of Intellectual Property and has not in the last 3
years given or received written notice threatening such proceedings.
25.11 The Company is entitled to use, without payment, all know-how and
technical information used by it in connection with its business and
all information concerning the products, methods and processes used by
the Company.
25.12 The Company does not use any Intellectual Property owned by any of the
Vendor's Group.
25.13 The database known as the "BTR/Permali database" falls within the
definition of "Databases" in the Silvertown licence (document 10.3.1 of
the disclosure bundle).
25.14 Following the expiry of the S-2 Glass Ballistics Laminate Licence
(document 10.5 of the disclosure bundle) on 31 December
2000, the licensor (as this term is defined in that agreement):
25.14.1 has been aware at all times of the continuing use by the
Company of the intellectual property licensed under that
agreement (the "O-C IP"); and
25.14.2 has not indicated in writing to the Company that it is not
entitled to continue using the O-C IP or that it should
refrain from using the O-C IP; and
25.14.3 has not indicated in writing to the Company that any form
of payment is expected in respect of its continuing use of
the O-C IP.
26. Property
26.1 The Company is in possession of the whole of each of the Properties
none of which is vacant and no other person is in or actually or
conditionally entitled to possession occupation use or control of any
of the Properties, and the Company is not in occupation of or entitled
to any estate or interest in any land or premises save for the
Properties.
26.2 The Company is the sole beneficial owner of and otherwise absolutely
entitled to the Freehold Property and the proceeds of sale thereof and
all fixtures fittings plant and equipment at the Freehold Property and
all tenant's fixtures and fittings at the Leasehold Properties are
owned absolutely by the Company free from any encumbrance.
26.3 None of the Properties is affected by a subsisting contract for
sale or other disposition of any interest in it by the Company.
26.4 The information in respect of the Properties set out in Schedule 3
is true complete and accurate and not misleading in any respect.
26.5 The Vendor has not received any written notice alleging any breach by
the Company of any obligations, restrictions, conditions and covenants
affecting the Properties.
26.6 There are no current contingent or anticipated notices disputes actions
complaints liabilities claims or demands relating to or in respect of
any of the Properties or their use nor are there any circumstances
rendering any of the foregoing likely.
26.7 So far as the Vendor is aware, the Freehold Property is not affected
by:-
26.7.1 any rent charge, easement, reservation, covenant,
restriction, agreement, licence, franchise, mortgage,
charge, encumbrance, option or right of pre-emption or
third party right;
26.7.2 any notice, order, dispute or complaint relating to it or
its present use under any legislation, agreement,
covenant, condition, licence or consent; or
26.7.3 outgoings other than uniform business rates, water charges
and other standard payments to the relevant water company
including, without limitation, insurance premiums.
26.8 There is no outstanding liability for any rent service charge insurance
rent rates taxes or other outgoings in respect of
any of the Leasehold Properties.
26.9 All original deeds and documents necessary to prove title to each of
the Properties are in the possession of the Company.
26.10 No development alterations or other works which would require any
permission or consent under planning legislation or under
any bye-laws building regulations or other relevant legislation have
been carried out without all those permissions and consents having been
obtained and all conditions attached to those permissions and consents
have been observed and performed.
26.11 So far as the Vendor is aware no breach of planning legislation or of
any bye-laws building regulations or other relevant legislation has
been committed in relation to any of the Properties.
26.12 The Company has not entered into nor is any of the Properties subject
to any planning agreement or planning obligation.
26.13 Copies of all structural surveys site surveys engineers' reports and
architects' reports relating to the Freehold Property
or any structure on the Freehold Property which have been commissioned
by or are in the possession of or under the control of the Vendor or
the Company have been given to the Purchaser.
26.14 The Company has no actual or contingent obligation or liabilities in
relation to any freehold or leasehold property other than under its
existing title to any of the Properties.
26.15 No lease for any of the Leasehold Properties has been varied nor have
any licences or consents been issued under any such lease and no
collateral assurances or undertakings have been entered into with the
reversioner or any third party.
26.16 Any deeds documents and information supplied to or held by solicitors
for the purpose of deducting title to or replying to enquiries raised
by the Purchaser's solicitors and the contents of the replies to CPSEs
made on the Vendor's behalf on 7 September 2005 are true and accurate
in all material respects.
26.17 The Vendor has provided true and complete copies of all deeds documents
and other information relevant to its interest in or
use of any of the Properties or their value.
27. Competition
27.1 So far as the Vendor is aware, the Company has not entered into any
agreement which breaches in any material respect:
27.1.1 the Competition Xxx 0000 or the Enterprise Xxx 0000; or
27.1.2 articles 81 or 82 of the Treaty of Rome.
27.2 The Company has not been notified in writing that it is subject to any
enquiry or investigation at its premises or to any undertaking or
direction by the Office of Fair Trading and/or the European Commission
in respect of its trade.
28. Insolvency
28.1 The Company is not insolvent or unable to pay its debts within the
meaning of section 123 of the Insolvency Xxx 0000.
28.2 No order has been made, petition served or resolution passed for the
winding up of the Company; there are no grounds on
which any such order or petition could be made or presented and so far
as the Vendor is aware no such resolution is contemplated.
28.3 No distress, execution, statutory demand or other process in respect of
the Company has been served on the Vendor in writing and remains
undischarged and there is no outstanding judgement or court order
against the Company.
28.4 No power to appoint a receiver has been exercised or has arisen in
respect of the business or any of the assets of the Company and there
is no unfulfilled or unsatisfied judgment or Court order outstanding
against it.
29. Environmental
29.1 All permits, consents and licences required or issued under
Environmental Law which are necessary for carrying on the business of
the Company are in full force and effect and have been complied with
and so far as the Vendor is aware there are no circumstances
(including, but not limited to, the sale of the Shares to the
Purchaser) likely to give rise to the modification, suspension or
revocation of, or lead to the imposition of unusual or onerous
conditions on, or to prejudice the renewal of, any of those permits,
consents or licences.
29.2 So far as the Vendor is aware, the Company and the Subsidiary have at
all times complied with all Environmental Laws.
29.3 So far as the Vendor is aware, there are no Hazardous Substances or
Waste at any of the Properties in circumstances which
constitute a breach of Environmental Law.
29.4 So far as the Vendor is aware, no above or below ground natural or man
made structures at any of the Properties contain or are constructed
from any Hazardous Substances (including but not limited to asbestos or
asbestos-containing material).
29.5 No proceeding or action relating to Environmental Law has been taken or
has been threatened against the Company or its Subsidiary or any
directors or officers of the Company by any competent authority or any
other person.
29.6 The Company has no actual liability under any Environmental Law
by reason of it having owned, occupied or used any
Previously-owned Land and Buildings.
29.7 All environmental reports, audits, assessments, reviews or
investigations (including any testing, sampling or monitoring results)
carried out in the last three years and which are in the possession or
control of the Vendor's Group or the Company relating to the Properties
have been disclosed.
29.8 The Company has not given or received any warranties or indemnities in
respect of, have any insurance in respect of, or have otherwise
attempted to apportion, any liabilities, duties or obligations that
arise under Environmental Law.
SCHEDULE 5
Taxation
Part 1 - Definitions and Interpretation
1. Definitions
In this Schedule the following words and expressions shall have the
following meanings:-
"Accounts Relief" means any Relief which was:-
(i) treated as an asset of
the Company in the
Completion Accounts; or
(ii) taken into account in
computing (and so
reducing or eliminating)
any provision for
deferred tax which
appears in the
Completion Accounts or
which but for such
Relief would have
appeared in the
Completion Accounts;
"Auditors" means the auditors for the time
being of the Company;
"CAA 2001" mean the Capital Xxxxxxxxxx
Xxx 0000;
"Claim for Tax" means any assessment
notice demand letter or other
document issued or action taken
by or on behalf of any person,
authority or body from which it
appears that the Company is or
may be subject to a Tax
Liability;
"CTIP" means the Corporation Tax
(Instalment Payment) Regulations
1998 (SI 1998/3175);
"Event" includes (without limitation)
any payment, transaction, action
or omission (including omitting
to comply with its objections
under the Pay and File regime),
any change in the residence of
any person for the purposes of
any Tax, the death of any person,
and a failure to take any action
which would avoid an
apportionment or deemed
distribution of income and shall
also include the execution of the
Agreement and Completion;
"FA" means the Finance Act for the
year by which it is designated;
"Group Relief" means any of the following:
(a) group relief capable of
being surrendered or
claimed pursuant to
Chapter IV Part X of the
Taxes Xxx 0000;
(b) advance corporation tax
capable of being
surrendered or claimed
pursuant to Regulation
15 of the Corporation
Tax (Treatment of
Unrelieved Surplus
Advance Corporation Tax)
Regulations 1999; and
(c) a tax refund capable of
being surrendered or
claimed under Section
102 of the Finance Xxx
0000;
"ICTA" means the Income and Corporation
Taxes Xxx 0000;
"IHTA" means the Inheritance Tax Xxx
0000;
"ITEPA" means the Income Tax (Earnings
and Xxxxxxxx) Xxx 0000;
"income, profits or gains" shall include
income, profits or gains
(including capital gains) of any
description or from any source
and income, profits, or gains
which are deemed to be earned
accrued or received for any Tax
purpose;
"Loss" means, in relation to a Relief,
the reduction, modification,
cancellation, or non-availability
(in whole or in part) of that
Relief or a failure to obtain
Accounts Relief or to receive the
benefit of a right to repayment
of Tax to which the Company was
or assumed it was entitled to in
preparing the Completion Accounts
and "Lost" shall be construed
accordingly;
"New Relief" means any Relief which arises
after Completion;
"Relief" means any loss, relief,
allowance, exemption, set-off,
deduction, credit, or relief from
or against or available in
respect of Tax or in the
computation of income profits or
gains for the purposes of Tax or
any right to a repayment of Tax;
"SDRT" means stamp duty reserve tax;
"Tax" means all forms of taxation,
including any tax, duty, impost,
levy, deduction and governmental
charge in the nature of tax (but
for the avoidance of doubt
excludes uniform business rates,
water rates, community charge and
council tax) whether a primary
or secondary liability and any
amount payable to any person or
Tax Authority as a result of any
enactment relating to Tax
together with all related
penalties, fines, surcharges and
interest;
"Tax Authority" means any national, state,
federal, municipal or local
government authority or any
political subdivision thereof or
taxing authority thereof or
therein, and whether in the
United Kingdom or any other
part of the world and without
prejudice to the generality of
the foregoing includes Her
Majesty's Revenue and Customs,
Department of Social Security and
any equivalent thereof;
"Tax Claim" means any claim by the Purchaser
under the Tax Covenant or any of
the Tax Warranties;
"Tax Liability" means:
(i) any liability to make an
actual payment or
increased payment of
Tax; or
(ii) the Loss by the Company
of an Accounts Relief;
"TCGA" means the Taxation of Chargeable
Gains Xxx 0000;
"TMA" means the Taxes Management Xxx
0000;
"VAT" means value added tax within
the meaning of the VATA and
any similar tax outside the
United Kingdom;
"VATA" means the Value Added Tax Xxx 0000.
2. Interpretation
2.1 Reference to the result of any Event on or before Completion includes
the combined result or results of two or more Events at least one of
which took place on or before Completion provided that the Event or
Events which took place before Completion occur outside the ordinary
course of business of the Company as carried on at Completion and the
Event or Events which take place after Completion occur inside the
ordinary course of business of the Company as carried on at Completion.
2.2 For the purposes of this Agreement, where any document is not (or is
not properly) stamped, the stamp duty (together with any accrued
interest and/or penalties) required to be paid in order that such
document may be received in evidence as referred to in Section 14 of
the Stamp Act 1891 shall be treated as a liability of the Company
arising by reference to the date when the document was executed if and
when the document is required to be presented in evidence.
2.3 Without limiting the generality of the expression, reference in
this Schedule to anything "in the ordinary course of
business" does not include:
2.3.1 an Event which results in the Company becoming liable for Tax for which
it is not primarily liable;
2.3.2 the acquisition, disposal or supply or deemed acquisition,
disposal or supply of any asset, goods, service or
facility (including a loan of money or the letting, hiring
or licensing of tangible property) in a transaction which
is not entered into at arm's length;
2.3.3 the making of a distribution or deemed distribution for Tax purposes;
2.3.4 the creation, cancellation or reorganisation of any share
or loan capital or any company becoming or ceasing to be a
member of a group of companies for any Tax purpose;
2.3.5 the failure by the Company to deduct, charge, recover or account for
Tax;
2.3.6 a deemed disposal of a capital asset under section 179
TCGA 1992, any withdrawal of relief under Section 111, 113
or paragraph 58 Schedule 29 to the Finance Xxx 0000
occurring as the direct result of this Agreement becoming
unconditional or Completion (whichever is earlier);
2.3.7 an Event giving rise to a liability or potential liability
under Part XVII Taxes Act (tax avoidance), section 29 or
section 36 TMA, schedule 9A VATA (anti-avoidance
provisions; groups) or Part V of schedule 18 FA 1998
(Revenue determinations and assessments);
2.3.8 a transaction or arrangement which includes, or a series
of transactions or arrangements which includes, any step
or steps having no commercial or business purpose apart
from the avoidance of a liability to Tax; and
2.3.9 any failure to pay any Tax Liability arising before
Completion, to the extent that such failure give rise to
any interest, fine, penalty, charge or surcharge in
connection with that Tax Liability.
2.4 Reference to the Company in this Schedule includes reference to NP
Aerospace Jordan WLL save that in relation to calculating any liability
of the Vendor under Part 2 of this Tax Covenant or the extent of any
limitation to that liability where a relevant amount is reflected in
the Completion Accounts (but for the avoidance of doubt without
prejudice to any limitation contained in part 2 of this Schedule in
respect of the liability) in respect of NP Aerospace Jordan WLL such
liability or limitation shall be 51% only of the amount which would
otherwise have applied.
2.5 Reference to any term defined in any other part of Agreement shall have
the same meaning in this Schedule as for other purposes of this
Agreement unless the contrary intention is clear.
Part 2 - Tax Covenant
1. Vendor's Covenant
1.1 Subject as provided in this Schedule, the Vendor hereby covenants with
the Purchaser to pay to the Purchaser an amount equal to:-
1.1.1 any Tax Liability of the Company which has arisen or
arises as a consequence of or in connection with any Event
which occurred or in respect of any income profits or
gains being or being treated for Tax purposes to be earned
accrued or received on or before Completion;
1.1.2 any Tax Liability of the Company which would have arisen
(and in respect of which the Vendor would have been liable
under this Schedule) but for the setting-off of an
Accounts Relief or a New Relief against that Tax Liability
or (as the case may be) against the income, profits or
gains which would have given rise to that Tax Liability;
1.1.3 any Accounts Relief Lost or (where the Accounts Relief
Lost was a deduction from or set-off against income,
profits or gains) the Tax which would (on the basis of the
rates of Tax current at the date of the Loss) have been
saved but for the Loss;
1.1.4 any Tax Liability of the Company arising as a consequence
of or by reference to any of the following occurring or
being deemed to occur at any time after Completion:
1.1.4.1 the disposal by any Relevant Company of any asset or of
any interest in or right over any asset;
1.1.4.2 any Relevant Company ceasing to be resident in
the United Kingdom for the purposes of any Tax; or
1.1.4.3 any Relevant Company failing to pay the whole of the Tax
charged by any Tax Assessment made in respect of that
Relevant Company within six months of the date of
that Tax Assessment.
and, for the purposes of this paragraph, the term
"Relevant Company" shall mean the Vendor and any company,
other than the Company and NP Aerospace Jordan WLL that
may be treated for the purposes of any Tax as being, or as
having at any time been, either a member of the same group
of companies as the Vendor or otherwise associated with
the Vendor;
1.1.5 any liability of the Company arising from an obligation to
repay the whole or any part of any payment received for
Group Relief or to pay for any Group Relief pursuant to an
agreement entered into by the Company on or before
Completion;
1.1.6 any Tax Liability of the Company or the Purchaser in
respect of Inheritance Tax which:-
1.1.6.1 is at, or becomes after, Completion as a
result of the death of any person within
seven years after a transfer of value (or
deemed transfer of value) on or before
Completion, a charge on any of the shares
or assets of the Company or gives rise to
a power to sell, mortgage or charge any
of the shares or assets of the Company;
or
1.1.6.2 arises as a result of a transfer of value
occurring or being deemed to occur on or
before Completion (whether or not in
conjunction with the death of any person
whenever occurring) which increased or
decreased the value of the estate of the
Company;
1.1.7 any Tax Liability of the Company or the Purchaser arising
as a result of the exercise of any stock options in the
share capital of the Vendor and the sale and any shares
acquired under such stock options;
1.1.8 the reasonable professional costs and expenses properly
incurred by the Purchaser and/or the Company in connection
with a successful claim under paragraph 1 of part 2 of
this Schedule.
1.2 In determining for the purposes of this Schedule whether a charge on or
a power to sell, mortgage or charge any of the shares or assets of the
Company exists at any time, the fact that any Tax is not yet payable or
may be paid by instalments shall be disregarded and such Tax shall be
treated as becoming due and the charge or power to sell, mortgage or
charge as arising on the date of the transfer of value or other Event
on or in respect of which it becomes payable or arises.
1.3 The provisions of section 213 IHTA shall not apply to any payment
falling to be made under this Schedule.
2. Limitations on the Vendor's Liability
2.1 The covenants contained in paragraph 1 shall not extend to any Tax
Liability or other amount payable by the Vendor under
this Schedule to the extent that:-
2.1.1 such Tax Liability or other amount was paid or discharged
on or before Completion and taken into account as
discharged in preparing the Completion Accounts;
2.1.2 provision or reserve in respect of that Tax Liability or other amount
was made in the Completion Accounts;
2.1.3 such Tax Liability or other amount would not have arisen but for a
voluntary act, transaction or omission of the Company carried out after
Completion and where the Purchaser or the Company knew or ought to have
known, acting reasonably that such act, transaction or omission would
give rise to the Tax Liability but excluding any act:-
2.1.3.1 carried out pursuant to a legally binding
obligation entered into by the Company on
or before Completion or imposed on the
Company by any regulation or requirement
having the force of law;
2.1.3.2 occurring in the ordinary course of business of the Company as carried
on at Completion; or
2.1.3.3 taking place with the written approval of the Vendor;
2.1.4 such Tax Liability or other amount arises or is increased as a
direct result of:-
2.1.4.1 any change in Tax Legislation or the published practice of any Tax
Authority; or
2.1.4.2 any increase in the rate of Tax; (in each case enacted after
Completion, with retrospective effect);
2.1.5 recovery (less costs and expenses) has been made by the Purchaser under
the Agreement in respect of the same subject matter;
2.1.6 such Tax Liability or other amount arises or is increased or any
provision or reserve in respect of the Liability for
Taxation in the Completion Accounts is insufficient as a
result of any change after Completion in the bases,
methods or policies of accounting of the Company;
2.1.7 the Tax Liability or other amount would not have arisen or would
have been reduced or eliminated but for any claim, election,
surrender or disclaimer made or notice or consent given or any other
thing done, after Completion (other than one, the making, giving or
doing of which was taken into account in computing any provision for
Tax in the Completion Accounts (and the notes to the Completion
Accounts make it clear that such making, giving or doing was so taken
into account) under, or in connection with the provisions of any
enactment or regulation relating to Tax by the Company or any member
of the Purchaser's Group and where the Company or the relevant
member of the Purchaser's Group knew or ought to have known, acting
reasonably, that such claim, election, surrender, disclaimer, notice
or consent would give rise to such Tax Liability;
2.1.8 the Tax Liability or other amount would not have arisen or
would have been reduced or eliminated but for the failure
or omission by the Company or any member of the
Purchaser's Group to make any claim, election, surrender
or disclaimer or give any notice, or consent or do any
other thing under or in connection with, the provision of
any enactment or regulation relating to Tax at Completion
where the making, giving or doing of which was taken into
account in computing any provision in the Completion
Accounts (and the notes to the Completion Accounts make it
clear that the making, giving or doing of such claim,
election, surrender, disclaimer, notice, consent or other
thing was so taken into account);
2.1.9 any Relief is available at no expense to the Company to
set against or otherwise mitigate the Tax Liability or
other amount (other than an Accounts Relief or a New
Relief);
2.1.10 the income, profits or gains in respect of which the
Liability for Taxation or other amount arises were
actually earned, accrued or received by the Company prior
to the Accounts Date but were not reflected in the
Accounts;
2.1.11 the Tax Liability or other amount would not have arisen
but for a cessation or any change in the nature of conduct
of any trade carried out on or by the Company being a
change or cessation occurring on or after Completion;
2.1.12 such Tax Liability or other amount has been made good by
insurers or otherwise compensated for without cost to the
Purchaser or the Company;
2.1.13 such Tax Liability or other amount arises by virtue of the
Company's average rate of corporation tax increasing as a
result of becoming a member of the Purchaser's Group;
2.1.14 to the extent that the Company has recovered from any
person (other than from the Purchaser or any member of the
Purchaser's Group) any sum in respect of such Tax
Liability or other amount;
2.1.15 such Tax Liability or other amount consists of stamp duty
or stamp duty reserve tax payable on the transfer or
agreement to transfer the Shares pursuant to the
Agreement; or
2.1.16 such Tax Liability or other amount arises or is increased
as a result of either the Company or the Purchaser failing
to act in accordance with any of its obligations set out
in this Schedule.
2.2 The provisions of Schedule 7 (Limitations) shall apply to this Schedule
as if set out herein, save that in case of any contradiction between
the provisions of Schedule 7 and the provisions of this Schedule the
provisions of this Schedule shall prevail.
3. Credit for Tax Savings
3.1 If, at the Vendor's request and expense, the Auditors determine that
the Company has obtained a "Tax Saving" (which for the purposes of this
paragraph 3 shall mean where the Vendor has made a payment under this
Tax Covenant or the Tax Warranties in respect of a Tax Liability which
results in the reduction of any other Tax liability of the Company
including by reason of a Relief being or, as a result becoming,
available to the Company (and the Purchaser agrees to use reasonable
endeavours to ensure that any such Relief so reduces any such other Tax
Liability and to utilise that Relief in priority to any other Relief))
the Purchaser shall on demand repay to the Vendor the lesser of:-
3.1.1 the amount of the Tax Saving (as determined by the Auditors);
3.1.2 the amount paid by the Vendor in respect of the Tax
Liability which gave rise to the Tax Saving, less any
reasonable costs and expenses incurred by the Purchaser or
the Company pursuant to paragraph 1.1.6 above; and
3.1.3 the amount which leaves the Purchaser in the same net after Tax
position that it would have been in had no such Tax Saving been
attained.
3.2 If the Purchaser becomes aware that there is or may be a Tax Saving it
shall (or shall procure that the Company shall) as soon as reasonably
practicable inform the Vendor of that fact and the amount of the Tax
Saving.
3.3 In determining whether the Company has obtained a Tax Saving, the
Auditors will act as experts and not as arbitrators and their
determination will (in the absence of manifest error) be conclusive and
binding on the parties.
4. Over-Provisions
4.1 If:
4.1.1 the amount by which any provision for Tax (including for
the avoidance of doubt any provision for deferred
Taxation) contained in the Completion Accounts proves to
be an over-provision then the over-provision shall be
dealt with in accordance with paragraph 4.3 below;
4.1.2 the amount of any repayment of Tax to the Company by any
Taxation Authority in the Completion Accounts proves to be
understated (or if no amount is stated, the amount of any
repayment of Tax to the Company), then the amount of such
repayment understanding shall be dealt with in accordance
with paragraph 4.3 below.
4.2 If the Purchaser becomes aware that there are or may be such amounts as
are referred to in paragraph 4.1 above, it shall (or shall procure that
the Company shall) as soon as reasonably practicable inform the Vendor
of the fact and the amount in question. If the Auditors are requested
by either of the parties hereto to certify any of such amounts as are
referred to above the relevant party shall procure that the Auditors
are instructed to give and shall (at the expense of the party
requesting) give as soon as practicable such certificate and in so
doing they shall act as experts and not as arbitrators and (in the
absence of manifest error) their decision shall be final and binding on
the parties hereto.
4.3 Where it is provided under paragraph 4.1 above that any amount (the
"Relevant Amount") is to be dealt with in accordance
with this paragraph 4.3:
4.3.1 the Relevant Amount shall first be set off against any
payment then due from the Vendor under this Tax Covenant
and/or the Tax Warranties;
4.3.2 to the extent there is an excess of the Relevant Amount
after any amounts have been set off under paragraph 4.3.1
above, a refund shall be made to the Vendor of any
previous payment or payments by the Vendor under this Tax
Covenant and/or the Tax Warranties and not previously
refunded under this paragraph 4.3.2 up to the amount of
such excess or if less the amount that will leave the
Purchaser in the same net after Tax position that it would
have been in had no Relevant Amount arisen; and
4.3.3 to the extent that the excess referred to in paragraph
4.3.2 above is not exhausted under that clause, the
remainder of that excess shall be carried forward and set
off against any future payment or payment which become due
from the Vendor under this Tax Covenant or the Tax
Warranties.
4.4 Where any such certification as is mentioned in paragraph 4.2 above has
been made, the Vendor or the Purchaser may (at its expense) request the
Auditors to review such certification in the light of all relevant
circumstances, including any facts which have become known only since
such certification, and to certify whether such certification remains
correct or whether, in the light of those circumstances, the amount
that was the subject of such certification should be amended.
4.5 If the Auditors certify under paragraph 4.4 above that an amount
previously certified should be amended, that amended amount shall be
substituted for the purpose of paragraph 4.3 above as the relevant
Amount in respect of the certification in question in place of the
amount originally certified, and such adjusting payment (if any) as may
be required by virtue of the above mentioned substitution shall be made
as soon as reasonably practicable by the Vendor or the Purchaser as the
case may be.
5. Group Relief
5.1 The Purchaser shall procure that:
5.1.1 the Company will forthwith upon the request of the Vendor
make such provisional or final claims to accept the
surrender of Group Relief from the Vendor or any member of
the Vendor's Group in respect of any accounting period
commencing before Completion as the Vendor may in its
absolute discretion direct in writing;
5.1.2 the Company, shall take all such steps as the Vendor may reasonably
request to permit and effect any such surrender;
5.1.3 if the Company accepts a surrender of Group Relief, pursuant to
sub-paragraph 5.1.1 which can be used against an actual
liability to corporation tax which will not give rise to a
claim under paragraph 1 of Part 2 of this Schedule, the
Company makes a payment to the company making the
surrender of an amount equal to the corporation tax which
would have been payable but for the surrender, payment to
be made on the date on which the tax would otherwise have
been payable (assuming no application for postponement of
payment of the tax had been made).
6. Amount of Tax Liability
The amount of any Tax Liability shall be as follows:-
6.1 to the extent that a Tax Liability involves a liability of the Company
to make an actual payment or increased payment of Tax, the amount of
such payment or increased payment;
6.2 to the extent that a Tax Liability involves a liability of the Company
to make a payment or increased payment of Tax which would have arisen
but for being satisfied, avoided or reduced by any Accounts Relief or
New Relief, the amount of Tax which the Accounts Relief or New Relief
in fact saves;
6.3 to the extent that a Tax Liability involves the Loss of any Accounts
Relief (other than a right to a repayment of Tax) the amount of Tax
which the use of the Accounts Relief would have saved had the Accounts
Relief been used by the Company in the period in which the relevant Tax
Authority first disallows, withdraws, claws-back, reduces, restricts or
modifies the Accounts Relief; and
6.4 to the extent that a Tax Liability involves the disallowance or
reduction by any Tax Authority of a right to a repayment of
Tax, the amount of the repayment so disallowed or reduced.
7. Due Date for Payment
7.1 Where the Vendor becomes liable to make a payment pursuant to the
provisions of this Schedule, the due date for the making of that
payment in cleared funds shall be the date falling five business days
after the date on which the Company or (as the case may be) the
Purchaser has notified the Vendor of the amount of the payment required
to be made or, if later:-
7.1.1 in the case of a liability within paragraph 1.1.1 and
1.1.5 the Business Day prior to the last date on which the
payment of Tax in question may be paid to the relevant Tax
Authority in order to avoid incurring a liability to
interest or a charge fine or penalty in respect of that
Tax Liability; or
7.1.2 in the case of the Loss or set-off of a Relief (being a
right to repayment of Tax) within paragraphs 1.1.2 or
1.1.3 the date on which such repayment would have been
received but for the Loss or set-off; or
7.1.3 in the case of the Loss or set-off of a Relief (other than
a right to repayment of Tax) within paragraphs 1.1.2 or
1.1.3 the last date on which the Tax Liability which (but
for the loss or set-off) would have been payable could
have been paid to the relevant Tax Authority in order to
avoid incurring a liability to interest or a charge fine
or penalty in respect of that Tax Liability; or
7.1.4 in the case of a liability within paragraph 1.1.6, the
Business Day before such costs and expenses become due and
payable or are otherwise incurred by the Purchaser and/or
the Company; or
7.1.5 in the case of a liability within paragraph 1.1.4 the date
on which the Company is required to make the said
repayment or payment.
8. Interest on Late Payments
If any payment required to be made by the Vendor under this Tax
Covenant is not made by the due date for payment thereof, then that
payment shall carry interest from that due date until the date when the
payment is actually made at the rate of 1% per annum above the base
rate from time to time of the Bank compounded quarterly, save that this
paragraph shall not apply to the extent that the Vendor's liability
under paragraph 1 above compensates the Purchaser for the late payment
by virtue of it extending to penalties and interest.
9. Price Reduction
Any payment by the Vendor under this Tax Covenant shall (so far as
possible) be treated as a reduction in the consideration paid for the
Shares provided that nothing in this paragraph 9 shall limit or exclude
the liability of the Vendor under this Agreement.
10. Claims for Tax
10.1 If the Purchaser or the Company receives a Claim for Tax which is
likely to give rise to a liability of the Vendor under this Tax
Covenant, the Purchaser shall (or shall procure that the Company shall)
as soon as reasonably practicable and in any event 10 Business Days
before the expiry of any deadline relevant to responding to or
appealing against a Claim for Tax give written notice of such Claim for
Tax to the Vendor giving details of the nature and quantum of the Claim
for Tax in so far as available at the time notice is given.
10.2 If the Vendor in writing requires the Purchaser shall, or shall procure
that the Company shall, supply the Vendor with such available and
relevant details, documentation, correspondence and information and
shall take such action as the Vendor reasonably requests in writing to
negotiate, avoid, dispute, resist, compromise, defend or appeal against
the Claim for Tax and any adjudication in respect of the Claim for Tax
provided that the Vendor shall first indemnify the Company and the
Purchaser to the reasonable satisfaction of the Purchaser against all
reasonable costs and expenses which may be incurred by the Purchaser or
the Company in relation to the same.
10.3 The Purchaser shall further procure that the Company (if the Vendor
shall indemnify the Purchaser and the Company to the Purchaser's
reasonable satisfaction against all costs and expenses, including
interest on overdue Tax, which may be incurred thereby and, if a
condition of appealing against a Claim for Tax, pay an amount in
respect of the Tax the subject of the Claim for Tax) shall take action
in accordance with the reasonable instructions of the Vendor to avoid,
dispute, defend, resist, appeal or compromise the claim the subject of
the claim for Tax (such a claim where action is so requested being
hereinafter referred to as a "Dispute"), provided that:
(a) the Purchaser shall not be obliged to appeal, nor shall it be
obliged to procure that the Company to appeal, against any
Claim for Tax if, the Vendor having been given written notice
of the receipt of that Claim for Tax in accordance with the
preceding provisions of this paragraph, the Company have not
within 21 days thereafter received instructions in writing
from the Vendor, in accordance with the preceding provisions
of this paragraph, to make that appeal;
(b) the Purchaser shall not be obliged to procure that the Company
take any action under this paragraph which involved contesting
any Claim for Tax before any court or other appellate body
(excluding the authority or body demanding the Tax in
question) unless a written opinion of leading tax counsel of
at least 7 years call, chosen by agreement (and in the absence
of such agreement proposed by the Chair person of the Bar
Council) between the Purchaser and the Vendor, has been
obtained to the effect that an appeal against the Claim for
Tax in question will, on the balance of probabilities, be won;
and
(c) the Purchaser shall not be obliged to take any action which
increases the future liability to Tax of the Purchaser or any
company which is for this time being a member of the same
group of companies as the Purchaser including the company.
10.4 If the Vendor does not request the Purchaser to take or procure the
Company to take any action under paragraph 10.3 or fails to indemnify
the Purchaser or the Company to the Purchaser's reasonable satisfaction
within a period of time (commencing with the date of the notice given
to the Vendor) that is reasonable having regard to the nature of the
claim for Tax and the existence of any time limit in relation to
avoiding, disputing, defending, resisting, appealing or compromising
such claim and which period shall not in any event exceed a period of
30 days or the Dispute concerns fraudulent or dishonest conduct on the
part of the Company before Completion or on the part of the Vendor
before on or after Completion, the Purchaser or Company shall have the
conduct of the Dispute absolutely and without further reference to the
Vendor (without prejudice to its rights under this Deed) and subject to
paragraph 10.7 shall be free to pay or settle the claim for Tax on such
terms as the Purchaser or the Company may in its absolute discretion
consider fit.
10.5 Neither the Purchaser nor the Company shall be subject to any liability
to any of the Vendors for non-compliance with any of the foregoing
provisions of this paragraph 10 if the Purchaser or the Company has
acted bona fide in accordance with their obligations under this
paragraph 10.
10.6 The Purchaser shall keep the Vendor fully informed of the progress in
settling the relevant Claim for Tax conducted at the instructions of
the Vendor and shall, as soon as reasonably practicable, forward, or
procure to be forwarded to the Vendor, copies of all material
correspondence pertaining to it.
10.7 The Purchaser shall not be required on the Vendor's instructions for
the Company to settle or compromise any Claim for Tax if Tax Counsel of
at least 10 years call (approved by the Vendor (such approval not to be
unreasonably withheld or delayed)) determines, at the cost of the
Purchaser, it would be reasonable on the merits of the Claim for Tax
for the Company not to settle or compromise such a claim and the Vendor
shall not be entitled to settle or compromise any Claim for Tax without
the written consent of the Purchaser such consent not to be
unreasonably withheld or delayed.
11. Recovery from Third Parties
11.1 If the Purchaser or the Company recovers from any other person (not
being the Company but including without limitation a Tax Authority) any
amount which is referable to a Tax Liability in respect of which the
Vendor has made a payment under this Schedule, the Purchaser will repay
to the Vendor the lesser of:-
11.1.1 the sum recovered (less any reasonable costs and expenses
properly incurred by the Company and/or the Purchaser in
recovering that sum and any Tax payable on the receipt of
the same);
11.1.2 the amount paid by the Vendor under paragraph 1 above less
any amount paid in respect of costs and expenses under
paragraph 1.1.6 above in respect of the Tax Liability; and
11.1.3 the amount which will leave the Purchaser in the same net
after Tax position that it would have been in had no such
recovery been made.
11.2 If the Purchaser or the Company becomes aware that it is entitled to
recover any amount mentioned in paragraph 10.1 above, the Purchaser
will as soon as reasonably practicable give notice of that fact to the
Vendor and provided that the Vendor indemnifies the Purchaser or the
Company to the reasonable satisfaction of the Purchaser against all
reasonable costs and expenses (including additional Tax) which may be
incurred thereby, the Purchaser shall procure that the Company shall
take such action as the Vendor may reasonably request to effect such
recovery.
12. Purchaser's Covenant
12.1 The Purchaser hereby covenants with the Vendor to pay to the Vendor an
amount equal to any Tax for which the Vendor is or may be liable as a
result of the application of section 767A or section 767AA Taxes Act
(change in company ownership: corporation tax) where the taxpayer
company or the transferred company (as defined in section 767A(1)(a)
and 767AA(1)(a) respectively) is the Company by virtue of non-payment
of Tax by the Company together with any reasonable costs and expenses
reasonably and properly incurred by the Vendor in connection with
taking any successful action under this paragraph save that this
paragraph shall not apply in respect of any Tax for which the Vendor is
liable to make (but has not yet made) payment to the Purchaser under
this Schedule.
12.2 A payment to be made by the Purchaser under this Schedule shall be
made in cleared funds seven days after written demand for
such payment.
12.3 Where the Purchaser fails to make a payment in satisfaction of a
liability under this Schedule by the due date for payment, the
liability of the Purchaser shall be increased to include interest on
such sum from the date on which the Purchaser becomes liable to make
payment until the date when the payment is actually made at a rate per
annum being 1% per annum above the base rate from time to time of the
Bank compounded quarterly.
13. Administration
13.1 The Vendor or its duly authorised agents shall (at the Company's
expense) forthwith prepare the accounts and corporation tax returns of
the Company for all accounting periods ending on or before Completion
to the extent that the same have not been prepared before Completion
and the Purchaser shall procure that the Company provides such access
to its books, accounts and records as is reasonable to enable the
Vendor or its duly authorised agents to prepare the documentation and
to deal with all matters relating thereto.
13.2 Without prejudice to the Purchaser's rights under this Schedule (in
particular paragraph 9) or in relation to the Tax Warranties, the
Purchaser shall procure that the Company shall cause the accounts and
returns mentioned in paragraph 12.1 of this Part so far as it is
legally able to do so to be authorised, signed and submitted to the
appropriate authority with such reasonable amendments, if any, as the
Purchaser may request and shall give the Vendor or his agents all such
assistance as may be reasonably required to agree those returns with
the appropriate Tax Authority provided that the Company shall not be
obliged to sign and submit a return which is wrong or inconsistent, in
any manner.
13.3 The Vendor shall ensure that all communications to the relevant Tax
Authority under this paragraph are first sent to the
Purchaser at least fifteen Business Days before the due date for the
submission of the same and the Vendor shall incorporate
any reasonable comments of the Purchaser.
13.4 The Purchaser shall ensure that all material communications to the
relevant Tax Authority in respect of the accounting period in which
Completion takes place are first sent to the Vendor and the Purchaser
shall consult with the Vendor regarding the contents of such
communications and (without prejudice to the Purchaser's rights under
this Schedule (in particular paragraph 9) or in relation to the Tax
Warranties) shall incorporate any reasonable comments of the Vendor.
13.5 Upon the agreement with the Inland Revenue or other Tax Authority of
the matters conducted by the Vendor or his agents under this paragraph
the Vendor or his agents shall forthwith deliver copies of all relevant
files, documents and information to the Purchaser.
13.6 The Vendor shall use or shall procure that their agents use all
reasonable expedition to ensure that all the tax affairs of the Company
conducted by the Vendor or his agents under this paragraph are
completed as soon as reasonably possible.
14. Section 179A TCGA
The Purchaser shall be entitled to require that the Vendor makes or
procures a member of the Vendor's Group (the member being chosen by the
Vendor) to make an election under Section 179A TCGA to pass any
liability to such other company that would have arisen under Section
179 TCGA to the Company.
15. No Deductions or Withholdings
15.1 Save only as may be required by law all sums payable by the Vendor
under this Agreement shall be paid free and clear of all
deductions or withholdings whatsoever.
15.2 If any deduction or withholding is required by law to be made from any
payment by the Vendors under this Agreement, or the Purchaser is
subject to Tax in respect of any payment by the Vendor under this
Agreement, the Vendor shall pay such additional sum as is necessary to
ensure that the net amount received and retained by the Purchaser
(after taking account of such deduction or withholding or Tax) will,
leave the Purchaser with the same amount as it would have been entitled
to receive in the absence of any such requirement to make a deduction
or withholding for Tax PROVIDED THAT to the extent that the benefit of
any part of this Agreement is assigned, novated or otherwise
transferred by the Purchaser the Vendor's liability under this
Agreement shall be no greater than it would have been had the payment
in question been made to the Purchaser.
Part 3 - Tax Warranties
1. Tax Returns
1.1 The Company has duly made all claims disclaimers elections and
surrenders and given all notices and consents and done all other things
in respect of Tax the making giving or doing of which was assumed to
have been made for the purposes of the Accounts. All such claims,
disclaimers, elections, surrenders, notices, consents and other things
have been accepted as valid by the relevant Tax Authority and none have
been revoked or otherwise withdrawn.
1.2 The Company has duly made or submitted all returns, computations,
notices, registrations and accounts which ought to have been made for
the purposes of Tax (including all returns, documents or information in
respect of PAYE and National Insurance or any similar taxes outside the
United Kingdom) and all such returns (and all other information
supplied to any Tax Authority for such purpose were at the time when
they were submitted complete, correct and up-to-date and remain
complete and correct in all material respects.
1.3 The Tax affairs of the Company have never been the subject of
investigation or enquiry (other than routine enquiries in respect of
PAYE, VAT or Social Security Contributions) by any Tax Authority and no
Tax Authority has indicated that it intends to investigate the Tax
Affairs of the Company.
1.4 The Company has duly paid all Tax which it has become liable to pay and
is under no liability to pay any penalty or interest in connection with
any claim for Tax and there is no Tax the payment of which has been
postponed by agreement with the relevant Tax Authority or by virtue of
any right under the Tax Statutes or the practice of any Tax Authority.
1.5 The Company has (to the extent required by law) preserved and retained
in its possession records relating to its Tax affairs (including PAYE
and National Insurance or any similar taxes outside the United Kingdom
records and VAT records) and has sufficient records relating to past
events to calculate the profit, gain, loss, balancing charges or
allowances or any reliefs (all for Tax purposes) which would arise on
any disposal or on the realisation of any assets owned at the Accounts
Date or acquired since that date.
2. Deductions and Withholdings
The Company has made all deductions and withholdings in respect of, or
on account of, any Tax (including amounts to be deducted under the PAYE
and National Insurance systems) from any payments made by it which it
is obliged or entitled to make and (to the extent required to do so)
has accounted in full to the relevant Tax Authority for all amounts so
deducted or withheld and has (to the extent required by law) duly
provided certificates of deduction of tax to the recipients of payments
from which deductions have been made.
3. Overseas Elements
The Company has never been resident or had a branch, agency, place of
business, any permanent establishment (within the meaning of the OECD
Model Double Taxation Agreement) or subsidiary incorporated outside the
United Kingdom and has never carried out any trading activities outside
the United Kingdom for the purposes of any Tax Legislation.
4. Close Companies
4.1 The Company is not and has not at any time been a close investment
holding company within the meaning of section 13A ICTA.
4.2 The Company has not at any time during the period of seven years ending
on the date of this Agreement made any payment which
falls to be treated as a distribution under section 418 ICTA
(distribution to include certain expenses of close companies).
4.3 The Company has not made any loan, advance or payment or given any
consideration which could fall to be chargeable to tax
under sections 419 to 422 ICTA and which have remained outstanding at
any time during the period of seven years ending on the date of this
Agreement and the Company has not released or written off or agreed to
write off the whole of any such loans or advances.
5. Capital Gains
The sum which would be allowed as a deduction from the consideration
under section 38 TCGA of each asset of the Company (other than trading
stock) if disposed of on the date of this Agreement would not be less
than (in the case of an asset held on the Accounts Date) the book value
of that asset shown or included in the Accounts or (in the case of an
asset acquired since the Accounts Date) an amount equal to the
consideration given for its acquisition.
6. Capital Allowances
No balancing charge in respect of any capital allowances claimed or
given would arise if any asset of the Company were to be realised for a
consideration equal to the amount of the book value of such asset as
shown or included in the Accounts (or, in the case of any asset
acquired since the Accounts Date, for a consideration equal to the
consideration given for the acquisition)
7. Stamp Duties
7.1 The Company has duly paid all stamp duty for which it is or has been or
may be made liable and without limitation:-
7.1.1 all documents in the enforcement of which the Company is or may be
interested have been duly stamped; and
7.1.2 there are no documents outside the United Kingdom which if they were
brought into the United Kingdom would give rise to a
liability to stamp duty payable by the Company.
7.2 The Disclosure Letter sets out full and accurate details of any
chargeable interest (as defined under section 48 of FA 2003) acquired
or held by the Company in respect of which a land transaction return or
additional land transaction return will be required to be filed with a
Tax Authority or payment of Stamp Duty Land Tax made on or after
Completion.
8. Value Added Tax
8.1 The Company is registered for VAT in the United Kingdom under schedule
1 VATA and has not at any time in the last six years been treated as
(nor applied to be) a member of a group of companies for VAT purposes.
8.2 The Company has not made and is not otherwise bound by any election
made pursuant to paragraph 2 (election to waive
exemption) of schedule 10 VATA.
9. Share and Bonus Schemes
The Company has not established (nor is it a participant in) any bonus,
share option, profit related pay or other scheme or arrangement,
whether or not approved by the Inland Revenue, for the benefit of its
current or former officers or employees or any of them.
10. Corporation Tax - Instalment Payments
The Company is a "large company" as defined by regulation 3 CTIP.
11. Capital Goods Scheme
The Company does not own and has not at any time within the period of
10 years preceding the date of this Agreement owned any assets which
are capital items subject to the Capital Goods Scheme under Part XV of
the VAT Regulations 1995.
12. Section 765 TA 88
The Company has not without the prior consent of the Treasury carried
out or agreed to carry out any transaction under section 765 TA 88
which would be unlawful in the absence of such consent and has, where
relevant, complied with the requirements of section 765A(2) TA 88
(supply of information on movement of capital within the EU) and any
regulations made or notice given under this Agreement.
13. Transactions Requiring Clearance or Consent
All particulars furnished to any Taxation Authority in connection with
an application for clearance or consent by the Company or on its behalf
or affecting the Company have been made and obtained on the basis of
full and accurate disclosure to the relevant Taxation Authority of all
relevant material facts and considerations and any transaction for
which clearance or consent was obtained, has been carried into effect
only in accordance with the terms of the relevant clearance or consent.
14. Calculation of Liability
The Company has sufficient records relating to past events, including
any elections made, to permit accurate calculation of the Taxation
liability or relief which would arise upon a disposal or realisation on
Completion of each asset owned by the Company at the Accounts Date or
acquired by the Company since that date but before Completion.
15. Claims and Disclaimers
The Company has duly submitted all claims and disclaimers the making of
which has been assumed for the purposes of the Accounts.
16. Leased Assets
The Company has not made any claim for capital allowances in respect of
any asset which is leased to or from or hired to or from the Company
and no election affecting the Company has been made or agreed to be
made under sections 53 or 55 CAA in respect of such assets.
17. Finance Leases
The Company is not a lessee under a lease to which the provisions of
Schedule 12 FA 1997 apply or could apply.
18. Short Life Assets
The Company has not made any election under section 37 CAA nor is it
taken to have made such an election under section 37(8)(c) CAA.
19. Long Life Assets
The company does not own and has not owned a long life asset (within
the meaning of section 38A CAA) in respect of which any claim for
capital allowances would be subject to the provisions of sections
38E-38G CAA.
20. Industrial Buildings
None of the assets of the Company expenditure on which has qualified
for a capital allowance under Part I CAA has at any time been used
otherwise than as an industrial building or structure.
21. Non-Deductible Payments
No rents, interest, annual payments or other sums of an income nature
paid or payable by the Company or which the Company is under an
existing obligation to pay in the future are or may be wholly or
partially disallowable as deductions, management expenses or charges in
computing profits for the purposes of corporation tax.
22. No Unremittable Income or Gains
No claims have been made by the Company under sections 584, 585 or 723
TA 88 or under section 279 TCGA.
23. Controlled Foreign Companies
No notice of the making of a direction under section 747 TA 88 has been
received by the Company and no circumstances exist which would entitle
the Inland Revenue to make such a direction or to apportion any profits
of a controlled foreign company to the Company pursuant to section 752
TA 88.
SCHEDULE 6
Limitations
1. The aggregate liability of the Vendor in respect of all Claims
(excluding a Claim under paragraph 3 of Schedule 4) shall be
limited to (pound)16,500,000.
2. No Warranty Claim shall be brought by the Purchaser nor shall the
Vendor be liable in respect of any Warranty Claim unless:- 2.1 that
Warranty Claim exceeds (pound)15,000 in amount ("a Relevant Claim");
and unless 2.2 the amount of that Relevant Claim when added to the
aggregate amount of all other Relevant Claims exceeds (pound)300,000 in
which
case the Vendor shall be liable for the whole of such Relevant Claims
and not merely the excess. For the avoidance of doubt, no matter waived
by the Purchaser in accordance with Clause 5 shall be taken into
account in determining whether or not the amount of any such Relevant
Claims is equal to or greater than (pound)300,000.
3. The Purchaser shall not make any Warranty Claim against the Vendor nor
shall the Vendor have any liability in respect of any matter or thing
unless notice in writing of the relevant matter or thing (specifying
the details and circumstances giving rise to the Warranty Claim or
Warranty Claims and an estimate in good faith of the total amount of
such Warranty Claim or Warranty Claims) is given to the Vendor:
3.1 18 months in the case of any other Warranty Claim excluding a claim
under paragraphs 13 (Product Liability) and 29
(Environmental) of Schedule 4; and
3.2 two years in the case of a Warranty Claim under paragraph 13 (Product
Liability) of Schedule 4; and
3.3 four years in the case of a Warranty Claim under paragraph 29
(Environmental) of Schedule 4.
4. The Purchaser shall not make any Claim against the Vendor in respect
of the Tax Covenant nor shall the Vendor have any
liability in respect of any matter or thing unless notice in writing of
the relevant matter or thing (specifying the details and circumstances
giving rise to a Claim in respect of the Tax Covenant and an estimate
in good faith of the total amount of such Claim) is given to the Vendor
seven years after the Completion Date.
5. The Purchaser shall promptly notify the Vendors of Claims (other than a
Claim in relation to the Tax Covenant) provided that a failure to
notify promptly shall not affect such Claim save to the extent the
Vendor is actually prejudiced by such failure to notify promptly.
6. The liability of the Vendor in relation to any Warranty Claim shall
absolutely terminate (if that Warranty Claim has not previously been
withdrawn, satisfied or settled) if legal proceedings in respect of
that Warranty Claim containing particulars of the nature and extent of
it (to the extent then known) shall not have been properly issued and
validly served on the Vendor within six months of the date of service
of any notice under paragraph 3.
7. No Warranty Claim may be made by the Purchaser against the Vendor and
the Vendor shall have no liability under any Warranty Claim in respect
of:
7.1 any liability, matter or thing or disclosure fairly disclosed by the
Disclosure Letter and/or the Supplemental Disclosure
Letter; or
7.2 any warranty, representation, indemnity, covenant, undertaking given
in relation to the sale of the Shares except where it
is expressly contained in this Agreement; or
7.3 any liability, matter or thing provided for in the Accounts; or
7.4 any liability, matter or thing paid or satisfied on or before the
Accounts Date where such payment is reflected in the
Accounts; or
7.5 any liability, matter or thing specifically provided for or taken
account of in the Management Accounts; or
7.6 any liability, matter or thing provided for in the Completion Accounts
or which was otherwise the subject of an adjustment
under Schedule 7; or
7.7 any liability, matter or thing if that liability, matter or thing would
not have arisen or occurred but for an act, transaction or omission
done, entered into or omitted to be done by the Purchaser or the
Company or any of their respective directors, employees or agents:
7.7.1 on or before Completion on the request of or under the direction of
the Purchaser or any of its directors, employees or agents; or
7.7.2 after Completion other than as required by law or pursuant
to a legally binding commitment of the Company created on
or before Completion and otherwise than in the proper and
ordinary course of business of the Company as carried on
immediately before Completion; or
7.8 any liability or matter resulting from a change in the accounting or
taxation policies or practices of the Purchaser or any related company
of the Purchaser or the Company (including the method of submitting
taxation returns) introduced or having effect after Completion; or
7.9 any liability, matter or thing to the extent that it occurs as a result
of or is otherwise attributable to:
7.9.1 any law, regulation, rule or practice not in force at the date of this
Agreement or any change in the interpretation of any law, regulation,
rule or practice whether or not with retrospective effect; or
7.9.2 any increase after the date of this Agreement in the rates
of taxation in force at the date of this Agreement
(including any effect such increase may have on any
provision or reserve made in the Accounts which were
prepared in good faith prior to this increase); or
7.9.3 the Purchaser or the Company disclaiming any part of the
benefit of capital or other allowances against the
taxation claimed or proposed to be claimed on or before
the date of this Agreement provided that such claim or
proposed claim has been taken into account in preparing
the Completion Accounts and the Purchaser is or ought
reasonably to be aware of this; or
7.10 any liability which is contingent only unless or until such contingent
liability becomes an actual liability and is due and payable, but this
paragraph 7.10 shall not operate to avoid a Warranty Claim made in
respect of the contingent liability within the applicable time limits
specified in paragraph 4 above; or
7.11 any change in the conduct of or the cessation or winding up of the
business of the Company; or
7.12 any loss for which the Purchaser or the Company has been reimbursed.
8. The Vendor shall be entitled to require the Purchaser (in the name
of the Company if the Vendor so requests) or the Company at the expense
of the Vendor to take all such steps or proceedings as the Vendor may
reasonably require in order to avoid, dispute, resist, mitigate,
compromise, defend or appeal against any relevant third party claim
(that is to say any claim by a third party against the Company either
in relation to Clause 11.4 or which will give rise or has given rise to
any other Claim (other than a Claim in relation to Tax) and in respect
of which the Vendor has admitted liability to the Purchaser
under this Agreement, a "Relevant Third Party Claim") and the Purchaser
shall act or shall procure that the Company shall act in accordance
with any such requirements subject to the Purchaser and/or the Company
being indemnified by the Vendor to the reasonable satisfaction of
the Purchaser against all reasonable costs and expenses incurred
or to be incurred in connection with the taking of such steps or
proceedings.
9. For the purpose of enabling the Vendor to avoid, dispute, resist,
mitigate, compromise, defend or appeal against any Relevant Third Party
Claim or to decide what steps or proceedings should be taken in order
to do so, the Purchaser shall:
9.1.1 give written notice to the Vendor within 14 days of any
Relevant Third Party Claim or any circumstances giving or
likely to give rise to a Relevant Third Party Claim coming
to its notice or to the notice of the Company;
9.1.2 subject to legal or professional privilege disclose in writing to the
Vendor all information and documents relating to any Relevant Third
Party Claim or liability, matter or thing which may give rise to a
Relevant Third Party Claim and, if requested by the Vendor, on
reasonable notice give the Vendor and its professional advisers
reasonable access during normal working hours to the personnel of the
Purchaser and/or the Company as the case may be and to any relevant
premises, chattels, accounts, documents and records within the power,
possession or control of the Purchaser and/or of the Company which
relate to such Relevant Third Party Claim to enable the Vendor and
its professional advisers to interview such personnel, and to
examine such premises, chattels, accounts, documents and records
and to take copies or photographs of the relevant accounts,
documents or records all at their own expense;
9.1.3 not make any admission of liability, agreement or
compromise with any person, body or authority in relation
to the Relevant Third Party Claim without prior
consultation with the Vendor;
9.1.4 if the Vendor so requests, delegate entirely to it the
conduct of any proceedings of whatsoever nature arising in
relation to the Relevant Third Party Claim and, in that
event, give or cause to be given to the Vendor all such
assistance as it may reasonably require in disputing that
Relevant Third Party Claim and instruct such solicitors or
other professional advisors (at the cost of the Vendor) as
the Vendor may nominate (with the approval of the
Purchaser, such approval not to be unreasonably withheld
or delayed) to act in accordance with the Vendor's
instructions on their behalf or on behalf of the Company.
10. Neither the Purchaser or the Company shall be obliged to take any
action referred to in paragraphs 8 and 9 of this Schedule if the taking
of such action is in the reasonable view of the Purchaser likely to be
detrimental to the goodwill of the Purchaser or the Company or disrupt
the business or operations of the Company.
11. The Vendor shall reimburse to the Purchaser or the Company (as the case
may be) all reasonable costs, charges and expenses incurred by any of
them in complying with its obligations under paragraphs 8 and 9 of this
Schedule.
12. The Purchaser shall forthwith reimburse to the Vendor an amount equal
to any sum paid by the Vendor in relation to any Claim which is
subsequently recovered by or paid to the Purchaser or to the Company by
a third party, less the reasonable costs of recovery.
13. Payment of any Warranty Claim by a third party shall to the extent of
such payment satisfy and preclude any other Warranty Claim which is
capable of being made against the Vendor in respect of the same subject
matter to the intent that the Purchaser shall not be entitled to
recover more than once in respect of the same sum.
14. Nothing in this Agreement shall in any way diminish the Purchaser's or
the Company's common law obligation to mitigate its loss.
15. If the Vendor shall have made any payment in respect of any Warranty
Claim and the Company shall receive a benefit or refund which was not
taken into account in calculating the liability of the Vendor in
respect of that Warranty Claim and would have reduced the liability had
this been so, the Purchaser shall forthwith repay to the Vendor a sum
corresponding to such benefit or refund as the case may be up to an
amount equal to the payment made in respect of the Warranty Claim.
16. The Purchaser agrees with the Vendor that, in respect of any matter
which may give rise to a Claim or other liability in relation to this
Agreement or any of the documents in Agreed Form, such Claim or
liability shall not be met more than once.
17. Any payment made by the Vendor pursuant to any Claim shall be deemed to
constitute a repayment of and a reduction in the aggregate
consideration payable by the Purchaser for the Shares.
18. In assessing any damages or compensation payable by the Vendor the
value of the Shares shall not be taken as exceeding the Purchase Price.
19. Without prejudice to any other provision of this Agreement, if the
Purchaser intends to bring a Warranty Claim against the Vendor in
respect of paragraph 13 (Product Liability) of Schedule 4 (a "PL
Claim"), the Purchaser agrees not to issue and serve proceedings
against the Vendor in accordance with the provisions of this Schedule
unless it has:
19.1 notified the Vendor as soon as practicable of the circumstances
relating to that PL Claim; and
19.2 provided all reasonable assistance to the Vendor and details of all
relevant correspondence and documentation in respect of
such PL Claim; and
19.3 co-operated with the Vendor and the relevant insurance broker or
insurance company and exhausted all available means to it to effect
recovery under any relevant policy of insurance within the time period
in paragraph 19.4; and
19.4 not either recovered under any relevant policy of insurance or received
confirmation from the relevant insurance broker or insurance company of
an intention to settle the relevant PL Claim in either case within a
period of 4 months from the date on which the Vendor has been notified
of the relevant PL Claim under paragraph 19.1 above,
provided always that any action in relation to this paragraph shall
increase the time limit set out in paragraph 5 above so that the
Purchaser has a further six months from the date of complying with this
paragraph 19 to bring proceedings against the Vendor in respect of a PL
Claim.
20. Without prejudice to the terms of the Tax Covenant, no Claim may be
made by the Purchaser against the Vendor under Clause 11.4, and the
Vendor shall have no liability, in respect of any liability matter or
thing provided for in the Completion Accounts or which was otherwise
the subject of an adjustment under Schedule 7.
21. Without prejudice to any other provision of this Agreement, if the
Purchaser intends to bring a Warranty Claim against the Vendor in
respect of paragraph 29 (Environmental) of Schedule 4 (a "Environmental
Claim"), the Purchaser agrees not to issue and serve proceedings
against the Vendor in accordance with the provisions of this Schedule
unless it has:
21.1 notified the Vendor as soon as practicable of the circumstances
relating to that Environmental Claim; and
21.2 provided all reasonable assistance to the Vendor and details of all
relevant correspondence and documentation in respect of
such Environmental Claim; and
21.3 co-operated with the Vendor and the relevant insurance broker or
insurance company and exhausted all available means to it to effect
recovery under any relevant policy of insurance within the time period
in paragraph 21.4; and
21.4 not either recovered under any relevant policy of insurance or received
confirmation from the relevant insurance broker or insurance company of
an intention to settle the relevant Environmental Claim in either case
within a period of 4 months from the date on which the Vendor has been
notified of the relevant Environmental Claim under paragraph 21.1
above,
provided always that any action in relation to this paragraph shall
increase the time limit set out in paragraph 5 above so that the
Purchaser has a further six months from the date of complying with this
paragraph 21 to bring proceedings against the Vendor in respect of a
Environmental Claim.
SCHEDULE 7
Part One - Adjustment of Consideration
1. Interpretation
In this Schedule, where the context admits:
"Completion
Accounts"
means the consolidated balance sheet of the Company and its Subsidiary prepared
in accordance with paragraph 2 and agreed or determined in accordance with
paragraph 4 and a statement of Net Working Capital using the pro forma set out
in part three of this Schedule;
"Debt"
means the aggregate, stated in pounds sterling, of the following (i) the amount
drawn down by the Company and the Subsidiary under any facilities as stated in
their respective books on the Completion Date, (ii) any additional amounts
required in order to pay off such facilities in full at Completion including
break fees and all costs and expenses, including in relation to the transactions
contemplation by this Agreement to the extent not satisfied in full prior to
Completion, (iii) the total amounts required to pay off at Completion under any
finance leases or capital leases, hire purchase contracts, factoring
arrangements whether or not interest bearing, in each case entered into in the
period between 1 July 2005 and the Completion Date, including all repayment
fees, costs and expenses, (iv) all employee loyalty, stay bonus, transaction
bonus or costs to the extent not satisfied in full prior to Completion and any
Taxes incurred or withheld in connection thereunder, (v) pension liabilities of
the Company or the Subsidiary as at Completion to the extent not paid prior to
Completion and any amounts owing but unpaid by the Company or its Subsidiary in
connection with any pension or retirement benefit of any person or any insurance
legally required in connection therewith, (vi) all amounts required to pay off
and discharge in full all other indebtedness for borrowed money of whatever
nature outstanding in the Company or its Subsidiary upon Completion, (vii) all
amounts of whatsoever nature owed to the Vendor or any member of the Vendor's
Group, (viii) the amount of customer deposits, unearned revenue or advance
payments received for which the associated supplies of goods or services have
not been made at or prior to the Completion Date (ix) any unpaid breakage costs
for the unwinding of any foreign exchange and interest rate xxxxxx as at the
Completion Date, (x) obligations as of the Completion Date in respect of the
deferred purchase price of property or services (other than payables incurred in
the ordinary course of business), (xi) an amount equal to any accrual for all
unpaid Taxes of the Company and its Subsidiary as at Completion as set forth in
the Completion Balance Sheet (whether or not due and payable), (xii) an amount
equal to any exceptional liabilities in respect of severance, restructuring,
product warranties, litigation and legal claims, onerous contracts and
provisions in respect of the Hive Up Agreement in each case as set forth on the
Completion Accounts other than those exceptional liabilities to which the
Purchaser has consented under Clause 6.3 or which are otherwise the subject of
Clause 5.9, (xiii) any amounts payable by the Purchaser or any member of the
Purchaser's Group to replace any guarantee or security of the nature described
in Clause 11.1;
"Net Working Capital"
means the aggregate of Current Assets minus (a) Current Liabilities and (b) Debt
which is not repaid on or prior to Completion; where
i) Current Assets means all current assets,
stocks, debtors and cash in hand and at
bank as shown in the Completion Accounts,
but excluding to the extent included
therein the following: (i) restricted /
trapped cash in hand and at bank; (ii) all
amounts owed by the Vendor's Group; (iii)
stocks, debtors and any other current
assets related to the Aircraft Seating
Business; and (iv) deferred tax assets;
ii) Current Liabilities means all current
liabilities, creditors and accruals as
shown in the Completion Accounts, but
excluding to the extent included therein
the following: (i) current and deferred
corporate income tax liabilities; and (ii)
all Debt to the extent not paid on or
prior to Completion.
2. Completion Accounts
2.1 The Purchaser shall as soon as practicable, and in any event within 20
Business Days after Completion, procure that a draft consolidated
balance sheet for the Company and the Subsidiary shall be prepared in
the form set out in part two of this Schedule and in accordance with
paragraph 4 of this Schedule and a draft statement of Net Working
Capital are delivered to the Vendor.
2.2 The parties shall use their best endeavours to secure compliance with
this Schedule by their respective accountants.
2.3 Each party shall promptly supply all such information and provide
access to all such records and personnel as the other and
any independent firm of accountants appointed under paragraph 2.8 shall
reasonably require.
2.4 The Vendor, if so required by the Purchaser or such independent firm,
shall use all reasonable endeavours with the reasonable assistance of
the Purchaser (including the provision by the Purchaser of an indemnity
to the auditors in the usual form), to obtain for the Purchaser or such
independent firm access to the working papers of the Company's auditors
prepared in relation to the audit of the Accounts.
2.5 As soon as the draft Completion Accounts shall have been prepared, the
Purchaser shall send a copy to the Vendor and shall in addition, at the
same time, send to the Vendor its calculation of the Net Working
Capital together with any relevant supporting documents.
2.6 Unless the Vendor shall within 10 Business Days after receipt of the
draft Completion Accounts (and calculation as provided in paragraph 2.5
serve a notice in writing on the Purchaser that it objects to the draft
Completion Accounts (identifying the reason for any objection and the
amount(s) or item(s) in the draft Completion Accounts and/or
calculation which is/are in dispute) (such notification being, for the
purposes of this paragraph 2.6, an "Objection Notice") the Vendor shall
be deemed to have agreed to the draft Completion Accounts and the
Purchaser's calculation of the Net Working Capital for all purposes of
this Agreement.
2.7 If, on or before the expiry of the period referred to in paragraph 2.6,
the Vendor shall serve upon the Purchaser an Objection Notice then the
Purchaser and the Vendor shall use their reasonable endeavours to reach
agreement upon adjustments to the draft Completion Accounts and the
value of Net Working Capital. Neither the Vendor nor the Purchaser
shall be entitled to propose any adjustments to the draft Completion
Accounts except: (i) in the case of the Vendor, an adjustment relating
to any asset or liability referred to its Objection Notice and (ii) in
the case of either of them, an adjustment by way of counter-proposal to
an adjustment proposed by the other of them, being in each case, a
revision of an adjustment referred to in the Objection Notice.
2.8 If the Vendor and the Purchaser are unable to reach agreement within 10
Business Days following service of the Objection Notice, either the
Vendor or the Purchaser shall be entitled to refer the matter or
matters in dispute to KPMG or, in the event that KPMG is unable or
unwilling to act, to an independent national firm of chartered
accountants (in either case, "the Firm") agreed upon between them or
(failing agreement) to be selected (at the instance of either party) by
the President for the time being of the Institute of Chartered
Accountants in England and Wales. The Vendor and the Purchaser shall
use their respective best endeavours to procure that the Firm delivers
their decision within such time as may be stipulated in their terms of
reference. The Firm shall act as experts not as arbitrators and shall
determine the matter or matters in dispute (which may include any
dispute concerning the interpretation of any provision of this
Agreement affecting the Completion Accounts or their jurisdiction to
determine the dispute or the content or interpretation of their terms
of reference) and their decision shall be final and binding. The Firm
may so far as is reasonable instruct valuers, solicitors and other
professional advisers to the extent they consider necessary to reach
their determination. The fees and expenses of the Firm (including the
reasonable fees of any professional advisers appointed by them as
aforesaid) and any professional fees incurred by the Vendor and the
Purchaser in relation to the dispute shall be borne by the Vendor and
the Purchaser equally or in such other proportions as the Firm shall
direct.
2.9 If on or before the expiry of the period referred to in paragraph 2.4
the Vendor shall not have served an Objection Notice on the Purchaser,
or if such notice is served and the Purchaser and the Vendor shall
subsequently agree the draft Completion Accounts or the matters in
dispute are referred to the Firm under paragraph 2.6, the draft
Completion Accounts, as adjusted (where applicable) so as to be in
accordance with the agreement of the Purchaser and the Vendor or the
determination of the Firm shall be the Completion Accounts for the
purposes of this Agreement and shall be final and binding on the
parties.
3. Specific requirements
3.1 In preparing the Completion Accounts, a classified consolidated balance
sheet should be prepared in the format set out in part two of this
Schedule and in accordance with the following hierarchy of Policies:
3.1.1 in the first place, the specific accounting policies set out in
paragraph 4 below;
3.1.2 subject to paragraph 3.1.1 above and where the accounting
treatment set out in paragraph 3.1.1 is inapplicable,
using the same accounting policies, principles, bases and
practices as those adopted in the preparation of the
Accounts, consistently applied; and
3.1.3 subject to paragraph 3.1.2 above and where the accounting
treatment set out in paragraph 3.1.2 is inapplicable, in
accordance with UK GAAP as at the Completion Date. For
these purposes, "UK GAAP" means the statements of standard
accounting practice referred to in section 256 CA 1985
issued by the Accounting Standards Board or such other
body as is prescribed by the Secretary of State from time
to time, including the statements of standard accounting
practice formerly issued by the Accounting Standards
Committee and since adopted by the Accounting Standards
Board, the Abstracts issued by the Urgent Issues Task
Force and any financial reporting standards issued by the
Accounting Standards Board or such other body referred to
above.
3.2 The Completion Accounts shall be prepared to the close of business on
the Completion Date and shall not include any transactions contemplated
by this Agreement. The Hive Up is not to be treated as a transaction
contemplated by this Agreement.
3.3 The Completion Accounts shall be prepared as if the Completion
Date had fallen on an accounting reference date of the Company.
4. Specific Accounting Policies to be applied in the Completion Accounts
4.1 The Completion Accounts shall contain a note of all the material
details of each claim, election, surrender, disclaimer made or notice
or consent given or any other thing done for the purpose of calculating
any provision for Tax in the Completion Accounts or any provision for
Tax that would have been made in the Completion Accounts but for any
Relief (as defined in Schedule 5).
4.2 For the avoidance of doubt, in preparing the draft Completion Accounts
no minimum materiality limits shall be applied, except where stated in
paragraph 5 below.
4.3 No adjustments shall be made to the Completion Accounts in relation
to any matter which arises from any decision taken by
the Purchaser.
4.4 In the event that the Completion Date does not fall upon the date of a
normal accounting month end, all items accounted for on a time
apportioned basis, including accruals, and prepayments, will be
calculated on a daily basis.
4.5 Save as otherwise provided in this Schedule, to the extent that the
making of general provisions was part of the accounting policies,
principles, practices, evaluation rules and procedures, methods and
bases adopted by the Company in the preparation of the Accounts, such
general provisions shall be made in the Completion Accounts.
4.6 No provision shall be made in respect of any post-balance sheet
event occurring more than 20 Business Days after the
Completion Date.
4.7
4.7.1 On the Completion Date the Vendor will commence a physical
stock take of the stock of the Company and its Subsidiary
in a manner consistent with normal procedures of the
Vendor's Group and will conclude the same as soon as
practicable thereafter. The Vendor's auditors and the
Purchaser's auditors shall be given access to relevant
sites at relevant times in order to observe the procedures
being carried out.
4.7.2 Stock should be valued at the lower of cost and net
realisable value. Net realisable value is the estimated
selling price of the stock, less further costs to
completion, and less all administrative, distribution and
selling expenses that would be incurred in selling that
stock. Cost is defined as the actual acquisition costs for
purchased goods and materials plus direct and indirect
production costs, including actual production overheads
(absorbed using consistent absorption methodologies as
applied in the preparation of the Accounts) for
manufactured goods.
4.7.3 The cost of raw materials is the invoice purchase price
applied on a first in first out basis. This will include
all charges incurred in bringing them to their current
location and physical state, eg. customs duties, freight
and carriage charges. Demurrage charges should not be
included. Trade discounts and rebates should be deducted
where practicable, but not discounts for cash settlement.
4.7.4 The cost of work in progress and finished goods is factory
cost comprising all expenditure incurred up to the last
operation completed. The valuation should also include
direct labour and production overheads (absorbed using
consistent absorption methodologies as applied in the
preparation of the Accounts).Costs are determined on the
basis of first in first out (FIFO).
4.7.5 Adequate provision will be made for slow moving and
obsolete stocks. The method of calculating provisions is
as follows:
i) a 50% provision shall be applied to all stock
which has not moved for between 6 and 12 months,
ii) a 100% provision shall be applied to all stock
which has not moved for over 12 months, except where,
on review of individual product lines taking into account
shelf life, product in back log and necessary stock
holdings for ongoing business, management views the
formula based provision for the individual stock line as
inappropriate. Slow moving stock is valued on the basis of
expected realisable value. Unsaleable stock is fully
written-off. If this will involve disposal costs,
these are provided for at the time the decision is made to
write off the stock.
4.7.6 Unrealised profit consists of the gross margin on intra
group sales relating to goods that have not been sold to a
third party by the receiving group company as of the
Completion Date and is eliminated on consolidation.
5. Adjustment of Consideration
5.1 When the Completion Accounts have become final and
binding, the Purchase Price shall forthwith:
5.1.1 be increased by the amount (if any) by which the Net
Working Capital of the Company as at the date of
Completion as shown by the Completion Accounts are greater
than (pound)3,700,000; or (as the case may be)
5.1.2 be reduced by the amount (if any) by which the Net Working
Capital of the Company as at the date of Completion as
shown by the Completion Accounts are less than
(pound)3,700,000.
5.2 Any increase or reduction in the Purchase Price shall be paid by the
Purchaser or the Vendor (as appropriate) within 5 Business Days after
agreement or determination of the Completion Accounts and the statement
of Net Working Capital.
5.3 Notwithstanding any other provision of this Schedule, no payment shall
be made under this paragraph 5 of Schedule 7 unless such payment
exceeds (pound)20,000 in which case the whole amount of any increase or
reduction in the Purchase Price shall be payable and not merely the
excess over (pound)20,000.
Part Two - Pro Forma Consolidated Balance Sheet
Fixed Assets
Intangible Assets
Tangible Assets
Current Assets
Stocks
Debtors
Investments
Cash at bank
Restricted / Trapped Cash
Creditors: amounts falling due within one year
Net Current Assets
Total assets less current liabilities
Provisions for liabilities and charges
Deferred tax
Minority interests
Net Assets
Part Three - Statement of Net Working Capital
Current Assets X
Current Liabilities X
Debt X
Net Working Capital X
Total {}[due to Vendor/Purchaser] X
Executed as a deed by XXXXXXXX INDUSTRIES INC
acting by:
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Authorised Signatory
Authorised Signatory
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[Authorised Signatory]
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Executed as a deed by TCG GUARDIAN 2 LIMITED
acting by:
Director
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Director
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Director/Secretary
