EXHIBIT 2.1
DATED ______________ 2005
(1) XXXXXX XXXXXXXX AND OTHERS
- AND -
(2) XXXXXX XXXX
- AND -
(3) COTT BEVERAGES LIMITED
AGREEMENT
relating to
the sale and purchase of the whole of the issued
share capital of
Macaw (Holdings) Limited
CONTENTS
1. DEFINITIONS AND INTERPRETATION ...................................... 1
2. SALE AND PURCHASE OF SHARES ......................................... 8
3. CONSIDERATION ....................................................... 9
4. COMPLETION .......................................................... 9
5. WARRANTIES .......................................................... 9
6. LIMITATION ON THE WARRANTORS' LIABILITY ............................. 11
7. DEFERRED A SHARE SUBSCRIPTION ....................................... 11
8. POST COMPLETION COVENANTS ........................................... 11
9. INDEBTEDNESS ........................................................ 13
10. TAXATION ............................................................ 13
11. PURCHASER'S WARRANTIES, COVENANTS AND POST COMPLETION COVENANTS ..... 14
12. FURTHER ASSURANCE AND ATTORNEY ...................................... 14
13. ANNOUNCEMENTS ....................................................... 15
14. COSTS ............................................................... 15
15. CONFIDENTIALITY ..................................................... 15
16. SUCCESSORS AND ASSIGNMENT ........................................... 17
17. ENTIRE AGREEMENT .................................................... 17
18. VARIATIONS .......................................................... 18
19. WAIVER .............................................................. 18
20. AGREEMENT CONTINUES IN FORCE ........................................ 18
21. SEVERABILITY ........................................................ 19
22. NOTICES ............................................................. 19
23. COUNTERPARTS ........................................................ 19
24. THIRD PARTY RIGHTS .................................................. 19
25. GOVERNING LAW AND JURISDICTION ...................................... 19
SCHEDULE 1 ................................................................ 21
Details of the Vendors, the Shares and the Consideration ............... 21
SCHEDULE 2 ................................................................ 22
Part 1 ................................................................. 22
The Company ............................................................ 22
Part 2 ................................................................. 24
The Subsidiary ......................................................... 24
SCHEDULE 3 ................................................................ 26
The Warranties ......................................................... 26
Part 1 ................................................................. 26
General ................................................................ 26
Part 2 ................................................................. 54
Properties and environmental matters ................................... 54
SCHEDULE 4 ................................................................ 59
Taxation ............................................................... 59
Part 1 Definitions and interpretation .................................. 59
Part 3 Tax Covenant .................................................... 72
Part 4 Limitations and Procedure ....................................... 75
SCHEDULE 5 ................................................................ 86
Completion ............................................................. 86
SCHEDULE 6 ................................................................ 89
Limitations on Liability ............................................... 89
SCHEDULE 7 ................................................................ 96
The Properties ......................................................... 96
SCHEDULE 8 ................................................................ 97
Schedule of Outstanding Indebtedness re Plant and Equipment Bought on
Deferred Payment Terms .............................................. 97
SCHEDULE 9 ................................................................ 98
Employee bonuses ....................................................... 98
THIS AGREEMENT is made on _____________________ 2005
BETWEEN
(1) THE PERSONS whose names and addresses are set out in schedule 1
("VENDORS");
(2) XXXXXX XXXX of 00x Xxxxxxxxx Xxxxxx, Xxxxxx XX00 0XX; and
(3) COTT BEVERAGES LIMITED a company registered in England and Wales with
number 2836071 whose registered office is at Xxxxxx Xxxxx, Xxxx Xxx,
Xxxxxxxx, Xxxxx XX00 0XX ("PURCHASER"),
each a "PARTY" and together the "PARTIES" to this agreement.
BACKGROUND
A Macaw (Holdings) Limited ("COMPANY") is a private company limited by
shares. Further information relating to the Company and its Subsidiary is
set out in schedule 2.
B Each Vendor is the beneficial owner or is otherwise able to procure the
transfer of the numbers of Shares set opposite his or its name in column
(2) of schedule 1.
C The Vendors have agreed to sell and the Purchaser has agreed to purchase
the Shares for the consideration and upon the terms and conditions set out
in this agreement.
D The Warrantors have agreed to give certain warranties, as detailed in
schedule 3.
IT IS HEREBY AGREED:
1. DEFINITIONS AND INTERPRETATION
1.1 In this agreement the following words and expressions shall (except
where the context otherwise requires) have the following meanings:
"1985 ACT" means the Companies Xxx 0000;
"1989 ACT" means the Companies Xxx 0000;
"ACCOUNTS" means the audited consolidated accounts of the Company
comprising (inter alia) the audited consolidated balance sheet as at
the Accounts Date and the audited consolidated profit and loss account
for the period ended on the Accounts
1
Date, the notes and the cash flow statement relating to them and the
reports of the directors and auditors on them;
"ACCOUNTS DATE" means 30 September 2004;
"ACQUISITION DOCUMENTS" means this agreement (including the schedules
to it), the Disclosure Letter and the documents in the agreed form;
"BUSINESS" means the development, manufacture, sale, supply,
distribution and marketing of dilute to taste, carbonated, still and
aseptic soft drinks and waters, flavoured or otherwise, as carried on
by the Subsidiary at the date of this agreement;
"BUSINESS DAY" means a day other than a Saturday or Sunday on which
banks are open for commercial business in the City of London;
"BUSINESS INTELLECTUAL PROPERTY" means all Intellectual Property used
by the Company or the Subsidiary in its business;
"CLAIM" means any claim in respect of a breach of the Warranties or
the Tax Covenant;
"COMPANIES ACTS" means the 1985 Act, the 1989 Act and the Companies
Consolidation (Consequential Provisions) Xxx 0000;
"COMPLETION" means the performance of all the obligations of the
parties to this agreement set out in clause 4;
"COMPLETION BOARD MINUTES" means minutes of meetings of the boards of
directors of the Company and the Subsidiary in the agreed form;
"COMPLETION DATE" means the date of this agreement;
"COMPROMISE AGREEMENTS" means the compromise agreements to be entered
into between the Company and each of Xxxxxx Xxxxxxxx, Xxxxxxxx Xxxxxx
and Xxxxxx Xxxx;
"COMPUTER SYSTEMS" means all the computer and automated systems used
by the Company or the Subsidiary in connection with the Business at
any time, and computer processors, associated and peripheral
equipment, software, computer programs, technical and other
documentation and data entered into or created by the
2
foregoing from time to time in each case in connection with the
administration aspects of the Company's business;
"CONFIDENTIAL INFORMATION" means information (however stored) relating
to or connected with the business, customers or financial or other
affairs of the Company or the Subsidiary details of which are not in
the public domain including, without limitation, information
concerning or relating to:
(a) the Business Intellectual Property and any other property of the
Company or the Subsidiary in the nature of intellectual property;
(b) any technical processes, future projects, business development or
planning, commercial relationships and negotiations;
(c) the marketing of goods or services including, without limitation,
customer, client and supplier lists, customer and supplier price
lists, costs and margins, sales targets, sales statistics, market
share statistics, market research reports and surveys and details
of contractual arrangements; and
(d) any other matters concerning the customers or the suppliers of
the Company or the Subsidiary;
"CONSIDERATION" means the consideration for the Shares set out in
clause 3;
"CONSULTANCY LETTER" means the consultancy letter to be entered into
at Completion between Cott Beverages Limited and Xxxxxx Xxxxxxxx;
"COVENANTORS" means Xxxxxx Xxxxxxxx, Xxxxxx Xxxx and Xxxxxxxx Xxxxxx;
"DISCLOSURE LETTER" means the letter of the same date as this
agreement from the Warrantors to the Purchaser relating to the
Warranties together with any documents annexed to it;
"ENCUMBRANCE" means a mortgage, charge, pledge, lien, option,
restriction, equity, right to acquire, right of pre-emption, third
party right or interest, option, conversion right, right of set-off or
counterclaim, trust arrangement other encumbrance or security interest
of any kind or any other type of preferential arrangement (including,
without limitation, a title transfer and retention arrangement) having
similar effect or any other rights exercisable by or claims by third
parties;
3
"EXISTING DEBT" means any amounts (including principal, interest and
costs) owed by the Company or the Subsidiary in respect of:
(a) the overdraft facility between the Subsidiary and The Royal Bank
of Scotland plc dated 27 July 2004;
(b) the term loan facility between the Subsidiary and The Royal Bank
of Scotland plc dated 16 August 2004;
(c) the revolving advance facility between the Subsidiary and The
Royal Bank of Scotland dated 21 October 2004;
(d) the invoice discounting facility between the Subsidiary and
Lombard Natwest Discounting Limited (as now operated by The Royal
Bank of Scotland Invoice Discounting Limited) dated 3 February
1992, as varied and amended from time to time;
(e) the hire purchase agreement between HSBC Equipment Finance (UK)
Limited and the Subsidiary (undated) pursuant to which the
Subsidiary financed the Sidel SB014 bottle blowing machine; and
(f) the amounts outstanding pursuant to deferred purchase terms
agreed with equipment suppliers, as detailed in schedule 8;
"FSMA" means Financial Services and Markets Xxx 0000;
"GROUP" means the Company and the Subsidiary and references to a
"member of the Group" or a "Group member" shall be construed
accordingly;
"INTELLECTUAL PROPERTY" includes patents, inventions, know-how, trade
secrets, formulae and recipes and other confidential information,
registered designs, copyrights, data, database rights, design rights,
rights affording equivalent protection to copyright, database rights
and design rights, trade marks, service marks, logos, domain names,
business names and trade names and all registrations or applications
to register any of the aforesaid items, rights in the nature of any of
the aforesaid items in any country or jurisdiction, rights in the
nature of unfair competition rights and rights to xxx for passing-off,
breach or other infringement;
4
"MANAGEMENT ACCOUNTS" means the unaudited balance sheets and profit
and loss accounts of the Company and the Subsidiary in the agreed form
as at and for the eight periods to the Management Accounts Date;
"MANAGEMENT ACCOUNTS DATE" means 2 July 2005;
"PERMITTED ENCUMBRANCE" means:
(a) any unpaid sellers' or suppliers' lien arising in the ordinary
course of business to secure amounts due in respect of goods sold
or supplied; and
(b) any Encumbrance granted by the Company or the Subsidiary, either
intra-group or to a third party, in respect of the Existing Debt
in the ordinary course of business;
"PRODUCTION LINE IT SYSTEMS" means all the computer and automated
systems used by the Company or the Subsidiary in connection with the
Business at any time and computer processors, associated and
peripheral equipment, software, computer programs, technical and other
documentation and data entered into or created by the foregoing from
time to time, in each case in connection with the production line and
other manufacturing, warehousing and distribution aspects of the
Company's business;
"PROPERTIES" means the freehold land and premises described in
schedule 7 and any part or parts thereof;
"PURCHASER'S GROUP" means the Purchaser, any subsidiary (direct or
indirect) or holding company of the Purchaser or any subsidiary
(direct or indirect) of any such holding company;
"PURCHASER'S SOLICITORS" means Pinsent Xxxxxx xx 0 Xxxx Xxx, Xxxxx XX0
0XX;
"RELEVANT AUTHORITY" means any government, government agency, local
authority and/or any court of law or tribunal;
"ROSE TRUSTEES" means Xxxxxx Xxxx and Xxxxx Xxxxx as trustees of the
MC Rose Settlement No. 1;
"SHARE WARRANTIES" means the warranties set out in schedule 3;
5
"SHARES" means the 152,502 issued and allotted "A" ordinary shares of
L1 each and the 10,167 issued and allotted "B" ordinary shares of L1
each in the capital of the Company comprising the whole of the issued
share capital of the Company;
"SUBSIDIARY" means the subsidiary undertaking of the Company at the
date of this agreement, further details of which are set out in part 2
of schedule 2;
"TAX CLAIM" has the meaning given in part 1 of schedule 4;
"TAX COVENANT" means any covenant set out in part 3 of schedule 4;
"TAX WARRANTIES" means the warranties on the part of the Warrantors in
relation to taxation set out in part 2 of schedule 4;
"TAXES ACT" means the Income and Corporation Taxes Xxx 0000;
"TRUSTEE VENDORS" means (1) Xxxxxx Xxxxxxxx and Xxxxx Xxxxxxxx as
trustees of the X X Xxxxxxxx Number 1 Settlement and (2) the Rose
Trustees;
"VAT" means value added tax;
"VENDORS' ACCOUNTANTS" means Xxxxx Xxxxxxxx of St John's Centre, 000
Xxxxxx Xxxxxx, Xxxxx XX0 0XX;
"VENDORS' SOLICITORS" means DLA Xxxxx Xxxxxxx Xxxx Xxxx UK LLP of 000
Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx X0 0XX;
"WARRANTIES" means the Share Warranties and the Tax Warranties;
"WARRANTORS" means (1) Xxxxxx Xxxxxxxx and (2) the Rose Trustees and
"WARRANTOR" shall mean either of them; and
"WARRANTY CLAIM" means any claim for breach of any of the Warranties.
1.2 In this agreement where the context admits:
1.2.1 save in relation to schedule 4, words and phrases which are
defined or referred to in or for the purposes of the Companies
Acts have the same meanings in this agreement (unless otherwise
expressly defined in this agreement);
6
1.2.2 sections 5, 6, 8 and 9 of and schedule 1 to the Interpretation
Xxx 0000 apply in the same way as they do to statutes;
1.2.3 reference to a statutory provision includes reference to:
1.2.3.1 any order, regulation, statutory instrument or other
subsidiary legislation at any time made under it for the
time being in force (whenever made);
1.2.3.2 any modification, amendment, consolidation, re-enactment
or replacement of it or provision of which it is a
modification, amendment, consolidation, re-enactment or
replacement except to the extent that any modification,
amendment, consolidation, re-enactment or replacement
made after the date of this agreement would increase the
liability of any of the parties hereto;
1.2.4 reference to a clause, schedule or paragraph is to a clause,
schedule or a paragraph of a schedule of or to this agreement
respectively;
1.2.5 reference to any party to this agreement comprising more than
one person includes each person constituting that party;
1.2.6 reference to any gender includes the other genders;
1.2.7 reference to any professional firm or company includes any firm
or company effectively succeeding to the whole, or
substantially the whole, of its practice or business;
1.2.8 the index, headings and any descriptive notes are for ease of
reference only and shall not affect the construction or
interpretation of this agreement;
1.2.9 this agreement incorporates the schedules to it;
1.2.10 a person shall be deemed to be connected with another if that
person is so connected within the meaning of section 839 of the
Taxes Act;
1.2.11 unless otherwise expressly provided, all covenants, warranties,
undertakings and indemnities given or made by the Vendors or
the Warrantors in this agreement are given or made severally;
7
1.2.12 in clauses 5, 7 and 8 and schedules 3 and 4 and the definitions
in clause 1.1 which are used in those clauses and Schedules,
references to "the Company" shall, in addition to the Company,
include the Subsidiary to the intent and effect that the
provisions of clauses 5, 7 and 8 and the Warranties and
schedule 4 and the relevant definitions in clause 1.1 shall
apply to and be given in respect of the Subsidiary as well as
the Company;
1.2.13 where any statement is qualified by the expression "to the best
of the knowledge information and belief of the Warrantors" or
"so far as the Warrantors are aware" or any similar expression
it shall mean (i) the actual knowledge of the relevant
Warrantor having made reasonable and careful enquiry as to the
subject matter of the Warranty of the other Warrantor and each
of Xxxxxx Xxxxxxx, Xxxx Xxxxx, Xxx Xxxxxx and Xxxxx Xxxxx; and
(ii) the knowledge of the Warrantors having made reasonable and
careful enquiry as to the subject matter of the Warranty of
Xxxxxxxx Xxxxxx and the knowledge, information, belief and
awareness each of the Warrantors shall be deemed to include the
knowledge, information, belief and awareness of Xxxxxxxx Xxxxxx
whether or not such enquiry is actually made;
1.2.14 the "agreed form" in relation to any document means the form
agreed between the parties to this agreement and, for the
purposes of identification only, initialled by or on behalf of
the parties; and
1.2.15 references to "including" or any words having similar effect
meaning including without limiting the generality of any
description preceding such term.
2. SALE AND PURCHASE OF SHARES
2.1 Each of the Vendors other than the Trustee Vendors shall sell with
full title guarantee the number of Shares set opposite their
respective names in column (2) of schedule 1, and the Purchaser shall
purchase such Shares, free from all Encumbrances and together with all
rights attached to them.
2.2 The Trustee Vendors shall sell the whole of the legal and beneficial
interest in the number of Shares set opposite their names in column
(2) of Schedule 1 and the Purchaser shall purchase such Shares free
from all Encumbrances and together with all rights attached to them,
with full title guarantee save that Section 3 of the Law of
8
Property (Miscellaneous Provisions) Xxx 0000 ("LPA") shall be
construed as if in Section 3(1) the words "and could not reasonably be
expected to" were omitted.
2.3 Each of the Vendors hereby waives any right of pre-emption or other
restriction on transfer in respect of the Shares or any of them
conferred on him under the articles of association of the Company or
otherwise.
2.4 Part 1 of the Law of Property (Miscellaneous Provisions) Xxx 0000
shall not apply for the purpose of this Agreement.
3. CONSIDERATION
The Consideration payable by the Purchaser to the Vendors for the purchase
of the Shares shall be sixty two million, sixty seven thousand, six hundred
and two pounds (L62,067,602) which shall be paid in cash at Completion and
apportioned between the Vendors in the amounts set opposite their names in
column (3) of schedule 1.
4. COMPLETION
Completion shall take place immediately following the receipt of the
Consideration by the Vendors' Solicitors at the offices of the Purchaser's
Solicitors on the Completion Date when each of the parties shall comply
with the provisions of schedule 5.
5. WARRANTIES
5.1 Subject to the provisions of clause 6, each of the Warrantors
severally warrants to the Purchaser in the terms of the Warranties.
5.2 Each of the Warranties shall be construed as a separate and
independent warranty and (except where this agreement provides
otherwise) shall not be limited or restricted by reference to or
inference from any other term of this agreement or any other Warranty
and accordingly, subject to clause 6 and schedule 6, the Purchaser may
have a separate claim and right of action in respect of each breach of
Warranty.
5.3 The rights and remedies of the Purchaser in respect of any breach of
any of the Warranties shall survive Completion.
5.4 The Warranties shall be qualified by such information as is fairly
disclosed in the Disclosure Letter.
9
5.5 Any amount paid by the Warrantors to the Purchaser in respect of any
Claim shall, to the extent possible, be deemed to be a reduction in
the Consideration by an amount equal to such payment.
5.6 Each of the Warrantors waives and may not enforce any claims which he
may have in respect of any misrepresentation, inaccuracy or omission
in or from any information supplied by or on behalf of the Company or
the Subsidiary or by any employees of the Company or the Subsidiary in
connection with the giving of the Warranties or the Tax Covenant or
the preparation of the Disclosure Letter by the Warrantors.
5.7 The Warrantors severally warrant to the Purchaser that they have made
reasonable and careful enquiry as to the subject matter of the
Warranties of each other and of each of Xxxxxxxx Xxxxxx, Xxxxxx
Xxxxxxx, Xxxx Xxxxx, Xxx Xxxxxx and Xxxxx Xxxxx.
5.8 Each Vendor severally warrants in respect of himself and/or (as
appropriate) the Shares held by such Vendor that:
5.8.1 such Vendor has full capacity, power and authority and has taken
all action necessary to execute and deliver this agreement and
to exercise his rights and perform his obligations under this
agreement and such obligations constitute valid and binding
obligations enforceable against such Vendor in accordance with
their terms;
5.8.2 there is no Encumbrance on, over or affecting the Shares and
there is no agreement or commitment to give or create any such
Encumbrance and no claim has been paid by any person to be
entitled to an Encumbrance in relation thereto;
5.8.3 in the case of Vendors other than the Trustee Vendors, each such
Vendor is entitled to sell and transfer the full legal and
beneficial ownership in the Shares to the Purchaser and such
sale will not result in any breach of or default under any
agreement, restriction or other obligation binding upon such
Vendor;
5.8.4 in the case of Trustee Vendors, each such Trustee Vendor is
entitled to sell and transfer the full legal and beneficial
interest in the Shares to the Purchaser and such sale will not
result in any breach of or default under any agreement,
restriction or other obligation binding upon such Vendor; and
10
5.8.5 there is no litigation, arbitration, prosecution, administrative
or other legal proceedings or dispute in existence or threatened
against such Vendor in respect of the Shares or such Vendor's
entitlement to transfer or otherwise dispose of the Shares and
there are no circumstances known to such Vendor which might give
rise to any such dispute.
6. LIMITATION ON THE WARRANTORS' LIABILITY
Save in the case of fraud or wilful concealment, the provisions of schedule
6 shall apply to limit and/or regulate the liability of the Warrantors in
respect of any Warranty Claim.
7. DEFERRED A SHARE SUBSCRIPTION
Left intentionally blank
8. POST COMPLETION COVENANTS
8.1 Each of the Covenantors severally undertakes to and covenants with the
Purchaser that (except with the consent in writing of the Purchaser or
except in the course of any continued employment or other engagement
with the Company, the Purchaser, the Subsidiary or any member of the
Purchaser's Group) he will not at any time after Completion:
8.1.1 use or procure or cause or (so far as he is able) permit the use
of any name or names identical or similar to or including the
word "Macaw" or any colourable imitation thereof in connection
with any activity whatsoever;
8.1.2 disclose or divulge to any person (other than to officers or
employees of the Purchaser or the Group whose province it is to
know the same) or use (other than for the benefit of the
Purchaser or the Group) any Confidential Information which is
within his knowledge provided always for the avoidance of doubt
that the restrictions contained in this clause 8.1.2 shall not
apply to Confidential Information which, following Completion,
enters the public domain other than by reason of a breach of
this covenant nor to any disclosure required by law provided
further that prior to such disclosure the Covenantor shall
consult with the Purchaser with regard to the content of such
disclosure and to the extent permitted by law; or
11
8.1.3 do or say anything which is likely or intended to damage the
goodwill or reputation of the Company or the Subsidiary.
8.2 Each of the Covenantors severally undertakes to and covenants with the
Purchaser that (except with the consent in writing of the Purchaser)
he will not, for a period of three years or, in relation to clauses
8.2.4 and 8.2.5, in the case of Xxxxxxxx Xxxxxx only, one year after
the date of this agreement, either on his own behalf or jointly with
or as an officer, manager, employee, adviser, consultant or agent for
any other person, directly or indirectly:
8.2.1 approach, canvass, solicit or otherwise act with a view to
enticing away from or seeking in competition with the Business
the custom of any person who is, or who has at any time during
the period of 12 months preceding the Completion Date been, a
customer of the Company and during such period he shall not use
his knowledge of or influence over any such customer to or for
his own benefit or the benefit of any other person carrying on
business in competition with the Business;
8.2.2 seek to contract with or engage (in such a way as adversely to
affect the Business) any person who has been contracted with or
engaged to manufacture, supply or deliver products, goods or
materials to the Company at any time during the period of 12
months preceding the Completion Date;
8.2.3 approach, canvass, solicit, engage or employ or otherwise
endeavour to entice away any person who at any time during the
period of six months preceding the Completion Date shall have
been an employee or officer, of the Company with a view to the
specific knowledge or skills of such person being used by or for
the benefit of any person carrying on business in competition
with the Business;
8.2.4 be engaged, concerned or interested in any business within the
United Kingdom in competition with the Business; or
8.2.5 be engaged, concerned or interested in any business outside of
the United Kingdom which competes with the Business within the
United Kingdom.
8.3 Xxxxxxxx Xxxxxx further undertakes to and covenants with the Purchaser
that (except with the consent in writing of the Purchaser) he will
not, for a period of two years
12
after the date of this agreement, directly or indirectly be an
employee of or consultant to or otherwise provide services to any of
Princes Soft Drinks Limited, Silver Spring Mineral Water Company
Limited, Gerber Foods Soft Drinks Limited, Villa Soft Drinks Limited,
Xxxxxx Soft Drinks Limited, Calypso Soft Drinks Limited or Waters &
Xxxxxx Limited or any member of the same group of companies as such
companies.
8.4 Each of the covenants contained in clauses 8.1 to 8.3 (inclusive)
shall constitute an entirely separate and independent restriction on
Xxxxxxxx Xxxxxx and each of the covenants contained in clauses 8.1 and
8.2 (inclusive) shall constitute an entirely separate and independent
restriction on each of Xxxxxx Xxxxxxxx and Xxxxxx Xxxx.
8.5 Nothing in this clause 8 shall prohibit any of the Covenantors from
holding shares or stock quoted or dealt in on a recognised investment
exchange (as defined in the FSMA) so long as not more than three per
cent of the shares or stock of any class of any one company (other
than the Purchaser) is so held provided that such shareholding is the
only direct or indirect interest in such company.
8.6 The Covenantors and each of them agree and acknowledge that the
restrictions contained in this clause 8 are fair and reasonable and
necessary to assure to the Purchaser the full value and benefit of the
Shares but, in the event that any such restriction shall be found to
be void or unenforceable but would be valid and effective if some part
or parts thereof were deleted or modified, such restriction shall
apply with such deletion or modification as may be necessary to make
it valid and effective.
9. INDEBTEDNESS
The Warrantors shall indemnify the Purchaser against all costs, claims,
expenses, losses and liabilities suffered or incurred by the Company or the
Subsidiary by reason of the Existing Debt not comprising all amounts owed
by the Company or the Subsidiary in respect of borrowings or indebtedness
in the nature of borrowings other than trade debts incurred in the ordinary
and usual course.
10. TAXATION
The provisions of schedule 4 shall apply with respect to the matters
contained or referred to therein.
13
11. PURCHASER'S WARRANTIES, COVENANTS AND POST COMPLETION COVENANTS
11.1 The Purchaser warrants to each of the Vendors that:
11.1.1 the Purchaser has the requisite power and authority to enter
into and perform its obligations under this agreement and each
of the other Acquisition Documents; and
11.1.2 this agreement constitutes and the other Acquisition Documents
will, when executed, constitute binding obligations upon the
Purchaser in accordance with their respective terms.
11.2 The Purchaser undertakes to and covenants with the Warrantors that
none of the monies used to fund the purchase of the Shares are derived
from the proceeds of crime and the Purchaser has not at any time
received moneys representing the proceeds of crime.
11.3 The Purchaser shall procure that the Company or the Subsidiary shall
pay performance bonuses to certain employees of the Group, in the
amounts set out against their respective names in schedule 9, with the
employees' salaries to be paid on 26 August 2005. Such sums are net of
employer's national insurance, but prior to deduction of employee's
national insurance and PAYE, which shall be deducted by the Group
prior to the payments being made.
12. FURTHER ASSURANCE AND ATTORNEY
12.1 On and after Completion, the Vendors shall, at the request of the
Purchaser, do and execute or procure to be done and executed all such
acts, deeds, documents and things as may reasonably be necessary to
give effect to this agreement.
12.2 Each Vendor hereby irrevocably and unconditionally appoints (by way of
security) the Purchaser and any director of the Purchaser for the time
being acting severally as his lawful attorney (and to the exclusion of
any rights that he may have in such regard) for the purpose of
exercising all voting and other rights and receiving all benefits and
entitlements which at any time after the Completion Date attach to or
arise in respect of any of the Shares and receiving notices of and
attending and voting at all meetings of the members of the Company (or
any class thereof) and generally executing or approving such deeds or
documents and doing any such acts or things in
14
relation to any of the Shares as the attorney may think fit, in each
case from Completion to the day on which the Purchaser or its nominee
is entered in the register of members as the holder of the Shares. For
such purpose, each Vendor hereby authorises and instructs the Company
to send all notices in respect of the Shares to the Purchaser during
such period.
13. ANNOUNCEMENTS
No announcement, communication or circular concerning this agreement shall
be made (whether before, on or after the Completion Date) by or on behalf
of the Parties without the prior approval of the other or others (such
approval not to be unreasonably withheld or delayed) save for:
13.1 announcements to employees, customers, suppliers and agents of the
Company and/or the Subsidiary and/or the Purchaser in the agreed form
or as are reasonably necessary for the Purchaser and/or the Group to
conduct their business after Completion;
13.2 announcements to analysts and media briefings; and
13.3 any announcement or other public disclosure required for the purposes
of clause 15.2.
14. COSTS
Each of the Parties shall bear and pay its own legal, accountancy,
actuarial and other fees and expenses incurred in and incidental to the
preparation and implementation of this agreement and of all other documents
in the agreed form, save that the fees payable to Deloitte and Touche in
respect of the production of the Financial due diligence report shall be
paid by the Company.
15. CONFIDENTIALITY
15.1 Subject to clause 15.2, each Party shall treat as strictly
confidential and shall not disclose to any third party, any
information received or obtained by it as a result of entering into or
performing this agreement which relates to:
15.1.1 the negotiations relating to this agreement or any of the
Acquisition Documents;
15
15.1.2 the provisions or subject matter of this agreement or any of
the Acquisition Documents;
15.1.3 in the case of the Vendors - the Purchaser or any member of the
Purchaser's Group; and
15.1.4 in the case of the Purchaser - the Vendors.
15.2 A Party may disclose information which would otherwise be confidential
if and only to the extent:
15.2.1 disclosure is required by the law of any relevant jurisdiction
applicable to any Party or the Purchaser's Group or for the
purposes of any judicial proceedings;
15.2.2 disclosure is required by any recognised investment exchange
(as defined in the FSMA) or the rules of any market operated by
such an exchange or by any regulatory or governmental body to
which such Party or a member of that Party's group of companies
is subject or submits;
15.2.3 the information is disclosed on a strictly confidential basis
to that Party's professional advisers, lenders or potential
lenders for the purposes of advising that Party in connection
with this agreement or any of the Acquisition Documents
(including enforcing its rights or remedies hereunder or
thereunder);
15.2.4 the information is disclosed to that Party's or members of that
Party's group of companies, directors, officers or employees on
the basis that that they keep such information confidential and
do not disclose it to any third party (save as provided by
clauses 15.2.1 to 15.2.3 (inclusive));
15.2.5 the information has come into the public domain otherwise than
through any fault of that Party; or
15.2.6 the other Parties have given prior written consent to the
disclosure,
provided that any information disclosed pursuant to clauses 15.2.1
and/or 15.2.2 shall only be so disclosed after consultation (where
practicable) with the other Parties relevant to such disclosure. Xx
Xxxxxx Xxxxxxxx and/or Xx Xxxxxx Xxxx shall be
16
consulted (where practicable) in respect of any disclosure relating to
the Vendors or the price paid for the Shares.
16. SUCCESSORS AND ASSIGNMENT
16.1 This agreement shall be binding on and enure for the benefit of each
Party's successors and personal representatives but subject to clause
16.2, shall not be assignable without the prior written consent of the
other Parties.
16.2 Notwithstanding the provisions of clause 16.1, the Purchaser shall be
entitled to assign the benefit to this agreement without the prior
written consent of the other Parties:
16.2.1 to any company which is for the time being a member of the
Purchaser's Group provided that in the event of such assignee
ceasing to be a member of the Purchaser's Group, the Purchaser
shall procure that the said benefit shall be reassigned by the
assignee to another member of the Purchaser's Group, failing
which all of such benefit shall lapse and the assignee shall
cease to have any rights under or in respect of this agreement;
and
16.2.2 by way of security or charge to the banks or other financial
institutions providing the Purchaser with finance for the
Consideration.
16.3 Any purported assignment in breach of the clause shall be void and
confer no rights on the purported assignee.
17. ENTIRE AGREEMENT
17.1 The Acquisition Documents constitute the entire agreement between the
Parties with respect to the subject matter of the Acquisition
Documents.
17.2 Except for any misrepresentation or breach of warranty which
constitutes fraud:
17.2.1 the Acquisition Documents supersede and extinguish any
representations and warranties previously given or made other
than those contained in the Acquisition Documents;
17.2.2 each Party acknowledges to the others (and shall execute the
Acquisition Documents in reliance on such acknowledgement) that
it has not been induced to enter into any such documents by nor
relied on any representation
17
or warranty other than the warranties contained in the
Acquisition Documents;
17.2.3 each Party hereby irrevocably and unconditionally waives any
right it may have to claim damages or to rescind this agreement
or any of the other Acquisition Documents by reason of any
misrepresentation and/or warranty not set forth in any such
document.
17.3 Each of the Parties acknowledges and agrees for the purposes of the
Misrepresentation Xxx 0000 and the Unfair Xxxxxxxx Xxxxx Xxx 0000 that
the provisions of this clause 17 are reasonable.
18. VARIATIONS
No variation of this agreement or any of the documents in the agreed form
shall be valid unless it is in writing and signed by or on behalf of each
of the relevant Parties.
19. WAIVER
19.1 A waiver or discharge of any term, provision or condition of, or
consent granted under, this agreement shall be effective only if given
in writing and signed by the waiving or consenting Party and then only
in the instance and for the purpose for which it is given.
19.2 No failure or delay on the part of any Party in exercising any right,
power or privilege under this agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.
19.3 Except as specifically provided herein, the rights and remedies herein
provided are cumulative with and not exclusive of any rights or
remedies provided by law.
20. AGREEMENT CONTINUES IN FORCE
This agreement shall remain in full force and effect so far as concerns any
matter remaining to be performed at Completion even though Completion shall
have taken place.
18
21. SEVERABILITY
The invalidity, illegality or unenforceability of any provisions of this
agreement shall not affect the continuation in force of the remainder of
this agreement.
22. NOTICES
22.1 Any notice to be given pursuant to the terms of this agreement shall
be given in writing to the Party due to receive such notice at (in the
case of a company) its registered office from time to time or (in the
case of an individual) at his address set out in this agreement or
such other address as may have been notified to the other parties in
accordance with this clause 22.
22.2 Notice shall be delivered personally or sent by prepaid special
delivery or registered post (airmail if overseas) and shall be deemed
to be given in the case of delivery personally on delivery and in the
case of posting (in the absence of evidence of earlier receipt) two
Business Days after posting (five Business Days if sent by airmail).
23. COUNTERPARTS
This agreement may be executed in any number of counterparts each of which
when executed by one or more of the Parties shall constitute an original
but all of which shall constitute one and the same instrument.
24. THIRD PARTY RIGHTS
Save for a permitted assignee in accordance with clause 16.2, a person who
is not Party to this agreement shall have no right under the Contracts
(Rights of Third Parties) Xxx 0000 to enforce any term of this agreement.
This clause does not affect any right or remedy of any person which exists
or is available otherwise than pursuant to that Act.
25. GOVERNING LAW AND JURISDICTION
25.1 This agreement shall be governed by and construed in accordance with
the laws of England.
25.2 The Parties irrevocably agree that the courts of England shall have
exclusive jurisdiction to settle any dispute which may arise out of or
in connection with this agreement and that accordingly, any suit,
action or proceedings arising out of or in connection with this
agreement shall be brought in such courts.
19
IN WITNESS of which the Parties or their duly authorised representatives have
executed this agreement as a deed.
20
SCHEDULE 3
THE WARRANTIES
PART 1
GENERAL
1. DISCLOSURE OF INFORMATION
The facts set out in the schedules 1, 2 and 7 are true and accurate.
2. SHARE CAPITAL
2.1 The Shares constitute the whole of the allotted and issued share
capital of the Company and have been properly allotted and issued.
2.2 Other than this agreement, the Company has not entered into any
agreement, option or commitment requiring the allotment, issue,
transfer of or the grant to any person of the right to require the
allotment, issue, transfer or grant to any person of any shares in the
capital of the Company which, in each case, remains outstanding.
2.3 The Company has not received any written notice under the provisions
of the Companies Acts for the rectification of the register of members
of the Company.
2.4 The Company has not exercised any lien over the Shares and no call on
the Shares is outstanding and all the Shares are fully paid up.
2.5 The Company has not in the last six years given any financial
assistance in connection with the purchase of shares as would fall
within the provisions of sections 151 to 157 of the 1985 Act.
EFFECT OF SALE
2.6 The execution or the performance of this agreement or any document to
be executed at or before Completion in accordance with this agreement
will not:
2.6.1 result in a breach of, conflict with, or give rise to an event
of default under, any agreement to which the Company is party or
by which the Company is bound;
26
2.6.2 relieve any other party to an agreement with the Company of its
obligations or enable it to terminate the agreement or
arrangement; or
2.6.3 result in the creation or imposition of an Encumbrance on any of
the assets of the Company.
3. ACCOUNTS
3.1 The Accounts have been prepared in accordance with the requirements of
the Companies Acts and on a basis consistent with that adopted in the
preparation of the audited accounts of the Company for each of the
last three preceding financial years of the Company and in accordance
with current applicable financial reporting standards and current
applicable statements of standard accounting practice and applicable
generally accepted accounting principles and practices in the United
Kingdom and give a true and fair view of the assets and liabilities
and state of affairs of the Company as at the Accounts Date and its
profits and losses for the relevant period ended on the Accounts Date.
3.2 The Management Accounts have been carefully prepared on a basis
consistent with the management accounts for the previous 12 months and
give a reasonable view, having regard to the purpose for which they
were prepared, of the Company's assets and liabilities and profits and
losses as at the Management Accounts Date.
3.3 Neither the Accounts nor the Management Accounts reflect any unusual
or extraordinary items.
4. POSITION SINCE ACCOUNTS DATE AND THE MANAGEMENT ACCOUNTS DATE
4.1 Since the Accounts Date:
4.1.1 the business of the Company has been carried on in the ordinary
and usual course and so as to maintain the same as a going
concern;
4.1.2 the Company has not acquired or disposed of or agreed to acquire
or dispose of any business or any material asset or assumed or
agreed to assume any material liability otherwise than in the
ordinary course of business;
27
4.1.3 no capital expenditure has been, or agreed to be, incurred and
no commitments of a capital nature have been, or agreed to be,
entered into by the Company, in each case which remain
outstanding in whole or in part;
4.1.4 no management, consultancy or like charges have been incurred
or agreed to by the Company;
4.1.5 no provision or reserve included in the Accounts has proved to
be inadequate in the light of subsequent circumstances and, so
far as the Warrantors are aware, there are no circumstances
which indicate that any such provision or reserve may prove to
be inadequate;
4.1.6 no debtor has been released by the Company on terms that he
pays less than the book value of his debt and no debt owing to
the Company has been deferred, subordinated or written off or
has proved to any extent irrecoverable;
4.1.7 there has been no resolution of or agreement by the members of
the Company or any class thereof (except as provided in this
agreement or with the prior written consent of the Purchaser)
and in particular there has been no capital reorganisation or
other change in the capital structure of the Company;
4.1.8 no supplier to or customer of the Company who accounted for
more than five per cent of the Company's annual turnover in the
last financial year has ceased to trade with the Company or
notified the Company of its intention to do so;
4.1.9 the Company has paid its creditors and collected its debts in
accordance with the usual practice of the Company;
4.1.10 there has been no capitalisation of reserves of the Company;
4.1.11 the Company has not changed its accounting reference period or
any of its accounting principles or accounting policies; and
4.1.12 the Company has not declared or paid any dividend or
distribution.
28
4.2 Since the Management Accounts Date there has been no material adverse
change in the financial, cashflow or trading position of the Company
(provided that nothing herein shall constitute a warranty in respect
of the trading prospects of the Company).
5. LICENCES AND CONSENTS
5.1 The Company has obtained all material licences, permissions,
authorisations and consents necessary to own and operate its assets
and for the proper carrying on of its business as carried on at the
Completion Date (the "LICENCES").
5.2 All the Licences are detailed in the Disclosure Letter (including the
expiry date of such Licence) are in full force and effect and the
Company is not in breach of any of the material terms and conditions
attached thereto.
5.3 The execution or the performance of this Agreement or any document to
be executed at or before Completion in accordance with this Agreement
will not:-
5.3.1 result in a breach of any Licence; or
5.3.2 entitle any third party to terminate a Licence.
6. ASSETS
6.1 Other than stock and work in progress sold or realised in the ordinary
course of business and debts collected in the ordinary course of
business all the property and assets which are described and included
in the Accounts or which have been acquired since the Accounts Date
are:
6.1.1 legally and beneficially owned by the Company;
6.1.2 situated in the United Kingdom;
6.1.3 in the possession or under the control of the Company; and
6.1.4 free from all Encumbrances other than a Permitted Encumbrance.
6.2 The Company owns all the assets necessary for the effective operation
of the business as it is run as at the Completion Date.
29
6.3 None of the assets referred to in paragraph 6.1 are the subject of any
assignment, royalty, overriding royalty, factoring arrangement,
leasing or hiring agreement or hire purchase agreement for payment on
the deferred terms.
6.4 All the plant, machinery, equipment (other than vehicles) owned or
used by the Company:
6.4.1 is in reasonable repair and working order having regard to its
age and level of usage;
6.4.2 has been maintained so as to comply with all relevant legal
requirements; and
6.4.3 so far as the Warrantors are aware, neither requires nor is
undergoing substantial repairs; and
6.4.4 so far as the Warrantors are aware, none of such plant,
machinery or equipment fails to comply with applicable safety
standards.
6.5 So far as the Warrantors are aware, all motor vehicles owned or used
by the Company are in a roadworthy condition.
6.6 The asset registers and the register of items on hire or contract
purchase of the Company comprise a complete and accurate record of all
assets owned or used by the Company, including the plant, machinery,
equipment and vehicles.
MAINTENANCE
6.7 Copies of the maintenance contracts which are in effect in respect of
the assets of the Company are annexed to the Disclosure Letter.
6.8 The Production Line IT Systems have been satisfactorily maintained and
have the benefit of the maintenance agreements specified in the
Disclosure Letter.
6.9 So far as the Warrantors are aware, the Production Line IT Systems
have adequate capability and capacity for the current projected
requirements of the Company for not less than two years following
Completion.
6.10 In the reasonable opinion of the Warrantors, the Company has
sufficient technically competent and trained employees to ensure the
proper handling, operation, monitoring and use of the Production Line
IT Systems.
30
6.11 The Company has adequate procedures to ensure internal and external
security of the Production Line IT Systems including procedures for
taking and storing on-site back-up copies of computer programs and
data.
6.12 In the year preceding Completion, the Company has not suffered any
major failures or bugs in or breakdowns of any of the Production Line
IT Systems (including hardware and software) which have resulted in
significant or repeated disruption or loss or interruption in or to
its use.
6.13 The Company has not authorised the use of its Production Line IT
Systems for any illegal purpose.
7. DEBTS AND STOCK
7.1 All the existing stock of raw materials, packaging and finished goods
is of satisfactory quality and in good repair and condition and is
capable of being sold on an arm's length basis in accordance with the
Company's current price list without rebate or allowance (other than
normal customer rebates and allowances).
7.2 The stock referred to in paragraph 7.1 is sufficient and has a
remaining shelf life which is appropriate for the normal requirements
of the business of the Company having regard to current and reasonably
anticipated demand.
7.3 All obsolete, redundant and excess stocks have been written off by the
Company, and all slow-moving and damaged stocks have been written down
appropriately.
7.4 The book debts shown in the Accounts have realised their nominal
amount less any reserve for bad or doubtful debts included in the
Accounts and none of the book debts incurred since the Accounts Date
and which are outstanding at the Completion Date are overdue by more
than 12 weeks or is the subject of an arrangement not made in the
usual course of the Company's business.
7.5 The Warrantors are not aware of any reason why any of the debts owing
to the Company at the Completion Date and which were not fully written
off or fully provided against in the Accounts or Management Accounts
may prove to be irrecoverable to any extent.
7.6 The Company is not owed any sums other than trade debts incurred in
the ordinary course of business.
31
8. INSURANCE
8.1 Material particulars of all insurance policies (together the
"POLICIES") effected by the Company or by any other person in relation
to any of the Company's assets are set out in the Disclosure Letter.
All premiums due on such Policies have been duly paid and all such
Polices are valid and in force. The Company has not been notified in
writing of the repudiation of any of the Policies or any denial or
reduction of coverage under any Policies.
8.2 There are no outstanding claims made by the Company under any
insurance policy maintained by the Group and so far as the Warrantors
are aware, no circumstances exist which might give rise to such a
claim.
8.3 All of the Company's assets and Properties which are of an insurable
nature have at all material times been, and are insured to their full
reinstatement or replacement value.
8.4 The Company has at all material times been insured in accordance with
the recommendations of its insurance brokers against accident, injury,
third party loss, loss of profits and damage.
8.5 The Company has no interest in and is not a beneficiary under, and
does not pay and is not liable to pay any part of the premiums on, any
policy of life assurance.
9. RECORDS
9.1 All the books of account of the Group which the Group is required by
Section 221 of the 1985 Act to maintain (other than records required
for VAT purposes) are in its possession or under its control and have
in all material respects, been properly kept and compiled.
9.2 So far as the Warrantors are aware, there are no significant
deficiencies or material weaknesses in the design or operation of the
Company's internal controls over financial reporting that would
reasonably be expected to adversely affect the Company's ability to
record, process, summarise and report financial information, given the
extent and nature of the business of the Company as carried on at
Completion.
32
10. CONFIDENTIAL INFORMATION
10.1 The Company does not use and process and is not engaged in any
activities which involve the misuse of confidential information
belonging to a third party.
10.2 The Warrantors are not aware of misuse by any person of any of the
Confidential Information.
10.3 The Company has not disclosed to any person any of its Confidential
Information except where such disclosure was made in the ordinary
course of the Company's business and was made subject to an agreement
under which the recipient is obliged to maintain the confidentiality
of such Confidential Information.
11. INTELLECTUAL PROPERTY
11.1 The Company is the sole unencumbered legal and beneficial owner and,
where registered, the sole registered proprietor of all the Business
Intellectual Property.
11.2 The Business Intellectual Property comprises all Intellectual Property
required in order to carry on the business of the Company in the
manner it was carried on as at the Completion Date.
11.3 The material particulars as to ownership and registration (and
applications therefor) of registrable Business Intellectual Property,
including priority and renewal dates where applicable, are set out in
the Disclosure Letter.
11.4 The material particulars as to ownership of unregistrable Business
Intellectual Property of which the Company is not the legal owner are
set out in the Disclosure Letter.
11.5 Each part of the Business Intellectual Property is valid, subsisting
and enforceable and not subject to any limit as to time or any other
limitation, right of termination, reassignment or restriction.
11.6 The Company is not engaged in, and has not received notice of, any
proceedings for opposition, cancellation, revocation or rectification
of or claims by any person (including, without limitation, from any
employees or former employees of the Company) in respect of any
Business Intellectual Property and, so far as the Warrantors are
aware, no such proceedings or claims are pending.
33
11.7 The Company has taken all reasonable steps necessary for the
maintenance and protection of the Business Intellectual Property and
all rights therein in all relevant jurisdictions.
11.8 The Company has not granted or entered into any agreement or
arrangement for the licensing or otherwise permitting or authorising
the use or exploitation of the Business Intellectual Property by third
parties or which prevent, restrict or otherwise inhibit the Company's
freedom to use and exploit the Business Intellectual Property (whether
now or in the future). So far as the Warrantors are aware, none of the
Business Intellectual Property is currently being infringed. No third
party has threatened any such infringement and nor is it the subject
of any claim for ownership or compensation by any third party or any
criminal investigation or prosecution in relation thereto.
11.9 The carrying on of the Company's business as presently constituted
does not require the making of royalty or similar payments to any
third party and none of the Company's activities, processes or
products, infringe any Intellectual Property or other rights belonging
to or vested in any third party. Insofar as such Business Intellectual
Property is not owned by the Company, its use is licensed to the
Company under the agreements listed in the Disclosure Letter which
agreements are valid and subsisting. The agreements and the use of the
Business Intellectual Property licensed to the Company thereunder are
not restricted in any way and neither the Company nor any other party
thereto is in breach of any of the provisions thereof.
11.10 There are no outstanding claims against the Company for infringement
of any Intellectual Property used by it.
11.11 The Company does not carry on business or sell any product or service
under any name other than its corporate name and the trading names,
trade marks, current product names and other trading styles disclosed
in the Disclosure Letter.
11.12 No claims or applications have been made against and no notifications
(including "non-threatening letters") have been received by the
Company in respect of the business of the Company which
(notwithstanding any view taken by the Warrantors as to the merits of
such claim application, notification or circumstances) if pursued,
granted or acted on would affect the accuracy of the Warranties set
out in this paragraph 11.
34
12. COMPUTER SYSTEMS
12.1 None of the Company's records, systems, controls, data or information
are recorded, stored, maintained, operated or otherwise dependent upon
or held by any means (including any electronic, mechanical or
photographic processes whether computerised or not) which (including
all means of access thereto and therefrom) are not under the exclusive
ownership and direct control of the Company.
12.2 The Computer Systems have been satisfactorily maintained and have the
benefit of the maintenance agreements specified in the Disclosure
Letter.
12.3 So far as the Warrantors are aware, the Computer Systems have adequate
capability and capacity for the projected requirements of the Company
for not less than two years following Completion for the processing
and other functions required to be performed for the purposes of the
business of the Company as carried on as at the Completion Date.
12.4 In the reasonable opinion of the Warrantors, the Company has
sufficient technically competent and trained employees to ensure the
proper handling, operation, monitoring and use of the Computer
Systems.
12.5 The Company has adequate procedures to ensure internal and external
security of the Computer Systems including procedures for taking and
storing on-site back-up copies of computer programs and data.
12.6 In the year preceding Completion, the Company has not suffered any
major failures or bugs in or breakdowns of any of the Computer Systems
(including hardware and software) which have resulted in significant
or repeated disruption or loss or interruption in or to its use.
12.7 The Company has not used the Computer Systems for any unauthorised
purpose.
12.8 The Company is registered under the Data Protection Xxx 0000 and, to
the extent necessary, has notified the Data Protection Commissioner
under the Data Protection Xxx 0000 (the terms "Data Xxxxxxxxxx Xxx
0000" and "Data Xxxxxxxxxx Xxx 0000" for the purposes of paragraphs
12.8 to 12.10 inclusive include any equivalent non-UK data protection
legislation to which the Company may be subject) and, no individual
has claimed compensation from the Company under the Data Protection
Acts 1984 and 1998.
35
12.9 The Company complies with all requirements under the Data Protection
Acts 1984 and 1998 including, without limitation:
12.9.1 the data protection principles set out under the Data
Protection Acts 1984 and 1998;
12.9.2 requests from individuals for access to personal data
held by it;
12.9.3 the requirements relating to the registration and/or
notification of processing of personal data;
12.9.4 where necessary, under the Data Protection Acts 1984 and 1998,
the consent of the data subjects to the processing of personal
data relating to them has been obtained.
12.10 The Company has not received a notice from or been subject to
enquiries by the Data Protection Registrar or Commissioner regarding
non-compliance or alleged non-compliance by the Company with any
provision of the Data Protection Acts 1984 and 1998 (including,
without limitation, the data protection principles).
12.11 The Company is the sole owner of the domain names Xxxxx.xx.xxx,
Xxxxxxx.xxx, x0xxxxxx.xx.xx, x0xxxxx.xx.xx, x0xxxxxx.xx.xx,
x0xxxxx.xx.xx, x0xxxx.xx.xx and x0xxxxxx.xxx together with the
websites which may be accessed at those domain names (the "WEBSITES")
including the goodwill, copyright and other Intellectual Property in
the Websites.
12.12 The Company does not operate the Website in any manner or allow it to
host material which is in breach of any law, international
conventions, codes or regulations applicable to the Internet
including infringement of copyright or other Intellectual Property,
defamation, fraud, theft, drug-trafficking, money laundering or
terrorism.
12.13 The Computer Systems and the Production Line IT Systems comprise all
of the computer and automated systems used by the Company and all of
the computer processors, associated and peripheral equipment,
software, computer programs, technical documentation and data entered
into or created by the foregoing from time to time.
36
13. EMPLOYEES
13.1 None of the officers or senior employees of the Company (being an
employee whose basic salary is in excess of L40,000 per annum)
has given or received notice terminating his employment or will be
entitled to give notice as a result of the provisions of this
agreement and the Warrantors are not aware of any such officer or
employee who intends to give notice of resignation.
13.2 Particulars of all the material terms and conditions of employment of
all the directors or employees of the Company (including, without
limitation, remuneration, incentives, bonuses, expenses,
profit-sharing arrangements and other payments, share option schemes
and other benefits whatsoever payable) are set out in the Disclosure
Letter. Copies of directors' service agreements and a specimen copy of
the standard terms and conditions of employment applicable to all of
the employees of the Company are annexed to the Disclosure Letter.
13.3 Save as set out in the schedule of employees attached to the
Disclosure Letter:-
13.3.1 the Company has no employees; and
13.3.2 no employee of the Company receives or is entitled to receive
any bonus, commission, variable remuneration, insurance,
benefit in kind, motor vehicle for private use or other reward
other than wages or salary at a fixed rate
and true, complete and accurate particulars of each employee's current
remuneration, age, sex, date of commencement of continuous employment (for
the purposes of the Employment Rights Act 1996) and pension scheme
membership appear in that schedule.
13.4 Where any employee has been continuously absent from work for more
than one month, the length and reason for the absence is set out in
the Disclosure Letter.
13.5 There is not in existence any contract of employment with any director
or employee of the Company (or any contract for services with any
individual) which cannot be terminated by the Company giving three
months' notice or less without giving rise to the making of a payment
in lieu of notice or a claim for damages or compensation (other than a
statutory redundancy payment or statutory compensation for unfair
dismissal) or which is in suspension or has been terminated but is
capable of being revived or enforced or in respect of which the
Company has a continuing obligation.
37
13.6 In the three years prior to Completion in relation to each of the
present and former officers or employees of the Company, the Company
has:
13.6.1 complied in all material respects with all obligations imposed
on it by articles of the Treaty establishing the European
Community, European Community law, European Commission
regulations and directives and all statutes, statutory
instruments, orders and regulations relevant to the relations
between it and its employees or it and any recognised trade
union or appropriate representatives or the terms and
conditions of employment or working conditions of its employees
(including, without prejudice to the generality of the
foregoing, health and safety at work and sex, race, disability,
sexual orientation or religion/belief discrimination) and
complied with any recommendations made to the Company by the
Advisory Conciliation and Arbitration Service or the Equal
Opportunities Commission, the Commission for Racial Equality or
the Disability Rights Commission;
13.6.2 maintained accurate personnel records which are up to date in
all material respects, in respect of each of its employees;
13.6.3 complied in all material respects with all collective
agreements for the time being dealing with such relations or
the conditions of service of its employees; and
13.6.4 complied with all relevant orders and awards made under any
statute affecting the conditions of service of its employees.
13.7 The Company is not involved in any litigation or other disputes with
any of the former or present officers or employees of the Company.
13.8 The aggregate level of remuneration payable to employees of the
Company has not increased by more than 10% within the last 12 months.
13.9 The Company has not offered or agreed to increase the remuneration of
any employee beyond that disclosed and has not altered or sought to
alter any of the terms and conditions of employment of any employee
from those disclosed.
13.10 No present or former employee has any right to be indemnified by the
Company arising out of an act or omission in the course of his office
or employment or in
38
relation to the termination of that office or employment on or before
the date of this agreement.
13.11 There is no share incentive scheme, share option scheme, profit
sharing scheme or other bonus scheme or incentive scheme for all or
any of the officers or employees of the Company nor has any proposal
been announced to establish any such scheme.
13.12 The Company has no agreement or other arrangement, whether oral or
written with any trade union or other body representing employees or
any of them and the Company does not recognise any trade union or
other body representing employees of the Company or any of them.
13.13 The Company is not involved in any industrial or trade union dispute
or any dispute or negotiation with any trade union or association of
trade unions or organisation or body of employees, and, so far as the
Warrantors are aware, there are no circumstances likely to give rise
to any such dispute.
13.14 There has been no strike, work to rule or industrial action (official
or unofficial) by any employee or group of employees within the last
five years and, so far as the Warrantors are aware, there are no
current facts likely to give rise to the same.
13.15 The Company has complied with all awards and declarations made by the
Central Arbitration Committee.
13.16 Other than as imposed by statute, there is no agreement, arrangement,
scheme or obligation for the payment of any pensions, allowances, lump
sums or other like benefits:
13.16.1 on redundancy;
13.16.2 on retirement;
13.16.3 on death; or
13.16.4 during periods of sickness or disablement,
in each case for the benefit of any of the present or former officers
or employees of the Company.
39
13.17 Within the five years preceding Completion, the Company has not been
a party to a relevant transfer (as defined in the Transfer of
Undertakings (Protection of Employment) Regulations 1981) nor has the
Company failed to comply with any duty to inform and consult any
appropriate representative of any of the employees of the Company
under the said Regulations within the six months preceding
Completion.
13.18 Save for current month accrued salary, benefits and expenses,
no amounts due to or in respect of any of the officers or employees
of the Company (including PAYE and national insurance and pension
contributions) are in arrears or unpaid.
13.19 So far as the Warrantors are aware, there is not at present a claim
against the Company arising out of the employment or termination of
employment of any employee or former employee of the Company for
compensation for loss of office or employment or otherwise and
whether under the Employment Rights Xxx 0000, Race Relations Xxx
0000, Equal Pay Xxx 0000, Sex Discrimination Xxx 0000, Sex
Discrimination Xxx 0000, Disability Discrimination Xxx 0000, Working
Time Regulations 1998, National Minimum Wage Xxx 0000, Trade Union
and Labour Relations (Consolidation) Xxx 0000, Employment Equality
(Sexual Orientation) Regulations 2003, Employment Equality (Religion
or Belief) Regulations 2003 and the regulations made under such acts
or regulations or any other act or otherwise nor, so far as the
Warrantors are aware, has any such claim been threatened nor any
circumstances arisen which is likely to give rise to such a claim.
13.20 The Company has not within the period of 12 months preceding the date
of this Agreement given notice of any redundancies to the Secretary
of State or started consultations with any appropriate representative
of any of the Company's employees under the provisions of Part IV of
the Trade Union and Labour Relations (Consolidation) Xxx 0000, nor
has the Company failed to comply with such obligation under that
Part.
13.21 The Company has no contractual rules, policies, procedures,
arrangements or agreements express or, so far as the Warrantors are
aware, implied through custom and practice in relation to redundancy
procedures and payments.
40
14. PENSIONS
14.1 In this warranty:
"APPROVED" means exempt approved by the Board of Inland Revenue for
the purposes of either Chapter I or Chapter IV of Part XIV of the
Taxes Act and "APPROVAL" shall be construed accordingly;
"DISCLOSED SCHEMES" means the Stakeholder Scheme, the Macaw (Soft
Drinks) Directors' Pension Plan; the Macaw (Soft Drinks) Executive
Pension Plan; the Macaw Soft Drinks Retirement Benefit Scheme with
Scottish Life, the Death in Service Scheme; the Personal Accident
Cover scheme and the Permanent Disability Cover scheme;
"STAKEHOLDER SCHEME" means the Macaw (Soft Drinks) Limited Stakeholder
Pension Scheme, a Stakeholder Pension Scheme within the meaning of
Section 1 of the Welfare Reform and Xxxxxxxx Xxx 0000;
"1993 ACT" means the Xxxxxxx Xxxxxxx Xxx 0000.
14.2 There is not and has not been in operation, and no proposal has been
announced to enter into or establish, and the Company does not
contribute, is not bound to contribute either now or in the future and
has not contributed to, any agreement, arrangement, scheme, custom or
practice (whether enforceable or not, whether or not Approved and
whether or not funded for in advance) for the payment of any relevant
benefits as defined in Section 612 of the Taxes Act (including,
without limitation, any pensions, allowances, lump sums or other
benefits on death, retirement or termination of employment (whether
voluntary or not), or during any period of sickness or disablement),
for or in respect of any of the Company's employees or officers or
former employees or officers, or any dependant of such an employee or
officer, or former employee or officer, other than under the Disclosed
Schemes.
14.3 All relevant details of the Disclosed Schemes, including current
details of the rate(s) at which the Company is obliged to contribute
in respect of each employee or officer who is a member of the
Disclosed Schemes, have been disclosed to the Purchaser.
14.4 In relation to all of the Disclosed Schemes there has been supplied to
the Purchaser a list of all of the Company's employees or officers who
are members of the Disclosed Schemes and a list of all of the
Company's employees or officers who will become
41
eligible to join the Disclosed Schemes upon the satisfaction of any
conditions of eligibility.
14. All contributions due to or premiums due in respect of the Disclosed
Scheme have been paid on or before the date on which payment falls
due. No contribution to or premium due to any of the Disclosed Scheme
in respect of a period prior to Completion is unpaid.
14.6 The Disclosed Schemes have been Approved since their commencement
dates and there is no reason why such Approval may be withdrawn or
cease to apply.
14.7 The Stakeholder Scheme is a contracted-out scheme as defined in
Section 7 of the 1993 Act and has been administered in accordance with
the contracting-out requirements of Part III of the 1993 Act. The
Company holds or is named in a current contracting-out certificate
covering the employments of all its officers or employees who are
members of the Stakeholder Scheme and there is no reason why such
certificate should be withdrawn or cease to apply.
14.8 All benefits (other than lump sum benefits on death in service)
payable under the Disclosed Schemes are money purchase benefits (as
defined in section 181 of the 1993 Act).
14.9 All death in service benefits which may be payable under any of the
Disclosed Schemes are fully insured, all insurance premiums have been
duly paid and, so far as the Warrantors are aware, there are no
grounds on which the relevant insurance company could avoid liability
under any policy of insurance applicable to such benefits.
14.10 All actuarial, consultancy, legal and other fees, charges or expenses
in respect of the Disclosed Schemes have been paid and, so far as the
Warrantors are aware, there are no such fees currently unbilled.
14.11 The Disclosed Schemes and the Company have at all times complied with
the material provisions of the Disclosed Schemes and with all
relevant statutes, regulations and requirements in relation to the
Disclosed Schemes.
14.12 All benefits under the Disclosed Schemes are provided on a money
purchase basis. No assurance, promise or guarantee (whether oral or
written) has been given to any person as to the level of benefits to
be provided under any of the Disclosed Schemes.
42
14.1 None of the Disclosed Schemes hold any employer related investments
(as defined in Section 40 of the Pensions Act 1995).
14.14 Actuarial advice has been taken on the funding of the Macaw (Soft
Drinks) Directors' Pension Plan and the Macaw (Soft Drinks) Executive
Pension Plan and contributions have at all times been paid in
accordance with the rates recommended by the actuary. The latest
actuarial valuation of the Macaw (Soft Drinks) Directors' Pension
Plan has been delivered to the Purchaser.
14.15 So far as the Warrantors are aware, there are no civil, criminal,
arbitration, administrative or other proceedings, claims or disputes
(including, without limitation, any complaints by members, former
members or prospective members under the internal disputes resolution
procedure, any complaint to the Pensions Ombudsman or any
investigation or enquiry, routine or otherwise by the Occupational
Pensions Regulatory Authority or the Pensions Regulator) by or
against the trustees, managers or administrators of the Pension
Scheme or the Company in progress, pending or threatened and no
circumstances exist which might give rise to any such proceedings,
claims or disputes.
15. CONTRACTS
15.1 There is not outstanding in connection with the business of the
Company:
15.1.1 any agency, distributorship, marketing or licensing agreement
pursuant to which any part of the business of the Company has
been carried on;
15.1.2 any agreement requiring capital expenditure or a series of
related capital expenditures in excess of L50,000; or
15.1.3 any agreement obligating the Company to guarantee the
obligations of any third party.
15.2 The Company is not a party to, or subject to any contract,
arrangement, obligation or liability which:-
15.2.1 is long term (ie not terminable on 60 days notice or less
without payment of compensation or damages);
43
15.2.2 is not wholly on an arm's length basis in the ordinary course
of business, nor has the Company been party to any such
contract, arrangement, obligation or liability within the past
three years;
15.2.3 is loss making; or
15.2.4 restricts its freedom to carry on its business in any part of
the world.
15.3 The Company is not in default of any material provisions of any
agreement and, so far as the Warrantors are aware, no party with whom
the Company has entered into any agreement is in default of any
material provisions of such agreement.
15.4 Neither the Warrantors nor the Company has received notice of
intention to terminate any agreement or contract to which it is a
party or to call in any money before the date on which payment thereof
would normally or otherwise be due from the Company.
15.5 The Company is up to date with all payments under the HSBC hire
purchase agreement relating to the bottle blowing machine.
CUSTOMERS AND SUPPLIERS
15.6 During the six months preceding the date of this Agreement there has
been no substantial change in the basis or terms on which any person
(including any supplier) is prepared to enter into contracts or do
business with the Company (apart from normal price changes) and so far
as the Warrantors are aware, the Company has not received notice from
any customers or suppliers, that any such change is likely or
contemplated.
15.7 So far as the Warrantors are aware, the Company has not received
notice from any customers or suppliers that they will cease to do
business with the Company following Completion.
16. TRADING
16.1 The Company has not given any guarantee or warranty or made any
representation in respect of goods supplied or contracted to be
supplied by it save for any guarantee or warranty implied by law and
(save as aforesaid) has not accepted any obligation
44
which could give rise to any liability after any such goods or
services have been supplied by it.
16.2 Neither the Company nor the Warrantors have received notice of any
claim which remains outstanding alleging any defect in, or lack of
fitness for purpose of, any goods supplied by the Company, and the
Warrantors are not aware of any defective products having been
supplied by the Company which are likely to give rise to any such
claim.
16.3 So far as the Warrantors are aware, the Company has not supplied or
produced any product, and has no product in stock or in the course of
production, which is or was dangerous or injurious to health or likely
to cause loss or damage or which it would be illegal to supply or use
or having a defect in it within the meaning of section 3 of the
Consumer Protection Xxx 0000.
16.4 Details of all recalls within the last two years of products produced
by the Company are set out in the Disclosure Letter.
LABELLING
16.5 All of the stocks of goods held by the Company at Completion which
have been labelled or packed bear labels or packaging (and if
applicable are accompanied by instructions) which comply with all
applicable legal requirements governing the form and content of
labels, packaging and instructions for goods of the nature of those in
question in the places in or through which they are to be supplied,
used or transported and do not infringe any intellectual property
rights of any person.
16.6 Other than in the ordinary course of business, no offer or tender is
outstanding which is capable of being converted into a legally binding
obligation of the Company by an acceptance or other act of some other
person.
17. JOINT VENTURES ETC
17.1 The Company is not:
17.1.1 a party to any joint venture, consortium, partnership or
profit-sharing arrangement or agreement; or
17.1.2 a member of any partnership, trade association or society.
45
17.2 The Company does not use or operate any branch outside
of the United Kingdom.
18. BORROWINGS
18.1 Except as disclosed in the Accounts and other than Permitted
Encumbrances or Existing Debt, the Company does not have outstanding:
18.1.1 any borrowing or indebtedness in the nature of borrowing
including any bank overdrafts, loan capital, off balance-sheet
financing, liabilities under acceptances (other than in respect
of normal trade bills) and acceptance credits other than normal
trade credit from suppliers in the ordinary course of business;
18.1.2 any guarantee, suretyship, indemnity or similar encumbrances,
agreement or undertaking (whether or not legally binding) to
procure the performance by any person of any obligation or to
procure the solvency of any person or any similar obligation;
or
18.1.3 any Encumbrance or any obligation (including a conditional
obligation) to create an Encumbrance.
18.2 All of the Company's borrowings may be repaid by the Company at any
time on no more than one month's notice and without any premium or
penalty (howsoever called) on repayment.
18.3 The Company has disclosed full and correct information in accordance
with the terms of the facility to its invoice discount facility
provider (including rebates and allowances). No material actions have
been required of the Company by The Royal Bank of Scotland plc and/or
The Royal Bank of Scotland Invoice Discounting Limited as a result of
invoice discounting audits in the two years prior to Completion.
18.4 The total amount borrowed by the Company is from its bankers or raised
by way of acceptance credit and does not exceed its loan and other
facilities. True, complete and accurate details of all such facilities
are set out in the Disclosure Letter and such facilities do not exceed
the limitation on its borrowing and other powers contained in its
articles of association or any other deed or document binding upon it.
18.5 The Company has not received notice from any lenders of any money
requiring repayment, which notice is still outstanding.
46
18.6 None of the facilities of the Company are dependent on the guarantee
or support or indemnity of, or any security provided by, a third party
other than a Group Company.
18.7 The Company has not factored its debts nor has the Company engaged in
financing of a type which would not require to be shown or reflected
in the Accounts.
18.8 A statement certified by the Company's bankers of the credit or debit
balances of the Company's bank accounts as at a date not more than two
Business Days before the date of this Agreement has been supplied to
the Purchaser and the Company has no other bank or deposit account
(whether in credit or overdrawn) not included in such statement and
since the date of such statement there have been no payments out of
any such accounts except for routine payments in the ordinary course
of business.
18.9 The Company has not entered into any agreement or undertaking (whether
or not legally binding) to subordinate or postpone repayment of debt
owed to it by any person.
19. LITIGATION, OFFENCES AND COMPLIANCE WITH STATUTES
19.1 Otherwise than as claimant in the collection of debts arising in the
ordinary course of business not exceeding L10,000 individually
and L100,000 in aggregate, the Company is not and has not been in
the two years preceding the Completion Date the claimant, defendant or
otherwise a party to any litigation, arbitration or administrative
proceedings which are in progress or, so far as the Warrantors are
aware, are threatened by or against the Company. So far as the
Warrantors are aware, no facts, matters or circumstances exist which
might give rise to the same.
19.2 The Company is not subject to any order or judgment given by any
court, tribunal or government agency which is still in force and
unsatisfied.
19.3 So far as the Warrantors are aware neither the Company nor any of its
officers, agents or employees (during the course of their duties in
relation to the business of the Company) has committed or omitted to
do any act or thing the commission or omission of which is in
contravention of any statutory obligation or any other law of the
United Kingdom giving rise to any fine, penalty, default proceedings
or other liability or restriction in relation to the business or
officers of the Company or any of its assets or any judgment or
decision.
47
19.4 Particulars of all grants, allowances, subsidies, loans or financial
assistance paid or pledged to the Company during the last six years by
any supranational, national or local authority or government agency
are set out in the Disclosure Letter and the Company has not done or
agreed to do anything as a result of which either any investment or
other grant paid to the Company is liable to be refunded in whole or
in part or any such grant for which application has been made by it
will not be paid or will be reduced.
19.5 There is not outstanding any liability for industrial training levy or
for any other statutory or governmental levy or charge.
19.6 There is and has been no governmental, regulatory or other
investigation, enquiry or disciplinary action regarding the Company
and none is pending or threatened and, so far as the Warrantors are
aware, there are no circumstances which could give rise to such an
investigation, enquiry or action.
19.7 Neither the Company nor any person for whose acts or defaults the
Company may be vicariously liable has:-
19.7.1 induced a person to enter into an agreement or arrangement with
the Company by means of an unlawful or immoral payment,
contribution, gift or other inducement;
19.7.2 offered or made an unlawful or immoral payment, contribution,
gift or other inducement to a government official or employee;
or
19.7.3 directly or indirectly has made a contribution to a political
activity.
20. RESTRICTIVE AGREEMENTS
20.1 Neither the Company nor any of its officers or employees has been
party to any agreement, understanding, arrangement, concerted practice
or conduct which infringed:
20.1.1 the Competition Xxx 0000;
20.1.2 the Enterprise Xxx 0000;
20.1.3 Articles 81 and 82 of the Treaty establishing the European
Community; or
48
20.1.4 any other competition or anti-trust legislation or regulations
which apply in the EEA or within any jurisdiction within the
EEA or any other jurisdiction in the world.
20.2 The Company has received no notice, request, order or other
communication from any authority, commission, government department,
court or other public agency charged with the oversight or enforcement
of any of the legislation referred to in paragraph 20.1.
20.3 The Company has not given any assurance or undertaking to the Office
of Fair Trading, the Director General of Fair Trading, the Competition
Commission, any sector regulator, the Secretary of State for Trade and
Industry, the European Commission, the Court of First Instance or the
Court of Justice of the European Communities or any other court of
competent jurisdiction and is not subject to any act, decision, order,
regulation or other instrument made by any of them in relation to the
Company under or by reference to any legislation or regulations
referred to in paragraph 20.1.
20.4 The Company has received no complaint under or by reference to any of
the legislation referred to in paragraph 20.1 from any person and has
not received any request for information, investigation or objection
under or by reference to any of the legislation referred to in
paragraph 20.1 or been party to any proceedings to which this
legislation (or any of it) was pleaded or relied upon.
20.5 The Company has not notified any agreements or other arrangements to
the European Commission for negative clearance or an exemption under
Article 81(3) of the Treaty establishing the European Community.
20.6 The Company has not notified any agreement or other arrangement to the
Office of Fair Trading, the Director General of Fair Trading, any
sector regulator or any other authority having jurisdiction under the
Competition Xxx 0000 for a decision or guidance in relation to the
Competition Xxx 0000.
20.7 The Company has not received any state aid or other public or
government grant subsidy, tax relief, exemption, privilege or
indulgence that might be subject to any proceedings or process
challenging the propriety or lawfulness of such government grant,
subsidy, tax relief, exemption privilege or indulgence.
49
21. SUBSIDIARIES
The Company has no subsidiaries or subsidiary undertakings and never has
had any subsidiaries or subsidiary undertakings apart from the Subsidiary
and the Company has not agreed to acquire any interest in any body
corporate.
22. ADMINISTRATION
22.1 All documents required by the Companies Acts to be filed with the
Registrar of Companies have been duly filed.
22.2 The register of members and other statutory books of the Company have
been properly kept and contain a true, accurate and complete record of
all the matters which should be dealt with therein and no notice or
allegation that any of the same is incorrect or should be rectified
has been received.
22.3 The Company was incorporated in accordance with its memorandum and
articles of association and is validly existing and is entitled to
carry on the business now carried on by it.
22.4 The Company has not given (whether orally or in writing) any power of
attorney or any other authority (express, implied or ostensible) which
is still outstanding or effective to any person to enter into any
contract or commitment or do anything on its behalf (other than any
implied and undocumented authority of directors or employees to enter
into routine trading contracts in the normal course of their duties).
23. INSOLVENCY
23.1 No resolution has been passed nor meeting called to consider such
resolution, no petition has been presented and no order has been made
for the winding up of or for the appointment of a provisional
liquidator to the Company.
23.2 So far as the Warrantors are aware no petition has been presented and
no application has been made to court for an administration order in
respect of the Company and no notice of an intention to appoint an
administrator of the Company has been given or filed.
50
23.3 No liquidator, administrator, receiver, receiver and manager,
administrative receiver or similar officer has been appointed in
relation to the Company or in relation to the whole or any part of its
assets, rights or revenues.
23.4 In relation to the Company:
23.4.1 no voluntary arrangement has been proposed or implemented under
section 1 of the Insolvency Xxx 0000;
23.4.2 no scheme of arrangement has been proposed or implemented under
section 425 of the Companies Xxx 0000;
23.4.3 no scheme for the benefit of creditors has been proposed or
implemented, whether or not under the protection of the court
and whether or not involving a reorganisation or rescheduling
of debt; and
23.4.4 so far as the Warrantors are aware no proceedings have been
commenced under any law, regulation or procedure relating to
the reconstruction or adjustment of debts.
23.5 The Company has not stopped or suspended payment of its debts, and the
Company is not unable or capable of being deemed unable to pay its
debts within the meaning of section 123 of the Insolvency Xxx 0000.
23.6 No distress, execution or other process has been levied on an asset of
the Company and no unsatisfied judgment, order or award is outstanding
against the Company.
23.7 No action has been or is being taken by the Registrar of Companies to
strike the Company off the register under section 652 of the Companies
Xxx 0000.
23.8 Each Warrantor warrants in relation to himself only that:
23.8.1 no statutory demand has been issued against him nor are there
are any reasonable grounds for believing that he is unable to
pay any debts within the meaning of Section 268 of the
Insolvency Xxx 0000 as amended;
23.8.2 no petition has been presented and no order made for his
bankruptcy or for the appointment of a receiver over any of his
or her assets;
51
23.8.3 no Encumbrance has been enforced and no distress, execution or
other process has been levied, on or over any of the Shares or
any assets held by him;
23.8.4 no proposal has been made in respect of an individual voluntary
arrangement of him, pursuant to the Insolvency Xxx 0000 as
amended; and
23.8.5 no event analogous to any of the above has occurred in any
jurisdiction.
24. INSIDER CONTRACTS
24.1 The Company is not, and during the three years preceding the date of
this Agreement has not been, a party to any agreement or arrangement
(whether legally enforceable or not), other than agreement(s) on arms
length terms, in which any Vendor or any Group Company or any director
or former director of any Group Company or any connected person of any
of them is or was directly or indirectly interested.
24.2 None of the Company's assets (including the benefit of any licences or
agreements) have been acquired other than on arms' length terms.
24.3 Other than accrued salary and expenses to Completion there are no
debts (whether or not due for payment and including contingent
liabilities) or unfulfilled obligations (present or future, actual or
contingent) owing between the Company and any Vendor or any director
or former director of the Company or any connected person of any of
them.
24.4 There is no claim or, so far as the Warrantors are aware, circumstance
which may give rise to a claim against the Company by any director or
former director of the Company or any connected person of any of them
on any account whatsoever.
24.5 None of the Vendors nor any connected person of any of the Vendors
have a direct or indirect interest in any person (other than the
Company) or any intellectual property rights which is or is likely to
on a recognised investment exchange (as defined in FSMA) and in
respect of which each Vendor or such person is beneficially interested
in less than three per cent of all the issued securities of that
class.
52
25. FINDER'S FEE ETC
No person is entitled to receive from the Company a finder's fee, brokerage
or commission in connection with this agreement or any document to be
executed at or before Completion in accordance with this agreement.
53
PART 2
PROPERTIES AND ENVIRONMENTAL MATTERS
1. TITLE
1.1 The Properties comprise:
1.1.1 all the land and premises of whatever tenure owned, occupied or
otherwise used by the Group whether in the United Kingdom or
elsewhere; and
1.1.2 all the estate, interest, right and title whatsoever (including
for the avoidance of any doubt interests in the nature of
options, rights of pre-emption or other contractual
relationships) of the Group in respect of any land or premises.
1.2 There is no circumstance which could render any transaction affecting
the Group's title to the Properties liable to be set aside under the
Insolvency Xxx 0000.
1.3 The information contained in schedule 7 as to the tenure of the
Properties is correct.
1.4 All deeds and documents necessary to prove the title of the Group to
the Properties are in the possession or under the control of the
Group.
1.5 The Properties have not been transferred or conveyed to the Group
within the last three years pursuant to an intra group transfer and
which relief from stamp duty has been claimed pursuant to section 42
of the Finance Xxx 0000 (as amended) or on which relief from stamp
duty land tax has been claimed pursuant to schedule 7 to the Finance
Xxx 0000.
2. ENCUMBRANCES
2.1 The Properties and the title deeds are free from any lien or other
encumbrance securing the repayment of monies or other obligation or
liability whether of the Group or any other party.
2.2 So far as the Warrantors are aware, the Properties are not subject to
any liability for the payment of any outgoings other than national
non-domestic rates, water and sewerage, services, charges and
insurance premiums.
54
2.3 The Properties are not subject to any agreement or right to acquire
the same nor any option, right of pre-emption or right of first
refusal and there are no outstanding actions, claims or demands
between the Group and any third party affecting or in respect of the
Properties.
2.4 So far as the Warrantors are aware no matter exists which is not
currently registered but is capable of registration against the
Properties as a local land charge, unilateral notice, agreed notice or
restriction.
2.5 There is no person who is in occupation or who has or claims any
rights or easements of any kind in respect of the Properties adversely
to the estate, interest, right or title of the Group to the
Properties.
3. PLANNING MATTERS
3.1 For the purposes of paragraphs 3.2 and 3.3 (inclusive) below the
"PLANNING ACTS" means:
Xxx Xxxx xxx Xxxxxxx Xxxxxxxx Xxx 0000
The Planning (Listed Buildings and Conservation Areas) Xxx 0000
The Planning (Hazardous Substances) Xxx 0000
The Planning (Consequences Provisions) Xxx 0000
The Planning Compensation Act 1991
as the same are from time to time varied or amended and any other
statute or subordinate legislation relating to planning matters.
3.2 So far as the Warrantors are aware, the use of the Properties is
permitted or lawful use for the purposes of the Planning Acts and the
Group has not received any notice or correspondence alleging breach of
Planning Acts which has not been complied with.
3.3 So far as the Warrantors are aware, all development carried out in
relation to the Properties has been lawful and all necessary consents
and permissions have been obtained for the development and the Group
has not received any notice or correspondence alleging breach of the
Planning Acts which has not been complied with.
55
3.4 No planning application relating to the Properties has been submitted
which awaits determination or which has been refused.
3.5 There is no outstanding order, notice or other requirement of any
local or other authority that affects the existing use of the Property
or involves expenditure in complying with it.
3.6 No compensation in respect of the Properties has been received
consequent upon the refusal or revocation of any planning consent or
the imposition of any restrictions in any planning consent and no
planning consent is suspended.
4. ADVERSE ORDERS
4.1 There are no compulsory purchase notices, orders or resolutions
affecting the Properties nor are the Warrantors aware of any
circumstances likely to lead to any being made.
4.2 There are no closing demolition or clearance orders affecting the
Properties nor are the Warrantors aware of any circumstances likely to
lead to any being made.
5. GENERAL MATTERS
5.1 The Group does not have any continuing liability in respect of any
other property formerly owned or occupied by the Group either as
original contracting party or by virtue of any direct covenant having
been given on a sale or assignment to the Group or as a guarantor of
the obligations of any other person in relation to such property.
5.2 Any replies given by or on behalf of the Group or the Vendors to
enquiries before contract raised by or on behalf of the Purchaser
relating in any way to the Properties are true and accurate in all
respects and are not misleading.
5.3 All premiums payable in respect of insurance policies relating to the
Properties which have become due have now been duly paid and no
circumstances have arisen which would vitiate or permit the insurers
to avoid such policies.
5.4 There are no disputes with any adjoining or neighbouring owner with
respect to boundary walls and fences or with respect to any easement,
right or means of access to the Properties.
56
5.5 The Group is entitled to, and has exclusive possession and occupation
of the Properties and none of the Properties are subject to any lease,
tenancy, licence to occupy or agreement to grant any of them.
6. LIABILITIES
Since the Accounts Date the Group has not acquired or disposed of, or
agreed to acquire or dispose of, or granted any option in respect of, any
interest in any land or premises.
7. ENVIRONMENTAL MATTERS
In this Warranty 7:
"CONTROLLED WATERS" shall have the same meaning as it has for the purposes
of part III of the Water Resources Xxx 0000.
"ENVIRONMENTAL LAWS" means any legal requirements for the protection of the
environment or of human health or amenity.
"HAZARDOUS SUBSTANCES" means any substance defined as a hazardous or
dangerous substance by environmental law or reasonably capable (whether
alone or in combination with any other substance) of causing harm to the
environment.
"RELEVANT AUTHORITY" means any government, government agency, local
authority or any other person or entity having regulatory authority under
environmental laws and/or any court of law or tribunal and, in relation to
private agreements, includes any person having powers under or in relation
to that agreement.
7.1 So far as the Warrantors are aware, there does not exist any Hazardous
Substance in, on, or under the Properties, any deposit of waste,
existing or past storage areas for hazardous or radioactive
substances, existing or former storage tanks (whether below or above
ground) or any part of the Property that are or were landfill. No
Group member has received any notice or other communication from any
Relevant Authority or third party in respect of the business carried
on by any Group member or in relation to any property at any time
owned, occupied or controlled by any Group member alleging any breach
of or failure to comply with environmental laws, and so far as the
Warrantors are aware there are no existing circumstances which might
give rise to such notice, order or other communication being received,
or any
57
correspondence, communication or circumstances giving indication of
any intention on the part of a Relevant Authority or third party to
give such a notice.
7.2 No Relevant Authority has, in relation to the property, assets or
business of the Company, exercised any powers of entry, taken samples,
measurements or photographs, removed, dismantled or tested any
substance, article or organism, required statements (signed or
otherwise) from any person in relation to any examination or
investigations, required any production of data or taken any steps to
seize and/or render harmless any substance, articles or organism.
7.3 So far as the Warrantors are aware no material works or other
investments are necessary to maintain compliance with any
environmental licences, permissions, authorisations or consents.
7.4 So far as the Warrantors are aware, none of the activities of the
Group have involved the use or storage or containment of, or the
released or discharged into the environment any Hazardous Substances
except as permitted by environmental laws or any environmental
licences, permissions, authorisations or consents.
7.5 All environmental audits, surveys, reports, assessments relating to
the activities of the Group or occupation, use or ownership of the
Properties prepared for or on behalf of the Group have been provided
to the Purchaser.
7.6 So far as the Warrantors are aware, the Subsidiary has complied with
its obligations and targets set out in the climate change levy
agreement disclosed in the Disclosure Letter and the Group has not
received any notice or other communication from any Relevant Authority
alleging any failure of the Subsidiary to comply with its obligations
set out in the climate change levy agreement disclosed in the
Disclosure Letter.
58
SCHEDULE 4
TAXATION
PART 1
DEFINITIONS AND INTERPRETATION
1. In this schedule the following words and expressions shall (except where
the context otherwise requires) have the following meanings:
"ACCOUNTS RELIEF" means any of:
(a) a Relief which has been treated as an asset in the Accounts; or
(b) a Relief which has been taken into account in computing a provision
for tax (including deferred tax) which appears in the Accounts or has
resulted in no provision for tax being made in the Accounts;
"ACT" has the meaning as previously defined in section 14(1) of the Taxes
Act (now repealed);
"ACTUAL TAX LIABILITY" means any liability of the Company to make a payment
of or increased payment of or in respect of Tax (whether or not discharged
prior to Completion);
"CAA 1990" means the Capital Xxxxxxxxxx Xxx 0000;
"CAA 2001" means the Capital Xxxxxxxxxx Xxx 0000;
"CLAIM FOR TAX" includes any claim, notice, demand, assessment, letter or
other document issued or any action taken by or on behalf of any Tax
Authority whether before or after the date of this agreement from which it
appears that the Company has or may have a Tax Liability;
"EFFECTIVE TAX LIABILITY" shall have the meaning given in part 1 paragraph
3;
"EVENT" includes any act, omission, event or transaction;
"FA" FOLLOWED BY A YEAR means the Finance Act of that year or where there
was more than one, "FA" FOLLOWED BY A NUMBER IN BRACKETS AND A YEAR shall
be construed accordingly;
59
"INTANGIBLE ASSET" shall have the same meaning as in paragraph 3 of
schedule 29 to the FA 2002
"ITEPA" means the Income Tax (Earnings and Xxxxxxxx) Xxx 0000;
"LOAN RELATIONSHIP" shall have the same meaning as in section 81(1) FA
1996;
"XXXXXX EMBANKMENT CLAIM" means any and all receipts, costs, claims and
liabilities in respect of excavation work undertaken at any of the
Properties in 2000;
"NON-AVAILABILITY" means loss, reduction, modification, cancellation,
non-availability or non-availability ab initio;
"PAYE" means the mechanism prescribed by Tax Statutes for the collection
and making of deductions from or in respect of the following:
(a) sums to which sections 203 to 203L of the Taxes Act and regulations
made under such sections apply
(b) sums to which Part 11 of the ITEPA and regulations made under section
684 of the ITEPA apply, and
(c) Class 1, Class 1A and Class 1B contributions referred to in section
1(2) of the Social Security Contributions and Benefits Xxx 0000;
"POST ACCOUNTS RELIEF" means a Relief to the extent that it arises either:
(a) after Completion: or
(b) between the Accounts Date and Completion by reference to the ordinary
course of business;
"RELIEF" includes any loss, relief, allowance, credit, deduction,
exemption, set-off or right to repayment of Tax including, without
limitation, any deduction in computing income profits or gains for the
purposes of any Tax;
"SCHEDULE 28AA" means Schedule 28AA to the Taxes Act;
"SDLT" means Stamp Duty Land Tax;
60
"TAXATION" or "TAX" means:
(a) any form of taxation, duty, impost, levy, tariff or withholding of any
nature whatsoever, whether of the United Kingdom or elsewhere, whether or
not any such taxation, duty, impost, levy, tariff or withholding arises in
respect of actual, deemed, gross or net income, profit, gain, or in respect
of value, receipt, payment, sale, supply, use, occupation, franchise, value
added, property or right; and
(b) any penalty, charge, surcharge, fine or interest payable in connection
with any thing within paragraph (a) above;
"TAX AUTHORITY" means the Commissioners of Inland Revenue, the
Commissioners of Customs and Excise, or any authority or body, whether of
the United Kingdom or elsewhere, and whether national or otherwise having
the power or authority or other function in relation to Tax;
"TAX CLAIM" means a claim under any Tax Warranty or the Tax Covenant;
"TAX COVENANT" means any covenant set out in part 3;
"TAX LIABILITY" means any Actual Tax Liability, Effective Tax Liability or
other liability of the Company which is relevant for the purposes of part
3;
"TAX STATUTE" means any primary or secondary statute, instrument,
enactment, order, law, by-law or regulation making any provision for or in
relation to Tax;
"TAXES ACT" means the Income and Corporation Taxes Xxx 0000;
"TAX WARRANTY" means any warranty set out in part 2;
"TCGA" means the Taxation of Chargeable Gains Xxx 0000;
"TMA" means the Taxes Management Xxx 0000;
"VATA" means the Value Added Tax Xxx 0000;
"VAT REGULATIONS" means the Value Added Tax Regulations 1995 (SI
1995/2518);
2. In this schedule 4 "COMPANY" shall in addition to the Company include every
Subsidiary to the intent and effect that the provisions of this schedule
shall apply to and be given in respect of each Subsidiary as well as the
Company.
61
3. In this schedule "EFFECTIVE TAX LIABILITY" shall mean the following:
3.1 The non-availability in whole or in part of any Accounts Relief;
3.2 The utilisation or set-off of any Post Accounts Relief or any Accounts
Relief against any Tax or against income, profit or gains in
circumstances where but for such utilisation or set-off an Actual Tax
Liability would have arisen in respect of which the Warrantors would
have been liable to the Purchaser under this schedule.
4. The value of an Effective Tax Liability shall be as follows:
4.1 Where the Effective Tax Liability involves the non-availability of any
Accounts Relief:
4.1.1 if the Accounts Relief was not or is not a right to repayment of
Tax, the amount of Tax which would have been saved but for the
non-availability of the Accounts Relief on the assumption that
the Company would have been able to fully utilise that Accounts
Relief in the accounting period during which Completion falls;
or
4.1.2 if the Accounts Relief was or is a right to repayment of Tax,
the amount of the right which is not available.
4.2 Where the Effective Tax Liability involves the utilisation or set-off
of a Post Accounts Relief or an Accounts Relief, the value of the
Effective Tax Liability shall be the amount of Tax saved by such
utilisation or set-off.
5. Any reference to a Tax Liability in respect of income, profits or gains
earned, accrued or received shall include a Tax Liability in respect of
income, profits or gains deemed to have been or treated or regarded as
earned, accrued or received and any reference to Tax Liability on the
happening of any Event shall include Tax Liability where such Event (for
the purposes of the Tax Statute in question) is deemed to have occurred or
is treated or regarded as having occurred.
6. Any reference to a "PART" is (except where the context requires otherwise)
to a part of this schedule and any reference to a paragraph contained
within any part of this schedule is (except where the context requires
otherwise) to a paragraph of that part.
62
PART 2
TAX WARRANTIES
1. TAX RETURNS AND COMPLIANCE
1.1 The Company has at all times submitted to all relevant Tax Authorities
by the requisite dates every computation, return and all information
for the purpose of Tax howsoever required and each such computation,
return and information was and remains true, complete and accurate and
there is no matter unresolved regarding the Tax affairs of the Company
and such computation, return and information is not likely to be the
subject of any dispute with any Tax Authority and is not the subject
of any notice of enquiry.
1.2 The Company has discharged every Tax Liability, whether or not a
primary liability of the Company, due from the Company directly or
indirectly in connection with any Event occurring on or before
Completion and there is no Tax Liability or potential Tax Liability in
respect of which the date for payment has been postponed by agreement
with the relevant Tax Authority or by virtue of any right under any
Tax Statute or the practice of any Tax Authority.
1.3 The Company has properly made all deductions, withholdings and
retentions required to be made in respect of any actual or deemed
payment made or benefit provided on or before Completion and has
accounted for all such deductions, withholdings and retentions to each
relevant Tax Authority and complied with all its obligations under Tax
Statutes in connection with the same and, without prejudice to the
generality of the foregoing, the Company has properly operated PAYE.
1.4 So far as the Warrantors are aware, no Relief claimed prior to
Completion is likely to be disallowed, lost, reduced or modified or be
the subject of any dispute with any Tax Authority.
1.5 Every claim, election and disclaimer which has been taken into account
for the purposes of the Accounts has been duly submitted by the
Company within the requisite periods and either has been accepted as
valid or its validity has not been and so far as the Warrantors are
aware is not likely to be questioned or challenged by the relevant Tax
Authority.
63
1.6 The Company has maintained and has in its possession and under its
control all records and documentation that it is required by any Tax
Statute to maintain and preserve and the Company has complete and
accurate records and/or information to calculate its future Tax
Liability or relief from Tax including, without limitation, arising
upon the disposal of any asset owned by the Company at the date of
this agreement or which has been disposed of since the Accounts Date.
1.7 The Disclosure Letter contains full details of every:
1.7.1 claim, election or disclaimer taken into account for the
purposes of the Accounts or returns required to be made by the
Company, in each case the time limits for the making of which
will not have expired on or before the Completion Date; and
1.7.2 subsisting formal or informal arrangement or agreement entered
into by the Company with any Tax Authority with regard to any of
its Tax affairs.
1.8 The Company has not been and so far as the Warrantors are aware is not
likely to be subject to any investigation or non-routine audit or
visit by any Tax Authority.
1.9 The Company has not been party to any arrangements the sole or main
purpose of which was the avoidance, mitigation or deferral of National
Insurance Contributions or amounts to be accounted for under the PAYE
system.
1.10 The Company has complied with all relevant reporting obligations
contained in Part 7 of ITEPA and there are disclosed in the Disclosure
letter all returns made under Part 7.
1.11 No employee or director of the Company has acquired shares in the
Company or any other company and in particular no such employee or
director has acquired shares which are restricted securities within
the meaning of section 423 ITEPA as substituted by Finance Xxx 0000 or
has any right or option to acquire any such shares.
2. CORPORATION TAX INSTALMENT PAYMENTS, ETC
2.1 The Disclosure Letter correctly identifies whether or not the Company
is a "large company" within the meaning of regulation 3 of the
Corporation Tax (Instalment Payments) Regulations 1998.
64
2.2 The Disclosure Letter contains details of all instalment payments
which have been made or which are required to be made by the Company
under the Corporation Tax (Instalment Payments) Regulations 1998 since
the Accounts Date, and of all repayments claimed by the Company under
those regulations since the Accounts Date and of all such instalment
payments required to be made after Completion in respect of periods
ended on the Accounts Date or in respect of the period current at
Completion (but only on the basis of information available at
Completion). All such payments or repayments have been duly made or
received, and the computations of each such payment or claim for
repayment took full and proper account of all relevant estimates and
other information available to the Company at the time when any such
payment was required to be made or (as the case may be) at the time
when any such claim for repayment was submitted to the Inland Revenue
and have been calculated and made on the basis required by the
relevant legislation.
2.3 The Company has sufficient books, documents, records and other
information to enable it promptly to comply in full with any notice
served on it under Regulation 10 or 11 of the Corporation Tax
(Instalment Payments) Regulations 1998 in respect of any accounting
period commencing before Completion.
2.4 No action has been taken by the Company before Completion such that
the provisions of regulation 14 of the Corporation Tax (Instalment
Payments) Regulations 1998 could have effect in respect of the Company
at any time.
3. GENERAL PROVISIONS FOR TAX
To the extent required by generally accepted accounting principles,
provision or reserve was made in the Accounts in respect of every Tax
Liability for which the Company at the Accounts Date was or may have been
liable or accountable whether or not such Tax Liability was or is a primary
liability of the Company and whether or not the Company has had or may have
any right of reimbursement against any other person.
4. COMPUTATION OF PROFITS AND LOSSES
Since the Accounts Date:
4.1 no Event has occurred which has given or may give rise to any Tax
Liability (or would or may have given rise to a Tax Liability but for
the availability of a Relief) other than corporation tax on trading
profits of the Company (and not chargeable
65
gains, balancing charges or deemed income or profits) or any other Tax
arising from transactions entered into in the ordinary course of
business of the Company carried on at the Accounts Date;
4.2 no expense has been incurred which is not deductible by the Company in
computing its taxable profits for corporation tax purposes for its
accounting period current at the date of this agreement;
4.3 no dividend has been declared or paid and no distribution or deemed
distribution for Tax purposes has been made or declared or agreed to
be made by the Company; and
4.4 no Event has occurred as a result of which a disposal value would be
required to be brought into account for capital allowances purposes.
5. DISTRIBUTIONS
The Company has not:
5.1 been concerned with or involved in any exempt distribution for the
purposes of sections 213 to 218 of the Taxes Act (demergers);
5.2 at any time repaid or redeemed or agreed to repay or redeem any shares
of any class of its share capital or otherwise reduced or agreed to
reduce its share capital or any class thereof or issued any share
capital as paid up otherwise than by the receipt of new consideration
(as defined in section 254(1) and (5) of the Taxes Act);
5.3 issued any security now outstanding in such circumstances or which is
of such a character that the interest payable in respect thereof is to
be treated as a distribution under section 209 of the Taxes Act
(matters to be treated as distributions).
6. CHARGEABLE GAINS
6.1 No chargeable profit or gain would arise in respect of any asset of
the Company:
6.1.1 treated as such in the Accounts if that asset were to be
disposed of for consideration equal to the value attributed
thereto in the Accounts;
6.1.2 acquired after the Accounts Date if that asset were to be
disposed of for consideration equal to the consideration given
for its acquisition;
66
in each case disregarding any statutory right to claim any allowance
or relief other than amounts deductible under section 38 of the TCGA.
6.2 There are no assets currently owned by the Company in respect of which
a charge to Taxation may arise on the Company ceasing to be a member
of the Group.
7. CAPITAL ALLOWANCES
7.1 Save to the extent provided for in the deferred Tax provision in the
Accounts, if all the assets in respect of which allowances have been
claimed under Part 2 of the CAA 2001 or Part II of the CAA 1990 (Plant
and Machinery Allowances) and Part 3 of the CAA 2001 or Part I of the
CAA 1990 (Industrial Buildings Allowances) and owned by the Company at
the Accounts Date were to be sold by the Company for an amount equal
to the value attributed to such assets in the Accounts then (ignoring
any reliefs or allowances available to the Company) no balancing
charge would be made on the Company.
8. CLOSE COMPANIES
8.1 The Company is a close company as defined in section 414 of the Taxes
Act but has never been a close investment holding company as defined
in section 13A of the Taxes Act or had any interest in possession in
settled property.
8.2 No loan or advance has been made or waived or debt incurred or
assigned whether by or to the Company or any other person as a result
of which section 419 of the Taxes Act has applied, applies or may
apply to the Company and there is no agreement or arrangement for such
loan advance or debt to be made, waived, incurred or assigned and no
such loan advance or debt will be outstanding at Completion.
8.3 The Company has never made a distribution or transfer of value or
disposition to which sections 418 of the Taxes Act and 94 of the
Inheritance Tax Xxx 0000 applied, applies or may apply and there has
been no alteration of the share or loan capital of the Company as a
result of which section 98 of the Inheritance Tax Act applied, applies
or may apply.
9. INHERITANCE TAX
Neither the assets nor the shares of the Company are or may be subject to
any charge by virtue of section 237 of the Inheritance Tax Xxx 0000 and no
person has or may have the
67
' power under section 212 of the Inheritance Tax Xxx 0000 to raise any
capital transfer tax or inheritance tax by sale or mortgage of, or a
terminable charge on, any of the Company's assets or shares.
10. STAMP DUTY AND SDRT
10.1 Each document which is in the possession or under the control of the
Company or which the Company is entitled to the production of and on
which the Company relies or may rely for any purpose whatsoever and
which, in the United Kingdom or elsewhere, requires any stamp or xxxx
to denote that:
10.1.1 any duty, tax or fee required to be paid by law has been paid;
or
10.1.2 a duty, tax or fee referred to in paragraph 10.1.1 is not
required to be paid or that the document in question or the
Event evidenced by it qualifies from a relief or exemption from
such duty, tax or fee; or
10.1.3 the document has been produced to the appropriate authority,
has been properly stamped or marked, as appropriate, and no
such document which is outside the United Kingdom would attract
stamp duty if it were to be brought into the United Kingdom.
10.2 The Company does not directly or indirectly hold any interest in real
property situated in the United Kingdom which was granted or
transferred to it on or after 24 April 2002 and where such grant or
transfer was the subject of an application for relief from stamp duty
under section 42 of the FA 1930, section 151 of the FA 1995, or
section 76 of the FA 1986.
10.3 The Company has complied in all respects with the provisions of Part
IV FA 1986 (Stamp Duty Reserve Tax) and any regulations made under
such legislation.
11. VALUE ADDED TAX
11.1 The Company is registered as a taxable person for the purposes of VAT
and has never been registered as a member of a group of companies
under section 43 of the VATA nor applied to be treated as such a
member.
68
11.2 The Company (which expression shall for the purposes of this warranty
11.2 include without limitation any member of any VAT Group of which
any Company is now or has at any time been a member):
11.2.1 has complied in all respects with all Tax Statutes relevant to
VAT and guidance published by all relevant Tax Authorities in
any form whatsoever and has made and obtained full, complete,
correct and up-to-date records and invoices and other documents
appropriate or requisite for the purposes of such Tax Statutes
and guidance;
11.2.2 is not in arrears with any payment and has not failed to submit
any return (fully and properly completed) or information
required in respect of VAT and is not liable or so far as the
Warrantors are aware are likely to become liable to any
abnormal or non-routine payment or default surcharge or any
forfeiture or penalty or subject to the operation of any penal
provision;
11.2.3 is and has in respect of all its prescribed accounting periods
ending on or after the Accounts Date been able to obtain credit
for all input tax (as defined in Section 24 VATA) which it has
incurred and has not carried out any transaction which could or
might result in it becoming exempt or partially exempt for VAT
purposes;
11.2.4 confirms that no election to waive exemption has been made by
the Company or by any relevant associate (for the purpose of
paragraph 3(7) of Schedule 10 VATA) and all such elections have
been validly made and notified, and are effective; and
11.2.5 has no assets to which Part XV of the Value Added Tax
Regulations 1995 (capital goods scheme) applies.
12. OVERSEAS DEALINGS
The Company has always exclusively been resident in the UK for tax purposes
and no circumstance or arrangement exists which would or may cause the
Company to cease to be resident in the UK for Tax purposes and the Company
is not liable to taxation in any jurisdiction outside the UK.
69
13. INTELLECTUAL PROPERTY
13.1 The Company has not sold or agreed to sell any patent rights for a
capital sum (which would be chargeable as income) pursuant to section
524 of the Taxes Act.
13.2 Since the Accounts Date, the Company has not acquired or disposed of
or agreed to acquire or dispose of know-how (whether or not together
with a trade or part of trade) in connection with which section
531(1), (2), (4) or (8) of the Taxes Act apply or may apply.
14. TRANSFER PRICING
The Company has not at any time entered into nor is it at Completion a
party to any transaction (within the meaning in paragraph 3 of Schedule
28AA) or a series of transactions with any person with which it is Related
other than on fully arm's length terms and there are no circumstances which
could cause any Tax Authority to make or require to be made any material
adjustment for Tax purposes to any provision made by means of any such
transaction or transactions and no such adjustment has actually been made.
15. SDLT
15.1 The Company has complied in all respects with the provisions of Part 4
of and Schedules 3 and 20 to the FA 2003 (Stamp Duty Land Tax) and any
regulations made under such legislation.
15.2 The Company has not made an application under section 90 of the FA
2003 to defer any payment of SDLT or may otherwise be liable to make a
payment of SDLT in respect of any land transaction occurring on or
before Completion.
15.3 The Company does not directly or indirectly hold any interest in real
property situated in the United Kingdom which was granted or
transferred to it prior to the date of this agreement where such grant
or transfer was the subject of an application for relief from SDLT
under Schedule 7 to the FA 2003.
70
16. ANTI-AVOIDANCE
16.1 The Company has not been party to any transaction in relation to which
either it could be liable to Tax under Part XVII of ICTA
(anti-avoidance) or the sole or main purpose of which was the
avoidance or deferral of Tax.
16.2 All information supplied to any Tax Authority in connection with any
clearance obtained by a Company was complete and accurate and all
transactions for which such clearances were obtained have been carried
out in accordance with the terms of the clearances given and the
applications made for them.
71
PART 3
TAX COVENANT
1. COVENANT
The Warrantors severally and in the proportions set out in paragraph 2.2 of
schedule 6 covenant to pay to the Purchaser an amount, whether or not that
amount is a liability of or recoverable from another person, equal to:
1.1 any Actual Tax Liability (whether or not discharged prior to or on
Completion) which arises directly, indirectly, before or after or on
Completion by reference to an Event occurring or income, profits or
gains earned, accrued or received on or before Completion;
1.2 the value of any Effective Tax Liability;
1.3 any liability for Inheritance Tax which:
1.3.1 has, at Completion, given rise to a charge on any of the shares
or assets of the Company or given rise to a power to sell,
mortgage or charge any of the shares or assets of the Company;
1.3.2 after Completion, gives rise to 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 and which
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)
PROVIDED THAT any right to pay tax by instalments shall be
disregarded and the provisions of section 213 of the Inheritance
Tax Act 1984 shall not apply to any payment falling to be made
under this schedule;
1.4 the reasonable costs and expenses of the Purchaser or the Company in
connection with any of the above or with a successful claim under this
part 3 of this schedule;
1.5 without prejudice to the generality of this Clause 1, any Actual Tax
Liability (including for the avoidance of doubt any liability of the
Company to make any payment to any trustees of the EBT in respect of
Tax) arising in connection with or by reference to the provisions of
shares in Thornybolt (No 143) and Thornybolt (No 234) to employees of
the Company and any Event relating to such shares, these
72
companies or the Macaw (Soft Drinks) Limited Employee Benefit Trust
(the "EBT") including any liability to national insurance
contributions or under the PAYE Systems and any liability arising by
return of any payment or contribution to the EBT not being deductible
for tax purposes in the period of which said payment or contributions
was made and any reasonable costs and expenses of the Purchaser or the
Company to the extent not discharged before Completion in connection
with any such Actual Tax Liability or with a successful claim by the
Purchaser in respect of such Actual Tax Liability;
1.6 any liability falling within paragraph (a) of the definition of
Taxation up to a maximum amount of L250,000, arising in
connection with or by reference to the receipt by the Company of
amounts relating to the Xxxxxx Embankment Claim or amounts paid by the
Company in relation to the Xxxxxx Embankment Claim being treated for
tax purposes in a different way to that assumed for the purposes of
the Accounts or the Company's corporation tax returns;
1.7 50% of any liability falling within paragraph (b) of the definition of
Taxation up to a maximum amount of L250,000 which arises as a
result of or by reference to any liabilities arising pursuant to
paragraph 1.6 above, such amount of L250,000 to include, for the
avoidance of doubt, any reasonable costs and expenses of the Purchaser
or the Company in connection with any claim under paragraph 1.6 or
this paragraph 1.7.
2. DEDUCTIONS FROM PAYMENTS
2.1 All sums payable by the Warrantors under any Tax Claim shall be paid
gross, free and clear of any rights of counterclaim or set-off and
without any deduction or withholding unless the deduction or
withholding is required by law, in which event the Warrantors shall
pay such additional amount as shall be required to ensure that the net
amount received and retained (free of any liability) by the Purchaser
will equal the full amount which would have been received by it had no
such deduction or withholding been required provided that this
paragraph 2.1 shall not apply to any interest payable under paragraph
5.5 of part 4.
2.2 If any amount payable under a Tax Claim is subject to Tax the amount
so payable shall be grossed up by such amount as will ensure that,
after deduction of the Tax in question, there shall be left an amount
equal to the amount that would otherwise be payable under the Tax
Claim.
73
2.3 In the event that the Purchaser is subject to tax in any jurisdiction
other than the UK, paragraph 2.2 shall not apply.
3. CHOICE OF TAX CLAIM
The Purchaser shall in its absolute discretion decide whether to make a
claim under the Tax Covenant, the Tax Warranties or both.
74
PART 4
LIMITATIONS AND PROCEDURE
1. LIMITATIONS
The Warrantors shall not be liable under any Tax Warranty or any claim
under paragraph 1 of part 3 in respect of any Tax Liability to the extent
that:
1.1 except in relation to a Tax Claim to which paragraphs 1.5, 1.6 or 1.7
of part 3 of this schedule applies, provision, reserve or allowance
has been made in the Accounts in respect of such liability or to the
extent that the payment or discharge of such liability has been taken
into account in the Accounts;
1.2 the Tax Liability arises as a result of transactions in the ordinary
course of the Company's business (as carried on at Completion) between
the Accounts Date and Completion, it being agreed that none of the
following Events shall be treated as having been carried out in the
ordinary course of business of the Company:
1.2.1 the acquisition or disposal of any asset other than trading
stock for consideration or deemed consideration exceeding
L10,000 or any deemed disposal for Tax purposes;
1.2.2 any acquisition, disposal, supply or deemed acquisition,
disposal or supply of any asset, goods, service or right for
consideration deemed for Tax purposes to be different from that
(if any) actually received or given by the Company;
1.2.3 the making or declaring of any distribution or deemed
distribution for Tax purposes or the grant or release of any
right in relation to the same;
1.2.4 any Event which results or may result in a Tax Liability
primarily attributable to another person or entity;
1.2.5 any failure to deduct, charge, recover or account for Tax
(including the under deducted tax) and for the purposes of this
schedule any Tax Liability relating to such Tax shall be treated
as arising outside the ordinary course of business;
1.2.6 the creation, cancellation, redemption, reorganisation or
variation of the share capital of the Company or of any loan
relationship;
75
1.2.7 any Event of which the main purpose or one of the main purposes
was the avoidance of (including without limitation any reduction
in) Tax;
1.2.8 any Event to which the following provisions applied, apply or
may apply:
1.2.8.1 Part XVII of the Taxes Act;
1.2.8.2 sections 29 or 36 of the TMA;
1.2.8.3 Schedule 9A VATA;
1.2.8.4 regulation 108 or part XV of the VAT Regulations;
1.2.9 any Event which gives rise to any interest, fine, penalty,
charge or surcharge in connection with Tax;
1.3 the provision for Tax made in the Accounts in relation to such
liability is only insufficient by reason of any increase in the rates
of Tax after the Completion Date with retrospective effect;
1.4 such liability arises or is increased as a result of any change in
legislation (primary or delegated) or the published practice of a Tax
Authority occurring after the Completion Date (but not announced
before that date) but this paragraph 1.4 shall not apply to any amount
payable under paragraph 2 of part 3;
1.5 such liability arises or is increased as a result of any voluntary
act, transaction or omission of the Company or the Purchaser after
Completion otherwise than in the ordinary course of business of the
Company carried on at Completion which the Purchaser knew would give
rise to the liability in question other than any of the following:-
1.5.1 an act carried out pursuant to a legally binding obligation
entered into before Completion;
1.5.2 an act which the Company was required to do by any legislation
(whether relating to Tax or otherwise);
1.5.3 any disclosure to a tax authority or other government, state,
municipal, local or federal regulatory authority;
76
1.6 the liability would not have arisen or would have been reduced or
eliminated but for a failure or omission after Completion, on the part
of the Company or the Purchaser, to make any claim, election,
surrender or disclaimer or to give any notice or consent or to do any
other thing under any enactment or regulation relating to Tax the
making, giving or doing of which was taken into account in computing
the provision for Tax in the Accounts details of which have been set
out in the Disclosure Letter or in a written notice given to the
Purchaser not less than 30 days before the final date upon which the
claim, election, surrender, disclaimer, notice consent or other thing
in question may be made given or done;
1.7 the liability arises or is increased as a result of either the Company
or the Purchaser failing to act in accordance with the provisions of
paragraph 4 of this part of this schedule;
1.8 the liability arises or is increased as a result of any change after
Completion in the bases, methods or policies of accounting of the
Purchaser or the Company save where such change is made to comply with
generally accepted accounting principles, the published practice of
any Tax Authority, law or rule of any regulatory authority or body in
force at the Completion Date;
1.9 such liability arises as a result of:
1.9.1 any voluntary disclaimer by the Company after Completion of the
whole or part of any capital allowances claimed before
Completion;
1.9.2 the revocation or revision by the Company after Completion of
any Relief claimed or the entitlement to which was taken into
account in preparation of the Accounts; or
1.10 any Relief, other than an Accounts Relief or a Post Accounts Relief,
is available to the Company to relieve or mitigate that Tax Liability;
1.11 any Tax liability which arises in connection with or by reference or
in consequence to:
1.11.1 the provision of B shares in the Company to employees of the
Company and any Event relating to such shares, including any
liability to national insurance contributions or under the PAYE
system; and
77
1.11.2 capital allowances claimed under part 2 of the Capital
Allowances Act 2001 (plant and machinery allowances) for the
accounting period ended 2002, 2003 and 2004 not being available
to the extent any such Tax Liability has been discharged prior
to Completion.
2. The Warrantors shall not be liable in respect of any breach of the Tax
Warranties if and to the extent that the loss incurred is or has been
included in any claim under the Tax Covenant which has been satisfied in
full in cleared funds, nor shall the Warrantors be liable in respect of a
claim under the Tax Covenant if and to the extent that the amount claimed
is or has been included in a claim for breach of the Tax Warranties which
has been satisfied in full.
3. DURATION AND EXTENT
3.1 No claim shall be admissible and the Warrantors shall not be liable in
respect of any Tax Claim unless details of the Tax Claim shall have
been notified in writing to the Warrantors within seven years of the
Completion Date (the "NOTIFICATION DATE") (save that this paragraph
shall not apply in relation to any matter which is the subject of any
enquiry or investigation by any Tax Authority at the Notification
Date).
3.2 Paragraphs 2.1 and 2.2 of schedule 6 of the Agreement shall apply in
respect of any Tax Claim (with all necessary changes) as if the same
were set out and repeated in this part 4 of this schedule.
4. CONDUCT OF CLAIMS
4.1 If the Purchaser or the Company becomes aware of any Claim for Tax
which gives or may give rise to a Tax Claim, the Purchaser shall, or
shall procure that the Company shall as soon as reasonably practicable
give written notice of the Claim for Tax to the Warrantors.
4.2 The Purchaser shall, or shall procure that the Company shall, supply
the Warrantors with such available and relevant details,
documentation, correspondence and information and shall take such
action as the Warrantors may reasonably request 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 Warrantors 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 in
relation to the same and provided further that:-
78
4.2.1 neither the Purchaser nor the Company shall be obliged to comply
with any request of the Warrantors that involves contesting any
claim for tax before any tribunal, court or appellate body,
excluding the General Commissioners of HM Revenue and Customs,
the Special Commissioners of HM Revenue and Customs or the Value
Added Tax Tribunal, unless Tax counsel of appropriate standing
instructed by agreement between the Purchaser and the Warrantors
(and with the Purchaser approving the Instructions to Counsel
and being invited to any conference with Counsel) and at the
sole expense of the Warrantors has recommended that course of
action in writing;
4.2.2 neither the Purchaser nor the Company shall be obliged to take
any step which it reasonably considers would be materially
prejudicial to the Tax affairs of the Purchaser or the Company
or their dealings with any Tax Authority and, where the
Warrantors have conduct of the claim for tax pursuant to
paragraph 4.2.4 below, the Warrantors shall not take any step
which either the Purchaser or the Company reasonably considers
to be so prejudicial;
4.2.3 the provisions of this paragraph 4.2 shall not apply to any Tax
Claim where any Tax Authority alleges fraudulent conduct or
conduct involving dishonesty on the part of the Company or any
person acting on its behalf in relation to the matter giving
rise to the claim;
4.2.4 the Warrantors shall not be entitled to conduct negotiations and
proceedings in respect of the claim for tax in the name of the
Company save where the claim relates to a liability within
paragraph 1.5, 1.6 or 1.7 of Part 3 in which case the following
shall apply:-
4.2.4.1 the Warrantors shall keep the Purchaser fully informed of
the progress of the claim for tax;
4.2.4.2 the Purchaser promptly receives copies of all written
correspondence with any Tax Authority insofar as it is
relevant to the claim for tax;
4.2.4.3 the Purchaser is invited to any meeting which the
Warrantors or their agents attend with any representative
of a Tax Authority which relates to the claim for tax;
79
4.2.4.4 the Purchaser is afforded the opportunity to comment
within a reasonable period of time on any correspondence,
return or other document prior to its submission to the
relevant Tax Authority and the Warrantors shall take into
account such comments so far as they are reasonable;
4.2.4.5 no correspondence, return or other document is submitted
to a Tax Authority which is not, so far as the Warrantors
are aware, complete, true and accurate in all respects;
4.2.4.6 no correspondence is submitted to, or any agreement
reached with, any Tax Authority without the prior
approval of the Purchaser (such approval not to be
unreasonably withheld or delayed); and
4.2.4.7 the Warrantors shall not take any steps which the
Purchaser reasonably considers would be materially
prejudicial to the Tax Affairs of the Purchaser or the
Company or their dealings with any Tax Authority;
4.2.5 a Warrantor's rights under this Clause 4 cease if that Warrantor
is declared bankrupt.
4.3 The Purchaser shall keep the Warrantors fully informed of the progress
in settling the relevant Claim for Tax and shall, as soon as
reasonably practicable, forward, or procure to be forwarded to the
Warrantors, copies of all material correspondence pertaining to it.
4.4 If the Warrantors do not request the Purchaser to take any action
under this Clause within 28 days of notice to the Warrantors or no
action is required to be taken by virtue of any of the provisions of
this Clause the Purchaser shall be free to satisfy or settle the
relevant claim for tax on such terms as it may in its absolute
discretion think fit.
4.5 The compliance of the Purchaser and/or the Company with the provisions
of this Clause shall not be a condition precedent to the liability of
the Warrantors.
80
5. DATE FOR PAYMENT
5.1 Where a Tax Claim or any sum to which paragraph 2.2 of part 3 applies
involves the Purchaser or the Company being under a liability to make
a payment to any Tax Authority, the Warrantors shall pay to the
Purchaser in cleared funds the amount claimed on or before the later
of the fifth Business Day after demand is made for such payment and
the fifth Business Day before the date on which the amount in question
is payable to the relevant Tax Authority without any interest,
penalty, fine or surcharge arising in respect of it.
5.2 Where a Tax Claim is made under the Tax Covenant in respect of the
non-availability of a right to repayment of Tax, the Warrantors shall
pay to the Purchaser in cleared funds the amount in question on the
later of the fifth Business Day after demand is made for such amount
to be paid and the fifth Business Day after the date on which the Tax
in question would have been repaid but for that non-availability.
5.3 Where a Tax Claim is made under the Tax Covenant in respect of the
utilisation or set-off of a Relief, the Warrantors shall pay to the
Purchaser in cleared funds the amount in question on the later of the
fifth Business Day after the date on which the Tax in question would
have arisen but for such utilisation or set-off and the fifth Business
Day after demand is made for such amount to be paid.
5.4 Where the Warrantors are liable to make any payment under paragraph
1.5 of the Tax Covenant or under any other Tax Claim the date for the
payment of which is not determined under paragraphs 5.1, 5.2 or 5.3,
the Warrantors shall pay to the Purchaser the amount in question on
the fifth Business Day after demand is made for such amount to be
paid.
5.5 Any sum not paid by the Warrantors on a date determined under
paragraphs 5.1, 5.2, 5.3 or 5.4 ("DUE DATE") shall bear interest
(which shall accrue from day to day after as well as before any
judgement in respect of such sum) at the rate of 2% per annum over the
base rate of Barclays Bank PLC or in the absence of such rate at such
similar rate as the Purchaser shall select from the due date up to and
including the day of actual payment of such sum (or the next Business
Day if the date of actual payment is not a Business Day) compounded
quarterly. Such interest shall be paid on the demand of the Purchaser.
81
6. CORRESPONDING BENEFIT
6.1 If before the sixth anniversary of the date of this agreement:
6.1.1 the amount by which any right to repayment of Tax which has been
treated as an asset in the Accounts proves to have been
understated; or
6.1.2 a payment by the Warrantors in respect of any Tax Liability
under a Tax Claim results in the Purchaser receiving any Relief
(other than an Accounts Relief) which it utilises (including by
way of obtaining a repayment of Tax) ("CORRESPONDING RELIEF")
then an amount equal to such understated right to repayment of Tax or
the Tax saved by the Corresponding Relief at the date such
Corresponding Relief is utilised ("RELEVANT AMOUNT") shall be dealt
with in accordance with paragraph 6.2 provided that no account shall
be taken of any understatement to the extent that it arises as a
consequence of the utilisation of any Post Accounts Relief or Accounts
Relief or any action taken by the Company after Completion or any
change in law after Completion.
6.2
6.2.1 The Relevant Amount shall first be set off against any payment
then due from the Warrantors under a Tax Claim;
6.2.2 to the extent there is an excess of the Relevant Amount after
any application of it under paragraph 6.2.1, a refund shall be
made to the Warrantors of any previous payment or payments made
by the Warrantors under a Tax Claim and not previously refunded
under this paragraph 6.2.2 up to the amount of such excess; and
6.2.3 to the extent that the excess referred to in paragraph 6.2.2 is
not exhausted under that paragraph, the remainder of that excess
shall be carried forward and set off against any future payment
or payments which become due from the Warrantors under a Tax
Claim.
6.3 If the Purchaser or the Company become aware of any circumstances
which shall or may give rise to the application of paragraph 6.1 the
Purchaser shall or shall procure that the Company shall, as soon as
reasonably practicable, give written notice of the
82
same to the Warrantors. For the avoidance of doubt, the Purchaser or
the Company shall have full discretion over the utilisation of the
Corresponding Relief and shall not be under any obligation to utilise
any Corresponding Relief in priority to any Post Accounts Relief.
6.4 The Warrantors may, at their own expense require the Auditors to
certify the existence and quantum of any Relevant Amount and the date
on which the Corresponding Relief is utilised and in the absence of
manifest error, their decision shall be final and binding.
7. THIRD PARTY CLAIMS
7.1 If the Company or the Purchaser is before the sixth anniversary of the
date of this agreement entitled to recover from another person
(excluding any other company within the definition of Company or the
Purchaser's Group or any current or former employees or officers of
the Company) or a Tax Authority a sum in respect of any Tax Liability
to which a Tax Claim relates and which has been satisfied in full by
the Warrantors in cleared funds, the Purchaser shall as soon as
reasonably practicable give written notice of such fact to the
Warrantors and if the Warrantors indemnify and secure the Purchaser or
as appropriate the Company (to the Purchaser's reasonable
satisfaction) against the reasonable costs of the Purchaser or as
appropriate the Company in connection with taking the following
action, the Purchaser shall or shall procure that the Company shall
take such action reasonably requested by the Warrantors to enforce
recovery against that person or Tax Authority.
7.2 In the event that the Purchaser recovers any sum referred to in
paragraph 7.1 after taking any action at the request of the Warrantors
under that paragraph, the lesser of:
7.2.1 the sum recovered net of any Tax on the sum and the costs and
expenses of recovering the same; and
7.2.2 any amount paid by the Warrantors in respect of the Tax
Liability giving rise to the relevant Tax Claim;
shall be treated as a Relevant Amount and dealt with in accordance
with paragraph 6.2 above.
83
8. APPLICATION OF THIS PART 4 TO TAX WARRANTIES
The provisions of paragraphs 6 and 7 shall not apply to or in respect of
any Tax Warranty to the extent that the relevant over-provision,
understatement, corresponding benefit or right to recover has been taken
into account in quantifying the liability of the Warrantors under the
relevant Tax Warranty.
9. COVENANT BY THE PURCHASER
9.1 The Purchaser covenants with the Warrantors to pay to the Warrantors
an amount equal to any of the following:
9.1.1 any liability or increased liability to Tax of the Warrantors or
any person connected with the Warrantors arising under or by
reference to section 767A or section 767AA of the Taxes Act,
section 179, 190 or 191 of the TCGA or section 132 of the
Finance Xxx 0000, paragraph 68 of schedule 29 to the Finance Xxx
0000, paragraph 8 of schedule 34 to the Finance Xxx 0000,
paragraph 9 of schedule 35 to the FA 2002, or paragraphs 1 or 2
of schedule 39 to the Finance Xxx 0000 by virtue of the
non-payment of Tax by the Company save that this paragraph 9.1.1
shall not apply in respect of any Tax for which the Warrantors
are liable to make (but have not yet made) payment to the
Purchaser under this schedule;
9.1.2 any liability or increased liability to Tax of the Warrantors
arising in connection with any of the following events occurring
or being deemed to occur at any time after Completion:
9.1.2.1 the disposal by the Company of any asset or of any
interest on or right over any asset; or
9.1.2.2 the Company ceasing to be resident in the United Kingdom
for the purposes of any Tax;
9.1.3 the reasonable costs and expenses of the Warrantors or any
member of the Vendor Group in connection with any liability
referred to or in taking any action under this paragraph.
84
9.2 For the purposes of this paragraph, any reference to a liability to
Tax shall include any liability to make a payment of Tax which would
have arisen but for the utilisation of any Relief.
9.3 Paragraphs 2 and 3 of this part 4 of this schedule shall apply to this
paragraph 10 (with all necessary changes) as if: (a) (except in
paragraph 4.3) references to the Warrantors were references to the
Purchaser and vice versa; and (b) references to the Company in the
definition of Claim for Tax were references to the Warrantors.
10. MISCELLANEOUS
10.1 Any payment to the Purchaser or the Company under any Tax Claim shall
be deemed to be a reduction of the total consideration payable
hereunder for the Shares.
10.2 The provisions of this part 4 shall not apply to limit and/or regulate
the liability of the Warrantors in respect of any Tax Claim in the
case of fraud or wilful concealment.
85
SCHEDULE 5
COMPLETION
1. Each of the Vendors shall repay or procure the repayment of all sums owed
by him to the Company or the Subsidiary.
2. The Vendors shall deliver or procure to be delivered to the Purchaser:
2.1 duly executed transfers of the Shares set out opposite their
respective names in column (2) of schedule 1 in favour of the
Purchaser together with duly executed (or certified copies of) powers
of attorney or other authorities pursuant to which any transfers or
any of the Acquisition Documents have been executed;
2.2 the relevant share certificates (or an express indemnity in the agreed
form in the event of any found to be missing) in respect of the Shares
set out opposite their respective names in column (2) of schedule 1;
2.3 the written resignations in the agreed form of Xxxxxx Xxxxx Xxxxxxxx,
Xxxxxx Xxxxxxxx Xxxxxx and Martyn Xxxxx Xxxx as directors of and
Xxxxxx Xxxxxxxx Xxxxxx as the secretary of the Company and the
Subsidiary;
2.4 the written resignation in the agreed form of the auditors of the
Company and the Subsidiary;
2.5 all certificates of incorporation and certificates of incorporation on
change of name for the Company and the Subsidiary;
2.6 the common seal (if any) and statutory books of the Company and the
Subsidiary made up to the Completion Date;
2.7 share certificates in respect of all the issued shares of the
Subsidiary held by the Company;
2.8 the documents of title to the Properties (or in respect of any
individual property charged to a third party where the charge is to
stay in place certified true copies thereof) as shown in the schedule
of deeds in the agreed form;
2.9 the documents of title relating to the Intellectual Property belonging
to the Company and/or the Subsidiary;
86
2.10 a statement certified by the Company's bankers of the credit or debit
balances of the Company's bank accounts as at a date not more than two
Business Days before the date of this Agreement.
2.11 duly executed deeds of amendment in the agreed form amending the Macaw
(Soft Drinks) Directors' Pension Plan;
2.12 a duly executed deed of removal and appointment of trustees in the
agreed form removing the Company from the Trusteeship of the Macaw
(Soft Drinks) Executive Pension Plan;
2.13 the Compromise Agreements duly executed by Xxxxxx Xxxxxxxx, Xxxxxxxx
Xxxxxx and Xxxxxx Xxxx;
2.14 the Consultancy Letter duly executed by Xxxxxx Xxxxxxxx;
2.15 powers of attorney executed by each of Xxxxx Xxxxx (one of the Rose
Trustees) and Xxxx Xxxxxxxxx of Knebworth (one of the Vendors) in
respect of the Acquisition Documents in the agreed form;
2.16 duly executed deeds of release in the agreed form releasing Existing
Debts (a) to (d);
2.17 written resolutions on behalf of the Company and the Subsidiary in the
agreed form (the "FINANCIAL ASSISTANCE RESOLUTIONS");
2.18 executed powers of attorney signed by each of the Vendors in favour of
any director of the Purchaser in the agreed form to enable the
Financial Assistance Resolutions to be signed;
2.19 the Disclosure Letter duly executed by the Warrantors together with
the bundle of disclosure documents; and
2.20 letters signed by Xxxx XxxXxxxxx of Knebworth, Xxxxx Xxxxxxxx and the
Rose Trustees confirming that those persons have no outstanding claims
against the Target and the Subsidiary.
3. The Vendors shall procure that meetings of the boards of directors of the
Company and the Subsidiary are convened and held at which resolutions in
the form set out in the Completion Board Minutes are duly passed.
87
4. The Purchaser shall:
4.1 deliver to the Vendors a certified copy of a resolution of the board
of directors of the Purchaser in the agreed form approving the
acquisition by the Purchaser of the Shares and the execution by the
Purchaser of the Acquisition Documents; and
4.2 pay to the Vendors' Solicitors by transfer of funds through a UK
clearing bank the sum of L62,067,602 in respect of the cash
consideration payable at Completion. The Vendors' Solicitors' receipt
shall be a sufficient discharge for such sum and the Purchaser shall
not be concerned to see to the application thereof.
88
SCHEDULE 6
LIMITATIONS ON LIABILITY
1. ACKNOWLEDGEMENT
The Purchaser:
1.1 confirms that the provisions of this schedule shall apply despite (and
prevail over) any other provision of this agreement or the Tax
Covenant and are in addition to and without prejudice to the
Purchaser's general legal obligation to mitigate any loss or damage it
may suffer; and
1.2 agrees that rescission shall not be available as a remedy for any
breach of this agreement and agrees not to claim that remedy.
2. DURATION AND EXTENT
2.1 The aggregate liability of the Warrantors in respect of all Claims
shall:
2.1.1 in the case of Claims notified during the period from Completion
down to and including the first anniversary of Completion
("FIRST PERIOD") not exceed a sum equal to seventy five (75) per
cent of the Consideration; and
2.1.2 in the case of Claims notified during the period from and after
the first anniversary of Completion down to and including the
second anniversary of Completion ("SECOND PERIOD"), not exceed a
sum equal to fifty (50) per cent of the Consideration except in
the case of a Tax Claim in which case the Second Period will be
the period from and after the first anniversary of Completion
down to and including the seventh anniversary of Completion.
2.2 The liability of each Warrantor in respect of all Claims shall not
exceed a sum equal to the amount set out against his name in column
(2) below in relation to the First Period and the amount set out
against his name in column (3) below in relation to the Second Period
and, subject to that, his percentage liability in respect of any Claim
shall not exceed the amount set out against his name in column (4)
below.
89
(2) (3)
MAXIMUM MAXIMUM (4)
(1) LIABILITY FOR LIABILITY FOR PERCENTAGE
WARRANTOR FIRST PERIOD SECOND PERIOD LIABILITY
----------------- ------------- ------------- ----------
Xxxxxx Xxxxxxxx L27,464,914 L18,309,943 59%
The Rose Trustees L19,085,788 L12,723,858 41%
---
TOTAL L46,550,702 L31,033,801 100%
2.3 No amount shall be payable by the Warrantors in respect of any
Warranty Claim :
2.3.1 unless the amount of the liability in respect of each such
Warranty Claim or series of related Warranty Claims exceeds
L15,000; and
2.3.2 unless and until the aggregate cumulative liability of the
Warrantors in respect of all such Warranty Claims (other than
any Tax Claim, to which this paragraph 2.3 shall not apply)
exceeds L500,000 in which case the Warrantors shall be liable
for the whole amount and not just the excess.
2.4 Other than a Tax Claim for any liability arising under paragraphs 1.5,
1.6 or 1.7 of part 3 of schedule 4, no amount shall be payable by the
Warrantors in respect of any Tax Claim unless and until the aggregate
cumulative liability of the Warrantors in respect of all such Tax
Claims exceeds L250,000 in which case the Warrantors shall be liable
for the whole amount and not just the excess.
2.5 The Warrantors shall not be liable for any Warranty Claim unless the
Warrantors are given notice of that Warranty Claim setting out in
reasonable detail the subject matter of the Warranty Claim and, if
practicable, the amount claimed on or before the second anniversary of
Completion in the case of a claim under the Share Warranties and on or
before the seventh anniversary of Completion in the case of any Tax
Claim and unless legal proceedings shall have been served in respect
of any such Warranty Claim within nine months of the Warrantors being
notified of any such Warranty claim.
2.6 Where the Rose Trustees do not pay to the Purchaser, from the MC Rose
Settlement No. 1 ("SETTLEMENT"), in full, the amount of any claim
agreed or determined to be payable by them (subject to the provisions
of Part 4 of Schedule 4 and the provisions
90
of this Schedule 6) ("TRUSTEES' CLAIM") then Xxxxxx Xxxx shall be
liable to meet the Trustees' Claim or the element thereof not so paid
by the Rose Trustees and Xxxxxx Xxxx hereby irrevocably and
unconditionally:-
2.6.1 guarantees to the Purchaser the due and punctual payment by the
Rose Trustees of the Trustees' Claim on or before the Final
Trustee Payment Date; and
2.6.2 undertakes with the Purchaser that whenever the Rose Trustees do
not pay the Trustees' Claim or any part thereof on or before the
Final Trustee Payment Date he shall immediately on demand either
put the Rose Trustees in funds, by paying money into the
Settlement, to meet the Trustees' Claim, or part thereof not
already so paid, or pay such amount as if he was the principal
obligor.
For the purposes of this paragraph 2 the "FINAL TRUSTEE PAYMENT DATE"
means the date being 21 days after the date on which the Trustees'
Claim is due and payable.
2.7 Any amounts payable by Xxxxxx Xxxx pursuant to paragraph 2.6 above
shall be payable to the Purchaser on or before the date falling 5 days
after the Final Trustee Payment Date.
2.8 The liability of Xxxxxx Xxxx under the guarantee contained in
paragraph 2.6 above shall be irrevocable, absolute, independent and
unconditional and shall not be affected by any other circumstances
which might constitute a discharge of the Rose Trustees' obligations
hereunder other than the payment in full of all Trustees' Claims and
in particular (but without limitation) shall not be affected by:
2.8.1 any incapacity or lack of power, authority or legal personality
or change in the status of the Rose Trustees;
2.8.2 any irregularity, unenforceability, illegality or invalidity of
any obligation of the Rose Trustees' under this Agreement;
and/or
2.8.3 the dissolution, reconstruction or reorganisation of the MC Rose
Settlement No. 1 or any change in the status thereof.
91
3. LIMITATIONS
No Warranty Claim (save for a claim for breach of the Tax Warranties which
shall be dealt with under part 4 of schedule 4) shall be admissible and the
Warrantors shall not be liable under any of the Share Warranties:
3.1 to the extent that there is specific provision, reserve or allowance
in the Accounts or in the Management Accounts the matter is
specifically referred to in the notes to the Accounts in respect
thereof; or
3.2 to the extent that such liability arises or is increased as a result
of any change in legislation (primary or delegated) including without
limitation any increase in rates of taxation or the introduction of
any changes or new form of taxation or in the published practice of
the Inland Revenue or HM Customs & Excise or any other relevant
authority (in the United Kingdom or elsewhere) occurring after the
Completion Date (but not announced before that date) with
retrospective effect; or
3.3 to the extent that the liability would not have arisen or would have
been reduced or eliminated but for a failure or omission after
Completion, on the part of the Company or the Subsidiary or the
Purchaser or any of them to make any claim, election, surrender or
disclaimer or to give any notice or consent or to do any other thing
under any enactment or regulation relating to taxation the making,
giving or doing of which was taken into account in computing the
provision for taxation in the Accounts, details of which have been set
out in the Disclosure Letter or in a written notice given to the
Purchaser not less than 30 days before the final date upon which the
claim, election, surrender, disclaimer, notice, consent or other thing
in question may be made, given or done; or
3.4 to the extent that such liability occurs or arises as a result of or
is otherwise attributable wholly or partly to any voluntary act,
transaction or omission of the Company or the Subsidiary or the
Purchaser or their respective directors, employees or agents after
Completion which is authorised by or carried out at the written
request of the Purchaser or any member of the Purchaser's Group.
4. THIRD PARTY CLAIMS
4.1 Where the Purchaser and/or the Company and/or the Subsidiary is/are at
any time entitled to recover from some other person (including any Tax
Authority but
92
excluding under any policy of insurance) any sum in respect of any
matter giving rise to a Warranty Claim in respect of the Share
Warranties the Purchaser shall and shall procure that the Company or
the Subsidiary shall, subject to the Purchaser being indemnified and
secured by the Warrantors for all reasonable costs and expenses, take
all necessary steps to enforce such recovery prior to taking any
action against the Warrantors (other than notifying the Warrantors of
the Warranty Claim) provided that the Purchaser shall not be required
to take any action which it reasonably considers would be materially
prejudicial to the goodwill of or otherwise materially detrimental to
the business or interest of the Purchaser, the Purchaser's Group, the
Company or the Subsidiary.
4.2 In the event that the Purchaser or the Company or the Subsidiary shall
recover any amount from such other person the amount of the Warranty
Claim against the Warrantors shall be reduced by the amount recovered
(including any repayment supplement) less all costs, charges and
expenses incurred by the Purchaser or the Company or the Subsidiary in
recovering that sum from such other person.
4.3 If the Warrantors pay at any time to the Purchaser or to the Company
or to the Subsidiary an amount pursuant to a Warranty Claim and the
Purchaser or the Company or the Subsidiary subsequently becomes
entitled to recover from some other person (other than under any
policy of insurance) any sum in respect of any matter giving rise to
such Warranty Claims the Purchaser shall and shall procure that the
Company or the Subsidiary shall take all necessary steps to enforce
such recovery and shall as soon as reasonably practicable repay to the
Warrantors so much of the amount paid by them to the Purchaser or the
Company or the Subsidiary as does not exceed the sum recovered from
such other person less all costs, charges and expenses incurred by the
Purchaser or the Company or the Subsidiary in recovering that sum from
such other person provided always that the Purchaser shall not be
required to take any action which it reasonably considers would be
materially prejudicial to the goodwill of or otherwise materially
detrimental to the business or interest of the Purchaser, the
Purchaser's Group, the Company or the Subsidiary.
4.4 Any amount paid to the Purchaser by the Warrantors, the Vendors or any
of them pursuant to any provision in this agreement shall be treated
as a reduction to the Consideration.
93
5. CONDUCT OF CLAIMS
5.1 If the Purchaser or the Company or the Subsidiary believe, acting
reasonably, that there may be an issue which might give rise to a
Warranty Claim in respect of the Share Warranties:
5.1.1 subject to paragraph 5.2 the Purchaser shall (or shall procure
that the Company or the Subsidiary concerned shall) as soon as
reasonably practicable give written notice to the Warrantors of
the matter and shall consult with the Warrantors with respect to
such matter provided that a failure to comply with this
paragraph 5.1.1 shall not preclude the Purchaser from bringing a
Warranty Claim against the Warrantors provided that such Claim
is made within the time scales in paragraph 2.4 of this
Schedule;
5.1.2 subject to paragraph 5.2 the Purchaser shall (and shall procure
that the Company or the Subsidiary concerned shall) provide to
the Warrantors and their advisers reasonable access on
reasonable notice to premises and personnel and to relevant
assets, documents and records within the Purchaser's Group for
the purposes of investigating the matter and enabling the
Warrantors to take the action referred to in paragraph 5.1.4;
5.1.3 the Warrantors (at their own cost) may take copies of the
documents or records, and photograph the premises or assets,
referred to in paragraph 5.1.2;
5.1.4 subject to paragraphs 5.1.5, 5.2 and 5.3, the Purchaser shall
(and shall procure that the Company or the Subsidiary shall)
take such action as the Warrantors may reasonably request in
writing to negotiate, avoid, dispute, resist, mitigate,
compromise, defend or appeal against any Warranty Claim and any
adjudication with respect thereto which shall include (without
limitation) the Company or the Subsidiary applying to postpone
(so far as legally possible) the payment of any taxation; and
5.1.5 the Warrantors shall indemnify and secure the Purchaser and the
Company and the Subsidiary against all losses, damages and
expenses reasonably incurred by them in connection with
paragraph 5.1.4 above and reimburse to the Purchaser and the
Company and the Subsidiary all out-of-pocket expenses reasonably
incurred by them in complying with their obligations under this
paragraph 5.
94
5.2 The Purchaser shall not be required to provide any information or
access to premises, personnel, assets, documents or records which its
lawyers have properly considered and confirmed are legally privileged
or which relate to the Purchaser's view on whether an action against
the Warrantors in respect of the Warranty Claim would be successful.
5.3 The Purchaser shall not be required to take any action (or procure
that any action is taken) which is (in its reasonable opinion),
materially prejudicial to the goodwill of or otherwise materially
detrimental to the business or interests of the Purchaser, the
Purchaser's Group, the Company or the Subsidiary.
6. CONTINGENT CLAIMS
If any potential Claim shall arise by reason of a loss or liability which
is contingent, future or unascertainable, no such Claim may be brought in
respect of such loss or liability until such time as the Purchaser or any
company in the Purchaser's Group shall have actually suffered the loss or
incurred the liability in question provided that the time limits for
issuing proceedings in respect of such Claim shall be nine months from such
time.
7. MISCELLANEOUS
7.1 The Purchaser may not recover any sums in respect of a Claim to the
extent that it has already made recovery in respect of such loss under
another Claim made pursuant to this agreement.
7.2 The Purchaser will, and shall ensure that each Group Company will,
preserve all documents, records, correspondence, accounts and other
information whatsoever relevant to a matter which may give rise to a
Claim for such period as is required by any relevant legislation or,
if longer, the period during which a Claim may be made and for the
duration of any Claim.
95
SIGNED (but not delivered until the date hereof) )/s/ X.X. Xxxxxxxx
as a deed by Xxxxxx Xxxxx Xxxxxxxx in the )
presence of: )
/s/ Xxxxx X. Xxxx
-------------------------------------
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx X0 0XX
SIGNED (but not delivered until the date hereof) ) /s/ X. X. Xxxxxxxx
as a deed by Xxxxxx Xxxxx Xxxxxxxx and Xxxxx ) /s/ X. X. Xxxxxxxx
Xxxxxxxx Xxxxxxxx as trustees of the A J )
Cawthray Number 1 Settlement in the presence of: )
/s/ Xxxxx X. Xxxx
-------------------------------------
(as above)
SIGNED (but not delivered until the date hereof) ) /s/ Xxxxxx Xxxx
as a deed by Xxxxxx Xxxx and Xxxxx Xxxxx as ) /s/ Xxxxx Xxxxx (as attorney)
trustees of the MC Rose Settlement No. 1 in the )
presence of:
/s/ Xxxxx X. Xxxx
-------------------------------------
(as above)
SIGNED (but not delivered until the date hereof) ) /s/ X. X. Xxxxxxxx (as
as a deed by Xxxx Xxxxxxxxx of Knebworth in the ) attorney)
presence of: )
/s/ Xxxxx X. Xxxx
-------------------------------------
(as above)
SIGNED (but not delivered until the date hereof) ) /s/ Xxxxxxxx Xxxxxx
as a deed by Xxxxxxxx Xxxxxx in the presence of: )
/s/ Xxxxx X. Xxxx
-------------------------------------
(as above)
SIGNED (but not delivered until the date hereof) )/s/ Xxxxxx Xxxx
as a deed by Xxxxxx Xxxx in the presence of: )
/s/ Xxxxx X. Xxxx
-------------------------------------
(as above)
EXECUTED (but not delivered until the date )
hereof) as a deed by Cott Beverages Limited )
acting by: )
Director /s/ Xxxxx X. Main
Director/Secretary /s/ XX Xxxxxx
99
