EXHIBIT 2.2
DATED APRIL 6, 1998
XXXXXXX XXXXXXXX XXXXXX, XXXXXXX XXXXXX BRAND AND XXXXX XXXXXXXX (1)
and
XXXXXXXX CASTING UK LTD (2)
_______________________________________________________________________
DEED OF WARRANTY AND UNDERTAKING in respect of
SHEFFIELD FORGEMASTERS GROUP LIMITED AND ITS SUBSIDIARIES
_______________________________________________________________________
XXXXXX XXXXXX
KINGS COURT
00 XXXX XXXXXX
XXXXX
XX0 0XX
REF: PDE
CONTENTS
PART/
PARAGRAPH HEADING PAGE
PART A Principal provisions
A1 Interpretation 2
A2 Consideration 10
A3 Acceptance of the Offer 10
A4 Completion 13
A5 Warranties 15
A6 Protection for the Covenantors 17
A7 Non-competition covenants 17
A8 Books and records, tax returns and computations 18
A9 Committee 19
A10 Publicity 24
A11 Costs 25
A12 Miscellaneous 25
A13 Termination 26
A14 Notices 27
A15 Choice of law 28
PART B Details of the Covenantors and the Committed Shares 29
PART C List of the Group Companies 30
PART D Property 32
PART E Warranties 35
PART F Protection for the Covenantors 75
PART G Details of the Pension Schemes 83
ANNEXURES:
1 Group Companies List
2 Shareholder List
AGREED FORM DOCUMENTS:
1 Agreed Costs List
2 Certificates of Title
3 Deed of Acknowledgement
4 Deed of Covenant
5 Offer Document
6 Directors' resignation letters
7 Letter of credit
THIS AGREEMENT is made on 1998
PARTIES:
(1) XXXXXXX XXXXXXXX XXXXXX, XXXXXXX XXXXXX BRAND AND XXXXX XXXXXXXX, whose
addresses are set out in part B of this agreement (the "COVENANTORS"); and
(2) XXXXXXXX CASTING UK LTD (company number 3514183) whose registered office is
at 00 Xxxx Xxxxxx, Xxxxx, XX0 0XX ("ATCHISON").
RECITALS:
(1) Xxxxxxxx wishes to acquire all the Shares.
(2) Xxxxxxxx has entered into the Roll-Over Agreement to acquire 1,267,476 of
the Shares, such Shares comprising 1.64 per cent of the Shares.
(3) Xxxxxxxx intends to make the Offer for the remainder of the Shares (the
"REMAINING SHARES").
(4) The Covenantors hold in aggregate 4,188,898 Shares, such Shares comprising
5.53 per cent of the Remaining Shares.
(5) Xxxxxxxx has received irrevocable undertakings from further holders of
Shares amounting in aggregate to an additional per cent of
the Remaining Shares.
(6) The Covenantors have agreed to undertake to accept the Offer and Xxxxxxxx
has agreed to make the Offer on the terms and conditions set out in this
document.
(7) The Offer and Offer Document have been approved by the board of directors
of SFGL.
OPERATIVE PROVISIONS:
PART A
PRINCIPAL PROVISIONS
A1 INTERPRETATION
A1.1 In this agreement:
"XXXXXXXX'X SOLICITORS" means Xxxxxx Xxxxxx of Kings Court, 00 Xxxx Xxxxxx,
Xxxxx XX0 0XX;
"ACCOUNTS" means the UK Accounts and the Non-UK Accounts or, as relevant,
any of them;
"ACCOUNTS DATE" means 31 March 1997;
"THE ACT" means the Companies Xxx 0000;
"AEROSPACE AGREEMENTS" means the agreement dated 6 February 1998 and made
between Sheffield Forgemasters Limited (1), the Covenantors (2), Teledyne
Holdings Limited (3), Teledyne Industries Inc (4) and Allegheny Teledyne
Incorporated relating to the sale of the issued share capitals of the
Aerospace Group (the "FIRST AEROSPACE AGREEMENT") and the agreement dated 6
February 1998 and made between Forgemasters Realisations (1998) Limited
(then called Commercial Testing Services Limited) (1) and Teledyne Holdings
Limited (2) relating to the sale of the business and assets of Forgemasters
Realisations (1998) Limited;
"AEROSPACE GROUP" means Xxxxxx Xxxxxxx Limited, Special Melted Products
Limited, Forgemasters Inc and SMP Metals Inc;
"AGREED COSTS LIST" means a list of the costs to be paid or procured to be
paid by
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Xxxxxxxx in the agreed form;
"BUSINESS DAY" means any day (other than Saturday or Sunday) on which
clearing banks are open in the UK for a full range of banking transactions;
"CERTIFICATES OF TITLE" means certificates from the Covenantors' Solicitors
and Shepherd & Wedderburn in the agreed form as to the title of SFGL or
another Group Company to certain of the UK Properties;
"COMPETING BUSINESS" means any business engaged, interested or involved in
the manufacture or supply of any of the Restricted Goods or Services where
such business is carried on or conducted at or from any premises located
within the Restricted Area;
"COMPLETION" means the carrying out of the matters described in paragraph
A4;
"COMPUTER KNOW-HOW" means all information (including that comprised in or
derived from data, discs, tapes, manuals, source codes, flow charts and
specifications) relating to the use or programming of any computer and any
computer software in whatever form held;
"COVENANTORS' SOLICITORS" means Dibb Xxxxxx Xxxxx of Xxxxxxxx Xxxxxxxx,
Xxxx Xxxxx, Xxxxxxxxx, X0 0XX;
"CUSTOMER" means any person who was, at any time during the period of 12
months before Completion, a customer of any Group Company or a person with
whom, at any time during that period, any Group Company had dealings with a
view to obtaining business;
"DATA ROOM INDEX" means the version of the index of documents and
information relating to the Group headed "Data Room Information" in the
form annexed to the Disclosure Letter;
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"DEED OF ACKNOWLEDGEMENT" means a deed in the agreed form signed by each of
the Covenantors in respect of claims which he may have against SFGL or any
other Group Company;
"DEED OF COVENANT" means a deed of covenant in respect of taxation between
the Covenantors and Xxxxxxxx in the agreed form;
"DISCLOSURE LETTER" means the letter of disclosure of today's date written
by the Covenantors to Xxxxxxxx, the information annexed to it and the
documents set out in any indexes attached to it;
"ENCUMBRANCE" means any mortgage, charge, pledge, lien, assignment or other
security, interest or any equity of any person (including, without
limitation, any right to acquire, option or right of pre-emption);
"EUROPEAN COMMISSION" means the Commission of the European Community or the
relevant Directorate of it;
"EUROPEAN UNION" means the European Community and the European Coal and
Steel Community established under the Treaty of Rome 1957, the Treaty of
Xxxxx 0000 and the Treaty of Maastricht;
"EXEMPTION ORDER" means the Financial Services Xxx 0000 (Investment
Advertisements) (Exemptions) (No 2) Order 1995 (1995/1536);
"GROUP" means SFGL and each other company (or other body corporate),
details of which are set out in part C of this agreement and the Group
Companies List;
"GROUP COMPANY" means a company (or other body corporate) within the Group;
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"GROUP COMPANIES LIST" means the list containing details of SFGL and the
other Group Companies as at the date of, and in the form annexed to, this
agreement;
"INFORMATION MEMORANDUM" means the information memorandum dated 12
September 1997 which was issued in relation to the proposed sale of the
entire issued share capitals of certain Group Companies, a copy of which is
attached to the Disclosure Letter;
"INTELLECTUAL PROPERTY" means all patents, trade marks, service marks,
registered designs or any applications for any of the foregoing, copyright,
design right, topographical rights, unregistered trade marks or other
intellectual or industrial property rights, and all know how whether
subsisting in the United Kingdom or anywhere else in the world;
"IN THE AGREED FORM" means in the form of a draft agreed between the
parties on or prior to today's date and initialled by or on behalf of them
for the purposes of identification;
"MANAGEMENT ACCOUNTS" means the unaudited consolidated balance sheet of the
SFG Group as at 31 January 1998 in the form attached to the Disclosure
Letter;
"MARKETING INFORMATION" means all information relating to the marketing of
any products or services (including customer names and lists, sales
targets, sales statistics, market share statistics, marketing surveys and
reports, marketing research and any advertising or other promotional
materials);
"NON-UK ACCOUNTS" means the audited financial statements of each Group
Company which is a Non-UK Company for the financial year ended on the
Accounts Date; the term "RELEVANT NON-UK ACCOUNTS" shall be construed
accordingly;
"NON-UK COMPANIES" means those Group Companies whose names are listed in
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paragraph 2 of part C of this agreement;
"NON-UK PROPERTIES" means the properties short particulars of which are set
out in paragraph 2 of part D of this agreement and includes any part or
parts of them;
"OFFER" means the offer by Xxxxxxxx for the Shares (other than the
Roll-Over Shares), as described in the Offer Document;
"OFFER DOCUMENT" means the document in the agreed form containing the
Offer;
"PENSION SCHEMES"means the pension schemes of the Group, details of which
are set out in part G of this agreement;
"PROPERTIES" means the UK Properties and the Non-UK Properties or, as
relevant, any of them;
"RESTRICTED AREA" means the United Kingdom of Great Britain and Northern
Ireland the United States of America, China, Taiwan, Italy, Canada and the
Federal Republic of Germany and any other countries in which the Group
achieved sales of L1,000,000 or more in one or more of the three calendar
years prior to the date of this agreement;
"RESTRICTED EMPLOYEE" means any person who is at Completion, or was at any
time during the period of six months before Completion, a director of any
Group Company or employed by any Group Company in a senior management,
sales, research or development function;
"RESTRICTED GOODS OR SERVICES" means any goods or services the same as or
competitive with any of those manufactured or supplied by any Group Company
at any time during the period of 12 months before Completion;
"RESTRICTED PERIOD" means the period from Completion to 31 December 1998;
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"ROLL-OVER AGREEMENT" means an agreement of today's date between Xxxxxxxx
and certain holders of Shares relating to the acquisition of the Roll-Over
Shares by Xxxxxxxx from such holders;
"ROLL-OVER SHARES" means the 1,267,476 Shares agreed to be acquired by
Xxxxxxxx pursuant to and on the terms of the Roll-Over Agreement;
"SFGL" means Sheffield Forgemasters Group Limited, further information in
relation to which is set out in the Group Companies List;
"SFL" means Sheffield Forgemasters Limited, further information in relation
to which is set out in the Group Companies List;
"SHAREHOLDER LIST" means the list of shareholders of SFGL as at the date
of, and in the form annexed to, this agreement;
"SHARES" means the whole of the allotted equity share capital of SFGL
details of which are contained in the Group Companies List and the
Shareholder List or, as the context may require, any of the shares
comprised in that share capital;
"SUPPLIER" means any person who, to the knowledge of the Covenantors, was
at any time during the period of 12 months before Completion, a supplier to
any Group Company;
"TAX" means (a) within the United Kingdom: corporation tax, advance
corporation tax, income tax (including income tax required to be deducted
or withheld from or accounted for in respect of any payment), capital gains
tax, development land tax, capital transfer tax, inheritance tax, VAT,
PAYE, national insurance contributions, capital duty, stamp duty, stamp
duty reserve tax, duties of customs and excise, any amount recoverable
under section 601 of the Taxes Act and any other taxes, levies,
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duties, charges, imposts or withholdings corresponding to, similar to,
replaced by or replacing any of them, together with all penalties, charges
and interest relating to any of them; and (b) outside the United Kingdom:
all taxes, levies, duties, imposts, charges and withholdings of any nature
whatever, including (without limitation) taxes on gross or net income,
profits or gains and taxes on receipts, sales, use, occupation, franchise,
value added, and personal property, together with all penalties, charges
and interest relating to any of them, regardless (in either case) of
whether any such taxes, levies, duties, imposts, charges, withholdings,
penalties, and interest are chargeable directly or primarily against or
attributable directly or primarily to any Group Company, or any other
person and of whether any amount in respect of any of them is recoverable
from any other person;
"TAX AUTHORITY" means any taxing or other authority (whether within or
outside the United Kingdom) competent to impose any liability to Tax;
"TAXES ACT" means the Income and Corporation Taxes Xxx 0000;
"TCGA" means the Taxation of Chargeable Gains Xxx 0000;
"UK" means the United Kingdom;
"UK ACCOUNTS" means the audited financial statements of SFGL and each other
Group Company which is a UK Company for the financial year ended on the
Accounts Date, comprising in each case a balance sheet, profit and loss
account, notes, auditors' and directors' reports the term "RELEVANT UK
ACCOUNTS" shall be construed accordingly;
"UK COMPANIES" means those Group Companies whose names are listed in
paragraph 1 of part C of this agreement;
"UK PROPERTIES" means the properties short particulars of which are set out
in
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paragraph 1 of part D of this agreement and includes any part or parts
of them;
"VAT" means value added tax;
"VATA" means the Value Added Tax Xxx 0000;
"WARRANTIES" means those warranties on the part of the Covenantors
contained or referred to in paragraph A5 and part E of this agreement and
"WARRANTY" shall be construed accordingly.
A1.2 References to the Covenantors and Xxxxxxxx shall include their respective
personal representatives and successors.
A1.3 Reference to any statutory provision shall be deemed to include reference
to all relevant statutory modifications, re-enactments and extensions and
any orders, instruments, rules or regulations or other subordinate
legislation made under such provision or in relation to such provision now
in force and (so far as liability may exist or can arise) shall include
also any past statutory provisions (as from time to time modified, extended
or re-enacted prior to the date of this agreement) which such provision has
directly or indirectly replaced, amended, consolidated or extended and any
definitions contained in any statutory provisions shall be used in
construing any part of this agreement which refers to such or any other
relevant statutory provision.
A1.4 Unless the context otherwise requires words importing the singular only
shall include the plural and vice versa.
A1.5 Words importing the masculine gender only shall include the feminine gender
and words importing natural persons shall also include corporations,
unincorporated persons and partnerships.
A1.6 Unless otherwise stated, references to paragraphs and parts are references
to paragraphs
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of and parts of this agreement. Any headings or sub-headings are inserted
for convenience only and shall not affect the construction of this
agreement or any part of it.
A1.7 Any question as to whether a person is connected with another shall be
determined in accordance with section 839 of the Taxes Act which shall
apply in relation to this agreement as it applies in relation to that Act.
A2 CONSIDERATION
A2.1 In consideration of the covenants on Xxxxxxxx'x part contained in paragraph
A2.2, the Covenantors agree and undertake with and to Xxxxxxxx in the terms
of the remainder of this agreement.
A2.2 Xxxxxxxx agrees and undertakes with each of the Covenantors as follows:
A2.2.1 to make the Offer and issue the Offer Document to all holders of
Shares (as detailed on the Shareholder List) in respect of all of
the Shares (other than the Roll-Over Shares) within one Business
Day of exchange of this agreement;
A2.2.2 not to withdraw the Offer prior to 30 April 1998;
A2.2.3 not to vary the Offer or waive any condition of the Offer;
A2.2.4 not extend the time for acceptance of the Offer at any time prior
to the date on which the Offer is declared or becomes
unconditional in all respects.
A3 ACCEPTANCE OF THE OFFER
A3.1 Each of the Covenantors severally and irrevocably undertakes and warrants
that:
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A3.1.1 except pursuant to the Offer and/or the Roll-Over Agreement, he
will not, prior to the Offer becoming or being declared
unconditional in all respects, sell, transfer, encumber, grant
any option over or otherwise dispose of all or any of the Shares
registered in his name (as set against his name in part B of this
agreement) and/or any other shares in SFGL which are otherwise
acquired by him subsequent to the date of this undertaking
(collectively and severally in respect of each Covenantor, his
"COMMITTED SHARES"), otherwise than to Xxxxxxxx, or enter into
any agreement or arrangement which could result in their sale or
other disposal (except under the Offer and/or the Roll-Over
Agreement) or which would or might restrict their disposal;
A3.1.2 he will on the same day as the Offer Document is despatched
accept or procure the acceptance of the Offer in respect of all
of the Committed Shares and will (if not already delivered to
Xxxxxxxx) at the same time forward or procure the forwarding of
the relevant share certificate(s) or other documents of title and
all other relevant documents in accordance with the terms of the
Offer Document;
A3.1.3 he will supply or procure the supply of all information relating
to him or SFGL required for the purposes of the Exemption Order
to be included in the Offer Document and immediately notify
Xxxxxxxx in writing of any material change in the accuracy or
import of any information previously supplied by him and (if and
so long as such Covenantor is a director of SFGL and subject to
his duties as a director) otherwise provide or procure the
provision of such information and do or procure to be done (in
each case so far as he is able by the exercise of the votes
attaching to his Committed Shares but not otherwise) such acts as
may be reasonably necessary to expedite the preparation and
despatch of the Offer Document;
A3.1.4 he will not directly or indirectly initiate any approach to any
party with a view to soliciting any offer for any or all of the
Shares from any third party.
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A3.2 Each of the Covenantors severally and irrevocably undertakes and warrants
that by the exercise of the votes attaching to his Committed Shares and (if
and for so long as such Covenantor is a director and subject to his duties
as a director) the exercise of his votes at any meeting of the board of
directors of any Group Company, he will (in so far as he is able by such
exercise (but not further or otherwise)) unless and until the Offer becomes
or is declared unconditional in all respects:
A3.2.1 procure that there are convened such meetings of directors or
members of SFGL (if so requested by Xxxxxxxx) as may be necessary
to pass such resolutions as may be required to enable the Offer
to be implemented;
A3.2.2 procure that all transfers of shares made pursuant to or in
connection with the Offer (subject to the transfers being duly
stamped) are registered in the register of members of SFGL;
A3.2.3 procure that SFGL does not allot, or grant options over, any
shares in the capital of SFGL nor issue any debt or other
securities convertible into shares in the capital of SFGL nor
agree to do any such thing;
A3.2.4 procure that no dividend is declared by SFGL;
A3.2.5 procure that no Group Company disposes of any material assets or
assumes or incurs any material liabilities (including contingent
liabilities) other than in the ordinary course of business;
A3.2.6 procure that no Group Company undertakes any material commitments
or enters into any material contract or agrees to the amendment
of any existing material contract (including any service
contract) otherwise than in the ordinary course of business; and
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A3.2.7 procure that each Group Company will carry on business in the
ordinary and normal course.
A3.3 Each Covenantor warrants and undertakes that the number of Shares set
against his name in part B of this agreement are both legally and
beneficially owned by him and neither the whole nor any part of his
interest in those Shares is subject to any Encumbrance and, upon the Offer
being made, he will be able and entitled to accept or procure acceptance of
the Offer in respect of those Shares and to transfer those Shares with full
title guarantee and free from all Encumbrances and together with all rights
attaching to those Shares, including the right to all dividends and other
distributions (if any) declared, made or paid after the date on which the
Offer becomes or is declared unconditional in all respects and otherwise
perform his obligations under this paragraph A3.
A3.4 In order to secure the performance of this undertaking, each of the
Covenantors irrevocably appoints Xxxx Xxxxx or, in his absence, any other
director for the time being of Xxxxxxxx, to be his attorney in his name and
on his behalf to execute a form or forms of acceptance and such other
documents and to do such other acts and things as may be necessary to
accept the Offer in respect of the Committed Shares, provided however that
such appointment shall not take effect until the expiry of two Business
Days from the date of despatch of the Offer Document and only then if he
shall have failed to comply with his obligations in paragraph A3.1.2. Such
appointment shall be irrevocable in accordance with section 4 of the Powers
of Xxxxxxxx Xxx 0000 until the earlier of the date on which the Offer
lapses and the date on which the Shares are registered in the name of
Xxxxxxxx or its nominees following the Offer having become or been declared
unconditional in all respects.
A3.5 Each of the Covenantors recognises and acknowledges that if he should fail
to accept or procure the acceptance of the Offer in accordance with his
obligations under paragraph A3.1.2 damages in the form of a liquidated sum
would not be an adequate remedy and that an order for specific performance
would be the only adequate remedy for such
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failure or breach.
A4 COMPLETION
A4.1 Completion shall take place at the offices of the Covenantors' Solicitors
on the Business Days following the Offer having become or been declared
unconditional in all respects.
A4.2 The Covenantors undertake to procure that on Completion the following shall
be delivered or caused to be delivered to Xxxxxxxx at the offices of the
Covenantors' Solicitors (or as Xxxxxxxx may direct):
A4.2.1 duly executed transfers of any shares in any Group Company not
held in the name of SFGL or another Group Company duly executed
in favour of Xxxxxxxx (or as it shall direct) together with the
relative share certificates or other documents of title (or in
the case of any lost certificate an indemnity satisfactory to
Xxxxxxxx in relation to it);
A4.2.2 written resignations in the agreed form from Xx X X Xxxxxx, Mr M
A Brand and Dr F Xxxxxxxxxx as directors of SFGL and each other
Group Company of which any of such persons is a director, each of
whom shall resign from his respective office(s) with immediate
effect after the appointment of Xxxxxxxx'x nominees as provided
in paragraph A4.4.2;
A4.2.3 a release duly executed by the Bank of Scotland of any charges,
guarantees or other security in its favour given by or subsisting
over any of the assets of the Group Companies;
A4.2.4 the Certificates of Title and all documents of title to the UK
Properties;
A4.2.5 the statutory books, share certificate books, common seals,
certificate of incorporation, any certificate(s) of incorporation
on change of name and a
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copy of the memorandum and articles of association of SFGL and
each other Group Company (other than the Non-UK Companies) all,
where appropriate, duly written up to date;
A4.2.6 all credit cards, keys and other property of each Group Company
which are in the possession or under the control of any
Covenantor in his capacity as a director who resigns as an
officer of SFGL and each other Group Company in accordance with
this paragraph.
A4.3 Each of the Covenantors undertakes that on Completion he shall deliver or
cause to be delivered to Xxxxxxxx at the offices of the Covenantors'
Solicitors:
A4.3.1 the Deed of Covenant duly executed by him;
A4.3.2 a Deed of Acknowledgement signed by him;
A4.3.3 in the case of Mr M A Brand his written resignation in the agreed
form from his office as a director of any Group Company.
A4.4 The Covenantors shall procure the passing of resolutions of the directors
of each Group Company to:
A4.4.1 register Xxxxxxxx or its nominee(s) as the holders of the Shares
which by Completion have been the subject of valid acceptances of
the Offer and any other shares in each Group Company referred to
in paragraph A4.2.1 above, subject only to the proper stamping of
the transfers;
A4.4.2 appoint such persons as Xxxxxxxx shall nominate as directors of
each Group Company and accept the resignations of those directors
and secretaries who are resigning; and
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A4.4.3 revoke of all existing authorities to the bankers of and each
Group Company in respect of the operation of each Group Member's
bank accounts giving authority in favour of such persons as
Xxxxxxxx may nominate to operate those accounts.
A5 WARRANTIES
A5.1 The Covenantors severally (but not jointly) warrant to Xxxxxxxx in the
terms set out in part E of this agreement, subject to all matters fairly
disclosed in the Disclosure Letter (with sufficient detail to enable a
purchaser with reasonable knowledge of the sectors in which the Group
operates to assess the nature and import of each matter disclosed) and each
of the Covenantors agrees and acknowledges that Xxxxxxxx has agreed to make
the Offer in reliance on the Warranties.
A5.2 The Warranties and Xxxxxxxx'x rights in respect of the Warranties shall not
in any respect be extinguished or affected by Completion.
A5.3 Unless expressly stated in this agreement, no information (other than that
fairly disclosed in the Disclosure Letter (with sufficient detail to enable
a purchaser with reasonable knowledge of the sectors in which the Group
operates to assess the nature and import of each matter disclosed))
relating to SFGL or any other Group Company of which Atchison has knowledge
(whether actual or constructive) shall prejudice any claim made by Atchison
under the Warranties or operate to reduce any amount recoverable in respect
of any breach of any of the Warranties.
A5.4 Each of the Covenantors undertakes that, in the event of any claim being
made against that Covenantor in connection with this agreement, he will not
make any claim against any Group Company or any director or employee of any
Group Company on which or on whom he may have relied before agreeing to any
of the Warranties or the Deed of Covenant or authorising any statement in
the Disclosure Letter.
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A5.5 The Covenantors agree and acknowledge that each of the Warranties shall be
construed as a separate and independent warranty and shall not be limited
or restricted by reference to, or inference from, the terms of any other
Warranty or (other than as set out in this paragraph A5 or part F of this
agreement) any other term of this agreement.
A5.6 Where any of the Warranties is qualified by an expression such as "so far
as the Covenantors are aware" or "to the best of the knowledge, information
and belief of the Covenantors" or any similar expression, it shall be
deemed to include an additional statement that it has been made after
reasonable enquiry by the Covenantors of each of the directors of each of
the Group Companies and after having made inspection of all relevant
documentation under the ownership or control of the Group or to which any
Group Company may have access.
A6 PROTECTION FOR THE COVENANTORS
The provisions of part F of this agreement shall have effect.
A7 NON-COMPETITION COVENANTS
A7.1 Each of the Covenantors undertakes to Atchison that he or it will not
(except as required by law or any regulatory authority) divulge or
communicate to any person (other than to any officer or employee of any
Group Company who needs that knowledge in the discharge of his duties) any
confidential information concerning the business, customers, accounts,
financial or contractual arrangements, transactions or affairs of the Group
which may be within or come to his or its knowledge to the extent and so
long as that information is confidential and not in the public domain.
A7.2 Each of the Covenantors (other than Mr Xxxxx Xxxxxxxx) severally covenants
with Atchison that he will not during the Restricted Period directly or
indirectly, and either solely or jointly on behalf of himself or any other
person:
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A7.2.1 for the purposes of a Competing Business, solicit or canvas or
endeavour to solicit or canvas the custom of any Customer in
respect of the supply of any of the Restricted Goods or Services;
A7.2.2 for the purposes of a Competing Business, entice away or
endeavour to entice away from any of the Group Companies any
Supplier in respect of the supply or provision of any of the
Restricted Goods or Services or any component part of any of
them;
A7.2.3 employ, solicit or entice away or endeavour to employ, solicit or
entice away any Restricted Employee (whether or not any such
person would, as a result, commit a breach of his terms of
employment or his contract).
A7.3 The parties consider that the restrictions in paragraphs A7.1 and A7.2
taken separately and together, are not more onerous or extensive than is
reasonable and necessary for the protection of the legitimate business
interests of Atchison. If any restriction is held to be void or otherwise
unenforceable but would be valid and enforceable if some part of that
restriction were deleted, such restriction shall apply with such deletions
as are necessary to make it valid and enforceable.
A8 BOOKS AND RECORDS, TAX RETURNS AND COMPUTATIONS
A8.1 Atchison shall procure that each Group Company:
A8.1.1 shall preserve all of its books and records existing at
Completion for a period of not less than three years from
Completion or, in the case of books and records relating to Tax,
seven years from Completion; and
A8.1.2 shall at any reasonable time or times and upon reasonable notice
allow the Covenantors (or their duly authorised representatives)
access to and the right
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to take copies of such books and records.
A8.2 Atchison (on behalf of the Group Companies) or its duly authorised agents
shall prepare the computations and returns relating to corporation tax in
respect of all accounting periods beginning before Completion to the extent
not prepared before Completion and shall submit such computations to the
Covenantors or their duly authorised agents for comment. Atchison shall be
obliged to take account of the Covenantors' reasonable comments in relation
to any such return, save to the extent that to do so would materially
increase the liability to Tax of any of the Group Companies in respect of
any accounting period beginning after Completion.
A8.3 Atchison shall procure that the returns of SFL deal with the capital losses
of SFL on the basis and in the form requested by the Covenantors (or their
agents) and shall provide copies of all correspondence with the Inland
Revenue relating to such losses to the Covenantors (or their agents) and
shall not agree any matter relating to the amount or manner of set-off of
such capital losses with the Inland Revenue save in accordance with the
instructions of the Covenantors (or their agents).
A8.4 Atchison shall procure that the relevant UK Companies make (to the extent
legally possible) the claims for the surrender by them for no consideration
of advance corporation taxes (pursuant to section 240 Taxes Act) and/or
group relief (pursuant to section 402 Taxes Act) in respect of the
accounting periods commencing 1 April 1995, 1 April 1996 and 1 April 1997
as provided in clause 14.4 of the First Aerospace Agreement.
A8.5 Atchison agrees to procure the making (to the extent legally possible) by
Teledyne Holdings Limited of a joint election with Special Melted Products
Limited ("SMP") pursuant to section 158 of the Capital Xxxxxxxxxx Xxx 0000
in respect of the disposal to SFL by SMP of the land and buildings at
Staybrite works in occupation by SMP.
A8.6 Atchison agrees to procure compliance of each of the Group Companies of its
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obligations pursuant to clauses 14.1 and 14.2 of the First Aerospace
Agreement.
A9 COMMITTEE
A9.1 Atchison undertakes and covenants to procure that forthwith upon the Offer
being made each of SFL and Forgemasters Realisations (1998) Limited and (in
the case of clause A9.1.3 only) relevant Group Companies irrevocably and
unconditionally appoints the Committee as its agent:
A9.1.1 to exercise all and any rights, powers, privileges and
discretions vested in or conferred upon SFL and/or Forgemasters
Realisations (1998) Limited in relation to the preparation,
review agreement and/or determination of the Completion Accounts
(as defined in the First Aerospace Agreement) for the purposes of
the Aerospace Agreements;
A9.1.2 to take, after the date of the Offer, all and any steps as the
Committee thinks fit (in its absolute discretion) to seek payment
and enforce recovery of all or any of the Aerospace Additional
Payment (as defined in the Offer Document) including, without
limitation, the commencement of legal proceedings (in the name of
SFL and/or Forgemasters Realisations (1998) Limited) against
Teledyne Holdings Limited and/or Teledyne Industries Inc and/or
Allegheny Teledyne Incorporated (as guarantor under each of the
Aerospace Agreements) or any other person; and
A9.1.3 to surrender, after Completion, to any UK company within the
Aerospace Group up to L3,000,000 of tax losses available for
group relief (pursuant to section 402 Taxes Act) on such terms as
the Committee may, in its absolute discretion, determine;
and Atchison acknowledges and agrees that the Committee shall have full
power and
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authority to exercise all the rights and authorities set out in or given
or delegated to it pursuant to the Offer Document.
A9.2 Atchison undertakes and covenants to procure that each of SFL and
Forgemasters Realisations (1998) Limited:
A9.2.1 confirms to the Committee in writing, upon the Offer being made,
its appointment on the terms of this clause A9 in the agreed
terms;
A9.2.2 will not after the date of the Offer undertake any of the matters
detailed in clause 9.1 nor waive, release or suspend or agree to
waive, release or suspend any rights under or pursuant to, or
vary, or agree to vary any Aerospace Agreement or direct that
payment or discharge of the Aerospace Additional Payment be made
other than to the Vendor's Solicitors under the terms of the
relevant Aerospace Agreement;
A9.2.3 issues a letter in the agreed terms upon the Offer being made to
the other parties to the Aerospace Agreements (informing them,
inter alia, of the irrevocable authorities and delegation
contained in this clause A9); and
A9.2.4 allows unrestricted access to all documentation in its possession
or under its control relating to or affecting the Completion
Accounts and procure that its relevant personnel and, so far as
it is lawfully able to do so, Coopers & Xxxxxxx provide such
assistance in relation to the Completion Accounts and the
exercise of rights under this clause A9 as the Committee
reasonably requests from time to time.
A9.3 Atchison undertakes to procure that the Committee is provided upon demand
with all information necessary to enable it to calculate the Additional
Consideration (as defined in the Offer Document) and to notify the
Committee immediately upon receipt by
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SFGL, SFL or any other third parties on their behalf of any monies in
respect of (or upon any discharge of all or any of) the Aerospace
Additional Payment or any relevant documents (providing copies thereof).
A9.4 Atchison agrees (on behalf of itself and SFL and Forgemasters Realisations
(1998) Limited) that the Committee shall:
A9.4.1 not be obliged to take any action or proceedings on behalf of SFL
and/or Forgemasters Realisations (1998) Limited pursuant to the
Aerospace Agreements (whether for payment or recovery of the
Aerospace Additional Payment (as defined in the Offer Document)
or otherwise); and
A9.4.2 be entitled to rely on the advice of any professional advisers
selected by it and shall not be liable to SFL or Forgemasters
Realisations (1998) Limited for any of the consequences of such
reliance.
A9.5 Atchison agrees (on behalf of itself and SFL and Forgemasters Realisations
(1998) Limited) that no member of the Committee shall be liable to
Atchison and/or SFL and/or Forgemasters Realisations (1998) Limited for
any action taken or omitted to be taken by the Committee under the terms
of or in connection with this clause and Atchison shall indemnify each
member of the Committee on demand for any and all liabilities, losses,
damages, penalties, actions, judgements, costs, expenses or disbursements
of any kind whatsoever which may be imposed on, incurred by or asserted
against him or it by Atchison, SFL and/or Forgemasters Realisations (1998)
Limited in any way relating to or arising out of him or it acting as a
member of the Committee or performing his/its duties in connection
therewith or any action taken or omitted by such member thereunder.
A9.6 The Committee shall consist of not more than three persons, two being
appointed by the Covenantors (the first such appointees being M A Brand
and X Xxxxxxxx) and one being appointed by NatWest Ventures (Nominees)
Limited. The relevant appointor(s) may
-22-
remove their appointee to the Committee and appoint another in his/her
place by giving written notice to Atchison and (in the case of removal)
to the person being removed. For the purposes of clause A9.5, "MEMBER
OF THE COMMITTEE" includes all members from time to time together with
NatWest Ventures (Nominees) Limited.
A9.7 A vacancy in the members of the Committee need not be filled if the
relevant appointor(s) so agree, provided that the total number of members
does not fall below two.
A9.8 The Committee shall act unanimously but shall otherwise transact its
business in such manner as it thinks fit.
A9.9 Notwithstanding clause A9.8, all acts done by the Committee or by any
person acting as a member of the Committee shall (notwithstanding that it
is afterwards discovered that there was some defect in the appointment of
any member of the Committee or person so acting or his authority to act or
that they or any of them had vacated office) be as valid and effectual as
if each such member or person had been properly appointed, had appropriate
authority and had continued to be a member of the Committee.
A9.10 SFL shall be responsible for all costs, charges and expenses incurred
(including, without limitation, professional advice and the costs of any
Independent Accountants appointed pursuant to the First Aerospace
Agreement) by or on behalf of the Committee in carrying out its functions
under this clause A9. Atchison undertakes to procure that SFL promptly
discharges all such costs, charges and expenses when due and payable.
A9.11 Atchison undertakes to the Covenantors to:
A9.11.1 procure the issue to DLA Nominees Limited of a letter of credit
from Xxxxxx Trust and Savings Bank in the agreed form upon
exchange of this agreement;
A9.11.2 procure that upon receipt by or on behalf of the SFG Group of all
or any part
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of the Aerospace Additional Payment, such sums will
be promptly placed on deposit with the Bank of Scotland
accompanied by a direction that they be held on terms that will
result in it earning the best rate of interest then available
from Bank of Scotland for such sums for a minimum deposit period
of six weeks or, if earlier, to the date that is seven days prior
to the due date for payment of the Additional Consideration (as
defined in the Offer Document) and that the authority of the
Committee shall be required to withdraw the money from that
account within such minimum deposit period;
A9.11.3 consult the Committee prior to implementation of any such deposit
arrangements; and
A9.11.4 procure that Bank of Scotland is authorised to provide full
details of all and any interest accrued on sums deposited with
them pursuant to clause A9.11 (such authorisation to be provided
upon the date of such deposit).
A9.12 Any notice to be given to the Committee shall be given to all Committee
members in accordance with clause A14, save that the addresses and fax
numbers for service shall (unless and until otherwise notified by the
relevant appointors) be:
M A Brand (as per clause A14.4)
X Xxxxxxxx (as per clause A14.4)
NatWest Ventures (Nominees) Limited
For the attention of Xxxxxxx Xxxx
Xxxxxxxxx Xxxxxxxx
Xxxxxx
XX0X 0XX
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Fax No: 0000 000 0000
A10 PUBLICITY
No announcement or disclosure in respect of the making or terms of this
agreement or the Offer shall be made or disclosed by a party to this
agreement without the prior written consent of the others (which consent
may be given by any of the Covenantors on behalf of all of them) except to
the extent disclosure is required by law or the rules of a recognised
investment exchange (as defined by the Financial Services Xxx 0000 and
including the New York Stock Exchange), or the rules of the Securities and
Exchange Commission which disclosure shall then only be made:
A10.1 after prior consultation between the parties to this agreement as
to its terms (which consultation may be held with any of the
Covenantors on behalf of all of them);
A10.2 strictly in accordance with any agreement as to the terms of
disclosure; and
A10.3 only to the persons and in the manner required by law or the
rules of the relevant recognised investment exchange or the
Securities and Exchange Commission or as otherwise agreed.
A11 COSTS
Atchison shall pay its own costs of and incidental to the negotiation and
preparation of this agreement, the preparation of the Offer Document and
the making of the Offer and shall pay or procure the payment of the costs
of the Covenantors if and to the extent that such costs are listed in the
Agreed Costs List. Subject to clause A9, all other costs of the
Covenantors will be borne by the Covenantors.
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A12 MISCELLANEOUS
A12.1 Save in the case of any fraudulent misrepresentation, Atchison agrees that
it will have no remedy against the Covenantors, and the Covenantors shall
not have any liability of whatever nature to Atchison, in respect of any
statement of fact or opinion whatsoever, including any untrue or
misleading statement, warranty or representation, express or implied, made
to Atchison or its agents, officers or employees upon which Atchison
relied or may have relied in entering into this agreement (unless repeated
in this agreement) and that Xxxxxxxx'x sole remedy (save in the case of
any fraudulent misrepresentation) is for breach of contract in respect of
the warranties, undertakings, covenants or indemnities expressly set out
in this agreement and the Deed of Covenant, subject to the limitations
contained in this agreement and the Deed of Covenant.
A12.2 No variation of this agreement shall be effective unless made in writing
and signed by or on behalf of the parties to this agreement and no waiver
of any term, provision or condition of this agreement shall be effective
except to the extent made in writing and signed by the waiving party.
A12.3 Atchison may freely assign the benefit of this agreement and/or the Deed
of Covenant to any company within the Atchison Group (as defined in the
Offer Document) provided that the Covenantors' liability under this
agreement and Deed of Covenant shall be no greater following any such
assignment than it would have been had such assignment not taken place.
Save as set out above, this agreement and the Deed of Covenant shall not
be assignable.
A12.4 The invalidity, illegality or unenforceability of any provision of this
agreement shall not affect the other provisions of this agreement.
A12.5 The provisions of this agreement shall continue in full force and effect
notwithstanding Completion.
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A12.6 This agreement may be executed in any number of counterparts by the
different parties or separate counterparts, each of which when executed
and delivered shall constitute an original but all of which shall together
constitute one and the same instrument.
A12.7 No failure or delay in exercising or enforcing any right or remedy under
this agreement shall constitute a waiver of such right or remedy and no
single or partial exercise or enforcement of any right or remedy under
this agreement shall preclude or restrict the further exercise or
enforcement of any such right or remedy. The rights and remedies provided
in this agreement are cumulative and not exclusive of any rights and
remedies provided by law.
A13 TERMINATION
The obligations of the Covenantors under this agreement shall cease and
determine on the withdrawal or lapsing of the Offer without liability on
the part of any of the Covenantors save for the liability of any
Covenantor for his prior breaches of paragraph A3.3.
A14 NOTICES
A14.1 Any notice or document to be served under this agreement shall (if sent to
Atchison) be sent by:
A14.1.1 facsimile transmission; followed by
A14.1.2 courier
and, if sent to the Covenantors, be sent by first class recorded delivery
post in each case at its or their address specified in paragraph A14.4 or
at any other address which the
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party to be served may have notified to the other parties in accordance
with this paragraph.
A14.2 Any such notice or document shall be deemed to have been served one hour
after the time of despatch by facsimile transmission in accordance with
paragraph A14.1, provided that it is despatched before 4:00p.m. on any
Business Day and, in any other case, at 10:00a.m. on the Business Day
following the date of such despatch (and for this purpose, such times
shall be construed as United Kingdom time in respect of documents served
on a Covenantor and central United States time in respect of documents
served on Atchison).
A14.3 In proving service it shall be enough to prove that delivery was made,
that the envelope containing the notice or document was properly addressed
and posted as a prepaid first class recorded delivery letter or that the
facsimile transmission was properly addressed and despatched (as
appropriate).
A14.4 The following are the addresses of the Covenantors and the address and fax
number of Atchison for the purposes of paragraph A14.1:
THE COVENANTORS
Mr P M Xxxxxx
Address as stated in part B of this agreement
Mr M A Brand
Address as stated in part B of this agreement
Xx X Xxxxxxxx
Address as stated in part B of this agreement
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ATCHISON
c/o Atchison Casting Corporation
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxx
Xxxxxx 00000-0000
United Stated of America
Fax number: 000 000 000 0000
Marked for the attention of the Chief Executive Officer
A15 CHOICE OF LAW
This agreement shall be governed by and construed in accordance with
English Law and the parties irrevocably agree that the English courts
shall have exclusive jurisdiction to settle any dispute which may arise
out of or in connection with this agreement and that, accordingly, any
proceedings, suit or action arising out of this agreement shall be brought
in such courts.
IN WITNESS of which the parties have executed this agreement as a deed and
delivered it on the day and year first above written.
-29-
PART B
DETAILS OF THE COVENANTORS AND THE COMMITTED SHARES
(1) (2) (3) (4)
NAME AND ADDRESS NUMBER RELEVANT PERCENTAGE OF CASH LIMITATION
OF COMMITTED ANY CLAIM UNDER THE ON LIABILITY (L)
SHARES WARRANTIES AND
DEED OF COVENANT
Xxxxxxx Xxxxxxxx Xxxxxx 2,040,353 67.39 235,865
Xxxx Xxxxx
00 Xxxxxxxx
Xxxxxxxxx
Xx Xxxxxxxx
Xxxxx Xxxxxxxxx
X00 0XX
Xxxxxxx Xxxxxx Brand 1,207,500 16.08 56,280
0X Xxxxxxxx Xxxx
Xxxxxxxxx
Xxxxxxx
Xxxxxxxxxxxxxxx
X00 0XX
Xxxxx Xxxxxxxx 941,045 16.53 57,855
Dearne Mill House
00X Xxxxxxxxx Xxxx
Xxxxx Xxxx
Xxxxxxxxxxxx XX0 0XX
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PART C
LIST OF THE GROUP COMPANIES
C1 THE UK COMPANIES
Sheffield Forgemasters Group Limited
British Rollmakers Corporation Limited
C Akrill Limited
Engineering Technologies Group Limited
Firth Xxxxxxx Special Steels Limited
Forgealert Limited
Forgemasters Realisations (1998) Limited
Forged Rolls (UK) Limited
Forgemasters Engineering Limited
Forgemasters Steel and Engineering Limited
Xxxxxx Engineering Company Limited
Hadura Products Limited
Xxxxxxx'x Rolls Limited
Midland Rollmakers Limited
Xxxxxx and Company Limited
Offshore Castings Limited
River Don Castings Limited
Sheffield Forgemasters Holdings Limited
Sheffield Forgemasters Limited
Sheffield Forgemasters Share Trustees Limited
Sheffield Forgemasters Trustees Limited
X X Xxxxxxx Limited
Talos Group Limited
Xxxxxx Xxxxx Limited
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PART C
LIST OF THE GROUP COMPANIES (CON)
C2 THE NON-UK COMPANIES
Sheffield Forgemasters (Canada) Limited
Euro SFM Edelstahl GmbH
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PART D
PROPERTY
D1 THE UK PROPERTY
D1.1 All that land and buildings at Xxxxxxxxxx Xxxx, Xxxxxxxx Xxxxxx,
Xxxxx Xxxxxx and Upwell Street, Sheffield, South Yorkshire
collectively known as River Don Works, part of which is
registered with Freehold Title Absolute under title numbers
SYK356783, SYK389861 and SYK381599 and the remaining part is
leasehold being demised by a lease dated 22 January 1993 and is
registered at H M Land Registry under title number SYK328360.
D1.2 All that freehold land lying to the north west of Xxxxxxxxx Xxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxxx registered at H M Land Registry with
Freehold Title Absolute under title numbers SYK204372 and
SYK377124.
D1.3 All that land and buildings known as the Old Rectory, School
Hill, Whiston, Rotherham, South Yorkshire as is registered at H M
Land Registry with Freehold Title Absolute under title number
SYK247462.
D1.4 All that land and buildings at Shirecliffe Road, Sheffield as is
registered at H M Land Registry with Freehold Title Absolute
under title number SYK168119.
D1.5 All that land known as Aston Ponds, Aston cum Aughton, Rotherham
as is registered at H M Land Registry with Freehold Title
Absolute under title numbers SYK204378 and SYK354602.
D1.6 All that land and buildings at Weston Road, Crewe comprising the
remainder of the land in a conveyance dated 8 June 1948 made
between the Mayor, Xxxxxxxx and Burgesses of the Borough of Crewe
(1) and Midland Rollmakers Limited (2) and as the same is shown
for identification purposes only edged in
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red on the plan annexed to the relevant Certificate of Title.
D1.7 A former boiler house situate at Princess Street, Sheffield being
part of the land registered at H M Land Registry with Freehold
Title Absolute under title number SYK169835 and presently
occupied by Xxxxxx Xxxxxxxxx by virtue of a lease dated 6
December 1996 between (1) Sheffield Forgemasters Limited and (2)
Xxxxxx Xxxxxxxxx.
D1.8 All that leasehold land situate at Xx 0, 00 X' Xxxxx Xxxxx,
Xxxxxxxxxxx Xxxx, Xxxxxxxxx all more fully described in a lease
dated 21 November 1997 between (1) Xxxxxxx Assets Limited and (2)
Sheffield Forgemasters Limited.
D1.9 All and whole the subjects known as Whifflet Foundry, Whifflet
Street, Coatbridge registered in the Land Register of Scotland
under title number LAN 101911.
D1.10 All and whole the subjects known as Meadow Foundry, Calder
Street, Coatbridge comprising those several plots or areas of
ground lying in the County of Lanark more particularly described
in and disponed by and shown delineated and partly hatched in red
on the plan annexed to the relevant Certificate of Title and
subscribed as relative to the Disposition by X.X. Xxxxxxx Limited
in favour of Sheffield Forgemasters Limited dated 16 December
1982 and recorded in the Division of the General Register of
Sasines for the County of Lanark on 22 December 1983 (Book 7371,
Folio 65); but excepting therefrom all and whole those subjects
registered in the Land Register of Scotland under title number
LAN 21451; which said subjects under the aforesaid exception are
presently under application for registration in the Land Register
of Scotland under title number LAN 101910.
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D2 THE NON-UK PROPERTY
D2.1 Leasehold property at Xxxxx 000, 000 Xxxxx Xxxxxx, Xxxxx
Xxxxxxxx, Xxxxxxx, Xxxxxx occupied by Sheffield Forgemasters
(Canada) Limited.
D2.2 Leasehold property at Xxxxxxxxxxxxxx 00, 00000 Xxxxxxxxxx,
Xxxxxxx occupied by Euro SFM Edelstahl GmbH
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PART E
WARRANTIES
E1 BOOKS AND RECORDS
Each of the Group Companies have kept all accounts, books, ledgers,
financial, statutory and other records required by law to be kept by them
and these:
E1.1 have been accurately maintained in all material respects and are
up to date;
E1.2 are in the possession or under the control of the relevant Group
Company;
and no notice or allegation that any of them is incorrect or should be
rectified has been received by the relevant Group Company.
E2 ACCOUNTS
E2.1 THE UK ACCOUNTS:
E2.1.1 have been prepared in accordance with the requirements of all
relevant statutes and generally accepted accounting principles;
E2.1.2 comply with all applicable accounting standards;
E2.1.3 show a true and fair view of the financial position of the
relevant UK Company at the Accounts Date and of the profits and
losses of the relevant UK Company for the financial period ended
on the Accounts Date; and
E2.1.4 adopt bases and apply accounting policies which have been adopted
or applied in the UK Companies audited accounts for the two
financial years before the Accounts Date.
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E2.2 THE NON-UK ACCOUNTS:
The Non-UK Accounts fairly present the financial condition and the results
of operations, changes in stockholder's equity and cashflows of the Non-UK
Companies as at the respective dates of, and for the periods referred to
in the Non-UK Accounts.
E2.3 THE MANAGEMENT ACCOUNTS
The Management Accounts have been prepared in good faith and in accordance
with the accounting policies adopted in the preparation of the UK Accounts
(or, as appropriate, the Non-UK Accounts) and on bases and principles
consistent with those used in the preparation of the management accounts
of the Group for the financial year which ended on the Accounts Date.
E3 THE GROUP COMPANIES' ASSETS
E3.1 ASSETS AND CHARGES
E3.1.1 Each of the Group Companies owns all assets included in its
relevant Accounts and all assets which have been acquired by it
since the Accounts Date (except for assets disposed of by it in
the ordinary course of its business).
E3.1.2 Save for liens and suppliers' retentions of title no assets of
any of the Group Companies, nor any of their undertakings,
goodwill or uncalled capitals are subject to any Encumbrance or
any agreement or commitment to give or create any Encumbrance.
E3.1.3 Since the Accounts Date each of the Group Companies has been in
possession or control of all its assets (except those disposed of
in the ordinary course of
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business for an amount less than L25,000).
E3.1.4 No asset is shared by any of the Group Companies with any other
person (other than other Group Companies) and none of the Group
Companies depend for their respective businesses upon, or use,
any assets, facilities or services owned or supplied by the
Aerospace Group.
E3.2 DEBTS DUE TO THE GROUP COMPANIES
E3.2.1 So far as the Covenantors are aware the debts owed to each of the
Group Companies have or will realise the value at which they are
shown in the relevant Accounts for that company (net of the
provisions made in the Accounts).
E3.2.2 None of the Group Companies have factored or discounted any of
their debts or agreed to do so or waived any right of set off
against a third party.
E3.3 TITLE RETENTION
None of the Group Companies have acquired or agreed to acquire any asset
on terms that property in them does not pass until full payment is made.
E3.4 STOCK
So far as the Covenantors are aware each of the Group Companies' stock in
trade was valued for the purposes of its relevant Accounts at the lower of
cost and net realisable value and such valuation was made in accordance
with the relevant company's normal method for valuing stock.
E3.5 PLANT
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So far as the Covenantors are aware each major item of machinery and plant
necessary to carry on the business of each of the Group Companies:
E3.5.1 is (having regard to its age and current use) in satisfactory
working order; and
E3.5.2 complies in all material respects with all material legal
requirements relating to it and its use.
E4 THE GROUP COMPANIES' BUSINESS SINCE THE ACCOUNTS DATE
E4.1 Since the Accounts Date, each of the Group Companies has carried on
business:
E4.1.1 in the ordinary and usual course;
E4.1.2 without entering into any transaction, assuming any liability or
making any payment (not provided for in the relevant Accounts)
which is not in the ordinary course of its business;
E4.1.3 without any material interruption or material alteration in the
nature, scope or manner of its business.
E4.2 Since the Accounts Date:
E4.2.1 none of the Group Companies has made or paid, nor is now
proposing to make or pay, any dividend or distribution;
E4.2.2 no resolution of the shareholders of any of the Group Companies
has been passed other than resolutions relating to the routine
business of annual general meetings;
E4.2.3 no change in the accounting reference period of any member of the
Group has
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been made and no change has been made in the accounting
policies or accounting methods adopted by any member of the
Group; and
E4.2.4 no Group Company has waived repayment, in whole or in part, of
any indebtedness owing to it or agreed to the discharge of any
charge or other security in its favour.
E5 TAX WARRANTIES
E5.1 THE UK COMPANIES
E5.1.1 ADMINISTRATION AND RETURNS
E5.1.1.1 So far as the Covenantors are aware each of the UK Companies
has, within the requisite time limits specified by statute,
made all returns, given all notices, made all applications
and supplied all other information required by law to be
supplied to the Inland Revenue or other Tax Authorities, all
such information, applications, returns and notices were and
remain, so far as the Covenantors are aware, complete, true
and accurate in all material respects and so far as the
Covenantors are aware are not the subject of any dispute
with the relevant authorities.
E5.1.1.2 The Disclosure Letter contains details, so far as they
affect the UK Companies, of all concessions, arrangements
and agreements (whether formal or informal) negotiated with
any Tax Authority.
E5.1.2 PAYMENT OF TAX
E5.1.2.1 Each of the UK Companies has paid all Tax which it has
become
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liable to pay and so far as the Covenantors are aware
are under no liability to pay nor are there any
circumstances by virtue of which any of the UK Companies is
likely to become liable to pay, any fine, penalty, surcharge
or interest in connection with any claim for Tax.
E5.1.2.2 Each of the UK Companies have properly deducted Tax as
required by law from all payments made and have accounted to
the appropriate Tax Authority for all Tax so deducted.
E5.1.3 PAYE AND NATIONAL INSURANCE
E5.1.3.1 So far as the Covenantors are aware each of the UK Companies
have properly operated the Pay As You Earn and National
Insurance system deducting Tax as required by law from all
payments made, or treated as made to, employees and
ex-employees of the UK Companies and have accounted to the
Inland Revenue, DSS or Contributions Agency (as the case may
be) for all Tax so deducted and all Tax chargeable on
benefits provided for employees of the UK Companies.
E5.1.3.2 So far as the Covenantors are aware, each of the UK
Companies have complied in all material respects with all
reporting requirements and has kept books and records
relating to all payments and benefits made or provided, or
treated as made or provided to its directors, employees or
officers or former directors, employees or officers.
E5.1.3.3 None of the UK Companies participate in a scheme registered
under chapter III of part V of the Taxes Act and no
application for registration of such a scheme has been made
by any of the UK Companies.
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E5.1.4 CAPITAL GAINS
None of the UK Companies have made a claim under section 23, sections
152 to 156 (inclusive), section 158, section 162 or section 247 of the
TCGA and no such claim has been made by any other company which
affects or could affect the amount or value of the consideration for
the acquisition of any asset by any of the UK Companies taken into
account in calculating liability to corporation tax on chargeable
gains on a subsequent disposal.
E5.1.5 STAMP DUTY AND STAMP DUTY RESERVE TAX
All documents necessary to establish title of each of the UK Companies
to their respective assets held at Completion and which attract stamp
duty have been duly stamped.
E5.1.6 DISTRIBUTIONS AND PAYMENTS
E5.1.6.1 Since the Accounts Date no dividend or other distribution
within the meaning of part VI chapter II of the Taxes Act
has been made by any of the UK Companies nor are any of the
UK Companies bound to make any such distribution.
E5.1.6.2 No rents, interest, annual payments or other sums of an
income nature which any of the UK Companies is under an
existing obligation to pay in the future, are wholly or
partially disallowable as deductions or charges in computing
profits for the purposes of corporation tax.
E5.1.6.3 None of the UK Companies have made or received any
distribution which is, or is treated as, an exempt
distribution within sections 213
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to 218 (inclusive) of the Taxes Act.
E5.1.7 VAT
E5.1.7.1 Each of the UK Companies is a registered and taxable person
for the purposes of VAT and no such registration is subject
to any condition imposed by or agreed with HM Customs and
Excise.
E5.1.7.2 So far as the Covenantors are aware each of the UK Companies
have complied in all material respects with all statutory
provisions and regulations and made all necessary returns
required by law in relation to VAT and, within the
prescribed time limits, has provided all necessary
information and documents required by law to be provided to
H M Customs and Excise, or other appropriate Tax Authorities
and paid all amounts due by law to the proper person.
E5.1.7.3 So far as the Covenantors are aware, each of the UK
Companies have at all times kept materially complete,
correct and up-to-date records, invoices and other documents
required by law to be kept for the purposes of the VATA.
E5.1.7.4 None of the UK Companies have been required by H M Customs
and Excise to give security under paragraph 4 of schedule 11
to the VATA.
E5.1.7.5 So far as the Covenantors are aware, all VAT payable upon
the importation of goods and all duties of customs and
excise payable in respect of any assets (including trading
stock) imported or owned by each of the UK Companies has
been paid in full.
E5.1.7.6 None of the UK Companies are liable and will not (in respect
of
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anything done before Completion) be liable to any interest,
penalty or surcharge in respect of VAT.
E5.1.8 VAT ON PROPERTY
E5.1.8.1 None of the UK Companies owns the fee simple in any building
or civil engineering work which is uncompleted or which was
completed (within the meaning of note (2) to group 1 of
schedule 9 to the VATA) less than three years before the
date of this agreement or was completed before 1 April 1989
but (in the case of a building) was not fully occupied or
(in the case of a civil engineering work) not fully used
before 1 April 1989.
E5.1.8.2 None of the UK Companies have made any election under
paragraph 2 of schedule 10 to the VATA to waive exemption
from VAT in relation to any land or building and no such
election has been made in relation to any land or building
by any member or former member of any group of companies of
which the UK Companies is or was a member for VAT purposes.
E5.1.9 CUSTOMS DUTIES
E5.1.9.1 Each of the UK Companies has complied in all material
respects with all statutory provisions and regulations and
made all necessary returns in relation to the collection and
payment of customs duties, excise duties and other charges
having an equivalent effect; and the UK Companies have
provided all necessary information and documents and paid
all amounts due to HM Customs and Excise, or other
appropriate Tax Authority in relation to such charges within
the prescribed time limits.
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E5.1.9.2 Details of all bonds, recognisance and guarantees given to
HM Customs and Excise, or other appropriate Tax Authority by
or in relation to the UK Companies are set out in the
Disclosure Letter.
E5.1.10 CLOSE COMPANY
E5.1.10.1 None of the UK Companies is a close company within the
meaning of section 414 of the Taxes Act.
E5.1.10.2 No distribution within section 418 of the Taxes Act has been
made by any of the UK Companies and no such distribution
will be made before Completion.
E5.1.10.3 None of the UK Companies have made (and will not be deemed
to have made) any loan or advance to a participator or an
associate of a participator so as to become liable to make
any payment under section 419 of the Taxes Act.
E5.1.11 RESIDENCE
Each of the UK Companies are and always have been resident in the
United Kingdom for the purposes of any Tax and are not a dual resident
company for Tax purposes.
E5.1.12 GROUPS
E5.1.12.1 All assets currently owned by each of the UK Companies in
respect of which a charge may arise on any of the UK
Companies ceasing to be a member of the same group of
companies as any other company in the six years following
Completion under section 179 TCGA
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(company ceasing to be a member of the group) are listed
in the Disclosure Letter.
E5.1.12.2 Details of all claims for group relief and all claims for
or agreements relating to the surrender of surplus advance
corporation tax or repayments of Taxation to which any of
the UK Companies is or was a party before Completion where
such claim has not been finally accepted by the Inland
Revenue are contained in the Disclosure Letter.
E5.1.13 INHERITANCE TAX
E5.1.13.1 There is no unsatisfied liability to capital transfer tax
or inheritance tax attached or attributable to the assets
or shares of the UK Companies and neither the assets nor
the shares are subject to any Inland Revenue charge as
mentioned in section 237 of the Inheritance Tax Xxx 0000
("ITA").
E5.1.13.2 No person has the power under section 212 of the ITA to
raise any capital transfer tax or inheritance tax by the
sale or mortgage of or by a terminable charge on any of the
UK Companies' assets.
E5.2 THE NON-UK COMPANIES
E5.2.1 ADMINISTRATION AND RETURNS
E5.2.1.1 So far as the Covenantors are aware each of the Non-UK
Companies has, within the requisite time limits specified
by statute, made all returns, given all notices, made all
applications and supplied all other information required by
law to be supplied to the appropriate
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Tax Authorities, all such information, applications,
returns and notices were and remain, so far as the
Covenantors are aware, complete, true and accurate in all
material respects and so far as the Covenantors are aware
are not the subject of any dispute with the relevant
authorities.
E5.2.1.2 The Disclosure Letter contains details, so far as they
affect the Non-UK Companies, of all concessions,
arrangements and agreements (whether formal or informal)
negotiated with any Tax Authority.
E5.2.2 PAYMENT OF TAX
E5.2.2.1 Each of the Non-UK Companies has paid all Tax which it has
become liable to pay and so far as the Covenantors are
aware are under no liability to pay nor are there any
circumstances by virtue of which any of the Non-UK
Companies is likely to become liable to pay, any fine,
penalty, surcharge or interest in connection with any claim
for Tax.
E5.2.2.2 Each of the Non-UK Companies have properly deducted Tax as
required by law from all payments made and have accounted
to the appropriate Tax Authority for all Tax so deducted.
E6 PROPERTY AND ENVIRONMENTAL WARRANTIES
E6.1 WARRANTIES RELATING TO ALL OF THE PROPERTIES
E6.1.1 The particulars of the Properties shown in part D are true and
correct.
E6.1.2 The Properties comprise all the land and premises of any tenure
owned, used or
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occupied by the Group Companies.
E6.1.3 The Certificates of Title are true, complete and accurate in all
material respects.
E6.2 WARRANTIES RELATING TO THE NON-CERTIFICATED PROPERTIES
The following warranties apply to the properties listed in part D which
are not covered by the Certificates of Title, namely those properties
whose details are contained in paragraphs D1.4, D1.5, D1.7 and D1.8 (the
"Non-Certificated Properties"):
E6.2.1 TITLE
(i) The information contained in part D as to the tenure of the
Non-Certificated Properties, is true and accurate in all
respects.
(ii) Where the title to any of the Non-Certificated Properties is
registered, a member of the Group is shown on the register
thereof at HM Land Registry as the Proprietor and the Land or
Charge Certificate in respect of each of such Non-Certificated
Properties is in the possession or under the control of the
Group.
(iii) The title to each of the freehold Non-Certificated Properties is
good and, so far as the Covenantors are aware, the
Non-Certificated Properties have the benefit of easements and
rights to allow the activities and use presently carried on.
E6.2.2 ENCUMBRANCES
(i) So far as the Covenantors are aware, the Non-Certificated
Properties are free from any mortgage, debenture or other
financial charge
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(whether specific or floating, legal or equitable) or rent charge
securing the repayment of monies or other obligation or liability
whether of the Group or any other party.
(ii) So far as the Covenantors are aware, no formal notices have been
received that the Non-Certificated Properties are subject to any
covenants, restrictions, stipulations, easements, rights of way
or wayleaves materially affecting their present use.
(iii) Save as disclosed in the Disclosure Letter, the Group has vacant
possession of each of the Non-Certificated Properties so far as
the Covenantors are aware.
(iv) So far as the Covenantors are aware, no compulsory purchase
notices have been received affecting the Non-Certificated
Properties.
E6.2.3 PLANNING MATTERS
(i) For the purposes of this paragraph 6.2.3 "THE PLANNING ACTS"
means:
(a) Xxx Xxxx xxx Xxxxxxx Xxxxxxxx Xxx 0000;
(b) The Planning (Listed Buildings and Conservation Areas) Xxx
0000;
(c) The Planning (Hazardous Substances) Xxx 0000;
(d) The Planning (Consequential Provisions) Xxx 0000; and
(e) The Planning and Compensation Xxx 0000;
-49-
as the same are from time to time varied or amended and any
other statute or subordinate legislation relating to planning
matters.
(ii) So far as the Covenantors are aware, no formal notices have been
received that the use of each of the Non-Certificated Properties
is not the permitted or lawful use for the purposes of the
Planning Acts.
E6.3 ENVIRONMENTAL
E6.3.1 So far as the Covenantors are aware each of the Group Companies
holds (in its name) all authorisations, permissions, consents,
licences and agreements necessary to enable it to carry on its
business lawfully and effectively in the places and in the manner
in which that business is now carried on and in particular (but
without limitation): to make all relevant abstractions of water;
to keep, store or hold all relevant substances whether as raw
materials, products or wastes; to carry on all relevant
processes; and to hold, treat, manage, consign and dispose of all
waste materials, substances, gases and effluents in the relevant
manner.
E6.3.2 So far as the Covenantors are aware all such authorisations,
permissions, consents, licences and agreements have been lawfully
obtained and are in full force and effect.
E6.3.3 So far as the Covenantors are aware no further authorisations,
permissions, consents, licences and agreements are necessary to
enable any of the Group Companies to carry on its business as now
conducted or as conducted in the period covered by the Accounts.
E6.3.4 Without prejudice to paragraphs E6.3.1, E6.3.2 and E6.3.3,
details of authorisations, permissions, consents, licences and
agreements of the types referred to in paragraph E6.3.1 are set
out in the Disclosure Letter.
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E6.3.5 So far as the Covenantors are aware each of the Group Companies
has complied in all material respects with all conditions
attaching to the authorisations, permissions, consents, licences
and agreements referred to in paragraph E6.3.1 and held by it
(whether such conditions are imposed expressly or are implied by
law) and, so far as the Covenantors are aware, there are no
circumstances which would render it impracticable for the
relevant Company to comply with those conditions in the future.
E6.3.6 So far as the Covenantors are aware none of the Group Companies
have received any notice, correspondence or communication in any
other form in respect of any of the authorisations, permissions,
consents, licences or agreements referred to above revoking,
suspending, modifying or varying any of them and there are no
circumstances which might give rise to such notice being received
or of any intention on the part of any relevant authority to give
any such notice.
E6.3.7 So far as the Covenantors are aware none of the Group Companies
have received any notice, order or other communication from any
relevant environmental authority in respect of their respective
businesses, failure to comply with which would constitute breach
of any legal requirements for the protection of the environment
or of human health or amenity (or compliance with which could be
secured by further proceedings).
E6.3.8 The Warranties set out in paragraphs E6.3.1 to E6.3.7 above
(inclusive) are the only Warranties given in respect of the
environment and each of the other Warranties shall be deemed not
to be given in relation to the environment.
E7 SALE OF SHARES
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E7.1 COMMISSION
No one is entitled to receive from any of the Group Companies any finder's
fee, brokerage, or other commission in connection with the sale or purchase
of the Shares and any commission payable by the Covenantors (or any of
them) in connection with the sale or purchase of the Shares will be paid by
the relevant Covenantors prior to Completion.
E7.2 CONSEQUENCE OF SHARE ACQUISITION BY XXXXXXXX
So far as the Covenantors are aware, neither the acquisition of the Shares
by Xxxxxxxx nor compliance with the terms of this agreement:
E7.2.1 will cause any of the Group Companies to lose the benefit of any
material right it presently enjoys;
E7.2.2 will relieve any person of any contractual obligation to the
Group Companies or enable any person to determine any obligation
by or to any of the Group Companies or any right or benefit
enjoyed by the UK Companies or to exercise any right under any
agreement with or otherwise in respect of the Group Companies in
any such case which would have a material adverse effect on the
financial position of any of the Group Companies;
E7.2.3 will result in any present or future indebtedness of any of the
Group Companies becoming due or capable of being declared due and
payable earlier than otherwise;
E7.2.4 will give rise to or render exercisable any right of pre-emption
or termination; or
-52-
E7.2.5 will conflict with or result in the breach of or a default under
or give rise to any obligation of any of the Group Companies
(whether under its articles of association or equivalent
constitution documents, or under any deed agreement, trust,
charter, decree, lease, mortgage, indenture or other instrument
or the judgment, award or order of any authority) or give rise to
any increased liability of any of the Group Companies under any
such obligation in any such case which would have a material
adverse effect on the financial position of any of the Group
Companies.
E7.3 OPTIONS ETC
No person has the right (whether exercisable now or in the future and
whether contingent or not) to call for the allotment, issue, sale or
transfer of any share or loan capital of the Group Companies under any
option or other agreement (including conversion rights and rights of
pre-emption).
E7.4 THIRD PARTY CONSENT
No consent or permission of any third party is required in connection with
the sale of the Shares by any of the Xxxxxxxxxxx.
X0 TRANSACTIONS AT AN UNDERVALUE
None of the Shares have ever been the subject of a transaction at an
undervalue.
E9 THE GROUP COMPANIES' CONSTITUTIONS
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E9.1 DUE INCORPORATION
Each UK Company is a company duly incorporated and validly existing under
English law. Each Non-UK Company is a company duly incorporated and
validly existing under the laws of the jurisdiction specified in respect of
that Company in the Group Companies List.
E9.2 REGISTERED AND OTHER PARTICULARS
The particulars of the Group Companies in the Group Companies List are
accurate.
E9.3 SHARE CAPITAL
E9.3.1 All the issued shares in the Company are fully paid and are
beneficially owned and registered in the names of the persons
listed as shareholders of the Company in the Shareholder List.
E9.3.2 The Shares represent the entire issued share capital of the
Company and there are no options or other agreements (conditional
or unconditional) outstanding which call for the issue of or
accord to any person the right to call for the issue of any
shares in the capital of any of the Group Companies (other than
SFGL).
E9.3.3 None of the Group Companies have:
E9.3.3.1 repaid or redeemed any shares of any class of its share
capital or otherwise reduced its issued share capital or any
class of it or purchased any of its own shares or carried
out any transaction having the effect of a reduction of
capital;
E9.3.3.2 made or resolved to make any issue of shares or other
securities by
-54-
way of capitalisation of profits or reserves;
E9.3.3.3 (in the case of the UK Companies) given any financial
assistance as defined in section 152 of the Act;
E9.3.3.4 offered any shares or securities to the public except in
accordance with the provisions as to authority and
pre-emption contained in the Act; or
E9.3.3.5 agreed to do any such thing specified in this paragraph E9.
E9.4 MEMORANDUM AND ARTICLES OF ASSOCIATION
E9.4.1 THE UK COMPANIES
The copy of the memorandum and articles of association of each of the
UK Companies attached to the Disclosure Letter is true and complete
and includes or has attached to it a copy of every such resolution or
agreement as is referred to in section 380 of the Act.
E9.4.2 THE NON-UK COMPANIES
The copy of the articles of incorporation and the bylaws of each of
the Companies attached to the Disclosure Letter is true and complete.
E9.5 COMPANY AUTHORITY
E9.5.1 Each of the Group Companies have at all times carried on their
respective business and affairs in accordance with their
respective memorandum and
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articles of association or equivalent documents.
E9.5.2 None of the UK Companies have given any power of attorney or any
other authority (express, implied or ostensible) to any person to
enter into any contract or commitment or do anything on its
behalf which is still outstanding or effective (other than any
authority of directors or employees to enter into routine trading
contracts in the normal course of their duties).
E10 LICENCES AND LITIGATION
E10.1 COMPLIANCE WITH LAWS
E10.1.1 THE UK COMPANIES
So far as the Covenantors are aware each of the UK Companies has
conducted its business in all material respects in accordance with all
laws, statutes and regulations and all regulations and directives of
the European Union applicable in the United Kingdom (including those
made or issued pursuant to the Treaties of Rome, Paris and Maastricht)
and any relevant foreign country (excluding laws, statutes and
regulations for the protection of the environment or of human health
or amenity), and there is no order or judgment of any court or any
governmental agency of the United Kingdom, the European Union or any
foreign country outstanding against any of the UK Companies (or any of
its officers or employees in their capacities as such) which may have
an adverse and material effect upon the assets or businesses of any of
the UK Companies.
E10.1.2 THE NON-UK COMPANIES
So far as the Covenantors are aware, each of the Non-UK Companies has
conducted its business in all material respects in accordance with all
applicable
-56-
Legal Requirements and neither of the Non-UK Companies nor
any of its officers, agents or employees (during the course of their
duties in relation to the Non-UK Companies) have committed, or omitted
to do, any act or thing the commission or omission of which is, or
could be, a breach or contravention of any of the applicable Legal
Requirements. For the purposes of this paragraph, "LEGAL REQUIREMENTS"
means federal, state, local, municipal, foreign, international,
multinational or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute or treaty.
E10.2 LICENCES ETC
So far as the Covenantors are aware all necessary licences, consents,
permits, and authorities (public and private) (excluding any required under
any laws for the protection of the environment or of human health or
amenity) have been obtained by each of the Group Companies to enable them
to carry on their respective business effectively in the places and in the
manner in which that business is now carried on and so far as the
Covenantors are aware they are all valid and subsisting and, so far as the
Covenantors are aware, there is no reason why any of them should be
suspended, cancelled or revoked.
E10.3 LITIGATION AND CONTRACTUAL PERFORMANCE
E10.3.1 Neither any of the Group Companies nor so far as the Covenantors
are aware any of their officers or employees (in relation to
their duties with the Group Companies or for which they may be
vicariously liable) are engaged in any criminal prosecution or
civil litigation or arbitration proceedings or dispute resolution
procedures in which the amount claimed in any case exceeds
L20,000 (or its equivalent in any relevant foreign currency as at
today's date).
E10.3.2 So far as the Covenantors are aware no criminal prosecution or
civil litigation or arbitration proceedings or dispute resolution
procedures are pending or
-57-
threatened by or, so far as the Covenantors are aware, against
any of the Group Companies (or any of their officers or employees
in relation to their duties with the Group Companies or for which
they may be vicariously liable) which could involve the
imposition of penalties, fines or liabilities on any of the Group
Companies in any case exceeding L20,000 (or its equivalent in any
relevant foreign currency as at today's date) and, so far as the
Covenantors are aware, there are no facts likely to give rise to
any litigation, arbitration or dispute.
E10.3.3 None of the Group Companies are or have been a party to any
undertaking or assurance (which is still in force) given to any
court or governmental agency or other regulatory body.
E10.3.4 So far as the Covenantors are aware, no governmental or official
investigation or inquiry concerning any of the Group Companies is
in progress or pending and so far as the Covenantors are aware,
there are no facts or circumstances likely to give rise to any
such investigation or inquiry.
E10.4 RETURNS
All returns, particulars, resolutions and other documents required under
applicable legislation affecting companies to be delivered by or on behalf
or in respect of any of the Group Companies or sent to the Registrar of
Companies (or its equivalent in any foreign jurisdiction) have been made
and delivered.
E11 FINANCE
E11.1 FINANCE OBLIGATIONS
None of the Group Companies have outstanding:
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E11.1.1 any loan, loan capital or other liability (actual or contingent)
in the nature of borrowings (including but not limited to
acceptance credits, unmatured bills or other commercial paper) or
any long term or interest bearing obligation which will or may
result in any of the Group Companies being liable to make any
payment or incur any other liability;
E11.1.2 any guarantee, indemnity, suretyship or other arrangement under
which any of the Group Companies is or may become liable for any
obligation of any other person;
E11.1.3 any obligations under any factoring or similar agreement;
E11.1.4 any indebtedness except trade creditors in the ordinary course of
business;
E11.1.5 any bond or other interest bearing indebtedness; or
E11.1.6 any liabilities under contracts for hire or rent or hire purchase
or purchase by way of credit or instalment payment, in respect of
which the annual amounts payable by any Group Company exceeds
L20,000 (or its equivalent in a relevant foreign currency as at
today's date), other than contracts in respect of motor vehicles
used in the ordinary course of business.
E11.2 REPAYMENT REQUIREMENTS
None of the Group Companies have received any notice to repay any monies or
liabilities which are repayable on demand and no default or event has
occurred entitling any person (with or without giving any formal notice and
whether immediately or after expiry of any notice) to demand or accelerate
repayment, appoint a receiver or take other action to protect security
granted to it by any of the Group Companies.
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E11.3 GRANTS
E11.3.1 None of the Group Companies have applied for or received any
financial assistance from any supra-national, national or local
authority or governmental agency within the last five years or
any financial assistance which is or may be or become repayable
(whether in whole or in part) as a result of any act or omission
of any of the Group Companies, the transfer of the Shares
pursuant to the Offer or for any other reason.
E11.3.2 Where any Group Company has received financial assistance and a
notification to or the consent, permission or waiver of any
supra-national, national or local authority or governmental
agency is required to the transfer of the Shares in order that
such financial assistance is not, or may not be, required to be
repaid in whole or in part, such notification, consent,
permission or waiver has been made or obtained and a copy of it
is attached to the Disclosure Letter.
E11.4 INSOLVENCY
E11.4.1 THE UK COMPANIES
E11.4.1.1 No receiver or administrative receiver has been appointed in
respect of any of the UK Companies or any of the assets or
undertaking of any of the UK Companies.
E11.4.1.2 No administration order has been made and no petition has
been presented for such an order in respect of any of the UK
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Companies.
E11.4.1.3 No meeting has been convened at which a resolution will be
proposed, no resolution has been passed, no petition has
been presented and no order has been made for the winding-up
of any of the UK Companies.
E11.4.1.4 None of the UK Companies have stopped or suspended payment
of its debts, become unable to pay its debts (within the
meaning of section 123 of the Insolvency Act 1986) or
otherwise become insolvent.
E11.4.1.5 No unsatisfied judgment, order or award is outstanding
against any of the UK Companies.
E11.4.1.6 No written demand under section 123(1)(a) of the Insolvency
Xxx 0000 has been made against any of the UK Companies.
E11.4.1.7 No distress or execution has been levied on, or other
process commenced against, any asset of any of the UK
Companies.
E11.4.1.8 No voluntary arrangement has been proposed under section 1
of the Insolvency Xxx 0000 in respect of any of the UK
Companies.
E11.4.1.9 So far as the Covenantors are aware, no circumstances have
arisen which entitle any person to take any action, appoint
any person, commence proceedings or obtain any order of the
type mentioned in any part of this paragraph E11.
E11.4.2 THE NON-UK COMPANIES
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No meeting has been convened at which a resolution will be proposed, no
resolution has been passed, no petition has been presented and no order
has been made for the winding-up of any of the Non-UK Companies.
E12 INSURANCE
E12.1 Particulars of all the insurance policies maintained by each of the
Group Companies at the date of this agreement are disclosed in the
Disclosure Letter.
E12.2 All premiums due in respect of those insurance policies have been fully
paid; and the next renewal date for each of such insurances is as
specified in the Disclosure Letter;
E12.3 No claim is outstanding under any of the insurances and, so far as the
Covenantors are aware, no circumstances exist which are likely to give
rise to any such claim.
E12.4 There are no outstanding claims against any of the Group Companies, by
any employee or other person, in respect of any accident, injury or
damage, which are not fully covered by insurance.
E12.5 There have been no material claims against insurers by any of the Group
Companies in the twelve months ending on the date of this agreement.
E13 CONTRACTS
E13.1 None of the Group Companies are party to any material agreement:
E13.1.1 entered into otherwise than by way of bargain at arms length in
the ordinary and proper course of its business;
E13.1.2 which so far as the Covenantors are aware:
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E13.1.3 cannot be fulfilled by the relevant Company without undue or
unusual expenditure of money using only fixed assets presently
owned by it and current assets of the types presently held by it
and in quantities requiring a level of purchase of current assets
not materially greater than during the period covered by the
relevant Accounts and finance within the existing facilities of
the relevant Company.
E13.1.4 is for the supply to or by the relevant Company of goods or
services which may last longer then twelve months;
E13.1.5 is for the supply of goods or services by the relevant Company of
a type not manufactured or supplied by it in the period covered
by the relevant Accounts.
E13.2 So far as the Covenantors are aware, none of the Group Companies is in
breach of any contract to which it is a party, and no other party to any
such contract is in breach of it. So far as the Covenantors are aware,
all agreements, rights, commitments, obligations, arrangements and
understandings to which each Group Company is a party are valid and
enforceable. The Covenantors are not aware of any grounds for the
termination, rescission, avoidance or repudiation of any contract by any
Group Company or another party to such contract.
E13.3 The Covenantors are not aware of any fact, matter or circumstance which
is reasonably likely to result in any claim being made under or pursuant
to any guarantee, warranty or penalty provision in any contract entered
into by any of the UK Companies.
E14 COMPETITION
E14.1 RESTRICTIVE AGREEMENTS
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There are no agreements:
E14.1.1 which have or will have the effect of restricting the freedom of
any of the Group Companies to provide or take goods or services
or to otherwise conduct its trade or business by such means and
from or to such persons at such prices (and otherwise in such
manner) as the Group Companies may from time to time think fit;
E14.1.2 which will or may restrict the use or disclosure of information
by any of the Group Companies or oblige them to disclose
information;
E14.1.3 limiting or excluding any of the Group Companies' right to do
business and/or compete in any area or field with any other
person;
E14.1.4 to which any of the UK Companies are party which contravene any
of the provisions of the Treaty of Rome 1957 or the Treaty of
Xxxxx 0000 or the Treaty of Maastricht.
E14.2 CONSUMER, TRADE, ANTI-COMPETITIVE AND OTHER RESTRICTIVE PRACTICES
E14.2.1 None of the practices or arrangements of any of the UK Companies
is or has been or, so far as the Covenantors are aware, is likely
to be the subject of any investigation, reference, report or
order made under the Fair Trading Xxx 0000, the Competition Xxx
0000, and no undertaking has been given by any of the UK
Companies pursuant to any action taken under any of those Acts.
E14.2.2 None of the Group Companies have received any process, notice or
communication (formal or informal) by or on behalf of, in the
case of the UK Companies, the Office of Fair Trading, the
Monopolies and Mergers Commission, the Secretary of State for
Trade and Industry, the European Commission or, in the case of
all Group Companies, any other authority of any
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country or supra-national organisation having jurisdiction in
competition or anti-trust matters, in relation to any aspect of
the business of any of the Group Companies or any agreement or
arrangement to which any of the Group Companies are or were a
party and (so far as the Covenantors are aware) none of the
Group Companies is likely to receive any such process, notice
or communication.
E14.3 RELATIONSHIPS WITH THIRD PARTIES
E14.3.1 Neither more than 10 per cent of the aggregate amount of all the
purchases nor more than 10 per cent of the aggregate amount of
all the sales of the Group Companies during the period covered by
the Accounts were obtained from or made to the same supplier or
customer (or connected suppliers or customers).
E14.3.2 There is no embargo or trade boycott on the business of any of
the Group Companies or any of their products or suppliers nor so
far as the Covenantors are aware is it likely that any material
source of supply to any of the Group Companies or any material
outlet for the sales of any of the Group Companies will be put in
jeopardy by an embargo or trade boycott (whether as a result of
political action or trade dispute or otherwise).
E14.3.3 The Disclosure Letter contains details of any industry, trade or
professional organisation, regulatory body or quality control
organisation of which any of the Group Companies is a member, to
which it is affiliated, to whose regulation it is subject or in
respect of which it has any continuing liability (including
details of any shares held, fees payable and rules governing
membership).
E14.3.4 Each of the Group Companies has complied in all material respects
with the rules (whether or not legally binding) of any
organisation or body of the types specified in paragraph E14.3.3
of which it is a member or to which it is
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subject.
E14.3.5 So far as the Covenantors are aware, none of the Group Companies
are subject to or threatened with any disciplinary action or
penalty by any such organisation or body as is specified in
paragraph E14.3.3.
E15 DEFECTIVE PRODUCTS
So far as the Covenantors are aware none of the Group Companies have
received notice alleging that any goods manufactured, sold or supplied by
them are or were, in any material respect, faulty or defective that remains
unsettled.
E16 INFORMATION
E16.1 SECRET OR CONFIDENTIAL INFORMATION
So far as the Covenantors are aware, none of the Group Companies have at
any time (except in the ordinary course of business or to persons under
duties to it to maintain confidentiality or to its professional advisers)
disclosed to any person other than Xxxxxxxx:
E16.1.1 any information relating to any of its confidential information;
E16.1.2 any other information relating to its business or affairs the
disclosure of which might or could cause loss or damage to or
adversely affect the relevant Company; nor
E16.1.3 any secret or confidential information relating to its
manufacturers, suppliers, customers, clients and agents or to any
other person who has or has had any dealings with it.
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E16.2 COMPUTER KNOW-HOW AND MARKETING INFORMATION
E16.2.1 All Computer Know-how and Marketing Information used by each of
the Group Companies is owned by it or is the subject of a valid
grant of rights to the relevant Company (as the case may be) and
is not subject to any restriction which materially and adversely
affects the relevant Company's ability to use it for the purpose
of its business.
E16.2.2 So far as the Covenantors are aware, none of the Group Companies
have disclosed (other than to its own employees under obligations
of confidence to it), nor is it obliged to disclose, any Computer
Know-how or Marketing Information of a confidential nature to any
person.
E16.2.3 So far as the Covenantors are aware, none of the Group Companies
are in breach to an extent which is material of any agreement
under which any Computer Know-how or Marketing Information was or
is to be made available to it.
E16.3 DATA AND RECORDS
E16.3.1 All the records and systems (including but not limited to
computer systems), data and information of the Group Companies
are recorded, stored, maintained or operated or otherwise held by
the Group Companies and are not wholly or partly dependent on any
facilities or means (including any electronic, mechanical or
photographic process, computerised or otherwise) which are not
under the exclusive ownership and control of the relevant
Company.
E16.3.2 None of the Group Companies have disclosed to any third party any
such records, control and other systems, data and information as
is referred to in paragraph E16.3.1.
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E16.3.3 The UK Companies have complied with all relevant requirements of
the Data Protection Xxx 0000, including:
E16.3.3.1 the data protection principles established in that Act;
E16.3.3.2 requests from data subjects for access to data held by it;
and
E16.3.3.3 the requirements relating to the registration of data users.
E16.3.4 None of the UK Companies have received any notice or allegation
from either the Data Protection Registrar or a data subject
alleging non-compliance with the data protection principles or
prohibiting the transfer of data to a place outside the United
Kingdom.
E16.3.5 No individual has claimed compensation from any of the UK
Companies under that Act for loss or unauthorised disclosure of
data.
E16.5 INFORMATION SUPPLIED TO XXXXXXXX
All information contained or referred to in the Information Memorandum was
when given and remains and will at Completion be, true and accurate in all
respects and is not misleading because of any omission or ambiguity or for
any other reason.
E17 INTELLECTUAL PROPERTY RIGHTS
E17.1 INTELLECTUAL PROPERTY RIGHTS
E17.1.1 The Disclosure Letter sets out details of all:
E17.1.1.1 registered Intellectual Property owned or used by the Group
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Companies in their business;
E17.1.1.2 unregistered trademarks, service marks and design rights
owned by them or used by the Group Companies in their
business;
E17.1.1.3 Intellectual Property licensed to the Group Companies by
others; and
E17.1.1.4 Intellectual Property the Group Companies have licensed to
others.
E17.1.2 The Group Companies are the sole beneficial owners of the
Intellectual Property used by them in their business and (where
such property is capable of registration) its registered
proprietor.
E17.1.3 Except for copyrights, the Group Companies own no Intellectual
Property other than that detailed in the Disclosure Letter.
E17.1.4 Except as specified in the agreements disclosed in the Disclosure
Letter:
E17.1.4.1 no person has been authorised to make any use whatever of
any Intellectual Property owned by the Group Companies;
E17.1.4.2 the Group Companies have not been authorised to make any use
of any Intellectual Property owned by any other person.
E17.1.5 So far as the Covenantors are aware, none of the processes or
products of any of the Group Companies infringe any right of any
other person relating to Intellectual Property or involve the
unlicensed use of confidential information disclosed in
circumstances which might give rise to a claim against any of the
Group Companies, and none of the Intellectual Property owned or
used by
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the Group Companies is being used, claimed, opposed or
challenged by any person.
E18 THE UK COMPANIES AND THEIR EMPLOYEES
E18.1 EMPLOYMENT TERMS
E18.1.1 None of the Group Companies have any contract of employment with
any employee (including any director) of the relevant Company
which cannot be terminated at any time by giving three months'
notice without giving rise to any claim for damages or
compensation (other than a statutory redundancy payment or
statutory compensation for unfair dismissal).
E18.1.2 No director or senior employee of any of the Group Companies has
given notice terminating his contract of employment or is under
notice of dismissal.
E18.1.3 There are no arrears of remuneration due to any director or
employee of any of the Group Companies.
E18.1.4 There is no agreement or understanding (contractual or otherwise)
between any of the Group Companies and any employee or
ex-employee with respect to his employment, his ceasing to be
employed or his retirement which is not included in the written
terms of his employment or previous employment (as the case may
be).
E18.2 COMPLIANCE WITH LEGISLATION ETC.
E18.2.1 So far as the Covenantors are aware, each of the Group Companies
has, in relation to each of its employees (and so far as relevant
to each of its former
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employees):
E18.2.1.1 complied in all material respects with all obligations
imposed on it by all statutes and regulations relating to
employment;
E18.2.1.2 maintained adequate records regarding its employees;
E18.2.1.3 complied in all material respects with all collective
agreements for the time being having effect as regards
relations with or the conditions of service of its employees
or the trade unions representing them; and
E18.2.1.4 (in the case of the UK Companies) complied with its
obligations with respect to statutory sick pay as defined in
the Social Security Contributions and Benefit Xxx 0000.
E18.2.2 None of the Group Companies have in existence, or have undertaken
to introduce:
E18.2.2.1 any share incentive scheme, share option scheme or profit
sharing scheme, corporate personal equity plan,
profit-related pay scheme or similar scheme for any of its
directors, officers or employees; or
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E18.2.2.2 any scheme under which any director, officer or employee of
any of the UK Companies is entitled to a commission or
remuneration of any other sort calculated by reference to
the whole or part of the turnover, profits or sales of the
relevant Company.
E18.3 PAYMENTS ON TERMINATION
Except to the extent (if any) to which provision or allowance has been made
in the relevant Accounts:
E18.3.1 no liability has been incurred by any of the UK Companies as a
result of the decision in the case of R V SECRETARY OF STATE FOR
EMPLOYMENT EX PARTE EQUAL OPPORTUNITIES COMMISSION AND ANOTHER,
or for breach of any contract of service or for services, for
redundancy payments, protective awards or for compensation for
wrongful dismissal or unfair dismissal or for failure to comply
with any order for the reinstatement or re-engagement of any
employee or for any other liability accruing from the termination
of any contract of employment or for services;
E18.3.2 no gratuitous payment has, during the twelve months ending on the
date of this agreement been made or promised by any of the UK
Companies (whether or not pursuant to any legally binding
obligation) in connection with the actual or proposed termination
or suspension of employment or variation of any contract of
employment of any present or former director or employee of any
of the Group Companies;
E18.3.3 none of the Group Companies have made or agreed to make any
payment to or provided or agree to provide any benefit for any
present or former director or former employee or any dependant of
any such director, former director or former employee.
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E18.4 REDUNDANCIES AND TRANSFER OF BUSINESS
None of the UK Companies have within the period of twelve months preceding
the date of this agreement:
E18.4.1 given notice of any redundancies to the relevant Secretary of
State or started consultations with any trade union under
sections 188 to 198 (inclusive) of the Trade Union and Labour
Relations (Consolidations) Xxx 0000 nor failed to comply with any
such obligations under those sections of that Act; and
E18.4.2 been a party to any relevant transfer (as defined in the Transfer
of Undertakings (Protection of Employment) Regulations 1981) nor
failed to comply with any duty to inform and consult any
independent trade union under those regulations.
E18.5 TRADE UNIONS AND DISPUTES
E18.5.1 Save as set out in the Disclosure Letter, none of the Group
Companies have any material agreement or other arrangement
(binding or otherwise) with any trade union or other body
representing its employees or any of them.
E18.5.2 None of the Group Companies are involved in any industrial or
trade disputes or any dispute or negotiation regarding a claim
with any trade union or association of trade unions or
organisation or body of employees and has not been involved in
any such dispute within the last twelve months.
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E18.6 VARIATION OF TERMS
None of the Group Companies have entered into, agreed to or undertaken any
obligation (whether or not legally binding) to take effect at any time on
or after the Accounts Date to alter the rates of remuneration of or to make
any bonus or incentive payments or provide any benefits in kind or any
payments under a profit sharing scheme to or on behalf of any of their
directors or employees at any future date.
E18.7 OUTSTANDING CLAIMS
There is no outstanding claim which has been notified to any of the Group
Companies for breach of any contract of service or for services or for
compensation for unfair or wrongful dismissal or redundancy or for failure
to comply with any order for the re-engagement or reinstatement of any
former employee or for any other liability accruing from the termination of
any contract of employment or for services by any former employee and (so
far as the Covenantors are aware) no such claim could now be made by any
former employee of any of the Group Companies.
E19 THE GROUP COMPANIES
E19.1 SUBSIDIARIES AND SUBSIDIARY UNDERTAKINGS
None of the Group Companies has any subsidiary company or subsidiary
undertaking.
E19.2 INVESTMENTS, ASSOCIATIONS AND BRANCHES
None of the Group Companies:
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E19.2.1 is the holder or beneficial owner of, or has agreed to acquire,
any share or other capital of any company or corporation (whether
incorporated in the United Kingdom or elsewhere);
E19.2.2 is or has agreed to become a member of any partnership, joint
venture, consortium or other unincorporated association;
E19.2.3 has any branch, agency or place of business outside the United
Kingdom or any permanent establishment (as that expression is
defined in the respective Double Taxation Relief Orders current
at the date of this agreement) outside the United Kingdom; and
E19.2.4 has outstanding or potential liability in respect of any of the
matters specified in this paragraph E19.2.
E19.3 AUTHORITIES TO ALLOT SHARES
There are no valid authorities granted to the directors of any of the UK
Companies under section 80 of the Act nor have the provisions of section
89(1) of the Act been disapplied in respect of any UK Company.
E19.4 BUSINESS NAME
E19.4.1 None of the Group Companies carry on business under any name
other than its own corporate name.
E19.4.2 No third party has been permitted to use the name "Sheffield
Forgemasters" by any Group Company or any other name under which
any Group Company carries on business.
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E20 PENSIONS
E20.1 True and accurate copies of the Trust Deeds, Rules and Memoranda
governing the Pension Schemes, the booklet and any other announcements
(detailing matters not incorporated in the booklet or formal governing
documents of the Pension Schemes) issued to employees and officers of
the UK Companies who are members of it have been delivered to Xxxxxxxx.
E20.2 The Pension Schemes are exempt approved schemes (within the meaning of
chapter I of part XIV of the Taxes Act) and, so far as the Covenantors
are aware, there are no circumstances which will result in the
withdrawal of the Schemes' exempt approved status.
E20.3 A current contracting-out certificate under part III of the Xxxxxxx
Xxxxxxx Xxx 0000 is in force in respect of the employments of the
employees and officers of the UK Companies whose employments are
intended to be contracted-out and employments by reference to the
Pension Schemes and so far as the Covenantors are aware there are no
circumstances which will result in the withdrawal or revocation of that
certificate.
E20.4 Since the date of the last actuarial valuation of the Pension Schemes,
contributions have been paid at the rate (or rates) recommended in that
valuation.
E20.5 All contributions due to the Pension Schemes have been promptly paid and
each of the UK Companies has duly accounted for any deductions made by
it in respect of the contributions payable by or in respect of the
members of the Pension Schemes.
E20.6 No claim (other than routine claims for benefits) has been made against
any of the UK Companies or the trustees or administrators of the Pension
Schemes in relation to the Pension Schemes and the Covenantors are not
aware of any circumstances which may result in any such claim.
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E20.7 Other than the Pension Schemes and the national insurance scheme there
is no legally binding arrangement under which any of the UK Companies
is, or will become, under an obligation to provide or contribute towards
the provision of, relevant benefits (within the meaning of the Taxes
Act) for or in respect of the employees or officers or former employees
or officers of any of the UK Companies.
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PART F
PROTECTION FOR THE COVENANTORS
F1 The provisions of this part F are in addition to and without prejudice to
Xxxxxxxx'x general legal obligation to mitigate any loss or damage it may
suffer. In this part F, unless specifically otherwise stated, "Claim"
shall mean a claim under the Warranties.
F2 Xxxxxxxx:
F2.1 confirms that, in entering into this agreement, it relies on no
warranties, representations, covenants, undertakings or indemnities
except the Warranties, the Deed of Covenant and as otherwise set out
in this agreement;
F2.2 agrees that no information, advice or assurances it or anyone on its
behalf may have received from the Covenantors, the Covenantors'
advisors or anyone else on the Covenantors' behalf in relation to the
Group or otherwise in relation to the Offer or this agreement or its
negotiation may be legally relied upon in any manner, save in each
case for any information, advice or assurances which are expressly set
out or referred to in the Warranties, the Deed of Covenant and this
agreement;
F2.3 waives any rights it may have in respect of any such information,
advice or assurance it may have received other than that expressly set
out or referred to in the Warranties, the Deed of Covenant and this
agreement;
F2.4 agrees that rescission shall not be available as a remedy for any
breach of this agreement (including for any breach of Warranty) or the
Deed of Covenant and agrees not to claim that remedy.
F3 Xxxxxxxx shall not be entitled to make a Claim if and to the extent that
the facts or information upon which it is based are fairly disclosed (with
sufficient detail to enable a
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purchaser with a reasonable knowledge of the sectors in which the Group
operates to assess the nature and import of each matter disclosed):
F3.1 in the Disclosure Letter; or
F3.2 in the Information Memorandum; or
F3.3 in any document or information listed in the Data Room Index,
provided that a disclosure that there exists an agreement under which
representations, warranties, covenants, undertakings or indemnities have
been given by any Group Company is not by itself a disclosure that a claim
has been or is likely to be made against that Group Company (or any other
Group Company) in respect of any such representations, warranties,
covenants, undertakings or indemnities.
F4 Xxxxxxxx shall not be entitled to make a Claim to the extent that:
F4.1 specific provision or reserve in respect of the matter to which the
Claim relates has been made in the Accounts;
F4.2 it relates to Tax and it arises or is increased (or any specific
provision or reserve for Tax made in the Accounts is insufficient) by
reason only of any increase in rates of Tax or change in the law or in
published practice of any Tax Authority occurring after the date of
those accounts having retrospective effect;
F4.3 it would not have arisen but for either the failure or omission by any
Group Company to make any claim, election, surrender or disclaimer,
give any notice or consent or do any other thing in relation to Tax,
the making, giving or doing of which was assumed in computing the Tax
liabilities of any Group Company for the purposes of the Accounts and
details of which are given in writing to
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the Purchaser within a reasonable time so as to enable the Purchaser
to make such claim, election, surrender or disclaimer, give such
notice or consent or do such thing prior to the expiry of any
applicable time limit;
F4.4 it would not have arisen but for the voluntary making of any claim,
election, surrender or disclaimer or voluntary giving of any notice or
consent by Xxxxxxxx or any Group Company after Completion, the giving,
making or doing of which was not assumed in computing the Tax
liabilities of any Group Company for the purposes of the Accounts and
which the Purchaser knew or ought reasonably to have known would give
rise to such Tax liabilities;
F4.5 it is due to any change after Completion in the accounting principles
adopted by any Group Company from those used in the preparation of the
Accounts unless such change is necessary to comply with generally
accepted accounting principles subsisting at Completion; and
F4.6 the matter to which it relates arises as a result of the passing or
amendment of any legislation (including any subsidiary legislation)
after Completion with retrospective effect.
F5 Xxxxxxxx shall have no right to recover in respect of any Claim under the
Warranties and the Deed of Covenant unless and until the aggregate
liability of the Covenantors (but for this paragraph) in respect of all
such Claims would exceed L25,000, but, if such aggregate liability should
exceed that sum, the Covenantors shall be liable for the full aggregate
amount of such Claims and not only for the amount by which the amount of
such Claims exceeds that sum. Xxxxxxxx shall have no right to recover in
respect of any individual Claim under the Warranties or the Deed of
Covenant in respect of which liability of the Covenantors (but for this
paragraph) would not exceed L1,000 and any such Claim should be discounted
in calculating the aggregate liability of the Covenantors for the L25,000
limit in this paragraph F5.
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F6 Subject to paragraph F9, the maximum liability of each Covenantor in
respect of all Claims shall not exceed the figure set against his name in
column (4) of part B (including interest and costs) and the liability of
the Covenantors in respect of each Claim shall be several and in relation
to any and each Claim capable of being made against the Covenantors the
individual liabilities of each of the Covenantors in respect of that Claim
shall not exceed that proportion of the total liability of all the
Covenantors under such Claim as is set opposite his name in column (3) of
part B. In this paragraph, "Claim" shall mean any claim under the
Warranties or the Deed of Covenant.
F7 Subject to paragraph F9, Xxxxxxxx shall not be entitled to make any Claim:
F7.1 unless and until Completion has occurred; and
F7.2 subject to paragraph F9, unless particulars of that Claim (with
sufficient detail to enable the Covenantors to identify the basis of
the Claim and Xxxxxxxx'x best estimate of the quantum of the Claim and
how this has been quantified) are given in writing to the Covenantors
in respect of any Claim not later than 30 September 1999.
In this paragraph, "Claim" shall mean any claim under the Warranties or the
Deed of Covenant.
F8 Any Claim shall be unenforceable and be deemed waived unless proceedings in
respect of it are issued and served within 12 months of the date of service
of notice of that Claim under paragraph F7, unless the Covenantors
otherwise agree.
F9 In the event of fraud on the part of a Covenantor, the provisions of
paragraph F6 and F7.2 shall not apply in relation to such fraudulent
Covenantor in relation to the Claim arising as a result of his fraud. For
the avoidance of doubt, any fraud on the part of one Covenantor shall not
affect the application of paragraphs F6 and F7.2 in relation to the
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other non-fraudulent Covenantors.
F10 The Covenantors shall not be liable to make any payment in respect of any
Claim based upon a contingent liability of any of the Group Companies
(without prejudice to Xxxxxxxx'x right to establish the Covenantors'
liability in respect of that Claim pursuant to paragraph F7.2 above) until
the liability becomes an actual liability provided that if the Claim
relating to such a contingent liability is notified to the Covenantors
prior to the expiry of the period referred to in paragraph F7.2 above,
Xxxxxxxx shall not be prevented from pursuing a Claim in respect of that
liability by reason of anything contained in that paragraph.
F11 If any of the Group Companies or Xxxxxxxx is or becomes entitled to recover
any sum from any person in respect of the subject matter of any Claim under
the Warranties or the Deed of Covenant in respect of which the Covenantors
make or have made any payment to Atchison, Xxxxxxxx shall:
F11.1 procure that the Covenantors are notified as soon as practicable
after Xxxxxxxx becomes aware of the possible entitlement;
F11.2 (unless to do so would, in the reasonable opinion of Xxxxxxxx,
cause material damage or material further damage to the business
or goodwill of any Group Company) procure that all steps are
taken which the Covenantors request to enforce the indemnity or
right of recovery or (but only if the Covenantors so choose) the
Covenantors are permitted to enforce the indemnity or right of
recovery (in the name of the relevant Group Company or other
person entitled to do so) and are given all authorities and
assistance as they may request to enable them to do so and
Xxxxxxxx shall pay to the Covenantors immediately upon receipt by
Xxxxxxxx of the amount recovered (or permit the Covenantors to
retain) a sum equal to the lesser of:
F11.2.1 any amount any of the Group Companies or Xxxxxxxx recovers
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(less all costs and expenses reasonably and properly
incurred by Xxxxxxxx or any of the Group Companies in
pursuing the claim against the other person which are not
reimbursed by such other person and less any Taxation
suffered by Xxxxxxxx or any of the Group Companies in
respect of such recovered amount); and
F11.2.2 the amount paid by the Covenantors in respect of the Claim,
less any part of that amount which represents interest for
late payment.
F12 In so far as the payments made by the Covenantors to Xxxxxxxx in respect of
Claims under the Warranties or the Deed of Covenant are less than the
consideration paid to them under the Offer they shall constitute a
repayment of and a reduction in such consideration.
F13 If any matter or circumstance which may give rise to a Claim comes to the
attention of any of the Group Companies or Atchison, Xxxxxxxx shall
(without prejudice to paragraph F10):
F13.1 (unless to do so would, in the reasonable opinion of Xxxxxxxx,
cause material damage or material further damage to the business
or goodwill of any Group Company) ensure that no admission of
liability or agreement or compromise in relation to the matter or
circumstance is made without the written consent of the
Covenantors (not to be unreasonably withheld or delayed);
F13.2 notify the Covenantors of such matter or circumstance as soon as
practicable after it comes to the attention of any of the Group
Companies or Xxxxxxxx and such notification (with sufficient
detail to enable the Covenantors to identify the basis of the
potential Claim which may result from such matter or circumstance
and including a statement that such notification constitutes a
Claim for the purposes of paragraphs F7.2 and F10 giving rise to
a contingent liability) shall constitute notification of any
Claim which does arise in
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connection with such matter or circumstance;
F13.3 give the professional advisers of the Covenantors such access to
the premises and personnel of each of the Group Companies as they
may request, and afford them any opportunity they request to
examine any accounts, documents, records and other things in the
possession or control of any of the Group Companies which are
relevant to the Claim;
F13.4 subject to the Covenantors indemnifying Xxxxxxxx to its
reasonable satisfaction against the costs incurred, and unless to
do so would, in the reasonable opinion of Xxxxxxxx, cause
material damage or material further damage to the business or
goodwill of any Group Company, take all steps which the
Covenantors request to avoid, dispute, resist, appeal, compromise
or defend any matter which may otherwise result in a Claim and
give the Covenantors all authorities and assistance as may be
requested by the Covenantors to enable them to do so.
For the purposes of this paragraph F13, a matter or circumstance shall not
be treated as having come to the attention of any of the Group Companies or
Xxxxxxxx unless it has come to the attention of a director of the relevant
company.
F14 The provisions of clauses 3.1.6, 3.1.7, 3.1.8 and 3.1.10 and clause 4 of
the Deed of Covenant shall apply mutatis mutandis in respect of Claims
relating to Tax.
F15 Xxxxxxxx shall not be at liberty to bring more than one Claim in respect of
the same facts or subject matter. Any liability of the Covenantors in
respect of a Claim shall be in satisfaction of its liability under any
claim under the Deed of Covenant in respect of the same facts or
circumstances and vice versa.
F16 Xxxxxxxx shall procure that the Group Companies shall observe and perform
the
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provisions of this part F.
F17 Xxxxxxxx represents to the Covenantors that it is not aware at the date of
this agreement of any facts, information or circumstances which it is aware
constitutes the basis for any claim under the Warranties or the Deed of
Covenant. For the purposes of this paragraph F17, "awareness" of Xxxxxxxx
shall be construed as the actual knowledge of Xx Xxxx Xxxxx.
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PART G
DETAILS OF THE PENSION SCHEMES
The Sheffield Forgemasters Pension Scheme established by an interim trust deed
dated 30 December 1993 and the Sheffield Forgemasters Senior Executive Pension
Scheme established by an interim trust deed dated 30 March 1986.
-86-
EXECUTED AS A DEED by )
XXXXXXX XXXXXXXX XXXXXX ) /s/ P M Xxxxxx
in the presence of: )
Witness signature: /s/ X. Xxxx
Witness address: Dibb Xxxxxx Xxxxx
Witness occupation: Solicitor
EXECUTED AS A DEED by )
XXXXXXX XXXXXX BRAND ) /s/ M A Brand
in the presence of: )
Witness signature: /s/ X. Xxxx
Witness address: Dibb Xxxxxx Xxxxx
Witness occupation: Solicitor
EXECUTED AS A DEED by )
XXXXX XXXXXXXX ) /s/ M A Brand
in the presence of: )
Witness signature: /s/ X. Xxxx
Witness address: Dibb Xxxxxx Xxxxx
Witness occupation: Solicitor
-87-
EXECUTED AS A DEED )
by XXXXXXXX CASTING )
UK LTD acting by: )
Director /s/ Xxxx X Xxxxx
Director/Secretary /s/ X X Xxxxxxx
-88-
