EXHIBIT 10.1
DATED 16TH APRIL, 1999
GLYNWED STEELS LIMITED
GLYNWED INTERNATIONAL plc
NIAGARA LASALLE (UK) LIMITED
and
NIAGARA CORPORATION
--------------------------------
SALE OF BUSINESS AGREEMENT
--------------------------------
▇▇▇▇▇ & ▇▇▇▇▇
London
O:279842.11
CONTENTS
Clause Page
1. Interpretation.........................................................1
2. Sale of Business.......................................................6
3. Excluded Assets and Liabilities........................................6
4. Condition..............................................................8
5. Conduct of Business Before Completion and Rescission...................9
6. Consideration.........................................................10
7. Completion Accounts...................................................11
8. Contracts.............................................................14
9. Debtors and Creditors.................................................16
10. Warranties Relating to Capacity.......................................19
11. Seller's Warranties...................................................19
12. Completion............................................................22
13. Employees.............................................................25
14. Product Claims........................................................26
15. Environmental.........................................................27
16. Pensions..............................................................27
17. Sales Literature......................................................27
18. Protective Covenants..................................................28
19. Announcements.........................................................28
20. Value Added Tax.......................................................28
21. Interest..............................................................31
22. Glynwed's Guarantee...................................................31
23. Niagara's Guarantee...................................................32
24. Further Assurance.....................................................33
25. Notices...............................................................33
26. General...............................................................34
27. Indemnity Claims......................................................36
28. Whole Agreement.......................................................36
29. Governing Law.........................................................37
Schedules
1. Business Intellectual Property .......................................38
2. Pensions .............................................................41
3. Left intentionally blank .............................................57
4. Completion Account Principles ........................................58
4A. GB Steel Bar ........................................................63
4B. ▇▇▇▇▇▇▇▇ .............................................................65
4C. Midland Engineering Steels ...........................................67
4D. ▇▇▇▇▇▇ Port Rolling ▇▇▇▇▇ ............................................68
4E. Macreadys ............................................................70
4F. Ductile Hot Mill .....................................................71
4G. ▇▇▇▇▇▇ ▇▇▇▇ ..........................................................73
4H. Wesson ...............................................................75
5. Warranties ...........................................................77
6. Protective Covenants .................................................89
7. Environmental ........................................................92
Agreed Form Documents
Accounts
IP Assignments
THIS AGREEMENT is made on 16th April, 1999 BETWEEN:
(1) GLYNWED STEELS LIMITED (registered number 193046) whose registered
office is at ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ (the "Seller");
(2) GLYNWED INTERNATIONAL plc (registered number 354715) whose registered
office is at ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ("Glynwed");
(3) NIAGARA LASALLE (UK) LIMITED (registered number 3725308) whose
registered office is at 1st Floor, Bouverie House, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (the "Purchaser"); and
(4) NIAGARA CORPORATION, a corporation organised and existing under the
laws of the state of Delaware, whose principal office is at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ("Niagara").
WHEREAS:
(A) The Seller carries on the Business (as defined below).
(B) The Seller wishes to sell and the Purchaser wishes to purchase the
goodwill and certain assets of the Business with a view to carrying
on the Business as a going concern in succession to the Seller on the
terms and subject to the condition set out in this agreement.
(C) Glynwed is the ultimate holding company of the Seller's Group (as
defined below) and has agreed to guarantee the obligations of the
Seller under this agreement and to covenant in the terms hereinafter
provided and Niagara is the ultimate holding company of the
Purchaser's Group (as defined below) and has agreed to guarantee the
obligations of the Purchaser under this agreement.
IT IS AGREED as follows:
1. INTERPRETATION
(1) In this agreement:
"Accounts" means the consolidated audited accounts of the Business
prepared for the period to and as at the Accounts Date, a copy of
which has been initialled for the purpose of identification by the
Seller's Solicitors and the Purchaser's Solicitors;
"Accounts Date" means 31st December, 1998;
"Agreed Form" means, in relation to any document, the form of that
document which has been initialled for the purpose of identification
by the Seller's Solicitors and the Purchaser's Solicitors;
"Assets" means the several assets to be sold by the Seller to the
Purchaser under this agreement and described in clause 2(1);
"Business" means the various vertically integrated steel bar
businesses of the Seller comprising production of hot rolled and cold
finished bars, stock holding and distribution carried on under the
names "Ductile Hot Mill", "▇▇▇▇▇▇ Port Rolling ▇▇▇▇▇", "GB Steel
Bar", "▇▇▇▇▇▇ ▇▇▇▇ & Company", "▇▇▇▇▇▇▇▇ Brothers", "Macreadys",
"Midland Engineering Steels" and "▇. ▇▇▇▇▇▇";
"Business Day" means a day (other than a Saturday or Sunday) on which
banks are generally open for normal business in London;
"Business Intellectual Property" means all Intellectual Property
Rights owned by the Seller (or any member of the Seller's Group) and
used exclusively or primarily in connection with the Business
including (but without limitation) those Intellectual Property Rights
shortly described in Schedule 1 but excluding any contracts for the
licensing of Intellectual Property Rights;
"Claims" means: (i) all rights and claims of the Seller (or any other
member of the Seller's group) at the Effective Time under any
warranty, condition, guarantee or indemnity, whether express or
implied, in favour of the Seller (or any other member of the Seller's
Group) in relation to the supply of goods or services to the Seller
(or any other member of the Seller's Group) in connection with the
Business, other than under any policy of insurance; and (ii) the
benefit of any sums to which the Seller (or any other member of the
Seller's Group) is entitled from insurers or other third parties in
respect of physical damage to the Assets, where such damage subsists
at the Effective Time;
"Completion" means completion of the sale and purchase of the Assets
in accordance with clause 12(1) and (2);
"Completion Accounts" has the meaning ascribed to it in clause 7(1);
"Confidentiality Undertakings" means the various confidentiality
undertakings entered into by any third party in favour of Glynwed (or
any other member of the Seller's Group) in connection with the
proposed disposal by Glynwed of the Business or other related assets,
to the extent they relate to the Business and/or the Assets;
"Consideration" has the meaning ascribed to it in clause 6(1);
"Contracts" means all contracts and engagements (written or oral)
entered into or orders made before the Effective Time by or on behalf
of the Seller or of which the Seller has the benefit with third
parties either wholly or partly in connection with the Business (and,
if partly, only to the extent the same relate to the Business) which
remain (in whole or in part) to be performed at the Effective Time
including (but without limitation) all such orders and contracts for
the manufacture, sale or purchase of goods or provision or supply of
services or for the hire purchase, credit sale, leasing or license of
goods or services, or the licensing of Intellectual Property Rights
but excluding the following (which shall be excluded from the sale of
Assets hereunder):
(i) contracts of employment;
(ii) any policy of insurance;
(iii) any contract for the supply of gas or electricity;
(iv) the Divisionalisation Agreement;
(v) any (a) loan agreement for the borrowing of money by the Seller
or any other member of the Seller's Group and (b) agreement
entered into by any member of the Seller's Group for the
forward purchase, exchange or settlement of any foreign currency
insofar as these agreements relate to the Debts or the Creditors;
(vi) the Metal ▇▇▇▇▇ Contract; and
(vii) (subject to the terms of the Property Agreement) all leases and
other contracts conferring or granting rights of title to or in
respect of any of the Properties;
"Creditors" means those amounts owing by the Seller in connection
with the Business to trade creditors at the Effective Time (whether
or not then due) but excluding all liabilities for financing charges
and taxation other than VAT on any accrued liabilities or included on
invoices issued to the Seller prior to the Effective Time;
"Customs" means H M Customs & Excise;
"Debts" means (i) any debts or other sums due or payable to the
Seller in connection with the Business at the Effective Time, (ii)
any debts or other sums which become due or payable to the Seller
after the Effective Time in connection with the goods supplied or
services performed in connection with the Business prior to the
Effective Time (other than (a) sums comprised in Claims and (b)
rebates due from suppliers), (iii) any interest payable on those
debts or other such sums and (iv) the benefit of all securities,
guarantees, indemnities and rights relating to those debts or other
such sums;
"Debtors" means the persons from whom the Debts are due or payable;
"Disclosure Letter" means the letter of the same date as this agreement
from the Seller to the Purchaser;
"Divisionalisation Agreement" means the agreement dated 18th
February, 1999 and made between Glynwed, Glynwed Metals Processing
Limited and the Seller relating to the sale and purchase of the
Undertakings (as described in such agreement);
"Effective Time" means the close of business on the date of Completion;
"Employees" means those individuals employed by the Seller in the
Business as at the date of Completion;
"Employment Regulations" means the Transfer of Undertakings
(Protection of Employment) Regulations 1981;
"Equipment" means the plant, machinery, spare parts, tools,
equipment, tangible chattels (other than Stocks), motor vehicles,
furniture, fixtures and fittings (to the extent they do not form part
of the Properties) owned by the Seller or any member of the Seller's
Group at the Effective Time and used exclusively or primarily in
connection with the Business;
"Goodwill" means the goodwill of the Business with the right to carry
on the Business in succession to the Seller and every member of the
Seller's Group;
"holding company" means a holding company for the purposes of the
Companies ▇▇▇ ▇▇▇▇;
"Intellectual Property Rights" means trade marks, service marks,
trade and business names, rights in designs, patents, copyright,
database rights, moral rights, rights in know-how, trade secrets and
confidential information and other intellectual property rights in
each case whether registered or unregistered and including
applications for the grant of any of the foregoing and all rights or
forms of protection having equivalent or similar effect to any of the
foregoing which may subsist anywhere in the world together with the
rights to ▇▇▇ for past infringement of any of the foregoing;
"Metal ▇▇▇▇▇ Contract" means the agency agreement dated 15th June,
1998 between Glynwed Metals Processing Limited (formerly known as
Glynwed Steels Limited) and Metal Mill Specialities, Inc.
"Properties" means the properties as defined in the Property Agreement;
"Property Agreement" means the property agreement of the same date as
this agreement entered into between Glynwed, Glynwed Properties
Management Limited, Glynwed Properties Limited, the
Purchaser and Niagara;
"Purchaser's Auditors" means BDO ▇▇▇▇ ▇▇▇▇▇▇▇ of ▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇;
"Purchaser's Group" means Niagara and its subsidiaries at the relevant
time;
"Purchaser's Solicitors" means Paisner & Co of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇;
"Seller's Auditors" means PricewaterhouseCoopers of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇;
"Seller's Group" means Glynwed and its subsidiaries at the relevant
time;
"Seller's Solicitors" means ▇▇▇▇▇ & ▇▇▇▇▇ of ▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇;
"Statement of Net Assets Transferred" has the meaning ascribed to it in
clause 7(1);
"Stocks" means all stocks (wherever held) of raw materials,
consumables, work in progress, finished goods, spare parts, rolls,
packaging, pallets, promotional items and materials owned by the
Seller or any member of the Seller's Group in connection with the
Business at the Effective Time including, without limitation, all
stocks held on consignment for the Seller that are owned by the
Seller or any member of the Seller's Group;
"subsidiary" means a subsidiary for the purposes of the Companies
▇▇▇ ▇▇▇▇;
"Taxation" means all forms of taxation, duties, imposts and levies,
whether of the United Kingdom or elsewhere, including income tax
(including income tax or amounts equivalent to or in respect of
income tax required to be deducted or withheld from or accounted for
in respect of any payment), corporation tax, advance corporation tax,
capital gains tax, capital transfer tax, inheritance tax, value
added tax, customs and other import or export duties, excise duties,
stamp duty, stamp duty reserve tax, development land tax, national
insurance, social security or other similar contributions, and any
interest, penalty, surcharge or fine in connection with it;
"Taxation Authority" means any taxing or other authority (whether
within or outside the United Kingdom) competent to impose, administer
or collect any Taxation;
"VAT" means value added tax;
"VATA" means the Value Added Tax ▇▇▇ ▇▇▇▇;
"VAT Group" means two or more bodies corporate registered as a group
for VAT purposes under section 43 VATA;
"Viking ▇▇▇▇▇▇▇ Contract" means the contract dated 9th November, 1993
made between Glynwed Steels Limited (now called Glynwed Metals
Processing Limited) (1) and Viking ▇▇▇▇▇▇▇ Limited (2) (as the same
may have been varied or extended from time to time prior to the date
hereof), the benefit of which is vested in the Seller;
"Warranties" means the warranties on the part of the Seller contained
in clause 11(1) and Schedule 5; and
"▇▇▇▇ Contract" means the agreement dated 26th October, 1995 and made
between Glynwed Metals Processing Limited and ▇▇▇▇ Systems Limited
concerning "Metals 2000" software and the software support and
maintenance agreement of the same date and between the same parties
(as each may have been varied or extended from time to time prior to
the date hereof) the benefit of which is vested in the Seller.
(2) In this agreement any reference, express or implied, to an enactment
includes references to:
(a) that enactment as re-enacted, amended, extended or applied by or
under any other enactment;
(b) any enactment which that enactment re-enacts (with or without
modification); and
(c) any subordinate legislation made under that enactment, as
re-enacted, amended, extended or applied as described in
paragraph (a) above, or under any enactment referred to in
paragraph (b) above,
provided that no such enactment, re-enactment, amendment, extension,
application or subordinate legislation made after the date hereof
shall operate to increase or alter the liability of any of the
parties.
(3) Where any statement is qualified by the expression "so far as the
Seller is aware" or "to the best of the Seller's knowledge,
information and belief" or any similar expression, in respect of that
statement the Seller shall be deemed to possess the knowledge
actually possessed by the Seller or Glynwed and such information as
the Seller would have by making reasonable enquiries of the following
individuals ▇ ▇ ▇▇▇▇▇▇▇▇, R ▇▇▇▇▇, ▇ ▇ ▇▇▇▇▇▇, W ▇▇▇▇▇▇, K ▇▇▇▇, W
▇▇▇▇▇▇▇▇, T Singh, M O'Brien, G ▇▇▇▇▇▇ and ▇. ▇▇▇▇▇ within 48 hours
prior to the execution of this agreement, but no other enquiries.
(4) Words denoting persons shall include bodies corporate and
unincorporated associations of persons.
(5) Subclauses (1) to (4) above apply unless the contrary intention appears.
(6) The headings in this agreement do not affect its interpretation.
2. SALE OF BUSINESS
(1) Subject to clause 4(1) the Seller shall sell (or, to the extent it is
owned by another member of the Seller's Group, procure the sale by
that member of), and the Purchaser shall purchase, the following
assets with effect from the Effective Time with a view to the
Purchaser carrying on the Business from that time as a going concern
in succession to the Seller:
(a) the Goodwill;
(b) the Equipment;
(c) the Stocks;
(d) the benefit (subject to the burden) of the Contracts;
(e) the Business Intellectual Property;
(f) all records and other documents relating exclusively or
primarily to the Business (including the value added tax
records referred to in clause 20) other than any records or
documents which any member of the Seller's Group is required to
retain by law;
(g) cash in hand at the Effective Time relating to the Business; and
(h) the benefit of the Claims.
(2) The Assets shall be sold with full title guarantee and property and
risk in those Assets shall vest in the Purchaser on Completion. All
of the Equipment shall be in, or shall be placed into, a severable
condition at Completion.
3. EXCLUDED ASSETS AND LIABILITIES
(1) Nothing in this agreement shall operate to transfer any assets or
rights of the Seller or any member of the Seller's Group other than
those specifically referred to in clause 2(1) and without limiting
the generality of the foregoing there shall be expressly excluded and
excepted from the sale and purchase and nothing in this agreement
shall operate to transfer:
(a) any cash at bank or bills receivable;
(b) any Intellectual Property Rights of the Seller or any other
member of the Seller's Group or any rights to use the same
other than those expressly included in the Business
Intellectual Property or the Contracts;
(c) (subject as provided in clause 17) the right to use the name
"Glynwed" or any rights the Seller (or any member of the
Seller's Group) has to the name "Ductile" or the name
"▇▇▇▇▇▇▇▇" provided that nothing herein shall operate to
prevent the Purchaser from using the name "Ductile" (other than
in connection with the names "Ductile Steel Processors",
"Ductile Stourbridge Cold Mill", "Ductile Cold Mill" or any
other name that is confusingly similar) or the name "▇▇▇▇▇▇▇▇"
(other than in connection with the name "▇▇▇▇▇▇▇▇ Tubes" or any
other name that is confusingly similar);
(d) the Debts; or
(e) the Seller's rights under this agreement or the Property
Agreement.
(2) Nothing in this agreement shall pass to the Purchaser, or be
construed as an acceptance by the Purchaser of, any liability or
obligation which is not expressly assumed by the Purchaser under this
agreement.
(3) Subject to subclause (5) below, the Seller shall remain liable to pay
and shall discharge when the same falls due for settlement after the
Effective Time: (i) all liabilities and obligations of the Business
not discharged at or prior to the Effective Time insofar as they
relate to the period prior to the Effective Time; and (ii) any
liability relating to or arising out of or in connection with any
contract of the Business (which is not a Contract) entered into
(other than by any member of the Purchaser's Group) prior to the
Effective Time or any other asset of the Business (which is not an
Asset) owned by any member of the Seller's Group prior to the
Effective Time and which in any such case is not assumed or
indemnified or acquired by the Purchaser under this agreement or by
the Purchaser (or as it may direct) under the Property Agreement, and
in both cases shall indemnify the Purchaser in respect of all such
liabilities and obligations.
(4) Subject to subclause (6) below, the Purchaser shall discharge when
the same falls due for settlement after the Effective Time all
liabilities and obligations of the Business insofar as they relate to
the period after the Effective Time and shall indemnify the Seller in
respect of all such liabilities and obligations.
(5) The liabilities and obligations referred to in subclause (3) above or
in the second sentence of clause 7(10) shall not include any
liabilities or obligations: (i) to the extent of any amount thereof
for which provision or allowance has been made in the Statement of
Net Assets Transferred (or paid or reimbursed by the Seller under
clause 7(11)); (ii) in respect of the state of repair or condition of
any of the Properties or the Assets (other than (for the avoidance of
doubt) any liability for personal injury to an individual to the
extent suffered prior to the Effective Time or other liabilities
which are due for payment prior to the Effective Time in each case as
a result of the state of repair or condition of any of the Properties
or Assets); (iii) in respect of any Environmental Matters (as defined
in Schedule 7); (iv) to render the Business or any of the Assets
Millennium Compliant (as defined in paragraph A.3(11) of Schedule 5);
(v) expressly assumed or indemnified by the Purchaser under this
agreement or by the Purchaser (or as it may direct) under the
Property Agreement; (vi) that is the subject of any other indemnity
by the Seller to the Purchaser under the terms of this agreement (or
against which the Purchaser would be so indemnified but for any
applicable limitations, exceptions or exclusions provided in this
agreement) or by any member of the Seller's Group to the Purchaser
(or as it may direct) under the terms of the Property Agreement or
(vii) in respect of which the Purchaser is entitled to bring a
Warranty Claim (as defined in clause 11) or would be so entitled but
for the provisions of clauses 11(4) or 11(7); or (viii) in connection
with any failure to obtain any third party consent to the assignment
or novation to the Purchaser of any of the Contracts; or (ix) in
respect of the computer or information systems supplied by ▇▇▇▇
Systems Limited under the ▇▇▇▇ Contract (other than any liabilities
or obligations of any member of the Seller's Group under the ▇▇▇▇
Contract (including the obligation to pay any money to ▇▇▇▇ Systems
Limited for services supplied to any member of the Seller's Group) in
respect of the period prior to the Effective Time).
(6) The liabilities referred to in subclause (4) above shall not include
any liability or obligation: (i) retained or expressly assumed or
indemnified by the Seller under this agreement or by any member of
the Seller's Group under the Property Agreement; or (ii) that is the
subject of any other indemnity to the Seller by the Purchaser under
the terms of this agreement (or against which the Seller would be so
indemnified but for any applicable limitations, exceptions or
exclusions provided in this agreement) or to any member of the
Seller's Group by the Purchaser (or as it may direct) under the terms
of the Property Agreement or (iii) that relates to or arises out of
or in connection with any contract of the Business (which is not a
Contract) entered into (other than by any member of the Purchaser's
Group) prior to the Effective Time or any other asset of the Business
(which is not an Asset) owned by any member of the Seller's Group
prior to the Effective Time.
(7) In subclauses (3) to (6) inclusive above, references to the "Property
Agreement" include any agreement or document to be granted or entered
into pursuant to the Property Agreement at Completion (as defined in
the Property Agreement).
4. CONDITION
(1) The sale and purchase of the Business is conditional on: (i) the
expiration or earlier termination of the waiting period under the
▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR Act"); and (ii) the absence of any injunction or restraining
order issued by any court of competent jurisdiction which restrains
or prohibits closing of the transaction contemplated hereby.
(2) As promptly as practicable after the date hereof, the Purchaser and
the Seller shall file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice the
notifications and other information required to be filed under the
HSR Act with respect to the transaction contemplated hereby. Each of
the Purchaser and the Seller agrees to make available to the other
such information as each of them may reasonably request relative to
its business, assets and properties as may be required of each of
them to so file. In the event such authorities make a request for
additional information concerning the acquisition of the Business
hereunder, the parties will take all reasonable steps to promptly
obtain, prepare and deliver such information.
(3) If the condition set out in subclause (1) above is not satisfied on
or before 31st May 1999, this agreement shall (unless the parties
agree otherwise) automatically terminate.
(4) If this agreement terminates in accordance with subclause (3) above
then all of the clauses under this agreement (except this clause and
clauses 1, 19, 22, 23, 25, 26, 28 and 29) shall cease to have effect
and none of the parties will have any rights or liabilities under
those clauses.
5. CONDUCT OF BUSINESS BEFORE COMPLETION AND RESCISSION
(1) Between the date of this agreement and Completion the Seller shall
procure that the Business will be carried on in the ordinary course
consistent with past practices. In particular (but without prejudice
to the generality of the foregoing) the Seller shall procure that the
acts or matters specified in subclause (2) do not occur in relation
to the Business without the prior written consent of the Purchaser
(such consent not to be unreasonably withheld or delayed).
(2) The acts and matters referred to in subclause (1) are as follows:
(a) any disposal of any material asset (being an asset with a value
in excess of (pound)25,000) other than in the ordinary course
of trading;
(b) any creation or grant of any option, right to acquire,
mortgage, charge, pledge, lien, on over or affecting any of the
Assets or any of the Properties, other than in the ordinary
course of business;
(c) the failure to renew on expiry or to pay any premium due in
respect of its insurances;
(d) the entry into of any contract or commitment (or the making of
a bid or offer which would be likely to lead to a contract or
commitment) having a value or involving expenditure in excess
of (pound)25,000 in aggregate other than in the ordinary course
of trading;
(e) the changing of any terms and conditions of employment,
including pension fund commitments and severance package offers
in respect of any Employee with a basic annual remuneration of
more than(pound)35,000 or any grade of Employees generally or
the engagement (other than in the ordinary course of business,
at basic annual remuneration of no more than (pound)25,000, and
on the Business's standard terms and conditions of employment
for employees of the relevant grade) of any Employee or the
dismissal (other than, in the case of any individual earning in
excess of(pound)35,000 per annum after consultation with the
Purchaser, for cause) of any person who would but for such
dismissal be an Employee;
(f) the entry into of any agreement to do any of the acts and
matters specified in this subclause; or
(g) the sale, sharing, leasing, licensing or other disposal of any
part or the whole of any of the Properties (or agreement to do
any of the foregoing).
(3) From the date hereof until the date of Completion: (i) the Seller
will promptly disclose to the Purchaser all relevant information
which comes to the notice of the Seller in relation to any fact or
matter (whether existing on or before the date of this agreement or
arising afterwards) which would be likely to constitute a material
breach of any of the Warranties; (ii) the Seller will give the
Purchaser and its representatives such reasonable information in
respect of and reasonable access to the Business and to the records
of the Business as the Purchaser may reasonably request; and (iii)
the Seller will not, and will not permit any member of the Seller's
Group to, solicit or entice away from the employment of the Business
any Employee.
(4) Subject to subclause (5) below, if before Completion any material
breach of the Warranties or of any of the covenants in subclauses (1)
or (2) above occurs or anything occurs which has a material adverse
effect on the Business, then the Purchaser may without any liability
upon the Purchaser to the Seller or any member of the Seller's Group,
elect not to complete the purchase of the Business by giving notice
in writing to the Seller (a "Termination Notice") at any time prior
to Completion. For the purpose of this clause, "material adverse
effect" means a reduction in the underlying value of the Assets
(judged by reference to the Accounts) or of the Business taken as a
whole in each case of more than (pound)2,500,000.
(5) The Purchaser may not exercise its right under subclause (4) above in
relation to any material breach of Warranty:
(a) by reason of any matter actually known to the Purchaser or
Niagara before the date of this agreement; or
(b) by reason of anything arising from an act or omission of any
member of the Purchaser's Group.
(6) Upon service of a Termination Notice in accordance with subclause (4)
above, all of the clauses in this agreement shall cease to have
effect (except subclauses 5(4) to 5(8) inclusive, clause 1, 19, 22,
23, 25, 26, 28 and 29) and none of the parties will have any rights
or obligations under those clauses.
(7) If the Purchaser elects under subclause (4) above not to complete the
sale and purchase of the Business, each party shall bear the costs,
charges and expenses incurred by it in connection with the
negotiation, preparation and rescission of this agreement and the
Property Agreement.
(8) The Purchaser shall not be entitled to terminate this agreement or
any part of it before or after Completion other than under subclause
(4) above or clause 12(3) but without prejudice to the provisions of
clause 4.
6. CONSIDERATION
(1) The consideration payable by the Purchaser for the Assets shall be
(pound)21,202,000 (the "Consideration"), to be apportioned as
follows:
(a) for the Goodwill, the sum of (pound)1;
(b) for the Equipment, the sum of (pound)7,180,000;
(c) for the Stocks and the cash in hand, the sum of (pound)14,021,998;
(d) for the benefit of the Contracts, the Purchaser's covenant in
clause 8(1); and
(e) for the remaining items in clause 2(1) the sum of (pound)1.
(2) The Consideration shall be paid to the Seller in cash in full on
Completion, but shall be subject to adjustment in accordance with
clause 7(7) below.
7. COMPLETION ACCOUNTS
(1) The Purchaser shall, within 60 days of Completion, prepare a draft
audited statement of the assets and liabilities of the Business at
the Effective Time on the basis set out in Schedule 4 (the
"Completion Accounts") together with a statement of Net Assets
Transferred (as defined in subclause (9) below) (the "Statement of
Net Assets Transferred"). For this purpose:
(a) the Purchaser shall procure that a return shall be prepared for
each business unit in the Business in the form known as the
"Final Accounts Pack" used for the consolidation by Glynwed and
these returns will be consolidated;
(b) the Purchaser shall prepare an inventory of the Stocks as at
the Effective Time on the basis also set out in Schedule 4; and
(c) the Seller shall procure that the Seller's Auditors give to the
Purchaser's Auditors access to their working papers relating to
the preparation of the Accounts under the appropriate "hold
harmless letters".
(2) The Purchaser shall ensure that forthwith upon completion of the
preparation of the draft Completion Accounts and Statement of Net
Assets Transferred they are submitted to the Seller and the Seller's
Auditors for review. The Purchaser shall provide the Seller and the
Seller's Auditors with such information, access to the physical
assets, accounts and records, employees and other facilities of the
Business as they shall reasonably require to carry out such review
and shall provide such information and explanations as the Seller or
the Seller's Auditors may reasonably request during the course of
their review of the draft Completion Accounts and Statement of Net
Assets Transferred (including such information and access in the
period during which the draft Completion Accounts and Statement of
Net Assets Transferred are being prepared). For these purposes the
Purchaser shall procure that the Purchaser's Auditors give to the
Seller's Auditors access to their working papers under the
appropriate "hold harmless" letters.
(3) The Seller's Auditors shall have up to 30 days to carry out their
review of the draft Completion Accounts and Statement of Net Assets
Transferred submitted to them under subclause (2) above and notify
the Purchaser's Auditors of any item which they wish to dispute
(together with, in reasonable detail, the basis of such dispute in
relation to each such item) and, if the Seller's Auditors fail to
notify the Purchaser's Auditors in writing of any disputed matter
relating to the draft Completion Accounts or Statement of Net Assets
Transferred within such 30 day period, the draft Completion Accounts
and Statement of Net Assets Transferred submitted to the Seller's
Auditors under subclause (2) above shall be final and binding on the
parties as the Completion Accounts and the Statement of Net Assets
Transferred, respectively.
(4) If the Seller's Auditors and the Purchaser's Auditors are not able to
agree any matter on the draft Completion Accounts or Statement of Net
Assets Transferred disputed in accordance with subclause
(3) above they shall specify in writing to the Seller and the
Purchaser the matter(s) in dispute which in default of any agreement
within seven days between the Seller and the Purchaser shall be
determined by:
(a) such firm of chartered accountants as the parties may agree in
writing; or
(b) failing agreement on the identity of the firm of chartered
accountants within a further seven days from the expiry of the
period of seven days referred to above, such firm of chartered
accountants as may be appointed for this purpose on the
application of either the Seller or the Purchaser by the
President for the time being of the Institute of Chartered
Accountants in England and Wales.
(5) The accountants appointed under subclause (4) above (the "Accountants")
shall act on the following basis:
(a) the Accountants shall act as experts and not as arbitrators;
(b) their terms of reference shall be to determine an amount which
represents the item or items in dispute, as notified to them in
writing by either the Seller or the Purchaser within 28 days of
their appointment;
(c) the Seller and the Purchaser shall each provide the Accountants
with all information which they reasonably require and the
Accountants shall be entitled (to the extent they consider it
appropriate) to base their opinion on such information and on
the accounting and other records of the Business;
(d) the determination of the Accountants shall (in the absence of
manifest error) be conclusive; and
(e) their costs shall be borne equally as between the Seller on the
one hand and the Purchaser on the other.
(6) Upon agreement of the Completion Accounts and the Statement of Net
Assets Transferred between the Seller's Auditors and the Purchaser's
Auditors (or, in the event of any dispute being determined pursuant
to subclause (4) above, upon completion of such determination), the
Completion Accounts and the Statement of Net Assets Transferred as so
agreed or determined shall be final and binding on the parties.
(7) Within five Business Days of agreement or determination of the
Completion Accounts and the Statement of Net Assets Transferred in
accordance with this clause, if the amount of the Net Assets
Transferred (as shown on the Statement of Net Assets Transferred) is
more than (pound)24,796,000 (the "Estimated Net Assets Transferred")
the Purchaser shall pay to the Seller an amount equal to the surplus
and if the amount of the Net Assets Transferred (as shown on the
Statement of Net Assets Transferred) is less than the amount of the
Estimated Net Assets Transferred the Seller shall repay to the
Purchaser an amount equal to the shortfall.
(8) [Left blank intentionally]
(9) For the purposes of this clause "Net Assets Transferred" shall
comprise the aggregate of the following assets, at the values
reflected in the Completion Accounts:
(a) Equipment;
(b) Stocks;
(c) cash in hand; and
(d) the benefit of any Claims against any insurers in respect of
physical damage to any of the Assets to the extent of any
amount by which the value of the relevant Asset is reduced or a
provision is made, on account of the circumstances giving rise
to that Claim, in the Completion Accounts.
plus or minus (as the case may be) the net value, as extracted from
the Completion Accounts (and therefore valued in accordance with
Schedule 4), of provisions and liabilities (other than the Creditors)
referable to the Assets or the Properties and prepayments and
accruals relating to the following apportioned as at the Effective
Time:
(i) the Contracts (including all rebates payable to or by
Business), the Properties (including all rents, rent charges,
rates, water and telephone charges and other periodical
payments and outgoings) and the other Assets; and
(ii) all salaries, wages, accruals or prepayments for holiday pay
and other emoluments and contributions payable in respect of
Employees (including all income tax deductible under PAYE and
all employer's contributions to the Seller's Pension Scheme and
all other normal employment costs),
and for the avoidance of doubt no item shall be accounted for in the
Statement of Net Assets Transferred more than once.
(10) Save for the sum of (pound)660,000 referred to in subclause (12)
below, the Purchaser shall discharge when due all liabilities which
are (and only to the extent they are) reflected in the Statement of
Net Assets Transferred and shall indemnify the Seller in respect
thereof. Subject to clause 3(5) to the extent that any liability is
reflected in the Completion Accounts but not in the Statement of Net
Assets Transferred, the Seller shall discharge it when due and will
indemnify the Purchaser against any failure to do so.
(11) Accruals which the Seller and the Purchaser have agreed and which are
to be included in the Statement of Net Assets Transferred but which
fall due for payment prior to the agreement or determination of that
statement will be paid by the Seller, or reimbursed by the Seller to
the Purchaser, and an appropriate adjustment will be made for the
amount so paid, or reimbursed, in the Statement of Net Assets
Transferred.
(12) Notwithstanding the treatment in the Accounts the parties hereby
expressly agree that in preparing the Statement of Net Assets
Transferred, there shall be included as a liability of the Business
deemed to be assumed by the Purchaser (and therefore as a deduction
in the valuation of the Net Assets Transferred) an agreed sum of
(pound)660,000 in respect of the compensation paid for the compulsory
purchase of land pursuant to an agreement dated 10th May, 1996
between Glynwed Property Management Limited and Black Country
Development Corporation.
(13) If and insofar as the value of any of the Stocks is reduced, or a
provision is made, in the Statement of Net Assets Transferred on
account of a defect or deficiency in the Stocks (the "Defects
Provision") for which the Purchaser is able to obtain a refund or
reimbursement from the relevant supplier of those goods to the
Business (not being amounts comprised or included in the Debts), then
the Purchaser agrees that it will on the Seller's behalf (but at the
Seller's cost) use its reasonable endeavours to claim against the
relevant supplier for such refund or reimbursement and the Purchaser
agrees that it will repay to the Seller any amount so recovered from
the supplier equal to the lesser of the amount recovered or
reimbursed (less any Taxation thereon and any reasonable costs
incurred in securing such recovery or reimbursement) and the Defects
Provision. The Purchaser shall not settle any such claim for a refund
or reimbursement without the prior consent of the Seller (not to be
unreasonably withheld or delayed).
8. CONTRACTS
(1) Subject to clause 24(1) the Seller shall, as required by the
Purchaser at or at any time and from time to time following
Completion, assign (or procure the assignment) to the Purchaser of
all of the Contracts which are capable of assignment without the
consent of any other party or in respect of which such consent has
been obtained (including, without limitation, the ▇▇▇▇ Contract and
the Viking ▇▇▇▇▇▇▇ Contract). In addition, the Purchaser shall:
(a) join with the Seller or other members of the Seller's Group in
entering into an assignment or a novation of the Contracts
(other than Contracts not assignable except with third party
consent) on terms that the Purchaser will carry out, perform
and discharge all the obligations and liabilities created by or
arising under the Contracts falling due for performance or
discharge after the Effective Time and otherwise in such form
as the Purchaser shall reasonably agree;
(b) carry out, perform and discharge all the obligations and
liabilities created by or arising under any of the Contracts
falling due for carrying out, performance or discharge after
the Effective Time; and
(c) (subject as provided by clause 14) indemnify the Seller (for
itself and as trustee for each other member of the Seller's
Group) against all liabilities resulting from any failure on
the part of the Purchaser to carry out, perform and discharge
the obligations and liabilities referred to in (b) above or to
the extent resulting from the carrying out, performance or
discharge or failure to carry out, perform or discharge (and
any breach) by the Purchaser of any of the Contracts after the
Effective Time.
(2) Subject only (a) as provided by clause 14, (b) to the extent of any
amount for which provision or allowance is made in the Statement of
Net Assets Transferred (or any amount paid or reimbursed by the
Seller under clause 7(11)) or (c) to the extent resulting from any
failure to obtain any third party consent to the assignment or
novation of any of the Contracts, the Seller shall indemnify the
Purchaser against all liabilities arising under the Contracts: (i) to
the extent falling due for carrying out, performance or discharge in
the period prior to the Effective Time; or (ii) to the extent
resulting from the carrying out, performance or discharge or failure
to carry out, perform or discharge (and any breach) by any member of
the Seller's Group of any of the Contracts in the period prior to the
Effective Time.
(3) Insofar as the benefit or burden of any of the Contracts cannot
effectively be assigned to the Purchaser except by an agreement or
novation with or consent to the assignment from the person, firm or
company concerned:
(a) the Seller shall at the Purchaser's request use all reasonable
endeavours (but without being obliged to take any legal
proceedings (without first being indemnified (for itself and
other members of the Seller's Group) by the Purchaser against
any liability, cost, claim or expense (including reasonable
professional fees and expenses) in connection with the
proceedings, other than any liability which the Seller has
assumed or which is the subject of any other indemnity by the
Seller in favour of the Purchaser under the terms of this
agreement) or pay out any money other than in respect of such
professional advice as it may deem necessary) with the
co-operation of the Purchaser to procure such agreement,
consent or novation as soon as possible;
(b) until the Contract is novated or assigned or such consent
obtained the Seller or other relevant member of the Seller's
Group shall hold it in trust for the Purchaser absolutely and
the Purchaser shall (if such sub-contracting is permissible and
lawful under the Contract), as the sub-contractor of the Seller
or other relevant member of the Seller's Group, carry out,
perform and discharge all the obligations and liabilities of
the Seller or other relevant member of the Seller's Group under
or in respect of the Contract to be carried out, performed or
discharged after the Effective Time and (subject as provided by
clause 14) shall indemnify the Seller (for itself and as
trustee for each other member of the Seller's Group) against
all actions, proceedings, costs, damages, claims and demands in
respect of any failure on the part of the Purchaser to carry
out, perform or discharge those obligations or to the extent
resulting from the carrying out, performance or discharge or
failure to carry out, perform or discharge (and any breach) by
the Purchaser of the Contract after the Effective Time; and
(c) until the Contract is novated or assigned or such consent
obtained the Seller or other relevant member of the Seller's
Group shall (so far as it lawfully may) give all reasonable
assistance to the Purchaser (at the Purchaser's request and
expense) to enable the Purchaser to enforce the rights of the
Seller and (except where such a member is the counterparty to
the Contract) of the Seller's Group under the Contract.
(4) The Purchaser acknowledges that, notwithstanding any of the other
terms of this agreement, consent has been obtained for the assignment
of the ▇▇▇▇ Contract and the Viking ▇▇▇▇▇▇▇ Contract and that (unless
revoked before Completion) no further consent to the assignment of
those contracts is required.
9. DEBTORS AND CREDITORS
(1) The Seller shall remain entitled to the Debts and liable for the
Creditors.
(2) As soon as possible after Completion but no more than 10 Business
Days thereafter, a duly authorised representative of each of the
Seller and the Purchaser shall meet and agree a list of the Debts as
at Completion (the "Debtors List") and the Creditors as at the
Completion (the "Creditors List"). To the extent that the parties
cannot agree whether to include an item on the Debtors List, it shall
not be included on the Debtors List and the Seller shall be entitled
to collect such Debts as it sees fit including but not limited to the
institution of legal proceedings. To the extent that the parties
cannot agree whether to include a Creditor on the Creditors List it
shall not be included and the Seller shall discharge it.
(3) The Purchaser shall, as agent on behalf of the Seller, collect the
Debts on the Debtors List (the "Collectible Debts") and discharge the
Creditors on the Creditors List during the period of six months
immediately following Completion in accordance with the following
provisions of this clause 9. Subject to the provisions of subclause
(6) below, this clause shall not require the Purchaser to institute
or threaten any legal proceedings, to terminate any supplies or to
take any step which is not at present part of the normal routine of
the Seller in the collection of debts. During this period, and
subject to the provisions of subclause (6) below, the Seller shall
not itself take any step to collect the Collectible Debts, and shall
do nothing to hinder their collection by the Purchaser. If
nevertheless the Seller should receive any communication or payment
in respect of any Collectible Debt it shall promptly give details of
any such communication or payment to the Purchaser.
(4) All money collected in respect of the Collectible Debts on behalf of
the Seller by the Purchaser shall be paid into the an account
nominated to it by the Seller (the "Seller's Account"). Any money
received by the Purchaser which is:
(a) referable wholly to the Collectible Debts, shall be paid into the
Seller's Account;
(b) referable wholly to the debts of the Purchaser in respect of
the Business (not being Debts) ("Post Completion Debts") shall
belong to the Purchaser and be applied as the Purchaser shall
think appropriate;
(c) referable partly to the Collectible Debts and partly to Post
Completion Debts shall be paid into the Seller's Account
subject to withdrawal in favour of the Purchaser of that part
of such money which is referable to the Post Completion Debts
in accordance with subclause (6) below;
(d) not appropriated either to a Collectible Debt or a Post
Completion Debt shall notwithstanding that the debtor or
customer may also owe Post Completion Debts be paid into the
Seller's Account subject to withdrawal in favour of the
Purchaser of that part of such money which is referable to the
Post Completion Debts in accordance with subclause (6) below;
and
(e) paid directly into the Purchaser's bank account or payable only
into the Purchaser's bank account and which is referable wholly
or partly to Collectible Debts ("Mistaken Payments") shall be
paid into the Purchaser's account details of which are set out
in clause 26(3)(b) (the "Purchaser's Account") and dealt with
in accordance with subclause (6) below.
If any sum which is paid into any bank account of the Purchaser
contains an amount referable to Collectible Debts the Purchaser shall
within two Business Days of the receipt of such sum transfer an
amount equal to that sum to the Seller's Account. If any sum which is
paid into the Seller's Account contains an amount referable to Post
Completion Debts the Seller shall within two Business Days of demand
being made by the Purchaser transfer an amount equal to that sum to
the Purchaser's account.
(5) The Purchaser will on behalf of the Seller discharge the Creditors on
the Creditors List (the "Trade Payables") from its own bank account
in accordance with subclause (6) below, subject to the funds for
which being provided by the Seller in accordance with subclause (7)
below.
(6) Following Completion, there shall be a weekly meeting between the
representatives of the Seller and the Purchaser to review the
collection of the Collectible Debts and the payment of the Trade
Payables. At the weekly meeting, the following shall take place:
(a) the Purchaser shall present the Seller with a revised Debtors
List, showing all Collectible Debts that are outstanding,
together with a reconciliation of the amounts paid into the
Seller's Account with the movements from the previous Debtors
List and details of all Mistaken Payments;
(b) the Seller shall be entitled to approve any adjustment of over
(pound)1,000 by the Purchaser (including discounts for early
payment) to any Collectible Debt (it being acknowledged and
agreed by the Seller that notwithstanding the foregoing no such
approval shall be required for any such adjustment which is in
accordance with the terms of the contract with the debtor or of
an amount equal to or less than(pound)1,000);
(c) the Purchaser and the Seller shall agree the allocation of the
payments into the Seller's Account referred to in subclauses
(4)(c) and (d) above and agree the payment to be made to the
Purchaser (the "Payments to Purchaser"). The failure to agree
on the allocation of any particular payment shall not delay the
payment to the Purchaser of those Payments to Purchaser which
have been agreed;
(d) the Seller and the Purchaser shall review what action should be
taken in respect of outstanding Collectible Debts. If the
Seller (acting in a reasonable and proper manner) wishes to
commence legal action in respect of any Collectible Debt, it
shall so notify the Purchaser at the weekly meeting and the
Purchaser shall have until the next weekly meeting to elect by
irrevocable notice to either allow the Seller to pursue what
action it considers necessary in respect of the Collectible
Debt or to purchase the Collectible Debt from the Seller at its
outstanding face value (less any applicable discounts, partial
payments or rebates agreed by the Seller with the debtor in
writing) against delivery of a legal assignment thereof, and if
the Purchaser fails to give such notice within such period the
Seller shall be entitled to pursue any such action as it
considers necessary. Any Collectible Debt so purchased by the
Purchaser is hereinafter referred to as a "Transfer Debt";
(e) the Purchaser shall present the Seller with a revised Creditors
List, showing all the Trade Payables that are outstanding
together with reconciliation of the Creditors Payment (as
defined in subclause (6)(g) below) since the previous Creditors
List with the movements from the Creditors List;
(f) the Seller shall be entitled to approve any adjustment of over
(pound)1,000 by the Purchaser of any Trade Payable (it being
acknowledged and agreed by the Seller that notwithstanding the
foregoing no such approval shall be required for any such
adjustment which is in accordance with the terms of the
contract with the creditor or of an amount equal to or less
than(pound)1,000); and
(g) the Seller and the Purchaser shall agree the amounts falling
due for payment in respect of Trade Payables before the next
meeting (the "Creditors Payment") and where the Seller and the
Purchaser cannot reach agreement over any Trade Payables they
shall be removed from the Creditors List and the Seller shall
discharge such debt.
(7) Within two Business Days of such weekly meeting there shall be
transferred by the Seller (in same day funds and by telegraphic
transfer) to the Purchaser's Account a sum calculated in accordance
with the following formula:
(pound)X = (A + B) - (C + D)
where:
(pound)X = the amount to be transferred;
A = the Payments to Purchaser;
B = the Creditors Payment;
C = that part of any Mistaken Payment which has not been
transferred to the Seller's Account; and
D = the Transfer Debt (if any),
provided that if the product of the formula is such that (pound)X is
negative, then an amount equal to (pound)X shall be transferred by
the Purchaser (in same day funds and by telegraphic transfer) to the
Seller's Account within such two Business Days.
(8) Upon the expiry of the period of six months after Completion, the
Seller alone shall be responsible for the collection of any of the
Collectible Debts and shall be entitled to take such steps as it may
think fit to recover any such Collectible Debt and the Purchaser
shall cease to assist the Seller in the discharge of the Creditors,
except that where the Purchaser has notified the Seller in writing
that the Debtor is a continuing customer or debtor of the Business,
the Seller shall give the Purchaser not less than 5 Business Days'
notice of its intentions to commence proceedings and during which 5
Business Days period the Purchaser may elect by irrevocable notice in
writing to the Seller to purchase that Collectible Debt, in which
event the Purchaser shall pay the outstanding face value of such
Collectible Debt (less any applicable discounts, partial payments or
rebates agreed by the Seller with the Debtor in writing) to the
Seller against delivery of a legal assignment thereof and if the
Purchaser has not given such notice within such period, then the
Seller shall be entitled to commence proceedings immediately.
(9) Any disputes, differences or questions arising from subclauses (6) or
(7) shall be referred on the application of either the Seller or the
Purchaser to an independent firm of chartered accountants agreed by
the Seller and the Purchaser or (failing agreement within 7 days) to
such a firm appointed in accordance with clause 7(4)(b) who shall act
on the basis set out in clause 7(5).
10. WARRANTIES RELATING TO CAPACITY
Each party warrants to the others that:
(a) it has the requisite power and authority to enter into and
perform this agreement; and
(b) compliance with the terms of this agreement does not and will
not conflict with or constitute a default under any provision
of:
(i) any agreement or instrument to which it is a party
(except in respect of any contract or licence to which
any member of the Seller's Group is a party in relation
to the Business); or
(ii) its constitutional documents; or
(iii) any loan to or mortgage created by it or any lien, lease,
order, judgement, award, injunction, decree, ordinance or
(except as excluded under (i) above) regulation or any
other restriction of any kind or character by which it is
bound.
11. SELLER'S WARRANTIES
(1) The Seller warrants at the date of this agreement to the Purchaser in
the terms set out in Schedule 5.
(2) The Purchaser acknowledges and agrees that:
(a) the Warranties are the only warranties or other assurances of
any kind given by or on behalf of the Seller or any other
member of the Seller's Group and on which the Purchaser may
rely in entering into this agreement;
(b) no other statement, promise or forecast made by or on behalf of
the Seller or any other member of the Seller's Group may form
the basis of, or be pleaded in connection with, any claim by
the Purchaser under or in connection with this agreement; and
(c) any claim by the Purchaser or any person deriving title from it
in connection with the Warranties (a "Warranty Claim") shall be
subject to the following provisions of this clause.
(3) The Seller acknowledges and agrees with the Purchaser (in the case of
subclause (d) below, the Purchaser contracting hereunder as trustee
on behalf of the Employees) that:
(a) the Purchaser is entering into this agreement in reliance upon
each of the Warranties and the Warranties are given with the
intention of inducing the Purchaser (which has been so induced)
to enter into this agreement;
(b) each of the Warranties are separate and independent and (save
as expressly provided in this agreement or the Disclosure
Letter) shall not be limited by reference to any other Warranty
or anything in this agreement;
(c) the Warranties shall remain in full force and effect
notwithstanding Completion; and
(d) if any claim is made against it in connection with the
Warranties it will not make any claim against any Employee on
whom it may have relied before agreeing to the terms of this
agreement or in preparing the contents of the Disclosure
Letter; and
(e) (save only as fairly disclosed in the Disclosure Letter as
provided in subclause (5)(a) below), the Warranties shall not
be diminished or in any way affected by any investigation made
by the Purchaser into the affairs or assets of the Business
prior to the signing of this agreement or by its knowledge of
information it may have received or been given or of which it
has actual or implied or constructive notice in each case prior
to the signing of this agreement.
(4) The liability of the Seller in respect of claims under the Warranties
shall be limited as follows:
(a) the Purchaser shall not be entitled to recover any damages in
respect of any breach or breaches of the Warranties except to
the extent that the amount of damages in respect of such breach
or breaches exceeds in aggregate the sum of (pound)250,000 and
in which case the Purchaser shall only be entitled to recover
the excess; and
(b) the maximum aggregate liability of the Seller in respect of all
and any Warranty Claims and all and any claims under the
Environmental Indemnity shall not exceed the amount of the
Consideration as adjusted under clause 7(7).
(5) The Purchaser shall not be entitled to make any Warranty Claim:
(a) in respect of anything fairly disclosed in the Disclosure Letter;
(b) to the extent that the claim would not have arisen but for a
change in legislation made after the date of this agreement
(whether relating to taxation, rates of taxation or otherwise)
or the withdrawal of any extra-statutory concession previously
made by the Inland Revenue or other taxing authority (whether
or not the change purports to be effective retrospectively in
whole or in part);
(c) to the extent that the claim arises as a result of any change
after Completion in the accounting bases, policies or practices
upon which the Business values its assets or computes its
profits;
(d) to the extent that the claim arises directly or indirectly as a
result of any voluntary act or omission of any member of the
Purchaser's Group after Completion otherwise than in the
ordinary course of the Business where the member of the
Purchaser's Group knew or ought reasonably to have known that
such act or omission would give rise to the liability in
question; or
(e) to the extent of any amount for which provision or allowance
for the matter or liability which would otherwise give rise to
the claim in question has been made in the Statement of Net
Assets Transferred (or paid or reimbursed by the Seller under
clause 7(11)).
(6) If the Purchaser becomes aware of a matter which it reasonably
considers might give rise to a Warranty Claim the Purchaser shall
give notice of the relevant facts to the Seller as soon as reasonably
practicable and in any event within 30 days of the Purchaser becoming
aware of those facts and if the Warranty Claim in question is as a
result of or in connection with a liability or alleged liability to a
third party:
(a) the Purchaser shall make no admission of liability, agreement,
settlement or compromise with any third party in relation to
any such liability or alleged liability without the prior
written consent of the Seller (such consent not to be
unreasonably withheld or delayed) and (subject to first being
indemnified to the Purchaser's reasonable satisfaction against
all costs and any losses or liability thereby resulting or
incurred) shall take such action to avoid, dispute, resist,
appeal, compromise or contest the liability as may reasonably
be requested by the Seller (save where such action would
reasonably be expected to be materially prejudicial to the
Business), and the Seller (subject to first indemnifying the
Purchaser as aforesaid in this sub-paragraph (a)) shall be
entitled to have the conduct of any appeal, dispute, compromise
or defence of the dispute and of any incidental negotiations
but at the Seller's expense; and
(b) the Purchaser shall make available to the Seller such persons
and all such information relating to the Business as the
Purchaser may possess or control as the Seller may reasonably
require for avoiding, disputing, resisting, appealing,
compromising or contesting any such liability.
(7) The Seller shall cease to have any liability under or in respect of
the Warranties on the date which is 18 months after the date of this
agreement except in respect of a Warranty Claim of which the
Purchaser gives notice to the Seller before that date and in
accordance with subclause (6) above but, unless the Seller shall have
assumed conduct of the claim in question in accordance with the above
provisions, the liability of the Seller in respect of any Warranty
Claim shall absolutely terminate if proceedings in respect of it have
not been commenced within thirty months of Completion.
(8) If the Seller has made a payment to the Purchaser in respect of, or
relating to, any claim under the Warranties (the "Damages Payment")
and the Purchaser has a right of reimbursement or recovery against
any other person including any insurer under an insurance policy in
respect of or relating to that claim, the Purchaser shall notify the
Seller within a reasonable period of that fact and shall (save where
such action would reasonably be expected to be materially prejudicial
to the Business) take all reasonable steps or proceedings to enforce
(and procure the enforcement of) such right but in which case the
period of thirty months from Completion referred to in subclause (7)
above shall not start to run until the Purchaser has taken all such
steps and, in the event that the Purchaser shall be reimbursed or
recover any amount, the Purchaser shall immediately pay to the Seller
an amount equal to the lesser of the amount reimbursed or recovered
(less any Taxation thereon and any reasonable costs of recovery or
any increase in insurance costs (which shall include the loss of any
deductible or excess as well as any increased premium) which are
directly referable to the Purchaser claiming under that insurance
policy in respect of the loss giving rise to such claim) and the
Damages Payment. The Seller shall not require the Purchaser to take
any such steps or proceedings against any insurer unless the
Purchaser is reasonably satisfied that such increase in insurance
costs referred to above which are directly referable to the Purchaser
claiming under the insurance policy would not exceed the amount to be
reimbursed or recovered from the insurer (after reduction by any
estimated Taxation thereon and any other reasonably likely reasonable
costs of recovery).
(9) The Purchaser shall not be entitled to rescind this agreement in any
circumstances other than under clause 5(4) or clause 12(3), but
without prejudice to the provisions of clause 4.
(10) None of the limitations on the liability of the Seller set out in
this clause shall apply to any Warranty Claim in the case of fraud or
deliberate concealment on the part of the Seller or Glynwed or (save
to the extent and as provided in clause 27) to the liability of the
Seller under any other provisions of this agreement.
(11) The provisions of this clause shall have effect notwithstanding any
other provisions of this agreement.
12. COMPLETION
(1) Subject to clause 5(4) Completion shall take place at the offices of
the Seller's Solicitors on the next Friday being at least three
Business Days following the date the condition in clause 4(1) is
satisfied (or such other date as the Seller and the Purchaser may
agree, it being the aim, so far as practicable, of the parties
(subject to clause 4(1)) that Completion should occur on 30 April,
1999) and the Property Agreement shall be completed at the same time
as this agreement.
(2) On Completion:
(a) the Seller shall transfer those Assets capable of being
transferred by delivery and shall let the Purchaser into
possession of the other Assets;
(b) the Seller shall deliver to the Purchaser assignments in the
Agreed Form of the Business Intellectual Property described in
Schedule 1 duly executed by the Seller or by the member of the
Seller's Group identified in that Schedule as the
registered owner of the same;
(c) the Seller shall deliver to the Purchaser (i) a list of the
Employees; and (ii) copies of all third party consents received
to the assignment of the Contracts by Completion, (other than
the Viking ▇▇▇▇▇▇▇ Contract and the ▇▇▇▇ Contract);
(d) the Seller shall cancel or procure the cancellation of the user
licence agreements and registered user agreements referred to
in Schedule 1 with effect from Completion and without liability
to the Business; and
(e) the Purchaser shall pay to the Seller the sum of
(pound)21,202,000 in respect of the Consideration.
(3) (a) Neither the Seller nor the Purchaser shall be obliged to
complete or procure the Completion of this agreement unless:
(i) the other complies fully with its obligations under
subclauses (1) and (2); and
(ii) the Property Agreement is completed at the same time as
this agreement.
(b) If Completion does not take place on the date set for
Completion by subclause (1) as a result of the Seller failing
to comply with its obligations under subclause (2), the
Purchaser may at its option (but without prejudice to any other
right or remedy it may have) by notice in writing to the Seller
elect to:
(i) proceed to Completion insofar as is reasonably practicable;
or
(ii) postpone the date for Completion to a date falling not
more than 10 Business Days after the date set for
Completion in accordance with subclause (1) or such later
date as the Seller and the Purchaser may agree; or
(iii) rescind this agreement.
(c) If Completion does not take place on the date set for
Completion in subclause (1) as a result of the Purchaser
failing to comply with its obligations under subclause (2), the
Seller may at its option (but without prejudice to any other
right or remedy it may have) by notice in writing to the
Purchaser elect to:
(i) proceed to Completion insofar as is reasonably practicable;
or
(ii) postpone the date for Completion to a date falling not
more than 10 Business Days after the date set for
Completion in accordance with subclause (1) or such later
date as the parties may agree; or
(iii) rescind this agreement.
(d) If the Purchaser or the Seller elects to postpone the date for
Completion in accordance with subclause (b) or (c) respectively
then the provisions of this agreement shall apply as if the
date set for Completion in subclause (1) were the date to which
Completion is so postponed but without creating a further right
to postpone (and the Effective Time shall similarly be
postponed accordingly).
(4) The Seller and the Purchaser shall each provide the other (and their
respective advisers) upon reasonable request with reasonable access
(including the right to take copies) at reasonable times to
the books, accounts and records of the Business to be held by each of
them after Completion and which relate to the period up to
Completion. To the extent not disruptive to the Business and at such
time or times as may be reasonably convenient to the Purchaser and
the individuals concerned, the Seller and its advisers shall also, at
its own cost, be permitted after Completion to discuss with relevant
employees of the Business any reasonable queries the Seller or its
advisers may have concerning the affairs of the Business before
Completion.
(5) At, or as soon as practicable after Completion and in any event
within 14 days, Glynwed shall procure that each member of the
Seller's Group incorporated with any of the following names, that is
to say "Ductile Hot Mill", "▇▇▇▇▇▇ Port Rolling ▇▇▇▇▇", "GB Steel
Bar", "▇▇▇▇▇▇ ▇▇▇▇ & Company", "▇▇▇▇▇▇▇▇ Brothers", "Macreadys",
"Midland Engineering Steels" or "W Wesson", or any of such names in
its corporate title resolves to change its name so as to exclude any
such names (or any confusingly similar words) from its corporate
title.
(6) All notices, correspondence, information, orders or enquiries (other
than those relating to Taxation) relating to the Business or the
Assets (including without limitation the Properties) which are
received by the Seller or any other member of the Seller's Group
after Completion shall be passed to the Purchaser as soon as
practicable and the Purchaser shall pass to the Seller as soon as
practicable any notices, correspondence, information, orders or
enquiries received by the Purchaser after Completion relating to any
asset, property, liability or contract of the Seller or any other
member of the Seller's Group which in each case is not included in
the sale to the Purchaser under this agreement.
(7) Glynwed and the Purchaser agree that they will engage
PricewaterhouseCoopers ("PWC") to audit within 60 days of Completion
financial statements for the years ended 31 December 1996, 31
December 1997 and 31 December 1998 and to assist in the preparation
of relevant unaudited historic quarterly financial statements
(together, the "Historic Accounts") in respect of the Business in
compliance with generally accepted accounting principles and in the
form required by the United States Securities and Exchange
Commission. Each of the Purchaser and Glynwed shall provide all
necessary co-operation in respect of the preparation of the Historic
Accounts as may be reasonably required by PWC, including the
provision of appropriate representation letters in favour of PWC. The
fees of PWC in respect of the Historic Accounts shall be paid by the
Purchaser. Each of the parties agree that they will engage PWC on
terms to be agreed with PWC. For the avoidance of doubt neither
Glynwed nor the Seller, nor any other member of the Seller's Group or
any of their respective directors, officers, employees or agents
shall be in anyway liable to the Purchaser or Niagara, in connection
with the Historic Accounts or their preparation but nothing in this
subclause (7) shall prejudice the right of the Purchaser to bring a
Warranty Claim in respect of any breach of the Warranties given in
relation to the Accounts.
(8) The Seller will use its reasonable endeavours to procure the removal
of the registered users in respect of the licences referred to in
subclause (2)(d) from the Trade Marks Register by Completion but in
any case will provide all reasonable assistance to the Purchaser to
have these registered users removed after Completion to the extent
that this has not been achieved by Completion.
(9) As soon as practicable after Completion, Glynwed shall request each
of the companies that entered into a Confidentiality Undertaking with
any member of the Seller's Group to return to Glynwed the
confidential information in respect of the Business supplied under
the terms of the Confidentiality Undertakings and, as soon as
practicable after Glynwed receives any such information, Glynwed
shall either confirm to the Purchaser in writing that it has
destroyed such information or send the information to the Purchaser.
(10) Glynwed agrees with the Purchaser that it will for so long as the
same may continue to be enforceable retain with its records the
originals and all copies of each of the Confidentiality Undertakings
and further agrees that (unless and save to the extent prohibited
from doing so by the terms of any continuing duty of confidentiality
binding on the Seller's Group) it will from time to time on request
provide the Purchaser with such information as the Purchaser may
reasonably require to enable the Purchaser to determine whether a
material breach of any of the Confidentiality Undertakings has or may
have occurred.
(11) If it comes to the attention of Glynwed (or if in response to the
information provided by Glynwed the Purchaser is of the reasonable
opinion) that there is or is likely to be any material breach of any
Confidentiality Undertaking, (subject to any duty of confidentiality
to which any company in the Seller's Group may be subject) after
Completion Glynwed shall inform the Purchaser of that fact and shall
take any steps reasonably requested by the Purchaser to enforce the
Confidentiality Undertaking (at the expense of the Purchaser)
provided that Glynwed shall not be obliged to take any legal
proceedings in this regard unless it has been indemnified (for itself
and any other member of the Seller's Group) by the Purchaser against
any liability, cost, claim or expense (including reasonable
professional fees and expenses) in connection with the proceedings
(other than any liability which the Seller has assumed or which is
the subject of any other indemnity by the Seller in favour of the
Purchaser under the terms of this agreement).
13. EMPLOYEES
(1) In this clause:
"claim" includes a claim by any person (including a trade union, a
governmental or statutory or local authority or commission);
"liability" and "liabilities" include any award, compensation,
damages, fine, loss, order, payment made by way of settlement,
reasonable costs and expenses (including reasonable legal expenses on
an indemnity basis) properly incurred in connection with a claim and
also includes the costs and expenses of any investigation by the
Equal Opportunities Commission, the Commission for Racial Equality or
any health and safety enforcement body and of implementing any
requirements which may arise from any such investigation.
(2) The Seller and the Purchaser acknowledge and agree that under the
Employment Regulations the contracts of employment between the Seller
and the Employees will have effect after Completion as if originally
made between the Purchaser and the Employees or between the Purchaser
and the relevant trade union (as the case may be) except insofar as
the contracts or agreements relate to an occupational pension scheme.
(3) The Seller shall discharge all its obligations in respect of the
Employees up to Completion and shall indemnify the Purchaser against
all liabilities arising from the Seller's failure to do so. The
Seller shall also indemnify the Purchaser against any liability
relating to an Employee which arises out of any act or omission by
the Seller or any other member of the Seller's Group or any other
event, matter or circumstance occurring before Completion (including
any failure to comply with Regulation 10 of the Employment
Regulations but subject to subclause 4(c)) excluding:
(a) any obligation to make any payment which is calculated by
reference to a period of employment with the Seller or any
member of the Seller's Group as well as the period of
employment with the Purchaser; and
(b) any liability referred to in subclause (4).
(4) The Purchaser shall on and from Completion discharge of all the
obligations of the employer in relation to the Employees arising and
referable to the period after Completion and shall indemnify the
Seller against all liabilities arising from the Purchaser's failure
to do so. The Purchaser shall also indemnify the Seller against any
liability relating to an Employee which arises out of or in
connection with:
(a) the change of employer occurring by virtue of the Employment
Regulations and/or this agreement; or
(b) the termination of his employment by the Purchaser, a change to
a term of his employment or working conditions by the Purchaser
(including, without limitation, any term relating to an
occupational pension scheme), any other act or omission by the
Purchaser or any other event, matter or circumstance arising
after Completion; or
(c) any failure by the Purchaser to provide the Seller with the
information necessary to enable the Seller to comply with its
obligations under Regulation 10 of the Employment
Regulations.
(5) In the event that any contract of employment of any employee of any
member of the Seller's Group who is not included in the list of
Employees delivered at Completion (or who has been employed in breach
of clause 5(2)(e)) is found to have effect as if originally made
between the Purchaser and such employee as a result of the operation
of Regulation 5 of the Employment Regulations the Purchaser shall
promptly notify the Seller. The Seller or any member of the Seller's
Group may offer employment to that person within 21 days of that
notification. If after that period has elapsed, the person concerned
has not been offered such employment which has been accepted the
Purchaser may terminate the contract in accordance with the terms of
the contract of employment (provided such terms have been disclosed
to the Purchaser) and taking all reasonable steps to mitigate any
damages or compensation which might be awarded to the persons
concerned and in any event acting in consultation with the Seller.
The Seller will indemnify the Purchaser against any liabilities
arising out of such termination and against any sums payable to or on
behalf of such employee in respect of any period of employment
following Completion, assuming his pay and other terms of employment
have not been changed by the Purchaser (without a pre-existing
commitment) following Completion.
14. PRODUCT CLAIMS
(1) If any warranty or guarantee claims arise after Completion from
customers in respect of any item supplied by the Seller or any other
member of the Seller's Group in connection with the Business
before the Effective Time then the Purchaser shall, if so requested
by the Seller, carry out or provide any repairs or replacements at
the Purchaser's own expense but subject to reimbursement from the
Seller as provided in this clause.
(2) Subject to clause 27 and (except as set out in this clause 14)
without prejudice to clause 8(2), the Seller shall reimburse the
Purchaser the costs of carrying out such repairs or replacements
referred to in subclause (1) at cost price if and to the extent that
in respect of any individual claim the costs of repair or replacement
(but less the reasonable value to the Purchaser of any returned
products in respect of the claim) exceed (pound)500 provided that the
Seller shall reimburse to the Purchaser the full costs of carrying
out all such repairs or replacements at cost price to the extent that
such costs (less the reasonable value to the Purchaser of any
returned products in respect of all such claims) exceed (pound)50,000
in aggregate and the Seller shall, except as provided in this
subclause (2), indemnify the Purchaser (for itself and each member of
the Purchaser's Group) against all actions, proceedings, costs,
damages, claims and demands in respect of every such claim.
(3) The Purchaser shall notify the Seller of any claim made by a customer
after Completion to which this clause applies.
(4) The Purchaser shall be solely responsible for any warranty or
guarantee claim arising in respect of any item supplied by it in
connection with the Business at any time after the Effective Time and
the Purchaser shall indemnify the Seller (for itself and each member
of the Seller's Group) against all actions, proceedings, costs,
damage, claims and demands in respect of every such claim.
15. ENVIRONMENTAL
The Seller and the Purchaser shall observe and perform the provisions
of Schedule 7 expressed to be observed and performed by each of them
respectively.
16. PENSIONS
The Seller and the Purchaser shall observe and perform the provisions
of Schedule 2 expressed to be observed and performed by each of them
respectively.
17. SALES LITERATURE
(1) Subject as provided by subclause (2), below, as from Completion the
Purchaser shall not represent that the Seller or any other member of
the Seller's Group retains any connection with the Business and shall
ensure that no catalogue or item of sales literature or publicity
material (together "Promotional Materials") relating to the Business
is distributed or issued by it after Completion with any reference to
the Seller or any other member of the Seller's Group.
(2) If any Stocks or Promotional Materials are supplied to the Purchaser
under this agreement bearing any name or ▇▇▇▇ of the Seller or any
other member of the Seller's Group, the Purchaser is hereby
authorised by the Seller to sell or otherwise dispose of those Stocks
(and for a period not exceeding four months from Completion to sell
or otherwise dispose of any other stocks manufactured by the
Purchaser bearing any such name or ▇▇▇▇) and for a period not
exceeding three months from Completion to use those Promotional
Materials.
18. PROTECTIVE COVENANTS
Glynwed covenants with the Purchaser in the terms set out in Schedule
6.
19. ANNOUNCEMENTS
No party shall make or permit any member of the Seller's Group or the
Purchaser's Group (as the case may be) to make any announcement
concerning this sale and purchase or any ancillary matter before, on
or after Completion except (i) as required by law or any competent
regulatory body (including, in the case of Niagara, the United States
Securities and Exchange Commission or the NASDAQ Stock Market and, in
the case of Glynwed, the London Stock Exchange) or (ii) with the
written approval of the other party, such approval not to be
unreasonably withheld or delayed, and (iii) nothing herein shall
restrict the Purchaser after Completion from communicating with the
Employees, with any parties to the Contracts and with all customers
and suppliers of the Business in relation to the fact of the
acquisition and matters incidental to its future operations.
20. VALUE ADDED TAX
(1) The Seller and the Purchaser intend that article 5 of the Value Added
Tax (Special Provisions) Order 1995 ("Article 5") shall apply to the
sale of the Assets under this agreement, so that the sale is treated
as neither a supply of goods nor a supply of services.
(2) If nevertheless any VAT is payable on any supply by the Seller under
this agreement, the Purchaser shall pay the amount of that VAT in
addition to the price and the Seller shall issue to the Purchaser a
proper VAT invoice in respect of that VAT.
(3) Without limiting subclause (2), VAT shall be treated as payable if
Customs rule that it is payable. The Purchaser shall pay the amount
of VAT payable on whichever is the latest of:
(a) the day on which the Seller is liable to pay such VAT to Customs;
(b) the day on which the Purchaser (or any member of its VAT group)
recovers (or is treated under clause 20(13) as recovering) an
amount in respect of that VAT from Customs, whether by way of
repayment, credit or set-off; and
(c) five business days after receipt by the Purchaser of a copy of
the written notice of the ruling together with a proper VAT
invoice from the Seller.
(4) Subject to the remaining provisions of this clause, if the Purchaser
disagrees with the ruling of Customs referred to above and if (having
used reasonable endeavours to procure such a review on its own
account) the Purchaser is unable to obtain a review of the decision
by Customs on its own account, it may, within 15 Business Days (or
such longer time as the Seller may agree) of being notified of such
decision by the Seller, notify the Seller that it requires the Seller
to obtain a review of the decision by Customs and the Seller shall
forthwith request Customs to undertake that review.
(5) The Seller shall, without prejudice to the Purchaser's liability to
make any payment in accordance with this clause, notify the Purchaser
within 5 Business Days of receipt of the decision of Customs referred
to above and if the Purchaser disagrees with the decision and if
(having used reasonable endeavours to make an appeal in its own
right) the Purchaser is unable to make an appeal in its own right,
then it may, subject to clause 20(6), give notice to the Seller
within 15 Business Days (or such longer time as the Seller may agree)
of being notified of such decision by the Seller that it requires the
Seller to make an appeal to the tribunal in accordance with section
83 VATA 1994.
(6) The Seller shall not be obliged to take any action under this clause
unless the Purchaser shall indemnify the Seller against all
reasonable costs and expenses incurred in taking any such action and,
in any case where any appeal cannot be made against the decision of
Customs without the Seller accounting for the VAT to which that
appeal relates, unless the Purchaser shall also have paid to the
Seller an amount equal to that VAT (against the issue of an
appropriate VAT invoice).
(7) Within 5 Business Days of the decision of the Commissioners referred
to above or, if a further appeal has been made, within 5 Business
Days of the decision of the tribunal:
(a) the Purchaser shall pay to the Seller by way of additional
consideration a sum equal to the amount of VAT (if any) that
has been determined to be properly payable in respect of the
supply (against delivery by the Seller of a proper tax invoice
for VAT purposes in respect of it) after deducting from it any
amount previously paid in respect of such VAT by the Purchaser
to the Seller; or
(b) if an amount previously paid by the Purchaser to the Seller
under this clause exceeds the VAT that is finally determined to
be payable, the Seller shall pay to the Purchaser an amount
equal to any excess VAT payable (to the extent that, if the
Seller has already accounted to Customs for such VAT, the
Seller has recovered such VAT from Customs) and deliver to the
Purchaser (to the extent it has not already done so) a proper
tax invoice for VAT purposes.
(8) If Customs impose any interest or penalties on the Seller as a result
of the late payment of VAT on the consideration paid in respect of
the Business and the Assets the Purchaser shall when it pays an
amount in respect of VAT on the consideration paid for the Business
and the Assets in accordance with this clause 20 or, if later, 5
Business Days after a copy of any notice of such penalty or interest
has been received from the Seller, also pay to the Seller an amount
equal to the amount of any such penalties and interest to the extent
only that they are directly referable to the late payment of VAT on
the Consideration.
(9) With a view to procuring that Article 5 applies, the Purchaser:
(a) shall ensure that the Purchaser is registered for VAT not later
than Completion; and
(b) warrants that the Assets are to be used by the Purchaser in
carrying on the same kind of business as that carried on by the
Seller.
(10) References in paragraphs (a) and (b) of subclause (7) to the
Purchaser shall be construed as references to the transferee within
the meaning of the corresponding provision of Article 5 if different.
(11) Subject to sub-clauses (12) and (13) below, if VAT is determined to
be payable on the sale of the Assets under this Agreement as a result
of the transactions effected by the Divisionalisation Agreement and
would not have been so payable but for such transactions, then and in
that event the Seller shall indemnify the Purchaser against all and
any VAT to the extent so payable by the Purchaser to the Seller under
the provisions of this clause (to the extent the same is
irrecoverable by the Purchaser or any member of the Purchaser's VAT
group) five Business Days after receipt by the Seller of evidence
which demonstrates that the Purchaser has used all reasonable
endeavours to procure recovery of such VAT, together with interest on
that sum calculated on a day to day basis of a rate equal to the
aggregate of two per cent per annum above the base rate of Midland
Bank plc for the time being, from the date that the Purchaser made a
payment to the Seller in respect of such irrecoverable VAT to the
date of payment.
(12) Any claim by the Purchaser under the indemnity in subclause (11) will
be subject to the provisions of clause 27 (Indemnity Claims).
(13) For the purposes of this clause, "irrecoverable VAT" means any amount
in respect of VAT paid by the Purchaser under this clause which the
Purchaser (or any member of the Purchaser's VAT group) is unable to
recover as input tax (whether by way of credit, set off or actual
repayment) from Customs assuming that:
(i) the Purchaser (or the representative member of any VAT group of
which the Purchaser is a member) has duly submitted all
necessary returns and claims for the relevant VAT accounting
periods within the appropriate time limits and that such
submissions are true, accurate and complete in all material
respects (to the extent that, where the Purchaser is relying
upon information provided by the Seller to the Purchaser to
complete such submissions, the information provided by the
Seller to the Purchaser upon which such submissions are based,
was true, accurate and complete in all material respects at
Completion) and has taken such steps and done such things as
may reasonably be required to obtain recovery of such input tax
(whether by way of credit, set off or actual repayment); and
(ii) the Purchaser carries on and has carried on since Completion
the Business in all material respects in the manner in which it
was carried on by the Seller at Completion and its only
activities consist of the carrying on of the Business;
(iii) neither the Purchaser nor any member of its VAT group has taken
any other action in relation to its VAT affairs or the VAT
affairs of the Business, which may otherwise prejudice the
recovery of such VAT
and the same assumptions shall be made in determining when the
Purchaser (or a member of its VAT group) recovers or is treated as
recovering any amount of VAT).
(14) The Seller and the Purchaser intend that s.49 of the Value Added Tax
Act 1994 shall apply to the sale of the Assets under this agreement
and accordingly:
(a) the Seller shall on Completion deliver to the Purchaser all
records referred to in s.49;
(b) the Seller shall not make any request to Customs for those
records to be preserved by the Seller rather than the
Purchaser;
(c) the Purchaser shall preserve those records for such period as
may be required by law, and shall do so in the United Kingdom;
(d) the Purchaser shall during that period or such longer period as
it retains the records permit the Seller reasonable access to
them in the United Kingdom to inspect or make copies of them;
(e) the Purchaser shall not cease to retain the records without
first giving the Seller a reasonable opportunity to inspect and
remove such of them as the Seller wishes; and
(f) the Seller (or any person for the time being nominated under
this paragraph) may by written notice to the Purchaser nominate
another person for the purpose of paragraphs (d) and (e), in
which case the reference in that paragraph to the Seller shall
be read as a reference to the person nominated.
21. INTEREST
If any sum due for payment under this agreement is not paid on the
due date the party in default shall pay interest on that sum from the
due date calculated on a day to day basis of a rate equal to the
aggregate of two per cent. per annum and the base rate of Midland
Bank plc for the time being.
22. GLYNWED'S GUARANTEE
(1) In consideration of the mutual covenants contained in this agreement,
Glynwed guarantees to the Purchaser and shall procure the due and
punctual performance of each obligation of the Seller under this
agreement and shall pay to the Purchaser from time to time on demand,
or procure that the Seller shall pay, any sum which the Seller is at
any time liable to pay to the Purchaser under this agreement and
which has not been paid at the time the demand is made.
(2) The obligations of Glynwed under subclause (1):
(a) constitute direct, primary, unconditional and irrevocable
obligations without the need for any recourse on the part of
the Purchaser against the Seller;
(b) shall not be affected or impaired by any concession, time or
indulgence granted by the Purchaser or by any other dealing or
thing which would but for this subclause (2) operate to
discharge or reduce that liability; and
(c) shall not be affected or impaired by anything (including any
legal limitation, disability or incapacity on the part of the
Seller) which causes any of the obligations of the Seller under
this agreement to be or become invalid or unenforceable(other
than as a result of any applicable time limit under this
agreement).
(3) If any of the obligations of the Seller under this agreement is or
becomes invalid or unenforceable (other than as a result of any
applicable time limit under this agreement) Glynwed shall perform and
discharge all such obligations as if they were primary obligations of
Glynwed or shall procure that the Seller performs and discharges all
such obligations.
(4) The guarantee set out in this clause 22 shall extend to any costs,
charges and expenses incurred by the Purchaser in enforcing or
seeking its enforcement.
(5) Glynwed shall make any payments due from it under this clause 22 in
full and without any deduction or withholding in respect of any claim
whatsoever (whether by way of set-off, counterclaim or otherwise).
23. NIAGARA'S GUARANTEE
(1) In consideration of the mutual covenants contained in this agreement,
Niagara guarantees to the Seller and shall procure the due and
punctual performance of each obligation of the Purchaser under this
agreement and shall pay to the Seller from time to time on demand, or
procure that the Purchaser shall pay, any sum which the Purchaser is
at any time liable to pay to the Seller under this agreement and
which has not been paid at the time the demand is made.
(2) The obligations of Niagara under subclause (1):
(a) constitute direct, primary, unconditional and irrevocable
obligations without the need for any recourse on the part of
the Seller against the Purchaser;
(b) shall not be affected or impaired by any concession, time or
indulgence granted by the Seller or by any other dealing or
thing which would but for this subclause (2) operate to
discharge or reduce that liability; and
(c) shall not be affected or impaired by anything (including any
legal limitation, disability or incapacity on the part of the
Purchaser) which causes any of the obligations of the Purchaser
under this agreement to be or become invalid or unenforceable
(other than as a result of any applicable time limit under this
agreement).
(3) If any of the obligations of the Purchaser under this agreement is or
becomes invalid or unenforceable (other than as a result of any
applicable time limit under this agreement) Niagara shall perform and
discharge all such obligations as if they were primary obligations of
Niagara or shall procure that the Purchaser performs and discharges
all such obligations.
(4) The guarantee set out in this clause 23 shall extend to any costs,
charges and expenses incurred by the Seller in enforcing or seeking
its enforcement.
(5) Niagara shall make any payments due from it under this clause 23 in
full and without any deduction or withholding in respect of any claim
whatsoever (whether by way of set-off, counterclaim or otherwise).
24. FURTHER ASSURANCE
(1) Each of Glynwed and the Seller shall from time to time on being
requested to do so by the Purchaser do or procure the carrying out of
all such acts and/or execute or procure the execution of all
documents (in a form reasonably satisfactory to the Purchaser) as the
Purchaser may reasonably require or reasonably consider necessary for
giving full effect to this agreement (including any action required
under subclauses 8(1) and 8(3)), and each party shall bear its own
costs in that regard, provided that neither Glynwed nor the Seller
shall be obliged to take or procure the taking of any legal
proceedings (without first being indemnified for itself and the other
members of the Seller's Group by the Purchaser against any liability,
cost, claim or expense (including reasonable professional fees and
expenses) in connection with the proceedings, other than any
liability which the Seller has assumed or which is the subject of any
other indemnity by the Seller in favour of the Purchaser under the
terms of this agreement) or pay out or procure the payment out of any
money other than in respect of such professional advice as it may
deem necessary.
(2) Without limiting subclause (1) above, each of Glynwed and the Seller
shall from time to time on being requested to do so by the Purchaser
do or procure the carrying out of all such acts and/or execute or
procure the execution of all such documents (in a form reasonably
satisfactory to the Purchaser) as the Purchaser may reasonably
require or reasonably consider necessary for vesting in the Purchaser
the benefit of the Claims (other than any Claims comprising a claim
for refund or reimbursement referred to in clause 7(13)) (provided
that neither Glynwed nor the Seller shall be obliged to take or
procure the taking of any legal proceedings (except as provided
below) or pay out or procure the payment out of any money other than
in respect of such professional advice as it may deem necessary),
including (if the Purchaser shall reasonably require but in that
event at the Purchaser's own cost) taking (at the direction of the
Purchaser) any steps or being joined in any proceeding which the
Purchaser intends to bring or defend for the enforcement thereof
provided that neither Glynwed nor the Seller shall be obliged to take
or defend or be joined in (or procure the same) any legal proceedings
in this regard unless it has been indemnified (for itself and any
other member of the Seller's Group) by the Purchaser against any
liability, cost, claim or expense (including reasonable professional
fees and expenses) in connection with the proceedings (other than any
liability which the Seller has assumed or which is the subject of any
other indemnity by the Seller in favour of the Purchaser under the
terms of this agreement).
(3) For the avoidance of doubt, notwithstanding any of the other
provisions of this clause, neither Glynwed nor the Seller shall be
required to procure that any person (other than a member of the
Seller's Group) brings, defends or is joined in any legal
proceedings.
25. NOTICES
(1) Any notice or other document to be served under this agreement may be
delivered, or sent by post, to the party to be served as follows:
(a) To the Seller, at
▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
marked for the attention of
The Company Secretary
(b) To the Purchaser (before Completion) at its address set out in
this agreement or (after Completion at
Victoria Steelworks
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
marked for the attention of
▇▇▇▇▇ ▇▇▇▇▇▇ (before Completion)
or ▇▇▇▇ ▇▇▇▇▇▇▇▇ (after Completion)
with a copy to Niagara at its address as set out in this agreement
marked for the attention
of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
or at such other address as it may have notified to the other parties
in accordance with this clause. Any notice or other document sent by
post shall be sent by prepaid first class recorded delivery post (if
within the United Kingdom) or by prepaid registered airmail (if
elsewhere).
(2) Any notice or other communication shall be deemed to have been duly
given:
(a) if delivered personally, when left at the address referred to in
subclause (1) above; or
(b) if sent by recorded mail other than airmail, two days after
posting it; or
(c) if sent by registered airmail, six days after posting it.
provided always that a notice given in accordance with the above but
received on a day which is not a Business Day or after business hours
on a Business Day in the place of receipt will only be deemed to be
given on the next Business Day in that place.
26. GENERAL
(1) Each of the obligations, warranties and undertakings set out in this
agreement which is not fully performed at Completion will continue in
force after Completion.
(2) Subject to any applicable time limits under this agreement, any
failure by any party to exercise any rights under any indemnity in
this agreement will not operate as a waiver by that party of any such
rights nor should it prevent that party from exercising the same
right.
(3) Unless otherwise expressly stated all payments to be made under this
agreement shall be made in sterling to the party to be paid as
follows:
(a) to the Seller in immediately available funds to the account of
the Seller at:
bank: National Westminster Bank plc
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇
sort code: 60 02 35
account number: ▇▇▇▇▇▇▇▇
or such other account as the Seller may specify; and
(b) to the Purchaser in immediately available funds to the account
of the Purchaser at:
bank: National Westminster Bank plc
sort code: 60-02-35
account number:▇▇▇▇▇▇▇▇
or such other account as the Purchaser may specify.
(4) Subject to Schedule 7 paragraph 12 any of the parties may assign any
of its rights (but not obligations) under this agreement to any
company which is its holding company or subsidiary, provided that if
the assignee ceases to be such a holding company or subsidiary, then
the assigning party shall procure that such assignee shall reassign
back to such party all such rights as have been assigned to such
assignee with effect from the date on which such assignee ceases to
be such a holding company or subsidiary and the assignee shall no
longer have the benefit of any rights under this agreement and the
original party shall have the benefit of all rights under this
agreement as if the assignment had never taken place, provided that:
(i) on any assignment of any of the Purchaser's rights under this
agreement, the liability of the Seller to make a payment to an
assignee pursuant to this agreement shall be no greater than
the liability which would have arisen had no such assignment
taken place and any payment made by the Seller in discharge or
settlement of that liability had been made to the Purchaser;
and
(ii) on any assignment of the Seller's rights under this agreement,
the liability of the Purchaser to make a payment to an assignee
pursuant to this agreement shall be no greater than the
liability which would have arisen had no such assignment taken
place and any payment made by the Purchaser in discharge or
settlement of that liability had been made to the Seller.
(5) Save as provided in subclause (4) above and in Schedule 7 ▇▇▇▇▇▇▇▇▇
▇▇, ▇▇▇▇ of the rights or obligations under this agreement may be
assigned or transferred without the prior written consent of all the
parties.
(6) Save where expressly provided herein to the contrary, each party
shall pay the costs and expenses incurred by it in connection with
the entering into and completion of this agreement.
(7) This agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same agreement and
any party may enter into this agreement by executing a counterpart.
27. INDEMNITY CLAIMS
(1) Notwithstanding any of the other provisions of this agreement, in
relation to each of the indemnities given by the Purchaser in favour
of the Seller (or the Seller's Group) or by the Seller in favour of
the Purchaser (or the Purchaser's Group) contained in clauses 3(3),
3(4), 8, 13 and 14, paragraph 8 of Schedule 2 and Schedule 7 the
provisions of clause 11(6)(a) and (b) (and, in the case of the
indemnity in clause 14(2), the provisions of clause 11(8)) shall
mutatis mutandis apply to any claim under the relevant indemnity.
(2) Notwithstanding any of the other provisions of this agreement, in
relation to each of the indemnities contained in clauses 3(3), 3(4),
8, 13 and 14 and Schedule 7, the Purchaser shall not be entitled to
make a claim to the extent of any amount for which provision or
allowance for the matter or liability which would otherwise give rise
to the claim in question has been made in the Statement of Net Assets
Transferred (or paid or reimbursed by the Seller under clause 7(11)).
(3) If the Seller or the Purchaser (in this clause, "Covenantor") has
made a payment to the other (in this clause, "Beneficiary") in
respect of, or relating to, any claim under any of the indemnities in
clauses 3(3), 3(4), 7, 8, 13, 14 and Schedule 7 (an "Indemnity
Payment") and the Beneficiary subsequently recovers or is reimbursed
any amount directly referable to that claim (other than any amount in
respect of Taxation) (but without being obliged under this subclause
to pursue such recovery or reimbursement) the Beneficiary shall as
soon as practicable following such recovery or reimbursement pay to
the Covenantor an amount equal to the lesser of such amount
reimbursed or recovered (less any Taxation thereon and any reasonable
costs of recovery or reimbursement) and the Indemnity Payment.
28. WHOLE AGREEMENT
(1) This agreement and the documents referred to in it contain the whole
agreement between the parties relating to the transactions
contemplated by this agreement and the documents referred to in it
and supersede all previous agreements between the parties relating to
these transactions except for the confidentiality agreement made
between Glynwed and Niagara dated 18th September, 1998 which shall
terminate at Completion.
(2) Each of the parties acknowledges that in agreeing to enter into this
agreement and the documents referred to in it, it has not relied on
any representation, warranty, collateral contract or other
assurance except those set out in this agreement or in the Property
Agreement (or the other agreements referred to in the Property
Agreement) provided that nothing in this agreement shall limit or
exclude any liability for fraud.
(3) In entering into this agreement and the documents referred to in it
no party may rely on any representation, warranty, collateral
contract or other assurance (except those set out in this agreement
or the Property Agreement or the other agreements referred to in the
Property Agreement) made by or on behalf of any other party before
the signature of this agreement and each of the parties waives all
rights and remedies which, but for this subclause, might otherwise be
available to it in respect of any such representation, warranty,
collateral contract or other assurance; provided that nothing in this
agreement shall limit or exclude any liability for fraud.
29. GOVERNING LAW
This agreement is governed by and shall be construed in accordance
with English law. Niagara submits to the jurisdiction of the English
courts for all purposes relating to this agreement and irrevocably
appoints the Purchaser's Solicitors as its agent for
service of process with respect thereto.
AS WITNESS the hands of the duly authorised representatives of the
parties on the date which first appears on page 1.
SIGNED by /s/ ▇. ▇. ▇▇▇▇▇▇
for and on behalf of
GLYNWED STEELS LIMITED
SIGNED by /s/ ▇. ▇. ▇▇▇▇▇▇▇
for and on behalf of
GLYNWED INTERNATIONAL plc
SIGNED by /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
for and on behalf of
NIAGARA LASALLE (UK) LIMITED
SIGNED by /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
for and on behalf of
NIAGARA CORPORATION