Dated July 1, 1998
(1) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PLC
(2) WESTPARK LIMITED
(3) PACIFIC AEROSPACE & ELECTRONICS (UK) LIMITED
(4) PACIFIC AEROSPACE & ELECTRONICS, INC.
SHARE ACQUISITION AGREEMENT
relating to
AEROMET INTERNATIONAL PLC
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Telephone ▇▇▇▇-▇▇▇ ▇▇▇▇
CONTENTS
Clause of Agreement Page
1 Definitions and interpretation 1
2 Sale of Shares 6
3 Consideration and Condition 7
4 Warranties 8
5 Purchaser's and Guarantor's warranties 13
6 Announcements and confidentiality 14
7 Completion 15
8 Covenants 17
9 Costs 20
10 Restrictive Trade Practices ▇▇▇ ▇▇▇▇ 20
11 Guarantee 21
12 Guarantee by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 22
13 Termination 23
14 Properties 23
15 General 24
16 Notices 25
17 Applicable law and jurisdiction 26
Schedules
1 Particulars of the Vendor, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the Purchaser and the
Guarantor
2 Particulars of the Company and the Subsidiary Undertakings
3 Completion obligations
4 General Warranties
5 Warranties relating to Taxation
6 Licensed and Listed Intellectual Property
7 Properties
Documents in the approved terms
Tax Deed
Letters of resignation
Board minutes of the Group Companies
Power of attorney
Birmingham Lease
Birmingham Car Parking Licence
Deeds of Guarantee and Variation
Option Agreement
Property Leases
Deed of Change of Trustee
Letter pursuant to Clause 7.5
Letter in relation to ongoing trading arrangements
Letter in relation to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Letter regarding stamp duty
Annexures
1 Accounts
2 Announcements
3 Management Accounts
4 Offering Circular
5 List of Customers/Suppliers
6 List of foreign exchange agreements
THIS AGREEMENT is made on 1998
BETWEEN:-
(1) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PLC, particulars of which are set out in Part I of Schedule 1
("▇▇▇▇▇▇▇ ▇▇▇▇▇▇");
(2) WESTPARK LIMITED, particulars of which are set out in Part II of Schedule I
("the Vendor");
(3) PACIFIC AEROSPACE & ELECTRONICS (UK) LIMITED particulars of which are set
out in Part III of Schedule 1 ("the Purchaser"); and
(4) PACIFIC AEROSPACE & ELECTRONICS, INC., particulars of which are set out in
Part IV of Schedule 1 ("the Guarantor").
WHEREAS:-
(A) Particulars of the Company and the Subsidiary Undertakings are set out in
Schedule 2.
(B) The Vendor has agreed to sell and the Purchaser has agreed to purchase the
Shares on the terms set out in this Agreement.
(C) Immediately prior to Completion, the Purchaser will lend to Aeromet such
amount as will enable Aeromet to repay the Intra Group Debt.
(D) The Vendor will sell and the Purchaser will buy in accordance with the
terms of this Agreement the Company free from the Intra Group Debt, any
borrowings (including finance leases) or cash other than Approved Debt.
IT IS AGREED as follows:-
1. Definitions and interpretation
1.1 The following words and expressions where used in this Agreement (including
in the Recitals and the Schedules) have the meanings given to them below:-
Accounts the audited balance sheet of each Group
Company as at the Accounts Date and the
audited profit and loss account of each
Group Company for the financial year
ended on the Accounts Date, together in
each case with the related notes,
directors' report and auditors' report, a
copy of each of which comprises Annexure
1;
Accounts Date 31 December 1997;
Aeromet Aeromet International PLC;
Announcements announcements to the London Stock
Exchange and the United States public
securities markets for release to the
market and the press in the form of the
drafts comprising Annexure 2;
Approved Debt the Finance Lease Debt and the Bank
Overdraft;
Bank Overdraft the amount owing to Barclays Bank plc by
the Company at close of business on the
day prior to Completion adjusted to
reflect cheques and deposits in the
course of clearance;
Birmingham Car Parking Licence the car parking licence in respect of the
Birmingham Property in the approved terms
to be entered into by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
the Company upon Completion;
Birmingham Lease the lease in respect of the Birmingham
Property in the approved terms to be
entered into between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
Aeromet upon Completion;
Birmingham Property all those premises at Tame Road, Witton
Birmingham currently occupied by the
Company and to be demised by the
Birmingham Lease, as referred to in
paragraph 1 of Schedule 7;
Business Day a weekday, other than a Saturday, on
which clearing banks are ordinarily open
for business in the City of London and in
the city of Seattle, Washington State;
Companies Act the Companies ▇▇▇ ▇▇▇▇;
Company Aeromet International PLC, details of
which are set out in Part I of Schedule
2;
Completion the performance of the obligations to
complete the sale and purchase of the
Shares in accordance with this Agreement;
2
Completion Date not later than the third Business Day
following the date on which the condition
specified in Clause 3.5 is satisfied;
Company Intellectual Property Intellectual Property owned by the Group
and Intellectual Property owned by third
parties which the Group uses;
Deeds of Guarantee and Variation deeds of guarantee and variation in
respect of those Properties referred to
in paragraphs 2, 4 and 5 of Schedule 7 in
the approved terms to be entered into
upon Completion and between the Guarantor
(1) and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (2);
Disclosure Letter the letter of the same date as this
Agreement (including its annexures) from
the Vendor to the Purchaser containing
the disclosures to the Warranties;
EEC Treaty the Treaty establishing the European
Economic Community;
Finance Lease Debt the capitalised amount (determined in
accordance with the Company's normal
accounting policies) of the Company's
indebtedness under the finance leases
(whose particulars are set out in the
Disclosure Letter) as at the close of
business on the day prior to Completion;
Group the Company and the Subsidiary
Undertakings and "Group Company" means
any of such companies;
ICTA 1988 the Income and Corporation Taxes ▇▇▇
▇▇▇▇;
Intellectual Property patents, trade marks, registered designs,
applications for any of the foregoing,
copyright, unregistered trade marks,
database rights, design rights and rights
analogous to any of the foregoing, trade
and business names, rights in
confidential information (including
confidential formulae, processes and know
how) howsoever arising and any right or
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interest in any of the foregoing;
Intra Group Debt amounts owing on inter company account at
the close of business on the day prior to
Completion by any member of the Group to
any member of the Vendor Group other than
debt incurred for goods or services
supplied;
Licensed Intellectual Property Intellectual Property owned by third
parties which the Group or any member
thereof is permitted to use or exercise,
details of which and the agreements
relating to which are listed in Part I of
Schedule 6;
Listed Intellectual Property that Intellectual Property owned by the
Group which is listed in Part II of
Schedule 6;
London Stock Exchange London Stock Exchange Limited;
Management Accounts the unaudited profit and loss account for
Aeromet for the five months ended 31 May
1998 and the unaudited balance sheet of
the Company as at that date comprising
Annexure 3;
Offering Circular the document comprising Annexure 4 and
any updated supplement thereto;
Option Agreement an Option Agreement in the approved terms
to be entered into upon Completion
between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (1) and the
Purchaser (2);
Properties all that leasehold property of Aeromet
details of which appear in Schedule 7;
Property Leases the leases in the approved terms entered
into between ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and Aeromet
on 30 June 1998 in respect of those
Properties referred to in paragraphs 2, 4
and 5 of Schedule 7;
Purchaser's Solicitors Macfarlanes, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇;
Shares the 1,000,000 issued ordinary shares of
10p in the capital of the Company
(comprising the
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entire issued share capital) to be
acquired by the Purchaser in accordance
with the terms of this Agreement;
Subsidiary Undertakings the subsidiary undertakings of the
Company, details of which are set out in
Part II of Schedule 2;
Tax Deed the deed in the approved terms relating
to taxation to be executed at Completion;
Territory the United Kingdom, the United States of
America and any territory in which the
Company carries on its business on the
date of this Agreement;
Unit H Lease the underlease dated 21 March 1996 made
between Wolseley Centers Limited (1) and
Kent Aerospace Castings plc (2) of Unit H
Cosgrove Close, Worcester for the term of
25 years from 25 March 1978 (less 3
days);
Unregistered ▇▇▇▇ the unregistered ▇▇▇▇ "Aeromet";
Vendor Group the group of companies comprising
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and each subsidiary of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, excluding the Company and
the Subsidiary Undertakings (and "Vendor
Group member" and "member of the Vendor
Group" shall be construed accordingly);
Vendors' Solicitors ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ of ▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇;
Warranties the representations and warranties set
out in Schedules 4 and 5;
Warrantors the Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
1.2 Where used in this Agreement the terms "subsidiary", "subsidiary
undertaking", "holding company", "financial year" and "director" shall have the
meanings respectively attributed to them by the Companies Act at the date of
this Agreement; the term "recognised investment exchange" shall have the meaning
attributed to it by Part V of the Financial Services ▇▇▇ ▇▇▇▇ at the date of
this Agreement; the term "connected person" shall have the meaning attributed to
it by section 839 ICTA 1988 at the date of this Agreement and the words
"connected with" shall be construed accordingly; the term "taxation" shall have
the
5
meaning attributed to "Taxation" in the Tax Deed; and the expressions "for
taxation purposes" and "Taxation Authority" shall have the meanings respectively
attributed to them in the Tax Deed.
1.3 A reference to any statutory provision in this Agreement:-
1.3.1 includes any order, instrument, plan, regulation, permission and
direction made or issued under such statutory provision or deriving
validity from it;
1.3.2 shall be construed as a reference to such statutory provision as in
force at the date hereof; and
1.3.3 shall also be construed as a reference to any statutory provision of
which such statutory provision is a re-enactment or consolidation.
1.4 The headings in this Agreement are for convenience only and shall not affect
its meaning.
1.5 References to a clause, Schedule or paragraph are (unless otherwise stated)
to a clause of and Schedule to this Agreement and to a paragraph of the relevant
Schedule.
1.6 A document expressed to be "in the approved terms" means a document, the
terms, conditions and form of which have been agreed by the parties to this
Agreement and a copy of which has been identified as such and initialled by or
on behalf of each of the parties.
1.7 A document expressed to be an "Annexure" means a document a copy of which
has been identified as such and initialled by or on behalf of each of the
parties.
1.8 Words importing one gender shall (where appropriate) include any other
gender and words importing the singular shall (where appropriate) include the
plural and vice versa.
2. Sale of Shares
2.1 The Vendor shall sell or procure to be sold with full title guarantee and
the Purchaser shall purchase the Shares free from all liens, charges,
encumbrances, equities and claims whatsoever and together with all rights now or
hereafter attaching to them, in each case upon the terms of this Agreement.
2.2 The Purchaser shall not be obliged to complete the purchase of any of the
Shares unless the purchase of all of the Shares is completed simultaneously.
2.3 The Vendor irrevocably and unconditionally waives and agrees to procure the
waiver of all rights of pre-emption or other restrictions on transfer which may
exist, whether under the Articles of Association of the Company or the
Subsidiary Undertakings or otherwise, in respect of the transfer to the
Purchaser or its nominee(s) of the Shares or any of them and shall execute and
deliver or procure the execution and delivery of all such deeds of waiver in
6
respect thereof as the Purchaser may require.
3. Consideration and Condition
3.1 The consideration for the sale and purchase of the Shares shall be a sum
equal to (pound)42 million less the amount of the Intra Group Debt and the
Approved Debt and shall be payable in cash on Completion ("the Shares
Consideration").
3.2 Any amount paid in respect of a breach of any of the Warranties or under the
Tax Deed shall be deemed to give rise to a corresponding reduction in the Shares
Consideration.
3.3 Immediately prior to Completion the Vendor shall deliver to the Purchaser a
statement showing the amount of the Intra Group Debt, the Bank Overdraft and the
Finance Lease Debt.
3.4 The Vendor hereby covenants to hold the Purchaser, for itself and as trustee
for each of the members of the Group, indemnified in respect of any and all sums
which any Group Company is required to pay to any person in respect of any
borrowing or indebtedness in the nature of borrowing, including bank overdrafts,
liabilities under acceptances (other than normal trade bills) or acceptance
credits, hire purchase commitments or obligations under finance leases other
than the Intra Group Debt and the Approved Debt of that or any other Group
Company (excluding, for the avoidance of doubt, debts incurred in the ordinary
course of business including debts to suppliers and other providers of services,
and customer pre-payments) which is outstanding at Completion.
3.5 Completion shall be conditional upon the closing of the offering proposed to
be made by the Guarantor pursuant to the Offering Circular and the raising by
the Guarantor of net proceeds from such offering of not less than US$70 million.
3.6 If the condition set out in Clause 3.5 shall not have been satisfied by 31
July 1998, this Agreement (except for the provisions of this Clause and of
Clauses 1, 6.2 to 6.6 (inclusive), 9, 15, 16 and 17) shall be null and void and
of no further effect.
3.7 The Purchaser shall be entitled in its absolute discretion to waive in whole
or part the condition set out in Clause 3.5.
3.8 The Guarantor shall take all steps (which in its reasonable opinion (arrived
at in good faith) it considers necessary) to secure satisfaction of the
condition in Clause 3.5 and shall promptly supply ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ with such
information and documentation as ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ may reasonably require in
connection therewith. The Guarantor shall as soon as practicable notify ▇▇▇▇▇▇▇
▇▇▇▇▇▇ of satisfaction of the condition in Clause 3.5. Unless the Purchaser
shall have exercised its rights under Clause 3.7 the Guarantor shall notify
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ if it becomes apparent to the Guarantor that closing of the
Offering will not take place prior to 31 July 1998 in which case this Agreement
shall terminate upon service of such notice and shall thereupon be null and void
and of no further effect (except that the provisions of this Clause and of
Clauses 1, 6.2 to 6.6 (inclusive), 9, 15, 16 and 17 shall
7
continue to apply notwithstanding such termination).
4. Warranties
4.1 The Warrantors, upon the execution of this Agreement, represent and warrant
to the Purchaser that, subject to Clause 4.2, each of the Warranties:-
4.1.1 is at the date of this Agreement true and accurate and not misleading;
and
4.1.2 is not to be affected or limited by any previous or other disclosures,
express or implied, to, or investigation by, the Guarantors, the
Purchaser, or any of their officers, representatives or professional
advisers.
4.2 The Warranties are given subject to matters fairly disclosed in the
Disclosure Letter and shall continue in full force and effect notwithstanding
Completion.
4.3 The Vendor hereby covenants to hold the Purchaser, for itself and as trustee
for each member of the Group, indemnified in respect of any breach of warranty
20.3.2 save in respect of any indebtedness or other liabilities (actual or
contingent) referred to therein which were in existence as at the date of the
transfer by the relevant Subsidiary Undertaking of its business to the Company
or have arisen in the ordinary course of the carrying out of such business since
that date or which are in respect of Taxation (as defined in the Tax Deed).
4.4 The Warrantors acknowledge that the Purchaser has entered into this
Agreement in reliance on representations in the terms of the Warranties made by
the Warrantors with the intention of inducing the Purchaser to enter into this
Agreement and that accordingly the Purchaser has been induced by those
representations to enter into this Agreement.
4.5 Where any statement in the Warranties is qualified by the expression "to the
best of the knowledge, information and belief of the Warrantors" or "so far as
the Warrantors are aware" or any similar expression, the Warrantors shall be
deemed to have knowledge or be aware only of those matters within the knowledge
of ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ("the relevant
individuals") and that expression shall be deemed to include a warranty by the
Warrantors that the statement has been made by the Warrantors after all (or
some) of the relevant individuals had made reasonable enquiries in respect of
the subject matter of such Warranty.
4.6 Each of the Warranties shall be separate and independent and, save as
expressly provided, shall not be limited by reference to or inference from any
other Warranty or any other provision in this Agreement.
4.7 The Warrantors undertake not to exercise any right of counterclaim or
set-off or any other claim or right of recovery against any Group Company or any
of such companies' officers and employees or ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in relation to any
claim which may be made in respect of the Warranties or under the Tax Deed, save
where such claim arises as a result of the fraud or
8
wilful default of any such officer or employee or ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
4.8 The Warrantors shall be under no liability:-
4.8.1 in respect of any claim for breach of the Warranties (other than
those contained in Schedule 5) unless written notice of the claim
identifying if practicable its source and reasonable details of the
circumstances giving rise to the claim as then known to the Purchaser shall
have been given by or on behalf of the Purchaser to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ prior to
31 December 1999 and any such claim which may be made shall be deemed to be
withdrawn (if it has not been previously satisfied, settled or withdrawn)
on the expiry of 12 months commencing on the date on which notice of the
claim shall be given in accordance with this Agreement unless legal
proceedings in respect thereof have been commenced against the Vendor or
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and for this purpose such legal proceedings shall not be
deemed to have been commenced unless they have been both issued and served
on the Vendor or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; and
4.8.2 in respect of any claim for breach of the Warranties contained in
Schedule 5 or pursuant to the terms of the Tax Deed unless written notice
of the claim has been given by or on behalf of the Purchaser to the Vendor
or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ on or before the date which is six calendar months after
the end of the latest of the accounting periods of the Group Companies to
end six years after the Completion Date.
4.9 The Warrantors shall not be liable in respect of any claim for breach of the
Warranties or pursuant to the terms of the Tax Deed, whether by virtue of a
judgment of a court of competent jurisdiction, an arbitral award or an admission
in writing signed by either of them, unless the loss thereby sustained (together
with the aggregate amount of losses sustained arising from previous claims (if
any)) shall exceed a total sum of (pound)1,000,000 in which event the whole of
the amounts in respect of such claim or claims shall be recoverable and not
merely the excess over (pound)1,000,000 (and, for the avoidance of doubt,
thereafter all amounts in respect of any further claim or claims shall be
recoverable). This clause shall not apply to a claim under clause 2.2.9 of the
Tax Deed.
4.10 The aggregate liability of the Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ for breach of the
Warranties and for claims pursuant to the terms of the Tax Deed shall not in any
event exceed the amount of (pound)42 million.
4.11 The Warrantors shall not be liable for any breach of the Warranties to the
extent that the specific loss occasioned by the circumstances giving rise to
such breach has been recovered under the Tax Deed and shall not be liable for
any claim pursuant to the Tax Deed to the extent that the specific loss
occasioned by the circumstances giving rise to such claim has been recovered
under the Warranties.
4.12 The Purchaser shall as soon as reasonably practicable inform ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
in writing of any fact, matter, event or circumstance ("claim against the
Group") which comes to its notice or to the notice of the Company or a
Subsidiary Undertaking and to the notice of a director of the Purchaser or of
the Company or of a Subsidiary Undertaking whereby it appears
9
in the reasonable opinion of the Purchaser that the Vendor or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ are
or may become liable in respect of a breach of any of the Warranties and shall
in relation thereto:-
4.12.1 consult with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in good faith as to the way in which the
claim against the Group might be avoided, resolved, mitigated, settled or
compromised and so far as reasonably practicable afford to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
an opportunity to propose to the Purchaser a method of resolving,
mitigating, settling or compromising the same;
4.12.2 make no admission of liability to, or any agreement, settlement or
compromise with, any third party without the prior written consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇;
4.12.3 at the written request of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and on being indemnified
accordingly to the reasonable satisfaction of the Purchaser in respect of
all losses, claims, demands, costs and expenses ("Losses") which may
thereby be incurred, take or procure that the Company or the Subsidiary
Undertaking concerned shall so far as reasonably practicable take such
action as ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ may reasonably require to avoid, dispute, resist,
mitigate, settle, compromise or defend the claim against the Group and
render or cause to be rendered to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and its advisers all such
assistance (including providing access to all information and documentation
and to employees of the Company and the Subsidiary Undertakings) as ▇▇▇▇▇▇▇
▇▇▇▇▇▇ and its advisers may reasonably require in connection with the same;
4.12.4 without prejudice to the generality of clause 4.12.3, permit ▇▇▇▇▇▇▇
▇▇▇▇▇▇, upon its providing indemnities reasonably satisfactory to the
Purchaser for all Losses which may thereby be incurred, to have the conduct
of all proceedings relating to the claim against the Group including the
appointment of solicitors or other professional advisers and the making of
any settlement or compromise thereof,
provided that (and without prejudice to clause 4.20) the Purchaser shall
not be required to take any action pursuant to this Clause 4.12 which would
harm its or any Group Company's commercial relationship (potential or
actual) with that person.
4.13 No liability shall attach to the Warrantors in respect of a breach of any
of the Warranties to the extent that:-
4.13.1 any specific provision, allowance or reserve in respect of the
matters giving rise to such breach has been made in the Accounts or the
Management Accounts;
4.13.2 such claim arises as a consequence of a change in the law enacted
after the date of this Agreement;
4.13.3 any claim in respect of a breach of any of the Warranties arises as
a result of any provision or reserve made in respect thereof in the
Accounts or in the Management Accounts being insufficient by reason of any
increase in rates of taxation made after the date of this Agreement or as a
result of the retrospective imposition of taxation as a consequence of a
change in the law or the published practice of a
10
Revenue authority enacted or introduced after the date of this Agreement;
4.13.4 (and in respect only of those Warranties in Schedule 5) the breach
or the events giving rise to such breach would not have arisen but for any
failure on the part of the Purchaser or any other member of the group of
companies of which the Purchaser is a member (including the Company and the
Subsidiary Undertakings or any of them) to make any claim, election,
surrender or disclaimer or give any notice or consent to do any other thing
after Completion, in each case the making, giving or doing of which was
taken into account in preparing the Accounts and is disclosed in the
Disclosure Letter as requiring such action;
4.13.5 any losses arising from a claim in respect of a breach of any of the
Warranties is recoverable under a policy of insurance of the Company and/or
any Group Company ("the Insuring Parties") in force on the date when such
breach occurred, provided that:
4.13.5.1 in limiting the liability of the Warrantors under this
clause, there shall be deducted from the amounts recoverable
any increase in premiums payable by the Insuring Parties on
any relevant insurance policy by reason of such recovery
being made;
4.13.5.2 the Insuring Parties are under no obligation to maintain any
policy of insurance after Completion; and
4.13.5.3 nothing in this Clause 4.13.5 shall require the Purchaser to
delay making any claim or bringing proceedings against the
Warrantors pending settlement of such insurance claim if
such delay would or might reasonably jeopardise the
Purchaser's rights hereunder; or
4.13.6 such liability is contingent unless and until such contingent
liability becomes an actual liability and is due and payable provided that
this Clause shall not prejudice any claim in respect of which notice given
in accordance with Clause 4.8 in respect of a liability which at that time
is contingent only.
4.14 The Warrantors shall not be liable in respect of any breach of the
Warranties or pursuant to the Tax Deed in respect of all and any matters
resulting from a change of accounting policy or practice of the Purchaser or any
other member of the group of companies of which the Purchaser is a member
(including the Company and the Subsidiary Undertakings of any of them)
introduced after Completion.
4.15 If the Purchaser or any Group Company is or may be entitled to recover from
a third party other than an employee of the Company or a Subsidiary Undertaking
any sum in respect of any matter giving rise to a claim for breach of any of the
Warranties or a claim under the Tax Deed, the Purchaser shall procure on being
indemnified accordingly to the reasonable satisfaction of the Purchaser in
respect of all costs and expenses which are thereby incurred
11
that all reasonable steps are taken to enforce the recovery thereof and, if any
sum is so recovered, then the amount payable by the Vendor or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in
respect of such claim shall be reduced by an amount equal to the sum so
recovered provided that neither the Purchaser nor any Group Company shall be
required to take any action pursuant to this Clause 4.15 which would harm its or
any Group Company's commercial relationship (potential or actual) with that or
any other person. In the event of the Vendor or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ having paid to
the Purchaser or any member of the group of companies of which the Purchaser is
a member (including the Company and the Subsidiary Undertakings or any of them)
an amount in respect of a claim for breach of any of the Warranties or a claim
under the Tax Deed and subsequent to the date of making such payment the
Purchaser or any other member of such group (including the Company and the
Subsidiary Undertakings or any of them) recovers from a third party a sum which
relates to that payment, then the Purchaser shall as soon as reasonably
practicable repay or procure the repayment by such group member to the Vendor or
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of so much of the amount paid by the third party as does not
exceed the sum paid by the Vendor or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to the Purchaser or other
such group member.
4.16 The Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall not be liable for breach of any of the
Warranties to the extent that the subject of the claim has been made good or is
otherwise compensated for, in either such case, to the reasonable satisfaction
of the Purchaser without cost to the Purchaser or any member of the group of
companies of which the Purchaser is a member (including the Company and the
Subsidiary Undertakings or any of them).
4.17 Without prejudice to the provisions of Clause 13, the Purchaser irrevocably
and unconditionally waives any right it may have to rescind this Agreement,
and/or claim damages, for any breach of warranty or untrue representation,
undertaking or statement of fact or opinion made to it in relation to the
subject matter of this Agreement or the Company or the Subsidiary Undertakings
which is not contained in this Agreement and the liability of the Vendor and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ under or in respect of the Warranties is in place of and in
substitution for any liability of either of them under any other head of loss
that could arise in respect of any facts stated in the Warranties provided that
nothing in this clause shall exclude liability for any warranty, representation,
undertaking or statement of fact or opinion made fraudulently. In particular,
but not by way of limitation, the Purchaser acknowledges and agrees with the
Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (for themselves and for the benefit of their
respective officers, employees, agents and advisers and as trustee for such
officers, employees, agents and advisers) that this Agreement has been entered
into on the basis that (without prejudice to the Warranties or the Tax Deed or
any indemnity given under this Agreement) neither of them nor any member of the
Vendor Group nor any of their respective officers, employees, agents or advisers
has made nor is taken as making any representation or warranty as to the
accuracy or completeness or otherwise of the information contained in the
information bundles supplied to the Purchaser or its advisers and referred to in
paragraph 1(b) of the Disclosure Letter under the heading "General Disclosures"
nor accepts any duty of care to the Purchaser or the Guarantor in respect
thereof and that (save as aforesaid) none of such persons shall be liable in any
way whatsoever to the Purchaser or the Guarantor in the event that, for whatever
reason, such information proves to be inaccurate, incomplete or misleading in
any respect.
12
4.18 If any claim is made by the Purchaser for breach of any of the Warranties,
then, for the purposes of determining the amount for which the Warrantors are
liable as a result of such breach, the Warrantors shall be entitled to assert
that account shall be taken of the amount of any saving of tax or other benefit
which has in fact been or is subsequently obtained by any member of the group of
companies of which the Purchaser is a member by reason of the matters
constituting such breach of Warranty.
4.19 The provisions of this Clause 4 shall not apply in respect of:-
4.19.1 any claim under paragraphs 2.2, 2.4, 3.1, 3.2 and 20.1 of Schedule
4; and
4.19.2 any claim arising out of fraud on the part of the Vendor or ▇▇▇▇▇▇▇
▇▇▇▇▇▇.
4.20 Nothing in this clause 4 shall operate so as to qualify in any way the
Purchaser's duty to mitigate loss suffered by virtue of a breach of the
Warranties.
5. Purchaser's and Guarantor's warranties
5.1 The Purchaser warrants to the Vendors and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in the following
terms:-
5.1.1 the Purchaser has all requisite power and authority to enter into and
perform this Agreement;
5.1.2 the execution and delivery of and performance by the Purchaser of its
obligations under this Agreement will not result in a breach of any
provision of the constitution of the Purchaser, or result in a breach of or
constitute a default under, any agreement or instrument to which the
Purchaser is a party or by which the Purchaser is bound, or result in a
breach of any order, judgment or decree of any court or governmental agency
by which the Purchaser is bound.
5.2 The Guarantor warrants to the Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in the following
terms:-
5.2.1 the Guarantor has all requisite power and authority to enter into and
perform this Agreement; and
5.2.2 the execution and delivery of and performance by the Guarantor of its
obligations under this Agreement will not result in a breach of any
provision of the constitution of the Guarantor, or result in a breach of or
constitute an default under, any agreement or instrument to which the
Guarantor is a party or by which the Guarantor is bound, or result in a
breach of any order, judgment or decree of any court or governmental agency
by which the Guarantor is bound
5.3 Each of such foregoing warranties shall be separate and independent and
shall not be limited by reference to any other of them or any other provision in
this Agreement.
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6. Announcements and confidentiality
6.1 The Announcements shall be released by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in the United Kingdom
and by the Guarantor in the United States of America upon the execution of this
Agreement by all the parties hereto and upon ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Guarantor
having agreed the exact time and manner of such releases. No announcement (other
than the Announcements) relating to the subject matter of this Agreement or any
matter ancillary to this Agreement shall be made by or on behalf of ▇▇▇▇▇▇▇
▇▇▇▇▇▇ or the Guarantor without the prior written approval of the other (not to
be unreasonably withheld) provided that (even in the absence of the approval of
the other party provided it has used reasonable endeavours to consult with and
obtain the prior written consent of that other party) nothing shall prevent
either party from making any announcement or disclosure required by law, the
London Stock Exchange, the United States National Association of Securities
Dealers Automated Quotation System or the United States Securities Exchange
Commission.
6.2 The Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall keep confidential and not at any time
after the date of this Agreement disclose or make known in any way to anyone
(other than the Purchaser, the Vendor's Solicitors or financial advisers or
accountants) or use for its own or any other person's benefit any know how or
confidential information relating exclusively to any of the customers, suppliers
or affairs of the business of the Group or otherwise relating exclusively to the
business of the Group.
6.3 All records, papers and documents in the possession of the Vendor or ▇▇▇▇▇▇▇
▇▇▇▇▇▇ relating exclusively to the business or affairs of the Group and of which
a Group Company does not have a record or copy shall be deemed to be the
property of the Group Company to which such documentation relates and all such
items shall be delivered to the Purchaser or as the Purchaser may direct at
Completion.
6.4 The Purchaser shall, and shall procure that each Group Company shall, keep
confidential and not at any time after the date of this Agreement disclose or
make known to any third party other than to the Purchaser's Solicitors or
financial advisers or accountants or use for its own or any other person's
benefit any confidential information which may have been disclosed to the
Purchaser or to any Group Company or which may otherwise have come to the
attention of the Purchaser or any Group Company which relates exclusively to the
business or affairs of the Vendor Group.
6.5 The parties agree that the Guarantor shall be entitled, notwithstanding any
provision of this Agreement, to disclose information regarding the Company and
the Subsidiary Undertakings, the terms of this Agreement and matters
contemplated herein to potential institutional investors who receive the
Offering Circular; provided that the Guarantor shall not disclose any such
information without first providing to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ a copy of and the
opportunity to comment on such proposed disclosure nor shall the Guarantor
disclose any information which would result in a breach by the Company of any of
the undertakings as to confidentiality referred to in the Disclosure Letter.
14
6.6 The obligations of confidentiality imposed by the provisions of clauses 6.2,
6.4 and 6.5 shall not apply to the extent that the confidential information in
question:-
6.6.1 is or comes into the public domain without fault on the part of the
party (or of a member of the same group as such party) to whom the same was
disclosed or to whose attention the same has come;
6.6.2 has been disclosed to the relevant party by a third party which (to
the relevant party's knowledge) was able lawfully to disclose the same; or
6.6.3 is required by law or regulation to be disclosed.
7. Completion
7.1 Completion shall take place at the offices of the Purchaser's Solicitors on
the Completion Date. On such date the Vendor, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the Guarantor and
the Purchaser shall each perform their respective obligations in relation to the
sale and purchase of the Shares in accordance with and as set out in Schedule 3.
In addition ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Guarantor shall agree the cost of closing out
the foreign exchange commitments described in Annexure 6 by reference to the
spot rate at 2.00 p.m. London time on the Completion Date for delivery of US
dollars on the forward dates specified therein and there shall be paid within
three Business Days of Completion by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to the Company or by the
Company to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ the net settlement amount. The Guarantor shall procure
the performance by the Company of this obligation.
7.2 The Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ undertake to and covenant with the Purchaser
that they will procure that between the date of this Agreement and Completion:-
7.2.1 no increase shall be made in the authorised, allotted or issued share
capitals of the Company or any of the Subsidiary Undertakings;
7.2.2 no option shall be offered or granted by the Company or any of the
Subsidiary Undertakings over the whole or any part of their
respective share capitals, whether issued or unissued; and
7.2.3 no dividends or other distributions shall be declared, made or paid
by the Company or any of the Subsidiary Undertakings.
7.3 The Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ further undertake to and covenant with the
Purchaser that they will procure that between the date of this Agreement and
Completion (save with the previous written consent of the Purchaser):-
7.3.1 the business of the Company shall be carried on in the ordinary and
usual course and so as to maintain the same as a going concern and
with a view to profit;
15
7.3.2 the Company shall not:-
7.3.2.1 alter or agree to alter or terminate or agree to terminate
any agreement to which it is a party or enter or agree to
enter into any unusual or abnormal contract or commitment
otherwise than in the ordinary course of business
including, but not limited to, any agreement relating to
the Sophia process (as described in Schedule 6);
7.3.2.2 enter into any transaction, contract or commitment, except
in the ordinary course of its business and not requiring
the payment in any case of an amount in excess of (pound)1
million over any 12 month period.
7.3.2.3 other than in accordance with the Company's existing
capital expenditure plan, incur any capital expenditure or
any capital commitment or dispose of or realise any capital
asset or any interest in any such asset in each case for a
consideration in excess of (pound)50,000;
7.3.2.4 create or agree to create any mortgage, charge, lien or
encumbrance over all or any of its assets (other than liens
arising in the ordinary course of business) or redeem or
agree to redeem any existing security or give or agree to
give any guarantee or indemnity in respect of the
obligations of a third party;
7.3.2.5 alter or agree to alter the terms of any existing borrowing
facilities or arrange any new or additional borrowing
facilities;
7.3.2.6 increase or agree to increase the remuneration (including,
without limitation, pension contributions, bonuses,
commissions and benefits in kind) of any director or
employee or provide or agree to provide any gratuitous
payment or benefit to any such person or any of his
dependants and no employee whose annual remuneration
exceeds (pound)30,000 shall be engaged or dismissed or have
his terms of employment altered.
7.3.3 No Subsidiary Undertaking shall commence any business or carry on any
trade.
7.4 The Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall procure that, between the date of this
Agreement and Completion, reasonable advance notice shall be given to the
Purchaser of all Meetings of the Board of Directors (or of Committees of the
Directors) of the Company (together with an agenda of the business to be
transacted at such Meetings and all supporting documentation) and that duly
authorised representatives of the Purchaser (not being more
16
than two in number at any one time) shall be permitted to attend and speak at
such Meetings. Without the prior written consent of the Purchaser no board
meeting of any Subsidiary Undertaking shall be convened or held.
7.5 The Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall, and shall procure that the officers and
employees of and the professional advisers to the Company and each of the
Subsidiary Undertakings shall, between the date of this Agreement and
Completion, at the request of the Purchaser supply the Purchaser and/or its
professional advisers with such information concerning the Company and the
Subsidiary Undertakings and provide such access to the premises of the Company
and the Subsidiary Undertakings, in each case, as the Purchaser or its
professional advisers may reasonably require. Upon Completion ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and
the Vendor shall each deliver to the Purchaser's Solicitors a letter stating
that to its knowledge (and for this purpose ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Vendor shall
be deemed to have knowledge only of those matters within the knowledge of ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ as if they had made
reasonable enquiries in relation thereto) no breach or non-fulfilment of Clause
7.3 has arisen or occurred.
8. Covenants
8.1 Each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Vendor covenants with the Purchaser that it
will not, either on its own account or in conjunction with or on behalf of any
other person or persons, whether directly or indirectly, for the period of:-
8.1.1 three years from the Completion Date, be engaged or concerned or
interested or participate in or carry on any business which is the same as
or similar to or in competition with the businesses carried on by the
Company, including, but not limited to the following businesses anywhere in
the Territory:
(a) the manufacture or design of aluminium or magnesium sand castings
and the manufacture or design of aluminium investment castings;
(b) the hot or super-plastic forming of titanium; and
(c) the stretch forming of aluminium,
in each case for use in the industries in which each Group Company's
businesses currently operate, PROVIDED THAT:
(i) the restriction contained in this clause 8.1.1 shall not prevent
any member of the Vendor Group from holding securities in any company
listed or dealt in on a recognised investment exchange on the
condition that such holding shall not exceed one per cent of the
class of securities of which the said holding forms part.
(ii) no member of the Vendor Group shall be prevented during such
period from acquiring any business or company or group of companies
which includes any
17
of the businesses referred to in sub-clauses 8.1.1(a) to 8.1.1(c)
("the competing business") which is ancillary to its principal
business (or, in the case of a company which is a member of a group
of companies, that of the group taken as a whole) but that member
shall use all reasonable endeavours to dispose of the competing
business within 12 months of its acquisition; and
8.1.2 three years from the Completion Date, solicit or entice away or
endeavour to solicit or entice away from the Purchaser or any Group
Company any person who was at the Completion Date, or who during the
period of six months prior to the Completion Date had been, employed
by any Group Company whether or not such person would commit a breach
of his or her contract of employment by reason of leaving service,
save that this clause 8.1.2 shall not apply to any individual
employed by any Group Company in a purely secretarial role.
8.2 The Purchaser covenants with the Vendor that it will not, either on its own
account or in conjunction with or on behalf of any other person or persons, and
will procure that no Group Company will, whether directly or indirectly, for the
period of one year from the Completion Date, solicit or entice away or endeavour
to solicit or entice away from the Vendor or any member of the Vendor Group any
person (excluding ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇) who was at the Completion
Date, or who during the period of six months prior to the Completion Date had
been, employed by the Vendors or any member of the Vendor Group whether or not
such person would commit a breach of his or her contract of employment by reason
of leaving service, save that this clause 8.2 shall not apply to any individual
employed by the Vendor or any member of the Vendor Group in a purely secretarial
role.
8.3 The Purchaser hereby covenants to hold the Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, for
themselves and as trustee for each of the members of the Vendor Group,
indemnified and to keep them indemnified from and against all losses, costs,
expenses and other liabilities incurred by either of them and/or any of the
members of the Vendor Group in relation to or arising out of any guarantee,
indemnity or similar contingent obligation which has been given or undertaken by
any member of the Vendor Group in relation to or arising out of any obligations
or liabilities of any Group Company and which is referred to in the Disclosure
Letter for the purpose of this clause. The Purchaser undertakes to use its
reasonable endeavours to procure the release, as soon as reasonably practicable
following Completion, of the Vendor, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and all other members of the
Vendor Group from any such guarantees, indemnities or similar contingent
obligations provided that in the event the Purchaser has been unable to procure
the release of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ from the guarantee given by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in
respect of the Lloyds Bowmaker finance lease (as more particularly described in
the Disclosure Letter) by the second anniversary of the Completion Date then the
Purchaser shall at that time discharge in full (by way of repayment of all
outstanding amounts due pursuant to such finance lease) the Lloyds Bowmaker
finance lease and to the extent the Purchaser has failed to so discharge within
a period of ten Business Days from such date ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be entitled
(in its absolute discretion) to procure the discharge and recover from the
Purchaser, by way of indemnity, the amount of such repayment and all costs,
charges and expenses incurred by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in relation thereto.
18
8.4 The Vendor hereby covenants to hold the Purchaser, for itself and as trustee
for each Group Company, indemnified and to keep it and them indemnified from and
against all losses, costs, expenses and other liabilities incurred by any Group
Company in relation to or arising out of any guarantee, indemnity or similar
contingent obligation which has been given or undertaken by any Group Company in
relation to or arising out of any obligations or liabilities of any member of
the Vendor Group. The Vendor undertakes to use its reasonable endeavours to
procure the release as soon as reasonably practicable following Completion (if
not effected upon Completion), of each Group Company from any such guarantees,
indemnities or similar contingent obligations given or undertaken by any Group
Company in relation to or arising out of any obligations or liabilities of any
member of the Vendor Group which remain outstanding following Completion.
8.5 The Purchaser undertakes with the Vendor with effect from the day falling
one month after Completion and for a period of five years from Completion not to
use, and to procure that no Group Company nor any person connected with any such
company shall use, the names, styles and colours of any member of the Vendor
Group including, without limitation, "▇▇▇▇▇▇▇ ▇▇▇▇▇▇" or any variation thereof.
8.6 The parties agree that in relation to the outstanding insurance claim (as
more particularly described in the Disclosure Letter) in respect of the damage
to the Property at Watchmead, Welwyn Garden City (as referred to in Schedule 7),
any monies received in respect of such claim ("the Amount Recovered") shall be
dealt with in the following manner:-
8.6.1 that part of the Amount Recovered which relates to the damage to
the said Property shall be for the account of the Company and shall be
paid to the Company within five Business Days of receipt of the Amount
Recovered, where the Amount Recovered is received by a party other than
the Company;
8.6.2 that part of the Amount Recovered which relates to the business
interruption caused by the damage to the said Property and attributable
to the period prior to Completion shall be for the account of ▇▇▇▇▇▇▇
▇▇▇▇▇▇ and shall be paid (either by Aeromet or to the extent such
payment would be unlawful an amount equivalent thereto shall be paid by
the Purchaser) within five Business Days of receipt of that part of the
Amount Recovered, where the Amount Recovered is received by a party
other than ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
8.7 Each of the undertakings contained in clause 8 is a separate undertaking by
the Vendor or the Purchaser (as the case may be) and in the event that any such
undertaking shall be found to be void but would be valid if some part were
deleted or the period or area of application were reduced, then such undertaking
shall apply with such modification as may be necessary to make it valid and
effective.
8.8 The Vendor shall procure that all lump sum death in service benefits which
may become payable to any Relevant Person (as defined in paragraph 21.1 of
Schedule 4) under the TKR International Limited Retirement Benefits Scheme (the
"Scheme") shall be fully insured under a policy of insurance with an insurance
company of good repute authorised to
19
issue such insurance for a period of one month following Completion or such
shorter period as the Purchaser may notify to the Vendor in writing. The
Purchaser shall pay to the Vendor (or such other person or organisation as the
Vendor advises payment should be made) the contributions due and payable in
respect of employees of the Company or any Group Company, who are entitled as at
Completion to lump sum death in service benefits, at the rate of 0.185% of the
lump sum death in service benefits payable in respect of each such employee (or
at such rate which may become payable by the companies within the Vendor Group
participating in the Scheme following any review by the insurance company with
whom benefits are insured). Where life cover continues to be provided by the
Scheme to such employees following Completion the Purchaser shall procure that
no amendment will be made to the level of salary payable or the level of cover
provided in respect of each such employee until one month after Completion
without the Vendor's prior written consent.
9. Costs
Each party shall pay its own costs and expenses incurred in the negotiation,
preparation and execution of this Agreement.
10. Restrictive Trade Practices Act 1976
Where this Agreement is or forms part of an agreement which is subject to
registration under the Restrictive Trade Practices Act 1976 ("RTPA"), no
restriction accepted or information provision made under that agreement shall be
given effect to or enforced until the day after particulars of the agreement
have been furnished to the Director General of Fair Trading under section 24 of
the RTPA. If any party shall wish to furnish such particulars, the other parties
will render such co-operation and undertake such action as may reasonably be
required of them for such purpose so that particulars may be furnished as soon
as practicable following the signature of this Agreement and each of the parties
consents to the disclosure of all information so furnished. In this clause the
words and terms "agreement" and "subject to registration" shall have the
meanings respectively given to them by the RTPA and the reference to
"restrictions accepted" or "information provisions made" under the agreement
shall be to restrictions accepted or information provisions made by virtue of
which the agreement is subject to registration.
11. Guarantee
11.1 The Guarantor hereby unconditionally and irrevocably guarantees to the
Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, their successors and assigns the due and complete
performance by the Purchaser of all of its obligations under this Agreement. If
the Purchaser shall default in the due performance of any of its obligations
under this Agreement, the Guarantor shall immediately procure the same to be
performed.
20
11.2 The Guarantor agrees that the Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be entitled
to enforce this guarantee without making any demand on or taking proceedings
against the Purchaser and shall not be required before enforcing this guarantee
to pursue, enforce or exhaust any other right, remedy or security which it may
have. This guarantee shall continue in full force and effect until all the
liabilities and obligations of the Purchaser under this Agreement have been
fully performed and discharged.
11.3 This guarantee shall not be affected in any way by any time or indulgence
granted to the Purchaser or by any variation, compromise or release of any of
its obligations hereunder.
11.4 This guarantee shall not be affected by the liquidation or dissolution of
the Purchaser or by the appointment of a receiver over the undertaking, property
or assets of the Purchaser or by any circumstances affecting the obligation of
the Purchaser to meet its liabilities or by any alteration in the constitution
of the Purchaser or by reason of any change in the interest of the Guarantor in
the Purchaser. In the event of any such matters or any other act or event in
consequence of which the Purchasers loses its separate legal identity, the
Guarantor shall become liable for the obligations of the Purchaser under this
Agreement as if it were a primary obligor.
11.5 This guarantee shall be of a continuing nature and shall not be considered
as wholly or partially satisfied by the payment or liquidation at any time or
times hereafter of any sum or sums of money for the time being due to the Vendor
or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ but shall extend to cover and be a security for all future
sums of money at any time owing to the Vendor or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ under this
Agreement notwithstanding any such payment or liquidation.
11.6 This guarantee shall not be affected or impaired by reason of any fact or
event (whether or not similar to any of the facts or events referred to in
clauses 11.2 to 11.5) which in the absence of this provision would or might
constitute or afford a legal or equitable discharge or release of or defence to
a guarantee (other than the express release of its obligations).
11.7 As a separate and independent stipulation, the Guarantor agrees that any
sum or sums of money intended to be the subject of this guarantee shall be
recoverable from the Guarantor as sole or principal debtor even if they would
not be recoverable from the Purchaser, whether by reason of any legal
limitation, disability or incapacity or liquidation or the Purchaser or any
other fact or circumstance (whether known to the Vendor or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or
not) but which would have been recoverable from the Guarantor if the Guarantor
was the sole or principal debtor in respect of such liability in place of the
Purchaser.
11.8 In consideration of the obligations of the Guarantor under this clause 11
the Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ undertake to the Guarantor to fulfil their
obligations to the Purchaser under this Agreement.
21
12. Guarantee by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
12.1 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ hereby unconditionally and irrevocably guarantees to the
Purchaser and the Guarantor, their successors and assigns the due and complete
performance by the Vendor of all of its obligations under this Agreement. If the
Vendor shall default in the due performance of any of its obligations under this
Agreement, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall immediately procure the same to be performed.
12.2 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ agrees that the Purchaser and the Guarantor shall be
entitled to enforce this guarantee without making any demand on or taking
proceedings against the Vendor and shall not be required before enforcing this
guarantee to pursue, enforce or exhaust any other right, remedy or security
which it may have. This guarantee shall continue in full force and effect until
all the liabilities and obligations of the Vendor under this Agreement have been
fully performed and discharged.
12.3 This guarantee shall not be affected in any way by any time or indulgence
granted to the Vendor or by any variation, compromise or release of any of its
obligations hereunder.
12.4 This guarantee shall not be affected by the liquidation or dissolution of
the Vendor or by the appointment of a receiver over the undertaking, property or
assets of the Vendor or by any circumstances affecting the obligation of the
Vendor to meet its liabilities or by any alteration in the constitution of the
Vendor or by reason of any change in the interest of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in the
Vendor. In the event of any such matters or any other act or event in
consequence of which the Vendor loses its separate legal identity, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ shall become liable for the obligations of the Vendor under this
Agreement as if it were a primary obligor.
12.5 This guarantee shall be of a continuing nature and shall not be considered
as wholly or partially satisfied by the payment or liquidation at any time or
times hereafter of any sum or sums of money for the time being due to the
Purchaser or the Guarantor but shall extend to cover and be a security for all
future sums of money at any time owing to the Purchaser or the Guarantor under
this Agreement notwithstanding any such payment or liquidation.
12.6 This guarantee shall not be affected or impaired by reason of any fact or
event (whether or not similar to any of the facts or events referred to in
clauses 12.2 to 12.5) which in the absence of this provision would or might
constitute or afford a legal or equitable discharge or release of or defence to
a guarantee (other than the express release of its obligations).
12.7 As a separate and independent stipulation, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ agrees that any
sum or sums of money intended to be the subject of this guarantee shall be
recoverable from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as sole or principal debtor even if they would
not be recoverable from the Vendor, whether by reason of any legal limitation,
disability or incapacity or liquidation or the Vendor or any other fact or
circumstance (whether known to the Purchaser or the Guarantor or not) but which
would have been recoverable from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ if ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ was the sole
or principal debtor in respect of such liability in place of the Vendor.
12.8 In consideration of the obligations of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ under this clause 12
the Purchaser
22
and the Guarantor undertake to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to fulfil their obligations to the
Vendor under this Agreement.
13. Termination
13.1 If at any time at or before Completion the Purchaser becomes aware of any
fact, matter, event or circumstances which would result in a breach of any of
the Warranties if they were deemed given again immediately before Completion by
reference to the facts and circumstances then subsisting (but so that Warranty
7.2 shall be deemed given again only with the addition of the words "otherwise
than as a result of completion of this Agreement" and Warranty 7.3 shall not be
deemed to be given again) and such breach or claim would be likely to result in
a liability under the Warranties (if they were actually repeated immediately
prior to Completion) in excess of (pound)4 million or a reduction in profit
before interest and taxation of the Company for the year ending 31 December 1998
of (pound)500,000 or more ("a Deemed Breach"), then the Purchaser shall be
entitled by notice to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to terminate this Agreement whereupon this
Agreement (except for the provisions of this Clause and of Clauses 1, 6.2 to 6.6
(inclusive), 15, 16 and 17) shall be null and void and of no further effect. The
Vendor undertakes to notify the Purchaser of any such fact, matter, event or
circumstances which comes to its attention having made reasonable enquiries.
13.2 Whether or not the Purchaser exercises its right to terminate this
Agreement in accordance with Clause 13.1 it shall not be entitled to make any
claim against the Vendor or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in respect of the fact, matter, event
or circumstance giving rise to the Deemed Breach.
14. Properties
14.1 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Company shall enter into the Option Agreement upon
Completion.
14.2 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the Company and the Guarantor shall enter into the Deeds of
Guarantee and Variation upon Completion.
14.3 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Company shall enter into the Birmingham Lease and
the Birmingham Car Parking Licence upon Completion.
14.4 On Completion ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ will procure that a statutory declaration is
handed over to the Purchaser, to the effect that:-
14.4.1 the Unit H Lease was taken in the wrong company name in error and
should have been in the name of Aeromet;
14.4.2 rent under the Unit H Lease has always been paid by Aeromet rather
than any third party; and
14.4.3 Aeromet is the beneficial owner of the Unit H lease.
23
14.5 As soon as practicable after Completion, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ will use its
reasonable endeavours to complete and hand over to the Purchaser at the
Purchaser's cost a deed of rectification by which this error is remedied and the
Unit H Lease is vested in Aeromet, and in the event that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ has been
unable to do so within three months from Completion despite using its reasonable
endeavours, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ will use its reasonable endeavours to procure an
assignment of the Unit H Lease from Kent Aerospace Castings plc to Aeromet
including obtaining a licence to assign from the immediate and superior
landlords provided that in each such case the Purchaser shall meet the
reasonable cost of so doing.
14.6 The Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ jointly and severally undertake to hold the
Purchaser and the Company and each of the Subsidiary Undertakings indemnified
and to keep them indemnified from and against all actions claims proceedings
losses damages payments costs expenses or liabilities incurred by each of them
in relation to or arising in relation to any leasehold property in any part of
Great Britain other than the Properties including any actions claims proceedings
losses damages payments costs expenses or liabilities arising directly or
indirectly from any obligation to pay rent or rents service charges insurance
premiums or other monies or observe or perform covenants agreements or
conditions contained in the agreement for lease or other document ancillary or
supplemental to a lease whether or not expressed to be so or any obligations to
make payments under or otherwise observe or perform any guarantee or surety
whether as primary or secondary obligor or indemnity or otherwise assume any
liabilities of any third party by accepting a lease. v
15. General
15.1 This Agreement constitutes the entire and only legally binding agreement
between the parties relating to the sale and purchase of the Shares and no
variation of this Agreement shall be effective unless made in writing signed by
or on behalf of each of the parties and expressed to be such a variation.
15.2 No failure or delay by any party or time or indulgence given by such party
in or before exercising any remedy or right under or in relation to this
Agreement shall operate as a waiver of the same nor shall any single or partial
exercise of any remedy or right preclude any further exercise of the same or the
exercise of any other remedy or right.
15.3 No waiver by any party of any requirement of this Agreement or of any
remedy or right under this Agreement shall have effect unless given by notice in
writing signed by such party. No waiver of any particular breach of the
provisions of this Agreement shall operate as a waiver of any repetition of such
breach.
15.4 Time shall be of the essence of this Agreement, both as regards the dates
and periods specifically mentioned and as to any dates and periods which may by
agreement in writing between the parties be substituted for any of them.
15.5 This Agreement may be executed in two or more counterparts and execution by
any of the parties of any one of such counterparts will constitute due execution
of this Agreement.
24
15.6 The provisions of this Agreement shall remain in full force and effect
after Completion so far as they then remain to be observed and performed.
15.7 The Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ undertake to the Purchaser that as soon as
possible they will do or procure to be done all such further acts and things and
execute or procure the execution of all further such documents as the Purchaser
may from time to time reasonably require for the purpose of vesting effectively
the beneficial and legal ownership of the Shares or as it may direct free from
all liens, charges, encumbrances and adverse claims and otherwise to give to the
Purchaser the full benefit of the provisions of this Agreement.
15.8 Any rights arising from or in connection with this Agreement may not be
assigned by any party save that the Purchaser may, upon providing written notice
thereof to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, assign such rights to any subsidiary or holding
company or to any subsidiary of such holding company (any such company being
hereinafter referred to as a "member of the Guarantor's Group") provided that
any such assignee remains a member of the Guarantor's Group and provided further
that before any such assignee or the Purchaser ceases to be a member of the
Guarantor's Group, the Guarantor will procure that, upon providing written
notice thereof to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, such assignee or the Purchaser itself (as the
case may be) assigns such rights to the Guarantor or to another member of the
Guarantor's Group (any such further assignment to be subject to the same
conditions as are set out in this clause 15.8).
16. Notices
16.1 Any notice shall be in writing and signed by or on behalf of the person
giving it. Except in the case of personal service, any notice shall be sent or
delivered to the party to be served at the address set out in Schedule 1 marked
for the attention of the person set out therein. Any alteration to such details
shall, to have effect, be notified to the other parties in accordance with this
clause.
16.2 Service of a notice must be effected by one of the following methods:-
16.2.1 personally on a director or the secretary of any party and shall be
treated as served at the time of such service;
16.2.2 by prepaid first class post (or by air courier if from one country
to another) and shall be treated as served on the second (or if by air
courier the fourth) Business Day in the place of receipt of delivery after
the date of posting. In proving service it shall be sufficient to prove
that the envelope containing the notice was correctly addressed, the
postage paid and duly posted;
16.2.3 by delivery of the notice through the letterbox of the party to be
served and shall be treated as served on the first Business Day after the
date of such delivery; or
16.2.4 by facsimile transmission and shall be treated as served at the time
and on the date on which the transmission is made, such delivery being
evidenced by printed
25
confirmation of the sender's facsimile machine.
17. Applicable law and jurisdiction
17.1 This Agreement shall be governed by and construed in accordance with the
laws of England.
17.2 The parties irrevocably submit to the exclusive jurisdiction of the Courts
of England in respect of any claim, dispute or difference arising out of or in
connection with this Agreement.
17.3 The Guarantor shall at all times maintain an agent for the service of
process and any other documents in proceedings in England or any other
proceedings in connection with this Agreement. Such agent shall initially be the
Purchaser and any writ, judgment or other nature of legal process shall be
sufficiently served on the Guarantor if delivered to such agent at its
registered office for the time being. The Guarantor undertakes not to revoke the
authority of the above-named agent provided that the Guarantor shall be entitled
by giving notice in writing to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to appoint an alternative agent on
the same terms set out in this Clause. If, for any reason, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
reasonably requests the Guarantor to do so, the Guarantor shall promptly appoint
another such agent with an address in England and advise ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ thereof.
If, following such a request and having given the Guarantor a reasonable
opportunity to make such appointment, the Guarantor fails to appoint another
agent, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be entitled to appoint one on behalf of the
Guarantor and shall provide written notice thereof to such party.
AS WITNESS this Agreement has been executed by or on behalf of the parties the
day and year first before written.
26
SCHEDULE 1
Part I
Particulars of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ plc
Registered office: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Registered no: 164822
For the attention of: Company Secretary
Part II
Particulars of the Vendor
Name: Westpark Limited
Registered office: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Registered no: 1516704
For the attention of: Company Secretary
Part III
Particulars of the Purchaser
Name: Pacific Aerospace & Electronics (UK) Limited
Registered office: c/o Macfarlanes, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Registered no: 3590167
For the attention of: ▇▇▇ ▇▇▇▇▇
27
Part IV
Particulars of the Guarantor
Name: Pacific Aerospace & Electronics, Inc.
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
For the attention of: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
28
SCHEDULE 2
Part I
Particulars of the Company
Name:- Aeromet International PLC
Registered in England under no:- 1626585
Registered Office:- Eurolink ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇
Authorised capital:- (pound)500,000 divided into 5,000,000 ordinary shares of
10p each
Issued and fully paid up capital:- (pound)100,000 divided into 1,000,000
ordinary shares of 10p each
Registered Shareholders:- Technical Component Industries Limited - 1,000,000
ordinary shares of 10p
Directors:- A D Crighton
J ▇▇▇▇▇▇▇▇▇
▇ ▇ ▇▇▇▇
Coach House Management Services Limited
▇▇▇▇▇ Street Corporate Services Limited
Secretary:- K ▇▇▇▇▇▇
Accounting reference date:- 31 December
Such shares are the subject of a transfer to the Vendor which is presently
subject to adjudication for stamp duty.
29
Part II
Particulars of the Subsidiary Undertakings
Name:- ▇▇▇▇▇ ▇▇▇▇ (Aircraft Components) Limited
Registered in England under no:- 505590
Registered Office:- ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Authorised capital:- (pound)10,000 divided into 10,000 ordinary shares of
(pound)1 each
Issued and fully paid up capital:- (pound)1,000 divided into 1,000 ordinary
shares of (pound)1 each
Registered Shareholders:- Aeromet International PLC - 1,000 ordinary shares
of (pound)1
Directors:- Coach House Management Services Limited
▇▇▇▇▇ Street Corporate Services Limited
Secretary:- ▇. ▇▇▇▇▇▇
Accounting reference date:- 31 December
30
Part II (continued)
Particulars of the Subsidiary Undertakings
Name:- Kent Aerospace Limited
Registered in England under no:- 651741
Registered Office:- ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Authorised capital:- (pound)10,000 divided into 10,000 ordinary shares of
(pound)1 each
Issued and fully paid up capital:- (pound)100 divided into 100 ordinary
shares of (pound)1 each
Registered Shareholders:- Aeromet International Plc -
100 ordinary shares of (pound)1
Directors:- Coach House Management Services Limited
▇▇▇▇▇ Street Corporate Services Limited
Secretary:- ▇. ▇▇▇▇▇▇
Accounting reference date:- 31 December
31
Part II (continued)
Particulars of the Subsidiary Undertakings
Name:- TKR Aerospace Limited
Registered in England under no:- 689646
Registered Office:- ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Authorised capital:- (pound)100,000 divided into 100,000 ordinary shares of
(pound)1 each
Issued and fully paid up capital:- (pound)13,520 divided into 13,520 ordinary
shares of (pound)1 each
Registered Shareholders:- Aeromet International PLC - 13,520 ordinary shares
of (pound)1
Directors:- Coach House Management Services Limited
▇▇▇▇▇ Street Corporate Services Limited
Secretary:- ▇. ▇▇▇▇▇▇
Accounting reference date:- 31 December
32
Part II (continued)
Particulars of the Subsidiary Undertakings
Name:- TKR Group Limited
Registered in England under no:- 561819
Registered Office:- ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Authorised capital:- (pound)30,000 divided into 30,000 ordinary shares of
(pound)1 each
Issued and fully paid up capital:- (pound)30,000 divided into 30,000 ordinary
shares of (pound)1 each
Registered Shareholders:- Aeromet International PLC - 30,000 ordinary shares
of (pound)1
Directors:- Coach House Management Services Limited
▇▇▇▇▇ Street Corporate Services Limited
Secretary:- ▇. ▇▇▇▇▇▇
Accounting reference date:- 31 December
33
Part II (continued)
Particulars of the Subsidiary Undertakings
Name:- TKR International Limited
Registered in England under no:- 341757
Registered Office:- ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Authorised capital:- (pound)2,384,000 divided into:-
(i) 9,272,000 deferred ordinary shares of 25 ▇▇▇▇▇ each
(ii) 6,600,000 ordinary shares of 1 ▇▇▇▇▇ each
Issued and fully paid up capital:- (pound)2,384,000 divided into:-
(i) 9,272,000 deferred ordinary shares of 25 ▇▇▇▇▇ each
(ii) 6,600,000 ordinary shares of 1 ▇▇▇▇▇
Registered Shareholders:- Aeromet International PLC -
(i) 9,272,000 deferred ordinary shares of 25 ▇▇▇▇▇
(ii) 6,600,000 ordinary shares of 1 ▇▇▇▇▇
Directors:- Coach House Management Services Limited
▇▇▇▇▇ Street Corporate Services Limited
Secretary:- ▇. ▇▇▇▇▇▇
Accounting reference date:- 31 December
34
Part II (continued)
Particulars of the Subsidiary Undertakings
Name:- Truflo Gas Turbines Limited
Registered in England under no:- 1943211
Registered Office:- ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Authorised capital:- (pound)250,000 divided into 250,000 ordinary shares of
(pound)1 each
Issued and fully paid up capital:- (pound)250,000 divided into 250,000
ordinary shares of (pound)1 each
Registered Shareholders:- Aeromet International PLC - 250,000 ordinary shares
of (pound)1
Directors:- Coach House Management Services Limited
▇▇▇▇▇ Street Corporate Services Limited
Secretary:- ▇. ▇▇▇▇▇▇
Accounting reference date:- 31 December
35
SCHEDULE 3
Completion Obligations
Part I
Obligations of the Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
1. The Vendor shall deliver to the Purchaser:-
1.1 transfers of all the Shares duly executed by the registered holder thereof
in favour of the Purchaser or a person or persons nominated by the Purchaser,
together with the share certificates and other authority under which such
transfer has been executed relating thereto;
1.2 an indemnity in such form as the Purchaser shall require in relation to any
missing share certificates of the Shares and the issued shares of the Subsidiary
Undertakings;
1.3 an engrossment of the Tax Deed executed by the Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇;
1.4 the common seal, statutory books and other record books of each Group
Company written-up to the time immediately prior Completion;
1.5 the certificates in respect of all the issued shares in the Subsidiary
Undertakings and duly executed transfers in respect of any such shares not
registered in the name of the Company or a Subsidiary Undertaking in favour of
the Purchaser or a person nominated by the Purchaser;
1.6 unqualified resignation letters with effect from the Completion Date in the
approved terms from K ▇▇▇▇▇▇, Coach House Management Services Limited and ▇▇▇▇▇
Street Corporate Services Limited;
1.7 a power of attorney in the approved terms in favour of the Purchaser or its
nominee(s) generally in respect of the Shares and which enables the Purchaser or
its nominee(s) to attend and vote at general meetings of the Company;
1.8 the Property Leases duly executed;
1.9 the Birmingham Lease and the Birmingham Car Parking Licence duly executed;
1.10 one part of the Option Agreement duly executed;
1.11 the letter in the approved terms regarding stamp duty;
1.12 a duly signed letter in relation to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in the approved terms;
1.13 the Deed of Change of Trustee duly executed by the Company and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Pension Trustees Limited;
36
1.14 deeds of release whereby the Company is released from those guarantees
referred to in paragraph 6.1 of the Disclosure Letter.
2. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall repay or procure the repayment of all sums due to any
member of the Group at Completion by any member of the Vendor Group other than
trade debts incurred in the ordinary and normal course of any member of the
Group's business.
3. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ will repay by telegraphic transfer the deposit of US $100,000
to the Guarantor.
4. The Vendor shall procure the holding of a meeting of the board of directors
of each Group Company at which board resolutions in the approved terms shall be
passed and shall supply the Purchaser with certified copies thereof.
Part II
Obligations of the Purchaser and the Guarantor
The Purchaser and the Guarantor shall, conditionally upon the implementation of
the matters set out in Part I of this Schedule:-
1. pay the Shares Consideration to the Vendor for value on the Completion Date;
2. procure the repayment by Aeromet of the Intra Group Debt for value on the
Completion Date;
3. deliver to the Vendor an engrossment of the Tax Deed executed by the
Purchaser and the Guarantor;
4. deliver to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇:-
4.1 the counterparts of the Birmingham Lease and the Birmingham Car Parking
Licence duly executed;
4.2 one part of the Option Agreement duly executed by the Company;
4.3 the Deeds of Guarantee and Variation duly executed;
4.4 the duly signed letter referred to at paragraph 1.11 of part I of this
Schedule ;
4.5 the counterpart of the letter referred to at paragraph 1.12 of Part I of
this Schedule duly signed;
37
SCHEDULE 4
General Warranties
Accuracy of information
1.1 The information contained in Part I of Schedule 1 and in Schedule 2 is true
and accurate in all respects.
Constitution of the Company
2.1 The statutory books and minute books of the Company have been properly kept
and contain an accurate and complete record of the matters which should be dealt
with in those books and no notice or allegation that any of them is incorrect or
should be rectified has been received.
2.2 The Shares are legally and beneficially owned by the Vendor are free from
all liens, charges, equities and encumbrances or interests of any nature
whatsoever, or any agreement, arrangement or obligation to create any of the
same in favour of any other person, are fully paid-up and together represent the
entire allotted and issued share capital of the Company.
2.3 The copy of the memorandum and articles of association of the Company
annexed to the Disclosure Letter is true and complete and has embodied in it or
annexed to it a copy of every such resolution or agreement as is referred to in
section 380(1) of the Companies Act and sets out in full the rights and
restrictions attaching to the share capital of the Company.
2.4 Save as provided for in this Agreement, no person has the right (whether
exercisable now or in the future and whether contingent or not) to call for the
present or future creation, allotment, redemption, repayment, issue or transfer
of or to grant to any person the right (whether exercisable now or in the future
and whether conditional or not) to call for the creation, allotment, issue,
transfer, redemption or repayment of, any share or loan capital of the Company
under any option or other agreement or under any right of conversion or
pre-emption.
2.5 The Company has made all returns which it is required to make to the
Registrar of Companies.
2.6 Due compliance has been made with all the provisions of the Companies Act,
the Articles of Association of the Company from time to time in force and other
legal requirements, in connection with the formation of the Company, the
allotment, issue, transfer, purchase and redemption of shares, debentures and
other securities in the Company, the reduction of the authorised and issued
share capital of the Company, any amendment to the memorandum or articles of
association of the Company and the passing of resolutions and the payment of
dividends by the Company.
2.7 Since the Accounts Date, no share or convertible share securities of the
Company (or any rights or interests therein) have been created, allotted or
issued or agreed to be created,
38
allotted or issued.
2.8 The Company has no branches, agency, place of business or permanent
establishment outside the United Kingdom.
Capacity and interest of the Vendor and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
3.1 Each of the Warrantors has the requisite power and authority to enter into
and perform this Agreement and has the requisite power and authority to enter
into and perform the Tax Deed and the other documents to be executed in
connection with it ("the Other Documents"), all of which constitute (or will
when executed constitute) legal and valid binding obligations on them.
3.2 The execution and delivery of and the performance by the Warrantors of their
obligations under this Agreement and the Tax Deed and the Other Documents will
not:-
3.2.1 conflict with, result in a breach of, or constitute a default under,
any agreement or instrument to which either Warrantor is a party or by
which either Warrantor is bound; or of the Memorandum or Articles of
Association of the Company
3.2.2 conflict with, result in a breach of any order, judgment or decree of
any court or governmental agency to which either Warrantor is a party or by
which either Warrantor is bound; or
3.2.3 result in a breach of the rules or requirements of any professional
body or trade association of which either Warrantor is a member or by which
either Warrantor is bound.
3.3 No indebtedness (actual or contingent) is outstanding and no contract exists
between any Group Company and the Vendor or any member of the Vendor Group other
than trading arrangements on normal commercial terms.
3.4 Neither of the Warrantors nor any person connected with either of them has
any interest, direct or indirect, in any business which competes or is likely to
become competitive with the business or any proposed business of the Company
other than those holding securities as more particularly defined in Clause
8.1.1.
39
Accounts and Management Accounts and Working Capital
4.1 The Accounts have been prepared in accordance with all applicable SSAPs,
FRSs or UITF abstracts or where there are none, in accordance with generally
accepted accounting practice in the United Kingdom, complied in all respects
with the requirements of the Companies Act as at the Accounts Date and in all
respects with relevant statements of standard accounting practice issued and in
force or adopted by the Accounting Standards Board Limited as at the Accounts
Date and show a true and fair view of the state of affairs and the financial
position of each Group Company as at and for the financial year ended on the
Accounts Date and of the profits or losses of each Group Company for the
financial year ended on the Accounts Date and, without prejudice to the
generality of the foregoing, proper provision or reserve (as appropriate) in
accordance with generally accepted accounting practice in the United Kingdom and
all relevant statements of standard accounting practice as aforesaid has been
made in the Accounts for all assets and liabilities of each Group Company.
4.2 Save as expressly disclosed, the Accounts are not affected by any
extraordinary, exceptional or non-recurring items.
4.3 The bases and accounting policies of each Group Company adopted for the
purpose of preparing the Accounts are the same as those adopted for the purpose
of preparing the audited accounts of that Group Company for the two preceding
accounting periods.
4.4 All books of account of each Group Company have at all times been properly
and accurately kept and completed, are up to date and contain due and accurate
records of all the information required by law and generally accepted accounting
principles and contain or reflect no material inaccuracies (whether by omission
or otherwise) or discrepancies of any kind.
4.5 The Management Accounts have been prepared on a consistent basis with the
monthly management accounts usually prepared by Aeromet and fairly reflect the
directors of Aeromet's understanding of the trading and financial position of
Aeromet for the five month period ending on and as at the date to which they are
prepared.
4.6 The method of valuing stock-in-trade and work-in-progress for the Accounts
was in accordance with SSAP 9 and, subject to that Standard, was consistent in
all respects with that adopted in the corresponding audited accounts for the
preceding three financial periods and has not been challenged by the Inland
Revenue for taxation purposes.
Business since the Accounts Date
5. Since the Accounts Date:-
5.1 the Company has (to the extent it is not dormant) carried on its business in
the ordinary and usual course and without entering into any transaction,
assuming any liability or making any payment not provided for in the Accounts
which is not in the ordinary course of business and without any interruption or
alteration in the nature, scope or manner of its business;
40
5.2 the Company has not borrowed or raised any money or taken any financial
facility other than Approved Debt;
5.3 the Company has paid its creditors within the times agreed with such
creditors;
5.4 the Company has not entered into, or agreed to enter into, any capital
commitment nor has it disposed of or realised any capital assets other than in
accordance with budget;
5.5 no share or loan capital has been allotted or issued or agreed to be
allotted or issued by the Company;
5.6 there has been no reduction in the book value of the net assets of the
Company (determined in accordance with the Company's existing accounting
policies);
5.7 there has been no material deterioration in the financial position or
turnover of the Company;
5.8 no resolution of the shareholders of the Company has been passed nor has any
general meeting of the shareholders of the Company been convened;
5.9 no distribution of capital or income has been declared, made or paid in
respect of any share in the capital of the Company.
Guarantees, indemnities and borrowings
6.1 There is not outstanding any guarantee, indemnity, security or similar
commitment whether secured or unsecured given by the Company to secure the
obligations of any third party.
6.2 The Company has no borrowings, and has not agreed to create any borrowings,
from its bankers or any other source and, in respect of borrowings disclosed in
the Disclosure Letter, the Company has not exceeded any limitation on its
borrowing contained in its Articles of Association or in any debenture or loan
stock deed or other instrument.
6.3 No option, right to acquire, mortgage, charge, pledge, lien (other than a
lien arising by operation of law in the ordinary course of business) or other
form of security or encumbrance or equity on, over or affecting the whole or any
part of the undertaking or assets of the Company is outstanding and there is no
agreement or commitment to give or create any.
6.4 No part of the borrowings or loan capital of the Company is dependent on the
guarantee or indemnity of or security provided by any other person.
Customers and suppliers
7.1 Neither more than ten per cent. of the aggregate amount of all the purchases
of the
41
Company nor more than ten per cent. of the aggregate amount of all the sales of
the Company in the financial year ended 31 December 1997 were obtained or made
from or to the same supplier or customer (including any person, firm or company
in any way connected with such supplier or customer).
7.2 No customer or supplier of or to the Company who accounts for ten per cent.
or more of the total sales by or supplies to the Company has during the last
twelve months ceased or given written notice to the Company of an intention to
cease trading with the Company.
7.3 Neither ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ nor the Company have been notified that any customer
or supplier of or to the Company which is listed in Annexure 5 will refuse to
continue to deal with the Company or will deal with it on a smaller scale or on
terms less favourable to the Company than at present as a result of the
completion of this Agreement.
7.4 The Customers and suppliers listed in Annexure 5 represent the ten largest
customers and the ten largest suppliers by reference to sums paid or received
from such persons in the financial year ended 31 December 1997.
Title to and condition of assets
8.1 Except for trading stock sold, realised or applied by the Company in the
ordinary course of its day to day business or for trading stock acquired subject
to retention or reservation of title by the supplier or manufacturer of such
trading stock and excluding immovable property, all the tangible assets included
in the Accounts or acquired by the Company after the Accounts Date:-
8.1.1 are legally and beneficially owned by the Company free from any
mortgage, charge, lien or other encumbrance (other than those arising by
operation of law);
8.1.2 are not held subject to any agreement for lease, hire, hire purchase
or sale on conditional or deferred terms; and
8.1.3 are in the possession or under the control of the Company.
8.2 In respect of any of the items referred to in the preceding paragraph 8.1
which are held under any agreement for lease, hire, hire purchase or sale on
conditional or deferred terms, there has been no default by the Company in the
performance or observance of any of the provisions of such agreements.
8.3 The plant and machinery, including fixed plant and machinery, and all
vehicles and office and other equipment used in connection with the business of
any member of the Company are in satisfactory working order have been regularly
and properly maintained and are fit for their purpose.
8.4 The Company's work-in-progress is in good condition and is capable of being
sold by the Company in the ordinary course of its business.
42
Insurance
9.1 The Disclosure Letter contains details of all insurance policies currently
in force in relation to the Company and of all claims made during the twelve
months prior to the date of this Agreement in respect of such policies.
9.2 There is no claim outstanding under such insurance policies nor, so far as
the Warrantors are aware, has any event occurred which will give rise to any
such claim.
9.3 The Company has paid all premiums due and, so far as the Warrantors are
aware, has not done or omitted to do anything the doing or omission of which is
likely to make any such policy of insurance void or voidable.
Grants
10. During the two years preceding the date of this Agreement, the Company has
not applied for or received any investment grant, employment subsidy or other
similar allowance from any authority or agency.
Licences and consents
11. All necessary licences, consents, approvals, permissions, permits and
authorities (public and private) have been obtained to enable the Company to
carry on its business effectively in the places and in the manner in which such
business is now carried on and all such licences, consents, approvals,
permissions, permits and authorities are valid and subsisting and so far as the
Warrantors are aware there is no reason which would cause any of them to be
suspended, cancelled or revoked. For the avoidance of doubt, this Warranty 11
shall not apply to any licences of any kind in respect of Intellectual Property.
Litigation
12.1 The Company is not engaged in any litigation or arbitration proceedings
and, no such litigation or arbitration proceedings are pending or threatened by
or against the Company, nor has any event occurred which is likely to give rise
to any such litigation or arbitration proceedings being commenced by or against
the Company.
12.2 The Company is not being prosecuted for any criminal offence and, so far as
the Warrantors are aware, there are no such prosecutions pending or threatened
nor has any event occurred which is likely to give rise to any such prosecution.
12.3 The Company is not subject to any order or unsatisfied judgment given by
any court, governmental agency or other regulatory body or is a party to any
undertaking or assurance given to any court, governmental agency or other
regulatory body which is still in force and, so far as the Warrantors are aware,
no event has occurred which is likely to result in the Company becoming subject
to any such order or judgment or being required to be a party to
43
any such undertaking or assurance.
12.4 There are no investigations being carried out into the Company and, so far
as the Warrantors are aware, no event has occurred which is likely to give rise
to any such investigations.
13. Competition law matters
13.1 The Company is not or has not been a party to any agreement (as defined in
the Restrictive Trade Practices Act 1976 ("the RTPA")) which is material to the
business of such company and a copy of which has been furnished to the Director
General of Fair Trading as provided for in the RTPA or which is or was subject
to registration pursuant to the RTPA and which has not been so furnished.
13.2 The Company is or has been a party to any agreement or concerted practice
which infringes Article 85 of the EEC Treaty or is in contravention of any
regulation or other enactment made under Article 87 of the EEC Treaty.
13.3 No action, practice or course of conduct now or previously done or carried
on by the Company and no agreement to which the Company is or was a party or any
part of any such agreement:-
13.3.1 is or has been the subject of any investigation or reference under
the Competition ▇▇▇ ▇▇▇▇; or
13.3.2 is or was unlawful by virtue of the Resale Prices ▇▇▇ ▇▇▇▇; or
13.3.3 is or was an abuse of a dominant position under the EEC Treaty; or
13.3.4 infringes any other competition, restrictive trade practice,
anti-trust or consumer law or legislation applicable in the United Kingdom
or elsewhere and not specifically mentioned in this paragraph 13.3.
13.4 The Company has not received any communication or request for information
relating to any aspect of the Company's business from the Director General of
Fair Trading, the Monopolies and Mergers Commission, the Secretary of State for
Trade and Industry, the Commission of the European Communities. So far as the
Warrantors are aware, no agreement, arrangement or conduct of the Company has
been the subject of an investigation, report or decision by any of those persons
or bodies.
Trading and contractual arrangements
14.1 The Company is not a party to:-
14.1.1 any partnership, joint venture, European Economic Interest Grouping
or consortium arrangement or agreement or any agreement for sharing
commissions,
44
finders' fee, royalties or other income;
14.1.2 any agreement, transaction, obligation, commitment, understanding,
liability or arrangement which:
14.1.2.1 is liable to be terminated or varied in accordance with its terms
by another party as a result of any change in control of the Company and
whose termination would be likely to have a material adverse effect on the
business of the Company;
14.1.2.2 contains covenants limiting or excluding its right to do business
and/or to compete in any area or in any field or with any person, firm or
company;
14.1.2.3 has been entered into otherwise than on an arm's length basis in
the ordinary and usual course of the Company's business;
14.1.2.4 is incapable of complete performance by the Company or, so far as
the Warrantors are aware, by the counterparty in accordance with its terms;
14.1.2.5 is likely to result in the achievement of a gross margin
(determined in accordance with the Company's existing method of calculating
the same) of less than 10 per cent in respect of such agreement,
transaction, obligation, commitment, understanding liability or
arrangement;
14.1.2.6 is a forward contract relating to foreign currency.
14.2 The Company nor so far as the Warrantors are aware any other party to any
agreement with the Company is in default under any such agreement as is
described in para 14.1 nor (so far as the Warrantors are aware) are there any
circumstances likely to give rise to such a default.
14.3 Save for those in the ordinary course of trading, no offer or tender given
or made by the Company on or before the date of this Agreement and still
outstanding is capable of giving rise to a contract merely by a unilateral act
of another person.
14.4 There is no:-
14.4.1 agency or distributorship agreement requiring payment by the Company
of commissions of more than (pound)50,000 per annum; or
14.4.2 purchase contract or contract for the manufacturing by a
sub-contractor of goods the purchase price of which exceeds (pound)250,000
per annum;
to which any part of the business of the Company is subject.
45
Title deeds
15. All documents which are required to be stamped which are in the possession
of the Company and by virtue of which a Company has a right have been properly
stamped.
Powers of attorney
16. The Company has not given a power of attorney which remains in effect and no
person has any authority (express, implied or ostensible) which is still
outstanding or effective to enter into any contract or commitment or to do
anything on behalf or the Company other than any authority to employees to enter
into routine trading contracts in the normal course of their duties and to
executive directors.
Insolvency
17.1 No receiver or administrative receiver has been appointed of the whole or
any part of the assets or undertaking of the Company nor has any encumbrance
over all or any of its assets become enforceable.
17.2 No administration order has been made in relation to the Company and no
petition for such an order has been presented.
17.3 No proposal for a voluntary arrangement under Section 1 Insolvency Act 1986
between the Company and its creditors (or any class of them) has been made to or
is in the contemplation of the Company.
17.4 No petition has been presented, no order has been made and no resolution
has been passed for the winding-up of the Company.
17.5 The Company has not stopped or threatened to stop payment to its creditors
nor is it insolvent or unable to pay its debts within the meaning of section 123
of the Insolvency ▇▇▇ ▇▇▇▇ nor is it nor has it admitted to itself to be unable
to pay its debts as they fall due.
17.6 No unsatisfied judgment is outstanding against the Company.
17.7 No guarantee, loan capital, borrowed money or interest is overdue for
payment and no other obligations or indebtedness is outstanding which is
substantially overdue for performance or payment.
17.8 No order has been made and no resolution has been passed for the winding up
of the Company or for a provisional liquidator to be appointed in respect of the
Company and no petition has been presented and no meeting has been convened for
the purpose of winding up the Company.
17.9 The Company has not been a party to any transaction at an undervalue as
defined in Section 238 Insolvency Act 1986 nor has it given or received any
preference as defined in
46
Section 239 Insolvency ▇▇▇ ▇▇▇▇, in either case at a time when it was unable to
pay its debts as they fell due and within the period of two years ending on the
date of this Agreement.
17.10 No event analogous to the foregoing has occurred in or outside England.
17.11 The Company has not suspended or ceased or threatened to suspend or cease
to carry on all or a material part of its business.
17.12 No creditor of the Company has attached or taken possession of and no
distress, execution, sequestration or other process has been levied or enforced
or sued out against any asset of the Company which has not be discharged.
Officers and employees
18.1 The Warrantors have disclosed a list of all those persons employed by the
Company as at 23 March 1998 and no other person was employed in the businesses
of the Company and its Subsidiary Undertakings as at that date. Those persons
named as such in Schedule 2 are the only directors of the Company or the
relevant Subsidiary Undertaking (as the case may be) and the particulars set out
in Schedule 2 are true and accurate and no additional director has been
appointed.
18.2 The particulars shown in the schedule of employees annexed to the
Disclosure Letter list all the employees of the Company whose current salary is
(pound)30,000 or more ("relevant employees") and shows in relation to each such
employee his age, current salary and years' service with and other benefits
provided by the Company that the Company is bound to provide (whether now or in
the future) and include true and complete particulars of all profit sharing,
incentive and bonus arrangements to which the Company is party whether legally
binding on the Company or not.
18.3 The Company is under no obligation to increase, nor has it made any
provision to increase the aggregate annual remuneration or value of benefits
currently payable to the employees of the Company and no change has been made in
the terms of engagement of any relevant employee.
18.4 There is not outstanding any contract of service between the Company and
any of its directors, officers or employees which is not terminable by the
Company without damages or compensation (other than any compensation payable by
statute) on three months' notice given at any time.
18.5 No director or relevant employee has served or been served with notice on
the Company terminating his contract of employment and no such director or
relevant employee will be entitled to give such notice solely by reason of the
sale of the Shares to the Purchaser.
18.6 There is no dispute between the Company and any trade union.
47
18.7 There is no outstanding written notice alleging breach by the Company of
regulations made under the Health and Safety at Work etc. ▇▇▇ ▇▇▇▇ or otherwise
regarding the health and safety at work of its employees.
18.7 The attention of all employees of any member of the Company has been drawn
to such of the terms of their employment as is required by the Employment Rights
▇▇▇ ▇▇▇▇.
18.8 The Company is not a party to any written agreement or arrangement with or
commitment to any trades union or staff association nor, so far as the
Warrantors are aware are any of its employees members of any trades union or
staff association.
18.9 There is no outstanding claim against the Company by any person who is now
or has been an officer or employee of any member of the Company or any dispute
between the Company and a material number or class of its employees and no
payments are due by the Company under the provisions of the Employment Rights
▇▇▇ ▇▇▇▇.
18.10 In the 12 months preceding the date of this Agreement, the Company has
not:-
18.10.1 given notice of redundancies to the relevant Secretary of State or
started consultations with a trades union under Chapter II of Part IV
of the Trade Union and Labour Relations (Consolidation) ▇▇▇ ▇▇▇▇ or
failed to comply with its obligations under Chapter II of Part IV of
that Act; or
18.10.2 been a party to a relevant transfer (as defined in the Transfer of
Undertakings (Protection of Employment) Regulations 1981) or failed to
comply with a duty to inform and consult a trade union under those
Regulations.
18.11 There is not now outstanding any contract or arrangement to which the
Company is a party for the payment to any person or body of any consultancy or
like fees exceeding (pound)30,000 per annum.
18.12 Since the Accounts Date, no ex-gratia payments have been made by the
Company to any officer or employee or former officer or employee of the Company
or to their dependants or relatives nor is the Company considering making any
such payments.
Intellectual Property rights
19.1 The Company is the sole and absolute beneficial and legal owner of the
Listed Intellectual Property which is owned free and clear from any liens,
charges, restrictions and encumbrances.
19.2 No licence, permission or other right has been granted to the Company by
any third party in respect of any Intellectual Property except (a) Intellectual
Property in computer software which is in substance non-bespoke software and for
which the Company has a standard form licence; and (b) the Licensed Intellectual
Property (details of which have been
48
disclosed to the Purchaser).
19.3 The Listed Intellectual Property represents all the Intellectual Property
which has been duly registered in the name of the Company and the details of
such Listed Intellectual Property given in Schedule 6 Part II are correct.
19.4 So far as the Warrantors are aware, the Company has not done or omitted to
do any act, matter or thing in respect of any Company Intellectual Property or
any Licensed Intellectual Property which would or might impinge upon the
validity or enforceability of the same or upon the right of the Company to use
the same in relation to the business of the Company as it has been carried on up
to the date of this Agreement.
19.5 So far as the Warrantors are aware, none of the Company Intellectual
Property:-
19.5.1 is the subject of any claim or opposition which impinges upon the
validity, enforceability or ownership of the same by the Company or the use
of the same (or any part of the same) howsoever by the Company;
19.5.2 is being infringed by any person.
19.6 So far as the Warrantors are aware, none of the processes, products or
activities of the business of the Company infringes any right of any other
person relating to Intellectual Property or gives rise to a liability for any
royalty or similar payment other than by virtue of an agreement relating to
Licensed Intellectual Property (as disclosed to the Purchaser).
19.7 So far as the Warrantors are aware the Company has not granted any licences
of the Company Intellectual Property other than (a) licences which the Company
on less than three months' notice could terminate without liability; and (b) the
licences listed in Part III of Schedule 6 and disclosed to the Purchaser.
19.8 So far as the Warrantors are aware the Company has not disclosed any
confidential information material to the business of the Company, to any person
save where such person is subject to express obligations to keep the same
confidential or such obligations are implied by law.
19.9 Where a person other than an employee has been engaged, directly or
indirectly by the Company such that he may contribute to the creation of
Intellectual Property material to the business of the Company, such person or
his employer has so far as the Warrantors are aware, granted rights to the
Company which are sufficient for the purposes for which the Company engaged such
person.
19.10 So far as the Warrantors are aware no claims have been made or threatened
by employees or ex-employees of the Company under s40 of the Patents ▇▇▇ ▇▇▇▇ of
any equivalent inventor compensation provision in any jurisdiction.
19.11 The assignment dated 18 November 1994 ("the Assignment") by Triplex ▇▇▇▇▇
Plc of
49
the licence relating to the Sophia Process dated 5 July 1989 ("the Licence")
was validly and legally effected and so far as the Warrantors are aware the
Company as a result has the full benefit of the Licence.
19.12 The licensor under the Licence, Advanced Metal Technology Limited, has
made no objections to the Assignment and so far as the Warrantors are aware has
not behaved otherwise than that the Company has the full benefit of the Licence.
19.13 So far as the Warrantors are aware there are no reasons why the Licence
will be terminated and so far as the Warrantors are aware the Company is not in
breach of the Licence.
The Subsidiary Undertakings
20.1 The particulars of the Subsidiary Undertakings set out in Part II of
Schedule 2 are accurate and the Company is the beneficial owner of the entire
issued share capital of each of the Subsidiary Undertakings and the shares of
the Subsidiary Undertakings are held legally and beneficially as shown in that
Schedule free from all liens, charges and encumbrances and with all rights now
or hereafter attaching to them and the Company has no other subsidiary
undertakings and does not hold or own any other shares in any other companies.
20.2 The terms of the Warranties set out in paragraphs 2.1 and 2.3 to 2.7 of
Schedule 4 are accurate insofar as they are repeated with the words "each
Subsidiary Undertaking" or "any Subsidiary Undertaking" (as the case may be)
being substituted for the words "the Company".
20.3 The Subsidiary Undertaking:-
20.3.1 are not engaged in any manner in carrying on any business or trade;
20.3.2 have no indebtedness, mortgages, charges, debentures or guarantees;
or other liabilities (actual or contingent);
20.3.3 have no employees and have not given any subsisting power of
attorney or other authority to any person;
20.3.4 are not parties to any litigation or arbitration and the Warrantors
are not aware of any circumstances which are likely to give rise to
any legal proceedings against any Subsidiary Undertaking; and
20.3.5 have no assets or property and are not parties to any subsisting
agreement or contract.
Pensions
21.1 In this paragraph 21 the following terms have the following meanings:
50
Vendor's Scheme means the TKR International Limited
Retirement Benefits Scheme.
The term Vendor's Scheme includes, where
the context allows, the trustees of the
Vendor's Scheme.
Relevant Benefits is defined in section 612 of ICTA 1988
but with the omission of the exception
in that definition.
Relevant Person each past and present employee, officer
and director of a Group Company and
their respective spouses and dependants
and any person who, at the date of this
Agreement, is a beneficiary (present or
contingent) of the Vendors' Scheme.
ICTA Income and Corporation Taxes ▇▇▇ ▇▇▇▇.
Pensions Act the ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇.
21.2 Except under the Vendor's Scheme, no agreement or arrangement exists for
the provision of Relevant Benefits for any Relevant Person in connection with
which any Group Company is legally liable, or may become legally liable as a
result of any action taken by any Group Company prior to the date of this
Agreement, to make any payment.
21.3 No change in the benefits currently being provided under the Vendor's
Scheme has been announced by the Company or any Group Company. No undertaking or
assurance has been given to any Relevant Person as to the continuance or
introduction or improvement of any Relevant Benefits which the Company would be
required to implement in accordance with good industrial relations practice,
whether or not there is any legal obligation to do so.
21.4 The Disclosure Letter contains or has annexed to it copies of documents
containing the material provisions of the Vendor's Scheme including, but not
limited to:
21.4.1 the trust deed and rules and the other documents containing the
provisions currently governing the Vendor's Scheme;
21.4.2 a copy of the most recent audited accounts and trustees' report
relating to the Vendor's Scheme;
21.4.3 copies of all notices issued under the Occupational Pension Schemes
(Member-nominated Trustees and Directors) Regulations 1996 (as amended) in
relation to the Vendor's Scheme;
21.4.4 a copy of the Vendor's Scheme's internal disputes resolution
procedure;
51
21.4.5 copies of the contracting-out certificates presently in force
covering employments with any Group Company and a letter from the Board of
the Inland Revenue confirming that the Vendor's Scheme is an exempt
approved scheme (as defined in section 592 of ICTA 1988);
21.4.6 a full list of active, deferred and pensioner members under the
Vendor's Scheme.
21.5 The Vendor's Scheme is an exempt approved scheme (as defined in section 592
of ICTA 1988). So far as the Warrantors are aware there is no reason why
approval of the Vendor's Scheme by the Board of Inland Revenue should be
withdrawn. There is no reason why the contracting out certificate for the
Vendor's Scheme might be cancelled, varied or surrendered.
21.6 The Company is the principal employer for the purposes of the Vendor's
Scheme.
21.7 There is contained in or annexed to the Disclosure Letter a statement of
the amounts and rate of contributions payable to the Vendor's Scheme.
Contributions to the Vendor's Scheme are not paid in arrear. All amounts due to
the Vendor's Scheme from a Group Company or a Relevant Person have been paid in
accordance with the provisions governing the Vendor's Scheme.
21.8 There are no actions, suits, complaints to the Pensions Ombudsman or claims
pending or, so far as the Warrantors are aware, threatened against a Group
Company or the trustees of the Vendor's Scheme in respect of the provision of
Relevant Benefits.
21.9 The liability for all lump sum death in service benefits which may become
payable under the Vendor's Scheme to or in respect of any Relevant Person is
fully insured with a reputable insurance company on normal terms and at normal
rates with all lives assured being treated as enjoying good health and all
premiums have been properly paid by their due dates.
21.10 The Vendor's Scheme does not have any employer-related investments (as
defined in section 40 of the Pensions Act).
21.11 Other than guaranteed minimum pensions (as defined in the Pension Schemes
Act 1993) that accrued prior to 6 April 1997 and lump sum death in service
benefits, the Vendor's Scheme only provides money purchase benefits (as defined
in the Pension Schemes Act 1993). No Relevant Person has been promised that he
will receive Relevant Benefits which are linked to final pensionable salary,
however termed or defined, (other than guaranteed minimum pensions and lump sum
death in service benefits).
21.12 So far as the Warrantors are aware the Vendor's Scheme has at all times
complied with and been administered in accordance with the provisions governing
it and all applicable laws, regulations and requirements, including the
requirements of the Inland Revenue for continued approval as an exempt approved
scheme or the Department of Social Security for continued eligibility for
contracting-out of the State Scheme, and of trust law.
52
21.13 Other than in conformity with the contracting out legislation, the
provisions of the Vendor's Scheme do not discriminate between male and female
members whether directly or indirectly as regards eligibility, the rate of
contributions, or the date on or from which benefits will or may be provided.
Compliance with Laws
22. The Company has conducted its business in all material respects in
accordance with all applicable laws and regulations of the United Kingdom or any
foreign country and there is no violation of, or default with respect to, any
statute, regulation, order, decree or judgment of any Court or any governmental
agency of the United Kingdom or any foreign country which may have a material
adverse effect upon the assets or business of the Company.
Properties
23.1 The Properties comprise the only freehold or leasehold property in any part
of the world in which any Group Company has any interest or which are otherwise
occupied or used by any Group Company.
23.2 The particulars of each of the Properties set out in Schedule 7 are true
and accurate.
23.3 A Group Company is in physical possession and actual occupation of the
whole of each of the Properties on an exclusive basis.
23.4 Aeromet is solely entitled at law and in equity to the Properties.
23.5 The Company has in its physical possession free from any lien all of the
deeds and documents necessary to prove the title to the Properties and the title
deeds and documents (other than the Property Leases and the Birmingham Lease)
are all duly stamped originals.
23.6 The Warrantor has no reason to believe that the Properties do not enjoy all
rights and privileges necessary for their continued use and enjoyment for their
current use without any material restrictions or limitations.
23.7 The current use of the Properties is the permitted use under planning
legislation.
23.8 So far as the Warrantor is aware all necessary planning permissions and
consents and approvals from all statutory and other competent authorities in
relation to the use of the Properties for the current use have been obtained and
are valid and subsisting.
23.9 The Vendor has not received any notice of any outstanding breach or
non-compliance with any statutory requirements or recommendations of any
competent authority.
23.10 In relation to the Properties, the relevant Group Company entitled to the
Property
53
has paid all sums due and is not aware of any claim in respect of non observance
or performance of the covenants on the part of the tenant and the conditions
contained in the leases and the obligations contained in any licence or other
document supplemental to any of the leases.
23.11 The replies of the Vendor and the Vendor's Solicitors to the enquiries of
the Purchaser and the Purchaser's Solicitors including any enquiries raised or
replies given in correspondence concerning the Properties (and any other matters
relating to real property) are true and accurate in all respects and the Vendor
and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ are not aware of any other fact or matter which renders or
might upon its disclosure render any such replies misleading.
23.12 Each of the Properties enjoys a valid Fire Certificate (where the same is
legally required) and complies in all material respects with all statutes orders
and regulations applicable to the Properties in relation to fire prevention and
there are no outstanding requirements or recommendations of any competent
authority in relation to such matters.
23.13 So far as the Warrantors are aware there are no matters events or
circumstances which upon the grant of the Property Leases and the Birmingham
Lease would amount to a material breach and/or material non-observance or
non-performance of the covenants and conditions on the part of the tenant.
23.14 The Property Leases as completed on 30 June 1998 are in the approved
terms.
Miscellaneous
24. The Company does not hold assets in the United States having an aggregate
book value of US$ 15 million or more and the Company and all entities controlled
by it have not made aggregate sales in or into the United States of US$ 25
million or more in its most recently completed fiscal year.
54
SCHEDULE 5
Warranties relating to Taxation
1. General
1.1 Each Group Company has made all returns, and notifications ("Returns") it is
required by law to make. All Returns have been properly and punctually submitted
by each Group Company to all relevant taxation authorities (whether of the
United Kingdom or elsewhere) and the Returns are complete and accurate in all
respects and are not the subject of any question or dispute nor are, so far as
the Vendor is aware, likely to become the subject of any question or dispute
with any taxation authority.
1.2 Since the Accounts Date no accounting period of any Group Company has ended.
1.3 All payments by any Group Company to any person which ought to have been
made under deduction of taxation have been so made and each Group Company has
(if required by law to do so) accounted to the relevant taxation authority for
the taxation so deducted.
1.4 Each Group Company has duly and punctually paid all taxation and any customs
duties which it has become liable to pay and it has never paid or, so far as the
Warrantors are aware, become liable to pay any penalty, fine or surcharge in
connection with taxation or any customs duties.
2. Loan relationships
2.1 No Group Company has any loan relationships where:-
2.1.1 there is a connection between the parties as defined by section 87
Finance ▇▇▇ ▇▇▇▇; or
2.1.2 there has been or will prior Completion be a release of the amounts
payable under the relationship.
2.2 The Accounts account for all of the Group Companies' loan relationships in
accordance with an authorised accruals basis of accounting complying with
section 85 Finance Act 1996 and there has been no change in such accounting
method in respect of any loan relationship since the Accounts Date.
3. Distributions
3.1 No Group Company has since the Accounts Date made or agreed to make any
distributions within the meaning of section 209 ICTA 1988 (meaning of
"distribution").
55
4. Capital Allowances
4.1 The aggregate book value of each of the assets of the Group Companies, on
which an entitlement to industrial building allowances or other allowances in
respect of capital expenditure has arisen under the Capital ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
or the Capital ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, in or adopted for the purposes of the
Accounts does not exceed the aggregate residue of expenditure or written-down
value attributable to such assets for the purposes of those Acts. The aggregate
book value of plant and machinery allocated to a pool of plant and machinery on
which an entitlement to capital allowances has arisen under Part II Capital
Allowances Act 1990 (machinery and plant) does not exceed the written-down value
of the qualifying expenditure in respect of each such pool under that Act.
5. Capital Gains
5.1 No Group Company has since the Accounts Date been a party to any
depreciatory transaction for the purpose of section 176 Taxation of Chargeable
Gains ▇▇▇ ▇▇▇▇ (depreciatory transactions in a group) or which could be treated
as a depreciatory transaction under section 177 Taxation of Chargeable Gains ▇▇▇
▇▇▇▇ (dividend stripping).
6. Groups of Companies
6.1 There is set out in the Disclosure Letter with express reference to this
warranty full details of all arrangements relating to relief under the
provisions of sections 402 to 413 ICTA 1988 (group relief).
6.2 All dividends and other payments referred to in section 247 ICTA 1988 (group
income) which have been paid by Group Companies have been paid under an election
made under that section and all such elections are now and will up to Completion
remain valid and in force.
6.3 None of the assets of the Group Companies have been acquired from another
company which, at the time of acquisition, was a member of the same group as
defined in section 170 Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇ (groups of
companies - interpretation).
6.4 No tax-free benefit has ever been conferred either upon any Group Company or
upon any person connected with a Group Company within the meaning of section 30
Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇ (tax-free benefits). No scheme or
arrangement has been effected under which such a tax-free benefit could be so
conferred.
6.5 None of the Group Companies' assets and no relevant asset has been
materially reduced in value within the meaning of section 30 Taxation of
Chargeable Gains ▇▇▇ ▇▇▇▇ (tax-free benefits). No scheme or arrangement has been
effected under which there could be such a reduction in value.
56
7. Value Added Tax
7.1 Each Group Company is a registered and taxable person for the purposes of
the Value Added Tax ▇▇▇ ▇▇▇▇ and has complied with and observed in all respects
the terms of all statutory provisions, directions, conditions, notices and
agreements with HM Customs and Excise relating to value added tax. Each Group
Company has maintained and obtained accounts, records, invoices and other
documents (as the case may be) appropriate or requisite for the purposes of
value added tax which are complete, correct and up-to-date.
7.2 No Group Company:-
7.2.1 is, or in the two years prior to Completion has been, in arrears with
any payments or returns or notifications under any statutory provisions,
directions, conditions or notices relating to value added tax, or liable to
any forfeiture or penalty or interest or surcharge or to the operation of
any penalty, interest or surcharge provision;
7.2.2 is or has agreed to become, an agent, manager, factor or VAT
representative for the purposes of section 47 or 48 Value Added Tax ▇▇▇
▇▇▇▇ (agents etc.) of any person who is not resident in the United Kingdom
7.3 No Group Company has ever received a surcharge liability notice under
section 59 Value Added Tax Act 1994 (default surcharge) or a penalty liability
notice under section 64 Value Added Tax ▇▇▇ ▇▇▇▇ (persistent misdeclarations).
8. Close Companies
8.1 No Group Company is or has ever been a close company within the meaning of
section 414 ICTA 1988 (close companies).
9. Employees
9.1 Each Group Company has complied with sections 203 to 203L Income and
Corporation Taxes Act 1988 (pay as you earn) and the regulations made thereunder
in respect of all payments within the meaning of those sections and with the
Social Security (Contributions) Regulations 1979 in respect of all earnings
which are subject to those regulations.
10. Stamp Duties
10.1 There is no instrument which is necessary to establish any Group Company's
title to any right or asset which is liable to stamp duty (or any like duty or
tax in a jurisdiction outside the United Kingdom) which has not been duly
stamped or which would attract stamp duty if brought within the relevant
jurisdiction.
57
11. International
Each Group Company is and always has been resident only in the United Kingdom
for taxation purposes. No Group Company is liable to taxation in any
jurisdiction other than the United Kingdom.
12. No Group Company has since the Accounts Date been involved in any
transaction otherwise than on arm's length terms.
13. No Group Company has since:-
13.1 the Accounts Date made any distribution or deemed distributions within the
meaning of Sections 209 or 210 ICTA 1988 (distributions and deemed
distributions) except as provided for in its audited accounts;
13.2 within the period of six years preceding Completion issued any share
capital as paid up otherwise than by the receipt of new consideration (within
the meaning of Section 254 ICTA 1988); or
13.3 within the period of six years preceding Completion redeemed, repaid or
purchased, or agreed to redeem, repay or purchase, any of its own shares.
14. No securities (within the meaning of Section 254(1) ICTA 1988) issued by any
Group Company and remaining in issue at the date of this Agreement were issued
in circumstances such that the interest or any other amount payable on those
securities falls to be treated as a distribution.
15. No Group Company has within the period of six years preceding Completion
made or received any distribution which is an exempt distribution within
Sections 213 to 218(1) (inclusive) ICTA 1988 (demergers).
16. If each of the assets other than trading stock of the Company were disposed
of for a consideration equal to the book value of that asset in, or adopted for
the purpose of, the Accounts, no liability to taxation and no balancing charge
(or corresponding tax in any jurisdiction) in relation to any such asset or pool
of assets would arise in excess of (pound)20,000 (disregarding for this purpose
any relief and allowances available to the Company other than amounts falling to
be deducted from consideration receivable under Section 38 TCGA 1992).
17. Foreign exchange and financial instruments
No Group Company has:-
17.1 qualifying assets, qualifying liabilities or currency contracts to which
the provisions of Chapter II, Part II Finance ▇▇▇ ▇▇▇▇ apply or will or may
apply;
58
17.2 interest rate or currency contracts or options to which the provisions of
Chapter II, Part IV Finance ▇▇▇ ▇▇▇▇ apply or will or may apply.
59
SCHEDULE 6
INTELLECTUAL PROPERTY
Part I
Licensed Intellectual Property
Agreement dated as of 5 July 1989 between Advanced Metal Technology Holland B.V.
and Triplex ▇▇▇▇▇ PLC and related assignment dated 18 November 1994 from Triplex
▇▇▇▇▇ PLC to Kent Aerospace Castings PLC.
Part II
Listed Intellectual Property
Patent application no. 9804599.0 relating to cast aluminium copper alloys
60
SCHEDULE 7
PROPERTIES
Property Lease
1. Tame Road Witton Birmingham The Birmingham Lease
2. Units F and G Cosgrove Close 30 June 1998 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ plc (1)
Blackpole Worcester Aeromet International Plc (2)
3. Unit H Cosgrove Close Blackpole 21st March 1996 Wolseley Centers Limited
Worcester (1) Kent Aerospace Castings Plc (2)
4. ▇▇▇▇▇ ▇, ▇▇, ▇▇▇, ▇▇▇, ▇▇▇ and 30 June 1998 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ plc (1)
Sittingbourne Aeromet International Plc (2)
12d Eurolink Industrial Centre
5. Watchmead Welwyn Garden City 30 June 1998 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ plc (1)
Aeromet International Plc (2)
6. Units D5 and D6 ▇▇▇▇▇-▇▇▇▇ Centre 23rd March 1984 The London Life
Centre Eurolink Industrial Centre Association Limited and Blue Circle
Sittingbourne Sittingbourne Estates Limited (1) Kent
Automotive Castings (Sittingbourne)
Limited (2)
7. Unit D4 ▇▇▇▇▇-▇▇▇▇ Centre 22nd July 1985 The London Life
Eurolink Industrial Estate Association Limited and Blue Circle
Sittingbourne Sittingbourne Estates Limited (1) Kent
Aerospace Castings Limited (2)
8. ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 13th August 1981 Allnatt London
Properties Limited (1) Industrial
Precision Castings Plc (2)
61
SIGNED BY ) /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
for and on behalf of )
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PLC )
in the presence of: )
SIGNED BY ) /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
for and on behalf of )
WESTPARK LIMITED )
in the presence of:- )
SIGNED BY ) /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
for and on behalf of )
PACIFIC AEROSPACE & )
ELECTRONICS (UK) LIMITED )
in the presence of:- )
SIGNED BY ) /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
for and on behalf of )
PACIFIC AEROSPACE & )
ELECTRONICS, INC. )
in the presence of:- )
62