Dated 18 September 1997
BIG FLOWER LIMITED
- and -
▇▇▇▇▇ ▇▇▇▇▇▇
- and -
▇▇▇▇▇▇ ▇▇▇▇▇▇
- and -
3i GROUP PLC
AGREEMENT
for the sale and purchase of
all of the issued shares of
Olwen Direct Mail Limited
ASHURST ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Tel: ▇▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇▇-▇▇▇-▇▇▇▇
▇▇▇/▇▇▇/566B00035
PAGE 5 OF 74
CONTENTS
CLAUSE PAGE
1. INTERPRETATION...........................................................1
2. SALE AND PURCHASE........................................................4
3. COMPLETION...............................................................6
4. WARRANTIES...............................................................8
5. PROTECTION OF GOODWILL..................................................12
6. CONFIDENTIAL INFORMATION................................................14
7. ANNOUNCEMENTS...........................................................14
8. COSTS...................................................................15
9. 3i GROUP LOAN...........................................................15
10. EFFECT OF COMPLETION...................................................15
11. FURTHER ASSURANCES.....................................................15
12. ENTIRE AGREEMENT.......................................................16
13. VARIATIONS.............................................................16
14. WAIVER.................................................................16
15. INVALIDITY.............................................................17
16. NOTICES................................................................17
17. COUNTERPARTS...........................................................18
18. GOVERNING LAW AND JURISDICTION.........................................18
SCHEDULE 1.................................................................20
Particulars relating to the Company........................................20
SCHEDULE 2.................................................................21
Particulars relating to Subsidiaries.......................................21
SCHEDULE 3.................................................................25
The Warranties.............................................................25
SCHEDULE 4.................................................................56
Form of Release............................................................56
SCHEDULE 5.................................................................57
The Properties.............................................................57
SCHEDULE 6.................................................................58
Deed of Indemnity..........................................................58
PAGE 6 OF 74
THIS AGREEMENT is made on 18 September 1997
BETWEEN:-
(1) BIG FLOWER LIMITED (No.3435268) whose registered office is at ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (the "Purchaser"); and
(2) (i) ▇▇▇▇▇ ▇▇▇▇▇▇ of ▇▇/▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇");
(ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇ of The Barn, Sunt Farm, Caterfield Lane, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇, Oxted, Surrey ("▇▇▇▇▇▇"); and
(iii) 3i GROUP PLC (No: 397156) whose registered office is at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("3i Group")
(together, the "Vendor(s)" as the context admits).
THE PARTIES AGREE AS FOLLOWS:-
1. INTERPRETATION
1.1 In this agreement the following words and expressions and abbreviations
have the following meanings, unless the context otherwise requires:-
"Accounts" means the audited financial statements of each Group Company as
at and for the financial period ended on the Accounts Date;
"Accounts Date" means 30 June 1997;
"associated company" has the meaning given to it in sections 416 et seq.
TA;
"Board" means the board of directors of the Company;
"Business Day" means a day (excluding Saturdays) on which banks generally
are open in both London and New York for the transaction of normal banking
business;
"Company" means Olwen Direct Mail Limited No. 2545971;
"Completion" means the completion of the sale and purchase of the Shares in
accordance with clause 5;
"Completion Date" means the date on which Completion occurs;
"Confidential Information" means all information relating to any Group
Company's business, or financial or other affairs (including future plans
and targets of any Group Company) which is not publicly available or
generally known;
"Disclosure Letter" means a letter of today's date together with the
attachments thereto addressed by the Vendors' Solicitors to the Purchaser
disclosing exceptions to the Warranties;
PAGE 7 OF 74
"Encumbrance" means any mortgage, charge (fixed or floating), pledge, lien,
hypothecation, trust, right of set-off or other third party right or
interest (legal or equitable) including any right of pre-emption,
assignment by way of security, reservation of title or any other security
interest or adverse claim of any kind however created or arising or any
other agreement or arrangement (including a sale and repurchase
arrangement) having similar effect;
"Escrow Account" means the interest bearing deposit account in the joint
names of the Vendors' Solicitors and the Purchaser's Solicitors at National
Westminster Bank PLC of ▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, Sort Code: 50-00-00,
Account Number ▇▇▇▇▇▇▇▇.
"Escrow Amount" means the sum of (pound)2,000,000 to be paid by the
Purchaser in cash at Completion into the Escrow Account;
"Group" means the Company and the Subsidiaries and "Group Company" means
any one of them;
"Intellectual Property" means any and all patents, trade marks, rights in
designs, get up, trade, business or domain names, copyrights and topography
rights (whether registered or not and any applications to register or
rights to apply for registration of any of the foregoing), rights in
inventions, know-how, trade secrets and other confidential information,
rights in databases and all other intellectual property rights of a similar
or corresponding character which may now or in the future subsist in any
part of the world;
"Permit" means a permit, licence, consent, approval, certificate,
qualification, specification, registration and other authorisation and a
filing of a notification report or assessment necessary in any jurisdiction
for the proper and efficient operation of each Group Company's business,
its ownership, possession, occupation or use of an asset or the execution
and performance of this agreement;
"Properties" means the properties described in schedule 5 or any part or
parts thereof and "Property" shall mean any one of them;
"Purchaser's Group" means the Purchaser, its holding companies and the
subsidiary undertakings and associated companies from time to time of such
holding companies, all of them and each of them as the context admits;
"Purchaser's Solicitors" means Ashurst ▇▇▇▇▇▇ ▇▇▇▇▇ of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇;
"Related Person" means in relation to any party its holding companies and
the subsidiary undertakings and associated companies from time to time of
such holding company, or connected persons, all of them and each of them as
the context admits;
"Relief" means any loss relief, allowance, exemption, set-off, deduction,
credit or right to repayment of taxation;
"▇▇▇▇▇▇ Shares" means the 75,000 shares in the Company held by ▇▇▇▇▇▇;
PAGE 8 OF 74
"▇▇▇▇▇▇ Shares" means the 1513 shares in the Company held by ▇▇▇▇▇▇;
"3i Shares" means the 25,000 shares in the Company held by 3i Group;
"Shares" means the 3i Shares and ▇▇▇▇▇▇ Shares and ▇▇▇▇▇▇ Shares taken
together amounting to all of the issued shares in the capital of the
Company;
"Subsidiary" means a subsidiary undertaking of the Company specified in
schedule 2 and "Subsidiaries" means all those subsidiary undertakings;
"TA" means the Income and Corporation Taxes ▇▇▇ ▇▇▇▇;
"Tax Deed" means a deed of indemnity in the agreed terms;
"Vendor Associate" means each of the Vendors, any holding company of a
Vendor and any subsidiary undertaking or associated company of such Vendor
or holding company and any persons connected with any of them within the
meaning of section 839 of the TA or any company associated with them
(excluding the Group Companies) as the context admits;
"Vendors' Solicitors" means Church ▇▇▇▇▇ ▇▇▇▇▇▇ of ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
"Warranties" means the warranties set out in schedule 3.
1.2 In this agreement unless otherwise specified, reference to:-
(a) a "subsidiary undertaking" is to be construed in accordance with
section 258 of the Companies ▇▇▇ ▇▇▇▇ and a "subsidiary" or "holding
company" is to be construed in accordance with section 736 of that Act;
(b) a document in the "agreed terms" is a reference to that document in the
form approved and for the purposes of identification signed by or on
behalf of each party;
(c) "FA" followed by a stated year means the Finance Act of that year;
(d) "includes" and "including" shall mean including without limitation;
(e) a "party" means a party to this agreement and includes its assignees
(if any) and/or the successors in title to substantially the whole of
its undertaking and, in the case of an individual, to his or her estate
and personal representatives;
(f) a "person" includes any person, individual, company, firm, corporation,
government, state or agency of a state or any undertaking (whether or
not having separate legal personality and irrespective of the
jurisdiction in or under the law of which it was incorporated or
exists);
(g) a "statute" or "statutory instrument" or "accounting standard" or any
of their provisions is to be construed as a reference to that statute
or statutory instrument or accounting standard or such provision as the
same may have been amended or re-enacted before the date of this
agreement;
PAGE 9 OF 74
(h) "clauses", "paragraphs" or "schedules" are to clauses and paragraphs of
and schedules to this agreement;
(i) "writing" includes any methods of representing words in a legible form
(other than writing on an electronic or visual display screen) or in
other non-transitory form;
(j) words denoting the singular shall include the plural and vice versa and
words denoting any gender shall include all genders;
(k) any statute, statutory instrument, regulation, by-law or other
requirement of English law and to any English legal term for any
action, remedy, method of judicial proceeding, legal document, legal
status, procedure, court, official or any legal concept or doctrine or
other expression shall in respect of any jurisdiction other than
England be deemed to include that which most nearly approximates in
that jurisdiction to the English term;
(l) any time of day is reference to time in London, England.
1.3 The schedules form part of the operative provisions of this agreement and
references to this agreement shall, unless the context otherwise requires,
include references to the schedules.
1.4 The index to and the headings and the descriptive notes in brackets
relating to provisions of taxation statutes in this agreement are for
information only and are to be ignored in construing the same.
1.5 Any question of whether a person is connected with another shall be
determined in accordance with section 839 of the TA (except that in
construing section 839 "control" has the meaning given by section 840 or
section 416 of the TA so that there is control whenever section 840 or 416
requires) which shall apply in relation to this agreement as it applies in
relation to the TA.
2. SALE AND PURCHASE
2.1 Upon the terms and subject to the conditions of this agreement, each of the
Vendors severally as legal and beneficial owner and with full title
guarantee shall sell and the Purchaser shall purchase the ▇▇▇▇▇▇ Shares,
the ▇▇▇▇▇▇ Shares and the 3i Shares respectively with effect from
Completion. Each Vendor hereby warrants and undertakes to the Purchaser
that the shares he or it is selling are sold free from any Encumbrance and
together with all benefits and rights now or hereafter attached thereto
including the right to all dividends and other distributions declared made
or paid after the Accounts Date in respect of the Shares.
2.2 Each of the Vendors hereby waives any rights or restrictions conferred upon
them which may exist in relation to the transfer or sale of the Shares
under the articles of association of the Company or otherwise.
PAGE 10 OF 74
2.3 The Purchaser shall not be obliged to complete the purchase of any of the
Shares unless the Vendors complete the sale of all of the Shares
simultaneously, but completion of the purchase of some Shares shall not
affect the rights of the Purchaser with respect to its rights to the other
Shares.
2.4 The consideration for the sale and purchase of the Shares shall be
(pound)20.8 million in aggregate.
The consideration shall be divided amongst the Vendors in the proportions
74.757 per cent ▇▇▇▇▇▇, 1.648 per cent ▇▇▇▇▇▇ and 23.595 per cent 3i Group.
The Purchaser may deduct from the consideration due to ▇▇▇▇▇▇ any amount
for which he is liable to the Purchaser or any subsidiary of the Purchaser,
including the Company or any of its subsidiaries.
At Completion out of the net consideration due to ▇▇▇▇▇▇ the Purchaser will
pay into the Escrow Account a sum representing the Escrow Amount.
At Completion the Purchaser will pay the remaining sums due to the Vendors
to the Vendors' Solicitors or to 3i Group, as specified in clause 3.5.
2.5 If the Purchaser shall not have notified ▇▇▇▇▇▇ in writing of any claims
under the Warranties or the Tax Deed or any other provision of this
agreement on or before the date falling one year after the Completion Date,
the Escrow Amount (together with accrued interest earned thereon) shall be
released to ▇▇▇▇▇▇. If the Purchaser shall have so notified ▇▇▇▇▇▇ in
writing of any such claim(s), then the Purchaser's reasonable estimate of
the aggregate amounts so claimed (disregarding, for this purpose, clause
4.9) shall be retained in the Escrow Account pending final determination of
such claim(s) and any balance (together with accrued interest earned on
such balance) shall be released to ▇▇▇▇▇▇. Upon final determination of the
total amount(s) due to the Purchaser such amounts shall (to the extent that
there are funds available in the Escrow Account) be paid forthwith to the
Purchaser. Any payments to the Purchaser from the Escrow Account shall for
the avoidance of doubt be without prejudice to the Purchaser's right to
payment of any further amounts which cannot be satisfied from the Escrow
Account. Any balance held in the Escrow Account after such final
determination and payment to the Purchaser (together with all accrued
interest earned thereon) shall be released to ▇▇▇▇▇▇ PROVIDED ALWAYS that
no payment shall be made under any circumstances to ▇▇▇▇▇▇ from the Escrow
Account before the date falling one year after the Completion Date.
For the purposes of this clause 2.5 only, any claim in respect of which
notice shall have been given in accordance with clause 4.8 shall be deemed
to have been finally determined in favour of ▇▇▇▇▇▇ if proceedings in
respect of such claim have not been issued and served on ▇▇▇▇▇▇ not later
than the expiry of the period of 12 months after the date of the said
notice.
2.6 Interest earned on amounts held in the Escrow Account shall not be released
other than in accordance with clause 2.5. Any amounts to be released to
▇▇▇▇▇▇ shall be subject to deduction of tax thereon or other amounts (if
any) required by law to be deducted in respect thereof.
PAGE 11 OF 74
2.7 ▇▇▇▇▇▇ and the Purchaser confirm that they have irrevocably instructed
their respective solicitors to operate the Escrow Account in accordance
with this clause 2.
3. COMPLETION
3.1 Completion shall take place at the offices of the Purchaser's Solicitors
immediately after the execution of this agreement.
3.2 On Completion the Vendors shall deliver to or, if the Purchaser shall so
agree, make available to the Purchaser:-
(a) transfers in common form relating to all the Shares duly executed in
favour of the Purchaser (or as it may direct);
(b) share certificates relating to the Shares;
(c) any waivers or consents by members of any Group Company or other
persons which the Purchaser has specified prior to Completion so as to
enable the Purchaser or its nominees to be registered as the holders of
the Shares and any shares of Subsidiaries or a representation from the
Vendors that no such waivers or consents are required;
(d) (i) service agreements in the agreed terms with Mr A ▇▇▇▇▇▇,
Mr A ▇▇▇▇▇▇ and Mr P Croft;
(ii) the resignation of ▇▇ ▇▇▇▇▇▇ as secretary of each Group Company;
and
(iii) the resignations of all directors of Olwen International Direct
Mail Inc from their offices as directors (but they will other-
wise remain as employees of that company on the same terms).
(e) the written resignations of the auditors of each Group Company
(effective from Completion) containing an acknowledgement that they
have no claim against any Group Company for compensation for loss of
office, professional fees or otherwise and a statement under section
394(1) of the Companies ▇▇▇ ▇▇▇▇;
(f) the Tax Deed duly executed by ▇▇▇▇▇▇;
(g) all land certificates, charge certificates, leases, title deeds and
other documents relating to the Properties (except to the extent that
the same are in the possession of mortgagees pursuant to mortgages
disclosed in schedule 5 in which case copies will be provided);
(h) the common seals, certificates of incorporation and statutory books,
share certificate books and cheque books of each Group Company;
PAGE 12 OF 74
(i) to the extent not in the possession of any Group Company, all books of
account or references as to customers and/or suppliers and other
records and all insurance policies in any way relating to or concerning
the businesses of any Group Company;
(j) to the extent not in the possession of any Group Company, all licences,
consents, permits and authorisations obtained by or issued to any Group
Company or any other person in connection with the business carried on
by any of them and such contracts, deeds or other documents (including
assignments of any such licences) as shall have been required by the
Purchaser's Solicitors prior to the date hereof;
(k) duly executed transfers of each share in the Subsidiaries not
registered in the name of any Group Company in favour of the Company
(or as the Purchaser may direct);
(l) share certificates relating to all of the issued shares in the capital
of each of the Subsidiaries; and
(m) a release in the form set out in Schedule 4 duly executed as a deed, in
a form satisfactory to the Purchaser, releasing each Group Company from
any liability whatsoever (actual or contingent) which may be owing to a
Vendor Associate by any Group Company.
3i shall have no liability under this clause 3.2 save in respect of the 3i
Shares under paragraphs (a), (b) and (c).
3.3 At or prior to Completion (and prior to the taking effect of the
resignations of the directors referred to in clause 3.2(d) above) each of
the Vendors shall procure the passing of board resolutions of each Group
Company:-
(a) sanctioning for registration (subject where necessary to due stamping)
the transfers in respect of the Shares and any shares to which clause
3.2(k) refers;
(b) appointing such persons as are specified by the Purchaser to be the
directors and secretary of each Group Company;
(c) revoking all mandates to bankers and giving authority in favour of the
directors appointed under clause 3.3(b) above or such other persons as
the Purchaser may nominate to operate the bank accounts thereof;
(d) changing the accounting reference date of each Group Company to 31
December;
(e) resolving that the Company and the persons named in clause 3.2(d)(i)
enter into service agreements in the agreed terms.
3.4 Each of ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall procure that at Completion:-
(a) there is repaid all sums (if any) owing to any Group Company by any
Vendor Associate (other than another Group Company) or by the directors
of any Group Company or any of their connected persons and whether or
not such sums are due for repayment and that there remain no
outstanding transactions between any Group Company and any Vendor
Associate;
PAGE 13 OF 74
(b) each Group Company is released from any guarantee, indemnity, bond,
letter of comfort or Encumbrance or other similar obligation given or
incurred by it which relates in whole or in part to debts or other
liabilities or obligations, whether actual or contingent, of any person
other than a Group Company;
and prior to such repayment or release ▇▇▇▇▇▇ and ▇▇▇▇▇▇ undertake to
the Purchaser (on behalf of itself and as trustee on behalf of each
Group Company) to keep each Group Company fully indemnified against any
failure to make any such repayment or any liability arising under any
such guarantee, indemnity, bond, letter of comfort or Encumbrance.
3.5 Upon compliance by the Vendors with the provisions of clauses 3.2, 3.3 and
3.4 and in accordance with clause 2.4 the Purchaser shall:-
(a) provide for the transfer of a sum representing the Escrow Amount to the
Escrow Account and so that notification by National Westminster Bank
PLC of receipt of such sum shall be a good discharge to the Purchaser;
(b) provide for the bank transfer of the remaining sums due to ▇▇▇▇▇▇ and
▇▇▇▇▇▇ (being(pound)13,892,240) under clause 2.4 to the Vendors'
Solicitors at National Westminster Bank PLC of ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇. Sort Code: 60-30-06, Account No. ▇▇▇▇▇▇▇▇ and so that receipt
by such bank of such amount shall be a good discharge to the Purchaser;
and
(c) provide for the bank transfer of(pound)4,822,169 of the sums due to 3i
Group under clause 2.4 to its account at Royal Bank of Scotland plc,
Corporate Banking office, ▇▇ ▇▇▇ ▇▇▇, ▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇.
Sort Code: 16-04-00T, Account Name: 3i Group plc UK Investment, Account
No: ▇▇▇▇▇▇▇▇, ref: CFC/230272 and of the remainder of(pound)85,591 due
to 3i Group in accordance with (b) above.
(d) deliver to ▇▇▇▇▇▇ a counterpart of the Tax Deed duly executed by the
Purchaser.
3.6 If in any respect the obligations of the Vendors are not complied with on
Completion the Purchaser may:-
(a) defer Completion to a date not more than 28 days after Completion (and
so that the provisions of this clause 3, apart from this clause 3.6(a),
shall apply to Completion as so deferred); or
(b) proceed to Completion so far as practicable (without prejudice to its
rights hereunder).
4. WARRANTIES
4.1 ▇▇▇▇▇▇ warrants with the Purchaser in the terms of all the Warranties set
out in schedule 3.
▇▇▇▇▇▇ acknowledges that he gives the Warranties with the intention of
inducing the Purchaser to enter into this agreement and that the Purchaser
does so in reliance on the Warranties.
4.2 Any information (including the Accounts) supplied by or on behalf of any
Group Company to or on behalf of the Vendors in connection with the
Warranties, the Disclosure Letter or
PAGE 14 OF 74
otherwise in relation to the business and affairs of any Group Company
shall not constitute a representation or warranty or guarantee as to the
accuracy thereof by any Group Company and each of ▇▇▇▇▇▇ and ▇▇▇▇▇▇ and 3i
Group undertakes to the Purchaser (on behalf of itself and as trustee of
each Group Company and their respective directors, employees, agents and
advisers) that it will not bring any and all claims which it might
otherwise have against any Group Company or any of their respective
directors, employees, agents or advisers in respect thereof.
4.3 Without restricting the rights of the Purchaser or the ability of the
Purchaser to claim damages on any basis available to it if ▇▇▇▇▇▇ is in
breach of any of the Warranties he shall pay to the Purchaser on demand the
amount necessary to put the Purchaser and the Group into the position which
would have existed if the said Warranties had not been breached together
with all costs and expenses reasonably incurred by the Purchaser and any
Group Company as a result of such breach.
4.4 Each of the Warranties shall be construed as a separate warranty and
(unless expressly provided to the contrary) shall not be limited by the
terms of any of the other Warranties or by any other term of this
agreement.
4.5 ▇▇▇▇▇▇ shall not be under any liability under the Warranties in relation to
any matter forming the subject matter of a claim thereunder to the extent
that the same are disclosed in the Disclosure Letter. No letter, document
or other communication shall constitute a disclosure for the purposes of
the Warranties except and to the extent that the same is expressly referred
to in the Disclosure Letter.
4.6 No information relating to the Group of which the Purchaser has knowledge
(actual or constructive) other than that contained in or referred to in
this agreement and/or included in the Disclosure Letter and no
investigation by or on behalf of the Purchaser shall prejudice any claim by
the Purchaser under the Warranties or reduce any amount recoverable
thereunder.
4.7 Each of ▇▇▇▇▇▇ and ▇▇▇▇▇▇ shall give to the Purchaser all such information
and documentation relating to the Group as the Purchaser shall reasonably
require to enable it to satisfy itself as to whether there has been any
breach of the Warranties.
4.8 Save in the case of fraud or fraudulent concealment by ▇▇▇▇▇▇, ▇▇▇▇▇▇ shall
be under no liability in respect of any claim under the Warranties and any
such claim shall be wholly barred and unenforceable unless written notice
of such claim setting out reasonable details of the relevant claim
(including the grounds on which such claim is based) shall have been served
upon ▇▇▇▇▇▇ by the Purchaser:-
(a) in the case of a claim under the Warranties' (other than the Warranties
relating to Tax), by not later than 5.00 p.m. on the third anniversary
of the date hereof;
(b) in the case of a claim under the Warranties relating to Tax by not
later than 5.00 p.m. on the seventh anniversary of the date hereof;
4.9 Save in the case of fraud or fraudulent concealment ▇▇▇▇▇▇ shall not be
liable in respect of all and any claims made by the Purchaser under the
Warranties or under the Tax Deed (excluding
PAGE 15 OF 74
claims under clauses 2.1(a)(iv) and (v) of the Tax Deed) unless and until
the aggregate cumulative liability of ▇▇▇▇▇▇ in respect of all such claims
(excluding claims under such clauses 2.1(a)(iv) and (v)) exceeds
(pound)150,000 in which event ▇▇▇▇▇▇ shall be liable for the entire amount
of such liability insofar as it exceeds (pound)50,000.
4.10 Save in the case of fraud or fraudulent concealment the aggregate liability
of ▇▇▇▇▇▇ in respect of all claims under this agreement and the Tax Deed
shall not in any circumstances exceed (pound)15,549,456.
4.11 Where the Purchaser and/or the Company is or is likely to be entitled to
recover from some other person any sum in respect of any matter giving rise
to a claim for breach of the Warranties then the Purchaser shall procure
that reasonable steps are taken to enforce such recovery and if any sum is
so recovered then either the amount payable by ▇▇▇▇▇▇ in respect of that
claim shall be reduced by an amount equal to the sum so recovered (less the
reasonable costs and expenses of recovering it and any taxation payable by
the Purchaser or the Company as a result of its receipt) or (if an amount
shall already have been paid by ▇▇▇▇▇▇ in respect of that claim) there
shall be repaid to ▇▇▇▇▇▇ the lesser of:
(a) the amount so paid by ▇▇▇▇▇▇; and
(b) the amount so recovered (less in either case the reasonable costs and
expenses of its recovery and any taxation payable by the Purchaser or
the Company as a result of its receipt).
4.12 Without prejudice to the generality of clause 4.11 the provisions of clause
4.11 shall apply where the Company is entitled to recover from its insurers
(in respect of insurance effected on or before the Completion Date) any sum
in respect of any matter giving rise to a claim under the Warranties
4.13 ▇▇▇▇▇▇ shall have no liability (or such liability shall be reduced) in
respect of any claim for breach of any of the Warranties:
(a) if and to the extent that provision or reserve for or in respect of the
liability or other matter giving rise to such claim has been made in
the Accounts
(b) save in respect of section 57 and schedule 22 of the Environmental
Protection ▇▇▇ ▇▇▇▇, if and to the extent that such claim occurs or is
increased as a result of any change in legislation after the date of
this agreement (or any legislation not in force at the date of this
agreement) which takes effect retrospectively or the withdrawal after
the date of this agreement of any published concession or published
general practice previously made by the Inland Revenue or other taxing
authority
(c) if and to the extent that such claim occurs or is increased as a result
of any increase in the rate of taxation from that in force at the date
of this agreement
(d) if and to the extent that any breach of the Warranties occurs as a
result of or is otherwise attributable to the Purchaser or any Group
Company disclaiming any part of the benefit of capital or other
allowances against taxation claimed or proposed to be
PAGE 16 OF 74
claimed on or before the date of this agreement save where such
disclaimer was contemplated in computing the provision for taxation in
the Accounts.
(e) if and to the extent that such claim would not have arisen or would
have been reduced or eliminated but for the failure or omission on the
part of the Purchaser or any Group Company to make any claim election
surrender or disclaimer or give notice or consent or do any other thing
under the provisions of any enactment or regulation relating to
taxation after Completion the making giving or doing of which was taken
into account in computing the provision for taxation in the Accounts
and was notified to the Purchaser prior to the date of this agreement
(f) if and to the extent that such claim relates to a liability for
Taxation which would not have arisen but for any winding up or
cessation or change in the nature after the Completion Date of any
trade or business carried on by the Company except to the extent that
such winding up or cessation or change in nature is occasioned by the
facts or circumstances giving rise to one or more claims under the
Warranties
(g) if and to the extent such claim would not have arisen but for a change
of accounting policy or accounting practice of any Group Company after
Completion other than one required to comply with the provisions of UK
GAAP currently in force.
(h) if and to the extent that any Relief (other than a Relief that has been
reflected in the net assets of the Company as shown by the Accounts) of
the Company arising in respect of an accounting period ended on or
before Completion is available to relieve or mitigate such claim or
liability for Taxation
(i) if and to the extent that it arises as a result of any change after
Completion in the date to which the Company makes up its accounts
4.14 The amount of any claim for breach of the Warranties shall take into
account the amount of any relief from Taxation arising by virtue of the
loss or damage in respect of which the claim was made and also the amount
of any Taxation in respect of the receipt of the sums claimed for breach.
4.15 Nothing in this clause 4 shall derogate from the Purchaser's obligation to
mitigate any loss which it suffers in consequence of a breach of the
Warranties.
4.16 For the avoidance of doubt the Purchaser shall not be entitled to recover
damages in respect of any claim for breach of the Warranties and/or of the
covenants contained in the Tax Deed to the extent that to do so would
involve recovery more than once in respect of the same loss or damage
4.17 Any amount payable by ▇▇▇▇▇▇ to the Purchaser in satisfaction of any claim
under the Warranties or under the Tax Deed shall be treated as a reduction
by that amount of the price paid by the Purchaser for the ▇▇▇▇▇▇ Shares.
PAGE 17 OF 74
4.18 The Purchaser shall upon it or the Company becoming aware of any matter or
event ("the Matter") which might give rise to a claim under the Warranties
give notice in writing to ▇▇▇▇▇▇ of the Matter as soon as is reasonably
practicable.
4.19 The Purchaser shall provide and shall procure that each Group Company will
provide to ▇▇▇▇▇▇ and his professional advisers reasonable access to
premises and relevant personnel and to any relevant assets documents and
records within their power possession or control for the purpose of
investigating the Matter and enabling ▇▇▇▇▇▇ to take such action as
referred to in the following paragraph and shall allow ▇▇▇▇▇▇ and his
advisers to take copies of any relevant documents or records subject in
each case to keeping the same confidential and using them only in relation
to minimising ▇▇▇▇▇▇'▇ liabilities regarding the Matter.
4.20 The Purchaser shall and shall procure that the Company will take such
action and institute and conduct such proceedings on behalf of the
Purchaser or the Company as ▇▇▇▇▇▇ may reasonably request in writing to
dispute resist appeal compromise defend remedy or mitigate the Matter or to
enforce against any third party the rights of the Company in relation to
the Matter (save where the Purchaser reasonably demonstrates that to do so
would be reasonably forseeably likely to result in the loss to the Group of
any customer accounting for 2% or more of the anticipated turnover of the
Group in the then current financial period) subject to ▇▇▇▇▇▇ fully
indemnifying and securing the Purchaser and each Group Company to the
reasonable satisfaction of the Purchaser against all reasonable costs and
expenses incurred as a result of any action taken pursuant to this
sub-clause
4.21 Save as provided in the preceding paragraph, the Purchaser shall not and
shall procure that the Company will not admit liability in respect of or
compromise or settle the Matter without the prior written consent of ▇▇▇▇▇▇
(such consent not to be unreasonably withheld or delayed)
5. PROTECTION OF GOODWILL
5.1 Each of ▇▇▇▇▇▇ and ▇▇▇▇▇▇ hereby respectively undertakes that (except as
otherwise agreed in writing with the Purchaser) he will not either solely
or jointly with any other person (either on their own respective accounts
or as the agent of any other person):-
(a) for the Relevant Period from Completion carry on or be engaged or
concerned or (except as the holder of shares in a listed company which
confer not more than five per cent. of the votes which can generally be
cast at a general meeting of the company) interested directly or
indirectly in a business which competes in the United Kingdom with the
type of business carried on by any member of the Group at Completion in
the United Kingdom;
(b) for the Relevant Period from Completion solicit or accept the custom of
any person in respect of goods or services competitive with those
manufactured or supplied by any member of the Group prior to
Completion, such person having been a customer of the Company in
respect of such goods or services during such period;
(c) for the Relevant Period from Completion induce, solicit or endeavour to
entice any person who during the period of 12 months prior to
Completion was an employee of
PAGE 18 OF 74
any member of the Group occupying a senior or managerial position or
any position involving data management or sales likely (in the opinion
of the Purchaser) to be:-
(i) in possession of Confidential Information relating to; or
(ii) able to influence the customer relationships or connections of;
or
(iii) otherwise crucial to the operation of the business of
any member of the Group to leave the service or employment of any
member of the Group; or
(d) use any trade name (including the expression "Olwen") used by any
member of the Group at any time during the three years immediately
preceding the date of this agreement or any other name intended or
likely to be confused with any such trade name.
5.2 Each of ▇▇▇▇▇▇ and ▇▇▇▇▇▇ agrees that the undertakings contained in this
clause 5 are reasonable and are entered into for the purpose of protecting
the goodwill of the business of each member of the Group and that
accordingly the benefit of the undertakings may be assigned by the
Purchaser and its successors in title without the consent of ▇▇▇▇▇▇ or
▇▇▇▇▇▇.
5.3 Each undertaking contained in this clause 5 is and shall be construed as
separate and severable and if one or more of the undertakings is held to be
against the public interest or unlawful or in any way an unreasonable
restraint of trade or unenforceable in whole or in part for any reason the
remaining undertakings or parts thereof, as appropriate, shall continue to
bind ▇▇▇▇▇▇ and ▇▇▇▇▇▇.
5.4 If any undertaking contained in this clause 5 shall be held to be void but
would be valid if deleted in part or reduced in application, such
undertaking shall apply with such deletion or modification as may be
necessary to make it valid and enforceable. Without prejudice to the
generality of the foregoing, a period (as the same may previously have been
reduced by virtue of this clause 5.4) shall take effect as if reduced by
six months until the resulting period shall be valid and enforceable.
5.5 The references in this clause 5 to the Relevant Period means 3 years in
respect of ▇▇▇▇▇▇ and 2 years in respect of ▇▇▇▇▇▇.
5.6 In the event that ▇▇▇▇▇▇ is wrongfully dismissed from his employment with
the Company, he shall no longer be bound by clause 5.1(a), (b) or (c).
5.7 No provision of this agreement, by virtue of which this agreement is
subject to registration (if such be the case) under the Restrictive Trade
Practices Act 1976 (unless this agreement is a non-notifiable agreement
pursuant to section 27A of that Act), shall take effect until the day after
particulars of this agreement have been furnished to the Director-General
of Fair Trading pursuant to section 24 of that Act. For this purpose the
expression "this agreement" includes any agreement or arrangement of which
this agreement forms part and which is registrable or by virtue of which
this agreement is registrable.
PAGE 19 OF 74
6. CONFIDENTIAL INFORMATION
6.1 Each of the Vendors shall:-
(a) not use or disclose to any person Confidential Information; and
(b) use all reasonable endeavours to prevent the use or disclosure of
Confidential Information by any person other than by members of the
Purchaser's Group.
6.2 Clause 6.1 does not apply to:-
(a) disclosure of Confidential Information to or at the written request of
the Purchaser;
(b) use or disclosure of Confidential Information required (as determined
by written opinion of independent counsel reasonably satisfactory to
the Purchaser) to be disclosed by law or any regulatory authority;
(c) disclosure of Confidential Information to professional advisers for the
sole purpose of advising the Vendors with respect to this agreement but
the Vendors shall ensure that, prior to such disclosure, such
professional advisers give an undertaking on similar terms to the
undertaking in clause 6.1 to keep the information confidential; or
(d) Confidential Information which becomes generally known other than by
the Vendors' breach of clause 6.1.
7. ANNOUNCEMENTS
7.1 No announcement of the making of this agreement nor its terms nor those of
the Heads of Agreement entered into in relation to this Agreement shall be
made by or on behalf of the Vendors save with the approval of the Purchaser
unless disclosure is:-
(a) to the Vendors' professional advisers for the sole purpose of advising
that party with respect to this agreement; or
(b) required (as determined by written opinion of independent counsel
reasonably satisfactory to the Purchaser) by law or some regulatory
body and disclosure shall then only be made by that party:-
(i) after it has taken all such steps as may be reasonable in the
circumstances to agree the contents of such announcement with the
other party before making such announcement and provided that any
such announcement shall be made only after as much advance notice
to the other parties as commercially practicable; and
(ii) to the person or persons and in the manner required (as
determined by written opinion of independent counsel reasonably
satisfactory to the Purchaser) by law or any regulatory authority
or as otherwise agreed between the parties; or
PAGE 20 OF 74
(c) by 3i Group in the form of a brochure sent to potential investee
companies and referring only to the fact of 3i Group's investment in
the Company and its subsequent realisation (without any reference to
prices).
7.2 The restrictions contained in clause 7.1 shall apply without limit of time
and whether or not this agreement is terminated.
8. COSTS
Unless expressly otherwise provided in this agreement each of the parties
shall bear its own legal, accountancy and other costs, charges and expenses
connected with the sale and purchase of the Shares.
9. 3i GROUP LOAN
3i Group agrees with the Purchaser that it will waive the 3 month interest
charge (due under the terms of its loan to the Company on a change of
control of the Company) upon such loan becoming repayable as a result of
the acquisition of the Company by the Purchaser.
10. EFFECT OF COMPLETION
10.1 The terms of this agreement (insofar as not performed at Completion and
subject as specifically otherwise provided in this agreement) shall
continue in force after and notwithstanding Completion.
10.2 The remedies of the Purchaser in respect of any breach of any of the
Warranties shall continue to subsist notwithstanding Completion.
11. FURTHER ASSURANCES
11.1 Following Completion each of the Vendors shall from time to time forthwith
upon request from the Purchaser at the Vendors' expense do all acts and/or
execute all such documents in a form reasonably satisfactory to the
Purchaser for the purpose of vesting in the:-
(a) Purchaser the full legal and beneficial title to the:-
(i) Shares and otherwise giving the Purchaser the full benefit of
this agreement; and
(ii) Intellectual Property used by the Company except where such
Intellectual Property is the subject of licences to the Company
as at the date hereof; and
(b) Company title to the Properties or insofar as any consent or licence
may be required by reason of the transactions set out in this agreement
or otherwise to enable any of the Properties to continue to be vested
with title as aforesaid in the Company when under the ownership or
control of the Purchaser or other person being entitled for the time
being to the benefit of the Warranties.
PAGE 21 OF 74
12. ENTIRE AGREEMENT
12.1 Each party on behalf of itself and as agent for each of its Related Persons
acknowledges and agrees with the other party (each such party acting on
behalf of itself and as agent for each of its Related Persons) that:-
(a) this agreement together with any other documents referred to in this
agreement (together the "Transaction Documents") constitute the entire
and only agreement between the parties and their respective Related
Persons relating to the subject matter of the Transaction Documents;
(b) neither it nor any of its Related Persons have been induced to enter
into any Transaction Document in reliance upon, nor have they been
given, any warranty, representation, statement, assurance, covenant,
agreement, undertaking, indemnity or commitment of any nature
whatsoever other than as are expressly set out in the Transaction
Documents and, to the extent that any of them have been, it (acting on
behalf of itself and as agent on behalf of each of its Related Persons)
unconditionally and irrevocably waives any claims, rights or remedies
which any of them might otherwise have had in relation thereto;
PROVIDED THAT the provisions of this clause 12 shall not exclude any
liability which any of the parties or, where appropriate, their Related
Persons would otherwise have to any other party or, where appropriate, to
any other party's Related Persons or any right which any of them may have
to rescind this agreement in respect of any statements made fraudulently by
any of them prior to the execution of this agreement or any rights which
any of them may have in respect of fraudulent concealment by any of them.
13. VARIATIONS
This agreement may be varied in a manner adverse to a party hereto only by
a document signed by that party and the Purchaser.
14. WAIVER
14.1 A waiver of any term, provision or condition of, or consent granted under,
this agreement shall be effective only if given in writing and signed by
the waiving or consenting party and then only in the instance and for the
purpose for which it is given.
14.2 No failure or delay on the part of any party in exercising any right, power
or privilege under this agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
14.3 No breach of any provision of this agreement shall be waived or discharged
in a manner adverse to a party hereto except with the express written
consent of that party and the Purchaser.
14.4 The rights and remedies herein provided are cumulative with and not
exclusive of any rights or remedies provided by law.
PAGE 22 OF 74
15. INVALIDITY
If any provision of this agreement is or becomes invalid, illegal or
unenforceable in any respect under the law of any jurisdiction:-
(a) the validity, legality and enforceability under the law of that
jurisdiction of any other provision; and
(b) the validity, legality and enforceability under the law of any other
jurisdiction of that or any other provision,
shall not be affected or impaired in any way.
16. NOTICES
16.1 Any notice, demand or other communication given or made under or in
connection with the matters contemplated by this agreement shall be in
writing and shall be delivered personally or sent by fax or prepaid first
class post (air mail if posted to or from a place outside the United
Kingdom):-
In the case of the Purchaser to:-
Big Flower Press Holdings Inc.
▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇▇▇
▇▇▇
Fax: ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇
Attention: General Counsel
In the case of 3i Group to:-
3i Group plc
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
Fax: ▇▇▇▇ ▇▇▇ ▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇
In the case of ▇▇▇▇▇▇ to:-
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇/▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
And to the Vendors' Solicitors (for the attention of Mr M Crooks) on Fax:
▇▇▇▇▇ ▇▇▇▇▇▇
PAGE 23 OF 74
In the case of ▇▇▇▇▇▇ to:-
▇▇▇▇▇▇ ▇▇▇▇▇▇
The Barn
Sunt Farm
Caterfield Lane
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Oxted
Surrey
and shall be deemed to have been duly given or made as follows:-
(a) if personally delivered, upon delivery at the address of the relevant
party;
(b) if sent by first class post within the UK, two Business Days after the
date of posting;
(c) if sent by air mail, ten Business Days after the date of posting; and
(d) if sent by fax, when received during normal hours of business in the
place of receipt);
provided that if, in accordance with the above provision, any such notice,
demand or other communication would otherwise be deemed to be given or made
outside 9.00 a.m. - 2.00 p.m. such notice, demand or other communication
shall be deemed to be given or made at 9.00 a.m. on the next Business Day.
16.2 A party may notify the other party to this agreement of a change to its
name, relevant addressee, address or fax number for the purposes of clause
16.1 provided that such notification shall only be effective on:-
(a) the date specified in the notification as the date on which the change
is to take place; or
(b) if no date is specified or the date specified is less than five
Business Days after the date on which notice is given, the date falling
five Business Days after notice of any such change has been given.
17. COUNTERPARTS
This agreement may be executed in any number of counterparts which together
shall constitute one agreement. Any party may enter into this agreement by
executing a counterpart and this agreement shall not take effect until it
has been executed by all parties.
18. GOVERNING LAW AND JURISDICTION
18.1 This agreement (and any dispute, controversy, proceedings or claim of
whatever nature arising out of or in any way relating to this agreement or
its formation) shall be governed by and construed in accordance with
English law.
18.2 Each of the parties to this agreement irrevocably agrees that the courts of
England shall have exclusive jurisdiction to hear and decide any suit,
action or proceedings, and/or to settle any
PAGE 24 OF 74
disputes, which may arise out of or in connection with this agreement
(respectively, "Proceedings" and "Disputes") and, for these purposes, each
party irrevocably submits to the jurisdiction of the courts of England.
18.3 Each party irrevocably waives any objection which it might at any time have
to the courts of England being nominated as the forum to hear and decide
any Proceedings and to settle any Disputes and agrees not to claim that the
courts of England are not a convenient or appropriate forum for any such
Proceedings or Disputes and further irrevocably agrees that a judgment in
any Proceedings or Disputes brought in any court referred to in this clause
18 shall be conclusive and binding upon the parties and may be enforced in
the courts of any other jurisdiction.
18.4 Without prejudice to any other permitted mode of service the parties agree
that service of any writ, notice or other document ("Documents") for the
purpose of any Proceedings begun in England shall be duly served upon it if
delivered personally or sent by registered post, in the case of:-
(a) the 3i Group to ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ (marked for the
attention of ▇.▇. ▇▇▇▇▇▇);
(b) ▇▇▇▇▇▇ to any partner for the time being of the Vendors' Solicitors;
(c) ▇▇▇▇▇▇ to ▇▇▇▇▇▇ ▇▇▇▇▇▇ at The Barn, Sunt Farm, Caterfield Lane,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, Oxted, Surrey; and
(d) the Purchaser to ▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, ▇▇▇ (marked
for the attention of General Counsel)
or such other person and address in England and/or Wales as the respective
Vendor shall notify the Purchaser in writing or vice versa from time to
time.
18.5 Clause 18.4(b) has effect irrespective of whether, as between the Vendors'
solicitors and ▇▇▇▇▇▇, the Vendors' solicitors have, or continue to have,
any authority to act on ▇▇▇▇▇▇'▇ behalf; and no failure or mistake by the
Vendors' solicitors (including a failure to notify ▇▇▇▇▇▇ of the service of
any process or to forward any process to ▇▇▇▇▇▇) shall invalidate any
proceedings or judgment.
IN WITNESS whereof this agreement has been executed on the date first above
written.
PAGE 25 OF 74
SCHEDULE 1
Particulars relating to the Company
Company: Olwen Direct Mail Limited
Company Number: 2545971
Status: Trading
Registered Office: ▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇
Accounting Reference Date: 30 June
Shares:
Authorised share capital: (pound)120,000
Issued and fully paid up capital: 75,000 ordinary shares of (pound)1
25,000 A ordinary shares of (pound)1
1513 C ordinary shares of (pound)1
Directors: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
Company Secretary: ▇▇▇▇▇ ▇▇▇▇▇▇
Shareholders: ▇▇▇▇▇▇ 75,000 ordinary
3i Group 25,000 A ordinary
▇▇▇▇▇▇ 1513 C ordinary
PAGE 26 OF 74
SCHEDULE 2
Particulars relating to Subsidiaries
Subsidiary 1
Company: Olwen Press Limited
Company Number: 1628956
Status: Dormant since 30 June 1996
Registered Office: ▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇
Accounting Reference Date: 30 June
Shares:
Authorised Capital: (pound)50,000
Issued and fully paid up capital: (pound)50,000
Directors: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Company Secretary: ▇▇▇▇▇ ▇▇▇▇▇▇
Shareholders: Olwen Direct Mail Limited -
49,999 shares
▇▇▇▇▇ ▇▇▇▇▇▇ - 1 share
Subsidiary 2
Company: Olwen Data Management Limited
Company Number: 2435079
Status: Dormant since 30 June 1990
Registered Office: ▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇
Accounting Reference Date: 30 June
Shares:
Authorised capital: (pound)20,000
Issued and fully paid up capital: (pound)100
Directors: ▇▇▇▇ ▇▇▇▇▇▇
Company Secretary: ▇▇▇▇▇ ▇▇▇▇▇▇
Shareholders: Olwen Direct Mail Limited - 99 shares
▇▇▇▇▇ ▇▇▇▇▇▇ - 1 share
PAGE 27 OF 74
Subsidiary 3
Company: Olwen Graphic Services Limited
Company Number: 2824166
Status: Dormant since 30 June 1995
Registered Office: ▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇
Accounting Reference Date: 30 June
Shares:
Authorised capital: (pound)100
Issued and fully paid up capital: (pound)100
Directors: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Company Secretary: ▇▇▇▇▇ ▇▇▇▇▇▇
Shareholders: Olwen Direct Mail Limited - 99 shares
▇▇▇▇▇ ▇▇▇▇▇▇ - 1 share
Subsidiary 4
Company: Olwen Envelopes Limited
Company Number: 1963984
Status: Dormant since 30 June 1996
Registered Office: ▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇
Accounting Reference Date: 30 June
Shares:
Authorised capital: (pound)10,000
Issued and fully paid up capital: (pound)10,000
Directors: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Company Secretary: ▇▇▇▇▇ ▇▇▇▇▇▇
Shareholders: Olwen Direct Mail Limited -
9,999 shares
▇▇▇▇▇ ▇▇▇▇▇▇ - 1 share
PAGE 28 OF 74
Subsidiary 5
Company: Olwen Mailing Services Limited
Company Number: 2343143
Status: Dormant since 30 June 1996
Registered Office: ▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇
Accounting Reference Date: 30 June
Shares:
Authorised capital: (pound)20,000
Issued and fully paid up capital: (pound)20,000
Directors: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
Company Secretary: ▇▇▇▇▇ ▇▇▇▇▇▇
Shareholders: Olwen Direct Mail Limited -
20,000 shares
Subsidiary 6
Company: Olwen International Direct Mail Inc.
Company Number: 270642
Status: U.S. Corporation registered in the
State of Maryland
Registered Office: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Accounting Reference Date: 30 June
Shares:
Authorised capital: US$100,000
Issued and fully paid up capital: US$100,000
Directors: ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Company Secretary: ▇▇▇▇▇ ▇▇▇▇▇▇
Shareholders:
PAGE 29 OF 74
Name: Olwen Direct Mail Limited
Address: ▇-▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Shares: 100,000 shares
PAGE 30 OF 74
SCHEDULE 3
The Warranties
For the purpose of this schedule 3 Company means Olwen Direct Mail Limited and
includes the Subsidiaries, all of them and each of them as the context admits.
Any Warranty expressed to be given "to the best of ▇▇▇▇▇▇'▇ knowledge and
belief" or "so far as ▇▇▇▇▇▇ is aware" or otherwise qualified by reference to
the knowledge of ▇▇▇▇▇▇ shall not be qualified in the manner stated unless
▇▇▇▇▇▇ establishes that he has made all reasonable enquiries of the directors,
employees and agents of each Group Company and relevant third parties to
establish the truth and accuracy of that Warranty.
In this schedule 3 the following words have the following meanings, unless the
context otherwise requires:-
"Activities" means any activity, operation or process carried out by the Company
at any property whether or not currently owned, occupied or used by the Company;
"Claim for Tax" means any of the following:-
(a) any liability to make a payment of Tax and any claim, assessment,
demand, notice or other document issued or action taken by or on behalf
of any person, authority or body whatsoever and of whatever country,
including any Tax Authority, which claims payment of Tax;
(b) any non-availability or loss of or reduction of any Relief (including
in particular a right to repayment);
"distribution" means a distribution as defined by sections 209 to 211
(inclusive) of the TA and section 418 of the TA;
"Environment" means any and all living organisms (including man), ecosystems,
property and the media of air (including air in buildings, natural or man-made
structures, below or above ground), water, (as defined in section 104(1) of the
Water Resources ▇▇▇ ▇▇▇▇ and within drains and sewers) and land (including under
any water as described above and whether above or below surface);
"Environmental Consent" means any consent, approval, permit, licence, order,
filing, authorisation, exemption, registration, permission, reporting or notice
requirement and any related agreement required under any Environmental Law;
"Environmental Laws" means all international, EU, national, federal, state or
local statutes, (which for the avoidance of doubt shall include section 57 and
Schedule 22 of the Environment ▇▇▇ ▇▇▇▇ and the guidance and regulations adopted
under those provisions,) bylaws, orders, regulations or other law or subordinate
legislation or common law, all orders, ordinances, decrees or regulatory codes
of practice, circulars, guidance notes and equivalent controls concerning the
protection of human health or which have as a purpose or effect the protection
or prevention of harm to the Environment or health and safety which are binding
in relation to the Properties and/or upon the Company in the relevant
jurisdiction in which the Company has been or is operating (including by the
export of its products, or its waste thereto) on or before Completion;
"ERA" means the Employment Rights ▇▇▇ ▇▇▇▇;
PAGE 31 OF 74
"Hazardous Substance" means any natural or artificial substance (whether solid,
liquid, gas, noise, ion, vapour, electromagnetic or radiation, and whether alone
or in combination with any other substance) which is capable of causing harm to
or have a deleterious effect on the Environment, being a nuisance, or which
restricts or makes more costly the use, development, ownership or occupation of
any Properties;
"ITA" means the Inheritance Tax ▇▇▇ ▇▇▇▇;
"L&T Covenants Act" means the Landlord and Tenant (Covenants) ▇▇▇ ▇▇▇▇;
"Leases" means all the leases in respect of which the Company is under any
obligation or has any liability or is a party, as specified in Schedule 5;
"Substantial Customer" means a customer accounting for more than five per cent.
of the Group's sales in the financial year ended on the Accounts Date;
"Substantial Supplier" means a supplier accounting for more than five per cent.
of the Group's purchases in the financial year ended on the Accounts Date;
"Tax" or "tax" means any tax, and any duty, contribution, impost, withholding,
levy or charge in the nature of tax, whether domestic or foreign, and any fine,
penalty surcharge or interest connected therewith and includes corporation tax,
advance corporation tax, income tax (including income tax required to be
deducted or withheld from or accounted for in respect of any payment), national
insurance and social security contributions, capital gains tax, inheritance tax,
value added tax, customs excise and import duties, stamp duty, stamp duty
reserve tax, insurance premium tax, air passenger duty, rates and water rates,
land fill tax, petroleum revenue tax, advance petroleum revenue tax, gas levy
and any other payment whatsoever which any person is or may be or become bound
to make to any person and which is or purports to be in the nature of taxation;
"Taxation Authority" means any local, municipal, governmental, state, federal or
fiscal, revenue, customs or excise authority, body, agency or official anywhere
in the world having or purporting to have power or authority in relation to Tax
including the Inland Revenue and HM Customs and Excise;
"Taxation Statutes" means all statutes, statutory instruments, orders,
enactments, laws, by-laws, directives and regulations, whether domestic or
foreign decrees, providing for or imposing any Tax;
"TCGA" means the Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇;
"TMA" means the Taxes Management ▇▇▇ ▇▇▇▇;
"Transfer Regulations" means the Transfer of Undertakings (Protection of
Employment) Regulations 1981;
"TULR(C)A" means the Trade Union and Labour Relations (Consolidation) ▇▇▇ ▇▇▇▇;
"VATA" means the Value Added Tax ▇▇▇ ▇▇▇▇ and "VAT legislation" means VATA and
all regulations and orders made thereunder;
"Waste" means waste including anything which is discarded or which the holder
intends or is required to discard and anything which is abandoned, unwanted or
surplus irrespective of whether it is capable of being recovered or recycled or
has any value such that there is likely to be a breach of
PAGE 32 OF 74
Environmental Law or such that any investigation, treatment or remediation of
any of the Properties is or would be required or would be undertaken by a
prudent owner or occupier.
1. VENDOR'S CAPACITY
[Deleted]
2. THE COMPANY, THE SHARES AND THE SUBSIDIARIES
2.1 Incorporation and Existence
The Company and each of the Subsidiaries are limited companies incorporated
under English law and have been in continuous existence since
incorporation. Each of the Group Companies has full corporate power and
authority to conduct its respective business as to the extent now conducted
and to own, use and lease its assets and Properties.
2.2 The Shares
(a) The Shares are the entire issued shares of the Company.
(b) The Company has not allotted any shares other than the Shares and the
Shares are fully paid or credited as fully paid.
(c) There is no Encumbrance in relation to any unissued shares in the
capital of the Company. No Group Company is under any obligation
(whether actual or contingent) to sell, charge or otherwise dispose of
any of the Shares or any interest therein to any person.
(d) Other than this agreement, there is no agreement, arrangement or
obligation requiring the creation, allotment, issue, sale, transfer,
redemption or repayment of, or the grant to a person of the right
(conditional or not) to require the allotment, issue, sale, transfer,
redemption or repayment of, a share in the capital of the Company
(including an option or right of pre-emption or conversion).
2.3 The Subsidiaries
(a) The Company does not have any subsidiary undertakings other than the
Subsidiaries. Each of the Subsidiaries is a wholly-owned subsidiary of
the Company (unless otherwise indicated in schedule 2) and each of the
shares of each such company has been properly allotted and issued and
is fully paid or credited as fully paid.
(b) There is no Encumbrance in relation to any of the shares or unissued
shares in the capital of any of the Subsidiaries. No person has claimed
or can claim to be entitled to an Encumbrance in relation to any of the
shares of any of the Subsidiaries and no Group Company is under any
obligation (whether actual or contingent) to sell, charge or otherwise
dispose of any shares in any of the Subsidiaries or any interest
therein to any person.
(c) Other than this agreement, there is no agreement, arrangement or
obligation requiring the creation, allotment, issue, sale, transfer,
redemption or repayment of, or the grant
PAGE 33 OF 74
to a person of the right (conditional or not) to require the allotment,
issue, sale, transfer, redemption or repayment of, a share in the
capital of any of the Group Companies (including an option or right of
pre-emption or conversion).
(d) The Company does not own any shares or stock in the capital of nor does
it have any beneficial or other interest in any company or business
organisation other than the Subsidiaries nor does the Company control
or take part in the management of any other company or business
organisation.
3. ACCOUNTS
3.1 General
(a) The Accounts show a true and fair view in all respects of the:-
(i) assets, liabilities (including contingent and unmatured),
financial position and state of affairs at the Accounts Date; and
(ii) the profits and losses for the financial year ended on the
Accounts Date.
of the Company (or of the Group to the extent that they are
consolidated accounts).
(b) The Accounts have been prepared and audited in accordance with the
standards, principles and practices specified on the face of the
Accounts applied on a consistent basis and subject thereto in
accordance with the law and applicable standards, principles and
practices generally accepted in the United Kingdom consistently
applied.
(c) The Accounts have been prepared on a basis consistent with the basis
upon which all audited accounts of the Company have been prepared in
respect of the three years before the Accounts Date.
3.2 Liabilities
The Accounts make full provision or reserve for or disclose all liabilities
(including all contingent or deferred liability to Tax) of the Company
whether actual, contingent or otherwise.
3.3 Extraordinary and Exceptional Items
The results shown by the audited profit and loss account of the Company and
the consolidated audited profit and loss accounts of the Group for each of
the three financial years of the Company and the Group ended on the
Accounts Date have not (except as disclosed in those accounts) been
affected by an extraordinary, exceptional or non-recurring item or by any
other matter making the profits or losses for a period covered by any of
those accounts unusually high or low.
The Company's financial projections for the 12 month period to 30 June
1998, as annexed to the Disclosure Letter, have been compiled after due and
careful enquiry and on reasonable
PAGE 34 OF 74
bases consistent with the basis upon which the Accounts have been prepared
and all assumptions on which such projections are based, are reasonable
assumptions and are disclosed in such projections.
3.4 Off Balance Sheet Financing
No member of the Group is engaged in any financing (including the incurring
of any borrowing or any indebtedness in the nature of acceptances or
acceptance credits) of a type which would not be required to be shown or
reflected in the Accounts.
3.5 Accounting and Other Records
(a) The books of account and all other records of the Company (including
any which it may be obliged to produce under any contract now in force)
are up-to-date, in its possession and do not contain or reflect any
material inaccuracy or omission in accordance with the law and
applicable standards, principles and practices generally accepted in
the United Kingdom.
(b) All deeds and documents (properly stamped where stamping is necessary
for enforcement thereof) (excluding deeds and documents relating to the
Properties) belonging to the Company or which ought to be in the
possession of the Company are in the possession of the Company.
3.6 Accounting Reference Date
The accounting reference date of the Company under section 224 of the
Companies ▇▇▇ ▇▇▇▇ is, and during the last six years has always been, 30
June.
3.7 Management Accounts
The Management Accounts of the Company for the period ended 31 August 1997
in the agreed terms have been prepared by the Company on a basis (including
standards, principles and practice) consistent with the Accounts and with
due care and attention, show with reasonable accuracy the state of affairs
and profit and loss of the Company as at and for the period in respect of
which they have been prepared and the balance sheet of the Company as at
such date but it is hereby acknowledged that they are not prepared on a
statutory basis.
4. CHANGES SINCE THE ACCOUNTS DATE
4.1 General
Since 30 June 1997:-
(a) the Company has carried on its business prudently and in the ordinary
and usual course, consistent with past practice and so as to maintain
the business as a going concern;
(b) there has been no material adverse change in the financial or trading
position or prospects of the Company; and
PAGE 35 OF 74
(c) there has been no material reduction in the value of those fixed assets
specified in the Accounts, to the extent still owned by the Company.
4.2 Specific
Since 30 June 1997:-
(a) the Company has not, other than in the ordinary course of trading and
consistent with past practice:-
(i) disposed of, or agreed to dispose of, an asset; or
(ii) assumed or incurred, or agreed to assume or incur, a liability,
obligation or expense (actual or contingent);
and in the case of a disposal or agreement to dispose of an asset for
an amount which is lower than book value or an open market arm's length
value, whichever is the higher;
(b) the Company has not acquired or agreed to acquire an asset for an
amount which is higher than open market arm's length value;
(c) the Company has not made, or agreed to make, or incurred, or agreed to
incur, a commitment or connected commitments involving capital
expenditure exceeding in total (pound)75,000;
(d) no Substantial Supplier or Substantial Customer has ceased or
substantially reduced its trade with the Company or has altered the
terms of trade to the Company's disadvantage and, to the best of
▇▇▇▇▇▇'▇ knowledge, this will not happen in the foreseeable future;
(e) the Company has not declared, paid or made a dividend or other
distribution (including a distribution within the meaning of the TA) on
any class or classes of share capital except to the extent provided in
the Accounts;
(f) no resolution of the shareholders of the Company has been passed
(except for those representing the ordinary business of an annual
general meeting or as provided for in this agreement);
(g) the Company has not repaid or redeemed share or loan capital, or made
(whether or not subject to conditions) an agreement or arrangement or
undertaken an obligation to do any of those things;
(h) the Company has not repaid any sum in the nature of borrowings in
advance of any due date or made any loan or incurred any indebtedness
(including in each case inter group) other than in the ordinary course
of trading; and
PAGE 36 OF 74
(i) the Company has not paid nor is under an obligation to pay any service,
management or similar charges or any interest or amount in the nature
of interest to any other person or incurred any liability to make such
a payment or made any payment to any Vendor Associate whatsoever.
(j) the Company has not incurred or paid any liability (which expression
shall include any matter which would fall to be treated as a provision)
outside the normal course of trading; and
(k) the Company has not incurred or paid any liability for solicitors,
accountancy, surveyors, valuers, or other professional advisers' fees.
5. ASSETS
5.1 Title and Condition
(a) There are no Encumbrances, nor has the Company agreed to create any
Encumbrances, over any part of its undertaking or assets and each asset
used or usable by the Company (tangible or intangible) is:-
(i) legally and beneficially owned by the Company; and
(ii) where capable of possession, in the possession of the Company.
(b) The Company owns each asset (tangible or intangible) necessary for the
operation of its business as currently conducted and without limitation
no rights (other than rights as shareholders in the Company) relating
to the business of the Company are owned or otherwise enjoyed by or on
behalf of any Vendor Associate or any other person.
5.2 Hire Purchase and Leased Assets
Copies of any ▇▇▇▇ of sale or any hiring or leasing agreement, hire
purchase agreement, credit or conditional sale agreement, agreement for
payment on deferred terms or any other similar agreement to which the
Company is a party are included in the Agreed Bundle referred to in the
Disclosure Letter.
5.3 Debts
Except to the extent to which specific provision or reserve has been made
in the Accounts ▇▇▇▇▇▇ is not aware of any circumstances which could result
in any indebtedness owed to the Company and whether included in Accounts or
arising since 30 June 1997 not being paid in full and none of such debts
has been factored, sold or agreed to be sold by the Company.
6. INTELLECTUAL PROPERTY
6.1 General
(a) The Company is the sole and absolute legal and beneficial owner of all
Intellectual Property used in connection with its business.
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(b) The Intellectual Property used by the Company in connection with its
business is free from Encumbrances and, in the case of Confidential
Information, any disclosure obligation and is subsisting, valid,
exercisable and enforceable and all steps have been taken diligently
for the maintenance and protection of unregistered Intellectual
Property owned by the Company.
6.2 [deleted]
6.3 Licences
(a) The terms of all licences or rights which have been granted by the
Company or which the Company or a Vendor Associate intends to enter
into for the purposes of the business of the Company or which are being
currently negotiated or other agreement or consents or undertakings
entered into by the Company or Vendor Associate relating to the
Intellectual Property owned by or licensed to the Company are set out
in the Disclosure Letter and unless disclosed neither the Company nor
any Vendor Associate is obliged to enter into any such agreement
relating to the business of the Company. So far as ▇▇▇▇▇▇ is aware
there has been or is no breach nor is there any fact or matter which
would or may create a breach of such licences or undertakings.
(b) The terms of all licences or rights granted to the Company or which the
Company or a Vendor Associate intends to enter into for the purposes of
the business of the Company or which are being currently negotiated or
other agreement or consents or undertakings entered into by the Company
or a Vendor Associate relating to the Intellectual Property used in the
business of the Company are set out in the Disclosure Letter and
neither the Company nor any Vendor Associate is obliged to enter into
any such agreement relating to the business of the Company. So far as
▇▇▇▇▇▇ is aware there has been or is no breach nor is there any fact or
matter which would or may create a breach of such licences or
undertakings.
6.4 Infringement
(a) The use by the Company of any Intellectual Property used in the
business of the Company does not and is not likely to infringe and the
processes or methods employed, services provided, the business
conducted and the products used, manufactured and dealt in or supplied
by the Company do not nor did they at the time used, manufactured,
dealt in or supplied infringe the Intellectual Property of any other
person.
(b) No proceedings, claims or complaints have been brought or threatened in
writing or otherwise by any third party or competent authority in
relation to the Intellectual Property owned by or licensed to the
Company including any concerning title subsistence validity or
enforceability or grant of any right or interest in such Intellectual
Property.
(c) So far as ▇▇▇▇▇▇ is aware no third party is infringing or misusing or
threatening to infringe or misuse the Intellectual Property owned by or
licensed to the Company.
PAGE 38 OF 74
(d) The Company is not subject to any injunction, undertaking or court
order or order of any other authority of competent jurisdiction not to
use or restricting the use of any Intellectual Property.
6.5 Confidential Agreements
Save as contained in the Agreed Bundle, the Company has not and no Vendor
Associate of ▇▇▇▇▇▇ has entered into any confidentiality or other agreement
or is subject to any duty which restricts the free use or disclosure of any
information used in the business of the Company and there is no breach of
any such agreement or duty.
7. EFFECT OF SALE
7.1 Neither the execution nor performance of this agreement or any document to
be executed at or before Completion will:-
(a) result in the Company losing the benefit of a Permit or an asset,
licence, grant, subsidy, right or privilege which it enjoys at the date
of this agreement in any jurisdiction; or
(b) conflict with, or result in a breach of, or give rise to an event of
default under, or require the consent of a person under, or enable a
person to terminate or accelerate or otherwise grant to any person any
additional rights under, or relieve a person from an obligation under,
an agreement, arrangement or obligation to which the Company is a party
or a legal or administrative requirement in any jurisdiction; or
(c) result in any Substantial Customer being entitled to or, so far as
▇▇▇▇▇▇ is aware, cease dealing with the Company or to reduce its
existing level of business or to change the terms upon which it deals
with the Company; or
(d) result in any Substantial Supplier being entitled to or, so far as
▇▇▇▇▇▇ is aware, cease supplying to the Company or to reduce its
supplies to or to change the terms upon which it supplies the Company;
(e) result in any officer or senior employee leaving the Company or result
in such a person having any additional rights to payments or benefits
from the Company; or
(f) make the Company liable to offer for sale, transfer or otherwise
dispose of or purchase or otherwise acquire any assets, including
shares held by it in other bodies corporate under their articles of
association or any agreement or arrangement.
8. CONSTITUTION
8.1 Memorandum and Articles
The memorandum and articles of association of the Company in the form set
out in the Agreed Bundle are true, correct and complete and have embodied
therein or annexed thereto copies of all resolutions and agreements as are
referred to in section 380 of the Companies ▇▇▇ ▇▇▇▇, and all amendments
thereto (if any) were duly and properly made.
PAGE 39 OF 74
8.2 Register of Members
The register of members of the Company has been properly kept and contains
true and complete records of the members from time to time of the Company
and the Company has not received any notice or allegation that any of them
is incorrect or incomplete or should be rectified.
8.3 Powers of Attorney
The Company has not executed any power of attorney or conferred on any
person other than its directors, officers and employees any authority to
enter into any transaction on behalf of or to bind the Company in any way
and which power of attorney remains in force or was granted or conferred
within three years of the Completion Date.
8.4 Statutory Books and Filings
(a) The statutory books of the Company are up to date, in its possession
and are true and complete in all material respects in accordance with
the law.
(b) All resolutions, annual returns and other documents required to be
delivered to the Registrar of Companies (or other relevant company
registry or other corporate authority in any jurisdiction) have been
properly prepared and filed and are true and complete and the common
seal of the Company is in its possession.
9. INSURANCE
9.1 Policies
The Disclosure Letter contains a true and complete list of each current
insurance and indemnity policy in respect of which the Company has an
interest (together the "Policies"). So far as ▇▇▇▇▇▇ is aware each of the
Policies is valid and enforceable and is not void or voidable. So far as
▇▇▇▇▇▇ is aware there are no circumstances which might make any of the
Policies void or voidable or lead any claim under the Policies to be
avoided by the insurers.
9.2 Claims
No claim is outstanding under any of the Policies and so far as ▇▇▇▇▇▇ is
aware no matter exists which might give rise to a claim under any of the
Policies.
9.3 Premiums
So far as ▇▇▇▇▇▇ is aware the Company has not done or omitted to do
anything which might result in an increase in the premium payable under any
of the Policies.
10. CONTRACTUAL MATTERS
10.1 Validity of Agreements
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(a) So far as ▇▇▇▇▇▇ is aware each contract to which the Company is a party
is in full force and effect and constitutes a legal, valid and binding
agreement, enforceable in accordance with its terms. So far as ▇▇▇▇▇▇
is aware there exists no invalidity of, or ground for termination,
avoidance or repudiation of, or a claim or incidence of breach in
respect of, an agreement, arrangement or obligation to which the
Company is a party. So far as ▇▇▇▇▇▇ is aware no party with whom the
Company has entered into an agreement, arrangement or obligation has
given notice of its intention to terminate or claim a breach, or has
sought to repudiate or disclaim, the agreement, arrangement or
obligation.
(b) No party with whom the Company has entered into an agreement or
arrangement is in material breach of the agreement or arrangement. So
far as ▇▇▇▇▇▇ is aware no matter exists which might give rise to such
breach.
(c) So far as ▇▇▇▇▇▇ is aware the Company is not in material breach of any
agreement or arrangement. So far as ▇▇▇▇▇▇ is aware no matter exists
which might give rise to such breach but nothing in this clause shall
constitute a warranty as to the condition of the Properties.
10.2 Standard Terms and Conditions
A copy of the standard terms and conditions of business of the Company are
annexed to the Disclosure Letter and the Company has not entered into an
agreement or arrangement with any of its ten biggest customers (ranked by
turnover) different from these.
10.3 Supply Contracts
Full and accurate details of all agreements or arrangements for the supply
of stock, raw materials, products or goods to or by the Company which
involve or are likely to involve the supply of goods the aggregate sale
value of which will represent in excess of five per cent. of the turnover
for the financial year of the Company ended on the Accounts Date are
contained in the Disclosure Letter and copies included in the Agreed
Bundle.
10.4 Material Agreements
(a) Save for those contained in the Agreed Bundle the Company is not a
party to and is not liable under any contract, transaction, arrangement
or liability which involves, or is likely to involve obligations or
liabilities which, by reason of their nature or magnitude, ought
reasonably to be made known to an intending purchaser of the Shares
including any which:-
(i) is of an unusual or abnormal nature, or outside the ordinary and
proper course of business;
(ii) is of a long-term nature (that is, unlikely to have been fully
performed, in accordance with its terms, more than six months
after the date on which it was entered into or undertaken);
PAGE 41 OF 74
(iii) is incapable of termination in accordance with its terms, by the
Company, on 60 days' notice or less;
(iv) cannot readily be fulfilled or performed by the Company on time
without undue or unusual expenditure of money, effort or
personnel;
(v) involves payment by the Company by reference to fluctuations in
the index of retail prices, or any other index or in the rate of
exchange for any currency;
(vi) involves an aggregate outstanding expenditure or other liability
by the Company of more than (pound)50,000 (in the case of a
one-off payment) or (pound)100,000 per annum; or
(vii) restricts its freedom to engage in any activity or business or
confines its activity or business to a particular place;
(b) The Company is not a party to and is not liable under:-
(i) an agreement, arrangement or obligation by which the Company is a
member of a joint venture, consortium, partnership or association
(other than a bona fide trade association); or
(ii) a distributorship, agency, marketing, licensing or management
agreement or arrangement.
10.5 Contracts with Connected Persons
Save for service contracts disclosed in or annexed to the Disclosure
Letter, there is, and during the three years ending on the date of this
agreement there has been, no agreement or arrangement (legally enforceable
or not) to which the Company is or was a party and in which any Vendor
Associate, a director or former director of any Vendor Associate or a
person connected with any of them is or was interested in any way. The
Company does not owe any obligation or sum to, nor is it owed any
obligation or sum by, nor does it and neither will it immediately after
Completion have any contractual or other arrangements of any sort with any
Vendor Associate and nor does any Vendor Associate owe such obligation or
sum to the Company.
10.6 Conditions and Warranties in Respect of Goods or Services
Except for a condition or warranty implied by law or contained in its
standard terms of business or otherwise given in the usual course of
trading, the Company has not given a condition or warranty, or made a
representation, in respect of goods or services supplied or agreed to be
supplied by it, or accepted an obligation that could give rise to a
liability after the goods or services have been supplied by it.
11. INFORMATION TECHNOLOGY
11.1 Information Technology
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In the twelve months prior to the date hereof the Company has not suffered
and so far as ▇▇▇▇▇▇ is aware no other person has suffered any failures or
bugs in or breakdowns of any computer hardware or software used in
connection with the business of the Company which have caused any
substantial disruption or interruption in or to its use and ▇▇▇▇▇▇ does not
know nor is ▇▇▇▇▇▇ aware of any fact or matter which may so disrupt or
interrupt or affect the use of such equipment following the acquisition by
the Purchaser of the Shares pursuant to this agreement on the same basis as
it is presently used.
11.2 None of the software or technical manuals used by the Company has been
copied wholly or substantially from any material in which the Company does
not own copyright.
11.3 All computer systems, excluding software, used in the business of the
Company are owned and operated by and are under the control of the Company
and are not wholly or partly dependent on any facilities which are not
under the exclusive ownership, operation or control of the Company. No
action will be necessary to enable such systems to continue to be used in
the business of the Company to the same extent and in the same manner as
they have been used prior to the date hereof.
11.4 The Company is validly licensed to use the software used in its business
and no action will be necessary to enable it to continue to use such
software to the same extent and in the same manner as they have been used
prior to the date hereof.
12. LIABILITIES
12.1 Continuance of Facilities
Full and accurate details of all overdrafts, loans or other financial
facilities outstanding or available to the Company are set out in the
Disclosure Letter and whether or not of a type which would be required to
be shown in or reflected in the Accounts (including any indebtedness for
moneys borrowed or raised under any acceptance credit, bond, note, ▇▇▇▇ of
exchange or commercial paper, finance lease, hire purchase agreement, trade
bills (other than those on terms normally obtained) forward sale or
purchase agreement or conditional sale agreement or other transaction
having the commercial effect of a borrowing) and copies of all documents
relating to such matters are annexed to the Disclosure Letter. No Vendor
Associate has done anything whereby the continuance of any such facilities
in full force and effect might be affected or prejudiced.
12.2 Bank Accounts
A statement of all the bank accounts of the Company and of the credit or
debit balances on such accounts as at a date not more than seven days
before the date of this agreement has been supplied to the Purchaser. The
Company does not have any other bank or deposit accounts (whether in credit
or overdrawn) not included in such statement. Since such statement there
have been no payments out of any such accounts except for routine payments
and the balances on current account are not now substantially different
from the balances shown on such statements.
12.3 Guarantees and Indemnities
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(a) The Company is not a party to and is not liable (including
contingently) under a guarantee, indemnity or other agreement to secure
or incur a financial or other obligation with respect to another
person's obligation.
(b) No part of the loan capital, borrowing or indebtedness in the nature of
borrowing of the Company is dependent on the guarantee or indemnity of,
or security provided by, another person (other than a Group Company).
12.4 Events of Default
No event has occurred or is subsisting or been alleged or so far as ▇▇▇▇▇▇
is aware is likely to arise which:-
(a) constitutes an event of default, or otherwise gives rise to an
obligation to repay, or to give security under an agreement relating to
borrowing or indebtedness in the nature of borrowing (or will do so
with the giving of notice or lapse of time or both) or gives any person
any additional rights to accelerate, modify or do otherwise under such
agreement;
(b) will lead to an Encumbrance constituted or created in connection with
borrowing or indebtedness in the nature of borrowing, a guarantee, an
indemnity or other obligation of the Company becoming enforceable (or
will do so with the giving of notice or lapse of time or both); or
(c) will, with the giving of notice and/or lapse of time, constitute or
result in a default or the acceleration of any obligation under any
agreement or arrangement to which the Company is a party or by which it
or any of its properties, revenues or assets is bound.
12.5 Grants
The Company is not liable to repay an investment or other grant or subsidy
made to it by any person (including the Department of Trade and Industry or
its predecessor). No matter (including the execution and performance of
this agreement) exists which might entitle a body to require repayment of,
or refuse an application by the Company for, the whole or part of a grant
or subsidy.
13. PERMITS
13.1 Compliance with Permits
The Company has obtained and complied with the terms and conditions of each
Permit (full and accurate details of which are contained in the Disclosure
Letter).
13.2 Status of Permits
Each Permit is valid, binding and in full force and effect, and the Company
is not in default under any Permit. There are no pending or threatened
proceedings which might in any way affect the Permits and ▇▇▇▇▇▇ is not
aware of any other reason why any of them should be suspended, threatened
or revoked or be invalid.
PAGE 44 OF 74
14. INSOLVENCY
14.1 Winding up
No order has been made, petition presented or resolution passed for the
winding up of the Company or for the appointment of a provisional
liquidator to the Company.
14.2 Administration
No administration order has been made and no petition for an administration
order has been presented in respect of the Company.
14.3 Receivership
No receiver, receiver and manager or administrative receiver has been
appointed of the whole or part of the Company's business or assets.
14.4 Compromises with creditors
(a) No voluntary arrangement under section 1 of the Insolvency ▇▇▇ ▇▇▇▇ has
been proposed or approved in respect of the Company.
(b) No compromise or arrangement under section 425 of the Companies ▇▇▇
▇▇▇▇ has been proposed, agreed to or sanctioned in respect of the
Company.
(c) The Company has not entered into any compromise or arrangement with its
creditors or any class of its creditors generally.
14.5 Insolvency
The Company is not unable to pay its debts within the meaning of section
123 of the Insolvency ▇▇▇ ▇▇▇▇ (but for this purpose ignoring the reference
to "if it is proved to the satisfaction of the court that" in section
123(1)(e) and 123(2)).
14.6 Payment of Debts
The Company has not stopped paying its debts as they fall due or delayed
paying the same beyond the standard terms.
14.7 Distress etc.
No distress, execution or other process has been levied on an asset of the
Company.
14.8 Unsatisfied Judgments
There is no unsatisfied judgment or court order outstanding against the
Company.
14.9 Striking Out
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No action is being taken by the Registrar of Companies to strike the
Company off the register under section 652 of the Companies ▇▇▇ ▇▇▇▇.
15. LITIGATION AND COMPLIANCE WITH LAW
All references to the Company in this paragraph 15 should be deemed to
include the Company's officers, agents and employees to the extent that the
Company may be liable for their acts or defaults.
15.1 Litigation
(a) Neither the Company nor a person for whose acts or defaults the Company
may be vicariously liable is involved, or has during the two years
ending on the date of this agreement been involved, in a civil,
criminal, arbitration, administrative or other proceeding in any
jurisdiction. So far as ▇▇▇▇▇▇ is aware no civil, criminal,
arbitration, administrative or other proceeding in any jurisdiction is
pending or threatened by or against the Company or a person for whose
acts or defaults the Company may be vicariously liable.
(b) So far as ▇▇▇▇▇▇ is aware, no matter exists which might give rise to a
civil, criminal, arbitration, administrative or other proceeding in any
jurisdiction involving the Company or a person for whose acts or
defaults the Company may be vicariously liable.
(c) There is no outstanding judgment, order, decree, arbitral award or
decision of a court, tribunal, arbitrator or governmental agency in any
jurisdiction against the Company or a person for whose acts or defaults
the Company may be vicariously liable and in relation to such judgment,
order, decree, award or decision the Company would be liable for such
persons acts or defaults.
15.2 Compliance with Law
So far as ▇▇▇▇▇▇ is aware the Company has conducted its business and dealt
with its assets in all material respects in accordance with all applicable
legal and administrative requirements in any jurisdiction.
15.3 Investigations
The Company is not and has not been subject to any investigation, enquiry
or disciplinary proceeding (whether judicial, quasi-judicial or otherwise)
in any jurisdiction and none is pending or threatened, and neither has it
received any request for information from, any court or governmental
authority (including any national competition authority and the Commission
of the European Communities and the EFTA Surveillance Authority) under any
anti-trust or similar legislation in any jurisdiction. So far as ▇▇▇▇▇▇ is
aware no matter exists which might give rise to such an investigation,
enquiry, proceeding or request for information.
15.4 Competition Law
PAGE 46 OF 74
(a) The Company is not nor has been a party to or concerned in any
agreement or arrangement, or conducted itself (whether by omission or
otherwise) in a manner, which:-
(i) could give rise to an investigation by the Office of Fair Trading
or the Monopolies and Mergers Commission under the Fair Trading
▇▇▇ ▇▇▇▇;
(ii) has been or is required to be furnished to the Director General
of Fair Trading pursuant to the Restrictive Trade Practices Acts
1976 and 1977;
(iii) contravenes the provisions of the Resale Prices ▇▇▇ ▇▇▇▇;
(iv) contravenes the provisions of the Trade Descriptions Acts 1968
and 1972;
(v) constitutes an anti-competitive practice within the meaning of
the Competition ▇▇▇ ▇▇▇▇;
(vi) constitutes a breach of any relevant undertaking, order,
assurance or other measure made under the Fair Trading ▇▇▇ ▇▇▇▇,
the Restrictive Trade Practices Acts 1976 and 1977, the Resale
Prices ▇▇▇ ▇▇▇▇, the Trade Descriptions Acts 1968 and 1972, or
the Competition ▇▇▇ ▇▇▇▇;
(vii) infringes Articles 85 and/or 86 of the Treaty of Rome or their
equivalent provisions under the European Economic Area Agreement
or any other anti-trust or similar legislation in any
jurisdiction; or
(viii) is registrable, unenforceable or void (whether in whole or in
part) or renders it liable to civil, criminal or administrative
proceedings by virtue of any anti-trust, anti-monopoly,
anti-cartel, consumer law or any other similar legislation in any
jurisdiction.
(b) The Company has not given an undertaking or written assurance (whether
legally binding or not) to any court or governmental authority
(including any national competition authority and the Commission of the
European Communities and the EFTA Surveillance Authority) under any
anti-trust or similar legislation in any jurisdiction.
(c) The Company is not subject to an order, regulation or decision made by
any court or governmental authority (including any national competition
authority and the Commission of the European Communities and the EFTA
Surveillance Authority) under any anti-trust or similar legislation in
any jurisdiction.
(d) The Company is not and has not been a party to or concerned in any
agreement, arrangement or concerted practice in respect of which an
application for negative clearance and/or an exemption has been made to
the Commission of the European Communities or the EFTA Surveillance
Authority.
15.5 Unlawful Payments
PAGE 47 OF 74
Neither the Company nor a person for whose acts or defaults the Company may
be vicariously liable has:-
(a) induced a person to enter into an agreement or arrangement with the
Company by means of an unlawful or immoral payment, contribution, gift
or other inducement;
(b) offered or made an unlawful or immoral payment, contribution, gift or
other inducement to a government official or employee; or
(c) directly or indirectly made an unlawful contribution to a political
activity.
16. BROKERAGE OR COMMISSIONS
No person is entitled to receive from the Company (or from the Purchaser as
a result of any action or omission by the Company) a finder's fee,
brokerage or commission in connection with this agreement or anything in it
and the Company is not liable to pay any sums whatsoever or give any
benefit to any of its directors, employees, agents and advisers in
connection with the sale of the Shares and no Vendor Associate is liable to
pay any sum whatsoever or give any benefit to any of the Company's
directors or employees in connection with the sale of the shares.
17. DIRECTORS AND EMPLOYEES
17.1 Particulars of Officers
The particulars of all employees annexed to the Disclosure Letter show the
names, job title, date of commencement of employment, date of birth and
period of continuous employment (calculated in accordance with chapter 1 of
part XIV of the ERA) of every employee of the Company and contain details
of negotiations which have taken place in this calendar year concerning pay
for all such employees.
17.2 Remuneration and Benefits
The particulars of all employees annexed to the Disclosure Letter show all
remuneration and other benefits:-
(a) actually provided; and
(b) which the Company is bound to provide (whether now or in the future)
to each director, officer and employee of the Company and are true and
complete and include particulars of and details of participation in all
profit sharing, incentive, bonus, commission, share option, medical,
permanent health insurance, directors' and officers' insurance, travel,
car, redundancy and other benefit schemes, arrangements and understandings
(the "Schemes") operated for all or any employees or former employees of
the Company or their dependants whether legally binding on the Company or
not.
17.3 Terms and Conditions
PAGE 48 OF 74
(a) The Disclosure Letter contains copies of all the standard terms and
conditions, staff handbooks and policies which apply to employees of
the Company and identifies which terms and conditions apply to which
employees.
(b) There are no terms and conditions in any contract with any director,
officer or employee of the Company pursuant to which such person will
be entitled to receive any payment or benefit or such person's rights
will change as a direct consequence of the transaction contemplated by
this agreement.
(c) There are no service agreements or contracts of employment between the
Company and any of its directors, officers or employees containing any
provision in addition to the matters required to be contained therein
under section 1 of the ERA.
(d) All employees of the Company have received a written statement of
particulars of their employment as required by section 1 of the ERA.
17.4 Operation of the Schemes
(a) The Schemes have at all times been operated in accordance with their
governing rules or terms and all applicable laws and all documents
which are required to be filed with any regulatory authority have been
so filed and all tax clearances and approvals necessary to obtain
favourable tax treatment for the Company and/or the participants in the
Schemes have been obtained and not withdrawn and no act or omission has
occurred which has or could prejudice any such tax clearance and/or
approval.
(b) No past or present director, officer, employee or any dependant thereof
or any other participant in any Scheme has made any claim against the
Company in respect of any Scheme and no event has occurred which could
or might give rise to any such claim.
17.5 Notice Periods
The terms of employment or engagement of all employees, agents, consultants
and professional advisers of the Company are such that their employment or
engagement may be terminated by not more than the statutory minimum period
of notice given at any time without liability for any payment including by
way of compensation or damages (except for unfair dismissal or a statutory
redundancy payment).
17.6 Changes since the Accounts Date
Since 30 June 1997 the Company has not made, announced or proposed any
changes to the emoluments or benefits of or any bonus to any of its
directors, officers or employees and the Company is under no obligation to
make any such changes with or without retrospective operation.
17.7 Loans
There are no amounts owing or agreed to be loaned or advanced by the
Company to any directors, officers and employees of the Company (other than
amounts representing
PAGE 49 OF 74
remuneration accrued due for the current pay period, accrued holiday pay
for the current holiday year or for reimbursement of expenses).
17.8 Notice of Termination and Leave of Absence
(a) Since the Accounts Date, no director, officer or employee of the
Company has given or received notice to terminate his employment.
(b) There are no directors, officers or employees of the Company who are on
secondment, maternity leave or absent on grounds of disability or other
leave of absence (other than normal holidays or absence of no more than
one week due to illness).
17.9 Payment up to Completion
All salaries and wages and other benefits of all employees of the Company
have, to the extent due, been paid or discharged in full.
17.10 Industrial Relations
(a) No directors, officers or employees of the Company are members of a
trade union, staff association or any other body representing workers
and no such union, association or body is recognised by the Company for
the purposes of collective bargaining.
(b) The Disclosure Letter contains copies of and full details of all rights
and liabilities relating or pursuant to any collective agreements
(whether with a trade union, staff association or any other body
representing workers and whether legally binding or not) concerning the
Company.
(c) Within the three years preceding the date hereof the Company has not
been engaged or involved in any trade dispute (as defined in section
218 of the TULR(C)A) with any employee, trade union, staff association
or any other body representing workers and no event has occurred which
could or might give rise to any such dispute and no industrial action
involving employees of the Company, official or unofficial, is now
occurring or threatened nor has any industrial relations or employment
matter been referred either by the Company or its employees or by any
trade union staff association or any other body representing workers to
ACAS for advice, conciliation or arbitration.
17.11 Claims by Employees
No past or present director, officer or employee of the Company or any
predecessor in business has any claim or right of action against the
Company including any claim:-
(a) in respect of any accident or injury which is not fully covered by
insurance; or
(b) for breach of any contract of services or for services; or
(c) for loss of office or arising out of or connected with the termination
of his office or employment
PAGE 50 OF 74
and no event or inaction has occurred which could or might give rise to any
such claim.
17.12 Enquiries and Discrimination
(a) There are no enquiries or investigations existing, pending or
threatened affecting the Company in relation to any directors, officers
or employees by the Equal Opportunities Commission, the Commission for
Racial Equality or the Health and Safety Executive or any other bodies
with similar functions or powers in relation to workers and no grounds
for such enquiries or investigations exist.
(b) There are no terms or conditions under which any director, officer or
employee of the Company is employed, nor has anything occurred or not
occurred prior to Completion that may give rise to any claim for sex
discrimination, race discrimination, disability discrimination or equal
pay or other discrimination of any kind either under domestic United
Kingdom or European Law whether by such director, officer or employee
or a prospective director, officer or employee or otherwise and no
grounds for such a claim exists.
17.13 Compliance with Laws
(a) The Company has complied in all material respects with all relevant
provisions of the Treaty of Rome, EC Directives, statutes, regulations,
codes of conduct, collective agreements, terms and conditions of
employment, orders, declarations and awards relevant to the Company's
directors, officers and employees or the relations between the Company
and any trade union, staff association or any other body representing
workers.
(b) There are no training schemes, arrangements or proposals, whether past
or present, in respect of which a levy may henceforth become payable by
the Company under the Industrial Training Act 1982 and pending
Completion no such schemes, arrangements or proposals will be
established or undertaken.
17.14 Transfer Regulations
The Company has not entered into any agreement and no event has occurred
which may involve the Company in the future acquiring any undertaking or
part of one such that the Transfer Regulations may apply thereto.
17.15 Duty to Inform and Consult
The Company has complied with its obligations to inform and consult with
trade unions and other representatives of workers and to send notices to
the Secretary of State pursuant to sections 188 to 194 of the TULR(C)A and
regulations 10 and 11 of the Transfer Regulations.
17.16 Records
PAGE 51 OF 74
The Company has maintained adequate and suitable records regarding the
service of its directors, officers and employees and such records comply
with the requirements of the Data Protection ▇▇▇ ▇▇▇▇.
17.17 Business is conducted by Employees
The Company has not entered into any agreement or arrangement for the
management or operation of its business or any part thereof other than with
its employees.
18. PROPERTIES
18.1 All Property
The Properties comprise all the freehold and leasehold land owned, used or
occupied by and all the rights vested in the Company and all agreements
whereby the Company has any financial entitlement relating to any land at
the date hereof.
18.2 No Other Liabilities
The Company has no actual or contingent obligations or liabilities (in any
capacity including as principal contracting party or guarantor) in relation
to any lease, licence or other interest in, or agreement relating to, land
apart from the Properties.
18.3 Replies to Enquiries
All disclosures and replies to enquiries and requisitions relating to the
Properties made or given by or on behalf of ▇▇▇▇▇▇ or the Company to the
Purchaser or the Purchaser's Solicitors are now and will at Completion be
complete and correct in all material respects.
18.4 Accuracy of Information
All the information produced to or given in writing to the Purchaser or the
Purchaser's Solicitors by the Vendors' Solicitors in respect of or relating
to the Properties (including replies to enquiries and requisitions) in the
course of negotiations leading up to the execution of this agreement is
true and accurate and ▇▇▇▇▇▇ is not aware of any fact, matter or thing
which has not been disclosed to the Purchaser or the Purchaser's Solicitors
which makes any such information untrue or misleading at the date of this
agreement.
19. PENSIONS
19.1 Pension arrangements disclosed
The Company is under no obligation or commitment, nor is it a party to any
custom or practice, to pay, provide or contribute towards any "relevant
benefits" within the meaning of section 612 of the TA (ignoring the
exception therein) or sickness or disability benefits to or in respect of
any person and has not at any time participated in or contributed towards
any scheme or arrangement which has as its purpose or one of its purposes
the provision of any such benefits.
PAGE 52 OF 74
19.2 Ex gratia pensions etc.
The Company has not made or proposed any voluntary or ex gratia payments to
any person in respect of any relevant benefit (as defined in paragraph 19.1
of this schedule).
19.3 Contributions to personal pensions
The Company has no contractual liability to make any contributions to any
personal pension scheme or any retirement annuity contract of any employee
or director or to make any payment of remuneration specifically referrable
to contributions payable by any employee or director under such scheme or
contract.
20. TAXATION
INFORMATION AND RETURNS
20.1 Returns
The Company has made all returns and supplied all information and given all
notices to the Inland Revenue or other Taxation Authority as reasonably
requested or required by law within any requisite period and all such
returns and information and notices were in all material respects up to
date correct and on a proper basis and none of them is or is likely to be
the subject of a material dispute.
20.2 Disclosures
So far as ▇▇▇▇▇▇ is aware all statements and disclosures made to any
Taxation Authority in connection with any provision of the Taxation
Statutes whatsoever were when made and remain complete and accurate in all
material respects.
20.3 Clearances
No action has been taken by the Company in respect of which any consent or
clearance from the Inland Revenue or other Taxation Authority was required
except in circumstances where such consent or clearance was validly
obtained and where any conditions attaching thereto were met and will,
immediately following Completion, continue to be met.
PROVISION FOR AND PAYMENT OF TAX
20.4 General
The Accounts make full provision or reserve in respect of any period ended
on or before the Accounts Date for all Tax assessed or liable to be
assessed on the Company or for which it is accountable at the Accounts Date
whether or not the Company has or may have any right of reimbursement
against any other person including Tax in respect of property (of whatever
nature) income, profits or gains held, earned, accrued or received by or to
any person on or before the Accounts Date or by reference to any event
occurring, act done or circumstances existing on or before that date
including distributions made down to such date or provided for
PAGE 53 OF 74
in the Accounts and proper provision has been made and shown in the
Accounts for deferred Tax in accordance with generally accepted accounting
principles.
20.5 Payment of Tax
The Company has duly and punctually paid all Tax (including Tax required to
be deducted or withheld from payments) to the extent that the same ought to
have been paid and is not liable nor has it within three years prior to the
date hereof been liable to pay any penalty or interest in connection
therewith.
20.6 Pay As You Earn
The Company has properly operated the PAYE system deducting Tax as required
by law from all payments to or treated as made to or benefits provided for
employees, ex-employees or independent contractors of the Company
(including any such payments within section 134 of the TA) and duly
accounted to the Inland Revenue for Tax so deducted and has complied with
all its reporting obligations to the Inland Revenue in connection with any
such payments made or benefits provided, and no PAYE audit in respect of
the Company has been made by the Inland Revenue nor has the Company been
notified that any such audit will be made.
20.7 Secondary Liability
No transaction or event has occurred in consequence of which the Company is
or may be held liable for any Tax or deprived of relief or allowances
otherwise available to it in consequence of any Tax or may otherwise be
held liable for or to indemnify any person in respect of any Tax, where
some other company or person is or may become primarily liable for the Tax
in question (whether by reason of any such other company being or having
been a member of the same group of companies or otherwise).
CORPORATION TAX
20.8 Deductions
The Company has not since the Accounts Date made any payment or incurred
any liability to make any payment in either case, of a revenue nature which
could be disallowed as a deduction in computing the taxable profits of the
Company or as a charge on the Company's income including any payment which
could be disallowed under sections 74 (general rules as to deductions not
allowable), 125 (annual payments for non-taxable consideration), 338-340
(allowance of charges on income), 779-785 (leased assets) or 787
(restriction of relief for payments of interest) of the TA.
20.9 Sales at Undervalue/Overvalue
All transactions entered into by the Company have been entered into on an
arm's length basis and the consideration (if any) charged or received or
paid by the Company on all transactions entered into by it has been equal
to the consideration which might have been expected to be charged, received
or paid (as appropriate) between independent persons dealing at arm's
PAGE 54 OF 74
length and no notice or enquiry pursuant to section 770 of the TA or the
transfer pricing provisions of any arrangements made under section 788 of
the TA (relief by agreement with other countries) has been made in
connection with any of such transactions.
20.10 Loan Relationships
The Company is and has since the Accounts Date been taxed on an authorised
accruals basis of accounting in relation to all loan relationships which
are creditor relationships as defined in section 103 of the FA 1996 and in
relation thereto:-
(a) the accruals on which the Company is taxable are computed only by
reference to interest;
(b) if any such debt were to be repaid at its face value the Company would
not suffer any charge to Tax in excess of Tax on interest accrued; and
(c) there is no connection between the Company and the debtor as mentioned
in section 87 of the FA 1996.
20.11
(a) The Company obtains and has since the Accounts Date obtained tax relief
on an authorised accruals basis of accounting in relation to all loan
relationships which are debtor relationships as mentioned in section
103 of the FA 1996 and in relation to each such relationship:-
(i) the deduction given in computing the taxable profits of the
Company in consequence of that relationship is not less than the
interest accruing for the period concerned;
(ii) the Company would suffer no adverse tax consequences were such
debts to be repaid at face value except that the tax deduction
for interest accrued would cease.
(b) The Company has not since the Accounts Date held or been the debtor
under any deep discount securities as defined in paragraph 1 of
schedule 4 of the TA or any deep gain securities as defined in
paragraph 1 of schedule 11 of the FA 1989 or any relevant discounted
security as mentioned in schedule 13 of the FA 1996.
CAPITAL ASSETS
20.12 Capital Allowances
(a) No balancing charge in respect of any capital allowances claimed or
given would have arisen if all the assets of the Company had been
realised on the Accounts Date for a consideration equal to the amount
of the book value thereof as shown or included in the Accounts.
(b) The Company has not since the Accounts Date become liable for any
balancing charge.
PAGE 55 OF 74
20.13 Finance Leases
(a) The Company is not and has not been the lessee under any leases of
plant or machinery except for the Leases.
(b) No assets subject to the Leases have at any time been leased by the
Company or its lessees to a person who is not resident in the UK and
does not use the machinery or plant for the purposes of a trade carried
on there.
(c) ▇▇▇▇▇▇, after making due and reasonable enquiry, is not aware of any
revenue investigation, revenue enquiry or other circumstance which
indicates that any person who is or was a lessor or owner of equipment
subject to any of the Leases will or may be denied the first year
allowances and/or writing down allowances by reference to which the
initial rental under that Lease was calculated.
DISTRIBUTIONS
20.14 Repayments of Share Capital
(a) The Company has not at any time after 6 April 1991 repaid or agreed to
repay or redeemed or agreed to redeem or purchased or agreed to
purchase (or made any contingent purchase contract within the meaning
of section 165 of the Companies Act 1985) in respect of any of its
issued share capital or any class thereof. Further the Company has not
after 6 April 1991 capitalised or agreed to capitalise in the form of
shares, debentures or other securities or in paying up amounts unpaid
on any shares, debentures or other securities any profits or reserves
of any class or description or passed or agreed to be passed any
resolution to do so.
(b) The Company has not made (and will not be deemed to have made) any
distribution within the meaning of sections 209 and 210 (bonus issue
following repayment of capital) of the TA since 5 April 1991 except
dividends properly authorised and shown in its Accounts nor is the
Company bound to make any such distribution.
CHARGEABLE GAINS
20.15 Sales at Book Value
No chargeable gain or profit (disregarding the effects of any indexation
relief available) would arise if any asset of the Company (other than
trading stock) were to be realised for a consideration equal to the amount
of the book value thereof as shown or included in the Accounts.
ANTI-AVOIDANCE PROVISIONS
20.16 Tax Schemes
The Company has not entered into nor been a party to nor otherwise involved
in any scheme or arrangement designed wholly or partly for the purpose of
avoiding, reducing or deferring Tax which could be challenged by the Inland
Revenue.
PAGE 56 OF 74
FOREIGN ELEMENT
20.17 Treasury Consents
The Company has always been resident in the territory in which it was
incorporated and has never been resident in any other territory or treated
as so resident for the purposes of any double tax agreement.
20.18 Double Taxation
The Company has received or is entitled to receive credit against its UK
Tax liability for all Tax charged (whether by Tax being withheld or through
direct assessment) on the Company's income from any foreign jurisdiction
and the Company holds all deduction certificates or other documents
necessary to claim all relief due to it under part XVIII of the TA.
20.19 Controlled Foreign Companies
The Company does not have and never has had an interest in a controlled
foreign company within the meaning of section 747 of the TA such that all
or any of the chargeable profits of the controlled foreign company have
been or will or may be apportioned to the Company.
20.20 Withholding of Tax and Agency for Non-Residents
The Company is not and has not been assessable to Tax by virtue of section
78 of the TMA or sections 42A or 43 of the TA, or section 126 of the FA
1995.
CLOSE COMPANY
20.21 Close Companies - Transfers of Value
At any time after 6 April 1991 the Company has made no transfer of value
such as is specified in section 94(1) (or section 99(2)) of the ITA.
20.22 Close Companies - Loans to Participators
the Company has not at any time after 6 April 1991 made any loan advance or
payment or given any consideration falling within sections 419-420 or 422
of the TA.
20.23 Close Companies - Distributions
At any time after 6 April 1991 the Company has made no payments and
conferred no benefits falling to be treated as distributions under section
418 of the TA.
20.24 Close Companies - Transfers at Undervalue
The Company has not at any time after 6 April 1991 made a transfer at an
undervalue so that section 125 of the TCGA could apply.
20.25 Close Companies - Shortfall etc
PAGE 57 OF 74
The Company is not and never has been a close investment-holding company as
defined in section 13A of the TA.
GROUPS OF COMPANIES
20.26 Intra-Group Transfers
The Company has at any time after 6 April 1991 acquired any asset other
than trading stock from any other company other than another Group Company
belonging at the time of acquisition to the same group of companies as the
Company within the meaning of section 170 of the TCGA and no member (other
than another Group Company) of any group of companies of which the Company
is or has at any material time been the principal company (as defined in
section 170(2)(b) of the TCGA) has so acquired any asset.
20.27 Group Relief and Advance Corporation Tax
The Company is not part of and has never entered into any arrangements
relating to relief under section 240 or sections 402 - 413 of the TA other
than with another Group Company.
INHERITANCE TAX
20.28 Inheritance Tax
(a) The Company is not, and will not become, liable to be assessed to
inheritance tax as donor or donee of any gift or transferor or
transferee of value (actual or deemed) nor as a result of any
disposition, chargeable transfer or transfer of value (actual or
deemed) made by or deemed to be made by any other person on or prior to
Completion.
(b) There is no unsatisfied liability to inheritance tax attached or
attributable to the Shares or any asset of the Company and in
consequence no person has the power to raise the amount of such tax by
sale or mortgage of or by a terminable charge on any of the Shares or
assets of the Company as mentioned in section 212 of the ITA and none
of the Shares or assets of the Company are subject to an Inland Revenue
charge within section 237 of the ITA.
VALUE ADDED TAX
20.29 Value Added Tax
(a) The Company is a registered taxable person for the purpose of the VAT
legislation and has not at any time been treated as a member of a group
of companies for such purpose and has not made any application to be so
treated and no circumstances exist whereby the Company would or might
become liable for value added tax as an agent or otherwise by virtue of
section 47 of the VATA.
(b) The Company has complied in all material respects with the requirements
and provisions of the VAT legislation and has made and maintained and
will pending Completion make and maintain accurate and up to date
records invoices accounts and other documents required by or necessary
for the purposes of the VAT legislation and
PAGE 58 OF 74
the Company has at all times punctually paid and made all payments and
returns required thereunder.
(d) The Company has not made any exempt supplies in consequence of which it
is or will be unable to obtain credit for all input tax paid by it
during any VAT quarter ending after the Accounts Date.
20.30 Capital Goods Scheme
There are set out in the Disclosure Letter with express reference to this
Warranty full details of each of the assets of the Company of a kind
described in part XV of the Value Added Tax Regulations 1995 (SI No 2518)
(adjustments to the deduction of input tax on capital items) in relation to
which that part could operate to adjust the amount of input tax deducted,
including in particular:-
(a) a description (including, in the case of land, or a building or part of
a building the nature of the tenure and the time that the tenure has to
run), the date of acquisition (or, in the case of a lease, the date of
grant) and the price paid and VAT upon the purchase or acquisition of
the capital item in question;
(b) the proportion of the VAT on the purchase price for which credit has
been claimed, including any adjustments made under part XV of the Value
Added Tax Regulations 1995.
STAMP DUTY
20.31 Stamp Duty
All documents in the enforcement of which the Company is or may be
interested have been duly stamped and since the Accounts Date the Company
has not been a party to any transaction whereby the Company was or is or
could become liable to stamp duty reserve tax.
21. ENVIRONMENTAL MATTERS
21.1 Consents
The Company has obtained and complied with the terms and conditions of all
Environmental Consents. All current Environmental Consents remain in full
force and effect. The Company has not received any notice of and so far as
▇▇▇▇▇▇ is aware there are no circumstances that may lead to the revocation,
modification or suspension of, or that may prejudice or require material
expenditure for the renewal, extension, grant or transfer of, any current
Environmental Consents.
21.2 Liability
The Company complies and has at all times complied with and the Company's
use of the Properties has at all times complied with all Environmental Laws
and there are no facts or circumstances known to ▇▇▇▇▇▇ which interfere or
prevent compliance with any Environmental Laws.
PAGE 59 OF 74
There are no civil, criminal arbitration or administrative actions, claims,
proceedings or suits pending or threatened against the Company arising from
or relating to Environmental Consents or Environmental Law and so far as
▇▇▇▇▇▇ is aware there are no circumstances which may lead to such actions,
claims, proceedings or suits.
21.3 Notices and Complaints
The Company has not received any notice of enforcement, prohibition,
improvement, remediation or other notice of equivalent nature, or any
judgment, order, decree, award, demand or decision in respect of the
Environment from any court, tribunal, arbitrator or governmental or
regulatory authority and ▇▇▇▇▇▇ is not aware of any complaints,
investigations, enquiries, requests for information or other formal or
informal indications of any possible claims or legal actions in respect of
the Environment from any person including any neighbour, governmental or
regulatory authority, current or former employee or third party.
21.4 Contaminated Land
So far as ▇▇▇▇▇▇ is aware, there has not been and there is not present on,
at or under the Properties and there is and has been no release, migration,
leakage, spill, discharge, entry, deposit or emission onto or from the
Properties of any Hazardous Substance or Waste.
So far as ▇▇▇▇▇▇ is aware, there has not been any disposal, storage,
release, leakage, migration, spill, discharge, entry, deposit or emission
of any Hazardous Substance or Waste into the Environment caused by the
Activities.
21.5 Future Laws
[deleted]
21.6 Documentation
There are no environmental reports, surveys, assessments and investigations
in respect of the Properties or Activities in the possession of the Vendors
and the Company.
22. INFORMATION
22.1 General
All information given by, or on behalf of, the Vendors or the Company to
the Purchaser, its advisers or agents before or during the negotiations
leading to this agreement is true, complete, accurate and not misleading in
any material respects.
22.2 The Agreement and the Disclosure Letter
The information set out in schedules 1, 2 and 5 of this agreement and in
the Disclosure Letter is true, complete, accurate and not misleading in any
material respects.
22.3 Material Information
PAGE 60 OF 74
So far as ▇▇▇▇▇▇ is aware, all information about the Shares and the
Company's business which might be material to a purchaser of the Shares has
been disclosed to the Purchaser in writing.
PAGE 61 OF 74
SCHEDULE 4
Form of Release
(to be signed by each Vendor)
[ ] 1997
To: Olwen Direct Mail Ltd and
each of its subsidiaries
(together "the Group") and
their respective officers and
employees (together "Employees")
I confirm that I have no claims (actual or contingent) against the Company or
any other member of the Group or Employees in respect of any cause, matter or
thing whatsoever (including unpaid remuneration) but to the extent that any such
claim exists or may exist I hereby irrevocably waive such claim and release the
Company and each other member of the Group and Employees from any liability
whatsoever in respect thereof [save [▇▇ ▇▇▇▇▇▇ only] in respect of the Company's
obligations to me under or pursuant to my service contract with it].
[3i Group only] [This release is also given on behalf of all subsidiaries of 3i
Group]
Executed as a Deed and Delivered
by [ ]
in the presence of:-
......................................................
(Witness)
Address
Occupation
PAGE 62 OF 74
SCHEDULE 5
The Properties
Address Date of Lease Parties Term Rent
------- ------------- ------- ---- ----
Unit 1 ▇▇▇▇▇▇▇▇ 2.8.1989 (1) The Prudential From (pound)120,640
Cross Ind. Est Assurance Co. Ltd 25.12.88 p.a. subject
Croydon (2) Olwen Press Ltd until to review on
24.12.2013 25.12.98 and
at 5 yearly
intervals
Unit 2 ▇▇▇▇▇▇▇▇ 2.8.1989 (1) The Prudential From (pound)120,640
Cross Ind. Est Assurance Co. Ltd 25.12.88 p.a. subject
Croydon (2) Olwen Press Ltd until to review on
24.12.2013 25.12.98 and
at 5 yearly
intervals
Unit 8 ▇▇▇▇▇▇▇▇ 20.2.1989 (1) The Prudential From (pound)85,397
Cross Ind. Est Assurance Co. Ltd 25.12.88 subject
Croydon (2) H.T. Electrical Ltd. until to review as
24.12.2013 above
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ 30.12.1993 Landlord - 100 East 1 March 1994 US$29,888
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Partnership to 31 per annum
Baltimore Assigned from December 1998
Maryland Production Group
21202 International Inc.
15.12.1994
PAGE 63 OF 74
SCHEDULE 6
Deed of Indemnity
THIS DEED OF INDEMNITY is made on 18 September 1997
BETWEEN:-
(1) ▇▇▇▇▇ ▇▇▇▇▇▇ of ▇▇/▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ (the
"Covenantor"); and
(2) BIG FLOWER LIMITED whose registered office is at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (the "Purchaser" which expression shall include its
successors and assigns).
RECITAL
This deed of indemnity is entered into pursuant to the provisions of an
agreement of today's date (the "Sale Agreement") pursuant to which the Purchaser
agreed to purchase the whole of the share capital of Olwen Direct Mail Limited.
THE PARTIES AGREE AS FOLLOWS:-
1. INTERPRETATION
1.1 Subject to clause 1.2 and unless the context otherwise indicates, words,
expressions and abbreviations defined in the Sale Agreement shall have the
same meanings in this deed and any provisions of the Sale Agreement
concerning matters of construction or interpretation shall mutatis mutandis
apply to this deed.
1.2 The following words, expressions and abbreviations used in this deed shall,
unless the context otherwise requires, have the following meanings:-
"Claim for Tax" means any of the following:-
(a) any liability to make a payment of Tax and any claim, assessment,
demand, notice or other document issued or action taken by or on behalf
of any person authority or body whatsoever and of whatever country
which claims payment of Tax or any submission, return or correspondence
from which it appears that there is or will be a liability to Tax or
Claim for Tax within (b) below; or
(b) any non-availability or loss of or reduction of any Relief (including
in particular a right to repayment) to the extent that such Relief has
been reflected in the net assets of the Company as shown by the
Accounts.
"Company" means each and all of the companies listed in Schedule 1 and 2 to
the Sale Agreement;
"Group Relief" means any of the following:-
PAGE 64 OF 74
(a) relief surrendered or claimed pursuant to chapter IV part X of the TA;
or
(b) a Transferred Tax Refund;
"income profits or gains" includes any other measure by reference to which
Tax is computed;
"Purchaser's Relief" means any Relief to the extent that the same either:-
(a) has been reflected in the net assets of the Company as shown by the
Accounts; or
(b) arises in respect of periods after the Completion Date;
"Relevant Event" means every event, act, omission, default, occurrence,
circumstance, transaction, dealing or arrangement of any kind whatsoever
done or omitted to be done by the Covenantor or the Company or which in any
way concerns or affects the Company whether or not done or omitted to be
done by the Company or the Covenantor;
"Relief" means any allowance, credit, exemption, deduction or relief from,
in computing, against or in respect of Tax or any right to the repayment of
Tax;
"Tax" means any tax, and any duty, impost, levy or charge in the nature of
tax, whether domestic or foreign, and any fine, penalty or interest
connected therewith, including (without prejudice to the foregoing)
corporation tax, advance corporation tax, income tax (including, tax
falling to be deducted at source), national insurance and social security
contribution, capital gains tax, inheritance tax, petroleum revenue tax,
value added tax, customs excise and import duties, stamp duty, stamp duty
reserve tax, insurance premium tax, air passenger duty, and any other
payment whatsoever which the Company is or may be or become bound to make
to any person by reason of any taxation statutes but excludes, for the
avoidance of doubt, any rates and water rates payable in respect of the
Properties;
"taxation statutes" means all statutes, decrees, orders and regulations,
whether domestic or foreign providing for or imposing any Tax;
"Transferred Tax Refund" means a tax refund relating to an accounting
period as defined by section 102(3) of the FA 1989 in respect of which a
notice has been given pursuant to section 102(2) of the FA 1989;
"Utilisation of a Purchaser's Relief" means the utilisation or set off of a
Purchaser's Relief available to the Company.
1.2 References to income, profits or gains being earned, accrued or
received before a particular date shall include deemed income, profits or
gains treated as earned, accrued or received prior thereto.
2. INDEMNITY
2.1 Subject to clause 2.2, the Covenantor hereby covenants with the
Purchaser to pay from time to time to the Purchaser:-
PAGE 65 OF 74
(a) such sums as would if paid to the Company indemnify and keep
indemnified the Company against each and every Claim for Tax where the
Claim for Tax in question arises whether in whole or in part:-
(i) in connection with or as a consequence of one or more Relevant
Events occurring or entered into on or before Completion; or
(ii) in respect of or by reference to any income profits or gains
earned, accrued or received on or before Completion; or
(iii) in consequence of the combined effect of two or more Relevant
Events of which at least one shall have occurred on or before
Completion but only in circumstances where such Claim for Tax
would not have been suffered by the Company but for the failure
of any person (other than a company falling within the definition
of the Company for the purposes of this deed) to discharge or pay
any liability for Tax;
(iv) in consequence of HM Customs & Excise treating postage costs
recharged by Olwen Direct Mail Limited as a standard-rated supply
for VAT purposes;
(v) in consequence of any transaction or transactions entered into by
any of the Companies being treated by US Internal Revenue Service
or the UK Inland Revenue as being transactions other than ones
entered into on an arms length basis with the consideration (if
any) charged or received or paid by any of the Companies on such
transactions being equal to the consideration which might have
been expected to be charged received or paid (as appropriate)
between independent persons dealing at arms length.
(b) such sums as will indemnify and keep indemnified the Purchaser and such
further sums as would if paid to the Company and/or any subsidiary or
holding company of the Purchaser (or any subsidiary of any such holding
company) indemnify the same against all costs and expenses reasonably
incurred or payable in connection with any Claim for Tax the subject of
a claim under clause 2.1(a), including all legal proceedings relating
thereto and the settlement of any Claim for Tax and/or rebuttal of any
contention or in connection with any legal proceedings and reasonable
steps taken to avoid any Claim for Tax or contention whether actual,
threatened and/or anticipated;
2.2 If any Claim for Tax or liability which would have otherwise given rise to
a Claim for Tax shall be reduced or avoided in consequence of any
Utilisation of a Purchaser's Relief this deed shall apply as if such
Purchaser's Relief had not been available so that the amounts paid by the
Covenantors hereunder shall be the amounts which would have been payable in
the absence of that or any other Purchaser's Relief.
2.3 The covenant contained in clause 2.1(a) shall not apply:-
(a) to any Claim for Tax to the extent that any Tax giving rise to the same
has been paid prior to the Accounts Date and payment is reflected in
the Accounts or to the extent that provision or reserve for the
liability to which the same relates has been made in
PAGE 66 OF 74
the Accounts or that the Claim for Tax arises as a result of an
increase in rates of Tax announced after the date of the Sale
Agreement;
(b) to any Claim for Tax to the extent that the same shall have arisen in
consequence of any act or transaction which could reasonably have been
avoided, and which was carried out without the agreement of the
Covenantor by the Purchaser or the Company after Completion otherwise
than in the ordinary course of business of the Company, and which the
Purchaser was or should reasonably have been aware would give rise to
the Claim for Tax in question provided that the exclusion contained in
this clause shall not apply in relation to any Claim for Tax pursuant
to Clause 2.1(a)(v) above; or
(c) to any Claim for Tax to the extent that it arises in the ordinary
course of business of the Company after the Accounts Date but on or
before Completion and for this purpose, but without limitation, the
following shall not be regarded as being in the ordinary course of
business:-
(i) the declaration or payment of any dividend or the making of any
other distribution; or
(ii) any transaction entered into by the Company in circumstances
where the consideration (if any) received by or as the case may
be, paid by the Company in respect thereof is less than or more
than the consideration deemed to have been received or paid for
Tax purposes but to the extent only of the Claim for Tax arising
in respect of the amount by which the deemed consideration
exceeds or is less than the actual consideration; or
(iii) the Company ceasing or being deemed to cease, for Tax purposes,
to be the member of any group or associated with any other
company or person whether in consequence of the entering into of
the Sale Agreement or anything done under it or otherwise; or
(iv) a Relevant Event which gives rise to a liability on the Company
in respect of the income, profits or gains, whether actual or
deemed, of any non resident person; or
(v) any other Relevant Event which gives rise to a liability to Tax
on deemed (as opposed to actual) income, profits or gains.
(d) to the extent that any amount subject to the covenant in Clause 2.1
above has been received pursuant to a claim under the Warranties in the
Sale Agreement.
2.4 In computing the amount to be paid by the Covenantors under this deed in
respect of any Claim for Tax no account shall be taken of any Tax for which
the Company would have been liable in respect of such amount had it in fact
been paid to the Company.
2.5 All sums payable by the Covenantors under this deed shall be paid free and
clear of all deductions or withholdings (including Tax) unless the
deduction or withholding is required by law, in which event or in the event
that the Purchaser shall incur any liability for Tax chargeable or
assessable in respect of any payment pursuant to this deed, the Covenantors
PAGE 67 OF 74
shall pay such additional amounts as shall be required to ensure that the
net amount received and retained by the Purchaser (after Tax) will equal
the full amount which would have been received and retained by it had no
such deduction or withholding been made and/or no such liability to Tax
been incurred and in applying this clause 2.5 no account shall be taken of
the extent to which any liability for Tax may be mitigated or offset by any
Relief available to the Purchaser so that where such Relief is available
the additional amount payable hereunder shall be the amount which would
have been payable in the absence of such availability.
3. TIMING
3.1 Where the Covenantors become liable to make any payment pursuant to clause
2, the due date for the making of that payment shall be:-
(a) insofar as the claim arises pursuant to clause 2.1(a) seven days before
the day on which a payment of Tax becomes due under or in consequence
of the Claim for Tax in question or seven days before the day on which
any repayment (or increased repayment) of Tax which but for such Claim
for Tax would have been available, would have been due and for this
purpose it shall be assumed that the repayment would have become due at
the earliest possible date;
(b) insofar as the claim arises pursuant to clause 2.1(b), seven days
before the day on which the costs and expenses fall due for payment;
(c) insofar as the claim arises pursuant to clause 2.2, the date on which
payment would have become due under clause 3.1(a) had no Purchaser's
Relief been available and for this purpose it shall be assumed that the
Claim for Tax would have been made and all Tax would have become due at
the earliest possible date (assuming no application for postponement).
3.2 Where but for the non-availability, loss or reduction of any Purchaser's
Relief the Company could have surrendered the same to another company by
way of Group Relief this deed and in particular clause 3.1(a) shall apply
as the Company could have saved an equivalent amount of Tax by utilising
such relief saved as the recipient of the Group Relief surrender would have
saved as a consequence of such surrender and at the same time.
3.3 For the purposes hereof where Tax is due or a repayment due is lost or
reduced or where, but for a Utilisation of a Purchaser's Relief Tax would
be due or costs and expenses fall due for payment, on more than one
occasion then paragraphs (a) to (c) of clause 3.1 shall apply separately on
each such occasion.
3.4 If any sum due under clause 2 is not paid by the Covenantor by the later of
the due date and the date seven days after the date of the demand made
therefor the same shall carry interest (from such later date until the date
of payment) at the rate of two per cent. over the base rate for the time
being of National Westminster Bank PLC (or in the absence of such rate at
such equivalent rate as the Purchaser shall select) save that interest
shall not start to run in respect of any payments of Tax above until seven
days before the day on which the Company makes the payment of Tax due.
PAGE 68 OF 74
4. RIGHT TO REIMBURSEMENTS AND CREDITS
4.1 Subject to clause 4.3, in calculating amounts due from the Covenantor under
this deed no account shall be taken of any entitlement of the Purchaser or
the Company to make any recovery in respect of that amount or the
circumstances giving rise to the same from some other person or of any
Relief or other benefit which may become available to the Purchaser or the
Company in consequence of the Claim for Tax in question or the
circumstances giving rise to the same.
4.2 If the Purchaser or the Company is or becomes entitled to recover from some
other person (not being the Company or any employee of the Company but
including, inter alia, any Tax authority) any amount in respect of the
Claim for Tax or liability within clause 2.1(b) resulting in a payment by
the Covenantor to the Purchaser under this deed, then the Purchaser shall
promptly notify the Covenantor of the said entitlement and, if so required
by the Covenantor and if the Covenantor shall undertake to pay all costs
and expenses incurred by the Purchaser and the Company and shall provide
reasonable security for the same, shall take all reasonable steps to
enforce or procure that the Company shall enforce that recovery (keeping
the Covenantor fully informed of progress) and shall apply the same in
accordance with clause 4.3.
4.3 If the Purchaser or the Company receives:-
(a) a recovery as mentioned in clause 4.2; or
(b) a benefit being either a reduction in Tax due and payable or any
increased repayment of Tax in each case as a result either of credit
being obtained for Tax giving rise to a claim by the Purchaser under
the terms of this deed (including pursuant to clause 2.5) or as a
result of the availability of any relief for which the payment in
clause 2.1(b)(ii) was consideration (other than a reduction in a
liability to Tax which would otherwise have itself given rise to a
payment hereunder or been taken into account in a claim for damages
under the Warranties)
then the Purchaser shall promptly pay to the Covenantors an amount equal to
so much of the benefit received or sum recovered (less any Tax paid by the
recipient in respect thereof and less any costs and expenses reasonably
incurred by the Purchaser and the Company) as does not exceed the amount
which the Covenantor paid in respect of the Claim for Tax in question
(together with so much of any interest or repayment supplement paid to the
recipient of the recovery or benefit in respect thereof as corresponds to
the proportion of the recovery or benefit accounted for under this clause
4.3, less any Tax thereon).
4.4 Where any recovery or benefit is accounted for under clause 4.3:-
(a) the amount of the payment originally made by the Covenantor under
clause 2 shall be treated as reduced for all purposes of this deed
(including any further application of this clause 4) and of the Sale
Agreement; and
(b) the same shall not prejudice the right of the Purchaser to make further
recoveries under this deed whether in respect of matters to which the
original claim related or otherwise.
PAGE 69 OF 74
5. RESISTANCE OF CLAIMS
5.1 If the Purchaser or the Company becomes aware of any Claim for Tax (which
expression shall for the avoidance of doubt include any claim which would
give rise to a Claim for Tax but for a Utilisation of a Purchaser's Relief)
which may result in the Purchaser having a claim against the Covenantor
under this deed, the Purchaser shall give notice to the Covenantor in the
manner provided by the Sale Agreement as soon as is reasonably practicable
and the Covenantor shall except where an allegation of fraud or wilful
default or neglect is made forthwith be entitled at its sole discretion
(but after consultation with the Purchaser) to resist such Claim for Tax in
the name of the Purchaser or the Company or any of them but at the expense
of the Covenantor and to have the conduct of any appeal or incidental
negotiations provided that:-
(a) the Purchaser shall be kept fully informed of all matters pertaining to
the dispute; and
(b) no material communication, written or otherwise, pertaining to the
dispute (and in particular no proposal for or consent to any settlement
or compromise thereof) shall be transmitted to the Inland Revenue H.M.
Customs & Excise or other taxation authority or governmental body or
authority without the same having been submitted to, and approved by
the Purchaser such approval not to be unreasonably withheld or delayed;
and
(c) no application shall be made for postponement of Tax unless the
Purchaser and the Company shall be provided with such security as the
Purchaser may reasonably require in respect of sums subsequently
becoming payable under this deed; and
(d) the Covenantor shall not be entitled to resist any such Claims for Tax
before any court, tribunal or other appellate body unless it has been
advised by leading tax counsel, after disclosure of all relevant
information and documents, that it is reasonable to resist the Claim
for Tax in the manner proposed by the Covenantor.
5.2 The Purchaser shall and shall procure that the Company shall give the
Covenantor all reasonable co-operation, access and assistance, technical or
otherwise, for the purpose of resisting such a Claim for Tax provided that
each of the Purchaser and the Company is indemnified and secured to the
reasonable satisfaction of the Purchaser by the Covenantor against all
losses (including additional Claims for Tax, costs, damages and expenses)
which may thereby be incurred.
5.3 If the Covenantor does not request the Purchaser or the Company to take any
appropriate action or shall fail to indemnify and secure the Purchaser or
the Company to its reasonable satisfaction within 21 days of the said
notice to the Covenantor, the Purchaser and/or the Company shall be free to
pay or settle the Claim for Tax on such terms as it may in its absolute
discretion think fit.
6. MISCELLANEOUS
6.1 Claims under this deed (whether being claims against the Covenantor under
clause 2 or claims by the Covenantors pursuant to clause 4) shall be wholly
barred and unenforceable
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unless full written particulars of the claim shall have been given by the
claimant within six years of the end of the accounting period current at
Completion.
6.2 In determining the amount of any Claim for Tax suffered by, or any recovery
or benefit received by, any company for the purposes of this deed any party
hereto may at its own expense request the auditors of that company to
determine the same and to provide a certificate thereof; any certificate so
provided shall be binding on the parties hereto in the absence of manifest
error.
6.3 The provisions of clauses 13 (variations),14 (waiver), 16 (notices), 17
(counterparts) and 18 (governing law) of the Sale Agreement shall apply to
this deed as if the same were incorporated herein.
6.4 The provisions of Clause 4.9, 4.10, 4.13(b), 4.13(d), 4.13(e), 4.13(f),
4.13(g), 4.13(h) and 4.13(i) shall apply to limit the Liability of the
Covenantor under the covenant contained in Clause 2.1 as if the same were
incorporated herein.
IN WITNESS whereof this deed has been executed on the date first above written.
Executed by )
▇▇▇▇▇ ▇▇▇▇▇▇ )
in the presence of:- )
PAGE 71 OF 74
Signed by )
▇▇▇▇▇ ▇▇▇▇▇▇ )
in the presence of:- )
Signed by )
▇▇▇▇▇▇ ▇▇▇▇▇▇ )
in the presence of:- )
Signed by )
for and on behalf of 3i GROUP PLC )
in the presence of:- )
Signed by )
for and on behalf of BIG FLOWER LTD in the )
presence of:- )
PAGE 72 OF 74