1
Dated 12 March 1998 CONFORMED COPY
------------------- --------------
THE INDIVIDUALS LISTED IN SCHEDULE 4
-and-
ADVANCED MARKETING (EUROPE) LIMITED
SHARE PURCHASE AGREEMENT
▇▇▇▇▇▇▇ & CO
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇
Tel: (01908) 668555
Fax: (01908) 674344
2
CONTENTS
1. Interpretation
2. Sale and Purchase
3. Consideration
4. Completion
5. Completion Accounts
6. Post Completion Action
7. Warranties
8. Purchaser's Remedies and Vendors' Limitations on Liability
9. Restrictions on Business Activities
10. Provision of Business Information
11. Effect of Completion
12. Joint and Several Liability
13. Release of Vendors
14. Remedies and Waivers
15. Assignment
16. Further Assurance
17. Entire Agreement
18. Notices
19. Announcements
20. Confidentiality
21. Restrictive Trade Practices Act 1976
22. Costs and Expenses
3
23. Counterparts
24. Time of Essence
25. Choice of Governing Law
26. Jurisdiction
27. Agent for Service
28. Indemnities
SCHEDULE 1 COMPLETION ARRANGEMENTS
SCHEDULE 2 REPRESENTATIONS AND WARRANTIES
SCHEDULE 3 LIMITATIONS ON LIABILITY
SCHEDULE 4 OWNERSHIP OF THE SHARES
SCHEDULE 5 BASIC INFORMATION ABOUT THE GROUP
SCHEDULE 6 PROPERTY
4
THIS AGREEMENT is made on 12 March 1998
BETWEEN:-
1. EACH PARTY LISTED IN SCHEDULE 4 TO THIS AGREEMENT
(collectively the "VENDORS" and individually a "VENDOR"); and
2. ADVANCED MARKETING (EUROPE) LIMITED (registered number 3410987) a
company incorporated in England and Wales whose registered office
is at Suite 25, Challenge House, Sherwood Drive, Bletchley, ▇▇▇▇▇▇
Keynes, MK3 6DP; (the "PURCHASER").
WHEREAS:-
(A) Particulars of the Group (as defined in this agreement) are set
out in Schedule 5 (Basic Information about the Group).
(B) The Vendors have agreed to sell, or procure the sale of, and the
Purchaser has agreed to purchase all, but not less than all, the
Shares (as defined in this agreement) in each case on the terms
and subject to the conditions of this agreement.
NOW IT IS HEREBY AGREED as follows:-
1. INTERPRETATION
1.1 In this agreement and the schedules to it:-
"ACCOUNTS" means the audited financial
statements of the Company, prepared
in accordance with UK generally
accepted accounting principles and
the Companies Acts, for the
accounting reference period ended on
the Accounts Date, comprising a
balance sheet, profit and
loss account, notes,
- 1 -
5
auditors' and directors' reports;
"ACCOUNTS DATE" means 31 January 1998;
"ACCOUNTS DELIVERY DATE" means the date on
which the audit report on the
Company's accounts for the year
ending 31 January 1999 is signed by
the Company's auditors or 30 June
1999, whichever is the earlier;
"▇▇▇▇▇ ▇▇▇▇▇▇▇" means ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ who was
between February 1987 and June 1997
a director and shareholder of the
Company;
"AURA AGREEMENTS" means the Trading Agreement and the
Service Agreements;
"BOOKS AND RECORDS" has its common law meaning and
includes, without limitation, all
notices, correspondence, orders,
inquiries, drawings, films, plans,
books of account and other documents
and all computer disks or tapes or
other machine legible programs or
other records;
"BUDGETED NET PROFITS" means (pound)632,000;
"BUSINESS DAY" means a day (other than a Saturday
or a Sunday) on which banks are open
for business in London;
"BUSINESS INFORMATION" means all information, know-how and
records (whether or not confidential
and in whatever form held) including
(without limitation) all formulas,
designs, specifications, drawings,
films, data, manuals and
instructions and all customer lists,
- 2 -
6
sales information, business plans
and forecasts, and all records of
technical or other expertise and all
computer software and all accounting
and tax records, correspondence,
orders and inquiries;
"BUSINESS PROPERTIES" means the leasehold or other
immovable property referred to in
Schedule 6 (Property);
"BUSINESS TRANSFER means the agreement of today's date
AGREEMENT" between the Company and Windguard
Limited whereby the Company
transferred the business and assets
of its retail division to Windguard
Limited;
"CGTA 1979" means the Capital Gains Tax ▇▇▇
▇▇▇▇;
"COMPANIES ACT" means the Companies ▇▇▇ ▇▇▇▇, the
Companies Consolidation
(Consequential Provisions) ▇▇▇ ▇▇▇▇,
the Companies ▇▇▇ ▇▇▇▇ and Part V of
the Criminal Justice ▇▇▇ ▇▇▇▇;
"COMPANY" means Aura Books Plc basic
information concerning which is set
out in Part 1 of Schedule 5;
"COMPLETION" means completion of the sale and
purchase of the Shares under this
agreement;
"COMPLETION ACCOUNTS" has the meaning given to it in
Clause 5;
"COMPLETION DATE" means the date of this agreement;
"DETERMINED CLAIMS" means from time to time all claims
under this Agreement or the Tax
Covenant which have been
- 3 -
7
settled between the Vendors'
Representative and the Purchaser or
in respect of which a judgement has
been given by a court of competent
jurisdiction (and includes, for the
avoidance of doubt, the costs
forming part of such judgement or
settlement);
"DISCLOSURE LETTER" means the letter of today's date
written by or on behalf of the
Vendors to the Purchaser for the
purposes of clause 7 (Warranties)
and delivered to the Purchaser's
Solicitors before the execution of
this agreement;
"ELECTION DATE" has the meaning given to it in
clause 5.2;
"ENVIRONMENT" means all, or any, of the following
media namely the air (including,
without limitation, the air within
buildings and the air within other
natural or man-made structures above
or below ground), water and land and
any living organisms or systems
supported by those media;
"ENVIRONMENTAL LAWS" means all applicable statutes and
subordinate legislation and other
national, federal, state and local
laws, and common laws, guidance
notes or codes of conduct, insofar
as they relate to or apply to
Environmental Matters;
"ENVIRONMENTAL MATTERS" means:-
(i) pollution or contamination;
(ii) the disposal, release,
spillage, deposit, escape,
discharge, leak or emission
of,
- 4 -
8
Hazardous Materials or
Waste;
(iii) exposure of any person to
Hazardous Materials or
Waste;
(iv) all matters relating to the
health and safety of
employees;
(v) the creation or existence
of any noise, vibration,
common law or statutory
nuisance, or other adverse
impact on the Environment;
(vi) any other matters relating
to the condition,
protection, maintenance,
restoration or replacement
of the Environment or any
part of it arising directly
or indirectly out of the
manufacturing, processing,
treatment, keeping,
handling, use (including as
a building material),
possession, supply,
receipt, sale, purchase,
import, export,
transportation or presence
of Hazardous Materials or
Waste;
"ENVIRONMENTAL PERMITS" means any permit, licence,
consent or authorisation required by
Environmental Laws in relation to
either the carrying on of the
business of the Company or in
relation to the Business Properties;
"ESCROW ACCOUNT" means the interest bearing account
established with National
Westminster Bank plc in the joint
names of the Purchaser's Solicitors
and the
- 5 -
9
Vendors' Solicitors;
"ESCROW LETTER" means the letter of today's date
between the parties and their
respective solicitors in relation to
the operation of the Escrow Account;
"GROUP" OR "GROUP means the Company and the Subsidiary
COMPANIES" and "GROUP COMPANY" means any one of
them;
"HAZARDOUS MATERIALS" means anything which alone or in
combination with other things is
capable of causing harm or damage to
property or to man or any other
organism supported by the
Environment including, without
limitation, hazardous substances,
pollutants, contaminants, petroleum,
petroleum products and radioactive
materials;
"ICTA 1988" means the Income and Corporation
Taxes ▇▇▇ ▇▇▇▇;
"INFORMATION TECHNOLOGY" means all hardware (including
processors, disks and peripherals),
software and other
telecommunications equipment used in
the business of the Company;
"INTELLECTUAL PROPERTY" means patents, trade marks and
service marks, rights in designs,
trade or business names, copyrights
and topography rights (whether or
not any of these is registered and
including applications for
registration of any such thing) and
all rights or forms of protection of
a similar nature or having
equivalent or similar effect to any
of these which may subsist anywhere
in the world;
"KEY STATISTICS" means the information relating to
sales and credits for the
- 6 -
10
month of February 1998, a copy of
which is attached to the Disclosure
Letter;
"LIABILITY" means any liability, fine, cost,
expense, damages or loss;
"LIFE SCHEME" means the Aura Books plc death in
service benefits scheme;
"NASDAQ" means the North American Securities
Dealers Automatic Quotations System;
"NET ASSET VALUE" means the net asset value of the
Company at the Election Date,
determined by reference to the
Completion Accounts;
"NET ASSET VALUE means (pound)849,000;
REFERENCE AMOUNT"
"NET PROFITS" means in relation to the year ending
31 January 1999 (the "Year") the
profits (less losses) of the Company
as shown by its audited accounts for
the Year:-
(i) after taking account of all
extraordinary or
exceptional items save to
the extent they may relate
directly to any relocation
from the Property;
(ii) after providing for
interest at the rate of 2%
p.a. above the base rate
from time to time of
NatWest Bank plc on all
sums
- 7 -
11
advanced to the Company by
the Purchaser or any member
of the Purchaser's Group
whether or not such
interest has actually been
charged;
(iii) before deducting any
Taxation on profits; and
(iv) before deducting the
goodwill payment of
(pound)12,000 due to be
made in the Year relating
to the purchase by the
Company of the DKMS
business;
and adjusted as follows (save to the
extent already taken into account in
such audited accounts):-
(i) by excluding therefrom any
charge or provision made
for any dividends or other
distributions declared,
paid or made in or in
respect of the Year;
(ii) by adding back:-
(a) the amount (if any)
by which the profits
are reduced by
reason of the
Company adopting
bases and policies
of accounting in
lieu of those
adopted by the
Company for the
purposes of the
Accounts;
(b) any charge by way of
interest
- 8 -
12
on any sums lent by
the Purchaser or any
member of the
Purchaser's Group to
the Company in
excess of the rate
of 2% per annum
above National
Westminster Bank plc
base rate from time
to time;
(c) any amounts charged
in respect of fees
of any directors of
the Company being
directors appointed
by the Purchaser to
represent its
interests in respect
of the affairs of
the Company;
(d) any charge by way of
interest incurred by
the Company arising
directly from the
payment of any
distributions
referred to in
paragraph (i) above;
"OPTION DEED" means the deed to be entered
into between the Purchaser and the
shareholders of Windguard Limited
granting an option over the shares
of Windguard Limited;
"OPTION EXERCISE DATE" has the meaning given to it in the
Option Deed;
"PANEL" means the Panel on Take-overs and
Mergers;
"PENSION SCHEMES" means (a) The Aura Books plc Group
Personal Pension Plan; (b) The
Bookends Pension Fund; (c) the small
Self Administered Scheme for ▇▇▇▇▇▇
▇▇▇▇▇▇; (d) the executive scheme for
▇▇▇▇▇ ▇▇▇▇▇;
- 9 -
13
and (e) the executive scheme for
▇▇▇▇ ▇▇▇▇▇▇▇ operated by the
Company;
"PROCEEDINGS" means any proceeding, suit or action
arising out of or in connection with
this agreement;
"PROPERTY" or "PROPERTIES" means leasehold or other immovable
property in any part of the world;
"PROPERTY ESCROW ACCOUNT" means the Vendors'
Solicitors client account in respect
of which the Vendors Solicitors will
hold from Completion the sum of
(pound)750,000 subject to an escrow
letter in the agreed terms;
"PURCHASE OF SHARES" means the buy back by the Company of
the ordinary shares held by ▇▇▇▇▇
▇▇▇▇▇▇▇ pursuant to an agreement
dated 30 June 1997;
"PURCHASER'S GROUP" means the Purchaser, its
subsidiaries and subsidiary
undertakings, any holding company of
the Purchaser and all other
subsidiaries of any such holding
company from time to time;
"PURCHASER'S SOLICITORS" means ▇▇▇▇▇▇▇ & Co;
"REORGANISATION" means the sale of the business and
assets of the retail division of the
Company pursuant to the Business
Transfer Agreement;
"RETAIL LEASE DATE" means the date on which the last
Retail Lease is assigned to
Windguard Limited;
- 10 -
14
"RETAIL LEASES" means the leases in respect of
Retail Properties;
"RETAIL PROPERTIES" means those properties set out in
schedule 6 Part 2;
"REQUIRED FOR THE BUSINESS" has the meaning given in clause 15
(Provision of Business Information);
"RTPA 1976" means the Restrictive Trade
Practices ▇▇▇ ▇▇▇▇;
"SEC" means the Securities Exchange
Commission;
"SERVICE AGREEMENTS" means the service
agreements or letters of appointment
to be entered into between the
Company and each of ▇▇▇▇ ▇▇▇▇▇▇
D'Aeth, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇
in the agreed form;
"SECONDMENT AGREEMENT" means the secondment agreement to be
entered into between the Company,
Windguard Limited and the Vendors'
Representative in the agreed form;
"SHARES" means all the issued shares in the
capital of the Company;
"SHARE PURCHASE has the meaning given to it in
DOCUMENTS" clause 17 (Entire Agreement);
"SUBSIDIARY" means Bookends (Bargain Books)
Limited basic information concerning
which is set out in Part II of
Schedule 3;
"TRADING AGREEMENT" means the agreement to be entered
into between the Purchaser and
Windguard Limited relating to
- 11 -
15
the post-Completion relationship
between the Purchaser and Bookends
Limited in the agreed form;
"TAX" or "TAXATION" shall have the meaning ascribed
thereto in the Tax Covenant;
"TAX COVENANT" means the deed of tax covenant to be
entered into between the Vendors and
the Purchaser on or prior to
Completion;
"TCGA 1992" means the Taxation of Chargeable
Gains ▇▇▇ ▇▇▇▇;
"VALID CLAIM" means from time to time all claims
under this Agreement or the Tax
Covenant which have been made in
good faith by the Purchaser but
which are not yet Determined Claims;
"VALID CLAIMS AMOUNT" means from time to time the amount
certified by the Purchaser in good
faith to be required to satisfy all
Valid Claims;
"VATA 1994" means the Value Added Tax ▇▇▇ ▇▇▇▇;
"VENDORS' REPRESENTATIVE" means ▇▇▇▇▇▇ ▇▇▇▇▇▇;
"VENDORS' SOLICITORS" means ▇▇▇▇▇▇, Son & Pepper;
"WARRANTIES" means the representations and
warranties set out in Schedule 2
(Representations and Warranties)
given by the Vendors and "WARRANTY"
shall be construed accordingly;
- 12 -
16
"WASTE" means any waste including anything
which is abandoned, unwanted or
surplus irrespective of whether it
is capable of being recovered or
recycled or has any value;
"WINDGUARD LIMITED" means Windguard Limited (registered
number 3512960) a company
incorporated under the Laws of
England and Wales whose registered
office is at ▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ whose entire issued
share capital is held by ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
D'Aeth;
"WORKING HOURS" means 9.30 a.m. to 5.30 p.m. on a
Business Day; and
"WORKS" means the carrying out of:
(i) inspection, investigation,
sampling and monitoring
works; and
(ii) any works (including the
installation, operation,
repair or replacement of
plant or equipment) in
order to remove, remediate
or contain any
Environmental Matter or in
order to prevent an
Environmental Matter from
arising.
1.2 In this agreement, unless otherwise specified:-
1.2.1 references to clauses, sub-clauses, paragraphs,
sub-paragraphs, and schedules are to clauses,
sub-clauses, paragraphs, sub-paragraphs of, and
schedules to, this agreement;
1.2.2 a reference to any statute or statutory provision
shall be construed as a
- 13 -
17
reference to the same as it may have been, or may
from time to time be, amended, modified or
re-enacted;
1.2.3 references to "COMPANY" shall be construed so as to
include any company, corporation or other body
corporate, wherever and however incorporated or
established;
1.2.4 references to a "PERSON" shall be construed so as to
include any individual, firm, company, government,
state or agency of a state or any joint venture,
association or partnership (whether or not having
separate legal personality);
1.2.5 the word "subsidiary" shall have the same meaning in
this Agreement as its definition in the Companies ▇▇▇
▇▇▇▇;
1.2.6 references to "INDEMNIFY" and "INDEMNIFYING" any
person against any circumstance include indemnifying
and keeping him harmless from all actions, claims and
proceedings from time to time made against that
person and all loss or damage and all payments, costs
or expenses made or incurred by that person as a
consequence of or which would not have arisen but for
that circumstance;
1.2.7 the expressions "ACCOUNTING REFERENCE DATE",
"ACCOUNTING REFERENCE PERIOD", ALLOTMENT", "BODY
CORPORATE", "CURRENT ASSETS", "DEBENTURES", "HOLDING
COMPANY", "PAID UP", "PROFIT AND LOSS ACCOUNT",
"SUBSIDIARY", "SUBSIDIARY UNDERTAKING" and
"WHOLLY-OWNED SUBSIDIARY" shall have the meanings
given in the Companies Acts;
1.2.8 a person shall be deemed to be connected with another
if that person is connected with another within the
meaning of section 839 ICTA 1988;
- 14 -
18
1.2.9 references to writing shall include any modes of
reproducing words in a legible and non-transitory
form;
1.2.10 headings to clauses and schedules are for convenience
only and do not affect the interpretation of this
agreement;
1.2.11 the schedules form part of this agreement and shall
have the same force and effect as if expressly set
out in the body of this agreement, and any reference
to this agreement shall include the schedules;
1.2.12 references to any English legal term for any action,
remedy, method of judicial proceedings, legal
document, legal status, court, official, or any legal
concept or thing shall in respect of any jurisdiction
other than England be deemed to include what most
nearly approximates in that jurisdiction to the
English legal term;
1.2.13 (a) the rule known as the ejusdem generis rule
shall not apply and accordingly general
words introduced by the word "other" shall
not be given a restrictive meaning by reason
of the fact that they are preceded by words
indicating a particular class of acts,
matters or things; and
1.2.14 (b) general words shall not be given a
restrictive meaning by reason of the fact
that they are followed by particular
examples intended to be embraced by the
general words;
1.2.15 references to "SO FAR AS THE VENDORS ARE AWARE" shall
be construed so as to mean after having made due and
careful enquiry of each director and the senior
management of the Company.
2. SALE AND PURCHASE
- 15 -
19
2.1 Each of the Vendors shall, with full title guarantee, sell or
procure the sale of and the Purchaser shall purchase the Shares
set opposite that Vendor's name in Schedule 4 (Ownership of the
Shares) with all rights attached or accruing to them at the date
of this agreement. The Shares shall be free from all charges and
encumbrances and from all other rights exercisable by or claims by
third parties.
2.2 The Purchaser shall be entitled to exercise all rights attached or
accruing to the Shares including, without limitation, the right to
receive all dividends, distributions or any return of capital
declared, paid or made by the Company on or after the date of this
agreement.
2.3 Each of the Vendors hereby waives all rights of pre-emption over
any of the Shares conferred upon it by the articles of association
of the Company or in any other way.
3. CONSIDERATION
3.1 The total consideration for the sale of the Shares shall be the
sum of (pound)4,275,719 (the "Consideration").
3.2 The Consideration shall be payable as follows:-
3.2.1 the sum of (pound)3,275,719 shall be paid to the
Vendors in accordance with clause 4 (Completion);
3.2.2 the sum of (pound)750,000 (the "Property Escrow
Amount") shall be paid to the Vendors' Solicitors who
shall place the same into the Property Escrow
Account; and
3.2.3 the sum of (pound)250,000 shall be paid into the
Escrow Account.
3.3 The sum of(pound)250,000 referred to in sub-clause 3.2.3 shall be
paid by the Purchaser into the Escrow Account. All interest
accruing on amounts standing to the balance of the Escrow Account
shall be credited to the Escrow Account. On the Accounts
- 16 -
20
Delivery Date (the "ESCROW PAYMENT DATE"), the Vendors shall be
entitled to, and the Vendors and the Purchaser shall instruct the
Vendors' Solicitors and the Purchaser's Solicitors to pay to the
Vendors' Representative, the sum standing to the credit of the
Escrow Account on the Escrow Payment Date less:-
3.3.1 if the Purchaser shall have elected for Completion
Accounts in accordance with clause 5, a pound for
pound reduction for any shortfall between the Net
Asset Value and the Net Asset Value Reference Amount;
3.3.2 to the extent Net Profits for the year ended 31
January 1999 are below Budgeted Net Profits, a pound
for pound reduction to the extent of that shortfall;
3.3.3 the aggregate amount (if any) of all Determined
Claims not paid to the Purchaser on or before the
Escrow Payment Date; and
3.3.4 the aggregate amount (if any) of all Valid Claims
which have not become Determined Claims and that have
not been paid to the Purchaser on or before the
Escrow Payment Date. To the extent Valid Claims do
not become Determined Claims any amounts standing to
the credit of the Escrow Account shall be paid to the
Vendors' Representative forthwith.
3.4 The sum of(pound)750,000 referred to in sub-clause 3.2.2 shall be
paid by the Purchaser to the Vendors' solicitors who shall pay the
same into the Property Escrow Account. All interest accruing on
the amounts standing to the balance of the Property Escrow Account
shall be credited to the Property Escrow Account. Each time a
Retail Lease is assigned in accordance with the Business Transfer
Agreement, the Vendors shall be entitled to, and the Purchaser
shall instruct the Vendors' Solicitors to pay to the Vendors'
Representative (pound)187,500 less any amounts paid by the Company
pursuant to that Retail Lease and payable by Windguard to the
extent not recovered by the Company from Windguard and to pay to
the Vendors' Representative on the Retail Lease Date the balance
(if any) standing to the credit of the Property Escrow Account.
- 17 -
21
3.5 Neither the Vendors' Solicitors nor the Purchaser's Solicitors
shall be under any obligation to take any action in respect of the
Escrow Account except where they have received express and
irrevocable written instructions from their respective clients in
accordance with the terms of the Escrow Letter.
3.6 The Vendors' Solicitors shall not be under any obligation to take
any action in respect of the Property Escrow Account unless they
shall have received express and irrevocable instructions in
accordance with Clause 3.4.
3.7 Where the Vendors are liable to pay to the Purchaser an amount in
respect of any matter referred to in Clause 3.3 (the "Claim
Amount") then the Purchaser shall be entitled to, and the Vendors
and the Purchaser shall instruct the Vendors' Solicitors and the
Purchaser's Solicitors to pay to the Purchaser from the Escrow
Account the Claim Amount.
3.8 Where the Vendors' Representative is liable to pay to the
Purchaser an amount in respect of any matter referred to in Clause
3.4 ("the Property Claim Amount") then the Purchaser shall be
entitled to and the Vendor's Representative and the Purchaser
shall instruct the Vendor's Solicitors to pay to the Purchaser
from the Property Escrow Account the Property Claim Amount.
3.9 Where the amount standing to the balance of the Escrow Account is
less than the Claim Amount (the "Shortfall") then the Vendors
shall jointly and severally (subject to the provisions of Schedule
3) pay to the Purchaser the balance of the Shortfall.
4. COMPLETION
4.1 Completion shall take place immediately after signature of this
agreement at the offices of the Purchaser's Solicitors at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇.
4.2 At Completion the parties shall do those things listed in Schedule
1 (Completion Arrangements).
- 18 -
22
4.3 The Purchaser shall not be obliged to complete this agreement
unless each Vendor complies fully with the requirements of
sub-clause 4.2.
4.4 The Purchaser shall not be obliged to complete the sale and
purchase of any of the Shares unless the sale and purchase of all
the Shares is completed simultaneously. This sub-clause shall not
limit any other clause of this agreement and in particular clause
14 (Remedies and Waivers).
4.5 If the obligations of the Vendors under sub-clause 4.2 are not
complied with on the Completion Date the Purchaser may:-
4.5.1 defer Completion (so that the provisions of this
clause 4 shall apply to Completion as so deferred);
or
4.5.2 proceed to Completion as far as practicable (without
limiting its rights under this agreement); or
4.5.3 treat this agreement as terminated.
4.6 Payment by telegraphic transfer of(pound)3,275,719, the payment
of(pound)250,000 into the Escrow Account and the payment
of(pound)750,000 into the Property Escrow Account in accordance
with clause 4.2 shall discharge the obligation of the Purchaser
under sub-clauses 3.2.1 and 3.2.2 and the Purchaser shall not be
concerned to see that the moneys transferred are applied in paying
the Vendors in accordance with their respective entitlements.
5. COMPLETION ACCOUNTS
5.1 Immediately following Completion, the Purchaser shall procure that
the Company carry out random stock checks on stock at Completion
and a review of despatch notes in the period leading up to
Completion.
5.2 If the Purchaser, acting in good faith, is dissatisfied with the
results of any exercise
- 19 -
23
carried out pursuant to Clause 5.1, the Purchaser may within 14
days of Completion (the "Election Date") elect to procure the
preparation by the Company of a profit and loss account and a
balance sheet (together with appropriate notes of the Group as at
the close of business on the last Business Day prior to the
Election Date (the "Draft Accounts"). The Draft Accounts shall be
delivered to the Vendor in accordance with clause 18 (Notices) as
soon as reasonably practicable, and in any event, within 30
Business Days, following the Election Date, together with, if
requested, all of the working papers used in the preparation of
the Draft Accounts. The costs of preparing the Draft Accounts
shall be borne by the Vendors and the Purchaser equally.
5.3 The Vendors may dispute the Draft Accounts by notice (in this
clause, the "Notice") in writing to the Purchaser within 10
Business Days of receiving the Draft Accounts. The Notice shall
specify (a) which items are disputed and (b) the reasons therefor.
5.4 If the Vendors do not serve the Notice, the Draft Accounts shall
constitute the Completion Accounts.
If the Vendors do serve the Notice, then either:-
(i) if the Purchaser and the Vendors, negotiating in good
faith, reach agreement on the items in dispute within
10 Business Days of the Notice being served (or such
longer period as the Purchaser and the Vendor may
agree in writing), the Draft Accounts shall be
amended to reflect such agreement and shall
constitute the Completion Accounts; or
(ii) if the Purchaser and the Vendors negotiating in good
faith, do not reach agreement in accordance with (i)
above, the Purchaser or the Vendors may refer the
dispute to an independent chartered accountant (the
"Expert") appointed by agreement between or in the
absence of an agreement by the President for the time
being of the Institute of Chartered Accountants in
England and Wales.
5.5 In any reference to the Expert in accordance with sub-clause 5.4:-
- 20 -
24
5.5.1 the Expert shall act as an expert and not as an
arbitrator;
5.5.2 the decision of the Expert shall, in the absence of
fraud or manifest error, be final and binding on the
Purchaser and the Vendors and the Completion Accounts
shall be the Draft Accounts amended to reflect the
decision of the Expert;
5.5.3 the costs of the Expert shall be paid by the party
against whom the dispute is determined; and
5.5.4 each of the Vendors and the Purchaser shall
respectively provide or procure the provision to the
Expert of all such information as the Expert shall
reasonably require.
5.6 Following determination of the Completion Accounts pursuant to
sub- clause 5.5, the amount of the Stock and the Net Asset Value
shall be determined by reference to the Completion Accounts.
6. POST-COMPLETION ACTION
Immediately following Completion, the parties shall enter into, or
shall procure the entering into of:-
6.1 the Service Agreements;
6.2 the Secondment Agreement;
6.3 the Option Deed; and
6.4 the Trading Agreement.
7. WARRANTIES
- 21 -
25
7.1 The Vendors represent and warrant to the Purchaser that each of
the Warranties is accurate in all respects and not misleading at
the date of this agreement.
7.2 The Vendors accept that the Purchaser is entering into this
agreement in reliance upon each of the Warranties.
7.3 Each of the Vendors undertakes (if any claim is made against any
of them in connection with the sale of the Shares to the
Purchaser) not to make any claim against the Company or any
director or employee on whom any of them may have relied before
agreeing to any terms of this agreement or of the Tax Covenant or
authorising any statement in the Disclosure Letter.
7.4 Each of the Warranties shall be construed as a separate and
independent Warranty and (except where expressly provided to the
contrary) shall not be limited or restricted by reference to or
inference from the terms of any other Warranty or any other term
of this agreement.
8. PURCHASER'S REMEDIES AND VENDORS' LIMITATIONS ON LIABILITY
8.1 Subject to sub-clause 8.3 and to the limitations set out in
Schedule 3 (Vendors' Limitations on Liability) the Purchaser shall
be entitled to claim that any of the Warranties has or had been
breached or is or was misleading and, without limitation, to claim
under any Warranty even if the Purchaser could have discovered on
or before Completion that the Warranty in question had been
breached or was misleading and (in accordance with clause 12
(Effect of Completion)) Completion shall not in any way constitute
a waiver of any of the Purchaser's rights.
8.2 The Purchaser confirms to the Vendors that it is not aware of any
matter, as at the date of this agreement that would entitle it to
make a claim under any of the Warranties immediately following
Completion.
8.3 The Purchaser shall not be entitled to claim that any fact causes
any of the Warranties to be breached or renders any Warranty
misleading if it has been fairly disclosed to
- 22 -
26
the Purchaser in the Disclosure Letter in the absence of any fraud
or dishonesty on the part of any of the Vendors or their
respective agents or advisers.
8.4 No liability shall attach to the Vendors in respect of claims
under the Warranties if and to the extent that the limitations
referred to in sub- clause 8.1 and set out in Schedule 3 (Vendors'
Limitations on Liability) apply, in the absence of any fraud or
dishonesty on the part of any of the Vendors or their respective
agents or advisers.
8.5 Except as stated expressly in this clause, this clause and
Schedule 3 (Vendors' Limitations on Liability) shall not limit any
other clause of this agreement and in particular clause 14
(Remedies and Waivers).
9. RESTRICTIONS ON BUSINESS ACTIVITIES
9.1 Each Vendor undertakes that he or she will not, either alone or in
conjunction with or on behalf of any other person, do any of the
following things:-
9.1.1 within three years after Completion, be engaged or
(except as the holder of shares in a listed company
which confer not more than five per cent. of the
votes which could normally be cast at a general
meeting of the company) directly or indirectly
interested in carrying on any business which competes
with the business of the Company as it is carried on
at the date of Completion in any of the countries in
which the Company carries on its business at the date
of Completion;
9.1.2 disclose to any other person or (in any way which may
be detrimental to the business of the Company as
carried on at the date of Completion) use any
information which is confidential Business
Information for so long as that information remains
confidential Business Information;
9.1.3 without limitation to the provisions of this clause,
in relation to a business which is competitive or
likely to be competitive with the business of the
Company as carried on at the date of Completion, use
any trade
- 23 -
27
or business name or distinctive ▇▇▇▇, style or logo
used by or in the business of the Company at any time
during the three years before the date of Completion
or anything intended or likely to be confused with
it;
9.1.4 neither pending nor within three years after
Completion, solicit the custom, in relation to goods
or services sold to any person by the Company in the
course of its business during the two years before
the date of Completion, of that person in respect of
similar goods or services;
9.1.5 neither pending nor within three years after
Completion, solicit or entice away from the
employment of the Group any person who is at the date
of this agreement an employee of the Group PROVIDED
THAT no utilisation of the services of any employee
of the Company pursuant to the Trading Agreement
shall be a breach of this undertaking; nor
9.1.6 assist or encourage any other person to do any of the
foregoing things.
9.2 Each undertaking contained in this clause shall be construed as a
separate undertaking 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, the remaining undertakings
shall continue to bind the Vendors.
9.3 The undertakings in sub-Clauses 9.1.1 and 9.1.3 shall not apply to
the business transferred by the Company to Windguard pursuant to
the Business Transfer Agreement. The undertaking contained in
clause 9.1.4 shall not apply to Windguard in respect of customers
of the retail business.
10. PROVISION OF BUSINESS INFORMATION
10.1 During the period of six years after Completion and without
prejudice to any of the Warranties:-
- 24 -
28
10.1.1 if any Business Information Required for the Business
of the Company is not in the possession of the
Company or the Purchaser or readily discoverable by
the Company or the Purchaser but is in the possession
or under the control of the Vendors, the Vendors
shall procure that such Business Information is
provided to the Purchaser promptly on request; and
10.1.2 if any Books or Records of any Vendor contain
Business Information which should be provided to the
Purchaser, such Vendor shall procure that copies of
such Books or Records are given to the Purchaser
promptly on request.
10.2 For the purposes of this clause and this agreement generally,
"REQUIRED FOR THE BUSINESS" means any Intellectual Property or
Business Information of the Group which is or has in the last six
years been used in the business of the Group or is or will be
needed by the Group to carry on the business of the Group in the
same manner as it is presently carried on by the Group or is or
will be needed to fulfil any of the present contracts, plans or
projects of the Group or to comply with any law applicable in
relation to the business of the Group or is vested in any of the
Vendors and its retention by any Vendor after Completion of this
agreement would be damaging or detrimental to the business of the
Group.
11. EFFECT OF COMPLETION
Any provision of this agreement and any other documents referred
to in it which is capable of being performed after but which has
not been performed at or before Completion and all Warranties and
covenants and other undertakings contained in or entered into
pursuant to this agreement shall remain in full force and effect
notwithstanding Completion.
12. JOINT AND SEVERAL LIABILITY
12.1 Save as provided in Schedule 3, the obligations of the Vendors
under this agreement
- 25 -
29
are joint and several.
12.2 If any liability of one or some but not all of the Vendors is, or
becomes, illegal, invalid or unenforceable in any respect, that
shall not affect or impair the liabilities of the other Vendors
under this agreement.
13. RELEASE OF VENDORS
The Purchaser may release, or compromise the liability of, any
Vendor or grant time or other indulgence to any Vendor without
releasing or reducing the liability of any other Vendor. Where a
liability of one or some but not all of the Vendors under any
obligation which is both joint and several is released or
compromised, the remaining Vendors shall continue to be severally
and shall together be jointly liable on that obligation.
14. REMEDIES AND WAIVERS
14.1 No delay or omission on the part of any party to this agreement in
exercising any right, power or remedy provided by law or under
this agreement or any other documents referred to in it shall
impair such right, power or remedy or operate as a waiver thereof.
14.2 The single or partial exercise of any right, power or remedy
provided by law or under this agreement shall not preclude any
other or further exercise thereof or the exercise of any other
right, power or remedy.
14.3 The rights, powers and remedies provided in this agreement are
cumulative and not exclusive of any rights, powers and remedies
provided by law.
15. ASSIGNMENT
15.1 The rights or benefits of or under this agreement and any
agreements referred to in clause 17 (Entire Agreement), including
without limitation the Warranties, may be
- 26 -
30
assigned (together with any cause of action arising in connection
with any of them) by the Purchaser to a member of the Purchaser's
Group.
15.2 Obligations under this agreement shall not be assignable.
16. FURTHER ASSURANCE
The Vendors shall from time to time on being required to do so by
the Purchaser now or at any time in the future, do or procure the
doing of all such acts and/or execute or procure the execution of
all such documents in a form satisfactory to the Purchaser as the
Purchaser may reasonably consider necessary for the rights, powers
and remedies conferred upon the Purchaser in this agreement.
17. ENTIRE AGREEMENT
17.1 For the purpose of this clause, "PRE-CONTRACTUAL STATEMENT" means
a draft agreement, undertaking, representation, warranty, promise,
assurance or arrangement of any nature whatsoever, whether or not
in writing, relating to the Share Purchase Documents or any of
them (as defined in sub- clause 17.2) made or given by a party to
any of the Share Purchase Documents or any other person at any
time prior to execution of the Share Purchase Documents.
17.2 This agreement, the Tax Covenant, the Disclosure Letter referred
to in clause 8 (Purchaser's Remedies and Vendors' Limitations on
Liability) and any other documents referred to in this agreement
(the "SHARE PURCHASE DOCUMENTS") constitute the whole and only
agreement between the parties relating to the sale and purchase of
the Shares.
17.3 Except to the extent repeated in any of the Share Purchase
Documents, the Share Purchase Documents supersede and extinguish
any prior Pre- contractual Statement relating thereto.
17.4 All of the parties acknowledge that in entering into the Share
Purchase Documents
- 27 -
31
or any of them on the terms set out therein, they are not relying
upon any Pre-contractual Statement which is not expressly set out
therein.
17.5 None of the parties shall have the right of action against any
other party to this agreement or any of the Share Purchase
Documents arising out of or in connection with any Pre-contractual
Statement (except in the case of fraud).
17.6 This agreement may only be varied in writing signed by all of the
parties.
18. NOTICES
18.1 Any notice or other communication given or made under or in
connection with the matters contemplated by this agreement shall
be made in writing.
18.2 Any such notice or other communication shall be addressed as
provided in sub-clause 18.3 and, if so addressed, shall be deemed
to have been duly given or made as follows:-
18.2.1 if sent by first class post, two Business Days after
the date of posting;
18.2.2 if sent by facsimile, when despatched to the correct
facsimile number confirmed by an activity report
showing "transaction O.K." or words to similar effect
and if followed by written confirmation by first
class post.
PROVIDED THAT if, in accordance with the above provisions, any
such notice or other communication would otherwise be deemed to be
given or made outside Working Hours, such notice or other
communication shall be deemed to be given or made at the start of
Working Hours on the next Business Day.
18.3 The relevant addressee, address and facsimile number of each party
for the purposes of this agreement, subject to sub-clause 18.4,
are:-
Name of party Address Facsimile No.
------------- ------- -------------
- 28 -
32
Purchaser
Advanced Marketing Suite 25, Challenge 01908 365945
(Europe) ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
F.A.O.: ▇▇▇▇ Pickup
Vendors
c/o Vendors' ▇▇▇▇▇▇ ▇▇▇▇▇▇
Representative ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
18.4 A party may notify the other parties to this agreement of a change
to its name, relevant addressee, address or facsimile number for
the purposes of sub-clause 18.3 PROVIDED THAT such notification
shall only be effective on:-
18.4.1 the date specified in the notification as the date on
which the change is to take place; or
18.4.2 if no date is specified or the date specified is less
than five clear Business Days after the date on which
notice is given, the date falling five clear Business
Days after notice of any such change has been given.
19. ANNOUNCEMENTS
19.1 Subject to sub-clause 19.2, no announcement concerning the sale of
the Shares or any ancillary matter shall be made by either party
without the prior written approval of the other, such approval not
to be unreasonably withheld or delayed provided that the Vendors
may withhold their consent to the making of any announcement which
states the amount of the Consideration.
19.2 Any of the parties may make an announcement concerning the sale of
the Shares or any ancillary matter if required by:-
- 29 -
33
19.2.1 the law of any relevant jurisdiction;
19.2.2 any securities exchange or regulatory or governmental
body to which either party is subject or submits,
wherever situated, including (without limitation) the
London Stock Exchange, the Panel, NASDAQ or the SEC,
whether or not the requirement has the force of law
PROVIDED THAT any such announcement shall be made only after
notice to all of the other parties.
19.3 The restrictions contained in this clause shall continue to apply
after Completion without limit in time.
20. CONFIDENTIALITY
20.1 Subject to sub-clause 20.2, all of the parties shall treat as
strictly confidential all information received or obtained as a
result of entering into or performing this agreement which relates
to:-
20.1.1 the provisions of this agreement;
20.1.2 the negotiations relating to this agreement; or
20.1.3 any of the other parties.
20.2 Any of the parties may disclose information which would otherwise
be confidential if and to the extent such disclosure is:-
20.2.1 required by the law of any relevant jurisdiction;
20.2.2 required by any securities exchange or regulatory or
governmental body to which any of the parties is
subject or submits, wherever situated, including
(without limitation) the London Stock Exchange or the
Panel,
- 30 -
34
whether or not the requirement for information has
the force of law;
20.2.3 required to vest the full benefit of this agreement
in any of the parties;
20.2.4 disclosed to the professional advisers, auditors and
bankers of that party;
20.2.5 of information that has already come into the public
domain through no fault of that party; or
20.2.6 approved by all of the other parties having given
prior written approval of the disclosure, such
approval not to be unreasonably withheld or delayed
PROVIDED THAT any such information disclosed pursuant to paragraph
20.2.1 or 20.2.2 shall be disclosed only after notice to the other
parties.
20.3 The restrictions contained in this clause shall continue to apply
after Completion of the sale and purchase of the Shares under this
agreement without limit in time.
21. RESTRICTIVE TRADE PRACTICES ACT 1976
If this agreement (which for the purposes of this clause includes
any other agreement or arrangement of which it forms part)
contains any provision which causes or would cause it to be
subject to registration under RTPA 1976, and if it is not a
non-notifiable agreement under RTPA 1976, that provision will not
take effect until the day after particulars of this agreement have
been furnished to the Director General of Fair Trading in
accordance with section 24 RTPA 1976.
22. COSTS AND EXPENSES
Each of the parties shall pay its own costs and expenses in
relation to the negotiations leading up to the sale of the Shares
and to the preparation, execution and carrying into effect of this
agreement and all other documents referred to in it.
- 31 -
35
23. COUNTERPARTS
23.1 This agreement may be executed in any number of counterparts, and
by the parties on separate counterparts, but shall not be
effective until each of the parties has executed at least one
counterpart.
23.2 Each counterpart shall constitute an original of this agreement,
but all the counterparts shall together constitute but one and the
same instrument.
24. TIME OF ESSENCE
Except as otherwise expressly provided, time is of the essence of
this agreement.
25. CHOICE OF GOVERNING LAW
This agreement shall be governed by and construed in accordance
with English law.
26. JURISDICTION
The parties to this agreement irrevocably agree that the courts of
England are to have jurisdiction to settle any disputes which may
arise out of or in connection with this agreement and that
accordingly any Proceedings may be brought in such courts.
27. INDEMNITIES
27.1 The Vendors undertake with the Purchaser to indemnify and keep
fully and effectually indemnified the Purchaser (for itself and as
trustee for each Group Company, each of which is referred to as
the "Indemnified Parties" in this clause 27) from and against any
Liability incurred, sustained or suffered, whether before, on, or
after the Completion Date by the Indemnified Parties which,
directly or indirectly arises out of or pertains to the
following:-
27.1.1 the Purchase of Shares;
- 32 -
36
27.1.2 the termination of ▇▇▇▇▇ ▇▇▇▇▇▇▇'▇ contract of
employment; and
27.1.3 the reduction in share capital of the Company
pursuant to the Purchase of Shares.
27.2 The Vendors' Representative undertakes to indemnify
and keep fully and effectively indemnified the
Indemnified Parties from and against any liability
incurred, sustained or suffered directly or
indirectly in respect of the Retail Properties.
28. PURCHASER'S UNDERTAKING
28.1 The Purchaser undertakes with the Vendors and each of
them that until the funds in the Escrow Account have
been disbursed in accordance with Clause 3.4 so that
there shall be no amount standing to the credit
thereof:-
28.1.1 the Purchaser shall not at any time dispose of any
beneficial interest in the Shares;
28.1.2 the Purchaser shall procure that all of the business
of the Company shall be carried on entirely through
the Company;
28.1.3 the Purchaser shall procure that the Company shall
not dispose of any of its fixed assets otherwise than
in the ordinary and proper course of business;
28.1.4 the Purchaser shall procure that the Company shall
not change its name without the prior written consent
of the Vendors.
28.2 Nothing in paragraph 28.1 shall impose any liability on the
Purchaser for anything done or omitted to be done on behalf of the
Company by the Vendors.
- 33 -
37
SCHEDULE 1
COMPLETION ARRANGEMENTS
At Completion:-
1. the Vendors shall deliver, or procure the delivery, to the
Purchaser or the Purchaser's Solicitors:-
1.1 duly executed transfers in respect of the Shares in favour of the
Purchaser or such person as the Purchaser may nominate together
with share certificates for the Shares in the names of the
relevant transferors and any power of attorney under which any
transfer is executed on behalf of any Vendor or nominee;
1.2 powers of attorney in agreed terms;
1.3 a letter from the Vendors' Solicitors confirming the
disapplication of the City Code on Takeovers and Mergers to the
transaction contemplated by this agreement;
1.4 a counterpart Tax Covenant duly executed by the Vendors;
1.5 an original Escrow Letter;
1.6 a counterpart Trading Agreement duly executed by Windguard
Limited;
1.7 a counterpart Option Deed signed by ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇ ▇▇▇▇▇▇ D'Aeth;
1.8 counterpart Service Agreements;
1.9 counterpart Secondment Agreement.
2. the Vendors shall deliver to or to the order of the Purchaser (or
to any person whom
- 34 -
38
the Purchaser may nominate as agent for the Company) such of the
following as the Purchaser may require:-
2.1 the statutory books (which shall be written up to but not
including the Completion Date), the certificate of incorporation
(and any certificate of incorporation on change of name) and
common seal (if any) of the Company;
2.2 the title deeds relating to each Business Property;
2.3 the original of the letter from the auditors of the Company
referred to in paragraph 3 below;
3. The Vendors shall procure the present auditors of the Company to
resign their office as such, and to deposit at the registered
office of the Company a letter notifying their resignation,
acknowledging that they have no claim against the Company and
containing a statement pursuant to section 394(1) Companies ▇▇▇
▇▇▇▇ that there are no circumstances connected with their ceasing
to hold office which they consider should be brought to the
attention of any members or creditors.
4. The Vendors shall procure board meetings of the Company to be held
at which:-
4.1 it shall be resolved that each of the transfers relating to the
Shares shall be approved for registration and (subject only to the
transfer being duly stamped) each transferee registered as the
holder of the Shares concerned in the register of members;
4.2 each of the persons nominated by the Purchaser shall be appointed
directors and/or secretary, as the Purchaser shall direct, such
appointments to take effect on the Completion Date;
4.4 all existing instructions to banks shall be revoked and new
instructions shall be given to such banks in such form as the
Purchaser may direct;
- 35 -
39
4.5 the Service Agreements between the Purchaser and each of shall be
approved and entered into by each of ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ D'Aeth.
The Vendors shall procure that minutes of the board meetings
referred to in this paragraph 5, certified as correct by the
secretary of the Company, and the resignations, acknowledgements
and service agreements referred to, are delivered to the
Purchaser's Solicitors.
5. The Purchaser shall:-
5.1 pay the Vendors' Solicitors by way of telegraphic transfer the sum
referred to in sub-clause 3.2.1;
5.2 pay into the Escrow Account the sum referred to in sub-clause
3.2.2;
5.3 deliver to the Vendors' Solicitors, duly executed by the
Purchaser, a counterpart original of the Tax Covenant and the
Option Deed.
6. The Vendors and the Purchaser shall procure that the Company
repays the amount of the SAS Loan made to the Company by the
Managing Trustees of the Aura Books plc Pension Fund (Small Self
Administered Scheme) together with all accrued interest (a copy of
the loan agreement being attached to the Disclosure Letter).
- 36 -
40
SCHEDULE 2
REPRESENTATIONS AND WARRANTIES
Each Vendor represents and warrants to the Purchaser as follows:-
1. OWNERSHIP OF THE SHARES
1.1 Each of the Vendors is the sole beneficial owner of the Shares set
opposite his name in Schedule 4 (Ownership of the Shares).
1.2 The Company is the owner of all the issued shares in the
Subsidiary and these shares are all fully paid up.
1.3 The bonus issue of shares in the Company made immediately prior to
completion complies in all respects with the provisions of the
Companies Acts.
2. CAPACITY OF THE VENDORS
2.1 Each of the Vendors has the requisite power and authority to enter
into and perform this agreement and the Tax Covenant and the other
documents executed by the Vendors which are to be delivered at
Completion.
2.2 This agreement constitutes and the Tax Covenant and the other
documents executed by any Vendor which are to be delivered at
Completion will, when executed, constitute binding obligations of
each Vendor in accordance with their respective terms.
2.3 The execution and delivery of, and the performance by the Vendors
of their respective obligations under, this agreement, the Tax
Covenant and the other documents executed by the Vendors which are
to be delivered at Completion will not:-
- 37 -
41
2.3.1 result in a breach of, or constitute a default under,
any instrument to which any Vendor or any Group
Company is a party or by which any Vendor or any
Group Company is bound; or
2.3.2 result in a breach of any order, judgment or decree
of any court or governmental agency to which any
Vendor or any Group Company is a party or by which
any Vendor or any Group Company is bound.
2.4 None of the Vendors is subject to any legal disability including
any mental disability under the Mental Health ▇▇▇ ▇▇▇▇.
3. ARRANGEMENTS BETWEEN THE GROUP AND THE VENDORS
No indebtedness (actual or contingent) and no contract or
arrangement is outstanding between any Group Company and any
Vendor or any person connected with any Vendor.
4. OTHER INTERESTS OF VENDORS
No Vendor nor any person connected with any Vendor has any
interest, direct or indirect, in any business which competes with
any business now carried on by the Group or the Purchaser or, so
far as the Vendors are aware, intends to acquire any such
interest.
5. GROUP DETAILS, ETC.
5.1 The Shares comprise the whole of the issued and allotted share
capital of the Company and all of them are fully paid up.
5.2 There is no agreement or commitment outstanding which calls for
the allotment, issue or transfer of, or accords to any person the
right to call for the allotment or issue of, any shares (including
the Shares) or debentures in or securities of any Group Company.
- 38 -
42
5.3 No Group Company has any interest and has never had any interest
in the share capital of any other body corporate or undertaking.
5.4 No Group Company acts or carries on business in partnership with
any other person or is a member of any corporate or unincorporated
body, undertaking or association and no Group Company holds or is
liable on any share or security which is not fully paid up or
which carries any liability.
5.5 No Group Company has any branch, agency, place of business or
permanent establishment outside the United Kingdom.
6. OPTIONS, MORTGAGES AND OTHER ENCUMBRANCES
6.1 There is no option, right to acquire, mortgage, charge, pledge,
lien or other form of security or encumbrance or equity on, over
or affecting the Shares or any of them and there is no agreement
or commitment to give or create any and no claim has been made by
any person to be entitled to any.
6.2 No option, right to acquire, mortgage, charge, pledge, lien (other
than a lien arising by operation of law in the ordinary course of
trading) or other form of security or encumbrance or equity on,
over or affecting the whole or any part of the undertaking or
assets of any Group Company is outstanding and there is no
agreement or commitment to give or create any and no claim has
been made by any person to be entitled to any.
7. ACCURACY AND ADEQUACY OF INFORMATION
7.1 All information which has been given by the Vendors, the Vendors'
Solicitors or the directors, officers, auditors or financial
advisers of the Group to the Purchaser or to the solicitors,
accountants or agents of the Purchaser relating to the business
activities, affairs or assets or liabilities of the Group was,
when given, and is now accurate (or, in the case of accounts and
all financial records, accurate in all material respects) and
comprehensive in all material respects.
- 39 -
43
7.2 The information given in Schedule 5 (Basic Information about the
Group) and in the Disclosure Letter (including any of its
attachments) is true and complete in all material respects and is
not misleading because of any omission or ambiguity.
7.3 The copies of the memorandum and articles of association of the
Group Companies which have been supplied to the Purchaser or the
Purchaser's Solicitors are complete and accurate in all respects,
have attached to them copies of all resolutions and other
documents required by law to be so attached and fully set out the
rights and restrictions attaching to each class of share capital
of each Group Company.
7.4 The statutory books (including all registers and minute books) of
the Group Companies have been properly kept and contain an
accurate and complete record of the matters which should be dealt
with in those books and no notice or allegation that any of them
is incorrect or should be rectified has been received.
7.5 All documents which should have been delivered by the Group
Companies to the Registrar of Companies have been properly so
delivered.
8. ACCOUNTS
8.1 The Accounts:-
8.1.1 were prepared in accordance with accountancy
practices generally accepted in the United Kingdom on
a basis consistent with the last six prior years;
8.1.2 contain proper provision for bad and doubtful debts,
for old depreciated and unsaleable stock and for
Taxation on profits (whether of an income or capital
nature) relating to any period ending on or before
the date to which they are made up;
8.1.3 show a true and fair view of the state of affairs of
the Group at the Accounts Date; and
- 40 -
44
8.1.4 save as the Accounts expressly disclose, are not
affected by any unusual or non-recurring items.
8.2 The Key Statistics were prepared in good faith after due care and
inquiry and, so far as the Vendors are aware, provide an accurate
picture of sales and credits during February 1998.
8.3 At the Accounts Date, no Group Company had any liability (whether
actual, contingent, unquantified or disputed) or outstanding
capital commitment that was not adequately disclosed or provided
for in the Accounts.
8.4 The accounting records of the Group have been kept on a proper and
consistent basis in all material respects (no change in the
methods or bases of valuation or accountant treatment having been
made for at least six years prior to the Accounts Date or since),
are up-to-date and contain in all material respects complete and
accurate details of the business activities of the Group and of
all matters required by the Companies Act to be entered in them.
9. EVENTS SINCE THE ACCOUNTS DATE
Since the Accounts Date:
9.1 there has been no material adverse change in the turnover or
financial or trading position or prospects of the Group ;
9.2 save as disclosed in the Disclosure Letter the business of the
Group has been carried on in the ordinary and usual course and in
the same manner (including nature and scope) as in the past and no
unusual or onerous contract differing from the routine contracts
necessitated by the nature of its trade has been entered into by
any Group Company;
9.3 no assets have been acquired or disposed of on capital account or
have been agreed to be acquired or disposed of and no contracts on
capital account have been entered
- 41 -
45
into by any Group Company, the value of which exceed in aggregate
(pound)25,000;
9.4 there has been no unusual increase or decrease in the level of
stock of any Group Company;
9.5 no debts or other receivables and no trading stock, goods, plant,
machinery or equipment of any Group Company have been factored or
sold or agreed to be sold, apart from the sale of trading stock to
trade customers or the public on that Group Company's normal terms
of business in the routine course of trading;
9.6 No Group Company has offered any price reductions or discounts or
allowances on sales of trading stocks or provided them at less
than cost to an extent which may materially affect its
profitability;
9.7 no resolutions of a Group Company in general meeting have been
passed other than resolutions relating to the routine business of
annual general meetings;
9.8 no change in the accounting reference period of any Group Company
has been made; and
9.9 no change in the basic remuneration of key employees has been
made.
10. WORK IN PROGRESS AND STOCK-IN-TRADE
10.1 All work in progress represented in the Accounts has been valued
on a basis excluding profit and including adequate provision for
losses which are or could reasonably be anticipated.
10.2 All stock-in-trade represented in the Accounts was valued at the
lower of cost or net realisable value. None of the stock-in-trade
of any Group Company is obsolete or slow moving or out of date,
fashion or demand or likely to realise less than its book value.
- 42 -
46
10.3 The amounts of raw materials, work in progress, finished goods and
packaging and promotional material held or ordered by any Group
Company are appropriate and normal for that Group Company's
present level of business.
11. CONTRACTS AND COMMITMENTS
11.1 No Group Company is under any obligation, nor is it a party to any
contract, which cannot readily be fulfilled or performed by it on
time and without undue or unusual expenditure of money or effort.
11.2 No Group Company is a party to nor does it have any liability
(present or future) under any guarantee or indemnity or letter of
credit or any leasing, hiring, hire purchase, credit sale or
conditional sale agreement nor has it entered into any contract or
commitment involving, or likely to involve, obligations or
expenditure of an unusual or exceptional nature or magnitude.
11.3 No Group Company is a party to any contract or arrangement which
restricts its freedom to carry on its business in any part of the
world in such manner as it may think fit, or to any agency,
distributorship or management agreement.
11.4 Neither a Group Company nor any of the Vendors is aware of any
breach of, or any invalidity, or grounds for determination,
rescission, avoidance or repudiation of, any contract to which any
Group Company is a party or of any allegation of such a thing
which would have a material effect on any Group Company.
11.5 No Group Company has outstanding any bid or tender or sale or
service proposal which is substantial in relation to its business
or which, if accepted, would be likely to result in a loss which
would be material to a Group Company.
11.6 Except for any guarantee or warranty or indemnity implied by law
or contained in its standard terms of business (a copy of which is
attached to the Disclosure Letter), so far as the Vendors are
aware, no Group Company has given any guarantee, indemnity,
warranty, or made any representation, in respect of goods or
services
- 43 -
47
supplied or contracted to be supplied by it or accepted any
liability or obligation that would apply after such goods or
services had been supplied by it.
11.7 No Group Company is a party to any joint venture agreement or
arrangement or any agreement or arrangement under which it is to
participate with any other in any business.
11.8 No Group Company is a party to any contract which falls within
any of the cases specified below:-
11.8.1 the contract is of a value greater than (pound)5000
and which has material consequences in terms of
expenditure or revenue expectations or it relates to
matters not within the ordinary business of that
Group Company or it constitutes a commercial
transaction or arrangement deviant from the usual
pattern for that Group Company; or
11.8.2 the contract is of three years or greater duration,
or if it is less than of three years' duration, it is
of a length which significantly exceeds what is
normal in relation to the subject matter of that
contract; or
11.8.3 the contract can be terminated in the event of any
change in the underlying ownership or control of the
Company or would be materially affected by such a
change;
and for this purpose "CONTRACT" includes any understanding,
arrangement or commitment however described.
12. INSIDER CONTRACTS
There is not, and there has not at any time during the last six
years been, any contract or arrangement to which a Group Company
is, or was, a party and in which any Vendor or any director of a
Group Company or any person connected with any such director is,
or has been, interested, either directly or indirectly, and no
Group
- 44 -
48
Company is a party to, nor has its profits or financial position
during that period been affected by, any contract or arrangement
which was not of an entirely arm's length nature; in particular,
without limitation, no Group Company has transferred assets to any
other person except at market value.
13. POWERS OF ATTORNEY
No Group Company has given any power of attorney or other
authority (express, implied or ostensible) which is still
outstanding or effective to any person to enter into any contract
or commitment on its behalf.
14. GRANTS AND ALLOWANCES
Full particulars of all grants, allowances, aids and subsidies
paid or made to any Group Company during the last six years by,
and of all outstanding claims by any Group Company for any such
grant, allowance, aid or subsidy from, any supranational, national
or local authority or government agency are set out in the
Disclosure Letter and no Group Company has done or failed to do
any act or thing which could result, nor will the sale of the
Shares result, in all or any part of such grant, allowance, aid or
subsidy becoming repayable or forfeited.
15. TERMS OF TRADE
15.1 No substantial customer or supplier of any Group Company has
during the twelve months preceding the date of this agreement
ceased or indicated an intention to cease trading with or
supplying to any Group Company or indicated an intention to reduce
substantially its trading with or supplies to any Group Company
and the Vendors have no reason to believe that any of the
foregoing may occur and there is no contract to which any Group
Company is a party which by reason of the sale of the Shares gives
any other contracting party the right to terminate any contract
of, or to impose any additional obligation by virtue of such sale
(whether to make payment or otherwise) on, any Group Company and,
so far as the Vendors are aware, the attitude or actions of
customers, suppliers, employees and other persons with regard to
any
- 45 -
49
Group Company will not be prejudicially affected by the execution
of this agreement or Completion.
15.2 No Group Company does use or otherwise carries on its business
under any name other than its corporate name.
16. SUBSTANTIAL DEPENDENCE
Neither in the financial period ending on the Accounts Date nor in
the period since the Accounts Date has any person (together with
other persons connected with him) purchased from or sold to a
Group Company more than 5 per cent. of the aggregate amount of all
sales or purchases made by that Group Company during such period,
and there is no person (together with other persons connected with
him) on whom any Group Company is substantially dependent or the
cessation of transactions with whom would substantially affect the
business of any Group Company.
17. LICENCES
All licences, consents and other permissions and approvals
required for or in connection with the carrying on of the business
now being carried on by the Group have been obtained, are not
limited in duration or subject to onerous conditions and are in
full force and effect and there is no circumstance which indicates
that any licence, consent, permission or approval which is
material is likely to be revoked or may confer a right of
revocation.
18. BANK ACCOUNTS AND BORROWINGS
18.1 Full details of all bank accounts maintained or used by the Group
(including, in each case, the name and address of the bank with
whom the account is kept and the number and nature of the
account)and of all direct debit or standing order or similar
authorities to any of the accounts and statements showing all
payments and receipts on each account as at the close of business
on a date not being more than 3 days prior to the date of this
agreement are set out in or attached to the Disclosure Letter.
Since
- 46 -
50
the date of each statement no payment out of any of the accounts
has been made, except for routine payments in the ordinary course
of trading, and the present balances are not substantially
different from those shown in the statement. Amounts represented
by cheques, warrants, mandates or other payment instructions
issued or given by the Group Companies which at the date of this
agreement remain outstanding or unpaid or unperformed do not
exceed in the aggregate (pound)10,000.
18.2 Full details of all overdraft, loan and other financial facilities
available to Group Companies are set out in the Disclosure Letter
and none of the Vendors nor any of the Group Companies has done
anything whereby the continuance of any of those facilities might
be affected or prejudiced.
18.3 The total amount borrowed by each Group Company from its bankers
does not exceed its financial facilities and the total amount
borrowed from whatsoever source does not exceed any limitation on
its borrowing contained in that Group Company's articles of
association.
18.4 Except for the borrowings referred to in paragraphs 18.1 and 18.2,
no Group Company has outstanding any loan capital nor has it
incurred or agreed to incur any borrowing which it has not repaid
or satisfied, or lent or agreed to lend any money which has not
been repaid to it nor does it own the benefit of any debt present
or future (other than debts due to it in respect of the sale of
trading stock in the normal course of trading) nor is it a party
to nor does it have any obligation under:-
18.4.1 any loan agreement, debenture, acceptance credit
facility, ▇▇▇▇ of exchange, promissory note, finance
lease, debt or inventory financing, discounting or
factoring arrangement or sale and lease back
arrangement; or
18.4.2 any other arrangement the purpose of which is to
raise money or provide finance or credit.
18.5 No event which is or, with the giving of notice, certificate,
declaration or demand,
- 47 -
51
would become, an event of default under, or any breach of any of
the terms of, any loan capital, borrowing, debenture or financial
facility of any Group Company or would entitle any third party to
call for repayment prior to normal maturity has occurred or been
alleged.
19. INSOLVENCY
19.1 No order has been made and no resolution has been passed for the
winding up of any Group Company or for a provisional liquidator to
be appointed in respect of any Group Company and no petition has
been presented and no meeting has been convened for the purpose of
winding up of any Group Company.
19.2 No administration order has been made and no petition for such an
order has been presented in respect of any Group Company.
19.3 No receiver (which expression shall include an administrative
receiver) has been appointed in respect of any Group Company or
all or any of its assets.
19.4 No Group Company is insolvent, or unable to pay its debts within
the meaning of section 123 Insolvency ▇▇▇ ▇▇▇▇, nor has it stopped
paying its debts as they fall due.
19.5 No voluntary arrangement has been proposed under section 1
Insolvency ▇▇▇ ▇▇▇▇ in respect of any Group Company.
19.6 No unsatisfied judgment, order or award is outstanding against any
Group Company.
19.7 No bankruptcy order has been made in respect of any of the Vendors
nor has any petition for such an order been presented.
19.8 No application has been made in respect of any of the Vendors for
an interim order under section 253 Insolvency ▇▇▇ ▇▇▇▇.
19.9 None of the Vendors are unable to pay or have no reasonable
prospect of being able
- 48 -
52
to pay any debt as those expressions are defined in section 268
Insolvency ▇▇▇ ▇▇▇▇.
19.10 No interim receiver has been appointed of the property of any of
the Vendors under section 286 Insolvency ▇▇▇ ▇▇▇▇.
19.11 No event analogous to any of the foregoing has occurred in or
outside England.
19.12 No guarantee, loan capital, borrowed money or interest is overdue
for payment, and no other material obligation or indebtedness is
outstanding which is substantially overdue for performance or
payment.
20. PRODUCT LIABILITY
20.1 No Group Company has manufactured, sold or provided any product or
service which does not in any material respect comply with all
applicable laws, regulations or standards or which is defective
(in any material respect) or dangerous or does not conform in all
material respects with any representation or warranty, express or
implied, given in respect of it.
20.2 In the 3 years ending on the Completion Date, no Group Company has
received a prohibition notice, a notice to warn or a suspension
notice under the Consumer Protection ▇▇▇ ▇▇▇▇, or equivalent
legislation in any other jurisdiction.
21. LITIGATION
No Group Company is engaged in any litigation or arbitration,
administrative or criminal proceedings, whether as plaintiff,
defendant or otherwise, and no litigation or arbitration,
administrative or criminal proceedings by or against any Group
Company is pending or threatened and there is no fact or
circumstance likely to give rise to any such litigation or
arbitration, administrative or criminal proceedings or to any
proceedings against any director or employee (past or present) of
any Group Company in respect of any act or default for which any
Group Company might be vicariously liable.
- 49 -
53
22. DELINQUENT AND WRONGFUL ACTS
22.1 No Group Company has committed nor is liable for any criminal,
illegal, unlawful or unauthorised act or breach of any obligation
or duty whether imposed by or pursuant to statute and no claim
that it has or is remains outstanding against that Group Company.
22.2 No Group Company has received notification that any investigation
or inquiry is being or has been conducted by any governmental or
other body in respect of the affairs of a Group Company and no
Vendor is aware of any circumstances which would give rise to such
investigation or inquiry.
23. OWNERSHIP AND CONDITION OF ASSETS
23.1 Each of the assets included in the Accounts or acquired by a Group
Company since the Accounts Date (other than current assets sold,
realised or applied in the normal course of trading) is owned both
legally and beneficially by that Group Company free from any third
party rights, and each of those assets capable of possession is in
the possession of a Group Company.
23.2 All plant and machinery (including fixed plant and machinery),
fixtures and fittings (including display stands), vehicles and
office equipment used by each Group Company in connection with its
business are in reasonable repair and condition (fair wear and
tear excepted) and capable of being properly used in connection
with the business of the Group Company and none is dangerous or in
need of immediate renewal or replacement.
23.3 The asset register kept by each Group Company which has been
produced to the Purchaser for its inspection sets out in all
material aspects a complete and accurate record of the plant and
machinery and vehicles owned or possessed by it.
- 50 -
54
23.4 No Group Company has agreed to acquire any asset on terms that the
property in it does not pass until full payment is made.
24. PROPERTY
24.1 The Business Properties are the only Properties used or occupied
by the Group Companies or in respect of which the Group Companies
have any estate, interest, right or liability. Each of the
Business Properties is used and occupied for the purpose of the
business of the Group.
24.2 In relation to each Business Property:-
24.2.1 the Business Property is held under the terms of the
lease (the "LEASE") briefly referred to in Schedule 6
(Property) and no collateral assurances, undertakings
or concessions have been made by any party to the
Lease;
24.2.2 the Lease is not a "new tenancy" as defined in the
Landlord and Tenant (Covenants) ▇▇▇ ▇▇▇▇;
24.2.3 there are no rent reviews outstanding or exercisable
by the lessor from a date prior to the Completion
Date;
24.2.4 the document of title to the Business Property
include any consents required for the grant of the
Lease and satisfactory evidence of the reversioner's
title, of the current annual rent having been agreed
or determined (where it is not the same as that
originally reserved by the Lease) and of all
reversioners' consents required under the Lease
having been obtained;
24.2.5 the security of tenure provisions of Part II of the
Landlord and ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ are not excluded nor is
the right to compensation for disturbance;
24.2.6 the rent and all other sums payable under the Lease
have been paid to
- 51 -
55
date, all covenants and conditions contained in the
Lease or in any licence, consent or other document
entered into supplemental to the Lease, whether on
the part of the landlord or the tenant have been
observed and performed to date, no breaches have been
waived or acquiesced in and the Lease is valid and in
full force;
24.2.7 the landlord is entitled to elect that supplies made
under the Lease should be standard rates for VAT
purposes and to increase the rent accordingly but has
not done so;
24.2.8 the Lease does not require the tenant to indemnify
the landlord against any cancellation of the
landlord's entitlement to credit for or deduction or
repayment of any VAT input tax or by costs, claims,
demands or expenses incurred or suffered by the
landlord as a result of the occupier of the Business
Property using the Business Property for ineligible
purposes to any significant extent for the purposes
of Schedule 10 to the Value ----------- Added Tax ▇▇▇
▇▇▇▇;
24.2.9 the receipts for rent any service charge due on the
date for payment next before the Completion Date have
been issued without qualification;
24.2.10 no alterations or improvements carried out by the
Property Owner or any other person are required by
the Lease to be reinstated or removed on or before
the end of the term.
25. INTELLECTUAL PROPERTY
25.1 Details of all registered rights (and applications for any such
right) in any Intellectual Property owned or used by the Group are
disclosed in the Disclosure Letter. The Group is the legal and
beneficial owner of each such right free from encumbrances.
25.2 So far as the Vendors are aware, no right required to be disclosed
pursuant to paragraph 25.1 above is subject to opposition,
challenge or attack by any third party
- 52 -
56
or competent authority and all fees or other steps required for
the maintenance or prosecution of such rights have been paid or
taken.
25.3 Details of all unregistered trade or service marks, business or
trade names and other material unregistered rights in any
Intellectual Property (including rights in computer software)
owned by the Group are disclosed in the Disclosure Letter.
25.4 Details of all licences, sub-licences or assignments granted to or
by the Group in respect of Intellectual Property are disclosed in
the Disclosure Letter. Where any licence or sub-licence is subject
to any limit as to time or other limitation, right of termination
or restriction the nature and extent of this is clearly set out.
25.5 Except as required to be disclosed pursuant to paragraph 25.4 no
Group Company has granted nor is it obliged to grant any licence,
sub-licence or assignment in respect of any Intellectual Property
owned or otherwise Required for the Business of the Group.
25.6 Neither the Company nor any other party thereto is in breach of
any licence in respect of any Intellectual Property and no licence
is subject to any right of termination as a result of the
transactions contemplated by this Agreement.
25.7 So far as the Vendors are aware, there is no, nor has there been
any, unauthorised use or infringement by any person of any
Intellectual Property or confidential Business Information owned
or used in the Business of the Group.
25.8 No Group Company nor any party with which any Group Company has a
contract infringes or makes unauthorised use, and has not
infringed or made unauthorised use, of any rights of any other
person's Intellectual Property or confidential Business
Information.
25.9 Details of all confidentiality agreements which restrict the free
use or disclosure of any Business Information Required for the
Business of the Group are disclosed in the Disclosure Letter.
- 53 -
57
25.10 Save subject to express obligations of confidentiality, any Group
Company has disclosed nor is it obliged to disclose any
confidential Business Information relating to the business of the
Group to any third party.
25.11 All rights in all material Intellectual Property and confidential
Business Information owned or otherwise Required for the Business
of the Group are vested in or validly granted to a Group Company
and are not subject to any limit as to time or any other
underlying ownership or control of that Group Company save as set
out in accordance with paragraph 25.4.
25.12 Details of all Information Technology Required for the Business of
the Group and owned by a Group Company and all Information
Technology Required by the Business and used by a Group Company
under licenses are disclosed in the Disclosure Letter, together
with the leasing and hire purchase agreement subject to which such
use is made.
25.13 The Information Technology is owned by or licensed to a Group
Company and is all the Information Technology that is required for
the Business of the Group and does not infringe any Intellectual
Property of any other rights of any third party. So far as the
Vendors are aware, neither is the Information Technology of the
Group infringed by any third party.
25.14 All agreements relating to Information Technology are disclosed in
the Disclosure Letter and the transactions contemplated hereunder
will not give rise to a right of termination of any such agreement
nor any payment in excess of the payment which would have been
payable by a Group Company but for such transactions.
25.15 The Information Technology required for the Business of the Group
is millennium compliant in that it will not be adversely affected
by any date change between 31 December 1999 and 1 January 2000 and
is able to calculate dates into the twenty-first century and
otherwise perform as intended. The Vendors have no reason to
believe (not having made specific enquiry) that any of the
customers or suppliers with which it does business will not be
millennium compliant.
- 54 -
58
25.16 None of the Group's records, systems, controls, data or
information are recorded, stored, maintained, operated or
otherwise wholly or partly dependent on or held by any means
(including any electronic, mechanical or photographic process
where computerised or not) which (including all means of access
thereto and therefrom) are not under the exclusive ownership and
direct control of a Group Company.
25.17 All software required for the Business of the Group, and which is
not the subject of a written licence from a third party was
either;
25.17.1 written or created by the employees of the Group in
the ordinary course of their duties; or
25.17.2 written for the Group by a third party invoiced and
paid for by a Group Company and all Intellectual
Property Rights in such software are vested in a
Group Company.
25.18 So far as the Vendors are aware, no Software Required for the
Business is or has been affected by any virus or other
extraneously induced malfunction or contamination in the two year
period prior to Completion and the Group operates reasonable
controls to avoid all such infections or contamination.
25.19 All computer systems, excluding Software, used in the business of
the Group are owned and operated by and are under the control of a
Group Company and are not wholly or partly dependent on any
facilities which are not under the ownership, operation or control
of a Group Company. Immediately following Completion, no action
will be necessary to enable such systems to continue to be used in
the Business of the Group to the same extent and in the same
manner as they have been used prior to the date hereof.
25.20 It is not necessary to incur any further expenditure on the
modification, development, expansion or (save for replacement in
the normal course of business) replacement of the Software
required for the Business of the Group in the context of its
current activities and their scope thereof. No Group Company has
received any report from
- 55 -
59
any consultant or third party recommending the incurring of such
expenditure.
25.21 Each Group Company has, if required to do so under the Data
Protection ▇▇▇ ▇▇▇▇, duly registered as a data user and has
complied with the Data Protection Principles as set out in that
Act.
26. COMPETITION AND TRADE REGULATION LAW
26.1 Each Group Company is not and has not been a party to and is not
and has not been concerned in any agreement or arrangement and is
not conducting and has not conducted itself (whether by omission
or otherwise) in a manner which:
26.1.1 has been or is required to be registered under the
RTPA; or
26.1.2 contravenes the provisions of the Resale prices ▇▇▇
▇▇▇▇ or any secondary legislation adopted under the
Fair Trading ▇▇▇ ▇▇▇▇.
26.2 Each Group Company is not, nor has been a party to and is not, nor
has been concerned in any agreement or arrangement in respect of
which any undertaking has been given by or any order made against
any Group Company pursuant to the RTPA or in respect of which an
undertaking has been given by or an order made against any Group
Company pursuant to the Resale Prices ▇▇▇ ▇▇▇▇.
26.3 No Group Company is in breach of any anti-trust or similar
legislation in any jurisdiction in which it carries on business or
where its activities may have effect.
27. INSURANCES
27.1 Each Group Company has maintained adequate insurance cover against
risks normally insured against by companies carrying on a similar
business, and in particular has maintained all insurance required
by statute and adequate product liability and environmental
liability insurance, and has insured its assets against those
risks to their full replacement or reinstatement value free from
any deduction or
- 56 -
60
excess.
27.2 Full details of the insurance policies in respect of which each
Group Company has an interest have been disclosed in writing to
the Purchaser, all such policies are in full force and effect and
are not void or voidable, no claims are outstanding and no event
has occurred which might give rise to any claim.
28. EMPLOYMENT
28.1 A list of the names, jobs and short details of the terms of
employment of every employee of each Group Company and the years
of continuous service for redundancy purposes of that employee are
set out in the Disclosure Letter.
28.2 Full particulars of the terms of all consultancy agreements with
any Group Company are contained in the Disclosure Letter.
28.3 Any contract of employment with any director or employee to which
any Group Company is a party can be terminated by the employing
company without damages or compensation (other than that payable
by statute) by giving at any time not more than three months'
notice.
28.4 No employee of any Group Company has given notice terminating his
contract of employment or is under notice of dismissal and no
amount due to or in respect of any such employee or former
employee of any Group Company is in arrears and unpaid other than
his salary for the month current at the date of this agreement.
28.5 Since the Accounts Date, no change has been made in the emoluments
or other terms of engagement of any employee of any Group Company,
and no such change, and no negotiation or request for such a
change, is due or expected within six months from the date of this
agreement.
28.6 There is no dispute between any Group Company and any trade union
or other organisation formed for a similar purpose existing,
pending or threatened and there
- 57 -
61
is no collective bargaining agreement or other arrangement
(whether binding or not) to which any Group is a party.
28.7 With the exception of PAYE and national insurance contributions in
respect of the month current at Completion, no Group Company has
outstanding any undischarged liability to pay to any governmental
or regulatory authority in any jurisdiction any contribution,
Taxation or other impost arising in connection with the employment
or engagement of personnel by a Group Company.
28.8 Each Group Company has at all relevant times complied with all its
obligations under statute and otherwise concerning the health and
safety at work of its employees, and there are no claims (or so
far as the Vendors are aware) threatened or pending by any
employee or third party in respect of any accident or injury which
are not fully covered by insurance.
28.9 Save as may be agreed between the parties there is no obligation
upon any Group Company to make any payment, employ, provide any
benefit or service or to enter into any agreement with the
Vendors' Representative or any person connected with him.
29. PENSIONS
29.1 No other schemes
Except in terms of and pursuant to the Pension Schemes no Group
Company has prior to the Completion Date been a party to or
participated in or contributed to, any scheme, arrangement or
agreement (whether or not legally enforceable and whether or not
established in the United Kingdom) for the provision of
retirement/death/disability benefit or otherwise to provide
"relevant benefits" within the meaning of ICTA 1988 s.612(1) and
no Group Company is under any obligation (whether or not legally
enforceable) to pay or provide retirement/death/disability benefit
or other relevant benefits as aforesaid in respect of any person
whether or not through an established trust scheme or arrangement
or otherwise.
- 58 -
62
29.2 Documentation provided
Full details and particulars of the Pension Schemes and, where
appropriate, copies of the following information and documentation
are included in or annexed to the Disclosure Letter;
29.2.1 true and complete documentation governing the Pension Schemes
including all trust deeds, rules, notices, announcements,
explanatory literature, booklets and trustees' resolutions and a
copy of the report of the latest actuarial valuation and audited
accounts of the Pension Scheme;
29.2.2 all such particulars of the employees, officers, former employees
and officers and, if applicable, their respective spouses and/or
dependants of each Group Company relevant to the membership of the
Pension Schemes and necessary to establish
retirement/death/disability benefit of those persons including,
without limitation, full details of any enhanced benefits provided
for senior officers or employees;
29.2.3 a statement of the current basis on which each Group Company and
the employees and officers of each Group Company contribute to the
Pension Schemes and the rate and amount of such contributions made
in the 3 years prior to the Completion Date;
29.2.4 true, complete and accurate details of the assets, investments and
policies (and reserves held under any such policies) comprising
the funds of the Pension Schemes;
29.2.5 a true and complete copy of the contracting-out certificate, if
applicable, and letter of Inland Revenue approval in respect of
the Scheme.
29.3 Tax status and compliance
29.3.1 The Life Scheme is an exempt approved scheme (within the meaning
of Chapter 1 of Part XIV of ICTA 1988). So far as the Vendors are
aware, there are no grounds upon which such exempt approved status
may be withdrawn or cease to apply to the such schemes.
- 59 -
63
29.3.2 The Pension Schemes conform with and have at all times been
administered and operated in accordance with the documentation
governing them and all applicable legal and administrative
requirements and without limitation to the foregoing all decisions
made by the trustees of the Pension Schemes have been made in
accordance with their respective powers and duties as trustees of
the Pension Schemes.
29.3.3 The Pension Schemes have in the five years prior to the Completion
Date offered membership to all part-time employees of the Group on
the same basis as all the other employees of the Group.
29.4 Insurances
All contracts of insurance relating to the Pension Schemes are
enforceable and there is no ground upon which the insurers might
avoid liability thereunder. All premiums payable under such
contracts of insurance have been paid.
29.5 All information correct
All information made available by the Sellers or their advisers to
the Purchaser or its advisers in connection with or relating to
the Pension Schemes is true, complete and accurate in all respects
and contains no material omission.
29.6 Participation.
29.6.1 Each Group Company:
29.6.1.1 has observed and performed those provisions of the
Pension Schemes which apply to it;
29.6.1.2 has duly paid all contributions which under the
Pension Schemes have become payable by it and there
are no arrears in payment. All fees, charges or
expenses referable to the Pension Schemes and payable
by it are not payable in arrear and all such fees,
charges or expenses have been
- 60 -
64
duly paid;
29.6.1.3 has not made any loan to the trustees of the Pension
Schemes.
29.6.2 No company or other entity participates in or has any time
participated in the Pension Schemes other than a Group Company.
29.7 Self investment
Other than as disclosed in the Disclosure Letter, none of the
assets of the Pension Schemes are invested (directly or
indirectly) in or loaned (directly or indirectly) to a Group
Company.
29.8 Transfer payments
29.8.1 No assets have been or are proposed to be received and accepted by
the Pension Schemes from any other pension scheme, plan or
arrangement (the "Transferring Scheme") in circumstances which the
benefits provided under the Transferring Scheme were
discriminatory or otherwise failed to comply with the requirements
of Article 199 of the Treaty of Rome.
29.8.2 No indemnity, covenant, undertaking or other assurance has been
given or is proposed to be given by or on behalf of the Pension
Schemes, any of the trustees of the Pension Schemes or a Group
Company to any person in respect of any matter including, without
limitation, compliance with Article 119 of the Treaty of Rome
whether in connection with the transfer of assets by the Pension
Schemes, or otherwise.
29.9 Sex discrimination
29.9.1 Each Group Company has complied fully with all equal pay, equal
entitlement, sex and other discrimination legislation including
Article 119 of the Treaty of Rome, all applicable EC directives
and all national statutes and regulations and statutory
- 61 -
65
instruments.
29.9.2 In respect of all present and former employees of each Group
Company or any person claiming benefit through or in respect of
such employees each Group Company and the Pension Schemes have
complied fully with the requirements of Article 119 of the Treaty
of Rome.
9.10 Funding
29.10.1 The assets, investments and policies comprising the funds of the
Pension Schemes are and will be at the Completion Date
beneficially held in the names of the trustees of the Pension
Schemes and legally and effectually comprised within the assets of
the Pension Schemes.
29.10.2 The data used for the purposes of the actuarial valuation referred
to at paragraph 29.2.1 was at the date at which such valuation was
undertaken true, complete and accurate in all respects.
29.11 No litigation
Neither the trustees of the Pension Schemes nor a Group Company is
in dispute with any member or former member (or any such member's
or former member's spouse or dependants) of the Pension Schemes,
or any other employee, officer or former employee or officer of a
Group Company, or engaged in any litigation or arbitration
proceedings in respect of the Pension Schemes or any benefit
provided thereunder, or otherwise, and no litigation or
arbitration proceedings are pending or threatened or expected by
or against a Group Company and/or the trustees of the Pension
Schemes. There have been no submissions or referrals made to the
Pensions Ombudsman, OPAS or the Occupational Pensions Regulatory
Authority in relation to the Pension Schemes and so far as the
Vendors are aware no such submission or referral is proposed or
threatened.
- 62 -
66
29.12 Effect of completion
No retirement/death/disability benefit will become payable or be
subject to any augmentation as a result of (a) Completion or (b)
any act committed by a Group Company on or after Completion which,
had Completion not occurred, would not have resulted in such
benefit becoming payable or being subject to augmentation.
29.13 Money Purchase benefits
The GPP Scheme provides only money purchase benefits within the
meaning of section 181(1) of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇.
30. THE ENVIRONMENT
30.1.1 All Environmental Permits have been obtained and are
in full force and effect and no Environmental Permits
will expire or require renewal within five years from
the date of this agreement. The Environmental Permits
do not materially limit or affect the process,
methods, capacity or operating hours of any Group
Company or any likely future increase in capacity or
operating hours.
30.1.2 No material operating expenditure is required in
order to comply with the Environmental Permits. No
capital expenditure is proposed in relation to
Environmental Matters or is likely to be required in
order to comply with, extend, renew or obtain any
Environmental Permit or comply with Environmental
Laws during the period ending five years from the
date of this agreement in relation to the carrying on
of the business of the Group substantially as it is
presently carried on.
30.1.3 No circumstances exist which could result in and the
sale of the Shares under this agreement will not
result in (a) the variation, limitation or revocation
of any Environmental Permit or (b) any Environmental
Permit not being extended, renewed or granted.
- 63 -
67
30.2.1 Each Group Company has complied at all times and in
all material respects with Environmental Law and, so
far as the Vendors are aware, there are and have been
no acts or omission of any Group Company in relation
to Environmental Matters which could give rise to
fines, penalties, losses, damages, costs, expenses or
liabilities.
30.2.2 So far as the Vendors are aware, no Environmental
Matters exist at or about any Business Property or
any other Property formerly owned, occupied or used
by any Group Company which could give rise to any
fines, penalties, losses, damages, costs, expenses or
liabilities. So far as the Vendor is aware, no such
matters are likely to arise.
30.2.3 There are no PCBs or TCBs at any Business Property.
There are no landfill sites, underground storage
tanks, leaking, unsafe, uncontained or unlined
storage treatment or disposal areas for Hazardous
Materials or Waste at or so far as the Vendors are
aware, within 250 metres of any Business Property.
30.2.4 So far as the Vendors are aware, no Business Property
has been polluted or contaminated and has been used
for any purpose which has or is reasonably likely to
have resulted in pollution or contamination. No
pollution or contamination from any Business Property
has migrated to or otherwise affected any other
Property.
30.2.5 No Group Company is nor has been involved in any
litigation, proceedings, claim or complaint by any
person under Environmental Laws, none is threatened
and, so far as the Vendors are aware, none is likely
to arise. At no time has any Group Company received
any notice or communication or information alleging
any liability in relation to Environmental Matters or
that any Works are required or stating or suggesting
that there is or might be any pollution or
contamination at the Business Property.
- 64 -
68
30.2.6 All audits and other assessments, reviews and reports
relating to Environmental Matters in the possession
or control of any Group Company relating to any
Business Property or any of the activities of any
Group Company have been disclosed.
30.2.7 No Group Company does has any liability in respect of
Environmental Matters arising out of or in connection
with any former business of the Group .
30.2.8 So far as the Vendors are aware, there has been no
transfer to any person or disposal of Hazardous
Materials or Waste by or on behalf of a Group Company
which could give rise to fines, penalties, losses,
damages, costs, expenses or liabilities in respect of
a Group Company.
30.2.9 So far as the Vendors are aware, no Group Company has
any liability to any person in respect of
Environmental Matters under any contract or other
agreement relating to the sale or other disposal or
grant of any interest in any shares, land or other
asset.
31. THE ACCOUNTS AND TAX
31.1 The Group does not have any liability in respect of Taxation
(whether actual or contingent) that is not properly provided for
in the Accounts and, in particular, has no outstanding liability
for:-
31.1.1 Taxation in any part of the world assessable or
payable by reference to profits, gains, income or
distribution earned, received or paid or arising or
deemed to arise on or at any time prior to the
Accounts Date or in respect of any period starting
before the Account Date; or
31.1.2 purchase, value added, sales or other similar tax in
any part of the world referrable to transactions
effected on or before the Accounts Date.
- 65 -
69
31.2 The amount of the provision for deferred Taxation in respect of
the Group contained in the Accounts was, at the Accounts Date,
adequate and in accordance with accountancy practices generally
accepted in the United Kingdom and commonly adopted by companies
carrying on businesses similar to those carried on by the Group
and, in particular, was in accordance with SSAP 15 (or any
replacement of it instituted by the Accounting Standards Board).
32. TAX EVENTS SINCE THE ACCOUNTS DATE
Since the Accounts Date:-
32.1 No Group Company has declared, made or paid any distribution
within the meaning of ICTA 1988;
32.2 no accounting period of any Group Company has ended;
32.3 there has been no disposal of any asset (including trading stock)
or supply of any service or business facility of any kind
(including a loan of money or the letting, hiring or licensing of
any property whether tangible or intangible) by any Group Company
in circumstances where the consideration actually received or
receivable for such disposal or supply was less than the
consideration which could be deemed to have been received for Tax
purposes;
32.4 no event has occurred which will give rise to a Tax Liability of
the Group calculated by reference to deemed (as oppose to actual)
income, profits or gains or which will result in any Group Company
becoming liable to pay or bear a Tax Liability or primarily
chargeable against or attributable to a person, firm or company
other than a Group Company;
32.5 no disposal has taken place or other event occurred which will or
may have the effect of crystallising a liability to Taxation which
should have been included in the provision for deferred Taxation
contained in the Accounts if such disposal or other event had been
planned or predicted at the Accounts Date;
- 66 -
70
32.6 No Group Company has made any payment or incurred any obligation
to make a payment which will not be deductible in computing
trading profits for the purposes of corporation tax, or be
deductible as a management expense for an investment company in an
aggregate amount exceeding(pound)5,000;
32.7 No Group Company has been a party to any transaction for which any
Tax clearance provided for by statue has been or could have been
obtained;
32.8 No Group Company has paid or become liable to pay any interest or
penalty in connection with any Tax, has otherwise paid any Tax
after its due date for payment or owes any Tax the due date for
payment of which has passed or will arise in the 30 days after the
date of this agreement.
33. TAX RETURNS, DISPUTES, RECORDS AND CLAIMS, ETC.
33.1 Each Group Company has within the applicable time limits made or
caused to be made all proper returns required to be made, and has
supplied or caused to be supplied all information required to be
supplied, to any revenue authority including (but without
limitation) the Inland Revenue and H M Customs and Excise.
33.2 There is no dispute or disagreement outstanding nor is any
contemplated at the date of this agreement with any revenue
authority regarding liability or potential liability to any Tax or
duty (including in each case penalties or interest) recoverable
from a Group Company or regarding the availability of any relief
from Tax or duty to a Group Company and, so far as the Vendors are
aware, there are no circumstances which make it likely that any
such dispute or disagreement will commence.
33.3 The Group has sufficient records relating to past events,
including any elections made, to calculate the Tax liability or
relief which would arise on any disposal or on the realisation of
any asset at the Group Accounts Date by a Group Company or
acquired by that Company since that date but before Completion.
33.4 Each Group Company has duly submitted all claims, disclaimers,
elections,
- 67 -
71
surrenders and application which have been assumed to have been
made for the purposes of the Accounts.
33.5 The amount of Tax chargeable on the Group during any accounting
period ending on or within six years before the Accounts Date has
not, to any material extent, depended on any concession, agreement
or other formal or informal arrangement with any revenue
authority, including (but without limitation) the Inland Revenue
or H M Customs and Excise.
33.6 No Group Company has received any notice from any revenue
authority, including the Inland Revenue, which required or will or
may require a Group Company to withhold Tax from any payment made
since the Accounts Date or which will or may be made after the
date of this agreement.
34. STAMP DUTY AND STAMP DUTY RESERVE TAX
34.1 All documents which are required to be stamped and which are in
the possession of the Group or by virtue of which a Group Company
has any right have been duly stamped.
34.2 Since the Accounts Date no Group Company has incurred any
liability to stamp duty reserve tax.
35. VALUE ADDED TAX
35.1 Each Group Company is registered for the purpose of VATA 1994 and
has in all material respects made, given, obtained and kept full,
complete, correct and up-to-date records, invoices and other
documents appropriate or required for those purposes and is not in
arrears with any payment or returns due and has not been required
by the Commissioners of H M Customs and Excise to give security
under paragraph 4 of Schedule 11 VATA 1994.
- 68 -
72
35.2 No Group Company has since the date 12 months before the Accounts
Date been in default in respect of any prescribed accounting
period as mentioned in ▇▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇.
35.3 Full details of any claim for bad debt relief under Section 36
VATA 1994 made by any Group Company have been disclosed in writing
to the Purchaser.
35.4 No Group Company has made an election to waive exemption in
relation to any land in accordance with paragraph 2 to Schedule 10
VATA 1994.
35.5 The Disclosure Letter contains full details of any assets of the
Group Companies to which the provisions of Part XV Value Added Tax
Regulations 1995 (the Capital Goods Scheme) apply and in
particular:
35.5.1 the identity (including, in the case of leasehold
property, the term of years, date of acquisition and
cost of the asset; and
35.5.2 the proportion of input tax for which credit has been
claimed (either provisionally or finally in a tax
year and stating which).
36. DUTIES, ETC.
All value added tax, import duty and other taxes or charges
payable upon the importation of goods and all excise duties
payable to H M Customs and Excise or any other customs or excise
authority payable in respect of any assets (including trading
stock) imported, owned or used by any Group Company have been paid
in full.
37. TAX ON DISPOSAL OF ASSETS
On a disposal of all its assets by a Group Company for:-
37.1 in the case of each asset owned by a Group Company at the Accounts
Date, a consideration equal to the value attributed to the asset
in preparing the Accounts; or
- 69 -
73
37.2 in the case of each asset acquired since the Accounts Date, a
consideration equal to the consideration given for the
acquisition,
then either:-
37.2.1 in respect of any asset falling within sub-paragraph
37.1 above, the liability to Tax (if any) which would
be incurred by the Group Company in respect of that
asset in computing the maximum liability to deferred
Taxation is as stated in the Accounts; or
37.2.2 in respect of any asset within sub-paragraph 37.2
above, no tax liability would be incurred by a Group
Company in respect of that asset.
38. REPLACEMENT OF BUSINESS ASSETS
Full particulars of each claim under Section 115 or 116 CGTA 1979
or under Sections 152 or 153 TCGA 1992 made prior to the date of
this agreement to which Section 117 CGTA 1979 or Section 154 TCGA
1992 applies and which affects any asset which was owned by a
Group Company on or after the Accounts Date (except where the held
over gain is treated as having accrued prior to the Accounts Date)
have been disclosed in writing to the Purchaser.
39. DISTRIBUTIONS
39.1 Since 6 April 1965, no Group Company has made any repayment of
share capital which Section 210(1) ICTA 1998 applies or issued any
share capital or other security as paid up otherwise than by the
receipt of new consideration within the meaning of Part VI ICTA
1988.
39.2 No part of the amount payable on redemption of any share capital
or security will be a distribution, as defined in ICTA 1988.
40. CLOSE COMPANY
- 70 -
74
40.1 No Group Company has requested its Inspector of Taxes to proceed
under paragraph 16 of Schedule 19 ICTA 1988 in relation to every
accounting period ended within six years before the date of this
agreement, and to which that paragraph applies, no apportionment
in respect of any such period can now be made and no such
apportionment will become possible otherwise than in consequence
of the cessation of any trade or business after the date of this
agreement.
40.2 No Group Company has outstanding any loan to which the provisions
of section 419 ICTA 1988 would apply (loans to participators
etc.).
40.3 No Group Company is a close investment-holding company as defined
in section 13A ICTA 1988.
41. NON-DEDUCTIBLE REVENUE OUTGOINGS
No Group Company is under any obligation to make any future
payment which will be prevented (whether on the grounds of being a
distribution, or for any other reason) from being deductible for
corporation tax purposes, whether as a deduction in computing the
profits of a trade or as an expense of management or as a charge
on income, by reason of any statutory provision, other than
section 74(1)(f) ICTA 1988 (capital).
42. DEDUCTIONS AND WITHHOLDINGS
Each Group Company has made all deductions in respect, or on
account, of any Tax from any payments made by it which it is
obliged or entitled to make and has accounted in full to the
appropriate authority for all amounts so deducted.
43. INTER-GROUP TRANSACTIONS
No Group Company has within the last six years acquired any asset
from any other company which was, at the time of the acquisition,
a member of the same group of companies as that Group Company for
the purposes of any Tax.
- 71 -
75
44. RESIDENCE
The country which is given in Schedule 5 (Basic Information about
the Group) as the Tax residence of each Group Company is the only
country whose tax authorities seek to charge Tax on the worldwide
profits or gains of the Group and the Group has never paid Tax on
income profits or gains to any Tax authority in any other country
except that mentioned in Schedule 5 (Basic Information about the
Group).
45. NON-ARM'S LENGTH TRANSACTIONS
No Group Company is a party to any transaction or arrangement
under which it may be required to pay for any asset or any
services or facilities of any kind an amount which is in excess of
the market value of that asset or services or facilities or will
receive any payment for an asset or any services or facilities of
any kind that it has supplied or provided or is liable to supply
or provide which is less than the market value of that asset or
services or facilities.
46. The Subsidiary
The Subsidiary is registered with each of Companies House and the Inland Revenue
as dormant.
- 72 -
76
SCHEDULE 3
VENDORS' LIMITATIONS ON LIABILITY
1. WARRANTIES
Notwithstanding anything in this agreement to the contrary, the
provisions of this schedule shall operate to limit the liability
of the Vendors only in respect of any claim by the Purchaser or
the Company for (i) any breach of or inaccuracy in the Warranties
(ii) where specified, under the Tax Covenant.
2. LIMITATIONS ON LIABILITY UNDER WARRANTIES
2.1 LIMITATION ON QUANTUM
2.1.1 The Vendors shall not have any liability to the
Purchaser (whether for damages or other amounts) in
respect of any claim or claims under any of the
Warranties or under the Tax Covenant unless and
until:-
2.1.1.1 the aggregate amount of all such
claims under the Warranties and/or
the Tax Covenant exceed
(pound)25,000 but, once the amount
of all such claims has exceeded such
sum, the Vendors' liability shall
arise in respect of the full amount
of all such claims; and
2.1.1.2 the amount of any individual claim
under the Warranties and/or the Tax
Covenant or any claim arising out of
the same subject matter shall exceed
(pound)5,000 but, once the amount of
that claim or aggregate amount of
claims arising out of the same
subject matter has exceeded such
sum, the Vendors' liability shall
arise in respect of the full amount
of that claim or series of claims
and not merely in respect of the
excess over such sum.
2.1.2 The total aggregate liability of the Vendors under or pursuant
to this agreement and the Tax Covenant shall not in any event
exceed (pound)4,000,000
- 73 -
77
2.1.3 The liability of each of the Vendor in respect of any claims
under any of the Warranties or under the Tax Covenant shall be
limited to the following percentages:-
▇▇▇▇▇▇ ▇▇▇▇▇▇ - 95%
▇▇▇▇ ▇▇▇▇▇▇▇ - 2.5%
▇▇▇▇▇ ▇▇▇▇▇ - 2.5%
2.2 TIME LIMITS FOR BRINGING CLAIM
No claim shall be brought against any of the Vendors in respect of any
breach of the Warranties or the Tax Covenant unless the Purchaser shall
have given to the Vendors written notice of such claim specifying the
matter which gives rise to the breach or claim, the nature of the
breach or claim and a reasonable estimate of the amount claimed in
respect thereof:-
2.2.1 on or before the seventh anniversary of Completion in respect
of claims relating to UK Taxation or on or before the end of
the period of limitation applicable to all Taxation (which
applies generally and other than in cases of fraud or
negligent conduct), which is deemed for this purpose to begin
at the date of Completion, in respect of claims so far as they
relate to Taxation in any jurisdiction other than the UK;
2.2.2 on or before the seventh anniversary of Completion in respect
of claims relating to Environmental Matters; or
2.2.3 on or before the second anniversary of Completion in respect
of any other matters,
PROVIDED THAT the liability of the Vendors under this sub-paragraph
shall absolutely determine (if such claim has not been previously
satisfied, settled or withdrawn), if legal proceedings in respect of
such claim shall not have been commenced against the Vendors within
nine months of the service of such notice and PROVIDED FURTHER THAT in
- 74 -
78
the case of a claim based upon a liability which is contingent or
otherwise not capable of being quantified, the nine months' period
referred to above shall commence on the date upon which the contingent
liability becomes an actual liability or the liability is capable of
being quantified.
2.3 CONDUCT OF LITIGATION
2.3.1 Upon the Purchaser or the Company becoming aware of any claim,
action or demand against it or the Company or matter likely to
give rise to any of these in respect of the Warranties (other
than the Tax Warranties to which clause 6 of the Tax Covenants
shall apply), the Purchaser shall:-
2.3.1.1 notify the Vendors by written notice as soon as
reasonably practicable after it appears to the
Purchaser that any claim of a third party
received by or coming to the notice of the
Purchaser may result in a claim against the
Vendors under the Warranties;
2.3.1.2 subject to the Vendors indemnifying the Purchaser
and/or the Company to their reasonable
satisfaction against any liability, costs,
damages or expenses which may be incurred thereby
and giving an undertaking as to confidentiality
reasonably acceptable to the Purchaser, take such
action and give such information and access to
personnel, premises, chattels, documents and
records of the Purchaser and/or the Company and
their professional advisers as the Vendors'
Representative may reasonably request and the
Vendors' Representative shall be entitled to
require the Purchaser or the Company to take such
action and give such information or assistance in
order to avoid, dispute, resist, mitigate,
settle, compromise, defend or appeal any claim in
respect thereof or adjudication with respect
thereto;
2.3.1.3 make no admission of liability, agreement,
settlement or compromise with any third party in
relation to any such claim or adjudication
without the prior written consent of the Vendors'
Representative such consent
- 75 -
79
not to be unreasonably withheld or delayed; and
2.3.1.4 take all reasonable action to mitigate any loss
suffered by it or the Company in respect of which
a claim could be made under the Warranties.
2.3.2 In relation to claims to which sub-clause 2.3.1 applies,
notwithstanding any other provision of sub-clause 2.3.1, the
Purchaser shall not be required to take, permit or omit, or
procure the taking, permitting or omission of, any step or
action in relation to any third party claim where the
Purchaser reasonably believes that the taking, permitting or
omission of the relevant step or action would have a material
adverse effect on any trading relationship or goodwill of the
Company and the failure to take, permit or omit such step or
action is reasonable in the circumstances.
2.4 NO LIABILITY IF LOSS IS OTHERWISE COMPENSATED FOR
2.4.1 PURCHASER CAN ONLY CLAIM ONCE
2.4.1.1 The Purchaser and those deriving title from the
Purchaser on or after Completion shall not be
entitled to recover damages or otherwise obtain
reimbursement or restitution more than once
between them in respect of any event giving rise
to a breach of the Warranties or to recover more
than once in respect of the same claim under this
agreement or the Tax Covenant.
2.4.1.2 The Vendors shall not be liable for breach of any
of the Warranties to the extent that the subject
of the claim has been or is made good or is
otherwise compensated for without cost to the
Purchaser or the Company.
2.4.2 INSURANCES
If, in respect of any matter which would give rise to a claim
under the Warranties,
- 76 -
80
the Company is entitled to claim under any policy of
insurance, then no such matter shall be the subject of a claim
under the Warranties unless and until the Company shall have
made a claim against its insurers and any such insurance claim
shall then reduce (by the amount recovered) or extinguish any
such claims and any liability of the Vendors.
2.4.3 RECOVERY FROM THIRD PARTIES
Where the Purchaser and/or the Company are at any time
entitled to recover by way of payment, discount, credit, set
off, counterclaim or otherwise from some other person
(including any taxation or fiscal authority or body) any sum
in respect of any matter giving rise to a claim under the
Warranties, the Purchaser shall, and shall procure that the
Company shall, take such reasonable steps (at the cost of the
Vendors) to enforce such recovery prior to taking action
against the Vendors (other than to notify the Vendors of the
claim against the Vendors) and, in the event that the
Purchaser of the Company shall recover any amount from such
other person, the amount of the claim against the Vendors
shall be reduced by the amount recovered, less all reasonable
costs, charges and expenses incurred by the Purchaser or
the Company recovering that sum from such other person and
less any liability to Taxation that is or may be incurred by
the Purchaser or the relevant member of the Purchaser's Group
in respect of such sum PROVIDED THAT the Purchaser shall not
be required to take any step to enforce such recovery where
the Purchaser reasonably believes that the taking of the
relevant step would have a material adverse effect on any
trading relationship or goodwill of the Company and the
failure to take such step is reasonable in the circumstances.
2.5 OTHER LIMITATIONS
No claim shall be brought against the Vendors under this agreement:-
2.5.1 to the extent that a specific allowance, provision or reserve
is made in the Accounts in respect of the matter or thing
giving rise to the claim;
- 77 -
81
2.5.2 in respect of any matter to the extent that it occurs as a
result of or is attributable to a change in the accounting
policies or practices of the Purchaser or the Company
introduced or having effect after Completion other than a
change which is required in order to comply with Statements of
Standard Accounting Practice, Financial Reporting Standards
and Pronouncements of the Urgent Issues Task Force or
generally accepted accounting principles in the United
Kingdom, in each case in force or effect at Completion;
2.5.3 in respect of any matter to the extent that such claim arises
or is increased as a result of any legislation not in force at
the date hereof which takes effect retrospectively provided
that the provisions of this paragraph 2.5.3 shall not apply in
so far as any claim arises or is increased by the
Environmental ▇▇▇ ▇▇▇▇;
2.5.4 to the extent that the amount of the claim is repaid to the
Purchaser out of the Escrow Account;
2.5.5 to the extent that any Taxation arises out of the proper
course of the business of the Company from and after the
Accounts Date.
2.6 PAYMENT OF CLAIM TO BE REDUCTION IN PURCHASE PRICE
Any payment made by the Vendors in respect of any claim under the
Warranties shall be deemed to be a reduction in the total consideration
payable to the Vendors under clause 3 (Consideration) of this
agreement.
- 78 -
82
SCHEDULE 4
OWNERSHIP OF THE SHARES
Name and Address No. of Shares beneficially
of Shareholder Owned
▇▇▇▇▇▇ ▇▇▇▇▇▇ 46,720
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ 1,640
Croesco
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ 1,640
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
50,000
- 79 -
83
SCHEDULE 5
BASIC INFORMATION ABOUT THE GROUP
PART 1 - THE COMPANY
1. Registered number : 2055748
2. Date of incorporation : 17 September 1986
3. Place of incorporation : England and Wales
4. Address of registered office : ▇▇/▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇
5. Class of Company : Public Limited Company
6. Authorised share capital : (pound)50,000
7. Issued share capital : (pound)50,000
8. Loan capital : None
9. Directors:
Full Name Usual residential address Nationality
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ Croesco British
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
- 80 -
84
▇▇▇▇ ▇▇▇▇▇▇ 15 Foxleigh British
▇▇▇▇▇▇ D'Aeth ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇
10. Secretary:
Full Name Usual residential address Nationality
▇▇▇▇ ▇▇▇▇▇▇ 15 Foxleigh British
▇▇▇▇▇▇ D'Eath ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇
11. Accounting reference date : 31 January
12. Auditors : ▇▇▇▇▇▇▇ & Son
13. Tax residence : United Kingdom
14. Business activities : Book Wholesalers and
Retailers
- 81 -
85
Part 2 - The Subsidiary
1. Registered number : 1734258
2. Date of incorporation : 24 June 1983
3. Place of incorporation : England and Wales
4. Address of registered office : ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇
5. Class of Company : Limited
6. Authorised share capital : (pound)16,000
7. Issued share capital : (pound)16,000
8. Loan capital : None
9. Directors:
Full Name Usual residential address Nationality
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
- 82 -
86
▇▇▇▇ ▇▇▇▇▇▇ 15 Foxleigh British
▇▇▇▇▇▇ D'Eath ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇
10. Secretary:
Full Name Usual residential address Nationality
▇▇▇▇ ▇▇▇▇▇▇ 15 Foxleigh British
▇▇▇▇▇▇ D'Eath ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇ ▇▇▇
11. Accounting reference date : 31 January
12. Auditors : None
13. Tax residence : United Kingdom
14. Business activities : Dormant
- 83 -
87
SCHEDULE 6
PROPERTY
PART 1
TENANT DATE OF LEASE PARTIES SHORT DESCRIPTION CURRENT USE
------ ------------- ------- ----------------- -----------
Aura Books plc 1 September 1994 Bilton (Greenford) ▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Limited and Aura Drive, Greenford,
Books plc Middlesex
Aura Books plc 15 July ▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇▇) ▇▇/▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and distribution
Limited and Aura Drive, Greenford,
Books plc Middlesex
Aura Books plc 21 January 1998 Continuforms ▇▇▇▇ ▇, ▇▇▇▇▇▇▇ Storage
Holdings plc and Drive, Greenford,
Aura Books plc Middlesex
- 84 -
88
PART 2
LEASE PARTIES TO LEASE
ADDRESS DATE LEASE TERM
------- ----- ---------- -----
▇▇▇▇ ▇▇ 26.09.96 (1) RAM Euro-Centres 10 years from
The Yorkshire (Doncaster) Limited 24.06.1996
Outlet Doncaster (2) the Vendor
Units 24 & 25 07.08.97 (1) Rockeagle Festival 5 years from
Festival Shopping Shopping Limited 24.06.1997
Victoria Village (2) the Vendor
Ebbw Vale Blaenau
Gwent
▇▇▇▇ ▇▇ Factory Shop 04.12.97 (1) FOC Company 5 years from
Scheme Clarks (No 2) Limited 04.12.1997
Village Street (2) the Vendor
Mezzanine at ▇▇▇▇ ▇▇ 04.12.97 (1) FOC Company 04.12.1997
Factory Shop Scheme (No. 2) Limited to 01.06.1998
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (2) the Vendor
Unit 106 Great undated (1) BAA-▇▇▇▇▇▇/▇▇▇▇ 10 years from
Western Designer (Swindon) Limited 17.02.1997
Outlet Village (2) the Vendor
Churchward Swindon
- 85 -
89
IN WITNESS whereof this Agreement has been duly executed
SIGNED by )
▇▇▇▇▇▇ ▇▇▇▇▇▇ ) A ▇▇▇▇▇▇
in the presence of:- )
▇ ▇ ▇▇▇▇▇
SIGNED by )
▇▇▇▇ ▇▇▇▇▇▇▇ ) A ▇▇▇▇▇▇▇
in the presence of:- )
▇ ▇ ▇▇▇▇▇
SIGNED by )
▇▇▇▇▇ ▇▇▇▇▇ ) ▇▇▇▇▇ ▇▇▇▇▇
in the presence of:- )
▇ ▇ ▇▇▇▇▇
SIGNED by )
for and on behalf of )
ADVANCED MARKETING ) C TILLINGHURST
(EUROPE) LIMITED in the )
presence of:- )
T PICKUP
- 86 -