Exhibit 10.38
SHARE PURCHASE AGREEMENT
DATED , 2000
BETWEEN:
1. NATWEST EQUITY PARTNERS LIMITED whose registered office is at ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (registered in England and Wales No. 3220373)
("NWEP"); and
2. THE EUROPEAN PRIVATE EQUITY FUND, THE EUROPEAN PRIVATE EQUITY FUND "B",
THE EUROPEAN PRIVATE EQUITY FUND "C", THE EUROPEAN PRIVATE EQUITY FUND
"D", NATWEST EQUITY PARTNERS NO. 5 FUND, NATWEST EQUITY PARTNERS NO. 4
FUND AND THE NATWEST EQUITY PARTNERS PARTNERSHIP, each of which is an
English limited partnership having its principal place of business at 7th
and 8th floors, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ and NATWEST EQUITY
PARTNERS CO-INVESTMENT PLAN LIMITED, a company incorporated in Guernsey
whose registered office is at ▇▇-▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇ Port,
Guernsey (the "Beneficial Owners"); and
3. NATWEST VENTURES NOMINEES LIMITED whose registered office is ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ (registered in England and Wales No. 03139614
("Natwest Nominees"); and
4. ▇▇. ▇. ▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇, ▇▇. ▇. ▇▇▇▇▇▇▇▇▇ of ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇-▇▇-▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇ and ▇▇. ▇. ▇▇▇▇▇▇▇ of Braeburn
House, 2 Nine Squares, Eckington, Nr. Pershore, Worcestershire, WR10 3PZ
(the "Managers"); and
5. BANK OF SCOTLAND of ▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇
("BOS"); and
6. All those holders of B ordinary shares in the capital of the Company whose
names are set out in Schedule 5 (the "B Shareholders"); and
7. BRYONIE GLANFIELD of ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇-▇▇-▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ of ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ of ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇ ▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ of ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ of ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ of The
Old Market House, Station Road, Beckford, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ of The Old Market House, Station Road, Beckford,
Tewkesbury, Gloucestershire GL20 7AN, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of The ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇ and
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇.
Pershore, Worcestershire WR10 3PZ (the "Managers' Family Parties"); and
2
8. DDi CORP. of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (incorporated in
California but intended to be re-incorporated in Delaware, USA) (the
"Purchaser").
WHEREAS:
NWEP has agreed to procure the sale of, the Sellers (as defined in this
Agreement) have agreed to sell and the Purchaser has agreed to purchase and pay
for the Shares (as defined in this Agreement) on the terms and subject to the
conditions of this Agreement.
WHEREBY IT IS AGREED as follows:
1. INTERPRETATION
(A) Certain words and expressions used in this Agreement are defined in
Schedule 1.
(B) The Schedules form part of this Agreement and shall have the same force
and effect as if set out in the body of this Agreement and any reference
to this Agreement shall include the Schedules.
(C) The parties acknowledge that DDi Corp., incorporated in California USA,
intends to merge with and into DDi Corp., incorporated in Delaware USA,
immediately prior to the IPO and prior to Completion and the issue of the
Consideration Shares and that from and after the effectiveness of such
merger the term "Purchaser" shall refer to DDi Corp., incorporated in
Delaware USA, the surviving corporation of such merger.
2. SALE AND PURCHASE
(A) On the terms and subject to the conditions set out in this Agreement, NWEP
shall procure the sale of the Shares, each of the Sellers shall sell or
procure the sale of the Shares set forth opposite its name in Schedule 5
and the Purchaser shall purchase the Shares as at and with effect from
Completion together with all rights attached or accruing to them at
Completion.
(B) Each of the Managers has the right to transfer the legal and beneficial
title to the Shares set forth opposite his name in Schedule 5.
(C) NatWest Nominees has the right to transfer the legal title, and the
Beneficial Owners have the right to transfer the beneficial title to the
Shares set forth opposite their names in Schedule 5.
(D) BOS will on Completion have the right to transfer the legal and beneficial
title to the Shares set forth opposite its name in Schedule 5.
(E) Each B Shareholder has the right to transfer the legal and beneficial
title to the Shares set forth opposite its name in Schedule 5.
3
(F) Each of the Managers' Family Parties has the right to transfer the legal
and beneficial title to the Shares set forth opposite his or her name in
Schedule 5.
(G) The Shares shall be sold with full title guarantee and free from all
liens, charges and encumbrances.
(H) 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 Completion Date.
(I) The Sellers waive all rights of pre-emption over any of the Shares
conferred upon them by the articles of association of the Company or in
any other way.
3. CONDITIONS
(A) The obligations of the Purchaser under this Agreement are conditional in
all respects upon:
(i) the Purchaser's registration statement (No. 333-95623) filed with
the US Securities and Exchange Commission having been declared
effective, the IPO Price having exceeded USD 10 per share, the
receipt of the net proceeds of the IPO by the Purchaser and the
listing of the shares of the Purchaser on the NASDAQ National
Market;
(ii) the Investor Parties having each complied fully with its obligations
in Clause 9 and the Investor Parties having delivered to the
Purchaser a certificate in form and substance satisfactory to the
Purchaser, who shall act reasonably, and duly executed by the
Investor Parties confirming that, if such be the case, the Investor
Parties have each complied fully with its obligations in Clause 9;
(iii) no order or judgement of any court or governmental, statutory or
regulatory body having been issued or made prior to Completion,
which has the effect of making unlawful or otherwise prohibiting the
purchase of the Company by the Purchaser;
(iv) the receipt of a letter in the Agreed Form from BOS indicating that
it does not intend to exercise any rights that may be triggered by
the transactions contemplated by this Agreement pursuant to a term
loan agreement and a working capital letter and documentation
relating thereto each dated 27 May, 1999(the "BOS Facilities")
notwithstanding Completion and confirming that the BOS Facilities
will remain in full force and effect notwithstanding Completion, in
all respects on their existing terms;
4
(v) the Warranties being accurate and not misleading as at the date of
this Agreement by reference to the fact and circumstances in
existence at the date of this Agreement;
(vi) the Warranties continuing to be accurate in all material respects
and not misleading in any material way up to and including the
Completion Date and the Warranties being materially accurate and not
misleading in any material way when repeated immediately before
Completion by reference to the facts and circumstances subsisting at
that time and the Obligors (on behalf of themselves) and the Natwest
Parties and BOS (on behalf of themselves solely in relation to the
Warranties in paragraphs 1 and 2 of Schedule 3) having delivered a
certificate in form and substance satisfactory to the Purchaser, who
shall act reasonably, and duly executed by the Obligors and the
NatWest Parties and BOS confirming that, if such be the case, the
applicable Warranties were accurate and not misleading as at the
date of this Agreement and that they have continued to be and are
materially accurate and not misleading in any material way;
(vii) no change which in the Purchaser's reasonable opinion affects
adversely the business or assets or condition or the financial or
trading position or prospects of any member of the Group in any
material way having occurred before the time of Completion;
(viii) the Investor Parties having delivered a certificate in a form and
substance satisfactory to the Purchaser, who shall act reasonably,
confirming that the Company and/or any other relevant member of the
Group has served all notices and obtained all consents necessitated
by the transactions contemplated by this Agreement in relation to
the Assumed Liabilities;
(ix) the receipt by the Purchaser of a certificate from the Investor
Parties confirming that they have complied with all of their
obligations under the Investment Agreement and have no claims
against the Company (in respect of the Investor Parties other than
the Managers)or the Managers under the Investment Agreement and, on
payment of the Investor Loans Amount and the April Interest, no
amounts will remain outstanding from any member of the Group to the
Investor Parties;
(x) the receipt by the Purchaser of confirmation from the Company that
Mr P ▇▇▇▇▇▇▇ has paid up all amounts currently outstanding on his
Shares and confirmation from ▇▇▇▇▇▇▇ Limited that it has released
its equitable charge over the B Shares of ▇▇▇▇ ▇▇▇▇▇▇▇▇;
(xi) the Purchaser having received all necessary approvals in respect of
its existing financing facilities in relation to the transactions
contemplated by this Agreement.
5
(B) Each of the Investor Parties, BOS and the Purchaser shall (to the extent
that it is within their ability to do so) use their respective reasonable
endeavours to fulfil or procure the fulfilment of the conditions set out
in sub-clause (A) above and will notify the other parties immediately upon
the satisfaction of such conditions.
(C) The Purchaser may waive in whole or in part all or any of the conditions
set out in sub-clause (A). For the avoidance of doubt, the Investor
Parties and BOS expressly acknowledge that the Purchaser has sole and
absolute discretion to decide:
(i) whether or not to consummate, postpone or abandon the IPO; and
(ii) the IPO Price,
and the Purchaser shall have no liability to any Investor Party or BOS
arising from, relating to, or in connection with any such decision (save
as stated in sub-clause 3(G)).
(D) If the conditions set out in sub-clause (A) are not fulfilled
(notwithstanding the required reasonable endeavours in sub-clause (B)) or
waived by the Purchaser on or before the Termination Date, then the
Purchaser shall be entitled to treat this Agreement as terminated by
written notice to the Investor Parties and BOS.
(E) If an event or series of events occurs or first becomes known to the
Company after the date hereof but prior to Completion which is reasonably
likely to result in the Adjusted Enterprise Value being less than GBP
47,800,000 then NWEP, on behalf of the Investor Parties and BOS, may give
written notice to the Purchaser (such notice to be sent by fax and by same
day courier) giving reasons for such belief and delivered to the Purchaser
no later than three Business Days before Completion. Unless the Purchaser
responds to such notice within two Business Days of receipt, indicating
that it wishes to proceed to Completion, this Agreement shall terminate
automatically three Business Days after service of such notice by NWEP. If
the Purchaser elects to proceed to Completion in accordance with this
sub-clause, the Adjustment Amount shall be capped at GBP 5,000,000. NWEP
(on behalf of the Investor Parties and BOS), undertakes to notify the
Purchaser immediately on its becoming aware of any circumstance which
would cause it to serve a notice pursuant to this sub-clause (E).
(F) If the Agreement is terminated then, subject to sub-clauses (G) and (H),
the obligations of each party under this Agreement shall automatically
terminate PROVIDED that the rights and liabilities of the parties which
have accrued prior to termination shall subsist.
(G) If the Agreement is terminated due to the non-fulfilment of the condition
in sub-clause (A)(i) above, the Purchaser will pay to the Sellers an
amount equal to 50% of the reasonable out of pocket expenses incurred by
the Sellers in relation to this Agreement up to a maximum amount of GBP
100,000.
6
(H) The Investor Parties and BOS acknowledge that the restrictions contained
in Clauses 18 and 19 shall continue to apply after the termination of the
sale and purchase of the Shares under this Agreement without limit in
time.
4. CONSIDERATION
(A) The Provisional Consideration for the sale of the Shares shall be GBP
22,709,000 which figure has been calculated as set out in Schedule 8.
(B) Each of the Sellers shall be entitled to the percentage of the Provisional
Consideration set forth opposite their names in column (5) of Part A of
Schedule 5 which is equivalent to the amount of the Provisional
Consideration set forth opposite their names in column (6) of Part A of
Schedule 5.
(C) The Provisional Consideration due to each of the Sellers after deduction
of their proportion of the Sellers' Advisers' Fees is set out column (8)
of Part A of Schedule 5 (the "Completion Payments")
(D) If the IPO Price is in excess of USD 18.50, each of the Investor Parties
will be entitled to receive additional Consideration Shares in accordance
with Part B of Schedule 11. If the Investor Parties become entitled to
such further shares, BOS shall be entitled to receive its pro rated
equivalent in cash as set out in Part B of Schedule 11.
(E) The Completion Payments shall be satisfied as follows:
(i) that portion of the Completion Payments set forth opposite each
Seller's name in column (9) of Part A of Schedule 5 shall be
satisfied on the Completion Date in cash; and
(ii) that portion of the Completion Payments set forth opposite each
Seller's name in column (10) of Part A of Schedule 5 shall be
satisfied on the Completion Date by the allotment and issue to those
parties of his or its allocable portion of the Consideration Shares.
(F) The Provisional Consideration shall be adjusted in accordance with the
provisions of Schedule 10.
5. COMPLETION
(A) Completion of the sale and purchase of the Shares shall take place on the
Completion Date at the offices of the Purchaser's Solicitors.
(B) At Completion each of the Investor Parties, BOS and the Purchaser shall do
those things respectively listed in respect of them in Schedule 2.
7
(C) 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.
(D) The Provisional Consideration shall be satisfied by or on behalf of the
Purchaser at Completion as referred to in Clause 4 and Schedule 2.
(E) Receipt of the Provisional Consideration in accordance with sub-clause (D)
shall constitute a good discharge of the Purchaser in respect of the
payment of the Provisional Consideration, but not, for the avoidance of
doubt, in respect of the parties' respective obligations under Schedule
10. In relation to the Sellers' Advisers' Fees and any Completion Payments
to be made in cash, for the avoidance of doubt, the Purchaser shall not be
concerned to how such moneys transferred in accordance with Schedule 2 are
applied.
(F) Immediately upon Completion the Purchaser shall procure the repayment by
the Company of the Investor Loans Amount and the April Interest provided
that the Investor Parties shall have demanded such repayment.
(G) Immediately upon Completion each of the Sellers other than BOS shall
execute a Lock-up Agreement in the form or substantially in the form of
Attachment V.
6. INVESTOR PARTIES' AND BOS's WARRANTIES, INDEMNITIES AND UNDERTAKINGS AND
PURCHASER'S REMEDIES
(A) Subject as provided in this Agreement, and in particular, sub-clause (B)
of this Clause 6, each of the Investor Parties and BOS severally warrants
to the Purchaser as at the date of this Agreement in the terms set out in
Schedule 3.
(B) Notwithstanding any other provision of this Agreement, the only Warranties
given by the NatWest Parties, BOS and the Managers' Family Parties are the
Warranties contained in paragraphs 1 and 2 of Schedule 3 in respect of
themselves and their Shares and each of their obligations under this
Clause 6 shall be read in that context.
(C) Each of the Investor Parties and BOS shall severally warrant to the
Purchaser immediately before Completion that the Warranties are true and
accurate in all material respects and not misleading in any material
respect and such repetition of the Warranties shall be by reference to the
facts and circumstances then subsisting save that a reference in the
Warranties to any fact, matter or thing existing, occurring or having
occurred at or before the date of this Agreement shall be construed as a
reference to that fact, matter or thing existing, occurring or having
occurred (as the case may be) at or before Completion (as the case may be)
and that any reference in the Warranties, whether express or implied, to
the date of this Agreement is substituted by a reference to the Completion
Date.
(D) The Investor Parties and BOS shall procure in so far as they are able that
no act shall be performed or omission allowed, whether by themselves or by
any member of
8
the Group which would result in any of the Warranties being breached or
misleading at any time up to and including the time of Completion.
(E) In the absence of fraud or dishonesty on the part of any of the Investor
Parties or BOS or their respective officers or employees, the liability of
each of the Investor Parties or BOS under or in relation to the Warranties
shall be limited as set out in Schedule 4.
(F) Each of the Investor Parties and BOS accepts that the Purchaser is
entering into this Agreement in reliance upon the Warranties.
(G) Each of the Investor Parties and BOS undertakes (if any claim is made
against him or it in connection with the Warranties or the sale of the
Shares to the Purchaser) not to make any claim against any member of the
Group or any director or employee of any member of the Group on whom he or
it may have relied before agreeing to any terms of this Agreement or of
the Tax Covenant or authorising any statement in the Disclosure Letter.
(H) Each of the Warranties shall be construed as a separate and independent
warranty and shall not be limited or restricted by reference to any other
Warranty except that the only Warranties given in respect of Environmental
Matters are the Environmental Warranties and each of the other Warranties
shall be deemed not to have been given in relation to Environmental
Matters.
(I) Between the date of signing this Agreement and the Completion Date, each
of Investor Parties and BOS as soon as is reasonably practicable upon any
of them becoming aware of any such matter disclose to the Purchaser any
matter:-
(i) which is or may reasonably foreseeably constitute a breach of or be
inconsistent with any of the Warranties if they were to be repeated
at any time after the date of this Agreement; or
(ii) which is or may reasonably foreseeably constitute a breach of or be
inconsistent with any of the Warranties.
(J) Subject to the limitations set out in Schedule 4, the Purchaser shall be
entitled to claim that any of the Warranties has or had been breached both
before and after Completion or is or was inaccurate or misleading and,
without limitation, to claim under any indemnity or covenant even if the
Purchaser could have discovered on or before Completion that the Warranty
in question had been breached or was inaccurate or misleading and
Completion shall not in any way constitute a waiver of any of the
Purchaser's rights.
(K) All Warranties, indemnities, covenants and other undertakings contained in
or entered into in accordance with this agreement shall remain in full
force and effect notwithstanding Completion.
9
(L) If, between the signing of this Agreement and Completion, the Purchaser
becomes aware (whether it does so by reason of any disclosure made under
sub-clause (I) or not) that any of the Warranties is or was materially
inaccurate or misleading or that there has been any material breach or
breaches of any of the Warranties or any other term of this Agreement, the
Purchaser shall (save to the extent that such inaccuracy, misleading
nature or breach is set out in the Disclosure Letter) be entitled to treat
this Agreement as terminated from such time by notice in writing served on
the Investor Parties and BOS prior to the Completion Date.
(M) If the Agreement is terminated then, subject to sub-clause 3(H), the
obligations of each party under this Agreement shall automatically
terminate PROVIDED that the rights and liabilities of the parties which
have accrued prior to termination shall subsist.
(N) If in respect of or in connection with any breach of any of the Warranties
or any facts or matters warranted not being true and being misleading any
amount payable to the Purchaser by the Investor Parties and BOS
(including, without limitation, any payment under the Indemnities and
whether under this clause or otherwise) is subject to Taxation, such
additional amounts shall be paid to the Purchaser by the Investor Parties
and BOS so as to ensure that the net amount received by the Purchaser is
equal to the full amount payable to the Purchaser under this agreement.
(O) Each Seller agrees not to resell its Consideration Shares or engage in
hedging transactions with respect to such Consideration Shares except (i)
in accordance with Regulation S under the Securities Act, (ii) pursuant to
a registration statement under the Securities Act, or (iii) pursuant to an
available exemption from registration under the Securities Act.
(P) Each Seller accepts that the certificates representing the Consideration
Shares shall bear a legend to the effect that transfer of such shares is
prohibited except (i) in accordance with Regulation S under the Securities
Act, (ii) pursuant to a registration statement under the Securities Act,
or (iii) pursuant to an available exemption from registration under the
Securities Act.
(Q) Each of the Investor Parties acknowledges that it shall not be entitled to
claim that any provision of the Investment Agreement has been breached by
the Company as a result of its entry into this Agreement or any matters
arising out of or contemplated by this Agreement. The Investor Parties
acknowledge and agree that on Completion the Investment Agreement will be
terminated and of no further effect and the Company shall be under no
further obligation to any of the Investor Parties pursuant to that
Agreement.
(R) Each of the Sellers agrees that the Purchaser shall (subject to the option
mentioned below) be entitled to require it to surrender such number of his
or its Consideration Shares to the Purchaser as shall be necessary to
satisfy any liabilities of that Seller under this Agreement. If the
Purchaser chooses to exercise this right, each
10
Consideration Share surrendered shall be deemed to be surrendered at the
IPO Price. Each Seller shall have the option to satisfy any such liability
in cash instead of by the surrender of Consideration Shares.
7. OBLIGORS' INDEMNITIES AND COVENANTS
(A) Each of the Obligors agrees severally to indemnify the Purchaser (for
itself, and, as a separate covenant, as trustee for each member of the
Group) against all or any of the matters set out in this Clause 7.
(B) The Obligors shall severally indemnify the Purchaser against Claims made
in relation to the sale and purchase of Finishing Services Limited and
Finishing Technology Limited.
(C) The Obligors shall severally indemnify the Purchaser against:
(i) any liability of any member of the Group arising by virtue of
Article 141 of the Treaty of Rome or any other provision of
English or EU law to contribute to any pension scheme in which
any member of the Group participates or has participated in
order to equalise any guaranteed minimum pension of scheme
members; and
(ii) any liability of any member of the Group to contribute to the
▇▇▇▇▇▇▇ Engineering Retirement Benefit Scheme or the
administration fees associated with the winding up of that
scheme.
(D) The Obligors shall severally indemnify the Purchaser against any and all
Claims, payments and expenses incurred by the Purchaser or any member of
the Group arising out of or in connection with:
(i) the Zlin Electronics Limited Directors Pension Scheme or the
Calne Electronics Limited Directors Pension Scheme;
(ii) the exclusion of part time employees from any pension scheme
or benefits; and
(iii) warranties or indemnities given by any member of the Group in
respect of the HBH Tools & Stampings Limited Retirement and
Death Benefit Scheme, the HBH Retirement Benefits Scheme and
the HBH. Tools & Stampings Limited Money Purchase Scheme.
(E) Without restricting the rights of the Purchaser or its ability to claim
damages on any basis in the event that any of the Warranties is breached
or is untrue or misleading, the Obligors severally covenant with the
Purchaser (for the benefit of the Purchaser, each member of the Group,
each member of the Purchaser's Group and each of their respective
directors, officers, agents and employees from time to time) that the
Obligors will pay to the Purchaser or to such person as the Purchaser
11
shall direct (so far as possible, and if so requested by the Purchaser, by
way of repayment by the Obligors of the consideration payable under this
Agreement) an amount equal to all fines, penalties, costs, losses,
damages, expenses (including legal and other professional expenses) or
liabilities resulting directly or indirectly from:
(i) any Environmental Matters which have arisen or arise at any time as
the direct or indirect result of any act or omission of any person
in relation to any present or former business or premises of the
Company or any member of the Group or any other act or omission of
any member of the Group at or prior to Completion; or
(ii) any Environmental Matters existing at or prior to Completion at or
about any of the Properties; or
(iii) the transfer to any person or the disposal at or prior to Completion
of any Hazardous Materials or Waste by or on behalf o any member of
the Group,
including the amount necessary to put the relevant person into the
position which would have existed had the relevant matter not existed or
arisen and in particular including the full amount of any deficiency or
diminution in value of the Shares or any asset and any reduced profits or
increased losses.
(F) In the absence of fraud or dishonesty on the part of any of the Obligors
or their respective officers or employees, the liability of each of the
Obligors under or in relation to the indemnities in this Clause 7 (the
"Indemnities") shall be limited as set out in Schedule 4.
8. PURCHASER'S WARRANTIES
The Purchaser warrants to the Sellers that:
(i) the Purchaser is a corporation duly organised, validly existing and
in good standing under the laws of California and has full power and
authority to conduct its business as presently conducted and to
enter into and perform this Agreement and the other documents which
are to be executed by the Purchaser at Completion (the "Purchaser's
Completion Documents") and to carry out the transactions
contemplated by this Agreement and the Purchaser's Completion
Documents;
(ii) this Agreement constitutes and the Purchaser's Completion Documents
will constitute, when executed by the Purchaser, binding obligations
of the Purchaser in accordance with their respective terms;
(iii) on the Completion Date, following the merger to which reference is
made in Clause 1(C), prior to the issuance of shares (a) hereunder
or (b) in connection with the IPO, and assuming an IPO Price of USD
16, there will be
12
approximately 24,750,000 shares of the Purchaser's common stock
issued and outstanding; and
(iv) the issuance, sale and delivery of the Consideration Shares in
accordance with this Agreement has been duly authorised by all
necessary corporate action on the part of the Purchaser and when
issued, sold and delivered at Completion, the Consideration Shares
will be duly and validly issued, fully paid and non-assessable.
9. CONDUCT OF BUSINESS BEFORE COMPLETION
(A) Subject to sub-clause (B), each of the Investor Parties shall procure that
between the date of this Agreement and Completion or termination of this
Agreement each member of the Group shall carry on business in the ordinary
course and in a manner consistent with the way in which the business has
been carried on in the twelve months prior to the date of this Agreement
and shall procure that no member of the Group shall undertake any act or
course of conduct which is outside the ordinary course of the business of
the Group or which is not of a routine unimportant nature. Subject as
aforesaid, in particular (but without prejudice to the generality of the
foregoing) each of the Investor Parties shall procure that no member of
the Group shall undertake any of the acts or matters specified in
sub-clause (B) without the prior written consent of the Purchaser.
(B) The acts and matters referred to in sub-clause (A) are as follows:-
(i) the acquisition or disposal of any interest in real property (but
excluding the subleasing of the Company's property at Axis ▇▇, ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, details of which are
set out in the Disclosure Letter);
(ii) any acquisition or disposal of any interest in the business or share
capital of any undertaking;
(iii) any offer by any member of the Group to engage any new employee or
consultant at any annual salary or fee per employee or consultant
(on the basis of full time employment or consultancy) in excess of
(pound)50,000 per annum or which is not terminable by the employer
by giving six months' notice;
(iv) any dismissal of any Senior Employee of the Group, other than for
cause;
(v) any amendment, including any increase in emoluments (including,
without limitation, pension benefits and contributions, bonuses,
commissions and benefits in kind), to the terms of employment of any
category of employees of the Group, but excluding the annual pay
review for the year 2000, details of which are set out in the
Disclosure Letter;
13
(vi) any declaration, authorisation, making or payment of a dividend (in
cash or in specie) or other distribution of a similar nature or
which is taxed in the same way as a dividend;
(vii) any reduction of capital;
(viii) any grant of any guarantee or indemnity for the obligations of any
person who is not a member of the Group whether in relation to the
business of the Group or otherwise;
(ix) with the exception of the allotment of 41,237 A ordinary shares in
the capital of the Company to BOS pursuant to BOS's outstanding
warrant to subscribe for such shares, any creation, allotment or
issue or any grant of any option over or other right to subscribe
or purchase, or any redemption or purchase of, any share or loan
capital or securities of any member of the Group or securities
convertible into any of the foregoing;
(x) any creation or grant of any option, right to acquire, mortgage,
charge, pledge, lien (other than a lien arising by operation of law
or in the ordinary course of business) or other form of security or
encumbrance or equity on, over or affecting the whole or any part
of the undertaking or assets of any member of the Group other than
rights arising under retention of title clauses in the ordinary
course of business;
(xi) the making of any loan (other than the granting of trade credit in
the ordinary course of business in accordance with the Group's
normal practice) to any person other than to a member of the Group;
(xii) any borrowing (other than the receipt of trade credit in the
ordinary course of business) other than borrowings from a member of
the Group;
(xiii) the appointment of any agent or distributor of any member of the
Group or varying the terms of any agent or distributor of any
member of the Group;
(xiv) appoint or permit any person to become a director of any member of
the Group;
(xv) any change in the manner or timing of the collection or enforcement
of any trade receivables or of the payment of any trade payables or
other Indebtedness or any action in relation to such matters which
is inconsistent with the past practice of the members of the Group
and the way in which the business has been previously carried on;
(xvi) any reduction of provisions or reserves shown in the Accounts;
(xvii) any roll over or hold over claim or election in respect of the site
at Cheshunt (full particulars of such disposal being set out in the
Disclosure Letter);
14
(xviii) the entering into of any agreement (conditional or otherwise) with
any Investor Party or BOS; and
(xix) the entering into of any agreement (conditional or otherwise) to
do any of the foregoing.
(C) Each of the Investor Parties shall procure that between the date of this
Agreement and the Completion Date, on the reasonable request of the
Purchaser (after discussion with the Managers), each member of the Group
shall allow the management of the Purchaser (and its advisers, lawyers,
bankers, financiers, accountants, underwriters of the IPO and any other
persons authorised by it), upon reasonable notice, to have full access
during normal working hours to the books and records of each member of the
Group in the possession or control of the relevant member of the Group and
to directors and members of the management of the Group and the members of
the Group. The directors and members of the management of the Group shall
be instructed to give promptly all information and explanations to the
Purchaser or any such persons as they may reasonably request. For the
avoidance of doubt, nothing in this sub-clause (C) shall oblige the
Investor Parties to procure that any member of the Group disclose
information relating to its customers and suppliers, which, in the
reasonable opinion of the Investor Parties, would prejudice the
competitive position of that member of the Group in its market should the
transactions contemplated by this Agreement not proceed to Completion.
(D) The Purchaser shall, between the date of this Agreement and the Completion
Date, on the reasonable request of the Managers (after discussion with the
Purchaser), permit selected members of the Company's management (and their
advisers and lawyers), upon reasonable notice, to have full access during
normal working hours to the books and records of the Purchaser including
the statutory books, minutes books, leases, contracts, intellectual
property and supplier lists (but excluding customer lists) in the
possession or control of the Purchaser and to directors and members of the
management of the Purchaser and the directors and members of the
management of the Purchaser shall be instructed to give promptly all
information and explanations to the Manager (and their advisers and
lawyers) as they may reasonably request. For the avoidance of doubt,
nothing in this sub-clause (D) shall oblige the Purchaser to disclose
information relating to its customers and suppliers which, in the
reasonable opinion of the Purchaser, would prejudice the Purchaser's
competitive position in its market should the transactions contemplated by
this Agreement not proceed to Completion.
10. RESTRICTIONS ON THE MANAGERS AND THE NATWEST PARTIES
(A) Each of the Managers undertakes that he will not, either alone or in
conjunction with or on behalf of any other person, do any of the following
things:
(i) neither pending nor for a period of two years after the Completion
Date either alone or jointly with or as adviser to or agent of any
person directly
15
or indirectly carry on or be engaged or economically interested in
any business which competes (directly or indirectly) with any of the
Acquired Businesses;
(ii) within two years from the Completion Date, entice away from the
employment of any member of the Purchaser's Group any Key Employee;
nor
(iii) disclose to any other person or (in any way which may be detrimental
to the Acquired Businesses) use any information which is
Confidential Business Information;
(iv) solicit the custom, in relation to goods or services sold to any
person (which, for the avoidance of doubt, shall be construed so as
to include any individual, firm, company, joint venture, association
or partnership (whether or not having separate legal personality))
by any member of the Group in the course of its business during the
two years before the Completion Date, of that person in respect of
similar goods or services; nor
(v) assist any person to do any of the foregoing things.
(B) Each of the NatWest Parties undertakes that they will not disclose to any
other person or use any information which is Confidential Business
Information and that they will treat such information as strictly
confidential.
11. PROVISION RELATING TO RESTRICTIONS
Each undertaking contained in Clause 10 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 Managers
and/or the NatWest Parties as the case may be.
12. EFFECT OF COMPLETION
Save as otherwise provided herein, any provision of this Agreement or of
any other document referred to herein which is capable of being performed
after but which has not been performed at or before Completion and all
Warranties and other Assurances contained in or entered into pursuant to
this Agreement shall remain in full force and effect notwithstanding
Completion.
13. REMEDIES AND WAIVERS
(A) 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.
16
(B) 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
except where expressly stated herein.
(C) The rights, powers and remedies provided in this Agreement are cumulative
and not exclusive of any rights, powers and remedies provided by law
unless otherwise stated herein.
14. ASSIGNMENT
(A) Obligations under this Agreement shall not be assignable.
(B) The benefits of this Agreement shall not be assignable except that the
Purchaser may assign all or any part of the benefit of, or its rights or
benefits under, this Agreement and any agreements referred to in Clause 16
together with any causes of action arising in connection with them to its
successors in title or a member of the Purchaser's Group or as security to
any person lending money to a member of the Purchaser's Group (a
"Permitted Assignee").
15. FURTHER ASSURANCE
Without prejudice to any restriction or limitation on the extent of any
party's obligations under this Agreement contained in this Agreement, each
of the parties shall from time to time so far as each is reasonably able
do or procure the doing of all such acts and/or execute or procure the
execution of all such documents in a form reasonably satisfactory to the
party concerned as they may reasonably consider necessary to transfer the
Shares to the Purchaser or otherwise to give the other party the full
benefit of this Agreement.
16. ENTIRE AGREEMENT
(A) For the purposes 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 subject matter of this Agreement and any other
documents referred to in this Agreement (the "Share Purchase Documents")
or any of them made or given by a party to any of the Share Purchase
Documents or any other person at any time prior to the date of this
Agreement.
(B) The Share Purchase Documents constitute the whole and only agreement
between the parties relating to the sale and purchase of the Shares.
(C) To the extent expressly repeated in the Share Purchase Documents, the
Share Purchase Documents supersede and extinguish any Pre-contractual
Statement.
17
(D) Each party acknowledges that in entering into the Share Purchase Documents
it or he is not relying upon any Pre-contractual Statement which is not
expressly set out in them.
(E) None of the parties shall have any rights of action (except in the case of
fraud) against any other party to this Agreement arising out of or in
connection with any Pre-contractual Statement except to the extent that
such Pre-contractual Statement is repeated in the Share Purchase
Documents.
(F) This Agreement may only be varied by a document signed by both of the
parties and expressed to be a variation to this Agreement.
17. NOTICES
(A) Any notice or other communication given or made under or in connection
with the matters contemplated by this Agreement shall be in writing.
(B) Any such notice or other communication shall be addressed as provided in
sub-clause (C) and, if so addressed, shall be deemed to have been duly
given or made as follows:
(i) if sent by personal delivery, upon delivery at the address of the
relevant party;
(ii) if sent by first class post, two Business Days after the date of
posting;
(iii) if sent by facsimile, when received;
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.
(C) The relevant addressee, address and facsimile number of each party for the
purposes of this Agreement, subject to sub-clause (D), are:
1. Name of party Address Facsimile No. For the attention of
-- ------------- ------- ------------ ---------------------
Purchaser ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, 001714-688-7500 ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
▇▇▇
18
1. Name of party Address Facsimile No. For the attention of
-- ------------- ------- ------------ ---------------------
c.c. Ropes & ▇▇▇▇ 001617-951-7050 ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇,
▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇
2. Managers, B Wragge & Co, 0121 214 1099 ▇▇▇ ▇▇▇▇▇▇▇▇
Shareholders and ▇▇ ▇▇▇▇▇▇▇ ▇▇▇,
Managers' Family ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Parties
3. NatWest Parties NatWest Equity 01212362089 ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Partners
Wellesley House
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇
4. BOS Bank of Scotland 01216338463 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇
(D) 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 (C) PROVIDED THAT such notification shall only be effective
on:-
(i) the date specified in the notification as the date on which the
change is to take place; or
(ii) 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.
(E) For the avoidance of doubt, the parties agree that the provisions of this
Clause shall not apply in relation to the service of any writ, summons,
order, judgement or other document relating to or in connection with any
Proceedings.
18. ANNOUNCEMENTS
(A) Subject to sub-clause (B), no announcement concerning the sale or purchase
of the Shares or any ancillary matter (other than the Press Announcements
and any documents published or announcements made by any member of the
Purchaser's Group in connection with the IPO) shall be made by any party
without the prior
19
written approval of the Purchaser and NWEP, such approval not to be
unreasonably withheld or delayed.
(B) Either party may make an announcement concerning the sale or purchase of
the Shares or any ancillary matter if required by:-
(i) the law of any relevant jurisdiction; or
(ii) any securities exchange or regulatory or governmental body to which
either party is subject or submits, wherever situated, whether or
not the requirement has the force of law,
in which case the party concerned shall take all such steps as may be
reasonable and practicable in the circumstances to agree the contents of
such announcement with the other party before making such announcement and
PROVIDED THAT any such announcement shall be made only after notice to the
other party.
(C) The restrictions contained in this Clause shall continue to apply after
the termination of this Agreement without limit in time.
19. CONFIDENTIALITY
(A) Subject to sub-clause (B) and Clause 18, each party shall treat as
strictly confidential all information received or obtained as a result of
entering into or performing this Agreement which relates to:-
(i) the provisions or the subject matter of this Agreement or any
document referred to herein;
(ii) the negotiations relating to this Agreement or any document referred
to herein;
(iii) (in the case of the Purchaser only) the Investor Parties and BOS (in
the case of the Investor Parties and BOS only) the Purchaser's Group
and the business carried on by each member of each of them.
(B) Any party may disclose information which would otherwise be confidential
if and to the extent:-
(i) required by the law of any relevant jurisdiction or for the purpose
of any judicial proceedings;
(ii) required by any securities exchange or regulatory or governmental
body to which either party is subject or submits, wherever situated,
including (without limitation) any Revenue Authority, whether or not
the requirement for information has the force of law;
20
(iii) that the information is disclosed on a strictly confidential basis
to the professional advisers, auditors and bankers of that party;
(iv) that the information has come into the public domain through no
fault of that party;
(v) that the other party has given prior written approval to the
disclosure;
(vi) that the information was in the possession of the Purchaser's Group
or the Investor Parties and/or BOS (as the case may be) prior to
the time that it was acquired by a member of the Purchaser's Group
or the Investor Parties and/or BOS (respectively) from any of the
Investor Parties and/or BOS or of the Purchaser's Group or any of
the Investor Parties and/or BOS (respectively) and provided that
such information is not known to a member of the Purchaser's Group
or the Investor Parties and/or BOS (respectively) to be subject to
any other duty of confidentiality owed to any of the Investor
Parties and/or BOS or any of the Purchaser's Group (respectively);
(vii) it does so to a member of the Purchaser's Group (in the case of the
Purchaser) which accepts restrictions in the terms of this Clause;
or
(viii) required to enable that party to enforce its rights under this
Agreement,
PROVIDED THAT any such information disclosed pursuant to paragraphs (i) or
(ii) shall be disclosed only after notice to the other party unless it is
information supplied to a Revenue Authority in confidence and in
compliance with Clause 19.
(C) The restrictions contained in this Clause shall continue to apply after
the termination of the sale and purchase of the Shares under this
Agreement without limit in time.
(D) With effect from Completion, the provisions of the confidentiality
undertakings entered into between the Company and the Purchaser and dated
3rd March, 2000 shall, in respect of Confidential Information and
Documents (as defined therein) relating to the Acquired Businesses, be
terminated and the Purchaser shall be released from all obligations and
liabilities thereunder in respect of such Confidential Information and
Documents, save as regards any antecedent breach. Pending Completion, if
there is a conflict between the terms of such confidentiality undertakings
and the terms of this Clause, the provisions of this Clause shall prevail.
20. COSTS AND EXPENSES
Save as otherwise stated in this Agreement, each party 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
21
documents referred to in it and the Investor Parties and BOS agree that no
cost or expense of whatever nature relating to the sale and purchase of
the Shares or the preparation, execution and carrying into effect of this
Agreement and all other documents referred to in it has been or is to be
borne by any member of the Group.
21. COUNTERPARTS
(A) This Agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, but shall not be effective until each
party has executed at least one counterpart.
(B) Each counterpart shall constitute an original of this Agreement, but all
the counterparts shall together constitute but one and the same
instrument.
22. INVALIDITY
If at any time any provision of this Agreement is or becomes illegal,
invalid or unenforceable in any respect under the law of any jurisdiction,
that shall not affect or impair:-
(i) the legality, validity or enforceability in that jurisdiction of any
other provision of this Agreement; or
(ii) the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this Agreement.
23. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law.
24. JURISDICTION
(A) Each of the parties to this Agreement irrevocably agrees for the exclusive
benefit of the other party 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. Nothing contained in this Clause shall limit the
right of any party to take Proceedings against others in any other court
of competent jurisdiction, nor shall the taking of Proceedings in one or
more jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not, to the extent permitted by the
law of such other jurisdiction.
(B) Each party irrevocably waives (and irrevocably agrees not to raise) any
objection which it may have now or hereafter to the laying of the venue of
any Proceedings in any such court as is referred to in sub-clause (A) and
any claim of forum non conveniens and further irrevocably agrees that a
judgement in any Proceedings brought in any court referred to in this
Clause shall (provided that there is no
22
appeal pending or open) be conclusive and binding upon such party and may
be enforced in the courts of any other jurisdiction.
25. AGENT FOR SERVICE
(A) The Purchaser irrevocably appoints DDi Europe Limited of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ to be its agent for the
receipt of service of process in England. It agrees that any Service
Document may be effectively served on it in connection with Proceedings in
England and Wales by service on its agent.
(B) Any Service Document shall be deemed to have been duly served if marked
for the attention of DDi Europe Limited at ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ or such other address within England
and Wales as may be notified to the party wishing to serve the Document
and:
(i) left at the specified address; or
(ii) sent to the specified address by first class post.
In the case of (A), the Service Document will be deemed to have been duly
served when it is left. In the case of (B), the Service Document shall be
deemed to have been duly served two clear Business Days after the date of
posting.
(C) If the agent at any time ceases for any reason to act as such, the
Purchaser shall appoint a replacement agent having an address for service
in England or Wales and shall notify the other parties of the name and
address of the replacement agent. Failing such appointment and
notification, the other parties shall be entitled by notice to the
Purchaser to appoint a replacement agent to act on the Purchaser's behalf.
The provisions of this clause applying to service on an agent apply
equally to service on a replacement agent.
(D) A copy of any Service Document served on an agent shall be sent by post to
the Purchaser. Failure or delay in so doing shall not prejudice the
effectiveness of service of the Service Document.
(E) "Service Document" means a claim form, order or judgement issued out of
the courts of England and Wales/document relating to or in connection with
any Proceedings.
IN WITNESS whereof the parties have entered into this Agreement the day and year
first before written.
23
SCHEDULE 1
(Interpretation)
DEFINITIONS
(A) In this Agreement and the Schedules to it:-
"Accounts Date" means 31st March, 1999;
"Accounts" means the consolidated statutory
accounts of the Subsidiaries as at the
Accounts Date for the twelve months
ended on the Accounts Date, copies of
which are Attachment I;
"Acquired Business" means the business of a member of the
Group as carried on by that member in
the 12 months immediately preceding the
date of this Agreement and "Acquired
Businesses" shall be construed
accordingly;
"Adjusted Enterprise Value" is defined in Schedule 10;
"Adjustment Amount" is defined in Schedule 10;
"Adjustment Period" 1st April, 1999 to 31st March, 2000;
"Adjustment Statement" is defined in Schedule 10;
"Agreed Form" in relation to any document means such
document in the form initialled for the
purposes of identification only by the
Purchaser's Solicitors and the Investor
Parties' Solicitors;
"Amended and Restated Stockholders' means an amended and restated
Agreement" stockholders agreement between the
Purchasers' shareholders, in the Agreed
Form;
"April Interest" means interest on the Investor Loans
for the period from 1st April, 2000 to
the Completion Date;
"Assumed Liabilities" is defined in Schedule 8;
24
"Assurance" means any warranty, representation,
statement, assurance, covenant,
agreement, undertaking, indemnity or
commitment of any nature whatsoever;
"Attachment" means a document referred to in this
Agreement as an attachment and being in
the Agreed Form;
"Beneficial Owners" means the second named parties to this
Agreement;
"BOS" means the fifth named party to this
Agreement;
"BOS Account" means Bank of Scotland CHAPS Suspense
Account (for the attention of ▇▇▇▇
▇▇▇▇▇▇▇▇) ▇▇▇▇▇▇▇▇ at Bank of Scotland,
sort code 12-05-65;
"BOS Facilities" is defined in Clause 3(A)(iv);
"BOS Shares" means 41,237 A ordinary shares in the
capital of the Company;
"B Shareholders" means the sixth named parties to this
Agreement;
"Business Day" means a day (other than a Saturday or a
Sunday) on which banks are open for the
transaction of normal banking business
in London and New York;
"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,
data, manuals and instructions and all
customer lists, sales information,
business plans and forecasts, and all
technical expertise and all computer
software and all accounting and tax
records, correspondence, orders and
inquiries;
"CGTA 1979" means the Capital Gains Tax ▇▇▇ ▇▇▇▇;
25
"Claims" means all and any liabilities, losses,
claims, actions, demands, costs and
expenses, proceedings or judgements of
whatsoever nature and whether or not
arising in the ordinary course of
business;
"Companies Acts" means the Companies ▇▇▇ ▇▇▇▇, the
Companies Consolidation (Consequential
Provisions) ▇▇▇ ▇▇▇▇, the Companies ▇▇▇
▇▇▇▇ and Part V of the Criminal Justice
▇▇▇ ▇▇▇▇;
"Company's Account" means MCM Electronics Limited current
account, account number ▇▇▇▇▇▇▇▇ at
Bank of Scotland, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇, sort code 12-05-65;
"Company" means MCM Electronics Limited, basic
information concerning which is set out
in Schedule 6;
"Completion" means completion of the sale and
purchase of the Shares under this
Agreement;
"Completion Date" means the day on which the conditions
listed in Clause 3 shall have been
satisfied or waived or, if such day is
not a Business Day, the Business Day
immediately following such day, or such
other date as the parties may agree;
"Confidential Business Information" means Business Information which is
confidential or not generally known;
"Consideration Shares" is defined in Schedule 11;
"Completion Payments" is defined in Clause 4(C);
"Data Room" means those documents referred to in
the list in the Agreed Form forming
Attachment III;
"Disclosure Letter" means the letter dated with the same
date as this Agreement written by the
Investor Parties to the Purchaser for
the purposes of paragraph 5 of Schedule
4;
"EBITDA" is defined in Schedule 10;
26
"EBITDA Adjustment" is defined in Schedule 10;
"Employees" means persons employed by any member of
the Group including directors of the
Company and/or the Subsidiaries at the
date of this Agreement;
"Encumbrance" is defined in Schedule 3;
"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
European, national and local laws and
bylaws, common laws, civil code,
directives or guidance notes of a
mandatory nature insofar as they relate
to or apply to Environmental Matters
including for the avoidance of doubt
the New Contaminated Land Power;
"Environmental Matters" means:-
(i) pollution or contamination;
(ii) the disposal, release,
spillage, deposit, escape,
discharge, leak or emission
of Hazardous Materials or
Waste;
(iii) exposure of any person to
Hazardous Materials or Waste;
(iv) the creation of any noise,
vibration, radiation, common
law or statutory nuisance or
other adverse impact on the
Environment.
27
"Environmental Permit" means any registration, permit,
licence, permission, consent,
authorisation, waiver, order or
exemption issued or granted or required
to be issued or granted under
Environmental Laws in relation to
either the carrying on of the business
of any member of the Group or in
relation to any Properties;
"Environmental Report" means the Environmental Review: Project
Fish - Final version dated April 1999
prepared by ▇▇▇▇▇▇▇▇▇ & Company on
behalf of NWEP;
"Environmental Warranties" means the Warranties set out in
paragraph 18 of Schedule 3 and
"Environmental Warranty" shall be
construed accordingly;
"Estimated Net Debt" means GBP 30,091,000 as set out in
Schedule 8;
"Final Net Debt Amount" is defined in Schedule 10;
"GBP" means pounds sterling;
"Group" means the Company and all the
Subsidiaries and where the context so
requires, includes any one or more of
such companies;
"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 to the
environment or any other organism
supported by the environment including,
without limitation, pollutants,
contaminants and dangerous, toxic or
radioactive substances;
"ICTA 1988" means the Income and Corporation Taxes
▇▇▇ ▇▇▇▇;
"Indebtedness" shall be construed to include any
obligation (whether incurred as
principal or surety) for the payment or
repayment of money (including, without
limitation, contingent liabilities in
accordance with generally accepted
accounting principles in the United
Kingdom);
"Indemnities" is defined in Clause 7(F)
28
"Independent Auditors" means a partner of at least 10 years'
qualified experience at Deloitte &
Touche of Colmore Gate, ▇ ▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ or such other firm
as the parties may agree;
"Information Technology" means computer software, hardware,
networks and other peripherals;
"Intellectual Property" means patents, trade marks and service
marks, rights in designs, trade or
business names or signs, copyrights
(including rights in computer software)
and topography rights (whether or not
any of these is registered and
including applications for registration
of any such thing) and rights under
licences and consents in relation to
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;
"Investment Agreement" means an agreement dated 27th May, 1999
between the Company, the Managers, NWEP
and the Beneficial Owners;
"Investors' Completion Documents" is defined in paragraph 2(A) of
Schedule 3;
"Investor Loan" means the facilities designated as such
in Schedule 8;
"Investor Loans Amount" means GBP 14,868,000;
"Investor Parties" means the Sellers (other than BOS) and
NWEP;
"Investor Parties' Auditors" means KPMG;
"Investor Parties' Solicitors" means Wragge and Co.;
"IPO Price" means the price at which shares of
common stock of the Purchaser are first
offered to the public pursuant to the
IPO;
"IPO" means the initial public offering of
shares in the Purchaser;
29
"Key Employee" means:-
(i) any Employee in a position
carrying significant managerial
responsibilities or whose
responsibilities are of a
technical nature who, having
regard to his experience,
skills and knowledge of the
Acquired Businesses, is not
readily replaceable within a
reasonable time without
material expense (excluding
payments made to that Employee)
on the part of any member of
the Group; or
(ii) any Senior Employee;
"Liability Cap Addition" is defined in paragraph 1 of Schedule 4;
"Lock-up Agreement" means the lock-up agreement relating to
the Consideration Shares in the Agreed
Form of Attachment IV;
"Management Accounts" means the monthly unaudited
consolidated financial statements of
the Group for the months April 1999 to
January 2000 (inclusive) (each of which
includes the unaudited profit and loss
of the Group for the cumulative period
starting on 1st April 1999 and ending
on the last day of the relevant month)
copies of which are Attachment VII;
"Managers" means the fourth named parties to this
Agreement;
"Managers' Family Parties" means the seventh named parties to this
Agreement;
"Material Contract" is defined in paragraph 9(C) of
Schedule 3;
"NatWest Group" means NWEP and its subsidiaries and
associated companies (but excluding
each member of the Group);
"NatWest Nominees" means the third named party to this
Agreement;
"NatWest Parties" means NWEP, the Beneficial Owners and
NatWest Nominees;
30
"Negative Debt Adjustment" is defined in Schedule 10;
"New Contaminated Land Power" means the new power enacted by section
57 of the Environment ▇▇▇ ▇▇▇▇ (but not
yet brought into force) including the
Statutory Guidance on Contaminated Land
published 16th February, 2000 and SI
2000 No. 227 made 2nd February, 2000
laid before Parliament 9th February,
2000 coming into force on 1st April,
2000 and SI 2000 No. 340 (C.8) made 2nd
February, 2000 under that power;
"NWEP" means the first named party to this
Agreement;
"Obligors" means the Managers and the B
Shareholders;
"Permitted Assignee" is defined in Clause 14(B);
"Positive Debt Adjustment" is defined in Schedule 10;
"Pre-contractual Statement" is defined in Clause 16;
"Press Announcements" means the press announcements (if any)
to be issued by the parties in the
Agreed Form of Attachment IV;
"Proceedings" means any proceeding, suit or action
arising out of or in connection with
this Agreement;
"Property" or "Properties" means the real properties listed in
Schedule 9;
"Proportional Provisional is defined in Schedule 11;
Consideration"
"Provisional Consideration" means GPB 22,709,000 calculated as set
out in Schedule 8;
"Purchaser" means the eighth named party to this
Agreement;
"Purchaser's Account" means the Purchaser's account with
Union Bank of Canada, ▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇. ▇▇▇▇▇, Swift Code UBLAU 566 ABA
122000496, account number ▇▇▇▇▇▇▇▇▇▇;
"Purchaser's Auditors" means PricewaterhouseCoopers;
31
"Purchaser's Completion Documents" has the meaning given thereto in Clause
8;
"Purchaser's Group" means the Purchaser, its subsidiaries
(including each member of the Group),
any holding company of the Purchaser
and all other subsidiaries of any such
holding company from time to time;
"Purchaser's Solicitors" means ▇▇▇▇▇▇▇▇▇ and May;
"Revenue Authority" means the Inland Revenue and the
Commissioners of Customs and Excise and
any similar body in any other
jurisdiction;
"RTPA 1976" means the Restrictive Trade Practices
▇▇▇ ▇▇▇▇;
"Securities Act" means the United States Securities Act
of 1933 as amended;
"Sellers" means the Beneficial Owners, NatWest
Nominees, the Managers, BOS, the B
Shareholders and the Managers Family
Parties;
"Sellers' Account" means Wragge & Co Client Account at
Lloyds TSB Bank plc of ▇▇▇-▇▇▇ ▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇, sort code
30-00-03 account number ▇▇▇▇▇▇▇;
"Sellers' Advisers' Fees" means GBP 1,700,000 (as set out in
Schedule 8);
"Sellers' Shares" means the Shares other than the BOS
Shares;
"Senior Employee" means any one of the Employees who is
entitled to emoluments at a rate (or,
in the case of fluctuating amounts, has
or would have been entitled to an
average annual rate over the last three
financial years) in excess of
(pound)50,000 per annum and every
director who is also an employee;
"Service Document" is defined in Clause 25(E);
"Share Purchase Documents" is defined in Clause 16;
32
"Shares" means the entire issued share capital
of the Company;
"Subsidiaries" means any of the subsidiaries of the
Company, basic information concerning
which being set out in Schedule 7 and,
which expression, where the context so
requires, includes any or all of such
companies and "Subsidiary" shall be
construed accordingly;
"Takeover" means the successful bid by the Company
to acquire the entire share capital of
▇▇▇▇▇▇▇ Limited;
"Takeover Date" means 5th July, 1999;
"Tax Authority" means any taxing or other authority
(whether within or outside the United
Kingdom) competent to impose any
liability to Tax;
"Tax Covenant" means the tax covenant in the Agreed
Form as set out in Attachment II;
"Tax Warranties"
means the Warranties set out in
paragraphs 26 to 37 of Schedule 3 and
"Tax Warranty" shall be construed
accordingly;
"Tax" or "Taxation" has the meaning given in the Tax
Covenant;
"TCGA 1992" means the Taxation of Chargeable Gains
▇▇▇ ▇▇▇▇;
"Termination Date" means 30th June, 2000;
"USD Equivalent" in relation to an amount expressed in a
currency other than USD, means such
amount translated into USD at the
prevailing exchange rate applicable to
that amount of USD by reference to the
rates published in the UK Financial
Times on the Completion Date;
"USD" means United States Dollars;
"VATA 1994" means the Value Added Tax ▇▇▇ ▇▇▇▇;
33
"Warranties" means the warranties set out in
Schedule 3 and "Warranty" shall be
construed accordingly;
"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;
"Working Hours" means 9.30 a.m. to 5.30 p.m. on a
Business Day; and
"Year 2000 Matters" means whether the performance or
functionality of Information Technology
is, has been or will be affected by
dates prior to, during or after the
year 2000 and, in particular (but
without limitation), whether:
(i) no value for current date
causes, has caused or will
cause any interruption in
operation;
(ii) date-based functionality
behaves, has behaved and will
behave consistently for dates
prior to, during and after
the year 2000;
(iii) in all interfaces and data
storage, the century in any
date is, has been and will be
specified either explicitly
or by unambiguous algorithms
or inferencing rules; and
(iv) the year 2000 is and will be
recognised as a leap year.
(B) In this agreement, unless otherwise specified:-
(i) references to Clauses, Schedules and Attachments are to Clauses of,
and Schedules and Attachments to, this Agreement;
(ii) a reference to a sub-clause is to a sub-clause of the Clause in
which such reference appears, to a paragraph is to a paragraph of
the sub-clause or Schedule (as the case may be) in which such
reference appears and to a sub-paragraph is to a sub-paragraph of
the paragraph in which such reference appears;
34
(iii) a reference to any statute or statutory provision shall be
construed as a reference to the same as it may have been, or may
from time to time be, amended, modified or re-enacted except to the
extent that any amendment or modification made after the date of
this Agreement would increase the liability of the Investor Parties
under this Agreement;
(iv) references to a "company" shall be construed so as to include any
company, corporation or other body corporate, wherever and however
incorporated or established;
(v) 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);
(vi) the expressions "holding company", "subsidiary" and "wholly-owned
subsidiary" shall have the meaning given in the Companies ▇▇▇ ▇▇▇▇;
(vii) a person shall be deemed to be connected with another if that
person is connected with that other within the meaning of section
839 ICTA 1988;
(viii) references to writing shall include any modes of reproducing words
in a legible and non-transitory form;
(ix) references to times of the day are to London time;
(x) headings are for convenience only and do not affect the
interpretation of this Agreement;
(xi) references to any English legal term for any action, remedy, method
of judicial proceeding, 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;
(xii) "so far as the Obligors are aware" means so far as is within the
actual knowledge of the Obligors or any of them and such knowledge
as the Obligors or any of them would have had had they made all
enquiries that a reasonable person of their qualification,
experience and position would have made.
35
SCHEDULE 2
(Completion arrangements)
1. The Investor Parties' Obligations
At Completion the Investor Parties shall:
(A) deliver to the Purchaser or the Purchaser's Solicitors:
(i) the Tax Covenant, duly executed by the Obligors;
(ii) a Lock-Up Agreement, duly executed by each of the Sellers (except
BOS);
(iii) a copy of the minutes (or the relevant extract thereof) of a duly
held meeting of the directors of each of the Investor Parties (or a
duly constituted committee thereof) authorising the execution by
each of the Investor Parties of this Agreement and the Investors'
Completion Documents and, in the case where such execution is
authorised by a committee of the board of directors of the relevant
Investor Party, a copy of the minutes of a duly held meeting of the
directors constituting such committee or the relevant extract
thereof (in each case such copy minutes being certified as correct
by the secretary of the relevant Investor Party);
(iv) duly executed transfers in respect of the Shares (including any
Shares held by any nominee ) in favour of the Purchaser and share
certificates for such shares in the names of the relevant
transferors and any power of attorney under which any transfer is
executed on behalf of any of the transferors;
(v) the statutory registers (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 and each of the Subsidiaries;
(vi) counterparts of the Amended and Restated Stockholders' Agreement,
duly executed by each of the Sellers (except BOS);
(B) procure the holding of board meetings of the Company and each of the
Subsidiaries at which:-
(i) it shall be resolved that the relevant transfers referred to in
paragraphs 1(A)(iv) above and 2(B) below shall be approved for
registration and (subject only in each case to the transfer being
duly stamped) the respective transferee registered as the holder of
the respective shares in the register of members of the relevant
member of the Group;
36
(ii) each of the persons nominated by the Purchaser shall be appointed
directors of the relevant company, as the Purchaser shall direct,
such appointments to take effect on the Completion Date;
(iii) the resignation from the office of director of the relevant member
of the Group of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall be tendered and accepted so as
to take effect at the close of the meeting and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall
deliver to the relevant company an acknowledgement executed as a
deed in the Agreed Form, stating that he has no claim against the
relevant company for breach of any contract of employment with the
relevant company, compensation for loss of office, redundancy or
unfair dismissal or on any other account whatsoever and that no
agreement or arrangement is outstanding under which the relevant
company has or could have any obligation to him;
(iv) (if the Purchaser so requires) the situation of the registered
office shall be changed to such address as the Purchaser may
nominate and (subject to the provisions of the Companies Acts) the
accounting reference date shall be changed in accordance with any
instructions given by the Purchaser to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ on behalf of
the Investor Parties; and
(v) all existing instructions to banks shall be revoked and new
instructions to such banks in such form as the Purchaser may
reasonably direct shall be approved, provided that the Purchaser has
supplied such new instructions to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ on behalf of the
Investor Parties prior to Completion;
(C) (if required by the Purchaser) procure that the present auditors of the
Company and/or any of the Subsidiaries resign their office as such and
deposit at the registered office of the Company and/or any of the
Subsidiaries (as the case may be) a letter in Agreed Form notifying their
resignation acknowledging that, save for the payment of fees in the
ordinary course, they have in each case no claim against the relevant
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;
(D) procure that minutes of the board meetings referred to above, certified as
correct by the secretary of the relevant company, and the resignations and
acknowledgements referred to above are delivered to the Purchaser or the
Purchaser's Solicitors;
(E) use their reasonable endeavours to procure the signing by ▇▇▇▇▇▇▇▇▇ &
Company of a reliance agreement in a form suitable to the Purchaser in all
respects granting to the Purchaser (and any such person or persons as the
Purchaser may nominate) and at the Sellers' cost the right to rely on the
Environmental Report.
37
2. BOS Obligations
At Completion BOS shall deliver to the Purchaser or the Purchaser's
solicitors:-
(A) a certified copy of a power of attorney authorising the execution of those
of the Investors Completion Documents to which BOS is a party by BOS; and
(B) duly executed transfers in respect of the BOS Shares (including any Shares
held by any nominee) in favour of the Purchaser and share certificates for
such shares in the names of the relevant transferors and any power of
attorney under which any transfer is executed on behalf of any of the
transferors.
3. Purchaser's obligations
At Completion the Purchaser shall:
(A) deliver to the Investor Parties' Solicitors:
(i) a counterpart of the Tax Covenant, duly executed by the Purchaser;
(ii) a counterpart of the Amended and Restated Stockholders' Agreement,
duly executed by the Purchaser;
(iii) a copy of the minutes of a duly held meeting of the directors of the
Purchaser (or a duly constituted committee thereof) authorising (i)
the execution by the Purchaser of this Agreement and the Purchaser's
Completion Documents, (ii) the issue, sale and delivery of the
Consideration Shares in accordance with this Agreement, and (iii)
the performance by the Purchaser of this Agreement and the
Purchaser's Completion Documents;
(iv) share certificates for the Consideration Shares;
(v) pay the Completion Payments due to BOS in GBP by CHAPS transfer same
day value to the BOS Account ;
(vi) pay the Investor Loan Amount in GBP by CHAPS transfer for same day
value to the Company's Account.
(vii) pay the Sellers' Advisers' Fees and the Completion Payments due to
the Managers, the Managers' Family Parties and the B Shareholders
which are to be satisfied in cash in GBP by CHAPS transfer for same
day value to the Sellers' Account.
38
SCHEDULE 3
(The Warranties)
1. Ownership of the Shares
(A) Each of the Sellers are the sole legal and beneficial owners of the Shares
set opposite his or its name in Schedule 5.
(B) BOS is the sole legal and beneficial owner of the BOS Shares.
(C) The Shares constitute the entire issued share capital of the Company.
(D) There is no option, warrant, 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 of the foregoing and no claim has been
made against the Company or any of the Investor Parties or BOS by any
person to be entitled to any.
2. Capacity of the Investor Parties
(A) Each of the Investor Parties and BOS has the requisite power and authority
to enter into and perform this Agreement and the other documents which are
to be executed by any of them at Completion (the "Investors' Completion
Documents").
(B) This Agreement constitutes and the relevant Investors' Completion
Documents to which they are a party will, when executed by the Investor
Parties, constitute binding obligations of each of the Investor Parties
and BOS in accordance with their respective terms.
(C) The execution and delivery of, and the performance by each of the Investor
Parties and BOS of obligations under, this Agreement and the Investors'
Completion Documents will not:-
(i) result in a breach of any provision of the memorandum or articles of
association of NWEP, NatWest Nominees or BOS or the constitutional
documents of the Beneficial Owners or the memorandum or articles of
association of any member of the Group;
(ii) result in a breach of, or constitute a default under, any instrument
to which any of the Investor Parties or BOS or any member of the
Group is a party or by which any of the Investor Parties or BOS or
any member of the Group is bound;
(iii) result in a breach of any order, judgement or decree of any court or
governmental agency to which any of the Investor Parties or BOS or
any member of the Group is a party or by which any of the Investor
Parties or BOS or any member of the Group is bound; or
39
(iv) require any of the Investor Parties or BOS or any member of the
Group to obtain any consent or approval of, or give any notice to or
make any registration with, any United Kingdom governmental or other
authority which has not been obtained or made at the date hereof
both on an unconditional basis and on a basis which cannot be
revoked.
(D) None of the Sellers is a US person as such term is defined in Regulation S
of the Securities Act, nor are any of the Sellers acquiring the
Consideration Shares for the account or benefit of any such US person.
3. Arrangements between the Group and the Investor Parties
No Material Contract is outstanding between any member of the Group and
any of
(i) the Investor Parties or BOS; or
(ii) any member of the NatWest Group; or
(iii) any person who is a director of the NatWest Group or connected with
any such member of the NatWest Group, with any of the Investor
Parties, or with BOS,
and the Data Room contains each Material Contract which was outstanding
between any member of the Group and any of the Investor Parties or BOS or
any member of the NatWest Group or any person who is a director of the
NatWest Group or connected with any such member of the NatWest Group or
with BOS or with any of the Investor Parties at any time during (i) the
twelve months ended on the Accounts Date or (ii) the period from the
Accounts Date to the date of signing of this Agreement.
4. Group structure, etc.
(A) The Shares comprise the whole of the issued and allotted share capital of
the Company and all of them are fully paid up and there are no
restrictions of any kind on the voting or transfer of any of the Shares.
(B) There is no agreement or commitment or option or warrant 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 member of the Group.
(C) The information given in Schedules 6 and 7 is true and accurate.
(D) The Company is the sole legal and beneficial owner of the entire issued
share capital of each of the Subsidiaries free and clear of all pledges,
securities, liens, charges, encumbrances, equities, claims, restrictions,
options or limitations affecting the Company's ability to vote or transfer
such shares.
40
(E) No member of the Group has any interest in the share capital of or other
equity interest in any company other than the Subsidiaries.
(F) No member of the Group acts or carries on business in partnership with any
other person or is a member (otherwise than through the holding of share
capital) of any corporate or unincorporated body, undertaking or
association or holds or is liable on any share or security which is not
fully paid up or which carries any liability.
(G) No member of the Group trades under a name other than its corporate name.
(H) Each member of the Group is duly organised and validly existing under
English law.
(I) Each member of the Group has the corporate power and authority to own its
own properties and to carry on its business as it is currently conducted.
5. Ownership of Assets
(A) All assets used by any member of the Group in the course of its business
are both legally and beneficially owned by a member of the Group free from
any third party rights and all such assets are included in the Accounts or
the Management Accounts.
(B) Each of the assets included in the Accounts or acquired by any member of
the Group since the Accounts Date is owned both legally and beneficially
by a member of the Group and each of those assets capable of possession is
in the possession of a member of the Group.
(C) Apart from stock which is subject to suppliers' usual retention of title
terms, no option, right to acquire, mortgage, charge, pledge, lien or
other form of security or encumbrance or equity (an "Encumbrance") on,
over or affecting the whole or any part of the undertaking or the assets
of any member of the Group (including any investment in any other member
of the Group) is outstanding and there is no agreement or commitment to
give or create any such Encumbrance and no claim has been made by any
person to be entitled to any such Encumbrance which is still outstanding.
(D) Each item of plant and machinery, including fixed plant and machinery and
all vehicles and office and other equipment used by any member of the
Group in the Acquired Businesses is serviceable and capable of being
properly used without interruption in connection with the Acquired
Businesses taken as a whole as currently conducted.
(E) To the extent that any of the assets referred to in sub-paragraph (C) are
not owned by a member of the Group, details of such assets are contained
in the Disclosure Letter including, in the case of assets leased by a
member of the Group, all details of the leases under which such assets are
held.
41
6. Accuracy of information
(A) All registers required to be kept by each member of the Group by law have
been properly kept and are up to date and contain a record of the matters
which should be dealt with in those registers and no notice or allegation
that any of them is incorrect or should be rectified has been received by
any member of the Group.
(B) The copies of the memorandum and articles of association or other like
constitutional documents of each member of the Group contained in the Data
Room are complete and accurate copies.
(C) All returns and other documents relating to the Group required to be
delivered to the Registrar of Companies have been properly made and
delivered.
7. Accounts and Statutory Accounts
(A) The Accounts:-
(i) were prepared in accordance with accounting principles generally
accepted in the United Kingdom as at the Accounts Date and commonly
adopted by companies carrying on businesses similar to those carried
on by the respective members of the Group;
(ii) show a true and fair view in accordance with such generally accepted
accounting principles and practices of the assets and liabilities of
the members of the Group to which they relate, and of the Group as a
whole as at the Accounts Date and the profits of the Group for the
accounting period then ended; and
(iii) are not affected by any unusual or non-recurring items save for
those items specifically stated as such therein.
(B) Each of the Management Accounts have been properly prepared in accordance
with good accounting practice and on a basis consistent with that
previously adopted and give a fair and reasonable view of the results of
the Group for the period to which they relate. The Management Accounts do
not contain any unusual, exceptional, non- recurring or extraordinary
items of income or expenditure (save as specifically disclosed therein)
which would render the profits or losses of the of the Group for all or
any part of the period to which the Management Accounts relate unusually
high or low.
(C) The accounts provided by the Company for inclusion in the Purchaser's S-1
Registration Statement conform in all material respects to the
instructions set forth in item 18 of Form 20-F promulgated by the US
Securities and Exchange Commission.
42
(D) Details of all Indebtedness of each member of the Group are set out in the
Disclosure Letter.
(E) At the Accounts Date, no member of the Group had any liability (whether
actual, contingent, unquantified or disputed) or outstanding capital
commitment which is not adequately disclosed or provided for in the
Accounts.
8. Events since the Takeover Date
(A) Since the Takeover Date:-
(i) there has been no material adverse change in the business or assets
or condition or the financial or trading position or prospects of
the Group as a whole or any member of the Group;
(ii) the Acquired Businesses have in all material respects been carried
on in the ordinary course and no Material Contract has been entered
into by any member of the Group;
(iii) no asset of any member of the Group of a value in excess of
(pound)100,000 has been acquired or disposed of on capital account
or has been agreed to be acquired or disposed of;
(iv) no resolution of any member of the Group in general meeting has
been passed other than resolutions relating to the routine business
of annual general meetings;
(v) no member of the Group has declared, authorised, made or paid to
its members any dividend or other similar distribution;
(vi) no member of the Group has allotted or issued or agreed to issue or
granted an option or other right to acquire any share capital;
(vii) no member of the Group has redeemed or purchased or offered or
agreed to redeem or purchase any of its share capital; and
(viii) no customer or supplier has:-
(a) so far as the Obligors are aware, ceased or notified an
intention to cease trading with or supplying to the Group;
(b) so far as the Obligors are aware, reduced, or notified an
intention to reduce (conditionally or otherwise)
substantially its trading with or supplies to the Group; or
43
(c) changed or indicated in writing an intention to change
substantially the terms on which it is prepared to trade with
or supply the Group (other than price and quota changes
consistent with past practice).
(B) All net book debts and other trade receivables shown in the Accounts have
been realised for an aggregate sum not being less than that shown in the
Accounts less applicable provisions.
(C) No indication has been received that any debt now owing to any member of
the Group is bad or doubtful in whole or in part.
9. Contracts and commitments
(A) The Data Room contains each outstanding contract or arrangement entered
into by any member of the Group which:
(i) is worth more than GBP(pound)50,000 per annum;
(ii) restricts it from carrying on the Acquired Business Group in any
part of the world;
(iii) is a joint venture agreement or arrangement under which it is to
participate with any other person in any business; or
(iv) is an agency or distributorship contract or arrangement.
(B) No member of the Group is a party to any contract or arrangement which is
not contained in the Data Room and which:
(i) is a contract or arrangement which has an unexpired term of or more
one year;
(ii) can be terminated by any other party thereto in the event of a
change of control of that member of the Group or would be materially
affected by such change; or
(iii) makes it liable to make any investment in securities or make any
loan (other than normal trade credit) to any person.
(C) No member of the Group is in breach of any contract or arrangement of the
type referred to in paragraphs (A) or (B) above (a "Material Contract")
and, so far as the Obligors are aware, no other party to any such,
Contract is in breach of any such Material Contract.
44
10. Bank accounts and borrowings
(A) Details of all bank accounts maintained or used by each member of the
Group (comprising, in each case, the name and address of the bank with
whom the account is kept and the number and nature of the account) are set
out in the Disclosure Letter.
(B) The Data Room contains the terms of each overdraft, loan and other similar
financial facility available to each member of the Group and the amounts
outstanding under them (as at the close of business on the Business Day
immediately preceding the date of this Agreement) are set out in the
Disclosure Letter and no Investor Party or member of the Group has done
anything whereby the continuance of any of those facilities might be
affected or prejudiced.
(C) The total amount of Indebtedness of each member of the Group does not
exceed any limitation in its financial facilities or memorandum or
articles of association.
(D) The copy of the agreements relating to the BOS Facilities contained in the
Data Room are complete and accurate copies.
(E) Except for the borrowings referred to in paragraphs 10(B) and 10(C) no
member of the Group has outstanding any loan capital or incurred or agreed
to incur any borrowing which it has not repaid or satisfied, or has lent
or agreed to lend any money which has not been repaid to it or owns 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) or
is a party to or has any obligation under:
(i) 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
(ii) any other arrangement the purpose of which is to raise money or
provide finance or credit.
(F) No event which is or, with the passing of any time or the giving of any
notice, certificate, declaration or demand, would become an event of
default under or any material breach of any of the terms of any loan
capital, borrowing, debenture or financial facility of any member of the
Group or would entitle any third party to call for repayment prior to
normal maturity has occurred or been alleged.
11. Powers of attorney
No member of the Group has given any power of attorney, proxy or similar
authority in relation to the Acquired Business which is still outstanding.
45
12. Grants and allowances
No member of the Group has received any grant, allowance, aid or subsidy
from any supranational, national or local authority or government agency
during the last three years which is currently repayable as a result of
any act or failure to act by the member of the Group concerned or which
would be repayable as a result of the sale of the Shares to the Purchaser.
13. Substantial dependence
Since 1st April, 1999 no person has purchased from or sold to any member
of the Group more than 10 per cent. of the aggregate amount of all sales
or purchases made by the Group taken as a whole during such period.
14. Licences
All licences, consents, and other permissions and approvals which are
necessary to any Acquired Business (excluding those referred to in Clause
3 of this Agreement) are held by the relevant member of the Group and are
listed in the Disclosure Letter, are not subject to onerous conditions and
are in full force and effect and all reports, returns and information
required by law or as a condition of any licence, consents, permit or
approval to be made or given to any person or authority in connection with
the business of any member of the Group have been made or given to the
appropriate person or authority and no member of the Group has received
any indication that any licence, consent, permission or approval is likely
to be revoked or which may confer an right of revocation.
15. Litigation
(A) No member of the Group is engaged in any litigation or arbitration,
administrative or criminal proceedings, whether as plaintiff, defendant or
otherwise.
(B) No such litigation or arbitration, administrative or criminal proceedings
as are referred to in sub-paragraph (A) is pending or threatened or
expected and so far as the Obligors are aware (having made due and careful
enquiry of each member of the Group), there is no fact or circumstance
likely to give rise to any such litigation, arbitration, administrative or
criminal proceedings or to any proceedings against any director or
employee (past or present) of any member of the Group in respect of any
act or default for which that member might be vicariously liable.
16. Investigations and Inquiries
No member of the Group has received notification that any investigation or
inquiry is being or has been conducted by any supranational, national or
local authority or governmental agency in respect of the business or
affairs of any member of the
46
Group nor, so far as the Obligors are aware, are there any matters or
facts which might reasonably be expected to give rise to such litigation
or proceedings.
17. Property
(A) The Properties are the only real properties owned, used or occupied by the
Company or any member of the Group or in respect of which the Company or
any member of the Group has any estate, interest, right or liability.
(B) In relation to each Property:
(i) the member of the Group set out in Schedule 9 (Property) is solely
legally and beneficially entitled to such Property;
(ii) the member of the Group set out in Schedule 9 (Property) has under
its control all of the title deeds and documents necessary to prove
its title to such Property;
(iii) the member of the Group set out in Schedule 9 (Property) is in
physical possession and actual occupation of the whole of such
Property on an exclusive basis.
(C) (i) There are no mortgages or charges, legal or equitable, fixed or
floating, affecting any of the Properties and no person has or
claims to have any lien on any of the Properties or the documents of
title.
(ii) There have been no notices received of any non-compliance with any
covenants, restrictions and other encumbrances affecting any
Property.
(D) (i) Each Property is presently used for the purpose referred to in
Schedule 9 (Property), which so far as the Managers are aware is a
permitted or lawful use under applicable planning legislation.
(ii) There have been no notices received of any non-compliance with any
conditions to any consent or permission relating to any Property and
the Managers are not aware of any breach of the same.
(iii) No enforcement notice, stop notice, breach of condition notice or
revocation, modification or discontinuance order affecting any
Property has been received.
(E) No notice of non-compliance has been received regarding statutes, orders
or regulations relating to each Property, its current use or development
or the use of any fixtures, machinery or chattels in it.
47
(F) So far as the Managers are aware no member of the Group has received a
compulsory purchase order, notice to treat or a notice of entry and no
proposals have been published for its compulsory acquisition in respect of
the Properties.
(G) (i) To the best of the Managers' knowledge (having made no specific
enquiry) all buildings or other structures on or comprising each
Property are in good state of repair and condition and none of the
Managers expect that the expenditure of any substantial sum of money
will be required in respect of the Property within two years of the
date of this agreement.
(ii) Neither the Sellers nor the relevant member of the Group that has
the title interest in any Property has received any adverse
surveyors', engineers' or other professionals' reports in respect of
any Property.
(H) None of the Properties is subject to the payment of any outgoings other
than the uniform business rate or water rates (and, in the case of
leaseholds, the rents, insurance and service charge reserved by the Lease)
all of which have been paid to date.
(I) So far as the Managers are aware there are no outstanding disputes,
actions, claims, demands or complaints in respect of any Property and no
notice affecting any Property has been given or received.
(J) In relation to each Property which is leasehold:
(i) the Property is held under the terms of the lease (the "Lease")
briefly referred to in Schedule 9 (Property) and no collateral
assurances, undertakings or concessions have been made by any party
to the Lease;
(ii) there are no rent reviews outstanding or exercisable by the lessor
from a date prior to the Completion Date;
(iii) the rent and all other sums payable under the Lease have been paid
to date. Neither the Managers nor any of the relevant site
management have received any notice of any non-compliance with any
covenants and conditions contained in the Lease or in any licence,
consent or other document entered into supplemental to the Lease;
(iv) neither the tenant nor any other person has carried out any
alterations or improvements which are required by the Lease to be
reinstated or removed on or before the end of the term.
18. Environment
(A) All Environmental permits have been obtained and are in full force and
effect.
48
(B) No circumstances exist which could result in and the sale of the Shares
under this Agreement will not result in (a) the limitation or revocation
of any Environmental Permit; or (b) any Environmental Permit not being
renewed or granted.
(C) Each member of the Group complies and in the last three years has complied
in all respects with Environmental Law and there are and have been no acts
or omissions of the Company in relation to Environmental Matters which are
reasonably likely to give rise to any fines, penalties, losses, damages,
costs, expenses or liabilities.
(D) No member of the Group is or has been involved in the past 3 years in any
litigation proceedings, claim or complaint by any person under
Environmental Laws and none is threatened or pending. At no time in the
past 3 years has any member of the Group received any written notice or
communication alleging any liability in relation to Environmental Matters.
(E) All environmental audits and other assessments, reviews and reports
published in the last 12 months in the possession or control of any member
of the Group relating to any Property or any of the activities of the
members of the Group have been disclosed.
(F) No member of the Group has any liability to any person in respect of
Environmental Matters under any contract or other agreement entered into
within the last 12 months relating to the sale or other disposal or grant
of any interest or rights in relation to any shares, land or other asset.
19. Intellectual Property
(A) No member of the Group owns any registered Intellectual Property legally
or beneficially.
(B) No member of the Group has granted a licence in respect of any
Intellectual Property used or being developed for use in any of the
Acquired Businesses.
No member of the Group has granted a licence in respect of any
Intellectual Property used or being developed for use in any of the
Acquired Businesses.
(C) So far as the Obligors are aware the processes and methods employed, the
services provided, the businesses conducted and the products manufactured,
used or dealt in by each member of the Group do not infringe and have not
infringed the rights of any other person in any Intellectual Property.
(D) So far as the Obligors are aware, there is no unauthorised use or
infringement by any person of any Intellectual Property owned or otherwise
required for the business of any member of the Group.
49
20. Competition and trade regulation law
(A) So far as the Obligors are aware, no member of the Group is a party to any
agreement in a manner which:-
(i) contravenes the Competition ▇▇▇ ▇▇▇▇; or
(ii) infringes Article 81 or 82 of the Treaty establishing the European
Union.
(B) No member of the Group is a party to any agreement in respect of which any
undertaking has been given by or any order made against any member of the
Group pursuant to the RTPA 1976 or in respect of which an undertaking has
been given by or an order made against any member of the Group pursuant to
the Resale Prices ▇▇▇ ▇▇▇▇.
(C) No member of the Group has given any assurance or undertaking (which
remains outstanding) to, or is subject to any specific order, decision or
ruling of:-
(i) the Office of Fair Trading or the Competition Commission; or
(ii) the Commission of the European Union under EC competition
legislation.
(D) No member of the Group is a party to or is concerned in any agreement or
arrangement in respect of which an application for negative clearance
and/or exemption has been made to the Commission of the European Union.
(E) No filing is required by any of the Investor Parties as an "acquiring
person" under the U.S. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976 as amended in connection with his, her or its acquisition of
Consideration Shares.
21. Insurances
Details of the insurance policies in respect of which any member of the
Group has an interest are set out in the Data Room and, no individual or
related claims for amounts in excess of (pound)25,000 are outstanding
thereunder.
22. Employment
(A) A list of the names, jobs and details of the terms of employment
(including the emoluments) of each Employee is set out in the Disclosure
Letter.
(B) Short details of any material benefit received by any Employee otherwise
than in cash, and of any benefit received by any Employee in cash which is
related in whole or in part to sales, profits, turnover or performance, or
which is otherwise variable (other than normal overtime), are set out in
the Disclosure Letter.
50
(C) Unless provided otherwise by mandatory statutory provisions and in
accordance with applicable law, any contract of employment with any
Employee to which any member of the Group is a party can be terminated by
the employing company without damages or compensation (other than that
payable under statute) by giving at any time no more than three months'
notice in writing to that Employee.
(D) No Senior Employee 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 Senior Employee, director or employee or former Senior Employee is in
arrears and unpaid other than his salary for the month current at the date
of this Agreement.
(E) Since the Takeover Date, no change has been made in the emoluments or
other terms of employment of any Senior Employee.
(F) There is no dispute between any member of the Group and any trade union or
other organisation formed for a similar purpose existing nor, pending or
threatened in writing to any member of the Group and there is no
collective bargaining agreement (whether binding or not) to which any
member of the Group is a party.
(G) There is no person who works wholly or predominantly in any Acquired
Business who is not an employee of a member of the Group.
(H) No member of the Group is the employer of any person who does not work
wholly in one or more of the Acquired Businesses.
(I) Any and all arrangements under which benefits of any kind are payable to
or in respect of any employee or former employee of any member of the
Group in the event of disability or sickness are fully insured under a
policy with an insurance company and will not cease to be so insured
before Completion.
(J) The Group complies with all applicable laws and industry guidelines
relating to the health and safety of employees and so far as the Obligors
are aware, no circumstances exist which are likely to endanger the health
and safety of any of the Group's employees.
23. Information Technology
So far as the Obligors are aware:-
(A) in the 12 months prior to the date of this Agreement there has been no
failure or breakdown of any computer software and/or computer hardware
used by any member of the Group which has caused any material disruption
to the Acquired Business.
(B) the computer software and hardware operated by each member of the Group is
adequate for the purposes of running the Acquired Business as currently
carried on.
51
(C) no member of the Group has experienced any material disruption to its
business or operations as a result of Year 2000 Matters and there is no
fact or circumstance of which the Obligors are aware likely to give rise
to such disruption.
24. Product Liability
No member of the Group has received in the period of two years prior to
the date of this Agreement any material notification or claim which
remains outstanding that it has manufactured, sold or provided any product
or service which does not comply with all applicable laws, regulations or
standards or which is defective or dangerous or not in accordance with any
representation or warranty, express or implied, given by the relevant
member of the Group. So far as the Obligors are aware, no matters or facts
exist which might reasonably be expected to give rise to any such
notification or claim.
25. Pensions
In this paragraph 25:
"Former Schemes" means all occupational pension schemes (as
defined in section 1 of the Pension Schemes Act
1993) to which any member of the Group may be
required to make a payment pursuant to section
75 of the Pensions ▇▇▇ ▇▇▇▇, or otherwise as a
result of the liabilities of the scheme
exceeding the value of its assets,
"Pension Schemes" means:-
(i) the Zlin Electronics Limited Group Personal
Pension Scheme insured with Norwich Union;
(ii) the Guardian Group Life Assurance Scheme;
(iii) the Zlin Electronics Limited Personal
Pension Scheme insured with Scottish
Equitable;
(iv) the Zlin Electronics Limited Staff Pension
Fund;
(v) the Zlin Electronics Limited Directors
Pension Fund;
(vi) the Calne Electronics Ltd Staff Benefit
Scheme insured with Eagle Star;
(vii) the Calne Electronics Limited Directors
Pension Scheme;
52
(viii) the Calne Electronics Staff Retirement
Benefit Scheme;
(ix) the Sun Life Group Personal Pension Plan
(in relation to the Group);
(x) the Scottish Life Group Money Purchase Plan
(in relation to the Group);
(xi) the AXA Money Purchase Scheme for ▇.
▇▇▇▇▇▇;
(xii) the ▇▇▇▇▇▇▇ Engineering plc Retirement and
De ath Benefits Scheme; and
(xiii) the ▇▇▇▇▇▇▇ Engineering Retirement Benefit
Scheme insured with Scottish Life.
"Relevant Employee" means an employee or director for the time
being of or a former employee or director of
any member of the Group or a former employee or
director of any other employer to whose
business (or any part thereof) any member of
the Group has succeeded.
(A) Other than the Pension Schemes and the State schemes, there is no
arrangement to which any member of the Group contributes or has
contributed under which benefits of any kind are payable to or in respect
of any of the Relevant Employees on retirement or death (whether
accidental or not).
(B) Full details have been disclosed to the Purchaser of all present officers
and employees of any member of the Group who are members of the Pension
Schemes and of the rates at which any member of the Group is or may be
liable to contribute in respect of each of those members.
(C) No member of the Group is making and no member of the Group has regularly
made or will before Completion make any ex gratia payments to any of the
Relevant Employees or to any spouse, child or dependant of any of them.
(D) Each Pension Scheme:
(i) is an exempt approved scheme (within the meaning of Chapter I of
Part XIV or Chapter IV or Part XII of the Income and Corporation
Taxes Act 1988);
(ii) has at all times complied with and been duly administered in
accordance with, and will until Completion continue to comply with
and to be duly administered in accordance with, all applicable laws,
regulations and requirements (including Revenue and trust
requirements).
53
(E) Each member of the Group in respect of each Pension Scheme which is
contracted-out (other than any Pension Scheme under which at no time has
any Relevant Employee in the employ of that member of the Group been
entitled to benefit) holds or is named in and will until Completion
continue to hold or be named in an appropriate contracting-out certificate
(within the meaning of the Pension Schemes Act 1993) in respect of those
of its employees who are members of such a Pension Scheme.
(F) All benefits payable under each Pension Scheme on death before normal
pension age of a Relevant Employee while in an employment to which the
Pension Scheme relates are insured fully under a policy with an insurance
company and will not cease to be so insured before Completion.
(G) All contributions to each Pension Scheme have at all times been made in
accordance with the provisions of the Pension Scheme and those which fall
due for payment before the date of Completion will have been paid by that
date.
(H) No undertaking or assurance has been given to any Relevant Employee as to
the continuance or introduction or increase or improvements of any pension
rights or entitlement.
(I) Each Pension Scheme provides only money purchase benefits within the
meaning of section 181(1) of the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇.
(J) No claims (other than routine claims for benefits), complaints to the
Pensions Ombudsman or reports to the Occupational Pensions Regulatory
Authority have been made or as far as the Obligors are aware are pending
or threatened in respect of the provision of (or failure to provide)
pension, lump sum or death benefits by any member of the Group. There is
no fact or circumstance likely to give rise to such claims or complaints.
(K) No "surplus payment" within the meaning of the Pension Scheme Surpluses
(Administration) Regulations 1987 (S.I. 1987 No. 352) has been, or will
before Completion be, made out of any of the Pension Schemes.
(L) Each member of the Group and each Pension Scheme has complied fully with
all equal pay, equal entitlement, sex and other discrimination legislation
including Article 141 of the Treaty of Rome, all applicable EU directives
and all UK statutes and regulations and statutory instruments.
(M) (i) The identity of every Former Scheme is set out in the Disclosure
Letter.
(ii) No member of the Group has participated in any Former Scheme
immediately before or at a time when that scheme ceased to admit new
members.
54
(N) The name, registered number and registered office of all companies
participating in any of the Pension Scheme or the Former Schemes at the
date of this Agreement or, if the scheme has ceased to admit new members,
immediately before or at any time after such cessation have been disclosed
to the Purchaser in the Disclosure Letter.
(O) The ▇▇▇▇▇▇▇ Engineering Retirement Benefit scheme is being wound up and
there are sufficient assets in this Scheme to meet all current and future
liabilities of the scheme and after any augmentation of the members'
benefits to discharge any administration fees associated with the winding
up.
26. The Accounts and Tax
Save in respect of accounting periods commencing after the Accounts Date, no
member of the Group has any liability in respect of Taxation (whether actual or
contingent) that is not disclosed or provided for in the Accounts and, in
particular, has no outstanding liability for:-
(A) Taxation in any part of the world assessable or payable by reference to
profits, gains, income or distributions 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 Accounts Date; or
(B) for purchase, value added, sales or other similar tax in any part of the
world referable to transactions effected on or before the Accounts Date,
that is not properly provided for in full in the Accounts.
27. Tax returns, disputes, records and claims etc.
(A) Each member of the Group has 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 Tax Authority.
(B) So far as the Obligors are aware, there is no dispute or disagreement
outstanding nor is any contemplated at the date of this agreement with any
Tax Authority regarding liability or potential liability to any Tax
(including in each case penalties or interest) recoverable from any member
of the Group or regarding the availability of any relief from Tax to any
member of the Group and there are no circumstances which make it likely
that any such dispute or disagreement will commence.
(C) The amount of Tax chargeable on any member of 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 Tax Authority.
55
(D) No member of the Group has received any written notice from any Tax
Authority which requires such member to withhold Tax from any payment made
since the Accounts Date.
28. Stamp duty
All material documents which are required to be stamped and which are in
the possession of any member of the Group or by virtue of which any member
of the Group has any right have been duly stamped.
29. Value added tax
(A) The Company is registered for the purposes of VATA 1994 and has 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 payments or returns due and has not been
required by the Commissioners of Customs & Excise to give security under
paragraph 4 of Schedule 11 VATA 1994.
(B) The Company has never been treated as a member of a group under section 43
VATA 1994 and no application has ever been made for the Company so to be
treated.
(C) The Company has not, since the date of its registration for the purposes
of VATA 1994, been in default in respect of any prescribed Accounting
Period, as mentioned in section 59(1) VATA 1994.
(D) Full details of any outstanding claim for bad debt relief under section 36
VATA 1994 or under section 11 Finance Act 1990 made by the Company has
been disclosed in writing to the Purchaser.
30. Tax events since the Accounts Date
Since the Accounts Date:-
(i) no member of the Group has declared, made or paid any distribution
within the meaning of ICTA 1988;
(ii) no accounting period of any member of the Group has ended;
(iii) no member of the Group has been a party to any transaction for which
any tax clearance provided for by statute has been or could have
been obtained from any Revenue Authority;
(iv) no member of the Group 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.
56
31. 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 &
Excise payable in respect of any assets (including trading stock)
imported, owned or used by any member of the Group have been paid in full.
32. Replacement of business assets
Full particulars of each claim under section 115 or 116 CGTA 1979 or under
sections 152 or 153 of the 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 any member of the Group 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 the
Disclosure Letter.
33. Distributions
Since the date of incorporation of the relevant member of the Group, no
member of the Group has made any repayment of share capital to which
section 210(1) ICTA 1988 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.
34. Deductions and withholdings
Each member of the Group 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 Tax
Authority for all amounts so deducted.
35. Residence
The country which is given in Schedule 6 or Schedule 7 as the tax
residence of each member of the Group is the only country whose Tax
Authorities seek to charge Tax on the world-wide profits or gains of that
member of the Group and no member of the Group has ever paid Tax on income
profits or gains to any Tax Authority in any other country except that
mentioned in Schedule 6 or Schedule 7 in respect of it.
36. Group arrangements
There are no circumstances by virtue of which section 410 or 413 of ICTA
1988 would prevent each member of the Group resident in the United Kingdom
being treated as a member of the same group of companies as each other
such member so resident within Chapter IV Part X of ICTA 1988 for any
accounting period commencing on or before the date of this Agreement.
57
37. Exit Charges
No liability to Tax will arise to any member of the Group under section
179 of TCGA 1992 in consequence of the sale and purchase of the Shares
pursuant to this Agreement.
38. Roll-over and Hold-over Relief
No roll-over or hold-over claim or election has been made in respect of
the disposal of the site at Cheshunt (full particulars of such disposal
being set out in the Disclosure Letter).
58
SCHEDULE 4
(Limitations on liability)
Part 1
1. Limitation on quantum and general
(A) Subject as provided below, the total aggregate liability of the Obligors
under the Warranties, the Indemnities and the Tax Covenant (other than any
claim under the Warranties set out in paragraphs 1 and 2 of Schedule 3)
shall not in any event exceed:
(i) up to the first anniversary of the Completion Date, an amount equal
to 9.85 per cent. of the Provisional Consideration plus in the case
of a Manager an amount equal to that Manager's Liability Cap
Addition; and
(ii) after the first anniversary of the Completion Date, an amount equal
to 3.4 per cent of the Provisional Consideration,
provided that the individual liability of any one Obligor under the
Warranties, the Indemnities and the Tax Covenant (other than any claim
under the Warranties set out in paragraphs 1 and 2 of Schedule 3) in
respect of each claim shall be pro rata to its or his percentage of the
Provisional Consideration and shall not in any event exceed:
(i) up to the first anniversary of the Completion Date, an amount equal
to 9.85 per cent. of the Provisional Consideration attributable to
that particular Obligor plus in the case of a Manager an amount
equal to that Manager's Liability Cap Addition; and
(ii) after the first anniversary of the Completion Date, an amount equal
to 3.4 per cent. of the Provisional Consideration attributable to
that particular Obligor.
In this paragraph the expression "Liability Cap Addition" means:
(i) in the case of ▇▇▇▇▇▇ ▇▇▇▇▇▇, (pound)366,000 (58 per cent.);
(ii) in the case of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (pound)196,000 (31 per cent.); and
(iii) in the case of ▇▇▇▇ ▇▇▇▇▇▇▇ (pound)68,000 (11 per cent.).
In the event that the total aggregate liability of the Obligors under the
Warranties, the Indemnities and the Tax Covenant (other than any claim
under the Warranties set out in paragraphs 1 and 2 of Schedule 3) exceeds
9.85 per cent. of the Provisional Consideration in respect of the period
up to the first anniversary of the Completion Date, and the Managers are
additionally liable up to the Managers'
59
Liability Cap Addition, then the liability of each Manager in respect of
that additional liability shall not exceed his pro rata percentage of the
Managers' Liability Cap Addition.
(B) The Purchaser shall not be entitled in any event to damages or other
payment in respect of any claim or claims under the Warranties, the Tax
Covenant or the Indemnities unless and until the amount of all claims made
in respect of the Warranties, the Tax Covenant or the Indemnities or any
of them exceeds GBP 30,000 but, once the amount of all such claims has
exceeded such sum, the Obligors' liability shall arise in respect of the
full amount of all such claims and not merely in respect of the excess
over such sum.
(C) Each provision of this Schedule shall be read and construed without
prejudice to each of the other provisions of this Schedule.
(D) As regards the Tax Covenant the provisions of this Schedule shall operate
to limit the liability of the Obligors only in so far as any provision in
this Schedule is expressed to be applicable to the Tax Covenant.
2. Time limits for bringing claims
(A) No claim shall be brought against the Obligors or any of them in respect
of any of the Warranties, the Tax covenant or the Indemnities unless the
Purchaser shall have given written notice to the Obligors of such claim
specifying (in reasonable detail) the matter which gives rise to the claim
and the nature of the claim:-
(i) subject to sub-paragraphs (ii), (iii) and (iv), on or before the
date falling 12 months after the Completion Date;
(ii) on or before the second anniversary of the Completion Date in
respect of claims relating to Environmental Matters;
(iii) on or before the sixth anniversary of the Completion Date in respect
of any claims under the Tax Warranties or the Tax Covenant;
(iv) at any time after Completion in respect of any claim under the
Warranties set out in paragraphs 1 and 2 of Schedule 3.
(B) the liability of the Obligors in respect of any claim 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 within 12 months of the service of such notice and for this
purpose proceedings shall not be deemed to have been commenced unless they
shall have been properly issued and validly served upon the Obligors or
any of them as relevant.
60
3. Conduct of litigation
Upon the Purchaser becoming aware that any claim, action or demand against it or
any other matter is reasonably likely to give rise to any claim in respect of
any of the Warranties (except a Tax Warranty), the Purchaser shall:-
(A) as soon as reasonably practicable notify the Investor Parties in writing
as soon as it appears to the Purchaser that any assessment or claim of a
third party received by or coming to the notice of the Purchaser or any
member of the Purchaser's Group may result in a claim under the
Warranties;
(B) save where the Purchaser reasonably believes that to do so would be
reasonably likely to be materially detrimental to the business or affairs
of any member of the Purchaser's Group or where there is a conflict of
interest between the Obligors and any member of the Purchaser's Group (in
which event the Purchaser shall explain the reasons to the Investor
Parties), and subject to the Obligors indemnifying and securing the
Purchaser and each member of the Purchaser's Group to their reasonable
satisfaction against any liability, costs, damages or expenses which may
be incurred thereby (but without prejudice to any rights which the
Purchaser may have against the Obligors in respect of any such claim and
without constituting a waiver of such rights):-
(i) give such information and reasonable access to personnel, premises,
documents and records within the power, possession or control of the
Purchaser, not subject to legal professional privilege, to Obligors
and their professional advisers as it may reasonably request
(subject to confidentiality undertakings reasonably acceptable to
the Purchaser being given by the Obligors and take such reasonable
action and give such reasonable information and assistance as the
Obligors may reasonably request in order to avoid, dispute, resist,
mitigate, settle, compromise, defend or appeal any claim in respect
thereof or adjudication with respect thereto; and
(ii) if the Investor Parties so request, allow the Investor Parties to
take the sole conduct of such actions as the Investor Parties may
deem appropriate in connection with any such assessment or claim in
the name of the Purchaser or any relevant company and in that
connection the Purchaser shall give or cause to be given to the
Investor Parties all such assistance as the Investor Parties may
reasonably require in avoiding, disputing, resisting, settling,
compromising, defending or appealing any such claim and shall
instruct such solicitors or other professional advisers as the
Investor Parties may nominate to act on behalf of the Purchaser or
any relevant company, as appropriate, provided that the Purchaser
shall not be required to commence any legal proceedings where
either:-
(a) the Purchaser has validly assigned all of its rights in
relation to the relevant claim to the Investor Parties in a
manner which entitles the
61
latter to the same benefits in respect of such rights as the
Purchaser had; or
(b) where sub-paragraph (B)(ii)(a) does not apply the Investor
Parties have not notified the relevant party against whom such
proceedings are brought that such proceedings are being
brought at their instruction; and
(C) save where the Purchaser reasonably believes that failure to do so would
be reasonably likely to be materially detrimental to the business or
affairs of any member of the Purchaser's Group or where there is a
conflict of interest between the Investor Parties and any member of the
Purchaser's Group or where it is required to do so by law, make no
admission of liability, agreement or compromise with any third party in
relation to any such claim or adjudication without prior consultation with
the Investor Parties.
(D) Any failure by the Purchaser to comply or procure compliance with the
provisions of this paragraph 3 due to events beyond its control shall not
prevent any claim by the Purchaser or extinguish any liability of the
Investor Parties in respect of the matter in question.
4. No liability if loss is otherwise compensated for
No liability shall attach to the Obligors by reason of any breach of any
of the Warranties or the Tax Covenant to the extent that the same loss has
been recovered by the Purchaser by a claim under any other Warranty or
under the Tax Covenant.
5. Disclosure
The Purchaser shall not be entitled to claim that any fact, matter or
circumstance causes any of the Warranties to be breached if fairly
disclosed in the Disclosure Letter.
6. Claim to be reduction of Adjusted EnterpriseValue
Any payment made by any of the Obligors or any other person in respect of
any claim under the Warranties shall be deemed to be a reduction of the
Adjusted Enterprise Value.
7. Fraud
None of the limitations contained in this Schedule 4 shall apply to any
claim by the Purchaser pursuant to this Agreement which (or the delay in
discovery of which) is the consequence of fraud or dishonest concealment
by any of the Investor Parties or any of their respective offices or
employees or agents or advisers.
62
8. Insurance
If, in respect of any matter which would give rise to a claim under the
Warranties (other than a Tax Warranty) the Purchaser and/or any member of
the Group is entitled to claim indemnity against any loss or damage
suffered by it arising out of the subject matter thereof under the terms
of any insurance policy for the time being in force, the Purchaser shall
at the request of the Investor Parties, subject to the Investor Parties
indemnifying and securing the Purchaser and/or any member(s) of the Group
to the Purchaser's reasonable satisfaction against any liability, costs,
damages or expenses (including, without limitation, increased premiums)
which may be incurred, procure that all such steps are taken to enforce
recovery and, if any sum is so recovered, then either:-
(i) the amount payable by the Investor Parties in respect of such claim
shall be reduced by an amount equal to the sum recovered less all
reasonable costs, charges and expenses incurred by the Purchaser
and/or any member(s) of the Group in recovering that sum under the
terms of the insurance policy; or
(ii) (if any amount shall already have been paid by the Investor Parties
in respect of such claim) there shall be repaid to the Investor
Parties an amount equal to the amount recovered or (if less) the
amount of such payment less all reasonable costs, charges and
expenses incurred by the Purchaser and/or the relevant member of the
Group in recovering that sum from such other person,
PROVIDED THAT
(i) nothing in this sub-paragraph shall oblige the Purchaser and/or any
member of the Group to take such steps prior to making a claim or
recovering from the Investor Parties under the Warranties; and
(ii) to the extent that any such amount recovered from insurers does not
cover the entire loss, the Purchaser shall be entitled to recover
the shortfall from the Obligors up to the full extent of their
liability under this Agreement.
9. Company Taxation Liability Reduced
In calculating the liability of the Obligors for any breach of the Warranties,
there shall be taken into account the amount by which any Taxation for which the
Company or any of the Subsidiaries is now or in the future accountable or liable
to be assessed is reduced or extinguished as a result of the matter giving rise
to such liability.
10. Tax Warranties
Clause 3 (Limits on Clause 2) of the Tax Covenant shall apply to any claims made
in respect of the Tax Warranties. The provisions of Clause 6 (Claims Procedure)
shall apply
63
in respect of any claim, action or demand in relation to the Tax Warranties as
if any such claim, action or demand were a Claim (as defined in the Tax
Covenant).
11. Provisions
The Purchaser shall not be entitled to make any claim under the Warranties in
respect of any matter in respect of which a full and specific provision has been
made in the Accounts or the Management Accounts.
64
SCHEDULE 5
(Ownership of the Shares and Entitlement to Consideration Shares)
[DETAIL OMITTED]
92
SCHEDULE 8
(Agreed Calculation of the Provisional Consideration as at 31st March, 2000)
(A) Calculation of Provisional Consideration
93
(B) The Investor Loans are (in GBP):
[DETAIL OMITTED]
----------------------------------------------=================================
TOTAL 14,868,000
=================================
94
(C) The Assumed Liabilities are (in GBP):
-------------------------------------------------------------------------------
The outstanding BOS loans (18,500,000) ((pound))
-------------------------------------------------------------------------------
The Estimated Net Cash 4,150,000
-------------------------------------------------------------------------------
The Calne loan notes (573,000)
-------------------------------------------------------------------------------
An agreed figure for finance leases (300,000)
-------------------------------------------------------------------------------
TOTAL 15,223,000
================================
95
SCHEDULE 9
(Property)
Part A
Relevant Properties
Freehold Properties with registered titles
Registered proprietor (owner) Title number Nature of title Short description Use
Zlin Electronics Ltd GR117211 Absolute Land on the east side of Vacant - bare land
Alexandra Way, Ashchurch
Rd, Tewkesbury, Gloucs.
Leasehold Properties with registered titles
Registered Title number Nature and Parties Term Current rental Short description Use
proprietor (owner) Date of title
lease
Zlin Electronics GR164514 11 April 1994 N P I Trustee 25 years (pound)126,000 ▇▇▇▇ ▇▇, Classes B1(c),
Ltd Services Limited expires 24 p.a. ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇, ▇▇
& P V L ▇▇▇▇▇ & March 2019 Ashchurch
F A Kozuibik (1) Industrial
Zlin Electronics Estate,
Ltd (2) Tewkesbury,
Gloucs.
96
Calne Electronics
Ltd WT177524 3 August 1998 RYU Limited (1) 25 years (pound)205,000 ▇▇ ▇▇▇▇▇▇ ▇▇, Class B1(b)
Calne expiring 2 p.a. Porte ▇▇▇▇▇ and/or (c)
Electronics Ltd August 2023 Industrial and/or B2
(2) ▇▇▇▇▇▇▇ Plc Estate, Calne, and/or B8 and
(3) Wiltshire in each case
with ancillary
offices
▇▇▇▇▇▇▇ Limited BD199250 9 April 1997 London Pensions 25 years (pound)104,000 Premises at Class B1
Fund Authority expiring 8 p.a. from 9 ▇▇▇▇▇ ▇▇▇▇▇▇▇ Road, (Business)
(1) Finishing April 2022 1999 to 8 April Woburn Road
Services Limited 2000 Industrial
(2) ▇▇▇▇▇▇▇ Plc Estate, Kempston,
Bedfordshire
Leasehold Properties with unregistered titles
Present lessee (owner) Date of lease Parties Term Current rental Short description Use
Classical Circuits Ltd 2 November ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Expires 27 (pound)127,500 ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇, Class B1(c)
Properties (1) September p.a. (Believed Tolworth,
Classical Circuits 2012 not finalised) Surbiton, Surrey
Limited (2) Ravenscroft
Industrial Estates
Limited (3) and Thorn
EMI Business
Electronics Limited (in
liquidation (4)
97
Calne Electronics Ltd 18 June 1993 R G & ▇ ▇ ▇▇▇▇▇▇ (1) Extended (pound)17,592 ▇▇-▇▇ ▇▇▇▇▇▇ ▇▇▇▇, Light
Calne Electronics Ltd until 24 p.a. Porte ▇▇▇▇▇ industrial and
(2) December Industrial Estate, B1
L R & A Buckland (3) 2001 Calne, Wiltshire
A term of
▇▇▇▇▇▇▇ Precision Ltd 6 November British Aluminium years from (pound)84,538 ▇▇▇▇ ▇, ▇▇▇▇▇▇ ▇▇, ▇▇, ▇▇
▇▇▇▇ Limited (1) 8 p.a. Industrial Estate,
▇▇▇▇▇▇▇ Engineering September Bingley Road,
(Precision) Ltd (2) ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
expiring 8 (18,338 square
November feet)
2001
▇▇▇▇▇▇▇ Precision Ltd 1 September Standard Life 20 years (pound)331,259 Axis 10, ▇▇▇▇ ▇▇▇▇ B2, B8 (general
1997 Investment Fund Limited from 24 p.a. Road, Foxholes industrial
(1) June 1997 Business Park, purposes and
▇▇▇▇▇▇▇ Engineering until 20 Hertford for storage, or
(Precision) Ltd (2) June 2017 as a
▇▇▇▇▇▇▇ Plc (3) distribution
centre
respectively)
98
Calne Electronics Ltd 24 January 1994 R G & ▇ ▇ ▇▇▇▇▇▇ (1) Extended (pound)7,380 Unit 8, ▇▇▇▇▇▇ B1 light
Calne Electronics Ltd until ▇▇ ▇.▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ industrial
(2) December Industrial Estate, purposes which
2001 Calne, Wiltshire can be carried
out within a
residential
area without
detriment to
the amenity of
the area
Calne Electronics Ltd 13 April 1995 R G & ▇ ▇ ▇▇▇▇▇▇ (1) Extended (pound)7,830 Unit 9, ▇▇▇▇▇▇ B1 as above
Calne Electronics Ltd until ▇▇ ▇.▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(2) December Industrial Estate,
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 2001 Calne, Wiltshire
and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (3)
Calne Electronics Ltd 24 November R G & ▇ ▇ ▇▇▇▇▇▇ (1) Extended (pound)11,262 Unit 10, Harris B1 as above
1995 Calne Electronics Ltd until ▇▇ ▇.▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(2) December Industrial Estate,
L.R. and Buckland (3) 2001 Calne, Wiltshire
Calne Electronics Ltd 19 November MacDonald Hydratools Current (pound)6,000 Unit 2, ▇▇▇▇▇▇ Light
1998 Limited (1) tenant in p.a. Road, Porte ▇▇▇▇▇ industrial
Calne Electronics Ltd occupation Industrial Estate, premises and/or
(2) until 24 Calne, Wiltshire warehouse
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & March premises and
Company (Pneumatic 2000. for all
Tools) Ltd (3) Lease not ancillary
renewed. purposes
99
Calne Electronics Ltd 22 October 1991 ▇ ▇ ▇▇▇▇▇▇▇ Limited (1) Tenant (pound)5,670 Unit 5, ▇▇▇▇▇▇ Light
Calne Electronics Ltd holding p.a. paid Road, Porte ▇▇▇▇▇ industrial
(2) over quarterly Industrial Estate, purposes
Calne, Wiltshire
Calne Electronics Ltd 1 February 1990 ▇▇▇▇▇ ▇▇▇▇▇▇ (1) Tenant (pound)10,000 ▇▇▇▇ ▇, ▇▇▇▇▇▇ ▇▇, ▇▇, ▇▇
▇▇▇▇▇ Electronics Ltd holding p.a. paid Road, Porte ▇▇▇▇▇
(2) over quarterly Industrial Estate,
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Calne, Wiltshire
(3)
From 11
▇▇▇▇▇▇▇ Limited 17 December Chapter One Group December (pound)20,000 1st Floor, Phase 4 B1 other than
1998 Limited (1) 1998 to 30 p.a. Building Racal for any
▇▇▇▇▇▇▇ Plc (2) September Site, ▇▇▇▇▇▇▇▇ industrial
2002 Industrial Estate, purposes
Green Lane,
Tewkesbury, Gloucs.
Calne Electronics Ltd 14 July 1987 ▇▇▇▇▇ ▇▇▇▇▇▇ (1) 11 years (pound)3,000 Unit 4, ▇▇▇▇▇▇ Storage
Calne Electronics Ltd from 1 licence fee Road, Porte ▇▇▇▇▇
(2) July 1987 (one off Industrial Estate,
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ which payment) Calne, Wiltshire
(3) expired 30
June 1998
- by
letter
licence
granted to
23 June
2000
100
Part B
Letting documents
Relevant Property Part let/letting Date of letting Nature of letting Current landlord Current rental Current occupier
of whole document document and and current and next rent
parties tenant review
Land at ▇▇▇▇▇▇▇ Lease of whole 30 April, 1999 Underlease ▇▇▇▇▇▇▇ Limited (pound)104,000 Finishing
Road, Woburn between ▇▇▇▇▇▇▇ (1) p.a. - 9 April, Services Limited
Industrial Estate, PLC (1) Finishing 2004
Kempston, Finishing Services Limited
Bedfordshire Services Limited (2)
(2)
101
SCHEDULE 10
(Adjustments to the Provisional Consideration)
1. Preparation of Adjustment Statement
(A) As soon as possible after the later of (i) the end of the Adjustment
Period and (ii) the Completion Date, the Investor Parties shall procure
that the Investor Parties' Auditors prepare and deliver to the Purchaser's
Auditors (i) a statement of EBITDA for the Adjustment Period drawn up in
accordance with the provisions of this Schedule 10 and (ii) the aggregate
amount of the liabilities of the Group, set out in Schedule 8 as at 31st
March, 2000 which has been calculated in accordance with Generally
Accepted Accounting Principles in the UK except in the case of finance
leases which shall be deemed to be GBP 3,000,000 (the "Final Net Debt
Amount).
(B) "EBITDA" for the Adjustment Period means the profit of the Group for that
period:
(a) before taking into account all extraordinary items (whether
positive or negative) but after taking into account all
exceptional items (whether positive or negative) except for,
specifically, the exceptional items relating to Invision
Microsystems bad debt (GBP 378,000) and the expenses of
▇▇▇▇▇▇▇ Limited related to the Takeover (GBP 518,000) which
shall not be deducted for the purposes of calculating EBITDA;
(b) before deducting corporation tax;
(c) before taking into account interest accrued, whether or not
paid, deferred or capitalised during the period;
(d) after deducting any gain, and adding back any loss, relative
to book value arising on the sale, lease or other disposal of
any capital asset during that period and after deducting any
gain, and adding back any loss, arising on revalution or any
asset during that period, in each case to the extent that it
would otherwise be taken into account;
(e) before deducting amortisation of any goodwill and other
intangibles; and
(f) before deducting depreciation,
calculated in accordance with generally accepted accounting principles in
the United Kingdom.
(C) The Purchaser shall procure that the Purchaser's Auditors shall as soon as
possible review the Adjustment Statement and, within 15 Business Days of
receipt, confirm to the Investor Parties' Auditors whether or not they
agree with the Adjustment Statement, giving written details of any matters
in dispute.
102
(D) If the Purchaser, or the Purchaser's Auditors on behalf of the Purchaser,
confirm their agreement with the Adjustment Statement (either as presented
to them or as modified in such manner as they and the Purchaser shall
agree) the Adjustment Statement shall be final and binding on the parties
to this Agreement.
(E) If the Purchaser's Auditors are unable to agree with part or all of the
Adjustment Statement, and if such matter remains unresolved for a period
of 5 Business Days after the end of the 15 Business Day period set out in
paragraph (C) above, any matter in dispute shall be referred by either the
Purchaser or the Investor Parties (acting collectively) to the Independent
Auditors for determination. The Independent Auditors shall act as experts
and not as arbitrators.
(F) The Independent Auditors shall be requested to make and communicate their
decision to the Investor Parties and the Purchaser within 30 days of
appointment and it shall be final and binding on the parties to this
Agreement (in the absence of manifest error) for the purposes of this
Agreement.
(G) Following settlement of any such matter which the Investor Parties and BOS
shall have disputed (whether settled under paragraph (E) above or
otherwise by agreement between the Investor Parties and BOS and the
Purchaser), EBITDA for the Adjustment Period shall be finalised in
accordance with that settlement and the resulting statement of EBITDA
shall be final and binding on the parties to this Agreement.
(H) The "EBITDA Adjustment" shall be equal to the amount (if any) by which (i)
EBITDA (having been finalised in accordance with the provisions of this
Schedule 10) multiplied by 7.96 is less than (ii) GBP52,800,000.
(I) The Investor Parties and BOS and the Purchaser shall give each other, the
Investor Parties' Auditors, the Purchaser's Auditors or the Independent
Auditors, as the case may be, reasonable access to those books of account,
documents, files and papers (including the working papers of the Investor
Parties' Auditors or the Purchasers' Auditors (as the case may be)) which
the requesting party or firm may reasonably require to prepare or review
the Adjustment Statement and/or determine whether the Adjustment Statement
has been prepared in accordance with the provisions of this Schedule 10.
(J) The Investor Parties and BOS shall be responsible for the charges of the
Investor Parties' Auditors and the Purchaser shall be responsible for the
charges of the Purchaser's Auditors. The charges of any Independent
Auditors shall be shared equally by the Purchaser and the Investor Parties
unless the Independent Auditors shall determine otherwise.
103
2. Net Debt at Completion
(A) "Positive Debt Adjustment" means the total amount of the difference
between the Estimated Net Debt and the Final Net Debt if the Estimated Net
Debt exceeds the Final Net Debt by GBP300,000 or more.
(B) "Negative Debt Adjustment" means the total amount of the difference
between the Estimated Net Debt and the Final Net Debt if the Final Net
Debt exceeds the Estimated Net Debt by GBP300,000 or more.
3. Calculation and Payment of the Adjustment Amount
(A) "Adjusted Enterprise Value" means the result of the following calculation:
GBP 52,800,000;
less the EBITDA Adjustment (if any); and either
plus the Positive Debt Adjustment (if any); or
less the Negative Debt Adjustment (if any).
(B) The difference between the Adjusted Enterprise Value and GBP52,800,000
shall be the "Adjustment Amount"
(C) If the Adjusted Enterprise Value is greater than GBP 52,800,000 the
Purchaser shall pay 97 per cent. of the Adjustment Amount to the Sellers'
Account and 3 per cent of the Adjustment Amount to BOS's Account, in each
case within 7 days of the Adjustment Statement being finally agreed or
determined in accordance with paragraph 1.
(D) If the Adjusted Enterprise Value is less than GBP 52,800,000, the Sellers
shall pay the amount of the Adjustment Amount to the Purchasers' Account
within 7 days of the Adjustment Statement being finally agreed or
determined in accordance with paragraph 1. Each Seller shall be liable for
that percentage of the Adjustment Amount set forth opposite his or its
name in column (5) of Part A of Schedule 5.
(E) At the option of the Purchaser, the liability of the Sellers for the
Adjustment Amount shall be satisfied by the surrender to the Purchaser of
that number of their Consideration Shares equal to their share of the
Adjustment Amount divided by the IPO Price.
104
SCHEDULE 11
(Consideration Shares)
PART A
The number of Consideration Shares to which each Seller shall be entitled shall
be calculated in accordance with the following formula:
A / B
where:
A = the USD Equivalent of the GBP amount set opposite that Seller's name in
column (10) of Part A of Schedule 5; and
B = the IPO Price.
PART B
In the event that the IPO Price exceeds USD 18.50, the number of additional
Consideration Shares to which the Sellers are entitled shall be calculated in
accordance with the following table:
Aggregate Number of
IPO Price Additional Shares
--------- -----------------
$18.50 0
$19.00 17,000
$20.00 46,000
$21.00 75,000
$22.00 100,000
$23.00 123,000
$24.00 144,000
$25.00 164,000
$26.00 182,000
$27.00 198,000
$28.00 214,000
$29.00 228,000
$30.00 241,000
Each Seller shall be entitled to the percentage set forth opposite his or its
name in column (5) of Part A of Schedule 5 of the aggregate number of additional
Consideration Shares calculated in accordance with the above table.
105
In lieu of its percentage of additional Consideration Shares, BOS shall be
entitled to the cash equivalent of 3% of the aggregate number of additional
Consideration Shares calculated in accordance with the following formula:
3% of the aggregate number of additional Consideration Shares multiplied by the
IPO Price.
That amount, being a USD amount shall be translated into the USD Equivalent of
GBP and paid by the Purchaser to the BOS Account.
The parties acknowledge that if the IPO Price is not a whole dollar amount the
aggregate number of additional shares shall be pro rated by reference to the
immediately higher and the immediately lower full dollar IPO Price on the
foregoing table. For example, if the IPO Price were USD 22.50 the aggregate
number of additional shares would be 111,500.
106
NWEP
EXECUTED AS A DEED )
by )
as attorney for and on )
behalf of NATWEST EQUITY )
PARTNERS LIMITED )
in the presence of: )
THE BENEFICIAL OWNERS
EXECUTED AS A DEED )
by )
as attorney for and on )
behalf of NATWEST EQUITY )
PARTNERS LIMITED in )
its capacity as the )
manager )
of THE EUROPEAN PRIVATE )
EQUITY FUND in the )
presence of: )
EXECUTED AS A DEED )
by )
as attorney for and on )
behalf of NATWEST EQUITY )
PARTNERS LIMITED in )
its capacity as the )
manager )
of THE EUROPEAN PRIVATE )
EQUITY FUND "B" in the )
presence of: )
107
EXECUTED AS A DEED )
by )
as attorney for and on )
behalf of NATWEST EQUITY )
PARTNERS LIMITED in )
its capacity as the )
manager )
of THE EUROPEAN PRIVATE )
EQUITY FUND "C" )
in the presence of: )
EXECUTED AS A DEED )
by )
as attorney for and on )
behalf of )
NATWEST EQUITY )
PARTNERS LIMITED in )
its capacity as the )
manager )
of THE EUROPEAN PRIVATE )
EQUITY FUND "D" )
in the presence of: )
108
EXECUTED AS A DEED )
by )
as attorney )
for and on behalf of )
NATWEST EQUITY )
PARTNERS LIMITED in )
its capacity as the )
manager of NATWEST )
EQUITY PARTNERS )
NO. 5 FUND )
in the presence of: )
EXECUTED AS A DEED )
by )
as attorney )
for and on behalf of )
NATWEST EQUITY )
PARTNERS LIMITED in )
its capacity as the )
manager )
of NATWEST EQUITY )
PARTNERS NO. 4 FUND )
in the preseence of: )
EXECUTED AS A DEED )
by )
as attorney )
for and on behalf of )
NATWEST EQUITY )
PARTNERS LIMITED in )
its capacity as the )
manager )
of NATWEST EQUITY )
PARTNERS NO. 5 FUND )
in the presence of: )
109
EXECUTED AS A DEED )
by )
as attorney )
for and on behalf of )
NATWEST EQUITY )
PARTNERS LIMITED in )
its capacity as the )
manager )
of THE NATWEST EQUITY )
PARTNERS PARTNERSHIP )
in the presence of: )
EXECUTED AS A DEED )
by )
as attorney )
for and on behalf of )
NATWEST EQUITY PARTNERS )
CO-INVESTMENT PLAN )
LIMITED in the presence )
of: )
NATWEST NOMINEES
EXECUTED AS A DEED )
by )
as attorney )
for and on behalf of )
NATWEST VENTURES NOMINEES )
LIMITED in )
the presence of: )
110
THE MANAGERS
Signed by ▇. ▇▇▇▇▇▇ )
)
)
Signed by ▇. ▇▇▇▇▇▇▇▇▇ )
)
)
Signed by ▇. ▇▇▇▇▇▇▇ )
)
)
BOS
Signed by )
for and on behalf of )
BANK OF SCOTLAND )
THE B SHAREHOLDERS
Signed by )
as duly authorised )
attorney for an ond on )
behalf of ▇. ▇▇▇▇▇▇▇
111
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇▇▇
112
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇
113
Signed by by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of U. DIGE
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇▇▇
114
Signed by )
as duly authorised )
attorney for and on )
behalf of ▇. ▇▇▇▇▇▇▇▇
MANAGERS' FAMILY PARTIES
Signed by )
as duly authorised )
attorney )
for and on behalf of )
BRYONIE GLANFIELD )
Signed by )
as duly authorised )
attorney )
for and on behalf of )
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney )
for and on behalf of )
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney )
for and on behalf of )
▇▇▇▇▇ ▇▇▇▇▇
115
Signed by )
as duly authorised )
attorney )
for and on behalf of )
▇▇▇▇▇ ▇▇▇▇▇
Signed by )
as duly authorised )
attorney )
for and on behalf of )
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney )
for and on behalf of )
▇▇▇▇ ▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney )
for and on behalf of )
▇▇▇▇▇▇ ▇▇▇▇▇▇
Signed by )
as duly authorised )
attorney )
for and on behalf of )
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
116
PURCHASER
Signed by )
for and on behalf of )
DDi Corp )
CONTENTS
Page
1. INTERPRETATION...................................................2
2. SALE AND PURCHASE................................................2
3. CONDITIONS.......................................................3
4. CONSIDERATION....................................................6
5. COMPLETION.......................................................6
6. INVESTOR PARTIES' AND BOS's WARRANTIES, INDEMNITIES AND
UNDERTAKINGS AND PURCHASER'S REMEDIES............................7
7. OBLIGORS' INDEMNITIES AND COVENANTS..............................9
8. PURCHASER'S WARRANTIES..........................................11
9. CONDUCT OF BUSINESS BEFORE COMPLETION...........................12
10. RESTRICTIONS ON THE MANAGERS AND THE NATWEST PARTIES...........14
11. PROVISION RELATING TO RESTRICTIONS.............................15
12. EFFECT OF COMPLETION...........................................15
13. REMEDIES AND WAIVERS...........................................15
14. ASSIGNMENT.....................................................15
15. FURTHER ASSURANCE..............................................16
16. ENTIRE AGREEMENT...............................................16
17. NOTICES........................................................17
18. ANNOUNCEMENTS..................................................18
19. CONFIDENTIALITY................................................19
20. COSTS AND EXPENSES.............................................20
21. COUNTERPARTS...................................................20
22. INVALIDITY.....................................................21
23. GOVERNING LAW..................................................21
24. JURISDICTION...................................................21
25. AGENT FOR SERVICE..............................................21
SCHEDULE 1 (Interpretation).........................................23
SCHEDULE 2 (Completion arrangements)................................35
1. The Investor Parties' Obligations...............................35
2. BOS Obligations.................................................36
3. Purchaser's obligations.........................................37
SCHEDULE 3 (The Warranties).........................................38
1. Ownership of the Shares.........................................38
2. Capacity of the Investor Parties................................38
3. Arrangements between the Group and the Investor Parties.........39
4. Group structure, etc............................................39
5. Ownership of Assets.............................................40
6. Accuracy of information.........................................41
7. Accounts and Statutory Accounts.................................41
8. Events since the Takeover Date..................................42
9. Contracts and commitments.......................................43
10. Bank accounts and borrowings...................................43
11. Powers of attorney.............................................44
12. Grants and allowances..........................................44
13. Substantial dependence.........................................45
14. Licences.......................................................45
15. Litigation.....................................................45
16. Investigations and Inquiries...................................45
17. Property.......................................................45
18. Environment....................................................47
19. Intellectual Property..........................................48
20. Competition and trade regulation law...........................48
21. Insurances.....................................................49
22. Employment.....................................................49
23. Information Technology.........................................50
24. Product Liability..............................................50
25. Pensions.......................................................50
26. The Accounts and Tax...........................................53
27. Tax returns, disputes, records and claims etc..................54
28. Stamp duty.....................................................54
29. Value added tax................................................54
30. Tax events since the Accounts Date.............................55
31. Duties etc.....................................................55
32. Replacement of business assets.................................55
33. Distributions..................................................55
34. Deductions and withholdings....................................56
35. Residence......................................................56
36. Group arrangements.............................................56
37. Exit Charges...................................................56
38. 38. Roll-over and Hold-over Relief.............................56
SCHEDULE 4 (Limitations on liability)...............................57
Part 1..............................................................57
1. Limitation on quantum and general...............................57
2. Time limits for bringing claims.................................58
3. Conduct of litigation...........................................59
4. No liability if loss is otherwise compensated for...............60
5. Disclosure......................................................60
6. Claim to be reduction of Adjusted EnterpriseValue...............60
7. Fraud...........................................................60
8. Insurance.......................................................61
9. Company Taxation Liability Reduced..............................61
10. Tax Warranties.................................................61
11. Provisions.....................................................62
SCHEDULE 5 (Ownership of the Shares and Entitlement to
Consideration Shares)....................................63
SCHEDULE 6 (The Company)............................................65
SCHEDULE 7 (The Subsidiaries).......................................67
SCHEDULE 8 (Agreed Calculation of the Provisional Consideration
as at 31st March, 2000)..................................89
SCHEDULE 9 (Property)...............................................93
SCHEDULE 10 (Adjustments to the Provisional Consideration)..........99
1. Preparation of Adjustment Statement.............................99
2. Net Debt at Completion.........................................101
3. Calculation and Payment of the Adjustment Amount...............101
SCHEDULE 11 (Consideration Shares).................................102
PART A.............................................................102
PART B.............................................................102
Attachments
I Accounts
II Tax Covenant
III Data Room List
IV Press Announcements
V Lock-Up Agreement
VI Management Accounts
DATED , 2000
--------------------------
NatWest Equity Partners Limited
The Beneficial Owners
NatWest Ventures Nominees Limited
The Managers
Bank of Scotland
The "B" Shareholders
The Managers' Family Parties
and
DDi Corp
-----------------------------------------------
SHARE PURCHASE AGREEMENT
relating to the issued share capital of
MCM Electronics Limited
-----------------------------------------------
▇▇▇▇▇▇▇▇▇ and May
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
(PMO/KSM)