EXHIBIT 2.1
(PINSENT MASONS LOGO)
DATED 16 DECEMBER 2005
ES/500973 07020
(1) ▇▇▇▇ ▇▇▇▇▇▇▇ AND OTHERS
(2) ▇▇▇▇▇▇▇▇▇ TECHNOLOGIES HOLDINGS LIMITED
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AGREEMENT
FOR THE SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF
DARCHEM HOLDINGS LIMITED
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CONTENTS
CLAUSE PAGE
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1 INTERPRETATION 1
2 SALE AND PURCHASE OF SHARES 5
3 CONSIDERATION 6
4 COMPLETION 6
5 WARRANTIES 8
6 LIMITATIONS ON WARRANTORS' LIABILITY 9
7 PROTECTION OF GOODWILL 9
8 CONFIDENTIALITY 11
9 ANNOUNCEMENTS 11
10 NOTICES 12
11 ENTIRE AGREEMENT 12
12 FURTHER ASSISTANCE 13
13 INVALIDITY 13
14 EFFECT OF COMPLETION 13
15 WAIVER 13
16 COSTS 13
17 ASSIGNMENT 13
18 CONTRACTS (RIGHTS OF THIRD PARTIES) ▇▇▇ ▇▇▇▇ 13
19 COUNTERPARTS 14
20 GENERAL 14
21 LAW AND JURISDICTION AND SERVICE OF PROCESS 14
Schedule 1
Part 1
Part 2
SCHEDULE 2
Part 1 - THE COMPANY
Part 2 - SUBSIDIARIES
SCHEDULE 3 - PROPERTIES
SCHEDULE 4 - WARRANTIES
SCHEDULE 5 - LIMITATIONS ON WARRANTORS' LIABILITY
SCHEDULE 6 - INTELLECTUAL PROPERTY
SCHEDULE 7 - PROVISIONS RELATING TO THE RETENTION
Part 1 - GENERAL
Part 2 - INSTRUCTION LETTER
SCHEDULE 8 - COMPLETION ACCOUNTS AND ADJUSTMENT TO CONSIDERATION
Schedule 8Part 1
ACCOUNTING PRINCIPLES
Schedule 8Part 1 - PRO FORMA BALANCE SHEET
SCHEDULE 9 - ENVIRONMENTAL INDEMNITY
THIS AGREEMENT is made on 16 DECEMBER 2005
BETWEEN:-
(1) THE PERSONS whose names and addresses are set out in Schedule 1 (the
"SELLERS"); and
(2) ▇▇▇▇▇▇▇▇▇ TECHNOLOGIES HOLDINGS LIMITED (No 5148070) whose registered
office is at ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇ (the
"BUYER").
IT IS AGREED as follows:-
1. INTERPRETATION
1.1 In this Agreement:-
"ACCOUNTS" means the audited balance sheet of each
Group Company and the audited consolidated
balance sheet and cash flow statement of the
Group as at the Accounts Date, and the
audited profit and loss account of each
Group Company and the audited consolidated
profit and loss account of the Group for the
financial period ended on, the Accounts
Date, together with the notes, directors'
report and auditors' report, copies of which
are included in the documents attached or
deemed attached to the Disclosure Letter
"ACCOUNTS DATE" means 31 December 2004
"AGREED PROPORTION" means in relation to each of the Sellers the
percentage set out in column 4 of Schedule 1
against that Sellers' name
"ACT" means the Companies ▇▇▇ ▇▇▇▇ (as amended)
"BUSINESS DAY" means 9.00am to 5.00pm on any day (other
than a Saturday, Sunday or any day which is
a public holiday in England and Wales) on
which clearing banks in the City of London
are open for the transaction of normal
sterling banking business
"BUYER'S GROUP" means the Buyer, a subsidiary or holding
company for the time being of the Buyer and
a subsidiary for the time being of a holding
company of the Buyer and (for the avoidance
of doubt) includes each Group Company
"BUYER'S SOLICITORS" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of Carmelite, ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
"CERTIFICATES OF TITLE" means the certificate of title and report on
lease addressed to the Buyer from Jacksons
in respect of the Properties in the form
annexed to the Disclosure Letter
"COMPANY" means Darchem Holdings Limited, details of
which are set out in Part 1 of Schedule 2
"COMPLETION" means completion of the sale and purchase of
the
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Shares in accordance with this Agreement
"CONFIDENTIAL INFORMATION" means all information (not in the public
domain) concerned with the operation of any
technology or process, trade secrets, the
design or development of any products or
schemes; the marketing of any products or
services (including customer lists,
financial information, sales statistics,
survey reports and market share data)
"CONSIDERATION" means the consideration for the purchase of
the Shares set out in Clause 3
"DISCLOSED" means disclosed to the Buyer in the
Disclosure Letter with sufficient details to
enable the Buyer (acting reasonably) to make
an assessment of the matter disclosed
"DISCLOSURE LETTER" means the letter (together with all the
documents attached to it) from the
Warrantors to the Buyer executed and
delivered to the Buyer immediately prior to
the execution of this Agreement
"EHT AGREEMENT" means the agreement between the Company and
Bodycote Heat Treatments Limited dated 19
August 2005 for the sale of Expert Heat
Treatments Limited
"EMPLOYEES" means all the directors or officers (whether
or not employed by a Group Company) or
employees of each Group Company
"ENCUMBRANCE" means any mortgage, charge, lien, pledge,
trust, right of set off or other third party
right, claim or encumbrance including any
right of option or pre-emption howsoever
created or arising or any other arrangement
or third party right having similar effect
(or an agreement to create any of them)
"ENVIRONMENTAL INDEMNITY" means the indemnity set out in Schedule 9
"EXECUTIVE LIFE ASSURANCE SCHEME" means the Darchem Holdings Limited Executive
Group Life Assurance arrangement insured
with Canada Life
"GROUP" means the Company and its Subsidiaries
"GROUP COMPANY" means the Company or any of the Subsidiaries
"ICTA" means the Income and Corporation Taxes Act
1988
"INDEMNITIES" means the indemnities in Clauses 5.11.1 and
5.11.2
"IHTA" means the Inheritance Tax ▇▇▇ ▇▇▇▇
"INTELLECTUAL PROPERTY" means all intellectual property throughout
the world including trade marks, service
marks, patents, registered design rights,
applications for any of the foregoing,
unregistered trade marks and service marks,
trade, business, brand or domain names,
rights in any get up or trade dress, rights
in data
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bases, moral rights, copyrights,
unregistered design rights, rights
subsisting in inventions, designs, drawings,
processes, software and computer programmes,
know-how, trade or business secrets and
Confidential Information
"ITEPA" means the Income Tax (Earnings and ▇▇▇▇▇▇▇▇)
▇▇▇ ▇▇▇▇
"LICENCE" means a licence, permit, certificate,
consent, approval, registration or
authorisation required by law for the
operation of the business of each Group
Company
"LIFE ASSURANCE SCHEME" means the Darchem Holdings Group Life
Assurance Scheme established under a
Declaration of Trust dated 10 June 2004
"LOAN STOCK" means 11,032,000 units of 10% unsecured loan
notes 2004 constituted by the Company
pursuant to an instrument dated 22 December
2000 (and amended on 23 December 2004)
"LOSS" means any loss, damage, liability, fine,
penalty, charge and any other cost and
expense including any costs of recovery on a
full indemnity basis and "LOSSES" shall be
construed accordingly
"MANAGEMENT ACCOUNTS" means the Management Accounts of the Group
for the month ended 4 November 2005
"MATERIAL CONTRACT" means a contract, long term agreement or
arrangement:-
(a) with a supplier which involves a
payment or payments in aggregate by a
Group Company to such supplier equal to
or exceeding 5% of the total sum paid
to all suppliers in the current and
previous financial year
(b) with a customer which involves a
payment or payments in aggregate by the
customer to a Group Company equal to or
exceeding 5% of the total sum paid by
all customers in the current and
previous financial year
"PENSION INDEMNITIES" means the indemnities at Clause 29.2 and at
Paragraph 7 of Schedule 8 of the share sale
agreement dated 22 December 2000 between The
▇▇▇▇ Group Plc; the Company; and Royal Bank
Private Equity Limited
"PENSION SCHEMES" means the Stakeholder Scheme, the Personal
Scheme, the Executive Life Assurance Scheme
and the Life Assurance Scheme
"PERSONAL SCHEME" means the personal pension scheme for the
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managing director
"PROPERTIES" means the properties, details of which are
set out in Schedule 3 and references to a
"PROPERTY" include a reference to each of
the individual Properties
"RELEVANT BENEFITS" means has the meaning given in section
612(1) of ICTA
"RESTRICTED BUSINESS" means the design, development and
manufacture of insulation systems, high
temperature precision components used in
turbines in air, land and sea including high
temperature exhaust systems and passive fire
protection systems
"SELLERS' SOLICITORS" means Pinsent Masons of ▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇
"SHARES" means the 218,315 fully paid ordinary shares
of L1.00 5,148,111 fully paid preference
shares of L0.01 each and 514,286 fully paid
A preferred ordinary shares of L0.01 each
together comprising the whole of the issued
share capital of the Company
"STAKEHOLDER SCHEME" means the Darchem Holdings Limited
Stakeholder Pension Scheme with Legal &
General
"SUBSIDIARIES" means the subsidiaries of the Company
details of which are set out in Part 2 of
Schedule 2 and reference to a "SUBSIDIARY"
includes a reference to each of the
individual Subsidiaries
"TAX OR TAXATION" has the meaning given to it in the Tax Deed
"TAX AUTHORITY" means any government, state or other fiscal,
revenue, customs or excise authority, body
or official having functions in relation to
Tax
"TAX DEED" means the tax deed between the Warrantors
and the Buyer in agreed form
"TAX WARRANTIES" means the warranties contained in paragraph
17 of Schedule 4
"TCGA" means the Taxation of Chargeable Gains ▇▇▇
▇▇▇▇
"VAT" means value added tax
"VATA" means the Value Added Tax ▇▇▇ ▇▇▇▇
"WARRANTIES" means the warranties contained in Schedule 4
and references to a "WARRANTY" shall be
construed accordingly
"WARRANTORS" means the individuals listed in Part 2 of
Schedule 1
"▇▇▇▇ GROUP SCHEME" means the ▇▇▇▇ Group Pension and Life
Assurance Scheme
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1.2 In this Agreement, a reference to:-
1.2.1 a Clause or Schedule is a reference to a clause of and schedule to
this Agreement;
1.2.2 a document "IN THE AGREED FORM" is a reference to a document in the
form approved and, for the purposes of identification only, signed by
or on behalf of the Buyer and the Sellers (in each case with such
amendments as may be agreed by or on behalf of the Sellers and the
Buyer);
1.2.3 a statutory provision includes a reference to that provision as
modified, replaced, amended and/or re-enacted from time to time
(before or after the date of this Agreement) and any prior or
subsequent subordinate legislation made under it, except to the extent
that any such modification, replacement, amendment or re-enactment
would impose any new, increased or extended obligation, liability or
restriction on, or adversely affect the rights of, any party;
1.2.4 "COSTS" includes a reference to costs, charges and expenses of every
description;
1.2.5 a "PERSON" includes a reference to an individual, partnership,
unincorporated association or body corporate wherever situate;
1.2.6 a "SUBSIDIARY", "HOLDING COMPANY" and "BODY CORPORATE" has the
respective meaning set out in sections 736 and 740 of the Act;
1.2.7 a "COMPANY" has the meaning set out in sections 735 of the Act;
1.2.8 a "SUBSIDIARY UNDERTAKING" or a "PARENT UNDERTAKING" or a "GROUP
UNDERTAKING" has the respective meaning set out in sections 258 and
259 of the Act;
1.2.9 a "CONNECTED PERSON" is a reference to a person connected with
another within the meaning of section 839 of ICTA; and
1.2.10 words, expressions or abbreviations detailed in the Schedules shall
have the same meaning in this Agreement except where otherwise
provided.
1.3 The Schedules form part of this Agreement and shall be interpreted and
construed as though they were set out in this Agreement.
1.4 The headings to Clauses, Schedules and paragraphs of the Schedules are for
convenience only and shall not affect the interpretation or construction of
this Agreement.
1.5 Any statement which refers to the knowledge or belief of the Warrantors or
so far as the Warrantors are aware or any similar expression shall be
limited to the knowledge, belief or awareness of the Warrantors having made
due, diligent and careful enquiry of each other and of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (in respect of the Warranties set out in paragraph 15 of
Schedule 4 only), ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇.
2. SALE AND PURCHASE OF SHARES
2.1 Each of the Sellers shall sell with full title guarantee the Shares set
opposite their respective names in Schedule 1 to the Buyer and the Buyer
shall purchase the Shares, in each case free from all Encumbrances and
together with all rights to dividends and distributions declared after the
date of this Agreement in respect of the Shares and all other rights and
benefits now and at any time hereafter attaching or accruing to the Shares.
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2.2 Each Seller irrevocably waives any and all rights of pre-emption or other
restriction on transfer in respect of the Shares or any of them conferred
on him under the articles of association of the Company or any other
agreement or otherwise.
3. CONSIDERATION
3.1 The Consideration for the purchase of the Shares is L55,413,159.46, subject
to adjustment in accordance with the provisions of Schedule 8.
3.2 Subject to Clause 3.3 the Consideration shall be satisfied as follows
3.2.1 L51,413,159.46 shall be paid in cash to the Sellers' Solicitors at
Completion by telegraphic transfer to Barclays Bank PLC, Pinsent
Masons Client Account, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇, Account
Number: ▇▇▇▇▇▇▇▇, Sort Code: 20-07-71. The Sellers' Solicitors are
irrevocably authorised by the Sellers to accept the same and their
receipt shall be an absolute discharge to the Buyer of its obligation
to pay the Consideration.
3.2.2 L4,000,000 of the Consideration (the "RETENTION") shall be paid into
the Retention Account on Completion and held in accordance with the
provisions of Schedule 7.
3.3 Any adjustment to the Consideration shall be paid in accordance with the
provisions of Schedule 8.
4. COMPLETION
4.1 Completion shall take place at the offices of the Buyer's Solicitors
immediately after signature and exchange of this Agreement when all the
business referred to in Clauses 4.2 to 4.4 shall be transacted.
4.2 At Completion the Sellers shall deliver or make available to the Buyer:-
4.2.1 duly executed transfers of the Shares to the Buyer or as it directs
together with the share certificates for all the Shares (or an
indemnity in a form satisfactory to the Buyer in the case of any
missing certificate) and any duly executed powers of attorney or other
authorities under which any of the transfers have been executed;
4.2.2 share certificates for all the issued shares in each Subsidiary;
4.2.3 letters of resignation from each director and secretary of each Group
Company in the agreed form;
4.2.4 a letter of resignation from the auditors of each Group Company
accompanied by a statement under section 394 of the Act and
confirmation that there are no fees or other payments due to them from
the relevant Group Company in the agreed form;
4.2.5 the statutory books of each Group Company (comprising materially
complete and accurate registers as are required to be maintained by
the Act) their respective common seals, Certificates of Incorporation
and Certificates of Incorporation on Change of Name;
4.2.6 a signed deed addressed by each Seller to the Buyer and to the
Company and each Group Company acknowledging that there is no
outstanding indebtedness owing at Completion from the Company or any
Group Company to such Seller or any person connected to such Seller or
vice versa;
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4.2.7 the Tax Deed signed by the Warrantors;
4.2.8 the title deeds to each of the Properties, together with the duly
signed Certificates of Title;
4.2.9 the Disclosure Letter signed by the Warrantors;
4.2.10 the financial and accounting books and records of each Group Company
and all insurance policies in any way relating to or concerning the
business of the Group;
4.2.11 a deed of release in the agreed form in respect of each charge and
guarantee of each Group Company to the Governor and Company of the
Bank of Scotland ("BOS");
4.2.12 powers of attorney in the agreed form duly executed by the Sellers
for the purpose of securing the interest of the Buyer in the Shares
pending their registration into the name of the Buyer and/or its
nominee;
4.2.13 revised service agreements between the Company and each of ▇▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ in the agreed form;
4.2.14 a consultancy agreement and fixed term service agreement duly
executed by ▇▇▇▇ ▇▇▇▇▇▇▇ and the Company in the agreed form;
4.2.15 a compromise agreement duly executed by ▇▇▇▇▇▇▇ ▇▇▇▇▇ and the
Company in the agreed form;
4.2.16 the Instruction Letter (as defined in Schedule 7) duly signed by the
Sellers; and
4.2.17 the due diligence reports by ▇▇▇ ▇▇▇▇ & Partners Limited and ▇▇▇▇▇
addressed to the Buyer.
4.3 At Completion the Sellers shall procure that a board meeting of the Company
and each Group Company is held at which the directors:-
4.3.1 approve the registration of the share transfers referred to in Clause
4.2.1 (subject only to stamping);
4.3.2 accept the resignations referred to in Clause 4.2.3 and appoint the
persons nominated by the Buyer as directors and secretary of each
Group Company with effect from the end of the relevant meeting;
4.3.3 accept the resignations referred to in Clause 4.2.3 and subject to
formal acceptance appoint Ernst & Young as auditors of each Group
Company;
4.3.4 revoke all existing authorities to bankers regarding the operation of
each Group Company's bank accounts and give authority in favour of
persons nominated by the Buyer to operate such accounts;
4.3.5 resolve to change each Group Company's registered office address as
the Buyer directs; and
4.3.6 resolve to change each Group Company's accounting reference date as
the Buyer directs.
4.4 At Completion the Buyer shall:-
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4.4.1 pay the Consideration less the Retention in cash by telegraphic
transfer to the account details of which are set out in Clause 3.2.1;
4.4.2 pay the Retention by telegraphic transfer to the Retention Account;
4.4.3 pay the sum of L12,086,840.54 to the Company and procure that this
sum is paid to the account detailed in Clause 3.2.1 in satisfaction
of all sums outstanding in respect of the Loan Stock;
4.4.4 sign the Disclosure Letter to acknowledge receipt;
4.4.5 sign the Instruction Letter; and
4.4.6 deliver to the Sellers copies of a resolution of the Buyer's board of
directors (or an authorised committee of that board) authorising the
execution and completion of this Agreement and any other relevant
documents referred to in this Agreement.
4.5 If any of the Sellers fails to comply with his obligation to transfer his
Shares on Completion then the Buyer shall not be obliged to complete the
sale and purchase of any of the Shares but may nevertheless elect to
complete the purchase of the other Shares without prejudice to its rights
against the defaulting Seller(s).
5. WARRANTIES
5.1 Each Warrantor severally warrants at the date of this Agreement to the
Buyer (subject to Clause 5.3 and 5.4) in the terms set out in Schedule 4 in
the knowledge that the Buyer is entering into this agreement in reliance on
the Warranties.
5.2 Each Seller (other than the Warrantors) severally warrants at the date of
this Agreement to the Buyer in respect of himself only in the terms set out
in paragraphs 1.1 and 2.1 of Schedule 4 only.
5.3 The Warranties are subject to the provisions of Clause 6 and, where
indicated, the Warranties are subject to Schedule 5.
5.4 ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇ do not warrant in the terms set
out in paragraph 15.4 of Schedule 4.
5.5 Subject to the provisions of Schedule 5, each of the Warranties shall be
interpreted as separate and independent so that the Buyer shall have a
separate claim and right of action in respect of every breach of each
Warranty.
5.6 Any payment made by the Sellers to the Buyer pursuant to a claim under this
Agreement shall be treated as a reduction of the Consideration.
5.7 The Sellers make no representation and give no warranty or undertaking to
the Buyer save only as and to the extent expressly set out in this
Agreement. The Buyer shall not have any remedy in respect of any
misrepresentation or untrue statement (whether made carelessly or not) made
by the Sellers unless and to the extent that a claim lies for breach of the
Warranties. In particular, the Sellers disclaim all liability and
responsibility for any representation, warranty, statement, opinion, or
information made or communicated (orally or in writing) to the Buyer
(including the Information Memorandum relating to the Group and its
businesses prepared and issued by ▇▇▇▇▇▇▇▇▇ Quarterdeck (a division of
▇▇▇▇▇▇▇▇▇ International Limited)) and, without limitation, any
representation, warranty, statement, opinion, information or advice
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made or communicated to the Buyer by any officer, director, employee,
agent, consultant or representative of any Group Company or otherwise made
available by or on behalf of the Sellers.
5.8 Clause 5.7 shall not exclude any liability of the Sellers for fraud,
dishonesty or fraudulent misrepresentation.
5.9 The Buyer shall have no right to rescind or terminate this Agreement after
Completion by reason of a breach of any of the Warranties.
5.10 No information supplied by, or on behalf of, a Group Company to one or more
of the Warrantors or their advisers in connection with the business and
affairs of a Group Company constitutes a representation, warranty or
undertaking as to its accuracy to the Warrantors by a Group Company and
each Warrantor waives each and every claim which he or she may have against
the Group Company or its Employees in respect of such information save in
the case of fraud or wilful default by any such Group Company or any such
Employees.
5.11 The Warrantors shall indemnify the Buyer against and shall pay to the Buyer
an amount equal to the amount which if paid to the Company or any relevant
Group Company would indemnify the Company or that Group Company against all
Losses arising in respect of:-
5.11.1 any claim against a Group Company or the Buyer by any broker,
finder, financial adviser or other person retained by the Seller or a
Group Company in connection with the transactions effected by this
Agreement; or
5.11.2 any claims against the Company under the EHT Agreement (including
for the avoidance of doubt any claim for breach of a warranty or
indemnity contained therein).
5.12 The provisions set out in Schedule 9 shall apply in respect of the
Environmental Indemnity.
6. LIMITATIONS ON WARRANTORS' LIABILITY
6.1 The Warrantors' liability in respect of Claims (as defined in Schedule 5)
shall be limited or excluded (as the case may be) by the provisions of
Schedule 5.
6.2 The provisions of Schedule 5 shall not apply to any Claim against a
Warrantor which arises or is increased as a consequence of fraud,
dishonesty or wilful non-disclosure on the part of such Warrantor.
7. PROTECTION OF GOODWILL
7.1 Each Warrantor severally covenants in respect of himself only with the
Buyer (for itself and as trustee for each Group Company) and any member of
the Buyer's Group that, without the written consent of the Buyer or
pursuant to any contract of employment between himself and one of the Group
Companies, he shall not directly or indirectly, in any capacity, either by
himself or in conjunction with any other persons or through his employees
or agents or otherwise, and whether on his own behalf or on behalf of any
other person or otherwise howsoever, for a period of 3 years from the date
of Completion:-
7.1.1 carry on or assist in carrying on or be employed as an employee or
consultant or otherwise engaged, concerned or interested in any
capacity (including holding any post or position which enables that
Warrantor to exercise, whether personally or by an agent and whether
on his own account or in association with or for the benefit of any
other person a controlling influence over any business which is
engaged in the Restricted Business) in
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the Restricted Business within the United Kingdom, the rest of Europe
or the United States;
7.1.2 for the purpose of competing with the Restricted Business solicit,
approach or seek out or cause to be solicited, approached or sought
out or by any other means endeavour to entice away in relation to the
Restricted Business any person who during the period of one year prior
to Completion has been a customer of any Group Company and with whom
he had personal contact during such period;
7.1.3 for the purpose of competing with the Restricted Business interfere
with or seek to interfere with contractual or other trade relations
between the Group and any person who during the period of one year
prior to the date of Completion has been a customer or supplier of any
Group Company and with whom he had an established business
relationship or dealt with on a regular basis in the period prior to
the date of Completion;
7.1.4 for the purpose of competing with the Restricted Business deal with
or engage in business with any person who during the period of one
year prior to the date of Completion has been a customer or supplier
of any Group Company and with whom he had an established business
relationship or dealt with on a regular basis in the period prior to
the date of Completion; and
7.1.5 solicit or induce or attempt to solicit or induce, employ or offer
employment to any person or aid or assist any other person or persons
in employing or otherwise retaining any person who is a director or is
employed in a senior managerial capacity by any Group Company as at
the date of Completion.
7.2 Each Warrantor severally covenants in respect of himself only with the
Buyer (for itself and as trustee for each Group Company) that, without the
written consent of the Buyer he will not at any time:-
7.2.1 use the name or word "DARCHEM" or any name resembling it or use any
distinctive ▇▇▇▇, style, name or logo used by any Group Company or any
confusingly similar ▇▇▇▇, style, name or logo; or
7.2.2 make use of or disclose to any person any Confidential Information
belonging to the Group.
7.3 Nothing in this Clause 7 shall prevent each Warrantor from owning not more
than two per cent of any class of the issued share capital of a company
which is dealt in on any recognised investment exchange (as defined in the
Financial Services and Markets Act 2000).
7.4 Each of the Warrantors agrees with the Buyer that each of the undertakings
in this Clause 7 is a separate and independent undertaking.
7.5 Each of the Warrantors agrees with the Buyer that the undertakings in this
Clause 7 are reasonable and necessary for the protection of the value of
the Shares and the Group and that, having regard to that fact, those
undertakings do not work harshly on him and that he has had the opportunity
to take independent advice on them. While this Clause 7 is considered to be
reasonable, if any of the undertakings set out in it shall be found to be
void or voidable but would be valid and enforceable if some part or parts
of the undertaking were deleted, such undertaking shall apply with such
deletions as may be necessary, to make it valid and enforceable.
7.6 If a breach of clauses 7.1 to 7.3 occurs, the Warrantors and the Buyer
agree that damages alone may not be sufficient compensation and that
injunctive relief may be reasonable to safeguard the interests of the Buyer
and of each Group Company and
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that injunctive relief (in addition to any other remedies) may subject to
the discretion of the courts be obtained.
8. CONFIDENTIALITY
8.1 Subject to Clauses 8.2 and 9, the Sellers shall and the Buyer shall (and
shall procure that all other members of the Buyer's Group shall) keep
strictly confidential:-
8.1.1 all information received or obtained as a result of entering into or
performing this Agreement which relates to the existence, subject
matter or provisions of this Agreement or any document referred to in
it; or
8.1.2 the negotiations relating to this Agreement; or
8.1.3 in the case of a Seller, information relating to the Buyer or any
member of the Buyer's Group and each Group Company.
8.2 A party to this Agreement may disclose information which would otherwise be
confidential if and to the extent:-
8.2.1 it is required by the law or Tax authorities of any relevant
jurisdiction;
8.2.2 it is required by any securities exchange or regulatory or
governmental body to which either party is subject or submits,
wherever situated, including (without limitation) the London Stock
Exchange plc, the Takeover Panel or the UK Listing Authority, whether
or not the requirement for information has the force of law;
8.2.3 it is disclosed on a strictly confidential basis to the professional
advisers, auditors and bankers of that party who are aware of the
obligations of confidentiality and agree to keep the information
confidential;
8.2.4 the information has come into the public domain through no fault of
that party;
8.2.5 the other party has given prior written approval to the disclosure
(such approval not to be unreasonably withheld or delayed); or
8.2.6 required to enable that party to enforce its rights under this
Agreement.
9. ANNOUNCEMENTS
9.1 Subject to Clause 9.2 any announcement, communication or circular by or on
behalf of the Buyer and/or the Sellers relating to this Agreement shall be
in terms agreed between the parties.
9.2 Clause 9.1 does not apply to an announcement, communication or circular:-
9.2.1 required by law or the rules of any stock exchange or by any other
regulatory or governmental body, provided that:-
(a) prior notice of such disclosure of such announcement,
communication or circular is given to the other party and such
announcement, communication or circular contains the minimum
detail necessary to meet such requirement;
(b) each of the parties agrees that no such announcement,
communication or circular shall contain any reference to the
Consideration unless legally required to do so; and
11
(c) if practicable, the party required to make it has first consulted
and taken into account the reasonable requirements of the other
parties;
9.2.2 made by the Buyer after Completion to any supplier to or customer of
the Group advising them of the change of control of the Company,
provided that no such document, statement or disclosure shall contain
any reference to the terms of this Agreement (including but not
limited to the Consideration).
10. NOTICES
10.1 Any notice or other communication pursuant to, or in connection with, this
Agreement shall be in writing and delivered personally, or sent by first
class pre-paid recorded delivery post (by federal express or equivalent if
overseas) to the party due to receive such notice at the address set out in
this Agreement for such party (or to such other address as may have been
notified in writing to the other party in accordance with this Clause 10).
10.2 Subject to Clause 10.3, any notice or other communication shall be deemed
to have been served:-
10.2.1 if delivered personally, at the time of delivery;
10.2.2 if sent by pre-paid recorded delivery post (other than by federal
express or equivalent), two days from the date of posting; and
10.2.3 if sent by federal express or equivalent, five days from the date of
posting.
10.3 If a notice is given or deemed given at a time or on a date which is not a
Business Day, it shall be deemed to have been given on the next Business
Day.
11. ENTIRE AGREEMENT
11.1 This Agreement (together with all documents executed at Completion)
constitutes the entire agreement and understanding between the parties in
respect of the sale and purchase of the Shares. Accordingly this Agreement
supersedes and extinguishes all prior agreements, undertakings,
arrangements or statements (in whatsoever form) as between the parties. It
is agreed that:-
11.1.1 no party has entered into this Agreement in reliance upon any
representation, warranty or undertaking of any other party which is
not expressly set out or referred to in this Agreement;
11.1.2 a party may claim in contract for breach of Warranty or indemnity
under this Agreement but shall have no claim or remedy in respect of
misrepresentation (whether negligent or otherwise, and whether made
before or in this Agreement) or untrue statement made by any other
party;
11.1.3 this Clause shall not exclude any liability or remedy for fraud or
fraudulent misrepresentation by a party; and
11.1.4 save as expressly set out in this Agreement, no party shall owe any
duty of care to any other party.
11.2 No future variation of this Agreement shall be effective unless made in
writing and signed by or on behalf of each party.
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12. FURTHER ASSISTANCE
The Sellers shall for a period of 12 months from the date of Completion at
the Buyer's cost and upon reasonable notice from the Buyer do or procure to
be done all such further acts and things, and execute or procure the
execution of all such other documents as the Buyer may from time to time
reasonably require for the purpose of giving the Buyer the full benefit of
the provisions of this Agreement.
13. INVALIDITY
If any provision of this Agreement is held to be unenforceable or illegal,
in whole or in part, such provision or part shall to that extent be deemed
not to form part of this Agreement but the enforceability of the remainder
of this Agreement shall remain unaffected.
14. EFFECT OF COMPLETION
This Agreement and in particular the Warranties and indemnities in so far
as any of its provisions remain to be, or are capable of being, performed
or observed, shall remain in full force and effect after Completion.
15. WAIVER
15.1 The failure to exercise or delay in exercising a right or remedy under this
Agreement shall not constitute a waiver of the right or remedy or a waiver
of any other rights or remedies and no single or partial exercise of any
right or remedy under this Agreement shall prevent any further exercise of
the right or remedy or the exercise of any other right or remedy.
15.2 The parties' rights and remedies contained in this Agreement are in
addition to, and not exclusive of, any other rights or remedies available
at law.
16. COSTS
Each party shall pay his or its own costs and expenses of and incidental to
the negotiation, preparation, execution and implementation by it of this
Agreement, of each document referred to in it and the sale and purchase of
the Shares.
17. ASSIGNMENT
17.1 This Agreement is personal to the parties and (subject to Clause 17.2)
neither the Agreement nor any of the benefits arising under the Agreement
shall be assignable and none of the parties shall purport to assign or
transfer the same.
17.2 The Buyer may assign to any member of the Buyer's Group the benefit of any
Warranty, indemnity or any other right which it may have under this
Agreement provided that in the event of such undertaking ceasing to be a
member of the Buyer's Group the benefit of such Warranty, indemnity or
other right shall be deemed to be transferred to any other member of the
Buyer's Group immediately before such cessation and provided further that
any such assignment shall not impose greater liability on any Seller than
would have been the case had such an assignment not taken place.
18. CONTRACTS (RIGHTS OF THIRD PARTIES) ▇▇▇ ▇▇▇▇
Except as expressly provided in this Agreement, a person who is not a party
to this Agreement shall have no rights under the Contracts (Rights of Third
Parties) ▇▇▇ ▇▇▇▇ to rely upon or enforce any term of this Agreement
provided that this does not affect any right or remedy of the third party
which exists or is available apart from that Act.
13
No party may declare itself as a trustee of the rights under this Agreement
for the benefit of any third party save as expressly provided in this
Agreement.
19. COUNTERPARTS
This Agreement may be executed in any number of counterparts and by each of
the parties on separate counterparts each of which when executed and
delivered shall be deemed to be an original, but all the counterparts
together shall constitute one and the same document.
20. GENERAL
Unless expressly provided otherwise, all representations, warranties,
undertakings, covenants, agreements and obligations made, given or entered
into in this Agreement by more than one person are made, given or entered
into severally not jointly or jointly and severally.
21. LAW AND JURISDICTION AND SERVICE OF PROCESS
21.1 This Agreement shall be governed by and construed in accordance with the
laws of England.
21.2 The parties hereby submit to the exclusive jurisdiction of the High Court
of England in relation to any dispute or claim arising out of or in
connection with this Agreement or any of the documents to be executed
pursuant to this Agreement.
SIGNED by or on behalf of the parties on the date which first appears in this
Agreement
14
SCHEDULE 4
WARRANTIES
(Clause 5)
1. SHARE CAPITAL, COMPANY, SUBSIDIARIES AND JOINT VENTURES
OWNERSHIP OF SHARES
1.1 He is the sole legal and beneficial owner of the Shares set out opposite
his name in Schedule 1 free from all security interests, options, equities,
claims or other third party rights (including rights of pre-emption) of any
nature whatsoever.
1.2 The Shares have been lawfully issued, constitute the whole of the Company's
allotted and issued share capital and are fully paid or credited as fully
paid.
1.3 No person has the right (whether exercisable now or in the future and
whether contingent or not) to call for the issue, allotment, conversion or
redemption of any shares, debentures or other securities of any Group
Company and there is no Encumbrance on the Shares or any shares in any
Group Company or any arrangements or obligations to create any
Encumbrances.
COMPANY
1.4 The Company is a company which is duly incorporated and validly existing
under the laws of England and Wales and has full power and authority to
carry on its business.
SUBSIDIARIES
1.5 The Company does not have any subsidiary other than the Subsidiaries and no
Group Company has or has agreed to acquire an interest in any body
corporate other than the Subsidiaries.
1.6 The Company is the legal and beneficial owner of each allotted and issued
share in the capital of the Subsidiaries and each share is fully paid or
credited as fully paid.
1.7 The contents of Schedule 2 are complete and accurate in all material
respects.
JOINT VENTURES
1.8 No Group Company is or has agreed to become a member of any partnership or
other unincorporated association, joint venture, European Economic Interest
Grouping or consortium (other than a recognised trade association) or other
profit or income sharing arrangement.
SHADOW DIRECTORS
1.9 No Group Company has liability as a former member, officer or shadow
director of any person nor so far as the Warrantors are aware, are there
any circumstances in which such liability could arise.
1.10 No person is or has been a shadow director of any Group Company within the
meaning of section 741(2) of the Act.
15
BRANCH
1.11 No Group Company has assets outside the United Kingdom nor does it have any
branch, agency, place of business or any permanent establishment (as
defined in the relevant double taxation treaty) outside the United Kingdom
and does not use on its letterhead, books or vehicles or otherwise carry on
its business under any name other than its corporate name.
SHARE CAPITAL
1.12 Since 22 December 2000 no Group Company has provided any financial
assistance as defined in section 152(1) of the Act directly or indirectly
for the purpose of acquiring its own shares or those of any of its holding
companies or reducing or discharging any liability so incurred.
1.13 Since 22 December 2000 no Group Company has redeemed or purchased or agreed
to redeem or purchase any of its share capital or passed any resolutions
authorising any such redemption or purchase or entered into or agreed to
enter into any contingent purchase contract (as defined in section 165(1)
of the Companies Act) or passed any resolutions approving any such contract
or made any capitalisation of reserves.
1.14 Since 22 December 2000 no share in the capital of any Group Company has
been issued for a consideration other than cash.
1.15 Save as detailed in Schedule 2, no director or secretary of any Group
Company is interested in the share capital of any Group Company.
1.16 The Company has no interest in the shares or other securities of any
company which is not a Subsidiary and no interest in any business other
than that of a Group Company and has not agreed to acquire any such shares,
securities or interest or held any such shares, securities or interest or
held any such shares, securities or interest at any time.
2. CAPACITY
2.1 He has the legal right and full power and authority to enter into and
perform his obligations under this Agreement and any other documents to be
executed by him in connection with this Agreement. When executed, the
Seller's obligations under this Agreement and any other documents executed
in connection with it will be enforceable in accordance with their terms
and the execution and delivery of, and the performance by the Seller of his
obligations under this Agreement and any other documents to be executed by
him in connection with this Agreement does not require the consent of any
third party.
EFFECT OF SALE
2.2 So far as the Warrantors are aware (but without having made any enquiries
of the other party, customers or suppliers) the execution or the
performance of this Agreement and any other document to be executed at
Completion will not:-
2.2.1 relieve any other party to a Material Contract of its obligations or
enable it to terminate the agreement or arrangement;
2.2.2 result in the creation, crystallisation or imposition of an
Encumbrance on any of the material assets of a Group Company; or
2.2.3 result in a breach of any order, judgement or decree of any court or
governmental agency.
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3. ACCOUNTS AND OTHER RECORDS
ACCURACY OF THE ACCOUNTS
3.1 The Accounts:-
3.1.1 give a true and fair view of the state of each Group Company's
affairs and of its assets and liabilities as at the Accounts Date and
its profits and losses for the financial year ended on that date;
3.1.2 have been prepared and audited in compliance with the Act and
accounting standards, principles and practices generally accepted in
the United Kingdom; and
3.1.3 have been prepared on the same basis as that adopted for the previous
two financial years ended on the Accounts Date.
3.2 The Accounts make provision for, reserve for or disclose, as appropriate:
3.2.1 all liabilities, whether actual, contingent, unquantified or
disputed;
3.2.2 all capital commitments, whether actual or contingent;
3.2.3 all bad or doubtful debts;
3.2.4 all exceptional items;
3.2.5 all changes in accounting policies; and
3.2.6 all transactions with any Seller, any person connected with a Seller,
any director or any person connected with a director,
of each Group Company as at the Accounts Date.
3.3 So far as the Warrantors are aware the fixed asset register places no value
on non-existent items.
ACCOUNTING REFERENCE DATE
3.4 The Company's and its Subsidiaries' accounting reference dates are as set
out in Schedule 2
BOOKS AND RECORDS
3.5 Each Group Company's books of accounts are up-to-date and comply in all
material respects with sections 221 and 222 of the Act.
STORAGE OF RECORDS
3.6 No Group Company has any of its records, systems, or data recorded or
operated by any means which are not under the exclusive ownership and
direct control of a Group Company.
MANAGEMENT ACCOUNTS
3.7 The Management Accounts have been prepared with reasonable care and
attention, and on a basis consistent with that adopted in the preparation
of the management accounts of
17
the Group for the previous 12 months. Having regard to the purpose for
which they were prepared and are used by the Group the Management Accounts
are not in the opinion of the Warrantors materially misleading.
EVENTS SINCE THE ACCOUNTS DATE
3.8 Since the Accounts Date:-
3.8.1 the business of each Group Company has been carried on in the
ordinary course on arm's length terms and so as to maintain the
business as a going concern;
3.8.2 no distributions within the meaning of Part VIII of the Act or
sections 209 or 210 or 418 of ICTA have been declared, paid or made by
any Group Company except as provided for in the Accounts;
3.8.3 no share or loan capital of any Group Company has been or agreed to
be issued, allotted, redeemed, purchased or repaid by any Group
Company;
3.8.4 no asset of a value in excess of L100,000 has been, or has been
agreed to be, acquired or disposed of on capital account by a Group
Company except for current assets in the ordinary course of business;
3.8.5 no debtor has been released by any Group Company on terms that he
pays less than the face value of his debt; no debt has been
subordinated, written down or written off, provided against (in whole
or in part), factored or assigned;
3.8.6 no Group Company has borrowed any money or raised any money in the
nature of borrowings except for borrowings on overdraft in the
ordinary course of business from the Bank of Scotland within the Group
Company's existing overdraft facility with that bank as set out in the
Disclosure Letter;
3.8.7 no contract, arrangement or transaction has been entered into and no
payment has been made by any Group Company otherwise than in the
ordinary and usual course of carrying on its business and on an arm's
length terms;
3.8.8 no new management or consultancy charges of more than L50,000 have
been incurred or agreed to by any Group Company;
3.8.9 no shareholder resolution of the Company has been passed (other than
ordinary business at annual general meetings);
3.8.10 the business of any Group Company has not been materially and
adversely affected by the loss of any customer which in the financial
year preceding the Accounts Date accounted for 5 per cent. or more of
its turnover; and
3.8.11 there have been no material changes to any accounting policies of
any Group Company.
4. FINANCE
BANK ACCOUNTS
4.1 Details of all bank, building society, investment and deposit accounts
maintained or used by each Group Company and the credit or debit balances
are set out in or attached to the Disclosure Letter. No Group Company is or
has engaged in any off balance sheet
18
financing of a type which would not require to be shown in the Accounts,
had such arrangement or financing been entered into on or before the
Accounts Date.
4.2 Details of all loan, overdraft and other financial facilities available to
each Group Company other than from another Group Company are set out in or
attached to the Disclosure Letter.
NOTICE OF REPAYMENT OF BORROWINGS
4.3 No Group Company has received written notice at its registered office from
any lenders of any money requiring repayment or relating to term loan
facilities becoming on demand.
LOAN CAPITAL
4.4 No Group Company has outstanding loan capital nor has it factored its debts
or borrowed any money (save for short term borrowings from its bankers)
which it has not repaid.
CREATION OF CHARGES
4.5 No Group Company has created or agreed to create an Encumbrance or
agreement for the postponement of debt (except in the ordinary course of
business) for lien or set-off.
GUARANTEES AND INDEMNITIES
4.6 Other than in respect of another Group Company, no Group Company has
granted any guarantee or indemnity for the obligation of any third party.
GRANTS
4.7 The Disclosure Letter contains details of each grant or subsidy or other
financial assistance received (and not fully repaid) by the Company from
any supranational, national, or local authority or government agency.
FOREIGN CURRENCY HEDGING
4.8 The Company and each Group Company has complied at all times with SSAP 20
in respect of its foreign currency hedging arrangements.
5. ASSETS AND STOCK
TITLE TO AND CONDITION OF ASSETS
5.1 With the exception of:-
5.1.1 trading stock and assets disposed of in the ordinary course of the
business;
5.1.2 trading stock and assets acquired under retention or reservation of
title arrangements; or
5.1.3 assets which are leased, hired or rented or obtained under any
similar arrangement
each of the assets included in the Accounts or acquired by a Group Company
since the Accounts Date and all assets owned or used by each Group Company
are:-
19
5.1.4 legally and beneficially owned solely by the Group Company free from
any Encumbrance but for the avoidance of doubt this Warranty shall not
be deemed to relate to the Properties;
5.1.5 in the possession or under the control of the Group Company; and
5.1.6 situated in the United Kingdom.
5.2 So far as the Warrantors are aware all material plant, machinery, vehicles
and equipment owned or used by each Group Company is in the possession and
control of a Group Company and is functioning correctly as at the date of
Completion given its age and usage (fair wear and tear excepted) and is
adequately maintained.
ASSETS SUFFICIENT FOR BUSINESS
5.3 A schedule of fixed assets, including plant, machinery, tools, vehicles and
equipment owned by each Group Company is attached to the Disclosure Letter
and such schedule includes all such assets which have been owned by a Group
Company for 10 years or more.
5.4 In the reasonable opinion of the Warrantors the assets owned by each Group
Company together with the assets which are leased, hired or rented comprise
all material assets reasonably necessary for the continuation of the
business of each Group Company as previously carried on prior to the date
of this Agreement.
HIRE PURCHASE AND LEASED ASSETS
5.5 No Group Company is a party to, or is liable under, a lease, hire, hire
purchase, credit sale or conditional sale agreement in respect of an asset
with a book value of in excess of L50,000 and has not received any written
notice to terminate such agreement or arrangement.
TRADE DEBTORS
5.6 None of the debts which are shown in the Accounts, or which have arisen
subsequently, have been outstanding for more than three months from the
Group Company's due date for payment or have been released such that the
debtor has paid less than the full amount of his debt.
5.7 No single debtor owes to any Group Company an amount or amounts in
aggregate greater than ten per cent of the total of all debts owing to such
Group Company.
PRODUCTS AND SERVICES
5.8 No Group Company has given any guarantee or warranty which is still
outstanding in respect of goods or services supplied or contracted to be
supplied by it save for any warranty or guarantee implied by law or set out
in its standard terms and conditions and so far as the Warrantors are aware
no goods or services sold or delivered by any Group Company were materially
defective or materially failed to comply with the terms of sale or
provision.
STOCK
5.9 The Group's stock is of satisfactory quality.
5.10 So far as the Warrantors are aware the level of the Group's stock is
materially appropriate having regard to the current levels of business.
20
6. INSURANCE
INSURANCE OF ASSETS
6.1 Particulars of all insurances and indemnity policies in respect of which
each Group Company has an interest are set out in the report prepared by
▇▇▇▇▇ (the "INSURANCE REPORT") which is attached to the Disclosure Letter
(the "POLICIES").
6.2 So far as the Warrantors are aware, each Group Company has at all material
times been, and is insured against accident, injury, third party loss, loss
of profits, damage and all other risks prudently insured against by
companies carrying on a similar business to the Group Company.
6.3 The Group has no interest in and is not a beneficiary under, and does not
pay and is not liable to pay any part of the premiums on, any policy of
life assurance.
STATUS
6.4 All premiums due on the Policies have been paid and so far as the
Warrantors are aware all the Policies are valid and in force.
CLAIMS
6.5 No claim is outstanding under any of the Policies and so far as the
Warrantors are aware no matter exists which might give rise to such a claim
under any of the Policies. Details of all claims made during the last three
years under any of the Policies are set out in the Insurance Report
appended to the Disclosure Letter.
6.6 The replies to due diligence enquiries raised in respect of liabilities
associated with Expert Heat Treatments Limited (no.4910338) ("EHT")
appended to the Disclosure Letter at 2.13 are complete and accurate in
all material respects
7. CONTRACTS
MATERIAL CONTRACTS
7.1 Copies of each Group Company's standard terms and conditions of sale and of
purchase are attached to the Disclosure Letter.
7.2 Details or copies of all Material Contracts are attached to the Disclosure
Letter.
7.3 There is not outstanding any offer, tender or bid which is capable of being
converted by acceptance into a contract with a supplier which will involve
a payment by a Group Company in excess of L100,000 in each year.
7.4 There is not outstanding any offer, tender or bid which is capable of being
converted by acceptance into a contract with a customer which will involve
payments by the customer in excess of L100,000 in each year.
7.5 There is no material agreement or arrangement whether or not in writing to
which any Group Company is a party:
7.5.1 under which that Group Company gives any guarantee, performance or
other bond, indemnity, letter of comfort or similar commitment
(whether or not legally binding) in relation to, or stands surety for,
the obligations of any third party;
21
7.5.2 which involves future capital expenditure by the Group Company
exceeding L100,000;
7.5.3 which is an agency, distributorship, marketing, purchasing,
licensing, management or administration (including the management or
administering of the affairs of any company, firm, association or
business organisation) agreement or arrangement or is an OEM
Agreement;
7.5.4 under which the Group Company is subject to any liability (contingent
or otherwise and including any liability to a third party under the
Contracts (Rights of Third Parties) Act 1999) not provided for in the
Accounts or the Management Accounts; and
7.5.5 which relates to the acquisition or disposal of companies, businesses
or fixed assets by the Group Company either during the last six years
or under which the Group Company or any other party has outstanding
obligations.
MAJOR CUSTOMERS, CLIENTS AND SUPPLIERS
7.6 No customer or client or supplier of any Group Company has ceased or given
written notice to a Group Company indicating an intention to cease trading
or dealing with that Group Company nor, so far as the Warrantors are aware
(without having made any specific enquiries) is any customer, client or
supplier proposing to cease trading with or to make any substantial
reduction in its trading or dealing with the Group Company.
CREDITORS
7.7 Each Group Company has paid its creditors within the credit periods
normally applied by a Group Company to such creditors and no debt owing by
a Group Company has been due for more than 120 days.
8. INSIDER CONTRACTS
8.1 No Group Company is, or during the two years preceding the date of this
Agreement has been, a party to any agreement or arrangement (whether
legally enforceable or not) in which any Warrantor or any director or
former director of any Group Company or any other person beneficially
interested in the share capital of the Company at that time or any
connected person of any of them is or was directly or indirectly interested
other than their contract of employment.
8.2 There are no debts (whether or not due for payment and including contingent
liabilities) or unfulfilled obligations owing between a Group Company and
any Warrantor or any director or former director of a Group Company or any
connected person of any of them other than remuneration accrued (but not
yet due for payment) in respect of the calendar month in which this
Agreement is executed or for reimbursement of business expenses
exceeding L1,000 for each Warrantor.
8.3 There is no claim or circumstance which may give rise to a claim against a
Group Company by any director or former director of a Group Company or any
connected person of any of them on any account whatsoever.
8.4 No Group Company is party to any agreement or arrangement which is not
entirely of an arm's length nature.
22
OTHER INTERESTS OF THE WARRANTORS
8.5 None of the Warrantors nor any connected person of any of the Warrantors
have a direct or indirect interest in any person (other than a Group
Company) which is competitive with the business of any Group Company (save
as the beneficial owner of any class of securities of any company listed on
a recognised investment exchange (as defined in the Financial Services and
Markets Act 2000) and in respect of which each Warrantor or such person is
beneficially interested in less than three per cent of all the issued
securities of that class).
9. FINDER'S FEE ETC
No person is entitled to receive from any Group Company a finder's fee,
brokerage or commission in connection with this Agreement or any document
to be executed at or before Completion in accordance with this Agreement.
10. LITIGATION AND COMPETITION MATTERS
PROCEEDINGS
10.1 No Group Company is engaged in any litigation, arbitration or
administrative or other similar proceedings which might have a material
effect on the Group's business and so far as the Warrantors are aware there
are no such litigation, arbitration or administrative or other such
proceedings pending or threatened by or against any Group Company and so
far as the Warrantors are aware no circumstances exist which are reasonably
likely to give rise to the same.
10.2 There is and has been no governmental, regulatory or other investigation,
enquiry or disciplinary action during the 2 years prior to the date of this
Agreement regarding any Group Company and so far as the Warrantors are
aware none is pending or threatened and so far as the Warrantors are aware
no circumstances exist which are reasonably likely to give rise to the
same.
10.3 So far as the Warrantors are aware, no Group Company is, or at any material
time has been, in connection with the business, a party to any agreement,
arrangement or course of conduct which infringes or infringed any
competition, anti-trust, merger control, monopoly, fair trading or similar
legislation of the EU and/or of any EU Member State.
10.4 So far as the Warrantors are aware, no Group Company has received any
notice or communication from the European Commission, or a national
competition authority of any EU Member State in respect of any agreement,
arrangement or course of conduct to which the Group Company has been or is
or has been alleged to be in connection with the business a party to.
11. LEGAL MATTERS
LICENCES
11.1 So far as the Warrantors are aware each Group Company has and complies in
all material respects with all Licences which are material and necessary
for the proper carrying on of its business (details or copies of which are
contained in or attached to the Disclosure Letter), and so far as the
Warrantors are aware there are no pending or threatened proceedings or
investigations which are reasonably likely to affect the Licences in a
material way and, so far as the Warrantors are aware, there is no fact or
circumstance existing that is reasonably likely to lead to the suspension
or revocation of any such Licence.
23
11.2 No Licence is personal to any one or more of the Warrantors.
11.3 No Group Company has been or has received notice that it has been suspended
or debarred from bidding for contracts or subcontracts for any department
or any agency of the government of the United Kingdom or any department or
agency of the United States government or any foreign government nor has
any such suspension or debarment been threatened or action for suspension
or debarment been commenced.
11.4 No Group Company is currently being audited, except in the ordinary course
of business or as is customary in the industry or as provided by the
Federal Acquisition Regulations nor is any Group Company currently being
investigated by the United States Government Accounting Office, the United
States Department of Justice, the United States Department of Defence or
any of its agencies, the Defence Contract Audit Agency or the Inspector
General or other authorities of any agency of the United States government,
any equivalent British government department or agency or any foreign
government nor so far as the Warrantors are aware has any such audit or
investigation been threatened and so far as the Warrantors are aware there
is no valid basis for any Group Company's suspension or debarment from
bidding on contracts or subcontracts for any agency of the United States
Government or any foreign government and so far as the Warrantors are aware
there is no valid basis for a claim pursuant to an audit or investigation
by the United States government or any foreign government.
11.5 No Group Company nor any of the directors or officers of any Group Company
nor so far as the Warrantors are aware any of the other Employees or any
other person acting on behalf of any Group Company has in the course of
their duties to the relevant Group Company, directly or indirectly, (i)
made, provided, or offered any unlawful, immoral or improper contributions,
payments, other inducement, gifts of anything of value or entertainment to
any government officials, political parties, candidates or others, or (ii)
made or offered any unlawful or improper expenditures or gifts of anything
of value relating to political activity to government officials, political
parties, candidates or others (any payment pursuant to (i) or (ii)
hereinafter referred to as an UNLAWFUL PAYMENT).
11.6 No Group Company, as at the date of this agreement, has received notice of
any Unlawful Payment or an investigation of an alleged Unlawful Payment. In
the reasonable opinion of the Warrantors each Group Company has adequate
financial controls to prevent and detect any such Unlawful Payment. No
Group Company nor any of their directors or officers, nor so far as the
Warrantors are aware any of the other Employees or any other person acting
on behalf of the relevant Group Company have in the course of their duties
to the relevant Group Company given, offered, accepted or received any
unlawful or improper contributions, payments, gifts of anything of value,
or expenditures.
11.7 So far as the Warrantors are aware each Group Company is in compliance in
all respects and has, during all periods for which any applicable statute
of limitations has not expired, complied with all English, European Union,
United States and other applicable foreign laws and regulations relating to
the prevention of corrupt practices and similar matters
POWERS OF ATTORNEY
11.8 No Group Company has given any power of attorney which remains in effect
nor has it given any other similar authority which is still outstanding
(other than authority for an Employee to enter into routine trading
contracts in the ordinary course of their duties).
DOCUMENTS FILED
11.9 All returns, particulars, resolutions and other documents required by law
to be delivered to the Registrar of Companies by each Group Company have
been properly prepared and delivered.
24
MEMORANDUM AND ARTICLES OF ASSOCIATION
11.10 The copy of the memorandum and articles of association of each Group
Company attached to the Disclosure Letter is up-to-date and has embodied
therein or annexed thereto a copy of every resolution or agreement subject
to section 380 of the Companies ▇▇▇ ▇▇▇▇.
PREVIOUS ACQUISITIONS AND DISPOSALS
11.11 Other than liabilities details of which are listed in the Disclosure
Letter, there is no outstanding claim, demand, action, suit, proceeding or
course of action either by or against any Group Company in relation to the
acquisition or disposal of all or part of the shares or assets of any
company including any company (or part of a company) that is now or has
been in the last ten years a subsidiary or holding company of any Group
Company.
12. INSOLVENCY
12.1 In relation to each Group Company:-
12.1.1 no resolution has been passed (and no meeting has been convened, and
no written resolution has been circulated), no petition has been
presented that has not been withdrawn and no order has been made, for
winding up;
12.1.2 no notice of intention to appoint an administrator has been filed
and no application for the appointment of an administrator has been
made by any Group Company, the directors or any creditor;
12.1.3 no holder of a qualifying floating charge has taken any steps to
appoint an administrator pursuant to the provisions of the Insolvency
▇▇▇ ▇▇▇▇ as amended by the Enterprise ▇▇▇ ▇▇▇▇;
12.1.4 no administrative receiver, receiver, administrator, liquidator or
provisional liquidator has been appointed;
12.1.5 no distress, distraint, charging order, execution or other process
has been levied against any of its assets and remains undischarged;
12.1.6 there is no unsatisfied judgment or court order outstanding against
any Group Company; and
12.1.7 no meeting of its creditors, or any class of them, has been held or
summoned, no proposal has been made for a moratorium, composition or
arrangement in relation to any of its debts, or for a voluntary
arrangement under Part 1 of the Insolvency ▇▇▇ ▇▇▇▇;
12.1.8 it has not stopped paying its creditors or been deemed to be unable
to pay its debts within the meaning of Section 123 of the Insolvency
▇▇▇ ▇▇▇▇; and
12.1.9 no event analogous to any of the above has happened in any
jurisdiction in which that person is incorporated or resident or in
which it carries on business or has assets.
12.2 So far as the Warrantors are aware no Group Company has been a party to any
transaction with any third party which, in the event of such third party
going into liquidation or an administration order or a bankruptcy order
being made in relation to it or to him, would constitute a transaction at
an undervalue, a preference, an invalid floating charge
25
or an extortionate credit transaction or part of a general assignment of
debts, under sections 238 to 245 and sections 339 to 344 of the Insolvency
▇▇▇ ▇▇▇▇.
12.3 No person who is or has at any time within the last three years been a
director or officer of any Group Company has at any material time been
subject to any disqualification order under the Companies Act or under any
other legislation relating to the disqualification of directors and
officers, or was the subject of any investigation or proceedings capable of
leading to a disqualification order being made.
13. INTELLECTUAL PROPERTY
13.1 Details of all registered Intellectual Property owned by the Group and all
applications for registration are set out in Schedule 6.
13.2 All material Group Intellectual Property is legally and beneficially owned
by a Group Company or used under and in accordance with written licences,
and is summarised in Schedule 6 or in the Disclosure Letter.
13.3 The Intellectual Property set out in the Disclosure Letter is all the
material Intellectual Property required by the Group to carry on its
business as carried on at the date of this Agreement.
13.4 In respect of all Intellectual Property registered by each Group Company
and all applications for registration by each Group Company, all renewal
and other fees have been paid.
13.5 Subject to paragraph 13.6, so far as the Warrantors are aware, no Group
Company has infringed within the last 3 years or is infringing any
Intellectual Property of any third party and no third party has within the
last 3 years threatened in writing to the relevant Group Company any action
in respect of, or alleged, such infringement.
13.6 No Group Company has infringed within the last 3 years or is infringing any
copyright, rights in confidential information, trade secret rights, rights
in databases or unregistered design rights of any third party and no third
party has within the last 3 years threatened in writing to the relevant
Group Company any action in respect of, or alleged, such infringement.
Notwithstanding the foregoing the use of Intellectual Property licensed to
any Group Company which has resulted in or does result in any infringement
of any of the rights specified above shall be excluded from this warranty
13.6.
13.7 So far as the Warrantors are aware, no material rights which any Group
Company has in Intellectual Property owned by the Group have within the
last 3 years been infringed by any third party. No Group Company has
alleged any such infringement against any third party.
13.8 Other than as set out in the Disclosure Letter no Group Intellectual
Property will be lost, automatically terminated, or rendered liable to a
right of termination, assignment or licence to a third party, by virtue of
the execution of this Agreement or the transaction effected by this
Agreement.
13.9 No Intellectual Property owned by the Group in connection with its
business, nor the validity or subsistence of the Group's right, title or
interest in such Intellectual Property, is the subject of any written
current, pending or threatened challenge, claim or proceeding, including
for opposition, cancellation, revocation or rectification notified to the
Company.
13.10 Save with respect to licences for standard software packages, copies of
all material contracts to which a Group Company is a party:
26
13.10.1 whereby the Group Company uses or exploits any material
Intellectual Property belonging to a third party; or
13.10.2 whereby the Group Company has authorised or otherwise permitted,
expressly or by implication, any use whatsoever of any material
Intellectual Property, or granted to any third party any rights or
interest in respect of any material Intellectual Property,
(together the "IP AGREEMENTS") are attached to the Disclosure Letter.
13.11 So far as the Warrantors are aware, all the IP agreements are valid and
binding. None of the IP agreements has been the subject of any material
breach or default or of any event which with notice or lapse of time or
both would constitute a default by any Group Company or, so far as the
Warrantors are aware, any other party thereto.
13.12 Other than in the ordinary course of business, and pursuant to written
confidentiality agreements signed by each disclosee, there has been no
disclosure of or agreement to disclose to any person other than the Buyer,
employees or former employees of the Group any of the Confidential
Information of the Group within the last 3 years.
13.13 No Group Company has within the last 3 years materially breached any
agreements relating to Confidential Information of a third party.
14. INFORMATION TECHNOLOGY
For the purposes of the following warranties in this Section 14 "COMPUTERS"
and "COMPUTER SYSTEMS" means all hardware, firmware, peripherals,
communication links, storage media and networking equipment.
14.1 So far as the Warrantors are aware all the Computers and Computer Systems
owned by any Group Company or used by or on behalf of any Group Company:-
14.1.1 are fulfilling the purposes for which they were acquired or
established without material failures;
14.1.2 have adequate capacity for each Group Company's present needs; and
14.1.3 have reasonably adequate security, back-up systems, duplication,
hardware and software support and maintenance.
14.2 Darchem Engineering Limited is the sole owner of the domain names
▇▇▇▇▇▇▇.▇▇.▇▇, ▇▇▇▇▇▇▇.▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇.▇▇.
14.3 Each Group Company has complied and is complying in all material respects
with the Data Protection ▇▇▇ ▇▇▇▇.
14.4 No Group Company has in the three years immediately preceding the date of
this Agreement received a notice or allegation from either the Information
Commissioner (or previously the Data Protection Commissioner), a data
subject or other individual alleging non-compliance with the data
protection principles or any other provisions of, or claiming compensation
under, the Data Protection ▇▇▇ ▇▇▇▇.
14.5 Save with respect to licences for standard software packages, there are no
royalties, licence fees or other fees payable in connection with the use of
any part of the Computer Systems other than as expressly set out in the
contracts appended to the Disclosure letter.
27
14.6 Other than elements of the Computer Systems leased or licensed to a Group
Company:
14.6.1 one or more Group Companies are the legal and beneficial owner free
from Encumbrances of the Computer Systems; and
14.6.2 the Computer Systems are not wholly or partly dependent on any
facilities which are not under the exclusive ownership or control of a
Group Company.
LICENCES
14.7 Each Group Company has been permitted to use the software used in its
business pursuant to licences which are so far as the Warrantors are aware
in full force and effect. Details of all material licences are set out in
or attached to the Disclosure Letter.
15. EMPLOYEES AND DIRECTORS
15.1 Save as set out in the Schedule of Employees attached to the Disclosure
Letter:-
15.1.1 no Group Company has any Employees;
15.1.2 no Employee of a Group Company is employed on terms which differ to
any material extent from the Group Company's written standard terms
and conditions of employment as annexed to the Disclosure Letter; and
15.1.3 no Employee receives or is entitled to receive any bonus or
commission other than wages or salary at a fixed rate.
15.1.4 there is no employee handbook or employment related policy which
applies to the Employees;
15.1.5 no Employee is contractually entitled to receive or does receive
benefits from any Group Company which are either a company car, mobile
telephone, private medical insurance, life assurance or permanent
health insurance
15.2 Particulars of each Employee's current remuneration, age, sex, date of
commencement of continuous employment (for the purposes of the Employment
Rights Act 1996), job location, and pension scheme membership appear in
that Schedule.
15.3 No Warrantor:
15.3.1 has, as at the date of this Agreement, given or received notice of
termination of employment and no Warrantor will become entitled to
terminate their employment on any terms different to those set out in
their terms and conditions of employment by reason of the Completion
of this Agreement;
15.3.2 will become entitled to receive a payment or to receive any new or
improved benefit or any material change in their terms and conditions
of employment by reason of the Completion of this Agreement;
15.3.3 is at the date of this Agreement on sick leave which has continued
for more than 14 consecutive days nor has any Warrantor been absent
from his duties as a result of illness or injury for a period of at
least 3 months in aggregate within the period of 12 months prior to
Completion; or
15.3.4 requires a work permit to work in the United Kingdom.
28
15.4 He is not intending or considering leaving employment within the 12 month
period commencing immediately after Completion.
15.5 There is no outstanding offer to employ or engage any person to provide
services to any Group Company, and no person has accepted such an offer who
has not yet taken up the position accepted.
15.6 There are no contracts of service with Employees (whether or not in
writing) which cannot be terminated by a Group Company by three months'
notice or less without giving rise to any claim for damages or compensation
(other than a statutory redundancy payment or statutory compensation for
unfair dismissal) and as at the date of this Agreement no Group Company has
given or received notice of termination of employment from any of the
Employees.
15.7 The aggregate level of remuneration payable to Employees has not increased
by more than 10% within the last 12 months.
15.8 No Group Company has received a written application for formal or statutory
recognition of any trade union or other body representing Employees within
the last 6 months and no Group Company has a formal written agreement with
any trade union or other employee representing body for the purposes of
collective bargaining. The Warrantors are not aware of any trade union or
other employee representing body construing or seeking to construe any
action by any Group Company as recognition.
15.9 No Group Company has entered into any written collective agreement or other
agreement binding on any such Group Company where the agreement is to
implement increases in remuneration for any Employee and where such
increases have yet to take effect.
15.10 No Group Company negotiates or communicates with or provides information
to a Works Council (whether formally or informally) in respect of the
Employees.
15.11 No Group Company has offered or agreed to increase the remuneration of any
Employee.
15.12 There is no liability, outstanding or contingent or anticipated, to any
present or former Employee other than remuneration accrued for the current
wage or salary period or for reimbursement of normal business expenses and
(so far as the Warrantors are aware) no present or former Employee has any
claim, outstanding or contingent or anticipated, against any Group Company
or right to be indemnified by any Group Company arising out of an act or
omission in the course of his office or employment or in relation to the
termination of that office or employment on or before the date of this
Agreement.
15.13 No Group Company is involved in any industrial or trade dispute or any
dispute or negotiation with any trade union or association of trade unions
or organisation or body of Employees, and so far as the Warrantors are
aware there are no circumstances reasonably likely to give rise to any such
dispute. No Group Company has been involved in the last 12 months in any
industrial or trade dispute with any trade union or association of trade
unions or organisation or body of Employees.
15.14 No Group Company has within the period of 12 months preceding the date of
this Agreement given notice of any redundancies to the Secretary of State
or started consultations with any appropriate representative under the
provisions of Part IV of the Trade Union and Labour Relations
(Consolidation) ▇▇▇ ▇▇▇▇.
15.15 There is no share incentive scheme, share option scheme, profit sharing
scheme or other bonus or incentive scheme for all or any Employees nor has
any proposal been announced to establish any such scheme.
29
15.16 No Group Company has any apprentices or trainees or consultants or any
industrial training programme, youth training scheme or similar programme
or scheme.
15.17 There are no Employees who are currently on maternity leave or paternity
leave or parental leave, or who are absent from work in accordance with the
terms of any agreement or arrangement (written or otherwise) pursuant to
which they have a right to return to work and there are no Employees who
have been absent from work due to sickness for more than 3 continuous
months in the 12 months period ending on the date of this Agreement.
15.18 There are no:
15.18.1 Employees who are on a fixed term contract;
15.18.2 Employees who have made a formal written application to any Group
Company to work flexibly under section 80F of the Employment Rights
▇▇▇ ▇▇▇▇ within the 12 months preceding the date of this Agreement and
there are no Employees who are currently working flexibly following a
formal application under section 80F of that act to do so;
15.18.3 Former Employees (or their next of kin) who are currently being
paid any monetary payment by a Group Company, other than pension
benefits; or
15.18.4 loans currently outstanding from any Group Company to any Employee
where the amount to be repaid as at the date of this Agreement is in
excess of L1,000 and there are not more than 25 loans currently
outstanding from any Group Company to any Employee regardless of the
size of the loan.
15.19 No Employee will become contractually entitled to receive a monetary
payment from any Group Company by reason of the Completion of this
Agreement.
15.20 So far as the Warrantors are aware, no payment has been made or agreed to
be made by any Group Company in connection with the actual or proposed
termination (except statutory redundancy payments), breach or suspension of
any employment or engagement of any of its Employees or former employees of
any Group Company and there are no outstanding obligations or fees or
arrangements for any Group Company to pay any compensation or gratuitous
payments to any such person.
15.21 In the twelve months prior to the date of this Agreement:-
15.21.1 no formal disciplinary action has been taken against any Employee
earning in excess of L30,000 per annum; and
15.21.2 no written complaint or formal grievance of sex, race or disability
discrimination or discrimination on grounds of religion, belief or
sexual orientation has been raised by any Employee.
15.22 There are no Employment Tribunal or civil court claims which have been
formally lodged against a Group Company by an Employee or former Employee
where such Group Company has been formally notified of the existence of
such claim and where such claim is, at the date of this Agreement, still to
be determined by such Employment Tribunal or Court.
15.23 Each of the Employees has a legal right to work in the United Kingdom.
30
15.24 Within the period of one year preceding the date of this agreement no
Group Company has been a party to any transaction which both parties to the
transaction treated as a relevant transfer as defined in the Transfer of
Undertakings (Protection of Employment) Regulations 1981 ("TUPE") nor has
any employment tribunal claim or formal written grievance been lodged
within the period of one year preceding the date of this Agreement against
any Group Company alleging a failure to comply with the duty to inform and
consult any appropriate representatives under Regulation 10 of TUPE or that
a transaction ought properly to have been treated as a relevant transfer as
defined by Regulation 3 of TUPE that was not so treated.
16. PENSIONS
16.1 Except in relation to the Pension Schemes, no Group Company is or has been
party to any agreement or arrangement (in each case whether formal or
informal) in relation to which a Group Company has incurred, or may be
expected to incur any liability or responsibility for or in relation to the
provision of any Relevant Benefits for any person.
16.2 The Stakeholder Scheme is a stakeholder pension scheme as defined in
section 1 of the Welfare Reform and Pensions ▇▇▇ ▇▇▇▇ and so far as the
Warrantors are aware there are no circumstances which could result in any
penalty for failure to comply with that Act or the Stakeholder Pension
Schemes Regulations 2000.
16.3 There have been delivered to the Buyer true and complete copies of:-
16.3.1 the Declaration of Trust, rules and any other documents containing
the provisions governing the Life Assurance Scheme;
16.3.2 the current explanatory booklets issued to any Employees about the
Stakeholder Scheme and the Life Assurance Scheme; and
16.3.3 a list of all Employees for whom any Group Company contributes or
deducts contributions from pay together with all particulars necessary
to establish the contributions payable or contingently payable by or
in respect of them to the Pension Schemes.
16.4 All benefits under the Stakeholder Scheme and the Personal Scheme are
provided on a money purchase basis within the meaning of section 181(1) of
the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇. No assurance, promise or guarantee (whether
oral or written) has been given to any person as to the level or amount of
benefits to be provided under the Stakeholder Scheme and the Personal
Scheme.
16.5 So far as the Warrantors are aware, there are no claims or actions in
respect of the Pension Schemes (including, without limitation, complaints
to the Pensions Ombudsman or investigations by the Occupational Pensions
Regulatory Authority or the Pensions Regulator) in progress, pending or
threatened (other than routine claims for benefits) and no circumstances
exist which are reasonably likely to give rise to any such claim or action.
16.6 All amounts due to be paid to the Pension Schemes by or on behalf of each
Group Company and all Employees and former employees have been paid.
16.7 Each trading Group Company has been properly admitted to participation in
the Life Assurance Scheme.
16.8 The Stakeholder Scheme and (so far as the Warrantors are aware) the
Personal Scheme are approved schemes within the meaning of section 631 ICTA
and the Life Assurance Scheme is an exempt approved scheme within the
meaning of section 592 ICTA
31
respectively and the Warrantors are not aware of any reason why such
approved and exempt approved status may or could be withdrawn.
16.9 No Group Company has any liability in respect of participation in, or an
employee's participation in, the ▇▇▇▇ Group Scheme under section 75 of the
1995 Act or otherwise.
16.10 No Group Company has given any undertaking or assurance to any person as
to the continuance or improvement of any of the Pension Schemes or the
benefits that they provide, or as to the introduction of any new scheme to
provide any Relevant Benefits in respect of any person.
16.11 All Employees who are entitled to join any of the Pension Schemes joined
such scheme or schemes at their first opportunity or decided not to do so
having been informed of their entitlement to join in writing.
16.12 No Employee or former employee of any Group Company has been excluded from
membership of any of the Pension Schemes or had contributions to or
benefits under any of the Pension Schemes limited in ways which constitute
illegal discrimination.
16.13 All benefits payable under the Life Assurance Scheme and under the
Executive Life Assurance Scheme are fully insured with an insurance company
of good repute on the insurer's normal terms and, so far as the Warrantors
are aware, there are no grounds on which the insurance company would avoid
liability under such insurance.
16.14 Each Group Company has at all times complied with all of its obligations
to, under and in respect of the Pension Schemes.
16.15 Neither of the Pensions Indemnities has been altered or released. No claim
has been made under either of the Pensions Indemnities and so far as the
Warrantors are aware no circumstances have arisen which might give rise to
any such claim.
16.16 Since 1 August 1993 no Employee or former employee of any Group Company
has been employed by any Group Company as a result of a transfer of an
undertaking or part of an undertaking to which TUPE has applied so as to
give rise to any liability to provide Relevant Benefits and/or any benefits
on or following redundancy or leaving service for other reasons in respect
of any such Employee or former employee above the levels that result or
will result from the contributions payable to the Stakeholder Scheme and/or
the Personal Scheme.
16.17 Since 27 August 2004 no act or omission has taken place which would or
might expose any Group Company to any liabilities arising under sections 38
to 42 (inclusive) of the Pensions ▇▇▇ ▇▇▇▇ and no circumstances exist which
would or might result in the issue of a financial support direction under
sections 43 to 51 (inclusive) of the Pensions ▇▇▇ ▇▇▇▇ in respect of any
Group Company.
16.18 Benefits under the Executive Life Assurance Scheme are insured under a
separate policy for each member or under a group policy that satisfies the
conditions set out in section 539A of ICTA and has satisfied such
conditions at all times since before 6 April 2004 or since it was taken out
where this was after 6 April 2004.
17. TAX MATTERS
GENERAL
17.1 The Accounts provide for Taxation in accordance with UK GAAP.
32
17.2 Each Group Company has made all returns required to be made and given all
accounts, statements, reports, computations and notices required to be
given by a Group Company for any Tax purpose and the information contained
in any such returns, accounts, statements, reports, computations and
notices was and so far as the Warrantors are aware remains full and
accurate in all material respects.
17.3 No Group Company is or has been liable to pay any fines, interest or
penalties to a Tax Authority within the last three years.
17.4 So far as the Warrantors are aware, there is no dispute and there has not
at any time within the last six years been any dispute between any Group
Company and any Tax Authority (other than the routine negotiation of tax
returns and computations) and, so far as the Warrantors are aware, no Group
Company is or has within the last six years, been the subject of an
investigation by any Tax Authority (other than routine PAYE, national
insurance and VAT audits).
17.5 All Tax for which any Group Company is liable (including amounts becoming
due since the Accounts Date), the due date for payment of which is on or
before Completion, has been or will be paid on or before Completion.
17.6 The Company has maintained all records that it is required to maintain for
Tax purposes.
17.7 There are set out in the Disclosure Letter details of any arrangements
entered into between each Group Company and the HM Revenue & Customs
pursuant to Section 36 Finance ▇▇▇ ▇▇▇▇.
17.8 The Disclosure Letter contains details of any instalments of corporation
tax paid by each Group Company or apportioned to each Group Company under
any group payment arrangement for the accounting period beginning
immediately after the Accounts Date.
17.9 No Group Company has any dispensations or PAYE Settlement agreements with
the Tax Authorities or any other agreement or arrangement whereby it is
assessed to Tax other than in accordance with the strict terms of the
legislation or practice of the Tax Authority.
17.10 No Group Company is, nor so far as the Warrantors are aware will become,
liable to pay, to reimburse or to indemnify any person (including a Tax
Authority) in respect of the Taxation liability of a third person whether
or not as a consequence of that third person failing to discharge that
liability;
17.11 No transaction has been entered into by any Group Company since the
Accounts Date in respect of which any Group Company is required to make a
specific return or to provide information to any Tax Authority and in
respect of which the time for making such return or providing such
information will expire on or within three months of Completion.
17.12 No Group Company has made, nor, so far as the Warrantors are aware, may
become, liable to make any payment or reimbursement or give any indemnity
in respect of Taxation, as a result of the failure of any person to
discharge Taxation, where such Taxation relates to a profit, income or
gain, transaction, event, omission or circumstance arising, occurring or
deemed to arise or occur on or prior to Completion.
PAYE AND NATIONAL INSURANCE
17.13 Each Group Company has properly operated the PAYE system and has complied
with its obligations in respect of National Insurance and has complied with
its reporting, accounting and payment obligations to the relevant
authorities in connection with payments (including notional payments) and
benefits provided for Employees of a Group Company.
33
17.14 No employee or director of any Group Company or any other person including
but not limited to consultants has been granted an option over or any other
right to acquire shares or securities in any Group Company or any other
company.
17.15 In respect of each acquisition of securities within Chapter 2 of Part 7,
ITEPA (Restricted Securities), an election has been made under section 431
ITEPA (Election for full or partial disapplication of this Chapter) in
respect of all securities.
VAT
17.16 Each Group Company is registered in the United Kingdom for the purposes of
legislation relating to VAT. The Disclosure Letter contains details of all
companies which are or have since 22 December 2000 been treated as a member
of the same group of companies as each Group Company for the purposes of
section 43 VATA, including details of the representative member of such
groups.
17.17 Each Group Company has complied with its payment and other obligations
under the legislation relating to VAT and has maintained complete, correct
and up to date records and documents required for VAT purposes, has not
within the last three years incurred any penalty, default surcharge or
interest in relation to VAT and has not within the last two years been
served with any penalty liability notice within section 64 VATA or any
surcharge liability notice within section 59 VATA or been issued with any
written warning within section 76 (2) VATA.
17.18 No Group Company has been required to give security to HM Revenue &
Customs.
CAPITAL GAINS/CAPITAL ALLOWANCES
17.19 The Disclosure Letter contains details of all claims made by each Group
Company under sections 152 to 154 (replacement of business assets) or
section 179B (roll over of degrouping charge on business assets) of the
TCGA and which apply to any asset owned by a Group Company at Completion
and no other claim has been made by any other person under sections 165
(gifts of business assets) and 175 (replacement of business assets by
members of a group) of the TCGA which affects the consideration for the
acquisition of any such asset taken into account in computing any liability
to corporation tax on chargeable gains on a subsequent disposal of that
asset.
17.20 If any of the assets (or, in respect of assets which are in pools for
capital allowances purposes, the pool of assets) of any Group Company were
disposed of for a consideration equal to the book value of that asset (or,
in respect of assets which are in pools for capital allowances purposes,
the book value of that pool) in, or adopted for the purposes of, the latest
audited accounts of the relevant Group Company no balancing charge or
balancing allowance would arise and if any of the assets of any Group
Company were disposed of for a consideration equal to the book value of
that asset in, or adopted for the purposes of, the latest audited accounts
of the relevant Group Company no liability to corporation tax on chargeable
gains (disregarding any statutory right to claim an allowance or relief)
would arise.
17.21 No Group Company has agreed to acquire or dispose of any asset the
consideration for the acquisition or disposal of which will be in excess or
less than its market value.
17.22 No liability to Taxation (other than VAT but disregarding any statutory
right to claim an allowance or relief) would arise if any Group Company
were to dispose of any asset acquired since the Accounts Date for a
consideration equal to the consideration actually given for the acquisition
of that asset.
34
17.23 Neither the signing of this Agreement nor Completion will result in any
profit or gain being deemed to accrue to any Group Company for the purposes
of Taxation under section 179 TCGA (Company ceasing to be a member of a
group).
17.24 No Group Company has entered into or will, on or before Completion, enter
into an election under section 179A TCGA (Re-allocation within group of
gain or loss accruing under section 179).
17.25 Since the Accounts Date no Group Company has done, or agreed to do, any
act, as a result of which any balancing charge has arisen or may arise
under CAA or other legislation relating to capital allowances.
CLAIMS AND ELECTIONS
17.26 Details of all matters relating to Taxation in respect of which any Group
Company has, or at Completion will have, an outstanding entitlement;
17.26.1 to make an appeal (including a further appeal) against an
assessment to Taxation;
17.26.2 to make an application for the postponement of, or the payment by
instalments of, any Taxation; or
17.26.3 to disclaim or require the postponement of any allowance or relief,
have been Disclosed in the Disclosure Letter (where the appeal, application
or disclaimer must be made within eight weeks of Completion).
DISALLOWANCE AND DEDUCTIONS
17.27 All rents, interest (including any amounts treated as interest for
Taxation purposes, for example, amounts treated as interest under section
730A (Treatment of price differentials on sale and repurchase of
securities), annual payments, emoluments, management or service fees or
charges or other sums of an income nature (including benefits in kind) in
excess of L 5,000 which any Group Company is under an obligation entered
into on or before Completion to pay or provide in the future are or will
under the law currently in force be wholly allowable as deductions or
charges on income in computing profits or against profits for the purposes
of corporation tax in the accounting period in which they have or will be
incurred.
INTANGIBLE ASSETS
17.28 No Group Company owns any chargeable intangible assets as defined in
Schedule 29 Finance ▇▇▇ ▇▇▇▇.
GROUP MATTERS
17.29 No Group Company has any outstanding obligation to make or any entitlement
to receive any payment to or from another company (other than another Group
Company) in respect of any amounts surrendered, or agreed to be
surrendered, by way of group relief, either to or by a Group Company.
RESIDENCE AND OVERSEAS MATTERS
17.30 Each Group Company is and always has been resident only in the United
Kingdom for Tax purposes.
35
17.31 No Group Company acts as the branch, agent, factor or tax representative
of any person resident outside the United Kingdom for Tax purposes and no
such person carries on any trade or business through a Group Company.
BONUS ISSUES/DISTRIBUTIONS
17.32 No Group Company has made any repayment of share capital to which section
210 of ICTA (bonus issue following repayment of share capital) applies or
made any bonus issue or otherwise issued any share capital as paid up
otherwise than by receipt of new consideration within the meaning of Part
VI of ICTA.
17.33 No Group Company has within the last 6 years been concerned in any exempt
distribution or received a chargeable payment within sections 213 to 218
(inclusive) (Demergers).
CLOSE COMPANY
17.34 No Group Company is a close company within the meaning of section 414 of
ICTA or a closed investment-holding company within the meaning of section
13A (Close investment-holding companies).
17.35 No loan or advance has been made or waived or debt incurred or assigned
whether by or to a Group Company or any other person as a result of such
Section 419 of ICTA has applied, applies or so far as the Warrantors are
aware may apply to a Group Company and there is no agreement or arrangement
for such loan advance or debt to be made, waived, incurred or assigned and
no such loan advances or debt will be outstanding at Completion.
STAMP DUTY AND STAMP DUTY LAND TAX
17.36 All instruments executed by any Group Company which are not subject to
stamp duty land tax and which are necessary to establish the title of a
Group Company to any asset have been duly stamped and, where appropriate,
stamped with the particulars delivered stamp by the HM Revenue & Customs,
and so far as the Warrantor is aware there are no circumstances including
execution, substantial performance of any contract for a land transaction
and performance of this Agreement which may result in any Group Company
becoming liable to any such penalty, interest or fine or to any such
forfeiture.
17.37 Each Group Company has paid all stamp duty land tax which it is liable to
pay and has made all land transaction returns it is obliged to make within
30 days after the effective date of the transaction.
17.38 HM Revenue & Customs have not opened an enquiry or investigation into any
land transaction return made by a Group Company which remains open.
17.39 No contract for a land transaction has been entered into and substantially
performed, but not yet completed, without the required payment of stamp
duty land tax.
17.40 No Group Company has entered into a contract for a land transaction on
which there will be an outstanding balance of stamp duty land tax to pay on
completion of the land transaction.
17.41 No Group Company has entered into any land transaction where the whole or
part of the chargeable consideration for the transaction is uncertain,
contingent or unascertained.
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INHERITANCE TAX
17.42 There has been no transfer of value made by a Group Company or in relation
to any share capital of a Group Company to which Part IV of the IHTA (close
companies) applies.
17.43 No HM Revenue & Customs charge for unpaid capital transfer tax or
inheritance tax has been or may be imposed under section 237 of the IHTA
over any asset of a Group Company or so far as the Seller is aware in
relation to any part of the share capital of a Group Company.
TAX AVOIDANCE
17.44 No Group Company has, so far as the Warrantors are aware, entered into or
been involved in any transaction, series of transactions scheme or
arrangement designed wholly or mainly for the purpose of avoiding or
reducing a liability to Tax.
17.45 No Tax Authority has investigated any transaction, series of transactions,
scheme or arrangement involving any Group Company with a view to applying
section 770A (Provision not at arm's length) and Schedule 28AA (Provision
not at arm's length), or equivalent legislation or legal principles in any
other country, and, so far as the Warrantors are aware, no circumstances
exist which could result in liability or increased liability of any Group
Company to Taxation if such investigation were undertaken.
17.46 In relation to section 770A (Provision not at arm's length) and Schedule
28AA (Provision not at arm's length), each Group Company has complied with
its obligations under the corporation tax self-assessment regime.
17.47 The Disclosure Letter contains full particulars of all disclosures made
under Part 7 FA 2004 including (if available) the number given by HM
Revenue & Customs in respect of any such disclosure made.
18. PROPERTY MATTERS
TITLE
18.1 The Properties comprise all the premises owned, used or occupied by a Group
Company.
18.2 Each Group Company (or its mortgagees) has in its possession all deeds and
documents of title necessary to prove good title to each of the Properties
18.3 The relevant Group Company is the legal and beneficial owner of the
relevant part of each of the Properties.
OCCUPATION
18.4 Save as set out in Schedule 3 each Group Company is entitled to and has,
exclusive physical possession and occupation of the whole of each of the
Properties and none of the Properties are subject to any lease, tenancy,
licence to occupy or agreement to grant any of them or any claim or
overriding interest (as defined in Schedules 1 and 3 of the Land
Registration Act 2002) and no right of occupation or enjoyment has been
acquired or is in the course of being acquired by any third party or has
been granted or has agreed to be granted to any third party.
37
LIABILITIES
18.5 So far as the Warrantors are aware no Group Company has been the tenant,
licensee, assignee or guarantor of any lease, licence or tenancy agreement
other than in relation to the Properties.
18.6 So far as the Warrantors are aware no Group Company has ever acquired,
assigned or otherwise disposed of any leasehold property in such a way that
it retains any material residual liability in respect of it.
18.7 Since the Accounts Date no Group Company has acquired, or disposed of, or
agreed to acquire or dispose of, or granted any option in respect of, any
interest in any land or premises.
18.8 Each of the Properties is insured for the amount and in respect of the
risks referred to in the Disclosure Letter and all premiums due in respect
of policies insuring the buildings on the Properties have been paid in
full; and no such insurances are renewable within 30 days of Completion.
18.9 Save for the building of a new canteen at the Stillington site (detailed
in Schedule 3) no other building work or erection of any new structure at
the Stillington site has been started (but not completed) or committed to
by a Group Company.
18.10 No Group Company has received notice that it is in breach of any
obligation in a lease of the Properties to obtain any licence, consent or
approval from a landlord or superior landlord and the covenants on the part
of the tenant contained in any such licences, consents or approvals as have
been obtained have been complied with.
18.11 There are no rent reviews currently in progress under any of the leases of
any of the Properties.
18.12 So far as the Warrantors are aware the information contained in the
Certificates of Title and the information concerning the Properties given
in correspondence and by email on behalf of the Sellers by Jacksons
solicitors and/or by the Sellers' Solicitors in replies to enquiries raised
on behalf of the Buyer by the Buyer's Solicitors is complete and accurate
in all material respects.
18.13 The Properties are sufficiently and adequately served by electricity and
other necessary utilities for the Properties to be put to their current
uses.
19. ENVIRONMENTAL WARRANTIES
38
"COMPETENT AUTHORITY" means any person or body with judicial,
administrative or regulatory sanctions or
otherwise having the power to Environmental Laws,
including without limitation the local authority
and Environment Agency
"ENVIRONMENT" means all and any of the following media being
land water and air (wherever situated)
"ENVIRONMENTAL LAWS" means all legally binding international, European
Union, national, regional or local laws (including
common law, statute law, civil, criminal and
administrative law), together with all subordinate
legislation and legally binding codes of practice,
guidance notes, circulars, decisions, regulations,
and judgments, applicable to the business or
operations of any Group Company at or prior to
Completion which relate to or have as their
purpose or effect and the protection of the
Environment, together with any judicial or
administration interpretation of each of the
foregoing in each and every case to the extent
that they have the force of law as at Completion
"ENVIRONMENTAL PERMITS" means all or any permits, licences,
authorisations, consents, approvals, certificates,
including any condition thereof required at any
time under any Environmental Laws for the
activities of each Group Company up to and
including Completion
"ENVIRONMENTAL PROCEEDINGS" means any written proceeding, claim, suit, action,
writ, order, judgement, decree or notice (whether
civil, criminal, judicial or administrative) in
each case served upon any Group Company by any
Competent Authority or third party under
Environmental Laws
"HAZARDOUS SUBSTANCES" means any natural or artificial substance or
combination of substances (whether in solid or
liquid form or in the form of gas or vapour)
capable of causing harm to the Environment
19.1 So far as the Warrantors are aware each Group Company has at all times
prior to 22 December 2000 complied in all material respects with all
Environmental Laws that are enforceable both in respect of the Group's
business as carried on from time to time at the Properties and in respect
of any part of the Properties. Since 22 December 2000 each Group Company
has at all times complied in all material respects with all Environmental
Laws that are enforceable both in respect of the Group's business as
carried on from time to time at the Properties and in respect of any part
of the Properties
19.2 No Group Company has during its ownership of the Properties been involved
in any Environmental Proceedings under any Environmental Laws and there are
no past or (to the knowledge of the Warrantors) pending or
39
threatened Environmental Proceedings against any Group Company brought
under any Environmental Laws nor is there any matter or issue of which the
Warrantors are aware which would lead to Environmental Proceedings under
any Environmental Laws at the date of this Agreement which have had or
which would have had or which would in the event of a judgment decision
ruling or order being unfavourable to the Group's business have a
materially adverse effect on the financial or trading prospects of the
Group's business.
19.3 All Environmental Permits required for the lawful conduct of any Group
Company's business as carried on at the date of this Agreement have been
obtained and maintained. All conditions, restrictions and obligations
contained in the Environmental Permits have been complied with in all
material respects and the Warrantors are not aware of any reason why any of
the Environmental Permits should be revoked or amended.
19.4 Copies of all reports, investigations and surveys relevant to the
application of the Environmental Laws to the Group's business and the
Properties which have been prepared in the last five years by or on behalf
of a Group Company and which are in any Group Company's possession have
been provided to the Buyer.
40
SCHEDULE 5
LIMITATIONS ON WARRANTORS' LIABILITY
(Clause 6)
1. DEFINITIONS USED IN THIS SCHEDULE
1.1 In this Schedule:-
"CLAIM" means any claim (whether in contract, tort or
otherwise) made by the Buyer for breach of any of the
Warranties, Indemnities or any other provision of this
Agreement but excluding a claim under the
Environmental Indemnity
"DETERMINED CLAIM" means a Claim or claim under the Tax Deed which:-
(a) has been settled by written agreement between the
Warrantors and the Buyer, or is the subject of an
acknowledgement in writing by all of the
Warrantors that they accept liability and quantum
in respect of that relevant Claim or claim under
the Tax Deed; or
(b) is the subject of an order as to both liability
and quantum made by a court of competent
jurisdiction; or
(c) is the subject of an order made by a court of
competent jurisdiction for damages to be assessed
and an order made by such a court assessing the
quantum of those damages
"EVENT" means any event, act, transaction, arrangement,
default or omission, including, without limitation,
the receipt or accrual of any income or gains or any
distribution, failure to distribute, cessation or
commencement of business, acquisition, disposal,
transfer, payment, loan or advance
"RELIEF" means any relief, allowance, deduction, exemption or
set-off relevant to the computation of any liability
for Tax or any credit against Tax
2. LIMITATIONS ON QUANTUM
2.1 The Warrantors shall have no liability whatsoever in respect of:-
2.1.1 any Claim unless the liability of the Warrantors in respect of that
individual Claim (or series of related Claims with respect to related
facts or circumstances) exceeds L30,000 (excluding interest and
costs);
41
2.1.2 a claim under the Tax Deed unless the liability of the Warrantors in
respect of that individual claim under the Tax Deed (or series of
related claims under the Tax Deed with respect to related facts or
circumstances) exceeds L10,000 (excluding interest and costs); and
2.1.3 any Claim unless the aggregate amount of the liability of the
Warrantors for all such Claims exceeds L675,000 (in which event the
Warrantors shall be liable for the whole amount not just the excess).
2.2 The total aggregate liability of each of the Warrantors in respect of all
Claims and claims under the Tax Deed shall not in any event exceed the
amount set opposite their respective names in Column 5 of Part 2 of
Schedule 1 plus the proportion (as set out in Column 6 of Part 2 of
Schedule 1) attributable to such Warrantor of the balance standing to the
credit of the Retention Account from time to time (inclusive of all legal
and other professional fees and expenses paid by the Warrantors). For the
avoidance of doubt, the total aggregate liability of each of the Warrantors
shall be reduced by the proportion (as set out in Column 6 of Part 2 of
Schedule 1) attributable to such Warrantor of any amount paid from the
Retention Account to the Buyer.
2.3 Subject to paragraph 2.2, above in respect of any individual Claim or any
claim under the Tax Deed, each of the Warrantors shall only be responsible
for the percentage of the value of such claim as is set out opposite his
name in Column 6 of Part 2 of Schedule 1.
2.4 For the avoidance of doubt amounts for which the Warrantors have no
liability pursuant to paragraph 2.1.1 or paragraph 2.1.2 shall not count
towards the financial threshold in paragraph 2.1.3.
2.5 The limitations set out in this Schedule 5 shall not apply to a Claim which
is a result of a breach of the warranties set out in paragraphs 1.1, 1.2
and 2.1 of Schedule 4.
2.6 The Warrantors liability in respect of a Claim under the Tax Warranties
and/or the Tax Deed shall be further limited in accordance with the terms
of the Tax Deed.
3. TIME LIMITS FOR BRINGING CLAIMS
3.1 The Warrantors shall have no liability for a Claim unless they receive from
the Buyer written notice of the Claim (specifying in reasonable detail the
matter giving rise to the Claim, the nature of the Claim and the amount
claimed):-
3.1.1 on or before the seventh anniversary of Completion in respect of any
Claim for breach of any of the Tax Warranties;
3.1.2 on or before the second anniversary of Completion in respect of any
other Claim.
3.2 Any Claim which has been made against the Warrantors (and which has not
been previously satisfied, settled or withdrawn) shall be deemed to have
been withdrawn and shall become fully barred and unenforceable on the
expiry of the period of nine months commencing on the date on which notice
of the Claim was given to the Warrantors in accordance with paragraph 3.1,
unless legal proceedings in respect of the Claim shall have been properly
issued and validly served on the Warrantors, or in the case of a claim
based on a contingent liability, within nine months of that contingent
liability becoming an actual liability.
4. DETERMINED CLAIMS
4.1 Upon a Claim or any claim under the Tax Deed becoming a Determined Claim
made in the whole or part in favour of the Buyer, then the Buyer shall:-
42
4.1.1 first deduct the amount of such Determined Claim due to the Buyer
from the Retention Account in accordance with Schedule 7; and
4.1.2 to the extent that a sum remains due to the Buyer in respect of a
Determined Claim after it has been paid all sums standing to the
credit of the Retention Account the Buyer shall be entitled to recover
any remaining sums due to it from the Warrantors (subject always to
the provisions set out in this Agreement).
5. GENERAL EXCLUSIONS ON LIABILITY
5.1 The Warrantors shall have no liability (or, as appropriate, liability will
be reduced) in respect of a Claim (other than a Claim in respect of a
breach of the Tax Warranties which shall be limited in accordance with the
provisions of clause 3 of the Tax Deed) if and to the extent that:-
5.1.1 the Claim arises or is increased as a result of any voluntary act or
omission carried out by or at the request of or with the consent of
the Buyer, any other member of the Buyer's Group or any of their
respective officers, employees, agents, professional advisers or
successors in title or assigns;
5.1.2 the Claim arises or is increased as a result of, or is otherwise
attributable to, the passing or coming into force of, or any change
in, after the date of this Agreement, any law, rule, regulation,
directive, interpretation of the law or any administrative practice of
any government, governmental department, agency or regulatory body, or
any increase in the rates of any Taxation or any imposition of
Taxation, in any such case not actually or prospectively in force at
the date of this Agreement;
5.1.3 the Claim arises or is increased as a result of, or is otherwise
attributable to, any changes made after Completion in the accounting
policies or accounting or commercial practices or any Taxation
reporting practice or the length of any accounting period for Taxation
purposes of the Buyer or a Group Company, save to the extent that such
change is necessary to correct an improper policy or practice that was
contrary to UK GAAP at the date of this Agreement;
5.1.4 the matter giving rise to the Claim arises (in whole or in part) from
any Event before or after Completion as a result of a written request
or direction of any member of the Buyer's Group (which for this
paragraph includes after Completion any Group Company) or an
authorised representative or professional advisor of any member of the
Buyer's Group;
5.1.5 the matter giving rise to the Claim was specifically allowed,
provided for or reserved in the Accounts, the Management Accounts and
the Completion Accounts (as defined in Schedule 8);
5.1.6 the Claim is based upon a liability which is contingent only unless
and until such contingent liability becomes an actual liability and is
due and payable; and
5.1.7 the Buyer assigns or purports to assign any of its rights under this
Agreement (other than in accordance with Clause 17) without the
Warrantors' prior written consent; or (other than in accordance with
Clause 17) the Buyer ceases to beneficially own the entire issued
share capital of the Company.
5.2 The Warrantors shall have no liability whatsoever in respect of a Claim if
the fact, matter and circumstance giving rise to the Claim has been
Disclosed or expressly provided for or stated to be an exception under the
terms of this Agreement.
43
5.3 All amounts available for set-off or otherwise liable to be deducted
pursuant to paragraph 4.1 will be taken into account before ascertaining if
the loss giving rise to a Claim or a claim under the Tax Deed exceeds the
de minimis limit referred to in paragraph 2.1.1 or 2.1.2.
6. NO LIABILITY IF LOSS IS OTHERWISE COMPENSATED
6.1 Neither the Buyer nor the Company shall be entitled to recover more than
once for the same loss in respect of the same circumstances giving rise to
a Claim or a claim under the Tax Deed or Environmental Indemnity.
6.2 The Warrantors shall not be liable (or, as appropriate, the liability shall
be reduced) to the extent that the Buyer and/or any Group Company recovers
any sums from a third party in respect of the circumstances giving rise to
the Claim or would have had such a right of recovery under an insurance
policy applicable to the Group for the period up to the date of Completion
but for any change in the terms of the Group's insurance cover made on or
after Completion.
6.3 The Buyer shall procure that each member of the Buyer's Group shall take
all reasonable steps to avoid and/or mitigate the Warrantors liability
under this Agreement.
6.4 Nothing in this Schedule 5 shall in any way restrict or limit the general
obligation at law of the Buyer to mitigate any loss or damage which it may
suffer in consequence of any matter giving rise to any Claim.
7. CONDUCT OF CLAIMS
7.1 If any member of the Buyer's Group becomes aware of any matter which might
give rise to a Claim (excluding a Claim under the Tax Warranties) or upon
any Claim being made the following provisions shall apply:-
7.1.1 the Buyer shall as soon as reasonably practicable give written notice
to the Warrantors specifying in reasonable detail the nature of the
matter and shall consult with the Warrantors with respect to the
matter;
7.1.2 the Buyer shall provide, and shall procure that each member of the
Buyer's Group will provide, to the Warrantors and the Warrantors'
professional advisers reasonable access to premises, personnel and to
all relevant assets, documents, records and information within the
power, possession or control of the Buyer's Group for the purpose of
investigating the matter and/or enabling the Warrantors to take such
action as is referred to in paragraph 7.1.5;
7.1.3 the Buyer shall and shall procure as far as reasonably possible that
all other members of the Buyer's Group retain and preserve originals
or copies of all relevant documents, records and information within
the power, possession or control of the Buyer's Group of, or relating
to the Company which are relevant in connection with any Claim for so
long as any actual or prospective Claims remain outstanding;
7.1.4 the Warrantors shall be entitled (at their expense) to copies of any
of the documents or records and (if appropriate in the context of the
matter which may give rise to a Claim) to photograph any premises or
assets, referred to in paragraph 7.1.2;
7.1.5 In relation to any claim made by a third party which may give rise to
a claim (a "THIRD PARTY CLAIM") the Buyer shall and shall procure that
each member of the
44
Buyer's Group will take such action and institute such proceedings,
and give such information and assistance, as the Warrantors may
reasonably request to:-
(a) dispute, resist, appeal, compromise, defend, remedy or mitigate
the matter; or
(b) enforce against any person (other than the Warrantors) the rights
of any member of the Buyer's Group in relation to the matter;
provided that the Warrantors indemnify and, to the extent the amount
standing to the credit of the Retention Account is less than the
Buyer's reasonable estimate of the costs and expenses referred to in
this paragraph together with the Buyer's reasonable estimate of any
other Claims or claims under the Tax Deed or Environmental Indemnity,
secure each member of the Buyer's Group to their reasonable
satisfaction for all reasonable costs and expenses (including their
legal fees) properly incurred as a result of any request or nomination
by the Warrantors and provided that the Buyer shall not be required to
take any such action if it considers (acting reasonably) that such
action could have a material adverse effect on the business of any
Group Company.
8. RECOVERY FROM THIRD PARTIES
8.1 If a Warrantor pays to the Company or the Buyer (or any member of the
Buyer's Group) an amount in respect of a Claim (other than a Claim under
the Tax Warranties to which the provisions of clause 9 of the Tax Deed
shall apply), then if the Company or the Buyer (or any other member of the
Buyer's Group) subsequently recovers (whether by reason of insurance,
payment, discount, credit, relief or otherwise) from a third party
(including any Tax Authority) an amount which is referable to the matter
giving rise to the Claim:-
8.1.1 if the amount paid by the Warrantors in respect of that Claim is more
than the total amount actually recovered from the third party, the
Company, Buyer or member of the Buyer's Group (as appropriate) will
pay to the Warrantors the sum recovered; or
8.1.2 if the amount paid by the Warrantors is less than or equal to the
total actual amount recovered from the third party, the Company, Buyer
or member of the Buyer's Group (as appropriate) will pay to the
Warrantors an amount equal to the amount paid by the Warrantors;
in each case less any reasonable costs of making such a recovery.
8.2 If at any time after Completion the Warrantors wish to insure all or any
part of its liability in respect of Claims or claims under the Tax Deed,
the Buyer shall provide such information as any prospective insurer or
broker may reasonably require before effecting such insurance.
8.3 The Buyer shall and shall procure that each Group Company will retain and
preserve all documents, records, correspondence, accounts and other
information whatsoever relevant to a matter which may give rise to a Claim
or claim under the Tax Deed.
9. RESTRICTIONS ON CLAIMS MADE
The Warrantors will not be liable for any Claim:-
9.1 in respect of pension matters unless it is brought under paragraph 16 of
Schedule 4 and each of the other Warranties will be deemed not to be given
in relation to pension matters;
45
9.2 in respect of Intellectual Property unless it is brought under paragraph 13
of Schedule 4 and each of the other Warranties will be deemed not to be
given in relation to Intellectual Property;
9.3 in respect of the Properties unless it is brought under paragraph 18 of
Schedule 4 and each of the other Warranties will be deemed not to be given
in relation to the Properties;
9.4 in respect of Tax unless it is brought under paragraph 17 of Schedule 4 and
each of the other Warranties will be deemed not to be given in relation to
Tax matters;
9.5 in respect of environmental matters unless it is brought under paragraph 19
of Schedule 4 and each of the other Warranties will be deemed not to be
given in relation to environmental matters.
46
SCHEDULE 7
PROVISIONS RELATING TO THE RETENTION
PART 1
GENERAL
1. DEFINITIONS
In this agreement:
"BANK" means National Westminster Bank plc
"INSTRUCTION LETTER" means a letter from the Buyer and the Sellers to the
Solicitors relating to the Retention in agreed form a
draft of which is set out in part 2 of this schedule
"RELATED INTEREST" means, in relation to any part of the Retention Account
withdrawn in accordance with this Agreement, that portion
of the interest accruing from Completion in respect of
the Retention Account as is attributable to the sum
withdrawn net of any taxation required by law to be
deducted from it
"RETENTION ACCOUNT" means an interest bearing solicitor's reserve account in
the joint names of the Solicitors opened in accordance
with the Instruction Letter
"RETENTION CLAIM" means:
(i) a Claim by the Buyer, including a claim for payment
under Schedule 8 of this Agreement or under the
Environmental Indemnity; or
(ii) a claim under the Tax Deed
in each case notified to the Sellers in accordance with
this Agreement and/or the Tax Deed on or before the
Termination Date
"SOLICITORS" means the Buyer's Solicitors and the Sellers' Solicitors
"TERMINATION DATE" means the date following 2 years after the date of this
Agreement
2. RETENTION ACCOUNT
2.1 The following provisions shall apply in respect of the Retention Account:
2.1.1 all interest earned in respect of the Retention shall be credited to
the Retention Account;
47
2.1.2 no other credit shall be made to the Retention Account without the
written consent of the Solicitors;
2.1.3 no withdrawal shall be made from the Retention Account except in
accordance with the Instruction Letter or as may otherwise be ordered
by a court of competent jurisdiction;
2.1.4 neither the Buyer nor the Sellers shall have any entitlement to
interest until payment of the principal to which it relates; and
2.1.5 the amount standing to the credit of the Retention Account (including
Related Interest) shall be paid to the Sellers in the Agreed
Proportions on the Termination Date less:-
(a) the amount of all Retention Claims which have not at that date
become Determined Claims;
(b) any amount which the Buyer and Sellers have notified in
accordance with clause 3.1 of the Retention Schedule but which
has not then been withdrawn from the Retention Account (which
amount shall be paid to the Buyer);
(c) any amounts payable out of the Retention Account in accordance
with paragraph 1.3 of the Instruction Letter;
(d) the amount of any claims under the Environmental Indemnity which
have not at that date been determined in accordance with Schedule
9; and
(e) the Related Interest attributable to the sums referred to in
paragraphs (a), (b), (c) and (d) above;
3. RETENTION CLAIMS
3.1 On any Retention Claim becoming a Determined Claim or a claim under
Schedule 9 being determined in accordance with Schedule 9 (a "DETERMINED
ENVIRONMENTAL CLAIM"), the Buyer and the Sellers shall give notice as soon
as reasonably practicable (in accordance with the Instruction Letter) to
the Solicitors to request payment from the Retention Account of the amount
of such Determined Claim or Determined Environmental Claim due to the
Buyer.
3.2 The amount of the Retention shall not be regarded as imposing any limit on
the amount of any Claims under the Agreement or claims under the Tax Deed.
3.3 To the extent that a payment from the Retention Account (and the Related
Interest attributable to it) is less than the amount which the Buyer is
entitled to in respect of a Retention Claim which has become a Determined
Claim it shall be treated as a payment on account of the amount determined
to be payable and the Warrantors shall promptly pay any excess which they
are each obliged to pay pursuant to the term of this Agreement to the Buyer
in cash.
48
PART 2
INSTRUCTION LETTER
Date:__________ 2005
To:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Carmelite
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
and
Pinsent Masons
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇
Dear Sirs
This is the Instruction Letter as defined in Schedule 7 to the agreement (the
"Agreement") between the Buyer and the Sellers of today's date a copy of such
schedule being set out in the schedule to this letter (the "Retention
Schedule").
Terms defined in the Agreement and in the Retention Schedule shall have the same
meaning when used in this letter.
1. You are hereby authorised and instructed:
1.1 to open an interest bearing solicitor's reserve account in your joint names
at the Bank and to place funds on the money markets;
1.2 to receive and hold all sums paid to you in accordance with the Retention
Schedule and all sums from time to time standing to the credit of the
Retention Account, on trust to pay such sums either to the Buyer or to the
Sellers, or partly to one and partly to the other, on the terms of this
letter;
1.3 to pay out of the Retention Account:
1.3.1 any taxation which may be payable as a matter of law in respect of
interest accrued on the amount standing from time to time to the
credit of the Retention Account; and
1.3.2 all bank charges payable in respect of the Retention Account;
1.4 following receipt of a Notice (as defined in paragraph 3 of this letter)
that an amount is payable to the Buyer from the Retention Account,
specifying the amount of the payment, instruct the Bank to transfer from
the Retention Account to the account nominated for this purpose by the
Buyer the amount specified in the Notice and the Related Interest
attributable to it;
1.5 following receipt of a Notice that an amount is payable to the Sellers from
the Retention Account, specifying the amount of the payment, instruct the
Bank to transfer from the Retention Account to the Sellers in the Agreed
Proportions the amount specified in the Notice and the Related Interest
attributable to it; and
1.6 on the Termination Date, to pay to the Sellers in the Agreed Proportions
out of the Retention Account the balance in the Retention Account and the
Related Interest attributable to it less:
1.6.1 the amount of all Retention Claims which have not at that date become
Determined Claims;
1.6.2 any amount which the Buyer and Sellers have notified in accordance
with clause 3.1 of the Retention Schedule but which has not then been
withdrawn from the Retention Account (which amount shall be paid to
the Buyer);
1.6.3 any amounts payable out of the Retention Account in accordance with
paragraph 1.3 above;
1.6.4 the amount of any claims under the Environmental Indemnity which have
not at that date been determined in accordance with Schedule 9; and
1.6.5 the Related Interest attributable to the sums referred to in 1.6.1,
1.6.2, 1.6.3 and 1.6.4 above;
2. Instructions to be given by you to the Bank shall be signed by ▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇▇ of Pinsent Masons and any two of ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or ▇▇▇ ▇▇▇▇▇▇ of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or, if those named
partners have ceased to be practicable signatories, by such other partner
or partners of each of your respective firms as you shall respectively
nominate.
3. For the purpose of this letter "NOTICE" means a written notice given by
letter or facsimile transmission stating to whom the sum is payable, the
amount of the payment and instructing the Solicitors to arrange a transfer
from the Registration Account to the account nominated for this purpose and
the amount specified signed by:-
3.1 a director of the Buyer; and
3.2 each of the Sellers
or by such other persons as may from time to time be notified to you in
accordance with the following paragraph. Any such joint Notice may consist
of separate documents in the same form, each signed by one of the
authorised signatories.
4. The Sellers or the Buyer may from time to time add or remove authorised
signatories by a Notice to you, except that in the case of a removal of an
authorised signatory, the notice need not be signed by the signatory to be
removed. In the case of an addition to the authorised signatories, the
notice shall contain a specimen of the signature of the additional
signatory.
5. Except in accordance with the above arrangements or in accordance with an
order of a competent court, you will not authorise or request any
withdrawal to be made from the Retention Account.
6. In consideration of your agreeing to act in accordance with our
instructions we agree that:
6.1 you are not obliged to take any action with respect to the Retention
Account except in accordance with the terms of this letter or our joint
written instructions;
6.2 you may place the sums in the Retention Account on deposit for such period
as we agree or, failing agreement, on monthly deposit. You have no
responsibility for the rate or amount of interest earned;
6.3 we will pay your fees and expenses (including VAT) incurred in connection
with establishing and operating the Retention Account;
6.4 we will indemnify you against all liabilities incurred by you in respect of
the operation of the Retention Account and in particular against any costs
(on a full indemnity basis) of defending or being party to any claim
arising out of the operation of the Retention Account.
The provisions of Schedule 7 of the Agreement of which the Retention
Schedule forms part shall apply to the agreement contained in this letter as if
set out in full in this letter.
Yours faithfully
-------------------------------------
On behalf of the Buyer
Yours faithfully
------------------------------------- ----------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Gagg
------------------------------------- ----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
------------------------------------- ----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------- ----------------------------------------
For and on behalf of For and on behalf of
PVLP-R LIMITED PARTNERSHIP PARALLEL VENTURES NOMINEES NO. 3 LIMITED
------------------------------------- ----------------------------------------
For and on behalf of For and on behalf of
RBDC ADMINISTRATOR LIMITED ROYAL BANK INVESTMENTS LIMITED
We acknowledge receipt of the above instructions.
-------------------------------------
On behalf of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
On behalf of Pinsent Masons
SCHEDULE 8
COMPLETION ACCOUNTS AND ADJUSTMENT TO CONSIDERATION
1.1 In this schedule references to a "party" are to the Sellers or the Buyer:
"CASH" means the aggregate cash in hand or at the bank belonging to or
readily available to each Group Company on Completion, less an amount equal
to the Property Tax Figure, cash and any monies held on behalf of any other
person;
"COMPLETION ACCOUNTS" means the consolidated accounts of the Company for
the period commencing on 1 January 2005 and ending on the date of
Completion prepared in accordance with the requirements set out in part 2
of this Schedule and including a balance sheet presented in the form of the
pro forma balance sheet set out in part 3 of this Schedule;
"INDEBTEDNESS" means any cash deficits and the total borrowings of each
Group Company at Completion excluding the aggregate sum owed by the Company
at Completion to the holders of Loan Stock, but including any
other monies owed to investors;
"PROPERTY TAX FIGURE" means an amount equal to the corporation tax payable
on the disposal at Stillington to ▇▇▇▇▇▇ Wimpcy on 16 November 2005 but
remaining unpaid at Completion.
"WORKING CAPITAL VALUE" means the working capital of the Group including
accrued corporation tax liabilities, but for the avoidance of doubt,
excluding any cash, as at the date of Completion as shown in the Completion
Accounts.
1.2 Completion Accounts
1.2.1 Within 40 Business Days following Completion, the Buyer shall prepare
and deliver to the Sellers draft Completion Accounts and a draft
statement of the amount of Cash, Indebtedness, the Property Tax Figure
and Working Capital Value.
1.2.2 The Sellers shall within 15 Business Days after the delivery of the
drafts referred to in paragraph 1.2.1 of part 1 of this schedule,
deliver to the Buyer a report setting out any matters of disagreement
with the drafts in sufficient detail to enable the Buyer to consider
them. If no report is delivered within such period the amount of Cash
and Indebtedness, the Property Tax Figure and the Working Capital
Value shall be that shown in the Buyer's statement. If the Sellers
deliver a report within such period, the amount of Cash and
Indebtedness, the Property Tax Figure and the Working Capital Value
shall be those shown in the Buyer's statement adjusted by such amounts
as may be agreed between the parties or determined by the chartered
accountant nominated in accordance with paragraph 1.2.4 of this
part 1.
1.2.3 For the purposes of preparing and reviewing the Completion Accounts,
each party shall procure that the other parties and their accountants
and any expert nominated under paragraph 1.2.4 of this part 1 are
given reasonable access at reasonable times to:
(a) the accounting records and working papers (including any audit
working papers) required or used for; and
(b) all staff of the other party and their accountants who have been
engaged in the preparation of the Accounts, the Management
Accounts or the draft Completion Accounts and that the staff
referred to in paragraph (b) of this paragraph answer all
reasonable questions put to them.
1.2.4 If, within 10 Business Days after the delivery to the Buyer of the
report referred to in paragraph 1.2.2 of this part 1, there remains an
outstanding dispute about the Completion Accounts or the calculation
of the amount of Cash and Indebtedness or Working Capital Value any
party may refer any matter in dispute to a chartered accountant,
nominated jointly by the parties or (failing nomination within 10
Business Days after a request for joint nomination by any party)
nominated at the request of either party by the president of the
Institute of Chartered Accountants in England and Wales.
1.2.5 The chartered accountant so nominated shall:
(a) be instructed by the referring party to determine as soon as
practicable the matters in dispute having regard to the draft
Completion Accounts, the statements and the report referred to
above;
(b) for the purpose of making his determination under paragraph
1.2.5(a) of this part of the Schedule determine any issue as to
interpretation of this Agreement, his jurisdiction to determine
any matter or his terms of reference;
(c) adopt such procedures to assist with the conduct of the
determination as he reasonably considers appropriate including
instructing professional advisers to assist him in reaching his
determination; and
(d) act as an expert and not as an arbitrator
and his decision will be binding on the parties except in the case of
manifest error. His fees will be payable by the Sellers and the Buyer in
such proportions as he decides. If any party fails to give him any required
undertaking or advance contribution as regards its fees it will be open to
the other parties to give such undertaking or make such contribution and to
the extent the chartered accountant so decides such party shall be entitled
to be reimbursed by the other parties.
1.2.6 No party shall be entitled to make any objection to the appointment
of the accountant on the ground that he imposes limits on his
liability in relation to the carrying out of his instructions under
this Agreement.
1.3 Reduction in the Consideration
1.3.1 If the Cash is less than the Indebtedness the Consideration shall be
reduced by the amount of the shortfall.
1.3.2 Within five Business Days after the amount of Cash and Indebtedness
have been agreed or determined the Sellers shall pay to the Buyer (in
the Agreed Proportions) the amount of any reduction in the
Consideration.
1.3.3 The payment referred to in paragraph 1.3.2 of this part of the
Schedule shall be paid out of the Retention Account (to the extent
that there are moneys in the Retention Account) in accordance with the
provisions of Schedule 7.
1.4 Increase in the Consideration
1.4.1 If the Cash is more than the Indebtedness the Consideration shall be
increased by the amount of the excess.
1.4.2 Within five Business Days after the amount of Cash and Indebtedness
have been agreed or determined the Buyer shall pay to the Sellers (in
the Agreed Proportions) the amount of any increase in the
Consideration plus interest on such amount calculated from the date of
Completion until the date of payment at the base rate of Barclays Bank
plc from time to time.
1.5 Working Capital Value adjustment
1.5.1 The Consideration is subject to the following adjustment.
1.5.2 If the Working Capital Value falls short of 6,754,000
the Consideration shall be reduced by the amount of the Shortfall.
1.5.3 If the Working Capital Value is more than of 6,754,000
the Consideration shall be increased by the amount of the excess
1.5.4 If a payment is required to be made under paragraph 1.5.2 of this
part of the Schedule the Sellers shall pay to the Buyer (in the Agreed
Proportion) the amount of any reduction in the Consideration within
five Business Days after the Working Capital Value has been agreed or
determined. The payment shall be paid out of the Retention Account (to
the extent that there are monies in the Retention Account) in
accordance with the provisions of Schedule 7.
1.5.5 If a payment is required to be made under paragraph 1.5.3 of this
part of the Schedule the Buyer shall pay to the Sellers (in the Agreed
Proportions) the amount of any increase in the Consideration within
five Business Days after the Working Capital Value has been agreed or
determined with interest on such amount from the date of Completion
until payment at a yearly rate of base rate of Barclays Bank plc from
time to time.
Schedule 9
ENVIRONMENTAL INDEMNITY
1. DEFINITIONS
1.1 "ENVIRONMENTAL CLAIM" means any actionable claim by a third party
under Environmental Laws in relation to
Hazardous Substances (excluding for the
avoidance of doubt claims arising as a result
of the presence of any asbestos or asbestos
containing materials in buildings) present in
or under or emanating from the Site and whose
presence is directly attributable to the
activities of a Group Company at or prior to
the date of this Agreement
1.2 "LOSSES" always excluding consequential losses
means for the purposes of this Schedule
all reasonable costs and expenses of
investigating, settling and/or defending
any Environmental Claim and all costs and
expenses of any Remedial Works which are
reasonably incurred, suffered, sustained
or paid by the Buyer or a Group Company in
respect of the Site and references to Loss
shall be construed accordingly
1.3 "ON-SITE CONTAMINATION" means the presence in, on or under the
Site (at or prior to the date of this
Agreement) of Hazardous Substances and
whose presence is directly attributable to
the activities of a Group Company
(excluding for the avoidance of doubt any
asbestos or asbestos containing materials
in buildings) and where, at or prior to
Completion such presence amounts to a
breach of Environmental Laws and it would
reasonably be anticipated that a Competent
Authority would serve a notice requiring
Remedial Works under Environmental Laws in
relation to the same
1.4 "REMEDIAL WORKS" means such works as are necessary to
remove, remedy, clean up, ▇▇▇▇▇ or
ameliorate the presence of On-Site
Contamination (or to procure the carrying
out of the same) to a standard such that
the presence of Hazardous Substances no
longer amounts to a breach of
Environmental Laws or where, if a
Competent Authority were aware of its
presence, it would no longer be expected
that they would serve notice under
Environmental Laws requiring any works to
remove, remedy, clean up, ▇▇▇▇▇ or
ameliorate the same
2. INDEMNITY
The Warrantors shall, subject to the provisions of this Schedule,
indemnify and keep indemnified the Buyer against an amount equal to
any and all Losses.
3. PROCEDURE FOR INVESTIGATIONS AND REMEDIATION AT STILLINGTON
3.1 Within a reasonable period after the date of this Agreement, the
Buyer and the Warrantors shall jointly instruct (at the Buyers' and
Warrantors' joint expense subject to the Warrantors' aggregate
contribution being capped at Pound Sterling 40,000 and where the
Warrantors' contribution will be paid out of the Retention Account)
▇▇▇ ▇▇▇▇ &
1
Partners Limited ("THE ENVIRONMENTAL CONSULTANT") to undertake a
Phase II environmental site investigation at the Darchem Engineering
Limited's freehold property at Stillington (the "SITE") for the
purpose of identifying On-Site Contamination on the terms and to the
scope to be agreed (the "ENVIRONMENTAL INVESTIGATION") and thereafter
to prepare a report on their findings.
3.2 The Buyer shall deliver a certified copy of the report on the
Environmental Investigation (the "▇▇▇ ▇▇▇▇ REPORT") to each of the
Warrantors within 2 Business Days of its receipt by the Buyer or the
Company (as the case may be).
3.3 The Buyer and the Warrantors shall supply a copy of any report,
notice or document prepared in connection with the matters covered in
this Schedule to Royal Bank Equity Finance (for the attention of :
▇▇▇▇▇ ▇▇▇▇▇▇), ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇ on
behalf of each of the other Sellers at the same time as such report,
notice or document is issued to the other party or parties to this
Agreement.
3.4 On completion of any Remedial Works the Buyer will provide to the
Warrantors a closing report prepared by the Environmental Consultant
confirming that the Remedial Works have been carried out to the
Environmental Consultant's satisfaction and that no further On-Site
Contamination remains.
4. LIMITATION OF LIABILITY
4.1 The Warrantors shall have no liability under the indemnity provisions
of this Schedule:-
4.1.1 unless the aggregate liability of the Warrantors exceeds
Pound Sterling 30,000;
4.1.2 unless written notice of any claim on the indemnity is
received by the Warrantors on or before the second
anniversary of the date of this Agreement, itemising in
reasonable detail the amount of such claim;
4.1.3 where any claim arises as a result of any actual or
prospective change of use of, or additions to, works
carried out on or redevelopment of the Site or any part of
the Site or any buildings or other structures erected on or
within the Site after Completion with the exception of the
works associated with the rebuilding of canteen facilities
at the Site;
4.2 The Warrantors shall have no liability for any Losses either in whole
or in part to the extent that either the whole or part (as
relevant):-
4.2.1 arises from or is incurred or increased by any voluntary
act or omission, or any voluntary disclosure of information
or samples, to any Competent Authority or person, or body
corporate, by or on behalf of the Buyer or any Group
Company;
4.2.2 arises from or is incurred or increased as a result of: (i)
any change which occurs after Completion in the application
of any Environmental Laws or (ii) any act or omission of
the Buyer or any Group Company (or anyone acting on their
instruction or behalf) from which the Buyer or any Group
Company (or anyone acting on their instruction or behalf)
could reasonably be expected to have refrained;
4.2.3 arises from or is attributable to an increase in the level
of Hazardous Substances in, on, under or emanating from the
Site (as benchmarked in the ▇▇▇ ▇▇▇▇ Report) from the date
of the ▇▇▇ ▇▇▇▇ Report and the date of any claim against
the Warrantors under this Schedule (if later)(whether as
evidenced by an Environmental Claim Report (as defined
below) or otherwise).
2
4.3 Neither the Buyer, the Company nor any Group Company shall make any
admission of liability, agreement, settlement or compromise with any
Competent Authority or any third party in relation to any matters
which may give rise to a claim on the indemnity in this Schedule
without the prior written consent of the Warrantors, (such consent
not to be unreasonably withheld or delayed), and if the Warrantors so
decide, they shall be entitled (subject to indemnifying the Buyer
against any liabilities, costs or expense which the Buyer may
reasonably suffer or incur thereby) to take on or take over at their
own cost and expense the conduct of the dispute or engagement with
the Competent Authority or third party including the conduct of any
related proceedings provided that the Warrantors shall not make any
admission, agreement or compromise of such disputes without the prior
consent of the Buyer (such consent not to be unreasonably withheld or
delayed);
4.4 To the extent that the Buyer or Group Company recovers any sums or
amounts or other form of enrichment from a third party relating to
any matter in respect of which the Buyer or Group Company has claimed
and recovered from the Warrantors under the indemnity provisions
contained in this Schedule the Buyer shall pay to the Sellers in the
Agreed Proportions any and all monies or other form of enrichment the
Buyer or Group Company received in relation to the same within 3
months of receipt by the Buyer or Group Company.
4.5 The Buyer shall allow the Warrantors or shall procure that the
Warrantors are allowed (subject to the Warrantors indemnifying the
Buyer against any liabilities cost or expense which the Buyer may
reasonably suffer or incur thereby) to pursue any third party who may
be liable for any sums for which the Warrantors are responsible
pursuant to the indemnity provisions of this Schedule and shall
provide such co-operation as is reasonably requested by the
Warrantors at the Warrantors' expense.
4.6 On or after the second anniversary of the date of this Agreement
responsibility for any and all subsequent claims or any liabilities
associated with or arising from the state or condition of the
Properties shall rest solely with the Buyer and the Warrantors'
liabilities and obligations pursuant to this Schedule shall cease
save where such claims or liabilities have previously been notified
in writing to the Warrantors in accordance with the provisions of
this Schedule.
4.7 In any circumstances which may give rise to an actual or potential
claim against the Warrantors on the indemnity provisions contained in
this Schedule the Buyer or any Group Company shall seek to avoid,
minimise or mitigate all actual or potential losses or liabilities
where the same shall or may become payable by the Warrantors pursuant
to the provisions of this Schedule.
5. ENVIRONMENTAL CLAIM PROCEDURE
5.1 Unless a shorter notification period is agreed between the parties,
not less than 30 Business Days prior to commencing any Remedial
Works, the Buyer shall notify the Warrantors of the proposed Remedial
Works.
5.2 The Warrantors and the Buyer shall jointly instruct (at the Buyers'
and Warrantors' joint expense subject to the Warrantors' aggregate
contribution being capped at Pound Sterling 40,000 and where the
Warrantors' contribution will be paid out of the Retention Account),
an environmental consultant agreed between the parties (both parties
acting reasonably) to undertake a further environmental site
investigation of the Site on the same terms as the Environmental
Investigation and to produce a report on the levels of On Site
Contamination at the time of such further investigation (the
"ENVIRONMENTAL CLAIM REPORT").
5.3 Unless the Buyer or a Group Company are required by any Competent
Authority acting in accordance with its powers and duties under
Environmental Law to commence any Remedial Works sooner no Remedial
Works shall not be commenced until the Environmental Claim Report has
been delivered to the Warrantors.
3
5.4 Where there is any dispute between the Warrantors and the Buyer as to
the identity of the environmental consultant to be appointed pursuant
to para 5.2 of this Schedule such dispute shall fall to be resolved
by referring the dispute for resolution to the President for the time
being of the Institute of Environmental Management and Assessment.
5.5 If the Buyer or a Group Company becomes aware that any Competent
Authority acting in accordance with its powers and duties under
Environmental Law is proposing to investigate the Site or if any such
Competent Authority requires the Buyer and/or a Group Company to
carry out any Remedial Works ("REMEDIAL ORDER"), the Buyer shall
forthwith advise the Warrantors of such fact within 7 days of first
notice of the same and the parties shall use all reasonable
endeavours to obtain the Environmental Claim Report as soon as is
reasonably possible thereafter and in any event, before the date by
which any Remedial Works are required to be commenced by the
Competent Authority.
5.6 In the event that the ▇▇▇ ▇▇▇▇ Report or the Environmental Claim
Report is not available at the time the Buyer or a Group Company is
required by any Competent Authority acting in accordance with its
powers under Environmental Law to commence any Remedial Works then
the Buyer or the Company shall take all steps reasonably possible to
evidence the level of Hazardous Substances present in, on, at or
under the Site prior to commencing the Remedial Works.
5.7 The Buyer shall provide the Warrantors with copies of all documents
relating to any Remedial Order or Remedial Works and of the actual or
proposed costs of the Remedial Works within 5 Business Days of a
request for the same by the Warrantors.
5.8 In relation to any Remedial Works or any related works, proceedings,
claims or other matter for which the Buyer or any Group Company may
make a claim against the Warrantors pursuant to the indemnity
provisions contained in this Schedule the Buyer and any Group Company
shall (subject to appropriate arrangements to maintain
confidentiality and privilege):
5.8.1 ensure that upon written request by the Warrantors
reasonably frequent and detailed reports shall be provided
to the Warrantors regarding the progress of the same;
5.8.2 ensure that copies of all material correspondence and
documents passing between the parties in relation to such
works shall be provided to the Warrantors;
5.8.3 ensure that the reasonable instructions and requests of the
Warrantors in relation to such works are taken into
account;
5.8.4 ensure that no settlement or admission (including any
failure to appeal or decision not to do so) shall be agreed
or made without the prior consent in writing of the
Warrantors, provided that such consent is not to be
unreasonably withheld or delayed;
5.8.5 allow the Warrantors a reasonable opportunity to review and
comment in advance on any written pleadings or other formal
documents to be prepared and provided to the relevant court
or other decision-making body or Competent Authority; and
5.8.6 allow the Warrantors and/or any party it nominates acting
reasonably to attend as an observer meetings it is lawfully
able to attend relating to matters which may form the basis
of any claim for Losses.
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5.9 INDEMNITY PAYMENTS
The Warrantors' liability (if any) in respect of any claim under the
provisions of this Schedule shall be satisfied solely by payment from
the Retention Account to the Buyer of the Losses. Accordingly, the
maximum liability of the Warrantors under the indemnity provisions of
this Schedule shall be limited to the amount standing to the credit
of the Retention Account from time to time and to the extent that the
amount of the Losses cannot be satisfied by payment from the
Retention Account, the Warrantors shall not have any liability to pay
any additional amount to the Buyer.
6. TAXATION
If the Buyer or any Group Company obtains a corporation tax deduction
or any other saving or credit against taxation as a result of any
liability or matter giving rise to a claim or expenditure of costs
under the indemnity contained in this Schedule, the amount payable
under the indemnity shall be reduced by an amount equal to the tax
which is saved as a result of the deduction, saving or credit.
7. DISPUTE RESOLUTION
7.1 If any dispute arises between the Warrantors and the Buyer in
connection with this Schedule as to:-
7.1.1 the cause, existence or extent of any Environmental Claim;
7.1.2 the date(s) on which such Environmental Claim arose;
7.1.3 the subject and extent of the matters which fall within
works or actions necessary to deal with an Environmental
Claim;
7.1.4 the extent of any Remedial Works or the necessity of the
same;
7.1.5 the extent of the Losses.
together ("DISPUTED EXPERT MATTERS") then the dispute shall be
referred to a reputable environmental consultant having experience
relevant to the matter in dispute (the "DISPUTE EXPERT").
7.2 As soon as possible after a dispute about a Disputed Expert Matter
has arisen and either party wishes to refer to it a Dispute Expert
the parties will seek to agree the identity of the Dispute Expert
upon certain terms. Such terms, which are conditions under which the
Dispute Expert shall act, shall include the following:
7.2.1 the Dispute Expert shall have not less than 10 (ten) years
experience relevant to the matter in issue in the relevant
jurisdiction and shall be a member of a company or firm
which has been established for at least 3 (three) years
preceding the date of the appointment;
7.2.2 the scope of the Dispute Expert's determination shall be
limited to the relevant Dispute Expert Matter(s) in
dispute;
7.2.3 within forty five (45) days of his/her accepting his/her
appointment, the Dispute Expert shall be required to (A)
make a determination on the basis of the information
provided by and exchanged between the parties (subject to a
procedure which the parties shall request the Dispute
Expert to impose and with which the parties shall comply)
and any advice or evidence he/she has sought of any third
party pursuant to his/her appointment and his or her own
expertise and (B) provide his/her determination in the form
of a fully reasoned written decision determining (a) the
Disputed Expert Matter(s) in dispute and (b) the
proportions of his/her costs and expenses (including
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without limitation in relation to his/her appointment, the
costs of any third party advice or evidence he/she may have
obtained or otherwise incurred in relation to the
determination process in accordance with his/her
appointment) each party shall pay and the reasonable
timescales within which such payment shall be made (the
"DISPUTE EXPERT'S REPORT");
7.2.4 the Dispute Expert shall act as an expert and not as an
arbitrator and shall consider the Disputed Expert Matters
in accordance with the parameters of this Agreement;
7.2.5 the parties shall be bound by the determination of the
Dispute Expert save in the case of manifest error or
serious misconduct on the part of the Dispute Expert;
7.2.6 in performing his/her duties and obligations under the
terms of his/her appointment, the Dispute Expert shall so
far as permitted by law or regulatory requirements comply
with the reasonable requests of the parties for
arrangements to maintain confidentiality or privilege in
relation to information or documents passed to him/her in
respect of the Dispute Expert's performance of his/her
duties and obligations;
7.2.7 the Dispute Expert shall confirm that upon any future
request (and at reasonable cost) he/she shall provide a
deed of collateral warranty in a form generally in
accordance with market practice at the relevant time in
favour of at least two (2) third parties (each party to be
entitled to nominate one (1) such third party); and
7.2.8 the Dispute Expert shall take advice from a reputable
independent barrister, solicitor or legal counsel of not
less than 10 (ten) years' experience relevant to the matter
in issue in the relevant jurisdiction where any dispute
between the parties relating to a Disputed Expert Matter
involves any question of legal construction, interpretation
and/or application of this Agreement;
7.3 If, for any reason, a Dispute Expert cannot or refuses to act, the
parties shall use reasonable endeavours to agree an alternative one
within 7 days after both parties have been notified that the Dispute
Expert cannot or refuses to act.
7.4 If the parties cannot agree an alternative Dispute Expert it shall be
finally settled by the appointment of a Dispute Expert by the
Institute of Environmental Management and Assessment.
The parties agree that the determination of the Dispute Expert shall be
admissible in evidence in any court or arbitrational proceedings involving the
same subject matter as the Disputed Expert Matters. For the avoidance of doubt
in the event of any conflict between determination of any Disputed Expert Matter
by the court or arbitrational proceedings or by the Dispute Expert, the
determination of the Disputed Expert Matter by the court or arbitrational
proceedings shall prevail
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SIGNED by
for and on behalf of
PVLP-R LIMITED PARTNERSHIP
SIGNED by
for and on behalf of
RBDC ADMINISTRATOR LIMITED
SIGNED by
for and on behalf of
PARALLEL VENTURES NOMINEES NO 3 LIMITED
SIGNED by
for and on behalf of
ROYAL BANK INVESTMENTS LIMITED
in the presence of:-
SIGNED by ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ) /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
)
SIGNED by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ GAGG ) /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Gagg
)
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SIGNED by ▇▇▇▇ ▇▇▇▇▇▇▇ MENZIES ) /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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SIGNED by ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ) /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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for and on behalf of )
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Holdings Limited )