Exhibit 4.7
This Agreement is made the 14th day of June 2000
Between:
(1) The persons (excluding 3i) whose names and addresses are set out in
Schedule 1 ("the Vendors"); and
(2) 3i Nominees Limited (company number: 02916955) and 3i 96 Partners Nominees
Limited (company number: 03172468) (together "3i") both of whom have their
registered office at 00 Xxxxxxxx Xxxx, Xxxxxx XX0 0XX.
(3) Xxxxxxxxx Industrial Holdings Limited (company number: 02887689) whose
registered office is at Xxxxxxxxxx Xxxxx, 00-00 Xxxxxxx Xxxxxx, Xxxxxx X0X
0XX ("the Purchaser").
Background:
The Vendors and 3i have agreed to sell and the Purchaser has agreed to purchase
the Shares (as defined below) on the terms of this Agreement.
It is agreed as follows:
1. Definitions and interpretation
1.1 In this Agreement, unless the context otherwise requires, the following
words have the following meanings:
"AB Jelly and others" the persons defined as vendors under the
sale and purchase agreement for the entire
issued share capital of Elvadene Limited
dated 20 December 1996;
"the Accounts" the audited balance sheet as at the Accounts
Date and the audited profit and loss account
for the year ended on the Accounts Date of
each Group Company, including all documents
required by law to be annexed to them and,
in the case of the Company, the audited
consolidated balance sheet as at that date
and the audited consolidated profit and loss
account for that year;
"the Accounts Date" 30 September 1999
"this Agreement" this Agreement (including any Schedule or
annexure to it);
"Amana Statement" the witnessed statement, in the agreed
form, in relation to Amana Company L.P.
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given by the Warrantors;
"the Bank" the Governor and the Company of the Bank of
Scotland;
"the Board" in relation to each Group Company, its board
of directors;
"Borrowings" (a) all monies borrowed (or if in the
nature of borrowings raised) from
banks or other providers of finance
and capitalised interest thereon;
(b) liabilities under any bond, note,
debenture, loan stock or other
instrument or security;
(c) liabilities in respect of any
debentures, bonds, loan stock,
commercial paper, acceptance or
documentary credits or discounted
instruments or note purchaser
facilities or other similar
instruments;
(d) liabilities in respect of the
acquisition cost of asset or
services to the extent payable on
deferred payment terms;
(e) liabilities under guarantees or
indemnities or other assurances
against financial loss of any person
(other than in respect of product
warranties);
(f) liabilities under debt purchase,
factoring or similar agreements and
amounts payable under finance
leases, hire purchase agreements or
conditional sale agreements;
(g) any interest rate or currency swap,
cap, floor or collar transaction or
any similar or other derivative
transaction; and
(h) any other transaction or item
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having substantially the same commercial
effect as any of the foregoing,
including liabilities which are not
shown as borrowings on the balance
sheets of the Companies by reason of
being contingent, conditional or
otherwise;
but for the avoidance of doubt shall not
include:
(i) trade credit incurred in the ordinary
course of business nor any liabilities
incurred under those finance and/or
operating (e.g. the Lex leasing
agreement for company vehicles amounting
to (Pounds)120k approximately) leases
copies of which are included in the
Disclosure Bundle;
(ii) a prospective liability for corporation
tax payable on 18 July 2000 of
(Pounds)265,000;
(iii) a liability in respect of the proposed
purchase of a motor vehicle for Xx
Xxxxxx Xxxx amounting to (Pounds)26,000;
(iv) deferment of VAT payable of
(Pounds)15,000 on a rolling basis
guaranteed by the Bank.
(V) any amounts outstanding from one Group
Company to another Group Company
"the CA" means the Companies Xxx 0000, as amended;
"Claim" a claim by the Purchaser against the
Warrantors under the Covenant for Taxation
or under the Warranties and "Non-Tax Claim"
means any Claim which is not a Tax Claim (as
defined in Schedule 8 of the Agreement);
"Confidential Business means all or any information of a
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Information" confidential nature and not publicly known
which is owned by a Group Company or which is
used in or otherwise relates to the business,
customers or financial or other affairs of any
Group Company including, without limitation,
information relating to:
(a) the business methods, corporate plans,
management systems, finances, new
business opportunities or development
projects of any Group Company; or
(b) the marketing or sales of any past or
present or future products, goods or
services of any Group Company
including, without limitation,
customer names and lists and other
details of customers, sales targets,
sales statistics, market share
statistics, prices, market research
reports and surveys and advertising
and other promotional materials; or
(c) future projects, business development
or planning, commercial relationships
and negotiations; or
(d) any trade secrets or other
information relating to the provision
of any product or service of any
Company.
"the Company" Merrychef Holdings Limited (formerly known
as Blakedew Twenty Four Limited), details of
which are set out in Schedule 2;
"Completion" the completion of the sale and purchase of the
Shares under this Agreement;
"the Consideration" the consideration payable by the Purchaser to
the Vendors and 3i for the Shares under
Clause 3;
"the Covenant for the covenant given by the Vendors under
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Taxation" paragraph 2 of Schedule 8;
"Disclosed" fully and fairly disclosed to the Purchaser
expressly for the purposes of this Agreement in
the Disclosure Letter and "fully and fairly" means
disclosed with sufficient particularity to enable
the Purchaser to assess the full impact on the
Company of the matter disclosed;
"the Disclosure Letter" the letter of the same date as this Agreement in
the agreed form from the Warrantors to the
Purchaser, together with any attachments,
disclosing matters that are exceptions to the
Warranties;
"the Group Companies" the Company, its Subsidiaries, any Holding Company
of the Company and any Subsidiary of any such
Holding Company and "Group Company" means any of
them;
"Company Intellectual all Intellectual Property which are used or
Property" required in the carrying on of the business of the
Company or any of the Subsidiaries in the manner
in which such business was carried on immediately
before the date of this Agreement;
"Guarantee" any guarantee, suretyship, indemnity, bonding
liability or similar contingent liability given or
undertaken by a person to secure or support the
obligations of any third party;
"Intellectual Property" patents, trade marks or names whether or not
registered or capable of registration, registered
designs, design rights, copyrights (including
copyright in computer software), database rights,
the right to apply for and applications for any of
the preceding items, together with the rights in
inventions, processes, software, know-how, trade
or business secrets and confidential information;
"the Lease" the lease under which the Property is held,
particulars of which are set out in Schedule 5;
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"the Loan Note" the secured variable rate Loan Note instrument
between the Company (1) and AB Jelly and others (2)
dated 20 December 1996;
"Management Accounts" the unaudited management accounts for the Company
for the period from Accounts Date to 30 April 2000;
"Materially Adverse means an act, event, omission which alone or in
Event" combination with other such acts, events or
omissions has had or is reasonably likely to result
in a material adverse change in or effect on the
assets, business, condition (financial or otherwise)
results or operations of any Group Company except as
a direct result of:
(a) any gneral change in the general economic or
financial position common to all companies or
businesses engaged in the activities carried on
by any Group Company as at the date of this
Agreement ("Industry"); or
(b) the occurrence or continuance of any material
disruption of or material adverse change in any
of the worldwide, US, European or UK financial,
banking or capital markets since the date of
this Agreement; or
(c) any change resulting from an action of the
Buyer affecting any Group Company or any member
of the Industry; or
(d) any loss of custom or supply as a result of the
announcement of the proposed sale of any Group
Company or following Completion;
"the Net Consideration" the Consideration less the costs incurred by the
Vendors, details of which are set out in column 7 of
Schedule 1;
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"Non-Tax Warranties" the representations referred to in Clause 6 and
set out in Schedule 4;
"Planning Acts" the Town and Country Planning Xxx 0000, the
Planning (Listed Buildings and Conservation Areas)
Xxx 0000, the Planning (Hazardous Substances) Xxx
0000, the Planning (Consequential Provisions) Xxx
0000, the Planning and Compensation Xxx 0000 and
all other statutes containing provisions relating
to town and country planning;
"the Policies" all insurance policies maintained by the Company
on the date of this Agreement and "Policy" means
any of them;
"the Property" the lease hold property particulars of which are
set out in Schedule 5;
"the Purchaser's means Xxxxxxx Xxxxxxxx, 0 Xxxxxxxxxx Xxxxxx,
Solicitors" Xxxxxxx Xxxxxxx, Xxxxxx XX0X 0XX;
"Security Interest" means any mortgage, charge, assignment or
assignation by way of security, guarantee,
indemnity, debenture, hypothecation, pledge,
declaration of trust, lien, right of set off or
combination of accounts, or any encumbrance or
security interest whatsoever, howsoever created or
arising;
"the Senior Loan the facilities agreement between the Company (I),
Facility" Merrychef Limited and Elvadene Limited (2) and the
Bank dated 20 December 1996;
"the Shares" all the issued shares of the Company at
Completion, as set out in Schedule 2;
"the Subordinated Loan the agreement between the Company (1) Reece
Agreement" Houghton and others (2), 3i plc (3), 3i Group plc
(4) and 3i UK Investment Partners (5) dated 20
December 1996;
"Subsidiaries" any subsidiaries of the Company within the meaning
of Xxxxxxx 000, Xxxxxxxxx Xxx 0000 and any
subsidiary undertakings
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within the meaning of Xxxxxxx 000, Xxxxxxxxx Xxx
0000 from time to time, details of which are set
out in Schedule 3, and "Subsidiary" means any of
them;
"Tax Authority" having the meaning given in Schedule 8 (Tax
Schedule);
"Tax Warranties" the representations set out in paragraph 4 of
Schedule 8 (Tax Schedule) and each of them;
"the Tenancies" any tenancies or other occupational arrangements
under which the Properties are held by third
parties, particulars of which are set out in
Schedule 5;
"Warrantors" R Houghton, XX Xxxx, XX Xxxxxxx, GPB Xxxx, SC
Xxxxxx and N Thorneywork, details of whom are set
out in Schedule 1;
"Warrantor Associate" each of the Warrantors and any persons connected
with any of them within the meaning of Section
839, ICTA;
"Warranties" the Non-Tax Warranties and the Tax Warranties, and
"Warranty" means any one of them;
1.2 Words defined in paragraph 1 of Schedule 8 (Tax Schedule) shall bear the
same meaning in the entire Agreement.
1.3 In this Agreement, unless the context otherwise requires:
(a) words in the singular include the plural and vice versa and words in
one gender include any other gender;
(b) a reference to a statute or statutory provision includes:
(i) any subordinate legislation (as defined in Section 21(l),
Interpretation Act 1978) made under it;
(ii) any repealed statute or statutory provision which it re-enacts
(with or without modification); and
(iii) any statute or statutory provision which modifies, consolidates,
re-enacts or supersedes except to the extent that it would
create or increase the liability of 3i, the Vendors or the
Warrantors under Clause 6;
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(c) a reference to:
(i) any party includes its successors in title and permitted
assigns;
(ii) a "person" includes any individual, firm, body corporate,
association or partnership, government or state (whether or not
having a separate legal personality);
(iii) Clauses and schedules are to Clauses and schedules of this
Agreement and references to sub-clauses and paragraphs are
references to sub-clauses and paragraphs of the Clause or
schedule in which they appear;
(iv) any provision of this Agreement is to that provision as amended
in accordance with the terms of this Agreement;
(v) any document being "in the agreed form" means in a form which
has been agreed by the parties on or before the date of this
Agreement and for identification purposes signed by them or on
their behalf by their solicitors;
(vi) "indemnify" and "indemnifying" any person against any
circumstance include indemnifying and keeping him harmless from
all actions, claims and proceedings from time to time made
against him and all loss or damage and all reasonable payments,
reasonable costs or reasonable expenses made or incurred by that
person as a consequence of or which would not have arisen but
for that circumstance; and
(d) except as set out in sub-clause 1.1, terms defined in the Companies
Xxx 0000 have the meanings attributed to them by that Act;
(e) "sterling" and the sign "(Pounds)" mean pounds sterling in the
official currency of the United Kingdom save that if, following the
introduction of the Euro, pounds sterling ceases to exist as the
currency of the United Kingdom, then all references in this Agreement
to pounds sterling shall be construed as references to the Euro at the
conversion rate applicable at the close of business on the day before
that on which sterling ceased to exist;
(f) the table of contents and headings are for convenience only and shall
not affect the interpretation of this Agreement;
(g) general words shall not be given a restrictive meaning:
(i) if they are introduced by the word "other" by reason of the fact
that they are preceded by words indicating a particular class of
act, matter or thing; or
(ii) by reason of the fact that they are followed by particular
examples intended to be embraced by those general words;
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(h) where any liability or obligation is undertaken by two or more
persons, the liability of each of them shall be several; and
(i) where any statement is qualified by the expression "so far as the
Warrantor is aware" or "to the best of the Warrantor's knowledge and
belief" or any similar expression it shall be deemed to include an
additional statement that the statement is given individually and
severally by each Warrantor after due and careful consideration of the
factors relevant to each statement or warranty and after enquiry by
each of them of the others, save that Xxxxx Xxxxxxxx need not enquire
of any of the other Warrantors, and the other Warrantors need not
enquire of Xxxxx Xxxxxxxx.
2. Sale and purchase
2.1 Subject to the terms of this Agreement, the Vendors and 3i shall sell the
Shares set opposite their respective names in Schedule 1 and the Purchaser
shall purchase such Shares, with effect from Completion, with:
(a) full title guarantee (free from any and all Security Interests
(whether monetary or not) and all other rights exercisable by third
parties which 3i or the Vendors do not, and could not reasonably be
expected to, know about); and
(b) all rights attaching to or accruing to them at Completion (including
all dividends and distributions declared, paid or made on or after
that date).
2.2 Each of the Vendors and 3i waive all rights of pre-emption over any of the
Shares conferred on them by the Articles of Association of the Company or
in any other way.
2.3 The Purchaser shall not be obliged to complete the purchase unless the sale
and purchase of all the Shares is completed simultaneously.
3. Consideration
3.1 The Consideration is the payment by the Purchaser to the Vendors and 3i of
the sum of (Pounds)3,750,000 which shall be payable in cash at Completion
in accordance with Clause 4.
3.2 Subject to Clause 4, the Consideration shall be apportioned between the
Vendors and 3i in accordance with Schedule 1.
3.3 The bonuses amounting in aggregate to the gross sum of (Pounds)183,000
payable to Messrs Barker, Veal, Thorneywork, Keywood and Xxxx ("the
Managers") shall be paid by the Company on or around Completion subject and
to the extent that the Company has cash in sufficient amount to pay the
same, failing which the Company shall not be liable to pay such bonuses and
the managers waive their right to receive the same from the Company.
4. Completion
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4.1 Completion shall take place at the offices of the Vendor's Solicitors in
Reading immediately after the execution of this Agreement.
4.2 On Completion:
(a) the Vendors shall deliver or procure the delivery to the Purchaser:
(i) stock transfer forms, duly completed and executed by the
registered holders, in favour of the Purchaser (or as it may
direct) in respect of the Shares together with the relevant
share certificates;
(ii) irrevocable powers of attorney in favour of the Purchaser in
the agreed form executed by each of the Vendors in respect of
the Shares registered in their names to enable the Purchaser
(pending registration of transfers of the Shares) to exercise
all voting and other rights attaching to the shares and to
appoint proxies for this purpose;
(iii) the certificate of incorporation, any certificates of
incorporation on change of name or re-registration, the
statutory books written up to date, share certificate books,
minute books, and the common seal of each Group Company;
(iv) subject to clause 4.2(d)(ii) and (iii) duly executed releases
of all charges granted by any Group Company details of which
are set out in Schedule 7;
(v) all title deeds relating to the Properties including all
documents relating to the Tenancies and, where the Properties
are charged, Forms DS1 or receipted Legal Charges as
appropriate;
(vi) a statement of all overdraft and credit balances from each
Group Company's bankers and other lenders as at the close of
business on the day two days before Completion;
(vii) the Disclosure Letter;
(viii) the Letter of Instruction and the Redcliffe Letter of
Instruction signed for and on behalf of the relevant
signatories (excluding the Purchaser).
(b) The Vendors shall repay all monies then owing by them to any Group
Company whether due and payable or not.
(c) The Vendors shall procure that a board meeting of each Group Company
is held at which:
(i) the stock transfer forms referred to in sub-clause (a)(i) are
approved and (subject to them being appropriately stamped)
registered in the relevant Group Company's books;
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(ii) the persons nominated by the Purchaser are appointed as
directors and secretary of each Group Company and any requested
resignations are implemented;
(d) When the Vendors have complied with the provisions of sub-clauses
(a)-(c) inclusive, the Purchaser shall:
(i) advance to the Company the sum of (Pounds)12,950,000 by way of
loan, such loan to be interest free and repayable on demand by
telegraphic transfer to the client account of the Vendors'
solicitors, Xxxxxxx Xxxxxx OWA at the National Westminster Bank
plc, account number 00000000, sort code 56-00-05;
(ii) pay the amount of the Retention (as defined in Schedule 9) into
the Retention Account (as therein defined);
(iii) pay the amount of the Redcliffe Retention (as defined in
Schedule 10) into the Redcliffe Retention Account (as therein
defined);
(iv) pay to the Vendors and 3i the Consideration for the Shares
namely the sum of (Pounds)3,750,000 (less in the case of 31,
the amount of the Retention and in the case of the Vendors and
31, less their proportionate share of the Redcliffe Retention)
in the proportions set out in Schedule 1 by telegraphic
transfer to the client account of the Vendors' solicitors,
Xxxxxxx Xxxxxx OWA at the National Westminster Bank plc,
account number 00000000, sort code 56-00-05;
(v) sign the Letter of Instruction and the Redcliffe Letter of
Instruction.
4.3 If any of the requirements of sub-clause 4.2 are not complied with on the
date set for Completion under sub-clause 4.1, the Purchaser (in the case of
the requirements of sub-clauses 4.2(a)-(c) inclusive) or the Vendors or 3i
(in the case of the requirements of sub-clause 4.2(d)) may:
(a) defer Completion with respect to some or all of the Shares to a date
not less than 7 nor more than 28 days after that date (in which case
the provisions of this sub-clause shall also apply to Completion as so
deferred); or
(b) proceed to Completion so far as practicable (including, at the
Purchaser's option, completion of the purchase of some only of the
Shares) but without prejudice to any other rights which it or they may
have under this Agreement; or
(c) rescind this Agreement by notice in writing.
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4.4 The Retention shall be held by the Purchaser's Solicitors and 3i's
Solicitors as set out in Clause 6.9 of this Agreement and shall be dealt
with in accordance with the provisions of Clause 6.9, Schedule 9 and the
Instruction Letter.
4.5 The Redcliffe Retention shall be held by the Purchaser's Solicitors,
Vendor's solicitors and 3i's Solicitors as set out in Clause 6.10, Schedule
10 and the Redcliffe Letter of Instruction.
5. Post completion matters
5.1 The Vendors and 3i declare that for as long as they remain the registered
holders of the shares after Completion they will:
(a) hold the shares and the dividends and any other moneys paid or
distributed in respect of them after Completion and all rights arising
out of or in connection with them in trust for the Purchaser;
(b) deal with the shares and all such dividends, distributions and rights
as the Purchaser may direct for the period between Completion and the
day on which the Purchaser or its nominee is entered in the register
of members of the Company as the holder of the shares such
registration to be carried out by the Purchaser with in 21 days of
Completion.
5.2 The Vendors and 3i irrevocably appoint the Purchaser as their attorney for
the purpose of exercising any rights, privileges or duties attaching to the
shares including receiving notices of and attending and voting at all
meetings of the members of the Company from Completion to the day on which
the Purchaser or its nominee is entered in the register of members of the
Company as the holder of the Shares.
5.3 For the purpose of Clause 5.2, the Vendors and 3i authorise:
(a) the Company to send any notices in respect of their share holdings to
the Purchaser;
(b) the Purchaser to complete and return proxy cards, consents to short
notice and any other document required to be signed by the Purchaser
as a member.
6. Warranties
6.1 The Warrantors, Xx Xxxxxx Xxxxxxxx and 3i severally in relation to their
respective holdings of Shares and capacity respectively warrant to the
Purchaser that Warranties 1 and 2 (Capacity) and 3.3 in Schedule 4 is true
and accurate in all respects and not misleading at the date of this
Agreement and will continue to be true and accurate in all respects and not
misleading up to and including Completion.
6.2 The Warrantors severally warrant to the Purchaser that all of the Warranties
other than those referred to in Clause 6.1 above are true and accurate in
all respects and not misleading and will continue to be true and accurate in
all
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respects and not misleading up to and including Completion. Provided that
in the case of Xx Xxxxx Xxxxxxxx he shall not be liable for any breach of
any Warranty in respect of any matter occurring after 19 January 2000 which
would otherwise be treated as a breach of Warranty, save where the matter
in question relates to a breach of the Warranty at paragraph 43 of Schedule
4 in which case no such time restriction shall apply.
6.3 The Warrantors acknowledge that the Purchaser has entered into this
Agreement in reliance upon the Warranties (including the Warranties in this
Clause 6), but such acknowledgement shall not give rise to any right of
rescission of this Agreement.
6.4 Each Warranty (including the Warranties in this Clause 6) made or given in
respect of the "Company" shall be deemed to be a Warranty of the Warrantors
made or given in respect of the Company and each Group Company and (unless
the context or subject matter otherwise requires) the expression the
"Company" in Schedule 4 shall be construed accordingly.
6.5 Each of the Warranties (including the Warranties in this Clause 6) shall be
construed as a separate and independent Warranty and, except where
expressly stated, shall not be limited or restricted by reference to or
inference from the terms of any other Warranty or any other provision of
this Agreement. The Warranties (including any Warranty in this Clause 6)
shall not in any respect be extinguished or affected by Completion.
6.6 The rights and remedies of the Purchaser in respect of any breach of the
Warranties shall not be affected by completion of the purchase of the
Shares, by any investigation made by or on behalf of the Purchaser into the
affairs of any Group Company, by its failure to rescind this Agreement, by
any failure to exercise or delay in exercising any right or remedy or by
any other event or matter whatsoever, except a specific and duly authorised
written waiver or release expressly referring to such breach.
6.7 The Warrantors, Xx Xxxxxx Xxxxxxxx and 3i agree with the Purchaser (for
themselves and as trustee for each Group Company and their respective
directors, officers, and employees) and 3i agree on behalf of themselves
only to waive any claim or remedy or right which they may have in respect
of any misrepresentation, inaccuracy or omission in or from any information
or advice supplied or given by any Group Company or a director, officer or
employee of any Group Company for the purpose of assisting the Warrantors
in giving any warranty, representation, undertaking or covenant, in
preparing the Disclosure Letter and in entering into this Agreement, the
Covenant for Taxation or any agreement or document entered into pursuant to
this Agreement.
6.8 Subject to the proviso of this Clause but not to any other limitations
(including in particular the limitations set out in Clause 9):
(a) the Warrantors jointly and severally warrant and represent to the
Purchaser that save for the items listed at Clause 6.11 of this
Agreement
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the Group Companies have no Borrowings save that Xx Xxxxxxxx
warrants only in respect of the period up to 19 January 2000;
(b) the Warrantors covenant to indemnify and keep indemnified the
Purchaser and the Group Companies in the event that the
Borrowings listed at Clause 6.11 do not represent all the
Borrowings of the Group Companies as at Completion provided that
in the absence of fraud or dishonesty or wilful non-disclosure:
(i) no claims under Clauses 6,8 and 6.9 shall be made unless
and until the amount of the claim equals or exceeds
(Pounds)l00,000;
(ii) no Warrantor shall be liable under this Clause to pay more
than the Net Consideration received by that Warrantor;
(iii) no claim shall be made under this Clause 6 unless it is
made in writing; before the date which is 12 months from
the date of this Agreement;
6.9
In relation to the Retention, 3i and the Purchaser shall comply with their
respective obligation as set out in Schedule 9.
6.10 The Redcliffe Claim shall be dealt with in accordance with Schedule 10.
6.11 The items referred to in Clause 6.8 and 6.9 above are:
(a) (Pounds)3,950,000 which together with interest thereon amounting
to (Pounds)14,076.50 equals the indebtedness of the Company to
the Bank under the Senior Loan Facility;
(b) (Pounds)7,000,000 which together with interest thereon amounting
to (Pounds)294,625.66 equals the indebtedness of the Company to
3i under the Subordinated Loan Agreement;
(c) (Pounds)2,000,000 which together with interest thereon amounting
to (Pounds)50,936.99 equals the indebtedness of the Company to
AB Jelly and others under the Loan Note others; and
7. Covenant for Taxation
The Warrantors severally covenant to the Purchaser in the terms of the
Covenant for Taxation as set out in Schedule 8.
8. Purchaser's remedies
8.1 Each of the Warrantors undertakes to disclose in writing to the Purchaser
anything which is or may lead to a breach of the Warranties or which may be
inconsistent with the Warranties or the contents of the Disclosure Letter
directly it comes to the notice of any of them at the time of after
Completion.
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8.2 The rights and remedies of the Purchaser in respect of any breach of the
Warranties or the Covenant for Taxation shall not be affected by
Completion.
8.3 If any Claim is made, no Warrantor nor Xx Xxxxxx Xxxxxxxx nor 3i shall make
any claim against any Group Company or any director or employee of any
Group Company on whom he may have relied before agreeing to any terms of
this Agreement or authorising any statement in the Disclosure Letter. This
sub-clause shall not preclude any Warrantor from claiming against any other
Warrantor under any right of contribution or indemnity to which he may be
entitled.
8.4 In the event of a Claim the Warrantors, Xx Xxxxxx Woodhead as the case may
be, as the case may be, agree to pay in cash to the Purchaser by way of
damages a sum equal to the diminution in value of the Shares as agreed
between the Vendors and the Purchaser or, in default of such agreement, as
determined by order of a court of competent jurisdiction.
8.5 Any amount paid by the Warrantors to the Purchaser in respect of any of the
provisions of this Agreement shall be treated as paid to the Purchaser by
the Warrantors by way of pro rata reduction in the Consideration.
9. Limitations on liability
9.1 The liability of the Warrantors under the Covenant for Taxation shall be
reduced if and to the extent that the loss shall have been recovered under
the Warranties (and vice versa).
9.2 In the absence of fraud or dishonesty or wilful non-disclosure on the part
of any of the Warrantors, their agents or advisors:
(a) the Purchaser shall not have any claim under the Warranties in respect
of any matter if, and to the extent that, it is Disclosed in the
Disclosure Letter;
(b) the Warrantors shall not be liable for any Claim unless:
(i) they have received written notice from the Purchaser giving
reasonable details of the Claim and, if practicable, the
Purchaser's estimate of the amount involved on or before:
(A) in the case of all Warrantors the expiration of one (1) year
from the date of this Agreement;
(B) in the case of any claim relating to Taxation, the date
which is the earlier of two (2) years from the date of the
filing of the tax return for the Company for the year ending
30 September 2001, such return to be made within 6 months of
30 September 2001, and agreement of the returns for the
years ending 30 September 2000 and 30 September 2001 by the
Inland Revenue;
(ii) subject to sub-clause (iii), an individual Claim is equal to or
16
exceeds (Pounds)20,000 ("a (Pounds)20,000 Threshold
Claim). In circumstances where Claims relate to the
same set of circumstances or matters then such Claims
shall be aggregated and treated as one individual
Claim for the purposes of this Clause;
(iii) the amount of the Claim, when aggregate with all
other (Pounds)20,000 Threshold Claims made on the
same occasion or previously, is equal to or exceeds
(Pounds)200,000 (in which case the Warrantors shall
be liable for the whole amount of all Claims
irrespective of whether an individual Claims exceeds
(Pounds)20,000 and not simply the excess).
(c) The liability of a Warrantor in respect of a Claim shall be
limited to and shall not exceed the lower of the following
amounts and proportions:
Warrantor Amount Proportion of Claim
Warrantor is liable
for
Xxxxx Xxxxxxxx 531744 37.5%
Xxxxx Xxxxxxx 176269 12.5%
Xxxxxx Xxxx 176269 12.5%
Xxxxxx Xxxx 176269 12.5%
Xxxxx Xxxxxx 176269 12.5%
Nigel Thorneywork 176269 12.5%
and the aggregate liability of the Warrantors in respect of
all the Warranties shall not exceed the aggregate of the Net
Consideration received by the Warrantors as set out in
column 7 in Schedule 1;
Always provided that in respect of those Warranties which
are given "so far as the Warrantor(s) is/are aware "or" to
the best of the Warrantor's belief " or any similar
expression where the number of Warrantors liable in respect
of a claim is less than the total number of Warrantors, the
above proportions shall be adjusted so that such liable
Warrantors shall (subject to the limitations set out in this
Clause 9) together be liable for one hundred per cent of the
Claim but each of the individual liable Warrantors shall be
liable for the proportion of the Claim as represents the
proportion which his shareholding in the Company immediately
prior to Completion bears to the total number of such shares
held by all of the liable Warrantors immediately prior to
Completion. For the purpose of this calculation a
Warrantor's holding of Shares shall include any held by his
spouse.
9.3 The Warrantors shall not be liable for any Claim (save in respect of
any Tax Claim in respect of which Clause 5 (Limitations) of Schedule 8
of the
17
Agreement shall apply) if and to the extent that:
(a) proper allowance, provision or reserve in respect of any liability the
subject of such a Claim was made or taken into account, or payment or
discharge of which the Warrantors can demonstrate was taken into
account, in or in preparing the Accounts;
(b) it is attributable to or arises as a result of:
(i) any voluntary act or omission of the Purchaser (or any persons
deriving title from it) or any Group Company after Completion
done or suffered outside the ordinary course of business;
(ii) a change in the law (whether retrospectively or not after
Completion);
(iii) any change after Completion in the bases upon which the Accounts
are prepared or any change in accounting or taxation practice,
policies or principles save where such change is made to bring
the Accounts into line with generally accepted accounting
principles in the United Kingdom applying as at the Accounts
Date in so far as the Accounts did not conform to such
principled; or
(iv) any change after Completion in the date to which any Group
Company makes up its Accounts.
(c) the Purchaser or any Group Company is indemnified against any loss or
damage suffered by it under the terms of any insurance policy for the
time being in force or would have been so indemnified had the
insurance policies held by the Group Companies immediately prior to
Completion remained in full force and effect, but for a decision by
the Purchaser not to continue such policies in full force and effect.;
(d) the liabilities under it are contingent, future or unascertainable in
which case the Purchaser shall not be precluded from making a claim
but the Warrantors shall not be liable to recompense the Purchaser
until such time as the Purchaser shall actually have suffered the loss
or incurred the liability in question or the amount of the loss shall
be ascertainable;
(e) has been or is made good or it is otherwise compensated for without
cost to the Purchaser or any Group Company; and
(f) it would not have arisen or would have been reduced but for a
cessation of a trade or a change in the nature or conduct of a trade
carried on by any Group Company in either case occurring after
Completion.
9.4 Where the subject matter of the Claim is capable of remedy, the Warrantors
shall not be liable for the Claim if the breach or default is remedied by
them to the reasonable satisfaction of the Purchaser within 30 days of
receipt by them of the
18
notification of the Claim.
9.5 Repayment
If the Warrantors shall make any payment to the Purchaser in relation to
any Claim (other than a Tax Claim) and the Purchaser or any Group Company
subsequently receives or is entitled to receive from any Tax Authority or
any person (other than another Group Company) any amount referable to the
subject matter of that Claim, the Purchaser shall take all necessary steps
to recover the same and once it or any Group Company has received such
amount, repay (after deducting the costs and expenses of the Purchaser or
any Group Company incurred in recovering such amount and any Taxation
payable on it or on any interest) to the Warrantors either:
(a) a sum equal to such amount; or
(b) if lesser a sum equal to the Claim paid by the Warrantors to the
Purchaser,
together with any interest paid to the Purchaser or that Group
Company in respect of such sum.
10. Conduct of Non Tax Claims
10.1 The Purchaser shall notify the Warrantors in a timely fashion in writing
of:
(a) any claim made against it by a third party which may give rise to a
Non Tax Claim; and
(b) any claim any Group Company is entitled to bring against a third party
which claim is based on circumstances which may give rise to a Non Tax
Claim.
10.2 The Purchaser shall procure that the conduct, negotiation, settlement or
litigation of the claim by or against such third party is, so far as is
reasonably practicable, carried out in accordance with the wishes of the
Warrantors in a timely fashion and at their cost subject to their giving
timely instructions to the Purchaser and providing reasonable security for
any costs and expenses which might be incurred by the Purchaser or a Group
Company provided that the Warrantors shall not be entitled to request that
anything be done which in the reasonable opinion of the Purchaser (but, for
the avoidance of doubt only, without any obligation to take into account
the interests of any other party to this Agreement) might be against the
interests of any Group Company or in any way effect the goodwill of any
such company.
10.3 The Purchaser shall provide and shall procure that each Group Company
provides to the Warrantors and the Warrantors' professional advisers
reasonable access to premises and personnel and subject to appropriate
Confidentiality Undertakings to any relevant assets, documents and records
within their power, possession or control for the purpose of investigating
any Non Tax Claim and
19
enabling the Warrantors to take the action referred to in sub-clause 11.2
and shall allow the Warrantors and their advisers to take copies of any
relevant documents or records at their expense.
10.4 In so far as the subject matter ("the Relevant Subject Matter") of any
Claim is a liability for Taxation which is, on the face of it, recoverable
from the persons defined as the "Covenantors" in the Deed of Covenant dated
20 December 1996 between the persons defined as "Covenantors" (1) and the
Company (2),("the Jelly Deed of Covenant") the Purchaser will procure that
the Company pursues all remedies available to it pursuant to the Jelly Deed
of Covenant against the Covenantors provided that, having pursued any
remedies that might be available under the Jelly Deed of Covenant to the
Purchaser or a Group Company, a Claim remains unsatisfied, either in whole
or in part then the Purchaser shall be entitled to pursue such Claim in
respect of the Relevant Subject Matter under the Covenant for Taxation.
11. Non-competition covenants
11.1 In order to assure to the Purchaser the full benefit of the business and
goodwill of the Group Companies, each Warrantor together with (only in the
case of the provisions of 11.1 (a) 3i) and Xx Xxxxxx Woodhead undertakes
that he shall not, either alone or in conjunction with or on behalf of any
other person, do any of the following things:
(a) except in the circumstances referred to in sub-clause 13.12(b)
(Confidentiality), disclose to any other person any Confidential
Business Information of any Group Company or use any such information
to the detriment of the business of any Group Company for so long as
that information remains secret or confidential;
(b) neither before nor within one year after Completion solicit or
endeavour to solicit orders or the custom from any person, firm or
company to whom any Group Company has sold its goods or services in
the 12 months before Completion or to whom any Group Company has
actioned plans to sell goods in respect of similar goods or services;
or
(c) neither before nor within one year after Completion solicit or seek to
entice away or employ any employee who holds a senior management
position in a Group Company from the employment of any Group Company;
or
(d) for a period of 12 months after the date of Completion either as
principal or partner, alone or jointly with, through or as a manager,
adviser, consultant, or agent for any person or in any other capacity
whatsoever, directly or indirectly, carry on or be engaged, concerned
or interested in the business of manufacture and supply of commercial
(as distinct from domestic) (as defined)) microwave and commercial (as
distinct from domestic) (as defined)) combination ovens in the United
Kingdom in competition with the business of any Group Company as
carried on at the date of Completion PROVIDED THAT nothing contained
in this Clause
20
11 (d) shall preclude any of the Vendors from being the registered
holder or beneficial owner for investment purposes only of not more
than 3% of the equity share capital of any company listed on the
Official List of the London Stock Exchange or the Alternative
Investment Market.
11.2 Each undertaking contained in sub-clause 11.1 shall be construed as a
separate and independent undertaking.
11.3 In this Clause 11 "domestic" shall mean microwaves sold to and purchased by
domestic end-users but shall not include domestic microwaves sold to and
purchased by commercial end-users.
11.4 For the avoidance of doubt 3i's undertaking is only in relation Clause 11.1
(a).
12. Pensions
The pension arrangements of the Company are as set out in paragraph 33.2 of
Schedule 4.
13. General
13.1 Entire Agreement
(a) This Agreement sets out the entire agreement and understanding between
the parties in respect of the subject matter of this Agreement.
(b) This Agreement supersedes the Heads of Agreement dated 31 March 2000
except for any of its provisions which this Agreement specifically
preserves.
(b) The Purchaser acknowledges that it has entered into this Agreement in
reliance only upon the warranties specifically contained or
incorporated in this Agreement and, save as expressly set out in this
Agreement, the Vendors, the Warrantors and 3i shall have no liability
in respect of any other representation, warranty or promise made prior
to the date of this Agreement unless it was made fraudulently.
13.2 Contracts (Rights of Third Parties) Xxx 0000
The Contracts (Rights of Third Parties) Xxx 0000 does not apply this
Agreement.
13.3 Assignment
This Agreement shall be binding upon and enure for the benefit of the
successors of the parties but, shall not be assignable any party without
the prior written consent of the other provided that the liability of the
Warrantors shall not thereby be increased as a result of this Clause 13.3.
13.4 Variation
21
No purported variation of this Agreement shall be effective unless it is in
writing and signed by or on behalf of each of the parties.
13.5 Effect of Completion
Except to the extent already performed, all the provisions of this
Agreement shall, so far as they are capable of being performed or observed,
continue in full force and effect notwithstanding Completion.
13.6 Invalidity
If any part of this Agreement is found by any court or competent authority
to be invalid, unlawful or unenforceable in any jurisdiction, then that
part shall be deemed not to be a part of this Agreement, it shall not
effect the enforceability of the remainder of this Agreement, nor shall it
affect the validity, lawfulness or enforceability of that provision in any
other jurisdiction.
13.7 Releases and waivers
(a) The rights, powers and remedies conferred on the parties by this
Agreement and remedies available to the parties are cumulative and are
additional to any right, power or remedy which it may have under
general law or otherwise.
(b) A party may, in whole or in part, release, compound, compromise, waive
or postpone, in its absolute discretion, any liability owed to it or
right granted to it in this Agreement by any other party or parties
without in any way prejudicing or affecting its rights in respect of
that or any other liability or right not so released, compounded,
compromised, waived or postponed.
(c) No single or partial exercise, or failure or delay in exercising any
right, power or remedy by a party shall constitute a waiver by it, or
impair or preclude any further exercise of, that or any right, power
or remedy arising under this Agreement or otherwise.
13.8 Further assurance
After Completion, the Vendors and 3i shall execute such documents and take
such steps as the Purchaser may reasonably require at the Purchaser's cost
to vest the full title to their respective Shares in the Purchaser and to
give the Purchaser the full benefit of this Agreement.
13.9 Counterparts
(d) This Agreement may be executed in any number of counterparts and by
the parties on separate counterparts, but shall not be effective until
each party has executed at least one counterpart.
(e) Each counterpart, when executed, shall be an original of this
Agreement and all counterparts shall together constitute one and the
same
22
instrument.
13.10 Time of the essence
Except as otherwise expressly provided, time is of the essence as
regards every obligation of any party under this Agreement.
13.11 Termination
Without prejudice to any remedy available to any party arising out
of any outstanding breach of this Agreement on the part of any other
party, if this Agreement is terminated in accordance with its terms,
the following shall occur:
(a) the restrictions contained in sub-clause 13.12 (Confidentiality)
and Clause 14 (Announcements) shall continue to apply; and
(b) except as referred to in sub-clause (a), all obligations of the
parties under this Agreement shall cease.
13.12 Confidentiality
(a) Except as referred to in sub-clause (b), each party shall treat
as strictly confidential all information received or obtained as
a result of entering into or performing this Agreement which
relates to the provisions or subject matter of this Agreement, to
any other party to this Agreement or the negotiations relating to
this Agreement.
(b) Any party may disclose information which would otherwise be
confidential if and to the extent:
(i) it is required to do so by law or any securities exchange
or regulatory or governmental body to which it is subject
wherever situated;
(ii) it considers it necessary to disclose the information to
its professional advisers, auditors and bankers provided
that it does so on a confidential basis;
(iii) the information has come into the public domain through no
fault of that party; or
(iv) each party to whom it has given its consent in writing.
13.13 Default interest
If any party defaults in the payment when due of any sum payable under
this Agreement (whether payable by agreement or by an order of a court
or otherwise), the liability of that party shall be increased to
include interest on that sum from the date when such payment was due
until the date of actual payment at a rate per annum of 4 per cent
above the base rate from time to time of National Westminster Bank
PLC. Such interest shall accrue from day to day and
23
shall be compounded annually.
14. Announcements
14.1 Subject to sub-clause 14.2, no announcement concerning the terms of this
Agreement shall be made by or on behalf of any of the parties without the
prior written consent of the others, such consent not to be unreasonably
withheld or delayed.
14.2 Any announcement or circular required to be made or issued by any party by
law or under the regulations of the London Stock Exchange or the City Code
on Takeovers and Mergers issued by the Panel on Takeovers and Mergers may
be made or issued by that party without consent if it has first given the
other parties a reasonable opportunity to comment on the subject matter and
form of the announcement or circular (given the time scale within which it
is required to be released or despatched).
15. Costs and expenses
15.1 Except as referred to in sub-clause 15.2 each party shall bear its own
costs and expenses incurred in the preparation, execution and
implementation of this Agreement.
15.2 The Purchaser shall pay all stamp and other transfer duties and
registration fees applicable to any document to which it is a party and
which arise as a result of or in consequence of this Agreement.
16. Notices
16.1 Any notice to a party under this Agreement shall be in writing signed by or
on behalf of the party giving it and shall, unless delivered to a party
personally, be left at, or sent by prepaid first class post, prepaid
recorded delivery, or facsimile to the address of the party as set out on
page 1 or in Schedule 1 of this Agreement or as otherwise notified in
writing from time to time.
16.2 Except as referred to in sub-clauses 16.3 and 16.4, a notice shall be
deemed to have been served:
(a) at the time of delivery if delivered personally;
(b) 48 hours after posting in the case of an address in the United Kingdom
and 96 hours after posting for any other address;
(c) 24 hours after transmission if served by facsimile on a business day
prior to 3pm or in any other case at 10 am on the business day after
the date of despatch.
16.3 If the deemed time of service is not during normal business hours in the
country of receipt, the notice shall be deemed served at or, in the case of
faxes, 2 hours after the opening of business on the next business day of
that country.
24
16.4 The deemed service provisions set out in sub-clause 16.2 do not apply to:
(a) a notice served by post, if there is a national or local suspension,
curtailment or disruption of postal services which affects the
collection of the notice or is such that the notice cannot reasonably
be expected to be delivered within 48 hours or 96 hours (as
appropriate) after posting; and
(b) a notice served by facsimile, if, before the time at which the notice
would otherwise be deemed to have been served, the receiving party
informs the sending party that the notice has been received in a form
which is unclear in any material respect, and, if it informs the
sending party by telephone, it also despatches a confirmatory
facsimile within 2 hours.
16.5 In proving service it will be sufficient to prove:
(a) in the case of personal service, that it was handed to the party or
delivered to or left in an appropriate place for receipt of letters at
its address;
(b) in the case of a letter sent by post, that the letter was properly
addressed, stamped and posted;
(c) in the case of facsimile, that it was properly addressed and
despatched to the number of the party.
16.6 A party shall not attempt to prevent or delay the service on it of a notice
connected with this Agreement.
17. Severance
If any term or provision in this Agreement shall be held to be illegal or
unenforceable, in whole or in part, under any enactment or rule of law,
such term or 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 not be affected.
18. Governing law and jurisdiction
18.1 This Agreement shall be governed by and construed in accordance with
English Law.
18.2 Each of the parties irrevocably submits for all purposes in connection with
this Agreement to the exclusive jurisdiction of the courts of England.
This Agreement has been signed on the date appearing at the head of page 1.
25
Schedule 1
(The Vendors and 3i)
Name Address No. of Ord No of A Ord Consideration Costs Net
Shares Shares Consideration
(Pounds) (Pounds) (Pounds)
Xxxxx Xxxxxxxx 5 St Barbe Close 70,000 525,000 28,706 496,294
Xxxxxx
Xxxxxxxxx
XX0 0XX
Xxxxx Xxxxxxxx 5 St Barbe Close 5,000 37,500 2,050 35,450
Xxxxxx
Xxxxxxxxx
XX0 0XX
Xxxxx Xxxxxxx Xxxxxxx 22 York Gardens 25,000 187,500 11,231 176,269
Xxxxxx-xx-Xxxxxx
Xxxxxx
XX00 0XX
Xxxxxx Xxxxxxxx Xxxx Fir Tree Cottage 25,000 187,500 11,231 176,269
Xxxxxxx Xxxx
Xxxxxxxx
Xxxxxx
XX0 0XX
1
Xxxxxx Xxxxxx Xxxxxxx The Stile 19,460 145,950 8,742 137,208
Veal Xxxxxxx Xxxx
Xxxxxx
Xxxxxxxxx
XX00 XXX
Xxxxxxxxx Xxxx The Stile 5,540 41,550 2,489 39,061
Xxxxxxx Xxxx
Xxxxxx
Xxxxxxxxx
XX00 XXX
Simon Xxxxxxx Xxxxxx Timberdene 19,325 144,938 8,682 136,256
Xxxxxxx
Xxxxx Xxxx
Xxxxxxx, Xxxxx
Xxxx Xxxxxx
XX00 OUD
Xxxxx-Xxxx Xxxxxxxxx Timberdene 5,675 42,562 2,549 40,013
Xxxxxx Xxxxxxx
Xxxxx Xxxx
Xxxxxxx, Xxxxx
Xxxx Xxxxxx
XX00 OUD
Nigel Thorneywork Xxxxxx Xxxx 19,460 145,950 8,742 137,208
Xxxxxx Xxxx
Guildford
Surrey
2
GU3 2AX
Iris Thorneywork Xxxxxx Xxxx 5,540 41,550 2,489 39,061
Xxxxxx Xxxx
Xxxxxxxxx
Xxxxxx
XX0 0XX
Xxxxxx Xxxxxxxx Hammer Cottage 5,000 37,500 2,247 35,253
Woodhead Xxxxxxx Xxxxxx
Xxxxxx
XX0 0XX
3i Nominees Limited 00 Xxxxxxxx Xxxx 177,000 1,327,500 79,517 1,247,983
Xxxxxx
XX0 0XX
3i 96 Partners Nominees 00 Xxxxxxxx Xxxx 118,000 885,000 53,012 831,988
Limited Xxxxxx
XX0 0XX
--------------------------------------------------------
Total 210,540 295,000 3,750,000 221,687 3,528,313
--------------------------------------------------------
3
Schedule 2
(Information concerning the Company)
Merrychef Holdings Limited
Registered number 3274972
Date of incorporation 7 November 1996
Place of incorporation United Kingdom
Address of registered office Xxxxxxx Xxxx Xxxx, Xxx Xxxx,
Xxxxxxxxx, Xxxxxxxxx XX00 0XX
Class of company Private company limited by shares
Authorised share capital (Pounds)525,000 divided into 205,000
ordinary shares of (Pound)l each,
295,000 A ordinary shares of (Pound)l
each and 25,000 B ordinary shares of
(Pound)l each
Issued share capital (Pounds)500,000 divided into 205,000
ordinary shares of (Pound)l each and
295,000 A ordinary shares of (Pound)l
each
Loan Capital
Directors
Full name Usual residential address Nationality
Xxxxxx Xxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx
Xxxxxxxx Xxxxxx, Xxxxxx XX0 0XX
Xxxxx Xxxxxxx Timberdene Cottage, Chalk British
Xxxxxx Xxxx, Xxxxx, Xxxxxxx,
Xxxxxxxxxxxxx, Xxxx Xxxxxx
XX00 0XX
Nigel Xxxxxx Xxxx, Xxxxxx Xxxx, Xxxxxxx
Xxxxxxxxxxx Xxxxxxxxx, Xxxxxx XX0
0XX
Xxxxxx Xxxxxxxx Xxx Xxxx Xxxxxxx, Xxxxxxx Xxxxxxx
Xxxx Xxxx, Xxxxxxxx, Xxxxxx XX0
0XX
Xxxxxx Xxxxxx The Stile, Xxxxxxx Xxxx, British
Brisley Veal Ropley, Hampshire SO24
30
0EL
Xxxxx Xxxxxxx 00 Xxxx Xxxxxxx, Xxxxxx- Xxxxxxx
Xxxxxxx on-Thames, Surrey KT 12
3EP
Secretary
Full name Usual residential address
Xxxxx Xxxxxxx Xxxxxxx 22 York Gardens, Xxxxxx-xx-
Xxxxxx, Xxxxxx XX00 0XX
Accounting reference date 30 September
Auditors Deloitte & Touche
Tax residence United Kingdom
31
Schedule 3
Information concerning the Group Companies
Elvadene Limited
Registered number 01680157
Date of incorporation 22 November 1982
Place of incorporation United Kingdom
Address of registered office Xxxxxxx Xxxx Xxxx, Xxx Xxxx,
Xxxxxxxxx, Xxxxxxxxx XX00
0XX
Business classification Management Activities of
Holding Companies
Code: 7415
Authorised share capital (Pounds)60,000 divided into 60,000
ordinary shares of (Pound)l each
Issued share capital (Pounds)60,000 divided into 60,000
ordinary shares of (Pound)l each
Members
Full name Registered address Number of
shares held
Merrychef Holdings Station Road West, Ash Vale, 60,000
Limited Xxxxxxxxx, Xxxxxxxxx XX00
0XX
Directors
Full name Usual residential address Nationality
Xxxxx Xxxxxxx 22 York Gardens, Xxxxxx-on- British
Xxxxxxx Xxxxxx, Xxxxxx XX00 0XX
Xxxxx Xxxxxx Timberdene Cottage, Chalk British
Road, Ifold Loxwood,
Billingshurst, West Sussex
32
RH14 OUD
Secretary
Full name Usual residential address
Xxxxx Xxxxxxx 00 Xxxx Xxxxxxx, Xxxxxx-xx-Xxxxxx, Xxxxxx XX00
Xxxxxxx 0XX
Accounting reference date 30 September
Auditors Deloitte & Touche
Tax residence United Kingdom
33
Merrychef Limited
Registered number 00487712
Date of incorporation 27 October 1950
Place of incorporation United Kingdom
Address of registered office Xxxxxxx Xxxx Xxxx, Xxx Xxxx,
Xxxxxxxxx, Xxxxxxxxx XX00 0XX
Business classification Manufacture other electrical
equipment Code: 7499
Authorised share capital (Pounds)56,000 divided into 56,000
ordinary shares of (Pound)l each
Issued share capital (Pounds)44,800 divided into 44,800
ordinary shares of (Pound)l each
Members
Full name Registered address Number of shares held
Elvadene Limited Station Road West, Ash 44,800
Xxxx, Xxxxxxxxx,
Xxxxxxxxx XX00 0XX
Directors
Full name Usual residential address Nationality
Xxxxx Xxxxxxx Xxxxxxx 00 Xxxx Xxxxxxx, Xxxxxx-xx- Xxxxxxx
Xxxxxx, Xxxxxx KT 12 3EP
Simon Xxxxxxx Xxxxxx Timberdene Cottage, Chalk British
FCCA Road, Ifold Loxwood,
Billingshurst, West Sussex
RH14 OUD
Xxxxxx Xxxx The Stile, Xxxxxxx Xxxx, British
Ropley, Hampshire SO24 OEL
Nigel Thomeywork Xxxxxx Xxxx, Xxxxxx Xxxx, British
Normandy, Guildford, Surrey
34
GU3 2AX
Xxxxxx X Xxxx Xxx Xxxx Xxxxxxx, Xxxxxxx Xxxxxxx
Xxxx, Xxxxxxxx, Xxxxxx XX0
0XX
Secretary
Full name Usual residential address
Xxxxx Xxxxxxx Xxxxxxx 00 Xxxx Xxxxxxx, Xxxxxx-xx-Xxxxxx,
Xxxxxx XX00 0XX
Accounting reference date 30 September
Auditors Deloitte & Touche
Tax residence United Kingdom
35
Mealstream (UK) Limited
Registered number 02954945
Date of incorporation 2 August 1994
Place of incorporation United Kingdom
Address of registered office Xxxxxxx Xxxx Xxxx, Xxx Xxxx,
Xxxxxxxxx, Xxxxxxxxx XX00
0XX
Business classification Non-trading/ceased to trade
Code: 7499
Authorised share capital (Pounds)100 divided into 100 ordinary
shares of (Pound)l each
Issued share capital (Pounds)2 divided into 2 ordinary
shares of (Pound)l each
Loan capital
Members
Full name Registered address Number of
shares held
Merrychef Limited Station Road West, Ash Vale, 2
Xxxxxxxxx, Xxxxxxxxx XX00
0XX
Directors
Full name Usual residential address Nationality
Xxxxx Xxxxxxx 22 York Gardens, Walton-on- British
Xxxxxxx Xxxxxx, Xxxxxx XX00 0XX
Xxxxx Xxxxxx Timberdene Cottage, Chalk British
Road, Ifold Loxwood,
Billingshurst, West Sussex
RH14 OUD
Secretary
36
Full name Usual residential address
Xxxxx Xxxxxxx 00 Xxxx Xxxxxxx, Xxxxxx-xx-Xxxxxx, Xxxxxx XX00
Xxxxxxx 0XX
Accounting reference date 30 September
Auditors
Tax residence United Kingdom
37
Merrychef Projects Limited
Registered number 0142641
Date of incorporation 7 June 1979
Place of incorporation United Kingdom
Address of registered office Xxxxxxx Xxxx Xxxx, Xxx Xxxx,
Xxxxxxxxx, Xxxxxxxxx XX00 0xX
Business classification Non-trading/ceased to trade
Authorised share capital (Pounds)5,000 divided into 5,000
ordinary shares of (Pound)l each
Issued share capital (Pounds)100 divided into 100
ordinary shares of (Pound)l each
Loan capital
Members
Full name Registered address Number of
shares held
Pumpcroft Limited Station Road West, Ash Vale, 100
Xxxxxxxxx, Xxxxxxxxx XX00
0XX
Directors
Full name Usual residential address Nationality
Xxxxx Xxxxxxx 22 York Gardens, Xxxxxx-on- British
Keywood Thames, Surrey KY12 3KP
Xxxxx Xxxxxx Timberdene Cottage, Chalk British
Road, Ifold Loxwood,
Billingshurst, West Sussex
RH14 OUD
Secretary
38
Full name Usual residential address
Xxxxx Xxxxxxx 00 Xxxx Xxxxxxx, Xxxxxx-xx-Xxxxxx,
Xxxxxx XX00 0XX
Keywood
Accounting reference date 30 September
Auditors
Tax residence United Kingdom
39
Pumpcroft Limited
Registered number 00630988
Date of incorporation 24 June 1959
Place of incorporation United Kingdom
Address of registered office Xxxxxxx Xxxx Xxxx, Xxx Xxxx,
Xxxxxxxxx, Xxxxxxxxx XX00
0XX
Business classification Non-trading/ceased to trade
Code: 7499
Authorised share capital (Pounds)355,755 divided into 355,755
ordinary shares of (Pound)1 each
Issued share capital (Pounds)355,755 divided into 355,755
ordinary shares off (Pound)1 each
Loan capital
Members
Full name Registered address Number of
shares held
Merrychef Limited Station Road West, Ash Vale, 355,755
Xxxxxxxxx, Xxxxxxxxx XX00
0XX
Directors
Full name Usual residential address Nationality
Xxxxx Xxxxxxx 22 York Gardens, Walton-on- British
Xxxxxxx Xxxxxx, Xxxxxx XX00 0XX
Xxxxx Xxxxxx Timberdene Cottage, Chalk British
Road, Ifold Loxwood,
Xxxxxxxxxxxxx, Xxxx Xxxxxx
XX00 0XX
Secretary
40
Full name Usual residential address
Xxxxx Xxxxxxx 00 Xxxx Xxxxxxx, Xxxxxx-xx-Xxxxxx, Xxxxxx
Xxxxxxx XX00 0XX
Accounting reference date 30 September
Auditors
Tax residence United Kingdom
41
Twilight Band Limited
Registered number 00973272
Date of incorporation 25 February 1970
Place of incorporation United Kingdom
Address of registered office Xxxxxxx Xxxx Xxxx, Xxx Xxxx,
Xxxxxxxxx, Xxxxxxxxx XX00
0XX
Business classification Non-trading/ceased to trade
Code: 7499
Authorised share capital (Pounds)80,000 divided into 80,000
ordinary shares of (Pound)1 each
Issued share capital (Pounds)80,000 divided into 80,000
ordinary shares of (Pound)1 each
Loan capital
Members
Full name Registered address Number of
shares held
Merrychef Limited Station Road West, Ash Vale, 80,000
Xxxxxxxxx, Xxxxxxxxx XX00
0XX
Directors
Full name Usual residential address Nationality
Xxxxx Xxxxxxx 22 York Gardens, Walton-on- British
Xxxxxxx Xxxxxx, Xxxxxx XX00 0XX
Xxxxx Xxxxxx Timberdene Cottage, Chalk British
Road, Ifold Loxwood,
Billingshurst, West Sussex
RH14 OUD
Secretary
42
Full name Usual residential address
Xxxxx Xxxxxxx 00 Xxxx Xxxxxxx, Xxxxxx-xx-Xxxxxx, Xxxxxx XX00
Xxxxxxx 0XX
Accounting reference date 30 September
Auditors
Tax residence United Kingdom
43
Schedule 4
(Non-Tax Warranties)
The Vendors
1. Capacity
1.1 3i and each Vendor has full power and authority to enter into and perform
this Agreement and any agreement or document to be entered into by 3i
and/or each Vendor pursuant to this Agreement.
1.2 3i has taken all corporate and other action necessary to enable it to
enter into and perform this Agreement.
1.3 Neither 3i nor any Vendor is bankrupt, has proposed a voluntary
arrangement or has made or proposed any arrangement or composition with
his creditors or any class of his creditors.
2. Enforceability
This Agreement and any agreement or document to be entered into by 3i
and/or each Vendor pursuant to this Agreement constitutes and imposes
valid legal and binding obligations on 3i and each Vendor fully
enforceable in accordance with its terms.
Share capital
3. Company
3.1 The Shares constitute the entire issued and allotted share capital of the
Company and have been validly allotted and issued, are fully paid or
credited as fully paid.
3.2 Apart from this Agreement, there is no agreement, arrangement or
commitment outstanding which calls for the present or future allotment,
issue, redemption, repayment of or transfer of, or accords to any person
the right to call for the allotment, issue or transfer of, any share or
loan capital of the Company.
3.3 There is no Security Interest on, over or affecting any of the Shares
registered in the name of 3i and each Vendor and 3i and each Vendor have
not entered into any agreement or arrangement to give or create any such
Security Interest. No claim has been or will be made by any person to be
entitled to such Security Interest.
3.4 None of the Shares was, or represents assets which were, the subject of a
transfer at an undervalue, within the meaning of Sections 238 or 339,
Insolvency Xxx 0000, since 20 December 1996.
3.5 The Company has not since 20 December 1996 at any time:
44
(a) reduced or agreed to reduce its share capital;
(b) redeemed or agreed to redeem any share capital;
(c) purchased or agreed to purchase any of its shares;
(d) forfeited or agreed to forfeit any of its shares; or
(e) created or granted or agreed to create or grant any Security
Interest in respect of any of its uncalled share capital.
3.6 3i and each Vendor are the only legal and beneficial owners of the Shares.
4. Subsidiaries
4.1 Schedule 3 lists all the Subsidiaries of the Company and the holders of
the entire issued and allotted share capital of the Subsidiaries.
4.2 The whole of the issued share capital of each of the Subsidiaries has been
validly allotted and issued and is fully paid or properly credited as
fully paid.
4.3 The Company does not have, and has never had since 20 December 1996, a
participating interest (as defined in Section 260, Companies Act 1985) in
any undertaking which is not a Subsidiary nor has it agreed to acquire
such an interest.
4.4 No Group Company holds or is liable on any share or relevant security
which is not fully paid up or which carries any liability.
4.5 Apart from this Agreement, there is no agreement, arrangement or
commitment outstanding which calls for the present or future allotment,
issue or transfer of, or accords to any person the right to call for the
allotment, issue or transfer of, any share or loan capital of any
Subsidiary.
4.6 There is no Security Interest on, over or affecting any of the shares in
the capital of any Subsidiary and no holder of such shares has entered
into any agreement or arrangement to give or create any such Security
Interest. No claim has been or will be made by any person to be entitled
to any such Security Interest.
4.7 None of the shares in the capital of any Subsidiary was, or represents
assets which were, the subject of a transfer at an undervalue, within the
meaning of Sections 238 or 339, Insolvency Xxx 0000, since 20 December
1996.
4.8 The Company does not have any branch, agency or place of business, or any
permanent establishment (as the expression is defined in the relevant
double taxation relief order current at the date of this
45
Agreement) outside the United Kingdom.
Corporate matters
5. Insolvency of the Group
5.1 No order has been made, no resolution has been passed, no meeting convened
and so far as the Warrantors are aware, no petition presented, for the
winding up of any Group Company or for a provisional liquidator to be
appointed in respect of any Group Company.
5.2 No administration order has been made and so far as the Warrantors are
aware, no petition for one has been presented in respect of any Group
Company.
5.3 No receiver or administrative receiver has been appointed in respect of any
Group Company or the whole or any part of any of the property, undertaking
or assets of any Group Company.
5.4 No Group Company is insolvent, has failed or is unable to pay any of its
debts as they fall due, as those expressions are defined in Xxxxxxx 000,
Xxxxxxxxxx Xxx 0000.
5.5 No voluntary arrangement has been proposed under Xxxxxxx 0, Xxxxxxxxxx Xxx
0000 in respect of any Group Company and no Group Company has made or
proposed any arrangement or composition with its creditors or any class of
them.
5.6 No distress, execution or other process has been levied or applied for in
respect of the whole or any part of any of the Group Company's assets,
property or undertaking or action taken to repossess goods in the
possession of any Group Company.
5.7 No unsatisfied judgement is outstanding against any Group Company and no
demand has been served on any Group Company under Section 123(l)(a),
Insolvency Xxx 0000.
5.8 No event analogous to any referred to in sub-paragraphs 5.1 to 5.7 has
occurred anywhere in the world.
5.9 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 being the
subject of an administration order or a bankruptcy order, would/is likely
to constitute (whether in whole or in part) a transaction at an undervalue,
a preference, an invalid floating charge or an extortionate credit
transaction or part of a general assignment of debts pursuant to the
Insolvency Xxx 0000.
6. Corporate compliance
6.1 Each Group Company has at all times carried on business and
46
conducted its affairs in all material respects in accordance with its
Memorandum and Articles of Association for the time being in force and any
other documents to which it is or has been a party.
6.2 Each Group Company is empowered and duly qualified to carry on business in
all jurisdictions in which it now carries on business.
6.3 Due compliance has been made with all the provisions of the CA 1985 and
other legal requirements in connection with the formation of each Group
Company, the allotment or issue of any of the Group Company's shares,
debentures and other securities and the payment of dividends.
7. Statutory books and documents filed
7.1 The statutory books, including all registers and minute books, of each Group
Company have been properly kept and contain a materially accurate and
complete record of the matters with which those books should deal.
7.2 All returns, particulars, resolutions and documents which should have been
delivered by any Group Company to the Registrar of Companies or any other
authority are complete and accurate and have been properly so delivered.
7.3 Since the Accounts Date the members of any Group Company in general meeting,
or of any class of them, have not passed any resolution other than
resolutions relating to the ordinary business of annual general meetings.
7.4 All mortgages and charges in favour of any Group Company have (where
necessary in order to secure their enforceability) been duly registered in
accordance with the CA 1985.
8. Memorandum and Articles of Association
The copy of the Memorandum and Articles of Association of the Company and
each Subsidiary, which is attached to the Disclosure Letter is true,
accurate and complete in all respects and has embodied in it or annexed to
it a copy of every such resolution as is referred to in Section 380 CA 1985.
9. Common seal
Each Group Company has a common seal.
10. Documents stamped
All documents which in any way affect the right, title or interest of any
Group Company in or to any of its properties, undertakings or assets, or to
which any Group Company is a party, and which attract stamp duty or stamp
duty reserve tax have been duly stamped within the
47
requisite period for stamping.
11. Possession of documents
All documents of title relating to the assets of the Group Companies
(including, without limitation, all title deeds relating to the
Properties), an executed copy of all agreements to which any Group Company
is a party and an original executed copy of every document or instrument
creating or evidencing a charge over any of its assets, property or
undertaking or is in the relevant Group Company's possession.
Information
12. Accuracy and adequacy of information
The information contained in Schedules 2, 3, 5, 6 and 7 to this Agreement
is accurate and complete.
Accounts
13. Preparation and contents of the Accounts
13.1 The Accounts were prepared in accordance with the requirements of all
relevant statutes and generally accepted United Kingdom accounting
practices in force at the date of the preparation of the Accounts
including, without limitation, all applicable Financial Reporting Standards
issued by the Accounting Standards Board, Statements of Standard Accounting
Practice issued by the Institute of Chartered Accountants of England and
Wales and Statements from the Urgent Issues Task Force current at the
Accounts Date and, where the accounting practice used to prepare the
Accounts differs from those applicable in previous financial periods, the
effect of any such difference is Disclosed in the Disclosure Letter.
13.2 Without prejudice to the generality of sub-paragraph 14.1 the
Accounts:
(i) give a true and fair view of the state of affairs of each Group
Company at the Accounts Date and the profits or losses of each
Group Company for the financial period ending on that date;
(ii) make appropriate provisions or reserves for all liabilities and
for all capital and revenue commitments of each Group Company as
at the Accounts Date;
(iii) disclose all the assets of each Group Company as at the Accounts
Date;
(iv) make provisions reasonably regarded as adequate for all bad and
doubtful debts as at the Accounts Date;
48
(v) do not include any figure which is referable to the value of an
intangible asset; and
(vi) make provisions reasonably regarded as adequate for depreciation
of the fixed assets of each Group Company having regard to their
original cost and life;
13.3 The profits and losses of each Group Company shown in the accounts were
not, save as disclosed in the Accounts or in any note accompanying them,
to any material extent affected by any extraordinary, exceptional or
unusual income (as defined in FRS 10 and XXXX 13) capital gain or
expenditure or by any other factor known to the Warrantors rendering any
such profit or loss for such period exceptionally high or low.
13.4 The audited profit and loss accounts and audited balance sheets of each
Group Company contained in the Accounts were prepared on a consistent
basis with each other.
14. Accounting records
14.1 The accounting records of each Group Company comply with the requirements
of Sections 221 and 222, Companies Xxx 0000, do not contain or reflect any
material inaccuracy or discrepancy and present and reflect in accordance
with generally accepted accounting principles and standards the financial
position of and all transactions entered into by the relevant Group
Company or to which it has been a party.
14.2 All the accounts, financial books, ledgers, financial and records of each
Group Company are in its possession or otherwise under its direct control.
14.3 Where any of the records of any Group Company are kept on computer, that
Group Company:
(a) is the owner or licensee of all hardware and all software necessary to
enable it to use the records as they have been used in its business to
the date of this Agreement and to Completion;
(b) does not share any hardware or software relating to the records with
any person; and
(c) maintains adequate back up records and support in the event of any
fault or failure of such computer hardware and software.
15. Management Accounts
The Management Accounts have been carefully prepared on a basis consistent
with the Accounts, fairly reflect the trading position of each Group
Company as at their date and for the period to which they relate and are
not affected by any extraordinary, exceptional or unusual
49
income, capital gain or expenditure or by any other factor known by the
Warrantors rendering profits or losses for the period covered exceptionally
high or low.
16. Events since the Accounts Date
16.1 Since the Accounts Date there has been no material adverse change in:
(a) the financial or trading position or prospects of any Group
Company;
(b) the value or state of assets or amount or nature of liabilities as
compared with the position disclosed in the Accounts; or
(c) in the turnover, direct or indirect expenses or the margin of
profitability of any Group Company as compared with the position
disclosed for the equivalent period of the last financial year.
16.2 Each Group Company which is trading has since the Accounts Date carried on
its business in the ordinary course and without interruption, so as to
maintain it as a going concern and paid its creditors in the ordinary
course and within the credit periods agreed with such creditors either
formally or by trading practice.
16.3 Since the Accounts Date no supplier which accounts for more than ten per
cent of the Group Companies supply requirements of any Group Company has
ceased or restricted supplies or threatened so to do, there has been no
loss or material curtailment of the business transacted by any Group
Company with any customer which at any time in the preceding financial year
represented ten per cent or more of the turnover of that Group Company and
the Warrantors are not aware of any circumstances likely to give rise to
any of the above.
16.4 Since the Accounts Date no Group Company has:
(a) incurred or committed to incur:
(i) material expenditure in excess of (Pounds)20,000; or
(ii) any liability in excess of (Pounds)20,000 whether actual or
contingent except for full value or in the ordinary course of
business;
(b) acquired or agreed to acquire:
(i) any asset for a consideration higher than its market value at the
time of acquisition and otherwise than in the ordinary course of
business; or
(ii) any business or substantial part of it or any share or
50
shares in a body corporate;
(c) disposed of or agreed to dispose of, any of the assets of any Group
Company, except in the ordinary course of business and for full
value;
(d) repaid wholly or in part any loan except upon the due date or dates
for repayment;
(e) issued or allotted share or loan capital, increased its authorised
share capital, purchased or redeemed any shares, reduced or re-
organised its share capital or agreed to do so; or
(f) declared or paid any distribution of profit.
16.5 None of the debts included in the Accounts or any of thedebts subsequently
arising have been the subject of factoring by any Group Company and the
Warrantors are not aware of any circumstances which could result in any
presently outstanding debt in excess of (Pounds)10,000 not being paid in
full.
Financial
17. Financial commitments and borrowings
17.1 Complete and accurate details of all overdraft, loan and other financial
facilities available to the Group Companies and the amounts outstanding
under them at the close of business no earlier than three days prior to
the date of this Agreement are set out in the Disclosure Letter and none
of the Warrantors or any Group Company has done anything, or omitted to do
anything, as a result of which the continuance of any of those facilities
might be affected or prejudiced.
17.2 No Group Company is a party to, or has agreed to enter into, any lending,
or purported lending, agreement or arrangement (other than agreements to
give credit in the ordinary course of its business).
17.3 No Group Company is exceeding any borrowing limit imposed upon it by its
bankers, other lenders, its articles of association or otherwise nor has
any Group Company entered into any commitment or arrangement which might
lead it so to do.
17.4 No overdraft or other financial facilities available to any Group Company
are dependent upon the guarantee of or security provided by any other
person.
17.5 No Group Company is, or has agreed to become, bound by any guarantee,
indemnity, surety or similar commitment.
17.6 No Group Company has received any grants, allowances, loans or financial
aid of any kind from any government departmental or other
51
board, body, agency or authority which may become liable to be refunded or
repaid in whole or in part.
17.7 No Group Company has engaged in financing of a type which is not required,
or has not been, shown or reflected in the Accounts.
18. Defective products or services
So far as the Warrantors are aware, no Group Company has manufactured, sold
or supplied products or services which are or were or will become in any
material respect faulty or defective or which do not comply in any material
respect with any warranties or representations expressly or impliedly
(whether by statute common law or otherwise) made by it or with all
applicable regulations standards and requirements.
19. Insurances
19.1 Each Group Company maintains, and at all material times since 20 December
1996 has maintained, insurance cover against all risks normally insured
against by companies carrying on a similar business, for the full
replacement or reinstatement value of its business and assets, and in
particular maintains and has maintained at all relevant times product
liability, professional indemnity insurance and all insurance required by
statute.
19.2 The Policies are so far as the Warrantors are aware valid and enforceable
and all premiums due have been paid. There are no outstanding claims or so
far as the Warrantors are aware circumstances likely to give rise to a
claim under the Policies or which would be required to be notified to the
insurers and so far as the Warrantors are aware nothing has been done or
omitted to be done which has made or could make any Policy void or voidable
or as a result of which the renewal of any Policy might be refused or the
premiums due in respect of them may be liable to be increased.
19.3 There are no claims outstanding or threatened, or so far as the Warrantors
are aware, pending, against any Group Company which are not fully covered
by insurance.
Trading and contracts
20. Contracts and commitments
20.1 No Group Company is a party to any agreement, arrangement or commitment
which:
(a) has or is expected to have material adverse effects or consequences in
terms of expenditure or revenue;
(b) relates to matters outside the ordinary business of that Group
52
Company or was not entered into on arms' length terms;
(c) can be terminated in the event of any change in the underlying
ownership or control of that Group Company or would be materially
affected by such change;
(d) cannot readily be fulfilled or performed by it materially in
accordance with the timetable set out in the relevant contract for
completion;
(e) cannot be terminated, without giving rise to any liabilities on any
Group Company, by that Group Company giving 3 months' notice or less;
or
(f) the termination of which would cause a Materially Adverse Event to
the Company.
20.2 All material contracts or arrangements to which a Group Company (whether
written or unwritten or intended to have a binding legal effect or pursuant
to which any Group Company is trading or acting) under which a
consideration of more than (Pounds)25,OOO is payable by suppliers and
(Pounds)50,OOO in relation to customers is payable by either party are
listed in the Disclosure Letter and copies of such contracts or
arrangements are attached to the Disclosure Letter.
20.3 So far as the Warrantors are aware, no Group Company is in breach of any
material contract or arrangement to which it is a party and the Warrantors
are not aware of any breach of such contracts or arrangements by any other
party thereto.
20.4 The Company is not a party to any agreement other than those listed in the
Disclosure Letter under which rights accrue third parties pursuant to the
Contracts (Rights of Third Parties) Xxx 0000.
21. Terms of trade
No Group Company has accepted any liability to service, maintain, repair or
otherwise do or refrain from doing anything in relation to any product sold
or supplied except for those contained in its standard conditions of
trading, complete and accurate copies of which are contained in the
Disclosure Letter.
22. Licences and consents
22.1 Save for fire certificates, (copies of which are attached to the Disclosure
Letter) no Group Company requires any licence, consent, permission,
authorisation or approval to continue to carry on its business.
22.2 All such consents are in full force and effect are not limited in duration
or subject to any unusual or onerous condition or any condition which
53
is personal to the Vendors. No expenditure or work is or will be
necessary to comply with maintain or obtain any such consents and the
Company is not in breach of any of the terms or conditions of any such
consents.
23. Trading partners
23.1 No Group Company acts or carries on business in partnership with any
other person or is a member of any corporate or unincorporated body,
undertaking or association.
23.2 No Group Company is a party to any joint venture agreement or arrangement
or any agreement or arrangement under which it is to participate with any
other person in any business.
23.3 No Group Company is a party to any agency, distributorship, licence or
management agreement or is a party to any contract or arrangement which
restricts its freedom to carry on its business in such manner as it may
think fit in any part of the world.
23.4 No Group Company has any branch, agency, place of business or
establishment outside the United Kingdom.
24. Competition and trade regulation law
24.1 No Group Company is or has been a party to, or is or has been concerned
in any agreement or arrangement, or is conducting or has conducted
itself, whether by omission or otherwise, in a manner which:
(a) contravenes or contravened the provisions of the Resale Prices
Acts 1976 and 1977, the Fair Trading Xxx 0000, the Competition Xxx
0000 or any amendments to those acts;
(b) infringes Articles 81 or 82 of the EC Treaty or any Regulation or
Directive made under it or any other anti-trust or similar
legislation in any jurisdiction in which any Group Company has
assets or sales or carries on or intends to carry on business or
where its activities may have any effect; or
(c) infringes Chapter 1 or Chapter 2 of the Competition Xxx 0000 or
any secondary legislation made under it.
24.2 No Group Company has:
(a) given an undertaking to, or is subject to, any order of or
investigation by, or has received any request for information
from;
(b) received, nor so far as the Warrantors are aware, is it likely to
receive any process, notice or communication, formal or informal
by or on behalf of;
54
(c) been or is a party to, or is or has been concerned in, any
agreement or arrangement in respect of which an application for
negative clearance and/or exemption has been made to
the Office of Fair Trading, the Competition Commission, the Secretary of
State, the European Commission or any other governmental or other
authority, department, board, body or agency of any country having
jurisdiction in anti-trust or similar matters in relation to its
business.
24.3 The Company has not received notice that it is a party to an agreement or
arrangement which is void and unenforceable (in whole or in part) or may
render the Company liable to proceedings under any legislation referred
to above.
25. Compliance with laws
25.1 So far as the Warrantors are aware, each Group Company has conducted and
is conducting its business in accordance with all applicable laws and
regulations whether of the United Kingdom or elsewhere.
25.2 The Company is not subject to any investigation, enquiry or enforcement
proceedings or other process by any governmental, administrative or
regulatory body or agency and the Company is not in breach of any order,
decree, or judgement of any court of any governmental or regulatory
authority (whether of the United Kingdom or elsewhere).
25.3 The Company does not carry on (and has not, at any time when not an
authorised person under Chapter III Financial Services Xxx 0000 or
Section 98(a) Friendly Societies Act 1992 carried on) investment business
in the United Kingdom within the meaning of Section 1 Financial Services
Xxx 0000.
25.4 The Company has not received notice that it has not done nor omitted to
do anything which is contrary to the Trade Description Xxx 0000 or the
Consumer Protection Xxx 0000 or any secondary legislation enacted
thereafter.
26. Litigation and disputes
26.1 Except for actions to recover any debt incurred in the ordinary course of
the business owed to any Group Company where each individual debt and its
costs outstanding amounts to less than (Pounds)20,000:
(a) no Group Company is engaged, and during the 2 years preceding the
date of this Agreement has been engaged, in any litigation,
arbitration, administrative or criminal proceedings, whether as
plaintiff, defendant or otherwise;
(b) no litigation, arbitration, administrative or criminal proceedings
55
by or against any Group Company are threatened or expected and, as
far as the Warrantors are aware, none are pending;
(c) there are no proceedings, processes, or disputes pending or
threatened by or against the Company and the Company is not aware
of any circumstances which are likely to give rise to any such
proceedings, processes or disputes.
26.2 No Group Company is subject to any order or judgement given by any court
or governmental or other authority, department, board, body or agency or
has not been a party to any undertaking or assurance given to any court
or governmental or other authority, department, board, body or agency
which is still in force.
Assets
27. Ownership and condition of assets
27.1 Each of the assets included in the Accounts or acquired by any Group
Company since the Accounts Date (other than the Properties and current
assets subsequently disposed of or realised in the ordinary course of
business) is owned both legally and beneficially by a Group Company free
from any third party rights and, if capable of possession, is in the
possession of that Group Company.
27.2 Each item of plant and machinery, vehicle and office equipment used by
each Group Company at the date of this Agreement is in satisfactory
working order, has been regularly maintained and is capable of doing the
work for which it was designed or purchased.
27.3 No Group Company has acquired, or agreed to acquire, any asset on terms
that title to that asset does not pass until full payment is made or all
indebtedness incurred in connection with the acquisition is discharged.
27.4 The assets owned by each Group Company, together with all assets held
under hire purchase, lease or rental agreements which are contained in
the Disclosure Letter, comprise all assets necessary for the continuation
of the business of each Group Company as it is currently carried on.
27.5 All vehicles owned, leased or used by the Company have been regularly
maintained and, where relevant, have up to date MOT certificates and are
appropriately licensed.
27.6 The stocks held by the Company are not excessive and are adequate in
relation to the current trading requirements of the Company, and so far
as the Warrantors are aware, none of the stock is obsolete, unusable or
of limited value in relation to the current business of the Company.
28. Charges and encumbrances over assets
56
28.1 No option, right to acquire, mortgage, charge, pledge, lien (other than a
lien arising by operation of law in the ordinary course of trading) or
other form of security or encumbrance or equity on, over or affecting the
shares or the whole or any part of the undertaking or assets of any Group
Company, including any investment in any other Group Company, is
outstanding other than as set out in Schedule 7 and, apart from this
Agreement, there is no agreement or commitment to give or create any of
them and no claim has been made by any person to be entitled to any of
them.
28.2 No floating charge created by a Group Company has crystallised and there
are no circumstances likely to cause such a floating charge to
crystallise.
28.3 No Group Company has received notice from any person intimating that it
will enforce any security which it may hold over the assets of any Group
Company, and there are no circumstances likely to give rise to such a
notice.
29. Intellectual Property
29.1 All Group Company Intellectual Property is either:
(a) in the sole legal and beneficial ownership of the Company or the
Subsidiaries which uses it, free from all third party rights of
ownership, licences, charges or other encumbrances; or
(b) the subject of binding, subsisting and enforceable licences from
third parties in favour of the Company or the Subsidiaries (as the
case may be) which uses it:
(i) of which no notice to terminate has been received or so far
as the warrantors are aware sent;
(ii) all parties to which, so far as the Warrantors are aware,
have fully complied with all obligations in those licences;
and
(iii) in relation to which no disputes have arisen; and
(iv) a copy of which has been disclosed to the Purchaser.
and in either case nothing has been done or omitted to be done whether by
the Company or as far as the Warrantors are aware which would jeopardise
the validity, enforceability or subsistence of any Company Intellectual
Property or any such licences.
29.2 The Warrantors are not aware nor have they or any Group Company received
any notice or allegation, whether written or otherwise, that the carrying
on of the business of the Company or of any of the Subsidiaries in the
manner in which it was carried on immediately
57
before the date of this Agreement infringes or conflicts with any
Intellectual Property of any third party or breaches any obligations of
confidence owed by the Company or any of the Subsidiaries to any third
party or gives rise to any liability on the part of the Company or any
of the Subsidiaries to pay any royalty or any sum in the nature of a
royalty or to a liability to pay compensation pursuant to any applicable
legislation. Without prejudice to the generality of the foregoing, the
Warrantors warrant that the Evolution ovens developed and currently
marketed by the Company:
(a) do not xxxx food by directed hot air impingement;
(b) maintain air circulation at a constant non-variable rate after
switch-on;
(c) do not contain plenums containing metal (other than the plenum
housing and heating elements) which functions substantially as
heat-sink during operation;
(d) do not contain temperature sensing means located in the plenum;
(e) do not contain auxiliary catalytic converters on the exhaust
air; and
(f) contain one waveguide per magnetron, there being more than one
magnetron.
29.3 Any Company Intellectual Property which is capable of registration has
been registered in the name of either the Company or one of the
Subsidiaries or is the subject of an application for registration in the
name of the Company or one of the Subsidiaries. Schedule 11 contains a
complete and accurate list of all the registered Intellectual Property,
which are owned by the Company or any of the Subsidiaries either legally
or beneficially, and details of the type of Intellectual Property each
registration/application relates to, a description of each
registration/application, the registration/application number of each
registration/application, and the proprietorship and current status of
each registration/application the current status of those
registrations/applications. All the Intellectual Property set out in
Schedule 11 is subsisting.
29.4 In the case of those registrations of Intellectual Property set out in
Schedule 11, all renewal fees have been paid and renewals made by their
due date and all such other actions necessary to preserve and maintain
such registrations have been taken;
29.5 In the case of those registrations, set out in Schedule 11, being trade
marks each is presently used by either the Company or at least one of
the Subsidiaries and has not been abandoned:
58
29.6 In the case of those pending applications for Intellectual Property set
out in Schedule 11, the Warrantors are aware of no fact or matter why
any such applications should not proceed to valid grant and all
prosecution and other fees relating to the same have been paid in full
and in time;
29.7 So far as the Warrantors are aware there exists no fact or matter which
might make any of the Group Company Intellectual Property (whether
registered or not) invalid and/or unenforceable.
29.8 So far as the Warrantors are aware, none of the Company Intellectual
Property is subject to any attack or challenge or claim of invalidity by
or of any other person.
29.9 No licence, security interest, option, lien, assignment or other rights
or encumbrances have been granted or agreed to be granted or other
agreements entered into or agreed to be entered into imposing
restrictions on the Company's or any Subsidiary's rights to use the
Company Intellectual Property.
29.10 The Warrantors are not aware nor have they or any Group Company received
any notice or allegation, whether written or otherwise, that any Company
Intellectual Property is being infringed.
29.11 So far as the Warrantors are aware, none of the subject matter of any of
the Company Intellectual Property is subject to any claims by any third
parties arising under sections 77-80 of the Copyright, Designs and
Patents Xxx 0000 or under similar legislation in any part of the world.
29.12 Except in the ordinary course of business and on a confidential basis,
no disclosure has been made (and nor is any Group Company currently
obliged to make any such disclosure in the future) of any of the
confidential information, know-how, technical processes, financial or
trade secrets or customer or supplier lists of the Company or any
Subsidiary.
29.13 Neither the Company nor any of the Subsidiaries is a party to any
agreement which imposes on it a material restriction on the use or
disclosure of any information.
29.14 Any names used by the Company or any of the Subsidiaries other than
their corporate names are contained in the Letter.
29.15 Neither the Company, nor any of the Subsidiaries nor any of their
servants, agents or officers have made any threat to bring proceedings
for infringement of any Intellectual Property which is actionable by
virtue of any applicable legislation.
29.16 So far as the Warrantors are aware no licence or assignment of
Intellectual Property granted to the Company or any of the Subsidiaries
59
is determinable by such third party by virtue of the change in control
of the Company or the Subsidiaries occasioned by this Agreement.
30. Data Protection Act
30.1 All Group Companies have at all relevant times complied in all respects
with the provisions of the Data Protection Act 1984 ("xxx 0000 Xxx") and
the Data Protection Xxx 0000 ("DPA") and the data protection principles
contained in the 1984 Act and the DPA and any requests from data
subjects for access to data held by it.
30.2 The Company has not received any notice, letter or communication from
the enforcement bodies under the 1984 Act or the DPA nor is the Company
obliged to pay any individual compensation under the 1984 Act or the
DPA.
30.3 Details of the procedures the Company has in place to ensure compliance
with the DPA are set out in the Disclosure Letter.
Employment
31. Directors and employees
31.1 Complete and accurate particulars of the terms and conditions of
employment of all employees of each Group Company, including the date of
commencement of their continuous period of employment, notice period,
date of birth and full particulars of remuneration and material benefits
are contained in the Disclosure Letter.
31.2 Each Group Company has maintained up-to-date, adequate and suitable
records regarding the service and terms and conditions of employment of
each of its employees.
31.3 No Group Company is a party to any consultancy agreement, any agreement
for management services or any contract of services with any director.
31.4 Since the Accounts Date there has been:
(a) no material alteration in the terms of employment or any
material change in the number of employees employed by any Group
Company; or
(b) no material increase in any fees, remuneration or benefits paid
or payable to any officer or employee of any Group Company, nor
are any negotiations for any such increase current or likely to
take place in the next 6 months.
31.5 No officer or employee of any Group Company is remunerated on a
profit-sharing, bonus or commission basis.
60
31.6 Other than salary for the current month and accrued holiday pay, no
amount is owing to any present or former officer or employee of any
Group Company.
31.7 There is no share option or share incentive scheme in operation by or in
relation to any Group Company for any of its officers or employees nor
has the introduction of such a scheme been proposed.
31.8 So far as the Warrantors are aware there are no claims capable of
arising or pending or threatened by any employee or third party in
respect of any accident or injury which are not fully covered by
insurance.
31.9 Save as provided for or taken into account in the Accounts:
(a) no claim or liability to make any payment of any kind to any
person who is or has been an officer or employee has been
received or so far as the Warrantors are aware, incurred by any
Group Company whether under the Employment Rights Xxx 0000, Sex
Discrimination Xxx 0000, the Race Relations Xxx 0000 and the
Disability Discrimination Xxx 0000; and
(b) no gratuitous payment of a material amount has been made or
promised by any Group Company in connection with the actual or
proposed termination or suspension of employment or variation of
any contract of employment of any present or former officer or
employee.
31.10 No officer or employee of any Group Company has given notice or is under
notice of dismissal nor are there any service contracts between any
Group Company and its officers or employees which cannot be terminated
by the relevant Group Company by 12 weeks notice or less without
giving rise to a claim for damages or compensation (other than a
statutory redundancy payment).
31.11 No Group Company has, in contravention of the Companies Xxx 0000:
(a) entered into any arrangement involving the acquisition of
non-cash assets from or disposal to;
(b) granted any loan or quasi-loan to or entered into any guarantee
or credit transaction with; or
(c) provided any security in connection with any loan, quasi-loan or
credit transaction to or with
any director or person connected with a director within the meaning of
the Companies Xxx 0000.
31.12 No person employed by the Company has been dismissed at any time in the
3 months preceding Completion.
61
31.13 No persons have been offered employment commencing after the date of
Completion who would earn a basic salary of more than (Pounds)30,000
p.a. in aggregate.
31.14 No Employee, officer, worker or consultant will be entitled by reason of
this transaction to any one-off payment or similar, or to terminate his
service with the Company on other than his normal contractual terms.
31.15 No persons working or who have worked for the Company under contracts of
employment or contracts for services in the last 6 years have issued or
threatened to issue any court, employment tribunal or other proceedings
against the Company or any officer or employee thereof which actual or
threatened proceedings (including any appeal) remain unresolved at the
date of this Agreement.
31.16 No contracts of employment or contracts for services in with the Company
contain any pay in lieu of notice clauses or liquidated damages clauses
or any other provision whereby this transaction triggers or otherwise
brings about any change to such contracts.
31.17 There are no enhanced redundancy payment or other severance schemes or
practices conferring any entitlements on any Employees, workers or
officers of the Company.
31.18 In the 12 months preceding this Agreement there has in relation to the
Company been no recommendation made by an employment tribunal nor any
investigation by any body responsible for investigating or enforcing
matters relating to sex, race or disability discrimination.
31.19 In the 12 months preceding the date of this Agreement no improvement or
prohibition notice has been served on the Company by any body
responsible for Health and Safety.
31.20 The Company has complied with all its obligations (if any) owed under
the Trade Union and Labour Relations (Consolidation) Xxx 0000 and the
TUPE Regulations 1981 (as amended).
31.21 All Employees have received a written statement of particulars of
employment as required by Section 1 Employment Rights Act 1996 to the
extent they are so entitled.
31.22 The Company has complied with the requirements of the Working Time
Regulations 1998 in relation to its Employees and workers. No Employee
or worker of the Company has working time exceeding 48 hours per week on
average over any 17 weeks.
31.23 So far as the Company is aware there are no terms or conditions under
which any officer, worker or Employee is employed, nor so far as the
Company is aware has anything occurred or not occurred prior to
Completion that may give rise to any claim for sex discrimination, race
62
discrimination, disability discrimination or equal pay either under
domestic United Kingdom, European Law or the laws of any other
jurisdiction to the extent applicable whether by such officer, worker or
Employee or a prospective officer, worker or Employee or otherwise.
31.24 The Company has not entered into any agreement which may involve it
acquiring any undertaking or part undertaking such that the TUPE
Regulations 1981 (as amended) may apply thereto.
31.25 The Company has taken every reasonable step to ensure that records held
in respect of the Employees comply with the requirements of the Data
Protection Acts 1984 and 1998 in respect of the United Kingdom and in
respect of any other jurisdiction any laws relating to the use, control
and dissemination of information and records relating to employees.
31.26 Within the 6 months prior to Completion no Employee, officer or worker
has made any protected disclosure under the Public Interest (Disclosure)
Act 1998 in relation to the Company.
32. Industrial relations
32.1 No Group Company is a party to any contract, agreement or arrangement
with any trade union or other body or organisation representing any of
its employees.
32.2 No dispute has arisen between any Group Company and a material number or
category of its employees nor are there any present circumstances known
to the Warrantors which are likely to give rise to any such dispute.
32.3 No training schemes, arrangements or proposals exist nor have there been
any such schemes, arrangements or proposals in the past in respect of
which a levy may become payable by any Group Company under the
Industrial Training Xxx 0000.
33. Pensions
33.1 Save for the Disclosed Schemes 6, no Group Company has any plans,
schemes or arrangements in relation to death, disability or retirement
of any of its current or past directors or employees.
33.2 In this Section 33, "Disclosed Schemes" means each of the following:
(a) "Scheme 1" means the Sun Life Group Money Purchase (Contracted
Out) Scheme (Ref: 81491);
(b) "Scheme 2" means the Sun Life Group Personal Pension Scheme
(Ref: 892167);
(c) "Scheme 3" means the Standard Life Group Money Purchase
63
Scheme (Ref: H190890) and
(d) "Scheme 4" means the Group Long Term Disability Insurance Scheme;
(e) "Scheme 5" means the scheme insured with Legal and General and
providing death in service benefits at between 2 and 4 times
salary.
33.3 Save pursuant to the Disclosed Schemes, the Vendors and the Group
Companies are under no obligation or commitment nor are party to any
custom or practice to pay, provide or contribute towards the provision of
any "relevant benefits" within the meaning of section 612 of ICTA or any
other death, retirement, sickness or disability benefits to or in respect
of any person and has not at any time participated in or contributed
towards any scheme or arrangement which has or had as its purpose or one
of its purposes the provision of any such benefits (other than schemes
which have been fully wound up).
33.4 Neither the Vendors nor the Group Companies have made or proposed nor
will before Completion make or propose any voluntary or ex gratia
payments to any person in respect of any relevant or other benefit
referred to in paragraph 33.1.
33.5 Copies of an up to date list of beneficiaries with all relevant data in
respect of them, all policies and contracts including premium details
effected with any insurance company and details of contributions payable
by any Group Company and all documents containing the provisions
currently governing the Disclosed Schemes are attached to the Disclosure
Letter and these are true and accurate.
33.6 All due contributions and expenses including professional fees in respect
of the Disclosed Schemes payable by the Vendors and any Group Company
have been properly paid as they have fallen due.
33.7 All contracts of insurance relating to the Disclosed Schemes are
enforceable and there is no ground on which the insurers might avoid
liability under them. All premiums payable under such contracts of
insurance have been properly and timeously paid. Without limitation to
the foregoing, all lump sum and pension benefits (other than refunds of
contributions with interest where appropriate) payable in the event of a
member's death in service are fully insured and secured on normal terms
with a reputable insurance company which is carrying on ordinary
long-term insurance business in the United Kingdom or any other member
state of the European Union (and which is, in each case, authorised to do
so by the competent authority of the relevant member state) and no
special terms including as to premiums in relation to any such contract
of insurance have been imposed.
33.8 The Disclosed Schemes have, where appropriate, at all times been
64
operated in all material respects in accordance with the requirements of
the Inland Revenue for exempt approval under Chapter IV of Part XIV of
ICTA, the requirements of the governing documentation of the Disclosed
Schemes and all applicable domestic laws and laws of the European Union.
All employers participating in the Disclosed Schemes have observed and
performed in all material respects all obligations applicable to them
under the Disclosed Schemes' documentation.
33.9 No outstanding claim action complaint or investigation has been made or
threatened against the Vendors, any Group Company or the trustees or
administrators of the Disclosed Schemes or against any person whom any
Group Company or those trustees or administrators is/are or may be liable
to indemnify or compensate, in respect of or involving any act, event,
omission or other matter arising out of or in connection with the
Disclosed Schemes (other than routine claims for benefit). After making
due and careful enquiries the Vendors are not aware of any circumstances
which may give rise to any such claim. No indemnities have been given to
any person in connection with the Disclosed Schemes under which any Group
Company or the trustees of any of the Disclosed Schemes may be liable.
33.10 Scheme 1, Scheme 2 and Scheme 3 provide only money purchase benefits for
beneficiaries and neither the Group Company nor the Vendors have given
any promise or assurance (oral or written) to any beneficiary that his or
her benefits under the Scheme 1, Scheme 2 or Scheme 3 will be calculated
wholly or partly by reference to any person's remuneration or will
constitute (approximately or exactly) any particular amount.
33.11 All membership and administration records of the Disclosed Schemes have
been fully and properly compiled in all material respects so as to enable
the benefits and prospective benefits payable in respect of all
beneficiaries of the Disclosed Schemes to be accurately calculated.
33.12 There are no outstanding expenses or liabilities arising out of the
termination or winding up of Scheme 1 for which any Group Company is or
could be liable.
Property
34. Title
34.1
(a) The Property comprises all of the property presently owned,
occupied, held, controlled or otherwise used by any Group Company
and all of the estate, interest, right and title whatsoever of any
Group Company in respect of any land or premises (including
interests in the nature of options and rights
65
in the nature of contractual licences) and a Group Company is in
actual and exclusive occupation of the Property.
(b) The particulars of the Property set out in Schedule 5 are true and
correct.
34.2 The title of each Group Company to the Property is good and marketable.
34.3 The Property is occupied or otherwise used by a Group Company under the
Lease, the terms of which permit its occupation or use as tenant and not
under any provision allowing the parting of or sharing of possession with
group or associated companies and there are no outstanding circumstances
which would restrict the continued possession and enjoyment of the
Property or any part of it.
34.4 All deeds and documents necessary to prove title to each Property are in
the possession and control of the Group Companies and consist of original
deeds and documents or properly examined abstracts.
34.5 No person is in adverse possession of any Property or has acquired or is
acquiring any rights or overriding interests (as defined by Section 70,
Land Registration Act 1925) adversely affecting any Property.
34.6 No Group Company has had occasion to make any claim or complaint in
relation to any neighbouring property or its use or occupation and there
are no disputes, claims, actions, demands or complaints in respect of the
Property which are ongoing nor are any disputes, claims, actions, demands
or complaints anticipated and no notices materially affecting the
Property have been given or received and not complied with.
35. Encumbrances
35.1 The Property is not subject to any outgoings other than business rates,
water rates, insurance premiums, rent, insurance rent and service charges
and all outgoings have been duly paid to date and none is in dispute.
35.2 The Property is free from any mortgage, debenture, charge, rent charge,
lien or other encumbrance securing the repayment of monies or other
obligation or liability of the Group Companies and the Vendors or any
other person.
35.3 So far as the Warrantors are aware the Property is not subject to any
matter (other than those contained in the title deed supplied to the
Purchaser or its solicitors prior to the date of this Agreement) which
adversely affect its proper use and occupation for the purposes of the
business, as structured and carried on prior to the date of this
Agreement, of the Group Companies.
66
35.4 Where any such matters as are referred to in paragraph 35.2 and 35.3
above have been disclosed, the obligations and liabilities imposed and
arising under them have been fully observed and performed and any
payments in respect of them due and payable have been duly paid.
35.5 The Company's interest in the Property is not subject to any option,
right of pre-emption or right of first refusal.
35.6 So far as the Warrantors are aware, he Property is not subject to any
Local Land Charges or other matters which are capable of registration as
such against the Property and has not been so registered.
35.7 There are no claims, disputes or outstanding orders or notices affecting
the Property (whether served by a landlord, local authority, local
planning authority or other body or person) and none are anticipated.
36. Planning matters
36.1 The use of the Property is a lawful and permitted use for the purposes of
the Planning Acts.
36.2 All consents applicable to the use of the Property are either
unconditional or are subject only to conditions which have been satisfied
or are subject to continuing conditions all of which have been and are
being duly complied with and which are not onerous. No consents are
personal or for a limited period only.
36.3 Planning permission has been obtained in respect of all development of
the Property carried out by the Company and any subsequent alteration,
extensions or other improvement of the same, and no such planning
permission has been revoked, modified or suspended or remains
unimplemented in whole or in part, and no application submitted by the
Company for planning permission in relation to the Property) is either
awaiting decision or the subject of any appeal.
36.4 All necessary bye law consents, building regulation consents and other
statutory permissions and approvals have been obtained and complied with
in respect to all development, alterations and improvements to the
Property carried out by the Company.
36.5 The Company has not been notified of) any breaches of planning control,
listing building control, conservation area control or other regulatory
schemes imposed by the Planning Acts, or regulations made thereunder, or
the Building Xxx 0000 or regulations (or other secondary legislation made
thereunder) with respect to the Property by any of the Group Companies.
36.6 Compliance is being made and has at all times been made with all
agreements, relating to the Property made under Section 106 Town and
Country Xxxxxxxx Xxx 0000, Xxxxxxx 00 Xxxxxxxx Xxx 0000, Section
67
33 Local Government (Miscellaneous Provisions) Xxx 0000 or Section 111
Local Government Xxx 0000.
37. Statutory obligations
37.1 So far as the Warrantors are aware, each Group Company has complied with
and is continuing to comply with all applicable statutory and by- law
requirements with respect to the Property, and in particular with the
requirements as to fire precautions under the Fire Precautions Xxx 0000
and under the Public Health Acts, the Offices, Shops and Railway Premises
Xxx 0000, the Health and Safety at Work Xxx 0000, the Xxxxxxxxx Xxx 0000
and the Shops Acts 1950 to 1956, the Food Premises (Registration)
Regulations 1981 and Food Safety Xxx 0000.
37.2 There is no outstanding and unobserved or unperformed obligation with
respect to the Property necessary to comply with the requirements of any
competent authority exercising statutory or delegated powers.
37.3 There are not in force or required to be in force any licences whether
under the Licensing Xxx 0000 or otherwise which apply to the Property or
the present use of the Property for the purpose of the business of the
Group Companies.
37.4 No notices, orders, proposals, applications affecting or relating to the
Property have been served or made by any authority or by the Group
Companies or the Vendors and, so far as the Vendors are aware, there are
no circumstances which are likely to result in any being served or made.
37.5 A fire certificate has been issued in respect of the Property where
requisite and the Property comply with the fire regulations and has
sufficient right of escape in the event of fire or other emergency.
38. Adverse orders
38.1 So far as the Warrantors are aware, there are no closing, demolition or
clearance orders, enforcement notices or stop notices affecting the
Property nor are there any circumstances likely to lead to any being
made.
38.2 So far as the Warrantors are aware, there are no compulsory purchase
notices orders or resolutions or blight notices affecting the Property
nor are there any circumstances likely to lead to any being made.
39. Leasehold properties
39.1 The Lease is valid and in full force and there are no circumstances which
would entitle the landlord or other person to exercise any power of entry
or take possession of the Property other than as set out in the Lease.
68
39.2 Each Group Company has paid the rent and observed and performed the
covenants on the part of the tenant and the conditions contained in any
Lease to which it is a party, and the last demands (or receipts for rent
if issued) were unqualified.
39.3 All licences, consents and approvals required from the landlords and any
superior landlords for the grant of the Lease and during the continuance
of the Lease have been obtained and any covenants on the part of the
tenant contained in those licences, consents and approvals have been duly
performed and observed.
39.4 There are no rent reviews outstanding or in progress under the Lease.
39.5 Any alteration or improvement carried out on the Property is to be
disregarded for rent review purposes.
39.6 The sale of the Shares will not constitute an assignment or other dealing
in respect of the Property under the terms of the Lease.
39.7 No notices have been served on the Company by any Landlord in respect of
the Lease or the Property under the terms of the Lease.
39.8 There is not outstanding or unobserved or unperformed any obligation
necessary to comply with any notice or other requirement given by any
Landlord in respect of any the Property.
39.9 There are no side letters, collateral assurances, undertakings or
concessions which have been made by any party to the leases under which
the Group Companies occupy the Property.
39.10 There is no obligation to reinstate the Property by removing or
dismantling any alteration or improvements made to it by the Group
Companies.
40. Condition of the Properties
40.1 There are no disputes with any adjoining or neighbouring owner with
respect to boundary walls and fences or with respect to any easement,
right of or means of access to the Property.
40.2 Neither the Group Companies nor the Vendors have had occasion to make any
claim or complaint in relation to any neighbouring property or its use or
occupation.
40.3 The Property enjoys mains services of water foul and surface water
drainage, electricity and gas.
40.4 So far as the Warrantors are aware, there has been no flooding,
subsidence, heave or significant structural or drainage defect affecting
the Property during the Company's ownership.
69
40.5 No deleterious building material or method of construction not in
accordance with currently accepted good building practice has been used
in the alteration or repair of the Property by the Company.
40.6 The Group Companies and the Vendors are not expecting to have to expend
any sum of money in respect of the Property in the near future.
41. Tenancies
There is no lease, underlease, tenancy or licence affecting the Property.
42. Other involvement in relation to Property
42.1 The Group Companies have not at any time:
(a) had vested in them (whether as an original tenant or undertenant
or as an assignee, transferee or otherwise) any freehold or
leasehold property other than the Property; or
(b) given any covenant or entered into any agreement, deed or other
document (whether as a tenant or undertenant or as an assignee,
transferee, guarantor or otherwise) in respect of any freehold or
leasehold property in respect of which any contingent or potential
liability remains with the Group Companies.
43. Amana matter
43.1 So far as each of the Warrantors is aware all of the material written
information in relation to the Amana matter (being the matter referred to
in the Amana Statement) in the possession of each Warrantor or of which
he is aware has been provided to the Purchaser by each Warrantor and is
included in the Disclosure Bundle.
43.2 The facts and statements contained in the Amana Statement are honestly
believed by each of the Warrantors to be true and accurate.
44. Preliminary enquiries
So far as Warrantors are aware all replies to the preliminary enquiries
in relation to the Property raised by the Purchasers solicitors are true,
complete and accurate in all material respects.
70
Schedule 5
(Particulars of the Property)
Address Date and parties Term of Lease Current rental Rent reviews
Station Road Xxxx Xxxxxxxx Xxxx Xxxx Twenty years from and (Pounds)150,000 per annum until 15 December 2001 and
Ash Vale and Merrychef Limited including 15 December 13 December 2001 and 15 December 2006
Aldershot 1991 then (Pounds)140,150 and then
Hampshire subject to review
XX00 0XX
71
Schedule 6
(Current Pension and
Disability Schemes)
1. Group Personal Pension Plan with AXA Sun Life (Ref: 892167).
2. Sun Life Group Money Particular (Contracted Out) Schemes (Ref 81491).
3. Standard Life Group Money Purchase Scheme - for the benefit of X.
Xxxxxxx, X. Xxxx, X. Xxxx and X. Xxxxxxx.
4. Long Term Disability Scheme - insured with Unum Limited.
5. Death in service benefits scheme with Legal and General.
62
Schedule 7
(Charges)
Company Description Date of Date of Amount Secured Chargee
Charge Registration
Merrychef Composite 20 December 27 December All monies due Bank of
Holdings Guarantee 1996 1996 Scotland
Limited and
Debenture
Composite 20 December 3 January All monies due 3i plc
Guarantee 1996 1997
and
Debenture
Deed 28 July 1997 5 August All indebtedness, The Bank
Assignment 1997 liabilities and of
of Keyman obligations due Scotland
Life
Policies
Company Description Date of Date of Amount Secured Chargee
Charge Registration
Elvadene Composite 20 December 27 December All monies due Bank of
Limited Guarantee 1996 1996 Scotland
and
Debenture
Composite 20 December 3 January All monies due 3i plc
Guarantee 1996 1997
and
Debenture
Company Description Date of Date of Amount Secured Chargee
Charge Registration
Merrychef Composite 20 December 27 December All monies due Bank of
Limited Guarantee 1996 1996 Scotland
and
Debenture
63
Composite 20 December 3 January All monies due 3i plc
Guarantee 1996 1997
and
Debenture
Company Description Date of Date of Amount Secured Chargee
Charge Registration
Twilight
Band Deed 26 January 11 February (Pounds)50,000 due Elvadene
Limited 1983 1983 from the company Limited
to the chargee
supplemental to a
debenture dated
19 August 1977
64
Schedule 8
Tax Schedule
1. Definitions and interpretation
1.1 In this Agreement, unless the context otherwise requires, the following
words have the following meanings:
"Claim for Taxation" any notice, demand, assessment, letter or other
document issued or action taken by any Tax
Authority or any person (including any Group
Company) indicating that any person is or may
be placed or sought to be placed under either a
Liability to Taxation or a claim for Taxation
to which paragraph 3 may apply;
"ICTA" the Income and Corporation Taxes Xxx 0000;
"Liability to Taxation" (a) any liability to make a payment of or in
respect of Taxation regardless of whether
such Taxation is chargeable or
attributable directly or primarily to a
Group Company or to any other person;
(b) the loss of any Relief which would (were
it not for the loss) have been available
to any Group Company and which has been
treated as an asset in preparing the
Accounts or taken into account in
computing (and so reducing) or obviating
any provision for deferred taxation which
appears in the Accounts (or which, but
for the availability or presumed
availability of such Relief prior to its
loss, would have appeared in the
Accounts); and
(c) the setting off against any liability to
Taxation or against Profits earned,
accrued or received on or before
Completion of any Relief which arises in
respect of any
65
period after Completion or in respect of any
Transaction effected on or after Completion in
circumstances where, but for the setting off,
any Group Company would have had a liability to
Taxation in respect of which the Warrantors
would have been liable under the Covenant for
Taxation;
"Profits" income, profits and gains, the value of any supply and any
other consideration, value or receipt used or charged for
Taxation purposes and references to "Profits earned,
accrued or received" means income and profits (excluding
chargeable gains) earned, accrued or received or deemed to
have been earned, accrued or received and chargeable gains
realised or deemed to have been realised for Taxation
purposes;
"Purchaser's Relief" a Relief falling within the definition of Liability
to Taxation;
"Relief" any relief, loss, allowance, exemption, set-off, deduction
or credit in computing or against Profits or Taxation or
any right to repayment of Taxation and references to the
"loss of any Relief" include the loss, reduction,
counteraction, disallowance, setting-off against Profits,
crediting against a liability to make an actual payment of
Taxation or failure to obtain a Relief and "lose" and
"lost" shall be construed accordingly;
"Taxation" all forms of taxation and statutory, governmental, supra
governmental, state, provincial, local governmental or
municipal impositions, duties, contributions and levies in
the nature of taxation (including withholdings and
deductions), whether of the United Kingdom or elsewhere in
the world, whenever imposed and however arising other than
any taxation arising from the occupation of property and
all penalties,
66
fines, and interest, together with the cost of removing any
charge or other encumbrance, relating thereto and "Tax"
shall be construed accordingly
"Tax Authority" any taxing or other authority, body or official competent to
administer, impose or collect any Taxation;
"Tax Claim" a claim by the Purchaser against the Warrantors under the
Covenant for Taxation or that any of the Taxation Warranties
is untrue or inaccurate in any respect or is misleading or,
as the case may be, a claim by the Warrantors against the
Purchaser under the covenant in paragraph 3;
"TCGA" the Taxation of Chargeable Gains Xxx 0000;
"TMA" the Taxes Management Xxx 0000;
"Transaction" any transaction, arrangement deed, act, event, omission,
failure, payment or receipt of whatever nature and whether
actual or deemed for Tax purposes and includes (without
limitation) the execution and performance of the Agreement
and reference to a Transaction occurring on or before any
date shall be deemed to include the combination of two or
more Transactions only the first of which shall have
occurred on or before that date provided that there shall be
disregarded:
(a) any Transaction which shall have occurred before
Completion in the ordinary course of the Company's
business; and
(b) any Transaction which shall have occurred after
Completion outside the ordinary course of the
Company's business;
"VATA" the Value Added Tax Xxx 0000; and
"Warrantors" R Houghton, JR Keywood, XXX Xxxx,
00
SC Xxxxxx and N Thoneywork, details of whom
are set out in Schedule 1;
"Warrantor Associate" any Warrantor and any other person with whom
such Warrantor is either associated (within
the meaning of section 417 ICTA) or
connected (within the meaning of Section 839
ICTA).
1.2 Without limiting the generality of the expression, references in this
Tax Schedule to anything "in the ordinary and normal course of business"
does not include:
(a) a Transaction which results in a Group Company becoming liable for
taxation for which it is not primary liable under the provisions
of Section 767A.
(b) the acquisition, disposal or supply or deemed acquisition,
disposal or supply of any asset, service or facility (including a
loan of money or the letting, hiring or licensing of tangible or
intangible property) in a Transaction which is not entered into at
arm's length for Taxation purposes;
(c) the making of a distribution or deemed distribution or any other
event which gives rise to an obligation to account for advance
corporation tax (prior to 5 April 1999), the creation,
cancellation or reorganisation of any share or a loan capital of
any Group Company becoming or ceasing to be a member of a group of
companies for any Taxation purpose;
(d) the failure by any Group Company to deduct or account for Taxation
from any payment;
(e) the disposal of a capital asset in excess of (Pounds)l0,000; and
(f) any Transaction or a series of Transaction which includes, any
step or steps having no commercial or business purposes apart from
the reduction, avoidance or deferral of the liability for Taxation
under Part XVII, ICTA (tax avoidance);
2. Covenant for Taxation
2.1 Subject to paragraph 5 of this Schedule and of Clause 9 (but not Clause
9.2(a)) of the Agreement the Warrantors severally covenant and undertake
to the Purchaser to pay to the Purchaser an amount equal to any
Liability to Taxation of any Group Company:
(a) arising from any Transaction effected or deemed to be effected on
or before Completion;
(b) in respect of, or by reference to, any Profits earned, accrued or
68
received on or before Completion;
(c) any stamp duty by way of liquidated damages in respect of which there is
a breach of warranty pursuant to paragraph 4 of this Tax Schedule;
(d) which would not have arisen but for the failure by any person who is or
has been a Warrantor Associate to discharge a Liability to Taxation
which falls upon such Warrantor Associate:
(i) arising directly or indirectly from any Transaction effected or
deemed to have been effected at any time by such Warrantor
Associate; or
(ii) in respect of any Profits earned, accrued or received at any time
by such Warrantor Associate;
(e) any Inheritance Tax which is unpaid at the Completion and in respect of
which the Inland Revenue has a charge on any of the shares or assets of
a Group Company, or gives rise to a power to sell, mortgage or charge
any of the shares or assets of that Group Company or which after the
Completion Date becomes a charge on or gives rise to a power to sell,
mortgage or charge any of the shares or assets of the Company, being a
liability in respect of Inheritance Tax payable as a result of the death
of any person within seven years after a transfer of value (or a deemed
transfer of value) if a charge on or power to sell, mortgage or charge
any such shares or assets existed at the Completion or would have
existed at Completion, if the death had occurred immediately before the
Completion and the Inheritance Tax payable as a result thereof had not
been paid;
(f) any liability of a Group Company to repay in whole or part any payment
for group relief under Chapter IV, Part X, ICTA, advance corporation tax
and Section 240, ICTA or a tax refund under Section 102, Finance Xxx
0000;
(g) arising as a direct result of the termination payment paid to Xxxxx
Xxxxxxxx on 4 May 2000 under the terms of the Compromise Agreement dated
2 May 2000 and made between the Company and Xxxxx Xxxxxxxx but only to
the extent that such liability to Taxation has not been accounted for by
the Company and for the purposes of this Clause 2.1(g) only reference to
Tax Disclosures 4.3 and 4.9 in calculating such additional liability to
Taxation:
together with all costs and expenses reasonably and properly incurred by the
Purchaser or any Group Company in connection with any such Liability to Taxation
or Claim for Taxation or in bringing any claim or
69
defending any action under the provisions of this Schedule.
2.2 Where the Warrantors become liable to make any payment under the
Covenant for Taxation, the due date for the making of that payment shall
be:
(a) in a case that involves an actual payment of Taxation by any
Group Company, the date that is two days before the last date on
which the relevant Group Company is liable to pay to the
appropriate Tax Authority the Taxation in question in order to
avoid incurring a liability to interest or penalties or, if
later, five days following a written demand from the Purchaser
giving details of the payment of taxation in question;
(b) in the case of the loss of any Relief, on or before the later of
(a) five days following the date when the Warrantors have been
notified by the Purchaser of the amount of the loss of the
Relief as certified by its auditors for the time being of the
relevant Group Company (pursuant to paragraph 2.3 herein) and
(b) five days before, the date on which Taxation which would
otherwise have been saved but for the loss of Relief becomes due
and payable or in the case of repayment of Taxation, the date on
which such repayment would have been made but for the loss of
Relief; or
(c) in the case of costs and expenses, the date falling five
Business Days following the date on which the Warrantors receive
a written demand for such amount from the Purchaser.
2.3 In a case of a loss of any Relief, the amount (as certified by the
auditors for the time being of the relevant Group Company) that is to be
treated under the Covenant for Taxation as a Liability to Taxation
shall:
(a) be the amount of that Relief, if the Relief that was the subject
of the loss was either a deduction from or offset against
Taxation or a right to a repayment of Taxation;
(b) be the amount of Taxation which has been saved in consequence of
the setting off where the Relief that was the subject of the
loss was a deduction from or offset against gross Profits, and
the Relief was the subject of a setting off; and
(c) in any other case where the Relief that was the subject of the
loss was a deduction from or offset against gross Profits, be
the amount of Taxation which would, on the basis of the rates of
Taxation current at the date of the loss, have been saved but
for the loss.
2.4 Gross payments
70
Subject to Clause 2.5, all payments made by the Warrantors hereunder
shall be made gross free from any rights of counterclaim or set off and
without any deductions or withholdings of any nature save for such
deductions or withholdings as are required by law.
2.5 Gross up
If, in respect of or in connection with any Claim, or otherwise in
connection with any payment made hereunder, any amount payable to the
Purchaser by the Warrantors is subject to Taxation, the amount to be
paid to the Purchaser by the Warrantors shall be such amount as will
ensure that the net amount received by the Purchaser after such Taxation
has been taken into account is equal to the full amount which would be
payable to the Purchaser had the amount not been subject to Taxation,
provided that this sub paragraph 2.4 shall not inure for the benefit of
any assignee of the purchaser.
2.6 Additional tax
If a payment under a Tax Claim is subject to Taxation in the hands of
the Purchaser, the Warrantors shall within 7 days of notice in writing
being served on it by the Purchaser pay to the Purchaser such amount as
will ensure that the net amount received in respect of such payment
after such Taxation is the same as it would have been were the payment
not so subject to Taxation.
3. Covenant to Warrantors
3.1 The Purchaser hereby covenants with the Warrantors to pay to the
Warrantors an amount equal to any Taxation which is assessed on the
Warrantors or on any Warrantor Associate (together with any costs and
expenses incurred by the Warrantors or any Warrantor Associate in
relation to such Taxation) where such Taxation arises as a result of or
pursuant to either section 767A or section 767AA, ICTA by reason of
Taxation assessed on or primarily or directly attributable to the
Purchaser or any Group Company for any accounting period remaining
unpaid provided that this covenant shall not apply to any Taxation in
respect of which the Purchaser is entitled to bring a claim against the
Warrantors under the Covenant for Taxation or would have been so
entitled but for paragraph 5 below or Clauses 9.1, 9.2, 9.3(c)-(f) and
9.4 of the Agreement (Limitations) except and to the extent that the
Warrantors have paid such a claim to the Purchasers.
3.2 The Warrantors hereby covenant that they shall make no claim under
paragraph 3.1 above to the extent that it has recovered the Taxation in
question under section 767B(2), ICTA and that to the extent that it
recovers any amount under paragraph 3.1 it shall not seek to recover
payment under section 767B(2).
3.3 The provisions of paragraphs 2.2 (date of payment), 2.4 (grossing up),
71
6 (repayment) and 9 (Claims Procedure) shall apply to this covenant as
if references to the "Purchaser" were to the "Warrantors" (and vice
versa), references to the "the Group Company" were also to the
"Warrantors" and references to "Covenant for Taxation" were to the
"covenant under paragraph 3".
4. Tax Warranties
Stamp Duty
4.1 All documents which are required to be stamped and which are in the
possession of or in the enforcement of any Group Company have been duly
and sufficiently stamped.
4.2 Since the Accounts Date, no Group Company has incurred any liability to
stamp duty reserve tax.
Records and compliance
4.3 Each Group Company has paid all Taxation which is due to be paid prior
to the date hereof and made all withholdings and deductions in respect,
or on account, of any Taxation from any payments made by it which it is
obliged or entitled to make and has paid to the appropriate Tax
Authority all amounts so withheld or deducted due to be paid prior to
the date hereof.
4.4 Each Group Company has submitted all notices, returns and applications
for clearances or consents required for Tax purposes and so far as the
Warrantors are aware has provided complete and accurate information to
any Tax Authority.
4.5 Each Group Company has kept and maintained complete and accurate
records, invoices and other documents and information of whatever nature
appropriate or requisite for Tax purposes.
4.6 There are no disputes, unsettled or outstanding assessments or appeals
in respect of Taxation and no Group Company has within the last three
years been subject to any enquiry, investigation or other dispute with
any Tax Authority and so far as the Warrantors are aware there are no
circumstances which have arisen before the date hereof which may give
rise to such an enquiry or dispute.
4.7 No Group Company has within the last three years been liable to pay any
interest, penalty, fine or sum of a similar nature in respect of
Taxation nor, in relation to value added tax, has received any penalty
liability notice, surcharge liability notice or other written notice or
warning under the VATA.
4.8 In the past 6 years each Group Company has at all times been resident
for Tax purposes in the jurisdiction identified as the Tax Residence in
72
Schedule 2 and no Group Company has during the past six years paid and
is not liable to pay Tax in any other jurisdiction.
4.9 Each Group Company has operated the Pay As You Earn ("PAYE") system
accurately and correctly and has materially complied with all reporting
obligations to the Inland Revenue and the Contributions Agency in
connection with benefits provided for employees and former employees of
each Group Company.
4.10 So far as the Warrantors are aware, no payment of, or on account of,
income of a director, other officer, or employee of each Group Company
has been made by an Intermediary. No agreement or arrangement has been
entered into under which a payment of this kind will or might be an
Intermediary in respect of which each Group Company may be liable under
the PAYE system or any other system of payroll deduction of tax. In this
paragraph, "Intermediary" means:
(a) a person acting on a Group Company's behalf either at the
expense of that Group Company or a person connected with that
Group Company; or
(b) a trustee holding property for persons who include, or a class
of persons which includes, a director, other officer or employee
of a Group Company;
and for the purpose of paragraph (a) of this definition, "connected" has
meaning given by section 839 of ICTA.
4.11 The Disclosure Letter contains details of all share options schemes and
profit sharing schemes established by the Group Companies and in respect
of which rights all subsist after Completion.
4.12 Each Group Company has materially complied with its obligations relating
to Class 1 and Class 1A National Insurance Contributions, both primarily
and secondary obligations.
VAT
4.13 Each Group Company:
(a) is registered for the purpose of, and has complied in all
material respects with, the VATA and is not subject to any
conditions imposed or agreed with any Tax Authority; and
(b) is not, and has not within the last three years been a member of
a group for value added tax purposes under Section 43, VATA
(groups of companies).
Customs duties
4.14 Each Group Company has made all necessary returns in relation to the
73
collection and payment of customs duties, excise duties and other Taxes
having an equivalent effect and has provided to any relevant Tax
Authority all necessary information, returns and documentation and paid
all amounts clue in relation to the same and within the prescribed time
limits.
Balance sheet values
4.15 No Liability to Taxation will arise or be incurred on a disposal by any
Group Company of any of its capital assets if disposed of in a single
transaction for:
(a) in the case of its assets owned at the Accounts Date,an aggregate
consideration equal to the value attributed to those assets in
preparing the Accounts; and
(b) in the case of its assets acquired since the Accounts Date,an
aggregate consideration equal to the consideration given for the
acquisition.
Close company
4.16 No Group Company has at any time made any loan or advance or payment or
given any consideration or effected any transaction falling within
Sections 419 to 422 (inclusive), ICTA (loans to participators etc).
Group transactions
4.17 Within the last six years no Group Company has been a member of a group
of companies within the meaning of Section 170 TCGA (groups of
companies), other than one of which the Group Companies were the only
members.
Deductible expenses.
4.18 No Group Company has since the Accounts Date made or provided and is not
under any legally binding obligation to make any payment of an income or
revenue nature in excess of (Pounds)20,000 which will be prevented from
being deductible for Tax purposes, whether as a deduction in computing
the profits of a trade or as an expense of management or as a charge on
income.
4.19 The accounting treatment adopted by each Group Company in its Accounts
in relation to any loan relationship as defined in Section 81, Finance
Xxx 0000 (meaning of "loans relationships" etc.) will be treated as an
authorised accounting method for the purposes of Section 85, Finance Xxx
0000 (authorised accounting methods).
4.20 No Group Company has been a party to a loan relationship treated as
being for an unallowable purpose within the meaning of Paragraph 13
74
Schedule 9, Finance Xxx 0000 (loan relationships for unallowable
purposes).
Dividends and distributions
4.21 No Group Company has at any time purchased, repaid or redeemed or agreed
to purchase, repay or redeem its share capital, or capitalised or agreed
to capitalise in the form of redeemable shares or debentures any profits
or reserves, or otherwise issued any share capital or other security as
paid up otherwise than by the receipt of new consideration within the
meaning of Section 254, ICTA (interpretation of Part VI).
4.22 In the past 6 years no Group Company has entered into any Transaction or
series of Transactions which includes, any step or steps having no
commercial purposes apart from the reduction, avoidance or deferral of
the liability for Taxation.
5. Limitations on liability
5.1 The liability of the Warrantors under the Covenant for Taxation shall be
reduced if and to the extent that the Liability to Taxation shall have
been recovered under the Warranties or under any other part of the
Covenant for Taxation (and vice versa).
5.2 The Warrantors shall not be liable to the Purchaser for a Tax Claim in
respect of any Liability to Taxation or under the Warranties in respect
of Taxation (which for the purposes of this paragraph 5 is additionally
referred to as a Liability to Taxation):
(a) to the extent that proper provision or reserve in respect of that
Liability to Taxation was included in the Accounts or payment or
discharge of it was taken in to account therein and is identified
in the notes thereto;
(b) to the extent that the Liability to Taxation arises or is
increased as a result only of:
(i) any increase in rates of Taxation;
(ii) any change in law or in the published practice thereof;
(iii) any change in the bases upon which the Accounts of the
relevant Group Company are prepared or any change in
accounting practice or principles except in either case in
order to comply with generally accepted accounting
principles; or
(iv) any change in the date to which the relevant Group Company
makes up its Accounts,
made in any such case after Completion with retrospective
75
effect.
(c) to the extent that such Liability to Taxation is:
(i) upon income, profits or gains which were actually
earned, accrued or received by a Group Company; or
(ii) in consequence any Transaction carried out by a Group
Company,
in each case since the Accounts Date in the ordinary and normal
course of the business of that Group Company;
(d) to the extent that there is available to the relevant Group
Company to relieve or mitigate such Liability to Taxation any
Relief which is not a Purchaser's Relief;
(e) to the extent that such Liability to Taxation would not have
arisen but for a voluntary act or omission carried out or
effected by the relevant Group Company at any time after
Completion and which the Purchaser know or ought to have
reasonably known would give rise to such liability to Taxation,
other than any act or omission carried out or effected:
(i) under a legally binding commitment created on or before
Completion; or
(ii) in the ordinary and normal course of the business
carried on by that Group Company;
(f) to the extent that such Liability to Taxation would not have
arisen or would have been reduced but for a failure or omission
on the part of the Group Company concerned after Completion to
make any claim or election, the making or claiming of which was
taken into account in computing the provision or reserve for
Taxation in the Accounts and identified in the notes therein;
(g) to the extent that the rate or average rate of any Taxation for
any period which is applicable to the Company is increased as a
result of the Group Companies becoming associated with the
Purchaser or Companies in the same group as the Purchaser;
(h) to the extent that the Liability to Taxation has been relieved
or mitigated because the Warrantors have procured for no
consideration a surrender of group relief, ACT or a right to
repayment of Tax to the relevant Group Company.
76
5.3 For the avoidance of doubt the provisions of Clauses 9.1, 9.2,
9.3(c)-(f) and 9.4 of the Agreement shall apply to the Tax Schedule as
if their terms were specifically set out herein.
6. Repayment
If the Warrantors shall make any payment to the Purchaser in relation to
any Tax Claim and the Purchaser or any Group Company subsequently
receives or is entitled to receive from any Tax Authority or any person
(other than another Group Company or an employee of the Group Company)
any amount referable to the subject matter of that Tax Claim, the
Purchaser (if so required by the Warrantors and provided that the
Purchaser notifies the Warrantors of their entitlement) shall take all
necessary steps to recover the same and once it or any Group Company has
received such amount, repay (after deducting the costs and expenses of
the Purchaser or any Group Company incurred in recovering such amount
and any Taxation payable on it or on any interest) to the Warrantors the
lesser amount of:
(a) a sum equal to such amount; or
(b) if lesser a sum equal to the Tax Claim paid by the Warrantors to
the Purchaser,
together with any interest paid to the Purchaser or that Group Company
in respect of such sum.
7. Over-provision and Reliefs
7.1 If the auditors for the time being of the relevant Group Company shall
certify (at the request and expense of the Warrantors) that any
provision for Taxation in the Accounts (excluding any provision for
deferred taxation) has proved to be an over-provision, then the amount
of such over-provision shall be dealt with in accordance with paragraph
7.3 below.
7.2 If the auditors for the time being of the relevant Group Company shall
certify (at the request and expense of the Warrantors) that any
Liability to Taxation which has resulted in a payment having been made
or becoming due from the Warrantors under the Covenant for Taxation will
give rise to a Relief for any Group Company (other than a Purchaser's
Relief) which would not otherwise have arisen, then as and when such
Relief reduces a liability to make an actual payment of Tax (other than
a liability for which the Purchaser would be entitled to bring a Tax
Claim), the amount of that reduction shall be dealt with in accordance
with paragraph 7.3 below.
7.3 Where it is provided under paragraphs 7.1 or 7.2 that any amount ("the
relevant amount") is to be dealt with in accordance with this sub-
clause:
77
(a) the relevant amount shall first be set-off against any payment
then due from the Warrantors under the Covenant for Taxation;
(b) to the extent that there is an excess, a refund shall be made to
the Warrantors of any previous payment made by the Warrantors
under the Covenant for Taxation (to the extent not previously
refunded under this paragraph 7) up to the amount of such
excess; and
(c) to the extent that the excess referred to in paragraph 7.3(b)
above is not exhausted under that paragraph, the remainder of
the excess shall be carried forward and set off against any
future payment or payments which become due from the Warrantors
under the Covenant for Taxation.
7.4 Where any certification referred to in paragraphs 7.1 or 7.2 has been
made, the Warrantors or the Purchaser or the relevant Group Company may
request the auditors (at the cost of the requesting party) to review
such certification in the light of all relevant circumstances, including
any facts which have become known only since such certification, and to
certify whether such certification remains correct or whether the
certified amount should be amended.
7.5 If the auditors certify under paragraph 7.4 that an amount previously
certified should be amended, that amended amount shall be substituted
for the purposes of paragraph 7.3 as the relevant amount in respect of
the certification in question in place of the amount originally
certified, and such adjusting payment (if any) as may be required shall
be made as soon as practicable by the Warrantors or (as the case may be)
to the Warrantors to give effect to the revised certification.
8. Tax Returns
8.1 The Warrantors or their duly authorised agent shall at the reasonable
expense of the relevant Group Company prepare the corporation tax
returns of each Group Company for all accounting periods ended on or
before the Accounts Date to the extent that they have not been prepared
prior to Completion.
8.2 The Purchaser shall procure that each Group Company shall cause the tax
returns mentioned in paragraph 8.1 above to be authorised, signed and
submitted to the relevant Tax Authority without amendment or with such
amendments as the Warrantors shall reasonably agree provided that the
Purchaser shall not be obliged to procure that any Group Company takes
any such action as is mentioned in this paragraph 8 in relation to any
tax return that is not true and accurate in all material respects.
8.3 The Warrantors or their duly authorised agent shall at the reasonable
expense of the relevant Group Company prepare all documentation and
78
deal with all matters (including correspondence) relating to the tax
returns of each Group Company for all accounting periods ended on or
prior to the Accounts Date and the Warrantors shall provide the
Purchaser with copies of any correspondence relating to such tax returns
prior to their submission and copies of any correspondence from the
Inland Revenue. The Warrantors shall give the Purchaser a reasonable
opportunity to comment on such correspondence prior to submission and
shall take account of the Purchaser's reasonable comments. The Purchaser
shall upon reasonable notice (having regard to the circumstances) being
given by the Warrantors procure that the relevant Group Company shall
afford such access to its books, accounts, records and personnel as is
necessary and reasonable to enable the Warrantors or their duly
authorised agent to prepare those tax returns and conduct matters
relating thereto in accordance with the rights of the Warrantors under
this paragraph.
8.4 The provisions of paragraph 8.3 shall be without prejudice to the rights
of the relevant Group Company in relation to any audit or any enquiry
resulting therefrom and if the Purchaser shall at any time become aware
of a Claim for Taxation which may result in a Tax Claim, the Purchaser
may at any time thereafter by notice in writing to the Warrantors notify
that the provisions of paragraph 8.3 shall lapse, in which case the
provisions of paragraph 9 (Claim Procedure) shall come into operation in
accordance with its terms.
9. Claims Procedure
9.1 Upon the Purchaser or any Group Company becoming aware of a Claim for
Taxation which may result in a Tax Claim the Purchaser shall as soon as
is reasonably practicable give written notice of that Claim for Taxation
to the Warrantors or, as the case may be, shall procure that the Group
Company forthwith give written notice of that Claim for Taxation to the
Warrantors provided that the delivery of such notice is not a condition
precedent to the liability of the Warrantors under the Covenant of
Taxation.
9.2 The Purchaser shall subject to the Warrantors agreeing to indemnify and
securing the Purchaser and/or the relevant Group Company to its
reasonable satisfaction against all losses, costs, damages and expenses,
including additional Taxation and interest on overdue Taxation, which
may be incurred, further procure that the Group Company take such
action, including assigning the conduct of the Claim to the Warrantors,
and give such information and assistance in connection with the affairs
of the relevant Group Company, as the Warrantors may reasonably and
promptly by written notice request to avoid, resist, appeal or
compromise the Claim for Taxation provided that neither the Purchaser or
a Group Company shall be obliged to take any action required by
Warrantors which could be reasonably be said to be frivolous or
vexatious or which could materially adversely increase the Taxation
79
Liability of the Tax Claim in question.
9.3 The Purchaser shall not be obliged to procure that the Group Company
appeals against any tax assessment if, the Warrantors having been given
written notice of the receipt of that Claim for Taxation in accordance
with paragraph 9.1 above, the Group Company has not within 21 days (or, if
there is a statutory time limit of not more than 30 days, within 10
business days before the expiry of such limit) thereafter received
instructions in writing from the Warrantors, in accordance with the
preceding provisions of this paragraph 9, to make that appeal or fail
within that period to give the indemnity and security referred to in
Clause 9.2.
9.4 The Warrantors shall procure that the Purchaser is promptly provided with
copies of any correspondence from the Tax Authority and of any
correspondence from the Warrantors to the Tax Authority prior to its
submission to the Tax Authority, and shall give the Purchaser a reasonable
opportunity to comment thereon prior to submission and account shall be
taken of its reasonable comments to the extent that there might otherwise
be a material adverse effect on the amount of tax payable by the Purchaser
or any Group Company in respect of a period after Completion as compared
with the provision for Taxation in the Accounts.
9.5 The Purchaser shall not be obliged to procure that any Group Company take
any action under paragraph 9.1 above which involves contesting any matter
before the any court or other applicable body unless the Warrantors
furnish the Group Company with the written opinion of tax counsel of at
least 7 years call to the effect that such contest will on the balance of
probabilities be successful. Such tax counsel shall be instructed by the
Warrantors at the Warrantors' expense but the Warrantors shall promptly
provide the Purchaser with a copy of such instructions and give the
Purchaser or its representative a reasonable opportunity to attend any
conference with Counsel.
9.6 Clause 9.6 shall not apply if the Warrantor or the relevant Group Company
has committed acts or omissions which constitute fraud.
10. Miscellaneous
10.1 Any amount paid under this Schedule 8 shall be treated as an adjustment to
the consideration paid by the Purchaser for the Shares under the terms of
the Agreement.
10.2 The Purchaser will procure that each of the Group Companies co-operates
with the Warrantors in making such surrenders of or claims for group
relief and such claims for capital allowances as are reasonable required
by the Warrantor, subject to the Purchaser being reasonably satisfied that
there is no net cost to it or the Group Companies in doing so. If there is
a dispute between the parties as to
80
this Clause, the procedure for resolving disputes set out in Clause 9 of this
Schedule shall adopt.
81
Schedule 9
1. In this Schedule:
"Expert" shall mean a Chartered Accountant (acting as
an expert and not as an arbitrator)
nominated by 3i and the Purchaser or in the
event of disagreement as to nomination
appointed upon the application of either 3i
or the Purchaser by the President for the
time being of the Institute of Chartered
Accountants for England and Wales;
"Retention" shall mean the principal amount of
(Pounds)500,000 to be placed on deposit in
the Retention Account under Clause
4.2(d)(ii)
"Retention Account" shall mean an interest bearing account in
the joint names of the Purchaser's
Solicitors and 3i's Solicitors, Xxxxxxxxx
Xxxxx & Co. of 00 Xxxxxx Xxxxxx, Xxxxxx XX0X
0XX with NatWest Bank Plc, City of London
Office, PO Box 12258, 0 Xxxxxxx Xxxxxx,
Xxxxxx XX0X 0XX, sort code: 60-00-01,
account number: .;
2. The operation of the Retention Account shall require the signature of both
a partner in the Purchaser' Solicitors and a partner in 3i's Solicitors
and the Retention (together with any accrued interest thereon) shall be
released in accordance with terms of this Schedule and the letter of
instruction signed for and on behalf of 3i and the Purchaser ("Instruction
Letter").
3. The Purchaser shall within 60 days from the date hereof prepare or procure
the preparation of a certified statement of all the Borrowings of the
Group Companies (excluding those Borrowings listed at Clause 6.11) (the
"Group Borrowings") as at Completion (the "Group Borrowings Statement")
and deliver such statement to 3i (marked with the reference - "Case
number: 00-0000000 at Xxxx Xxxxx, Xxxxxxx Xxxx, Xxxxxxx XX0 0XX.
4. If the Group Eorrowings Statement shall show there to be either no Group
Borrowings or Group Borrowings of (Pounds)l00,000 or less or if the
Purchaser fails to produce a Group Borrowings Statement within the 60
82
day period set out in paragraph 3 above the whole of the Retention
together with accrued interest thereon shall as soon as reasonably
practicable be released to 3i's Solicitors.
5.1 If the Group Borrowings Statement shall show there to be Group Borrowings
in excess of (Pounds)l00,000 3i shall be entitled to appoint accountants
to act on its behalf ("3i's Accountants") which accountants shall be
entitled to have access to all working papers and other documentation
necessary for the purpose of attempting to verify the Group Borrowings
Statement. 3i's Accountants and the Purchaser shall endeavour to agree the
Group Borrowings Statement. In the event that the Purchaser and 3i's
Accountants are unable within 60 days of the date of receipt by 3i of such
Group Borrowings Statement to agree the Group Borrowings figure as set out
therein the matter shall be referred to the Expert whose determination
shall be final and binding on 3i and the Purchaser.
5.2 In the event that the Group Borrowings Statement shall show there to be
Group Borrowings of (Pounds)lOO,OOO or less (as agreed or determined (as
the case may be)) the whole of the Retention together with accrued
interest shall be released as soon as reasonably practicable to 3i, but if
such Group Borrowings (as agreed or determined (as the case may be)) shall
exceed (Pounds)l00,000 then there shall be released as soon as reasonably
practicable to the Purchaser from the Retention Account a sum equal to 59%
of such Group Borrowings together with interest accrued on such sum and
the balance (if any) of the Retention together with accrued interest on
such balance shall as soon as reasonably practicable be released to 3i.
5.3 If after the expiry of 60 days from the date hereof monies are retained in
the Retention Account in accordance with this Schedule 9 then in addition
to interest accruing on the Retention Account a deemed rate of interest
shall begin accruing on the amount so retained at a rate of 2% above the
rate payable by the Bank on the Retention Account from time to time (the
"Default Interest").
In the event that it is determined by the Expert in accordance with this
Schedule 9 that any amount of the monies retained beyond the 60 day period
be released to 3i and in the event that the Expert determines that the
retention beyond 60 days occurred as a result of vexatiousness or bad
faith on the part of the Purchaser, then in addition to any accrued
interest under paragraph 5.2 the Purchaser shall pay to 3i an amount equal
to the Default Interest which is deemed to have accrued on the principal
amount released to 3i (excluding accrued bank interest on that principal
amount and excluding Default Interest on any principal amount not released
to 3i). For the avoidance of doubt Default Interest shall be payable by
the Purchaser only in the circumstances and to the extent set out in this
paragraph 5.3.
83
6. The costs of the Expert appointed under paragraph 5.1 shall be borne
equally by (i) and the Purchaser and (ii) 3i.
7. 3i and the Purchaser agree the bank's costs and charges incurred in
connection with the opening and operation of the Retention Account shall be
borne by them in the same proportion as their entitlement to receive an
amount out of the Retention bears to (Pounds)500,000 so that such costs and
charges shall be deducted from the amount standing to the credit of the
Retention Account before any payment is made out of such account under this
Schedule 9 and any payments out of the Retention Account shall be reduced
accordingly.
8. Each of the Purchaser and 3i undertakes to instruct the respective
signatory to the Retention Account to release the sums standing to the
credit of the Retention Account in accordance with the provisions of this
Schedule.
9. To the extent that the Purchaser is entitled to have released to it a sum
out of the Retention pursuant to this Schedule the Consideration, to the
extent payable to 3i, shall be reduced by an amount equal to such sum.
10. The Purchaser shall have no claim under this Schedule against 3i for any
amount in excess of the Retention.
11. The Retention shall be applied only in accordance with this Schedule 9 and
the Instruction Letter. The Purchaser shall not be entitled to exercise any
right of set-off, counterclaim or any other like right against the
Retention.
84
Schedule 10
(The Redcliffe Claim)
For the purposes of Clause 6.10 and this Schedule 10 the following provisions
have the following meanings:
"Redcliffe Claim" means the claim particulars of which are set out in
a letter dated 1 June 2000 to the Company from Mr S
Xxxxxxx of Redcliffe Magtronics Limited
("Redcliffe"), a copy of which is attached as
Exhibit "A";
"Claim Amount" means the amount (if any) paid by the Company to
Redcliffe pursuant to the Redcliffe Claim in full
and final settlement of the Redcliffe Claim;
"Redcliffe Retention" means the amount of (Pounds)l30,000 paid into the to
Redcliffe Retention Account and detailed in this
Schedule 10;
"Redcliffe Retention means an interest bearing account in the joint names
Account" of Xxxxxxxxx Xxxxx & Co ("3i's Solicitors"),
Xxxxxxx Xxxxxx ("the Warrantor's Solicitors") and
Xxxxxxx Suddards ("the Purchaser's Solicitors) with
National Westminster Bank plc, City of London
Office, PO Box 12258, 0 Xxxxxxx Xxxxxx, Xxxxxx XX0X
0XX, sort code: 60-00-01, account number: .;
"Redcliffe Retention means the date which is 6 months from the date of
Date" this Agreement.
1. 3i and the Warrantors severally agreed that in the event that the Redcliffe
Claim results in the Company paying a Claim Amount to Redcliffe before the
Redcliffe Retention Date then the Purchaser will be entitled to have
released to it an amount equal to whichever is the lesser of:
(a) the amount of the Redcliffe Retention (i.e. (Pounds) 130,000); and
(b) the Claim Amount.
and the sums (if any) remaining to the credit of the Redcliffe Retention
Account after such release to the Purchaser shall be released to 3i and the
Warrantors.
2. If legal proceedings in relation to the Redcliffe Claim are not commenced
against the Company before the Redcliffe Retention Date or no Claim Amount
is paid to Redcliffe then the Redcliffe Retention
85
shall be released to 3i and the Warrantors forthwith on the expiration of
the said 6 month period.
3. If legal proceedings in relation to the Redcliffe Claim are commenced
within 6 months of the date of this Agreement then the parties will
instruct counsel of not less than 10 years standing (and in default of
agreement on the identity of counsel then counsel nominated by the
chairman of the Bar Council) on the issues concerned together with all
appropriate supporting papers to give his opinion as to:
(a) the merits of the Redcliffe Claim; and
(b) the amount (if any) which should continue to be retained as the
Redcliffe Retention.
and any amount which such counsel determines need not be so retained
shall forthwith be released to the Warrantors and 3i.
4. The Redcliffe Retention shall be deemed to be apportioned as between 3i
and the Warrantors (including their respective spouses) in the
proportions which their respective holdings of shares in the Company bear
to each other immediately prior to the execution of this document and any
payment under this Agreement from the Redcliffe Retention shall be borne
in such proportions. For the avoidance of doubt, 3i's maximum liability
under this Schedule 10 shall be 59% of the Redcliffe Retention.
5. The Warrantors shall be entitled to conduct the Redcliffe Claim as they
think fit provided that in the event that proceedings are commenced
either by or against the Company in relation to the Redcliffe Claim such
proceedings shall be advised on by counsel of not less than 10 years
standing and the Purchaser shall be entitled to review and comment on
instructions to counsel and to attend any conferences with counsel.
And further
Always provided they shall at all times do so in good faith.
6. Upon the release of the whole or any part of the Redcliffe Retention to
3i and the Xxxxxxxxxx, 0x and the Warrantors shall be entitled to any
interest which has accrued pro rata to the amounts of the Redcliffe
Retention as released but otherwise the Purchaser shall be entitled to
all such interest.
7. For the purpose of this Schedule 10, 3i and the Purchaser and the
Warrantors irrevocably instruct 32s Solicitors, the Warrantors'
Solicitors and the Purchaser's Solicitors respectively to sign up any
withdrawal form or other document to give effect to the provisions of
this Schedule.
86
8. Save in the case of fraud or gross negligence the parties hereto agree to
indemnify 3i's Solicitors, the Warrantors' solicitors and the Purchaser's
Solicitors in respect of all claims made against them and any costs,
liabilities or expenses incurred by them in that capacity.
9. Save as set out in this Schedule 10, there shall be no set-off of any
kind against the Redcliffe Retention.
00
Xxxxxxx
Xxxxxx XXX [LOGO]
SCHEDULE II
MERRYCHEF LIMITED - INTELLECTUAL PROPERTY
PART I - REGISTERED DESIGNS
------------------------------------------------------------------------------------
REGISTERED DESIGN TITLE COUNTRY APPLICATION/ STATUS
NO. REGISTRATION DATE
------------------------------------------------------------------------------------
2032000 "Microwave Oven Roof" GB 25 June 1993 ABD
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
1
MERRYCHEF LIMITED - INTELLECTUAL PROPERTY
PART II - PATENTS
--------------------------------------------------------------------------------------
PATENT NO. TITLE COUNTRY APPLICATION/ STATUS
REGISTRATION DATE
--------------------------------------------------------------------------------------
9915368.5 Microwave Heating GB 2 July 1999 ABD
--------------------------------------------------------------------------------------
9927368.2 Ovens with Catalytic Converter GB 20 November 1999 PEN
--------------------------------------------------------------------------------------
0007033.4 Microwave Heating GB 23 March 2000 PEN
--------------------------------------------------------------------------------------
9412338.7 Microwave Heating GB 20 June 1994 GRA
2279856 5 March 1997
--------------------------------------------------------------------------------------
9444304454.5 Microwave Oven EP 20 June 1994 GRA
0631459 23 September 1998
--------------------------------------------------------------------------------------
08/261547 Microwave Heating with hot air US 17 June 1994 GRA
5483044 and cold air streams 9 January 1996
--------------------------------------------------------------------------------------
94304454.5 Hot Air Microwave Oven DE 20 June 1994 GRA
0631459 23 September 1998
--------------------------------------------------------------------------------------
94304454.5 "Microwave Oven" FR 20 June 1994 GRA
0631459 23 September 1998
--------------------------------------------------------------------------------------
94304454.5 "Microwave Oven" IT 20 June 1994 GRA
0631459 23 September 1998
--------------------------------------------------------------------------------------
2
MERRYCHEF LIMITED - INTELLECTUAL PROPERTY
PART III - TRADE MARKS
-------------------------------------------------------------------------------------------------
TRADE XXXX TITLE CLASS COUNTRY APPLICATION/ STATUS
APPLICATION NO. REGISTRATION DATE
-------------------------------------------------------------------------------------------------
2219333 MERRYCHEF 9, 00 XX 00 Xxxxxxx 0000 XXX
-------------------------------------------------------------------------------------------------
953921 MERRYCHEF 9 GB 21 January 1970 REG
renewed 14 years from
21/01/91
-------------------------------------------------------------------------------------------------
2221928 MEALSTREAM 9 GB 10 February 2000 PEN
-------------------------------------------------------------------------------------------------
2221930 MICRO-AIRE 9 GB 10 February 2000 PEN
-------------------------------------------------------------------------------------------------
1501287 XXXXXXXXX 0, 00 XXX 0 February 2000 PEN
-------------------------------------------------------------------------------------------------
1501386 XXXXXXXXXX 0, 00 XXX 0 February 2000 PEN
-------------------------------------------------------------------------------------------------
1501345 XXXXXXXXX 0, 00 XXX 0 February 2000 PEN
-------------------------------------------------------------------------------------------------
953922 MERRYCHEF 11 GB 21 January 1970 REG
Renewed 14 years from
21/01/91
-------------------------------------------------------------------------------------------------
1291030 "MERRYCHEF" - GB 17 October 1986 ABD
-------------------------------------------------------------------------------------------------
3
-------------------------------------------------------------------------------------------------------------
TRADEMARK TITLE CLASS COUNTRY APPLICATION/ STATUS
APPLICATION NO. REGISTRATION DATE
-------------------------------------------------------------------------------------------------------------
1539798 TURBOAIRE 9 GB 25 June 1993 REG
29 September 1995
-------------------------------------------------------------------------------------------------------------
1539802 TURBOAIRE 11 GB 25 June 1993 REG
23 June 1995
-------------------------------------------------------------------------------------------------------------
4
PART IV - MISCELLANEOUS
The following trade marks are registered in the name of Mealstream UK Limited
and are to be assigned to Merrychef Limited:-
--------------------------------------------------------------------------------------------
TRADE XXXX XXXX CLASS COUNTRY STATUS
REGISTRATION NO.
--------------------------------------------------------------------------------------------
1104876 MEALSTREAM II GB REG
Renewed 10 years from 17/ll/99
--------------------------------------------------------------------------------------------
945009 MICRO-AIRE II GB REG
Renewed 14 years from l/7/90
--------------------------------------------------------------------------------------------
There is also a UK patent registered number 2234655 (application number
8915531-9) dated 7 July 1989 registered applicant Xxxxxx Xxxxxxx Xxxxxx which
has been abandoned.
KEY:-
ABD - Abandoned GB - Great Britain REG - Registered
CTM - Community Trade Xxxx DE - Germany XX - Xxxxxx Xxxxxx xx Xxxxxxx
XXX - Xxxxxxx XX - France
PEN - Pending IT - Italy
EP - European Patent
5
Executed as a Deed by )
Xxxxx Xxxxxxxx but not delivered )
until the date appearing at the ) /s/ Xxxxx Xxxxxxxx
beginning of this document )
in the presence of: )
Witness [ILLEGIBLE]
Signature /s/ [ILLEGIBLE]
Address [ILLEGIBLE]
Occupation [ILLEGIBLE]
Executed as a Deed by )
Xxxxx Xxxxxxxx but not delivered )
until the date appearing at the ) /s/ Xxxxx Xxxxxxxx
beginning of this document )
in the presence of: )
Witness [ILLEGIBLE]
Signature /s/ [ILLEGIBLE]
Address [ILLEGIBLE]
Occupation
Executed as a Deed by )
Xxxxx Xxxxxxx Xxxxxxx but not )
delivered until the date ) /s/ Xxxxx Xxxxxxx Xxxxxxx
appearing at the )
beginning of this document )
in the presence of: )
Witness XXXXXXX XXXXX
Signature /s/ Xxxxxxx Xxxxx
Address 00 XXXXXXXX XXXXX
XXXXXXX
XXXXXXXXX XXX 0XX
Occupation TRAINEE SOLICITOR
88
Executed as a Deed by )
Xxxxxx Xxxxxxxx Xxxx but not )
delivered until the date appearing at ) /s/ Xxxxxx Xxxxxxxx Xxxx
the beginning of this document in )
the presence of: )
Witness Xxxxxxx Xxxxx
Signature /s/ Xxxxxxx Xxxxx
Address 00 XXXXXXXX XXXXX
XXXXXXX, XXXXXXXXX
XX0 0XX
Occupation TRAINEE SOLICITOR
Executed as a Deed by )
Xxxxxx Xxxxxx Xxxxxxx but not )
delivered until the date appearing at ) /s/ Xxxxxx Xxxxxx Xxxxxxx
the beginning of this document in )
the presence of: )
Witness Xxxxxxx Xxxxx
Signature /s/ Xxxxxxx Xxxxx
Address 00 XXXXXXXX XXXXX
XXXXXXX, XXXXXXXXX
XX0 0XX
Occupation TRAINEE SOLICITOR
Executed as a Deed by ) Xxxxxxxxx Xxxx
Xxxxxxxxx Xxxx but not delivered ) by her attorney
until the date appearing at the )
beginning of this document in )
the presence of: )
Witness Xxxxxxx Xxxxx /s/ [ILLEGIBLE]
Signature /s/ Xxxxxxx Xxxxx
Address 00 XXXXXXXX XXXXX
XXXXXXX, XXXXXXXXX
XX0 0XX
Occupation TRAINEE SOLICITOR.
89
Executed as a Deed by )
Simon Xxxxxxx Xxxxxx but not )
delivered until the date appearing at ) /s/ Simon Xxxxxxx Xxxxxx
the beginning of this document )
in the presence of: )
Witness Xxxxxxx Xxxxx
Signature /s/ Xxxxxxx Xxxxx
Address 00 XXXXXXXX XXXXX
XXXXXXX, XXXXXXXXX
XX0 0XX
Occupation TRAINEE SOLICITOR
Executed as a Deed by )
Xxxxx-Xxxx Xxxxxxxxx Xxxxxx but ) Xxxxx-Xxxx Xxxxxxxxx Xxxxxx
not delivered until the date appearing at ) by her Attorney
the beginning of this document )
in the presence of: ) /s/ [ILLEGIBLE]
Witness Xxxxxxx Xxxxx
Signature /s/ Xxxxxxx Xxxxx
Address 00 XXXXXXXX XXXXX
XXXXXXX, XXXXXXXXX
XX0 0XX
Occupation TRAINEE SOLICITOR
Executed as a Deed by )
Nigel Thorneywork but not )
delivered until the date appearing at ) /s/ Nigel Thorneywork
the beginning of this document )
in the presence of: )
Witness Xxxxxxx Xxxxx
Signature /s/ Xxxxxxx Xxxxx
Address 00 XXXXXXXX XXXXX
XXXXXXX, XXXXXXXXX
XX0 0XX
Occupation TRAINEE SOLICITOR
90
Executed as a Deed by )
Iris Thorneywork but not ) Iris Thorneywork
delivered until the date appearing at ) by attorney
the beginning of this document )
in the presence of: ) /s/ [ILLEGIBLE]
Witness Xxxxxxx Xxxxx
Signature /s/ Xxxxxxx Xxxxx
Address 00 XXXXXXXX XXXXX
XXXXXXX, XXXXXXXXX
XX0 0XX
Occupation TRAINEE SOLICITOR
Executed as a Deed by )
Xxxxxx Xxxxxxxx Xxxxxxxx but ) Xxxxxx Xxxxxxxx
not delivered until the date appearing at ) by his attorney
the beginning of this document )
in the presence of: ) /s/ [ILLEGIBLE]
Witness X. X. Xxxx
Signature /s/ X. X. Xxxx
Address 0 Xxxxxxxxxx Xxxxxx,
Xxxxxxx Xxxxxxx,
Xxxxxx, XX0X 0XX
Occupation SOLICITOR
duly authorized attorney for and on behalf of
Executed as a Deed by CRESSIDA XXXX )
3i Nominees Limited but not ) /s/ Cressida Xxxx
delivered until the date appearing at )
the beginning of this document )
in the presence of: )
Witness Xxxxxxx Xxxxxx
Signature /s/ Xxxxxxx Xxxxxx
Address 00 Xxxxxx Xxxxxx
Xxxxxx
Occupation SOLICITOR
91
duly authorized attorney for and on behalf of
Executed as a Deed by CRESSIDA XXXX )
3i 96 partners Nominees Limited but not ) /s/ Cressida Xxxx
delivered until the date appearing at )
the beginning of this document in the )
presence of: )
Witness Xxxxxxx Xxxxxx
Signature /s/ Xxxxxxx Xxxxxx
Address 00 Xxxxxx Xxxxxx
Xxxxxx
Occupation Solicitor
Executed as a Deed by )
Xxxxxxxxx Industrial Holdings Limited ) /s/ [ILLEGIBLE]
but not delivered until the date appearing at )
the beginning of this document in the )
presence of: )
Witness X. X. Xxxx
Signature /s/ X. X. Xxxx
Address 0 Xxxxxxxxxx Xxxxxx,
Xxxxxx, XX0X 0XX
Occupation Solicitor
92
EXHIBIT A
Private and Confidential
Mr. Xxxxx Xxxxxx
Merry Chef Limited
Xxxxxxx Xxxx Xxxx
Xxx Xxxx
Xxxxxxxxx
Xxxxxxxxx
XX00 0XX
[LETTERHEAD OF REDCLIFFE MACTRONICS]
Ref: SRP/PB
Date: 1 June 2000
Dear Simon
Magnetech
As you know, Redcliffe have cause to be very unhappy with the financial
performance of Magnetech since it was acquired from you on June 11/th/ 1998.
In accordance with the Agreement covering the sale of Magnetech please take this
letter as formal notice under schedule 10 of the terms of the Sale and Purchase
agreement dated June 11/th/ 1998 that Redcliffe is making a claim based upon
various warranties given by Merrychef in the Agreement. In particular, the
warranty given in the Agreement in 22.1 that the Magnetech business was
continuing in the ordinary and normal course and that neither turnover nor the
financial trading position of Magnetech had deteriorated. This was clearly not
so as the Magnetech trading performance in the year July 1998 to June 1999
demonstrates. During that period, Magnetech sales were (Pounds)104,532 and not
the projected (Pounds)200,000 that the financial structure of the deal was
entirely based upon.
This shortfall in turnover caused Redcliffe to make a loss in Magnetech in that
first year period of (Pounds)65,000. The loss in the second year will be of a
similar nature and the total extent of our claim will therefore be
(Pounds)130,000. Redcliffe have also relied on other warranties given by
Merrychef and in particular, clause 24 and the general warranty in clause 27
covering the accuracy of all material information given by the Vendor to the
Purchaser relating to the Business or Assets of Merrychef and that it was
materially complete and accurate.
Please let me know how you would like to proceed.
Yours sincerely
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Chief Executive
To Xxxxxxxxx Industrial Holdings Limited, Xxxxxxxxxx Xxxxx, 00/00 Xxxxxxx
Xxxxxx, Xxxxxx X0X 0XX
14 June 2000
Dear Sirs
Merrychef Holdings Limited (and where appropriate Merrychef Limited (together
"the Company"))
1. Introduction
1.1 This is the Disclosure Letter defined in the agreement entered into
immediately prior to the delivery of this Disclosure Letter between Xxxxx
Xxxxxxx Xxxxxxx, Xxxxxx Xxxxxxxx Xxxx, Xxxxxx Xxxxxx Xxxxxxx Xxxx,
Xxxxxxxxx Xxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxxxx, Xxxxx Xxxxxxx Xxxxxx,
Xxxxxx-Xxxx Xxxxxxxxx Xxxxxx, Nigel Thorneywork, Iris Thorneywork and
Xxxxxx Xxxxxxxx Xxxxxxxx (1) ("the Vendors"); 3i Nominees Limited and 3i 96
Partners Limited (2) (together "3i") and Xxxxxxxxx Industrial Holdings
Limited (3) ("the Purchaser") for the sale and purchase of the entire
issued share capital of the Company ("the Agreement").
1.2 Words and expressions defined in the Agreement, unless the context
otherwise requires, have the same meaning in this Disclosure Letter.
1.3 The purpose of this Disclosure Letter is as set out in the Agreement.
1.4 The headings and numbering used in this Disclosure Letter are for
convenience only and shall not affect its interpretation.
1.5 Annexure A to this Disclosure Letter is an index of copy and original
documents which have been supplied to the Purchaser or its solicitors ("the
Disclosure Bundle"). In this Disclosure Letter, references to numbered
documents are to those so referenced in the Disclosure Bundle. For the
avoidance of doubt the contents of the Disclosure Bundle have been provided
to the Purchaser and/or its advisors but are not deemed to be disclosed and
are not disclosed unless reference in the Disclosure Letter is made to a
document or part of a document in the Disclosure Bundle.
1.6 If there is any conflict between the contents of any document appearing in
the Disclosure Bundle and the contents of this Disclosure Letter, this
Disclosure Letter shall prevail.
2. General disclosures
This Disclosure Letter shall be deemed to disclose:
1
(a) any matter contained within the Agreement and all documents in agreed
form;
(b) any matter:
(i) appearing on the company search of each of the Group Companies
which are attached at documents 1 to 7 of File 1A of the
Disclosure Bundle (excluding all company accounts);
(ii) which would be revealed by a search made at the Central Registry
of Winding-up Petitions in England and Wales;
(c) any matter contained within the statutory books in the last two years
of each Group Company excluding all minutes;
(d) any matter:
(i) contained in the deeds of the Property revealed or supplied to
the Purchaser or which would be disclosed by or as a result of
searches in registers held by the relevant local authorities, HM
Land Charges Registry searches, HM Land Registry searches,
Commons Register and/or Register of Village Green searches, index
map searches conducted in respect of the premises at Station Road
West, Ash Vale, Aldershot
(ii) revealed in replies to formal enquiries given by the Vendors and
3i to the Purchaser in each case in relation to the Property at
the date of this Disclosure Letter; and
(e) any matter specifically provided for in the Accounts for the 2
financial years ended on 30 September 1999.
3. Specific disclosures
For convenience only, each of the following specific disclosures is
numbered to correspond to the paragraph number of the Warranty to which it
is considered most likely to relate. However, each matter disclosed is a
disclosure in respect of all Warranties to which it is or may be
appropriate and shall not be limited to the specific paragraphs referred to
below:
Share Capital
3.1 The authorised share capital of the Company consists of:
2
295,000 A Ordinary Shares of (Pound)l.00 each;
205,000 Ordinary Shares of (Pound)l.00 each; and
25,000 B Ordinary Shares of (Pound)l.00 each.
Before 13 November 1997 there were also 25,000 Deferred
Ordinary Shares of (Pound)l.00 each. On 13 November 1997 in
accordance with the terms of the agreement between AB Jelly
and others and the Vendors and 3i dated 20 December 1996
these were converted into 25,000 Ordinary Shares of
(Pound)l.00 each.
On 20 August 1999 5000 A Ordinary Shares of (Pound)l.00 each
were transferred from 3i to Xxxxxx Xxxxxxxx. These 5000 A
Ordinary Shares which were transferred were converted into
5000 Ordinary Shares of (Pound)l.00 each.
3.2 In accordance with the terms of a compromise agreement
between Xxxxx Xxxxxxxx and the Company ("the Compromise
Agreement") the nominee shares held in the name of Xxxxx
Xxxxxxxx have been transferred to the immediate parent
Company. A copy of the Compromise Agreement and a letter
from Xxxxx Xxxxxxxx Solicitors dated 10 April 2000 are
attached at document 12 of File 4 of the Disclosure Bundle.
Subsidiaries
4.2 The business of Magnetising Techniques Limited was sold by
the Company to Redcliffe Magtronics Limited ("Redcliffes")
on 11 June 1998 for the sum of (Pounds)207,500. The
Magnetech business was part of the business of Mealstream
(UK) Limited acquired by the Company on 25 June 1990.
Magnetising Techniques Limited has now been re-named
Merrychef Projects Limited and continues to be dormant. A
copy of the Acquisition Agreement for the Magnetech business
is attached at document 33 of File 3 of the Disclosure
Bundle. Copies of the ancillary documents, namely, the
Assignment of Industrial Property Rights, the Assignment of
Goodwill, the Assignment of Contracts and the Technical
Support Agreement are attached at documents 1,2,3 and 4 of
File 3A of the Disclosure Bundle respectively.
Statutory
books and
documents
filed
7.2 On 13 November 1997 25,000 Deferred Ordinary Shares of
(Pound)1.00 each were converted into 25,000 Ordinary Shares
of (Pound)1.00 each. Form 122 in relation to this conversion
was
3
not filed at Companies House until 23 May 2000. The
Company has not as yet received any penalty from
the Registrar of Companies or notice of penalty.
7.2 The 1998 the Annual Return for the Company was
filed late and the Registrar of Companies notified
the Directors accordingly. No action was taken by
the Registrar of Companies.
From time to time other documents have not been
filed on time but no penalties have been imposed by
the Registrar of Companies.
7.3 Due to the resignation of Xx Xxxxx Xxxxxxxx, a
written agreement has been entered into by all the
shareholders of the Company waiving the pre-emption
provisions of Article 8.8 of the Articles of
Association for a period from the date of the
shareholders' agreement (referred to above) to 31
July 2000. A copy of this shareholders' agreement
is attached at document 3 of File 1 of the
Disclosure Bundle.
9. Only Merrychef Holdings Limited, Merrychef Limited
and Elvadene Limited have company seals.
Possession of
Documents
11 There are a number of commercial agreements entered
into by the Company of which the originals are not
in the possession of the Company
Accounts
13.1 The auditors of the Company Deloitte & Touche have
given unqualified approval for the annual accounts.
13.1 The September 1996 accounts contained no warranty
or deferred revenue provisions. Provision for these
are now included in the Accounts. In the Accounts
research and development expenditure was provided
for the first time. This provision amounted to
(Pounds)55,000. It is estimated that the research
and development expenditure for the year 1999/2000
will be approximately (Pounds)250,000. See a copy
of the Accounts attached at document 33 of File 1
of the Disclosure Bundle
13.2(ii) The Company has under-provided for performance
related pay ("PRP") in all audited accounts since
PRP was introduced on 1 October 1995. The Company
has
4
consequently had to provide for additional
contributions in the following year's accounts
including the Accounts.
13.2(iii) A large number of the Company's assets have a nil
value in the Accounts as a consequence of the
annual depreciation policy. These assets continue
to be used by the Company.
13.2(iv) A debt of (Pounds)62,000 is outstanding from
Redcliffes in relation to its purchase of the
Magnetech business in June 1998, details of which
are set out in the disclosure against warranty
4.2. This debt was not provided for in the
Accounts. The basis for this outstanding debt is
that Redcliffes claim that the Company made a
representation to Redclilfes that the sales figures
of the Magnetech business purchased would be
(Pounds)200,000 per year and that to date sales
figures are only just in excess of (Pounds)l00,000
per year. The Company is contesting this claim. An
offer of settlement has been received from
Redcliffes by the Company and is attached at
document 5 of File 3A of the Disclosure Bundle but
this has been rejected by the Company. Since that
rejection, the Company has received a letter dated
1 June 2000 from Xxxxxxx Xxxxxxx, the Chief
Executive of Redcliffes a copy of which is attached
at document 11 of File 3A of the Disclosure Bundle.
13.2(iv) There is a debt of (Pounds)44,000 outstanding from
GVL mbH. GVL mbH contracted with the Company to
acquire 53 microwave ovens. The Company understands
that GVL mbH are currently raising further capital
to finance this debt. Forty of the microwave ovens
remain in the possession of the Company. A copy of
the contract is attached at document 2 of File 2 of
the Disclosure Bundle.
13.2(iv) Hi-Spec Limited have recently gone into liquidation
owing the Company approximately (Pounds)ll,500.
This amount has yet to be provided for in the
Management Accounts.
13.2(iv) Nordson Inc. ("Nordson") entered into a verbal
agreement with the Company which is evidenced by a
purchase order dated 17 May 1999. Under the terms
of this agreement with Nordson the Company carried
out research and development work for Nordson for
an agreed fee of (Pounds)107,000. It was agreed
that one third of the consideration would be
payable immediately, a third would be payable on
completion of the research and development work and
the balance would be payable when Nordsen ordered
100 units of power supplies. The research and
development work has been completed by the Company
and Nordsen have paid two thirds of the
consideration due. However,
5
due to difficulties in other areas of Nordson's projects they
have not yet ordered the 100 units of power supplies and the
balance of the consideration is therefore outstanding. A copy of
the purchase order is attached at document 12 of File 3 of the
Disclosure Bundle.
13.2(v) There is attached at document 5 of File 1 of the Disclosure
Bundle a copy of Note 10 (investments) to the 1990 consolidated
accounts of Merrychef Limited dealing with an investment of
(Pounds)14,003 in Mealstream (UK) Limited
13.2(vi) The Company's depreciation policy is listed in Note 1 of the
Accounts. See document 33 of File 1 of the Disclosure Bundle.
13.3 Redundancy costs of (Pounds)20,000 were incurred in the financial
year ended 30 September 1999.
13.3 Consolidated profits in the Accounts were under-reported by
(Pounds)80,564 being the tax deducted on the interest payable on
the Jelly and 3i loans in the financial year ended 30 September
1999. This figure has not yet been corrected but will be
corrected in the May management accounts. Accordingly, the tax
provision for the period was understated by (Pounds)24,572.
13.3 In 1997 there were capital losses with regard to the sale of 2
vehicles to AB and JJ Jelly of (Pounds)3,217. It should also be
noted that it is expected that there will be a capital loss of
approximately (Pounds)3,400 on the sale of a car previously owned
by Xxxxx Xxxxxxxx.
13.3 In 1998 the Magnetech business was sold creating an exceptional
gain of approximately (Pounds)154,000 in the accounts of the
Company to 30 September 1998. (See disclosure against warranty
4.2)
13.3 In the period to September 1999 the Company received
approximately (Pounds)24,650 in full and final settlement of a
debt owed by Diodes Limited which had been written off some years
previously.
Accounting
records
14.1 In the management accounts of the Company up to April 2000 the
profits were under-reported by (Pounds)80,564. See the disclosure
against warranty 13.3.
14.2 The Accounting records relating to taxation are held by the
6
Company's tax advisors, Nicoloau Dearle.
14.3(c) The Company keeps daily back-ups of its computer data in case of
any failure of computer hardware or software. These back-ups are
removed from the Company premises each night and then brought to
the Company's offices the next day and placed in a safe where
they are kept for two weeks. After two weeks the tapes are
re-used.
The accounting computer software requires updating or replacing
in order to fulfil user requirements. However, it remains fully
operational.
Management
Accounts
15 There was a difference between the stock figure in the management
accounts and the Accounts. This is due to the fact that the stock
figure is not updated accurately each month and the warranty, bad
debt and deferred revenue provisions are not altered on a monthly
basis. These and other procedures are updated or altered on an
annual basis.
Events since
the accounts
date
16.1(a) Current sales figures for March and April of this year are higher
than this time last year by (Pounds)412,000.
16.1(b) The management accounts show that there has been an increase in
debtors by (Pounds)650,000 during the months of March and April
2000 as compared with the months March and April 1999. This is as
a result of the increase in the sales figures for March and April
2000. (See disclosure against warranty 16.1(a))
16.1(c) Overall material costs in the current year are generally
consistent with those of the previous year.
16.1(c) Material costs in relation to the Microaire ranges have risen by
approximately 12 per cent since last year largely due to the
strength of sterling. Changes in the specification of the
Evolution Oven have increased the material cost. (Please see
document 7 of File 1 of the Disclosure Bundle) This will be off
set to a certain extent by higher planned average selling prices.
Pre-production prototypes of the Evolution oven incurred a
considerably higher unit material cost. Technical specification
of the Merrychef Evolution oven is provided at document 1 of File
8 of the Disclosure Bundle.
7
16.2 Merrychef Limited is the only trading company of the Group
Companies.
16.3 The nature of the Company's business is that it receives large
bulk orders for capital products on an intermittent basis.
Therefore the Company's sales from year to year will inevitably
fluctuate depending on its customers' projects. The Company has
not lost any material customers and Scottish and Newcastle plc
remains its largest customer constituting approximately 12% of
the Company's entire sales revenue.
It should be noted that the expected invoice sales to Whitbread
plc will be materially less than forecast in August 1999 but
will not be materially less than was represented to the
Purchaser at presentations and meetings given by the Company's
management in April and May 2000. Equally it should be noted
that several other customers are expected to purchase
significantly more than had been budgeted.
16.3 The supplier of transformers to Merrychef Limited has cut back
its production of lower value transformers but has confirmed to
Merrychef Limited that it will continue to supply Merrychef
Limited with the higher value transformers it orders. In any
event the transformers would be readily available from other
plants owned by the supplier.
16.4(a)(ii) Under the terms of the Compromise Agreement with Xxxxx Xxxxxxxx
(attached at document 12 File 4 of the Disclosure Bundle) a net
payment of (Pounds)71,713.20 was paid to him by the Company.
Approximately (Pounds)34,000 of tax and national insurance
contributions in respect of the payment to Xxxxx Xxxxxxxx will
be paid by the Company in June 2000.
16.4(a)(ii) In the ordinary course of the Company's existing Company car
policy, Xxxxxx Xxxx'x vehicle will be replaced with effect from
the end of May 2000 and Nigel Thorneywork's vehicle is due to
be replaced at the end of August 2000
16.4(b)(ii) Merrychef Limited has a right of first refusal in relation to
the entire issued share capital of Xxxxxx Microwaves Limited.
Attached at document 28 of File 3 of the Disclosure Bundle is a
copy of the agreement with the shareholders of Xxxxxx
Microwaves.
8
16.4(c) Under Schedule B of the Compromise Agreement (document 12 File 4
of the Disclosure Bundle) Xxxxx Xxxxxxxx has agreed to purchase
various items from the Company including a computer for
(Pounds)1,500.
16.4(f) A dividend of (Pounds)l12,171 was declared in the 1998/1999
Accounts and paid to 3i on 24 March 2000.
16.5 See disclosure against warranty 13.2(iv)
Financial
commitments
and
borrowings
17.1 The Company has a duty deferment guarantee from the Bank of
Scotland for the amount of (Pounds)30,000. A copy of the relevant
documentation is attached at 36 of File 1 of the Disclosure
Bundle.
17.1 In March 2000, the Company was in breach of two of its bank
covenants in relation to cash available for debt service. Oral
assurance has been given to the Company by the Bank and the
Company believes that this matter has been resolved.
See also the disclosure against warranty 28.2.
17.5 The Company has a car leasing agreement with Lex Vehicle Leasing
Limited. A copy of the agreement and addendum to this agreement is
attached at documents 21 and 23 of File 3 of the Disclosure Bundle
respectively.
The Company further has a leasing agreement in respect of a fork
lift truck, two pension scheme arrangements, a life assurance and
private health scheme and a long term disability scheme (see
schedule 6 of the Agreement).
17.6 In the previous 10 years, the Company has received grants
/subsidies in respect of:
a) Y2K training;
b) ISO 9000; and
c) general training.
17.7 See disclosure against warranty 17.5
Defective
Products
Services
9
18 There are at any one time a number of warranty claims in respect
of alleged defective products but the number of such claims has
not materially increased over the previous 2 years. A general
statement by the Company regarding defective products is attached
at document 19 of File 7 of the Disclosure Bundle.
18 On 1 January 1998 the standard warranty for microwave ovens
increased from 2 years to 3 years.
19.1 The Company does not carry professional indemnity insurance.
19.2 Xxxx Xxxxxxxxxx an employee of the Company suffered an injury at
work on 7 February 2000 when acid splashed in his eye. This may
give rise to a claim for compensation but no claim has been made
to date or is expected to be made by Xx Xxxxxxxxxx.
A Xx X Xxxxxx suffered a scald at work on 26 January 1999 which
may give rise to a claim for compensation, but no claim has been
made to date or is expected to be made by Xx Xxxxxx. Please see
document 25 of File 4 of the Disclosure Bundle.
19.2 In May of this year an employee named Xxxx Xxxxxx suffered a
shock as a result of the explosion of a capacitor. No claim to
date has been made nor is any claim expected to be made by Xxxx
Xxxxxx.
19.2 See health and safety policy document attached at document 24 of
File 4 of the Disclosure Bundle and the accident report book
attached at document 23 of File 4 of the Disclosure Bundle.
19.2 In November/December of 1998 a chair collapsed under an employee
called Xxxxx Xxxxxxxxx. He had at that time already been
suffering from back problems. Sun Alliance Insurance has paid him
(Pounds)8,088 in full and final settlement of this claim. Please
see document 25 of File 4 of the Disclosure Bundle.
19.2 Details of car insurance claims is attached at document 24 of
File 5 the Disclosure Bundle.
Contracts and
commitments
10
20.1(c) Under the terms of the Bass Agreement, Bass may terminate the
Agreement on a change of ownership of Merrychef Limited. Please
see documents 6 and 7 of File 2.
20.1(d) The MC1000 is an entry level microwave oven which the Company is
obliged to offer in its range of products in order to receive
major contracts. This, however, is a very low selling product by
the unit. The material gross margin in relation to the MC1 000 is
approximately 14.7% per cent.
20.1(e) The lease agreement in respect of the company cars cannot be
terminated on giving 3 months notice or less. See Lex Master
Lease Agreement at documents 21 and 23 of File3 of the Disclosure
Bundle.
20.1(e) There are certain 3 month or more rolling purchase orders to
which the production is tied. The most notable are with Rinnai,
Sampo, Xxxxxx Engineering and Mori Associates. A copy of the
agreement with Sampo is attached at document 26 File 3 of the
Disclosure Bundle.
20.2 A list of the Company's material customers is listed at document
1 of File 2 of the Disclosure Bundle. Please also refer to
documents 5 to 20 and 26 to 37 of File 2 and document 1 of File 3
of the Disclosure Bundle.
Terms of
Trade
21 Under the Company's terms of trade, microwave ovens have a 3 year
warranty and combination microwave ovens have a 1 year warranty.
However, some of the Company's larger customers received a
preferential warranty of 3 years in relation to microwave ovens
prior to its introduction in 1998. Some larger customers receive
a 2 or 3 year warranty on microwave combination ovens.
The Company also has maintenance contracts which are renewable on
an annual basis. Copies of the maintenance contract documentation
is attached at document 24 File 7.
Licences and
consents
22.1 The Company believes it may not have all necessary software
licences. An audit for requirements of these licences is
currently being carried out. These licences comprise shrink wrap
licences in relation to PC's used in
11
the business of the Company and the cost of obtaining such
licences will not exceed (Pounds)l0,000.
22.1 The Company's products are required to conform with the Low
Voltage Directive ("LVD") and the Electra Magnetic Compatibility
Directive ("EMC"). A copy of the LVD and EMC licences together
with other British Standards certificate's/licences are attached
at document 26 File 7 of the Disclosure Bundle. The Company's
products also required to be CE marked.
22.2 LVD and EMC licences are limited in duration but all products
conform to current EC legislation at the time of testing. There
are no other approvals required particularly UL (i.e. US)
approval as the Company does not sell to the United States.
Trading
Partners
23.1 The Company is a member of CEDA, BSI and the Guildford Chamber
of Commerce. The cost of membership of these associations does
not in total exceed (Pounds)2,000 per annum.
23.2 The Company has agreements in place with certain authorised
service companies under which service engineers receive
preferential discounted rates of between 25 and 40 per cent for
the parts they purchase.
23.2 Negotiations between the Company and GVL mbH are currently taking
place whereby GVL mbH will grant exclusive manufacturing rights
to the Company to produce an oven based on the Turboaire 2.
23.2 The Company has entered into commercial discussions with VCK srl
regarding the development of an oven to go into a hot food
vending machine. The Company is also negotiating a manufacturing
agreement and joint distribution agreement with Jenton
International Limited ("Jenact") for non-catering products.
23.3 The Company has entered into a written distribution agreement
with Xxxxx Gastrotechnik GmbH a copy of which is attached at
document 21 of File 2 of the Disclosure Bundle. The Company has
not entered into any other written distribution agreements.
23.3 Attached at document 31 of File 3 is a copy of an
12
agreement between Xxxxx Xxxxx Corporation and the Company. This
agreement is terminable on 3 months notice. The Company does not
know if this agreement has in fact been formally terminated.
There has been no trading activity between Xxxxx Xxxxx
Corporation and the Company for some years.
23.3 In 1999 following a decision of the board authorising the opening
of discussions with Amana Company LP ("Amana") the then managing
director of the Company contacted Amana. One of the options was
that Amana might have been appointed as distributor for the Group
in the United States. A number of sample ovens were supplied to
Amana following the entering into of a confidentiality agreement
by Amana and the Company. It is understood that the discussions
were terminated and an e-mail dated 22 May 2000 has been sent to
Amana requesting the return of the ovens. All the relevant
documentation and correspondence is attached at document 25 of
File 3 of the Disclosure Bundle. The Company is not aware of any
other distribution agreements. The Company's directors and Xxxxx
Xxxxxxxx have signed a statement confirming that there is no
contractual relationship between Amana and the Company.
23.3 The Company has a number of regular buyers which the Company
terms as "distributors." With the exception of Xxxxx,
Gastrotechnik GmbH the Company has not entered into any formal
agreements with these "distributors"
Competition
and trade
regulation law
24.1(a) The Company has a policy of only supplying replacement parts to
recognised microwave service engineers and companies
24.1(b) The Company believes that it has approximately 30% of the
commercial combination microwave oven market in the United
Kingdom; and 10% of the microwave oven market in the United
Kingdom.
With regard to "total cooking equipment" the Company believes
that it has approximately 1% of the European market.
Compliance
with laws
13
25.2 In August, 1999, the Company had a VAT review and in July
1997, the Company had a PAYE inspection. Neither the review
nor the inspection has resulted in any material adverse
consequences to date.
Litigation and
disputes
26.1(b) See disclosure against warranty 13.2(iv)
26.1(b) The Company supplied 7 microwaves to Sainsburys Supermarkets
plc ("Sainsburys") which were subsequently stolen from
Sainsburys. The ovens were actually delivered to Sainsburys
pursuant to an official order number from Sainsburys. There
is a dispute over how the order number was actually obtained
as there is evidence to suggest that the order number may
have been fraudulently obtained by an employee of
Sainsburys' head office. The ovens have been recovered and
are held by the police but no payment has yet been made to
the Company by Sainsburys in respect of these microwaves
ovens. The Company does not expect to suffer any loss as a
result of this incident as it will either receive payment
from Sainsburys or will take the ovens back from the custody
of the police. Until the boxes are opened and the microwaves
ovens are tested, it is not known whether the microwaves are
in a merchantable condition.
26.1(b) Turbochef has informally indicated to certain customers that
the Company may have infringed some of its patents. The
managing director of Turbochef has denied that he knows of
any potential or pending claim. Turbochef has a patent
relating to ovens with catalytic converters on application
for registration in the UK which has not been granted. The
management believes that Turbochef's US patent applies only
in respect of its own oven with a heat reservoir. The
Group's lawyers have indicated to the Company that the ovens
do not infringe this patent. See attached at documents 6, 8
and 9 of File 8 of the Disclosure Bundle the correspondence
and documentation relating to the alleged infringement of
the Turbochef patent.
26.1(b) There is a potential intellectual property claim made
against the Company by Xxxxx International Limited ("One
Shot"). One Shot claim that the Company was in breach of a
confidentiality agreement dated 24 March 1999 by using One
Shot's idea for a packaging relating to a microwave
defroster. Negotiations under the agreement had broken
14
down between the parties over a failure to agree terms on
distribution rights. On discovering that the Company had
filed a patent in respect of microwave defroster, One Shot
threatened legal action against the Company if the patent
was not assigned to them on the basis that the Company had
used information which was proprietary to One Shot. The
Company rejected this claim on the basis that it had
discovered the idea prior to the agreement with One Shot. No
further correspondence has been received by the Company from
One Shot since the Company's letter dated 10 September 1999
at document 5 at File 8 of the Disclosure Bundle. Attached
at document 5 of File 8 of the Disclosure Bundle is the
documentation and correspondence relating to this issue.
Please also refer to document 27 of File 3 of the Disclosure
Bundle.
Ownership and
condition of
assets
27.1 Tools used in production but which do not belong to the
Company are listed in document 18 of File 1.
27.1 The Company is currently testing 3D software supplied by NT
CAP CAM. The Company intends to buy the software for
(Pounds)l0,000 in June 2000.
27.3 Xxxxxx Xxxx paid the Company an additional (Pounds)2,500 in
relation to his company car. This was done to allow him to
upgrade his Company car.
27.4 In common with most manufacturing businesses, the Company
relies on the use of assets (e.g. tools) owned by
sub-contractors for the manufacture of component parts.
27.6 The Company's stock provision policy that is the first
year's stock supply is valued at full cost, between 1 and 2
years stock is valued at 50% and for 2 or more years stock
is valued at nil.
Charges and
incumbrances
over assets
28.1 See disclosure against warranty 17.5.
Intellectual
Property
29.1(a) See disclosure against warranty 22.1.
15
29.1(a) The Turboaire patent is registered in the UK, Germany, Italy France
and the USA. The trade xxxx is registered in the UK and there is a CTM
(European) registration pending.
The Company is aware that Turbochef has registered "Turboair" in the
United States. See Marks and Clerks Intellectual Property
correspondence attached at document 8 of File 8.
29.1(a) The Warrantors are aware that there is a company in Malaysia which
has registered in the UK Trade Marks Register the name of "Merrychef"
for a range of food products. However, the Company is unable to take
any action to prevent this as the company in Malaysia has registered
the name for a different class of products to the classes under which
Merrychef has registered the name "Merrychef".
29.2 See disclosure against warranty 26.1(b) with regard to third party
infringement and potential litigation by One Shot and Turbochef
respectively.
29.3 If the Company enters into a contract with GVL mbH, as detailed in the
disclosure against warranty 13.2 (iv). GVL mbH will obtain the right to
make use of the Turboaire technology should the Company stop producing
the Turboaire ovens in exchange for a royalty. At the date hereof a
contract with GVL mbH has not been signed.
29.3 The Company has adopted a policy not to register every item of
intellectual property which is potentially capable of registration.
29.5 The schedule of intellectual property registrations identifies those
registrations which have been abandoned by the reference "ABD" and this
schedule and a letter is attached as document 9 of File 8 of the
Disclosure Bundle.
29.6 See disclosure against warranty 29.5
29.7 See disclosure against warranty 26.1(b).
29.8 The Company has pending US trade xxxx applications for "Merrychef" and
for "Mealstream". The Company's Trade Xxxx Agents have carried out
searches which have revealed that these two marks are available for
use. The Company will have to file a letter of intent in the US
notifying its intention to use the marks. The Company has
16
not yet done so on the basis that the letter of intent gives
the Company a "window of opportunity" to exploit the xxxx
for a period of 6 months. The Company would therefore need
to put in place a US distribution arm before filing the
letter of intent so that it can take maximum advantage of
the 6 month period to avoid any argument that the marks are
not being exploited.
29.8 The Company has a UK application pending for the xxxx
"XCELAIRE". A trade xxxx search has been carried out and has
revealed a conflicting "EXCEL" which is currently being used
by Glynwed Limited, a catering Company. About 2 months ago
the Company's Business Development Director Xxxxxx Xxxx
contacted this organisation and has obtained a verbal
agreement from Glynwed Limited that it would not object to
the Company's proposed use of the xxxx. The Company is
awaiting written confirmation from Glynwed Limited in this
respect.
29.9 The Company has two UK registrations in the name of
Mealstream (UK) Limited: "MICRO-AIRE" (No. 945009) in class
11 and "MEALSTREAM" (No. 1104876) in class 11. These marks
are to be assigned to Merrychef Limited.
29.12 See disclosure against warranty 29.13
29.14 A list of the names used by any Group Company is contained
in document 1 of File 1 of the Disclosure Bundle.
Data
Protection Act
30.3 The Company has no procedures.
Employment
31.1 Please refer to documents 1 and 2 of File 4 of the
Disclosure Bundle. Copies of the directors' service
contracts together with subsequent correspondence are
attached at documents 5,6,7,8 and 9 of File 4 of the
Disclosure Bundle. Variations to the above service contracts
are attached at document 10 of File 4 of the Disclosure
Bundle.
31.2 The Company keeps personnel files which includes contracts
of employment together with starter and leaver
documentation. However, it is likely that not all
correspondence during the interim period of employment are
filed in the personnel records.
17
See Company Handbook attached at document 3 of File 4 of the
Disclosure Bundle. This was last updated in 1997.
31.3 Xxxxxx Xxxxxxxx provides his services to the Company under a
consultancy agreement A copy of the consultancy agreement is
attached at document 18 of File 4.
Furthermore, Xxxx Xxxxxxx, Xxxx Xxxxxx and Xxxxxxx Xxxxxxxx
invoice the Company for their services. Details of their
consultancy agreements are contained at documents 19, 20 and
21 of File 4 of the Disclosure Bundle. Other trainers are
used on an occasional basis. Xxx Xxxxx works as a contract
draughtsman and Xxxxxxx Xxxxxx is the Quality and Health and
Safety consultant whose company is paid on a daily basis.
31.4(b) A salary review was implemented on 1 April 2000 resulting in
an average across the board increase in salaries of
approximately 5%. Details of the directors' current salaries
are set out in document 10 of File 4 of the Disclosure
Bundle.
31.4(b) Xxxxx Woodcraft's benefits have been increased to include a
company car.
31.5 The Company operates a management bonus scheme. In 1998 the
total amount paid out (excluding that paid to the directors)
was (Pounds)60,000. In 1999 this sum was (Pounds)30,000
divided between approximately 20 people. A discretionary
management bonus scheme is also in operation within the
Company. In 1999 a discretionary payment was made as the
management bonus scheme was not triggered. This amounted to
approximately (Pounds)30,000. Additionally, bonuses and
commissions are sometimes paid to certain service workmen
with regard to overtime and commission for the sale of
ovens.
31.5 An example of a letter relating to a bonus is attached at
document 22 of File 4 of the Disclosure Bundle.
31.6 A service engineer Xx Xxxxx Xxxxxx left the Company in 1999
owing the Company (Pounds)896.64. The Company deducted the
outstanding sum from his wages and did not pay his expenses
claim amounting to (Pounds)700. The Company has since paid
(Pounds)270 of the expenses claim in full and final
settlement. The Company believes the matter has now been
resolved.
18
31.6 Claims for expenses incurred by employees during the course
of business are received on a regular basis.
31.7 A share option scheme had informally been proposed in 1997
by the former managing director of the Company (Xxxxx
Xxxxxxxx) to certain employees but no specific details have
been provided. This proposal was not sanctioned by the board
of directors of the Company.
31.8 See disclosure against warranty 19.2
31.9 There are three compromise agreements in place which
document the termination of the following employees: Xxxxx
Xxxxxxxx (document 12 of File 4) who received (Pounds)95,000
(less tax); Xxxxx Xxxxxx (document 14 of File 4), who
received (Pounds)19,118 (no tax deducted); and Xxxxx
Xxxxxxxx (document 15 of File 4), who received
(Pounds)8,671.52 (no tax deducted).
31.10 Statutory notice periods apply, save in respect of the
directors of the Company, whose contracts cannot be
terminated by 12 weeks' notice.
31.10 Xxxxxx Xxxxxxxx a regional export sales manager has tendered
her resignation from the Company with her employment due to
end on 2 June 2000.
Xxxx Xxxxxx a business development assistant has tendered
her resignation from the Company with her employment due to
end on 9 June 2000.
Xxxx Xxxxxx senior development engineer has tendered his
resignation from the Company with his employment due to
end on 30 June 2000.
These employees are leaving the Company to further their
careers and will be paid their normal salary and any holiday
entitlement due to them upon their termination of employment
with the Company.
31.12 Xxxx Xxxxxx'x employment was terminated on 20 April 2000.
The reason for terminating his employment after four months
service was that he was not suitable to carry out the
activities required of him in the Company's ordinary course
of business. His employment was terminated during his
probationary period. Xxxx Xxxxxx has made no appeal against
the decision to terminate his employment nor is any appeal
anticipated.
19
Industrial
relations
32.3 See disclosure against warranty 17.6
Pensions
33.5 No policies or governing documentation have been supplied in
relation to scheme 1, scheme 3, or scheme 5.
33.9 As referred to in relation to warranty 33.5, we have not seen
the governing documentation for either scheme 1 or scheme 3 but
these may well contain indemnities from the Company in favour of
the trustees. We can however confirm that even if this is the
case no such indemnities have been invoked.
Property
34.1(i) A copy of the lease of the Brinell Factory is attached at
document 9 of File 6 of the Disclosure Bundle.Please also refer
to the Deed of Agreement for the Property attached at document 8
of File 6 of the Disclosure Bundle.
34.1(i) So far as the Vendors are aware, the Group has occupied
properties at, the Vendors believe, the following addresses:-
a) Premises at Terrace Road Xxxxxx-on-Thames. The occupation
was largely freehold and part leasehold and was transferred
to Ford and Weston Holdings Limited.
b) Premises at Perram Works, Xxxxxx, Guildford which was
transferred to Romarc Limited in or around 1982;
c) Xxxx 00, Xxxxxx, Xxxxxxxxx which was transferred in or
around 1977;
d) Xxxx 0 and the 1st floor office, Xxxxxx, Guildford. The
lease of the first floor office was surrendered in or around
1983. The lease of unit 6 expired in 1984.
e) Premises at Xxxxxxxxx Xxxx, Xxxxxxxx Xxxxxxxxxx Xxxxxx,
Xxxxxxxxx. Xx 18 November 1996 the Company and X.X Xxxxxx &
Sons Limited entered into a Surrender and Deed of Release, a
copy of which is attached at document 2 of File 6 of the
Disclosure Bundle, relating to the termination of a lease of
the premises at Moorfield Road. The aggregate costs incurred
in
20
terminating the lease amounting to (Pounds)146,864.91 has
been paid by the Company;
f) Depot at Rawdon, Leeds which was terminated in or around
1980;
g) 00 Xxxxxxxx Xxxx, Xxxxxxx which the lease was assigned in or
around 1980;
h) Premises at Crawley, Sussex, which occupation was terminated
in 1990.
34.6 The Company has on several occasions made complaints in relation
to the parking of vehicles obstructing access to the front of
the Property, by a neighbouring Company, XX Xxxx.
Encumbrances
35.1 The lease of the Company premises contains a full repairing
covenant except with regard to the roof. A copy of the lease is
attached at document 9 of File 6 of the Disclosure Bundle.
35.1 The rateable value of the Company's premises has fallen by
approximately 10% to (Pounds)93,050 which may be increased on a
subsequent review.
00.0 Xxxxxxx Xxxx Xxxx is has not been formally adopted by the local
authority. However, the road has been maintained throughout the
duration of the lease to the Company.
39.4 The next rent review for the Property is due in December 2001
and the terms of the lease provide for an upwards only review.
Planning
matters
39.3 The Company only received oral consent from the landlord with
regard to certain alterations. These alterations comprised
improvements to the board room on the ground floor and the room
above it. The Landlord is aware of all the alterations and is a
frequent visitor.
Condition of
the Properties
21
40.5 The Vendors are unaware as to the nature of materials used in
the alteration and/or construction and/or repair to the
Property.
40.6 The roof includes asbestos made cement.
Tax
disclosures
2.2 Arising as a direct result of the termination paid to Xxxxx
Xxxxxxxx on 4 May 2000 under the terms of the Compromise
Agreement dated 2 May 2000 and made between the Company and
Xxxxx Xxxxxxxx but only to the extent that such Liability to
Taxation has not been accounted for by the Company and for the
purposes of this Clause 2.2 only reference is made to Tax
Disclosures 4.3 and 4.9 in calculating such additional Liability
to Taxation.
4.17 In 1990 the assets and trade of Mealstream (UK) Limited were
transferred to Merrychef Limited. The assets were transferred at
book value. The transfer will have been deemed, for the purposes
of corporation tax on chargeable gains, to have taken place on a
no loss no gains basis.
In 1993 a reorganisation of the Group was carried out. The
assets of each of the subsidiaries of Merrychef Limited were
transferred up to Merrychef. Again, these transfers will have
taken place on a no loss no gains basis for the purposes of
corporation tax on chargeable gains.
4.15(a) & Twilight Band Limited owes (Pounds)50,000 to Elvadene Limited
under a debenture. The original cost of this debenture in the
books of Elvadene Limited is (Pounds)22,164. The debenture was
4.20 assigned to Elvadene on 26th January 1983, being the date of the
acquisition by Elvadene of the entire issued share capital of
Twilight Band from Ford and Western Holdings Limited. The
debenture was purchased by Elvadene for approximately
(Pounds)24,000. It is considered that the debenture is a debt on
a security and that a payment by Twilight Band of the full
amount due under the debenture could create a chargeable gain in
Elvadene. Accordingly, the debenture remains outstanding with a
face value of (Pounds)50,000 although no interest is being
charged by Elvadene.
4.3 and 4.9 Please refer to disclosure against warranty 16.4(a)(ii) of the
Disclosure Letter.
Payments are made gross to GM Associates, Xxxxxxx Xxxxxx and a
number of oven trainers under various consultancy
22
agreements. The Company has no reason to believe that the
consultants are anything other than self employed.
4.3 and 4.9 Please refer to the disclosure against warranty 16.4(a)(ii).
The Compromise Agreement provided that the termination payment
to be paid after the issue of the P45. However, the P45 was sent
to Xxxxx Xxxxxxxx on 25 May 2000. Accordingly, higher rate tax
at 40% should have been deducted, however, only basic rate tax
of 22% was deducted together with employees NIC. The payment was
made to Xxxxx Xxxxxxxx on May 4 2000.
4.4 and 4.6 In 1997 the Company paid corporation tax of (Pounds)141.76 late.
Interest was charged. Please refer to document 32 of File 1 of
the Disclosure Bundle.
In 1997 the Company had a PAYE audit. During December of each
year the Company gives Marks and Xxxxxxx vouchers. No tax is
deducted on such vouchers and they are not declared on the pl
Ids. The Company pays the tax on behalf of the employees each
year in respect of the vouchers. Please refer to document 32 of
File 1 of the Disclosure Bundle.
In 1998 a CT61 was filed late. Interest of (Pounds)179.17 was
paid.
All computations for the years up to and including 30 September
1998 have been agreed. There are no outstanding queries. You are
referred to the corporation tax computations disclosed at
document 32 of File 1 of the Disclosure Bundle.
The corporation tax computations for the period ended 30
September 1999 are in draft. The group intends to make a group
relief claim. You are referred to disclosure document 32 of File
1 of the Disclosure Bundle.
4.6 and 4.7 The Company was subject to a VAT audit last year. No issues
were raised.
4.13(b) The companies are grouped for VAT purposes. The VAT
representative member is 211 8156 94. Please refer to documents
28 of File 1 of the Disclosure Bundle.
4.15(a) There are four dormant subsidiaries. If these dormant
subsidiaries are wound up there may be a charge to corporation
tax on chargeable gains.
Please also refer to disclosure against 40.6.
23
4.15(b) and Disposal of assets to Xxxxx Xxxxxxxx. Please refer to
4.16 disclosure against warranty number 13.3 and 16.4(c). The
Company is not aware that any PAYE/NIC is due on the sale.
A number of employees have been lent ovens for use at home. The
value of each oven is approximately (Pounds)1,500, although
there second hand value is approximately (Pounds)700 (this value
varies). The ovens are not declared as a benefit in kind.
4.21 - Please refer to the disclosure against warranty 3.1.
Yours faithfully
/s/ Xxxxx Xxxxxxxx
----------------------------
Xxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxx
----------------------------
Xxxxx Xxxxxxx
/s/ Xxxxxx Xxxx
----------------------------
Xxxxxx Xxxx
/s/ Xxxxxx Xxxx
----------------------------
Xxxxxx Xxxx
/s/ Xxxxx Xxxxxx
----------------------------
Xxxxx Xxxxxx
/s/ Nigel Thorneywork
----------------------------
Nigel Thorneywork
24
We confirm receipt of your letter dated 14 June 2000 of which the above is a
true copy.
/s/ [ILLEGIBLE]
----------------------------
Xxxxxxxxx Industrial Holdings Limited
25
Annexure A
Index to the Disclosure Bundle
File 1
No. Description
1. Merrychef Holdings Group Structure including a brief history and previous
names used
2. Certificates of Incorporation and Change of Name together with Articles of
Association
3. Company statement regarding share options/Waiver of Pre-emption
Rights/Written Resolution/Temporary Waiver of the Articles of Association
4. Directors names and addresses
5. Notes to Financial Statements and Accounts for the year end 30 September
1990 and 1999
6. Series of accounts for the year end 30 May 2000
7. Manufacturing Board Report for April 1999 and April 2000
8. Merrychef Limited Consolidated Cashflow
9. Blank
10. Merrychef Limited Fixed Assets 1999/2000
11. Details of share ownership (Note: Xxxxx Xxxxxxxx has transferred 4,000
shares to his wife)
12. Annual Return up to 7 November 1999
13. Minutes of Merrychef Holdings Limited
14. Bank details
15. Various notes relating to the Company
16. Terms and conditions of sale
17. Correspondence to directors relating to their disposal of their share
capital
18. Merrychef Limited Current Tooling Register
1
19. Memorandum relating to Member Companies of the Group
20. Extract from a profit and loss account
21. Merrychef Limited consolidated Profit and Loss Account for 1 October 1999
to 30 April 2000
22. Merrychef Holdings Accounts - April 2000
23. Blank
24. Consolidated Balance Sheet as at 30 April 2000 for Merrychef Limited
25. Blank
26. Merrychef Limited - Bank of Scotland covenant calculations
27. Cashflow cover for Bank borrowings as at 30 April 2000
28. Correspondence relating to the Group treatment VAT
29. Inland Revenue correspondence on PAYE and NIC together with dispensation
30. Details of private fuel benefits and the payable
31. Blank
32. Inland Revenue Documentation
33. Accounts for 1998 & 1999
34. April 2000 management accounts
35. Blank
36. Bank of Scotland duty deferment guarantee documents
2
File 1A
No. Description
1. Merrychef Holdings Limited Company Search Report
2. Elvadene Limited Company Search Report
3. Merrychef Limited Company Search Report
4. Mealstream (UK) Limited Company Search Report
5. Pumpcroft Limited Company Search Report
6. Twilight Band Company Search Report
7. Merrychef Projects Limited Company Search Report
File 2
No. Description
1. Statement relating to significant contracts
2 GVL Turboaire Development Project Contract
3. GVL mbh Manufacturing Agreement
4. VCK SL Manufacturing Agreement
5. Supply Proposal for Microwave and Microwave Combination Ovens to Asda
Stores plc
6. Bass Taverns Supply Agreement and related correspondence
7. Conditions of contract for the supply of goods and services to Bass Taverns
Limited
8. Correspondence relating to supply proposal for City Centre Restaurants (UK)
Limited
9. Correspondence relating to the Renewal of Sole Supply Pricing Proposal
regarding Xxxxxx Xxxxx and Xxxxxx plc
10. Proposal for the Supply of Microwave and Microwave Combination Ovens
regarding Granada Purchasing Limited
3
11. Group Purchasing Agreement for Rank Leisure Holdings plc
12. Tender to supply microwave ovens and microwave combination ovens to
Scottish and Newcastle Retail Limited
13. Scottish and Newcastle proposal for the renewal of Merrychefs sole supplier
nomination with Scottish and Newcastle Limited
14. Correspondence with Bass Leisure Retail regarding Vantage Inns
15. Asda Stores plc Supply Proposal 1998-2000
16. Scottish and Newcastle proposal for Sole Supply Nomination with Scottish
and Newcastle Retail Limited
17. Tesco plc proposal
18. Whitbread - Proposal for the Supply of Microwave and Microwave and
Combination Ovens
19. Scottish and Newcastle Retail Limited QARAC Margin Analysis (example)
20. Whitbread - Contract GC1216P
21. Xxxxx Gastrotechnik GmbH Agreement
22. Nordson Corporation Manufacturing Agreement
23. Redcliffe Magtronics Limited Technical Support Agreement
24. Redcliffe Magtronics Limited Agreement for the Aquisition for the Magnetech
Business
25. Blank
26. Bass Taverns Limited Supply Agreement
27. Bass Taverns Limited - Conditions of Contract for the Supply of Goods and
Services
28. City Centre Restaurants Supply Proposal
29. Xxxxxx Xxxxx & Xxxxxx - Renewal of Sole Supply Pricing Proposal
30. Granada Purchasing Limited - Supply Proposal
31. Blank
4
32. Rank Group Pricing Proposal
33. Rank Divisions - Users Guide to Merrychef
34. Tesco Pricing Agreement
35. Whitbread plc - Users Guide to Merrychef
36. Scottish and Newcastle Retail Managed Estate - Supply Tender
37. Asda Stores plc - Supply Proposal
File 3
No. Description
1. Whitbread plc - Contract GC/1216P Correspondence/Agreement/Annex
2. Microcare Agreement
3. Southampton Football Club Agreement
4. Blank
5. VCK Spain - quote for development of vending oven
6. Norsden Corporation Manufacturing agreement
7. GVL mbH - correspondence and agreement
8. Concept Product Design - Non-Disclosure and Protective Agreement
9. Charcuterie Limited agreement
10. Hot Sandwich Project - Agreement and Termination Letter
11. Compromise Agreement (Xxxxx Xxxxxxxx)
12. ACT Spectral Purchase Orders and 10" System Development Proposal
13. JenAct Limited Manufacturing Agreement
14. Lex Accident Management Agreement
15. RICHO Purchase, Services and Supplies Agreement
5
16. Microcare Systems Limited Agreement
17. Redcliffe Magtronics Technical Support Agreement
18. Hot Sandwich Project Correspondence and Agreement
19. Charcuterie - Agreement and Notice of Termination
20. Rinnai - Correspondence and Distribution Agreement
21. Lex Vehicle Leasing Master Hiring Agreement
22. Xxxxx Copiers Limited Service Agreement
23. Lex Vehicle Leasing Addendum to the Master Hiring Agreement
24. Hitachi Europe Limited - Note to Confirmation
25. Amana - Correspondence and Agreement
26. Sampo Corporation Joint Agreement
27. Unike International Confidentiality Agreement
28. Xxxxxx Microwave Limited Agreement
29. Nt Cad Cam Purchaser Order Requisition Form
30. TSSC (Statement with regard to distribution in Dubai)
31. Xxxxx Xxxxx Corporation - Commercial Heads of Agreement
32. List of Key Distributors for Merrychef
33. Redcliffe Magtronics Limited - Agreement for the Acquisition of the
Megnetech Bushess.
6
File 3A
No. Description
1. Redcliffe Magtronics Limited - Assignment of Industrial Property Rights
2. Redcliffe Magtronics Limited - Assignment of Goodwill
3. Redcliffe Magtronics Limited - Assignment of Contracts
4. Redcliffe Magtronics Limited - Technical Support Agreement
5. Redcliffe Magtronics Limited - Without Prejudice Letter
6. City Centre Restaurants (UK) Limited - 2000-2001 Supply Proposal
7. E-mail and GLV mbH Manufacturing Agreement
8. Draft Contract relating to the GVL Turboaire Development Project Contract
9. Two letters from GVL MbH
10. List of agreements which the company has entered in to
11. Letter dated 1 June from Redcliffe Magtronics Limited
File 4
No. Description
1. List of employees and escalation procedure
2. Details of employees
3. Company Handbook
4. Contracts of employment and other documents relating to Xxxxx Xxxxxxx
5. Service Agreement of Xxxxxx Xxxx
6. Service Agreement of Xxxxx Xxxxxxx
7. Service Agreement of Nigel Thorneywork
8. Service Agreement of Xxxxxx Xxxx
7
9. Service Agreement of Xxxxx Xxxxxx
10. Variation of directors' service agreements
11. Details relating to non standard employees/potential leavers/leaver and
joiners
12. Compromise Agreement of Xxxxx Xxxxxxxx and related correspondence
13. Commentary on staff turnover and leavers
14. Compromise Agreement of Xxxxxx Xxxxxx
15. Compromise Agreement of Xxxxx Xxxxxxxxx Xxxxxxxx
16. Details relating to salary reviews
17. Details relating to various employee issues/non standard
employees/leavers and joiners
18. Documents and correspondence relating to the appointment of Xxxxxx
Xxxxxxxx as Non Executive Director
19. Xxxxxxx Xxxxxxxx - Consultancy Agreement
20. M Xxxxxx - Consultancy Agreement
21. J Whirton - Consultancy Agreement
22. Salary review of Xxxxx Xxxxxx
23. Accident Book
24. Health and Safety Policy Document
25. Accident reports
26. Certificate of Employers Liability Insurance
27. List of employee pension and salary details
28. Blank
29. Letter regarding Xxxxx Xxxxxxxxxxx'x salary
8
File 5
No. Description
1. General company statement on insurance policies
2. Royal & Sun Alliance Insurance policy details Policy No. PZ-RKJ246240
3. The Fairmount Group long term disability insurance
4. Correspondence relating to UNUM Policy No. 911601 long term disability
insurance provisions
5. AON Risk Services Policy No. RNN768606
6. Description of company Claims Procedures
7. Royal & Sun Alliance Policy and Schedule
8. Blank
9. Spectrum policy no. 74UK855213
10. Sun Life Assurance. Contracted-Out Money Purchase Pension Scheme No.: 81491
11. Letter From Sun Life regards Retirement Benefits Scheme (1)
12. Retirement and Death Benefits Plan
13. Sun Life Group Personal Pension Plan information Pack
14. Sun Life Group Personal Pension Plan xxxxxx details
15. Company description of long term disability insurance scheme available to
employees
16. List of employees enrolled with the Sun Life Pension Plan
17. Letter from Xxxx Xxxxx Financial Services Ltd relation to pension
Arrangements
18. Inland Revenue Certificate of approval for retirement benefits scheme
19. Standard Life Memorandum to company relation to Stanplan
20. Letter from AON Insurance Brokers confirming Public/Products Liability
9
21. Letter from the Contributions Agency to the Pensions Scheme Trustees
22. Sun Life Contracted-Out Money Purchase Scheme on employer's guide
23. Material relation to the Sun Life Personal Pension Plan
24. AON Insurance Claims Record
25. List of Insurance Policies
File 6
No. Description
1. Letter regarding rating at Ash Vale
2. Letter/Lease/Surrender and Deed of Release/Letter of Assignment relating to
Moorfield Road and Memorandum relating to Slyfield Industrial Estate
3. Surrender between Max Art Limited and Crusader Insurance
4. Tenancy Agreements relating to 2 & 3 of Xxxxxxx Way Crawley
5. Tenancy Agreements relating to 2 & 3 of Xxxxxxx Way Crawley
6. Orders of Clerkenwell County Court regarding Xxxxx 0 & 0 Xxxxxxx Xxx
Xxxxxxx
7. Report on Inspection of CPV Industrial Unit Enterprise Estate Station Road
West Lysons Avenue Ash Vale Aldershot
8. Deed of Agreement for the lease of the Brinell Factory Station Road West
Ash Vale Aldershot/Specification for Office Extension and Internal
Alterations/Warranty Agreement/Memorandum of Agreement/Schedule of Services
and fees/Supplemental Deed of Agreement
9. Lease of the Brinell Factory Road West Ash Vale Aldershot
10. land Certificate relating to on the South Side of Lysons Avenue the land
Ash Vale
11. Conveyance between the State for Defence and the Council Secretary of the
Borough of Guildford
10
12. Blank
13. Warranty Agreement and invoice relating to he works carried out at the
Brinell Factory
14. Lease of land at Lysons Avenue Ash Vale Surrey
15. Property Report relating to the Brinell Factory Road West Ash
Vale/Schedule of Planning Permissions
16. Letter from Xxxxxxxx Xxxx and Plan relating to the Brinell Machine Tools
Factory Lysons Avenue Ash Vale
17. Letter from Xxxxxxxx Xxxx regarding the surrender of the Brinell Machine
Tools Factory Lysons Avenue Ash Vale
18. Various Decisions/Consents/Permissions of Guildford Borough Council and
Plans relating to the Brinell Works Station Road West together with
Office Copy Entries and Plans
File 7
No. Description
1. Various reports from Surrey County Council and letter to Surrey Fire and
Rescue Service regarding fire precautions
2. Series of Health & Safety Minutes
3. Safety Procedures Memorandum
4. Health & Safety Requirements for Service Engineers
5. Blank
6. Details of any specific legislation or regulations under which the
business operates
7. Series of British Standard Specification Requirements and Standards
8. Royal Sun Alliance Report of working examination of a single item within
a pressure system
9. Gas Safety Report
10. Nimrod Fire Protection Limited Inspection invoice
11
11. Maintenance Report
12. Modern Alarms Limited Agreement/Specifications/NACOSS Certificate of
Compliance in respect of Security System Installation
13. AMP letter regarding the payment of invoices/AMP Summary Sheet
14. North Hants for Lift Hire Contract Services
15. ADT Call Form/Receipt
16. IS0 9002: 1994 Certificate of Approval
17. Various Corgi Certificates
18. Office of Fair Trading Standing Licence (Renewal)
19. Details regarding defective products
20. Blank
21. Blank
22. General Declaration of Conformity with EMC 89/336/EEC and LVD 73/23/EEC
Directives
23. Blank
24. Merrychef Cover Maintenance Service Contracts details
25. Various documents relating to waste and packaging
26. British Standards including LVD and EMC compliance certificates
certificates/licences
File 8
No. Description
1. Merrychef Evolution Technical Specifications
2. Details regarding intellectual property
3. Claims and Patent Specifications
4. Intellectual property infringement claims
12
5. Correspondance between Merrychef Limited and Xxxxx International Limited
relating to the Revolver Project
6. Marks and Clerk correspondence/documents regarding work undertaken for
Merrychef Holdings Limited
7. Data Protection Register correspondence and a copy of the register
8. Patents, specifications, correspondence and other documents relating to
the Turbochef issue.
9. Letter and Schedules of patents owned by the Company
13
Contents
1. Definitions and interpretation .......................................... 1
2. Sale and purchase ....................................................... 10
3. Consideration ........................................................... 10
4. Completion .............................................................. 11
5. Post completion matters ................................................. 13
6. Warranties .............................................................. 13
7. Covenant for Taxation ................................................... 15
8. Purchaser's remedies .................................................... 15
9. Limitations on liability ................................................ 16
10. Conduct of Non Tax Claims .............................................. 19
11. Non-competition covenants .............................................. 20
12. Pensions ............................................................... 21
13. General ................................................................ 21
14. Announcements .......................................................... 24
15. Costs and expenses ..................................................... 24
16. Notices ................................................................ 24
17. Severance .............................................................. 25
18. Governing law and jurisdiction ......................................... 25
Schedule I .................................................................. 1
(The Vendors and 3i) ........................................................ 1
Schedule 2 .................................................................. 30
(Information concerning the Company) ........................................ 30
Schedule 3 .................................................................. 32
Information concerning the Group Companies .................................. 32
Schedule 4 .................................................................. 44
(Non-Tax Warranties) ........................................................ 44
1. Capacity ................................................................ 44
2. Enforceability .......................................................... 44
3. Company ................................................................. 44
4. Subsidiaries ............................................................ 45
5. Insolvency of the Group ................................................. 46
6. Corporate compliance .................................................... 46
7. Statutory books and documents filed ..................................... 47
8. Memorandum and Articles of Association .................................. 47
9. Common seal ............................................................. 47
10. Documents stamped ...................................................... 47
11. Possession of documents ................................................ 48
12. Accuracy and adequacy of information ................................... 48
13. Preparation and contents of the Accounts ............................... 48
14. Accounting records ..................................................... 49
15. Management Accounts .................................................... 49
16. Events since the Accounts Date ......................................... 50
17. Financial commitments and borrowings ................................... 51
18. Defective products or services ......................................... 52
19. Insurances ............................................................. 52
20. Contracts and commitments .............................................. 52
21. Terms of trade ......................................................... 53
i
22. Licences and consents ................................................ 53
23. Trading partners ..................................................... 54
24. Competition and trade regulation law ................................. 54
25. Compliance with laws ................................................. 55
26. Litigation and disputes .............................................. 55
27. Ownership and condition of assets .................................... 56
28. Charges and encumbrances over assets ................................. 56
29. Intellectual Property ................................................ 57
30. Data Protection Act .................................................. 60
31. Directors and employees .............................................. 60
32. Industrial relations ................................................. 63
33. Pensions ............................................................. 63
34. Title ................................................................ 65
35. Encumbrances ......................................................... 66
36. Planning matters ..................................................... 67
37. Statutory obligations ................................................ 68
38. Adverse orders ....................................................... 68
39. Leasehold properties ................................................. 68
40. Condition of the Properties .......................................... 69
41. Tenancies ............................................................ 70
42. Other involvement in relation to Property ............................ 70
43. Amana matter ......................................................... 70
44. Preliminary enquiries ................................................ 70
Schedule 5 ................................................................ 71
(Particulars of the Property) ............................................ 71
Schedule 6 ................................................................ 62
(Current Pension and Disability Schemes) .................................. 62
Schedule 7 ................................................................ 63
1. Definitions and interpretation ........................................ 65
2. Covenant for Taxation ................................................. 68
3. Covenant to Warrantors ................................................ 71
4. Tax Warranties ........................................................ 72
5. Limitations on liability .............................................. 75
6. Repayment ............................................................. 77
7. Over-provision and Reliefs ............................................ 77
8. Tax Returns ........................................................... 78
9. Claims Procedure ...................................................... 79
10. Miscellaneous ........................................................ 80
Schedule 9 ............................................................... 82
Schedule 10 ............................................................... 85
(The Redcliffe Claim) ..................................................... 85
ii
