DATED 1st December 1999
4FRONT GROUP UK LIMITED
- and -
4FRONT GROUP PLC -
- and -
BLAKEDEW 181 LIMITED
SHARE SALE AND PURCHASE AGREEMENT
relating to the entire issued share
capital of Hammer Distribution
Limited and V2 Electronics Limited
ENGROSSMENT
Index to Clauses
1 Interpretation
2 Agreement for Sale of the Sale Shares
3 Purchase Consideration
4 Completion
5 Warranties and Undertakings by the Vendor
6 Restrictive Covenants
7. General
8 Law and Jurisdiction
9 Notices
10 Guarantee
Schedules
1 The Companies
2 Warranties
3 Short Particulars of the Properties
4 Vendor Protection Provisions
THIS AGREEMENT is made on 1st December 1999
BETWEEN
(1) "The Vendor" 4FRONT GROUP UK LIMITED (registered number 3504724)
whose registered office is at 0 Xxxxxxxx Xxxxxxxx
Xxxx, Xxxxxxxx Xxx, Xxxxxxx, Xxxxxxxxxxxxx, XX0 0XX;
(2) "The Guarantor" 4FRONT GROUP PLC (registered number 2278419) whose
registered office is also at 4 Colonial Business Park;
(3) "The Purchaser" BLAKEDEW 181 Limited (registered number 3829646) whose
registered office is at Xxx Xxxxx, 0 Xxxxxx Xxxxxx
Road, Segensworth East, Xxxxxxx, Xxxxxxxxx XX00 0XX.
IT IS AGREED as follows:
1. INTERPRETATION
In this Agreement, including its Schedules, unless the context otherwise
requires, the following words and expressions have the following meanings:
1.1 Definitions
"Additional
Consideration" the amount (if any) payable to the Vendor pursuant
to clause 3.2(a)(ii);
"Agreed form" in relation to any document such document in the
form agreed between the parties on or prior to the
date of this Agreement and initialled for the purpose
of identification by the parties;
"CA" Companies Xxx 0000 (as amended by the Companies
Act 1989);
"CAA" Capital Allowances Xxx 0000;
"Companies Acts" CA and the former Companies Acts (within the meaning
of CA s 735(1));
"Companies" Hammer and V2 and the expression "Company" shall mean
either of them;
"Completion" completion of the sale and purchase of the Sale Shares
in accordance with clause 4;
"Completion Date" the date of this Agreement;
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"Consideration" the total consideration for the Sale Shares being the
sum specified in clause 3.1;
"Deed of Tax the deed in respect of Taxation in
Covenant" the Agreed Form;
"Disclosure Letter" the disclosure letter of the same date as this
Agreement from the Vendor to the Purchaser;
"Environmental Laws" in relation to Environmental Matters all or any
relevant statutes, rules, regulations, statutory
instruments, treaties, directives, directions,
by-laws, codes of practice, circulars, guidance,
notes, orders, notices, demands, injunctions, statute
law or common law, statutory or common law, duty of
care of any governmental authority or agency or any
regulatory or other body in any jurisdictions or the
European Community;
"Environmental any of the following:
Matters"
(a) any discharge, release, entry or introduction
whether direct or indirect into the environment;
(b) any deposit, disposal, keeping, treatment of any
waste or Relevant Substance or any importation,
exportation, transportation, handling,
processing, manufacture, collection, sorting or
presence of any Relevant Substance;
(c) any discharge, release or entry into water,
including (without limitation) into any river,
water course, lake, loch or pond (whether natural
or artificial or above or below ground) or
reservoir, the surface of the river bed or of
other land supporting such waters, ground waters
(as defined in s 1(12) Environmental Protection
Act 1990), sewer or the sea;
(d) nuisance, noise, defective premises, health and
safety at work, industrial illness, industrial
injury due to environmental health problems, the
conservation, preservation or protection of the
natural or built environment or of man or any
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living organisms supported by the environment or
any other matter whatsoever affecting the
environment or any part of it;
and so that "environment", "release" and "waste" have
the respective meanings ascribed thereto by the
Environmental Protection Xxx 0000 or under the
relevant environmental legislation applicable to the
appropriate jurisdiction in which either the Relevant
Property is situated or the business of the relevant
Group Company is conducted or carried on;
"FA" Finance Act;
"Group" the group of companies consisting of Hammer and V2.
The expression "member of the Group" or "Group
Company" means either of them;
"Hammer" Hammer Distribution Limited (Registered Number
2640532) whose registered office is at 0 Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx Xxx, Xxxxxxx, Xxxxxxxxxxxxx,
XX0 0XX;
"ICTA" Income and Corporation Taxes Xxx 0000;
"Intellectual includes any patent, patent application, know-how,
Property Rights" trade xxxx, trade xxxx application, trade name,
registered design, copyright, trade secret and other
confidential information, design rights, topography
rights, service xxxx, service xxxx application,
business name, moral rights, registrations of and
applications to register any of the aforesaid items,
rights in the nature of any of the aforesaid items in
any country;
"Last Accounts" the audited financial statements of each
member of the Group for the accounting reference
period which ended on the Last Accounts Date (each
such financial statement comprising a balance sheet,
profit and loss account, cash flow statement, notes
and directors' and auditors' report) copies of which
are annexed to the Disclosure Letter;
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"Last Accounts Date" 31st January 1999 (being the date to which the Last
Accounts have been prepared);
"Press Announcement" means the press announcement in the Agreed Form
relating to the sale and purchase hereunder
"Properties" the leasehold properties of the Group shortly
described in Schedule 3;
"Purchaser's Messrs. Xxxxx Xxxxxxxx of 21 Cumberland Place,
Solicitors" Xxxxxxxxxxx, Xxxxxxxxx XX00 0XX;
"Relevant Property" the Properties and any other freehold or leasehold
property now or previously owned, leased, licensed or
otherwise occupied by the Group;
"Relevant Substances"any hazardous, dangerous, toxic, poisonous,
radioactive, offensive, harmful, flammable, explosive,
infectious or polluting substance, including (without
limitation) any substance or waste included under
referred to in or regulated by any Environmental Laws
relating to matters within the scope of the definition
of Environmental Matters, or anything made using those
substances or any substance the presence of which in
or under land has caused significant harm or creates a
significant possibility of such harm being caused or
which pollutes or is likely to pollute the
environment;
"Restricted the distribution of mass storage devices, and computer
Business" peripheral products;
"Sale Shares" in respect of Hammer, the 11,875 ordinary shares
of L1.00 each in the capital of Hammer fully paid or
credited as fully paid comprising the whole of its
issued share capital and, in respect of V2, the 2
ordinary shares ofL1.00 each in the capital of V2
fully paid or credited as fully paid comprising the
whole of its issued share capital;
"Substantial means the entry into of any contract and/or scheme
Disposal" and/or arrangement, or any series of contracts and/or
schemes and/or arrangements, whereby:
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(a) a Substantial Interest in the Purchaser or any
holding company of the Purchaser is or is to be
or may be acquired by any person or associated
persons; and/or
(b) a Substantial Interest in the Company is or is to
be or may be acquired by any person or associated
persons; and/or
(c) a Substantial Part of the Undertaking of the
Company is or is to be or may be acquired by any
person or associated persons;
"Substantial means in relation to a Substantial Disposal the
Disposal aggregate from time to time of the values of all of
Consideration" the items referred to in paragraphs (a) and (b) below
but excluding VAT charged on a Substantial Disposal
falling within paragraph (c) of the definition of
Substantial Disposal:
(a) the value of the consideration received by or on
behalf of the person or persons making the
Substantial Disposal (including, where such
person(s) is or includes a company, the
consideration received by or on behalf of any
member or members of that company) in respect of
the Substantial Disposal as part of or connected
with the contract, scheme or arrangement
effecting the Substantial Disposal (whether in
cash, by the assumption or settlement of
liabilities or otherwise whatsoever); and
(b) the value of any cash, property, assets, rights
and/or other benefits received by or on behalf of
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any person or persons (other than the persons or
associated persons to whom the Substantial
Disposal is made) as part of or connected with
the contract, scheme or arrangement effecting the
Substantial Disposal including (without
limitation and where applicable) any dividends
and distributions paid or distributed immediately
prior to or in contemplation of the Substantial
Disposal and any sums paid or agreed to be paid
in respect of any redemption or repurchase of
shares by the Company in which a Substantial
Interest was acquired so as to constitute a
Substantial Disposal falling with paragraphs (a)
or (b) of the definition of Substantial Disposal
immediately prior to or in contemplation of that
Substantial Disposal;
PROVIDED THAT any value to be determined pursuant
to paragraphs (a) and (b) above shall be
determined as at the date upon which it is
received;
"Substantial means the beneficial interest in more than 51 per cent
Interest" of the equity share capital of a company or the right
to exercise in excess of 51 per cent of the votes
ordinarily capable of being cast on a poll at a
general meeting of a company or the right to appoint
or remove a majority of the board of directors of a
company.
"Substantial means any part of the undertaking or assets of the
Part of the Company whose turnover in the 12 month period
Undertaking" completed immediately prior to the Substantial
Disposal comprised more than 51 per cent of the total
turnover of the Company in that 12 month period.
"Taxation" includes all forms of taxes, charges, imposts, duties,
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and levies, of whatsoever kind payable in respect of
income, profits, distributions, gains and receipts of
all kinds or otherwise at the instance of the Inland
Revenue, Customs and Excise, Department of Health and
Social Security, fiscal, Governmental or local
Authorities or any other competent taxing authority of
the United Kingdom or elsewhere and all penalties,
charges and interest relating to any Tax Assessment,
including (without limitation) income tax, corporation
tax, advance corporation tax, capital gains tax, value
added tax, withholding tax, petroleum revenue tax,
customs and other import duties, stamp duty, stamp
duty reserve tax, inheritance tax, payments to be made
by any Group Company under the Pay As You Earn system
and national insurance contributions regardless of
whether such tax is directly or primarily chargeable
against or attributable to any Group Company or any
other person firm or company and references to:-
(a) income or profits or gains earned, accrued, or
received on or before a particular date or in
respect of a particular period shall include
income or profits or gains which have been deemed
to have been earned, accrued or received at or
before that date or in respect of that period;
(b) any payment or distribution made on or before a
particular date shall include:-
(i) any payment or distribution which on or
before that date has fallen due to be made;
and
(ii) any act or transaction which has occurred on
or before that date and is or has been
deemed to be a payment or distribution for
the purposes of any Tax Assessment; and
(c) any dividend shall include anything which has
been deemed to be a dividend or distribution to
shareholders or others for the purposes of any
Tax
7
Assessment;
"Taxation Statute" any statute, enactment, law, regulation or arrangement
wheresoever enacted or issued, coming into force or
entered into providing for or imposing any Taxation;
"TCGA" Taxation of Chargeable Gains Xxx 0000;
"TMA" Taxes Management Xxx 0000;
"VATA" Value Added Tax Xxx 0000;
"Vendor Group" means the Vendor, and any subsidiary or holding
company from time to time of the Vendor or a
subsidiary from time to time of any such holding
company other than in each case the Group Companies or
either of them;
"Vendor's Directors" means Xxxxxxx Xxxxxxx Xxxx and Xxxxxxx Xxxx Xxxxxx;
"Vendor's Solicitors"Messrs Xxxxxxxxx Xxxxxx & Xxxxx of 000 Xxxxxx Xxxxxx,
Xxxxxx, XX0X 0XX;
"V2" V2 Electronics Limited (registered number 03295088)
whose registered office is at 0 Xxxxxxxx Xxxxxxxx
Xxxx, Xxxxxxxx Xxx, Xxxxxxx, Xxxxxxxxxxxxx, XX0 0XX;
"Warranties" the warranties, representations and undertakings of
the Vendor set out in clause 5 and Schedule 2.
1.2 All references to a statutory provision shall be construed as including
references to:
1.2.1 any statutory modification, consolidation or re-enactment (whether
before or after the date of this Agreement) for the time being in
force;
1.2.2 all statutory instruments or orders made pursuant to a statutory
provision;
1.2.3 any statutory provisions of which a statutory provision is a
consolidation, re-enactment or modification.
1.3 A reference to an SSAP is a reference to a Statement of Standard
Accounting Practice and a reference to an FRS is a reference to a
Financial Reporting Standard both established by the Accounting
Standards Board in England and Wales.
1.4 Words denoting the singular include the plural and vice versa; words
denoting any one gender include all genders; words denoting persons
include firms and corporations and vice versa.
1.5 Unless otherwise stated, a reference to a clause or sub-clause or a
Schedule is a reference to a clause or a sub-clause of or a Schedule to
this Agreement and a reference to a paragraph is a reference to a
paragraph of a Schedule.
8
1.6 The words "subsidiary" and "holding company" shall have the same
meanings in this Agreement as their respective definitions in CA.
1.7 A person shall be deemed to be connected with another if that person is
connected with another within the meaning of s 839 ICTA.
1.8 Headings in this Agreement and in the Schedules are inserted for ease of
reference only and do not affect the construction of this Agreement.
2. AGREEMENT FOR SALE OF THE SALE SHARES
2.1 Subject to the terms and conditions of this Agreement, the Vendor shall
sell and the Purchaser in reliance upon the representations, Warranties
and undertakings set out in this Agreement and the Deed of Tax Covenant
shall purchase the Sale Shares.
2.2 The Vendor shall sell the Sale Shares free from all liens, claims,
charges, equities and encumbrances and with full title guarantee and so
that the provisions of ss 6(1) and 6(2) of the Law of Property
(Miscellaneous Provisions) Xxx 0000 shall not apply to the Purchaser.
2.3 Title to and beneficial ownership of the Sale Shares shall pass to the
Purchaser on Completion and the Sale Shares shall be sold and purchased
together with all rights and benefits attaching to them at the date of
this Agreement (including the right to receive all dividends,
distributions or any return of capital declared made or paid by the
Company on or after the date of this Agreement).
2.4 The Vendor hereby waives and agrees to procure the waiver of any
pre-emption rights and any other restrictions on transfer which may
exist in relation to any of the Sale Shares whether conferred by the
Articles of Association of the Company or otherwise.
2.5 The Purchaser shall not be obliged to complete the purchase of any of
the Sale Shares unless the purchase of all the Sale Shares is completed
simultaneously.
3. PURCHASE CONSIDERATION
3.1 The consideration shall be the sum of L5,192,500.00 which shall be paid
or satisfied as follows:-
3.1.1 by payment of the sum of L4,650,000 on Completion by telegraphic
transfer to the Vendor's Solicitors (whose receipt shall be a
sufficient discharge therefor); and
3.1.2 by payment of the sum of L542,500 to the Vendor in the following
instalments on the following dates:-
31st May 2000 L90,333
30th June 2000 L90,333
31st July 2000 L90,333
31st August 2000 L90,333
30th September 2000 L90,333
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31st October 2000 L90,835
3.2 a) If during the period ending six months after the Completion Date
a Substantial Disposal occurs (whether or not completion of such
Substantial Disposal occurs during such period of 6 months) the
Purchaser shall:-
(i) forthwith upon a Substantial Disposal occurring and on completion
of such Substantial Disposal and (if applicable) upon the date
upon which any contingent Substantial Disposal Consideration is
payable notify the Vendor in writing of the terms of the same
including, without limitation, a calculation of the amount of the
Additional Consideration payable (insofar as the same is
ascertainable) or if none is payable a statement thereof; and
(ii) pay to the Vendor an amount equal to one half of the amount by
which the Substantial Disposal Consideration exceeds L5,192,500
in accordance with the provisions of clause 3.2(b) or (c) as
applicable.
(b) If the Substantial Disposal Consideration is payable in full on
completion of the Substantial Disposal the Additional Consideration
shall be paid by the Purchaser to the Vendor in cash immediately
following such completion.
(c) If any part of the Substantial Disposal Consideration is contingent the
Purchaser shall pay to the Vendor in cash immediately following
completion of the Substantial Disposal such amount of the Additional
Consideration as is then ascertainable and the balance of any Additional
Consideration shall become due and payable in cash immediately following
the payment of the contingent Substantial Disposal Consideration (if
any).
(d) If either:-
(i) the Purchaser notifies the Vendor pursuant to clause 3.2(a)(i)
that no Additional Consideration is payable; or
(ii) the Substantial Disposal Consideration or any part of it is not
payable in cash;
the Purchaser shall, upon completion of the Substantial Disposal furnish
the Vendor with written evidence of the basis of determination of the
value of the Substantial Disposal consideration and the Vendor shall be
entitled, at any time within 6 months of receipt of such written
evidence to request from the Purchaser such other documents and
information as the Vendor may reasonably require in relation to such
determination.
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(e) If the Vendor, within 6 months of any date when any part of the
Substantial Disposal Consideration falls to be determined disputes the
amount of the Additional Consideration or part thereof or the absence of
any Additional Consideration payable the parties shall use reasonable
endeavours to agree the matter the subject of the dispute and, in
default of agreement shall, on the application of either party, refer
the matter in dispute to a chartered accountant agreed between them or
in default of agreement appointed by the President for the time being of
the Institute of Chartered Accountants in England and Wales. Any such
accountant shall act as expert and not as arbitrator and his decision
shall in the absence of fraud or manifest error be final and binding.
The costs of such accountant shall be borne as he shall direct.
3.3 Any payment pursuant to this clause 3 which is not made on its due date
shall bear interest at 3% above the base rate of the Governor and
Company of the Bank of Scotland from time to time from such due date to
the date of actual payment (both dates inclusive) as well after as
before judgment.
3.4 The deferred consideration of L542,500 referred to in clause 3.1.2 above
shall not be subject to any right of set off or counterclaim by the
Purchaser in respect of any claim made by the Purchaser pursuant to the
Warranties and or the Deed of Tax Covenant unless and until such claim
shall have either been agreed in writing by the Vendor and the Purchaser
or determined by a judgment of the Supreme Court of England and Wales
and that judgment includes an express provision permitting set off.
4. COMPLETION
4.1 Completion shall take place at the offices of the Purchaser's Solicitors
on the Completion Date when, subject to clause 4.6, all the transactions
mentioned in the following provisions of this clause 4 shall take place.
4.2 The Vendor shall deliver to the Purchaser:
4.2.1 duly completed and signed transfers in favour of the Purchaser or
as it may direct in respect of all of the Sale Shares together
with the relative share certificates in the name of the Vendor
or, in respect of any of the Sale Shares which are not registered
in the name of the Vendor, executed Stock Transfer forms in
respect of such shares in favour of the Purchaser, together with
the relative share certificates in the names of the relevant
transferors;
4.2.2 the Deed of Tax Covenant duly executed by the Vendor;
4.2.3 the resignations of the Vendor's Directors and the secretary
(Xxxxxxxx Xxx Xxxxxx) from their respective offices in each
member of the Group, with a written acknowledgement under seal
from each of them in such form as the Purchaser
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requires that he has no claim against any member of the Group in
respect of breach of contract, compensation for loss of office,
redundancy or unfair dismissal or on any other grounds
whatsoever;
4.2.4 the written resignation of the existing auditors of each member
of the Group to take effect on the Completion Date confirming
that they have no outstanding claims of any kind against any
member of the Group and containing a statement complying with CA
s394;
4.2.5 such waivers or consents as the Purchaser may require to enable
the Purchaser or its nominees to be registered as holders of any
of the Sale Shares in the Agreed Form;
4.2.6 an unconditional deed of release from each member of the Group's
bankers evidencing the release and discharge of all guarantees
and charges granted by each member of the Group together with a
release from the Vendor Group's bankers in respect of any
security granted by the Vendor Group over the Sale Shares;
4.2.7 certified copies of any powers of attorney under which any of the
documents referred to in this clause 4.2 is executed or evidence
satisfactory to the Purchaser of the authority of any person
signing on its behalf;
4.2.8 irrevocable powers of attorney (in the Agreed Form) executed by
the Vendor in favour of the Purchaser, or its nominees, enabling
the Purchaser or its nominees, pending registration of the
transfers of the Sale Shares to exercise all voting and other
rights attaching to the Sale Shares and to appoint proxies for
such purpose;
4.2.9 the statutory books of each member of the Group complete and up
to date and their certificates of incorporation, cheque books,
common seals (if any) and any unused share certificate forms;
4.2.10 the title deeds relating to each of the Properties;
4.2.11 written confirmation from the Vendor for itself and on behalf of
the Vendor Group that there are no subsisting guarantees given by
any member of the Group in their favour and that after compliance
with clause 4.3 the Vendor and any member of the Vendor Group
will not be indebted to any member of the Group or vice versa.
4.3 Forthwith upon Completion
4.3.1 the Vendor shall repay and shall procure that any member of the
Vendor Group shall repay all monies then owing by it to any
member of the Group whether due for payment or not; and
4.3.2 the Purchaser shall procure that each member of the Group shall
repay to the
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Vendor and/or any other member of the Vendor's Group all monies
owing to such persons and to the extent that either or both of
the Group Companies does not have sufficient funds available to
make any such repayment the Purchaser shall make available such
funds to such Group Company for such purpose.
4.4 Board meetings of each member of the Group shall be held at which:
4.4.1 such persons as the Purchaser may nominate shall be appointed
additional directors;
4.4.2 the transfers referred to in clause 4.2.1 (as the case may be)
shall be approved (subject to stamping);
4.4.3 the resignations referred to in clauses 4.2.3 and 4.2.4 shall be
submitted and accepted;
4.4.4 Messrs Xxxxx Xxxxxxxx shall be appointed auditors of the Company;
4.4.5 the registered office shall be changed as directed by the
Purchaser.
The Vendor shall hand to the Purchaser duly certified copies of
such Board Resolutions.
4.5 Upon Completion the Purchaser shall:
4.5.1 provide a CHAPS payment for the sum of L4,650,000 to the Vendor's
Solicitors who are authorised to receive the same on behalf of
the Vendor and whose receipt shall be an absolute discharge
therefor to the Purchaser and the Purchaser shall not be
concerned to see to the distribution of the monies thereby
represented;
4.5.2 execute the Deed of Tax Covenant
4.6 The Purchaser may in its absolute discretion waive any requirement
contained in clauses 4.2, 4.3(1) and 4.4 and the Vendor may in its
absolute discretion waive any requirement contained in clauses 4.3(2)
and 4.5.2.
4.7 Immediately following Completion the parties will procure that the Press
Announcement is released.
5. WARRANTIES AND UNDERTAKINGS BY THE VENDOR
5.1 The Vendor hereby represents, and warrants to and with the Purchaser
that each of the statements in Schedule 2 are true complete and accurate
in all respects and so that all references in Schedule 2 to the Company
shall unless the context otherwise requires be construed as references
to each Group Company.
5.2 The Warranties are given subject to matters fairly and properly
disclosed in the Disclosure Letter.
5.3 The Vendor undertakes in relation to any Warranty which is expressed to
be made "to the best of the Vendor's knowledge and belief" or "so far as
the Vendor is aware" or is qualified in some other manner having
substantially the same effect, that it has made
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reasonable enquiry into the subject matter of the Warranty prior to the
date hereof in respect of Warranties relating to Taxation of Xxxxxx
Xxxxx & Spofforth, of Xxxxxx Xxxxxxx in respect of the warranty in
paragraph 9.8 of Schedule 2 and of the Vendor Directors in respect of
all Warranties.
5.4 Each of the Warranties is without prejudice to any other Warranty and,
except where expressly stated otherwise, no clause contained in this
Agreement shall govern or limit the extent or application of any other
clause.
5.5 The rights and remedies of the Purchaser in respect of any breach of the
Warranties shall not be affected by Completion, or failing to exercise
or delaying the exercise of any right or remedy or by any other event or
matter whatsoever, except a specific and duly authorised written waiver
or release, and no single or partial exercise of any right or remedy
shall preclude any further or other exercise.
5.6 The Vendor acknowledges that the Purchaser has entered into this
Agreement in reliance inter-alia upon the Warranties..
5.7 None of the information supplied by the Company and/or its directors or
employees or its professional advisers prior to the date hereof to any
of the Vendor or its agents, representatives or advisers in connection
with the Warranties, the Tax Deed and the contents of the Disclosure
Letter, or otherwise in relation to the business or affairs of the
Company shall be deemed a representation, warranty or guarantee of its
accuracy by the Company and/or any of its directors or employees to the
Vendor, and the Vendor waives any claims against the Company and/or any
of its directors or employees which it might otherwise have in respect
of it except to the extent that the same arises as a result of the fraud
of any such person.
5.8 Save in respect of a Claim referred to in Clause 5.10 the Purchaser
shall not be entitled to bring a claim against the Vendor in respect of
any claim pursuant to the Warranties to the extent that the relevant
facts or matters giving rise to the claim were within the actual
knowledge of the Purchaser or Xxxxxx Xxxxxxxxxxx or Xxxx Xxxxxxxx on or
prior to today's date and were actually known by the Purchaser or Xxxxxx
Xxxxxxxxxxx or Xxxx Xxxxxxxx on or prior to today's date to constitute a
breach of the Warranties on or prior to the date hereof. For the
avoidance of doubt the burden of proof as to whether such fact or matter
giving rise to a claim pursuant to the Warranties was within the actual
knowledge of the Purchaser and/or Xxxxxx Xxxxxxxxxxx and/or Xxxx
Xxxxxxxx shall be for the Vendor to prove.
5.9 The Purchaser warrants to the Vendor that neither it nor Xxxxxx Xxxx
Xxxxxxxxxxx nor Xxxx Xxxxxxxx has actual knowledge of any circumstances
that would or may entitle it to make a
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claim under the Warranties and/or the Deed of Tax Covenant.
5.10 If the Purchaser notifies to the Vendor a Claim in accordance with the
Deed of Tax Covenant or in accordance with this Agreement for breach of
the Warranties relation to a Taxation liability arising in respect of
unpaid corporation tax by either Group Company in respect of the
accounting periods ended 31 January 1997, 31 January 1998 and/or 31
January 1999 arising from treatment of management charges and/or group
relief claims and the matter has not been resolved with the Inland
Revenue before 30 September 2000, the following provisions shall apply
notwithstanding Clause 3.4:-
5.10.1 as security for payment of such liabilities the Purchaser may instead of
paying the full amount of the Deferred Consideration to the Vendor due
on 30 September 2000 and 30 October 2000 deduct therefrom the lesser of
L150,000 and the estimated amount of unpaid corporation tax referred to
above and pay the sum deducted into a designated joint deposit account
in the names of the Vendors' solicitors and the Purchasers' solicitors
("the Deposit");
5.10.2 the Deposit shall be released to the Vendor as soon as possible after
the amount of the Claim is resolved in accordance with the Deed of Tax
Covenant or this Agreement, or otherwise PROVIDED THAT to the extent
that the Claim gives rise to a liability on the Vendor to make a payment
for breach of the Tax Warranties or pursuant to the Deed of Tax Covenant
that amount shall be released to the Purchaser from the joint deposit
account and only the balance (if any) shall be released to the Vendor;
5.10.3 interest accruing on the Deposit (after payment of bank charges and any
deduction of tax) shall follow the principal in accordance with Clause
5.10.2;
5.10.4 for the avoidance of doubt, any sum not deducted from the Deferred
Consideration with this Clause 5.10 shall be paid when due to the Vendor
in accordance with Clause 3.1 of this Agreement; and
5.10.5 the Vendor and the Purchaser hereby agree to instruct their respective
solicitors to give effect to the provisions of Clauses 5.10.1 to 5.10.4
5.11 The parties agree that any claims under the Warranties and/or the Deed
of Tax Covenant shall (save in the case of fraud) be limited in
accordance with the provisions of Schedule 4.
6. RESTRICTIVE COVENANTS
6.1 The Vendor undertakes (for itself and as agent for each member of the
Vendor Group) with the Purchaser that, except with the consent in
writing of the Purchaser but subject to the proviso that none of the
covenants contained in this clause 6.1 shall prevent or restrict the
Vendor or any member of the Vendor's Group at the date hereof from
carrying on business in the manner in which that company has hitherto
carried on business the Vendor will not and will procure that no member
of the Vendor Group shall, for a period of two years
15
from the Completion Date:
6.1.1 either on its` own account or for or on behalf of or through or
in conjunction, association or by arrangement with any person
whether for its own benefit or that of others, directly or
indirectly, carry on or be engaged, concerned or interested in or
in the carrying on of the Restricted Business in the United
Kingdom save:-
(a) as the holder for investment purposes only of not more than
3% of any class of shares or stock in a company where such
shares or stock are quoted or dealt in on a recognised
investment exchange.
(b) subject always to the provisions of clause 6.5 below where
the Vendor or Vendor Group has acquired a company or
business which has as an incidental part of its operations
the Restricted Business, and for the purposes of this clause
"incidental part" shall mean a company or business whose
turnover in respect of the Restricted Business is not
greater than 10% (ten per cent) of that company's or
business' turnover as a whole;
6.1.2 either on its own account or for or on behalf of or through or in
conjunction, association or by arrangement with any person
whether for its own benefit or that of others, directly or
indirectly in relation to the Restricted Business solicit,
canvass or approach any person who, at any time during the 12
months prior to the Completion Date it has actual knowledge was
provided with goods or services by any Group Company for the
purpose of offering to that person goods or services similar to
those with which he was so provided or otherwise to entice away
the custom or business of that person from any Group Company;
6.1.3 either on its own account or for or on behalf of or through or in
conjunction, association or by arrangement with any person,
whether for its own benefit or that of others, directly or
indirectly supply to any person specified in clause 6.1.2 goods
or services similar to those with which such person was so
provided by either Group Company at any time during the 12 months
prior to the Completion Date;
6.1.4 either on its own account or for or on behalf of or through or in
conjunction, association or by arrangement with any person,
whether for its own benefit or that of others, directly or
indirectly, solicit or entice away or endeavour to entice away
from any Group Company or offer to employ or offer to conclude
any contract for services with any person whom it knows to have
been a director, manager, consultant or employee of any Group
Company at any time during the 12 months
16
prior to the Completion Date (whether or not such persons would
commit any breach of contract by reason of his leaving service);
6.1.5 either on its own account or for or on behalf of or through or in
conjunction, association or by arrangement with any person
whether for its own benefit of that of others, directly or
indirectly, employ or conclude any contract for services with any
person whom it knows to have been a director, manager, consultant
or employee of any Group Company at any time during the 12 months
preceding the Completion Date.
6.2 The Vendor undertakes with the Purchaser (for itself and as trustee for
each Group Company) that, except with the prior consent in writing of
the Purchaser:
6.2.1 it will not and will procure that no member of the Vendor Group
shall wilfully use to the detriment of any Group Company or
disclose divulge or communicate directly or indirectly to any
person any secret or confidential knowledge or information
relating to the business, transactions, products or affairs of
any Group Company (including but not limited to operations,
processes, plans, inventions, product information, know-how,
design rights, trade secrets, software, market opportunities,
customers and business affairs) or supply or disclose to any
person details of any contracts or negotiations to which any
Group Company is a party or of any tenders offers or proposals
submitted or to be submitted by any Group Company in connection
with its business and of which it has knowledge at Completion
except as authorised in writing by any Group Company or a Court
of competent jurisdiction or otherwise required by law or any
applicable regulatory authority;
6.2.2 it will not and will procure that no member of the Vendor Group
shall at any time hereafter in relation to any trade, business,
firm, company or organisation use a name (whether registered or
not) or any trade xxxx or design the same as or confusingly
similar to any name or trade xxxx of any Group Company in use at
Completion.
6.3 Each of the covenants contained in clauses 6.1 and 6.2 shall be deemed
to be separate covenants and independent of each other.
6.4 While the parties hereto consider that the covenants contained in
clauses 6.1 and 6.2 are reasonable as between themselves their
respective interests and the public interests in all the circumstances
in which this Agreement will operate in order to protect the interests
of the Purchaser, it is agreed by and between the parties that if any
such restrictions shall be adjudged by a Court of competent jurisdiction
to be void or unenforceable but would be
17
valid and enforceable if deleted in part or reduced in application,
such restrictions shall apply with such deletion or modification as may
be necessary to make it valid and enforceable.
6.5 Where the Vendor or any member of the Vendor Group has acquired a
company or business whose turnover is in excess of 10% (ten per cent) as
referred to in clause 6.1 (b) above the Vendor shall, and shall procure
that the relevant member of the Vendor Group shall use all reasonable
endeavours to sell or cease to trade that part of the business referable
to the Restricted Business carried on by that company or business within
six months of the date of the purchase by the Vendor or the relevant
member of the Vendor Group of that company or business as the case may
be.
7. GENERAL
7.1 Each of the parties undertakes that no announcement of any kind shall be
made in respect of the subject matter of this Agreement unless
specifically agreed between the parties or an announcement is required
by law or any applicable regulatory authority.
7.2 This Agreement shall be binding upon and enure for the benefit of each
party's successors in title, but, except as expressly provided herein,
none of the rights of the parties under this Agreement or the Warranties
may be assigned or transferred.
7.3 (a) None of the parties shall be entitled to assign their rights or
obligations under this Agreement except that the Purchaser may
assign its rights and obligations hereunder to any other company
(incorporated in the United Kingdom) which is a member of the
same group of companies as the Purchaser or to the Governor and
Company of the Bank of Scotland or such other person providing
funding to the Purchaser for the purposes of the Consideration
which has been notified to the Vendor prior to signature of this
Agreement.
(b) Any assignment made pursuant to clause 7.3(a) shall have effect
only:-
(i) in the case of an assignment to a member of the same group
of companies as the Purchaser for so long as the assignee
remains a member of such group; and
(ii) in relation to the Governor and Company of the Bank of
Scotland or any other person providing funding to the
Purchaser for the purposes of payment of the Consideration
for so long as any such funding remains outstanding in whole
or in part;
and upon cessation in either case the Purchaser shall procure
that the assignee shall reassign such rights and obligations to
the original assignor.
7.4 (a) All expenses incurred by or on behalf of the parties, including
all fees of agents,
18
representatives, solicitors, accountants and actuaries employed
by any of them in connection with the negotiation, preparation or
execution or this Agreement shall be borne solely by the party
who incurred the liability and no member of the Group shall have
any liability in respect of them.
(b) All stamp duty payable upon the transfer of the Sale Shares
hereunder shall be borne by the Purchaser.
7.5 (a) This Agreement (together with any documents referred to herein or
executed in connection herewith) constitutes the whole agreement
between the parties hereto and supersedes any previous agreements
or arrangements between them relating to the subject matter
contained herein.
(b) Each party acknowledges that in entering into this Agreement it
has not relied on any undertaking, representation, warranty,
collateral contract or other assurance (except as set out in this
Agreement) made by or on behalf of any other party before the
signature of this Agreement. None of the parties shall have any
rights or remedies in respect of any such undertaking
representation warranty, collateral contract or other assurance
except in the case of fraud.
7.6. No variations to this Agreement shall be effective unless made in
writing and executed by or on behalf of the Vendor and the Purchaser.
7.7 All of the provisions of this Agreement, except in so far as they set
out obligations which have been fully performed at Completion, shall
remain in full force and effect notwithstanding Completion or any other
event or matter whatsoever, and shall not be deemed to be waived or
released except by a specific and duly authorised written waiver or
release by the Purchaser.
7.8 At any time after the date hereof the Vendor shall at the request and
cost of the Purchaser execute such documents and do such acts and things
as the Purchaser may reasonably require for the purpose of vesting the
Sale Shares in the Purchaser or its nominee and giving to the Purchaser
the full benefit of all the provisions of this Agreement or any
agreement referred to herein or executed in connection herewith.
7.9 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.
7.10 This Agreement may be entered into in any number of counterparts and by
the parties to it on separate counterparts, each of which when so
executed and delivered shall be an original, but all the counterparts
shall together constitute one and the same instrument.
19
8. LAW AND JURISDICTION
8.1 This Agreement shall be governed by English law and the parties shall
submit to the exclusive jurisdiction of the English Courts.
9. NOTICES
9.1 All notices, claims, demands or proceedings served by the parties with
respect to this Agreement shall be in writing and may be delivered by
hand or facsimile transmission or sent by pre-paid first class recorded
delivery post to the address of the addressee as set out in this
Agreement, or to such other address as the addressee may from time to
time have notified for the purpose of this clause and shall be deemed to
have been received:
9.1.1 if sent by first class post 2 business days after posting
exclusive of the day of posting;
9.1.2 if delivered by hand on the day of delivery.
9.2 In proving service:
9.2.1 by delivery by hand it shall be necessary only to produce a
receipt for the communication signed by or on behalf of the
addressee;
9.2.2 by post it shall be necessary only to prove that the
communication was contained in an envelope which was duly
addressed and posted in accordance with this clause.
10 GUARANTEE
10.1 The Guarantor hereby irrevocably and unconditionally guarantees to the
Purchaser as primary obligor and not merely as surety full prompt and
complete performance by the Vendor of all obligations on its part herein
contained and the payment of all sums due to the Purchaser or any Group
Company (as the case may be) by the Vendor pursuant to this Agreement
and shall on default by the Vendor of any of its obligations pursuant to
this Agreement procure the performance of the Vendor of such obligations
or pay to the Purchaser or any Group Company (as applicable) all amounts
owed by the Vendor to any such company pursuant to this Agreement. More
than one demand may be made by the Purchaser pursuant to this clause.
10.2 The foregoing guarantee is a continuing guarantee and shall remain in
full force until all the obligations of the Vendor hereunder shall have
been satisfied and all sums due hereunder to the Purchaser or any Group
Company (as the case maybe) shall have been paid.
10.3 Any settlement or discharge by the Purchaser of the Guarantor's
obligations under this clause shall be deemed to be given or made on
condition that it shall be of no effect if the assurance security or
payment on the faith of which it was made shall thereafter be avoided by
virtue of
20
any statutory provision in relation to administration, bankruptcy,
winding-up, insolvency or liquidation so that at any time after such
avoidance the Purchaser shall be entitled to exercise its rights under
this Clause as if no such settlement or discharge had been made.
10.4 The obligations of the Guarantor under this Clause shall not be
discharged, impaired, reduced or otherwise affected by any act omission
matter or thing which but for this provision might operate to release or
otherwise exonerate the Guarantor from such obligations or to dismiss
such obligations including without limitation and whether or not known
to the Purchaser:-
10.4.1 any time or other indulgence given or agreed to be given to or
composition with the Vendor or any other person; or
10.4.2 the taking variation compromise renewal or release of or refusal
or neglect to perfect or enforce any right remedies or securities
against the Vendor or any other person; or
10.4.3 any legal limitations disability incapacity or other
circumstances relating to the Vendor or any other person or any
amendment to or variation of the terms of this Agreement or any
other document or security; or
10.4.4 any irregularity unenforceability or invalidity of any
obligations of the Vendor or any other person under this
Agreement or any security or document to the intent that the
Guarantor's obligations under this Clause shall remain in full
force and be construed accordingly as if there were no such
irregularity unenforceability or invalidity.
10.5 The Guarantor waives any right it may have for first requiring the
Purchaser to proceed against or enforce any guarantee or security of or
claim payment from the Vendor before claiming under this Clause.
Further, the Purchaser may release or discharge any party from this
guarantee or accept any composition from or make any arrangements with
any of them without releasing or discharging any other party.
10.6 Until all sums owing to the Purchaser or any Group Company (as the case
maybe) by the Vendor under this Agreement have been paid in full the
Guarantor shall not:-
10.6.1 exercise in respect of any amount previously paid by it under
this Clause any right of subrogation or any other right or remedy
which it may have in respect thereof;
10.6.2 claim payment of any other monies for the time being due to it
from the Vendor or exercise any other right or remedy which it
may have in respect thereof; or
10.6.3 prove in the event of the liquidation of the Vendor in
competition with the Purchaser or any Group Company for any
monies owing to it by the Vendor on any account whatsoever.
AS WITNESS the hands of the parties or their duly authorised representatives
have executed this
21
Agreement as a deed the day and year first before written.
22
SCHEDULE 1
Hammer Distribution Limited
Company Name: Hammer Distribution Limited
Company Number: 2640532
Date of Incorporation: 23rd August 1991
Share Capital:
authorised 500,000 ordinary L1
issued 11,875 ordinary L1
Registered Office: 0 Xxxxxxxx Xxxxxxxx Xxxx, Xxxxxxxx Xxx
Xxxxxxx, Xxxxxxxxxxxxx XX0 0XX
Directors: Xxxxxxx Xxxxxxx Xxxx
Xxxxxx Xxxx Xxxxxxxxxxx
Xxxxxxx Xxxx Xxxxxx
Xxxx Xxxxxxxx
Secretary: Xxxxxxxx Xxx Xxxxxx
Shareholders and Number
of Shares: 4Front Group UK Limited - 11,875 Xxxxxxxx X0 shares
Latest Accounts on file at Companies House: 31st January 1998
V2 Electronics Limited
Company Name: V2 Electronics Limited
Company Number: 03295088
Date of Incorporation: 20th December 1996
Share Capital:
authorised 1000 ordinary L1
issued 2 ordinary L1
Registered Office: 0 Xxxxxxxx Xxxxxxxx Xxxx, Xxxxxxxx Xxx
Xxxxxxx, Xxxxxxxxxxxxx XX0 0XX
Directors: Xxxxxxx Xxxxxxx Xxxx
Xxxxxxx Xxxx Xxxxxx
Secretary: Xxxxxxxx Xxx Xxxxxx
Shareholders and Number
of Shares: 4Front Group UK Limited - 2 Ordinary L1 shares
Latest Accounts on file at Companies House: 31st January 1998
23
SCHEDULE 2
Warranties
1. INFORMATION
General Information
1.1 The information in Schedule 1 relating to the Group Companies is true,
complete and accurate in all respects.
1.2 There are no subsidiaries or subsidiary undertakings of the Company and
during the period of the Vendor Group's ownership of the Company, the
Company has not previously had any other subsidiary or subsidiary
undertaking.
1.3 The Sale Shares constitute the whole of the issued and allotted share
capital of each of the Group Companies.
1.4 There is no pledge, lien or other encumbrance on, over or affecting the
Sale Shares or any of them and there is no agreement or arrangement to
give or create any such encumbrance and no claim has been made during
the Vendor Group's ownership of the Company by any person to be entitled
to any of the foregoing.
2. POWER TO CONTRACT
Power of the Vendor
2.1 The Vendor has and will have full power and authority to enter into and
perform this Agreement and the Deed of Tax Covenant which constitute or
when executed will constitute binding obligations on it in accordance
with their respective terms.
2.2 The Vendor will be entitled to transfer the full legal and beneficial
ownership of the Sale Shares to the Purchaser on the terms of this
Agreement without the consent of any third party.
3. ACCOUNTS
The Last Accounts
3.1 The Last Accounts were prepared in accordance with the historical cost
convention; and the bases and policies of accounting adopted for the
purpose of preparing the Last Accounts are the same as those adopted in
preparing the audited accounts of the Company in respect of the three
last preceding accounting periods.
3.2 The Last Accounts:
3.2.1 give a true and fair view of the assets and liabilities of the
Company at the Last Accounts Date and its profits for the
financial period ended on that date;
3.2.2 comply with the requirements of the Companies Acts and other
relevant
24
statutes;
3.2.3 comply with all current SSAPs and FRSs applicable to a United
Kingdom company; 3.2.4 are not affected by any extraordinary,
exceptional or non recurring item;
Deferred Taxation
3.3 Where provision for deferred taxation is not made in the Last Accounts,
full details of the amounts of such deferred taxation have been
disclosed in the Disclosure Letter.
4. CORPORATE MATTERS
Options
4.1 Except as required by this Agreement neither the Vendor nor the Vendor's
Directors have caused the Company to enter into any agreements or
arrangements which provide for the present or future issue, allotment or
transfer of or grant to any person the right (whether conditional or
otherwise) to call for the issue, allotment or transfer of any share or
loan capital of the Company (including any option or right of
pre-emption or conversion).
Memorandum and Articles of Association, Statutory Books and Resolutions
4.2 The copy of the memorandum and articles of association of the Company
attached to the Disclosure Letter is 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 CA s 380.
4.3 The register of members and other statutory books of the Company have
been properly kept and contain an accurate and complete record of the
matters with which they should deal and no notice or allegation that any
of the foregoing is incorrect or should be rectified has been received
by the Vendor or so far as the Vendor is aware by the Company.
Documents Filed
4.4 So far as the Vendor is aware all returns, particulars, resolutions and
documents required by the Companies Act or any other legislation to be
filed with the Registrar of Companies, or any other authority, in
respect of the Company since the Vendor Group became beneficially
entitled to the Sale Shares or any of them have been duly filed and were
correct; in all material respects and due compliance has been made with
all the provisions of the Companies Act and other legal requirements in
connection with the allotment or issue of shares, debentures and other
securities, the payment of dividends and the conduct of its business
since that date.
Possession of Documents
Investigations
4.5 So far as the Vendor is aware the Company has received no written notice
that there are any investigations or enquiries by, or on behalf of, any
governmental or other body in
25
respect of the affairs of the Company pending or in existence.
5. TAXATION
General
Notices and returns
5.1 All notices, returns, computations and registrations of the Company for
the purposes of Taxation have been made punctually on a proper basis and
are correct in all material respects and none of them is, or so far as
the Vendor is aware is likely to be, the subject of any dispute with the
Inland Revenue, H.M. Customs and Excise or any other fiscal authority.
Payment of tax due
5.2 All Taxation which the Company is liable to pay prior to Completion has
been or will be so paid prior to Completion.
Penalties or interest on tax
5.3 The Company has not since 31st January 1996 become liable to pay any
penalty, fine or interest charged by virtue of the provisions of the TMA
or any other Taxation Statute.
No back duty investigation
5.4 Since 31st January 1996 the Company has not been the subject of a
discovery, audit or investigation by the Inland Revenue other than a
routine investigation or discovery and so far as the Vendor is aware
there are no facts which are likely to cause a discovery, audit or
investigation to be made.
Tax provision
5.5 Full provision or reserve has been made in the Last Accounts for all
Taxation assessed or liable to be assessed on the Company or for which
it is accountable in respect of income, profits or gains earned, accrued
or received on or before the Last Accounts Date, including distributions
made down to such date or provided for in the Last Accounts other than
in connection with VAT and PAYE.
Concessions and arrangements
5.6 The amount of Taxation chargeable on the Company during any accounting
period beginning on or after 1 February 1996 has not depended on any
concessions, agreements or other arrangements with any revenue authority
including (but without limitation) the Inland Revenue other than in
connection with VAT and PAYE.
Anti-avoidance provisions
5.7 Neither the Vendor nor the Vendor's Directors have caused the Company to
enter into or be a party within the period of six years ending on the
date hereof to any scheme or arrangement of which the main purpose, or
one of the main purposes, was the avoidance of
26
or the reduction in liability to Taxation.
Transactions requiring clearance
5.8 Since 31st January 1996 the Company has not been a party to or otherwise
involved in any transaction, scheme or arrangement to which any of the
following provisions have been or could be applied, namely, ss 703 to
709 inclusive and s 776 ICTA 1988, ss 135 to 139 TCGA, and s 75 CAA
other than transactions in respect of which all necessary consents or
clearances have been obtained on the basis of full and accurate
disclosure to the Inland Revenue of all relevant material facts and
considerations where such transactions have been carried into effect
only in accordance with the terms of the relevant consent or clearance.
Calculation of taxation liability
5.9 The Company has sufficient records relating to past events which
occurred at any time after the Vendor Group became the beneficial owner
of the Sale Shares or any of them to permit accurate calculation of the
Taxation liability or relief which would arise upon a disposal or
realisation on Completion of each capital asset owned by the Company at
Completion.
Claims and disclaimers
5.11 The Company has duly submitted all claims and disclaimers the making of
which has been assumed for the purposes of the Last Accounts.
Corporation tax
Base values and acquisition costs
5.11 If each of the capital assets of the Company acquired after 31 January
1996 was disposed of on the date hereof for a consideration equal to the
book value of that asset in, or adopted for the purposes of, the Last
Accounts or, in the case of assets acquired since the Last Accounts
Date, equal to the consideration given upon its acquisition, no
liability to corporation tax on chargeable gains or balancing charges
under the CAA would arise and for the purpose of determining the
liability to corporation tax on chargeable gains there shall be
disregarded any relief and allowances available to the Company other
than amounts falling to be deducted under s 38 of the TCGA and any
appropriate indexation allowance.
Non-deductible payments
5.12 Since the Last Accounts Date no rents, interest, annual payments or
other sums of an income nature paid or payable by the Company or which
the Company is under an existing obligation to pay in the future are or
may be wholly or partially disallowable as deductions management
expenses or charges in computing profits for the purposes of corporation
tax by reason of the provisions of ss 74, 79, 125, 338, 339, 779 to 784
inclusive, 787 or 788
27
ICTA 1988 or any other statutory provision or otherwise save for
business entertaining expenses within the meaning of ICTA S577.
Payments to directors, officers or employees
5.13 The Company has not made or agreed to make any payment to or provided
any benefit for any present or former director, officer or employee of
the Company, whether as compensation for loss of office, termination of
employment or otherwise, which is not allowable as a deduction in
calculating the profits of the Company for Taxation purposes since the
Last Accounts Date.
Sales at under-value or over-value
5.14 Since the Last Accounts Date the Company has not been a party to any
sale or other disposal of an asset either at an under-value or an
over-value for the purposes of s 770 ICTA 1988 so that the provisions of
such section have been or may be applied.
Transactions not at arm's length
5.15 Since 31st January 1996 the Company has not disposed of or acquired any
asset in circumstances falling within s 17 of the TCGA and no allowable
loss has accrued to the Company to which s 18(3) TCGA will apply since
31 January 1996.
Corporation tax - groups of companies
Group Relief
5.16.1 Any claims by the Company for group relief (as defined by S.402 ICTA)
were when made and are now valid and have been allowed by way of relief
from corporation tax;
5.16.2 The Company has not made nor is liable to make any payment under any
arrangement or agreement save in consideration for the surrender of
group relief allowable to the Company by way of relief from corporation
tax; and
5.16.3 The Company has received all payments due to it under any arrangement or
agreement for any surrender of group relief made by it and the payments
are not liable to be refunded in whole or in part.
5.17 Surrender of advance corporation tax
5.17.1 The Company has not paid nor so far as the Vendor is aware is
liable to pay for the benefit of any advance corporation tax
which is or may become incapable of set-off against the Company's
liability to corporation tax; and
5.17.2 The Company has received all payments due to it under any
arrangement or agreement for any surrender of advance corporation
tax made by it and the payments are not liable to be refunded in
whole or in part.
Acquisitions from group members
5.18 The Company does not own any asset which was acquired since 31 January
1996 from any
28
company which was, at the time of acquisition, a member of the same
group of companies (as defined in s 170 TCGA) as the Company by virtue
of s 173 TCGA.
Leaving the group
5.19 The execution or completion of this agreement will not result in any
profit or gain being deemed to accrue to the Company for Taxation
purposes pursuant to s 179 TCGA.
Value added tax
VAT groups
5.20 The Company is not and has not been for VAT purposes a member of any
group of companies other than the Group.
Stamp duty and capital duty
Payment of stamp duty and stamp duty reserve tax
5.21 All stampable documents (other than those which have ceased to have any
legal effect or which the Company may not be interested in enforcing) to
which the Company is a party have been duly stamped.
6. FINANCE
Capital Commitments
6.1 Since the Last Accounts Date neither the Vendor nor the Vendor's
Directors have caused the Company to make or agree to make any capital
expenditure, or incur or agreed to incur any capital commitments or
dispose of or realise any capital assets or any interest therein.
6.2 So far as the Vendor is aware the Company has not outstanding, nor has
agreed to create or issue, any loan capital; nor has it factored any of
its debts, or engaged in financing of a type which would not require to
be shown or reflected in the Last Accounts, or borrowed any money which
it has not repaid, save for borrowings not exceeding the amounts shown
in the Last Accounts.
Loans by and Debts Due to the Company
6.3 Neither the Vendor nor the Vendor's Directors have caused the Company to
lend any money which has not been repaid to it, or to own the benefit of
any debt (whether or not due for payment), other than debts which have
arisen in the ordinary course of its business or to make any loan or
quasi-loan contrary to the Companies Acts.
Liabilities
6.4 So far as the Vendor is aware there are no liabilities (including
contingent liabilities) which are outstanding on the part of the Company
other than those liabilities disclosed in the Last Accounts or incurred
in the ordinary and proper course of trading since the Last Accounts
Date.
6.5 So far as the Vendor is aware there has been no exercise, purported
exercise or claim for
29
any charge, lien, encumbrance or equity over any of the fixed assets of
the Company; and there is no dispute directly or indirectly relating to
any of its fixed assets.
Bank Accounts
6.6 Details of the bank accounts of the Company are set out in the
Disclosure Letter and the credit and debit balances on the Company's
bank accounts as at the latest practicable date (but in any event at the
date no more than three days) before Completion attached to the
Disclosure Letter are correct.
Facilities
6.7 In relation to all debentures, acceptance credits, overdrafts, loans or
other financial facilities outstanding or available which the Vendor or
the Vendor's Directors have caused the Company to enter into (referred
to in this paragraph as "facilities"):
6.7.1 the Disclosure Letter sets out full details of, and there are
attached to it accurate copies of all documents relating to, the
facilities;
6.7.2 there has been no material contravention of or material
non-compliance with any provision of any of those documents and
no steps for the early repayment of any indebtedness have been
taken or threatened;
6.7.3 none of the facilities is dependent on the guarantee or indemnity
of or any security provided by a third party.
Government Grants
6.8 Neither the Vendor nor the Vendor's Directors have caused the Company to
apply for or receive from any governmental department or agency or any
local or other authority any grant, subsidy or financial assistance.
Options, Guarantees etc
6.9 The Company is not responsible for the indebtedness of any member of the
Vendor Group and in particular, the Company is not a party to any option
or pre-emption right or a party to any guarantee or suretyship or any
other obligation (whatever called) to pay, purchase or provide funds
(whether by the advance of money, the purchase of or subscription for
shares or other securities or the purchase of assets or services or
otherwise) for the payment of, or as an indemnity against the
consequences of default in the payment of, any indebtedness of any
member of the Vendor Group.
6.10 So far as the Vendor is aware there are no charges in favour of the
Company and none of the Company's assets or undertaking are subject to
any charge.
Dividends and Distributions
6.11 Since the Last Accounts Date no dividend or other distribution (as
defined in ICTA 1988 Part VI Ch II as extended by ICTA 1988 s.418) has
been or is treated as having been
30
declared, made or paid by the Company.
7. TRADING
Vendor's Other Interests and Liabilities to the Company
7.1 Neither the Vendor nor any member of the Vendor Group has any rights or
interests, directly or indirectly, in any business other than those now
carried on by the Company which are competitive with the businesses of
the Company.
7.2 There is no outstanding indebtedness of the Vendor or any member of the
Vendor Group to the Company.
Effect of Sale of Shares
7.3 The Vendor (having made no enquiries) has no knowledge, information or
belief that after Completion (whether by reason of an existing agreement
or arrangement or otherwise) or as a result of the proposed acquisition
of the Company by the Purchaser:
7.3.1 any supplier of the Company will cease or be entitled to cease
supplying it or may substantially reduce its supplies to it;
7.3.2 any customer of the Company will cease or be entitled to cease to
deal with it or may substantially reduce its existing level of
business with it;
7.3.3 the Company will lose the benefit of any right or privilege which
it enjoys;
7.3.4 any officer or senior employee of the Company will leave.
Litigation, Disputes and Winding Up
7.4 So far as the Vendor is aware the Company is not engaged in any
litigation or arbitration proceedings as plaintiff or defendant and;
there are no proceedings pending or threatened either by or against the
Company (other than in each case debt collectable by the company in the
ordinary course of business).
7.5 There is no dispute with any Taxation Authority (as that expression is
defined in the Deed of Tax Covenant) in the United Kingdom or elsewhere,
in relation to the affairs of the Company (other than in respect of
PAYE, NIC or VAT where so far as the Vendor is aware there is no such
dispute) or, so far as the Vendor is aware, in relation to the affairs
of or any person connected with the Company, and so far as the Vendor is
aware there are no facts which may give rise to any dispute.
7.6 No order has been made or petition presented or resolution passed for
the winding up of the Company; nor has any distress, execution or other
process been levied in respect of the Company which remains
undischarged; nor is there any unfulfilled or unsatisfied judgment or
court order outstanding against the Company.
Compliance with Statutes
7.7 So far as the Vendor is aware and whilst the Company has been owned by a
member of the
31
Vendor's Group the Company has not and none of the Vendor's Directors
(during the course of their duties in relation to it) has, committed or
omitted to do any act or thing the commission or omission of which is
or could be in contravention of any act, order, regulation or the like
(whether of the United Kingdom or elsewhere) giving rise to any fine,
penalty, default proceedings or other liability on its part.
7.8 So far as the Vendor is aware and whilst the Company has been owned by a
member of the Vendor's Group the Company has at all times conducted and
is conducting its business in all respects in accordance with all
applicable laws and regulations whether of the United Kingdom or
elsewhere.
Transactions Involving Directors
7.9 Neither the Vendor nor any of the Vendor's Directors have caused the
Company to be a party to any transaction to which any of the provisions
of CA s 317, s 320 or s 330 may apply.
Powers of Attorney and Authority
7.10 Neither the Vendor nor any of the Vendor's Directors have caused the
Company to give a power of attorney which remains in force and there are
not outstanding any authorities (express or implied) by which any person
may enter into any contract or commitment to do anything on behalf of
the Company.
Subsisting Contracts
7.11 Neither the Vendor nor the Vendor's Directors have caused the Company to
be a party to any contract, transaction, agreement or liability which of
an unusual or abnormal nature or outside the ordinary and proper course
of business.
Defaults Under Agreements by the Company
7.12 So far as the Vendor is aware the Company is not in default under any
agreement of covenant to which it is a party or in respect of any other
obligations or restrictions binding upon it.
7.13 So far as the Vendor is aware no threat or claim of default under any
agreement, instrument or arrangement to which the Company is a party has
been made and is outstanding against it.
Other Party's Defaults
7.14 So far as the Vendor is aware no party to any agreement with or under an
obligation to the Company is in default under it, being a default which
would be material in the context of its financial or trading position.
32
Guarantees and Indemnities
7.15 So far as the Vendor is aware there is not now outstanding in respect of
the Company any guarantee, or agreement for indemnity or for suretyship,
given by it or for its accommodation
Trading since the Last Accounts Date
7.16 Since the Last Accounts Date the Company has not paid or incurred any
management or other similar charges to the Vendor or any member of the
Vendor Group.
Pensions
8. The Company is under no legal obligation to provide any "relevant
benefits" (as defined by s612 ICTA) benefits in relation to the death,
disability or retirement of any of its employees or directors or any of
their dependants and no voluntary or ex-gratia payments in respect of
pensions or disability benefits have been paid or are being paid by the
Company.
9. ASSETS
9.1 The Company owned at the Last Accounts Date and (except for current
assets subsequently sold or realised in the ordinary course of business)
so far as the Vendor is aware still owns all assets included in the Last
Accounts (excluding the Properties) and to all assets acquired since the
Last Accounts Date and not subsequently sold or realised as aforesaid.
9.2 Save as disclosed in the Last Accounts, so far as the Vendor is aware
none of the property, assets, undertaking, goodwill or uncalled capital
of the Company is subject to and the Company has not agreed to grant in
respect of such property any option, charge, lien or encumbrance, or
right of pre-emption.
Insurance
9.3 All the stock-in-trade and the assets and undertakings of the Company of
an insurable nature (excluding the Properties) are insured in amounts
representing their full replacement or reinstatement value against fire
and other risks normally insured against by persons carrying on the same
business as that carried on by the Company.
9.4 The Company is now adequately covered against accident, damage, injury
third party loss (including product liability), loss of profits and
other risks normally insured against by persons carrying on the same
business.
9.5 No claim is outstanding under any of the Company's insurance policies
and so far as the Vendor is aware no circumstances exist which are
likely to give rise to such a claim.
Intellectual Property Rights and Trade Secrets
9.6 So far as the Vendor is aware there are no Intellectual Property Rights
used or required by the Company in connection with its business.
33
9.7 So far as the Vendor is aware the Company has not received any
notification that it has infringed the Intellectual Property Rights of
any other person and the business of the Company (and of any licensee
under a licence granted by the Company) as carried on now or at any time
in the past has infringed nor is likely to infringe any Intellectual
Property Right of any other person (or would not do so if the same were
valid) nor give rise to a liability to pay compensation pursuant to the
Patents Xxx 0000 ss 40 and 41 or give rise to a liability to pay a
royalty or like fee.
Integrity of Computer Systems
9.8 So far as the Vendor is aware the Company has taken all reasonable
precautions to preserve the availability, confidentiality and integrity
of its computer systems.
9.9 The Vendor is not aware of any case where fraud has been committed
against the Company by the use or abuse of its computer systems whether
alone or in conjunction with any third party.
10. PROPERTIES
Title
The Properties comprise all the properties owned, and occupied in
connection with its business by the Company and the Vendor has not
caused the Company to be in occupation of or have any rights over any
freehold and leasehold properties other than that Properties
11. ENVIRONMENTAL WARRANTIES
During the period of the Vendor Group's ownership of the Company and so
far as the Vendor is aware:-
11.1 (having made no enquiry of any environmental consultants) the Company
has complied with all Environmental Laws in connection with the use or
occupation of the Relevant Properties;
11.2 the Company has not incurred nor become subject to any civil or criminal
liability under any Environmental Law;
11.3 none of the Relevant Properties has been the subject of any
investigation or inspection under any Environmental Law other than
merely routine inspections and to the best of the Vendor's knowledge no
such investigation or inspection is pending, threatened or proposed;
11.4 the Company has received no notice of any civil, criminal or
administrative claim, accusation, allegation, notice of violation,
remediation notice, demand, cause of action, abatement or other order or
notice (conditional or otherwise) in the relevant jurisdiction in which
the Relevant Property is situated or the Company's business is conducted
and no
34
such notice has been made or brought against or served on the Company or
so far as the Vendor is aware any director, secretary, manager or other
similar officer (in his capacity as such) of the Company in relation to
any Environmental Matters relating to the Company.
35
SCHEDULE 3
Short particulars of the properties
Leasehold properties
Address
62 Tempus Business Centre, Xxxxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxx XX00 0XX
00/00 Xxxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxxxxxx XX00 0XX
*Intec 0, Xxxx Xxxx, Xxxxxxxxxxx
*Note - Agreement for Lease
36
SCHEDULE 4
Vendor Protection Provisions
1. The Vendor shall have no liability for any claim for breach of the
Warranties or the Deed of Tax Covenant unless notice in writing of such
claim has been given to the Vendor:-
1.1 On or before 30th November 2005 in respect of any claim for any
breach of any of the Warranties contained in paragraph 5 of
Schedule 2 of this Agreement or under the Deed of Tax Covenant;
and
1.2 On or before 31st May 2001 in respect of any other claim for
breach of any of the other Warranties.
2. Any claim for breach of Warranties or under the Deed of Tax Covenant
which has been made against the Vendor and which has not been previously
satisfied settled or withdrawn shall be deemed to have been withdrawn
and shall become fully barred and unenforceable on the expiry of the
period of 6 months commencing on the date on which notice of the claim
was given to the Vendor in accordance with paragraph 1 above, unless
proceedings in respect of that claim shall have been issued and served
on the Vendor prior to that time.
3.1 Save as set out in paragraphs 3.2 and 3.3 below the Vendor shall have no
liability whatsoever in respect of any claim for breach of the
Warranties or under the Deed of Tax Covenant unless and until the amount
that would otherwise be recoverable from the Vendor in respect of that
claim, when aggregated with any other amounts so recoverable in respect
of other claims exceeds L50,000 and in the event that the aggregate
amount exceeds L50,000 the Vendor shall be liable for the whole amount
of such claims and not merely the excess. Individual claims of L2,500 or
less shall not count towards the calculation of such aggregate amount
save where a series of claims arise out of a single event, circumstance,
act or omission or out of a repetition of a single event circumstance
act or omission in which case such repeated claims shall be treated as a
single claim.
3.2 In the case of any claim for a breach of the Warranties relating to
Taxation or under the Deed of Tax Covenant in each case arising out of
the circumstances described in clause 5.10 the Vendor shall have no
liability whatsoever in respect of such claim unless and until
37
the amount that would otherwise be recoverable by the Vendor in respect
of such claim when aggregated with all other claims arising out of the
circumstances provided for in clause 5.10 exceeds L25,000 and in the
event that such aggregate exceeds L25,000 the Vendor shall be liable for
the whole amount of such claims and not merely the excess.
3.3 Any claims under paragraph 3.2 and any other losses relating to the
Warranties relating to Taxation or under the Tax Covenant which are less
than L25,000 shall nevertheless be brought into the overall calculation
of claims under paragraph 3.1 above.
4. The aggregate liability of the Vendor in respect of all claims for
breach of the Warranties and under the Deed of Tax Covenant shall not
exceed L5,192,500.
5. The Vendor shall have no liability whatsoever in respect of any claim
pursuant to the Warranties to the extent that the matter giving rise to
the claim would not have arisen but for the passing of, or any change
in, after the date of this Agreement any law, rule, regulation,
interpretation of the law or administrative practice of any government,
governmental department, agency or regulatory body or any increase in
the rates of Taxation or any imposition of Taxation, in any such case
not actually or prospectively in force at the date of this Agreement;
6. The Vendor shall not be liable in respect of any claim pursuant to the
Warranties to the extent that:-
6.1.1 specific provision or reserve thereof is made in the Last
Accounts;
6.1.2 a claim arises or is increased by reason of any failure of the
Purchaser or a Group Company to mitigate any loss;
6.1.3 a claim arises or is increased as a result of any matter or thing
done or omitted to be done by the Vendor at the request of or
with the approval or acquiescence of the Purchaser (before or
after Completion) or a Group Company (after Completion);
6.1.4 a claim arises or is increased as a result of an act or omission
after Completion by or on behalf of the Purchaser or by or on
behalf of a Group Company otherwise than in the ordinary course
of business as it is carried on at the date of this Agreement or
pursuant to a legally binding commitment entered into in the
ordinary course of the relevant Group Company's business and
created before Completion by or on behalf of a Group Company;
6.1.5 a claim arises or is increased as a result of any changes after
Completion to the accounting reference date of a Group Company or
in the accounting bases, policies
38
or methods used by the Purchaser or a Group Company whether or
not as a consequence of any change in standard accounting
practice;
6.1.6 a claim arises or is increased as a result of any reorganisation
or change in ownership of the Purchaser or a Group Company after
Completion;
6.1.7 the Purchaser or a Group Company can make recovery from its
insurers in respect thereof under policies of insurance in force
at the date of this Agreement or would have been able to make
recovery from its insurers in respect thereof if it had
maintained in force the policies of insurance in fore at the date
of this Agreement.
6.1.8 a claim arises or is increased as a result of any admission of
liability after the date of this Agreement by or on behalf of the
Purchaser or a Group Company; and
6.1.9 the net amount of any corresponding cash saving to the Purchaser
or a Group Company resulting from the subject matter of the
claim.
7. The Purchaser shall not be entitled to recover more than once in respect
of any one matter giving rise to a claim pursuant to the Warranties to
the extent that any loss has been recovered under the Deed of Tax
Covenant or vice versa.
8. If the Vendor pays to the Purchaser an amount in respect of a claim
pursuant to the Warranties and the Purchaser subsequently recovers from
a third party an amount which is referable to the matter giving rise to
the said claim then:
8.1.1 if the amount paid by the Vendor in respect of the claim is more
than the Sum Recovered (as defined in paragraph 8.2 below), the
Purchaser or the relevant Group Company (as the case may be)
shall as soon as reasonably practicable pay to the Vendor the Sum
Recovered; and
8.1.2 if the amount paid by the Vendor in respect of the claim is less
than or equal to the Sum Recovered, the Purchaser or the relevant
Group Company (as the case may be) shall as soon as reasonably
practicable pay to the Vendor an amount equal to the amount paid
by the Vendor.
8.2 For the purposes of paragraph 8 the "Sum Recovered" means an amount
equal to the amount recovered from the third party plus any repayment
supplement in respect of the amount recovered from the third party under
section 825 ICTA plus any interest in respect of the amount recovered
from the third party less all reasonable costs and expenses incurred by
the Purchaser in recovering the amount from the third party.
9. If a claim is made or proceedings are brought against the Purchaser or
any Group Company
39
in respect of which the Vendor is or may become liable under the
Warranties the Purchaser shall, and shall procure that the Company
shall, (at the Vendor's cost and expense and subject to the Purchaser
and the relevant Group Company being indemnified to its reasonable
satisfaction in respect thereof) take such action and give such
information and assistance in connection with their affairs as the
Vendor may reasonably request to avoid, duplicate, resist, mitigate,
compromise defend or appeal against such claim or proceedings and any
adjudication with respect thereto including, if the Vendor so requires,
instructing professional advisers nominated by the Vendor to act on
behalf of the Purchaser and the relevant Group Company in accordance
with the reasonable instructions of the Vendor so that the action is
delegated entirely to the Vendor. The Purchaser shall not, and shall
procure that the relevant Group Company shall not, (except with the
prior written consent of the Vendors) accept, pay, compromise or make
any admission in respect of any such claim or proceedings.
10. Any payment made by the Vendor to the Purchaser in respect of any claim
pursuant to the Warranties shall be deemed to be a reduction in the
consideration for the Sale Shares.
11. Any claim under the Warranties shall give rise only to a claim for
damages and no right of recission shall be available to the Purchaser in
respect thereof.
12. Where the Purchaser or any Group Company may be entitled to a right of
reimbursement (including by way of indemnity) or to recover (whether by
way of payment, discount, credit, set off, counterclaim or otherwise)
from some other person any sum in respect of any matter giving rise to a
claim under the Warranties then subject to:
12.1 the Vendor obtaining (at the Vendor's cost and expense) a written
opinion in the affirmative from a barrister of at least ten years
relevant experience that the Purchaser and/or the Company has a
bona-fide claim and a reasonable chance on the balance of
probabilities of obtaining judgment in respect of such claim or
claims against such third party; and
12.2 the Vendor securing and indemnifying the Purchaser and/or the
Company to their reasonable satisfaction from and against all
losses, liabilities, costs and expenses the Purchaser and/or the
Company may suffer in relation to such a claim or claims; and
12.3 the Vendor agreeing that the time periods referred to in
paragraph 2 of this Schedule 4 shall be suspended accordingly and
shall not be deemed to have continued until such claim has been
agreed in writing by the Vendor, the
40
Purchaser and/or the Company and the relevant third party or in
respect of such claim a judgment of the Supreme Court of England
and Wales has been obtained and any time limit for any appeal has
expired or such judgment is a final judgment with no further
right of appeal;
the Purchaser shall and shall procure that relevant Group Company shall
undertake all necessary steps to enforce such recovery prior to taking
action against the Vendor (other than to notify the Vendor of any claim
against the Vendor) and if the Purchaser or the relevant Group Company
shall recover any amount from such other person the amount of the claim
against the Vendor shall be reduced by the amount recovered less all
reasonable costs, expenses and charges incurred by the Purchaser and the
relevant Group Company in recovering that sum from such other person.
EXECUTED as a DEED by )
4FRONT GROUP UK LIMITED )
acting by ) .........................
Director
...........................
Director/Secretary
EXECUTED as a DEED by )
4FRONT GROUP PLC )
acting by ) .........................
Director
...........................
Director/Secretary
EXECUTED as a DEED by )
BLAKEDEW 181 LIMITED )
acting by ) .........................
Director
...........................
Director/Secretary
41
