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Exhibit 2.1
DATED 31 MAY 2000
ROGER PERSEY & OTHERS (1)
PETER DUNSFORD (2)
and
HORIZON ORGANIC DAIRY LIMITED
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SHARE SALE AGREEMENT
for the sale and purchase of the entire issued shares in Meadow Farms Limited
-----------------------------------------
THEODORE
GODDARD
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CONTENTS
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Page
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1. DEFINITIONS AND INTERPRETATION................................................................... 1
2. SALE AND PURCHASE................................................................................ 1
3. CONSIDERATION.................................................................................... 2
4. WARRANTIES....................................................................................... 2
5. COMPLETION....................................................................................... 3
6. CONFIDENTIALITY.................................................................................. 6
7. RESTRICTIVE COVENANTS............................................................................ 7
8. RELEASE OF GUARANTEES AND INDEMNITIES............................................................ 10
9. HOLD HARMLESS PAYMENTS........................................................................... 11
10. REFERENCES TO EXPERT............................................................................. 13
11. COSTS............................................................................................ 13
12. NOTICES.......................................................................................... 14
13. GENERAL.......................................................................................... 14
SCHEDULE 1 - THE SELLERS, THEIR SHAREHOLDINGS AND APPORTIONMENT OF PROVISIONAL CONSIDERATION.......... 18
SCHEDULE 2 - WARRANTIES, REPRESENTATIONS AND UNDERTAKINGS............................................. 20
SCHEDULE 3 - PARTICULARS OF THE COMPANY............................................................... 52
SCHEDULE 4 - PARTICULARS OF ODL....................................................................... 54
SCHEDULE 5 - CONSIDERATION............................................................................ 56
SCHEDULE 6 - SELLERS' PROTECTIONS..................................................................... 61
APPENDIX - DEFINITIONS AND INTERPRETATION............................................................. 65
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Documents in the Agreed Form:
1. Acknowledgment of no claims and release
2. Certificate of non-crystallisation
3. Consultancy Agreement for Dunsford Management Consultants
4. Form of Director's/Secretary's Resignation
5. New Articles of Association for the Company
6. Power of Attorney from the registered holders of the Shares
7. Service Agreement for David Underdown
8. Consultancy Agreement with David Underdown and Magellan Enterprises Limited
9. Tax Deed
10. Supply Agreements with Roger Persey, Geoffrey Persey and W Persey & Sons
11. Supply Agreement with OMSCO
12. ODL Sale Agreement
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AGREEMENT dated 31 May 2000
PARTIES:
(1) THE PERSONS whose details are set out in Schedule 1 (Sellers).
(2) PETER DUNSFORD of Garden Court, Elm Grove Road, Topsham, Exeter, Devon,
EX3 0BN.
(3) HORIZON ORGANIC DAIRY LIMITED a company registered in England under number
3729723 whose registered office is at 150 Aldersgate Street, London EC1A
4EJ (Purchaser).
INTRODUCTION:
(A) The Sellers are the registered holders and beneficial owners of all the
issued shares in Meadow Farms Limited (Company).
(B) The Sellers are willing to sell such shares to the Purchaser, and the
Purchaser is willing to purchase them, on the terms and subject to the
conditions of this Agreement.
(C) Details of the Company are set out in Schedule 3.
(D) ODL is the only subsidiary of the Company at the date of this Agreement.
(E) Peter Dunsford has agreed to join in this Agreement for the purposes set
out in the Agreement.
IT IS AGREED as follows:
1. DEFINITIONS AND INTERPRETATION
The definitions and interpretation provisions set out in the Appendix
apply in this Agreement.
2. SALE AND PURCHASE
2.1 Each of the Sellers shall sell the number of Shares shown opposite his
name in column (2) of Schedule 1 and the Purchaser shall purchase the
Shares on the terms and subject to the conditions of this Agreement.
2.2 The Sellers shall sell the Shares with full title guarantee and free from
any Encumbrance.
2.3 The Sellers warrant and represent to the Purchaser that they are entitled
to sell and transfer to the Purchaser the full legal and beneficial
ownership of the Shares free from any Encumbrance on the terms of this
Agreement.
2.4 The Sellers shall sell the Shares with all rights now and in the future
attaching to them.
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2.5 The Purchaser shall not be obliged to complete the purchase of any of the
Shares unless the purchase of all the Shares is completed simultaneously.
However, completion of the purchase of some of the Shares will not affect
the rights of the Purchaser with respect to the others.
2.6 Each of the Sellers waives, and agrees to procure the waiver of, any
restrictions on transfer (including pre-emption rights) which may exist in
relation to the Shares under the existing articles of association of the
Company or otherwise.
3. CONSIDERATION
The provisions of Schedule 5 (Consideration) shall have effect.
4. WARRANTIES
4.1 The Covenantors warrant, represent to and undertake with the Purchaser in
the terms of Schedule 2.
4.2 The Covenantors acknowledge that the Purchaser is entering into this
Agreement in reliance on the Warranties.
4.3 The Warranties are given subject to the matters accurately disclosed in the
Disclosure Letter. However, the Warranties are not subject to any other
qualification including any matter within the knowledge (actual, imputed or
constructive) of the Purchaser or any of its advisers at Completion which
is not disclosed in the Disclosure Letter.
4.4 If it shall be alleged or determined that the knowledge (actual, imputed or
constructive) of the Purchaser or any of its representatives or advisers at
Completion of any matter, fact or circumstance which is not disclosed, or
is misleadingly disclosed, in the Disclosure Letter (Relevant Matter)
operates to deny the Purchaser, or to reduce the amount recoverable by the
Purchaser under, a claim for breach of any of the Warranties, then the
Covenantors shall pay to the Purchaser such sum or sums as shall be equal
to all amounts which the Purchaser would otherwise have recovered in
respect of such claim if the Purchaser or its representatives or advisers
had not had actual, imputed or constructive knowledge of the Relevant
Matter. This payment undertaking shall not be impaired by or otherwise
affected by such knowledge. This payment undertaking is a separate and
distinct undertaking arising independently of the Warranties and any claim
by the Purchaser under the Warranties. Any payment made by the Covenantors
pursuant to this clause 4.4 shall be treated as a reduction pro-rata in the
purchase consideration for their Shares.
4.5 In the event of any conflict or inconsistency between the provisions of
this Agreement (other than, and to the extent only that the Disclosure
Letter qualifies, the Warranties) and the Disclosure Letter the provisions
of this Agreement shall prevail.
4.6 The Covenantors undertake to the Purchaser that they will not seek to
pursue any right, remedy or claim against the Company or ODL or any of
their respective officers or employees or agents (including without
limitation any employee of Dunsford Management Consultants) which they or
any of them may have in respect of any
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misrepresentation, inaccuracy or omission in or from any information or
advice supplied or given to all or any of the Covenantors or any of their
advisers or agents in connection with this Agreement, the Warranties, the
Disclosure Letter, the Tax Deed or any other document referred to in this
Agreement. In any event, the Covenantors irrevocably undertake to the
Purchaser (for itself and trustee for each of such persons) to waive every
such claim they may have against any of such persons.
4.7 Each of the Warranties shall be construed separately and none of the
Warranties shall limit or govern the extent, application or construction of
any other of the Warranties.
4.8 Where any of the Warranties is qualified by the awareness, knowledge,
information or belief of the Covenantors or any other person that Warranty
shall only be deemed to be so qualified if the Covenantors have made, or
procured to be made, due and careful enquiry to ascertain whether the
Warranty concerned is correct and not misleading.
4.9 The provisions of Schedule 6 (Sellers' Protections) shall have effect.
5. COMPLETION
5.1 Completion shall take place at the offices of the Sellers' Solicitors on 31
May 2000 or at such later time or date as the Sellers and the Purchaser may
agree in writing.
5.2 On Completion:
5.2.1 the Sellers shall deliver to the Purchaser's Solicitors:
(a) transfers of the Shares duly executed by the registered
holders of such Shares in favour of the Purchaser or its
nominees together with the relative share certificates (or
an indemnity in such form as the Purchaser shall require in
relation to any missing certificates);
(b) a certificate of non-crystallisation in the Agreed Form from
HSBC Bank plc addressed to the Purchaser in respect of the
floating charge granted by the Company on 18 August 1998 and
dated with the date of Completion;
(c) letters of resignation in the Agreed Form from the present
directors (save for Peter Dunsford) and secretary of the
Company. It is agreed that if, despite the terms of such
resignation, any person so resigning shall nevertheless be
entitled to any form of compensation (whether for
redundancy, unfair dismissal, wrongful dismissal or
otherwise) the consideration for the Shares held by the
Sellers shall be reduced by the cost of such compensation
falling on the Company. The amount of such reduction shall
be recoverable by the Purchaser as a debt from the Sellers
payable on demand);
(d) an acknowledgment of no claims and release in the Agreed
Form from each of the Covenantors releasing the Company from
any liabilities which may be owing to that Covenantor by the
Company;
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(e) the written resignation of the Auditors and the present
auditors of the Company accompanied by a statement under
section 394(1) of the Act that there are no such
circumstances as are mentioned in that section and
confirming that they have no claim against the relevant
company of any nature whatever other than for proper
professional fees for services rendered in respect of their
duties as auditors prior to Completion;
(f) the Tax Deed executed by the Covenantors;
(g) the certificate of incorporation, (and, if applicable any
certificates of incorporation on change of name) any common
seal, any securities seal, statutory minute books and
registers (duly made up to the date of Completion), share
certificate book and all available copies of the memorandum
and articles of association of the Company;
(h) a certified copy of any power of attorney under which any
document delivered on Completion has been executed on behalf
of any of the Sellers;
(i) written confirmations from the relevant banks as to the
respective bank balances of the Company as at the close of
business on the second Business Day preceding Completion
together with a list of all unpresented cheques and
uncleared lodgements which upon presentation or clearance
would be debited or credited to the respective accounts;
(j) copies of all bank mandates of the Company together with a
blank mandate in respect of each bank account maintained by
the Company;
(k) letters addressed to the Purchaser from all of the existing
bankers of the Company confirming their consent to the
acquisition of the Shares by the Purchaser and confirming
that to their knowledge no event of default has occurred
under each of their facilities and is continuing;
(l) all documents of title relating to the investments of the
Company (including without limitation the Company's
investments in ODL);
(m) all cheque books in current use by the Company;
(n) all papers, books, records, keys, credit cards and other
property (if any) of the Company which are in the possession
or under the control of any of the Sellers or Peter
Dunsford;
(o) duly executed releases of the Company from any guarantee,
suretyship, indemnity, collateral security or letter of
comfort given in support of any of the liabilities of any of
the Sellers or Peter Dunsford or Dunsford Management
Consultants or any Associate of any of the Sellers or Peter
Dunsford or Dunsford Management Consultants or any director
or employee of the Company or any Associate of any such
director or employee;
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(p) irrevocable powers of attorney in the Agreed Form executed
by each of the holders of the Shares in favour of the
Purchaser and its directors to enable the Purchaser (pending
registration of the transfers of such shares) to exercise
all voting and other rights attaching to such shares and to
appoint proxies for this purpose;
(q) originals of the organic milk supply agreements executed by
Roger Persey, Geoffrey Persey and W Persey & Sons in the
Agreed Form;
(r) an original of the organic milk supply agreement executed by
OMSCO in the Agreed Form;
5.2.2 (s) an original (undated) of the ODL Sale Agreement executed by
the ODL Shareholders and the Company together with all documents
referred to in clause 5 of the ODL Sale Agreement;The Sellers and
Peter Dunsford shall procure that David Underdown shall enter
into a service agreement with ODL and that each of David
Underdown and Magellan Enterprises Limited shall enter into a
consultancy agreement with the Purchaser each in the Agreed Form;
5.2.3 Dunsford Management Consultants and Peter Dunsford and Fenella
Reeves and Richard Lowes will each enter into a consultancy
agreement with the Company for the provision by Dunsford
Management Consultants of the services of Peter Dunsford, Fenella
Reeves and Richard Lawes to the Company and ODL in the Agreed
Form;
5.2.4 the Covenantors shall repay and shall procure their Associates
and the directors and employees of the Company and the Associates
of such directors and employees to repay all moneys then owing by
any of them to the Company whether due for payment or not;
5.2.5 the Sellers and Peter Dunsford shall procure that there shall be
held a meeting of the directors of each of the Company attended
by a quorum of the directors, at which:
(a) Charles Marcy, Mark Retzloff, Don Gaidano, Wim Engels and
Jeremy Deacon shall be appointed additional directors of the
Company;
(b) the above-mentioned resignations of the present secretary
and auditors shall be accepted with immediate effect and Don
Gaidano and the Purchaser's Accountants shall be appointed
secretary and auditors respectively in their places;
(c) its registered office shall be changed to 150 Aldersgate
Street, London EC1A 4EJ;
(d) the transfers referred to in clauses 5.2.1(a) shall be
approved for registration (subject to stamping with any
required stamp duty);
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(e) the consultancy agreements referred to in respectively
clauses 5.2.2 and 5.2.3 shall be approved and executed by
the Company;
(f) the organic milk supply agreements referred to in clauses
5.2.1(q) and (r) shall be approved and executed by the
Company;
(g) such resolutions and actions regarding bankers as the
Purchaser may require shall be passed and taken;
(h) such other business as the Purchaser may reasonably require
shall be transacted; and
(i) the above-mentioned resignations of the present directors
(save for Peter Dunsford) and the secretary shall be
accepted with effect from the end of the meeting
and the Sellers shall deliver to the Purchaser certified copies
of the minutes of such board meetings;
5.2.6 the Sellers and Peter Dunsford shall procure the Company to adopt
new articles of association in the Agreed Form;
5.2.7 against compliance with the above provisions the Purchaser shall:
(a) remit by bank electronic transfer to the Sellers'
Solicitors' bank account (branch: Barclays Bank Plc, 20 High
Street, Exeter sort code: 20-30-47 account number: 00633755)
the Provisional Consideration specified in paragraph 1.2(a)
of Schedule 5;
(b) execute a counterpart of the Tax Deed and deliver it to the
Sellers' Solicitors;
(c) execute a counterpart of the consultancy agreement to which
it is a party and which is referred to in clause 5.2.2 and
deliver the same to David Underdown.
6. CONFIDENTIALITY
6.1 The Covenantors undertake to the Purchaser that they will not and will
procure that none of their Associates will at any time after the date of
this Agreement disclose to anyone or use for their own purposes or for any
purposes except those of any company in the Group or through any failure to
exercise all due care and diligence cause any unauthorised disclosure of
any Confidential Information which they or any of them now possess or come
into possession of prior to Completion.
6.2 Despite clause 6.1, the Covenantors may disclose Confidential Information:
6.2.1 to their professional advisers solely for the purpose of taking
advice on matters concerning this Agreement in which case the
Sellers shall ensure that such professional advisers are aware of
the confidential nature of the information and
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shall use their best endeavours to procure that such advisers
keep such information confidential on terms equivalent to this
clause;
6.2.2 to the extent required by law, or by any regulatory authority to
which the Covenantors may be subject.
6.3 Each of the Sellers will on demand made by the Purchaser at any time after
Completion deliver up or cause to be delivered up to the Purchaser, or
destroy or erase or cause to be destroyed or erased at the Purchaser's
direction, all notes and records on whatever media (including copies)
containing Confidential Information, in each case being in the custody,
control or possession of that Seller or any of his or its Associates.
6.4 The Covenantors and the Purchaser undertake to each other that they will
not and will procure that none of their respective Associates or any
employees or agents of the Company will at any time after the date of this
Agreement until the Purchaser's parent company, Horizon Organic Holding
Corporation files a report on Form 8-K with the United States Securities &
Exchange Commission with respect to the completion of the transaction
contemplated by this Agreement publicly disclose the existence or any of
the contents of this Agreement or use for their own respective purposes
knowledge of the existence or contents of this Agreement save that the
Purchaser may in its sole discretion publish press releases in the United
States and in the United Kingdom announcing and summarising this Agreement
upon its execution (and the Purchaser agrees to provide the Covenantors
with copies of such releases as soon as reasonably practicable before
publication) and the Purchaser may further in its sole discretion file such
Form 8-K.
7. RESTRICTIVE COVENANTS
7.1 To assure to the Purchaser the full value of the Shares and the underlying
goodwill of the business of the Company, each of the Covenantors undertakes
with the Purchaser that he will not and will procure that none of his
Associates will (whether directly or indirectly, or whether solely or
jointly with or as agent, director, shareholder, partner, manager,
employee, consultant or independent contractor of, in or to any other
person) without the prior written consent of the Purchaser:
7.1.1 during the period of 3 years and 10 months after Completion carry
on, or be engaged, concerned or interested in carrying on, or
provide technical, commercial or professional advice to any
person carrying on, any of the Restricted Activities within
England, Wales, Scotland, Northern Ireland, the Republic of
Ireland or any other territory anywhere else in the world in
which, at Completion, the Company has customers or outstanding
contracts, enquiries, tenders, quotations or the like in respect
of any of the Restricted Activities provided that this shall not
prevent Roger Persey, Geoffrey Persey and W Persey & Sons from
providing products or services to the Company pursuant to their
respective supply agreements with the Company referred to in
clause 5.2.1(q) and provided further that this shall not prevent
Peter Dunsford, Roger Persey, Geoffrey Persey and Herbert Persey
from carrying on the businesses of Meadow Farm Eggs Ltd or Meadow
Farms (Ingredients) Limited as carried out by such companies as
at Completion (subject to all organic liquid milk and
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cream as is necessary to carry out such businesses after
Completion being acquired from the Company);
7.1.2 during the period of 3 years and 10 months after Completion
supply or provide any products or services of the same or a
similar nature or type to those supplied by the Company at
Completion to any person who has been, to the knowledge of the
Covenantor, a customer of the Company at any time during the
period of two years immediately prior to Completion or who was at
the date of Completion in the process of negotiating or
contemplating doing business with the Company;
7.1.3 during the period of 3 years and 10 months after Completion
divert away from the Company any orders, enquiries or business
from which the Company could benefit in respect of the Restricted
Activities;
7.1.4 without prejudice to the provisions of clause 7.9, at any time
after Completion in any way make use of any corporate, business,
trade, product, domain or service name, mark, design or logo
which is identical or colourably similar to or likely to be
confused with the corporate name or any business, trade, product,
domain or service name, mark, design or logo used by the Company
at Completion or which might suggest a connection with the
Company;
7.1.5 at any time after Completion in any way indicate, suggest or
publicise any continuing connection between the Covenantor and
the Company which is in any way incorrect or misleading;
7.1.6 during the period of 3 years and 10 months after Completion cause
or seek to cause to be terminated or adversely affected or
otherwise interfere with any agreement or arrangement of any kind
to which the Company is at Completion a party or from which it
benefits;
7.1.7 during the period of 3 years and 10 months after Completion seek
to interfere with or adversely affect the ongoing relationships
between the Company and its professional and business contacts;
7.1.8 during the period of 12 months after Completion solicit or
endeavour to entice away from or discourage from being employed
by the Company any individual who was at Completion an employee
or consultant of the Company engaged in a managerial,
supervisory, technical or sales capacity or who had agreed to
become such with whom the Covenantor shall have had personal
contact and whether or not such individual would commit a breach
of contract by reason of leaving service;
7.1.9 during the period of 12 months after Completion employ or engage,
or attempt to employ or engage, or negotiate or arrange the
employment or engagement by any other person of, any individual
who was at Completion or was at any time within the period of
three months immediately prior to Completion, an employee or
consultant of the Company engaged in a managerial, supervisory,
technical or sales capacity with whom the Covenantor shall have
had personal
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contact, if such employment or engagement would require such
individual to exercise any skills or knowledge of the same or a
similar nature to those acquired or used by him while employed or
engaged by the Company or if that individual is, or is reasonably
likely to be, by reason of his employment or engagement or former
employment or engagement with the Company in possession of any
Confidential Information and whether or not such individual would
commit any breach of contract by reason of leaving service;
7.1.10 during the period of 3 years and 10 months after Completion,
accept employment or engagement in any capacity with any person
who to the knowledge of the Covenantor is then or was at any time
during the period of two years immediately prior to Completion a
customer of the Company and where the duties or work of the
Covenantor shall relate to a material extent to services of a
kind or nature the same as or similar to any services supplied by
the Covenantor to that customer on behalf of the Company at any
time during such period of two years;
7.1.11 induce, procure or knowingly assist any other person to do or
procure to be done anything which if done by the Covenantor would
be a breach of any of the provisions of this clause 7.1.
7.2 The expression the Company where used in clause 7.1 includes (where the
context admits) ODL to the intent and effect that clause 7.1 shall apply
(as a separate covenant in each case) in relation to ODL as it applies in
relation to the Company.
7.3 Each of clauses 7.1.1 to 7.1.11 shall be treated as a separate obligation
and shall be severally enforceable as such.
7.4 Nothing in clause 7.1 shall operate to prevent any Covenantor from properly
carrying out his duties under any contract of employment or contract for
services which he may have from time to time with the Company or any of its
Related Companies.
7.5 The restrictions in clauses 7.1.8 and 7.1.9 shall not apply to any persons
providing services to the Company and ODL in accordance with the
consultancy agreement entered into between the Company and Dunsford
Management Consultants and referred to in clause 6.2.3 and each of the
Covenantors undertakes with the Purchaser not to induce, procure or
knowingly assist any person to act or fail to act in breach of the said
consultancy agreement.
7.6 Nothing in clause 7.1 shall preclude a Covenantor from being the holder or
beneficial owner by way of bona fide investment only of any units of an
authorised unit trust and/or any securities in any company which are listed
or dealt in on any recognised stock exchange and where the Covenantor
(together with his Associates) neither holds nor is beneficially interested
in more than a total of 1 per cent of any single class of the securities in
that company.
7.7 The Covenantors consider the restrictions comprised in clause 7.1 to be
reasonable. However, any Covenantor against whom it is sought to enforce
any of such restrictions agrees to accept and observe such substituted
restriction(s) in place of all or any of those
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comprised in clause 7.1 as the Purchaser may from time to time specify,
on the condition that such substituted restriction(s) are in all respects
less restrictive in extent than those provided for in clause 7.1 which
they replace.
7.8 The provisions of clause 7.1 shall remain in force and be fully
applicable in all circumstances in accordance with their terms and in
particular shall not be discharged or affected by any breach, repudiation
or termination of this Agreement or of any of the agreements or other
documents referred to in this Agreement or of any contract of service,
contract for services or terms of service or engagement in force between
any of the Covenantors and the Purchaser or any of the Related Companies
of the Purchaser from time to time or by any unfair or wrongful dismissal
by any such company of any of the Covenantors, in each case whatever its
nature or however caused or arising or by any other matter, circumstance
or thing whatever.
7.9 In the event that the Purchaser or (as the case may be) the Company at
any time within 2 years of Completion serves upon the Covenantors a
written notice requiring that either Meadow Farms (Ingredients) Limited
(Registered Number3865964)(Ingredients) and/or Meadow Farm Eggs Ltd
(Registered Number3588969)(Eggs) changes its name, each of the
Covenantors undertakes (without incurring any unreasonable expense, such
expense not to exceed (Pounds)10,000) with the Purchaser to use his
reasonable endeavours to procure that within 28 days of receiving such
written notice Ingredients and/or as the case may be Eggs shall:
7.9.1 convene an extraordinary general meeting of its shareholders and cause a
special resolution to be passed changing the name of the said company to
a name not including the words 'Meadow Farms' or any confusingly similar
word or name; and
7.9.2 write to the Registrar of Companies notifying it of the change of name
and requesting the Certificate of Incorporation on Change of Name of Eggs
and/or Ingredients be issued as soon as possible thereafter; and
7.9.3 cease and procure that its Related Companies cease in any manner whatever
to use or display any trade or service marks, trade or service names,
domain names or logos used or held by such company or any confusingly
similar marks, domain name, name or logo.
8. RELEASE OF GUARANTEES AND INDEMNITIES
8.1 The Covenantors shall use their best endeavours (which shall include
(without limitation) procuring a bank or other person to act as
substitute guarantor or covenantor) to secure the release of the Company
with effect from Completion from any and all guarantees, indemnities,
collateral securities and letters of comfort which the Company has given
(whether alone or jointly with others) in respect of any obligations of
any of the Covenantors or their Associates and the Covenantors shall,
until such release be effected, indemnify the Purchaser (for itself and
as agent and trustee for the Company) the Company and each of them on
demand from and against all liabilities, costs and expenses which may
arise under any such guarantee, indemnity, collateral security or letter
of comfort or be incurred by reason of a requirement that such guarantee,
indemnity, collateral security or letter of comfort be honoured or
enforced.
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8.2 The Purchaser undertakes with each of the Covenantors (for himself and as
agent and trustee for each of his Associates) and his Associates that the
Purchaser shall use its best endeavours to secure the release of each of
the Covenantors and his Associates with effect from Completion from those
guarantees, indemnities, collateral securities and letters of comfort
which he or any of them have given (whether alone or jointly with others)
in respect of any obligations of the Company specified in the Disclosure
Letter by reference to this clause and the Purchaser shall (contracting
as above), until such release be effected, indemnify each of the
Covenantors and his Associates from and against all liabilities, costs
and expenses which may arise under any such guarantee, indemnity,
collateral security or letter of comfort or be incurred by reason of a
requirement that such guarantee, indemnity, collateral security or letter
of comfort be honoured or enforced.
8.3 The Covenantors acknowledge that the Purchaser or any of the Related
Companies of the Purchaser may make an election under Section 338 of the
U.S. Internal Revenue Code 1986 (as amended) (Section 338 Election) on or
after the date of this Agreement. Accordingly:
8.3.1 Each of the Covenantors warrants, represents to and undertakes with the
Purchaser that he is neither a citizen nor a resident of the U.S. for
U.S. federal tax purposes; and
8.3.2 The Purchaser hereby agrees to indemnify and keep indemnified each of the
Covenantors on demand from and against all tax liabilities incurred by
them arising out it making the Section 338 Election provided that this
indemnity shall not apply in respect of any tax liabilities incurred by
any or all of the Covenantors arising as a result of any or all of the
Covenantors being or being found to be either citizens or residents of
the U.S. for U.S. federal tax purposes on or after the date of this
Agreement.
9. HOLD HARMLESS PAYMENTS
9.1 Without restricting the rights of the Purchaser to claim damages on any
basis available to it in the event of any breach or non-fulfilment of any
of the Warranties, the Covenantors undertake with the Purchaser on demand
to make payments to the Purchaser equal to any and all liabilities paid,
discharged, sustained or incurred by the Company or ODL or any of their
respective officers or employees at any time (whether before, on or after
Completion) and which in any case arises out of or in relation to or by
reason of:
9.1.1 disputing, defending, settling or compromising the litigation
dispute between the Company and the Residuary Milk Marketing
Board (Case Number 96 BUS163) or in appealing against any
judgement or award made in relation thereto provided that if the
Company shall recover any or all of the sum of (Pounds)25,663.63
it paid into court on 22 July 1996 in respect of such dispute
then the Purchaser undertakes to make payment to the Covenantors
within 7 days of receipt by it of an amount equal to such sum
recovered (less any applicable taxation);
9.1.2 any of those Sellers that are minors at the date of this
Agreement either failing to comply with any or all of their
obligations under this Agreement or rescinding
<PAGE>
or repudiating or failing to ratify the terms of this Agreement
or seeking to do any of the above at any time before such Sellers
attain the age of majority or within a reasonable time of
attaining majority;
9.1.3 the Company being in breach of any of the terms and conditions of
the processing and marketing grant awarded by the Ministry of
Agriculture, Fisheries and Food (MAFF) (the details of which are
set out in a letter to the Company dated 23 April 1996) as a
result directly or indirectly of any change in the control of the
Company or change in the composition of the board of directors of
the Company subject always to the Purchaser undertaking with the
Covenantors that it shall not notify MAFF in writing at any time
after Completion of the said change in control or change in
composition without first agreeing with the Covenantors the form
of such notification to MAFF (such agreement not to be
unreasonably withheld, delayed or conditioned by the
Covenantors);
9.1.4 any failure by the Company or ODL at any time before Completion
to comply with any legal or regulatory requirements under the
Milk Quota Regime (which for the purpose of this clause 9.1
includes all EC and UK regulatory requirements concerning milk
quota);
9.1.5 any purchase or supply by the Company or ODL of milk in excess of
its milk quota in any quota year occurring before Completion
attracting the payment after Completion of levy by the Company or
ODL under the Milk Quota Regime;
9.1.6 any act or omission by the Company or ODL at any time before
Completion resulting in its status as an approved purchaser under
the Milk Quota Regime being adversely affected either before or
after Completion;
9.1.7 any action taken by the Company or ODL or any of their respective
officers or employees in assessing, disputing, resisting or
defending any claim, action, demand or proceedings relating to
any such liabilities and/or in seeking advice as to any such
claim, action, demand or proceedings.
9.2 For the purposes of clause 9.1, liabilities means any payment obligations,
losses, damages, costs (including legal costs on an indemnity basis),
fines, levies and penalties (whether civil or criminal), interest payments,
charges, expenses and liabilities.
9.3 No claim for payment shall be made pursuant to clause 9.1 to the extent
that provision for the liabilities in question was made in the Warranted
Accounts.
9.4 Any payments made by the Covenantors pursuant to clause 9.1 shall be
treated as a reduction pro-rata in the consideration for their Shares. Any
payment made by the Purchaser pursuant to clause 9.1.1 shall be treated as
an increase pro-rata in the consideration for their Shares.
9.5 If the United Kingdom Inland Revenue or any other taxing authority in any
jurisdiction brings into any charge to taxation any sum payable under the
payment undertaking
<PAGE>
contained in clause 9.1, then (to the extent that the payment is not
allowable as a deduction for tax purposes) the amount so payable shall
be grossed up by such amount as will ensure that after deduction of
the taxation so chargeable there shall remain a sum equal to the
amount that would otherwise be payable under such payment undertaking.
9.6 If any claim is made against the Company or ODL or any of their
respective officers or employees in relation to which payment is
sought or is likely to be sought under clause 9.1, the Purchaser shall
consult with the Covenantors with a view to determining the most
appropriate method of resolving the claim. If the Covenantors shall
indemnify and secure the Purchaser and the Company and ODL to the
Purchaser's reasonable satisfaction against the liabilities, costs,
damages and expenses which may be incurred as a result the Purchaser
shall at the expense of the Covenantors take such action and procure
that the Company and ODL shall take such action as the Covenantors may
reasonably request to avoid, resist or compromise the claim. If the
Covenantors shall not request the Purchaser to take any such action,
or shall fail to indemnify and secure the liabilities, costs, damages
and expenses mentioned above within 30 days after notice shall have
been given to the Covenantors then the Purchaser or the Company or ODL
shall be free to pay or settle the claim on such terms as it shall in
its absolute discretion think fit and the Purchaser shall be entitled
to claim payment from the Covenantors accordingly.
10. REFERENCES TO EXPERT
Any dispute arising under this Agreement which is to be settled in
accordance with this clause shall be referred for final settlement to
a firm of chartered accountants nominated jointly by the Sellers and
the Purchaser or failing such nomination within 14 days after request
by either the Sellers or the Purchaser, nominated at the request of
any of them by the President from time to time of the Institute of
Chartered Accountants in England and Wales. The accountants shall be
entitled to call for and inspect such documents as they may reasonably
consider necessary. In making their determination, the accountants
shall act as experts and not as arbitrators, their decision shall (in
the absence of manifest error) be final and binding on the parties and
their fees shall be borne and paid by the Sellers and the Purchaser in
such proportions as the accountants determine.
11. COSTS
11.1 Each party shall pay the costs and expenses incurred by that party in
connection with the preparation, negotiation and implementation of
this Agreement and the documents referred to in this Agreement.
However, the Purchaser shall bear any stamp duty payable on the
transfers of the Shares.
11.2 The Covenantors undertake to indemnify the Purchaser and keep the
Purchaser fully and effectively indemnified on demand against all
costs (including legal costs on an indemnity basis), charges, expenses
and liabilities (together with any value added tax which is not
recoverable by the Purchaser) which the Purchaser may reasonably
incur, either before or after the commencement of any action, in
connection with (i) the settlement of any claim by the Purchaser under
any of the provisions of this Agreement or the Tax Deed or any other
document referred to in this Agreement, (ii) any legal proceedings in
which the Purchaser claims that there has been a breach of any of the
provisions of this Agreement or any document referred to in this
Agreement or claims a payment under the
<PAGE>
Tax Deed and in which judgment is given for the Purchaser or (iii) the
enforcement of any such settlement or judgment.
12. NOTICES
12.1 Every notice given or required to be given under this Agreement
(Notice) shall be in writing and in the English language. A Notice
shall , in the case of the Purchaser, be sent to its registered office
from time to time and, in the case of each of the Covenantors, be
served on a party at the address of that party set out in this
Agreement or at such other address within the country of that party's
address set out in this Agreement as that party shall have notified to
the other party in accordance with this clause.
12.2 Every Notice shall be sent by courier, or by first class recorded
delivery post (if within the United Kingdom), or by prepaid airmail
(if elsewhere), or by facsimile transmission. A Notice addressed to a
corporation shall be marked for the attention of its chief executive
(or equivalent officer). To be valid a Notice must be despatched on a
Business Day.
12.3 A Notice shall be deemed to be served, if by courier, at the time of
delivery and, if posted, at 10.00 a.m. on the second Business Day
after the day it was put in the post if sent within the United Kingdom
or at 10.00 a.m. (local time at the place of destination) on the fifth
Business Day after the day it was put in the post if sent by airmail.
If sent by facsimile transmission it shall be deemed to be served at
the expiration of two hours after the time of despatch, if despatched
before 3.00 p.m. (local time to the sender), and in any other case at
10.00 a.m.(local time to the sender) on the first Business Day after
the date of despatch.
12.4 In proving service of a Notice it shall be sufficient to prove that
delivery was made or that the envelope containing the Notice was
properly addressed and posted (either by prepaid first class recorded
delivery post or by prepaid airmail, as the case may be) or that the
sender's facsimile transmission report confirmed receipt.
13. GENERAL
13.1 None of the rights or obligations of a party under this Agreement may
be assigned or transferred without the prior written consent of the
other parties. However, the Purchaser may at any time assign all or
any part of its rights and benefits under this Agreement, and any
cause of action arising under or in respect of any of them, to any
transferee of the share capital of the Company, or to any Related
Company of the Purchaser who may enforce them as if he had also been
named in this Agreement as the Purchaser.
13.2 This Agreement is binding on and shall apply for the benefit of the
parties' personal representatives, successors in title and permitted
assignees.
13.3 This Agreement and the documents referred to in it constitute the
entire agreement between the parties relating to their subject matter,
and supersede all previous agreements between the parties relating to
that subject matter. There shall be deemed to be comprised in this
Agreement all letters and acknowledgements exchanged between the
parties contemporaneously with and expressed to be ancillary to this
Agreement.
<PAGE>
13.4 Any variation or waiver of any of the terms of this Agreement shall
not be binding unless set out in writing, expressed to amend this
Agreement and signed by or on behalf of each of the parties.
13.5 This Agreement shall be governed by the laws of England and the
parties submit to the non-exclusive jurisdiction of the English
Courts.
13.6 If any provision of this Agreement, or any part of a provision of this
Agreement, is found to be illegal, invalid or unenforceable the
remaining provisions, or the remainder of the provision concerned,
shall continue in effect.
13.7 A failure or delay in enforcing compliance with any term of this
Agreement shall not be a waiver of that or any other term of this
Agreement.
13.8 Each party confirms that, in agreeing to enter into this Agreement,
that party has not relied on any representation, warranty or other
assurance except those set out in this Agreement. To the extent any
previous representation, warranty or assurance was made to a party
that party waives all rights and remedies in respect of it. However,
nothing in this clause shall limit or exclude liability for fraud.
13.9 Any date or period mentioned in this Agreement may be extended by
agreement between the parties. However, as regards any date or period
(whether or not extended by agreement) time shall be of the essence of
this Agreement.
13.10 All obligations of the parties shall continue in full force and effect
after Completion, except for any obligations then already fully
performed.
13.11 The express rights and remedies provided in this Agreement do not
exclude any other rights or remedies provided by law, except to the
extent that the rights and remedies of a party are expressly excluded
or restricted by the terms of this Agreement.
13.12 Any payment made to the Sellers' Solicitors pursuant to the terms of
this Agreement shall be deemed to be made to the Sellers (or the other
persons entitled to the payment). Such payment shall be in complete
satisfaction of the Purchaser's obligation to make the relevant
payment to the persons entitled to it and the Purchaser shall not be
responsible for seeing how those moneys are applied.
13.13 Where it is agreed that any payments by the Sellers or the Covenantors
to the Purchaser under this Agreement or the Tax Deed shall be treated
as a reduction in the consideration for their Shares, such payments
shall, to the extent that in aggregate they are less than or equal to
such consideration, constitute a repayment of and a reduction in (or,
as the case may be, a full return of) such consideration, but nothing
shall limit the liability of the Sellers or, as the case may be, the
Covenantors to make such payments in circumstances where, in
aggregate, they exceed the consideration for their Shares.
13.14 If any sum payable under the terms of this Agreement is not paid when
due then the party in default shall pay to the party entitled to
receive payment Interest on the unpaid sum at the Default Rate from
the date or last date for payment of the unpaid sum to the date
<PAGE>
of actual payment (both dates inclusive). Such interest shall be paid on
demand by the party entitled to payment.
13.15 None of the parties shall at any time make any announcement of this
transaction or disclose any term of this Agreement, or of any document
referred to in this Agreement, without the prior written approval of the
other parties except to the extent that such information is already
lawfully in the public domain. The parties shall each use their best
endeavours to keep the terms of this Agreement and the documents referred
to in it which are not already lawfully in the public domain from time to
time strictly confidential. Despite the above, a party shall be entitled
to make any announcement or disclosure which is imposed on that party by
law or by the rules of any regulatory body to which that party is subject
but the parties shall, as far as practicable, consult with one another on
the form of such announcement or disclosure. The provisions of this
clause 13.15 are subject to the provisions of clause 6.4.
13.16 The Purchaser may release or compromise the liability of any of the
Sellers or Covenantors under this Agreement or grant any concession to a
Seller or Covenantor without affecting the liability of any other Seller
or Covenantor under this Agreement. Where a liability of one or some, but
not all, of the Sellers or, as the case may be, the Covenantors in
respect of any obligation is released or compromised, the other Sellers
or, as the case may be, Covenantors shall continue to be fully liable in
respect of that obligation
13.17 Completion shall not constitute a waiver of any breach of this Agreement
even if the breach was known about at the time of Completion.
13.18 This Agreement may be executed in any number of counterparts and all the
counterparts when taken together will constitute one agreement. Each
party may enter into this Agreement by executing a counterpart.
13.19 Each party shall execute such further documents and perform and do such
further acts and things following Completion as any of the other parties
may reasonably request in writing in order to carry the provisions of
this Agreement into full effect.
13.20 At any time after Completion the Covenantors shall provide or procure to
be provided to the Purchaser and its agents and advisers all information
in their possession or under their control concerning the business,
accounts, finance or contractual arrangements or other dealings,
transactions or affairs of the Group as the Purchaser shall from time to
time reasonably require and the Covenantors will give or procure to be
given to the Purchaser and its agents and advisers such access (including
the right to take copies) to such documents containing such information
as the Purchaser shall from time to time reasonably require.
13.21 Each party agrees to co-operate with and assist the other parties in the
taking of all steps necessary or appropriate to complete the transactions
contemplated by this Agreement, including, without limitation, the
provision of information appropriate for submission to the U.S.
Securities and Exchange Commission or any other relevant regulatory or
governmental agencies.
EXECUTED by the parties on the date specified at the beginning of this
Agreement.
<PAGE>
SCHEDULE 2 - Warranties, Representations and Undertakings
1. CAPACITY
1.1 The Sellers and the Company have full power to enter into and perform
their obligations under this Agreement and the agreements and deeds to be
entered into pursuant to this Agreement which will, when executed,
constitute binding obligations on the Sellers and the Company in
accordance with their terms.
1.2 The Sellers are the beneficial owners of or are otherwise entitled to
sell and transfer to the Purchaser the full legal and beneficial
ownership of the Shares on the terms of this Agreement.
2. INFORMATION
2.1 All material written information which has been given by the Sellers or
any of their professional advisers or any officers or employees of the
Company to the Purchaser or any of its professional advisers in the
course of the negotiations leading to this Agreement (including, without
limitation, replies to enquiries relating to the Properties and to the
Purchaser's due diligence questionnaires) was when given, is now, and
will at Completion be true and accurate and not misleading in any
material respect. In so far as such information was expressed as a matter
of opinion such opinion was truly and honestly held and not given
casually or recklessly or without due regard for its accuracy.
2.2 The facts set out in the Introduction and Schedule 3 and the information
and documents contained or referred to in or attached to the Disclosure
Letter are true, accurate and complete in all material respects and there
are no other facts or matters which would render any such facts,
information or documents misleading.
3. SHARE CAPITAL AND CONSTITUTION
3.1 The Shares will at Completion constitute the whole of the issued and
allotted share capital of the Company and all the Shares are fully paid
up.
3.2 Apart from this Agreement, there is no Encumbrance on, over or affecting
the issued or unissued share or loan capital of the Company and there is
no agreement or commitment to give or create any such Encumbrance and no
claim has been made by any person to be entitled to any such Encumbrance.
3.3 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 them is incorrect or should be rectified has been received.
<PAGE>
3.4 All returns, particulars, resolutions and documents required by the Act
or any other legislation to be filed with the Registrar of Companies in
respect of the Company have been duly filed on time and were correct.
3.5 The copy of the memorandum and articles of association of the Company
supplied to the Purchaser is true and complete and the Company has at all
times carried on its business and affairs within the powers and in
accordance with the provisions of its memorandum and articles of
association and they set out fully the rights and restrictions attaching
to each class of authorised share capital of the Company.
3.6 Since the Accounting Date, neither the Company nor any class of its
members has passed any resolution (other than resolutions relating to
business at an annual general meeting which was not special business).
3.7 The Company has not since its incorporation been a subsidiary of any body
corporate (wherever incorporated).
4. ACCOUNTS AND ACCOUNTING RECORDS
4.1 The Warranted Accounts show a true and fair view of the state of affairs
of the Company at the Accounting Date and its profits for the accounting
reference period ended on that date, fully provide for or disclose all
liabilities (whether actual, contingent or disputed) in existence at the
Accounting Date, comply with all current Financial Reporting Standards
and other accounting standards applicable to a United Kingdom company and
with the requirements of the Act and all other applicable legislation,
were not affected by any extraordinary, exceptional or non-recurring
item, properly reflect the financial position of the Company as at the
Accounting Date and were prepared in accordance with the historical cost
convention.
4.2 The bases and policies of accounting adopted for the purpose of preparing
the Warranted Accounts are the same as those adopted in preparing the
audited accounts of the Company in respect of the three last preceding
accounting reference periods and no changes in the basis of accounting
were made during the accounting reference period ended on the Accounting
Date or have been made since that date.
4.3 In relation to the Company's accounts for each of its three accounting
reference periods immediately preceding the period to which the Warranted
Accounts relate, the statements contained in paragraph 4.1 above, with
the substitution of the relevant accounting date for the Accounting Date
and of the relevant accounting period for the period ended on the
Accounting Date, are true and accurate and those accounts, taken with the
Warranted Accounts, correctly show the trend of the Company's profits for
the entire period covered by them.
4.4 The Management Accounts have been prepared in accordance with UK
generally accepted accounting practice on a basis consistent with the
Warranted Accounts, accurately state the level of turnover and
expenditure of the Company for the period from the Accounting Date to 31
March 2000 and accurately reflect the state of affairs of the Company as
at 31 March 2000 and of the trading performance of the Company for the
period from the Accounting Date to 31 March 2000.
<PAGE>
4.5 The Sales Forecasts have been prepared with due care and attention in
accordance with the Company's normal practice, are made on reasonable and
realistic grounds and are based on all relevant assumptions (which are
set out in the Sales Forecasts) and there are no facts or circumstances
which render the Sales Forecasts unrealistic or misleading.
4.6 All the accounts, books, ledgers and financial and other material records
of whatever kind of the Company have been fully, properly and accurately
kept and completed and there are no material inaccuracies or
discrepancies of any kind contained or reflected in them and they give
and reflect a true and fair view of the financial, contractual and
trading position of the Company and of its transactions, fixed and
current assets, liabilities (actual and contingent), debtors, creditors,
plant and machinery, stock-in-trade and work-in-progress.
5. POSITION SINCE THE ACCOUNTING DATE
Since the Accounting Date:
5.1 the Company has carried on its business in the ordinary course and at a
profit and so as to maintain it as a going concern and without any
interruption or alteration in the nature, scope or method of carrying
such business;
5.2 there has been no material adverse change in the Company's financial or
trading position or prospects (not affecting similar businesses to a like
extent) nor has its turnover, expenses (direct or indirect) or margin of
profitability shown any material deterioration;
5.3 no material changes have occurred in the assets or liabilities of the
Company as shown in the Warranted Accounts and there has been no
reduction in the value of the net tangible assets of the Company
(determined in accordance with the same accounting policies as those
applied in the Warranted Accounts and on the basis that each fixed asset
is valued at a figure no greater than the value attributed to it in the
Warranted Accounts or, in the case of any fixed asset acquired by the
Company after the Accounting Date, at a figure no greater than cost)
below the value of the net tangible assets of the Company at the
Accounting Date as shown in the Warranted Accounts;
5.4 the Company has not assumed or incurred any liabilities (including
contingent liabilities) otherwise than in the ordinary course of carrying
on its business;
5.5 the Company has not disposed of or acquired any fixed assets nor, save in
the ordinary course of business, has it disposed of or acquired any
current assets;
5.6 there has been no unusual change in the Company's stock levels;
5.7 there has been no destruction of or material damage to any of the
Company's fixed assets;
5.8 no donation or covenant for charitable or political purposes or any ex-
gratia payment has been made or agreed to be made by the Company;
5.9 no debtor has been released on terms that he pays less than the full book
value of his debt (except for settlement discounts on the usual terms
which have been disclosed to the
<PAGE>
Purchaser) and no debt owing to the Company has been deferred,
subordinated or written off or has proved to any extent irrecoverable or
is now regarded as irrecoverable;
5.10 the Company has not accelerated the collection of trade debts or
decelerated the payment of trade creditors;
5.11 no loan or loan capital or redeemable share capital of the Company has
been repaid in whole or in part or has become liable to be repaid;
5.12 there has not been any distribution by the Company (whether of capital or
income) or dividend or bonus declared or paid on any part of its share
capital.
6. TAXATION
Taxation liabilities
6.1 All liabilities (including contingent and deferred liabilities) of the
Company for tax as at the Accounting Date whether as principal, agent or
trustee are fully provided for in the Warranted Accounts; and
6.2 all tax for which the Company is liable or for which the Company is
liable to account has been duly paid (insofar as it ought to have been
paid including (but not limited to) payments under the Corporation Tax
(Instalment Payments) Regulations 1998) and without prejudice to the
generality of the above the Company has made all such deductions and
retentions that it was obliged or entitled to make and all such payments
that should have been made.
Mitigation of tax deductions
6.3 The Disclosure Letter contains details of all current exemptions
obtained by the Company from any taxation authorities permitting the
payment of interest or royalties without deduction for or on account of
tax.
Outstanding tax matters
6.4 There are set out in the Disclosure Letter with express reference to
this paragraph full details of all matters relating to taxation in
respect of which the Company (either alone or jointly with any other
person) has an outstanding entitlement:
(a) to make any claim (including a supplementary claim) for relief under
any taxation statute;
(b) to make any election for one type of relief, or one basis, system or
method of taxation as opposed to another;
(c) to make any appeal (including a further appeal) against any
assessment to taxation;
(d) to make any application for the postponement of taxation; or
(e) to make any claim for the repayment of taxation.
<PAGE>
Tax returns, Corporation Tax self-assessment and Records
6.5 All necessary information, notices, accounts, statements, reports,
computations and returns which ought to have been made have been properly
and punctually submitted by the Company to the relevant Taxation
Authorities and all information, notices, computations and returns
submitted to such authorities are true and accurate and are not the
subject of any material dispute nor are likely to become the subject of
any material dispute;
6.6 The Company has preserved records required for the delivery of correct
and complete returns as required by Schedule 18 Finance Act 1998;
6.7 Save as disclosed all claims including claims to capital allowances taken
into consideration when setting the tax provisions in the Accounts were
in respect of accounting periods ending after 30 June 1998 included in
returns.
Altering existing arrangements
6.8 The Company has not, for any period commencing after the Accounting
Date taken any action which has had or might have the result of altering,
prejudicing or in any way disturbing for any period commencing after the
Accounting Date any arrangement or agreement which it has previously
negotiated with any Taxation Authority.
Penalties and interest
6.9 The Company has not within the period of six years ending on
Completion paid or become liable to pay nor are there any circumstances
by virtue of which the Company is likely to become liable to pay, any
penalty, fine, surcharge or interest charged by virtue of the provisions
of any taxation statute including (but not limited to) the Taxes
Management Act 1970, the VATA or otherwise.
Investigation
6.10 The Company has not been within the last three years the subject of
any dispute with or investigation, audit or visit by or involving any
Taxation Authority and so far as the Sellers are aware there is no
transaction, act, omission, event or circumstance which is likely to or
might give rise to any such dispute or investigation, audit or visit.
Tax indemnities
6.11 The Company is not nor will become liable to pay or make reimbursement
or indemnity in respect of any taxation in consequence of the failure by
any other person to discharge that taxation within any specified period
or otherwise, where such taxation relates to a profit, income or gain,
transaction, event, omission or circumstance arising, occurring or deemed
to arise or occur (whether wholly or partly) prior to Completion.
Expenditure Deductible
6.12 No rents, interest (including any amounts treated as interest under
ICTA 1988 s.730A), annual payments or other sums of an income nature paid
or payable by the
<PAGE>
Company since the Accounting Date or which the Company is under an
existing obligation to pay in the future are or may be wholly or
partially disallowable as deductions or charges in computing profits for
the purposes of corporation tax.
Deductions of Tax
6.13 All payments made by the Company which were required to be or which
ought to have been made under deduction or withholding of taxation have
been so made and any sums required to be accounted for have been
accounted for to the relevant Taxation Authority.
Notices of nil liability
6.14 There are no current dispensations or notices granted by the Inland
Revenue relating to the Company under section 166 of the Taxes Act
(notices of nil liability).
Payments to employees
6.15 The Company has not made nor is it under an obligation to make any
payment to or provide any benefit for any officer or employee or ex-
officer or ex-employee of the Company (including any compensation for
loss of office or any gratuitous payment on such loss of office) which is
not allowable as a deduction in calculating the profits of the Company
for taxation purposes.
Tax Avoidance
6.16 Other than transactions carried into effect in accordance with the
terms of a relevant application and corresponding valid and effective
consent or clearance obtained on the basis of full and accurate
disclosure to the Inland Revenue, the Company has not at any time been a
party to or otherwise involved in any transaction to which any of the
following provisions have been or could be applied:
(a) section 139(5) TCGA (Company reconstruction or amalgamation:
transfer of assets);
(b) section 75 of the CAA (further restrictions on allowances);
(c) section 106 of the TCGA (disposal of shares and securities within
prescribed period of acquisition);
(d) sections 135 and 136 of the TCGA (exchange of securities and
reconstruction or amalgamation involving issue of securities);
(e) sections 213 to 218 of the of the Taxes Act and section 192 of the
TCGA (demergers);
(f) section 219 of the Taxes Act (purchase by unquoted trading company
of its own shares);
<PAGE>
(g) sections 61, 63, 64 or 65 of the Finance Act 1993 (interest etc on
debt between associated companies);
(h) section 166 of the Finance Act 1993;
(i) sections 56 (transactions in deposits etc), 399 (dealings in
commodity futures etc), 410 (arrangements for transfer of company),
395 (leasing contracts), 116 (arrangements for transferring relief)
and section 118 (restrictions on relief) of the Taxes Act;
(j) Part XVII (tax avoidance) of the Taxes Act;
(k) paragraph 13 of Schedule 9 of the Finance Act 1996 (loan
relationships for unallowable purposes);
(l) sections 165, 166, 167 or 168 of the Finance Act 1994 (interest rate
and currency contracts, anti-avoidance and related provisions).
Ramsay principle
6.17 The Company has not been involved in any transaction or series of
transactions which, or any part of which, may for any tax purposes be
disregarded or reconstructed or recharacterised by reason of any motive
to avoid, reduce or delay a possible liability to tax.
Pension scheme refunds
6.18 Since the Accounting Date no payment has been made to the Company to
which section 601 of the Taxes Act applies. Depreciatory transactions
6.19 No allowable loss which may accrue on the disposal by the Company of
any asset is or may be liable to be reduced by virtue of the provisions
of sections 176 and 177 of the TCGA.
Value shifting
6.20 No chargeable gain or allowable loss arising on a disposal by the
Company is liable to be adjusted pursuant to the provisions of sections
29 to 34 inclusive of the TCGA.
VAT registration
6.21 The Company is a taxable person and is registered for the purposes of
the VATA and is not in arrears with any return or payments, has not
received any surcharge liability notice and has not been required to pay
any fine, surcharge or penalty or give security in relation to value
added tax.
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Exemption
6.22 The Company is not nor was partially exempt in its current or
preceding value added tax year and there are no circumstances by reason
of which the Company might not be entitled to credit for all value added
tax chargeable on supplies received and imports or acquisitions of goods
made (or agreed or deemed to be received or made) by it since the
beginning of its earliest value added tax year to include a period since
the Accounting Date, and there are no circumstances by reason of which
Regulation 107 of the Value Added Tax Regulations 1995 might apply (or
has since the Accounting Date applied) to the Company.
VAT group
6.23 The Company is not, nor has since 31 March 1973 been treated for the
purposes of value added tax as a member of a group for the purposes of
section 43 of the VATA (groups of companies) and no application for it to
be so treated has at any time been made).
Secondary liability
6.24 The Company is not nor has agreed to become an agent, manager, factor
or value added tax representative of any person for the purposes of
sections 47 and 48 of the VATA.
6.25 No claim has been made or could prior to Completion be made by the
Company for bad debt relief under section 36 of the VATA.
Option to tax
6.26 The Disclosure Letter contains full particulars of all elections to
waive exemption made or agreed to be made under Schedule 10 to the VATA
by (i) the Company or (ii) any person in relation to which the Company is
a relevant associate as defined in paragraph 3(7) of that Schedule and in
respect of each election made has been properly made and in particular
any necessary notification and information has been duly given under
paragraph 3(6) of that Schedule.
Landlords able to charge the Company VAT
6.27 The Company is not bound or has agreed to become bound by any lease,
tenancy or licence in the case of which under its terms or by statute the
Company is or could become liable to pay an amount in respect of value
added tax chargeable as a result of the making of an election to waive
exemption under Schedule 10 to the VATA.
Capital Goods Scheme
6.28 The Disclosure Letter sets out full details of all adjustments that
have arisen or could arise on the Company under Part XV of the Value
Added Tax Regulations 1995.
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Capital Allowances - book cost and tax cost
6.29 No balancing charge under the Capital Allowances Act 1990 (or other
legislation relating to any capital allowances) would be made on the
Company on the disposal of any pool of assets (that is to say all those
assets expenditure relating to which would be taken into account in
computing whether a balancing charge would arise on a disposal of any
other of those assets) or of any asset not in such a pool, on the
assumption that the disposals are made for a consideration equal to the
book value shown in or adopted for the purpose of the Warranted Accounts
for the assets in the pool or (as the case may be) for the asset.
Balancing charges
6.30 No event has occurred since the Accounting Date otherwise than in the
ordinary course of business by reason of which any balancing charge may
fall to be made against or any disposal value may fall to be brought into
account by the Company under the CAA (or other legislation relating to
any capital allowances).
Qualifying expenditure
6.31 All expenditure which the Company has incurred or may incur under any
subsisting commitment on the provision of machinery or plant has
qualified or will qualify (if not deductible as a trading expense of the
trade carried on by the Company) for writing-down allowances under Part
II of the CAA (machinery and plant) and the Company has notified its
Inspector of Taxes of all such expenditure pursuant to FA 1994 s.118.
Allowances claimed
6.32 All capital allowances made or to be made to the Company in respect of
capital expenditure incurred prior to Completion or to be incurred under
any subsisting commitment have been made or will be made in taxing its
trade.
Short life and long life assets
6.33 The Company has not made any election under section 37 of the CAA nor
is it taken to have made such an election under subsection (8)(c) of that
section.
6.34 The disclosure letter gives details of machinery or plant that is a
long life asset within Chapter IVA CAA.
Industrial buildings
6.35 None of the assets, expenditure on which has qualified for a capital
allowance under Part I of the CAA, has at any time since that expenditure
was incurred been used otherwise than as an industrial building or
structure.
Leased assets
6.36 The Company has not made any claim for capital allowances in respect
of any asset which is leased to or from or hired to or from the Company
and no election affecting the
<PAGE>
Company has been made or agreed to be made under sections 53 or 55 of the
CAA in respect of any such asset.
6.37 No claim for capital allowances on expenditure incurred by the Company
prior to Completion on the provision of machinery or plant which is still
leased will or may be restricted by reason of section 61(5) of the CAA.
Capital gains - book cost and tax cost
6.38 If each of the capital assets of the Company were disposed of at
Completion for a consideration equal to the book value of that asset in
or adopted for the purpose of the Warranted Accounts no chargeable gain
or allowable loss would arise, disregarding for this purpose any relief
or allowances available to the Company other than amounts falling to be
deducted from the consideration received under section 38 of the TCGA
(acquisition and disposal costs).
Acquisitions other than at arm's length
6.39 There are set out in the Disclosure Letter true and full particulars
(including cost) of each asset of the Company (except trading stock and
work in progress) that was acquired by the Company at any time:
(a) by transfer from any other company then belonging to the same group
of companies as the Company within the meaning of section 170 of the
TCGA (groups of companies); or
(b) otherwise than by way of bargain at arm's length.
1982 Re-basing
6.40 No election has been made under section 35 of the TCGA (re-basing) in
respect of any assets held by the Company and the Warranted Accounts were
prepared on the basis that no such election will be made.
Gifts involving the Company
6.41 The Company does not hold nor has held shares in a company on a
disposal of which section 125 of the TCGA (close company transferring
assets at an undervalue) could apply.
Roll-over of gains
6.42 The Company has not received any asset by way of gift as mentioned in
section 282 of the TCGA (recovery from donee).
6.43 The Disclosure Letter sets out full details of all claims and elections
made under section 23 of the TCGA (compensation and insurance moneys) or
under sections 247 to 248 152 to 162 or 165 (inclusive) of the TCGA
(replacement of business assets) insofar as such claim or election
affects or could affect the chargeable gains or allowable loss which
would arise on any disposal of any asset after the Accounting Date.
<PAGE>
Transactions between connected persons
6.44 The Company is not entitled to any capital loss to which the provisions of
section 18 of the TCGA are applicable.
Claims for relief
6.45 The Company has not made, nor is entitled to make, a claim under section
24(2) of the TCGA (assets lost or destroyed or whose value becomes
negligible) or section 48 of the TCGA (consideration due after time of
disposal).
Groups - group income elections
6.46 The Disclosure Letter contains full particulars of all elections made by
the Company under section 247 of the Taxes Act in the three years ending
at Completion (dividends etc paid by one member of a group to another) and
all such elections are now in force and no assessment has been or may be
made on the Company in respect of advance corporation tax which ought to
have been paid or income tax which ought to have been deducted.
Group relief surrenders of ACT and group income
6.47 The Disclosure Letter contains full and complete particulars of all
arrangements and agreements relating to group relief (as defined in
section 402 of the Taxes Act) to which the Company is or has been a party
in the three years ending at Completion. In particular the Company and the
claim(s) comply with the procedural and other requirements of Part VIII
Schedule 18 of the Finance Act 1998 for accounting periods ending after 30
June 1999 and in respect of earlier accounting periods:
(a) all claims made by the Company for group relief were, when made,
valid and have been or will be allowed by way of relief from
corporation tax;
(b) no Company has made nor is liable to make any payment under any such
arrangement or agreement;
(c) the Company has received all payments due to it under any such
arrangement or agreement for surrender of group relief made by it.
6.48 The Disclosure Letter contains full and complete particulars of all
arrangements and agreements relating to the surrender of advance
corporation tax (as described in section 240 of the Taxes Act) to which
the Company has been a party and:
(a) all claims made by the Company to accept the surrender of advance
corporation tax were, when made, valid and have been or will be
allowed by way of relief from corporation tax by the Company;
(b) the Company has not paid nor is liable to pay any advance corporation
tax which is or may become incapable of set off against the Company's
liability to corporation tax;
<PAGE>
(c) the Company has received all payments due to it under any such
arrangement or agreement for all surrenders of advance corporation tax
made by it.
6.49 No company has been party to a surrender of a tax refund under section 102
of the Finance Act 1989.
Acquisitions from group members
6.50 No assets of the Company shall be deemed under section 179 of the TCGA
(company ceasing to be a member of a group) to have been disposed of and
reacquired by virtue of or in consequence of the entering into a
performance of this Agreement or any other event since the Accounting
Date.
Intra-group transactions
6.51 No tax has been or may be assessed on the Company pursuant to section 190
of the TCGA in respect of any chargeable gain accrued prior to the date of
Completion and the Company has not at any time within the period of six
years ending at Completion transferred any asset other than trading stock
(including without limitation any transfer by way of share exchange within
section 135 of the TCGA) to any company which at the time of disposal was
a member of the same group (as defined in section 170 of the TCGA).
Distributions and other payments - distributions shown in Warranted
Accounts
6.52 No distribution within the meaning of sections 209 (distributions) and 210
(bonus issue following repayment of share capital) of the Taxes Act has
been made by the Company since 6 April 1965 except dividends shown in its
audited accounts nor is the Company bound to make any such distribution.
Chargeable payments
6.53 The Company has not been engaged in or party to any of the transactions
set out in Part VI, Chapter III of the Taxes Act (matters not
distributions) nor has made or received any chargeable payment as defined
in section 214 of the Taxes Act (chargeable payments connected with exempt
distributions).
Repayments and capitalisations
6.54 The Company has not at any time since 6 April 1965:
(a) purchased or agreed to purchase, repaid or agreed to repay or
redeemed or agreed to redeem any of its share capital for the
purposes of section 210 of the Taxes Act (bonus issues following
repayment of share capital);
(b) capitalised or agreed to capitalise in the form of shares or
debentures any profits or reserves of any class or description nor
has it passed or agreed to pass any resolution to do so.
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Stock dividends
6.55 The Company has not issued any share capital to which the provisions of
section 249 of the Taxes Act or section 141(1) of the TCGA (stock
dividends) would apply nor does the Company own any such share capital.
Foreign companies and overseas trade etc - UK residence
6.56 The Company is resident in the United Kingdom for the purposes of United
Kingdom taxation and is not and has never been resident in any other
jurisdiction and it has no branch, agency, place of business or permanent
establishment outside the UK.
Dual residence
6.57 The Company is not restricted in relation to the surrendering of group
relief by the provisions of section 404 of the Taxes Act (limitation of
group relief in relation to certain dual resident companies).
Migration without Treasury consent
6.58 The Company has not at any time entered into any of the transactions
specified in section 765 of the Taxes Act (migration etc of companies)
without the prior consent of the Treasury full particulars of which are
contained in the Disclosure Letter and without satisfying the requirements
of sections 130(2) and (3) of the Finance Act 1988 and there are no
circumstances by reason of which the Company could be liable to a penalty
under section 131 of the Finance Act 1988 or will be presumed by virtue of
sub-section (4) of that section to be so liable.
Interests in non-residents
6.59 There has not accrued any gain in respect of which the Company may be
liable to corporation tax on chargeable gains under the provisions of
section 13 of the TCGA (interests in non-resident companies) or section 87
of the TCGA (attribution of gains to beneficiaries).
Foreign loans
6.60 The Company has not received any foreign loan interest on which double
taxation relief will or may be restricted under section 798 of the Taxes
Act (interest on certain overseas loans).
Controlled foreign companies
6.61 No notice of the making of a direction under section 747 of the Taxes Act
has been received by the Company and no circumstances exist which would
entitle the Board of the Inland Revenue to make such direction or to
apportion any profits of a controlled foreign company to the Company
pursuant to section 752 of the Taxes Act (apportionment).
<PAGE>
Postponement of gains related to foreign trades
6.62 No claim or election has been made (or is shown in the Company's accounts
as being made) under section 140 of the TCGA (postponement of charge) or
section 187 of the TCGA.
Agency for non-residents
6.63 The Company has not been a party to any transaction or arrangement under
which it is or may in the future become liable for taxation or stamp duty
reserve tax under or by virtue of Part VIII of the Taxes Management Act
1970.
Deemed disposal on the Company ceasing to be resident
6.64 The Company shall not be deemed to have made a disposal of its assets
since the Accounting Date pursuant to section 185 or section 186 of the
TCGA.
Unremittable gains and income
6.65 The Company has not received or become entitled to any capital gain or
unremittable overseas income to which the provisions of section 279 of the
TCGA (foreign assets: delayed remittance) or section 584 of the Taxes Act
could apply.
6.66 The Company has not acquired or disposed of any assets which are material
interests whether in a qualifying or non-qualifying offshore fund for the
purposes of Chapter V of Part XVII of the Taxes Act.
Secondary liabilities
6.67 No company has ceased or will cease to be resident in the United Kingdom
in circumstances such that a notice might be served on the Company under
section 132 of the Finance Act 1988 by virtue of the relationship (as
specified in paragraph (a) or (b) of subsection (3) of that section) of
the Company with that company on or at any time prior to Completion.
6.68 The company is not, nor will it become, liable to pay, to reimburse or to
indemnify any person (including a Taxation Authority) in respect of the
taxation liability of any other person as a consequence of that other
person failing to discharge the liability.
6.69 The Company is not nor will become liable to tax under section 191 of the
TCGA in respect of a disposal occurring on or before Completion.
European economic interest grouping
6.70 The Company is not nor will be subject to any tax liability or liable as
agent for others as a result of being at or prior to Completion a member
of a European Economic Interest Grouping as defined in section 510A of the
Taxes Act.
<PAGE>
Dual residence (group relief)
6.71 The Company has not since the Accounting Date and on or after 20 March
1990 disposed of an asset or acquired an asset in circumstances such that
the reliefs contained in sections 139, 171 or 175 of the TCGA are not
available as a result of the acquiring company being regarded for the
purpose of any double taxation arrangements having effect by virtue of
section 788 of the Taxes Act as resident in a territory outside the United
Kingdom and as not liable in the United Kingdom to tax on a gain arising
on a disposal of the relevant asset occurring immediately after its
acquisition.
Close companies
Close company apportionment
6.72 No apportionment within section 423 of the Taxes Act has been made against
the Company within the last seven years and no such apportionment will be
made in respect of any accounting period commencing on or before 1 April
1989.
Cessation
6.73 The Company has not at any time within the last seven years ceased to
carry on the trade, or the business of holding investments, in which its
activities wholly or mainly consisted.
Close investment holding company
6.74 The Company has not in any accounting period beginning after 31 March 1989
been a close investment-holding company as defined in section 13A of the
Taxes Act.
Close company distributions
6.75 The Disclosure Letter contains full particulars of all expenses incurred
by the Company required to be treated as a distribution by section 418 of
the Taxes Act.
Loans by close companies
6.76 No loan or advance within Part XI, Chapter II of the Taxes Act (charges to
tax in connection with loans) has been made by the Company and remains
outstanding and the Company has since the Accounting Date released or
written off the whole or part of the debt in respect of any such loan or
advance.
Property - premiums and sale and lease back of land
6.77 The Company has not entered into any transaction to which the provisions
of sections 34, 35, 36 or 780 of the Taxes Act have been or could be
applied.
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Inheritance Tax
6.78 There is no outstanding any Inland Revenue charge for unpaid inheritance
tax (as provided by sections 237 (imposition of charge) of the Inheritance
Tax Act 1984 over any asset of the Company or in relation to any shares in
the capital of the Company.
6.79 There are not in existence any circumstances whereby any such power as is
mentioned in section 212(1) of the Inheritance Tax Act 1984 could be
exercised in relation to any shares, securities or assets of the Company.
Stamp duty - documents duly stamped
6.80 All documents in the possession or under the control of the Company to
which the Company is a party and which attract stamp duty have been
properly stamped, no claim for exemption from or reduction of stamp duty
is outstanding and no exemption already granted can be withdrawn,
cancelled or deemed not allowed.
Stamp Duty Reserve Tax
6.81 Since the Accounting Date the Company has not incurred any liability to or
been accountable for any stamp duty reserve tax and there has been no
agreement within s.87(1) of the Finance Act 1986 which could lead to the
Company incurring such a liability or becoming so accountable.
Documents abroad
6.82 No document in the enforcement of which the Company may be interested has
not been stamped by reason of it being executed and retained abroad.
Government Investment
6.83 The Company has not received any government investment within section 400
of the Taxes Act (write-off of government investment).
Grants
6.84 Details are set out in the Disclosure Letter of all assets the disposal of
which by the Company would or might result in any such grant becoming
liable to be refunded in whole or in part.
Development Land Tax
6.85 The Company does not remain liable to pay any outstanding instalments of
development land tax.
<PAGE>
Loan Relationships
6.86 The Company is not, and has not been a party to any loan relationship for
which the authorised accounting method under the Finance Act 1996 is not
the accounting method used in the Warranted Accounts.
6.87 The Company has not been released from the whole or any part of any debt
to which ICTA 1988 s.94 could apply nor has the Company been released from
a debt either in whole or in part which is a loan relationship for the
purpose of Finance Act 1996.
7. DIVIDENDS AND DISTRIBUTIONS
7.1 The Company has not, in respect of any accounting period, declared or paid
any dividend or made any other distribution other than those (if any)
provided for in its audited accounts for that period or specified in the
Disclosure Letter.
7.2 No capital distribution has been made in respect of any part of the
Company's share capital.
7.3 No balance (if any) shown credited to any reserve or profit and loss
account in the Warranted Accounts includes any sum which is not legally
available for distribution by way of dividend on income account.
8. INTERESTS OF SELLERS, DIRECTORS AND EMPLOYEES
8.1 There are:
(a) no loans made by the Company to any of the Sellers and/or any of the
directors of the Company and/or any Associate of any of them;
(b) no debts owing to the Company by any of the Sellers and/or any of the
directors of the Company and/or any Associate of any of them; and
(c) no securities for any such loans or debts as mentioned above.
8.2 There are no existing contracts, engagements, guarantees or indemnities to
which the Company is a party and in which any of the Sellers and/or any of
the directors of the Company and/or any Associate of any of them is
directly or indirectly interested and the Company does not depend upon or
derive any benefit from any assets, facilities or services owned or
supplied by any of the Sellers or any of their Associates or any contract
to which any of the Sellers or any of their Associates is a party.
8.3 The Sellers and their Associates either individually, collectively or with
any other person are not directly or indirectly interested in (in any way
whatever) any Intellectual Property not owned by the Company or in any
business which is competitive with any business carried on by the Company.
8.4 Neither the Sellers nor any of their Associates nor any of the officers or
employees (or former officers or employees) of the Company have any claim,
demand or right of action against the Company (whether actual, contingent
or prospective) otherwise than for
<PAGE>
remuneration accrued (but not yet due for payment) in respect of the
calendar month in which this Agreement is executed or for reimbursement of
business expenses incurred during such month in each case in accordance
with their contracts of employment and none of them is entitled to accrued
holiday pay other than in respect of the Company's current holiday year.
8.5 Neither the Sellers nor any of their Associates has, directly or
indirectly, provided or agreed or offered to provide any reward, incentive
or pecuniary advantage to any of the officers or employees of the Company
related to the acquisition for which this Agreement provides.
8.6 For the purposes of this paragraph 8 the expression the Sellers means the
Sellers and any other person or persons beneficially interested in the
Company's share capital.
9. TITLE, ENCUMBRANCES AND ASSETS
9.1 The Company has possession and control of and a good and marketable title
to all the assets used in or in connection with its business and no
distress, execution or other process has been levied on any of such assets
nor do any circumstances exist under which any person may claim
entitlement to possession of any of such assets in competition with or in
priority to the Company.
9.2 No Encumbrance (or agreement or commitment to grant any Encumbrance) is
outstanding against any part of the undertaking of the Company or against
any of the assets used in or in connection with its business (except for
retention of title agreements (as defined in section 251 of the Insolvency
Act 1986) arising in the ordinary course of business) and no claim has
been made by any person to be entitled to any such Encumbrance.
9.3 No assets of the Company have been depleted by any fraudulent or other
unlawful act on the part of any person.
9.4 No asset of the Company is shared with any other person.
9.5 Any assets of the Company which will not be situated at the Properties on
Completion are specified in the Disclosure Letter and are clearly
identified as assets of the Company.
9.6 No mortgage or charge granted in favour of the Company is void or voidable
for want of registration.
10. FINANCIAL MATTERS
10.1 Full and accurate details of all overdrafts, loans or other financial
facilities and any foreign currency facilities and dealings outstanding or
available to the Company (Facilities) are contained in the Disclosure
Letter and true and complete copies of all documents relating to the
Facilities are attached to the Disclosure Letter.
<PAGE>
10.2 Except as disclosed in the Warranted Accounts or in the Disclosure Letter:
(a) the Company has no outstanding capital commitments and is not engaged
in any scheme or project requiring the expenditure of capital;
(b) the Company has no outstanding loan capital, has no arrangements with
its bankers or others relating to overdraft, borrowing or other
financial facilities, has not factored or discounted any of its debts
and has not borrowed any money which it has not repaid;
(c) the Company has not engaged in financing of a type which would not
require to be shown or reflected in its audited accounts;
(d) the Company has not lent any money which has not been repaid to it
and does not own the benefit of any debt other than debts accrued to
it in the ordinary course of its business or owing to it by its
bankers.
10.3 A statement of the Company's bank accounts and of the credit or debit
balances on it as at the close of business on the second Business Day
immediately preceding the date of this Agreement has been supplied to the
Purchaser and the Company has no other bank or deposit accounts (whether
in credit or overdrawn) not included in such statement and since such
statement there have been no payments out of any such accounts except for
routine payments and the present balances on such accounts are not now
materially different from the balances shown on such statements.
10.4 The Company does not have any unpresented cheques drawn by the Company (i)
in the normal course of business for amounts exceeding in aggregate
(Pounds)5,000, or (ii) otherwise than in the normal course of business.
10.5 The Company is not in default under any instrument constituting any
indebtedness or under any guarantee of any indebtedness and there is no
reason why any such indebtedness or guarantee should be called or the
liabilities under them accelerated before their due date (if any) or any
loan or other financial facilities terminated.
10.6 No part of the amounts included in the Warranted Accounts as owing by any
debtors remains unpaid or has been released on terms that any debtor pays
less than the full book value of his debt.
10.7 None of the debts owed to the Company as recorded in the Company's books
and records is more than 45 days overdue for payment or is considered bad
or doubtful and none of such debts is subject to any dispute, right of
set-off or counter-claim of any kind.
10.8 Since the Accounting Date the Company has paid its creditors in accordance
with their respective credit terms and there are no amounts owing by the
Company which have been overdue for payment for more than six weeks.
10.9 Neither the Company nor any of the Sellers is insolvent or unable to pay
its or his debts as and when they fall due and is not the subject of any
liquidation or insolvency proceedings, petitions or resolutions or any
statutory demand nor has any administrator,
<PAGE>
receiver and/or manager, administrative receiver, trustee in bankruptcy or
other insolvency officer been appointed of the Company or any of the
Sellers or over any of its or their assets. No voluntary arrangement,
compromise or scheme of arrangement has been approved or sanctioned in
respect of the Company or any of the Sellers nor has any floating charge
created by the Company or any of the Sellers crystallised and there are no
facts known to the Covenantors which could give rise to any of the events
or circumstances referred to in this paragraph 10.9.
10.10 Full details of all grants, allowances and other financial assistance
provided to the Company or due to be made to it are disclosed in the
Disclosure Letter and the Company has not done or failed to do any act or
thing which could result in all or any part of such grants, allowances or
assistance becoming repayable or being forfeited by it in whole or in
part.
10.11 The Company is not liable to make any payment to any of its professional
advisers in respect of services rendered at any time prior to Completion.
10.12 No expenses or liabilities have been incurred or assumed by the Company
otherwise than exclusively for the purposes of the Company's business.
10.13 All costs incurred by the Company have been charged to the Company and not
borne by any other person including, without limitation, any of the
Sellers or their Associates.
10.14 There have been no reports concerning the Company by accountants or by
financial or management consultants made within 3 years prior to the date
of this Agreement.
11. THE PROPERTIES
The Company has no legal or other interests in real property whether
freehold, leasehold or otherwise and has no existing or contingent
liability in respect of such real property and the Company does not occupy
any real property nor is it necessary to occupy any real property for the
carrying on of the businesses of the Company.
12. THE COMPANY'S BUSINESS
12.1 The business of the Company has not been materially and adversely affected
by the loss of any important contract or customer or source of supply or
by any abnormal factor not affecting similar businesses to a like extent
and so far as the Covenantors are aware there are no facts likely to give
rise to any such effects.
12.2 During the past three years no important customer has significantly
reduced his orders for any of the products or services of the Company and
there has been no significant change in the basis or terms on which any
person is prepared to enter into contracts or do business with the Company
(apart from normal price changes) and no such change is anticipated.
12.3 The Company is not a party to nor have its profits or financial position
during the past three years been affected by any contract or arrangement
which is not of an entirely arm's length nature.
<PAGE>
12.4 Except as expressly mentioned in this Agreement, the Company is not and
has not since its incorporation been the holder or beneficial owner of any
share, debenture, mortgage or security (or interest in such) or a member
of any joint venture, consortium, partnership or other unincorporated
association or a party to any arrangement for sharing commissions or
income.
12.5 The Company does not have any branch office, agency, place of business or
permanent establishment outside England nor does it have any significant
assets outside the United Kingdom.
12.6 The Company has not carried on business under or used on or in its
notepaper, advertising, marketing materials, documents or vehicles any
name other than its full corporate name.
12.7 The Company has not at any time disclosed to any person (other than the
Purchaser) any of its know-how, trade secrets, confidential information,
price lists or lists of customers or suppliers relating to its business
except in the ordinary course of business of the Company and upon the
Company having secured the confidential nature of such disclosure.
12.8 None of the activities, contracts or rights of the Company is ultra vires,
unauthorised, invalid or unenforceable or in breach of any contract,
covenant or third party rights or requires any licence, authorisation or
consent which has not been obtained on a permanent and unconditional basis
and the Company is not liable to pay any royalty or like fee.
12.9 The stock of raw materials, packaging materials and finished goods now
held by the Company are not excessive and are adequate in relation to the
current trading requirements of the business of the Company and none of
such stock is obsolete, slow moving, unusable, unmarketable or
inappropriate or of limited value in relation to the current business of
the Company and no contracts are outstanding which are likely to result in
the above not being true.
12.10 The stock in trade of the Company is in good condition and is capable of
being sold by the Company in the ordinary course of its business in
accordance with its current price list without rebate or allowance to a
purchaser.
12.11 All finished goods in stock have been manufactured to satisfy orders by
bona fide customers of the Company.
12.12 No stock of the Company is held by a third party other than stock which
is in transit.
12.13 The Company has not contracted (i) to purchase any raw materials other
than those anticipated to be required for the production of finished goods
within three months after the date of contract, (ii) to purchase any raw
materials at prices in excess of market prices now ruling, or (iii) to
sell finished goods more than three months after the date of contract or
at prices more than five per cent below the Company's list price current
at the date of contract or at prices any part of which is payable more
than three months after the date of delivery.
<PAGE>
12.14 The plant, machinery, vehicles, tooling and other equipment used in
connection with the business of the Company:
(a) are in a good and safe state of repair and condition and
satisfactory working order and have been regularly and properly
maintained;
(b) are the absolute property of the Company, except for those items
the subject of the hire purchase, credit sale, leasing, rental or
similar agreements full details of which are set out in the
Disclosure Letter;
(c) are not expected to require replacements or additions at a total
cost in excess of (Pounds)5,000 within six months from the date
of this Agreement;
(d) are all capable, and (subject to normal wear and tear) will
remain capable, throughout the respective periods of time during
which they are each written down to a nil value in the accounts
of the Company (in accordance with the normal recognised
accountancy principles consistently applied by the Company prior
to the date of this Agreement) of doing the work for which they
were designed or purchased;
(e) are not to any extent surplus to requirements; and
(f) are completely and accurately recorded in its plant register a
copy of which is contained in the Disclosure Letter.
12.15 The Disclosure Letter correctly states the information contained in it
relating to all vehicles owned by the Company.
12.16 The Company has not given any guarantee or warranty or made any
representation in respect of any goods sold or supplied or contracted
to be sold or supplied by it except for any guarantee or warranty
implied by law and (except as mentioned above) has not accepted any
liability or obligation to take back or reprocess or otherwise do or
not do anything in respect of any goods which would apply after any
such goods have been delivered or supplied by it.
12.17 The Company has not produced, acquired, sold or supplied any goods
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 made by it or
with all applicable regulations, standards and requirements in respect
of them.
12.18 So far as the Covenantors are aware no circumstances exist which can
give rise or are likely to give rise to (i) any claim for repayment of
amounts paid to the Company pursuant to any agreement with any of its
customers, (ii) any claim against the Company in connection with or
arising out of any work done or which ought to have been done or any
agreement or part of an agreement performed or which ought to have
been performed by or on behalf of the Company prior to Completion, or
(iii) any liability under the Consumer Protection Act 1987 in respect
of products manufactured by others.
<PAGE>
12.19 The assets held under hire purchase, credit sale, leasing, rental or
similar agreements listed in the Disclosure Letter and the assets
owned by the Company comprise all the assets necessary for the
continuation of the business of the Company as now carried on.
12.20 Copies of all standard conditions of sale or purchase or business of
the Company (together with copies of any former standard conditions
under which it could now incur any liability in excess of that
provided for under the current standard conditions) are attached to
the Disclosure Letter.
12.21 No single customer of, or supplier to, the Company has accounted for
more than 10 per cent of the invoiced amount of sales of, or supplies
to, the Company of goods and/or services in any of the last three
accounting reference periods of the Company or is likely to in the
current accounting reference period of the Company.
12.22 The Company has not since the Accounting Date agreed to give and is
not in the habit of giving to any customer any discount (whether
present, future or retrospective), price reductions or other financial
incentives dependent on the level of purchases from the Company other
than those specified in the Disclosure Letter.
12.23 The Company is not dependent on the supply of any raw materials,
components or services from a single source of supply which are not
readily obtainable from another source of supply on comparable terms.
12.24 The Company has not carried on any activity constituting `investment
business' as defined by section 1 of the Financial Services Act 1986.
13. INFORMATION SYSTEMS AND INFORMATION TECHNOLOGY
13.1 The Company has none of its records, data or information recorded,
stored, maintained, processed, operated or otherwise wholly or partly
dependent on or held by any means (including any electronic,
mechanical or photographic process whether computerised or not) which
(including all means of access to and from them) are not under the
exclusive ownership and direct control of the Company.
13.2 Details of all of the Company's IT Systems are disclosed in the
Disclosure Letter.
13.3 In relation to any computer software owned by the Company, details of
all licences of such software granted to third parties (whether
written or otherwise) are disclosed in the Disclosure Letter. Except
as disclosed, the Company has not revealed to any third party any
source codes or algorithms relating to such software
13.4 The Company has a perpetual licence to use any computer software which
it uses under licence from third parties and is not in breach of the
terms of any such licence. None of such software has any `time stamp',
'logic bomb' or other form of electronic repossession embedded in it
which could prevent the Company from using such software in whole or
in part or which could cause the destruction or erasure of any of such
software or any of the data it processes. Except in respect of mass-
produced package software, the Company has copies of the source codes
relating to such software or such source codes are held under
industry-standard escrow arrangements.
<PAGE>
13.5 The Company has not suffered any material breakdown or difficulties in
using the Company's IT Systems and the Company has sufficient,
technically competent and trained employees to ensure proper handling,
operation, monitoring and use of the Company's IT Systems.
13.6 The Company's IT Systems have been and continue to be satisfactorily
maintained and supported and have adequate capability and capacity for
the existing requirements of the Company for the processing and other
functions required to be performed for the purposes of the business of
the Company.
13.7 Disaster recovery plans are in effect and are adequate to ensure that
the Company's IT Systems can be replaced or substituted without
material disruption to the business of the Company.
13.8 The Company keeps full security copies of the computer software
comprised within the Company's IT Systems and data it uses and
processes both on-site and off-site in accordance with best computing
practice.
13.9 The Company's IT Systems have adequate protection to detect and
eliminate any known computer virus and so far as the Covenantors are
aware none of the Company's IT Systems has been or is currently
infected with a virus.
13.10 The Company has adequate security procedures and devices to ensure
that no unauthorised person can obtain access to the Company's IT
Systems or to the data processed on it and the Company has not
experienced any breach of security of this nature.
13.11 Details of all agreements or arrangements relating to the use,
development, maintenance, support, security, disaster recovery and
management of the Company's IT Systems are disclosed in the Disclosure
Letter including development agreements, escrow agreements relating to
the deposit of source codes, facilities management, computer bureau,
computer services and outsourcing agreements.
13.12 All of the Company's IT Systems are Year 2000 Compliant and Euro
Compliant.
13.13 Details of all Internet domain names registered by the Company are
disclosed in the Disclosure Letter.
13.14 The Company and its employees have complied in all respects with the
requirements of applicable data protection legislation. There are no
unsatisfied requests to the Company made by data subjects in respect
of personal data held by the Company, nor any outstanding applications
for rectification or erasure of personal data. There are no
outstanding claims for compensation for inaccuracy, loss or
unauthorised disclosure of personal data nor is any personal data held
by the Company inaccurate to any material extent nor has the Company
lost or made any unauthorised disclosure of any such data.
<PAGE>
14. CONTRACTS AND OTHER OBLIGATIONS
14.1 The Disclosure Letter contains particulars of all material subsisting
contracts to which the Company is a party (and for this purpose this
shall include without limitation all subsisting contracts to which the
Company and either a customer of or supplier to the Company are
parties).
14.2 The Company has not entered into or undertaken any contract,
transaction, obligation, commitment, arrangement or liability which:
(a) is of an unusual, abnormal or onerous nature;
(b) is in the nature of a capital commitment;
(c) is of a long-term nature (that is to say, incapable of
performance in accordance with its terms within six months after
the date on which it was entered into or undertaken);
(d) is incapable of termination in accordance with its terms, by the
Company, on 60 days' notice or less;
(e) is of a loss-making nature (that is to say, known to be likely to
result in a material loss to the Company on completion of
performance);
(f) cannot readily be fulfilled or performed by the Company on time
and without undue or unusual expenditure of money or effort;
(g) involves or is likely to involve obligations, expenditure or
receipts of an unusual or exceptional nature and not in the
ordinary course of the Company's business;
(h) is linked to the Retail Prices Index or any other index;
(i) contains currency or commodity re-negotiation or re-determination
clauses;
(j) is a contract for services (other than contracts for the supply
of electricity or normal office services);
(k) requires the Company to pay any commission, finder's fee, royalty
or the like;
(l) depends on the continuation of the connection (whether as an
officer or employee of or consultant to the Company or otherwise)
of any person with the Company;
(m) is a contract for the sale of shares or assets which contains
warranties or indemnities or provides for them;
(n) is in any way otherwise than in the ordinary and usual course of
the Company's business.
14.3 The Company has not entered into any contract to buy foreign currency
or made any forward sales of foreign currency which in either case
remains outstanding.
<PAGE>
14.4 The Company has good working relationships with the other contracting
parties under all of its contracts.
14.5 The Company has not given any guarantee, indemnity or security for or
otherwise agreed to become directly or contingently liable for any
present or future obligation of any other person and no person has
given any guarantee of or indemnity or security for any obligation of
the Company.
14.6 There are no agreements or arrangements in force restricting the
competitive freedom of the Company to provide or take goods and
services by such means and from or to such persons as it may from time
to time think fit.
14.7 The Company is not a party to any agency, distributorship,
franchising, marketing or similar agreement.
14.8 No event has occurred regarding the Company which would entitle any
third party to terminate any contract or benefit enjoyed by the
Company or to call in any money before the due date for it to be
repaid.
14.9 The Company has no knowledge of the invalidity of or grounds for
rescission, avoidance or repudiation of any agreement or other
transaction to which it is or has been a party and has received no
notice of any intention to terminate any such agreement or to
repudiate or disclaim any other transaction.
14.10 The Company has not been party to any transaction with any third party
which, in the event of any such third party going into liquidation or
an administration order or a bankruptcy order being made in relation
to it or him, would constitute (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, under sections 238 to 245 inclusive and sections 339 to 344
inclusive of the Insolvency Act 1986.
14.11 There are in force no powers of attorney given by the Company (other
than to the holder of an Encumbrance solely to facilitate its
enforcement) and no person, as agent or otherwise, is entitled or
authorised to bind or commit the Company to any obligation not in the
ordinary course of the Company's business.
14.12 No tender or offer which is capable of being converted into an
obligation of the Company by an acceptance or other act of some other
person is outstanding.
14.13 The Company is not a party to any agreement which were it now fully
completed, performed, unconditional or in effect would now render any
of the Warranties untrue or misleading.
14.14 The Company has not at any time acquired, assigned or otherwise
disposed of any leasehold property in such a way that it retains any
residual liability in respect of that leasehold property.
<PAGE>
14.15 True and complete details of all trade or business associations of
which the Company is a member are set out in the Disclosure Letter and
the Company is complying and has at all material times complied in all
material respects with the regulations or guidelines laid down by any
such trade association and copies of such regulations and guidelines
are attached to the Disclosure Letter.
14.16 The Disclosure Letter contains full details of all accreditations
(including without limitation any accreditation awarded by the Soil
Association Certification Limited) the Company has been awarded in
respect of the conduct of the whole or any part of its business in
accordance with any recognised standard and the Company is continuing
to comply with the requirements of such standard and knows of no
reason why such accreditation might be revoked, qualified or impaired
in whole or in part. None of the tenders, contracts, rights or
privileges to which the Company is a party or which it enjoys is in
any way dependent on any such accreditation continuing in existence.
15. INTELLECTUAL PROPERTY
15.1 Except as disclosed in the Disclosure Letter, the Company does not
own, use, require to use or infringe any Intellectual Property.
15.2 All Intellectual Property registered in the name of the Company or
used or required to be used by the Company is beneficially owned by it
and not subject to any agreements, licences or registered user rights
affecting such Intellectual Property or subject to any claims from
employees or others and is valid and subsisting and not subject to
revocation and all requisite registration and renewal fees in respect
of such Intellectual Property have been duly paid on time.
15.3 All agreements and licences for the use by the Company of any
Intellectual Property not registered in its name or beneficially owned
by it are disclosed in the Disclosure Letter and are valid and
subsisting and the Company is not in breach of any of the provisions
of such agreements or licences.
15.4 So far as the Covenantors are aware, no person is infringing any
Intellectual Property registered in the Company's name or in which the
Company has a beneficial interest.
15.5 The Company has not entered into any agreement or arrangement for the
provision or acquisition of any know-how or technical information or
assistance or which prohibits or restricts the disclosure of any know-
how or technical information.
15.6 All inventions, designs, processes, know-how and other similar assets,
materials and rights owned or developed by the Company and capable of
legal protection have been appropriately protected by the Company.
15.7 The Company has in its possession all necessary documentation and
other things necessary to establish the Company's ownership of that
part of the Company's Intellectual Property which is not capable of
registration and to prove that such Intellectual Property is original
and/or novel.
<PAGE>
15.8 All the Company's Intellectual Property is sufficiently documented to
allow its full and proper use without reliance on the special
knowledge or memory of any one or more individuals.
15.9 All persons engaged or employed by the Company who, in the course of
their work for the Company will or might reasonably be expected to
bring into existence Intellectual Property or things protected by
Intellectual Property are, so far as is reasonably practicable,
individually bound by agreements with the Company under which all
Intellectual Property which such persons may bring into existence
during their work for the Company vests in the Company and all such
agreements contain terms which, so far as is reasonably practicable,
prevent such persons disclosing any confidential information about the
Company and its business.
15.10 None of the Intellectual Property owned or used by the Company is
subject to compulsory licensing or the granting of any licences of
right nor, so far as the Covenantors are aware, will it become so by
operation of law.
16. DISPUTES AND LITIGATION
16.1 There are no court orders, injunctions or unsatisfied judgments
outstanding against the Company and the Company is not party to any
undertaking or assurance given to a court, tribunal, regulatory
authority, governmental agency or any other person in connection with
the determination or settlement of any claim or proceedings.
16.2 Neither the Company nor any of its officers nor any person for whose
acts or defaults the Company may be liable is involved in any civil,
criminal or arbitration proceedings and no such proceedings and no
claims of any nature are pending or threatened by or against the
Company or any such person or in respect of which the Company is
liable to indemnify any party concerned and so far as the Covenantors
are aware there are no facts likely to give rise to any such
proceedings.
16.3 The Company is not the subject of or engaged in, and so far as the
Covenantors are aware there are no facts or circumstances likely to
cause it to be the subject of or engaged in, any proceedings,
investigations or enquiries by or before any governmental or municipal
department, commission, board, tribunal or other administrative,
judicial or quasi-judicial agency in which any unfavourable judgment,
decision, ruling or finding could adversely affect the Company in any
way.
17. INSURANCE
17.1 All assets of the Company which are of an insurable nature are insured
in their respective full replacement values and all risks and
liabilities which are normally or customarily insured against (or the
insurance against which is obligatory) by companies carrying on
business similar to that carried on by the Company or against which a
prudent company carrying on such a business would insure are
adequately insured against by the Company. In particular, the assets
of the Company are insured against fire in their full replacement
value, its computer systems and data are insured for all foreseeable
risks to their full replacement value together with incidental
expenses including costs and expenses of data recovery and
reconstruction and the Company is now, and has at all times been,
<PAGE>
adequately covered against accident, damage, injury, third party loss
(including product liability) and loss of profits.
17.2 Full details of the Company's policies of insurance are contained in
the Disclosure Letter and are true and correct in every particular and
such policies are in full force and effect and all premiums in
relation to them have been paid on time.
17.3 The Company has not done or omitted to do or suffered anything to be
done anything which has rendered or might render any policy of
insurance taken out by it void or voidable or not renewable on normal
terms and at generally applicable premium rates. No such policy is
subject to any special or unusual terms, restrictions or rates of
premium.
17.4 Any claims outstanding, pending, threatened or capable of arising
against the Company by any employee, workman or third party in respect
of any tort, damage, loss, accident or injury are fully covered by
insurance.
17.5 The Company has notified insurers promptly, and within the terms of
the policy, of any claim that may or might be made under any policies
of insurance of which the Company is a beneficiary.
17.6 No claim is outstanding under any of the insurance policies maintained
by the Company and so far as the Covenantors are aware no
circumstances exist which are likely to give rise to any such claim.
There have been no material claims against insurers by the Company in
the period of three years prior to the date of this Agreement.
17.7 In the last three years no application or proposal made by the Company
for a policy of insurance of any kind has been refused or rejected by
any insurance company in whole or in part nor has the level of
insurance cover provided by any policy of insurance in favour of the
Company been reduced or in any way altered at the instance of the
insurance company issuing such policy of insurance.
18. EMPLOYEES AND CONSULTANTS
18.1 The Disclosure Letter fully and accurately sets out particulars of the
identities, dates of commencement of employment or engagement, dates
of birth, notice periods and, where relevant, holiday entitlements of
all the officers of the Company (and of any persons whom the Company
has agreed to employ or engage as an officer) and, where relevant, all
remuneration payable and other benefits provided or which the Company
is bound to provide (whether now or in the future) to each such
person.
18.2 The Company does not currently employ or engage any employees or
workers (as this term is defined in the Working Time Regulations 1998)
and has not employed or engaged any employees or workers at any time
during the period of 12 months prior to the date hereof.
18.3 The Disclosure Letter contains full and accurate particulars of all
contracts for services which the Company has with any individual or in
relation to the provision of any
<PAGE>
individual's services to the Company (whether via a third party such
as a service company or otherwise).
18.4 Since the Accounting Date or, where holding of office commenced after
that date, since the commencement of such holding of office, no change
has been made in the emoluments or other terms of employment or
engagement of any of the Company's officers who on the Accounting Date
or on the date of such commencement were in receipt of remuneration at
a rate in excess of (Pounds)10,000 per annum.
18.5 The copy contracts delivered to the Purchaser are the forms of
contract under which all the officers and consultants (including
consultants engaged via third parties) of the Company are currently
employed or engaged.
18.6 The Company is not bound or accustomed to pay any moneys to or for the
benefit of any officer of the Company.
18.7 There is not in existence any contract for services with any
individual (or third party relating to the provision of any
individual's services) which cannot be terminated by three months'
notice or less or (where not reduced to writing) by reasonable notice
without giving rise to any claim for damages or compensation.
18.8 So far as the Covenantors are aware, no officer or former employee or
officer of the Company is in breach of any obligation or duty which he
owes to the Company.
18.9 The Company has not been a party to any relevant transfer as defined
in the Transfer of Undertakings (Protection of Employment) Regulations
1981 nor has the Company failed to comply with any duty to inform and
consult any independent trade union under such regulations.
19. PENSIONS
19.1 The Company is not a party to nor participates in nor contributes to
any scheme, arrangement or agreement (whether legally enforceable or
not) for the provision of any pension, retirement, death, incapacity,
sickness, disability, accident or other like benefits (including the
payment of medical expenses) for any past or present employee or
officer of the Company or of any predecessor to all or part of its
business (each a Relevant Employee) or for the widow, widower, child
or dependant of any Relevant Employee.
20. CONSENTS AND COMPLIANCE WITH LAWS
20.1 The Company has and there are now in force all permits, authorities,
licences and consents necessary for the Company to carry on its
business effectively and without hindrance in the manner and in the
places in which its business is now carried on (full details of which
are set out in the Disclosure Letter) and so far as the Covenantors
are aware there are no circumstances which might lead to the
suspension, alteration or cancellation of any such permits,
authorities, licences or consents and none is limited in duration or
subject to onerous conditions.
<PAGE>
20.2 The Company has performed all obligations required to be performed by
it with respect to or affecting its business and assets and is not in
default under any laws, regulations, orders, decrees, judgments,
contracts, agreements, licences, obligations or restrictions of
whatever nature binding upon it or which affect its assets or the
operations of its business.
20.3 No officer of the Company is or has been subject to any bankruptcy or
criminal proceedings or is or has been the officer of any company
which has been the subject of liquidation or insolvency proceedings.
20.4 So far as the Covenantors are aware no officer or agent of the Company
has paid any bribe or used any of the Company's assets unlawfully to
obtain an advantage for any person.
20.5 The Company has not been nor is it concerned in any agreements or
arrangements which infringed or infringe or which have or should have
been registered under or which have or may become the subject of any
reference, enquiry, proceeding, report, assurance or undertaking under
or in respect of the Restrictive Trade Practices Acts 1976 and 1977,
the Fair Trading Act 1973, Article 85 or Article 86 of the Treaty of
Rome, the Competition Act 1998 or any other anti-trust, anti-
restrictive practice or similar legislation in any jurisdiction and
the Company has not made or threatened to make any complaint against
any other person to any relevant authority under any law or
legislation referred to in this paragraph 21.5.
20.6 All current advertising, marketing and sales promotions by the Company
comply with all applicable codes of practice and self-regulatory
schemes. The Company has not been disciplined under any scheme or code
in respect of any such advertising, marketing or sales promotion and
no complaint has been made against it in respect of any of them and
there are no outstanding complaints or disciplinary proceedings
against the Company in respect of any of them.
21. ODL
21.1 The particulars of ODL set out in Schedule 4 are true and complete and
the shares of ODL are held and owned as shown in Schedule 4 free from
any Encumbrance and with all rights now and in the future attaching to
them.
21.2 The Company has no subsidiaries other than ODL.
22. EFFECT OF AGREEMENT
22.1 Compliance with the terms of this Agreement:
(a) does not require the consent or agreement of any person who is
not a party to this Agreement;
(b) will not cause the Company to lose any interest in or the benefit
of any asset, right, licence, grant or privilege it presently
owns or enjoys;
<PAGE>
(c) will not relieve any person of any obligation to the Company;
(d) will not cause the Company or any of the Sellers to be in breach
of any of their respective obligations;
(e) will not result in any present or future indebtedness of the
Company becoming due prior to its stated maturity;
(f) will not give rise to or cause to become exercisable any option
or right of pre-emption; and
(g) will not result in the creation or imposition of any Encumbrance
on or over any of the assets of the Company or the Shares
22.2 There are no agreements or arrangements concerning the Company which
can be terminated or are terminable or the terms of which can be
varied or are in any way variable as a result of any change in the
control of the Company or change in the composition of the board of
directors of the Company.
22.3 Neither this Agreement nor the acquisition for which it provides has
been procured by any agent or broker on behalf of the Company and no
agency or brokerage fees or charges are payable by the Company in
respect of this Agreement or the acquisition for which it provides.
<PAGE>
SCHEDULE 5 - Consideration
1. CONSIDERATION
1.1 The consideration shall be the aggregate of the Covenant Consideration (as
defined in paragraph 1.2 below) and the Shares Consideration (as defined in
paragraph 1.3 below) (together the Consideration).
1.2 The consideration for the restrictions contained in clause 9 shall be
(Pounds)30,000 to be apportioned amongst the Covenantors in the amounts set
out in column (4) of Schedule 1 (Covenant Consideration) with the balance
of the Consideration being in respect of the Shares.
1.3 The consideration for the Shares (Shares Consideration) shall be a sum
equal to the Adjusted Turnover less the Covenant Consideration. For the
purposes of this paragraph, Adjusted Turnover shall be an amount equal to
the Turnover less the extent to which Fixed Asset Value is below
(Pounds)900,000 and less the extent to which Net Current Asset Value is a
negative number (each to be determined as specified below), subject to a
maximum of (Pounds) 15,750,000.
1.4 Subject to the provisions of paragraph 3.9 below, the Consideration shall
be paid as to:
(a) (Pounds)13,937,000 (being payment in full of the Covenant
Consideration and the balance, subject to determination of Adjusted
Turnover, being a payment on account of the Shares Consideration)
(together the Provisional Consideration) on Completion in accordance
with clause 5.2.7 (a) of this Agreement; and
(b) the balance (if any) by remitting by bank electronic transfer to the
Sellers' Solicitors bank account (branch: Barclays Bank plc, 20 High
Street, Exeter sort code: 20-30-47 account number: 00633755) such
amount as is equal to the difference (if any) between the Provisional
Consideration and the Consideration within 7 Business Days of the date
of determination of the Turnover, the Fixed Asset Value and the Net
Current Asset Value in accordance with this Schedule.
2. DEFINITIONS
In this Schedule:
Accounts means the consolidated accounts of the Company and ODL for the
financial year (or in the case of ODL the financial period) ending 31 May
2000 to be prepared pursuant to paragraph 3.1 below, such expression to
include any adjustments to such accounts agreed upon or determined to be
required pursuant to any of the other provisions of this Schedule;
Fixed Asset Value means the aggregate amount of the net book value fixed
assets of the Company and ODL as shown in the Accounts;
Net Current Asset Value means the aggregate amount of the current assets as
shown in the Accounts less the aggregate amount of the liabilities (other
than issued share
<PAGE>
capital, reserves and retained profits) as shown in the Accounts such
liabilities to include the ODL Debt payable by the Company.
3. DETERMINATION OF ACCOUNTS
3.1 In order to determine the Turnover, the Fixed Asset Value and the Net
Current Asset Value, the parties (so far as they are able) shall procure
the Purchaser's Accountants to prepare as soon as practicable after
Completion, and in any event within 135 Business Days after Completion,
draft consolidated accounts of the Company and ODL for the financial year
(or in the case of ODL the financial period) ending 31 May 2000 and in
accordance with paragraph 3.2.
3.2 The Accounts shall:
(a) be prepared under the historic cost convention and in accordance with
the requirements of all legislation, Financial Reporting Standards,
Statements of Standard Accounting Practice and generally accepted
accounting practices and principles applying to a United Kingdom
company at the time they are prepared;
(b) subject to sub-paragraph (a) above, apply and adopt the same bases and
policies of accounting as were applied or adopted for the purposes of
the Warranted Accounts or (as the case may be) the previous accounting
period for ODL;
(c) be prepared so as to not treat as an asset the payment into court made
by the Company and referred to in clause 9.1.1;
(d) be prepared so that 100% provision for bad and doubtful debts shall be
made in respect of the face value of any debts owed to the Company or
ODL at Completion which shall not have been paid within 120 days after
the date of invoice or where the debtor is in receivership,
administration or liquidation or is bankrupt or has been dissolved or
is known to be insolvent or where collection of the debt has been
passed to solicitors or a third party debt collector to collect;
(e) make full provision for any liability to taxation arising from the
transfer by the Company before Completion of the shares in Genus plc
and/or National Milk Records plc held in its name to some or all of
the Covenantors;
(f) no provision shall be made in respect of the outstanding payment of
(Pounds)20,000 due to the Partnership Group, Inc pursuant to the
agreement to participate in the development of an Organics Program
details of which are set out in a letter dated 24 March 2000 from the
Partnership Group, Inc to Peter Dunsford;
(g) no provision shall be made in respect of the receipt by the Company of
a processing and marketing grant in the sum of (Pounds)41,400 from
MAFF, details of which are set out set out in a letter dated 23 April
1996 from MAFF to the Company;
(h) full provision shall be made for an amount which it has been agreed
will be paid by the Company to OMSCO for the period ended 31 May 2000,
such amount to be agreed between the Sellers and OMSCO after
Completion;
<PAGE>
(i) full provision shall be made for the aggregate amount of any (i)
milk supply bonuses or (ii) annual success fees declared by a
resolution of the board of directors of the Company dated 31 May
2000 to be payable to respectively (a) Roger Persey, Geoffrey
Persey, and Herbert Persey and/or W Persey & Sons and (b)
Dunsford Management Consultants in respect of the financial
period ended 31 May 2000, the aggregate amount of such bonuses
and fees being such amount as would result in Net Current Asset
Value being minus (Pounds)1,250,000 as agreed or determined in
accordance with this Schedule;
(j) no value shall be attached to any liability of the Company to pay
stamp duty on the acquisition of the ODL Shares pursuant to the
ODL Sale Agreement.
3.3 For the purposes of the preparation and review of the draft Accounts, the
parties shall procure (so far as they are able) that the Purchaser's
Accountants and the Sellers' Accountants shall be given the same access to
information and co-operation from the management of the Company and ODL and
any consultants engaged by either to provide, inter alia, management
services to the Company and ODL as if they were the auditors of the Company
and ODL and that their respective accountants will give access to their
working papers to the other accountants for such purpose.
3.4 The Sellers' Accountants shall act at the Sellers' expense and the
Purchaser's Accountants shall act at the Purchaser's expense.
3.5 When prepared, the parties shall (in so far as they are able) procure that
the draft Accounts shall as soon as possible be submitted by the
Purchaser's Accountants to the Sellers' Accountants (together with such
working papers used in connection with the preparation of the draft
Accounts as is necessary to understand their preparation) for review with
the Purchaser's Accountants and, if necessary, adjustment, after which (and
subject to their being in agreement) the Purchaser's Accountants and the
Sellers' Accountants shall issue a joint statement addressed to the
Purchaser and the Sellers (Joint Statement) enclosing the draft Accounts as
agreed and stating what (in their professional opinion) are the respective
amounts of the Turnover, the Fixed Asset Value and the Net Current Asset
Value as shown in the draft Accounts. In acting under this paragraph 3.5,
the Purchaser's Accountants and the Sellers' Accountants shall be treated
as acting as experts and not as arbitrators and the respective amounts of
the Turnover, the Fixed Asset Value and the Net Current Asset Value so
stated by them shall be accepted by and shall be final and binding on the
parties.
3.6 When submitting the draft Accounts to the Sellers' Accountants the
Purchaser shall procure that they shall be accompanied by a preliminary
statement (Preliminary Statement) from the Purchaser's Accountants stating
what in their professional opinion is the Turnover, the Fixed Asset Value
and the Net Current Asset Value as shown in the draft Accounts, subject to
the review of the Sellers' Accountants. The Sellers shall procure that,
within 20 Business Days following such submission, the Sellers' Accountants
shall notify the Purchaser's Accountants in writing (Response Notice)
whether they accept the draft Accounts as submitted or whether they reject
them as not being in accordance with this Schedule and if they reject them
that the Response Notice shall set out in reasonable particularity the
grounds for such rejection.
<PAGE>
3.7 If no Response Notice is given within the period stated in paragraph 3.6
above, the Sellers' Accountants shall be deemed to have accepted the draft
Accounts as being in accordance with this Schedule and the amounts of the
Turnover, the Fixed Asset Value and the Net Current Asset Value as stated
in the Preliminary Statement, and accordingly the amounts of the Turnover,
the Fixed Asset Value and the Net Current Asset Value so stated shall be
accepted by and shall be final and binding on the parties.
3.8 Should for any reason neither a Joint Statement be issued by the
Purchaser's Accountants and the Sellers' Accountants pursuant to paragraph
3.5 nor the amounts of the Turnover, the Fixed Asset Value or the Net
Current Asset Value stated in the Preliminary Statement become binding
pursuant to paragraph 3.7, in either case within 30 Business Days of the
submission of the Accounts to the Sellers' Accountants, then the matters
outstanding or in dispute shall be referred to an independent expert for
final determination in accordance with clause 10 of this Agreement who as
part of his determination shall state what, in his professional opinion,
are the adjustments (if any) required to be made to the draft Accounts in
order for them to comply with this Schedule and what are the respective
amounts of the Turnover, the Fixed Asset Value and the Net Current Asset
Value.
3.9 When the draft Accounts have become binding on the parties in accordance
with paragraph 3.5, 3.7 or 3.8 above:
(a) the Purchaser shall, if the Consideration exceeds the Provisional
Consideration, comply with its obligations under paragraph 1.4(b)
above; or
(b) the Sellers shall, if the Consideration falls short of the Provisional
Consideration, within 7 Business Days of the date of determination of
the Turnover, the Fixed Asset Value and the Net Current Asset Value:
(i) repay to the Purchaser in cleared funds a sum equal to such
shortfall; and
(ii) pay to the Purchaser in cleared funds a sum equal to the amount
of any overpaid stamp duty which may have been paid by the
Purchaser on the transfers of the Shares
together with Interest on each such amount at the Agreed Rate from
and including the date of Completion (or, in the case of stamp duty,
the date of payment by the Purchaser of such stamp duty) to and
excluding the last day of such period of 7 Business Days or the date
of earlier payment; or
(c) if the Consideration proves to be equal to the Provisional
Consideration, no further sum shall be due from the Purchaser to the
Sellers in respect of the Shares.
3.10 The amounts of the Turnover, the Fixed Asset Value and the Net Current
Asset Value becoming binding on the Purchaser pursuant to this paragraph 3
shall not adversely affect, limit or prejudice, or constitute a waiver of
any right or remedy of the Purchaser or the Company or ODL in relation to
any claim which they or any of them may have against the Covenantors in
respect of any breach of any of the Warranties or any of the other
provisions of this Agreement or under the Tax Deed.
<PAGE>
3.11 In the event that either party is required to make any payment in
accordance with paragraph 3.9 above, it is agreed that such payment shall
be made without set off or deduction.
<PAGE>
SCHEDULE 6 - Sellers' Protections
The provisions of this Schedule operate to limit or reduce the liability of the
Covenantors in respect of claims made by the Purchaser under the Warranties
(except those Warranties contained in paragraph 6 of Schedule 2 (Tax
Warranties)) (Relevant Claims). Claims made by the Purchaser under the Tax Deed
or the Tax Warranties are limited in accordance with the terms of the Tax Deed.
The parties agree as follows:
1. The Purchaser admits that it has not entered into this Agreement in
reliance upon any warranty, representation or promise other than those
incorporated in this Agreement and acknowledges that it has not relied upon
and will make no claim in respect of any such representation, warranty,
promise or assurance given by the employees or professional advisers of the
Covenantors.
2. The Covenantors shall be under no liability in respect of any claim under
the Warranties if and to the extent that such a claim arises or is
increased in circumstances in which the Purchaser or the Company or ODL
voluntarily acts or omits to act after Completion (otherwise than in the
ordinary course of business) and knows or should reasonably have known that
such act or omission could give rise to or increase such a claim and a
reasonable alternative course of action was available to the Purchaser (or
any member of the Company or ODL) which would not have given rise to such a
claim.
3. The Covenantors shall be under no liability whatsoever in respect of any
breach of the Warranties unless the Purchaser has served on the Covenantors
a written notice in the case of any claim or any contingent claim under the
Warranties on or before the date two years from the date of this Agreement
giving reasonable details of the breach including where reasonably
practicable the Purchaser's best estimate of the amount of the liability of
the Covenantors in respect thereof and has issued and served proceedings in
respect of such breach within twelve months after the date of expiry of
such two year period.
4. If any claim is made or proceedings are brought against the Purchaser or
the Company or ODL by a third party (Third Party Claim) in respect of which
the Covenantors are or may become liable under the Warranties, the
Purchaser shall and shall procure that the Company and ODL shall in its
conduct of such Third Party Claim:
4.1 take such actions as the Covenantors may reasonably request to avoid,
dispute, resist, mitigate, compromise, defend or appeal against such claim
or proceedings in any adjudication with respect thereto;
4.2 give the Covenantors and its professional advisers such information,
documents and assistance in relation to the Third Party Claim as the
Covenantors may reasonably request and access to the employees, agents,
professional advisers, premises, accounts and books and records within the
power, possession or control of the Purchaser or the relevant member of the
Company or ODL; and
<PAGE>
4.3 not accept or settle or compromise or make any admission in respect of such
Third Party Claim or proceedings without the Covenantors' prior written
consent (such consent not to be unreasonably withheld)
PROVIDED ALWAYS that (a) the provisions of this clause shall only apply if the
Purchaser and the Company and ODL are indemnified and secured by the Covenantors
to the Purchaser's reasonable satisfaction against all reasonable costs and
expenses which may be incurred in connection therewith; (b) if the Covenantors
shall not request the Purchaser to take any such action, or shall fail to
provide such indemnity or security within 30 days after notice shall have been
given to the Covenantors, then the Purchaser shall be free to pay or settle the
Third Party Claim on such terms as it shall in its absolute discretion think fit
and to make a corresponding Relevant Claim against the Covenantors; (c) the
Covenantors acknowledge and agree that all their rights under this paragraph 4
may only be exercised collectively and on a unanimous basis and provided they
appoint one Covenantor to represent all the Covenantors in relation to the Third
Party Claim in question; (d) If the Covenantors are unable unanimously to agree
among themselves how to proceed and/or which Covenantor will represent them for
the purposes of exercising their rights, then the Purchaser shall be free to pay
or settle the Third Party Claim in question or make any admission in respect of
such Third Party Claim as it may in its absolute discretion deem fit, to make a
corresponding Relevant Claim against the Covenantors and to refuse access to the
Covenantors, their representatives or advisers (as the case may be) to
investigate the matter or circumstance alleged to give rise to the Third Party
Claim and (e) no breach on the part of the Purchaser of its obligations under
paragraph 3 or this clause 4 shall prejudice any Relevant Claim it may have but
the amount recoverable pursuant to such Relevant Claim shall be limited to the
amount which would have been recoverable had the provisions of paragraph 3 or
this clause 4 been complied with.
5. The Covenantors shall not be liable in respect of any breach of the
Warranties if and to the extent that the loss occasioned thereby has been
recovered under the Tax Deed.
6. No claim shall lie under the Warranties to the extent the same is capable
of remedy by the Covenantors unless the Purchaser shall first afford to the
Covenantors such opportunity and information as is reasonable in the
circumstances to remedy the alleged breach and the Covenantors have failed
to do so within 30 days after being notified of such breach.
7. The aggregate liability of the Covenantors in respect of all breaches of
the Warranties when added to the aggregate amount of any liability under
the Tax Deed shall not exceed a sum equal to the Consideration.
8. The Covenantors shall have no liability for any Relevant Claim under the
Warranties where the amount of such claim does not exceed (Pounds)1,000 and
all such individual claims shall be excluded for the purposes of paragraph
9 of this Schedule 6.
9. The Covenantors shall not be liable in respect of any Relevant Claim for
breach of the Warranties unless the aggregate amount of all such claims
exceeds (Pounds)10,000 in which event the Covenantors shall be liable for
the whole of such liability and not merely the excess. However this
limitation shall not apply to any Relevant Claim made under paragraph 1 of
Schedule 2.
<PAGE>
10. The Covenantors shall not be liable in respect of any breach of the
Warranties in respect of all and any matters resulting from a change in
legislation or regulations (whether relating to Tax or otherwise) made
after Completion or a change of accounting policy or practice of the
Purchaser or the Company or ODL introduced after Completion (otherwise than
to bring the accounting policy or practice of the Purchaser or the Company
or ODL in line with generally accepted accounting policies or practices).
11. The Covenantors shall not be liable for any Relevant Claim to the extent
that it is provided for or included as a liability in the Warranted
Accounts or in the Accounts.
12. If the Covenantors make any payment by way of damages for breach of the
Warranties and within twelve months of them making the relevant payment the
Purchaser or the Company or ODL receives any benefit otherwise than from
the Covenantors which would not have been received but for the
circumstances giving rise to the Relevant Claim in respect of which the
damages payment was made, the Purchaser shall, once it or the Company or
ODL has received such benefit, forthwith repay to the Covenantors an amount
equal to the lesser of (after deducting all costs and expenses incurred by
the Company or ODL in obtaining such receipt and any applicable
taxation)(a) the amount of such benefit and (b) the damages payment in
question.
13. No liability shall attach to the Covenantors in respect of any Relevant
Claim based upon a liability which is contingent only, unless and until
such contingent liability becomes an actual liability or the Purchaser or
the Company or ODL (as appropriate) is required to make a provision for
such contingent liability in its accounts in accordance with standard
accounting practices provided always that the Purchaser may nevertheless
notify the Covenantors of such contingent liability under paragraph 3
above.
14. If the Covenantors pay to the Purchaser an amount in respect of any
Relevant Claim and the Purchaser subsequently recovers from a third party
(including an insurer) a sum which is referable to that Relevant Claim, the
Purchaser shall forthwith repay to the Covenantors so much of the amount
paid by the Covenantors as does not exceed the sum recovered from the third
party less all reasonable costs, charges and expenses incurred by the
Purchaser in obtaining that payment and recovering that sum from the third
party and any applicable taxation.
15. The Purchaser shall not be entitled to rescind this Agreement after
Completion in any circumstances save that the Purchaser shall be entitled
to rescind this Agreement after Completion in the event that any of those
Sellers that are minors as at the date of this Agreement rescind or
repudiate or fail to ratify the terms of this Agreement or seek to do any
of the above at any time.
16. If the Covenantors pay any sum to the Purchaser or the Company or ODL
pursuant to any Relevant Claim , the amount of the Consideration paid by
the Purchaser to the Covenantors for the Shares shall be deemed to be
reduced by the amount of any such payment.
17. The Purchaser confirms to the Covenantors that at the time of entering into
this Agreement it is not aware of any matter which at the date hereof gives
rise to any Relevant Claim.
<PAGE>
18. Nothing in this Schedule 6 shall in any way restrict or limit the general
obligation at law of the Purchaser and the Group to mitigate any loss or
damage which it may suffer in consequence of any breach by the Covenantors
of the Warranties (including without limitation any obligation at law of
the Company to mitigate any such loss by first taking steps or commencing
such proceedings against the Sellers (as defined in the ODL Sale Agreement)
or, as the case may be, the Covenantors (as defined in the ODL Sale
Agreement) under the ODL Sale Agreement as the Company may reasonably be
required to take under law).
19. Despite the above provisions of this Schedule, none of the limitations
contained in this Schedule shall apply to any Relevant Claim arising out of
fraud, wilful misconduct or wilful concealment on the part of any of the
Covenantors in relation to the matter giving rise to the Relevant Claim.
<PAGE>
APPENDIX - Definitions and Interpretation
1. DEFINITIONS
The following definitions apply in this Agreement:
Accounting Date means 31 May 1999 being the date to which the last
audited accounts of the Company were made up;
Act means the Companies Act 1985 (as amended);
Agreed Rate means the base rate of Barclays Bank plc (or such other London
Clearing Bank as the party entitled to receive payment of Interest may
nominate) from time to time in force;
Agreed Form means in the form previously agreed by the parties to this
Agreement and signed for the purpose of identification by or on their
behalf;
Agreement means this agreement including its schedules, appendices and
attachments (if any);
Associate has the meaning given to it by section 435 of the Insolvency Act
1986;
Auditors mean the auditors of the Company from time to time;
Business Day means a day other than a Saturday or Sunday or a day which is
a public holiday in England;
CAA means the Capital Allowances Act 1990;
Company's IT Systems means any and all computer hardware, software,
firmware, networks, other information technology and any assets which have
embedded in them material information technology in each case owned, used
or exploited by the Company or, where the context admits, proposed to be
owned, used or exploited by the Company;
Completion means the performance by the parties of the obligations (to the
extent not previously waived in terms of this Agreement) assumed by them
respectively under clause 5.2;
Confidential Information means (i) any information concerning the
business, accounts, finances, contractual arrangements or intellectual
property (whether owned or licensed) or other dealings, transactions,
affairs or property of the Company or ODL but does not include information
which is trivial or obvious or otherwise clearly of a non-confidential
nature or information which has become a matter of public knowledge (other
than by reason of a breach of clause 6 or its unlawful disclosure by any
person) and (ii) any information in respect of which an obligation of
confidence is owed to any third party by the Company or ODL;
<PAGE>
Covenantors means the Sellers and Peter Dunsford;
David Underdown means David Underdown of Steers House, Holcombe Rogus,
Wellington, Somerset TA21 OPN;
Default Rate means the base rate of Barclays Bank plc (or such other
London Clearing Bank as the party entitled to receive payment of Interest
may nominate) from time to time in force plus 2 per cent;
Directors means the directors of the Company whose names are specified in
Schedule 3;
Disclosure Letter means the letter (including its attachments) of the same
date as this Agreement from the Sellers' Solicitors to the Purchaser's
Solicitors containing qualifications to the Warranties;
Encumbrance means and includes any interest or equity of any person
(including, without limitation, any right to acquire, option, right of
pre-emption or right of conversion) or any mortgage, charge, pledge, lien,
assignment or any other encumbrance, priority or security interest or
arrangement of whatever nature over or in the relevant property;
Euro Compliant means fulfilment of the current minimum requirements for
Advanced accreditation by the Business and Accounting Software Developers'
Association in relation to their ability to process and display
information connected with the euro currency;
Group means the Company and ODL;
Intellectual Property means patents, trade marks, registered designs,
applications for any of the above, copyright, know-how, design rights,
database rights, trade secrets, confidential information, trade and
business names and brands, domain names and any other similar protected
rights in any country;
Interest means interest (as well after as before judgment) at the rate in
question accruing daily and compounded with rests on the last day of each
calendar month;
Management Accounts means the management accounts of the Company for the
period from the Accounting Date to 31 March 2000 copies of which are
attached to the Disclosure Letter;
ODL means Organic Dairies Limited whose details are set out in Schedule 4;
ODL Debt means the sum owing by the Company at Completion to the ODL
Shareholders for the acquisition of the ODL Shares pursuant to the terms
of the ODL Sale Agreement;
ODL Sale Agreement means the agreement proposed to be entered on or before
the date of this Agreement between the Company and each of the ODL
Shareholders in the Agreed Form for the acquisition by the Company of the
ODL Shares;
<PAGE>
ODL Shares means the 600 ordinary shares of (Pounds)1.00 each in the
capital of ODL held by the ODL Shareholders;
ODL Shareholders means each of David Underdown, Edward John Underdown and
Irene Joyce Underdown;
OMSCO means the Organic Milk Suppliers Co-operative Limited a company
registered in England under number 3388324 whose registered office is at
Court Farm, Loxton, Axbridge, Somerset BS26 2XC;
Peter Dunsford means Peter James Dunsford of Garden Court, Elm Grove Road,
Topsham, Exeter, Devon EX3 0BN;
Purchaser's Accountants means KPMG of Marlborough House, Fitzalan Court,
Fitzalan Road, Cardiff CF24 OTE or their successors in business or any
other firm of chartered accountants appointed by the Purchaser for the
purposes of this Agreement;
Purchaser's Solicitors means Theodore Goddard of 150 Aldersgate Street
London EC1A 4EJ or their successors in business or any other firm of
solicitors appointed by the Purchaser for the purposes of this Agreement;
Related Company means, in relation to a company, any company which is a
holding company of that company or a subsidiary of that company or of such
holding company (and the expression Related Companies shall be construed
accordingly);
Restricted Activities means provision of any products or services used in
or relating to organic liquid milk and cream supplied by the Company or
ODL at any time during the period of two years immediately prior to
Completion or which are now intended to be provided or offered by the
Company or ODL and the provision of any products or services which are
similar to or competitive with any of such products or services;
Sales Forecasts means the sales forecasts of the Company for the periods
expiring 31 May 2001, 2002, 2003 and 2004, a copy of which is attached to
the Disclosure Letter; Sellers' Accountants means Bush & Co of 14 Bedford
Street, Exeter, Devon EX1 1LE or their successors in business or any other
firm of chartered accountants appointed by the Sellers for the purposes of
this Agreement;
Sellers' Solicitors means Michelmores of 18 Cathedral Yard, Exeter, Devon
EX1 1HL or their successors in business or any other firm of solicitors
appointed by the Sellers for the purposes of this Agreement;
Shares means the shares comprised in the whole of the issued share capital
of the Company as specified in Schedule 3;
Subsidiaries means the subsidiaries of the Company at the date of this
Agreement details of which are set out in Schedule 4;
taxation or tax has the meaning given to it in the Tax Deed;
<PAGE>
Taxation Authority means any government, state or municipality or any
local, state, federal or other fiscal, revenue, customs or excise
authority, body or official competent to impose or collect tax in the
United Kingdom or elsewhere;
Tax Deed means the tax deed of covenant proposed to be entered into
between the Covenantors and the Purchaser in the Agreed Form;
Taxes Act means the Income and Corporation Taxes Act 1988;
TCGA means the Taxation of Chargeable Gains Act 1992;
Turnover means the net invoiced turnover of the Company (but not for the
avoidance of doubt of ODL) for organic liquid milk and cream as shown in
the Accounts (as determined in accordance with Schedule 5) of the Company
for the financial year ending 31 May 2000 exclusive of value added tax
(which, for the avoidance of doubt, shall be net of any discounts or
rebates relating to sales invoiced by the Company to any of its customers
in such financial year);
VATA means the Value Added Tax Act 1994;
Warranted Accounts means the audited balance sheet of the Company as at
the Accounting Date and the audited profit and loss account of the Company
for the financial year ended on the Accounting Date and the directors'
report and other documents annexed to them;
Warranties means the warranties, representations and undertakings
contained or referred to in clause 4.1 and Schedule 2;
Year 2000 Compliant has the meaning set out in the document published by
the part of the British Standards Institution called DISC entitled A
Definition of Year 2000 Conformity Requirements which has the reference
PD2000-1 and in construing the meaning of this definition regard shall be
had to the Amplification of the Definition and Rules set out in the same
document.
2. INTERPRETATION
In this Agreement:
2.1 references to statutes or statutory provisions include those statutes or
statutory provisions as amended, extended, consolidated, re-enacted or
replaced from time to time and any orders, regulations, instruments or
other subordinate legislation made under them except to the extent that any
amendment enacted after the date of this Agreement would increase or extend
the liability of any party to this Agreement;
2.2 words and phrases defined in the Act and in the relevant legislation
relating to taxation bear the same meanings, unless given a different
meaning in this Agreement;
2.3 unless specified to the contrary, use of the singular is deemed to include
the plural, use of any gender is deemed to include every gender and any
reference to a person is deemed
<PAGE>
to include a corporation, a partnership and other body or entity; and (in
each case) vice versa;
2.4 references to this Agreement or any other document shall, where
appropriate, be construed as references to this Agreement or such other
document as varied, supplemented, novated and/or replaced in any manner
from time to time;
2.5 any reference to a document in the Agreed Form includes a reference to that
document in its final executed form;
2.6 any reference to an agreement or contract includes an agreement, contract,
deed, franchise, concession, licence or undertaking and any waiver or
release (in each case whether written, oral, implied or arising by
operation of law);
2.7 obligations and liabilities assumed by more than one person are assumed
jointly and severally unless otherwise specified;
2.8 references to the Sellers or the Covenantors shall include each of the
Sellers or, as the case may be, each of the Covenantors severally;
2.9 references to any English legal or accounting term for any action, remedy,
method of judicial proceeding, legal or accounting document, legal or
accounting status, insolvency proceeding, event of incapacity, legal or
accounting status, court, governmental or administrative authority or
agency, accounting body, official or any legal or accounting concept,
practice or principle or thing shall in respect of any jurisdiction other
than England be deemed to include what most approximates in that
jurisdiction to the English legal or accounting term concerned;
2.10 any undertaking by any of the parties not to do any act or thing shall be
deemed to include an undertaking not to permit or suffer or assist the
doing of that act or thing;
2.11 the headings shall not affect interpretation.
<PAGE>
SIGNED by ROGER PERSEY )
in the presence of: ) /s/ Roger L. Persey
Signature of Witness: /s/ K Steer
Name of Witness: KEITH STEER
Address of Witness: 6 Sylvan Avenue Exeter
Occupation of Witness: Chartered Accountant
SIGNED by CAROLINE PERSEY )
in the presence of: ) /s/ Roger L. Persey
---------------------------
As duly authorised Attorney
Signature of Witness: /s/ K Steer
Name of Witness: KEITH STEER
Address of Witness: 6 Sylvan Avenue Exeter
Occupation of Witness: Chartered Accountant
SIGNED by SALLY PERSEY )
in the presence of: ) /s/ Roger L. Persey
---------------------------
As duly authorised Attorney
Signature of Witness: /s/ K Steer
Name of Witness: KEITH STEER
Address of Witness: 6 Sylvan Avenue Exeter
Occupation of Witness: Chartered Accountant
<PAGE>
SIGNED by ELIZABETH PERSEY )
in the presence of: ) /s/ Roger L. Persey
---------------------------
As duly authorised Attorney
Signature of Witness: /s/ K Steer
Name of Witness: KEITH STEER
Address of Witness: 6 Sylvan Avenue Exeter
Occupation of Witness: Chartered Accountant
SIGNED by HERBERT PERSEY )
in the presence of: ) /s/ Herbert Persey
---------------------------
Signature of Witness: /s/ K Steer
Name of Witness: KEITH STEER
Address of Witness: 6 Sylvan Avenue Exeter
Occupation of Witness: Chartered Accountant
SIGNED by VICTORIA PERSEY )
in the presence of: ) /s/ Herbert Persey
---------------------------
As duly authorised Attorney
Signature of Witness: /s/ K Steer
Name of Witness: KEITH STEER
Address of Witness: 6 Sylvan Avenue Exeter
Occupation of Witness: Chartered Accountant
<PAGE>
SIGNED by JAMES PERSEY )
in the presence of: ) /s/ Herbert Persey
---------------------------
As duly authorised Attorney
Signature of Witness: /s/ K Steer
Name of Witness: KEITH STEER
Address of Witness: 6 Sylvan Avenue Exeter
Occupation of Witness: Chartered Accountant
SIGNED by GEOFFREY PERSEY )
in the presence of: ) /s/ Geoffrey Persey
-------------------
Signature of Witness: /s/ K Steer
Name of Witness: KEITH STEER
Address of Witness: 6 Sylvan Avenue Exeter
Occupation of Witness: Chartered Accountant
SIGNED by LUCY PERSEY )
in the presence of: ) /s/ Geoffrey Persey
---------------------------
As duly authorised Attorney
Signature of Witness: /s/ K Steer
Name of Witness: KEITH STEER
Address of Witness: 6 Sylvan Avenue Exeter
Occupation of Witness: Chartered Accountant
<PAGE>
SIGNED by RICHARD PERSEY )
in the presence of: ) /s/ Geoffrey Persey
---------------------------
As duly authorised Attorney
Signature of Witness: /s/ K Steer
Name of Witness: KEITH STEER
Address of Witness: 6 Sylvan Avenue Exeter
Occupation of Witness: Chartered Accountant
SIGNED by PETER DUNSFORD )
in the presence of: ) /s/ Peter Dunsford
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Signature of Witness: /s/ K Steer
Name of Witness: KEITH STEER
Address of Witness: 6 Sylvan Avenue Exeter
Occupation of Witness: Chartered Accountant
SIGNED by a duly authorised officer for )
and on behalf of HORIZON ORGANIC LIMITED ) /s/ Mark Retzloff
in the presence of: )
Signature of Witness: /s/ Mattys Reesendaal
Name of Witness: Mattys Can Reesendaal
Address of Witness: 32 Upton Road, Southville, Bristol
Occupation of Witness: Marketing and Sales Assistant
