SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(AMENDMENT NO. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) DECEMBER 23, 1997
LYNTON GROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 0-6867 13-2688055
(State or other (Commission (I.R.S. Employer
jurisdiction of file number) Identification
incorporation or Number)
organization)
9 AIRPORT ROAD
MORRISTOWN MUNICIPAL AIRPORT
MORRISTOWN, NEW JERSEY 07960
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (973) 292-9000
<PAGE>
Explanatory Note
Lynton Group, Inc. is filing this Amendment No. 1 on Form 8-K/A to its Current
Report on Form 8-K, dated December 23, 1997, solely for the purpose of (i)
filing the financial statements and pro forma financial information required to
be filed in connection with the acquisition of the Magec Shares and (ii) filing
Exhibit 2.1.
2
<PAGE>
Item 7.FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Financial Statements of Businesses Acquired and Pro Forma Financial
Information:
The financial statements and pro forma financial information required to
be filed are included herewith. All monetary amounts presented in the
financial statements and notes (pages F3-F17) are in Pounds Sterling ('000).
Exhibits:
2.1 Agreement dated December 5, 1997 between The General Electric Company,
p.l.c., Lynton Group Limited and Lynton Group, Inc.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment No. 1 to its Form 8-K on Form
8-K/A to be signed on its behalf by the undersigned thereunto duly
authorized.
LYNTON GROUP, INC.
(Registrant)
Date: March 9, 1998 By: /s/ Paul A. Boyd
Paul A. Boyd,
Secretary, Treasurer and
Principal Financial Officer
4
<PAGE>
COMPANY NO 2288275
M A G E C A V I A T I O N L I M I T E D
Report and Accounts
for the 3 years ended 31 March 1997
F1
<PAGE>
INDEPENDENT AUDITORS' REPORT TO THE DIRECTORS OF MAGEC AVIATION LIMITED
__________________________________________________________________
We have audited the balance sheets of Magec Aviation Limited as at 31 March
1997 and 1996, and the related statement of income, cash flows and changes in
shareholders' equity for each of the three years in the period ended 31 March
1997, all expressed in pounds sterling. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards in the United Kingdom, which are similar to those in the United
States. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of
material mis-statement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements, referred to above, present fairly, in
all material respects, the financial position of Magec Aviation Limited as at
31 March 1997 and 1996, and the results of their operations and their cash
flows for each of the three years in the period ended 31 March 1997 in
conformity with generally accepted accounting principles in the United Kingdom
(which differ in certain material respects from generally accepted accounting
principles in the United States of America - see Note 18)
DELOITTE & TOUCHE
Chartered Accountants
St Albans, England
06 March 1998
F2
<PAGE>
MAGEC AVIATION LIMITED
PROFIT & LOSS ACCOUNT FOR THE YEARS ENDED 31 March 1995 to 1997
___________________________________________________________________
<TABLE>
<CAPTION>
NOTES 1997 1996 1995
<S> <C> <C> <C> <C>
Turnover 1 12,100 10,989 9,155
Staff costs 2 2,855 2,703 2,484
9,245 8,286 6,671
Other operating charges and expenses 4 8,433 7,588 5,879
Profit on ordinary activities before taxation 812 698 792
Tax on profit on ordinary activities 5 277 238 266
Profit on ordinary activities after taxation 535 460 526
Dividends 6 - 360 -
Retained profit for the year 535 100 526
Profit and loss account brought forward 1,296 1,196 670
Profit and loss account carried forward 1,831 1,296 1,196
</TABLE>
There were no recognised gains or losses other than those reported above. The
above results relate entirely to the continuing activities of the Company.
There is no difference between the retained profit for the year stated above,
and its historical cost equivalent. A statement of movements on shareholders'
funds has not been prepared as there have not been any movements, other than
the retained profit for the year in either 1995,1996 or 1997.
F3
<PAGE>
MAGEC AVIATION LIMITED
BALANCE SHEETS AT 31 March 1997
__________________________________________________________________
<TABLE>
<CAPTION>
NOTES 1997 1996
<S> <C> <C> <C>
FIXED ASSETS
Tangible Assets 7 8,049 6,412
CURRENT ASSETS
Stocks & Work in progress 8 305 364
Debtors 9 1,583 1,648
Cash at bank and in hand 102 131
1,990 2,143
CURRENT LIABILITIES
Creditors: amounts falling due
within one year 10 7,210 6,490
NET CURRENT LIABILITIES (5,220) (4,347)
TOTAL ASSETS LESS CURRENT LIABILITIES 2,829 2,065
DEFERRED TAXATION 11 (998) (769)
NET ASSETS 1,831 1,296
CAPITAL AND RESERVES
Called up share capital 12 - -
Profit & Loss Account 1,831 1,296
EQUITY SHAREHOLDERS' FUNDS 1,831 1,296
</TABLE>
The notes on pages F6 to F17 form an integral part of these accounts.
F4
<PAGE>
MAGEC AVIATION LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED
31 MARCH 1995, 31 MARCH 1996 & 31 MARCH 1997
Reconciliation of operating profit to net cash inflow from operating
activities.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
<S> <C> <C> <C>
31.03.97 31.03.96 31.03.95
Operating profit 812 698 792
Interest received (5) (6) (3)
Profit/Loss on sale of
tangible fixed assets (2) - (312)
Depreciation charges 723 692 435
Increase in Stocks 59 172 (11)
Increase in debtors (66) (107) (409)
Increase in creditors 157 162 2260
Net cash inflow from
operating activities 1,678 1,611 2,752
CASH FLOW STATEMENT
Net cash inflow from
operating activities 1,678 1,611 2,752
Returns on investments
& servicing of finance 5 6 3
Taxation 83 (90) (73)
Capital expenditure (1,726) (183) (4,253)
40 1,344 (1,571)
Equity dividends paid - (360) -
Increase/(decrease)
in cash 40 984 (1,571)
</TABLE>
F5
<PAGE>
MAGEC AVIATION LIMITED
NOTES TO THE CASH FLOW STATEMENT
___________________________________________________________________
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
<S> <C> <C> <C>
31.03.97 31.03.96 31.03.95
NOTE 1 : GROSS CASH FLOWS
Return on investments and servicing
of finance
Interest received 5 6 3
Capital expenditure
Payments to acquire tangible
fixed assets (1,729) (184) (5,289)
Receipts from sales of tangible
fixed assets 3 1 1,036
(1,726) (183) (4,253)
</TABLE>
<TABLE>
<CAPTION>
NOTE 2 : RECONCILLIATION OF NET CASH FLOWS TO MOVEMENT IN NET DEBT
<S> <C> <C> <C>
At Cash At
01.04.94 Flow 31.03.95
1995
Cash at bank and in hand 197 (80) 117
Overdraft - (1,491) (1,491)
197 (1,571) (1,374)
1996
Cash at bank and in hand 117 14 131
Overdraft (1,491) 970 (521)
(1,374) 984 (390)
1997
Cash at bank and in hand 131 (29) 102
Overdraft (521) 69 (452)
(390) 40 (350)
</TABLE>
NOTE 3: MATERIAL NON-CASH TRANSACTIONS
As described in Note 16i(a) during 1997 the Company acquired aircraft from its
immediate parent company for which <pound-sterling>632,000 of non-cash
consideration was paid through an increase in amount owed to fellow
subsidiaries.
F6
<PAGE>
MAGEC AVIATION LIMITED
ACCOUNTING POLICIES
___________________________________________________________________
The financial statements have been prepared in accordance with applicable
accounting standards in the United Kingdom.
The more important Magec Aviation Limited accounting policies are summarised
below:
(a) TURNOVER. The Company records transactions as sales when services have been
performed or when materials have been supplied. Turnover is shown net of VAT.
(b) TANGIBLE FIXED ASSETS. Aircraft, property, plant and machinery, fixtures,
fittings, tools and equipment are recorded at historic cost and depreciated on
a straight-line basis over their estimated useful lives.
DEPRECIATION RATES:
Leasehold property - over remaining life of lease.
Aircraft - 10% to 18% per annum.
Plant, machinery and equipment - 10% to 33% per annum.
(c) STOCK AND WORK IN PROGRESS. Stock and work in progress are valued at the
lower of cost and net realisable value. Costs consist of materials, labour and
an appropriate proportion of overheads.
(d) LEASES. Operating lease rentals are charged to the profit and loss account
as incurred.
(e) DEFERRED TAXATION. Deferred taxation is provided at the anticipated tax
rates on differences arising from the inclusion of items of income and
expenditure in taxation computations in periods different from those in which
they are included in the financial statements to the extent that it is probable
that a liability or asset will crystallise in the future.
(f) ACCOUNTING CONVENTION. The financial statements are prepared under the
historical cost convention.
F7
<PAGE>
MAGEC AVIATION LIMITED
NOTES TO THE ACCOUNTS
___________________________________________________________________
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C> <C>
1. TURNOVER
United Kingdom 11,995 10,820 8,788
Overseas 105 169 367
12,100 10,989 9,155
2. DIRECTORS AND EMPLOYEES Number Number Number
(a) Average number of employees
United Kingdom 123 113 109
Overseas - 2 3
123 115 112
(b) WAGES AND SALARIES
Aggregate gross remuneration 2,483 2,357 2,243
State Social Security costs 241 233 224
Other pension costs 131 113 17
2,855 2,703 2,484
(c) Directors' Emoluments including
Pension Contributions 173,918 131,304 111,621
Directors' Emoluments excluding
Pension Contributions 164,141 123,193 110,830
Highest paid Director 106,972 74,650 66,559
Emoluments of Other Director 57,169 48,543 44,271
</TABLE>
F8
<PAGE>
MAGEC AVIATION LIMITED
NOTES TO THE ACCOUNTS (continued)
__________________________________________________________________
3.PENSIONS
The Company is a subsidiary of The General Electric Company, p.l.c. ("GEC") and
all its employees who are members of a pension plan are members of The GEC Plan
("the Plan"), the principal pension plan of the GEC Group. The Plan is funded
and is of the "defined benefit" type. Particulars of the most recent actuarial
valuation, which was at 05 April 1994, will be disclosed in the report and
accounts of GEC for the year ended 31 March 1997.
The pensions cost charge of the Company in respect of employees who are members
of the Plan consists of employers' contributions payable which are similar
across the Group as a whole as a percentage of pensionable earnings. Based on
the advice of a qualified actuary, contributions for the year ended 31 March
1997 amounting to <pound-sterling>131,000 (1996 <pound-sterling>113,000), (1995
<pound-sterling>NIL) were calculated at 6 per cent. of members' pensionable
pay.
<TABLE>
<CAPTION>
1997 1996 1995
<S><C> <C> <C> <C>
4. OTHER OPERATING CHARGES AND EXPENSES
Raw materials & consumables 3,701 3,052 2,872
Decrease in stocks and work
in progress 59 172 (11)
Depreciation 723 692 435
Charter of aircraft 26 42 57
Other plant hire 7 5 4
Leasehold property ground rent 74 67 67
Auditors' remuneration 15 14 16
Other expenditure 3,828 3,544 2,439
8,433 7,588 5,879
5. TAX ON PROFIT ON ORDINARY ACTIVITIES
Corporation Tax @ 33%
Current year charge 48 111 (149)
Prior years' adjustment - (24) -
Deferred - current year 229 128 415
- prior years' adjustment - 23 -
277 238 266
</TABLE>
F9
<PAGE>
MAGEC AVIATION LIMITED
NOTES TO THE ACCOUNTS (continued)
__________________________________________________________________
<TABLE>
<CAPTION>
1997 1996 1995
<S><C> <C> <C> <C>
6. DIVIDENDS
Per Share - 180 -
Total - 360 -
</TABLE>
7. TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Short-term Aircraft Plant Total
leasehold machinery/
property equipment
<S> <C> <C> <C> <C>
Cost @ 01 April 1996 1,601 7,975 629 10,205
Additions 18 - 211 229
Disposals - - (16) (16)
Transfer from group company - 5,010 - 5,010
Cost @ 31 March 1997 1,619 12,985 824 15,428
Depreciation @ 01 April 1996 157 3,300 336 3,793
Charge for the year 34 615 74 723
Depreciation on disposals - - (15) (15)
Transfer from group company - 2,878 - 2,878
Depreciation @ 31 March 1997 191 6,793 395 7,379
Net Book Value
@ 31 March 1997 1,428 6,192 429 8,049
Net Book Value
@ 31 March 1996 1,444 4,675 293 6,412
</TABLE>
F10
<PAGE>
MAGEC AVIATION LIMITED
NOTES TO THE ACCOUNTS (continued)
<TABLE>
<CAPTION>
1997 1996
<S><C> <C> <C>
8. STOCKS AND WORK IN PROGRESS
Aircraft spares and components
and other stocks 305 332
Work in progress - 32
305 364
9. DEBTORS
Trade debtors 1,364 1,384
Amount owed by ultimate holding Company 23 -
Amounts owed by fellow subsidiaries 25 19
Taxation 50 163
Other debtors 56 22
Prepayments and accrued income 65 60
1,583 1,648
10. CREDITORS
Amounts falling due within one year:
Bank overdraft 452 521
Trade creditors 659 483
Amounts owed to fellow subsidiaries 5,573 4,996
Accruals and deferred income 526 490
7,210 6,490
11. DEFERRED TAXATION
Balance 01 April 769 618
Charge for the year 229 128
Prior years' adjustment - 23
Balance at 31 March 998 769
Deferred taxation is fully provided for in the accounts.
</TABLE>
F-11
MAGEC AVIATION LIMITED
NOTES TO THE ACCOUNTS (continued)
<TABLE>
<CAPTION>
1997 1996
Number Number
<S><C> <C> <C>
12. CALLED UP SHARE CAPITAL <pound-sterling>1 each
Issued and fully paid ordinary shares 2 2
Authorised ordinary shares 1,000 1,000
13. FINANCIAL COMMITMENTS
The Company's continued ownership of the leasehold property which was
occupied at the year end will result in the following payments of ground
rent during the next year subject to any pending rent reviews.
</TABLE>
<TABLE>
<CAPTION>
1997 1996 1995
<S> <C> <C> <C>
Leases which expire after 5 years 74 67 67
</TABLE>
14. DIRECTORS' INTERESTS
The Directors had no interests in the shares of The General Electric Company,
p.l.c. or its subsidiaries other than those shown below:-
IN THE GENERAL ELECTRIC COMPANY, p.l.c.
<TABLE>
<CAPTION>
01 APRIL 1996 31 MARCH 1997
<S> <C> <C>
ORDINARY SHARES OF 5P EACH FULLY PAID
R.O. Warner - 250
D.E.White 10,057 32,011
</TABLE>
OPTIONS IN RESPECT OF ORDINARY SHARES OF 5P EACH
(i) Under the terms of The GEC Managers' 1984 Share Option Schemethe following
Options were outstanding:-
<TABLE>
<CAPTION>
01 April Options exercised 31 March
1996 during the year 1997
<S> <C> <C> <C>
R.O. Warner 16,000 4,000 12,000
D.E. White 30,000 30,000 -
</TABLE>
No Options were granted to the Directors during the three years under the above
Scheme. Normally the Options are exercisable during the years 1997 to 2004 at
a subscription price of 328p per share.
F12
<PAGE>
MAGEC AVIATION LIMITED
NOTES TO THE ACCOUNTS (continued)
___________________________________________________________________
(ii) Under the terms of The GEC Employee Savings-Related Share Option Scheme
and The GEC Employee 1992 Savings-Related Share Option Scheme the following
Options were outstanding:-
<TABLE>
<CAPTION>
01 April Options granted 31 March
1996 during the year 1997
<S> <C> <C> <C>
R.O. Warner 3,564 1,757 5,321
D.E. White 9,596 - 9,596
</TABLE>
No Options granted under the above schemes were exercised by the Directors
during the year. Normally the Options are exercisable within six months of 01
April 1998, 1999, 2000 and 2002 at subscription prices between 219p and 314p
per share.
15. PARENT UNDERTAKINGS
The Company's ultimate parent company is The General Electric Company, p.l.c.
("GEC"). GEC is the parent undertaking of the largest group of undertakings of
which the Company is a member for which group accounts are prepared. The parent
undertaking of the smallest such group of undertakings of which the Company is
a member is GEC-Marconi Limited. Copies of the accounts of GEC are available
from The Secretary, 1 Stanhope Gate, London W1A 1EH.
16. RELATED PARTY TRANSACTIONS
i. TURNOVER
(a) During the 3 years ended 31 March 1997 the Company operated an HS125 800
aircraft which was owned by its parent company GEC-Marconi Limited.
The aircraft was held as a fixed asset by GEC-Marconi which incurred
depreciation charges on that aircraft. All other costs were incurred
by the Company and all revenue was earned by the Company. The Company
allowed a reduced charter rate to other companies in the GEC Group to
off-set the cost of depreciation.
The aircraft was transferred by GEC-Marconi Limited to the Company at
Net Book Value of <pound-sterling>2,131,798 on 31 March 1997. This was
funded by an increase in the Group Loan of <pound-sterling>632,000 and a
cash payment of <pound-sterling>1,499,798.
F13
<PAGE>
MAGEC AVIATION LIMITED
NOTES TO THE ACCOUNTS (continued)
___________________________________________________________________
(b) During the same period the Company had a contract on normal commercial
terms to provide Operational, Engineering and Hangarage support to GEC-
Marconi Sensors for the operation of a Shorts Skyvan aircraft.
(c) Scheduled Routine Inspection Engineering
Work was also undertaken on GEC-Marconi Avionics (Holdings) Ltd HS125
400 series aircraft at normal commercial rates.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
31.03.95 31.03.96 31.03.97
<S> <C> <C> <C>
TURNOVER
HS125-800 180 128 148
Shorts Skyvan 159 126 122
Hs125-400 78 8 14
417 262 284
AMOUNTS OWED AT YEAR END
HS125-800 37 19 33
Shorts Skyvan 14 - 15
HS125-400 1 - -
52 19 48
</TABLE>
ii. PURCHASE
(a) During the 3 years ended 31 March 1997 the Company was charged a management
fee for payroll and personnel services provided by the GEC-Marconi Head
Office.
(b) During the same period various parts of inventory were purchased or over-
hauled by other GEC subsidiaries and these were invoiced to the Company at
normal commercial rates.
F14
<PAGE>
MAGEC AVIATION LIMITED
NOTES TO THE ACCOUNTS (continued)
___________________________________________________________________
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
31.03.95 31.03.96 31.03.97
<S> <C> <C> <C>
Purchases of Inventory
& overhead of parts 19 24 6
Management Fee 21 21 21
40 45 27
AMOUNTS OWING AT YEAR END
Management Fee - - -
Purchases 1 - -
Payroll Cost - - 27
1 - 27
AMOUNT OWING AT YEAR END
Group Loan Account 4,906 4,996 5,546
</TABLE>
17. POST BALANCE SHEET EVENTS
(i) RECAPITALISATION
On 04 September 1997 the Company allotted one new ordinary share of
<pound-sterling>1 to its parent company GEC-Marconi Limited at a premium
of <pound-sterling>7,299,999 for a cash consideration. On the same date
the Company repaid a loan in the amount of <pound-sterling>5,545,694 to
GEC-Marconi Limited.
(ii) PAYMENT OF AN INTERIM DIVIDEND
On 20 August 1997 the Company declared and paid an interim dividend of
<pound-sterling>1,750,000 on the issued ordinary shares in respect of the
year ending 31 March 1998.
(iii) RE-ROOFING AND ASBESTOS REMOVAL WORK TO HANGAR 63
Work was undertaken between May 1997 and November 1997 to replace the
roof on one of the Company's hangars. Specialist contractors were
engaged to remove the asbestos insulation. The total cost of the work
amounting to <pound-sterling>827,000 has been capitalised as leasehold
improvements to be depreciated over the remaining life of the lease.
F15
<PAGE>
MAGEC AVIATION LIMITED
NOTES TO THE ACCOUNTS (continued)
___________________________________________________________________
(iv) PURCHASE OF THE COMPANY BY THE LYNTON GROUP, INC.
On 23 December 1997 The Lynton Group, Inc. acquired all the issued and
outstanding shares of Magec Aviation Limited.
18. SUMMARY OF DIFFERENCE BETWEEN UK AND US GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES
The Company's financial statements are prepared in accordance with
generally accepted accounting principles in the United Kingdom ("UK
GAAP"), which differ in certain significant respects from US generally
accepted accounting principles ("US GAAP"). For the years ended 31 March
1997, 31 March 1996 and 31 March 1995 there was no material effect.
DEFERRED INCOME TAXES
Under UK GAAP deferred income taxes are only provided to the extent an
asset or liability is expected to crystallise. Under US GAAP deferred
income tax is provided on all temporary differences under the liability
method, subject to a valuation allowance where applicable in respect of
deferred income tax assets. There are no material adjustments for US
GAAP.
CASH FLOWS
The attached cash flow statement is prepared in accordance with the UK
Financial Reporting Standard No 1 Cash Flow Statements (revised 1996)
("FRS 1") for UK GAAP reporting. Its objective and principles are
similar to those set out in Statement of Financial Accounting Standard
("SFAS") No 95 "Statement of Cash Flows". The principal difference
between the standards is in respect of classification. Under FRS 1, the
company presents its cash flows for operating activities; returns in
investments and servicing of finance; taxation; capital expenditure and
financial investment; acquisitions and disposals; equity dividends paid;
management of liquid resources and financing. SFAS No 95 requires only
three categories of cash flow activity; operating; investing and
financing.
Cash flows arising from dividends, taxation and returns on investments
and servicing of finance under FRS 1 would be included as financing
activity under SFAS No 95. In addition, under FRS 1, cash and cash
equivalents include short term borrowings with original maturities or
less than 90 days. SFAS No 95 requires movements on such short term
borrowings to be included in financing activities.
F16
<PAGE>
MAGEC AVIATION LIMITED
NOTES TO THE ACCOUNTS (continued)
___________________________________________________________________
ACCRUALS
The Company accrues amounts, in equal annual instalments over four years,
in respect of major mandatory maintenance inspections which are
undertaken on each aircraft. This method of accounting is acceptable
under US GAAP, however, the preferred treatment under US GAAP is to
expense such costs as incurred. The difference in methods does not have
a material impact on the financial position or results of operation of
the Company.
EMPLOYEE SHARE OPTION SCHEMES
SFAS No 123 "Accounting for stock based compensation" ("SFAS 123") was
issued in October 1995 and permits the fair value of share options issued
by a company to be included as a part of compensation cost of an employee
and charged to the statement of income over the anticipated employee
service period. SFAS 123 is first applicable to US GAAP financial
statements for years beginning after 15 December 1995. With respect to
the share option schemes administered by the Company's ultimate parent
company, all shares were granted prior to 1995 and, accordingly no
adjustment has been recorded in respect of SFAS 123.
DEFINED BENEFIT PENSION PLAN
As described in note 3, the Company participates in a defined benefit
plan which is sponsored by the Company's ultimate parent company. The
Company's annual expense is allocated by the parent company under a
multi-employer scheme and, accordingly, no adjustment has been made for
contributions to the defined benefit pension plan.
OPERATING LEASES
As described in the accounting policies (d), the Company accounts for
expenses related to operating leases as incurred. Under US GAAP expenses
related to operating leases are required to be accounted for in equal
annual instalments over the term of the lease. As described in Note 13,
the Company's only lease relates to ground rent payable which is subject
to periodic rent reviews which are not defined within the lease terms.
Therefore, there is no difference between the current accounting
treatment and that which would be acceptable under US GAAP.
F17
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 1997
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
FOR THE YEAR ENDED SEPTEMBER 30, 1997
(UNAUDITED)
The accompanying unaudited Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1997 is based upon the historical condensed consolidated balance
sheet of Lynton Group, Inc. ("Lynton") and Magec Aviation Limited ("Magec") as
of the date indicated. The accompanying unaudited Pro Forma Condensed
Consolidated Statements of Operations for the three months ended December 31,
1997 and the year ended September 30, 1997 are based upon the historical
condensed statements of operations of Lynton for the respective periods and the
condensed statements of operations of Magec for the three months ended December
31, 1997 and the year ended September 30, 1997.
The accompanying pro forma financial statements have been prepared to reflect
the acquisition of Magec for a cash consideration of 17,000,000 Pounds Sterling
together with acquisition costs. The funds used to purchase Magec (including
acquisition costs) included bank financing in the principal amount of
12,827,000 Pounds Sterling with the balance of the purchase price from debt
financing as follows: (i) promissory notes in the aggregate principal amount of
$1,664,000 due on December 23, 1999, with interest at 12% per annum, issued and
sold to entities which may be deemed affiliates of Paul R. Dupee, Jr .,
Chairman of the Board and a director of the Company, and (ii) a non interest
bearing loan in the principal amount of $1,353,000 due on December 31, 1998,
pursuant to an Option Agreement entered into between Magec and an unrelated
party to acquire certain aircraft owned by Magec, and (iii) 8% Subordinated
Convertible Debentures due December 31, 2007 in the aggregate principal amount
of $5,816,000 (the "Debentures") issued and sold to certain directors and
principal stockholders of the company, and/or their affiliates, as well as
other third parties.
The Debentures will be convertible into shares of the Company's Common Stock at
the option of the holder at any time prior to maturity at an initial conversion
price of $1.00 per share (subject to adjustment upon the occurrence of certain
events) once the Certificate of Incorporation is modified to increase the
number of authorized shares of Common Stock. In connection with the aforesaid
financing, an Option Agreement was entered into between Magec and Westbury
Properties Corporation ("Westbury"), which may be deemed an affiliate of Paul
R. Dupee Jr., Chairman of the board and a director of the Company, whereby
Westbury was granted an option expiring December 23, 1999 to acquire a certain
aircraft owned by Magec for the purchase price of $6,664,000.
The accompanying pro forma condensed consolidated financial statements should
be read in conjunction with the historical financial statements and notes
thereto of Lynton and Magec. The Pro Forma Condensed Consolidated Balance
Sheet is not necessarily indicative of future financial position or of the
financial position which would have existed had the events described above been
consummated as of the date presented. The Pro Forma Condensed Consolidated
Statements of Operations are not necessarily indicative of future results of
operations or of the results of operations which would have been obtained had
the events described above been consummated as of the beginning of the periods
presented. In addition, interim financial results may not be indicative of
full year results.
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(UNAUDITED)
($000S)
<TABLE>
<CAPTION>
PRO
LYNTON MAGEC FORMA Pro Forma
GROUP, AVIATION ADJUSTMENTS Consolidated
INC. LIMITED (NOTE 2) Balances
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $1,341 $138 $850 (a) $2,329
Accounts receivable 2,003 2,002 4,005
Inventory 817 550 1,367
Aircraft held for resale - - 12,114 (b) 12,114
Investment in jointly owned
company held for resale 928 - - 928
Other current assets 629 192 - 821
Total current assets 5,718 2,882 12,964 21,564
Property, plant and
equipment 18,151 27,200 (13,205) (b) 32,146
Less: accumulated
depreciation and
amortization 4,879 13,134 (13,134) (b) 4,879
13,272 14,066 (71) 27,267
Aircraft held for resale 1,870 - - 1,870
Funds held in escrow 150 - - 150
Long term ground lease, less
accumulated amortization 1,919 - - 1,919
Goodwill & other intangible
assets, less accumulated
amortization 2,146 - 7,176 (c) 9,322
Other assets & deferred
charges, less accumulated
amortization 466 - - 466
$25,541 $16,948 $20,069 $62,558
</TABLE>
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(UNAUDITED)
($000S)
<TABLE>
<CAPTION>
PRO
LYNTON MAGEC FORMA Pro Forma
GROUP, AVIATION ADJUSTMENTS Consolidated
INC. LIMITED (NOTE 2) Balances
<S> <C> <C> <C> <C> <C>
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities::
Accounts payable and
accrued liabilities $3,593 $1,607 $779 (d) $5,979
Advances from customers
and deferred revenue 1,845 - - 1,845
Current portion of capital
lease obligations 41 - - 41
Current portion of debt
on aircraft held
for resale - - 10,434 (e) 10,434
Current portion of other
long term debt 2,250 - 1,626 (e) 3,876
Total current liabilities 7,729 1,607 12,839 22,175
Obligations under capital
leases 61 - - 61
Long-term debt 12,151 - 12,097 (e) 24,248
Subordinated convertible
debentures - - 5,816 (f) 5,816
Deferred taxes 168 1,662 2,996 (g) 4,826
Deferred revenue 660 - - 660
Stockholders' equity
Common stock 1,918 12,147 (12,147) (h) 1,918
Additional paid-in
capital 9,780 - - 9,780
Retained (deficit)
earnings (6,949) 1,532 (1,532) (h) (6,949)
Translation adjustment 34 - - 34
4,783 13,679 (13,679) 4,783
Common stock held
in treasury (11) - - (11)
Total stockholders equity 4,772 13,679 (13,679) 4,772
$25,541 $16,948 $20,069 $62,558
</TABLE>
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)
($000S)
<TABLE>
<CAPTION>
PRO
LYNTON MAGEC FORMA Pro Forma
GROUP, AVIATION ADJUSTMENTS Consolidated
INC. LIMITED (NOTE 2) Balances
<S> <C> <C> <C> <C> <C>
Revenues $6,910 $6,012 - $12,922
Expenses:
Direct costs 5,436 4,823 - 10,259
Selling, general and
administrarive 707 526 - 1,233
Depreciation and
amortization 231 262 90 (a) 583
Interest 315 - 560 (b) 875
6,689 5,611 650 12,950
Income (loss) before income
tax provision (benefit) 221 401 (650) (28)
Income tax provision (29) - - (29)
Net income (loss) $192 $401 ($650) ($57)
Net loss attributable to Common Stock ($57)
Average number of common shares outstanding 6,394,872
Net loss per share ($0.01)
</TABLE>
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1997
(UNAUDITED)
($000S)
<TABLE>
<CAPTION>
PRO
LYNTON MAGEC FORMA Pro Forma
GROUP, AVIATION ADJUSTMENTS Consolidated
INC. LIMITED (NOTE 2) Balances
<S> <C> <C> <C> <C> <C>
Revenues $25,585 $21,890 - $47,475
Expenses:
Direct costs 19,229 17,541 - 36,770
Selling, general and
administrative 3,016 1,728 - 4,744
Depreciation and
amortization 894 999 359 (a) 2,252
Interest 1,162 - 1,456 (b) 2,618
24,301 20,268 1,815 46,384
Income (loss) before income
tax provision 1,284 1,622 (1,815) (1,091)
Income tax provision 238 - - 238
Net income (loss) before
extraordinary items 1,046 1,622 (1,815) 853
Extraordinary gain related
to early extinguishment
of debt 46 - - 46
Net income $1,092 $1,622 ($1,815) $899
Net income attributable to Common Stock $899
Average number of common shares outstanding 6,394,872
Net income per common share $0.14
</TABLE>
<PAGE>
LYNTON GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 1997
THREE MONTHS ENDED DECEMBER 31, 1997
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1997 is based upon the historical condensed consolidated balance
sheet of Lynton Group, Inc. ("Lynton") and Magec Aviation Limited ("Magec") as
of the date indicated.
The accompanying unaudited Pro Forma Condensed Consolidated Statements of
Operations for the three months ended December 31, 1997 and the year ended
September 30, 1997 are based upon the historical condensed statements of
operations of Lynton for the respective periods and the condensed statements of
operations of Magec for the three months ended December 31, 1997 and the year
ended September 30, 1997.
2. PRO FORMA ADJUSTMENTS
The Pro Forma Condensed Consolidated Balance Sheet as of December 31, 1997
gives effect to the following pro forma adjustments:
(a) To reflect the excess of total financing raised over the cash consideration
paid for Magec and certain acquisition expenses paid at closing.
(b) To adjust Magec asset values to their estimated fair market value as of the
date of acquisition, and the transfer of certain aircraft subject to the Option
Agreements to current assets at their respective option prices, based upon a
preliminary allocation of the purchase price.
(c) To reflect the allocation of the excess of the purchase price of Magec over
the estimated fair market value of the net assets acquired.
(d) To reflect the remaining acquisition costs to be paid post closing.
(e) To reflect the finance raised for the purchase price, including acquisition
costs, for Magec.
(f) To reflect the issuance of the Subordinated Convertible Debentures used to
purchase Magec.
(g) To reflect the increase in deferred tax provision related to the fixed
assets of Magec.
(h) To eliminate the Magec equity.
<PAGE>
The Pro Forma Condensed Consolidated Statements of Operations for the three
months ended December 31, 1997 and the year ended September 30, 1997 give
effect to the following pro forma adjustments:
(a) Represents amortization of goodwill, associated with acquisition of Magec.
(b) Represents interest costs related to debt raised to purchase Magec.
3. EARNINGS PER SHARE
Pro forma average shares outstanding has been based upon the historical
calculation of average shares outstanding of Lynton.
<PAGE>
Exhibit 2.1
THIS AGREEMENT (this "AGREEMENT") is made 5th December, 1997
BETWEEN:-
THE GENERAL ELECTRIC COMPANY, P.L.C. (registered in England No. 67307) having
its registered office at 1 Stanhope Gate, London W1A 1EH ("GEC")
AND
LYNTON GROUP LIMITED (registered in England No. 1755460) having its registered
office at Denham Airport, Hangar Road, Uxbridge, Middlesex UB9 5DF (the
"PURCHASER")
AND
3.LYNTON GROUP INC. incorporated in the State of Delaware, U.S.A. and having
its principal place of business at 9 Airport Road, Morristown Municipal
Airport, Morristown, New Jersey 07960, U.S.A. (the "Guarantor")
WHEREAS:-
GEC as the beneficial owner of the Shares has agreed to sell and transfer the
Shares, and the Purchaser has agreed to purchase them, on the terms and
conditions of this agreement, and the Guarantor has agreed to guarantee the
Purchaser's obligations hereunder
IT IS AGREED AS FOLLOWS:-
1. INTERPRETATION
1.1 The Schedules form part of this agreement and shall have the same force and
effect as if expressly set out in the body of this agreement and any reference
to this agreement shall include the Schedules.
1.2 Certain words and expressions used in this agreement are defined in Schedule
1.
2. SALE AND PURCHASE OF THE SHARES
2.1 GEC shall sell with full title guarantee the Shares and the Purchaser shall
purchase or procure the purchase of the Shares. The Shares shall be free from
all claims, liens, charges, encumbrances and equities whatsoever and shall be
sold with all rights attached or accruing to them at Completion including,
without limitation, the right to receive all dividends, distributions or any
return of capital hereafter declared, paid or made in respect of periods
commencing on or after Completion.
3. CONSIDERATION
3.1 The total consideration for the sale of the Shares shall be the payment by
the Purchaser to GEC of the Purchase Price.
4. DEPOSIT AND COMPLETION
4.1 On execution of this Agreement the Guarantor shall deliver in respect of the
Deposit to GEC <pound-sterling>7 in cash together with a banker's draft in the
sum of <pound-sterling>200,000 and an undertaking from the Purchaser's
Solicitors in the Agreed Form. If the Guarantor shall fail to make delivery as
aforesaid or the Purchaser's Solicitors fail to make available for collection
by GEC on 8 December 1997 a banker's draft in the sum of
<pound-sterling>1,799,993 drawn of The Royal Bank of Scotland plc Threadneedle
Branch, this Agreement shall terminate and be of no effect whatsoever so that
no party shall have any rights hereunder whatsoever (whether for damages,
specific performance or otherwise howsoever) save always that the Purchaser
shall remain liable to pay to GEC forthwith, by way of liquidated damages, the
amount of such part of the Deposit as has not been received by GEC, and the
Guarantor's obligations hereunder with respect to such liability of the
Purchaser shall also remain in full force and effect.
4.2 Completion shall take place on or as soon as reasonably possible following
the Business Day following the delivery to GEC of a letter from the Purchaser
(which shall be delivered by hand) confirming to GEC in the Agreed Form that
the Purchaser is in a position to complete the purchase hereunder in accordance
with the terms hereof Provided that if any such letter is delivered to GEC on
any day outside Working Hours such letter shall be deemed for all the purposes
of this clause 4 to have been delivered to GEC during Working Hours on the next
Business Day which follows the day of actual delivery in which case Completion
shall take place on or as soon as reasonably possible following the Business
Day following the Business Day on which such letter is deemed to have been
delivered to GEC and provided that in any event Completion shall take place on
or before 2nd January 1998.
4.3 At Completion, GEC and the Purchaser shall carry out their respective
obligations listed in Schedule 2 (Completion Arrangements). The business to be
transacted at Completion shall take place in the order set out in Schedule 2,
but so that unless all the business to be transacted at Completion is duly
carried out none of such business shall be treated as having been transacted
and the Purchaser shall not acquire title to the Shares until all of such
business (including without limitation payment of the monies due from the
Purchaser in respect of the Purchase Price at Completion) has been effected.
4.4 If Completion has not taken place on or before 2nd January 1998 (otherwise
than by reason of GEC's default), this Agreement shall terminate and be of no
effect whatsoever, so that no party shall have any rights hereunder whatsoever
(whether for damages, specific performance or otherwise howsoever) save always
for GEC's right to retain the Deposit.
4.5 GEC undertakes to the Purchaser that:-
(i)the business of the Company shall during the period from the date hereof
until Completion or termination of this Agreement pursuant to clause 4.4 be
carried out in all respects in the ordinary course;
(ii)during such period the Company will pay no dividend or dispose of any
tangible fixed assets with a book value in excess of <pound-sterling>50,000;
(iii)until such time as this Agreement has been completed or terminated as
provided in clause 4.4 it will not solicit offers from or carry on any
negotiations with any other person in relation to a sale of the Company;
(iv)during the periods specified in paragraph (i) above, the Company shall
maintain in force insurance on substantially the same terms, covering
substantially the same risks and at substantially the same level of cover as at
the date of this Agreement. GEC has asked its insurance brokers to note the
Purchaser's interest with the underwriters for each insurance policy under
which the Company is insured under the GEC group policies in respect of the
said period and GEC shall account to the Company for the net insurance proceeds
under such policies received by GEC in respect of claims made by the Company.
(v)no person shall during such period be appointed a director of the Company
without the consent of the Purchaser (such consent not to be unreasonably
withheld, having regard to clause 6.6)
Provided that nothing herein shall prevent any variation of the Company's
articles of association for the purposes of facilitating the implementation of
this Agreement.
4.6 The Purchaser shall be entitled to appoint a person reasonably acceptable to
GEC who shall until Completion or the date on which this Agreement shall
terminate pursuant to clause 4.4 be given all reasonable access to the
personnel, offices and premises of the Company and to the materials, books,
accounts and records of the Company (subject to any confidentiality or other
restrictions by which the Company may be bound).
5. GEC'S WARRANTIES AND UNDERTAKINGS
5.1 Subject to clause 7 (Purchasers' Remedies and GEC's Limitations on
Liability) and Schedule 4, GEC warrants to the Purchaser in the terms of the
Warranties at the date of this agreement but gives no further or other
warranties (except as provided by clause 2). It is acknowledged that if the
Purchaser completes the purchase of the Shares hereunder when it has become
aware after the date of this agreement of any matter forming the basis of a
claim for breach of Warranty, then such awareness shall not reduce (below the
amount to which it would otherwise be entitled if it had not become so aware)
the amount of damages to which the Purchaser shall be entitled to claim as a
result.
5.2 Subject to paragraph 2.2 of Schedule 4, each of the Warranties shall be
construed as a separate and independent warranty.
5.3 GEC waives and will procure that it and all other members of the GEC Group
will waive, any rights, remedies, or claims GEC or such other member of the GEC
Group may have against any director of the Company or any Employee with respect
to claims arising out of any information or advice supplied or given to GEC in
connection with the proposed entering into of this agreement or any other
agreement to be entered into pursuant hereto and the sale of the Company, other
than in the case of fraud, wilful misstatement or wilful omission, and in any
event waives and will procure the waiver by all other members of the GEC Group
of any claim of any kind against the Company based on its vicarious liability
for the acts or omissions of the Employees.
5.4 Following Completion, no member of the GEC Group will use any confidential
information concerning the Company which it has obtained by reason of the GEC
Group's ownership of the Company in order to compete with the Company.
5.5 For a period of one year after the Completion Date, no member of the GEC
Group will induce or seek to induce any of the Employees who are managers or
aircrew to become employed, whether as employee, consultant or otherwise by any
member of the GEC Group except for a person who responds to a public
advertisement or who is first approached when no longer an employee of the
Company or a member of the Purchaser's Group.
6. PURCHASER'S WARRANTIES AND UNDERTAKINGS
6.1 The Purchaser warrants to GEC as follows:-
(A)it has the requisite power and authority to enter into and perform this
agreement and the other documents to be executed by it and delivered at
Completion in accordance with this agreement;
(B)this agreement constitutes and the other documents executed by it which are
to be delivered at Completion will, when executed, constitute obligations
binding on it; and
(C)the execution and delivery of, and the performance by the Purchaser of its
obligations under this agreement will not:-
(i)result in a breach of a statutory provision or of any provision of its
memorandum or articles of association;
(ii)result in a breach of any order, judgment or decree of any court or
governmental agency to which it or any member of the Purchaser's Group is a
party or by which it or any member of the Purchaser's Group is bound; or
(iii)require the consent of its shareholders.
6.2.1Without prejudice to paragraph 2(D) to Schedule 2, the Purchaser
undertakes to use its reasonable endeavours to procure that, as soon as
reasonably practicable following Completion, GEC and each other member of the
GEC Group is released from all GEC Securities (if any) and undertakes to hold
GEC, for itself and as trustee for its subsidiaries and the relevant members of
the GEC Group indemnified and to keep it and them indemnified from and against
all actions, claims, proceedings, loss, damage, payments, costs or expenses
incurred by GEC or any member of the GEC Group in relation to or arising out of
any GEC Securities (other than claims by the Purchaser for breach of Warranty
under this Agreement that all GEC Securities have been disclosed).
6.2.2As soon as reasonably practical following GEC being aware of any actual or
potential claim, action or demand against it or any other member of the GEC
Group which is likely to give rise to a claim against GEC or any other member
of the GEC Group in respect of any GEC Security (other than claims by the
Purchaser for breach of warranty under this Agreement that all GEC Securities
have been disclosed) (a "GEC Security Claim"), GEC shall and shall procure that
the relevant member of the GEC Group shall:-
(A)notify the Purchaser in writing of the existence of the GEC Security Claim
and provide the Purchaser with such information in relation thereto as the
Purchaser may reasonably request;;
(B)subject to the Purchaser indemnifying GEC and/or any other relevant member
of its Group to their reasonable satisfaction against all liability, costs,
damages or expenses which may be reasonably and properly incurred thereby, take
such action and give such information and, upon reasonable notice, access to
relevant personnel, premises, chattels, documents and records to the Purchaser
and its professional advisers as the Purchaser may reasonably request and GEC
or the relevant member of the GEC Group shall take such action and give such
information and assistance in order to avoid dispute, resist, mitigate, settle,
compromise, defend or appeal any GEC Security Claim in respect thereof or
adjudication with respect thereto as the Purchaser may reasonably require; and
(C)make no admission of liability, agreement, settlement or compromise with any
third party in relation to any such GEC Security Claim or adjudication without
the prior written consent of the Purchaser (such consent not to be unreasonably
withheld or delayed). If the Purchaser agrees with the third party to settle
or compromise a claim, and GEC refuses to agree to such settlement or
compromise then, if the amount for which the Purchaser subsequently becomes
liable exceeds the figure at which it would have so settled or compromised the
relevant claim, the Purchaser shall not be liable for the excess amount or any
costs incurred since the proposed date of settlement or compromise.
6.3 The Purchaser hereby undertakes that it shall not and shall procure that
neither the Company nor any other member of the Purchaser's Group shall make
any use of any trade marks or business or corporate names consisting of or
incorporating any of the GEC Names and/or any trade mark or business or
corporate name confusingly similar thereto in relation to any goods or services
excluding the name "Magec", provided that in using the name "Magec" neither the
Company nor any other member of the Purchaser's Group shall give any prominence
or emphasis to the letters "GEC".
6.4 The Purchaser further undertakes that, in the case of the GEC Names, as soon
as reasonably practicable and in any event no later than four weeks from
Completion it shall procure the removal of such names from wherever they may
respectively appear in connection with the Company, including (without
limitation) all premises, advertisements, signs, brochures and vehicles which
are used by the Company Provided that immediately on Completion, the Purchaser
shall procure that the Company shall cease to use any stationery, purchase
order, invoice or receipt which bears reference to any of the GEC Names unless
such names have been covered with an appropriate sticker or otherwise been
rendered illegible.
6.5 The Purchaser undertakes that it will prior to Completion make an offer to
Richard Warner to employ him as from Completion on the same terms as or better
than those on which he is at present employed (and GEC shall release him from
his present employment contract accordingly).
6.6 If as contemplated in Schedule 2 the Purchaser shall at Completion have
requested GEC to procure the removal from office of any director of the
Company, the Purchaser shall pay GEC by way of adjustment to the Purchase Price
at Completion (if, at that time, any relevant amount shall have been finally
determined or agreed) or otherwise so soon thereafter as the relevant amount(s)
shall have been finally determined or agreed, the amount of any loss, damage,
payment, costs or expenses which GEC may suffer as a result of procuring any
such removal from office. The provisions of clause 6.2.2 hereof shall apply
mutatis mutandis to any claim which any director may make against GEC in
connection with his removal from office at the request of the Purchaser
pursuant hereto.
7. PURCHASER'S REMEDIES AND GEC'S LIMITATIONS ON LIABILITY
7.1 The Purchaser's right to claim that a Warranty has been breached shall be
limited as set out in sub-clause 7.2 and in Schedule 4 (Limitations on the
GEC's Liability under the Warranties) and no liability shall attach to GEC in
respect of claims under the Warranties or the Tax Covenant, as the case may be,
if and to the extent that such limitations apply.
7.2 The Purchaser shall not be entitled to claim that any fact causes any of the
Warranties to be breached if it was fairly disclosed or deemed to be disclosed
in the Disclosure Letter or in any document delivered as an annexure to the
Disclosure Letter.
7.3 If, following Completion, the Purchaser becomes aware that there has been
any material breach of the Warranties or any other term of this agreement the
Purchaser shall not be entitled to treat this agreement as terminated but shall
be entitled to claim damages under this agreement.
7.4 Each of the parties acknowledges that the restrictions contained in clauses
5.4 and 15 shall continue to apply after the termination of the sale and
purchase of the Shares under this agreement without limit in time.
8. PENSION ARRANGEMENTS
Each of GEC and the Purchaser shall comply with Schedule 5.
9. GUARANTEE
9.1 In consideration of GEC agreeing to sell the Shares on the terms set out in
this agreement, the Guarantor hereby unconditionally and irrevocably guarantees
to GEC as a primary obligor and notwithstanding any want of authority,
invalidity or other defect the due and punctual performance and observance by
the Purchaser of all of its obligations, commitments and undertakings under or
pursuant to this agreement or any other document referred to in it and agrees
to indemnify GEC in respect of any breach by the Purchaser of any of its
obligations, commitments and undertakings under or pursuant to this agreement
or any other document referred to in it. The liability of the Guarantor under
this agreement or any other document referred to in it shall not be released or
diminished by any variation of the terms of this agreement or any other
document referred to in it (whether or not agreed by the Guarantor), any
forbearance, neglect or delay in seeking performance of the obligations hereby
imposed or any granting of time for such performance.
9.2 If and whenever the Purchaser defaults for any reason whatsoever in the
performance of any obligation, commitment or undertaking undertaken or
expressed to be undertaken under or pursuant to this agreement or any other
document referred to in it, the Guarantor shall forthwith upon demand
unconditionally perform (or procure performance of) and satisfy (or procure
satisfaction of) the obligation, commitment or undertaking in regard to which
such default has been made in the manner prescribed by this agreement or any
other document referred to in it and so that the same benefits shall be
conferred on GEC as would have been received if such obligation, commitment or
undertaking had been duly performed and satisfied by the Purchaser.
9.3 This guarantee is to be a continuing guarantee and accordingly is to remain
in force until all the obligations of the Purchaser shall have been performed
or satisfied regardless of the legality, validity or enforceability of any
provisions of this agreement and notwithstanding the winding-up, liquidation,
dissolution or other incapacity of the Purchaser or any change in the status,
control or ownership of the Purchaser. This guarantee is in addition to,
without limiting and not in substitution for, any rights or security which GEC
may now or after the date of this agreement have or hold for the performance
and observance of the obligations, commitments and undertakings of the
Purchaser under or in connection with this agreement or any other document
referred to in it.
9.4 As a separate and independent stipulation, the Guarantor agrees that any
obligation, commitment or undertaking expressed to be undertaken by the
Purchaser (including, without limitation, any moneys expressed to be payable
under this agreement) which may not be enforceable against or recoverable from
the Purchaser by reason of any legal limitation, disability or incapacity on or
of the Purchaser or any fact or circumstance (other than any limitation imposed
by this agreement) shall nevertheless be enforceable against and recoverable
from the Guarantor as though the same had been incurred by the Guarantor and
the Guarantor were the sole or principal obligor in respect thereof and shall
be performed or paid by the Guarantor on demand.
10. REMEDIES AND WAIVERS
10.1 No delay or omission on the part of any party to this agreement in
exercising any right, power or remedy provided by law or under this agreement
or any other documents referred to in it shall:-
(A)impair such right, power or remedy; or
(B)operate as a waiver thereof
without prejudice to the provisions relating to limitations on liability under
the Warranties as set out in clause 7 (Purchasers' Remedies and GEC's
Limitations on Liability) and Schedule 4 (Limitations on GEC's Liability under
the Warranties).
10.2 The single or partial exercise of any right, power or remedy provided by
law or under this agreement shall not preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
10.3 Rights, powers and remedies provided in this agreement are cumulative and
subject as otherwise expressly provided not exclusive of any rights, powers and
remedies provided by law.
11. ASSIGNMENT
11.1 This agreement and the benefits and obligations under it and any part of it
shall not be assignable by the Purchaser except by way of security to a lender
to whom security is given over the Shares and except that the Purchaser may,
upon giving written notice to GEC assign the benefit (but not the burden) of
this agreement to a member of the Purchaser's Group provided that:-
(A)any such assignee remains a member of the Purchaser's Group; and
(B)before such assignee ceases to be a member of the Purchaser's Group, the
Purchaser will procure that the benefit of this agreement is assigned to the
Purchaser or (upon giving further written notice to GEC) to another company
within the Purchaser's Group (any such further assignment to be subject to the
same conditions as above); and
(C)if the liability of GEC shall be increased by reason of such assignment, the
assignee shall be entitled to claim against GEC only such amount as would equal
GEC's liability had no assignment taken place.
11.2 The Warranties shall cease to have any effect for all purposes in relation
to the Company upon the Company ceasing to be owned by a member of the
Purchaser's Group.
12. FURTHER ASSURANCE
Each of the parties shall from time to time, on being required to do so by the
other, now or at any time in the future, execute or procure the execution of
all such documents in a form satisfactory to the party concerned and, except as
provided elsewhere in, and subject to the terms of, this agreement, each of the
parties shall, at its own expense do or, so far as it is able, procure to be
done, all such acts as the parties may, in each such case, reasonably consider
necessary for giving full effect to this agreement and securing to the
Purchaser or GEC (as the case may be) the full benefit of the rights, powers
and remedies conferred upon them in this agreement.
13. ENTIRE AGREEMENT
13.1 This agreement, the Tax Covenant, the Disclosure Letter and any other
documents referred to in this agreement constitute the whole and only agreement
between the parties relating to the sale and purchase of the Shares and, save
to the extent expressly set out in this agreement, supersedes and extinguishes
any prior drafts, agreements, undertakings, representations, warranties,
promises, assurances and arrangements of any nature whatsoever, whether or not
in writing relating thereto.
13.2 Each party acknowledges that save to the extent expressly set out in this
agreement, in entering into this agreement, the Tax Covenant, the Disclosure
Letter and any other documents referred to in this agreement on the terms set
out therein, it is not relying upon any agreement, undertaking, representation,
warranty, promise, assurance or arrangement made or given by any other party or
any other person, whether or not in writing, at any time prior to the execution
of this agreement (including without limitation any statement made, information
given or opinion expressed in the Information Memorandum or in any document in
the Data Room) or any warranty or condition implied by statute or otherwise and
no representations or warranties are given by GEC save for the Warranties, and
Clause 2.
13.3 None of the parties shall have any right of action against the other party
to this agreement arising out of or in connection with any agreement,
undertaking, representation, warranty, promise, assurance or arrangement
referred to in sub-clause 13.1 or 13.2 above (except in the case of fraud and
save to the extent expressly set out in this agreement).
13.4 The parties have entered into this agreement in reliance on the express
terms hereof. In the event of either GEC or the Purchaser proving that in
entering into this agreement or fulfilling its obligations hereunder it has
acted in reliance on a statement fraudulently made by the other or would have
acted differently but for the fraudulent withholding of information by the
other, the parties acknowledge that the provisions of this agreement shall have
effect only to the extent consistent with applicable law and shall not limit in
any way the rights of GEC or the Purchaser (as the case may be) against the
other in respect of such statement or withholding of information.
14. NOTICES
14.1 Any notice or other communication given or made under or in connection with
the matters contemplated by this agreement shall, unless expressly stated
otherwise, be in writing, other than writing on the screen of a visual display
unit or other similar device which shall not be treated as writing for the
purposes of this clause.
14.2 Any such notice or other communication shall be addressed as provided in
sub-clause 14.3 and sent by personal delivery or by first class post or airmail
(if overseas) and, in the case of personal delivery, shall be deemed given or
made at the time of delivery or, in the case of a notice or communication sent
by first class post or airmail, shall be deemed given or made on the next
Business Day after posting (in the case of first class post) or the fifth
Business Day after posting (in the case of airmail) Provided that if, in
accordance with the above provisions, any such notice or other communication is
given or made outside Working Hours, such notice or other communication shall
be deemed to be given or made at the start of Working Hours on the next
Business Day.
14.3The relevant addressee and address of each party for the purposes of this
agreement, subject to sub-clause 14.4, are:-
<TABLE>
<CAPTION>
NAME OF PARTY Addressee Address
<S> <C> <C>
GEC Company Secretary 1 Stanhope Gate,
London, W1A 1EH
The Purchaser Company Secretary Denham Airport,
Hangar Road,
Uxbridge,
Middlesex,
UB9 5DF
The Guarantor President 9 Airport Road,
Morristown Municipal Airport,
Morristown,
New Jersey 07960, USA
</TABLE>
14.4 A party may notify the other parties to this agreement of a change to its
name, relevant addressee or address for the purposes of sub-clause 14.3
Provided that such notification shall only be effective on:-
(A)the date specified in the notification as the date on which the change is to
take place; or
(B)if no date is specified or the date specified is less than five clear
Business Days after the date on which notice is given, the date falling five
clear Business Days after notice of any such change has been given.
15. ANNOUNCEMENTS
15.1 Subject to sub-clause 15.2, no public announcement concerning the sale of
the Shares or any ancillary matter shall be made by either party without the
prior written approval of the other, such approval not to be unreasonably
withheld or delayed.
15.2 Any party may make a public announcement concerning the sale of the Shares
or any ancillary matter if required by the law of any relevant jurisdiction or
any securities exchange or regulatory or governmental body to which either
party or any connected person is subject, wherever situated, including (without
limitation) the London Stock Exchange or the Panel, whether or not the
requirement has the force of law, PROVIDED THAT any such announcement shall be
made only after consultation with the other party (if practicable).
15.3 The parties shall release a press announcement in the Agreed Form as soon
as reasonably practical following the signature of this Agreement.
15.4 The restrictions contained in this clause shall continue to apply after
Completion without limit in time.
16. RESTRICTIVE TRADE PRACTICES ACT 1976
If there is any provision of this agreement, or of any agreement or arrangement
of which this agreement forms part, which causes or would cause this agreement
or that agreement or arrangement to be subject to registration under the
RTPA 1976, then that provision shall not take effect until the day after
particulars of this agreement or of that agreement or arrangement (as the case
may be) have been furnished to the Director General of Fair Trading pursuant to
section 24 RTPA 1976.
17. COSTS AND EXPENSES
The Purchaser shall bear and pay the cost of all stamp duty, stamp duty reserve
tax and other similar duty or tax and all registration fees which may result
from the execution of this agreement and the other agreements entered into
pursuant hereto for the transfer of the Shares to the Purchaser. Save as
otherwise stated in this clause or in any other provision of this agreement,
each party shall pay its own costs and expenses in relation to the negotiations
leading up to the sale of the Shares and in relation to the preparation,
execution and carrying into effect of this agreement and all other documents
referred to in it.
18. COUNTERPARTS
18.1 This agreement may be executed in any number of counterparts, and by the
parties on separate counterparts, but shall not be effective until each party
has executed at least one counterpart.
18.2 Each counterpart shall constitute an original of this agreement, but all
the counterparts shall together constitute but one and the same instrument.
19. TIME OF ESSENCE
Time is of the essence of each provision of this agreement.
20. INVALIDITY
If at any time any provision of this agreement is or becomes illegal, invalid
or unenforceable in any respect under the law of any applicable jurisdiction,
then such provision will be deemed to be severed from this agreement and if
possible replaced by a lawful provision which carries out, as closely as
possible, the intention of the parties under this agreement and where
permissible that shall not affect or impair:-
(A)the legality, validity or enforceability in that jurisdiction of any other
provision of this agreement; or
(B)the legality, validity or enforceability under the law of any other
jurisdiction of that or any other provision of this agreement.
21. GOVERNING LAW
This agreement shall be governed by and construed in accordance with English
law.
22. JURISDICTION
Each party to this agreement irrevocably agrees that any Proceedings against it
may be brought in the courts of England. Nothing contained in this clause
shall limit either party's rights to take Proceedings against the other in any
other court of competent jurisdiction, nor shall the taking of Proceedings in
one or more jurisdictions preclude the taking of Proceedings in any other
jurisdiction, whether concurrently or not, to the extent permitted by the law
of such other jurisdiction.
23. AGENT FOR SERVICE
23.1 The Guarantor irrevocably appoints the Purchaser to be its agent for the
service of process in England. It agrees that any Service Document may be
effectively served on it in connection with Proceedings in England and Wales by
service on its agent.
23.2 Any Service Document shall be deemed to have been duly served if marked for
the attention of the Company Secretary at the registered office for the time
being of the Purchaser or such other address within England or Wales as may be
notified and:
(A)left at the specified address; or
(B)sent to the specified address by first class post.
In the case of (A), the Service Document shall be deemed to have been duly
served when it is left. In the case of (B), the Service Document shall be
deemed to have been duly served two clear Business Days after the date of
posting.
23.3 If the agent at any time ceases for any reason to act as such, the
Guarantor shall appoint a replacement agent having an address for service in
England or Wales and shall notify GEC of the name and address of the
replacement agent. Failing such appointment and notification, GEC shall be
entitled by notice to the Purchaser to appoint a replacement agent to act on
the Guarantor's behalf. The provisions of this clause applying to service on
an agent apply equally to service on a replacement agent.
23.4 A copy of any Service Document served on an agent shall be sent by post to
the Guarantor. Failure or delay in so doing shall not prejudice the
effectiveness of service of the Service Document.
23.5 "Service Document" means a writ, summons, order, judgment or other process
document issued out of the courts of England and Wales relating to or in
connection with any Proceedings.
AS WITNESS the hands of the duly authorised representatives of the parties the
day and year first above written.
<PAGE>
SCHEDULE 1:
Definitions
(A)In this agreement, unless otherwise specified the following terms and
expressions shall have the following respective meanings:-
<TABLE>
<CAPTION>
<S> <C>
"ACCOUNTS" the audited financial statements of the Company for the year
ended on the Accounts Date, including a balance sheet and
profit and loss account, copies of which are attached to the
Disclosure Letter;
"ACCOUNTS DATE" 31st March, 1997;
"AGREED FORM" in relation to any document, such document in a form agreed
and initialled for the purposes of identification by the
Purchaser's Solicitors on behalf of the Purchaser and GEC's
Solicitors on behalf of GEC;
"THE PURCHASER'S
SOLICITORS" Macfarlanes;
"BUSINESS DAY" means a day (other than a Saturday, a Sunday or Christmas
Eve) on which banks are open for business in London;
"CAA AND FAA
APPROVALS" means the Air Operator's Certificate Number 565, Operating
Licence (Type B) Number OL/B/219 and Airworthiness Authority
Approvals DAI/9172/88 and JAR-145 Approval (CAA, 00056)
issued to the Company by the Civil Aviation Authority and the
Repair Station Certificate MGTY 330K issued to the Company by
the Federal Aviation Administration;
"CODE" The City Code on Take-overs and Mergers;
"COMPANIES ACTS" the Companies Act 1985, the Company Securities (Insider
Dealing) Act 1985, the Companies Consolidation (Consequential
Provisions) Act 1985 and the Companies Act 1989;
"COMPANY" Magec Aviation Limited, of which particulars are given in
Schedule 7;
"COMPLETION" completion of the sale and purchase of the Shares under this
agreement;
"COMPLETION DATE" the date on which Completion occurs;
"DATA ROOM" the data room established at the offices of GEC's Solicitors
in connection with the transaction effected by this
Agreement;
"DEPOSIT" <pound-sterling>2,000,000 (two million pounds sterling);
"DISCLOSURE
LETTER" the letter dated the date of this Agreement written by GEC to
the Purchaser for the purposes of clause 7 and delivered to
the Purchaser's Solicitors contemporaneously with the
execution of this agreement;
"EMPLOYEES" the persons employed by the Company;
"ENVIRONMENT" any and all organisms (including without limitation man),
ecosystems, property and the following media: air, (including
without limitation, the air within buildings and the air
within other natural or man-made structures whether above or
below ground); water (including without limitation, water
under or within land or in drains or sewers and coastal and
inland waters); and land (including without limitation, land
under water);
"ENVIRONMENTAL
LAWS" any and all applicable laws in the relevant jurisdiction
(excluding those laws relating specifically to town planning
matters and to the health and safety of workers in the work
place) including European Community or European Union
regulations, directives and decisions; statutes and
subordinate legislation (which for the avoidance of doubt
(notwithstanding paragraph 3.7 of Schedule 4 to this
agreement) shall include Part IIA of the Environmental
Protection Act 1990 and/or Sections 161A - D of the Water
Resources Act 1991 (both Acts as enacted by Section 57 and
paragraph 162 of Schedule 22 respectively of the Environment
Act 1995) and the first set of guidance notes and regulations
adopted under those provisions (but not subsequent
modifications, amendments or re-enactments of those
provisions or guidance notes or such regulations) which are
applicable to the conduct of the business of the Company and
which have as a purpose or effect the protection of, and/or
the prevention of Harm or Damage to, the Environment and/or
the provision of remedies in respect of Harm or Damage to the
Environment;
"ENVIRONMENTAL
WARRANTY" any warranty contained in paragraph 21 of Schedule 3;
"GEC'S SOLICITORS"Slaughter and May;
"GEC GROUP" GEC and all subsidiaries or subsidiary undertakings from time
to time of GEC (other than the Company);
"GEC NAMES" the names GEC, General Electric and General Electric Company;
"GEC SCHEME" the retirement benefits scheme established by GEC and known as
the "GEC 1972 Plan" established by a Definitive Trust Deed and
Rules dated 4th March, 1982 as amended.
"GEC SECURITIES" guarantees, indemnities, performance bonds or other security
or contingent obligation in the nature of a financial
obligation which have or may have been given by GEC or any
other member of the GEC Group to secure any obligation of the
Company;
"ICTA 1988" the Income and Corporation Taxes Act 1988;
"IHTA 1984" the Inheritance Tax Act 1984;
"INFORMATION
MEMORANDUM" the information memorandum dated August 1997 and published in
connection with the transaction effected by this Agreement;
"INTELLECTUAL
PROPERTY" means patents, trade marks and service marks, rights in
designs, trade or business names or signs, copyrights
(including rights in computer software) compilation rights,
rights in any database and topography rights (whether or not
any of these is registered and including applications for
registration of any such thing) and all rights or forms of
protection of a similar nature or having an equivalent or
similar effect to any of these which may subsist anywhere in
the world;
"LONDON STOCK
EXCHANGE" the London Stock Exchange Limited;
"PANEL" the Panel on Take-overs and Mergers;
"PERMITS" as at the date of this agreement any and all licences,
consents, permits, authorisations or the like, made or issued
pursuant to or under, or required by, Environmental Laws in
relation to the conduct of the business of the Company;
"PRE-SALE
DIVIDEND" the <pound-sterling>1,750,000 dividend declared and paid by the Company on
20th August, 1997;
"PROCEEDINGS" any proceeding, suit or action arising out of or in connection
with this agreement;
"PROPERTY" all the leasehold property described in Schedule 8;
"PURCHASE PRICE" 17,000,000 (seventeen million pounds sterling), subject to
adjustment as provided in clause 6.6;
"PURCHASER'S
GROUP" the Purchaser and all subsidiaries or subsidiary undertakings
from time to time of the Purchaser;
"RTPA 1976" the Restrictive Trade Practices Act 1976;
"SHARES" the entire issued share capital of the Company at Completion;
"TAX COVENANT" the tax covenant referred to in Schedule 2 and set out in
Schedule 5;
"TCGA 1992" the Taxation of Chargeable Gains Act 1992;
"TULRCA" the Trade Union and Labour Relations Consolidation Act 1992;
"TRANSFERORS" GEC-Marconi Limited and Associated Electrical Industries
Limited;
"VAT" value added tax;
"VATA 1994" the Value Added Tax Act 1994;
"WARRANTIES" the warranties set out in Schedule 3 (Warranties) given by GEC
and "WARRANTY" shall be construed accordingly;
"WORKING HOURS" 9.30 a.m. to 5.30 p.m. on a Business Day.
</TABLE>
(B)In this agreement, unless otherwise specified:-
(i)references to clauses, sub-clauses, paragraphs, sub-paragraphs, and
schedules are to clauses, sub-clauses, paragraphs, sub-paragraphs of, and
schedules to, this agreement;
(ii)a reference to any statute or statutory provision shall be construed as a
reference to the same as it may have been, or may from time to time be,
amended, modified or re-enacted except to the extent that any amendment or
modification made after the date of this agreement would increase or alter the
liability of any party under this agreement;
(iii)references to "TAX" or "TAXATION" include, without limitation, all taxes,
levies, duties, imposts, charges and withholdings of any nature whatsoever,
whether of the United Kingdom or elsewhere, together with all penalties,
charges and interest relating to them;
(iv)references to a "COMPANY" shall be construed so as to include any company,
corporation or other body corporate, wherever and however incorporated or
established;
(v)references to a "PERSON" shall be construed so as to include any individual,
firm, company, government, state or agency of a state or any joint venture,
association or partnership (whether or not having separate legal personality);
(vi)the term "RELIEF" shall bear the same meaning as in the Tax Covenant;
(vii)a person shall be deemed to be connected with another if that person is
connected with another within the meaning of section 839 ICTA 1988;
(viii)references to writing shall include any modes of reproducing words in a
legible and non-transitory form;
(ix)references to the knowledge or awareness of GEC (or any similar expression)
in relation to the Warranties shall be deemed to refer to the actual knowledge
of the GEC Group Taxation Manager (in relation to Tax), the GEC Group
Environmental Manager (in relation to the Environment), the GEC Group Estates
Manager (in relation to other matters concerning the Property), the GEC Group
Pensions Manager (in relation to pensions) and of GEC having made enquiries of
R.O. Warner, Captain M.P. Hyde, P.D. Mainprize, K.A. Atkinson and T.J. King;
(x)references to the knowledge or awareness of the Purchaser (or any similar
expression) in relation to the Warranties shall be deemed to refer to the
actual knowledge of P. Dupee, C. Tennant, P. Boyd, S. Borrowdale, G. Holden and
M. Underwood;
(xi)words or phrases beginning with the introduction of the word "include" or
"including" are to be interpreted without limitation;
(xii)references to times of the day are to London time (except in the
definition of Working Hours for the purposes of service of notice on the
Guarantor, where they are references to Eastern Standard Time);
(xiii)headings to clauses and schedules are for convenience only and do not
affect the interpretation of this agreement; and
(xiv)the schedules and any attachments (but not the Tax Covenant) form part of
this agreement and shall have the same force and effect as if expressly set out
in the body of this agreement, and any reference to this agreement shall
include the schedules.
