<PAGE> 1
EXHIBIT 2.1
SHARE PURCHASE AGREEMENT
among
PLEXUS CORP.
LYCIDAS (323) LIMITED
and
M. JARMAN AND OTHERS
re
KELTEK (HOLDINGS) LIMITED
McCLURE NAISMITH
292 St. Vincent Street
GLASGOW G2 5TQ
Tel: 0141 204 2700
Fax: 0141 248 3998
GWF: 7851.1
<PAGE> 2
SHARE PURCHASE AGREEMENT
among
LYCIDAS (323) LIMITED, a Company incorporated under
the Companies Acts under registered number 207527 and
having its registered office at 292 St Vincent
Street, Glasgow, G2 5TQ (hereinafter referred to as
"the Purchaser") OF THE FIRST PART
PLEXUS CORP., a corporation incorporated in the state
of Wisconsin having its registered office at PO Box
156, 55 Jewelers Park Drive, Neenah, Wisconsin,
54957-0156, United States of America (hereinafter
referred to as "the Guarantor") OF THE SECOND PART
and
The persons whose names and addresses are set out in
Part 1 of the Schedule hereto (hereinafter referred
to as "the Vendors") OF THE THIRD PART
WHEREAS
(A) Keltek (Holdings) Limited (hereinafter called "the Company") is
incorporated in Scotland under the Companies Acts under registration
number 146948 with its Registered Office at Pinnacle Hill, Kelso,
Roxburghshire, TD5 8DW; fuller particulars of the Company are set out
in the Schedule Part 1A hereof;
(B) the Vendors are the registered holders and beneficial owners of the
Shares in the proportions specified in Column 2 of Part 1 of the
Schedule hereto;
(C) the Purchaser wishes in reliance on the warranties, undertakings and
representations narrated in the following Agreement to acquire the
Shares from the Vendors and the Vendors wish to sell the same to the
Purchaser upon and subject to the terms and conditions set out below.
NOW THEREFORE IT IS HEREBY AGREED AS FOLLOWS:-
1 DEFINITIONS
1.1 In this Agreement and the Schedule hereto, unless the context
otherwise requires:
<PAGE> 3
2
"the "A" Ordinary Shares" means the "A" Ordinary Shares of
pound sterling 1 each in the capital of the Company;
"the Accounts" means the audited consolidated Balance Sheet of
the Company and the Subsidiaries as at the Accounts Date and
the audited consolidated Profit and Loss Account of the
Company and the Subsidiaries for the twelve month period
ending on the Accounts Date;
"the Accounts Date" means 31 March 2000;
"the Accrued Dividend" means the dividend accrued up to
Completion on the Preference Shares and the fixed dividend on
the "A" Ordinary Shares payable to the Institutional Vendors;
"the Agreement for Lease" means the agreement entered into
between the Company and The Scottish Borders Council dated 9
February 2000 and 30 March 2000 relative to the site at
Pinnacle Hill Industrial Estate extending to 2.637 hectares or
thereby and shown edged red on the plan annexed and executed
as relative thereto;
"the Auditors" means the auditors to the Company and the
Subsidiaries, Pricewaterhouse Coopers, Leeds;
"the Act" means the Companies Act 1985 as amended by the
Companies Act 1989;
"in the agreed form/terms" means with reference to any
document its form and/or terms having been agreed and
initialled between the Purchaser's Solicitors and the Vendors'
Solicitors at or prior to Completion;
"a business day(s)" means any day upon which the Clearing
Banks in Scotland are open for business;
"the Bonus Agreement" means the agreement in the agreed form
between the Company, the Warrantors, the Purchaser and the
Guarantor relating to the payment of certain bonuses by the
Company;
"the Certificate of Title" means the certificate of title in
the agreed form by McGrigor Donald in respect of the title to
the New Kelso Property;
"Completion" means the completion of the sale and the purchase
of the Shares as specified in Clause 5 hereof;
"the Completion Date" means 14 July 2000;
<PAGE> 4
3
"Computer Systems" means any and all computer hardware,
including but not limited to peripherals, storage, media and
communication links, owned and/or used by the Company;
"Computer Software" means any and all computer software and/or
computer programs, including but not limited to source code,
object code and databases, owned and/or used by the Company;
"the Consideration" means the amount payable for the Shares to
be paid or satisfied by the Purchaser in the manner specified
at Clause 5.2;
"the Consultancy Agreement" means the agreement dated 1
December 1993 (as subsequently amended) between the Company
and Andrew Macfarlane;
"the Disclosure Letter" means the letter in the agreed form
from or on behalf of the Warrantors to the Purchaser's
Solicitors intimating certain disclosures against the
Warranties;
"the Employees" means the Employees of the Group at
Completion, full details of whom are annexed to the Disclosure
Letter;
"Environmental Laws" means all or any relevant statutes,
rules, regulations, statutory instruments, directives,
by-laws, legally binding codes of practice, orders, notices,
demands, statute law or common law, statutory or common law
duty of care, in force at Completion of any governmental
authority or agency or any regulatory or other body of
competent jurisdiction including without limitation the
Sewerage (Scotland) Act 1968, the Alkali Etc. Works Regulation
Act 1906, the Clean Air Acts 1956 and 1968, the Control of
Pollution Act 1974 and the Environmental Protection Act 1990
and the Environment Act 1995;
"the Fundshare Scheme" means the bonus scheme as more fully
described in the Memorandum dated 11 October 1998 issued by
the Company, a copy of which and any amendment to which, is
attached to the Disclosure Letter;
"Group" means the group of companies of which the Company is a
member immediately prior to Completion; and "Group Company"
shall be construed accordingly;
"Institutional Vendors" means 3i Group plc, CNW Nominees Ltd,
and Nat West Ventures Investments Ltd, as more fully designed
in the Schedule Part 1;
"Intellectual Property" means all know-how, patents, trade
marks, service marks, registered designs, applications for any
of the foregoing, trade or business names, unregistered design
rights or copyright, rights in the nature of copyright or any
other
<PAGE> 5
4
industrial, commercial or intellectual property rights;
"Interest" means that (with the exception of interest payable
pursuant to Clause 4.2 hereof) where interest is to be paid in
terms of this Agreement it shall be paid at four per centum
per annum above the base rate charged from time to time for
unsecured borrowing by Bank of Scotland, except where
otherwise expressly provided;
"the Leased Properties" means each of (a) Unit 6, Pinnacle
Hill Industrial Estate, Kelso, (b) 5 Abbotsford Court, Kelso
and (c) the New Kelso Property;
"the Heritable Property" means the factory premises at
Pinnacle Hill Industrial Estate, Kelso currently heritably
vested in the Company;
"Knowhow" means all data and information of any Group Company,
whether confidential or not including but not limited to
inventions, discoveries, improvements, processes, formulae,
techniques, designs, specifications, drawings, component
lists, manuals, instructions, whether in written or unwritten
form or electronic or other media;
"the Loan Note Guarantee" means the guarantee in the agreed
form (or in such other form as the Warrantors and the
Purchaser may approve in writing) by the Loan Note Guarantor
in respect of the Loan Notes;
"the Loan Note Guarantor" means such bank as is referred to in
Clause 5.4;
"the Loan Note Instrument" means the instrument constituting
pound sterling 4,704,773 in Loan Notes of the Company, in the
agreed form;
"the Loan Notes" means pound sterling 4,704,773 Loan Notes in
partial satisfaction of the Consideration to be issued subject
to the terms of the Loan Note Instrument;
"the Maldon Property" means the freehold property at Maldon,
Essex more fully described in the Schedule Part 2;
"the Management Accounts" means the management accounts of the
Group for the period from 1 April 2000 to 26 May 2000
inclusive;
"the New Kelso Property" means the factory premises at
Pinnacle Hill Industrial Estate, Kelso currently being
constructed and thereafter to be leased to the Company
pursuant to the Agreement for Lease;
"the Ordinary Shares" means the Ordinary Shares of pound
sterling 1 each in the capital of the Company;
<PAGE> 6
5
"Pension Scheme" means the Keltek Electronics Group Personal
Pension Plan;
"the Planning Acts" means (in relation to the Scottish
Properties) the Town and Country Planning (Scotland) Act 1997,
the Planning (Hazardous Substances) (Scotland) Act 1997, the
Planning (Listed Buildings and Conservation Areas) (Scotland)
Act 1997, and the Planning (Consequential Provisions)
(Scotland) Act 1997 and in respect of the Maldon Property, the
planning acts as defined in s336 of the Town and Country
Planning Act 1990;
"the Preference Bonus Scheme" means the bonus arrangements
more fully described in the letter(s) dated on or about 21
August 1995 from the Company an example of which is annexed to
the Disclosure Letter;
"the Preference Shares" means the A Preference Shares of pound
sterling 1 each of the Company and the B Preference Shares of
1 pence each of the Company;
"the Properties" means each of the Leased Properties, the
Heritable Property and the Maldon Property of which brief
particulars are given in Part 2 of the Schedule hereto;
"the Purchaser's Solicitors" means Messrs McClure Naismith,
292 St. Vincent Street, Glasgow G2 5TQ;
"the Shares" means the Ordinary Shares, the A Ordinary Shares
and the Preference Shares;
"the Shareholders Agreement" means the agreement amongst the
Vendors and the Company dated 1 December 1993, as same may
have been varied from time to time;
"the Scottish Properties" means the Leased Properties and the
Heritable Property;
"Subsidiaries" means the Subsidiaries of the Company
particulars of which are set out in Part 1A of the Schedule
hereto;
"the Supplemental Disclosure Letter" means the letter in the
agreed form dated as of the Completion Date (but with
reference only to issues which have arisen between the date of
this Agreement and Completion) from or on behalf of the
Warrantors to the Purchaser's Solicitors intimating certain
disclosures against the Warranties;
"tax" and "taxation" means, income tax, corporation tax,
capital gains tax, value added tax, national insurance
contributions, customs, excise and other import duties, stamp
duty, stamp duty reserve tax, inheritance tax, uniform
business rates, insurance premium tax, landfill tax and all
and any other taxes howsoever designed and including all
interest, penalties, charges and fines relative thereto
whether such tax is imposed by central or local government and
in any relevant jurisdiction;
<PAGE> 7
6
"the Taxes Act" or "ICTA 1988" means the Income and
Corporation Taxes Act 1988 and any amendment or re-enactment
or replacement thereof and references to provisions contained
in the Taxes Act include references to provisions contained in
earlier enactments including, without prejudice to the
foregoing generality the Income and Corporation Taxes Act 1970
("ICTA 1970"), as amended or re-enacted by the Taxes Act and
amendments or re-enactments or replacements of such provisions
of the Taxes Act;
"the Tax Undertaking" means the tax undertaking in the terms
set out in Part 4 of the Schedule hereto;
"TCGA" means the Taxation of Chargeable Gains Act 1992;
"the Vendors' Solicitors" means Addleshaw Booth & Co, Leeds;
"the Warranties" means the Warranties, representations and
undertakings contained in Clause 6 hereof and in Part 3 of the
Schedule hereto;
"the Warrantors" means each of A P Allen, M Jarman, T Q Ford
and A Macfarlane, all as more fully designed in the Schedule
Part 1;
1.2 Except where otherwise expressly stated references in this
Agreement to statutory provisions shall be construed as
references to those provisions as modified or re-enacted from
time to time whether before or after the date of this
Agreement, and to any subordinate legislation made under such
provision and shall include references to any repealed
statutory provision which has been so re-enacted.
1.3 Where the context so admits or requires words used herein
importing the singular shall be deemed to include the plural
and vice versa; the masculine gender shall be deemed to
include the feminine gender and vice versa; and a person shall
be deemed to include a company, partnership or any form of
incorporation.
1.4 References in this Agreement to any information, fact or
matter having been "disclosed" shall be deemed to refer, and
to refer only, to information, facts or matters fairly and
accurately set out in the Disclosure Letter or the
Supplemental Disclosure Letter with sufficient particularity
to enable the Purchaser to assess the impact on the Company of
the matter disclosed.
1.5 Words and phrases defined in the Act shall have the same
meanings in this Agreement unless they are otherwise defined
in this Agreement or unless the context or subject matter
otherwise requires.
1.6 Any reference to accounts of whatsoever nature shall include
any notes, reports or
<PAGE> 8
7
documents annexed thereto.
1.7 Clause headings are for convenience only and shall be ignored
in construing the Agreement.
1.8 Where in this Agreement reference is made to "the Company"
such shall where the context permits be deemed to include
references to the Company and all or any of the Subsidiaries.
2 SALE OF THE SHARES
The Vendors shall sell as beneficial owners free from all liens,
charges and encumbrances to the Purchaser and the Purchaser, relying on
the representations, warranties, indemnities and undertakings herein
contained, shall purchase the Shares from the Vendors with effect from
the Completion Date to the intent that (except as herein provided or
implied) all rights and advantages accruing thereto including any
dividends or distributions hereafter declared or paid on the Shares
shall belong to the Purchaser. For the avoidance of doubt,
notwithstanding any provision of the current Articles of Association of
the Company the Preference Shares shall not be redeemed prior to
Completion. The Vendors hereby waive all pre-emption or other rights in
connection with or in restriction of the transfer of the Shares to
which they may under the Articles of Association of the Company or
otherwise be entitled.
3 ALL SHARES TO BE SOLD
Without prejudice to the obligations of the Purchaser under this
Agreement the Purchaser shall not be obliged to complete the purchase
of any of the Shares unless the purchase of all of the Shares is
completed simultaneously, and if such sale is not completed on the
Completion Date then the Purchaser shall be entitled to rescind this
Agreement without liability of any kind.
4 CONSIDERATION
The Consideration for the purchase by the Purchaser of the Shares shall
be pound sterling 17,162,643.10. Of the Consideration, pound sterling
12,457,870.10 shall be payable in cash at Completion in the manner
specified in Clause 5.2 and pound sterling 4,704,773 will be satisfied
by the issue at Completion, fully paid of Loan Notes in the amounts set
against the names of the Warrantors in the Schedule Part 1. The
allocation of the Consideration in cash and Loan Notes shall be as set
out in the Schedule Part 1 and the Purchaser shall not otherwise have
any concern as to the allocation of the Consideration amongst the
Vendors. That part of the Consideration payable to the Institutional
Vendors is inclusive of the amount of Accrued Dividends plus interest
due to them as at the Completion Date.
5 COMPLETION
5.1 At or prior to Completion (which shall take place at the
offices of the Purchaser's
<PAGE> 9
8
Solicitors on the Completion Date) the Vendors shall:
5.1.1 procure the execution and delivery of transfers, with
certificates in support, of the Shares in favour of
the Purchaser or its nominee(s);
and the Vendors (other than the Institutional
Vendors) shall:
5.1.2 procure subject to stamping of the Stock Transfers
the registration (at a duly convened Board Meeting of
the Company) of the Purchaser and/or its nominees as
members of the Company and as holders of the Shares
and shall procure the issue to them of the relative
share certificates;
5.1.3 procure the delivery to the Purchaser of the
Certificate of Incorporation, any Certificates of
Incorporation on Change of Name and the Statutory
Books of the Company, the titles to the Heritable
Property and the Maldon Property (subject to the
rights of any secured creditor), the original leases
of the Leased Properties (other than the New Kelso
Property), the original Agreement for Lease, all
other Documentation relating thereto held by the
Company or the Vendors' Solicitors and all
authorisations obtained by the Company in connection
with its business, and all other books, records and
vouchers of the Company;
5.1.4 execute and deliver to the Purchaser the Tax
Undertaking;
5.1.5 procure the appointment of Tom Sabol, Joe Kaufman and
John Nussbaum as Directors of the Company and if the
Purchaser so requires, of the Subsidiaries;
5.1.6 procure the resignation of Andrew Macfarlane as a
Director and a discharge in agreed terms of the
Consultancy Agreement acknowledging that he has no
claim against any company in the Group for breach of
contract, compensation for loss of office,
redundancy, unfair dismissal or otherwise (except as
specified in such agreement), all such claims being
waived therein and Michael Jarman, Tim Ford, Andrew
Allan, J Reardon-Smith and M Merritt shall each enter
into new Service Agreements with the Company in the
agreed form by not later than 10 July 2000;
5.1.7 deliver to the Purchaser irrevocable powers of
attorney in the agreed form executed by the
Warrantors appointing the Purchaser to be their
lawful attorney to receive notice of and attend and
vote at all meetings of the members of the Company
pending registration of the transfer of the Shares
hereunder;
5.1.8 procure that all existing instructions to bankers
shall be revoked and shall be
<PAGE> 10
9
replaced with alternative instructions in such form
as the Purchaser may require;
5.1.9 procure the delivery from McGrigor Donald of the
Certificate of Title;
5.1.10 execute and deliver to the Purchaser or the
Purchaser's Solicitors the Supplemental Disclosure
Letter;
5.1.11 deliver copies of all bank, building society and
other deposit accounts of the Company as at a date
not earlier than two business days prior to the
Completion Date together with statement(s)
reconciling such balances to reflect payments made
out of, or cheques written against, such accounts and
payments made into such accounts or cheques received
prior to close of business two business days before
the Completion Date; and
5.1.12 execute and deliver to the Purchaser the Bonus
Agreement and procure the execution and delivery of
such Agreement by the Company.
5.2 The Purchaser shall at Completion in exchange for the Vendors
carrying out their obligations in terms of Clause 5.1 hereof:-
5.2.1 pay the sum of pound sterling 12,457,870.10 by
electronic transfer of funds from the Purchaser's
bankers to the Vendors' Solicitors, whose receipt
whereof shall be a full and complete discharge in
favour of the Purchaser;
5.2.2 execute the Loan Note Instrument and procure the
execution and (subject to Clause 5.4) delivery by the
Loan Note Guarantor of the Loan Note Guarantee;
5.2.3 issue to the Warrantors Loan Notes to the value set
against their respective names in the Schedule Part
1; and
5.2.4 execute the Tax Undertaking.
5.3 At Completion the Guarantor and the Purchaser shall execute
and deliver to the Warrantors the Bonus Agreement.
5.4 The Purchaser and/or the Guarantor shall use their best
endeavours to procure the availability of the Loan Note
Guarantee in the form of a bank guarantee from a UK bank
(being a financial institution with a long term credit rating
of not less than "A" as determined by Moody's Investor
Services, Inc.) for the Loan Notes on the normal commercial
terms available for such guarantees by close of business on 10
July 2000.
<PAGE> 11
10
6 WARRANTIES
6.1 6.1.1 Each of the Institutional Vendors hereby severally
warrants to the Purchaser that such Institutional
Vendor is entitled and able to sell and transfer the
full unencumbered legal and beneficial ownership in
the number of Shares set opposite such Institutional
Vendor's name in column 2 of Part 1 of the Schedule
to this Agreement on the terms set out in this
Agreement.
6.1.2 Each of the Warrantors hereby severally warrants to
the Purchaser that such Warrantor is entitled and
able to sell and transfer the full unencumbered legal
and beneficial ownership in the number of Shares set
opposite his name in column 2 of Part 1 of the
Schedule to this Agreement in terms set out in this
Agreement.
6.2 Subject to any matter provided for in this Agreement the
Warrantors hereby jointly and severally warrant and undertake
with and to the Purchaser (for itself and as trustee for its
successors in title) that each of the Warranties is true and
accurate in every respect. Should any of the Warranties be
found to be untrue or incorrect, then, subject to the
provisions of this Agreement and without restricting the
rights of the Purchaser to claim damages on any other basis
available to it at common law, the Warrantors will, on demand
by the Purchaser pay to the Purchaser an amount equal to the
amount by which the value of the Shares is less than it would
have been if the Warranties had been true and correct,
together with all reasonable costs and expenses incurred or
sustained by the Purchaser or the Company (including without
limitation solicitor's, attorney's and accountant's reasonable
fees).
6.3 Where any of the Warranties is expressed to be given or made
to the best of the Warrantors' knowledge and belief or after
having made all proper enquiry or so far as the Warrantors are
aware, or is qualified in some other manner having
substantially the same effect, such statement (save where
otherwise expressly stated) shall be deemed to be qualified by
the additional statement that the Warrantors have made all due
and diligent enquiries of the following persons:-
6.3.1 each of the Vendors;
6.3.2 each of the Directors of each Group Company;
6.3.3 Charlie McIntee (IT Manager);
6.3.4 Dan Slater (Site Controller, Maldon);
6.3.5 Alistair Dick (Site Controller, Kelso);
6.3.6 Derek Gordon (Business Unit Manager, Kelso);
<PAGE> 12
11
6.3.7 Robert Shephard (Property Consultant);
6.3.8 PricewaterhouseCoopers, Leeds;
6.3.9 the Vendors' Solicitors, and (in respect only of the
Leased Properties and the Heritable Property) McGrigor
Donald, Edinburgh;
6.3.10 Ward Evans Financial Services (in respect only of
Pensions matters).
6.4 The Warrantors shall be deemed to have repeated each of the
Warranties as at the Completion Date, immediately prior to
Completion.
6.5 Liability under any of the Warranties shall not be confined to
breaches discovered before Completion nor in any way be
modified or discharged by Completion save as specifically
stated in this Agreement.
6.6 The Warrantors hereby agree to advise the Purchaser within a
reasonable period of time in writing of any breach of or fact
contrary to or inconsistent with the Warranties and above
undertakings (taking account for these purposes of the de
minimis contained in Clause 7.3.2) which comes to their notice
before or after Completion. This Clause shall not itself give
rise to any cause of action or remedy not otherwise provided
for in Clause 6.2 or Clause 8 of this Agreement.
6.7 The Warrantors agree with the Purchaser that they waive and
will not enforce any right which they may have in respect of
any misrepresentation, inaccuracy or omission in or from any
information or advice supplied or given by any Group Company
or any officer, employee or adviser of or to any Group Company
for the purpose of assisting the Warrantors to give any of the
Warranties or to prepare the Disclosure Letter.
6.8 As a separate covenant and undertaking from any of the
Warranties or any provision of the Tax Undertaking, the
Warrantors hereby jointly and severally undertake to free,
relieve and indemnify on demand the Purchaser and the Company
6.8.1 against any liability of any Group Company for
payments which may be due to be and/or are properly
made by any Group Company under the Fundshare Scheme
or the Preference Bonus Scheme to the extent that the
aggregate payments thereunder by the Company exceed
pound sterling 1,764,856.90; and
6.8.2 against any liability of any Group Company for
taxation of any kind (howsoever arising) as a result
of any such payment of that excess, together with
(where relevant) all penalties, interest, costs and
legal fees incurred by any Group Company in
connection with the foregoing to the extent that
<PAGE> 13
12
payments by any Group Company referred to in this
Clause 6.8.2, when aggregated with the payments
referred to in Clause 6.8.1 exceed pound sterling
1,764,856.90. None of the provisions of Clause 7 of
this Agreement shall apply to this indemnity nor
shall liability hereunder be qualified by the terms
of the Disclosure Letter.
6.9 The provisions of Clause 4 of the Tax Undertaking shall apply
mutatis mutandis in respect of a Tax Claim (as defined
therein) to a liability under Clause 6.8.2 but the provisions
of Clause 2 of the Tax Undertaking shall not apply in respect
of such a liability nor shall the Warrantors be liable for
breach of any Warranty to the extent that the Purchaser or the
Company is entitled to make recovery under Clause 6.8 in
respect of the subject matter of the breach.
7 WARRANTY LIMITATIONS
Save in the case of fraud
7.1 The Warrantors shall be under no liability howsoever arising
in respect of any claim for any breach or non-fulfilment of
any of the Warranties or for any claim under the Tax
Undertaking (together in this Clause "a Claim") unless and to
the extent that the Purchaser, acting bona fide, has served on
each of the Warrantors a written notice thereof not later than
two years after Completion in the case of a Claim under the
Warranties and 7 years after Completion in the case of a Claim
under the Tax Undertaking giving details of the Claim
including the Purchaser's reasonable estimate of the amount of
any liability of the Warrantors in respect thereof based on
the information then available to the Purchaser. Any such
claim shall (if it has not been previously satisfied, settled
or withdrawn) be deemed to have been withdrawn 12 months after
service of such written notice (and the Warrantors shall have
no further liability in respect of it), unless proceedings in
respect of it have commenced by being warranted or signetted
by a relevant Scottish Court.
7.2 The Warrantors shall have no liability under the Warranties in
respect of matters fairly and accurately disclosed in the
Disclosure Letter or the Supplemental Disclosure Letter.
7.3 In relation to any Claim:-
7.3.1 the liability of each Warrantor in respect of all or
any Claims shall not exceed the Consideration paid to
such Warrantor in cash and/or Loan Notes.
7.3.2 the Warrantors shall have no liability unless the
aggregate amount of all claims under the Warranties
available to the Purchaser exceeds pound sterling
100,000 but in which event the Purchaser shall be
entitled to recover the whole amount of such claim.
<PAGE> 14
13
7.4 If any Claim is based upon a liability of the Company or the
Purchaser which is contingent only, the Warrantors shall not
be liable hereunder to make any payment to the Purchaser or to
the Company unless and until such contingent liability becomes
an actual liability.
7.5 The Purchaser will take all reasonable steps to avoid or
mitigate any loss or liability which might give rise to a
Claim.
7.6 Where any claim is made by a third party against the Company
or the Purchaser and in relation to which it appears that the
Warrantors are or may be liable hereunder, the Purchaser shall
give notice thereof to the Warrantors and the Purchaser shall
(provided that the Warrantors shall indemnify and, if the
Purchaser acting reasonably so requires, secure the Purchaser
against liability for costs associated therewith) take such
action and procure that the Company shall take such action and
provide such assistance as the Warrantors (acting reasonably)
may require including instructing such professional advisers
as the Warrantors may nominate to avoid, dispute, resist,
appeal against, compromise or defend the claim and any
adjudication in respect thereof provided that the Warrantors
shall have the conduct of any proceedings in respect of any
such claim or any such adjudication.
7.7 7.7.1 Where the Purchaser is or becomes entitled (whether
under any insurance or by way of payment, discount,
credit, set off, counterclaim or otherwise) to
recover from any third party (including any Taxation
Authority) any sum in respect of Taxation or any
other loss, damage or liability which is or may be
the subject of a Claim, the Purchaser shall, if so
required by the Warrantors and subject to Clause
7.7.2 take all such steps or proceedings as the
Warrantors may reasonably require to enforce such
recovery.
7.7.2 All such steps or proceedings shall be taken at the
Warrantors' cost and expense and the Purchaser shall
not be under any obligation to take them or procure
them to be taken unless the Warrantors shall have
provided indemnities and security to the reasonable
satisfaction of the Purchaser in respect of all costs
and expenses likely to be thereby incurred.
7.7.3 The Purchaser shall procure that the Warrantors are
provided (at the expense of the Warrantors) with all
such information and reports concerning any such
steps or proceedings taken by the Purchaser as the
Warrantors may from time to time reasonably request.
7.7.4 If any such sum as is referred to in Clause 7.7.1
shall be recovered by the Purchaser from the third
party, any Claim by the Purchaser in respect of any
Taxation or other loss, damage or liability to which
the sum relates shall be limited (without prejudice
to any other limitations on the liability of
<PAGE> 15
14
the Warrantors referred to in this Clause 7) to the
amount (if any) by which the amount of such Taxation
or other loss, damage or liability is exceeds the
aggregate of:-
7.7.4.1 the sum recovered less all costs, charges and
expenses properly incurred by the Purchaser in
recovering that sum from the third party; and
7.7.4.2 any sum or sums previously paid by the
Warrantors to the Purchaser in respect of such
Taxation or other loss, damage or liability.
7.7.5 If the aggregate of the sums referred to in Clause
7.7.4.1 and 7.7.4.2 exceeds the amount of Taxation or
other loss, damage or liability to which the sum
recovered relates, the Purchaser shall as soon as
reasonably practicable pay to the Warrantors the
amount of the excess.
7.8 The Warrantors shall have no liability for any Claims to the
extent that they are a result of or are otherwise attributable
to:
7.8.1 any matter expressly provided for in this Agreement
or in its implementation;
7.8.2 any voluntary act, matter or thing done or omitted to
be done by the Purchaser or the Company or at the
request or with the approval of the Purchaser after
Completion;
7.8.3 any legislation not in force at the date hereof or
any change of law or administrative practice which
takes effect retroactively or any increase in the
rates of taxation or withdrawal of any concession in
force at the date hereof;
7.8.4 any change in accounting policy or practice of the
Purchaser or the Company introduced or having effect
after Completion other than any such change made so
as to comply with any Standard Statement of
Accounting Practice in the UK.
7.9 The Warrantors shall have no liability for any Claims:-
7.9.1 if and to the extent that the Company would have been
indemnified in respect of the loss giving rise to the
Claim had it maintained after Completion insurance
cover at a level and type equal to that existing
immediately prior to the date of this Agreement; or
7.9.2 where provision or reserve in respect of the
circumstance giving rise to the Claim has been made
in the Accounts or the Management Accounts and in
<PAGE> 16
15
the case of the Management Accounts provided that the
relevant provision or reserve is specifically
identified in the relevant supporting papers.
7.10 If a Claim shall arise hereunder and under the Tax Undertaking
with reference to the same circumstances of claim the
Purchaser shall (if appropriate) be entitled to recover such
Claim under either the Warranties or the Tax Undertaking but
not both.
7.11 Any amount paid by the Warrantors in respect of any Claim
shall be deemed to constitute a reduction in the Consideration
received by them pursuant to this Agreement.
7.12 The Purchaser will not be entitled to recover damages in
respect of any Claim or obtain reimbursement or restitution
more than once in respect of the same misrepresentation or
breach of any particular Warranty.
7.13 As soon as is reasonably practicable, upon receipt of a
written request, the Purchaser will give or ensure that there
is given to the Warrantors and their professional advisers
full access during business hours at a mutually convenient
time to all relevant accounts, documents and records within
the possession or control of the Purchaser or the Company or
the Subsidiaries to enable the Warrantors and such advisers to
consider any Claim made by the Purchaser or as may reasonably
be required in connection with any returns by the Company to
any fiscal, governmental or other regulatory body and for such
purpose the Warrantors and such professional advisers will be
permitted (at the expense of the Warrantors) to take copies of
all such relevant accounts, documents and records.
7.14 The Warrantors will appoint one firm of solicitors (and if
relevant one firm of Chartered Accountants only) to act on
their behalf and shall nominate one of their number to be
their agent for the purpose of dealing with the Purchaser, its
solicitors or accountants under this Clause 7.
7.15 The Purchaser will use reasonable endeavours to procure that
the Company retains and preserves all books, records,
documents and information (including information recorded or
retained in any electronic form) of, or relating to the
Company which are or may be relevant in connection with any
Claim or Claims brought by the Purchaser against the
Warrantors for so long as any actual or prospective Claims
remain outstanding.
7.16 In this Clause 7, where reference is made to "the Company" in
respect of acts, omissions, requests, approvals or consents
(herein "Actions") such shall only exclude or limit liability
on the part of the Warrantors provided such Actions have been
disclosed by the Warrantors (to the extent that they are at
the relevant time continuing employees of the Company) to the
board of directors of the Company and approved by it having
regard to the best interests of the Company.
<PAGE> 17
16
7.17 The Purchaser shall be entitled to set off, in priority to but
without prejudice to any other rights and remedies which
remain after exercise of the right of set-off contained
herein, the amount of any liability of the Warrantors to the
Purchaser under Clause 6 and the Schedule Part 3 of this
Agreement or of the Covenantors to the Purchaser under (and as
defined in) the Tax Undertaking against any amount (whether by
way of principal or interest) payable by the Purchaser to the
Warrantor(s) in respect of the Loan Notes, to the extent that
the liability in question constitutes a relevant Claim in
terms of this Agreement or under the Tax Undertaking and
either (i) is the subject of a judgement of a court of
competent jurisdiction in favour of the Purchaser in respect
of which the period of any appeal which may be competent has
passed or (ii) has been agreed to in writing by the Warrantors
(or in their capacity as Covenantors, as the case may be) to
be then due and payable to the Purchaser, and such liability
shall not have been paid to the Purchaser for a period of 14
days from when it first became due and payable.
8 BREACH ETC. ON OR BEFORE COMPLETION
8.1 If at any time on or before the Completion Date:-
8.1.1 the Purchaser becomes aware of any fact or event (not
being a fact or event provided for or contemplated by
this Agreement) which in its reasonable opinion is a
material breach of any of the Warranties or is likely
to give rise to a material claim under the Tax
Undertaking (if executed), or
8.1.2 the Company sustains loss or damage on account of
fire, flood, explosion, death strike or any other
similar cause which in the reasonable opinion of the
Purchaser materially and adversely affects the value
of the Shares or the manner in which the Company can
continue to carry on its business
then the Purchaser may, by written notice to the Vendors elect
to rescind this Agreement (in which event no party will have
any claim against any other party in relation to this
Agreement and the matters contemplated herein) or to proceed
to Completion, in which event the terms of this Agreement
shall continue to apply and so that subject to the foregoing
if the Purchaser elects to so complete it waives any Claim in
relation to the relevant matter which has arisen under Clause
8.1 of this Agreement.
8.2 For the purposes of Clause 8.1 a matter shall be material if
it would give rise to a claim which, taking account of all
relevant circumstances is or would be likely to be greater
than pound sterling 250,000.
8.3 The Warrantors undertake to the Purchaser that (save as
otherwise agreed in writing by the Purchaser and the
Warrantors) they will procure that in the period between the
<PAGE> 18
17
date of this Agreement being executed and the Completion Date
the Company will carry on business in the normal course and
will not do or permit anything to be done which could give
rise to a material breach of the Warranties or a material
claim under the Tax Undertaking save after notice to and
consultation with the Purchaser after making full disclosure
of all relevant facts.
9 UNDERTAKINGS
9.1 In this Clause, unless the context or subject matter otherwise
requires, the following expressions shall have the following
meanings:
"Restricted Business" means the business of design and
assembly of printed circuit boards and any other business
which competes with any business carried on by the Company as
at the date of this Agreement;
"Restricted Area" means the United Kingdom;
"Restricted Period" means the period of three years from the
Completion Date.
9.2 Subject to the ongoing obligations of the Warrantors (other
than A Macfarlane) as employees of the Group after Completion,
the Warrantors hereby undertake to each of the Purchaser and
the Company that he or they (as the case may be) will not
himself or themselves (as the case may be), either alone or
jointly with others, whether as principal, agent, manager,
shareholder, independent contractor or in any other capacity,
directly or indirectly through any other person, for his or
their own benefit or that of others:
9.2.1 at any time during the Restricted Period engage in or
carry on or be concerned or interested in any
Restricted Business within the Restricted Area (other
than as a holder for investment of not more than 5%
of any class of shares or securities dealt in on a
recognised stock exchange);
9.2.2 at any time during the Restricted Period canvass or
solicit in relation to a Restricted Business the
custom of any person who was at any time during the
period of 12 months preceding the Completion Date a
customer of the Company or accept from any such
person orders for goods or services comprised within
the Restricted Business, or seek to induce any such
person to cease dealing with the Company, and/or the
Subsidiaries in connection with the Restricted
Business;
9.2.3 at any time during the Restricted Period knowingly
assist to a material extent any competitor of the
Company, and/or the Subsidiaries in carrying on or
developing any Restricted Business in the Restricted
Area;
<PAGE> 19
18
9.2.4 at any time during the Restricted Period solicit or
entice away any employee of the Company and/or the
Subsidiaries, or knowingly do any act whereby any
such employee is encouraged to leave the employment
of the Company and/or the Subsidiaries, whether or
not such employee would by reason of so leaving
commit a breach of his contract of employment;
9.2.5 at any time after Completion use or procure the use
in connection with any Restricted Business of any
name including the words "Keltek" or any colourable
intimation thereof;
9.2.6 at any time after Completion make use of or disclose
to any third party any secret or confidential
information relating to the Company and/or the
Subsidiaries or to their business or affairs or any
trade secrets, except if and insofar as such
disclosure is required by law (in which event notice
thereof shall be given to the Purchaser); and
9.2.7 at any time after Completion represent himself or
themselves or permit himself or themselves to be held
out as being in any way connected with or interested
in the business of the Company and/or the Purchaser
and/or any of the Subsidiaries.
9.3 Each of the covenants contained in the foregoing clause 9.2 is
entirely separate and severable and enforceable accordingly.
9.4 Each of the foregoing covenants in clause 9.2 is considered
fair and reasonable in all the circumstances by the parties
but in the event that any such restriction shall be found to
be void or ineffective but would be valid and effective if
some part thereof were deleted or the duration or area of
application reduced such restriction shall apply with such
modification as may be necessary to make it valid and
effective.
10 NON-ASSIGNABILITY
This Agreement shall be binding on and enure for the benefit of the
personal representatives or successors of the Vendors. This Agreement
may be freely assigned in whole or in part by the Purchaser to any of
its wholly owned subsidiaries or to any member of the group of
companies of which it forms part from time to time but not further or
otherwise without the prior written consent of the Warrantors.
11 WAIVER
No time, indulgence or action other than a specific waiver made
formally in writing by the Vendors or the Purchaser at any time of any
of their respective rights or remedies hereunder shall extinguish their
respective rights to enforce their respective remedies in connection
with the subject matter of any such waiver.
<PAGE> 20
19
12 CONFIDENTIALITY
None of the Vendors shall at any time hereafter make use of or disclose
or divulge to any third party any information of a secret or
confidential nature relating to any business of the Company or without
the prior written agreement of the Purchaser, the contents of this
Agreement, other than as required by law or the requirements of any
regulatory authority or for Revenue purposes.
13 ANNOUNCEMENTS
13.1 No announcement or information concerning this sale and
purchase or any ancillary matter (except as required by
applicable securities laws or regulations or the rules of the
Nasdaq Stock Market) shall be made or released before or after
Completion to any third party including the press (national,
provincial, local or trade) or the suppliers or customers of
the Company by any of the parties hereto without the prior
written consent of the other parties.
13.2 An announcement in agreed terms shall be made to the
employees, suppliers and customers of the Company promptly
following signing of this Agreement.
14 CONTINUING EFFECT
This Agreement may be founded upon by the parties notwithstanding
Completion and in particular, without prejudice to the generality of
the foregoing, the obligations, warranties and undertakings in this
Agreement shall (except in so far as fully performed or discharged at
Completion) continue in full force and effect in accordance with this
Agreement.
15 EXPENSES
The Vendors and the Purchaser shall bear their own respective expenses
arising out of this Agreement. All Stamp Duties on the transfer of the
Shares shall be borne by the Purchaser.
16 NOTICES
Any notice or other document to be given hereunder to the Vendors(other
than the Institutional Vendors), the Purchaser or the Guarantor shall
be delivered, sent by first class recorded delivery or sent via
facsimile (receipt electronically confirmed) to that party (with a copy
to the Purchaser's or the Vendors' Solicitors respectively) at the
undernoted addresses. Notices to the Institutional Vendors shall be
sent to the undernoted addresses. Any such notice shall be deemed to
have been served if delivered at the time of delivery or if posted at
the expiration of forty-eight hours after posting. The parties hereby
appoint their respective Solicitors as agents for service of any
proceedings which may arise from this Agreement and any notices or any
such proceedings shall be addressed as follows:-
<PAGE> 21
20
To the Purchaser/Guarantor:- To the Vendors (other than
the Institutional Vendors):-
For the attention of George Frier For the attention of Andrew
McClure Naismith Kay Addleshaw Booth & Co
292 St Vincent Street Solicitors
Glasgow G2 5TQ Sovereign House PO Box 8
Fax: 0141 248 3998 Sovereign Street
Leeds LS11 1HQ
and Fax 0113 209 2060
Attn: Kenneth V Hallett
Quarles & Brady LLP
411 E. Wisconsin Avenue
Milwaukee WI
USA
Fax 001 (414) 271 3552
Notices to the Institutional Vendors:- NatWest Ventures Investments
Limited/CNW Nominees Limited
3i Group plc
FAO Andrew Wallace FAO Ruth McIntosh
3i Group plc Bridgepoint Capital Limited
Legal Department 101 Finsbury Pavement
Trinity Park London EC2A 1EJ
Bickenhill
Birmingham B37 7ES Fax 0207 374 3600
Fax 0121 609 3643
17 FURTHER ASSURANCE
The Warrantors shall procure so far as they are able the convening of
all such meetings and the passing or giving of all resolutions waivers
and consents as may be necessary under the Companies Acts or the
present Articles of Association of the Company or otherwise to give
effect to this Agreement. The Vendors shall perform such acts and
execute such documents as may be required on or after Completion by the
Purchaser for securing to or vesting in the Purchaser the legal and
beneficial ownership of the relevant Vendors' Shares.
<PAGE> 22
21
18 SEVERABILITY
If any provision of this Agreement (or of any document referred to
herein) is or at any time becomes illegal, invalid or unenforceable in
any respect the legality validity and enforceability of the remaining
provisions of this Agreement (or such document) shall not in any way be
affected or impaired thereby.
19 ENTIRE AGREEMENT VARIATION AND BINDING FORCE
19.1 This Agreement (together with the documents referred to
herein) constitutes the entire agreement between the parties
in relation to the transactions referred to herein or therein
and supersedes any previous agreement between the parties in
relation to such transactions.
19.2 Each of the parties confirms that, in agreeing to enter into
this Agreement, it or he has not relied on any representation,
warranty or undertaking except those contained in this
Agreement.
19.3 No variation of any of the terms of this Agreement (or of any
other documents referred to herein) shall be effective unless
it is in writing and signed by or on behalf of each of the
parties hereto. The expression "variation" shall include any
variation, supplement, amendment, modification, deletion or
replacement however effected.
20 NO CLAIMS BY VENDORS/STATUS OF UNDERTAKINGS
20.1 Other than pursuant to this Agreement or any other agreement
entered into in connection herewith, each of the Vendors
acknowledge that none of them has any claim whether against
one another or any member of the Group whether arising from
the Shareholders Agreement or otherwise and further each of
the Warrantors hereby confirms that there are no amounts due
by such Warrantor, his spouse or children or any company
controlled by him or his spouse or children to the Company or
the Subsidiaries or due by the Company or the Subsidiaries to
such person or company and that neither he, his spouse nor any
of this children, nor any company controlled by him or his
spouse or children, has any claim against the Company or the
Subsidiaries nor is there any outstanding contract (including
any employment contract), agreement or arrangement under which
any such person or a company could have any such claim.
20.2 For the avoidance of doubt, where any undertaking in this
Agreement is given by any of the Institutional Vendors such
undertaking shall be given severally in their respective
capacities as Vendors, not jointly and severally.
<PAGE> 23
22
21 NOTIFICATION/COMPETITION
Should any party resolve to notify this Agreement to the European
Commission under Regulation (EEC) 17/62 or to the Director General of
Fair Trading under the Competition Act 1998, the other parties agree
promptly to provide to the notifying party any information which is
available to it and is reasonably required for such procedures.
22 GUARANTEE BY GUARANTOR
The Guarantor hereby guarantees the due punctual and full performance
of all obligations of the Purchaser hereunder and so that in the event
of any default by the Purchaser hereunder such Guarantee may, by
written notice sent forthwith to the Guarantor in accordance with
Clause 16, be called upon (without the necessity of having first
exhausted any remedies against the Purchaser). If duly performed by the
Guarantor such shall cure any default which has otherwise arisen on the
part of the Purchaser.
23 VOTING
Each of the Institutional Vendors undertakes to the Purchaser that from
today's date up to Completion it will not exercise any voting rights to
which it may be entitled in relation to the Shares so as to prevent the
Company from carrying on business in the normal course as set out in
Clause 8.3, and that with effect from Completion it will not exercise
any voting rights to which it may be entitled in relation to the
Shares.
24 PURCHASER'S COVENANT
24.1 The Purchaser covenants with each Vendor to pay to that Vendor
an amount equal to any Taxation liability of that Vendor or of
any company which is under the control of that Vendor under
section 767A or 767AA ICTA (and any reasonable costs and
expenses incurred by the Vendor or that company in relation to
such Taxation liability or in making any claim under this
clause 24.1) at the time such Taxation liability is imposed,
where such Taxation liability arises as a result of the
failure by the Company to discharge after Completion a
Taxation liability for which the Company is primarily liable
and which is not within clause 2.1 of the Tax Undertaking.
24.2 If the Purchaser becomes liable to make a payment under clause
24.1, the Purchaser shall (subject to Clause 24.4) pay such
amount in cleared immediately available funds on or before the
later of the date 2 business days before that Taxation
liability is finally due and payable and the date 5 business
days after the date of written demand on the Purchaser by the
relevant Vendor.
24.3 The Purchaser shall not be required to make any payment
pursuant to clause 24.1 unless that Vendor and each company in
respect of that Vendor referred to in clause
<PAGE> 24
23
24.1 shall enter into a binding irrevocable undertaking not to
seek to recover any amount from the Company in respect of the
Taxation liability in question pursuant to section 767B ICTA
1988.
24.4 The provision of Clause 7.17 (set off) will apply (mutatis
mutandis) in relation to any amount which would otherwise be
payable to the Warrantors under clause 24.2.
25 PROPER LAW
This Agreement shall be governed by and construed in accordance with
the law of Scotland which is the proper law of the Agreement and the
parties hereto prorogate the jurisdiction of the Scottish Courts: IN
WITNESS WHEREOF these presents typewritten on this and the twenty two
preceding pages are together with the Schedule annexed and the Appendix
hereto executed as follows:
Signed by the said Michael Neil Jarman
at on 26 June 2000
in the presence of
Witness /s/
------------------------------- ------------------------------
Full Name
-------------------------------
Address
-------------------------------
-------------------------------
Signed by the said Timothy Ford
at on 26 June 2000
in the presence of
Witness /s/
------------------------------- ------------------------------
Full Name
-------------------------------
Address
-------------------------------
-------------------------------
<PAGE> 25
24
Signed by the said Andrew Peter Allen
at on 26 June 2000
in the presence of
Witness /s/
------------------------------- ------------------------------
Full Name
-------------------------------
Address
-------------------------------
-------------------------------
Signed by the said Andrew John Macfarlane
at on 26 June 2000
in the presence of
Witness /s/
------------------------------- ------------------------------
Full Name
-------------------------------
Address
-------------------------------
-------------------------------
Executed for and on behalf of CNW Nominees Limited
by Authorised Signatory
at on 26 June 2000
before this witness
Witness /s/
------------------------------- ------------------------------
Full Name
-------------------------------
Address
-------------------------------
-------------------------------
<PAGE> 26
25
Executed for and on behalf of Nat West Ventures
Investments Limited
by Authorised Signatory
at on 26 June 2000
before this witness
Witness /s/
------------------------------- ------------------------------
Full Name
-------------------------------
Address
-------------------------------
-------------------------------
Executed for and on behalf of 3i Group plc
by Authorised Signatory
at on 26 June 2000
before this witness
Witness /s/
------------------------------- ------------------------------
Full Name
-------------------------------
Address
-------------------------------
-------------------------------
Executed for and on behalf of Plexus Corp
by Authorised Signatory
at on 26 June 2000
before this witness
Witness /s/
------------------------------- ------------------------------
Full Name
-------------------------------
Address
-------------------------------
-------------------------------
<PAGE> 27
26
Executed for and on behalf of Lycidas (323) Limited
by Director
at on 26 June 2000
before this witness
Witness /s/
------------------------------- -------------------------------
Full Name
-------------------------------
Address
-------------------------------
-------------------------------
<PAGE> 28
27
THIS IS THE SCHEDULE REFERRED TO IN THE FOREGOING AGREEMENT BETWEEN THE VENDORS
(AS THEREIN DEFINED) AND PLEXUS CORPORATION DATED 26 JUNE 2000
THE SCHEDULE
PART 1
<TABLE>
---------------------------- ------------------------------------------------ ------------------------ ----------------------------
THE VENDORS NO/CLASS OF SHARES PAYABLE AT COMPLETION PAYABLE AT COMPLETION
(CASH) pound sterling (Loan Notes) pound sterling
---------------------------- ------------------------------------------------ ------------------------ ----------------------------
<S> <C> <C> <C>
Michael Neil Jarman 51,666 Ordinary Shares of pound sterling 1 each 830,748.57 1,250,000.00
Muirburn
Sharplaw Road
Jedburgh
Roxburghshire TD8 6SF
---------------------------- ------------------------------------------------ ------------------------ ----------------------------
Timothy Ford 51,666 Ordinary Shares of pound sterling 1 each 80,748.58 2,000,000.00
9 Eden Park
Ednam
Kelso
Roxburghshire TD5 7RG
---------------------------- ------------------------------------------------ ------------------------ ----------------------------
</TABLE>
<PAGE> 29
28
<TABLE>
-------------------------------- ------------------------------------------------- ---------------------- --------------------------
<S> <C> <C> <C>
Andrew Peter Allen 45,002 Ordinary Shares of pound sterling 1 each 820,967.50 1,000,000.00
24 Forestfield
Kelso
Roxburghshire TD5 7BX
-------------------------------- ------------------------------------------------- ---------------------- --------------------------
Andrew John Macfarlane 51,666 Ordinary Shares of pound sterling 1 each 1,559,308.90 454,773.00
Gatehouse Farm
Ranters Lane
Goudhurst
Cranbrook
Kent TN17 1HL
-------------------------------- ------------------------------------------------- ---------------------- --------------------------
CNW 32,727 A Ordinary Shares of pound sterling 1 )
Nominees Limited )
c/o Bridgepoint Capital Limited 226,293 A Preference Shares of pound sterling 1 ) 1,843,156.10 NIL
101 Finsbury Pavement )
London EC2A 1EJ 193,940 B Preference Shares of 1p )
-------------------------------- ------------------------------------------------- ---------------------- --------------------------
</TABLE>
<PAGE> 30
29
<TABLE>
---------------------------------- ------------------------------------------------- ---------------------- ------------------------
<S> <C> <C> <C>
Nat West Ventures Investments Ltd 32,727 A Ordinary Shares )
c/o Bridgepoint Capital Limited )
101 Finsbury Pavement 226,293 A Preference Shares of pound sterling 1 ) 1,843,156.10 NIL
London EC2A 1EJ )
193,940 B Preference Shares of 1p )
---------------------------------- ------------------------------------------------- ---------------------- ------------------------
3i Group plc 98,182 A Ordinary Shares of pound sterling 1 )
20 Waterloo Road )
London SE1 678,880 A Preference Shares of pound sterling 1 ) 5,479,784.35 NIL
)
581,818 B Preference Shares of 1p )
---------------------------------- ------------------------------------------------- ---------------------- ------------------------
</TABLE>
<PAGE> 31
30
PART 1A
DETAILS OF THE COMPANY
COMPANY NAME Keltek (Holdings) Limited
COMPANY NUMBER SC146948
INCORPORATED IN Scotland
AUTHORISED SHARE CAPITAL pound sterling 1,989,998.98 divided
into 200,000 Ordinary Shares of pound
sterling 1 each 163,636 "A" Ordinary
Shares of pound sterling 1 each
1,616,666 Cumulative Redeemable "A"
Preference Shares of pound sterling 1
each 969,698 Cumulative Redeemable "B"
Preference Shares of 1p each
ISSUED SHARE CAPITAL pound sterling 1,504,796.98 divided
into 200,000 Ordinary Shares of pound
sterling 1 each 163,636 "A" Ordinary
Shares of pound sterling 1 each
1,131,466 Cumulative Redeemable "A"
Preference Shares of pound sterling 1
each 969,698 Cumulative Redeemable "B"
Preference Shares of 1p each
DIRECTORS Timothy Ford, Andrew Allen, Michael
Neil Jarman, Andrew John Macfarlane,
Michael Merritt, J Reardon-Smith
SECRETARY Timothy Ford
REGISTERED OFFICE Pinnacle Hill, Kelso, Roxburghshire,
TD5 8DW
ACCOUNTING REFERENCE DATE 31 March
REGISTERED CHARGES 1 Floating Charge in favour of
The Governor and Company of
the Bank of Scotland created
1 December 1993 and
registered 13 December 1993
for all sums due or to
become due over all property
and assets present and
future of the Company
including Uncalled Capital.
<PAGE> 32
31
2 Standard Security in favour
of The Governor and Company
of the Bank of Scotland
created 14 July 1995 and
registered 21 July 1995 for
all sums due or to become
due over Block 1, Pinnacle
Hill Industrial Estate,
Kelso.
3 Legal Charge containing
Fixed and Floating Charges
in favour of The Governor
and Company of the Bank of
Scotland created 21 August
1995 and registered 8
September 1995 for all sums
due or to become due over
Unit 1, Quayside Park, The
Causeway, Maldon, Essex
subsequently released from
ambit of charge on 24
February 1999.
4 Legal Charge containing
Fixed and Floating Charges
in favour of The Governor
and Company of the Bank of
Scotland created 27 October
1995 and registered 6
November 1995 for all sums
due or to become due
incorporating (1) Legal
Mortgage over Unit D,
Riverside Industrial Estate,
Maldon, (2) Floating Charge
over all unattached plant
and machinery, at such
property and (3) Fixed
Charges over any goodwill,
plant and machinery at such
property.
5 Legal Charge containing
Fixed and Floating Charges
in favour of The Governor
and Company of the Bank of
Scotland created 8 February
1999 and registered 24
February 1999 for all sums
due or to become due over
the Freehold Property known
as Land at Quayside Park,
The Causeway, Maldon, Essex
more particularly described
in a transfer dated 8
January 1997 and made
between Thomas Bates & Son
Limited and the Company and
<PAGE> 33
32
(a) by way of legal mortgage
over all the
freehold/leasehold property
known as ("the Property")
and registered at H. M. Land
Registry;
(b) by way of fixed charge over
all buildings and other
structures on, and items
fixed to, the Property;
(c) by way of fixed charge over
any goodwill relating to the
Property;
(d) by way of fixed charge over
all plant, machinery and
other chattels attached to
the property on or at any
time after the date of this
Legal Mortgage;
(e) by way of floating charge
over all unattached plant,
machinery, chattels and
goods now or at any time
after the date of this Legal
Mortgage on or in or used in
connection with the
Property;
(f) by way of legal assignment
the Rental Sums together
with the benefit of all
rights and remedies of the
Company;
(g) by way of fixed charge the
proceeds of any claim made
under any insurance policy
relating to any of the
property charged under the
charge.
DETAILS OF THE SUBSIDIARIES
COMPANY NAME Keltek Electronics Limited
COMPANY NUMBER SC041957
INCORPORATED IN Scotland
<PAGE> 34
33
AUTHORISED SHARE CAPITAL 40,000 Ordinary Shares of pound
sterling 1 each
ISSUED SHARE CAPITAL 4,180 Ordinary Shares of pound
sterling 1 each
DIRECTORS Andrew Allen, Timothy Ford, Michael
Neil Jarman
SECRETARY Timothy Ford
REGISTERED OFFICE Pinnacle Hill Industrial Estate,
Kelso, TD5 8DW
ACCOUNTING REFERENCE DATE 31 March
REGISTERED CHARGES Floating Charge in favour of The
Governor and Company of the Bank of
Scotland created 1 December 1993 and
registered 13 December 1993 for all
sums due or to become due -
undertaking and all property and
assets present and future of the
company including uncalled capital.
COMPANY NAME Keltek Electronics (Maldon) Limited
COMPANY NUMBER 03053862
INCORPORATED IN England
AUTHORISED SHARE CAPITAL 1,000 Ordinary Shares of pound
sterling 1 each
ISSUED SHARE CAPITAL 1 Ordinary Share of pound sterling 1
DIRECTORS Timothy Ford, Michael Neil Jarman
SECRETARY Timothy Ford
REGISTERED OFFICE Quayside Park
Bates Road
Maldon
Essex CM9 5FA
ACCOUNTING REFERENCE DATE 31 March
REGISTERED CHARGES Debenture in favour of The Governor
<PAGE> 35
34
and Company of the Bank of Scotland
created 21 August 1995 and registered
6 September 1995 for all monies due or
to become due from the company to the
chargee on any account whatsoever -
fixed and floating charges over the
undertaking and all property and
assets present and future including
goodwill, bookdebts, uncalled capital,
buildings, fixtures, fixed plant and
machinery.
<PAGE> 36
35
PART 2
THE PROPERTIES
<TABLE>
<CAPTION>
--------------------------------------- --------------------- -------------------------- -------------------------------
ADDRESS NATURE OF RENT LANDLORD
TENURE
--------------------------------------- --------------------- -------------------------- -------------------------------
<S> <C> <C> <C>
Quayside Park Owned N/A N/A
Bates Road
Maldon
Essex CM9 5FA
England
--------------------------------------- --------------------- -------------------------- -------------------------------
Pinnacle Hill Owned N/A N/A
Kelso
Roxburghshire TD5 8DW
Scotland
(current building)
--------------------------------------- --------------------- -------------------------- -------------------------------
Unit 6 Leased - pound sterling 14,000 per Scottish Borders Council
Pinnacle Hill Ind Est annum plus
Kelso expires VAT
Roxburghshire TD5 8DW 1 September
Scotland 2000
--------------------------------------- --------------------- -------------------------- -------------------------------
Pinnacle Hill Leased - entry maximum Scottish Borders Council
Kelso anticipated August pound sterling 275,000 per
Roxburghshire TD5 8DW 2000 annum plus
Scotland VAT
(new building) - duration 15 years
3 months
--------------------------------------- --------------------- -------------------------- -------------------------------
5 Abbotsford Court Leased - pound sterling 7,750 per Scottish Borders Council
Kelso annum plus
Roxburghshire TD5 7VN expires 3 April VAT
Scotland 2003
--------------------------------------- --------------------- -------------------------- -------------------------------
</TABLE>
<PAGE> 37
36
PART 3
THE WARRANTIES
In this part of the Schedule, where reference is made in a warranted statement
to "the Company" that shall be deemed to include a reference to each and all of
the Subsidiaries (where the context so permits).
THE COMPANY AND ITS SHARE CAPITAL AND RECORDS
1.1 The facts and information relating to the Company set out in
the Agreement, (including the Schedule Part 1 and Part 2 and
the recitals thereto) and the written information comprised in
the Appendix to this Agreement and initialled on the index
page by the Purchaser's Solicitors and the Vendors' Solicitors
was when given and remains true and accurate in all respects
and not misleading.
1.2 The Group's budgeted activity levels and profit forecast (a
copy of which are attached hereto) are based on facts which
are true and accurate in material respects, and the opinions
and forecasts contained therein are made on reasonable
grounds. There is no fact or circumstance known to the
Warrantors which would invalidate to any material extent such
opinions or forecasts.
2 The Company
2.1 is neither the holder nor beneficial owner of any class of the
shares or other capital of any other Company (whether
incorporated in the United Kingdom or elsewhere) other than
the Subsidiaries; and
2.2 is not a member of any partnership or other unincorporated
association (other than recognised trade associations).
3 No one is entitled to receive from the Company a finder's fee,
brokerage or other commission in connection with the sale and purchase
of the Shares pursuant to this Agreement.
4 None of the Shares has been the subject of a transfer which is
challengeable under Sections 242 or 243 of the Insolvency Act 1986
within the period of five years prior to the date of execution of this
Agreement.
5 All dividends or distributions of profits made or paid by the Company
have been declared, made or paid in accordance with the Act and the
Company's Articles of Association, and all dividends declared or
otherwise due in respect of the Shares have been paid.
6 The Shares comprise the whole of the Company's allotted and issued
share capital and are fully paid or properly credited as fully paid.
There are no agreements in force which call for
<PAGE> 38
37
the present or future issue or transfer of or grant to any person, firm
or company the right whether conditional or otherwise to call for the
issue or transfer of any share or loan capital of the Company
(including the Shares) nor for the grant of any option, nor is there
any right of pre-emption over the Shares. There is no mortgage, charge,
pledge, lien or other security over the Shares or agreement to create
such a security.
7 The Company has not issued any loan stock, loan notes, loan capital or
debentures which are outstanding.
8 The Company has not at any time since 1 December 1993:-
8.1 repaid or agreed to repay or redeem any of the Shares or any
class of its share capital or otherwise reduced or agreed to
reduce its share capital or any class thereof otherwise than
in accordance with the Company's Articles of Association;
8.2 capitalised or agreed to capitalise in the form of shares or
debentures or other securities, or in paying up any amounts
unpaid on any shares, debentures or other securities, any
profits or reserves of any class or description, or passed or
agreed to pass any resolution to do so; or
8.3 otherwise than in connection with the management buy-out of
the Group on 1 December 1993, purchased or given financial
assistance in connection with the purchase of any of its own
shares.
9 The copy of the Memorandum and Articles of Association of the Company
annexed to the Disclosure Letter are true and accurate in all respects
and up-to-date. The Company's Statutory Books and Records, including
its Register of Members have been properly kept and contain an accurate
and complete record of the matters which should be dealt with therein.
No notice or allegation that any of the same is incorrect or should be
rectified has been received by the Company. All returns, particulars,
resolutions and other documents required to be prepared, filed with or
delivered to the Registrar of Companies or any other statutory,
governmental or regulatory authority by the Company have been correctly
and properly prepared and filed and delivered.
10 Each of the Warrantors has the full legal right and capacity and full
power and authority, and has taken all action required, to sign this
Agreement, all the documents to be signed by him at Completion and to
perform his obligations under same, and this Agreement constitutes, and
(as applicable) the Tax Undertaking and all other documents to be
signed by him at Completion, when executed, will constitute,
obligations binding on each of the Warrantors in accordance with their
terms.
11 None of the accounts, books and records of the Company's business,
assets and/or activities is maintained, recorded or in any other manner
dependent in whole or in part upon any electronic, mechanical or
photographic or other process (whether computerised or not) which
<PAGE> 39
38
is not under the exclusive ownership and direct control of the Company.
THE COMPANY'S BUSINESS, CONTRACTS AND OWNERSHIP OF ASSETS
12 No contract has been entered into or commitment incurred by the Company
or in which it has an interest which
12.1 is outside its ordinary and proper course of business or
12.2 imposes an obligation of unusual length or which is unduly
onerous or is likely to result in a loss to the Company on its
completion or
12.3 is on other than an arm's length basis or is one in which any
Vendor is interested directly or indirectly;
12.4 involves a liability to pay liquidate or pre-estimated damages
(or a penalty) on breach thereof;
12.5 involves or is likely to involve an obligation (whether for
the supply of goods or services or otherwise) the aggregate
value of which in any period of twelve months will or is
likely to be more than 10% of the amount of the Company's
turnover as measured by reference to the financial year ended
on the Accounts Date.
13 Neither the profits of the Company nor the financial position of the
Company has been affected by any contract or arrangement of the Company
which is or was not on an entirely arms length basis.
14 The Company is not in material breach of contract with any third party
and no event has occurred which constitutes, or which with the giving
of notice and/or the lapse of time would constitute, a breach of, or
default under, any agreement or arrangement to which the Company is a
party. No event has occurred which would entitle any party to avoid,
repudiate or otherwise terminate any contract or any benefit enjoyed by
the Company.
15 The Company is not a party to any subsisting agency or distributorship
agreement nor has it any outstanding liability to any former agent or
distributor.
16 The Company is not a party to any written agreement or written
arrangement under the terms of which any other party shall by reason of
any change in the beneficial ownership of shares in the Company's
capital be entitled to terminate the agreement or arrangement earlier
than it would otherwise have been liable to be terminated or require
the adoption of terms less favourable to the Company than those
subsisting in the absence of the change.
17 The Company is not a party to any agreement or arrangement which
imposes any restriction on its freedom to borrow or give security or
dispose of its assets or which involve exclusive
<PAGE> 40
39
purchasing obligations or restrictive covenants in relation to sales.
18 The Company is not under any obligation or a party to any contract
which cannot readily be fulfilled or performed by it on time and
without undue or unusual expenditure of money or effort.
19 No person has been appointed agent of the Company for any purpose
whatsoever and the Company has not given any power of attorney or any
other authority (express implied or ostensible) which is still
outstanding or effective to any person to enter into any contract or
commitment or do anything on its behalf (other than any authority of
officers and employees to enter into routine trading contracts in the
normal course of their duties).
20 Other than in the ordinary course of business, no offer or tender has
been given or made by the Company which is still outstanding and which
is capable of giving rise to a contract merely by any unilateral act of
a third party.
21 The Company has not in the twelve months prior to Completion used any
standard terms and conditions of business other than those disclosed in
the Disclosure Letter.
22 None of the Company's assets have been acquired for a consideration in
excess of, or disposed of for less than, the market value at the date
of such acquisition or disposal.
23 23.1 Other than in relation to the Properties which are subject to
the terms of separate Warranties as to title herein, the
Company has a good title to its whole assets, free of any
mortgage or other security, express or implied (excluding
retention of title imposed under standard supplier terms and
conditions).
23.2 All of the Company's assets are in working order and in
reasonable condition having regard to their age and have been
properly maintained and where applicable serviced in
accordance with (as applicable) manufacturer's
recommendations, the requirements of any supply, leasing or
financing agreement and good industry practice and conform to
all relevant statutory requirements. No material repairs or
other work (excluding routine maintenance) requires to be
carried out in respect of such assets.
24 24.1 The Company's stock and work-in-progress is in good condition
and can be sold by the Company in the ordinary course of
business.
24.2 The Company's stock of raw materials, packaging and finished
goods held is not excessive and is adequate in relation to the
current trading requirements of the Company.
25 The Company owned at the Accounts Date all the assets represented in
the Accounts as being owned by the Company and (save for disposals for
value in the ordinary course of its trade) still owns such assets and
no person has any option or right to acquire such assets.
<PAGE> 41
40
26 The Company is not subject to any liability or obligation (save as may
be implied by law) whether by way of guarantee, warranty or otherwise
to service, repair, maintain, replace or take back any goods supplied
by it on terms other than under any standard form contracts disclosed
in the Disclosure Letter.
27 Full details of any hire or hire purchase agreement or credit sale
agreement or agreement for payment on deferred terms to which the
Company is a party are referred to in the Disclosure Letter and the
Company has observed and performed in all respects all the terms and
conditions on its part to be observed and performed in all such
agreements.
28 Other than those referred to in the Schedule hereto, there are no
loans, guarantees or undertakings, mortgages, charges indemnities or
other liabilities (including contingent liabilities) which have been
given or made or incurred by or assigned to or vested in and are
outstanding in respect of the Company.
29 29.1 All the stock-in-trade, the Properties and the assets
and undertaking of the Company of an insurable nature, have at
all relevant times since 1 December 1993 or (in relation to
the assets located at the Maldon Property) since 21 August
1995 been adequately insured against fire, accident, damage,
injury, third party loss, loss of profits and other risks
normally insured against by persons carrying on the same class
of business as that carried on by the Company, and all such
insurance is currently in full force and effect and nothing
has been done or is to be done which would make any policy of
insurance void or voidable. No claims are currently
outstanding or pending or threatened nor have circumstances
arisen which would entitle a claim to be made under any such
policy.
29.2 So far as the Warrantors are aware, within the period of
commencement of the Company's trading to 30 November 1993, and
since that date, no application or proposal for a policy of
insurance of any kind whatsoever made by the Company has been
refused or rejected by any insurance company in whole or in
part nor within the said period has the level of insurance
cover provided by any policy of insurance of any kind
whatsoever existing at any time during the said period in
favour of the Company been reduced or in any way altered at
the instance of the insurance company issuing such policy of
insurance.
29.3 Copies of all or summaries of all policies of insurance
effected by the Company since 1 December 1993 (and by the
Landlords in relation to the Leased Properties and the
building contractors in relation to the construction of the
New Kelso Property) are attached to the Disclosure Letter.
None of the insurance policies maintained by the Company is
subject to special or unusual terms or restrictions or to the
payment of a premium in excess of the normal rate.
29.4 All insurances have at all relevant times since 1 December
1993 been effected by the
<PAGE> 42
41
Company on the basis that cover is given in respect of claims
arising in relation to acts or omissions occurring during the
period covered by the insurance notwithstanding the date of
the claim.
THE ACCOUNTS, MANAGEMENT ACCOUNTS, EVENTS SINCE THE ACCOUNTS DATE
30 The Accounts have been prepared in accordance with and comply with the
Act and other applicable Statutes and Regulations and
30.1 show a true and fair view of the financial position of the
Company as at the Accounts Date and are not affected by any
extraordinary or exceptional items;
30.2 contain provisions or reserves therein adequate to cover and
full particulars in notes thereto of all liabilities known to
the Directors or which ought reasonably to have been known by
the Directors (whether actual, deferred, disputed, contingent,
qualified or otherwise) of the Company as at the Accounts
Date;
30.3 include all such reserves and provisions for taxation as are
necessary to cover
30.3.1 all tax liabilities (whether or not assessed and
including deferred taxation) of the Company up to the
Accounts Date and in particular (but without prejudice
to the generality of the foregoing) attributable to
profits and income received, gains realised and loans
and distributions (within the meaning of the Taxes
Acts) made to participators and associates within the
meaning of Section 417 of the Taxes Act or under
Section 20, 234 or 419 of the Taxes Act or Sections
423 to 430 and Schedule 19 of the Taxes Act, or in
respect of income tax payable under the P.A.Y.E.
regulations or under Sections 349 and 350 of the Taxes
Act, or in respect of Value Added Tax;
30.3.2 amounts corresponding to income tax payable under the
provisions of Sections 423 to 430 and Schedule 423 to
430 and Schedule 19 to the Taxes Act and income tax
payable under the provisions of Sections 423 to 430
and Schedule 19 to the Taxes Act or Sections 677 and
686, 707 and Schedule 29 of the Taxes Act in respect
of income (including deemed income) of the Company for
any period ended on or before the Accounts Date;
30.3.3 amounts corresponding to corporation tax payable in
respect of any such loans or advances as are mentioned
in Sections 419 to 422 of the Taxes Act on or before
the Accounts Date;
30.4 are in accordance with generally accepted accounting
principles and with current Statements of Standard Accounting
Practice, Financial Reporting Standards and Urgent Issues Task
Force (UITF) Abstracts all of which have been consistently
applied from the commencement of the Company's trading to the
Accounts Date;
<PAGE> 43
42
30.5 are not affected by any extraordinary or exceptional item or
by any other factor rendering the results for the financial
year ended on the Accounts Date unusually high or low.
31 There has been no change in the Company's accounting policies or their
application or the bases of accounting in the three financial periods
ending with the Accounts Date.
32 In the Accounts the basis of valuation for stock-in-trade and assets
has been accepted by the Inland Revenue and
32.1 is in accordance with normally recognised accounting
principles and practice for the kind of business in which the
Company is engaged being a value not lower than the lower of
cost and net realisable value and all stock of the Company has
been written off or written down if appropriate. No part of
such valuation is attributable to stock which is redundant,
obsolete, unusable or unsaleable in the ordinary course of
business;
32.2 is estimated to be sufficient to write down the value to nil
not later than the end of its useful working life;
32.3 has remained the same in respect of each of the accounting
periods of the Company during the period since 1 December 1993
and terminating on the Accounts Date.
33 The Company's standard credit terms do not exceed 60 days and all debts
shown in the Accounts as payable have been fully paid.
34 There are no material amounts owing by the Company which have been due
for more than 90 days not provided for in the Accounts or in the
Management Accounts.
35 All accounts, books, ledgers, financial and other material records of
the Company are up-to-date and in the possession of the Company; and
35.1 have been fully, properly, consistently and accurately
maintained;
35.2 include all accounts, books and records required to be
maintained and preserved by law.
36 THE MANAGEMENT ACCOUNTS
36.1 have been carefully prepared in accordance with the normal
monthly management procedure adopted by the Company;
36.2 fairly reflect the trading position, the profit or loss and
the assets and liabilities of the
<PAGE> 44
43
Company and of each Group Company as at the date(s) and for
the period(s) to which they relate; and
36.3 are not affected by any unusual or non-recurring items as
those terms are understood in accordance with generally
accepted accounting principles and practices in the United
Kingdom or by any other factor rendering the results for the
period(s) to which they relate unusually high or low.
37 Since the Accounts Date the Company has carried on its business as a
going concern in the ordinary and usual course and so as to maintain
the same as a going concern and without any interruption or alteration
to its nature or scope or in the manner of carrying on the same and
(without prejudice to the foregoing generality):-
37.1 the Company has not entered into or agreed to enter into any
contract, obligation or commitment except routine contracts on
arms' length terms in the normal course of trading nor has it
made any payment except for payments of a routine arms' length
nature in the normal course of trading;
37.2 there has been no change in the manner in which the Company
conducts its business or in the assets or liabilities of the
Company except for changes arising in the normal course of
trading and there has been no unusual increase or decrease in
the level of the current assets or current liabilities of the
Company;
37.3 there has been no material adverse change in the financial or
trading position of the Company;
37.4 there has been no resolution of or agreement or consent by the
members of the Company or any class thereof other than
resolutions relating to routine business at AGMs;
37.5 the Company has not entered into any capital transactions as
vendor, purchaser, lessor or lessee or otherwise undertaken
any commitments exceeding pound sterling 50,000 in aggregate;
37.6 no dividends or other distributions of capital or income have
been declared, paid or made by the Company other than as
provided for in the Accounts;
37.7 no share or loan capital has been allotted or issued or agreed
to be allotted or issued or put under option by the Company;
37.8 the turnover of the Company has not been materially less in
value or in monetary terms than its turnover for the
corresponding period in its preceding financial year;
37.9 no material debtor has been released by the Company on terms
that he pays less than the book value of his debt owing to the
Company and none of the Company's debts
<PAGE> 45
44
have been deferred, subordinated or written off or has proved
to be to any extent irrecoverable;
37.10 the Company has not repaid a loan or other indebtedness in
advance of its stated maturity date;
37.11 there has been no material change in the manner or time of
payment of creditors or the issues of invoices or collection
of debts; and
37.12 the Company has not acquired or disposed of, or agreed to
acquire or dispose of any business or any asset material to
its business;
38 No introductory or sales or other commission is payable in relation to
any income reflected in the Accounts or the Management Accounts which
is not fully provided for in the Accounts or the Management Accounts.
EMPLOYMENT, LITIGATION AND COMPLIANCE WITH LAWS
39 39.1 The Employees and their remuneration and their lengths of
service are all set out in the Disclosure Letter.
39.2 Since 1 April 2000 no change has been made or proposed in the
rate of remuneration or to the emoluments or pension benefits
or to any of the other terms and conditions of employment or
engagement of any Director, ex Director or employee earning in
excess of pound sterling 30,000 per annum of the Company. No
change has been made in the terms of engagement of any such
Director or Senior Executive and no additional Directors or
Senior Executives have been appointed or dismissed or removed.
No bonus or other similar payment has been paid or promised to
any of the employees or directors of the Company, there has
been no additional payment or contribution to any pension or
other retirement benefit scheme in respect of any of the
employees or directors or former employees or directors of the
Company.
39.3 None of the Employees possess credit cards or other financial
cards in respect of which the Company is the principal
obligant.
39.4 No Employees have any entitlement to holiday other than in
accordance with their terms and conditions of employment and
there are no sums outstanding in relation to holiday
entitlement not taken.
39.5 No Employee is under notice by the Company or has been
suspended or the subject of disciplinary procedures which may
give rise to dismissal. No Employee has at close of business
two business days prior to the date hereof given notice of
resignation to the Company. There are no outstanding disputes
(including industrial disputes) with any of the Employees or
former employees or any trade union or other representative
<PAGE> 46
45
organisation.
39.6 There are no wages, salary, commission, bonus or other
outstanding liabilities to any Employee due and owing as at
today's date other than the Fundshare Scheme and the
Preference Bonus Scheme details of which are annexed to the
Disclosure Letter.
39.7 No Employee is a member of any Trade Union, Works Council or
other representative organisation and there is no collective
agreement or undertaking between the Company and any Trade
Union or similar organisation.
40 There are no schemes in operation by or in relation to the Company
whereunder any employee of the Company is entitled to a commission or
remuneration of any other sort calculated by reference to the whole or
part of the turnover, profit or sales of the Company. The Company does
not operate any Profit Related Pay (PRP) Scheme. There are no share
option or share incentive schemes in operation other than the Fundshare
Scheme and the Preference Bonus Scheme details of which are annexed to
the Disclosure Letter.
41 No monies other than in respect of emoluments of employment and
reasonable out of pocket expenses are payable to or on behalf of any
employee of the Company.
42 All subsisting contracts of service to which the Company is a party
have been disclosed to the Purchaser and are determinable on three
month's notice or less without compensation (other than compensation in
accordance with the Employment Rights Act 1996).
43 There are no claims pending or threatened against the Company by any
Employee or by any former employee of the Company or by any third party
in respect of accident or injury or ill health which are not fully
recoverable under insurances disclosed in the Disclosure Letter. None
of the Employees and none of the former employees of the Company is
receiving or due to receive any payments under any disability or
permanent health or any similar insurance scheme.
44 The Company is not engaged in any litigation or arbitration proceedings
in any capacity, and there are no such proceedings pending or
threatened either by or against the Company, and there are no facts
known to the Warrantors which are likely to give rise to any litigation
or arbitration nor is there any dispute with the Commissioners of
Inland Revenue or any official of the Inland Revenue or Customs and
Excise in relation to the affairs of the Company. The Company is not
subject to any order or judgement of any Court or Government Agency
which is still in force nor has it been a party to any undertaking or
assurance to any Court or Government Agency.
45 Neither the Company nor any of its officers, agents or employees during
the course of their duties in relation to the Company have since 1
December 1993 committed or omitted to do any act or thing (other than
motoring offences not giving rise to a custodial sentence), the
commission or omission of which is or could be in contravention of any
applicable act, order,
<PAGE> 47
46
regulation or the like which could give rise to any fine or other
penalty, or have engaged in any corrupt practice.
46 The Company has since 1 December 1993 conducted its business in all
material respects in accordance with all applicable laws and
regulations of the United Kingdom and of each foreign country in which
it conducts business and has not committed any criminal, illegal or
unlawful act or violated any statute, regulation, order, decree or
judgment of any Court or any governmental agency of the United Kingdom
or any foreign country.
47 No officer of the Company has since 1 December 1993 been convicted of
any crime (other than minor traffic offences) connected with or
relating to the business of the Company.
48 The Company has not since 1 December 1993 committed any material breach
of contract or statutory duty or any delictual or other unlawful act
which could lead to a claim for damages or interdict being made against
it and no event has occurred as regards the Company which would entitle
any third party to terminate any contract or any benefit enjoyed by the
Company or call in any money before the normal due date therefor.
49 None of the activities of the Company is ultra vires.
INTELLECTUAL PROPERTY AND IT MATTERS
50 The Company is the sole beneficial owner of the Intellectual Property
(IP). Particulars of any IP which is registered are set out in the
Disclosure Letter.
51 In relation to any and all IP used, but not owned, by the Company:-
51.1 the Company has all necessary licences, consents,
authorisations and permissions in respect of its use of such
IP and has complied in all material respects with all relevant
conditions within them; and
51.2 so far as the Warrantors are aware there are no facts or
circumstances in existence which would or might adversely
affect such licences, consents, authorisations and/or
permissions nor so far as the Warrantors are aware will they
be adversely affected as a result of implementation of this
Agreement.
52 52.1 Copies of all licences, consents, authorisations and
permissions referred to in Warranty 51 above are set out in or
annexed to the Disclosure Letter.
52.2 All such licences, consents, authorisations and permissions
relating to the IP to which any Group Company is a party
(whether written or unwritten) are in full force and effect
and no party to any such agreement has been or is in breach
thereof.
53 So far as the Warrantors are aware no person other than a Group Company
uses in any way
<PAGE> 48
47
whatsoever any IP which is owned by any Group Company.
54 54.1 None of the IP is the subject of any challenge, claim,
opposition, action or proceedings (whether as to its validity,
in respect of infringement by or of the IP, or otherwise) nor
is subject to any other restriction or arrangement
(contractual or otherwise) which does or may impinge upon the
validity, enforceability or ownership thereof by the Company
or its use in any material respect. So far as the Warrantors
are aware there are no grounds, factors or other circumstances
which may give rise to any of the foregoing.
54.2 None of the processes or activities of the Company (including
any trading names, styles and get-up) infringe any
Intellectual Property rights of any other person or involve
the unlicensed use of information confidential to a third
party.
55 The Company has no unsatisfied or ongoing liability to pay compensation
under Sections 39 to 43 of the Patents Act 1977 (as amended and/or
updated from time to time) in respect of Employee inventions.
56 The Know-How of the Company, has, where reasonably practicable, been
recorded in writing or other reproducible medium.
57 The Company has not (except when necessary and then subject to
confidentiality agreements) disclosed any of its Know-How to any third
party.
58 The Company's computer software and hardware are:-
58.1 under the control of a Group Company and are not shared with
or used or accessible by any other persons; and
58.2 are in full operating order and carry out the functions
required of them free from error, malfunctions or material
downtime and have adequate capacity for present and reasonably
foreseeable future needs.
59 So far as the Warrantors are aware none of the software contains any
material defect whereby it will or may fail to perform according to its
specification or affect the performance of other software or systems
adversely.
60 The Computer Systems are covered by adequate security, back-ups,
duplication, hardware and software support and maintenance (including
emergency cover) provided by suitably trained personnel.
61 The Company owns all Intellectual Property in Computer Software
specifically written for the Company; in the case of all other Computer
Software, the use thereof is licensed to the Company without any
obligation on the Company to make any further payments, is not
<PAGE> 49
48
terminable without the consent of the Company and imposes no material
restrictions (save as to copying) on the use or transfer of such
Computer Software.
62 None of the licence terms applicable to material Computer Software are
unusual or onerous having regard to the nature and functions thereof.
63 So far as the Warrantors are aware none of the Computer Software
infringes Intellectual Property rights of any person, and all copies of
it have been lawfully made.
64 All records and data required by the Company for its business and
stored in electronic or magnetic media are capable of ready access
through its Computer Systems without recourse to any third party.
65 None of the Computer Systems, telephone systems or other systems or
equipment of the Group were adversely affected by the change in the
year from 1999 to 2000, and any related change in the field
configurations containing date information within such equipment was
fully compliant with Year 2000 Conformity. In particular but without
prejudice to the foregoing generality:
65.1 no value for current date caused any interruption in the
operation of any of the foregoing systems or equipment which
is still continuing;
65.2 date based functionality has behaved accurately and
consistently for dates prior to, during or after the year
2000;
65.3 date elements in interfaces and data storage permit specifying
the century to eliminate date ambiguity without human
intervention including leap year calculations; and
65.4 the year 2000 is being recognised as a leap year.
THE SCOTTISH PROPERTIES
Where reference is made in this section to "the Scottish Properties"
that is deemed to include reference, if applicable, to any property of
which the Scottish Properties form part.
66 Save for the new Kelso Property, the Company has a good, valid and
marketable title to the Heritable and Leasehold Properties. The Company
has no interest and is not in occupation of heritable property other
than as owner or tenant of the Scottish Properties which comprise all
the land and buildings owned occupied or otherwise used by the Company
in Scotland. The Company has not entered into any agreement to acquire
or dispose (on lease or otherwise) any land or buildings or any
interest therein other than the Scottish Properties.
67 The Company has exclusive and actual occupation of the Scottish
Properties free from encumbrances or heritable securities and the
Company has not granted or agreed to grant any
<PAGE> 50
49
right or interest therein including agreements to lease, tenancies,
heritable securities and rights of occupancy.
68 So far as the Warrantors are aware the rateable value of the Scottish
Properties is as shown in the current Valuation Roll and so far as the
Warrantors are aware there are no proposals for any change in the
rateable value of the Properties.
69 Save as disclosed in the titles and the leases listed in the Disclosure
Letter in relation to the Scottish Properties which have been exhibited
to the Purchaser's Solicitors there are no servitude rights, rights of
way, access or passage affecting the Scottish Properties. Save as
disclosed in the foregoing titles and leases, there are no other
burdens, restrictions or conditions affecting the Scottish Properties
or any part thereof of an unusual nature or which conflict with or
limit the present use of the Scottish Properties or any part thereof.
70 So far as the Warrantors are aware the Company has not by its
occupation or use of the Scottish Properties done any act or omitted to
do anything whereby the premiums on the insurance policy or policies
effected on the Scottish Properties have been increased or will be
increased after the Completion Date or whereby the policy or policies
have been or will be after the Completion Date invalidated in whole or
in part.
71 So far as the Warrantors are aware (but having made no investigation or
enquiry) the Scottish Properties are served by mains drainage, water,
electricity and gas services.
72 So far as the Warrantors are aware the Company has implemented and
observed the whole title conditions and burdens affecting the Scottish
Properties.
73 So far as the Warrantors are aware there are no outstanding obligations
in respect of mutual walls or gables.
74 So far as the Warrantors are aware there are no claims or disputes
outstanding affecting the Company in relation to boundaries,
servitudes, title conditions, the maintenance or otherwise of any
common parts or the provision of common services or other matters in
relation to any part of the Scottish Properties or their use.
So far as the Warrantors are aware in connection with the Leasehold
Properties:-
75 The landlords have not refused to accept rent or made any complaint or
objection and in particular no notice of intention to irritate or of
irritancy has been served.
76 Other than current rent the Company has no outstanding monetary
liabilities to the Landlords in connection with the Leasehold
Properties.
77 The rent and all other payment due under the leases of the Leasehold
Properties have been paid up to date by the Company.
<PAGE> 51
50
ENVIRONMENTAL LAWS AND THE PROPERTIES
78 The requirements and conditions of all agreements, consents and
licences required under Environmental Laws have so far as applicable
been complied with in all material respects since 1 December 1993 or
(in relation to the Maldon Property) since 21 August 1995.
79 The Company complies and has at all times since 1 December 1993 or (in
relation to the Maldon Property) since 21 August 1995 complied in all
material respects with all Environmental Laws; and so far as the
Warrantors are aware there are no facts or circumstances entitling any
licences, consents, authorisations and approvals to be revoked,
suspended, amended, varied, withdrawn or not renewed; and complies and
has complied in all material respects since 1 December 1993 or (in
relation to the Maldon Property) since 21 August 1995 with any
conditions of, and any notices, orders or requirements relating to,
such licences, consents, authorisations and approvals and is not
required to make any material investment or take any material action
under their terms to maintain or renew them in full force and effect.
80 No action, claim, proceedings, investigation, notice of suspension or
prohibition of any activity are pending or have been made or threatened
against the Company or any of its officers since 1 December 1993 or (in
relation to the Maldon Property) since 21 August 1995.
81 The Company has not since 1 December 1993 or (in relation to the Maldon
Property) since 21 August 1995 carried out any process on the
Properties which results or has resulted in the contamination or
pollution of the soil on the Properties or adjacent land or of any
water standing or running through the Properties or in trade effluent
or commercial or industrial waste requiring or which required disposal,
or the emission of any substance into the air and there are no storage
tanks (above or below ground) on the Properties.
82 The Company has not since 1 December 1993 or (in relation to the Maldon
Property) since 21 August 1995 deposited, disposed of, kept, treated,
imported, exported, transported, processed, manufactured, collected,
sorted or produced or caused or consented to the presence of any
deleterious, hazardous, toxic, noxious, proscribed or environmentally
damaging material substance including controlled or special waste under
Section 75 of the Environmental Protection Act 1990 at any time
(whether or not on the Properties).
83 So far as the Warrantors are aware there is not in relation to any
adjoining or neighbouring land or buildings, any controlled or special
waste or other substance referred to in the foregoing paragraph so far
as the Warrantors are aware nor any proposal to commence, alter or
cease operations on such land which would have a materially detrimental
effect on the use by the Company of the Properties.
<PAGE> 52
51
PLANNING LEGISLATION, ETC.
84 84.1 The present use of the Scottish Properties is authorised under
or pursuant to the Planning Acts and any relevant bye-laws,
building regulations or any other relevant legislation, such
authorisation or permission is unconditional and permanent and
no development or alteration has been carried out or been
instructed to be carried out in relation to the Scottish
Properties which would require any consent under or by virtue
of the Planning Acts or any bye-laws or building regulations
or other relevant legislation without such consent having been
properly obtained and any conditions and restrictions proposed
therein having been fully observed and performed.
84.2 So far as the Warrantors are aware no other breach of the
Planning Acts or of any relevant bye-laws, building
regulations and other legislation has been committed in
relation to the Scottish Properties.
84.3 No application for planning permission is awaiting decision.
85 85.1 The Company has not since 1 December 1993 received any notices
affecting the Properties from the local or other competent
authority or from any third party and there are no known
proposals made by any such authority or third party concerning
the compulsory acquisition of the whole or any part of the
Properties or any part thereof.
85.2 There are no material respects in which the Properties do not
comply with the requirements of the Factories Acts, the
Office, Shops and Railway Premises Act 1963, the Health and
Safety at Work etc. Act 1974.
85.3 So far as the Warrantors are aware the Properties are not
affected by any of the following matters;
85.3.1 any closing, demolition or clearance order
85.3.2 any enforcement order which has not been complied
with
85.3.3 any compensation received consequent upon a refusal
of any planning consent or the imposing of
restrictions on any planning consent
85.3.4 any order or proposal of a public or local authority
for the repair, compulsory acquisition or requisition
of the whole or any part thereof or the modification
or suspension of any planning application or
permission or the discontinuance of any use or the
removal of any building. Notwithstanding the
foregoing generality, there are no outstanding
Notices, orders or restrictions affecting the
Properties under the Planning Acts or any other
statutes or orders
<PAGE> 53
52
85.3.5 any agreement with the planning authority regulating
the use or development thereof
85.3.6 disputes with any adjoining or neighbouring owner
85.4 The Company holds a valid and unrestricted Fire Certificate in
respect of the Properties (where required).
CONDITION OF THE SCOTTISH AND MALDON PROPERTIES
86 All buildings or other erections on the Properties (other than the New
Kelso Property) are so far as the Warrantors are aware in good repair
and condition (having regard to their age) and are substantially fit
for the purpose for which they are at present used and there are no
major repairs contracted for or demanded by the Landlord or proposed in
respect of the Properties.
87 Copies of all structural surveys, site surveyors, structural engineers'
reports and architects' reports, which have been made since 1 December
1993 (in relation to the Heritable Property and the Leased Properties)
and 21 August 1995 (in relation to the Maldon Property) are in its
possession or power and which relate to the Properties have been
disclosed.
88 Save for the New Kelso Property, all buildings and erections on and all
plant and equipment on or in the Properties have so far as the
Warrantors are aware been erected or installed or where appropriate
altered or extended in accordance with all necessary permissions,
authorisations, licences and consents, including landlords' consents
and warrants, all of which permissions, authorisations, licences,
consents and warrants, together with relative Certificates of
Completion, will be delivered (where the same are available) to the
Purchaser at Completion.
89 To the best of the knowledge and belief of the Warrantors:-
89.1 no high alumina cement, blue asbestos, or any other substances
or material which is hazardous, defective or a risk to health
or safety has been used in the construction of, or any
alterations or additions to, any building or other erection on
the Properties.
89.2 no part of the Properties have since 1 December 1993 (in
relation to the Heritable Property and the Leased Properties)
or since 21 August 1995 (in relation to the Maldon Property)
been affected by flooding, subsidence or material structural
building or drainage defect.
TAXATION AND VAT
90 All necessary information, notices, computations and returns (all of
which were true and accurate in all material respects when made and as
far as the Warrantors are aware none of which is disputed by the Inland
Revenue or other appropriate authority) have been properly
<PAGE> 54
53
and timeously submitted by the Company to the Inland Revenue and any
relevant excise authorities in respect of taxation for all periods down
to the Accounts Date and have continued to be submitted on or before
the due date where the due date falls before Completion in respect of
later periods; there is no dispute with any such tax authority and the
Warrantors have no reason to suppose that any of such computations and
returns be the subject of such a dispute.
91 Claims have been timeously submitted for all reliefs from tax assumed
to be claimed for the purposes of the Accounts. The Warrantors are not
aware of any reason whereby the Company would be disentitled to claim
any such relief.
92 As far as the Warrantors are aware the Company has not since the
commencement of trading been the subject of a discovery or
investigation by the Inland Revenue or HM Customs & Excise and as far
as the Warrantors are aware there are no facts which are likely to
cause a discovery to be made or investigation to commence.
93 The Company has duly paid all tax for which it has been liable and
which has fallen due for payment by it as and when due and the Company
has not at any time been required to pay nor as far as the Warrantors
are aware have circumstances arisen which may give rise to a liability
to any penalty, fine, surcharge or interest under the provisions of the
Taxes Management Act 1970, the Value Added Tax Acts 1983 and 1994, the
Finance Act 1985, the Customs & Excise Management Act 1979, the Stamp
Act 1891 and the Stamp Duties Management Act 1891 or otherwise. So far
as the Warrantors are aware no circumstance has arisen whereby the
Company will be liable to make payment of any tax which might be the
subject of a claim by the Purchaser under the Tax Undertaking .
94 The Company has duly deducted and accounted to the Inland Revenue for
all tax required to be deducted from any payment made by it including
94.1 from payments by way of interest, annuity, rent or royalty in
terms of S349 and 350 of the Taxes Act, and
94.2 from payments to sub-contractors in the construction industry
(S559-567 of the Taxes Act).
95 No relief or deferment from Corporation Tax in respect of chargeable
gains has been obtained by the Company in respect of the replacement of
business assets pursuant to Sections 165, 247, 152, 153 or 175 of TCGA
which will affect the chargeable gain or allowable loss which would
arise on a disposal by the Company of any of its assets.
96 The Company has not at any time since 6 April, 1965 repaid or redeemed
or agreed to repay or redeem any shares of any class of its issued
share capital, nor capitalised or agreed to capitalise in the form of
shares or debentures any profits or reserves of any class or
description or passed or agreed to pass any resolution to do so.
<PAGE> 55
54
97 The Company has not issued any share capital which is of a relevant
class as defined in Section 249(1) of the Taxes Act and does not own
any such share capital. (stock dividends).
98 The Company does not participate in a Profit Related Pay Scheme under
Chapter III of Part V of the Taxes Act and no application for
registration of a Profit Related Pay Scheme has been made.
99 Save as disclosed or noted in the Accounts the written down value for
the purposes of the Capital Allowances Act 1990 of any pool of assets
is not less than the aggregate book value of the assets comprising the
pool shown or adopted for the purposes of the Accounts and the written
down value of any other asset for the purposes of the Capital
Allowances Act 1990 is not less than the book value of that asset shown
or adopted for the purposes of the Accounts.
100 Nothing has occurred since the Accounts Date other than in the ordinary
course of business by reason of which any balancing charge may be made
against or any disposal value may be brought into account by the
Company under the Capital Allowances Act 1990.
101 No capital allowances have been given to the Company in respect of any
asset which is leased to or from or hired to or from the Company and
the Company has not made any election or agreed to make any election in
terms of Section 53 and 55 of the Capital Allowances Act 1990 in
respect of such assets.
102 No elections under Section 37 of the Capital Allowances Act 1990 have
been made by the Company in respect of any asset and the Company is not
treated as having made such an election by virtue of Section 37 (8) (c)
of the Capital Allowances Act 1990. (short-lived assets).
103 In respect of any balancing charge which has arisen before the
Completion Date as a result of any act or sale or transfer of property
and to which Section 157 of the Capital Allowances Act 1990 applies, a
valid election has been made under Section 158 of the Capital
Allowances Act 1990. (sales between connected persons).
104 The Company is not in dispute with any person as to its entitlement to
capital allowances under Section 57(7) of the Capital Allowances Act
1990 and there are no circumstances which could give rise to such
dispute. (ownership of fixtures severed from land).
105 No securities within the meaning of Section 254 (1) of the Taxes Act
issued by the Company and remaining in issue at the date hereof were
issued in such circumstances that the interest payable thereon falls to
be treated as a distribution.
106 The Company has not received any capital distributions to which the
provisions of TCGA S189 apply.
<PAGE> 56
55
107 No claim for Tax has been assessed on the Company pursuant to Section
190 TCGA (tax on one group member recoverable from another).
108 The Company has not acquired any material asset from any other company
other than a Subsidiary which was at any relevant time a member of the
same group of Companies (as defined in Section 170 of TCGA) as that of
which the Company was also a member or an associated company other than
a Subsidiary as defined in Section 774(4) of the Taxes Act which the
Company continues to own.
109 Particulars of all elections made by the Company under the Taxes Act
Section 247 have been exhibited to the Purchaser and all such elections
are now in force.
110 The Company has not acquired or disposed of any asset or entered into
any transaction otherwise than by way of sale at arms length.
111 No chargeable profit or gain or balancing charge would arise if every
capital asset of the Company owned at the Accounts Date were to be
realised for a consideration equal to the amount of its book value in
the Accounts except to the extent provided for or noted in the Accounts
under the heading Deferred Tax.
112 The Company is not entitled to any capital loss to which the provisions
of Section 18 TCGA will apply. (transaction between connected persons).
113 No gain chargeable to corporation tax will accrue to the Company on the
disposal of any debt owed to the Company for proceeds equal to the
value of the debt (net of provisions) in the Accounts.
114 Details of any election made under Section 35 of the TCGA in relation
to the assets of the Company are attached to the Disclosure Letter.
115 The Company has not been gifted any asset to which Section 282 of the
TCGA might apply (failure of donor to pay chargeable gain).
116 The Company does not own and has not owned any shares on the disposal
of which Section 125(2) or (3) of the TCGA applies (disposal by close
company).
117 The Company does not own any interest in land which it acquired as a
result of a disposal made by a person who at the time of that disposal
was connected with the Company as defined by Section 286 of TCGA and
has not since 1 August, 1976 acquired any interest in land from any
person not resident in the United Kingdom.
118 The Company has not acquired benefits under any policy of assurance
other than as original beneficial owner.
<PAGE> 57
56
119 The Company has not made a claim
119.1 in respect of its assets under Sections 152 to 154 of TCGA
(replacement of business assets/rollover relief) or
119.2 under Section 85 of TCGA or Section 584 of the Taxes Act
(non-resident settlement/unremittable overseas income) or
119.3 under Section 280 or 48 of TCGA (instalment/contingent
consideration) or
119.4 pursuant to Section 23 of TCGA (compensation/insurance monies
used to restore asset) or
119.5 under Section 242 of the Taxes Act (losses set-off against
surplus FII) or
119.6 under Section 24 of TCGA (assets lost, destroyed etc).
120 The Company has not entered into any transaction to which the
provisions of the Taxes Act Section 780 applied (sale/leaseback of
land).
121 In relation to Section 30, 176 and 177 of TCGA, no loss which would
accrue on the disposal by the Company of any shares in, or securities
of, a company or any other asset is liable to be reduced by virtue of a
depreciatory transaction effected prior to Completion and no gain is
liable to be increased or deemed to have been made on such a disposal
by virtue of such transaction.
122 The Company is a close company.
123 No distribution within Section 418 of the Taxes Act has been made by
the Company (expenses treated as distribution) and no loan or advance
within Chapter II of Part XI of the Taxes Act has been made (and
remains outstanding) or agreed to, by the Company, and the Company has
not, since the Accounts Date, released or written off the whole or part
of the debt in respect of any such loan or advance.
124 Since the Accounts Date the Company has not made any such loan or
advance as is mentioned in Sections 419 to 422 of the Taxes Act. (loans
by close companies to participators).
125 There is no amount owing by the Warrantors or any of them or by any
other participator or associate of a participator to the Company or
vice versa "participator" and "associate" being defined as in Section
417 of the Taxes Act for the purposes of this and the next following
paragraph.
126 Since the Accounts Date the Company has not entered into any business
or dealing with any person who is or was a participator of the Company
(or any associate of such participator).
<PAGE> 58
57
127 The Company has not in the last six years made or agreed to make or
accepted:-
127.1 a surrender of or a claim for group relief pursuant to
Sections 402 to 413 of the Taxes Act or
127.2 a surrender of any amount of surplus advance corporation tax
pursuant to Section 240 of the Taxes Act.
which has not become final nor are there any outstanding rights to
receive payment for group relief under S402(b) of the Taxes Act.
128 The Company has not been concerned in any exempt distribution in terms
of the Taxes Act Sections 213 to 218 (inclusive) within five years
prior to the date hereof.
129 The Company has not been a party to or otherwise involved in any
transaction, scheme or arrangement to which any of the following
provisions have been or could be applied other than transactions in
respect of which all necessary clearances have been obtained on the
basis of accurate disclosure to the Inland Revenue and/or the Special
Commissioners of all material and relevant facts relating thereto
material to be known to the Inland Revenue and/or the Special
Commissioners, copies of which applications and clearances are
disclosed:-
ICTA 1988 S213-218 (demergers)
ICTA 1988 S219-229 (purchase of own shares)
ICTA 1988 SS.703 - 709 (transactions in securities)
TCGA SS.126 - 139 (Company reconstruction/amalgamation)
130 The Company has not been involved in any transaction or series of
transactions which may be regarded wholly or partly as a sham for any
tax purposes or be disregarded or reconstructed for any tax purposes by
reason of any motive to avoid, reduce or delay a possible liability to
tax.
131 The Company has not since the Accounts Date held any chargeable
security as defined in paragraph 2 of Schedule 4 to the Taxes Act (deep
discount securities).
132 The Company has not since the Accounts Date held any deep gain
securities as defined in Schedule 11 to the Finance Act 1989 or any
qualifying convertible securities as defined in Schedule 10 to the
Finance Act 1990 and has not issued any such securities which continue
to subsist and is not under any obligation to issue any such
securities.
133 The Company has not received any payments since the Accounts Date to
which Section 601
<PAGE> 59
58
or Schedule 22 of the Taxes Act applies (Pension Scheme Refunds).
134 Within the three year period prior to the date hereof there has been no
major change in the nature or conduct of a trade or business carried on
by the Company within the meaning of Sections 245 or 768 of the Taxes
Act.
135 As far as the Warrantors are aware the Inland Revenue or its equivalent
in other countries have not investigated any transactions or
arrangements involving the Company or its subsidiary with a view to
applying Taxes Act Section 770-773 or equivalent legislation in other
countries, and the Warrantors have no reason to believe that such an
investigation will be started in respect of any arrangements in
existence at present.
136 There is no outstanding Inland Revenue charge under the Inheritance Tax
Act 1984 S237-238 over the assets of or the shares in the Company.
137 No transfer of value in terms of the Inheritance Tax Act 1984 or
disposal by way of gift under Section 102 of the Finance Act 1986 has
been made to the Company and there are no circumstances as the result
of which any liability for capital transfer tax or inheritance tax has
arisen or could arise on the Company.
138 The Company has not at any time made a transfer of value (as defined in
Section 3 of the Inheritance Tax Act 1984).
139 The Company has properly operated the Pay as You Earn system and
deducted tax as required by law from all payments made or deemed to be
made to or for the benefit of its employees (and former employees) from
time to time including benefits provided for such employees which are
or have been treated as emoluments and has accounted for all tax so
deducted and has complied with all its reporting requirements in
relation thereto.
140 All National Insurance liabilities of the Company have been properly
accounted for by the Company to the relevant authorities.
141 The Company has not paid any amount or amounts of remuneration to nor
made any payment to or provided any benefit for any officer or employee
of the Company which will not be deductible in full from the profits of
the Company in computing the Corporation Tax payable by the Company and
the Company has not paid remuneration or compensation for loss of
office nor has it made any gratuitous payment to any of its present or
former directors or employees which will not be deductible from the
profits of the Company in computing the Corporation Tax payable by the
Company.
142 The Company is not party to any agreement or an arrangement requiring
or calling for the Company to pay any amount (other than an amount that
would be regarded or treated as a payment on capital account or for
business entertaining expenditure or for leased cars) that would be
wholly or partially disallowable as a deduction or charge for
Corporation Tax
<PAGE> 60
59
purposes.
OVERSEAS TAXATION ETC.
143 The Company has not since 31 March 1982 received any foreign loan
interest on which double taxation relief would be restricted under the
Taxes Act Section 798.
144 The Company is not affected by Section 830 of the Taxes Act (tax on
activities in territorial sea of the UK).
145 The Company has not since its incorporation been subject to taxation in
a jurisdiction outside the United Kingdom.
146 The Company has not without the prior consent of the Treasury under the
Taxes Act Sections 765 to 767 carried out or agreed to carry out any
transaction which would be unlawful in the absence of such consent
(migration of companies).
VALUE ADDED TAX ETC.
147 [There is no Warranty 147]
148 The Company has not exercised an election to waive the exemption under
Schedule 10 of the Value Added Tax Act 1994 in respect of any lands or
buildings in which the Company has or may acquire an interest.
149 The Company is not bound by reason of Section 89 of the Value Added Tax
Act 1994 applying to any agreement to pay value added tax in addition
to the agreed consideration or rent as a result of any person
exercising the election to waive the exemption in terms of paragraph 2
of Schedule 10 of the Value Added Tax Act 1994.
150 The Company has complied in all material respects with the provisions
of the Value Added Tax Act 1994 and all regulations made or notices
issued thereunder in respect of VAT.
151 The Company is not and has never been a member of any group of
companies for VAT purposes.
152 The Company has not made any exempt supplies in consequence of which it
is or will be unable to obtain credit for all input tax paid by it
during an VAT quarter ending after the Accounts Date.
153 The Company is not and will not become liable for VAT by virtue of
Section 47 of the Value Added Tax Act 1994 (agent for non-resident).
154 The Company is not required to give security for payment of Value Added
Tax.
<PAGE> 61
60
155 All documents in the enforcement of which the Company is interested
have been properly and duly stamped and duties accounted for.
156 No claim has been made by the Company at any time in respect of stamp
duty relief under Finance Act 1927 Section 55, Finance Act 1930 Section
42 (as amended) or Section 77 of the Finance Act 1986 or of capital
duly relief under Finance Act 1973 Schedule 19 Part III.
MISCELLANEOUS AND GENERAL
157 The Company has the benefit of all material licences, consents or other
permissions or approvals to enable it to carry on its business in the
manner carried on at today's date.
158 No order has been made or petition presented or resolution proposed or
passed for winding up the Company; no charge, arrestment, poinding or
other form of diligence has been executed against the Company or any of
its assets; no receiver has been appointed, or is entitled to be
appointed, by any person of its business or assets or any parts
thereof; no petition for administration of the Company has been
presented and there is no unfulfilled or unsatisfied judgement or court
order outstanding against the Company.
159 So far as the Warrantors are aware neither this Agreement nor the
consummation of the transactions herein contemplated will or is likely
to cause the Company to lose the benefit of any material right or
privilege it presently enjoys; nor so far as the Warrantors are aware
is any person who normally does business with the Company likely not to
continue to do so on the same basis; nor so far as the Warrantors are
aware is any officer or senior employee likely to leave the employment
of the Company.
160 The Company has not given any covenants limiting or excluding its right
to do business and/or compete in any area or field with any other
person.
161 The Company does not have bank borrowings which exceed applicable
overdraft limits nor does the total amount of the Company's borrowings
exceed any limitation in its Articles of Association or in any other
document.
162 The Company has not engaged in financing of any type which would not
require to be shown or reflected in its statutory accounts.
163 The Disclosure Letter contains full details of all overdrafts, loans,
letters of credit, debentures, acceptance credits, invoice discounting
arrangements and other financial facilities outstanding or available to
the Company,. There has been no material breach of, or material
non-compliance with, any provisions of any such facilities, no steps
for the early repayment of any indebtedness have been taken or
threatened, and no circumstances have arisen which might prejudice the
continuation of any such facilities in their current form.
<PAGE> 62
61
164 The Company has not, since the Accounts Date, repaid or become liable
to repay, any loan or indebtedness in advance of its stated maturity;
the Company has received no demand or notice (whether formal or
informal) from any lenders of money to the Company, requiring repayment
thereof or indicating the intention of any such lender to enforce any
security which it may hold over any assets of the Company, and there
are no circumstances likely to give rise to any such demand or notice.
165 In the three years prior to Completion there has been no material and
detrimental change in the basis on which credit has been given to the
Company nor has one been intimated.
166 The Company has no outstanding loan capital, nor has it discounted or
factored its debts or borrowed any money which it has not repaid.
167 The Company has not lent any money which has not been repaid to it and
does not own the benefit of any debt (whether present or future) other
than debts accrued to it in the ordinary course of its business.
168 Other than those referred to in the Schedule hereto, the Company has
not created or agreed to create any mortgage, charge, pledge or
debenture or given or entered into or agreed to give or enter into any
guarantee, indemnity or similar commitment or agreement for the
postponement or subordination of debt (whether in respect of its own
obligations or those of a third party) or (except in the ordinary
course of business) created or agreed to create any lien or set-off.
169 Details of any receipt of, or application for, any grant, subsidy or
financial assistance from any government department or agency or any
local or other authority, whether under the Industry Acts, or a
regional development grant, or temporary employment subsidy or
otherwise by the Company are included within the Disclosure Letter. The
Company is under no actual or contingent liability to repay any such
grant or subsidy; and so far as the Warrantors are aware no
circumstances have arisen in which any outstanding application by the
Company for any such grant or subsidy is likely to be refused either in
whole or in part and so far as the Warrantors are aware neither the
execution nor the completion of this Agreement will constitute such
circumstances.
170 So far as the Warrantors are aware the Company has not done, or omitted
to do, anything which could result in any such grant, subsidy or
payment received or receivable by it as is referred to in the preceding
warranty becoming repayable or being withdrawn or withheld.
171 The Company has not used in the course of its business any trading name
other than its full corporate name.
PENSIONS AND OTHER BENEFITS
172 Other than in relation to the Pension Scheme the Company is not under
any legal obligation to
<PAGE> 63
62
provide any retirement, death or disability benefits to any person nor
has it regularly conferred any such benefits (including without
prejudice to the foregoing generality such benefits in respect of
earnings in excess of the permitted maximum within the meaning of
paragraph 22 of Schedule 6 to the Finance Act 1989).
173 The Disclosure Letter has annexed to it true, complete and up to date
copies of:-
173.1 all (if any) agreements deeds and rules issued to the Company
relating to the Scheme;
173.2 copies of the explanatory literature issued to Employees who
are or may become members of the Scheme;
173.3 a list of the Employees who are members of the Pension Scheme.
174 There are no agreements with any person providing services of any
nature in connection with the Scheme, including (but without
limitation) investment management or advisory services, administration
and data processing services at any cost to the Company.
175 The Company is under no liability (whether to make any further
contribution or otherwise) in respect of the funding of the Keltek
Pension Scheme ("the former scheme") and no claim has been made by any
Employee to the Company that alleges the Company has any such
liability. All benefits provided by the former scheme are fully insured
and have been or will be transferred into the Pension Scheme.
176 All contributions that have become due under the Pension Scheme have
been paid to date and no payments will fall to be made by the Company
in respect of periods of employment prior to any individual's
commencement of membership of the Pension Scheme or any period which is
greater than the length of any individual's membership of the Pension
Scheme.
177 The Scheme is approved by the Board of Inland Revenue for the purposes
of Chapter IV of Part XIV of the Taxes Act and so far as the Warrantors
are aware there are no circumstances which might give the Inland
Revenue reason to withdraw such approval.
178 MALDON PROPERTY WARRANTIES
178.1 TITLE
178.1.1 The Maldon Property comprises all the property in
England and Wales owned, occupied or otherwise used
in connection with their business by the Company
178.1.2 The Maldon Property is exclusively occupied or
otherwise used by the Company in connection with the
Company's business
<PAGE> 64
63
178.1.3 The Company has not entered into any agreement to
acquire or dispose (on lease or otherwise) any land
or building in England or Wales or any interest
therein
178.2 STATUTORY OBLIGATIONS
178.2.1 So far as the Warrantors are aware the Company has
complied and is complying in all material respects
with all applicable statutory and bye-law
requirements with respect to the Maldon Property.
178.2.2 So far as the Warrantors are aware there is no
outstanding and unobserved or unperformed obligation
with respect to the Maldon Property necessary to
comply with the requirements (whether formal or
informal) of any competent authority exercising
statutory or delegated powers.
178.2.3 No licences are required whether under the Licensing
Act 1988 or otherwise in relation to the Maldon
Property.
178.3 CONDITION OF THE PROPERTY
178.3.1 The Company has been granted collateral warranties
from each of Maldon Sub-Contractors (meaning each of
Duplus Domes Ltd, C G Franklin Mechanical Services
Ltd, SD Samuels Limited, SCWS Ltd, and Bespoke
Precast Ltd) and possesses all relevant documentation
issued pursuant to the Construction (Design and
Management) Regulations 1994 in respect of the
construction of the buildings on the Maldon Property.
<PAGE> 65
64
PART 4
THIS DEED is made the day of 20
BETWEEN
(1) THE PERSONS whose respective names and addresses are set out in
Schedule 1 hereof (together referred to as the "Covenantors"); and
(2) LYCIDAS (323) LIMITED, a company incorporated in Scotland, having its
registered office at 292 St Vincent Street, Glasgow, G2 5TQ("the
Purchaser").
WHEREAS
By an Agreement ("the Sale Agreement") dated 26 June 2000 and made between the
Covenantors (1) and the Purchaser (2) the Covenantors agreed to sell the whole
of the issued share capital of Keltek Holdings Limited to the Purchaser and the
Covenantors agreed on completion of such sale to enter into this Deed.
IT IS AGREED as follows:
1 DEFINITIONS AND INTERPRETATIONS
In this Deed:
1.1 Words and expressions defined in the Sale Agreement have the
same meaning except where otherwise provided or unless there
is something in the subject matter or context which is
inconsistent with them.
1.2 "COMPANY" means each, any or all of the companies whose
respective names, registered numbers and registered offices
are set out in Schedule 2 as the context shall require.
1.3 "EVENT" means the death of any person, any transaction, event,
(including the execution and completion of all provisions of
the Sale Agreement) act or omission and includes further any
change of residence of any person for the purposes of any Tax
and becoming, being or ceasing to be a member of a group of
companies (howsoever defined) for the purposes of any Tax and
references to an Event occurring on or before Completion shall
include the result of a series of Events, the first of which
was an Event occurring on or before Completion and the second
or subsequent of which is an act or omission of the Company
arising as a result of a legally binding obligation created on
or before Completion.
1.4 "LIABILITY FOR TAXATION" means any liability of the Company to
make a payment of
<PAGE> 66
65
Taxation whether or not the same is primarily payable by the
Company and whether or not the Company has or may have any
right to reimbursement against any other person or persons
and:-
1.4.1 the Loss of any Relief as a result wholly or mainly
of an Event on or before Completion where such Relief
("an Accounts Relief") has been taken into account in
computing and so reducing or eliminating any
provision for deferred Tax which appears in the
Accounts (or which but for such Relief would have
appeared in the Accounts) or where such Relief was
treated as an asset of the Company in the Accounts in
which case the amount of the Liability for Taxation
shall be the amount of Taxation for which the Company
becomes liable and which could have been saved but
for such Loss;
1.4.2 the Loss of any right to repayment of Taxation
(including any repayment supplement) which was
treated as an asset in the Accounts of the Company in
which case the amount of the Liability for Taxation
shall be the amount of the right to repayment and any
related repayment supplement the subject of such
Loss; and
1.4.3 the set-off or use against income, profits or gains
earned, accrued or received by the Company on or
before Completion or against any Tax chargeable on
the Company in respect of an Event occurring on or
before Completion of any Relief or right to repayment
of Taxation (including any repayment supplement but
other than a Relief or right to repayment of Taxation
referred to in the definition of a "Saving" or which
arises as a result of any payment under the Fundshare
Scheme, the Preference Bonus Scheme or of any other
payment to officers or employees or ex-employees of
the Company or a subsidiary envisaged by the Sale
Agreement (an "Employee Payment")) which arises
wholly or mainly as a result of an Event after
Completion (a "Post-Completion Relief") in
circumstances where, but for such set-off or use, the
Company would have had a liability to make a payment
of Taxation for which the Purchaser would have been
able to make a claim against the Covenantor(s) under
this Deed in which case the amount of the Liability
for Taxation shall be the amount of Taxation for
which the Company would have become liable but for
such set-off or use.
1.5 "IHT LIABILITY" means:-
1.5.1 any amount of inheritance tax which is at Completion
unpaid and in respect of which the Inland Revenue has
a charge on any of the Shares or assets of a Company
or a power to sell, mortgage or charge any of the
Shares or assets of any Company; or
<PAGE> 67
66
1.5.2 any amount of inheritance tax which after Completion
becomes a charge on or gives rise to a power to sell,
mortgage or charge any of the Shares or assets of a
Company being a liability in respect of additional
inheritance tax payable on the death of any person
within seven years after a transfer of value if a
charge on or power to sell, mortgage or charge any
such Shares or assets of a Company existed at
Completion or would have existed at Completion, if
the death had occurred immediately before Completion
and the inheritance tax payable as a result of such
death had not been paid;
and in determining for the purposes of this Deed
whether a charge on or power to sell, mortgage or
charge any of the Shares or assets of a Company
exists at any time the fact that any inheritance tax
is not yet payable or may be paid by instalments
shall be disregarded and such inheritance tax shall
be treated as becoming due and a charge or power to
sell, mortgage or charge as arising on the date of
the transfer of value or other date or event on or in
respect of which it becomes payable or arises and the
provisions of section 213 of the Inheritance Tax Act
1984 shall not apply.
1.6 "LOSS" means any modification, loss of all or any part of an
amount of a Relief, counteraction, nullification, disallowance
or clawback for whatever reason.
1.7 "RELIEF" means any relief, allowance, credit, exemption or
set-off from or against Taxation or any deduction in computing
income, profits or gains for the purposes of Taxation.
1.8 "SAVING" means the reduction or elimination of any liability
of the Company to make an actual payment of Taxation in
respect of which the Covenantors would not have been liable
under Clause 2, or a right to a repayment of Taxation arising
as a result of any Relief arising wholly as a result of a
Liability for Taxation in respect of which the Covenantors are
liable to make a payment under Clause 2 or the Event giving
rise to that Liability for Taxation or the discharge of that
Liability to Taxation.
1.9 "TAX" or "TAXATION" means income tax, corporation tax, capital
gains tax, value added tax, national insurance contributions,
customs, excise and other import duties, stamp duty, stamp
duty reserve tax, inheritance tax, uniform business rates,
insurance premium tax, landfill tax and all and any other
taxes (but not duties or levies) howsoever designed and
including all interest, penalties, charges and fines relative
thereto whether such tax is imposed by central or local
government and in any relevant jurisdiction.
1.10 "TAX CLAIM" means any assessment (including self assessment
where required by
<PAGE> 68
67
law), notice, demand, letter or other document issued or
action taken by or on behalf of any Taxation Authority from
which it appears that the Company is or may be subject to a
Liability for Taxation or other liability in respect of which
the Covenantors are or may be liable under this Deed.
1.11 "TAXATION AUTHORITY" means the Inland Revenue, Customs &
Excise, Department of Social Security and any other
governmental or other authority whatsoever competent to impose
on the Company any Taxation whether in the United Kingdom or
elsewhere.
1.12 "TAXATION STATUTE" means any directive, statute, enactment,
law or regulation wheresoever enacted or issued, coming into
force or entered into providing for or imposing any Taxation
and shall include orders, regulations, instrument, bye-laws or
other subordinate legislation made under the relevant statute
or statutory provision and any directive, statute, enactment,
law, order, regulation or provision which amends, extends,
consolidates or replaces the same or which has been amended,
extended, consolidated or replaced by the same.
1.13 "VENDORS' RELIEF" means a Relief other than an Accounts Relief
or a Post-Completion Relief.
1.14 Headings are for convenience only and shall not affect the
construction of this Deed.
1.15 References to income, profits or gains earned, accrued or
received by the Company shall include any income, profits or
gains deemed pursuant to the relevant Taxation Statute to have
been or treated or regarded as earned, accrued or received by
the Company.
1.16 Unless the context otherwise requires the singular shall
include the plural and vice versa, the masculine shall include
the feminine and references to persons shall include bodies
corporate, unincorporated associations and partnerships in
each case whether or not having separate legal personality.
2 COVENANT
Subject as provided in this Deed and/or the Sale Agreement the
Covenantors hereby jointly and severally covenant to pay to the
Purchaser an amount equal to:
2.1 any Liability for Taxation resulting from any Event occurring
on or before Completion or in respect of income, profits or
gains earned, accrued or received by the Company on or before
Completion;
2.2 any IHT Liability;
<PAGE> 69
68
2.3 any Liability for Taxation for which the Company would not
have been liable but for being treated as being connected with
the Covenantors or any of them before Completion; and
2.4 all costs and expenses reasonably and properly incurred and
payable by the Company or the Purchaser as a result of any
action taken to avoid, resist or settle any Tax Claim at the
request of the Covenantors under Clause 4, Liability for
Taxation, IHT Liability or otherwise taking or defending any
action under this Deed for which the Covenantors are liable
hereunder.
3 LIMITATION OF COVENANTORS' LIABILITY
3.1 The covenant given by Clause 2 above shall not cover any
Liability for Taxation:
3.1.1 to the extent that a provision or reserve in respect
thereof was made in the Accounts;
3.1.2 to the extent that such Liability for Taxation arises
from any act or transaction of the Company in the
ordinary course of its business since the Accounts
Date and each of the following Taxation Liabilities
shall be deemed to so arise:
3.1.2.1 any liability to corporation tax in respect
of actual (as opposed to deemed) income
profits or gains earned, accrued or received
by the Company since the Accounts Date;
3.1.2.2 any Liability to Taxation which is
discharged after the Accounts Date, or may
be so discharged, out of moneys deducted or
withheld for the purpose of the Company; and
3.1.2.3 any liability to VAT in respect of any
supply, importation or acquisition of or by
the Company in the ordinary course of
business since the Accounts Date;
3.1.3 to the extent that such Liability for Taxation arises
or is increased as a result of any change to any
Taxation Statute announced and coming into force
after the Accounts Date;
3.1.4 to the extent recovery has been made by the Purchaser
under the Sale Agreement in respect of the same
subject matter;
3.1.5 to the extent that such Liability for Taxation would
not have arisen but for or is increased as a result
of a voluntary act or transaction carried out by
<PAGE> 70
69
the Purchaser or the Company after the date hereof
otherwise than in the ordinary course of business or
otherwise than pursuant to a legally binding
obligation created on or before Completion;
3.1.6 except in the case of fraud by the Covenantors, or,
on or before Completion, by the Company unless
written notice of such Liability for Taxation
specifying in reasonable detail the circumstances
giving rise to such Liability for Taxation and the
amount thereof has been served on the Covenantors on
or prior to the seventh anniversary of Completion;
3.1.7 in respect of stamp duty or stamp duty reserve tax
payable on the transfer or agreement to transfer the
Shares pursuant to the Agreement;
and for the purposes of this Clause 3 only "Liability for
Taxation" shall be deemed to include a liability or loss
falling within Clause 2.2 or 2.4 above.
3.1.8 any Vendors' Relief is or becomes available (or is
made available) to the Company to mitigate the
Liability to Taxation;
3.1.9 it results wholly or mainly from:
3.1.9.1 the Company ceasing to carry on any trade or
business after Completion or effecting a
major change after Completion in the nature
or conduct of any trade or businesses
carried on by it;
3.1.9.2 the Company changing the date to which it
make up its accounts or changing any of its
accounting policies, bases or practices
(including, without limitation, the
treatment of timing differences and the
bases on which the Company values its
assets) in either case on or after
Completion;
3.1.9.3 the failure by the Company after Completion
to make any claim, election, surrender or
disclaimer or to give any notice or consent
and which was taken into account:
(A) in computing and so reducing any
provision which appears in the
Accounts (or eliminating any
provision which would otherwise have
appeared in the Accounts); or
(B) in computing any right to repayment
of Taxation which appears in the
Accounts;
or the withdrawal or amendment by the
Company after Completion of any such claim,
election, surrender, disclaimer, notice or
consent
<PAGE> 71
70
properly and justifiably made by the Company
prior to Completion;
3.1.9.4 any claim, election, surrender, disclaimer,
notice or consent made by the Company after
Completion, the making or doing of which was
not taken into account:
(A) in computing and so reducing any
provision which appears in the
Accounts (or eliminating any
provision of which, would otherwise
have appeared in the Accounts); or
(B) in computing any right to repayment
of Taxation which appears in the
Accounts;
3.1.9.5 any material failure by the Purchaser or the
Company to comply with their obligations
under clauses 4 and 8 which was not capable
of remedy or was not remedied within a
reasonable time following a request from the
Covenantors so to do or any material delay
in complying with such obligations; or
3.1.9.6 any legislation or any change in the rate of
any Taxation or any imposition of Taxation
or change in the practice of, or concession
operated by, any Tax Authority where such
legislation, change or imposition has effect
after Completion.
3.2 The provisions of Clause 6.9, 7.1, 7.3.1, 7.4, 7.5, 7.7 and
7.9, 7.10 and 7.12 - 7.14 and 7.17 inclusive of the Sale
Agreement shall apply mutatis mutandis to limit the liability
of the Covenantors (therein the Warrantors) or conduct of
claims hereunder.
3.3 In this Deed, where reference is made to "the Company" in
respect of acts, omissions, consents, claims, elections,
surrenders, disclaimers, notices or changes (herein "Actions")
such shall only exclude or limit liability on the part of the
Covenantors provided such Actions have been disclosed by those
of the Covenantors (in their capacity as continuing employees
of the Company) to the Board of Directors of the Company and
approved by it.
4 DISPUTES AND CONDUCT OF TAX CLAIMS
4.1 If the Purchaser or the Company (as the case may be) shall
become aware of a Tax Claim, the Purchaser shall or shall
procure that the Company shall within a reasonable time
thereafter give written notice thereof to the Covenantors and
in any event within 14 days of receipt.
4.2 If the Covenantors shall secure the Company and/or (as the
case shall require) the
<PAGE> 72
71
Purchaser to the Purchaser's reasonable satisfaction against
all liabilities, costs, damages or expenses which may be
properly incurred thereby including any additional Liability
for Taxation, the Purchaser shall and shall procure that the
Company shall take such action as the Covenantors may
reasonably request by notice in writing given to the Company
and the Purchaser to avoid, mitigate, dispute, defend, resist,
appeal or compromise any Tax Claim (such a Tax Claim where
action is so requested being hereinafter referred to as a
"Dispute"). Provided that neither the Company nor the
Purchaser shall be obliged to appeal or procure an appeal
against any assessment to Taxation raised on either of them
if, the Covenantors having been given written notice of the
receipt of such assessment, the Company and the Purchaser have
not within 21 days of the date of the notice received
instructions in writing from the Covenantors to do so.
4.3 If (1) the Covenantors do not request the Purchaser or the
Company to take any action under sub-clause 4.2 of this Deed
or fail to secure the Purchaser and the Company to the
Purchaser's reasonable satisfaction within a period of time
(commencing with the date of the notice given to the
Covenantors that is reasonable having regard to the nature of
the Tax Claim and the existence of any time limit in relation
to avoiding, disputing, defending, resting, appealing or
compromising such Tax Claim) and which period shall not in any
event exceed a period of 42 days or (2) the Tax Claim alleges
on reasonable grounds that fraud or a criminal offence has
been committed by the Covenantors or, on or before Completion,
by the Company, the Purchaser or Company shall have the
conduct of the Dispute absolutely (without prejudice to its
rights under this Deed) and shall be free to pay or settle the
Tax Claim on such terms as the Purchaser or the Company may in
its absolute discretion consider fit without prejudice to any
rights of the Covenantors against either of them.
4.4 Subject to sub-clause 4.3, at the written request of the
Covenantors the conduct of a Dispute shall be delegated to the
Covenantors Provided that, unless the Purchaser and the
Company and the Covenantors specifically agree otherwise in
writing, the following terms shall apply;
4.4.1 the Company and the Purchaser shall promptly be kept
informed of all matters pertaining to the Dispute and
shall be entitled to see and keep copies of all
correspondence and notes or other written records of
meetings with representatives of the Tax Authority in
question to the extent that it relates to the
Dispute;
4.4.2 the appointment of solicitors or other professional
advisers to act in the name of the Company shall be
subject to the approval of the Purchaser, such
approval not to be unreasonably withheld or delayed;
4.4.3 all material written communications pertaining to the
Dispute which are to
<PAGE> 73
72
be transmitted to the relevant Taxation Authority
shall first be submitted to the Purchaser and the
Company for approval and shall only be finally
transmitted if such approval is given, which approval
is not to be unreasonably withheld or delayed; and
4.4.4 the Covenantors shall make no settlement or
compromise of the Dispute or agree any matter in the
conduct of the Dispute without the prior approval of
the Company, such approval the Purchaser shall
procure shall not be unreasonably withheld or
delayed.
4.5 Neither the Purchaser nor the Company shall be subject to any
claim by or liability to either of the Covenantors for
non-compliance with any of the foregoing provisions of this
Clause 4 if the Purchaser or the Company has bona fide acted
in accordance with the instructions of [any one or more of the
Covenantors].
5 PAYMENT DATE AND INTEREST
5.1 Where the Covenantors are liable to make any payment under
Clause 2, the due date for the making of that payment (the
"Due Date") shall be the later of the date falling seven days
after the Purchaser has served a notice on the Covenantors
demanding that payment and;
5.1.1 in a case that involves an actual payment of Taxation
by the Company, the date on which the Taxation in
question would have had to have been paid to the
relevant Taxation Authority in order to prevent a
liability to interest or a fine, surcharge or penalty
from arising in respect of the Liability for Taxation
in question; or
5.1.2 in any case that involves a Liability for Taxation
falling within Clause 1.4.1 the last date upon which
the Taxation referred to in that clause is or would
have been required to be paid by the Company to the
relevant Taxation Authority; or
5.1.3 in any case that involves a Liability for Taxation
falling within Clause 1.4.2 the date upon which the
repayment was due from the relevant Taxation
Authority; or
5.1.4 in any case that involves a Liability for Taxation
falling within Clause 1.4.3 the date upon which the
Taxation for which the Company becomes liable is
required to be paid to the relevant Taxation
Authority.
5.2 If any sums required to be paid by the Covenantors under this
Deed are not paid on the Due Date, then, except to the extent
that the Covenantors' liability under Clause 2 compensates the
Purchaser for the late payment by virtue of it extending to
<PAGE> 74
73
interest and penalties, such sums shall bear interest (which
shall accrue from day to day after as well as before any
judgement from the same) at the rate of 2 per cent per annum
over the base rate from time to time of Bank of Scotland from
the date following the Due Date up to and including the day of
actual payment of such sums.
6 TAXATION OF PAYMENTS
6.1 Any sum payable by the Covenantors to the Purchaser under this
Deed shall be paid free and clear of any deduction or
withholding whatsoever, save only as may be required by law.
6.2 If any deduction or withholding is required by law to be made
from any payment by the Covenantors under this Deed (other
than a payment made pursuant to Clause 5.3) or if (ignoring
any Accounts Relief or Post-Completion Relief) the Purchaser
is subject to Taxation in respect of such payment the
Covenantors shall (save to the extent the Purchaser is
entitled to credit for such deduction or withholding) increase
the amount of the payment by such additional amount as is
necessary to ensure that the net amount received and retained
by the Purchaser (after taking account of all deductions or
withholdings or Taxation) is equal to the amount which it
would have received and retained had the payment in question
not been subject to any deductions or withholdings or
Taxation.
6.3 The provision of Clause 6.2 shall not require the Covenantors
to make any such additional payment as is referred to therein
to the extent that the payment by the Covenantors is subject
to Taxation as a result of any act or omission of the
Purchaser or the Company on or after Completion.
7 RECOVERY FROM OTHER PERSONS
7.1 Where the Purchaser or the Company is or becomes entitled or
becomes aware that it may be entitled to recover from some
other person not being the Purchaser, the Company or any other
company within the same group companies as the Purchaser or
the Company any amount which is referable to a Liability for
Taxation which has resulted in a liability of the Covenantors
to make payment under this Deed or to make a Saving, the
Purchaser shall or shall procure that the Company shall:
7.1.1 notify the Covenantors of its entitlement or
potential entitlement; and
7.1.2 if required by the Covenantors and, subject to the
Purchaser and the Company being indemnified by the
Covenantors against any Taxation that may be suffered
on receipt of that amount and secured against any
costs and expenses incurred in recovering that
amount, take or procure that the Company takes all
reasonable steps to enforce that recovery or to make
that Saving.
<PAGE> 75
74
7.2 If the Purchaser or the Company recovers any amount referred
to in sub-clause 7.1 or obtains such a Saving the Purchaser
shall account to the Covenantors for the lesser of:
7.2.1 any amount recovered (including any related interest
or related repayment supplement) less any Taxation
suffered in respect of that amount and any costs and
expenses incurred in recovering that amount (save to
the extent that that amount has already been made
good by the Covenantors under sub-clause 7.1.2) or
the amount of that Saving; and
7.2.2 the amount paid by or due from the Covenantors under
Clause 2 in respect of the Liability for Taxation in
question.
8 CORPORATION TAX RETURNS
8.1 The Covenantors or their duly authorised agents shall (at the
Company's cost and expense) prepare the corporation tax
returns and computations of the Company for all accounting
periods ended on or prior to the Accounts Date, to the extent
that the same shall not have been prepared before Completion,
and submit them to the Purchaser.
8.2 The Purchaser shall procure that the returns and computations
mentioned in sub-clause 8.1 shall be authorised, signed and
submitted to HM Inspector of Taxes without amendment or only
with such amendments as the Purchaser reasonably considers to
be necessary so as to make them true and accurate in all
respects and as to which the Covenantors shall agree (such
agreement not to be unreasonably withheld or delayed) and
shall give the Covenantors or their agents all such assistance
as may reasonably be required (at the Company's cost and
expense) to agree those returns and computations with HM
Inspector of Taxes.
8.3 The Covenantors or their duly authorised agents shall (at the
Company's cost and expense) prepare all documentation and
shall have conduct of all matters (including correspondence)
relating to the corporation tax returns and computations of
the Company for all accounting periods ended on or prior to
the Accounts Date provided that the Covenantors shall not
without the prior written consent of the Purchaser (not to be
unreasonably withheld or delayed) transmit any substantive
communication to HM Inspector of Taxes.
8.4 The Purchaser shall procure that the Company affords such
access to its books, accounts and records as is necessary and
reasonable to enable the Covenantors or their duly authorised
agents to prepare the corporation tax returns and computations
of the Company for all accounting periods ended on or before
the Accounts Date and conduct matters relating to them in
accordance with this Clause 8.
<PAGE> 76
75
8.5 The Covenantors shall take all reasonable steps to ensure that
the corporation tax returns and computations of the Company
for all accounting periods ended on or before the Accounts
Date are prepared and agreed with HM Inspector of Taxes as
soon as reasonably practicable in accordance with this clause.
9 NON-ASSIGNABILITY
This Agreement shall be binding on the personal representatives or
successors of the Covenantors. This Agreement may be freely assigned in
whole or in part by the Purchaser to any of its wholly owned
subsidiaries or to any member of the group of Companies of which it
forms part from time to time but not further or otherwise without the
prior written consent of the Covenantors.
10 WAIVER
No time, indulgence or action other than a specific waiver made
formally in writing by the Covenantors or the Purchaser at any time of
any of their respective rights or remedies hereunder shall extinguish
their respective rights to enforce their respective remedies in
connection with the subject matter of any such waiver.
11 NOTICES
Any notice or other document to be given hereunder to the Covenantors
or the Purchaser shall be delivered, sent by first class recorded
delivery or sent via facsimile (receipt electronically confirmed) to
that party with a copy to the Purchaser's or the Vendors' Solicitors
respectively at the undernoted addresses. Any such notice shall be
deemed to have been served if delivered at the time of delivery or if
posted at the expiration of forty-eight hours after posting. The
parties hereby appoint their respective Solicitors as agents for
service of any proceedings which may arise from this Agreement and any
notices or any such proceedings shall be addressed as follows:-
To the Purchaser:- To the Covenantors:-
For the attention of George Frier For the attention of Andrew
McClure Naismith Kay/John Toon Addleshaw Booth & Co
292 St Vincent Street Solicitors
Glasgow G2 5TQ Sovereign House
PO Box 8
Fax: 0141 248 3998 Sovereign Street
Leeds LS11 1HQ
and Fax 0113 209 2060
<PAGE> 77
76
Attn: Kenneth V Hallett
Quarles & Brady LLP
411 E. Wisconsin Avenue
Milwaukee WI
USA
Fax 001 (414) 271 3552
12 PROPER LAW
This Agreement shall be governed by and construed in accordance with
the law of Scotland which is the proper law of the Agreement and the
parties hereto prorogate the jurisdiction of the Scottish Courts: IN
WITNESS WHEREOF
IN WITNESS WHEREOF this Deed consisting of this and the preceding pages
and the Schedules is executed as follows:-
SUBSCRIBED by
on the day of
20 in the presence of:-
---------------------------------
Witness
---------------------------------- ---------------------------------
Full Name
-------------------------------- ---------------------------------
Address
---------------------------------- ---------------------------------
----------------------------------------
SUBSCRIBED by on or behalf of the Purchaser
by at
on the day of
20 in the presence of:-
---------------------------------
Witness
---------------------------------
Full Name
-------------------------------
Address
---------------------------------
----------------------------------------
<PAGE> 78
77
SCHEDULE PART 1
THE COVENANTORS
Michael Neil Jarman
Muirburn
Sharplaw Road
Jedburgh
Roxburghshire TD8 6SF
Timothy Ford
9 Eden Park
Ednam
Kelso
Roxburghshire TD5 7RG
Andrew Allan
24 Forestfield
Kelso
Roxburghshire TD5 7BX
Andrew John MacFarlane
Gatehouse Farm
Ranters Lane
Goudhurst
Cranbrook
Kent TN17 1HL
<PAGE> 79
78
SCHEDULE PART 2
THE COMPANIES
NAME REGISTERED NO REGISTERED OFFICE
Keltek (Holdings) Limited SC146948 Pinnacle Hill, Kelso,
Roxburghshire TD5 8DW
Keltek Electronics Limited SC041957 Pinnacle Hill, Kelso,
Roxburghshire TD5 8DW
Keltek Electronics (Maldon) Limited 03053862 Quayside Park, Bates Road,
Maldon, Essex CM9 5FA
