<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 29, 1997
(December 12, 1997)
-------------------
THE SCOTTS COMPANY
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(Exact name of registrant as specified in its charter)
Ohio 1-11593 31-1199481
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
14111 Scottslawn Road, Marysville, Ohio 43041
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (937) 644-0011
----------------
Not Applicable
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(Former name or former address, if changed since last report.)
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Item 1. Changes in Control of Registrant.
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Not Applicable.
Item 2. Acquisition or Disposition of Assets.
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On December 12, 1997, Scotts Holdings Limited ("Scotts
Holdings"), a wholly-owned subsidiary of The Scotts Company, purchased all of
the outstanding shares of Levington Group Limited ("Levington") which, through
its subsidiaries, is the leading producer of consumer and professional lawn
fertilizer, organics and horticultural products in the United Kingdom. The
shares of Levington were purchased from Prudential Nominees Limited PAC Account;
Prudential Nominees Limited PSPS Account; Prudential Nominees Limited USV
Account; Prudential Nominees Limited BWV Account; Prudential Nominees Limited
Holborn Account; Prutec Limited; The Sears Pension Plan by The Chase Manhattan
Bank NA; HSBC Equity Limited; Candover Investments plc; Candover Trustees
Limited; Candover Partners Limited as General Partner of Candover 1991 Lead
Investors Limited Partner; Candover Partners Limited as General Partner of
Candover 1991 UK Limited Partnership; Candover Partners Limited as General
Partner of Candover 1991 US Limited Partnership; 3i Group plc; NatWest Ventures
Investments Limited; Philip Parry; Mrs. L. Parry; Philip Parry and Lynne Parry
as trustees of the Parry Trust; N. W. Gibbs; Mrs. A. Gibbs; N. W. Gibbs and A.
Gibbs as trustees of the Gibbs Trusts; P. J. Elsdon; Mrs. B. Elsdon; P. J.
Elsdon and B. Elsdon as trustees of the Elsdon Trust; and Fairmount Trustee
Services Limited as trustee for the time being of the Levington Unapproved
Pension Fund, in a privately-negotiated transaction.
The aggregate amount of consideration for the shares of
Levington acquired by Scotts Holdings (including debt assumed and acquisition
costs) was approximately 56.7 U.K. Pounds Sterling or approximately $93.7
million U.S. Dollars. Scotts Holdings used funds available under the Fourth
Amended and Restated Credit Agreement (the "Credit Agreement"), to which Scotts
Holdings and The Scotts Company are parties, in order to pay the purchase price
for the shares of Levington. The identity of the banks which are parties to the
Credit Agreement has been omitted as contemplated under Item 2(a) of Form 8-K
and filed separately with the Securities and Exchange Commission.
Neither Scotts Holdings nor The Scotts Company has any present
plans to devote any material amount of the assets related to the operations of
Levington and its subsidiaries to purposes other than the production of consumer
and professional lawn fertilizer, organics and horticultural products.
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The consummation of the acquisition of Levington is described
in the press release issued on December 15, 1997, which is included herewith as
Exhibit 99.
Item 3. Bankruptcy or Receivership.
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Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
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Not Applicable.
Item 5. Other Events.
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Not Applicable.
Item 6. Resignations of Registrant's Directors.
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Not Applicable.
Item 7. Financial Statements and Exhibits.
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(a) - (b) No financial statements or pro forma financial
information is required to be filed herewith.
(c) Exhibits:
Exhibit Number Description
-------------- -----------
2 Agreement for the Sale and
Purchase of Levington Group
Limited, dated December 12, 1997,
between Scotts Holdings Limited,
as Purchaser, and Prudential
Nominees Limited PAC Account;
Prudential Nominees Limited PSPS
Account; Prudential Nominees
Limited USV Account; Prudential
Nominees Limited BWV Account;
Prudential Nominees Limited
Holborn Account; Prutec Limited;
The Sears Pension Plan by The
Chase Manhattan Bank NA; HSBC
Equity Limited; Candover
Investments plc; Candover
Trustees Limited; Candover
Partners Limited as General
Partner of Candover 1991 Lead
Investors Limited Partner;
Candover Partners Limited as
General Partner of Candover 1991
UK Limited Partnership; Candover
Partners Limited as General
Partner of Candover 1991 US
Limited
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Partnership; 3i Group plc;
NatWest Ventures Investments
Limited; Philip Parry; Mrs. L.
Parry; Philip Parry and Lynne
Parry as trustees of the Parry
Trust; N. W. Gibbs; Mrs. A.
Gibbs; N. W. Gibbs and A. Gibbs
as trustees of the Gibbs Trusts;
P. J. Elsdon; Mrs. B. Elsdon; P.
J. Elsdon and B. Elsdon as
trustees of the Elsdon Trust; and
Fairmount Trustee Services
Limited as trustee for the time
being of the Levington Unapproved
Pension Fund, as Sellers
99 Press Release issued December 15,
1997
Item 8. Change in Fiscal Year.
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Not Applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
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Not Applicable
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
THE SCOTTS COMPANY
Date: December 29, 1997 By: /s/ Charles M. Berger
----------------------------------------
Charles M. Berger, Chairman of
the Board, President and Chief
Executive Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number Description Location
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<S> <C> <C>
2 Agreement for the Sale and Purchase of Levington Group *
Limited, dated December 12, 1997, between Scotts Holdings
Limited, as Purchaser, and Prudential Nominees Limited PAC
Account; Prudential Nominees Limited PSPS Account;
Prudential Nominees Limited USV Account; Prudential
Nominees Limited BWV Account; Prudential Nominees Limited
Holborn Account; Prutec Limited; The Sears Pension Plan by
The Chase Manhattan Bank NA; HSBC Equity Limited; Candover
Investments plc; Candover Trustees Limited; Candover
Partners Limited as General Partner of Candover 1991 Lead
Investors Limited Partner; Candover Partners Limited as
General Partner of Candover 1991 UK Limited Partnership;
Candover Partners Limited as General Partner of Candover
1991 US Limited Partnership; 3i Group plc; NatWest
Ventures Investments Limited; Philip Parry; Mrs. L. Parry;
Philip Parry and Lynne Parry as trustees of the Parry
Trust; N. W. Gibbs; Mrs. A. Gibbs; N. W. Gibbs and
A. Gibbs as trustees of the Gibbs Trusts; P. J. Elsdon;
Mrs. B. Elsdon; P. J. Elsdon and B. Elsdon as trustees of
the Elsdon Trust; and Fairmount Trustee Services Limited
as trustee for the time being of the Levington Unapproved
Pension Fund, as Sellers
99 Press Release Issued December 15, 1997 *
</TABLE>
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*Filed herewith.
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Exhibit 2
DATE 12 DECEMBER, 1997
PRUDENTIAL NOMINEES LIMITED AND OTHERS
SCOTTS HOLDINGS LIMITED
AGREEMENT FOR THE SALE AND PURCHASE OF LEVINGTON GROUP LIMITED
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CONTENTS
CLAUSE PAGE
1 Interpretation 1
2 Sale and Purchase 10
3 Consideration 11
4 Completion 13
5 Completion NAV 16
6 OFT Post-Completion Adjustment 19
7 Warrantors' Warranties 23
8 Other Sellers' Warranties 25
9 Restrictions on the Managers 26
10 NAV Escrow Account 30
11 OFT Escrow Account 31
12 Debts Escrow Account 34
12 Release by Sellers 37
13 Trustees' and Manager's Undertakings 38
14 Announcements 44
15 Competition 44
16 Costs 45
17 General 45
18 Entire Agreement 46
19 Assignment 46
20 Notices 47
21 Governing Law and Jurisdiction 47
22 Counterparts 48
SCHEDULES
1 Part 1: The Sellers and their shareholdings
Part 2: The Minority Shareholders and their shareholdings
2 Information about the Company and the Subsidiaries
3 Items for delivery by the Seller at Completion
4 Warrantors' Warranties
5 Limitations on the Warrantors' liability
6 Real Property
7 Registered IP and Trade Names
8 Completion Balance Sheet
9 Other Sellers' Warranties
10 Prudential Holborn participants
11 Trust participants
AGREED FORM DOCUMENTS
1 Directors' resignation letters
2 Auditors letters
3 Directors' Agreements
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4 Sellers Powers of Attorney
5 Board Minutes
6 Notice of Meeting
7 Loan Stock Instruments
8 Deed of Termination
9 List of Brand Names
10 Escrow Agent instruction letter(s)
11 Minority Shareholders' Agreement
12 Debt List
13 Due Diligence Request Lists
14 Purchaser Facility Agreement
15 Bank Debt Redemption Statement
ii
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AGREEMENT FOR THE SALE AND PURCHASE OF LEVINGTON GROUP LIMITED
DATE 12 December, 1997
PARTIES
1 THE SEVERAL PERSONS whose names and addresses are set out in Part 1 of
Schedule 1 (the "Sellers")
2 SCOTTS HOLDINGS LIMITED, a company incorporated in England and Wales
(Registered No. 3473956), whose registered office is at Salisbury
House, Weyside Park, Catteshall Lane, Godalming, Surrey GU7 1XE (the
"Buyer")
THE PARTIES AGREE as follows:
1 INTERPRETATION
1.1 In this Agreement:
ACCOUNTS: means, in relation to the Company, each Group Company's
individual accounts (as that term is used in section 226 of the Act)
and the Group's group accounts (as that term is used in section 227 of
the Act) and cash flow statement for the financial year ended on the
Last Accounting Date, the auditors' reports on those accounts and the
directors' report of each such Group Company for that year;
ACT: means the Companies Act 1985, the Companies Consolidation
(Consequential Provisions) Act 1985, the Companies Act 1989 and Part V
of the Criminal Justice Act 1993;
BANK DEBT: means the aggregate of all sums due to National Westminster
Bank plc from the Company and the Subsidiaries at Completion as
notified to the Buyer by the
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Sellers in writing following the close of business on the day preceding
the date of this Agreement in the agreed form marked 15;
BUSINESS DAY: means a day other than a Saturday or Sunday or public
holiday in England and Wales;
THE BUYER'S ACCOUNTANTS: means Arthur Andersen of Abbots House, Abbey
Street, Reading RG1 3BD;
BUYER'S GROUP UNDERTAKING: means the Buyer, a subsidiary undertaking or
parent undertaking for the time being of the Buyer or a subsidiary
undertaking for the time being of a parent undertaking of the Buyer and
includes, for the avoidance of doubt, each Group Company;
THE BUYER'S SOLICITORS: means Macfarlanes of 10 Norwich Street, London
EC4A 1BD;
THE CASH CONSIDERATION: means the sum referred to in Clause 3.2.2;
CERTIFICATES: means the certificates of title given by the Sellers'
Solicitors addressed to the Buyer in respect of each Property;
CHAPS: means clearing houses automated payment systems;
COMPANY: means Levington Group Limited, a company incorporated in
England and Wales (registered number 02906877), whose registered office
is at Paper Mill Lane, Bramford, Ipswich, Suffolk, IP8 4BZ;
COMPLETION: means completion of the sale and purchase of the Shares in
accordance with this Agreement;
THE COMPLETION NAV: means the amount by which the aggregate book value
of the
2
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consolidated assets of the Company and the Subsidiaries exceeds the
aggregate amount of the consolidated liabilities of the Company and the
Subsidiaries as at 30 November 1997 determined in accordance with
Schedule 8 and as set out in the Completion Balance Sheet;
THE COMPLETION BALANCE SHEET: means the balance sheet agreed or
determined in accordance with Clause 5;
THE COMPLETION DATE: means the date of this Agreement;
THE CONSIDERATION: means the Cash Consideration and the Consideration
Loan Stock subject to reduction in accordance with Clause 3;
THE CONSIDERATION LOAN STOCK: means pound sterling 4,535,533 nominal
value of the pound sterling 5,282,995 nominal 2005 loan stock to be
constituted by the four loan stock instruments in the agreed forms
marked 7 and to be issued by the Buyer in accordance with Clause 4.7.3;
DDB: means the deep discount bonds 2001 and the deep discount bonds
2002 with an aggregate issue price of pound sterling 8 million,
constituted by two Instruments, each dated 5 July 1994 and executed by
Levington Horticulture Limited, and owned by certain of the Sellers;
THE DEBTS: means the debts due to the Company from the persons listed
in the agreed form marked 12 as set against those persons name in the
said agreed form;
THE DEBTS ESCROW ACCOUNT: means the interest bearing deposit account
opened prior to Completion in the joint names of the Sellers'
Solicitors, the Managers' Solicitors and the Buyer's Solicitors with
the Escrow Agent into which the Debts Escrow Sum shall be paid;
THE DEBTS ESCROW SUM: means pound sterling 250,000;
3
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THE DEBTS RELEASE DATE: means 30 June 1998;
THE DEBTS SHORTFALL: a sum equal to whichever is the lesser of (i) the
aggregate of the Debts which are outstanding at the Debts Release Date
and (ii) the sum of pound sterling 250,000;
DEFERRED SHARE: means a deferred share of 1 pence in the capital of the
Company;
DIRECTORS' AGREEMENTS: means the agreements in the agreed form marked 3
to be entered into on Completion by each of the Managers and the
Company;
DISCLOSURE LETTER: means the letter from the Warrantors to the Buyer in
relation to the Warranties having the same date as this Agreement;
THE ELSDON TRUST: means the trust constituted by the deed of settlement
dated 30 June 1994 and made between Peter Elsdon (1) and Peter Elsdon
and Bozena Jolanta Elzbieta Elsdon (2) (as varied by a deed of
direction dated 2 April 1996 and made by Peter Elsdon and Bozena
Jolanta Elzbieta Elsdon);
ENCUMBRANCE: means a mortgage, charge, pledge, lien, option,
restriction, right of first refusal, right of pre-emption, third-party
right or interest, other encumbrance or security interest of any kind,
or another type of preferential arrangement (including, without
limitation, a title transfer or retention arrangement) having similar
effect;
ESCROW ACCOUNTS: means the NAV Escrow Account, the Debts Escrow Account
the OFT Escrow Account;
THE ESCROW AGENT: means The Royal Bank of Scotland plc at its branch at
62/63 Threadneedle Street, London EC2R 8LA;
THE GIBBS TRUSTS: means the trusts constituted by the deed of
settlement dated 30 June 1994 and made between Norman Gibbs (1) and
Norman Gibbs and Ann Gibbs (2) (as amended by a deed of direction dated
2 April 1996 and made by Norman Gibbs and
4
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Ann Gibbs) and three declarations of trusts dated 24 November 1997 and
made between the same parties;
GROUP: means the Company and each Subsidiary;
GROUP COMPANY: means in relation to any company, any body corporate
which is from time to time a holding company of that company, a
subsidiary of that company or a subsidiary of a holding company of that
company;
LAST ACCOUNTING DATE: means 30 June 1997;
LEVINGTON FUND: means the Levington Unapproved Pension Fund established
with effect from 1 March 1995 by a definitive trust deed dated 1 March
1995 between Levington Horticulture Limited, Fairmount Trustee Services
Limited, Philip David Parry and Norman William Gibbs;
LEVINGTON SCHEME: means the Levington Horticulture Pension Scheme
established with effect from 30 June 1994 by an interim trust deed
dated 5 July 1994 between the Company, Levington Horticulture Limited,
Philip David Parry and Peter John Elsdon and now governed by a
definitive trust deed dated 6 March 1997 (as amended) between the
Company, the Managers and others.
THE MANAGEMENT ACCOUNTS: means the unaudited accounts of the Company
and of each of the Subsidiaries for the four month period from the Last
Accounting Date to 31 October 1997 (comprising a balance sheet and
profit and loss account), a copy of each of which is annexed to the
Disclosure Letter;
MANAGERS: means Philip David Parry of Strawberry Hill, Pembroke Road,
Framlingham, Suffolk, Peter John Elsdon of 93 Constable Road, Ipswich,
Suffolk IP4 2XA and Norman William Gibbs of August House, Church Road,
Bacton, Stowmarket, Suffolk;
5
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THE MANAGERS' SOLICITORS: means Nicholson Graham & Jones of 110 Cannon
Street, London EC4N 6AR;
THE MINORITY SHAREHOLDERS: means the several persons whose names and
addresses are set out in Part 2 of Schedule 1;
THE MINORITY SHAREHOLDERS' AGREEMENT: means the agreement into which it
is proposed that the Minority Shareholders (1) and the Buyer (2) enter
on the date of this Agreement in the agreed form marked 11 pursuant to
which the Minority Shareholders shall agree to sell, and the Buyer
shall agree to buy, the Minority Shares;
THE MINORITY SHARES: means the aggregate of the Ordinary Shares held by
the Minority Shareholders, as set out in Part 2 of Schedule 1;
THE NAV ESCROW ACCOUNT: means the interest bearing deposit account
opened prior to Completion in the joint names of the Sellers'
Solicitors, the Managers' Solicitors and the Buyer's Solicitors with
the Escrow Agent into which the NAV Escrow Sum shall be paid;
THE NAV ESCROW SUM: means pound sterling 350,000;
THE NAV RELEASE DATE: means the date of the determination of the
Completion NAV in accordance with Clause 5;
THE OFT ESCROW ACCOUNT: means the interest bearing deposit account
opened prior to Completion in the joint names of the Sellers'
Solicitors, the Managers' Solicitors and the Buyer's Solicitors with
the Escrow Agent into which the OFT Escrow Sum shall be paid;
THE OFT ESCROW SUM: means pound sterling 1,750,000;
THE OFT RELEASE DATE: means the first anniversary of the Completion
Date;
6
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ORDINARY SHARE: means an ordinary share of 1 pence in the capital of
the Company;
THE PARRY TRUST: means the trust constituted by the deed of settlement
dated 30 June 1994 made between Philip Parry (1) and Philip Parry and
Lynne Parry (2);
THE PARTIES: means the parties to this Agreement;
PREFERENCE SHARES: means the 5,675,000 redeemable cumulative preference
shares of 1 pence in the capital of the Company in issue at the date of
this Agreement;
PROPERTY: means the property or properties details of which are set out
in Schedule 6 and includes an individual property and a part of an
individual property;
THE PURCHASER FACILITY AGREEMENT: the facility agreement of the same
date as the date of this Agreement and made between the Buyer (1) and
the Company (2) in the agreed form marked 14;
RELEVANT CLAIM: means a claim by the Buyer involving or relating to
breach of a Warranty;
RELIEF: means any relief, loss, allowance, exemption, set off,
deduction or credit in respect of any form of Taxation or relevant in
computing profits, income or gains for the purposes of Taxation;
THE RESTRICTED PRODUCTS: means horticultural fertilisers, horticultural
growing media, horticultural chemicals and grass seed;
THE RESTRICTED TERRITORIES: means the United Kingdom, the Channel
Islands, the Isle of Man and the Republic of Ireland;
SCHEMES: means the Levington Fund and the Levington Scheme;
7
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SELLERS' ACCOUNTANTS: means Coopers & Lybrand of The Atrium, St Georges
Street, Norwich NR3 1AG;
SELLERS' SOLICITORS: means Clifford Chance of 200 Aldersgate Street,
London EC1A 4JJ;
SHARES: means 655,546 Ordinary Shares and 319,454 Deferred Shares
comprising the whole of the issued share capital of the Company, save
for the Minority Shares and the Preference Shares;
SUBSIDIARY: means a subsidiary undertaking of the Company as listed in
Schedule 2, Part 2 and SUBSIDIARIES means all those subsidiary
undertakings;
TAX and TAXATION: means any form of taxation, levy, duty, charge,
contribution or impost of whatever nature whether of the United Kingdom
or elsewhere (including any related fine, penalty, surcharge or
interest save to the extent that such fine, penalty, surcharge or
interest is attributable to the unreasonable delay or default of the
Company after Completion) imposed by a Tax Authority;
TAX AUTHORITY and TAXATION AUTHORITY: means any local, municipal,
governmental, state, federal or other fiscal, revenue, customs or
excise authority, body or official anywhere in the world including,
without limitation, the Inland Revenue and H.M. Customs & Excise;
THE TRUSTEES: means the trustees of the Parry Trust, the trustees of
the Elsdon Trust and the trustees of the Gibbs Trusts, all of which are
Sellers;
THE TRUSTS: means the Parry Trust, the Gibbs Trusts and the Elsdon
Trust;
THE WARRANTORS: means the Managers, Mrs Lynne Parry, Mrs Ann Gibbs, Mrs
Bozena Elsdon and the Trustees;
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WARRANTY: means a statement contained in Schedule 4 and WARRANTIES
means all those statements.
1.2 In this Agreement, a reference to:
1.2.1 a "SUBSIDIARY UNDERTAKING" or "PARENT UNDERTAKING" is to be construed
in accordance with section 258 of the Act and a "SUBSIDIARY" or
"HOLDING COMPANY" is to be construed in accordance with section 736 of
the Act;
1.2.2 a document in the "AGREED FORM" is a reference to a document in a form
approved and for the purposes of identification signed by or on behalf
of each party;
1.2.3 a statutory provision includes a reference to the statutory provision
as modified or re-enacted or both from time to time before the date of
this Agreement and any subordinate legislation made under the statutory
provision before the date of this Agreement;
1.2.4 a person includes a reference to a body corporate, association or
partnership;
1.2.5 a person includes a reference to that person's legal personal
representatives and successors;
1.2.6 a Clause, paragraph or Schedule, unless the context otherwise requires,
is a reference to a clause or paragraph of or schedule to this
Agreement;
1.2.7 the singular includes a reference to the plural and vice versa;
1.2.8 any reference to a SSAP is to a Statement of Standard Accounting
Practice adopted by the Accounting Standards Board and shall be
construed as including a reference to any Financial Reporting Standard
issued by the Accounting Standards Board to amend,
9
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withdraw or supersede such SSAP and any reference to an FRS is to a
Financial Reporting Standard issued by the Accounting Standards Board;
1.2.9 "directly or indirectly" shall (without limiting the expression) mean
either alone or jointly with any other person, firm or body corporate
and whether on his own account or in partnership with another or others
or as the holder of any interest in or as officer, employee or agent of
or consultant to any other person, firm or body corporate.
1.3 The headings in this Agreement do not affect its interpretation.
1.4 A reference in Schedule 4 to the knowledge, information, belief or
awareness of each of the Managers is deemed to mean their own actual
knowledge, information, belief or awareness having made due and careful
enquiry in respect of the subject matter of such Warranties save for
enquiry of customers of the Company and the Subsidiaries.
2 SALE AND PURCHASE
2.1 Each of the Sellers (other than the Trustees) agrees to sell with full
title guarantee and the Trustees agree to sell with limited title
guarantee, in each case free of any Encumbrance, and the Buyer agrees
to buy, those Ordinary and Deferred Shares set opposite each such
Seller's name in Schedule 1 with effect from and including the
Completion Date to the intent that as from that date all rights and
advantages accruing to the Shares, including any dividends or
distributions declared or paid on the Shares after that date shall
belong to the Buyer.
2.2 The Buyer shall not be obliged to complete the purchase of any of the
Ordinary and Deferred Shares to which Clause 2.1 relates unless the
sale of all such Ordinary Shares and Deferred Shares and the sale of
the Minority Shares pursuant to the Minority Shareholders' Agreement is
completed simultaneously.
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3 CONSIDERATION
3.1 The aggregate consideration for the Deferred Shares which are the
subject of this Agreement shall be the sum of pound sterling 14 and the
aggregate consideration for the Ordinary Shares which are the subject
of this Agreement shall be the sum of pound sterling 31,284,440 less
the amount, if any:-
3.1.1 by which the Company's Completion NAV is less than pound
sterling 15,920,000 ("the Net Asset Shortfall") subject to a maximum
reduction of pound sterling 350,000; and
3.1.2 of the Adjustment as defined in and determined in accordance with
Clause 6 and the Debts Shortfall determined in accordance with Clause
12.
3.2 Of the Consideration:-
3.2.1 pound sterling 4,535,533 shall be satisfied by the issue of the
Consideration Loan Stock in accordance with Clause 4.7.3; and
3.2.2 the balance shall be satisfied in cash in accordance with Clauses
4.7.1, 5, 6, 10, 11 and 12.
3.3 The Consideration shall be divided between the Sellers in accordance
with Part 1 of Schedule 1, and as provided in Clause 3.4, but the Buyer
shall not be concerned with such division.
3.4.1 One of the Sellers, Prudential Nominees Limited Holborn Account
("Prudential Holborn") holds the Ordinary Shares set out against its
name in Schedule 1, Part 1, as bare trustee for certain individuals.
Accordingly, Prudential Holborn hereby directs the Buyer to issue the
amount of Consideration Loan Stock set out against its name in Schedule
1, Part 1 to the individuals whose names and addresses are set out in
Schedule 10 in the amounts set against their respective names in
Schedule 10. Prudential Holborn acknowledges and agrees that the issue
of the Consideration Loan
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<PAGE> 15
Stock by the Buyer in accordance with this Clause 3.4.1 shall be a good
and valid discharge to the Buyer of its obligation to issue
Consideration Loan Stock (but not Cash Consideration) to Prudential
Holborn in accordance with the terms of Schedule 1, Part 1.
3.4.2 Philip Parry holds certain of the Ordinary Shares set out against his
name in Part 1 of Schedule 1 as bare trustee for certain individuals.
Philip Parry hereby directs the Buyer to issue to the individuals whose
names are set against his name in column 2 of Schedule 11 such of the
amount of Consideration Loan Stock as is set against his name in Part 1
of Schedule 1 as is set against each such individuals name in column 3
of Schedule 11. Philip Parry acknowledges and agrees that the issue of
the Consideration Loan Stock by the Buyer in accordance with this
Clause 3.4.2 shall be a good and valid discharge to the Buyer of its
obligation to issue such Consideration Loan Stock (but not Cash
Consideration) to him in accordance with Part 1 of Schedule 1.
3.4.3 Norman Gibbs and Ann Gibbs in their capacity as trustees of the Gibbs
Trusts hold certain of the Ordinary Shares set out against their names
in such capacity in Part 1 of Schedule 1 as bare trustee for certain
individuals. Norman Gibbs and Ann Gibbs hereby direct the Buyer to
issue to the individuals whose names are set against their names in
column 2 of Schedule 11 such of the amount of Consideration Loan Stock
as is set against their names in Part 1 of Schedule 1 as is set against
each such individual's name in column 3 of Schedule 11. Norman Gibbs
and Ann Gibbs acknowledge and agree that the issue of the Consideration
Loan Stock in accordance with this Clause 3.4.3 shall be good and valid
discharge to the Buyer of its obligations to issue such Consideration
Loan Stock (but not Cash Consideration) to them in their capacity as
trustees of the Gibbs Trusts in accordance with Part 1 of Schedule 1.
3.5 Any amount paid in respect of a breach of any of the Warranties or
pursuant to Clause 6 shall be deemed to give rise to a corresponding
reduction in the Consideration.
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4 COMPLETION
4.1 Pursuant to the Purchaser Facility Agreement, the Buyer shall
immediately prior to Completion lend the Company a sum equal to the
aggregate of the principal amount of the DDB outstanding at Completion,
being pound sterling 9,847,476, and the Bank Debt. The Sellers shall
procure, as a condition precedent to Completion, that the Bank Debt is
repaid and all security relating to such debt is released and,
following the delivery and surrender to Levington Horticulture Limited
of the relevant certificates and their cancellation, the DDB is repaid.
4.2 Completion shall take place at the offices of the Buyer's Solicitors on
the date of this Agreement.
4.3 At Completion:-
4.3.1 each of the Sellers shall deliver to the Buyer items 1 and 10 in
Schedule 3 in respect of such of the Shares as are to be sold by that
Seller;
4.3.2 the Sellers shall deliver to the Buyer item 8 of Schedule 3; and
4.3.3 the Managers shall deliver to the Buyer each other item specified in
Schedule 3.
4.4 Each of the Sellers shall procure so far as they are able that at
Completion the Company's directors hold a meeting of the board of
directors of the Company at which the directors:-
4.4.1 convene an Extraordinary General Meeting;
4.4.2 vote in favour of the registration of the Buyer or its nominee(s) as
member(s) of the Company in respect of the Shares and the Minority
Shares (subject to the production of properly stamped transfers);
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4.4.3 change the Company's registered office to a place nominated by the
Buyer;
4.4.4 change the Company's accounting reference date to a date nominated by
the Buyer;
4.4.5 appoint persons nominated by the Buyer as directors and secretary of
the Company with effect from the end of the meeting;
4.4.6 with effect from the end of the meeting, authorise the secretary to
notify the specimen signatures of the new officers of the Company in
connection with each existing mandate given by the Company for the
operation of its bank accounts.
4.5 Each of the Sellers shall procure so far as they are able that at
Completion there shall be held an Extraordinary General Meeting of the
Company at which there shall be passed Resolutions set out and
contained in a Notice of Meeting of the Company in the agreed form
marked 6 to:
4.5.1 increase the authorised share capital of the Company;
4.5.2 give the Directors authority to allot new shares; and
4.5.3 adopt new Articles of Association of the Company.
4.6 Each of the Sellers shall procure so far as they are able that,
immediately after the board meeting referred to in Clause 4.4:
4.6.1 any meeting of the board of directors or of the shareholders of a
Subsidiary that the Buyer may require is held; and
4.6.2 any meeting held pursuant to Clause 4.6.1 deals with any matter
referred to in Clause 4.4 or 4.5 that the Buyer may require.
4.7 At Completion the Buyer shall:-
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4.7.1 pay by way of CHAPS the sum of pound sterling 24,398,921, on account of
the Consideration, to the client account of the Sellers' Solicitors,
the details of which are:
Bank: Midland Bank plc
Address: Poultry & Princes Street
London EC2
Account No: 23181499
Sort Code: 40-05-30
Account Name: Clifford Chance Client Account
4.7.2 pay into the NAV Escrow Account the NAV Escrow Sum, pay into the OFT
Escrow Account the OFT Escrow Sum and pay into the Debts Escrow Account
the Debts Escrow Sum, in each case on account of the Consideration;
4.7.3 procure that there shall be held a meeting of its board of directors
approving the issue of the Consideration Loan Stock to the relevant
Sellers in the amounts set out opposite each such Seller's name in Part
1 of Schedule 1 or in accordance with Clause 3.4 (where applicable) and
deliver to the Sellers' Solicitors duly executed certificates in
respect of such loan stock;
4.7.4 subscribe in cash for 5,675,000 Ordinary Shares in the Company at pound
sterling 1 each; and
4.7.5 deliver to the Sellers' Solicitors the Minority Shareholders' Agreement
duly executed by the Buyer.
4.8 Following the subscription referred to in Clause 4.7.4, as a condition
to this Agreement, the Sellers and the Buyer shall procure so far as
each of them is able that a meeting of the directors of the Company is
held to allot and issue 5,675,000 Ordinary Shares in the Company to the
Buyer subject to payment therefor by the Buyer and that the
subscription funds are immediately applied in redeeming all the issued
Preference Shares at pound sterling 1 each following the delivery and
surrender to the Company of the relevant
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share certificates. The Sellers which hold Preference Shares at the
date of this Agreement waive any and all rights, liabilities and claims
which arise from the redemption of the Preference Shares otherwise than
in accordance with the articles of association of the Company (which
require redemption prior to Completion) provided such redemption is
undertaken in accordance with this Clause 4.8.
4.9 The performance by the Sellers of their respective obligations under
this Clause 4, other than their obligations set out in Clause 4.8,
shall be a condition precedent to the performance by the Buyer of its
obligations under this Clause 4 (save under Clause 4.1) to the intent
that, if the Sellers or any of them shall fail or shall be unable to
perform any of their obligations under this Clause 4 (save as
aforesaid), the Buyer shall at its option (and without prejudice to any
other remedies or rights which it may have against the Sellers or any
of them in respect of such non-performance) cease to be liable to
perform its obligations under this Clause 4 (save as aforesaid).
5 COMPLETION NAV
5.1 The Buyer shall procure that within 8 weeks of Completion, the Buyer's
Accountants shall prepare and submit to the Sellers and the Sellers'
Accountants a draft of the Completion Balance Sheet ("the Draft
Statement"). The Draft Statement shall be prepared in accordance with
Schedule 8 and shall give a figure for the Completion NAV.
5.2 The Sellers shall procure that, within 28 days after receipt of the
Draft Statement, the Sellers' Accountants shall give written notice to
the Sellers, the Buyer and the Buyer's Accountants stating whether or
not they propose any amendments to the Draft Statement. The Buyer shall
procure that the Sellers and the Sellers' Accountants are promptly
given all such assistance and access during normal business hours and
at pre-arranged times to all such information and the Managers as they
may reasonably require in order to enable them to reach their decision
including, without prejudice to the generality of the foregoing, the
assistance and access referred to in Clause 5.7 below.
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5.3 If the Sellers' Accountants give notice that they have no proposed
amendments to the Draft Statement or fail to give the notice required
by Clause 5.2, then the Draft Statement shall constitute the Completion
Balance Sheet for the purposes of this Agreement. If they give notice
that they do have proposed amendments to the Draft Statement, they
shall within such notice inform the Sellers, the Buyer and the Buyer's
Accountants of their proposed amendments and their reasons for
proposing such amendments and the Sellers and the Buyer shall, within
the period of 21 days after receipt of such notice, seek to agree the
proposed amendments.
5.4 In the event of:-
5.4.1 a failure by the Buyer's Accountants to submit the Draft Statement to
the Sellers and the Sellers' Accountants within the period referred to
in Clause 5.1; or
5.4.2 any dispute between the Sellers and the Buyer, or between the Sellers'
Accountants and the Buyer's Accountants, as to any matter relevant to
the Draft Statement or the Completion Balance Sheet remaining
unresolved at the expiry of the period of 21 days referred to in Clause
5.3,
such failure or dispute shall be referred to an independent firm of
chartered accountants agreed by the Sellers and the Buyer within five
business days of such failure or notification of dispute or, in the
event of a failure to agree within five business days, to an
independent firm of chartered accountants appointed by the President
for the time being of the Institute of Chartered Accountants in England
and Wales on the application of either the Sellers or the Buyer. Such
independent firm of chartered accountants shall determine the
Completion Balance Sheet, in the event of a reference in circumstances
to which Clause 5.4.1 applies, or the matter or matters in dispute, in
the event of a reference in circumstances to which Clause 5.4.2
applies. The Sellers and the Buyer shall each use their respective
reasonable endeavours to ensure that such firm of independent
accountants makes such determination within 28 days of its appointment.
The fees of any such firm of independent accountants shall
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be paid by the Buyer in the event of a reference in circumstances to
which Clause 5.4.1 applies due solely to the default of the Buyer's
Accountants or, in any other event, by the Sellers and/or the Buyer in
the proportions determined by the independent accountant. Any firm
appointed under this Clause shall act as experts and not as arbitrators
and, save in the case of manifest error, their determination shall be
binding on the Parties.
5.5 In the event that there is a Net Asset Shortfall the provisions of
Clause 10 shall apply.
5.6 The costs arising in preparing and determining the Completion Balance
Sheet shall be paid by the Party to which they accrue save in respect
of the fees of any firm of independent accountants appointed pursuant
to Clause 5.4 which shall be paid in accordance with Clause 5.4.
5.7 After Completion, the Buyer shall provide, and shall ensure that the
Group provides, to the Sellers and the Sellers' Accountants prompt
access during normal business hours and at pre-arranged times to
relevant assets, documents and records within their possession or
control, and access to the Managers, including, without prejudice to
the generality of the foregoing, procuring that the working papers
prepared by Peter Elsdon and the Buyer's Accountants are made available
to the Sellers and the Sellers' Accountants for the purpose of (i)
reviewing and proposing amendments to the Draft Statement pursuant to
Clause 5.2, (ii) seeking to agree any proposed amendments pursuant to
Clause 5.3, (iii) in connection with any failure or dispute referred to
in Clause 5.4 and (iv) generally for the purposes of this Clause 5. The
Buyer shall not unreasonably withhold or delay agreement to the times
at which access shall be given pursuant to this Clause 5.7.
5.8 The Parties have agreed that the Completion NAV shall be calculated as
at 30 November 1997 for the reason, inter alia, that the Parties intend
that the profits made by the Company and its Subsidiaries from (and
inclusive of) 1 December 1997 shall accrue to the benefit of the Buyer.
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6 OFT POST-COMPLETION ADJUSTMENT
6.1 In the event that at any time following Completion but before the first
anniversary of the Completion Date, the Buyer is ordered by or
undertakes to the Office of Fair Trading ("OFT") or the Secretary of
State to dispose of any Buyer's Group Undertaking or all or any part of
the business (including, without limitation, the business of selling
specified brands and/or product lines) or assets of any Buyer's Group
Undertaking in either case as a consequence of the sale and purchase of
the Shares pursuant to this Agreement then the following provisions of
this Clause 6 shall apply.
6.2 The Buyer shall notify the Sellers as soon as is reasonably practicable
after entering into such an undertaking or being made subject to such
an order, save that in the case of an undertaking, the Buyer shall
consult with Philip Parry and Walter Henry Guest on behalf of the
Sellers in respect of and prior to entering into such undertaking in
sufficient time prior to entering into the undertaking to enable the
Buyer to (and the Buyer shall be obliged to) give proper consideration
to the reasonable views of Philip Parry and Walter Henry Guest on
behalf of the Sellers in relation to the entering into of the
undertaking or the terms thereof. Within 28 days of such notice the
Buyer shall calculate the annual turnover of that part of its business
to be disposed of by reference to the actual sales of that part of its
business in the twelve months prior to the month end immediately
preceding the date of entering into such an undertaking or being made
subject to such an order (as the case may be) (determined, in the case
of an undertaking or order to dispose of (or any business or assets of)
a Buyer's Group Undertaking which is a member of the Group, in
accordance with the principles, policies, bases, practices and methods
used in the preparation of the Accounts and, in the case of an
undertaking or order to dispose of (or any business or assets of) a
Buyer's Group Undertaking which is not a member of the Group, in
accordance with the principles, policies, bases, practices and methods
used in the preparation of the last audited consolidated accounts of
the relevant Buyers' Group undertaking, and shall submit such
calculation to the Sellers ("the Calculation").
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6.3 The Sellers shall, within 28 days after receipt of the Calculation give
written notice to the Buyer stating whether or not they propose any
amendment to the Calculation. The Buyer shall procure that the Sellers
and the Sellers' Accountants are given promptly all reasonable
assistance and access during normal business hours and at pre-arranged
times to all such information and the Managers as they may reasonably
require in order to enable them to reach their decision including,
without prejudice to the generality of the foregoing, the access and
assistance referred to in Clause 6.11 below. The Buyer shall not
unreasonably withhold or delay agreement to the times at which access
shall be given pursuant to this Clause 6.3.
6.4 If the Sellers give notice that they have no proposed amendments to the
Calculation or fail to give the notice required by Clause 6.3, then
Clause 6.6 shall apply. If the Sellers give notice that they do have
proposed amendments, the Sellers shall within such notice inform the
Buyer of their proposed amendments and their reasons for proposing such
amendments and the Sellers and the Buyer shall, within the period of 14
days after receipt of such notice, seek to agree the proposed
amendments.
6.5 In the event of any dispute between the Sellers and the Buyer as to any
matter relevant to the Calculation remaining unresolved at the expiry
of the period of 14 days referred to in Clause 6.4, such dispute shall
be referred to an independent firm of chartered accountants agreed by
the Sellers and the Buyer within five business days of such failure or
notification of dispute or, in the event of a failure to agree within
five business days, by an independent firm of chartered accountants
appointed by the President for the time being of the Institute of
Chartered Accountants in England and Wales on the application of either
the Sellers or the Buyer. Such independent firm of chartered
accountants shall determine those matters relating to the Calculation
which are in dispute. The Sellers and the Buyer shall each use their
respective reasonable endeavours to ensure that such firm of
independent accountants makes such determination within 28 days of its
appointment. The fees of any such firm of independent accountants shall
be paid by the Sellers and/or the Buyer in the proportions determined
by the independent accountant. Any firm appointed under this
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Clause shall act as experts and not as arbitrators and their
determination shall be binding on the Parties.
6.6 Following agreement or determination of the Calculation and subject to
(i) the disposal of that part of the business in respect of which the
Calculation was made being completed within 21 months of the date of
the undertaking or order to make such a disposal and (ii) to Clause
6.12, a reduction shall be made to the Consideration by an amount equal
to 25% of the Calculation subject to a maximum of pound
sterling 1,750,000 (such amount being referred to as "the Adjustment").
The Adjustment shall be paid, together with interest, by the Sellers to
the Buyer in accordance with Clause 11.
6.7 For the avoidance of doubt, if the Buyer enters into more than one
undertaking or is made the subject of more than one order as described
in Clause 6.1, the provisions of this Clause 6 shall apply to each such
undertaking and order save that the total reduction which may be made
to the Consideration as a result of the application of this Clause 6
shall in no circumstances exceed pound sterling 1,750,000.
6.8 In the event of any investigation or enquiries being made by or
dealings with the OFT or the Monopolies and Mergers Commission ("MMC")
following Completion in relation to the consequences of the sale and
purchase of the Shares pursuant to this Agreement the Sellers undertake
to the Buyer to co-operate fully and expeditiously with the Buyer in
relation to all and any such investigations and enquiries.
6.9 The Buyer hereby undertakes at all times following Completion, subject
to any requirement or determination of the OFT or MMC or any obligation
of law, regulation or confidentiality, in connection with any
investigation or enquiries made by or dealings with the OFT or the MMC
in relation to the consequences of the sale and purchase of the Shares
pursuant to this Agreement:-
6.9.1 to grant the Sellers prompt access to the information given by any
Buyer's Group Undertaking to the OFT or MMC and to the status and
contents of any discussions
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between any Buyer's Group Undertaking and the OFT or MMC in connection
with any possible disposal of the type referred to in Clause 6.1; and
6.9.2 to ensure, so far as shall be practicable, that the Sellers are given
the opportunity to participate in any discussions with the MMC or OFT
so that, in particular but without prejudice to the generality of the
foregoing, any submissions made to or discussions held with the OFT or
MMC shall (if the Sellers so require) be joint submissions or
discussions of the Buyer and the Sellers.
6.10 For the purposes of Clause 6.9, Philip Parry and Walter Henry Guest
shall be the Sellers' representatives and any obligation on the Buyer
pursuant to Clause 6.9 to deal with the Sellers shall be satisfied by
dealing with Philip Parry and Walter Henry Guest only.
6.11 The Buyer shall procure that the Sellers and the Sellers' Accountants
are at all times after Completion given access during normal business
hours and at pre-arranged times to relevant assets, documents and
records within the Buyer's possession or control, and access to the
Managers, including, without prejudice to the generality of the
foregoing, procuring that the working papers prepared by Peter Elsdon
are made available to the Sellers and the Sellers' Accountants, for the
purpose of (i) reviewing and proposing amendments to the Calculation
pursuant to Clause 6.3, (ii) seeking to agree any proposed amendments
pursuant to Clause 6.4, (iii) and in connection with any failure or
dispute referred to in Clause 6.5 and (iv) generally for the purposes
of this Clause 6. The Buyer shall not unreasonably withhold or delay
agreement to the times at which access shall be given pursuant to this
Clause 6.11.
6.12 In the event that:-
6.12.1 the Buyer is in material breach of Clause 6.2 or Clause 6.9 such that
the Adjustment is likely to be greater than in the absence of such
breach and it is within the power of the Buyer to remedy such breach;
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6.12.2 the Sellers give notice to the Buyer of such breach specifying a date
(being no earlier than 10 days from the date of such notice) by which
such breach should be remedied; and
6.12.3 the Buyer fails to remedy the breach referred to in the notice by the
date specified in the notice,
the provisions of Clauses 6.2 to 6.11 (inclusive) shall cease to apply
and, for the avoidance of doubt, no Adjustment shall be payable by the
Sellers pursuant to Clause 6.6.
7 WARRANTORS' WARRANTIES
7.1 Each of the Warrantors jointly and severally warrants to the Buyer that
each Warranty is true and accurate at the date of this Agreement.
7.2 If a Warranty is untrue or inaccurate and that Warranty also
constitutes a misrepresentation which the Buyer relied on in entering
this Agreement:
7.2.1 the Buyer's only remedy in respect of the Warranty is in damages for
breach of Clause 7.1;
7.2.2 the Sellers (including, for the avoidance of doubt, the Warrantors) are
not liable (in equity or tort, under the Misrepresentation Act 1967 or
in any other way) in respect of the misrepresentation; and
7.2.3 the Buyer may not terminate or rescind this Agreement as a result of
the breach of Warranty or the misrepresentation.
7.3 Clause 7.2 does not affect the Warrantors' liability or the Buyer's
rights or remedies in respect of a fraudulent misrepresentation.
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7.4 The Warranties shall not in any respect be extinguished or affected by
Completion.
7.5 The Sellers acknowledge that the Buyer has entered into this Agreement
in reliance on representations in the terms of the Warranties made by
the Warrantors with the intention of inducing the Buyer to enter into
this Agreement and that accordingly the Buyer has been induced by those
representations to enter into this Agreement.
7.6 The Warrantors undertake to the Buyer that, in the event of any claim
being made against them for breach of the Warranties, they will not
make any claim against the Company or any of the Subsidiaries or
against any director, officer or employee of the Company or of any of
the Subsidiaries on which or on whom they may have relied before
agreeing to any term of this Agreement or authorising any statement in
the Disclosure Letter.
7.7 The Warranties:-
7.7.1 are qualified by reference to those matters fairly disclosed in the
Disclosure Letter and not otherwise. In particular, but without
limitation, the rights and remedies of the Buyer in respect of the
Warranties shall not be affected by any investigation made by or on
behalf of the Buyer into the affairs of the Company and the
Subsidiaries;
7.7.2 apply to each of the Subsidiaries as well as to the Company as if the
word "Company" was defined to mean each of the Subsidiaries and the
Company.
7.8 Each Warranty is to be construed independently and (except where this
Agreement provides otherwise) is not limited by a provision of this
Agreement or another Warranty.
7.9 Schedule 5 operates to limit or exclude, as the case may be, the
Warrantors' liability for Relevant Claims, provided that the provisions
of Schedule 5 shall not apply in respect of:-
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7.9.1 any claim under paragraph 2.1 (capacity); 3.1 (share ownership) and 3.2
(share and loan capital) of Schedule 4; or
7.9.2 any claim arising out of any fraudulent or wilful non-disclosure on the
part of the Warrantors or any of their respective officers, employees
or advisers.
8 OTHER SELLERS' WARRANTIES
8.1 Each of the Sellers other than the Warrantors severally warrants to the
Buyer that each warranty set out in Schedule 9 is true and accurate at
the date of this Agreement in respect of that Seller.
8.2 If such a warranty is untrue or inaccurate and that warranty also
constitutes a misrepresentation which the Buyer relied on in entering
this Agreement:
8.2.1 the Buyer's only remedy in respect of the warranty is in damages for
breach of Clause 8.1;
8.2.2 the Sellers (including, for the avoidance of doubt, the Warrantors) are
not liable (in equity or tort, under the Misrepresentation Act 1967 or
in any other way) in respect of the misrepresentation; and
8.2.3 the Buyer may not terminate or rescind this Agreement as a result of
the breach of warranty or the misrepresentation.
8.3 Clause 8.2 does not affect the Sellers' liability or the Buyer's rights
or remedies in respect of a fraudulent misrepresentation.
8.4 The warranties set out in Schedule 9 shall not in any respect be
extinguished or affected by Completion.
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8.5 The Sellers acknowledge that the Buyer has entered into this Agreement
in reliance on representations in the terms of the warranties set out
in Schedule 9 made by the Sellers, other than the Warrantors, with the
intention of inducing the Buyer to enter into this Agreement and that
accordingly the Buyer has been induced by those representations to
enter into this Agreement.
8.6 The Sellers undertake to the Buyer that, in the event of any claim
being made against them for breach of the warranties set out in
Schedule 9, they will not make any claim against the Company or any of
the Subsidiaries or against any director, officer or employee of the
Company or of any of the Subsidiaries on which or on whom they may have
relied before agreeing to any term of this Agreement.
8.7 Each warranty set out in Schedule 9 is to be construed independently
and (except where this Agreement provides otherwise) is not limited by
a provision of this Agreement or another warranty.
8.8 Save for the warranties set out in Schedule 9, the Sellers, other than
the Warrantors, give no representations or warranties to the Buyer.
9 RESTRICTIONS ON THE MANAGERS
9.1 Each of the Managers covenants with the Buyer that save with the
previous written consent of the Buyer:-
9.1.1 he will not in the Restricted Territories for, in the case of Messrs
Parry and Elsdon, the period commencing on the Completion Date and
ending on (and including) the second anniversary of the Completion Date
and in the case of Mr Gibbs the period commencing on the Completion
Date and ending on (and including) 31 December 1998, directly or
indirectly in competition with the Company or any of the Subsidiaries
deal with or engage in business with or be in any way interested in or
connected with any concern, undertaking, firm or body corporate which
engages in or carries on within any part of the Restricted Territories
any business which competes with any
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business carried on by the Company or any of the Subsidiaries at the
Completion Date ("the Business") and in particular the business of the
production, development and sale of any of the Restricted Products
Provided that (for the avoidance of doubt only) if any such concern,
undertaking, firm or body corporate has a separately distinguishable
division that does not compete with the Business the Managers may be
employed or engaged in such division with duties and carrying out
activities which do not compete, and do not assist competition, with
the Business;
9.1.2 he will not in the Restricted Territories for in the case of Messrs
Parry and Elsdon, the period commencing on the Completion Date and
ending on (and including) the second anniversary of the Completion Date
and in the case of Mr Gibbs the period commencing on the Completion
Date and ending on (and including) 31 December 1998 directly or
indirectly:-
9.1.2.1 interfere with or, in competition with the Company or any of
the Subsidiaries, offer or agree to provide any of the
Restricted Products, or solicit, with a view to providing any
of the Restricted Products, or endeavour to entice away from
the Company or any of the Subsidiaries the custom of any
person, firm or body corporate which, at any time during the
period of two years ending on the Completion Date, has been a
customer or client of, or in the habit of dealing with, the
Company or any of the Subsidiaries or which, at any time
during that period, was to his knowledge negotiating with the
Company or any of the Subsidiaries in relation to the
provision of any of the Restricted Products;
9.1.2.2 interfere or seek to interfere with contractual or other trade
relations between the Company or any of the Subsidiaries and
any of its or their respective suppliers in existence or under
negotiation at any time during the period of two years ending
on the Completion Date;
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9.1.2.3 solicit the services of or endeavour to entice away from the
Company or any of the Subsidiaries any director, employee or
consultant of the Company or any of the Subsidiaries (whether
or not such person would commit any breach of his contract of
employment or engagement by reason of leaving the service of
such company) or knowingly employ, assist in or procure the
employment by any other person, firm or body corporate of any
such person;
9.1.3 he will not (otherwise than as, and in the ordinary course of his
duties as, an employee or officer of the Company or any of the
Subsidiaries) at any time following the Completion Date disclose to any
person, firm or body corporate or otherwise make use or permit the use
of (provided that he shall only be obliged to use his best endeavours
to prevent such use) any trade secrets or confidential knowledge or
information concerning the business, finance or affairs of the Company
or of any of the Subsidiaries or of any of their respective customers,
clients or suppliers and will use his best endeavours to prevent the
publication or disclosure of any such secrets, knowledge or information
by any third party, except where such secrets, knowledge or information
are already in the public domain or fall into the public domain through
no fault of his or any of his agents or advisors;
9.1.4 he will not at any time following the Completion Date use for any
purpose the trade or business names used by the Company or the
Subsidiaries set out on the list in the agreed form marked 9 (whether
alone or in conjunction with other names) or any name similar to those
names or likely to be confused with them.
9.2 In the event that, following Completion, there is a transfer or
transfers of the whole or any part of the business of the Company or
any of the Subsidiaries (such transferred business or businesses being
referred to in this Clause 9.2 as "Transferred Business"), Clause 9.1
shall be construed as follows:-
9.2.1 references to competition with the Company shall include (without
limitation) competition with the Transferred Business;
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9.2.2 the reference to the enticement of custom away from the Company and the
Subsidiaries shall include (without limitation ) the enticement of
custom away from the Transferred Business;
9.2.3 the reference to the contractual and other trade relations and to the
suppliers of the Company and the Subsidiaries shall include (without
limitation) the contractual and other trade relations and the suppliers
of the Transferred Business;
9.2.4 the reference to the solicitation and enticement of employees and
consultants of the Company and the Subsidiaries shall include (without
limitation) the solicitation and enticement of employees and
consultants of the Transferred Business;
9.2.5 the reference to the confidential information and similar matters of
the Company and the Subsidiaries in Clause 9.1.3 shall include (without
limitation) the confidential information and similar matters (as set
out in Clause 9.1.3) of the Transferred Business; and
9.2.6 the reference to the trade and business names used by the Company and
the Subsidiaries shall include the trade and business names used by the
Transferred Business.
9.3 Each of the Managers agrees that, having regard to the facts and
matters above, the restrictions contained in Clause 9.1 are reasonable
and necessary for the protection of the legitimate interests of the
Buyer and that, having regard to those facts and matters, those
restrictions do not work harshly on him. It is nevertheless agreed
that, if any of those restrictions shall, taken together or separately,
be held to be void or ineffective for any reason but would be held to
be valid and effective if part of its wording were deleted, that
restriction shall apply with such deletions as may be necessary to make
it valid and effective.
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9.4 The restrictions contained in the sub-clauses of Clause 9.1 shall be
construed as separate and individual restrictions and shall each be
capable of being severed without prejudice to the other restrictions or
to the remaining provisions of this Agreement.
9.5 For the purposes of this Clause 9 the words "best endeavours" shall not
include an obligation to pay or expend money.
10 NAV ESCROW ACCOUNT
10.1 On the Completion Date the Buyer shall pay into the NAV Escrow Account
the NAV Escrow Sum.
10.2 On the NAV Release Date and following the determination of the
Completion Balance Sheet:-
10.2.1 there shall be released to the Buyer (or as it shall direct) from the
NAV Escrow Account a principal sum equal to the Net Asset Shortfall (if
any) or, if the Net Asset Shortfall is in excess of the NAV Escrow Sum,
a principal sum equal to the NAV Escrow Sum, together with, in either
case, the interest accrued on that sum from the Completion Date to the
date of release of that sum to the Buyer (or as it shall direct) and
standing to the credit of the NAV Escrow Account on that date;
10.2.2 there shall be released to the Sellers' Solicitors from the NAV Escrow
Account a sum equal to the balance of the monies standing to the credit
of the NAV Escrow Account plus accrued interest on that sum (after
taking into account any amount to be released from the NAV Escrow
Account pursuant to Clause 10.2.1).
10.3 Save as provided in sub-clause 10.2, no releases or withdrawals shall
be made from the NAV Escrow Account save with the previous written
consent of the Sellers and the Buyer.
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10.4 The Sellers shall give such instructions to the Sellers' Solicitors,
the Managers shall give such instructions to the Managers' Solicitors
and the Buyer shall give such instructions to the Buyer's Solicitors as
may be required to give full effect to the provisions of this Clause
10.
10.5 Any sums released to the Sellers' Solicitors from the NAV Escrow
Account pursuant to Clause 10.2 shall be divided between the Sellers as
the Sellers agree between themselves but the Buyer shall not be
concerned with such division. The receipt of any sums by the Sellers'
Solicitors shall be an absolute discharge therefor. Upon agreement
being reached by the Sellers as to the division of such sums, the
Sellers shall procure that the Sellers' Solicitors inform the Buyer's
Solicitors in writing of the agreed division.
10.6 Any amount of interest earned on monies for the time being standing to
the credit of the NAV Escrow Account which is to be released to the
Buyer (or as it shall direct) or the Sellers' Solicitors pursuant to
Clause 10.2 shall be paid to the party entitled thereto subject to the
deduction of tax if and to the extent that the same is required by law
to be deducted therefrom.
10.7 The Sellers and the Buyer shall ensure that all rights to the NAV
Escrow Account or NAV Escrow Sum remain free from any Encumbrance,
set-off or counterclaim except as referred to in Clause 10.
10.8 The Escrow Agent's costs in respect of any work done pursuant to Clause
10 and the costs of establishing and running the NAV Escrow Account
shall be paid first out of the interest accruing on the NAV Escrow Sum
and second, as to any balance of such costs, out of the NAV Escrow Sum.
11 OFT ESCROW ACCOUNT
11.1 On the Completion Date the Buyer shall pay into the OFT Escrow Account
the OFT Escrow Sum.
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11.2 In the event that before the OFT Release Date:-
11.2.1 no undertaking or order to make a disposal of the type referred to in
Clause 6.1 has been made, there shall be released to the Sellers'
Solicitors on the OFT Release Date from the OFT Escrow Account the OFT
Escrow Sum plus accrued interest thereon;
11.2.2 an undertaking or order to make a disposal of the type referred to in
Clause 6.1 has been made, the OFT Escrow Sum shall be retained in the
OFT Escrow Account pending the agreement or determination of the
Calculation in respect of that part of the business undertaken or
ordered to be disposed of, following which agreement or determination:-
11.2.2.1 a principal sum equal to the Adjustment shall be retained in
the OFT Escrow Account pending completion of the disposal of
that part of the business in respect of which the Calculation
was made and if such disposal is (i) completed within 21
months of the date of the undertaking or order to make such a
disposal then there shall be released to the Buyer (or as it
shall direct) from the OFT Escrow Account on the date of such
completion a principal sum equal to the Adjustment plus
accrued interest thereon, or (ii) not completed within 21
months of the date of the undertaking or order to make such a
disposal then there shall be released to the Sellers'
Solicitors from the OFT Escrow Account on the date which is 21
months after the date of such undertaking or order a principal
sum equal to the Adjustment plus accrued interest thereon;
11.2.2.2 there shall be released to the Sellers' Solicitors from the
OFT Escrow Account a sum equal to the balance of the monies
standing to the credit of the OFT Escrow Account plus accrued
interest thereon (after taking into account any amount to be
retained in the OFT Escrow Account pursuant to Clause 11.2.2.1
and 11.8).
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11.3 Save as provided in sub-Clause 11.2, no releases or withdrawals shall
be made from the OFT Escrow Account save with the previous written
consent of the Sellers and the Buyer.
11.4 The Sellers shall give such instructions to the Seller's Solicitors,
the Managers shall give such instructions to the Managers' Solicitors
and the Buyer shall give such instructions to the Buyer's Solicitors as
may be required to give full effect to the provisions of this Clause
11.
11.5 Any sums released to the Sellers' Solicitors from the OFT Escrow
Account pursuant to Clause 11.2 shall be divided between the Sellers as
the Sellers shall agree between themselves but the Buyer shall not be
concerned with such division. The receipt of any sums by the Sellers'
Solicitors shall be an absolute discharge therefor. Upon agreement
being reached by the Sellers as to the division of such sums, the
Sellers shall procure that the Sellers' Solicitors inform the Buyer's
Solicitors in writing of the agreed division.
11.6 Any amount of interest earned on monies for the time being standing to
the credit of the OFT Escrow Account which is to be released to the
Buyer (or as it shall direct) or the Sellers' Solicitors pursuant to
Clause 11.2 shall be paid to the party entitled thereto subject to the
deduction of tax if and to the extent that the same is required by law
to be deducted therefrom.
11.7 The Sellers and the Buyer shall ensure that all rights to the OFT
Escrow Account or OFT Escrow Sum remain free from any Encumbrances,
set-off or counterclaim except as referred to in Clause 11.
11.8 The Escrow Agent's costs in respect of any work done pursuant to Clause
11 and the costs of establishing and running the OFT Escrow Account
shall be paid first out of the interest accruing on the OFT Escrow Sum
and second, as to any balance of such costs, out of the OFT Escrow Sum.
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12 DEBTS ESCROW ACCOUNT
12.1 On the Completion Date the Buyer shall pay into the Debts Escrow
Account the Debts Escrow Sum.
12.2 Subject to Clause 12.3, on the Debts Release Date:-
12.2.1 the Sellers shall pay to the Buyer an amount equal to the Debts
Shortfall (if any) together with interest on such amount which payment
(of principal and interest) shall be satisfied by the release to the
Buyer (or as it shall direct) from the Debts Escrow Account of a
principal sum equal to the Debts Shortfall (if any) with the interest
accrued on that sum from the Completion Date to the date of release of
that sum to the Buyer (or as it shall direct) and standing to the
credit of the Debts Escrow Account on that date;
12.2.2 there shall be released to the Sellers' Solicitors from the Debts
Escrow Account a sum equal to the balance (if any) of the monies
standing to the credit of the Debts Escrow Account plus accrued
interest on that sum (after taking into account any amount to be
released from the Debts Escrow Account pursuant to Clause 12.2.1).
12.3 The Company has a bad debt insurance policy pursuant to which, inter
alia, the first pound sterling 125,000 of the debt to the Company or
Levington Horticulture Limited owed by C Hetherington Limited and the
first pound sterling 125,000 of the debt to the Company or Levington
Horticulture Limited owed by East Riding Horticulture Limited is
insured. The Debt of those persons to the Company set out in the agreed
form marked 12 is the amount by which the debt to the Company of those
persons at the date of this Agreement is in excess of pound sterling
125,000. For the purposes of calculating the Debts Shortfall, the
following sub-clauses shall apply:-
12.3.1 it shall be deemed that the Debts of C Hetherington Limited and East
Riding Horticulture Limited referred to in agreed form 12 are comprised
of the invoices to
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such persons which at the date of this Agreement are the most recent in
date and which have in aggregate a value which is not less than the
amount of the Debt of such persons;
12.3.2 monies received by Levington Horticulture Limited or the Company from C
Hetherington Limited and East Riding Horticulture Limited following the
date of this Agreement shall be appropriated to payment of the invoices
in respect of which such monies are tendered as notified by the
relevant debtor or, in the event that the debtor does not specify the
invoice in respect of which monies are tendered, such monies shall be
appropriated to payment of the invoices addressed to the relevant
debtor which are the earliest in date and which remain outstanding at
the Debts Release Date; and
12.3.3 the Debts of C Hetherington Limited and East Riding Horticulture
Limited which remain outstanding at the Debts Release Date, if any, and
which, accordingly, are to constitute part of any Debts Shortfall,
shall be equal to the aggregate value of the invoices to which
reference is made in Clause 12.3.1 which remain outstanding for payment
at the Debts Release Date subject to a maximum of the amount stated in
agreed form 12.
12.4 Save as provided in sub-clause 12.2, no releases or withdrawals shall
be made from the Debts Escrow Account save with the previous written
consent of the Sellers and the Buyer.
12.5 The Sellers shall give such instructions to the Sellers' Solicitors,
the Managers shall give such instructions to the Managers' Solicitors
and the Buyer shall give such instructions to the Buyer's Solicitors as
may be required to give full effect to the provisions of this Clause
12.
12.6 Any amount of interest earned on monies for the time being standing to
the credit of the Debts Escrow Account which is to be released to the
Buyer (or as it shall direct) or the Sellers' Solicitors pursuant to
Clause 12.2 shall be paid to the party entitled
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<PAGE> 39
thereto subject to the deduction of tax if and to the extent that the
same is required by law to be deducted therefrom.
12.7 The Sellers and the Buyer shall ensure that all rights to the Debts
Escrow Account or Debts Escrow Sum remain free from any Encumbrance,
set-off or counterclaim except as referred to in Clause 12.
12.8 The Escrow Agent's costs in respect of any work done pursuant to Clause
12 and the costs of establishing and running the Debts Escrow Account
shall be paid first out of the interest accruing on the Debts Escrow
Sum and second, as to any balance of such costs, out of the Debts
Escrow Sum.
12.9 Following any release of the Debts Escrow Sum to the Buyer pursuant to
Clause 12.2.1, the Buyer shall procure that the Company and the
Subsidiaries shall take such steps to obtain payment of the Debts in
respect of which such release was made as the Sellers may reasonably
request in writing on the basis and condition that the Sellers shall
fully indemnify the Company and the Subsidiaries against any liability,
damage, expense or cost (in the case of legal costs being costs before
taxation) incurred thereby PROVIDED ALWAYS THAT the Buyer shall not be
obliged to procure the Company or any of the Subsidiaries to take any
such steps if, in the opinion of the Buyer (arrived at in good faith),
the taking of such steps would, having regard to all the circumstances,
materially adversely affect the legitimate interests of the Buyer or
any member of the Group.
12.10 Any sums received by the Company or the Subsidiaries after the Debts
Release Date in payment of the Debts in respect of which a release was
made pursuant to Clause 12.2.1 shall:
12.10.1 first, be retained by the Company or the Subsidiary until the aggregate
of such sums is equal to the amount by which (if any) the aggregate of
the Debts outstanding at the Debts Release Date is in excess of pound
sterling 250,000;
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12.10.2 second, be retained by the Company in satisfaction of any liability,
damage expense or cost incurred by the Company or any of the
Subsidiaries in obtaining such payment; and thereafter
12.10.3 third, be paid to the Sellers' Solicitors.
12.11 Any sums released to the Sellers' Solicitors from the Debts Escrow
Account pursuant to Clause 12.2 or paid to the Sellers' Solicitors
pursuant to Clause 12.10.3 shall be divided between the Sellers as the
Sellers agree between themselves but the Buyer shall not be concerned
with such division. The receipt of any sums by the Sellers' Solicitors
shall be an absolute discharge therefor. Upon agreement being reached
by the Sellers as to the division of such sums, the Sellers shall
procure that the Sellers' Solicitors inform the Buyer's Solicitors in
writing of the agreed division.
13 RELEASE BY SELLERS
13.1 Each of the Sellers confirms that he has no claim (whether in respect
of any breach of contract, compensation for loss of office or monies
due to him or on any account whatsoever) other than the claims referred
to in Clause 13.3 below outstanding against the Company or any
Subsidiary or against any of the shareholders, directors, employees or
professional advisers of the Company or any Subsidiary and that save as
aforesaid no agreement or arrangement (including (without limitation)
any contract of employment save for the Service Contracts) is
outstanding under which the Company or any Subsidiary or any of such
persons has or could have any obligation of any kind to him.
13.2 To the extent that any such claim or obligation exists or may exist,
save in respect of the claims referred to in Clause 13.3 below, each of
the Sellers irrevocably and unconditionally waives such claim or
obligation and releases the Company and each Subsidiary and any such
other persons from any liability whatsoever in respect of such claim or
obligation.
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13.3 Clauses 13.1 and 13.2 shall not apply in respect of accrued directors'
fees of pound sterling 2,725, the principal amount of the DDB (which
principal amount shall be repaid in accordance with Clause 4.1) or the
interest accrued on the DDB in the period up to and including the
Completion Date. The Buyer shall procure the payment of the sum of
pound sterling 57,601 by Levington Horticulture Limited not later than
31 December 1997 to the holders of the DDB (pro rata to their holdings
of the DDB at the date of this Agreement) which payment the Sellers
agree shall be in full and final settlement of the interest accrued on
the DDB in the period up to and including the Completion Date.
14 TRUSTEES' AND MANAGERS' UNDERTAKINGS
14.1 The Trustees undertake to the Buyer that, save with the prior written
consent of the Buyer (which shall not be unreasonably withheld), during
the period ending on (i) 31 December 1998 or (ii) if the Buyer shall
have given notice to the Trustees of any Relevant Claim against the
Trustees on or prior to such date which satisfies Clause 14.8 below,
the date on which the last of such claims shall be settled and
satisfied in full:-
14.1.1 the Trustees will not exercise any right or power in respect of any
Trust of which they are trustee:-
14.1.1.1 to change the forum of administration of the Trust;
14.1.1.2 to change the proper law of the Trust;
14.1.1.3 to vary, amend, alter, release or revoke any of the powers or
provisions of the Trust which includes, for the avoidance of
doubt, the power to add and to exclude beneficiaries;
14.1.1.4 to appoint or to remove any trustees of the Trust;
14.1.1.5 to appoint a protector of the Trust;
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14.1.1.6 to resign as trustee of the Trust;
14.1.2 subject always to the provisions of Clause 14.1.1, the Trustees will
procure in respect of any Trust of which they are Trustee that no
person shall be appointed as a trustee of the Trust of which they are
trustee unless such person shall prior to the date of the appointment
have entered into a deed of adherence containing a direct covenant and
undertaking with the Buyer (on terms satisfactory to the Buyer) to be
bound by the provisions of this Agreement as if a party to this
Agreement and named herein as one of the Trustees and (except where
such new trustee and the Trust to which he is being appointed is
resident in the United Kingdom) shall have first delivered to the Buyer
a formal written opinion from a reputable firm of solicitors in the
relevant jurisdiction or jurisdictions to the effect that the same will
not affect the rights (and their enforceability) of the Buyer against
or in relation to that Trust (or its trustees) pursuant to this
Agreement. If any resigning Trustee or deceased Trustee has not
breached any of the provisions of this Agreement (including the
provisions relating to the change of trustee contained in this Clause
14.1.2) the Buyer agrees that the deed of adherence shall provide that
the liability of the retiring Trustee or of the deceased Trustee's
personal representative shall terminate upon its ceasing to be a
trustee of the Trust;
14.1.3 the Trustees will not make any sale, transfer, advance, appointment,
loan or distribution or take any other action or fail to take any
action (in any case a "distribution") out of or in respect of the
capital of the Trust in respect of which they are trustee to any person
or persons whatsoever if the effect of a distribution would be to
reduce the value of the net assets of the Trust in question as at the
date of such distribution to less than the Relevant Limit (as defined
in sub-Clause 14.7) or if, immediately prior to the distribution, the
value of the net assets of the Trust in question is not less than the
Relevant Limit Provided that each Trust may make a maximum aggregate
capital distribution(s) of pound sterling 100,000 at any time following
the Completion Date whether such distribution(s) would reduce the value
of the net assets of the Trust below the Relevant Limit or not. For the
avoidance of doubt, the Trustees
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may make distributions out of the income of the Trust in respect of
which they are Trustees without restriction. For the purposes of this
Clause 14.1.3, (1) the Relevant Limit shall be regarded as reduced by
any amount paid out of the Escrow Accounts in accordance with this
Agreement and (2) in calculating whether any loan would reduce the
value of the net assets of the Trust in question to less than the
Relevant Limit, such loan shall be treated as an outright distribution
of assets equal to the value of the loan;
14.1.4 the Trustees will not charge, pledge or otherwise encumber any of the
assets of the Trust in respect of which they are trustee if as a result
the value of the net assets of the Trust in question not subject to any
such charge, pledge or other encumbrance would be less than the
Relevant Limit. For the purpose of this Clause 14.1.4 the Relevant
Limit shall be regarded as reduced by any amount paid out of the Escrow
Accounts in accordance with this Agreement;
14.1.5 save as provided in Clause 14.1.3, the Trustees will not act in such a
way that they would or might be precluded from exercising in full all
rights which they may have to reimbursement from the assets held
subject to the Trust in the event that any claim under this Agreement
is sustained against them; and
14.1.6 the Trustees will not enter into any transaction the purpose, or likely
or foreseeable effect, of which is to cause the value of the net assets
of the Trust of which the Trustee is a trustee to be diminished so as
to prejudice the interests of the Buyer under this Agreement.
14.2 Messrs Parry, Gibbs and Elsdon each undertake to the Buyer that, save
with the prior written consent of the Buyer which shall not be
unreasonably withheld, during the period ending on (i) 31 December 1998
(ii) if the Buyer shall have given notice to the Trustees of any
Relevant Claim against the Trustees on or prior to such date which
satisfies Clause 14.8 below, the date on which the last of such claims
shall be settled and satisfied in full:
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14.2.1 he will not exercise any right or power vested in him to appoint new or
additional trustees of any of the Trusts;
14.2.2 subject always to the provisions of Clause 14.2.1, they shall procure
that no person shall be appointed a new or additional trustee of any of
the Trusts unless such person shall, prior to the date of the
appointment, have entered into a deed of adherence containing a direct
covenant and undertaking with the Buyer (on terms satisfactory to the
Buyer) to be bound by the provisions of this Agreement as if a party to
this Agreement and named herein as one of the Trustees and (except
where such new trustee and the Trust to which he is being appointed is
resident in the United Kingdom) shall have first delivered to the Buyer
a formal written opinion from a reputable firm of solicitors in the
relevant jurisdiction or jurisdictions to the effect that the same will
not affect the rights (and their enforceability) of the Buyer against
or in relation to the Trust (or its trustees) pursuant to this
Agreement. If any resigning Trustee or deceased Trustee has not
breached any of the provisions of this Agreement the Buyer agrees that
the deed of adherence shall provide that the liability of the retiring
Trustee or of the deceased Trustee's personal representative shall
terminate upon its ceasing to be trustee of the Trust; and
14.2.3 he will not give away or settle in trust any or all of the
Consideration that he receives pursuant to this Agreement save that
such Consideration may be settled in trust if the trustees of the trust
in question shall, prior to the date of the settlement, have entered
into a deed of adherence containing a direct covenant and undertaking
with the Buyer (on terms satisfactory to the Buyer) to be bound by the
provisions of this Agreement as if a party to this Agreement and named
herein as one of the Trustees and (except where such trustees and the
trust in question is resident in the United Kingdom) shall have first
delivered to the Buyer a formal written opinion from a reputable firm
of solicitors in the relevant jurisdiction or jurisdictions to the
effect that the same will not affect the rights (and their
enforceability) of the Buyer against or in relation to that trust (or
its trustees) pursuant to this Agreement.
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14.3 The Trustees undertake to the Buyer that, save with the prior written
consent of the Buyer which shall not be unreasonably withheld, during
the period ending on (i) December 1998 or (ii) if the Buyer shall have
given notice to the Trustee of any Relevant Claim against the Trustees
on or prior to such date which satisfies Clause 14.8 below, the date on
which the last of such claims shall be settled and satisfied in full,
they will ensure that the net assets held subject to the Trust of which
they are trustee shall include short dated bonds, gilts and cash on
deposit in a bank or building society account in that Trust's or that
Trust's nominee's name of an aggregate value which is equal to the
Relevant Limit less such part of the amount outstanding from time to
time in the Escrow Accounts as shall equal the Trust in question's
proportionate interest in the total amount standing to the credit of
the Escrow Accounts at the relevant time (each Trust's proportionate
interest in the amount standing to the credit of the Escrow Accounts
from time to time shall be equal to such Trust's proportionate interest
in the Shares at the date hereof) and any amount distributed from the
Trust as is permitted by Clause 14.1.3 above.
14.4 If any such assets are held in foreign currency or are denominated in
foreign currency, then the value of such assets for the purposes of
Clauses 14.1 and 14.3 shall be established by converting the same into
Pounds Sterling at the spot rate offered at 12 noon on the day in
question by The Royal Bank of Scotland plc for transactions of the
relevant size.
14.5 Each of the Trustees hereby undertakes to the Buyer to provide the
Buyer with such information concerning the Trusts and the assets held
by them as the Buyer may from time to time reasonably require for the
purposes only of monitoring and enforcing compliance with the
provisions of sub-clauses 14.1.3, 14.1.4 and 14.3.
14.6 The undertakings of the Trustees contained in this Clause 14 are given
by the Trustees severally in relation to each Trust.
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14.7 The "Relevant Limit" for each of the Trusts shall be as set out below:-
<TABLE>
<CAPTION>
pound sterling
--------------
<S> <C>
Parry Trust 614,319
Gibbs Trusts 418,106
Elsdon Trust 409,546
</TABLE>
Provided that (i) the "Relevant Limit" for each of the Trusts shall be
increased from time to time immediately following any release of monies
from the Escrow Accounts by an amount which is equal to the amount of
principal (and not interest) which is released to such trust from those
accounts and (ii) if Clause 14.1, 14.2 or 14.3 applies after 31
December 1998, the "Relevant Limit" shall be the genuine pre-estimate
by the Buyer of the damages recoverable in respect of the Relevant
Claim agreed or determined pursuant to Clause 14.8 below.
14.8 A "Relevant Claim" for the purposes of this Clause 14 shall be a
Relevant Claim which the Buyer and the Trustees shall agree is made by
the Buyer in good faith and that the amount claimed is a genuine
pre-estimate by the Buyer of the damages recoverable in respect of the
matter giving rise to the Relevant Claim and if such matters shall not
be so agreed the Relevant Claim shall be referred by the Buyer to a
Queens Counsel of at least 10 years standing with experience of
commercial matters agreed by the Trustees and the Buyer or, in the
absence of such agreement within 28 days of the notice of the Relevant
Claim as appointed by the President for the time being of the Law
Society. Such Queens Counsel shall be instructed to determine whether
such claim is made by the Buyer in good faith and what the "Relevant
Limit" in respect of such Relevant Claim should be. The determination
of such Queen's Counsel shall be binding on the Parties. If the Queens
Counsel does determine that the Relevant Claim is made in good faith or
that the Buyer's pre-estimate of damages was a genuine pre-estimate of
the damages recoverable then his costs and fees shall be borne by the
Trustee concerned. If he determines to the contrary, his costs shall be
borne by the Buyer.
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15 ANNOUNCEMENTS
15.1 Subject to Clause 15.2, no party may, before or after Completion, make
or send a public announcement, communication or circular concerning the
transactions referred to in this Agreement unless it has first obtained
the written consent of the Buyer (unless it is the Buyer) and of both
Philip Parry and Walter Henry Guest on behalf of the Sellers (which
consent may not be unreasonably withheld or delayed).
15.2 Clause 15.1 does not apply to a public announcement, communication or
circular:
15.2.1 required by law or a regulation of a stock exchange, if the party
required to make or send it has, if practicable, first consulted and
taken into account the reasonable requirements of the other party; or
15.2.2 made or sent by the Buyer after Completion to a customer, client or
supplier of a Group Company informing it of the Buyer's purchase of the
Shares; or
15.2.3 made or sent by the Buyer or a Buyer Group Undertaking to comply with
or fulfil any federal or state securities law or regulation of or in
the United States of America or any State comprised in the United
States of America provided that the Buyer or the relevant Buyer Group
Undertaking shall have, if practicable, first consulted and taken into
account the reasonable requirements of both Phil Parry and Walter Henry
Guest on behalf of the Sellers.
16 COMPETITION
If there are provisions of this Agreement (or of an agreement or
arrangement of which it forms part) by virtue of which particulars of
this Agreement (or of an agreement or arrangement of which it forms
part) are, at the date of this Agreement, required to be furnished to
the Director General of Fair Trading under the Restrictive Trade
Practices Acts 1976 and 1977 those provisions do not take effect until
the day after those particulars have been furnished.
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17 COSTS
Except where this Agreement provides otherwise, each party shall pay
its own costs relating to the negotiation, preparation, execution and
performance by it of this Agreement and of each document referred to in
it.
18 GENERAL
18.1 A variation of this Agreement is valid only if it is in writing and
signed by or on behalf of each party.
18.2 The failure to exercise or delay in exercising a right or remedy
provided by this Agreement or by law does not constitute a waiver of
the right or remedy or a waiver of other rights or remedies. No single
or partial exercise of a right or remedy provided by this Agreement or
by law prevents further exercise of the right or remedy or the exercise
of another right or remedy.
18.3 Save as provided in Clause 7.1 in respect of the Warrantors, and in
respect of Clauses 10, 11 and 12, all obligations of the Sellers under
or in connection with this Agreement shall be several.
18.4 Any reference in the Agreement to the Sellers having access to the
Managers shall operate to limit the access of the Sellers to only those
persons except that it shall not operate to prevent the Sellers who are
also Managers from having such access to such employees of the Group as
is necessary for the fulfilment of their respective executive functions
in the Group.
18.5 This Agreement supersedes the exclusivity letters dated 10 October 1997
(as amended by a letter dated 24 October 1997) and 20 November 1997
from The Scotts Company to certain of the Sellers and the Parties agree
that the undertakings set out on those letters are terminated with
effect from the date of this Agreement. The terms,
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<PAGE> 49
conditions and acknowledgements set out in those letters shall not have
any affect on the construction of this Agreement or limit the Parties'
rights, obligations and remedies pursuant to or in connection with this
Agreement.
19 ENTIRE AGREEMENT
19.1 This Agreement constitutes the entire agreement between the parties
relating to the subject matter of this Agreement. Each of the Sellers
waives any and all rights of pre-emption over the Shares and the
Minority Shares including, without limitation, any right conferred on
him or held by him by virtue of the Company's Articles of Association
or by express agreement.
19.2 The Buyer acknowledges that it has not relied on or been induced to
enter into this Agreement by a representation other than those set out
in this Agreement and the Minority Shareholders Agreement.
19.3 The Sellers are not liable to the Buyer (in equity, contract or tort,
under the Misrepresentation Act 1967 or in any other way) for a
representation that is not set out in this Agreement.
19.4 Clause 19 does not affect the Sellers' liability in respect of a
fraudulent misrepresentation.
20 ASSIGNMENT
20.1 Subject to Clause 20.2, a party may not assign or transfer or purport
to assign or transfer any of its rights or obligations under this
Agreement.
20.2 The Buyer may assign or transfer all or any of its rights or
obligations under this Agreement to a Group Company, provided that if
such an assignee or transferee shall cease to be, in relation to the
Buyer, a Group Company at any time, the assignee or
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<PAGE> 50
transferee shall immediately assign or transfer its rights to a company
which is, in relation to the Buyer, a Group Company.
21 NOTICES
21.1 A notice or other communication under or in connection with this
Agreement shall be in writing and shall be delivered personally or sent
by first class post pre-paid recorded delivery (or air mail if
overseas) or by fax to the party due to receive the notice or
communication, at its address set out in this Agreement or another
address specified by that party by written notice to the other.
21.2 In the absence of evidence of earlier receipt, a notice or other
communication is deemed given:
21.2.1 if delivered personally, when left at the address referred to in Clause
21.1;
21.2.2 if sent by mail except air mail, two days after posting it;
21.2.3 if sent by air mail, six days after posting it; and
21.2.4 if sent by fax, on completion of its transmission.
22 GOVERNING LAW AND JURISDICTION
22.1 This Agreement is governed by English law.
22.2 The courts of England have exclusive jurisdiction to hear and decide
any suit, action or proceedings, and to settle any disputes, which may
arise out of or in connection with this Agreement (respectively,
"PROCEEDINGS" and "DISPUTES") and, for these purposes, each party
irrevocably submits to the jurisdiction of the courts of England.
47
<PAGE> 51
22.3 Each party irrevocably waives any objection which it might at any time
have to the courts of England being nominated as the forum to hear and
decide any Proceedings and to settle any Disputes and agrees not to
claim that the courts of England are not a convenient or appropriate
forum.
22.4 Process by which any Proceedings are begun in England may be served on
the Sellers or the Buyer by being delivered in accordance with Clause
21. Nothing contained in this Clause 22.4 affects the right to serve
process in another manner permitted by law.
23 COUNTERPARTS
This Agreement may be executed in any number of counterparts each of
which when executed and delivered is an original, but all the
counterparts together constitute the same document.
48
<PAGE> 52
SCHEDULE 1
PART 1
THE SELLERS AND THEIR SHAREHOLDINGS
<TABLE>
<CAPTION>
NAME AND ADDRESS NO. OF NO. OF NO. OF CASH CASH NOMINAL VALUE
ORDINARY DEFERRED PREFERENCE CONSIDERATION FOR CONSIDERATION OF
SHARES SHARES SHARES ORDINARY SHARES FOR DEFERRED CONSIDERATION
RECEIVABLE AT SHARES LOAN STOCK
COMPLETION RECEIVABLE AT POUND
(EXCLUDING ALL COMPLETION STERLING
ESCROW MONIES) (EXCLUDING ALL
ESCROW MONIES)
<S> <C> <C> <C> <C> <C> <C>
PRUDENTIAL NOMINEES LIMITED PAC 0 0 1,369,829 0 0 0
ACCOUNT
142 Holborn Bars
London
EC1N 2NH
PRUDENTIAL NOMINEES LIMITED PSPS 40,574 25,639 479,440 1,829,185 1 0
ACCOUNT
142 Holborn Bars
London
EC1N 2NH
PRUDENTIAL NOMINEES LIMITED USV 40,574 25,639 479,440 1,829,185 1 0
ACCOUNT
142 Holborn Bars
London
EC1N 2NH
PRUDENTIAL NOMINEES LIMITED BWV 17,389 10,988 205,474 783,936 1 0
ACCOUNT
142 Holborn Bars
London
EC1N 2NH
PRUDENTIAL NOMINEES LIMITED 12,203 7,711 0 139,366 1 410,772
HOLBORN ACCOUNT
142 Holborn Bars
London
EC1N 2NH
PRUTEC LIMITED 115,927 73,254 0 5,226,272 1 0
142 Holborn Bars
London
EC1N 2NH
</TABLE>
49
<PAGE> 53
<TABLE>
<CAPTION>
NAME AND ADDRESS NO. OF NO. OF NO. OF CASH CASH NOMINAL VALUE
ORDINARY DEFERRED PREFERENCE CONSIDERATION FOR CONSIDERATION OF
SHARES SHARES SHARES ORDINARY SHARES FOR DEFERRED CONSIDERATION
RECEIVABLE AT SHARES LOAN STOCK
COMPLETION RECEIVABLE AT POUND
(EXCLUDING ALL COMPLETION STERLING
ESCROW MONIES) (EXCLUDING ALL
ESCROW MONIES)
<S> <C> <C> <C> <C> <C> <C>
THE SEARS PENSION PLAN BY THE 17,389 10,988 205,474 783,936 1 0
CHASE MANHATTAN BANK NA
Woolgate House
Coleman Street
London
EC2P 2HD
HSBC EQUITY LIMITED 69,731 44,062 782,758 3,143,619 1 0
Vintners Place
68 Upper Thames Street
London
EC4V 3BJ
CANDOVER INVESTMENTS PLC 13,249 8,372 156,551 597,296 1 0
20 Old Bailey
London
EC4M 7LN
CANDOVER TRUSTEES LIMITED 697 441 0 31,436 1 0
20 Old Bailey
London
EC4M 7LN
CANDOVER PARTNERS LIMITED AS 71,126 44,944 798,413 3,206,523 1 0
GENERAL PARTNER OF CANDOVER 1991
LEAD INVESTORS LIMITED PARTNER
20 Old Bailey
London
EC4M 7LN
</TABLE>
50
<PAGE> 54
<TABLE>
<CAPTION>
NAME AND ADDRESS NO. OF NO. OF NO. OF CASH CASH NOMINAL VALUE
ORDINARY DEFERRED PREFERENCE CONSIDERATION FOR CONSIDERATION OF
SHARES SHARES SHARES ORDINARY SHARES FOR DEFERRED CONSIDERATION
RECEIVABLE AT SHARES LOAN STOCK
COMPLETION RECEIVABLE AT POUND
(EXCLUDING ALL COMPLETION STERLING
ESCROW MONIES) (EXCLUDING ALL
ESCROW MONIES)
<S> <C> <C> <C> <C> <C> <C>
CANDOVER PARTNERS LIMITED AS 15,340 9,694 172,207 691,583 1 0
GENERAL PARTNER OF CANDOVER 1991
UK LIMITED PARTNERSHIP
20 Old Bailey
London
EC4M 7LN
CANDOVER PARTNERS LIMITED AS 4,183 2,644 46,966 188,600 1 0
GENERAL PARTNER OF CANDOVER 1991
US LIMITED PARTNERSHIP
20 Old Bailey
London
EC4M 7LN
3i GROUP PLC 43,582 27,539 489,224 1,964,772 1 0
91 Waterloo Road
London SE1 8XP
NATWEST VENTURES INVESTMENTS 43,582 27,539 489,224 1,964,772 1 0
LIMITED
135 Bishopsgate
London
EC2M 3UR
PHILIP PARRY 23,029 0 0 19,500 0 923,643
Strawberry Hill
Pembroke Road
Framlingham
Suffolk
MRS L PARRY 8,029 0 0 20,000 0 308,824
Strawberry Hill
Pembroke Road
Framlingham
Suffolk
PHILIP PARRY AND LYNNE PARRY 15,000 0 0 614,319 0 0
as trustees of the Parry Trust
Strawberry Hill
Pembroke Road
Framlingham
Suffolk
N W GIBBS 27,820 0 0 149,999 0 989,357
August House
Church Road
Bacton
Stowmarket
Suffolk
MRS A GIBBS 8,029 0 0 30,000 0 298,824
August House
Church Road
Bacton
Stowmarket
Suffolk
</TABLE>
51
<PAGE> 55
<TABLE>
<CAPTION>
NAME AND ADDRESS NO. OF NO. OF NO. OF CASH CASH NOMINAL VALUE
ORDINARY DEFERRED PREFERENCE CONSIDERATION FOR CONSIDERATION OF
SHARES SHARES SHARES ORDINARY SHARES FOR DEFERRED CONSIDERATION
RECEIVABLE AT SHARES LOAN STOCK
COMPLETION RECEIVABLE AT POUND
(EXCLUDING ALL COMPLETION STERLING
ESCROW MONIES) (EXCLUDING ALL
ESCROW MONIES)
<S> <C> <C> <C> <C> <C> <C>
N W GIBBS AND A GIBBS 10,209 0 0 247,733 0 170,373
as trustees of the Gibbs Trusts
August House
Church Road
Bacton
Stowmarket
Suffolk
P J ELSDON 28,029 0 0 13,000 0 1,134,916
93 Constable Road
Ipswich
Suffolk
IP4 2XA
MRS B ELSDON 8,029 0 0 30,000 0 298,824
93 Constable Road
Ipswich
Suffolk
IP4 2XA
P J ELSDON AND B ELSDON 10,000 0 0 409,546 0 0
as trustees of the Elsdon Trust
93 Constable Road
Ipswich
Suffolk
IP4 2XA
FAIRMOUNT TRUSTEE SERVICES LIMITED 11,826 0 0 484,329 0 0
as trustee for the time being of
the Levington Unapproved Pension
Fund
--------- --------- --------- --------- --------- ---------
TOTAL 655,546 319,454 5,675,000 24,398,907 14 4,535,533
</TABLE>
52
<PAGE> 56
PART 2
MINORITY SHAREHOLDERS AND THEIR SHAREHOLDINGS
<TABLE>
<CAPTION>
NAME AND ADDRESS NO. OF
ORDINARY SHARES
<S> <C>
R BARNARD 1400
6 Pytches Close
Melton Woodbridge
Suffolk
IP12 1SE
R DANIELS 1,400
Hammerand
Red House Farm
Bawdsey
Suffolk
IP12 3AN
N DUNHAM 1,400
19 Wellclose Square
Framlingham
Suffolk
IP13 9DT
D HIGGINS 1,400
42 Anglesea Road
Ipswich
Suffolk
IP1 3PP
A HOLMES 1,400
15 Phillips Crescent
Needham Market
Suffolk
IP6 8TF
S HOLTON 1,400
Chestnut House
Mill Green
Edwardstone
Sudbury
CO10 5PY
</TABLE>
53
<PAGE> 57
<TABLE>
<CAPTION>
NAME AND ADDRESS NO. OF
ORDINARY SHARES
<S> <C>
J LLEWELLYN 1,400
120 Bell Lane
Kesgrave
Suffolk
IP5 1JN
A LOMAS 1,400
82 London Road
Ipswich
Suffolk
IP1 2HE
M MORGAN 1,400
3 Jordan Close
Creeting
St Mary
Ipswich
G NOYCE 1,400
2 Quince Close
Brantham
Manningtree
Essex
CO11 1TH
B READER 1,400
27 Coral Drive
Ipswich
Suffolk
IP1 5HP
D SEAGER 1,400
3 Oak Tree Cottages
Brook Road
Aldham
Essex
CO6 3RJ
M SUPPLE 1,400
1 The Oaks
The Street
Thorndon Eye
Suffolk
IP23 7NZ
</TABLE>
54
<PAGE> 58
<TABLE>
<CAPTION>
NAME AND ADDRESS NO. OF
ORDINARY SHARES
<S> <C>
N TEMPLE-HEALD 1,400
2 Millers Terrace
Snaith Goole
N Humberside
DN14 9HG
J CROWNE 1,400
10 Athole Gardens
Enfield
Middlesex
EN1 2EW
LEVINGTON TRUSTEES LIMITED 4,000
Paper Mill Lane
Bramford
Ipswich
IP8 4BZ
-------
TOTAL 25,000
</TABLE>
55
<PAGE> 59
SCHEDULE 2
INFORMATION ABOUT THE COMPANY AND THE SUBSIDIARY UNDERTAKINGS
PART 1: THE COMPANY
1 Registered number: 02906877
2 Date of incorporation: 10 March 1994
3 Place of incorporation: Companies House, Cardiff
4 Address of registered office: Paper Mill Lane
Bramford
Ipswich
Suffolk
IP8 4BZ
5 Type of company: Private company limited by shares
6 Authorised share capital: pound sterling 66,750 divided into
175,000 ordinary shares,
825,000 'A' ordinary shares and
5,675,000 preference shares.
7 Issued share capital: 175,000 ordinary shares of 1p
each, 825,000 convertible
cumulative participating preferred
"A" ordinary shares of 1p each and
5,675,000 redeemable cumulative
preference shares of 1p each.
8 Directors: Peter John Elsdon
Norman William Gibbs
Walter Henry Guest
Philip David Parry
Stephen Arthur Roberts
9 Secretary: Peter John Elsdon
10 Accounting reference date: 30 June
11 Auditors: Coopers & Lybrand
12 Tax residence: United Kingdom
13 VAT registration no.: 637919007
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<PAGE> 60
PART 2: THE SUBSIDIARY UNDERTAKINGS
LEVINGTON HORTICULTURE LIMITED
1 Registered number: 2924130
2 Date of incorporation: 29 April 1994
3 Place of incorporation: Companies House, Cardiff
4 Address of registered office: Paper Mill Lane
Bramford
Ipswich
Suffolk
IP8 4BZ
5 Type of company: Private company limited by shares
6 Authorised share capital: pound sterling 1,000,000 divided
into 1,000,000 shares of pound
sterling 1 each
7 Issued share capital: 999,999 ordinary shares of pound
sterling 1 each
8 Percentage owned by the Company: 100%
9 Directors: Peter John Elsdon
Norman William Gibbs
Philip David Parry
10 Secretary: Peter John Elsdon
11 Accounting reference date: 30 June
12 Auditors: Coopers & Lybrand
13 Tax residence: United Kingdom
14 VAT registration no: 637919007
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<PAGE> 61
PART 2: THE SUBSIDIARY UNDERTAKINGS
LEVINGTON TRUSTEES LIMITED
1 Registered number: 2930421
2 Date of incorporation: 18 May 1994
3 Place of incorporation: Companies House, Cardiff
4 Address of registered office: Paper Mill Lane
Bramford
Ipswich
Suffolk
IP8 4BZ
5 Type of company: Private company limited by shares
6 Authorised share capital: pound sterling 100 divided into 100
shares of pound sterling 1 each
7 Issued share capital: 2 ordinary shares of pound
sterling 1 each
8 Percentage owned by the Company: 100%
9 Directors: Peter John Elsdon
Norman William Gibbs
Philip David Parry
Walter Henry Guest
10 Secretary: Peter John Elsdon
11 Accounting reference date: 30 June
12 Auditors: None - dormant company
13 Tax residence: United Kingdom
14 VAT registration no: None - dormant company
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<PAGE> 62
PART 2: THE SUBSIDIARY UNDERTAKINGS
MURPHY HOME & GARDEN LIMITED
1 Registered number: 3013779
2 Date of incorporation: 25 January 1995
3 Place of incorporation: Companies House, Cardiff
4 Address of registered office: Paper Mill Lane
Bramford
Ipswich
Suffolk
IP8 4BZ
5 Type of company: Private company limited by shares
6 Authorised share capital: pound sterling 1,000 divided into
1,000 shares of pound
sterling 1 each
7 Issued share capital: 2 ordinary shares of pound
sterling 1 each
8 Percentage owned by the Company: 100%
9 Directors: Peter John Elsdon
Norman William Gibbs
Philip David Parry
10 Secretary: Peter John Elsdon
11 Accounting reference date: 30 June
12 Auditors: Coopers & Lybrand
13 Tax residence: United Kingdom
14 VAT registration no: None - dormant company
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<PAGE> 63
SCHEDULE 3
ITEMS FOR DELIVERY BY THE SELLERS AT COMPLETION
1 Executed transfer(s) in respect of the Shares to the Buyer or its
nominee(s) and the share certificate(s) for the Shares.
2 The common seal (if any) of each Group Company and each register,
minute book and other book required to be kept by each Group Company
under the Act made up to the date of Completion and each certificate of
incorporation and certificate of incorporation on change of name for
each Group Company.
3 Share certificates for all issued shares in the capital of each
Subsidiary Undertaking held by the Company.
4 A copy of a letter in the agreed form marked 2 to each Group Company
from its auditors.
5 A letter executed as a deed in the agreed form marked 1 from Norman
William Gibbs, Walter Henry Guest, Philip David Parry and Stephen
Arthur Roberts in each case resigning their respective offices as
directors of members of the Group and from Peter Elsdon resigning from
his office as secretary to each member of the Group (with effect from
the end of the meeting held pursuant to Clause 4.4) and acknowledging
that, save as provided therein, the writer has no claim against the
Company or a Subsidiary for compensation for loss of office or
otherwise.
6 The title deeds to, and Certificates in respect of, the Property.
7 Evidence of the unconditional release by National Westminster Bank plc
of all security which it has over any assets or undertakings of any
Group Company.
8 A certified copy of a deed in the agreed form marked 8 executed by each
of the Sellers and each of the Minority Shareholders terminating the
Shareholders Agreement dated 5 July 1994 and made between the Sellers,
the Company and Levington Horticulture
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<PAGE> 64
Limited with immediate effect from Completion.
9 The duly executed Directors' Agreements in the agreed form marked 3.
10 Duly executed powers of attorney in the agreed form marked 4.
11 The Minority Shareholders' Agreement in the agreed form marked 11 duly
executed by the Minority Shareholders, together with all documents and
other items which are required to be delivered to the Buyer by the
Minority Shareholders in accordance with its terms on its completion.
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<PAGE> 65
SCHEDULE 4
WARRANTIES
1 DISCLOSED INFORMATION
1.1 RECITALS AND OTHER SCHEDULES
The facts set out in Schedules 1 and 2 are true and accurate
in all respects.
1.2 THE DISCLOSURE LETTER
With the exception of information contained in the copies of
the legal agreements referred to in the Disclosure Letter,
which copies are true and complete copies of the originals,
all information contained or referred to in the Disclosure
Letter and any documents annexed to it is true and accurate in
all material respects and the Warrantors are not aware of any
other fact or matter which renders or might upon its
disclosure render any such information misleading in any
material respect.
1.3 MEMORANDUM AND ARTICLES OF ASSOCIATION
The copy of the memorandum and articles of association of the
Company annexed to the Disclosure Letter is true and complete,
has embodied in it or annexed to it a copy of every such
resolution or agreement as is referred to in Section 380(4)
Companies Act 1985 and sets out in full the rights and
restrictions attaching to each class of the Company's share
capital.
1.4 STATUTORY BOOKS
The statutory books (including all registers and minute books)
of the Company have been properly kept and contain a complete
and accurate record of the matters which should be dealt with
in them and no notice or allegation that any of them is
incorrect or should be rectified has been received.
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<PAGE> 66
1.5 RETURNS
All returns, particulars, resolutions and other documents
required under the Companies Act 1985 to be delivered on
behalf of the Company to the Registrar of Companies or to any
other authority whatsoever have been duly and properly made
and delivered.
1.6 MATERIAL DISCLOSURE
1.6.1 There are no facts or matters or circumstances relating to the
Shares or to the assets, business and affairs of the Company
of which the Warrantors are aware which are not disclosed by
the Disclosure Letter and which the Warrantors (either
individually or collectively) have determined not to disclose
to the Buyer which, if disclosed, would, in the reasonable
opinion of the Warrantors, qualify any Warranty in a manner or
to an extent which might reasonably be expected to affect
materially the willingness of the Buyer to purchase the Shares
on the terms (including price) of this Agreement.
1.6.2 Subject to the second sentence of this paragraph 1.6.2, all
items of information requested by or on behalf of the Buyer by
the due diligence requests in the agreed form marked 13 have
been supplied and were when supplied, and are, true and
accurate in all material respects and not misleading in any
material respect. The first sentence of this paragraph shall
be construed so as not to include any such information,
whether financial or otherwise, which relates to the future
performance or activities of the Company.
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<PAGE> 67
2 THE WARRANTORS
2.1 CAPACITY
2.1.1 Each Warrantor has full power to enter into and perform this
Agreement and this Agreement constitutes binding obligations
of each Warrantor (in all relevant capacities) in accordance
with its terms.
2.1.2 The execution and delivery of this Agreement by the Warrantors
and the performance of and compliance with its terms and
provisions will not:-
2.1.2.1 conflict with or result in a breach of, or
constitute a default under, any agreement or
instrument to which any of them or the
Company is a party or by which any of them
or the Company is bound or of the Memorandum
or Articles of Association of the Company;
2.1.2.2 conflict with or result in a breach of any
law, regulation, order, writ, injunction or
decree of any court or agency to which any
of them or the Company is subject; or
2.1.2.3 cause the Company to lose the benefit of any
right or privilege it presently enjoys or
cause any executive officer or any of Messrs
Temple-Heald, Daniels and Higgins to leave
their employment with the Company and, so
far as the Warrantors are aware, the
attitude or actions of customers and
suppliers with regard to the Company will
not be affected prejudicially thereby.
2.2 WARRANTORS' OTHER INTERESTS
No Warrantor or any person connected with any Warrantor has
any interest, direct or indirect, in any business other than
that now carried on by the Company which is or is likely to be
or become competitive with the business or any proposed
business of the
64
<PAGE> 68
Company.
3 THE SHARES AND THE COMPANY
3.1 THE SHARES
3.1.1 The Shares, the Preference Shares and the Minority Shares
together comprise the whole of the allotted and issued share
capital of the Company and all of the Shares, the Preference
Shares and the Minority Shares are fully paid or credited as
fully paid.
3.1.2 The Shares to be sold under this Agreement by the Warrantors
are legally and beneficially owned by such Warrantors free
from all liens, charges, equities, encumbrances or interests
of any nature whatsoever, or any agreement, arrangement or
obligation to create any of the same, in favour of any other
person.
3.2 SHARE AND LOAN CAPITAL
Save only as provided in this Agreement, there are no
agreements or arrangements in force which call for the present
or future creation, allotment, issue, transfer, redemption or
repayment of, or grant to any person the right (whether
exercisable now or in the future and whether conditional or
not) to call for the creation, allotment, issue, transfer,
redemption or repayment of, any share or loan capital of the
Company (including by way of option or under any right of
conversion or pre-emption).
3.3 COMPANY RESOLUTIONS
Neither the Company nor any class of its members has since the
date of incorporation of the Company passed any Resolution
(other than Resolutions relating to business at Annual General
Meetings which was not special business).
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<PAGE> 69
3.4 SUBSIDIARIES AND SUBSIDIARY UNDERTAKINGS
3.4.1 The Company does not have, and never has had, any subsidiaries
or subsidiary undertakings apart from the Subsidiaries.
3.4.2 The Company is the beneficial owner of the entire issued share
capital of each of the Subsidiaries, free from all liens,
charges, equities, encumbrances or interests of any nature
whatsoever, or any agreement, arrangement or obligation to
create any of the same, in favour of any other person.
3.5 ASSOCIATED COMPANIES
The Company has no associated companies as defined in SSAP1,
as amended by FRS3.
3.6 FOREIGN BRANCHES
The Company has no branch, agency, place of business or
permanent establishment outside the United Kingdom.
4 THE ACCOUNTS AND ACCOUNTING RECORDS
4.1 THE ACCOUNTS
The Accounts:-
4.1.1 comply with the requirements of the Companies Act 1985;
4.1.2 have been prepared in accordance with all SSAPs and FRSs which
were applicable as at the Last Accounting Date or, where there
are none, in accordance with accounting principles generally
accepted in the United Kingdom as at the Last Accounting Date
and on a basis consistent with the two preceding accounting
periods;
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<PAGE> 70
4.1.3 show a true and fair view of the state of affairs of the
Company as at the Last Accounting Date and of its profit or
loss for the financial year ended on that date;
4.1.4 save as expressly disclosed in the Accounts, are not affected
by any extraordinary, exceptional or non-recurring items; and
4.1.5 make adequate and proper disclosure of all the assets and
liabilities (whether ascertained, contingent or otherwise and
whether or not quantified or disputed) of the Company as at
the Last Accounting Date and make proper provision and/or
reserve for all such liabilities.
4.2 STOCK VALUATION
4.2.1 The method of valuing stock and work-in-progress for the
Accounts was in accordance with SSAP 9 and, subject to that
Standard, was consistent in all material respects with that
adopted in the corresponding audited accounts for the
preceding two financial periods and has been accepted by the
Inland Revenue for taxation purposes.
4.2.2 Proper provision has been made in the Accounts in accordance
with SSAP 9 in respect of slow moving, obsolete or redundant
stock and work-in-progress and the value attributed to the
remaining stock and work-in-progress did not exceed the lower
of direct cost or net realisable value at the Last Accounting
Date.
4.3 ACCOUNTING RECORDS
The accounting records of the Company:-
4.3.1 have at all times been fully and properly kept and are
accurate and complete in all material respects and contain
records, which are accurate in all material respects, of all
matters required by law to be entered in them;
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<PAGE> 71
4.3.2 contain or reflect no material inaccuracies or discrepancies;
and
4.3.3 give and reflect a true and fair view of the matters which
ought to appear in them.
4.4 MANAGEMENT ACCOUNTS
4.4.1 The Management Accounts have been properly prepared in a
manner consistent with the basis of preparation of the
Completion Accounts as set out in Schedule 8 of this
Agreement.
4.4.2 Having regard to the purpose for which the Management Accounts
have been prepared, the Management Accounts would not mislead,
in any respect which would be likely to be material, a person
or persons (having requisite expertise) seeking to assess the
financial position of the Company and its Subsidiaries (taken
as a whole).
5 TAXATION
5.1 PROVISION FOR TAXATION
5.1.1 Full provision has been made in the Accounts for taxation.
5.1.2 Proper provision has been made in the Accounts for deferred
taxation in accordance with SSAP15 (calculated according to
the liability method).
5.1.3 No Relief has been taken into account in reducing or
eliminating any provision for taxation which appears in the
Accounts or which, but for the presumed availability of such
Relief, would have appeared in the Accounts.
5.2 POSITION SINCE LAST ACCOUNTING DATE
Since the Last Accounting Date:
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<PAGE> 72
5.2.1 the Company has not been involved in any transaction which has
given or may give rise to a liability on the Company (or would
have given rise or might give rise to such a liability but for
the availability of any Relief) other than taxation of the
Company arising from transactions entered into by it in the
ordinary course of its trading or in the ordinary course of
acquiring or disposing of capital assets;
5.2.2 no payment of an income nature has been made by the Company
which will not be deductible for the purposes of corporation
tax (or any corresponding tax on profits in any relevant
foreign jurisdiction), either in computing the profits of the
Company or in computing the corporation tax or corresponding
tax chargeable on it except for expenditure on the acquisition
of any asset held otherwise than as stock, or expenditure on
entertaining customers and suppliers or on the hiring of
expensive motor cars within section 35(2) of the Capital
Allowances Act 1990 or the payment of taxation, such
expenditure not being materially greater than the level of
disallowable expenditure in previous years;
5.2.3 no disposal has taken place or other event occurred which has
given or may give rise to a liability to taxation which, if
such disposal or event had been planned or predicted at the
Last Accounting Date, should have reflected in the provision
for deferred taxation contained in the Accounts; and
5.2.4 no accounting period (as defined in section 12 ICTA 1988) of
the Company has ended as referred to in section 12(3) of that
Act.
5.3 ADMINISTRATIVE MATTERS
5.3.1 The Company has not at any time been, nor, so far as the
Warrantors are aware, does it expect to be, involved in any
dispute with, or the subject of any enquiry by any taxation
authority (whether of the UK or elsewhere) other than routine
enquiries of a minor nature following the submission of
computations and returns.
5.3.2 The Company has duly, and within any appropriate time limits,
made all returns, given all notices, made all relevant claims
for relief from taxation and stamp duty and
69
<PAGE> 73
supplied all other information required to be supplied to the
relevant taxation authorities; all such information was and
remains complete and accurate in all material respects and all
such returns and notices and claims were and remain complete
and accurate in all material respects and were made on the
proper basis and do not, and, so far as the Warrantors are
aware , are not likely to, reveal any transactions which may
be the subject of any dispute with any taxation authority.
5.3.3 The Company has duly paid all taxation which it has become
liable to pay and has not been notified of any liability to
pay any penalty, interest, supplement, fine, default surcharge
or other payment in connection with any claim for taxation.
5.3.4 No transaction in respect of which any consent or clearance
from any taxation authority was required or sought has been
entered into or carried out by the Company without such
consent or clearance having been properly obtained. Any
transaction for which such consent or clearance was obtained
has been carried out in accordance with the terms of such
consent or clearance and the application in respect of which
such consent or clearance was based and at a time when such
consent or clearance was valid and effective.
5.3.5 No taxation authority has operated or agreed to operate any
special arrangement or practice (being one not based on
relevant legislation or published practice) in relation to the
affairs of the Company.
5.4 BASE VALUES
5.4.1 If each of the capital assets or pool of assets other than
trading stock of the Company were disposed of at Completion
for a consideration equal to the book value of that asset or
pool in, or adopted for the purpose of, the Accounts, no
liability to corporation tax on chargeable gains and no
balancing charge under the Capital Allowances Act 1990 (or
corresponding tax in any jurisdiction) in relation to any such
asset or pool of assets would arise.
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5.4.2 No liability to taxation would arise on the disposal by the
Company of any asset other than trading stock acquired since
the Last Accounting Date for a consideration equal to the
consideration actually given for the acquisition.
5.5 STAMP DUTY ETC.
All documents to which the Company is a party and under which
the Company has any rights or which form part of the Company's
title to any asset owned by it have been duly stamped with the
correct amount of stamp duty and any applicable stamp or other
duty in respect of such documents have been accounted for and
paid.
5.6 VALUE ADDED TAX
5.6.1 The Company is registered for the purposes of value added tax
and is not a member of a group of companies for UK or foreign
value added tax purposes.
5.6.2 The Company has not been required by the Commissioners of
Customs and Excise or equivalent foreign authorities to give
security.
5.6.3 The Company has not been subject to any penalty, fine or
surcharge in respect of value added tax and has not received
any notice of any such penalty, fine or surcharge.
5.6.4 The Company has complied with and observed in all material
respects the terms of all other enactments relating to value
added tax or any equivalent tax in any jurisdiction and all
regulations, orders, notices, provisions and conditions made
thereunder ("VAT legislation").
5.6.5 The Company has maintained and obtained complete, correct and
up-to-date records, invoices and other documents (as the case
may be) appropriate or requisite for the purposes of VAT
legislation and has preserved such records, invoices and other
documents in such form and for such periods as are required by
VAT legislation.
5.6.6 The Company obtains credit for all input tax paid or suffered
by it.
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5.7 DISTRIBUTIONS AND PAYMENTS
5.7.1 The Company has not since its incorporation issued any share
capital as paid up otherwise than by the receipt of new
consideration (within the meaning of Section 211 ICTA 1988).
5.7.2 The Company has not at any time since its incorporation
redeemed, repaid or purchased, or agreed to redeem, repay or
purchase, any of its own shares.
5.7.3 No securities (within the meaning of Section 254(1) ICTA 1988)
issued by the Company and remaining in issue at the date of
this Agreement were issued in circumstances such that the
interest payable on those securities falls to be treated as a
distribution, nor is the Company under any obligation to make
any payments of interest or any annual payments for which no
tax relief will be received.
5.7.4 The Company has not made or received any distribution which is
an exempt distribution within Sections 213 to 218(1)
(inclusive) ICTA 1988.
5.8 EMPLOYEES ETC.
5.8.1 The Company has made all such deductions, withholdings or
reductions as it should have made from any remuneration or
benefits of any kind paid or provided to employees,
subcontractors or workers supplied by agencies in respect of
taxation, national insurance or social security contributions
and all sums payable by the Company to any taxation authority
in respect of such amounts have been, or will before
Completion be, paid to the relevant authority within the
prescribed time limits.
6 ASSETS
6.1 TITLE TO ASSETS AND ENCUMBRANCES
6.1.1 Except for trading stock sold by the Company in the ordinary
course of its day to day business or for trading stock
acquired subject to retention or reservation of title by the
supplier or manufacturer of such trading stock as disclosed in
the Disclosure Letter,
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all the assets included in the Accounts or acquired after the
Last Accounting Date as well as all the assets used in the
Company's business:-
6.1.1.1 are legally and beneficially owned by the
Company free from any mortgage, charge, lien
or other encumbrance;
6.1.1.2 are not held subject to any agreement for
lease, hire, hire purchase or sale on
conditional or deferred terms; and
6.1.1.3 are in the possession or under the control
of the Company.
6.1.2 In respect of any of the items referred to in the preceding
paragraph 6.1.1 which are held under any agreement for lease,
hire, hire purchase or sale on conditional or deferred terms,
there has been no default by the Company in the performance or
observance of any of the provisions of such agreements.
6.2 PLANT
The plant and machinery, including fixed plant and machinery,
and all vehicles, office and other equipment used in
connection with the business of the Company are, having regard
to their age and normal wear and tear, in good repair and
condition and in satisfactory working order, have been
regularly and properly maintained and, so far as the
Warrantors are aware, are not surplus to the requirements of
the Company's business as carried on at the date of this
Agreement. The Disclosure Letter sets out details of, (i)
equipment and machinery breakdowns since the Last Accounting
Date, (ii) insurance claims which have been or are due to be
made in respect of interruptions to normal business arising
from such breakdowns and (iii) budgeted and actual expenditure
since the Last Accounting Date in respect of the maintenance
of plant and machinery.
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6.3 STOCK
6.3.1 The Company's stock, subject only to processing and packaging
in the normal course of business, is capable of being
converted into finished products which are capable at the date
of this Agreement of being sold by the Company in the ordinary
course of its business in accordance with its current price
list without unusual rebate or allowance to a buyer.
6.3.2 As at the date of this Agreement, the Company's finished
products, within their existing packaging, are capable of
being sold by the Company in the ordinary course of its
business in accordance with its current price list without
unusual rebate or allowance to a buyer.
6.4 DEBTS
6.4.1 None of the debts recorded in the Accounts or the books of the
Company as being due to the Company (less the amount of any
specific provision or reserve for such debts made in the
Accounts) is subject to any counter-claim or set-off.
6.4.2 No part of the amounts included in the Accounts or (in the
case of an amount arising after the Accounts Date) in the
books of the Company as due to the Company has been released
on terms that any debtor pays less than the full book value of
his debt or has been written off or has proved to any extent
irrecoverable or is now regarded as irrecoverable.
6.5 INTELLECTUAL PROPERTY
6.5.1 For the purposes of this sub-paragraph 6.5, the following
expressions shall have the following meanings:-
THE BUSINESS: the business of the manufacture and sale of (1)
garden and household horticultural and pesticide products to
the consumer market, (2) professional
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horticultural products and (3) professional turf-care products
together with any other activities carried out by the Company;
INTELLECTUAL PROPERTY: patents, petty patents, registered and
unregistered trade marks, registered designs (in each case for
the full period thereof), applications for any of the
foregoing, inventions, confidential information, know-how,
business names, trade names, brand names, copyright and rights
in the nature of copyright, design rights and get-up and
similar rights subsisting in any country;
KNOW-HOW: any know-how, industrial information and techniques
including, without limitation, drawings, specifications,
formulations, test and technical reports, operating and
testing manuals, instruction manuals, quality control
procedures, packaging procedures and tables of operating
conditions and procedures used in the Business at the date
hereof;
REGISTERED IP: all Intellectual Property the subject of a
registration or application for registration used in the
Business;
TRADE NAMES: all trade names used in the Business.
6.5.2 The products as manufactured, produced and/or sold by or for
the Company and the manner in which the Business has been
conducted by the Company from 5 July 1994 do not (and at the
relevant time did not) infringe any Intellectual Property
owned by any third party and the manufacture and production of
such products and the conduct of the Business as at the date
hereof by the Company following Completion will not to the
Warrantors' knowledge infringe any Intellectual Property owned
by any third party.
6.5.3 The particulars of the Registered IP and the Trade Names
listed in Parts I and II respectively of Schedule 7 are full
and accurate. Where the Company is indicated in Schedule 7 as
the registered owner, the Company is the legal and beneficial
owner (free from all liens, charges, encumbrances, licences,
indulgences and any other third
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party rights of any nature whatsoever) of that Registered IP
and those Trade Names. All Intellectual Property necessary in
order effectively to carry on the Business as at the date
hereof following Completion is either legally and beneficially
owned by the Company or the subject of a subsisting right or
licence to the Company to use such rights. The Company has
taken all reasonable steps to protect and enforce its
Intellectual Property and has not done or omitted to do
anything which may invalidate or jeopardise any of it.
6.5.4 No Registered IP of which the Company is the registered
proprietor is at the date hereof the subject of any pending
proceeding for cancellation or rectification and, so far as
the Warrantors are aware, there are no facts or matters which
might reasonably be expected to give rise to any such
proceedings.
6.5.5 All registration and renewal fees regarding any of the
Registered IP of which the Company is the registered
proprietor in respect of which fees are payable and due before
Completion will have been paid in full on or before
Completion.
6.5.6 True copies of any licence, registered user or other rights
and any immunity against suit which have been granted by or
with the authority of the Company or to the Company in respect
of the Intellectual Property have been disclosed and none of
the same is the subject of any existing claim since 5 July
1994.
6.5.7 So far as the Warrantors are aware, none of the Intellectual
Property disclosed pursuant to sub-paragraph 6.5.3 of which
the Company is the proprietor has since 5 July 1994 been
infringed by any person. None of the Intellectual Property
disclosed pursuant to sub-paragraph 6.5.3 of which the Company
is the registered proprietor is the subject of any existing
claim by any third party (including any employee) that the
Company is not the sole beneficial owner thereof.
6.5.8 The Company has not disclosed to any person any of its
Know-How, except where such disclosure was made to employees
or otherwise in the normal course of carrying on the Business
under suitable obligations of confidentiality.
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6.5.9 No claims have been made by or against the Company since 5
July 1994:-
6.5.9.1 against or by (as the case may be) any third
party concerning Intellectual Property or
Know-How owned by the Company or moral
rights or, so far as the Warrantors are
aware, in respect of Software Systems (as
defined in paragraph 6.5.10 of this
Schedule) licensed into the Company;
6.5.9.2 against or by (as the case may be) any
employee of the Company concerning moral
rights or employee rights to compensation
regarding patents owned by the Company; or
6.5.9.3 by way of seeking cancellation or revocation
of any Intellectual Property owned by the
Company or for a licence of right or
otherwise adversely affecting the Company's
Intellectual Property;
nor are the Warrantors aware of any facts or matters which
might give rise to any such claims.
6.5.10 A list of all hardware, software and computer systems
(TOGETHER, "SOFTWARE SYSTEMS") used by the Company are
contained in the Disclosure Letter. The Software Systems
generally have the capacity for processing and storage of data
to meet the current needs of the Business.
6.5.11 The Company has sufficient copies of all the manuals, guides,
instruction books and technical documents (including any
corrections and updates) to ensure the operation, monitoring
and use of the Software Systems in use by the Company as at
the date hereof;
6.5.12 The Company has adequate procedures for preventing
unauthorised access, taking and storing on-site and off-site
back-up copies of software and data used by it.
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6.5.13 No products are at the date hereof manufactured, produced or
sold by or for the Company other than those listed in the
Disclosure Letter (HEREAFTER "PRODUCTS") and there are no
other products for the year 1997/8 in the course of
development by or for the Company except as set out in the
Disclosure Letter.
6.5.14 All product registrations and other consents required to
manufacture, produce and/or sell any Products are in full
force and effect and to the Warrantors' knowledge are not
liable to variation, cancellation or revocation and full and
accurate details of the same have been disclosed in the
Disclosure Letter. All data supplied by the Company (and, so
far as the Warrantors are aware, that supplied on its behalf)
in support of any application for any product registration was
full, accurate and not misleading, whether by omission or
otherwise.
6.5.15 So far as the Warrantors are aware the Royal Warrant (in the
name of Philip David Parry) relating to the Business is not
subject to any review by the Lord Chamberlain as a result of
which it may be revoked.
6.6 PROPERTIES
6.6.1 All information and material in whatever form and however
transmitted provided by the Warrantors or the Company to the
Sellers' Solicitors for the purpose of giving the Certificates
is true, complete and accurate in all respects and is not
misleading and has been given after due and careful enquiry
and there is no information, fact or matter which renders or
upon its disclosure would render the information and material
referred to above untrue, incomplete or inaccurate in any
respect. For the purpose of this Warranty 6.6.1, "the Sellers'
Solicitors" shall include Messrs Steadman Ramage and Messrs
Thorntons in respect of the certificates of title given by
those firms and "Certificates" shall include the certificates
of title given by those two firms.
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6.6.2 The Properties comprise the only freehold or leasehold or
other real property in any part of the world in which the
Group has any interest or which are otherwise or used by the
Group.
6.6.3 The Group has no liability whether actual, contingent or
prospective or obligation in respect of any property whether
freehold, leasehold, licensed or occupied under an informal or
undocumented arrangement in any part of the world other than
in relation to the Properties including without limitation any
liability or obligation to pay rent or other monies or observe
or perform covenants or conditions contained in any agreement
for lease, lease, licence or other document ancillary or
supplemental to a lease or to make payments under or otherwise
observe or perform any guarantee or surety whether as primary
or secondary obligor or obligation of indemnity or otherwise
assume any liabilities of any third party.
7 EMPLOYEES AND CONSULTANTS
7.1 DIRECTORS
The particulars of Directors shown in Schedule 2 are true and
complete and no person not named as such in that paragraph is
or is held out as a director of the Company.
7.2 PARTICULARS OF EMPLOYEES
7.2.1 The particulars shown in the Schedule of Employees annexed to
the Disclosure Letter show all remuneration payable and other
benefits provided or which the Company is bound to provide
(whether now or in the future) to each officer and employee of
the Company and/or any person connected with any such person
and include true and complete particulars of all profit
sharing, incentive and bonus arrangements to which the Company
is a party, whether legally binding on the Company or not, and
no person not named in that Schedule is an employee of the
Company.
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7.2.2 Since the Last Accounting Date, no change has been made in the
rate of remuneration or the emoluments or pension benefits of
any officer, ex-officer or employee of the Company and no
change has been made in the terms of engagement of any such
officer or employee and no additional officer or employee has
been appointed.
7.2.3 No present officer or employee of the Company has given or
received notice terminating his employment, except as
expressly contemplated under this Agreement.
7.3 SERVICE CONTRACTS
7.3.1 There is not now outstanding any service contract between the
Company and any of its directors, officers or employees which
is not terminable by the Company without compensation (other
than statutory compensation) on one month's notice or, if
greater, the period of notice required to be given to
employees in accordance with section 86 of the Employment
Rights Act 1996 given in either case at any time.
7.3.2 The attention of all employees of the Company has been drawn
to such of the terms of their employment as is required by the
Employment Rights Act 1996.
7.4 TRADES UNIONS
The Company is not a party to any agreement or arrangement
with or commitment to any trades union or staff association
nor have the Managers received oral or written notification
that any of its employees are members of any trades union or
staff association. There is no requirement to consult trades
unions in relation to the sale or proposed sale of the Shares
to the Buyer.
7.5 DISPUTES WITH EMPLOYEES
There is no outstanding claim against the Company by any
person who is now or has been an officer or employee of the
Company or any dispute between the Company and a material
number or class of its employees and no payments are required
to be made
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by the Company under the provisions of the Employment Rights
Act 1996.
7.6 REDUNDANCIES AND TRANSFER OF BUSINESS
In the 12 months preceding the date of this Agreement, the
Company has not:-
7.6.1 given notice of redundancies to the relevant Secretary of
State or started consultations with a trades union under
Chapter II of Part IV of the Trade Union and Labour Relations
(Consolidation) Act 1992 or failed to comply with its
obligations under Chapter II of Part IV of that Act; or
7.6.2 been a party to a relevant transfer (as defined in the
Transfer of Undertakings (Protection of Employment)
Regulations 1981) nor have claims been made under Regulation
11 of these Regulations, nor have Managers received oral or
written notification of grounds for such claims being brought.
7.7 CONSULTANTS
There is not now outstanding any contract or arrangement to
which the Company is a party for the payment to any person or
body of any consultancy or like fees.
7.8 EX-GRATIA PAYMENTS
Since the Last Accounting Date, no ex-gratia payments have
been made by the Company to any officer or employee or former
officer or employee of the Company or to their dependants or
relatives nor is the Company considering making any such
payments.
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7.9 PENSIONS
7.9.1 THE SCHEMES
7.9.1.1 Save in respect of the Schemes, neither the
Company nor any of the Subsidiaries:-
(a) has any obligation (whether legally
binding or not) to:-
(i) pay any pension; or
(ii) make any other payment on
or after retirement or
death or during periods of
sickness or disability
(whether of a temporary or
permanent nature); or
(iii) otherwise to provide
"relevant benefits"
(within the meaning of
section 612 of the Income
and Corporation Taxes Act
1988 ("ICTA"))
to or in respect of any person who
is now or has been an officer or
employee of the Company or spouse or
dependant of such officer or
employee; and
(b) is a party to or obliged to
contribute to any scheme or
arrangement (including, but not
limited to, a personal pension
scheme as defined in Section 630 of
ICTA 1988) having as its purpose or
one of its purposes the making of
any such payments, or the provision
of any such benefits, as are
mentioned in paragraph 7.9.1.1
above.
7.9.1.2 No change in the benefits currently being
provided under the Schemes has been
announced by the Company or is being
considered by it.
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7.9.1.3 No undertaking or assurance has been given
to any person who is now, or has been, an
officer or employee of the Company or any of
the Subsidiaries, or spouse or dependant of
such officer or employee, as to the
continuance or introduction or improvement
of any benefits referred to in this Warranty
7.9.1.
7.9.2 DETAILS OF THE SCHEMES
All material details of the Schemes have been disclosed to the
Purchaser and complete copies of the following documents
relating to each of the Schemes are annexed to or contained in
the Disclosure Letter:-
(a) the trust deeds and rules currently
governing the Schemes;
(b) any resolutions amending the terms
of the trust deeds and rules or
conferring special or augmented
benefits on any person and details
of all changes made or proposed to
be made to the trust deeds and
rules but which have not yet been
formally documented;
(c) the latest explanatory booklet and
any subsequent announcements;
(d) insurance policies;
(e) the latest trustees' annual report
and accounts;
(f) any actuarial certificate given in
accordance with Section 12A(6) of
the Pension Schemes Act 1993;
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(g) any actuarial certificate prepared
in accordance with section 57(1)(b)
of the Pensions Act 1995; and
(h) the latest actuarial valuation and
report and any current draft
actuarial valuation and report and
any subsequent written actuarial
advice or recommendations;
7.9.2.2 a full list of active members, deferred
pensioners and pensioners of the Schemes and
a list of those other employees who would
(if service continued) become eligible for
membership of the Levington Scheme;
7.9.2.3 the names and addresses of the trustees, the
administrators, the auditors, the fund
managers and the actuary of the Schemes.
These documents disclose full particulars of the benefits and
entitlements under the Schemes and there is no obligation to
provide benefits under the Schemes other than as revealed in
such documents and particulars or as required under applicable
legislation. All information concerning the Scheme or any
other payments or benefits referred to in Warranty 7.9.1 which
has been made available to the Purchaser or its advisers on or
before the date of this Agreement is, in all material
respects, true, complete, accurate and fairly presented.
7.9.3 EXEMPT APPROVED SCHEME
The Levington Scheme is an "exempt approved scheme" (within
the meaning of Chapter I of Part XIV of ICTA 1988). There is
no reason why approval of the Levington Scheme by the Board of
Inland Revenue should be withdrawn. So far as the Warrantors
are aware, no event or transaction has taken place in relation
to the Levington Scheme whose validity is dependent on the
approval of the Inland Revenue without such approval having
been obtained.
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7.9.4 CONTRACTING OUT
The Company holds or is named in an appropriate
contracting-out certificate in respect of the Levington Scheme
as defined in Section 7 of the Pension Schemes Act 1993. So
far as the Warrantors are aware there is no reason why such
certificate might be cancelled varied or surrendered. The
Disclosure Letter sets out the basis on which the Scheme has
contracted out and any changes to that basis since the Scheme
was established. The trustees of the Levington Scheme have
re-elected to contract-out of the State Earnings Related
Pension Scheme in respect of post 6 April 1997 service under
the Levington Scheme and all relevant documentation and
certification has been completed in relation to such
re-election.
7.9.5 SEX DISCRIMINATION
Save insofar as inequalities arise from the fact that the
Levington Scheme was contracted out on a GMP basis prior to 6
April 1997, the provisions of the Schemes have never
discriminated between male and female members whether directly
or indirectly as regards eligibility, the rate of
contributions, the amount of any benefits provided or the date
on or from which such benefits will or may be provided.
7.9.6 INSURED BENEFITS
All benefits (other than a refund of members' contributions
with interest where appropriate) payable under the Scheme on
death before normal pension age, in respect of any person
whilst in an employment to which the Scheme relates, are fully
insured. All premiums payable under the relevant insurance
policies have been paid. Details of the premiums payable for
such insurance are contained in the Disclosure Letter.
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7.9.7 PRINCIPAL EMPLOYER AND SOLE PARTICIPATOR
The Company is the principal employer for the purposes of the
Levington Scheme. Levington Horticulture Limited also
participates in the Levington Scheme. Levington Horticulture
Limited is the principal employer for the purposes of the
Levington Fund.
7.9.8 TERMINATION OF LIABILITY
The liability of the Company to contribute to the Levington
Scheme can be terminated by the Company without the consent of
any person.
7.9.9 RATE OF CONTRIBUTIONS
There is contained in or annexed to the Disclosure Letter a
statement of the amounts and rate of contributions to the
Schemes since the Schemes were established and a copy of the
current schedule of contributions prepared under the Pensions
Act 1995 (if any). There has been no alteration to the rate of
contributions to the Schemes or the method of calculating the
amount to which that rate of contributions is applied since
the Schemes were established. Actuarial advice has been taken
on the funding of the Schemes and employer contributions have
at all times been paid at the rates recommended by the
actuary.
7.9.10 PAYMENT OF CONTRIBUTIONS AND EXPENSES
Contributions to the Schemes are paid in accordance with the
Schemes' trust deeds. All contributions to and taxes and
expenses relating to the Schemes which have fallen due for
payment (whether in accordance with the schedule of
contributions or the provisions of the Schemes or otherwise)
have been paid.
7.9.11 TRANSFER PAYMENTS
There are no outstanding transfer payments due to or from
either of the Schemes
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except for individual transfer payments in the course of
ordinary scheme administration.
7.9.12 DEBT ON EMPLOYER
The Company has no current liability under section 59, 60 or
75 of the Pensions Act 1995 or otherwise to make any payment
to the Levington Scheme or any other retirement benefits
scheme to which the Company has contributed prior to
Completion.
7.9.13 CLOSURE AND WINDING UP
Neither of the Schemes has been closed to new entrants. No
event has taken place which has resulted or will or, so far as
the Warrantors are aware, may result in the commencement of
the winding up of the Schemes (or any part of them).
7.9.14 INDEPENDENT TRUSTEE
No event has occurred which has resulted or will result in an
independent trustee being appointed in respect of the
Levington Scheme under Section 119 of the Pension Schemes Act
1993.
7.9.15 DISCRETIONARY PRACTICES
No discretion or power under the Schemes has ever been
exercised:-
(a) to increase pensions in payment;
(b) to provide enhanced or new benefits in relation to
any employee or officer currently in the service of
the Company, or in relation to any other employee or
officer since the Schemes were established;
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(c) to admit to membership of the Schemes any person who
did not fulfil the eligibility requirements of the
Schemes (as set out in the documents disclosed to the
Purchaser);
(d) to make a special contribution to the Schemes to
secure additional benefits for any person under the
Schemes.
There is no arrangement (whether legally binding or not) to
provide enhanced or new benefits in a given set of
circumstances (by way of example, but without limitation, on
employees retiring from service at the request of the Company
or in the event of them, or those of them who are over a
specified age, being made redundant) and the Company is not
considering implementing any such arrangement.
7.9.16 FUNDING
The total amount or value of the funds as at Completion
subject to the trusts of the Levington Scheme is equal to or
exceeds, and does not fall short of, the total liabilities
(actual, contingent or prospective) as at Completion in
respect of benefits payable or to be payable to members or
past members of the Levington Scheme in respect of service up
to Completion, such liabilities being calculated on the basis
of actuarial and financial assumptions set out in the last
actuarial valuation of the Levington Scheme.
7.9.17 REFUNDS TO EMPLOYERS
No repayment of assets or monies of the Schemes has been or is
proposed to be made by the trustees of the Schemes to any
employer participating in the Schemes.
7.9.18 LITIGATION
So far as the Warrantors are aware, there is no dispute with
regard to the benefits payable under the Schemes or any other
payments or benefits referred to in Warranty 7.9.1. No legal
proceedings in connection with the Schemes are pending,
threatened or
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expected, and so far as the Warrantors are aware there is no
fact or circumstance likely to give rise to any such
proceedings. For these purposes legal proceedings includes a
complaint to the Pensions Ombudsman and any complaint or
report to or action instigated by the Occupational Pensions
Regulatory Authority. The trustees of the Schemes have
established an internal disputes resolution procedure as
required by the Pensions Act 1995 and that procedure has been
followed for all relevant disputes.
7.9.19 SCHEME ADMINISTRATION
So far as the Warrantors are aware, the Schemes have at all
times complied in all material respects with and been
administered in accordance with the provisions governing them
and all applicable laws and regulations, including the
requirements of the Inland Revenue for continued approval as
an exempt approved scheme or the Department of Social Security
for continued eligibility for contracting-out of the State
Scheme, and of trust law. Records and minutes of meetings of
the trustees of the Schemes have been properly and accurately
maintained at all times. All advisers to the Levington Scheme
have been properly appointed as required by the Pensions Act
1995. No fines, penalties or other sanctions have been imposed
on the Company, the trustees of the Levington Scheme or any
person who has at any time been a trustee of the Schemes under
the Pensions Act 1995.
7.9.20 SCHEME INVESTMENTS
The trustees of the Levington Scheme have prepared a written
statement of investment principles as required by the Pensions
Act 1995 and a copy is annexed to the Disclosure Letter. A
list of the investments held for the Levington Fund is annexed
to the Disclosure Letter. So far as the Warrantors are aware,
the trustees of the Scheme have good title to those
investments and are not aware of any challenge to the
trustees' title to those investments. The Schemes holds no
securities issued by, properties leased to or occupied by, and
has made no loans which are at the date hereof outstanding to
the Company or any other employer who participates in the
Scheme and there are no charges over any of the assets of the
Scheme. So far as the Warrantors
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are aware, there is no dispute with the Inland Revenue
relating to the income or gains of the Schemes (including any
claim on the part of the Inland Revenue that the trustees of
the Schemes are engaged in trading or that they are not
entitled to reclaim any tax deducted at source).
7.9.21 SCHEME REGISTRATION
The Levington Scheme has been properly registered and the
correct levy paid.
7.9.22 TRUSTEES
The Company and the trustees of the Levington Scheme have
complied with the appropriate provisions of Sections 16-21 of
the Pensions Act 1995 and related regulations relating to
Member-Nominated Trustees or Member-Nominated Directors. The
Warrantors have disclosed to the Purchaser details of the
procedures followed to comply with those provisions.
7.9.23 INDEMNITIES
The Company has not indemnified the trustees of the Schemes or
anyone else against any liabilities of whatsoever nature in
connection with the Schemes. The trustees of the Schemes have
not indemnified or given any undertakings to any person
(including for the avoidance of doubt the Board of Inland
Revenue) in connection with the Schemes.
7.9.24 OVERSEAS EMPLOYEES AND SCHEMES
No member of the Schemes is resident outside the United
Kingdom. The Company does not participate in any retirement
benefit scheme or similar arrangement established under or
regulated by the laws of any jurisdiction outside the United
Kingdom.
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7.9.25 THE LEVINGTON FUND
The Levington Fund provides only money purchase benefits
(within the meaning of section 181 of the Pension Schemes Act
1993) to or in respect of its members.
8 LIABILITIES AND COMMITMENTS
8.1 MATERIAL CONTRACTS
As at the date of this Agreement, the Company is not a party
to or subject to any agreement, transaction, obligation,
commitment, arrangement or liability which:-
8.1.1 is incapable of complete performance in accordance with its
terms within six months after the date on which it was entered
into or undertaken;
8.1.2 is likely to result in a trading loss to the Company on
completion of performance;
8.1.3 cannot readily be fulfilled or performed by the Company on
time without unusual expenditure of money and effort;
8.1.4 involves or is likely to involve obligations, restrictions,
expenditure or receipts of an unusual, onerous or exceptional
nature;
8.1.5 is a forward contract relating to foreign currency;
8.1.6 involves or is likely to involve the supply of goods by or to
the Company the aggregate sales value of which will represent
more than five per cent. of the turnover of the Company for
its last financial year;
8.1.7 is a contract for services (other than a contract for the
supply of electricity, gas or water or normal office
services);
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8.1.8 requires the Company to pay any commission, finders' fee,
royalty or the like;
8.1.9 restricts the Company's freedom to carry on the whole or any
part of its business in any part of the world in such manner
as it thinks fit;
8.1.10 is an agreement or arrangement otherwise than by way of
bargain at arm's length; or
8.1.11 is otherwise than in the ordinary and proper course of the
Company's business.
8.2 DEFAULTS
8.2.1 So far as the Warrantors are aware, the Company is not in
default under any such agreement as is mentioned in paragraph
8.1 of this Schedule 4.
8.2.2 So far as the Warrantors are aware (without making any enquiry
of third parties) no other party to any such agreement as is
mentioned in paragraph 8.1 of this Schedule is in default
under such agreement.
8.3 SURETIES
No person apart from the Company has given any guarantee of or
security for any overdraft, loan or loan facility granted to
the Company.
8.4 POWERS OF ATTORNEY
8.4.1 There is in force no power of attorney or other authority
(express, implied or ostensible) given by the Company to any
person to enter into any contract or commitment on its behalf
other than the implied or ostensible authority of its
employees to enter into routine trading contracts in the usual
course of their duties.
8.4.2 The Company has not appointed any agent or distributor in
respect of any of its products or services in any part of the
world.
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8.5 INSIDER CONTRACTS
8.5.1 There is not outstanding, and there has not at any time since
the date of incorporation of the Company been outstanding, any
agreement or arrangement to which the Company is a party and
in which any Seller or Minority Shareholder, any person
beneficially interested in the Company's share capital, any
director of the Company or any person connected with any of
them is or has been interested, whether directly or
indirectly.
8.5.2 The Company is and has not been party to any agreement or
arrangement which is not entirely of an arm's length nature.
8.6 DEBTS
There are no debts owing by the Company, other than debts
which have arisen in the ordinary course of business.
8.7 BORROWINGS AND MORTGAGES
8.7.1 The Company has no borrowings, and has not agreed to create
any borrowings, from its bankers or any other source and, in
respect of borrowings disclosed in the Disclosure Letter, the
Company has not exceeded any limitation on its borrowing
contained in its Articles of Association or in any debenture
or loan stock deed or other instrument.
8.7.2 No option, right to acquire, mortgage, charge, pledge, lien
(other than a lien arising by operation of law in the ordinary
course of business) or other form of security or encumbrance
or equity on, over or affecting the whole or any part of the
undertaking or assets of the Company is outstanding and there
is no agreement or commitment to give or create any.
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8.7.3 No part of the borrowings or loan capital of the Company is
dependent on the guarantee or indemnity of or security
provided by any other person.
8.8 THIRD PARTY INDEBTEDNESS
The Company is not subject to any option or pre-emption right
or party to any guarantee or suretyship or any other similar
contractual obligation to pay, purchase or provide funds
(whether by the advance of money, the purchase of or
subscription for shares or other securities, the purchase of
assets or services, or otherwise) for the payment of,
indemnity against the consequences of default in the payment
of, or otherwise to be responsible for, any indebtedness of
any other person.
8.9 TENDERS ETC
No offer, tender or the like is outstanding which is capable
of being converted into an obligation of the Company by an
acceptance or other act of some other person.
8.10 TRADE WARRANTIES
8.10.1 The Company has not at any time during the period of 12 months
immediately preceding the date of this Agreement taken back or
incurred any obligation to take back any goods or products
supplied or contracted to be supplied by it or otherwise
suffered any financial cost (whether direct or by way of
rebate or discount) in relation to its dealings with any
customer by reason of a failure on the part of the Company to
deliver goods or products in accordance with the requirements
of its customers.
8.10.2 The Company has not manufactured, sold or supplied any
products which are or were in any material respect faulty or
defective or which do not comply with any warranties or
representations expressly or impliedly made by the Company or
with any applicable regulations, standards and requirements.
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8.11 LITIGATION
Neither the Company, nor any person for whose acts or defaults
the Company may be vicariously liable, is involved in any
civil, criminal or arbitration proceedings and no such
proceedings are pending or threatened by or, so far as the
Warrantors are aware, against the Company and, so far as the
Warrantors are aware, there are no facts or circumstances
which are likely to lead to any such proceedings.
9 THE COMPANY'S BUSINESS
9.1 BUSINESS SINCE THE LAST ACCOUNTING DATE
Since the Last Accounting Date:-
9.1.1 the Company has carried on its business in the ordinary and
usual course and without entering into any transaction,
assuming any liability or making any payment not provided for
in the Accounts which is not in the ordinary course of its
business and without any interruption or alteration in the
nature, scope or manner of its business;
9.1.2 the Company has not taken any financial facility;
9.1.3 the Company has paid its creditors within the times agreed
with such creditors;
9.1.4 save for capital expenditure in accordance with the Capital
Expenditure Plan annexed to the Disclosure Letter, the Company
has not entered into, or agreed to enter into, any capital
commitment nor has it disposed of or realised any capital
assets;
9.1.5 no distribution of capital or income has been declared, made
or paid in respect of any share capital of the Company and
(excluding fluctuations in overdrawn current accounts with
bankers) no loan or loan capital or preference capital of the
Company has been repaid in whole or part or has become liable
to be repaid;
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9.1.6 the actual performance of the Company (as disclosed by the
Management Accounts) when compared with its budgeted
performance from 1 July 1997 (as disclosed in the Disclosure
Letter) is in line with the underlying assumptions on which
the budgeted performance was devised;
9.1.7 the Capital Expenditure Plan annexed to the Disclosure Letter
has been adhered to and there has been no capital expenditure
in excess of that provided for in such Plan.
9.2 WORKING CAPITAL
9.2.1 The Company has in the period which commenced on the Last
Accounting Date and ended on the date of this Agreement
continued to order, forecast and acquire stocks of raw
materials and produced finished goods stocks in the ordinary
course of business.
9.2.2 The Company's stock of finished goods is sufficient to enable
the business of the Company to fulfil all orders made by
customers which are required to be fulfilled within seven days
of the date of this Agreement.
9.3 GRANTS
Full details of all grants and allowances made to the Company
in the three financial periods of the Company preceding the
Last Accounting Date or since the Last Accounting Date are
disclosed in the Disclosure Letter and the Company has not
done or failed to do any act or thing which could result in
all or any part of such grants or allowances becoming
repayable or being forfeited by it.
9.4 COMPLIANCE WITH LAWS
The Company is entitled to carry on the business now carried
on by it without conflict with any valid right of any person,
firm or company and the Company has conducted its business in
all material respects in accordance with all applicable laws
and regulations of the United Kingdom or, so far as the
Warrantors are aware, any foreign
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country and there is no violation of, or default with respect
to, any statute, regulation, order, decree or judgment of any
Court or any governmental agency of the United Kingdom or, so
far as the Warrantors are aware, any foreign country which may
have a material adverse effect upon the assets or business of
the Company.
9.5 LICENCES
All necessary licences, consents, permits and authorisations
(public or private) have been obtained by the Company to
enable the Company to carry on its business effectively in the
places and in the manner in which such business is now carried
on and all such licences, consents, permits and authorisations
are valid and subsisting and, so far as the Warrantors are
aware, there is no reason why any of them should be suspended,
cancelled or revoked.
9.6 INSOLVENCY
9.6.1 No order has been made and no resolution has been passed for
the winding up of the Company or for a provisional liquidator
to be appointed in respect of the Company and no petition has
been presented and no meeting has been convened for the
purpose of winding up the Company.
9.6.2 No administration order has been made and no petition for such
an order has been presented in respect of the Company.
9.6.3 No receiver (which expression shall include an administrative
receiver) has been appointed in respect of the Company or over
all or any of its assets.
9.6.4 The Company is not insolvent or unable to pay its debts within
the meaning of Section 123 Insolvency Act 1986 nor has it
stopped paying its debts as they fall due.
9.6.5 No voluntary arrangement has been proposed under Section 1
Insolvency Act 1986 in respect of the Company.
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9.6.6 The Company has not been a party to any transaction at an
undervalue as defined in Section 238 Insolvency Act 1986 nor
has it given or received any preference as defined in Section
239 Insolvency Act 1986, in either case within the period of
two years ending on the date of this Agreement.
9.6.7 No event analogous to the foregoing has occurred in or outside
England.
9.6.8 No unsatisfied judgement is outstanding against the Company.
9.6.9 No guarantee, loan capital, borrowed money or interest is
overdue for payment.
9.7 FAIR TRADING
9.7.1 No agreement, practice or arrangement carried on by the
Company or to which the Company is a party:-
9.7.1.1 is or requires to be registered in
accordance with the provisions of the
Restrictive Trade Practices Acts 1976 and
1977 or contravenes the provisions of the
Resale Prices Act 1976 or is or has been the
subject or any formal enquiry, investigation
or proceeding in respect thereof;
9.7.1.2 so far as the Warrantors are aware, is
proscribed by the Fair Trading Act 1973 or
the Competition Act 1980;
9.7.1.3 is or has been the subject of any formal
enquiry investigation, reference or report
under the Fair Trading Act 1973 or the
Completion Act 1980;
9.7.1.4 so far as the Warrantors are aware,
infringes Article 85 of the Treaty of Rome
or constitutes an abuse of a dominant
position contrary to Article 86 of that
Treaty;
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9.7.1.5 is or has been the subject of any formal
enquiry, investigation or proceeding under
Articles 85 and 86 of the Treaty of Rome;
9.7.1.6 is, by virtue of its terms a "consumer trade
practice" within the meaning of Section 13
Fair Trading Act 1973;
9.7.1.7 is in material default or in material
contravention of any other competition,
restrictive trade practice or anti-trust law
or legislation applicable in the United
Kingdom and not specifically mentioned in
this paragraph 9.7; or
9.7.1.8 is or has been the subject of any enquiry or
proceeding (notified to the Company) of any
Court or regulatory authority (located
outside the European Union) in relation to
any competition restrictive trade practice
or anti-trust law applicable outside the
European Union.
9.7.2 The Company has not given any undertaking or assurance to the
Restrictive Practices Court or the Director General of Fair
Trading or the Secretary of State for Trade and Industry or
the Commission or Court of Justice of the European Community
and is not subject to any decision or order made by any of
them relating to any matter referred to in this paragraph 9.7.
9.7.3 The Company has not given any undertaking or assurance to any
court or regulatory authority (other than those specified in
paragraph 9.7.2 above) in relation to any of the matters set
out in this paragraph 9.7 and, so far as the Warrantors are
aware (but without having made any enquiry of any third
party), is not subject to any decision or order made by any
such court or regulatory authority in relation to such
matters.
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9.8 INSURANCES
9.8.1 The Company and all its normally insurable assets are, and at
all material times have been, insured to their full
replacement or reinvestment value by valid insurances against
all the risks against which a prudent business person carrying
on a business similar to that carried on by the Company at the
date of this Agreement would normally insure (including,
without limitation, risks which it is contractually required
by a third party to cover, third party risks, trade debts due
to the Company, public and employers' liability, consequential
loss liability and loss of profits) and the Company has paid
all premiums due and has not done or omitted to do anything
the doing or omission of which would make any such policy of
insurance void or voidable or, so far as the Warrantors are
aware, would be reasonably likely to result in an increase in
the rate of premiums payable under any such policy.
9.8.2 Where any of the Properties which are leasehold are insured by
the landlord under the relevant lease, the interest of the
Company is noted on the insurance policy.
9.8.3 The Schedule of Insurances annexed to the Disclosure Letter
contains full details of the insurance policies of the Company
or in which it has an interest.
9.8.4 No claim is outstanding under any of the policies referred to
in paragraph 9.8.3 and, so far as the Warrantors are aware, no
fact or circumstance exists which would be reasonably likely
to give rise to a claim under any of those policies.
9.9 CUSTOMERS AND SUPPLIERS
9.9.1 During the period of twelve months immediately preceding the
date of this Agreement ("the twelve month period"):-
9.9.1.1 the Company has not lost any major customer
for or supplier of all or any of its
products or requirements;
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9.9.1.2 no major customer has significantly reduced
its orders for all or any of the products of
the Company;
9.9.1.3 there has been no substantial change (apart
from normal price changes) in the basis or
terms on which any person is prepared to
enter into contracts or do business with the
Company;
and no such loss, reduction or change is anticipated by the
Managers or any of them whether as a result of Completion or
otherwise.
For the purposes of this paragraph 9.9, a "major customer"
shall be defined as a customer (including, for the avoidance
of doubt, a buying group of garden centres) to whom aggregate
sales in the twelve month period were budgeted, as disclosed
by the accounting records of the Company, by the Company to
equal or exceed pound sterling 300,000 and a "major supplier"
shall be defined as a supplier to whom aggregate payment for
supplies of raw materials in the twelve month period were
budgeted, as disclosed by the accounting records of the
Company, by the Company to equal or exceed pound
sterling 100,000.
9.9.2 Neither in the financial period ending on the Last Accounting
Date nor in the period since then has any person (together
with other persons connected with him) purchased from, or sold
to, the Company more than ten per cent. of the aggregate
amount of all sales or purchases made by the Company during
such period and there is no person (together with other
persons connected with him) the cessation of business with
whom would be likely to have a significant financial effect on
the business of the Company.
9.9.3 The Company has no agreement or arrangement with any customer
or supplier on terms which are materially different from the
Company's standard terms of business, a copy of which is
annexed to the Disclosure Letter.
9.10 THE COMPANY'S ACTIVITIES, ETC.
None of the activities, contracts or rights of the Company is
ultra vires, unauthorised,
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invalid or unenforceable or in breach of any contract or
covenant.
10 CONSEQUENCES OF SALE OF THE SHARES
10.1 OTHER AGREEMENTS AND OBLIGATIONS
Neither the Sellers nor the Company is a party to any
agreement or bound by any obligation the terms of which will
prevent the Buyer from enjoying the full benefit of this
Agreement.
10.2 CHANGE OF CONTROL
There are no agreements concerning the Company which in
accordance with their respective terms will or are capable of
being terminated or the terms of which will or are capable of
being varied as a result of a change in the control of the
Company or in the composition of the Board of Directors of the
Company.
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SCHEDULE 5
LIMITATIONS ON THE WARRANTORS' LIABILITY
1 No Warrantor is liable in respect of a Relevant Claim unless
the amount that would otherwise be recoverable from the
Warrantors (but for this paragraph 1) in respect of that
Relevant Claim exceeds pound sterling 12,500.
2 No Warrantor is liable in respect of a Relevant Claim unless
and until the amount that would otherwise be recoverable from
the Warrantors (but for this paragraph 2) in respect of that
Relevant Claim, when aggregated with any other amount or
amounts recoverable in respect of other Relevant Claims
(excluding any amounts in respect of a Relevant Claim for
which the Warrantors have no liability because of paragraph
1), exceedspound sterling 350,000 in which event the
Warrantors are only liable for amounts in excess of pound
sterling350,000.
3 The aggregate total liability of each Warrantor in respect of
all Relevant Claims is limited to:-
Philip Parry - pound sterling 943,143
Norman Gibbs - pound sterling 1,139,356
Peter Elsdon - pound sterling 1,147,916
Mrs Parry - pound sterling 328,824
Mrs Gibbs - pound sterling 328,824
Mrs Elsdon - pound sterling 328,824
Parry Trust - pound sterling 614,319
Gibbs Trust - pound sterling 418,106
Elsdon Trust - pound sterling 409,546
provided always that the total liability of each Warrantor in
respect of all Relevant Claims shall be increased from time to
time following any release of monies to such Warrantor from
the Escrow Accounts by an amount equal to the amount of
principal (and not interest) which is released to such
Warrantor from those accounts.
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4 A Warrantor is not liable in respect of a Relevant Claim
unless the Buyer has given the Warrantor notice of the
Relevant Claim (stating in reasonable detail the nature of the
Relevant Claim and, if practicable, the amount claimed) on or
before, in the case of a Relevant Claim made under paragraph 5
of Schedule 4, the date being the seventh anniversary of
Completion and, in the case of all other Relevant Claims, on
or before 31 December 1998.
5 A Relevant Claim notified in accordance with paragraph 4 and
not satisfied, settled or withdrawn is unenforceable against a
Warrantor on the expiry of the period of twelve months
starting on the day of notification of the Relevant Claim,
unless proceedings in respect of the Relevant Claim have been
issued and served on the Warrantor.
6 A Warrantor is not liable in respect of a Relevant Claim made
in respect of a breach of the Warranties set out in paragraph
5 of Schedule 4 to the extent that the matter giving rise to
the Relevant Claim would not have arisen but for, (i) a change
after the date of this Agreement of legislation, regulation or
an increase in the Tax rates or an imposition of Tax, in each
case, having retrospective effect or (ii) an act which could
reasonably have been avoided or an omission to perform an act
which could reasonably have been undertaken, in each case, of
the Buyer or (at the direction of the Buyer) any member of the
Group after Completion otherwise than in the ordinary course
of business of the relevant member of the Group and which the
Buyer was aware by reason of a disclosure in the Disclosure
Letter in respect of any of the Warranties set out in
paragraph 5 of Schedule 4 would give rise to the Relevant
Claim in question.
7 A Warrantor is not liable in respect of a Relevant Claim to
the extent that the matter giving rise to the Relevant Claim
was a liability for which specific allowance, provision or
reserve has been made in the Completion Balance Sheet or in
the Accounts.
8 The Buyer is not entitled to recover more than once in respect
of any one matter giving
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rise to a Relevant Claim.
9 If a Buyer's Group Undertaking becomes aware of a matter which
will give rise to a Relevant Claim the Buyer shall as soon as
reasonably practicable thereafter give notice to the
Warrantors of the matter and:-
9.1 the Buyer shall and shall ensure that each Buyer's Group
Undertaking will take any action and institute any
proceedings, give any information and assistance and give
reasonable access to the Warrantors and their professional
advisers to the premises, relevant assets, documents and
records of the Company (which access shall, for the avoidance
of doubt, include access to review and to take notes in
relation to such documents and records) and to the Managers as
the Warrantors may reasonably request in writing in clear and
precise terms to dispute, resist, appeal, compromise or defend
the matter or to enforce against a person other than a Buyer's
Group Undertaking rights against such person in relation to
such matter; and
9.2 the Buyer shall not, and shall ensure that no Buyer's Group
Undertaking will, admit liability in respect of, or compromise
or settle, the matter without the prior written consent of the
Warrantors (not to be unreasonably withheld or delayed),
and in each case on the basis and the condition that the
Warrantors shall fully indemnify and secure each Buyer's Group
Undertaking to the Buyer's satisfaction against any liability,
damage, expense or cost (in the case of legal costs being
costs before taxation) incurred thereby (but shall not be
required to indemnify any Buyer's Group Undertaking to the
extent that such liability, damage, expense or cost would not
have arisen but for the negligence or wilful default of the
Buyer in performing requests made in accordance with paragraph
9.1) PROVIDED ALWAYS THAT the Buyer shall not be obliged to
take or procure the taking of any such steps if in the opinion
of the Buyer (arrived at in good faith) the taking of such
steps would, having regard to all the circumstances,
materially adversely affect the legitimate interests of the
Buyer or any member of the Group.
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10 In the event of a failure of the Warrantors unanimously to
agree to take a particular decision or course of action in
respect of any of the matters referred to in paragraph 9, the
agreement of a majority of the Warrantors in favour of a
particular decision or course of action will bind all the
Warrantors to take that decision or course of action as if
such decision or course of action had been unanimously agreed
upon by all the Warrantors.
11.1 If the Warrantors pay to a Buyer's Group Undertaking an amount
in respect of a Relevant Claim and a Buyer's Group Undertaking
subsequently recovers from another person an amount which is
referable to the matter giving rise to the Relevant Claim:
11.1.1 if the amount paid by the Warrantors in respect of the
Relevant Claim is more than the Sum Recovered, the Buyer shall
immediately pay to the Warrantors the Sum Recovered by paying
to each Warrantor a proportion of the Sum Recovered which
bears the same proportion to the Sum Recovered as the amount
paid by that Warrantor in respect of the Relevant Claim bears
to the total amount paid by the Warrantors in respect of the
Relevant Claim; and
11.1.2 if the amount paid by the Warrantors in respect of the
Relevant Claim is less than or equal to the Sum Recovered, the
Buyer shall immediately pay to each Warrantor an amount equal
to the amount paid by that Warrantor in respect of the
Relevant Claim.
11.2 For the purposes of paragraph 11.1, "SUM RECOVERED" means an
amount equal to the total of the amount recovered from the
other person plus any repayment supplement in respect of the
amount recovered from the person under section 825 of the
Taxes Act 1988 plus any interest in respect of the amount
recovered from the person less all costs incurred by a Buyer's
Group Undertaking in recovering the amount from the person.
12 Where the Company or any of the Subsidiaries is insured
against the loss or damage suffered by the Company or any of
the Subsidiaries forming the basis of a Relevant Claim under
the terms of any insurance policy of the Company or any of the
Subsidiaries for the time being in force, the Buyer shall
procure that the Company or the Subsidiary (as the case may
be) shall make a claim under such policy in respect
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such loss or damage and the provisions of paragraph 11 shall
apply in relation to any sums recovered as a result of such
claim. Any increase in insurance premiums payable by the
Company or the Subsidiaries which is referable to a claim or
claims made in respect of such loss or damage shall be
regarded as a loss suffered by the Buyer in consequence of the
matter and shall be recoverable accordingly.
13 Nothing in Schedule 5 restricts or limits the general
obligation of the Buyer's Group Undertaking at law to mitigate
any loss or damage which it may incur in consequence of a
matter giving rise to a Relevant Claim.
14 If at any time after the date of this Agreement the Warrantors
(acting together) want to insure against liabilities in
respect of Relevant Claims, the Buyer shall (at the cost of
the Warrantors) provide any information as a prospective
insurer may reasonably require before effecting the insurance
provided that the provision of such information would not in
the reasonable opinion of the Buyer be detrimental to the
Buyer.
15 Upon becoming aware of a potential Relevant Claim the Buyer
shall, and shall ensure that each Group Company will, not
destroy documents, records, correspondence and accounts
relevant to the matter which may give rise to such Relevant
Claim.
16 The provisions of Schedule 5 do not apply to a Relevant Claim
if it is based on a fraudulent misrepresentation by a
Warrantor.
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SCHEDULE 6
REAL PROPERTY
FREEHOLD
<TABLE>
<CAPTION>
DESCRIPTION (INCLUDING TITLE EXISTING USE GROUP COMPANY
NUMBER)
- - ------------------------------------ ----------------------------------- -----------------------------------
<S> <C> <C>
Land and buildings on the east Offices and car parks, fertiliser Levington Horticulture Limited
and west sides of Paper Mill factory and nature reserves
Lane Bramford, Suffolk -
Title No. SK142550
Land at Hillcrest Approach, Part of property used as Levington Horticulture Limited
Bramford, Suffolk - Title No. allotments by unnamed third
SK143179 parties
Land and buildings on the south Horticultural research and Levington Horticulture Limited
east side of Bridge Road, development
Levington, Suffolk - Title No.
SK143178
Land on the west of Eastertown Production, storage and carting Levington Horticulture Limited
Road, Eastertown, Lanarkshire, away of peat
Scotland - Title No. LAN58915
No. 1 The Lees, Kirkbridge, Residential Levington Horticulture Limited
Cumbria - Title No. CU105977
Cumbria Peat Works and Guard Processing of peat (currently Levington Horticulture Limited
House, Low Eskrigg, Near curtailed). Storage and carting
Kirkbridge, Cumbria - Title No. of peat
CU105976
Land at Swinefleet Peat Works, Manufacture of growing media Levington Horticulture Limited
Reedness, Humberside - Title No.
HS238269
Land and buildings on the south Excavation of peat; processing, Levington Horticulture Limited
side of Stainforth Moor Road, manufacture, packaging and
Hatfield - Title No. SYK345547 storage of growing media and the
composting of materials for use
in peat alternatives
</TABLE>
108
<PAGE> 112
<TABLE>
<CAPTION>
DESCRIPTION (INCLUDING TITLE
NUMBER) EXISTING USE GROUP COMPANY
<S> <C> <C>
Swinefleet Warping Drain, Thorne Transport of peat Levington Horticulture Limited
Moors, Doncaster - Title No.
SYK345548
Land and buildings on the east No present use Levington Horticulture Limited
side of Ashcott Road, Meare,
Somerset - Title No. ST110671
Land on the east side of No present use except for Levington Horticulture Limited
Ashcott Road, Meare, access
Somerset - Title No.
ST110485
Land at Woodend Moss and Blackgate Extracting, stockpiling and Levington Horticulture Limited
Moss Carnworth, Lanarkshire - carrying away of peat
Title No. LAN115315 (Application
No. 96LAN 05845 26 March 1996)
</TABLE>
<PAGE> 113
SCHEDULE 6 (CONT.)
LEASEHOLD
<TABLE>
<CAPTION>
DESCRIPTION DETAILS OF LEASE DURATION
(DATE AND PARTIES)
- - ------------------------------ ------------------------------ -----------------------------
<S> <C> <C>
Land at Little Woolden Moss 23.12.87 between Bridgewater 1 December 1987 to 31
and the peat mill site, Estates Limited (1) Fisons December 2002
Irlam, Greater Manchester as plc (2)
more particularly delineated
on the plans 1 and 2 annexed
to the lease - Unregistered
East Building, Combs 1.2.96 between Webb & Son 16 October 1995 to 15
Tannery, Stowmarket, (Combs) Limited (1) and October 1997
Suffolk - Unregistered Levington Horticulture
Limited (2)
Land near 72 mile post, 22.19.94 between Railtrack From 22.12.94 until
Bramford, Suffolk - Plc (1) Levington terminated on 6 months'
adjoining land at Paper Mill Horticulture Limited (2) notice by either party
Lane, Bramford - Unregistered
Land at Wedholme Flow, 5.7.94 between Nature 5 July 1994 to 31 December
Cumbria as more particularly Conservancy Council for 2040
described and comprised in England ("English Nature")
the lease - Title No. (1) and Fisons plc (2)
CU106593
Land at Hatfield Moor, South 5.7.94 between English 5 July 1994 to 31 December
Yorkshire as more Nature (1) and Fisons plc (2) 2025
particularly described and
comprised in the lease -
Title No. SYK346893
Land at Thorne Moor and 5.7.94 between English 5 July 1994 to 31 December
Goole Moor, South Yorkshire Nature (1) and Fisons plc (2) 2025
as more particularly
described and comprised in
the lease - Title No.
SYK347562
</TABLE>
<TABLE>
<CAPTION>
CURRENT ANNUAL RENT AND EXISTING USE GROUP COMPANY
RENT REVIEW DATE(S)
- - ----------------------------- ----------------------------- ------------------------------
<S> <C> <C>
pound sterling22,794 plus pound sterling1.54 per Cutting, stacking and Levington Horticulture
tonne royalty in excess of drying of peat Limited
12,000 tonnes per annum.
1 January in each of the
years 1988, 1993 and 1998
pound sterling51,145 Warehousing and Levington Horticulture
No rent reviews distribution depot Limited
pound sterling550.67 reviewed 29 Access and pipe easements Levington Horticulture
September each year Limited
A peppercorn if demanded. Harvesting, stockpiling and Levington Horticulture
No rent reviews. carrying away of peat Limited
A peppercorn if demanded. Harvesting, stockpiling and Levington Horticulture
No rent reviews carrying away of peat Limited
A peppercorn if demanded. Harvesting, stockpiling and Levington Horticulture
No rent reviews. carting away of peat. Limited
</TABLE>
<PAGE> 114
<TABLE>
<CAPTION>
DETAILS OF LEASE
DESCRIPTION (DATE AND PARTIES) DURATION
<S> <C> <C>
Land in the Somerset Levels 5.7.94 between English 5 July 1994 to 31 December
comprised in the lease - Not Nature (1) and Fisons plc (2) 2000
Registrable
Land at Goole Moors 5.7.94 between English As to part 5 July 1994 to
comprised in the lease - Nature (1) and Fisons plc (2) 31 December 2025; as to the
Part Unregistered/Part remainder 5 July 1994 to 4
Registered - Title No. July 2008
HS236626
Land at Wedholme Flow, 11.12.1985 between Frederick 10 years from 1 November
Cumbria and comprised in the William Phillips (1) and 1985
lease - Unregistered Cumberland Moss Litter
Industry Limited (2)
Land at Eastertown Farm, 2.5.96 and 31.5.96 between 5 years from 14 June 1995
Eastertown, Lanarkshire Messrs C & C Tenant (1)
Levington Horticulture
Limited (2)
Strip of land and right of 26.06.95 between Clifford 7 years from 2.02.1994
way at Goole Fields, near Stephen Backhouse and Robert
Goole, Humberside - Frederick Backhouse (1) and
Unregistered Fisons plc (2)
Peat Lands at Goole Fields, 17.10.94 between George 7 years from 2.02.1994
North Humberside - Thompson Featherby (1) and
Unregistered Fisons plc (2)
Peat Lands at Goole Fields, 17.10.94 between John 7 years from 2.02.1994
North Humberside - William Featherby (1) and
Unregistered Fisons plc (2)
Peat Lands at Goole Fields, 17.10.94 between Ethel 7 years from 2.2.1994
North Humberside - Backhouse (1) and Fisons plc
Unregistered (2)
</TABLE>
<TABLE>
<CAPTION>
CURRENT ANNUAL RENT AND
RENT REVIEW DATE(S) EXISTING USE GROUP COMPANY
<S> <C> <C>
A peppercorn if demanded. Harvesting, stockpiling and Levington Horticulture
No rent reviews. carrying away of peat. Limited
A peppercorn if demanded. Harvesting, stockpiling and Levington Horticulture
No rent reviews. carrying away of peat. Limited
pound sterling33,948 Harvesting, stockpiling and Levington Horticulture
carrying away of peat. Limited
pound sterling4,420 (plus VAT) Stockpiling of peat Levington Horticulture
harvested from adjacent Limited
property.
pound sterling150 per annum Harvesting, stockpiling and Levington Horticulture
carrying away of peat; Limited
rights of way for railway
and vehicles
pound sterling226.31 per annum plus Harvesting, stockpiling and Levington Horticulture
pound sterling2.25 per ton of peat carrying away of peat; Limited
extracted rights of way for railway
and vehicles
pound sterling260.72 per annum plus Harvesting, stockpiling and Levington Horticulture
pound sterling2.25 per ton of peat carrying away of peat; Limited
extracted rights of way for railway
and vehicles
pound sterling720.56 per annum plus Harvesting, stockpiling and Levington Horticulture
pound sterling2.25 per ton of peat carrying away of peat; Limited
extracted rights of way for railway
and vehicles
</TABLE>
<PAGE> 115
<TABLE>
<CAPTION>
DETAILS OF LEASE
DESCRIPTION (DATE AND PARTIES) DURATION
<S> <C> <C>
Peat Lands at Goole Fields, 27.10.94 between The 7 years from 2.2.1994
North Humberside - Official Custodian for
Unregistered Charities and the Governors
of Read School Drax (1) and
Fisons plc (2)
Strip of land and rights of 17.10.94 between Alfred 7 years from 2.2.1994
way at Goole Fields, North James Cawkwell (1) and
Humberside - Unregistered Fisons plc (2)
Strip of land and rights of 10.11.94 between Michael 7 years from 2.2.1994
way at Goole Fields, North Peter George Dougherty (1)
Humberside - Unregistered Fisons plc (2)
Peat Lands at Goole Fields, 14.11.94 between Jane 7 years from 2.2.1994
North Humberside - Tindall (1) and Fisons plc
Unregistered (2)
Peat Lands at Goole Fields, 14.11.94 between Andrew 7 years from 02.02.1994
North Humberside - David Barker, Robin Andrew
Unregistered Barker and Robert Simon
Barker (1) and Fisons plc (2)
Strip of land and right of 21.12.94 between Winifred 7 years from 02.02.1994
way at Goole Fields, Goole, Johnson, Clive Johnson and
Humberside - Unregistered Barrie Everitt (1) and
Fisons plc (2)
</TABLE>
<TABLE>
<CAPTION>
CURRENT ANNUAL RENT AND
RENT REVIEW DATE(S) EXISTING USE GROUP COMPANY
<S> <C> <C>
pound sterling694.12 per annum plus Rights of way for railway Levington Horticulture
pound sterling2.25 per ton of peat and vehicles Limited
extracted
pound sterling225 per annum Rights of way for railway Levington Horticulture
and vehicles Limited
pound sterling750 per annum Rights of way for railway Levington Horticulture
and vehicles Limited
pound sterling363.37 per annum plus Harvesting, stockpiling and Levington Horticulture
pound sterling2.25 per ton of peat carrying away of peat; Limited
extracted rights of way for railway
and vehicles
pound sterling419.62 per annum plus Harvesting, stockpiling and Levington Horticulture
pound sterling2.25 per ton of peat carrying away of peat; Limited
extracted rights of way for railway
and vehicles
pound sterling300 per annum Rights of way Levington Horticulture
Limited
</TABLE>
<PAGE> 116
SCHEDULE 7
INTELLECTUAL PROPERTY
113
<PAGE> 117
SCHEDULE 8
COMPLETION BALANCE SHEET
1 The accounting principles, policies, bases, practices and
methods to be used in the preparation of the Completion
Balance Sheet are as follows:-
1.1 the specific principles, policies, bases, practices and
methods detailed in paragraph 3 below; and subject thereto
1.2 the principles, policies, bases, practices and methods
consistent with those used in the preparation of the Accounts;
and subject thereto
1.3 United Kingdom Generally Accepted Accounting Principles in
force at the date of this Agreement ("UK GAAP").
FOR THE AVOIDANCE OF DOUBT, PARAGRAPH 1.1 SHALL TAKE
PRECEDENCE OVER PARAGRAPHS 1.2 AND 1.3 AND PARAGRAPH 1.2 SHALL
TAKE PRECEDENCE OVER PARAGRAPH 1.3.
2 Events and circumstances occurring after 30 November 1997
shall not be taken into account in assessing the value of
items to be included in the Completion Balance Sheet, save
where expressly required by this Schedule.
3 Reliance on any computer reports referred to is dependent on
satisfactory testing by the Buyer's Accountants.
4 Any reference to the budget in this Schedule shall be taken to
mean the external budget document entitled 'Final Budget
1997/8' from P D Parry to The Board dated 16 May 1997.
5 The following specific principles, policies, bases, practices
and methods shall be used in preparation of the Completion
Balance Sheet:-
114
<PAGE> 118
5.1 STOCK PROVISIONS
For finished goods and packaging, the provision is calculated
by measuring the stock-turn. Stock-turn is the actual stock at
a month end measured against the latest 12 month rolling sales
forecast. The month end stock and rolling sales forecast are
both provided by the computer system operated by the Company
and these are matched in the Company's JBA inventory
management system to produce a computer report of stock-turn.
Stock provisions for slow moving finished goods and packaging
will be made as follows:-
- 100% packaging with no forecast sales;
- 20% finished goods with no forecast sales;
- 20% of packaging with plus one year forecast.
Intermediate, raw materials, peat and engineering stores are
provided on a specific individual basis.
5.2 PRICE VARIANCE (P/V) IN STOCK
Stock is accounted for using standard cost. In order to
correct this valuation to actual cost (for all stock other
than peat) an adjustment for the variance of standard cost to
current purchase prices (P/V) is made.
The P/V in stock will be calculated using the method applied
in the preparation of the statutory accounts at 30 June 1997.
115
<PAGE> 119
5.3 FIXED OVERHEADS IN STOCK FOR PEAT AND FINISHED GOODS
The starting point will be fixed overheads in stock at 30 June
1997 of (pound sterling) 1,709k. This will be adjusted for a
reclassification of certain costs from fixed to variable, a
one off downward adjustment of (pound sterling) 122,000 will
be made to fixed overheads in stock as at 1 July 1997. A
further downward adjustment of (pound sterling) 123,000 will
be written off on a time apportioned basis over the year to 30
June 1998.
Fixed overheads in stock will also be adjusted as required for
monthly sales and production.
5.4 VALUATION OF STOCK
Subject to paragraphs 5.1, 5.2 and 5.3 above, all stock will
be valued at standard cost (standard costs are those set for
1997/8) other than engineering stores which will be valued at
historic cost.
5.5 BAD DEBT PROVISION
In view of the credit insurance cover with Trade Indemnity,
provision will only be made against specific company debts
which are potentially bad and which are not covered by credit
insurance. The provision will also include any liability the
Group has in respect of excess on the insurance policy for
specific company debts which are potentially bad.
In calculating the provision there will be no netting of
credit balances due to any one customer against amounts due
from a separate customer, since any provision made is against
specific company debts which are potentially bad.
5.6 CASH DISCOUNT PROVISION
This will be calculated by taking the potential value of cash
discount that will be
116
<PAGE> 120
allowed on sales invoiced but not yet due for payment. The
calculation will apply the effective average monthly cash
discount rate experienced in the five months prior to 30
November 1997, (being discount taken compared to sales ledger
total balance at month end), to the sales ledger total balance
as at 30 November 1997.
5.7 DIRECT DELIVERY ALLOWANCE PROVISION
The provision will be calculated from the computer report
(third party unpaid invoices report: OEFV5) that details
unpaid sales invoices and the value of direct delivery
allowances due on those invoices.
5.8 RETRO REBATE AND SALES SUPPORT COSTS
The garden product retro rebate and sales support provision is
to be calculated on the following basis:
- The starting point will be the retro rebate and sales
support provision at 30 June 1997.
- To this will be added the following: budgeted total
rebates and sales support costs for the year to 30
June 1998 apportioned by using the percentage of
budgeted sales from 1 July 1997 to 30 November 1997
against budgeted sales for the year to 30 June 1998.
- From this will be deducted the actual total rebates
and sales support paid to 30 November 1997.
- Any amounts paid or agreed to be paid in respect of
periods ending on or before 30 June 1997, not
provided at 30 June 1997 (net of any amounts paid or
agreed to be paid in respect of periods ending 30
June 1997 no longer required), will not be deducted
from the provision, rather they will be expensed
(credited) in the profit and loss account at 30
November 1997.
117
<PAGE> 121
5.9 ADVERTISING AND PROMOTIONAL COSTS
Advertising support and promotional costs charged to the
profit and loss account will be calculated by taking the
budgeted expenditure (for the year to 30 June 1998) for such
expense and time apportioning it from the period 1 July 1997
to 30 November 1997. If actual costs to 30 November 1997 are
less or greater than the figure calculated the difference will
be recognised in full as an asset or liability in the
Completion Balance Sheet.
5.10 CREDIT NOTE PROVISION
A credit note provision of (pound sterling) 44,000 will be
carried in the balance sheet to cover all anticipated credit
notes at 30 November 1997. This will only be varied for
individual credit notes due of greater than (pound sterling)
10,000 each. An additional specific provision may be raised
for credit notes issued in respect of stock returned as a
result of the sale of extra-free promotional packs. The
adjustment in the Completion Balance Sheet will be the net
difference between the credit note value and the value of
items put back into stock.
5.11 SHAMROCK
No provision will be made in the Completion Balance Sheet for
any liabilities to customers that are contractually
recoverable by the Company from Shamrock as a result of
Shamrock's failure to comply with contracted terms.
A calculation shall be made of amounts to be provided as
falling due to or from Shamrock as a result of contractual
terms concerning the total value of purchases for the year
ended 31 March 1998. The calculation will be based on actual
purchases in the period to 3 January 1998 added to budgeted
purchases from 3 January 1998 to 31 March 1998. This total
purchase figure will be used to calculated the theoretical
amount which will fall due to or from Shamrock in terms of the
minimum purchase
118
<PAGE> 122
obligation referred to in the contract with Shamrock which for
the purposes of this calculation is agreed at (pound sterling)
6 million. This amount will be reduced pro rata by the number
of days from 1 April 1997 to 30 November 1997 divided by 365.
If this amount exceeds (pound sterling) 25,000 it will be
recognised as an asset or liability as appropriate in the
Completion Balance Sheet.
5.12 LEASED CAR RENTALS
The prepaid rentals (Pause Rental) paid by the Company for
each of its cars for the last three months of each contract
will be held in the Completion Balance Sheet as a prepayment.
These will be released during the last three months of the
life of each contract.
5.13 MAFF LEVY PROVISION
The provision will be that as at 30 June 1997 plus relevant
sales in the period, 1 July 1997 to 30 November 1997,
multiplied by the MAFF levy rate.
5.14 HOLIDAY PAY PROVISION
Provision will be made for each operative (qualifying
employee) who is due holiday pay based on their historic first
year of service. As holiday pay is now paid on the current
year this provision is now only paid when a qualifying
employee leaves.
5.15 R & D EXPENDITURE
All research and development expenditure will be written off
as incurred. No provision will be made for research and
development costs not incurred at 30 November 1997.
119
<PAGE> 123
5.16 PENSION COSTS
The amortisation of the pensions prepayment as at 30 June 1997
will be time apportioned over the year to 30 June 1998.
Any surplus or deficit arising from the pension fund actuarial
valuation at 30 June 1997 will not be reflected in the
Completion Balance Sheet.
5.17 FIXED ASSETS
These will be accounted for using the same policies and
methods as at 30 June 1997.
There will be no revaluation of assets at 30 November 1997.
Depreciation will be calculated on a monthly basis for the
period ending on 30 November 1997.
5.18 FINANCING CHARGES AND DIVIDENDS
No accrual will be made for any preference share dividends.
No accruals will be made for any early redemption penalties or
charges arising on the early repayment or any of the Group's
debt or equity.
No accrual will be made for interest payable on the DDB
outstanding at 30 November 1997, as all amounts payable on the
DDB are excluded from the Completion Balance Sheet.
5.19 ENVIRONMENTAL PROVISIONS
The environmental provision that existed at 30 June 1997 will
be adjusted for any actual expenditure made during the period
to 30 November 1997.
No other environmental provisions arising from the
reassessment of environmental
120
<PAGE> 124
liabilities will be reflected in the Completion Balance Sheet.
5.20 CORPORATION AND DEFERRED TAX
An effective corporation tax rate of 37% (which has been
calculated as the estimated tax rate for the year to 30 June
1998) will be used in the Completion Balance Sheet. Any debit
or credit arising from applying this to the profit/loss of the
Group will be recognised in the Completion Balance Sheet.
The unprovided deferred taxation of (pound sterling) 365,000
as at 30 June 1997, of which (pound sterling) 217,000 relates
to rolled over capital gains, will remain unprovided.
No adjustment will be made to the deferred tax provided as at
30 June 1997.
121
<PAGE> 125
SCHEDULE 9
OTHER SELLERS' WARRANTIES
1 CAPACITY
1.1 Each Seller that is not a Warrantor has full power to enter
into and perform this Agreement and this Agreement constitutes
binding obligations of each Seller that is not a Warrantor in
accordance with its terms.
1.2 The execution and delivery of this Agreement by each Seller
that is not a Warrantor and the performance of and compliance
with its terms and provisions will not:-
1.2.1 conflict with or result in a breach of, or constitute a
default under, any agreement or instrument to which such
Seller is a party or by which such Seller is bound or of the
memorandum or articles of association of the Company;
1.2.2 conflict with or result in a breach of any law, regulation,
order, writ, injunction or decree of any court or agency by
which the Seller is bound.
2 THE SHARES
The Shares to be sold under this Agreement by those Sellers
who are not Warrantors and the Preference Shares of the
Sellers to be redeemed under this Agreement are legally and
beneficially owned by such Sellers free from all liens,
charges, equities, encumbrances or interests of any nature
whatsoever, or any agreement, arrangement or obligation to
create any of the same, in favour of any other person.
122
<PAGE> 126
SCHEDULE 10
PRUDENTIAL HOLBORN PARTICIPANTS
<TABLE>
<CAPTION>
NAME AND ADDRESS VALUE OF CONSIDERATION
LOAN STOCK
<S> <C>
Kay Elizabeth Ashton (pound sterling) 12,346.00
21 Thornhill Square
London
N1 1BQ
James Edward Ashton (pound sterling) 12,346.00
21 Thornhill Square
London
N1 1BQ
Paul Brooks (pound sterling) 99,375.00
20 Marlin House
22 St Johns Avenue
London
SW15 2AA
Jennifer Mary Guest (pound sterling) 52,477.00
Spindleberry
Pine Avenue
Camberley
Surrey
GU15 2LY
Neil Patrick MacDougall (pound sterling) 13,496.00
The White Cottage
20 Grange Road
Bushey
Herts
WD2 2LE
Alison Rose McAlpine MacDougall (pound sterling) 13,496.00
The White Cottage
20 Grange Road
Bushey
Herts
WD2 2LE
Alistair Angus Mackintosh (pound sterling) 18,109.00
Whitecroft
Tilford Road
</TABLE>
123
<PAGE> 127
<TABLE>
<CAPTION>
VALUE OF
NAME AND ADDRESS CONSIDERATION LOAN STOCK
<S> <C>
Farnham
Surrey
GU9 8HX
Sara Jane Mackintosh (pound sterling) 18,109.00
Whitecroft
Tilford Road
Farnham
Surrey
GU9 8HX
Jonathan Windsor Morgan (pound sterling) 27,401.00
51 Castelnau
Barnes
London
SW13 9RT
Arabella Charlotte-Louise Morgan (pound sterling) 27,402.00
51 Castelnau
Barnes
London
SW13 9RT
Alexander Smart (pound sterling) 39,162.00
Grange House
Clock House Lane
Bramley
Guildford
GU5 0AP
Hilda Bruce Smart (pound sterling) 19,289.00
Grange House
Clock House Lane
Bramley
Guildford
GU5 0AP
Nicholas Andrew Lindsay Stuart (pound sterling) 15,584.00
19 Waldegrave Gardens
Strawberry Hill
Twickenham
TW1 4PQ
Catriona Margaret Stuart (pound sterling) 15,585.00
19 Waldegrave Gardens
</TABLE>
124
<PAGE> 128
<TABLE>
<CAPTION>
VALUE OF
NAME AND ADDRESS CONSIDERATION LOAN STOCK
<S> <C>
Strawberry Hill
Twickenham
TW1 4PQ
Matthew Charles Turner (pound sterling) 13,297.00
Springfield Hall
Bath Road
Knowl Hill
Berkshire
RG10 9UR
Caroline Anne Turner (pound sterling) 13,298.00
Springfield Hall
Bath Road
Knowl Hill
Berkshire
RG10 9UR
TOTAL (pound sterling) 410,772.00
</TABLE>
125
<PAGE> 129
SCHEDULE 11
TRUSTEE PARTICIPANTS
<TABLE>
<CAPTION>
MANAGER PARTICIPANT AMOUNT OF CONSIDERATION
LOAN STOCK
<S> <C> <C>
Norman Gibbs and Sarah Gibbs (pound sterling) 36,195
Ann Gibbs August House
Church Road
Bacton
Stowmarket
Suffolk
Damian Gibbs (pound sterling) 36,195
August House
Church Road
Bacton
Stowmarket
Suffolk
Philip Parry Louise Parry (pound sterling) 1,691
Strawberry Hill
Pembroke Road
Framlington
Suffolk
Neil Parry (pound sterling) 1,691
Strawberry Hill
Pembroke Road
Framlington
Suffolk
Keith Parry (pound sterling) 1,691
Strawberry Hill
Pembroke Road
Framlington
Suffolk
</TABLE>
126
<PAGE> 130
EXECUTED by the parties:
SIGNED by Walter Henry Guest )
as attorney for PRUDENTIAL ) /s/ Walter H. Guest
NOMINEES LIMITED PAC )
ACCOUNT )
SIGNED by Walter Henry Guest )
as attorney for PRUDENTIAL ) /s/ Walter H. Guest
NOMINEES LIMITED PSPS )
ACCOUNT )
SIGNED by Walter Henry Guest )
as attorney for PRUDENTIAL ) /s/ Walter H. Guest
NOMINEES LIMITED USV )
ACCOUNT )
SIGNED by Walter Henry Guest )
as attorney for PRUDENTIAL ) /s/ Walter H. Guest
NOMINEES LIMITED BWV )
ACCOUNT )
127
<PAGE> 131
SIGNED by Walter Henry Guest )
as attorney for PRUDENTIAL ) /s/ Walter H. Guest
NOMINEES LIMITED HOLBORN )
ACCOUNT )
SIGNED by Walter Henry Guest )
as attorney for PRUTEC LIMITED ) /s/ Walter H. Guest
SIGNED by Walter Henry Guest )
as attorney for THE SEARS ) /s/ Walter H. Guest
PENSION PLAN BY THE CHASE )
MANHATTAN BANK NA )
SIGNED by Walter Henry Guest )
as attorney for HSBC EQUITY ) /s/ Walter H. Guest
LIMITED )
SIGNED by Walter Henry Guest )
as attorney for CANDOVER ) /s/ Walter H. Guest
INVESTMENTS PLC )
SIGNED by Walter Henry Guest )
as attorney for CANDOVER ) /s/ Walter H. Guest
TRUSTEES LIMITED )
128
<PAGE> 132
SIGNED by Walter Henry Guest )
as attorney for CANDOVER ) /s/ Walter H. Guest
PARTNERS LIMITED AS GENERAL )
PARTNER OF CANDOVER 1991 )
LEAD INVESTORS LIMITED )
PARTNER )
SIGNED by Walter Henry Guest )
as attorney for CANDOVER ) /s/ Walter H. Guest
PARTNERS LIMITED AS GENERAL )
PARTNER OF CANDOVER 1991 )
UK LIMITED PARTNERSHIP )
SIGNED by Walter Henry Guest )
as attorney for CANDOVER ) /s/ Walter H. Guest
PARTNERS LIMITED AS GENERAL )
PARTNER OF CANDOVER 1991 )
US LIMITED PARTNERSHIP )
SIGNED by Nicole Sabina Dawson )
a duly authorised representative of ) /s/ Sabina Dawson
3i GROUP plc )
SIGNED by WALTER HENRY GUEST )
as attorney for NATWEST ) /s/ Walter H. Guest
VENTURES INVESTMENTS )
LIMITED )
129
<PAGE> 133
SIGNED by P D PARRY ) /s/ P D Parry
SIGNED by P D PARRY as attorney ) /s/ P D Parry
for MRS L PARRY )
SIGNED by P D PARRY ) /s/ P D Parry
in his capacity as a trustee of )
THE PARRY TRUST )
SIGNED by P J ELSDON as attorney ) /s/ P J Elsdon
for MRS L PARRY in her capacity )
as a trustee of THE PARRY TRUST )
SIGNED by N W GIBBS ) /s/ N. W. Gibbs
SIGNED by P D PARRY as attorney ) /s/ P D Parry
for MRS A GIBBS )
130
<PAGE> 134
SIGNED by N W GIBBS in his ) /s/ N. W. Gibbs
capacity as a trustee of THE GIBBS )
TRUSTS )
SIGNED by P D PARRY as attorney ) /s/ P D Parry
for MRS A GIBBS in her capacity as )
a trustee of THE GIBBS TRUSTS )
SIGNED by P J ELSDON ) /s/ P J Elsdon
SIGNED by P J ELSDON as ) /s/ P J Elsdon
attorney for MRS B ELSDON )
SIGNED by P J ELSDON in his ) /s/ P J Elsdon
capacity as a trustee of )
THE ELSDON TRUST )
SIGNED by P D PARRY as attorney ) /s/ P D Parry
for MRS B ELSDON in her capacity )
as a trustee of THE ELSDON TRUST )
131
<PAGE> 135
SIGNED by N W GIBBS, ) /s/ N. W. Gibbs
P J ELSDON and P D PARRY for ) /s/ P J Elsdon
and on behalf of FAIRMOUNT ) /s/ P D Parry
TRUSTEE SERVICES LIMITED )
SIGNED by MATTHEW REED ) /s/ Matthew Reed
a duly authorised representative of )
SCOTTS HOLDINGS LIMITED )
132
<PAGE> 1
Exhibit 99
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PRESS RELEASE ISSUED
DECEMBER 15, 1997
<PAGE> 2
SCOTTS ACQUIRES LEVINGTON HORTICULTURE LTD.,
LEADING U.K. LAWN AND GARDEN CARE PRODUCTS COMPANY
Marysville, Ohio, December 15, 1997 -- The Scotts Company (NYSE: SMG) announced
today that it has completed the purchase of privately-held Levington
Horticulture Ltd., the U.K.'s leading producer of consumer and professional lawn
fertilizer, organics and horticulture products, for approximately (pound)48
million (approximately $78 million).
Scotts expects the acquisition to be accretive to earnings per share in fiscal
1998 and to contribute growing earnings in fiscal 1999 and beyond.
Over the past three years, Levington's sales have grown at an annual rate of
approximately 10% to the equivalent of approximately $80 million. Operating
profit has grown at an annual rate of approximately 15% as margins have
expanded, and the company has been strongly cash generative. Levington became
privately held in 1994 through a management buyout from Fisons PLC, backed by
PPM ventures, the private equity subsidiary of Prudential Corporation.
Levington's leading brands in key segments of the approximately $500 million
U.K. market complement Scotts' existing U.K. business. While Scotts' U.K.
operations had been primarily oriented to consumer pesticides and garden
fertilizers, Levington's product lines add significant exposure to the compost,
lawn fertilizer and professional horticultural product areas. Approximately
two-thirds of Levington's sales are U.K. garden products, with the balance in
professional horticultural products and exports, primarily to continental
Europe. The brands that Levington markets in the U.K. include Levington(R),
Evergreen(R), the U.K.'s leading lawn fertilizer line, Shamrock(R), a leader in
the organics market, and Tumbleweed(R) pesticides.
Scotts' Miracle-Gro(R) product line has grown to be the leading consumer garden
fertilizer brand since its introduction in the U.K. several years ago and has
significantly accelerated the growth of this segment, demonstrating the value of
aggressive consumer advertising-driven marketing in the U.K. Levington brings a
similar consumer marketing-oriented culture, having grown faster than the U.K.
garden products market due to its innovation in product development, advertising
and retailer relationships.
Scotts' and Levington's combined fiscal 1997 U.K. sales were equivalent to
approximately $135 million. The U.K. market
<PAGE> 3
remains highly fragmented, with continuing opportunities for growth through more
aggressive marketing than has characterized the market in the past.
Salomon Smith Barney served as exclusive financial advisor to Scotts on the
Levington acquisition.
The Scotts Company is the leading supplier of consumable products for the lawn
and garden care, professional turf care, and horticulture markets in both the
U.S. and U.K., and is expanding operations in other international markets. The
company owns some of the industry's most powerful brands. In the U.S. lawn care
market, consumer awareness of the company's Scotts(R) and Turfbuilder(R) family
of brands outscores the nearest competitor by about 9-to-1, as does awareness of
the company's Miracle-Gro(R) family of brands in the U.S. garden care market. In
the U.K., the company's brands include Weedol(R) and Pathclear(R), the
top-selling consumer herbicides, Evergreen(R), the leading lawn fertilizer line,
the Levington(R) line of lawn and garden products, Tumbleweed(R) pesticides, and
Miracle-Gro(R), the leading plant fertilizer.
Safe Harbor Statement under the Private Securities Litigation Act of 1995:
Certain of the statements contained in this press release, including, but not
limited to, information regarding the future economic performance and financial
condition of the company, the plans and objectives of the company's management,
and the company's assumptions regarding such performance and plans are forward
looking in nature. Actual results could differ from the forward looking
information in this release, due to a variety of factors, including, but not
limited to:
- - - the effects of weather conditions on sales of the company's products,
especially during the spring selling season;
- - - the success of the company's promotional programs and the company's reduced
reliance on pre-season selling programs;
- - - the company's ability to maintain favorable profit margins on its products
and to produce its products on a timely basis;
- - - the effects of currency translation on the operations and reported results
of the company's overseas business units; and
<PAGE> 4
- - - environmental and governmental issues and consumer perceptions.
Additional detailed information concerning a number of the important factors
that could cause actual results to differ materially from the forward looking
information contained in this release is readily available in the company's
publicly filed quarterly, annual, and other reports.
For more information contact:
Rebecca Bruening
The Scotts Company
937-644-7290
