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UNITED STATES 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): April 30 1999
BIOFARM INC
(Exact name of Registrant as specified in its Charter)
Nevada 0-20317 88-00270266
(State or other (Commission File Number) (IRS Employer of
jurisdiction of Identification No.)
Incorporation)
403 Salisbury House, 31 Finsbury Circus, London, EC2M 5QQ
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area
Code: 0044 171 5888862
N/A
(Former name or former address, if changed since
last report.)
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ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
On April 30 1999 Burlington Chamber & James Limited, ("BCJ") a company
registered in England and Wales and wholly owned subsidiary of Biofarm Inc. (the
"Registrant") acquired a majority holding in Alterproof Limited, a company
registered in England and Wales ("Alterproof") pursuant to the terms and
conditions of a Subscription Agreement dated April 23, 1999 made between BCJ,
Alterproof and Terence Roger Hewett and Edward Marcus Rennick (the
"Warrantors").
Alterproof is a holding company and owns the entire share capital of Ian McCall
Holdings Limited ("IMH"). IMH owns the entire share capital of the following
companies: Ian McCall International Limited ("IMI"), a Lloyds Broker; Ian McCall
Financial Services Limited ("IMFS"); Ian McCall & Co Limited ("IM&Co"), a Lloyds
Agency Broker and Trifoliate Limited. All of the Companies are registered in
England and Wales save for Trifoliate Limited which is registered in Guernsey,
Channel Islands.
IMI is regulated by Lloyds and IMFS by the UK Personal Investment Authority.
IMI owns the entire share capital of Ian McCall North America Limited and Ian
McCall Insurance Services Limited, both of which companies are in run off. IMI
acts as an International Wholesale Insurance Broker, IM & Co is a United Kingdom
retail Insurance Broker, IMFS is a financial services company and Trifoliate
Limited manages off shore captive companies. The Registrant intends to continue
such use of the Companies, subject to rationalisation of the structure of the
group.
Pursuant to the Subscription Agreement, BCJ subscribed for 8,500 ordinary shares
of GBP1.00 each. After this Subscription the total outstanding share capital of
Alterproof is 10,000.ordinary share of GBP1.00 each. As a result of this
transaction BCJ owned 85% of the outstanding shares and the two Warrantors owned
7.5% each.
The Subscription price for the 8,500 shares was GBP 8,500. In addition BCJ lent
Alterproof the sum of GBP491,500 by way of an unsecured Loan Note repayable
after two years. The consideration was arrived at through arms length
negotiations with Alterproof.
There were no prior material relationships between BCJ, the Registrant or any of
the Registrants affiliates, any director or officer of the Registrant, or any
associate of such director or officer, on the one hand and Alterproof, or the
Warrantors on the other hand.
On the same day, April 30, 1999, BCJ exchanged 500 shares in Alterproof by way
of a Share Exchange Agreement for a 49% holding of Mr Anil Kumar Mahan in
Burlington & James Limited ("B&J Limited"), a subsidiary of BCJ, of which BCJ
holds the remaining 51% of the shares. Mr Anil Kumar Mahan is a director and
Chief Executive Officer of the Registrant. As a result BCJ now owns 100% of B&J
Limited.
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After accounting for the above transactions, the Registrant, through its BCJ
Subsidiary, now controls 80% of the outstanding capital stock of Alterproof. In
addition Anil Kumar Mahan as affiliate of the Registrant owns 5% and the
Warrantors own 7.5% each.
Additional information concerning the acquisition is also contained in the
Subscription Agreement and the Share Exchange Agreement, which documents are
filed as an exhibit to this Form 8-K and incorporated herein by reference.
Item 7: Financial Statements and Exhibits
a) Financial Status of Business Acquired
The Registrant has determined that it is impracticable to provide the
required financial statements of Alterproof Limited at this time. The
Registrant will file the required financial statements under an
amendment on Form 8-K/A as soon as practicable, but in any event within
60 days after the date hereof.
b) Pro-Forma Financial Information
The Registrant has determined that it is impracticable to provide the
required Pro-Forma Financial Information regarding the acquisition of
Alterproof Limited at this time. The Registrant will file the required
Pro-Forma financial information under an amendment on Form 8- K/A as
soon as is practicable but in any event within 60 days after the date
hereof.
c) Exhibits
10.1 Subscription Agreement dated April 23, 1999 between the Purchaser, the
Company and the Warrantors.
10.2 Share Exchange Agreement dated April 30, 1999 between the Purchaser and
Anil Kumar Mahan.
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 thereunto duly authorised.
Dated: May 13, 1999.
Biofarm Inc.
By:/s/ Keith D. Beekmeyer,
----------------------------
KEITH D.BEEKMEYER, PRESIDENT
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Exhibit Index
10.1 Subscription Agreement dated April 23 1999 between the Purchaser, the
Company and the Warrantor.
10.2 Share Exchange Agreement dated April 30 1999 between the Purchaser and
Anil Kumar Mahan.
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THIS AGREEMENT is made the 23 day of April 1999.
1 PARTIES
1.1 Alterproof Ltd. whose registered office is at 22/23 Widegate Street,
London, E1 7HX ("the Company")
1.2 Burlington Chamber and James Ltd whose registered office is at
Salisbury House, 31 Finsbury Circus, London EC2M5QQ ("the Subscriber"
which expression shall where the context so admits include its
successors and assigns)
1.3 Terence Roger Hewett of 335 Ware Road, Hertford, Herts SG13 7EL, and
Edward Marcus Rennick of 11 Oast Court, Yalding, Maidstone, Kent,
ME18 6JY ("the Warrantors")
2 RECITALS
2.1 The Company is a private company limited by shares and at the date of
this agreement has an authorised share capital of pound sterling 10,000
divided into 10,000 Ordinary shares of pound sterling 1.00 each of
which 1,500 have been issued fully paid and are registered in the names
of the Warrantors and short details of the Company are set out in
Schedule 1.
2.2 The Company is the beneficial owner (directly or indirectly) of the
whole of the issued share capital in each of the companies listed in
Schedule 2 ("the Subsidiaries"). The Subsidiaries are the only
subsidiaries of the Company.
2.3 The Company has agreed to grant to the Subscriber an option to
subscribe for all the 8,500 unissued ordinary shares of pound sterling
1 each of the Company on the terms of this Agreement.
NOW IT IS AGREED as follows:
3 DEFINITIONS AND INTERPRETATION
3.1 In this agreement and in the Schedules (unless the context otherwise
requires) the following words and expressions shall have the following
meanings:
3.1.1 "the Accounting Date" means 31ST October 1997.
3.1.2 "Agreed Form" means in relation to any document the draft of that
document which is either annexed to this agreement or which has been
initialled by the Vendors' Solicitors and the Purchaser's Solicitors by
way of identification.
3.1.3 "Associate" means in relation to any Vendor:
3.1.3.1 His issue spouse brother sister or parent or
3.1.3.2 Any Company with which he or any of his relatives as detailed in
3.1.3:1 above is or may be associated or
3.1.3.3 Any partnership of which he is a member and for the purposes of 3.1.3.2
above "associated" shall have the meaning ascribed to it in the
Companies Act 1985 Section 346
3.1.4. "The Audited Accounts" means the audited consolidated accounts of the
Company and the Subsidiaries for the period to the Accounting Date (a
copy of which has been attached to the Disclosure Letter) comprising
inter alia a balance sheet profit and loss accounts of the Company and
the Subsidiaries for the accounting reference period ended on the
Accounting Date, notes, auditors
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and directors' reports and where required by usual practice a
statement of the source and application of funds.
3.1.5 CAA 1990 means the Capital Allowances Act 1990.
3.1.6 "the Companies Act" means the Companies Acts 1985 and 1989 the
Company Securities (Insider Dealing) Act 1985 and the
Companies Consolidation (Consequential Provisions) Act 1985
and the Financial Services Act 1986.
3.1.7 "the Completion Date" means the date of actual completion of
the matters provided for in clause 7.1 and Completion shall be
construed accordingly.
3.1.8 the Disclosure Letter means the letter and its annexures dated
with today's date delivered immediately before the execution
of this agreement and addressed by the Warrantors' Solicitors
to the Subscribers' Solicitors disclosing and various matters
relative to the Warranties and the Tax Deed and the
Indemnities comprising Clause 9.
3.1.9 'Group Company' means the Company and (as the context
requires) the Subsidiaries and each or any of them
3.1.10 'ICTA 1988' means the Income and Corporation Taxes Act 1988
3.1.11 'IHTA 1984' means the Inheritance Tax Act 1984
3.1:12 'Incumbrance' means any mortgage charge (whether fixed or
floating) pledge lien option right of pre-emption right of
retention of title or any other form of security interest or
any obligation (including any conditional obligation) to
create any of the same
3.1:13 'Loan' means the loan of pound sterling 500,000 to be granted
by the Subscriber to the Company pursuant to Clause 4 of this
Agreement.
3.1:14 'Management Accounts' means the unaudited profit and loss
accounts of the Company and the Subsidiaries for the period
ended on 28th February 1999 and the unaudited balance sheets
of the Company and the Subsidiaries as at that date ( a copy
of which has been attached to the Disclosure letter )
3.1:15 'Options' means the put and call options granted by Clause 5
of this Agreement.
3.1:16 'the Properties means the leasehold properties short
particulars of which are contained in Parts 1 and 11 of
Schedule 3 and 'Property' shall mean any of them
3.1:17 'the Subscriber's Solicitor' means T.G. Nathan of Biofarm Inc.
Salisbury House, 31 Finsbury Circus London EC2M 5QQ.
3.1:18 'the Revenue' means all fiscal authorities (national municipal
or local) whether of the United Kingdom or elsewhere
3.1:19 'the Shares' means the 8500 unissued Ordinary Shares of pound
sterling 1 each in the share capital of the Company
3.1:20 'SSAP' means any Statement of Standard Accounting Practice in
force at the Accounting Date
3.1:21 'Taxation' or "Tax" means any form of taxation duty levy
impost charge national insurance or other similar contribution
whether created or imposed by any governmental state federal
local municipal or other body and whether in the United
Kingdom or elsewhere
3.1:22 'the Tax Deed' means the tax deed referred to in clause
7.1:2.7 below
3.1:23 'TCGA 1992' means the Taxation of Chargeable Gains Act 1992
3.1:24 'VATA 1983' means the Value Added Tax Act 1983
3.1:25 'the Group' means the Company and all or any of its
Subsidiaries
3.1.26 'the Company's Solicitors' means Bignalls of 3 De Walden
Court, 85 New Cavendish Street, London, W1.
3.1.27 'the Warranties' means the representations warranties and
undertakings given by the Warrantors referred to in Clause 8
and Schedule 5.
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3.1.28 'the Supplemental Disclosure Letter' means the letter and its
annexures delivered immediately before completion of this
Agreement giving details of any matters which have occurred
between this Agreement and Completion.
3.2 Expressions in the singular shall include the plural and in the
masculine shall include the feminine and vice versa and reference to
persons shall include corporations and vice versa.
3.3 References to any statute or statutory provision shall be construed as
references to such statute or statutory provision as respectively
amended or re- enacted or as their operation is modified by any other
Statute or statutory provision (whether before or after the date of
this agreement) and shall include any provisions of which they are re-
enactments (whether with or without modification) and shall include
subordinate legislation made under the relevant statute as of today's
date.
3.4 References to recitals clauses and schedules are references to recitals
and clauses of and schedules to this agreement.
3.5 All obligations expressed to be given or entered into by the Warrantors
or resulting from the execution of or breach of the provisions of this
agreement (including without limitation any of the warranties proving
to be untrue or misleading or being breached) shall be deemed to be
given undertaken or entered into by them jointly and severally.
3.6 Expressions defined in ICTA 1988 TCGA 1992 or in the Companies Acts
shall wherever used in this agreement have the meanings given to them
in the relevant statute (unless the context otherwise requires) and in
any case of any inconsistency the defined terms used in this Agreement
shall prevail.
3.7 The headings used in this agreement are inserted for convenience only
and shall not affect its construction or interpretation.
3.8 The Schedules form part of this agreement.
4 LOAN
4.1 Immediately following the execution of this Agreement the Subscriber
will advance to the Company the sum of pound sterling 500,000 by
telegraphic transfer to the Company's account no: 36262684 with
National Westminster Bank Plc, Branch, 1 Princes Street London EC2R 8PA
sort code no: 60-00-01 and on execution of this Agreement the Company
will execute a Loan Note in the Agreed Form.
5 OPTIONS
5.1 In consideration of the Subscriber advancing the Loan to the Company,
the Company grants to the Subscriber an Option to subscribe and the
Subscriber grants to the Company an Option to require it to subscribe,
to the shares fully paid at the subscription price of pound sterling
1.00 per share, totalling pound sterling 8,500. The Shares will rank
equally in all respects with the existing issued ordinary shares in the
Company as at the date of Completion.
5.2 The exercise of the options is subject to the conditions set out in
Clause 6, following the fulfilment of which to the reasonable
satisfaction of the
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Subscriber, either the Subscriber or the Company
may exercise their Option at any time by notice in writing to the
other.
5.3 The Subscriber hereby irrevocably applies to the Company for the
allotment and issue to it of the Shares and authorises the Company to
apply pound sterling 8,500 of the principal amount of the loan in and
towards payment of the subscription price for the Shares pursuant to
the exercise of an Option and shall submit the Loan Note for
endorsement.
5.4 The Warrantors hereby waive any rights of pre-emption conferred on them
by the articles of association of the Company over the Shares.
6 CONDITIONS
6.1 The exercise of the Options is conditional upon:
6.1.1 Contractual notice of termination by way of redundancy or
otherwise being given to each of the employees agreed between
the Parties whose employment has not already terminated by
30th April 1999 and in such form as the Parties may agree.
6.1.2 The payment in full of all debentures issued by the Company in
series dated 21 January 1999 totalling pound sterling
1,095,423.50 in consideration of the acquisition by the
Company of all the issued share capital of Ian McCall Holdings
Limited
6.1.3 The Company having given notice in writing to the Trustees of
the Ian McCall Holdings Limited Pension and Assurance Scheme
of the termination of its liability to contribute in the
agreed terms.
6.1.4 The parties to this agreement shall use all reasonable
endeavours to procure that the conditions in clause 6.1 are
fulfilled by 30th April 1999 or such later date as may be
agreed.
6 COMPLETION
7.1 Completion of the subscription and issue of the Shares pursuant to the
exercise of an Option shall take place at the offices of the Company
immediately following the fulfilment of the conditions referred to in
Clause 6, when the Company will:
7.1.1 allot and issue the Shares fully paid to the Subscriber at the
price of pound sterling 1 per share and deliver to the
Subscriber a definitive certificate for the Shares in the name
of the Subscriber.
7.1.2 Deliver to the Subscriber :
7.1.2.1 certificates in respect of all issued shares in each of the
Subsidiaries and transfers of all shares in any Subsidiary
held by a nominee other than the Company or another Subsidiary
7.1:2.2 the certificates of incorporation statutory books (including
minute books) common seal and all books of account and other
records of the Company and the Subsidiaries complete and
appropriately by written up to date
7.1:2.3 the title deeds to the Properties and all ancillary documents
7.1:2.4 the resignation of the existing directors and secretary of the
Company (other than Terence Roger Hewett and Edward Marcus
Rennick) and of the Subsidiaries other than Trifoliate Limited
(other than the said Terence Roger
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Hewett and Edward Marcus Rennick)) with a written
acknowledgement from each (which shall be executed under seal
or as a deed in the Agreed Form) that he has no claim whatever
against the Company or the Subsidiaries in respect of
compensation for loss of office.
7.1:2.5 the resignation of the existing auditors of the Company and
the Subsidiaries effective in all respects containing a
statement complying with the Companies Act 1985 Section 394
that there are no circumstances which they consider should be
brought to the attention of the members or creditors of the
Company
7.1:2.6 a Tax Deed in the form set out in Schedule 4 duly executed by
each of the Warrantors and the Company and the Subsidiaries
7.1:2.7 Electronic banking print outs for all the current and deposit
accounts of the Company and of the Subsidiaries (other than
dormant accounts) at the close of business on the last
business day preceding Completion
7.1:2.8 appropriate forms to amend the mandates given by the Company
and each Subsidiary to its bankers
7.1:2.9 written confirmation from each of the Warrantors that there
are no subsisting guarantees given by the Company or any
Subsidiary in his favour and that neither of the Warrantors
nor their Associates will be indebted to the Company or any
Group Company save for season ticket loans.
7.1:2.10 appropriate certified minutes of the Company authorising
execution of this agreement the Tax Deed and any other
ancillary documentation in the Agreed Form
7.1:2.11 evidence (in a form reasonably satisfactory to the Subscriber)
of the release (if any) from all charges debentures and other
security interests created by the Company or any of the
Subsidiaries or to which any of its or their assets is subject
or (as appropriate) certificates of non-crystallisation save
for the Lloyds Trust Deeds and the Debenture to Royscot Trust
7.1:2.12 such other papers and documents as the Subscriber may (by
notice from the Subscriber's Solicitors to the Company's
Solicitors given not less than 5 business days prior to
Completion) reasonably require
7.1.3 The Warrantor's will procure that a board meeting of the
Company and of each of the Subsidiaries shall be held at
which:
7.1.3.1 such persons as the Subscriber may nominate shall be appointed
as directors and the secretary of the Company and each of the
Subsidiaries
7.1.3.2 there shall be accepted the resignations of the directors
referred to in clause 7.1.2.6
7.1:3.3 BDO Stoy Hayward shall be appointed auditors of the Company
and of each of the Subsidiaries, subject to their agreement
7.1:3.4 The Shares will be issued to the Subscriber
7.1.3.5 the registered offices of the Company and the Subsidiaries
shall be changed as the Subscriber may direct
7.1:3.6 The Company and Terence Roger Hewett and Edward Marcus Rennick
shall enter into agreement amending their existing service
agreements in the Agreed Form
7.1:3.7 The Warrantors shall procure that their Associates shall repay
all money then owing by them to the Company and/or any
Subsidiary (whether then due for payment or not) save for
season ticket loans.
7.1.3.8 The Subscriber and Warrantor will enter into a Shareholders
Agreement in the agreed form.
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7.1.3.9 The Warrantors will be entitled immediately prior to
completion to deliver to the Subscriber the Supplemental
Disclosure Letter.
8 WARRANTIES
8.1 The Warrantors warrant and represent to the Subscriber:
8.1:1 in relation to the Company and as separate warranties and
representations in relation to each of the Subsidiaries as if
their respective names (where the context so admits) were
substituted for references to 'the Company"
8.1.2 but in respect to any transaction between members of the
Company's Group , only as to the net effect on them
consolidated as a Group
8.1:2.1 in the terms set out in Schedule 5 and
8.1:2.2 that all information contained or referred to in the
Disclosure Letter is true and accurate.
8.1:3 To the intent that such warranties and representations shall
remain in full force and effect notwithstanding Completion and
8.1.4 so far as such warranties and representations relate in whole
or in part to or past matters of fact at Completion they shall
also be deemed to constitute fundamental representations upon
the faith of which this agreement has been entered into by the
Purchaser
8.2 For the avoidance of doubt the Warranties shall be separate and
independent and save expressly provided shall not be limited by
reference to any other clause or anything in this agreement or its
Schedules
8.3 If at any time after the Completion Date it should transpire that any
of the Warranties is untrue or incorrect and has been breached, the
Warrantors will within 14 days of written demand pay to the Company or
the relevant Subsidiary (as the case may be) a sum equal to the loss
arising from such breach.
8.4 The rights of the Subscriber in respect of the Warranties and
Indemnities shall not be affected by any event or matter whatever other
than a specific written waiver or release signed by an officer of the
Subscriber and except as expressly provided in this Agreement.
8.5 The Subscriber confirms that it is not entering into this Agreement in
reliance upon any representation warranty information or statement
whether written or oral expressed or implied made by or on behalf of
the Company or the Warrantors other than the Warranties and the
Indemnities contained in this Agreement and the Tax Deed
8.6 The Warranties and Indemnities contained in this Agreement and the Tax
Deed are given subject to the matters disclosed by the Disclosure
Letter and the Supplemental Disclosure Letter or the documents attached
thereto or referred to therein.
8.7 The Warrantors shall not be liable under the Warranties to the extent
that the loss shall have been recovered under the Indemnities and/or
the Tax Deed and vice versa.
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8.8 Nothing contained in this Agreement shall be deemed to relieve the
Subscriber from its common law duty to the Warrantors to take all
reasonable steps to mitigate its loss in relation to any claim under
the Warranties and Indemnities.
8.9 The Subscriber shall take all reasonable steps to mitigate any
liability for Warranties as to Taxation under the Tax Deed including ,
but not limited to, the use of all losses and reliefs and allowances of
any Group Company in respect of all periods up to 30th April 1999
available to offset such liability before any of the same are carried
forward for use in offsetting future losses or gains, and to this
intent will procure that the preparation, auditing and signature of the
accounts of the Company's Group ( and including the companies formerly
within the Company's Group) for such periods shall be under the full
control of the Warrantors, who will for this purpose be constituted a
committee of the board of directors of the Company, and that all the
tax affairs of the Company and the Subsidiaries in respect of all such
periods are dealt with by their present auditors, Beavis Walker subject
to agreement of fees in advance.
8.10 The Warrantors shall not be liable in respect of any claim under the
Warranties, the Indemnities or the Tax Deed unless the same shall have
been made in writing by 30 April 2001 and, if not settled earlier,
unless legal proceedings shall have been commenced against the
Warrantors in respect thereof within one year of its having first been
made, for which purposes time shall be of the essence.
8.11 The Warrantors shall only be liable in respect of a claim under the
Warranties, the Indemnities or the Tax Deed the value of which exceeds
pound sterling 5,000, and will not be liable for any such claims unless
and until the aggregate cumulative liability of the Warrantors in
respect of all such claims exceeds pound sterling 20,000 exclusive of
costs, in which event the Warrantors shall be liable for the whole
amount and not just the excess of such claims.
8.12 The liability of the Warrantors for all claims under the Warranties,
the Indemnities and the Tax Deed and the Indemnity in clause 9 hereof
shall not in any event exceed the sum of pound sterling 100,000
inclusive of costs.
8.13 Upon the Subscriber becoming aware of circumstances that might give
rise to a claim under the Warranties, the Indemnities or the Tax Deed,
it will procure that the Company will as soon as is reasonably
practicable give written notice thereof to the Warrantors in sufficient
detail as to enable them to identify the matters giving rise to the
claim.
8.14 The Subscriber will keep the Warrantors fully and promptly informed,
with copies of all relevant documents, in relation to all such
circumstances and consult fully and in a timely manner with the
Warrantors at all stages thereof as the Warrantors may reasonably
request.
8.15 The Subscriber shall reimburse to the Warrantors any sum paid by it
pursuant to any claims under the Warranties, the Indemnities or the Tax
Deed to the extent that such sum is subsequently recovered by the
Company, the Subsidiaries or the Subscriber from any third party
including, but not limited to their insurers, in
<PAGE> 8
respect of the subject matter of that claim, less any costs and
expenses reasonably incurred in connection with such recovery, and the
Subscriber shall procure that the Company and the Subsidiaries use all
reasonable endeavours to pursue such claims against the third party
concerned or permit or procure that the Company and the Subsidiaries
permit the Warrantors to do so in their names or as their assignees.
8.16 No breach of the Warranties or any other term of this Agreement or
claim under the Tax Deed will entitle the Subscriber to rescind or
terminate this Agreement, and any such breach or claim will sound in
damages only. All obligations expressed to be given or entered into by
the Warranties, the Indemnities or under the Tax Deed or resulting from
the execution of or breach of the provisions of the agreement
(including without limitation any of the Warranties proving to be
untrue or misleading or being breached) shall be deemed to be given or
entered into by them jointly and severally.
8.17 Any of the Warranties which are qualified to the expression to the best
of knowledge information and belief of the Warrantors or so far as the
Warrantors are aware or any similar expression shall be deemed to
include an additional statement that they have been made after due
diligent, reasonable and reasonably careful inquiry.
8.18 The Warranties shall be deemed to be given as at the date of this
Agreement and be repeated immediately before Completion and to relate
to the facts then existing
8.19 All obligations expressed to be given or entered into by the Warrantors
or resulting from the execution of or breach of the provisions of this
Agreement (including without limitation any of the Warranties proving
to be untrue or misleading or being breached) shall be deemed to be
given or entered into by them jointly and severally.
9. INDEMNITIES
9.1 The Warrantors jointly and severally covenant with the Company and by
way of separate covenants with the Subscriber to indemnify them and
each of them and keep them or each of them indemnified and hold them
and each of them harmless:
9.1.1 Against the total amount of any debt that shall be owing or
become due from the Company or any of its subsidiaries under
section 75 of the Pensions Act 1995 and the Occupational
Pensions Schemes (Deficiency on Winding - Up etc) Regulations
1996 in respect of the Companies Pension Scheme ("the Scheme")
after the earliest date after the signing of this Agreement
that the Company can procure or request the termination of the
Scheme, the Warrantors undertake together with interest at two
percent above Barclay's Bank Plc's base rate from time to time
in force calculated on a day to day basis with monthly rests
from the date on which the payment of such debt is made to the
Scheme until the date payment is made by the Warrantors under
this Clause.
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9.1.2 (For itself and as an agent and trustee for McCall Financial
Services Ltd) in respect of all commission repayable by it
(including without limitation, commission received by it in
relation to the sale of any financial product by it or
arranged by it or advised on by it) to any third party for
any reason whatsoever together with any interest ,
penalties, charges, fines or costs directly or indirectly
relating thereto.
10 COVENANTS UP TO COMPLETION
10.1 The Warrantors and the Company covenant with the Subscriber that prior
to Completion except pursuant to this Agreement and without the prior
consent of the Subscriber:
10.1:1 neither the Company nor any of the Subsidiaries shall except
for the purposes of transactions between them:
10.1:1.1 incur any material expenditure on capital account or enter
into any commitments so to do
10.1.1.2 dispose of or agree to dispose of or grant any option in
respect of any part of its assets except in the ordinary
course of trading
10.1.1.3 borrow any money or make any payments out of or drawings on
its bank accounts other than routine payments
10.1:1.4 enter into any unusual or abnormal contract or commitment
or:
10.1:1:4:1 grant or agree to grant any lease or third party right in
respect of the Properties or any of them or assign or agree
to assign or otherwise dispose of the same
10.1:1:4.2 make any loan
10.1:1.4:3 enter into any leasing hire purchase or other agreement or
arrangements for payment on deferred terms
10.1:1.5 declare make or pay any dividend or other distribution or
suffer anything which may render its financial position less
favourable than as at the date of this agreement
10.1:1.6 grant or issue or agree to grant or issue any mortgages
charges debentures or other securities for money or redeem
or agree to redeem any such securities or give or agree to
give any guarantees or indemnities
10.1:1.7 make any change in the terms and conditions of employment or
pension benefits of any of its directors or employees or
employ or terminate (other than for good cause) the
employment of any person
10.1:1.8 knowingly permit any of its insurance's to lapse or do
anything which would make any policy of insurance void or
voidable
<PAGE> 10
10.1:1.9 create issue or grant any option in respect of any class of
share or loan capital or agree so to do
10.1:1.10 in any other way depart from the ordinary course of its
respective day-to-day business either as regards the nature
scope or manner of conducting the same and
10.1:2 Neither of the Warrantors shall:
10.1:2.1 dispose of any interest in their Shares in the Company or
any of them or grant any option over or mortgage charge or
otherwise encumber such shares or any of them
10.1:2.2 permit the Company or any Subsidiaries to pass any
resolution in general meeting except for the purpose of
increasing the share capital of Ian McCall & Company
Limited.
10.2 On the execution of this Agreement the Warrantors shall procure that
the Subscriber agents and representatives are given full access to the
Properties and to the books and records of the Company and Subsidiaries
and the Warrantors shall upon request furnish such information
regarding the businesses and the affairs of the Company and
Subsidiaries as the Subscriber may reasonably require
10.3 On the execution of this Agreement the Warrantors shall procure that
Anil Kumar Mahan is appointed Director of the Company
11 NON-COMPETITION
11.1 The Warrantors covenant with the Subscriber and as a separate covenant
with those subsidiary and associated companies of the Subscriber (as
such expressions are defined in the Companies Act 1985 Section 736 and
ICTA 1988 Section 302) engaged in similar businesses to the businesses
of any group of the Company at the date of this agreement or to that of
the Subscriber (the Subscriber for this purpose contracting on behalf
of itself and as a trustee for such subsidiary or associated companies)
that except as otherwise agreed in writing with the Subscriber:
11.1.1 They and neither of them will not (and will use reasonable
endeavours to procure that no Associate or member of a Group
Company shall) in respect of goods or services of the nature
presently provided in the business carried on at the date of
this agreement by any Group Company or the Company for a
period of 2 years from Completion solicit (either on his or
their own account or as the employee or manager agent
consultant or employee of any other person) the custom of
any person who is or was within a period of 1 month prior to
Completion a customer or client of any Group Company or the
Company in relation to their respective businesses or have
any dealings with any such person.
<PAGE> 11
11.1.2. they and each of them will (and procure that every Associate
or member of the Company's Group will) keep confidential and
not disclose or make use of any financial or other
confidential information or other know-how relating to the
said business including but not limited to any such
information about current or future affairs or plans or about
customers or other persons with whom the Company has or has
had dealings or are or have been concerned in relation to the
said business.
11.1.3 they each of them will not (and will use reasonable endeavours
to procure that no Associate or member of a Group Company
shall) induce or seek to induce away from any Group Company or
the Company with a view to engaging them in competing business
any current director manager employee consultant or
representative employed or engaged by it or them to be engaged
in the business of a Lloyds Insurance Broker and for the
purpose of this clause 'current director manager employee
consultant or representative shall mean any person who is
currently employed by any Group Company at the time of
Completion including all such persons who have given notice to
terminate their employment (whether or not in accordance with
the terms of their employment) and all such persons who should
have given such notice but failed to do so before leaving
their employment.
11.1.4 they and each of them will not (and will use reasonable
endeavours to procure that no Associate or member of a Group
Company) shall own beneficially or otherwise or be interested
in the share capital of any company engaged in any of the said
areas in providing services of the nature presently provided
by the said business of any Group Company or the Company
PROVIDED that nothing contained in this clause shall prevent either of the
Warrantors from at any time holding for investment purposes only any class of
securities for the time being listed or dealt in on any stock exchange where its
interest does not exceed 5% of all the issued securities of that class
11.2 The Warrantors confirm that the covenants contained in Clause 11.1 are
no greater than is reasonable or necessary for the protection of the
interests of the Subscriber and further that such covenants shall be
deemed to be entire separate severable and separately enforceable in
the widest sense from the other parts of Clause 11.1 so that each
covenant shall be deemed to be a separate covenant notwithstanding the
fact that it appears in the same clause sub-clause or sentence or any
other covenant or is imposed by the introduction of a word or phrase
conjunctively with or disjunctively from or alternatively to other
words or phrases.
12 COSTS
12.1 All costs and expenses incurred by or on behalf of the Parties to this
Agreement including all fees of representatives Solicitors and
accountants employed by any of the Parties in connection with the
negotiation preparation and execution of this Agreement shall be borne
soley by the Party who shall have incurred the same and the other
Parties shall have no liability in respect
<PAGE> 12
of such costs and expenses. The fees to be borne by the Company shall
not exceedpound sterling 35,000 any such excess to be paid by the
Warrantors.
13 NOTICES
13.1 Any notice to be given for the purposes of this agreement shall either
be delivered personally or sent by first class recorded delivery post
Datapost or telefax (facsimile transfer)
13.2 The address for service of the Warrantors shall be the address
(or principal address if more than one) of the Company's
Solicitors or such other firm:
13.2.1 with which it may merge or which a majority of its partners
may join or
13.2.2 If at any time it shall not be evident which firm of
solicitors is appointed for the purposes of this sub-clause
the Subscriber may by notice to the Warrantors at their
addresses in this agreement nominate one of their number for
the purposes of receiving and giving notices
13.3 The address for service of the Company and the Subscriber shall be
their respective registered offices for the time being
13.4 A notice shall be deemed to have been served as follows:
13.4.1 if personally delivered at the time of delivery
13.4:2 if sent by recorded delivery post at the expiration of 48
hours after the same was delivered into the custody of the
postal authorities
13.4:3 if sent by Datapost at the expiration of 24 hours after the
same was delivered into the custody of the postal authorities
and
13.4:4 if sent by telefax (facsimile transfer) at the expiration of
12 hours after despatch
13.5 In proving such service it shall be sufficient to prove that personal
delivery was made or that the envelope containing such notice was
properly addressed and delivered into the custody of the postal
authorities as a pre-paid recorded delivery letter or Datapost letter
or that the telefax (facsimile transfer) was properly addressed and
despatched
13.6 Notice given to the Warrantors pursuant to clause 13.2 above shall be
deemed to be notice to both the Warrantors and any notice by the
Warrantors (other than a notice changing their solicitors pursuant to
clause 13.2.2) shall only be given by their solicitors or the
Warrantors nominated by the Subscriber pursuant to clause 13.2.2
14 GOVERNING LAW AND JURISDICTION
<PAGE> 13
14.1 This agreement shall be governed by and construed in all respects in
accordance with English law and the parties irrevocably agree that the
Courts of England and Wales shall have exclusive jurisdiction in
respect of any dispute suit action arbitration or proceedings
('Proceedings') which may arise out of or in connection with this
agreement provided that nothing contained in this agreement shall be
taken to have limited the right of the Subscriber to bring Proceedings
in any other jurisdiction or jurisdictions whether concurrently or not
14.2 The Warrantors expressly and specifically agree and accept that the
terms of this clause are fair and reasonable and appoint the Company's
Solicitor or such other firm as is mentioned in Clause 13.1 for the
time being to accept service on their behalf of any Proceedings which
may be commenced in England and Wales
15 PUBLICITY
No announcement or other disclosure concerning subscription to the
Shares or any ancillary matter shall be made before or after Completion
by the Warrantors (whether to the press employees customers or
suppliers) save in a form agreed between the parties or otherwise as
required by law.
16 GENERAL
16.1 This agreement shall (except for any obligation fully performed prior
to or at the Completion Date) continue in full force and effect after
the Completion Date notwithstanding Completion
16.2 All of the parties to this agreement will after as well as before
Completion Date do all acts and things and sign and execute all deeds
requisite for the purpose of implementing the terms of this Agreement
16.3 Notwithstanding any rule of law or equity to the contrary any release
waiver or compromise or any other arrangement of any kind whatever
which the Subscriber may agree to or effect in relation to one
Warrantor in connection with this agreement and in particular the
Warranties shall not affect the rights and remedies of the Subscriber
as regards any other Warrantor
16.4 If the Shares shall at any time be sold or transferred the benefit of
each of the obligations undertakings indemnities or warranties
undertaken or given by the Warrantors or either of them but subject to
the related obligations of the Subscriber under or pursuant to this
agreement shall be assignable to the purchaser or transferee of the
Shares and such purchaser or transferee shall be entitled to enforce
the same against the Warrantors or any of them as if it were named in
this agreement as the Subscriber
<PAGE> 14
16.5 Save as set out in clause 16.4 none of the rights or obligations under
or pursuant to this agreement may be assigned or transferred to any
other person without the written consent of all the parties
16.6 This agreement contains the whole agreement between the parties
relating to the transactions provided for in this agreement and
supersedes all previous agreements (if any) between such parties in
respect of such matters and each of the parties to this agreement
acknowledges that in agreeing to enter into this agreement it has not
relied on any representations or warranties except for those contained
in this agreement
16.7 If there is any provision of this agreement or of any other agreement
or arrangement of which this agreement forms part which causes or would
cause this agreement or that agreement or arrangement to be subject to
registration pursuant to the Restrictive Trade Practices Act 1976 then
that provision shall not take effect until the day after particulars of
this agreement or of that agreement or arrangement (as the case may be)
have been furnished to the Director General of Fair Trading pursuant to
Section 24 of the said Act
16.8 Time shall be of the essence of this agreement both as regards the
dates and periods specifically mentioned and as to any dates and
periods which may by agreement in writing between or on behalf of the
Warrantors of the Company and the Subscriber be substituted for them
16.9 Any remedy or right conferred upon the Subscriber for breach of this
agreement shall be in addition to and without prejudice to all other
rights and remedies available to it
16.10 No failure or delay by the Subscriber in exercising any claim remedy
right power or privilege under this agreement shall operate as a waiver
nor shall any single or partial exercise of any claim remedy right
power or privilege preclude any further exercise thereof or exercise of
any other claim right power or privilege
IN WITNESS whereof the Parties hereto have executed this Agreement as a
Deed
<PAGE> 15
SCHEDULE 1
The Company
Alterproof Limited
Registered Number: 3689163
Registered Office: 22 - 23 Widegate Street, London E1 7HX
Date of Incorporation: 24TH December 1998
Directors: Terence Roger Hewett
Edward Marcus Rennick
Secretary: Edward Marcus Rennick
Accounting Reference Date: Not Set
Auditors: None
Issued Share Capital: 1,500
Mortgages/Charges...............................................................
Mortgagee ......................................................................
Date Created ...................................................................
Date Registered ................................................................
Amount Secured .................................................................
Property Charged ...............................................................
Grantee ........................................................................
Date Created ...................................................................
Maximum Liability ..............................................................
<PAGE> 16
SCHEDULE 2
THE SUBSIDIARIES
IAN MCCALL HOLDINGS LIMITED
Registered Number: 00955649
Registered Office: 22 - 23 Widegate Street, London E1 7HX
Date of Incorporation: 5th June 1969
Directors: Terence Roger Hewett
Edward Marcus Rennick
David.Pickering
Secretary: Niall Pickup
Accounting Reference Date: 30th April
Auditors: Beavis Walker, 3rd Floor Audrey House,
16/20 Ely Place London EC1N 6SN
Issued Share Capital: Ords 24390
A-Ords 17500
Mortgages/Charges: Fixed Charge
Mortgagee : Royscott Trust Plc
Date Created 28th April 1995
Date Registered ................. 10th May 1995
Amount Secured:
Property Charged
Grantee ........................................................................
Date Created ...................................................................
Maximum Liability ..............................................................
IAN MCCALL & COMPANY LIMITED
Registered Number: 01173982
Registered Office: 22 - 23 Widegate Street, London E1 7HX
Date of Incorporation: 14th June 1974
Directors: Terence Roger Hewett
Edward Marcus Rennick
Niall Pickup
Jon Quaile
Secretary: Edward Marcus Rennick
Accounting Reference Date: 30th April
Auditors: Beavis Walker, 3rd Floor Audrey House,
16/20 Ely
<PAGE> 17
Place London EC1N 6SN
Issued Share Capital: 10,000
Mortgages/Charges.................. Lloyd's Trust Deed
Mortgagee ......................................................................
Date Created ...................................................................
Date Registered ................................................................
Amount Secured .................................................................
Property Charged ...............................................................
Grantee ........................................................................
Date Created ...................................................................
Maximum Liability ..............................................................
IAN MCCALL INTERNATIONAL LIMITED
Registered Number: 01012399
Registered Office: 22 - 23 Widegate Street, London E1 7HX
Date of Incorporation: 26th May 1971
Directors: Terence Roger Hewett
Edward Marcus Rennick
Niall Pickup
Jon Quaile
John Fraser
Pat McKay
Secretary: Niall Pickup
Accounting Reference Date: 30th April
Auditors: Beavis Walker, 3rd Floor Audrey House,
16/20 Ely Place London EC1N 6SN
Issued Share Capital: 700,000
Mortgages/Charges Lloyds Trust Deed
Mortgagee
................................................................................
Date Created ...................................................................
Date Registered ................................................................
Amount Secured .................................................................
Property Charged ...............................................................
Grantee ........................................................................
Date Created ...................................................................
Maximum Liability ..............................................................
IAN MCCALL NORTH AMERICA LIMITED
Registered Number: 01037206
Registered Office: 22 - 23 Widegate Street, London E1 7HX
Date of Incorporation: 6th January 1972
Directors: Terence Roger Hewett
Edward Marcus Rennick
Secretary: Niall Pickup
Accounting Reference Date: 30th April
Auditors: Beavis Walker, 3rd Floor Audrey House,
16/20 Ely
<PAGE> 18
Place London EC1N 6SN
Issued Share Capital: 100
Mortgages/Charges...............................................................
Mortgagee ......................................................................
Date Created ...................................................................
Date Registered ................................................................
Amount Secured .................................................................
Property Charged ...............................................................
Grantee ........................................................................
Date Created ...................................................................
Maximum Liability ..............................................................
IAN MCCALL INSURANCE SERVICES LIMITED
Registered Number: 01379264
Registered Office: 22 - 23 Widegate Street, London E1 7HX
Date of Incorporation: 19th July 1978
Directors: Terence Roger Hewett
Edward Marcus Rennick
Secretary: Niall Pickup
Accounting Reference Date: 30th April
Auditors: Beavis Walker, 3rd Floor Audrey House,
16/20 Ely Place London EC1N 6SN
Issued Share Capital: 1000
Mortgages/Charges...............................................................
Mortgagee ......................................................................
Date Created ...................................................................
Date Registered ................................................................
Amount Secured .................................................................
Property Charged ...............................................................
Grantee ........................................................................
Date Created ...................................................................
Maximum Liability ..............................................................
IAN MCCALL FINANCIAL SERVICES LIMITED
Registered Number: 1226085
Registered Office: 22 - 23 Widegate Street, London E1 7HX
Date of Incorporation: 11th September 1975
Directors: Terence Roger Hewett
Edward Marcus Rennick
Anthony J. Sales
Secretary: Niall Pickup
<PAGE> 19
Accounting Reference Date: 30th April
Auditors: Beavis Walker, 3rd Floor Audrey House,
16/20 Ely Place London EC1N 6SN
Issued Share Capital: 10,000
Mortgages/Charges...............................................................
Mortgagee ......................................................................
Date Created ...................................................................
Date Registered ................................................................
Amount Secured .................................................................
Property Charged ...............................................................
Grantee ........................................................................
Date Created ...................................................................
Maximum Liability ..............................................................
TRIFOLIATE LIMITED
Registered Number: 13313
Registered Office: 26 Cornet Street, St Peter Port, Guernsey,
Channel Islands
Date of Incorporation: 20th September 1984
Directors: Terence Roger Hewett
M.J Savage
M. Bubb
CPM Harris
Secretary: M. Bubb
Accounting Reference Date: 30th April
Auditors: Moore Stephens, Town Mills, Rue Du Pre,
St Peter Port, Guernsey, Channel Islands
Issued Share Capital: 2000
Mortgages/Charges...............................................................
Mortgagee ......................................................................
Date Created ...................................................................
Date Registered ................................................................
Amount Secured .................................................................
Property Charged ...............................................................
Grantee ........................................................................
Date Created ...................................................................
Maximum Liability ..............................................................
<PAGE> 20
SCHEDULE 3
The Properties
1. All that the leasehold premises and buildings known as 22 Widegate
Street in the City of London demised by a lease made on the ninth day
of February 1982 between (1) Peranka Investments Limited and (2) Ian
McCall (Holdings) Limited for a term expiring on the 24th December 2006
and subject to the terms and conditions referred to therein.
2. All that the leasehold premises and buildings known as 2/3 Sandys Row
in the City of London demised by a lease made on the fifth day of April
1982 between (1) Peranka Investments Limited and (2) Winchester Fox &
Co Limited for a term expiring on the 24th December 2006 and subject to
the rents, terms and conditions referred to therein.
<PAGE> 21
SCHEDULE 4
"TAX DEED"
THIS TAX DEED is made the ..........day of 1999
BETWEEN
(1) Terence Roger Hewett of 335 Ware Road, Hertford, Herts SG13 7EL and
Edward Marcus Rennick of 11 Oast Court Yalding, Maidstone, Kent, ME18
6JY ('the Covenantors')
(2) The companies whose names and registered offices are set out in Part I
of the Schedule' ('the Companies') and
(3) Burlington Chamber & James Limited whose registered office is at
Salisbury House, 31 Finsbury Circus, London, EC2M5QQ ('the Subscriber'
which expression shall where the context so admits include its
successors and assigns)
WHEREAS pursuant to an agreement ('the Agreement') dated 1999 the Subscriber has
today subscribed to the issue of 8500 ordinary shares of pound sterling 1 each,
in the capital of the Company comprising 85 percent of its issued share capital
in reliance inter alia upon the indemnities contained in this deed
NOW IT IS AGREED as follows:
1 DEFINITIONS
1.1 In this deed unless the context otherwise requires the following
expressions shall have the following meanings:
1.1:1 'the Accounting Date' means 31st October 1997
1.1:2 'the Audited Accounts' means the audited accounts of the
companies for the period to the Accounting Date
1.1:3 'Business Day' means a day (other than a Saturday) when banks
are open for the transaction of normal banking business in
London
1.1:4 'Claim' means any notice, demand, assessment letter, direction
or order or other document issued or action taken by or on
behalf of any fiscal revenue or other authority or official
anywhere in the world whereby the Company is liable or is
sought to be made liable to make any payment to the authority
or official or other person (whether the same is primarily
payable by the Company and whether or not the Company shall or
may have any right of reimbursement against any other person)
or is denied or sought to be denied any Relief
<PAGE> 22
1.1:5 'the Company' means any or all of the Companies as the case
may be [as a group]
1.1:6 'Event' means any event act transaction omission or occurrence
of whatever nature and (without limitation) completion the
receipt or accrual of any income or any distribution failure
to distribute acquisition disposal transfer payment loan or
advance including the death of any person
1.1:7 'ICTA 1988' means the Income and Corporation Taxes Act 1988
1.1:8 'Relief' means any relief loss allowance credit deduction
exemption set-off or right to repayment claimed or available
in relation to Taxation pursuant to any legislation or
otherwise
1.1:9 'Taxation' means any form of taxation duty levy impost charge
national insurance or other similar contribution or rates
whether created or imposed by any government state federal
local municipal or other body and whether in the United-
Kingdom or elsewhere (including without limitation any
obligation to repay in whole or part any payment for group
relief or for the surrender of advance corporation tax)
including any payment which the Company may be or become bound
to make or obliged to account for to any person in respect of
Taxation and also including any related penalty interest fine
or surcharge
1.2 Other expressions used in this deed shall where the context so admits
have the meanings ascribed to them in the Agreement
1.3 Reference to the result of any Event on or prior to a particular date
shall include the combined result of 2 or more Events the first of
which shall have taken place on or before such date and shall also
include any Event which is deemed for Taxation purposes to have
occurred prior to such date'
1.4 Any reference to a statute or statutory provision shall be construed as
a reference to such provision (including any subordinate legislation
made under it), as modified or re-enacted from time to time
1.5 Headings in this deed are for case of reference only and shall not
affect its construction
2 THE INDEMNITIES
2.1 Subject to clause 2.5 the Covenantors jointly and severally covenant
with the Company and the Subscriber to indemnify them and hold the
Company harmless against any liability:
2.1:1 for Taxation arising as a result of or by reference to any Event on or
before completion
2.1:2 for Taxation which would have been saved but for the loss reduction
modification or cancellation of some Relief in consequence of an Event
occurring on or before completion"
2.1:3 for Taxation which arises in consequence of an Event occurring on or
before completion and which would have been payable but for the
utilisation or set-off of some Relief where the Relief arises in
respect of an Event occurring after completion and
2.1:4 for Taxation arising in consequence of an Event occurring after and for
which the Company is liable as a result of having been a member any
other group for Taxation purposes at any time before completion except
for Taxation arising as a result of the Subscription
<PAGE> 23
2.2 Any Taxation which would have been repaid to the Company but for the
loss reduction set-off or cancellation of any right to repayment of
Taxation in consequence of an Event occurring on or before completion
shall for the purposes of clause 2.1:1 be deemed to be Taxation for
which the Company is liable and which arises in consequence of the
Event
2.3 There shall be treated as an amount of Taxation which would for the
purposes of clause 2.12 have been saved but for the loss reduction
modification or cancellation of some Relief the amount by which the
liability to Taxation would have been reduced by the Relief lost
reduced modified or cancelled applying the relevant rates of Taxation
in force in the period or periods in respect of which the Relief would
have applied or (where the rate has at the relevant time not been
fixed) at the last known rate and assuming that the Company had
sufficient profits against which Relief might be set-off or given
2.4 The Covenantors jointly and severally covenant with the Company to
indemnify the Company on a full indemnity basis and to hold it harmless
against reasonable professional costs or expenses incurred or payable
by the Company in connection with any such liability is referred to in
Clause 2.1
2.5 The indemnity in clause 2.1 shall not apply to any liability to the
extent that:
2.5:1 a specific provision in respect of such liability is made in
the Audited Accounts
2.5:2 such a provision is insufficient by reason only of any change
in the legislation as to taxation or regulations thereunder or
in the interpretation thereof an increase in the rates of
Taxation taking place after completion but with retrospective
effect
2.5:3 the loss occasioned has been recovered pursuant to any claim
under the warranties in the Agreement
2.5:4 the liability arises in consequence of an Event which has
occurred since the Accounting Date in the ordinary course of
the trading activities of the Company and without limitation
for this purpose none of the following shall be regarded as
carried out in the ordinary course of the trading activities
of the Company namely any disposal of an asset other than
stock in trade or surplus fixed assets any Event giving rise
to a liability to Taxation primarily payable by some other
person and Event giving rise to a liability under ICTA 1988
Sections 703-787 in relation to tax avoidance or any event
which involves a distribution within the meaning of ICTA 1988
Section 418 or a loan within ICTA 1988 Section 419
2.6 This Deed is subject to the applicable terms of Clause [8] of this
Agreement in so far as they apply to this Deed
3 CONDUCT OF CLAIMS AND APPEALS
3.1 The appointment by the Covenantors of solicitors or other professional
advisors shall be subject to the approval of the Subscriber (such
approval not to be unreasonably withheld or delayed)
3.2 All communications written or otherwise relating to the Claim received
the Taxation authority shall be immediately copied (if in writing) or
other communicated to the Subscriber and all communications intended to
be made to the relevant Taxation authority shall first be submitted to
the Company c)
<PAGE> 24
Subscriber for approval giving sufficient time for
comments and shall only be transmitted if such approval is given (such
approval not to be unreasonably or delayed)
3.3 The Covenantors shall effect no settlement or compromise of the Claim
or any matter in the conduct of the dispute which is reasonably
considered likely the Subscriber to prejudice the future liability of
the Company respect of Taxation without the prior written approval of
the Company
3.4 If:
3.4:1 Covenantors or the Company have committed any relevant acts or
omissions which constitute fraudulent or negligent conduct or
3.4:2 the resistance of a Claim is at any time not being properly
and effectively conducted the Company or the Subscriber may
without further reference to the admit compromise settle
discharge or otherwise deal with that Claim
4 ST MARGARETS INSURANCE LTD.
4.1 For the avoidance of doubt, the Covenantors indemnify the Company
against any taxation arising out of the sale of St Margarets Insurance
Ltd.
5 DATE FOR PAYMENT AND INTEREST
5.1 The Covenantors shall pay to the Company any amount required to be paid
by them pursuant to Clause 2.1 in cleared funds on or before the
seventh Business Day prior to:
5.1:1 if the Claim involves an actual payment of Taxation the date
on which such Taxation becomes due and payable to the
authority official or person demanding the same
5.1:2 if the Claim involves no actual payment of Taxation then to
the extent that such liability involves the denial or loss or
set-off in whole or in part of any right to repayment of
Taxation the date on which such Taxation would otherwise have
been repaid
5.1:3 if a Claim involves no actual payment of Taxation then to the
extent that such liability involves the denial or loss or
set-off in whole or in part of any Relief other than a right
to repayment of Taxation the date on which the Taxation which
would have been saved but for such denial loss or set-off
becomes (or on the assumption in clause 2.3 would become) due
and payable and
5.1:4 (in the case of a liability under clause 2.1:3) the date
which would have been the due date in clause 4.1:1 but for the
availability of the Relief
5.2 The Covenantors shall pay to the Company any amount required to be paid
by them pursuant to clause 2.4 within 14 days of demand in writing
accompanied by the relevant invoice(s) therefor
5.3 Notice of the amount of the payment required to be made by the
Covenantors under clause 2 and the due date for payment shall be given
in writing by the Company or the Subscriber
5.4 Any sum not paid by the Covenantors on the due date for payment shall
bear interest (which shall accrue from day to day after as well as
before any judgement for the same) at the annual rate of 4% over the
base rate for the time
<PAGE> 25
being of Barclays Bank plc (or if such a rate cannot be ascertained for
any reason at such similar rate as the Subscriber shall reasonably
select) to and including the day of actual payment (or the next
Business Day if the date of actual payment is not a Business Day) of
such sums compounded on the usual quarter days
6 CREDIT FOR RECOVERIES
If the Covenantors shall have paid to the Company an amount in respect of a
claim and subsequent to the making of such payment the Subscriber or the Company
shall receive from a third party a sum referable to the sum paid to the
Subscriber the Subscriber shall immediately repay or procure the repayment to
the Covenantors of so much of the amount paid by the Covenantors to the
Subscriber as shall represent double recovery by the Subscriber but after
deduction of all reasonable professional costs and expenses of recovery less tax
thereon.
7 WAIVER
No delay or omission of the Company or the Subscriber in exercising any right
power or privilege under this deed shall impair the right power or privilege or
be construed as a waiver of the right power or privilege and any single or
partial exercise of any right power or privilege under this deed shall not
preclude the further exercise of any right power or privilege. The rights and
remedies of the Company and the Subscriber Provided in deed are cumulative and
not exclusive of any rights and remedies provided by law
8 ASSIGNMENT
The benefit of this deed may be assigned in whole or in part by the Subscriber
or Company
9 NOTICES
9.1 Any notice to be given under this deed shall either be delivered
personally or by recorded delivery post Datapost or telefax (facsimile
transfer)
9.2 The address for service of the Covenantors shall be the address (or if
more than one) of the Company's Solicitors or such other firm:
9.2:1 with which it may merge or which a majority of its partners
may join
9.2:2 as the Covenantors may by notice in writing to the Subscriber
require. If at any time it shall not be evident which firm of
solicitors is appointed for 1 purposes of this clause the
Subscriber may by notice to the Covenantors at 4 addresses in
the Agreement nominate one of their number for the purposes
receiving and giving notices
9.3 The address for service of the Company and the Subscriber shall be
their registered offices for the time being
9.4 A notice shall be deemed to have been served as follows:
9.4:1 if personally delivered at the time of delivery
9.4:2 if sent by recorded delivery post on the expiry of 48 hours
after the same was delivered into the custody of the postal
authorities
9.4:3 if sent by Datapost on the expiry of 24 hours after the same
was delivered into the custody of the postal authorities and
<PAGE> 26
9.4:4 if sent by telefax (facsimile transfer) on the expiry of 12
hours after was despatched
9.5 In proving such service it shall be sufficient to prove that personal
delivery was made or that the envelope containing such notice was
properly addressed and delivered into the custody of the postal
authorities as a pre-paid recorded delivery letter Datapost letter or
that the telefax (facsimile transfer) was properly addressed and
despatched to the appropriate number
9.6 Notice given to the Covenantors pursuant to clause 9.2 shall be deemed
to notice to all the Covenantors and any notice by the Covenantors
(other than notice changing solicitors pursuant to clause 9.2:2) shall
only be given by Company's Solicitors or the Covenantor nominated by
the Subscriber pursuant to clause 9.2
10 GOVERNING LAW AND JURISDICTION
10.1 This deed shall be governed by and construed in all respects in
accordance with English law and the parties irrevocably agree that the
courts of England and Wales shall have exclusive jurisdiction in
respect of any dispute suit action arbitration proceedings
('Proceedings') which may arise out of or in connection with this deed
save that nothing contained in this deed shall be taken to have limited
the right of the Subscriber or the Company to bring proceedings in any
other jurisdiction jurisdictions whether concurrently or not
10.2 The Covenantors expressly and specifically agree and accept that the
terms of this clause are fair and reasonable and appoint Bignalls
Solicitors or such other firm as mentioned in clause 9.2 for the time
being to accept service on their behalf of any Proceedings which may be
commenced in England and Wales
11 COUNTERPARTS
This deed may be executed in any number of counterparts by the
different parties on separate counterparts each of which shall when
executed and delivered constitute an original but all of which shall
together constitute one and the same instrument
IN WITNESS WHEREOF THE PARTIES HERETO HAVE EXECUTED THESE PRESENTS AS A DEED:
Executed as a Deed by
Alterproof Limited acting by its
Director and Secretary ( or two Directors)
<PAGE> 27
Signed as a Deed by Terence Roger Hewett
in the presence of
Signed as a Deed by Edward Marcus Rennick
in the presence of
Executed as a Deed by Burlington Chamber
and James Limited.
Acting by its Director and Secretary (or two Directors
<PAGE> 28
SCHEDULE 5
Warranties
The Warranties and undertakings referred to in Clause 9 are as follows (except
as provided for in this agreement or fairly and fully disclosed in the
Disclosure Letter):
1 CORPORATE MATTERS
The information contained in Clause 2 to this agreement and Schedules
1, 2 and 3 is true and accurate in all material respects
1.2 The Company has complied in all material respects with all applicable
provisions of the Companies Acts and the European Communities Act 1972
1.3 The register of members and all other statutory books and minute books
of the Company:
1.3:1 have been properly kept
1.3:2 are up-to-date and
1.3:3 contain true full and accurate records of all matters required
to be dealt in them
1.4 The Company has not received any notice of any application or intended
application under the provisions of the Companies Acts for the time
being in force for the rectification of the register of members
1.5 There is attached to the disclosure letter either a copy of the
memorandum and articles association of the Company having attached
thereto copies of all resolutions as are by law required to be attached
together with copies of all resolutions setting rights attached to or
the conditions of issue of any of the share capital of Company. Those
copies are true complete and up-to-date and set out in full rights and
restrictions attaching to the share capital of the Company
1.6 The Company is not a public limited company within the meaning of the
Companies Act 1985 Section 1(3)
1.7 No allotment of share capital in the Company has been made in
contravention the provisions of the Companies Acts
1.8 The Company has not at any time acquired or taken a charge over any of
its shares
1.9 No unlawful distribution has been made by the Company
<PAGE> 29
1.10 The Company has not entered into any arrangement involving the
acquisition from or disposal to its directors or connected persons of
non-cash assets
1.11 The Company has not in contravention of the provisions of the Companies
Acts in relation to any of its directors or any person connected with
such director:
1.11:1 granted any loan or quasi-loan or entered into any guarantee or
credit transaction or
1.11:2 provided any security in connection with any such loan
quasi-loan guarantee or credit transaction
1.12 The Company has properly and punctually made and filed all return
resolutions and documents required by the Companies Acts or any other
legislation to be filed with the registrar of companies or any other
government authority and all such filings were and are correct. In
particular all charges created by or in favour of the Company have (if
appropriate) been registered in accordance with the provisions of the
Companies Acts
1.13 The Company has maintained and continues to maintain readily available
inspection by members of the public all documents required to be made
so by the Companies Acts or other legislation
2 THE SHARES AND SHARE CAPITAL
2.1 Apart from this Agreement there are no agreements or other arrangements
in force which:
2.1:1 provide for the present or future issue allotment or transfer of
or
2.1:2 accord to any person the right (absolute or conditional) to call
for the issue allotment or transfer of any share or loan capital
of the Company (including any option or right of pre-emption or
conversion)
2.2 Since the Accounting Date:
2.2:1 no share or loan capital of the Company has been issued or
allotted to be issued or allotted whether conditionally
or absolute
2.2:2 the Company has not undergone any capital reorganisation or
change in its capital structure
2.2:3 no resolutions have been passed by the Company in general
meeting
2.3 The Company has not at any time:
2.3:1 reduced its share capital
2.3:2 redeemed any share capital
2.3:3 purchased any of its shares
2.4 No share capital shown in the Audited Accounts or in the statutory
books of the Company has been forfeited
2.5 No shares in the capital of the Company have at any time been issued
and no transfers of shares in the capital of the Company have been
registered otherwise than in accordance with the articles of
association of the Company from time to
<PAGE> 30
time in force and the Companies Acts and any necessary governmental
consents have been obtained for each issue and transfer of shares in
the capital of the Company
2.6 The existing issued shares of the Company and the Shares when issued
will together constitute the whole of the issued and allotted share
capital of the Company
2.7 No dividends or other distributions of profits have been declared made
or paid since the Accounting Date and
2.8 All dividends or other distributions of profits declared made or paid
since the date of incorporation of the Company have been declared made
and paid in accordance with law and its articles of association (or
equivalent documents)
3 CAPACITY OF VENDORS
3.1 The Company has taken all corporate (if relevant) and other actions
necessary to enable it to enter into and perform this agreement and has
secured all approvals and consents (governmental or otherwise) required
for the performance of the transactions contemplated by this agreement
3.2 Neither the execution or delivery of this agreement by the Company and
the Warrantors nor Completion of the transactions contemplated is
prohibited by or violates any provision and will not result in a breach
of:
3.2:1 any applicable law rule regulation judgement decree order or
other requirements of the United Kingdom or of any court
authority department commission board bureau or agency or
3.2:2 (to the extent relevant) the memorandum or articles of
association of the Company
3.3 This agreement constitutes and imposes valid legal and binding
obligations on the Company and the Warrantors fully enforceable in
accordance with its terms
3.4 Completion of the transactions contemplated by this agreement by the
Company will not conflict with result in the breach of constitute a
default under or accelerate the performance provided by the terms of
any contract agreement or deed to which the Company may be bound or
affected.
4 ACCOUNTS
4.1 The accounting reference date of the Company for the purpose of the
Companies Act is 30th April
4.2 The Subscriber has been supplied with a true and complete copy of the
Audited Accounts
4.3 The Audited Accounts:
<PAGE> 31
4.3:1 comply with the requirements of the Companies Acts
4.3:2 have been prepared on a consistent basis in accordance with
good accounting practice and comply with all current SSAPs and
financial reporting standards applicable to a United Kingdom
company.
4.3:3 show a true and fair view of the state of affairs for the
financial period ending on the Accounting Date
4.3:4 as at the Accounting Date are not affected by any exceptional
items
4.3:5 make provision for depreciation of the fixed assets of the
Company having regard to their original cost and estimated
life
4.3:6 make due provision for any bad or doubtful debts
4.3:7 include all assets of the Company (except for intangible
assets) as at the Accounting Date
4.4 The Audited Accounts set out correctly all such reserves or provisions
for Taxation as are necessary on the basis of the rates of tax then in
force to cover all Taxation (present and future) in respect of any
transaction occurring prior to the Accounting Date liable to be
assessed on the Company or for which the Company is accountable up to
such date
4.5 All material liabilities or outstanding capital commitments of the
Company as at the Accounting Date have been included in the Audited
Accounts by way of appropriate provision or reserve or disclosure by
way of note.
4.6 No event has occurred during the period covered by the Audited Accounts
or Management Accounts that has resulted in the profits of the Company
in respect of such period being abnormally high or low
4.7 The Management Accounts have been properly and carefully prepared and
materially reflect the results of the Company as at 28th February 1999
4.8 The accounting and other books ledgers financial and other records of
the Company:
4.8:1 are in its possession or under its control
4.8:2 have at all times been properly and fully written up
4.8:3 accurately present and reflect in accordance with generally
accepted accounting principles and standards and the Companies
Acts all of the transactions entered into by the Company or
the transactions to which the Company has been a party and its
financial contractual and trading position and
4.8:4 have been held for the periods required by the Companies Acts
5 BORROWINGS AND LENDING
5.1 The total amount borrowed by the Company from its bankers does not
exceed:
5.1:1 the limit of its facilities as set out in the Disclosure
Letter or as notified to the Purchaser in writing prior to the
date of this agreement or
5.1:2 any limitation on borrowing powers contained in its articles
of association or in any debenture or other agreement binding
on it
<PAGE> 32
5.2 The Company does not have outstanding (whether made by or incurred by
the Company):
5.2:1 any borrowing or indebtedness in the nature of borrowing
including (other than those contained in the Disclosure
Letter) any bank overdrafts liability under acceptances
(otherwise than in respect of normal trade bills) or any
acceptance credit (including any amounts due to any present or
former directors or to members of the Company other than
remuneration accrued due or for reimbursement of business
expenses) or
5.2:2 any Encumbrance guarantee or similar obligation
5.2:3 any arrangements of a type covered by the Companies Act 1985
Sections 320 or 330 or any agreements for such arrangements or
any other transaction in which a director of or a person
connected with the Company has a material interest
5.3 The Company:
5.3:1 has not lent any money which has not been repaid to it
5.3.2 does not own the benefit of any debt (whether present or
future) or the right to receive any money other than debts
accrued to it in the ordinary course of its business
5.4 In relation to such Encumbrances or guarantees (if any) detailed in the
Disclosure Letter or notified to the Subscriber in writing prior to the
date of this and in relation to any bank overdraft borrowings or other
financial facilities available to or financial obligations incurred by
the Company:
5.4:1 the Warrantors have supplied to the Subscriber full details
and true and correct copies of all relevant documents
5.4:2 there has been no material contravention of or non-compliance
with any provision of any such document
5.4:3 no steps for the enforcement of any Encumbrances have been
taken or threatened 5.4:4 there has not been any alteration in
the terms and conditions of any of the arrangements or
facilities all of which are in full force and effect
5.4:5 neither of the Warrantors nor the Company has done anything
whereby the continuance of the arrangements and facilities
might be affected or prejudiced and
5.4:6 none of the arrangements is dependent on the guarantee of or
on any Security provided by a third party
5.5 The Company has not:
5.5:1 factored any of its debts or engaged in financing of a type
which would not require to be shown or reflected in the
Audited Accounts
5.5:2 since the Accounting Date repaid or become liable to repay or
prepaid any loan or loan capital or indebtedness in advance of
its date of maturity
5.5:3 received notice from any lenders of money to it requiring
repayment or intimating enforcement of any Encumbrance and
there are no circumstances likely to give rise to any such
notice
<PAGE> 33
5.6 The Company has not applied for or received any grant award subsidy or
financial assistance from any governmental department or agency
('Governmental Grants')
5.7 The Company has not done or agreed to do anything as a result of which
any of the Governmental Grants is or may be liable to be refunded in
whole or in part
6 ASSETS
6.1 Except for assets disposed of by the Company in the ordinary course of
trading the Company is the owner of and has good marketable title to
all assets included in the Audited Accounts (excluding the Properties)
and all assets acquired since the Accounting Date and not subsequently
disposed of and all such assets are in the Company's possession or
under its control
6.2 There is no Encumbrance or agreement to create an Encumbrance over the
whole or any part of the undertaking property assets goodwill or
uncalled capital of the Company
6.3 The Company has not agreed to acquire any asset (including stock) on
terms that the property in such asset does not pass until full payment
is made or all indebtedness incurred in connection with that
acquisition discharged
6.4 Details of all contracts entered into by the Company for the
maintenance of any of the Company's assets are included in the
Disclosure Letter or have been disclosed to the Subscriber in writing
prior to the date of this agreement
6.5 All assets used in connection with the business of the Company are
owned by it absolutely and are held free from any lease hire purchase
or conditional sale agreement bill of sale or other agreement for
payment on deferred terms
6.6 No circumstance has arisen or is likely to arise in relation to any
asset held by the Company under a lease or similar agreement whereby
the rental payable has been or is likely to be increased and in
particular all such assets have at all relevant times been used for a
qualifying purpose within the meaning of the CAA 1990 Section 39
6.7 The assets owned by the Company (together with assets held under the
hire purchase lease or rental agreements listed in the Disclosure
Letter or which have been disclosed to the Subscriber in writing prior
to the date of this agreement) comprise all assets reasonably necessary
for the continuation of the business of the Company as presently
carried on
6.8 The Subsidiaries are the only subsidiaries of the Company. The shares
in the Subsidiaries are as shown in the Disclosure Letter free from all
Encumbrances and with all attached rights and the Company has no other
interest in any other company and has never owned or held any other
shares or The Company is not the holder or beneficial owner of and has
not agreed to acquire any class of any shares or other securities of
any other corporation (whether incorporated in England and Wales or
elsewhere). The Company does not have any beneficial
<PAGE> 34
interest in the share capital of any corporation (whether incorporated
in England and Wales or elsewhere) which is not a Subsidiary
7 INSURANCES
7.1 There is attached to the disclosure letter a schedule of all the
existing insurance policies held by the Company.
7.2 All premiums due in respect of the Company's insurance policies have
been paid in full
7.3 So far as the Warrantors are aware nothing has been done or has been
omitted to be done which could result in of the Company's insurance
policies being or becoming void or voidable
7.4 The Warrantors are not aware of any circumstances which would or might
entitle the Company to make a claim under any of its insurance policies
or which would or might be required under any of its insurance policies
to be notified to the insurers
8 DISPUTES/LITIGATION
8.1 The Company is not engaged whether as plaintiff or defendant or
otherwise in any litigation criminal or arbitration proceedings before
any court tribunal statutory governmental body department board or
agency and no litigation criminal arbitration proceedings are pending
or threatened by or against the Company and the Warrantors do not know
of any facts which will give rise to the same or which give rise to
proceedings in respect of which the Company would be liable to
indemnify any person concern
8.2 The Company is not subject to any order or judgement given by any court
governmental agency and has not been a party to any undertaking or
assurance given to any court or governmental agency which is still in
force nor are there facts or circumstances which (with or without the
giving of notice or lapse of time) will result in the Company becoming
subject to such an order Judgement or being required to be a party to
any such undertaking or assurance
8.3 Neither of the Warrantors, the Company, the directors of the Company or
any of the Company's employees is the subject of any investigation
inquiry process or request for information in respect of any aspect of
the activities of the Company by any governmental or European
Communities body department board or agency or by any organisation
charged with the supervision of any activities from time to time
engaged in by the Company and no such procedures are pending or
threatened and the Warrantors do not know of any facts which will give
rise to any such procedure
<PAGE> 35
8.4 There is no dispute with any revenue or other official department in
the United Kingdom or elsewhere in relation to the affairs of the
Company and there are no facts, which will give rise to such dispute
8.5 There are no claims pending or threatened or capable of arising against
the Company by any employee or workman or third party in respect of any
accident or injury, which are not fully covered by insurance
8.6 There has been no material default by the Company under any agreement
trust deed or any legally binding arrangement to which the Company is a
party and no threat or claim of such default has been made and is
outstanding which will cause:
8.6:1 any such agreement or arrangement to be terminated or
rescinded by any other party or
8.6:2 their terms to be worsened or the Company prejudiced as a
result of anything done or omitted or permitted to be done by
the Warrantors or the Company
9 COMPLIANCE WITH STATUTES AND LICENCES
9.1 The Company has obtained all licences consents approvals permissions
permits test and other certificates and authorities (public or private)
necessary for the carrying on of its business in the places and in the
manner in which such business is now carried on all of which are valid
and subsisting and the Warrantors know of no reason facts or
circumstances which (with or without the giving of notice or lapse of
time) will give rise to any reason why any of them should be suspended
cancelled revoked or not renewed
9.2 The Company has established procedures under and has complied with all
requirements from time to time in force under the Health and Safety at
Work etc Act 1974 and all regulations made under that Act
9.3 The Company has conducted and is conducting its business in all
respects in accordance with all applicable laws and regulations
(whether of the United Kingdom or elsewhere)
9.4 The Company has complied in all material respects with the provisions
of the Data Protection Act 1998 and all regulations made under that Act
and has established procedures to ensure continued compliance with all
such legislation
9.5 The Company has not received any notice from either the Data Protection
Registrar subject alleging non-compliance with the data protection
principles or prohibiting the transfer of data nor has any individual
claimed or will have the right to claim compensation from the Company
under the Data Protection Act 1998 for loss or unauthorised disclosure
of data
10 TRADING POSITION
<PAGE> 36
10.1 Since the Accounting Date:
10.1:1 the Company has not disposed of any material assets or assumed
or incurred any material outstanding capital commitment or any
material liabilities (whether actual or contingent) otherwise
than in the ordinary course of carrying on its business
10.1.2 the business of the Company has been carried on in the
ordinary and usual course of business without interruption and
so as to maintain the same as a going concern.
10.2 The Company's business has not been materially and adversely affected
by the loss of any important customer or source of supply
10.3 There has been no major change in the nature or conduct of the business
carried on by the Company during the 3 years prior to the date of this
agreement
10.4 The Company is entitled to carry on the business now carried on by it
and on by it during the 3 years prior to the date of this agreement
without any conflict with any valid right of any other person firm or
company
10.5 No substantial part of the business of the Company is carried on or is
required to be carried on with the agreement or consent of a third
party nor is there any agreement which significantly restricts the
field in which the Company carries on the business
10.6 The Company has not committed or omitted to do any act or thing which
will give rise to any fine or penalty nor is the Company party to any
agreement practice or arrangement which in whole or in part:
10.6:1 contravenes the provisions of the Trade Descriptions Acts
1968 and 1972
10.6:2 would or might result in a reference of a consumer trade
practice (within the meaning of the Fair Trading Act 1973 or
be liable to reference to the Consumer Protection Advisory
Committee under Part 11 of that Act or which is the subject
matter of a report to or of an order by the Secretary of State
under that Act
10.6:3 contravenes or is invalidated (in whole or in part) by or is
subject to registration under the Restrictive Trade Practices
Acts 1976 and 1977
10.6:4 contravenes any provisions of the EEC Treaty or any regulation
or other enactment made under that Treaty or
10.6:5 contravenes any other anti-trust anti-monopoly or anti-cartel
legislation or regulations
10.7 The Company has not engaged in any course of conduct which amounts to
anti-competitive practice within the meaning of the competition on Act
1976 or which is unlawful by virtue of the Resale Prices Act 1976
10.8 No agreement arrangement or other practice of the Company is or has
been the subject of an investigation report or decision by the Director
General of Fair Trading the Monopolies and Mergers Commission or the
Commission of the European Communities or has been the subject of a
judgement from the Restrictive Practices Court nor has the Company
received any process notice
<PAGE> 37
communication or request for information by or on behalf of the
Director General of Fair Trading the Monopolies and Mergers Commission
the Secretary of State for Trade and Industry or the Commission of the
European Communities relating to any aspect of the business of the
Company
11 CONTRACTS AND ARRANGEMENTS
11. 1 There are not now outstanding with respect to the Company or to which
the Company is a party:
11.1:1 any long term unusual or onerous contract or any contract not
made in the ordinary course of business
11.1:2 any joint venture consortium or other partnership arrangement
or agreement
11.1:3 any arrangements contractual or otherwise between the Company
and any third party which will or may in accordance with its
terms be terminated as a result of any change in the central
management or shareholders of the Company or of the
subscription provided for in this agreement or of compliance
with any other provision of this agreement
11.1:4 any arrangements contractual or otherwise which constitute or
involve breaches or violations of or default with respect to
the requirements or conditions of any statute treaty
regulation or bye-law or other obligation of the United
Kingdom or any foreign country relating to the Company or the
carrying on of its business
11.1:5 any contract for services (other than in the ordinary course
of business)
11.1:6 any power of attorney or contract of agency
11.1:7 (excepting guarantees or warranties implied by law with
respect to goods or services supplied or performed by the
Company in the ordinary course of business) any guarantee
warranty undertaking or contract for indemnity or for
suretyship under which the Company is under a prospective or
contingent liability
11.1:8 any agreement or arrangement entered into by the Company
otherwise than by way of bargain at arms length or on arms
length terms and in the ordinary course of the Company's
business
11.1:9 any contracts or arrangements of whatever nature binding on
the Company which cannot be terminated without giving rise to
any liabilities whatever on the part of the Company by the
Company giving 3 months' notice or less
11.1:10 any agreement containing covenants limiting or excluding its
right to do business and/or compete in any area or any field
or with any person firm or company
11.1:11 any agreement or arrangement which the Warrantors or the
Company know or believe to be invalid or in respect of which
there are grounds for its rescission avoidance or repudiation
(whether Company or any other party)
<PAGE> 38
11.2 The Warrantors have no knowledge information or belief that since the
Accounting Date or after Completion as a result of the proposed
subscription to the shares by the Subscriber
11.2:1 any material supplier of the Company has ceased or will cease
supplying or may substantially reduce its supplies to the
Company or
11.2:2 any material customer of the Company has terminated or will
terminate contract the Company or cease or materially reduce
its business with it
11.3 Except in the ordinary course of business no offer tender or the like
given or made by the Company on or before the of this agreement and
still outstanding is capable of giving rise to a contract merely a by a
unilateral act of a third party
12 INTELLECTUAL PROPERTY RIGHTS
12.1 All patents, trade marks, registered designs, design rights,
applications for an the foregoing, copyrights trade or business names,
inventions, processes, how and other industrial property rights
('Intellectual Property Rights') purported to be used or required, by
the Company are in full force and effect and are beneficially owned by
the Company free from Encumbrances
12.2 There are no Intellectual Property Rights owned or used by the Company
capable of registration which have not been so registered or in respect
of which application for registration has not been made and is pending
12.3 None of the Intellectual Property Rights owned or used by the Company
subject of any claim opposition attack assertion or other arrangement
nature which does or may impinge upon their use validity enforceability
ownership by the Company and there are no grounds or other which may
give rise to the same
12.4 No licences or registered user or other rights have been, granted or
agreed to be granted to any third party in respect of such Intellectual
Property Rights
12.5 No disclosure has been made to any person other than the Purchaser of
any of the industrial know-how or the financial or trade secrets of the
Company except properly and in the ordinary course of business and on
the footing that such disclosure is to be treated as being of a
confidential nature
12.6 No act has been done or has been omitted to be done to entitle any
authority or person to cancel forfeit or modify any Intellectual
Property Rights
12.7 The Company does not carry on business under any name other than the
name under which the Company has been incorporated and the business
names (names)
12.8 The Company has complied in all respects with the requirements of the
Companies Acts with regard to company names and business names and such
names do not infringe the rights of any third party
<PAGE> 39
13 EMPLOYEES
13.1 The replies to the employment inquiries attached to the Disclosure
Letter or given by the Warrantors to the Subscriber in writing prior to
the date of this agreement ('the Employment Replies') are true and
accurate in all material respects
13.2 Full particulars of the names and addresses dates of birth dates of
commencement of employment or appointment to office salaries and terms
and conditions of employment of all of the employees and officers of
the Company including all remuneration payable participation in benefit
schemes such as medical expenses permanent health insurance pension
company car etc any profit sharing commission incentive or
discretionary bonus arrangements to which the Company is a party
(whether legally binding on the Company or not) and all other benefits
provided which the Company is bound to provide (whether now or in the
future) to each officer and employee of the Company are set out in the
Employment Replies
13.3 There are not now outstanding:
13.3:1 any service agreements or contracts between the Company and
any of its directors officers executives or employees which
cannot be terminated by the Company by 12 weeks' notice or
less without giving rise to a claim for damages or
compensation (other than a statutory redundancy payment)
13.3:2 any recognition or other agreement or arrangement (whether or
not legally binding) between the Company and any trade union
or other body representing its employees
13.3:3 any liabilities of the Company for industrial training levy or
for any other, statutory or governmental levy or charge
13.4 The Warrantors are not aware of any outstanding claim against the
Company by any person who is now or has been an officer or employee of
the Company and no disputes have during the preceding 3 years arisen
between the Company and any material number or category of employees
and there are no present circumstances which will give rise to any such
dispute
13.5 The Company has no outstanding claims from any of its employees under
the Employment Rights Act 1996
13.6 Since the Management Account Date there have been no changes in the
rate of remuneration or the endowment or pension benefits of any
director or employee or in the terms of employment of any officer or
senior executive. No negotiations for any increase in the remuneration
or benefits of any officer or employee of the Company are current
13.7 None of the following are in existence and there are no proposals for
any of the following:
<PAGE> 40
13.7:1 profit sharing schemes
13.7:2 share option schemes
13.7:3 phantom share option schemes
13.7:4 profit related pay schemes
13.7:5 employee share ownership trusts under the Finance Act 1989
13.7:6 employee benefit trusts
14 PENSIONS
14.1 General
Particulars of all pension schemes have been disclosed including true
and complete copies of the following in relation to each pension
scheme:
Trust deeds and rules and all other deeds (currently in force);
Booklets and any subsequent announcements to scheme members ( currently
in force);
Latest actuarial valuation;
Details of members, pensioners and deferred pensioners (including dates
of birth, sex, entry, and current pay and name employer);
Details of prospective members;
Details of contributions by members and the employer in the last five
years and schedule of contributions;
List of investments and statement of investment principles;
Investment agreements;
Scheme accounts and trustee reports;
Evidence of Inland Revenue Approval;
Contracting - out certificate;
SSAP 24 disclosures in the employer's accounts for the last three
years;
Insurance policies and certificates and details of premiums paid;
Details of ex - gratia pensions and any discretionary increases in
benefits given in the last five years.
Other than the disclosed pension schemes there are no other retirement
death or disability benefit schemes for current or past directors or
employees of the Company.
14.2 BENEFITS DISCRETION AND FUNDING
<PAGE> 41
In relation to each pension scheme:
14.2.1 no power to augment benefits has been exercised;
14.2.2 no discretion has been exercised to admit an employee to membership of
the pension scheme who would not otherwise be eligible;
14.2.3 no discretion has been exercised to provide a benefit which would not
otherwise be provided;
14.2.4 all benefits (other than a refund of contributions with interest where
appropriate) payable under the pension scheme on the death of a member
while in an employment to which the pension scheme relates or during a
period of sickness or disability of a member are fully insured. The
insurance is effected by a policy with an insurance company of good
repute and each member has been covered for insurance by the insurance
company at its normal rates and on its normal terms for persons in good
health.
14.2.5 There are no contributions to the pension scheme which are due but
unpaid and have remained unpaid for more than one month and none of the
participating companies or members is enjoying a contribution holiday.
14.2.6 No take - over protection provision will be triggered by Completion;
and
14.2.7 The pension scheme is sufficiently funded on the basis of the
assumptions used in the last actuarial valuation (or if there has been
no actuarial valuation of the pension scheme, on the basis of actuarial
methods and assumptions which are consistent with the requirements of
paragraph 79 of Statement of Standard Accounting Practice No.24 ) to
secure at least the benefits accrued to Completion (other than those
which are insured). For this purpose if any benefits under the Pension
scheme will accrue or continue to accrue after Completion accrued to
completion (assuming the pension scheme continues in existence) the
proportion of the benefit which will be deemed to have accrued to
Completion is the proportion of the prospective benefit which the
period of pensionable service to Completion bears to the aggregate of
that period and the period of prospective pensionable service after
Completion on the assumption that the employee remains in the
employment to which the pension scheme relate until the pension scheme'
normal retirement date. If the amount of nay amount of any benefit
under the pension scheme is determined by reference to the final
remuneration at or averaged over a period ending on a date later than
the date of Completion, the amount of the benefit will be determined by
reference to final remuneration at or averaged over the same period
before completion. This will be increased in respect of the period from
Completion to the pension scheme's normal retirement date at a rate
which is consistent with the assumption that the employee remains in
the employment to which the pension scheme relates until the pension
scheme's normal retirement date.
14.3 ADMINISTRATION
Each pension scheme:
14.3.1 is either approved by the Commissioners of Inland Revenue for the
purposes of Chapter I of Part XIV of the Income and Corporation Taxes
Act 1988 or is a
<PAGE> 42
scheme under which the benefits provided or to be provided are
consistent with the approval of the scheme by the Commissioners of
Inland Revenue for such purposes and is a scheme in respect of which an
application of such approval has been made and has not been withdrawn
or refused and the Commissioners of Inland Revenue has not given notice
to the applicant that they believe the application has been dropped.
14.3.2 is established under irrevocable trusts
14.3.3 has been administered in accordance with : the preservation
requirements under the Pension Scheme Act 1993
the equal access requirements of the Pensions Act 1995
the contracting out requirements of the Pension Scheme Act 1993 ( where
applicable): and
all other applicable laws, regulations and requirements of any
component governmental body or regulatory authority and the trusts and
rules of the pension scheme; and
14.3.4 is a scheme in respect of which all actuarial, consultancy, legal and
other fees, charges or expenses have been paid and for which no
services have been provided for which an account or invoice has not
been rendered.
14.4 CLAIMS
No claim has been threatened or made or litigation commenced against
the trustees or administrator of any pension scheme or against the
Company of any other person whom the Company is or maybe liable to
indemnify or compensate in respect of any matter arising out of or in
connection with any pension scheme. So far as the Company is aware
there are no circumstances which may give rise to any such claim or
litigation.
14.5 AMENDMENTS
No amendments shall be made to any of the pension schemes from the date
of this Agreement to Completion ( except an amendment made solely to
comply with legislative requirements) without the prior consent in
writing of the Purchaser which is not to be unreasonably withheld.
15 FINANCIAL SERVICES
1. The Disclosure letter sets out accurately all the kinds of investment
business within the meaning of the Financial Services Act 1986 ("FSA")
and any other business activities in which McCall Financial Services
Limited ("McCall") is carrying on or engaged in the United Kingdom.
<PAGE> 43
2. In relation to all investment business (within the meaning of the FSA)
which McCall carries on in the United Kingdom, McCall is an authorised
person within the meaning of FSA.
3. The business of McCall has at all times been carried out in all
material respects in accordance with the provisions of the FSA and in
accordance with the rules of the Personal Investment Authority ("PIA"),
its predecessor the Financial Intermediaries, Managers and Brokers
Regulatory Association ("FIMBRA") or any other regulatory organisation.
4. There are in respect of all the past and present clients of McCall
valid client agreements and other client documentation as required
under the Rules of the PIA.
5. Save as disclosed in the Disclosure Letter, no complaints have been
made to McCall regarding its compliance with the rules of PIA or FIMBRA
and there are no matters currently in existence which would or may be
likely to give rise to any such complaint.
6. No government department with responsibility for the enforcement of
powers under the FSA nor any body to which any such powers have been
delegated has
a) exercised any of its powers under the FSA and/or any rules or
regulations made thereunder in relation to the business or
affairs of McCall (other than any such powers relating to the
conferral of authorised status upon McCall for the purpose of
the FSA or powers exercised in the course of regular
monitoring of any correspondence with McCall); or
b) given formal notice or informal indication that it is or may
be considering such action.
7. Neither McCall nor any of its directors or employees are in breach of
any of the rules of the PIA which in each case has had or would have a
materially adverse effect on McCall.
8. McCall has remedied to the satisfaction of the PIA all breaches of the
rules of the PIA (and its predecessor, FIMBRA) which have been notified
to it in writing by the PIA (or FIMBRA as the case may be) and McCall
has taken all reasonable and appropriate action to avoid a repetition
of those breaches in the future.
9. McCall has promptly complied with and / or responded to all requests
and recommendations concerning the manner in which it carries on its
business which have from time to time been made to it by the PIA (or
FIMBRA) or the Financial Services Authority.
10. McCall has at all times maintained the level of financial resources
required by the PIA or its predecessor FIMBRA and has never been the
subject of a special financial resource requirement.
<PAGE> 44
11.
a) McCall has at all times maintained adequate professional
indemnity insurance which in respect of the amount insured and
the scope of the policy is not less than that is normally
found in businesses of this type and size.
b) full particulars of the professional indemnity insurance
maintained by McCall and currently in force are contained in
the Disclosure Letter;
c) the premium due in respect of the professional indemnity
insurance policy has been paid;
d) all other conditions of the policy have been performed and
observed and nothing has been done or been omitted to be done
whereby the professional indemnity insurance has or may become
void or voidable;
e) the professional indemnity insurance is not subject to any
special or unusual terms or to the payment of any premium in
excess of the usual rate;
f) no claim is outstanding under any policy of the professional
indemnity insurance; and
g) there are no circumstances which will or may entitle a claim
to be made under any professional indemnity insurance policy
or which are required to be notified to the insurers in
accordance with the terms of any such policy.
12. McCall does not and never has held clients money of any description .
13. To the extent that McCall has had custody of client documentation it
has been properly authorised so to do and has done so in accordance
with the rules of PIA ( and previously, the rules of FIMBRA).
14. McCall does not and never offered to sell or dealt in any investments
(as defined in the FSA) as principle and has only carried on business
as an intermediary.
15. McCall has no unsatisfied liability in respect of the claw back of
commissions and has complied in all respects at all times with the
commission arrangements stipulated by the providers of investment
products which it has recommended to and sold to its clients.
16. Neither the Company nor any subsidiary or subsidiary undertaking (each
as defined in the Companies Act 1985 as amended) has any liability,
whether actual or contingent, in respect of McCall and, without
prejudice, to the generality of the foregoing;
<PAGE> 45
(a) none of such companies has given any guarantee, security,
indemnity or collateral with regard to or for the benefit of
McCall; and
(b) none of such companies has entered into any arrangement in the
nature of a partnership, consortium, joint venture or similar
with McCall; and
(c) none of such companies is a part of any group with McCall for
purposes of any taxation.
16 THE PROPERTIES
16.1 The Properties comprise all the freehold and leasehold properties owned
by the Company or occupied by it under licence or in which the Company
has any other interest
16.2 The Company has a good marketable title to each of the Properties
16.3 The information contained in Schedule 3 as to the tenure of each of the
Properties the principal terms of the leases or licences held by the
Company and the principal terms of the tenancies or licences subject to
which the Properties are held is true and accurate in all respects
16.4 Each of the Properties and their title deeds are free from any mortgage
charge rent charge lien encumbrance or other third party right whether
in the nature of security or otherwise
16.5 There is no option or agreement for sale mortgage charge (whether
specific or floating) lien lease agreement for lease condition
restrictive covenant or any other encumbrance in respect of the
Properties or any part of them (except as set out in Schedule 3) and
the Properties are not subject to the payment of any outgoings (except
the usual rents rates and taxes) nor are there any persons in unlawful
possession or occupation of or who have or claim any rights or
easements of any kind in respect of the Properties or any part of them
adverse to the estate interest right or title of the Company other than
the Landlords or superior Landlords of the Properties
16.6 The Company in whom title is vested:
16.6:1 has paid all rent insurance service charges and other
outgoings that are due to date in respect of the leasehold
Properties and
16.6:2 has received no notice of any breach of conditions agreements
statutory requirements planning consents by laws orders and
regulations effecting the Properties
16.7 No notices have been received by the Company in respect of the
state of repair and condition of the Properties
16.8 In respect of all buildings comprised in the Properties to which any
enactment regulation or order relating to protection against or means
of escape from fire applies the Company has received no notice to the
effect that any requirements
<PAGE> 46
of such enactment regulation or order have not been complied with to
the satisfaction of the district surveyor and other appropriate
officer and no order prohibiting the occupation of a building or part
of it has been made under such enactment regulation or order and issue
of such notices or orders has been intimated to the Company
16.9 Since the Accounting Date the Company has not acquired or disposed of
any land or buildings or any estate interest right or title in any land
or buildings
16.10 The Company has at all times complied with the Factories Act 1961 the
Public Health Acts 1875 to 1961 the Offices Shops and Railway Premises
Act 1963 the Control of Pollution Act 1974 and the Health and Safety at
Work etc Act 1974
16.12 The Company has not at any time assigned or otherwise disposed any
leasehold property of which it was first or subsequent lessee
16.13 All capital allowances rating relief's and other benefits received by
the Company in i respect of the Properties were granted pursuant to a
proper and valid claim and leave no scope for demand for recovery from
the Company
17 YEAR 2000 COMPLIANCE
17.1 To the best of the Warrantors knowledge the Company has met all the
requirements of the year 2000 Programme of the Society of Lloyds
18 TAXATION
18.1 General
18.1.1 All returns computations and payments which should be or
should have made by the Company for any fiscal purpose have
been prepared on a proper basis and submitted within the
prescribed time limits and are up-to-date and correct and none
of them is now the subject or likely to be the subject of any
dispute Inland Revenue and will not give rise to any
disallowance of relief deduction or credit or any assessment
(including any claim by the Inland for any penalty interest
surcharge or fine) and no taxation authority has or indicated
to the Company or the Warrantors that it intends to
investigate the tax affairs of the Company
18.1:2 All Taxation liabilities of the Company including contingent
and deferred liabilities as at the Accounting Date are fully
provided for in the Audited Accounts
18.1:3 The books and records of the Company are up-to-date and
contain sufficient detail in appropriate form to enable the
Taxation liability of the Company to be established and to
determine the Tax consequences which would arise on any
disposal or realisation of any asset owned at the Accounting
Date or acquired since that date but before the date of this
Agreement
<PAGE> 47
18.1.4 No event has occurred which will result in the Company
becoming liable to pay or to bear any Taxation which is
primarily or directly chargeable against or attributable to
any person firm or company other than the Company
18.1:5 The execution or completion of this agreement will not result
in any profit or gain being deemed to accrue to the Company
for Taxation purposes. As at the Accounting Date the Company
had available for setting off against future income profits
or gains relief's aggregating in total as detailed in the
Disclosure Letter against the name of the Company or the
amount notified to the purchaser in writing prior to the date
of this agreement
18.1:6 All rents interest annual payments and other sums of an
income nature or in respect of the 3 years ending on the
Accounting Date or payable by the Company or which the
Company is under an obligation to pay in the future and
wholly allowable as deductions or charges in computing
profits for the purposes of corporation tax
18.1:7 The Company has not made any payment to or provided any
benefit for any officer or employee during the 3 years ended
on the Accounting Date which is not allowable as a deduction
in calculating the profits of the Company for Taxation
purposes in the accounting period in which it was paid
18.1:8 Since the Accounting Date the Company has not been involved
in any transaction which has given or may give rise to a
liability to Taxation on the Company (or would have given or
might give rise to such a liability but for the availability
of any relief allowance deduction or credit) other than
corporation tax on normal trading income of the Company (and
not chargeable gains or deemed income) arising from
transactions entered into in the ordinary course of business
18.1:9 Since the date of the last accounts which have, been agreed
with the Inland Revenue the Company has not been engaged in
any transaction or arrangement in respect of which there may
be substituted for the consideration given or received by the
Company a different consideration for Taxation purposes
18.1:10 The Company has not during the 3 years ending on the
Accounting Date made any claim under:
18.1:10.1 ICTA 1988 Section 242 (set-off of losses etc against surplus
franked investment income) or
18.1:10.2 ICTA 1988 Section 584 (relief for unremittable overseas
income)
18.2 PAYE and other withholding tax
18.2:1 All income tax under the PAYE system and payments due in
respect of employees contributions to National Insurance have
been deducted from all payments made or treated as made by
the Company and (together with any employer' contribution)
have been duly paid by the Company to the Inland Revenue in
the appropriate manner and the Company has complied with all
its reporting obligations in connection with the benefits
provided for employees and directors of the Company.
18.2:2 All payments by the Company which ought to have been made
under deduction of Tax have been so made and the Company has
(if required by law to do so) accounted to the Inland Revenue
for the Tax so
<PAGE> 48
deducted including in particular any under the tax deduction
scheme contained in ICTA 1988 Part XIII Chapter IV
(sub-contractors in the construction industry)
18.3 FINANCING
18.3.1 The Company has not at any time after 5 April 1965 repaid or
agreed to repay or redeemed or agreed to redeem or purchased
or agreed to purchase any shares of any class of its issued
share capital
18.3.2 The Company has not at any time after 5 April 1965 capitalised
or agreed to capitalise in the form of shares or debentures
any profits or reserves of any class or description or passed
or agreed to pass any resolution to do so
18.3.3 No securities (within the meaning of ICTA 1988 Section 254(1))
issued by the Company and remaining in issue at the date of
this agreement were issued in circumstances such that the
interest payable on them falls to be treated as a distribution
under ICTA 1988 Section 209(2)(d) and (e)
18.3:4 The Company has not made or received any distribution which is
an exempt distribution within ICTA 1988 Sections 213-218
(demergers
18.3.5 The Company has not received any capital distribution to which
the provisions of ICTA 1988 Section 346 (capital distribution
of chargeable gains recovery of from shareholders) could apply
18.3:6 The Company has not issued any shares to which the provisions
of ICTA Sections 249-251and 254 (scrip dividends) could apply
nor does the own any such shares
18.3.7 The Company has not since the Accounting Date made any payment
which will be treated as a distribution for Taxation purposes
18.4 GROUPS
The Disclosure Letter contains particulars of elections made
by the Company under ICTA 1988 Section 247 (group dividends
and interest) all such elections are now in force or The
Company has not made or to make any elections under ICTA 1988
Section 247 (group dividends and the Company has not paid any
dividend without paying Advance Corporation Tax or made any
payment without deduction of income tax in the specified in
Section 247(4) of that Act
18.4:2 The Disclosure Letter contains particulars of all arrangements
and agreements relating to group relief (as defined by ICTA
1988 Section 402) to which the Company is or has been or
becomes before Completion a party :
18.4:2.1 all claims by the Company for group relief were when made and
are now valid and have been or will be allowed by way of
relief from, corporation tax
18.4:2.2 the Company has not made nor is liable to make nor will before
Completion become liable to make any payments under any such
arrangement or agreement save in consideration for the
surrender of group relief allowable to the Company by way of
relief from tax and
18.4:2.3 the Company has received all payments due to it under any such
arrangement for surrender of group relief made by it.
<PAGE> 49
18.4:3 The Warrantors have disclosed to the purchaser in writing prior to the
date of this agreement particulars of all arrangements and agreements
to which the Company is or has been or will before Completion become a
party relating to the surrender of advance corporation tax made or
received by the Company under ICTA 1988 Section 240 and:
18.4:3.1 the Company has not paid nor is liable to pay for the benefit of any
Advance Corporation Tax save in consideration for such surrender has
been or will be set-off against the Company's liability to corporation
tax and
18.4:3.2 the Company has received all payments due to it under any such
arrangement or agreement for all surrenders of advance corporation tax
made by it or the Company has neither made nor received nor purported
to make or receive any surrender of the benefit of advance corporation
tax under ICTA 1988 Section
18.4.4 No shares owned by the Company are held as trading stock
18.5 Close company provisions
The Company, is not nor has it been in respect of any accounting period
ended within the 6 years prior to the Accounting Date a close company
within the meaning of ICTA 1988 Section 414
18.6 Capital gains tax
18.6:1 If each of the capital assets of the Company were disposed of for a
consideration equal to the book value of that asset in or adopted for
the purpose of the Audited Accounts no liability to corporation tax on
chargeable gains would arise by reason of any such disposal
18.6.2 Full details of all assets currently owned by the Company in relation
to which any charge to Tax might at any time within the next 6 years
arise under TWA 1992 Sections 178-181 (company ceasing to be member of
a group): 17.6:2.1 on the sale of the Company pursuant to this
agreement or 17.62.2 on the sale of any company which is at the date of
this agreement a subsidiary of the Company are or have (together with
the current allowable expenditure in relation to each of such assets)
18.6:3 The Company does not own any shares or securities acquired as a 'new
holding' under the provisions of TCGA 1992 Sections 126-130 as extended
by TCGA 1992 Sections 132, 135 and 136
18.6.4 The Company has not made any such election as is referred to in TCGA
1992 Section 35 (5) (31st March 1982 rebasing) regulations made or
imposed under it and any other statutes or other provisions relating to
VAT
18.6.5 The Company has not engaged in any transactions which may hereafter
result in an adjustment being made under the TCGA 1992 Sections
29,30,31,32,33, or 34 of the consideration received on any future
disposal (value shifting)
<PAGE> 50
18.6.6 On any Disposal by the Company of any Shares any of its Subsidiaries
the relevant allowable base cost for capital gains purposes will not be
reduced by virtue of TCGA 1992 Sections 182-184 (removal or restriction
of indexation allowance in certain circumstances)
18.6.7 The Company has not made a claim or election under any of the
following:
18.6.7.1 TCGA 1992 Section 279 (Foreign assets delayed remittance) 23 (capital
sums compensation and insurance money) 24 (assets lost or destroyed or
whose value becomes negligible) or 48 (consideration due after time of
disposal)
18.6.7.2 TCGA 1992 Section 242 (small part disposals) 243 (disposal of authority
with compulsory purchase powers)244 ( part disposal consideration
exceeding allowable expenditure) 247 (roll-over on compulsory
acquisition) 152 or 153 ( roll - over on replacement of business
assets) or 161 (3) (appropriation to trading stock) nor has any claim
under those sections been made by any other Company so as to affect the
base cost of any of the Company's assets for the purpose of calculating
changeable gains
18.6.8 The Company is not entitled to any capital loss to which TCGA 1992
Section 18(3) applies (transactions between connected persons)
18.6.9 The Company has not acquired benefits under any policy of assurance
otherwise than as original beneficial owner.
18.6.10 No gain chargeable corporation tax will accrue to the Company on the
disposal of any debt owing to the Company.
18.7 CAPITAL ALLOWANCES
18.7.1 The book value of each of the assets of the Company in or adopted for
the purpose of the Audited Accounts does not exceed the written down
value of such asset for the purposes of the CAA 1990
18.7.1.1 No restrictions under the CAA 1990 Sections 5,75, and 76 are
applicable. No balancing charge pursuant to the CAA 1990 Sections 24
and 34-36 or otherwise will be made on the Company on any disposal of
any or all such assets for a consideration equal to or less than the
value of such asset or assets in the Audited Accounts.
18.7.1.2 No transaction has been entered into by virtue of which the CAA 1990
Sections 75 or 157 is applicable
18.7.2 None of the assets for which a capital allowance has been or is capable
of being made to the Company has been disposed of or ceased to be used
for the purpose of its trade since the Accounting Date
18.7.3 None of the Assets expenditure on which has qualified for a capital
allowance under the CAA 1990 Part I Chapters I or II (industrial
buildings) has at any time since such expenditure was incurred been
used otherwise than as an industrial building or structure as defined
in the CAA 1999 Section 18.
18.8 VALUE ADDED TAX
<PAGE> 51
18.8.1 For the purposes of this paragraph 'the VAT legislation' means VATA
1983 and all regulations made or imposed under it and any other
statutes or other provisions relating to VAT.
18.8.2 The Company is registered as a taxable person for the purposes of the
VAT legislation
18.8.3 The Company has complied in all respects with the VAT legislation and
has made and maintained full complete correct and up-to-date records
invoices and other documents appropriate or requisite for the purposes
of such legislation
18.8.4 The Company is not in arrears with any payment or returns due under the
VAT legislation and has not in the past 3 years been in default in
respect of any accounting period as the terms 'default' and 'accounting
period' are used in the Finance Act 1985 Section 19(1) (the default
surcharge) nor has it received any warning within Section 21 (1A) of
that Act
18.8.5 The Company is not liable to any abnormal or non-routine payment of VAT
or to any forfeiture or penalty or to the operation of any penal
provision and has not been required by the Commissioners of Customs &
Excise to give security
18:8.6 The Company is not treated as a member of a group of companies for VAT
purposes or All transactions by and between members of the Company's
Group have been made in accordance with a valid VAT group election and
the Company will not be required to make good any default by any other
member of such Group in relation to VAT
18.8:7 The Company is not and will not become liable for VAT by virtue of VAT
ACT 1983 Section 32 (agent manager or factor or factor of any person
who is not resident in the United Kingdom)
18.8.8 The Company has not been partially exempt for any VAT accounting period
at any time in the 5 years prior to Completion and will not in respect
of supplies invoiced to it prior to Completion be denied credit for any
input tax
18.8.9 Neither the Company nor any company of which the Company is a relevant
associate within the meaning of VATA 1983 Schedule 6A Paragraph 3(8)
(election to waive exemption) has elected to waive exemption under
Paragraph 2 of that Schedule in relation to any land and any such
elections have effect
18.8.10 No notice has been received by the Company and the Company is not aware
of anything which indicates that the grant to the Company of any
interest in or right over land or of any licence to occupy land is and
will continue to be other than an exempt supply
18.8:11 The Company owns no assets which are treated as capital items the input
tax on which may be subject to adjustment in accordance with the VAT
capital goods scheme
18.8.12 The Company has not during the last 10 years acquired any assets in
circumstances described in VATA 1983 Section 29A(1) (transfer of
business as a going concern)
18.9 STAMP DUTY
All documents in the possession or under the control of the Company to
which it has been a party and which attract stamp duty or stamp duty
reserve tax have been properly stamped. No documents are presently
subject to adjudication of claims for exemption or relief and there are
no circumstances which may result in the Company becoming liable for
any interest or penalties
<PAGE> 52
18.10 ANTI-AVOIDANCE
18.10.1 All particulars furnished to the Inland Revenue and its response in
connection with any application for any consent or clearance on behalf
of the Company under any of the following provisions:
TCGA 1992 Section 139 (company reconstruction transfer of a
TCGA 1992 Sections 135 and 136 (company re constructions)
ICTA 1988 Sections 703-709 (transactions in securities) and
ICTA 1988 Section 776 (transactions in land)
18.10.1.1 are included in the Disclosure Letter or have been disclosed to the
Purchaser in writing prior to the date of this agreement
18.10:1.2 fully and accurately disclosed all facts and circumstances material
the decision of the Inland Revenue and:
18.10.2:1 any such consent or clearance as was given is valid and effective and
18.10.2:2 any transaction for which such consent or clearance, has previously
been obtained has been carried into effect (if at all) only in
accordance with the terms of, the relevant application and consent or
clearance
18.10:3. The Company has not in the 6 years preceding the date of this
agreement been a party to any transaction in respect of which the
Company its officers directors or advisers considered that there was a
risk that the Company could be liable to Taxation:
18.10.3.1 under the provisions of ICTA 1988 Part XVII (anti-avoidance) or
18.10 3.2 as a result of the principles enunciated by the House of Lords in
Furniss (Inspector of Taxes) v Dawson and concluded that such a risk
was too remote to make provision for it in the relevant accounts of
the Company
18.10:4 The Company has not been a party to or otherwise involved in any
transaction scheme or arrangement to which any of the following
provisions could apply:
18.10:4.1 ICTA 1988 Sections 116 (partnerships involving companies) 395 (leasing
contracts and company re constructions) 404 (group relief dual
resident companies) and 410 (group relief 'arrangements')
18.10:4.2 ICTA 1988 Section 240(11) (ACT surrender 'arrangements') and
18.10.4.3 ICTA 1988 Section 399 (dealings in commodity futures)
18.10.5 The Company has not without the prior consent of H Treasury caused
permitted or entered into any of the transactions specified in ICTA
1988 Section 765 (migration etc of companies)
18.10:6 The Company does not have and never has had any interest in a
controlled foreign company as defined in ICTA 1988 Section 747
18.11 INHERITANCE TAX
18.11:1 The Company has made no transfer of value within the 1HTA 1984
Sections 94 or 99
<PAGE> 53
18.11:2 No person has the power under the 1HTA 1984 Section 212 to raise any
capital transfer tax or inheritance tax by the sale of or charge over
any of the Company's assets
18.11:3 There is no unsatisfied liability to capital transfer tax or
inheritance tax attached or attributable to the assets of the Company
or the shares of the Company and neither the assets nor the Shares are
subject to any Inland Revenue charge as is mentioned in the 1HTA 1984
Section 237
19 WARRANTORS INTERESTS
19.1 No Warrantor or Associate or person connected with any Warrantor has
any interest (direct or indirect) in any other company or business
which competes or has competed or is in the future likely to compete or
has a close trading relationship with any business now carried on by
the Company or intends to acquire any such interest
19.2 No indebtedness (actual or contingent) and no contract or arrangement
is outstanding between the Company and any Warrantor or director of the
Company or any person connected with any Warrantor or such director or
in which any Warrantor or director or persons connected with them are
or may be interested (directly or indirectly)
19.3 No person is entitled to receive from the Company any finder's fees
brokerage or other commission in connection with the sale and purchase
of the Shares under this agreement
19.4 There is not now outstanding and there has not at any time during the
past 3 years been outstanding any contract or arrangement to which the
Company is a party and in which any Warrantor or any director of the
Company is or has been interested whether directly or indirectly
19.5 The Company is not a party to nor has its profits or financial position
during the past 3 years been affected by any contract or arrangement
which was not of an entirely arm's length nature
20 GOOD STANDING
20.1 No receiver administrative receiver or administrator has been appointed
nor any notice given petition presented or order made for the
appointment of any such person over the whole or any part of the assets
or undertaking of the Company or any of the Warrantors
20.2 No petition has been presented no order has been made and no resolution
has been passed for the winding up of the Company or for the
appointment of a liquidator or provisional liquidator of the Company
20.3 No voluntary arrangement has been proposed or is in force under the
Insolvency Act 1986 Section 1 in respect of the Company
20.4 The Company has not stopped payment nor is it insolvent or unable to
pay its debts as and when they fall due
20.5 No unsatisfied judgement is outstanding against the Company and no
demand has 19.5 been served on the Company under the Insolvency Act
1986 Section 123(1) (a) 1986 No distress execution or other process has
been levied in respect of the Company which remains undischarged nor is
there any
<PAGE> 54
unfulfilled or unsatisfied judgement or court order outstanding against
the Company
20.6 No address execution or other process has been levied in respect of the
Company which remains undischarged nor is there any unfulfilled or
unsatisfied judgement or court order outstanding against the Company.
20.7 There are not pending or in existence any investigations or inquiries
by or on behalf of any governmental or other body in respect of the
affairs of the Company
20.8 None of the activities or contracts or rights of the Company is
materially ultra vires unauthorised invalid or unenforceable or in
breach of any contract or covenant
20.9 The Company has at all times carried on business and conducted its
affairs in all material respects in accordance with its memorandum and
articles of association for the time being in force and any other
documents to which it is or has been a party
20.10 The Company is empowered and duly qualified to carry on business in all
jurisdictions in which it now carries on business
21 MISCELLANEOUS
21.1 The Company does not carry on or have a place of business at any branch
or other location (whether in the United Kingdom or elsewhere)other
than at or from the Properties either the Trifoliate Ltd
21.2 All title deeds and arrangements to which the Company is a party and
any other documents in the enforcement of which the Company is
interested have been duly stamped and all such deeds and documents
owned by or which ought to be in the possession of the Company are in
the possession of the Company
21.3 All information or documents concerning the Company supplied in writing
to the Subscriber in response to the Subscriber's or its adviser's
questionnaires dated 24th February 1999, 11th March 1999 and two on the
17th March 1999 comprising the Company's letters of the 1st March 1999,
12th March 1999 and two letters of the 18th March 1999, 29th March 1999
and 12th April 1999 plus attachments and the folders marked IMHL Due
Diligence volumes I,II,III, IV annexed to this Agreement was when given
true and accurate in all material respects and insofar as they
consisted of opinion expressed were given in good faith
21.4 The Vendors have not procured or permitted any act or omission prior to
completion which would render untrue or inaccurate as at Completion the
Disclosure Letter or any Warranties.
21.5 There are fully and accurately disclosed in the Disclosure Letter all
matters which:
21.5.1 are necessary to qualify the statements set out in the schedule in
order for such statements when so qualified to be fair accurate and not
misleading
21.5.2 Which might materially and adversely affect the future value of the
share
21.5.3 Which would otherwise materially affect the decision of a Subscriber to
subscribe the Shares on the terms of this agreement.
<PAGE> 55
21.6 References in the preceding paragraphs of this schedule to the Company
shall be construed as a reference to the Company and each group Company
to the intent that each of the foregoing paragraphs of this schedule
shall have effect as if in relation to each Group Company the
respective name of that group Company was substituted for reference to
'the Company.
Executed as a Deed by
Alterproof Limited acting by its
Director and Secretary ( or two Directors) /s/ Edward Marcus Rennick
-----------------------
/s/ Terence Roger Hewett
-----------------------
Signed as a Deed by Terence Roger Hewett /s/ Terence Roger Hewett
in the presence of -----------------------
/s/ John Bignall, Solicitor
-----------------------
Signed as a Deed by Edward Marcus Rennick /s/ Edward Marcus Rennick
in the presence of -----------------------
/s/ John Bignall, Solicitor
-----------------------
Executed as a Deed by Burlington Chamber /s/ Keith D. Beekmeyer
and James Limted -----------------------
Acting by its Director and Secretary
(or two Directors)
/s/ Anil K. Mahan
-----------------------
<PAGE> 1
SHARE EXCHANGE AGREEMENT
This Agreement is made this 30th day of April 1999
BETWEEN: -
1. Burlington Chamber & James Ltd.; whose registered office is at
Salisbury House, 31 Finsbury Circus, LONDON EC2M 5QQ, ("BCJ") and
2. Anil Kumar Mahan of 31 Milton Road, East Sheen, LONDON SW14 8JP ("Mr
Mahan")
WHEREAS:-
1. BCJ is the registered holder of 51% and Mr Mahan is the registered
holder of 49% of the shares in Burlington & James Ltd.("B&J")
2. BCJ and B&J are both insurance wholesale intermediaries
3. BCJ has by even date completed the purchase of 85% of the share
capital, representing 8,500 shares in, Alterproof Ltd. a holding
Company for the McCalls Group comprising inter alia a Lloyd's broker
and other insurance and financial services companies
4. BCJ wishes to acquire the remainder of the shares in B&J from Mr Mahan
so that B&J shall forthwith be the West Midlands office of McCalls and
that Mr Mahan should in consideration thereof be issued with 5% of the
shares in Alterproof Ltd. representing 500 shares therein.
5. The parties hereto have consequently agreed to exchange 49% of the
shares in B&J and by Mr Mahan for 5% of the shares in Alterproof owned
by BC&J
6. Mr Ajay Kumar Mahan is a Director of B&J
NOW THIS DEED WITNESSED AS FOLLOWS:-
1. Mr Mahan hereby exchanges his 49% shareholding in B&J for 5% of the
shares in Alterproof Ltd. owned by BC&J to the effect that BC&J will
forthwith own the entire share capital of B&J and Mr Mahan will be the
registered holder of 500 shares in Alterproof Ltd.
2. Mr Ajay Kumar Mahan will be appointed a Director of Alterproof Ltd. and
its subsidiaries companies or such of them as he wishes to serve upon
and BC&J shall procure that whilst it is the majority shareholder in
Alterproof Ltd. Mr Ajay Kumar Mahan will continue to serve as a
Director of Alterproof Ltd. and its subsidiaries companies or such as
he shall wish to serve upon as long as he shall wish.
<PAGE> 2
IN WITNESS WHEREOF the parties hereto have executed this Agreement as a
Deed.
Executed as a Deed by
Burlington Chamber & James Limited /s/ Keith D. Beekmeyer
By its Director and Secretary (or two Directors) ---------------------
/s/ David James
---------------------
Signed as a Deed by Anil K. Mahan /s/ Anil Kumar Mahan
---------------------
Signed as a Deed in the Presence of /s/ Melanie D. Aharon
---------------------
