Exhibit 10.17
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Share Purchase Agreement
Herley Industries, Inc.
And
Dr Robert S. Andrews
And
Mrs Ann Andrews
And
EW Simulation Technology Limited
for the sale and purchase of all of the issued shares of EW Simulation
Technology Limited
September 2002
CONTENTS
CLAUSE PAGE
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1. Service Agreement...............................................2
2. List of Contracts...............................................2
3. Business Plan...................................................2
1. INTERPRETATION..................................................3
2. SALE AND PURCHASE...............................................6
3. COMPLETION......................................................7
4. WARRANTIES, INDEMNITIES AND CONTRIBUTIONS......................10
5. PROTECTION OF GOODWILL.........................................11
6. INTELLECTUAL PROPERTY..........................................12
7. CONFIDENTIAL INFORMATION.......................................13
8. ANNOUNCEMENTS..................................................13
9. ASSIGNMENT.....................................................13
10. COSTS..........................................................14
11. EFFECT OF COMPLETION...........................................14
12. FURTHER ASSURANCES.............................................14
13. ENTIRE AGREEMENT...............................................14
14. VARIATIONS.....................................................15
15. WAIVER.........................................................15
16. INVALIDITY.....................................................16
17. NOTICES........................................................16
18. COUNTERPARTS...................................................17
19. GOVERNING LAW AND JURISDICTION.................................17
20. THIRD PARTY RIGHTS.............................................17
SCHEDULE 1............................................................19
Particulars relating to the Sellers...................................19
SCHEDULE 2............................................................20
Particulars relating to the Company...................................20
SCHEDULE 3............................................................21
The Warranties........................................................21
SCHEDULE 4............................................................65
Form of Resignation...................................................65
SCHEDULE 5............................................................66
Sellers' Limitations on Liability.....................................66
SCHEDULE 6............................................................69
The Property..........................................................69
AGREED FORM DOCUMENTS
1. Service Agreement
2. List of Contracts
3. Business Plan
4. List of Employees
- 36 -
JAA\2784198.05
THIS AGREEMENT is made on 2002
BETWEEN:
(1) HERLEY INDUSTRIES, INC. whose corporate and principal office is at 3061
Industry Drive, Lancaster, PA 17603-4025, United States of America (the
"Buyer");
(2) DR ROBERT S. ANDREWS whose address is 2 Mayfield, Rowledge, Farnham, Surrey
GU10 4DZ ("Dr. Andrews");
(3) MRS ANN ANDREWS whose address is 2 Mayfield Rowledge, Farnham, Surrey GU10
4DZ ("Mrs Andrews"); and
(4) EW SIMULATION TECHNOLOGY LIMITED (No. 3155211) whose registered office is
at 2 Mayfield, Rowledge, Farnham, Surrey GU10 4DZ (the "Company").
THE PARTIES AGREE AS FOLLOWS:
1. INTERPRETATION
1.1 In this agreement the following words and expressions and
abbreviations have the following meanings, unless the context
otherwise requires:
"Accounts Date" means 31 March 2002;
"associated company" has the meaning given to it in sections 416
et seq. TA;
"Business Day" means a day (excluding Saturdays) on which banks
generally are open in London for the transaction of normal banking
business;
"Buyer's Group" means the Buyer, its holding companies and the
subsidiary undertakings and associated companies from time to time of
it and of such holding companies, all of them and each of them as the
context admits;
"Buyer's Solicitors" means Ashurst Morris Crisp of Broadwalk House,
5 Appold Street, London EC2A 2HA;
"Company Intellectual Property" means Intellectual Property, used by,
owned by or licensed to the Company together with the goodwill
relating thereto including without prejudice to the generality of the
foregoing the registered Intellectual Property and the unregistered
Intellectual Property rights set out in the document headed
Intellectual Property in the agreed terms;
"Completion" means the completion of the sale and purchase of the
Shares in accordance with clause 3;
"Completion Date" means the date on which Completion occurs;
"Confidential Information" means all information relating to the
Company's business, or financial or other affairs (including future
plans and targets of the Company) which is of a confidential nature
and not in the public domain;
"connected person" means a person who is connected with another for
the purpose of section 839 of the TA;
"Disclosure Letter" means a letter of today's date together with the
attachments thereto addressed by the Warrantor to the Buyer disclosing
exceptions to the Warranties;
"Encumbrance" means any mortgage, charge (fixed or floating), pledge,
lien, hypothecation, trust, right of set off or other third party
right or interest (legal or equitable) including any right of
pre-emption, assignment by way of security, reservation of title or
any other security interest of any kind however created or arising or
any other agreement or arrangement (including a sale and repurchase
arrangement) having similar effect;
"Intellectual Property" means any and all patents, trade marks, rights
in designs, get-up, trade, business or domain names, copyrights, and
topography rights, (whether registered or not and any applications to
register or rights to apply for registration of any of the foregoing),
rights in inventions, Know-How, trade secrets and other confidential
information, rights in databases and all other intellectual property
rights of a similar or corresponding character which may now or in the
future subsist in any part of the world;
"Know-How" means confidential or proprietary industrial or technical
information and techniques in any form (including paper,
electronically stored data, magnetic media, files and micro-film)
including, without limitation, drawings, data relating to inventions,
formulae, test results, reports, research reports, project reports and
testing procedures, shop practices, instruction and training manuals,
specifications, lists and particulars of customers and suppliers,
marketing methods and procedures;
"Loan Notes" means the Loan Notes to be issued pursuant to the Loan
Note Instrument;
"Loan Note Instrument" means the instrument constituting the
Guaranteed Unsecured Loan Notes 2005 of the Buyer in the agreed terms;
"London Stock Exchange" means the London Stock Exchange plc;
"Permit" means a permit, licence, consent, approval, certificate,
qualification, specification, registration and other authorisation and
a filing of a notification report or assessment necessary in any
jurisdiction for the proper and efficient operation of the Company's
business, its ownership, possession, occupation or use of an asset or
the execution and performance of this agreement;
"Property" means the property described in schedule 6 or any part or
parts thereof;
"Related Person" means in relation to the Buyer its holding companies
and the subsidiary undertakings and associated companies from time to
time of it and any such holding company, all of them and each of them
as the context admits;
"Sellers" means Dr. Andrews and Mrs Andrews;
"Sellers' Solicitors" means Mundays of Crown House, Church Road,
Claygate, Esher, Surrey KT10 0LP;
"Service Agreement" means the service agreement to be entered into
on Completion between the Company and Dr. Andrews in the agreed terms;
"Shares" means all of the issued shares in the capital of the Company;
"TA" means the Income and Corporation Taxes Act 1988;
"Tax Deed" means a deed of indemnity in the agreed terms;
"UK Listing Authority" means the Financial Service Authority in its
capacity as the competent authority for the purposes of Part VI of the
Financial Services and Markets Act 2000;
"Warranties" means the warranties and representations set out in
schedule 3; and
"Warrantor" means Dr. Andrews.
1.2 In this agreement unless otherwise specified, reference to:
(a) a "subsidiary undertaking" is to be construed in accordance
with section 258 of the Companies Act 1985 and a "subsidiary"
or "holding company" is to be construed in accordance with
section 736 of that Act;
(b) a document in the "agreed terms" is a reference to that document
in the form approved and for the purposes of identification signed by
or on behalf of each party;
(c) "FA" followed by a stated year means the Finance Act of that year;
(d) "includes" and "including" shall mean including without limitation;
(e) a "party" means a party to this agreement and includes its
permitted assignees (if any) and/or the successors in title to
that part of its undertaking which includes this agreement
and, in the case of an individual, to his or her estate and
personal representatives;
(f) a "person" includes any person, individual, company, firm,
corporation, government, state or agency of a state or any
undertaking (whether or not having separate legal personality
and irrespective of the jurisdiction in or under the law of
which it was incorporated or exists);
(g) a "statute" or "statutory instrument" or "accounting standard"
or any of their provisions is to be construed as a reference
to that statute or statutory instrument or accounting standard
or such provision as the same may have been amended or
re-enacted before the date of this agreement;
(h) "clauses", "paragraphs" or "schedules" are to clauses and paragraphs of
and schedules to this agreement;
(i) "writing" includes any methods of representing words in a
legible form (other than writing on an electronic or visual
display screen) or other writing in non-transitory form;
(j) words denoting the singular shall include the plural and vice versa and
words denoting any gender shall include all genders; and
(k) the time of day is reference to time in London, England.
1.3 The schedules form part of the operative provisions of this agreement
and references to this agreement shall, unless the context otherwise
requires, include references to the schedules.
1.4 The index to and the headings and the descriptive notes in brackets
relating to provisions of taxation statutes in this agreement are for
information only and are to be ignored in construing the same.
1.5 The obligations and liabilities of the Sellers under this agreement
shall be joint and several.
1.6 Any question of whether a person is connected with another shall be
determined in accordance with section 839 of the TA (except that in
construing section 839 "control" has the meaning given by section 840
or section 416 of the TA so that there is control whenever section 840
or 416 requires) which shall apply in relation to this agreement as it
applies in relation to the TA.
2. SALE AND PURCHASE
2.1 Upon the terms and subject to the conditions of this agreement, the
Sellers as legal and beneficial owners and with full title guarantee
shall sell and the Buyer shall purchase the respective numbers of
Shares of which each of the Sellers is the registered holder and
beneficial owner being set out opposite his or her name in column 2 of
schedule 1 with effect from Completion free from any Encumbrance,
together with all accrued benefits and rights attached thereto and all
dividends declared (other than as set out in the Disclosure Letter
(but excluding any attachments thereto)) after the Accounts Date in
respect of the Shares.
2.2 Each of the Sellers waives or agrees to procure the waiver of any
rights or restrictions conferred upon any of them or any other person
which may exist in relation to the transfer of the Shares under the
articles of association of the Company or otherwise.
2.3 The Buyer shall not be obliged to complete the purchase of any of the
Shares unless the Sellers complete the sale of all of the Shares
simultaneously, but completion of the purchase of some Shares shall
not affect the rights of the Buyer with respect to its rights to the
other Shares.
2.4 The consideration for such sale and purchase shall be the sum of
US$3,000,000 and (pound)965,001 to be satisfied on Completion in
accordance with the following provisions of this clause 2.
2.5 The consideration for such sale and purchase shall be satisfied at
Completion by:
(a) the payment in cash to the Sellers of the amounts set out opposite
their respective names in schedule 1;
and
(b) the remainder to be satisfied by the issue to the Sellers of
such number of Loan Notes as are set out opposite their
respective names in schedule 1 credited as fully paid.
3. COMPLETION
3.1 Completion shall take place at the offices of the Buyer's Solicitors
immediately after the execution of this agreement.
3.2 On Completion, the Sellers shall deliver to or, if the Buyer shall so
agree, make available to the Buyer:
(a) transfers in common form relating to all the Shares duly executed
in favour of the Buyer (or as it may direct);
(b) share certificates relating to the Shares;
(c) any waivers or consents by the Company or other persons which
the Buyer has reasonably specified prior to Completion so as
to enable the Buyer or its nominees to be registered as the
holders of the Shares;
(d) a resignation in the form set out in schedule 4 duly executed
as a deed by Mrs Andrews together with delivery to the Buyer
of all property of the Company in her possession or under her
control;
(e) the written resignation of the auditors of the Company
containing an acknowledgement that they have no claim against
the Company for compensation for loss of office, professional
fees (save as stated in such letter of resignation) or
otherwise and a statement under section 394(1) of the
Companies Act 1985;
(f) the common seals, certificates of incorporation and statutory books,
share certificate books and cheque books of the Company;
(g) the Tax Deed duly executed by the Warrantor;
(h) the Service Agreement duly executed by Dr. Andrews;
(i) all land certificates, charge certificates, leases, title
deeds and other documents relating to the Property (except to
the extent that the same are in the possession of mortgagees
pursuant to mortgages disclosed in schedule 6);
(j) to the extent not in the possession of the Company, all books of
account or references as to customers and/or suppliers and other
records of the Company and all insurance policies relating to the
Company; and
(k) to the extent not in the possession of the Company, all
licences, consents, permits and authorisations obtained by or
issued to the Company or any other person in connection with
the business carried on by any of them.
3.3 At Completion, the Sellers shall procure the passing of board
resolutions of the Company in the agreed terms:
(a) sanctioning for registration, subject to due stamping, the transfers in
respect of the Shares;
(b) authorising the delivery to the Buyer of share certificates in respect
of the Shares;
(c) appointing Mr Myron Levy to be a director (in addition to
Dr Andrews) and Mr John Kelley to be the secretary of the Company;
(d) revoking all mandates to bankers and giving authority in
favour of the directors appointed under clause 3.3(c) above or
such other persons as the Buyer may nominate to operate the
bank accounts thereof;
(e) resolving that the registered office of the Company be changed
to Unit 1, The Royston Centre, Lynchford, Ash Vale, Aldershot,
Hampshire GU12 5PQ;
(f) changing the accounting reference date of the Company to 31 July;
(g) resolving that the Company and Dr. Andrews enter into the Service
Agreement;
(h) resolving that(pound)38,432 owed by the Company to the Seller are
repaid forthwith.
3.4 The Sellers shall procure that at Completion:
(a) there is repaid all sums (if any) owing to the Company by any
of the Sellers or by the director or the secretary of the
Company or any of their connected persons (other than the
Company) and whether or not such sums are due for repayment;
(b) the Company is released from any guarantee, indemnity, bond,
letter of comfort or Encumbrance or other similar obligation
given or incurred by it which relates in whole or in part to
debts or other liabilities or obligations, whether actual or
contingent, of any person other than the Company,
and prior to such repayment or release the Sellers undertake to the
Buyer (on behalf of themselves and as trustee on behalf of the
Company) to keep the Company fully indemnified against any failure to
make any such repayment or any liability arising under any such
guarantee, indemnity, bond, letter of comfort or Encumbrance.
3.5 Upon compliance by the Sellers with the provisions of clauses 3.2, 3.3
and 3.4, the Buyer shall:
(a) provide for the transfer of US$3,000,000 to the Sellers'
Solicitors at Barclays Bank plc, Barclays Business Centre, PO
Box 193, 8/12 Church Street, Walton on Thames, Surrey KT12 2YW
Sort Code 20-90-56, Account No. 63196677 and receipt by such
bank of such sum shall be good discharge to the Buyer;
(b) allot to the Sellers such amount of Loan Notes as are set out
opposite their respective names in schedule 1 and enter the
names of the Sellers in the register of loan note holders of
the Buyer as the holders of such amounts of Loan Notes as
aforesaid; and
(c) deliver to the Sellers' Solicitors:
(i) a counterpart of the Tax Deed duly executed by the Buyer;
(ii) a counterpart of the Service Agreement duly executed by Dr. Andrews;
and
(iii) definitive certificates in respect of the Loan Notes.
3.6 If in any respect the obligations of the Sellers (or Buyer) are not
complied with on Completion the party not in default may:
(a) defer Completion to a date not more than 28 days after
Completion should have taken place but for the default (and so
that the provisions of this clause 3, apart from this clause
3.6(a), shall apply to Completion as so deferred); or
(b) proceed to Completion so far as practicable (without prejudice to its
rights hereunder); or
(c) terminate this agreement without prejudice to the rights and
liabilities which accrued prior to termination which shall
continue to subsist including those under clauses 8, 10 and 13
to 20 (inclusive),
by means of a notice in writing served by Dr. Andrews on the Buyer,
if the Buyer is in default, or served by the Buyer on Dr. Andrews if
either or both of the Sellers are in default.
3.7 Forthwith after Completion, the Buyer and Dr. Andrews shall use their
reasonable endeavours to procure that the Company:
(a) and each of Mike Barton, Neil Chapman and Elizabeth O' Conner enter
into service agreements; and
(b) Geoff Hawkins and Paul Shepard acting on behalf of the
consultancy company in which they are shareholders, Aware
Simulation Limited, enter into consultancy agreements.
It is hereby acknowledged that it is the intention of the Buyer that,
as an incentive to sign such service agreements and consultancy
agreements, such persons will be granted options in the Buyer.
3.8 Within six months of Completion, Dr. Andrews shall:
(a) use his best endeavours to dispose of his 60 per cent. shareholding in
EWST Australia Pty Limited; and
(b) resign from his position as a director of EWST Australia Pty Limited.
3.9 The Sellers shall assign, or shall procure the assignment of, to the
Buyer of the benefit of any confidentiality undertakings given to
either of them by any person within the last two years in relation to
a sale or potential sale by the Sellers of the Company or its assets
and undertakings or to any investment, by way of the subscription of
equity or otherwise, in the Company.
4. WARRANTIES, INDEMNITIES AND CONTRIBUTIONS
4.1 The Warrantor warrants with the Buyer in the terms of the Warranties.
4.2 Any information supplied by or on behalf of the Company to or on
behalf of the Warrantor in connection with the Warranties, the
Disclosure Letter or otherwise in relation to the business and affairs
of the Company shall not constitute a representation or warranty or
guarantee as to the accuracy thereof by the Company and each of the
Sellers agrees with the Buyer and the Company (and their respective
directors, officers, employees, agents and advisers) that he and/or
she hereby irrevocably waives any and all claims which he and/or she
and/or their connected persons might otherwise have against the
Company or any of their respective directors, officers, employees,
agents or advisers in respect thereof and any and all other claims
against the Company (unless such claim is covered by insurance) or any
such persons in respect of any cause, matter or thing whatsoever and
hereby releases the Company and each such persons from any liability
or obligation to him and/or her whatsoever (save, in the case of Dr
Andrews, for obligations and liabilities under his Service Agreement
with the Company).
4.3 Each of the Warranties shall be construed as a separate warranty and
representation and (unless expressly provided to the contrary) shall
not be limited by the terms of any of the other Warranties or by any
other term of this agreement.
4.4 The liability of the Warrantor under the Warranties shall be limited
if and to the extent that the limitations referred to in schedule 5
apply.
4.5 No information relating to the Company of which the Buyer has
knowledge (actual or constructive) other than that contained in or
referred to in this agreement and/or included in the Disclosure Letter
and no investigation by or on behalf of the Buyer shall prejudice any
claim by the Buyer under the Warranties or reduce any amount
recoverable thereunder.
4.6 The Sellers shall give to the Buyer all such information and
documentation relating to the Company as the Buyer shall reasonably
require to enable it to satisfy itself as to whether there has been
any breach of the Warranties, provided that the Sellers have
reasonable grounds for believing that there has been such a breach.
4.7 The Sellers irrevocably and unconditionally agree with the Buyer and
their professional advisers that they will not bring any claim or
other action (including a claim for contribution under the Civil
Liability (Contributions) Act 1978) of whatever nature and which
exists now or may exist in the future and whether known or not known
to the Sellers or either of them at the date hereof and whether in
relation to a matter which is past, present or future and in respect
of negligence or otherwise ("Claim") against any professional advisers
of the Buyer in relation to any matter arising (directly or
indirectly) out of or in connection with this agreement. To the extent
that any such Claim exists (if any and without prejudice to the
aforesaid), the Sellers irrevocably and unconditionally waive the
right to bring any form of claim against or recover any sums from any
of the Buyer's professional advisers in relation to any Claim and
unconditionally and irrevocably release the Buyer's professional
advisers from any liability in respect of any such Claim. It is
intended that any relevant professional adviser of the Buyer shall be
entitled to the benefit of the undertakings, releases and waivers
provided for in this clause for the purpose of, inter alia, the
Contracts (Rights of Third Parties) Act 1999.
4.8 Nothing in this clause 4 shall exclude or limit liability in respect
of Claims arising directly out of any statements made fraudulently or
arising as a direct result of wilful concealment by the Buyer's
professional advisers.
4.9 The Sellers agree with and undertake to the Buyer and each of its
Related Persons (including, without limitation, the Company together
with its directors, officers or employees) to indemnify and hold each
of them harmless from and against any and all costs (including,
without limitation, legal costs and registration or administrative
costs or fees), liabilities, losses, expenses and claims whatsoever
incurred by any of them arising out of the employment or termination
of employment by the Company of Mrs Andrews.
4.10 In the event that any independent or self employed contractors or
consultants of the Company bring an employment related claim against
the Company, the Sellers shall indemnify the Company on demand against
all liabilities, obligations, costs, claims and demands arising from
or in respect of any such employment related claim (including without
limitation any claim for unfair dismissal, in relation to redundancy
rights or under the Working Time Regulations 1998 or the Part Time
Workers (Prevention of Less Favourable Treatment) Regulations 2000)).
5. PROTECTION OF GOODWILL
5.1 The Sellers hereby undertake to procure that (except as otherwise
agreed in writing with the Buyer) they will not (and their respective
connected persons will not) either directly or indirectly and either
solely or jointly with any other person (either on their own account
or as the agent of any other person) and in any capacity whatsoever:
(a) subject to clause 5.2, for a period of three years from
Completion carry on or be engaged or concerned or (except as
the holder of shares in a listed company which confer not more
than five per cent. of the votes which can generally be cast
at a general meeting of the company) interested in a business
which competes with the type of business carried on by the
Company at Completion in any of the countries in which the
business was then carried on;
(b) for a period of three years from Completion solicit or accept
the custom of any person in respect of goods or services
competitive with those manufactured or supplied by the Company
during the period of 12 months prior to Completion, such
person having been a customer of the Company in respect of
such goods or services during such period;
(c) for a period of three years from Completion induce, solicit or
endeavour to entice to leave the service or employment of the
Company, any person who during the period of 12 months prior
to Completion was an employee of the Company occupying a
senior or managerial position and likely (in the opinion of
the Buyer) to be:
(i) in possession of confidential information relating to; or
(ii) able to influence the customer relationships or connections of
the Company; or
(d) use any trade or domain name (including the expressions "EWST"
and "EW Simulation Technology") or e-mail address used by the
Company at any time during the three years immediately
preceding the date of this agreement or any other name
intended or likely to be confused with any such trade or
domain name or e-mail address.
5.2 For a period of six months from Completion, Dr. Andrews shall be
permitted to hold not more than 60 per cent. of the issued share
capital of EWST Australia Pty Limited, provided such company shall
only perform the services that it is currently performing, details of
which are set out in the Disclosure Letter.
5.3 The Sellers agree that the undertakings contained in this clause 5 are
reasonable and are entered into for the purpose of protecting the
goodwill of the business of the Company and that accordingly the
benefit of the undertakings may be assigned by the Buyer and its
successors in title without the consent of any of the Sellers.
5.4 Each undertaking contained in this clause 5 is and shall be construed
as separate and severable and if one or more of the undertakings is
held to be against the public interest or unlawful or in any way an
unreasonable restraint of trade or unenforceable in whole or in part
for any reason the remaining undertakings or parts thereof, as
appropriate, shall continue to bind the Sellers.
5.5 If any undertaking contained in this clause 5 shall be held to be void
but would be valid if deleted in part or reduced in application, such
undertaking shall apply with such deletion or modification as may be
necessary to make it valid and enforceable. Without prejudice to the
generality of the foregoing, such period (as the same may previously
have been reduced by virtue of this clause 5.5) shall take effect as
if reduced by six months until the resulting period shall be valid and
enforceable.
6. INTELLECTUAL PROPERTY
6.1 Following Completion, to the extent it subsequently transpires that
any Company Intellectual Property is vested in the Sellers or any
other third party employed or contracted by the Company to develop
such Intellectual Property, the Sellers shall do and execute or
procure that there shall be done and executed all such documents,
deeds, matters, acts and things as the Buyer may at any time require
properly to vest such Intellectual Property in the Company or
otherwise to perfect the Company's title thereto.
6.2 The Sellers shall be responsible for all costs that have been or may
be incurred as a result of any assignment of Company Intellectual
Property executed between any of the Sellers or any of their connected
persons prior to Completion including the costs of recordal of such
assignments.
7. CONFIDENTIAL INFORMATION
7.1 The Sellers shall not and shall procure that none of their connected
persons shall use or disclose to any person Confidential Information.
7.2 Clause 7.1 does not apply to:
(a) disclosure of Confidential Information to or at the written request of
the Buyer;
(b) use or disclosure of Confidential Information required to be disclosed
by law, regulation, any revenue authority or the London Stock Exchange
or the UK Listing Authority;
(c) disclosure of Confidential Information to professional advisers for the
purpose of advising the Sellers;
or
(d) Confidential Information which is in the public domain other than by
a breach by any of the Sellers of clause 7.1.
8. ANNOUNCEMENTS
8.1 Save for an announcement in the agreed terms between the parties, no
party shall disclose the making of this agreement nor its terms nor
any other agreement referred to in this agreement (except those
matters set out in the press release in the agreed terms and subject
to clause 9.3) and in the case of the Buyer shall procure that its
Related Persons and its professional advisers shall not make any such
disclosure without the prior consent of the other party unless
disclosure is:
(a) to its professional advisers; or
(b) required by law or the rules or standards of the London Stock Exchange
or the Listing Rules of the UK Listing Authority or the rules and
requirements of any other regulatory body;
provided that this clause 8.1 does not apply to announcements,
communications or circulars made or sent by the Buyer and/or the
Company after Completion to customers, clients or suppliers of the
Company to the extent that it informs them of the Buyer's acquisition
of the Shares or to any announcements containing only information
which has become generally available.
8.2 The restrictions contained in clause 8.1 shall apply without limit
of time and whether or not this agreement is terminated.
9. ASSIGNMENT
9.1 This agreement is personal to the parties and accordingly. Subject to
clause 9.2 no party without the prior written consent of the other
shall assign, transfer or declare a trust of the benefit of all or any
of any other party's obligations nor any benefit arising under this
agreement.
9.2 The Buyer may (without the consent of any of the Sellers) assign to
any member of the Buyer's Group the benefit of all or any of any of
the Sellers' obligations or any benefit it enjoys under this agreement
provided however that such assignment shall not be absolute but shall
be expressed to have effect only for so long as the assignee remains a
member of the Buyer's Group and that immediately before ceasing to be
such a member the assignee shall assign the benefit to a member of the
Buyer's Group.
The sale or transfer of all or part of the business of the Company to
any member of the Buyer's Group shall not affect the liability of any
of the Sellers under any provision of this agreement whatsoever.
9.3 The Buyer may disclose to a proposed assignee information in its
possession relating to the provisions of this agreement the subject
matter of this agreement and the other parties which it is necessary
to disclose for the purposes of the proposed assignment,
notwithstanding the provisions of clause 9 provided that such
disclosure shall be made only after notice has been given to the other
party of the identity of the proposed assignee.
10. COSTS
Unless expressly otherwise provided in this agreement each of the
parties shall bear its own legal, accountancy and other costs, charges
and expenses connected with the sale and purchase of the Shares,
provided that no costs, charges or expenses shall be charged to the
Company.
11. EFFECT OF COMPLETION
11.1 The terms of this agreement (insofar as not performed at Completion
and subject as specifically otherwise provided in this agreement)
shall continue in force after and notwithstanding Completion.
11.2 The remedies of the Buyer in respect of any breach of any of the
Warranties shall continue to subsist notwithstanding Completion.
12. FURTHER ASSURANCES
Following Completion the Sellers shall from time to time forthwith
upon request from the Buyer at the Sellers' expense do or procure the
doing of all acts and/or execute or procure the execution of all such
documents in a form reasonably satisfactory to the Buyer for the
purpose of vesting in the Buyer the full legal and beneficial title to
the Shares and otherwise giving the Buyer the full benefit of this
agreement.
13. ENTIRE AGREEMENT
Each party on behalf of itself and, in the case of the Buyer, as agent
for each of its Related Persons or, in the case of the Sellers, their
connected persons, acknowledges and agrees with each of the other
party (each such party acting on behalf of itself and as agent for
each of its Related Persons or, in the case of the Sellers, their
connected persons) that:
(a) this agreement together with any other documents referred to in this
agreement (together the "Transaction Documents") constitute the entire
and only agreement between the parties and their respective Related
Persons or, in the case of the Sellers, their connected persons,
relating to the subject matter of the Transaction Documents;
(b) neither it nor any of its Related Persons or, in the case of the
Sellers, their connected persons, has been induced to enter into any
Transaction Document in reliance upon, nor has any such party been
given, any warranty, representation, statement, assurance, covenant,
agreement, undertaking, indemnity or commitment of any nature
whatsoever other than as are expressly set out in the Transaction
Documents and, to the extent that any of them has been, it (acting on
behalf of itself and as agent on behalf of each of its Related Persons
or, in the case of the Sellers, their connected persons),
unconditionally and irrevocably waives any claims, rights or remedies
which any of them might otherwise have had in relation thereto;
PROVIDED THAT the provisions of this clause 13 shall not exclude any
liability which any of the parties or, where appropriate, their
Related Persons in the case of the Buyer or, in the case of the
Sellers, their connected persons, would otherwise have to any other
party or, where appropriate, to any other party's Related Persons in
the case of the Buyer or, in the case of the Sellers, their connected
persons, or any right which any of them may have in respect of any
statements made fraudulently by any of them prior to the execution of
this agreement or any rights which any of them may have in respect of
fraudulent concealment by any of them.
14. VARIATIONS
This agreement may be varied only by a document signed by each of the
Sellers and the Buyer.
15. WAIVER
15.1 A waiver of any term, provision or condition of, or consent granted
under, this agreement shall be effective only if given in writing and
signed by the waiving or consenting party and then only in the
instance and for the purpose for which it is given.
15.2 No failure or delay on the part of any party in exercising any right,
power or privilege under this agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.
15.3 No breach of any provision of this agreement shall be waived or
discharged except with the express written consent of the Sellers and
the Buyer.
15.4 The rights and remedies herein provided are cumulative with and not
exclusive of any rights or remedies provided by law.
16. INVALIDITY
16.1 If any provision of this agreement is or becomes invalid, illegal or
unenforceable in any respect under the law of any jurisdiction:
(a) the validity, legality and enforceability under the law of that
jurisdiction of any other provision; and
(b) the validity, legality and enforceability under the law of any other
jurisdiction of that or any other provision,
shall not be affected or impaired in any way.
17. NOTICES
17.1 Any notice, demand or other communication given or made under or in
connection with the matters contemplated by this agreement shall be in
writing and shall be delivered personally or sent by fax or prepaid
first class post (air mail if posted to or from a place outside the
United Kingdom):
In the case of the Buyer to:
Herley Industries, Inc.
3061 Industry Drive
Lancaster
Pennsylvania
Fax: 001 717 3979503
Attention: Chief Executive Officer
In the case of the Sellers to:
2 Mayfield
Rowledge
Farnham
Surrey GU10 4DZ
Attention: Dr. Andrews
and shall be deemed to have been duly given or made as follows:
(a) if personally delivered, upon delivery at the address of the relevant
party;
(b) if sent by first class post, two Business Days after the date of
posting;
(c) if sent by air mail, seven Business Days after the date of posting;
and
(d) if sent by fax, when despatched,
provided that if, in accordance with the above provisions, any such
notice, demand or other communication would otherwise be deemed to be
given or made after 5.00 p.m. on a Business Day such notice, demand or
other communication shall be deemed to be given or made at 9.00 a.m.
on the next Business Day.
17.2 A party may notify the other party to this agreement of a change to
its name, relevant addressee, address or fax number for the purposes
of clause 17.1 provided that such notification shall only be effective
on:
(a) the date specified in the notification as the date on which the change
is to take place; or
(b) if no date is specified or the date specified is less than five
Business Days after the date on which notice is given, the date
falling five Business Days after notice of any such change has been
given.
18. COUNTERPARTS
This agreement may be executed in any number of counterparts which
together shall constitute one agreement. Any party may enter into this
agreement by executing a counterpart and this agreement shall not take
effect until it has been executed by all parties.
19. GOVERNING LAW AND JURISDICTION
19.1 This agreement (and any dispute, controversy, proceedings or claim of
whatever nature arising out of or in any way relating to this
agreement or its formation) shall be governed by and construed in
accordance with English law.
19.2 Each of the parties to this agreement irrevocably agrees that the
courts of England shall have exclusive jurisdiction to hear and decide
any suit, action or proceedings, and/or to settle any disputes, which
may arise out of or in connection with this agreement or its formation
(respectively, "Proceedings" and "Disputes") and, for these purposes,
each party irrevocably submits to the jurisdiction of the courts of
England.
20. THIRD PARTY RIGHTS
20.1 Any person (other than the parties to this agreement) who is given any
rights or benefits under clauses 4.2, 4.9 and 14 (a "Third Party")
shall be entitled to enforce those rights or benefits against the
parties in accordance with the Contracts (Rights of Third Parties) Act
1999.
20.2 Save as provided in clause 20.1 above the operation of the Contracts
(Rights of Third Parties) Act 1999 is hereby excluded.
20.3 The parties may amend, vary or terminate this agreement in such a way
as may affect any rights or benefits of any Third Party which are
directly enforceable against the parties under the Contracts (Rights
of Third Parties) Act 1999 without the consent of such Third Party.
20.4 Any Third Party entitled pursuant to the Contracts (Rights of Third
Parties) Act 1999 to enforce any rights or benefits conferred on it by
this agreement may not veto any amendment, variation or termination of
this agreement which is proposed by the parties and which may affect
the rights or benefits of the Third Party.
IN WITNESS whereof this agreement has been executed as a deed on the date first
above written.
SCHEDULE 1
Particulars relating to the Sellers
Column 1 2 3. 4.
Names & Address of Number of Cash Consideration Loan Notes ((pound))
Sellers Shares held (US$)
- --------------- ---------------------------- ----------------- ------------------------- -------------------------
1. Dr. Robert S Andrews 51 1,530,000 492,151
2 Mayfield
Rowledge
Farnham
Surrey GU10 4DZ
- --------------- ---------------------------- ----------------- ------------------------- -------------------------
2. Mrs Ann Andrews 49 1,470,000 472,850
2 Mayfield
Rowledge
Farnham
Surrey GU10 4DZ
- --------------- ---------------------------- ----------------- ------------------------- -------------------------
Totals: 100 US$3,000,000 (pound)965,001
- --------------- ---------------------------- ----------------- ------------------------- -------------------------
SCHEDULE 2
Particulars relating to the Company
Registration number: 3155211
Authorised share capital: 1,000 ordinary shares of(pound)1 each
Issued share capital: 100 ordinary shares of(pound)1 each
Shareholders (number of shares) Dr. Andrews (51)
Mrs Andrews (49)
Director: Dr. Andrews
Secretary: Mrs Andrews
Auditors: Brebner Allen & Trapp
Accounting reference date: 31 March
Registered Office: 2 Mayfield
Rowledge
Farnham
Surrey GU10 4DZ
SCHEDULE 3
The Warranties
Any Warranty expressed to be given "to the best of the Warrantor's knowledge and
belief" or "so far as the Warrantor is aware" or otherwise qualified by
reference to the knowledge of the Warrantor shall not be qualified in the manner
stated unless the Warrantor can establish that, where it is reasonable for him
to do so, he has made all reasonable enquiries of the company secretary,
employees and agents of the Company and relevant third parties to establish the
truth and accuracy of that Warranty.
In this schedule 3, the following words have the following meanings, unless the
context otherwise requires:
"Accounts" means the audited financial statements of the Company, comprising the
balance sheet, profit and loss account and cash flow statement of the Company
together with the notes thereon, directors' report and auditors' certificate, as
at and for the financial period ended on the Accounts Date;
"2001 Accounts" means the audited financial statements of the Company,
comprising the balance sheet, profit and loss account and cash flow statement of
the Company together with the notes thereon, directors' report and auditors'
certificate, as at and for the financial period ended on the 2001 Accounts Date;
"2001 Accounts Date" means 31 March 2001;
"Activities" means any activity, operation or process carried out by the Company
at any property whether or not currently owned, occupied or used by the Company;
"Business Plan" means the agreed form document 3 entitled "Business Plan for the
Expansion of EW Simulation Technology Ltd" dated 19 March 2002 and initialled,
for the purposes of identification only, by the parties hereto;
"Claim for Tax" means any of the following:
(a) any liability to make a payment of Tax and any claim, assessment, demand,
notice or other document issued or action taken by or on behalf of any
person, authority or body whatsoever and of whatever country, including any
Tax Authority, which claims payment of Tax;
(b) any non-availability or loss of or reduction of any relief (including in
particular a right to repayment);
"distribution" means a distribution as defined by sections 209 to 211
(inclusive) of the TA and section 418 of the TA;
"Environment" means any and all living organisms (including man), ecosystems,
property and the media of air (including air in buildings, natural or man-made
structures, below or above ground) water, (as defined in section 104(1) of the
Water Resources Act 1991 and within drains and sewers) and land (including under
any water as described above and whether above or below surface);
"Environmental Consent" means any consent, approval, permit, licence, order,
filing, authorisation, exemption, registration, permission, reporting or notice
requirement and any related agreement required under any Environmental Law;
"Environmental Laws" means all international, EU, national, federal, state or
local statutes, (which for the avoidance of doubt shall include section 57 and
schedule 22 of the Environment Act 1995 and the guidance and regulations adopted
under those provisions,) by-laws, orders, regulations or other law or
subordinate legislation or common law, all orders, ordinances, decrees or
regulatory codes of practice, circulars, guidance notes and equivalent controls
concerning the protection of human health or which have as a purpose or effect
the protection or prevention of harm to the Environment or health and safety
which are binding in relation to the Property and/or upon the Company in the
relevant jurisdiction in which the Company has been or is operating (including
by the export of its products, or its waste thereto) on or before Completion;
"ERA" means the Employment Rights Act 1996;
"Hazardous Substance" means any natural or artificial substance (whether solid,
liquid, gas, noise, ion, vapour, electromagnetic or radiation, and whether alone
or in combination with any other substance) which is capable of causing harm to
or have a deleterious effect on the Environment, being a nuisance, or which
restricts or makes more costly the use, development, ownership or occupation of
the Property;
"IHTA" means the Inheritance Tax Act 1984;
"Leases" means the leases specified in the Disclosure Letter;
"List of Contracts" means the agreed form document 2 entitled "List of
Contracts", dated the same date of this agreement and initialled, for the
purposes of identification only, by the parties hereto;
"List of Workers" means the agreed form document 4 entitled "List of Workers",
dated the same date of this agreement and initialled, for the purposes of
identification only, by the parties hereto;
"Permit" means a permit, licence, consent, approval, certificate, qualification,
specification, registration and other authorisation and a filing of a
notification report or assessment necessary in any jurisdiction for the proper
and efficient operation of the Company's business, its ownership, possession,
occupation or use of an asset or the execution and performance of this
agreement;
"Substantial Customer" means a customer accounting for more than five per cent.
of the Company's sales in the financial year ended on the Accounts Date;
"Substantial Supplier" means a supplier accounting for more than five per cent.
of the Company's purchases in the financial year ended on the Accounts Date;
"Systems" means all plant, equipment, systems, devices and components which
contain or are controlled or monitored by computer systems, microprocessors or
software;
"Tax" or "tax" means any tax, and any duty, contribution, impost, withholding,
levy or charge in the nature of tax, whether domestic or foreign, and any fine,
penalty, surcharge or interest connected therewith and includes corporation tax,
advance corporation tax, income tax (including income tax required to be
deducted or withheld from or accounted for in respect of any payment), national
insurance and social security contributions, capital gains tax, inheritance tax,
value added tax, customs excise and import duties, stamp duty, stamp duty
reserve tax, insurance premium tax, air passenger duty, rates and water rates,
land fill tax, petroleum revenue tax, advance petroleum revenue tax, gas levy
and any other payment whatsoever which any person is or may be or become bound
to make to any person and which is or purports to be in the nature of taxation;
"Taxation Authority" means any local, municipal, governmental, state, federal or
fiscal, revenue, customs or excise authority, body, agency or official anywhere
in the world having or purporting to have power or authority in relation to Tax
including the Inland Revenue and HM Customs and Excise;
"Taxation Statutes" means all statutes, statutory instruments, orders
enactments, laws, by-laws, directives and regulations, whether domestic or
foreign decrees, providing for or imposing any Tax;
"TCGA" means the Taxation of Chargeable Gains Act 1992;
"TMA" means the Taxes Management Act 1970;
"Transfer Regulations" means the Transfer of Undertakings (Protection of
Employment) Regulations 1981;
"TULR(C)A" means the Trade Union and Labour Relations (Consolidation) Act 1992;
"VATA" means the Value Added Tax Act 1994 and "VAT legislation" means VATA and
all regulations and orders made thereunder;
"Waste" means waste including anything which is discarded or which the holder
intends or is required to discard and anything which is abandoned, unwanted or
surplus irrespective of whether it is capable of being recovered or recycled or
has any value such that there is likely to be a breach of Environmental Law or
such that any investigation, treatment or remediation of the Property is or
would be required or would be undertaken by a prudent owner or occupier;
"Workers" means the employees, directors, officers, workers and consultants of
the Company;
"Year 2000 Conformity" shall have the meaning set out in the document published
with reference number DISC PD2000-1 by the part of the British Standards
Institution called DISC entitled "A Definition of Year 2000 Conformity
Requirements". In construing the meaning of this definition, regard shall be had
to the Amplification of the Definition and Rules set out in the same document.
1. THE COMPANY AND THE SHARES
1.1 Incorporation and Existence
The Company is a limited company incorporated under English law and
has been in continuous existence since incorporation.
1.2 The Shares
(a) The Sellers are the only legal and beneficial owners of the Shares.
(b) The Company has not allotted any shares other than the Shares
and the Shares are fully paid or credited as fully paid.
(c) There is no Encumbrance in relation to any of the Shares or
unissued shares in the capital of the Company. No person has
claimed to be entitled to an Encumbrance in relation to any of
the Shares and the Company is not under any obligation
(whether actual or contingent) to sell, charge or otherwise
dispose of any of the Shares or any interest therein to any
person.
(d) Other than this agreement, there is no agreement, arrangement
or obligation requiring the creation, allotment, issue, sale,
transfer, redemption or repayment of, or the grant to a person
of the right (conditional or not) to require the allotment,
issue, sale, transfer, redemption or repayment of, a share in
the capital of the Company (including an option or right of
pre-emption or conversion).
1.3 The Subsidiaries
(a) The Company does not have any subsidiaries nor any subsidiary undertakings.
(b) The Company does not own any shares or stock in the capital of nor does it
have any beneficial or other interest in any company or business
organisation nor does the Company control or take part in the management of
any other company or business organisation.
2. ACCOUNTS
2.1 General
(a) The Accounts and the 2001 Accounts show a true and fair view of the:
(i) assets, liabilities, financial position and state of affairs at the
Accounts Date (or, in the case of the 2001 Accounts, as at the 2001
Accounts Date); and
(ii) the profits and losses for the financial year ended on the Accounts
Date (or, in the case of the 2001 Accounts, as at the 2001 Accounts
Date),
of the Company.
(b) The Accounts and the 2001 Accounts have been prepared and
audited in accordance with the standards, principles and
practices specified on the face of the Accounts and the 2001
Accounts applied on a consistent basis and subject thereto in
accordance with the law and Generally Accepted Accounting
Standards, Principles and Policies in the United Kingdom
consistently applied.
(c) The Accounts and the 2001 Accounts have been prepared on a
basis consistent with the basis upon which all audited
accounts of the Company have been prepared in respect of the
three years before the Accounts Date (or, in the case of the
2001 Accounts, the 2001 Accounts Date).
2.2 Liabilities
The Accounts and the 2001 Accounts make full provision or reserve for
or disclose all liabilities (including all contingent or deferred
liability to Tax) of the Company whether actual, contingent or
otherwise.
2.3 Extraordinary and Exceptional Items
The results shown by the audited profit and loss account of the
Company for each of the three financial years of the Company ended on
the Accounts Date (or, in the case of the 2001 Accounts, the 2001
Accounts Date) have not (except as disclosed in those accounts) been
affected by an extraordinary, exceptional or non recurring item or by
any other matter making the profits or losses for a period covered by
any of those accounts unusually high or low.
2.4 Valuation of Stock
In the Accounts and the 2001 Accounts:
(a) stock was valued in the same way as in the two preceding financial
years to such accounts and on the basis of the lower of cost and net
realisable value; and
(b) all redundant and obsolete stock was written off and full provision
was made for all slow-moving and damaged stock.
2.5 Depreciation
The rates of depreciation and amortisation used in the audited
accounts of the Company for the three financial years of the Company
ended on the Accounts Date (or, in the case of the 2001 Accounts, the
2001 Accounts Date) were sufficient to ensure that each fixed asset of
the Company will be written down to nil by the end of its useful life.
2.6 Fixed Assets
The value of all of the fixed assets of the Company as shown in the
Accounts and the 2001 Accounts is at cost thereof less depreciation
deducted from time to time in a consistent manner and there has been
no revaluation of such fixed assets since their acquisition.
2.7 Off Balance Sheet Financing
The Company is not engaged in any financing (including the incurring
of any borrowing or any indebtedness in the nature of acceptances or
acceptance credits) of a type which would not be required to be shown
or reflected in the Accounts and the 2001 Accounts.
2.8 Accounting and other Records
(a) The books of account and all other records of the Company
(including any which it may be obliged to produce under any
contract now in force) are up-to-date, in its possession and
are true and complete in accordance with the law and
applicable standards, principles and practices generally
accepted in the United Kingdom.
(b) All deeds and documents (properly stamped where stamping is
necessary for enforcement thereof) belonging to the Company or
which ought to be in the possession of the Company are in the
possession of the Company.
2.9 Accounting Reference Date
The accounting reference date of the Company under section 224 of the
Companies Act 1985 is, and during the last six years has always been,
31 March.
2.10 Management Accounts
The management accounts of the Company for the period from the
Accounts Date to 31 July 2002 (a copy of which are annexed to the
Disclosure Letter) have been prepared on a basis consistent with the
Accounts and, to the best of the knowledge, information and belief of
the Warrantor, give a true and fair view of the assets and liabilities
(whether present or future, actual or contingent) of the Company as at
such date and of the state of affairs, financial position and results
of the Company for the period from the Accounts Date to such date and
comply with the terms of Warranties 2.2 - 2.6 (inclusive) above.
3. CHANGES SINCE THE ACCOUNTS DATE
3.1 General
Since the Accounts Date:
(a) the Company has carried on its business prudently and in the ordinary
and usual course and so as to maintain the business as a going
concern;
(b) there has been no material adverse change in the financial or trading
position or prospects of the Company; and
(c) there has been no material reduction in the value of those fixed
assets specified in the Accounts, to the extent still owned by the
Company.
3.2 Specific
Since the Accounts Date:
(a) the Company has not, other than in the ordinary course of trading:
(i) disposed of, or agreed to dispose of, an asset; or
(ii) assumed, incurred or paid or agreed to assume or incur or pay a
liability, obligation or expense (actual or contingent) or made
any payment,
and in the case of a disposal or agreement to dispose of an
asset for an amount which is lower than book value or an open
market arm's length value, whichever is the higher;
(b) the Company has not acquired or agreed to acquire an asset for an
amount which is higher than open market arm's length value;
(c) the Company has not made, or agreed to make, capital expenditure
exceeding in total (pound)10,000 or incurred, or agreed to incur, a
commitment or connected commitments involving capital expenditure
exceeding in total (pound)10,000;
(d) no Substantial Supplier or Substantial Customer has ceased or
substantially reduced its trade with the Company or has altered the
terms of trade to the Company's disadvantage;
(e) the Company has not declared, paid or made a dividend or other
distribution (including a distribution within the meaning of the TA)
except to the extent provided in the Accounts;
(f) no resolution of the shareholders of the Company has been passed
(except for those representing the ordinary business of an annual
general meeting);
(g) the Company has not repaid or redeemed share or loan capital, or made
(whether or not subject to conditions) an agreement or arrangement or
undertaken an obligation to do any of those things;
(h) the Company has not repaid any sum in the nature of borrowings in
advance of any due date or made any loan or incurred any indebtedness
(including in each case inter group);
(i) the Company has not incurred or paid any liability for any financial,
legal, accountancy, surveyors, valuers or other professional advisers
fees; and
(j) the Company has not paid nor is under an obligation to pay any
service, management or similar charges or any interest or amount in
the nature of interest to any other person or incurred any liability
to make such a payment or made any payment to any of the Sellers or
any of their connected persons whatsoever.
4. ASSETS
4.1 Title and Condition
(a) There are no Encumbrances, nor has the Company agreed to
create any Encumbrances, over any part of its undertaking or
assets and each asset used by the Company (tangible or
intangible) is:
(i) legally and beneficially owned by the Company; and
(ii) where capable of possession, in the possession of the Company.
(b) The Company owns each asset (tangible or intangible) necessary
for the operation of its business as currently conducted and
without limitation no rights (other than rights as
shareholders in the Company) relating to the business of the
Company are owned or otherwise enjoyed by or on behalf of any
of the Sellers of any of their connected persons.
(c) All plant, machinery, vehicles and equipment owned or used by
the Company are in good condition and working order and have
been regularly and properly maintained. None is dangerous or
in need of renewal or replacement.
4.2 Hire Purchase and Leased Assets
Copies of any bill of sale or any hiring or leasing agreement, hire
purchase agreement, credit or conditional sale agreement, agreement
for payment on deferred terms or any other similar agreement to which
the Company is a party are annexed to the Disclosure Letter.
4.3 Stock of components
(a) The Company's stock of components is of satisfactory quality for the
purpose for which they are used.
(b) So far as the Warrantor is aware, the Company has not supplied, or
agreed to supply, goods which have been, or will be, defective or
which fail, or will fail, to comply with their terms of sale.
(c) The Company's level of stock of components is reasonable having regard
to current and anticipated demand.
(d) The Company has not acquired nor agreed to acquire any material part
of its stock of components on terms that the property therein does not
pass until full payment is made.
4.4 Debts
Except to the extent to which specific provision or reserve has been
made in the Accounts, all indebtedness owed to the Company and whether
included in the Accounts or arising since the Accounts Date will be
duly paid in the ordinary course of business and none of such debts
has been factored, sold or agreed to be sold by the Company.
5. INTELLECTUAL PROPERTY
(a) Save for Intellectual Property licensed to the Company, the Company is
the sole and absolute legal and beneficial owner of all Company
Intellectual Property .
(b) All Intellectual Property created by any individual or any other party
on the Company's behalf, as an employee, a consultant, a
sub-contractor or otherwise has been assigned by such parties to the
Company and forms part of the Company Intellectual Property. No
further steps are necessary in order to vest each Intellectual
Property in the Company.
(c) The interest of the Company in the Company Intellectual Property is
free from Encumbrances and in the case of confidential information,
any disclosure obligation and are subsisting, valid, exercisable and
enforceable.
5.2 Renewals/maintenance
(a) Neither the Company nor the Sellers are the registered proprietors of
any registered Company Intellectual Property.
(b) All steps have been taken diligently for the maintenance and
protection of unregistered Company Intellectual Property.
(c) All taxes and other payments have been made in respect of Company
Intellectual Property and all governmental approvals have wherever
necessary for the exercise of the Company Intellectual Property been
obtained.
5.3 Sufficiency
(a) The Company Intellectual Property is all the Intellectual
Property necessary for the operation of the business of the
Company as now conducted and it will not be adversely affected
by the transaction contemplated by this agreement. Neither of
the Sellers owns any Intellectual Property used by the Company
or necessary for the operation of the business of the Company
as it was conducted at Completion.
5.4 Licences
(a) Completion will not affect the rights of the Company under any
such licences. Save as disclosed neither the Company nor
either of the Sellers is obliged to enter into any such
agreement relating to Company Intellectual Property. There has
been or is no breach nor is there any fact or matter which
would or may create a breach of such agreement, consent,
undertaking or licence.
(b) The terms of any order given or measure imposed by a court or
other body of competent jurisdiction relating to the Company
Intellectual Property against or in favour of the Company or
the Sellers or their connected persons are set out in the
Disclosure Letter and there is no breach of any such orders.
5.5 Infringement
(a) The use by the Company of the Company Intellectual Property
and the Business Intellectual Property does not and is not
likely to infringe and the processes or methods employed,
services provided, the business conducted and the products
used, manufactured and dealt in or supplied by the Company, do
not nor did they at the time used, manufactured, dealt in or
supplied, infringe the Intellectual Property of any other
person.
(b) No proceedings claims or complaints have been brought or
threatened by any third party or competent authority in
relation to the Company Intellectual Property and/or
Intellectual Property licensed to the Company including any
concerning title, subsistence, validity or enforceability or
grant of any right or interest in such Intellectual Property.
(c) So far as the Warrantor is aware no third party is infringing
or misusing or threatening to infringe or misuse the Company
Intellectual Property and/or Intellectual Property licensed to
the Company.
(d) The Company is not subject to any injunction, undertaking or
court order or order of any other authority of competent
jurisdiction not to use or restricting the use any Company
Intellectual Property.
5.6 Use of name
The Company does not carry on and has not in the last two years
carried on any business under any name other than its corporate name.
5.7 Confidential Agreements
Save as disclosed, the Company has not and none of the Sellers nor any
of their connected persons have entered into any confidentiality or
other agreement or is subject to any duty which restricts the free use
or disclosure of any information used in the business of the Company
and there is no breach of any such agreement or duty.
5.8 Documents
All documents material to the title to the Company Intellectual
Property form part of the records or materials in the possession and
ownership of the Company.
6. EFFECT OF SALE
6.1 So far as the Warrantor is aware, neither the execution nor
performance of this agreement or any document to be executed at or
before Completion will:
(a) result in the Company losing the benefit of a Permit or an
asset, licence, grant, subsidy, right or privilege which it
enjoys at the date of this agreement in any jurisdiction; or
(b) conflict with, or result in a breach of, or give rise to an
event of default under, or require the consent of a person
under, or enable a person to terminate, or relieve a person
from an obligation under, an agreement, arrangement or
obligation to which the Company is a party or a legal or
administrative requirement in any jurisdiction; or
(c) result in any Substantial Customer being entitled (and if a
Substantial Customer is so entitled, so far as the Warrantor
is aware, it will not exercise any such entitlement) to cease
dealing with the Company or substantially to reduce its
existing level of business or to change the terms upon which
it deals with the Company; or
(d) result in any Substantial Supplier being entitled (and if a
Substantial Supplier is so entitled, so far as the Warrantor
is aware, it will not exercise any such entitlement) to cease
supplying the Company or substantially to reduce its supplies
to or to change the terms upon which it supplies the Company;
(e) result in any officer or senior employee leaving the Company; or
(f) make the Company liable to offer for sale, transfer or
otherwise dispose of or purchase or otherwise acquire any
assets, including shares held by it in other bodies corporate
under their articles of association or any agreement or
arrangement.
7. CONSTITUTION
7.1 Intra Vires
The Company has the power to carry on its business as now conducted
and the business of the Company has at all times been carried on intra
vires.
7.2 Memorandum and Articles
The memorandum and articles of association of the Company in the form
annexed to the Disclosure Letter are true and complete and have
embodied therein or annexed thereto copies of all resolutions and
agreements as are referred to in section 380 of the Companies Act
1985, and all amendments thereto (if any) were duly and properly made.
7.3 Register of Members
The register of members of the Company has been properly kept and
contains true and complete records of the members from time to time of
the Company and the Company has not received any notice or allegation
that any of them is incorrect or incomplete or should be rectified.
7.4 Powers of Attorney
The Company has not executed any power of attorney or conferred on any
person other than its directors, officers and employees any authority
to enter into any transaction on behalf of or to bind the Company in
any way and which power of attorney remains in force or was granted or
conferred within three years of the Completion Date.
7.5 Statutory Books and Filings
(a) The statutory books of the Company are up to date, in its possession
and are true and complete in accordance with the law.
(b) All resolutions, annual returns and other documents required to be
delivered to the Registrar of Companies (or other relevant company
registry or other corporate authority in any jurisdiction) have been
properly prepared and filed and are true and complete and the common
seal of the Company is in its possession.
8. INSURANCE
8.1 Policies
The Disclosure Letter contains a list of each current insurance and
indemnity policy in respect of which the Company has an interest
(together the "Policies"). Each of the Policies is valid and
enforceable and is not void or voidable. There are no circumstances
which might make any of the Policies void or voidable or enable any
insurer to refuse payment of all or part of any claim under the
Policies.
8.2 Insurance of Assets
Each insurable asset of the Company has at all material times been and
is at the date of this agreement insured to its full replacement value
(with no provision for deduction or excess) against each risk normally
insured against by a prudent person operating the types of business
operated by the Company.
8.3 Other Insurance
The Company has at all material times been and is at the date of this
agreement adequately insured against accident, damage, injury, third
party loss (including product liability), loss of profits and any
other risk normally insured by a prudent person operating the types of
business operated by the Company and has at all times effected all
insurances required by law.
8.4 Claims
No claim is outstanding under any of the Policies and no matter exists
which might give rise to a claim under any of the Policies.
8.5 Premiums
The Company has paid all premiums due in respect of all the Policies
and has not done or omitted to do anything which might result in an
increase in the premium payable under any of the Policies.
9. CONTRACTUAL MATTERS
9.1 Validity of Agreements
(a) Neither the Company nor the Sellers have any knowledge of the
invalidity of, or a ground for termination, avoidance or
repudiation of, an agreement, arrangement or obligation to
which the Company is a party. No party with whom the Company
has entered into an agreement, arrangement or obligation has
given notice of its intention to terminate, or has sought to
repudiate or disclaim, the agreement, arrangement or
obligation.
(b) No party with whom the Company has entered into an agreement
or arrangement is in material breach of the agreement or
arrangement. No matter exists which might give rise to such
breach.
(c) The Company is not in breach of any agreement or arrangement
and, so far as the Warrantor is aware, no matter exists which
might give rise to such breach.
9.2 Standard Terms and Conditions
A copy of the standard terms and conditions of business of the Company
are annexed to the Disclosure Letter and the Company has not entered
into an agreement or arrangement with a customer or supplier different
from these.
9.3 Supply Contracts
Full and accurate details of all agreements or arrangements for the
supply of stock, raw materials, products or goods to or by the Company
which involve or are likely to involve the supply of goods the
aggregate sale value of which will represent in excess of five per
cent. of the turnover for the financial year of the Company ended on
the Accounts Date are contained in the Disclosure Letter and copies
annexed to it.
9.4 Material Agreements
(a) The Company is not a party to and is not liable under any
contract, transaction, arrangement or liability which involves,
or is likely to involve obligations or liabilities which, by
reason of their nature or magnitude, ought reasonably to be made
known to an intending buyer of the Shares including any which:
(i) is of an unusual or abnormal nature, or outside the ordinary
and proper course of business;
(ii) is of a long-term nature (that is, unlikely to have been
fully performed, in accordance with its terms, more than six
months after the date on which it was entered into or
undertaken);
(iii)is incapable of termination in accordance with its terms,
by the Company, on 60 days' notice or less;
(iv) cannot readily be fulfilled or performed by the Company on
time without undue or unusual expenditure of money, effort
or personnel;
(v) involves payment by the Company by reference to fluctuations
in the index of retail prices, or any other index or in the
rate of exchange for any currency;
(vi) involves an aggregate outstanding expenditure or other
liability by the Company of more than(pound)10,000; or
(vii)restricts its freedom to engage in any activity or business
or confines its activity or business to a particular place;
(b) The Company is not a party to and is not liable under:
(i) an agreement, arrangement or obligation by which the Company
is a member of a joint venture, consortium, partnership or
association (other than a bona fide trade association); or
(ii) a distributorship, agency, marketing, licensing or
management agreement or arrangement.
9.5 Contracts with Connected Persons
There is, and during the three years ending on the date of this
agreement there has been, no agreement or arrangement (legally
enforceable or not) to which the Company or any employee of the
Company is or was a party and in which any of the Sellers or a person
connected with any of them is or was interested in any way. The
Company does not owe any obligation or sum to nor does it and neither
will it nor any of its employees immediately after Completion have any
contractual or other arrangements of any sort with the Sellers or any
of their connected persons and since the Accounts Date no payment or
benefit has been made or given or received or agreed to be made given
or received (including in particular interest) between or for the
benefit of any of the Sellers or any of the Sellers' connected persons
on the one hand and the Company or any employee of the Company on the
other hand.
9.6 Conditions and Warranties in respect of Goods or Services
Except for a condition or warranty implied by law or contained in its
standard terms of business or otherwise given in the usual course of
trading, the Company has not given a condition or warranty, or made a
representation, in respect of goods or services supplied or agreed to
be supplied by it, or accepted an obligation that could give rise to a
liability after the goods or services have been supplied by it.
9.7 Backlog contracts
(a) The List of Contracts is a full and complete list of all the
current unfulfilled contracts with customers of the Company
in existence at the date of the management accounts referred
to in Warranty 2.10 which were, at that date, wholly or
partly uninvoiced.
(b) The terms of the contracts included in the List of Contracts
have been fully and fairly disclosed to the Buyer on
-------- September 2002.
(c) The figures shown in List of Contracts are true, accurate
and not misleading.
(d) Each contract included in the List of Contracts will be
profitable. The two contracts known to the parties as the
"Mercury" and the "Wodin" contracts shall be aggregated for
the purposes of determining profitability in accordance with
this warranty 9.7(d). For the avoidance of doubt, such
aggregation shall only apply in the case of these two named
contracts.
(e) Each contract included in the List of Contracts requires a
Permit. Other than the Permits relating to projects Zeus and
Vulcan, the Company has obtained and complied with the terms
and conditions of such Permits.
9.8 EDO Corporation "(EDO")
In respect of all products produced by the Company sold by or through
EDO in the USA (whether under the EWST name, the EDO name or otherwise
and whether as principal or as the Company's agent), no
misrepresentation as to their origin has been made.
9.9 EWST Australia Pty Limited
(a) EWST Australia Pty Limited has no other business other than
performing those services set out in the Disclosure Letter.
(b) The only transactions that EWST Australia Pty Limited have
entered into in the last two financial years are set out in
the Disclosure Letter.
10. INFORMATION TECHNOLOGY AND DATA PROTECTION
10.1 Future Adequacy of Systems
The Systems used in connection with the business of the Company are
adequate for the immediate needs of that business, including without
limitation as to system capacity and ability to process current peak
volumes and anticipated volumes in a timely manner.
10.2 No Systems failures
In the 12 months prior to the date hereof the Company has not suffered
and so far as the Warrantor is aware no other person has suffered any
failures or bugs in or breakdowns of Systems used in connection with
the business of the Company which have caused any substantial
disruption or interruption in or to its use and the Warrantor is not
aware of any fact or matter which may substantially disrupt or
interrupt or affect the use of such equipment following the
acquisition by the Buyer of the Shares pursuant to this agreement on
the same basis as it is presently used.
10.3 Data Compliance
All Systems used in the business of the Company are and have been Date
Compliant and will not cease to be so. In this clause, "Date
Compliant" means the ability to process eight digit date and four
digit year data and to otherwise function in all respects without
being adversely affected by any date or change of date, including any
date in any century or leap year, in each case without workarounds.
10.4 Copyright in Technical Manuals
None of the software or technical manuals used by the Company has been
copied wholly or substantially by the Company from any material in
which the Company does not own copyright.
10.5 Ownership of Systems
All Systems, excluding software, used in the business of the Company
are owned and operated by and are under the control of the Company and
are not wholly or partly dependent on any facilities which are not
under the ownership, operation or control of the Company. No action
will be necessary to enable such systems to continue to be used in the
business of the Company to the same extent and in the same manner as
they have been used prior to the date hereof.
10.6 Litigation in respect of Software
The Company is validly licensed to use the software used in its
business and no action will be necessary to enable it to continue to
use such software to the same extent and in the same manner as they
have been used prior to the date hereof.
10.7 Internet Presence
Other than the Company's web site, www.ewst.co.uk, the Company does
not have any public, private or reserved presence on the world wide
web, multi-party extranet, virtual private network or similar
internet-based, linked system ("Internet Presence"). The Company's
domain name(s), if any, are currently registered, are transferable to
the Buyer and are in good standing. The Company's Internet Presence,
if any, is wholly passive and informational in nature and involves no
interactivity between third parties and the Company including
purchases, sales, leases or other commercial transactions conducted in
any degree by or through the Internet Presence.
10.8 Data Protection Act
The Company complies in full with, and has in place all necessary
registrations and procedures to comply with the Data Protection Act
1984 and the Data Protection Act 1998, as applicable.
11. LIABILITIES
11.1 Borrowings
The total amount borrowed by the Company from its bankers does not
exceed the limits of the applicable facilities and the total amount
borrowed by the Company from whatsoever source does not exceed any
limitation on its borrowing contained in its articles of association,
or in any debenture or loan stock deed or other instrument.
11.2 Continuance of Facilities
Full and accurate details of all overdrafts, loans or other financial
facilities outstanding or available to the Company are set out in the
Disclosure Letter and whether or not of a type which would be required
to be shown in or reflected in the Accounts (including any
indebtedness for moneys borrowed or raised under any acceptance
credit, bond, note, bill of exchange or commercial paper, finance
lease, hire purchase agreement, trade bills (other than those on terms
normally obtained) forward sale or purchase agreement or conditional
sale agreement or other transaction having the commercial effect of a
borrowing) and copies of all documents relating to such matters are
annexed to the Disclosure Letter. None of the Sellers' nor any of
their connected persons has done anything whereby the continuance of
any such facilities in full force and effect might be affected or
prejudiced.
11.3 Bank Accounts
A statement being in the agreed terms of all the bank accounts of the
Company and of the credit or debit balances on such accounts as at a
date not more than seven days before the date of this agreement has
been supplied to the Buyer. The Company does not have any other bank
or deposit accounts (whether in credit or overdrawn) not included in
such statement. Since such statement there have been no payments out
of any such accounts except for routine payments and the balances on
current account are not now substantially different from the balances
shown on such statements.
11.4 Working Capital
Having regard to existing bank and other facilities, the Company has
sufficient working capital for the purposes of continuing to carry on
its business in its present form and at its present level of turnover
for a period of 12 months from Completion and for the purposes of
executing, carrying out and fulfilling in accordance with their terms
all orders, projects and contractual obligations which have been
placed with, or undertaken by, the Company.
11.5 Guarantees and Indemnities
(a) The Company is not a party to and is not liable (including
contingently) under a guarantee, indemnity or other agreement
to secure or incur a financial or other obligation with
respect to another person's obligation.
(b) No part of the loan capital, borrowing or indebtedness in the
nature of borrowing of the Company is dependent on the
guarantee or indemnity of, or security provided by, another
person.
11.6 Events of Default
No event has occurred or is subsisting or been alleged or so far as
the Warrantor is aware is likely to arise which:
(a) constitutes an event of default, or otherwise gives rise to an
obligation to repay, or to give security under an agreement
relating to borrowing or indebtedness in the nature of
borrowing (or will do so with the giving of notice or lapse of
time or both);
(b) will lead to an Encumbrance constituted or created in
connection with borrowing or indebtedness in the nature of
borrowing, a guarantee, an indemnity or other obligation of
the Company becoming enforceable (or will do so with the
giving of notice or lapse of time or both); or
(c) with the giving of notice and/or lapse of time constitute or
result in a default or the acceleration of any obligation
under any agreement or arrangement to which the Company is a
party or by which it or any of its property, revenues or
assets is bound.
11.7 Grants
The Company is not liable to repay an investment or other grant or
subsidy made to it by any person (including the Department of Trade
and Industry or its predecessor). No matter (including the execution
and performance of this agreement) exists which might entitle a body
to require repayment of, or refuse an application by the Company for,
the whole or part of a grant or subsidy.
12. PERMITS
12.1 Compliance with Permits
(a) Other than the Permits referred to in paragraph 9.7(e), the
Company does not have any Permits.
(b) So far as the Warrantor is aware, other than the Permits
referred to in paragraph 9.7(e), the Company does not need
or require any Permit to operate the business that the
Company is currently operating.
12.2 Status of Permits
There are no pending or threatened proceedings which might in any way
affect the Permits and the Warrantor is not aware of any other reason
why any of them should be suspended, threatened or revoked or be
invalid.
13. INSOLVENCY
13.1 Winding up
No order has been made, petition presented or resolution passed for
the winding up or for the appointment of a provisional liquidator to
the Company or any of the Sellers.
13.2 Administration
No administration order has been made and no petition for an
administration order has been presented in respect of the Company or
any of the Sellers.
13.3 Receivership
No receiver, receiver and manager or administrative receiver has been
appointed of the whole or part of the Company's or the whole or part
of any of the Seller's business or assets.
13.4 Compromises with Creditors
(a) No voluntary arrangement under section 1 of the Insolvency Act
1986 has been proposed or approved in respect of the Company
or any of the Sellers.
(b) No compromise or arrangement under section 425 of the
Companies Act 1985 has been proposed, agreed to or sanctioned
in respect of the Company or any of the Sellers.
(c) Neither the Company nor any of their Sellers have entered into
any compromise or arrangement with any of the respective
creditors or any class of their respective creditors
generally.
13.5 Insolvency
Neither the Company nor any of the Sellers are unable to pay their
respective debts within the meaning of section 123 of the Insolvency
Act 1986 (but for this purpose ignoring the reference to "if it is
proved to the satisfaction of the court that" in section 123(1)(e) and
123(2)).
13.6 Payment of Debts
Neither the Company nor any of the Seller's have stopped paying their
debts as they fall due.
13.7 Distress etc.
No distress, execution or other process has been levied on an asset of
the Company or any of the Sellers.
13.8 Unsatisfied Judgments
There is no unsatisfied judgment or court order outstanding against
the Company or any of the Sellers.
13.9 Striking Out
No action is being taken by the Registrar of Companies to strike the
Company nor any of the Sellers off the register under section 652 of
the Companies Act 1985.
13.10 Bankruptcy
None of the Sellers has been made bankrupt or a petition presented to
make any of the Sellers bankrupt.
14. LITIGATION AND COMPLIANCE WITH LAW
14.1 Litigation
(a) Neither the Company nor a person for whose acts or defaults
the Company may be vicariously liable is involved, or has
during the five years ending on the date of this agreement
been involved, in a civil, criminal, arbitration,
administrative or other proceeding in any jurisdiction. No
civil, criminal, arbitration, administrative or other
proceeding in any jurisdiction is pending or threatened by or
against the Company or a person for whose acts or defaults the
Company may be vicariously liable.
(b) So far as the Warrantor is aware, no matter exists which might
give rise to a civil, criminal, arbitration, administrative or
other proceeding in any jurisdiction involving the Company or
a person for whose acts or defaults the Company may be
vicariously liable.
(c) There is no outstanding judgment, order, decree, arbitral
award or decision of a court, tribunal, arbitrator or
governmental agency in any jurisdiction against the Company or
a person for whose acts or defaults the Company may be
vicariously liable.
14.2 Compliance with Law
The Company has conducted its business and dealt with its assets in
all material respects in accordance with all applicable legal and
administrative requirements in any jurisdiction.
14.3 Investigations
The Company is not and has not been subject to any investigation,
enquiry or disciplinary proceeding (whether judicial, quasi-judicial
or otherwise) in any jurisdiction and none is pending or threatened,
and neither has it received any request for information from, any
court or governmental authority (including any national competition
authority and the Commission of the European Communities and the EFTA
Surveillance Authority) under any anti-trust or similar legislation in
any jurisdiction. So far as the Warrantor is aware no matter exists
which might give rise to such an investigation, enquiry, proceeding or
request for information.
14.4 Competition Law
(a) The Company is not nor has been a party to or concerned in any
agreement or arrangement, or conducted itself (whether by
omission or otherwise) in a manner, which:
(i) constitutes a breach of any relevant undertaking,
order, assurance or other measure made under the Fair
Trading Act 1973, the Restrictive Trade Practices Acts
1976 and 1977, the Resale Prices Act 1976, the Trade
Descriptions Acts 1968 and 1972, the Competition Act
1980 or the Competition Act 1998;
(ii) so far as the Warrantor is aware, infringes the
Chapter I prohibition and/or the Chapter II
prohibition of the Competition Act 1998 or Articles 81
and/or 82 of the Treaty of Rome or their equivalent
provisions under the European Economic Area Agreement
or any other anti-trust or similar legislation in any
jurisdiction; or
(iii) so far as the Warrantor is aware, is registrable,
unenforceable or void (whether in whole or in part) or
renders it liable to civil, criminal or administrative
proceedings by virtue of any anti-trust,
anti-monopoly, anti-cartel, consumer law or any other
similar legislation in any jurisdiction including (in
relation to the UK) any legislation now repealed by
the Competition Act 1998.
(b) The Company is aware of the provisions of, and is taking all
reasonably necessary steps to comply with, the Competition Act
1998.
(c) The Company has not given an undertaking or written assurance
(whether legally binding or not) to any court or governmental
authority (including any national competition authority
(including the UK Office of Fair Trading) and the European
Commission and the EFTA Surveillance Authority) under any
anti-trust or similar legislation in any jurisdiction.
(d) The Company is not subject to any order, regulation or
decision made by any court or governmental authority
(including any national competition authority (including the
UK Office of Fair Trading) and the European Commission and the
EFTA Surveillance Authority) under any anti-trust or similar
legislation in any jurisdiction.
(e) The Company is not and has not been a party to or concerned in
any agreement, arrangement or concerted practice in respect of
which an application for negative clearance and/or an
exemption has been made to the UK Office of Fair Trading, the
European Commission or the EFTA Surveillance Authority.
(f) The Company has not received a written communication or
request for information in relation to any aspect of its
business from or by the Director General of Fair Trading (or
any officer of the Office of Fair Trading), the Competition
Commission (or, formerly, the Monopolies and Mergers
Commission), the Secretary of State for Trade and Industry,
the European Commission or the EFTA Surveillance Authority or
from any other authority under any anti-trust or similar
legislation in any other jurisdiction and no such
communication or request is currently expected.
(g) The Company is not in a dominant position in a market in the
UK (or any part of it), in the European Community or the
European Economic Area, or a substantial part of a market in
the European Community or European Economic Area, for the
purposes of Chapter II of the Competition Act 1998, Article 82
of the Treaty of Rome and Article 54 of the European Economic
Area Agreement.
(h) The Company has never received, nor is expecting to receive
any aid (in whatever form) from a Member State of the European
Community or from State resources such as could be regarded as
State aid for the purposes of Articles 87 to 89 of the Treaty
of Rome.
14.5 Unlawful Payments
Neither the Company nor a person for whose acts or defaults the
Company may be vicariously liable has:
(a) induced a person to enter into an agreement or arrangement with the
Company by means of an unlawful or immoral payment, contribution, gift
or other inducement;
(b) offered or made an unlawful or immoral payment, contribution, gift or
other inducement to a government official or employee; or
(c) directly or indirectly made an unlawful contribution to a political
activity.
All references to the Company in this paragraph 14 should be deemed to
include the Company's officers, agents and employees.
15. BROKERAGE OR COMMISSIONS
No person is entitled to receive from the Company or any Seller or any
connected person of the Sellers a finder's fee, brokerage or
commission or other benefit in connection with this agreement or
anything in it and, in particular, the Company is not liable to pay or
give to any of its directors, officers, employees, agents and advisers
any sum or benefit whatsoever in connection with the sale of the
Shares and no such person has any interest in such sale.
16. DIRECTORS, WORKERS AND EMPLOYEES
16.1 Workers
The List of Workers shows a complete true and up to date list of all
the Workers.
16.2 Particulars of Workers
The particulars of all Workers provided in List of Workers show the
names, job title, date of commencement of employment and date of birth
of every Worker of the Company.
16.3 Remuneration and Benefits
The particulars of all Workers provided in List of Workers together
with the information set out in the Disclosure Letter show all
remuneration and other benefits:
(a) actually provided; or
(b) which the Company is bound to provide (whether now or in the future)
to each Worker and are true and complete and include particulars of
and details of participation in all profit sharing, incentive, bonus,
commission, share option, medical, permanent health insurance,
directors' and officers' insurance, travel, car, redundancy and other
benefit schemes, arrangements and understandings (the "Schemes")
operated for all or any Workers or former Workers of the Company or
their dependants whether legally binding on the Company or not.
16.4 Terms and Conditions
(a) The Disclosure Letter contains copies of all the terms and
conditions, staff handbooks and policies which apply to the
Workers.
(b) There are no terms and conditions in any contract with any
Worker pursuant to which such person will be entitled to
receive any payment or benefit or such person's rights will
change as a direct consequence of the transaction contemplated
by this agreement.
(c) There are no service agreements or contracts of employment
between the Company and any of its Workers containing any
provision in addition to the matters required to be contained
therein under section 1 of the ERA.
(d) All employees of the Company have received a written statement
of particulars of their employment as required by section 1 of
the ERA.
16.5 Operation of the Schemes
(a) The Schemes have at all times been operated in accordance with
their governing rules or terms and all applicable laws and all
documents which are required to be filed with any regulatory
authority have been so filed and all tax clearances and
approvals necessary to obtain favourable tax treatment for the
Company and/or the participants in the Schemes have been
obtained and not withdrawn and no act or omission has occurred
which has or could prejudice any such tax clearance and/or
approval.
(b) No past or present Worker or any dependant thereof or any
other participant in any Scheme has made any claim against the
Company in respect of any Scheme and no event has occurred
which could or might give rise to any such claim.
16.6 Notice Periods
The terms of employment or engagement of all Workers, agents and
professional advisers of the Company are such that their employment or
engagement may be terminated by not more than three months' notice
given at any time without liability for any payment including by way
of compensation or damages (except for unfair dismissal or a statutory
redundancy payment).
16.7 Changes since the Accounts Date
Since the Accounts Date the Company has not made, announced or
proposed any changes to the emoluments or benefits of or any bonus to
any Worker and the Company is under no express or implied obligation
to make any such changes with or without retrospective operation.
16.8 Loans
There are no amounts owing or agreed to be loaned or advanced by the
Company to any Worker (other than amounts representing remuneration
accrued due for the current pay period, accrued holiday pay for the
current holiday year or for reimbursement of expenses).
16.9 Notice of Termination, Leave of Absence, Disciplinary Warning and
Outstanding Offers
(a) No Worker has given or received notice to terminate his employment or
engagement.
(b) There are no Workers who are on secondment, maternity leave or absent
on grounds of disability or other leave of absence (other than normal
holidays or absence of no more than one week due to illness).
(c) No Worker is subject to a current disciplinary warning or other
procedure.
(d) There are no outstanding offers of employment or engagement by the
Company and no person has accepted such an offer but not yet taken up
the position accepted.
16.10 Payment up to Completion
All salaries, fees and wages and other benefits of all Workers have,
to the extent due, been paid or discharged in full together with all
related payments to third party benefit providers and the relevant
authorities.
16.11 Industrial Relations
(a) No Workers are members of a trade union, staff association or any
other body representing workers and no such union, association or body
is recognised by the Company for the purposes of collective
bargaining.
(b) The Disclosure Letter contains copies of and full details of all
rights and liabilities relating or pursuant to any collective
agreements (whether with a trade union, staff association or any other
body representing Workers and whether legally binding or not)
concerning the Company.
(c) Within the three years preceding the date hereof the Company has not
been engaged or involved in any trade dispute (as defined in section
218 of the TULR(C)A) with any Worker, trade union, staff association
or any other body representing workers and no event has occurred which
could or might give rise to any such dispute and no industrial action
involving Workers, official or unofficial, is now occurring or
threatened nor has any industrial relations or employment matter been
referred either by the Company or its Workers or by any trade union
staff association or any other body representing Workers to ACAS for
advice, conciliation or arbitration.
16.12 Claims by Workers
So far as the Warrantor is aware, no past or present Worker or any
workers of a predecessor in business has any claim or right of action
against the Company including any claim:
(a) in respect of any accident or injury which is not fully covered by
insurance; or
(b) for breach of any contract of services or for services; or
(c) for loss of office or arising out of or connected with the termination
of his office or employment and no event or inaction has occurred
which could or might give rise to any such claim.
16.13 Enquiries and Discrimination
(a) There are no enquiries or investigations existing, pending or
threatened affecting the Company in relation to any Workers by
the Equal Opportunities Commission, the Commission for Racial
Equality, the Disability Rights Commission or the Health and
Safety Executive or any other bodies with similar functions or
powers in relation to workers.
(b) There are no terms or conditions under which any Worker is
employed or engaged, nor has anything occurred or not occurred
prior to Completion that may give rise to any claim for sex
discrimination, race discrimination, disability discrimination
or equal pay either under domestic United Kingdom or European
Law whether by such Worker or a prospective Worker or
otherwise.
16.14 Redundancy
Full and accurate details are disclosed in the Disclosure Letter of
any redundancy payment (whether pursuant to a redundancy scheme or
formula or policy or otherwise whether contractual or discretionary)
the Company has made in excess of the statutory redundancy entitlement
to any Worker or former Worker in the last 5 years, and there is no
provision in any occupational pension scheme in which Workers
participate which provides enhanced benefits on redundancy.
16.15 Health and Safety
Full details of all health and safety policies and procedures, health
and safety committees, health and safety representatives, and any
complaints, recommendations, investigations or claims relating to
health and safety issues made or carried out in the last 5 years and
affecting the Company and its Workers have been disclosed in the
Disclosure Letter.
16.16 Compliance with Laws
There are no training schemes, arrangements or proposals, whether past
or present, in respect of which a levy may henceforth become payable
by the Company under the Industrial Training Act 1982 and pending
Completion no such schemes, arrangements or proposals will be
established or undertaken.
16.17 Transfer Regulations
The Company has not within the three years preceding the date hereof
entered into any agreement which involved or may involve the Company
(and no event has occurred which may involve the Company in the
future) acquiring or disposing of any undertaking or part of one such
that the Transfer Regulations applied or may apply thereto.
16.18 Duty to Inform and Consult
The Sellers and the Company have complied with their obligations to
inform and consult with trade unions and other representatives of
workers and to send notices to the Secretary of State pursuant to
sections 188 to 194 of the TULR(C)A and regulations 10 and 11 of the
Transfer Regulations.
16.19 Records
The Company has maintained adequate and suitable records regarding the
service of its Workers and, in particular, has maintained all records
required under the Working Time Regulations 1998. All such records
comply with the requirements of the Data Protection Act 1998.
16.20 Business is Conducted by Workers
The Company has not entered into any agreement or arrangement for the
management or operation of its business or any part thereof other than
with its Workers.
17. PROPERTY
17.1 All Property
The Property comprises all the freehold and leasehold land owned, used
or occupied by and all the rights vested in the Company and all
agreements whereby the Company has any financial entitlement relating
to any land at the date hereof.
17.2 No Other Liabilities
The Company has no actual or contingent obligations or liabilities (in
any capacity including as principal contracting party or guarantor) in
relation to any lease, licence or other interest in, or agreement
relating to, land apart from the Property.
17.3 Title Deeds and Documents
The Company has under its control all title deeds and documents
necessary to prove its title to the Property and the same are original
documents or properly examined abstracts.
17.4 No Overriding Interests
The Property is not to the best of the Warrantor's knowledge and
belief subject to any overriding interests within the meaning of
section 70 of the Land Registration Act 1925.
17.5 No Default
The Company has duly performed, observed and complied with all of the
terms of any lease, underlease or tenancy agreement under which any
part of the Property is held and (in the case of leasehold property)
all rents and service charges have been paid to date and no notice of
any alleged breach of any of the terms of any such lease or tenancy
agreement as aforesaid has been served on the Company.
17.6 Leasehold Property
The Property which is leasehold is held under the lease brief details
of which are set out in schedule 6 and no licences or collateral
arrangements or concessions have been entered into or granted each
such lease being a head lease
17.7 Occupational Interests
All such leases, tenancies, licences and agreements to which the
Property are subject are correctly summarised in the particulars
thereof set out in schedule 6 and subject thereto the Company is in
exclusive occupation of each and every part of the Property.
17.8 Due Compliance by Occupational Tenants
Each lessee, tenant, licensee or occupier of any such lease,
underlease, tenancy, licence or agreement has in all material respects
observed and performed all covenants, obligations, conditions and
restrictions therein and no breach has been waived or acquiesced in
and all rent has been paid promptly and has not been commuted, waived
or paid in advance nor have any collateral assurances, undertakings or
concessions been made or entered into in connection therewith.
17.9 Use
The existing use of the Property is only that specified in schedule 6.
17.10 No Compulsory Acquisition or Enforcement Proceedings
To the best of the Warrantor's knowledge and belief but on the basis
that the Warrantor has made no enquiries relating thereto there are no
outstanding enforcement or other notices or proceedings issued in
respect of the Property and there is no resolution or proposal for
compulsory acquisition by the local or any other authority nor any
outstanding order, notice or other requirement of any such authority
that affects such existing use as aforesaid or involves expenditure in
complying with it nor any other circumstances known which may result
in any such order or notice being made or served or which may
otherwise affect the Property.
17.11 Replies to Enquiries
All disclosures and replies to enquiries and requisitions relating to
the Property made or given by or on behalf of the Sellers or the
Company to the Buyer or its solicitors are now and will at Completion
be complete and correct in all material respects.
17.12 No Litigation
The Company is not engaged in any litigation or arbitration
proceedings in connection with any of the Property.
17.13 No Disputes
The Property is not affected by any outstanding disputes, notices or
complaints which affect the use of the Property for the purposes for
which it is now used or proposed to be used.
18. TAXATION
COMPLIANCE
18.1 Returns
The Company has made all returns and supplied all information and
given all notices to the Inland Revenue or other Taxation Authority as
reasonably requested or required by law within any requisite period
and all such returns and information and notices are correct and
accurate in all respects and are not the subject of any dispute and
there are no facts or circumstances likely to give rise to or be the
subject of any such dispute.
18.2 Disclosures
All statements and disclosures made to any Taxation Authority in
connection with any provision of the Taxation Statutes whatsoever were
when made and remain complete and accurate in all material respects.
18.3 Clearances
No action has been taken by the Company in respect of which any
consent or clearance from the Inland Revenue or other Taxation
Authority was required save in circumstances where such consent or
clearance was validly obtained, and where any conditions attaching
thereto were and will, immediately following completion, continue to
be met.
18.4 Payment of Tax
The Company has duly and punctually paid all Tax to the extent that
the same ought to have been paid and is not liable nor has it within
three years prior to the date hereof been liable to pay any penalty or
interest in connection therewith.
18.5 Instalment Payments
The Company is not required, under the Corporation Tax (Instalment
Payments) Regulations 1998 (SI 1998/3175), to pay corporation tax by
instalments.
18.6 Withholdings
The Company has duly and punctually complied with its obligations to
deduct, withhold or retain amounts of or on account of Tax from any
payments made by it and to account for such amounts to the relevant
Taxation Authority and has complied with all its reporting obligations
to the relevant Taxation Authority in connection with any such
payments made.
18.7 Pay As You Earn
The Company has properly operated the PAYE system deducting Tax as
required by law from all payments to or treated as made to or benefits
provided for employees, ex-employees or independent contractors of the
Company (including any such payments within section 134 of the TA) and
duly accounted to the Inland Revenue for Tax so deducted and has
complied with all its reporting obligations to the Inland Revenue in
connection with any such payments made or benefits provided, and no
PAYE audit in respect of the Company has been made by the Inland
Revenue nor has the Company been notified that any such audit will be
made.
18.8 Give As You Earn
Details of any payroll deduction scheme pursuant to section 202 of the
TA operated by the Company are set out in the Disclosure Letter and
any such scheme has been operated in accordance with that section and
regulations made thereunder.
TAX IN THE ACCOUNTS AND SINCE THE ACCOUNTS DATE
18.9 General
The Accounts make full provision or reserve in respect of any period
ended on or before the Accounts Date for all Tax assessed or liable to
be assessed on the Company or for which it is accountable at the
Accounts Date whether or not the Company has or may have any right of
reimbursement against any other person including in particular (but
without prejudice to the generality of the foregoing) Tax in respect
of property (of whatever nature) income, profits or gains held,
earned, accrued or received by or to any person on or before the
Accounts Date or by reference to any event occurring, act done or
circumstances existing on or before that date including distributions
made down to such date or provided for in the Accounts and proper
provision has been made and shown in the Accounts for deferred
taxation in accordance with generally accepted accounting principles.
18.10 Post-Accounts Date Events
Since the Accounts Date:
(a) the Company has not been involved in any transaction which has given,
may give or would, but for the availability of any relief, give rise
to any Tax other than in respect of actual income earned by the
Company in the course of its trade;
(b) the Company has not made any payment of a revenue nature (or incurred
any liability to make any such payment) which could be disallowed as a
deduction in computing the taxable profits of the Company or as a
charge on the Company's income including (but without prejudice to the
generality of the foregoing) any payment which could be disallowed
under section 74 (general rules as to deductions not allowable), 125
(annual payments for non-taxable consideration), 338-340 (allowance of
charges on income), 779-785 (leased assets) or 787 (restriction of
relief for payments of interest) of the TA;
(c) the Company has not been involved in any transaction other than on
arm's length terms;
(d) the Company has not paid any Tax after its due date for payment;
(e) the Company has not declared or paid any dividend or made any other
distribution or deemed distribution for Tax purposes;
(f) no accounting period (as defined in section 12 of the TA) of the
Company has ended as referred to in section 12(3) of the TA;
(g) no disposal has taken place or other event occurred such that the
Company would be required to bring a disposal value into account for
the purposes of the CAA or such that a chargeable gain could or would
accrue to the Company;
(h) the Company has not ceased to be a member of a group (as defined in
section 170 of the TCGA).
CORPORATION TAX
18.11 Changes in Trade etc.
(a) Within the period of three years ending with the date hereof
there has been no major change in the nature or conduct of any
trade or business carried on by the Company within the meaning
of section 245 or 768 of the TA;
(b) Within the period of three years ending with the date hereof
there has been no cessation or discontinuance of any trade or
business carried on by the Company nor has the scale of
activities in any trade or business carried on by the Company
within three years hereof become small or negligible.
(c) Prior to the execution of this agreement no change of
ownership of the Company has taken place such that either or
both of sections 245 or 768 of the TA has or may be applied to
deny relief in respect of a loss or losses of the Company or
any set off of advance corporation tax.
18.12 Trading Assets
In the event that any asset shown in the Accounts as a fixed asset is
disposed of immediately following completion the proceeds derived from
such asset will not be treated as a trading receipt for Tax purposes.
18.13 Sales at Undervalue/Overvalue
All transactions entered into by the Company have been entered into on
an arm's length basis and the consideration (if any) charged or
received or paid by the Company on all transactions entered into by it
has been equal to the consideration which might have been expected to
be charged received or paid (as appropriate) between independent
persons dealing at arm's length. No notice or enquiry pursuant to
section 770 of the TA or the transfer pricing provisions of any
arrangements made under section 788 of the TA (relief by agreement
with other countries) has been made in connection with any of such
transactions and the Company has retained sufficient records in
connection with its transfer pricing arrangements to satisfy the
conditions of Section 12B TMA 1970 and paragraph 21, Schedule 18 FA
1998.
18.14 Interest Rate Contracts etc.
The Company is not and has not since the Accounts Date been a party to
contract which is a qualifying contract for the purposes of section
147 of the Finance Act 1994 or a contract which may become a
qualifying contract.
18.15 Exchange Gains and Losses
The Company is not and has not since the Accounts Date been:
(a) the holder of a qualifying asset;
(b) subject to a qualifying liability; or
(c) party to a currency contract,
for the purposes of chapter II of the FA 1993.
18.16 Loan Relationships
The Company is and has since the Accounts Date been taxed on an
authorised accruals basis of accounting in relation to all loan
relationships which are creditor relationships as defined in section
103 of the FA 1996 and in relation thereto:
(a) the accruals on which the Company is taxable are computed only by
reference to interest;
(b) if any such debt were to be repaid at its face value the Company
would not suffer any charge to Tax in excess of Tax on interest
accrued; and
(c) there is no connection between the Company and the debtor as
mentioned in section 87 of the FA 1996.
18.17 (a) The Company obtains and has since the Accounts Date
obtained Tax relief on an authorised accruals basis of
accounting in relation to all loan relationships which are
debtor relationships as mentioned in section 103 of the FA
1996 and in relation to each such relationship:
(i) the deduction given in computing the taxable profits of
the Company in consequence of that relationship is not
less than the interest accruing for the period
concerned;
(ii) the Company would suffer no adverse Tax consequences
were such debts to be repaid at face value save that
the Tax deduction for interest accrued would cease.
(b) The Company has not since the Accounts Date held or been
the debtor under any deep discount securities as defined in
paragraph 1 of schedule 4 of the TA or any deep gain securities
as defined in paragraph 1 of schedule 11 of the FA 1989 or any
relevant discounted security as mentioned in schedule 13 of the
FA 1996.
CAPITAL ASSETS/CHARGEABLE GAINS
18.18 Capital Allowances
(a) No balancing charge in respect of any capital
allowances claimed or given would arise if all the
assets of the Company were to be realised for a
consideration equal to the amount of the book value
thereof as shown or included in the Accounts.
(b) All necessary conditions for all capital allowances (as
defined in section 832(1) of the TA) claimed by the
Company were at all material times satisfied and remain
satisfied.
(c) The capital allowances computations for the period
ending on the Accounts Date are complete, correct and
annexed to the Disclosure Letter.
(d) The Company does not own any asset which is a long life
asset for the purposes of Chapter 10 of Part 2 of the
Capital Allowances Act 2001.
18.19 Sales at Book Value
No chargeable gain or profit (disregarding the effects of any
indexation relief available) would arise if any asset of the Company
(other than trading stock) were to be realised for a consideration
equal to the amount of the book value thereof as shown or included in
the Accounts.
18.20 Value Shifting
The Company has not been involved in any scheme or affected by any
arrangements whereby section 30 of the TCGA (tax-free benefits) might
be applicable in relation to any disposal by the Company since the
Accounts Date or on any asset of the Company being disposed of after
the date hereof.
18.21 Valuation of Assets
(a) The Company has not held at any time since the Accounts Date
any asset where on the disposal of that asset the amounts
deductible under section 38 TCGA fall or would fall to be
determined by reference to the application of section 42 TCGA
(part disposal of assets) to a previous transaction.
(b) The Company has not since the Accounts Date held or had any
interest in any asset where section 17 TCGA might apply to
reduce the consideration deemed to be given on the acquisition
of that asset.
18.22 Reconstructions
The Company has not been involved in any share for share exchange or
any scheme of reconstruction or amalgamation such as are mentioned in
sections 135 and 136 of the TCGA or section 139 of the TCGA under
which shares or debentures have been or will be issued or assets have
been or will be transferred.
18.23 Depreciatory Transactions
No loss which has arisen or which may hereafter arise on a disposal by
the Company of shares in or securities of any company is liable to be
reduced by virtue of the application of section 176 of the TCGA
(transactions in a group) or section 177 of the TCGA (dividend
stripping).
18.24 Receipt of Gift
The Company has not received any assets by way of gift as mentioned in
section 282 of the TCGA.
DISTRIBUTIONS
18.25 Repayments of Share Capital
(a) The Company has not at any time after 6 April 1965 repaid or
agreed to repay or redeemed or agreed to redeem or purchased
or agreed to purchase (or made any contingent purchase
contract within the meaning of section 165 of the Companies
Act 1985) in respect of any of its issued share capital or any
class thereof. Further the Company has not after 6 April 1965
capitalised or agreed to capitalise in the form of shares,
debentures or other securities or in paying up amounts unpaid
on any shares, debentures or other securities any profits or
reserves of any class or description or passed or agreed to be
passed any resolution to do so.
(b) The Company has not made (and will not be deemed to have made)
any distribution within the meaning of sections 209 and 210
(bonus issue following repayment of capital) of the TA since 5
April 1965 except dividends properly authorised and shown in
its Accounts nor is the Company bound to make any such
distribution.
(c) The Company has not been party to any transaction involving an
exempt distribution within section 213 of the TA within the
period commencing five years prior to the Accounts Date.
18.26 Payments to be treated as Distributions
The Company has not since the Accounts Date been subject to any debt
or security where the interest payable thereon fell or falls or could
on its assignment fall to be treated as a distribution for Tax
purposes.
FOREIGN ELEMENT
18.27 Company Residence
The Company has always been resident in the territory in which it was
incorporated and has never been resident in any other territory or
treated as so resident for the purposes of any double Tax agreement.
18.28 Treasury Consents
Neither the Company nor any subsidiary of the Company has been party
to any transaction or transactions within section 765 or 765A of the
TA save in circumstances where either the Treasury General Consents
1988 applied or where the Company applied for and obtained consent of
the Treasury to the transaction or transactions.
18.29 Company Migration
Since 15 March 1988, no election has been made by the Company as the
principal company as defined in section 187 of the TCGA (postponement
of charge on deemed disposal of assets by company ceasing to be
resident in the United Kingdom) nor has any company over which the
Company had control or which was a member of the same group of
companies as the Company ceased to be resident in the United Kingdom
otherwise than in compliance with section 130 of the FA 1988.
18.30 Transfers to Non-Resident Company
The Company has not made any such transfer as is mentioned in section
140 of the TCGA.
18.31 Double Taxation
The Company has received or is entitled to receive credit against its
UK Tax liability for all Tax charged (whether by Tax being withheld or
through direct assessment) on the Company's income from any foreign
jurisdiction and the Company holds all deduction certificates or other
documents necessary to claim all relief due to it under part XVIII of
the TA.
18.32 Controlled Foreign Companies
The Company does not have and never has had an interest in a
controlled foreign company within the meaning of section 747 of the TA
such that all or any of the chargeable profits of the controlled
foreign company have been or will or may be apportioned to the
Company.
18.33 Gains of Non-Resident Companies
The Company does not have and has never had any interest in any
company, body of persons or unit trust scheme not resident in the UK
where had that entity been a company resident in the UK it would have
been a close company.
18.34 Offshore Funds
The Company has not on or after 1 January 1984 disposed of and does
not now have a material interest in an offshore fund which at any
material time was or is a non-qualifying offshore fund within the
meaning of section 757 of the TA such that a disposal thereof by the
Company has given rise or will or may give rise to an offshore income
gain.
18.35 Withholding of Tax and Agency for Non-Residents
The Company is not and has not been assessable to Tax by virtue of
section 78 of the TMA or section 42A or 43 of the TA or section 126 of
the FA 1995.
GROUPS OF COMPANIES
18.36 General
The Company is not, nor has it ever been, a member of a group of
companies as defined by section 170 of the TCGA.
18.37 Advance Corporation Tax
The Disclosure Letter contains particulars of all arrangements for the
surrender under section 240 of the TA of any amount of advance
corporation tax and in respect of receipts and surrenders disclosed:
(a) the Company has not paid nor is liable to pay for the
benefit of any advance corporation tax which is or may
become incapable of set off against the Company's
liability to corporation tax;
(b) the Company has received all payments due to it for all
surrenders or purported surrenders of advance
corporation tax made by it;
(c) no such payment exceeds or could exceed the amount
permitted by section 240(8) of the TA; and
(d) there exist or existed for any period in respect of
which a claim under section 240 of the TA has been or
is to be made no arrangements such as are specified in
sub-section (11) of that section whereby any person
could obtain control of the Company or of any
subsidiary to which such surrender purports or is
purported to be made.
18.38 Group Income Election
The Company has not made nor been subject to any election pursuant to
section 247 of the TA.
18.39 Group Payment Arrangements
The Company has not made nor been party to any arrangements with the
Inland Revenue with respect to payment of corporation tax pursuant to
section 36 of the FA 1998.
CLOSE COMPANY
18.40 Close Companies - Transfers of Value
The Company has made no transfer of value such as is specified in
section 94(1) (or section 99(2)) of the IHTA.
18.41 Close Companies - Loans to Participators
The Company has not made any loan advance or payment or given any
consideration falling within sections 419-420 or 422 of the TA.
18.42 Close Companies - Distributions
The Company has made no payments and conferred no benefits falling to
be treated as distributions under section 418 of the TA.
18.43 Close Investment Holding Company
The Company is not and never has been a close investment-holding
company as defined at section 13A of the TA.
18.44 Close Companies - Transfers at Undervalue
The Company has not made a transfer at an undervalue so that section
125 of the TCGA could apply.
INHERITANCE TAX
18.45 Inheritance Tax
(a) The Company is not, and will not become, liable to be assessed
to inheritance tax as donor or donee of any gift or transferor
or transferee of value (actual or deemed) nor as a result of
any disposition chargeable transfer or transfer of value
(actual or deemed) made by or deemed to be made by any other
person.
(b) There is no unsatisfied liability to inheritance tax attached
or attributable to the Shares or any asset of the Company and
in consequence no person has the power to raise the amount of
such Tax by sale or mortgage of or by a terminable charge on
any of the Shares or assets of the Company as mentioned in
section 212 of the IHTA and none of the Shares or assets of
the Company are subject to an Inland Revenue charge within
section 237 of the IHTA.
SECONDARY LIABILITIES
18.46 Secondary Liability
No transaction or event has occurred in consequence of which the
Company is or may be held liable for any Tax or deprived of relief or
allowances otherwise available to it in consequence of any Tax or may
otherwise be held liable for or to indemnify any person in respect of
any Tax, where some other company or person is or may become primarily
liable for the Tax in question (whether by reason of any such other
company being or having been a member of the same group of companies
or otherwise).
18.47 Indemnities etc
The Company has not entered into any indemnity, guarantee or covenant
under which the Company has agreed to pay or discharge any amount
equivalent to or by reference to any other person's liability to Tax.
18.48 Finance Leases
(a) The Company is not and has not been the lessee under any
leases of plant or machinery save for the leases specified in
the Disclosure Letter (the "Leases").
(b) No assets subject to the Leases have at any time been leased
by the Company or its lessees to a person who is not resident
in the UK and does not use the machinery or plant for the
purposes of a trade carried on there.
(c) The Warrantor, after making due and reasonable enquiry, is not
aware of any revenue investigation, revenue enquiry or other
circumstance which indicates that any person who is or was a
lessor or owner of equipment subject to any of the Leases will
or may be denied the first year allowances and/or writing-down
allowances by reference to which the initial rental under that
Lease was calculated.
ANTI-AVOIDANCE PROVISIONS
18.49 Tax Schemes
The Company has not entered into nor been a party to nor otherwise
involved in any scheme or arrangement in relation to which the Company
may be liable to Tax under the principles set out in W.T. Ramsay
Limited v IRC (1981 STC 174) or Furniss v Dawson (1984 STC 153) as
developed in subsequent cases.
18.50 Transactions in Securities
The Company has not:
(a) become liable for Tax; or
(b) received and will not receive or be the subject of or
be adversely affected by any Claim for Tax arising
under or imposed by or resulting from the operation of
sections 703-709 of the TA (whether alone or in
conjunction with any other provisions of any Taxation
Statutes whatsoever) and which wholly or partly results
or arises from or is computed by reference to
circumstances existing or events occurring at any time
on or before the date hereof whether alone or in
conjunction with other circumstances arising before or
after completion.
18.51 Transactions in Land
The Company has not:
(a) become liable for Tax; or
(b) received and will not receive or be the subject of or
be adversely affected by any claim for Tax arising
under or imposed by or resulting from the operation of
sections 776-778 of the TA (whether alone or in
conjunction with any other provisions of any Taxation
Statutes whatsoever) and which wholly or partly results
or arises from or is computed by reference to
circumstances existing or events occurring at any time
on or before the date hereof whether alone or in
conjunction with other circumstances arising before or
after completion.
18.52 Sale and Leaseback of Land
The Company has not entered into any transaction as is mentioned in
sections 34-37 or section 780 of the TA.
18.53 Transactions between Dealing and Associated Company
The Company has not entered into any transaction mentioned in section
774 of the TA.
18.54 Loans or Credit
The Company has been involved in no transactions such that section 786
of the TA (transactions associated with loans or credit) might apply.
TAX FRAUD
18.55 The Company has not been party to any transaction within section 144 of
the FA 2000 (offence of fraudulent evasion of income tax).
VALUE ADDED TAX
18.56 Value Added Tax
(a) The Company is a registered taxable person for the purpose of the
VATA and all regulations and orders made thereunder (the "VAT
legislation") and has not at any time been treated as a member of
a group of companies for such purpose and has not made any
application to be so treated and no circumstances exist whereby
the Company would or might become liable for value added tax as
an agent or otherwise by virtue of section 47 of the VATA.
(b) The Company has complied in all respects with the requirements
and provisions of the VAT legislation and has made and maintained
and will pending completion make and maintain accurate and
up-to-date records, invoices, accounts and other documents
required by or necessary for the purposes of the VAT legislation
and the Company has at all times punctually paid and made all
payments and returns required thereunder.
(c) That (without prejudice to the generality of clause (b) of this
clause) the Company has not:
(i) taken part in conduct involving dishonesty as described in
section 60 of the VATA;
(ii) committed any serious misdeclaration or neglect as described
in section 63 of the VATA;
(iii)issued unauthorised invoices or failed to do anything
contemplated by section 67 of the VATA;
(iv) failed to comply with any regulatory requirements described
in section 69 of the VATA;
(v) been notified of any assessment within section 74 of the
VATA or a surcharge notice under section 59 of the VATA;
(vi) made any agreement with the Commissioners of Customs and
Excise which agreement has not been put in writing as
contemplated by section 85 of the VATA.
(d) The Company has not made any exempt supplies in consequence of
which it is or will be unable to obtain credit for all input tax
paid by it during any VAT quarter ending after the Accounts Date.
18.57 Capital Goods Scheme
There are set out in the Disclosure Letter with express reference to
this Warranty full details of each of the assets of the Company of a
kind described in part XV of the Value Added Tax Regulations 1995 (SI
No 2518) (adjustments to the deduction of input tax on capital items)
in relation to which that part could operate to adjust the amount of
input tax deducted, including in particular:
(a) a description (including, in the case of land, or a building
or part of a building the nature of the tenure and the time
that the tenure has to run), the date of acquisition (or, in
the case of a lease, the date of grant) and the price paid and
VAT upon the purchase or acquisition of the capital item in
question;
(b) the proportion of the VAT on the purchase price for which
credit has been claimed, including any adjustments made under
part XV, Value Added Tax Regulations 1995.
18.58 Leases
The Company has not at any time after 10 March 1997 granted any lease
or entered into any agreement for any lease where it was a developer
of the land for the purposes of paragraph 2(3AA) of Schedule 10 of
VATA 1994 and it was, at the time of the grant (or at the time the
grant was treated as made under paragraph 2(3AAA)), the intention or
expectation of the Company or any person within paragraph
2(3AA)(a)(ii) that the land would become exempt land for the purposes
of that paragraph.
STAMP DUTY
18.59 Stamp Duty
All documents in the enforcement of which the Company is or may be
interested have been duly stamped and since the Accounts Date the
Company has not been a party to any transaction whereby the Company
was or is or could become liable to stamp duty reserve tax.
18.60 Relief on Transfer of Land
The Company does not at the date hereof hold any estate or interest in
land in the United Kingdom, or any estate or interest which was
derived from such an estate or interest, that was transferred to it by
an instrument executed within two years prior to the date hereof, such
instrument having been stamped on the basis that either group relief
under section 42 of the Finance Act 1930, section 11 of the Finance
Act (Northern Ireland) 1954 or section 151 of the Finance Act 1995
applied or that relief under section 76 of the Finance Act 1986
applied.
19. ENVIRONMENTAL MATTERS
19.1 Liability
To the best of the Warrantor's knowledge and belief but on the basis
that the Warrantor has made no enquiries relating thereto the Company
and the Property comply and have at all times complied with all
Environmental Laws and there are no facts or circumstances which
interfere or prevent compliance with any Environmental Laws.
19.2 Notices and Complaints
The Company has not received any notice of enforcement, prohibition,
improvement, remediation or other notice of equivalent nature, or any
judgment, order, decree, award, demand or decision in respect of the
Environment from any court, tribunal, arbitrator or governmental or
regulatory authority and there have been no complaints,
investigations, enquiries, requests for information or other formal or
informal indications of any possible claims or legal actions in
respect of the Environment from any person including any neighbour,
governmental or regulatory authority, current or former employee or
third party.
19.3 Contaminated Land
(a) To the best of the Warrantor's knowledge and belief but on the
basis that the Warrantor has made no enquiries relating
thereto there has not been and there is not present on, at or
under the Property and there is and has been no release,
migration, leakage, spill, discharge, entry, deposit or
emission onto or from the Property of any Hazardous Substance
or Waste.
(b) To the best of the Warrantor's knowledge and belief there has
not been any disposal, storage, release, leakage, migration,
spill, discharge, entry, deposit or emission of any Hazardous
Substance or Waste into the Environment caused by the
Activities.
20. PENSIONS
20.1 Pensions arrangements disclosed
Save under the EW Simulation Technology Limited Pension Scheme (the
"Disclosed Scheme") the Company is not under obligation or commitment,
nor is it a party to any custom or practice, to pay, provide or
contribute towards any relevant benefits within the meaning of section
612 of the TA (ignoring the exception contained in that section),
including the making of any payment of contributions to, or
remuneration specifically referable to contributions to, any personal
pension scheme, stakeholder pension scheme, retirement annuity
contract or similar arrangement ("Relevant Benefits") to or in respect
of any person and nothing has been done to create a reasonable
expectation that any such payments, provision or contributions will be
made. The Company has not at any time participated in or contributed
towards any former scheme or arrangement ("Former Scheme") which has
as its purpose or one of its purposes the provision of Relevant
Benefits (other than schemes which have been fully wound up).
20.2 Money purchase scheme
Other than lump sum death in service benefits, the Disclosed Scheme
provides only money purchase benefits (as defined in section 181 of
the Pension Schemes Act 1993) and no promise or assurance (oral or
written) has been given to any person that his or her benefits under
the Disclosed Scheme (other than lump sum death in service benefits)
will be calculated by reference to any person's remuneration or equate
(approximately or exactly) to any particular amount.
20.3 Ex gratia payments and undertakings
The Company has not made or proposed any voluntary or ex gratia
payments of Relevant Benefits to or in respect of any person and is
not due to make any such payments in the future. No undertaking or
assurance (whether legally binding or not) has been given by the
Company to any person as to the introduction, continuance, increase or
improvement of any Relevant Benefits.
20.4 Disclosure of documents
Full details of the Disclosed Scheme have been supplied to the Buyer
including copies of the current governing trust documentation, current
booklet and any announcements made to members; all relevant approval
letters from the Inland Revenue; all relevant contracting-out
certificates; the most recent actuarial valuation and trustees' annual
report and accounts; the payment schedule; all documents evidencing
compliance with the Pensions Act 1995; all correspondence with the
Occupational Pensions Regulatory Authority, OPAS and the Pensions
Ombudsman; and full membership details.
20.5 Winding-up, termination or closure of the Disclosed Scheme
No event has occurred and no action has been taken which would or
could result in the winding-up, termination or closure of the
Disclosed Scheme in whole or in part.
20.6 Regulatory matters
The Disclosed Scheme is an exempt approved scheme within the meaning
of section 592(1) of the TA and has been with effect from its date of
commencement and there is no reason why such exempt approved status
might be withdrawn or cease to apply.
20.7 Payment of contributions and fees and expenses
All contributions and premiums which have become payable to or under
the Disclosed Scheme by or in respect of any current and former
employees and officers have been duly paid within any applicable
prescribed period under the Pensions Act 1995 and the Disclosed
Scheme's governing documentation. The aggregate of all actuarial,
consultancy, legal and other fees and charges and all taxation and
other expenses for which liability has arisen but which has not yet
been discharged and the value of all services which have been provided
but in respect of which an account has not yet been rendered in
relation to the Disclosed Scheme does not exceed (pound)5,000.
20.8 Legal compliance
The Disclosed Scheme has at all times been operated in accordance with
the trusts, powers and provisions of its governing documentation, all
applicable EC and domestic legislation, and the general requirements
of law and regulatory practice and no report has been made to the
Occupational Pensions Regulatory Authority in relation to any
potential or actual non-compliance. The Company has fulfilled all of
its obligations in relation to and under the Disclosed Scheme in
respect of any current and former employees and officers. Prior to the
date of this agreement all benefits which have been, or will be,
transferred into the Disclosed Scheme (whether on an individual or
bulk basis) have been, or will be, so transferred on a sex equal
basis.
20.9 Access to membership
Every employee and former employee who is or has been a part-time
employee is not and has never been excluded from membership of any
Disclosed Scheme. Every employee and officer and former employee and
officer who is or has been entitled to, or eligible for, membership of
the Disclosed Scheme, whether under a contract of employment or under
the rules of the Disclosed Scheme, has joined or been invited to join
as of the date on which he became so entitled or eligible. The Company
has complied at all times with its obligation to designate and provide
access to a stakeholder pension scheme for all its relevant employees.
20.10 Claims and litigation
No claim or complaint has been made or threatened against any current
or former trustee, manager or administrator of the Disclosed Scheme or
any employer participating therein (including, without limitation, any
complaint under the internal dispute resolution procedure, or to OPAS
or the Pensions Ombudsman) in respect of any act, event, omission or
other matter arising out of or in connection with the Disclosed Scheme
(other than routine claims for benefits) or generally in respect of
the provision of Relevant Benefits (whether payable under the
Disclosed Scheme or otherwise) and there are no circumstances which
may give rise to any such claim or complaint.
20.11 Records and assets of the scheme
The records of the Disclosed Scheme (including all books of account
and trustees' minutes) have been properly and accurately maintained
and all such records are in the possession of, or under the control
of, the trustees of the Disclosed Scheme. The trustees of the
Disclosed Scheme have legal title to all of the assets of that scheme.
None of the assets of the Disclosed Scheme constitute
"employer-related investments" for the purpose of section 40 of the
Pensions Act 1995. There are no charges or encumbrances over any of
the assets of the Disclosed Scheme and all such assets are either held
directly by the trustees of the Disclosed Scheme or by investment
managers (or nominees properly appointed by the trustees) and are not
subject to any stock lending arrangements.
20.12 Current trustees and scheme documentation
The current trustees of the Disclosed Scheme are the Warrantor and
Universal Pension Trustees Limited. They and the Disclosed Scheme are
all resident in the United Kingdom for tax purposes and the trustees
of the Disclosed Scheme are the administrators for the purposes of
Chapter 1 of Part XIV of the TA. The trust deeds, rules and other
documents which have at any time governed the Disclosed Scheme were
all validly adopted and accurately record the benefits payable under
them as referred to in all announcements, explanatory booklets and
other literature or communications issued in relation to the Disclosed
Scheme.
20.13 Insured death benefits
All death benefits which may be payable (other than a refund of
members' contributions with interest, where appropriate) are fully
insured with an insurance company authorised under the Financial
Services and Markets Act 2000 to carry on long-term insurance
business. All policies and contracts under which such benefits are
insured are enforceable and there is no ground on which the insurance
company concerned might avoid liability under such policy or contract.
Each member and beneficiary has been covered for such insurance by
such insurance company at its normal rates and on its normal terms for
persons in good health.
21. INFORMATION
21.1 General
(a) So far as the Warrantor is aware, all written information given by, or
on behalf of, the Sellers or the Company to the Buyer, its advisers or
agents before or during the negotiations leading to this agreement is
true, complete, accurate and not misleading;
(b) In relation to the Business Plan, as at 19 March 2002:
(i) all statements of fact contained in the Business Plan were true
and accurate in all material respects and not misleading;
(ii) all expressions of opinion or intention or expectation contained
in the Business Plan were made on reasonable grounds and were
truly and honestly held by the Warrantor and were fairly based;
and
(iii)there were no facts known or which could on reasonable enquiry
have been known to the Warrantor and which are not stated in the
Business Plan the omission of which would make any such statement
or expression in such document misleading.
(c) As at 19 March 2002, there were no facts known or which could on
reasonable enquiry have been known to the Warrantor and which are not
stated in the Business Plan which are, nor might be, material in the
context of this agreement or the acquisition by the Buyer of the
Shares.
21.2 This Agreement and the Disclosure Letter
The information set out in schedules 1, 2 and 6 of this agreement and
in the Disclosure Letter is true, complete, accurate in all material
respects and not misleading.
21.3 Material Information
So far as the Warrantor is aware, all information about the Shares and
the Company's business which might be material to a buyer of the
Shares has been disclosed to the Buyer in writing.
SCHEDULE 4
Form of Resignation
TO: The Directors
EW Simulation Technology Limited (the "Company")
and each of its directors, officers, agents and advisers
Date: ------- September 2002
I hereby resign as secretary, and if applicable, as employee of the Company with
effect from today. I confirm that I have no claims against the Company or any of
you in respect of any cause, matter or thing whatsoever (including unpaid
remuneration) but to the extent any such claims exists or may exist I (unless
such claim is covered by insurance) hereby irrevocably waive such claim and
release the Company and each of you from any liability or obligation whatsoever
in respect thereof.
EXECUTED as a DEED )
and DELIVERED by MRS ANN )
ANDREWS in the presence of : )
(Witness):
Name:
Address:
Occupation:
SCHEDULE 5
Sellers' Limitations on Liability
1. TIME LIMIT FOR CLAIMS
Save in the case of any liability based upon fraud and including
without limitation fraudulent concealment by the Warrantor, the
Warrantor shall not be liable in respect of a claim under the
Warranties unless written notice of such claim setting out reasonable
details of the relevant claim is served upon the Warrantor:
(a) in the case of a claim under the Warranties (other than the
Warranties relating to Tax or Environment), by not later than
5.00 p.m. on the second anniversary of Completion; and
(b) in the case of a claim under the Warranties relating to Tax or
Environment by not later than 5.00 p.m. on the day one month
after the seventh anniversary of Completion.
2. MONETARY LIMIT ON CLAIMS
Save in the case of any liability based upon fraud and including
without limitation fraudulent concealment by the Warrantor, the
Warrantor shall not be liable in respect of a claim under the
Warranties unless and until the aggregate amount of all such claims
(when aggregated with all claims under the Tax Deed) against the
Warrantor exceeds US$50,000 in which event the Warrantor's liability
shall be for the total amount of such claims and shall not be limited
to the excess provided that (save in the case of fraud or fraudulent
concealment by the Warrantor) the aggregate liability of the Warrantor
in respect of all claims under the Warranties and the Tax Deed shall
not in any circumstances exceed US $4,500,000.
3. DISCLOSURE
The Warrantor shall not be liable in respect of a claim under the
Warranties to the extent that the same or circumstances giving rise
thereto are fairly disclosed in the Disclosure Letter or are expressly
provided for or noted in the Accounts. No letter, document or other
communication shall be deemed to be disclosed except and to the extent
that the same is referred to in, and a copy attached to, the
Disclosure Letter.
4. NO LIABILITY FOR CERTAIN EVENTS
No liability shall attach to the Warrantor in respect of a breach of
any of the Warranties to the extent that:
(a) such claim arises as a consequence of a change in the law by the
English courts enacted after the date hereof;
(b) such claim arises as a result of any provision or reserve made in
respect thereof in the Accounts being insufficient by reason of
any increase in rates of taxation made after the date hereof or
arises as a result of the retrospective imposition of taxation as
a consequence of a change in the law in England and Wales enacted
after the date hereof;
(c) the breach or the events giving rise to such breach would not
have arisen but for an act omission or transaction of the Buyer
or the Company which could reasonably have been avoided effected
after Completion otherwise than in the ordinary and proper course
of trade as presently carried on by the Company and which the
Buyer knew or ought reasonably to have known would give rise to
the breach in question;
(d) it has been made good or compensated by payment made under the
Tax Deed;
(e) such claim arises as a result of a change of accounting policy or
practice of or change of the date to which accounts are made up
in each year by the Buyer or the Company introduced on or after
the date hereof other than any change introduced in order to
ensure that the Company complies with generally accepted
accounting principles in the UK; and
(f) the claim would not have arisen but for any act or omission prior
to Completion by the Sellers or the Company carried out at the
request of or with the written approval of the Buyer.
5. MISCELLANEOUS
5.1 Any of the Warranties to the extent remediable if breached shall not
entitle the Buyer to compensation unless the Warrantor is given
written notice of such breach and such breach is not remedied to the
reasonable satisfaction of the Buyer within 30 days after the date
such notice is received.
5.2 In the event of the Warrantor having paid to the Buyer an amount in
respect of a claim for breach of any of the Warrantor and subsequent
to the date of making such payment the Buyer or the Company recovers
from a third party a sum which is referable to that payment then the
Buyer shall forthwith repay or procure the repayment by the Buyer or
the Company to the Warrantor of the lesser of: (a) the amount
recovered (less costs and any tax thereon); and (b) the sum paid by
the Warrantor to the Buyer.
5.3 The amount of any liability arising in respect of any claim or claims
for breach of any of the Warranties or under the Tax Deed shall be
treated as a reduction of the consideration for the Shares.
5.4 In addition to the duty of the Buyer under the general law to mitigate
loss or damage the Warrantor shall be entitled to require the Company
and the Buyer (or either of them) at the Warrantor's expense to take
all such further reasonable steps or proceedings in order to mitigate
any claim for breach of any of the Warranties and the Buyer shall
procure that the Company shall, in so far as is reasonable to do so,
act in accordance with any such written requirements of the Warrantor
subject to the Company and the Buyer being fully indemnified by the
Warrantor against all reasonable costs and expenses incurred in
connection therewith.
5.5 For the purpose of enabling the Warrantor to remedy the breach or to
mitigate or otherwise determine the amount of any claim in respect of
the Warranties the Buyer shall notify the Warrantor within 40 days of
the breach or circumstances giving rise to the breach coming to its
notice and the Buyer shall make or procure to be made available to the
Warrantor and his duly authorised agents on reasonable notice during
normal business hours all relevant books of account records and
correspondence for the purpose of enabling the Warrantor to ascertain
or extract any information relevant to the claim.
5.6 The Buyer shall keep the Warrantor informed of all material
developments in relation to any claim under the Warranties, and shall
consult with the Warrantor regarding the conduct of any such claim.
SCHEDULE 6
The Property
Tenure Leasehold
Description Unit 1 The Royston Centre Ash Vale Farnborough
Mortgages or Charges Lloyds Bank plc debenture registered on 01/02/1997
Permitted uses/existing use
Light Industrial with
ancillary office
and/or B1(c) of the
Town and Country
Planning (use Clauses)
Order 1987
Sublettings
Description Ground Floor Offices Unit 1 The Royston Centre Ash
Vale Farnborough
Executed as a deed by DR ROBERT ANDREWS in the ) presence of: )
)
Witness name: )
Witness address: )
)
Executed as a deed by MRS ANN ANDREWS in the )
presence of: )
Witness name: )
Witness address: )
)
Executed as a deed by EW SIMULATION TECHNOLOGY ) LIMITED acting by ) in the
presence of: )
)
Witness name: ) Director
Witness address: )
) Director/Secretary
Executed as a deed by )
HERLEY INDUSTRIES, INC. )
acting )
by
in the presence of:
) Director
Witness name: )
Witness address: ) Director/Secretary