1
EXHIBIT (10) aa.
DATED 14 AUGUST 1995
GENESCO INC.
AND
PENTLAND INDUSTRIES LIMITED
__________________________________________________
A G R E E M E N T
- RELATING TO -
THE SALE AND PURCHASE OF THE ENTIRE ISSUED
SHARE CAPITAL OF MITRE SPORTS INTERNATIONAL LIMITED
__________________________________________________
2
SHARE PURCHASE AGREEMENT
DATED: 14 August 1995
PARTIES:
(1) GENESCO INC., a Tennessee corporation whose registered office is
at Genesco Park, Nashville, Tennessee, 37202 - 0731, USA ("the
Vendor"); and
(2) PENTLAND INDUSTRIES LIMITED a company registered in England
(Company Registration Number 2307419) whose registered office is
situated at The Pentland Centre, Lakeside, Squires Lane,
Finchley, London, N3 2QL ("the Purchaser").
RECITALS:
(A) Mitre Sports International Limited ("the Company") is a company
limited by shares incorporated under the Companies Act 1985
registered in England under number 2688851 whose registered
office is at Bay Hall Works, Birkby, Huddersfield, West
Yorkshire, HD1 5AY. At the date hereof it has an authorised
share capital of L.7,500,000 divided into 6,000,000 "A" Ordinary
Shares of L.1 each and 1,500,000 "B" Ordinary Shares of L.1
each, all of which have been allotted and issued and are fully
paid.
(B) The Vendor is the legal and equitable owner and the registered
holder of all of the shares in the capital of the Company.
(C) Particulars of the Company are set out in Schedule 1.
(D) The Vendor has agreed to sell and the Purchaser has agreed to
purchase all of the shares in the Company on and subject to the
terms of this Agreement.
3
(E) By an agreement of even date the Vendor has agreed to sell and
Pentland Sports Group, Ltd has agreed to purchase, certain other
assets owned by the Vendor and used in connection with the
"Mitre" business carried on by the Vendor in the USA, Canada and
Mexico.
OPERATIVE TERMS
1. INTERPRETATION
1.1 In this Agreement and its Recitals and Schedules:
"THE ACCOUNTS" means the audited balance sheet of the Company
made up as at the Balance Sheet Date and the audited profit and
loss account of the Company for the financial year ended on the
Balance Sheet Date, together with all notes, reports, statements
and other documents annexed thereto in accordance with any legal
requirement;
"THE AGREED EXCHANGE RATE" means USD 1.597 to L.1.00;
"THE BALANCE SHEET" means the audited balance sheet of the
Company forming part of the Accounts;
"THE BALANCE SHEET DATE" means 31st January 1995;
"BUSINESS DAY" means any day except Saturdays and Sundays on
which banks in the City of London are open for business;
"CAA" means Capital Allowances Act 1990;
"THE COMPANY" means Mitre Sports International Limited;
"COMPANY'S AUDITORS" means Price Waterhouse of York House, York
Street, Manchester, M2 4WS;
4
"COMPLETION" means completion of the sale and purchase of the
Shares pursuant to this Agreement;
"COMPLETION ACCOUNTS" shall bear the meaning set out in
Schedule 7;
"COMPLETION BALANCE SHEET" means the audited balance sheet of
the Company forming part of the Completion Accounts;
"THE COMPLETION DATE" means the date of this Agreement;
"THE DEED OF COVENANT" means a deed in the form set out in
Schedule 6;
"THE DISCLOSURE LETTER" means the letter of the same date as
this Agreement from the Vendor to the Purchaser;
"THE EMPLOYMENT STATUTES" means the Disabled Persons
(Employment) Act 1944, the Trade Union and Labour Relations Acts
1974 and 76, the Employment Protection Act 1975, the Employment
Protection (Consolidation) Act 1978, the Employment Act 1980,
the Contracts of Employment Act 1972, the Equal Pay Act 1970,
the Sex Discrimination Act 1975, the Health and Safety at Work
etc. Act 1974, the Race Relations Act 1976, the Trade Union Act
1984, the Wages Act 1986, the Sex Discrimination Act 1986 and
the Trade Union Reform and Employment Rights Act 1993;
"FA" means Finance Act;
"FRS" means a Financial Reporting Standard issued by The
Accounting Standards Board Limited or an SSAP;
"THE GENERAL WARRANTIES" means those Warranties set out in
Schedule 4;
"THE GENESCO CONTRACTS" means those contracts entered into by
the Vendor in respect of its U.S., Canada and Mexico "Mitre"
business and which it willnot
5
be in a position properly to perform following Completion by
virtue of the transactions contemplated in this Agreement and/or
in the US Agreement, details of which are provided in Schedule
10;
"THE ICTA" means the Income and Corporation Taxes Act 1988;
"INTELLECTUAL PROPERTY" means patents, trade marks, service
marks, registered designs, utility models, applications and
rights to apply for any of the foregoing, copyrights,
unregistered design rights, inventions, trade secrets,
confidential know-how and registrable business names and any
similar rights, whether registrable or not, in any part of the
world;
"THE INTELLECTUAL PROPERTY RIGHTS" means that Intellectual
Property owned or used by the Company and details of which are
set out in Schedule 3 (not being a comprehensive list of the
Intellectual Property owned or used by the Company);
"THE INTER-COMPANY INDEBTEDNESS" means the amount which as at
Completion is owed by the Company to the Vendor, inclusive of
all balances (trading or otherwise), management charges and
accrued interest to the date of Completion;
"ITA" means the Inheritance Tax Act 1984;
"NET TANGIBLE ASSETS" means the aggregate value of all fixed and
current assets (excluding goodwill, the Intellectual Property
and any other intangible assets) minus the aggregate value of
all liabilities and provisions (including provisions in
accordance with SSAP 18 in respect of contingent liabilities)
and any reserves or capital created by the upward revaluation of
assets subsequent to the Balance Sheet Date all as shown in the
Completion Accounts prepared in accordance with the provisions
of Schedule 7;
6
"OPEN LETTERS OF CREDIT" means those letters of credit which
have been opened by or to the order of the Vendor in respect of
the purchase of stock for the Company or for the United States,
Canadian and Mexican markets, which are outstanding as at
Completion and which are listed in Schedule 9, subject to the
following limits: for the Company - USD 1,000,000 and for the
United States, Canadian and Mexican market - USD 1,750,000;
"THE PROPERTIES" means the properties particulars of which are
set out in Schedule 2;
"THE PURCHASER'S ACCOUNTANTS" means Price Waterhouse, of
Southwark Towers, 32 London Bridge Street, London SE1 9SY;
"THE PURCHASER'S NOMINEE" means Linklaters & Paines of 59 - 67
Gresham Street, London, EC2V 7YA;
"THE PURCHASER'S SOLICITOR" John McLaren of The Pentland
Centre, Lakeside, Squires Lane, Finchley, London, N3 2QL;
"RELIEF" shall have the meaning set out in the Tax Deed of
Covenant;
"THE RETENTION" means the amount of USD 750,000 to be retained
out of the consideration pursuant to Clause 3 and to be dealt
with in accordance with Clause 5;
"THE SHARES" means each and all of the shares of the Company
comprising the whole of its issued and allotted share capital;
"THE STAKEHOLDERS' ACCOUNT" means the account referred to in
sub-clause 5.1;
"SSAP" means a Statement of Standard Accounting Practice adopted
by Accounting Standards Board Limited;
7
"TAXATION" means all forms of taxation, (including duties,
rates, levies, withholdings, deductions, charges and imposts)
imposed in the United Kingdom or overseas, including but not
limited to:
(a) corporation tax, income tax, advance corporation tax,
any liability arising under Sections 419 or 601 ICTA,
national insurance contributions, social security
contributions, value added tax and customs duties;
(b) all penalties, surcharges, fines and interest relating
to any of the above; and
(c) any payment by way of settlement or compromise of any
claim in respect of any of the above;
"TAX DEED OF COVENANT" means the deed in the form set out in
Schedule 8;
"TCGA" means the Taxation of Chargeable Gains Act 1992;
"TMA" means the Taxes Management Act 1970;
"THE TAX WARRANTIES" means those Warranties set out in Schedule
5;
"PENSION SCHEME" means the Mitre Sports International Limited
Pension Scheme;
"US AGREEMENT" means an agreement in the agreed terms between
the Vendor (1) and Pentland Sports Group, Ltd (2) relating to
the sale and purchase of certain assets owned by the Vendor and
used in connection with the "Mitre" business in the USA, Canada
and Mexico;
"VATA" means the Value Added Tax Act 1994;
8
"VENDOR'S ACCOUNT" means the account in the name of the
Vendor with the following account details:
Name of Account : Genesco Separate Asset Account
Bank: : NationsBank of Tennessee
ABA # : 0640-0002-0
Account # : 011-287-8053
"THE VENDORS ACCOUNTANTS" means Price Waterhouse, York House,
York Street, M2 4WS, Manchester;
"THE VENDOR'S SOLICITORS" means Messrs. Taylor Joynson Garrett,
Carmelite, 50 Victoria Embankment, London, EC4Y 0DX;
"THE WARRANTIES" means the warranties, representations and
undertakings set out in Schedules 4 and 5.
1.2 Any reference in this Agreement to a document being "in the
agreed terms" means that document in the terms agreed between
the parties and for the purpose of identification signed by the
Purchaser and the Vendor's Solicitors or such other terms as may
be agreed in writing between the parties in substitution
therefor.
1.3 In this Agreement, references to any statutory provision shall
include such provision as from time to time amended, whether
before on or (in the case of re-enactment or consolidation only)
after the date hereof, and shall be deemed to include provisions
of earlier legislation (as from time to time amended) which have
been re-enacted (with or without modification) or replaced
(directly or indirectly) by such provision and shall further
include all statutory instruments or orders from time to time
made pursuant thereto on or before the date hereof.
1.4 Words and phrases defined in the Companies Act 1985 (excluding
its Schedules and as amended by the Companies Act 1989) shall
have the same
9
meanings in this Agreement unless they are otherwise defined in
this Agreement or unless the context or subject-matter otherwise
requires.
1.5 In this Agreement and its Schedules:
(a) the masculine gender shall include the feminine and
neuter and the singular number shall include the plural
and vice versa;
(b) references to persons shall include individuals, bodies
corporate, unincorporated associations and
partnerships;
(c) the headings are inserted for convenience only and
shall not affect the construction of this Agreement;
(d) references to Recitals, Clauses and Schedules and
sub-divisions thereof, unless a contrary intention
appears, are to the Recitals and Clauses of and
Schedules to this Agreement and sub-divisions thereof
respectively.
1.6 Each of the Schedules shall have effect as if expressly set out
in the body of this Agreement.
2. SALE AND PURCHASE OF SHARES
2.1 On and subject to the terms of this Agreement, the Vendor shall
sell and the Purchaser shall purchase the Shares on and with
effect from the Completion Date, free from all charges, liens,
equities, encumbrances, claims or restrictions whatsoever and
together with all rights attaching or accruing thereto and all
dividends and distributions declared, made or paid thereon or in
respect thereof on or after Completion.
2.2 Neither the Purchaser nor the Vendor shall be obliged to
complete the purchase or sale of any of the Shares unless the
purchase and sale of all the Shares and the completion of the US
Agreement occur simultaneously and if
10
such sale and completion are not completed on the Completion
Date then either the Purchaser or the Vendor shall be entitled
to rescind this Agreement without liability of any kind.
3. CONSIDERATION
The purchase consideration payable by the Purchaser to the
Vendor for the Shares (subject to adjustment in accordance with
Schedule 7) ("the Purchase Consideration") shall be the
aggregate of
(a) USD 10,150,000; and
(b) the amount of cash or cash equivalents appearing on the
Completion Balance Sheet, subject to a maximum of USD
1,200,000 (such cash and cash equivalents together
being "the Cash Equivalents Amount"). For such
purposes "the Cash Equivalents Amount" shall mean cash
in hand and deposits repayable on demand with any bank
or other financial institution. Cash includes cash in
hand and deposits denominated in foreign currencies.
The Purchase Consideration (subject to adjustment in accordance
with Schedule 7) shall be paid on Completion:
(a) as to USD 10,600,000 by telegraphic transfer to the
Vendor's Account; and
(b) as to USD 750,000 ("the Retention") by telegraphic
transfer into the Stakeholders' Account, where it shall
be dealt with in accordance with clause 5 of this
Agreement.
4. COMPLETION
11
4.1 Subject to the provisions of this Clause, Completion shall take
place at the offices of the Vendor on the Completion Date or at
such other place and/or on such other date as may be agreed
between the parties.
4.2 On Completion the Vendor shall cause to be delivered to the
Purchaser:
(a) duly completed and executed transfers of the Shares by
the registered holders thereof in favour of the
Purchaser (or as it may direct) together with the
relative share certificates;
(b) such other documents (including any power of attorney
under which any document required to be delivered under
this Clause has been executed and any waivers or
consents) as the Purchaser may require to enable the
Purchaser or its nominees to be registered as holders
of the Shares;
(c) the Common Seal, Certificate of Incorporation, the
Memorandum and Articles of Association and the up to
date statutory books of the Company;
(d) the Deed of Covenant duly executed by the covenantors
named therein;
(e) the Tax Deed of Covenant duly executed by the
covenantors named therein;
(f) duly executed releases, in the agreed terms, releasing
the Company from any liability whatsoever (actual or
contingent) which may be owing by the Company to the
Vendor subject to repayment by the Company to the
Vendor of the Inter-company Indebtedness in accordance
with the terms of this Agreement;
(g) a certificate from the Vendor's Solicitors in agreed
terms as to the title of the Company to the Properties
("the Certificate of Title").
12
(h) the title deeds to the Properties;
(i) unconditional receipts for rent and any additional
rents or service charges due in respect of those of the
Properties held or occupied on lease or under licence;
(j) statements from each of the banks at which the Company
maintains an account as to the amounts standing to the
credit or debit of such accounts at the close of
business on the second business day preceding the
Completion Date ("the Reconciliation Date"), a
statement that all current cheque books and paying in
books for such accounts are in the possession of the
Company, together with a bank reconciliation statement
showing the bank position of the Company at the close
of business on the Reconciliation Date adjusted to
reflect credits since the Reconciliation Date to the
Completion Date inclusive and a list of unpresented
cheques as at the Reconciliation Date and of cheques
drawn since the Reconciliation Date to the Completion
Date inclusive and of standing orders payable from the
Reconciliation Date to the Completion Date inclusive.
Such reconciliation statements shall show amounts due
under such facilities to be no greater than:
Barclays Bank plc duty deferment bond -L.400,000
Barclays Bank plc overdraft -L.1,690,670
Barclays Bank plc letters of credit -USD 4,500,000
(including where applicable,
sterling letters of credit
converted at the Agreed Exchange
Rate);
(k) irrevocable powers of attorney executed by the holders
of the Shares in favour of the Purchaser appointing the
Purchaser to be their lawful attorney for the purpose
of receiving notices of and attending and voting
13
at all meetings of the members of the Company in
respect of the Shares and held from the date of this
Agreement to the day on which the Purchaser (or its
nominee) is entered in the register of members of the
Company as the holder of the Shares and irrevocable
authorities authorising:-
i) the Company to send any notices in respect of
the Vendor's holding of Shares to the
Purchaser; and
ii) the Purchaser to complete in such manner as it
thinks fit and to return proxy cards, consents
to short notice and any other document required
to be signed by the Vendor in its capacity as a
member;
(l) a duly executed agreement terminating the licence
between Benjamin Crook & Sons Limited and the Vendor
dated 13th March 1981;
(m) a statement from the Vendor that it will indemnify the
Company against any liabilities (including any
Taxation) arising by virtue of any agreement entered
into between the Vendor and the directors of the
Company relating to loyalty bonuses including but not
limited to those referred to in the letters from the
Vendor to each of Roger Holmes, Robert Reah, Simon
Peel, Duncan Benbridge and Duncan Anderson
respectively, each dated 4 August 1995 (save for that
to Duncan Anderson which is dated 13 July, 1995);
(n) copies of the Genesco Contracts;
(o) James Gulmi's letter of resignation as a trustee of the
Pension Scheme, which letter the Vendor shall accept,
on behalf of the Company, as being duly delivered in
accordance with the terms of the Pension Scheme;
14
(p) evidence acceptable to the Purchaser that the person(s)
executing this agreement (and the documents
contemplated by this agreement) on behalf of the Vendor
are duly authorised to do so.
4.3 On Completion the Vendor shall cause a Board Meeting of the
Company to be duly convened and held at which:
(a) the said transfers of the Shares shall be approved for
registration (subject only to the transfers being duly
stamped at the cost of the Purchaser);
(b) Peter McGuigan and Andrew Rubin shall be appointed as
directors and Richard Stevens shall be appointed as
secretary of the Company and J. S. Gulmi and W. S. Wire
II shall retire from all their offices and employments
with the Company and Robert Reah shall resign as
secretary of the Company, each delivering to the
Company a deed acknowledging that he has no claim
outstanding for compensation or otherwise and without
any payment under the Employment Protection
(Consolidation) Act 1978;
(c) the Deed of Covenant shall be approved and executed as
appropriate;
(d) all existing instructions to bankers shall be revoked
and it shall be resolved to replace them with
alternative instructions in such form as the Purchaser
may require;
(e) the registered office of the Company shall be changed
to The Pentland Centre, Lakeside, Squires Lane,
Finchley, London N3 2QL;
(f) the Company's accounting reference date shall be
changed to 31st December; and
15
(g) the repayment of the Inter-company Indebtedness and the
payment of the sum of USD 3,900,000 on account thereof
shall be approved.
4.4 On Completion the Purchaser shall, immediately following
compliance by the Vendor with the foregoing provisions:
(a) procure the transfer to the Vendor's Account of the sum
of USD 10,600,000 forming part of the Purchase
Consideration for the Shares;
(b) procure the transfer to the Stakeholder's Account of
the Retention;
(c) deliver to the Vendor's Solicitors counterparts of the
Deed of Covenant and the Tax Deed of Covenant duly
executed by the Purchaser;
(d) procure in so far as it able the Vendor's release from
the existing guarantee to Barclays Bank plc dated 1 May
1992;
(e) subject to any necessary consents, assume the Vendor's
liability to Barclays Bank plc and to First American
National Bank in respect of the Open Letters of Credit;
and
(f) provide evidence acceptable to the Vendor that the
person(s) executing this agreement (and the documents
contemplated by this agreement) on behalf of the
Purchaser are duly authorised to do so.
4.5 The Vendor's Solicitors are hereby irrevocably authorised by the
Vendor to receive all amounts expressed to be payable to it
hereunder and the receipt by the Vendor's Solicitors of each
such amount shall be an absolute discharge to the Purchaser to
the extent of the amount in question and the Purchaser shall not
be concerned to see to the application of any such amount.
16
4.6 Immediately following Completion the parties will procure that
the Company will immediately repay to the Vendor the sum of USD
3,900,000 on account of the Inter-company Indebtedness.
4.7 The parties shall use their respective best endeavours to
procure at the earliest possible date the unconditional release
of the Vendor from all its actual and contingent liabilities
under and/or in respect of and/or by virtue of each and all of
the following (other than the Open Letters of Credit):
(a) Guarantee issued by the Vendor to Barclays Bank plc
dated 1 May 1992; and
(b) each of the Genesco Contracts; and
(c) each of the Open Letters of Credit.
Pending the obtaining of such unconditional release(s) and in
any event in respect of the Open Letters of Credit, the
Purchaser shall indemnify and keep indemnified (and shall
reimburse the Vendor on its first demand) against all and any
losses or other amounts which the Vendor may be obliged or
called upon to pay under and/or in respect of and/or by virtue
of the above guarantee, the Genesco Contracts and/or each of the
Open Letters of Credit respectively. In meeting their
obligations under this clause 4.7 in respect of the Open Letters
of Credit, the parties shall follow as nearly as possible the
procedures set out in the document attached to this agreement as
"Attachment A". The liability of the Purchaser to indemnify in
respect of any particular Open Letter of Credit shall be limited
to the "Liability Amount" attributed to it in Schedule 9,
subject to any subsequently agreed adjustment.
Without prejudice to the foregoing, with regard to the Genesco
Contract referred to as item 1 of Schedule 10, being the
contract dated 15 December 1993 between (1) the Vendor (2) the
Company and (3) Asahi Corporation, ("the Asahi Contract"), the
Vendor hereby assigns to the Purchaser and the Purchaser hereby
assumes from the Vendor all the Vendor's rights and obligations
(other than those accrued prior to the Completion Date) under
the Asahi Contract and the parties shall notify Asahi
Corporation of such assignment immediately following Completion.
Without prejudice to the foregoing, with regard to the Genesco
Contract referred to as item 2 of Schedule 10 being the contract
dated 31 May 1994 between (1) Francisco Marcos (2) the Company
and (3) the Vendor, ("the Marcos Contract"), the Vendor hereby
assigns to the Purchaser and the
17
Purchaser hereby assumes from the Vendor all the Vendor's rights
and obligations (other than those accrued prior to the
Completion Date) under the Marcos Contract and the parties shall
notify Francisco Marcos of such assignment immediately following
Completion.
5. RETENTION
5.1 The Retention shall be paid into a designated interest-bearing
account with Lloyds Bank PLC in the joint names of the Vendors'
Solicitor and the Purchaser's Nominee ("the Stakeholders'
Account") immediately after Completion and the Retention
(together with interest accrued thereon) shall be applied in
accordance with the provisions of this Clause.
5.2 The Retention shall be held in the Stakeholders' Account until
the Completion Accounts become binding in accordance with
paragraph 3(D) of Schedule 7.
5.3 Within 14 days of the Completion Accounts becoming so binding,
the parties shall procure that any amounts payable to the
Purchaser in accordance with Schedule 7 (together with all
interest accrued thereon) shall be paid to the Purchaser, and
any balance of the Retention (together with all interest accrued
thereon) shall forthwith be released to the Vendor's Solicitor.
5.4 The Vendor and the Purchaser shall promptly give to the Vendor's
Solicitor and the Purchaser's Nominee respectively all such
written instructions as shall be
18
necessary to give effect to the provisions of this clause and on
Completion shall issue to the Vendors' Solicitors and the
Purchaser's Nominee a written undertaking accordingly.
6. WARRANTIES
6.1 The Vendor hereby represents, warrants and undertakes to the
Purchaser (for itself and as trustee for its successors in
title) in the terms of the Warranties and agrees that if any of
the Warranties is found to be untrue or incorrect, then, subject
to the provisions of this Agreement the Purchaser shall be
entitled to claim damages in an amount equal to the amount by
which the value of the Shares is less than it would have been if
such Warranty had been true and correct, together with all costs
and expenses incurred or sustained by the Purchaser as a result
of such breach.
6.2 The Warranties are given subject to the matters fully and fairly
disclosed in the Disclosure Letter and in the documents annexed
thereto but no other information of which the Purchaser may have
knowledge (actual or constructive) shall reduce the amount
recoverable in respect of any breach of Warranty.
6.3 Each of the Warranties set out in each paragraph and each
sub-paragraph of Schedules 4 and 5 shall be separate and
independent and save as expressly provided shall not be limited
by reference to any other paragraph or sub-paragraph.
6.4 Where any statement set out in Schedules 4 or 5 is expressed to
be given or made to the best of the Vendor's knowledge or to the
best of the Vendor's knowledge and belief after having made all
proper enquiry, or as qualified in some other manner having
substantially the same effect, such statement (save where
otherwise expressly stated) shall be deemed to be qualified by
the additional statement that the Vendor has made such enquiries
as are
19
reasonable in the circumstances including, in all cases,
enquiries of the Company.
6.5 (a) The Purchaser has entered into this Agreement on the
basis of the Warranties and in reliance on them.
(b) Liability under any of the Warranties shall not be
confined to breaches discovered before Completion nor
in any way be modified or discharged by Completion.
6.6 Any payment made by the Vendor to the Purchaser in respect of
claims under the Warranties or under the Tax Deed of Covenant
shall be treated by the parties as a reduction in the
consideration for the Shares.
6.7 The benefit of the Warranties shall be capable of being assigned
in whole or in part.
6.8 In the event of a claim alleging sexual discrimination being
brought by an individual on the basis of exclusion from
membership of the Pension Scheme as a result of working fewer
than 15 hours per week, the Vendor shall indemnify the Purchaser
against all liabilities and costs arising as a result of any
such claim but only to the extent that such liabilities and
costs relate to periods of employment prior to Completion.
The Purchaser shall promptly inform or shall use its best
endeavours to procure that the Company promptly informs the
Vendor of any matter which comes to its attention and which in
its reasonable opinion may give rise to liability under this
indemnity and shall conduct any claim according to any
directions of the Vendor and in particular shall not admit
liability or settle the liability without the prior consent of
the Vendor.
20
7. LIMITATION ON WARRANTY AND COVENANT CLAIMS
7.1 (a) The Vendor shall be under no liability whatsoever in
respect of any breach or non-fulfilment of any of the
General Warranties unless the Purchaser has served on
the Vendor a written notice on or before the date which
is twenty calendar months from the Completion Date
referring specifically (so far as is reasonably
possible) to the Warranty which the Purchaser alleges
has been breached or upon which the Purchaser relies
and giving reasonable details (so far as is reasonably
possible) of the claim including the Purchaser's best
estimate of the amount of the liability of the Vendor
in respect thereof and unless (if the relevant claim
has not been settled, withdrawn or agreed) proceedings
shall have been commenced and served upon the Vendor
(and not discontinued) on or before the date which is
twenty six calendar months from the Completion Date.
(b) The Vendor shall be under no liability whatsoever in
respect of any breach or non-fulfilment of any of the
Tax Warranties nor in respect of any claim under the
Tax Deed of Covenant unless the Purchaser has served on
the Vendor a written notice on or before the seventh
anniversary of the Completion Date referring
specifically (so far as is reasonably possible) in the
case of the Tax Warranties to the Tax Warranty which
the Purchaser alleges has been breached or upon which
the Purchaser relies and giving reasonable details of
the claim including the Purchaser's best estimate of
the amount of the liability of the Vendor in respect
thereof and unless (if the relevant claim has not been
settled, withdrawn or agreed) proceedings shall have
been commenced and served upon the Vendor (and not
discontinued) on or before the date which is ninety
calendar months from the Completion Date.
7.2 The Purchaser acknowledges that save for the Warranties, the
Purchaser has not relied in relation to the purchase of the
Shares, and was not induced to purchase the Shares, on or by any
warranties, representations, undertakings,
21
indemnities or covenants of any description, howsoever or
whatsoever and whether express or implied. In addition, the
Purchaser irrevocably and unconditionally waives any right which
it may have or might have had to claim damages and/or to rescind
this agreement for any misrepresentation not contained in this
agreement (or any of the other documents referred to in this
agreement) or for breach of any express or implied warranties
not specifically set out in this agreement.
7.3 The Purchaser shall not be entitled to make any claim or claims
(however many in number) under the Warranties or the Tax Deed of
Covenant where the sum claimed is less than L.500 or its
equivalent in other currencies (in the case of USD, converted at
the Agreed Exchange Rate), and any such claim or claims shall be
disregarded in computing the figure referred to in sub-clause
7.4.
7.4 The Vendor shall not be liable in respect of any claim under the
Warranties or under the Tax Deed of Covenant unless and to the
extent that the aggregate cumulative liability of the Vendor in
respect of all such claims exceeds L.50,000 or its equivalent in
other currencies (in the case of USD, converted at the Agreed
Exchange Rate) but in such event the Vendor shall be liable in
respect of the whole amount (subject to sub-clause 7.3) and not
merely the excess of such claims over such amount.
7.5 The Purchaser shall not be entitled to recover under the
Warranties and the Tax Deed of Covenant in aggregate any sum in
excess of the aggregate of:
(a) the Purchase Consideration (as adjusted in accordance
with the provisions of Schedule 7); and
(b) the consideration of US $3,846,560 paid by Pentland
Sports Group Limited ("PSG") to the Vendor under the US
Agreement in respect of the "Assets" (as defined in the
US Agreement) as adjusted in accordance with the
provisions of clause 1.3 of the US Agreement;
22
LESS the aggregate amount of any claim(s) at any time recovered
by PSG from the Vendor for breach of any warranty, indemnity or
representation given to PSG by the Vendor under the terms of the
US Agreement.
For the purposes of this clause 7.5, the Agreed Exchange Rate
shall be used where applicable.
7.6 The liability of the Vendor for breach of any Warranty or for a
claim under the Tax Deed of Covenant shall be reduced by the
value of any recoveries which have been, or subsequently are,
actually received or obtained by the Purchaser or the Company:
(a) from any third party responsible for the act, matter or
circumstances giving rise to such breach or claim; or
(b) from any related insurance monies received in respect
thereof.
If any recovery is made after the Vendor has made payment to the
Purchaser in respect of any such liability, the Purchaser shall
refund or procure that there is refunded to the Vendor the
lesser of:
(i) the sum of such payment by the Vendor; and
(ii) the sum of such recovery;
in each case after deducting all reasonable costs, charges and
expenses incurred by the Purchaser or the Company in obtaining
such recovery.
7.7 If the Vendor pays at any time to the Purchaser or to the
Company a sum pursuant to a claim in respect of the Warranties
or under the Tax Deed of Covenant and the Purchaser or the
Company subsequently becomes entitled to recover from some other
person any sum in respect of any matter giving rise to such
claim, the Purchaser shall, and shall procure that the Company
shall,
23
if the Vendor so requires, at the entire cost of the Vendor, use
its best endeavours to enforce such recovery, and shall
immediately repay to the Vendor (without interest) so much of
the sum paid by the Vendor to the Purchaser or the Company as
does not exceed the sum recovered from such other person (less
any costs, charges and expenses incurred by the Purchaser and/or
the Company in recovering that sum from such other person, which
have not previously been reimbursed by the Vendor.)
7.8 If the Vendor is liable to the Purchaser under the Warranties or
pursuant to the Tax Deed of Covenant by reason of an obligation
of the Company to pay advance corporation tax, or any sum
recoverable from the Company as if it were advance corporation
tax, any sum paid to the Purchaser in respect of such liability
shall be refunded, less any Taxation suffered on such tax, when
and to the extent that the Company becomes entitled to a
reduction in liability to mainstream corporation tax by reason
of such payment. Any payment due from the Purchaser under this
sub-clause shall be made five Business Days after the date when
the Company's Taxation liability which has been so reduced
becomes due and payable.
7.9 The Vendor shall be entitled to require and the Purchaser shall
procure the auditors of the Company to certify any sum due by
the Purchaser under sub-clause 7.8. Unless such certificate is
challenged by the Vendor within 21 days of its receipt by the
Vendor then it shall in the absence of manifest error be binding
on the Vendor. Following any such challenge by the Vendor and
unless the matter in dispute can be agreed between the Purchaser
and the Vendor within 21 days of such challenge then either
party may at any time thereafter refer the matter in dispute to
arbitration and the mechanism set out in paragraph 3(C) of
Schedule 7 shall apply.
7.10 If the Vendor is liable both in respect of a breach of Warranty
and under the Tax Deed of Covenant, the Purchaser shall be
entitled to claim in respect of either or both. The Purchaser
shall not however be entitled to recover from the Vendor under
the Warranties or the Tax Deed of Covenant more than once in
24
respect of the same damage suffered, and accordingly the Vendor
shall not be liable in respect of any breach of the Warranties
if and to the extent that the loss is or has been included in a
claim under the Tax Deed of Covenant which has been satisfied,
nor shall the Vendor be liable in respect of a claim under the
Tax Deed of Covenant if and to the extent that the loss is or
has been included in a claim for breach of the Warranties which
has been satisfied.
7.11 The Vendors' liability in respect of any breach of any of the
Warranties or under the Tax Deed of Covenant:
(a) shall be reduced by the extent that such liability
arises or is increased as a result of any legislation
not in force at today's date or of any change or
changes in legislation or the withdrawal after today's
date of any extra statutory concession previously made
by the Inland Revenue or any other fiscal authority
whether or not such change or changes or withdrawal
purport to be effective retrospectively in whole or in
part;
(b) shall be reduced by the extent that such liability
arises or is increased as a result of any change in the
basis or method of calculation of, or of any increase
in the rates of Taxation in either case made or imposed
by legislation after Completion with retrospective
effect to any period ending before Completion;
(c) shall be reduced if and to the extent that such
liability is attributable to any act, omission,
transaction or arrangement of the Purchaser or the
Company after Completion; and
(d) shall be reduced if and to the extent that such loss
has been or is made good or is otherwise compensated
for without cost to the Purchaser or the Company.
7.12 If the relevant loss, damage, cost, expense or liability of the
Company upon which a claim for breach of any of the Warranties
or under the Tax Deed of
25
Covenant is based, results in a reduction in the Taxation
actually paid by the Company, then the relevant loss, damage,
cost, expense or liability recoverable by the Purchaser from the
Vendor in respect of such claim shall be decreased by the amount
of such reduction or, as appropriate, the sum payable to the
Purchaser by the Vendor for breach of the relevant Warranty or
under the Tax Deed of Covenant shall be so decreased.
7.13 If under any of the provisions in this clause 7 a claim against
the Vendor is expressed as being reduced by reason of some
receipt or recovery under any insurance or from any other third
party, or if the Purchaser is obliged to make any payment to the
Vendor, the amount of such reduction or payment shall be
decreased by a sum equal to the Taxation due and payable by the
Purchaser and/or the Company in respect of such receipt or
recovery.
7.14 The Vendor shall be entitled to require, and the Purchaser shall
procure, that the auditors of the Company shall certify any
decrease referred to in subclause 7.12 or any Taxation referred
to in subclause 7.13. Unless such certificate is challenged by
the Vendor within 21 days of its receipt by the Vendor then it
shall in the absence of manifest error be binding on the Vendor.
Following any such challenge by the Vendor and unless the matter
in dispute can be agreed between the Purchaser and the Vendor
within 21 days of such challenge then either party may at any
time thereafter refer the matter in dispute to arbitration and
the mechanism set out in paragraph 3(C) of Schedule 7 shall
apply.
7.15 No claim against the Vendor relating to or arising out of any of
the Warranties or under the Tax Deed of Covenant shall be made
to the extent that the subject matter of such claim has been
reflected in the preparation of the Accounts, or results in an
adjustment in accordance with Schedule 7 of the consideration to
be paid by the Purchaser to the Vendor for the Shares.
7.16 The Vendor shall be under no liability under the Warranties in
respect of any matter fully and fairly disclosed in the
Disclosure Letter.
26
8. CONFIDENTIALITY AND ANNOUNCEMENTS
8.1 For the purpose of assuring to the Purchaser the full benefit of
the business and goodwill of the Company and in consideration of
the agreement of the Purchaser to buy the Shares on the terms
hereof the Vendor hereby agrees with the Purchaser and its
successors in title that it will not at any time hereafter
divulge or communicate to any person (other than to officers,
employees or professional advisers of the Vendor whose position
makes it necessary for them to know the same or to the Purchaser
or its officers, employees or professional advisers ("authorised
persons") and save as may be required by the provisions of any
applicable law or the regulations of any relevant stock
exchange) any confidential information concerning the business,
accounts, financial or contractual arrangements or other
dealings, transactions or affairs of the Company which may be
within or which may come to its knowledge and that it will use
its best endeavours to prevent the publication or disclosure of
any confidential information by any authorised person. The
Vendor will at the request of the Purchaser use its reasonable
endeavours to enforce any contractual rights which the Vendor
may have to require the return to it of any confidential
information relating to the Company and previously supplied by
the Vendor to any prospective purchaser of the Shares or the
business of the Company.
8.2 Save as may be required by law or by the rules of any stock
exchange no announcement or information concerning this sale and
purchase or any ancillary matter shall be made or released
before or after Completion to the public or to the press
(national, provincial, local or trade) or the suppliers or
customers of the Company by any of the parties hereto without
the prior written consent of the Purchaser and the Vendor which
will not be unreasonably withheld. Where any announcement is
required by law or the rules of any stock exchange the parties
shall consult with each other prior to such announcement and use
all reasonable endeavours to agree the terms of such
announcement.
27
8.3 No announcement or information concerning this sale and purchase
or any ancillary matter shall be made after Completion to any
employees of the Company by the Vendor without the prior
consent of the Purchaser (which consent shall not be
unreasonably withheld or delayed) PROVIDED that nothing shall
restrict the Vendor from making such disclosures to directors of
the Company as may be reasonably necessary for the performance
by such directors of their duties.
9. FURTHER ASSURANCE AND AVAILABILITY OF INFORMATION
9.1 The Vendor shall perform such acts and execute such documents as
may be reasonably required on or after Completion by the
Purchaser for securing to or vesting in the Purchaser the legal
and beneficial ownership of the Shares in accordance with the
terms and conditions of this Agreement and assuring to the
Purchaser the rights hereby granted.
9.2 The parties shall cause to be made available and shall procure
that both the Vendor's Accountants and the Purchaser's
Accountants shall make available to each of the parties all
information in the possession or control of the Vendor, the
Company, the Vendor's Accountants, the Purchaser or the
Purchaser's Accountants which the parties may from time to time
reasonably require (before or after Completion) relating to the
business and affairs of the Company (but, in the case of the
Vendor, in connection with this Agreement only) and each party
shall permit the other party to have access on reasonable notice
and at reasonable times to documents containing such information
and to take copies thereof.
10. INTEREST
If any party fails to make any payment hereunder on the due date
or within the applicable period for payment, such party shall
pay interest on the amount for the time being outstanding at the
rate of 3% per annum above the base lending rate of Barclays
Bank plc for the time being in force on the basis of actual days
28
elapsed from the due date for payment or from the date of expiry
of such period (as the case may be) until payment in full (after
as well as before judgement).
11. CONTINUING OBLIGATIONS
11.1 Each of the obligations, warranties, indemnities and
undertakings accepted or given by the Vendor or the Purchaser
pursuant to this Agreement (hereinafter called "the
Obligations"), excluding any of the Obligations fully performed
at Completion, shall continue in full force and effect
notwithstanding Completion taking place.
11.2 The parties recognise that Roger Holmes ("RH") has reserved the
right to contend that his employment with the Company is
governed by an alleged undated agreement between himself and
Grampian Holdings Plc ("Grampian") which he has signed but which
RH has acknowledged has not been signed by Grampian. The Vendor
has never acknowledged to RH that it considers such contract to
be in force.
In the event that the Purchaser causes the Company to terminate
RH's employment with the Company at any time on or before 30
November 1995, then
(a) The Vendor and the Purchaser shall each use all
reasonable efforts to minimise the level of damages or
compensation which may be payable to RH as a result of
such termination and, in particular, the parties shall
cause the Company to challenge any contention by RH
that he is entitled to more than 12 months' notice of
termination under the terms of his employment and the
Vendor shall seek to give such evidential support as it
can in support of such contention; and
(b) The Vendor shall reimburse the Company for any amount
which the Company is obliged to pay to RH by way of
damages for wrongful
29
dismissal (but excluding compensation for unfair
dismissal or redundancy) to the extent that (if such be
the case) such damages are increased by virtue of RH
establishing that the notice period under the terms of
his employment with the Company exceeds 12 months, but
subject to a maximum reimbursement obligation on the
Vendor of L.50,000. No settlement of any claim for
such damages in respect of which the Vendor will be
obliged to make a contribution will be made without the
prior approval of the Vendor, such approval not to be
unreasonably withheld.
12. COSTS
Each party to this Agreement shall pay its own costs, charges
and expenses incurred in the preparation, completion and
implementation of this Agreement (and the documents referred to
herein).
13. NOTICES
13.1 Any notice or other communication to be given or made under this
Agreement or the Tax Deed of Covenant must be in writing and
shall either be delivered personally or sent by first class
registered post or facsimile transmission. The address for
service of each of the parties shall be the following address or
such other address as the party to be served may have previously
notified to the other:
To the Vendor: Genesco Inc.,
490 Genesco Park
Nashville
Tennessee 37202
Tel: 001 - 615 - 3678325
Fax: 001 - 615 - 3677421
Attention: James S Gulmi
30
To the Purchaser: Pentland Industries Ltd
The Pentland Centre
Lakeside
Squires Lane
Finchley
London, N3 2QL
Tel: 0181 346 2600
Fax: 0181 346 2700
Attention: Frank A Farrant
With a copy for information to Clive
R Kelly, General Counsel at the same
address.
All notices shall be deemed to have been served as follows:
(a) if personally delivered, at the time of delivery;
(b) if posted by first class registered post, at the
expiration of 72 hours after the envelope containing
the same was delivered into the custody of the postal
authorities and shall be effective notwithstanding that
it may be misdelivered or returned undelivered; and
(c) if communicated by facsimile transmission, at the time
of transmission provided that a copy of such facsimile
transmission is posted by first class registered post
on the same day.
PROVIDED that where, in the case of delivery by hand or
transmission by facsimile, such delivery or transmission occurs
after 6 pm on a Business Day or on a day which is not a Business
Day, service shall be deemed to occur at 9 am on the next
following Business Day.
13.2 In proving such service it shall be sufficient to prove that
such personal delivery was made, or that the envelope containing
such notice was properly addressed and delivered into the
custody of the postal authorities as a pre-paid first class
31
registered letter, and that the facsimile transmission was made
after obtaining in person or by telephone appropriate evidence
of the capacity of the addressee to receive the same, as the
case may be.
13.3 The Vendor hereby appoints the Vendor's Solicitor as its
representative who may (without prejudice to the right of the
Vendor to do so itself) authorise the making of any request,
election, proposal or consent expressed to be made on behalf of
the Vendor to the Purchaser.
14. SEVERABILITY
If any provision or provisions of this Agreement (or of any
document referred to herein) is or at any time becomes illegal,
invalid or unenforceable in any respect, the legality, validity
and enforceability of the remaining provisions of this Agreement
(or such document) shall not in any way be affected or impaired
thereby.
15. ENTIRE AGREEMENT AND VARIATION
15.1 This Agreement (together with the other documents referred to
herein) constitutes the entire agreement between the parties in
relation to the transactions referred to herein or therein and
supersedes any previous agreement between the parties in
relation to such transactions.
15.2 Each of the parties hereto confirms that, in agreeing to enter
into this Agreement, it has not relied on any representation,
warranty or undertaking except those contained in this Agreement
and (by way of qualification to the Warranties) the Disclosure
Letter.
15.3 No variation of any of the terms of this Agreement (or of any
other documents referred to herein) shall be effective unless it
is in writing and signed by or on behalf of each of the parties
hereto or thereto. The expression "variation" shall include any
variation, supplement, deletion or replacement however effected.
32
16. GENERAL PROVISIONS
16.1 Any right of rescission or termination conferred upon either
party under this Agreement shall (unless otherwise expressed) be
in addition to and without prejudice to all other rights and
remedies available to it by reason of any breach of any
provisions of this Agreement.
16.2 No delay or omission of either party in exercising any right,
power or privilege hereunder shall operate to impair such right,
power or privilege or be construed as a waiver thereof and no
single or partial exercise or non-exercise of any right, power
or privilege shall in any circumstances preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege.
16.3 The Vendor agrees that it and its nominees hereby waive any
rights which may have been conferred on them under the Articles
of Association of the Company or otherwise or in any other way
to have any of the Shares offered to them for purchase at any
time on or before the transfer of the Shares pursuant to the
provisions of this Agreement.
17. GOVERNING LAW AND JURISDICTION
This Agreement (together with all documents referred to herein
and unless otherwise provided for therein) shall be governed by
and construed and take effect in accordance with English law and
each of the parties hereto submits to the non-exclusive
jurisdiction of the High Court of England.
33
AS WITNESS the hands of the parties hereto or of their duly authorised
representatives the day and year first before written.
SIGNED by [Roger G. Sisson] )
for and on behalf of )
GENESCO INC. ) /s/ Roger G. Sisson
SIGNED by [John S. McLaren] )
for and on behalf of )
PENTLAND INDUSTRIES )
LIMITED ) /s/ John S. McLaren