Prepare a memorandum in relation to each of Topco, Bidco and Parmeaux as to the resolutions which would need to be passed:

• by the shareholders; and

• by the directors.

  in order to implement the proposals. Your memorandum should include reference to all of the documents and paperwork necessary (including those requiring filing at Companies House), briefly explaining the purpose of each document and identifying any legislative requirement relating to it.

Parmeaux Ltd (Parmeaux) is a food producer specialising in the production of the delicious Teesside dish, the Parmo.

You act for Boro Food Ventures Ltd (BFV), which is owned and managed by Bill Ingham. BFV has recently negotiated the acquisition of the entire issued share capital of Parmeaux from its existing shareholder and sole director, Whinney Banks, who set up Parmeaux ten years ago. Bill is convinced that the Parmo can be turned into a worldwide success story.

BFV will be putting a new management team of three directors in place to run the business of Parmeaux. The three new directors are Lynne Thorpe, Albert Park and Coulby Newham. BFV will be incentivising them by allowing them to subscribe for new shares as set out below.

To put the acquisition into effect, two new companies have been set up.

One of them is a new holding company, Borotopco Ltd (Topco). As things currently stand, Topco has one ordinary share in issue, owned by Lynne Thorpe. Topco has the Model Articles for private companies, and its only director is, again, Lynne.

A second company, Borobidco (Bidco), will be the company which actually acquires the shares in Parmeaux. Bidco has one ordinary share in issue, owned by Topco. Bidco has the Model Articles for private companies, and its only director is Lynne.

In order to put into effect the proposed transaction, it is anticipated that the following steps will be taken by Topco, Bidco and Parmeaux:

Topco

Topco will appoint Bill, Albert and Coulby as directors in addition to Lynne. Topco will adopt new articles of association, based upon the Model Articles, but with special articles setting out proposed new classes of share below. It will then raise 10,000,000 by issuing the following shares at their nominal value:

• 9,000,000 preference shares of 1 each, to be issued to BFV

• 700,000 A ordinary shares of 1 each, to be issued to BFV

• 299,999 ordinary shares of 1 each, to be issued as to 100,000 each to Albert and Coulby, and as to 99,999 to Lynne.

  To provide funds to Bidco for the acquisition of Parmeaux, Topco will enter into an inter-company loan agreement with Bidco (the Junior Loan), under which it will lend Bidco 9,750,000. It will also enter into an intercreditor agreement with Bigbank (see below) in relation to sums lent to Bidco. It will use the balance of the proceeds of the share issue to cover transaction costs.

• Bidco

  Bidco will appoint Bill, Albert and Coulby as directors in addition to Lynne. Bidco will enter into the Junior Loan with Topco. It will raise an additional 7,000,000 under the provisions of a term loan from Bigbank (the Senior Loan). It will then purchase the shares in Parmeaux for a consideration of 16,500,000, under the terms of a sale and purchase agreement with Whinney Banks (the SPA). Finally, it will grant security to Bigbank way of a fixed charge over its shares in Parmeaux, as security for the sums due under the Senior Loan (the Share Charge). Bigbank has indicated that it intends to apply for a stop notice in respect of the Share Charge. The balance of the sums from the Junior Loan will be used to cover Bidcos transaction costs.

  Parmeaux

  At completion of the transaction, Parmeaux will:

• approve the registration of the transfer of Whinneys shares to Bidco, subject to the payment of stamp duty;

• appoint Bill, Lynne, Albert and Coulby as directors and accept the resignation of Whinney (who, as stated above, is currently the only director of Parmeaux);

• adopt the Model Articles for private companies as its articles of association;

• enter into a revolving credit facility with Bigbank (under which it can draw down a

  maximum of 2 million for the purposes of working capital) (the RCF);

• grant security to Bigbank over its assets, as security for the sums drawn under the RCF and for the obligations of Bidco under the Senior Loan (the Debenture);

• enter into five-year service contracts with each of Lynne, Albert and Coulby, terminable on twelve months notice but notice not to be given within the first 24 months of the contracts;

• change its registered office to 36, Dalwood Court, Middlesbrough, TS8 9JG;

• enter into a management agreement with BFV (the Management Agreement), under which BFV will provide various services relating to human resources, finance, and health and safety. Bill Ingham is an established industry expert in these areas.

  Under the terms of the SPA, Whinney has agreed to carry out any steps necessary in her capacity as shareholder, on behalf of Bidco, on account of the fact that it will not be possible for Parmeaux to register the transfer of her shares to Bidco until stamp duty has been paid on them.

  All the parties have indicated that it would be convenient for decisions of the directors to be taken in writing under Model Article 8 (applicable to all three companies at all times), and for decisions of shareholders to be taken by way of the written resolution procedure.