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EXHIBIT 10.1
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▇▇▇▇▇▇▇ International Holdings Limited
and
▇▇▇▇▇▇ Limited
AGREEMENT FOR THE SALE AND PURCHASE
OF SHARES
IN KLIPPAN LIMITED
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SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made on 29 January, 2001.
BETWEEN:
(1) ▇▇▇▇▇▇▇ International Holdings Limited (Company number 3407901), a
limited liability company incorporated in England and Wales (the
"Vendor"); and
(2) ▇▇▇▇▇▇ Limited (Company number 02933327), a limited liability company
incorporated in England and Wales (the "Purchaser").
RECITALS
(A) The Vendor owns all of the issued share capital (the "Klippan Shares")
of Klippan Limited (Company number 2264274) ("Klippan"), a private
limited liability company incorporated in England and Wales.
(B) Klippan owns all of the issued share capital of Akta Barnsakerhet AB, a
private limited liability company incorporated in Sweden, and Oy
Klippan Ab, a limited liability company incorporated in Finland (the
"Subsidiary Shares") and will on Completion own the German Assets and
the German Business.
(C) The Vendor owns all of the issued share capital of Klippan GmbH, a
private limited liability company incorporated in Germany and Klippan
SARL, a private limited liability company incorporated in France.
(D) The Vendor wishes to sell, and the Purchaser wishes to purchase the
Klippan Shares on and subject to the terms of this Agreement.
NOW THEREFORE, THE PARTIES AGREE as follows:
1. Sale and Purchase of Klippan Shares
1.1 Subject to the terms and conditions hereof, the Vendor agrees to sell,
with full title guarantee, and the Purchaser agrees to buy, the Klippan
Shares and each right attaching to the Klippan Shares at or after the
date of this Agreement, free from any Encumbrances.
1.2 The Purchaser will pay to the Vendor for the Klippan Shares an
aggregate purchase price of L2,800,000 less the amount set out in the
Estimated Indebtedness Statement as set forth in Clause 2.2 (the
"Purchase Price") and subject to an adjustment as provided in Clause 3.
1.3 The Purchaser agrees to procure the discharge of the Inter-Company
Indebtedness at Completion in accordance with Clause 2.2.
2. Completion
2.1 Completion shall take place at the offices of the Purchaser's
Solicitors on 29 January 2001 or on such other Business Day and time as
the parties shall have agreed to in
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writing. The date on which Completion shall occur is hereinafter
referred to as the "Completion Date".
2.2 At Completion the Vendor and the Purchaser shall do all those things
respectively required of them in Schedule 3 and the Purchaser shall pay
to the Vendor L2,800,000 less (i) the Escrow Amount and (ii) the
estimated aggregate amount of the InterCompany Indebtedness, the Net
External Debt and the Estimated Tax Adjustment as set out in the
Estimated Indebtedness Statement and pay to the Vendor the amount of
the Inter-Company Indebtedness, as set out in the Estimated
Indebtedness Statement, in each case by transfer of funds for same day
value, to be paid to the following account:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Client Account No: ▇▇▇▇▇▇▇
Sort Code: 30-00-03
Lloyds TSB Bank plc
Colmore Row Branch
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇
2.3 Payment of the Purchase Price and the Inter-Company Indebtedness (the
latter in accordance with Clause 2.2) shall be a good discharge to the
Purchaser for the Purchase Price and in respect of Inter-Company
Indebtedness. The Vendor confirms that it has authority from each
company in the Vendor Group to which Inter-Company Indebtedness is owed
to give such a discharge and provided that the Purchaser complies with
its obligations pursuant to Clause 2.2 with regard to the Inter-Company
Indebtedness the Vendor shall hold the Purchaser and the Group harmless
from any Inter-Company Indebtedness owed to the Vendor Group.
2.4 If Completion does not take place on the Completion Date because the
Vendor fails to comply with any of its obligations under this Clause 2,
the Purchaser may by notice to the Vendor:
(a) proceed to Completion to the extent reasonably practicable
including without limitation by purchasing some, but not all
of the Klippan Shares (but if the Purchaser exercises its
right pursuant to this Clause 2.4 completion of the purchase
of some of the Klippan Shares does not affect the Purchaser's
rights in connection with the others);
(b) postpone Completion to a date to be no later than 30 Business
Days after the date of this Agreement;
(c) terminate this Agreement.
2.5 If the Purchaser postpones Completion to another date in accordance
with Clause 2.4(b), the provisions of this Agreement shall apply as if
that other date is the date for Completion.
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2.6 The Warranties and all other provisions of this Agreement and the Tax
Deed insofar as the same shall not have been performed at Completion
shall not be extinguished or affected by Completion, or by any other
event or matter whatsoever.
2.7 If the Purchaser terminates this Agreement pursuant to Clause 2.4(c),
each party's further rights and obligations cease immediately on
termination, but termination does not affect a party's accrued rights
and obligations at the date of termination and, for the avoidance of
doubt, in such event the respective obligations of both the Vendor and
the Purchaser pursuant to the Heads of Terms shall remain in full force
and effect.
2.8 If following the date hereof and prior to Completion the Purchaser
receives a notification from the Vendor pursuant to Clause 4.6 that any
of the Warranties has, when given, or will be or would be, at
Completion (as if they had been given again at Completion) not complied
with or otherwise untrue or misleading the Purchaser shall be entitled
(in addition to and without prejudice to all other rights or remedies
available to it and its successors in title including the right to
claim damages) by notice in writing to the Vendor to terminate the
Agreement. If, notwithstanding such notification pursuant to Clause
4.6, the Purchaser elects to complete this Agreement, the occurrence of
such an event, the subject of the notification, shall not preclude the
Purchaser from any right to damages or compensation for breach of
Warranty save to the extent details of such breach have been fairly
notified in such notification. If any event shall occur (other than an
event constituting or giving rise to a breach of any of the Warranties)
following the date hereof but prior to Completion which affects or is
likely to affect adversely to a material degree the financial position
or turnover or profitability of any of the Group Companies as a whole
or any of the Group Companies, not being an event affecting or likely
to affect generally all companies carrying on similar businesses in the
United Kingdom, Sweden, or Finland, the Purchaser shall be entitled by
notice in writing to the Vendor to terminate this Agreement but the
occurrence of such an event shall not give rise to any right to damages
or compensation.
2.9 The Vendor agrees with the Purchaser (for itself and as trustee for
each Group Company and their respective officers, employees and agents)
to assign to the Purchaser any rights, remedies or claims which it may
have (other than in relation to fraud, or fraudulent misrepresentation,
willful misconduct or willful concealment) in respect of any
misrepresentation, inaccuracy or omission in or from any information or
advice supplied or given by any Group Company or its respective
officers, employees or agents in connection with assisting the Vendor
in the making of any representation and the giving of the Warranties or
the preparation of the Disclosure Letter and the Tax Deed.
3. Completion Accounts
3.1 The Completion Accounts. The Purchaser shall procure that as soon as
practicable following Completion there shall be drawn up a consolidated
balance sheet (to be drawn up as at immediately prior to Completion)
and a consolidated profit and loss account of the Group Companies
including the assets acquired and liabilities assumed by Klippan from
Klippan GmbH pursuant to the German Agreement (the "German Net
Assets") in respect of the period from the Reference Accounts Date to
immediately prior to Completion (the "Completion Accounts") and that
the same are
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reviewed by the Purchaser's Accountants. The Completion Accounts shall
be drawn up in accordance with the accounting principles set out in
Schedule 6.
3.2 Preparation. (a) The Completion Accounts shall be delivered to the
Vendor and the Vendor's Accountants by the Purchaser as soon as is
practicable following Completion and, in any event, not later than 28
February 2001. Prior to such delivery, the Purchaser shall so far as is
practicable consult with the Vendor and the Vendor's Accountants with a
view to reducing the potential areas of future disagreement.
(b) In order to enable the Purchaser to prepare and the Vendor and
Vendor's Accountants to review the Completion Accounts, the Purchaser
shall procure that the Group Companies shall keep up-to-date and make
available to the Vendor and to the Vendor's Accountants their books,
records and working papers relating to the businesses of the Group
Companies and the German Net Assets as at Completion during normal
office hours and cooperate with them with regard to the preparation and
review of the Completion Accounts. The Vendor agrees to make available
to the Purchaser and the Purchaser's Accountants its books, records and
working papers relating to the businesses of the Group Companies and
the German Net Assets as at Completion during normal office hours and,
in so far as it is reasonable to do so, to make available the services
of its employees to assist the Purchaser in the performance of its
duties under this Clause 3.
(c) If the Vendor does not within 45 days of presentation to it of
the Completion Accounts give notice to the Purchaser that it disagrees
with the Completion Accounts or any item thereof, such written notice
stating the reasons for the disagreement in reasonable detail (the
"Vendor's Disagreement Notice"), the Completion Accounts shall be final
and binding on the parties for the purpose of this Clause 3. If the
Vendor gives a Vendor's Disagreement Notice within such 30 days, the
parties shall attempt in good faith to reach agreement in respect
thereof and, if they are unable to do so within 21 days of such
notification or any other period as agreed between the parties, either
party may by notice to the other require that the Completion Accounts
to the extent not agreed be referred to the Reporting Accountants (as
defined in Clause 3.2(e) below) (an "Appointment Notice").
(d) Within 21 days of the giving of an Appointment Notice, the
Purchaser may by notice to the Vendor indicate that, in the light of
the fact that the Vendor has not accepted the Completion Accounts in
their entirety, the Purchaser wishes the Reporting Accountants to
consider matters relating to the Completion Accounts in addition to
those specified in the Vendor's Disagreement Notice, such notice
stating in reasonable detail the reasons why and in what respects the
Purchaser believes that the Completion Accounts should be altered (the
"Purchaser's Disagreement Notice"). Within 7 days of the giving of a
Purchaser's Disagreement Notice, the Vendor may by notice to the
Purchaser indicate that, in light of the Purchaser's Disagreement
Notice, the Vendor wishes the Reporting Accountants to consider
matters relating to the Completion Accounts in addition to those
specified in the Vendor's Disagreement Notice, such notice stating in
reasonable detail the reasons why and in what respects the Vendor
believes that the Completion Accounts should be altered and the
Vendor's Disagreement Notice shall be amended in accordance with such
notice.
(e) Such firm of accountants as the Vendor and the Purchaser may
agree (or in default of nomination by agreement between the Vendor and
the Purchaser, such firm
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of accountants nominated by the President for the time being of the
Institute of Chartered Accountants in England and Wales) (the
"Reporting Accountants") shall be engaged jointly by the parties on the
terms set out in this Clause 3.2(e) and otherwise on such terms as
shall be agreed provided that neither party shall unreasonably (having
regard, inter alia, to the provisions of this Clause 3.2) refuse its
agreement to terms proposed by the Reporting Accountants or by the
other party. If the terms of engagement of the Reporting Accountants
have not been settled within 45 days of their identity having been
determined (or such longer period as the parties may agree) then,
unless one party is unreasonably refusing its agreement to those terms,
those accountants shall be deemed never to have become the Reporting
Accountants and new Reporting Accountants shall be selected in
accordance with the provisions of this Clause.
(f) Except to the extent that the parties agree otherwise, the
Reporting Accountants shall determine their own procedure but:
(i) apart from procedural matters and as otherwise set
out in this Agreement shall determine only:
(A) whether any of the arguments for an
alteration to the Completion Accounts put
forward in the Vendor's Disagreement Notice
or the Purchaser's Disagreement Notice is
correct in whole or in part; and
(B) if so, what alterations should be made to
the Completion Accounts in order to correct
the relevant inaccuracy in it;
and in doing so shall apply the principles set out in
Schedule 6;
(ii) shall make their determination pursuant to paragraph
(i) above as soon as is reasonably practicable;
(iii) the procedure of the Reporting Accountants shall:
(A) give the parties a reasonable opportunity to
make written and oral representations to
them;
(B) require that each party supply the other
with a copy of any written representations
at the same time as they are made to the
Reporting Accountants;
(C) permit each party to be present while oral
submissions are being made by the other
party; and
(iv) for the avoidance of doubt, the Reporting Accountants
shall not be entitled to determine the scope of their
own jurisdiction.
(g) The determination of the Reporting Accountants pursuant to
Clause 3.2(f) shall (i) be made in writing delivered to the registered
offices of the Vendor and the Purchaser and (ii) unless otherwise
agreed by the parties include reasons for each relevant determination.
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(h) The Reporting Accountants shall act as experts and not as
arbitrators and their determination of any matter falling within their
jurisdiction shall be final and binding on the parties save in the
event of manifest error (when the relevant part of their determination
shall be void and the matter shall be remitted to the Reporting
Accountants for correction). In particular, without limitation:
(i) their determination shall be deemed to be
incorporated into the Completion Accounts, which
shall then be final and binding on the parties save
as aforesaid;
(ii) their determination of any fact which they have found
it necessary to determine for their determination
pursuant to Clause 3.2(f)(i) shall be final and
binding on the parties.
(i) The expenses of the Reporting Accountant shall be borne as
they shall direct at the time they make any determination under Clause
3.2(f)(i) or, failing such direction, equally between the Vendor, on
the one hand, and the Purchaser, on the other.
(j) The parties shall co-operate with the Reporting Accountants
and comply with their reasonable requests made in connection with the
carrying out of their duties under this Agreement. In particular,
without limitation, the Purchaser shall in relation to the German Net
Assets keep up-to-date and procure that the Group Companies keep
up-to-date and, subject to reasonable notice, make available to the
Vendor's representatives, the Purchaser's Accountants and the Reporting
Accountants the books, records and working papers relating to the
businesses of the Group Companies and the German Net Assets as at
Completion during normal office hours during the period from Completion
down to the agreement or relevant determination of the Completion
Accounts.
(k) Subject to Clause 3.2(l), nothing in this Clause 3.2 shall
entitle a party or the Reporting Accountants access to any information
or document which is protected by legal professional privilege, or
which has been prepared by the other party or its accountants or other
professional advisers with a view to assessing the merits of any claim
or argument.
(l) A party shall not be entitled by reason of Clause 3.2(k) to
refuse to supply such part or parts of documents or summaries thereof
as contain only the facts on which the relevant claim or argument is
based.
(m) Each party and the Reporting Accountants shall, and shall
procure that its accountants and other advisers shall, keep all
information and documents provided to them pursuant to this Clause 3.2
confidential and shall not use the same for any purpose, except for
disclosure or use in connection with the preparation of the Completion
Accounts, the proceedings of the Reporting Accountants or another
matter arising out of this Agreement or in defending any claim or
argument or alleged claim or argument relating to this Agreement or its
subject matter.
(n) References to a "party" or "parties" in this Clause 3.2 shall
be deemed to include the Vendor, the Vendor's Accountants, the
Purchaser and the Purchaser's Accountants.
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3.3 Adjustment of Consideration
(a) (i) If the Net External Debt set out in the Actual
Indebtedness Statement is greater than the estimated Net External Debt
set out in the Estimated Indebtedness Statement, then within 14 days of
either the Completion Accounts becoming final and binding under Clause
3.2(c) or the determination of the Reporting Accountants, the Vendor
shall repay to the Purchaser an amount equal to such difference in
immediately available funds. Such payment by the Vendor to the
Purchaser shall be made to the following account: ▇▇▇▇▇▇ Limited,
Account No. ▇▇▇▇▇▇▇▇, Barclays Bank, Sort Code 20-83-69, and shall
constitute a reduction in the Purchase Price.
(ii) If the Net External Debt set out in the Actual Indebtedness
Statement is less than the estimated Net External Debt set out in the
Estimated Indebtedness Statement, then within 14 days of either the
Completion Accounts becoming final and binding under Clause 3.2(c) or
the determination of the Reporting Accountants, the Purchaser shall pay
to the Vendor an amount equal to such difference in immediately
available funds. Such payment by the Purchaser to the Vendor shall be
made to the account referred to in Clause 2.2 and shall constitute an
increase in the Purchase Price.
(iii) The parties hereby agree that any liability of the Purchaser
pursuant to Clause 3.3(a)(ii) may be offset against any liability of
the Vendor pursuant to Clause 3.3(a)(iv).
(iv) If the Completion Working Capital Statement is less than
L104,000, then, within 14 days of either the Completion Accounts
becoming final and binding under Clause 3.2(c) or the determination of
the Reporting Accountants, the Vendor shall pay to the Purchaser as a
reduction to the Purchase Price an amount equal to such difference.
(v) The Purchaser agrees that the Purchaser shall pay to the
Vendor on demand as an increase to the Purchase Price an amount equal
to the capital expenditure incurred by Klippan from the effective date
of the Heads of Terms up to and including Completion, relating to the
▇▇▇▇▇ and Reclina Products, provided that the Purchaser shall have no
obligation to pay any amount to the Vendor to the extent that the
aggregate amount of capital expenditure incurred is in excess of
L36,000 (or as otherwise agreed in writing by the Purchaser and the
Vendor).
(vi) If The Scheme is not 100% funded as at the date of Completion
on the Minimum Funding Requirement basis as prescribed by the
Occupational Pension Schemes (Minimum Funding Requirement and Actuarial
Valuations) Regulations 1996 No 1536 and Actuarial Guidance Note EN27,
then within 14 days of either the Completion Accounts becoming final
and binding under Clause 3.2(c) or the determination of the Reporting
Accountants, the Vendor shall pay to the Purchaser an amount equal to
the amount by which The Scheme is less than 100% funded.
(vii) The Vendor and the Purchaser acknowledge and agree that, to
the extent possible, the Purchaser shall at its discretion be entitled
to obtain payment of any sums owing to it including, for the avoidance
of doubt, interest, as a result of the adjustment of the Purchase Price
and/or Net External Debt pursuant to Clause 3.3(a) and/or Clause
3.3(b), from the Escrow Account for same day value. For the avoidance
of doubt, in the event that the said payment cannot be satisfied in
full from the monies
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in the Escrow Account, the Purchaser shall be entitled to any shortfall
from the Vendor in immediately available funds. In the event that the
Purchaser obtains payment of any amount owing to it as a result of an
adjustment to the Purchase Price pursuant to Clause 3.3(a) and/or
Clause 3.3(b) from the Escrow Account, the Vendor shall forthwith
deposit with the Escrow Agent an amount equal to the amount of such
payment made out of the Escrow Account.
(b) If the Completion Tax Adjustment as shown in the Completion
Accounts is more than the Estimated Tax Adjustment, then within 14 days
of either the Completion Accounts becoming final and binding under
Clause 3.2(c) or the determination of the Reporting Accountants, the
Vendor shall pay to the Purchaser as a reduction to the Purchase Price
an amount equal to such difference. If the Completion Tax Adjustment as
shown in the Completion Accounts is less than the Estimated Tax
Adjustment, then within 14 days of either the Completion Accounts
becoming final and binding under Clause 3.2(c) or the determination of
the Reporting Accountants, the Purchaser shall pay to the Vendor as an
increase to the Purchase Price an amount equal to such difference.
3.4 Currency. All amounts used or calculated in this Clause 3 shall be
determined in UK pounds sterling. All payments to be made under this
Clause 3 shall be made in UK pounds sterling and in immediately
available funds.
3.5 Escrow Arrangements. On Completion, L400,000 of the Purchase Price
shall be deposited by the Purchaser with the Escrow Agent, to be held,
invested and distributed subject to the terms of the Escrow Agreement.
The Purchaser may use money in the Escrow Account to settle claims by
the Purchaser under or pursuant to Clause 5 of this Agreement or under
the Tax Deed subject to the terms of the Escrow Agreement.
3.6 Flymo Claim. The Vendor and Purchaser agree that all benefits, rights
and liabilities of Klippan arising out of or in any way connected to
the Flymo Claim either prior to or after the date of Completion, shall
be transferred to and assumed by the Vendor at Completion. The Vendor
and the Purchaser shall use their reasonable endeavours to assign the
benefit (subject to the burden) of the Flymo Claim to the Vendor. The
Vendor shall indemnify the Purchaser and/or Klippan fully in respect of
any liability whatsoever connected directly or indirectly to the Flymo
Claim, on the terms set out in Clause 8.5.
4. Warranties
4.1 The Vendor warrants to the Purchaser that each Warranty is true,
accurate and not misleading at the date of this Agreement and at
Completion in accordance with Clause 4.6.
4.2 The Vendor acknowledges that the Purchaser is entering into this
Agreement in reliance on each Warranty and the undertakings of the
Vendor contained in Clause 8 which have also been given as a
representation and with the intention of inducing the Purchaser to
enter into this Agreement.
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4.3 The Purchaser may rely on the Warranties in warranting to any
subsequent purchaser of all or any of the Klippan Shares or of all or
any part of the undertaking of any Group Company.
4.4 The Warranties are qualified by the facts and circumstances fairly
disclosed in the Disclosure Letter and/or any notification given
pursuant to Clause 4.6. No other knowledge regarding any Group Company
(actual, constructive or imputed) prevents or limits a claim made by
the Purchaser for breach of Clause 4.1. The Vendor shall not seek to
rely on the Purchaser's knowledge (actual, constructive or imputed) of
a fact or circumstance which might make a Warranty untrue, inaccurate
or misleading as a defence to a claim for breach of Clause 4.1 or
pursuant to any of the indemnities.
4.5 Each Warranty is to be construed independently and (except where this
Agreement provides otherwise) is not limited by a provision of this
Agreement or another Warranty.
4.6 The Vendor further warrants to the Purchaser and its successors in
title that subject to Clause 4.4, each Warranty will be true and
accurate in all respects and not misleading in any respect at
Completion as if each Warranty had been given again at Completion. If
after the signing of this Agreement and before Completion any event
shall occur or matter arises which results or may result in any
Warranty being unfulfilled, untrue, misleading or incorrect in any
respect at Completion, the Vendor shall immediately notify the
Purchaser in writing thereof prior to Completion and the Vendor (at its
own cost) shall make investigation concerning the event or matter which
the Purchaser may require.
5. Purchaser's Rights
5.1 If Completion takes place and there is a Warranty Claim, the Vendor
shall pay the Purchaser on demand (at the Purchaser's option) an amount
equal to either:
(a) the reduction in the value of the Klippan Shares; or
(b) if:
(i) the value of an asset of each Group Company is or
becomes less than the value would have been had the
breach not occurred; or
(ii) any Group Company is subject to or incurs a liability
or an increase in a liability which it would not have
been subject to or would not have incurred had the
breach not occurred,
the reduction in the value of the asset or, as the case may be, the
amount of the liability or increased liability.
Provided always that the Purchaser shall be required to mitigate its
loss in accordance with general common law principles and that only
damages which are reasonably foreseeable by the parties hereto as at
Completion shall be recoverable. The Purchaser shall be entitled to
recover all costs and expenses reasonably incurred in or about the
enforcement of its rights under this Clause 5.1.
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5.2 The Vendor shall indemnify the Purchaser on demand against each loss,
liability and cost which the Purchaser incurs arising (directly or
indirectly) out of:
(a) the settlement of a claim against the Vendor in respect of a
breach of Clause 7, Clause 8.1 and/or Clause 9 of this
Agreement or the enforcement of a settlement; or
(b) legal proceedings against the Vendor in respect of a breach or
alleged breach of Clause 7, Clause 8.1 and/or Clause 9 of this
Agreement in which judgment is given for the Purchaser or the
enforcement of the judgment,
and whether such loss, liability or cost is incurred before or after
the commencement of an action.
6. Limitations on the Vendor's Liability
6.1 The Vendor is not liable in respect of a Warranty Claim unless:
(a) the amount which would otherwise be recoverable from the
Vendor (but for this Clause 6.1) in respect of that Warranty
Claim exceeds L2,000; and
(b) the aggregate amount of all Warranty Claims of L2,000 or more
exceeds L30,000 but if the aggregate liability in respect of
all such claims exceeds that figure then all such Warranty
Claims shall accrue against and be recoverable from the
Vendor.
6.2 The Vendor's total liability in respect of all claims made under this
Agreement and the Tax Deed is limited to L2.0 million, provided always
that the amount of any reduction of the Purchase Price pursuant to
Clause 3.3(a) shall not be counted for this purpose.
6.3 The Vendor is not liable for a Warranty Claim:
(a) for a claim in respect of the Warranty contained in paragraph
6 of Schedule 4 unless the Purchaser has notified the Vendor
of the Warranty Claim stating in reasonable detail the nature
of the Warranty Claim and, if practicable, the amount claimed
not later than on or before seven years from the date of
Completion;
(b) in respect of any other Warranty Claim unless the Purchaser
has notified the Vendor of the Warranty Claim stating in
reasonable detail the nature of the Warranty Claim and, if
practicable, the amount claimed on or before 31 July, 2002;
(c) if and to the extent that a Warranty Claim would occur as a
result of any legislation not in force at the date hereof
which takes effect retrospectively or occurs as a result of
any increase in the rates of Tax in force at the date hereof;
(d) if and to the extent that a Warranty Claim would not have
arisen but for:-
(i) any act, omission, transaction or arrangement after
Completion by the Purchaser or any Group Company
otherwise than in the ordinary course of business of
any Group Company as presently carried on;
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(ii) the effect of the provisions of Sections 393, 393A,
343 and/or 768 ICTA in any Group Company and/or the
Purchaser.
(e) for a Warranty Claim if and to the extent that:
(i) any Group Company actually recovers a sum in respect
of the subject matter of such Warranty Claim under
the terms of any insurance policy held by any Group
Company or from any other third party in force at the
date hereof;
(ii) the Warranty Claim relates to a claim for Tax and the
Vendor has surrendered or procured the surrender of
amounts which have offset such Warranty Claim;
(iii) the Warranty Claim would not have arisen or would
have been reduced or eliminated but for the failure
or omission on the part of the Purchaser to make any
claim, election, surrender or disclaimer or give any
notice or consent to do any other thing under the
provisions of any enactment or regulation relating to
Tax after Completion;
(iv) the Warranty Claim would not have arisen but for any
winding up or cessation after Completion of, or any
change or diminution after Completion in, any trade
or business (or part thereof) carried on by any Group
Company;
(v) the Warranty Claim would not have arisen but for any
change in the accounting policy practice of any Group
Company introduced after Completion whether with
retrospective effect or not unless such change in the
accounting policy practice of any Group Company was
required to comply with applicable law, regulations,
or regulatory requirements or practice in force on or
before Completion;
(vi) if and to the extent that any sum is received by any
Group Company which has previously been written off
as unrecoverable in the accounts of that Group
Company;
(vii) to the extent that the matter giving rise to the
Warranty Claim was done or omitted to be done prior
to Completion by the Vendor or any Group Company at
the request of the Purchaser or its authorised
representatives or any of them;
(viii) to the extent that the claim has been made good or
otherwise compensated for at no expense to the Group
Company or the Purchaser;
(ix) to the extent that it has been properly provided for
in the Completion Accounts.
6.4 If the Purchaser becomes aware of any matter that may give rise to a
claim against the Vendor under this Agreement notice of the fact shall
be given as soon as possible to the Vendor.
13
6.5 Without prejudice to the validity of the claim or alleged claim in
question, the Purchaser shall allow, and shall procure that the
relevant Group Companies allow the Vendor and its accountants and
professional advisers to investigate the matter or circumstance alleged
to give rise to such claim and whether and to what extent any amount is
payable in respect of such claim and for such purpose the Purchaser
shall give, and shall procure that the relevant Group Company give,
subject to their being paid all reasonable costs and expenses as shall
be agreed with the Vendor in advance, all such information and
assistance, including access to premises and personnel, documents and
records as the Vendor or its accountants or professional advisers may
reasonably request.
6.6 If the claim in question is a result of or in connection with a claim
or liability to a third party then no admission of liability shall be
made by the Vendor and the claim shall not be compromised, disposed or
settled without the prior written consent of the Purchaser, which
consent shall not be unreasonably withheld or delayed.
6.7 The Purchaser shall be entitled at its own expense in its absolute
discretion to take such action as it deems necessary to avoid,
dispute, deny, defend, resist, appeal, compromise or contest such claim
or liability (including, without limitation, making counter-claims or
other claims against third parties), in the name of and on behalf of
the Vendor or the Group Company concerned and to have the conduct of
any related proceedings, negotiations or appeals provided that in
taking such action the Purchaser will act in such a way to minimise as
far as reasonably practicable any damage or harm to the name of the
Vendor and damage or harm to the business, trading or financial
prospects of the Vendor.
6.8 The provision of Clauses 6.3 (other than 6.3(a)), 6.4, 6.5 and 6.6
shall not apply to any claim for breach of a warranty contained in
paragraph 6 of Schedule 4 and the provisions of Clause 7 of the Tax
Deed shall apply to such claims.
6.9 Clauses 6.1, 6.2 and 6.3 do not apply in respect of a Warranty Claim
relating to breach of Clause 4.1 in respect of a Warranty contained in
paragraph 3 of Schedule 4.
6.10 Nothing in this Clause 6 shall have the effect of limiting or
restricting any liability of the Vendor in respect of a Warranty Claim
arising as a result of any fraud, fraudulent misrepresentation, willful
misconduct or willful concealment by the Vendor or any officer or
employee or any of the directors of the Group Companies.
6.11 Any amount paid in respect of any Warranty Claim or under the Tax Deed
shall so far as lawfully possible be treated as a reduction in the
consideration paid for the Klippan Shares.
6.12 If the Purchaser is entitled in its sole discretion (but subject to
Clause 7 of the Tax Deed) to make both a Warranty Claim and a claim
under the Tax Deed, the Warranty Claim shall be made first.
6.13 The limitations on liability of the Vendor set out in Clause 3 of the
Tax Deed shall apply to limit the liability of the Vendor in respect of
Warranty Claims under the Warranties contained in paragraph 6 of
Schedule 4 of this Agreement as if set out herein mutatis mutandis.
14
6.14 The Purchaser shall only be entitled to recover once under this
Agreement and/or the Tax Deed in respect of the same loss.
7. Use of Intellectual Property Rights
The Vendor shall not with, through or as manager, adviser, consultant
or agent for a person directly or indirectly use or authorise,
encourage or assist any person to use in connection with a business
which competes, directly or indirectly, with a business of any Group
Company as operated at the date of this Agreement, any of the
Intellectual Property Rights or use in that connection anything which
is intended, or is likely to be confused, with any of the Intellectual
Property Rights.
8. Vendor's Undertakings
8.1 The Vendor undertakes to the Purchaser and its lawful successors in
title, for itself and as agent and trustee for the Group Companies,
that it will not and will procure that any subsidiary undertaking,
fellow subsidiary undertaking or holding company or director of the
Vendor will not do any of the following things:
(a) for a period of 3 years starting on the date of this Agreement
through or as adviser to, or agent of, or manager for, or any
person directly or indirectly carry on or be engaged,
concerned or interested in or assist a business which
competes, directly or indirectly, with a business of any Group
Company as carried on at the date of this Agreement including
but not limited to child car safety seats and accessories,
child transportation seats and accessories, (including prams
or pushchairs which can be used as a child car safety seat or
part of a child transportation system), seat belts, car seat
belts and accessories (whether carried on under the name
"Klippan" or any name likely to be confused therewith or
otherwise) or at any time in the twelve months prior to that
date in a territory in which that business is or was carried
on at any such date or time (and which for the avoidance of
doubt includes North America);
(b) for a period of 3 years starting on the date of this
Agreement, knowingly do or say anything which is harmful to
any Group Company's goodwill (as subsisting at the date of
this Agreement) or which is likely to lead a person who has
dealt with any Group Company at any time during the twelve
months prior to the date of this Agreement to cease to deal
with any Group Company on substantially equivalent terms to
those previously offered or at all;
(c) for a period of 3 years starting on the date of this Agreement
on its own account or in conjunction with or on behalf of any
other person in respect of the products or services supplied
by a business of any Group Company, either seek to obtain
orders from, or do business with, or encourage directly or
indirectly another person to obtain orders from, or do
business with, a person who has been a customer of that
business at any time during the twelve months prior to the
date of this Agreement for the products or services supplied
by that business in the territory of operation of that
business;
(d) for a period of 3 years starting on the date of this
Agreement, engage, employ, solicit or contact with a view to
engagement or employment by another person, a director,
officer, employee or manager of any Group Company or a
15
person who was a director, employee or manager of any Group
Company at any time during the twelve months prior to the date
of this Agreement, in either case where the person in question
either has Confidential Information or know-how and would be
in a position to exploit either the Company's trade
connections or those of any Group Company;
(e) for a period of 3 years starting on the date of this
Agreement, seek to contract with or engage (in such a way as
to affect adversely a business of any Group Company as carried
on at the date of this Agreement) a person who has been
contracted with or engaged to manufacture, assemble, supply or
deliver goods or services to that business at any time during
the twelve months prior to the date of this Agreement unless
approved in advance by the Purchaser in writing; or
(f) for a period of 3 years starting on the date of this
Agreement, seek to contract with or engage or assist in a
business (as supplier or otherwise) which seeks, directly or
indirectly, to contract with Mama's & Papa's for the provision
or supply to Mama's and Papa's of any goods or services
referred to in Clause 8.1(a) unless approved in advance by
the Purchaser in writing.
8.2 Each undertaking in Clause 8.1 constitutes an entirely independent
undertaking 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:
(a) the remaining undertaking(s) shall continue to bind the Vendor
with such deletion or modification as may be necessary to make
it valid and enforceable; and
(b) if such undertaking(s) would not be held to be so if any
period of time expressed therein were expressed as a shorter
period of time then such undertaking(s) shall be deemed given
for such shorter period of time.
8.3 On receiving the Purchaser's reasonable request the Vendor shall (at
its own cost, save as specifically stated otherwise in this Agreement):
(a) do and execute, or arrange to be done and executed, each act,
document and thing necessary to implement this Agreement; and
(b) give to the Purchaser all information it possesses or to which
it has access relating to the business of any Group Company
and allow the Purchaser to copy any document containing that
information.
8.4 The Vendor agrees that the restrictions contained in Clauses 8.1, 8.2
and 8.3 are no greater than reasonable and necessary for the protection
of the interests of the Purchaser.
8.5 In accordance with Clause 3.6 hereto, the Vendor shall assume all
benefits, rights and liabilities of Klippan (or indemnify the Purchaser
and/or Klippan in respect of liabilities not novated) as set out
below:-
16
(a) The Vendor shall assume absolutely full responsibility of the
Flymo Claim. All legal fees and expenses in relation to the
Flymo Claim shall be for the account of the Vendor. The
Purchaser shall bear no liability (whether direct or indirect)
in relation to the Flymo Claim.
(b) The Vendor shall fully indemnify the Purchaser and/or Klippan
against each and every loss, liability, damage, cost, claim or
expense of any kind whatsoever which the Purchaser and/or
Klippan incurs or suffers arising directly or indirectly out
of, or in any way connected to, the Flymo Claim including for
the avoidance of doubt all costs, damages, expenses, legal
fees and interest thereon relating to:-
(i) the Flymo Claim;
(ii) any alternative dispute resolution procedures which
may be used in relation to the Flymo Claim;
(iii) any judgment or decision made against Klippan and/or
the Purchaser or the enforcement of such judgment
against Klippan and/or the Purchaser in relation to
the Flymo Claim;
(iv) any settlement of the Flymo Claim or the enforcement
of any settlement terms against Klippan and/or the
Purchaser in respect thereof;
(v) any enforcement of a judgment, decision or settlement
against Flymo or others,
regardless of when such loss, liability, expense or cost is
incurred.
(c) The Purchaser agrees, in order that the Vendor may seek to
take reasonable steps to take such action or take any other
reasonable steps in relation to the Flymo Claim, in the name
of and on behalf of Klippan, that the Purchaser shall and
shall use its reasonable endeavours to procure that Klippan
shall,
(i) take such action as the Vendor or its professional
advisers may reasonably request by notice in writing
given to the Purchaser with respect to the Flymo
Claim;
(ii) afford access to its books and records as is
necessary and reasonable to enable the Vendor and its
professional advisers to conduct matters relating to
the Flymo, Claim;
(iii) permit the Senior Employees to assist the Vendor, as
the Vendor or its professional advisers may
reasonably request by notice in writing given to the
Purchaser in the conduct of the Flymo Claim (which
shall include for the avoidance of doubt attendance
at any hearing in connection therewith),
provided always that the Vendor fully indemnifies the Purchaser and/or Klippan
to the reasonable satisfaction of the Purchaser and/or Klippan in respect of:-
17
(i) any liability, damage, cost or expense or legal fees
which may be incurred by Klippan and/or the Purchaser
in connection with this Clause 8.5(c);
(ii) the expense of each Senior Employee requested to
assist the Vendor pursuant to Clause 8.5(c), such
expense to be calculated at the rate of L500.00 per
day for ▇▇▇▇▇ ▇▇▇▇▇▇, L350 per day for each of ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, and L200 per
day for ▇▇▇▇ ▇▇▇▇▇▇▇ for the period that such persons
are employed by Klippan; and
(iii) any other costs and related expenses which may be
reasonably incurred by any Senior Employee in
connection with any action taken in accordance with
Clause 8.5(c).
(d) All payments to be made by the Vendor to the Purchaser and/or
Klippan under this Clause 8.5 shall be made to the Purchaser
and/or Klippan as the case may be in full within 7 Business
Days of the Purchaser's first written demand together with the
interest thereon calculated in accordance with Clause 13.
(e) The Vendor agrees that it and its professional advisers shall
keep the Purchaser and Klippan informed of all matters
relating to the Flymo Claim and the Purchaser shall be
entitled to see and keep copies of all correspondence and
notes and other written records in connection therewith
provided always that any change to the appointment of
solicitors or other professional advisers in relation to the
Flymo Claim shall be subject to the prior written approval of
the Purchaser (such approval not to be unreasonably withheld
or delayed).
(f) The Vendor shall ensure that the Flymo Claim is pursued in a
reasonable manner and take all appropriate steps in relation
to the Flymo Claim as to fully protect the good name and
reputation of Klippan.
(g) The Vendor shall not be entitled to make any final settlement
or compromise of the Flymo Claim or agree any matter in the
conduct of the Flymo Claim which is reasonably likely to
materially affect the amount of or any future liability of
Klippan without giving the Purchaser prior written notice of
such settlement or compromise or agreement and ensuring that
prior to the making of any final settlement or compromise or
agreement likely to affect the amount of or any future
liability of Klippan, the Purchaser and/or Klippan is put in
funds by the Vendor to enable Klippan to meet its liabilities
pursuant to any such settlement or compromise or agreement.
(h) Neither the Purchaser, Klippan nor any Senior Employee shall
be subject to any claim or liability to the Vendor for
non-compliance with any of the foregoing provisions of this
Clause 8.5 where each has acted bona fide in accordance with
the requests or the instructions of the Vendor.
8.6 The Vendor undertakes to indemnify and keep indemnified the Purchaser
from and against any liability, loss, damage, cost, claim or expense of
whatever kind which it may incur or may be suffered by the Purchaser
arising from any of the Excluded Liabilities.
18
8.7 The Vendor undertakes to indemnify and keep indemnified the Purchaser
from and against any liability, loss, damage, cost, claims or expenses
of whatever kind which it may incur or may be suffered by the Purchaser
arising from any interference (legal or otherwise) with Klippan's use
of the Access Road for all purposes as described in Part I of the
Second Schedule of the Main Carlisle Lease.
8.8 The Vendor undertakes to indemnify and keep indemnified the Purchaser
from and against any liability, loss, damage, cost, claims or
reasonable expense of whatever kind it may incur, or may be suffered by
the Purchaser arising in connection with any breach by Klippan GmbH of
the German Agreement or the Deed of Assignment.
8.9 The Vendor undertakes to indemnify and keep indemnified the Purchaser
in accordance with the provisions of the Environmental Indemnity set
out in Schedule 7 hereto.
8.10 The Vendor undertakes to indemnify and keep indemnified the Purchaser
and/or Oy Klippan Ab from and against any liability, loss, damage,
cost, claims or expenses of whatever kind which it may incur or may be
suffered by the Purchaser and/or Oy Klippan Ab in respect of (i) goods
or stock held as at Completion by Oy Klippan Ab for Autoliv, (ii) goods
or stock ordered by Oy Klippan Ab from suppliers or other third parties
prior to Completion in relation to the contract or arrangement between
Oy Klippan Ab and Autoliv, and (iii) any claims by or liabilities to
suppliers or other third parties in respect of goods supplied or to be
supplied in connection with the contract or arrangement between Oy
Klippan Ab and Autoliv to the extent that the subject matter or
circumstance giving rise to the claim or liability existed at or prior
to Completion.
8.11 To the extent that any provision is properly made in the Completion
Accounts in respect of a claim which is being made by the Purchaser
pursuant to Clauses 8.5 to 8.10 inclusive, then the Vendor's liability
shall be reduced by the amount of the provision which has been included
in the Completion Accounts.
8.12 Notwithstanding anything to the contrary otherwise stated in this
Agreement, the Vendor is not liable to indemnify the Purchaser pursuant
to Clauses 8.5, 8.6, 8.7 and 8.8 unless the Purchaser has notified the
Vendor of a claim thereunder on or before the expiry of 6 years from
the date of this Agreement. The Vendor is not liable to indemnify the
Purchaser pursuant to Clause 8.10 unless the Purchaser has notified
the Vendor of a claim thereunder on or before 31 July 2002.
9. Confidential Information
9.1 The Vendor undertakes to the Purchaser, for itself and as agent and
trustee for each Group Company, that following the date hereof the
Vendor shall not, except as required by Clause 3.1(m), use or
disclose, or permit the use or disclosure of, any Confidential
Information.
9.2 Clause 9.1 does not apply to disclosure of Confidential Information:
(a) to a director, officer or employee of the Purchaser or any
Group Company whose function requires him to have the
Confidential Information;
19
(b) required to be disclosed by law or any regulatory body,
provided that the disclosure shall be made so far as possible
after consultation with the Purchaser and so far or reasonably
practicable after taking into account the Purchaser's
reasonable requirements as to its timing, content and manner
of making or despatch; or
(c) to an adviser for the purpose of advising the Vendor in
connection with the transactions contemplated by this
Agreement provided that such disclosure is essential for these
purposes and is on the basis that Clause 9.1 applies to the
disclosure by the adviser.
10. Announcements
Neither party may, following the date hereof, make or send or issue a
public announcement, communication or circular concerning the
transactions referred to in this Agreement unless they have first
obtained the other party's prior written consent. This shall not affect
any announcement or circular required by law or any regulatory body or
the rules of any recognised stock exchange but the party with an
obligation to make an announcement, communication or circular shall
first consult with the other party on the form, substance and timing of
such disclosure insofar as is reasonably practicable before complying
with such obligations.
11. Competition
Notwithstanding any other provision of this Agreement, if there are
provisions of this Agreement (or of an agreement or arrangement of
which it forms part) by virtue of which particulars of this Agreement
(or of an agreement or arrangement of which it forms part) that are, at
the date of this Agreement, required to be furnished to the Director
General of Fair Trading under the Restrictive Practices Acts 1976 and
1977:
(a) the Purchaser shall ensure that particulars are duly furnished
as soon as possible and in any event within the time specified
by these Acts; and
(b) those provisions do not take effect until the day after the
particulars have been duly furnished.
This Clause shall not apply if this Agreement is, or by virtue of the
Competition ▇▇▇ ▇▇▇▇, is to be treated as, a non-notifiable agreement
for the purposes of the Restrictive Trade Practices Acts 1976 and 1977.
For the purposes of this Clause 11, the term "Agreement" shall include
every other agreement which forms part of the same arrangement.
12. Costs
Subject to Clauses 3 and 8.3, the Vendor shall bear all costs incurred
by it and the Group in connection with the preparation, negotiation,
execution and performance by it of this Agreement, the Tax Deed, the
German Agreement, and the sale of Klippan Shares (which shall include
for the avoidance of doubt any management bonus incentive scheme in
connection with the sale of the Klippan Shares). Subject to Clause 3,
the Purchaser shall bear all such costs incurred by it.
20
13. Interest
If the Vendor or the Purchaser default in the payment when due of any
sum payable under this Agreement or the Tax Deed (howsoever determined)
the liability of the Vendor or the Purchaser as the case may be shall
be increased to include interest on such sum from the date when such
payment is due until the date of actual payment (as well as after or
before judgment) at a rate of 3 per cent above the base rate from time
to time of Barclays Bank PLC. Such interest shall accrue from day to
day.
14. General
14.1 A variation of this Agreement is valid only if it is in writing and
signed by or on behalf of each party.
14.2 The failure to exercise or delay in exercising a right or remedy
provided with this Agreement or by law does not constitute a waiver of
the right or remedy or a waiver of other rights or remedies. No single
or partial exercise of a right or remedy provided by this Agreement or
by law prevents further exercise of the right or remedy or the
exercise of another right or remedy.
14.3 The Purchaser's rights and remedies contained in this Agreement are
cumulative and not exclusive of rights and remedies provided by law.
14.4 Except to the extent that they have been performed and except where
this Agreement provides otherwise, the obligations contained in this
Agreement remain in force after Completion.
15. Assignment
This Agreement and the Tax Deed is personal to the parties hereto and
may not be assigned or transferred to any third party without the prior
written consent of the other.
16. Further Assurance
At any time after the date of this Agreement, the Vendor shall use its
reasonable endeavors to procure that any necessary third party shall
execute such documents and do such acts and things as the Purchaser may
reasonably require for the purpose of giving to the Purchaser the full
benefit of all the provisions of this Agreement or Tax Deed and Klippan
the full benefit of all the provisions of the German Agreement.
17. Interpretation
17.1 In this Agreement:
"Access Road" means the part of the roadway known as ▇▇▇▇▇ Street
between points B and C shown on the plan to the Main Carlisle Lease;
"Accounts" means each Group Company's individual accounts (as that term
is used in section 226 of the CA 1985) for the financial year ended on
the Reference Accounts Date, the auditors' report on those accounts,
the directors' report for that year and the notes to those accounts;
21
"Actual Indebtedness Statement" means a statement to determine the
amount of Inter-Company Indebtedness, the Net External Debt and the
Completion Tax Adjustment of the Group Companies at the close of
business on the Completion Date and as set out in the Completion
Accounts;
"Adjuster Claim" means any liability of Klippan relating to the
IMMI 25 millimetre adjuster;
"Akta" means Akta Barnsakerhet AB, a private limited company
incorporated in Sweden;
"▇▇▇▇▇▇▇▇ and ▇▇▇▇ Claims" means the product liability claims against
Klippan by ▇▇▇▇▇▇▇▇ and ▇▇▇▇ disclosed in the Disclosure Letter;
"Business Day" means any day (other than a Saturday) when banks are
open in London for ordinary banking business;
"CA 1985" means the Companies ▇▇▇ ▇▇▇▇;
"Carrytot Claim" means all and any claims, actions and proceedings
actual or pending arising out of all and any product failure of the
"Carrytot Baby Seats" sold or supplied by any of the Group Companies
prior to the date hereof but excluding the Flymo Claim and the ▇▇▇▇▇▇▇▇
and ▇▇▇▇ Claims;
"Carlisle Leases" means the Main Carlisle Lease and the Warehouse Lease
as described in Schedule 5;
"Completion" means completion of the sale and purchase of the Klippan
Shares in accordance with this Agreement;
"Completion Accounts" shall have the meaning set out in Clause 3.1;
"Completion Working Capital Statement" means the amount of consolidated
net Working Capital of the Group Companies as at the Completion Date as
set out in the Completion Accounts;
"Completion Tax Adjustment" means a calculation of the amount of the
corporation tax payable by the Group Companies as at Completion as set
out in the Actual Indebtedness Statement;
"Confidential Information" means all information which is used in or
otherwise relates to any Group Company's business, distributors,
agents, suppliers, customers or financial or other affairs, including,
without limitation, information relating to:
(a) the marketing of goods or services including, without
limitation, distributors, agents, supplier and customer names
and lists and other details of distributors, agents, suppliers
and customers, sales data, prices and promotional material; or
(b) future projects, business development or planning, commercial
relationships (in writing or otherwise) and negotiations,
22
but does not include information which is made public by, or with the
consent of, the Purchaser after the Completion Date or which is in the
public domain or becomes a part of the public domain through no fault
of the Vendor;
"Deed of Assignment" means the assignment by Klippan GmbH of the Trade
▇▇▇▇ to Klippan at the date hereof in the agreed form;
"Disclosure Letter" means the letter from the Vendor to the Purchaser
in relation to the Warranties having the same date as this Agreement,
the receipt of which has been acknowledged by the Purchaser;
"Encumbrance" means a mortgage, charge, pledge, lien, option,
restriction, right of first refusal, right of pre-emption, third-party
right or interest, other encumbrance or security interest of any kind,
or another arrangement (including, without limitation, a title transfer
or retention arrangement) having similar effect;
"Environmental Indemnity" means the indemnity provided by the Vendor to
the Purchaser set out in Schedule 7;
"Environmental Prosecution" means the prosecution against the Klippan
Group by the Environment Agency or similar agencies in jurisdictions
where a prosecution has been initiated;
"Environmental Waste Prosecution" means the prosecution under the
Producer Responsibility Obligations (Packaging Waste) Regulations 1997
disclosed in the Disclosure Letter;
"Equipment Lease" means the telephone equipment lease entered into by
Klippan GmbH and Alcatel due to expire in 2005;
"Escrow Account" means the designated account set forth in the Escrow
Agreement;
"Escrow Agent" means ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ appointed as agent under the
Escrow Agreement and references in this Agreement to "Escrow Agent"
shall be deemed to refer to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇;
"Escrow Agreement" means the agreement in the form set out in Schedule
9 relating to the deposit of the Escrow Amount with the Escrow Agent
pursuant to Clause 3.5;
"Escrow Amount" means the amount of L400,000 of the Purchase Price to
be held in accordance with the terms of the Escrow Agreement;
"Estimated Completion Balance Sheet" means the consolidated balance
sheet to be provided by the Vendor to the Purchaser in accordance with
Schedule 3;
"Estimated Indebtedness Statement" means the estimate of the aggregate
of the Inter-Company Indebtedness, the Net External Debt and the
Estimated Tax Adjustment set out in the Estimated Completion Balance
Sheet;
"Estimated Funding Position" means the estimated funding position of
The Scheme as set out in the Estimated Completion Balance Sheet;
23
"Estimated Tax Adjustment" means the estimate of the amount of
corporation tax payable by the Group Companies as at Completion as set
out in the Estimated Indebtedness Statement;
"Excluded Liabilities" means any liability actual or known to be
pending at the date hereof with respect to operations discontinued in
the period from the Reference Accounts Date to the date hereof by
Klippan GmbH and/or Klippan SARL and/or any Group Company, termination
of employment or redundancies in each case made by any Group Company in
the period from the Reference Accounts Date to the date hereof,
litigation involving any Group Company, the Patents' Claims, the
Environmental Waste Prosecution, the ▇▇▇▇▇▇▇▇ and ▇▇▇▇ Claim, the
Equipment Lease, the Adjuster Claim, any breach of the restrictive
covenant set out in the ▇▇▇▇ Acquisition Agreement, the Carrytot Claim,
and Overdue Creditors, in each case save to the extent that such
liability has properly been included in the Completion Accounts in
accordance with Schedule 6;
"Flymo Claim" means the proceedings brought by Klippan against Flymo
("Flymo"), and any other connected claim, action or procedure brought
by Klippan, the Vendor, the Purchaser or Flymo with respect to the
recall of "Carrycot Babyseats";
"Flymo Indemnity" means the terms of the indemnity to be provided by
the Vendor to the Purchaser as more fully set out in Clause 8.5;
"▇▇▇▇▇ and Reclina Products" means the Groups 1 and 2 child car seats
introduced to the market in autumn 2000 ("▇▇▇▇▇") and the Group 1 child
car seats introduced to the market in autumn 2000 ("Reclina");
"FRS" means a financial reporting standard adopted or issued by the
Accounting Standards Board;
"German Agreement" means the assets transfer agreement to be entered
into on the date hereof for the transfer of the German Assets from
Klippan GmbH to Klippan;
"German Assets" means the assets specified in the German Agreement;
"German Business" means the undertaking and business carried on by
Klippan GmbH as at the Transfer Date as defined in the German
Agreement;
"Group" or "Group Companies" means Klippan and its Subsidiaries and
"Group Company" means any one of them;
"Heads of Terms" means the heads of terms entered into by the Vendor
and the Purchaser dated September 3, 2000;
"Historical Policies" means practices generally accepted in the United
Kingdom and the historical accounting policies of each Group Company
set forth in Schedule 6;
"ICTA" means the Income and Corporation Taxes ▇▇▇ ▇▇▇▇;
"Intellectual Property" means:
24
(a) patents, trade marks, service marks, registered designs,
applications and rights to apply for any of those rights,
trade, business and company names, logos, internet domain
names and e-mail addresses, unregistered trade marks and
service marks, copyrights, database rights, know-how, rights
in designs and inventions, database rights and all similar
rights which may subsist in any part of the world including,
where such rights are obtained or enhanced by registration,
any registration of such rights and applications and rights to
apply for such registrations;
(b) rights under licences, consents, orders, statutes or otherwise
in relation to a right in paragraph (a);
(c) rights of the same or similar effect or nature as or to those
in paragraphs (a) and (b) which now or in the future may
subsist; and
(d) the right to ▇▇▇ for past infringements of any of the
foregoing rights;
"Intellectual Property Rights" means all Intellectual Property owned,
used or required to be used, by any Group Company;
"Inter-Company Indebtedness" shall mean the amount of all sums owed by
the Group to the Vendor Group less all sums owed to the Group by the
Vendor Group;
"Klippan" means Klippan Limited, a private limited liability company
incorporated in England and Wales;
"Klippan GmbH" means Klippan GmbH, a private limited company
incorporated in Germany with registered office at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇;
"Klippan Group" means each of the Vendor and any of their respective
subsidiaries;
"Klippan SARL" means Klippan SARL, a private limited company
incorporated in France with registered office at ▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇;
"Klippan Shares" means 1,570,000 ordinary shares of Ll each in Klippan;
"▇▇▇▇ Acquisition Agreement" means the acquisition agreement between
Klippan Safety AB and the Vendor dated October 2, 1997;
"Landskrona Lease" means the premises at Hjalmar Brantings Vag 11 D,
Landskrona, Sweden;
"Landlord" means the landlord under the Main Carlisle Lease;
"Main Carlisle Lease" means the Lease dated April 3, 1986 between ▇▇▇▇
▇▇▇▇▇▇▇▇▇ Limited (1) and ASE (UK) Limited (2) being the main part of
the Carlisle Leases as defined in paragraph 1 of Schedule 5 hereto;
"Management Accounts" means the unaudited profit and loss account of
each Company in respect of the period starting on the date after the
Reference Accounts Date and ending on 30 December, 2000 and the
unaudited balance sheet of each Group Company as at 30 December, 2000;
25
"Net External Debt" means (i) any interest-bearing bank, hire-purchase,
finance lease (including the Equipment Lease), overdraft, invoice
discounting facility or other debt (including the Overdue Creditors,
but excluding all other trade creditors and excluding any monies owed
by the Group Companies to the Vendor Group) of any Group Company in
existence at the date of Completion whether or not due and payable less
any cash or bank deposits (which for the avoidance of doubt shall
include cheques in transit (presented or not)) and (ii) the Excluded
Liabilities to the extent crystallised as an actual liability on or
before the date on which the Completion Accounts are agreed or
determined in accordance with the terms of this Agreement;
"Overdue Creditors" means the amount due to trade creditors of any
Group Company at the date hereof which is overdue in accordance with
its payment terms as set out in the Disclosure Letter unless and to the
extent there is a valid dispute in existence;
"Oy Klippan Ab" means Oy Klippan Ab, a private limited company
incorporated in Finland with registered office at ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇▇▇;
"Patent Claims" means (i) the patent infringement claim against Akta
and Oy Klippan Ab relating to the product "Mammas Magbalte" and (ii)
the patent infringement claim by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇;
"Permit" means:
(a) a permit, licence, consent, approval, certificate,
qualification, specification, registration or other
authorisation; or
(b) a filing of a notification, report or assessment,
in each case necessary for the effective operation of each Group
Company's business, its ownership, possession, occupation or use of an
asset or the execution or performance of this Agreement;
"Property" means the property and interests set out in Schedule 5;
"Purchaser's Accountants" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇;
"Purchaser's Solicitors" means Debevoise & ▇▇▇▇▇▇▇▇ of Tower 42,
International ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇;
"Reference Accounts Date" means 31 March, 2000;
"Senior Employees" means each of ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇, or any other person as may
be agreed in writing by the parties;
"SSAP's" means a statement of standard accounting practice in force at
any material time as issued by the Accounting Standards Committee;
"Subsidiary Shares" means (i) 1,000 ordinary shares of 100 SEK in Akta;
and (ii) 6,000 shares of 83.34 FIM each in Oy Klippan Ab;
26
"Subsidiaries" means collectively Akta and Oy Klippan Ab;
"Tax" and "Taxation" has the meaning given in the Tax Deed;
"Tax Authority" has the meaning given in the Tax Deed;
"Tax Deed" means a Tax Deed in the agreed form between the Vendor and
the Purchaser set out in Schedule 10 hereto;
"TCGA" means the Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇;
"The Scheme" means the Klippan Limited Retirement and Death Benefits
Scheme and where the context so requires, the trustees of The Scheme;
"Trade ▇▇▇▇" means the registered trade ▇▇▇▇ owned by Klippan GmbH and
registered in the UK to be assigned on Completion to the Purchaser in
accordance with the terms of the Deed of Assignment;
"Vantaa Lease" means the lease of the premises at ▇▇▇▇▇▇▇▇▇ ▇,
▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇;
"VAT" means within the European Community such Tax as may be levied in
accordance with (but subject to derogations from) the Directive
77/388/EEC and outside the European Community any Taxation levied by
reference to added value or sales;
"VATA" means, in the United Kingdom, the Value Added Tax ▇▇▇ ▇▇▇▇ and,
in a jurisdiction outside the United Kingdom, any equivalent
legalisation;
"Vendor's Accountants" means Deloitte & Touche of ▇ ▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇;
"Vendor Group" means each of ▇▇▇▇ International Corp, ▇▇▇▇
International (UK) Limited, the Vendor, Klippan GmbH, Klippan SARL and
all respective subsidiaries and subsidiary undertakings thereof other
than the Group;
"Vendor's Solicitors" means ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, of ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇;
"Warehouse Lease" means the Lease of February 28, 1995 between the
House of Fraser (Stores) Limited (1) and Klippan (2) of the warehouse
premises referred to the Carlisle Leases at paragraph 1 of Schedule 5
hereto;
"Warranty" means a statement contained in Schedule 4 of this Agreement
and "Warranties" means all those statements;
"Warranty Claim" means a claim by the Purchaser under or pursuant to
the provisions of Clause 4 (subject to Clause 6);
"Working Capital" means stock, trade and other debtors, trade and other
creditors (excluding any interest-bearing liabilities, Overdue
Creditors and any sums taken into account in calculating Inter-Company
Indebtedness), accruals, prepayments (to the
27
extent that the Group Companies receive the benefit thereto
post-Completion) and VAT as at the Completion Date as set out in the
Completion Accounts.
17.2 In this Agreement, a reference to:
(a) a "subsidiary undertaking" or "parent undertaking" is to be
construed in accordance with section 258 of the CA 1985 and to
a "subsidiary" or "holding company" is to be construed in
accordance with Section 736 of the CA 1985;
(b) liability under, pursuant to or arising out of (or any
analogous expression) any agreement, contract, deed or other
instrument includes a reference to contingent liability under,
pursuant to or arising out of (or any analogous expression)
that agreement, contract, deed or other instrument;
(c) a document in the "agreed form" is a reference to a document
in a form approved and for the purposes of identification
signed by or on behalf of each party;
(d) a statutory provision includes a reference to the statutory
provision of modified or re-enacted or both from time to time
before the date of this Agreement and any subordinate
legislation made under the statutory provisions (as so
modified or re-enacted) before the date of this Agreement;
(e) a person includes a reference to any individual, firm,
company, corporation or other body corporate, government,
state or agency or a state or any joint venture, association
or partnership (whether or not having separate legal
personality);
(f) a person includes a reference to that person's legal personal
representatives and lawful successors;
(g) a Clause, paragraph or Schedule, unless the context otherwise
requires, is a reference to a Clause or paragraph of, or
Schedule to, this Agreement; and
(h) any English legal term for any action, remedy, method of
judicial proceeding, legal document, legal status, court,
official or any legal concept or thing shall in respect of any
jurisdiction other than England be deemed to include what most
nearly approximates in that jurisdiction to the English legal
term and to any English statute shall be construed so as to
include equivalent or analogous laws of any other
jurisdiction.
17.3 The headings in this Agreement do not affect its interpretation.
17.4 References to any authority, agencies or regulatory body in the UK
shall be deemed to include all equivalent authorities, agencies or
regulatory bodies in other jurisdictions.
18. Notices
18.1 A notice, claim, demand or other communication under and in connection
with this Agreement or with any arbitration under this Agreement (a
"Notice") shall be:
(a) in writing; and
28
(b) delivered personally or sent by first class post, prepaid
recorded delivery (and airmail if overseas) or by fax to the
party due to receive the Notice to the address set out in
Clause 18.3 or to another address, person, or fax number
specified by that party by not less than seven days' written
notice to the other party received before the Notice was
despatched.
18.2 Unless there is evidence that it was received earlier, a Notice is
deemed given if:
(a) delivered personally, when left at the address referred to in
Clause 18.1 (b);
(b) sent by mail, two Business Days after posting;
(c) sent by airmail, six Business Days after posting;
(d) sent by fax, when confirmation of its transmission has been
recorded by the sender's fax machine.
18.3 The address referred to in Clause 18.1 (b) is:
Name of Party Address Fax Number Marked for the
------------- ------- ---------- --------------
attention of
------------
The Vendor ▇▇▇▇▇▇▇ International Holdings 01902 406281 ▇. ▇▇▇▇▇
Limited
▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
The Purchaser ▇▇▇▇▇▇ Rubbermaid Inc., 001 212 332 7803 General Counsel
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Debevoise & ▇▇▇▇▇▇▇▇ 020 7588 4180 ▇▇▇▇▇ ▇▇▇▇▇
Tower 42
International Financial
Centre
Old Broad Street
London EC2N 1HQ
19. Governing Law and Jurisdiction
19.1 This Agreement and the documents to be entered into pursuant to it
shall be governed by English law.
29
19.2 The courts of England have exclusive jurisdiction to settle any dispute
arising from or connected with this Agreement and the documents to be
entered into pursuant to it (a "Dispute").
19.3 The parties agree that the courts of England are the most appropriate
and convenient courts to settle any Dispute and, accordingly, they will
not argue to the contrary. This Clause 19.3 is for the benefit of the
parties hereto and shall not limit their respective rights to take
proceedings in any other court of competent jurisdiction.
19.4 The parties agree that the documents which start any such action or
proceedings (the "Proceedings") and any other documents required to be
served in relation to those Proceedings may be served on the Vendor or
Purchaser (as relevant) in accordance with Clause 18. These documents
may however be served in any other manner allowed by law. This Clause
applies to all Proceedings wherever started.
20. Counterparts
This Agreement may be executed in any number of counterparts, each of
which is an original and all of which together evidence the same
Agreement. Any party may enter into this Agreement by executing any
such counterpart.
21. Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇
Except as expressly stated herein, nothing in this Agreement confers
any right on any person (other than the parties hereto) pursuant to the
UK Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇.
30
SIGNED BY )
on behalf of )
▇▇▇▇▇▇ LIMITED )
SIGNED BY )
for and on behalf of )
▇▇▇▇▇▇▇ INTERNATIONAL )
HOLDINGS LIMITED )
31
SCHEDULE 1
Shareholder Details
Shareholder No. of Shares
----------- -------------
▇▇▇▇▇▇▇ International 1,570,000 ordinary
Holdings Limited shares of Ll each in
Klippan Limited
Klippan Limited 1,000 ordinary shares of
100 SEK each in Akta,
Barnsakerhet AB
Klippan Limited 6,000 ordinary shares of
83.34 FIM each in Oy
Klippan Ab
32
SCHEDULE 2
PART 1
Vendor Details
1 Registered number: 03407901
2 Place of incorporation: England and Wales
3 Registered office: ▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇
4 Type of company: Private Limited
5 Authorised share capital: L498,200 divided into 2,491,000 ordinary
shares of; L0.20 each
6 Issued share capital: L498,200 divided into 2,491,000 ordinary shares
7 Directors: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Jnr.
8 Secretary: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Firth
9 Accounting reference date: March 31
10 Auditors: Deloitte & Touche
PART 2
Particulars of Klippan
1 Registered number: 02264274
2 Place of incorporation: England and Wales
3 Registered office: ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
4 Type of company: Private Limited
5 Authorised share capital: L2,000,000 divided into 2,000,000 ordinary
shares of L1 each
6 Issued share capital: L1,570,000 divided into 1,570,000 ordinary shares
7 Directors: ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Jnr.
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
8 Secretary: ▇▇▇▇▇ ▇▇▇▇
33
9 Accounting reference date: March 31
10 Auditors: Deloitte & Touche
PART 3
Particulars of the Subsidiaries
Akta Barnsakerhet AB
1 Registered number: 556540-7961
2 Place of incorporation: Klippan Kommun, Sweden
3 Registered office: Hjalmar Bratings vag ▇▇▇, ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
4 Type of company: Private Limited
5 Authorised.share capital: 100,000 SEK
6 Issued share capital: 100,000 SEK divided into 1,000 shares
7 Directors: Sten-Ake Kjellstedt
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Jnr.(chairman)
▇▇▇▇▇ ▇▇▇▇▇▇ (member of the board and managing
director)
8 Secretary: No permanent secretary
9 Accounting reference date: March 31
10 Auditor: Deloitte & Touche, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ Ab
1 Registered number: 150.956
2 Place of incorporation: Finland
3 Registered office: ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
4 Type of company: Private Limited
5 Authorised shares capital: 2,000,000 FIM
6 Issued share capital: 500,040 FIM divided into 6,000 shares
7 Directors: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Jnr.
8 Secretary: No Secretary
9 Accounting reference date: March 31
34
10 Auditors: Deloitte & Touche
35
SCHEDULE 3
Completion Requirements
1. Vendor's Obligations
1.1 At Completion the Vendor shall deliver to the Purchaser:
(a) duly executed transfer(s) in respect of the Klippan Shares to
the Purchaser or its nominee(s) and the share certificate(s)
for the Klippan Shares;
(b) any waiver, consent, release or other document necessary to
give the Purchaser or its nominee(s) full legal and beneficial
ownership of the Klippan Shares;
(c) the common seal (if any) of each Group Company and each
register, minute book and other book required to be kept by
each Group Company under the CA 1985 (or applicable
legislation) duly written up to the date of Completion and
each certificate of incorporation and certificate of
incorporation on change of name for each Group Company (to
the extent applicable) and the share certificates in respect
of each of the Subsidiaries;
(d) a copy of a letter to each Group Company from its auditors
resigning their office with effect from Completion and, in
relation to Klippan, containing the statement referred to in
Section 394 of the CA 1985, the original of the letter having
been deposited at the registered office of the relevant
company;
(e) a resignation in the agreed form from each of the directors of
each Group Company (other than ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
Sten-Ake Kjellstedt and ▇▇▇ ▇▇▇▇▇▇) expressed to take effect
from the end of the meeting held pursuant to paragraph 1.2;
(f) the Management Accounts and all title deeds and other
documentation relating to the Properties;
(g) a copy of each bank mandate of each Group Company and copies
of statements of each bank account of each Group Company made
up to a date not earlier than two Business Days before
Completion;
(h) so far as possible, all documentation relating to the
Intellectual Property Rights, including (without limitation)
the original registration and renewal certificates for each of
the Intellectual Property Rights which are registered or
pending as at Completion (or copies thereof where such
original documentation is not available);
(i) a certified copy of the notarial deed and notification of the
share transfer evidencing the transfer of the entire issued
share capital of Klippan GmbH from Klippan to the Vendor;
(j) a copy of the agreement for the transfer of shares and
certified copy of the filings at the Commercial Registry
evidencing the transfer of the entire issued share capital of
Klippan SARL from Klippan to the Vendor;
36
(k) the Tax Deed duly executed by the Vendor;
(l) the Escrow Agreement duly executed by the Vendor and the
Escrow Agent;
(m) the duly executed resolutions of the Vendor approving the sale
and purchase of the Klippan Shares, in a form and substance
satisfactory to the Purchaser;
(n) the Estimated Completion Balance Sheet in accordance with
Schedule 8 in form and substance satisfactory to the
Purchaser;
(o) the Escrow Agreement duly executed by the Escrow Agent;
(p) the German Agreement duly executed by the Klippan Limited and
Klippan GmbH; and
(q) the Deed of Assignment duly executed by Klippan Limited and
Klippan GmbH.
1.2 The Vendor shall ensure that at Completion a meeting of the board of
directors of each Group Company is held at which the directors:
(a) vote in favour of the registration of the Purchaser or its
nominee(s) as member(s) of each Group Company in respect of
the Klippan Shares (subject to the production of properly
stamped transfers);
(b) appoint persons nominated by the Purchaser as directors,
secretary and auditors of each Group Company with effect from
the end of the meeting;
(c) revoke each existing mandate given by each Group Company for
the operation of its bank accounts and pass the resolutions
contained in new mandate(s) giving authority to persons
nominated by the Purchaser OR with effect from the end of the
meeting, authorise the secretary to notify the specimen
signatures of the new officers of each Group Company in
connection with each existing mandate given by the Group
Company for the operation of its bank accounts;
(d) accept the resignation of each director of each Group Company
so as to take effect from the end of the meeting and shall
hand to the Purchaser duly certified copies of such
Resolutions.
1.3 Each of the requirements set out in Clauses 1.1 and 1.2 above shall
apply equally to each of the Subsidiaries to the extent applicable
under relevant law.
2. Purchaser's Obligations
2.1 On Completion, the Purchaser shall deliver to the Vendor:
(a) the Tax Deed duly executed duly executed by the Purchaser;
(b) the Escrow Agreement duly executed by the Purchaser; and
(c) the German Agreement duly executed by the Purchaser.
37
SCHEDULE 4
Warranties
1. Capacity and Authority
1.1 The Vendor and each Group Company are companies duly incorporated and
validly existing under English law or the relevant law of incorporation
and have been in continuous existence since incorporation.
1.2 Each Group Company has the right, power and authority to conduct its
business as conducted at the date of this Agreement and to own or lease
its properties, as now conducted, owned or leased.
1.3 The Vendor's obligations under this Agreement, the Tax Deed, the Escrow
Agreement and each document to be executed at or before Completion are,
or when the relevant document is executed will be, enforceable in
accordance with their terms and will not conflict with any other
obligation of the Vendor.
2. Information
2.1 To the best of the Vendor's knowledge, information and belief (after
having made all reasonable enquiry of each of the Directors of the
Group Companies, the Vendor's Accountants, the Vendor's Solicitors,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇) all written factual information provided
to the Purchaser or its agents or employees or to Debevoise & ▇▇▇▇▇▇▇▇
or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ during the period from July 20, 2000 to the date of
this Agreement was when given true, accurate and not misleading in any
respect which is material to the business of the Group Companies as a
whole at the time given. For the avoidance of doubt, this Warranty does
not relate to any statement of opinion, forecast, budget or other
comment, statement, representation or undertaking in respect of a
future position, happening or event. In the event of there being a
conflict in any information warranted pursuant to this Warranty 2.1,
this Warranty shall be deemed to relate only to the information most
recently received.
2.2 The information set out in the Recitals and Schedules 1 and 2 of this
Agreement is true, accurate and not misleading.
3. Shares and Subsidiary Undertakings
3.1 The Vendor is the sole legal and beneficial owner of the number of
Klippan Shares set out against his name in Schedule 1, free from any
Encumbrances.
3.2 Klippan is the sole legal and beneficial owner of the number of
Subsidiary Shares set out against his name in Schedule 1, free from any
Encumbrances.
3.3 The Klippan Shares comprise the entire issued share capital of Klippan,
have been properly allotted and issued and are fully paid or credited
as fully paid. The particulars of the Vendor and Klippan set out in
Schedule 2 are true and complete and the Vendor has no other
subsidiaries other than Klippan.
3.4 The Subsidiary Shares comprise the entire issued share capital of the
Subsidiaries, have been properly allotted and issued and are fully paid
or credited as fully paid.
38
The particulars of the Subsidiaries set out in Schedule 2 are true and
complete and Klippan has no other subsidiaries other than Akta and Oy
Klippan AB.
3.5 There is no Encumbrance, and there is no agreement, arrangement or
obligation to create or give an Encumbrance, in relation to any of the
Shares or unissued shares in the capital of any Group Company. No
person has claimed to be entitled to an Encumbrance in relation to any
of the Shares.
3.6 Other than this Agreement, there is no agreement, arrangement or
obligation requiring the creation, allotment, issue, transfer,
redemption or repayment of or the grant to a person of the right
(conditional or not) to require the allotment, issue, transfer,
redemption or payment of a share in the capital of any Group Company
(including, without limitation, an option or right of pre-emption or
conversion).
3.7 A copy of the memorandum and articles of association of each Group
Company (or the equivalent under the relevant law of incorporation) is
annexed to the Disclosure Letter and is true, accurate and complete and
has annexed thereto a copy of every resolution or agreement as is
required by law to be annexed to it and sets out the rights and
restrictions attaching to each class of share capital in each Group
Company.
3.8 None of the Subsidiaries have and ever had any subsidiary undertaking.
3.9 Each Group Company has no interest in, and has not agreed to acquire an
interest in, any corporate body.
4. Accounts
4.1 The Accounts have been prepared on a proper and consistent basis and
audited in accordance with the Companies ▇▇▇ ▇▇▇▇ and applicable
standards, principles and Historical Policies.
4.2 No change in accounting policies has been made in preparing the
accounts of each Group Company for each of the three financial years of
each Group Company ended on the Reference Accounts Date, except as
stated in the audited financial statements for those years.
4.3 The Accounts and the Historical Policies show a true and fair view of
the assets, liabilities and state of affairs of each Group Company as
at the Reference Accounts Date and of the profits and losses of each
Group Company for the financial year ended on the Reference Accounts
Date.
4.4 To the extent required by the Companies ▇▇▇ ▇▇▇▇ and all appropriate
SSAPs and FRS, the Accounts disclose and provide for all bad and
doubtful debts, all liabilities (actual contingent or otherwise) and
all financial commitments existing at the Reference Accounts Date.
4.5 The results shown by the audited profit and loss accounts of each Group
Company for each of the three financial years of each Group Company
ended on the Reference Accounts Date have not (except as disclosed in
those accounts) been effected by any extraordinary, exceptional or
non-recurring item or by another fact or circumstance
39
making the profit or loss for a period covered by any of those accounts
unusually high or low.
4.6 The Accounts and the Historical Policies reserve or provide in
accordance with applicable standards, principles and practices
generally accepted in the United Kingdom for all Tax liable to be
assessed on each Group Company, or for which it is or may become
accountable, for all periods starting on or before the Reference
Accounts Date (whether or not each Group Company has or may have a
right of reimbursement against another person). The Accounts reserve in
accordance with applicable standards, principles and practices
generally accepted in the United Kingdom for all contingent or deferred
liabilities to Tax for all periods starting on or before the Reference
Accounts Date.
4.7 In the Accounts:
(a) stock (except long term contract balances) was valued in the
same way as in the audited accounts of each Group Company for
the two preceding financial years and on the basis of the
lower of cost and net realisable value;
(b) all redundant and obsolete stock was written off and all sold,
moving and damaged stock was written down appropriately.
4.8 The basis and rates of depreciation and amortisation used in the
Accounts were the same as those used in the audited accounts of each
Group Company for the two preceding financial years.
4.9 The rates of depreciation and amortisation used in the audited accounts
of each Company for the three financial years of each Group Company
ended on the Reference Accounts Date were sufficient to ensure that
each fixed asset of the Group Company will be written down to nil by
the end of its useful life.
4.10 The Management Accounts have been carefully and properly prepared with
all due care on a basis consistent with each other and are not
misleading with respect to the state of assets, liabilities and affairs
of the Group Companies as at the relevant Accounts Date and of the
profits or losses for the period concerned.
4.11 Each Group Company's accounting records are up to date, in its
possession or under its control and are properly completed in
accordance with the law and applicable standards, principles and
practices generally accepted in the United Kingdom.
4.12 None of the debts receivable or due to any Group Company which are
included in the Accounts or which have subsequently arisen has been
outstanding for more than three months from its due date for payment or
has been released on terms that the debtor has paid less than the full
value of his debt and all such debts have realised or, so far as the
Vendor is aware (having made all due enquiry of the directors of the
Group Company), will realise in the normal course of collection their
full value as included in the Accounts, the Historical Policies or in
the books of the relevant Group Company after taking into account the
provision for bad and doubtful debts made in the Accounts. For the
avoidance of doubt, a debt which has been paid or repaid to any Group
Company shall not be regarded as realising its full value to the extent
that it is paid, received or otherwise recovered in circumstances in
which to the knowledge
40
of the Vendor (having made all due enquiry of the directors of the
Group Company) such payment, receipt or recovery is or may be void,
voidable or otherwise liable to be reclaimed or set aside.
4.13 All inventory of each Group Company (whether or not allocated to
contracts in process), including without limitation raw materials, work
in process and finished products, packaging, items purchased for
distribution or resale and items which have been ordered or purchased
by each Group Company, including inventory shown in the Accounts or
acquired thereafter, was acquired or manufactured in the ordinary
course of business and is valued on the books of each Group Company at
the lower of cost or market value determined in accordance with UK GAAP
and the Historical Policies consistently applied, and the Accounts
contain all inventory reserves that are appropriate in accordance with
UK GAAP and the Historical Policies consistently applied. Except as
reserved against in the Accounts in accordance with UK GAAP and the
Historical Policies consistently applied, all inventory of each Group
Company is of good and merchantable quality, meets current industry or
customer specifications, is shown in the current product catalogue, is
not damaged or defective, meets all relevant quality control standards,
is not mislabeled or mispackaged and is saleable or usable for its
intended purposes in the ordinary course of business, has not been
returned from customers and is not excessive in amount in light of each
Group Company's business and current economic conditions. All inventory
reflected in the Accounts can be sold no later than 12 months after the
Completion Date.
5. Changes since the Reference Accounts Date
5.1 Since the Reference Accounts Date:
(a) each Group Company's business has been operated in the
ordinary and usual course so as to maintain it as a going
concern and without any material interruption or alteration in
the nature, scope or manner of its business;
(b) there has been no adverse change in the financial or trading
position or turnover of each Group Company;
(c) no material change has occurred in the assets and liabilities
shown in the Accounts and there has been no reduction in the
value of the net tangible assets of each Group Company on the
basis of valuation used in the Accounts; and
(d) no Group Company has borrowed or raised any money or taken any
form of financial facility (whether pursuant to a factoring
arrangement or otherwise).
5.2 Since the Reference Accounts Date:
(a) each Group Company has not other than in the usual course of
its business:
(i) acquired or disposed of or agreed to acquire or
dispose of, a material asset; or
(ii) assumed or incurred, or agreed to assume or incur, a
liability, obligation or expense (actual or
contingent); or
41
(iii) entered into or amended any material contract or
arrangement (in writing or otherwise) in each case
involving consideration, expenditure or liabilities,
in excess of 5,000;
(b) each Group Company has not factored, sold or agreed to sell a
debt;
(c) each Group Company's business has not been materially or
adversely affected by the loss of any important distributor,
agent, customer or source of supply. For these purposes, an
important distributor, agent, customer or source of supply
means the relevant party having a revenue exceeding L10,000
per annum;
(d) each Group Company has not:
(i) made, or agreed to make, capital expenditure
exceeding in total L10,000; or
(ii), incurred, or agreed to incur, a commitment or
commitments involving capital expenditure exceeding
in total L10,000;
(e) each Group Company's business has not been materially or
adversely affected by the termination of, or a change in the
terms of, an agreement or by the loss of a distributor, agent,
supplier or customer;
(f) each Group Company has not taken any steps to procure the
payment by any debtor generally in advance of the date on
which book and other debts are usually payable in accordance
with the standard terms of business of any Group Company or
(if different) the period extended to any particular debtor in
which to make payment;
(g) each Group Company has not delayed in making payment to any
trade creditors generally beyond the date on which payment of
the relevant trade debt should be paid in accordance with
credit periods authorised by the relevant creditors (or (if
different) the period extended by creditors in which to make
payment) or extend or amend any of the terms in respect of any
trade creditors outside the ordinary course;
(h) each Group Company has not declared, paid or made a dividend
or distribution (including, without limitation, a distribution
within the meaning of ICTA) except as provided in the
Accounts;
(i) each Group Company has not changed its accounting reference
period;
(j) no resolutions of the shareholders of any Group Company have
been passed;
(k) each Group Company, save as required by law, has not made any
amendment to the terms and conditions of employment
(including, without limitation, remuneration, pension
entitlement and other benefits) of any employee (other than
minor increases which the Vendor shall notify to the Purchaser
as soon as reasonably possible), provide or agree to provide
any gratuitous payment or benefit to any such person or any of
their dependants, or dismiss any employee or engage or appoint
any additional employee;
42
(l) each Group Company has not created, allotted, issued,
acquired, repaid or redeemed share or loan capital or made an
agreement or arrangement or undertaken an obligation to do any
of those things; and
(m) each Group Company has not been refused any insurance claims
or settled below the amount claimed.
6. Tax
6.1 Klippan is and has at all times been resident only in the United
Kingdom for all Tax purposes. Klippan is not liable to pay and has at
no time incurred any liability to Tax chargeable under the laws of any
jurisdiction other than the United Kingdom.
6.2 Each Group Company has paid all Tax which it has become liable to pay
and is not and has not in the six years ending on the date of this
Agreement been, liable to pay a penalty, surcharge, fine or interest in
connection with Tax.
6.3 Without prejudice to paragraph 6.2 each Group Company has deducted or
withheld all Tax which it has been obliged by law to deduct or withhold
from amounts paid by it, has properly accounted to the relevant Tax
Authority for all amounts of Tax so deducted or withheld and has
otherwise complied with its legal obligations in respect of such
deductions or withholdings.
6.4 Each Group Company has within applicable time limits made all returns,
provided all information and maintained all records in relation to Tax
as it is required to make, provide or maintain and has fully complied
on a timely basis with all notices served on it and any other
requirements lawfully made of it by any Tax Authority. No return (and
nothing in a return) is disputed or is yet to be determined by, or is
subject to agreement with, a Tax Authority.
6.5 Klippan has properly operated in all material respects the
Pay-As-You-Earn system and has complied in all material respects with
each reporting obligation in connection with benefits provided (whether
by each Group Company or by any other person) for each Group Company's
directors, other officers and employees.
6.6 So far as the Vendor is aware, having made all reasonable enquiries,
each Group Company is not and does not expect to be involved in a
dispute in relation to Tax. No Tax Authority has investigated or
indicated to the Vendor or to any Group Company that it intends to
investigate each Group Company's Tax affairs.
6.7 Each Group Company has sufficient records to determine the Tax
consequences which would arise on a disposal or on the realisation of
each material asset owned by it at the Reference Accounts Date, or
acquired since the Reference Accounts Date but before the date of this
Agreement.
6.8 No Tax Authority has agreed to operate any special arrangement (that
is, an arrangement which is not based on a strict application of all
relevant Tax legislation, published extra-statutory concessions and
published statements of practice) in relation to the affairs of each
Group Company. All notices and other communications from a Tax
Authority requiring or permitting each Group Company to deal with its
Tax
43
affairs in a particular manner or on a particular basis are in the
possession of each Group Company.
6.9 The Disclosure Letter contains full details of all applications which
have been made at any time in the last 3 years by each Group Company
for any statutory consent or clearance. All particulars and other
information given to any Tax Authority in connection with any such
application for such consent or clearance were full and accurate in all
material respects and, as far as the Vendor is aware, any consent or
clearance given in response to such application was valid and
effective. All transactions in respect of which such consent or
clearance was obtained have been carried into effect, and have been
undertaken strictly in accordance with the terms of the application for
the relevant consent or clearance.
6.10 Except as disclosed in the Disclosure Letter, each Group Company is not
and has not been a party to or otherwise involved in any transaction,
agreement or arrangement otherwise than by way of a bargain at arms'
length, or any transaction, agreement or arrangement (whether or not by
way of a bargain at arms' length) under which it has been or is or may
be required to make any payment for any goods, services or facilities
provided to it which is in excess of the market value of such goods,
services or facilities or under which it has been, or is or may be
required to provide goods, services or facilities for a consideration
which is less than the market value of such goods, services or
facilities and/or in consequence of which it is or will be liable to
Tax in respect of an amount deemed for Tax purposes to be income or
gains of each Group Company but not actually income or gains of each
Group Company.
6.11 Klippan:
(a) is registered for the purposes of the VATA;
(b) has made, given, obtained and kept up-to-date, full and
accurate records in all material respects, invoices and
documents required for the purposes of the VATA;
(c) has complied in all material respects with all other
applicable VAT legislation and in particular has filed all
returns and made all payments of VAT on a timely basis; and
(d) has not been required by a Tax Authority to give security
under the VATA.
6.12 Klippan is not under a duty to make payments on account of VAT pursuant
to any order made under section 28 of the VATA.
6.13 In the three years ending on the date of this Agreement Kippan has not
been in default in respect of an accounting period, as the terms
"default" and "accounting period" are used in section 59(1) of the VATA
(the default surcharge).
6.14 Klippan is not and has not been liable to a penalty under section 63 of
the VATA.
6.15 No VAT Return made by Klippan has contained a material inaccuracy for
the purposes of section 64 of the VATA.
6.16 Klippan is entitled under the VATA to credit for all of its input tax.
44
6.17 The Disclosure Letter contains adequate details of any method agreed
with or directed by H M Customs and Excise or otherwise applicable to
each Group Company for determining the allowability to that company of
input tax in accordance with Part XIV of the Value Added Tax
Regulations 1995.
6.18 The Disclosure Letter contains details of each claim made in the three
years ending on the date of this Agreement for bad debt relief under
section 36 of the VATA (bad debts) made by Klippan.
6.19 No Group Company owns any asset which is a capital item, the input tax
on which may be subject to adjustment in accordance with Part XV of the
Value Added Tax Regulations 1995 (capital goods scheme).
6.20 Neither Klippan, nor a company of which any Group Company is a relevant
associate within the meaning of paragraph 3(7) of Schedule 10 to the
VATA (election to waive exemption), have elected to waive exemption
under paragraph 2 of Schedule 10 in relation to any land owned by it at
Completion except as disclosed in the Disclosure Letter. Each such
election disclosed in the Disclosure Letter has effect. Where any such
election has been made, no supplies in relation to the relevant land
will be taken by virtue of paragraph 2(3AA) of Schedule 10 to the VATA
to be supplies other than taxable supplies. Each Group Company does not
have an interest in any land supplies in relation to which, if an
election to waive exemption under paragraph 2 of Schedule 10 to the
VATA were to be made by each Group Company (or by a company of which
any Group Company is a relevant associate within the meaning of
paragraph 3(7) of Schedule 10 to the VATA), would be taken by virtue
of the said paragraph 2(3AA) to be supplies other than taxable
supplies.
6.21 No Group Company (to the extent applicable) has received a notice of
and to the best of the Vendor's knowledge, information and belief there
is nothing which indicates that the grant to any Group Company of an
interest in or right over land owned by a Group Company at Completion
or of a licence to occupy land owned by a Group Company at Completion
will not be an exempt supply because of an election under Schedule 10
to the VATA (election to waive exemption).
6.22 No event, transaction, act or omission has occurred by reason or in
consequence of which any Group Company (to the extent applicable) may
be deemed to make a taxable supply under paragraph 1 of Schedule 10 to
the VATA or under the Value Added Tax (Self-Supply of Construction
Services) Order 1989.
6.23 No tenancy, lease or licence to which any Group Company (to the extent
applicable) is a party is or may become a developmental tenancy,
developmental lease or developmental licence for the purposes of Group
1 of Schedule 9 to the VATA.
6.24 No Group Company (to the extent applicable) is and has not been a party
to any transaction or arrangements in respect of which a direction has
been or could be made under paragraphs 1 or 2 of Schedule 6 or
paragraph 1 of Schedule 7 to the VATA.
6.25 Klippan is not, nor has it is, agreed to become an agent, manager or
factor for the purposes of section 47 of the VATA (agents, etc.) of a
person not resident in the United Kingdom.
45
6.26 Klippan has not been a party to any transactions in respect of which a
direction under the provisions of Schedule 9A to the VATA has been or
may be made.
6.27 All value added tax payable on the import of goods and all customs
duties and duties of excise payable to a Tax Authority in respect of
any asset (including, without limitation, trading stock) imported or
owned by each Group Company have been paid in so far as payment has
fallen due and otherwise such liability has been properly recorded.
6.28 Klippan has not been and is not a close company for the purposes of
ICTA.
6.29 The entry into or Completion of this Agreement will not result in any
profit or gain being deemed to accrue to any Group Company for taxation
purposes, whether pursuant to Section 179 or otherwise.
6.30 All documents by virtue of which any Group Company has any right or in
the enforcement of which any Group Company is interested have been duly
stamped.
6.31 No Group Company has or has ever had an interest in a controlled
foreign company as defined in Chapter IV of Part XVIII of ICTA or any
material interest in an offshore fund as described in Section 759 of
ICTA.
6.32 No claim has been made under Section 152, 153, 154 or 175 TCGA or any
other section which would afflict the amount of any gain accruing or
being treated as accruing as a disposal of an asset of any Group
Company.
7. Assets
7.1 Each asset included in the Accounts or acquired by any Group Company
since the Reference Accounts Date (other than stock disposed of in the
usual course of business) and each asset used by any Group Company or
which is in the reputed ownership of any Group Company is:
(a) legally and beneficially owned solely by each Group Company
free from any Encumbrance; and
(b) where capable of possession, in the possession or under the
control of each Group Company.
7.2 Each Group Company owns or has a right to use each asset necessary for
the effective operation of its business as currently conducted.
7.3 All plant, machinery, vehicles and equipment owned, possessed or used
by each Group Company are in good condition and working order (fair
wear and tear accepted) and have been regularly and properly
maintained. None is in the Vendor's reasonable opinion in need of
renewal or replacement or surplus to each Group Company's requirements.
7.4 Each Group Company's asset registers comprise a complete and accurate
record of all the plant, machinery, equipment, vehicles and other
assets owned, possessed or used by it.
46
7.5 Maintenance contracts are in force for each asset of each Group Company
which it is normal to have maintained by independent or specialist
contractors and for each asset which each Group Company is obliged to
maintain or repair under a leasing or similar agreement.
7.6 No Group Company is a party to, nor is liable under, a lease or hire,
hire purchase, credit sale or conditional sale agreement.
7.7 No charge in favour of any Group Company is void or voidable for want
of registration.
7.8 Each Group Company's level of stock is reasonable having regard to
current and anticipated demand.
7.9 No debt shown in the Accounts, the Management Accounts or any Group
Company's accounting records is overdue by more than 12 weeks.
7.10 No Group Company has released a debt shown in the Accounts, the
Management Accounts or its accounting records so that the debtor has
paid or will pay less than the debt's book value. None of the debts
shown in the Accounts, the Management Accounts or any Group Company's
accounting records has been deferred, subordinated or written off or to
the best of the Vendor's knowledge, information and belief (having made
all due enquiry) become irrecoverable to any extent. To the best of the
Vendor's knowledge, information and belief, each of those debts will
realise its book value in the usual course of collection.
7.11 No Group Company has acquired or agreed to acquire any material asset
(other than stock) on terms that property thereon does not pass until
full payment is made.
8. German Warranties
8.1 Each of the representations and warranties set out in Article 7 of the
German Agreement is true accurate and not misleading.
8.2 Klippan GmbH's obligations under the German Agreement are, and will
be, enforceable in accordance with their terms and will not conflict
with any other obligation of Klippan GmbH.
8.3 Save as set out in the German Agreement, all Assets relating to the
Business are being transferred to Klippan as of the Transfer Date.
8.4 So far as the Vendor is aware, other than the Assets, there is no other
agreement or arrangement for the benefit of the Business in existence.
8.5 So far as the Vendor is aware, all the Business Contracts are in full
force and effect and have been duly complied with and nothing has
occurred whereby any of them is or could be subject to early
termination or which has given or may give right to any claim under any
of them by any party to any of them.
8.6 So far as the Vendor is aware, no fact or circumstance exists which
might invalidate or give rise to a ground for termination, avoidance or
repudiation of any of the Business Contracts. No party with whom
Klippan GmbH has entered into any of the
47
Business Contracts has given notice of its intention to terminate, or
has sought to repudiate or disclaim, any of the Business Contracts and
no party with whom it has entered into any of the Business Contracts is
not in material breach of the Assets.
8.7 Klippan GmbH has no outstanding liabilities or obligations of any
nature, whether known or unknown or absolute, accrued or contingent or
otherwise and whether due or to become due relating to the Assets.
8.8 Klippan GmbH has no other employee save for ▇▇▇▇▇▇ ▇▇▇▇▇▇.
8.9 This employment contract for the Employee can be terminated by Klippan
GmbH by three month's notice without giving rise to a claim for damages
or compensation. Klippan GmbH is not obliged to increase, nor has it
made provision to increase, the total annual remuneration payable to
its employee by more than five per cent.
8.10 There are no other employment or consultancy contracts or other
contracts of engagement between Klippan GmbH and any person in respect
of which Klippan GmbH has a continuing obligation.
8.11 Klippan GmbH does not owe any amount to its Employee other than for
accrued remuneration or reimbursement of business expenses, and has not
provided, or agreed to provide, a gratuitous payment or benefit to its
Employee.
8.12 Klippan GmbH has complied with each obligation imposed on it by, and
each order and award made under, statute, regulation, code for conduct
and practice derived from statute or regulation, collective agreement,
custom and practice relevant to relations between it and its Employee
or a trade union or the terms of employment of its Employee.
8.13 Klippan GmbH does not recognise a trade union or other body
representing its Employee.
8.14 No order has been made, petition presented or resolution passed for the
winding up of Klippan GmbH or for the appointment of a provisional
liquidator to Klippan GmbH and no administration order has been made in
respect of Klippan GmbH.
8.15 No receiver or manager has been appointed of the whole or part of
Klippan GmbH's Business or in respect of any of the Assets.
8.16 Klippan GmbH is not unable to pay its debts within the meaning of
Section 17 of the German Insolvency Act ("Insolvenzordnung").
For the purposes of this Clause 8, each of "Assets", "Business",
"Business Contracts" and "Employee" shall have the same meaning
ascribed thereto in the German Agreement.
9. Intellectual Property
9.1 Each of the Intellectual Property Rights is:
(a) so far as the Vendor is aware, valid and enforceable and
nothing has been done or omitted to be done by which it may
cease to be valid and enforceable;
48
(b) legally and beneficially owned by and validly granted to each
Group Company alone, free from any licence, Encumbrance,
restriction on use or disclosure obligation (or is lawfully
used with the consent of the owner under a licence); and
(c) not, and will not be, so far as the Vendor is aware, the
subject of a claim or opposition from a person (including,
without limitation, an employee of each Company) as to title,
validity, enforceability, entitlement or otherwise.
9.2 The Disclosure Letter contains details of all the Intellectual Property
Rights in respect of which each Group Company is a registered or
beneficial owner or applicant for registration including full correct
and up-to-date information in relation to each registration and
application.
9.3 All renewal and maintenance fees and taxes due and payable prior to
Completion in respect of each of the pending and registered
Intellectual Property Rights have been paid in full. Each other action
required to maintain and protect the pending and registered
Intellectual Property Rights has been taken.
9.4 To the best of the Vendor's knowledge, information and belief (having
made all reasonable enquiry) nothing has been done or omitted to be
done and no circumstances exist by which a person is or will be able to
seek cancellation, rectification or other modification of a
registration of any of the Intellectual Property Rights.
9.5 There is and during the two years ending on the date of this Agreement
has been, no civil, criminal, arbitration, administrative or other
proceeding or dispute in any jurisdiction concerning any of the
Intellectual Property Rights. No civil, criminal, arbitration,
administrative or other proceeding or dispute concerning any of the
Intellectual Property Rights is pending or threatened. To the best of
the Vendor's knowledge, information and belief, no fact or circumstance
exists which might give rise to a proceeding of that type.
9.6 No Group Company has granted and nor is obliged to grant a licence,
assignment, consent, undertaking, security interest, or other right in
respect of any of the Intellectual Property Rights.
9.7 There are no, and never have been, any outstanding claims against any
Group Company for an infringement or unauthorised use of any of the
Intellectual Property Rights. No Group Company has received any written
claim that any of the Intellectual Property is invalid.
9.8 The activities, processes, methods, products, services or Intellectual
Property used, manufactured, dealt in or supplied on or before the date
of this Agreement by each Company:
(a) are not, so far as the Vendor is aware, at the date of this
Agreement, nor were they at the time used, manufactured, dealt
in or supplied, subject to licence, consent or permission of,
or payment to, another person;
49
(b) to the best of the Vendor's knowledge, information and belief,
do not at the date of this Agreement, nor did they at the time
used, manufactured, dealt in or supplied, infringe, misuse or
embody the subject matter of any rights in the Intellectual
Property (including, without limitation, moral rights) of
another person;
(c) to the best of the Vendor's knowledge, information and belief,
have not given, and will not give, rise to a claim against any
Group Company.
9.9 No party to an agreement relating to the use:
(a) by each Group Company of Intellectual Property owned by
another person; or
(b) of any Intellectual Property Rights owned by each Group
Company by another person,
is, or has at any time been, in breach of the agreement and, so far as
the Vendor is aware, no circumstances exist which would give rise to
any breach of any such agreement or to any such agreement being
terminated, suspended, varied or revoked without each Group Company's
consent (other than termination without cause upon notice in accordance
with the terms of the agreement).
9.10 Each Group Company has not disclosed and is not obliged to disclose any
Confidential Information to any person other than its employees who are
bound by obligations of confidence or except in the ordinary and usual
course of business and then only on condition that the disclosure is to
be treated as being of a confidential nature. The Vendor is not aware
of any such confidentiality having been breached.
9.11 The Intellectual Property Rights and each Group Company's ownership,
licence or rights in them will not be adversely affected by the
transaction contemplated by this Agreement.
9.12 The Intellectual Property Rights comprise all the Intellectual Property
necessary for each Group Company to operate its business, and for the
business to continue to operate, as it has been operated during the two
year period ending on the date of this Agreement.
9.13 Each Group Company is not a party to a confidentiality or other
agreement and is not otherwise subject to any duty which restricts the
free use or disclosure of information or of any of the Intellectual
Property Rights.
9.14 Each Group Company does not use or operate its business under a name
other than its corporate name.
10. Trade ▇▇▇▇
10.1 Klippan GmbH is the registered owner of the Trade ▇▇▇▇, free from any
licence, Encumbrance, restriction on use or disclosure obligation (or
is lawfully used with the consent of the owner under a licence).
10.2 Klippan GmbH owns no other trade marks other than the Trade ▇▇▇▇.
50
10.3 There is no claim or opposition from any person (including, without
limitation, an employee of Klippan GmbH or any Group Company) as to
title, validity, enforceability entitlement or otherwise of the Trade
▇▇▇▇.
10.4 Klippan GmbH has the requisite right, power and authority to enter into
and perform its obligations under the German Agreement and the Deed of
Assignment.
10.5 The obligations of Klippan GmbH under the German Agreement and the Deed
of Assignment, when executed, will be legal, valid, binding and
enforceable in accordance with their terms and will not conflict with
any other obligation of Klippan GmbH or of the Vendor.
11. Insurance
11.1 Each insurable asset of each Group 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 person operating the types of
business operated by each Group Company.
11.2 Each Group 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, without limitation, product liability),
credit risk, loss of profits and all other risks to which a person
operating the types of business operated by each Group Company is
exposed.
11.3 The Disclosure Letter contains a Schedule of each current insurance and
indemnity policy in respect of which each Group Company has an interest
(including any active historic policies which provide cover on a losses
occurring basis) (together the "Policies").
11.4 Each of the Policies is valid and enforceable and is not void or
voidable and will be maintained in full force and effect without
alteration pending Completion and all premiums will be paid on time.
11.5 No Group Company has done anything or omitted to do anything which may
make any of the Policies void or voidable.
11.6 No insurer under any of the Policies has disputed, or given any
indication that they intend to dispute, the validity of any of the
Policies on any grounds.
11.7 To the best of the Vendor's knowledge, information and belief, (i)
there is nothing which could vitiate any of the Policies or, (ii)
prejudice the ability to effect insurance on the same or better terms
in the future.
11.8 No insurer has ever cancelled or refused to accept or continue any
insurance in relation to each Group Company.
11.9 No claims have been made, no claim is outstanding and no fact or
circumstance known to the Vendor exists, which might give rise to a
claim under any of the Policies.
51
11.10 No event, act or omission has occurred which requires notification
under any of the Policies.
11.11 None of the insurers under any of the Policies has refused, or given
any indication that it intends to refuse, indemnity in whole or in part
in respect of any claims under the Policies.
11.12 Nothing has been done or omitted to be done, and there is nothing,
which might entitle the insurers under any of the Policies to refuse
indemnity in whole or in part in respect of any claims under the
Policies.
11.13 All premiums which are due under the Policies have been paid.
11.14 No Group Company has not done anything or omitted to do anything, and
there is nothing, which might result in an increase in the premium
payable under any of the Policies.
12. Real Property
12.1 The Property comprises all land and premises owned, occupied or used
by, or in the possession of, each Group Company.
12.2 There is appurtenant to the Property each right and easement necessary
for its proper and existing use including, without limitation,
emergency escape routes. No right or easement is restricted in any way
(including, without limitation, a restriction on hours of use) or is
capable of being lawfully interrupted or terminated by any person.
12.3 Each Group Company has no right or easement appurtenant for a term less
than the unexpired term of the lease, tenancy or licence other than
disclosed in the documents.
12.4 Each service necessary for the Property's existing use (including,
without limitation, electricity, gas and water supplies, sewerage and
telecommunications lines) is available to each Group Company.
12.5 Each Group Company's access to the Property is sufficient for the
existing use of the Property and (other than in relation to the
Carlisle Property) is by means of a road adopted by the local highway
authority and maintainable at public expense.
12.6 The Property is not subject to outgoings other than the uniform
business rate, water and sewerage rates, rent, service charge and
insurance premiums.
12.7 Neither the Property nor any of its title deeds is subject to an
Encumbrance, agreement, obligation, condition, right, easement,
exception, reservation, or other interest.
12.8 There is, so far as the Vendor is aware, no person in possession or
occupation of, or who has or claims a right or interest of any kind, in
the Property adversely to each Company's interest and each Group
Company is entitled to and has exclusive vacant possession of the
Property.
52
12.9 No fact or circumstance exists which materially and adversely affects
the use or enjoyment of the Property or casts doubt on each Group
Company's right or title to the Property.
12.10 Each Group Company has performed or complied with each Property Permit,
obligation, condition, restriction, agreement (including, without
limitation, the term of any lease) and legal and administrative
requirement affecting the Property, or its respective ownership,
occupation, possession or existing use.
12.11 There is, and during the two years ending on the date of this Agreement
has been, no civil, criminal, arbitration, administrative, or other
proceeding or dispute concerning the Property. No civil, criminal,
arbitration, administrative or other proceeding concerning the Property
is pending or threatened. To the best of the Vendor' knowledge,
information and belief, no fact or circumstance exists which might give
rise to a proceeding of that type. There is no outstanding notice
affecting the Property.
12.12 There is, so far as the Vendor is aware, no resolution or proposal for
compulsory acquisition of the Property by a local or other authority.
12.13 Each Property's existing use is the lawful use permitted under the
lease and any applicable town and country planning legislation and such
permission is not temporary or personal.
12.14 Any permission necessary for the Property's existing use, construction
and any subsequent alteration has been obtained and is in force,
unimpeachable and unconditional or subject only to a condition that has
been satisfied (and nothing more remains to be done under the
condition).
12.15 To the best of the Vendor's knowledge, information and belief there is
no material deficiency which requires correction in the state or
condition of any building or other structure on or forming part of the
Property.
12.16 No flooding, subsidence or other material defect of any kind
(including, without limitation, a design or construction defect) which
affects or has affected the Property.
12.17 To the best of the Vendor's knowledge, information and belief, no
building or other structure on or forming part of the Property contains
a deleterious substance or a substance which is not at the date of this
Agreement used in generally accepted good building practice.
12.18 There is no fact or circumstance (and, to the best of the Vendor's
knowledge, information and belief, no fact or circumstance will within
six months starting on the date of this Agreement occur or arise)
which:
(a) could entitle or require a person (including, without
limitation, a landlord or licensor) to forfeit or enter on, or
take possession of, or occupy, the Property; or
(b) could restrict or terminate each Group Company's continued and
uninterrupted possession or occupation of the Property.
53
12.19 A rent or fee payable in respect of the Property is not at the date of
this Agreement being reviewed and cannot be reviewed before Completion.
12.20 No person (including, without limitation, a landlord or licensor) has
elected to waive, or indicated an intention to waive, an exemption from
payment by each Group Company of value added tax in respect of a
payment made under the Lease.
12.21 The documents disclosed relating to the Property are all those that are
relevant and are complete copies.
12.22 No Group Company has any contingent liability or other liability as
original tenant, landlord, assignee or otherwise in respect of any real
property or interest in real property except the Property.
12.23 As far as the Vendor is aware, no landlord or party to any lease of the
Property (except the Group Company) is in breach of its obligations to
the Group Company under such lease.
12.24 There is no interference with the rights of any of the Group Companies
in respect of or appurtenant to the Property.
13. Environmental Matters, Health and Safety and Product Liability
13.1 The operation of each Group Company's business does not involve and so
far as the Vendor is aware has never involved the use, or the release
or discharge of a hazardous substance or article, waste, sewage or
other pollutant or contaminant.
13.2 So far as the Vendor is aware, no land or other asset owned, occupied,
possessed or used by each Group Company on or at any time before the
date of this Agreement:
(a) contains or so far as the Vendor is aware has contained (in
the case of land, above or below ground) a hazardous substance
or article, waste or other pollutant or contaminant;
(b) is or so far as the Vendor is aware has been used for the
deposit, storage, treatment or disposal of waste or sewage; or
(c) is referred to or listed in a register of polluted or
contaminated land and so far as the Vendor is aware no fact or
circumstance exists which might give rise to an entry in such
a register.
13.3 No Group Company has sold, supplied or provided a defective product or
services in the course of its business on or prior to the date hereof.
13.4 No Group Company has manufactured, sold or supplied any product or
service which:
(a) is, was or will become, in any material respect, faulty or
defective when sold to an end-user; or
(b) does not comply in any material respect with any warranty or
representation, express or implied, made by or on behalf of
any Group Company in respect of it or with all laws,
regulations, standards and requirements applicable to it; or
54
(c) was sold or supplied on terms that any Group Company accepts
an obligation to service or repair or replace such products
after delivery.
13.5 No Group Company has received a prohibition notice, a notice to warn or
a suspension notice under the Consumer Protection ▇▇▇ ▇▇▇▇ in relation
to any of its products at any time within the last 3 years.
13.6 Each Group Company has in relation to its plant and machinery and other
fixed assets, and the Properties and its employees, complied with all
legal requirements relating to health and safety including, but not
limited to, those imposed by the Health and Safety at Work etc. ▇▇▇
▇▇▇▇ and all regulations made thereunder, and no action has been taken
by any entering authority in relation to any actual or alleged breach
of such requirements and neither is any Group Company in receipt of any
claim by any officer or employee or any past officer or employee in
relation to any such breach and the Vendor is not aware of any
circumstances which may lead to such action or claim.
13.7 (a) Each Group Company is and to the Vendor's knowledge always has
been in full compliance with all Environmental Laws and the existence
and the use of the Properties, machinery and other property of any
Group Company has been and is in accordance with all Environmental
Laws.
(b) No written notice, written demand or written request for
information has been issued or made and no investigation or review is
or has been threatened or is pending by any governmental authority or
other person with respect to any alleged violation by any Group Company
of any Environmental Law or liability thereunder.
(c) No Group Company owns or so far as the Vendor is aware has in
the past owned or had any interest in land which has been used for a
contaminative use or upon which toxic, radioactive, caustic or other
hazardous substances (of whatever kind) have been stored or processed
in a manner inconsistent with any Environmental Laws.
14. Agreements
14.1 To the best of the Vendor's knowledge, information and belief no fact
or circumstance exists which might invalidate or give rise to a ground
for termination, avoidance or repudiation of any agreement, arrangement
or obligation of which each Group Company is a party. No party with
whom each Group 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.
14.2 No Group Company nor any party with whom each Group Company has entered
into an agreement, arrangement or obligation is in material breach of
the agreement, arrangement or obligation. To the best of the Vendor's
knowledge, information and belief, no fact or circumstance exists which
might give rise to a breach of this type.
14.3 No Group Company is a party to and is not liable under a long-term,
onerous or unusual legally binding agreement, arrangement or obligation
including, without limitation:
55
(a) an agreement, arrangement or obligation entered into other
than in the usual course of its business;
(b) an agreement, arrangement or obligation entered into other
than by way of a bargain at arms length;
(c) an agreement, arrangement or obligation restricting each Group
Company's freedom to operate the whole or part of its business
or to use or exploit any of its assets;
(d) a sale or purchase, option or similar agreement, arrangement
or obligation affecting an asset owned, occupied, possessed or
used by each Group Company or by which each Group Company is
bound;
(e) a material agreement, arrangement or obligation with which
each Group Company cannot comply on time or without undue or
unusual expenditure of money or effort;
(f) a contract for the sale of shares or assets comprising a
business undertaking which contains warranties or indemnities
under which any Group Company still has a remaining liability
or obligation or can be terminated as a result of any change
in the underlying ownership or control of any Group Company,
or would be materially affected by such change; or
(g) an agreement, arrangement or obligation which is in any way
otherwise than in the ordinary course of any Company's
business.
14.4 Each Group Company is not:
(a) a member of a joint venture, consortium, partnership or
association (other than the bona fide trade association); or
(b) a party to a distributorship, agency, franchise or management
agreement or arrangement.
15. Terms of Trade and Business
15.1 Each Group Company has paid its creditors within the times agreed with
them. No debt owing by it has been due for more than 30 days.
15.2 During the year ending on the date of this Agreement, no substantial
supplier, distributor, agent or customer of each Group Company has:
(a) stopped, or indicated an intention to stop, trading with each
Company;
(b) reduced, or indicated an intention to reduce, trading with
each Company; or
(c) changed or indicated an intention to change, substantially the
terms on which it is prepared to trade with each Group
Company.
15.3 To the best of the Vendor's knowledge, information and belief no
substantial supplier, distributor, agent or customer of each Group
Company is likely to:
56
(a) stop trading with each Group Company;
(b) reduce substantially its trading with each Group Company; or
(c) change substantially the terms on which it is prepared to
trade with each Group Company.
15.4 To the best of the Vendor's knowledge, information and belief, the
attitude of suppliers, distributors, agents, customers and employees
with regard to each Group Company will not be prejudicially affected by
the execution or performance of this Agreement or any document to be
executed at or before Completion.
15.5 No Group Company has entered into an agreement or arrangement with a
supplier, distributor, agent or customer in terms materially different
to its standard terms of business.
15.6 No person (either individually or jointly with another person) has
bought from or sold to each Group Company, either in the financial year
of each Group Company ended on the Reference Accounts Date or since the
Reference Accounts Date, more than five per cent of the total amount of
all purchases or sales made by each Group Company in that period.
15.7 No Group Company has outstanding any bid, tender, sale or service
proposal.
15.8 So far as the Vendor is aware, no supplier, distributor, agent or
customer of any Group Company is in breach of any of its obligations to
any Group Company.
15.9 None of the records, systems, data or information of each Group Company
is recorded, stored, maintained, operated or otherwise wholly or partly
dependent on or held or accessible by any means (including, without
limitation, any electronic, mechanical or photographic process,
computerised or not) which are not under the exclusive ownership and
direct control of each Group Company.
15.10 Each Group Company has (to the extent applicable to such Group Company)
at all times complied with the Data Protection Acts 1984 and 1998
(including, for the avoidance of doubt, the data protection principles
set out in Schedule 1 to the Data Protection ▇▇▇ ▇▇▇▇ and the
Telecommunications (Data Protection and Privacy) (Direct Marketing)
Regulations 1998.
16. Effect of Sale
Neither the execution nor the performance of this Agreement or any
document to be executed at or before Completion will, so far as the
Vendor is aware, result in any Group Company losing the benefit of any
Permit necessary for carrying on each Group Company's business in the
places and in the manner currently carried on or any asset, grant,
subsidy, right or privilege which it enjoys at the date of this
Agreement or will:
(a) conflict with;
(b) result in the breach of;
57
(c) give rise to an event of default under;
(d) require the consent of a person under;
(e) enable a person to terminate; or
(f) relieve a person from an obligation under
any agreement or arrangement to which any Group Company is a party or
any legal or administrative requirement by which any Group Company is
bound or result in any present or future indebtedness of any Group
Company becoming due or capable of being declared due and payable prior
to its stated maturity.
17. Employees
17.1 Save as referred to in the Disclosure Letter, there is no employment or
other contract of engagement between any Group Company and any of its
directors or their officers. No Group Company is a party to a
consultancy contract.
17.2 There is no employment contract between any Group Company and any its
employees which cannot be terminated by any Group Company by three
month's notice or less without giving rise to a claim for damages or
compensation (other than a statutory redundancy payment or statutory
compensation for unfair dismissal).
17.3 There is no employment or consultancy contract or other contract of
engagement between any Group Company and any person which is in
suspension or has been terminated but is capable of being revised or
enforced and in respect of which each Company has a continuing
obligation.
17.4 The Disclosure Letter contains details of:
(a) the total number of Group Company's employees including those
who are on maternity leave or absent because of disability or
other long-term leave of absence and who have or may have a
right to return to work with each Group Company;
(b) the name, date of start of employment, period of continuous
employment, salary and other benefits, grade and age of each
employee of each Group Company and, where an employee has been
continually absent for more than one month, the reason for the
absence; and
(c) the terms of the contract of each director, other officer and
employee of each Group Company entitled to remuneration at an
annual rate or an average annual rate, or an average annual
rate over the last three financial years, of more than
L30,000.
17.5 The basis of the remuneration payable to each Group Company's
directors, other officers and employees is the same as that in force at
the Reference Accounts Date. Each Group Company is not obliged to
increase, nor has it made provision to increase, the total annual
remuneration payable to its directors, other officers and employees by
more than five per cent.
58
17.6 No Group Company owes any amount to a present or former director, other
officer or employee of each Group Company (or his dependant) other than
for accrued remuneration or reimbursement of business expenses.
17.7 There is no agreement or arrangement between each Group Company and an
employee or former employee with respect to his employment, his ceasing
to be employed or his retirement which is not included in the written
terms of his employment or previous employment. No Group Company has
provided, or agreed to provide, a gratuitous payment or benefit to a
director, officer or employee or to any of their dependants.
17.8 Each Group Company has maintained up-to-date and accurate records
regarding the employment of each of its employees (including, without
limitation, details of terms of employment, payments of statutory sick
pay and statutory maternity pay, income tax and social security
contributions, disciplinary and health and safety matters), and
termination of employment.
17.9 No Group Company has since the Reference Accounts Date:
(a) incurred a liability for breach or termination of an
employment contract including, without limitation, a
redundancy payment, protective award and compensation for
wrongful dismissal, unfair dismissal and failure to comply
with an order for the reinstatement or re-engagement of an
employee;
(b) incurred a liability for breach or termination of a
consultancy agreement; or
(c) made or agreed to make a payment or provided or agreed to
provide a benefit to a present or former director, other
officer or employee of each Company or to any of their
dependants in connection with the actual or proposed
termination or suspension of employment or variation of an
employment contract.
17.10 Each Group Company has complied with:
(a) each obligation imposed on it by, and each order and award
made under, statute, regulation, code for conduct and practice
derived from statute or regulation, collective agreement,
custom and practice relevant to relations between it and its
employees or a trade union or the terms of employment of its
employees; and
(b) each recommendation made by the Advisory, Conciliation and
Arbitration Service and each award and declaration made by the
Central Arbitration Committee.
17.11 Within the year ending on the date of this Agreement, no Group Company
(to the extent applicable) has:
(a) given notice of redundancies to the relevant Secretary of
State or started consultations with a trade union under
Chapter II of Part IV of the Trade Union and Labour Relations
(Consolidation) ▇▇▇ ▇▇▇▇ or failed to comply with its
obligations under Chapter II of Part IV of that Act; or
59
(b) been a party to a relevant transfer (as defined in the
Transfer of Undertakings (Protection of Employment Regulations
1981) or failed to comply with a duty to inform and consult a
trade union under those Regulations.
17.12 No Group Company has any arrangement with and does not recognise a
trade union, works council, staff association or other body
representing any of its employees.
17.13 No Group Company is involved in, and, so far as the Vendor is aware, no
fact or circumstance exist which might give rise to, a dispute with a
trade union, works council, staff association or other body
representing any of its employees.
17.14 No Group Company has and is not proposing to introduce a share
incentive, share option, profit sharing, bonus or other incentive
scheme for any of its directors, other officers or employees.
17.15 There is not and has not been a training scheme, arrangement or
proposal in relation to each Company in respect of which a levy may
become payable by each Company under the Industrial Training ▇▇▇ ▇▇▇▇.
18. Pensions and Other Benefits
18.1 The Scheme is the only scheme to which Klippan makes payment for
providing retirement, death, disability or life assurance benefits. The
Group Companies have no obligation (whether legally binding or not) to
provide "relevant benefits" (within the meaning of Section 612 ICTA
1988) to, or in respect of any person who is now or has been an officer
or employee of any Group Company or spouse or dependant of such officer
or employee.
18.2 Full and accurate details and particulars of The Scheme in all material
respects have been disclosed in the Disclosure Letter together with
accurate, up-to-date and complete copies of all documents relating to
The Scheme including (i) the actuary's report on the latest actuarial
valuations of The Scheme, (ii) the latest annual report and accounts
and (iii) a list of investments held for The Scheme during the last
year showing each asset of The Scheme and its market value at a date no
earlier than a month before the date of this Agreement. There is no
obligation to provide benefits under The Scheme other than as revealed
in such documents and particulars.
18.3 The members data relating to The Scheme disclosed in the Disclosure
Letter is accurate, up-to-date and complete. The Disclosure Letter sets
out the rate at which contributions to The Scheme are being paid and
the basis on which they are calculated, and whether they are paid in
advance or in arrear.
18.4 No power to increase the benefits under The Scheme has been exercised
in the last year of the Scheme.
18.5 The Scheme is contracted out of the State Earnings Related Pension
Scheme within the meaning of the ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇.
18.6 The Scheme is "exempt approved" (within the meaning of Chapter I of
Part XIV ICTA 1988) and, to the best of the Vendor's knowledge and
awareness, there is no reason why approval of the Board of Inland
Revenue should be withdrawn.
60
18.7 During the Vendor's period of ownership of the Companies, the
provisions of The Scheme has never discriminated illegally between male
and female members.
18.8 All premiums payable under contracts of insurance relating to payment
of benefits on death before normal pension age in respect of any
officer or employee of any Group Company have been paid and all
contributions to, and expenses of, The Scheme which have fallen due for
payment have been paid.
18.9 Except as fairly disclosed in the Disclosure Letter, there is no
dispute with regard to the benefits payable under The Scheme, no claim
by or against the Trustees of The Scheme or any of the participating
employers or any other payments or benefits (other than routine claims
for benefits). Except as fairly disclosed in the Disclosure Letter, no
legal proceedings in connection with The Scheme or any of the trustees
are pending, threatened or expected nor is there any fact or
circumstance likely to give rise to any such proceedings.
18.10 The Scheme has at all times complied with and been administered in all
material respects in accordance with the provisions governing it and
all applicable laws, regulations and requirements, including the
requirements of the Inland Revenue for continued approval as an exempt
approved scheme, and of trust law.
18.11 Klippan has at all times complied with all the provisions of The Scheme
which apply to it.
18.12 The actuary's report on the latest actuarial valuation accurately
describes the financial position of The Scheme at its effective date.
No change has occurred since such date that would materially affect the
level of funding of The Scheme and, since such date, contributions have
been paid to The Scheme at the rate recommended by the actuary. No
assets have been withdrawn from The Scheme (except to pay benefits)
since the effective date of the list of assets disclosed in the
Disclosure Letter.
18.13 All taxes and expenses relating to the Scheme have been paid and no
services have been rendered or requested which have not been paid for.
19. Liabilities
19.1 Except as disclosed in the Accounts or in the Disclosure Letter, no
Group Company has any outstanding and has not agreed to create or incur
loan capital, borrowing or indebtedness in the nature of borrowing.
19.2 No Group Company is a party to and is not liable under a guarantee,
indemnity or other agreement to secure or incur a financial or other
obligation with respect to another person's obligation.
19.3 No part of the loan capital, borrowing or indebtedness in the nature of
borrowing of each Group Company is dependent on the guarantee or
indemnity of, or security provided by, another person.
19.4 No event has occurred or been alleged to have occurred which:
(a) constitutes an event of default, or otherwise gives rise to an
obligation to repay, under an agreement relating to borrowing
or indebtedness in the nature
61
of borrowing (or will do so with the giving of notice or lapse
of time or both) or
(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
each Group Company becoming enforceable (or will do so with
the giving of notice or lapse of time or both);
19.5 No Group Company is liable to repay an investment or other grant or
subsidy made to it by a body (including, without limitation, the
Department of Trade and Industry or its predecessor).
19.6 No fact or circumstance (including, without limitation, execution and
performance of this Agreement) exists which might entitle a body to
require repayment of, or refuse an application by each Group Company
for, the whole or part of a grant or subsidy.
19.7 Each Group Company has no liabilities or obligations of any nature,
whether known or unknown, absolute, accrued contingent or otherwise and
whether due or to become due, arising out of relating to the business
and operations of the Group Company as previously or currently
conducted except (a) as and to the extent disclosed or provided for in
the Accounts and/or the Management Accounts and (b) for liabilities and
obligations that (i) were incurred after the Reference Accounts Date in
the ordinary course of business consistent with past practice; (ii)
individually and in the aggregate would not have a material adverse
effect; and (iii) do not materially impair the ability of the Vendor to
perform its obligations hereunder.
19.8 The Vendor is not aware of anything that may prevent the Group
Companies from conducting their respective businesses and operations in
the manner currently conducted following the Completion Date.
20. Permits
20.1 Each Group Company has obtained and has complied with the terms and
conditions of each Permit.
20.2 Details of each Permit are set out in the Disclosure Letter.
20.3 Each Permit is in force and unconditional or subject only to a
condition that has been satisfied. To the best of the Vendor's
knowledge, information and belief, no Permit will be revoked,
suspended, canceled or varied or not renewed.
20.4 Each action required for the renewal or extension of each Permit has
been taken.
21. Insolvency
21.1 No order has been made, petition presented or resolution passed for the
winding up of any Group Company or for the appointment of a provisional
liquidator to any Group Company and no administration order has been
made in respect of each Group Company.
21.2 No receiver or manager has been appointed of the whole or part of any
Group Company's business or assets.
62
21.3 (To the extent applicable to any Group Company), no voluntary
arrangement has been proposed under Section 1 of the Insolvency ▇▇▇
▇▇▇▇ in respect of any Group Company and no compromise or arrangement
has been proposed, agreed to or sanctioned under section 425 of the CA
1985 in respect of each Group Company.
21.4 No Group Company (to the extent applicable) is insolvent or unable to
pay its debts within the meaning of Section 123 of the Insolvency ▇▇▇
▇▇▇▇.
21.5 No Group Company has stopped paying its debts as they fall due.
21.6 No distress, execution or other process has been levied on an asset of
each Group Company or action taken to repossess goods in each Group
Company's possession which has not been satisfied in full.
21.7 There is no unsatisfied judgment or court order outstanding against any
Group Company.
21.8 No floating charge created by any Group Company has crystallized and,
so far as the Vendor is aware, there are no circumstances likely to
cause such floating charge to crystallize.
21.9 No action has been taken by the Registrar of Companies to strike any
Group Company off the register under section 652 of the CA 1985.
21.10 No Group Company has at any time during the two years immediately prior
to the date of this Agreement:
(a) entered into a transaction with any person at an undervalue
(as referred to in Section 238(4) of the Insolvency Act 1986);
or
(b) been given a preference by any person (as referred to in
section 239(4) of the Insolvency Act 1986).
21.11 No event analogous to any of the foregoing has occurred in or outside
England.
22. Competition
22.1 No Group Company has any liability under, and is not a party to, any
agreement or arrangement
(a) particulars of which have been furnished to the Director
General of Fair Trading under the Restrictive Trade Practices
Acts 1976 and 1977;
(b) which is prohibited by any competition law.
22.2 No Group Company has given an undertaking or written assurance (legally
binding or not) to a governmental authority or an authority of the
European Communities or European Economic Area under the Fair Trading
▇▇▇ ▇▇▇▇, Competition ▇▇▇ ▇▇▇▇, Restrictive Trade Practices Acts 1976
and 1977, Resale Prices ▇▇▇ ▇▇▇▇, Treaty of Rome, Agreement on the
European Economic Area or any other statute or legal instrument. No
Group Company is affected by an order or regulation made under the Fair
Trading Act 1973 or the Competition ▇▇▇ ▇▇▇▇ or by a decision of the
63
Commission of the European Communities, EFTA Surveillance Authority or
a competition or governmental authority of another jurisdiction.
22.3 No Group Company has received a communication or request for
information relating to any aspect of each Group Company's business
from or by the Director General of Fair Trading, Competition
Commission, Secretary of State for Trade and Industry, Commission of
the European Communities or EFTA Surveillance Authority or a
competition or governmental authority of another jurisdiction. No
agreement, arrangement or conduct (by omission or otherwise) of each
Group Company is or has been the subject of an investigation, report or
decision by any of those persons or bodies and none is pending or
threatened. To the best of the Vendor's knowledge, information and
belief, no fact or circumstance exists which might give rise to an
investigation, report or decision by any of those persons or bodies.
23. Litigation and Compliance with Law
23.1 No Group Company nor a person for whose acts or defaults each Group
Company may be vicariously liable is involved, or has during the two
years ending on the date of this Agreement been involved, in a civil,
criminal, arbitration, administrative or other proceedings. No civil,
criminal, arbitration, administrative or other proceeding is pending or
threatened by or against each Group Company or a person for whose acts
or default each Group Company may be vicariously liable.
23.2 To the best of the Vendor's knowledge, information and belief, no fact
or circumstance exists which might give rise to a civil, criminal,
arbitration, administrative or other proceeding involving each Group
Company or a person for whose acts or defaults each Group Company may
be vicariously liable.
23.3 There is no outstanding judgement, order, decree, arbitral award or
decision of the court, tribunal, arbitrator or governmental agency
against each Group Company or a person for whose acts or defaults each
Group Company may be vicariously liable.
23.4 Each Group Company has, in the Vendor's reasonable knowledge, conducted
its business and dealt with its assets in all material respects in
accordance with all applicable legal and administrative requirements.
23.5 There is not and has not been any governmental or other investigation,
inquiry or disciplinary proceeding concerning each Group Company and
none is pending or threatened. To the best of the Vendor's knowledge,
information and belief no fact or circumstance exits which might give
rise to an investigation, inquiry or proceeding of that type.
23.6 So far as the Vendor is aware, no Group Company or any person for whose
acts or defaults each Group Company may be vicariously liable has:
(a) induced a person to enter into an agreement or arrangement
with any Group Company by means of a 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
64
(c) directly or indirectly made an unlawful contribution to a
political activity.
24. Insider Agreements
There is not, and during the three years ending on the date of this
Agreement, there has not been, any agreement or arrangement (legally
enforceable or not) to which any Group Company is or was a party and in
which any of the Vendor, a director or former director of any Group
Company or a person connected with any of them is or was interested in
any way. For this purpose, "connected" has the meaning given by section
839 of ICTA, except that in construing section 839 "control" has the
meaning given by section 840 or section 416 of ICTA so that there is
control wherever either section 840 or 416 requires.
25. Miscellaneous
25.1 Each Group Company is operating and has always operated its business in
all respects in accordance with its memorandum and articles of
association at the relevant time.
25.2 Each register, minute book and other book which the CA 1985 requires
each Group Company to keep has been properly kept and contains a
complete and accurate record of the matters which it is required by the
CA 1985 to record. No notice has been received or allegation made that
a register or book is incorrect or should be rectified.
25.3 All returns, particulars, resolutions and other documents required to
be delivered by each Group Company to the Registrar of Companies and
other governmental or other authority or agency have been properly
prepared and delivered.
25.4 No Group Company has not given a power of attorney or other authority
by which a person my enter into an agreement, arrangement or obligation
on any Group Company's behalf (other than an authority for a director,
other officer or employee to enter into an agreement in the usual
course of that person's duties).
26. Brokerage or Commission
No person is entitled to receive a finder's fee, brokerage or
commission from any Group Company in connection with this Agreement.
65
SCHEDULE 5
Properties
1. The Carlisle Lease - Premises at ▇▇▇▇▇ Street, Caldergate, Carlisle,
Cumbria, being registered under title number CU 34611 with good title
leasehold and more particularly described in a lease dated April 3,
1986 between ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Limited (1) and Ase (UK) Limited (2).
Leasehold - for a term of 25 years from January 10, 1986 and Warehouse
Premises at ▇▇▇▇▇ Street, Caldergate, Carlisle, Cumbria between The
House of Fraser (Stores) Limited and Klippan dated February 28, 1995.
Leasehold for a term of 16 years from January 10, 1995.
2. The Landskrona Lease - Premises at Hjalmar Brantings, Vag 11 D,
Landskrona, Sweden.
3. The Vantaa Lease - Premises at Sandbanan 8,01370 Vanda, Finland.
66
SCHEDULE 6
Accounting Principles
The Completion Accounts as defined in Clause 3.1 of the Agreement shall be
prepared in accordance with all applicable UK GAAP, in a manner consistent with
the Group's established practice and in a manner consistent with the policies
and practices adopted in preparation of the Accounts.
The following bases and principles represent agreed interpretations of the
application of these principles and practices to specific areas of the Accounts.
To the extent that there is any conflict between the following bases and
principles and those adopted in preparation of the Accounts then the policies
set out herein shall prevail.
Sales and Debtors
1. Trade Debtors represent the amounts owed by third parties for goods and
services provided on or before the period end, inclusive of VAT. For
the avoidance of doubt, the point of sale is normally dispatch by the
Group of the goods or performance of the service.
2. A credit note provision will be made based on valid debit notes
received from customers, and other known credits which are foreseen
(normally valued at one to two months credit note costs). Any disputes
will be resolved by the Company.
3. A provision will be made for bad or doubtful trade debts where it is
considered that a specific customer is unlikely to be able to meet
their debts as they fall due. Accounts which have been sent to a
collection agency or referred to counsel for collection shall be valued
at the higher of nil and the amount actually collected after the
Completion Date up to the date on which the Completion Accounts are
agreed or determined. An additional provision will be established in
accordance with historical practice.
4. A provision will be made based on the best estimate of the amount that
will be taken by customers by way of settlement discount on a time
apportioned basis according to historical practice, based on the actual
amount outstanding.
5. A provision will be made based on the royalty payment due under the
terms of the Mamas & Papas licence agreement.
6. A rebate provision will be made based on the amount due to customers
under their rebate agreements. The relevant rebate percentage for each
customer shall be calculated by reference to the aggregate of (i) the
actual turnover during the rebate period in which Completion falls,
from the commencement of such period up to and including Completion,
and (ii) the best forecast of turnover for the balance of the rebate
period. To calculate the amount of the rebate provision the rebate
percentage calculated for the relevant customer in accordance with the
foregoing should then be applied to the actual turnover from the
commencement of the rebate period in which Completion falls up to and
including Completion.
7. Prepayments will be accounted for on a time apportioned basis, normally
calendar weeks.
67
8. No provision will be made in respect of any inter Group trading
balances.
Pensions
1. The cash cost of providing pensions and other post-retirement benefits
for employees is charged to the profit and loss account as incurred. No
provision or accrual will be made for any pension fund surplus or
deficit.
2. An accrual or prepayment will be made for any unpaid insurance premiums
relating to the group life assurance scheme.
Insurance
1. Insurance prepayments or accruals will be calculated on a time
apportioned basis.
Agent's commission
1. Commission is accrued for as incurred under the terms of the individual
agency agreements.
Pre-paid and Deferred Expenses
1. Prepaid expenses and deferred expenses shall be included as to the
extent that a direct and measurable benefit will be received, or cash
will be recoverable.
2. Product displays or samples sent to a customer, operating supplies (for
example, oils and fluids) and repair parts (for example, minor or small
parts for production equipment) will not be recorded as assets.
Stocks and Inventories
1. A physical stock count will be performed to identify all stocks and
inventories.
2. Stocks and inventories will be stated by product, at the lower of cost
and net realisable value on a basis consistent with the historical
practice and the practice applied in the calculation of stocks and
inventories as at the December 2000 period end.
3. Cost includes all expenditure incurred in the normal course of business
in bringing the stocks to their present location and condition,
including the appropriate proportion of production related overheads
calculated on a consistent basis.
4. Costs are to be the standard costs in use as at the December 2000
period end unless there is a significant change in the cost of raw
materials from that date, in which case the new cost of raw materials
will be used rather than the standard cost.
5. Net realisable value is the actual or estimated selling price, net of
trade discounts but before settlement discounts, less:
(a) all further costs to completion; and
(b) all costs to be incurred in marketing, selling and
distribution.
6. The gross value of the material content of stock is based on the actual
cost.
68
7. The value of work-in-progress includes the standard labour element
required in order to process the part to its current location
calculated on actual material cost on a consistent basis. Factory
overheads are apportioned through a single labour recovery rate.
8. Obsolete stocks are identified through a review of the reasonable
future sales of stock items. A provision is made against all identified
obsolete stock items to reduce them to their estimated net realisable
value in accordance with historical practice as at the December 2000
period end.
9. Returned, damaged, defective and unsaleable stocks and inventories are
separately identifiable and will be written down to the lower of cost
and net realisable value.
Tooling
1. Tooling costs are held in the balance sheet under fixed assets and
written off over a 5 year period commencing when the test products meet
the product specification.
Fixed Assets
1. Fixed Assets are defined as assets which would be classified as
tangible fixed assets under UK GAAP or an asset financed by a finance
lease.
2. Unless part of a larger project, items costing less than L1,000 will be
treated as an expense and charged against profits.
3. The cost of fixed assets will be written off over their estimated
useful lives by providing depreciation on a straight line basis as
follows:
Plant & Machinery 5 to 10 years
Computer Equipment (excluding desk top computers) 5 years
Desk top computers (and peripheral equipment including
printers, monitors and software). 1 to 2 years
Office Equipment 5 years
Leasehold Improvements Remaining life of Lease
Depreciation should continue to be charged up to the month of
disposal/scrapping when the profit or loss on disposal is calculated.
4. For the purposes of the Completion Accounts, assets acquired under
finance leasing contracts will be recorded in the balance sheet as
fixed tangible assets at their equivalent capital value and depreciated
over the useful life of the asset. The corresponding liability is
recorded as a finance lease creditor and the interest element of the
finance charge charged against profits over the primary lease period.
5. Payments under operating leases are charged against profits in the year
in which the payments are made.
69
6. No provision is made for dilapidations on leasehold buildings other
than the L25,000 provision for Carlisle property.
7. Capital grants (as distinct from revenue grants) are recorded as
deferred income and amortised to match the depreciation rate of the
relevant asset.
8. Revenue grants are recognised in the period in which they are received.
9. A provision to write down to net realisable value will be made for any
assets not in service and for which no future use is reasonably
envisaged or which are otherwise not useable.
10. No amount shall be included for goodwill or other intangible assets.
Research and development costs
1. Research and development costs are charged to profit as incurred.
VAT
1. VAT is accounted for to the relevant authorities on a quarterly basis.
2. The creditor for the purposes of the Completion Accounts will be output
tax less input tax for the period outstanding up to the period end as
per the nominal ledger with any appropriate manual adjustment for
accruals.
Purchasers and Creditors
1. Trade Creditors will be calculated as invoiced (including VAT) and
recorded on the purchase ledger, plus invoices received and not yet
posted to the purchase ledger, plus a provision for goods and services
received but not yet invoiced less a provision for goods returned but
not yet credited. Overdue Creditors shall not be included in the
calculation of trade creditors.
2. Accruals will be accounted for on a time apportioned basis, normally
calendar weeks on a consistent basis in accordance with historical
practice and shall include operating expenses, customer credits, free
or sample goods, repurchase provisions, rebates and advertising
arrangements.
3. Any salaries and related payroll costs due, unpaid will be accrued for
at the period end. The accounts will include any sums due but not paid
less any sums paid but not due.
4. A provision for holiday pay will be made in the accounts calculated on
a time apportioned basis in accordance with historical practice.
5. Provision will only be made for actual goods and services received
prior to the relevant period end and no general accruals will be made.
In particular, the following will not be accrued in the accounts: costs
associated with the proposed transaction, general warranty accruals,
goods at suppliers, potential computer reorganisation, rationalisation
or redundancy costs as a result of the proposed transaction.
70
6. No provision will be made in the accounts in respect of claims against
the Group with regard to potential, prospective or actual litigation or
contingent liabilities, if UK GAAP would not require such provision to
be made.
7. For the avoidance of doubt creditors in relation to ▇▇▇▇▇ & Reclina
Products will be dealt with in accordance with paragraphs 1, 5 and 6
above.
Cash/overdraft/invoice discounting facility and loans
1. The cash/overdraft/invoice discounting facility balance will be
included in the Completion Accounts on the basis of the balance of the
cash book, having been appropriately reconciled to the bank statements.
2. Loans will be included in the Completion Accounts on the basis of the
outstanding balance of the loan.
3. A sum equal to Overdue Creditors shall be treated as paid with a
corresponding adjustment to the cash/overdraft/invoice discounting
facility balance.
Corporation and Deferred Tax
1. Corporation tax will be provided for based on draft tax computations
for the Group Companies.
2. Deferred taxation will be provided using the liability method on all
timing differences which are expected to reverse in the future without
being replaced, calculated at the rate at which it is anticipated the
timing of differences will reverse.
Foreign currencies
1. Transactions in foreign currencies will be recorded at the rate of
exchange ruling at the date of the transaction. Any foreign exchange
gains and losses are to be dealt with in accordance with SSAP 20.
Interest receivable and payable
1. Interest receivable on bank deposits and interest payable on cash
overdrafts will be accrued up to the period end.
German Agreement
1. All assets acquired by Klippan and liabilities assumed by Klippan
pursuant to the German Agreement shall be treated in the manner set out
above for the relevant asset or liability category.
71
Completion Statement Proforma
L L
Actual Working Capital at Completion per
Completion Accounts
Stocks [Extracted from Completion Balance Sheet]
Trade debtors [Extracted from Completion Balance Sheet]
Other debtors and prepayments [Extracted from Completion Balance Sheet]
Trade creditors [Extracted from Completion Balance Sheet]
Other creditors and accruals [Extracted from Completion Balance Sheet]
VAT [Extracted from Completion Balance Sheet]
-------------------------------------------
Less: target Working Capital (104,000)
-------------------------------------------
Working Capital Adjustment (if actual Working [Sub-total]
Capital at Completion is greater than L104,000 the
Working Capital adjustment is (nil)
Actual Net External Debt at Completion per
Completion Accounts:
Overdraft/invoice discounting [Extracted from Completion Balance Sheet]
Overdue creditors [Separately calculated by Klippan]
Loans [Extracted from Completion Balance Sheet]
HP and finance leases [Extracted from Completion Balance Sheet]
Cash [Extracted from Completion Balance Sheet]
-------------------------------------------
Less: Estimated Net External Debt at Completion (364,683) [Sub-total]
-------------------------------------------
Net External Debt adjustment [Sub-total]
Completion Tax Adjustment [Extracted from Completion Balance Sheet
-------------------------------------------
Less: Estimated Tax Adjustment at Completion (140,798) [Sub-total]
Tax Adjustment [ ]
Actual ▇▇▇▇▇ and Reclina [Separately calculated by Klippan]
Capital Expenditure
Less: Estimate ▇▇▇▇▇ and Reclina capital (34,500)
expenditure
-------------------------------------------
Capex Adjustment [Sub-total]
-----------
Completion Accounts Adjustment [Total]
===========
72
SCHEDULE 7
Environmental Indemnity
1. Interpretation
"Commercially Reasonable Expenses" are those costs and expenses which a
reasonable person, acting in a commercially prudent manner, would
expend in order to satisfy any obligations pursuant to Environmental
Laws. For the avoidance of doubt, Commercially Reasonable Expenses
shall not include any costs or expenses to the extent that they are
incurred as a result of the adoption or imposition of standards of
remediation materially more stringent than those which are provided for
under Environmental Laws;
"Environment" means any ecological system, including without limitation
living organisms (including man) and the following media (alone or in
combination): air, water (including ground or surface water, water
under or within land or in drains, culverts or sewers, and coastal and
inland waters) and land (including land under water);
"Environmental Laws" means any and all laws and legislation (whether
civil, criminal, administrative, supranational, national, federal,
state or regional), statutes, treaty, statutory instrument, directive
bylaw or judgment (including any judgment by the European Court of
Justice), regulations, orders, (including any notices, government
circulars, codes of practice and guidance notes or decision of any
competent regulatory body, provided in each case they have the force of
law) or common law relating to pollution or protection of the
Environment which as at Completion are in effect and capable of
enforcement by legal process;
"Environmental Liabilities" means all claims, costs, damages, expenses
(including reasonable professional fees incurred), losses, liabilities
(including without limitation liability to third parties), fines or
penalties relating to the Environment and suffered or incurred by any
Group Company as a direct consequence of or in connection with:
(i) any Environmental Proceedings; or
(ii) relating directly to any agreement in writing between the
Vendor and the Purchaser, or in the event of disagreement any
determination by the Expert that it is reasonably necessary to
undertake remediation or other actions in order to prevent any
Environmental Proceedings which, but for the remediation or
other actions, would reasonably result in Environmental
Proceedings within a period of six months of the date of this
determination.
BUT EXCLUDING any claims, costs, damages, expenses, losses,
liabilities:
(i) in respect of capital expenditure on plant and equipment which
would be incurred in the ordinary course of business;
(ii) where applicable to the extent that they are not Commercially
Reasonable Expenses;
73
"Environmental Proceedings" means any writ and/or interim or final
judicial or administrative decree, judgment, injunction, order, notice
or requirement relating to the enforcement of or breach or alleged
breach of or liability under any Environmental Laws which enforcement
of or breach or alleged breach of or liability relates to acts or
omissions prior to Completion;
2. Environmental Indemnity
2.1 The Vendor undertakes to indemnify and keep indemnified the Purchaser
for a period of 48 months from the date of Completion from and against
all Environmental Liability relating to any sites or properties owned
or leased (including for the avoidance of doubt sites or properties
previously owned or leased) by any of the Group Companies or relating
to third party sites to which waste materials from such sites or
properties are or were transported.
2.2 If any Environmental Liability arises from the period prior to the
acquisition of Klippan by the Vendor, the Purchaser agrees as follows:
2.2.1 to the extent that any Environmental Liability is assessed by
the Purchaser to be less than L100,000, the Purchaser agrees to pay
10% of such Environmental Liability;
2.2.2 to the extent that any Environmental Liability is assessed by
the Purchaser to be between L100,000 and L250,000, the Purchaser
agrees to pay 20% of such Environmental Liability; and
2.2.3 to the extent that that any Environmental Liability is
assessed by the Purchaser to be in excess of L250,000, the Purchaser
agrees to pay 30% of such Environmental Liability,
provided always that the Purchaser's aggregate liability in respect of
payments made under this Clause 2 shall be limited to L200,000.
3. Notification
3.1 As soon as reasonably practicable after the Purchaser becomes aware of
any actual or potential Environmental Liabilities which may give rise
to a claim under the Environmental Indemnity, the Purchaser shall
notify the Vendor forthwith and thereafter keep the Vendor fully
informed of all material developments. Written notice shall include all
material details of any actual or potential Environmental Liabilities
(including to the extent practicable the Purchaser's reasonable
estimate of the extent of the Environmental Liabilities as a result
thereof).
3.2 The Purchaser shall not admit, settle or discharge any claim or
liability unless the Purchaser has first served notice to the Vendor
under Clause 3.1 and given the Vendor reasonable opportunity to
consider and comment in writing upon the circumstances contained
therein.
4. Conduct of Third Party Claims
If any notice made by the Purchaser under Clause 3.1 above relates to
any existing or potential Environmental Proceedings, the Purchaser
shall be entitled to take all steps
74
which are necessary and reasonable to avoid, resist, appeal, compromise
or defend any claim and any adjudication in respect thereof and shall
be indemnified against all costs and expenses which may reasonably and
necessarily be incurred in connection therewith. The Vendor shall, at
its request, be permitted to conduct any negotiations, proceedings or
appeals incidental thereto provided that it consults fully with the
Purchaser.
5. Dispute Resolution
Upon the Purchaser giving a notice in accordance with Clause 3.1, in
the event that the Vendor and the Purchaser are unable to agree
promptly any technical matter relevant to a claim under the
Environmental Indemnity or in the event of any other matter being
referred to the Expert in accordance with this Schedule or with the
agreement of the Vendor and the Purchaser then the following provisions
of this paragraph shall apply:
5.1 a reputable independent environmental consultant (the "Expert") (who
shall act as expert and not arbitrator) in relation to the Environment
relevant to the claim or potential claim (having at least ten years
relevant experience) shall be appointed by mutual agreement of the
parties hereto (and the parties shall each be obliged to use their
respective best endeavours to reach agreement as soon as practicable)
to resolve any technical matter in dispute between the parties;
5.2 the Expert shall be offered the appointment within 15 Business Days of
the parties reaching such mutual agreement and shall be notified in
writing of the provisions of Clause 5.9 below;
5.3 failing such mutual agreement on the appointment of an Expert, the
parties shall promptly refer the issue, at their joint cost, if the
issue relates to the United Kingdom to the President for the time being
of the Royal Institution of Chartered Surveyors in the United Kingdom
(or if the dispute concerns another jurisdiction the nearest equivalent
of the Royal Institution of Chartered Surveyors in the relevant
jurisdiction) with instructions to appoint a suitable Expert within
fourteen (14) days of receipt of such instructions;
5.4 the said Expert shall only be dismissed by the mutual agreement of the
parties hereto;
5.5 both parties shall promptly and simultaneously exchange with each other
and submit to the Expert, and in any event in accordance with the
Expert's written directions, their arguments and submissions in
connection with any matter referred to him in accordance with this
Clause;
5.6 following receipt by the Expert of the written arguments and other
submissions of the parties pursuant to Clause 5.5, the parties shall
instruct the Expert to issue, as soon as reasonably practicable, a
formal written opinion pertaining to the matter of fact referred to
him. In any event the Expert shall be instructed to present the said
opinion within two months of receiving the written arguments and other
submissions of the parties pursuant to Clause 5.5;
75
5.7 the formal written opinion of the Expert issued pursuant to Clause 5.6
shall be conclusive in any proceedings between the parties hereto as to
any matter so determined;
5.8 the fees and expenses of the Expert shall be borne equally by the
Vendor and the Purchaser (unless otherwise directed by the Expert); and
5.9 the Expert, and any company, firm, partnership or other organisation
with which the Expert is connected shall not be eligible to be
considered to undertake any work in respect of the claim save where the
parties hereto mutually agree to waive this provision. For the
avoidance of doubt, either party may withhold such consent in any
event.
6. Statements
In the event of any circumstances arising which do or may give rise to
Environmental Liabilities which may fall within the terms of the
Environmental Indemnity the Vendor shall not, and shall procure that no
member of the Vendor Group shall, make any public statements
(including, for the avoidance of doubt, any statement to any regulatory
authority, unless required by law or in an emergency) regarding such
circumstances without first discussion with the other party and paying
reasonable regard to the view of the other parties on the text of any
such public statement before it is made.
7. General
7.1 Any information, records, or other material of one party shall be
treated as strictly confidential by the other party except when it is
required to be used in order to comply with an order of the court or
regulatory authority or it is used by the other party to enforce its
rights under this Schedule or so as to make an insurance claim or to
pursue a third party claim as required herein.
7.2 The Purchaser's exclusive remedies in respect of any claims which fall
within the scope of the Environmental Indemnity shall be in accordance
with the provisions of this Schedule, and the Purchaser hereby waives
all other remedies whether in contract, tort (including, for the
avoidance of doubt, negligence), or howsoever otherwise arising which
it may have against the Vendor at law or in equity in respect of the
matters which fall within the scope of the Environmental Indemnity and,
for the avoidance of doubt, if such a claim under this Schedule could
also give rise to a claim under any other provision of this Agreement
in respect of the same subject matter, the Purchaser may only bring a
claim under this Schedule.
7.3 Subject to Clause 7.2, the Purchaser does not release, amend or waive
any of its rights it has arising hereunder the Warranties.
76
8. Co-operation
The Purchaser undertakes that wherever co-operation is required by any
of the Group Companies to ensure compliance with the Purchaser's
obligations hereunder, the Purchaser will use its reasonable endeavours
to ensure that the Group Companies provide the requisite co-operation.
9. Notices
A notice or other communication under or in connection with this
Schedule shall be given in accordance with Clause 18 of this Agreement.
77
SCHEDULE 8
Estimated Completion Balance Sheet
Companies to be acquired Assets to be Consolidation Total
----------------------------- ------------ ------------- -----
acquired adjustments
-------- -----------
Klippan Oy Klippan Akta
UK Finland Sweden Germany
L'000 L'000 L'000 L'000 L'000 L'000
------- ---------- ------ ------- ------ ------
Tangible fixed assets 410 67 7 0 0 484
Investments 180 0 0 0 (180) 0
Goodwill 0 0 0 0 0 0
------ ------ ---- ---- ------ ------
590 67 7 0 (180) 484
Stock 301 480 114 28 (29) 894
Trade Debtors 525 203 278 36 0 1,043
Inter-Company - trading 84 116 11 0 (210) 0
Inter-Company - non-trading 136 4 0 0 (140) 0
Other debtors 38 175 26 0 0 239
VAT 0 24 0 0 0 24
Cash 0 98 82 23 0 204
------ ------ ---- ---- ------ ------
1,084 1,099 512 88 (379) 2,404
Trade creditors 1,025 250 49 8 0 1,332
Inter-Company - trading 292 13 119 0 (424) 0
Inter-Company - non-trading 66 169 0 0 209 444
Other creditors 153 423 174 14 (5) 759
VAT 35 0 0 3 0 38
Taxation 0 105 36 0 0 141
Cash 429 0 0 0 0 429
------ ------ ---- ---- ------ ------
2,000 960 379 25 (220) 3,143
Net Current Assets (916) 139 133 63 (159) (739)
Long term loan 132 90 0 0 (132) 90
Deferred tax (29) 0 15 0 0 (14)
------ ------ ---- ---- ------ ------
Net assets (429) 116 126 63 (207) (330)
====== ====== ==== ==== ====== ======
76
78
Estimated Completion Statement
L L
BASE CONSIDERATION 2,800,000
Less:
Less: Estimated Net External Debt:
- Overdraft/invoice discounting facility (429,000)
- Cheques in transit (0)
- Overdue Creditors (49,730)
- Loans (89,850)
- HP and finance leases 0
- Cash in hand and at bank 203,897
--------
(364,683)
Less: Estimated Tax Adjustment (140,798)
Plus: Estimated Reclina and ▇▇▇▇▇ Capital 34,500
Expenditure
---------
2,329,019
=========
Notes:
1. Overdue Creditors at the December 2000 period end were separately
calculated by Klippan Ltd. and is not identifiable from the face of the
Estimated Completion Balance Sheet.
2. For the avoidance of doubt, Working Capital as extracted from the
Estimated Completion Balance sheet is:
L
Stock 894,000
Trade Debtors 1,043,000
Other Debtors and Prepayments 239,000
Trade Creditors (1,332,000)
Overdue Creditors 49,730
Other Creditors and accruals (759,000)
VAT (L38,000 less L24,000) (14,000)
----------
120,730
----------
79
3. Reclina and ▇▇▇▇▇ capital expenditure was separately calculated by
Klippan and is not identifiable from the face of the Estimated
Completion Balance Sheet.
80
SCHEDULE 9
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is made on 29 January, 2001.
BETWEEN
(1) ▇▇▇▇▇▇▇ International Holdings Limited (company number 02877163), a
limited liability company incorporated in England and Wales (the
"Vendor");
(2) ▇▇▇▇▇▇ Limited (company number 0293327), a limited liability company
incorporated in England and Wales (the "Purchaser"); and
(3) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ of St ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇ acting as Escrow Agent (the "Escrow Agent").
WITNESSETH:
WHEREAS, pursuant to the Share Purchase Agreement, dated as of January 29, 2001
(the "Share Purchase Agreement") among the Purchaser and the Vendor, pursuant
to which the Purchaser has agreed to purchase from the Vendor, and the Vendor
has agreed to sell to the Purchaser, the Klippan Shares in consideration of the
payments by the Purchaser provided for therein, including the payment by wire
transfer to the Escrow Agent of L400,000 (the "Escrow Amount") to be held and
disposed of on the terms set forth in this Escrow Agreement; and
WHEREAS, the Purchaser and the Vendor desire the Escrow Agent to hold and
dispose of the Escrow Fund (as defined herein), and the Escrow Agent is willing
to do so on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the transactions contemplated by the Share
Purchase Agreement, and of the premises and the mutual agreements hereinafter
set forth, the parties hereto do hereby agree as follows:
1. Interpretation. In this Escrow Agreement, words and expressions defined
in the Share Purchase Agreement have the same meaning herein. Unless
the context requires otherwise, the words and expressions defined in
this Escrow Agreement shall have the meaning as so defined. In the
event of conflict, the definitions in this Escrow Agreement shall
prevail.
2. Appointment of the Escrow Agent. The Purchaser and the Vendor hereby
appoint the Escrow Agent to serve as, and the Escrow Agent hereby
agrees to act as, escrow agent upon the terms and conditions of this
Escrow Agreement.
3. Deposit of the Escrow Funds. At Completion, in accordance with the
terms of the Share Purchase Agreement, the Purchaser shall, deposit the
sum of L400,000 with the Escrow Agent to be held and disposed of as
provided in this Escrow Agreement. The funds and property held by the
Escrow Agent hereunder, including without limitation any interest,
dividends or gains earned thereon and any other earnings in respect
thereof, are hereinafter called the "Escrow Fund." The Escrow Fund
shall be held in
81
trust and shall not be subject to any lien or attachment of any
creditor of any party hereto and shall be used solely for the purposes
and subject to the conditions set forth herein. The Escrow Agent shall
hold the Escrow Fund in a separate designated interest-bearing account
with the Allied Irish Bank in the Escrow Agent's name (the "Escrow
Account").
4. Liability Secured by the Escrow Fund. The Escrow Fund shall be used,
(a) at the option of the Purchaser, to pay for any sums owing to it
(including for the avoidance of doubt, interest) as a result of an
adjustment to the Purchase Price and/or Net External Debt and/or
Inter-Company Indebtedness and/or Completion Tax Adjustment and/or as a
result of the covenant regarding The Scheme under or pursuant to Clause
3.3(a)(iv) under or pursuant to Clause 3.3 of the Share Purchase
Agreement (the "Adjustment Amount"), and (b) subject to Clause 5 of
this Escrow Agreement, to settle any and all Warranty Claims by the
Purchaser under or pursuant to Clause 5 of the Share Purchase Agreement
or under or pursuant to Clause 2 of the Tax Deed.
5. Payments to the Purchaser from the Escrow Account.
(a) In the event that the Purchaser wishes to use money in the
Escrow Account to settle any Adjustment Amount required to be
paid to the Purchaser as referred to in Clause 4(a) above, the
Purchaser shall have the right (but not the obligation) to
give written notice (an "Adjustment Notice") to the Escrow
Agent setting forth (i) the amount of the Adjustment Amount
(ii) the amount (if not in full) to be paid from the Escrow
Fund in immediately available funds for same day value and
(iii) instructions for payment. Upon receipt of an Adjustment
Notice, the Escrow Agent shall pay promptly the requested
amount of the Adjustment Amount to the Purchaser in
immediately available funds according to the Purchaser's
instructions. If the Adjustment Amount cannot be satisfied in
full from the Escrow Fund, the Purchaser shall be entitled to
any shortfall from the Vendor in immediately available funds.
(b) In the event that the Purchaser wishes to use money in the
Escrow Account to settle a Warranty Claim pursuant to Clause 5
of the Share Purchase Agreement and/or settle a Claim pursuant
to Clause 2 of the Tax Deed (a "Tax Claim"), the Purchaser
shall have the right (but not the obligation) to give written
notice to the Vendor of the Warranty Claim and/or Tax Claim
(the "Claim Notice") stating (i) in reasonable detail the
nature of the Warranty Claim and/or Tax Claim (ii) specifying
the portion thereof to be paid from the Escrow Fund in respect
of the Warranty Claim and/or Tax Claim (the "Claimed Amount")
and (iii) instructions for payment and, at the same time
provide a copy to the Escrow Agent. The Vendor shall notify
the Purchaser within 21 days from the date of the Claim Notice
whether it accepts liability for the Warranty Claim and/or Tax
Claim, and if not, the portion of the Claimed Amount it does
not accept and, at the same time provide a copy to the Escrow
Agent. If the Vendor fails to notify the Purchaser in
accordance with this Clause 5(b), the money standing to the
credit of the Escrow Fund shall be used to satisfy the Claimed
Amount in full.
(c) If the Vendor gives a notice of objection pursuant to Clause
5(b) (the "Objection Notice") to any Claim Notice, the
Purchaser and Vendor shall
82
attempt in good faith to resolve the dispute and shall give to
the Escrow Agent as soon as practicable written notice
executed by each of the Purchaser and the Vendor of the
resolution of the dispute and the amount of the Claimed
Amount. On receipt of such notice, the Escrow Agent shall
promptly pay to the extent possible the agreed amount to the
Purchaser in immediately available funds out of the Escrow
Fund.
(d) If the Vendor and Purchaser are unable to resolve a disputed
claim in accordance with Clause 5(c) within seven Business
Days after the date of receipt of the Objection Notice, the
Escrow Agent shall not be obliged to make any payment to the
Purchaser until there is a determination of the amount payable
by a court of a competent jurisdiction or, in relation to a
Claimed Amount in respect of Taxation, by the Inland Revenue
in favour of the Purchaser, against which no appeal has been
lodged with the statutory time limit by the Vendor. On receipt
of such determination, the Escrow Agent shall release and
deliver to the Purchaser the determined amount in immediately
available funds out of the Escrow Fund.
(e) If the Vendor accepts liability in respect of the Claim Notice
but accepts only a portion of the Claimed Amount, the Escrow
Agent shall release and deliver the portion of the Claimed
Amount which is accepted to the Purchaser in immediately
available funds out of the Escrow Fund.
(f) If there is a determination of the amount payable in respect
of the Warranty Claim and/or Tax Claim by the Inland Revenue
or by a court of competent jurisdiction in favour of the
Purchaser against which no appeal has been lodged within the
statutory time limit by the Vendor, the Escrow Agent shall
forthwith on receipt of a copy of the said determination and
written confirmation from the Purchaser that no appeal has
been lodged within the statutory time limit in respect of such
determination, release and deliver the amount so determined
(in the latter case less any money previously paid under
Clause 5(c) in respect of the Claimed Amount) to the Purchaser
in immediately available funds.
(g) To the extent that a payment to the Purchaser out of the
Escrow Account is made in partial satisfaction of a Claimed
Amount, such payment shall be deemed to be a payment on
account of the amount finally agreed or determined to be
payable in respect of the Claimed Amount. The liability of the
Vendor in respect of any claim under or pursuant to Clause 5
of the Share Purchase Agreement and/or Clause 2 of the Tax
Deed shall not be limited by the amount standing to the credit
of the Escrow Account from time to time.
(h) Delivery of a Claim Notice by the Purchaser shall not be a
limitation in any respect of any claim which the Purchaser is
entitled to make against the Vendor with respect to the Share
Purchase Agreement and/or the Tax Deed.
(i) If any Adjustment Amount is paid to the Purchaser from the
Escrow Fund pursuant to this Clause 5 the Vendor shall
forthwith deposit with the Escrow Agent an amount equal to
such Adjustment Amount within 5 Business Days of such payment
having been made to the Purchaser, such additional amount to
83
be held as part of the Escrow Fund in accordance with the
terms of this Escrow Agreement.
6. Payments to the Vendor from the Escrow Account; Termination.
(a) The Vendor and Purchaser agree that within 5 Business Days of
the date on which the Completion Accounts are agreed or
determined in accordance with the Share Purchase Agreement,
the Escrow Agent shall pay to the Vendor in immediately
available funds from the Escrow Fund the amount of L100,000
less any Adjustment Amount payable to the Purchaser.
(b) The Vendor and Purchaser agree that within 5 Business Days of
October 30, 2001, the Escrow Agent shall pay the amount of
L140,000 to the Vendor in immediately available funds from the
Escrow Fund less the aggregate of:-
(i) any unpaid Claimed Amount(s) claimed by the Purchaser
within 30 days prior October 30, 2001: and
(ii) any outstanding disputed claim(s) pursuant to Clause
5(c) and/or Clause 5(d) hereof,
to the extent that such amounts are in excess of L160,000 less
any amount outstanding to be paid by the Vendor pursuant to
Clause 5(i) above.
(c) Within 5 Business Days of October 30, 2002, the Escrow Agent
shall pay to the Vendor the balance of the Escrow Fund
remaining in the Escrow Account less the aggregate of (i) any
unpaid Claimed Amounts claimed by the Purchaser within 30 days
prior to October 30, 2002 and (ii) any outstanding dispute
claim(s) pursuant to Clause 5(c) and/or Clause 5(d) hereof.
The provisions of Clause 6(d) hereof shall apply mutatis
mutandis with respect to any amounts balance outstanding in
the Escrow Fund.
(d) If there are any monies held in escrow after October 30, 2002,
by the Escrow Agent, such monies shall be disposed of in
accordance with Clause 5. If the Vendor and Purchaser agree
that (i) any such amount outstanding (or part thereof) is not
payable to the Purchaser, or (ii) that a court of competent
jurisdiction or, in respect of a Claimed Amount relating to
Taxation, by the Inland Revenue has determined in favour of
the Vendor against which no appeal has been lodged within the
statutory time limit by the Purchaser, then in relation to
(i), the Vendor and Purchaser shall provide to the Escrow
Agent written notice executed by both parties stating the
amount to be transferred to the Vendor by the Escrow Agent in
immediately available funds and in relation to (ii), the
Escrow Agent shall forthwith on receipt of a copy of the said
determination and written confirmation from the Vendor that no
appeal has been lodged within the statutory time limit in
respect of such determination release and deliver to the
Vendor in immediately available funds a sum equal to the
amount retained pursuant to Clause 6(b)(ii) in respect of a
relevant Warranty Claim or Tax Claim less the amount of such
Warranty Claim or Tax Claim determined in favour of the
Purchaser (if any).
84
7. Taxes. All interest or other income earned under this Escrow Agreement
shall be treated for all tax purposes as earned by the Vendor and shall
be reported as such by the Vendor. The Vendor shall hold the Purchaser
harmless from any and all tax liability arising in the event that the
Purchaser is treated as the tax owner of all or any portion of earnings
on the Escrow Fund. The Vendor and the Purchaser acknowledge that the
Escrow Agent may withdraw and pay to the Vendor from time to time on
reasonable evidence that such tax is due or has been paid from the
Escrow Account an amount of tax on the interest in respect of the money
held in the Escrow Fund for which the Vendor may become liable.
8. Concerning the Escrow Agent
(a) The Vendor agrees to pay or reimburse the Escrow Agent upon
request for all expenses, disbursement and advances incurred
or made by it in connection with carrying out their duties
hereunder, including, without limitation, trading commissions
and fees and reasonable legal fees.
(b) The Escrow Agent shall prepare and deliver to the Purchaser
and the Vendor within ten Business Days after the end of each
calendar month prior to termination of this Escrow Agreement a
written account describing all transactions with respect to
the Escrow Fund during such calendar month.
(c) The Vendor and the Purchaser agree jointly and severally to
indemnify the Escrow Agent for, and to hold it harmless
against any loss, liability or expense incurred without gross
negligence or bad faith on the part of the Escrow Agent
arising out of or in connection with them entering into this
Escrow Agreement and carrying out their duties hereunder,
including the costs and expenses of defending itself against
any claim of liability. Notwithstanding the foregoing, as
between the Vendor and the Purchaser, any indemnity to be paid
to the Escrow Agent pursuant to the preceding sentence shall
be borne by the Vendor and Purchaser jointly and severally,
provided that any such indemnity to be paid in respect of
expenses, disbursements or advances referred to in Clause 8(a)
hereof shall be borne by the Vendor.
(d) The duties and responsibilities of the Escrow Agent hereunder
shall be determined solely by the express provisions of this
Escrow Agreement, and no further duties or responsibilities
shall be implied.
(e) The Escrow Agent may act upon any instrument or other writing
provided by a duly authorised officer of any of the Vendor and
the Purchaser as named in the Schedule hereto believed by it
in good faith to be genuine, and to be signed or presented by
the proper person as named in the Schedule hereto, and shall
not be liable in connection with the performance by it of its
duties pursuant to the provisions of this Escrow Agreement,
except for its own wilful misconduct or gross negligence.
9. Resignation of Escrow Agent; Appointment of Successor. The Escrow Agent
may at any time resign by giving ninety days' prior written notice of
resignation to the Purchaser and the Vendor. The Purchaser and the
Vendor may at any time jointly remove the Escrow Agent by giving ninety
days' prior written notice signed by the Purchaser and the Vendor to
the Escrow Agent. If the Escrow Agent shall resign or
85
be removed, a successor escrow agent, which shall be a bank or trust
company having offices in London and assets in excess of L1 billion,
shall be appointed jointly by the Purchaser and the Vendor and notified
to the Escrow Agent by written instrument executed by the Purchaser and
the Vendor and delivered to the Escrow Agent and to such successor
escrow agent and, thereupon, the resignation or removal of the
predecessor Escrow Agent shall become effective and such successor
escrow agent, without any further act, deed or conveyance, shall become
vested with all right, title and interest to all cash and property held
hereunder of such predecessor Escrow Agent, and such predecessor Escrow
Agent shall, on the written request of the Purchaser and the Vendor's
Representative, on the one hand, or the successor escrow agent, on the
other hand, execute and deliver to such successor escrow agent all the
right, title and interest hereunder in and to the Escrow Fund of such
predecessor Escrow Agent and all other rights hereunder of such
predecessor Escrow Agent. If no successor escrow agent shall have been
appointed within ninety days of a notice of resignation by the Escrow
Agent, the Escrow Agent's sole responsibility shall thereafter be to
hold the Escrow Fund until the earlier of its receipt of designation of
a successor escrow agent, a joint written instruction by the Purchaser
and the Vendor and the termination of this Escrow Agreement in
accordance with its terms.
10. Assignment. Neither the Purchaser nor the Vendor shall sell, assign,
transfer, or encumber, or in any other manner anticipate or dispose of
any portion of the Escrow Fund on deposit with the Escrow Agent until
the same shall be actually paid over to and received by the Purchaser
or the Vendor, as the case may be, pursuant to the terms hereof without
the prior written consent of the other.
11. Notices. Any and all notices or other instruments or papers to be sent
to any party hereto by any other party hereto pursuant to this Escrow
Agreement shall be (a) mailed by first-class, registered or certified
mail, return receipt requested, postage prepaid, (b) transmitted by
hand delivery, (c) sent charges prepaid by next-day or overnight mail
or delivery or (d) sent by facsimile transmission, addressed as
follows:
(i) if to the Purchaser, to
▇▇▇▇▇▇ Rubbermaid Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
Attention: General Counsel
with a copy to:
Debevoise & ▇▇▇▇▇▇▇▇
Tower ▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
Fax: ▇▇▇ ▇▇▇▇ ▇▇▇▇
86
Telephone: ▇▇▇ ▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
(ii) if to the Escrow Agent, to
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇
Fax: ▇▇▇▇ ▇▇▇ ▇▇▇▇
Telephone: ▇▇▇▇ ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
(iii) if to the Vendor, to
▇▇▇▇▇▇▇ International Holdings Limited
▇▇ ▇▇▇ ▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇
Fax: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: ▇▇▇▇▇ ▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
▇▇ ▇▇▇
Fax: ▇▇▇▇ ▇▇▇ ▇▇▇▇
Telephone: ▇▇▇▇ ▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇
or, in each case, to such other address as may be specified in writing
to the other parties hereto.
12. Binding Effect. This Escrow Agreement shall be binding upon and inure
to the benefit of the respective successors, assigns and legal
representatives of the Purchaser, the Vendor and the Escrow Agent.
13. Governing Law, etc. This Escrow Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the
laws of England and Wales. In relation to any legal action or
proceedings to enforce this Escrow Agreement or arising out of or in
connection with this Escrow Agreement each of the parties irrevocably
submits to the exclusive jurisdiction of the English courts and waives
any objections to such proceedings in such courts on the grounds of
venue or on the grounds that such proceedings have been brought in an
inconvenient forum.
87
14. Headings, Counterparts. The headings of the several clauses contained
herein are for convenience only and do not define, limit or construe
the contents of such clauses. This Escrow Agreement may be executed in
one or more Counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
15. Amendment; Waivers, etc. No amendment, modification or discharge of
this Escrow Agreement, and no waiver hereunder, shall be valid or
binding unless set forth in writing and duly executed by the party
against whom enforcement of the amendment, modification, discharge or
waiver is sought by the Escrow Agent. Any such waiver shall constitute
a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting
such waiver in any other respect or at any other time. Neither the
waiver by any of the parties hereto of a breach of or a default under
any of the provisions of this Escrow Agreement, nor the failure by any
of the parties, on one or more occasions, to enforce any of the
provisions of this Escrow Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach
or default of a similar nature, or as a waiver of any of such
provisions, rights or privileges hereunder. The rights and remedies
herein provided are cumulative and are not exclusive of any rights or
remedies that any party may otherwise have at law or in equity.
16. Severability. If any provision of this Escrow Agreement, including any
phrase, sentence, clause or subsection is inoperative or unenforceable
for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any
other case or circumstance, or of rendering any other provision or
provisions herein contained invalid, inoperative, or unenforceable to
any extent whatsoever.
17. Contracts (Rights of Third Parties) ▇▇▇ ▇▇▇▇. Except as expressly
stated herein, nothing in this Agreement confers any right on any
person (other than the parties hereto) pursuant to the UK Contract
(Rights of Third Parties) ▇▇▇ ▇▇▇▇.
IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
signed as of the day and year first above written.
By:
Name:
Title:
For and on behalf of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ acting as Escrow Agent
By:
Name:
Title:
For and on behalf of the Vendor
By:
Name:
88
Title:
For and on behalf of the Purchaser
89
Schedule
Authorised Signatories
The Vendor
Name:
Title:
Sample Signature
The Purchaser
Name:
Title:
Sample Signature
90
SCHEDULE 10
TAX DEED
THIS TAX DEED is made on 29 January, 2001:
BETWEEN:
(1) ▇▇▇▇▇▇▇ International Holdings Limited (Company number 02877163), a
limited liability company incorporated in England and Wales (the
"Vendor"); and
(2) ▇▇▇▇▇▇ Limited (Company number 02933327), a limited liability company
incorporated in England and Wales (the "Purchaser").
RECITAL:
This Deed is entered into pursuant to the provisions of an agreement dated 29
January, 2001 pursuant to which the Purchaser agreed to purchase from the
Vendor the entire issued share capital of Klippan Limited (the "Agreement").
It is agreed as follows:
1. Interpretation
1.1 In this Deed, words and expression defined in the Agreement have the
same meaning, and, unless the context requires otherwise, the following
words and expressions shall have the following meanings and, in the
event of conflict, the definitions in this Deed shall prevail.
1.2 "Claim" includes any notice, demand, assessment, self-assessment,
letter or other document (including but not limited to those issued or
taken by or on behalf of any Taxation Authority (whether of the United
Kingdom or elsewhere)) indicating that any Group Company is or may be
placed or sought to be placed under a liability to make a payment of
Taxation in respect of which the Vendor is or may be liable under this
Deed or under any of the Warranties.
1.3 "Liability for Taxation" means any liability of the Group Company to
make a payment of or in respect of Taxation whether or not the same is
primarily payable by the Group Company and whether or not the Group
Company has or may have any right of reimbursement against any other
person or persons and shall also include:
(i) the Loss of any Relief where such Relief has been taken into
account in computing and so reducing or eliminating any
provision for deferred Tax which appears in the Completion
Accounts (or which but for such Relief would have appeared in
the Completion Accounts) or was taken into account in
computing any deferred Tax asset which appears in the
Completion Accounts in which case the amount of the Liability
for Taxation shall be the amount of Taxation which would (on
the basis of tax rates current at the date of such Loss) have
been saved but for such Loss at the salient date the Group
Company had sufficient profits or was otherwise in a position
to use the Relief provided (in either case) that the amount of
such Liability for Taxation shall
91
be limited to the amount by which such Relief led to the
reduction to the Purchase Price under the Agreement;
(ii) the Loss of any right to repayment of Taxation (including any
repayment supplement) which was treated as an asset in the
Completion Accounts of the Group Company in which case the
amount of the Liability for Taxation shall be the amount of
the right to repayment and any related repayment supplement;
and
(iii) where tax becomes payable in respect of a Transaction
occurring on or before Completion the use of any Relief or
right to repayment of Taxation (including any repayment
supplement) which is not a Vendor's Relief but arises after
Completion in circumstances where, but for such set-off or
use, the Group Company would have been subject to a Liability
for Taxation in respect of which (and to the extent that) the
Vendor would have been liable under this Deed, in which case
the amount of the Liability for Taxation shall be the amount
of that payment.
1.4 "Loss" means any reduction, modification, loss, counteraction,
nullification, utilisation, disallowance or clawback for whatever
reason.
1.5 "Relevant Company" means any company other than the Group Company and
the Purchaser.
1.6 "Relief" means any loss, relief, allowance, credit, exemption or
set-off in respect of Taxation or any deduction in computing income,
profit or gains for the purposes of Taxation.
1.7 "Saving" means the reduction or elimination of any liability of any
Group Company to make an actual payment of Taxation in respect of which
the Vendor would not have been liable under Clause 2, by the use of any
Relief arising wholly as a result of a Liability for Taxation in
respect of which the Vendor has made a payment under Clause 2.
1.8 "Tax" or "Taxation" means:
1.8.1 all forms of taxation including and without any limitation any
charge, tax, duty, levy, impost, withholding or liability
wherever chargeable imposed for support of national state,
federal, municipal or local government but excluding business,
general or water rates, council tax and vehicle duty or any
other person and whether of the UK or any other jurisdiction;
and
1.8.2 any penalty, fine surcharge, interest, charges or similar
imposition payable in connection with any Taxation within
Clause 1.8.1 above.
1.9 "Taxation Authority" means any government, state, or municipality or
any local, state, federal or other fiscal, revenue, customs or excise
authority, body or official whatsoever competent to impose Taxation
whether in the United Kingdom or elsewhere.
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1.10 "Taxation Statute" means any directive, statute, enactment, law or
regulation wheresoever enacted or issued, coming into force or entered
into providing for or imposing any Taxation and shall include orders,
regulations, instruments, by-laws, published practice or concession or
other subordinate legislation made under the relevant statute or
statutory provision and any directive, statute, enactment, law, order,
regulation or provision which amends, extends, consolidates or replaces
the same or which has been amended, extended, consolidated or replaced
by the same.
1.11 "Transaction" means the existence of any state of affairs and any
payment, transaction, act, omission, or occurrence of whatever nature
whether or not the Group Company or Purchaser is a party thereto and
for the avoidance of doubt, includes the execution and completion of
the sale of Klippan Shares to the Purchaser. References to a
Transaction occurring on or before Completion shall include a
Transaction deemed pursuant to any Taxation Statute, to occur or which
is otherwise treated or regarded as occurring on or before Completion.
1.12 "Vendor's Relief" means any relief not taken account of in the
Completion Accounts but which arises solely with respect to the period
before Completion.
1.13 References to gross receipts, income profits or gains earned, accrued
or received shall include any gross receipts, income, profits or gains
deemed pursuant to the relevant Taxation Statute to have been or
treated or regarded as earned, accrued or received.
1.14 References to a Transaction which occurred on or before Completion
include the combined result of two or more Transactions one or more of
which occurred on or before Completion and at least one of those events
occurs after Completion but only where the event or events occurring
after Completion is or are:
1.14.1 the completion of the disposal by the Group Company of any
capital asset which was contracted to be sold by the Group
Company before Completion, provide that such disposal shall
only be treated as occurring on or before Completion to the
extent that it gives rise to a Liability to Taxation in
respect to actual income, profits or gains and only tax
arising in respect of the amount by which the deemed income,
profits and gains shall be treated as arising in consequence
of an event occurring on or before Completion
1.14.2 the satisfaction of a condition to which the disposal by the
Group Company of any asset pursuant to a contract entered into
before Completion was subject, provided that such disposal
shall only be treated as occurring on or before Completion to
the extent that it gives rise to a Liability to Taxation in
respect of actual income, profits or gains and only tax
arising in respect of the amount by which deemed profits of
gains of the Group Company exceeds the actual income, profits
or gains shall be treated as arising in consequence of an
event occurring on or before Completion; or
1.14.3 the bringing into the United Kingdom of any document executed
prior to Completion outside the United Kingdom.
1.15 Headings are for convenience only and shall not affect the construction
of this Deed.
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2. Covenant
2.1 Subject as hereinafter provided in this Deed, the Vendor hereby agrees
and undertakes to the Purchaser to pay so far as possible by way of an
adjustment to the Purchase Price an amount equal to:
2.1.1 any Liability for Taxation payable by any Group Company after
the Completion Date:
2.1.1.1 in respect of or arising from any Transaction
occurring on or before the Completion Date; or
2.1.1.2 in respect of any gross receipts, income, profits or
gains earned, accrued or received by the Group
Company on or before Completion;
2.1.1.3 by reference to the net wealth, asset values,
turnover or added value of any Group Company on or
before the Completion Date;
2.1.1.4 in respect of any liability of any Group Company to
repay or the loss of the right to receive in whole or
in part any payment for the surrender of group
relief;
2.1.1.5 in respect of the benefit of any surplus advance
corporation tax received or receivable by any Group
Company pursuant to any agreement or claim made on or
before the date hereof;
2.1.1.6 in respect of any Liability for Taxation for which
the Group Company would not have been liable but for
being treated as being or having been a member of the
same group of companies as, or associated with the
Vendor for the purposes of any Tax; and
2.1.2 any reasonable costs and expenses properly incurred and
payable by the Purchaser and the reasonable costs and expenses
properly incurred and payable by any Group Company in
connection with any item for which the Vendor is liable under
this Deed.
2.2 The due date for payment (the "Due Date") under Clause 2.1 shall be the
later of (i) the date five days (or, if such a day is not a Business
Day, the next Business Day) after the date on which a notice setting
out the details of the matter and amount for which the Vendor is liable
is received from the Purchaser pursuant to Clause 7 below, and (ii) the
latest date on which the payment or repayment, as the case may be,
would have been required to be paid or shall have been due.
2.3 Any payments made under Clause 2.2 hereof shall be treated as an
adjustment to the consideration paid by the Purchaser under the terms
of the Agreement.
2.4 For the avoidance of doubt, Clause 2.1 above shall not cover any
Taxation to the extent relating to any profits earned, accrued or
received after the Completion Date or
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in respect of or arising from any Transaction whatsoever and by
whosoever effected after the Completion Date.
2.5 Any dispute as to the amount specified in any notice served on the
Vendor under Clauses 2.2 shall be determined by the auditors of the
Group Company for the time being acting as experts and not as
arbitrators (the costs of such determination to be borne equally by the
Vendor and the Purchaser).
2.6 If any sums are not paid by the Due Date then, except to the extent
that the Vendor's liability compensates the Purchaser for late payment
by virtue of it extending to interest and penalties, such amounts shall
bear interest in accordance with Clause 14 of the Agreement.
3. Limitation of Liability
3.1 The covenants given by the Vendor in Clause 2 shall not apply, in
either case to the extent that:
3.1.1 a provision or reserve in respect of such liability was made
in the Completion Accounts; or
3.1.2 the same has been satisfied by the surrender or other transfer
to the relevant Group Company of any Relief by the Vendor or
by a member of the Vendor's Group (other than a Group Company)
or by a member of the same group of companies of which the
Vendor was a member on or prior to Completion at no cost to
the relevant Group Company; or
3.1.3 such Taxation arises or is increased as a result of any
increase in rates of Taxation or imposition of new Taxation
legislation or withdrawal of relief from Taxation or any
change to Taxation Statute announced or made after the
Completion Date whether with or without retrospective affect;
or
3.1.4 recovery (less costs and expenses) has been made in respect of
the liability in question or the matter giving rise to the
Taxation under the Warranties or recovery has already been
made under this Deed in respect of it; or
3.1.5 such Liability for Taxation would not have arisen but for or
is increased by any voluntary act or Transaction carried out
by the Purchaser or Group Company after the date hereof or
otherwise than pursuant to a legally binding obligation
created on or before the date hereof, where in each case the
Purchaser or the Group Company knew or reasonably should have
known that such act or transaction would give rise to such
Liability for Taxation provided that, without limitation to
the foregoing, the parties agree that the following are all
examples of voluntary acts which can reasonably be expected to
give rise to a Liability to Taxation:
3.1.5.1 any change in the accounting policy of a company
(including a change to the date to which a company
makes up its accounts for tax purposes) or the basis
upon which a company values its assets;
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3.1.5.2 any failure or delay in making any payment to the
relevant Taxation Authority, or any failure in
keeping preserving, maintaining or submitting any
account records form return or computation;
3.1.5.3 any failure or omission to make any election or claim
a Relief the making or claiming of which was taken
into account in computing the provision or reserve
for tax in the Completion Accounts;
3.1.5.4 a voluntary disclaimer of the whole or any part of
any allowance to which a company is entitled under
Part II of the Capital Allowances Act 1990 or a
revocation of any claim for Relief;
3.1.5.5 a cessation of, or any change in, the nature or
conduct of any trade carried on by a company;
3.1.5.6 any failure by the Purchaser to comply with any of
its obligations under the terms of this Deed
(including its obligations to procure certain actions
by Group Companies).
3.1.6 except in the case of fraudulent or negligent conduct by the
Vendor or (prior to Completion) the relevant Group Company
unless written notice of the Liability for Taxation or any Tax
Claim which may give rise to such Liability for Taxation
specifying in reasonable detail the circumstances giving or
which may give rise to such Liability for Taxation and the
amount thereof has been served on the Vendor on or prior to
the seventh anniversary after Completion; or
3.1.7 to the extent that such liability for Taxation is in respect
of stamp duty or stamp duty reserve tax payable on the
transfer or agreement to transfer the Klippan Shares to the
Purchaser under the Agreement
and for the purposes of this Clause 3 only, "Liability for
Taxation" shall be deemed to include a liability or loss
falling within Clauses 2.1.1(v) and 2.1.1(vii).
3.2 The Vendor shall not be liable in respect of any claim under Clause 2.1
of this Deed unless written notice of such claim is given in writing by
the Purchaser to the Vendor setting out full details of the specific
matter in respect of which the claim is made, including an estimate of
the amount of such claim, if practicable, as soon as reasonably
practicable (any in the case of a Claim for which there is a time limit
for the making of an appeal, within 10 days of the Purchaser or Group
Company first becoming aware of the Claim) but such notice shall not be
a condition precedent to the liability of the Vendor under this Deed
provided always that the Purchaser shall not be required to notify the
Vendor where the Claim relates to the period prior to Completion where
the Vendor or any of its professional advisers have been notified of a
Claim by a Taxation Authority (or other competent authority) or to a
Claim conducted by the Vendor.
3.3 The Vendor's obligation to make payments under Clause 2.1 shall not be
affected by the Purchaser's knowledge or the disclosure, in the
Disclosure Letter or otherwise, of any Liability to Tax giving rise to
the payment, or of the circumstances giving rise to such Liability to
Tax.
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4. Savings
4.1 If, at the Vendor's request and expense, the auditors of the Group
Company for the time being determine that the Group Company has
obtained a Saving, the Purchaser shall as soon as reasonably
practicable thereafter repay to the Vendor the lesser of:
4.1.1 the amount of the Saving (as determined by the Purchaser's
Auditors) less any costs incurred by the Group Company or the
Purchaser; and
4.1.2 the amount paid by the Vendor under Clause 2 in respect of the
Liability for Taxation which gave rise to the Saving less any
part of that amount previously repaid to the Vendor under any
provision of this Deed or otherwise.
4.2 The Purchaser shall procure that the Group Company shall use any Relief
(which would if used give rise to a Saving) in priority to using any
other Relief available to it unless doing so would result in a lesser
benefit to the group of companies to which the Group Company is then a
member.
4.3 If any Group Company avoids or reduces a payment of Taxation by use of
a Vendor's Relief, an amount equal to the amount of Taxation so saved
shall be set-off against any liability of the Vendor under Clause 2
with any excess being carried forward and set-off until such Liability
for Taxation is exhausted.
4.4 If, at the Vendor's request and expense, the auditors of the Group
Company for the time being certify that any provision for Taxation in
the Completion Accounts for any liability to Taxation or liability to
make a payment in respect of Taxation (excluding any provision for
deferred tax) has proved to be an over-provision, the Purchaser shall
as soon as practicable pay to the Vendor the lesser of the value of:-
4.4.1 the over-provision (as determined by the auditors); and
4.4.2 the aggregate amount (if any) paid, in respect of the same
type of Taxation for which there has been an over-provision,
by the Vendor under Clause 2 less any part of that amount
previously repaid to the Vendor under any provision of this
Deed or otherwise prior to the determination of such
over-provision.
4.5 In the event that the amount in 4.4.1 exceeds the amount set out in
4.4.2, the excess shall be set off (in order to reduce or eliminate)
any liability of the Vendor under Clause 2 in respect of any liability
for the same type of Taxation as the over-provision then outstanding or
which arises after the date of such determination, when such liability
arises provided that no deduction shall be made from any payment which
the Vendor shall be obliged to make unless such certificate is in
existence on the Due Date.
4.4 In determining whether any Group Company has obtained a Saving (or
whether any provision in the Completion Accounts is an over-provision)
pursuant to this Clause 4, the auditors shall act as experts and not as
arbitrators and, in the absence of manifest error, their determination
shall be conclusive and binding on the Vendor and the Purchaser.
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5. Recovery from Other Persons
5.1 Where the Purchaser or the Group Company is or becomes entitled either
immediately or at some subsequent date to recover from some other
person not being the Purchaser, the Group Company or any member of the
Purchaser's Group (including any Taxation Authority or other competent
authority) any amount which is referable to a Liability for Taxation
under this Deed, the Purchaser shall and shall procure that each Group
Company shall;
5.1.1 notify the Vendor as soon as reasonably practicable of its
entitlement; and
5.1.2 if required by the Vendor, and subject to the Purchaser and
the Group Company being indemnified by the Vendor against any
Taxation that may be suffered on receipt of such amount and
any costs and expenses properly incurred in recovering that
amount, take all reasonable steps to enforce such recovery
(keeping the Vendor informed of the progress of any action
taken).
5.2 If the Purchaser or the Group Company recovers any amount referred to
in Clause 5.1 above, the Purchaser shall account to the Vendor for the
lesser of:
5.2.1 any amount recovered (including any related interest or
related repayment supplement) less any Taxation suffered by
the Purchaser or Group Company in respect of that amount and
any costs and expenses incurred in recovering that amount
(save to the extent that the amount has already been made good
by the Vendor under Clause 5.1.2); and
5.2.2 the amount paid by the Vendor under Clause 2 (less any costs
and expenses properly incurred by the Purchaser and/or any
Group Company in recovering such amount under Clause 5.1.2
save to the extent that payment under Clause 5.1.2 includes
such costs and expenses) in respect of the Liability for
Taxation in question.
5.3 Notwithstanding anything in the Agreement or in this Deed, neither the
Purchaser nor any Group Company shall be obliged to take any action
unless the Vendor shall first indemnify and secure the Group Company
and the Purchaser to their reasonable satisfaction against all losses
(including any additional Tax Liability), costs, interest damages and
expenses which that may incur.
6. Corporation Tax Returns
6.1 The Vendor or its duly authorised agents shall at the Vendor's cost and
expense prepare the corporation tax returns and computations of the
Group Company for all accounting periods ended on or prior to
Completion. To the extent that the same shall not have been prepared
before Completion, the Vendor or its duly authorised agents shall
submit them to the Purchaser for onward submission to the relevant
Taxation Authority.
6.2 The Purchaser shall procure that the returns and computations mentioned
in Clause 6.1 shall be authorised, signed and submitted to the relevant
Taxation Authority without amendment or only with such amendments as
the Purchaser reasonably considers to be necessary and shall give the
Vendor or its agents all such assistance as
98
may reasonably be required (at the Vendor's cost and expense) to agree
those returns and computations with the relevant Taxation Authority,
provided that the Purchaser shall not be obliged to take any such
action as is mentioned in this Clause in relation to any return that is
not in the reasonable opinion of the Purchaser full, true and accurate
in all material respects.
6.3 The Vendor's duly authorised agents shall at the Vendor's cost and
expense prepare all documentation and shall have conduct of all matters
(including correspondence) relating to the corporation tax returns and
computations of the Group Company for all accounting periods ended on
or prior to the Completion, provided that the Vendor shall not without
the prior written consent of the Purchaser (not to be unreasonably
withheld or delayed) transmit any communication (written or otherwise)
to the relevant Taxation Authority or agree any matter with the
relevant Taxation Authority unless necessary to make an appeal within
the permitted time limit.
6.4 The Purchaser shall procure that the Group Company, at the Vendor's
cost and expense, affords such access to its books, accounts and
records as is necessary and reasonable to enable the Vendor's duly
authorised agents to prepared the corporation tax returns and
computations of the Group Company for all accounting periods ended on
or before Completion, and conduct matters relating to them in
accordance with this Clause.
6.5 The Vendor and the Purchaser agree to take (and the Purchaser agrees to
procure that the Group Company shall take) all reasonable steps to
ensure that the corporation tax returns and computations of the Group
Company for all accounting periods ended on or before the Completion
Date are prepared and agreed with the relevant Taxation Authority as
soon as possible.
6.6 The Purchaser shall procure that each Group Company shall sign and
deliver to the Vendor all such letters, claims, surrenders,
applications and elections and do all such other acts as the Vendor may
reasonably request for the purpose of enabling the Vendor to minimise
the liability to taxation for each Group Company in relation to the
profits and losses of each Group Company in the financial periods of
the Company up to and including that ended on the Reference Accounts
date and for the period from the Reference Accounts Date to Completion
(without however the Vendor being under any liability to reduce the
Group Companies net taxation liability below that set out in the
Completion Accounts).
6.7 The Purchaser shall procure that each Group Company will surrender as
group relief losses to such company or companies in the Vendor's Group
as the Vendor shall direct to the extent that such losses have not been
utilised in accordance with Clause 6.6 and will also procure that
copies of all documentation relating to such surrenders shall be
submitted to the Vendor prior to submission to the relevant Taxation
Authority, together with any relevant correspondence from time to time.
6.8 The Purchaser shall procure that the corporation tax computations
already submitted to the relevant Taxation Authority for periods up to
and including the period ended on the Reference Accounts Date will not
be altered or amended in any way without the prior written approval of
the Vendor.
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6.9 The Purchaser shall procure that no changes are made to the tax
returns, computations and other documents mentioned in this Clause 6 as
would lead to any of them effecting the minimisation of tax liability
or the surrenders directed by the Vendor mentioned by Clause 6.6 and
6.7 respectively.
7. Conduct of Claims
7.1 If the Purchaser or a Group Company becomes aware of any Claim, the
Purchaser shall or shall procure that the Group Company give written
notice in accordance with Clause 3.2 and shall keep the Vendor informed
as far as reasonably practicable of all relevant information relating
to such matter.
7.2 The Purchaser shall and shall procure that the relevant Group Company,
provided the Vendor previously indemnifies the Group Company and the
Purchaser to the Purchaser's reasonable satisfaction against all
liability, costs, damages or expenses which may be properly incurred
thereby including any additional Liability for Taxation, take such
action as the Vendor may reasonably request by notice in writing given
to the Purchaser to avoid, dispute, delay, defend, resist, appeal or
compromise any Claim (hereinafter defined as the "Dispute"), provided
that no Group Company nor the Purchaser shall be obliged to appeal or
procure an appeal against any assessment to Taxation raised on any of
them if, the Vendor having been given notice of the Claim in accordance
with Clause 3.2 and such assessment, the Purchaser has not within 30
days of the date of the notice received instructions in writing from
the Vendor to do so.
7.3 In respect of a Claim which is not conducted by the Vendor, and subject
to the Vendor previously indemnifying the Group Company and Purchaser
in accordance with Clause 7.2, the Purchaser shall, and shall procure
that each Group Company shall:
7.3.1 promptly submit all written communications relating to the
Claim which are to be transmitted to the relevant Taxation
Authority to the Vendor for its approval (not to be
unreasonably withheld or delayed) allowing reasonable time for
the Vendor to review then taking account of the date on which
the Group received notice of the Claim and any time limits
which apply and shall only transmit them after such approval
is given, except where necessary to submit an appeal before
the relevant time limit; and
7.3.2 make no settlement or compromise of a Dispute and shall make
no payment in respect of it without the prior approval of the
Vendor, provided that this shall not prevent the making of a
payment of Taxation on the latest date on which such payment
can be made before interest, fines, and/or penalties will
apply to such Taxation unless the Vendor directs otherwise in
writing and has previously provided full indemnity and
security to the reasonable satisfaction of the Purchaser
against all such interest, fines, and/or penalties.
7.4 If the Vendor does not request the Purchaser or the Group Company to
take any action under Clause 7.2 of this Deed or fails to indemnify and
secure the Purchaser and the Group Company to the Purchaser's
reasonable satisfaction within a period of time (commencing with the
date of the notice given to the Vendor) that is reasonable having
regard to the nature of the Claim and the existence of any time limit
in relation
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to avoiding, disputes, defending, resisting, appealing or compromising
such Claim and which period shall not be less than 60 days or the
Dispute concerns fraudulent or negligent conduct of the Vendor or the
Group Company prior to Completion (but not otherwise), the Purchaser or
Group Company shall have the conduct of the Dispute absolutely (without
prejudice to its rights under the terms of this Deed) and shall be free
to settle the Claim on such terms as the Purchaser or the Group Company
may in its absolute discretion consider fit.
7.5 Subject to Clause 7.4, by agreement in writing between the Purchaser
and the Vendor, the conduct of a Dispute shall be delegated to the
Vendor upon the following terms, unless the Purchaser and the Vendor
specifically agree otherwise in writing:
7.5.1 the Group Company, the Purchaser and the Vendor shall use
their reasonable endeavours to keep each other fully informed
of all matters pertaining to a Dispute and shall be entitled
to see and keep copies of all relevant correspondence and
notes or other written records (or a record of any oral
discussions) as soon as practicable after receipt of the same
with any Taxation Authority to the extent that it relates to a
Dispute;
7.5.2 the appointment of solicitors or other professional advisers
shall be notified to the Purchaser;
7.5.3 all written communications pertaining to the Dispute be
prepared by the Vendor which are to be transmitted to the
relevant Taxation Authority shall first be submitted to the
Purchaser for approval and shall only be finally transmitted
if such approval is given (unless when such transmission is
required on order to meet a relevant time limit), which
approval is not to be unreasonably withheld or delayed; and
7.5.4 the Vendor shall make no settlement or compromise of the
Dispute or agree any matter in the conduct of the Dispute
which is likely to affect the amount thereof or the future
liability to Taxation of the Company or of the Purchaser
without the prior approval of the Purchaser, such approval not
to be unreasonably withheld or delayed.
7.5.5 the Vendor may pay amounts of the relevant Liability to
Taxation to the relevant Taxation Authority in satisfaction
(to the extent of such payment) of the liability of the Vendor
under Clause 2.1 in respect of the Liability to Taxation in
question.
7.5.6 Notwithstanding any other provision of this Deed, where the
Vendor has conduct of a Claim, the Vendor may make payment of
any amount under Clause 7.5.5 where it is necessary to avoid
or avoid an increase to any item set out in Clause 1.8.2.
7.6 Neither the Purchaser nor any Group Company shall be subject to any
claim by or liability to the Vendor for non-compliance with any of the
foregoing provisions of this Clause 7 if the Purchaser or the Group
Company has bona fide acted in accordance with the written instructions
of the Vendor.
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8. Withholdings and Deductions
8.1 All sums payable by the Vendor to the Purchaser under this Deed shall
be paid free and clear of all deductions, withholdings, set-offs or
counter-claims whatsoever save only as may be required by law or as
expressly permitted by this Deed. If any deductions or withholdings are
required by law the Vendor shall (except to the extent the same has
been taken into account in calculating the amount due under any other
provision of this Deed and except in the case of interest payable under
Clause 2.6) be obliged to pay to the Purchaser such sum as will after
such deduction or withholding has been made leave the Purchaser with
the same amount as it would have been entitled to receive in the
absence of any such requirement to make a deduction or withholding.
8.2 If any Taxation Authority charges to Taxation in the hands of the
Purchaser any sum paid to the Purchaser by the Vendor pursuant to
Clause 2 of this Deed (except to the extent the same has been taken
into account in calculating any amount due under any other provision of
this Deed) then the amount so payable shall be grossed up by such
amount as will ensure that after payment of the Taxation so charged
there shall be left a sum equal to the amount that would otherwise be
payable under this Deed.
8.3 To the extent that the Vendor is satisfied (acting in good faith) it
can so do without prejudice to the retention of any Saving, credit
refund or similar benefit the Purchaser receives, if the Purchaser
receives a Saving, credit for or refund of any Taxation payable by it
or similar benefit by reason of any deduction or withholding for or on
account of Taxation or Taxation referred to by Clause 8.2, the
Purchaser shall reimburse to the Vendor such part of such additional
amounts paid to it pursuant to Clause 8.1 above as shall leave the
Purchaser (after taking account of such Saving, credit, refund or
similar benefit) in no better and no worse position than it would have
been if the Vendor had not been required to make such deduction or
withholding.
8.4 If any deduction or withholding is made from any payment as
contemplated in Clause 8.1, the Vendor shall supply to the Purchaser
such official receipt, if any, or other evidence of payment to the
relevant authority of the amount deducted or withheld and shall give
all reasonable assistance to enable the Purchaser to receive a Saving,
credit or refund or similar benefit by reason of the deduction or
withholding as promptly as possible.
8.5 If the Purchaser becomes aware that it is or is likely to be entitled
to receive a Saving, credit, refund or similar benefit referred to by
Clause 8.3, it shall as soon as reasonably practicable, notify the
Vendor.
9. Disputes
9.1 All claims, disputes and differences between the parties hereto
relating to Taxation arising out of or in connection with this Deed
shall be referred to the Reporting Accountants.
9.2 Such reference shall be conducted in the same way as if it were a
reference under the Agreement and the provisions of Clause 3.2(c) of
the Agreement shall apply mutatis mutandis to this Deed.
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10. Purchaser's Indemnity
10.1 The Purchaser covenants with and undertakes to the Vendor to pay to the
relevant Taxation Authority on behalf of the Vendor an amount equal to
any Taxation which is assessed under section 767A ICTA 1988 or section
767AA ICTA 1988 on the Vendor by reason of any act or omission of the
Group Company or the Purchaser other than any Taxation the liability
for which falls upon the Vendor pursuant to Clause 2 of this Deed.
10.2 The covenant contained in Clause 10.2 above will apply to any interest
penalties and reasonable costs and expenses incurred by the Vendor in
connection with any such Taxation, such amount to be paid to the
Vendor.
10.3 The due date for payment of any amount payable pursuant to this Clause
will be the later of the date falling 5 days before latest date upon
which the party assessed under section 767A ICTA 1988 or section 767AA
ICTA 1988 is obliged to pay the Taxation in question to avoid any
liability to interest or penalties and the date falling 10 days after
the Vendor has served written notice on the Purchaser demanding such
payment.
10.4 The Purchaser shall not be liable for any amount under this Clause
where recovery (less costs and expenses) has already been made by the
Vendor in respect of the liability in question or the matter giving
rise to the Taxation or recovery has already been made under this Deed
in respect of it.
11. Vendor's Indemnity
11.1 The Vendor covenants with and undertakes to the Purchaser to pay to the
relevant Taxation Authority on behalf of the Purchaser and/or any Group
Company any amount of Taxation may be assessed under section 770 ICTA
1988 on a Group Company with respect or arising in the period prior to
Completion (such indemnity shall include, for the avoidance of doubt,
any imputed interest liability which is imposed by a Taxation Authority
on the Group Company with respect to or arising in the period prior to
Completion).
11.2 The covenant contained in Clause 11.1 above shall include any interest
penalties and reasonable costs and expenses incurred by the Purchaser
in connection with any such Taxation, such amount to be paid to the
Purchaser.
11.3 The due date for payment of any amount payable pursuant to this Clause
will be the later of the date falling 5 days before latest date upon
which the party assessed under section 770 ICTA 1988 is obliged to pay
the Taxation in question to avoid any liability to interest or
penalties and the date falling 10 days after the Purchaser has served
written notice on the Vendor demanding such payment.
11.4 The exclusions set out within Clauses 3.1.1, 3.1.2 and 3.1.4 shall
apply to the covenants given by the Vendor under this Clause 11
(substituting for this purpose the reference "Clause 11 " for "Clause
2" where it appears in Clause 3.1) so as to exclude or restrict the
liability of the Vendor under this Clause 11.
103
12. Limits
12.1 The Vendor and/or the Purchaser (as the case may be) shall have no
liability for any liability to Tax under this Deed (which shall include
for the avoidance of doubt any liability to Tax pursuant to the
covenants set out in Clauses 10 and 11 hereto) unless the Vendor
and/or the Purchaser (as the case may be) have notified the other of
such liability to Tax, on or before seven years from the date of
Completion.
13. Other Provisions
13.1 The provisions of Clauses 6.2 and 6.11 (Limitations on Vendor's
Liabilities), 9 (Confidential Information), 10 (Announcements), 11
(Competition), 12 (Costs), 13 (Interest), 14 (General), (Interest), 15
(Assignment), 16 (Further Assurance), 18 (Notices), 19 (Governing Law
and Jurisdiction), 20 (Counterparts), and 21 (Contracts (Right of Third
Parties) Act 1999) of the Agreement shall apply to this Deed as if
expressly incorporated herein save that references to "this Agreement"
shall be construed as references to "this Deed" other than within
Clauses 6.2 and 6.11 of the Agreement, provided that Clause 13 of the
Agreement shall not apply to any item that already includes interest
pursuant to this Deed.
In witness whereof parties hereto have duly been executed this deed the day and
year first before written
104
EXECUTED as a Deed by )
▇▇▇▇▇▇▇ INTERNATIONAL )
HOLDINGS, LIMITED )
Acting by its duly appointed
Attorney ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇
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Director
in the presence of:-
/s/ ▇▇▇▇▇ ▇▇▇▇ - Solicitor
----------------------------------
Director/Secretary
SIGNED as a Deed by )
▇▇▇▇▇▇ COMPANY LIMITED )
Acting by its duly appointed
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇
----------------------------------
Director
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Director/Secretary
