DATED 30 MAY 1997
SHARE SALE AND PURCHASE AGREEMENT
relating to
the acquisition of the entire issued share
capital of Safeline Limited
SAFELINE HOLDING COMPANY AND (1)
XXXXXXX-XXXXXX INC.
SAFELINE LIMITED (2)
EACH OF SELLERS LISTED HEREIN (3)
30.05.97
Ref: F3345.9/CF:118430.22/klm
TABLE OF CONTENTS
PARTIES 1
ARTICLE 1 1
PURCHASE AND SALE; CLOSING 1
1.1 SALE AND TRANSFER OF SHARES 1
1.2 PURCHASE PRICE 2
1.2A PURCHASE OF MINORITY INTERESTS 4
1.3 CALCULATION OF STANDALONE OPERATING PROFIT 6
1.4 TIME AND PLACE OF CLOSING; CLOSING DELIVERIES 8
1.5 ADJUSTMENT OF INITIAL PURCHASE PRICE 9
1.6 GOVERNMENT GRANTS 11
1.7 WAIVER BY SELLERS 11
ARTICLE 2 11
REPRESENTATIONS AND WARRANTIES OF SELLERS OTHER THAN
3i GROUP PLC 11
2.1 ORGANIZATION AND STANDING OF THE COMPANY AND EACH
OF ITS SUBSIDIARY COMPANIES 12
2.2 CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARY
COMPANIES 13
2.3 AUTHORITY 15
2.4 FINANCIAL STATEMENTS 16
2.5 MATERIAL CHANGES 17
2.6 PROPERTY 18
2.7 COMPLIANCE WITH LAW 19
2.8 IMPROPER PAYMENTS 20
2.9 TAXES 20
2.10 DISPUTES 26
2.11 CONTRACTS 27
2.12 BROKER'S AND FINDER'S FEE 29
2.13 EMPLOYEES AND EMPLOYEE BENEFITS 30
2.14 INTELLECTUAL PROPERTY RIGHTS 36
2.15 CONSENTS 39
2.16 ENVIRONMENTAL MATTERS 39
2.17 BOOKS AND RECORDS 43
2.18 BANKRUPTCY/INSOLVENCY 43
2.19 AFFILIATE TRANSACTIONS 45
2.20 INSURANCE 45
2.21 CUSTOMERS AND SUPPLIERS 46
2.22 PRODUCTS AND SERVICING 47
2.23 INFORMATION 47
2.24 RELEASES 47
2.25 LIMITATION OF WARRANTIES 48
ARTICLE 3 48
REPRESENTATIONS AND WARRANTIES OF 3i GROUP PLC 48
3.1 OWNERSHIP OF THE SHARES 48
3.2 AUTHORITY 48
3A REPRESENTATIONS AND WARRANTIES OF OPTIONHOLDERS 49
3A.1 OWNERSHIP OF THE SHARES 49
3A.2 AUTHORITY 49
ARTICLE 4 50
REPRESENTATIONS AND WARRANTIES OF PURCHASER 50
4.1 ORGANIZATION AND STANDING 50
4.2 AUTHORITY 50
4.3 BROKER'S AND FINDER'S FEE 51
4.4 ACQUISITION OF SHARES 51
4.5 CONSENTS 51
4.6 BREACHES OF WARRANTY 51
ARTICLE 5 51
CERTAIN COVENANTS AND AGREEMENTS OF SELLERS AND
PURCHASER 51
5.1 CONDUCT AND MANAGEMENT OF THE COMPANY TO MARCH
31, 1998 51
5.2 EXPENSES 52
5.3 STAMP TAXES, DUTIES, ETC 52
5.4 FURTHER ASSURANCES 52
5.5 FILINGS 52
5.6 EMPLOYEE ARRANGEMENTS, ETC. 53
5.7 NON-COMPETITION; NON-INDUCEMENT 53
5.8 ACQUISITION OF RIGHTS TO CONFIDENTIALITY 55
5.9 U.S. FINANCIAL STATEMENTS 55
ARTICLE 6 55
TAX COVENANTS AND INDEMNITIES 55
6.1 TAX COVENANTS 55
6.2 TAX INDEMNITIES 56
ARTICLE 7 64
INDEMNIFICATION 64
7.1 INDEMNIFICATION BY SELLERS OTHER THAN 3i 64
7.2 INDEMNIFICATION BY 3i GROUP PLC 65
7.3 INDEMNIFICATION BY PURCHASER 65
7.4 LOSSES 65
7.5 CLAIMS 66
7.6 DATE FOR PAYMENT 67
7.7 LIMITATIONS ON INDEMNIFICATION 67
ARTICLE 8 72
MISCELLANEOUS 76
8.1 SELLERS' REPRESENTATIVE 76
8.2 SURVIVAL 78
8.2 PUBLIC DISCLOSURE 78
8.3 ASSIGNMENT 78
8.4 ENTIRE AGREEMENT 79
8.5 AMENDMENT AND MODIFICATION 79
8.6 WAIVER 79
8.7 COUNTERPARTS 79
8.8 REFERENCE 79
8.9 NOTICES 80
8.10 GOVERNING LAW; CONSENT TO JURISDICTION 81
8.11 GROSSING-UP OF PAYMENT 82
8.12 ADJUSTMENT TO PURCHASE PRICE 82
8.13 LIMITATIONS ON THE REPRESENTATIONS AND WARRANTIES
OF SELLERS OTHER THAN 3i GROUP PLC 82
8.14 ILLEGALITY 83
8.15 SELLERS' KNOWLEDGE 83
8.17 SPECIFIC PERFORMANCE; REMEDIES 84
DATE
30 May 1997
PARTIES
(1) SAFELINE HOLDING COMPANY a company incorporated in England
and Wales with company number 3374841 and whose registered
office is at 000 Xxxxx Xxx Xxxx, Xxxxxx XX0X 0XX and
XXXXXXX-XXXXXX INC., a company incorporated in Canada whose
principal place of business is located in Toronto, Canada
(together the "Purchaser")
(2) SAFELINE LIMITED, a company incorporated in England and
Wales with company number 2261148 and whose registered
office is at 000 Xxxxxxxx Xxxxx, Xxxxxxxx Xxxxxx, Xxxxxxx
X0 0XX ("the Company")
(3) EACH OF SELLERS LISTED IN EXHIBIT A HEREOF (each, a
"Seller" and collectively, the "Sellers")
THIS AGREEMENT OF PURCHASE AND SALE, dated 30 May, 1997
(this "Agreement"), is made and entered into by and between
Safeline Holding Company and Xxxxxxx-Xxxxxx Inc.,
("Purchaser"), Safeline Limited ("the Company") and each of
the holders of ordinary shares of the Company whose names
are set forth on Exhibit A to this Agreement (each, a
"Seller" and collectively, the "Sellers").
WITNESSETH:
WHEREAS, each Seller is the holder of the number of
ordinary shares in the capital of the Company that are
listed next to such Seller's name on Exhibit A to this
Agreement, which together constitute all of the issued
share capital of the Company (the "Shares");
WHEREAS, Purchaser is willing to purchase from Sellers and
Sellers are willing to sell to Purchaser, upon the terms
and subject to the conditions set forth herein, all of the
Shares in the proportions set out in Exhibit A; and
WHEREAS Purchaser's obligations, covenants, representations
and warranties are in each case joint and several.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained
herein, and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the
parties hereto hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE; CLOSING
1.1 SALE AND TRANSFER OF SHARES
Upon the terms and subject to the conditions set forth in
this Agreement, Sellers are selling the Shares to Purchaser
in the proportions set out in Exhibit A with full title
guarantee, free and clear of any and all Encumbrances and
Shareholder Agreements (as such terms are defined in
Section 2.2(a) hereof), and Purchaser is purchasing the
Shares together with all dividends, benefits and other
rights and privileges accruing or attaching thereto,
whether accruing or attaching before or after the date of
this Agreement. In exchange for the Initial Purchase Price
and the Deferred Purchase Price (as defined below), Sellers
are delivering to Purchaser certificates representing all
of the Shares, accompanied by stock transfer forms duly
executed in favour of Purchaser in accordance with Exhibit
A.
1.2 PURCHASE PRICE
(a) The aggregate consideration to be paid by Purchaser
to Sellers for the Shares shall be [POUND STERLING]
61,000,000 (subject to adjustment pursuant to Section
1.5) ("the Initial Purchase Price") plus, to the extent
payable in accordance with the terms of this Agreement,
the amount of the Deferred Purchase Price (as defined
below).
(b) The Initial Purchase Price shall be paid and
satisfied by:
(i) the payment on the Closing Date of [POUND
STERLING]47,195,684 in immediately
available funds to Freshfields client
account, details of which have been
notified to Purchaser prior to Closing;
(ii) the issue by Purchaser to Sellers on the
Closing Date of loan notes in the form set out
at Exhibit B ("Loan Notes") in the individual
principal amounts set out in Exhibit A opposite
Sellers' respective names together with a
letter of credit in the agreed form;
(iii) payment on the Closing Date to be made in
accordance with Section 1.2A(a) for the
purposes of the Cancellation (as defined in
that Section); and
(iv) the payment on the Closing Date of [POUND
STERLING]73,155 in immediately available funds
to a bank account of the Company, details of
which have been notified to the Purchaser prior
to Closing in satisfaction in full of the
undertakings from Optionholders in their
respective Notices of Exercise of Options to
pay the Company on demand their respective
aggregate Option exercise amounts.
(c) Subject to sections 1.2(d), (e) and (f) and if, but
only if, Standalone Operating Profit (as defined in
Section 1.3) exceeds [POUND STERLING]8,000,000, but
is not more than [POUND STERLING]9,500,000 then Sellers
shall be entitled to receive by way of additional
consideration such amount ("Deferred Purchase Price")
as is equal to:
(i) (Standalone Operating Profit for the financial
year ending 31 March 1998 - [POUND STERLING]
8,000,000) DIVIDED BY 1,500,000 x 6,000,000;
(ii) in the event that Standalone Operating Profit
(as defined in Section 1.3) exceeds [POUND
STERLING]9,500,000, then Sellers shall be
entitled to receive by way of additional
consideration in addition to (i) above the
sum of [POUND STERLING]1 for each additional
[POUND STERLING]1 million of Standalone
Operating Profit above the sum of [POUND
STERLING]9,500,000.
The Deferred Purchase Price shall be paid by
Purchaser to Sellers in accordance with Exhibit A.
Subject to Section 1.3(c), the amount of the Deferred
Purchase Price, if any, shall be paid by the transfer
of immediately available funds by Purchaser to an
account details of which will have been notified by
Sellers Representative to Purchaser at least 5
business days prior to the due date for payment which
payment shall constitute a good discharge to
Purchaser, and the issue of Loan Notes in the agreed
form by Safeline Holding Company (allocated in
accordance with Exhibit A) which Loan Notes shall be
supported by a letter of credit issued by any bank
with a credit rating similar to that of Bank of Nova
Scotia substantially in the form provided to Sellers
receiving Loan Notes at Closing (except as to time
and amount).
(d) If any Seller who is an employee of the Company or
the Company's Subsidiaries at the date of this
Agreement is not employed (in any capacity) or
retained as a consultant by the Company or the
Company's Subsidiaries on March 31, 1998, such Seller
shall not be entitled to receive the Deferred
Purchase Price otherwise payable to him in accordance
with this section 1.2 unless:
(i) such Seller has resigned from his employment or
consultancy with the relevant company with the
prior written agreement of Purchaser or as a
result of death, medical incapacity or serious
illness he is not able to perform his duties;
or
(ii) such Seller has been dismissed by the relevant
company acting in breach of the terms of his
service agreement or his consultancy agreement.
(e) In the event that any Seller shall not be entitled to
receive any part of the Deferred Purchase Price in
accordance with Section 1.2(d), that part of the
Deferred Purchase Price which would have been
allocated to such Seller in accordance with this
Section 1.2 shall be reallocated amongst those of
Sellers who are entitled to receive the Deferred
Purchase Price in proportion to their respective
entitlements.
(f) If a claim pursuant to this Agreement is notified and
is settled or otherwise finally determined in
Purchaser's favour prior to the date on which
payment, if any, is to be made pursuant to Section
1.3(c), Purchaser shall be entitled to deduct from
the amount of the Deferred Purchase Price due to
Sellers hereunder an amount equal to the amount of
the liability (as so settled or determined) in or
towards satisfaction of the relevant liability and
where the amount retained is the full amount settled
or determined, the retained amount shall be in full
and final settlement of the claim in question.
(g) Subject to the terms of this Agreement if a claim has
been made which is not settled or otherwise finally
determined in accordance with Section 1.2(f),
Purchaser shall be entitled to withhold from the
amount due to Sellers hereunder Purchaser's
reasonable estimate of the amount of such claim
provided that:
(i) Purchaser shall appoint an escrow agent
acceptable to Sellers' Representative acting
reasonably to hold that amount in an interest
bearing bank account in the joint names of
Purchaser and Sellers' Representative until the
claim is settled or otherwise finally
determined;
(ii) on settlement or other determination of any
such claim the escrow agent will be instructed
to pay Purchaser an amount equal to the amount
of the liability (as so settled or determined)
in or towards satisfaction of the relevant
liability (if any) and otherwise (including if
a claim is deemed to be withdrawn under Section
1.2(h)) to pay the balance (if any) in the
escrow account to Sellers in accordance with
Exhibit A (other than to Xxxxx Xxxxx, Xxxxx
Xxxx and Xxx Xxxxxxxxx, in respect of whom an
amount equal to their aggregate pro rata
entitlement to the Deferred Purchase Price
(determined by reference to such balance) as
notified to the escrow agent by Sellers'
Representative shall be released to Purchaser
who shall, immediately on receipt, satisfy
their entitlement to the Deferred Purchase
Price by the issue of Loan Notes which shall be
supported by a letter of credit issued by any
bank with a credit rating similar to that of
Bank of Nova Scotia substantially in the form
provided to Sellers receiving Loan Notes at
Closing (except as to time and amount) in
accordance with this Agreement);
(iii) any bank or other charges arising in the escrow
account and all fees and expenses of the escrow
agent shall be charged to the escrow account;
(iv) any interest or profit generated from the
escrow account (subject to any deduction of tax
and any bank or other charges properly charged
to the escrow account) shall be retained in the
escrow account; and
(v) each time any amount standing to the credit of
the escrow account is paid out of that escrow
account in accordance with this Article 1.2(g),
it will have added to it the corresponding
proportion of the interest and profits accrued
to the escrow account (subject to any
deductions referred to in (iii) above).
(h) Any claim shall (if it has not been previously
satisfied, settled or withdrawn) be deemed withdrawn
unless legal proceedings in respect of it have been
commenced by being both issued and served within 12
months of the notification of any claim to Sellers or
Sellers' Representative in accordance with this
section in which event any amount withheld from the
Deferred Purchase Price under Section 1.2(g) shall be
immediately released by the escrow agent to Sellers
for payment or satisfaction in accordance with this
Section 1.2(g).
1.2A PURCHASE OF MINORITY INTERESTS
(a) [POUND STERLING]500,000 out of the Initial Purchase Price
shall be paid by Purchaser on the Closing Date into a
separate escrow account in the joint names of XX Xxxxxx &
Co and Chaffe Street (together the "Escrow Agent") where
the said sum shall be retained until the date on
which the Cancellation (as defined below) is
completed in all respects and all interest accruing
thereon shall be credited to the said escrow account.
(b) Immediately following Closing Sellers (other than 3i
and Optionholders as defined in Exhibit A) agree and
undertake with Purchaser to use their best endeavours
to procure that the Company purchases all of the
share capital of Safeline SA not at the date of this
Agreement owned by the Company and procure that
Safeline GmbH terminates by means of a negotiated
agreement the Participation Agreement made between
Safeline GmbH (1) and Xxxxxxx Xxxxxxxx (2) (together,
such repurchase and such termination the
"Cancellation"). Sellers (other than 3i and
Optionholders) agree and undertake with Purchaser to
use their best endeavours to procure that the
Companies implement an incentive scheme in favour of
Xxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx to ensure that
following the Cancellation both Xxxx Xxxxxxxx and
Xxxxxxx Xxxxxxxx continue to devote their full time
and attention to the management of Safeline SA and
Safeline GmbH respectively.
(c) Sellers (other than 3i and the Optionholders) agree
to keep Purchaser fully informed of all stages of the
negotiations in connection with the Cancellation.
Sellers (other than 3i and the Optionholders) agree
to provide Purchaser with all correspondence,
documents and other information in connection
therewith. Purchaser shall be entitled to be in
attendance at all meetings and in all telephone
conversations that are held in connection with the
Cancellation. Sellers (other than 3i and the
Optionholders) shall not make any proposal, take any
action or reach any agreement affecting or likely to
affect any of the Companies (including for the
avoidance of doubt any incentive scheme in favour of
Xxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx as referred to
Section 1.2A(b)) in respect of the Cancellation
without the consent of Purchaser (such consent not to
be unreasonably withheld or delayed).
(d) In the event that the Cancellation has not been
completed by 30 November 1997 (or such later date as
Sellers and Purchaser may agree) then:
(i) Purchaser shall take over all negotiations in
connection with the Cancellation and Purchaser
shall use its best endeavours to procure that
the Company completes the Cancellation as soon
as practicable;
(ii) Purchaser agrees to keep Sellers (other than 3i
and the Optionholders) fully informed of all
stages of negotiations in connection with
Cancellation. Purchaser agrees to provide
Sellers (other than 3i and Optionholders) with
all correspondence, documents and other
information in connection therewith. Sellers
(other than 3i and Optionholders) shall be
entitled to be in attendance at all meetings
and on all telephone conversations that are
held in connection with the Cancellation.
Purchaser shall not make any proposal, take any
action or reach any agreement in respect of the
Cancellation pursuant to which the cost of
obtaining Cancellation would exceed [POUND
STERLING]300,000 without the consent of Sellers
(other than 3i and Optionholders), such consent
not to be unreasonably withheld or delayed.
(e) On the terms of the Cancellation being agreed,
Sellers (other than Optionholders) and Purchaser
shall instruct the Escrow Agent shall pay such monies
to be paid to any third party in connection with or
in relation to the Cancellation from the said deposit
account. In addition, any reasonable costs, fees or
expenses incurred by Purchaser in negotiating and
agreeing the Cancellation shall also be paid to
Purchaser from the escrow account.
(f) On the day which is 10 working days after completion
of the Cancellation, the escrow agent shall pay to
Sellers (to be allocated in accordance with Exhibit
A) the sum standing to the credit of the deposit
account less the aggregate amount of all sums paid or
to be paid by the escrow agent from the escrow
account in connection with or in relation to the
Cancellation including any costs, fees or expenses as
set out above.
(g) In the event that the cost of the Cancellation
exceeds the sum then standing to the credit of the
escrow account plus any reasonable fees, costs or
expenses incurred in connection with or in relation
to the Cancellation, then Sellers other than 3i and
the Optionholders agree and undertake to Purchaser to
pay to Purchaser such sum in excess of that amount on
completion of the Cancellation.
1.3 CALCULATION OF STANDALONE OPERATING PROFIT
Standalone Operating Profit (as defined below) shall be
calculated as follows:
(a) As promptly as practicable, and in any event within
60 days following March 31, 1998, Purchaser shall
prepare and deliver to Sellers' Representative a
preliminary pro forma consolidated profit and loss
account of Safeline Holding Company and its
subsidiaries for the 12 month period ended March 31,
1998 (the "Earn-Out Profit and Loss Statement") and a
preliminary pro forma statement of consolidated
standalone operating profit derived therefrom (the
"Statement of Standalone Operating Profit") together
with copies of all KPMG's working papers used as a
basis for preparing the Earn-Out Profit and Loss
Statement and Statement of Standalone Operating
Profit. Both the Earn-Out Profit and Loss Statement
and the Statement of Standalone Operating Profit
shall be prepared in accordance with GAAP (as defined
in Section 2.4(a)) applied on a basis consistent
with, but subject to, the accounting principles,
practices, policies, treatment and the methodology
used to prepare the Balance Sheet, and also subject
to the adjustments set out in Schedule 1.3, and
delivered together with a certificate of KPMG
addressed to Purchaser stating that the Earn-Out
Profit and Loss Statement (from which the Statement
of Standalone Operating Profit was derived) gives a
true and fair view of the pro forma consolidated
results of operations of Safeline Holding Company and
its subsidiaries for the 12 month period ended
March 31, 1998 and that the calculation of standalone
operating profit as set forth on the preliminary
Statement of Standalone Operating Profit conforms to
this Section 1.3 and Schedule 1.3.
As used herein, the terms "Final Earn-Out Statement"
and "Final Earn-Out Profit and Loss Statement" mean
the Statement of Standalone Operating Profit and the
Earn-Out Profit and Loss Statement if such statements
are not subject to an Accounting Dispute (as defined
below) or, if such statements are subject to an
Accounting Dispute, the Statement of Standalone
Operating Profit and Earn-Out Profit and Loss
Statement as adjusted and as agreed to by the parties
or as prepared by the Arbiter (as defined in Section
1.3(b)) taking into account all items that are not
subject to an Accounting Dispute and those Disputed
Items (as defined in Section 1.3(b)) resolved by the
parties pursuant to Section 1.3(b) hereof or by the
Arbiter appointed pursuant to Section 1.3(b).
(b) Sellers' Representative may dispute the Statement of
Standalone Operating Profit or the Earn-Out Profit
and Loss Statement (an "Accounting Dispute") by
identifying to Purchaser each item (the "Disputed
Item") in such Accounting Dispute (specifying in
writing the amount in dispute and setting forth, in
reasonable detail, the basis for such dispute) within
45 days after receipt by it of such statement and
account. In the event of an Accounting Dispute, the
parties together with KPMG and Xxxxxx Xxxxxxxx shall
attempt to reconcile each Disputed Item, and any
resolution by them recorded in writing as to each
Disputed Item shall be final, binding and conclusive
on them. If the parties are unable to resolve all of
the Disputed Items within ten Business Days after
Purchaser's receipt of written notice of an
Accounting Dispute, Purchaser and Sellers'
Representative shall submit the unresolved Disputed
Items for resolution to an accounting firm of
international reputation that has not rendered,
directly or indirectly, any significant amount of
services for Purchaser, AEA or any member of the
Xxxxxxx-Xxxxxx group, Sellers or the Companies within
the preceding two years (the "Arbiter"), which firm
shall be mutually designated by Purchaser and
Sellers' Representative within 20 Business Days after
Purchaser's receipt of written notice of the
Accounting Dispute (if it has not by that time been
resolved) or, in the absence of such designation,
appointed on the application of either Purchaser or
Sellers' Representative by the President of the
Institute of Chartered Accountants in England and
Wales. Sellers, Purchaser, KPMG and Xxxxxx Xxxxxxxx
shall have the right to make written representations
to the Arbiter and shall in any event provide the
Arbiter with copies of Section 1.3 of this Agreement
and Schedule 1.3. The Arbiter shall, within twenty
Business Days after such submission, prepare the
Final Earn-Out Profit and Loss Statement and the
Final Earn-Out Statement and report to Purchaser and
Sellers' Representative upon the resolution of the
Disputed Items submitted to it, and the resulting
Final Earn-Out Profit and Loss Statement and Final
Earn-Out Statement shall save in the case of manifest
error be final, binding and conclusive on Purchaser
and Sellers and shall reflect any changes that were
made to the Earn-Out Profit and Loss Statement and/or
the Statement of Standalone Operating Profit as a
result of changes agreed to by Purchaser, Sellers'
Representative, Xxxxxx Xxxxxxxx and KPMG. The fees
and disbursements of the Arbiter shall be allocated
between Purchaser and Sellers in the same proportion
that the aggregate amount of the Disputed Items
submitted to the Arbiter that are unsuccessfully
disputed by each party (as finally determined by the
Arbiter) bear to the total amount of such remaining
Disputed Items submitted to the Arbiter. In acting
under this Section 1.3(b), the Arbiter shall be
entitled to the privileges and immunities of
arbitrators.
(c) Any payment owing by Purchaser to Sellers in
accordance with Section 1.2(c) shall be made as
follows:
(i) if Sellers do not assert an Accounting Dispute
such payment (if any) shall be made on the
third Business Day after the earlier of the day
on which Sellers' Representative notifies
Purchaser in writing that Sellers do not assert
an Accounting Dispute and the day which is 45
days after receipt by Sellers' Representative
of the Statement of Standalone Operating
Profit; or
(ii) in the event of an Accounting Dispute, such
payment shall be made on the third Business Day
after the earlier of the day on which Sellers'
Representative and Purchaser agree as to a
Final Earn-Out Profit and Loss Statement and
Final Earn-Out Statement or the Arbiter renders
its final decision in accordance with Section
1.3(b) with respect to the Final Earn-Out
Profit and Loss Statement and Final Earn-Out
Statement;
and shall be satisfied in accordance with Article
1.2(c) or, in respect of Xxxxx Xxxxx, Xxxxx Xxxx and
Xxx Xxxxxxxxx, by the issue of Loan Notes which shall
be supported by a letter of credit substantially in
the form provided to Sellers at Closing in respect of
the whole of the Deferred Purchase Price due to them.
Purchaser shall cause the Company to give reasonable
access to the Books and Records (as defined in
Section 2.4(e)) of the Companies to Sellers and
Xxxxxx Xxxxxxxx in order to permit them to review the
Statement of Standalone Operating Profit and the Earn
Out Profit and Loss Statement.
As used herein, the term "Business Day" shall mean
any day excluding Saturday, Sunday and any day on
which banks in the State of New York or in London are
authorized or required by Law (as defined in Section
2.3) or other governmental action to close or are not
open for normal banking business.
1.4 TIME AND PLACE OF CLOSING; CLOSING DELIVERIES
(a) Upon the terms and subject to the conditions of this
Agreement, the closing of the transactions
contemplated hereby (the "Closing") has taken place
at the offices of X X Xxxxxx & Co, 000 Xxxxx Xxx
Xxxx, Xxxxxx XX0X 0XX as of the date hereof (the
"Closing Date").
(b) Immediately prior to Closing, Sellers and the Company
delivered to Purchaser the documents listed in
Schedule 1.4(b).
1.5 ADJUSTMENT OF INITIAL PURCHASE PRICE
(a) Notwithstanding anything in Section 1.2 to the
contrary, the amount of the Initial Purchase Price
shall be subject to adjustment after the Closing by
the amount, if any, by which Working Capital (as
defined below) at the close of business on the
Closing Date is either greater or less than
[POUND STERLING]4,000,000. In the event that Working
Capital exceeds [POUND STERLING]4,000,000 the amount
of the Initial Purchase Price shall be increased by an
amount equal to the excess and in the event that Working
Capital is less than [POUND STERLING]4,000,000 the amount
of the Initial Purchase Price shall be reduced by an
amount equal to the shortfall. As used herein, the term
"Working Capital" means the excess of the consolidated
current assets of the Company and its subsidiaries (as
shown in the Final Closing Statement) over the
consolidated current liabilities (but excluding all
accrued but unpaid UK and US corporation taxes including
for the avoidance of doubt UK advanced corporation tax
payable) of the Company and its subsidiaries (as
shown in the Final Closing Statement) at the close of
business on the Closing Date, each determined in
accordance with GAAP applied on a basis consistent
with, but subject to the accounting principles,
practises, policies, treatments and the methodology
used to prepare the Balance Sheet and also subject to
the principles and other matters set forth in
Schedule 1.5(a).
(b) As promptly as practicable, and in any event within
60 days following the Closing Date, Sellers shall
prepare and deliver to Purchaser a preliminary
consolidated balance sheet of the Company as of the
close of business on the Closing Date (the "Closing
Balance Sheet") and a preliminary statement of
consolidated Working Capital (the "Statement of
Working Capital") derived therefrom, both of which
shall be delivered together with a certificate of
Xxxxxx Xxxxxxxx addressed to Sellers stating that the
Closing Balance Sheet (from which the Statement of
Working Capital was derived) gives a true and fair
view of the consolidated financial position of the
Company at the close of business on the Closing Date
in accordance with GAAP applied on a basis
consistent with but subject to the accounting
principles, practises, policies, treatments and the
methodology used to prepare the Balance Sheet and
also subject to the principles and other matters set
forth in Schedule 1.5(a) and that the calculation of
working capital in the Statement of Working Capital
conforms to this Section 1.5 and Schedule 1.5(a).
The statements and certificate delivered pursuant to
the preceding sentence shall be accompanied by copies
of all Xxxxxx Xxxxxxxx'x working papers used as a
basis for the Statement of Working Capital.
Purchaser shall cause the Company to give reasonable
access to the Books and Records (as defined in
Section 2.4(e)) of the Companies to Sellers and
Xxxxxx Xxxxxxxx in order to permit them to prepare
such Closing Balance Sheet and Statement of Working
Capital and deliver the certificate of Xxxxxx
Xxxxxxxx.
As used herein, the terms "Final Closing Statement"
and "Final Closing Balance Sheet" mean the Statement
of Working Capital and the Closing Balance Sheet if
such statements are not subject to an Accounting
Dispute (as defined below) or, if such statements are
subject to a Working Capital Dispute, the Statement
of Working Capital and Closing Balance Sheet as
adjusted and as agreed to by the parties or as
prepared by the Working Capital Arbiter (as defined
in Section 1.5(c)) taking into account all items that
are not subject to a Working Capital Dispute and
those Working Capital Disputed Items (as defined in
Section 1.5(c)) resolved by the parties pursuant to
Section 1.5(c) hereof or by the Working Capital
Arbiter pursuant to Section 1.5(c).
(c) Purchaser may dispute the Statement of Working
Capital or the Closing Balance Sheet (a "Working
Capital Dispute") by identifying to Sellers'
Representative each item (the "Working Capital
Disputed Item") in such Working Capital Dispute
(specifying in writing the amount in dispute and
setting forth, in reasonable detail, the basis for
such dispute) within 45 days after receipt by it of
such statement and balance sheet. In the event of a
Working Capital Dispute, the parties together with
KPMG and Xxxxxx Xxxxxxxx shall attempt to reconcile
each Working Capital Disputed Item, and any
resolution by them as to each Working Capital
Disputed Item shall be final, binding and conclusive
on them. If the parties are unable to resolve all of
the Working Capital Disputed Items within ten
Business Days after Sellers' Representative's receipt
of written notice thereof, Purchaser and Sellers'
Representative shall submit the unresolved Working
Capital Disputed Items for resolution to an
accounting firm of international reputation that has
not rendered, directly or indirectly, any significant
amount of services for Purchaser, AEA or any member
of the Xxxxxxx-Xxxxxx group, Sellers or the Companies
within the preceding two years (the "Working Capital
Arbiter"), which firm shall be mutually designated by
Purchaser and Sellers' Representative within 20
Business Days after Sellers' Representative's receipt
of written notice of the Working Capital Dispute (if
it has not by that time been resolved) or, in the
absence of such designation, appointed on the
application of either Purchaser or Sellers'
Representative by the President of the Institute of
Chartered Accountants in England and Wales. Sellers,
Purchaser, KPMG and Xxxxxx Xxxxxxxx shall have the
right to make written representations to the Working
Capital Arbiter and in any event shall provide it
with a copy of Section 1.5 of this Agreement and
Schedule 1.5. The Working Capital Arbiter shall,
within twenty Business Days after such submission,
prepare the Final Closing Balance Sheet and the Final
Closing Statement and report to Purchaser and
Sellers' Representative upon the resolution of the
Disputed Items submitted to it, and the resulting
Final Closing Balance Sheet and Final Closing
Statement shall save in the case of manifest error be
final, binding and conclusive on Purchaser and
Sellers and shall reflect any changes that were made
to the Closing Balance Sheet and/or the Statement of
Working Capital as a result of changes agreed to by
Purchaser and Sellers' Representative. The fees and
disbursements of the Working Capital Arbiter shall be
allocated between Purchaser and Sellers in the same
proportion that the aggregate amount of the Working
Capital Disputed Items submitted to the Working
Capital Arbiter that are unsuccessfully disputed by
each party (as finally determined by the Working
Capital Arbiter) bear to the total amount of such
remaining Working Capital Disputed Items submitted to
the Working Capital Arbiter. In acting under this
Section 1.5(c), the Working Capital Arbiter shall be
entitled to the privileges and immunities of
arbitrators.
(d) Any payment owing by Sellers to Purchaser or by
Purchaser to Sellers pursuant to this Section 1.5
shall be made by wire transfer of immediately
available funds to an account designated by Purchaser
or by Sellers' Representative (as appropriate). If
Purchaser does not assert a Working Capital Dispute
such payment shall be made on the third Business Day
after the earlier of the day on which Purchaser
notifies Sellers' Representative in writing that
Purchaser does not assert a Working Capital Dispute
and the day which is 45 Days after receipt by
Purchaser of the Statement of Working Capital. In
the event of a Working Capital Dispute, such payment
shall be made on the third Business Day after the
earlier of the day on which Sellers' Representative
and Purchaser agree as to a Final Closing Balance
Sheet and Final Closing Statement or the Working
Capital Arbiter in accordance with Section 1.5(c)
above renders its final decision with respect to the
Final Closing Balance Sheet and Final Closing
Statement.
1.6 GOVERNMENT GRANTS
In the event that the Company is obligated to repay any or
all government grants received on or prior to the Balance
Sheet Date as a result of the transactions contemplated
herein Sellers (other than 3i Group plc and 3i plc
(together "3i") and those Sellers who were formerly
optionholders, whose names are listed in Part 2 of Exhibit
A ("Optionholders")) shall, within 30 days of receipt of
notice from the Company of any such repayment, reimburse
the Company for the full amount of such repayment.
1.7 WAIVER BY SELLERS
Each Seller hereby waives and releases any rights of
pre-emption over or in respect of the Shares existing under
the Articles of Association of the Company or otherwise.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLERS OTHER THAN 3I AND
OPTIONHOLDERS
Each Seller other than 3i and Optionholders (and references
in this Article 2 to "Seller" or "Sellers" shall be
construed accordingly):
(a) acknowledges that Purchaser has been induced to enter
into this Agreement and to purchase the Shares on the
basis of the representations and warranties set out
in this Article 2;
(b) acknowledges and agrees that each such representation
and warranty is a separate and independent
representation, warranty and undertaking, and that no
representation or warranty shall be limited by
reference to any other representation or warranty or
by any other term of this Agreement;
(c) acknowledges and agrees that the rights and remedies
of Purchaser in respect of any breach of
representation or warranty shall not be affected by
Closing, by any investigation made by or on behalf of
Purchaser into the affairs of the Company and its
subsidiaries or by any other event or matter
whatsoever which otherwise might have affected such
rights and remedies except a specific duly authorised
written waiver or release or except as otherwise
provided for in this Agreement;
(d) acknowledges and agrees that for the purpose of each
representation and warranty set forth herein,
references to "the Company" shall save where the
context otherwise requires be deemed to extend both
to the Company and to each of the Subsidiary
Companies (as defined in Section 2.1(a)) to the
effect that each of the warranty statements shall be
deemed to be repeated in respect of each of the
Subsidiary Companies as though the expression "the
Company" has been replaced by the name of the
subsidiary concerned throughout; and
(e) hereby (except where expressly stated otherwise)
jointly and severally represents and warrants as
follows:
2.1 ORGANIZATION AND STANDING OF THE COMPANY AND EACH OF ITS
SUBSIDIARY COMPANIES
(a) The Company and each of the Company's subsidiaries
(those subsidiaries being: (i) Safeline Inc., (ii)
Safeline S.A., (iii) Safeline GmbH and (v) Safeline
Executive Share Option Scheme Trustee Limited (each
individually a "Subsidiary Company" and,
collectively, the "Subsidiary Companies")) are
limited liability corporations duly incorporated and
validly existing under the laws of their respective
jurisdictions of incorporation. Schedule 2.1(a)
specifically sets forth accurate details of the
Companies and of all branches, establishments and
offices maintained by each of the Companies, stating
its jurisdiction of incorporation and including a
summary description of its business activities. Each
of the Companies has the requisite corporate power to
own or lease and operate the properties and assets
that it respectively owns or holds under lease and to
carry on its respective businesses as presently
conducted. Each of the Companies is duly qualified
to do business in all jurisdictions where the nature
of the properties owned or leased by it or the
activities conducted by it make such qualification
necessary, except where the failure to be so
qualified would not have individually, or in the
aggregate, a Material Adverse Effect (as defined
below). All documents required by law to be filed
with the appropriate Authority (as hereinafter
defined) in respect of each of the Companies have
been properly and duly filed except where the failure
to do so would not have individually, or in the
aggregate, a Material Adverse Effect. Sellers have
previously delivered to Purchaser true and complete
certified copies of each of the Companies' Memorandum
and Articles of Association (or other equivalent
constituent documents) having attached to them all
documents required by law to be attached to them, as
currently in effect and such Memorandum and Articles
(or other equivalent constituent documents) set forth
all rights attaching to the share capital of the
Company or the relevant Subsidiary Company (as
appropriate). All material agreements and documents
(including without limitation title deeds, share
certificates, agreements, accounts, books, records
and ledgers) owned by and which ought reasonably to
be in the possession of any of the Companies are in
the possession of the Companies or under the
Companies' control. The Companies do not trade nor
have they traded under any names other than their
full corporate names (or a similar name or an
abbreviated name), and no action has been taken
against any of the Companies under Section 28 of the
Companies Xxx 0000, as amended, or the equivalent
legislation in each of the Companies' respective
jurisdiction of incorporation and so far as Sellers
are aware there are no circumstances by which any of
the Companies may become obligated to change its name
or trade under a different name.
As used herein, the term "Authority" means any
supranational, national, provincial or local
government or any governmental, judicial, taxation,
regulatory, public or self-regulatory agency,
authority, bureau or commission (excluding HM Land
Registry).
As used herein, the term "Companies Acts" shall mean
the Companies Acts 1985 and 1989, the Companies
Consolidation (Consequential Provisions) Xxx 0000 and
the Company Directors Disqualifications Xxx 0000 and
all regulations made under any of the foregoing prior
to the date of this Agreement.
As used herein, the term "Material Adverse Effect"
means an adverse effect on the business, assets,
liabilities, properties, condition (financial or
otherwise), prospects, operations or results of
operations of any of the Companies that is material
to the Company individually or the Companies taken as
a whole.
(b) The only directors of the Companies are the persons
listed in Schedule 2.1(b). No person is a shadow
director (as defined in the Companies Acts) or a de
facto director of any of the Companies.
(c) Safeline do Brasil Limitada is a limited liability
corporation duly incorporated and validly existing
under the laws of Brazil the entire issued share
capital of which corporation is wholly beneficially
owned by the Company. Since the date of its
incorporation Safeline do Brazil Ltda has not carried
on any trade, business or other activity and has not
incurred any liability of whatever nature save for a
lease details of which are set out at point 3,
Safeline Brazil, disclosure file 12.
2.2 CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARY COMPANIES
(a) Schedule 2.2(a) sets forth (i) the authorized share
capital of the Company and (ii) the number of the
issued and allotted shares of the Company and the
holders thereof. All of the issued and allotted
shares of the Company have been duly authorized and
validly issued, are fully paid (or credited as fully
paid) and, in the case of Safeline Inc. non-
assessable and are save for those Shares held by the
Trustees and 3i plc and in relation to Safeline SA,
the shares owned by Xxxx Xxxxxxxx), owned
beneficially by and are registered in the Register of
Members of the Company in the names of Sellers, free
and clear of any liens, claims, charges, security
interests, pledges, mortgages, rights of final
approval, rights of set off, preemptive rights,
options trust arrangements or other encumbrances of
any character whatsoever (whether arising from
contract or corporate law or otherwise (collectively,
"Encumbrances") or any shareholder agreements, voting
agreements, proxies or similar agreements
(collectively, "Shareholder Agreements"). Those
Shares held by the Trustees are owned legally by the
Trustees subject only to the terms of the Trusts (as
defined in Exhibit A) but otherwise free from any
Encumbrance or Shareholder Agreements.
(b) Schedule 2.2(b) sets forth (i) the authorized share
capital of each Subsidiary Company and (ii) the
number of issued and allotted shares of such
Subsidiary Company and the ownership thereof. All of
the issued and allotted shares of each class of share
capital of each Subsidiary Company have been duly
authorized and validly issued, are fully paid and in
the case of Safeline Inc. non-assessable and are
except as noted in Schedule 2.2(b) owned beneficially
by the Company (directly or through one or more
Subsidiary Companies), free and clear of any
Encumbrances or Shareholder Agreements. Except only
as specifically set forth on Schedule 2.2(b), the
Subsidiary Companies are the only companies,
corporations, partnerships, trusts or unincorporated
organizations (x) in which the Company, directly or
indirectly, owns, beneficially or of record, or ever
has owned beneficially or of record, any equity
interest or any notes, debentures, loan stock or
other debt security or other indebtedness; (y) which
the Company, directly or indirectly, controls or ever
has controlled, the composition of the board of
directors or (z) which are or ever have been,
"subsidiary undertakings" of the Company (as such
expression is defined in the Companies Acts).
(c) There are no outstanding securities convertible into
or exchangeable for or carrying the right to acquire
any equity or other security of any description of
any of the Companies and no outstanding options,
warrants or other agreements or commitments that
relate to, or require the issuance, sale or other
disposition of, any equity or other securities of any
description of any of the Companies.
(d) Except as set forth in Schedule 2.2(d) neither the
Company nor any Subsidiary Company has at any time
(i) repaid, redeemed or purchased or agreed to repay,
redeem or purchase any shares of any class of its
respective issued share capital or otherwise reduced
or agreed to reduce its respective issued share
capital or any class thereof; or (ii) directly or
indirectly provided any financial assistance (as
defined in Section 151 of the Companies Xxx 0000, as
amended or any equivalent statutory provision under
the Companies jurisdiction of incorporation) for the
purpose of the acquisition of shares of any of the
Companies or for the purpose of reducing or
discharging any liability incurred in any such
acquisition, whether pursuant to Section 155 of the
Companies Xxx 0000, as amended or otherwise; or (iii)
capitalized or agreed to capitalize, in the form of
shares, debentures or other securities or in paying
up any amounts unpaid on any shares, debentures or
other securities, any profits or reserves of any
class or description, or passed or agreed to pass any
resolution to do so; or (iv) advanced any loan or
borrowed any amount or issued any share, debenture or
other security in a manner giving rise to a
distribution or deemed distribution or made any other
distribution (whether of income or capital) except
dividends shown in its audited accounts; or (v) paid
or (in circumstances in which it may be required to
repay all or part of the same by virtue of Section
277 of the Companies Act or otherwise or any
equivalent statutory provision under the Companies
jurisdiction of incorporation) received any dividend
or other distribution paid in breach of that Act. The
Companies do not have outstanding, nor have they
agreed to create or issue, any loan capital, and none
of the Companies is in breach of the borrowing powers
set out in its Articles of Association (or equivalent
constituent documents), if any.
2.3 AUTHORITY
(a) Each Seller has all requisite legal right, power and
authority to execute and deliver this Agreement and
all documents ancillary hereto which are referred to
in this Agreement and to perform his or its
obligations hereunder and thereunder and such
documents have been duly and validly executed and
delivered by such Seller and constitutes the valid
and binding obligation of such Seller, enforceable
against him or it, as the case may be, in accordance
with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and
other similar laws of general applicability relating
to or affecting creditors' rights and to general
principles of equity.
(b) Except only as specifically set forth in Schedule
2.3(b), the execution and delivery by each of Sellers
of this Agreement and all documents ancillary hereto
and the consummation of the transactions contemplated
hereby and thereby will not (i) violate, conflict
with, or result in a breach of, or default or loss of
benefit under, or give rise to a right of termination
under, any agreement, binding obligation or binding
commitment to which any of the Companies is a party
or bound (including, without limitation, the
Contracts (as defined in Section 2.11 hereof)),
except where the violation, conflict, breach, default
or termination would not have individually, or in the
aggregate, a Material Adverse Effect, (ii) violate or
result in the loss of any benefit under any provision
of any applicable Law to which any of the Companies
is subject, except where the violation or loss would
not have individually, or in the aggregate, a
Material Adverse Effect, (iii) violate or result in
the loss of any benefit under any order, judgment or
decree applicable to any of the Companies or (iv)
conflict with, or result in a breach of or default
under, any term or condition of the Memorandum or
Articles of Association (or other constituent
documents) of any of the Companies.
As used herein, the term "Law" means any treaty, law,
statute, directive, rule, ordinance or regulation or
delegated legislation of any Authority in force at
the date of this Agreement.
(c) Except only as specifically set forth in Schedule
2.3(c), no consent, license, approval, waiver,
expiration of waiting period or authorization of, or
registration or declaration with, any Authority is
required to be obtained or made by any Seller or any
of the Companies in connection with the execution,
delivery and performance of the transactions
contemplated by this Agreement or for the
continuation by the Companies and Purchaser of the
respective businesses of any of the Companies after
the Closing Date in the same manner as presently
conducted.
(d) So far as Sellers are aware each of the Company and
Sellers have made all filings or submissions that are
required to be made by it or them, as the case may
be, in order to obtain any Governmental Approval.
For the purposes of this Agreement, the term
"Governmental Approval" shall mean any approval,
consent, license, clearance, exemption, waiver or
registration of or with any Authority necessary or
appropriate in order to lawfully consummate the
transactions contemplated hereby, including without
limitation the Governmental Approvals to be or which
may be obtained from the United Kingdom Director
General of Fair Trading, the United States Department
of Justice and all other jurisdictions in respect of
antitrust issues and each of the Governmental
Approvals set forth in Schedule 2.3(c) and Schedule
4.5.
2.4 FINANCIAL STATEMENTS
(a) Sellers have delivered to Purchaser true and complete
copies of (i) the audited consolidated and
unconsolidated balance sheets of the Company as at
March 31, 1997, March 31, 1996, March 31, 1995 and
March 31, 1994, together with the audited
consolidated profit and loss account, the audited
statements of consolidated cash flows, the audited
statement of consolidated total recognized gains and
losses for the periods ended on such dates and the
notes to such audited consolidated and unconsolidated
accounts. The foregoing financial statements are
herein referred to as the "Financial Statements"; and
the consolidated balance sheet included in the
Financial Statements for the period ended on March
31, 1997 (the "Balance Sheet Date") is herein
referred to as the "Balance Sheet". The Financial
Statements have been prepared in accordance with GAAP
(as defined below), consistently applied and give a
true and fair view of the state of affairs and the
financial position of the Company or Companies (as
the case may be) and of the Companies' profits and
losses, cash flows and recognized gains and losses as
at the dates and for the periods concerned. The
profits and losses reflected in the Financial
Statements in any one period have not been affected
to a material extent (except as disclosed in the
footnotes thereto or Schedule 2.4(a) hereto) by any
extraordinary, nonrecurring, exceptional or unusual
item, event or circumstance or by any other factor
rendering such profits or losses unusually high or
low.
As used herein, the term "GAAP" means generally-
accepted accounting principles in the United Kingdom
(including all applicable requirements of the
Companies Acts and Statements of Standard Accounting
Practice and Financial Reporting Standards published
by the former Accounting Standards Committee or the
present Accounting Standards Board, UITF Abstracts.
(b) The Company does not have any liabilities or
obligations of any kind which (i) are not reflected
(as to amount and description) as liabilities or
reserved for in the Balance Sheet, (ii) were incurred
after the Balance Sheet Date otherwise than in the
ordinary course consistent with the normal business
practices of the Companies or which would have
individually, or in the aggregate, a Material Adverse
Effect, or (iii) are not specifically disclosed in a
Schedule hereto or in the Disclosure Documents; and
for the avoidance of any doubt Sellers confirm that
the Company does not have any outstanding loans,
borrowings, loan stock, loan notes, quasi-loans, any
nil or partly paid issued share capital or any other
debt or debt security.
(c) The inventories of the Companies as reflected in the
Balance Sheet or acquired after the Balance Sheet
Date consist only of items of merchantable quality,
usable and saleable in the ordinary course of the
Companies' businesses at regular prices, and which
are, so far as Sellers are aware, valued in
accordance with SSAP 9 at the lower of cost and net
realisable value, and adequate reserves having been
provided therefor in accordance with the accounting
policies, principles, practises and methodologies in
compliance with GAAP subject to being consistent with
those used in preparing the financial statements and
taking into account the quantity of such items.
(d) The accounts receivable of the Companies as reflected
in the Balance Sheet or acquired after the Balance
Sheet Date: (i) arose from bona fide sales of goods
or services in the ordinary course consistent with
the normal business practices of the Companies; (ii)
are owned by the Companies free and clear of any
Encumbrances, and have not been assigned,
transferred, factored or otherwise disposed of; (iii)
are properly reflected in the Balance Sheet or, with
respect to accounts receivable created on or after
the Balance Sheet Date, are properly reflected in the
relevant Books and Records (as defined below); and
(iv) are so far as Sellers are aware collectible and
have been or so far as Sellers are aware will be
collected at their face amounts, less any reserve
applicable to such accounts receivable properly
reflected in the Balance Sheet or with respect to
accounts receivable created on or after the Balance
Sheet Date properly reflected in the Books and
Records, within six months after the respective dates
on which such accounts receivable were created.
As used herein, the term "Books and Records" means the
originals of all books (including statutory books),
records, files, plans, blueprints, drawings, designs,
specifications, customer lists, supplier lists, credit
information, business records and plans, studies, surveys,
reports, correspondence, sales and other selling materials,
computer software, books of account and accounting and
operational records and other data used or held for use by
the Companies.
2.5 MATERIAL CHANGES
Since the Balance Sheet Date, (a) the Companies have
conducted their respective businesses in the ordinary
course consistent with the normal business practices of the
Companies, (b) no event has occurred that could reasonably
be expected to have a Material Adverse Effect, and (c) no
liability for any Tax other than the advanced corporation
tax referred to in (w) below has arisen other than
liabilities for Taxes incurred in the ordinary course of
business. In addition, since the Balance Sheet Date, (u)
other than in the ordinary course of the Companies'
business(es), none of the Companies has paid any bonus or
management fee, (w) none of the Companies has paid or
declared any dividend, bonus, management fee or other
actual or deemed distribution or agreed to do any of the
foregoing other than the dividends paid by the Company on
3 April 1997 amounting in aggregate to [POUND STERLING]2.1
million (net of tax credit); (x) except as set forth in
Schedule 2.5(x) none of the Companies has granted any increase
in employee compensation or any increase in any benefits
otherwise due under any Employment Agreement, Employee Plan
(as such terms are defined in Section 2.13(d) hereof) or
otherwise or has accelerated the time of vesting of any such
benefits; (y) except as set forth in Schedule 2.5(y) no
donation or covenant for charitable or political purposes
or any ex gratia payment has been made or agreed to be made
by any of the Companies; and (z) except as set forth in
Schedule 2.5(z) no repayment or waiver of repayment of any
loan or part of a loan (save as expressly required by this
Agreement) has been made by or in favour of any of the
Companies.
2.6 PROPERTY
(a) Schedule 2.6(a) sets forth a complete list of all of
the real property (as defined below), owned or used
or held for use by the Companies (the "Real
Property") (and the owner or lessor thereof), and
setting forth where such property is located, the
relevant Company, and whether, in the case of Real
Property located in the United Kingdom, the relevant
company's title is registered at H.M. Land Registry.
The particulars of the Real Properties specified in
Schedule 2.6(a) are true and accurate in all
respects. None of the Companies has entered into any
agreement for the purchase of any interest in any
real property other than a Real Property. There is
no actual or contingent liability on the part of any
of the Companies arising directly or indirectly out
of any lease, agreement for lease, conveyance or
licence or other deed, including any actual or
contingent liability, arising directly or indirectly
out of any estate or interest previously held by any
of the Companies as an original lessee, sublessee,
guarantor or surety except where any liability
thereunder would not have individually, or in the
aggregate, a Material Adverse Effect.
As used herein, the term "real property" means,
irrespective of location, all real property
(including any part or parts thereof) together with
(i) all buildings, facilities and other structures
and improvements thereon, (ii) all rights,
privileges, hereditaments and appurtenances
appertaining thereto or to any such buildings,
facilities or other structures or improvements, and
(iii) to the extent constituting real property under
applicable law, all fixtures, installations,
machinery, equipment and other property attached
thereto or located thereon.
(b) Each of the Companies has in its possession or under
its control all deeds and documents relating to the
Real Properties necessary to constitute proper title
to each of the Real Properties, copies of such deeds
and documents being contained in Schedule 2.6(c).
All such deeds and documents have been properly
stamped and produced. Where the title to any of the
Real Properties is, or is required to be, registered
at H.M. Land Registry it is so registered with Title
Absolute.
(c) The replies to general enquiries and supplemental
enquiries raised by Purchaser's solicitors, copies of
which are contained in Schedule 2.6(c), are true and
accurate in all respects and have been given after
due and diligent enquiry by Sellers.
(d) No lease under which the Companies hold any of the
leasehold Real Properties outside the United Kingdom:
(i) contains rent review provisions the operation
of which would or may result in more than a
current market rent being payable for that Real
Property;
(ii) contains any provision enabling the landlord to
terminate the lease prior to the term
determination date.
(e) In relation to the Real Property outside the United
Kingdom the Companies are not engaged in any
negotiation for review of the rent payable under any
lease under which they hold any of the leasehold Real
Properties, no such negotiations have been concluded
changing the rent from that specified in Schedule
2.6(a) and there are no rent reviews capable of being
implemented by the landlord in respect of the period
prior to completion.
(f) All buildings and structures owned, operated, or
leased by any of the Companies are in good condition
and repair in all material respects, free of any
material structural or engineering defect, are
suitable for the conduct of the respective businesses
of the Companies as presently conducted and as
presently proposed to be conducted, do not require
any maintenance or repairs except for any repairs and
maintenance which would not have individually, or in
the aggregate, a Material Adverse Effect and do not
constitute a risk to health and safety.
(g) Each of the Companies has complied with its
obligations imposed on it by the leases of these Real
Properties which are leasehold and with the
provisions of any planning permission or other
consents necessary for the operation of the
respective businesses of the Companies or the lawful
occupant of the Real Properties.
(h) In respect of the Real Property situated at Units
500, 510, 520 and 000 Xxxxxxxx Xxxxx, Xxxxxxxx
Xxxxxx, Xxxxxxx only Sellers agree to indemnify
Purchaser if an enforcement notice is served because
there has been a change of use of any of these
properties (prior to the date of this Agreement)
without planning permission, against all costs
connected with the challenging of such notice and
obtaining retrospective planning consent and for the
relocation of the Company and its business which uses
the premises which are the subject of such
enforcement notice, if retrospective planning consent
can not be obtained.
2.7 COMPLIANCE WITH LAW
(a) Except only as specifically set forth in Schedule
2.7, each of the Companies is and has been in
compliance with all applicable Laws except where the
failure to comply would not have individually, or in
the aggregate, a Material Adverse Effect. No
investigation is pending or, to the knowledge of any
Seller, threatened by any Authority with respect to
any violation by any of the Companies of any such
Law. The Companies are not in a dominant position in
any market in any part of the European Economic
Community for the purpose of Article 86 of the Treaty
of Rome and none of the Companies is a party to any
agreement, arrangement or activity which has been or
should be notified to the Commission of the European
Community for an exemption or in respect of which an
application has been or should be made to the said
Commission for negative clearance.
(b) The inventories of the Companies are in all material
respects properly stored by the Companies in
compliance with applicable laws (including, without
limitation, any laws and regulations with respect to
contents, packaging or labelling) and the physical
storage requirements for such inventories.
2.8 IMPROPER PAYMENTS
Each of Sellers, their respective Affiliates (as defined in
Section 2.19), the Companies, and their respective
Employees, agents, representatives and other Persons
associated with or acting on behalf of any of them, has not
so far as Sellers are aware used any corporate or other
funds for unlawful contributions, payments, gifts or
entertainment, or so far as Sellers are aware made any
unlawful expenditures relating to, any political activity,
or so far as Sellers are aware made any direct or indirect
unlawful payments to government officials or others.
2.9 TAXES
Except only as specifically set forth in Schedule 2.9:
(a) All Returns which were required to be filed with
respect to the Companies have been timely filed, were
correct and complete in all material respects and
have been prepared on a proper and consistent basis;
provided, however that for the avoidance of doubt a
return shall not be complete and accurate in all
material respects if a liability to pay penalties or
interest could arise or be increased as a result of
any omission or inaccuracy in relation to such return
or if such omission or inaccuracy could give rise to
any uncertainty concerning the present or future
liability to Tax of any of the Companies.
As used herein, the term "Returns" means all returns,
reports, estimates, declarations, information returns
and statements of any nature with respect to Taxes,
including, without limitation, corporation tax
returns and computations required to be filed by and
with respect to any of the Companies and declarations
of estimated tax and tax reports required to be filed
by or with respect to the Companies or their
respective income, properties or operations.
As used herein, the term "Tax" or "Taxes" means any
national, federal, provincial, state, municipal,
local or foreign taxes, duties or levies charged in
respect of income, gross receipts, value-added,
profits, severance, capital, net worth, distributions
(whether hidden or not), franchise, license,
transfer, stamp or stamp duty reserve, sales,
turnover, use, payroll, employment, any
profit-related pay schemes withholding, social
security, national insurance, workers and
unemployment compensation, property (real or
personal), gains, occupation, excise and all other
similar taxes, assessments, customs, duties, charges
and fees (including interest, fines, penalties or
additions to such taxes and any interest in respect
of such penalties or additions) applicable to (or
subject to withholding by) any of the Companies, or
on a consolidated basis, all or any combination of
the Companies, and shall in the United Kingdom
include (but without limitation) advance corporation
tax, any amounts payable pursuant to Section 350,
Section 419 or Section 601 of the Taxes Act and input
tax within the meaning of Section 24 of the VAT Act
but shall exclude uniform business rates payable in
respect of Real Property.
As used herein, the term "Taxes Act" means the United
Kingdom Income and Corporation Taxes Xxx 0000.
As used herein, the term "VAT Act" means the United
Kingdom Value Added Tax Xxx 0000.
(b) Each of the Companies has paid all Taxes which it is
required to pay on or before the Closing Date. The
Companies are not liable for any interest, penalties,
fines or surcharges in relation to any Tax.
(c) The Balance Sheet makes proper provision for deferred
taxation in accordance with GAAP and SSAP 15, and no
transfer from or reduction to the deferred taxation
account or any other reserve in respect of deferred
taxation has been made or will have been made by any
of the Companies on or before the Closing Date.
(d) There are no pending requests for rulings, clearances
or consents from any Taxing Authority (as defined
below), no outstanding subpoenas or requests for
information by any Taxing Authority with respect to
any Returns or Taxes, and so far as Sellers are aware
no proposed reassessments by any Taxing Authority of
any property owned or leased by any of the Companies.
As used herein, the term "Taxing Authority" means any
national, federal, provincial, state municipal, local
or foreign government or any authority, agency, body
or official empowered to levy or collect any Tax.
(e) With the sole exception of the U.S. federal income
tax returns of the Companies, which U.S. federal
income tax returns have never been examined by the
U.S. Internal Revenue Service, the Income Tax Returns
of the Companies have been examined by and agreed
with the relevant Taxing Authorities, or the period
covered by such Returns has been closed by an
applicable statute of limitations, for the periods
set forth on Schedule 2.9.
As used herein, the terms "Income Tax" or "Income
Taxes" mean any Tax (i) based upon, measured by, or
calculated with respect to, net income or net
receipts, proceeds, or profits (including, but not
limited to, any corporation Taxes, capital gains
Taxes, real property gains Tax, minimum Taxes and any
Taxes on items of Tax preference, but not including
sales, use, value-added, severance, production,
extraction, federal royalty, real or personal
property transfer, stamp or other similar Taxes) or
(ii) based upon, measured by, or calculated with
respect to multiple bases (including, but not limited
to, corporate franchise or occupation Taxes) if one
or more of the bases on which such Tax may be based,
measured by, or calculated with respect to is
described in (i) above.
(f) There are no agreements in effect, whether written or
oral, to extend (i) the time to file any Return of or
relating to any of the Companies, or (ii) the period
of limitations for the assessment or collection of
any Taxes for which any of the Companies would be
liable.
(g) All deficiencies of Taxes asserted or proposed in
writing or, to the knowledge of any Seller, otherwise
asserted, proposed or threatened, with respect to any
of the Companies as a result of any profit-related
pay scheme or any audit, examination, investigation
or similar proceeding by any Taxing Authority have
been paid or adequate provision therefor has been
made in the Balance Sheet.
(h) There is no pending Tax audit, examination,
investigation or similar proceeding or any dispute
with any Taxing Authority relating to any of the
Companies, nor is any Seller aware of any matter
which may lead to any such examination, investigation
or similar proceeding or dispute.
(i) All clearances and consents obtained from any Taxing
Authority by any of the Companies are specifically
set forth in Schedule 2.9 and were obtained after
sufficient and accurate disclosure of all material
facts and considerations and so far as the Sellers
are aware no such clearance or consent is liable to
be withdrawn, nullified or rendered void.
(j) All amounts required to be withheld or collected by
each of the Companies with respect to Taxes have been
duly collected or withheld and any such amounts that
were required to be remitted to any Taxing Authority
on or before the Closing Date have been duly
remitted.
(k) Prior to the date hereof, Sellers have provided (or
caused to be provided) to Purchaser copies of all
Taxing Authorities' reports, assessments and other
written assertions of Tax deficiencies of each of the
Companies (in which any of the Companies is or may be
liable) with respect to each of the last six taxable
years of each of such entities and any closing
agreements executed with respect thereto.
(l) No Tax will be chargeable on or recoverable from any
of the Companies nor will any credit or allowance
cease to be available to any of them or be restricted
in each case as a result of or in connection with the
sale of the Shares hereunder, and none of the
Companies has made any distribution or deemed
distribution (including, without limitation, any
distribution under Section 418 of the Taxes Act)
without paying advance corporation tax to the extent
due and payable thereon.
(m) No liability to Tax would arise if any assets or debt
valued in excess of [POUND STERLING]5,000 of any of the
Companies were disposed of for an amount equal to the
value attributed to such asset or debt in the Balance
Sheet.
(n) None of the Companies has or so far as Sellers are
aware will have any liability for Taxes of another
Person other than any of the other Companies (i)
under any provision relating to liability of a former
member of an affiliated group (including U.S.
Treasury Regulation [Section] 1.1502-6 or any similar
provision), (ii) as a transferee or successor, (iii)
by contract, or (iv) save in relation to withholding
taxes (including PAYE and other payroll taxes or
deductions of social security contributions)
otherwise.
(o) None of the Companies is a party to any Tax
allocation or sharing agreement that includes any
entity other than the Companies.
(p) None of the Companies has made any payments, is
obligated to make any payments or is a party to any
agreement that could obligate it to make any non-
deductible payments to any Employee (as defined in
Section 2.13) upon a change of control (including
pursuant to Section 280G of the U.S. Internal Revenue
Code).
(q) Except only as specifically described in Schedule
2.9(q), (i) the Company is resident in the United
Kingdom for United Kingdom Tax purposes and is not
and never has been resident for any purpose in any
other country, (ii) none of the Subsidiary Companies
is or ever has been resident for any Tax purposes
(including for the purposes of any double taxation
treaty) in any territory other than that in which it
is incorporated and (iii) none of the Companies
carries on business through a branch or agency or
permanent establishment or is otherwise liable to
Tax, in any jurisdiction other than that in which it
is incorporated.
(r) No amount of an income nature which has been paid or
is payable by any of the Companies, or which it is
under an obligation entered into before the Closing
Date to pay, is wholly or partly disallowable as a
deduction, charge on income or otherwise in computing
its liability to Taxation.
(s) Each capital expenditure of a kind that potentially
qualified or qualifies for capital allowances
incurred or to be incurred by the Company prior to
Closing has qualified and continues to qualify for
capital allowances.
(t) There are no held-over gains (within the meaning of
Section 154 of the TCG Act) attributable to any of
the assets of the Company.
As used herein, the term "TCG Act" means the United
Kingdom Taxation of Chargeable Gains Xxx 0000.
(u) All documents in the possession of any of the
Companies or to the production of which it is
entitled and which attract stamp or transfer duty of
in excess of [POUND STERLING]100 in the United Kingdom,
United States, France, Germany or so far as Sellers are
aware elsewhere have been properly stamped.
(v) None of the Companies has entered into or been a
party to any scheme or arrangement designed wholly or
mainly for the purpose of such company or (so far as
any Seller or the Company is aware) any other Person
avoiding Taxation.
(w) The Company: (i) has not agreed to any special method
of attributing accounting or otherwise in relation to
value-added tax with H.M. Customs & Excise; (ii) does
not own any capital items which are subject to Part
XV of the Value Added Tax Regulations 1995 (the
capital goods scheme) and (iii) does not own any land
or building (including any interest in or right over
any land or building) in respect of which it or a
relevant associate of it has made an election to
waive exemption pursuant to paragraphs 2 and 3 of
Schedule 10 to the VAT Act.
(x) The Company is registered for purposes of United
Kingdom value-added tax ("VAT") and has complied in
all material respects with all statutory provisions
relating thereto, including, without limitation,
preparing and filing all VAT returns on a timely,
proper and consistent basis and paying all VAT on a
timely basis; provided, however, that for the
avoidance of doubt statutory provisions shall not
have been complied with in all material respects if a
liability to pay penalties or interest could arise or
be increased as a result of any failure to comply or
if such failure to comply could give rise to any
uncertainty concerning the present or future
liability to Tax of any of the Companies. All
supplies made by the Company are taxable supplies for
purposes of VAT. The Company has never been a member
of a group of companies for the purposes of Section
43 of the VAT Act. The Company is not, and has not
agreed to become, an agent or VAT representative for
the purposes of Section 47 or 48 of the VAT Act of
any person not resident in the United Kingdom.
(y) No apportionment under Chapter III of Part XI of the
Taxes Act has been made or threatened against the
Company nor are there any circumstances which allow
such an apportionment to be made or threatened. All
transactions among the Companies were conducted on an
"arm's-length" basis. No loan, advance, release or
payment has been made or consideration given or
transaction effected by the Company falling within
Section 419 to 422 (inclusive) of the Taxes Act. The
Company has made no transfer of the kind referred to
in Section 125 of the TCG Act nor any transfer of
value relevant for Section 94 Inheritance Tax Act.
(z) Neither the assets nor the shares of any of the
Companies are subject to any United Kingdom Inland
Revenue charge as mentioned in Section 237 of the
United Kingdom Inheritance Tax Xxx 0000.
(aa) No person has, or could obtain, the power under
Section 212 of the United Kingdom Inheritance Tax Xxx
0000 to raise any inheritance tax by the sale or
mortgage of or by a terminable charge on any of the
Company's assets.
(bb) None of the Companies has caused, permitted or
entered into any of the transactions specified in
Section 765 of the Taxes Act without the prior
consent of HM Treasury nor made a deemed disposal of
assets pursuant to Section 185 or 186 of the TCG Act
nor made an election as "the principal company" under
Section 187 of the TCG Act nor failed to comply with
Section 130 Finance Act 1988 before ceasing to be
resident in the United Kingdom.
(cc) Each of the Companies has properly operated the PAYE
(or other applicable payroll tax) system and all
deductions and payments required to be made by any of
the Companies in respect of National Insurance or
other social security contributions (including
employer's contributions) on or before the Closing
Date have been made and each of the Companies has
complied in all material respects with all reporting
obligations in connection with benefits provided for
each of the Companies' directors, other officers and
employees; provided, however that for the avoidance
of doubt reporting obligations shall not have been
complied with in all material respects if a liability
to pay penalties or interest could arise or be
increased as a result of any failure to comply or if
such failure to comply could give rise to any
uncertainty concerning the present or future
liability to Tax of any of the Companies
(dd) All claims, elections and notices in relation to Tax
or other Returns which have been taken into account
in calculating the provisions for Tax in the Balance
Sheet have, except to the extent specifically set
forth in Schedule 2.9(dd), been properly and duly
submitted to the relevant Taxing Authorities and are
not the subject nor so far as Sellers are aware are
likely to be the subject of any dispute with the
relevant Taxing Authorities.
(ee) Proper provision or reserve has been made in the
Balance Sheet in accordance with GAAP for all Tax
liable to be assessed on each of the Companies or for
which they are or may become accountable in respect
of the period ended on the Balance Sheet Date.
(ff) There are specifically set forth in Schedule 2.9(gg)
copies of all notifications from a Taxing Authority
to any of the Companies that any payment which any of
the Companies is currently liable to make may be made
gross or at a reduced rate of withholding which
otherwise should have been made subject to deduction
of an amount in respect of Tax and no rent payable by
the Company is subject to the provisions of Section
42A Taxes Act and/or any regulations made thereunder.
(gg) Any liability (actual or contingent) on any of the
Companies to make a payment subject to a deduction or
withholding of Tax which are subject to a liability
to gross up are specifically set forth in Schedule
2.9(gg).
(hh) The Company has not (i) at any time repaid or
redeemed or agreed to repay or redeem any share
capital or securities; or (ii) issued or agreed or
resolved to issue shares or securities otherwise than
for new consideration; or (iii) at any time
capitalised or agreed to capitalise any profits or
reserves into shares or securities and has not passed
or agreed to pass any resolution to do so.
(ii) The Company has not issued and is not the owner of
(i) any securities (as defined in Section 254(1)
Taxes Act) in relation to which payments might fall
within Section 209(2)(d) and/or (da) and/or (e) Taxes
Act; or (ii) any relevant discounted securities
within the meaning of paragraph 3 of Schedule 13 to
the Finance Xxx 0000; or (iii) any debt which is not
a normal commercial loan for the purposes of Section
117(1) TCG Act or Schedule 18 Taxes Act.
(jj) The Company has not been concerned or agreed to be
concerned in any transaction involving an exempt
distribution within Sections 213 to 218 (inclusive)
Taxes Act.
(kk) The Company is not a party to a loan relationship
with a person other than a Subsidiary Company which
falls within the provisions of Section 87 of the
Finance Xxx 0000 (connected parties) and no debt owed
by the Company has since the Balance Sheet Date been
released in whole or in part in circumstances that
give rise or could give rise to a liability to
Taxation.
(ll) No loss which might accrue on the disposal by the
Company of any share in or security of any company is
liable to be reduced by virtue of any depreciatory
transaction or deemed depreciatory transaction within
Sections 176 and 177 TCG Act.
(mm) The Company has not elected nor has it been treated
by paragraph 8(2) Schedule 3 TCG Act as having
elected that all disposals made by it shall fall
outside Section 35(3) TCG Act.
(nn) The Company has not been involved in any transactions
where a claim has or could have been made under
Sections 140A and 140C of the TCG Act.
(oo) The Company has not within the last six years (i)
made any elections or payments under Section 247 of
the Taxes Act; or (ii) entered into any agreements or
arrangements relating to group relief; or (iii)
entered into any agreements or arrangements relating
to the surrender of ACT; or (iv) been a party to any
agreement or arrangement under Section 102 of the
Finance Xxx 0000.
(pp) None of the Companies (i) are parties to leasing
transactions to which the provisions of section 82
and Schedule 12 of the Finance Xxx 0000 would apply;
or (ii) have made a or currently intends to declare
and/or make prior to Closing a distribution to which
the provisions of section 69 and Schedule 7 of the
Finance Xxx 0000 would apply.
(qq) The full amount of the Company's surplus ACT (if any)
is set forth in Schedule 2.9(qq);
(rr) No transaction has been entered into or event
occurred in consequence whereof any of the Companies
so far as Sellers are aware could be liable to
Taxation or increased Taxation pursuant to Section
770-773 Taxes Act or any equivalent or substantially
equivalent provision, law or regulation in any other
relevant jurisdiction;
(ss) The Company is not a controlled foreign corporation
within the meaning of Section 957(a) of the US
Internal Revenue Code.
2.10 DISPUTES
Except only as set forth in Schedule 2.10, there is no
actual, pending or, to any Seller's knowledge, threatened
suit or other legal or administrative action, investigation
or arbitration other than in connection with the collection
of debts arising in the ordinary course of business less
than [POUND STERLING]10,000 in the aggregate ("Litigation");
nor has there been at any time within the six years ending on
the date hereof any Litigation which either (i) involves any
of the Companies or Sellers, whether as plaintiff or defendant,
and would have a Material Adverse Effect; or (ii) seeks or
could reasonably be expected to prevent, restrict or delay
the consummation of the transactions contemplated hereby or
the fulfilment of the conditions contained herein. In
addition, so far as Sellers are aware no circumstances
exist which render any director of any of the Companies
capable of being disqualified from being a director
thereof.
2.11 CONTRACTS
(a) Except for Contracts terminable upon notice of 90
days or less without penalty, and Contracts involving
commitments on behalf of any of the Companies
aggregating less than [POUND STERLING]10,000, Purchaser
has been provided with copies of all Contracts,
including without limitation:
(i) any Contract (whether as licensor or licensee,
assignor or assignee) relating to any of the
Intellectual Property Rights (as defined in
Section 2.14);
(ii) any Employee Agreement (as defined in Section
2.13(c)) and any Employee Plan (as defined in
Section 2.13(c) or any contract, loan or other
obligation in which an Employee or related
Person is interested for the purposes of
Section 317 of the Companies Act or otherwise;
(iii) any material Contract with customers or
suppliers;
(iv) any Contract with any distributor, dealer,
sales agent or representative or any agreement
containing a grant to or by any of the
Companies of any sole, exclusive or non-
exclusive rights to deal in such Company's
products (whether by reference to territory,
product, type of customer or supplier or
otherwise);
(v) any collective bargaining or other Contract
with any labour union;
(vi) any Contract granting to any person a right at
such person's option to purchase or acquire any
asset or property of any of the Companies (or
any interest therein) (other than inventory in
the ordinary course of business);
(vii) any Contract granting any Person an Encumbrance
on any of the assets or properties of any of
the Companies, including without limitation any
factoring agreement or agreement for the
assignment of accounts receivable or inventory;
(viii) any joint venture, consortium or
partnership or other profit-sharing Contract
with any Person or any research, development or
co-operation agreement with any Person;
(ix) any indenture, mortgage, loan note, bond,
debenture, loan capital or other evidence of
indebtedness, redeemable preference share, any
credit, loan, overdraft facility or similar
Contract under which it has borrowed any money,
and any guarantee of or agreement to acquire
any such obligation, or agreement to guarantee
or acquire any liability of any other Person,
or any loan by any of the Companies to any
other Person;
(x) any Contract for the modification of any
building or structure or for the incurrence of
any other capital expenditure over [POUND
STERLING]30,000;
(xi) any Contract or any other arrangements,
understandings or commitments to which the
Company is a party (whether or not such
arrangements, understandings or commitments are
binding) which restricts it from entering into
any new or existing line of business, contains
geographic restrictions on its ability to
conduct business activities, or otherwise
restricts its ability to deal with whomever and
by whatever means it thinks fit, or any
Contract, arrangement or concerted practice
which contravenes, may result in any references
under, or is or may be required to be
registered under, or has been the subject of
any undertaking or order under, the United
Kingdom Restrictive Trade Practices Xxx 0000,
the Retail Prices Xxx 0000, the Competition Xxx
0000 or other applicable antitrust legislation,
or which contravenes Articles 85(1) or 86 of
the Treaty of Rome (or which would be so
prohibited but for any exempting provisions
under such Treaty or any Regulations in force
under it) or has been notified to the
Commission of the European Union;
(xii) any Contract which by its terms: (A) entitles
any party thereto (other than any of the
Companies) to terminate it in the event of any
change in the underlying ownership or control
or management of any of the Companies, or
(B) entitles such party to renegotiate the
terms in any material respect or otherwise
materially alter the operation or duration
thereof in the event of any such change;
(xiii) any Contract relating to clean-up,
abatement or other actions in connection with
the remediation of any liabilities relating to
any Environmental Matters (as defined in
Section 2.16) or relating to the performance of
any environmental audit or study with respect
to the respective business of any of the
Companies;
(xiv) any Contract relating to the acquisition or
disposal of a material amount of assets (by way
of merger, consolidation, purchase, sale or
otherwise);
(xv) any other Contract not in the ordinary course
of business.
As used herein, the term "Contracts" means all
written leases, contracts, grants, licenses, sales
orders and all other agreements, whether written or
oral, to which any of the Companies is a party or by
which it is bound.
(b) Except only as specifically set forth in Schedule
2.11, (i) subject to the availability of equitable
reliefs, laws relating to insolvency and bankruptcy,
law and practise on the determination of disputes and
the enforcement of judgments and matters of public
policy each Contract is valid, in full force and
effect and enforceable in accordance with its terms
unless the failure to be so would not have
individually, or in the aggregate, a Material Adverse
Effect, (ii) the Companies have complied in all
material respects with the provisions of all the
Contracts and are not in default thereunder except
where the lack of compliance or any default would not
have individually, or in the aggregate, a Material
Adverse Effect, and (iii) to the knowledge of any
Seller, there has not occurred any default by others
or any event which, with the lapse of time or the
election of any person other than any of the
Companies will become a default under any of the
Contracts except where such default would not have
individually, or in the aggregate, a Material Adverse
Effect.
(c) Save as set out in Schedule 2.11(c) and save for
retention of title liens and similar arrangements no
plant or equipment, currently used by any of the
Companies in the course of their respective
businesses has or have been supplied under any
Contract or arrangement which precludes its or their
sale, transfer, assignment, disposal or use by any
other person.
(d) The Companies have terminated, without incurring any
liability (whether actual, future, vested or
contingent) all credit, loan, overdraft or other
borrowing facilities and all other Contracts to which
the Company was a party prior to Closing or within
the preceding 12 months pursuant to which the
Companies were entitled to obtain credit or borrow
money save for trade credit in the ordinary course of
trading, save for any credit, loan, overdraft or
borrowing facilities and any charge, mortgage,
debenture, fixed and floating charge, pledge or other
security document or arrangement entered into in
accordance with the written request of Purchaser.
(e) The Companies have, without incurring any liability
(whether actual, future, vested or contingent),
secured the release, discharge or removal of all
Encumbrances over or affecting or relating to any
undertaking or assets of the Companies and have
secured the release, discharge or termination of any
guarantees or contracts in the nature of a guarantee
provided by the Company or any Subsidiary Company,
save for any credit, loan, overdraft or borrowing
facilities and any charge, mortgage, debenture, fixed
and floating charge, pledge or other security
document or arrangement entered into in accordance
with the written request of Purchaser.
2.12 BROKER'S AND FINDER'S FEE
Neither any Seller nor any of the Companies has employed
any broker, finder, consultant or intermediary in
connection with the transactions contemplated by this
Agreement that would be entitled to a broker's, finder's or
similar fee or commission in connection therewith which was
or will be payable by any of the Companies or Purchaser.
2.13 EMPLOYEES AND EMPLOYEE BENEFITS
(a) U.K. Employee Pension Scheme
----------------------------
(i) Except under the Standard Life Executive
Scheme, the Sun Alliance Personal Pension Plan
and the NPI Group Personal Pension Plan (the
"Pension Schemes") or as otherwise set forth in
Schedule 2.3(a)(i), the Companies have no
agreement, arrangement, understanding or
obligation (whether contractual, under trust or
otherwise) which exists for the provision of
relevant benefits (as defined in Section 612 of
the Taxes Act) to any Employee of such
Companies (or a predecessor in business of such
Companies) or for any relative or dependent of
such a Person in connection with which such
Companies are or may become legally or morally
liable to make any payment.
As used herein, the term "Employee" means any
current, former, seconded or retired employee,
officer, consultant or director of any of the
Companies.
(ii) Full details of the Standard Life Executive
Scheme have been given to Purchaser in the form
of copies of the material deeds and rules of
the Pension Scheme, the current booklet and any
announcements of current effect which have been
issued to Employees, all insurance policies and
contracts, any undertakings and indemnities
given to the U.K. Inland Revenue and the
Occupational Pensions Board and the Standard
Life Executive Scheme is governed solely by the
afore-mentioned documents, deeds and rules
which, to the knowledge of any Seller, have
been properly and validly brought into effect.
Copies of all announcements and explanatory
booklets of current effect concerning the Sun
Alliance Personal Pension Plan and the NPI
Group Personal Pension Plan have been given to
Purchaser.
(iii) The Standard Life Executive Scheme is an exempt
approved scheme within the meaning of Chapter I
of Part XIV of the Taxes Act and so far as
Sellers are aware there is no matter which
could lead to the withdrawal of that approval.
The Sun Alliance Personal Pension Plan and the
NPI Group Personal Pension Plan are personal
pension schemes which are approved under
Chapter IV of Part XIV of the Taxes Act and, so
far as Sellers are aware, there is no matter
which could lead to withdrawal of that
approval.
(iv) No power to augment or alter benefits or to
provide benefits which would not otherwise have
been provided under the Pension Scheme has been
exercised in respect of any Employee and no
Employee or member of the Pension Scheme has
been notified that such exercise may be
contemplated.
(v) Any Employee may join any of the Pensions
Schemes after completing six months employment
with the Company.
(vi) Schedule 2.13(a)(vi) contains a list of the
Employees who are active members of the Pension
Schemes, detailing which scheme that individual
is a member of. Details of the relevant
contribution rate payable by the Company in
respect of each Employee are contained at
document 17 of Additional File 7 of the Data
Room.
(vii) All benefits (other than a refund of
contributions with interest where appropriate)
payable under the Pension Schemes on the death
of a member while in employment to which the
Pension Schemes relate are fully insured under
a policy effected with an insurance company
authorized to conduct long-term insurance
business under the Insurance Companies Xxx
0000. To the knowledge of any Seller there is
no reason why any such insurance might be
voidable.
(viii) All amounts due to the Pension Schemes
from the Companies or their Employees have been
paid and were properly assessed or calculated,
in the case of the Standard Life Executive
Scheme in accordance with the payment schedule
prepared for the purpose of Section 87 of the
Pensions Xxx 0000, and in the case of the Sun
Alliance Personal Pension Plan and the NPI
Group Personal Pension Plan in accordance with
Employees' contracts of employment. There has
been no contribution holiday, suspension or
reduction during the three years prior to
Closing.
(ix) So far as Sellers are aware there are no
circumstances in existence which require or
might require the Pension Schemes to be wound
up, and except as set forth in Schedule
2.13(a)(ix) none of the Companies has any
liability to the Pension Schemes under Section
75 of the Pensions Xxx 0000.
(x) To the knowledge of the Company and any Seller
the Standard Life Executive Scheme has been
operated at all times in accordance with the
documents constituting the same (as lawfully
amended from time to time).
(xi) No claim has been made or threatened against
the Companies or, in the case of the Standard
Life Executive Scheme, so far as Sellers are
aware, against the trustees or administrators
of the Pension Schemes (other than routine
claims for benefits). To the knowledge of any
Seller there are no circumstances which may
give rise to any such claim and neither any
Seller nor the Companies have given any
indemnity to any Person in connection with the
Pension Schemes.
(xii) So far as Sellers are aware the Pension Schemes
have no self-investment which exceeds the
limits imposed by The Occupational Pension
Scheme (Investment of Schemes' Resources)
Regulations 1992.
(xiii) Employees may contract out on an individual
basis in relation to any Pension Scheme.
(xiv) No loans have been made by the Standard Life
Executive Scheme and remain outstanding (as to
interest or principal) to the Companies or any
associate of it or to any other person or body
participating in that scheme.
(xv) The Pension Schemes provide only money purchase
benefits as defined in Section 181 of the
Xxxxxxx Xxxxxxx Xxx 0000 and do not seek to
ensure a level of benefit for any past or
present Employee relative to such Employee's
salary or remuneration. Section 74(6) of the
Xxxxxxx Xxxxxxx Xxx 0000 (uniform accrual) does
not apply to the calculation of short service
benefit under the Pension Scheme.
(b) U.S. Employee Plans
-------------------
(i) Schedule 2.13(b)(i) contains an accurate list
of each U.S. Employee Plan. None of the
Companies has any plan or commitment, whether
legally binding or not, to establish or to
enter into any new U.S. Employee Plan or to
modify or to terminate any U.S. Employee Plan
or the funding thereof (except to the extent
required to conform any such U.S. Employee Plan
to the requirements of any applicable law, in
each case as previously disclosed to Purchaser
or as required by this Agreement), nor has any
intention to do any of the foregoing been
communicated to Employees.
(ii) Except as set forth in Schedule 2.13(b)(ii)
Sellers have provided, or have caused the
Companies to provide, to Purchaser (A) current,
accurate copies of all documents embodying or
relating to each U.S. Employee Plan, including
all amendments thereto and trust agreements and
insurance contracts related thereto; (B) the
most recent summary plan description, together
with the most recent summary of material
modifications, if any, required under ERISA
with respect to each U.S. Employee Plan; (C)
the two most recent annual actuarial
valuations, if any, prepared for each U.S.
Employee Plan; (D) the two most recent annual
reports (Series 5500 and all schedules
thereto), if any, required under ERISA in
connection with each U.S. Employee Plan or
related trust; and (E) to the knowledge of the
Companies and any Seller, all material
communications to any Employee or Employees
relating to each U.S. Employee Plan and any
proposed U.S. Employee Plan.
(iii) Each of the Companies have performed all
material obligations required to be performed
by them under each U.S. Employee Plan and (A)
each U.S. Employee Plan has been established
and maintained in accordance with its terms and
in compliance with all applicable laws,
statutes, orders, rules and regulations,
including but not limited to ERISA and the U.S.
Internal Revenue Code of 1986, as amended, (the
"IRC"), except where failure to do so would not
result in any material liability to Seller, any
Company or Purchaser; (B) each U.S. Employee
Plan intended to qualify under Section 401 of
the IRC is, and since its inception has been,
so qualified and a determination letter has
been issued by the U.S. Internal Revenue
Service (the "IRS") to the effect that each
such U.S. Employee Plan is so qualified and
that each trust forming a part of any such U.S.
Employee Plan is exempt from tax pursuant to
Section 501(a) of the IRC; (C) no "prohibited
transaction," within the meaning of Section
4975 of the IRC or Section 406 of ERISA, has
occurred with respect to any U.S. Employee
Plan; (D) each U.S. Employee Plan can be
amended, terminated or otherwise discontinued
without liability to any Company; (E) no U.S.
Employee Plan is under audit or investigation
by the IRS, the Department of Labour or the
Pension Benefit Guaranty Corporation, and to
the knowledge of Sellers, no such audit or
investigation is pending or threatened; and (F)
except as disclosed on Schedule 2.13(b)(iii),
there are no actions, proceedings, suits or
claims pending, threatened or anticipated
(other than routine claims for benefits)
against any of Sellers or any Company by or in
respect of any Employee arising out of any U.S.
Employee Plan.
(iv) No U.S. Employee Plan provides, nor does any of
the Companies have any liability to provide,
life insurance, medical or other employee
welfare benefits to any Employee upon his or
her retirement or termination of employment,
except as may be required by law or as listed
on Schedule 2.13(b)(iv), and neither Sellers
nor any of the Companies has ever represented,
promised or contracted (whether in oral or
written form) to any Employee (either
individually or to Employees as a group) that
such Employee(s) would be provided with life
insurance, medical or other employee welfare
benefits upon their retirement or termination
of employment, except to the extent required by
law.
(v) None of the Companies presently sponsors,
maintains, contributes to, nor is any of the
Companies required to contribute to, nor has
any Companies ever sponsored, maintained,
contributed to, or been required to contribute
to, an Employee Plan which is subject to Title
IV of ERISA.
(vi) None of the Companies is now or has ever been
(i) a member of a "controlled group of
corporations," under "common control" or an
"affiliated service group" within the meanings
of Section 414(b), (c) or (m) of the IRC; (ii)
required to be aggregated under Section 414(o)
of the IRC; or (iii) under "common control,"
within the meaning of Section 4001(a)(14) of
ERISA, with any corporation or other entity
(other than the Company or any of the
Subsidiary Companies).
(c) The Companies have at all times administered the
profit-related pay schemes in accordance with their
terms and subject to the provisions of Chapter III of
Part V of Schedule 8 to ICTA 1988 and has discharged
all its obligations under such Schemes.
(d) All Employees
-------------
(i) No work stoppage or labour strike against any
of the Companies is pending, anticipated or so
far as Sellers are aware threatened. No labour
union is conducting any union organizing
activities with respect to any of the
Employees. None of the Companies has had a
complaint made to it by any Employee in
relation to discrimination on the basis of
race, sex or disability or otherwise in its
remuneration rates and policies, promotion
policies and practices, employment conditions
or practices with respect to the Employees in
the last 6 years. None of the Companies is
involved in or, so far as Sellers are aware,
threatened with any dispute, grievance, or
litigation relating to the employment of the
Employees, safety or discrimination matters
involving any Employee, in each case including,
without limitation, violation of any
supranational, national, provincial or local
labour or employment laws except in each case
where it would not individually, or in the
aggregate, have a Material Adverse Effect, nor
does any basis therefor exist.
(ii) None of the Companies is presently a party to,
or bound by, any collective bargaining
agreement or union contract with respect to
Employees, and no collective bargaining
agreement, union contract or recognition
agreement is currently being negotiated by any
of the Companies.
(iii) Schedule 2.13(d)(iii) sets forth the name,
position, title or function, and the salary or
wages and commission entitlements, date of
birth and date of commencement of the
respective periods deemed to be their period of
continuous employment with each of the
Companies of each Current Employee. Except
only as specifically set forth in Schedule
2.13(d)(iii), no such Current Employee has
notified any Seller or any of the Companies of
his or her intention to resign or retire. The
execution of, and performance of the
transactions contemplated in, this Agreement
will not (either alone or upon the occurrence
of any additional or subsequent events) (i)
constitute an event under any Employee Plan or
Employee Agreement that will or may result in
any payment (whether of severance pay or
otherwise), forgiveness of indebtedness,
vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any
Employee, or any obligation to make payment to
any Tax Authority, or (ii) result in the
triggering or imposition of any restrictions or
limitations on the right of any Company to
amend or terminate any Employee Plan and
receive the full amount of any excess assets
remaining or resulting from such amendment or
termination, subject to applicable taxes. No
payment or benefit which will or may be made by
any Company, Seller or Purchaser, or any of
their respective Affiliates with respect to any
Employee will be characterized as an "excess
parachute payment," within the meaning of
Section 280G(b)(1) of the IRC.
(iv) Purchaser has been provided with copies of the
principal statement of terms and conditions of
employment, the employee handbook for all
Current Employees of the Company (together the
"Principal Terms of Employment"). Except as
specifically set forth on Schedule 2.13(d)(iv),
no Current Employee of the Company (including
Sellers and the directors of the Company) is
employed on terms other than those contained in
the Principal Terms of Employment.
(v) Complete copies of the Employee Agreements have
been provided to Purchaser.
(vi) No Current Employee has ceased to be employed
by or to be under contract to any of the
Companies in circumstances in which he could
make any claim for damages or compensation
other than a claim which would not be frivolous
or vexatious or is under notice of resignation,
dismissal or termination.
(vii) The Companies take and have taken appropriate
precautions to ensure that the Employees have a
working environment and working practices
(whether or not on the Companies' premises)
which are not injurious to their health or
safety. So far as Sellers are aware each of
the Companies (A) is in compliance with all
applicable laws respecting employment,
employment practices, terms and conditions of
employment and hours, in each case, with
respect to Employees; (B) has withheld all
amounts required by law or by agreement to be
withheld from the wages, salaries and other
payments to Employees; (C) is not liable for
any arrears of wages or any taxes or any
penalty for failure to comply with any of the
foregoing; and (D) is not liable for any
payment to any trust or other fund or to any
governmental or administrative authority, with
respect to unemployment compensation benefits,
social security or other benefits for
Employees. The Companies have discharged all
obligations to pay wages, salaries and other
benefits under any Employee Agreement or
Employee Plan up to the date of Closing.
(viii) There is no outstanding commitment
(whether legally binding or not) to increase
the remuneration of any Current Employee. The
remuneration of Current Employees is not
reviewed, and no Current Employee has any right
or expectation (whether legally binding or not)
to have their remuneration reviewed, more
frequently than once in every calendar year and
the last such review was completed in 1 April
1997.
(ix) Except where any provision or allowance is made
in the Financial Statements, (A) no liability
(actual or contingent) has been incurred in the
12 months prior to the date hereof by any
Seller or by any of the Companies for breach of
any contract of service or consultancy, for
redundancy payments (including protective
awards), for compensation for wrongful
dismissal or unfair dismissal or under Part II
of the Employment Rights Xxx 0000, sex
discrimination, race discrimination, disability
discrimination, for equal pay or loss of
office, under any order for reinstatement or re-
engagement of any officer or Employee or for
failure to comply with any other similar law;
and (B) in the last 12 months no payment has
been made or promised by the Seller or by any
of the Companies in connection with the
termination, suspension or variation of any
contract of service or consultancy or for
services of any Employee.
As used herein, the term "Current Employee"
means any Employee who is actively working for
or providing services to any of the Companies
or on approved leave of absence and has a right
to return to employment or to resume providing
services to any of the Companies as of the
Closing Date and who has an annual salary or
wage of [POUND STERLING]10,000 or more.
As used herein, the term "Employee Agreement"
means each management, employment, consulting,
non-compete, change-in-control,
confidentiality, agreement or contract entered
into by any of the Companies with any Employee.
As used herein, the term "Employee Plan" means
each plan, program, policy, payroll practice,
contract, or other arrangement (other than any
Employee Agreement) providing for compensation,
termination pay, performance awards, profit
related pay schemes, stock or stock-related
awards, life and health insurance,
hospitalization, saving, bonus, pensions,
supplemental pensions, deferred compensation,
incentive compensation, holidays, profit
sharing, vacations, sick pay, sick leave,
disability benefits, tuition refunds, service
awards, company cars, scholarships, relocation
benefits, patent awards, fringe benefits or
other employee benefits of any kind, whether
formal or informal, funded or unfunded and
whether or not in writing or legally binding.
As used herein, the term "U.S. Employee Plan"
means an "Employee Plan" which by its terms
applies to Employees of Safeline Incorporated.
As used herein, the term "ERISA" means the U.S.
Employee Retirement Income Security Act of
1974, as amended.
(e) None of the Companies have any Employee Plans
other than the Pension Schemes and the US
Employee Plans.
2.14 INTELLECTUAL PROPERTY RIGHTS
(a) Schedule 2.14 specifically sets forth and describes
all material Intellectual Property Rights and all
licences of the same that are material to the
business of the Companies as well as all material
Licensed Intellectual Property. Except only as
specifically set forth in Schedule 2.14, (i) the
Companies are the sole legal and beneficial owner of
the Intellectual Property Rights, free from all
claims, actions, suits, demands, contractual
limitations or restrictions and (so far as Sellers
are aware) all other Encumbrances; and all Licensed
Intellectual Property has been validly granted to one
or more of the Companies and each licence is used by
the Companies in accordance with its terms (ii)
neither any Seller nor any of the Companies has
received written notice or otherwise has knowledge
that any of the Intellectual Property Rights or the
Licensed Intellectual Property is being infringed
upon or appropriated by others; (iii) all patents
and trade marks which have been applied for or
registered have been registered or applied for in the
name of one of the Companies and any registrations
have been properly maintained and renewed in
accordance with all applicable Laws; (iv) Sellers and
the Companies have been and are taking all reasonable
steps necessary to prevent any impairment of the
right of any of the Companies to use the Intellectual
Property Rights and the Licensed Intellectual
Property; (v) the Companies have filed all
appropriate renewals, extensions, affidavits of
continued use and/or incontestability, and have paid
all fees associated therewith, necessary to maintain
the Intellectual Property Rights; (vi) there is no
claim or demand of any person pertaining to, or any
prosecution, suit, action or proceeding pending or,
to the knowledge of any Seller or the Company,
threatened, that challenges the exclusive right of
any of the Companies to use the Intellectual Property
Rights or use by the Companies of the Licensed
Intellectual Property which, if pursued, might cause
any of the warranties in this Section 2.14 to be
untrue; (vii) no aspect of the Intellectual Property
Rights is subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any
Authority and as far as the Sellers are aware, the
Intellectual Property Rights are valid, subsisting
and enforceable; (viii) neither any Seller nor any of
the Companies has been engaged in any dispute,
whether or not resulting in litigation, and, to the
knowledge of any Seller, no dispute or litigation is
threatened, with respect to the use of any of the
Intellectual Property Rights; (ix) neither any Seller
nor any of the Companies is obligated to pay any
amount, whether as a royalty, license fee or other
payment, to any Person in order to use any of the
Intellectual Property Rights and in respect of all
Licensed Intellectual Property which requires payment
to be made such payment has been made in accordance
with the terms of the relevant licence; (x) the
conduct of the respective businesses of the Companies
as now being or previously conducted does not
infringe or otherwise conflict with, any intellectual
property rights of any third party; (xi) the
Companies have sufficient right, title and ownership
of all Intellectual Property Rights and sufficient
Licensed Intellectual Property necessary for the
conduct of their respective business; (xii) none of
Sellers nor any of the Companies has disclosed or is
obligated to disclose any of the Companies'
confidential information or Know-How (as hereafter
defined) to any third party other than in the
ordinary course of business and under valid and
enforceable obligations of confidentiality; (xiii) no
claim for compensation has been made, and none of
Sellers is aware of any threatened claim for
compensation, by an employee of any of the Companies
carrying on trade in the United Kingdom under the
Patents Xxx 0000 or under any comparable legislation
in any part of the world or under any award scheme;
(xiv) neither any Seller nor any of the Companies has
granted or is obligated to grant any licenses or
assignments under or in respect of any Intellectual
Property Rights owned or used by any of the
Companies; (xv) the moral rights (as described in
Chapter IV of the United Kingdoms Copyright Designs
and Patents Act 1988) in all copyright works
comprised in the Intellectual Property Rights owned
or used by any of the Companies have been waived;
(xvi) where copyright in computer software is owned
by any of the Companies, such Company has sole
possession of the source code and has not granted any
rights whatsoever in or over the source code to any
person or entity; (xvii) in the case of any computer
software licensed to any of the Companies and where
such software is used in or in connection with any of
the Companies' products, including but without
limitation, metal detectors, such Company has full
rights of access to and use of the source code to the
software in the event of any insolvency,
administrative receivership, receivership,
administration or bankruptcy (or equivalent event in
any relevant jurisdiction) or breach by the owner of
the software of the relevant license; and (xviii) no
independent contractor and no Person other than
employees of the Companies has been engaged to
prepare, maintain or modify any software or computer
programs used by the Companies in relation to their
respective businesses except under written
obligations to treat as confidential all information
regarding their businesses thereby obtained and to
assign to the Companies the full right to use such
software and computer programs without limit in time
or other restriction.
As used herein, the term "Intellectual Property
Rights" means all patents, copyrights and trademarks,
and all rights in service marks, trade names and
logos and get-up, inventions, utility models,
semiconductor topographies, improvements, drawings,
designs, patterns, processes, formulae, trade
secrets, proprietary rights and all rights of
whatever nature in computer software and data,
confidential information, ideas and Know-How and all
intangible rights and privileges of a nature similar
to any of the foregoing, in every case in any part of
the world and wherever registered, filed, applied for
and whether or not patentable or registrable, owned
by the Companies and/or used in the business of the
Companies (other than the Licensed Intellectual
Property). "Licensed Intellectual Property" means
any licenses or agreements in relation to the use of
intellectual property rights from third parties (and
including without limitation those patents,
copyrights, trademarks and other intellectual
property rights used or held for use by any of the
Companies and required to be listed in Schedule 2.14
hereto).
As used herein, the term "Know-How" means all
confidential, commercial and technical information
relating to the respective businesses of any of the
Companies, including, without limitation, all lists
and particulars of customers and suppliers,
particulars of marketing and other procedures,
advertising copy, studies, surveys, meeting notes,
prices, repair and refurbishing agreements, product
features, circuit diagrams, layouts, designs and
specifications, methods of manufacture, techniques,
product files, product master files, correspondence
with suppliers and customers, manuals, quality
assurance, inspection reports, photographs and films,
computer discs and all other media for the storage of
computer programs and all information relating to the
technology of the respective businesses of any of the
Companies, not in the public domain or publically
available.
(b) None of the Companies operates as a computer bureau,
as that term is defined in the Data Protection Xxx
0000, in the United Kingdom or elsewhere in the
world, and no notice of any kind has been served on
any of the Companies under any provision under any
part of that Act or any analogous Law in any part of
the world. Insofar as any of the Companies is a
"Data User" under the Act or in an equivalent
position under any analogous Law in any other
country:
(i) all necessary applications for registration
have been duly made and are listed in Schedule
2.14(b); and
(ii) the details supplied to the Registrar, or other
official concerned, in relation to each
application are accurate and complete.
(c) The Companies' advertising for or in connection with
any part of their businesses:
(i) makes no inaccurate or misleading claims for
the performance and quality of its products or
services; and
(ii) has not been the subject of any complaint from
any Authority, customer or other person that
such advertising is misleading or deceptive or
likely to cause confusion.
2.15 CONSENTS
Each Seller and the Companies have obtained and complied
with the terms of all such consents, licences, approvals,
waivers, authorizations or registrations, as specifically
set forth on Schedule 2.15, necessary for the conduct of
the Companies' respective businesses, except where the
failure to do so would not individually, or in the
aggregate, have a Material Adverse Effect, and none of such
consents, licences, approvals, waivers, authorizations or
registrations contains any unusual or onerous terms and/or
conditions.
2.16 ENVIRONMENTAL MATTERS
(a) Except only as specifically set forth in Schedule
2.16(a), the respective businesses of each of the
Companies (which, for the purposes of this Section
2.16 and Section 7A, expressly includes transferred,
disposed of or discontinued operations of each of the
Companies) have at all times been operated, and are,
and Sellers and the Companies are in full compliance
with, and have no actual or contingent liability
under, any Environmental Laws (as defined below)
(including, without limitation, all limitations,
restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables
contained therein), except where the failure to do so
would not have individually, or in the aggregate, a
Material Adverse Effect.
(b) Except only as specifically set forth in Schedule
2.16(b), each of the Companies has obtained, is in
full compliance with, and has made all appropriate
filings as are required under, Environmental Laws or
under the terms of Environmental Permits for issuance
or renewal of all Environmental Permits (as defined
below) relevant or appropriate to or required for the
continuation of the activities of each of the
Companies, including, without limitation, those
regulating the use, storage, keeping, accumulation,
treatment, transportation, release, emission,
discharge and disposal of Hazardous Materials, raw
materials, by-products and Waste and all such
Environmental Permits are in full force and effect,
except where the failure to so obtain, comply, file
or have in full force and effect would not have
individually, or in the aggregate, a Material Adverse
Effect. No application in respect of any of the
Companies for an Environmental Permit or for the
surrender or variation thereof has been refused or
granted subject to unusual or onerous conditions in
comparison to businesses carrying on similar
activities. Sellers will use reasonable endeavours
to transfer to Purchaser (or its designee) any
Environmental Permits, including, without limitation,
those not held by the Companies, which are relevant
or appropriate to or required for the activities of
the Companies. Sellers know of no intention on the
part of any relevant Authority to revoke, suspend,
vary, modify or not renew such Environmental Permits.
No such Environmental Permits contain any conditions
making them personal to any of the Companies.
(c) Except only as specifically set out in Schedule
2.16(c), there has been no release or other
dissemination or threat of release or dissemination
at any time of any Hazardous Materials at, on, from,
under or within any real property currently or
formerly owned, operated, occupied or leased by any
of the Companies (other than pursuant to and in
accordance with Environmental Permits held by one of
the Companies or any such predecessor) except where
such release would not have individually, or in the
aggregate, a Material Adverse Effect.
(d) Except only as specifically set forth in Schedule
2.16(d), there are no (i) surface impoundments,
incinerators, landfills, landraisings, lagoons,
ponds, waste piles, containment cells, or deep well
injection systems, each as currently defined by or
subject to Environmental Law, at, on, under or
within, the Real Property or (ii) underground or
above ground storage tanks located at, on, under or
within any real property currently or formerly owned,
operated, occupied or leased by any of the Companies
which have individually, or in the aggregate, a
Material Adverse Effect.
(e) Except only as specifically set forth in Schedule
2.16(e), (i) there are no claims, complaints,
notices, civil, criminal or administrative actions,
suits, hearings, investigations, inquiries or
proceedings pending or threatened against (A) any of
Sellers, in connection with or otherwise relating to
the conduct of the business of any of the Companies,
or (B) against any of the Companies, and (ii) no
request from any Authority to perform any
investigation or remedial activity has been received
(Y) by any of Sellers in connection with or otherwise
relating to the conduct of the business of any of the
Companies, or (Z) by the Companies, that are based on
or related to any Environmental Matters or the
failure to have any required Environmental Permits;
(f) Except only as specifically set forth in Schedule
2.16(f), there are no past or present conditions,
events, circumstances, facts, activities, practices,
incidents, actions, omissions or plans that may:
(i) interfere with or prevent continued compliance by
any of the Companies with Environmental Laws and/or
Environmental Permits, or (ii) give rise to any
liability or other obligation under any Environmental
Laws that may require any of the Companies or
Purchaser to incur any Environmental Costs, or (iii)
form the basis of any claim, complaint, notice,
action, suit, proceeding, hearing, investigation or
inquiry against or involving any of the Companies
which in any case is based on any Environmental
Matter, except in each case where such conditions
would not have individually, or in the aggregate, a
Material Adverse Effect.
(g) Except only as specifically set forth in Schedule
2.16(g), none of Sellers, in connection with or
otherwise, relating to the conduct of the business of
the Companies, nor any of the Companies have received
any notice or other written communication that any of
them is or may be a potentially responsible person or
otherwise liable in connection with any waste
disposal site or other location used for the storage,
treatment or disposal of any Hazardous Materials.
(h) Except only as specifically set forth in Schedule
2.16(h), there is no lien, charge or other
restriction on the ownership, occupancy, use or
transferability of any Real Property under any
Environmental Law or relating to any Environmental
Matter, and no condition exists which could result in
the filing of a lien, charge or other such
restriction against any Real Property under any
Environmental Law, except where it would not have
individually, or in the aggregate, a Material Adverse
Effect.
(i) Neither Sellers nor any of the Companies has
commissioned or is aware of any survey, inspection,
study, test, report or audit which has revealed (A)
any matter which would be a contravention of the
provisions of this Section 2.16, or which may
indicate a failure to comply with Environmental Law
or an Environmental Permit or (B) an actual or
contingent liability arising under Environmental Law
other than those which would not have individually,
or in the aggregate, a Material Adverse Effect; nor
do any of Sellers or any of the Companies know of any
subsequent development or circumstances which would
render any such survey, inspection, study, test,
report or audit incorrect or subject to revision, and
proper records have been kept of each of them; and
Sellers have made available to Purchaser all such
surveys, inspections, studies, tests, reports or
audits received or commissioned other than those
which would not have individually or in the aggregate
a Material Adverse Effect.
(j) The Companies have at all times supplied to the
competent Authorities such information and
assessments as to the Companies' Hazardous Materials
as is required under Environmental Laws; all such
information given (whether under a legal obligation
or otherwise) was materially correct at the time the
information was supplied and all information
contained on public registers relating to such
matters is correct.
(k) Except as specifically set forth in Schedule 2.16(k),
there are no polychlorinated terphenyls, lead,
polychlorinated byphenyls, asbestos or other
deleterious or potentially deleterious materials on,
in or under any Real Property now owned, operated,
occupied or leased by any of the Companies which may
give rise to any material Environmental Costs falling
on any of Sellers, Purchaser or the Companies.
(l) None of the Companies has assumed by contract any
liabilities or obligations arising under Environmental
Law in connection with (i) the Real Property or (ii)
any real property formerly owned, operated, occupied
or leased by any of the Companies or (iii) any real
property used for the storage or disposal of Hazardous
Materials or (iv) any divisions, subsidiaries,
companies or other entities formerly owned by the
Companies.
As used herein, the term "Environmental Costs" shall have
the same meaning as Environmental Losses as defined in
Article 7A.
As used herein, the term "Environmental Laws" means any
Laws governing Environmental Matters (including, without
limitation, (i) in England and Wales, the Alkali Works
Regulation Xxx 0000, the Public Health Acts 1936 and 1961,
the Public Health (Drainage to Trade Premises) Xxx 0000,
the National Parks and Access to the Countryside Xxx 0000,
the Radioactive Substances Xxx 0000, the Factories Xxx
0000, the Offices, Shops and Railway Premises Xxx 0000, the
Nuclear Installations Xxx 0000, the Countryside Xxx 0000,
the Prevention of Oil Pollution Xxx 0000, the Control of
Pollution Xxx 0000, the Health and Safety at Work, etc.,
Xxx 0000, the Salmon and Freshwater Fisheries Xxx 0000, the
Wildlife and Xxxxxxxxxxx Xxx 0000, the Food and
Environmental Protection Xxx 0000, the Control of Pollution
(Amendment) Xxx 0000, the Environmental Protection Xxx
0000, the Planning (Hazardous Substances) Xxx 0000, the
Town and Country Planning Xxx 0000, the Planning (Listed
Buildings and Conservation Areas) Xxx 0000, the Water
Industry Xxx 0000, the Water Resources Xxx 0000, the Clean
Air Xxx 0000 and the Environment Xxx 0000, and (ii) in the
United States, the Comprehensive Environmental Response
Compensation and Liability Act ("CERCLA"), 42 U.S.C. 9601,
et seq., the Hazardous Materials Transportation Act, 49
U.S.C. 1801 et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. 6901, et seq., the Clean Water Act, 33
U.S.C. 1251, et seq., the Clean Air Act, 42 U.S.C. 7401, et
seq., the Toxic Substances Control Act, 15 U.S.C. 2601 et
seq., the Emergency Planning and Community Xxxxx-xx-Xxxx
Xxx, 00 X.X.X. 00000 et seq., the Federal Insecticide,
Fungicide, and Rodanticide Act, 7 U.S.C. 136 et seq., the
Safe Drinking Water Act, 42 U.S.C. 300f et seq. and the
Occupational Safety and Health Act, 29 U.S.C. 651, et seq.)
as any of the above have been or may be amended from time
to time, all rules, regulations, codes of practice,
guidance notes, circulars and statutory instruments
promulgated pursuant to any of the above Laws, and any
other Law governing Environmental Matters, as enacted or in
existence (but not necessarily in force) at the Closing
Date and Part IIA of the Environmental Protection Act 1990
and any other laws providing for controls over land or
water contamination pollution and remediation, including
any common law cause of action providing for any right or
remedy with respect to any Environmental Matter, and all
applicable judicial or administrative decisions, orders, or
decrees.
As used herein, the term "Environmental Matter" means any
matter arising out of, relating to, or resulting from
pollution, contamination, protection of the environment
(including flora or fauna), human health or safety, noise
and vibration, electro-magnetic fields, the condition of
buildings and the workplace, amenity and any matters
relating to emissions, discharges, disseminations, releases
or threatened releases of Hazardous Materials into the air
(indoor and outdoor), surface water, groundwater, soil,
land surface or sub-surface, buildings, structures,
enclosures and other constructions, facilities, real or
personal property or otherwise arising out of, relating to,
or resulting from the manufacture, processing,
distribution, use, treatment, storage, keeping,
accumulation, disposal, transport, handling, release or
threatened release of Hazardous Materials.
"Environmental Permits" means any authorization,
certificate, consent, licence, registration, permission,
permit, variation, modification, transfer consent or
approval given under Environmental Laws or agreements made
pursuant to Environmental Laws.
As used herein, the term "Hazardous Material" means any
substance and any matter that contains any such substance
(A) the use, handling or disposal of which is regulated by
any Environmental Law, (B) which may form the basis of
liability under, any Environmental Law, (C) which makes
more costly the use, development, ownership or occupation
of real property or (D) which is categorized or listed
under any Environmental Law; in each case including,
without limitation, any pollutants, contaminants, toxic,
ignitable, reactive, corrosive, hazardous or extremely
hazardous substances, materials, constituents, chemicals,
oils, petroleum, any petroleum-derived substance or Waste
or any by-products or fractions thereof, any form of
natural gas, lead, asbestos and asbestos-containing
materials, polychlorinated terphenyls, polychlorinated
biphenyls ("PCBs") and PCB-containing equipment, radon and
other radioactive elements, infectious, carcinogenic,
mutagenic, or etiologic agents, pesticides, defoliants,
explosives, flammables, corrosives and urea formaldehyde
foam insulation.
As used herein, the term "Waste" means "waste" as defined
or referred to in any Environmental Law.
2.17 BOOKS AND RECORDS
The books of account and statutory records of the Companies
have been maintained in accordance with good business
practices and all applicable Laws, rules and regulations,
and all the other Books and Records, are complete and
correct in all material respects and have been maintained
by the Companies in all material respects in accordance
with good business practices and all applicable Laws, rules
and regulations. The minute books of director and
shareholder meetings of each of the Companies, as
previously made available to Purchaser and its counsel,
contain accurate records of all such meetings and
accurately reflect all other corporate action of the
stockholders and directors of each such Company. All
charges in favour of the Companies, where appropriate, have
been registered in accordance with the provisions of the
Companies Act or other applicable equivalent legislation,
and appropriate Memoranda of Satisfaction have been filed
at the Companies Registry in England and Wales with respect
to all charges against any of the Companies that have been
fully discharged or with the relevant corporate Authority.
2.18 BANKRUPTCY/INSOLVENCY
(a) None of the Companies has, in any country, (i)
commenced any proceeding or other action seeking (A)
to have an order for relief entered on its behalf as
debtor in a bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement, composition,
readjustment of debt or similar proceeding or to
adjudicate it as bankrupt or insolvent, or (B)
reorganization, liquidation, dissolution, winding-up,
arrangement, composition or readjustment of its debts
or (C) any other relief; in each case under any
bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement, composition, readjustment
of debt or other similar Law of any applicable
jurisdiction; or (ii) applied for a receiver,
custodian, trustee or liquidator of it or for a
substantial part of its undertaking; or (iii) made a
general assignment for the benefit of, or a
composition or arrangement with, its creditors; or
(iv) admitted in writing its inability to pay its
debts as they become due; or (v) taken any corporate
action in furtherance of any of the foregoing.
(b) No proceeding or other action against any of the
Companies has been commenced in any country seeking
(i) to have an order for relief entered against it in
a bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement, composition,
readjustment of debt or similar proceeding or to
adjudicate it as bankrupt or insolvent, or (ii)
reorganization, liquidation, dissolution, winding-up,
arrangement, composition or readjustment of its
debts, or (iii) any other relief, in each case under
any bankruptcy, insolvency, reorganization,
liquidation, dissolution, arrangement, composition,
readjustment of debt or other similar Law of any
applicable jurisdiction; and there is no circumstance
which might reasonably be expected to lead to any of
the foregoing and no receiver, custodian, trustee or
other liquidator or any similar person for any of the
Companies has been appointed in any such case or
proceeding.
(c) None of the Companies has stopped payment to its
creditors generally or ceased to carry on business or
is insolvent or unable to pay its debts.
(d) There has not been and there is not, in respect of
any of the Companies or any part of the business or
assets thereof, any distress, execution or other
process levied or any unfulfilled or unsatisfied
judgment or court order outstanding or any delay by
any of the Companies in the payment of any obligation
due for payment or any circumstance which might lead
to any of the foregoing.
(e) None of the Companies is party to any transaction as
a result of which any asset owned or used by it is
liable to be transferred or re-transferred pursuant
to any legislation concerning insolvency nor is it
party to any transaction which may otherwise be
liable to be set aside or avoided for any reason.
(f) No circumstances have occurred which can result in
third party claims involving any asset owned or used
by Safeline GmbH or involving any agreement,
obligation or promise of the Company being made under
the Konkursordnung, Vergleichsordnung, the
Anfechtungsgesetz (Voidance Act) or other insolvency
related provisions. No prohibited repayments of
share capital pursuant to s30 of the GmgHG (Limited
Liability Company Act) have been made. No
agreements, commitments or obligations to enter into
agreements or commitments exist between the Company
and its shareholder(s) that have qualified or
continue to qualify as share capital replacement
(eigenkapitalersetzende Gesellschafterleistungen).
2.19 AFFILIATE TRANSACTIONS
(a) Schedule 2.19 specifically sets forth (i) all
management, computer, telephone, tax, risk management
or other services, and all space, facilities,
personnel and services provided by any Seller or any
of such Seller's Affiliates to the Companies or by
the Companies to any Seller or any of such Seller's
Affiliates and all fees charged since April 1, 1994
in connection therewith, and (ii) all other Contracts
and transactions (including the purchase and sale of
inventories and supplies) between any of the
Companies on the one hand and any Seller or any of
such Seller's Affiliates (other than a Company), on
the other hand, since April 1, 1994. Also, since
that date, all transactions and obligations,
including, but not limited to, those for the sale or
purchase of goods or services, between any of the
Companies, on the one hand, and any of Sellers or
Affiliates (as defined below) thereof, on the other
hand, have been incurred on an arm's-length basis and
were properly reflected in the Financial Statements.
As used herein, the term "Affiliate" means, with
respect to any Person (i) the Person's spouse, or a
relative (as defined below), or the spouse of a
relative, of the Person or of the Person's spouse,
(ii) any other Person directly or indirectly
controlling, controlled by, or under common control
with such other Person and (iii) the trustees of a
trust (other than a pension scheme or any employees
share scheme (within the meaning of the Companies
Act)) the beneficiaries of which include, or the
terms of which confer a power that may be exercised
for the benefit of, such Person or, in relation to
such Person, any of the Persons referred to in
subparagraphs (i) and (ii) above.
As used herein, the term "Person" means an
individual, corporation, partnership, trust or
unincorporated organization or a government or any
agency or political subdivision thereof.
As used herein, the term "relative" means, with
respect to any Person, that Person's brother, sister,
uncle, aunt, nephew, niece, lineal ancestor or lineal
descendant including by adoption.
(b) No Seller nor any of such Seller's Affiliates has
(other than his or its ownership interest in the
Companies) any direct or indirect interest in any
business which competes or is likely to compete with
the business of the Companies or intends to acquire
any such interest.
(c) Prior to the Closing Date all accounts owed to any of
the Companies by any of Sellers or any of their
respective Affiliates (except the Companies) have
been settled in full.
2.20 INSURANCE
Schedule 2.20 specifically sets forth (i) an accurate list
of all of the policies of insurance and fidelity or surety
bonds with respect to the assets owned, leased or used by
the Companies; (ii) the name of the beneficiary thereunder;
(iii) the annual premium payable thereunder; (iv) the
liabilities covered thereunder; (v) the amount of coverage
thereunder (including the amount of any deductible
thereunder); and (vi) the period of coverage thereunder.
All such policies and other instruments are in full force
and effect and all premiums with respect thereto up to the
date hereof have been paid. Neither any Seller nor any of
the Companies has failed to give any notice or present any
claim under any insurance policy in due and timely fashion
or as required by any of such insurance policies or has
otherwise, through any act, omission or nondisclosure,
jeopardized or impaired full recovery under such policies
except where the failure to make such claim would not have
individually, or in the aggregate, a Material Adverse
Effect, and there are no claims by any Seller or any of the
Companies under any of such policies as to which any
insurance company is denying liability or defending under a
reservation of rights or similar section, except where such
denial or defence would not have, individually or in the
aggregate, a Material Adverse Effect. Neither any Seller
nor any of the Companies has received notice of any pending
or threatened termination of any of such policies or any
premium increases for the current policy period with
respect to any of such policies.
2.21 CUSTOMERS AND SUPPLIERS
(a) None of Sellers are aware of any termination,
cancellation or threatened termination or
cancellation of or limitation of, or any material
modification or change in, or material
dissatisfaction with, the business relationship
between any of the Companies and any of the customers
or any distributor for any of the Companies. None of
Sellers are aware that any significant customer of
any of the Companies might prior to or as a result of
the Closing cease to contract with the Company or the
relevant Subsidiary Company or might substantially
reduce its business with the Company or the relevant
Subsidiary Company as a result of the Closing.
(b) Schedule 2.21(b) sets forth an accurate list of the
ten largest suppliers (by revenue in pounds Sterling)
of products and services for each of the Companies
for each of the fiscal years ended March 31, 1995 and
March 31, 1996, March 31, 1997 and for the period
from April 1, 1997 until the date of this Agreement.
None of Sellers are aware of any termination,
cancellation or threatened termination or
cancellation of or limitation of, or any material
modification or change in, or material
dissatisfaction with the business relationship
between any of the Companies and any of the
suppliers. None of Sellers are aware that any
significant supplier of any of the Companies might as
a result of the Closing cease to contract with or
supply to the Company or the relevant Subsidiary
Company or might substantially reduce its business
with the Company or the relevant Subsidiary Company.
Except as set forth on Schedule 2.21(b), none of
Sellers are aware of any termination, cancellation or
limitation of or any modification or change in the
business relationship with any sole-source or limited-
source suppliers of materials or services to any of
the Companies or other suppliers to any of the
Companies with respect to which practical alternative
sources of supply are not available on comparable
terms.
(c) Schedule 2.21(c) sets forth an accurate list of all
material distributorships and sales agencies of each
of the Companies, including a summary description of
the distributor or agent and its relationship with,
and activities on behalf of, such company.
2.22 PRODUCTS AND SERVICING
(a) Except only as set forth on Schedule 2.22(a), none of
the Companies has sold or distributed any products
which were at the time of sale of such products
patently or latently defective or which did not at
that time comply in any respect (i) with any express
or implied warranties or representations made by, or
so far as Sellers are aware directly or indirectly on
behalf of, any of the Companies, or (ii) with all
applicable legislation, standards and requirements;
and the Companies have not, except in the ordinary
course of business, given any express warranties,
guarantees or indemnities as to the fitness for
purpose, quality or otherwise of any of its products.
Except only as specifically disclosed on
Schedule 2.22(a) or Schedule 2.10, no Litigation has
threatened, commenced, settled or concluded in the
past five years which involves an assertion
inconsistent with the preceding sentence.
(b) A complete copy of the terms and conditions upon
which the Companies sell and supply products and
services is contained in Schedule 2.22(b) and Sellers
confirm that the Companies use their reasonable
endeavours to ensure that products and services sold
by the Companies are sold and supplied on the
Companies' standard terms and conditions for sale or
supply of such products and services. The Companies
have not given any express warranties, guarantees or
indemnities as to the fitness for purpose, quality or
otherwise of any of their products.
2.23 INFORMATION
None of the information and documents referred to in this
Agreement (including without limitation the Disclosure
Documents and the Confidential Memorandum but excluding,
for the avoidance of doubt, all information relating to the
Companies' market shares and competitor information and all
forecasts) is materially false or misleading or so far as
Sellers are aware contains any material misstatement of
fact or omits any material fact necessary to be stated in
order to make the statements therein not misleading. Save
for matters likely to affect to a similar extent generally
companies carrying on similar businesses in any of the
jurisdictions in which the Companies carry on business so
far as Sellers are aware there are no matters of which
Sellers are aware which in the reasonable opinion of
Sellers could be expected to have a Material Adverse
Effect.
2.24 RELEASES
There are no guarantees, indemnities, contracts of
suretyship and third-party charges or security interests
given by any Company in respect of Sellers or any of their
respective Affiliates (excluding the Companies).
2.25 CONFIDENTIALITY AGREEMENTS
The Company is a party to any confidentiality agreement
with any Person other than Purchaser that was entered into
in connection with or relating to a possible sale of the
Companies or any part thereof, and the Company has, without
limitation, the right to enforce all terms of such
confidentiality agreements.
2.26 LIMITATIONS OF REPRESENTATIONS AND WARRANTIES
None of the representations and warranties in this
Article 2:
(i) other than those contained in Article 2.6, 2.9, 2.10,
2.11(a)(vi), 2.11(a)(vii), 2.11(a)(ix), 2.11(a)(x),
2.11(d), 2.11(e) and 2.19, shall be deemed to
constitute a warranty or representation in respect of
the Real Property;
(ii) other than those contained in Article 2.14 shall be
deemed to constitute a warranty or representation in
respect of Intellectual Property Rights; and
(iii) other than those contained in Article 2.11(a)(xiii)
and 2.16 shall be deemed to constitute a warranty or
representation in respect of Environmental Matters.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF 3I GROUP PLC
3i:
(a) acknowledges that Purchaser has been induced to enter
into this Agreement and to purchase the Shares on the
basis of the representations and warranties given by
3i set out herein;
(b) acknowledges and agrees that each representation and
warranty given by 3i is a separate and independent
representation, warranty and undertaking, and that no
representation or warranty shall be limited by
reference to any other representation or warranty or
by any other term of this Agreement;
(c) acknowledges and agrees that the rights and remedies
of Purchaser in respect of any breach of
representation or warranty given by 3i shall not be
affected by Closing, by any investigation made by or
on behalf of Purchaser into the affairs of the
Company and its subsidiaries or by any other event or
matter whatsoever which otherwise might have affected
such rights and remedies except a specific duly
authorised written waiver or release or as otherwise
provided for in this Agreement; and
(d) hereby represents and warrants to Purchaser as
follows:
3.1 OWNERSHIP OF THE SHARES
It is the sole beneficial owner of the number of Shares
shown against the names of 3i Group plc and 3i plc in
Exhibit A free from all Encumbrances and Shareholder
Agreements.
3.2 AUTHORITY
(a) 3i has the requisite power and authority to execute
and deliver this Agreement and all documents
ancillary hereto and to perform fully its obligations
hereunder and thereunder. This Agreement has, and
all documents ancillary hereto will have been, duly
and validly executed and delivered by 3i and
constitutes the valid and binding obligation of 3i,
enforceable against it, in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other
similar laws of general applicability relating to or
affecting creditors' rights and to general principles
of equity.
(b) Except only as specifically set forth in Schedule
3.2(b), no consent, licence, approval, waiver,
expiration of waiting period or authorization of, or
registration or declaration with, any Authority is
required to be obtained or made by 3i in connection
with the execution, delivery and performance of the
transactions contemplated by this Agreement.
3A REPRESENTATIONS AND WARRANTIES OF OPTIONHOLDERS
Each Optionholder:
(a) acknowledges that the Purchaser has been induced to
enter into this Agreement and to purchase the Shares
on the basis of the representations and warranties
given by him set out herein;
(b) acknowledges and agrees that each representation and
warranty given by such Optionholder is a separate and
independent representation, warranty and undertaking,
and that no representation or warranty shall be
limited by reference to any other representation or
warranty or by any other term of this Agreement;
(c) acknowledges and agrees that the rights and remedies
of Purchaser in respect of any breach of
representation or warranty given by such Optionholder
shall not be affected by Closing, by any
investigation made by or on behalf of the Purchaser
into the affairs of the Company and its subsidiaries
or by any other event or matter whatsoever which
otherwise might have affected such rights and
remedies except a specific duly authorised written
waiver or release or as otherwise provided for in
this Agreement; and
(d) hereby represents and warrants to Purchaser as
follows:
3A.1 OWNERSHIP OF THE SHARES
Each Optionholder is the sole legal and beneficial owner of
the number of Shares shown against his name as shown in
Part 2 of Exhibit A free from all Encumbrances and
Shareholder Agreements.
3A.2 AUTHORITY
(a) Each Optionholder has the requisite power and
authority to execute and deliver this Agreement and
all documents ancillary hereto and to perform fully
his obligations hereunder and thereunder. This
Agreement has, and all documents ancillary hereto
will have been, duly and validly executed and
delivered by such Optionholder and constitutes the
valid and binding obligations of such Optionholder
enforceable against each of them, in accordance with
its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and
other similar laws of general applicability relating
to or affecting creditors' rights and to general
principles of equity.
(b) No consent, licence, approval, waiver, expiration of
waiting period or authorization of, or registration
or declaration with, any Authority is required to be
obtained or made by Optionholders in connection with
the execution, delivery and performance of the
transactions contemplated by this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby jointly and severally represent and
warrant to Sellers as follows and each of Purchaser's
representations and warranties contained in this Agreement
is separate and independent and shall not be limited by
reference to any other representation or warranty or to any
other provision of this Agreement:
4.1 ORGANIZATION AND STANDING
Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of its
jurisdiction of incorporation.
4.2 AUTHORITY
Purchaser has full corporate power and authority to execute
and deliver this Agreement and the Loan Notes, and to
perform fully its obligations hereunder. The execution and
delivery of this Agreement and the Loan Notes by Purchaser
and the consummation by Purchaser of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action of Purchaser. This Agreement and
the Loan Notes has been duly and validly executed and
delivered by Purchaser and constitutes the valid and
binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors'
rights and to general principles of equity. Except as
specifically set forth in Schedule 4.2, the execution and
delivery by Purchaser of this Agreement and the Loan Notes
and the consummation of the transactions contemplated by
this Agreement will not (i) violate, conflict with, or
result in a breach of, or default under, any agreement,
obligation or commitment to which Purchaser is a party or
bound, (ii) violate or result in the loss of any benefit
under any provision of any Law to which Purchaser is
subject, (iii) violate or result in the loss of any benefit
under any order, judgment or decree applicable to
Purchaser, or (iv) conflict with, or result in a breach of,
or default under, any term or condition of the charter or
by-laws of Purchaser. No law or order, decree or judgment
of or in any court or tribunal of competent jurisdiction is
in effect that prohibits or restricts the consummation of
the transactions contemplated hereby.
4.3 BROKER'S AND FINDER'S FEE
Purchaser has not employed any broker, finder, consultant
or intermediary in connection with the transactions
contemplated by this Agreement that would be entitled to a
broker's, finder's or similar fee or commission in
connection therewith.
4.4 ACQUISITION OF SHARES
The Shares are being acquired by Purchaser for its own
account solely for the purpose of investment without a view
to, or for sale in connection with, any distribution
thereof in violation of applicable securities laws.
4.5 CONSENTS
Except only as specifically set forth in Schedule 4.5, no
consent, license, approval, waiver, expiration of waiting
period or authorization of, or registration or declaration
with, any Authority or other third party is required to be
obtained or made by Purchaser in connection with the
execution, delivery and performance of the transactions
contemplated by this Agreement.
4.6 BREACHES OF WARRANTY
At the date of this Agreement neither the Purchaser nor its
Affiliates are aware of any fact, matter or event which to
its or their knowledge gives rise to or is likely to give
rise to a claim for a material breach of warranty,
representation, indemnity or covenant under or pursuant to
this Agreement.
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS OF SELLERS AND PURCHASER
5.1 CONDUCT AND MANAGEMENT OF THE COMPANY TO MARCH 31, 1998
(a) It is hereby agreed by the parties that until March
31, 1998:
(i) Sellers in their capacity as executive
directors and officers of the Companies will be
responsible for the day-to-day management and
conduct of the business of the Companies, which
management and conduct shall be carried out in
the ordinary and usual course and in accordance
with customary practices and the business plan/
operating budget attached hereto as Exhibit C
(the "Plan"); and
(ii) None of Sellers will do or omit to do any act
or thing which is likely to distort the
operating results of the Companies;
(b) If (x) Sellers in their capacity as executive
directors and officers of the Companies do not manage
and conduct the business of the Companies in the
ordinary and usual course and in accordance with
customary practices and the Plan; (y) Purchaser
causes the business of the Companies to be managed
and conducted other than in the ordinary and usual
course and in accordance with customary practices and
the Plan; or (z) Sellers, on the one hand, or
Purchaser, on the other, do or omit to do any act or
thing which distorts the operating results of the
Companies; then in each case Standalone Operating
Profit shall be adjusted as provided in and pursuant
to the terms of Part C of Schedule 1.3.
5.2 EXPENSES
Except as otherwise provided in Section 5.2 hereof, all
costs and expenses incurred in connection with the
preparation and negotiation of this Agreement and the
transactions contemplated hereby (including, without
limitation, fees and disbursements of financial advisors,
accountants and attorneys) shall be paid (i) by Sellers, if
such costs or expenses are incurred by Sellers, including
all fees of Xxxxxxx Xxxxx, Freshfields and local counsel,
if any, whether retained by any of Sellers or the
Companies, (ii) the Company, to the extent that such costs
or expenses are incurred for the benefit of any of the
Companies on or prior to Closing; provided, however, that
such costs or expenses do not exceed [POUND STERLING]
43,000, and (iii) by Purchaser, if such costs or expenses
are incurred by Purchaser or any of its Affiliates.
5.3 STAMP TAXES, DUTIES, ETC
Any stamp duties and stamp duty reserve Taxes arising from,
the transfer of the Shares, shall be borne by Purchaser.
5.4 FURTHER ASSURANCES
5.4.1 Subject to the terms and conditions provided herein, each
of Sellers other than 3i and Optionholders and Purchaser
agree to use their respective best efforts to take, or
cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under
applicable Laws to consummate and make effective the
transactions contemplated by this Agreement and the
Exhibits hereto and if, at any time after the Closing Date,
any further action is necessary or desirable to carry out
the purposes of this Agreement, each of Sellers and the
proper officers or directors of Purchaser, as the case may
be, shall execute and deliver any further instruments or
documents and take all such necessary action that may
reasonably be requested of any of them.
5.4.2 3i agree and undertake with Purchaser that on and following
Closing 3i authorises Purchaser or any director or officer
of Purchaser to execute or sign any document, instrument,
resolution or agreement on behalf of 3i and perform any
acts or things to be done by 3i that Purchaser deems
necessary in connection with Purchaser's dealing with the
Shares as if Purchaser was the legal, as well as the
beneficial owner, of the Shares at that date and 3i agrees
to ratify any document, instrument or agreement executed by
Purchaser on behalf of 3i pursuant to this clause 5.4.2.
5.5 FILINGS
The Sellers other than 3i and Optionholders and Purchaser
shall each procure that the Companies promptly make all
filings or submissions as are required to be made by the
Companies to obtain any Governmental Approval. The Sellers
other than 3i and Optionholders and Purchaser shall furnish
to each other such necessary information and reasonable
assistance as may be reasonably requested in connection
with the preparation of any filing or submission which is
necessary to obtain any Governmental Approval. The Sellers
and Purchaser shall keep each other appraised of the status
of any communications with and any inquiries or requests
for additional information made by any Authority and shall
comply promptly with any such inquiry or request.
5.6 EMPLOYEE ARRANGEMENTS, ETC.
Messrs. Beswick, Dearman, Lock, Bell, Jackson, Ives,
Xxxxxxxxx and Xxxxx shall at Closing each enter into
service agreements with the Company in the agreed form and
Xx Xxxxx shall enter into the consultancy agreement with
the Company in the agreed form.
5.7 NON-COMPETITION; NON-INDUCEMENT
(a) In consideration of the benefits to Sellers hereunder
and in order to induce Purchaser to enter into this
Agreement, each Seller (other than 3i and
Optionholders) hereby covenants and agrees with
Purchaser (for its own benefit and for the benefit of
the Companies) that he or it, as the case may be,
will not and will cause his Affiliates not to,
directly or indirectly, (i) for the period of five
years immediately following the Closing Date, as a
proprietor, partner, stockholder (other than as a
passive investor holding less than one percent of any
class of equity securities of a corporation with
publicly traded securities), director, officer,
employee, joint venturor, investor, lender or in any
other capacity, own, engage in, conduct, manage,
operate or control, or participate in, be associated
with or be connected in any manner whatsoever in the
ownership, management, operation or control of, any
business which, directly or indirectly, competes in
the Prohibited Area with any business that any
Company conducts or is planning to conduct on the
Closing Date or engages in the Prohibited Area in the
production and supply of industrial or commercial
metal detection; (ii) for the period of five years
immediately following the Closing Date solicit,
encourage, entice or induce any person who is an
Employee of one of the Companies at any time on or
after the date hereof to terminate his or her
relationship with any of such Companies or employ or
engage or recommend the employment or engagement of
such person as an employee of such Seller or as an
employee or officer of any subsequent employer of
such Seller; (iii) for the period of five years
immediately following the Closing Date solicit the
custom in the Prohibited Area of any person who at
any time during the period of three years ending on
the Closing Date was a customer or client of the
Companies; (iv) at any time after the Closing Date
seek to cause to be terminated or adversely affected
or otherwise interfere with any agreement or
arrangement of any kind to which any of the Companies
is party; or (v) at any time after the Closing Date
use any trade name, trademark or trading style which
may suggest a connection with any of the Companies or
which is similar to any trade name, trademark or
trading style now or at any time within the period of
two years ending on the Closing Date used by any of
the Companies or permit the name of any of Sellers to
be used in such a manner.
For the avoidance of doubt the covenants in (a) above
of the Trustees are provided to Purchaser by them in
their capacity solely as trustees of the Trusts (as
defined in Exhibit A) and not in any other capacity
(including without limitation as trustees of any
other trust).
As used herein, the term "Prohibited Area" means all
countries in which any of the Companies, as of the
Closing Date, is selling products manufactured by
them, whether directly or through distributors or
agents.
(b) No provision contained in this Agreement or in any
arrangement of which this Agreement forms part by
virtue of which this Agreement or such arrangement is
subject to registration under the United Kingdom
Restrictive Trade Practices Act 1976 shall come into
effect until the day following the day on which
particulars of this Agreement and of any such
arrangement have been furnished to the United Kingdom
Office of Fair Trading (or on such later date as may
be provided for in relation to any such restriction)
and Sellers (other than 3i and Optionholders) and
Purchaser hereby agree to furnish such particulars
within three months of the date of this Agreement.
(c) 3i will not and will procure that none of its
subsidiary companies will use, disclose or divulge
any confidential information relating to the business
of the Company or any Subsidiary Company.
(d) 3i will procure that for the Relevant Period Xxxxxxx
Xxxxx will not be involved in any way in appraising
or managing any investment which he knows or believes
is engaged or intends to engage in the production
and/or supply of industrial or commercial metal
detection. The 'Relevant Period' means the period
ending two years after the Closing Date or (if
sooner) the date Xxxxxxx Xxxxx ceases to be employed
by 3i or any company in the 3i group.
(e) Each relevant Seller acknowledges and agrees that his
or its covenants and agreements in this Section 5.7
are a material inducement to Purchaser to enter into
and perform its obligations hereunder and that, if he
or it, as the case may be, or any of his or its
Affiliates breaches any covenant in subsection (a) of
this Section 5.7, any time period specified therein
for such covenant shall be suspended for so long as
such Seller remains in breach thereof. Sellers other
than 3i and Optionholders acknowledge that any
violation of this Section 5.7 by such Sellers shall
give rise to an entitlement to equitable relief on
the part of Purchaser as contemplated by Section
8.17, and such Seller agrees to indemnify Purchaser
against all Losses (as defined in Section 7.4),
including reasonable attorneys' fees, arising from
any such violation of this Section 5.7. 3i
acknowledge and agree that any violation of this
Section 5.7(c) and (d) by 3i shall give rise to an
entitlement to equitable relief on the part of
Purchaser as contemplated by Section 8.17.
(f) None of Sellers (other than 3i and Optionholders) has
any interest in any Intellectual Property Rights,
whether as owner, licensee or beneficiary under any
Contract, which is directly or indirectly related to
any business that presently is or is expected by such
Sellers to be conducted by any of the Companies.
Each of Sellers (other than 3i and Optionholders in
their capacity as Optionholders) employed by the
Company agrees that if he should have, create,
develop or otherwise acquire any such interest in
Intellectual Property Rights directly or indirectly
at any time when he is so employed by, or is subject
to any obligation not to compete with, any of the
Companies, such acquisition shall be for the
exclusive account of the Company, shall be promptly
described in full detail to the Company and shall be
assigned in its entirety to the Company (or its
successors or assigns designated by the Company) upon
demand and pending any such demand shall be held in
trust for the Company.
5.8 INTENTIONALLY DELETED
5.9 U.S. FINANCIAL STATEMENTS
(a) Sellers other than 3i and Optionholders shall
cooperate with, and provide reasonable access and
reasonable assistance to, Purchaser and its
accountants and other advisors in order to permit the
preparation by Purchaser (at its expense) of
consolidated financial statements for the Companies
in accordance with U.S. GAAP (as defined below).
As used herein, the term "U.S. GAAP" means generally
accepted accounting principles in the United States,
together with any specialized, modified, revised or
other accounting principles used by MT Investors,
Inc. and its subsidiaries in the preparation of its
financial statements.
ARTICLE 6
TAX COVENANTS AND INDEMNITIES
6.1 TAX COVENANTS
Returns
-------
(i) Sellers (other than 3i and Optionholders) (and in
this section the term "Sellers" shall be construed
accordingly) and their duly authorized agents shall
be responsible for, and have the conduct of
preparing, submitting to and agreeing with the Inland
Revenue and all other relevant Taxing Authorities in
a timely fashion, all Tax Returns of the Companies
required to be filed prior to the Closing, subject to
all such Returns which have not been filed prior to
the date hereof, being submitted in draft form to
Purchaser or its duly authorized agents for comment,
and Sellers jointly and severally covenant with
Purchaser to do so at their expense and with all
reasonable dispatch. All such Tax Returns prepared
by Sellers in accordance with this Section 6.1 shall
save as required by law or by changes in GAAP be
prepared on a basis consistent with the Companies'
past practices. If Sellers' Representative has not
received any comments within 21 days after submitting
such draft returns, Purchaser and its duly authorized
agents shall be deemed to have approved such draft
Returns, computations, documents or correspondence.
If Purchaser or its duly authorized agents have any
comments or suggestions, Sellers shall not
unreasonably refuse to adopt such comments or
suggestions. Sellers and Purchaser shall each
respectively afford (or procure the affordance) to
the other or their duly authorized agents of
information and assistance which may reasonably be
required to prepare, submit and agree all such Tax
Returns.
Purchaser or its duly authorized agents shall be
responsible for, and have the conduct of preparing,
submitting to and agreeing with the Inland Revenue
and all other relevant Taxing Authorities all Tax
Returns of the Companies required to be filed after
the Closing with respect to the accounting period,
quarterly VAT return period or other relevant period
which ends prior to or including Closing and
Purchaser hereby covenants with Sellers, at its own
expense and with all reasonable dispatch, to submit
in draft form to Seller's Representative for comment,
all such Returns. If Purchaser has not received any
comments within 21 days after submitting such draft
Returns, Sellers and their duly authorized agents
shall be deemed to have approved such draft Returns.
If Sellers' Representative or its duly authorized
agents have any comments or suggestions, Purchaser
shall not unreasonably refuse to adopt such comments
or suggestions. Sellers and Purchaser shall each
respectively afford (or procure the affordance) to
the other side or their duly authorized agents of
information and assistance which may reasonably be
required to prepare, submit and agree all such Tax
Returns.
(ii) The signature or agreement by Purchaser or the
Companies or any Person on their behalf to any Tax
Returns, computations, correspondence or other
document prepared under the provisions of this
Section 6.1 shall in no way affect the rights of
Purchaser under any of the representations,
warranties, covenants or agreements of Sellers in
this Agreement.
(iii) After the Closing Date, Purchaser and Sellers'
Representative shall make available to each other, as
reasonably requested, all information, records or
documents relating to Tax liabilities or potential
Tax liabilities of the Companies for all periods
ending prior to or including the Closing Date. Each
of the parties shall hold the information, records
and documents made available to it by the other party
in strict confidence, and shall preserve all such
information, records and documents until the
expiration of any applicable statute of limitations
or extensions thereof. Notwithstanding any other
provisions hereof, Purchaser and Sellers shall bear
their own respective expenses in complying with the
foregoing provision.
6.2 TAX INDEMNITIES
(a) Indemnification
---------------
Except as provided in Section 6.2(b) Sellers (other
than 3i and Optionholders) jointly and severally
covenant with Purchaser to pay to Purchaser by way of
an adjustment to the Purchase Price an amount equal
to:
(i) all Pre-Closing Taxes payable by or assessed
against any of the Companies or any Affiliate
thereof (whether or not the Tax is primarily
payable by the Person in question and whether
or not the Person in question has or may have a
right of reimbursement against another Person);
(ii) Taxes payable by or assessed against, or Losses
incurred by Purchaser as the result of a breach
by Sellers of any representation, warranty,
covenant or agreement, to the extent such
representation, warranty, covenant or agreement
relates to Taxes (including, without
limitation, the representations and warranties
contained in Sections 2.4 and Section 2.9);
(iii) all Pre-Closing Taxes which would have been
payable by the Companies but for the use or set-
off of any loss, relief, allowance, exemption,
deduction, credit, right to repayment in
respect of Tax or other relief of a similar
nature including the carryback of net operating
loss, capital loss, credit or other item
(hereinafter referred to as a "Tax Relief")
which arises in respect of an Event after the
Closing Date;
(iv) any value-added tax payable by any of the
Companies as a result of the Company being
treated for value-added tax purposes as a
member of the same group as any other body
corporate during any prescribed accounting
period of that group ending on or before or
within ninety (90) days after the Closing Date
or as a result of any direction made pursuant
to Schedule 9A VAT Act to the extent that it
(x) relates to a date falling on or before the
Closing Date and (y) did not arise in respect
of supplies, acquisitions or imports by that
Company;
(v) all Tax liabilities of the Companies or any
Affiliate of any of them which would not have
arisen but for the loss, reduction,
modification or cancellation of some Tax Relief
in consequence of an Event occurring on or
before Closing where the availability of the
Relief has been shown as an asset in the
Balance Sheet or has been taken into account in
computing (and reducing) a provision (for
deferred Tax or otherwise) which appears in the
Balance Sheet or has resulted in no provision
for deferred Tax being made in the Balance
Sheet;
(vi) any repayment of Tax the right to which is
shown as an asset in the Balance Sheet but
which is lost or cancelled in consequence of an
event occurring on or before Closing;
(vii) all Tax liabilities in respect of which any of
the assets of the Companies and/or any of the
shares in the Companies are or become subject
to an Inland Revenue charge under Section 237
Inheritance Tax Act 1984 as a result of an
Event occurring on or before Closing (whether
or not in combination with any Event occurring
after Closing);
(viii) all Tax liabilities in respect of which
any Person exercises or intends to exercise a
power to sell, mortgage or impose a terminable
charge on any of the assets of the Companies
and/or any of the shares in the Companies under
Section 212 Inheritance Tax Act 1984 as a
result of any Event occurring on or before
Closing (whether or not in combination with any
Event occurring after Closing);
(ix) any Tax liability which is also a Tax liability
of another person (other than one of the
Companies) and which is payable by one or more
of the Companies by virtue of (A) the other
person failing to discharge such Taxation
Liability; and (B) one or more the Companies
being at any time prior to Closing a member of
the same group as such other person or
otherwise connected with or related to such
other person for any Tax purpose;
(x) all liabilities of the Companies under a
contractual or statutory liability entered into
or incurred prior to Closing to make a payment
by way of reimbursement, indemnity, or damages
in respect of or arising from any Tax liability
of any other person; and
(xi) all reasonable costs and expenses incurred by
Purchaser or the Companies or any Affiliate of
any of them in connection with any of the
matters referred to in paragraphs (i) to (x)
above or any Tax Claim (as defined in Section
6.2(d)) therefor or in connection with any
claim under this Article 6.
As used herein, "Pre-Closing Taxes" means any Taxes
arising in respect of or with reference to any
income, profits or gains, earned, accrued or received
on or before or in respect of a period or portion of
a period ending on or before Closing (or deemed for
any Tax purposes to have been so earned, accrued, or
received) or as a result of or with reference to any
Event which occurred on or before Closing; "Event"
means an event, act, transaction or omission
including, without limitation, a receipt or accrual
of income or gains, distribution, failure to
distribute, acquisition, disposal, transfer, payment,
loan, advance or death and further includes an Event
deemed to have occurred for Tax purposes; and
references to Events on or before any date or to the
occurrence of or result of any Event on or before any
date shall include two or more Events or the combined
result of two or more Events all of which occurred or
were deemed to occur before that date or the combined
result of two or more events the first of which
occurred or is deemed for any tax purpose to have
occurred before that date outside the ordinary course
of business and all such events occurring after that
date which occur in the ordinary course of business
or pursuant to a contractual obligation entered into
on or before Closing or as required by law or to
comply with applicable regulatory requirement or at
the request of, or with the consent of, Sellers.
(b) Exclusions
----------
Sellers shall be under no liability pursuant to
Section 6.2(a) in respect of any Tax:
(i) to the extent that identifiable provision or
reserve for that Tax (not including any
provision for deferred Tax) has been made in
the Balance Sheet;
(ii) to the extent that it arises out of a
transaction undertaken after the Balance Sheet
Date but before Closing by any of the Companies
in the ordinary course of its day to day
business;
(iii) to the extent that the Tax liability was paid
or discharged before Closing;
(iv) to the extent that the Tax liability arises as
a result of any change in rates of Tax, law,
regulation or directive occurring and announced
after Closing with retrospective effect;
(v) to the extent that the Tax liability would not
have arisen but for a voluntary transaction,
action or omission carried out or effected by
any of Purchaser, any of the Companies or any
other person connected with any of them, at any
time after Closing which Purchaser was actually
aware of or (on the basis of information
actually supplied in writing by Sellers to
Purchaser prior to Closing) could reasonably
have been expected to be aware that it would
give rise to the liability; provided, however,
that this exclusion shall not apply where any
such transaction, action or omission:
(A) is carried out or effected by one of the
Companies pursuant to a legally binding
commitment created on or before Closing;
or
(B) is carried out or effected by one of the
Companies concerned in the ordinary
course of business of that Company as
carried on at Closing
(vi) to the extent that the Tax liability arises as
a result of a change (other than to comply with
the law or with GAAP) after Closing in any
accounting policy, or the length of any
accounting period for Tax purposes, of the
Company concerned;
(vii) to the extent that such Tax liability arises as
a result of the Company concerned failing to
submit the returns and computations required to
be made by it or not submitting such returns
and computations within the appropriate time
limits or submitting such returns and
computations otherwise than on a proper basis,
in each case after Closing and otherwise than
as a result of any default or failure of
Sellers in carrying out, or in failing to carry
out, Sellers' obligations under Section 6.1(a);
(viii) to the extent that the Tax liability
arises as a result of the failure of Purchaser
to comply with its obligations contained in
Section 6.2(d)(ii);
(ix) to the extent that the Tax Liability is a
liability to pay advance corporation tax of an
amount not exceeding [POUND STERLING]533,000 in
respect of the dividends of [POUND STERLING]
2,129,000 paid by the Company on 3 April 1997;
(x) to the extent that the Tax Liability would not
have arisen but for the failure or omission on
the part of the Company concerned (otherwise
than at the request or with the agreement of
Sellers) to make any valid claim, election,
surrender or disclaimer or give any valid
notice or consent as Sellers' Representative
may reasonably require in respect of (i)
periods or matters for which Sellers have
responsibility under Section 6.1(i) or (ii) in
respect of periods or matters for which Sellers
do not have responsibility, where the making,
giving or doing of which was taken into account
in the preparation of the Balance Sheet and was
disclosed in writing to Purchaser prior to
Closing.
(c) Date for Payment
----------------
Where Sellers become liable to make any payment
pursuant to Section 6.2, the due date for the making
of that payment shall be: (i) where that payment
relates to a liability on the part of Purchaser or
any of the Companies or an Affiliate thereof actually
to pay an amount of Tax, the fifth Business Day prior
to the date on which that amount must be paid to the
Taxing Authority concerned in order to avoid
incurring a liability to interest or a charge or
penalty in respect of such Tax; and (ii) in any other
case, the date falling ten Business Days after the
date when Sellers have been notified by Purchaser
that Sellers have a liability for a determinable
amount pursuant to Section 6.2. If any payment
required to be made by Sellers pursuant to Section
6.2 is not made in cleared funds by the due date,
then, the amount payable shall carry interest (before
and after judgment) from the due date until the date
when payment is actually made in cleared funds at the
rate of interest publicly announced from time to time
by the Bank of Nova Scotia in London, England as its
"base" rate, plus 2%.
(d) Appeals and Conduct of Claims
-----------------------------
(i) Purchaser shall give notice in writing to
Sellers' Representative of any Tax Claim in
respect of any Tax liability or any other event
for which Sellers could become liable under
Section 6.2(a) as soon as reasonably
practicable after becoming aware thereof
provided that failure to give such notice shall
not release Sellers from liability under
Section 6.2(a) in respect thereof.
As used herein, the term "Tax Claim" means any
claim, notice, demand, assessment, charge,
letter or other document issued or action taken
or omission made by or on behalf of any Taxing
Authority or any other Person whereby any
Person is or may be placed or sought to be
placed under a Tax liability or is or may be or
sought to be denied a Tax Relief or whereby any
assets of or shares in any of the Companies is
or may be made or sought to be made subject to
any Inland Revenue charge as mentioned in
Section 237 Inheritance Tax Act 1984 and/or any
power to raise inheritance tax under Section
212 Inheritance Tax Act 1984 or any similar
provision of the laws of any other
jurisdiction;
(ii) Purchaser shall and shall procure that the
Companies shall (subject to Purchaser, the
Companies and any Affiliate of any of them
being indemnified and secured to Purchaser's
reasonable satisfaction against all costs,
expenses and additional Tax which may be
incurred in relation thereto) take such action
as Sellers may reasonably request to avoid,
dispute, resist, appeal, compromise or defend
any Tax Claim with respect to a period which
ends on or before the Closing Date; provided,
however, that neither Purchaser nor the
Companies shall be obliged to take any action
which involves contesting any Tax Claim beyond
the first appellate body (excluding the Taxing
Authority demanding the Tax in question) in the
jurisdiction concerned unless Sellers furnish
Purchaser with the written opinion of a leading
Tax Counsel in the United Kingdom (or of a
senior tax adviser of equivalent professional
standing in the relevant jurisdiction concerned
outside the United Kingdom) to the effect that
an appeal against the Tax Claim in question
should, on a balance of probabilities, be
successful;
(iii) The action which Sellers may reasonably request
under Section 6.2(d)(ii) shall include allowing
Sellers upon giving written notice to that
effect to take over at their own expense the
conduct of all proceedings in connection with
the Tax Claim in question. If Sellers take
over the conduct of any such proceedings:
(A) Purchaser shall be kept fully informed of
all matters relating to the Tax Claim and
shall receive copies of all
correspondence in connection with it;
(B) all written communications which are to
be transmitted to the Taxing Authorities
in connection with the Tax Claim shall
first be submitted to Purchaser and shall
not be dispatched without its prior
written consent (which consent shall not
be unreasonably refused or delayed);
(C) the appointment by Sellers of solicitors
and other professional advisers shall be
subject to the prior written consent of
Purchaser (which consent shall not be
unreasonably refused or delayed);
(D) Sellers shall make no settlement or
compromise of any Tax Claim nor agree any
matter in the conduct of such claim which
is likely to affect the amount thereof or
the future Tax liability of any of
Purchaser, the Companies or any Affiliate
of any of them without the prior written
consent of Purchaser which consent shall
not be unreasonably refused or delayed);
(iv) Purchaser or any of the Companies shall be at
liberty without further reference to Sellers to
admit, compromise, settle, discharge or
otherwise deal with any Tax Claim on or after
the earliest of:
(A) the expiry of a period of fourteen days
(or, if earlier, the expiry of any period
for the making of an appeal against the
Tax Claim in question) following service
of notice of the Tax Claim on Sellers'
Representative under Section 6.2(d)(i) if
Sellers have not by that date notified
Purchaser of their request to take any
action in relation to the Tax Claim;
(B) the service of notice by Sellers'
Representative on Purchaser to the effect
that Sellers do not wish to request any
action in relation to the Tax Claim;
(C) the expiry of five Business Days
following the service of notice by
Purchaser on Sellers' Representative
(Sellers having requested the right to
take conduct of the Tax Claim) to the
effect that Sellers are not properly and
effectively dealing with the Tax Claim if
during the period Sellers do not take
steps properly and effectively to deal
with such Tax Claim;
(D) any action or other steps being taken or
legal proceedings being started for the
bankruptcy of any of Sellers;
(E) the failure by Sellers to comply with any
of their obligations under Section
6.2(d)(iii); and
(F) the service of notice on Sellers'
Representative by Purchaser that it has
become aware that any of Sellers or the
Companies has committed an act or is
responsible for an omission in relation
to the Tax liability or Tax Claim in
question which constitutes fraudulent
conduct.
(v) Sellers shall be bound to accept for the
purposes of this Agreement any admission,
compromise, settlement or discharge of any Tax
liability and the outcome of any proceedings
relating to any Tax Claim made or arrived at in
accordance with the provisions of this Section
6.2(d).
(e) Section 767A Taxes Act 1988
---------------------------
(i) Purchaser hereby covenants with Sellers to pay
to Sellers' Representative, by way of
adjustment to the Initial Purchase Price and
the Deferred Purchase Price, an amount
equivalent to any Tax for which Sellers become
liable by virtue of the operation of Section
767A and 767B of the Taxes Act in circumstances
where the taxpayer company (as referred to in
Section 767A(1)) is one of the Companies.
(ii) the covenant contained in Section 6.2(e)(i)
shall:
(A) extend to any reasonable costs incurred
by Sellers in connection with such Tax or
a claim under Section 6.2(e)(i);
(B) not apply to Tax to the extent that
Purchaser could claim payment in respect
of it under Section 6.2(a) ignoring the
provisions of Section 7.7; and
(C) not apply to Tax which has been recovered
under Section 767B(2) of the Taxes Act
(and Sellers shall procure that no such
recovery is sought to the extent that
payment is made hereunder).
(iii) Sections 6.2(b) to 6.2(d) shall apply to any
claim under this Section 6.2(e) as they apply
to any claim under Section 6.2(a) replacing
references to Sellers by Purchaser (and vice
versa) and making any other necessary
modifications.
(f) Recovery from third parties
---------------------------
(i) If any payment is made by Sellers under this
Section 6.2 in respect of a Tax liability and
Purchaser or any of the Companies either
receives or obtains from any person (other than
Purchaser, one of the Companies or any person
connected with any of them) a payment or relief
(other than a post-Closing relief or a right to
repayment of tax which is shown as an asset in
the Final Closing Balance Sheet) in respect of
the Tax liability in question, then Purchaser
shall pay to Sellers' Representative by way of
adjustment to the Initial Purchase Price and
the Deferred Purchase Price the amount received
(less any costs of recovering or obtaining such
payment or relief and any Tax thereon) (the
"Benefit") to the extent that the amount of the
Benefit does not exceed the aggregate payments
previously made by Sellers in respect of that
liability and except where any amount so saved
would otherwise have given rise to a claim
under this Section 6.2 (in which event no such
claim shall be made).
(ii) Any payment required to be made by Purchaser
pursuant to Section 6.2(i)(i) shall be made:
(A) in a case where Purchaser or the Company
or other person concerned receives a
payment, within five Business Days of the
receipt thereof; and
(B) in a case where Purchaser or the Company
or other person concerned obtains a
relief, the date on which Tax would have
become recoverable by the appropriate Tax
authority but for the use of such relief.
ARTICLE 7
INDEMNIFICATION
7.1 INDEMNIFICATION BY SELLERS OTHER THAN 3I AND OPTIONHOLDERS
7.1.1 Subject to Section 7.7, Sellers other than 3i and
Optionholders shall jointly and severally indemnify and
hold harmless Purchaser, and its directors, employees,
shareholders, any intra-group successors, transferees and
assigns and any person claiming by or through any of the
foregoing from and against any and all Losses (as defined
in Section 7.4), arising from any of the following:
(a) any breach by any of such Sellers of any of the
representations or warranties made or given by such
Sellers in this Agreement;
(b) any failure by any of such Sellers to perform any of
such Sellers' covenants or agreements contained in
this Agreement;
(c) any liability arising from any product manufactured
and/or sold and/or shipped prior to the Closing which
was, at the time of sale, patently or latently
defective;
(d) the termination and release, prior to the Closing
Date, of all share option schemes and outstanding
share options granted by, or exercisable into shares
of, the Company and any liability to pay any Tax
which any of the Company or Purchaser may incur as a
result thereof save to the extent that any sum in
respect of Tax relating to the exercise of share
options is taken into account in arriving at the
calculation of Working Capital in accordance with
Section 1.5 and Schedule 1.5; or
(e) a claim made against the Company by Xxxxxxx Xxxxx
pursuant to the engagement letter made between
Sellers, Xxxxxxx Sachs International and the Company
or otherwise except that Sellers shall have no
liability pursuant to this Section 7.1.1(e) for any
claim made by MT Investors, Inc. or any of its
subsidiaries or Affiliates against Xxxxxxx Xxxxx.
7.1.2 Without prejudice to Purchaser's rights in respect of any
breach of any of the warranties, Sellers (other than 3i and
Optionholders) hereby indemnify, and agree to keep
indemnified, Purchaser and the Company to the extent that
either Purchaser or the Company suffer or incurs any loss,
damage, expense, claim or liability including for the
avoidance of doubt any diminution in the value of the
shares of the Company (howsoever arising) in consequence of
or arising from any of the Companies being in breach prior
to Closing of any material term of its/their distribution
agreements and, without prejudice to the generality of the
foregoing, including in consequence of or arising from any
of the Companies prior to Closing granting distribution
rights to third parties in countries where any exclusive
distribution arrangement exists between any of the
Companies and another third party.
7.2 INTENTIONALLY DELETED
7.3 INDEMNIFICATION BY PURCHASER
Subject to Section 7.7, Purchaser shall indemnify and hold
harmless Sellers, their respective intra group successors,
transferees and assigns and any person claiming by or
through any of the foregoing from and against any and all
Losses by the Person being paid by Purchaser as a result of
any liability of such Person which gave rise to Purchaser's
indemnification obligation) based upon or resulting from
any of the following:
(a) any breach by Purchaser of any of the representations
and warranties made or given by Purchaser in this
Agreement; or
(b) any failure by Purchaser to perform any of its
covenants or agreements contained in this Agreement.
7.4 LOSSES
For the purposes of this Agreement, the terms "Loss" or
"Losses" shall mean each and all of the following items:
losses to the extent that they relate to the value of
Purchaser or the Companies, liabilities, obligations,
damages (actual, punitive, consequential or other),
judgments, fines, penalties, amounts paid in settlement or
satisfaction of claims, Environmental Costs, reasonable
costs and expenses (including, without limitation, interest
which may be imposed in connection therewith), costs and
expenses of investigation, actions, proceedings, demands,
assessments, remediation, reasonable fees and disbursements
of counsel and other experts, and the reasonable cost to
the person seeking indemnification (the "Indemnified
Party") of any funds properly expended (including
reasonable fees and disbursements of counsel) by reason of
the occurrence of any of the events enumerated in Section
7.1 and 7.3, (as the case may be) incurred by the
Indemnified Party (whether relating to claims asserted by
or against third parties or to claims asserted against the
party providing indemnification (the "Indemnifying Party")
for charges or any other relief).
The amount of any Loss for which indemnification is
provided under Article 7 shall be computed net of any Net
Insurance Proceeds received by the Indemnified Party in
connection with such Loss. As used herein, the term "Net
Insurance Proceeds" means the insurance proceeds received
by the Indemnified Party and any retrospective premium
adjustments or reimbursement obligations relating thereto
and less any increase in premiums attributable thereto.
Purchaser shall forthwith on bringing any claim against
Sellers use reasonable endeavours to pursue any valid claim
which Purchaser may have under any of Purchaser's or the
Companies' insurance policies from time to time to the
extent that any such insurance policy covers any fact,
matter or circumstance giving rise to a claim by Purchaser
against any of Sellers for breach of any representation or
warranty provided that Purchaser shall not be obligated to
commence proceedings against its or the Companies'
insurers.
Where any of the Companies suffers a Loss based upon,
relating to or resulting from any of the matters referred
to in Section 7.1(a), (b) or (c) or Section 7.2 (a) or (b)
for the purposes of this Agreement Purchaser shall be
deemed to have suffered the same Loss (provided that
Sellers shall in no event be liable more than once in
respect of the same Loss).
7.5 CLAIMS
(a) When an Indemnified Party receives notice of any
claim made by a third party ("Third-Party Claims"),
the Indemnified Party shall give prompt written
notice thereof to the Indemnifying Party reasonably
indicating (to the extent known) the nature of such
claims and the basis thereof; provided, however, that
the failure of the Indemnified Party to give the
Indemnifying Party prompt notice as provided herein
shall not relieve the Indemnifying Party of any of
its obligations hereunder unless, and only to the
extent that, the Indemnifying Party shall have been
materially prejudiced thereby. Upon notice from the
Indemnified Party, the Indemnifying Party may, but
shall not be required to, assume the defense of any
such Third-Party Claims, including its compromise or
settlement, and the Indemnifying Party shall pay all
costs and expenses thereof and shall be fully
responsible for the outcome thereof; provided,
however, that in such case, the Indemnifying Party
shall have no obligation to pay any costs or expenses
of legal counsel of the Indemnified Party in
connection with such defense. No compromise or
settlement in respect of any Third-Party Claims may
be effected by the Indemnifying Party without the
Indemnified Party's prior written consent (which
consent shall not be unreasonably withheld or
delayed). The Indemnifying Party shall give notice to
the Indemnified Party as to its intention to assume
the defense of any such Third-Party Claims within
thirty days after the date of receipt of the
Indemnified Party's notice in respect of such Third-
Party Claims (and any assumption by the Indemnifying
Party of the defense of such claim shall constitute a
legally binding admission that the Indemnifying Party
admits its responsibility to indemnify the
Indemnified Party therefor, subject to any applicable
thresholds and limitations on liability provided for
in this Agreement). If an Indemnifying Party does
not, within thirty days after the Indemnified Party's
notice is given, give notice to the Indemnified Party
of its assumption of the defense of the Third Party
Claims or if the Indemnifying Party gives such notice
within the 30-day period but thereafter elects not to
assume the defense of the Third Party Claims, the
Indemnifying Party shall be deemed to have waived its
rights to control the defense thereof. If the
Indemnified Party assumes the defense of any Third-
Party Claims because of the failure of the
Indemnifying Party to do so in accordance with this
Section 7.5, it may do so in such manner as it may
deem reasonably to be appropriate, and the
Indemnifying Party shall pay all reasonable costs and
expenses of such defense (including settling or
compromising the claim) and shall be bound by any
determinations made therein. Notwithstanding the
foregoing, the Indemnified Party shall have the right
to assume the defense of any Third-Party Claim,
including its compromise or settlement, if either (i)
none of the amount for which indemnification is
sought is recoverable from the Indemnifying Party
because of the Basket (as defined in Section 7.7
hereof) (in which case the Indemnified Party shall be
responsible for all costs and expenses thereof and
shall be fully responsible for the outcome thereof),
or (ii) the Basket has been exceeded by reason of
other claims by the Indemnified Party against the
Indemnifying Party for indemnification but the
Indemnifying Party has not acknowledged in writing
its obligation to indemnify the Indemnified Party
with respect to such claims or has not furnished the
Indemnified Party with reasonably satisfactory
evidence of such Indemnifying Party's financial
ability to satisfy its indemnification obligation
with respect to such claims (in which case the
Indemnified Party's assumption of the defense shall
be without prejudice to any of its rights hereunder).
(b) Notwithstanding Section 7.5(a), with respect to any
such Third-Party Claim, the defense, negotiation
and/or settlement of which the Indemnifying Party has
taken control, (i) the Indemnified Party shall have
the right to retain separate counsel to represent it
and the Indemnifying Party shall pay the fees and
expenses of such separate counsel if (A) in the
Indemnified Party's reasonable judgment, it is
advisable for the Indemnified Party to be represented
by separate counsel or (B) the named parties to any
such Third-Party Claim include both the Indemnified
Party and Indemnifying Party and the Indemnified
Party reasonably determines that defences are
available to it that are unavailable to, or conflict
with those available to the Indemnifying Party; (ii)
the Indemnified Party shall have the right and shall
be given the opportunity to consult with the
Indemnifying Party and to participate in the defense
of such Third-Party Claim; and (iii) the Indemnifying
Party shall make all reasonable efforts to minimize
interference with the Indemnified Party's ability to
conduct its business.
(c) If, by reason of any Third-Party Claim relating to
any matter subject to indemnification under this
Article 7 (other than Section 7.2), a lien,
attachment, garnishment or execution is placed or
made upon any of the assets or properties of any
Indemnified Party, the Indemnifying Party shall
furnish an indemnity bond sufficient to obtain the
prompt relief thereof, which shall be in addition to
any other indemnity which the Indemnifying Party may
be obligated to provide hereunder.
7.6 DATE FOR PAYMENT
When an Indemnifying Party becomes liable to make any
payment pursuant to Section 7,1, 7.2 or 7.3, the due date
for making that payment shall be: (i) where the payment
relates to a liability on the part of Purchaser or any of
the Companies to pay a Third-Party Claim, the fifth
Business Day prior to the date on which that amount must be
paid to the third party; and (ii) in any other case, the
date falling ten Business Days after the date on which the
Indemnifying Party has been notified by the Indemnified
Party that the Indemnifying Party has a liability for a
determinable amount pursuant to Section 7,1 or 7.3. If any
payment required to be made by the Indemnifying Party
pursuant to Section 7,1 or 7.3 is not made by the due date,
then the amount payable shall carry interest from the due
date until the date when payment is actually made at the
rate of interest publicly announced from time to time by
Bank of Nova Scotia in London, England at its "base" rate,
plus 2%.
7.7 LIMITATIONS ON INDEMNIFICATION
(a) No claim shall be made under the provisions for
indemnity under Section 7.1.1(a) or 7.3(a),
respectively, until the aggregate amount of all
Losses for which Purchaser or Sellers are making
claims in excess of [POUND STERLING]30,000 per claim
(or per group of like claims) under Section 7.1.1(a)
or 7.3(b), respectively, exceeds [POUND STERLING]
400,000 (the "Basket"), whereupon the Indemnifying
Party shall be liable for one hundred per cent (100%)
of the Indemnified Party's Losses. The provisions of
this Subsection (a) of Section 7.7 shall not apply to
any claim for indemnity under Section 2.2(a) or (c),
2.3(a), 2.12, first 2 sentences of 4.2 and 4.3 provided
that for the avoidance of doubt nothing herein shall be
taken to subject the provisions of Article 6 to this
Section 7.7(a).
(b) In calculating the amount of any Losses for purposes
of the Basket, the qualifications for Material
Adverse Effect and materiality (or correlative
meaning) included in the representations and
warranties set forth in Article 2 and Article 4 shall
be disregarded and have no effect on the indemnities
of Sellers and Purchaser with respect to such
representations and warranties, each of which is
given for purposes of such indemnities as though
there were no qualification for Material Adverse
Effect or materiality (or correlative meaning).
(c) The total amount of the liability together with the
proper and reasonable costs of recovery of any
damages for breach of any representation and warranty
incurred by or on behalf of Purchaser of each of the
parties hereto shall be limited as follows:
(i) in the case of Sellers other than 3i and
Optionholders, liability for damages for
breach of any representation and warranty, the
indemnities set out at Sections 6.2, 7.1.1(c),
(d) and (e) and Section 7.1.2 shall, except in
the case of fraud or wilful non-disclosure, be
limited to the amount of the Initial Purchase
Price plus the Deferred Purchase Price received
by each Seller;
(ii) in the case of 3i, liability for damages for
breach of any representation and warranty
provided in this Agreement by 3i shall, except
in case of fraud or wilful non-disclosure, be
limited to the amount of the Initial Purchase
Price plus the amount of the Deferred Purchase
Price, in each case as received by 3i; and
(iii) in the case of Optionholders, liability for
damages for breach of any representation and
warranty provided in this Agreement by
Optionholders shall, except in case of fraud or
wilful non-disclosure, be limited to the amount
of the Initial Purchase Price plus the amount
of the Deferred Purchase Price received by
Optionholders; and
(iv) in the case of Purchaser, liability for damages
for breach of any representation and warranty
shall, except in the case of fraud or wilful
non-disclosure, be limited to an amount equal
to the Initial Purchase Price plus the Deferred
Purchase Price, if any, paid by Purchaser to
Sellers.
(d) Save in the case of fraud or wilful concealment, none
of Sellers shall be liable for any claim unless
Sellers' Representative shall have received from
Purchaser written notice containing details of the
claim in reasonable detail including Purchaser's
estimate of the amount thereof (on a without
prejudice basis):
(i) in the case of a claim in respect of any of the
representations or warranties other than the
warranties set out in Section 2.9, and the
indemnities set out at Sections 7.1.1(c) and
(e) and Section 7.1.2 on or before 30 June
1999; and
(ii) in the case of a claim pursuant to Section
6.2(a) or the representations or warranties in
Section 2.9 on or before 31 March 2004.
Any claim (other than a claim under Section 6.2(a) or
the representations or warranties set out in Section
2.9) shall (if it has not been previously satisfied,
settled or withdrawn) be deemed to have been
withdrawn unless legal proceedings in respect of it
have been commenced by both being issued and served
within 12 months of notification to Sellers'
Representative in accordance with this section.
In respect of any matter which is the subject of a
claim (other than a claim under Section 6.2(a) or the
representations or warranties set out in Section 2.9)
and which is capable of remedy, none of Sellers shall
be liable for such claim unless Purchaser shall have
given Sellers' Representative twenty-eight (28) days'
notice in writing within which to remedy the same and
Sellers shall have failed to do so within the said
twenty-eight (28) day period.
(e) The liability in respect of all claims under this
Agreement against the Trustees (as defined in Exhibit
A) who are holders of the Shares as trustees of a
settlement, shall be restricted to the extent that
the Trustees are entitled and able to indemnify
themselves from the assets subject to the trusts of
the said settlement from time to time provided that
each Trustee agrees and undertakes with Purchaser
that it shall not, prior to 30 June 1999, distribute
any of the assets of the said trust and in the event
that any trust assets are dissipated in breach of
this section, the defaulting Trustee shall be liable
up to the amount of the Initial Purchase Price plus
the Deferred Purchase Price received by that Trustee
under this Agreement. Nothing in this Section 7.7(e)
shall prevent the Trustees from distributing, at any
time prior to or following 30 June 1999:
(i) any income received from trust assets;
(ii) the amount of any liability to Purchaser in
respect of any claim or claims brought against
Trustees pursuant to or in relation to this
Agreement;
(iii) any liability to pay or reimburse any Taxes
properly payable or reimbursable by the
Trustees out of capital trust assets;
(iv) any reasonable administrative costs and
expenses properly payable by the Trustees out
of capital trust assets;
(v) trust assets, up to the amount (if any) by
which the value of trust assets held by the
Trustees from time to time exceeds the amount
of the Initial Purchase Price plus the Deferred
Purchase Price received by the Trustees; and
(vi) trust assets, where such trust assets are to be
paid to a Seller, provided that such Seller
shall have executed a deed acknowledging that
their liability under the terms of this
Agreement shall be increased by the amount of
trust assets received by such Seller.
On 30 June 1999, the Trustees shall, unless Purchaser
shall have made a claim against any of Sellers in
respect of a breach of any representation, warranty
or any other term of this Agreement, be entitled to
distribute trust assets held by them at that date in
an amount equal to 50% of the value of all the assets
held by the Trust at such date, provided, however,
that if Purchaser shall have made any claim as set
out above the Trustees shall set aside an amount
which is equivalent to twice the Trustees' share
(being their percentage share of the Initial Purchase
Price and the Deferred Purchase Price) of the total
amount of the Purchaser's claim plus a sum which the
Purchaser reasonably considers it would incur in
pursuing such claim on an indemnity basis (the "Set
Aside Trust Assets") and the Trustees shall not be
entitled to distribute the Set Aside Trust Assets
until such claim is resolved. At the expiry of each
12 month period after 30 June 1999 the Trustees
shall, save where Purchaser shall have made a claim
against any of Sellers for breach of any
representation warranty or a breach of any term of
this Agreement, be entitled to distribute an
additional 10% of the trust assets (determined by
value) provided, however, that if Purchaser shall
have made any such claim as set out above the
Trustees shall not be entitled to distribute any
trust assets which have become Set Aside Trust Assets
until such claim is resolved.
On 31 March 2004 the Trustees shall, save where
Purchaser shall have made a claim against any of
Sellers in respect of a breach of representation,
warranty or breach of any of the terms of this
Agreement, be entitled to distribute all remaining
trust assets provided, however, that if Purchaser
shall have made any such claim as set out above the
Trustees shall not be entitled to distribute any
trust assets which have become Set Aside Trust Assets
until such claim is resolved.
(ee) Notwithstanding any other provision in this
Agreement, nothing in this Agreement shall impose any
personal liability on any Trustee provided that the
provision in this sub-clause (ee) shall cease to have
effect if at any time following Closing the Trustee
acts or omits to act in a manner that constitutes a
breach of trust under the relevant Trust.
(f) Purchaser shall and shall procure that each of its
subsidiaries, any holding company of Purchaser and
any subsidiary of any such holding company
("Purchaser's Group") shall promptly reimburse to
Sellers (or to such of Sellers who have paid) all
amounts (not exceeding the aggregate sum paid by
Sellers or such of Sellers as aforesaid) in respect
of any claim paid by Sellers in respect of any claim
which is subsequently recovered by Purchaser or of
any of Purchaser's Group as the case may be from any
third party.
(g) Purchaser shall only be entitled to recover once for
a loss suffered as a result of a single act or
omission which constitutes a breach of one or more of
the representations and warranties or Section 6.2(a)
of this Agreement.
(h) Purchaser acknowledges that in entering into this
Agreement it is relying on the representations and
warranties set out in this Agreement and not upon any
other warranties, undertakings or representations of
any description given or made by or on behalf of any
of Sellers, Sellers' solicitors or other agents or
advisers.
(i) Sellers shall not be liable in respect of any claim
for breach of a representation or warranty
(i) to the extent that any such claim arises or is
increased as a result of:
(A) any change in rates of tax made after the
Closing Date or of any change in law,
regulation, directive or requirement, or
the practice of any tax authority,
occurring after the Closing Date; or
(B) any change after the Closing Date in any
accounting policy, any tax reporting
practice, or the length of any accounting
period for tax purposes, of any member of
the Group;
(ii) which would not have arisen but for any act,
matter or thing done or omitted to be done
after Closing by the Company or any of the
Subsidiary Companies otherwise than in the
ordinary course of business or pursuant to a
legally binding commitment entered into prior
to Closing;
(iii) to the extent that provision or reserve is
specifically made for the matter giving rise to
the claim in the Balance Sheet;
(j) The sole remedy for any breach of any of the
Warranties or any other breach of this Agreement by
Sellers or any event giving rise to liability on
Sellers under Section 6.2(a) shall save in the case
of fraudulent misrepresentation be an action for
damages and Purchaser shall not save in the case of
fraudulent misrepresentation be entitled to rescind
this Agreement.
(k) No claim shall be made under warranty 2.14(a)(x)
where Purchaser or the Companies (acting under the
direction of Purchaser):
(i) shall have commenced legal proceedings against
any third party without obtaining the prior
written consent of Sellers; and
(ii) the Companies are held by the Court in the
course of those proceedings to infringe the
intellectual property rights of the third
party.
(l) Nothing in this Section 7.7 shall restrict
Purchaser's duty to mitigate any loss.
7A. ENVIRONMENTAL INDEMNITY
DEFINITIONS
-----------
Environmental Expert an environmental consultant agreed
on by the relevant Indemnified
Party and the relevant Indemnifying
Party or in the absence of
agreement and on application by
either the relevant Indemnified
Party or the relevant Indemnifying
Party as appointed by the President
of the Royal Institution of
Chartered Surveyors who shall act
as an expert and not as an
arbitrator and whose costs shall be
paid by the relevant Indemnifying
Party and/or the relevant
Indemnified Party or
proportionately by each as the
Environmental Expert shall
determine
Environmental
Indemnity the environmental indemnity contained
in Article 7A
Environmental seven years from the date of this
Indemnity Period Agreement
Environmental Law has the meaning given to that
phrase in Section 2.16
Environmental Losses means:
(i) all and any liabilities,
costs (including without
limitation, investigation
costs), claims, damages,
expenses (including
reasonable professional
expenses), penalties or fines
("Environmental Costs")
incurred (A) as a consequence
of any governmental,
administrative, criminal or
civil proceedings or (B) as
the result of any order or
instruction of any regulatory
authority under Environmental
Law;
(ii) any such Environmental
Costs incurred pursuant to
agreement of the relevant
Indemnified Party and the
relevant Indemnifying Party
or failing agreement pursuant
to the determination of the
Environmental Expert as
Environmental Costs
reasonably incurred to
prevent or mitigate the risk
of Environmental Losses
otherwise being incurred
within the Environmental
Indemnity Period;
(iii) any such Environmental
Costs reasonably incurred in
making a claim under the
Environmental Indemnity;
(iv) any such Environmental
Costs reasonably incurred in
pursuing any claim or
recovery of costs against
environmental regulators or
third parties.
Existing Personal
Property any personal property owned
or used by any of the Group
Companies at the date of this
Agreement which is subject to
Environmental Laws.
Property Contamination all and any Environmental Losses
Liabilities arising from or originating from
Hazardous Materials (as defined in
Section 2.16 of this Agreement)
which are present in, at, on or
under, migrating to or emanating
from:
(i) any of the Real Properties
as at the Closing Date; or
(ii) any offsite facility or
location used on or prior to
the Closing Date for the
storage, treatment or
disposal of Hazardous
Materials from any Real
Property
Relevant (a) from the date of this Agreement
Indemnification to two years from the date of
Percentage this Agreement, one hundred per
cent (100%)
(b) from two years and one
day from the date of this
Agreement to three years from
the date of this Agreement,
eighty-four per cent (84%)
(c) from three years and
one day from the date of this
Agreement to four years from
the date of this Agreement,
sixty-seven per cent (67%)
(d) from four years and one
day from the date of this
Agreement to five years from
the date of this Agreement,
forty-five per cent (45%)
(e) from five years and one
day from the date of this
Agreement to six years from
the date of this agreement,
thirty-four per cent (34%)
(f) from six years and one
day from the date of this
Agreement to seven years from
the date of this Agreement,
seventeen per cent. (17%)
(g) and for the avoidance
of doubt, from seven years,
nil per cent. (0%)
the Relevant Indemnification
Percentage in each case being
determined in respect of each claim
as of the time at which notice of
the claim is given under Section
7.5(a).
Residual Liabilities all and any Environmental Losses
incurred by any of the Companies or
the Indemnified Parties before or
after the date of this Agreement in
respect of or in connection with:
(i) any freehold or leasehold
property at any time owned
leased occupied or used by
any of the Group Companies
other than the Real Property
and in respect of or in
connection with any personal
property owned or used by
any of the Group Companies
other than the Existing
Personal Property; or
(ii) any offsite facility or
location used for the
storage, treatment or
disposal of Hazardous
Materials from any real
property currently or
formerly owned, leased or
operated by any of the Group
Companies (or any
predecessors thereof) other
than the Real Property
7A.1 Sellers other than 3i and Optionholders ("Indemnifying
Parties") shall jointly and severally indemnify and hold
harmless Purchaser and its directors, employees,
shareholders, any intra-group successors, transferees and
assigns and any person claiming by or through any of the
foregoing ("Indemnified Parties") and keep them indemnified
and held harmless against the Relevant Indemnification
Percentage of the Residual Liabilities and against the
Relevant Indemnification Percentage of the Property
Contamination Liabilities.
7A.2 The provisions of Section 7.7 (a) shall apply to any claim
under the Environmental Indemnity for Residual Liabilities
or for Property Contamination Liabilities as if for the
purposes of that Section the amount of such claim was
regarded as a Loss and the claim was a claim under Section
7.1.1 (a).
7A.3 The provisions of Section 7.7 (c) (i) shall apply to any
claim under the Environmental Indemnity for Residual
Liabilities or for Property Contamination Liabilities as if
for the purposes of that Section the claim was regarded as
a claim for liability for damages for breach of any
representation and warranty.
7A.4 The Sellers shall not be liable under this Environmental
Indemnity:
(a) unless the Purchaser has given notice to the Sellers
under Section 7.5(a) as applied by Section 7A.6
within the Environmental Indemnity Period
(aa) unless the claim is made in relation to legal
proceedings or formal regulatory action taken,
received by, served on or implemented against the
Indemnified Parties or any one of them (or which
would have been expected to be so taken, received by,
served on or implemented but for any Environmental
Costs expended within paragraph (ii) of the
definition of Environmental Losses within the
Environmental Indemnity Period) which if uncontested
would result (or if taken, received by, served on or
implemented would have been expected to have
resulted) in a legal obligation binding on the
relevant Indemnified Party whereby the relevant
Indemnified Party would incur or would be expected to
incur Environmental Losses within 8 years of this
Agreement.
(b) if a claim is made in respect of the use of any Real
Property for a purpose dissimilar to that for which
it is used as of the Closing Date, for the proportion
of the claim which exceeds that which would have been
suffered or sustained by Indemnified Parties had the
relevant Real Property continued to be used for that
purpose or a purpose similar to the existing purpose
as of the Closing Date
7A.5 Indemnifying Parties shall pay and reimburse any amount due
under Section 7A.1 to Indemnified Parties within 21 days of
written demand.
7A.6 Section 7.5 shall apply mutatis mutandis to claims made
under this Section 7A save that Section 7.5(a) shall apply
in respect of any matter giving rise to a claim under this
Environmental Indemnity as if such matter was a Third Party
Claim within the meaning of Section 7.5(a) and save to the
extent that the provisions of Section 7.5 shall be
inconsistent with this Article 7A.
7A.7 No Indemnified Party shall, without the written consent of
the Indemnifying Party, notify any regulatory authority
under Environmental Law of any environmental matter which
is reasonably in the opinion of the Indemnified Party at
that time capable of giving rise to liability under this
Environmental Indemnity or notify any third party who may
in the reasonable opinion of the Indemnified Party at the
time may have a claim against the Indemnified Party in
respect of any such environmental matter, provided always
that this shall not prevent the Indemnified Party revealing
any matter, act or circumstance:
(i) to its professional advisers so as to enable such
advisers to perform the duties expected of them; and
(ii) to the extent that the Indemnified Party shall be
under any legal obligation to do so.
7A.8 If and to the extent that the amount of any liability in
respect of which the Indemnified Party has recovered under
this Agreement is reduced by whatever means at any time
subsequent to notice of the claim having been given to the
Indemnifying Party, whether by virtue of any recovery or
contribution received by the Indemnified Party from any
third party (including any insurer of the Indemnified
Party) or otherwise, the Indemnifying Party's liability to
the Indemnified Party under this Agreement shall be reduced
accordingly and the Indemnified Party shall as soon as
reasonably practicable notify the Indemnifying Party of the
reduction in writing and forthwith upon receipt of the same
pay the amount of such reduction to the Indemnifying Party.
7A.9 The Indemnified Parties shall unless the Indemnifying Party
provides otherwise in writing enforce or pursue any
indemnities or remedies subject to the Indemnified Party
being indemnified to its reasonable satisfaction against
all costs that it may incur in respect thereof which the
Indemnified Parties or any of them may have in respect of
the relevant claim against any reasonably identifiable
third party against whom the Indemnified Party having taken
legal advice has a greater than 50% chance of success as
indicated by such legal advice.
7A.10 The Indemnifying Party shall not be liable under this
Article 7A to the extent that any relevant claim arises as
a result of or to the extent that the costs, expenses,
losses or claims have been aggravated or increased by the
Indemnified Parties or any of them or by any third parties
after the Closing Date save to the extent that such
aggravation or increase is caused by the carrying out of
actions incurring Environmental Losses within the meaning
of paragraph (ii) of the definition of Environmental
Losses.
7A.11 The Indemnifying Party shall not be liable under this
Article 7A to the extent that at any time after the Closing
Date Environmental Losses are incurred or should properly
have been incurred as part of routine maintenance and
upkeep of the Indemnified Parties' business not involving
material capital expenditure or as part of any routine
expenditure relating to any item or product in satisfaction
of day to day compliance obligations after the Closing
Date.
ARTICLE 8
MISCELLANEOUS
8.1 SELLERS' REPRESENTATIVE
(a) By the execution and delivery of this Agreement, each
of Sellers other than 3i hereby appoints Xxxx
Xxxxxxx, Xxxx Xxxxxxx and Xxxxxx Xxxx and each of
them as a Sellers' Representative and authorizes and
empowers each Sellers' Representative as such
Seller's true and lawful agent and attorney-in-fact
to act, individually, in the name, place and stead of
such Seller with respect to this Agreement, as the
same may be from time to time amended, and with
respect to the transfer of such Seller's Shares to
Purchaser pursuant hereto, and to do or refrain from
doing all such acts and things of an administrative
nature as such Sellers' Representative shall deem
necessary or appropriate in order to effect the terms
of this Agreement or any of the transactions
contemplated hereby, including, without limitation,
the power:
(i) to receive, hold, and deliver to Purchaser the
certificates evidencing the Shares accompanied
by executed stock powers, signature guarantees,
and any other documents relating thereto on
behalf of such Seller;
(ii) to receive and give a valid receipt for the
Closing Payment;
(iii) to vary, amend or waive any provisions of this
Agreement;
(iv) to act for such Seller with regard to all
indemnification matters referred to in this
Agreement, including, without limitation, the
power to acknowledge responsibility for any
claim and the power to compromise any claim on
behalf of such Seller; and
(v) to receive all demands, notices or other
communications directed to such Seller under
this Agreement and to do or refrain from doing
any further act or deed on behalf of such
Seller which such Sellers' Representative deems
necessary or appropriate.
(b) The appointment of each Sellers' Representative shall
be deemed coupled with an interest and shall be
irrevocable until the later of 30 June 1999 and the
date when any claim made by Purchaser prior to 30
June 1999 shall have been resolved, settled or
withdrawn or deemed to have been withdrawn, at which
date such appointment shall automatically terminate,
and Purchaser and any other person may conclusively
and absolutely rely, without inquiry, upon any action
of any of Sellers' Representatives in accordance with
this Article as the act of Sellers in all matters
referred to in this Agreement. Each of Sellers
hereby ratifies and confirms all that any Sellers'
Representative shall do or cause to be done by virtue
of his appointment as Sellers' Representative of such
Seller. Each of Sellers' Representatives shall act
for all Sellers on all of the matters set forth in
this Agreement in the manner such Sellers'
Representative believes to be in the best interest of
Sellers and consistent with their obligations under
this Agreement, but none of Sellers' Representatives,
Purchaser or any of the Companies shall be
responsible to any Seller for any loss or damage any
Seller may suffer by reason of the performance by any
Sellers' Representative of his duties under this
Agreement, except, in the case of a Sellers'
Representative, for loss or damage arising from
wilful violation of law or negligence in the
performance of his duties hereunder. Each Seller may
deliver to any of Sellers' Representatives, for
payment to Purchaser upon two Business Day's prior
written notice any amount owing by such Seller to
Purchaser under this Agreement, but nothing herein
shall be construed as holding any Sellers'
Representative liable to Purchaser for any amount
such Seller does not deliver to Sellers'
Representatives and for which Sellers' Representative
is not otherwise liable in their capacity as Sellers.
(c) In the event of the death or incapacity of any of
Sellers' Representatives, the survivors or survivor
shall become the sole Sellers' Representative(s). In
the event of the death or incapacity of all three of
Sellers' Representatives, Sellers agree to appoint a
successor within the thirty day period immediately
following the date of the death or incapacity of the
last surviving Sellers' Representative, and such
successor shall either be a Seller or any other
Person reasonably acceptable to Purchaser, who shall
agree in writing to accept such appointment in
accordance with the terms hereof. The appointment of
a successor Sellers' Representative pursuant to this
Section 8.1 shall be promptly notified to Purchaser.
(d) Sellers agree that Purchaser may rely on the
provisions of this Section 8.1 in dealing with any
Sellers' Representative on behalf of any of Sellers.
Purchaser shall not be bound by, and its rights shall
not be limited by, any agreement among Sellers in
this Section 8.1.
(e) Each of Xx. Xxxxxxx, Mr. Lock and Xx. Xxxxxxx hereby
acknowledges and agrees to act as Sellers'
Representative, upon the terms and conditions set
forth above and in accordance with this Agreement.
8.2 SURVIVAL
All representations and warranties made by the parties
herein shall survive as provided in Section 7.7(d). Save
as set out in Article 7 all covenants and agreements made
and given by the parties herein shall survive indefinitely.
8.2 PUBLIC DISCLOSURE
Each of Sellers and Purchaser agree that no press release
or similar public announcement or communication will be
made or caused to be made by him or it concerning the
execution or performance of this Agreement or any
transaction contemplated hereby unless specifically
approved in advance and in writing by Purchaser in the case
of a communication by any of Sellers or Companies and by
Sellers' Representative in the case of a communication by
Purchaser; provided, however, that Purchaser may make any
public announcement required by applicable Law or which
Purchaser deems prudent on advice of counsel and in light
of the disclosure obligations applicable to it as a
reporting corporation in the United States.
8.3 ASSIGNMENT
Any party may assign its rights and obligations under this
Agreement, but no such assignment shall relieve such party
of its obligations under this Agreement nor shall any such
assignment have the effect of increasing the liability of
Sellers under this Agreement. This Agreement shall be
binding upon and inure to the benefit of each of the
parties hereto and their respective successors and
permitted assigns.
Purchaser agrees to provide Sellers with reasonable notice
of any proposed assignment under this Agreement.
8.4 ENTIRE AGREEMENT
This Agreement and the Exhibits and Schedules (including
the Disclosure Documents) attached hereto (i) constitute
the entire agreement and supersede all prior agreements and
understandings, both written and oral, between the parties
with respect to the subject matter hereof. It is agreed
that: (i) no party has entered into this Agreement in
reliance upon any representation, warranty or undertaking
of any other party which is not expressly set out or
referred to in this Agreement; (ii) no party shall have any
remedy in respect of misrepresentation or untrue statements
made by any other party unless and to the extent that a
claim lies for breach of warranty under this Agreement; and
(iii) this clause shall not exclude any liability for
fraudulent misrepresentation.
8.5 AMENDMENT AND MODIFICATION
This Agreement and any of the terms contained herein may
only be amended or modified by Sellers' Representative and
Purchaser in writing.
8.6 WAIVER
Either Sellers' Representative or Purchaser may:
(i) extend the time for the performance of any of the
obligations or other acts of the other parties
hereto;
(ii) waive any inaccuracies in the representations and
warranties contained herein or in any other document
delivered pursuant hereto which are intended to
benefit it; or
(iii) waive compliance with any of the agreements or
conditions contained herein or in any other documents
delivered pursuant hereto and which are intended to
benefit it.
Any agreement on the part of a party to any such extension
or waiver shall be valid only if set forth in an instrument
in writing by the party granting the extension or waiver.
No waiver of any of the provisions of this Agreement shall
be deemed to or shall constitute a waiver of any other
provision hereof.
8.7 COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of
which shall be considered one and the same instrument.
8.8 REFERENCE
The table of contents and the section and paragraph
headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning
or interpretation of this Agreement.
8.9 NOTICES
All notices hereunder shall be deemed given by a party
hereto if in writing and delivered personally or by
facsimile transmission or by registered or certified mail
(return receipt requested) to the other party at the
following address for such party (or at such other address
as shall be specified by like notice):
if to any of Sellers to: any Sellers' Representative at the
address given for such person in Exhibit A.
with a copy to each of the other Sellers at the addresses
given in Exhibit A
if to the Company, to: Safeline Limited
000 Xxxxxxxx Xxxxxx
Xxxxxxx X0 0XX
Great Britain
Attention of:
with a copy to:
Chaffe Street (Ref: Xxx Xxxxxx)
Xxxxx Xxxxx
00 Xxxxxx Xxxxxx
Xxxxxxxxxx X0 0XX
(Facsimile: 0161 228 6862)
if to Purchaser, to: Xxxxxx X. Xxxxxxx
Xxxxxxx-Xxxxxx, Inc.
Im Langacher
XX-0000 Xxxxxxxxxx,
Xxxxxxxxxxx
Fax No: 00-0-000-00-00
with a copy to: Xxxxx XxXxxx, Esq.
X.X. Xxxxxx & Co.
000 Xxxxx Xxx Xxxx
Xxxxxx XX0X 0XX
Fax No: 0000 000 0000
with a copy to: Xxxxxxx Xxxxxxx, Esq.
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Fax No: (000) 000-0000
Any notice given by mail or by facsimile transmission,
receipt of which is confirmed by a facsimile transmittal
sheet, shall be effective when received. Any notice given
by Purchaser to Sellers pursuant hereto shall be deemed
given also to each of the Companies.
8.10 GOVERNING LAW; CONSENT TO JURISDICTION
(a) This Agreement shall be governed by and construed in
accordance with the laws of England, without regard
to the conflicts of laws provisions thereof.
(b) Any suit, claim, action or proceeding arising out of
or relating to this Agreement and the transactions
contemplated hereby or for the enforcement of any
judgment or order entered by any court in respect
thereof, may be brought in the English Courts, and
each party hereto hereby submits to the exclusive
jurisdiction of such court. The parties hereby
irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or
hereafter have to the laying of venue of any dispute
arising out of or relating to this Agreement or any
of the transactions contemplated hereby brought in
such court or any defense of inconvenient forum for
the maintenance of such dispute. Each of the parties
hereto agrees that a judgment in any such dispute may
be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
This consent to jurisdiction is being given solely
for purposes of this Agreement and the agreements
executed in connection herewith and is not intended
to, and shall not, confer consent to jurisdiction
with respect to any other dispute in which a party to
this Agreement may become involved.
(c) Each of the parties hereto hereby consents to process
being served by any party to this Agreement in any
suit, action or proceeding of the nature specified in
Section 8.10(b) above by the mailing of a copy
thereof in the manner specified by the provisions of
this Section 8.10.
8.11 GROSSING-UP OF PAYMENT
All sums payable by Sellers pursuant to this Agreement
shall be paid free and clear of all deductions or
withholdings whatsoever, save only as may be required by
any applicable law provided that Sellers shall in no
circumstance be required to pay by this clause any amount
exceeding the amounts specified for each Seller in Section
7.7(c) and (e). If any deductions or withholdings are
required by law to be made from any of the sums payable by
Sellers pursuant to this Agreement, (i) Sellers shall
(except in the case of interest) deduct or withhold such
sums as are required to be deducted or withheld from such
sum and any additional sum described in (ii) and pay such
sums owed to the appropriate Taxing Authority and (ii)
Sellers shall be obliged to pay to the recipient such an
additional sum as will, after any deduction or withholding
required by law to be made from such additional sum has
been made, leave the recipient 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. If
Tax is payable on any sum paid by Sellers to the recipient
pursuant to this Agreement, the sum otherwise so payable
shall be grossed up by such amount as will ensure that,
after payment of any Tax charged on or in respect of such
payment, the recipient receives and retains a sum equal to
that which would otherwise be payable pursuant to this
Agreement.
8.12 ADJUSTMENT TO PURCHASE PRICE
To the extent permitted by applicable Law, any payment by
Purchaser or Sellers under Article 6, 1.2A or Article 7 or
in respect of the warranties shall be treated by Purchaser
and Sellers as an adjustment to the Initial Purchase Price.
8.13 LIMITATIONS ON THE REPRESENTATIONS AND WARRANTIES OF
SELLERS
Notwithstanding anything herein to the contrary,
representations and warranties made by Sellers, or by any
of them, shall be subject to:
(a) any matters stated in this Agreement or in any
document referred to therein and for the avoidance of
doubt a disclosure against any one or more warranty
statements will constitute disclosure of such fact or
matter against all of the warranties set out in this
Agreement;
(b) the information in the disclosure documents
("Disclosure Documents") listed in Schedule 8.13 of
this Agreement, copies of which have been provided to
Purchaser or its advisers;
(c) all matters appearing on the microfiche file at the
Companies Registry for England and Wales on 29 May
1997 in respect of the Company;
(d) in relation to Real Property (excluding Real Property
to the extent that representations and warranties
affect both Real Property and Environmental Matters):
(i) any information which would be revealed upon an
inspection or search (whether or not made) of
any document, register or record which may be
inspected by the public and maintained by, or
information which is available upon enquiry
(whether or not made) of, or otherwise from, HM
Land Registry, HM Land Charges Registry or any
register of local land charges; and
(ii) any matter which would be revealed upon an
inspection (whether or not made) of the office
copies of the registered titles, conveyances,
transfers, leases or other title deeds
comprised in the Disclosure Documents;
provided, however, that such matters or information will be
treated as qualifying or limiting the application of any
representation and warranty only to the extent that it
constitutes fair disclosure.
8.14 ILLEGALITY
In the event that any provision in this Agreement shall be
invalid, illegal or unenforceable, to the extent permitted
by applicable law, the validity, legality and
enforceability of the remaining provisions shall not in any
way be affected or impaired thereby.
8.15 SELLERS' KNOWLEDGE
(a) Whenever used in this Agreement, "to Sellers'
knowledge", "to the knowledge of Sellers," "Sellers
are aware" or "known to Sellers" or similar language
shall be deemed to include, in addition to the actual
knowledge or awareness of any of Sellers, such
knowledge or awareness as would have been acquired
following due and careful inquiry of the other
management of the Company in relation to the subject
matter of the warranties.
(b) Any information supplied by the Companies, their
officers or employees to Sellers, their agents,
representatives or advisers in connection with, or to
form the basis of, any representation or warranty or
any matter covered in the representations or
warranties or for any other reason shall be deemed
not to include or have included a representation,
warranty or guarantee of its accuracy to Sellers and
shall not constitute a defence to Sellers against any
claim made by Purchaser. Sellers waive any and all
claims against the Companies, their officers or
employees in respect of any information so supplied
save in respect of any right of contribution
available as between Sellers as joint and several
obligors under this Agreement.
8.17 SPECIFIC PERFORMANCE; REMEDIES
Each Seller, on the one hand, and Purchaser, on the other
hand, acknowledges that the other will be irreparably
harmed and will have no adequate remedy at law if such
party fails to perform any of its obligations under this
Agreement. It is accordingly agreed that, in addition to
any other remedies which may be available, the parties
shall have the right to obtain injunctive relief to
restrain a breach or threatened breach of, or otherwise
obtain specific performance of, any covenants and other
agreements of the other party contained in this Agreement.
Any remedy conferred on any party hereto under this
Agreement for breach or threatened breach of this Agreement
shall be in addition and without prejudice to any other
rights and remedies available to it and the exercise or
failure to exercise any remedy shall not constitute a
waiver by any party of any of its other rights and
remedies.
-----------------------------------
IN WITNESS WHEREOF, this Agreement has been signed on
behalf of each of the parties hereto as of the date first
above written.
XXXXXXX-XXXXXX INC.
By: /s/ Xxxxxxx X Xxxxxxxx
------------------------------
Name: Xxxxxxx X Xxxxxxxx
Title: Chief Financial Officer
SAFELINE HOLDING COMPANY
By: /s/ Lukas Braunschweiler
------------------------------
Name: Lukas Braunschweiler
Title: Chairman
SAFELINE LIMITED
By: /s/ Xxxx Xxxxxxx
------------------------------
Name: Xxxx Xxxxxxx
Title: Director
/s/ Xxxxxx Xxxx
------------------------------
Name: Xxxxxx Xxxx
Title: Director
/s/ I Beswick
------------------------------
I Beswick
/s/ A D Xxxxxxx
------------------------------
A D Xxxxxxx
/s/ X X Xxxxx
------------------------------
X X Xxxxx
/s/ A P Lock
------------------------------
A P Lock
/s/ K Ives
------------------------------
K Ives
/s/ X X Xxxxx
------------------------------
X X Xxxxx
/s/ I Xxxxxxxxx
------------------------------
I Xxxxxxxxx
/s/ Xxxxxx Xxxxxxxx Xxxxxx as attorney for
-------------------------------------------
Xxxxxxx Xxxx Xxxxxxx
Trustee Co Ltd
as Trustee of the Xxxxxxx
Trust dated 15 March 1991
/s/ Xxxxxx Xxxxxxxx Xxxxxx as attorney for
-------------------------------------------
Xxxxxxx Xxxx Xxxxxxx
Trustee Co Ltd
as Trustee of the Xxxx
Xxxxxxx Trust dated 15th
March 1991
------------------------------
Xxxxxxx Xxxx Xxxxxxx
Trustee Co Ltd as Trustee
of the Xxxx Xxxxxxx Trust
dated 15th March 1991
/s/ Xxxxxx Xxxxxxxx Xxxxxx as attorney for
-------------------------------------------
R &H Trust Co (Jersey)
Limited as Trustee of the
Xxxxx Xxxx Xxxxx Offshore
account dated 13 March
1987
/s/ Xxxxxx Xxxxxxxx Xxxxxx as attorney for
-------------------------------------------
Reads Trustees Ltd as
Trustee of the Xxxxx Xxxxx
1987 Settlement dated 30th
September 1987
Each of the Optionholders (whose names are for the avoidance of
doubt listed below) acting by their duly authorised attorney,
Xxxx Xxxxxxx.
/s/ Xxxx Xxxxxxx
----------------------------
Duly signed by Xxxx Xxxxxxx as attorney for Optionholders
Xxxxxxxx X Xxxx
Xxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxx J Franklewicz
Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx
Xxx X Xxxxx
Xxxxxxxxxxx Xxxxxx
Xxxxx X Xxxxx
Xxxx Xxxxxxxxx
Xxxxxxx X Xxxxxxx
Xxxxx Xxxxxx
Xxxx Xxxxxxxxxxxx
Xxxxxx Xxxxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxxx
Xxxxx XxXxxxxxxx
Xxxxxx Xxxxx
Xxxxxxx Xxxxxx
Xxx Xxxxx
Xxxxxxx Xxxx-Xxxx
Xxxxxx Xxx Xxxxx XX
Xxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxxxxxxxx
Xxxxxxx Xxxxxxxxxxx
Xxxxxx Xxxx
Xxxxxxxxxxx Xxxxxxx
3i GROUP plc
By: /s/ Xxxx Xxxxxxx Xxxx
-----------------------
Name: Xxxx Xxxxxxx Xxxx
Title: Authorized Signatory
3i plc -----------------------
Name: Xxxx Xxxxxxx Xxxx
Title: Authorized Signatory
