Dated 27th November 2006 Share purchase agreement between CEH Limited and Jardin International Holding BV and Katy Industries, Inc.
EXHIBIT
10.1
Dated
27th
November 2006
------------
Share
purchase agreement
between
CEH
Limited
and
Jardin
International Holding BV
and
Katy
Industries, Inc.
XXXXXX
XXXXXXX
00
Xxxxxxxxx Xxxxxx
Xxxxxx
X0X 0XX
DX
00000
Xxxxxx Xxxxxx North
telephone
x00(0)00
0000 0000
fax
x00
(0)00
0000 0000
Ref
:kl1/ drl1/ 027043.1 [2688192]
Contents
Clause
1.
Interpretation.....................................................................................................................4
2.
this
paragraph has been intentionally
deleted..............................................................9
3.
Sale
and
purchase..............................................................................................................9
4.
Purchase
price....................................................................................................................9
5.
Completion..........................................................................................................................9
6.
Warranties.........................................................................................................................11
7.
Limitations
on
claims.......................................................................................................12
8.
Conduct
of
claims............................................................................................................15
9.
Tax
covenant....................................................................................................................18
10.
working
capital
statement...............................................................................................18
11.
Restrictions
on
Seller......................................................................................................18
12.
Guarantee..........................................................................................................................19
13.
Confidentiality
and
announcements.............................................................................19
14.
Further
assurance............................................................................................................21
15.
Provision
of Assistance by the
Company...................................................................21
16.
Assignment......................................................................................................................22
17.
Entire
Agreement.............................................................................................................22
18.
Variation
and
Waiver......................................................................................................23
19.
Costs..................................................................................................................................23
20.
Notice................................................................................................................................23
21.
Interest
on Late
Payment................................................................................................25
22.
Severance..........................................................................................................................25
23.
Agreement
Survives
Completion..................................................................................25
24.
Third
Party
Rights...........................................................................................................25
25.
Counterparts.....................................................................................................................26
26.
Language..........................................................................................................................26
27.
Governing
Law and
Jurisdiction....................................................................................26
Schedules
Schedule
1
Particulars
of the
Company............................................................................27
Schedule
2
Completion........................................................................................................28
Part
1.
What
the
Seller shall deliver to the Buyer at
Completion..................................28
Part
2.
Matters
for the board meeting at
Completion......................................................30
Schedule
3
Warranties.........................................................................................................31
Part
1.
General
warranties....................................................................................................31
1.
Power
to
sell the
company......................................................................................31
Page
1
2.
Shares
in
the
company....................................................................................................31
3.
Constitutional
and corporate
documents....................................................................32
4.
information........................................................................................................................33
5.
Compliance
with
laws......................................................................................................33
6.
Licences
and
consents...................................................................................................33
7.
Insurance..........................................................................................................................33
8.
Power
of
attorney............................................................................................................33
9.
Disputes
and
investigations..........................................................................................34
10.
Defective
products and
services...................................................................................34
11.
Customers
and
suppliers................................................................................................35
12.
Competition......................................................................................................................35
13.
Contracts...........................................................................................................................35
14.
Transactions
with the
seller...........................................................................................37
15.
Finance
and
guarantees..................................................................................................37
16.
Insolvency........................................................................................................................39
17.
Assets...............................................................................................................................40
18.
Condition
of plant and
equipment................................................................................40
19.
property.............................................................................................................................40
20.
Intellectual
property........................................................................................................41
21.
Information
technology..................................................................................................48
22.
Employment......................................................................................................................49
23.
Accounts..........................................................................................................................53
24.
Financial
and other
records............................................................................................53
25. Changes
since accounts
date........................................................................................54
26.
Effect
of
sale on sale
shares...........................................................................................55
27.
Retirement
benefits..........................................................................................................56
Part
2.
Tax
warranties...................................................................................................................................56
1.
General...............................................................................................................................56
2.
Capital
allowances...........................................................................................................58
3.
Distributions.....................................................................................................................59
4.
Loan
relationships...........................................................................................................59
5.
Close
companies..............................................................................................................60
6.
Group
relief.......................................................................................................................60
7.
Groups
of
companies......................................................................................................60
8.
Company
residence and overseas
interests................................................................61
9.
Anti-avoidance.................................................................................................................61
10.
VAT...................................................................................................................................62
11.
Stamp
duty and stamp duty land
tax............................................................................63
12.
INHERITANCE
TAX......................................................................................................64
13.
Employee
taxation...........................................................................................................64
Part
3.
Buyer’s
Warranties..................................................................................................65
Page
2
1.
Power
to
Buy the
company............................................................................................65
Schedule
4
Tax
Covenant...................................................................................................66
2.
Interpretation....................................................................................................................66
3.
Covenant...........................................................................................................................70
4.
Payment
date and
interest..............................................................................................70
5.
Exclusions.........................................................................................................................71
6.
Savings,
Overprovisions, Tax
Refunds........................................................................72
7.
Recovery
from third
parties............................................................................................73
8.
Surrender
of group
relief................................................................................................74
9.
Corporation
tax
returns...................................................................................................74
10.
Conduct
of tax
claims......................................................................................................77
11.
Grossing
up......................................................................................................................78
12.
BUYER’S
COVENANT...................................................................................................79
13. Value
added tax
groups..................................................................................................79
Schedule
5
Intellectual
property
rights.............................................................................81
Part
1.
Registered
Intellectual Property
Rights................................................................81
Part
2.
Material
unregistered Intellectual Property
Rights.............................................81
Part
3.
Intellectual
property rights licensed from third
parties......................................82
Part
4.
Intellectual
property rights licensed to third
parties..........................................82
Schedule
6
Working
Capital
Statement............................................................................83
Page
3
THIS
AGREEMENT
is dated
27th
November
2006
Parties
| (1) |
CEH
Limited
incorporated and registered in England and Wales with company number
04992300 whose registered office is at Xxxxxx Xxx, Xxxxxxx, Xxxxxxxx,
XX00
0XX (Seller);
|
| (2) |
JARDIN
INTERNATIONAL HOLDING BV
incorporated and registered in the Netherlands , with its corporate
seat
in Rijen and with a registered office at Xxxxxxxxxxxxxx
00, 0000 XX Xxxxx, xxx Xxxxxxxxxxx
(Buyer);
|
| (3) |
Katy
Industries, Inc.
incorporated in Delaware, USA, whose principal office is at
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000,
as guarantor (Guarantor).
|
Background
| (A) |
The
Company has an issued share capital of £10.00 divided into ten ordinary
shares of £1.00 each;
|
| (B) |
Further
particulars of the Company at the date of this agreement are set
out in
Schedule
1;
|
| (C) |
The
Seller has agreed to sell and the Buyer has agreed to buy the Sale
Shares
subject to the terms and conditions of this agreement;
|
| (D) |
The
Guarantor is the ultimate holding company of the Seller and has become a
party to this agreement for the purpose of entering into the guarantee
set
out in clause 12.
|
Agreed
terms
| 1. |
Interpretation
|
| 1.1 |
The
definitions and rules of interpretation in this clause apply in this
agreement.
|
Accounts:
the
audited financial statements of the Company as at and to the Accounts Date,
including the balance sheet, profit and loss account together with the notes
thereon, the cash flow statement and the auditor´s and Directors´ reports (a
copy of which is attached to the Disclosure Letter).
Accounts
Date:
31
December 2005.
Affiliate:
of a
Party shall mean an entity: (i) which is directly or indirectly controlling
such Party; (ii) which is under the same direct or indirect ownership or
control as such Party; or (iii) which is directly or indirectly owned or
controlled by such Party. For these purposes, an entity shall be treated as
being controlled by another if that other entity has more than fifty (50%)
of
the votes in such entity or is able to control the composition of its board
of
directors or any other equivalent body.
Page
4
Business:
the
business of the Company that consists of the marketing and sale of plastic
products for home storage or garage organisation, gardening, food storage,
laundry, bath, cleaning, closet or cupboard organisation and refuse removal
into
a primarily consumer distribution market, and the manufacture of such products
for sale into a primarily consumer distribution market, except with respect
to
certain garden storage and related products manufactured for and sold to the
independent garden retail market, excluding Wyevale. For purposes of
clarification, a “primarily consumer distribution market” shall not include any
business which substantially serves a commercial market, even if such business
also serves a consumer market.
Business
Day:
a day
(other than a Saturday, Sunday or public holiday) when banks in the City of
London are open for business.
Buyer’s
Warranties: the
warranties given by the Buyer in clause 6 and Part 3 of
Schedule 3.
CAA
2001:
the
Capital Allowances Xxx 0000.
Change
in Control:
shall
mean (a) the Seller is a party to a merger, consolidation or other
reorganization (each, a “Reorganization”)
with a
non-Affiliate, or the Seller or its parent Continental Commercial Products,
LLC
(“CCP”)
or its
ultimate parent Katy Industries, Inc. (“Katy”,
together with CCP, the “Parents”)
is a
party to a sale, assignment, lease, conveyance or other transfer of
substantially all of its assets (each, a “Sale”)
to a
non-Affiliate, as a consequence of which members of the Board of Directors
of
the Seller or a Parent, as the case may be, in office immediately prior to
such
Reorganization or Sale constitute less than a majority of the Board of Directors
of the Seller or a Parent, as the case may be, thereafter; or (b) there is
a sale, assignment, conveyance or other transfer of over 50% of the voting
stock
of the Seller or a Parent to a non-Affiliate, as a consequence of which members
of the Board of Directors of the Seller or a Parent, as the case may be, in
office immediately prior to such transaction or event constitute less than
a
majority of the Board of Directors of the Seller or a Parent, as the case may
be, thereafter.
CML:
Contico
Manufacturing Limited (Company Number: 01338772)
Company:
Contico
Europe Limited, a company incorporated and registered in England and Wales
with
company number 04992337 whose registered office is at Xxxxxx Xxx, Xxxxxxx,
Xxxxxxxx, XX00 0XX, further details of which are set out in Schedule
1.
Companies
Acts:
the
Companies Xxx 0000 and the Companies Xxx 0000 (as amended).
Completion:
completion of the sale and purchase of the Sale Shares in accordance with this
agreement.
Completion
Date:
the date
upon which Completion occurs.
Page
5
Completion
Payment:
the sum
of US$4,000,000 (four million US dollars) in cash to be paid by the Buyer to
the
Seller on Completion.
Conditions:
the
conditions set out in clause 2.1.
Connected:
in
relation to a person, has the meaning contained in section 839 of the ICTA
1988.
Control:
in
relation to a body corporate, the power of a person to secure that the affairs
of the body corporate are conducted in accordance with the wishes of that
person:
| (a) |
by
means of the holding of shares, or the possession of voting power,
in or
in relation to that or any other body corporate;
or
|
| (b) |
by
virtue of any powers conferred by the constitutional or corporate
documents, or any other document, regulating that or any other body
corporate,
|
and
a
Change
of Control
occurs
if a person who controls any body corporate ceases to do so or if another person
acquires control of it.
Director:
each
person who is a director or shadow director of the Company, the names of whom
are set out in Schedule
1.
Disclosed:
fairly
disclosed in the Disclosure Letter.
Disclosure
Letter:
the
letter from the Seller to the Buyer with the same date as this agreement that
is
described as the disclosure letter, including the bundle of documents attached
to it (Disclosure
Bundle).
Environment:
air,
water and land, all living organisms and natural or man-made structures.
Environmental
Law:
all
applicable laws, statutes, regulations, secondary legislation, bye-laws, common
law, directives, treaties and other measures, judgements and decisions of any
court or tribunal, codes of practice and guidance notes which are legally
binding and in force as at the date of this agreement in so far as they relate
to or apply to the Environment, including Part IIA of the Environmental
Protection Act 1990 and any legally binding regulations and guidance made or
issued thereunder.
Encumbrance:
any
interest or equity of any person (including any right to acquire, option or
right of pre-emption) or any mortgage, charge, pledge, lien, assignment,
hypothecation, security, title, retention or any other security agreement or
arrangement.
Event:
has the
meaning given in Schedule 4.
Group:
in
relation to a company (wherever incorporated) that company, any company or
group
of companies which is owned directly or indirectly by the same ultimate
beneficial owners as that company, any company of which it is a Subsidiary
(its
holding company) and any other Subsidiaries of any such holding company; and
each company in a group is a member of the group. Unless the context otherwise
requires, the application of the definition of Group to any company at any
time
will apply to the company as it is at that time.
Page
6
ICTA
1988:
the
Income and Corporation Taxes Xxx 0000.
IHTA
1984:
the
Inheritance Tax Xxx 0000.
Intellectual
Property Rights:
has the
meaning given in paragraph 20.1
of
Part
1
of
Schedule 3.
Lease
means
the Lease of the Property to be granted by the Seller to the Company on the
Completion Date in the agreed form.
Management
Accounts:
the
unaudited balance sheet and the unaudited profit and loss account of the Company
for the period of ten months ended 31 October 2006 (a copy of which is attached
to the Disclosure Letter).
Pension
Scheme:
the
Contico Group Personal Pension Plan administered by Scottish Mutual Assurance
Plc.
Purchase
Price:
the
purchase price for the Sale Shares to be paid by the Buyer to the Seller in
accordance with clause 4.
Property:
the
land and buildings on the east side of Xxxxxxx Xxx, Xxxxxxx, Xxxxxxxx, XX00
0XX
being the entire land and buildings registered at the Land Registry under title
number: CL84586.
Receivable:
the sum
of £512,515 owed by the Seller to the Company as at 2359hrs GMT on Friday 17
November 2006 represented by the note in agreed form issued by the
Seller.
Sale
Shares:
the ten
ordinary shares of £1.00 each in the Company, all of which have been issued and
are fully paid.
Subsidiary:
in
relation to a company wherever incorporated (a holding company) means a
"subsidiary" as defined in section 736 of the Companies Xxx 0000 and any other
company which is a subsidiary (as so defined) of a company which is itself
a
subsidiary of such holding company. Unless the context otherwise requires the
application of the definition of Subsidiary to any company at any time will
apply to the company as it is at that time.
Sterling
Consideration:
the sum
equal to the Receivable
Sub-Lease
means
the sublease of part of the Property to be granted by the Company to CML on
the
Completion Date in the agreed form.
Tax
Covenant:
the tax
covenant as set out in Schedule 4.
Tax
or Taxation:
has the
meaning given in Schedule 4.
Tax
Claim:
has the
meaning given in Schedule 4.
Page
7
Tax
Warranties:
the
Warranties in Part 2 of Schedule 3.
Taxation
Authority:
has the
meaning given in Schedule 4.
Taxation
Statute:
has the
meaning given in Schedule 4.
TCGA
1992:
the
Taxation of Chargeable Gains Xxx 0000.
TMA
1970:
the
Taxes Management Xxx 0000.
Transaction:
the
transaction contemplated by this agreement or any part of that
transaction.
VATA
1994:
the
Value Added Tax Xxx 0000.
Warranties:
the
warranties given by the Seller in clause 6 and Parts 1 and 2 of
Schedule 3.
Working
Capital:
the
amount of the Company’s working capital as at 2359hrs GMT on Friday 17 November
2006 as determined in accordance with Schedule 6 and shown in the Working
Capital Statement.
Working
Capital Statement:
the
statement of Working Capital to be prepared pursuant to clause 10 and in
accordance with Schedule 6.
| 1.2 |
Clause
and schedule headings do not affect the interpretation of this
agreement.
|
| 1.3 |
A
person
includes a corporate or unincorporated
body.
|
| 1.4 |
Words
in the singular include the plural and in the plural include the
singular.
|
| 1.5 |
A
reference to one gender includes a reference to the other
gender.
|
| 1.6 |
A
reference to a particular law is a reference to it as it is in force
for
the time being taking account of any amendment, extension, or re-enactment
and includes any subordinate legislation for the time being in force
made
under it.
|
| 1.7 |
Writing
or
written
includes faxes but not e-mail.
|
| 1.8 |
Documents
in agreed
form
are documents in the form agreed by the parties or on their behalf
and
initialled by them or on their behalf for
identification.
|
| 1.9 |
References
to clauses and schedules are to the clauses and schedules of this
agreement; references to paragraphs are to paragraphs of the relevant
schedule.
|
Page
8
| 1.10 |
Reference
to this agreement include this agreement as amended or varied in
accordance with its terms.
|
| 2. |
this
paragraph has been intentionally
deleted
|
| 3. |
Sale
and purchase
|
On
the
terms of this agreement the Seller shall sell and the Buyer shall buy, with
effect from Completion, the Sale Shares with full title guarantee free from
all
Encumbrances and together with all rights that attach (or may in the future
attach) to them including, in particular, the right to receive all dividends
and
distributions declared, made or paid on or after the date of this
agreement.
| 4. |
Purchase
price
|
| 4.1 |
The
Purchase Price is the aggregate of US$4,000,000 (four million US
dollars)
and the Sterling Consideration, subject to adjustment in accordance
with
clause 4.2.
|
| 4.2 |
The
Purchase Price shall be adjusted as
follows:
|
| (a) |
the
Purchase Price shall be increased by the amount which is the amount,
if
any, by which the Working Capital exceeds £2,467,000 (two million four
hundred and sixty seven thousand pounds); and
|
| (b) |
the
Purchase Price shall be reduced by the amount which is the amount,
if any,
by which the Working Capital is less than £2,467,000 (two million four
hundred and sixty seven thousand
pounds).
|
| 4.3 |
The
Purchase Price shall be deemed to be reduced by the amount of any
payment
made to the Buyer:
|
| (a) |
for
a breach of any Warranty; or
|
| (b) |
under
the Tax Covenant.
|
| 5. |
Completion
|
| 5.1 |
Completion
shall take place forthwith following signature of this
agreement:
|
| (a) |
at
the offices of Xxxxxx Xxxxxxx; or
|
| (b) |
at
any other place or time as agreed in writing by the Seller and the
Buyer.
|
| 5.2 |
Immediately
upon Completion the Seller shall:
|
Page
9
| (a) |
deliver
or cause to be delivered the documents and evidence set out in Part 1
of Schedule 2;
|
| (b) |
procure
that any indebtedness in the nature of borrowing owed by the Company
to a
bank or other financial institution or any member of its Group as
at the
Completion Date or any other indebtedness which has not been incurred
in
the normal course of business (it being acknowledged that any debt
which
has arisen in the ordinary course of business between the Company
and CML
shall not be required to be discharged on the Completion Date, but
in the
normal course) is repaid or otherwise discharged and the Seller undertakes
to indemnify and keep indemnified the Company against all losses
or
liabilities which it may suffer or incur as a result of the Seller’s or
the Company’s failure to do so;
|
| (c) |
procure
that a board meeting of the Company is held at which the matters
identified in Part 2 of Schedule 2 are carried out or that such
matters are otherwise approved by the board of the Company;
and
|
| (d) |
deliver
any other documents referred to in this agreement as being required
to be
delivered by the Seller.
|
| 5.3 |
At
Completion the Buyer shall:
|
| (a) |
pay
the Completion Payment in cash by telegraphic transfer to the
Seller;
|
| (b) |
deliver
to the Seller a certified copy of the resolution adopted by the board
of
directors of the Buyer authorising the Transaction and the execution
and
delivery by the officers specified in the resolution of this agreement,
and any other documents referred to in this agreement as being required
to
be delivered by it;
|
| (c) |
deliver
to the Seller any other documents referred to in this agreement as
being
required to be delivered by the
Buyer;
|
| (d) |
deliver
to the Seller an original of the Transition Services Agreement between
the
Company and CML in the agreed form duly executed by the
Company;
|
| (e) |
deliver
to the Seller an original of the Lease between the Seller, the Company
and
the Buyer in the agreed form duly executed by the Company and the
Buyer;
|
| (f) |
deliver
to the Seller an original of the Sub Lease between the Company and
CML in
the agreed form duly executed by the
Company;
|
| (g) |
deliver
to the Seller an original of the Trademark Licence Agreement between
the
Company and the Guarantor in the agreed form duly executed by the
Company;
|
| (h) |
deliver
to the Seller an original of the Trademark Licence Agreement between
the
Company and CML
in
the agreed form duly executed by the Company;
and
|
Page
10
| (i) |
deliver
to the Seller an original of the note in the agreed form duly executed
by
the Buyer in satisfaction of the Sterling
Consideration.
|
| 5.4 |
As
soon as reasonably practicable after Completion the Seller shall
send to
the Buyer (at the Buyer´s registered office for the time being) all
records, correspondence, documents, files, memoranda and other papers
belonging to the Company not required to be delivered at Completion
and
which are not kept at any of the properties used by the
Company.
|
|
5.5
|
The
Seller shall pay to the Buyer within 5 Business Days of demand by
the
Buyer a sum equal to 0.5% of the Sterling Consideration (as adjusted,
if
applicable, in accordance with clause
5.7).
|
|
5.6
|
The
Seller shall pay to the Buyer or the Company within 5 Business Days
of
demand by the Buyer an amount equal to the professional costs (including
counsel’s fees) and expenses reasonably incurred by the Company in
connection with the proposed reduction in the Company’s share premium
account for the purposes of creating distributable reserves of the
Company
such costs not to exceed £20,000 (excluding VAT if payable) without the
Seller’s consent (such consent not to be unreasonably withheld or
delayed). The Buyer shall provide to the Seller copies of all relevant
invoices if requested by the
Seller.
|
|
5.7
|
In
the event that the net amount due to the Company by members of the
Seller’s Group as at 2359hrs GMT on 17 November 2006 as recorded in the
accounting records of the Company is more or less than the amount
of the
Receivable the Seller and the Buyer agree that the amount of the
Receivable and the amount of the Sterling Consideration shall be
adjusted
so that they both equal such net amount and the Notes in the agreed
form
shall be amended accordingly.
|
|
5.8
|
It
is recognised that the Working Capital is likely to be less than
£2,467,000. The Seller shall therefore within 4 Business Days following
the Completion Date pay to the Buyer the sum of £370,000 on account of
monies which are anticipated to be due pursuant to paragraph 8 (b)
of
Schedule 6 hereof. No interest will be payable on such sum of ££370,000
for the period of 4 Business Days referred to
above.
|
|
5.9
|
The
Seller will procure that there shall be repaid to the Company as
soon as
reasonably practicable following Completion and in any event within
4
Business Days of Completion any sums which have been swept by Bank
of
America from the Company's bank accounts after 2359hrs on Friday
17
November 2006.
|
| 6. |
Warranties
|
| 6.1 |
The
Buyer is entering into this agreement on the basis of, and in reliance
on,
the Warranties.
|
Page
11
| 6.2 |
The
Seller warrants to the Buyer that each Warranty is true on the date
of
this agreement except as Disclosed.
|
| 6.3 |
Warranties
qualified by the expression so
far as the Seller is aware or
to the Seller’s knowledge
(or any similar expression) are deemed to be given to the best of
the
knowledge, information and belief of the Seller after it has made
all
reasonable enquiries.
|
| 6.4 |
Each
of the Warranties is separate and, unless otherwise specifically
provided,
is not limited by reference to any other Warranty or any other provision
in this agreement; provided, however, that notwithstanding any provision
in this agreement to the contrary, any matter Disclosed for any purpose
shall be deemed Disclosed for all purposes to the extent that such
disclosure amounts to a fair
disclosure.
|
| 6.5 |
The
Seller waives and may not enforce any right which he may have in
respect
of any misrepresentation, inaccuracy or omission in or from any
information or advice supplied or given by the Company or its officers
or
employees in enabling the Seller to give the Warranties or to prepare
the
Disclosure Letter unless such right arises as a result of fraud or
deliberate non-disclosure or dishonest
deception.
|
| 6.6 |
The
Seller and the Guarantor are each entering into this agreement on
the
basis of, and in reliance on, the Buyer’s
Warranties.
|
| 6.7 |
The
Buyer warrants to the Seller and the Guarantor that each Buyer’s Warranty
is true on the date of this
agreement.
|
| 7. |
Limitations
on claims
|
| 7.1 |
The
definition and rules of interpretation in this clause apply in this
agreement.
|
Claim:
a claim for breach of any of the Warranties, the Tax Warranties,
the
Tax Covenant or this Agreement
| 7.2 |
The
Seller is not liable for a Claim to the extent that the Claim relates
to
matters Disclosed.
|
| 7.3 |
The
Seller is not liable for a Claim unless the Buyer has given the Seller
notice in writing of the Claim, summarising the nature of the Claim
as far
as it is known to the Buyer and the amount claimed,
within the period of two years beginning with the Completion Date
except
that the period in which the Buyer may make a Claim in respect of
the Tax
Warranties or the Tax Covenant shall be seven years beginning with
the
Completion Date.
|
Page
12
| 7.4 |
Nothing
in clause 7 applies to a Claim that arises or is delayed as a result
of dishonesty, fraud, wilful misconduct or wilful concealment by
the
Seller, its agents, officers or
advisers.
|
| 7.5 |
The
aggregate liability of the Seller in respect of all Claims notified
in
accordance with clause 7.3 on or prior to the date which is 6 months
after the Completion Date shall not exceed an amount equal to 100%
(one
hundred per cent.) of the Purchase Price. The aggregate liability
of the
Seller in respect of all Claims notified after the date which is
6 months after the Completion Date but within the period of two years
beginning with the Completion Date (other than Claims under clause
7.14
(“Environment
Claims”))
shall not exceed an amount equal to “A” minus “B”, where “A” equals 50%
(fifty per cent.) of the Purchase Price and “B” equals the aggregate
liability (if any) of the Seller in respect of all Claims notified
on or
prior to the date which is 6 months after the Completion Date (if
any).
The aggregate liability of the Seller in respect of all Environment
Claims
notified in accordance with clause 7.3 after the date which is
6 months after the Completion Date but within the period of two years
beginning with the Completion Date shall not exceed an amount equal
to “C”
minus “D”, where “C” equals 100% (one hundred per cent.) of the Purchase
Price and “D” equals the aggregate liability (if any) of the Seller in
respect of all other Claims notified within the period of two years
beginning with the Completion Date (if any). Subject to Clause
7.4,
in no circumstances shall the aggregate liability of the Seller in
respect
of Claims (whenever notified) exceed an amount equal to 100% (one
hundred
per cent.) of the Purchase Price.
|
| 7.6 |
No
amount shall be payable by the Seller in respect of any Claim unless
and
until:
|
| (a) |
the
liability for that individual Claim exceeds £20,000
(twenty thousand pounds) but provided always that individual Claims
arising out of the same subject matter fact or circumstances shall
be
aggregated for this purpose; and
|
| (b) |
the
aggregate cumulative liability of the Seller in respect of all such
Claims
exceeds £50,000 (fifty thousand pounds) in which case the Seller shall be
liable for both the initial £50,000
(fifty
thousand pounds) and the excess.
|
| 7.7 |
No
Claim shall be admissible and the Seller shall not be liable under
any
Claim:
|
| (a) |
to
the extent that provision, reserve or allowance has been made in
the
Management Accounts or the Accounts in respect thereof;
or
|
| (b) |
to
the extent that such liability arises or is increased as a result
of any
change or changes in legislation after Completion (primary or delegated)
and whether or not with retrospective effect;
or
|
| (c) |
to
the extent that such liability occurs or arises as a result of or
is
otherwise attributable wholly or partly to any voluntary act, transaction
or omission of the Company or the Buyer or their respective directors,
employees or agents on or after Completion (including any act, transaction
or omission which does or might reasonably be expected to subject
the
Company to a greater risk of enforcement action or any investigation
under
Environmental Law) otherwise
than:
|
Page
13
| (i) |
in
the ordinary and proper course of business; or
|
| (ii) |
pursuant
to a legally binding commitment created on or before Completion by
the
Company; or
|
| (d) |
to
the extent that any Claim or the subject matter thereof has been
or is
made good or is otherwise compensated for (otherwise than by the
Buyer or
any member of the Buyer´s
Group); or
|
| (e) |
to
the extent that the matter to which it relates is recovered by the
Company
from its insurers save that the Seller hereby agrees to pay any increases
in insurance costs shown to be directly related to such Claim but
only to
the extent that such increase is shown to amount to a sum greater
than
that figure set out in clause 7.6 (a) per annum ;
or
|
| (f) |
if
a Claim results from or is increased or extended by the change of
the
accounting reference date of the Company on Completion or any subsequent
change thereafter or by any change in the accounting policies of
the
Company after Completion unless such change is necessary to comply
with
generally accepted accounting principles subsisting at Completion;
or
|
| (g) |
to
the extent that the Buyer has actual knowledge at the date of this
Agreement of a matter which it is aware would enable a Claim to be
brought.
|
| 7.8 |
In
assessing the liability of the Seller in respect of any Claim there
shall
be taken into account any benefit (including Taxation benefit) accruing
to
the Buyer or the Company solely and directly as a consequence of
the
matter or circumstances giving rise to the
Claim.
|
| 7.9 |
The
Buyer shall not be entitled to recover any sum more than once in
respect
of any claim under the Warranties or the Tax Covenant or otherwise
obtain
reimbursement more than once in respect of any loss which arises
out of
the same act, matter or thing to the extent that the Buyer has already
made a recovery or obtained reimbursement under the Warranties or
the Tax
Covenant in respect of that act, matter or
thing.
|
| 7.10 |
Where
the Buyer and/or the Company is/are at any time entitled to recover
from
some other person any sum in respect of any matter giving rise to
a Claim
the Buyer shall and shall procure that the Company shall take all
reasonable steps to enforce such recovery prior to taking any action
against the Seller (other than notifying the Seller of the Claim)
and in
the event that the Buyer or the Company shall recover any amount
from such
other person the amount of the Claim against the Seller shall be
reduced
by the amount recovered less all costs and expenses reasonably incurred
by
the Buyer or the Company in recovering that sum from such other
person.
|
Page
14
| 7.11 |
If
the Seller or the Guarantor pays at any time to the Buyer or to the
Company an amount pursuant to a Claim or the Company subsequently
becomes
entitled to recover from some other person any sum in respect of
any
matter giving rise to such Claim, the Buyer shall and shall procure
that
the Company shall take all reasonable steps to enforce such recovery
and
shall, as soon as reasonably practicable, repay to the Seller or
the
Guarantor (as the case may be) so much of the amount paid by it to
the
Buyer or the Company as does not exceed the sum recovered from such
other
person less all costs and expenses reasonably incurred by the Buyer
or the
Company in recovering that sum from such other
person.
|
| 7.12 |
The
Parties acknowledge and agree that for the purposes of clause 7.10
and 7.11
hereof in taking “all reasonable steps” neither the Company nor the Buyer
shall be required to institute legal proceedings against any of the
top
five customers identified pursuant to schedule 3 paragraph
11.
|
| 7.13 |
The
provisions of this clause 7 shall apply, in relation to claims made
by the
Seller in respect of the Buyer’s Warranties mutatis mutandis but with the
substitution of the word Seller with Buyer, Buyer with Seller and
Claim
with the words claim under the Buyer’s
Warranties.
|
|
7.14
|
The
parties agree and acknowledge that the Seller shall remain liable
to
comply with any notice served or requirement made by any competent
authority under any Environmental Law or rules of common law applicable
from time to time to the Property in respect of any matter, event
or
circumstance arising as a result of the use and/or operation of the
Property prior to the date hereof and that the Seller shall indemnify
the
Buyer against all actions, proceedings, costs, claims, demands or
liabilities whatsoever, howsoever arising as a result of any pollution
or
contamination, whatsoever or such matters, event or circumstance
prior to
the date hereof. The Seller’s liability under this clause 7.14 is subject
to all of the provisions of this clause 7 relating to
Claims.
|
| 8. |
Conduct
of claims
|
| 8.1 |
If
either the Buyer or the Company become aware of a matter which they
reasonably consider might give rise to a Claim (other than a Claim
in
respect of Tax to which the provisions of paragraph 9 of the Tax
Covenant
shall apply) or the Seller becomes aware of a matter which it reasonably
considers might give rise to a claim pursuant to the Buyer’s Warranties
then such party:
|
| (a) |
shall
(or, in the case of the Buyer, shall procure that the Company shall)
as
soon as reasonably practicable give notice to the Seller or the Buyer
as
the case may be of the matter and shall consult with the Seller or
the
Buyer as the case may be with respect to such matter but such notice
shall
not be a condition precedent to the liability of the Seller or the
Buyer
as the case may be;
|
Page
15
| (b) |
shall
provide to the Seller or the Buyer as the case may be and its advisers
reasonable access (at reasonable hours and with reasonable prior
notice
having been given) to premises and personnel and to relevant assets,
documents and records within the Buyer´s
or the Seller’s Group (as the case may be) for the purposes of
investigating the matter;
|
| (c) |
(at
the requesting party’s cost) may take copies of the documents or records,
and photograph the premises or assets, referred to in clause
8.1(b);
|
| (d) |
subject
to the following provisions of this clause 8
and clause 7.12,
shall (and in the case of the Buyer shall procure that the Company
shall)
take such action and give such information and assistance in connection
with the affairs of the Buyer or the Company or the Seller as the
requesting party may reasonably request in writing to negotiate,
avoid,
dispute, resist or defend against the
matter;
|
| (e) |
shall
indemnify the other party against all costs and expenses reasonably
incurred by that other party or any member of such party’s Group in
complying with their obligations under this clause 8.
|
| 8.2 |
The
Buyer and, as the case may be, the Seller shall not be obliged to
take or
procure the taking of any of the following actions pursuant to its
obligations contained in clause 8.1(d):
|
| (a) |
the
submission of any proposal to settle or compromise the relevant matter
made by the Seller or the Buyer (as the case may be) of which the
Buyer
(or the Seller as the case may be) (acting reasonably) does not
approve;
|
| (b) |
agreeing
to the settlement or compromise of any claim or any proposal for
the same
which is likely to affect the future liability of the Company, the
Buyer
or any member of the Buyer´s
Group or the Seller or any member of the Seller’s Group unless the Seller
(or the Buyer as the case may be) indemnifies the Buyer (or the Seller
as
the case may be), or the Company or the relevant member of the
Buyer´s
Group or the Seller’s Group (as the case may be) against any such future
liability;
|
| (c) |
complying
with any unreasonable instruction of the Seller or the Buyer as the
case
may be or taking any action or procuring the taking of any action
which
the Buyer or the Seller (as the case may be) considers (acting reasonably)
to be onerous or prejudicial to the Buyer or any member of the
Buyer´s
Group or the Seller or any member of the Seller’s Group (as the case may
be).
|
Page
16
| 8.3 |
If
a Party does not request the other to take action pursuant to clause
8.1(d) or shall fail to indemnify the other Party or the Company
concerned
in accordance with clause 8.1(e)
within 14 days of the written notice to the Seller (or the Buyer
as the
case may be) served in accordance with clause 8.1(a) the Buyer (or
the
Seller as the case may be) or the Company shall be free to pay or
settle
the relevant matter on such terms as it may in its absolute discretion
think fit.
|
| 8.4 |
Any
Claim or claim under the warranties given by the Buyer shall (if
it has
not been previously satisfied, settled or withdrawn) be deemed to
be
irrevocably withdrawn and waived at the expiration of twelve months
from
the date of giving notice of such Claim (or claim under the Buyer’s
Warranties) unless legal proceedings in respect thereof have been
commenced by the other party by issuing and serving such proceedings
on
the Seller (or the Buyer as the case may be) and the loss giving
rise to
any such Claim (or claim under the warranties given by the Buyer)
which
shall be so deemed withdrawn and waived shall not be capable of being
the
subject of a further Claim (or claim under the Buyer’s
Warranties).
|
| 8.5 |
The
Seller acknowledges that if any Warranty is breached or proves to
be
untrue or misleading or if a Claim is made and in assessing the loss
to
the Company or the Buyer all
costs and expenses reasonably and properly incurred by the Buyer
or the
Company as a result of such breach or of the Warranty being untrue
or
misleading shall be taken into account and form part of any
Claim.
|
| 8.6 |
Notwithstanding
any failure by the Buyer to notify the Seller or of the Seller to
notify
the Buyer (as the case may be) pursuant to clause 8.1(a) the Buyer
(or the
Seller as the case may be) shall not (and shall procure, only in
the case
of the Buyer, that the Company shall not) settle or compromise any
such
claim or make any admission of liability without the prior written
consent
of the Seller or the Buyer (as the case may be) (which shall not
be
unreasonably withheld or delayed).
|
| 8.7 |
If
any Claim (or claim under the warranties given by the Buyer) shall
arise
by reason of some liability which, at the time the Claim (or claim
under
the Buyer’s Warranties) is notified to the Seller (or the Buyer as the
case may be), is contingent only, the Seller (or the Buyer as the
case may
be) shall not be under any obligation to make any payment in respect
of
such Claim (or claim under the Buyer’s Warranties) unless and until the
contingent liability crystallises as an actual liability. Provided
that
such Claim shall have been notified to the Seller or the Buyer (as
the
case may be) in accordance with clause 7.3 then clause 8.4 shall
be
amended in relation to such Claim (or claim under the Buyer’s Warranties)
so as to require that legal proceedings be commenced within twelve
months
from the date on which the said liability ceases to be contingent
or
becomes capable of being quantified, as the case may
be.
|
| 8.8 |
Nothing
in this agreement shall be deemed to relieve the Buyer or of the
Seller
(as the case may be) from any duty to mitigate any loss or damage
incurred
by it.
|
Page
17
| 9. |
Tax
covenant
|
| 9.1 |
The
provisions of Schedule 4 apply with effect from
Completion.
|
| 10. |
Working
capital statement
|
The
Working Capital Statement shall be prepared and agreed or determined in
accordance with Schedule 6.
| 11. |
Restrictions
on Seller
|
| 11.1 |
The
Seller and the Guarantor covenant with the Buyer that each of them
shall
not and in the case of the Guarantor shall procure that none of its
Subsidiaries shall:
|
| (a) |
at
any time during the period beginning on the Completion Date and ending
upon the earlier to occur of (i) the date which is 2 years from and
after
the Completion Date, and (ii) the date of a Change in Control in the
United Kingdom of Great Britain and Northern Ireland or the European
Economic Area and Switzerland, directly or indirectly for its own
or
another’s account or benefit carry on or be employed, engaged or
interested in any part of the Business as the Business was carried
on at
the Completion Date; or
|
| (b) |
at
any time during the period of one year beginning with the Completion
Date,
attempt
to entice away from the Company any individual who is at the time
of the
attempt, and was at the Completion Date, employed or directly engaged
in
an executive or managerial position with the Company;
or
|
| (c) |
at
any time after Completion, except as otherwise permitted by the Buyer or
its Affiliates under this agreement or otherwise, use in the course
of any
business:
|
| (i) |
any
trade or service xxxx, business or domain name, design or logo the
rights
to which, at Completion, were owned by the Company;
or
|
| (ii) |
anything
which is likely to be confused with such words, xxxx, name, design
or
logo.
|
| 11.2 |
The
covenants in this clause 11 are intended for the benefit of the Buyer
and apply to actions carried out by the Seller and the Guarantor
in any
capacity and whether directly or indirectly, on the Seller´s or the
Guarantor´s own behalf, on behalf of any other person or jointly with any
other person.
|
| 11.3 |
Each
of the covenants in this clause 11 is a separate undertaking and
shall be enforceable by the Buyer separately and independently of
its
right to enforce any one or more of the other covenants contained
in this
clause 11. Each of the covenants in this clause 11 is considered
fair and reasonable by the parties, but if any restriction is found
to be
unenforceable, but would be valid if any part of it were deleted
or the
period or area of application reduced, the restriction shall apply
with
such modifications as may be necessary to make it valid and
enforceable.
|
Page
18
| 11.4 |
The
consideration for the undertakings contained in this clause 11 is
included in the Purchase Price.
|
| 12. |
Guarantee
|
| 12.1 |
In
consideration of the Buyer entering into this agreement, the Guarantor,
at
the request of the Seller, unconditionally and irrevocably guarantees
as a
primary obligation to the Buyer and its permitted assignees the due
and
punctual performance and observance by the Seller of all the Seller´s
obligations and restrictions, and the punctual discharge by the Seller
of
all the Seller´s liabilities to the Buyer, arising under this agreement
and under the Tax Covenant provided, however, that all limitations
and
defences available to the Seller shall apply to such obligation of
the
Guarantor.
|
| 12.2 |
If
the Seller defaults in the payment when due of any amount payable
to the
Buyer under this agreement, the Guarantor shall, immediately on written
demand by the Buyer, unconditionally pay that amount to the Buyer
in the
manner prescribed in this agreement as if it were the
Seller.
|
| 12.3 |
This
guarantee is a continuing guarantee and shall extend to the ultimate
balance of sums payable by the Seller under this agreement, regardless
of
any intermediate payment or discharge in whole or in part. It shall
not be
affected by any act, omission, matter or thing which, but for this
clause
12.3, would reduce, release or prejudice any of the Guarantor´s
obligations under this clause 12 (without limitation and whether or
not known to it or the Buyer).
|
| 12.4 |
If
any payment by the Seller, or any discharge given by the Buyer, is
avoided
or reduced as a result of insolvency or any similar event, the liability
of the Seller and Guarantor shall continue as if the payment, discharge,
avoidance or reduction had not
occurred.
|
| 12.5 |
The
obligations of the Guarantor shall be in addition to and independent
of
all other security which the Buyer may at any time hold in respect
of any
of the obligations of the Seller under this
agreement.
|
| 13. |
Confidentiality
and announcements
|
| 13.1 |
The
Seller and the Guarantor undertake to the Buyer to keep confidential
the
terms of this agreement and all information which it has acquired
about
the Company and the Buyer´s Group (as such Group is constituted
immediately before Completion) and to use the information only for
the
purposes contemplated by this
agreement.
|
Page
19
| 13.2 |
The
Buyer undertakes to the Seller and the Guarantor to keep confidential
the
terms of this agreement and all information that it has acquired
about the
Seller and the Seller’s Group (other than the Company) and to use the
information only for the purposes contemplated by this
agreement.
|
| 13.3 |
The
Buyer does not have to keep confidential or restrict its use of
information about the Company after
Completion.
|
| 13.4 |
A
party does not have to keep confidential or to restrict its use
of:
|
| (a) |
information
that is or becomes public knowledge other than as a direct or indirect
result of a breach of this agreement;
or
|
| (b) |
information
that it receives from a source not connected with the party to whom
the
duty of confidence is owed that it acquires free from any obligation
of
confidence to any other person; or
|
| (c) |
information
that it independently develops without otherwise violating the terms
of
this clause 13.
|
| 13.5 |
Any
party may disclose any information that it is otherwise required
to keep
confidential under this
clause 13:
|
| (a) |
to
such persons as the disclosing party, acting reasonably and in good
faith,
deems reasonably necessary if the disclosing party procures that
the
people to whom the information is disclosed first enter into a
non-disclosure agreement in a customary form and that such people
keep the
information confidential in accordance with the terms of such agreement;
or
|
| (b) |
with
the written consent of all the other parties;
or
|
| (c) |
to
confirm that the sale has taken place and the date of the sale (but
without otherwise revealing any other items of sale or making any
other
announcement); or
|
| (d) |
to
members and shareholders of its Group if
the disclosing party procures that the people to whom the information
is
disclosed keep
the information confidential and otherwise comply
with the provisions of this clause as if they were bound by
them;
or
|
| (e) |
to
bona fide third party purchasers of the entire issued share capital
of the
Seller or the Buyer or members of their Group if
the disclosing party procures that the
people to whom the information is disclosed first enter into a
non-disclosure agreement in a customary form and that such people
keep the
information confidential in accordance with the terms of such agreement;
or
|
Page
20
| (f) |
to
the extent that the disclosure is
required:
|
| (i) |
by
law; or
|
| (ii) |
by
a regulatory body, Taxation Authority or securities exchange;
or
|
| (iii) |
to
make any filing with, or obtain any authorisation from, a regulatory
body,
Taxation Authority or securities exchange;
or
|
| (iv) |
under
any arrangements in place under which negotiations relating to terms
and
conditions of employment are conducted;
or
|
| (v) |
to
protect the disclosing party´s interest in any legal
proceedings;
or
|
| (g) |
after
the expiry of a period of 10 years from the Completion Date
|
but
shall
use reasonable endeavours to consult the other parties and to take into account
any reasonable requests they may have in relation to the disclosure before
making it.
| 13.6 |
Each
party shall supply any other party with any information about itself,
its
Group or this agreement as such other party may reasonably require
for the
purposes of satisfying the requirements of a law, regulatory body
or
securities exchange to which such other party is
subject.
|
| 14. |
Further
assurance
|
During
the period which is one year from and after Completion, the Buyer and the Seller
shall (at their own expense) promptly execute and deliver all such documents,
and do all such things, as the other party may require for the purpose of giving
full effect to the provisions of this agreement.
| 15. |
Provision
of Assistance by the
Company
|
| 15.1 |
The
Buyer undertakes to the Seller that it will procure that the Company
will
make available during normal business hours and on reasonable notice
(and
shall use its reasonable endeavours to procure that the auditors
of the
Company make available) to the Seller, its advisers and its agents,
all
such information and assistance (including access to properties and
any of
the Company´s
books, correspondence or other documents or records and the right
to copy
the same and making available employees and directors to give assistance
in each case during normal business hours and on reasonable notice)
as may
reasonably be required by the Seller in connection with the preparation
of
the Seller´s
audited accounts and corporation tax computations for the year ending
31 December 2006.
|
Page
21
| 16. |
Assignment
|
| 16.1 |
Except
as otherwise provided herein, no party may assign, or grant any
Encumbrance or security interest over, any of its rights under this
agreement or any document referred to in
it.
|
| 16.2 |
Each
party that has rights under this agreement is acting on its own
behalf.
|
| 16.3 |
The
Buyer may assign its rights under this agreement (or any document
referred
to in this agreement) but not its obligations to a member of its
Group
(Permitted
Assignor).
|
| 16.4 |
In
the event of any Permitted Assignor itself subsequently becoming
the
subject of a sale or transfer other than to a Permitted Assignor
then the
Buyer shall procure that the rights assigned under this agreement
are
assigned to a Permitted Assignor prior to the completion of any such
sale
or transfer. For the avoidance of doubt nothing in this Agreement
shall
restrict or prohibit the ability of the Purchaser or the Company
to deal
with the Sale Shares or any assets of the
Company.
|
| 17. |
Entire
Agreement
|
| 17.1 |
This
agreement (including the schedules to it) and any documents in the
agreed
form and the Disclosure Letter (Acquisition
Documents)
constitute the entire agreement between the parties with respect
to the
subject matter of this agreement.
|
| 17.2 |
Except
for any misrepresentation or breach of warranty which constitutes
fraud:
|
| (a) |
the
Acquisition Documents supersede and extinguish all previous agreements
between the parties relating to the subject matter thereof and any
representations and warranties previously given or made other than
those
contained in the Acquisition
Documents;
|
| (b) |
each
party acknowledges to the other (and shall execute the Acquisition
Documents in reliance on such acknowledgement) that it has not been
induced to enter into any such documents by nor relied on any
representation or warranty other than the warranties contained in
such
documents;
|
| (c) |
each
party hereby irrevocably and unconditionally waives any right it
may have
to claim damages or to rescind this agreement or any of the other
Acquisition Documents by reason of any misrepresentation and/or warranty
not set forth in any such document;
|
| (d) |
no
breach of this agreement shall in any event give rise to a right
on the
part of the Buyer to rescind or terminate this agreement;
and
|
Page
22
| (e) |
the
Buyer has no rights against and may not make a claim against any
employee,
director (save to the extent that such claim arises from any matters
not
disclosed in their letters of resignation, in the agreed form), agent
or
adviser of any member of the Seller´s
Group on whom it may have relied before entering into this
agreement.
|
| 17.3 |
Each
of the parties acknowledges and agrees for the purposes of the
Misrepresentation Xxx 0000 and the Unfair Xxxxxxxx Xxxxx Xxx 0000
that the
provisions of this clause 17
are reasonable.
|
| 18. |
Variation
and Waiver
|
| 18.1 |
Any
variation of this agreement shall be in writing and signed by or
on behalf
of each party.
|
| 18.2 |
Any
waiver of any right under this agreement is only effective if it
is in
writing and signed by the waiving or consenting party and it applies
only
in the circumstances for which it is given and shall not prevent
the party
who has given the waiver from subsequently relying in a different
instance
or occurrence on the provision it has
waived.
|
| 18.3 |
No
failure to exercise or delay in exercising any right or remedy provided
under this agreement or by law constitutes a waiver of such right
or
remedy or shall prevent any future exercise in whole or in part
thereof.
|
| 18.4 |
No
single or partial exercise of any right or remedy under this agreement
shall preclude or restrict the further exercise of any such right
or
remedy.
|
| 18.5 |
Unless
specifically provided otherwise, rights arising under this agreement
are
cumulative and do not exclude rights provided by
law.
|
| 19. |
Costs
|
| 19.1 |
All
costs in connection with the negotiation, preparation, execution
and
performance of this agreement, and any documents referred to in it,
shall
be borne by the party that incurred the
costs.
|
| 20. |
Notice
|
| 20.1 |
A
notice given under this agreement:
|
| (a) |
shall
be in writing in the English language (or be accompanied by a properly
prepared translation into English);
|
Page
23
| (b) |
shall
be sent for the attention of the person, and to the address or fax
number,
specified in this clause 20 (or such other address, fax number or
person as each party may notify to the others in accordance with
the
provisions of this clause 20);
and
|
| (c) |
shall
be:
|
| (i) |
delivered
personally; or
|
| (ii) |
sent
by fax; or
|
| (iii) |
sent
by pre-paid first-class post or recorded delivery;
or
|
| (iv) |
(if
the notice is to be served by post outside the country from which
it is
sent) sent by airmail.
|
| 20.2 |
The
addresses for service of notice
are:
|
| (a) |
In
the case of the Seller or the Guarantor, Katy Industries,
Inc.
|
| (i) |
address:
0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx
00000
|
| (ii) |
for
the attention of:
Xxxx Xxxxxxxxx, CFO
|
| (iii) |
fax
number:
x0
(000) 000-0000
|
| (b) |
In
the case of the Buyer:
|
| (i) |
address:
Keter, 0 Xxxxx Xx Xxxxxxxxxx Xxxx, Xxxxxxxx, 00000
Israel
|
| (ii) |
for
the attention of:
Xxx Xxxxxxxxxx
|
| (iii) |
fax
number:000-0-0000000
or x00000000000
|
| 20.3 |
A
notice is deemed to have been
received:
|
| (a) |
if
delivered personally, at the time of delivery;
or
|
| (b) |
in
the case of fax, at the time of transmission;
or
|
| (c) |
in
the case of pre-paid first class post or recorded delivery, two Business
Days from the date of posting; or
|
| (d) |
in
the case of airmail, 5 Business Days from the date of posting;
or
|
| (e) |
if
deemed receipt under the previous paragraphs of this clause 20.3
is not
within business hours (meaning 9.00 am to 5.30 pm Monday to Friday
on a
day that is not a public holiday in the place of receipt), when business
next starts in the place of
receipt.
|
Page
24
| 20.4 |
To
prove service, it is sufficient to prove that the notice was transmitted
by fax to the fax number of the party or, in the case of post, that
the
envelope containing the notice was properly addressed and
posted.
|
| 21. |
Interest
on Late Payment
|
| 21.1 |
Where
a sum is required to be paid under this agreement but is not paid
before
or on the date the parties agreed, the party due to pay the sum shall
also
pay an amount equal to interest on that sum for the period beginning
with
that date and ending with the date the sum is paid (and the period
shall
continue after as well as before judgment). For purposes of clarification,
the term “required to be paid under this agreement” shall not include (i)
any amounts which are the subject of a dispute among the parties
hereto or
(ii) amounts
payable in respect of a Claim, unless and until such amount is agreed
among the parties to be due and owing or after final resolution of
such
Claim.
|
| 21.2 |
The
rate of interest shall be 3% per annum above the base lending rate
for the
time being of Barclays Bank Plc. Interest shall accrue on a daily
basis
and be compounded quarterly.
|
| 21.3 |
This
clause 21 is without prejudice to any claim for interest under the
law.
|
| 22. |
Severance
|
| 22.1 |
If
any provision of this agreement (or part of a provision) is found
by any
court or administrative body of competent jurisdiction to be invalid,
unenforceable or illegal, the other provisions shall remain in
force.
|
| 22.2 |
If
any invalid, unenforceable or illegal provision would be valid,
enforceable or legal if some part of it were deleted, the provision
shall
apply with whatever modification is necessary to give effect to the
commercial intention of the
parties.
|
| 23. |
Agreement
Survives Completion
|
This
agreement (other than obligations that have already been fully performed)
remains in full force after Completion.
| 24. |
Third
Party Rights
|
| 24.1 |
Save
as set out herein, a person who is not a party to this agreement
shall
have no right under the Contracts (Rights of Third Parties) Xxx 0000
to
enforce any term of this agreement.
|
Page
25
| 24.2 |
This
agreement and the documents referred to in it are made for the benefit
of
the parties and Permitted Assignors and are not intended to benefit,
or be
enforceable by, anyone else.
|
| 24.3 |
Each
party represents to the other that their respective rights to agree
to any
amendment, variation, waiver or settlement under this agreement are
not
subject to the consent of any person that is not a party to this
agreement.
|
| 25. |
Counterparts
|
This
agreement may be executed in any number of counterparts, each of which is an
original and which together have the same effect as if each party had signed
the
same document.
| 26. |
Language
|
If
this
agreement is translated into any language other than English, the English
language text shall prevail.
| 27. |
Governing
Law and Jurisdiction
|
| 27.1 |
This
agreement and any disputes or claims arising out of or in connection
with
its subject matter are governed by and construed in accordance with
the
law of England.
|
| 27.2 |
The
parties irrevocably agree that the courts of England have exclusive
jurisdiction to settle any dispute or claim that arises out of or
in
connection with this agreement.
|
This
document has been executed as a deed and is delivered and takes effect on the
date stated at the beginning of it.
Page
26
| Schedule 1 |
Particulars
of the Company
|
|
Name:
|
Contico
Europe Limited
|
|
Registration
number:
|
04992337
|
|
Registered
office:
|
Xxxxxx
Xxx
Xxxxxxx
Xxxxxxxx
XX00
0XX
|
|
Authorised
share capital:
|
Amount:
£1,000
Divided
into: 1,000 ordinary shares of £1 each
|
|
Issued
share capital:
|
Amount:
£10
Divided
into: 10 ordinary shares of £1 each
|
|
Registered
shareholder (and number of Sale Shares held):
|
CEH
Limited (all of the Sale Shares)
|
|
Beneficial
owner of Sale Shares (if different) and number of Sale Shares beneficially
owned:
|
CEH
Limited (all of the Sale Shares)
|
|
Directors
and shadow directors:
|
T
Xxxxxxx
C
Xxxxxxxx
C
Xxxxxxxx
A
Xxxxxx
K
Xxxxx
|
|
Secretaries:
|
A
Xxxxxx
Xxxx
Xxxxxxxxx
|
|
Auditors:
|
PricewaterhouseCoopers
LLP
|
|
Registered
Charges:
|
Guarantee
and debenture dated 20th
April 2004 made between, inter alios, the Company and Fleet National
Bank,
London U.K. branch
|
Page
27
| Schedule 2 |
Completion
|
| Part 1. |
What
the Seller shall deliver to the Buyer at
Completion
|
| 1. |
At
Completion, the Seller shall deliver or cause to be delivered to
the Buyer
the following documents and evidence
:
|
| (a) |
transfers
of the Sale Shares executed by the registered holder in favour of
the
Buyer;
|
| (b) |
the
share certificates for the Sale Shares in the name of the registered
holder or an indemnity in the agreed form for any lost
certificates;
|
| (c) |
the
waivers, consents and other documents required to enable the Buyer
to be
registered as the holder of the Sale
Shares;
|
| (d) |
an
irrevocable power of attorney in agreed form given by the Seller
in favour
of the Buyer to enable the beneficiary (or its proxies) to exercise
all
voting and other rights attaching to the Sale Shares before the transfer
of the Sale Shares is registered in the register of
members;
|
| (e) |
the
original of any power of attorney under which any document to be
delivered
to the Buyer under this paragraph 1
has been executed;
|
| (f) |
in
relation to the Company, the statutory registers and minute books
(written
up to the time of Completion), the common seal, certificate of
incorporation and any certificates of incorporation on change of
name;
|
| (g) |
the
written resignation, executed as a deed and in the agreed form, of
the
directors (other than T Xxxxxxx) and A Xxxxxxxxx as joint secretary
of the
Company from their offices and employment with the
Company;
|
| (h) |
a
certified copy of the minutes of the board meetings held or resolutions
approved pursuant to Part 2 of this
Schedule 2;
|
| (i) |
in
relation to the Company:
|
| (i) |
statements
from each bank at which the Company has an account, giving the balance
of
each account at the close of business on the last Business Day before
Completion;
|
| (ii) |
all
cheque books in current use and written confirmation that no cheques
have
been written since those statements were
prepared;
|
| (iii) |
details
of its cash book balances; and
|
| (iv) |
reconciliation
statements reconciling the cash book balances and the cheque books
with
the bank statements delivered;
|
Page
28
| (j) |
evidence
that any indebtedness of the Company to banks or other financial
institutions has been discharged;
|
| (k) |
all
charges, mortgages, debentures and guarantees to which the Company
is a
party and, in relation to each such instrument and any covenants
connected
with it
|
| (l) |
certified
copy of the resolution adopted by the board of directors of the Seller
authorising and approving the
Transaction;
|
| (m) |
an
original of the Transition Services Agreement between the Company
and CML
in the agreed form duly executed by
CML;
|
| (n) |
an
original of the Lease between the Seller, the Company and the Buyer
in the
agreed form duly executed by the
Seller;
|
| (o) |
an
original of the Sub-Lease between the Company and CML in the agreed
form
duly executed by CML;
|
| (p) |
an
original of the Trademark Assignment Letter between Continental Commercial
Products, LLC and the Company in the agreed form duly executed by
Continental Commercial Products, LLC (Trademark
Assignment Letter);
and
|
| (q) |
a
certified true copy of a full release of security interest in respect
of
the trademark which are the subject of the Trademark Assignment Letter
in
the agreed form duly executed by Bank of America
N.A.;
|
| (r) |
an
original of the Trademark Licence Agreement between the Company and
the
Guarantor in the agreed form duly executed by the
Guarantor;
|
| (s) |
an
original of the Trademark Licence Agreement between the Company and
CML
in
the agreed form duly executed by CML;
|
| (t) |
a
form of election under section 569 of CAA 2001 in respect of the
Property
executed by the Seller and containing all information required under
section 569 of CAA 2001 to validly make such
election;
|
| (u) |
A
form of election under section 198 CAA 2001 in respect of the plant
and
machinery duly containing all information required and duly executed
by
the Seller and the Company; and
|
(v) an
original of the note in respect of the Receivable in the agreed form duly
executed by the Seller.
Page
29
| Part 2. |
Matters
for the board meeting at
Completion
|
| 2. |
A
resolution to register the transfer of the Sale Shares shall be passed
at
such board meeting of the Company, subject to the transfer being
stamped
at the cost of the Buyer.
|
| 3. |
All
directors, (other than T Xxxxxxx) and A Xxxxxxxxx as joint secretary
of
the Company shall resign from their offices and employment with the
Company with effect from the end of the relevant board meeting.
|
| 4. |
The
persons the Buyer nominates shall be appointed as directors of the
Company
(but not exceeding any maximum number of directors contained in the
Company´s articles of association). The appointments shall take effect at
the end of the board meeting.
|
| 5. |
All
the existing instructions and authorities to bankers shall be revoked
and
replaced with new instructions and authorities to those banks in
the form
the Buyer requires.
|
| 6. |
The
address of the registered office of the Company shall be changed
to the
address required by the Buyer.
|
| 7. |
The
accounting reference date of the Company shall be changed to the
date
required by the Buyer.
|
Page
30
| Schedule 3 |
Warranties
|
| Part 1. |
General
warranties
|
| 1. |
Power
to sell the company
|
| 1.1 |
The
Seller has taken all necessary action and has all requisite power
and
authority to enter into and perform this agreement in accordance
with its
terms and the other documents referred to in
it.
|
| 1.2 |
This
agreement and the other documents referred to in it constitute (or
shall
constitute when executed) valid, legal and binding obligations on
the
Seller in the terms of the agreement and such other
documents.
|
| 1.3 |
Compliance
with the terms of this agreement and the documents referred to in
it shall
not breach or constitute a default under any of the
following:
|
| (i) |
any
agreement or instrument to which the Seller is a party or by which
it is
bound; or
|
| (ii) |
any
order, judgment, decree or other restriction applicable to the
Seller.
|
| 2. |
Shares
in the company
|
| 2.1 |
The
Sale Shares constitute the whole of the allotted and issued share
capital
of the Company and are fully paid.
|
| 2.2 |
The
Seller is the sole legal and beneficial owner of the Sale
Shares.
|
| 2.3 |
The
Sale Shares are free from all
Encumbrances.
|
| 2.4 |
No
right has been granted to any person to require the Company to issue
any
share capital and no Encumbrance has been created in favour of any
person
affecting any unissued shares or debentures or other unissued securities
of the Company.
|
| 2.5 |
No
commitment has been given to create an Encumbrance affecting the
Sale
Shares (or any unissued shares or debentures or other unissued securities
of the Company) or for the Company to issue any share capital and
no
person has notified the Company of any claim to be entitled to any
rights
in connection with any of those
things.
|
Page
31
| 2.6 |
The
Company:
|
| (i) |
does
not hold or beneficially own, nor has it agreed, nor has it ever
agreed to
acquire, any securities of any corporation;
|
| (ii) |
is
not, nor has agreed to become, a member of any partnership or other
unincorporated association, joint venture or consortium (other than
recognised trade associations);
|
| (iii) |
has
not, outside its country of incorporation, any branch or permanent
establishment; and
|
| (iv) |
has
not allotted or issued any securities that are convertible into
shares.
|
| 2.7 |
The
Company has not at any time:
|
| (i) |
purchased,
redeemed or repaid any of its own share capital;
or
|
| (ii) |
given
any financial assistance in connection with any acquisition of its
share
capital or the share capital of its holding company (as that expression
is
defined in section 736 of the Companies Acts) as it would fall within
sections 151 to 158 (inclusive) of the Companies
Acts.
|
| 2.8 |
All
dividends or distributions declared, made or paid by the Company
have been
declared, made or paid in accordance with its memorandum, articles
of
association, the applicable provisions of the Companies Acts and
any
agreements or arrangements made with any third party regulating the
payment of dividends and
distributions.
|
| 3. |
Constitutional
and corporate documents
|
| 3.1 |
The
copies of the memorandum and articles of association or other
constitutional and corporate documents of the Company Disclosed to
the
Buyer or its advisers are true, accurate and complete in all respects
and
copies of all the resolutions and agreements required to be annexed
to or
incorporated in those documents by the law applicable are annexed
or
incorporated.
|
| 3.2 |
All
statutory books and registers of the Company have been properly kept
and
no notice or allegation that any of them is incorrect or should be
rectified has been received.
|
| 3.3 |
All
returns, particulars, resolutions and other documents which the Company
is
required by law to file with or deliver to any authority in any
jurisdiction (including, in particular, the Registrar of Companies
in
England and Wales) have been correctly made up and filed or, as the
case
may be, delivered save where the failure to so file or deliver would
not
have a material adverse effect.
|
Page
32
| 4. |
information
|
| 4.1 |
The
particulars relating to the Company set out in Schedule 1 are
accurate and not misleading.
|
| 5. |
Compliance
with laws
|
The
Company has at all times conducted its business materially in accordance with
all applicable laws and regulations.
| 6. |
Licences
and consents
|
| 6.1 |
The
Company has all licences, consents, permits and authorities necessary
to
carry on its business in the places and in the manner in which its
business is now carried on, all of which are valid and
subsisting.
|
| 6.2 |
The
Company has not received notice of any reason why any of those licences,
consents, permits and authorities should be suspended, cancelled,
revoked
or not renewed on the same terms.
|
| 7. |
Insurance
|
| 7.1 |
To
the Seller´s knowledge there are no outstanding claims under, or in
respect of the validity of, any of the insurance policies maintained
by or
on behalf of the Company and so far as the Seller is aware, there
are no
circumstances likely to give rise to any claim under any of those
policies.
|
| 7.2 |
To
the Seller´s knowledge all such insurance policies are in full force and
effect, are not void or voidable, nothing has been done or not done
which
could make any of them void or voidable and Completion will not terminate,
or entitle any insurer to terminate, any such
policy.
|
| 8. |
Power
of attorney
|
| 8.1 |
There
are no powers of attorney in force given by the
Company.
|
| 8.2 |
No
person, as agent or otherwise, is entitled or authorised to bind
or commit
the Company to any obligation not in the ordinary course of the Company´s
business.
|
Page
33
| 8.3 |
The
Disclosure Letter sets out details of all persons who have authority
to
bind the Company in the ordinary course of
business.
|
| 9. |
Disputes
and investigations
|
| 9.1 |
Neither
the Company nor any person for whom the Company is vicariously
liable:
|
| (i) |
is
engaged in any litigation, administrative, mediation or arbitration
proceedings or other proceedings or hearings before any statutory
or
governmental body, department, board or agency (except for debt collection
in the normal course of business);
or
|
| (ii) |
to
the Seller´s knowledge, is the subject of any investigation, inquiry or
enforcement proceedings by any governmental, administrative or regulatory
body.
|
| 9.2 |
To
the Seller´s knowledge, no such proceedings, investigation or inquiry as
are mentioned in paragraph 9.1 have been threatened or are pending
and
there are no circumstances likely to give rise to any such
proceedings.
|
| 9.3 |
The
Company is not affected by any existing or, to the Seller’s knowledge,
pending judgments or rulings (save in respect of any ex-parte judgments
of
which it is unaware) and has not given any undertakings arising from
legal
proceedings to a court, governmental agency, regulator or third
party.
|
| 10. |
Defective
products and services
|
| 10.1 |
The
Company has not manufactured or sold any products which were, at
the time
they were manufactured or sold, in any material respect faulty or
defective or did not materially comply
with:
|
| (i) |
warranties
or representations expressly made or implied by or on behalf of the
Company; or
|
| (ii) |
all
laws, regulations, standards and requirements applicable to the
products.
|
| 10.2 |
No
proceedings have been started or to the Seller´s knowledge are pending or
have been threatened against the Company in which it is claimed that
any
products manufactured or sold by the Company are defective, not
appropriate for their intended use or have caused bodily injury or
material damage to any person or property when applied or used as
intended.
|
Page
34
| 11. |
Customers
and suppliers
|
| 11.1 |
In
the 12 months ending with the date of this agreement, the business
of the
Company has not been materially affected in an adverse manner as
a result
of any one or more of the following things happening to the
Company:
|
| (i) |
the
loss of any of its top five customers ranked by reference to sales
to the
Company’s customers in the financial year ended 31 December 2005 (“Top
Five Customers”) or top five suppliers ranked by reference to purchases
from the Company’s suppliers in the financial year ended 31 December 2005
(“Top Five Suppliers”); or
|
| (ii) |
a
reduction in trade with its Top Five Customers or in the extent to
which
it is supplied by any of its Top Five Suppliers;
or
|
| (iii) |
a
change in the terms on which it trades with or is supplied by any
of the
Top Five Customers or Top Five
Suppliers.
|
| 11.2 |
The
Disclosure Letter contains the names of and copies of the relevant
agreements for the Top Five
Customers.
|
| 12. |
Competition
|
| 12.1 |
The
definition in this paragraph applies in this
agreement.
|
Competition
Law:
the
national and directly effective legislation of any jurisdiction which governs
the conduct of companies or individuals in relation to restrictive or other
anti-competitive agreements or practices (including, but not limited to,
cartels, pricing, resale pricing, market sharing, bid rigging, terms of trading,
purchase or supply and joint ventures), dominant or monopoly market positions
(whether held individually or collectively) and the control of acquisitions
or
mergers.
| 12.2 |
The
Company is not engaged in any agreement, arrangement, practice or
conduct
which amounts to an infringement of the Competition Law of any
jurisdiction in which the Company conducts
business.
|
| 13. |
Contracts
|
| 13.1 |
The
definition in this paragraph applies in this
agreement.
|
Material
Contract:
an
agreement to which the Company is a party or is bound by and which is of
material importance to the business, profits or assets of the
Company.
Page
35
| 13.2 |
Except
for the agreements and arrangements Disclosed, the Company is not
a party
to or subject to any agreement
which:
|
| (i) |
is
a Material Contract; or
|
| (ii) |
contains
a contractual right for the other party to terminate such agreement
as a
result of any Change of Control of the Company;
or
|
| (iii) |
restricts
the freedom of the Company to carry on the whole or any part of its
business in any part of the world in such manner as it thinks fit;
or
|
| (iv) |
is
not on arm´s length terms;
|
| (v) |
involves
agency or distributorship; or
|
| (vi) |
involves
partnership, joint venture, consortium, joint development, shareholders
or
similar arrangements; or
|
| (vii) |
requires
the Company to pay any commission, finders fee, royalty or the
like.
|
| 13.3 |
To
the Seller´s knowledge, each Material Contract is in full force and effect
and binding on the parties to it and the Company has not defaulted
under
or breached a Material Contract in any material respect
and:
|
| (i) |
to
the Seller´s knowledge, no other party to a Material Contract has
defaulted under or breached such a contract;
and
|
| (ii) |
to
the Seller´s knowledge, no such default or breach by the Company or any
other party is likely or has been
threatened.
|
| 13.4 |
No
notice of termination of a Material Contract has been received or
served
by the Company and to the Seller´s knowledge there are no grounds for
determination, rescission, avoidance, repudiation or a material change
in
the terms of any such contract.
|
| 13.5 |
All
contracts entered into or purportedly entered into by any member
of the
Seller’s Group and relating to the Business and the Company and Disclosed
have been performed by the Company and the relevant counterparty
has not
objected to the same and has treated the Company for all purposes
as the
relevant contracting party.
|
Page
36
| 14. |
Transactions
with the seller
|
| 14.1 |
Except
in respect of trading in the ordinary course of business with CML
there is
no outstanding indebtedness or other liability (actual or contingent)
and
there is no outstanding contract or commitment between the Company
and any
of the following:
|
| (i) |
the
Seller or any member of the Seller´s Group or any person Connected with
the Seller; or
|
| (ii) |
any
director of a member of the Seller´s Group or any person Connected with
such a member or director.
|
| 14.2 |
Except
in respect of trading in the ordinary course of business with CML
neither
the Seller, nor any person Connected with the Seller, is entitled
to a
claim of any nature against the Company or has assigned to any person
the
benefit of a claim against the Company to which the Seller or a person
Connected with the Seller would otherwise be
entitled.
|
| 15. |
Finance
and guarantees
|
| 15.1 |
Full
particulars of all money borrowed by the Company (including full
particulars of the terms on which such money has been borrowed) have
been
Disclosed.
|
| 15.2 |
No
guarantee, mortgage, charge, pledge, lien, assignment or other security
agreement or arrangement has been given by or entered into by the
Company
or any third party in respect of borrowings or other obligations
of the
Company.
|
| 15.3 |
The
total amount borrowed by the Company does not exceed any limitations
on
the borrowing powers contained:
|
| (i) |
in
the memorandum and articles of association of the Company;
or
|
| (ii) |
in
any debenture or other deed or document binding on the
Company.
|
| 15.4 |
The
Company has no outstanding loan capital, or has not lent any money
that
has not been repaid, and there are no debts owing to the Company
other
than debts that have arisen in the normal course of
business.
|
| 15.5 |
The
Company has not:
|
| (i) |
factored
any of its debts or discounted any of its debts or engaged in financing
of
a type which would not need to be shown or reflected in the Accounts;
or
|
Page
37
| (ii) |
waived
any right of set-off it may have against any third
party.
|
| 15.6 |
All
debts (less any provision for bad and doubtful debts) owing to the Company
reflected in the Accounts and all debts subsequently recorded in
the books
of the Company:
|
| (i) |
have
arisen out of bona fide transactions in the ordinary course of business;
and
|
| (ii) |
reflect
actual transactions and/ or the granting of credit to customers in
a
manner consistent with past practices of the
Company.
|
| 15.7 |
No
indebtedness of the Company in the nature of borrowing is due and
payable
and no security over any of the assets of the Company is now enforceable,
whether by virtue of the stated maturity date of the indebtedness
having
been reached or otherwise. The Company has received no notice in
relation
to any such indebtedness whose terms have not been fully complied
with
and/or carried out from any creditor requiring any payment to be
made
and/or stating that it intends to enforce any security which it may
hold
over the assets of the Company.
|
| 15.8 |
The
Company has not given or entered into any guarantee, mortgage, charge,
pledge, lien, assignment or other security agreement or arrangement
or is
responsible for the indebtedness, or for the default in the performance
of
any obligation, of any other
person.
|
| 15.9 |
The
Company is not subject to any arrangement for receipt or repayment
of any
grant, subsidy or financial assistance from any government department
or
other body.
|
| 15.10 |
Particulars
of the balances of all the bank accounts of the Company, showing
the
position as at the day immediately preceding the date of this agreement,
have been Disclosed and the Company has no other bank accounts. Since
those particulars were given, there have been no payments out of
those
accounts other than payments in the ordinary course of
business.
|
| 15.11 |
A
Change of Control of the Company will not result
in:
|
| (i) |
termination
of or material effect on any financial or, to the Seller’s knowledge,
other agreement to which the Company is a party or subject;
or
|
| (ii) |
any
indebtedness of the Company becoming due, or capable of being declared
due
and payable, prior to its stated
maturity.
|
Page
38
| 16. |
Insolvency
|
| 16.1 |
The
Company:
|
| (i) |
is
not insolvent or unable to pay its debts within the meaning of the
Insolvency Xxx 0000; and
|
| (ii) |
has
not stopped paying its debts as they fall
due.
|
| 16.2 |
No
step has been taken to initiate any process by or under
which:
|
| (i) |
the
ability of the creditors of the Company to take any action to enforce
their debts is suspended, restricted or prevented;
or
|
| (ii) |
some
or all of the creditors of the Company accept, by agreement or in
pursuance of a court order, an amount less than the respective sums
owing
to them in satisfaction of those sums with a view to preventing the
dissolution of the Company; or
|
| (iii) |
a
person is appointed to manage the affairs, business and assets of
the
Company on behalf of the Company´s creditors;
or
|
| (iv) |
the
holder of a charge over the Company´s assets is appointed to control the
business and assets of the Company.
|
| 16.3 |
In
relation to the Company :
|
| (i) |
no
administrator has been appointed;
|
| (ii) |
no
documents have been filed with the court for the appointment of an
administrator; and
|
| (iii) |
no
notice of an intention to appoint an administrator has been given
by the
relevant company, its directors or by a qualifying floating charge
holder
(as defined in paragraph 14 of Schedule B1 to the Insolvency Act
1986).
|
| 16.4 |
No
process has been initiated which could lead to the Company being
dissolved
and its assets being distributed among the Company´s creditors,
shareholders or other contributors.
|
| 16.5 |
No
distress, execution or other process has been levied on an asset
of the
Company.
|
Page
39
| 17. |
Assets
|
| 17.1 |
The
Company is the full legal and beneficial owner of, and has good and
marketable title to, all the assets included in the Accounts and
any
assets acquired since the Accounts Date except for those disposed
of since
the Accounts Date in the normal course of business and the freehold
property which has been sold to the Seller or a member of the Seller’s
Group.
|
| 17.2 |
None
of the assets shown in the Accounts or acquired by the Company since
the
Accounts Date is the subject of any lease, lease hire agreement,
hire
purchase agreement or agreement for payment on deferred terms or
is the
subject of any licence or factoring
arrangement.
|
| 17.3 |
The
Company is in possession and control of all the assets included in
the
Accounts or acquired since the Accounts Date and all other assets
used by
the Company, except for those in the possession of a third party
in the
normal course of business, those disposed of since the Accounts Date
in
the normal course of business and the freehold property which has
been
sold to the Seller or a member of the Seller’s
Group.
|
| 17.4 |
None
of the assets, undertakings or goodwill of the Company is subject
to an
Encumbrance, or to any agreement or commitment to create an Encumbrance,
and to the Seller’s knowledge no person has claimed to be entitled to
create such an Encumbrance.
|
| 18. |
Condition
of plant and equipment
|
| 18.1 |
The
plant, machinery, equipment and vehicles used in connection with
the
Business are in a reasonable condition taking account of their age,
fair
wear and tear excepted.
|
| 19. |
Property
|
19.1 Interests
in Property
| (a) |
Other
than the Lease (when granted), the Company does not own, use, occupy
or
have any interest in or liability for or in respect of any land or
buildings.
|
| (b) |
The
Company has not owned, used, occupied or had any interest in or liability
for or in respect of any land or buildings save that
the Company has occupied the part of the Property not demised in
the
Sub-Lease for the purposes of the
Business.
|
| (c) |
The
particulars of the Property set out above are correct and not
misleading.
|
Page
40
| (d) |
The
Company has disclosed to the Buyer true, complete and accurate copies
of
all documents in its possession (including documents in possession
of
Continental Commercial Products LLC (formerly known as Contico
International LLC), the Seller and any member of the Company’s Group and
any mortgagee) relating to the
Property.
|
| (e) |
The
Company has not entered into any agreement to acquire or dispose
of any
land or interest therein.
|
| (f) |
Save
for the interest conferred by the Sublease, the Company is in physical
possession and actual occupation of the Property on an exclusive
basis for
the purposes of the Business.
|
19.2 Replies
to Enquiries
The
replies to enquires relating to the Property given by Xxxxxx Xxxxx Sapte (on
behalf of the Seller) to the Buyer are true and accurate in all material
respects.
19.3 Other
involvement in relation to real property
The
Company has not at any time:-
| (a) |
had
vested in it (whether as an original tenant or undertenant or as
an
assignee, transferee or otherwise) any freehold or leasehold properties
other than the Property; or
|
| (b) |
given
any covenant or entered into any agreement, deed or other document
(whether as a tenant or undertenant or as an assignee, transferee,
guarantor or otherwise) in respect of any freehold or leasehold properties
other than those disclosed to the Buyer in writing in relation to
those
properties in respect of which any contingent or potential liability
remains with the Company.
|
| 20. |
Intellectual
property
|
| 20.1 |
The
definition in this paragraph applies in this
agreement.
|
Page
41
Intellectual
Property Rights:
means
all right, title and interest in, to, and under all patents and design patents,
rights to inventions, utility models, copyright, trade marks, service marks,
trade, business and domain names, rights in trade dress or get-up, rights in
goodwill or to xxx for passing off, unfair competition rights, rights in
designs, technology design rights, rights in computer software, database rights,
topography rights, moral rights, rights in confidential information (including
know-how and trade secrets) and any other intellectual property rights, in
each
case whether registered or unregistered and including all applications for
and
renewals or extensions of such rights, and all similar or equivalent rights
or
forms of protection in any part of the world.
Trademarks:
means
the trademarks and domain name set forth in Part
1 of
Schedule 5 together
with the goodwill associated therewith to be assigned and transferred to the
Buyer by Continental
Commercial Products LLC
(“CCP”)
under
the terms set forth in the Trademarks Assignment Letter.
Use:
means
use, sell, exploit, commercialize, modify, improve, utilize, license, transfer,
assign, distribute and otherwise dispose of any of the Trademarks or any portion
thereof.
| 20.2 |
Complete
and accurate particulars are set out in Part 1 and Part 2 of Schedule
5
respectively of all registered Intellectual Property Rights (including
applications for such rights) and material unregistered Intellectual
Property Rights owned, used or held for use by the
Company.
|
| 20.3 |
Complete
and accurate particulars are set out in Part 3 and Part 4 of Schedule
5
respectively of all licences, agreements, authorisations and permissions
(in whatever form and whether express or implied) under
which:
|
| (i) |
the
Company uses or exploits Intellectual Property Rights owned by any
third
party; or
|
| (ii) |
the
Company has licensed or agreed to license Intellectual Property Rights
to,
or otherwise permitted the use of any Intellectual Property Rights
by, any
third party.
|
| 20.4 |
Except
as set out in Part 3 and Part 4 of Schedule 5, the Company is the
sole
legal and beneficial owner of (or applicant for) the Intellectual
Property
Rights set out in Part 1 and Part 2 of Schedule 5, free from all
Encumbrances. The Company has the sole right to bring actions for
infringement of any Intellectual Property Rights set out in Part
1 and
Part 2 of Schedule 5. The Company has not transferred, assigned or
licensed any of its rights in any Intellectual Property Rights except
as
set out in Part 3 and Part 4 of Schedule 5.
Except as set out in Part 3 and Part 4 of Schedule 5, there are no
outstanding options, licenses, or agreements of any kind relating
to the
Intellectual Property Rights set out in Part 1 and Part 2 of Schedule
5,
nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the Intellectual Property
Rights of
any other person or entity.
|
Page
42
| 20.5 |
Part
1 and Part 2 of Schedule 5 contain details of all material Intellectual
Property Rights required in order to carry on the Company’s activities and
Business. The
Intellectual Property Rights set
out in Part 1 and Part 2 of Schedule 5 constitutes
all of the intellectual
property rights used by the Company in order to conduct the Business
as currently conducted.
|
| 20.6 |
The
Intellectual Property Rights set out in Part 1 and Part 2 of Schedule
5
are valid, subsisting and enforceable and nothing has been done or
not
been done by the Company as a result of which any of them has ceased
or
might cease to be valid, subsisting or enforceable. And in respect
of such
Intellectual Property Rights, to the Seller’s
knowledge:
|
| (i) |
all
application and renewal fees and other steps required for the maintenance
or protection of such rights have been paid on time or
taken;
|
| (ii) |
all
material Intellectual Property Rights and confidential information
(including know-how and trade secrets) owned or used by the Company
has
been kept confidential and has not been disclosed to third parties
(other
than parties who have signed written confidentiality undertakings
in
respect of such information, details of which are set out in the
Disclosure Letter). The Company has not taken any action or, failed
to
take an action that directly or indirectly caused its Intellectual
Property Rights and related confidential information to enter into
the
public domain or in any way affected its value or the Company’s absolute
and unconditional ownership
thereof;
|
| (iii) |
no
xxxx, trade name or domain name identical or similar to any such
rights
and which is material to the business of the Company has been registered,
or is being used by any person in the same or a similar business
to that
of the Company, in any country in which the Company or has registered
or
is using that xxxx, trade name or domain name, except as set forth
in
paragraph 20.6.1 below; and
|
| (iv) |
there
are and have been no claims, challenges, disputes or proceedings,
pending
or threatened, which was not favourably resolved, in relation to
the
ownership, validity or use of such rights and none of Company nor
any of
their directors and officers has ever received any charge, complaint,
claim, demand, or notice, which was not favourably resolved, alleging
any
interference, infringement, misappropriation or violation by the
Company
of any third party’s rights.
|
Page
43
| (v) |
Seller
owns U.S. Trademark Registration No. 1,448,359 for the trademark
TUFF BOX
for plastic tool boxes, granted July 21, 1987. On or about July 1,
2005,
Seller became aware of use of the xxxx XXXX BOX in connection with
utility
and tool storage boxes by Sunshine Home Products of Cerritos, California
(“Sunshine”). Seller has taken commercially reasonable steps to enforce
its trademark rights against Sunshine Home Products, including a
written
demand that Sunshine cease use of the subject xxxx. The parties are
still
engaged in discussions as of the date of this agreement.
|
| 20.7 |
Nothing
is due to be done within 60 days of Completion the omission of which
would
jeopardise the maintenance or prosecution of any of the Intellectual
Property Rights owned or used by the Company which are registered
or the
subject of an application for registration. Part 1 of Schedule 5
includes
a list of actions due to be done within 180 days of Completion with
respect to the maintenance and/or prosecution of any of the Intellectual
Property Rights owned or used by the Company which are registered
or the
subject of an application for registration.
|
| 20.8 |
To
the Seller’s knowledge there has been no infringement, interference or
misappropriation by any third party of any Intellectual Property
Rights
set out in Part 1 and Part 2 of Schedule 5, which was not favourably
resolved, except as set forth in paragraph 20.6.1 above, nor any
third
party breach of confidence, passing off or actionable act of unfair
competition in relation to the business or assets of the Company,
and no
such infringement, breach of confidence, passing off or actionable
act of
unfair competition is current or
anticipated.
|
| 20.9 |
The
agreements and licences set out in Part 3 and Part 4 of Schedule
5:
|
| (i) |
are
legal, valid, binding and enforceable and in full force and effect
and
shall stay such on identical terms following the consummation of
the
transactions contemplated hereby;
|
| (ii) |
have
not been the subject of any breach or default by any party or of
any event
which, with the giving of notice or lapse of time, would constitute
a
default or permit termination, modification, or acceleration, under
such
agreement or license;
|
| (iii) |
are
not to the Seller’s knowledge the subject of any claim, dispute or
proceeding, pending or threatened;
|
| (iv) |
have,
where required, been duly recorded or registered;
and
|
| (v) |
neither
the Company nor to the Seller’s knowledge any of the other parties to the
agreements and licenses has repudiated any provision of the agreement
and/or license.
|
Page
44
| 20.10 |
A
Change of Control of the Company will not automatically result in
the
termination of any of the Intellectual Property Rights set out in
Schedule
5.
|
| 20.11 |
To
the Seller’s knowledge the activities of the
Company:
|
| (i) |
have
not infringed, do not infringe and are not likely to infringe the
Intellectual Property Rights or any other rights of any third party;
or
|
| (ii) |
have
not given and do not give rise to any obligation to pay any royalty,
fee
compensation or any other sum
whatsoever.
|
| 20.12 |
Each
Employee, consultant and officer of the Company has executed an agreement
with the Company pertaining to non-competition, confidentiality and
assignment of inventions, or has otherwise sufficiently vested in
the
Company good title to the work product or result of endeavours of
every
employee, officer or contractor, free of any retained rights or royalty
or
similar obligations, except where such a failure would not have a
material
adverse effect to the business of the Company. To the Seller’s knowledge:
(i) none of the said employees, officers or consultants is in violation
thereof; (ii) no such employees, officers or consultants breached
any
third party contract with respect to any item of the Intellectual
Property
Rights set out in Part 1 and Part 2 of Schedule 5; (iii) no such
employees, officers or consultants retained by the Company has, or
has
alleged to have any right, title or
interest in the Intellectual Property Rights set out in Part 1 and
Part 2
of Schedule 5.
|
| 20.13 |
The
Trademarks.
In connection with the Trademarks and without derogating from the
provisions of Sections 20.1
.20.12, (it is hereby agreed that warranties herein with respect
to the
Trademarks shall only apply to such period in which the Trademarks
or any
portion thereof were owned by any member of the Seller’s Group) For
purposes of clarification, to the extent that the records of the
relevant
Patent and Trademark Office indicated in 2006 that Contico International,
Inc. is the owner of any of the Trademarks CCP has corrected such
records
to properly reflect that CCP is the owner of the Trademarks effective
as
of the date Contico International, Inc. assigned such Trademarks
to
Contico International, LLC, which thereafter changed its name to
that of
CCP:
|
| (i) |
CCP
has
full power and authority (including full corporate power and authority)
to
execute and deliver the Trademark Assignment Letter and to perform
its
obligations thereunder. The Trademark Assignment Letter constitutes
the
valid and legally binding obligation of CCP,
enforceable in accordance with its terms and conditions, except to
the
extent that enforceability may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium, receivership and similar
laws
affecting the enforcement of creditors’ rights
generally.
|
Page
45
| (ii) |
Neither
the execution and the delivery of the Trademark Assignment Letter,
nor the
consummation of the transactions contemplated thereby, will (i) violate
any constitution, statute, regulation, rule, injunction, judgment,
order,
decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which CCP
is
subject;
or (ii) result in any lien against the Trademarks.
|
| (iii) |
CCP
does
not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government, governmental
agency
or any third party in order to consummate the transactions contemplated
by
the Trademark Assignment Letter, other than the filing of the Trademark
Assignment Letter to the relevant patent and/or trademark office.
No
consent, approval, license, permit, declaration, registration or
authorization of the action by, or filing with, any person, or entity
including any court, governmental or regulatory authority, commission,
board, administrative agency or non-governmental third party, on
the part
of CCP,
is required in connection with the execution and performance of the
Trademark Assignment Letter or the consummation of the transactions
contemplated thereunder other than the filing of such
Trademark Assignment Letter.
|
| (iv) |
The
Trademarks are owned solely by CCP,
and, except as set forth in part 4 of Schedule 5, CCP has
not transferred, assigned or licensed to any third party (including
to any
Affiliate and related party) any of its rights in the
Trademarks.
|
| (v) |
CCP
has,
and immediately following the Completion Date, the Buyer shall have,
good
and marketable title to the Trademarks, free and clear of all Encumbrances,
or restrictions on transfer.
There are no agreements or arrangements between CCP
and any third party that are reasonably likely to have a material
effect
upon CCP’s
title to the Trademarks. Except as set forth in part 4 of Schedule
5, (i)
with respect to the assignment of rights in and to the Trademarks
under
the Trademark Assignment Letter, no party nor person other than Buyer
shall have any right, title or interest in the Trademarks, and (ii)
Buyer
shall be subject to no limitations, obligations or restrictions with
regard to the Use or other transfer or exploitation of the Trademarks.
CCP
is under no
obligation to pay any other party any royalties or other fixed or
contingent amounts based upon the sale, distribution or other use
or
exploitation of the Trademarks (the “Royalties”). Buyer,
by entering into the Trademark Assignment Letter and consummating
the
transactions contemplated thereby, is not assuming or agreeing to
pay or
otherwise become liable for any contracts, indebtedness, obligations
or
liabilities CCP, or any of CCP’s Affiliates of any type or nature
whatsoever, except for Buyer’s assumption as of the Completion Date of the
rights and obligations arising from Buyer’s ownership or use of the
Trademarks from and after the Completion
Date.
|
Page
46
| (vi) |
To
Seller’s
and Guarantor’s best knowledge, CCP
has
complied with all applicable laws with regard to the Trademarks (including
rules, regulations, codes, plans, injunctions, judgments, orders,
decrees,
rulings and charges there under) of federal, state, local, and foreign
governments (and all agencies thereof). No action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice
has
been filed or commenced against CCP
in connection with the Trademarks alleging any failure so to comply.
There
are no judgments outstanding and unsatisfied against the
Trademarks.
|
| (vii) |
To
Seller’s and Guarantor’s best knowledge, no
claim (which was not favourably resolved) has been made against
CCP
that the Trademarks infringes, misappropriates, or otherwise comes
into
conflict with any intellectual property rights of third parties,
and
CCP
has not
received any
charge, complaint, claim, demand, or notice (which was not favourably
resolved) alleging any such interference, infringement, misappropriation,
or violation. To Seller’s and Guarantor’s best knowledge, no third party
is currently interfering with, infringing upon, misappropriating,
or
otherwise coming into conflict with any of
the Trademarks, except as set forth in paragraph 20.6.1; and no third
party has in the past interfered with, infringed upon, misappropriated,
or
otherwise come into conflict with the Trademarks, except for instances
which were favourably resolved following CCP taking commercially
reasonable action to protect the Trademarks. CCP
has
the sole right to bring actions for infringement of the
Trademarks.
|
| (viii) |
There
are no instances in which CCP
(i) is subject to any outstanding injunction, judgment, order, decree,
ruling, or charge
in
respect of the Trademarks;
or (ii) is party or, to their
best knowledge, is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court
or
quasi-judicial or administrative agency of any state, local, or foreign
jurisdiction or before any arbitrator in respect of the Trademarks.
To
their best knowledge, there is no litigation pending or threatened
against
CCP (a) that would have a material adverse effect on the ability
of Seller
to perform its obligations under the Trademark Assignment Letter;
or (b)
that seeks to enjoin or obtain damages in respect of the consummation
of
the transactions contemplated
thereby.
|
Page
47
| (ix) |
Following
the Completion Date, CCP shall fully cooperate with the Buyer in
protecting the Buyer’s rights in the Trademarks including but not limited
to by making its personnel available, and providing such testimony
and
access to its books and records as shall be reasonably
necessary
in connection with any contest or defense,
all at Buyer’s cost.
|
| (x) |
Except
to the extent described in the Trademark License Agreements in the
agreed
form, as soon as practicable after the Completion Date, Seller,
Guarantor and CCP shall cease any use of
the word “Contico” or any other name which includes any of the Trademarks
or any derivation thereof.
|
| (xi) |
As
of the Completion Date, the license agreement between CCP and the
Company dated
December 31, 2003 shall immediately terminate and shall be deemed
null and
void.
|
| (xii) |
The
Seller shall notify the Buyer as soon as reasonably practicable following
the date upon which the purchaser of Contico Manufacturing (Ireland)
Limited becomes obliged to change that company’s name to a name which does
not include the word “Contico”.
|
| (xiii) |
Nothing
in the Sale Agreement between CEH Limited and Xxxxxxx Xxxxxx and
Xxxxxxx
Xxxxxx (the "Sale Agreement") and/or in the Distribution Agreement
between
Contico Manufacturing Limited and Contico Manufacturing (Ireland)
Ltd (the
"Distribution Agreement") contradicts, prevents or prohibits Buyer
and/or
its assigns from utilizing the name CONTICO in any form or manner,
including without limitation, as a trade name, trademark, service
xxxx,
logo, domain name or otherwise in any territory, including but not
limited
to the territories of the Sale Agreement and/or the aforementioned
Distribution Agreement
|
| 21. |
Information
technology
|
| 21.1 |
The
definitions in this paragraph apply in this
agreement.
|
IT
System:
all
computer hardware (including network and telecommunications equipment) and
software (including associated preparatory materials, user manuals and other
related documentation) owned, used, leased or licensed by or to the
Company.
IT
Contracts:
all
material agreements under which any third party (including without limitation
any member of the Seller´s Group and any source code deposit agents) provides
any element of, or services relating to, the IT System, including leasing,
hire
purchase, licensing, maintenance and services agreements.
Page
48
| 21.2 |
Save
to the extent provided in the IT Contracts, the Company is the owner
of
the IT System free from Encumbrances. The Company has obtained all
necessary rights from third parties to enable it to use the IT
System.
|
| 21.3 |
The
IT Contracts are valid and binding and to the Seller’s knowledge no act or
omission has occurred which would, if necessary with the giving of
notice
or lapse of time, constitute a breach of any such
contract.
|
| 21.4 |
There
are and have been no claims, disputes or proceedings arising or to
the
Seller’s knowledge threatened under any IT
Contracts.
|
| 21.5 |
To
the Seller´s knowledge, none of the IT Contracts is liable to be
terminated by a Change of Control of the Company, and the Seller
has no
reason to believe that any IT Contracts will not be renewed on the
same or
substantially the same terms when they
expire.
|
| 21.6 |
The
Company is duly licensed to use the IT System and no further licences
are
required for the operation of the IT
System.
|
| 21.7 |
The
IT System is functioning to the level necessary for the conduct of
the
Business as it has been carried on by the Company.
|
| 22. |
Employment
|
| 22.1 |
The
definitions in this paragraph apply in this
agreement.
|
Employment
Legislation:
legislation applying in England and Wales affecting contractual or other
relations between employers and their employees including, but not limited
to,
any legislation and any amendment, extension or re-enactment of such legislation
and any claim arising under European treaty provisions or directives enforceable
against the Company by any Employee.
Employee:
any
person employed by the Company.
| 22.2 |
The
name of each person who is a Director is set out in Schedule
1.
|
Page
49
| 22.3 |
The
Disclosure Letter includes details of all Employees of the Company,
the
particulars of each Employee and the principal terms of their contract
including:
|
| (i) |
the
company which employs or engages them;
|
| (ii) |
their
remuneration (including any benefits and privileges provided or which
the
Company is bound to provide to them or their dependants whether now
or in
the future);
|
| (iii) |
the
commencement date of each contract and the date on which their continuous
service began;
|
| (iv) |
the
length of notice necessary to terminate each contract or, if a fixed
term,
the expiry date of the fixed term and details of any previous
renewals;
|
| (v) |
the
type of employment contract (whether full or
part-time);
|
| (vi) |
their
date of birth;
|
| (vii) |
any
country in which the Employee works and/or is paid, if the Employee
works
or is paid outside England and Wales;
and
|
| (viii) |
the
law governing the contract, if the Employee works or is paid outside
England and Wales,
|
| (ix) |
which
information is accurate and
complete.
|
| 22.4 |
The
Disclosure Letter includes details of all Employees of the Company
who are
on secondment, maternity, paternity, adoption or other leave or absent
due
to ill-health or for any other reason for more than 3
months.
|
| 22.5 |
No
notice to terminate the contract of employment of any Employee of
the
Company (whether given by the Company or by the Employee) has been
issued
or received by the Company or to the Seller’s knowledge is pending or
threatened and no dispute under any Employment Legislation or otherwise
is
outstanding between the Company and any of its current or former
Employees
relating to their employment or its
termination.
|
| 22.6 |
No
questionnaire has been served on the Company by an Employee under
any
Employment Legislation which remains unanswered in full or in
part.
|
| 22.7 |
To
the Seller´s knowledge, every Employee of the Company who requires a work
permit or other permission to work in the United Kingdom has a current
and
appropriate work permit or other permission and all necessary permissions
to remain in the United Kingdom.
|
Page
50
| 22.8 |
No
offer of employment or engagement has been made by the Company that
has
not yet been accepted, or which has been accepted but where the employment
or engagement has not yet started.
|
| 22.9 |
The
acquisition of the Sale Shares by the Buyer and compliance with the
terms
of this agreement will not entitle any senior Employees of the Company
to
terminate their employment or receive any payment or other
benefit.
|
| 22.10 |
All
contracts between the Company and its Employees are terminable at
any time
on not more than three months' notice without compensation (other
than for
unfair dismissal or a statutory redundancy payment or any other
express contractual liability
on the part of the Company).
|
| 22.11 |
The
Company is not a party to, bound by or proposing to introduce in
respect
of any of its Employees any redundancy payment scheme in addition
to
statutory redundancy pay, nor is there any agreed procedure for redundancy
selection.
|
| 22.12 |
The
Company is not a party to, bound by or proposing to introduce in
respect
of any of its Employees any share option, profit sharing, bonus,
commission or any other scheme relating to the profit or sales of
the
Company.
|
| 22.13 |
The
Company has not incurred any actual or contingent liability in connection
with any termination of employment of its Employees (including redundancy
payments) or for failure to comply with any order for the reinstatement
or
re-engagement of any Employee.
|
| 22.14 |
The
Company has not incurred any liability for failure to provide information
or to consult with Employees under any Employment
Legislation.
|
| 22.15 |
The
Company has not made or agreed to make a payment or provided or agreed
to
provide a benefit to a present or former Director or officer, Employee
or
to their dependants in connection with the actual or proposed termination
or suspension of employment or variation of an employment
contract.
|
| 22.16 |
The
Company is not involved in any industrial or trade dispute or negotiation
regarding a claim with any trade union, group or organisation of
employees
or their representatives representing Employees and to the Seller’s
knowledge there is nothing likely to give rise to such a dispute
or
claim.
|
Page
51
| 22.17 |
The
Company has not in the last 12 months materially altered nor entered
into
negotiations to alter or proposed to alter any of the terms of employment
or engagement of any of the
Employees.
|
| 22.18 |
There
are no sums owing to or from any Employee other than reimbursement
of
expenses, wages for the current salary period and holiday pay for
the
current holiday year.
|
| 22.19 |
The
Disclosure Letter includes true, complete and
accurate:
|
| (i) |
copies
of all contracts, handbooks, policies and other documents which apply
to
any of the Employees whose basic annual salary exceeds
£15,000;
|
| (ii) |
copies
of all agreements with any trade union, employee representative or
body of
employees or their representatives (whether binding or not) and details
of
any such unwritten agreements which may affect any
Employee.
|
| 22.20 |
In
respect of each Employee, the Company
has:
|
| (i) |
performed
all obligations and duties they are legally required to perform (and
settled all outstanding claims);
|
| (ii) |
complied
with the terms of any relevant agreement with any trade union, employee
representative or body of employees or their
representatives;
|
| (iii) |
maintained
adequate and up to date records.
|
| 22.21 |
There
are no consultants or independent contractors who currently provide
services to the Company or who have provided services to the Company
in
the twelve months prior to the date of this Agreement and in respect
of
whom a fee exceeding £10,000 or more has been paid or is payable. There is
no person who has accepted an offer to provide services to the Company
but
his engagement has not yet started.
|
| 22.22 |
No
former Employee has the right to return to work for whatever reason,
or
has, or may have, the right to be reinstated.
|
| 22.23 |
The
Company does not recognise and has not in the last six months received
a
request for recognition of a trade union for the purposes of collective
bargaining in relation to any of its
Employees.
|
Page
52
| 22.24 |
There
is no works council or other body of Employees convened for the purpose
of
providing information to or consulting with the Employees which represents
or is elected by its Employees.
|
| 22.25 |
The
Seller is not aware of any disciplinary or grievance issue that has
been
raised by or against any Employee or any allegation of discrimination,
harassment or bullying within the last twelve
months.
|
| 22.26 |
During
the last 12 months no Employee has been made redundant or has been
given
notice of redundancy and the Company is not obliged or accustomed
to make
any payments to any Employee of the Company by way of an enhanced
redundancy payment.
|
| 23. |
Accounts
|
| 23.1 |
The
Accounts have been prepared in accordance with the Companies Acts
and with
accounting standards, policies, principles and practices generally
accepted in the UK and in accordance with the law of that
jurisdiction.
|
| 23.2 |
The
Accounts have been audited by an auditor or firm of accountants qualified
to act as auditors in the UK and the auditors´ report(s) required to be
annexed to the Accounts is
unqualified.
|
| 23.3 |
The
Accounts show a true and fair view of the state of the Company’s affairs
as at the Accounts Date and of the profit of the Company for the
financial
year ended on that date.
|
| 23.4 |
The
Accounts have been filed and laid before the Company in general meeting
in
accordance with the requirements of the Companies
Acts.
|
| 23.5 |
The
Management Accounts have been prepared on a basis consistent with
that
employed in preparing the Accounts and fairly represent the income
and
expenditure of the Company to the date for which they have been
prepared.
|
| 24. |
Financial
and other records
|
| 24.1 |
All
financial and other records of the
Company:
|
| (i) |
have
been properly prepared and
maintained;
|
| (ii) |
constitute
an accurate record of all matters required by law to appear in
them;
|
| (iii) |
do
not contain any material inaccuracies or discrepancies;
and
|
Page
53
| (iv) |
are
in the possession of the Company to which they
relate.
|
| 24.2 |
No
notice has been received or allegation made that any of those records
are
incorrect or should be rectified.
|
| 24.3 |
All
statutory records, including accounting records, required to be kept
or
filed by the Company have been properly kept or filed and comply
with the
requirements of the Companies Acts.
|
| 24.4 |
All
deeds and documents belonging to the Company are in the possession
of the
Company.
|
| 25. |
Changes
since accounts date
|
Since
the
Accounts Date:
| (i) |
the
Company has conducted its business in the normal course and as a
going
concern;
|
| (ii) |
there
has been no change in the turnover or financial position of the Company
which has had a material adverse
effect;
|
| (iii) |
the
Company has not issued or agreed to issue any share or loan
capital;
|
| (iv) |
no
dividend or other distribution of profits or assets has been, or
agreed to
be, declared, made or paid by the Company;
|
| (v) |
the
Company has not borrowed or raised any money or taken any form of
financial security and no capital expenditure has been incurred on
any
individual item by the Company in excess of £50,000 and the Company has
not acquired, invested or disposed of (or agreed to acquire, invest
or
dispose of) any individual item in excess of £50,000 (other than the sale
of the freehold property to a member of the Seller’s Group);
and
|
| (vi) |
no
shareholder resolutions of the Company have been passed other than
as
routine business at the annual general
meeting.
|
Page
54
| 26. |
Effect
of sale on sale shares
|
Neither
the acquisition of the Sale Shares by the Buyer nor compliance with the terms
of
this agreement will:
| (i) |
result
in any third party being entitled contractually to exercise a right
which
would cause the Company to lose the benefit of any right or privilege
it
presently enjoys; or
|
| (ii) |
relieve
any person of any contractual obligation to the Company, or contractually
enable any person to determine any such obligation or any right or
benefit
enjoyed by the Company, or to exercise any contractual right in respect
of
the Company; or
|
| (iii) |
give
rise to, or cause to become exercisable, any right of pre-emption
over the
Sale Shares; or
|
| (iv) |
entitle
any person to receive from the Company any finder´s fee, brokerage or
other commission in connection with the purchase of the Sale Shares
by the
Buyer; or
|
| (v) |
result
in any customer or supplier being contractually entitled to cease
dealing
with the Company or to reduce substantially its existing level of
business
or to change the terms on which it deals with the Company;
or
|
| (vi) |
result
in any officer or senior Employee being entitled contractually to
leave
the Company; or
|
| (vii) |
result
in a breach by the Company of contract, law, regulation, order, judgment,
injunction, undertaking, decree or other like imposition;
or
|
| (viii) |
result
in the loss or impairment of or any default under any licence,
authorisation or consent required by the Company for the purposes
of its
business; or
|
| (ix) |
result
in the creation, imposition, crystallisation or enforcement of any
Encumbrance on any of the assets of the Company;
or
|
| (x) |
result
in any present or future indebtedness of the Company becoming due
and
payable, or capable of being declared due and payable, prior to its
stated
maturity date or in any financial facility of the Company being withdrawn;
or
|
| (xi) |
entitle
any person to acquire or affect the entitlement of any person to
acquire
shares in the Company.
|
Page
55
| 27. |
Retirement
benefits
|
| 27.1 |
The
Pension Scheme is the only arrangement under which the Company has
any
obligation to provide or contribute towards pension, lump sum, death,
ill-health, disability or accident benefits in respect of its past
or
present officers and employees and no proposal or announcement has
been
made to any Employee about the introduction, continuance, increase
or
improvement of, or the payment of a contribution towards, any other
pension, lump sum, death, ill-health, disability or accident
benefit.
|
| 27.2 |
The
details of the Pension Scheme and its members set out in the Disclosure
Letter are true and accurate in all material
respects.
|
| 27.3 |
All
contributions, insurance premiums, Tax and expenses due by the Company
to
and in respect of the Pension Scheme have been duly
paid.
|
| Part 2. |
|
Tax
warranties
| 1. |
General
|
| 1.1 |
Provision
or reserve (as appropriate) has been made in the Accounts:
|
| (i) |
for
all Taxation liable to be assessed on the Company or for which the
Company
is accountable in respect of all income, profits or gains earned,
accrued
or received on or before the Accounts Date or deemed to have been
or
treated as earned accrued or received for taxation purposes on or
before
the Accounts Date, and in respect of any event occurring or deemed
to have
occurred on or before the Accounts Date, including distributions
made on
or before the Accounts Date or provided for in the Accounts;
and
|
(ii) for
all
deferred Taxation of the Company in accordance with generally accepted
accounting practice in the United Kingdom (or, where the Accounts are prepared
in accordance with international accounting standards as defined in section
50(2) of the Finance Xxx 0000, in accordance with those standards).
| 1.2 |
All
notices, returns (including any land transaction returns), reports,
accounts, computations, statements, assessments and registrations
and any
other necessary information submitted by the Company to any Taxation
Authority for the purposes of Taxation have been made on a proper
basis
were punctually submitted, were accurate and complete when supplied
and so
far as the Seller is aware, remain accurate and complete in all material
respects and none of the above is the subject of any dispute with
any
Taxation Authority.
|
Page
56
| 1.3 |
All
Taxation (whether of the United Kingdom or elsewhere) for which the
Company is or has been liable or is liable to account for has been
duly
paid (insofar as such Taxation ought to have been paid) within the
necessary time limits and
deadlines.
|
| 1.4 |
The
Company has not made any payments representing instalments of corporation
tax pursuant to the Corporation Tax (Instalment Payments) Regulations
1998
in respect of any current or preceding accounting periods and is
not under
any obligation to do so.
|
| 1.5 |
The
Company has not paid within the past three years ending on the date
of
this agreement or will become liable to pay any penalty, fine, surcharge
or interest charged by virtue of the provisions of the TMA 1970 or
any
other Taxation Statute.
|
| 1.6 |
The
Company has not within the past three years been subject to any
non-routine visit, audit, investigation, discovery or access order
by any
Taxation Authority and the Seller is not aware of any circumstances
existing which make it likely that a visit, audit, investigation,
discovery or access order will be made in the next 12
months.
|
| 1.7 |
The
amount of Taxation chargeable on the Company during any accounting
period
ending on or within the six years before Completion has not, to any
material extent, depended on any concession, agreements or other
formal or
informal arrangement with any Taxation Authority.
|
| 1.8 |
All
transactions in respect of which any clearance or consent was required
from any Tax Authority have been entered into by the Company after
such
consent or clearance has been properly obtained, any application
for such
clearance or consent has been made on the basis of full and accurate
disclosure of all relevant material facts and considerations, and
all such
transactions have been carried into effect only in accordance with
the
terms of the relevant clearance or consent.
|
| 1.9 |
The
Company is not nor will it become liable to make to any person (including
any Taxation Authority) any payment in respect of any liability to
Taxation of any other person where that other person fails to discharge
liability to Taxation to which he is or may be primarily liable and
there
is no liability to Taxation for which the Company is or may become
liable
to be assessed or asked to account for or have collected from it
where
such Taxation is the joint and several liability of the Company and
some
other person or where the Taxation in question relates to any income,
profits or gains earned, accrued or received by any other person
.
|
| 1.10 |
All
income tax deductible and payable under the PAYE system and/or any
other
Taxation Statute has so far as is required to be deducted been deducted
from all payments made or treated as made by a Company or any Subsidiary
and all amounts due to be paid to the relevant Taxation Authority
prior to
the date of this Agreement have been so paid including all Tax chargeable
on benefits provided for directors, employees or former employees
of the
Company or any Subsidiary or any persons required to be treated as
such.
|
Page
57
| 1.11 |
The
Company has, where legally obliged to do so, deducted or withheld
amounts
in respect of Taxation from all payments it has made. The Company
has, if
required by law, provided a certificate of deduction or withholding
to the
recipient of the payment and has properly and punctually accounted
to the
relevant taxation authority for the Taxation so deducted or
withheld.
|
| 1.12 |
Any
liability of the Company (actual or contingent) to gross up any payment
which it is or may become to required to make, as well as copies
of all
notifications from HM Revenue & Customs that any payment 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 Taxation, are
set out
in the Disclosure Letter.
|
| 1.13 |
The
Company has correctly applied the provisions of Section 349E ICTA
1988 to
any appropriate payments made under Section 349(1) ICTA
1988.
|
| 2. |
Capital
allowances
|
| 2.1 |
If
the entire pool of assets was disposed of by the Company for a
consideration equal to the tax written down value shown in or adopted
for
the purposes of the Accounts there would be no balancing charge under
CAA
2001 (or any legislation relating to capital
allowances).
|
| 2.2 |
No
event has occurred since the Accounts Date whereby any balancing
charge
may fall to be made against, or any disposal value may fall to be
brought
into account by the Company under the CAA 2001 (or any other legislation
relating to capital allowances).
|
| 2.3 |
The
Seller has maintained all the records necessary to quantify and claim
Capital Allowances in respect of the Plant (being plant and machinery
within the meaning of the CAA 2001).
|
| 2.4 |
The
Seller warrants that an election made pursuant to section 569 of
CAA 2001
or section 198 CAA 2001 in either case in the amount equal to the
tax
written down value of the Property or the assets covered by the election
as per the Accounts can be validly made within the requirements of
such
section and that it knows of no circumstance which would invalidate
the
effectiveness for tax purposes of any such
election.
|
| 2.5 |
In
relation to the sale of the Property from the Company to Seller,
the
Seller warrants that it shall, and it shall procure that the Company
shall, enter into such section 198 and 569 elections as are necessary
to
ensure that there is no balancing charge or accelerated allowance
arising
as a result of the sale. The Seller and the Buyer warrant that
neither of them will seek to, or will procure or permit the Company
to,
seek to withdraw from or otherwise cause such election to be invalidated,
provided always that the elections have been made in amounts equal
to the
tax written down values of the relevant
assets.
|
Page
58
| 3. |
Distributions
|
| 3.1 |
No
distribution or deemed distribution within the meaning of sections
209,
210 or 211 of ICTA 1988 has been made (or will be deemed to have
been
made) by the Company after 5 April 1965 except dividends shown in
their
audited accounts and the Company is not bound to make any such
distribution.
|
| 3.2 |
No
rents, interest, annual payments or other sums of an income nature
in
excess of £2,500 paid or payable by the Company or which the Company is
under an existing legal obligation to pay in the future are or may
be
wholly or partially disallowable as deductions, management expenses
or
charges in computing profits for the purposes of corporation tax.
|
| 3.3 |
The
Company has not within the period of seven years preceding Completion
been
engaged in, nor been a party to, any of the transactions set out
in
sections 213 to 218 (inclusive) of ICTA 1988, nor has it made or
received
a chargeable payment as defined in section 218(1) of ICTA
1988.
|
| 4. |
Loan
relationships
|
| 4.1 |
The
Company is not party to any loan relationship (as defined in section
81
Finance Act 1996):
|
| (i) |
which,
were it to be repaid in full in accordance with its terms, may give
rise
to any Taxation liability (other than in relation to
interest);or
|
| (ii) |
to
which any of paragraphs 10 (imported losses), 11 (transactions not
at
arm’s length), 11A (exchange gains and losses where loan not on arm’s
length terms), 13 (loan relationships for unallowable purposes) or
15
(repo transactions and stock-lending) of schedule 9 Finance Xxx 0000
(special computational provisions) apply or may
apply.
|
| 4.2 |
The
Company has no loan relationship in relation to which:
|
| (i) |
there
is or was a connection between the parties as defined by section
87
Finance Act 1996 (accounting method where parties have a connection),
or
one of the parties has or had a major interest (as defined in paragraph
20
of schedule 9 Finance Act 1996) in the other;
or
|
| (ii) |
there
has been, or has been deemed to be, a release or waiver of the amounts
payable under the relationship; or
|
| (iii) |
paragraph
5 of schedule 9 Finance Xxx 0000 (bad debts etc) applies or
applied.
|
Page
59
| 4.3 |
All
interests, discounts and premiums payable by the Company in respect
of its
loan relationships (within the meaning of section 81 of the Finance
Act
1996) are eligible to be brought into account by the Company as a
debit
for the purposes of Chapter II of Part IV of the Finance Xxx 0000
at the
time and to the extent that such debits are recognised in the statutory
accounts of the Company.
|
| 4.4 |
The
Company has not been released from any loan relationship or other
debt in
whole or in part in circumstances that give rise or could give rise
to a
liability to Taxation.
|
| 5. |
Close
companies
|
| 5.1 |
The
Company is not, nor has ever been, a close investment-holding company
as
defined in section 13A of ICTA
1988.
|
| 5.2 |
No
distribution within section 418 of ICTA 1988 has been made by the
Company
during the last six years ending at the Accounts Date, nor have such
distributions been made between the Accounts Date and
Completion.
|
| 5.3 |
Any
loans or advances made, or agreed to be made, by the Company within
sections 419 and 420 or 422 of ICTA 1988 and which remain outstanding
have
been disclosed in the Disclosure Letter and any tax liability of
the
Company or any participator within the meaning of section 416 of
ICTA 1988
in relation to such loans or advances have been paid. The Company
has not
released or written off, or agreed to release or write off, the whole
or
any part of any such loans or advances.
|
| 6. |
Group
relief
|
Except
as
provided in the Accounts, the Company is not or will not be obliged to make
or
be entitled to receive any payment for group relief as defined in section 402(6)
of ICTA 1988 in respect of any period ending on or before the Accounts Date,
or
any payment for the surrender of the benefit of an amount of advance corporation
tax or any repayment of such a payment.
| 7. |
Groups
of companies
|
| 7.1 |
The
Company has not entered or agreed to enter into an election pursuant
to
section 171A or section 179A of TCGA 1992 or paragraph 66 of Schedule
29
to the Finance Xxx 0000.
|
| 7.2 |
The
execution or completion of this agreement or any other Event (as
defined
in the Tax Covenant) since the Accounts Date will not result in any
chargeable asset being deemed to have been disposed of and re-acquired
by
the Company for Taxation purposes pursuant to section 179 of TCGA
1992,
paragraphs 58 or 60 of Schedule 29 to the Finance Xxx 0000.
|
Page
60
| 7.3 |
The
Company has never been party to any arrangements pursuant to section
36 of
the Finance Xxx 0000 (group payment
arrangements).
|
| 8. |
Company
residence and overseas
interests
|
| 8.1 |
The
Company has within the past seven years been resident in the United
Kingdom for corporation tax purposes and has not at any time in the past
seven years been treated for the purposes of any double taxation
arrangements having effect by virtue of section 249 of the Finance
Xxx
0000, section 788 of ICTA 1988 or for any other tax purpose as resident
in
any other jurisdiction.
|
| 8.2 |
The
Company has not without the prior written consent of HM Treasury
caused,
permitted or entered into any of the transactions specified in section
765
of ICTA 1988 (migration of
companies).
|
| 8.3 |
The
Company does not hold shares in a company which is not resident in
the
United Kingdom and which would be a close company if it were resident
in
the United Kingdom in circumstances such that a chargeable gain accruing
to the company not resident in the United Kingdom could be apportioned
to
the Company pursuant to section 13 of TCGA
1992.
|
| 8.4 |
The
Company is not holding or has not held in the past seven years any
interest in a controlled foreign company within section 747 of ICTA
1988,
and has no material interest in an offshore fund as defined in section
759
of ICTA 1988.
|
| 8.5 |
The
Company does not have a permanent establishment outside the
UK.
|
| 9. |
Anti-avoidance
|
| 9.1 |
The
Company has not at any time been a party to or otherwise involved
in a
transaction or series of transactions the main purpose or one of
the main
purposes was the avoidance of Tax and there was a risk that the Company
could be liable to taxation as a result of the principles in X.X
Xxxxxx Limited v IRC (54 TC 101)
or
Xxxxxxx
v Xxxxxx (55 TC 324),
as developed in subsequent cases.
|
| 9.2 |
Transactions
or arrangements made by the Company have been made on fully arms
length
terms and there are no circumstances in which section 770A of or
Schedule
28AA to ICTA 1988 or any other rule or provision could apply causing
any
Taxation Authority to make an adjustment to the terms on which such
transaction or arrangement is treated as being made for Taxation
purposes.
|
Page
61
| 10. |
VAT
|
| 10.1 |
The
Company is a member of a group for VAT purposes of which Contico
International LLC
is
the representative member (the Representative
Member)
with quarterly prescribed accounting periods, such registration not
being
pursuant to paragraph 2 of Schedule 1 to the VATA 1994 or subject
to any
conditions imposed by or agreed with HM Revenue &
Customs.
|
| 10.2 |
Neither
the Company nor the Representative Member nor any Group Member is
(nor are
there any circumstances in which they may become) under a duty to
make
monthly payments on account under the Value Added Tax (Payments on
Account) Order 1993.
|
| 10.3 |
The
Disclosure letter contains full details of the group registration
including details of each company which has or has been in the period
of
six years ending with the date of Completion, a member of that group.
(“Group Member”)
|
| 10.4 |
The
Company and the Representative Member and any Group Member have complied
with all statutory provisions, rules, regulations, orders and directions
in respect of VAT and promptly submitted accurate returns, and maintained
full and accurate VAT records, invoices and other requisite documents.
Neither the Company nor the Representative Member nor any Group Member
have been:
|
| (i) |
subject
to any interest, forfeiture, surcharge or penalty;
or
|
| (ii) |
given
any notice under sections 59, 59A or 64 of the VATA 1994;
or
|
| (iii) |
given
a warning within section 76(2) of the VATA 1994;
or
|
| (iv) |
required
to give security under paragraph 4 of Schedule 11 to the VATA
1994.
|
| 10.5 |
VAT
has been duly paid by the Company and each Group Member and Representative
Member or provision has been made in the Accounts for all amounts
of VAT
for which the Company is liable.
|
| 10.6 |
All
supplies made by the Company are taxable supplies and the Company
has not
been or will not be denied full credit for all input tax by reason
of the
operation of sections 25 and 26 of the VATA 1994 and regulations
made
thereunder or for any other reasons and no VAT paid or payable by
the
Company is not input tax as defined in section 24 of the VATA 1994
and
regulations made thereunder.
|
| 10.7 |
For
the purposes of paragraph 3(7) of Schedule 10 to the VATA 1994, the
Company or any relevant associates of such companies (within the
meaning
of paragraph 3(7) of Schedule 10 to the VATA 1994) has exercised
the
election to waive exemption from VAT (pursuant to paragraph 2 of
Schedule
10 to the VATA 1994) only in respect of those Properties listed (as
having
been the subject of such an election) in the Disclosure Letter
and:
|
Page
62
| (a) |
all
things necessary for the election to have effect have been done and
in
particular any notification and information required by paragraph
3(6) of
Schedule 10 to the VATA 1994 has been given and any permission required
by
paragraph 3(9) of Schedule 10 to the VATA 1994 has been properly
obtained;
and
|
| (b) |
no
election has or will be disapplied or rendered ineffective by virtue
of
the application of the provisions of paragraph 2(3AA) of Schedule
10 to
the VATA 1994.
|
| (c) |
the
election will not cease to have effect as a result of the Company
leaving
the VAT Group
|
| 10.8 |
The
Disclosure Letter contains details of all assets owned by the Company
which are capital items for the purpose of the Capital Goods Scheme
under
Part XV of the VAT Regulations 1995.
|
| 10.9 |
All
transactions between any Group Member and the Company have been made
in
accordance with a valid VAT Group Election and the Company will not
be
required to make good any default by any other Group Member in relation
to
VAT nor will it be liable for additional output tax or non recoverable
input tax as a result of a direction under VATA 1994 section 9A paragraph
3.
|
| 10.10 |
The
transfer of the assets and trade of Contico Europe Holdings Limited
to the
Company constituted a “transfer of a going concern” for the purposes of
section 49 of VATA 1994 and Article 5 of the Value Added Tax (Special
Provisions) Order 1995.
|
| 11. |
Stamp
duty and stamp duty land
tax
|
| 11.1 |
Any
document which is in the possession or control of the Company and
that may
be necessary in proving the title of the Company to any asset which
is
owned by the Company at Completion is duly stamped for stamp duty
purposes.
|
| 11.2 |
Neither
entering into this agreement nor Completion will result in the withdrawal
of any stamp duty or stamp duty land tax relief granted on or before
Completion which will affect the
Company.
|
| 11.3 |
The
Company has complied in all respects with the provisions of Part
4 Finance
Xxx 0000 (stamp duty land tax), including its associated schedules,
and
with any regulations made under the same and the Company is not and
will
not become liable to pay stamp duty land tax by reference to any
land
transaction, as defined in section 43 Finance Xxx 0000, to which
the
Company has before Completion been, or has agreed by legally binding
contract to be, a party. HM Revenue & Customs has not enquired, or
given notice of its intention to enquire, into a land transaction
return
delivered by or on behalf of the Company and the Company is not aware
that
HM Revenue & Customs has reasonable grounds for commencing such an
enquiry.
|
Page
63
11.4 The
Disclosure Letter sets out full and accurate details of any chargeable interest
(as defined under section 48, Finance Act 2003) acquired or held by the Company
before Completion in respect of which the Seller is aware or ought reasonably
to
be aware that an additional land transaction return will be required to be
filed
with a Taxation Authority and/or a payment of stamp duty land tax made on or
after Completion.
| 12. |
INHERITANCE
TAX
|
| 12.1 |
The
Company has never made any transfer of value within the meaning of
the
Inheritance Tax Xxx 0000.
|
| 12.2 |
Neither
the assets owned by, nor the shares of, the Company are subject to
an
outstanding HM Revenue & Customs charge as defined in section 237
Inheritance Tax Act 1984 (imposition of
charge).
|
|
12.3
|
No
circumstances exist, or but for section 204(6) Inheritance Tax Act
1984
(contingent liability of transferee for unpaid capital transfer tax
or
inheritance tax) would exist, such that a power of sale could be
exercised
in relation to any assets or shares of the Company pursuant to section
212
Inheritance Tax Act (powers to raise
tax).
|
| 13. |
EMPLOYEE
TAXATION
|
| 13.1 |
The
Seller warrants that it will, or will procure that the Company is
fully
informed of any payments made to employees or former employees of
the
Company to enable the Company to comply with its obligations to report
and
account for employee taxation including payments made by any member
of the
Seller's Group of companies. The Seller shall notify the Company
within 7 days of making such payments or becoming aware of any third
party
making such a payment.
|
Page
64
| Part 3. |
Buyer’s
Warranties
|
| 1. |
Power
to Buy the Company
|
| 1.1 |
The
Buyer has taken all necessary action and has all requisite power
and
authority to enter into and perform this agreement in accordance
with its
terms and the other documents referred to in
it.
|
| 1.2 |
This
agreement and the other documents referred to in it constitute (or
shall
constitute when executed) valid, legal and binding obligations on
the
Buyer in the terms of the agreement and such other
documents.
|
| 1.3 |
Compliance
with the terms of this agreement and the documents referred to in
it shall
not breach or constitute a default under any of the
following:
|
| (a) |
any
agreement or instrument to which the Buyer is a party or by which
it is
bound; or
|
| (b) |
any
order, judgment, decree or other restriction applicable to the
Buyer.
|
Page
65
| Schedule 4 |
Tax
Covenant
|
1. INTENTIONALLY
BLANK
| 2. |
Interpretation
|
| 2.1 |
The
definitions and rules of interpretation in this paragraph apply in
this
Tax Covenant:
|
Buyer´s
Relief:
means:
| (a) |
any
Accounts Relief (as defined in paragraph 2.1(a)) of the definition
of
Liability for Taxation) or Repayment Relief (as defined in paragraph
2.1(b) of the definition of Liability for
Taxation);
|
| (b) |
any
Post-Completion Relief of the Company (as defined in paragraph 2.1(c)
of
the definition of Liability for Taxation);
and
|
| (c) |
any
Relief, whenever arising, of the Buyer or any member of the Buyer´s Tax
Group other than the Company.
|
Buyer´s
Tax Group:
the
Buyer and any other company or companies which either are or become after
Completion treated as members of the same group as, or otherwise connected
or
associated in any way with, the Buyer for any Tax purpose.
Degrouping
Charge:
any
Liability for Taxation of the Company as a result of the Company ceasing to
be,
or ceasing to be treated as, a member of a group of companies for Tax purposes
as a result of Completion or of entering into this agreement, or of the
satisfaction of any condition in this agreement.
Event:
includes
(without limitation), the expiry of a period of time, the Company becoming
or
ceasing to be associated with any other person for any Tax purpose or ceasing
to
be or becoming resident in any country for any Tax purpose, the death or the
winding up or dissolution of any person, and any transaction (including the
execution and completion of all provisions of this agreement), event, act or
omission whatsoever, and any reference to an Event occurring on or before a
particular date shall include Events which for Tax purposes are deemed to have,
or are treated or regarded as having, occurred on or before that
date.
Group
Relief:
any or
all of the following:
| (a) |
relief
surrendered or claimed pursuant to Chapter IV Part X ICTA
1988;
|
| (b) |
advance
corporation tax surrendered or claimed pursuant to section 240 of
ICTA
1988 (set off of company´s surplus advance corporation tax against
subsidiary´s liability to corporation
tax);
|
| (c) |
a
Tax refund relating to an accounting period as defined in section
102(3)
of the Finance Xxx 0000 (surrender of company Tax refund etc within
group)
in respect of which a notice has been given pursuant to section 102(2)
of
that statute; and
|
| (d) |
eligible
unrelieved foreign Tax surrendered or claimed pursuant to The Double
Taxation Relief (Surrender of Relievable Tax Within a Group) Regulations
2001.
|
Page
66
Liability
for Taxation:
any
liability of the Company to make a payment of or in respect of Tax whether
or
not the same is primarily payable by the Company and whether or not the Company
has or may have any right of reimbursement against any other person or persons
and shall also include:
| (a) |
the
Loss of any Relief (Accounts
Relief)
where such Relief has been taken into account in computing and so
reducing
or eliminating any provision for Tax which appears in the Working
Capital
Statement (or which but for such Relief would have appeared in the
Working
Capital Statement) or where such Relief was treated as an asset of
the
Company in the Working Capital Statement (Loss
of an Accounts Relief),
in which case the amount of the Liability for Taxation will be the
amount
of Tax which would (on the basis of Tax rates current at the date
of
Completion) have been saved but for such Loss, assuming for this
purpose
that the Company had sufficient profits or was otherwise in a position
to
use the Relief;
|
| (b) |
the
Loss of any right to repayment of Tax (including any repayment supplement)
(Repayment
Relief)
which was treated as an asset in the Working Capital Statement
(Loss
of a Repayment Relief),
in which case the amount of the Liability for Taxation will be the
amount
of the loss of the right to repayment and any related repayment
supplement;
|
| (c) |
the
set off or use against income, profits or gains earned, accrued or
received on or before Completion or against any Tax chargeable in
respect
of an Event occurring on or before Completion of any Relief (Post-Completion
Relief)
or right to repayment of Tax (including any repayment supplement)
which is
not available before Completion but arises after Completion in
circumstances where, but for such set off or use, the Company would
have
had a liability to make a payment of or in respect of Tax for which
the
Buyer would have been able to make a claim against the Seller under
this
Tax Covenant (Loss
of a Post-Completion Relief),
in which case, the amount of the Liability for Taxation shall be
the
amount of Tax saved by the Company as a result of such set off or
use;
|
| (d) |
any
liability to repay in whole or in part any payment received by the
Company
or a liability of the Company to make any payment (other than to
the
Company) for the surrender of Group Relief pursuant to any arrangement
or
agreement entered into on or before Completion (save to the extent
that
such repayment or payment is reflected in the Working Capital Statement
or
to the extent that the Group Relief which was the subject of the
payment
is returned to the Company), in which case the amount of the Liability
for
Taxation shall be the amount of such liability (disregarding any
set
off).
|
| (e) |
the
loss in whole or in part of the right of the Company to receive any
payment (other than from the Company) for Group Relief pursuant to
any
arrangement or agreement entered into on or before Completion where
such
payment was taken into account in the Working Capital Statement,
in which
case the amount of the Liability for Taxation shall be the amount
taken
into account in the Working Capital
Statement.
|
Loss:
any
reduction, modification, loss, counteraction, nullification, utilisation,
disallowance or claw-back for whatever reason.
Page
67
Overprovision:
the
amount by which any provision in the Working Capital Statement relating to
Tax
(other than a provision for deferred Tax) is overstated (except to the extent
that such overstatement results from the utilisation of a Post-Completion
Relief), applying the accounting policies, principles and practices adopted
in
relation to the preparation of the Working Capital Statement (and ignoring
the
effect of any change in law made after Completion).
Relief:
includes
any loss, relief, allowance, credit, exemption or set off in respect of Tax
or
any deduction in computing income, profits or gains for the purposes of Tax
and
any right to a repayment of Tax.
Retained
Group:
the
Seller and any other company or companies (other than the Company) which either
are or become after Completion, or have within the seven years ending at
Completion been, treated as members of the same group, or otherwise connected
or
associated in any way with the Seller for Tax purposes.
Saving:
the
reduction or elimination of any liability of the Company to make an actual
payment of corporation tax in respect of which the Seller would not have been
liable under paragraph 3, by the use of any Relief arising wholly as a result
of
a Liability for Taxation in respect of which the Seller has made a payment
under
paragraph 3 of this Tax Covenant.
Tax:
all
forms of taxation and statutory, governmental, state, federal, provincial,
local, government or municipal charges, duties, imposts, contributions, levies,
withholdings or liabilities in the nature of taxation wherever chargeable and
whether of the UK or any other jurisdiction; and any penalty, fine, surcharge,
interest, charges or costs imposed by a Taxation Authority, and Taxation
shall
have the same meaning.
Tax
Claim:
any
assessment (including self-assessment), notice, demand, letter or other document
issued or action taken by or on behalf of any Taxation Authority from which
it
appears that the Company or the Buyer is or may be subject to a Liability for
Taxation or other liability in respect of which the Seller is or may be liable
under this Tax Covenant or that the Company is denied or is sought to be denied
a Relief.
Taxation
Authority:
HM
Revenue & Customs, the Inland Revenue, HM Customs & Excise, the
Department of Social Security and any other governmental or other authority
whatsoever competent to impose any Tax whether in the United Kingdom or
elsewhere.
Tax
Refund:
means a
right of repayment of Tax or an actual repayment of Tax which the Company
becomes entitled to or receives in respect of a period (or part period) prior
to
Completion or arising as a result of an Event occurring on or before Completion
other than where such Tax Refund is a Repayment Relief;
Taxation
Statute:
any
directive, statute, enactment, law or regulation wheresoever enacted or issued,
coming into force or entered into providing for or imposing any Tax and shall
include orders, regulations, instruments, bye-laws or other subordinate
legislation made under the relevant statute or statutory provision and any
directive, statute, enactment, law, order, regulation or provision which amends,
extends, consolidates or replaces the same or which has been amended, extended,
consolidated or replaced by the same.
| 2.2 |
References
to gross
receipts,
income,
profits
or
gains
earned, accrued or received shall include any gross receipts, income,
profits or gains deemed pursuant to the relevant Taxation Statute
to have
been or treated or regarded as earned, accrued or
received.
|
Page
68
| 2.3 |
A
reference to an Event
occurring on or before Completion includes
a series or combination of Events all of which were Events occurring
on or
before Completion or the first of which was an Event occurring on
or
before Completion which was not in the ordinary course of business
of the
Company and any of which occurring after Completion were in the ordinary
course of business of the Company and, for the avoidance of doubt, this
clause shall not apply to any series of Events which result in any
Tax
Liability which arises on income , profits or gains earned, accrued
or
received after Completion due to in whole or part an Event occurring
on or
before Completion save to the extent that such tax Liability is on
deemed
(as opposed to actual) income, profits or gains earned accrued or
received
on or before Completion.
|
| 2.4 |
Any
reference to something occurring in the ordinary course of business
shall,
without prejudice to the generality thereof, be deemed not to
include:
|
| (a) |
anything
which involves, or leads directly or indirectly to, any liability
of the
Company to Tax that is the primary liability of, or properly attributable
to, or due from another person (other than a member of the Buyer´s Tax
Group) or is the liability of the Company only because some other
person,
other than a member of the Buyer´s Tax Group, has failed to pay it or is
the liability of the Company because it has elected to be regarded
as
taxable or liable or to be regarded as having made a disposal;
or
|
| (b) |
anything
which relates to or involves the acquisition or disposal of an asset
or
the supply of services (including the lending of money, or the hiring
or
licensing of tangible or intangible property) in a transaction which
is
not entered into on arm´s length terms;
or
|
| (c) |
anything
which relates to or involves the making of a distribution for Tax
purposes, the creation, cancellation or re-organisation of share
or loan
capital, the creation, cancellation or repayment of any intra-group
debt
or the Company becoming or ceasing to be or being treated as ceasing
to be
a member of a group of companies or becoming or ceasing to be associated
or connected with any other company for any Tax purposes;
or
|
| (d) |
anything
which relates to a transaction or arrangement which includes, or
a series
of transactions or arrangements which includes, any step or steps
having
no commercial or business purpose apart from the reduction, avoidance
or
deferral of a Liability for Taxation;
or
|
| (e) |
anything
which gives rise to a Liability for Taxation on deemed (as opposed
to
actual) profits or to the extent that it gives rise to a Liability
for
Taxation on an amount of profits greater than the difference between
the
sale proceeds of an asset and the amount attributable to that asset
in the
Accounts or, in the case of an asset acquired since the Accounts
Date, the
cost of that asset;
|
| (f) |
anything
which involves, or leads directly or indirectly to, a change of residence
of the Company for Tax purposes; or
|
| (g) |
any
employment related taxes arising from bonuses paid to employees or
former
employees of the Company as a result of commitments provided by the
Company or any member of the Seller's Group prior to Completion in
respect
of duties performed prior to
Completion.
|
Page
69
| 2.5 |
Unless
the contrary intention appears, words and expressions defined in
this
agreement have the same meaning in this Tax Covenant and any provisions
in
this agreement concerning matters of construction or interpretation
also
apply in this Tax Covenant.
|
| 3. |
Covenant
|
The
Seller covenants with the Buyer that, subject to the provisions of this Tax
Covenant, the Seller shall pay to the Buyer, an amount equal to any:
| (a) |
Liability
for Taxation resulting from or by reference to any Event occurring
on or
before Completion or in respect of any gross receipts, income, profits
or
gains earned, accrued or received by the Company on or before
Completion;
|
| (b) |
Liability
for Taxation which arises solely as a result of the relationship
for Tax
purposes of the Company with any person other than a person which
is or
has been a member of the Buyer’s Tax Group whensoever
arising;
|
| (c) |
Liability
for Taxation arising in connection with or as a result of the grant
of
share options to and/or the exercise thereof to by employees or directors
of the Company in either case on or before Completion and save to
the
extent that such Liability for Taxation was withheld or deducted
from
payments made to that individual (including, for the avoidance of
doubt,
payments of the Purchase Price in respect of Sale Shares owned by
the
relevant individual).
|
| (d) |
Liability
for Taxation arising in connection with or as a result of the actions
or
omissions of any Company which was within the same VAT Group as the
Company prior to Completion.
|
| (e) |
Liability
for Taxation arising in connection with, or as a result of, transactions
which the Company entered into on or before Completion with Continental
Commercial Products LLC.
|
| (f) |
all
reasonable costs and expenses reasonably and properly incurred by
the
Buyer and/or the Company on an indemnity basis in connection with
a
successful claim in respect of such Liability to
Taxation.
|
| 4. |
Payment
date and interest
|
| 4.1 |
Where
the Seller is liable to make any payment under paragraph 3 (including
any
payment pursuant to paragraph 3(f)), the due date for the making
of that
payment (Due Date) shall be the later of the date falling seven days
after
the Buyer has served a written notice on the Seller demanding that
payment
and in a case:
|
| (a) |
that
involves an actual payment of Tax (including any payment pursuant
to
paragraph 3(f)) by the Company, the date which is 5 days prior to
that
date on which the Tax in question would have had to have been paid
to the
relevant Taxation Authority in order to prevent a liability to interest
or
a fine, surcharge or penalty from arising in respect of the Liability
for
Taxation in question; or
|
| (b) |
that
falls within paragraph 2.1(a) of the definition of Liability to Taxation,
the last date upon which the Tax is or would have been required to
be paid
to the relevant Taxation Authority in respect of the period in which
the
Company is deprived of the benefit of using the Relief; or
|
Page
70
| (c) |
that
falls within paragraph 2.1(b) of the definition of Liability to Taxation,
the date upon which the repayment was due from the relevant Taxation
Authority; or
|
| (d) |
that
falls within paragraph 2.1(c) of the definition of Liability to Taxation,
the date upon which the Tax saved by the Company is or would have
been
required to be paid to the relevant Taxation Authority;
or
|
| (e) |
that
falls within paragraph 2.1(e) of the definition of Liability for
Taxation
(loss of payment rights relating to the surrender of group relief),
not
later than the day on which the right to a payment or other consideration
is lost.
|
| 4.2 |
If
any sums required to be paid by the Seller under this Tax Covenant
are not
paid on the Due Date, then, except to the extent that the Seller’s
liability under paragraph 3 compensates the Buyer for the late payment
by
virtue of it extending to interest and penalties, such sums shall
bear
interest (which shall accrue from day to day after as well as before
any
judgement for the same) at the rate of 2% per annum over the base
rate
from time to time of Barclays Bank plc or (in the absence thereof)
at such
similar rate as the Buyer shall select from the day following the
Due Date
up to and including the day of actual payment of such sums, such
interest
to be compounded quarterly.
|
| 5. |
Exclusions
|
| 5.1 |
The
covenant contained in paragraph 3 above shall not cover any Liability
for
Taxation (and the Seller shall not be liable for any breach of the
Tax
Warranties) to the extent that:
|
| (a) |
a
provision or reserve in respect thereof is made in the Working Capital
Statement; or
|
| (b) |
it
arises or is increased as a result of any change in the law of Tax
announced and coming into force after Completion (whether relating
to
rates of Tax or otherwise) or the withdrawal or change of any
extra-statutory concession, published practice or written interpretation
previously made by a Taxation Authority (whether or not the change
purports to be effective retrospectively in whole or in part); or
|
| (c) |
it
would not have arisen but for a change after Completion in the accounting
reference date or the accounting bases upon which the Company values
its
assets (other than a change made in order to correct pre-Completion
failures to comply with UK GAAP applicable prior to Completion);
or
|
| (d) |
the
Buyer is compensated for any such matter under any other provision
of this
agreement; or
|
| (e) |
it
would not have arisen but for a voluntary act, transaction or omission
carried out by the Buyer or the Company (including any act, transaction
or
omission by any director, officer, employee, agent or adviser of
the
Company) after Completion being an act
which:
|
| (i) |
is
not in the ordinary course of business;
or
|
| (ii) |
the
Company was not legally committed to do under a commitment that existed
on
or before Completion; or
|
Page
71
| (iii) |
the
Buyer was aware, or ought reasonably to have been aware, would give
rise
to the Liability for Taxation in question;
or
|
| (f) |
the
Liability for Taxation is a Degrouping Charge which, whether by election
or otherwise, is treated as accruing not to the Company but to the
Seller
or any member of the Retained Group;
or
|
| (g) |
the
Liability to Taxation would not have arisen but for a major change
in the
nature or conduct of the trade (within the meaning of section 768A
of ICTA
1988) of, the Company on or after Completion;
or
|
| (h) |
the
Liability to Taxation is in respect of interest and/or penalties
and
arises or is increased in consequence of any failure by the Buyer
to
comply with, or a failure to procure the compliance of the Company
with,
any of their respective obligations under this Agreement;
or
|
| (i) |
any
Relief (other than a Buyer's Relief) is available, or is for no
consideration made available, to the Company (and in circumstances
where
the Buyer or Company is aware that such a Relief is available) to
set
against or otherwise mitigate the Liability to Taxation, and so
that:
|
(a)
for
this purpose, any Relief arising in respect of an accounting period falling
partly before and partly after Completion shall be apportioned on a time basis,
unless some other basis is more reasonable; and
(b)
any
Relief that is so available in relation to more than one Liability to Taxation
to which this Schedule applies shall be deemed, so far as possible, to be used
in such a way as to reduce to the maximum extent possible the Seller's total
liability under this Schedule;
(j)
the
Liability to Taxation would not have arisen but for:
(a)
the
making of a claim, election, surrender or disclaimer, the giving of a notice
or
consent, or the doing of any other thing under the provisions of any enactment
or regulation relating to Tax, in each case after Completion by the Purchaser,
or the Company or the relevant Subsidiary other than at the Seller’s direction
in accordance with paragraph 9 or 10 ; or
(b)
the
failure by the Buyer to comply with, or a failure by the Buyer to procure the
compliance of the Company with, their respective obligations under paragraphs
9
and/or 10;
(k)
such
Liability to Taxation is interest arising under the Corporation Tax (Instalment
Payments) Regulations 1998 as a result of the instalment payments made before
Completion being insufficient as a result of Income, Profits or Gains earned,
accrued or received after Completion or an Event arising after Completion;
or
(l)
such
Liability for Taxation arises as a result of a withdrawal by the Buyer or the
Company post Completion of the election under s 569 CAA 2001 made by the Company
and the Seller in relation to the Property.
| 6. |
Savings,
Overprovisions, Tax
Refunds
|
| 6.1 |
If
the Buyer or the Company becomes aware that an Overprovision, Saving
or
Tax Refund has arisen, the Buyer shall promptly give details of such
Overprovision, Saving or Tax Refund by written notice to the Seller.
|
Page
72
| 6.2 |
The
Seller may instruct the auditors for the time being of the Company
to
certify (at the request and expense of the Seller) whether (i) any
provision for Tax in the Working Capital Statement has proved to
be an
Overprovision, and, if so, the extent of such Overprovision, or (ii)
a
Saving has arisen and, if so, the extent of such Saving, or (iii)
a Tax
Refund has arisen and, if so, the extent of such Tax
Refund.
|
| 6.3 |
If
the auditors certify that an Overprovision, Saving or Tax Refund
has
arisen, then:
|
| 6.4 |
After
the Company´s auditors have produced any certificate under this paragraph
6, the Seller or the Buyer may, at any time before the seventh anniversary
of Completion, request the auditors for the time being of the Company
(as
the case may be) to review (at the expense of the party requesting
the
review) that certificate in the light of all relevant circumstances,
including any facts of which they were not or it was not aware, and
which
were not taken into account, at the time when such certificate was
produced and to certify whether, in their opinion, the certificate
remains
correct or whether, in light of those circumstances, it should be
amended.
|
| 6.5 |
If
the auditors make an amendment to the earlier certificate and the
amount
of the Overprovision, Saving or Tax Refund is revised, that revised
amount
shall be substituted for the previous amount and any adjusting payment
that is required shall be made by or to the Seller (as the case may
be) as
soon as reasonably practicable.
|
| 7. |
Recovery
from third parties
|
| 7.1 |
Where
the Seller has paid an amount in full discharge of a liability under
paragraph 3 in respect of any Liability for Taxation and the Buyer
or the
Company is or becomes entitled to recover from some other person
not being
the Buyer or the Company or any other company within the Buyer’s Tax
Group, any amount in respect of such Liability for Taxation to which
paragraph 3 applies, the Buyer shall or shall procure that the Company
shall:
|
| (a) |
notify
the Seller of its entitlement as soon as reasonably practicable;
and
|
| (b) |
if
required by the Seller and, subject to the Buyer, the Company being
reasonably indemnified by the Seller to the satisfaction of the Buyer
against any Tax that may be suffered on receipt of that amount and
any
costs and expenses incurred in recovering that amount, take or procure
that the Company takes all reasonable steps to enforce that recovery
against the person in question (keeping the Seller fully informed
of the
progress of any action taken).
|
Page
73
| 7.2 |
If
the Buyer or the Company recovers any amount referred to in paragraph
7.1,
the Buyer shall account to the Seller for the lesser of:
|
| (a) |
any
amount recovered (including any related interest or related repayment
supplement) less any Tax suffered in respect of that amount and any
costs
and expenses incurred in recovering that amount (save to the extent
that
amount has already been made good by the Seller under paragraph 7.1
above); and
|
| (b) |
the
amount paid by the Seller under paragraph 3 in respect of the Liability
for Taxation in question.
|
| 7.3 |
If
any amount recovered pursuant to paragraph 7.1 (the Recovered
Amount)
exceeds any payment made to the Seller pursuant to paragraph 7.2
(the
Payment
Amount)
then an amount equal to the difference between the Payment Amount
and the
Recovered Amount shall be set off against the liability of the Seller
in
respect of future claims under the Tax Covenant.
|
| 8. |
Surrender
of group relief
|
| 8.1 |
Subject
to and in accordance with the provisions of this paragraph 8, if
any
liability of the Seller under this Tax Covenant or in respect of
any claim
under the Tax Warranties can be reduced or eliminated by the surrender
of
Group Relief to the Company by the Seller or any company other than
a
member of the Buyer’s Tax Group, the Seller may make or procure the making
of such surrender and the Company shall co-operate with the Seller
in
relation to such surrender and make all necessary returns, claims,
consents and notifications required to be made in respect of such
surrender.
|
| 8.2 |
The
Company shall not be liable to give any consideration in respect
of any
surrender of Group Relief pursuant to paragraph
8.1.
|
| 9. |
Corporation
tax returns
|
| 9.1 |
The
Seller or its duly authorised agent shall at the cost of the Company
prepare the corporation tax returns and computations of the Company
for
all accounting periods ended on or prior to the Accounts Date, to
the
extent that the same have not been prepared before Completion, and
submit
them to the Buyer.
|
| 9.2 |
The
Buyer shall procure that the returns and computations referred to
in
paragraph 9.1 shall be authorised, signed and submitted to the relevant
Taxation Authority without amendment or with such amendments as requested
by the Buyer but subject to the prior approval of the Seller (such
approval not to be unreasonably withheld) and shall give the Seller
or its
agent all such assistance as may reasonably be required (at the Seller´s
cost and expense) to agree those returns and computations with the
relevant Taxation Authority provided that the Buyer shall not be
obliged
to take any such action as is mentioned in this paragraph 9.2 in
relation
to any return that is not full, true and accurate in all material
respects.
|
Page
74
| 9.3 |
The
Seller or its duly authorised agent shall at the Seller´s cost and expense
prepare all documentation and shall have conduct of all matters (including
correspondence) relating to the corporation tax returns and computations
of the Company for all accounting periods ended on or prior to the
Accounts Date provided that the Seller shall not without the prior
written
consent of the Buyer (not to be unreasonably withheld or delayed)
transmit
any communication (written or otherwise) to the relevant Taxation
Authority or agree any matter with the relevant Taxation Authority.
|
| 9.4 |
The
Buyer shall procure that the Company, at the Seller´s cost and expense,
afford such access to their books, accounts and records as is necessary
and reasonable to enable the Seller or its duly authorised agent
to
prepare the corporation tax returns and computations of the Company
for
all accounting periods ended on or before the Accounts Date and conduct
matters relating to them in accordance with this paragraph 9.
|
| 9.5 |
The
Seller shall take all reasonable steps to ensure that the corporation
tax
returns and computations of the Company for all accounting periods
ended
on or before the Accounts Date are prepared and agreed with the relevant
Taxation Authority as soon as
possible.
|
| 9.6 |
The
Buyer shall procure that the
Company:
|
(a)
makes
such claims (including, but not limited to, claiming or disclaiming capital
allowances, depreciation allowances and claiming roll over
reliefs);
(b)
executes such documents (including but not limited to returns of profits and
losses and amended returns); and
(c)
does
such other things in relation to the relevant accounting periods as are
considered necessary by the Seller;
in
each
case, as is required to give effect to the returns, computations and other
documentation referred to in paragraphs 9.2 and 9.3.
| 9.7 |
The
Buyer shall further procure that the Company shall not (unless it
has been
approved by the Seller such approval not to be unreasonably withheld
or
delayed or otherwise pursuant to this paragraph
9):
|
(a)
amend, withdraw or disclaim any election or claim previously made;
nor
(b)
disclaim any allowance or Relief arising on or before Completion;
nor
(c)
carry
back any Post-Completion Relief in circumstances where such carry back will
reduce the Company’s ability to make any surrenders, claims or
elections.
| 9.8 |
In
relation to the accounting period commencing prior to but ending
after
Completion, the Buyer shall have conduct of all corporation tax matters
of
the Company and its Subsidiaries provided that the Buyer shall not
(and
shall procure that its agents shall not) transmit any written
communication or agree any matter with a Tax Authority without the
prior
written consent of the Sellers (such consent not to be unreasonably
withheld or delayed).
|
Page
75
| 9.9 |
The
Seller shall ensure that if the Company is a party to a group payment
arrangement with HM Revenue & Customs under section 36 of the Finance
Xxx 0000, it shall be immediately removed from the arrangement as
provided
for in the arrangement.
|
| 9.10 |
The
Seller will ensure that the Nominated Company under the group payment
arrangement to which the Company is a party exercises its rights
to
apportion and re-apportion payments under the arrangement so far
as
possible to ensure that Liability for Taxation of the Company for
which
(disregarding any de minimis provisions in this agreement) recovery
would
otherwise be available under this Tax Covenant are fully and expeditiously
discharged.
|
| 9.11 |
The
Seller will ensure (to the extent permitted by law and for no
consideration) that any Degrouping Charge for which recovery would
otherwise be available under this Tax Covenant or under the Tax Warranties
is treated as accruing not to the Company but to the Seller or a
member of
the Retained Group and the Buyer will procure that the Company executes
all claims, elections, consents or other documents relevant for that
purpose.
|
9.12
For
the
avoidance of doubt:
(a)
where
any matter relating to Tax gives rise to a Tax Claim, the provisions of
paragraph 10 shall take precedence over the provisions of this paragraph 9;
and
(b)
the
provisions of this paragraph 9 shall not prejudice the rights of the Buyer
to
make a Tax Claim under this Tax Covenant in respect of any Liability for
Taxation.
|
9.13
|
The
Seller shall, or shall procure, to the extent that it is able to
do so,
that all the records not in the possession or control of the Company
needed by the Buyer to identify, quantify and submit a claim for
capital
allowances shall be preserved and, to the extent that such records
are not
delivered to the Buyer on Completion, the Seller shall make available
or
shall procure that the records shall be made available to the Buyer.
The
Seller agrees to provide such information and other assistance as
the
Buyer may reasonable request to enable it to claim capital allowances
in
respect of the plant and the Seller will keep the Buyer informed
of any
information and correspondence which it receives from HM Revenue
&
Customs which might effect the capital allowances on the plant or
indicate
that such capital allowances may be
challenged.
|
|
9.14
|
For
the avoidance of doubt, the Seller shall (to the extent permitted
by law)
be free to make claims and obtain consents for the surrender of Group
Relief between the Company and the Retained Group for the period
between
the Accounts Date and 1 April 2006 on a just and reasonable apportionment
basis (as well as periods ending prior to the Accounts Date). If
Group
Relief is surrendered under this paragraph 9 to a member of the Retained
Group, no member of the Retained Group shall be liable to pay any
consideration to the Company or the Buyer in respect of such
surrender.
|
Page
76
| 10. |
Conduct
of tax claims
|
| 10.1 |
If
the Buyer or the Company becomes aware of a Tax Claim, the Buyer
shall
give or procure that notice in writing is given to the Seller as
soon as
is reasonably practicable (and, in any event, within 10 Business
Days
where there is a time limit for appeal), provided that if the Seller
receives any Tax Claim for whatever reason, it shall notify the Buyer
in
writing as soon as is reasonably practicable and the Buyer shall
be deemed
on receipt of such claim by the Seller to have given the Seller notice
of
such Tax Claim in accordance with the provisions of this paragraph
10
provided always that the giving of such notice shall not be a condition
precedent to the Seller´s liability under this Tax
Covenant.
|
| 10.2 |
Provided
that the Seller indemnifies the Buyer and the Company to the Buyer´s
reasonable satisfaction against all liabilities, costs, damages or
expenses which may be reasonably incurred thereby including any additional
Liability for Taxation, the Buyer shall take and shall procure that
the
Company shall take such action as the Seller may reasonably request
by
notice in writing given to the Buyer or the Company to avoid, dispute,
defend, resist, appeal or compromise any Tax Claim (such a Tax Claim
where
action is so requested being hereinafter referred to as a Dispute),
provided that neither the Buyer nor the Company shall be obliged
to appeal
or procure an appeal against any assessment to Tax raised on any
of them
if, the Seller having been given written notice of the receipt of
such
assessment, the Buyer or the Company has not within 10 Business Days
or,
where there is a time limit for appeal, 5 Business Days of the date
of the
notice, received instructions in writing from the Seller to do
so.
|
| 10.3 |
If:
|
(a)
the
Seller does not request the Buyer or the Company to take any action under
paragraph 10.2 or fails to indemnify the Buyer or the Company to the Buyer´s
reasonable satisfaction within a period of time (commencing with the date of
the
notice given to the Seller) that is reasonable having regard to the nature
of
the Tax Claim and the existence of any time limit in relation to avoiding,
disputing, defending, resisting, appealing or compromising such Tax Claim;
or
(b)
the
Seller (or the Company before Completion) has been involved in a case involving
fraudulent conduct or wilful default in respect of the Liability for Taxation
which is the subject matter of the Dispute; or
(c) the
Dispute involves an appeal against a determination by the General or Special
Commissioners of the VAT and Duties Tribunal, unless the Seller has obtained
the
opinion of Tax counsel of at least 5 years´ standing that there is a reasonable
prospect that the appeal will succeed,
the
Buyer
or the Company shall have the conduct of the Dispute absolutely (without
prejudice to its rights under this Tax Covenant) and shall be free to pay or
settle the Tax Claim on such terms as the Buyer or the Company may in its
absolute discretion consider fit.
| 10.4 |
Subject
to paragraph 10.3, the Seller may resist any Dispute for and on behalf
of
the Company or the relevant Subsidiary and in its name provided
that:
|
Page
77
(a) the
Buyer
or the Company shall promptly be kept fully informed of all matters pertaining
to a Dispute and shall be entitled to see and keep copies of all correspondence
and notes or other written records of telephone conversations or meetings and,
in the event that there is no written record, shall be given an immediate report
of all telephone conversations with any Taxation Authority to the extent that
it
relates to a Dispute;
(b) the
appointment of solicitors or other professional advisers shall be subject to
the
approval of the Buyer, such approval not to be unreasonably withheld or delayed;
and
(c) all
material written communications pertaining to the Dispute which are to be
transmitted to the relevant Taxation Authority shall first be submitted to
the
Buyer for approval and shall only be finally transmitted if such approval is
given, which approval is not to be unreasonably withheld or delayed;
and
(d) the
Seller shall make no settlement or compromise of the Dispute or agree any matter
in the conduct of the Dispute which is likely to affect the amount thereof
or
the future liability to Tax of the Buyer or the Company without the prior
approval of the Buyer (not to be unreasonably withheld or delayed).
(e) the
Buyer
shall not be required and the Seller shall not be permitted to make or procure
the making of a formal appeal to any tribunal, court, appellate body or judicial
authority unless the Seller, at its own expense and after disclosure of all
relevant information and documents, obtains and delivers to the Buyer an opinion
from appropriate counsel who has been approved for the purpose by the Buyer
(such approval not to be unreasonably withheld or delayed) and who has
specialised in relevant Tax matters for a minimum of five years that the appeal
has a reasonable change of success.
| 10.5 |
The
Buyer shall provide and shall procure that the Company provides to
the
Seller and the Seller´s professional advisors reasonable access to
premises and personnel and to any relevant assets, documents and
records
within their power, possession or control for the purpose of investigating
the matter and enabling the Seller to take such action as is referred
to
in this paragraph 10.
|
| 10.6 |
Other
than where paragraph 10.3 applies, the Buyer shall not (and shall
procure
that the Company shall not) settle, accept, pay or compromise the
Dispute
without the Seller's written consent (such consent not to be unreasonably
withheld or delayed).
|
| 10.7 |
Neither
the Buyer nor the Company shall be subject to any claim by or liability
to
the Seller for non-compliance with any of the provisions of this
paragraph
10 if the Buyer, or the Company has bona fide acted in accordance
with the
instructions of the Seller.
|
| 11. |
Grossing
up
|
| 11.1 |
All
sums payable by the Seller to the Buyer under this Tax Covenant shall
be
paid free and clear of all deductions or withholdings in respect
of
Taxation unless the deduction or withholding is required by law.
If any
deductions or withholdings are required by law to be made from any
of the
sums payable under this Tax Covenant, the Seller shall pay to the
Buyer
such sum as will, after the deduction or withholding has been made,
leave
the Buyer 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.
|
Page
78
| 11.2 |
If
the Buyer incurs a Taxation liability which results from, or is calculated
by reference to, any sum paid under this Tax Covenant, the amount
so
payable shall be increased by such amount as will ensure that, after
payment of the Taxation liability, the Buyer is left with a net sum
equal
to the sum it would have received had no such taxation liability
arisen.
|
| 11.3 |
If
the Buyer would, but for the availability of a Buyer´s Relief, incur a
Taxation liability falling within paragraph 11.2, it shall be deemed
for
the purposes of that paragraph to have incurred and paid that
liability
|
| 11.4 |
If
the Seller pays an additional amount in accordance with paragraph
11.1 or
11.2, the Buyer shall reimburse the Seller such amount as the Buyer
shall
(acting in good faith) determine as leaving the Buyer in the same
position
as the Buyer would have been in had no such additional Tax been paid
or
deduction or withholding been made, but only to the extent that the
Buyer
can do so without prejudicing the retention of any credit or relief
obtained as a result of the relevant deduction or withholding or
additional Tax
|
| 11.5 |
If
the Buyer assigns the benefit of this Tax Covenant or this agreement,
the
Seller shall not be liable pursuant to paragraph 11.1 or paragraph
11.2,
save to the extent that the Seller would have been so liable had
no such
assignment occurred.
|
| 12. |
BUYER’S
COVENANT
|
| 12.1 |
The
Buyer covenants to pay to the Seller and any member of the Retained
Group
an amount equal to any Tax assessed on the Sellers or a member of
the
Retained Group to the extent that such Tax is primarily a liability
of the
Company and is not of a type which would allow it to be claimed by
the
Buyer from the Seller under paragraph
3.
|
| 12.2 |
Paragraphs
4 (Payment
Date and interest),
10 (Conduct
of Tax Claims)
and 11 (Grossing
up)
apply to the covenant at paragraph 12.1 as they apply to the covenant
in
paragraph 3 as if all references in the relevant paragraphs to the
"Seller"
were to the "Buyer"
instead and vice versa.
|
13 Value
added tax groups
13.1 Immediately
after the date of this Deed the Seller shall procure that an application be
made
to HM Revenue & Customs, pursuant to section 43 VAT 1994 for the exclusion
of the Company from the Seller’s value added tax group and that such exclusion
is sought to have effect from Completion. Unless the Buyer otherwise requires,
the Seller shall co-operate to ensure that the exclusion from the Seller’s value
added tax group is simultaneous with the registration of the Company for value
added tax purposes or their inclusion in the Buyer’s value added tax group (as
the case may be).
Page
79
13.2 Pending
the taking effect of such application and for so long thereafter as may be
necessary, the Seller and the Buyer shall reciprocally furnish such information
as may be required to enable the continuing representative member of the VAT
Group to make all the returns required of it in respect of the VAT Group and
the
party being or controlling (as defined in Section 43(8) VATA) that
representative member shall make or procure it to make such returns
accordingly.
13.3 The
Buyer
will procure that the Company will account to the representative member of
the
VAT Group for any excess output VAT over input VAT paid or payable by such
representative member to the Commissioners of HM Revenue & Customs in
respect of any supply of goods or services made or received by the Company
in
respect of a prescribed accounting period during which the Company was and
remained a member of the VAT Group for the purposes of section 43
VATA.
13.4 The
Seller will procure that the representative member of the VAT Group will account
to the Company for any excess of input VAT over output VAT received or
receivable by such representative member from the Commissioners of Customs
and
Excise in respect of any supply of goods or services made by or received by
the
Company in respect of a prescribed accounting period or part of a prescribed
accounting period during which the Company was an remained a member of the
VAT
Group for the purposes of Section 43 VATA.
13.5 The
provisions of clause 4 (Amount Due from Seller and Date of Payment) shall apply
to any payments made under this clause 13 as if incorporated
herein.
Page
80
| Schedule 5 |
Intellectual
property rights
|
The
following table contains particulars of all the registered Intellectual Property
Rights used by the Company:
|
No.
|
Country
|
Registration
No.
|
Trademark
|
Owner
|
|
1
|
United
Kingdom
|
2171543
|
CONTICO
|
Continental
Commercial Products LLC
|
|
2
|
Ireland
|
212752
|
CONTICO
|
Continental
Commercial
Products
LLC
|
|
3
|
European
Community
|
001764786
|
CONTICO
|
Continental
Commercial
Products
LLC
|
|
4
|
USA
|
1822425
|
CONTICO
|
Continental
Commercial Products LLC
(by
assignment 25-Jul-03)
|
|
5
|
USA
|
1428387
|
CONTICO
|
Continental
Commercial Products LLC
(by
assignment 25-Jul-03)
|
xxx.xxxxxxx.xx.xx
Part
2. Material unregistered Intellectual Property Rights
The
following table contains particulars of all material unregistered Intellectual
Property Rights used by the Company on an unregistered basis in connection
with
the Business in Europe:
|
No.
|
Trademark
|
|
1)
|
TUFF
BOX
|
|
2)
|
TUFFBIN
|
|
3)
|
TUFF-E
|
|
4)
|
VALUE
TUFF
|
Page
81
|
5)
|
WORK
BIN
|
|
6)
|
NEUVO
|
|
7)
|
TRASH
'N' STASH
|
|
8)
|
TUFF
CRATE
|
|
9)
|
TUFF
|
|
10)
|
STRUCTURAL
FOAM
|
|
11)
|
STRUCTOLENE
|
|
12)
|
FUN
STORAGE
|
Part
3. Intellectual
property rights licensed from third parties
N/A
| Part 4. |
Intellectual
property rights licensed to third
parties
|
The
following is a list of all licences, agreements, authorisations and permissions
under which the Company has licensed or agreed to license Intellectual Property
Rights to, or otherwise permitted the use of any Intellectual Property Rights,
by any third party:
| 1) |
License
Agreement dated December 31, 2003 between Continental Commercial
Products
LLC (“CCP”) and the Company, according to which CCP grants the Company a
license under the terms of the license agreement to use the intangible
assets as detailed therein. Such license shall be terminated on the
Completion Date.
|
| 2) |
As
part of the sale by CCP of its truck box business, a non-exclusive,
royalty-free license to use the Contico trademark for one year post
closing (until June 2, 2007) was granted to Tradesman Truck Accessories
LLC under the license agreement dated June 2,
2006.
|
| 3) |
As
part of the sale of Contico Manufacturing (Ireland) Limited, the
share
sale and purchase agreement between CEH Limited and Xxxxxxx Xxxxxx
and
Xxxxxxx Xxxxxx dated February 21, 2005, gives Contico Manufacturing
(Ireland) Limited the right to use the Contico name. This arrangement
shall cease on termination of the distribution agreement between
CML and
Contico Manufacturing (Ireland)
Ltd.
|
Page
82
| Schedule 6 |
Working
Capital Statement
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1.
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The
Buyer shall at its cost prepare as soon as practicable after Completion,
and in any event within 40 Business Days after Completion, a draft
Working
Capital Statement.
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2.
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The
Working Capital Statement shall be prepared in accordance with the
accounting principles, policies and practices adopted by the Company
for
the purposes of the Accounts (the Policies)
including a stock count at which representatives of the Seller and
the
Buyer shall be present. The Working Capital Statement shall show
the
Working Capital of the Company as at 2359hrs GMT on Friday 17 November
2006 which shall comprise the aggregate of Account Receivables (net
of any
provisions necessary in accordance with the Policies but excluding
the
Receivable) and Stock (net of any provisions necessary in accordance
with
the Policies and subject as stated below) less Account Payables (including
, VAT, PAYE and National Insurance contributions), in each case as
at
2359hrs GMT on Friday 17 November 2006.
The amount for Stock shall not in any event exceed £1,600,000 (one million
six hundred thousand pounds) and if such sum shall exceed such amount
then
the difference shall not be included in calculating the Working Capital.
The Working Capital Statement will not take into account amounts
relating
to pre-payments and accruals as at 2359hrs on Friday 17 November
2006
unless the net amount of accruals and pre-payments as at 2359hrs
on Friday
17 November 2006 exceeds the aggregate net amount of accruals and
pre-payments as at 31 December 2005 (as shown in the agreed form
pro-forma) by a sum greater than £150,000 whereupon the excess over such
value shall be included as a liability within the Working Capital
Statement. The
Working Capital Statement shall be prepared in accordance with the
pro-forma Working Capital Statement in the agreed form and shall
only
contain those line items shown on the pro-forma. For the purposes
of
illustration, the Working Capital of the Company as at 31 December
2005 by reference to the Accounts would have been £2,467,000 (two million
four hundred and sixty seven thousand
pounds).
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3.
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When
prepared, the Buyer shall procure that the draft Working Capital
Statement
shall be promptly submitted to the Seller (together with such working
papers used in connection with the preparation of the Working Capital
Statement as are necessary to understand its preparation) for review
by
the Seller and its advisers.
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4.
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For
the purposes of such review the Buyer shall procure that the Seller
and
its advisers shall be given the same access to information and
co-operation from the management of the Company as if they were the
auditors of the Company.
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Page
83
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5.
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The
Seller shall within 10 Business Days following its receipt of the
draft
Working Capital Statement, notify the Buyer in writing (Response
Notice)
whether it accepts the draft Working Capital Statement as submitted
or
whether it rejects the draft as not being in accordance with this
Schedule. Any Response Notice rejecting the draft shall set out in
reasonable particularity the grounds for such
rejection.
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6.
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If
no Response Notice is given within the period stated in paragraph 5,
the Seller shall be deemed to have accepted the draft Working Capital
Statement as being in accordance with this Schedule and the amount
of the
Working Capital as stated in the draft Working Capital Statement,
and
accordingly the amount of the Working Capital so stated shall be
accepted
by and shall be final and binding on the
parties.
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7.
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If
within 20 Business Days of the submission of the draft Working Capital
Statement to the Seller the draft Working Capital Statement has not
been
accepted by the Seller, then the matters outstanding or in dispute
shall
be referred for final determination to a firm of chartered accountants
nominated jointly by the Seller and the Buyer or failing such nomination
within 10 Business Days after request by either the Seller or the
Buyer,
nominated at the request of either of them by the President of the
Institute of Chartered Accountants in England and Wales (the Experts).
The Buyer shall procure that the Experts shall be given the same
access to
information and co-operation from the management of the Company as
if they
were the auditors of the Company and the Buyer shall procure that
the
Experts shall be given access to such working papers used in connection
with the preparation of the draft Working Capital Statement as are
necessary to understand its preparation. In making their determination
the
Experts shall be treated as acting as experts and not as arbitrators.
The
determination of the Experts shall be final and binding on the parties.
The Experts’ fees shall be borne and paid by the Seller and the Buyer in
such proportions as the Experts
determine.
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8.
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Within
5 Business Days of the date of agreement or determination of the
Working
Capital Statement and the amount of the Working Capital in accordance
with
this Schedule:
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(a) if
the
Purchase Price as adjusted in accordance with clause 4.2 exceeds the Completion
Payment, the Buyer shall
pay
to the Seller an amount equal to the aggregate of such excess and the sum of
£370,000 paid to the Buyer pursuant to clause 5.8 of the Agreement (plus
interest at an annual rate equal to the base rate of Barclays Bank Plc from
time
to time plus 2% in respect of the period from the Completion Date to the date
of
payment of such excess) by way of telegraphic transfer; or
(b) if
the
Purchase Price as adjusted in accordance with clause 4.2 is less than the amount
equal to the Completion Payment less the sum of £370,000 paid to the Buyer
pursuant to clause 5.8 of the Agreement, the Seller shall pay to the Buyer
an
amount equal to such shortfall (plus interest at an annual rate equal to the
base rate of Barclays Bank Plc from time to time plus 2% in respect of the
period from the Completion Date to the date of payment of such shortfall) by
way
of telegraphic transfer.
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84
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9.
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Notwithstanding
the above provisions no recognition shall be made in the Working
Capital
Statement of any deferred Tax asset arising from the recognition
of tax
losses.
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85
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Executed
as a deed by CEH
Limited
acting
by its attorney
Executed
as a deed by Jardin
International Holding BV
acting
by its attorney
Executed
as a deed by Katy
Industries, Inc.
acting
by its attorney
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/s/
Xxxxx Xxxxxxxx
as
attorney for
CEH
Limited
/s/
Xxxx Xxxxx
for
and behalf of
Jardin
International Holding BV
/s/
Xxxxx Xxxxxxxx
as
attorney for
Katy
Industries, Inc.
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Page
86
