DATED 14 JUNE 2005
NORCROS INDUSTRY (INTERNATIONAL) LIMITED AND NORCROS LIMITED
SURFACE TREATMENTS LIMITED
NORCROS (HOLDINGS) LIMITED
MACDERMID INCORPORATED
AGREEMENT
FOR THE SALE AND PURCHASE OF THE ENTIRE ISSUED SHARE CAPITAL OF AUTOTYPE
INTERNATIONAL LIMITED AND AUTOTYPE HOLDINGS (USA) INC
CONTENTS
CLAUSE PAGE
1 Definitions and interpretation . . . . . . . . . . . . . . . . . . . 1
2 Sale and purchase of the Sale Shares . . . . . . . . . . . . . . . . 8
3 Consideration and adjustment of Consideration. . . . . . . . . . . . 9
4 Completion and Post-Completion Restrictions. . . . . . . . . . . . . 11
5 Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6 Restrictive covenants. . . . . . . . . . . . . . . . . . . . . . . . 14
7 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8 Buyer's Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . 18
9 Sellers' Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . 18
10 Post-Completion matters. . . . . . . . . . . . . . . . . . . . . . . 19
11 Assignment and third party rights. . . . . . . . . . . . . . . . . . 22
12 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
13 Choice of law, submission to jurisdiction and service of process . . 26
SCHEDULE
1 The Group. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Part 1 - The Companies . . . . . . . . . . . . . . . . . . . . . . . . 28
Part 2 - Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 30
Part 3 - The Associated Undertaking. . . . . . . . . . . . . . . . . . 35
2 Completion matters . . . . . . . . . . . . . . . . . . . . . . . . . 36
3 Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Part 1 - General . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
4 Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5 The Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Part 1 - Freehold Properties . . . . . . . . . . . . . . . . . . . . . 73
Part 2 - Leasehold Properties. . . . . . . . . . . . . . . . . . . . . 73
Part 3 - Licensed Properties . . . . . . . . . . . . . . . . . . . . . 74
6 Pensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
7 Provisions for the protection of the Sellers . . . . . . . . . . . . 77
8 Preparation of Statements for adjustments to Purchase Price. . . . . 84
Part 1 - General provisions. . . . . . . . . . . . . . . . . . . . . . 84
Part 2 - Normalised Working Capital Statement. . . . . . . . . . . . . 89
Part 3 - Dispute resolution. . . . . . . . . . . . . . . . . . . . . . 90
Part 5 - Calculation of Final EBITDA Consideration . . . . . . . . . . 92
Part 6 - 2004/2005 Management Accounts - Principal Accounting Policies 93
9 Relevant Forward Foreign Exchange Contracts. . . . . . . . . . . . . 95
THIS AGREEMENT is made on 14 June 2005
BETWEEN
(1) NORCROS INDUSTRY (INTERNATIONAL) LIMITED (NIIL) (a company registered in
England and Wales with number 308999) and NORCROS LIMITED (NL) (a company
registered in England and Wales with number 566694) each of which has its
registered office at Xxxxxxxxx Xxxxx, Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx XX0 0XX
(SELLERS); and
(2) SURFACE TREATMENTS LIMITED (a company registered in England and Wales
with number 783250) and whose registered office is at Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxxx, Xxxx Xxxxxxxx X0 0XX (BUYER); and
(3) NORCROS (HOLDINGS) LIMITED (a company registered in England and Wales
with number 3691883) and whose registered office is at Xxxxxxxxx Xxxxx, Xxxxxxx
Xxxx, Xxxxxxxx, Xxxxxxxx XX0 0XX (SELLER GUARANTOR); and
(4) MACDERMID INCORPORATED (a company incorporated and governed under the
laws of Connecticut having its registered office at 0000 Xxxxx Xxxxxx, Xxxxxx,
XX 00000 (BUYER GUARANTOR),
(together the PARTIES and each a PARTY).
IT IS AGREED
1 DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS USED IN THIS AGREEMENT
In this Agreement, unless the context otherwise requires:
ACCOUNTS means:
(a) the individual accounts of each Group Company (other than the Associated
Undertaking and Autotype Italia s.r.l.) copies of which are included at
documents 1.29, 1.31, 1.32, 1.33, 1.34 and 1.35 of the Data Room Documents in
each case for the financial year ended on the Accounts Date; and
(b) the financial statements of the Associated Undertaking and Autotype
Italia s.r.l. (copies of which are included at documents 1.36 and 1.37 of the
Data Room Documents) in each case for the financial year ended on the Accounts
Date
ACCOUNTS DATE means 3 April 2005
ACTUAL TAXATION LIABILITY has the meaning given in part 1 of schedule 3
AUTOTYPE UK means Autotype International Limited, further details of which are
set out in part 1 of schedule 1
AUTOTYPE USA means Autotype Holdings (USA) Inc, further details of which are set
out in part 1 of schedule 1
ASSOCIATED UNDERTAKING means Holotools GmbH, further details of which are set
out in part 3 of schedule 1
BUSINESS means the business carried on by the Group as at the date of this
Agreement and includes any part or parts of such business
BUSINESS DAY means a day other than a Saturday or a Sunday on which clearing
banks are open for business in London for dealings in Sterling
BUYER'S GROUP means the Buyer, any subsidiary of the Buyer, any holding company
of the Buyer and any subsidiary of any holding company of the Buyer, in each
case for the time being and MEMBER OF THE BUYER'S GROUP shall be construed
accordingly
BUYER'S SOLICITORS means Wragge & Co LLP of 00 Xxxxxxx Xxx, Xxxxxxxxxx, Xxxx
Xxxxxxxx, X0 0XX
CA 1985 means the Companies Xxx 0000
CASH means all cash on hand and on deposit or otherwise held at banks or other
financial institutions at the opening of business on the Completion Date (and,
for the avoidance of doubt the quantification of such amounts shall be the
balances as per the cash book balances of the relevant Group Company properly
reconciled to reflect the actual amounts held in any relevant bank accounts)
COMPANIES means each of Autotype UK and Autotype USA
COMPANY IPR means all Intellectual Property owned by a Group Company or used by
a Group Company in connection with the Business
COMPLETION means completion of the sale and purchase of the Sale Shares by the
performance by the Parties of their respective obligations under clause 4.1 and
schedule 2 (Completion matters)
COMPLETION EXCHANGE RATES means the following respective rates for each GBP 1:
Euro 1.50, Sing$ 3.03, US$1.81, Dkr 11.13
COMPLETION DATE means the date of this Agreement
COMPLETION SUM has the meaning ascribed to it in clause 3.1
COMPLETION WORKING CAPITAL means the Working Capital of the Group as at the
opening of business on the Completion Date as shown in the Completion Working
Capital Statement
COMPLETION WORKING CAPITAL STATEMENT means the statement of Completion Working
Capital to be prepared, and agreed or determined, in accordance with schedule 8
DATA ROOM DOCUMENTS has the meaning ascribed to it in paragraph 1 of schedule 7
DEBT means all borrowings (and indebtedness in the nature of borrowings)
including (but not limited to) bank debt, loan stocks, bonds, debentures,
overdrafts and monies owed pursuant to any finance leases and (including any
Intra Group Debt, and any fees, costs, charges and expenses including legal
expenses associated with discharge of or early repayment of any of the
foregoing, but excluding any Ordinary Course Debt, in any such case, at the
opening of business on the Completion Date
DEBT REGULATIONS means the Occupational Pension Schemes (Employer Debt)
Regulations 2005 (SI 2005 No.678)
DISCLOSED SCHEME means the Norcros Security Plan established by an interim trust
deed dated 30 March 1964
DISCLOSURE LETTER means the letter of the same date as the date of this
Agreement from the Sellers to the Buyer in relation to the Warranties which has
been delivered to the Buyer prior to the execution of this Agreement and all
documents and information attached to that letter or deemed by its terms to be
incorporated in that letter
ENVIRONMENT means all, or any part, of the air (including without limitation the
air within buildings and the air within natural or other man-made structures
above or below ground), water and land
ENVIRONMENTAL LAWS means all laws, regulations, directives and other measures
having the force of the law imposed by any relevant body to which a Group
Company has been subject insofar as they relate to the pollution or protection
of the Environment
ENVIRONMENTAL LICENCE means any relevant permits, licences, consents or other
authorisations required under any Environmental Laws for the operation of the
Business
ESTIMATED DEBT AMOUNT STATEMENT means a statement of the estimated UK Debt
Amount (or UK Cash Amount, as the case may be) and the estimated USA Debt Amount
(or USA Cash Amount, as the case may be) prepared by the Sellers and delivered
by the Sellers to the Buyer on Completion, in accordance with schedule 8
ESTIMATED UK DEBT AMOUNT means the Sellers' estimate of the UK Debt Amount as
shown in the Estimated Debt Amount Statement (or the Sellers' estimate of the UK
Cash Amount as shown in the Estimated Debt Amount Statement which shall be the
ESTIMATED UK CASH AMOUNT, as the case may be)
ESTIMATED USA DEBT AMOUNT means the Sellers' estimate of the USA Debt Amount as
shown in the Estimated Debt Amount Statement (or the Sellers' estimate of the
USA Cash Amount as shown in the Estimated Debt Amount Statement which shall be
the ESTIMATED USA CASH AMOUNT, as the case may be)
EXPERT means an independent accountant of at least 10 years' qualified
experience appointed with the consent of all Parties or, in the absence of such
consent, pursuant to the application of any Party to the President for the time
being of the Institute of Chartered Accountants in England and Wales
FINAL DEBT AMOUNT STATEMENT means a statement of the UK Debt Amount (or UK Cash
Amount, as the case may be) and the USA Debt Amount (or USA Cash Amount, as the
case may be) prepared, and agreed or determined, in accordance with schedule 8
FINAL EBITDA CONSIDERATION means that cash sum stated in column (2) of the table
set out in part 5 of schedule 8 opposite the value range in column (1) of that
table in which the First Quarter EBITDA falls
FINAL EBITDA STATEMENT means the statement of First Quarter EBITDA to be
prepared, and agreed or determined, in accordance with schedule 8
FIRST QUARTER means the period from 4 April 2005 to 3 July 2005 (inclusive)
FIRST QUARTER EBITDA means the consolidated earnings before interest, tax,
depreciation and amortisation of goodwill achieved by the Group during the First
Quarter as shown in the Final EBITDA Statement
GROUP means the Companies, the Subsidiaries and the Associated Undertaking and
GROUP COMPANY and MEMBER OF THE GROUP shall be construed accordingly
GUARANTEES means any guarantee, indemnity, suretyship, letter of comfort or
other assurance, security or right of set-off given or undertaken directly or
indirectly by a person to secure or support obligations (actual or contingent)
of any third party
HOLDING COMPANY means a holding company (as defined in sections 736 and 736A CA
1985) or a parent undertaking (as defined in section 258 CA 1985)
ICTA means the Income and Corporation Taxes Xxx 0000
INTELLECTUAL PROPERTY means patents, trade marks and service marks, rights in
designs, trade or business names or signs, copyrights (including rights in
computer software) and rights under licences and consents in relation to any
such thing and all rights or forms of protection of a similar nature or having
equivalent or similar effect to any of these which may subsist anywhere in the
world
INTERIM EBITDA means the consolidated earnings before interest, tax,
depreciation and amortisation of goodwill achieved by the Group during the
period from 4 April 2005 to 5 June 2005 (inclusive) as shown in the Interim
EBITDA Statement
INTERIM EBITDA CONSIDERATION means the sum of GBP 3,621,286
INTERIM EBITDA STATEMENT means the statement of Interim EBITDA set out in part 4
of schedule 8
INTRA GROUP DEBT means the aggregate of all amounts owed by any member of the
Group to any member of the Sellers' Group, or vice versa, as at opening of
business on the Completion Date
LETTERS OF CREDIT means any letter of credit which any member of the Sellers'
Group has been, or may be, required to arrange, provide or procure in connection
with any excesses payable in respect of any insurance claims which may be made
by reference to either product liability and/or employment liability insurance
policies obtained by any member of the Sellers' Group for the benefit of both
members of the Sellers' Group and the Group Companies which claims are in
respect of matters, incidents or omissions arising during the financial year of
the Group ending on the Accounts Date
MANAGEMENT ACCOUNTS has the meaning ascribed to it in paragraph 2.3 of schedule
4
MANAGEMENT ACCOUNTS DATE means 8 May 2005
MATERIAL CONTRACT means any written contract relating to the Business calling
for payments by any party thereto in excess of GPB 150,000 in any one year other
than:
(a) any contract with any employee of the Business; and
(b) purchase or sale orders for stock placed in accordance with the normal
practice of the Business;
NORMALISED WORKING CAPITAL means GBP 10,670,000 being the average Working
Capital of the Group determined by reference to the 13 monthly financial periods
of the Groups immediately prior to the Accounts Date, adjusted for non-ordinary
course matters, as shown in the Normalised Working Capital Statement
NORMALISED WORKING CAPITAL STATEMENT means the statement of Normalised Working
Capital set out in part 2 of schedule 8
NSL means Norcros Securities Limited a company registered in England and Wales
with number 776101
ORDINARY COURSE DEBT means all trade creditors of the Group and all liabilities
of the Group pursuant to any hire purchase, conditional sale, contract hire or
operating lease agreements entered into by any member of the Group in the
ordinary course of Business
PROPERTIES means the leasehold properties details of which are set out in part 2
of schedule 5 and the licensed property details of which are set out in part 3
of schedule 5 and PROPERTY means any of them
PURCHASE PRICE means the consideration payable by the Buyer to the Sellers for
the sale of the Sale Shares as determined in accordance with clause 3
(Consideration and adjustment of Consideration)
RECONCILED GROUP ACCOUNTS means those consolidated accounts of the Group which
are derived from the Accounts for the financial year of the Group ending on the
Accounts Date and included at document 1.38 of the Data Room Documents
RELIEF has the meaning given in part 1 of schedule 3
RELEVANT FORWARD FOREIGN EXCHANGE CONTRACTS means those forward exchange
contracts entered into with third parties (that is, not including any other
member of the Seller's Group or any Group Company) by any member of the Seller's
Group in respect of the business of any Group Company, or by any Group Company,
wholly or partly in respect of the First Quarter and referred to in schedule 9
(including, without limitation, those forward exchange contracts to be novated
to the Buyer as referred to in paragraph 5(e) of schedule 2)
RETIRING DIRECTORS means the persons identified in schedule 1 as directors of
any Group Company registered in England and Wales but excluding Xxxxx Xxxxxxxxx
and Xxxxx Xxxxxx
RETIRING SECRETARY means the persons identified in schedule 1 as secretary of
any Group Company registered in England and Wales
SALE PROPORTIONS means, in the case of each Seller, the proportion which that
part of the Completion Sum which is received by that Seller pursuant to clause
3.1 bears to the total amount of the Completion Sum
SALE SHARES means the UK Shares and the USA Shares
SECURITY INTEREST means any lien, charge, option, encumbrance, equity or right
of pre-emption or other right exercisable by, or in favour of, any third party
SELLERS' ACCOUNTANTS means PricewaterhouseCoopers LLP of 000 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxxx X0 0XX
SELLERS' GROUP means the Sellers, any subsidiary of a Seller, any holding
company of a Seller and any subsidiary of a holding company of a Seller, in each
case for the time being but excluding any Group Company, and MEMBER OF THE
SELLERS' GROUP shall be construed accordingly
SELLERS' SOLICITORS means Xxxxxxxxx Xxxxxxx of 000 Xxxxxxxxxx Xxxxxx, Xxxxxxxxxx
X0 0XX
STERLING means the lawful currency of the United Kingdom for the time being
SUBSIDIARY means a subsidiary (as defined by sections 736 and 736A CA 1985) or a
subsidiary undertaking (as defined by section 258 CA 1985)
SUBSIDIARIES means those companies identified in part 2 of schedule 1
TAX and TAXATION have the meaning given in part 1 of schedule 3
TAX COVENANT means part 2 of schedule 3
TAX WARRANTIES means the warranties set out in part 3 of schedule 3
TRANSACTION DOCUMENTS means this Agreement, the Disclosure Letter and each of
the documents referred to in this Agreement as being in the agreed form
UK DEBT AMOUNT means the amount (if any) by which the aggregate of all Debt
balances of Autotype UK and the UK Subsidiaries as at the opening of business on
the Completion Date exceeds the aggregate of all Cash balances of Autotype UK
and the UK Subsidiaries at that time (including any Intra Group Debt owed to or
from such entities), all such balances being expressed in Sterling, such
Sterling amounts being calculated where relevant by applying the Completion
Exchange Rates to any such amounts not expressed or denominated in Sterling (and
if the aggregate amount of relevant Cash exceeds the aggregate amount of
relevant Debt, then the UK Debt Amount shall be zero and the amount of such
positive balance shall be the UK CASH AMOUNT for the purposes of this Agreement)
UK SHARES means the 14,304 ordinary shares of GBP 1 each in the issued share
capital of Autotype UK held by NIIL and NSL as shown in schedule 1 representing
all the outstanding share capital of Autotype UK
UK SUBSIDIARIES means each of the Subsidiaries other than Autotype America Inc
USA BUYER means MacDermid US Holdings LLC (a company incorporated and governed
under the laws of Delaware) having its registered office at 000 Xxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxx
XXX DEBT AMOUNT means the amount (if any) by which the aggregate of all Debt
balances of Autotype USA and Autotype America Inc as at the opening of business
on the Completion Date exceeds the aggregate of all Cash balances of Autotype
USA and Autotype America Inc at that time (including any Intra Group Debt owed
to or from such entities), all such balances being expressed in Sterling, such
Sterling amounts being calculated where relevant by applying the Completion
Exchange Rates to any such amounts not expressed or denominated in Sterling (and
if the aggregate amount of relevant Cash exceeds the aggregate amount of
relevant Debt, then the USA Debt Amount shall be zero and the amount of such
positive balance shall be the USA CASH AMOUNT for the purposes of this
Agreement)
USA SHARES means the 100 shares of US$1.00 each in the issued share capital of
Autotype USA held by NL representing all the outstanding share capital of
Autotype USA
WARRANTIES means the Tax Warranties and the warranties referred to in clause 5.1
and set out in schedule 4
WARRANTY CLAIM has the meaning given in schedule 7
WORKING CAPITAL means the aggregate of trade debtors, stock, capital debtors and
other debtors (but excluding Cash and, in each case, any Intra Group Debt) of
the Group, less the aggregate of trade creditors, capital creditors and other
creditors and accrued charges (but excluding Debt and, in each case, any Intra
Group Debt), of the Group
1.2 TERMS DEFINED ELSEWHERE IN THIS AGREEMENT
In addition to the terms defined in clause 1.1, certain other terms are defined
elsewhere in this Agreement (denoted by capitalised words in bold type). Each
such term shall have the meaning stated for the purpose of the provision in
which it is defined and, if used elsewhere in this Agreement, where so used,
unless the context otherwise requires.
1.3 INTERPRETATION OF WORDS AND EXPRESSIONS USED IN THIS AGREEMENT
In this Agreement, unless the context otherwise requires:
(a) a document expressed to be IN THE AGREED FORM means a document in a form
which has been agreed by the Parties at or before the execution of this
Agreement and which has, for the purposes of identification, been signed or
initialled by them or on their behalf;
(b) references to a clause, schedule or annexure are to a clause of, or a
schedule or annexure to, this Agreement respectively; references to this
Agreement include its schedules and annexures and references in a schedule or
part of a schedule to a paragraph are to a paragraph of that schedule or that
part of that schedule respectively;
(c) references to this Agreement or any other document or to any specified
provision of this Agreement or any other document are to this Agreement, that
document or that provision as in force for the time being and as amended from
time to time in accordance with the terms of this Agreement or that document, as
the case may be;
(d) words importing the singular include the plural and vice versa, words
importing a gender include every gender and references to a PERSON include any
individual, corporation, firm, partnership, joint venture, association, body of
persons, organisation or trust (in each case whether or not having separate
legal personality);
(e) words and phrases which are generally defined for the purposes of CA
1985 shall bear the meanings attributed to them by that Act as at the date of
this Agreement;
(f) a person shall be deemed to be ASSOCIATED WITH another person or an
ASSOCIATED PERSON of that other person if such person is an associate of the
other person within the meaning of section 435 Insolvency Xxx 0000;
(g) references to any English legal term for any action, remedy, statute,
regulation, method of judicial proceeding, legal document, legal status, Court,
official or any legal concept or thing shall in respect of any jurisdiction
other than England shall be deemed to include what most nearly approximates in
that jurisdiction to the English legal term, doctrine or document; and
(h) all agreements, obligations and liabilities in this Agreement on the
part of any two or more of the Sellers are (unless expressly provided otherwise)
joint and several and shall be construed accordingly and references to the
Sellers shall include each of them severally.
1.4 CONTENTS TABLE AND HEADINGS
In this Agreement, the contents table and the descriptive headings to, and
within, clauses, schedules and paragraphs are inserted for convenience only,
have no legal effect and shall be ignored in the interpretation and construction
of this Agreement.
1.5 REFERENCES TO STATUTORY PROVISIONS
In this Agreement, unless the context otherwise requires, references to
statutory provisions or subordinate legislation (as defined by section 21(1)
Interpretation Act 1978) shall be construed as references to those provisions or
that subordinate legislation as respectively replaced, amended or re-enacted
(whether before or after the date of this Agreement) from time to time and shall
include any provisions or subordinate legislation of which they are
re-enactments (whether with or without modification) and any subordinate
legislation made under such provisions save to the extent that such
replacements, amendments or re-enactments taking effect after the date of
Completion would impose any greater obligations or liabilities on, or reduce the
benefit to, any Party.
2 SALE AND PURCHASE OF THE SALE SHARES
2.1 SALE AND PURCHASE
NIIL shall sell (or, in the case of the UK Shares registered in the name of NSL,
procure that NSL sells) to the Buyer, and the Buyer shall purchase, the UK
Shares. NL shall sell to the USA Buyer, and the Buyer shall procure that the
USA Buyer shall purchase, the USA Shares.
2.2 THE SELLERS' TITLE
Each of the Sellers shall sell and transfer (or, in the case of the UK Shares
registered in the name of NSL, procure that NSL sells and transfers) to the
Buyer (or, in the case of the USA Shares, the USA Buyer) those Sale Shares to be
sold by it with full title guarantee and free from any Security Interest.
2.3 WAIVER OF PRE-EMPTION RIGHTS BY THE SELLERS
Each Seller waives, and shall procure that any other member of the Sellers'
Group waives, any rights of pre-emption or first refusal or similar rights
conferred on it by the articles of association of each of the Companies or
otherwise over any of the Sale Shares.
2.4 CAPACITY OF THE BUYER'S GROUP
The Buyer warrants to each of the Sellers that:
(a) each relevant member of the Buyer's Group has obtained all corporate
approvals, consents and waivers including, but not limited to, all board and
shareholder approvals which it needs to enter into this Agreement (including all
its obligations to be fulfilled at Completion) and any other Transaction
Document and all transactions contemplated by each of those documents;
(b) each relevant member of the Buyer's Group has the requisite power and
authority to execute, deliver and perform its obligations under this Agreement
(including all its obligations to be fulfilled at Completion) and any other
Transaction Document to be executed by it;
(c) this Agreement constitutes, and the other Transaction Documents executed
or to be executed by the relevant member of the Buyer's Group will, when
executed, constitute legal, valid and binding obligations of the relevant member
of the Buyer's Group enforceable in accordance with their respective terms;
(d) the execution, delivery and performance by each relevant member of the
Buyer's Group of the terms of this Agreement and the other Transaction Documents
will not contravene or violate any provision of:
(i) any law and/or regulation and/or any order and/or decree of any
authority, agency or court binding on the relevant member of the Buyer's Group;
or
(ii) the memorandum and articles of association or other constitutional
documents of the relevant member of the Buyer's Group; or
(iii) any other undertaking or instrument to which any relevant member of
the Buyer's Group is a Party; and
(e) it has (and at Completion will have) immediately available on an
unconditional basis the necessary cash resources to meet its obligations under
this Agreement and the other Transaction Documents.
3 CONSIDERATION AND ADJUSTMENT OF CONSIDERATION
3.1 The consideration for the sale of the Sale Shares shall be the payment
on Completion by the Buyer (on behalf of itself and the USA Buyer) to the
Sellers of the following sums (such amounts in aggregate being the COMPLETION
SUM):
(a) a cash sum shall be paid by the Buyer to NIIL (in respect of the sale by
NIIL of the UK Shares to the Buyer) equal to GBP 31,960,065 less the Estimated
UK Debt Amount, or plus the Estimated UK Cash Amount (as the case may be);
(b) a cash sum shall be paid by the Buyer (on behalf of the USA Buyer) to NL
(in respect of the sale by NL of the USA Shares to the USA Buyer) equal to
GBP 13,039,935 less the Estimated USA Debt Amount, or plus the Estimated USA
Cash Amount (as the case may be); and
(c) the Buyer shall pay to the Sellers in the proportions GBP 2,571,923 to
NIIL (in respect of the sale of the UK Shares) and GBP 1,049,363 to NL (in
respect of the sale of the USA Shares) an aggregate cash sum equal to the
Interim EBITDA Consideration.
The Purchase Price shall be subject to further adjustment in accordance with
this clause 3.
3.2 The Final EBITDA Statement, the Final Debt Amount Statement and the
Completion Working Capital Statement shall each be prepared, and agreed or
determined, in accordance with schedule 8.
3.3 If the Final Debt Amount Statement shows that:
(a) the UK Debt Amount is greater than the Estimated UK Debt Amount; or
(b) the UK Debt Amount falls short of the Estimated UK Debt Amount
then that part of the Purchase Price which is payable to NIIL in accordance with
clause 3.1(a) shall be decreased by the amount of such excess debt, or increased
by the amount of such shortfall in debt (as the case may be). If the Final Debt
Amount Statement shows a UK Cash Amount, then the Purchase Price shall be
increased by an amount equal to the Estimated UK Debt Amount aggregated with the
UK Cash Amount.
3.4 If the Final Debt Amount Statement shows that:
(a) the USA Debt Amount is greater than the Estimated USA Debt Amount; or
(b) the USA Debt Amount falls short of the Estimated USA Debt Amount,
then that part of the Purchase Price which is payable to NL in accordance with
clause 3.1(b) shall be decreased by the amount of such excess debt, or increased
by the amount of such shortfall in debt (as the case may be). If the Final Debt
Amount Statement shows a USA Cash Amount, then the Purchase Price shall be
increased by an amount equal to the Estimated USA Debt Amount aggregated with
the USA Cash Amount.
3.5 If the Completion Working Capital Statement shows that:
(a) the Completion Working Capital exceeds the sum of GBP 10,900,000; or
(b) the Completion Working Capital falls short of the sum of GBP 9,900,000
then the overall Purchase Price shall be increased by the amount of such excess
(over GBP 10,900,000), or decreased by the amount of such shortfall (below
GBP 9,900,000) (as the case may be). If the Completion Working Capital Statement
shows a negative sum for Completion Working Capital, then the Purchase Price
shall be decreased by an amount equal to GBP 9,900,000 aggregated with such
negative sum.
3.6 If the Final EBITDA Statement shows that:
(a) the Final EBITDA Consideration is greater than the Interim EBITDA
Consideration; or
(b) the Final EBITDA Consideration is less than the Interim EBITDA
Consideration then that part of Purchase Price paid pursuant to clause 3.1(c)
shall be increased (if clause 3.6(a) applies) or decreased (if clause 3.6(b)
applies) by the difference between the Interim EBITDA Consideration and the
Final EBITDA Consideration. For the avoidance of doubt, the Final EBITDA
Consideration shall not exceed GBP 5,000,000.
3.7 Any increase or reduction in the Purchase Price payable to the Sellers
pursuant to this clause 3 shall be satisfied by the payment of such amount by
the Buyer to the Sellers (in the case of any increase), and/or by the repayment
of such amount by the Sellers to the Buyer (in the case of any reduction), on or
before the date (DUE DATE) which is 5 Business Days following, as the case may
be, either:
(a) the date on which the Final Debt Amount Statement is agreed or
determined in accordance with schedule 8 (in the case of any adjustment pursuant
to clause 3.3 or 3.4); or
(b) the date on which the Completion Working Capital Statement is agreed or
determined in accordance with schedule 8 (in the case of any adjustment pursuant
to clause 3.5); or
(c) the date on which the Final EBITDA Statement is agreed or determined in
accordance with schedule 8 (in the case of any adjustment pursuant to clause
3.6) in each case any such payment being made in the manner prescribed by
clause 7 (Payments). Interest shall also be paid on any such amount at the rate
of 2.25% above the base rate for the time being of Lloyds TSB Bank plc from the
date of Completion to either the date of actual payment, or (if payment is not
made on or before the Due Date) the Due Date. To the extent that any such
payment is not made on or before the Due Date, then interest shall also accrue
on any such amount in accordance with clause 7.4 from the Due Date to the date
of actual payment. Any increase or reduction to the Purchase Price pursuant to
clause 3.5 shall be paid to, or borne by, the Sellers in the Sale Proportions.
Any increase or reduction to the Purchase Price pursuant to clause 3.6 shall be
paid to, or borne by, the Sellers in the proportions in which they received
the payment of the Estimated EBITDA Consideration pursuant to clause 3.1(c).
In the event that any part of this clause 3 would operate so as to reduce the
Purchase Price by an amount (THE REDUCTION) which in fact exceeds the Purchase
Price, then for the avoidance of doubt the Sellers shall on or before the Due
Date pay the Buyer a cash amount equal to the full amount of the Reduction.
4 COMPLETION AND POST-COMPLETION RESTRICTIONS
4.1 Completion shall take place at the Manchester offices of the Sellers'
Solicitors or at such other place as the Parties may agree immediately following
exchange of this Agreement when the Parties shall comply with their respective
obligations as set out in schedule 2.
4.2 The Buyer undertakes with the Sellers that, during the period from
Completion to the end of the First Quarter, except with the prior written
consent of the Sellers (such consent not to be unreasonably withheld):
(a) no material change shall be made in the nature of the business of any
Group Company or the manner in which such business is carried on and no Group
Company will do, or permit to do any act or thing which act or omission is
outside the ordinary course of its business;
(b) the manufacturing activities of the Group Companies shall continue in
materially the same manner and those activities are, taken as a whole, continued
to the same extent as is currently budgeted and in particular (but without
prejudice to the generality of the foregoing) no Group Company shall dispose of
any material part of its business or assets, close or reduce the scope of any
material part of its business, or otherwise reorganise or restructure its
business or operations in any material respect;
(c) the wholly-owned subsidiaries of each of Autotype UK and Autotype USA
shall remain wholly-owned subsidiaries of Autotype UK or Autotype USA (as the
case may be);
(d) no Group Company shall transact business except through itself, or
another Group Company (but provided that this shall not restrict any Group
Company from transacting business through agency or distributorship arrangements
in the ordinary course of trading);
(e) no resolution shall be passed to wind up any Group Company or to cause
any Group Company to cease to carry on any part of its business, except in
circumstances in which such Group Company is insolvent or the directors of such
Group Company have received advice to the effect that it is their duty to cause
such Group Company to be wound up having regard to its financial position;
(f) there shall continue to be in place and effective the current credit
insurance cover which is currently in force in respect of trade debtors (it
being acknowledged that such cover shall cease at the end of the First Quarter
as contemplated by clause 10.5(a));
(g) the Buyer shall act in good faith towards the Sellers' interest under
this Agreement, shall not do any act or thing with a view to reducing the Final
EBITDA Consideration and, without limitation, shall procure that no Group
Company shall:
(i) enter into any contract or arrangement with any member of the Buyer's
Group other than on normal commercial terms or pay or incur any management or
similar charges to any member of the Buyer's Group;
(ii) create, issue or grant any option in respect of any class of share
capital or agree so to do;
(iii) dismiss any senior employee or employ or offer employment to any
person not employed by it or another Group Company at the date of this Agreement
and proposed to be appointed as a senior employee (senior employee in the
context of this paragraph meaning a person earning a salary in excess of GBP
50,000 per annum), dismiss any other employee (save where there are bona fide
grounds for such dismissal on the basis of misconduct or breach of contract
by such employee or the same is contemplated by the current budget), or amend
the terms and conditions of employment of any of its employees;
(iv) pay or be liable in respect of premiums or other costs or charges
relating to insurance cover to an extent greater than was contemplated by the
current budget;
(v) acquire or agree to acquire any share, shares or other interest in any
company, partnership or other venture;
(vi) take steps to procure payment by any debtor generally in advance of the
date on which book and other debts are usually payable in accordance with its
standard terms of business or (if different) the period extended to any
particular debtor in which to make payment or to reschedule any bad debt;
(vii) delay making payment to any trade creditors generally beyond the date
on which payment of the relevant trade debt should be paid in accordance with
the credit period authorised by the relevant creditors (or, if different, the
period extended by creditors in which to make payment); or
(viii) amend to any material extent, including by increasing existing credit
lines, any of the terms on which goods, facilities or services are supplied
(including, for the avoidance of doubt, the price at which such goods,
facilities or services are supplied), except where required to do so in order to
comply with any applicable legal or regulatory requirement or except in the
ordinary course of business (but provided that the Buyer will not instruct or
seek to procure that any such terms are amended).
5 WARRANTIES
5.1 WARRANTIES BY THE SELLERS
(a) The Sellers warrant to the Buyer in the terms set out in the Warranties
as follows:
(i) the Warranties are given by NIIL only in respect of Autotype UK and the
UK Subsidiaries; and
(ii) the Warranties are given by NL only in respect of Autotype USA and
Autotype Americas Inc.
(b) For the avoidance of doubt each Seller shall only have any liability
under the Warranties in respect of those companies referred to in either clause
5.1(a)(i) (in the case of NIIL) or 5.1(a)(ii) (in the case of NL).
5.2 WARRANTIES QUALIFIED BY REFERENCE TO AWARENESS, KNOWLEDGE AND SIMILAR
TERMS
Any of the Warranties which is qualified as being given "so far as the Sellers
are aware" or "to the best of the knowledge, information and belief of the
Sellers" or qualified by any similar expression, is deemed to refer to only
those matters which are within the actual knowledge of each of the following
individuals, such individuals being deemed to have made careful enquiry in
relation to the subject matter of the relevant warranty:
- Xxxxxx Xxxxxxxx
- Xxxxx Xxxxxxxx
- Xxxxxxxx Xxxxxxx
- Xxxxxx Xxxxxx
- Xxxxxx Xxxxxx
- Xxxx Xxxxxxx
- Xxxxxxx Xxxxxx
- Xxxxxx Xxxxxx
- Xxxxx Xxxxxx
- Xxxxx Xxxxxxxxx
- Xxxxxxx Xxxxxxx
- Xxxxxxx Xxxx Ko Siong
at the date of this Agreement.
5.3 INDEPENDENT WARRANTIES
Each of the Warranties shall be construed as a separate and independent warranty
and, save as expressly provided otherwise in this Agreement, shall not be
limited by reference to or inference from any other Warranty or by any other
provision of this Agreement or any other matter.
5.4 REDUCTION OF PURCHASE PRICE
Any payment made by a Seller to the Buyer in respect of any of the Warranties
shall, to the extent possible, be deemed to be a reduction in that part of the
Purchase Price paid to the Seller in question.
5.5 EFFECT OF COMPLETION
Neither the Warranties, nor any rights or remedies in respect of the them, shall
in any respect be extinguished or affected by Completion.
5.6 SCHEDULE OF LIMITATIONS
The liability of the Sellers pursuant to this Agreement shall be subject to the
provisions of schedule 7.
6 RESTRICTIVE COVENANTS
6.1 DEFINITIONS USED IN THIS CLAUSE 6
In this clause 6 the following expressions have the meanings given to them:
GROUP CONFIDENTIAL INFORMATION means any trade or business information
(including formulae, processes, methods, knowledge and Know-how) directly
connected with the maintenance and supply of any Restricted Products by any
Group Company and which is for the time being confidential to any Group Company
KNOW-HOW means all industrial and commercial information and techniques,
instruction manuals, operating conditions and procedures, information as to
suppliers and customers and all other accounts, records and information
(wherever situated) relating directly to the activities of any Group Company
PROHIBITED AREA means every country in the world in which the Group has
manufactured or sold any of the Restricted Products during the 2 years prior to
Completion
RESTRICTED PRODUCTS means hard coat films, light management films, screen
printing products and gravure and masking films, in each case as manufactured,
produced and/or sold by any Group Company as at the date of this Agreement and
any other products which are of a type similar to and competing with any such
products
SELLER CONFIDENTIAL INFORMATION means all information in whatever form held:
(a) relating to any member of the Sellers' Group or the business of any such
member
(b) supplied by or on behalf of any member of the Sellers' Group to any
member of the Group or any other member of the Buyer's Group or
(c) supplied in confidence to any member of the Sellers' Group by any third
party but in each case excluding, for the avoidance of doubt, the Group
Confidential Information
6.2 RESTRICTIVE COVENANTS
Each of the Sellers undertakes with the Buyer that without the prior consent in
writing of the Buyer it will not (and it will procure that no member of the
Sellers' Group will) directly or indirectly whether by itself, its employees or
agents and whether on its own behalf or on behalf of any other person or
otherwise howsoever, for a period of 3 years from the date of Completion:
(a) carry on, or be employed or engaged in, the manufacture, production or
sale of the Restricted Products or any of them in the Prohibited Area in
competition with the Business as carried on at the date of this Agreement; or
(b) in relation to the Restricted Products solicit, canvass, accept orders
from or otherwise deal with any person who was a customer or supplier of any
Group Company at any time during the 2 years prior to Completion; or
(c) solicit or entice away or endeavour to solicit or entice away from any
Group Company any director or senior manager employed or otherwise engaged by
the relevant Group Company on the date of Completion, whether or not that person
would commit any breach of his contract of employment by reason of his leaving
the service of the relevant Group Company;
provided that nothing in this clause 6.2 shall operate to prohibit any Seller
from holding in aggregate up to 5% of the nominal value of shares of any class
of any company which shares are listed or dealt in on a recognised stock
exchange.
6.3 USE OF THE SELLERS' TRADING NAMES
(a) Subject to clause 6.3(b), the Buyer shall not, and shall procure that no
member of the Buyer's Group (including any Group Company) shall, at any time
after Completion:
(i) use or display the names NORCROS, NOR or NOR or any confusingly similar
names or logos thereof and/or any other name or logo used by any member of the
Sellers' Group (which, for the avoidance of doubt, does not include any Group
Company) (together the SELLERS' NAMES) in relation to any goods or services
provided by the Buyer or any member of the Buyer's Group including, without
prejudice to the foregoing, the use of the Sellers' Names on any building owned
or used by the Buyer or any member of the Buyer's Group and on any letterhead or
communications; and
(ii) in the course of carrying on any trade or business, claim, represent or
otherwise indicate any present or continuing association with the Sellers'
Group.
(b) Notwithstanding clause 6.3(a), the Buyer (in relation to the Companies
and the Subsidiaries only) shall be permitted to use or display the Sellers'
Names for a transitional period (which shall not exceed 3 months following
Completion without the consent of the Sellers) provided that the Buyer shall use
its reasonable endeavours to procure that the relevant member of the Buyer's
Group ceases to use the Sellers' Names as soon as practicable following
Completion.
6.4 USE OF THE GROUP'S TRADING NAMES
(a) Subject to clause 6.4(b), the Sellers shall not, and shall procure that
no member of the Sellers' Group shall, at any time after Completion:
(i) use or display the names AUTOTYPE or HOLOTOOLS or any confusingly
similar names or logos thereof and/or any other name or logo used by any member
of the Group (together the GROUP NAMES) in relation to any goods or services
provided by the Sellers' Group including, without prejudice to the foregoing,
the use of the Group Names on any building owned or used by any members of the
Sellers' Group and on any letterhead or communications; and
(ii) in the course of carrying on any trade or business, claim, represent or
otherwise indicate any present or continuing association with the Group.
(b) Notwithstanding clause 6.4(a), each member of the Sellers' Group shall
be permitted to use or display the Group Names for a transitional period (which
shall not exceed 3 months following Completion without the consent of the Buyer)
provided that the Sellers shall use their respective reasonable endeavours to
procure that the relevant member of the Sellers' Group ceases to use the Group
Names as soon as practicable following Completion.
6.5 USE OF GROUP CONFIDENTIAL INFORMATION
(a) Each of the Sellers undertake with the Buyer that:
(i) it will not (and shall procure that no member of the Sellers' Group
will) at any time after Completion directly or indirectly, whether by itself,
its employees or agents or otherwise howsoever (subject to clause 6.5(b))
without the consent of the relevant Group Company use, whether on its own behalf
or on behalf of any other person, or divulge to any other person, any Group
Confidential Information; and
(ii) if any Group Company shall have obtained any Group Confidential
Information from any third party under an agreement including any restriction on
disclosure known to it, it will not at any time without the consent of the
relevant Group Company infringe that restriction.
(b) The restrictions in clause 6.5(a) shall not apply:
(i) in respect of any Group Confidential Information which is in or becomes
part of the public domain, other than through a breach of the obligations of
confidentiality set out in this Agreement; or
(ii) to any Seller to the extent that it is required to disclose
Confidential Information by any applicable law, government order, decree,
regulation, licence or rule or pursuant to the regulations of any securities
exchange or regulatory or governmental body to which it is subject.
6.6 USE OF SELLER CONFIDENTIAL INFORMATION
(a) The Buyer undertakes with the Sellers that:
(i) no member of the Buyer's Group (including any Group Company) will at any
time after Completion directly or indirectly, whether by itself, its employees
or agents or otherwise howsoever (subject to clause 6.6(b)) without the consent
of the Sellers use, whether on its own behalf or on behalf of any other person,
or divulge to any other person, any Seller Confidential Information; and
(ii) if any member of the Buyer's Group shall have obtained any Seller
Confidential Information from any third party under an agreement including any
restriction on disclosure known to it, it will not at any time without the
consent of the Sellers infringe that restriction.
(b) The restrictions in clause 6.6(a) shall not apply:
(i) in respect of any Seller Confidential Information which is in or becomes
part of the public domain, other than through a breach of the obligations of
confidentiality set out in this Agreement; or
(ii) to any member of the Buyer's Group to the extent that it is required to
disclose Seller Confidential Information by any applicable law, government
order, decree, regulation, licence or rule or pursuant to the regulations of any
securities exchange or regulatory or governmental body to which it is subject.
7 PAYMENTS
7.1 PAYMENTS TO THE SELLERS
Any amounts payable to a Party pursuant to this Agreement may be paid by
telegraphic transfer to the account specified below (or such other UK bank
account as a Party may notify to the others in writing for this purpose from
time to time):
(a) SELLERS
Account name:. . . . . . . Xxxxxxxxx Xxxxxxx Client Account
Name of bank:. . . . . . . Royal Bank of Scotland plc
Bank details omitted
(b) BUYER
Account name:. . . . . . . Wragge & Co LLP Client Account
Name of bank:. . . . . . . Lloyds TSB Bank plc
Bank details omitted
7.2 DISCHARGE OF OBLIGATION TO MAKE PAYMENTS
The Parties hereby confirm that receipt of any amount in an account specified
by, or in accordance with, clause 7.1 shall be good, valid and effectual
discharge for the paying Party in respect of such amount.
7.3 NO SET OFF
Any payment to be made to any Party under this Agreement shall be made in full
without any set-off, restriction, condition or deduction for or on account of
any counterclaim.
7.4 DEFAULT INTEREST
In the event that any payment is not made by any Party (or by another member of
the Sellers' Group or the Buyer's Group as a consequence of an obligation of any
Party) pursuant to this Agreement on its due date, interest shall accrue on such
amount at the rate of 4% above the base rate of Lloyds TSB Bank plc for the time
being in force from the due date until the date of actual payment.
8 BUYER'S GUARANTEE
8.1 If the Buyer fails to comply with any of the provisions of this
Agreement on the due date, then the Buyer Guarantor guarantees that it shall (on
demand by a Seller) immediately perform and discharge the obligations of the
Buyer under those provisions provided always that (notwithstanding any other
provision of this clause 8) the Buyer Guarantor's liability under this clause 8
shall be no greater than the Buyer's liability under the terms of this
Agreement.
8.2 The Buyer Guarantor's liability under clause 8.1 shall not be affected
by any concession, time or indulgence granted by a Seller to the Buyer or by any
other dealing or thing (whether relating to the Buyer, any co-guarantor or any
other person) which would, but for this clause 8.2, operate to discharge or
reduce that liability.
8.3 If anything (including any legal limitation, disability or incapacity on
the part of the Buyer) causes any of the Buyer's obligations under this
Agreement and/or the guarantee set out in clause 8.1 to be or become invalid or
unenforceable, then the Buyer Guarantor shall perform and discharge all of the
Buyer's obligations under this Agreement as if they were the primary obligations
of the Buyer Guarantor.
8.4 Subject always to the Buyer Guarantor's liability not being any greater
than the Buyer's liability under the terms of this Agreement, the Buyer
Guarantor shall indemnify and keep indemnified the Sellers against any losses,
liabilities, costs and expenses resulting from the failure of the Buyer to
observe any of the provisions of this Agreement.
8.5 The Buyer Guarantor shall make any payments due from it under this
clause 8 in full, without any deduction or withholding in respect of any claim
(whether by way of set-off, counterclaim or otherwise) asserted from time to
time by the Buyer against any Seller under this Agreement or in respect of any
other matter or thing.
8.6 The Buyer Guarantor shall not exercise any rights which it may have
against the Buyer arising from or otherwise relating to its guarantee under
clause 8.1 or its other obligations under this clause 8 unless and until all of
the obligations of the Buyer and the Guarantor under this Agreement have been
performed and discharged.
8.7 The Guarantor's obligations under this clause 8, including its guarantee
under clause 8.1, are unconditional and irrevocable.
9 SELLERS' GUARANTEE
9.1 If the Sellers or either of them fail to comply with any of the
provisions of this Agreement on the due date, then the Seller Guarantor
guarantees that it shall (on demand by the Buyer) immediately perform and
discharge the obligations of the Sellers under those provisions provided that
(notwithstanding any other provision of this clause 9) the Seller Guarantor's
liability under this clause 9 shall be no greater than the Sellers' liability
under the terms of this Agreement.
9.2 The Seller Guarantor's liability under clause 9.1 shall not be affected
by any concession, time or indulgence granted by the Buyer to a Seller or by any
other dealing or thing (whether relating to a Seller, any co-guarantor or any
other person) which would, but for this clause 9.2, operate to discharge or
reduce that liability.
9.3 If anything (including any legal limitation, disability or incapacity on
the part of a Seller) causes any of the Sellers or any of their obligations
under this Agreement and/or the guarantee set out in clause 9.1 to be or become
invalid or unenforceable, then the Seller Guarantor shall perform and discharge
all of the Sellers' obligations under this Agreement as if they were the primary
obligations of the Seller Guarantor.
9.4 Subject always to the Seller Guarantor's liability not being any greater
than the Sellers' liability under the terms of this Agreement, the Seller
Guarantor shall indemnify and keep indemnified the Buyer against any losses,
liabilities, costs and expenses resulting from the failure of the Sellers to
observe any of the provisions of this Agreement.
9.5 The Seller Guarantor shall make any payments due from it under this
clause 9 in full, without any deduction or withholding in respect of any claim
(whether by way of set-off, counterclaim or otherwise) asserted from time to
time by the Sellers against the Buyer under this Agreement or in respect of any
other matter or thing.
9.6 The Seller Guarantor shall not exercise any rights which it may have
against either Seller arising from or otherwise relating to its guarantee under
clause 9.1 or its other obligations under this clause 9 unless and until all of
the obligations of the Sellers and the Seller Guarantor under this Agreement
have been performed and discharged.
9.7 The Seller Guarantor's obligations under this clause 9, including its
guarantee under clause 9.1, are unconditional and irrevocable.
10 POST-COMPLETION MATTERS
10.1 DEALINGS IN THE SALE SHARES PENDING REGISTRATION OF TRANSFERS
Each Seller declares that, for so long as it remains the registered holder of
any of the Sale Shares after Completion, it will:
(a) hold such Sale Shares and any dividends and other distributions of
profits or surplus or other assets declared, paid or made in respect of them on
or after Completion and all rights arising out of or in connection with them in
trust for the Buyer and its successors in title; and
(b) deal with and dispose of the Sale Shares and all such dividends,
distributions and rights as are described in clause 10.1 only as the Buyer or
any such successor may direct.
10.2 PENSIONS
The provisions set out in schedule 6 shall apply in relation to the Disclosed
Scheme.
10.3 RELEASE OF GUARANTEES GIVEN IN FAVOUR OF THE SELLERS BY ANY GROUP
COMPANY
Each Seller shall:
(a) use all reasonable endeavours to secure as soon as practicable after
Completion (but with effect from Completion) the release of each Group Company
without cost to any Group Company from all Guarantees and liabilities given or
undertaken by any Group Company to secure or support the obligations of:
(i) any of the Sellers; or
(ii) any member of the Sellers' Group (not being a Group Company)
(including, if required, offering their own Guarantee or liability on the same
terms as and in substitution for the existing Guarantee or other liability of
the relevant Group Company); and
(b) indemnify and keep indemnified the Buyer (which takes the benefit of
this indemnity for itself and as trustee for each Group Company) against all
actions, proceedings, losses, costs, claims, damages, liabilities and expenses
which it or any Group Company may suffer or incur in respect of any claim made
under any Guarantees or liabilities referred to in clause 10.3(a) after
Completion.
10.4 RELEASE OF GUARANTEES GIVEN IN FAVOUR OF ANY GROUP COMPANY BY THE
SELLERS
The Buyer shall:
(a) use all reasonable endeavours to secure as soon as practicable after
Completion (but with effect from Completion) the release of each Seller (at the
relevant Seller's cost) from all Guarantees and liabilities given or undertaken
by:
(i) any of the Sellers; or
(ii) any other member of the Sellers' Group
to secure or support the obligations of any Group Company (including, if
required, offering its own Guarantee or liability on the same terms as and in
substitution for the existing Guarantee or other liability of the relevant
Seller); and
(b) indemnify and keep indemnified each Seller (which takes the benefit of
this indemnity for itself and as trustee for each other member of the Sellers'
Group) against all actions, proceedings, losses, costs, claims, damages,
liabilities and expenses which it or any such person may suffer or incur in
respect of any claim made under any Guarantees or liabilities referred to in
clause 10.4(a) after Completion provided that any payment under this clause
10.4(b) shall not prejudice the Buyer's rights or remedies under any other term
of this Agreement (including the Warranties).
For these purposes the Letters of Credit shall not constitute a Guarantee and
shall instead be governed by the terms set out in clause 10.5(c) below.
10.5 INSURANCE
(a) The Buyer acknowledges and agrees that with effect from Completion, or,
in the case of credit insurance in respect of trade debtors, with effect from
the end of the First Quarter, all insurance cover provided in relation to the
Business pursuant to polices maintained by the Sellers' Group shall cease but
(subject to the terms of any relevant policy) without prejudice to any accrued
claims which arise as a result of certain circumstances occurring prior to
Completion (which shall be paid over to the extent that it exceeds any
deductible or excess arising in relation to such claim or claims which shall be
for the account of the Buyer) to the Buyer as soon as is reasonably practicable
following receipt).
(b) Following any cessation referred to in clause 10.5(a) above taking
effect, any amount(s) refunded by the Sellers' Group insurers in respect of
insurance premiums or fees as a result of any such cessation shall be for the
account of the Group (and the Sellers shall procure that any such amounts
received by any member of the Sellers' Group shall be paid over to the Buyer as
soon as is reasonably practicable following receipt), but the Buyer acknowledges
and agrees that any such refund will be at the discretion of the relevant
underwriters and so may not be made or may not constitute a full pro rata refund
of all such premiums or fees paid by or on behalf of the Group in respect of
such insurance.
(c) In the event that any member of the Sellers' Group may have incurred or
may at any time incur any costs, fees or expenses in connection with the
arrangement, provision or procurement of any Letters of Credit, the Buyer hereby
covenants to pay to NL (or such other member of the Sellers' Group as NL may
direct) (to the extent that the same has not already been paid by the Group) an
amount equal to one third of such costs, fees or expenses as soon as is
reasonably practicable following the demand of such amount(s) by NL.
10.6 INTRA GROUP DEBT
If and to the extent that any Intra Group Debt remains outstanding following
Completion and was or is to be accounted for in the Final Debt Amount Statement,
the Sellers shall procure that any such Intra Group Debt owing by any member of
the Sellers' Group is repaid to the relevant Group Company and the Buyer shall
procure that any such Intra Group Debt owing by any Group Company is repaid to
the relevant member of the Seller's Group, in any such case:
(a) if the relevant parties have agreed in writing a period during which the
amount shall be paid, on or before the end of such period; and
(b) if the relevant parties have not made such an agreement, within 30 days
of final agreement/determination of the Final Debt Amount Statement.
10.7 ACCESS TO GROUP RECORDS
The Buyer shall procure that the Sellers and their accountants and agents shall
as soon as reasonably practicable and in any event within 5 days of request for
the same be given reasonable access during normal business hours to any
employees of, and any books and records of, any Group Company as may reasonably
be required by the Sellers or any other member of the Sellers' Group for any
tax, regulatory or financial reporting requirement of any member of the Sellers'
Group.
10.8 ACCESS TO SELLERS' GROUP RECORDS
The Sellers shall procure that the Buyer and its accountants and agents shall as
soon as reasonably practicable and in any event within 5 days of request for the
same be given reasonable access during normal business hours to any employees
of, and any books and records of, any member of the Sellers' Group as may
reasonably be required by the Buyer or any other member of the Buyer's Group for
any tax, regulatory or financial reporting requirement of any member of the
Buyer's Group.
11 ASSIGNMENT AND THIRD PARTY RIGHTS
11.1 Unless this Agreement expressly states otherwise, no right or obligation
arising under it (or any document entered into pursuant to or in connection with
it) may be assigned, transferred or otherwise disposed of, in whole or in part,
without the prior written agreement of the Parties.
11.2 Notwithstanding clause 11.1, the benefit of this Agreement (and/or any
document entered into pursuant to or in connection with it) may be assigned, in
whole or in part, at any time and on more than one occasion by the Buyer to any
member of the Buyer's Group at that time. However, such assignee shall only be
entitled to enforce the benefit assigned to it whilst it remains a member of the
Buyer's Group. Before such assignee ceases to be a member of the Buyer's Group,
the Buyer shall procure that such assignee reassigns the benefit that has been
assigned to it pursuant to this clause to the Buyer (or another member of the
Buyer's Group at that time).
11.3 Notwithstanding clause 11.1, the benefit of this Agreement (and/or any
document entered into pursuant to or in connection with it) may be assigned, in
whole or in part, at any time and on more than one occasion by either of the
Sellers to any member of the Sellers' Group at that time. However, such
assignee shall only be entitled to enforce the benefit assigned to it whilst it
remains a member of the Sellers' Group. Before such assignee ceases to be a
member of the Sellers' Group, the Sellers shall procure that such assignee
reassigns the benefit that has been assigned to it pursuant to this clause to
either of the Sellers (or another member of the Sellers' Group at that time).
11.4 References in this Agreement to a Party shall, except where the context
requires otherwise, include its successors in title and permitted assigns.
11.5 Unless this Agreement expressly states otherwise:
(a) a person who is not a Party to this Agreement has no right to enforce
any of its terms under the Contracts (Rights of Third Parties) Xxx 0000; and
(b) if a person who is not a Party to this Agreement is stated to have the
right to enforce any of its terms under the Contracts (Rights of Third Parties)
Xxx 0000, the Parties may rescind or vary this Agreement (and any documents
entered into pursuant to or in connection with it) without the consent of that
person.
12 GENERAL
12.1 The Sellers shall indemnify and keep indemnified the Group, the Buyer
and any member of the Buyer's Group (together the Indemnified Parties) against
all:
(a) actions, proceedings, losses, costs, claims, damages, liabilities,
expenses; or
(b) fines and penalties
(together RELEVANT COSTS)
made against or incurred or suffered by the Indemnified Parties insofar as the
same arise from or in connection with any claim or allegation by a third party
that clause 3 of the distribution agreements disclosed against warranty 13.3(a)
in the Disclosure Letter (the DISTRIBUTION AGREEMENTS), in any way breach the
competition laws of any jurisdiction to which such Distribution Agreement
relates.
12.2 No claim under clause 12.1 may be brought against the Sellers:
(a) to the extent that the Relevant Costs concerned are incurred pursuant to
any matters, events or circumstances which occur after Completion including, but
not limited to, the continuation in force of the Distribution Agreements I
(b) any Indemnified Party makes or causes to be made a notification to any
competition authority in respect of the Distribution Agreements without the
Sellers prior written approval except and to the extent required by any
applicable law.
12.3 Any Group Company and any member of the Buyer's Group shall be entitled
to enforce the indemnity set out in clause 12.1 above directly against the
Sellers under the Contracts (Rights of Third Parties) Xxx 0000.
12.4 CONTINUING EFFECT OF THIS AGREEMENT
All provisions of this Agreement and any other Transaction Document shall, so
far as they are capable of being performed or observed, continue in full force
and effect notwithstanding Completion, except in respect of those matters then
already performed and Completion shall not constitute a waiver of any of the
Party's rights in relation to this Agreement or any other Transaction Document.
12.5 ANNOUNCEMENTS
(a) Subject to clause 12.5(b) and 12.5(c), no Party shall make (or permit
any other member of their respective Groups to make) any announcement concerning
this Agreement or any ancillary matter before, on or after Completion without
the consent of the others.
(b) The restriction in clause 12.5(a) shall not prohibit any Party from
making any announcement or dispatching any circular as required by law or any
relevant national or supra-national regulatory, governmental or
quasi-governmental body or authority, but in any such case the Party making such
announcement or dispatching such circular shall (in so far as it is lawfully
able) use its reasonable endeavours to consult with the other Parties, and take
into account their reasonable requirements, as to the content of such
announcement or circular.
(c) Any Party may disclose information which would otherwise be prohibited
by clause 12.5(a) if and to the extent that the information is disclosed on a
strictly confidential basis to the professional advisers, auditors, bankers
and/or private equity funders of that Party.
12.6 NOTICES
(a) LANGUAGE OF NOTICES: Any notice or other document to be given under
this Agreement shall be in writing in the English language.
(b) ADDRESSES AND FAX NUMBERS FOR NOTICES: Notice details for the Parties
are as follows:
ADDRESSEE/MARKED FOR
PARTY. . . . . . . . . . . . ADDRESS AND FAX NUMBER THE ATTENTION OF
---------------------------- -------------------------------- --------------------
Sellers. . . . . . . . . . . Norcros Industry (International) Company Secretary
Limited Xxxxxxxxx Xxxxx
Xxxxxxx Xxxx
Xxxxxxxx
Xxxxxxxx
XX0 0XX
Fax no 00000 000000
Norcros Limited Company Secretary
Xxxxxxxxx Xxxxx
Xxxxxxx Xxxx
Xxxxxxxx
Xxxxxxxx
XX0 0XX
Fax no 00000 000000
---------------------------- -------------------------------- --------------------
Buyer. . . . . . . . . . . . MacDermid Inc General Counsel
000 Xxxxxxx Xxxxxx
Xxxxxxxxx
Xxxxxxxxxxx
00000
XXX
Fax no 000(000)000-0000
---------------------------- -------------------------------- --------------------
Seller Guarantor . . . . . . Norcros (Holdings) Limited Company Secretary
Xxxxxxxxx Xxxxx
Xxxxxxx Xxxx
Xxxxxxxx
Xxxxxxxx
XX0 0XX
Fax no 00000 000000
---------------------------- -------------------------------- --------------------
Buyer Guarantor. . . . . . . MacDermid Inc General Counsel
000 Xxxxxxx Xxxxxx
Xxxxxxxxx
Xxxxxxxxxxx
00000
XXX
Fax no 000(000)000-0000
---------------------------- -------------------------------- --------------------
A Party may change its notice details for the purpose of this clause 12.6 by giving notice to all the Parties to
this Agreement in accordance with this clause 12.6.
(c) PROOF OF NOTICE BEING PROPERLY GIVEN: In proving the giving of a
notice, it shall be conclusive evidence to prove:
(i) if delivered by hand, that the notice was left at the appropriate
address specified in clause 12.6(b);
(ii) if sent by post, that the envelope containing such notice was properly
addressed and posted; or
(iii) if sent by fax, that a fax transmission report was obtained by the
sender confirming the fax transmission to the relevant number stated in clause
12.6(b).
(d) WHEN NOTICES ARE TO BE DEEMED RECEIVED: If a notice is:
(i) delivered by hand between 9.00 am and 5.00 pm on a Business Day (such
time period being referred to in this clause 12.6(d) as within BUSINESS HOURS),
it shall be deemed received when so delivered or, if delivered by hand outside
Business Hours, it shall be deemed received at 9.00 am on the next Business Day
after the time of delivery;
(ii) sent by post:
(a) if the notice was posted on a Business Day, it shall be deemed received
at 9.00 am on the second Business Day (or, in the case of any notice posted by
airmail to a recipient outside the country in which such notice was posted, the
fifth Business Day) after the day the envelope containing such notice was
posted; or
(b) if the notice was not posted on a Business Day, it shall be deemed
received at 9.00 am on the third Business Day (or, in the case of any notice
posted by airmail to a recipient outside the country in which such notice was
posted, the sixth Business Day) after the day on which the envelope containing
such notice was posted; or
(iii) sent by fax during Business Hours, it shall be deemed received when so
delivered or, if sent by fax outside Business Hours, it shall be deemed received
at 9.00 am on the next Business Day after the time that the fax was sent to the
relevant number stated in clause 12.6(b).
(e) TIME: Any reference in this clause 12.6 to a particular time is to that
time in the location of the recipient of the relevant notice.
12.7 ENTIRE AGREEMENT
(a) This Agreement (together with all of the other Transaction Documents)
sets out the entire agreement and understanding between the Parties in
connection with the sale and purchase of the Sale Shares and other matters
described in them.
(b) Each of the Parties acknowledges that it is not relying on any
statements, warranties or representations given or made by any of the Parties in
relation to the subject matter of this Agreement, save for those expressly set
out in this Agreement and the other Transaction Documents and that it shall have
no rights or remedies with respect to such subject matter otherwise than under
this Agreement and any of the other Transaction Documents, provided that nothing
in this clause 12.7(b) shall exclude or limit liability in respect of fraud.
12.8 ALTERATIONS
No purported alteration of this Agreement shall be effective unless it is in
writing, refers specifically to this Agreement and is duly executed by each
Party to this Agreement.
12.9 SEVERABILITY
Each provision of this Agreement is severable and distinct from the others. The
Parties intend that every such provision shall be and remain valid and
enforceable to the fullest extent permitted by law. If any such provision is or
at any time becomes to any extent invalid, illegal or unenforceable under any
enactment or rule of law, it shall to that extent be deemed not to form part of
this Agreement but (except to that extent in the case of that provision) it and
all other provisions of this Agreement shall continue in full force and effect
and their validity, legality and enforceability shall not be thereby affected or
impaired.
12.10 COUNTERPARTS
This Agreement may be entered into in the form of two or more counterparts, each
executed by one or more of the Parties but, taken together, executed by all and,
provided that all the Parties so enter into this Agreement, each of the executed
counterparts, when duly exchanged and delivered, shall be deemed to be an
original, but, taken together, they shall constitute one instrument.
12.11 PAYMENT OF COSTS
Each of the Parties shall be responsible for its respective legal and other
costs and expenses incurred in relation to the negotiation, preparation and
completion of this Agreement and all ancillary documents. For the avoidance of
doubt all stamp, transfer, registration and other similar taxes, duties and
charges payable in connection with the sale and purchase of any of the Sale
Shares shall be paid by the Buyer.
12.12 FURTHER ASSURANCE
The Parties shall execute or, so far as they are able, procure the execution of,
all such documents and/or do or, so far as they are able, procure the doing of,
such acts and things as the other Party shall after Completion reasonably
require in order to give effect to the provisions of this Agreement and any
other Transaction Document.
12.13 TIME
Save where stated in clause 12.6(e) all references to time in this Agreement are
to London time.
13 CHOICE OF LAW, SUBMISSION TO JURISDICTION AND SERVICE OF PROCESS
13.1 CHOICE OF LAW
(a) This Agreement shall be governed by and construed in accordance with
English law, and all claims and disputes between the parties or any of them
arising out of or in connection with this Agreement (whether or not contractual
in nature) shall be determined in accordance with English law.
(b) If in any court any party argues that a court other than the courts of
England and Wales has jurisdiction to determine any dispute or difference
between the parties or any of them arising out of or in connection with this
Agreement that issue shall be determined in accordance with English law, and any
right any party might otherwise have to rely upon the law of the forum or any
other law is hereby irrevocably and unconditionally waived.
13.2 SUBMISSION TO JURISDICTION
(a) Each Party submits to the exclusive jurisdiction of the Courts of
England and Wales in relation to all claims, disputes, differences or other
matters arising out of or in connection with this Agreement.
(b) Each Party irrevocably waives any right that it may have:
(i) to object on any ground to an action being brought in the Courts of
England and Wales, to claim that the action brought in the Courts of England and
Wales has been brought in an inconvenient forum, or to claim that the Courts of
England and Wales do not have jurisdiction. The waiver contained in this clause
13.2(b)(i) includes a waiver of all formal and substantive requirements of any
otherwise competent jurisdiction in relation to this clause 13.2(b)(i);
(ii) to oppose the enforcement of any judgment of any court of England and
Wales whether on any ground referred to in clause 13.2(b)(i) or otherwise.
13.3 SERVICE OF PROCESS
(a) Each Party agrees that, without prejudice to the validity of any other
mode of service, any document in an action (including, but not limited to, any
claim form, application notice or other originating process) may be served on
any party by being delivered to or left for that party at its address for
service of notices under clause 12.6.
(b) Notwithstanding and without prejudice to the foregoing, the Buyer
Guarantor appoints the Buyer as its agent to receive service of process in
respect of any proceedings commenced by either of the Sellers in the Courts of
England and Wales arising out of or in connection with this Agreement.
(c) Without prejudice to the effectiveness of service pursuant to any other
method recognised by the Rules of Civil Procedure, service of such process upon
the Buyer at its address given in clause 12.6(b) or elsewhere within the
jurisdiction of the Courts of England and Wales pursuant to the Rules of Civil
Procedure for the time being in force shall constitute good service on the Buyer
Guarantor. The Buyer Guarantor undertakes not to contest in any court in any
jurisdiction the enforcement in that jurisdiction of any judgment of the courts
of England and Wales against it on the ground that the courts of England and
Wales did not have jurisdiction over it or that service of process (being
service in accordance with this clause) was invalid or ineffective or resulted
in it not having due or adequate notice of the proceedings.
EXECUTED by the Parties or their duly authorised representatives on the date of
this Agreement.
SCHEDULE 1
THE GROUP
PART 1 - THE COMPANIES
AUTOTYPE INTERNATIONAL LTD
1 Date and place of incorporation: 1 October 1923, England and Wales
2 Registered number: 192795
3 Registered office: Xxxxx Xxxx
Xxxxxxx
Xxxx
XX00 0XX
4 Authorised share capital: 25,000 ordinary shares of GBP 1 each
5 Issued share capital and Shareholders: 14,302 ordinary shares of GBP 1 each
held by Norcros Industry (International)
Limited and 2 ordinary shares of GBP 1
each held by Norcros Securities Limited
6 Directors: Prof. Xxxxxx Xxxx Xxxxxx
Xxxx Xxxxxxx
Xxxxxxx Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx Xxxxxxxx
Xxxxxxxx Xxxx Xxxxxxx
Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxx
Xxxxxxx Xxxxx Xxxxxxx
Xxxxxxx Xxxx Ko Siong
7 Secretary: Xxxxx Xxxxxxx Xxxxxx
8 Auditors: PricewaterhouseCoopers LLP
9 Accounting reference date: 31 March
AUTOTYPE HOLDINGS (USA) INC
1 Date and place of incorporation: 24 March 2000, Illinois
2 Registered number: 00-0000000
3 Registered office: Illinois Corporation Service Company,
000 Xxxxx Xxxxxxxxx Xxxxx,
Xxxxxxxxxxx, Xxxxxxxx 00000
4 Authorised share capital: 1000 shares of US$1.00 each
5 Issued share capital and Shareholders: 100 shares of US$1.00 each all
held by Norcros Limited
6 Directors: Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxx
Xxxxxx XxXxxxx
7 Secretary: P XxXxxxx
8 Auditors: PricewaterhouseCoopers LLP
9 Accounting reference date: 31 March
PART 2 - SUBSIDIARIES
AUTOTYPE INTERNATIONAL (ASIA) PTE LTD
1 Date and place of incorporation: 17 March 1993, Singapore
2 Registered number: 199301554K
3 Registered office: 00 Xxxxxx Xxxx,
Xxxxxxxxx 000000
4 Authorised share capital: 2,000,000 shares of Sing$1 each
5 Issued share capital and Shareholders: 1,000,002 shares of Sing$1 each all
held by Autotype International Limited
6 Directors: Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxx Ko Siong
Xxxx Xxx Xx Xxxxxx
7 Secretary: Lathika Devi
Xxxxxx Xxx
8 Auditors: PricewaterhouseCoopers LLP
9 Accounting reference date: 31 March
AUTOTYPE AMERICAS INC
1 Date and place of incorporation: 26 August 1970, Delaware
2 Registered number: 00-0000000
3 Registered office: United States Corporation Company,
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000
4 Authorised share capital: 500,000 shares of US$0.10 each
5 Issued share capital and Shareholders: 1,000 shares of US$0.10 each all
held by Autotype Holdings (USA) Inc
6 Directors: Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxx
Xxxxxx XxXxxxx
7 Secretary: P XxXxxxx
8 Auditors: PricewaterhouseCoopers LLP
9 Accounting reference date: 31 March
AUTOTYPE ITALIA S.R.L.
1 Date and place of incorporation:. . . . . 16 June 0000, Xxxxx
2 Registered number:. . . . . . . . . . . . 03894510373
3 Registered office:. . . . . . . . . . . . Xxx Xxxxxx Xxxxxx 00, 00000
Xxxxxx, Xxxxx
4 Authorised capital: . . . . . . . . . . . 46,800 euro
5 Issued capital and quota holders: . . . . 46,800 euro held as follows:
Autotype International Limited
a quota of 35,100 euros
Letcombe Investments Limited
a quota of 11,700 euros
6 Directors:. . . . . . . . . . . . . . . . Xxxxx Xxxxxxx Xxxxxxxxx
7 Secretary:. . . . . . . . . . . . . . . . None
8 Auditors: . . . . . . . . . . . . . . . . PricewaterhouseCoopers LLP
9 Accounting reference date:. . . . . . . . 31 March
CPS CHEMICAL PRODUCTS & SERVICES A/S
1 Date and place of incorporation:. . . . . 1 December 0000, Xxxxxxx
2 Registered number:. . . . . . . . . . . . 66 69 63 16
3 Registered office:. . . . . . . . . . . . Xxxxxxxxxxxx 00, XX-0000 Xxxxxxxxxxx, Xxxxxxx
4 Authorised share capital: . . . . . . . . 18,980 shares of DKK50
5 Issued share capital and Shareholders: 18,980 shares of DKK50 all held by
Autotype International Limited
6 Directors:. . . . . . . . . . . . . . . . Xxxxx Xxxxxxx Xxxxxxxxx
Xxxxx Xxxxx
Xxxxxx Xxxxxxxx Xxxxx
Prof. Xxxxxx Xxxx Xxxxxx
Xxxxxx H Forinton
7 Secretary:. . . . . . . . . . . . . . . . Xxxxx Xxxxx
8 Auditors: . . . . . . . . . . . . . . . . PricewaterhouseCoopers LLP
9 Accounting reference date:. . . . . . . . 31 March
LETCOMBE INVESTMENTS LIMITED
1 Date and place of incorporation:. . . . . 20 February 1996, England and Wales
2 Registered number:. . . . . . . . . . . . 3162018
3 Registered office:. . . . . . . . . . . . Xxxxx Xxxx
Xxxxxxx
Xxxx
XX00 0XX
4 Authorised share capital: . . . . . . . . 1,000 ordinary shares of GBP 1 each
5 Issued share capital and Shareholders:. . 1 ordinary share of GBP 1 held by
Autotype International Limited and
1 ordinary share of GBP 1 held by
Norcros Securities Limited
6 Directors:. . . . . . . . . . . . . . . . Prof. Xxxxxx Xxxx Xxxxxx
Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx Xxxxxxxxx
7 Secretary:. . . . . . . . . . . . . . . . Xxxxx Xxxxxxx Xxxxxx
8 Auditors: . . . . . . . . . . . . . . . . PricewaterhouseCoopers LLP
9 Accounting reference date:. . . . . . . . 31 March
PART 3 - THE ASSOCIATED UNDERTAKING
HOLOTOOLS GMBH
1 Date and place of incorporation: 6 November 0000, Xxxxxxx
2 Registered number: . . . . . . . HRB 6710
3 Registered office: . . . . . . . Freiburg/Breisgan
4 Authorised share capital:. . . . EUR 46,200
5 Issued share capital:. . . . . . EUR 46,200
6 Directors: . . . . . . . . . . . Xxxxxxx Xxxxxx
SCHEDULE 2
COMPLETION MATTERS
1 GENERAL
This schedule 2 is set out in the following paragraphs:
1 General
2 Documents and other items to be delivered by the Sellers
3 Obligations of the Sellers
4 Obligations of the Buyer
5 Joint obligations of the Buyer and the Sellers
2 DOCUMENTS AND OTHER ITEMS TO BE DELIVERED BY THE SELLERS
2.1 The following documents and other items set out in the remainder of this
paragraph 2 shall be delivered or otherwise made available by the Sellers to the
Buyer at Completion.
2.2 THE SALE SHARES: Transfers in respect of the UK Shares (SHARE
TRANSFERS) duly executed and completed in favour of the Buyer.
2.3 A duly executed transfer (in favour of the Buyer or such other Group
Company as the Buyer may direct) of the share in the issued share capital of
Letcombe Investments Limited registered in the name of Norcros Securities
Limited.
2.4 A duly executed transfer (in favour of the Buyer or such other Group
Company as the Buyer may direct) the share in the issued share capital of
Autotype UK registered in the name of Norcros Securities Limited.
2.5 Share certificates for the UK Shares and any shares in any subsidiary of
the Company or an indemnity in respect of any lost share certificate in the
agreed form.
2.6 Stock certificate(s) representing the USA Shares, together with a stock
power duly executed by NL in favour of the USA Buyer, authorising the transfer
of the USA Shares on the books of Autotype USA.
2.7 BOARD MINUTES OF THE SELLERS AND SELLER GUARANTOR: Certified copies of
the board minutes for each of the Sellers recording the resolution of the Board
of Directors of the Sellers authorising:
(a) the sale of those Sale Shares which are held by that Seller;
(b) the execution of the transfer document in respect of such Sale Shares as
set out in paragraphs 2.2 and 2.5 above; and
(c) the execution of this Agreement and all relevant Transaction Documents
and board minutes of the Seller Guarantor authorising the execution of this
Agreement.
2.8 STATUTORY RECORDS AND MINUTE BOOKS: As agent for each Group Company
registered in England and Wales:
(a) all its statutory and minute books;
(b) its common seal (if any);
(c) its certificate of incorporation, any certificate or certificates of
incorporation on change of name; and
(d) copies of its memorandum and articles of association.
2.9 As agent for each Group Company organised under the laws of a state of
the United States:
(a) its corporate minute books;
(b) a copy of its articles or certificate of incorporation, as applicable,
including any amendments thereto; and
(c) a copy of its bylaws.
2.10 DIRECTORS' AND SECRETARIES' RESIGNATIONS AND CONFIRMATIONS: Written
resignations of the Retiring Directors and the Retiring Secretary in the agreed
form resigning their respective offices with effect from Completion.
2.11 RELEASES OF CHARGES
Evidence satisfactory to the Buyer that all Security Interests over the assets
or shares of any Group Company have been released including the debenture
granted by Autotype UK in favour of Lloyds TSB Bank plc created on 17 December
2003.
2.12 ESTIMATED UK AND USA DEBT AMOUNT: the Estimated Debt Amount Statement.
3 OBLIGATIONS OF THE SELLERS
3.1 INTRA GROUP DEBT
The Sellers shall procure that at or before Completion there is repaid to each
Group Company all Intra Group Debt owed by either the Sellers or any member of
the Sellers' Group, and any debt owed to any Group Company by any director of
any member of the Sellers' Group.
3.2 BOARD MEETING
The Sellers shall procure that a duly convened and quorate board meeting of each
relevant Group Company registered in England and Wales is held at which:
(a) REGISTRATION OF THE SHARE TRANSFERS: The Share Transfers relating to
the UK Shares are resolved to be registered (subject only to their being duly
stamped) notwithstanding any provision to the contrary in the articles of
association of the relevant Group Company;
(b) APPOINTMENTS AND RESIGNATIONS OF DIRECTOR(S) AND SECRETARY: The
following persons are validly appointed as additional directors of the relevant
Group Company specified below:
NAME OF GROUP COMPANY NAME OF NEW DIRECTOR
------------------------ -----------------------
Autotype UK Xxxx Xxxxxxx
Xxxxx Xxxxxxxx
Xxxxx Xxxxxx
------------------------ -----------------------
Letcombe Investments Limited Xxxx Xxxxxxx
Xxxxx Xxxxxxxx
Xxxxx Xxxxxx
------------------------ -----------------------
(c) on the appointments referred to in paragraph 3.2(b) being made, the
Retiring Directors shall cease to be directors of the relevant Group Companies
(and the Sellers shall procure all such persons deliver to the Buyer their
agreed form written resignations of their respective offices acknowledging that
they have no claim outstanding including for compensation for less of office,
redundancy and unfair dismissal);
(d) the following persons are appointed as secretary of the Group Company
specified in place of the relevant existing Secretary (RETIRING SECRETARY):
NAME OF GROUP COMPANY NAME OF NEW SECRETARY
------------------------ -----------------------
Autotype UK Xxxxx Xxxxxxxx
------------------------ -----------------------
Letcombe Investments Limited Xxxxx Xxxxxxxx
------------------------ -----------------------
(e) AUDITORS: The Sellers' Accountants shall resign their office as
auditors of each Group Company incorporated in England and Wales by depositing
their written notice of resignation in the agreed form at the relevant
registered office in accordance with section 392 CA 1985 along with a statement
under section 394 of that Act that there are no circumstances connected with
their ceasing to hold office which they consider should be brought to the
attention of the members or creditors of the relevant Group Company;
(f) MISCELLANEOUS: The matters referred in paragraph 5 are approved.
4 OBLIGATIONS OF THE BUYER
The Buyer shall:
(a) pay the Completion Sum on account of the Purchase Price by electronic
funds transfer for value on the day of Completion in accordance with the
provisions of clause 7 (Payments); and
(b) procure that each Group Company repays all Debt as shown in the
Estimated Debt Amount Statement on the day of Completion (including, for the
avoidance of doubt, any Intra Group Debt as shown in the Estimated Debt Amount
Statement owed by any such Group Company). Payment by the Buyer to the Sellers
on Completion of the Estimated Debt Amount shall be an effective discharge of
the Buyer's obligation to procure discharge of the Estimated Debt Amount.
5 JOINT OBLIGATIONS OF THE BUYER AND THE SELLERS
The Buyer and the Sellers shall join in procuring that:
(a) KMPG shall be appointed auditors of each Group Company in place of the
Sellers' Accountants;
(b) all existing bank mandates in force for each Group Company shall be
altered in such manner as the Buyer shall at Completion require;
(c) the Relevant Forward Foreign Exchange Contracts details of which are
provided at numbers 3 and 4 in schedule 9, are novated in favour of the Buyer.
SCHEDULE 3
TAX
PART 1 - GENERAL
1 INTERPRETATION
1.1 In this schedule (unless the context otherwise requires):
ACCOUNTS RELIEF means any Relief which is shown as an asset in the Accounts or
is taken into account in computing (and so reducing or eliminating) any
provision for deferred Taxation which appears, or which but for the presumed
availability of the Relief would have appeared, in the Accounts;
ACTUAL TAXATION LIABILITY means a liability to make an actual payment of
Taxation whether or not such Taxation is also or alternatively chargeable
against or attributable to any other person;
CLAIM means any assessment, notice, demand or other document issued or action
taken by or on behalf of any Taxation Authority or any form of return,
computation or self-assessment required by law from which it appears that the
Company is subject to or is sought to be made subject to, or will or might
become subject to, any Taxation Liability or that a breach of any Tax Warranty
has occurred;
DEEMED TAXATION LIABILITY means:
(a) the setting off of a Post-Completion Relief or an Accounts Relief
against an Actual Taxation Liability of the Company in respect of which the
Relevant Seller would have been liable under paragraph 1.1(a) of part 2 or (as
the case may be) against income, profits or gains which would have given rise to
such an Actual Taxation Liability (a SET OFF LIABILITY), in which event the
amount of the Set Off Liability is in the former case the amount of the Actual
Taxation Liability eliminated by such setting off and in the latter case the
amount of the Actual Taxation Liability of the Company which would have arisen
but for such setting off;
(b) the unavailability of an Accounts Relief in consequence of an Event
occurring on or before Completion in which event the amount of the Deemed
Taxation Liability is:
(i) where the Accounts Relief unavailable is a deduction from either
Taxation or income, profits or gains (an UNAVAILABLE RELIEF LIABILITY), the
amount of the earliest Actual Taxation Liability of the Company to arise which
would not have arisen or could have been avoided but for such unavailability;
and
(ii) where the Accounts Relief unavailable is a right to a repayment of
Taxation (an UNAVAILABLE REPAYMENT LIABILITY), the amount of Taxation which
would have been repaid but for such unavailability;
EVENT means any event, occurrence, transaction, or act whatsoever;
GROUP RELIEF has the meaning given to that expression by section 402 ICTA;
POST-COMPLETION RELIEF means any Relief which arises in consequence of or by
reference to an Event occurring or deemed to occur after Completion and not in
consequence of or by reference to any Event occurring or deemed to occur on or
before Completion (but shall not include any Relief referred to in paragraph
4.2);
RELEVANT PERSON means:
(a) any company which before Completion was a member of the same group of
companies as a Company for any Taxation purpose ("SELLER GROUP COMPANY");
(b) any person with whom, before Completion, a Company was connected;
(c) any person who stands or has stood in a direct or indirect relationship
with a Company at any time before Completion such that failure by such person at
any time to pay Taxation could result in an assessment on a Company.
but in each case excluding the Company (and any Company within the defined term
of Company for the purposes of this Schedule) and/or the Buyer and/or any member
of the Buyer's Group;
RELEVANT SELLER means:
(a) Norcros Limited in respect of any Taxation Liability of Autotype
Holdings (USA) Inc or Autotype Americas Inc;
(b) Norcros Industry (International) Limited in respect of any Taxation
Liability of Autotype International Limited or of any company which is a
Subsidiary (other than Autotype Americas Inc ) and Holotools GmbH.
RELEVANT PERCENTAGE means 100% save in respect of Holotools GmbH where the
relevant percentage means 41%
RELIEF means any loss, allowance, exemption, set-off, deduction, credit or other
relief from any Taxation or in the computation of income, profits or gains for
the purpose of any Taxation and any right to a repayment of Taxation;
SELLERS' RELIEF means any Relief which is or becomes available to the Company
(including but not limited to any Group Relief), other than an Accounts Relief
or a Post-Completion Relief;
TAXATION means:
(a) any form of tax, and any levy, duty, impost, deduction, or withholding
in the nature of tax whether governmental, statutory, state, provincial, local
governmental or municipal whenever created or imposed and whether of Germany,
Italy, Denmark, Singapore, the United Kingdom, the United States of America or
elsewhere but not including uniform business rates, water rates, community
charge, council tax or any tax, charge, rate or duty similar to, corresponding
with, replacing or replaced by any of them; and
(b) all charges, surcharges, interest, penalties and fines relating to any
Taxation falling within paragraph (a) of this definition or which relate to any
return or information required by Taxation Legislation to be provided to a
Taxation Authority for the purposes of any such Taxation;
TAXATION AUTHORITY means any authority or person, whether of Germany, Italy,
Singapore, Denmark, the United Kingdom, the United States of America or
elsewhere, competent to impose, assess or collect any Taxation Liability;
TAXATION LEGISLATION means any statute, enactment, law or regulation, in each
case providing for the imposition of Tax;
TAXATION LIABILITY means any Actual Taxation Liability, any Deemed Taxation
Liability and any costs, fees and expenses falling within paragraph 1.1(c) of
part 2; and
UNAVAILABILITY means, in relation to an amount of a Relief, the reduction,
modification, claw-back, counteraction, disallowance or cancellation of or
failure to obtain that amount of that Relief but does not include the set-off of
any Relief against Taxation or any income, profits or gains and UNAVAILABLE
shall be construed accordingly.
1.2 In this schedule (unless the context otherwise requires):
(a) references to "the Company", whether express or implied, shall be read
and construed as references to each of the Companies (as defined in clause 1.1)
and each of the Subsidiaries and the Associated Undertaking (in each case, as
defined in clause 1.1) individually as if the provisions of this schedule were
set out in full in respect of each such company;
(b) references to persons include an individual, corporation, partnership,
unincorporated association, or body of persons and any state or any agency
thereof;
(c) references to parts are references to parts of this schedule and
reference in any part to a paragraph shall, unless otherwise stated, be to the
paragraph of that part.
1.3 Any payments made pursuant to this schedule or for breach of any
Warranty shall, so far as possible, be treated as an adjustment to the
consideration paid by the Buyer for the Sale Shares under this Agreement.
1.4 For the avoidance of doubt:
(a) Norcros Limited shall have no liability under this schedule, or for
breach of any Tax Warranty, in respect of any Taxation Liability other than in
respect of any Taxation Liability of Autotype Holdings (USA) Inc or Autotype
Americas Inc;
(b) Norcros Industry (International) Limited shall have no liability under
this schedule, or for breach of any Tax Warranty, in respect of any Taxation
Liability other than in respect of any Taxation Liability of Autotype
International Limited or of any company which is a Subsidiary (other than
Autotype Americas Inc) and Holotools GmbH.
2 EXCLUSIONS AND LIMITATIONS
2.1 The Sellers shall not be liable for breach of any Tax Warranty in
respect of any Taxation Liability (or where the loss, liability or damage
arising in consequence of a breach of any Tax Warranty is any Taxation
Liability) or under part 2 in respect of any Taxation Liability to the extent
that:
(a) provision or reserve or accrual for it is made in the Accounts or (in
respect of the non-UK Subsidiaries only) the Management Accounts (as defined in
paragraph 2.3 of Schedule 4);
(b) it is, or has been, paid or discharged on or before Completion whether
or not such payment or discharge is reflected in the Accounts;
(c) (in respect of the UK Subsidiaries only) it is tax other than
corporation tax that arises in consequence of an Event in the ordinary course of
business of the Company since the Accounts Date;
and for the purposes of this paragraph 2.1(c) the following Events shall not
constitute Events in the ordinary course of business:
(i) the acquisition, disposal or supply or deemed acquisition, disposal or
supply of any goods, assets, services or business facilities of any kind for a
consideration deemed for any Tax purposes to be different from that (if any)
actually received, to the extent of that difference;
(ii) the making of any distribution or deemed distribution or the creation,
cancellation or reorganisation of any share or loan capital;
(iii) the Company ceasing to be a member of a group for any Taxation purpose
prior to Completion;
(iv) the disposal and/or completion of the disposal of any capital asset
since the Accounts Date and whether before or after Completion for an amount in
excess of its value adopted and/or provided for in the Accounts and is a
Taxation Liability in respect of actual as opposed to deemed income, profits or
gains not exceeding such excess;
(v) any Event to which Part XVII ICTA applies; and
(vi) any Event which gives rise to a Taxation Liability in respect of deemed
(as opposed to actual) income, profits or gains.
(d) any Sellers' Relief is or becomes available (or is made available at no
cost) to the Company to reduce and/or extinguish the Taxation Liability or
breach;
(e) it arises in consequence of, or would have been reduced or eliminated
but for:
(i) any act or omission (other than at the express written request of the
Relevant Seller or pursuant to the rights of the Relevant Seller under paragraph
6 or 7 of this part 1) of the Company or any member of the Buyer's Group after
Completion otherwise than in the ordinary course of the business of such company
and otherwise than pursuant to a legally binding obligation of such company in
existence at Completion and which does not consist of communicating with any
Taxation Authority (but only to the extent any such communication is required by
Taxation Legislation) or where such action or omission is necessary to comply
with generally accepted accounting principles of the jurisdiction in which the
Company is incorporated in force at Completion;
(ii) the Company paying an unusual or abnormal dividend after Completion;
(iii) the Company ceasing to carry on any trade or business after Completion
or effecting a major change after Completion in the nature or conduct of any
trade or businesses carried on by it;
(iv) the Company changing the date (other than at the express written
request of the Relevant Seller or pursuant to the rights of the Relevant Seller
under paragraph 6 or 7 or 8 of this part 1) to which it makes up its accounts or
changing any of its accounting policies, bases or practices (including, without
limitation, the treatment of timing differences for capital allowances purposes
or otherwise and the bases on which the Company values its assets) in either
case after Completion save where such change is required to comply with
generally accepted accounting principles or applicable law (in each case, in the
jurisdiction in which the Company is incorporated) and which is in force at the
Accounts Date;
(v) the Company disposing of any capital asset, or ceasing to be a member of
a group for the purposes of any Taxation, after Completion;
(vi) the failure (other than at the express written request of the Relevant
Seller or pursuant to the rights of the Relevant Seller under paragraph 6 or 7
or 8 of this part 1 or where such failure is necessary to comply with generally
accepted accounting principles of the jurisdiction in which the Company is
incorporated in force at Completion) by the Company after Completion to make any
claim, election, surrender or disclaimer or to give any notice or consent or to
do any other thing, the making, giving or doing of which was permitted by law
and which is taken in account:
(A) in computing and so reducing any provision which appears in the Accounts
(or eliminating any provision which would otherwise have appeared in the
Accounts); or
(B) in computing any right to repayment of Taxation which appears in the
Accounts;
in each case which was disclosed by the Relevant Seller in sufficient time and
detail to enable the claim, election, surrender or disclaimer to be made given
or done, as the case may be, or the withdrawal or amendment by the Company after
Completion (other than at the express written request of the Relevant Seller or
pursuant to the rights of the Relevant Seller under paragraph 6 or 7 or 8 of
this Part 1) of any such claim, election, surrender, disclaimer, notice or
consent made by the Company prior to Completion save where such claim, election,
surrender, disclaimer, notice or consent was not in accord with generally
accepted accounting principles or applicable law in the jurisdiction in which
the Company is incorporated;
(vii) any claim, election, surrender, disclaimer, notice or consent made by
the Company after Completion, the making or doing of which was not taken into
account:
(A) in computing and so reducing any provision which appears in the Accounts
(or eliminating any provision which, would otherwise have appeared in the
Accounts); or
(B) in computing any right to repayment of Taxation which appears in the
Accounts,
(other than at the express written request of the Relevant Seller or pursuant to
the rights of the Relevant Seller under paragraph 6 or 7 or 8 of this Part 1 or
save where such action or omission is necessary to comply with generally
accepted accounting principles or applicable law, in each case of the
jurisdiction in which the Company is incorporated in force at Completion);
(viii) any failure by the Buyer or the Company to comply with its
obligations under paragraph 6 (Appeals and conduct of claims) paragraph 7
(Taxation Computations) or paragraph 8 (Group Relief);
(ix) any legislation or any change in the rate of any Taxation or any
imposition of Taxation or change in the published practice of, or published
concession operated by, any Taxation Authority or published change in
interpretation of law in each case coming into effect after Completion;
(x) the earning, receipt or accrual for any Taxation purpose of any actual
income, profit or gain (and receipt of money in respect of the same) prior to
the Accounts Date which is not recognised in the Accounts; or
(f) the Taxation Liability arises only in respect of income, profits or
gains actually earned, received or accrued after Completion but deemed to be
earned, accrued or received before Completion due to the time apportionment of
income, profits or gains arising in the accounting period of the Company which
is current at Completion;
(g) the Buyer has recovered damages or any other amount under this Agreement
(whether for breach of warranty, under this schedule or otherwise) in respect of
the same loss, liability, damage or Event or the Buyer or the Company have
otherwise obtained reimbursement or restitution from any Seller.
3 MITIGATION OF LIABILITY
The Relevant Seller may, in particular but without limitation, by notice in
writing to the Buyer avoid or reduce any liability which the Relevant Seller
would, apart from this paragraph 3, have under part 2 or for breach of any Tax
Warranty by surrendering or procuring the surrender to the Company of any Relief
(including, without limitation, any Group Relief) (without the Buyer or the
Company being liable to make any payment in consideration for such surrender)
and the liability of the Relevant Seller under part 2 or for breach of any Tax
Warranty shall be satisfied or avoided to the extent of the amount of Taxation
which could be satisfied or avoided as a result of such surrender. The Buyer
shall procure that the Company takes all such reasonable steps, including
(without limitation) making and giving all such reasonable claims and consents
as may be necessary to effect any such surrender.
4 OVER-PROVISIONS AND RELIEFS
4.1 The Buyer shall at the request of the Relevant Seller require the
auditors of the Company (THE AUDITORS) to determine (as experts and not as
arbitrators and at the expense of the Relevant Seller) whether:
(a) any provision in the Accounts for Taxation or for payment for the
surrender of any Relief has proved to be an over-provision and if so its amount;
or
(b) any right to a repayment of Taxation treated as an asset in the Accounts
has proved to be understated and if so its amount or, where no right to
repayment of Taxation was treated as an asset in the Accounts, whether any such
amount should have been treated as an asset in the Accounts and if so the
amount; and
if the Auditors determine that there has proved to be any such over-provision or
understatement, the amount of such over-provision or understatement (as the case
may be) shall be dealt with in accordance with paragraph 4.3.
4.2 The Buyer shall at the request of the Relevant Seller require the
Auditors to determine (as experts and not as arbitrators and at the expense of
the Relevant Seller) whether any Taxation Liability (or the Event giving rise to
such Taxation Liability or the discharge of it) which has resulted in any sum
having been paid by any Seller under part 2 or for breach of any Tax Warranty
has given rise to a Relief (or would give rise to a Relief assuming that all
reasonable steps are taken to obtain such Relief) which would not otherwise have
arisen, and:
(a) a liability of the Company to make an actual payment or increased
payment of Taxation (save where such liability is a liability of the Relevant
Seller under this schedule) has been satisfied or avoided in whole or in part by
the use of that Relief; or
(b) a right to a repayment of Taxation has arisen as a result of the use of
that Relief;
and, if the Auditors so determine, the amount by which that liability has been
satisfied or avoided or an amount equal to the amount of that repayment (as the
case may be) shall be dealt with in accordance with paragraph 4.3.
4.3 Subject to paragraph 4.4 below, it is provided under paragraph 4.1 or
4.2 that any amount is to be dealt with in accordance with this paragraph 4.3:
(a) the amount shall first be set off against any payment then due from the
Relevant Seller under part 2 or for breach of any Tax Warranty; and
(b) to the extent there is an excess, that excess shall be carried forward
and set off against any future payment which becomes due from a Relevant Seller
under part 2 or for breach of any Tax Warranty.
4.4 Paragraph 4.3 shall not apply unless and until the aggregate of the
amounts determined pursuant to paragraphs 4.1 and 4.2 to be dealt with under
paragraph 4.3 exceed GBP 150,000, at which point paragraph 4.3 shall apply in
respect of the whole of such amounts and not merely the excess.
4.5 Where such determination by the Auditors as is mentioned in paragraph
4.1 or 4.2 has been made, the Relevant Seller or the Buyer may request the
Auditors to review such determination (at the expense of the person making the
request) in the light of all relevant circumstances, including any facts which
have become known only since such determination, and to determine whether such
determination remains correct or whether, in the light of those circumstances,
the amount that was the subject of such determination should be amended. In
making any determination as to the amount of any Relief which might be available
to a Relevant Seller under paragraph 4.2, the Auditors shall not include any
Relief to the extent to which it has already been reflected in calculating the
amount of any damages paid by the Relevant Seller in respect of any breach of a
Tax Warranty.
4.6 If the Auditors determine under paragraph 4.5 that an amount previously
determined should be amended, that amended amount shall be substituted for the
purposes of paragraph 4.1 or 4.2, as the case may be, in place of the amount
originally determined and such adjusting payment (if any) as may be required by
virtue of such substitution shall forthwith be made by the Relevant Seller to
the Buyer or, as the case may be, by the Buyer to the Relevant Seller.
5 RECOVERY FROM THIRD PARTIES
5.1 If the Relevant Seller has made, or is liable to make, a payment to the
Buyer under part 2 or for breach of any Tax Warranty and the Company is entitled
to recover from any third party (including any Taxation Authority) any sum in
consequence of any Event to which the payment made by, or liability of, the
Relevant Seller relates under this schedule the Buyer shall and shall procure
that the Company shall (at the cost of the Relevant Seller) use all reasonable
endeavours (requested by the Relevant Seller) to effect such recovery.
5.2 The Buyer covenants with the Relevant Seller to pay to the Relevant
Seller an amount equal to the lesser of any sum referred to in paragraph 5.1
(including any interest or repayment supplement) which the Company actually
recovers and the amount paid by the Relevant Seller to the Buyer in respect of
the Taxation Liability in question, less any costs, fees or expenses (including
any additional Tax Liability which the Buyer actually suffers as a result of the
receipt of any such amount as is referred to in paragraph 5.1) incurred by the
Buyer in respect of the matter in question within five Business Days of
recovering such sums.
6 APPEALS AND CONDUCT OF CLAIMS
6.1 If the Buyer or the Company (or any of their officers, employees,
servants or agents) becomes aware of a Claim, the Buyer shall or shall procure
that the Company shall as soon as reasonably practicable give written notice of
the Claim to the Relevant Seller (provided always that the service of such
notice shall not constitute a condition precedent to the liability of the
Relevant Seller) and, in any event, where a statutory or other time limit is
applicable for responding to or appealing against the Claim or to any
assessment, notice, demand or other document issued (or deemed to be issued) or
action taken which constitutes the Claim, the Buyer shall give written notice of
the Claim to the Relevant Seller at least 15 days prior to the expiry of such
time limit. Such written notice shall (if reasonably possible) include an
estimate of the Relevant Seller's liability under this schedule and/or for
breach of any Tax Warranty in respect of such Claim, the basis of calculation of
that estimate and such details of the Claim as are then available to the Buyer
or the Company.
6.2 The Buyer shall, and shall procure that the Company shall, take such
action to appeal, protest against, mitigate, reduce, avoid, dispute, resist or
compromise the Claim and make available such documents, information and
assistance in connection with the Claim as the Relevant Seller may by written
notice reasonably request provided the Relevant Seller shall indemnify the Buyer
and the Company against all reasonable costs and expenses which the Buyer or the
Company incurs as a result of taking such action or providing such information
and assistance.
6.3 The Relevant Seller may elect to have any action referred to in
paragraph 6.2 conducted by professional advisers acting in the name of the
Company (at the cost and expense of the Relevant Seller) but reporting to and
taking instructions from the Relevant Seller in which event the provisions of
paragraph 6.4 shall apply.
6.4 The Relevant Seller hereby undertakes to the Buyer to:
(a) obtain the prior written approval of the Buyer (not to be unreasonably
withheld or delayed) to the professional advisers to be appointed to act in
connection with the action;
(b) keep the Buyer informed of all matters relating to the action and
deliver to the Buyer copies of all material correspondence relating to the
action;
(c) obtain the prior written approval of the Buyer (not to be unreasonably
withheld or delayed) to the content and sending of written communications
relating to the action to a Taxation Authority; and
(d) obtain the prior written approval of the Buyer (not to be unreasonably
withheld or delayed) to:
(i) the settlement or compromise of the Claim which is the subject of the
action; and
(ii) the agreement of any matter in the conduct of the action which is
likely to affect the amount of the Claim or any future liability to Taxation of
the Company.
6.5 The Buyer shall not be obliged to procure that the Company take any
action under this clause which involves contesting any matter beyond the first
appellate body (excluding the Taxation Authority which has or shall have made
the Claim in question and the General and Special Commissioners) unless the
Relevant Seller furnishes the Buyer with the written opinion of Counsel of at
least five years call or, as the case may be, an advocate and solicitor (within
the meaning of the Singapore Legal Profession Act (Cap 161), where the Company
is incorporated in Singapore) who is experienced in the subject matter of the
Claim to the effect that an appeal in respect of the matter in question has a
reasonable prospect of being won.
6.6 If at any time the Relevant Seller has not exercised the election
referred to in paragraph 6.3 but requests that the Buyer take, or procure that
the Company take, any action referred to in paragraph 6.2, the provisions of
paragraph 6.4 shall apply as if references to "Relevant Seller" are references
to "Buyer" and reference to "Buyer" are references to "Relevant Seller".
7 TAXATION COMPUTATIONS
7.1 Subject to complying with the provisions of paragraph 7.2 below, the
Sellers or their duly authorised agents shall, at the cost and expense of the
Company (up to the amount provided for the same in the Accounts with any excess
at the expense of the Relevant Seller, save where such excess cost arises as
result of any failure by the Buyer or the Company after Completion to comply
with their obligations under this paragraph 7):
(a) prepare the corporation tax (or income tax in Singapore) returns and/or
the trade tax on income returns of the Company for all accounting periods ending
on or prior to the 31 March 2005 (the RELEVANT RETURNS) to the extent that the
same shall not have been prepared before the date hereof; and
(b) prepare all documentation and deal with all matters (including
correspondence) relating to the Relevant Returns.
7.2 The Sellers covenant with the Buyer:
(a) to keep the Buyer and its duly authorised agents and the Company
informed of all material matters relating to the submission, negotiation and
agreement of the Relevant Returns;
(b) that no Relevant Returns nor any material correspondence or
communication pertaining to the negotiations or agreement of the Relevant
Returns shall be transmitted to any Taxation Authority without first being
submitted to the Buyer and the Company or their duly authorised agents for their
comments and approval (in each case, not to be unreasonably withheld or delayed)
and that it shall incorporate all reasonable comments of the Relevant Seller.
7.3 In the event that the provisions of paragraph 7.2 have been complied
with by the Sellers the Buyer shall procure that the Company shall cause the
returns mentioned in paragraph 7.2 (and all claims, elections, disclaimers,
surrenders and consents assumed to be made or given therein) to be authorised,
signed and submitted to the appropriate Taxation Authority and generally do all
such things as may be necessary to give effect to such returns, claims,
elections, disclaimers, surrenders or consents.
7.4 The Buyer shall (if requested in writing by any of the Sellers) procure
that the Company promptly makes or gives such returns, claims, elections,
disclaimers, surrenders and consents in relation to Taxation which it was
assumed would be made or given in computing any provision which appears in the
Accounts (or in eliminating any provision which would have so appeared) or which
relate to any Sellers' Relief, and generally does all such things as may be
reasonably necessary to give effect to such returns, claims, elections,
surrenders or consents.
7.5 The Buyer shall procure that the Company keeps the Sellers fully
informed of its Taxation affairs in respect of the accounting period of the
Company current at Completion and shall not submit any correspondence or submit
or agree any return or computation for such period to any Taxation Authority
without giving the Sellers a reasonable opportunity to make comments thereon and
without incorporating all reasonable comments of the Sellers.
7.6 The Buyer shall provide, and shall procure that the Company provides,
the Sellers with such documents, information and assistance (including, without
limitation, access to books, accounts, records and personnel) as the Sellers may
reasonably require in connection with their conduct of the Company's Taxation
affairs pursuant to this paragraph 7.
7.7 If and to the extent there is any conflict between the provisions of
this paragraph 7 and paragraph 6 above in respect of any Claim, the provisions
of the latter shall rank in priority to the former.
7.8 Nothing in the preceding provisions of this paragraph 7 or in paragraph
8 shall oblige the Buyer to:
(a) do or omit to do or procure that the Company does or omits to do
anything that is incompatible with either Taxation Legislation or generally
accepted accounting principles in the jurisdiction in which the Company is
incorporated; or
(b) procure that the Company surrenders any losses or other amounts eligible
for surrender by Group Relief arising in respect of the accounting period of the
Company current at Completion; or
(c) procure that the Company accepts the surrender for payment of any losses
or other amounts eligible for surrender by Group Relief
and if any of (a), (b) or (c) have been done before Completion or an agreement
is in place before Completion obliging the Company to take any such steps, the
Buyer may take any steps as are necessary to reverse that position.
8 GROUP RELIEF
8.1 The Buyer acknowledges that trading losses and other amounts eligible
for surrender by Group Relief by the Company arising in the period ended 31
March 2005 are to be surrendered for no payment to the Relevant Seller for the
purpose of the Group Relief to the extent allowed by sections 402-413 ICTA
provided that after such surrender the Company remains in a position of no
corporation tax being due for such period. No correspondence concerning or
computation implying the date when arrangements for the transfer of the Company
to the Buyer came into existence or the amount of the trading losses available
for the purpose of Group Relief shall be sent by the Buyer or any person acting
on its behalf to any Taxation Authority without the prior written approval of
the Relevant Seller (not to be unreasonably withhold or delayed).
8.2 The Buyer shall, and shall procure that the Company shall, take or
procure to be taken all such further action and execute or procure the execution
of all such further documents as the Sellers (or any of them) may reasonably
request to give effect to any surrender pursuant to this paragraph 8, including,
without limitation, entering into any claim, election, surrender, consent to
surrender or any amendment to any such claim, election, surrender or consent to
surrender.
8.3 Save with the prior written consent of the Sellers, the Buyer shall not,
and shall procure that the Company shall not, take any action, or omit to take
any action, to amend, withdraw or vary any surrender (whether final, provisional
or otherwise) of any trading losses and other amounts eligible for surrender by
Group Relief by the Company made by or to the Company, or agreed to be made by
or to the Company, on or before Completion.
9 MISCELLANEOUS
9.1 Nothing in this Agreement shall in any way diminish the Buyer's or the
Company's common law obligation to mitigate its loss.
10 BUYER'S COVENANT
10.1 The Buyer covenants with each Relevant Seller to pay to that Relevant
Seller an amount equal to any Actual Taxation Liability of that Relevant Seller
or of any company which is under the control of that Relevant Seller at any time
after Completion (and any reasonable costs and expenses incurred by the Relevant
Seller or that company in relation to such Actual Taxation Liability or in
making any successful claim under this paragraph 10.1), where such Actual
Taxation Liability arises as a result of the failure by the Company to discharge
after Completion an Actual Taxation Liability for which the Company is primarily
liable and which is not within paragraph 1 of part 2.
10.2 If the Buyer becomes liable to make a payment under paragraph 10.1, the
Buyer shall pay such amount in cleared immediately available funds on or before
the later of the date five business days before that Actual Taxation Liability
is finally due and payable and the date five Business Days after the date of
written demand on the Buyer by the Relevant Seller.
11 JOINT ELECTIONS
11.1 The Relevant Sellers and the Buyer agree that any chargeable
realisation gain or any chargeable gain accruing to the Company under any of
paragraphs 58 or 60 Schedule 29 of the FA 2002 or Section 179 of the TCGA which
arises from entering into this Agreement, this Agreement being unconditional,
performing any obligation under this Agreement or Completion shall be treated as
accruing to the Relevant Seller or to such one or more other companies (other
than the Company) which was a member of the same group of companies (for the
purposes of paragraph 58 and 60 Schedule 29 of the FA 2002 or Section 179 of the
TCGA (as appropriate)) as the Company immediately before this Agreement was
entered into as the Relevant Seller nominates in writing (a NOMINATED COMPANY)
and the Relevant Seller shall, and shall procure that each Nominated Company
shall, enter into any claim or election under paragraph 66 Schedule 29 of the FA
2002 or Section 179A of the TCGA (as appropriate) required to give effect to
this paragraph.
PART 2 - TAXATION COVENANT
1 COVENANT BY THE RELEVANT SELLER
1.1 Subject to the provisions of part 1 and (where stated) of schedule 8,
the Relevant Seller hereby covenants with the Buyer to pay to the Buyer an
amount equal to the Relevant Percentage of:
(a) any Actual Taxation Liability of the Company arising as a result of ;
(i) an Event occurring on or before Completion; or
(ii) any income, profits or gains earned, accrued or received on or before
or in respect of any period ended on or before the date of Completion; or
(iii) the failure by any Relevant Person at any time to pay any amount of
Tax where the resulting liability is a liability under Section 767A or 767AA
ICTA or Section 189, 190 or 191 Taxation of Chargeable Gains Xxx 0000 or section
43 Value Added Tax Xxx 0000 or section 132 Finance Act 1988 and/or any
comparable legislation in Germany, Italy, Singapore, Denmark or the United
States of America;
(b) any Deemed Taxation Liability;
(c) any reasonable costs, fees and expenses reasonably incurred by the Buyer
or the Company in relation to any Actual Taxation Liability within paragraph
1.1(a) or any Deemed Taxation Liability within paragraph 1.1(b) or in
successfully taking any action under this part 2.
2 COVENANT BY THE RELEVANT SELLER
2.1 If the Relevant Seller is or becomes liable to make a payment under this
part 2 in respect of:
(a) an Actual Taxation Liability, the Relevant Seller shall pay such amount
on or before the date five Business Days after the date of written notice from
the Buyer to the Relevant Seller of the amount which the Relevant Seller is
required to pay and requesting payment or, if later, the date five Business Days
before the date on which the Actual Taxation Liability in question is due for
payment;
(b) a Deemed Taxation Liability, the Relevant Seller shall pay such amount
five Business Days after the date of written notice from the Buyer to the
Relevant Seller of the amount which the Relevant Seller is required to pay and
requesting payment, and:
(i) in the case of a Set Off Liability, the date on which the Actual
Taxation Liability referred to in the definition of that term would otherwise
have become due for payment;
(ii) in the case of an Unavailable Relief Liability, 2 business days before
the date on which the Actual Taxation Liability referred to in the definition of
that term is actually due for payment; or
(iii) in the case of an Unavailable Repayment Liability, the date on which
the repayment of Taxation would have been made but for that unavailability; or
(c) any amount within paragraph 1.1(c) the Buyer will notify the Relevant
Seller in writing of such amount specifying details of the services for which
those costs, fees and expenses were incurred and the circumstances in which they
were obtained and the Relevant Seller shall pay such amount on or before the
date five Business Days after the date of such notice.
3 TAX ON PAYMENTS BY RELEVANT SELLER
3.1 Save only as may be required by law, all sums payable by the Relevant
Seller under this schedule shall be paid free and clear of any deductions or
withholding. If any deductions or withholdings are required by law to be made
from any payment under this schedule, the Relevant Seller shall pay such sum as
will, after the deduction or withholdings 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.
3.2 If any amount paid to the Buyer under this part 2 is subject to
Taxation, the Relevant Seller covenants to pay to the Buyer such further sum as
will ensure that the Buyer receives and retains a net amount (after taking into
account such Taxation) equal to the full amount which it would have received and
retained had the payment in question not been subject to Taxation, provided that
the Relevant Seller shall not be obliged to pay such additional amount if the
payment received by the Buyer is subject to Taxation as a result of any action
or omission by the Buyer and/or the Company and/or any member of the Buyer's
Group (at any time), after Completion which causes the payment to fall outside
the scope of the Inland Revenue's Extra Statutory Concession D33 or otherwise
become subject to Taxation or as a result of the Buyer not being resident in the
UK for UK tax purposes.
PART 3 - TAXATION WARRANTIES
1 POST ACCOUNTS DATE
1.1 Within the last three years:
(a) the Company has not paid any Taxation after its due date for payment and
is not liable for any Taxation the due date for payment of which has passed;
(b) the Company has not declared or paid any dividend or made any other
distribution for the purposes of any Taxation.
2 COMPLIANCE
2.1 There is no dispute between the Company and any Taxation Authority, the
Company is not the subject of an investigation, audit or review by any Taxation
Authority and as far as the Relevant Seller is/are aware there are no facts
which are likely to give rise to any such dispute, investigation, audit or
review.
2.2 The Company is not and has not at any time within the three years prior
to the date hereof been liable to pay any penalty, fine, surcharge, interest or
similar amount in relation to Taxation in excess of GBP 5,000 (or equivalent in
other currencies) and as far as the Relevant Seller is aware there are no facts
which are likely to cause it to become liable to pay any such penalty, fine,
surcharge, interest or similar amount.
2.3 Within the last three years, the Company has duly and punctually
complied with all its obligations to deduct Taxation from payments made by it
and to account for such Taxation to any Taxation Authority.
2.4 Within the last three years, all accounts, computations notices and
returns required to be made or submitted by the Company to any Taxation
Authority and all notices and information required to be given by the Company to
any Taxation Authority have been properly and duly prepared and made, submitted
or given by the Company within any specified time limits and were, when made, up
to date and correct in all material respects.
2.5 The Company has preserved and retained in its possession (to the extent
required by law) complete and accurate records relating to its Taxation affairs.
2.6 There are set out in the Disclosure Letter details of quarterly payments
of corporation tax made on account and, so far as the Sellers are aware, those
payments were when made and remain for the correct amount.
3 CLOSE COMPANIES
The Company is not and has never been a close company within the terms of
section 414 ICTA.
4 DISTRIBUTIONS AND PAYMENTS
4.1 No distribution (for the purposes of any Taxation) has been made by the
Company during the six years ended on the Accounts Date (except as provided in
the Accounts).
4.2 The Company has not at any time within the last three years made or
received or been involved in any distribution pursuant to a demerger or
reconstruction.
4.3 The Company has not at any time within the last three years received a
capital distribution either in cash or in specie.
4.4 The Company has not on or after 6 April 1965:
(a) repaid, redeemed or purchased or agreed to repay, redeem or purchase any
of its share capital; or
(b) capitalised or agreed to capitalise in the form of shares or debentures,
any profits or reserves of any class or description, or otherwise issued or
agreed to issue share capital otherwise than for new consideration.
5 EMPLOYEE BENEFITS
5.1 The Disclosure Letter contains full details of all long-term incentive
plans, share option schemes and profit sharing schemes established by the
Company whether or not approved by any relevant Taxation Authority.
5.2 So far as the Relevant Seller is aware, none of the consideration for
the sale of the Sale Shares to the Buyer will be treated as income in respect of
which PAYE and/or National Insurance will have to be accounted (whether by the
Buyer, the Company or any other person).
5.3 No employee or officer (or former employee of officer) of the Company:
(a) has since the Accounts Date exercised or surrendered any share options;or
(b) at the date of this Agreement holds any unexercised share options, the
future exercise or surrender of which may result in a liability for the Buyer,
the Company or any other person to account for PAYE and/or National Insurance.
6 GROUP TRANSACTIONS
6.1 Details of all claims and surrenders and agreements and arrangements,
relating to the claim or surrender by the Company of any Relief to or by any
member of the Sellers' Group within the last three years are set out in the
Disclosure Letter. The Company is not liable to make any payment for any Relief
surrendered to it and there are no amounts due or which may become due to the
Company in respect of the surrender of any Relief.
6.2 The Company has not at any time in the last six years:
(a) acquired any asset from any company which at the time of the acquisition
was a member of the same group of companies;
(b) acquired an asset as trading stock from a member of the same group where
the asset did not form part of the trading stock of any trade carried on by the
other member, or disposed or an asset which formed part of the trading stock of
any trade carried on by the Company to another member of the same group which
acquired the asset otherwise than as trading stock of a trade carried on by the
other member;
(c) ceased to be a member of a group of companies in such circumstances that
a profit or gain was deemed to accrue to the Company and neither the execution
of this Agreement, this Agreement becoming unconditional or Completion will
result in any profit or gain being deemed to accrue to the Company for any
Taxation purpose
7 RESIDENCE AND OFFSHORE INTERESTS
7.1 The Company is and has at all times been resident for Taxation purposes
in, and only in, the jurisdiction in which it was incorporated and is not and
has never been treated as resident anywhere else at any time since its
incorporation and will be so resident at Completion. For the avoidance of
doubt, references to residence in this paragraph shall be construed as
references to residence as determined by the local law of the jurisdiction in
which it was incorporated and not (unless required by the relevant local law) by
reference to the provisions of any relevant double taxation agreement, treaty or
convention or as having a branch or permanent establishment in any other
jurisdiction for any Taxation purpose (including under any double taxation
treaty or agreement).
7.2 The Company is not liable for any Taxation as the agent or Tax
representative of any other person or business and does not constitute a
permanent establishment of any other person, business or enterprise for any
Taxation purposes.
7.3 The Company does not have and has never had a branch, agency or
permanent establishment in and is not liable to any Taxation in, any other
jurisdiction other than that in which it was incorporated.
8 CHARGES ETC
8.1 There is no outstanding charge imposed by any Taxation Authority over
any asset of the Company or over any of the Sale Shares and there are no
circumstances in which such a charge could arise.
8.2 There are in existence no circumstances by virtue of which any Tax
Authority could impose a charge over any asset of the Company or over any of the
Sale Shares.
8.3 The Company has not received any asset by way of gift.
9 VAT
9.1 The Company is a taxable person and is duly registered for the purposes
of value added tax or any equivalent turnover or sales tax or goods and services
tax (VAT). Such registration is not subject to any conditions imposed by or
agreed with a relevant Taxation Authority.
9.2 Within the last three years the Company has complied in all material
respects with relevant law relating to VAT and all orders, provisions,
directions or other conditions made or imposed thereunder or under any other law
relating to VAT and all VAT filings of the Company are up to date and the
Company has in all other respects complied with the VAT legislation and all
regulations, notices, orders, provisions, directions and conditions relating to
VAT.
9.3 The Company has not within the two years ending on the date of this
Agreement been served with any penalty liability notice or any surcharge
liability notice or been issued with any written warning in relation to VAT and
the Company is not in arrears with any payments or returns under such
legislation or liable to any abnormal or non-routine payment or any forfeiture,
penalty, interest or surcharge or to the operation of any penal, interest or
surcharge provisions contained in such legislation.
9.4 The Company has not been required to give security for the purposes of
VAT.
9.5 The Company has not registered for VAT purposes in any country other
than that in which it is incorporated.
10 STAMP DUTY AND STAMP DUTY RESERVE TAX
10.1 All documents in the possession of the Company or to the production of
which the Company is entitled or which confer any right or title upon the
Company and which attract stamp or transfer duty in Germany, Italy, Singapore,
Denmark, the United Kingdom, the United States of America or elsewhere, have
been duly stamped.
11 LOAN RELATIONSHIPS
11.1 No material liability to Taxation or a material non-trading deficit
would arise from the loan relationships to which the Company is a party at
Completion being repaid to the extent of the amounts shown in respect of such
loan relationships in the books of the Company at the date of this Agreement.
12 CAPITAL GAINS
12.1 The Company does not own any depreciating asset in respect of which a
holdover gain may accrue pursuant to any Taxation Legislation.
13 AMORTISATION AND CAPITAL ALLOWANCES
13.1 No Taxation in respect of any amortisation allowances or capital
allowances, claimed or given would arise if any asset of the Company (or, where
computations are made for amortisation purposes for pools of assets, all the
assets in that pool) were to be realised for a consideration equal to the amount
of its book value as shown or included in the Accounts (or, in the case of any
asset acquired since the Accounts Date, for a consideration equal to the
consideration given for the acquisition).
13.2 All necessary conditions for the availability of all amortisation
allowances or capital allowances claimed by the Company have at all times been
satisfied and remain satisfied in each case, in all material respects.
14 TRANSACTIONS WITH ASSOCIATED PERSONS
14.1 The Company has not in the period of three years ending on the date of
this Agreement been party to any non-arms length transaction.
15 ANTI-AVOIDANCE
15.1 The Company has not in the period of three years ending on the date of
this Agreement, been party to or otherwise involved in any scheme or arrangement
the main purpose or one of the main purposes of which was to avoid Taxation.
SCHEDULE 4
WARRANTIES
1 GENERAL
1.1 CONTENTS OF THIS SCHEDULE 4
This schedule 4 is set out in the following paragraphs:
1 General
2 Accounts
3 The Business
4 Assets
5 Directors and employees
6 Pension arrangements
7 Information technology
8 Intellectual property
9 Property matters and interests in land
10 Environmental Matters
11 Litigation, disputes and investigations
12 Insurance
13 Compliance and regulatory
14 Constitutional and the Sellers
15 Insolvency
1.2 COMPANY
Each of the Warranties is given by each Seller only in respect of those Group
Companies as is set out in clause 5.1. Any reference in this schedule to
COMPANY shall be deemed to be a reference to each such Group Company in respect
of the Seller in question.
1.3 REFERENCES TO MATERIAL
Any reference in this schedule 4 to a matter or thing being MATERIAL means
material in the context of the financial position of the Group taken as a whole.
2 ACCOUNTS
2.1 The Accounts:
(a) comply with all applicable statutory requirements;
(b) comply with generally accepted accounting practice, policies and
principles (including methods of valuation) in the jurisdiction in which the
Group Company in question is incorporated;
(c) in the case of those Group Companies incorporated in England and Wales,
give a true and fair view of:
(i) the state of affairs of the Company as at the Accounts Date;
(ii) the assets and liabilities of the Company as at the Accounts Date; and
(iii) the profit or losses of the Company for the financial year ended on
that date
and in the case of the other Group Companies fairly reflect in all material
respects the financial performance of those Group Companies for the financial
year ended on the Accounts Date.
2.2 SPECIFIC MATTERS IN THE ACCOUNTS
The Accounts, by reference to the requirements of generally accepted accounting
practice, policies and principles in the jurisdiction in which the Group Company
in question is incorporated:
(a) do not, to an extent that is material, overstate the value of the assets
of the Group as at the Accounts Date;
(b) include reasonable provision in all material respects for all known
liabilities as at the Accounts Date;
(c) include reasonable provision in all material respects (or notes in
accordance with generally accepted accounting practice) for all contingent
liabilities as at the Accounts Date; and
(d) include reasonable provision in all material respects for all bad or
doubtful debts as at the Accounts Date.
2.3 MANAGEMENT ACCOUNTS
The management accounts of the Group for the period from 4 April 2005 to the
Management Accounts Date (MANAGEMENT ACCOUNTS) (a copy of which is included at
Documents 1.28 of the Data Room Documents, and which includes, for the avoidance
of doubt, the separate management accounts of Autotype USA) have been prepared
on a basis consistent with the management accounts of the Group for the
corresponding period in the financial year of the Group ending on the Accounts
Date (a copy of which is included as Document 1.27 of the Data Room Documents)
and having regard to their nature and intended use:
(a) have been prepared on a basis considered by the Sellers in good faith to
be reasonable; and
(b) fairly reflect in all material respects the financial performance of the
Group for the period to which they relate.
2.4 TRANSACTIONS SINCE THE ACCOUNTS DATE
Since the Accounts Date:
(a) the Company has carried on business in the ordinary course;
(b) there has been no material adverse change in the financial position of
the Group taken as a whole;
(c) the Company has not declared, paid or made any dividend or other
distribution save for those details of which are set out in the Data Room
Documents;
(d) the Company has not agreed to acquire any business;
(e) the Company has not ceased to deal with any customer or supplier which,
in either of the two consecutive financial periods of the Company the second of
which ends on the Accounts Date, accounted for 5 per cent or more of (for a
customer) the sales made by the Group or (for a supplier) the goods or services
supplied to the Group.
2.5 GUARANTEES
(a) No member of the Sellers' Group has given any Guarantee or created any
other like obligation or given comfort in support of the Company which remains
outstanding.
(b) The Company has not given any Guarantee or created any other like
obligation or given comfort in support of any member of the Sellers' Group.
2.6 NO FINDER'S FEES OR BROKERAGE PAYABLE BY THE COMPANY
No-one is entitled to receive from the Company any finder's fee, brokerage or
commission or other benefit in connection with the sale of the Sale Shares.
3 THE BUSINESS
3.1 TERMS OF CONTRACTS TO WHICH THE COMPANY IS A PARTY
The Company is not a party to any material contract or obligation which:
(a) has been entered into otherwise than in the ordinary course of business;
or
(b) imposes any commitment on the Company to obtain or supply goods or
services from or to any person and which cannot be terminated within 12 months
from Completion.
3.2 OUTSTANDING POWERS OF ATTORNEY
There are no powers of attorney which are still outstanding or effective to or
in favour of any person to enter into any contract or commitment or to do
anything on behalf of the Company other than those which have been granted to
employees of the Company.
3.3 MATERIAL CONTRACTS
The Data Room Documents contain or provide material details of each outstanding
contract entered into by any member of the Group which:
(a) is a Material Contract;
(b) restricts it from carrying on the Business in any part of the world;
(c) is a joint venture agreement under which it is to participate with any
other person in any business; or
(d) is an agency or distributorship contract which cannot be terminated
within 12 months from Completion,
and no member of the Group is in material breach of any Material Contract and,
so far as the Sellers are aware, no other party to any Material Contract or
arrangement is in material breach of any such Material Contract.
3.4 BANK ACCOUNTS AND BORROWINGS
(a) Details of all bank accounts maintained or used by any member of the
Group (comprising, in each case, the name and address of the bank with whom the
account is kept and the number and nature of the account) are included out in
the Data Room Documents.
(b) The Data Room Documents includes the terms of each overdraft, loan and
other similar financial facility available to any member of the Group.
(c) The total amount borrowed by each member of the Group does not exceed
any limitation in its financial facilities or articles of association.
(d) The Company has not factored or discounted any of its debts
(e) The Company has not given any guarantee or entered into any agreement
for the postponement of debt (or regulating the priority of any security for
debt) or for lien or set off, save, in any such case, by way of Relevant
Security Interests (as defined in paragraph 4.3 below).
3.5 GRANTS AND ALLOWANCES
The Company has not received any grant, allowance, aid or subsidy in relation to
the Business from any supranational, national or local authority or government
agency during the last three years which is currently repayable as a result of
any act or failure to act by the Company or which would be repayable as a result
of the sale of the Sale Shares to the Buyer.
3.6 TRANSACTIONS WITH SHAREHOLDERS OR DIRECTORS AND OTHERS
(a) Except for bona fide contracts of employment with executive directors of
the Company, no transactions, contracts or arrangements (including any loan or
guarantee made or given by the Company) have been entered into during the 3
years prior to the date of this Agreement, or are otherwise currently in force,
to which the Company is a party and in which a shareholder or director of the
Company, or any person connected with a shareholder or director of the Company,
has been materially interested whether directly or indirectly.
(b) No monies are owed by the Company to any director of the Company, or to
the Sellers, or to any person connected with any such director of the Company or
to the Sellers, or to any company or partnership in which any of those directors
(or the spouse of any such directors) of the Company or the Sellers are directly
or indirectly interested other than as holders of listed securities.
(c) There are no debts currently owed to the Company by its directors or any
of them or by the Sellers (or by a person connected with any such director or
the Sellers) or by any company in which the directors of the Company or any of
them or the Sellers (or any person connected with any of them) are materially
directly or indirectly interested (other than as holders of listed securities).
3.7 BRIBES ETC
No Company has given any unlawful or improper gifts or inducements, or any
bribes, to any person.
3.8 MATERIAL CUSTOMERS AND SUPPLIERS
In the three years preceding the date of this Agreement not more than ten per
cent in value of purchases by the Group have been placed in any twelve month
period with any one supplier, and not more than ten per cent in value of sales
by the Group have been made in any twelve month period to any one customer.
3.9 STOCK
The value of the stock-in-trade of the Group as at the Management Accounts Date
is in all material respects stated in the Management Accounts at the lower of
cost and net realisable value.
3.10 DEBTORS
The Company's provisions (as stated in the Management Accounts) in respect of
bad or doubtful debts are in all material respects reasonable having regard to
the facts and circumstances of which the Sellers are aware, and are consistent
with the past practice of the Company in that regard.
3.11 NORMALISED WORKING CAPITAL STATEMENT
The information set out in the Normalised Working Capital Statement is in all
material respects fairly and reasonably stated based on information extracted in
good faith from the accounting records of the Group and prepared in accordance
with the principal policies set out in part 6 of schedule 8.
4 ASSETS
4.1 CONDITION OF FIXED ASSETS, PLANT, MACHINERY, VEHICLES AND EQUIPMENT
All material fixed assets, plant, machinery, vehicles and equipment owned or
used by the Company are in working order.
4.2 RIGHT TO USE ALL ASSETS NEEDED TO CARRY ON THE BUSINESS
The Company owns or has the right to use all assets and rights that it uses to
carry on the Business as at the date of this Agreement.
4.3 SECURITY INTERESTS
Save for interests arising pursuant to leases (including finance leases) and any
retention of title, rental, hire or hire purchase arrangements or any like
arrangements arising in the ordinary course of business of the Company (RELEVANT
SECURITY INTERESTS), there are no outstanding debenture, mortgages, charges,
liens or other security interests affecting any material asset of the Company.
5 DIRECTORS AND EMPLOYEES
5.1 DETAILS OF EMPLOYEES
There is contained within the Data Room Documents the following information,
which is true and accurate in all material respects, in relation to each
employee of the Company earning in excess of GBP 50,000 per annum or equivalent:
(a) name of employee;
(b) emoluments (including any bonus or commission arrangements and any
non-cash benefits);
(c) date of commencement of employment; and
(d) notice period required to be given by the Company and the employee.
5.2 CHANGES SINCE THE ACCOUNTS DATE
Since the Accounts Date, save for any increases in salary given as part of
annual salary reviews, no material change has been made by the Company to the
terms of employment of any of its employees.
Further, the Company is not engaged in any current negotiations for any increase
in remuneration or benefits or material change in any other term of employment
of any of the employees of the Company earning in excess of GBP 50,000 per annum
or equivalent or other employees together numbering more than 20 in total nor
are any such negotiations due to take place within 6 months of the date of this
Agreement and the Company has not offered, nor has it received notice of any
demand for, any such increase.
5.3 NO DISPUTES IN RELATION TO EMPLOYEES
So far as the Sellers are aware, the Company is not involved in any dispute with
any of its employees.
5.4 COLLECTIVE AGREEMENTS
There is no collective bargaining agreement or other arrangement (whether
binding or not) between the Company and any trade union or other body
representing its employees.
5.5 SHARE OPTIONS/INCENTIVE PLANS
(a) The Company does not have any share incentive scheme, share option
scheme or profit sharing bonus or other incentive scheme for any director,
officer or employee.
(b) There are not in existence any employment contracts or other contracts
with directors or employees of the Company which cannot be terminated by three
months notice or less without giving rise to any right to claim damages or
compensation (other than compensation under the Employment Rights Act 1996).
5.6 NOTICES OF TERMINATION
No employee of the Company earning in excess of GBP 50,000 per annum has given
notice to terminate, or is under notice of termination of, his employment and
the Sellers have received no notice that there are any grounds on which any such
employee may give, or may be given, notice to terminate his employment with the
Company for breach of the terms of that employment.
5.7 OBLIGATIONS TO EMPLOYEES
The Company has in relation to each of its employees complied in all material
respects with all material obligations imposed on it by:
(a) all enactments, rules, regulations, acts and codes of conduct and
practice relevant to the relations between it and its employees or any trade
union or employee representatives;
(b) all collective agreements, recognition agreements and customs and
practices for the time being dealing with those relations or the conditions of
employment of its employees;
(c) all relevant orders and awards made under any relevant enactment or code
of conduct and practice affecting the conditions of service of its employees;
(d) all relevant recommendations made by the Advisory Conciliation and
Arbitration Service, all decisions made in relation to employees of the Company
by its Arbitration Panel and with all awards and declarations made by the
Central Arbitration Committee and, in each case, of which it is aware;
(e) all orders, judgments and decisions of any court or tribunal; and
(f) all obligations imposed on it under the contracts or terms of employment
of its employees,
and has maintained in all material respects those records regarding the service
and terms of employment of each of its employees which are required in order for
the Company to comply with the material obligations referred to in paragraphs
(a) to (f) above.
6 PENSION ARRANGEMENTS
For the purpose of this paragraph 6 EMPLOYEES means Autotype UK's employees,
directors, former employees and former directors.
6.1 Save for the Disclosed Scheme there is not and has not been in operation
and no proposal has been announced to enter into or establish any agreement,
arrangement, custom or practice (whether enforceable or not) for the provision
of relevant benefits (as defined in section 612 ICTA but ignoring the exception
in that definition) or sickness or disability benefits for any person to which
Autotype UK is or has been or will be a party and Autotype UK has not
contributed and is not and will not become under any obligation to contribute to
any such agreement, arrangement, custom or practice and Autotype UK has not
provided any such benefits on a voluntary basis.
6.2 All material details relating to the Disclosed Scheme have been supplied
to the Buyer's Solicitors including:
(a) all current trust deeds and rules governing or relating to the Disclosed
Scheme;
(b) all current and material booklets, announcements and other explanatory
literature issued to the Employees who are members of the Disclosed Scheme and
copies of letters or other documents relating to arrangements for individual
members or groups of members;
(c) a list of all Employees who are members of the Disclosed Scheme together
with all particulars of them necessary to establish the benefits payable or
contingently payable to or in respect of them under the Disclosed Scheme;
(d) a list of all Employees who will become eligible to join the Disclosed
Scheme upon the satisfaction of any conditions of eligibility.
6.3 No undertaking or assurance has been given by Autotype UK or the
trustees of the Disclosed Scheme as to the continuance of the Disclosed Scheme
or the continuance, increase or improvement of any benefit provided by the
Disclosed Scheme.
6.4 There is no obligation to provide benefits under, or make contributions
to, the Disclosed Scheme except as revealed in the Data Room Documents or any
other documents provided to the Buyer.
6.5 All amounts that have become due to be paid to the Disclosed Scheme have
been paid on their due date.
6.6 The Disclosed Scheme has been exempt approved for the purpose of Chapter
1 Part XIV ICTA since its commencement date and the Sellers are not aware of any
circumstances, which will or which the Sellers are aware are likely to result in
withdrawal of such approval.
6.7 No discretion or power has been exercised under the Disclosed Scheme in
relation to the employees or former employees of Autotype UK to:
(a) augment any benefits;
(b) admit to membership any person who was not automatically eligible for
membership;
(c) provide any benefit that would not otherwise have been provided;
(d) pay any contribution that would not otherwise have been paid.
6.8 The Disclosed Scheme does not hold any employer related investments as
defined in section 40 Xxxxxxxx Xxx 0000.
6.9 No payment has been or is proposed to be made from the Disclosed Scheme
to Autotype UK.
6.10 So far as the Sellers are aware no employee or former employee of
Autotype UK has made or threatened any claim (other than a routine claim for
benefits) or complaint (including a complaint under the Disclosed Scheme's
internal dispute resolution procedure or to the Pensions Ombudsman) against
Autotype UK or against the trustees or administrator of the Disclosed Scheme or
made any complaint or report to the Occupational Pensions Regulatory Authority
in respect of any act, event or omission arising out of the Disclosed Scheme and
so far as the Sellers are aware there are no circumstances which may give rise
to any such claim, complaint or report being made.
6.11 The Disclosed Scheme is and has at all times been administered in all
material respects in accordance with all applicable legislation and the general
requirements of trust law and subject thereto in accordance with its governing
provisions.
6.12 No employee or officers or former employees or officers of Autotype UK
have been excluded from membership of the Disclosed Scheme in circumstances such
that had their hours of employment been different they would not have been
excluded.
6.13 All expenses relating to the Disclosed Scheme that have fallen due for
payment have been paid and no expenses have been incurred in relation to the
Disclosed Scheme for which payment has not fallen due.
6.14 Autotype UK has not participated in and does not have any liability in
respect of any occupational pension scheme other than the Disclosed Scheme.
6.15 The Disclosed Scheme does not distinguish between male and female
members in the provision of benefits relating to periods of pensionable service
after 17 May 1990 and no adverse alteration has been made to benefits already
accrued at the date of announcing changes designed to equalise benefits.
6.16 Since 30 August 1993 no employee has had his contract of employment
transferred to Autotype UK from another employer in circumstances where the
Transfer of Undertakings (Protection of Employment) Regulations 1981 applied to
the transfer of his contract of employment.
6.17 Autotype UK has complied with its obligations under the Welfare Reform
and Pensions Xxx 0000 in relation to the provision of access for employees to a
stakeholder scheme (as defined in section 1 of that Act) including:
(a) undertaking the necessary consultation process with the employees in
selecting the stakeholder scheme; and
(b) designating the stakeholder scheme
and so far as the Sellers are aware, there are no circumstances which could
result in any penalty for failure to comply with that Act or regulations made
under it becoming payable by Autotype UK.
6.18 Since 27 April 2004 Autotype UK has not been party to an act or a
deliberate failure to act which may result in a contribution notice being
imposed by the Pensions Regulator under section 38 of the Pensions Xxx 0000.
6.19 So far as the Sellers are aware, there are no circumstances which could
result in any penalty under the Pensions Xxx 0000 being payable by Autotype UK.
7 INFORMATION TECHNOLOGY
In this section 7:
DATA SUBJECT has the meaning given in Data Protection Xxx 0000
IT SYSTEMS means any computer hardware, software, operating systems, firmware,
networking equipment or other equipment which is reliant on microchip technology
used by the Company
PERSONAL DATA means any data held by any Group Company which falls within the
definition of "personal data" given from time to time in Data Protection Xxx
0000
PROCESS and PROCESSING have the respective meanings given to them from time to
time in Data Protection Xxx 0000
7.1 DATA PROTECTION
(a) The Company has not received a written notice from either the
Information Commissioner (or previously the Data Protection Commissioner or Data
Protection Registrar), a data subject or other individual alleging
non-compliance with the data protection principles or any other provisions of
the Data Protection Acts 1984 and 1998 or from any other relevant data
protection authority under any applicable law, nor has the Company received
notice that there are any circumstances which will or are likely to give rise to
the issue of any such notice.
(b) No copies of Personal Data will be retained after Completion by the
Seller's Group except if, and then to the extent, required by any applicable
law.
(c) The Company has maintained, for the last 3 years, and continues to
maintain as at Completion, a valid, accurate (in all material respects) and
up-to-date notification of the purposes for which it Processes Personal Data
with The Office of the Information Commissioner.
7.2 COMPUTER SOFTWARE USED BY THE COMPANY
(a) The Data Room Documents include details of all computer software used by
the Company other than standard off the shelf packages generally available to
the public (Standard Software), and no Standard Software used by the Company has
been materially modified.
(b) The Company possesses all necessary licences with respect to its use of
any computer software and no licence terms have been breached in any material
respect.
7.3 The Data Room contains at Documents 8.1, 8.2, 8.3, 8.8, 8.9 and 8.10
details of the Company's procedures to ensure internal and external security of
the IT Systems which have been established by the Company.
8 INTELLECTUAL PROPERTY
8.1 DISCLOSURE OF INTELLECTUAL PROPERTY RIGHTS
Details of the Intellectual Property in respect of which the Company is, or has
applied to be, registered as proprietor (the REGISTERED IPR) are included in the
Data Room Documents.
8.2 REGISTERED IPR IN FULL FORCE AND EFFECT AND COMPANY IPR COMPLIANCE
(a) The Registered IPR is in full force and effect and not subject to any
application for cancellation and is vested in and is legally and beneficially
owned solely by the Company or licensed to the Company.
(b) All application, renewal and other official statutory fees payable by
the Company prior to the date of this Agreement relating to the administration
of the Registered IPR or for the protection or enforcement of the Registered IPR
have been duly paid.
(c) The Company has complied in all material respects with all its
obligations under any licence of the Company IPR and no such licence is or will
become liable to termination in accordance with its terms due either to any
breach by the Company or the transaction contemplated by this Agreement.
8.3 NO DISPOSALS OF INTELLECTUAL PROPERTY SINCE THE ACCOUNTS DATE
Since the Accounts Date, the Company has not sold or otherwise disposed of any
material Intellectual Property owned or used by the Company.
8.4 DISPUTES CONCERNING COMPANY IPR
The Sellers are not aware of:
(a) any person infringing any material item of Company IPR;
(b) any material item of Company IPR being the subject of a claim or
opposition from any person as to title or validity; or
(c) any litigation or other proceedings (whether legal or administrative)
involving any of the material Company IPR being pending or threatened (including
any claim for revocation, amendment, opposition or rectification of any material
Company IPR, or any challenge to the Company's ownership or any other
entitlement to use any material Company IPR due to non-payment of renewal fees
or otherwise),
in each case during the 3 years prior to Completion.
8.5 NO INFRINGEMENT OF INTELLECTUAL PROPERTY OF THIRD PARTIES
So far as the Sellers are aware, the Company has not, during the 3 years prior
to Completion, materially infringed the intellectual property rights of others
in connection with the conduct of the ordinary business of the Company.
9 PROPERTY MATTERS AND INTERESTS IN LAND
9.1 The Properties comprises all the premises used or occupied by the
Company. The particulars of the Properties shown in schedule 5 are true and
accurate in all material respects.
9.2 No notice of any breach of the material terms or conditions affecting
the Properties has been received by a Seller and so far as the Sellers are aware
there are no circumstances which would or might entitle any landlord to exercise
any powers of entry or to take possession of any of the Properties or which
would otherwise restrict or terminate the continued possession and quiet
enjoyment of any of the Properties for the purposes of the business of the
Company as presently carried on.
9.3 So far as the Sellers are aware there are no outstanding disputes of
material importance with any person relating to the Properties or their use.
9.4 The Sellers do not own, use or occupy, or have any interest in, any land
and/or buildings other than the Properties.
9.5 So far as the Sellers are aware, the replies to enquiries given by each
Group Company to the Buyer or the Buyer's Solicitors in respect of the
Properties (being Documents 12.23, 12.24 and 12.25 of the Data Room Documents)
are true and accurate in all material respects and not misleading in any
material respect.
10 ENVIRONMENTAL MATTERS
10.1 Details of all material Environmental Licences held by the Company are
included in the Data Room Documents.
10.2 The Company has not received any notification that any material
Environmental Licence it holds is or is likely to be modified, restricted or
withdrawn or that any works or other upgrading or investment are or will be
necessary to secure compliance with or to maintain any such Environmental
Licence.
10.3 The Company has not received any written notification that further
Environmental Licences will be required under Environmental Law in order for it
to continue its present business.
10.4 The Company has not in the last 3 years been threatened in writing with
any investigation or enquiry by any organisation in connection with the
Environment.
10.5 Each Group Company:
(a) complies and has at all times complied in all material respects with all
Environmental Laws and Environmental Licences;
(b) has obtained and maintained in all material respects all Environmental
Licences, and the Company has not been notified of any conditions, facts or
circumstances which could lead to any material Environmental Licence being
revoked, suspended, amended, varied, withdrawn or not renewed or which would
prevent compliance with any Environmental Licence in any material respect; and
(c) is not and is not likely to be required by any Environmental Licence or
any Environmental Law or as the result of any Environmental Claim to incur any
expenditure which is material in the context of the Group as a whole, or to
desist from taking any action which will or is likely to have a material adverse
effect on the Group's financial position (taken as a whole).
11 LITIGATION, DISPUTES AND INVESTIGATIONS
11.1 Apart from (if relevant) the collection of debts in the ordinary course
of the Business, the Company is not engaged in any capacity in any :
(a) disputes, litigation, arbitration, prosecution; or
(b) other legal proceedings before any statutory or Governmental body,
department, board or agency
and the Sellers are not aware of any such disputes, litigation, arbitration,
prosecution or other legal proceedings being pending or threatened.
11.2 There is no outstanding judgement, order, decree, arbitral award or
decision of any court, tribunal, arbitrator or governmental agency against the
Company .
11.3 The Company has not received notification that any investigation or
enquiry is being or has been conducted by any court, government body or
regulatory authority in respect of its affairs and the Sellers are not aware of
any circumstances which are likely to give rise to any such investigation or
enquiry.
12 INSURANCE
12.1 DETAILS OF INSURANCE COVER
Material particulars of all insurance policies maintained by the Company or in
respect of which it has an insured interest and currently in force (POLICIES)
are included in the Data Room Documents.
12.2 CLAIMS MADE
Details of any claims made by the Company under any insurance policy in the last
3 years are included in the Data Room Documents (save for individual claims of a
value not exceeding GBP 50,000 per claim). No claim (save for any claim) is
outstanding and, so far as the Sellers are aware, no circumstances exist which
will or are reasonably likely to give rise to a material claim under the
Policies and which would require notification to any insurer.
12.3 COMPLIANCE
All requirements to purchase insurance required by statute or assumed under any
material contract including those contained in any security document or lease
have been complied with including any requirement to provide and/or retain
evidence of such insurance. Material particulars of all employer liability and
public liability policies maintained by the Company since 1 April 1999 are
included in the Data Room Documents.
13 COMPLIANCE AND REGULATORY
13.1 LICENCES REQUIRED TO CARRY ON THE BUSINESS
The Company has obtained all governmental permits and licences required for or
in connection with the carrying on of the Business in all material respects.
Such permits and licences are in full force and effect, and so far as the
Sellers are aware there are no circumstances which indicate that any of such
licences will or may be revoked.
13.2 REGISTERS, MINUTE BOOKS, FILINGS ETC
(a) All registers and minute books required by law to be kept by the Company
have in all material respects been properly written up.
(b) All returns, particulars, resolutions and other documents required to be
filed or delivered by the Company have been correctly and properly prepared and
so filed or delivered.
(c) All the accounts, books, ledgers and other financial records of the
Company are held or stored in means which are either under exclusive ownership
and control of the Company, or are such that the Company otherwise has full
rights to access such records, and such records comply, in all material
respects, with all applicable laws.
13.3 COMPETITION
(a) So far as the Sellers are aware, the Sellers are not, nor have they been
in the last 3 years, party to or concerned in any agreement, arrangement,
understanding or concerted practice, or any other conduct or practice
(unilateral or otherwise) in relation to the Business which in any material
respect:
(i) contravenes the Competition Xxx 0000 or constitutes an offence under the
Enterprise Xxx 0000;
(ii) infringes Articles 81 or 82 of the EC Treaty or any other competition
provision of that treaty or enacted under it, including any rule relating to
state aid; or
(iii) constitutes a breach of any relevant undertaking, order, assurance or
other measure taken under the Enterprise Xxx 0000 or the Competition Xxx 0000.
(b) The Sellers have not received notice in relation to the Business of any
outstanding prohibition, order, condition, undertaking, commitment, assurance or
similar measure or obligation specifically imposed by or under any of the laws
referred to in paragraph 13.3(a) above (as opposed to applying by reason of
general application of any such laws).
(c) The Sellers have not received notification within the last 3 years of
any enquiry or investigation, or any material request for information, notice or
other communication (whether formal or informal, and whether or not in writing)
in relation to the Business under any of the laws referred to in paragraph
13.3(a), nor do the Sellers have any reason to believe that any such action as
mentioned in paragraph 13.3(b) will be taken in relation to the Business.
14 CONSTITUTIONAL AND THE SELLERS
14.1 DETAILS CONCERNING THE COMPANY
(a) All the information in schedule 1 is accurate in all material respects.
(b) The UK Shares constitute the entire issued fully paid share capital of
Autotype UK and the USA Shares constitute the entire issued share capital of
Autotype USA.
14.2 INTERESTS OF THE COMPANY IN OTHER ENTITIES
Save for its interests in the Subsidiaries and the Associated Undertaking the
Company has no interest in the share capital of, or other investment in, any
body corporate.
14.3 MEMORANDUM AND ARTICLES OF ASSOCIATION
A copy of the memorandum and articles of association (or equivalent document) of
the Company is included in the Data Room Documents.
14.4 NO SHARES OR LOAN CAPITAL OF THE COMPANY UNDER OPTION
No share or loan capital of the Company is now under option or is agreed or
resolved conditionally or unconditionally to be created or issued or put under
option.
14.5 THE SELLERS' ENTITLEMENT TO SELL THE SALE SHARES
Each Seller is entitled to sell and transfer or procure the sale and transfer of
the full legal and beneficial ownership in the Sale Shares being sold by it to
the Buyer on the terms set out in this Agreement.
14.6 POWERS AND OBLIGATIONS OF THE SELLERS
The execution and delivery of, and the performance by each Seller of its
obligations under, and compliance with the provisions of, this Agreement and the
other Transaction Documents will not:
(a) result in a violation of any provision of its memorandum or articles of
association;
(b) result in a breach of, or constitute a default under, any instrument to
which any of the Sellers is a Party or by which any of the Sellers is bound;
(c) result in a violation of any law or regulation in any jurisdiction
having the force of law or of any order, judgement or decree of any court or
governmental agency or agreement to which any of the Sellers is a party or by
which any of the Sellers is bound;
(d) relieve any person from any material contractual obligation to the
Company or enable any person to determine any such material contractual
obligation or any material contractual right or benefit enjoyed by the Company,
or to exercise any material contractual right against the Company;
(e) result in the creation, imposition, crystallisation or enforcement of
any encumbrance on any of the Sale Shares or on any of the assets of the
Company; or
(f) result in any present or future indebtedness of the Company becoming due
or capable of being declared due and payable prior to its stated maturity.
15 INSOLVENCY
15.1 No order has been made and no resolution has been proposed or passed
for the winding up of the Company or for a provisional liquidator to be
appointed in respect of the Company and no petition has been presented and no
meeting has been convened for the purpose of winding up the Company.
15.2 No administration order has been made in respect of the Company and no
petition or other application to the court for such an order has been presented
or made and no administrator has been appointed (or notice of intention so to
appoint given) in respect of the Company.
15.3 No receiver (which expression shall include an administrative receiver)
has been appointed, nor have the Sellers received notice that any such
appointment is threatened, in respect of the Company or in respect of all or any
material part of its assets.
15.4 No voluntary arrangement has been proposed under section 1 Insolvency
Xxx 0000 in respect of the Company.
15.5 No distress, execution or other process has been levied or threatened
against the Company in respect of any asset of the Company.
15.6 No event analogous to any of the circumstances mentioned in the
foregoing sub-paragraphs of this paragraph 15 has occurred in relation to the
Company in any jurisdiction other than England.
SCHEDULE 5
THE PROPERTIES
PART 1 - FREEHOLD PROPERTIES
NONE
PART 2 - LEASEHOLD PROPERTIES
DESCRIPTION PROPRIETOR DATE OF LEASE PARTIES TO LEASE
------------------------- ------------------------------ ------------------- ------------------------------
Premises at Grove Road, Autotype International Limited 25 March 1992 Norcros Estates Limited (1)
Wantage, Autotype International Limited (2)
Oxfordshire, Norcros plc (3)
England
------------------------- ------------------------------ ------------------- ------------------------------
Xxxx 000 Xxxxxx Xxxx, Autotype International Limited 8 August 0000 Xxxxxxxx Xxxxxxx Group Limited (1)
Abingdon, Norcros Estates Limited (2)
Oxfordshire,
England
------------------------- ------------------------------ ------------------- ------------------------------
Premises adjacent to and Autotype International Limited 24 November 0000 Xxxxxxxx Xxxxxxx Group Limited (1)
forming part of Xxxx 000 Xxxxxxx Xxxxxxx Xxxxxxx (0)
Xxxxxx Xxxx,
Xxxxxxxx,
Xxxxxxxxxxx,
Xxxxxxx
------------------------- ------------------------------ ------------------- ------------------------------
Xxxxxxx Xxx X00000 Autotype International (Asia) 4 September 1998 Jurong Town Corporation (1)
Xx. 00 Xxxxxx Xxxx, Xxx Limited Autotype International (Asia)
Xxxxx Xx. 00, Xxx Xxxxxxx (0)
Xxxxxx,
Xxxxxxxxx
------------------------- ------------------------------ ------------------- ------------------------------
0000 Xxxxxxx Xxxxx, Autotype Americas Inc 15 January 2002 The Manufacturers Life Insurance
Schaumburg, Company (USA) (1)
Illinois, Autotype Americas Inc (2)
60173,
USA
------------------------- ------------------------------ ------------------- ------------------------------
Xxxx 000, Xxxxxxxxx Autotype International 31 July 2003 to Shanghai Lianzhi Technology &
Tower B Far East (Asia) Pte Ltd Shanghai 31 July 2006 Development Co. Ltd (1)
International Plaza, Representative Office Singapore Autotype International
Xx. 000 Xxxxxxx Xxxx, (Xxxx) Pte Ltd Shanghai
Shanghai, Representative Office (2)
China
------------------------- ------------------------------ ------------------- ------------------------------
Xxxx 000, Xxxxxxxxx Autotype International 1 February 2002 to Zhang Diansheng (1)
Xx. 0 Xxxxxxx Xxxxxxxxx, (Xxxx) Pte Ltd Shanghai 31 January 2006 Singapore Autotype International
No. 168 Hongqiao Road, Representative Office (Asia) Pte Ltd Xxxxxxxx
Xxxxx Xxxxxxxx, Xxxxxxxxxxxxxx Xxxxxx (0)
Xxxxxxxx,
Xxxxx
------------------------- ------------------------------ ------------------- ------------------------------
Xxxxxxxxxxxx 00, Xxxxx Xxxxx Xxxxxx 1 February 1989 Xxxxx Xxxxx Xxxxxx (1)
3490 Kvistgaard, Chemicals Products &
Denmark Services A/S (2)
------------------------- ------------------------------ ------------------- ------------------------------
Xxxxxxxxxxxx 00 X, Xxxxxxxxxxxx 00 I/S 1 May 1990 Xxxxxxxxxxxx 00 X/X (0)
0000 Xxxxxxxxxx, Chemicals Products &
Denmark Services A/S (2)
------------------------- ------------------------------ ------------------- ------------------------------
Xxxxxxxxxxxx 00 X, Xxxxxxxxxxxx 00 I/S 1 January 1991 Xxxxxxxxxxxx 00 X/X (0)
0000 Xxxxxxxxxx, Chemicals Products &
Denmark Services A/S (2)
------------------------- ------------------------------ ------------------- ------------------------------
PART 3 - LICENSED PROPERTIES
Xxxx 0, 00 Xxxx Xxxxxx, Xxxxxxx licensed at GBP 6,300 per annum
SCHEDULE 6
PENSIONS
1 Subject to paragraphs 2, 3, 4, 5 and 10 below, the Sellers shall indemnify
Autotype UK against all actions, proceedings, costs, claims, damages, expenses,
losses or liabilities incurred by Autotype UK, insofar as the same arise from or
in connection with Autotype UK being liable for any deficiency pursuant to
section 75 of the Pensions Xxx 0000 in relation to the Disclosed Scheme. This
indemnity shall be enforceable by Autotype UK which shall be entitled to enforce
this indemnity under the Contracts (Rights of Third Parties) Xxx 0000.
2 No claim under paragraph 1 above shall be brought against the Sellers, and
Autotype UK shall not be entitled to make any recovery in respect of any such
claim, unless notice in writing of such claim (setting out all material details
known to Autotype UK in connection with the claim and, to the extent possible,
an estimate of the quantum of such claim) has been given to the Sellers by
Autotype UK by not later than the earlier of:
(a) 90 days from the date on which Autotype UK became aware that the
trustees of the Disclosed Scheme were calculating a debt pursuant to section 75
of the Pensions Xxx 0000 in relation to the Disclosed Scheme; and
(b) 18 months from the Completion Date,
but provided that no such notice shall be given before the date on which
Autotype UK shall become aware that the Trustees of the Disclosed Scheme were
calculating a debt pursuant to section 75 of the Pensions Xxx 0000 in relation
to the Disclosed Scheme.
3 If Autotype UK gives any notice pursuant to paragraph 2, the Buyer shall,
and shall ensure that each member of the Buyer's Group shall, allow the Sellers
and each of their duly authorised representatives and professional advisers upon
reasonable notice, and subject to their giving such undertakings as to
confidentiality as Autotype UK may reasonably require, reasonable access during
normal business hours for the purposes of the relevant matter to the premises
and personnel of Autotype UK, and to any relevant records or information of
Autotype UK and permit the Sellers and those representatives and advisers to
make copies (at the Sellers' cost) of those records and information.
4 The Buyer shall procure that Autotype UK shall reimburse to the Sellers
forthwith an amount equal to any sum paid by either of them in respect of any
claim under paragraph 1 which is subsequently recovered by or paid to Autotype
UK or any other member of the Buyer's Group by any other person in respect of
the matter giving rise to such claim (less any reasonable third party costs and
expenses (including reasonable legal expenses) incurred in making such
recovery).
5 Where the Buyer or any other member of the Buyer's Group may be entitled
(whether by reason of insurance or payment discount or otherwise) to recover
from some other person any sum in respect of any damage or liability the subject
of a claim under paragraph 1, then, whether before or after such Seller has made
payment in respect of any such claim, the Buyer shall, if so required by either
Seller, and subject to payment of any reasonable third party costs and expenses
(including reasonable legal expenses) by such Seller, take, or (as the case may
require) procure that the relevant member of the Buyer's Group (and the Buyer's
officers or the officers of the relevant member of the Buyer's Group as
applicable) take, all reasonable steps (whether by way of a claim against its
insurers or otherwise) in relation to such claim as such Seller may reasonably
require to enforce such recovery and shall keep such Seller informed to its
reasonable satisfaction of the progress of any action taken.
6 The Sellers shall use their reasonable endeavours to procure that the
trustees of the Disclosed Scheme:
(a) procure that the actuary to the Disclosed Scheme provides as soon as
practicable following Completion a certificate (CERTIFICATE) confirming the
extent of the deficiency, if any, in the assets of the Disclosed Scheme pursuant
to section 75 of the Pensions Act 1995 as at the Completion Date;
(b) notify Autotype UK in writing that they are calculating a debt pursuant
to section 75 of the Pensions Xxx 0000; and
(c) serve the Certificate on Autotype UK.
7 Subject to paragraph 8 and 9 below, with a view to the Sellers having an
opportunity to take such action as they deem necessary in order to reduce or
extinguish the amount otherwise payable by the Sellers pursuant to paragraph 1
above, the Buyer hereby agrees to procure that:
(a) until the expiration of the period of 90 days commencing upon notice in
writing being given by Autotype UK pursuant to paragraph 2 of a claim under
paragraph 1 above (including, for the avoidance of doubt, before such notice is
given), Autotype UK shall not make payment in respect of the whole or any part
of any relevant deficiency unless required to do so by order of a court of
competent jurisdiction; and
(b) it shall take or procure Autotype UK to take such action as the Sellers
may reasonably request to appeal the order of the court of competent
jurisdiction referred to in paragraph (a) above.
8 The Buyer's agreement, pursuant to paragraph 7 above, is conditional upon
the trustees of the Disclosed Scheme agreeing that Autotype UK need not make any
payment in respect of the whole or any part of the relevant deficiency before
the expiration of the period referred to in paragraph 7 above.
9 The Sellers hereby agree that they will pay the reasonable third party
costs and expenses (including reasonable legal expenses) incurred by the Buyer
or Autotype UK arising in connection with the Buyer procuring performance of
Autotype UK's obligations under paragraph 7 above.
10 A claim notified in accordance with paragraph 2 and not satisfied,
settled or withdrawn is unenforceable against any Seller on expiry of the period
of 9 months starting on the date on which Autotype UK is issued with a formal
notification of a debt by the trustees of the Disclosed Scheme pursuant to
section 75 of the Pensions Xxx 0000 unless proceedings in respect of such claim
shall have been issued and validly served on such Seller within that 9 month
period.
SCHEDULE 7
PROVISIONS FOR THE PROTECTION OF THE SELLERS
1 INTERPRETATION
In this schedule 7, unless the context otherwise requires:
CLAIMS means all and any Warranty Claims and claims against the Sellers or
either of them under the Tax Covenant (provided that references to "CLAIMS" in
paragraphs 6, 7.2, 8, 9, 10, 11, and 12 shall not include any claim under the
Tax Covenant or the Tax Warranties to which claims the provisions of schedule 3
(TAX) shall apply)
DATA ROOM DOCUMENTS means those documents attached to and forming part of the
Disclosure Letter
EXPENSES means reasonable third party costs and expenses (including reasonable
legal expenses)
OFFICIAL REQUIREMENT means any enactment, ordinance, pact, decree, treaty, code,
directive, order, notice or official published plan or policy with legal or
actual force in any geographical area and/or over any class of persons
RELEVANT AUTHORITY means any person or authority (including any nation, national
or local governmental or international organisation and any subdivision or
agency or executive arm of any of them, any court of judicial officer or any
securities exchange) with legal or de facto power to impose and/or enforce
compliance with any Official Requirement
WARRANTY CLAIMS means subject to paragraph 7.1 and 17.1 of this schedule all and
any claims against the Sellers (or either of them) under any of the Warranties,
including any claim for breach of contract, misrepresentation or indemnification
resulting from any breach of the Warranties and any and all claims against the
Sellers (or either of them) under the indemnity in clause 12 of this Agreement
2 APPLICATION OF THIS SCHEDULE
The provisions of this schedule apply notwithstanding and in priority to any
other provision of this Agreement.
3 MAXIMUM LIABILITY
The maximum liability of the Sellers in respect of all Warranty Claims and
claims under the Tax Covenant shall not exceed 45% of the Purchase Price.
4 SMALL CLAIMS AND THRESHOLD
4.1 Notwithstanding any other provision of this Agreement:
(a) no Warranty Claim shall be brought and the Buyer shall not be entitled
to make any recovery in respect of that Warranty Claim if the amount in respect
of which such Warranty Claim may properly be brought following application of
the other provisions of this schedule would otherwise be less than GBP 50,000
(an EXCLUDED CLAIM);
(b) subject to paragraph 4.1(a), no other Warranty Claim shall be brought
and the Buyer shall not be entitled to make any recovery in respect of that
Warranty Claim unless the amount in respect of which such Warranty Claim may
properly be brought following application of the other provisions of this
Agreement when aggregated with any other Warranty Claims exceeds GBP 1,000,000
in which case the Buyer shall be able to claim for the whole amount and not
merely the excess over GBP 1,000,000 only, but shall not, in any event, be
entitled to claim for any Excluded Claim; and
(c) no Claim under the Tax Covenant shall be brought and the Buyer shall not
be entitled to make any recovery in respect of such a Claim unless the amount in
respect of which such Claim may properly be brought following application of the
other provisions of this Agreement when aggregated with any other such Claims
exceeds GBP 150,000 in which case the Buyer shall be able to claim for the whole
amount and not merely the excess over GBP 150,000 only.
4.2 For the purpose of this paragraph 4, all Warranty Claims arising from
the same act, omission or event (or from what might be reasonably considered to
be a series of related act, omissions or events) shall be aggregated and shall
be deemed to be a single Warranty Claim.
5 TIME LIMITS
5.1 No Claim shall be brought against the Sellers and the Buyer shall not be
entitled to make any recovery in respect of that Claim unless notice in writing
of such Claim (setting out all material details known to the Buyer in connection
with the Claim and, to the extent possible, an estimate of the quantum of such
Claim) has been given to the Sellers by the Buyer by not later than the earlier
of:
(a) in relation to a Warranty Claim, the period of 90 days from the date on
which the Buyer became aware of facts which it is reasonably apparent could give
rise to the Warranty Claim; and
(b) either:
(i) 7 years from the Completion Date in respect of any Warranty Claim under
the Tax Warranties or any other claim under the Tax Covenant; and
(ii) 18 months from the Completion Date in respect of any other Warranty
Claim.
5.2 A Claim notified in accordance with paragraph 5.1 and not satisfied,
settled or withdrawn is unenforceable against any Seller on the expiry of the
period of 9 months starting on the day of notification of the Claim unless
proceedings in respect of such Claim shall have been both issued and validly
served on such Seller within that period, unless the resulting loss suffered or
which may be suffered is contingent or unascertainable (in which case such Claim
shall be unenforceable if legal proceedings have not been issued and validly
served on the Seller in question within 9 months starting on the day on which
such Claim ceases to be contingent or becomes ascertainable).
6 SELLERS' RIGHTS TO INFORMATION
If the Buyer gives any notice pursuant to paragraph 5.1, the Buyer shall, and
shall ensure that each member of the Buyer's Group shall, allow the Sellers and
each of its duly authorised representatives and professional advisers upon
reasonable notice, and subject to their giving such undertakings as to
confidentiality as the Buyer may reasonably require, reasonable access during
normal business hours for the purposes of the relevant matter to the premises
and personnel of the Buyer and each Group Company, and to any relevant records
or information of the Buyer or any Group Company and permit the Sellers and
those representatives and advisers to make copies (at the Sellers' cost) of
those records and information.
7 GENERAL LIMITATIONS
7.1 The Sellers shall not have any liability in respect of any Warranty
Claim and accordingly no Warranty Claim may be brought to the extent that :
(a) the subject matter of such Warranty Claim is fairly disclosed in the
Disclosure Letter; or
(b) the subject matter of such Warranty Claim is provided or reserved for in
the Accounts (either specifically, or as one of several items, matters or
circumstances giving rise to an applicable provision or reserve in the
Accounts).
For the purposes of paragraph 7.1(a), "Warranty Claim", shall not include any
claim against the Sellers (or either of them) under the indemnity in clause 12
of this Agreement.
7.2 The Sellers shall not have any liability in respect of any Warranty
Claim and accordingly no Warranty Claim may be brought to the extent that:
(a) the Buyer or any other member of the Buyer's Group actually receives
indemnity against any loss or damage under the terms of any insurance policy for
the time being in force in respect of the matter giving rise to the Claim;
(b) the Warranty Claim arises as a result of:
(i) any voluntary act, omission, transaction or arrangement of the Buyer or
the Buyer's Group at any time or of any Group Company after the date of this
Agreement or any of their respective officers, agents or successors in title
outside the ordinary course of the relevant company's business which is not
pursuant to a legally binding obligation entered into on or before Completion
and which the Buyer knew or reasonably ought to have known would give rise to a
Warranty Claim;
(ii) any asset acquired by any Group Company after Completion;
(iii) the disposal by any Group Company of any asset after Completion;
(iv) the passing of a resolution for the winding up of any Group Company
after Completion;
(v) any material change in the nature of the business of any Group Company
(or in the manner of conducting it) after Completion;
(vi) any:
(A) statutory or other binding or advisory legislative or regulatory
provision not in force at the date of this Agreement; or
(B) any change in any such provision after the date of this Agreement; or
(C) any publication or withdrawal of any decision of the Courts or any other
relevant regulatory authority after the date of this Agreement altering
the accepted interpretation of any such provision; or
(D) the withdrawal after the date of this Agreement of any extra statutory
or other concession previously made by or any change in practice of the
Inland Revenue or other taxation or regulatory authority or any increase in
the rates of Tax in force at Completion,
except (in each case) as announced prior to the date of this Agreement;
(vii) any departure after Completion from the format, matter, bases,
priorities and principles used in the preparation of the Accounts, save insofar
as the same is necessary to comply with law or generally accepted accounting
policies and principles; or
(viii) any change on or after Completion of the accounting reference date of
any Group Company;
(c) the loss or liability suffered or incurred by the Buyer to which the
Warranty Claim relates is contingent or unascertainable (so that no Warranty
Claim may be brought in respect of such loss or liability until such time as the
Buyer shall have actually suffered the loss or incurred the liability in
question, in which event the provisions set out in clause 5.2 in relation to
such circumstances shall apply); or
(d) the loss or liability to which such Warranty Claim relates has been or
is made good or otherwise compensated for at no expense to the Buyer.
8 SUBSEQUENT RECOVERY FROM THIRD PARTY
The Buyer shall reimburse to the Sellers forthwith an amount equal to any sum
paid by it in respect of any Warranty Claim which is subsequently recovered by
or paid to the Buyer or any other member of the Buyer's Group by any other
person in respect of the matter giving rise to the Warranty Claim (less any
Expenses incurred in making such recovery).
9 ASSIGNMENT OF CLAIM
Where having discharged any Warranty Claim, a Seller requests the assignment to
it of any right of the Buyer or any other member of the Buyer's Group to make
recovery in whole or in part from any third party, the Buyer will assign or
procure the assignment to such Seller (subject to such Seller paying any
associated Expenses) of such right and, if that right is not legally capable of
effective assignment, will, subject to being indemnified to the reasonable
satisfaction of the Buyer against any associated Expenses, seek to make recovery
pursuant to any such right(s) on behalf of such Seller (provided that pursuing
such right would not be materially detrimental to the ongoing business of the
Group (taken as a whole) or the Group's relations with any material customers or
material suppliers of the Group or any Relevant Authority) and pay over to such
Seller all amounts recovered up to the amount of the relevant Warranty Claim
previously discharged by it.
10 WARRANTY CLAIMS AGAINST THIRD PARTY
Where the Buyer or any other member of the Buyer's Group may be entitled
(whether by reason of insurance or payment discount or otherwise) to recover
from some other person any sum in respect of any damage or liability the subject
of a Warranty Claim, then, whether before or after such Seller has made payment
in respect of any Warranty Claim, the Buyer shall, if so required by either
Seller, and subject to payment of any Expenses by such Seller, take, or (as the
case may require) procure that the relevant member of the Buyer's Group (and the
Buyer's officers or the officers of the relevant member of the Buyer's Group as
applicable) take, all reasonable steps (whether by way of a claim against its
insurers or otherwise) in relation to such Warranty Claim as such Seller may
reasonably require to enforce such recovery and shall keep such Seller informed
to its reasonable satisfaction of the progress of any action taken. Thereafter
any Warranty Claim shall be limited (in addition to the limitations on the
liability of the Sellers referred to in this schedule 7) to the amount by which
the loss or damage suffered by the Buyer as a result of such breach shall exceed
the amount (if any) so recovered.
11 CLAIMS BY THIRD PARTY
If grounds for any Claim arise as a result of, or in connection with, a claim
by, or alleged liability to, a third party (a THIRD PARTY CLAIM), the Third
Party Claim shall not be compromised or settled without the consent of the
Sellers (such consent not to be unreasonably withheld or delayed). If requested
promptly in writing by either Seller and, subject to the Buyer being indemnified
to its reasonable satisfaction by that Seller against all associated Expenses,
the Buyer shall:
(a) take, and shall procure that each member of the Buyer's Group (and the
Buyer's officers or the officers of the relevant member of the Buyer's Group, as
applicable) take, all such action as such Seller may reasonably request to
avoid, dispute, resist, appeal or compromise the Third Party Claim (provided
that taking such action would not be materially detrimental to the ongoing
business of the Group (taken as a whole) or the Group's relations with any
material customers or material suppliers of the Group, or any Relevant
Authority); and
(b) make available, and procure that each member of the Buyer's Group (and
the Buyers officers or the officers of the relevant member of the Buyer's Group,
as applicable) shall make available, to such Seller on request all information
and reasonable assistance which is relevant for that purpose. The Sellers shall
not use or disclose any such information for any other purpose.
12 DUTY TO MITIGATE
Nothing in this Agreement shall be deemed to relieve the Buyer from its common
law duty to mitigate its loss.
13 NO DOUBLE CLAIM
Neither the Buyer nor any member of the Group shall be entitled to recover
damages or any other amount in respect of any Claim (including any claim under
the Tax Covenant) or otherwise obtain reimbursement or restitution more than
once in respect of the same matter, loss or liability and for this purpose any
payment by the Sellers under the Tax Covenant shall be deemed to satisfy any
Warranty Claim in respect of the same matter and vice versa.
14 RESCISSION
14.1 No breach of any of the Warranties nor of any other provision of this
Agreement by the Sellers shall entitle the Buyer to rescind or otherwise
terminate this Agreement after Completion.
14.2 The provisions of this schedule 7 shall remain in full force and be
fully applicable all circumstances and, in particular, shall not be discharged
by any breach of this Agreement of any nature or by any determination or
rescission by the Buyer of the whole or any part of this Agreement.
15 WARRANTIES CONCERNING CERTAIN MATTERS
The only Warranties given:
(a) in respect of Property are those contained in paragraph 9 of schedule 4
and each of the other Warranties shall be deemed not to be given in relation to
Property;
(b) in respect of Intellectual Property are those contained in paragraph 8
of schedule 4 and each of the other Warranties shall be deemed not to be given
in relation to Intellectual Property;
(c) in respect of Environmental Laws and Environmental Licences are those
contained in paragraph 10 of schedule 4 and each of the other Warranties shall
be deemed not to be given in relation to Environmental Laws and Environmental
Licences;
(d) in respect of pensions are those contained in paragraph 6 of schedule 4
and each of the other Warranties shall be deemed not to be given in relation to
pensions; and
(e) in respect of Tax are those contained in part 3 of schedule 3 and each
of the other Warranties shall be deemed not to be given in relation to Tax
provided always that nothing in this paragraph 15 shall prevent the Buyer from
pursuing any claim arising from a breach of the Warranties set out in paragraphs
2.1, 2.2, 2.3, 2.4 or 11 of schedule 4 irrespective of the nature of the
matters, facts or circumstances giving rise to such a claim.
16 TAX
16.1 Notwithstanding any other provision of this Agreement the Sellers shall
have no liability in respect of any Claim which relates to Tax or any Deemed Tax
Liability (as defined in part 1 of schedule 3) or the unavailability of any
Relief (as defined part 1 of schedule 3) other than pursuant to the Tax
Warranties and the Tax Covenant.
16.2 The provisions of paragraphs 2 (Exclusions and Limitations), 3
(Mitigation), 4 (Over-provisions and Reliefs), 5 (Recovery from third parties),
6 (Appeals), 9 (Miscellaneous) and 10 (Buyer's Covenant) of part 1 of schedule 3
(TAX PROVISIONS) shall apply to any claim against the relevant Seller under or
in respect of any of the Tax Warranties as if expressly set out in this schedule
7 and if there is any conflict between any provision of this schedule 7 and any
of the Tax Provisions insofar as the Tax Warranties (or the Tax Covenant) are
concerned, the Tax Provisions shall apply in priority thereto.
17 BUYER'S CONFIRMATION AND ACKNOWLEDGEMENT
17.1 The Buyer confirms and undertakes to the Sellers that as at the date of
this Agreement it has no actual knowledge of any fact, matter or circumstance
which it is aware may constitute a Warranty Claim and/or may give rise to a
claim under the Tax Covenant. For the purposes of this paragraph 17.1 "Warranty
Claim" shall not include any claim against the Sellers (or either of them) under
the indemnity in clause 12 of this Agreement.
17.2 The Buyer agrees, acknowledges and undertakes that (in the absence of
fraud) it has no rights against and shall not make any claim against any
employee, director, agent, officer or adviser of any member of the Sellers'
Group, or any Group Company, on whom it may have relied before agreeing to any
term of this Agreement or any other agreement or document referred to herein or
entering into this Agreement or any other agreement or document referred to
herein including, without prejudice to the generality of the foregoing, any such
persons as are named in clause 5.2 of this Agreement.
SCHEDULE 8
PREPARATION OF STATEMENTS FOR ADJUSTMENTS TO PURCHASE PRICE
PART 1 - GENERAL PROVISIONS
1 BASIS OF PREPARATION OF THE COMPLETION WORKING CAPITAL STATEMENT AND
FINAL EBITDA STATEMENT
1.1 The Completion Working Capital Statement shall be prepared so as to show
the determination of Completion Working Capital in the same format as the
Normalised Working Capital Statement shows the determination of Normalised
Working Capital (as set out in part 2 of this schedule). For the avoidance of
doubt, the Completion Working Capital Statement shall show the Completion
Working Capital calculated in such format at the Completion Date and shall not
include any aggregation of such Completion Working Capital with any historic
valuations for Working Capital to produce a normalised or averaged valuation.
1.2 The Final EBITDA Statement shall be prepared so as to show the
determination of First Quarter EBITDA in the same format as the Interim EBITDA
Statement shows the determination of Interim EBITDA (as set out in part 4 of
this schedule).
1.3 Subject to paragraphs 1.4 to 1.6 below, the Completion Working Capital
Statement and the Final EBITDA Statement shall be drawn up in accordance with
the following principles:
(a) using the same accounting principles, policies, practices, valuation
rules and procedures, methods and bases adopted by the Group in the preparation
of the management accounts of the Group for the period from 5 April 2004 to the
Management Accounts Date (and which for the avoidance of doubt includes the
separate management accounts of Autotype USA) (2004/2005 MANAGEMENT ACCOUNTS)
(the principal policies used in the preparation of the 2004/2005 Management
Accounts being set out in part 6 of this schedule ACCOUNTING POLICIES) and
applied on a basis consistent with the preparation of the 2004/2005 Management
Accounts;
(b) to the extent (but only to the extent) not covered by paragraph 1.3(a),
using the same accounting principles, policies, practices, evaluation rules and
procedures, methods and bases, adopted by the Group in the preparation of the
Reconciled Group Accounts and applied on a basis consistent with the preparation
of the Reconciled Group Accounts; and
(c) to the extent (but only to the extent) not covered by paragraph 1.3(a)
or 1.3(b) in accordance with generally accepted accounting practice prevailing
in the United Kingdom as at the Completion Date.
1.4 As the 2004/2005 Management Accounts consist of separate management
accounts for Autotype USA on the one hand, and the other Group Companies on the
other hand, but are not consolidated, the information derived in accordance with
the principles stated in paragraph 1.3 above for each of the Group Companies
shall be consolidated in accordance with the same principles and policies of
consolidation as were adopted for the purposes of consolidating the Accounts to
prepare the Reconciled Group Accounts, applied on a basis consistent with the
preparation of the Reconciled Group Accounts, in order to produce the
consolidated Completion Working Capital Statement and Final EBITDA Statement.
1.5 Any amounts not expressed in the accounting records of any relevant
Group Company in Sterling:
(a) shall be presented in the Completion Working Capital Statement in
Sterling by application of the Completion Exchange Rates to such amounts; and
(b) shall be presented in the Final EBITDA Statement in Sterling by
application of foreign exchange rates which are derived from a source, and
applied on a basis, which is consistent with the practice applied for such
conversion when preparing the 2004/2005 Management Accounts.
1.6 For the avoidance of doubt, due recognition shall be included in the
Final EBITDA Statement of the benefit of the Relevant Forward Foreign Exchange
Contracts in accordance with the principles stated in paragraph 1.3(a) above.
2 PREPARATION OF THE COMPLETION WORKING CAPITAL STATEMENT
2.1 The Buyer shall prepare and serve on the Sellers a draft of the
Completion Working Capital Statement (DRAFT WORKING CAPITAL STATEMENT) within 20
Business Days after the Completion Date.
2.2 REVIEW PERIOD: The Sellers may, within the period of 20 Business Days
after service of the Draft Working Capital Statement on the Sellers in
accordance with paragraph 2.1 (REVIEW PERIOD), notify the Buyer, in writing, of
any adjustments they consider need to be made to the Draft Working Capital
Statement in order for it to comply with paragraph 1 (together with the reasons
for such adjustments).
2.3 AGREEMENT AND DEEMED AGREEMENT: If:
(a) the Sellers notify the Buyer during the Review Period that no adjustment
needs to be made to the Draft Working Capital Statement; or
(b) the Sellers do not notify the Buyer during the Review Period of any
proposed adjustment to the Draft Working Capital Statement,
the Draft Working Capital Statement and the Completion Working Capital specified
in it shall be the Completion Working Capital Statement and Completion Working
Capital respectively for all purposes of this Agreement.
2.4 DISPUTE RESOLUTION: If the Sellers notify the Buyer during the Review
Period that certain adjustments need to be made and:
(a) the Buyer and the Sellers agree, in writing, on the adjustments to be
made to the Draft Working Capital Statement in order for it to comply with
paragraph 1, they shall jointly incorporate such adjustments into the Draft
Working Capital Statement and the Draft Working Capital Statement as so adjusted
and the Completion Working Capital stated therein, shall be the Completion
Working Capital Statement and Completion Working Capital for all purposes of
this Agreement; or
(b) if the Sellers and the Buyer are unable to so agree within 10 Business
Days then part 3 of this schedule shall apply.
3 PREPARATION OF THE ESTIMATED DEBT AMOUNT STATEMENT AND FINAL DEBT AMOUNT
STATEMENT
3.1 The Sellers shall on Completion deliver to the Buyer the Estimated Debt
Amount Statement.
3.2 As soon as reasonably practicable, and in any event within 10 Business
Days following Completion, the Buyer shall procure that the Group prepares and
delivers to the Sellers the draft Final Debt Amount Statement (DRAFT FINAL DEBT
AMOUNT STATEMENT), together with all relevant bank statements, financial records
and other supporting documents (including bank reconciliations) from which such
draft has been derived by the Buyer.
3.3 Within 10 Business Days of the delivery to the Sellers of the Draft
Final Debt Amount Statement and the statements, records and the other supporting
documents referred to in paragraph 3.2, the Sellers shall provide the Buyer with
notice in writing (DISPUTE NOTICE) of any item or items it wishes to dispute
together with the reasons for such dispute and a list of proposed adjustments.
If, by the expiry of such period of 10 Business Days, no such notice is received
by the Buyer, or the Sellers have notified the Buyer that there are no items
they wish to dispute, the Draft Final Debt Amount Statement shall constitute the
Final Debt Amount Statement for the purposes of this Agreement and the amounts
therein specified as the UK Debt Amount and the USA Debt Amount (or UK Cash
Amount and/or USA Cash Amount, as the case may be) shall constitute the UK Debt
Amount and the USA Debt Amount (or UK Cash Amount and/or USA Cash Amount, as the
case may be) for the purposes of this Agreement.
3.4 If a Dispute Notice is received by the Buyer, then the Sellers and the
Buyer shall attempt to agree in writing the item or items disputed by the
Sellers, and:
(a) if the Buyer and the Sellers agree, in writing, on all of the
adjustments to be made to the Draft Final Debt Amount Statement, they shall
jointly incorporate such adjustments into the Draft Final Debt Amount Statement
and the Draft Final Debt Amount Statement as so adjusted, and the UK Debt Amount
and the USA Debt Amount (or UK Cash Amount and/or USA Cash Amount, as the case
may be) stated therein, shall constitute the UK Debt Amount and the USA Debt
Amount (or UK Cash Amount and/or USA Cash Amount, as the case may be) for the
purposes of this Agreement; or
(b) to the extent that any such adjustments are not agreed in writing
between the Sellers and the Buyer then part 3 of this schedule shall apply.
4 PREPARATION OF THE FINAL EBITDA STATEMENT
4.1 The Buyer shall prepare and serve on the Sellers a draft of the Final
EBITDA Statement (DRAFT FINAL EBITDA STATEMENT) as soon as is reasonably
practicable, and in any event, within 15 Business Days after the end of the
First Quarter.
4.2 REVIEW PERIOD: The Sellers may notify the Buyer within the period of 15
Business Days after service of the Draft Final EBITDA Statement on such parties
in accordance with paragraph 4.1 (REVIEW PERIOD), in writing, of any adjustments
they consider need to be made to the Draft EBITDA Statement in order for it to
comply with paragraph 1 (together with the reasons for such adjustments).
4.3 AGREEMENT AND DEEMED AGREEMENT IF SELLERS MAKE NO ADJUSTMENTS: If:
(a) the Sellers notify the Buyer during the Review Period, that no
adjustment needs to be made to the Draft Final EBITDA Statement; or
(b) the Sellers do not make any notification during the Review Period
pursuant to paragraph 4.2 of any proposed adjustment to the Draft Final EBITDA
Statement,
the Draft Final EBITDA Statement and the First Quarter EBITDA specified in it
shall be the Final EBITDA Statement and the First Quarter EBITDA respectively
for all purposes of this Agreement.
4.4 DISPUTE RESOLUTION: If the Sellers notify the Buyer during the Review
Period, that certain adjustments need to be made and:
(a) the parties agree, in writing, on the adjustments to be made to the
Draft Final EBITDA Statement in order for it to comply with paragraph 1, they
shall jointly incorporate such adjustments into the Draft Final EBITDA Statement
and the Draft Final EBITDA Statement as so adjusted and the First Quarter EBITDA
stated therein, shall be the Final EBITDA Statement and First Quarter EBITDA for
all purposes of this Agreement; or
(b) if the parties are unable to so agree within 10 Business Days then part
3 of this schedule shall apply.
5 CO-OPERATION AND ACCESS
5.1 Until the Final Debt Amount Statement, the Final EBITDA Statement and
the Completion Working Capital Statement is each agreed or determined in
accordance with this schedule, the Sellers and the Buyer shall each (at their
own cost):
(a) maintain in their possession or under their control all books and
records held by them (including, in the case of the Buyer, each member of the
Group), which are relevant to the agreement or determination of the Final Debt
Amount Statement, the Final EBITDA Statement and the Completion Working Capital
Statement;
(b) give and procure that the other's accountants and employees, and (if
relevant) the Expert, is given access at all reasonable times to all books and
records which are in their respective possession or control (including, in the
case of the Buyer, each member of the Group) and each party undertakes not to
destroy or dispose of those books and records; and
(c) generally provide to the other's accountants and (if relevant) the
Expert such information and assistance (including access to employees during
normal business hours and on reasonable notice) as they may reasonably require
in relation to the review, agreement or determination of the Final Debt Amount
Statement, the Final EBITDA Statement and the Completion Working Capital
Statement.
5.2 Without prejudice to the generality of paragraph 5.1 the Buyer shall
provide to the Sellers:
(a) weekly sales and cash reports for each weekly period during the First
Quarter;
(b) the monthly "snapshot" report for each period in the First Quarter;
(c) the monthly management accounts pack for each period in the First
Quarter; and
(d) the monthly board report pack for each period in the First Quarter,
in each case in the same form, and within the same timescales, as such
information has been provided by the Group to the Sellers during the 12 months
prior to Completion.
5.3 In the event that any party or parties (a DEFAULTING PARTY) unreasonably
withhold(s) or delay(s) access to any of the books, records, information or
employees referred to in paragraphs 5.1 or 5.2 such that the other party or
parties (a NON-DEFAULTING PARTY) is/are unable either (in the case of the Buyer)
to prepare the Draft Working Capital Statement, Draft Final EBITDA Statement or
Draft Final Debt Amount Statement (as the case may be) within the period
specified in paragraphs 2,1, 3.2 or 4.1 (as applicable), or (in the case of the
Sellers) to provide full details of all adjustments they consider necessary to
the Draft Working Capital Statement, Draft Final EBITDA Statement or Draft Final
Debt Amount Statement before the end of the Review Period as specified in
paragraph 2.2 or 4.2, or the period specified in paragraph 3.3 (as the case may
be), then the relevant period shall in any such case be extended for any such
Non-defaulting Party (but not, for the avoidance of doubt, any Defaulting Party)
as if such period commenced on the date on which such access is actually
granted.
PART 2 - NORMALISED WORKING CAPITAL STATEMENT
AUTOTYPE GROUP (INCLUDING AUTOTYPE USA)
Year ended
Sterling Average 12m to 31/3/054 31 March 2005
Normalised P12 P11 P10 P9 P8
'000 '000 '000 '000 '000 '000
Inventory (net) . . . . . . . . . . . . 7,533 6,977 7,799 8,132 8,479 8,383
Debtors (net) . . . . . . . . . . . . . 8,733 8,353 8,427 7,876 7,742 7,973
Creditors <1 year . . . . . . . . . . . (5,366) (4,631) (4,808) (5,025) (5,759) (5,497)
Creditors >1 year . . . . . . . . . . . - - - - - -
Capital Debtors . . . . . . . . . . . . 8 - 22 30 - -
Capital Creditors . . . . . . . . . . . (22) (24) - - - (18)
------------------------ -------------- -------------- -------- --------- ---------
TOTAL WORKING CAPITAL . . . . . . . . . 10,886.3 10,675.0 11,440.0 11,013.0 10,462.0 10,841.0
======================== ============== ============== ======== ========= =========
Clariant Project2 . . . . . . . . . . . (117.8) - (77.0) (95.0) - -
Bank Covenant Optimisation3 . . . . . . (98.7) (210.0) - - - -
------------------------ -------------- -------------- -------- --------- ---------
NORMALISED WORKING CAPITAL. . . . . . . 10,669.8 10,465.0 11,363.0 10,918.0 10,462.0 10,841.0
======================== ============== ============== ======== ========= =========
AUTOTYPE GROUP (INCLUDING AUTOTYPE USA)
Year ended
31 March 2004
Sterling
Normalised. . . . . . . . . . . . . . X0 X0 X0 X0 X0 X0 X0 X00
'000 '000 '000 '000 '000 '000 '000 '000
Inventory (net) . . . . . . . . . . . . 8,361 7,611 7,755 7,376 7,001 6,874 6,685 6,500
Debtors (net) . . . . . . . . . . . . . 8,316 8,570 9,219 9,311 9,326 9,162 9,366 9,888
Creditors <1 year . . . . . . . . . . . (5,915) (5,199) (5,446) (5,456) (5,536) (5,243) (5,525) (5,716)
Creditors >1 year . . . . . . . . . . . - - - - - - - -
Capital Debtors . . . . . . . . . . . . - 7 - - - 15 33 -
Capital Creditors . . . . . . . . . . . (34) - (151) (26) (3) - - (35)
--------- --------- --------- --------- --------- --------- --------- ---------
TOTAL WORKING CAPITAL . . . . . . . . . 10,728.0 10,989.0 11,377.0 11,205.0 10,788.0 10,808.0 10,559.0 10,637.0
========= ========= ========= ========= ========= ========= ========= =========
Clariant Project2 . . . . . . . . . . . - - (251.0) (112.0) - (153.0) (441.0) (402.0)
Bank Covenant Optimisation3 . . . . . . - - - - - - - (1,073.0)
--------- --------- --------- --------- --------- --------- --------- ---------
NORMALISED WORKING CAPITAL. . . . . . . 10,728.0 10,989.0 11,126.0 11,093.0 10,788.0 10,655.0 10,118.0 9,162.0
========= ========= ========= ========= ========= ========= ========= =========
Notes
1. The data on this schedule is extracted from monthly Management Accounts ( form MR4 ) and monthly return for Autotype USA.
2. Adjustment to eliminate impact of Clariant project which is not ongoing.
3. Adjustment to reflect Norcros Group instruction to pay creditors earlier than the normal to optimise the Norcros Group
cashflow/funding covenant which is calculated on a rolling 12 month basis.
4. Average of 13 periods results.
PART 3 - DISPUTE RESOLUTION
1 If paragraphs 2.4(b), 3.4(b) or 4.4(b) of part 1 apply, then any matters
in dispute may be referred by any party for determination, on the basis set out
in this part 3, to the Expert.
2 A party may within 10 Business Days of the Expert being agreed or
nominated (as the case may be) submit a letter to the Expert setting out the
issues which it believes are in dispute, which letter shall also be delivered to
the other party.
3 The Expert shall be requested to notify the Sellers and the Buyer, in
writing, of his determination of any adjustments to be made to the Draft Final
Debt Amount Statement, Draft Final EBITDA Statement or Draft Working Capital
Statement (as the case may be) within 60 Business Days of written confirmation
by the Expert of his acceptance of the appointment.
4 The Sellers and the Buyer shall each be entitled to make one submission on
the matters referred for determination, by written submission delivered to the
Expert and served on the other party, within 15 Business Days of written
confirmation by the Expert of his acceptance of the appointment. Each party
shall have the opportunity to respond in writing to the other party's submission
within 15 Business Days of receipt of that submission. Each submission and
response shall contain the relevant party's best estimate of the monetary
amounts of the matters referred for determination and be accompanied by all
relevant supporting documents.
5 The Expert may request further information from the Sellers and/or the
Buyer at any time. The party (or parties, as the case may be) shall deliver
such information within the time specified by the Expert, and shall supply a
copy to the other party at the same time as it is delivered to the Expert.
6 Other than as provided in this part 3, the Expert shall have power to
determine the procedure to be followed in relation to his determination and the
parties shall be bound by such procedures.
7 In making his determination, the Expert shall act as expert and not as
arbitrator, and his decision as to any matter referred to him for determination
shall, in the absence of manifest error or fraud, be final and binding in all
respects on the parties and shall not be subject to question on any ground
whatsoever.
8 The Expert shall have the right to employ such professional assistance and
advice as he may require.
9 The fees and expenses of the Expert, and any other professional fees
incurred by them, shall be borne and paid as he directs or, failing such
direction, shall be shared equally between the Sellers (on the one hand) and the
Buyer (on the other hand).
10 Within 5 Business Days of any written determination by the Expert
pursuant to this schedule, the Sellers and the Buyer shall jointly incorporate
in the Draft Final Debt Amount Statement, Draft Final EBITDA Statement or the
Draft Working Capital Statement (as the case may be) the matters determined by
the Expert, together with any adjustments which may have been agreed separately
in writing between the Sellers and the Buyer, and shall date such adjusted Draft
Final Debt Amount Statement, Draft Final EBITDA Statement or Draft Working
Capital Statement (as the case may be) with the date on which such adjustments
are made. The Draft Final Debt Amount Statement, Draft Final EBITDA Statement
or Draft Working Capital Statement, as so amended, shall be the Final Debt
Amount Statement, Final EBITDA Statement or the Completion Working Capital
Statement (as the case may be) for all purposes of this Agreement.
PART 4 - FORMAT OF INTERIM EBITDA STATEMENT
UK Americas Rate Americas ASIA Rate ASIA CPS Rate CPS ITALY Rate
GBP'000 US$'000 GBP'000 US$'000 GBP'000 DK'000 GBP'000 '000
------ ------ ------ ------ ------ ------ ------ ------
1.8755 1.8755 10.948 1.474
SALES
External Sales . . . . Home 2,906 4,828 2,574 4,375 2,333 4,835 442
Export
Inter co sales . . . . 2,001 1,897 173 47
------ ------ ------ ------ ------ ------ ------ ------
SALES GROSS. . . . . . 4,907 4,828 2,574 4,375 2,333 6,732 615 47
Discounts & Rebates. . -14 -7
------ ------ ------ ------ ------ ------ ------ ------
TOTAL SALES NET. . . . 4,907 4,828 2,574 4,361 2,325 6,732 615 47
COST OF SALES. . . . . 3,449 3,413 1,820 3,374 1,799 4,204 384
------ ------ ------ ------ ------ ------ ------ ------
GROSS MARGIN . . . . . 1,458 1,415 754 987 526 2,528 231 47
Distribution . . . . . Payroll 65
Overhead 204 73 39 18 10 322 29
Warehouse. . . . . . . Payroll 35 63 34 19 10
Overhead 52 5 3 26 14 26 2
Selling. . . . . . . . Payroll 212 310 165 124 66 626 57 32
Overhead 56 135 72 127 68 349 32 6
Marketing. . . . . . . Payroll 11
Overhead 61 9 5 36 19 208 19
Development. . . . . . Payroll 151 90 48
Overhead 74 11 6
Administration . . . . Payroll 166 181 97 45 24 526 48
Overhead 225 234 125 62 33 573 52 5
Exchange Gains/(Loss). -173 -27 -2
------ ------ ------ ------ ------ ------ ------ ------
Total Overhead Expenses 1,139 1,111 592 457 244 2,603 238 43
------ ------ ------ ------ ------ ------ ------ ------
EBIT . . . . . . . . . 319 304 162 530 283 -75 -7 4
Exceptional Items
Interest . . . . . . . 00 00 00 -0 -0 -0 0
------ ------ ------ ------ ------ ------ ------ ------
PRE TAX PROFIT . . . . 285 246 131 533 284 -70 -6 4
Calculation of EBITDA
EBIT (as above). . . . 319 304 162 530 283 -75 -7 4
Add Depreciation . . . 295 53 28 19 10 245 22
EBITDA . . . . . . . . 614 357 190 549 293 170 16 4
ITALY GERM Rate GERM ADJMT AUTO US HOLD Rate US HOLD TOTAL
GBP'000 DM'000 GBP'000 '000 GRP US$'000 GBP'000 GRP
------ ------ ------ ------ ------ ------ ------ ------
1.474 1.8755
SALES
External Sales . . . . 18 12 8,267 8,267
Export
Inter co sales 32 -2,206 0
------ ------ ------ ------ ------ ------ ------ ------
SALES GROSS. . . . . . 32 18 12 -2,206 8,267 8,267
Discounts & Rebates -7 -7
------ ------ ------ ------ ------ ------ ------ ------
TOTAL SALES NET. . . . 32 18 12 -2,206 8,260 8,260
COST OF SALES. . . . . 11 7 -2,193 5,266 5,266
------ ------ ------ ------ ------ ------ ------ ------
GROSS MARGIN . . . . . 32 7 5 -13 2,993 2,993
Distribution . . . . . Payroll 65 65
Overhead -3 279 279
Warehouse. . . . . . . Payroll 79 79
Overhead 71 71
Selling. . . . . . . . Payroll 22 522 522
Overhead 4 232 232
Marketing. . . . . . . Payroll 11 11
Overhead 104 104
Development. . . . . . Payroll 199 199
Overhead 80 80
Administration . . . . Payroll 3 335 335
Overhead 30 20 459 459
Exchange Gains/(Loss) -175 -175
------ ------ ------ ------ ------ ------ ------ ------
Total Overhead Expenses 29 30 20 -3 2,259 2,259
------ ------ ------ ------ ------ ------ ------ ------
EBIT . . . . . . . . . 3 -23 -16 -10 734 734
------ ------ ------ ------ ------ ------ ------ ------
Exceptional Items
Interest 63 1 1 63
------ ------ ------ ------ ------ ------ ------ ------
PRE TAX PROFIT . . . . 3 -23 -16 -10 671 -1 -1 671
Calculation of EBITDA
EBIT (as above). . . . 3 -23 -16 -10 734 734
Add Depreciation 356 356
Add Amortisation
EBITDA . . . . . . . . 0 -00 -00 -00 1,090 1,090
PART 5 - CALCULATION OF FINAL EBITDA CONSIDERATION
VALUE OF FIRST QUARTER EBITDA (1) FINAL EBITDA CONSIDERATION (2)
Less than GBP 1,268,250 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GBP 0
Equal to or Greater Than GBP 1,268,250 But Less Than GBP 1,285,160. . . . . . . . . . . . . . . . GBP 333,333
Equal to or Greater Than GBP 1,285,160 But Less Than GBP 1,302,070. . . . . . . . . . . . . . . . GBP 666,667
Equal to or Greater Than GBP 1,302,070 But Less Than GBP 1,318,980. . . . . . . . . . . . . . . . GBP 1,000,000
Equal to or Greater Than GBP 1,318,980 But Less Than GBP 1,335,890. . . . . . . . . . . . . . . . GBP 1,333,333
Equal to or Greater Than GBP 1,335,890 But Less Than GBP 1,352,800. . . . . . . . . . . . . . . . GBP 1,666,667
Equal to or Greater Than GBP 1,352,800 But Less Than GBP 1,369,710. . . . . . . . . . . . . . . . GBP 2,000,000
Equal to or Greater Than GBP 1,369,710 But Less Than GBP 1,386,620. . . . . . . . . . . . . . . . GBP 2,333,333
Equal to or Greater Than GBP 1,386,620 But Less Than GBP 1,403,530. . . . . . . . . . . . . . . . GBP 2,666,667
Equal to or Greater Than GBP 1,403,530 But Less Than GBP 1,420,440. . . . . . . . . . . . . . . . GBP 3,000,000
Equal to or Greater Than GBP 1,420,440 But Less Than GBP 1,437,350. . . . . . . . . . . . . . . . GBP 3,333,333
Equal to or Greater Than GBP 1,437,350 But Less Than GBP 1,454,260. . . . . . . . . . . . . . . . GBP 3,666,667
Equal to or Greater Than GBP 1,454,260 But Less Than GBP 1,471,170. . . . . . . . . . . . . . . . GBP 4,000,000
Equal to or Greater Than GBP 1,471,170 But Less Than GBP 1,488,080. . . . . . . . . . . . . . . . GBP 4,333,333
Equal to or Greater Than GBP 1,488,080 But Less Than GBP 1,504,990. . . . . . . . . . . . . . . . GBP 4,666,667
Equal to or Greater Than GBP 1,504,990. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GBP 5,000,000
PART 6 - 2004/2005 MANAGEMENT ACCOUNTS - PRINCIPAL ACCOUNTING POLICIES
1 ACCOUNTING CONVENTION
The 2004/2005 Management Accounts have been prepared in accordance with the
historical cost convention and with applicable accounting standards in the
United Kingdom.
2 TURNOVER
Turnover represents the total amount, less Value Added Tax, or local equivalent,
receivable by the Company for goods supplied and services rendered during the
period.
3 GOVERNMENT GRANTS
Income from Government grants is recognised in the period in which the
expenditure to which the grants relate is incurred.
4 RESEARCH AND DEVELOPMENT
All expenditure on research and development is charged against the profits of
the period in which it is incurred.
5 FOREIGN EXCHANGE
5.1 Transactions denominated in foreign exchange are translated into
sterling and recorded at the rate of exchange ruling at the date of the
transaction. Turnover is translated into sterling at the average rate for the
period.
5.2 Gains and losses arising on translation are shown as other operating
income/expenses in the profit and loss account in the period in which they
arise, unless they relate to certain investments which are denominated in
foreign currency, when the exchange gains and losses, including gains and losses
made on foreign currency loans used to hedge the investment, are taken direct to
reserves.
5.3 Specifically in relation to the recognition of forward foreign exchange
contracts, the realised gain or loss on a forward foreign exchange contract is
recognised in the period that the cash is received from the customer.
The US$ debtor balances at the period end are translated at the rate of the
forward foreign exchange contract due for settlement in the following
period.
6 OPERATING LEASES
Operating lease rentals are charged against profit in the period in which they
are incurred.
7 TANGIBLE FIXED ASSETS
The cost of tangible fixed assets is their purchase cost, together with any
incidental cost of acquisition.
Depreciation on cost is calculated by the straight line method at rates
considered appropriate to the class and the life of the asset concerned.
Principal depreciation rates for plant and other equipment are between 10% and
33%, for transport and motor vehicles between 25% and 33% and for short
leasehold items 4%.
8 STOCK AND WORK-IN-PROGRESS
8.1 Stock and work-in-progress is valued at the lower of cost, including a
proportion of the appropriate manufacturing overheads, and net realisable value
on bases which have been applied consistently with the previous financial year.
Where necessary, provision is made for obsolete, slow moving and defective
stocks and this is set out in 8.2 below.
8.2 FINISHED GOODS AND WORK-IN-PROGRESS
(a) For Autotype UK, Autotype International (Asia Pty Limited) and Autotype
Americas Inc provision for aged stock is made as follows:
13 to 18 months 50% provision
19 to 24 months 75% provision
over 24 months 100% provision
The only exception to the age-related provisioning for finished goods is
Aspect equipment in the USA, where a provision of 100% is made when the
product exceeds 24 months (with no provisions prior to that point on an age
basis).
Any items moved to quality failed status, are provided 100%.
For film-coated rolls, only the "chargeable" quantity on the roll is
valued, i.e. areas of film which are marked as faulty during the
manufacturing process are not included in the valuation.
(b) For CPS Chemical Products & Services A/S (CPS) provision for aged stock
is made as follows:
0-12 mths 13-18 mths 19-24 mths 25-30 mths 31-36 mths +36 mths
Chemical, Film & Mesh 0% 25% 50% 100%
Emulsion. . . . . . . 0% 50% 100%
Equipment . . . . . . 0% 0% 10% 25% 50% 100%
8.3 RAW MATERIALS
Provision is made on a judgemental basis, reflecting appropriate shelf-lives.
9 TRADE DEBTORS
Credit insurance is in place. Provision is made for doubtful debts where a debt
is significantly overdue (e.g. 90 days+), or where an official (or unofficial)
notice of financial distress of the customer is received. In such circumstances
a provision will be made to the extent that the amount of the debt is not
covered by the insurance, i.e. normally the first GBP 5k. CPS is in a separate
insurance scheme in Denmark, but follows the same principle.
SCHEDULE 9
RELEVANT FORWARD FOREIGN EXCHANGE CONTRACTS
USD ALL IN RATE GBP MATURITY DATE COUNTERPARTY MATURED
1 US $1,500,000 1.7693 847,792.91 29/04/05 Nat West Yes
2 US $1,500,000 1.7132 875,554.52 31/05/05 Lloyds Yes
3 US $1,500,000 1.7055 879,507.48 30/06/05 Lloyds
4 US $1,500,000 1.7906 837,708.03 29/07/05 Nat West
Signed by
duly authorised for and on behalf of
NORCROS INDUSTRY (INTERNATIONAL) LIMITED
Signed by
duly authorised for and on behalf of
NORCROS LIMITED
Signed by
duly authorised for and on behalf of
SURFACE TREATMENTS LIMITED
Signed by
duly authorised for and on behalf of
NORCROS (HOLDINGS) LIMITED
Signed by
duly authorised for and on behalf of
MACDERMID INCORPORATED
