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THIS AGREEMENT is made on 2 October 1997
BETWEEN:
(1) KLIPPAN SAFETY AB (REGISTRATION NUMBER 556198-2140) whose registered
office is at Klippan, Sweden, S-26421 ("the Seller")
(2) XXXXXXX INTERNATIONAL HOLDINGS LIMITED (registration number 3407901)
whose registered office is at Beldray Road, Bilston, West Midlands,
WV 147 NF ("the Buyer")
1. INTERPRETATION
In this Agreement:-
1.1 the expressions set out in Schedule 1 shall have the meanings
stated in that Schedule unless inconsistent with the context;
1.2 references in this Agreement to clauses are to clauses of this
Agreement, and references to paragraphs are to paragraphs in the
Schedule in which such references appear; and
1.3 the Schedules form part of this Agreement and will have the same
force and effect as if expressly set out in the body of this
Agreement.
2. SALE OF SHARES
Upon the terms and conditions herein contained, the Seller will sell and
the Buyer will buy the Shares.
3. CONSIDERATION
3.1 The consideration for the sale of the Shares shall be the sum of
SEK 20,104,000 but subject to adjustment after Completion as
provided in Schedule 2.
3.2 The Provisional Consideration will be paid in cash on Completion
to the Seller's account (number 6126-142 226 572) at the Seller's
Bank.
4. COMPLETION
4.1 The sale and purchase of the Shares will be completed at the
offices of the Buyer's Solicitors immediately after the signing
and exchange of this Agreement when:-
4.1.1 the Seller will produce and deliver to the Buyer the
documents and other matters listed in Schedule 3;
4.1.2 the Seller will repay, and will procure that each
Associated Company will repay, all amounts owed by it to
any Group Member and each Group Member will repay all
amounts owed by it to the Seller or any Associated
Company, whether due for payment or not;
4.1.3 the Seller shall cause either a directors' or
extraordinary shareholders' meeting (as appropriate) to be
held for each Group Member for purposes of electing new
directors of each Group Member and auditors of the
Company;
4.1.4 the Buyer will pay the Provisional Consideration; and
4.1.5 the Buyer will as soon as practicable after Completion use
reasonable endeavours to procure the release of the Seller
from the agreed list of guarantees and will in the
meantime indemnify the Seller against any liability which
the Seller may suffer under or in relation to such
guarantees.
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4.2 The Seller covenants and will ensure that immediately following
Completion Per Xxxxx Xxxxxxx will be removed from his position as
a director(s) of each Group Member without any claim for
compensation or remuneration and that he will not exercise his
formal authority to represent any Group Member.
4.3 The Buyer agrees to procure that, if it is at the time a
registered shareholder in the Company, and if the Company is at
the time a registered shareholder in the relevant Group Member,
the next ordinary shareholders meeting of each of:-
4.3.1 Akta Barnsakerhet AB; and
4.3.2 Oy Klippan AB; and
4.3.3 Klippan Gmbh; and
4.3.4 Klippan SARL
will pass the necessary resolutions whereby XX Xxxxxxx will be
discharged from liability with respect to his administration of
such Group Member.
5. WARRANTIES
5.1 The Seller warrants and represents to the Buyer in the terms of
the Warranties, provided however that the Buyer will not be
entitled to claim that any fact or combination of facts
constitutes a breach of any of the Warranties if and to the
extent that such fact or combination of facts has been fully,
fairly and clearly disclosed in the Disclosure Letter;
5.2 The Seller undertakes to the Buyer that in the event of a breach
of any Warranty the Seller shall compensate the Buyer by one SEK
for each SEK of the shortfall or diminution in value of the
relevant Group Member, or the full amount of the liability
incurred by it (after having depleted all applicable reserves
specified in the Management Accounts or the Completion Accounts),
as a result of the matter constituting such breach of Warranty
unless the shortfall diminution or liability is deductible in the
Company's tax return in which case the compensation to be paid by
the Seller shall be adjusted to reflect the shortfall diminution
or liability net of tax.
5.3 Each of the Warranties will be construed as a separate Warranty
and will not be limited or restricted by reference to, or
inference from, the terms of any other Warranty or any other term
of this Agreement.
5.4 In this Agreement, unless otherwise specified, where any Warranty
refers to the knowledge, information, belief or awareness of the
Seller (or similar expression), the Seller is deemed to have such
knowledge, information, belief or awareness as the Seller would
have obtained had the Seller made all due and careful enquiries
into the subject matter of that Warranty.
6. SELLER'S PROTECTIONS
6.1 Despite the foregoing provisions of clause 5:-
6.1.1 the Buyer shall not claim compensation from the Seller
unless the total amount of all claims, after having
exhausted all available relevant insurance coverage which
the relevant Group Member has in place, if any, shall
exceed SEK 1,000,000, in which event the Buyer shall be
entitled to claim the excess over SEK 500,000 of such
claim or claims;
6.1.2 the total compensation to be paid by the Seller under the
Warranties shall in no event exceed SEK 10,052,000;
6.1.3 the Seller will be under no liability to make any payment
in respect of any claim unless:-
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6.1.3.1 written particulars of the claim (giving
details of the specific matter in respect of which such
claim is made) are given to the Seller within two months
of the Buyer having discovered the claim; and
6.1.3.2 such particulars are given within a period
of seven years from the date of this Agreement if the
claim relates to Taxation or, if not, one year form the
date of this Agreement;
6.1.4 the Seller will have no liability in respect of any claim
to the extent that it relates to any matter specifically
provided for, or included as a liability or disclosed, in
the Accounts of the relevant Group Member.
6.1.5 the Seller will have no liability under Warranty 4.2 if
and to the extent that the amount of the claim or claims
is less than the aggregate amount which has been recovered
from debtors which have been fully provided for in the
Accounts, the Management Accounts and/or the Completion
Accounts at the date 8 months after the Completion Date.
6.2 Despite any other provisions of this Agreement, the provisions of
clause 6.1 shall not apply to exclude or limit the liability of
the Seller to the extent that any claim arises by reason of any
fraud, or dishonest, reckless or willful misstatement or omission
by or on behalf of the Seller.
7. NON-COMPETITION
7.1 The Seller undertakes to the Buyer that it will not, and will
procure that no Associated Company will during a period of five
years after the Completion Date, directly or indirectly, and
whether alone or in conjunction with any other person carry out
or further or support any activity which in any way may compete
with any activity which is carried out by any Group Member within
the Restricted Area.
7.2 The Buyer undertakes during a period of five years after the
Completion Date not to, directly or indirectly, carry out or
further or support any activity which in any way may compete with
the remaining activity of the Seller, i.e. the development,
production and sale of safety belts, protection nets, luggage
restraints and attachments and fastenings for OEM vehicle
manufacturers, car importers and car accessory dealers and fall
restraints for truck cabins, convenience nets, net pockets,
safety nets and related products except that the Buyer shall not
be restricted in pursuing the business of assembling and selling
"after market seat belts" and other products concerned with the
restraint or safety of children in motor vehicles.
7.3 In the event that either party should commit a breach of the
covenants in this clause 7 such party shall (without restricting
the other party's rights) pay to the other party a penalty of SEK
1,000,000 and if the breach continues during a period longer than
one month, an additional SEK 200,000 for each month during which
the breach prevails.
7.4 The parties agree that each of the undertakings set out in this
clause 7 and clause 8 is separate and severable and enforceable
accordingly and if any one or more of such undertakings or part
of an undertaking is held to be against the public interest or
unlawful or in any way an unreasonable restraint of trade, the
remaining undertakings or remaining part of the undertakings will
continue in full force and effect and will bind the Seller.
7.5 No restriction contained in this Agreement, or in any agreement
or arrangement of which this Agreement forms part, which causes
this Agreement or that agreement or arrangement to be subject to
registration under the Restrictive Trade Practices Act 1976 will
take effect until the day after particulars of this Agreement or
of that agreement or arrangement, as the case may be, have been
furnished to the Director General of Fair Trading pursuant to
that Act.
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8. SECRECY
8.1 The Seller undertakes to the Buyer that it will not and will
procure that no Associated Company will make any unauthorized
disclosure of any Confidential Information regarding any Group
Member or its activities. The Seller undertakes to procure that
its employees, consultants and directors of the board will be
bound by a corresponding secrecy undertaking.
8.2 The Buyer undertakes to the Seller that it will not make any
unauthorised disclosure of any Confidential Information regarding
the Seller or its activities. The Buyer undertakes to procure
that its employees, consultants and directors of the board will
be bound by a corresponding secrecy undertaking.
8.3 In this clause 8 "Confidential Information" shall mean any
information, technical, commercial or of any other kind, whether
written or oral, except such information which is or will be
publicly known or which has come to or will come to the public
knowledge in any way other than through the Seller's breach of the
secrecy undertaking contained in clause 8.1 or the Buyer's breach
of the secrecy undertaking in clause 8.2.
8.4 The Buyer shall be entitled to claim compensation for non-
intentional and non-negligent acts or omissions by the Seller in
breach of this clause 8 and the Seller shall be entitled to claim
compensation for non-intentional and non-negligent acts or
omissions by the Buyer in breach of this clause 8.
9. NO OTHER REMEDIES
The Seller shall not be deemed to have made any other warranty or
representation other than those expressly made in Schedule 4 of this
Agreement. The only remedy available to the Buyer, in law or in
contract, shall be to claim compensation from the Seller by reason of an
inaccuracy in the representations or warranties given by the Seller in
Schedule 4.
10. PRESS RELEASE
10.1 The parties agree that a press release shall be worked out
jointly and be released on a date to be agreed before which no
announcement shall be made concerning this Agreement by either
party save with the prior written approval of the other party.
10.2 Notwithstanding clause 10.1 the employees of the Group Members
shall be informed of Completion immediately following Completion
and the Buyer consents to the Seller informing its employees of
Completion.
11. GOVERNING LAW
The formation, existence, construction, performance, validity and all
aspects whatsoever of this Agreement or of any term of this Agreement
shall be governed by English law. The Swedish Courts shall have
exclusive jurisdiction to settle any disputes which may arise out of or
in connection with this Agreement.
12. NOTICE AND LANGUAGE
12.1 Notice and other communications shall be in the English language
and deemed to be valid and effective if sent by courier or
registered letter to the addresses of the parties stated above or
to other addresses supplied at a later date.
12.2 The communications will be considered as having reached the
addressee:
12.2.1 if sent by courier; on delivery
12.2.2 if sent by registered letter; ten days after the date of
mailing
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13. HEADINGS
The division of this Agreement into separate sections and the insertion
of headings shall not affect the interpretation of this Agreement.
14. AMENDMENTS
Only those amendments and additions to this Agreement that are made in
writing and signed by the parties are valid.
15. ENTIRE AGREEMENT
Subject to clause 6.2:-
15.1 this Agreement constitutes the entire agreement between the
parties on all issues to which the Agreement relates;
15.2 the contents of this Agreement supersede all previous written or
oral commitments and undertakings
16. COSTS
Each party to this Agreement will bear such party's own costs and
expenses relating to the preparation and completion of this Agreement,
except where otherwise expressly stated.
17. INTEREST
If the Seller becomes liable to pay the Buyer or any Group Member any
sum pursuant to this Agreement the Seller will be liable to pay interest
on such sum from the due date for payment; at the annual rate of 4 per
cent above the base lending rate from time to time of National
Westminster Bank plc. accruing on a daily basis until payment is made,
whether before or after any judgement.
18. GENERAL
18.1 This Agreement will be binding on and will enure for the benefit
of each party's successors and assigns (as the case may be).
18.2 Each of the agreements, covenants, obligations, warranties,
indemnities and undertakings contained in this Agreement will
continue in full force and effect despite Completion.
18.3 The parties agree that they will do all such acts and things and
execute all such documents as may be required on or subsequent to
Completion:-
18.3.1 to vest in the Buyer legal and beneficial ownership of the
Shares in accordance with this Agreement;
18.3.2 to vest in the Company all the shares in, Akta
Barnsakerhet AB and 95% of the issued shares in Klippan
SARL; and
18.3.3 to vest in the Company or the relevant Group Member the
Intellectual Property Rights relating to the business
carried on by the Group
and otherwise to give effect to the terms and spirit of this
Agreement.
18.4 Failure or delay by any party in exercising any right or remedy
under this Agreement will not in any circumstances operate as a
waiver of it, nor will any single or partial exercise of any
right or remedy in any circumstances preclude any other or
further exercise of it or the exercise of any other right or
remedy.
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18.5 Any waiver of any breach of, or any default under, any of the
terms of this Agreement will not be deemed a waiver of any
subsequent breach or default and will in no way affect the other
terms of this Agreement.
18.6 The Buyer may release or compromise the liability of, or grant
time or any other indulgence to, any person who is a party to
this Agreement without in any way prejudicing or affecting the
liability (whether joint and several or otherwise) of any other
person who is a party to this Agreement.
18.7 This Agreement may be executed in any number of counterparts, and
by the parties on separate counterparts, each of which so
executed and delivered will be an original, but all the
counterparts will together constitute one and the same agreement.
18.8 Except as required by law all payments by the Seller under this
Agreement will be made free and clear of all deductions and
withholdings (whether in respect of tax or otherwise).
18.9 If any deduction or withholding is required by law to be made
from any payment by the Seller under this Agreement or if
(ignoring any available relief, credit or allowance) the Buyer is
subject to tax in respect of any payment by the Seller under this
Agreement, the Seller covenants with the Buyer to pay to the
Buyer such additional amount as is necessary to ensure that the
net amount received and retained by the Buyer is equal to the
amount which it would have received and retained had the payment
in question not been subject to the deduction or withholding of
tax.
19. INDEMNITIES
The Seller agrees to indemnify the Buyer:-
19.1 (both for itself as Buyer and as trustee for the Company) for any
liabilities of the Company in respect of any pension fund or
scheme operated by or relating to the Company arising from any
underfunding of contributions and/or of transfers in from other
pension schemes and/or otherwise howesoever in each such case as
certified by the actuary for the time being of any such fund or
scheme of or relating to the Company provided that this indemnity
shall not cover the first L.25,000 of any such liabilities and
this indemnity shall be limited to L.125,000;
19.2 for 50% of all and any dilapidation costs in relation to the
property at Xxxxx Street (including the costs of any property
consultants instructed in connection with such dilapidations) to
the extent that such costs exceed in aggregate the sum of
L.25,000;
19.3 for all and any redundancy cost in connection with the proposed
redundancy of Xxxx Xxxx which are attributable to the period
after 19 February 1998
20. DEBTORS AND STOCK
The Buyer agrees that it will procure the assignment to the Seller of
any debtor or stock of any Group Member which has either been fully
provided for in the Completion Accounts for nil cost or which amounts to
an agreed adjudged breach of a warranty on being requested to do so in
writing by the Seller within 12 months following completion and that the
sale of any such stock the Seller will not be a breach by the Seller of
clause 7.
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SCHEDULE 1
Definitions
In this Agreement the following expressions shall have the following meanings
unless inconsistent with the context:-
Expression Meaning
---------- -------
"the Accounts" The audited accounts of each Group Member for the
financial year which ended on the Accounting Date,
comprising in each case a balance sheet, a profit and
loss account, notes and directors' and auditors'
reports
"the Accounting Date" 31st December 1996
"the Act" The Companies Act 1985
"Associated Company" Any company, not being a Group Member, which at the
relevant time is:
(a) a holding company of the Seller; or
(b) a subsidiary or subsidiary undertaking of the
Seller; or
(c) a subsidiary or subsidiary undertaking (other
than the Seller itself) of any such holding company,
the expressions "holding company", "subsidiary" and
"subsidiary undertaking" having the meanings given to
them by the Act
"the Buyer's Advisers' Reports" (1) The "Memorandum on certain information and
documents" dated 23rd September 1997 prepared by
Xxxxxxxxxx Xxxxxxxxx Advolcatbyra for the Buyer in
relation to Akta Barnsakerhet AB.
(2) The "Legal due diligence" report dated 15th
September 1997 prepared by Xxxxxxx & Indrenius for
the Buyer in relation to Oy Klippan AB
(3) The "Due diligence report" dated 23rd
September 1997 prepared by Chaintrier & Associes for
the Buyer in relation to Klippan SARL
(4) The "Due diligence report" dated 18th
September 1997 prepared by Xxxxxxx Berenberg for the
Buyer in relation to Klippan GmbH together with a
facsimile letter dated 22nd September 1997 from
Xxxxxxx Berenberg to Xxxxxx Xxxxxxxx of Eversheds in
respect of the employment of Xxxx Xxxx
(5) the report dated 29 September prepared by
Deloitte & Touche for the Buyer
a copy of each of which is attached to the Disclosure
letter
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"the Buyer's Bank" National Westminster Bank plc XX Xxx 000, Xxxxxxxxx,
Xxxxxx, XX0 0XX, Sort code 60-09-21
"the Buyer's Solicitors" Eversheds of 00 Xxxxxxx Xxxxxx, Xxxxxxxxxx, X0 0XX
"claim" In clause 7 means any claim which would, but the
provisions of clause 7, be capable of being made
against the Seller for breach of warranty
"the Company" Klippan Limited, registered number 2264274 save in
Schedules 2 and 4 where the expression or the
expression "the Companies" shall mean each Group
Member and Oy Klippan AB as if the references in
Schedule 2 referred to, or the Warranties were set
out in full in respect of (as appropriate) each such
Group Member and Oy Klippan AB
"Completion" Completion of the sale and purchase in accordance
with clause 4
"the Completion Accounts" The accounts prepared in accordance with paragraph 2
of Schedule 2
"the Completion Date" The date of this Agreement
"the Consideration" The consideration for the sale of the Shares as
stated in clause 3.1
"Contract" Any agreement, arrangement or understanding
"the Disclosure Letter" The letter having the same date as this Agreement
from the Seller to the Buyer qualifying the
Warranties
"Event" Any event, fact or circumstance whatsoever including
any transaction, action or omission (whether or not
the Company is party to it), the earning, receipt of
accrual of any income, profits or gains, the sale and
purchase of the Shares pursuant to this Agreement and
Completion
"the Group" Together the Company and each other company details
of which are set out in Schedule 6
"Group Member" Any company which is a member of the Group
"Intellectual Property Rights" Patents, trade marks, service marks, registered
designs, design rights, copyright, know how and all
other intellectual property (of whatever nature) and
any applications for the same
"the Management Accounts" The management accounts to 31st August 1997 in the
form agreed between the parties
"Net Assets" Share capital, restricted and unrestricted equity
plus the taxed part of any untaxed reserves of the
Company
"Oy Klippan AB" Oy Klippan AB whose details appear in Schedule 7
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"the Pension Scheme" The Klippan Limited Retirement and Death Benefits
Scheme
"the Property" The property specified in the Disclosure Letter
"the Provisional Consideration" The sum of SEK 20,104,000
"the Restricted Area" France, Germany, the United Kingdom, Sweden, Finland,
Denmark, Norway, Holland, Belgium, Spain, Italy,
Austria, Switzerland
"the Seller's Bank" Svenska Handelsbankden, Stockholm, Sweden
"the Seller's Solicitors" Hybbinette & Partners AB Xxxxxxxxxx 0, X-000 00
Xxxxxxxxx, Xxxxxx
"the Shares" All the issued shares in the capital of the Company
"Stock" Stocks of the Company including, but not limited to,
raw materials components, work in progress, finished
goods and consumables
"the Warranties" The warranties, representations and undertakings set
out or referred to in clause 5 and Schedule 4.
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SCHEDULE 2
Adjustment of Consideration
1. Completion Accounts
1.1 The Buyer and the Seller shall arrange for accounts for the
Company to be prepared by employees of the Company and reported
on in accordance with the provisions of this Schedule.
1.2 The Completion Accounts shall consist of a consolidated balance
sheet dealing with the state of affairs of the Company and the
other Group Members as at the close of business on the Completion
Date.
1.3 The Completion Accounts shall be prepared using generally
accepted accounting principles consistent with those applied for
the purposes of the Accounts of the Company.
1.4 In preparing the Completion Accounts:
1.4.1 no value shall be attributed to goodwill or any other
intangible asset; and
1.4.2 fixed assets shall include (without limitation):-
1.4.2.1 all leasehold property in occupation by the
Company (but no other property):
1.4.2.2 all intangible assets, including without
limitation, goodwill, licences, the benefit of
contracts, names, trademarks, capitalised
professional fees which shall be valued at L.1;
1.4.2.3 all plant, machinery, fixtures, fittings,
equipment, motor vehicles, and other tangible
assets required for trading, whether located at
the Property or otherwise. Plant with a net book
value in excess L.5,000 and not used in the
previous 12 months will be valued at nil;
1.4.2.4 capital expenditure where goods received prior to
the Completion Date but invoice not received by
that date; and
1.4.2.5 all assets shown as fixed assets in the Accounts;
The parties agree that any fixed assets located in Finland associated
with seat belt production should have been transferred by Oy Klippan AB
to the Seller at net book value before Completion. Any such assets not
so transferred will be valued at nil.
1.4.3 Subject as provided in 1.4.2 fixed assets shall be
included at the value at which they were included in the
Company's schedule of depreciation and on the bases
adopted in the Accounts subject to annual rates of
depreciation in accordance with established accounting
policies as follows:-
Leasehold Improvements -over the remaining
period of the lease
except for the lease to
Oy Klippan AB, which
will continue to be
depreciated over 5
Plant & Equipment -over 2 to 16 years
Fixtures, fittings, tools and
equipment -over 2 to 3 years
1.4.4 if and to the extent that any asset is included in the
Accounts at the value in excess of cost, its value for the
purpose of the Completion Accounts shall be cost less
accumulated depreciation;
1.4.5 Stock and work-in-progress shall be included at the values
calculated in accordance with the stock take and valuation
carried out as at the Completion Date
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1.4.6 Stock and work-in-progress will be valued on a consistent
basis using the lower of cost and net realisable value.
1.4.7 provision for obsolete and slow moving stock will be made
for any items of stock and work in progress on the
following basis:
1.4.7.1 Finnish seat belt stocks to the extent not
previously transferred to the Seller at net book
value 100%
1.4.7.2 Stocks not relating to current products (including
those designated as R44-02) - 100%; and
1.4.7.3 For all other stocks, 100% provision will be made
against stock levels in excess of usage in the 8
months ended 30 September 1997, except where new
products have been introduced during that period,
for which provision will only be made against
stock in excess of 8 months reasonable forecast
usage.
1.4.7.4 Bradgate Textiles holds consignments stocks for
the Company. These stocks will not be included
in the Completion Accounts but they will be
assessed together with any other stocks held by
Bradgate which the Company is committed to buy,
for the purpose of making provisions under
1.4.7.2 and 1.4.7.3.
1.4.8 receivables (including trade debts) will be valued on the
basis of the Company's sales ledger on the Completion Date
subject to adequate reserves for bad and doubtful debts.
1.4.9 all liabilities of the Company at the close of business on
the Completion Date and all provisions for liabilities and
charges shall be shown as liabilities in the Completion
Accounts.
1.4.10 a deduction of SEK 600,000 will be made from any deferred
tax asset value. In addition, a deduction of the SEK
equivalent of L.8,775 will be made from ACT recoverable to
reflect the timing delay in its recovery.
1.5 The stand construction costs and rental of floor space for Kinder
and Jurgend and the IAA in Frankfurt are shown in the Management
Accounts as prepayments phased over the rest of the year. This
policy will be adopted for the purpose of the Completion
Accounts.
2. PROCEDURE
2.1 The Buyer and the Seller shall jointly instruct the Company's
employees to produce a draft of the Completion Accounts, with
such assistance from the personnel of the Company and the
Company's auditors as shall be deemed by the Buyer and/or the
Seller to be expedient. Within 28 days after the Completion Date
such draft of the Completion Accounts will be delivered to the
Seller and the Buyer for consideration. Unless the Seller shall
notify the Buyer or the Buyer shall notify the Seller in writing
within 28 days after receipt of such draft that it does not
accept that such draft complies with paragraph 1 both parties
shall be deemed to have accepted such draft as complying with
paragraph 1.
2.2 If within the period of 28 days referred to in paragraph 2.1
either party shall notify the other in writing that it does not
accept that the said draft complies with paragraph 1 then the
Buyer and the Seller shall use their best endeavours to reach
agreement upon adjustment of the said draft to meet the
objections of such notifying party.
2.3 When both parties accept or are deemed to accept that the said
draft complies with paragraph 1 both parties will sign the
Completion Accounts which shall be the Completion Account for the
purposes of this Agreement and shall be final and binding on the
parties.
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2.4 In the event that the Seller and the Buyer are unable to reach
agreement any matter in dispute shall be referred to KPMG,
Stockholm by either party ("the independent Accountant"). The
Independent Accountant (whose costs shall be paid as the
Independent Accountant shall direct) shall act as expert and his
decision shall (in the absence of manifest error) be final and
binding on the parties.
3. ADJUSTMENT OF CONSIDERATION
3.1 When the Completion Accounts have become final and binding
(whether under paragraph 2.3 or by virtue of a decision of the
Independent Accountant) the Provisional Consideration shall
forthwith:-
3.1.1 be increased by the amount (if any by which the Net Assets
are greater than SEK 13,805,000 or (as the case may be)
3.1.2 be reduced by the amount (if any) by which the Net Assets
are less than SEK 13,805,000
3.2 The Provisional Consideration shall only be increased or
decreased if the amount of such increase or decrease exceeds the
SEK equivalent of L.30,000 on the date upon which the Completion
Accounts are agreed or determined. If the amount of any increase
or decrease exceeds the SEK equivalent of L.30,000, the
Provisional Consideration shall be increased or decreased by the
full amount of such increase or decrease and not merely just the
excess.
3.3 Notwithstanding the provisions of clause 3.2:-
3.3.1 to the extent a difference arises in respect of the actual
provision for Stock in the Completion Accounts compared
with the estimated provisions made at 31st August 1997 (in
deriving the Provisional Consideration), the Provisional
Consideration will be increased by the amount of such
difference in full irrespective of whether the amount
calculated in accordance with clause 3.1 is in total less
than the SEK equivalent of L.30,000
3.3.2 the following additional agreed provisions will be deemed
to have been added to the provisions relating to the same
subject matters which appear in the Management Accounts
(or where no such provision appears, will be deemed to
have been made in the Management Accounts) when
calculating whether or not the Net Assets are greater or
less than SEK 13,805,000 for the purposes of paragraph
3.1:
Provision (L.)
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R44-02 stock in the UK 30,000
Bradgate consignment stock 30,000
Rebate due to Mothercare under-provided for 9,000
3.4 The amount of any increase or reduction in the Provisional
Consideration shall be paid by the Buyer or the Seller (as the
case may be) within 14 days after the Completion Accounts have
become final and binding as aforesaid and any amount not paid
when due shall carry interest on the amount to be paid at the
annual rate of two per cent above the base lending rate from time
to time of National Westminster Bank plc from the due date until
the date of actual payment (as well after judgment as before).
4. All sums payable under this Schedule shall be paid in cash by way of a
foreign banker's draft drawn in favour of the Seller or the Buyers, as
appropriate, on the Seller's Bank or the Buyer's Bank, as appropriate.
13
SCHEDULE 3
LIST OF DOCUMENTS AND OTHER MATTERS TO BE PRODUCED
AND DELIVERED BY THE SELLER TO THE BUYER ON COMPLETION
1. Duly executed transfers of the Shares in favour of the Buyer (or as it
will direct) together with all relevant share certificates.
2. Share certificates in the name of the Company of each Group Member.
3. Written resignations of X X Xxxxxxx as Director and Manager (as
appropriate) of each Group Member.
4. Trade xxxx licence assignments
14
SCHEDULE 4
WARRANTIES
1. SCHEDULES 5 & 6
1.1 The information contained in Schedules 5 and 6 is complete and
accurate in all respects.
1.2 The Shares and the shares of the Group Members (other than the
Company) shown in Schedule 6 are in issue fully paid and are
beneficially owned and registered as set out in Schedules 6 and 7
free from any third party right, lien, claim, option, pre-emption
right, charge or other encumbrance.
1.3 No Contract has been entered into which requires or may require
the Company to allot or issue any share or loan capital and no
resolutions have been made regarding issue of (i) new shares,
(ii) convertible debt instruments, (iii) debt instruments with a
right of option to subscribe for new shares or (iv) participating
debt instruments.
1.4 The Company has no interest in the share capital of any body
corporate save as specified in Schedule 6
2. INFORMATION ABOUT THE COMPANY
The information concerning the Company, and which is contained or
referred to in the Disclosure Letter and/or in the bundles of disclosure
documents, is true and accurate in all material respects and (where
appropriate) correctly and fairly reflects and Company's financial
position and is not misleading because of any omission.
3. ACCOUNTS AND MANAGEMENT ACCOUNTS
3.1 The Accounts of the Companies including annual reports and
balance sheets attached to the Disclosure Letter are correct,
have been prepared in accordance with law and generally accepting
accounting principles, applicable in its respective jurisdiction
and fairly present (or in the case of Klippan Limited, give a
true and fair view of) the financial position of the Companies as
of their respective dates.
3.2 The balance sheets of the Accounts include all of the assets and
liabilities of each of the Companies.
3.3 The Accounts are not affected by any extraordinary or exceptional
item (save as disclosed in the Accounts).
3.4 The accounting records of the Company are up to date and comply
with all relevant legislation.
3.5 Management Accounts
A true copy of the Management Accounts is enclosed with the
Disclosure Letter. Such Management Accounts have been prepared
in accordance with accounting principles generally accepted in
the relevant jurisdiction and on bases consistent with those used
in the preparation of the Accounts and the Seller does not
consider them misleading.
4. THE COMPANIES' ASSETS
4.1 The Companies have legal title to all assets referred to in the
Accounts as being the property of the Companies, and such legal
title is unrestricted and includes full right of disposition and
such assets are free of any liens or other encumbrance except as
disclosed in the Disclosure Letter.
15
4.2 Adequate provisions have been made in the Accounts for bad debts,
as required by generally accepted accounting standards, and all
other receivables reflected in the Accounts have been recovered
or will, to the best of the Seller's knowledge, be fully
recoverable within eight months following Completion.
4.3 The Stock of each of the Companies is not obsolete, slow moving
(i.e. with no movement in the 8 months prior to Completion) or
likely to realise less than its book value;
4.4 Each asset referred to in the Accounts is situated at the
Property.
5. REMUNERATION AND EMPLOYEES
5.1 Full particulars of the identities, dates of commencement of
employment (or appointment to office) and terms and conditions of
employment (including remuneration and any bonus, commission,
share incentives or profit sharing arrangement) of all the
management personnel and officers of the Company are enclosed
with the Disclosure letter.
5.2 No change has been made since the Accounting Date in the terms of
employment of any management personnel employed by the Company at
the date of this Agreement, and the Company is not party to any
Contract to make any such change.
5.3 No management personnel has been engaged by the Company since the
Accounting Date and no management personnel employed by the
Company at or since the Accounting Date has ceased, or given or
received notice to cease, to be so employed.
5.4 The Company has complied with all relevant local, national and
EEC requirements regarding the maintenance of records regarding
the service of each of its employees and complied with all
agreements for the time being relating to them.
6. PROPERTY
6.1 The Company is not in occupation of or entitled to any estate or
interest in any land or premises save the Property and has not
entered contractual liability or the like to create such;
6.2 The Company does not have any continuing liability in respect of
any other property formerly owned or occupied by the Company
either as original contracting party or by virtue of any direct
covenant having been given on a sale or assignment to the Company
or as a surety for the obligations of any other person in
relation to such property.
6.3 Copies of all leases of the Company have been disclosed to the
Buyer and contain all the current terms under which the Company
occupies the property and the Company is not contractually bound
to enter into any new leases.
7. INSURANCE
7.1 Any and all assets of the Companies are and have since the
Accounting Date been insured to their full replacement value
against fire, damage and loss and other risks.
7.2 The Company maintains and has since the Accounting Date
maintained appropriate cover relevant to the jurisidiction
against risks normally insured against.
7.3 The insurances under clauses 7.1 to 7.2 above will be in full
force and effect for at least one month following the Completion
Date.
7.4 All premiums due in relation to the Company's insurances have
been paid, and nothing has been done or omitted to be done which
would make any policy of insurance of the Company void or
voidable or which is likely to result in an increase in premium
or which would release any insurer from any of its obligations
under any policy of insurance of the Company.
16
7.5 There is no insurance claim pending or outstanding and, as far as
the Seller is aware, there are no circumstances likely to give
rise to any such claim.
7.6 Full particulars of all the Company's insurances are given in the
Disclosure Letter.
8. FINANCING AND WORKING CAPITAL
8.1 Full and accurate details of all overdrafts, loans or other
financial facilities outstanding or available to the Company are
contained in the Disclosure Letter; and no person who provides
any such facility has given any indication that it may be
withdrawn or its terms altered.
8.2 The details contained in the Disclosure Letter of the credit or
debit balances on all the bank or deposit accounts of the Company
were correct at the date stated in the Disclosure Letter and
since such date there have been no payments out of any such
accounts except for routine payments and the balances on such
accounts are not now substantially different from the balances
shown in the Disclosure Letter.
8.3 The Company has, since the Accounting Date, paid its creditors in
accordance with their respective credit terms.
9. AGREEMENTS AND UNDERTAKINGS
The Companies are not in breach of any Contract nor are they bound by
any Contract which:-
9.1 is not made in the ordinary course of business;
9.2 involves agency, distributorship, franchising, partnership, joint
venture, consortium, or similar arrangements;
9.3 commits the Company to capital expenditure other than that
disclosed in the Disclosure Letter;
9.4 is incapable of complete performance in accordance with its terms
within six months after the date on which it was entered into or
cannot readily be fulfilled or performed by the Company on time
and without undue or unusual expenditure of money or effort;
9.5 is for the supply of goods and/or services by or to the Company
terms under which retrospective or future discounts, price
reductions or other financial incentives are given by or to the
Company dependent on the level of purchases or any other factor;
9.6 involves warranties, indemnities or representations given in
connection with a sale of share or assets, or is a guarantee or
indemnity in respect of the obligations of a third party, under
which any liability or contingent liability is outstanding;
9.7 involves the Company in any residual liability in respect of any
leasehold property at any time assigned or otherwise disposed of
by it; or
9.8 is not on arm's length terms.
10. OTHER BUSINESS MATTERS
During the 12 months ended on the date of this Agreement there has been
no substantial change in the basis or terms on which any person is
prepared to do business with the Company (apart from normal price
changes), and no substantial customer or supplier of the Company has
ceased or substantially reduced its business with the Company, and no
indication has been received by the Company or the Seller that there
will or may be any such change, cessation or reduction.
17
11. RESTRICTIONS ON THE ACTIVITIES OF THE COMPANIES AND COMPLIANCE
11.1 The Companies have obtained all necessary permits from
authorities to carry out its activities and all the Companies'
activities and products or services sold always have been in
accordance with applicable laws and regulations, representations
and terms.
11.2 No objections at the Completion Date have been made against the
Companies with respect to the works and premises, machinery and
other assets, and the Seller as at the Completion Date has no
reason to believe that any such objections will be directed
against the Companies after the Completion Date.
11.3 No other circumstances or event has occurred which implies or
could imply any limitation or restriction in the conduct of the
Companies' activities.
12. BACKLOG OF ORDERS AND OUTSTANDING OFFERS
The Seller represents and warrants that the Companies' backlog of orders
and outstanding offers include orders and offers continuing prices and
other terms and conditions which do not deviate substantially from the
principles which were applied by the Companies prior to the Accounting
Date.
13. LITIGATION
The Companies are not involved in any litigation, arbitration
proceedings or any other dispute which may result in liability or costs
by reason of any event or circumstance which is attributable to the
period prior to the Completion Date except as disclosed in the
Disclosure Letter.
14. THE INTERIM BETWEEN THE ACCOUNTING DATE AND THE COMPLETION DATE
Since the Accounting Date:-
14.1 there has been no change in the manner of conducting the business
of the Companies relative to previously applied business
principles, nor has there been any entering into agreements and
undertaking(s) by the Companies other than on terms and
conditions generally applied in the Companies' field of business;
14.2 there has been no change in employment compensation, pension and
other employment benefits with respect to the Companies'
management personnel nor has there been any new employment nor
any termination of employment of any management personnel;
14.3 there has been no divestment of, nor investment in, any fixed
assets of a value in aggregate in excess of L.5,000;
14.4 there has been no change in the Companies' backlog of orders with
respect to terms and conditions, prices and credit risks;
14.5 there has been no indebtedness (except ordinary credits from
suppliers) incurred by the Companies either directly by way of
loans or other credits, or indirectly by way of guarantee or
ledge;
14.6 there has been no payment of dividend or any similar distribution
of funds or assets;
14.7 the trade and business of the Company has been carried on in the
ordinary and normal course;
15. EFFECTS OF AGREEMENT
This Agreement will not entitle any person to terminate or avoid any
Contract to which the Company is party or have any effect on any such
Contract.
18
16. WARRANTY PROVISIONS
The Companies have not issued any warranties which are not in the
ordinary course of business or not normal in the trade and which relate
to products which either have been delivered prior to the Completion
Date or, as evident from the backlog of orders or offers made as of the
Completion Date, will be delivered subsequent thereto.
17. DOCUMENTATION
All documentation concerning the Companies such as formation
documentation, share register, minutes of meetings of the Board of
Directors and the shareholders, contracts, undertakings, Government
permits, books and accounts, deeds and documents of title to property,
cheque books, keys, credit cards etc. will, to the extent not delivered
up to the Buyer on Completion, be in the possession and safe custody
of the Companies and freely available to the Buyer.
18. TAXES AND CHARGES
18.1 All necessary provisions for taxes, fees and other public charges
have been made in the Management Accounts.
18.2 The Companies will not be liable to pay any taxes, fines,
interest or other punitive charges which are attributable to or
connected with any Event on or before Completion.
18.3 The Companies currently have fully paid taxes, fees and other
public charges as required by laws and regulations.
19. INTELLECTUAL PROPERTY RIGHTS
19.1 The Company has no interest in any Intellectual Property Rights
(whether registered or not) save for the Intellectual Property
Rights details of which are given in the Disclosure Letter, all
of which are (where applicable) registered in the name of the
Company and are beneficially owned by it.
19.2 The Seller has no reason to believe (but without having conducted
searches of registers of Intellectual Property Rights ) that the
processes employed and the products and services dealt in by the
Company use, embody or infringe any Intellectual Property Rights
(whether registered or not) vested in any other party or give
rise (contingently or otherwise) to payment by the Company of any
royalty or of any other sum.
19.3 The Company is not passing off any part of its business as and
for the business of any other person and, so far as the Seller is
aware, no person is passing off its business as and for part of
the Company's business.
20. PENSIONS
20.1 Other than the Pension Scheme there are no other Company
administered arrangements to which the Company is or will become
liable to contribute under which benefits of any kind are payable
to or in respect of employees of the Company on retirement, death
or disability or on the attainment of a specified age or on the
completion of a specified number of years of service.
20.2 All relevant information about the Pension Scheme has been
disclosed to the Buyer. All contributions, premiums, costs and
expenses of the Pension Scheme have been fully paid to date. The
Pension Scheme has complied with all relevant legislation and
there are no claims (other than routine claims for benefits)
whatsoever against the trustees/administrators of the Pension
Scheme or the Company.
19
21. AUTOLIV FRANCE
The Seller has paid no compensation to Autoliv France in connection with
the cessation of the distributorship arrangement between the Seller and
Autoliv France and no tax or other charge is due or will become due by
the Company as a result of such cessation.
22. BUYER'S ADVISERS' REPORTS
All statements of fact in the Buyer's Advisers' Reports are true and
accurate in all material respects.
23. RIGHTS TO DEFEND
The Buyer agrees that where a breach of warranty results in compensation
being paid by the Seller to the Buyer or there is a provision in the
Completion Accounts in respect of any third party claims it will on the
Seller's written request permit the Seller to defend the third party
claim as the relevant Group Members agent and will procure that such
Group Member provides such reasonable assistance as the Seller shall
request provided that the Seller shall indemnify the Buyer and such
Group Member for their reasonable costs in relation thereto.
20
SCHEDULE 5
THE SELLER
NAME AND ADDRESS Number and class of Shares
---------------- to be sold
----------
Klippan Safety AB 1,060,000 Ordinary Shares of L.1
21
SCHEDULE 6
DETAILS OF THE COMPANY
SELLER TO COMPLETE DETAILS
Name of the Company. : Klippan Limited
Registered number : 2264274
Registered office : Xxxxx Xxxxxx, Xxxxxxxx, XX0 0XX, Xxxxxxx
Date of incorporation : 2nd June 1988
Place of incorporation : England and Wales
Status of Company : Private limited company
Authorised share capital : GBP 1,060,000 divided into 1,060,000
ordinary shares of 1 GBP each
Issued share capital : GBP 1,060,000 divided into 1,060,000
ordinary shares of 1 GBP each
Directors' full names : Per Xxxxx Xxxxxxx
Xxxxx Xxxxxx
Secretary's full name : Xxxxx Xxxx
Accounting reference date : 31st December
Auditors : Xxxxxxxxx Xxxxxx & Co., Xxxxxxxx Xxxxx,
Xxxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx, XX0 0XX,
England
Bankers : Svenska Handelsbanken, Manchester
Description of business : The development, manufacture and marketing
of child seats for cars and seat belts
DETAILS OF OTHER GROUP MEMBERS
------------------------------
Name of Group Member : Klippan GmbH
Registered number : HRB 3411
Registered office : Pinneberg, Germany
Date of incorporation : 13th June 1986
Place of incorporation : Duesseldorf
Status : Private limited company
22
Authorised share capital : DEM 50,000 divided into two ordinary shares
of DEM 5,000 and 45,000 respectively
Issued share capital : DEM 50,000 divided into two ordinary shares
of DEM 5,000 and 45,000 respectively
Registered shareholder : Klippan Limited:
Directors' full names : Per Xxxxx Xxxxxxx
Secretary's full name : N/A
Accounting reference date : 31st December
Auditors : N/A
Bankers : Xxxxxxx Xxxxxxxxxxxxx, Xxxxxxxxx, Xxxxxxx
and Volksbank, Mettman, Germany
Description of business : the marketing of child car seats
manufactured in the Group
DETAILS OF OTHER GROUP MEMBERS
------------------------------
Name of Group Member : Klippan S.A.R.L.
Registered number : B 403 378458
Registered office : Cergy, Paris
Date of incorporation : 17th January 1996
Place of incorporation : Pontoise
Status : Private Limited Company
Authorised share capital : FRF 50,000 divided into 500 ordinary shares
of FRF 100 each
Issued share capital : FRF 50,000 divided into 500 ordinary shares
of FRF 100 each
Registered shareholder : Klippan Limited : 95%
Xxxxxxxxxx Xxxxxxx : 5%
Directors' full names : Per Xxxxx Xxxxxxx
Secretary's full name : N/A
Accounting reference date : 31st December
Auditors : N/A
Bankers : Svenska Handelsbanken, Luxembourg and Union
de Banques a Paris, Paris, France
23
Description of business : the marketing of child car seats
manufactured in the Group
DETAILS OF OTHER GROUP MEMBERS
------------------------------
Name of Group Member : AKTA Barnsakerhet AB
Registered number : 556540-7961
Registered office : Klippan, Sweden
Date of incorporation : 21st April 1997
Place of incorporation : Klippan, Sweden
Status : Private Limited Company
Authorised share capital : SEK 100,000 divided into 1,000 ordinary
shares of SEK 100 each
Issued share capital : SEK 100,000 divided into 1,000 ordinary
shares of SEK 100 each
Registered shareholder : Klippan Limited
Directors' full names : Per Xxxxx Xxxxxxx, Managing Directors
Sten-Ake Kjellstedt, Executive Managing
Director
Secretary's full name : N/A
Accounting reference date : 31st December
Auditors : Ahsbergs Revisionsbyra AB, XX Xxx 0000;
X-000 00 Xxxxx, Xxxxxx
Bankers : Svenska Handelshanken, Gjorwellsgatan 22;
X-000 00 Xxxxxxxxx; Xxxxxx
Description of business : The marketing of child car seats
manufactured in the Group
24
SCHEDULE 7
DETAILS OF OY KLIPPAN AB
Name of Group Member : Oy Klippan AB
Registered number : 150,956
Registered office : Sibbo, Finland
Date of incorporation : 13th February 1959
Place of incorporation : Helsinki
Status : Private Limited Company
Authorised share capital : FIM 3,000,000 divided into 6,000 ordinary
shares of FIM 500 each
Issued share capital : FIM 3,000,000 divided into 6,000 ordinary
shares of FIM 500 each
Registered shareholder : Klippan Safety AB
Directors' full names : Per Xxxxx Xxxxxxx
Xxx Xxxxxx
Secretary's full name : N/A
Accounting reference date : 31st December
Auditors : Oy Xxx Xxxxxxxx and Co. AB Helsinki
Banks Svenska Handelsbanken, Helsinki, OY
Postanken AB Helsinki and OY Xxxxxx AB,
Helsinki
Description of business : The development, manufacturing and marketing
of child car seats, seat belts and fall
restraints and the marketing of
complimentary safety products for children
and home safety accessories from the Seller
25
SIGNED by )
for and on behalf of )
KLIPPAN SAFETY AB )
in the presence of:- /s/ Per Xxxxx Xxxxxx )
Witness's signature: /s/ X. X. Xxxxxxxx
Name: X. X. Xxxxxxxx
Address: Eversheds
Birmingham
Occupation: Solicitor
SIGNED by )
for and on behalf of )
XXXXXXX INTERNATIONAL )
HOLDINGS LIMITED )
in the presence of:- /s/ Xxxx Xxxx
Witness's signature: /s/ X. X. Xxxxxxxx
Name: X. X. Xxxxxxxx
Address: Eversheds
Birmingham
Occupation: Solicitor
