SALE AND PURCHASE AGREEMENT
between
DERBY NEDERLAND B.V.
(as Seller)
and
GAZELLE HOLDING B.V.
(as Purchaser)
and
THE DERBY CYCLE CORPORATION
(as Warrantor)
in relation to all shares in the capital of
KONINKLIJKE GAZELLE B.V.
(the Company)
15 June 0000
Xxx Xxxxxx
Xx Xxxxxxxxxxxxxx 000
X.X. Xxx 00000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
INDEX
CLAUSE PAGE
1 Interpretation...........................................................2
2 Sale, purchase and transfer of the Shares................................6
3 Purchase Price...........................................................7
4 Adjustment Purchase Price................................................8
5 Conditions precedent.....................................................9
6 Pre Completion and other undertakings...................................10
7 Completion..............................................................12
8 Warranties..............................................................12
9 Indemnities.............................................................15
10 Escrow Account..........................................................17
11 Settlement intercompany debt and fiscal unity matters...................17
12 Resignation of supervisory directors....................................19
13 Announcements to third parties..........................................19
14 Notices and other announcements to Parties..............................19
15 Further assurances and other provisions.................................20
16 Waiver of right to rescission...........................................20
17 Non-competition and confidentiality.....................................21
18 Binding effect; assignment and transfer of contract rights..............21
19 Partial invalidity......................................................22
20 Fees and costs..........................................................22
21 Entire Agreement........................................................22
22 Applicable law, dispute settlement and conflict of interest.............22
23 Counterparts............................................................23
SCHEDULES
NUMBER
1. Accounts
2. Data Room Documents
3. Deed of Transfer
4. Disclosed Information
5. Disclosure Letter
6. Resignation Letters
7. Warranties
8. Tax indemnities
9. Escrow Agreement
10. Management Accounts
11. Draft Effective Date Balance Sheet
12. Conditions precedent Clause 5.1 (d)
SALE AND PURCHASE AGREEMENT
THIS AGREEMENT is made the 15th day of June 2001 between:
(1) DERBY NEDERLAND B.V., a private company with limited liability
(BESLOTEN VENNOOTSCHAP MET BEPERKTE AANSPRAKELIJKHEID), incorporated
under the laws of The Netherlands, having its statutory seat in
Amsterdam, The Netherlands ("SELLER");
(2) GAZELLE HOLDING B.V., a private company with limited liability
(BESLOTEN VENNOOTSCHAP MET BEPERKTE AANSPRAKELIJKHEID), to be
incorporated under the laws of The Netherlands, having its statutory
seat in Utrecht ("PURCHASER"); and
(3) THE DERBY CYCLE CORPORATION, a company incorporated under the laws of
Delaware, having its statutory seat in Wilmington, Delaware, United
States of America ("WARRANTOR");
WHEREAS:
(A) Seller is the holder of all issued and paid-up shares (the "SHARES", to
be defined in more detail hereinafter) in the capital of KONINKLIJKE
GAZELLE B.V., a private company with limited liability (BESLOTEN
VENNOOTSCHAP MET BEPERKTE AANSPRAKELIJKHEID), incorporated under the
laws of The Netherlands, having its statutory seat in Dieren, The
Netherlands (the "COMPANY");
(B) Warrantor is the ultimate parent company of Seller;
(C) Seller has decided to divest the entire issued and paid-up share
capital in the Company and in regard thereto has invited interested
potential purchasers to make an offer for the purchase of the Shares;
(D) Purchaser has on 29 March 2001 submitted a non-binding preliminary
offer for the Shares on the basis of and subject to the information
contained in the Information Memorandum (as defined below), whereupon
Seller has short-listed Purchaser and has invited Purchaser to submit a
binding final offer for the Shares;
(E) Seller has caused the Company and its advisors to prepare a Data Room
(as defined below), containing certain due diligence information in
relation to the business conducted by the Company;
(F) Seller subsequently permitted Purchaser and its advisors access to the
Data Room;
(G) Purchaser was then given the opportunity to meet with the management of
the Company, visit the premises of the Company, ask questions and to
review further the Data Room information as deemed necessary;
(H) Following this procedure, Purchaser has made a final offer for the
Shares by letter dated 3 May 2001, subject to the terms and conditions
set forth therein, on the basis
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whereof Seller has selected Purchaser as a candidate to negotiate a
share purchase agreement;
(I) In respect of the acquisition contemplated by this Agreement, Purchaser
and Seller have to their mutual satisfaction finalised the consultation
process with the appropriate trade unions pursuant to the SER Merger
Code (SER-BESLUIT FUSIEGEDRAGSREGELS 1975) and the applicable
Collective Labour Agreements (COLLECTIEVE ARBEIDSOVEREENKOMSTEN) and
they have notified the SER Merger Committee (SER COMMISSIE VOOR
FUSIEAANGELEGENHEDEN);
(J) The Works Council of the Company has given a positive advice with
respect to the transactions contemplated by this Agreement;
(K) Seller is willing to sell the Shares to Purchaser, and, in reliance
upon - INTER ALIA - the Warranties and undertakings set forth in this
Agreement, Purchaser is willing to purchase the Shares from Seller
subject to the terms and conditions of this Agreement; and
(L) Each of Seller and Purchaser has taken all necessary corporate action
and obtained any and all necessary internal and external approvals,
consents and permits for the acquisition contemplated by this
Agreement, except for such approvals and consents which are pending as
a condition precedent as set forth below;
HAVE AGREED as follows:
1 INTERPRETATION
1.1 In this Agreement the following capitalised words shall have the
following meanings:
(a) "ACCOUNTS" means the Company's audited annual accounts,
consisting of a balance sheet as of the Last Accounting Date
and a profit and loss account for the financial year ending on
the Last Accounting Date, together with the explanatory notes
thereto, and to which the Company's chartered accountants have
issued their unqualified opinion (GOEDKEURENDE VERKLARING)
within the meaning of Section 2:393 of the Dutch Civil Code
(BURGERLIJK WETBOEK), attached hereto as SCHEDULE 1;
(b) "AGREEMENT" means this agreement, including the recitals, with
the Schedules and Annexes thereto;
(c) "ANNEXES" means the annexes to the Warranties;
(d) "APPENDICES" means the appendices to the Schedules other than
the Warranties;
(e) "ARTICLES OF ASSOCIATION" means the current articles of
association of the Company and/or the Subsidiary, as the case
may be;
(f) "BUSINESS DAY" means any day other than a Saturday or Sunday
or a public holiday in The Netherlands;
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(g) "COMPANIES" means the Company and the Subsidiary, collectively
and individually;
(h) "COMPANY" means Koninklijke Gazelle B.V. as described in more
detail in the recitals to this Agreement;
(i) "COMPLETION" means the completion of the sale, purchase and
transfer of the Shares by the carrying out each of the steps
listed in Clause 7;
(j) "COMPLETION DATE" means the date set for Completion pursuant
to Clause 7;
(k) "DATA ROOM" means the data room made available to Purchaser
and its advisors in the offices of Regus and Van Doorne at
Amsterdam from 10 to 23 April 2001 and 14 up to and including
16 May 2001;
(l) "DATA ROOM DOCUMENTS" means the documents with respect to the
Companies made available to Purchaser and its advisors in the
Data Room, which documents are listed in SCHEDULE 2;
(m) "DEED OF TRANSFER" means the notarial deed of transfer of
Shares in the form attached hereto as SCHEDULE 3;
(n) "DISCLOSED INFORMATION" means any and all information in
relation to the Companies known or available to Purchaser and
its advisors, as included in (i) the Information Memorandum,
(ii) the Data Room Documents, (iii) any information made
available by or on behalf of Seller during the Due Diligence
Investigation as listed in SCHEDULE 4, and (iv) any
information recorded in the Commercial Register;
(o) "DISCLOSURE LETTER" means the disclosure letter from Seller to
Purchaser of even date herewith attached hereto as SCHEDULE 5,
to be countersigned for acceptance by Purchaser for the
purpose of identifying the matters which Seller thereby
disclose against the Warranties;
(p) "DUE DILIGENCE INVESTIGATION" means the investigation by and
on behalf of Purchaser into the financial, operational, legal,
environmental and tax aspects of the Company from 9 April 2001
to 6 June 2001;
(q) "EFFECTIVE DATE" means 2 June 2001;
(r) "EFFECTIVE DATE BALANCE SHEET" means the Companies'
consolidated balance sheet as of the Effective Date, to be
prepared in a manner consistent with the procedures and
policies, bases and methods of valuation adopted in the
preparation of the Management Accounts;
(s) "EMPLOYEE BENEFIT PLANS" has the meaning ascribed to it in
Clause 9.3 of the Warranties;
(t) "ESCROW ACCOUNT" has the meaning ascribed thereto in Clause
10.1;
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(u) "ESCROW AGENT" has the meaning ascribed thereto in Clause
10.1;
(v) "ESCROW AGREEMENT" has the meaning ascribed thereto in Clause
10.2;
(w) "ESCROW AMOUNT" means the amount of EUR 10,000,000 (ten
million Euro);
(x) "INDEMNITIES" means the indemnities set forth in Clause 9;
(y) "INFORMATION MEMORANDUM" means the information memorandum
prepared by Lazard Brothers & Co., Limited, dated March 2001,
in relation to the Companies;
(z) "INTELLECTUAL PROPERTY RIGHTS" has the meaning ascribed to it
in Clause 8.1 of the Warranties;
(aa) "INTEREST RATE" means Euribor plus 150 basis points;
(bb) "LAST ACCOUNTING DATE" means 30 November 2000;
(cc) "MANAGEMENT ACCOUNTS" means the management accounts of the
Company as per the Effective Date, attached hereto as SCHEDULE
10;
(dd) "NET DEBT" means any and all interest bearing debt less any
cash and receivables of Seller's Group Companies, which debt,
at Completion, shall not exceed EUR 10,000,000 (ten million
Euro);
(ee) "NET EQUITY" means the net shareholders equity (EIGEN
VERMOGEN);
(ff) "NOTARY" means Mr. X.X. Lijdsman, civil law notary (NOTARIS)
in Amsterdam, or his deputy (PLAATSVERVANGER);
(gg) "PARTIES" means the parties to this Agreement;
(hh) "PROJECTED BALANCE SHEET" means the projected balance sheet as
per the Effective Date included in Annex 10 to the Warranties;
(ii) "PURCHASE PRICE" means as per Clause 3, the purchase price
payable by Purchaser to Seller in consideration for the
Shares;
(jj) "PURCHASER" means Gazelle Holding B.V., as described in more
detail above;
(kk) "PURCHASER'S GROUP COMPANY" means Purchaser and from time to
time any direct or indirect subsidiary;
(ll) "RESIGNATION LETTERS" means the resignation letters in the
form attached hereto as SCHEDULE 6;
(mm) "SCHEDULES" means the schedules to this Agreement;
(nn) "SELLER" means Derby Nederland B.V. as described in more
detail above;
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(oo) "SELLER'S GROUP COMPANY" means Seller and from time to time
any direct or indirect subsidiary or a direct or indirect
holding or parent company of Seller or any direct or indirect
subsidiary of a holding or parent company of Seller;
(pp) "SHARES" means as at the Completion Date, all issued and
outstanding shares in the capital of the Company, consisting
of 2,500 shares, numbered 1 up to and including 2,500, with a
par value of NLG 1,000 each;
(qq) "SUBSIDIARY" means N.V. Dierense Maatschappij tot Exploitatie
van Woningen en Assurantien, a private company with limited
liability incorporated under the laws of The Netherlands,
having its statutory seat in Dieren, The Netherlands;
(rr) "SUBSIDIARY SHARES" means as at the Completion Date, all
issued and outstanding shares in Dierense, consisting of 210
shares, numbered 1 up to and including 210, with a par value
of NLG 500 each;
(ss) "TAX" means for any jurisdiction all local (municipal), state,
provincial, regional and national taxes and other taxes levied
for public purposes and social security contributions, whether
direct or indirect, due or payable to any government or any
political subdivision thereof, whether by withholding or
otherwise, including, but not limited to, corporate income
tax, capital tax, wage withholding tax, social security
contributions, including both national insurance contributions
("VOLKSVERZEKERINGEN") and employee social insurance
contributions ("WERKNEMERSVERZEKERINGEN"), transaction taxes,
dividend withholding tax, real and personal property tax,
environmental taxes and (stamp) duties and value added tax,
including any levy, duty, excise, charge, premium, tax or
social security contribution and any interest and penalties
relating thereto;
(tt) "THIRD-PARTY BANK ACCOUNT" means the third-party bank account
(DERDENREKENING) of the Notary with ABN AMRO Bank N.V. at
Amsterdam, account number 00.00.00.000;
(uu) "WARRANTIES" means any and all of the representations and
warranties set forth in SCHEDULE 7; and
(vv) "WARRANTOR" means The Derby Cycle Corporation as described in
more detail above.
1.2 Where any reference is made in this Agreement to the "ORDINARY COURSE
OF BUSINESS" of the Company, such reference should be construed as a
reference to the activities conducted by the Company in the twelve
months period prior to the date of this Agreement and as described in
the Information Memorandum.
1.3 In this Agreement, a reference to:
(a) a "SUBSIDIARY" is to be construed in accordance with Section
2:24 (a) of the Dutch Civil Code (BURGERLIJK WETBOEK);
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(b) a document in the "AGREED FORM" is a reference to a document
in a form approved and for the purposes of identification
signed by or on behalf of each Party;
(c) a statutory provision includes a reference to a statutory
provision as modified or re-enacted or both from time to time
before the date of this Agreement and any subordinate
legislation made under the statutory provision before the date
of this Agreement;
(d) singular words shall include the plural and VICE VERSA and
words in a particular gender shall include all genders, unless
the context requires otherwise;
(e) a person includes a reference to a body corporate, association
or partnership;
(f) a person includes a reference to that person's legal personal
representatives and successors; and
(g) a Clause or Schedule, unless indicated to the contrary, is a
reference to a Clause of or Schedule to this Agreement.
1.4 The recitals, Schedules and Annexes to this Agreement form an integral
part hereof.
1.5 In this Agreement, Clause headings are inserted for convenience
purposes only and shall not affect the construction of this Agreement.
1.6 Where any of the Warranties is qualified by the expression "TO THE BEST
OF WARRANTOR'S OR SELLER'S KNOWLEDGE" or any similar expression, this
means that the matters stated in the Warranty concerned is limited to
(i) the knowledge which Warrantor or Seller has, and (ii) the knowledge
which Xx. X. Xxxxxxx has in his capacity as managing director of the
Company, in both events after having made due and careful inquiries of
the matters stated in the Warranties.
1.7 English language words used in this Agreement intend to describe Dutch
legal concepts only and the consequences of the use of these words in
English law or any other foreign law shall be disregarded. In the event
of a discrepancy between an English language word and a Dutch language
word used to clarify the same, the meaning of the Dutch language word
shall prevail.
2 SALE, PURCHASE AND TRANSFER OF THE SHARES
2.1 Subject to the terms and conditions of this Agreement, Seller hereby
sells the Shares to Purchaser and Purchaser hereby purchases the Shares
from Seller. As between Seller and Purchaser, the sale and purchase of
the Shares shall have effect from the Effective Date, to the effect
that all benefits and obligations of any nature whatsoever accrued in
respect of the Shares after the Effective Date are for the Purchaser,
without prejudice to the other provisions in this Agreement. Seller
covenants with Purchaser that on Completion it will have the right to
sell and transfer full legal and beneficial title to the Shares to
Purchaser, free from any pledges, usufruct and other encumbrances and
other (security) rights exercisable by third parties.
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2.2 Subject to the terms and conditions of this Agreement, Seller shall
transfer title to the Shares to Purchaser, and Purchaser shall accept
the same from Seller, on the Completion Date through the execution of
the Deed of Transfer, also containing acknowledgement of such transfer
by the Company, before the Notary.
2.3 Purchasers shall be entitled to nominate by notice in writing to Seller
at any time up to 5 (five) Business Days prior to the Completion Date,
one or more of its shareholders as Purchasers to purchase the Shares or
any part thereof in which case the Parties shall procure that any such
Purchaser shall become a party to this Agreement by entering into a
deed of adherence following which each reference to the Purchaser in
this Agreement (other than in this Clause 2.3 and otherwise where the
context so requires) shall be construed as including a reference to the
relevant Purchaser(s) in respect of the Shares to be acquired or
assumed by such Purchaser(s), always provided however, that Gazelle
Holding B.V. shall remain jointly and severally liable for any and all
obligations hereunder and shall be the sole Party representing
Purchaser hereunder.
3 PURCHASE PRICE
3.1 The purchase price shall be an amount of EUR 130,530,000 (one hundred
and thirty million fivehundred thirty thousand Euro), increased with
interest thereon and interest on the total aggregate amount of EUR
11,970,000 (eleven million nine hundred seventy thousand Euro)
calculated at the Interest Rate over the period from the Effective Date
up to the Completion Date (together the "PURCHASE PRICE"), subject to
any upward or downward adjustments as set forth in Clause 4.
3.2 Purchaser shall ultimately on the Completion Date, prior to Completion,
wire the Purchase Price to the Notary's Bank Account. Seller shall
instruct the Notary immediately upon execution of the Deed of Transfer
in the following order:
(a) to wire the Escrow Amount into the Escrow Account;
(b) to wire an amount, to be specified by Chase Manhattan
International Ltd. by fax to the Notary (with copy to Seller
and Purchaser) on the Completion Date before 10:00 am,
representing all anticipated outstandings under the Revolving
Multicurrency Credit Facility dated 12 May 1998 as amended
from time to time (the "FACILITY AGREEMENT") to include 105%
of the outstanding Ancillary Facilities as defined in the
Facility Agreement and all outstanding proper costs, fees and
expenses which are for the account of Warrantor under the
Facility Agreement less the Net Debt, to Chase Manhattan Bank,
Frankfurt (XXXXXXXX) in favour of Chase Manhattan Bank Ltd.
London (XXXXXX00) at account number A/C 6001600037, it being
understood that out of the payment by the Notary first an
amount equal to any and all outstanding proper costs, fees and
expenses related to the Facility Agreement and 5% of the
outstanding Ancillary Facilities as defined in the Facility
Agreement shall be deemed a payment by Warrantor due under the
Facility Agreement, whereafter an amount equal to the
receivable of Seller's Group Companies shall (i) be deemed a
payment by Seller to Curragh Finance Limited, which is then
(ii) deemed to be on-paid by Curragh Finance Limited to the
Company in repayment of the indebtedness of Curragh Finance
Limited
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due to the Company but only to the extent of such
indebtedness, and which is then (iii) deemed to be a payment
by the Company in repayment of the outstandings due by it
under the Facility Agreement less the Net Debt;
(c) to wire an amount to be determined in writing at Completion
and currently estimated at EUR 3,400,000 (three million four
hundred thousand Euro) for the fees and expenses of certain of
Seller's professional advisors in respect of this transaction
to an account number to be determined in writing prior to
Completion;
(d) to wire the Euro equivalent on the Completion Date of USD
2,500,000 (two million five hundred thousand United States
Dollars) to Seller's bank account to be specified in writing
prior to Completion; and
(e) to wire the remainder of the Purchase Price to The Bank of New
York, ABA 000-000-000, account number GLA/111-565, account
name GFU-IBW account, sub-account number 134503, reference
Derby Cycle Corporation.
3.3 Purchaser shall ultimately on the Completion Date, prior to Completion,
procure the Company to wire an amount equal to the actual amount of the
Net Debt at Completion Date to the Notary's Bank Account. The Notary is
hereby instructed immediately upon execution of the Deed of Transfer to
wire the Net Debt amount to Chase Manhattan Bank, Frankfurt (XXXXXXXX)
in favour of Chase Manhattan Bank Ltd. London (XXXXXX00) at account
number A/C 6001600037, which amount when taken together with the
payment set forth in Clause 3.2 (b), will discharge all outstandings
under the Facility Agreement and will result in full and final
settlement of any and all other interest bearing debt.
4 ADJUSTMENT PURCHASE PRICE
4.1 At the date of this Agreement, the Company has prepared a draft of the
Effective Date Balance Sheet (reflecting amongst other things the sale
and transfer by the Companies of 8 (eight) residential properties as
set forth in Clause 6.1 of the Warranties and Clause 11.3 of this
Agreement), attached to this Agreement as SCHEDULE 11, and Seller
submits the same hereby for approval to Purchaser.
4.2 Within 30 Business Days of the receipt by Purchaser of the draft
Effective Date Balance Sheet, Purchaser shall confirm to Seller whether
or not it agrees with the draft Effective Date Balance Sheet, giving
written details on any matter in dispute, failing which the draft
Effective Date Balance Sheet shall be deemed to be final.
4.3 If Purchaser submits a timely notice disputing the draft Effective Date
Balance Sheet, Purchaser and Seller shall meet with a view to reaching
agreement on the disputed items within 20 Business Days after such
notice. If agreement is reached on the disputed items, the (revised)
draft Effective Date Balance Sheet shall be the Effective Date Balance
Sheet for the purpose of this Clause 4.
4.4 If Purchaser and Seller are unable to agree on the draft Effective Date
Balance Sheet within the 20 Business Day period referred to in Clause
4.3, any matter that remains in
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dispute shall within 10 Business Days thereafter be referred to an
independent accountant (the "INDEPENDENT ACCOUNTANT"), at the request
of either Party appointed by the President of the NIVRA (NEDERLANDS
INSTITUUT VOOR REGISTER ACCOUNTANTS) (acting as an expert ("BINDEND
ADVISEUR") and not as an arbitrator).
4.5 The Independent Accountant shall be instructed to make and communicate
his decision with respect to any matters in dispute to each of
Purchaser and Seller within 20 Business Days of his appointment. Such
decision shall be final and binding upon the Parties. Following
settlement of any such matter in dispute, the draft Effective Date
Balance Sheet shall be finalised in accordance with that settlement and
shall, in final form, constitute the Effective Date Balance Sheet. The
allocation of the fees and expenses of the Independent Accountant
between Seller and Purchaser shall be determined by the Independent
Accountant.
4.6 Within 10 Business Days of the earlier of (i) the date that the draft
Effective Date Balance Sheet becomes final pursuant to Clause 4.2, (ii)
the date that the Parties reach agreement thereon pursuant to Clause
4.3, or (iii) the date that the Independent Accountant renders its
decision pursuant to Clause 4.5, an adjustment to the Purchase Price
shall be made, on a Euro for Euro basis, for any difference between the
Net Equity of the Companies per the Effective Date as shown in the
final Effective Date Balance Sheet and EUR 14,946,612 (fourteen million
nine hundred forty six thousand six hundred twelve Euro) (as shown in
the Projected Balance Sheet). Any amount so due and payable shall
become payable within 10 Business Days after final determination as set
forth above in this Clause 4.6, and shall be increased with interest at
the Interest Rate over the period from the Effective Date to the date
of payment.
5 CONDITIONS PRECEDENT
5.1 The sale and purchase of the Shares are subject to the following
conditions precedent (OPSCHORTENDE VOORWAARDEN) being satisfied in
accordance with this Clause 5:
(a) the Dutch competition authority (NEDERLANDSE
MEDEDINGINGSAUTORITEIT or NMA) having authorized (or not
objected within the statutory time period) the sale and
purchase of the Shares pursuant to this Agreement, including
Clause 17;
(b) no breach of the covenants set forth in Clause 6.1 having
taken place which has a material adverse impact on the
business of the Companies;
(c) no material adverse change having occurred in respect of the
business of the Companies which has a negative effect on the
projected EBIT for 2001 of at least 10% (ten percent); and
(d) the conditions precedent set forth in SCHEDULE 12 have been
met.
5.2 Parties shall use their best efforts to satisfy the conditions in
Clause 5.1 (a) as soon as possible after signing this Agreement. If at
any time Purchaser or Seller becomes aware of any fact or circumstance
which might prevent the conditions set out in Clause 5.1 from being
satisfied before Completion, it shall inform the other Parties as soon
as practically possible. Parties shall negotiate in good faith to find
a solution.
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5.3 If on or before 10:00 am Netherlands time on the date set for
Completion in Clause 7 the conditions set out in Clause 5.1 have not
been satisfied, either Party may on that date by notice to the other
Parties:
(a) postpone Completion one or more times but not beyond a date
more than 60 (sixty) days after the date set for Completion in
Clause 7; or
(b) failing Completion at any new date set for Completion under
Clause 5.3 (a) and provided the 60 (sixty) days referred to in
Clause 5.3 (a) has expired, rescind (ONTBINDEN) this
Agreement.
5.4 If a Party postpones Completion in accordance with Clause 5.3 (b), the
provisions of this Agreement apply as if the date to which Completion
is postponed is the date set for Completion in Clause 7.
5.5 If this Agreement is rescinded (ONTBONDEN) pursuant to Clause 5.3, all
further rights and obligations of the Parties shall cease immediately
upon rescission, provided, however, that rescission does not affect the
obligations of the Parties pursuant to Clauses 17, 20, 21 and 22.
5.6 If this Agreement is rescinded, Purchaser may not use or disclose by
any means whatsoever to any person, any information supplied to it by
Seller, their employees, agents or advisors in respect of the Company
and shall ensure that none of Purchaser's Group Companies' employees,
agents or advisors do so, unless Purchaser is required to do so by law
or if the information concerned already belongs to the public domain.
Purchaser shall return to Seller on request all information supplied to
it and shall ensure that its employees and advisors do the same.
6 PRE COMPLETION AND OTHER UNDERTAKINGS
6.1 During the period from Effective Date up to Completion, Seller has
procured and shall procure that none of the Companies shall without the
prior written consent of Purchaser, which consent shall not
unreasonably be withheld:
(a) issue or redeem any shares in its capital or make any other
changes in its equity structure; or
(b) amend the Articles of Association; or
(c) enter into any unusual or abnormal contract or commitment; or
(d) incur any expenditure on capital account exceeding EUR 25,000
for any individual item or EUR 100,000 in aggregate; or
(e) dispose of, or cease to carry on, the whole or any material
part of its undertaking or assets, whether by a single
transaction or a series of transactions whether related or
not, or dispose of or grant any option or right of pre-emption
in respect of any part of its assets at less than the full
market value of those assets; or
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(f) declare, make or pay any dividend or other distribution or do
or allow to be done anything which renders its financial
position less favourable than at the Effective Date; or
(g) borrow any money or make any payments out of or drawings on
its bank accounts (except payments in the ordinary course of
business) or make any payments to Seller's Group Companies
(except in the ordinary course of business both in nature and
amounts); or
(h) make any loan; or
(i) enter into any leasing, hire purchase or other agreement or
arrangements for payment on deferred terms; or
(j) grant, issue or redeem any mortgage, charge, debenture or
other security or give any guarantee or indemnity; or
(k) enter into or agree to enter into any joint venture,
partnership or other profit sharing arrangement other than
those existing at the date of this Agreement; or
(l) enter into any transaction, agreement or arrangement other
than for the benefit of the Companies; or
(m) make any change to its bonus, profit sharing or pension
arrangements; or
(n) commence or settle any legal proceedings involving one of the
Companies (in each case other than in respect of recovery of
bad debts); or
(o) make any payment in respect of the intra group payables
relating to Tax; or
(p) incur costs, fees, penalties or other extraordinary payments
on its financial indebtedness other than ordinary interest
payments;
(q) agree, conditionally or otherwise, to do any of the foregoing.
6.2 Between the date hereof and Completion, Seller shall and shall procure
that the Companies shall maintain the existing insurance policies at
the cost and expense of the Company, consistent with past practice.
6.3 Until 31 December 2001, Purchaser shall procure that the Company shall
continue to perform the actual accounting and reporting in The
Netherlands for Raleigh B.V. and any other Seller's Group Companies
(other than the Companies) against payment of fees consistent with past
practice on an arms' length basis.
6.4 Until completion of the selling season 1 September 2001/ 31 August
2002, Purchaser shall procure that the Company shall continue to
manufacture between 3,000 and 7,000 Raleigh bikes on terms and
conditions consistent with current commercial arrangements.
- 12 -
7 COMPLETION
7.1 Completion shall take place at the offices of Xxxxx & Xxxxx, Xxxxxxxxxx
00, Xxxxxxxxx, Xxx Xxxxxxxxxxx, on the earlier of the third Business
Day after the condition set forth in Clause 5.1 (a) has been fulfilled
and 19 July 2001, unless otherwise agreed between Seller and Purchaser
in writing and subject to the condition set forth in Clause 5.1 having
been satisfied.
7.2 The Parties shall perform or procure to be performed the following (or
to the extent that any of the documents or items referred to below
shall have been executed or delivered before Completion, shall be
deemed to have been executed or delivered) at Completion in the order
set out below, it being understood and agreed that the valid execution
and delivery of all of the following shall be a condition for the
effectiveness of each of the following:
(a) Seller shall produce irrevocable declarations, in the form
acceptable to Purchaser, from the relevant financial
institutions that the Companies are released from all
(financial) indebtedness (including interest, accrued interest
and penalties), liabilities, guarantees and security rights;
(b) Seller shall sign, and Purchaser shall co-sign for agreement
and acceptance, the Disclosure Letter;
(c) Parties and the Escrow Agent shall sign the Escrow Agreement;
(d) Each of the supervisory directors as named in Clause 12 shall
submit his resignation as supervisory director of the
Companies through the execution of the Resignation Letters,
confirming that he has no claim whatsoever against the
Companies;
(e) Parties shall sign the Deed of Transfer before the Notary;
(f) Seller shall deliver to Purchaser the original shareholders'
register of the Company, duly amended to reflect the transfer
of the Shares as agreed;
(g) Parties shall instruct the Notary to release the Purchase
Price and the Escrow Amount in the manner as set forth in
Clause 3.2;
(h) Parties shall do all such further acts and execute all such
further documents as shall be necessary to fully effect the
transactions contemplated by this Agreement.
8 WARRANTIES
8.1 Notwithstanding the provisions of Clauses 8 and 9, the Warranties and
Indemnities are given by Seller and Warrantor severally and jointly.
Purchaser shall, however, first bring and pursue any claim hereunder to
Warrantor and only if Warrantor does not pay such claim to Purchaser
subject to and in accordance with the terms and conditions of this
Agreement, Purchaser shall be entitled to bring and pursue a claim
against Seller. Purchaser agrees that Warrantor shall at all times be
entitled to sell or
- 13 -
liquidate Seller and that it shall not file any objections thereto as
meant in Section 2:23 b paragraph 5 of the Dutch Civil Code.
8.2 Seller and Warrantor hereby represent and warrant to Purchaser that
each of the Warranties shall be true, accurate and not misleading as of
the date of this Agreement and as of the Completion Date, except,
however, to the extent that the Warranties are qualified by matters
disclosed, and accepted as such by Purchaser, in the Disclosure Letter.
8.3 Seller and Warrantor shall, subject to the provisions of this Clause 8,
be liable to Purchaser for any and all damages (VERMOGENSSCHADE within
the meaning of Section 6:96 of the Dutch Civil Code (BURGERLIJK
WETBOEK)) resulting from any and all breaches of any one or more of the
Warranties. Warrantor shall, subject to the provisions of this Clause
8, take all such action and make all such payments to Purchaser or at
Purchaser's request, to any of the Companies, as may be required for
Purchaser to be brought in the position it would have been in if such
breach would not have occurred, always provided, however that if
Purchaser requests amounts to be paid to any of the Companies, such
amounts shall never exceed the amounts that would be payable by Seller
or Warrantor to Purchaser. Any such payment shall be deemed to be a
reduction of the Purchase Price.
8.4 Payments by Seller and Warrantor to Purchaser pursuant to this Clause 8
shall be made within 30 Business Days from an undisputed claim notice
by Purchaser. In the event of dispute by Warrantor of such claim,
payment shall be made within 15 Business Days from (i) Warrantor and
Purchaser having reached an amicable settlement, or (ii) a final and
binding arbitral award in respect of such claim.
8.5 The total liability of Seller and Warrantor together under this Clause
8 for breach of Warranties shall be limited as follows:
(a) no liability shall exist unless the breach of the Warranties
is notified in writing by Purchaser to Seller and Warrantor
within eighteen (18) months from the Completion Date; however,
with respect to the Warranties on Corporate (1) and Shares and
Subsidiary Shares (2), such period shall be extended until 31
March 2006, and with respect to the Warranties on Taxes (5),
such period shall be extended for so long as the Tax
authorities can still impose any additional assessments or
penalties in respect of the Accounts, increased with three
months after the expiry of such term, but in any event no
later than 30 October 2006;
(b) the total liability of Seller and Warrantor together for
breach of Warranties is limited to 20% (twenty percent) of the
Purchase Price;
(c) no liability of Seller and Warrantor for breach of the
Warranties shall exist unless (i) the amount of any single
claim exceeds EUR 50,000 ( fifty thousand Euro), whereby
claims arising from the same Warranty or in respect of the
same subject matter or from the same cause, set of facts or
relating to the same type of asset or liability on the balance
sheet, shall be considered one single claim, and (ii) the
total of the amounts that can be claimed exceeds the amount
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of EUR 250,000 (two hundred and fifty thousand Euro); in the
event that the sum of all claims exceeds this threshold,
Seller and Warrantor shall be liable for the entire amount up
to the maximum set forth in Clause 8.5 (b);
(d) the liability of Seller and Warrantor for breach of the
Warranties shall be reduced by any received Tax benefit,
cancellation or reduction of any provision in the Accounts or
in the Effective Date Balance Sheets to the extent that such
provision was specifically made for matters directly in
consequence of the matters giving rise to the breach concerned
and provided further that the liability shall only be reduced
by the amount with which the relevant provision has been
cancelled or reduced, payments made under insurance policies
or payments made by third parties for compensation of damages
caused by such third parties to the Companies, to the extent,
however, that the same is or can be obtained directly in
consequence of the matter giving rise to the breach concerned;
and
(e) no liability shall exist for claims to the extent that such
claims would not have arisen but for (i) any change in the
applicable law or taxes or interpretation thereof (whether or
not such change purports to have retroactive effect), or (ii)
any change in the accounting policies of the Companies (unless
required by law).
8.6 The Due Diligence Investigation shall not prejudice Purchaser from
bringing any claims under the Warranties, unless and to the extent that
Purchaser was aware of the breach of the Warranty involved, because the
facts and circumstances giving rise thereto (i) are disclosed and/or
accepted in this Agreement, and/or (ii) are made known to Purchaser in
the Disclosed Information. For the purpose of this Clause 8.6 and
Clause 8.7 and the related recitals, Purchaser's Due Diligence
Investigation and Purchaser's knowledge shall include the knowledge of
Gilde Buy-Out Fund.
8.7 Purchaser hereby declares to Warrantor that upon signing of this
Agreement it has no actual knowledge of any breach of the Warranties,
except to the extent that such Warranties are qualified by the
Disclosure Letter. If Purchaser has any such actual knowledge,
Purchaser will have no claim for any breach of the Warranties to which
such actual knowledge relates, except as otherwise provided for in this
Agreement.
8.8 Following Purchaser's becoming aware of a breach under the Warranties,
Purchaser shall give notice to Seller and Warrantor of all the relevant
facts known at that time to Purchaser as soon as possible but in any
event within 8 (eight) weeks thereafter.
8.9 Purchaser shall during normal business hours provide Seller and
Warrantor and its advisors reasonable access to the Companies premises
and personnel and to relevant assets, documents and records within
Purchaser's power of control for purposes of investigating the matter
as soon as reasonably possible after Purchaser shall have made a claim
arising out of an alleged breach of the Warranties and shall,
furthermore, in consultation with and at the expense of Seller and
Warrantor take all such reasonable action as is necessary to mitigate
or eliminate the consequences of such breach. Seller and Warrantor may
take copies of documents or records, and photograph, if
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necessary, all relevant premises and objects. All of the aforegoing in
a manner as not to interfere unreasonably with the operation of the
Companies.
8.10 If the claim for which Seller and the Warrantor may be held liable
hereunder is the result of or connected to a liability towards or a
dispute with a third party, Purchaser shall ensure that any action is
taken and information and assistance is given as Warrantor may
reasonably request to:
(a) avoid, dispute, resist, appeal, compromise, defend, remedy,
settle, contest or mitigate the matter and provided that
Warrantor shall assume liability for the claim;
(b) enforce against any person (other than Warrantor) any right
that Warrantor or Seller may have in relation to the matter
(if legally possible) and provided that Warrantor or Seller
shall assume liability for the claim; and
(c) in connection with proceedings related to the matter (other
than against Warrantor or Seller) use advisors nominated by
Warrantor and, at Warrantor's request, allow Warrantor the
exclusive conduct of the proceedings, in each case on the
basis that Warrantor shall fully indemnify Purchaser for all
reasonable costs incurred as a result of a request or
nomination by Warrantor and provided that shall assume
liability for the claim.
8.11 Purchaser shall not admit any liability in respect of, or compromise or
settle, any matters for which Seller or Warrantor is liable under this
Agreement without the prior written consent of Seller or Warrantor,
which consent shall not be unreasonably withheld or delayed.
8.12 Without prejudice to Clause 8.5 (d), in the event that Purchaser or any
of the Companies would be entitled to a Tax-saving, insurance payment
or payment by another third party at a future date in connection with a
claim under the Warranties as a result of which Warrantor or Seller has
paid or must pay damages to Purchaser or the Companies in accordance
with this Agreement, Purchaser shall immediately upon it or any of the
Companies so receiving the Tax-saving, insurance payment or payment by
another third party, pay to Warrantor or Seller or procure that the
Companies pay to Seller or Warrantor an amount equal to such
Tax-saving, insurance payment or payment by another third party.
Warrantor's external accountants shall at all relevant times be allowed
reasonable access to the books and records of Purchaser and the
Companies and to the working papers of the external accountants of
Purchaser and the Companies in order to verify the receipt of any such
Tax-savings, insurance payments and payments by other third parties as
well as the respective amounts thereof, provided that the accountants
shall not share any confidential information with Warrantor or Seller.
9 INDEMNITIES
9.1 Notwithstanding and without prejudice to the generality of the
Warranties, Seller and Warrantor shall indemnify and keep Purchaser
harmless from and against:
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(a) any and all penalties arising from the investigation of the
Dutch competition authority (NMa) against the Company and its
competitors into certain alleged anti-competitive activities
in the Dutch cycle industry or Dutch cycle reselling market,
which activities relate to the period prior to the Effective
Date, currently registered with the NMa under number 1615;
(b) any and all Tax claims arising from the matters as described
in the Memorandum attached hereto as SCHEDULE 8;
(c) 80% (eighty percent) of any and all costs to be made for
cleaning-up the identified problem areas (which costs shall,
before any prepayment or cancellation or reduction of any
provision in the Accounts or the Effective Date Balance Sheet
as meant in Clause 9.3 (c), for the purpose of this Clause 9
be limited to NLG 3,000,000 (three million Dutch guilders))
and modification of the sewer system (which costs shall,
before any prepayment or cancellation or reduction of any
provision in the Accounts or the Effective Date Balance Sheet
as meant in Clause 9.3 (c), for the purpose of this Clause 9
be limited to NLG 550,000 (five hundred and fifty five
thousand Dutch guilders)), as described in more detail in the
Arcadis Report referred to in paragraph 2.4 of the Disclosure
Letter;
(d) 50% (fifty percent) of any and all costs to be made in
relation to the software and any problems in connection
therewith as referred to in the Disclosure Letter under
paragraph 2.19, which costs shall, before any prepayment or
cancellation or reduction of any provision in the Accounts or
the Effective Date Balance Sheet as meant in Clause 9.3 (c),
for the purpose of this Clause 9 be limited to NLG 450,000
(four hundred and fifty thousand Dutch guilders); and
(e) the statements of joint and several liability, guarantees,
indemnities or liabilities for third parties, including
Seller's Group Companies, or in respect of any credit facility
arrangement or loan.
9.2 No claims can be made under this Clause 9 if and to the extent that the
same have been claimed under Clause 8 and VICE VERSA.
9.3 The total liability of Seller and Warrantor together under this Clause
9 shall be limited as follows:
(a) no liability shall exist unless (i) a claim under the
Indemnities as set out in Clause 9.1 (a), (c) or (d) is
notified in writing by Purchaser to Warrantor prior to the
third anniversary of the Completion Date and/or (ii) a claim
under the Indemnities as set out in Clause 9.1 (b) or (e) is
notified in writing by Purchaser to Warrantor within the
period set forth in Clause 8.5 (a);
(b) the total liability of Seller and Warrantor together in
respect of the Indemnities is limited to 40% (forty percent)
of the Purchase Price;
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(c) the liability Seller and Warrantor under the Indemnities shall
be reduced by any received Tax benefit, prepayment or
cancellation or reduction of any provision in the Accounts or
the Effective Date Balance Sheet to the extent that such
provision was specifically made for matters directly in
consequence of the matters giving rise to the breach concerned
and provided further that the liability shall only be reduced
by the amount with which the relevant provision has been
cancelled or reduced; and
(d) no liability shall exist for claims to the extent that such
claims would not have arisen but for (i) any change in the
applicable law or taxes or interpretation thereof (whether or
not such change purports to have retroactive effect), or (ii)
any change in the accounting policies of the Company (unless
required by law).
9.4 The provisions of Clauses 8.8 through 8.12 shall apply MUTATIS MUTANDIS
to this Clause 9.
10 ESCROW ACCOUNT
10.1 As a continuing security for the due and punctual fulfilment by Seller
and Warrantor of their obligations and liabilities under Clauses 8 and
9, Parties shall open an account with a first class Netherlands Bank
(the "ESCROW AGENT") under a number to be specified at Completion(the
"ESCROW ACCOUNT"), in the joint name of Purchaser, Seller and Warrantor
with sole disposition authority vested in the Escrow Agent.
10.2 At Completion, Parties and the Escrow Agent shall enter into the Escrow
Agreement in the form attached hereto as SCHEDULE 9 (the "ESCROW
AGREEMENT").
10.3 The Escrow Amount shall remain in place until 10 Business Days after
the later of a final and binding outcome of (i) the NMa investigation,
and (ii) the Tax investigation covering the period up to the Effective
Date, provided, however, that upon an earlier outcome of the NMa
investigation, the Escrow Account shall (after set-off or payment of
the relevant fine, if any) to the extent possible be reduced to EUR
5,000,000 (five million Euro). No payments shall be made out of the
Escrow Account without either (i) written mutual consent between the
Parties, or (ii) a final and binding arbitral award, except for any
payments due by Purchaser or any of the Companies under the
Indemnities, which shall be made if and when they fall due, subject to
reimbursement and payment of interest thereon at the Interest Rate in
the event such payments would finally be agreed or determined not to be
due by Purchaser or the Companies.
11 SETTLEMENT INTERCOMPANY DEBT AND FISCAL UNITY MATTERS
11.1 Without prejudice to Clauses 11.2 and 11.3, all intercompany account
balances and accruals (including receivables and payables) between the
Companies on the one hand and all the members of the Seller's Group
(excluding the Companies) on the other hand will be settled in full at
the Completion Date, provided, however, that the intercompany claims
between the Companies on the one hand and all the members of the
Seller's Group (excluding the Companies) on the other hand which have
arisen in the ordinary course of trading shall be settled in accordance
with their applicable terms (i.e., not accelerated). For the avoidance
of doubt, the group receivable per the Effective Date in the amount of
no less than NLG 85,143,000 (eighty-five million one
- 18 -
hundred and forty three thousand Dutch Guilders), shall be paid in full
to the Company before or on Completion or shall be used to set-off for
the same amount the indebtedness of the Company.
11.2 At Completion, a group Tax receivable for the Company against the
Seller ("RECEIVABLE") will arise on the balance sheet of the Company in
the amount of NLG 2,854,550 (two million eight hundred fifty-four
thousand five hundred and fifty Dutch guilders) (pre-payment by the
Companies to Seller regarding Tax over the current financial year).
This Receivable is hereby accepted by the Parties. Notwithstanding any
other provision in this Agreement, the group payable, included in the
Effective Date Balance Sheet, by the Company to Seller or any other
member of the Seller's Group (excluding the Companies) relating to Tax
over the financial years up to and including 1999/2000, which payable
amounts to approximately NLG 10,071,000 (ten million and seventy one
thousand Dutch Guilders) shall at Completion be paid into an interest
bearing escrow account and shall be released to Seller if and as soon
as:
(a) the relevant Tax authorities have unconditionally and
irrevocably confirmed to the Company in writing that the Tax
authorities will (i) allow the Company to set-off the amount
of NLG 2,854,550 (two million eight hundred fifty-four
thousand five hundred and fifty Dutch guilders) (pre-payment
by the Companies to Seller regarding Tax over the current
financial year) with any Tax due by the Company, or (ii) the
relevant Tax authorities have paid to the Company the amount
of NLG 2,854,550 (two million eight hundred fifty-four
thousand five hundred and fifty Dutch guilders) (pre-payment
by the Companies to Seller regarding Tax over the current
financial year) directly on behalf of Seller which reduces the
Receivable to zero, or (iii) Seller has paid the Receivable to
the Company in full; and
(b) Lyon Investments B.V. can provide the Company (copies of) the
(preliminary) assessments corporate income Tax for the
financial years 1998/1999 and 1999/2000 raised in the name of
Lyon Investments B.V. - in total amounting to at least NLG
12,932,440 (twelve million nine hundred thirty two thousand
four hundred and forty Dutch Guilders) - due as a result of
the approval of the fiscal unity in the name of Lyon
Investments B.V. as per 1 December 1998, and a written
confirmation of the Dutch Tax authorities that these
assessments have been fully and timely paid;
provided, however, that if the event mentioned in Clause 11.2 (b) takes
place prior to any of the events mentioned in Clause 11.2 (a), the
amount mentioned in Clause 11.2 (a) shall be kept in escrow pending
fulfillment of any of the events mentioned in Clause 11.2 (a). In the
event any of the Companies would become liable to pay any of the
amounts mentioned in Clause 11.2 (a) or (b) or any part thereof, the
amount in escrow shall be used to pay the same to any of such Companies
11.3 Parties hereby agree that notwithstanding any other provision of this
Agreement, the group payable by the Company to Seller or any other
member of the Seller's Group (excluding the Companies) relating to Tax
over the financial year 2000/2001 will in the Effective Date Balance
Sheet be included as "payable to Tax authorities" and shall,
- 19 -
therefore, no longer be part of the intercompany payables (and thus not
be paid to Seller).
12 RESIGNATION OF SUPERVISORY DIRECTORS
As of the Completion Date, each of Messrs A.J. Finden-Crofts, , X.X.
Xxxxxxx and X.X. Momma shall submit his resignation as supervisory
director (COMMISSARIS) of the Companies through the execution of the
Resignation Letters confirming that he has no claim whatsoever against
the Companies.
13 ANNOUNCEMENTS TO THIRD PARTIES
Parties shall consult and agree in advance with each other on the
timing and tenor of any public announcement in relation to this
Agreement and the transactions contemplated thereby and they will not
divulge the financial or any other terms thereof to any third party,
all except as required by law or applicable Stock Exchange Regulations,
in which case the Party required to provide information shall first
consult with the other Parties.
14 NOTICES AND OTHER ANNOUNCEMENTS TO PARTIES
14.1 Except as otherwise required by law, all notices, announcements,
summons and/or communications pursuant to this Agreement shall be
delivered to the addresses stated hereunder (or to such other address
as a Party has communicated to the other Party in accordance with this
Clause 14) by registered mail with return receipt, by courier or by
telefax:
(a) if directed to Seller or Warrantor: with copy to:
The Derby Cycle Corporation Van Doorne
Attn.: Messrs. Xxxx Xxxxxxx Attn.: Xx Xxxx X. Xxxxxxxx
and X. Xxxxxxx P.O. Box 75265
Raleigh 1070 XX Xxxxxxxxx
X.X. Xxx 00000 Xxx Xxxxxxxxxxx
Triumph Road Telefax: + 31 20 6789589
Xxxxxxxxxx
XX0 0XX
Xxxxxx Xxxxxxx
Telefax:x00 000 000 0000
(b) if directed to Purchaser: with copy to:
Gazelle Holding B.V. Gilde Buy-Out Fund II B.V.
Attn.: The Management Attn.: Xx Xxxxxx Xxxxx
Xxxxxxxxxxxxx 0 X.X Xxx 00000
6951 BP Dieren 3508 AB Utrecht
The Netherlands The Netherlands
Telefax: x00 000 000000 Telefax: x00 00 000 0000
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and:
Xxxxx & Xxxxx
Attn: Mr Xxx Xxxxx Xxxxxxxxx
X.X. Xxx 00000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Telefax: x00 00 0000000
14.2 Notices, announcements, summons and/or communications pursuant to this
Agreement shall be deemed to have been received at the following
moments:
(a) if sent by registered letter: at the date of delivery
evidenced by the return receipt;
(b) if sent by courier: at the date of delivery by the courier to
the addressee; and
(c) if sent via telefax: at the time of sending evidenced by the
dispatch note.
15 FURTHER ASSURANCES AND OTHER PROVISIONS
15.1 The Parties agree to execute such other documents or agreements and
provide such other services or to perform such other acts at the
request of either Party as may reasonably be necessary for the
implementation of this Agreement and the consummation of the
transaction contemplated by this Agreement.
15.2 After the date of this Agreement, Seller shall procure that the
Companies shall provide Purchaser with all assistance, including access
to personnel and books and records (including the working papers of the
Companies' accountants), reasonably required or useful in order,
amongst other reasons, for Purchaser and its advisors to review and
analyse the draft Effective Date Balance Sheet.
15.3 Seller and Warrantor confirm to Purchaser that Seller and Warrantor
will not bring any claim against any managing director and/or employee
of the Companies in the event of a claim by Purchaser and/or employee
of the Companies under this Agreement, except in the event of gross
negligence vis-a-vis Seller or Warrantor or fraud or criminal behaviour
by such managing director or employee.
15.4 Seller and Warrantor confirm to and agree with Purchaser and the
Companies that the Purchase Price will in significant part be used to
pay-off creditors (including banks and bondholders) of the Seller's
Group Companies.
16 WAIVER OF RIGHT TO RESCISSION
Parties hereby waive their right to seek rescission (ONTBINDING) or
annulment (VERNIETIGING) of this Agreement after Completion.
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17 NON-COMPETITION AND CONFIDENTIALITY
17.1 For the purpose of preserving the goodwill element of the Purchase
Price, Warrantor undertakes vis-a-vis Purchaser and the Company that it
shall, and shall procure that the Seller's Group Companies (excluding
the Companies) shall, during a period of three (3) years from the
Completion Date refrain in any manner, both directly and indirectly,
from conducting business activities (being manufacturing, assembling,
marketing, distributing and selling of bicycles) in The Netherlands
which compete with the current activities of the Company.
17.2 Notwithstanding the aforegoing, Warrantor shall in the first year after
the Completion Date have the right, in the manner as it deems fit, to
directly or indirectly sell or licence for sale in The Netherlands (i)
7,000 units of traditional Raleigh bikes, and (ii) to sell or licence
for sale 13,000 units of non-traditional bikes, such as mountain and
all terrain bikes. In the second and third year after the Completion
Date these sales may be increased with 10% (ten percent) annually.
17.3 Notwithstanding the right to claim full damages, in the case of a
breach relating to Clauses 17.1 and 17.2 which has not been rectified
within a period of 10 days after Warrantor having received written
notice to that effect from Purchaser, Warrantor shall pay to Purchaser
a penalty of EUR 150,000 (one hundred and fifty thousand Euro) to be
increased by EUR 15,000 (fifteen thousand Euro) for each day that such
breach continues.
17.4 Warrantor undertakes vis-a-vis Purchaser and the Company, and shall
procure that the Seller's Group Companies (excluding the Companies)
shall, during a period of one (1) year from the Completion Date
refrain, both directly and indirectly, from soliciting or in any way
retaining the services of employees of the Company or inciting
employees to terminate their employment agreement with the Company or
inducing any supplier or customer of the Company to cancel or to change
the terms and conditions of their business with the Company.
17.5 Except in so far as is legally required, Seller and Warrantor shall not
directly or indirectly use, publicise or otherwise make available to
third parties any information with respect to any confidential or
secret aspect of the business of the Company or with respect to
customers, suppliers, persons or institutions which do business with
the Company, regardless of whether such information is confidential or
secret.
18 BINDING EFFECT; ASSIGNMENT AND TRANSFER OF CONTRACT RIGHTS
18.1 All terms, provisions, Warranties, covenants and conditions of this
Agreement shall only be binding upon and inure to the benefit of and be
enforceable by the Parties hereto after this Agreement has been signed
by all Parties.
18.2 Unless otherwise provided for herein, none of the rights or obligations
under this Agreement may be assigned or transferred without the prior
written consent of all of the Parties, provided that, after Completion,
either Party (and any successor in title thereto) may assign and
transfer all its rights hereunder to any of its group companies and may
assign and transfer all its rights hereunder to banks or financial
institutions
- 22 -
(including the granting of any security rights thereon) designated by
either Party or any successor in title for that purpose.
18.3 Purchaser's shareholders, as referred to in Clause 2.3, shall be
entitled to assign and transfer all their rights and obligations
hereunder to Purchaser.
19 PARTIAL INVALIDITY
In the event that one or more provisions of this Agreement appears to
be non-binding, the other provisions of this Agreement will continue to
be effective. The Parties are obliged to replace the non-binding
Clauses with other Clauses that are binding, in such form and manner
that the new Clauses differ as little as possible from the non-binding
Clauses, taking into account the object and the purpose of this
Agreement.
20 FEES AND COSTS
Each Party shall bear its own costs and advisory fees in connection
with the preparation of and the entering into of this Agreement and the
execution of any other agreements, (notarial) deeds or other documents
pursuant thereto. Without prejudice to the generality of the foregoing,
the costs in connection with the preparation and execution of the Deed
of Transfer and the wiring of the monies due hereunder shall be borne
by Purchaser.
21 ENTIRE AGREEMENT
21.1 The recitals to this Agreement, the Schedules and the Annexes form an
integral part of this Agreement. This Agreement can be amended or
supplemented only by an instrument in writing signed by the Parties.
21.2 This Agreement contains all of the agreements between the Parties with
respect to the transactions contemplated by this Agreement and
supersedes all earlier written and/or oral agreements with respect to
the subject matter(s) hereof.
22 APPLICABLE LAW, DISPUTE SETTLEMENT AND CONFLICT OF INTEREST
22.1 The laws of The Netherlands are applicable to this Agreement and any
further agreements resulting therefrom.
22.2 Any differences or disputes arising out of this Agreement and any
further agreements resulting therefrom, including differences or
disputes concerning the existence and validity thereof, which cannot be
settled amicably, shall be finally determined in accordance with the
Rules of the Netherlands Arbitration Institute. Such arbitration shall
take place in Amsterdam, The Netherlands, and the proceedings shall be
conducted in the English language. The arbitral panel shall be composed
of three arbitrators. The arbitrators shall decide in accordance with
the rules of law.
22.3 Purchaser acknowledges that the Notary is associated with the law firm
Xxxxx & Xxxxx, being the external advisors to Purchaser. With reference
to Section 10 of the "RICHTLIJNEN MET BETREKKING TOT SAMENWERKING VAN
NOTARISSEN ONDERLING EN MET ADVOCATEN", as
- 23 -
adopted by the Board of the Royal Professional Organisation of Notaries
(KONINKLIJKE NOTARIELE BEROEPSORGANISATIE), Seller and Warrantor hereby
explicitly consent to Xxxxx & Overy 's acting for and advising
Purchaser in respect of this Agreement and possible further agreements
and possible disputes resulting therefrom.
23 COUNTERPARTS
This Agreement may be signed in any number of counterparts all of
which, when taken together, shall constitute one and the same document.
Signed in twofold in Amsterdam on the date first written above.
DERBY NEDERLAND B.V.
/s/ Xxxx X. Finden-Crofts
-------------------------------
by: Xxxx X. Finden-Crofts
title: CEO
GAZELLE HOLDING B.V.
/s/ Xxxxx Xxxxxxx
-------------------------------
by: Xxxxx Xxxxxxx
title: Managing Director
THE DERBY CYCLE CORPORATION
/s/ Xxxx X. Finden-Crofts
--------------------------------
by: Xxxx X. Finden-Crofts
title: CEO
SCHEDULE 7
WARRANTIES
draft, dated
15 June 0000
Xxx Xxxxxx
Xx Xxxxxxxxxxxxxx 000
X.X. Xxx 00000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
2
INDEX
Clause Page
1 Corporate................................................................2
2 The Shares and the Subsidiary Shares.....................................2
3 Accounts and Management Accounts.........................................3
4 Position since Last Accounting Date......................................3
5 Taxes....................................................................4
6 Real estate..............................................................4
7 Assets...................................................................5
8 Intellectual property rights.............................................6
9 Directors and employees..................................................6
10 Indebtedness.............................................................7
11 Insurance................................................................7
12 Agreements...............................................................7
13 Litigation...............................................................8
14 Licences.................................................................8
15 IT.......................................................................9
16 Accuracy and correctness.................................................9
3
ANNEXES
NUMBER
1. Articles of Association of the Company and the Subsidiary
2. Extracts of the Commercial Register
3. Real Estate......................................................
4. Intellectual Property Rights.....................................
5. Directors and Employees..........................................
6. Employee Benefit Plans...........................................
7. Insurance........................................................
8. Capital Expenditures ............................................
9. Litigation.......................................................
10. Projected Balance Sheet
WARRANTIES
1 CORPORATE
1.1 The Company is a private company with limited liability (BESLOTEN
VENNOOTSCHAP MET BEPERKTE AANSPRAKELIJKHEID) duly incorporated and
validly existing under the laws of The Netherlands with all requisite
power to carry on its business as presently conducted. The Subsidiary
is a public company with limited liability (NAAMLOZE VENNOOTSCHAP) duly
incorporated and validly existing under the laws of The Netherlands
with all requisite power to carry on its business as presently
conducted
1.2 The full text of the Articles of Association (STATUTEN) of the Company
and the Subsidiary currently in force are attached as ANNEX 1 and no
decision to amend the same has been made.
1.3 The Company and the Subsidiary are duly registered with the Commercial
Register of the competent Chamber of Commerce (HANDELSREGISTER VAN DE
KAMER VAN KOOPHANDEL) in accordance with Dutch law. The information
reflected in the extracts of the Commercial Register in respect of such
registration attached as ANNEX 2 is true and accurate. The Company and
the Subsidiary have properly filed all documents with the Commercial
Register required under Dutch law and no penalties have been incurred
in connection with the timing of these filings.
1.4 Neither the Company nor the Subsidiary has been or is involved in
proceedings for (i) a legal merger (FUSIE within the meaning of Section
2:309 of the Netherlands Civil Code), (ii) a legal split (SPLITSING
within the meaning of Section 2:334a of the Netherlands Civil Code),
(iii) its dissolution (ONTBINDING), (iv) its liquidation (VEREFFENING),
(v) its bankruptcy (faillissement), (vi) suspension of payment
(SURSEANCE VAN BETALING) and/or (vii) the offering of a settlement
agreement to its creditors outside bankruptcy.
1.5 All books of account and other financial and material records of the
Company and the Subsidiary have been fully, properly and accurately
kept in accordance with the law.
2 THE SHARES AND THE SUBSIDIARY SHARES
2.1 The Shares constitute the entire issued share capital of the Company,
consisting of 2,500 ordinary shares, numbered 1 through 2,500, with a
par value of NLG 1,000 each. The Company has full legal and beneficial
title to the Subsidiary Shares, consisting of 210 ordinary shares,
numbered 1 through 210, with a par value of NLG 500 each.
2.2 The Shares and the Subsidiary Shares are free and clear of any and all
pledges, attachments, usufructs and other encumbrances.
3
2.3 There are no outstanding options or rights under which third parties
could demand the issue, sale, transfer and/or encumbrance of any shares
in the Company or the Subsidiary, by conversion or otherwise (except as
contemplated by this Agreement).
2.4 The Shares and the Subsidiary Shares have been validly issued and fully
paid-up in accordance with all requirements of Dutch law.
2.5 No depository receipts of shares (CERTIFICATEN VAN AANDELEN) have been
issued in respect of the Shares or the Subsidiary Shares with or
without the co-operation of the Company or the Subsidiary,
respectively, and no share certificates have been issued.
2.6 No management charges, group charges, dividends, interim dividends or
other distribution, whether paid or still outstanding, have been
declared on any of the Shares since the Last Accounting Date, nor does
any other right exist to distribution from or payment based upon
reserves or profits of the Company.
3 ACCOUNTS AND MANAGEMENT ACCOUNTS
3.1 The Accounts (i) comply with all applicable statutory and legal
requirements in force at the time of their preparation and adoption,
(ii) have been prepared in accordance with generally accepted
accounting principles in The Netherlands, which accounting principles
have been applied on a basis consistent with previous years, and (iii)
provide such a view as enables the forming of a sound judgement on the
assets and liabilities and results of the Company and, insofar as the
nature of the Accounts permits, of their solvency and liquidity.
3.2 The Accounts truly and fairly (GETROUW), clearly (DUIDELIJK) and
systematically (STELSELMATIG) reflect (i) the net assets (VERMOGEN) and
composition of the assets and the liabilities of the Company as of the
Last Accounting Date and (ii) the results for the financial year ended
on the Last Accounting Date.
3.3 The Management Accounts and the Projected Balance Sheet attached hereto
as ANNEX 10 have been prepared in accordance with the same accounting
principles as those that have been applied by the Companies to the
management accounts in previous years. The Management Accounts and the
Projected Balance Sheet are not affected by unusual or non-recurring
items. The Management Accounts - INTER ALIA - reflect the dividend
payment in the amount of NLG 8,185,000 (eight million one hundred and
eighty five thousand Dutch Guilders), which was made on 1 June 2001 and
the sale and transfer of the houses as referred to in Clause 6.1
hereof.
3.4 As per the Last Accounting Date and the Effective Date, respectively,
there are, to the best of Warrantor's knowledge, in respect of the
Companies no liabilities other than those included or provided for in
full in the Accounts and the Effective Date Balance Sheet,
respectively, or in the explanatory notes thereto.
4 POSITION SINCE LAST ACCOUNTING DATE
4
4.1 Since the Last Accounting Date, the Companies have conducted their
business and affairs prudently and in a manner consistent with past
practice and since then no significant capital expenditures or
commitments have been entered into other than those in the ordinary
course of business or as disclosed in the Disclosure Letter.
4.2 To the best of Warrantor's knowledge, since the Last Accounting Date no
events have occurred which have a material adverse change (financially
or otherwise) on the business condition, assets, liabilities and/or
results of the Companies compared with such position as of the Last
Accounting Date.
4.3 Since the Last Accounting Date and except as disclosed:
(a) none of the Companies has entered into any unusual contract or
commitment or has otherwise departed from its ordinary course
of business;
(b) other than in the ordinary course of business, no asset of a
value or price in excess of EUR 200,000 (two hundred thousand
Euro) has been acquired or disposed of or agreed to be
acquired or disposed of by any of the Companies;
(c) there has been no disposal of any asset or supply of any
service or business facility of any kind by any of the
Companies in circumstances where the consideration actually
received or receivable for the disposal or supply was less
than the consideration which could be deemed to have been
received for Tax purposes;
(d) no shareholders resolution has been passed by any of the
Companies.
5 TAXES
5.1 The Companies and the other relevant companies forming part of the
fiscal unity that the Companies belong to or have belonged to, have
duly and timely filed all returns and statements with respect to all
Taxes for any period for which returns and statements had to be filed.
5.2 The Companies have withheld all Taxes as legally required and has
either timely paid all Taxes in full or have made full provision
therefor in the Management Accounts and the Effective Date Closing
Balance Sheet.
5.3 The Companies and no other relevant company forming part of the fiscal
unity that the Companies belong to have not received any demand nor
have any fines or penalties been imposed relating to the filing of
returns and statements concerning Taxes or relating to the payment
thereof.
5.4 The Companies are not subject to any special regime regarding Taxes and
they have not concluded any agreement, ruling or compromise with any
Tax authority.
6 REAL ESTATE
5
6.1 The Companies do not lease or own any land or buildings, except as
stated otherwise in ANNEX 3 ("REAL ESTATE"). The eight houses
previously owned by the Company and the Subsidiary, respectively, were
sold and transferred to Stichting Pensioenfonds Gazelle on 31 May 2001
for an aggregate purchase price of NLG 1,500,000 (one million five
hundred thousand Dutch Guilders) and neither the Company nor the
Subsidiary has any remaining liabilities in relation to this sale and
transfer, except for the Tax liability in the amount of NLG 525,000
(five hundred twenty-five thousand Dutch Guilders) resulting from the
profit realised on this sale.
6.2 Except for the security rights mentioned in the Accounts which will be
released in full at Completion, the Companies have full legal and
beneficial title to the Real Estate, free and clear from any
encumbrances.
6.3 All Real Estate are, subject to normal wear and tear, in such operating
condition and repair that they are suitable for the purposes for which
they are presently being used. No major repairs are planned or required
for which no accrual or provision has been made in the Accounts.
6.4 There is not any soil or groundwater pollution relating to the Real
Estate other than the pollution indicated in the reports mentioned in
the Disclosure Letter under paragraph 2.4.
6.5 Except as set forth in paragraph 2.21of the Disclosure Letter, none of
the Companies has done or omitted to do anything which is a
contravention of any law, regulation or the requirement of any
regulatory body giving rise to any fine, penalty, or other liability on
the part of such relevant Company.
7 ASSETS
7.1 Except for the security rights mentioned in the Accounts, which will be
released in full at Completion, the Companies have full legal and
beneficial title to the assets which are accounted for therein, free
and clear from any encumbrances.
7.2 All assets owned or leased by the Companies or otherwise applied by the
Companies in their business are, subject to normal wear and tear, in
such operating condition and repair that they are suitable for the
purposes for which they are presently being used. No major repairs are
planned or required for which no accrual or provision has been made in
the Accounts. All plants and equipment have not been defective in the
past two years prior to the Completion Date, resulting in losses,
expenses or loss of production. All plants and equipment have been
properly maintained and serviced and, to the best of Warrantor's
knowledge, comply with all relevant laws and regulations, including
health and safety protection.
7.3 There are no redundant, obsolete, unsaleable, deteriorated or slow
moving stock, other than provided for in the Accounts and the Effective
Date Balance Sheet. The assets comprise all the assets necessary for
the business of the Companies as presently conducted.
6
7.4 The Companies have not manufactured or sold products which are or
became dangerous, faulty or defective or which do not comply with any
warranty or representation made by any of the Companies in relation to
such products.
8 INTELLECTUAL PROPERTY RIGHTS
8.1 The Companies have the legal and beneficial title to the trade marks
and logo's, trade names and other industrial and intellectual property
rights in the manner and as specified in ANNEX 4 (the "INTELLECTUAL
PROPERTY RIGHTS"), which also specifically sets forth any encumbrances
on the Intellectual Property Rights. No other intellectual property
rights are required for the business of the Companies as presently
conducted and there are no intellectual property rights vested in
Seller or any of Seller's Group Companies (other than the Companies)
which the Companies would need to continue their business as presently
conducted.
8.2 The Intellectual Property Rights are valid and continuing, have been
properly maintained and protected and (where necessary) renewed, and
will not be altered or impaired by the consummation of the transactions
contemplated by this Agreement.
8.3 The Companies have not entered into any sort of agreement granting to
or obtaining from third parties a right to the Intellectual Property
Rights, save as disclosed in paragraph 2.9 of the Disclosure Letter.
8.4 To the best of Warrantor's knowledge, no activities of the Companies
(or of any licensee under any licence granted by the Companies)
infringe any intellectual property rights of any third party and no
claim has been made against the Companies or any such licensee in
respect of such infringement, save as disclosed in paragraphs 2.10 and
2.18 of the Disclosure Letter.
8.5 None of the Companies is aware of any unauthorised use by a third party
of any Intellectual Property Rights.
9 DIRECTORS AND EMPLOYEES
9.1 All directors (BESTUURDERS) and employees of the Companies, including
employees receiving sickness benefits or disability benefits or similar
benefits, are listed in ANNEX 5, along with, for each director and
employee, his or her function and salary. No director or employee is
entitled to any benefit or payment in connection with the consummation
of the transactions contemplated by this Agreement.
9.2 The basis of remuneration of and other terms of employment applicable
to the directors and the employees do not differ from those in force at
the Last Accounting Date, and, with respect to the employees only,
except for the annually recurring salary increases pursuant to the
applicable labour agreements or otherwise.
9.3 All employee benefit, bonus or profit sharing plans, pension
arrangement, early retirement arrangement and other similar
arrangements which the Companies maintain or contribute to are listed
in ANNEX 6 ("EMPLOYEE BENEFIT PLANS"). All
7
premiums and charges required to be paid in connection with the
Employee Benefit Plans, have been paid in full or full provision
therefor has been made in the Management Accounts and the Effective
Date Balance Sheet to enable the Companies to meet all their
obligations for all liabilities, calculated as per the Effective Date
Balance Sheet, whether actual, conditional or unconditional, in respect
of the Employee Benefit Plans (including without prejudice to the
generality of the foregoing so called back service liabilities), and
such Employee Benefit Plans have been maintained and operated in
accordance with all applicable laws and regulations and with the terms
and conditions of the respective plan documents.
9.4 The Companies have at all relevant times complied with all laws
pertaining to the works council and health and safety agreements
relating to the employment of its employees. No employee or director
has been given notice of termination of his employment, and to the best
of Warrantor's knowledge, there is no liability vis-a-vis present or
former employees whether for termination of employment, personal
injury, labour related illness or otherwise and no payments relating
thereto are due or have been made since 1999.
10 INDEBTEDNESS
Except as shown in the Management Accounts and the Effective Date
Balance Sheet, the Companies have not assumed any liability for any of
the present or future debts of any person, including present or former
affiliated persons (which include, for the avoidance of doubt,
companies belonging to the Seller's Group), nor has it given any
guarantee or indemnity in respect of the discharge of the present or
future liabilities or the performance of any of the obligations of any
other person, including present or former affiliated persons. None of
the Companies has lent any money which has not been repaid, nor does it
own the benefit of any debt (whether present or future) other than
debts accrued in the ordinary course of business.
11 INSURANCE
11.1 All policies of insurance maintained by the Companies or in the
Companies' name as insured or as beneficiary are listed in ANNEX 7,
along with the name of the insurer, coverage, premium and expiration
date.
11.2 All insurances listed are valid and the Companies have complied with
their obligations thereunder. There are no pending claims against any
insurer and no insurer has denied liability, except as set forth in
paragraph 2.13 of the Disclosure Letter. No notice of cancellation,
non-renewal, increase of premium, imposition of new conditions for any
insurance has been received by any of the Companies.
12 AGREEMENTS
12.1 The Companies have not been notified of a breach of any agreement to
which they are a party and Warrantor is not aware of any party
intending to terminate its agreement with the Companies as a
consequence of the transaction contemplated by this Agreement.
8
12.2 No party (including each of the Companies) to any agreement with the
Companies is in breach of such agreement nor does any event or
condition exist which after notice or lapse of time or both would
constitute such breach and no approval or consent of any person is
needed to continue any agreement to which any of the Companies is a
party in full force and effect following the transactions contemplated
hereby. There are no agreements with any other company of Seller's
Group
12.3 None of the Companies is a party to agreements that are not at arms'
length, agreements that are incapable of performance or resulting in a
loss or agreements outside the ordinary course of its business and
there are no commitments requiring material capital expenditures
following Completion other than ANNEX 8.
12.4 The Companies are not subject to any arrangement for receipt or
repayment of any grant, subsidy or financial assistance from any
governmental department or similar entities.
12.5 None of the Companies is a party to any joint venture, partnership or
other co-operation agreement, except as set forth in paragraph 2.17 of
the Disclosure Letter.
12.6 There are no relationships whatsoever between Seller, Seller's Group
Companies and the Companies which would prevent any of the Companies to
continue its business on a stand alone basis.
13 LITIGATION
13.1 All civil, criminal, fiscal or administrative litigation (including -
without limitation - arbitration proceedings and/or proceedings
regarding notices of objections (BEZWAARSCHRIFTPROCEDURES)) in which
the Companies are a party, are listed in ANNEX 9. Warrantor is not
aware of any threatened litigation against the Companies.
13.2 None of the Companies is subject of any investigation of any
governmental or other regulatory body, including tax and competition
authorities, except as set forth in the paragraph 2.21 of the
Disclosure Letter.
13.3 None of the Companies has done or omitted to do anything which is in
contravention of any law, regulation or the requirements of any
regulatory body giving rise to any fine, penalty or other liability on
the part of such relevant Company.
14 LICENCES
To the best of Warrantor's knowledge, the Companies possess all
licences, permits, permissions and exemptions required to exercise
their business and do not contravene the conditions of such licences,
permits, permissions and exemptions, and have not been notified of any
withdrawals, changes or revisions of such licences, permits,
permissions and exemptions or the conditions thereof. To the best of
Warrantor's knowledge, there are no facts or circumstances which may
lead to such withdrawal, changes or revisions.
9
15 IT
The computer and telecommunications facilities, the software and the
databases used by each of the Companies, are adequate for operational
and business requirements of the Companies. All data and information of
the Companies are recorded, stored, maintained and operated or
otherwise held exclusively by the Companies and are not wholly or
partially dependent on any facility or means, which are not under the
exclusive ownership or control of the Companies.
16 ACCURACY AND CORRECTNESS
The Disclosed Information is correct in all material respects and
Warrantor has to the best of its knowledge not withheld any information
from Purchaser which could be relevant for a prospective purchaser of
the Companies.
