1
Exhibit 2.01
STOCK PURCHASE AGREEMENT
between
WATERLINK, INC.
" US Purchaser"
WATERLINK (UK) HOLDINGS LIMITED
" UK Purchaser"
and
SUTCLIFFE XXXXXXXX PLC
"Seller"
CONCERNING THE ACQUISITION OF
ALL THE OUTSTANDING SHARES OF
XXXXXXXX & SUTCLIFFE CORPORATION
SUTCLIFFE XXXXXXXX CARBONS LIMITED
and
SUTCLIFFE CROFTSHAW LIMITED
May 19th, 1998
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Contents
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ARTICLE I ................................................................................................... 2
PURCHASE PRICE OF SHARES; MANNER OF PAYMENT..................................................................... 2
1.1 Purchase Price of the Shares........................................................... 2
1.2 Manner of Payment...................................................................... 2
ARTICLE II ................................................................................................... 2
CONDITION ................................................................................................... 2
ARTICLE III ................................................................................................... 3
WARRANTIES OF SELLER............................................................................................ 3
3.1 Organization and Standing.............................................................. 3
3.2 Capital Stock.......................................................................... 3
3.3 Title to Shares; Investments of the Corporations....................................... 4
3.4 Outstanding Options and Warrants....................................................... 4
3.5 Authority; Conflicts; Consents......................................................... 4
3.6 Financial Statements................................................................... 5
3.7 Absence of Undisclosed Liabilities..................................................... 6
3.8 Absence of Certain Changes............................................................. 6
3.9 Business Relations..................................................................... 8
3.10 Real Property.......................................................................... 8
3.11 Title to and Condition of Assets....................................................... 11
3.12 Taxes.................................................................................. 11
3.13 Indebtedness to Officers, Directors and Shareholders................................... 14
3.14 Organizational Documents............................................................... 14
3.15 Statutory Books........................................................................ 14
3.16 Brokerage and Finder's Fees............................................................ 14
3.17 Accounts Receivable.................................................................... 14
3.18 Employment Matters..................................................................... 15
3.19 No Defaults............................................................................ 16
3.20 Material Contracts..................................................................... 16
3.21 Purchase Orders........................................................................ 17
3.22 ....................................................................................... 17
3.23 Insurance.............................................................................. 18
3.24 Transactions with Officers, Etc........................................................ 18
3.25 Employees.............................................................................. 19
3.26 Trade Marks, Copyrights and Similar Matters............................................ 19
3.27 Employee Benefit Plans and Other Plans................................................. 22
3.28 Environmental Matters.................................................................. 26
3.29 Bank Accounts.......................................................................... 31
3.30 Compliance with Laws................................................................... 31
(i)
3
3.31 Powers of Attorney..................................................................... 31
3.32 Licenses and Rights.................................................................... 31
3.33 Products............................................................................... 31
3.34 Casualty Occurrences................................................................... 32
3.35 Inventory.............................................................................. 32
3.36 Capital Expenditure Plans.............................................................. 32
3.37 Year 2000 Compliance................................................................... 33
ARTICLE IV ................................................................................................... 33
UK TAX MATTERS.................................................................................................. 33
4.1 Definitions............................................................................ 33
4.2 Capital Gains.......................................................................... 34
4.3 Capital Gains: Appropriation to Trading Stock......................................... 34
4.4 Capital Gains: Chargeable Debt......................................................... 34
4.5 Capital Gains: Post Balance Sheet Date................................................ 34
4.6 Depreciatory Transactions.............................................................. 34
4.7 Close Companies........................................................................ 35
4.8 Liability for Tax Primarily Due From Another Person.................................... 35
4.9 Claims by the Company.................................................................. 35
4.10 Non-Allowable Payments................................................................. 35
4.11 Capital Allowances..................................................................... 36
4.12 Distributions.......................................................................... 36
4.13 Anti-Avoidance Provisions.............................................................. 37
4.14 Migration of Companies................................................................. 37
4.15 VAT.................................................................................... 38
4.16 Stamp Duty and Stamp Duty Reserve Tax.................................................. 39
4.17 Inheritance Tax........................................................................ 39
4.18 Purchase of Own Shares................................................................. 39
4.19 Gains Accruing to Non-Resident Companies or trusts..................................... 39
4.20 Offshore Funds......................................................................... 39
4.21 No Interest in a Controlled Foreign Company............................................ 40
4.22 Residence.............................................................................. 40
4.23 Returns, Records and Payments.......................................................... 40
4.24 Employee Benefits...................................................................... 41
4.25 Group Income........................................................................... 41
4.26 Group Relief and Surrender of Advance Corporation
Tax.................................................................................... 41
4.27 Intra Group Transfer................................................................... 42
4.28 Losses etc............................................................................. 42
ARTICLE V ................................................................................................... 42
UK PENSIONS MATTERS............................................................................................. 42
5.1 Applicability.......................................................................... 42
5.2 Pension Scheme......................................................................... 42
(ii)
4
ARTICLE VI ................................................................................................... 47
REPRESENTATIONS AND WARRANTIES OF PURCHASERS.................................................................... 47
6.1 Organization........................................................................... 47
6.2 Corporate Authorization; Validity of Agreement; Necessary
Action................................................................................. 48
6.3 Consents and Approvals; No Violations.................................................. 48
ARTICLE VII ................................................................................................... 49
COVENANTS ................................................................................................... 49
7.1 Covenants of Seller.................................................................... 49
7.2. Covenants of Purchasers................................................................ 50
ARTICLE VIII ................................................................................................... 50
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASERS
AND SELLER...................................................................................................... 50
ARTICLE IX ................................................................................................... 52
CLOSING ................................................................................................... 52
ARTICLE X ................................................................................................... 53
TERMINATION OF AGREEMENT........................................................................................ 53
ARTICLE XI ................................................................................................... 54
SURVIVAL OF WARRANTIES; INDEMNIFICATION;
DISPUTES : LIMITATIONS.......................................................................................... 54
11.1 Survival of Limitations Warranties..................................................... 54
11.2 Seller Indemnification................................................................. 54
11.3 Defense of Claim....................................................................... 55
11.4 Purchasers Indemnification............................................................. 56
11.5 Indemnification Basket; Cap............................................................ 56
11.6 Limitation on Remedies................................................................. 57
ARTICLE XII ................................................................................................... 64
CONDUCT PRIOR TO CLOSING DATE................................................................................... 64
12.1 Continuation of Business............................................................... 64
12.3 Acquisition Proposals.................................................................. 65
ARTICLE XIII ................................................................................................... 66
(iii)
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ASSIGNMENT, THIRD PARTIES, BINDING EFFECT....................................................................... 66
ARTICLE XIV ................................................................................................... 66
EXPENSES ................................................................................................... 66
ARTICLE XV ................................................................................................... 67
NOTICES ................................................................................................... 67
ARTICLE XVI ................................................................................................... 68
REMEDIES NOT EXCLUSIVE.......................................................................................... 68
ARTICLE XVII ................................................................................................... 68
NON-COMPETITION................................................................................................. 68
17.1 Non-Competition Agreement.............................................................. 68
17.2 Disclosure of Confidential Information................................................. 70
ARTICLE XVIII................................................................................................... 70
TERMINATION FEE................................................................................................. 70
ARTICLE XIX ................................................................................................... 71
TAX MATTERS ................................................................................................... 71
19.1 Cooperation in Tax Matters............................................................. 71
19.2 Tax Periods Ending on or Before the Closing Date....................................... 72
19.3 Tax Periods Beginning Before and Ending After the
Closing Date........................................................................... 72
19.4 Defense of Tax Claim................................................................... 73
ARTICLE XX ................................................................................................... 75
GUARANTEE AND INDEMNITY......................................................................................... 75
20 Guarantee and Indemnity................................................................ 75
ARTICLE XXI ................................................................................................... 76
US PHASE II ................................................................................................... 76
ARTICLE XXII ................................................................................................... 79
MISCELLANEOUS................................................................................................... 79
22.1 Counterparts........................................................................... 79
(iv)
6
22.2 Captions and Section Headings.......................................................... 79
22.3 Waivers................................................................................ 79
22.4 Right of Inspection.................................................................... 79
22.5 Amendments, Supplements or Modifications............................................... 79
22.6 Entire Agreement....................................................................... 80
22.7 Governing Laws......................................................................... 80
22.8 Knowledge.............................................................................. 80
22.9 Press Releases......................................................................... 81
22.10 Currency............................................................................... 81
22.11 Agents for Service..................................................................... 81
22.12 Agreed Form Documents.................................................................. 81
SCHEDULES
Schedule 3.11 Assets in Operating Condition
EXHIBITS
Exhibit A The Escrow Agreement
Exhibit B General Release
Exhibit C Termination Agreement
AGREED FORM DOCUMENTS
Pension Scheme "Ringfencing" Deed
Shareholders Resolution
Auditors Resignation for UK Companies
Tax Deed
Services Agreement
Deed of Release of Existing Security
Property Indemnities (4)
Deed changing Principal Employees of Pension Scheme
Disclosure Letter
(v)
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Xxxxxxxx Environmental Investigation Programme
Director's Resignations
Business Transfer Agreement
(vi)
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made this 19th day of May, 1998,
between Waterlink, Inc., a corporation organized under the laws of the State of
Delaware ("US Purchaser"), Waterlink (UK) Holdings Limited, a corporation
organised under the laws of England and Wales ("UK Purchaser" and together with
US Purchaser, collectively referred to herein as "Purchasers") and Sutcliffe
Xxxxxxxx PLC, a corporation organized under the laws of England and Wales
("Seller").
R E C I T A L S:
----------------
A. Seller owns all of the issued and outstanding shares of capital
stock of Xxxxxxxx & Sutcliffe Corporation, a corporation organized
under the laws of the State of Ohio ("Xxxxxxxx"), Xxxxxxxxx
Xxxxxxxx Carbons Limited, a corporation organized under the laws of
England and Wales ("Carbons") and Sutcliffe Croftshaw Limited, a
corporation organized under the laws of England and Wales
("Croftshaw," and together with Xxxxxxxx and Carbons, and each
subsidiary thereto, referred to hereinafter as the "Project Buckeye
Corporations").
B. The Project Buckeye Corporations together with the separate
business of selling certain products under the "Protect" brand as
carried on by Xxxxxx Banner Ltd which is subject to a separate
business transfer agreement in the agreed form to be entered into
at Closing ("the Business Transfer Agreement") comprise the entire
activated carbon and environmental business of Seller.
C. On the terms and subject to the conditions of this Agreement, and
subject to the performance by the parties of their respective
obligations under this Agreement, Seller desires to sell, and US
Purchaser desires to purchase, all of the issued and outstanding
shares of capital stock of Xxxxxxxx (the "US Shares"), and Seller
desires to sell, and UK Purchaser desires to purchase, all the
issued and outstanding shares of capital stock of Carbons and
Croftshaw (the "UK Shares", and together with the US Shares,
collectively referred to herein as the "Seller's Shares") at the
Closing (as defined in Article VI of this Agreement) for the
purchase price described in Article I of this Agreement.
NOW, THEREFORE, US Purchaser, UK Purchaser and Seller, intending to be legally
bound, agree as follows:
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ARTICLE I
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PURCHASE PRICE OF SHARES; MANNER OF PAYMENT
-------------------------------------------
1.1 PURCHASE PRICE OF THE SHARES. On the terms and subject
to the conditions of this Agreement, Seller shall, with
full title guarantee transfer to Purchasers at the
Closing all the Seller's Shares (as defined in Section
3.3), free and clear of all liens, charges, security
interests, adverse claims, pledges, encumbrances and
demands whatsoever (save for any taxes payable by
Purchasers on such transfer). Purchasers shall purchase
all the Seller's Shares for an aggregate purchase price
of $34,646,240 (the "Purchase Price"). The Purchase
Price represents the following consideration for the
shares in each of Xxxxxxxx, Croftshaw and Carbons:
Xxxxxxxx $21,606,240
Croftshaw $652,000
Carbons $12,388,000
Any profits made by the Project Buckeye Corporations
from the date hereof shall not be distributed by them
and thereby shall accrue for the benefit of Purchasers.
1.2 MANNER OF PAYMENT. The Purchase Price, less Two Hundred
Thousand Dollars ($200,000) previously paid as a
non-refundable deposit, will be paid at Closing as
follows:
(a) By wire transfer, to an account or accounts
designated by Seller at least five days
prior to the Closing, of $32,446,240 ; and
(b) By delivery, by certified or official bank
check or wire transfer, of Two Million
Dollars ($2,000,000) to the bank account in
the name of the escrow agents appointed
under the escrow agreement in the form
attached hereto as EXHIBIT A (the "Escrow
Agreement").
ARTICLE II
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CONDITION
---------
2.1 This Agreement is in all respects conditional upon the approval of
the disposal by the shareholders of Seller (the "Seller's
Shareholders") in general meeting (the "Condition")
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2.2 If the Condition has not been fulfilled or waived by
30th June 1998 or such later date as may be agreed in
writing by the parties neither Seller nor Purchaser
shall be obliged to complete the sale and purchase of
the Seller's Shares hereunder and none of the parties
shall have any further rights or obligations under this
Agreement and no claim shall lie hereunder or otherwise
in respect of the transaction hereby contemplated save
in respect of any claim that may be made as a result of
the Termination Agreement.
ARTICLE III
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WARRANTIES OF SELLER
--------------------
Seller warrants to Purchasers as follows:
3.1 ORGANIZATION AND STANDING. Seller and each of the Project Buckeye
Corporations (Seller and each Project Buckeye Corporation being
referred to hereinafter individually as a "Corporation" and
collectively as the "Corporations") and each subsidiary of any
Project Buckeye Corporation (each a "Subsidiary" and collectively
"Subsidiaries" and each Subsidiary incorporated in the US a "US
Subsidiary" and each Subsidiary incorporated in England and Wales a
"UK Subsidiary") is a corporation duly organized, and validly
existing under the laws of its jurisdiction of organization, which
jurisdictions are referred to in the Disclosure Letter. Each
Project Buckeye Corporation and each Subsidiary has full corporate
power and authority to carry on its business as and where now
conducted and to own or lease and operate its properties at and
where now owned or leased and operated by it, and Xxxxxxxx and each
US Subsidiary is duly qualified to do business and is duly
qualified or licensed and in good standing in every jurisdiction in
the United States of America in which the property owned, leased or
operated by it, or the nature of the business conducted by it,
makes such qualification necessary. All jurisdictions in which
Xxxxxxxx and each U.S Subsidiary is so qualified are set forth in
the Disclosure Letter.
3.2 CAPITAL STOCK. The authorized share capital of each of
the Project Buckeye Corporations is set out in the
Disclosure Letter. All of the outstanding shares of the
Project Buckeye Corporations and the Subsidiaries are
duly authorized, validly issued, and fully paid, and
with respect to Xxxxxxxx and each US Subsidiary are
non-assessable and were not issued in violation of
preemptive or any other rights of any person. The term
"person" means any individual, entity or organization
of any nature.
3.3 TITLE TO SHARES; INVESTMENTS OF THE CORPORATIONS.
Seller owns all of the Seller's Shares and the Project
Buckeye Corporations own all the capital stock of each
Subsidiary beneficially, and free and clear of all
liens, charges, security interests, adverse claims,
pledges, encumbrances and demand whatsoever. Except for
the Subsidiaries, which are set forth in the Disclosure
Letter none of the Project Buckeye Corporations nor any
of the
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Subsidiaries has any direct or indirect equity, debt or
other interest in any person, or any right, warrant or
option to acquire any such interest.
3.4 OUTSTANDING OPTIONS AND WARRANTS. There are no
subscription rights, options, warrants, rights, puts,
calls, commitments or agreements (respecting issuance,
redemption, repurchase, voting or otherwise) relating
to, nor any outstanding securities convertible into,
any shares of capital stock or other equity interest in
any of the Project Buckeye Corporations or any of the
Subsidiaries, or into any such convertible securities,
and neither Seller nor any of the Project Buckeye
Corporations nor any of the Subsidiaries have agreed to
issue, purchase, sell or transfer any of same, except
as provided in this Agreement.
3.5 AUTHORITY; CONFLICTS; CONSENTS.
(a) Seller's execution of this Agreement the
Termination Agreement and all other
agreements to be entered into by Seller at
or prior to Closing as contemplated by this
Agreement (the "Ancillary Agreements") have
been duly authorized and approved by its
Board of Directors, and at the Closing and
save for satisfaction of the Condition (set
out in Section 2.1), no further corporate
action will be necessary to make this
Agreement or any Ancillary Agreement valid
and binding on Seller. Subject to approval
of Seller's Shareholders, the execution,
delivery and consummation of this
Agreement, the Termination Agreement and
the Ancillary Agreements by Seller (i) does
not now and will not, with the passage of
time, the giving of notice or otherwise,
result in a violation or breach of, or
constitute a default under, any term or
provision of any indenture, mortgage, deed
of trust, lease, instrument, order,
judgment, decree, rule, regulation, law,
contract, agreement or any other
restriction to which any of the
Corporations or the Subsidiaries is a party
or to which any of them or any of their
respective assets are subject or bound at
Closing, (ii) will not result in the
creation of any lien or other charge upon
any assets of any of the Corporations or
the Subsidiaries, and (iii) will not result
in any acceleration or termination of any
loan or security interest agreement to
which any of the Corporations or the
Subsidiaries is a party or to which any of
them or any of their respective assets are
subject or bound.
(b) Except for filings, permits,
authorizations, consents and approvals as
may be required under, and other
appropriate requirements of the "HSR Act",
and for the approval by Seller's
Shareholders, no approval or consent of any
person, firm or other entity or
governmental body is or was required to be
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obtained by any of the Corporations or
Subsidiaries for the authorization of this
Agreement, the Termination Agreement or the
Ancillary Agreements or the consummation of
the transactions contemplated by this
Agreement, the Termination Agreement or the
Ancillary Agreements. Subject to approval
of the Seller's Shareholders, Seller is
authorized to consummate the transactions
contemplated hereby and upon the execution
hereof, this Agreement will constitute the
legal, valid and binding obligation of
Seller enforceable against Seller in
accordance with its terms.
3.6 FINANCIAL STATEMENTS. Prior to the date hereof, Seller
has provided US Purchaser with the following audited
accounts of each of Xxxxxxxx, Croftshaw Carbons
Lakeland processing Limited ("Lakeland") and Speakmanco
5 Limited ("Speakmanco") ("Financial Statements"):
Balance Sheets and Profit and Loss Accounts at and for
each of the fiscal years ended March 31, 1998, 1997 and
1996, together with the audit reports of Seller's
independent auditors and directors report thereon. The
Financial Statements (i) have been prepared in
accordance with generally accepted accounting
principles as applied in the United Kingdom ("UK GAAP")
in the case of Croftshaw Carbons Lakeland and
Speakmanco and as applied in the United States ("US
GAAP") in the case of Xxxxxxxx applied on a consistent
basis during such periods therein specified; (ii)
comply in the case of Croftshaw Carbons Lakeland and
Speakmanco with the provisions of the Companies Act
1985 (a UK statute) and all other relevant statutes;
(iii) make appropriate provision or reserve for all
actual liabilities; (iv) make appropriate provision for
or specifically note, in accordance with UK GAAP or
USGAAP (as relevant), all capital commitments and
contingent liabilities; (v) make appropriate provision
for all bad and doubtful debts; (vi) show a true and
fair view of the state of affairs of each of Xxxxxxxx,
Croftshaw Carbons Lakeland and Speakmanco as at the end
of the financial year to which they relate and of the
profits or losses of each of Xxxxxxxx, Croftshaw
Carbons Lakeland and Speakmanco for the accounting
period ended on those dates; and (vii) fairly present
the financial position, and cash flows at and for the
periods therein specified. The Financial Statements
include any notes and schedules thereto. Seller has
also provided Purchaser with an aggregated statement in
respect of the Profit and Loss accounts and Balance
Sheets of the Project Buckeye Corporations and Lakeland
at and for the fiscal years ending 31 March , 1996,
1997 and 1998 (the "Aggregated Statements") which
fairly presents the aggregated results of the Project
Buckeye Corporations for those years and the aggregated
balance sheet as at those dates.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the
extent included in the March 31, 1998 balance sheet
(and/or the notes thereon) of the Financial Statements,
so far as Seller is aware none of the Project Buckeye
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Corporations or the Subsidiaries is obligated for, nor
are any of their respective assets or properties
subject to, any material liabilities or material
adverse claims or obligations, absolute or contingent,
except those incurred in the ordinary course of
business since March 31, 1998, and so far as Seller is
aware none of the Project Buckeye Corporations nor any
Subsidiary is in default with respect to any terms or
conditions of any material liability or obligation or
any Subsidiaries. The outstanding indebtedness of the
Project Buckeye Corporations and the Subsidiaries on
the Closing Date in respect of borrowings and the
deferred consideration payable to the Vendors of the
business of Sorb Tech Inc less all cash at bank and in
hand of Carbons, Croftshaw and Lakeland, taken
together, will not exceed Eight Hundred and Seventy
Five Thousand Dollars ($875,000). Charges allocated by
Seller to the Project Buckeye Corporations and the
Subsidiaries in connection with the transactions
contemplated hereby, taken together, will not exceed
Fifty Thousand Dollars ($50,000) in aggregate on the
Closing Date.
3.8 ABSENCE OF CERTAIN CHANGES. Since March 31, 1998, the
Project Buckeye Corporations' businesses (including the
Subsidiaries) have been conducted in the ordinary
course. Since such date, there has not been any
material adverse change in the business, assets, or
liabilities of any Project Buckeye Corporation or any
Subsidiary. Since March 31, 1998, there has not been:
(a) apart from the general annual increase
granted as at 1 April 1998 that is
described in the Disclosure Letter no
increase has been made or promised in the
compensation or other remuneration payable
(including benefits payable to employees)
or to become payable to any of the
employees, agents or partners involved with
the Project Buckeye Corporations or the
Subsidiaries;
(b) any mortgage or pledge of, or any other
lien, charge or encumbrance of any kind
created in respect of any of the assets,
tangible or intangible, included in the
Project Buckeye Corporations and the
Subsidiaries other than in the ordinary
course of business;
(c) any sale or transfer of any assets, except
for sales of inventory in the ordinary
course of business, or settlement,
cancellation or release of any indebtedness
owing to any of the Project Buckeye
Corporations or any Subsidiary;
(d) any sale, license, assignment or transfer
by the Project Buckeye Corporations or any
Subsidiary of any patents, trademarks,
trade names or other similar intangible
assets;
(e) so far as Seller is aware any amendments or
termination of any material contract,
agreement or license to which any of the
Project Buckeye Corporations or any
Subsidiary is a party or to which the
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Project Buckeye Corporations or the
Subsidiaries or any of their respective
assets are subject or bound;
(f) any commitment made (through negotiations
or otherwise) or any liability incurred to
any labour organization by any of the
Project Buckeye Corporations or any
Subsidiary;
(g) any payment, declaration or setting aside
by any of the Project Buckeye Corporations
of dividends or a return of capital or any
distribution by any of the Project Buckeye
Corporations of any cash or other assets in
redemption of or as the purchase price for
any capital stock or equity or in discharge
or cancellation in whole or in part of any
indebtedness owing (whether in payment of
principal, interest or otherwise) to Seller
and (other than any Project Buckeye
Corporation) any affiliate of Seller;
(h) any discharge or satisfaction by any of the
Project Buckeye Corporations or any
Subsidiary of any lien, encumbrance,
obligation or liability (accrued, absolute,
fixed or contingent), other than those that
have been discharged or satisfied in the
ordinary course without acceleration and
other than those incurred and discharged in
the ordinary course of business;
(i) any institution by any of the Project
Buckeye Corporations or any Subsidiary of a
bonus, stock option, profit-sharing,
pension plan or similar arrangement or any
changes in any such existing plans;
(j) so far as Seller is aware any incurrence by
any of the Project Buckeye Corporations or
any Subsidiary (whether discharged or not)
of any obligation or liability (whether
accrued, absolute, fixed or contingent)
other than current liabilities incurred,
and obligations entered into, in the
ordinary course of business consistent with
past practice; and
(k) so far as Seller is aware any material
loss, damage or destruction to any of the
Project Buckeye Corporations' or any of the
Subsidiaries' properties (whether or not
covered by insurance) or any dispute with
employees;
3.9 BUSINESS RELATIONS. None of the Project Buckeye
Corporations nor any Subsidiary is required, in the
ordinary course of business, to provide any bonding or
any other financial security arrangements in connection
with any transactions with any customers or suppliers.
None of the Corporations or any Subsidiary has received
any notice of any disruption (including, without
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limitation, delayed deliveries or allocations by
suppliers) in the availability of any materials or
products used in any of the Project Buckeye
Corporations' or Subsidiaries' businesses and have no
reason to believe that any such disruption will occur.
There are no sole source suppliers of goods, equipment
or services used by any of the Project Buckeye
Corporations or any Subsidiaries (other than public
utilities) with respect to which practical alternative
sources of supply are unavailable. No single customer
of any of the Project Buckeye Corporations accounted
for greater than five percent (5%) of such Project
Buckeye Corporation's gross revenues for either the
most recently completed fiscal year.
3.10 REAL PROPERTY.
(a) The Disclosure Letter contains true details
of (i) all real property owned by any of
the Project Buckeye Corporations or any
Subsidiary (ii) all real property leases to
which any of the Project Buckeye
Corporations or any Subsidiary are parties
and (iii) all options, deeds of trust,
deeds of declaration, mortgages pursuant to
or in which any of the Project Buckeye
Corporations or any Subsidiary has any
interest (collectively, the "Real
Property"). Seller has delivered to
Purchasers: (a) a complete and correct copy
of each deed or other instrument which
provide evidence of Seller's title to or
interest in each property lease or other
interest comprising the Real Property; So
far as Seller is aware the written replies
to enquiries given to Edge and Xxxxxxx by
or on behalf of Seller relating to the Real
Property were when given and are now true
and correct.
(b) (i) None of the Corporations has
received written notice of a
breach of any laws and
ordinances, or of any
covenant, condition, easement
or restriction affecting the
Real Property or relating to
its use or occupancy.
(ii) With respect to the Real
Property in the United States
only:-
(a) none of the Corporations
has received notice of
improvements contemplated
to be made by any public
or private authority the
cost of which are to be
assessed as special taxes
or charges against the
Real Property in the
United States;
(b) none of the Corporations
has received any notice
which would result in the
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termination of access to
the Real Property in the
United States;
(c) none of the Corporations
has received any notice
with respect to boundary
or water drainage
disputes with the owners
of any premises adjoining
the Real Property in the
United States; and
(d) none of the Corporations
has received any notice
from the insurance
companies who issue the
current insurance
policies insuring the
Real Property in the
United States requiring
or recommending any
repairs to be done to the
Real Property in the
United States.
(c) With respect to the leased property
comprising the Real Property including all
leasehold improvements (collectively, the
"Leased Property"):
(i) all leases relating to Real
Property in the United Kingdom
are in the possession and are
under the control of the
Project Buckeye Corporations
and are in writing, and copies
of all leases have been
delivered to Purchaser or its
counsel;
(ii) the rental set forth in each
such lease is the actual
rental being paid, and there
are no separate agreements or
understandings with respect to
the same and the receipt for
the payment of rental due
immediately prior to the date
of this Agreement is
unqualified;
(iii) none of the Corporations has
received written notice that
there has been a default by
any of the Corporations or any
other party which affects the
Leased Property, and the
consummation of the
transactions contemplated by
this Agreement. No Corporation
will require the consent of
any other party to any lease
or agreement relating to the
Leased Property to the sale of
Seller's Shares to Purchasers
or the consummation of the
transactions contemplated by
this Agreement;
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(iv) there are no written or oral
contracts between such Project
Buckeye Corporation or any
Subsidiary and any third party
relating to any claim by such
third party of any right to
all or any part of the
interest of such Project
Buckeye Corporation or any
Subsidiary in any leasehold
estate or otherwise relating
to the use and occupancy by
such Project Buckeye
Corporation or Subsidiary of
such estate; and
(v) with respect to Leased
Property located in the United
Kingdom, no notices or
requests have been served or
received under Section 25 or
Section 26 of the Xxxxxxxx
Xxxxxx Xxx 0000.
(vi) With respect to the Leased
Property located in the United
States all security deposits
required by such leases have
been made and have not been
refunded or returned.
3.11 TITLE TO AND CONDITION OF ASSETS excluding the Real
Property. The Project Buckeye Corporations and
Subsidiaries own and possess all right, title and
interest in and to all the assets excluding the Real
Property used in the respective businesses of the
Project Buckeye Corporations and Subsidiaries, in each
case free and clear of all liens, charges, security
interests, adverse claims, encumbrances, encroachments,
reservations, limitations, servitudes and other title
defects or restrictions of any nature. All tangible
assets of each Project Buckeye Corporation and
Subsidiary are in such corporation's possession or
under its control, and all the assets set forth on
SCHEDULE 3.11 are in operating condition at the date
hereof.
3.12 TAXES.
(a) Xxxxxxxx and each of its Subsidiaries have
filed, and will file on a timely basis, all
Tax Returns (as defined in subsection (g)
below) required to be filed by them on or
before the Closing Date accurately
reflecting all Taxes (as defined in
subsection (g) below) owing to the United
States, or any other government or any
government subdivision, state or local, or
any other taxing authority, and have paid
in full or made adequate provision
(excluding any reserve for deferred Taxes
to reflect timing differences between book
and Tax income) in the Financial Statements
for the payment of all Taxes for which
Xxxxxxxx or any of its Subsidiaries has or
may have liability with respect to taxable
periods ending on or before the Closing
Date. All such Tax Returns are true,
correct and complete in all material
respects. Seller does not have knowledge of
any unassessed Tax
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deficiency proposed or threatened against
Xxxxxxxx or any of its Subsidiaries as a
result of the operation of their
businesses. There are no liens on the
assets of Xxxxxxxx or any of its
Subsidiaries as a result of any Tax
liabilities except for Taxes not yet due
and payable. There are, and after the date
of this Agreement, will be no Tax
deficiencies assessed against Xxxxxxxx or
any of its Subsidiaries pursuant to
Treasury Regulations Section 1.1502-6 or
any comparable state, local or foreign
statute or regulation with respect to
taxable periods or portions thereof ending
on or before the Closing Date. There are,
and after the date of this Agreement will
be, no Tax deficiencies of any kind
assessed against or relating to Xxxxxxxx or
any of its Subsidiaries which respect to
any taxable period ending on or before the
Closing Date. As to all Tax periods or
portions thereof, which end prior to, the
Closing Date for which no Tax Returns are
yet due, the liability of Xxxxxxxx and its
Subsidiaries for Taxes with respect to such
periods or portions thereof, does not
exceed the amount accrued for such
liability (rather than any reserve for
deferred Taxes to reflect timing
differences between book and Tax income) in
the Financial Statements as adjusted for
operations and transactions in the ordinary
course of business through the Closing Date
in accordance with the past practice and
custom of Xxxxxxxx and its Subsidiaries.
(b) Xxxxxxxx and its Subsidiaries have complied
in all material respects with all
applicable laws, rules and regulations
relating to the payment and withholding of
Taxes and has, within the time and the
manner prescribed by law, withheld and paid
over to the proper governmental
authorities, all amounts required to be so
withheld and paid over under applicable
laws;
(c) None of Xxxxxxxx or any of its Subsidiaries
is a party to any action, audit or
proceeding by any governmental or taxing
authority for the assessment or collection
of Taxes, nor has any such event been
asserted or threatened. None of Xxxxxxxx
nor any of its subsidiaries have filed any
consent of the type described under Section
341(f) of the Internal Revenue Code of
1986, as amended (the "Code"), nor is
Xxxxxxxx or any of its Subsidiaries subject
to any accumulated earnings penalties. None
of Xxxxxxxx or any of its Subsidiaries has
made any payments, or is obligated to make
any payments, or is a party to any
agreement that under certain circumstances
could oblige any of them to make any
payments that would not be deductible under
Section 280G of the Code. Neither Xxxxxxxx
nor any of its Subsidiaries is nor has been
since 1st January 1997 a member of
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any consolidated, combined or unitary group
that includes an entity other than Xxxxxxxx
or its Subsidiaries for federal, state,
local or foreign income, gross receipts or
franchise Tax purposes with respect to
which it could have liability under
Treasury Regulation Section 1.1502-6 or any
comparable state, local or foreign statute
or regulation, as a transferee or
successor, by contract or otherwise. None
of Xxxxxxxx or any of its Subsidiaries has
been a United States real property holding
corporation within the meaning of Section
897(c)(2) of the Code during the applicable
period specified in Section
897(c)(1)(A)(ii) of the Code.
(d) There are no outstanding agreements or
waivers extending the statutory period of
limitations applicable to any federal,
state, local, or foreign Tax Return of
Xxxxxxxx or any of its Subsidiaries for any
period. Except as set forth in the
Disclosure Letter neither the Internal
Revenue Service nor any state, local or
foreign taxing authority has audited any
Tax Return filed by Xxxxxxxx or any of its
Subsidiaries.
(e) The Disclosure Letter contains details of
all material tax elections made by Xxxxxxxx
or any of its Subsidiaries, all adjustments
under Section 481(a) of the Code which will
affect the taxes of either of Purchasers or
Xxxxxxxx or any of its Subsidiaries for all
taxable years which end on or after the
Closing Date and all tax rulings or closing
agreements to which Xxxxxxxx or any of its
Subsidiaries is a party. The Disclosure
Letter sets forth all jurisdictions in
which Xxxxxxxx or any of its Subsidiaries
has filed or will file state income or
franchise Tax Returns for each taxable
period, or portion thereof beginning after
December 31, 1992 and, ending on or before
the Closing Date.
(f) There are no Tax sharing agreements or
similar arrangements (whether written or
oral) in effect that includes Xxxxxxxx or
any of its Subsidiaries. None of Xxxxxxxx
or any of its Subsidiaries has any
liability to Seller or any of its
Subsidiaries or affiliates or, to Seller's
knowledge any other person with respect to
any previously terminated Tax sharing
agreement or similar agreement.
(g) For purposes of this Agreement, "Taxes"
shall mean any and all taxes, charges,
fees, levies or other assessments,
including, without limitation, income,
gross receipts, value added, excise, real
or personal property, sales, withholding,
social security, retirement, unemployment,
occupation, use, service, service use,
license, net worth, payroll, franchise,
transfer and recording
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taxes, fees and charges, imposed by the
Internal Revenue Service or any taxing
authority (whether domestic or foreign
including, without limitation, any state,
county, local or foreign government or any
subdivision or taxing agency thereof
(including a United States possession)),
whether computed on a separate,
consolidated, unitary, combined or any
other basis; and such term shall include
any interest, fines, penalties or
additional amounts attributable to, or
imposed upon, or with respect to, any such
taxes, charges, fees, levies or other
assessments. "Tax Return" shall mean any
report, return, document, declaration or
other information or filing required to be
supplied to any taxing authority or
jurisdiction (foreign or domestic) with
respect to Taxes, including, without
limitation, information returns, any
documents with respect to or accompanying
payments of estimated Taxes, or with
respect to or accompanying requests for the
extension of time in which to file any such
report, return, document, declaration or
other information.
3.13 INDEBTEDNESS TO OFFICERS, DIRECTORS AND SHAREHOLDERS.
No Project Buckeye Corporation or Subsidiary is
indebted to any of its shareholders, officers or
directors (or to members of their immediate families)
in any amount whatsoever other than for salaries
payable or for expenses incurred on behalf of such
corporation in the ordinary course of business.
3.14 ORGANIZATIONAL DOCUMENTS. True, accurate and complete
copies of the Articles or Certificate of Incorporation,
Memorandum and Articles of Association or Certificate
of Incorporation Upon Change of Name, as applicable,
and Bylaws or Regulations, as applicable, of each
Project Buckeye Corporation and each Subsidiary,
together with all amendments thereto in effect on the
date hereof, have been delivered to US Purchaser or its
counsel.
3.15 STATUTORY BOOKS. Seller has furnished or made available
to Purchaser and its counsel the statutory books of
each Project Buckeye Corporation and each Subsidiary
and the same are accurate and reflect all resolutions
adopted and all actions taken, authorized or ratified
by the shareholders and directors of such Project
Buckeye Corporation and Subsidiary.
3.16 BROKERAGE AND FINDER'S FEES. Except for Xxxx Xxxxxxxx,
to whom Seller expects to pay up to One Hundred
Thousand Dollars ($100,000), none of Seller, any
Project Buckeye Corporation, any Subsidiary or any
affiliate, officer, director or agent of such
Corporation has incurred any liability to any broker,
finder or agent for any brokerage fees, finder's fees,
or commissions with respect to the transactions
contemplated by this Agreement.
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3.17 ACCOUNTS RECEIVABLE. Seller has previously delivered
to US Purchaser an aging schedule as of 30 April 1998,
which is true, correct and complete as at the close of
business on the date to which it is drawn, of the
accounts receivables, both trade and non-trade, of
each Project Buckeye Corporation and each Subsidiary
as of that date. In the opinion of the directors and
officers of each of the Buckeye Corporations the
Financial Statements contain appropriate provisions
for bad and doubtful debts.
3.18 EMPLOYMENT MATTERS.
(a) No Project Buckeye Corporation or
Subsidiary is a party to, participant in,
or bound by, any recognition agreement with
a trade union or any collective bargaining
agreement.
(b) The employment by Xxxxxxxx of any person
(whether or not there is a written
employment agreement) may be terminated for
any reason whatsoever not inconsistent with
current law, without penalty or liability
of any kind other than accrued vacation
pay.
(c) There are no active, pending or threatened
administrative or judicial proceedings
under Title VII of the Civil Rights Act of
1964, the Age Discrimination in Employment
Act, the Fair Labour Standards Act, the
Occupational Safety and Health Act, the
National Labour Relations Act and there is
not at present a claim by any employee of
Carbons and/or Croftshaw or any UK
Subsidiary arising out of their employment
or termination of their employment for
compensation for loss of office or
employment or otherwise whether under the
Employment Rights Xxx 0000, Equal Pay Xxx
0000, Sex Discrimination Xxx 0000, Sex
Discrimination Xxx 0000, Race Relations Xxx
0000, Disability Discrimination Xxx 0000
Trade Union and Labour Relations
(Consolidation) Act of 1992, Transfer of
Undertakings (Protection of Employment)
Regulation of 1981 or any other Act or
European Treaty or Directive, and so far as
Seller is aware no employee of any Project
Buckeye Corporation or any Subsidiary has
had their contract terminated in the six
(6) months preceding the date of this
Agreement in circumstances likely to lead
to a claim in relation to which the
relevant Project Buckeye Corporation or
Subsidiary will be likely to have to make a
payment to such employee and none of the
Project Buckeye Corporations or
Subsidiaries has knowledge of any such
pending or threatened claim.
(d) None of the Project Buckeye Corporations
nor any Subsidiary is involved in any
dispute with any of its officers
or employees and so far as Seller is aware
there are no circumstances which may
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result in any dispute involving any of the
officers or employees of the Project
Buckeye Corporations or Subsidiaries nor
have there been any such disputes during
the last six months.
(e) Save as set out in the Disclosure Letter
there is not in existence any contract of
employment with any director or employee of
any of the Project Buckeye Corporations or
Subsidiaries which cannot be terminated by
giving 3 months' notice or less without
giving rise to a claim for damages or
compensation (other than a statutory
redundancy payment or statutory
compensation for unfair dismissal).
3.19 NO DEFAULTS. So far as Seller is aware none of the
Project Buckeye Corporations or Subsidiaries is in
material default (nor so far as the Seller is aware is
any such material default alleged to exist) under terms
of any material written or oral contract, agreement,
lease, license, mortgage, deed of trust, note,
guaranty, instrument or understanding (collectively,
"Contracts") to which it is a party or to which any of
its assets, business or operations is subject, nor so
far as Seller is aware is any condition or event
threatened, which, after notice or the passage of time,
or both, would constitute a material default under any
Contract. To Seller's knowledge, no such material
default, condition or event exists or is alleged to
exist with respect to the performance of any obligation
of any other party to any of such Contracts.
3.20 MATERIAL CONTRACTS.
(a) The Disclosure Letter contains a copy or a
written summary of each Contract (a true
and correct copy of which having been
provided to US Purchaser) to which any
Project Buckeye Corporation or any
Subsidiary is a party or by which any of
its assets, businesses or operations is
bound or affected excluding any Contract
that (i) may be cancelled by such Project
Buckeye Corporation or Subsidiary party
thereto on thirty (30) days' notice or less
without incurring a liability or obligation
on the part of such Project Buckeye
Corporation or Subsidiary for such
cancellation that is not material to the
business, operations or condition
(financial or otherwise) of such Project
Buckeye Corporation or Subsidiary, or (ii)
involves or is reasonably expected to
involve the payment of consideration having
an aggregate value of less than One Hundred
Thousand Pounds ((pound)100,000).
(b) The Disclosure Letter contains a copy or a
written summary of each Contract (a true
and correct copy of which having been
provided to US Purchaser) with a customer
of any Project
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Buckeye Corporation or Subsidiary that
contains provisions (i) providing for
payment terms to such Corporation or
Subsidiary of forty-five (45) days or
greater, (ii) permitting the customer to
retain any portion of the purchase price
for the products or services to be provided
thereby as security for warranty claims or
for any other purpose, (iii) providing for
liquidated or stipulated damages, or (iv)
providing bonding or similar requirements.
3.21 PURCHASE ORDERS. The Disclosure Letter contains a true
and complete list as of March 31, 1998 of all purchase
orders under which any Project Buckeye Corporation or
Subsidiary is or will become obligated to pay any
particular vendor an aggregate sum in excess of Fifty
Thousand Dollars ($50,000).
3.22 The Disclosure Letter contains details of all
administrative or judicial proceedings to which any
Project Buckeye Corporation or Subsidiary was a party
at any time within the past two (2) years, is a party
or, to the knowledge of Seller, to which any Project
Buckeye Corporation or Subsidiary is threatened to be
made a party, which relate, directly or indirectly, to
the Project Buckeye Corporations or Subsidiaries or any
of the Project Buckeye Corporations' or Subsidiaries'
assets, including, without limitation, proceedings that
could affect title to or interests in the assets. There
is no action, suit, claim, demand, arbitration or other
proceeding or investigation, administrative or
judicial, in respect of which written notice has been
received by the Project Buckeye Corporations or the
Subsidiaries or, to the knowledge of Seller, threatened
against or affecting the Project Buckeye Corporations
or Subsidiaries or any of their assets, including,
without limitation, any relating to so-called product
liability, which, if adversely determined or resolved,
would have a material adverse effect on the business or
assets of any of the Project Buckeye corporations or
Subsidiaries, or any provisions of, or the validity of,
or rights under, any leases or other operating
agreements, licenses, permits or grants of authority of
any of the Project Buckeye Corporations or
Subsidiaries. None of the Project Buckeye Corporations
or Subsidiaries has received notice that any Project
Buckeye Corporation or Subsidiary is the subject of any
governmental investigation and so far as Seller is
aware none of such corporations or Subsidiaries has
received notice that it is subject to, nor is it or has
it been in default with respect to, any order, writ,
injunction or decree of any court, or of any federal,
state, local or other governmental department,
commission, board, bureau, agency or instrumentality,
United States, United Kingdom or otherwise excluding
matters of general application not specific only to the
Project Buckeye Corporations and Subsidiaries.
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3.23 INSURANCE. The Disclosure Letter contains details of
all the policies of insurance covering the business,
properties and assets of the Project Buckeye
Corporations and Subsidiaries presently in force
(including as to each (i) risk insured against, (ii)
name of carrier, (iii) policy number, (iv) amount of
coverage, (v) amount of premium, (vi) expiration date
and (vii) the property, if any, insured), indicating as
to each whether it insures on an "occurrence" or a
"claims made" basis. All of the insurance policies
listed in the Disclosure Letter are in full force and
effect and all premiums, retention amounts and other
related expenses due have been paid, and none of the
Project Buckeye Corporations or Subsidiaries has
received any written notice of cancellations with
respect to any of the policies. None of the Project
Buckeye Corporations or Subsidiaries has been refused
any insurance by any insurance carrier to which it has
applied for insurance during the last two (2) years. So
far as Seller is aware there are no circumstances
existing that would enable any insurer to avoid
liability under any of the Project Buckeye
Corporations' or Subsidiaries' policies.
3.24 TRANSACTIONS WITH OFFICERS, ETC.
(a) Save in respect of arrangements
contemplated by this Agreement and the
Ancillary Agreements no Project Buckeye
Corporation nor Subsidiary has any interest
in any entity that has any current
contractual relationship, oral or written,
or other business relationship with any of
the Corporations or the Subsidiaries.
(b) The Disclosure Letter contains a true and
correct list of all Contracts to which any
Project Buckeye Corporation or Subsidiary
is a party and to which any of the
officers, directors or shareholders of any
Project Buckeye Corporation or Subsidiary,
or members of their immediate families or
other corporations, partnerships or other
entities in which any of them has a
material interest, is also a party. The
Disclosure Letter includes a list of
indebtedness of any such person or entity
to any Project Buckeye Corporation or
Subsidiary.
(c) None of the Project Buckeye Corporations or
Subsidiaries nor any officer, director or
shareholder of the Project Buckeye
Corporations or Subsidiaries, nor members
of their immediate families or other
corporations, partnerships or other
entities in which any of them has a
material interest, has so far as Seller is
aware any direct or indirect interest in
any competitor, supplier or customer of a
Project Buckeye Corporation or Subsidiary
or in any person, firm or entity from whom
or to whom a Project Buckeye Corporation or
Subsidiary leases any property, or in any
other person, firm or entity with whom a
Project Buckeye Corporation or Subsidiary
transacts business of any nature.
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3.25 EMPLOYEES. The Disclosure Letter contains a true and
correct list of all employees of each Project Buckeye
Corporation and Subsidiary (save that in respect of
Xxxxxxxx and the US Subsidiaries only employees with an
annual salary in excess of $50,000 are listed), their
age, the nature of their duties and the date and
average amount of their last increase in compensation.
Full particulars of the terms and conditions of
employment including all entitlements to benefits and
bonuses of all the officers or employees of each
Project Buckeye Corporation and Subsidiary are set out
in the Disclosure Letter. Copies of the contracts of
employment of the officers and directors of each
Project Buckeye Corporation and Subsidiary are included
in the Disclosure Letter. The Disclosure Letter also
sets forth the names of any persons who have or may
have a right to return to employment with a Project
Buckeye Corporation or Subsidiary, and the names of
persons who have been offered employment with a Project
Buckeye Corporation or Subsidiary.
3.26 TRADE MARKS, COPYRIGHTS AND SIMILAR MATTERS.
(a) During the last two (2) years none of the
Project Buckeye Corporations or
Subsidiaries has been charged with
infringement or violation of any patents,
trade marks, service marks, know-how,
registered designs, design rights, rights
in confidential information, business or
trade names or copyright (the "IPR"). So
far as Seller is aware none of the Project
Buckeye Corporations or Subsidiaries is
using or has in any way made use of any
patentable or unpatentable invention, or
any confidential information or trade
secret, of any former employer of any
present or past employee of such
corporation. Accurate details of all
applications or registrations relating to
IPR owned by the Project Buckeye
Corporations or Subsidiaries are set forth
in the Disclosure Letter and are valid and
subsisting and, to the extent indicated,
have been duly registered in, filed in or
issued by the patent office of the United
Kingdom or United States or other
corresponding governmental agency or
office. Complete copies of the terms of all
licences of IPR not owned by the Project
Buckeye Corporations or Subsidiaries and
used in their respective businesses, or
owned by the Project Buckeye Corporations
or Subsidiaries and licensed to third
parties, are listed in the Disclosure
Letter. So far as Seller is aware the
Project Buckeye Corporations and
Subsidiaries are the sole and exclusive
owners or valid licensees of each of the
IPR used in the respective businesses of
each of the Project Buckeye Corporations
and the Subsidiaries. Neither the Project
Buckeye Corporations nor the Subsidiaries
use any of the IPR owned by, or used in the
respective businesses of, the Project
Buckeye Corporations or Subsidiaries, by
consent of any other party and
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the same are free and clear of any
attachments, liens, claims, encumbrances or
agreements (including licenses,
sub-licenses and options), and none of the
Project Buckeye Corporations or
Subsidiaries is obliged to grant any
attachments, liens, encumbrances or
agreement in respect of such IPR.
(b) All information (whether or not
confidential) including, without
limitation, all information relating to the
marketing of any new products or services,
and all know-how and technical information,
including, without limitation, that
relating to design, manufacture, storage,
distribution, sale and supply of goods and
services, and all financial information,
relating to the Project Buckeye
Corporations or Subsidiaries or their
businesses ("Business Information") owned
by the Project Buckeye Corporations and
Subsidiaries or otherwise used in their
businesses is in the possession of the
Project Buckeye Corporations or the
Subsidiaries, and none of the Project
Buckeye Corporations or the Subsidiaries is
party to any confidentiality other
agreements or subject to any duty which
restricts the free use or disclosure of any
such Business Information. Save on receipt
of a confidentiality undertaking none of
the Project Buckeye Corporations or
Subsidiaries has in the last three (3)
years disclosed any confidential Business
Information in their possession to any
person to whom it is not obligated to do
so. So far as Seller is aware none of the
Project Buckeye Corporations or
Subsidiaries are in breach of (i) any
license, sub-license, option, charge or
assignment granted to or by them in respect
of any IPR owned by the Project Buckeye
Corporations or Subsidiary or otherwise
used in their businesses, or (ii) any
agreement pursuant to which any Business
Information was or is to be made available
to such Project Buckeye Corporation or
Subsidiary or party, and the transactions
contemplated by this Agreement will not
result in any such breach or otherwise
result or any such agreement being subject
to termination.
(c) The processes and methods employed, the
services provided, the businesses conducted
and the products manufactured, used or
dealt in by the Project Buckeye
Corporations and the Subsidiaries within
the last three (3) years do not infringe
and during that period have not infringed
upon the rights any other person or entity
has in any IPR or Business Information. So
far as Seller is aware there is no
unauthorized use or infringement by any
person of any of the IPR or confidential
Business Information owned by the Project
Buckeye Corporations or Subsidiaries or
used in their businesses, nor has any such
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unauthorized use or infringement occurred
during the three (3) year period prior to
this Agreement.
(d) So far as Seller is aware there are no
claims or demands of any other person, firm
or corporation pertaining to any of the IPR
owned by the Project Buckeye Corporations
or Subsidiaries or used in their respective
businesses. No notice has been received
that any proceedings have been instituted,
or are pending and so far as Seller is
aware no such proceedings have been
initiated in writing which may challenge
the right of the Project Buckeye
Corporations or Subsidiaries in respect of
any of the IPR owned by, or used in the
respective businesses of, the Project
Buckeye Corporations or Subsidiaries. None
of the IPR owned by, or used in the
respective businesses of, the Project
Buckeye Corporations or Subsidiaries, is
subject to any outstanding order, decree,
judgment or agreement restricting the scope
of its use.
(e) So far as Seller is aware each Project
Buckeye Corporation and each Subsidiary has
valid and sufficient rights to use its
corporate and any trading names and Seller
has not received written notice contesting
any such right. None of the Project Buckeye
Corporations or Subsidiaries uses such name
by consent of any other person or entity,
and so far as Seller is aware each Project
Buckeye Corporation and Subsidiary uses
such name free and clear of any
attachments, liens, claims or encumbrances.
There are no claims or demands of any other
person or entity known to Seller pertaining
to the use of such names and no proceedings
have been instituted or, to the knowledge
of Seller, are threatened or suspected
which may challenge the right of such
Project Buckeye Corporation or Subsidiary
in respect of such name; and the use of
such name by such Project Buckeye
Corporation or Subsidiary does not and will
not infringe on or, to the knowledge of
Seller, is not being infringed on by
others, and is not subject to any
outstanding order, decree, judgment,
stipulation or agreement restricting the
scope of its use.
(f) So far as Seller is aware the IPR owned by,
or used in the respective businesses of,
the Project Buckeye Corporations and
Subsidiaries comprise all the intellectual
property necessary to conduct the business
of each Project Buckeye Corporation and
Subsidiary as such business has been
conducted for the twelve (12) month period
prior to the date of this Agreement.
(g) True, correct and complete copies of all
patents, trade marks, service marks, trade
names, registered designs, design rights,
copyrights, and of all related applications
or registrations, that
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are listed in the Disclosure Letter have
been delivered to US Purchaser or its
counsel.
3.27 EMPLOYEE BENEFIT PLANS AND OTHER PLANS. This Section
3.27 applies only in respect of employee benefit Plans
(defined below) and other Plans subject to United
States state and federal laws.
(a) Except for the plans, policies or
arrangements set out in the Disclosure
Letter, which includes all plans, policies
and arrangements maintained by a Controlled
Group member in the past or present
(hereinafter referred collectively to as
the "Plans" and individually as a "Plan"),
no member of the Controlled Group (as
defined below), directly or indirectly,
maintains, sponsors or has any obligation
or liability with respect to any "employee
benefit plan," as defined in Section 3(3)
of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), any
fringe benefit plan, any equity
compensation plan or arrangement, any plan,
policy or arrangement for the provision of
executive compensation, incentive benefits,
bonuses or severance benefits, any deferred
compensation agreement or cafeteria plan or
split-dollar insurance arrangement. For the
purposes of this Agreement, "Controlled
Group" shall mean Seller, any Project
Buckeye Corporation, and any person, entity
or trade or business, whether or not
incorporated, which is required to be
aggregated with Seller and/or any Project
Buckeye Corporation under Section 414(b),
(c), (m) or (o) of the Code.
(b) The following applies in respect of Plans
subject to Title IV of ERISA ("Title IV
Plans")
(i) No Title IV Plan is a part of
a "multiple employer welfare
arrangement" within the
meaning of Section 3(40) of
ERISA, and no Title IV Plan is
a "multiemployer plan" within
the meaning of Section
4001(a)(3) of ERISA or Section
414(f) of the Code or a
multiemployer plan described
in clauses (i) and (ii) of
Section 3(37)(A) of ERISA.
(ii) No Title IV Plan has an
"accumulated funding
deficiency," as defined in
ERISA Section 302(a)(2) or
Code Section 412, whether or
not waived.
(iii) No "reportable event," within
the meaning of ERISA Section
4043(b), has occurred with
respect to any Title IV Plan
21
29
(iv) No notice of intent to
terminate any Title IV Plan
has been filed with the
Pension Benefit Guaranty
Corporation ("PBGC") under
ERISA Section 4041, nor has
the PBGC instituted or, to the
knowledge of Seller,
threatened to institute any
proceedings under ERISA
Section 4042 to terminate any
Title IV Plan.
(v) There has been no complete or
partial termination of any
Title IV Plan within the
meaning of Code Section
411(d)(3).
(vi) PBGC premiums have been paid
and required forms have been
filed as required by ERISA
Sections 4006 and 4007, in all
material respects.
(vii) With respect to each Title IV
Plan that is required to be
funded under ERISA, the
Disclosure Letter sets forth
the present value of accrued
benefits under each Title IV
Plan as of the end of the Plan
Year most recently ended, the
value of the assets funding
each Title IV Plan as of the
most recent date for which
information is available, the
actuarial assumptions used in
computing the present value of
accrued benefits for each such
Title IV Plan, and the
actuarial assumptions
presently used in determining
amounts to be contributed to
it.
(viii) No transaction has been
engaged ion with respect to
any Plan that could be subject
to Sections 4069 or 4212(c) of
ERISA.
(c) With respect to each Plan identified in the
Disclosure Letter:
(i) the Plan, each Controlled
Group member, each employee of
any Controlled Group member
and, to the knowledge of
Seller, the other fiduciaries
and administrators of the Plan
have at all times complied in
all material respects with
applicable requirements of law
(including, without
limitation, the Code and
ERISA) that relate to the Plan
and, with respect to the Plan
and there are no ongoing
audits or investigations by
any governmental agency. There
are no actions, suits or
claims (other than routine
claims for benefits) pending
or to the knowledge of the
Seller threatened against the
Plan, the assets of the Plan,
a Controlled Group member, any
employee, officer or director
of
22
30
a Controlled Group member or,
to the knowledge of Seller,
against any other trustee,
fiduciary or administrator of
the Plan;
(ii) if the Plan provides health,
accident or medical benefits,
(A) the Plan sponsor and
administrator have complied in
all material respects with the
requirements of Part 6 of
Subtitle B of Title I of ERISA
and Section 4980B of the Code
(herein collectively referred
to as "COBRA") and (B) the
Plan does not provide for
non-terminable or
non-alterable health,
accident, medical or life
benefits for employees, former
employees, dependents,
beneficiaries or retirees,
except as otherwise required
by COBRA, and then only to the
extent the person pays the
"applicable premium" (as
defined in Section 4980B(f)(4)
of the Code) for such
coverage, or otherwise pays
the full cost of such
coverage;
(iii) full payment has been made of
all amounts which a Controlled
Group member is required,
under applicable law or under
the Plan, to have paid as a
contribution or a benefit.
Except as stated in the
Disclosure Letter the
liability of each Controlled
Group Member with respect to
each Plan has been
sufficiently funded on the
basis of the actuarial
assumptions contained in the
last valuation report dated 1
January 1997 or has been fully
reserved for on its financial
statements. No changes have
occurred or are expected to
occur that would cause a
material increase in the cost
of providing benefits under
the Plan;
(iv) the consummation of the
transactions contemplated by
this Agreement will not (A)
entitle any current or former
employee or officer of the
Corporation to severance pay,
unemployment compensation or
any other similar payment, (B)
accelerate the time of payment
or vesting under the Plan, (C)
increase the amount of
compensation due any such
employee or officer, (D)
directly or indirectly cause
the Corporation to transfer or
set aside any assets to fund
or otherwise provide for the
benefits under the Plan for
any current or former
employee, officer or director,
or (E) result in any
non-exempt prohibited
23
31
transaction described in ERISA
Section 406 or Section 4975 of
the Code; and
(v) No non-exempt "prohibited
transaction" as that term is
defined in Code Section 4975
or ERISA Section 406 has
occurred with respect to any
Plan.
(d) with respect to each Plan identified in the
Disclosure Letter that is an "employee
pension benefit plan," as defined in Section
3(2) of ERISA and is funded or required to be
funded under ERISA and is intended to be
qualified under Section 401(a) of the Code
(A) the Plan and any associated trust
operationally comply in all material respects
with the applicable requirements of Section
401(a) of the Code, (B) the Plan and any
associated trust have been amended to comply
with all such requirements as currently in
effect, other than those requirements for
which a retroactive amendment can be made
within the "remedial amendment period"
available under Section 401(b) of the Code
(as extended under Treasury Regulations and
other Treasury pronouncements upon which
taxpayers may rely), (C) the Plan and any
associated trust have received a favourable
determination letter from the Internal
Revenue Service stating that the Plan
qualifies under Section 401(a) of the Code,
that the associated trust qualifies under
Section 501(a) of the Code and, if
applicable, that any cash or deferred
arrangement under the Plan qualifies under
Section 401(k) of the Code, unless the Plan
was first adopted at a time for which the
above-described "remedial amendment period"
has not yet expired, and (D) no contribution
made to the Plan is subject to an excise tax
under Section 4972 of the Code.
3.28 ENVIRONMENTAL MATTERS.
(a) Definitions. For purposes of this Section
3.28:
(i) "Contaminant" means hazardous
substances as that term is
defined in the Comprehensive
Environmental Response,
Compensation, and
Liability Act, 42 U.S.C.Section
9601 ET SEQ., as amended
("CERCLA"), and any other
individual or class of
pollutants, contaminants,
toxins, chemicals, substances,
wastes or materials in their
solid, liquid or gaseous phase,
defined, listed, designated,
regulated, classified or
identified under any
Environmental Law and includes
asbestos and asbestos-containing
materials, petroleum or
petroleum-based products or
derivatives thereof,
24
32
radioactive materials, energy,
flammable explosives and
polychlorinated biphenyls all of
which are present in such
quantities or forms as are
likely to result in liability
under Environmental Laws.
(ii) "Environmental Laws" means all
applicable federal, national,
state and local laws, rules,
regulations legally enforceable
codes and ordinances, and
binding determinations, orders,
permits, licenses, injunctions,
writs, decrees or rulings of any
governmental or judicial
authority, relating to or
governing air quality, soil
quality, water quality,
wetlands, solid waste, hazardous
waste, hazardous or toxic
substances, pollution or the
protection of public health,
human health or the environment,
including, but not limited to,
CERCLA, the Hazardous Materials
Transportation Act (49
U.S.C.ss.1801 ET SEQ.), the
Federal Water Pollution Control
Act (33 U.S.C. ss. 1251 ET
SEQ.), the Safe Drinking Water
Act (42 X.X.X.xx. 201 ET SEQ.),
the Resource Conservation and
Recovery Act (42 X.X.X.xx. 6901
ET SEQ.) ("RCRA"), the Clean Air
Act (42 U.S.C.ss.7401 ET SEQ.),
the Toxic Substances Control Act
(15 U.S.C.ss.2601 ET SEQ.), the
Federal Insecticide, Fungicide,
and Rodenticide Act (7
U.S.C.ss.136 ET SEQ.), and the
Occupational Safety and Health
Act of 1970 (29 U.S.C.ss.651 ET
SEQ.), as at Exchange but
excludes any Town and Country
Planning legislation (in the UK)
and any analogous land use or
zoning controls (in other
jurisdictions).
(iii) "Release" means any release,
spill, emission, leaking,
pumping, pouring, emptying,
disposing, injection, deposit,
discharge, dispersal, leaching,
or migration into any media,
whether soil, surface water,
ground water, air or any
combination of the foregoing, or
the movement of any Contaminant
through any media, and includes
the abandonment or discarding of
barrels, containers and other
receptacles containing any
Contaminant.
(iv) "Remedial Action" means any
action to: (i) investigate,
study, clean up, remove, treat
or dispose of any Contaminant,
including, but not limited to,
risk assessments and pilot
treatment or feasibility
studies; (ii) prevent the
Release or threatened Release,
25
33
or minimize the further Release
of any Contaminant; or (iii)
bring the existing operations of
each Project Buckeye Corporation
and Subsidiary in all material
compliance with Environmental
Laws.
(b) Except as qualified in Seller's Disclosure
Letter:
(i) each Project Buckeye
Corporation and Subsidiary and
the Real Property are, in
material compliance with all
Environmental Laws;
(ii) none of the Project Buckeye
Corporations or Subsidiaries
has caused any Contaminant to
be Released in violation of
Environmental Law through the
corporation's operations on or
off-site of any of the Real
Property or on any real
property owned, leased or
otherwise used at any time by
such corporation ("Former
Property");
(iii) none of the Project Buckeye
Corporations or Subsidiaries
has received any written
notice, order, decree or
agreement, regarding any
Remedial Action or the
Release, threatened Release or
presence of any Contaminants,
and no payments have been made
in relation to Remedial Action
which include payments to a
third party, and to Seller's
knowledge no charge is likely
to be placed upon the Real
Property in connection with
such matters;
(iv) none of the Project Buckeye
Corporations or Subsidiaries
nor any of the Real Property
or any Former Property are
subject to any liability under
Environmental Law in
connection with any Remedial
Action or the Release,
threatened Release, or
presence of any Contaminants;
and
(v) to the knowledge of Seller, no
portion of the Real Property
is or at any time was a
"wetland" (as such term is
defined in 33 C.F.R. ss.328.3)
and none of the Project
Buckeye Corporations or
Subsidiaries have performed,
caused or permitted to be
performed any activities that
have in any way filled,
destroyed, eliminated,
altered, obstructed,
disturbed, interfered with or
otherwise affected any
"wetlands" in violation of
any Environmental Laws.
26
34
(c) Except as qualified in Seller's Disclosure
Letter:
(i) Each Corporation and
Subsidiary has obtained all
environmental, health and
safety licenses, permits,
authorizations, consents,
approvals, exemptions,
registrations and certificates
required under all applicable
Environmental Laws
("Environmental Licenses") and
made all notifications and
filings necessary for the
current use of the Real
Property and for full
operation of the business of
such Corporation and
Subsidiary;
(ii) All such Environmental
Licenses are in full force and
effect, in good standing and
each Corporation and
Subsidiary has made all
material notifications,
filings and applications for
renewal of such Environmental
Licenses on a timely basis,
where necessary;
(iii) Each Project Buckeye
Corporation and Subsidiary and
the Real Property are, in
compliance with the terms and
conditions of such
Environmental Licenses; and
(iv) Seller does not have knowledge
of any fact or facts which
would render invalid or
require a material alteration
in any Environmental License
currently in effect with
respect to any Project Buckeye
Corporation or Subsidiary, or
the Real Property nor does
Seller have any knowledge of
any capital costs which would
need to be incurred to satisfy
such a material alteration.
(d) Except as qualified in Seller's Disclosure
Letter there is not now nor has there ever
been on, in or under the Real Property or,
to the knowledge of Seller, any Former
Property:
(i) any generation, processing,
treatment, storage, recycling,
disposal or arrangement
therefor, of any "hazardous
waste" as that term is defined
under RCRA, and any regulation
promulgated under RCRA, or any
state equivalent;
(ii) any aboveground or underground
storage tanks or surface
impoundments;
(iii) any asbestos or
asbestos-containing material;
27
35
(iv) any PCBs in any hydraulic
oils, transformers, capacitors
or other electrical equipment;
or
(v) any radioactive substances.
in violation of Environmental Law.
(e) The Disclosure Letter lists all written
communications between any Corporation or
Subsidiary and any governmental authority
or third party arising within the last year
under or relative to Environmental Laws,
and which remain outstanding including any
orders, notices of violation, warning
letters or requests for information with
respect to any Project Buckeye Corporation,
Subsidiary, the Real Property or any Former
Property.
(f) Except as qualified in Seller's Disclosure
Letter there are no past or present events,
conditions, circumstances, activities,
practices, incidents, or actions which have
given to Seller's knowledge or may to
Sellers knowledge give rise to any
liability or otherwise form the basis of
any claim, suit, action, demand,
proceeding, penalty, fine, hearing, notice
of violation, directive or requirement to
undertake any Remedial Action under any
Environmental Law, common law or otherwise,
relating to the Project Buckeye
Corporations, Subsidiaries, or the Real
Property or any Former Property.
(g) Except as qualified in Seller's Disclosure
Letter all Contaminants removed from the
Real Property or any Former Property have
been handled, transported, transferred,
stored, treated, recycled, received and
disposed of in material compliance with all
Environmental Laws.
(h) The Disclosure Letter identifies all
current waste disposal, treatment and
storage facilities and transporters and
persons or entities which currently arrange
for the disposal of Contaminants which are
presently used by or arranged for use by
any Project Buckeye Corporation or
Subsidiary.
(i) Except as qualified in Seller's Disclosure
Letter no application, report,
Environmental License, notification or
other document filed with or furnished to
any governmental authority regarding any
Project Buckeye Corporation, Subsidiary,
the Real Property or any Former Property
contains any material omissions,
inaccuracies or false or misleading
statements.
28
36
3.29 BANK ACCOUNTS. The Disclosure Letter contains a list of
the name of each bank, savings and loan, or other
financial institution in which any Project Buckeye
Corporation or Subsidiary has an account or safe
deposit box, the names of all persons authorized to
draw on each account or to have access to each box, the
number of signatures required to be given for a
withdrawal and a description of the type of account.
3.30 COMPLIANCE WITH LAWS. So far as Seller is aware each
Project Buckeye Corporation and each Subsidiary has
complied with all laws, regulations, rules and orders
of any governmental department or agency, including all
laws and regulations of the United Kingdom, or any
other federal, state or local, or other requirements of
law affecting its business and operations and no
Project Buckeye Corporation or Subsidiary has received
notice that it is in default under or in violation of
any provision of any federal, state or local law,
regulation, rule or order, law or regulation of the
United Kingdom, or any appropriate foreign law or
regulation.
3.31 POWERS OF ATTORNEY. None of the Project Buckeye
Corporations or Subsidiaries has given any power of
attorney (irrevocable or otherwise) that is presently
in effect to any person or entity, including Seller,
for any purpose.
3.32 LICENSES AND RIGHTS. So far as Seller is aware each
Project Buckeye Corporation and Subsidiary possesses
all franchises, licenses, easements, permits and other
authorizations from governmental or regulatory
authorities that are necessary to permit it to engage
in its business as presently conducted in and at all
locations and places where it is presently operating.
3.33 PRODUCTS.
(a) The products sold by each Project Buckeye
Corporation and Subsidiary conform to and
meet or exceed the standards required by
all applicable laws, ordinances and
regulations now in effect in relation to
the person to which such products are
supplied and the jurisdiction in which they
are supplied and, to Seller's knowledge,
there is no pending legislation, ordinance,
or regulation which if adopted or enacted
would have a material adverse effect on
such products or any Project Buckeye
Corporation's or Subsidiary's business.
(b) The Disclosure Letter contains details of
each Project Buckeye Corporation's and each
Subsidiary's warranties and customer
service policies and a description of any
material recurring warranty problems. None
of the Project Buckeye Corporations or
Subsidiaries has outstanding contracts or
proposals that depart
29
37
in any material respect from the warranty
and customer service policies and described
in the Disclosure Letter. No claims of
customers or others based on an alleged or
admitted defect of material, workmanship or
design or otherwise in or in respect of any
of such corporation's products are
presently pending or, to the knowledge of
Seller, threatened other than product
warranty claims in the aggregate not in
excess of Twenty Five Thousand Pounds
((pound)25,000).
3.34 CASUALTY OCCURRENCES. The Disclosure Letter contains
true and correct details of occurrences during the last
five (5) years which have resulted or which will be
likely to result in damages being incurred in excess of
$50,000 of which any Corporation or Subsidiary has
knowledge of damages to persons or property involving
any defects or alleged defects in any Project Buckeye
Corporation's or Subsidiary's products or their
respective designs.
3.35 INVENTORY. The inventory of the Project Buckeye
Corporations and the Subsidiaries has been recorded in
the Financial Statements in accordance with UK GAAP in
the case of Croftshaw Carbons and Lakeland and US GAAP
in the case of Xxxxxxxx. The value at which the
inventories are carried on such Project Buckeye
Corporation's or Subsidiary's books reflects the lower
of cost or estimated net realizable market value.
3.36 CAPITAL EXPENDITURE PLANS. The Disclosure Letter
contains a description of each capital expenditure
program of the Project Buckeye Corporations and of the
Subsidiaries involving the expenditure of at least One
Hundred Thousand Dollars ($100,000) as to which the
expenditure of funds is incomplete, setting forth (i)
the budgeted expenditures and (ii) the actual amounts
expended, if any.
3.37 YEAR 2000 COMPLIANCE. Seller has established a
committee to consider how to make the Project Buckeye
Corporations and Subsidiaries computer systems and
businesses Year 2000 compliant. All written reports and
minutes of the committee relating thereto are annexed
to the Disclosure Letter. Seller is aware that costs
will need to be incurred to resolve this issue for the
Project Buckeye Corporations and the Subsidiaries but
on its current information which is known to be
incomplete, Seller does not expect these costs to
exceed (pound)150,000 in the aggregate.
3.38 Xxxxxxxx-Xxxxxx Canada Limited has no liabilities
(fixed contingent or otherwise) or contractual
obligations and has been dormant for at least the last
five years.
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38
ARTICLE IV
----------
UK TAX MATTERS
--------------
4.1 DEFINITIONS. For purposes of this Article IV, the
following definitions apply:
(a) "CAA" means the Capital Xxxxxxxxxx Xxx
0000;
(b) "CGTA" means the Capital Gains Tax Xxx
0000;
(c) "the Company" means Carbons and Croftshaw
and save where the context requires to the
contrary the Subsidiaries;
(d) "the Subsidiaries" means Xxxxxx Banner & Co
Limited (Company Number 00083093)
("Banner"), Lakeland Processing Limited
(Company Number 02926645) ("Lakeland") and
Sutcliffe Croftshaw Limited Italia
("Italia") S.r.l. (a company incorporated
and operating in
Italy) ("Italia").;
(e) "Taxes Act" or "TA" means the Income and
Corporation Taxes Xxx 0000;
(f) "TCGA" means the Taxation of Chargeable
Gains Xxx 0000;
(g) "VATA" means the Value Added Tax Xxx 0000;
and
(h) "VAT" means value added tax.
4.2 CAPITAL GAINS.
(a) In respect of any asset owned by the
Company at the Balance Sheet Date or
acquired since the Balance Sheet Date:
(i) the provisions of Sections 17
or 165 of the TCGA do not
apply;
(ii) no claim has been made under
Sections 23, 140, 152 to 158
inclusive or 247 of the TCGA;
(iii) no such asset is subject to a
deemed disposal and
re-acquisition under
Paragraphs 16, 19 or 21 of
Schedule 2 to the TCGA or the
mandatory use of 6 April 1965
valuation under that Schedule;
31
39
(iv) no such asset is a wasting
asset under Section 44 of the
TCGA which does not qualify in
full for capital allowances
under Section 47(1) of the
TCGA; and
(v) no election has been made
under Section 35(5) of the
TCGA.
4.3 CAPITAL GAINS: APPROPRIATION TO TRADING STOCK. The
Company has not made any claim or election under
Section 161(3) of the TCGA.
4.4 CAPITAL GAINS: CHARGEABLE DEBT: No capital gain
chargeable to corporation tax will accrue to the
Company on the disposal of any debt owing to the
Company.
4.5 CAPITAL GAINS: POST BALANCE SHEET DATE. No chargeable
gain would arise on the disposal by the Company of any
asset acquired since the Balance Sheet Date for a
consideration equal to the consideration actually given
for the acquisition of such asset (disregarding any
indexation relief).
4.6 DEPRECIATORY TRANSACTIONS. No loss which might accrue
on the disposal by the Company of any asset is liable
to be reduced by virtue of any depreciatory transaction
within the meaning of sections 176 and 177 of the TCGA
nor is any expenditure on any share or security liable
to be reduced under Section 125 of the TCGA and no
chargeable gain or allowable loss arising on a disposal
by the Company is likely to be adjusted pursuant to the
provisions of Sections 29 and 30 of the TCGA or to fall
within the provisions of Section 34 thereof relating to
value shifting.
4.7 CLOSE COMPANIES. The Company is not and has never been
a close company.
4.8 LIABILITY FOR TAX PRIMARILY DUE FROM ANOTHER PERSON.
(a) No transaction, omission or event has
occurred in consequence of which the
Company is or may be held liable for any
taxation or deprived of relief otherwise
available to it or may be otherwise held
liable for any taxation primarily
chargeable against some other company or
person (other than any other Company).
(b) The Company has not since the Balance Sheet
Date made any payment in respect of
taxation primarily chargeable against some
other company or person.
32
40
4.9 CLAIMS BY THE COMPANY.
(a) There are no matters relating to taxation
in respect of which the Company (either
alone or jointly with any other person) has
made:
(i) any appeal (including, but not
limited to, a further appeal
against an assessment to
taxation); and
(ii) any application for the
postponement of taxation.
(b) The Company has made no claim under
Sections 24, 279 or 280 of the TCGA or
Section 584 of the TA.
4.10 NON-ALLOWABLE PAYMENTS.
(a) There are no rents, interest, annual
payments or other sums of an income nature
paid or payable by the Company or which the
Company is under an obligation to pay in
the future otherwise than in the ordinary
course of trade that are or may be wholly
or partially disallowable as deductions or
charges in computing profits for the
purposes of corporation tax by reason of
the provisions of Sections 74, 79, 125,
338, 339, 770, 779 to 786 (inclusive) or
787 of the TA or otherwise.
(b) The Company has not made any payment to or
provided any benefit or agreed to make any
payment to or provide any benefit for any
person or former director, officer or
employee of the Company or a dependant of
such persons which is not allowable as a
deduction in calculating the profits of the
Company for taxable purposes
4.11 CAPITAL ALLOWANCES.
(a) The value attributed in the Accounts to
each asset or pool of assets is such that
on a disposal of each such asset or pool of
assets on the Balance Sheet Date for a
consideration equal to such value or
aggregate value no balancing charge would
have arisen.
(b) Since the Balance Sheet Date the Company
has not done or omitted to do or agreed to
do or permitted to be done any act as a
result of which the Company could be
required to bring a disposal value into
account or suffer a balancing charge or be
subject to recovery of excess relief for
the purpose of capital allowances under
Sections 4, 24, 87, 100 or 128 of the CAA
or
33
41
a withdrawal of first year allowances or a
recovery of excess relief under Sections 46
or 47 of the CAA.
(c) The Company has not made any election under
Section 37 of the CAA (short life assets)
nor is it taken to have made any such
election under subsection (8)(c) thereof.
(d) The Company has not obtained any capital
allowances under Chapter VI Part II of the
CAA (fixtures).
(e) The Company is not involved in a dispute
with another person as to the entitlement
of capital allowances under Section 51(7)
of the CAA.
4.12 DISTRIBUTIONS.
(a) No distribution within the meaning of
Sections 209 or 210 of the TA (other than
dividends shown in its audited accounts)
has been made by the Company since 6 April
1992. The Company is not bound to make any
such distributions.
(b) No securities (within the meaning of
section 254(1) of the TA) issued by the
Company and remaining in issue at the
date of this Agreement were issued in such
circumstances that the interest payable
thereon or any other payment in respect of
them falls to be treated as a distribution
under Section 209 of the TA.
(c) The Company has not been concerned in any
exempt distribution within section 213 of
the TA.
(d) The Company has not received any capital
distributions to which the provisions of
Section 346 of the TA could apply.
(e) The Company has not issued nor agreed to
issue any share capital in the
circumstances referred to in Section 211(1)
of the TA.
4.13 ANTI-AVOIDANCE PROVISIONS.
(a) So far as Seller is aware, the Company has
not been engaged in or been a party to any
transaction or series of transactions or
scheme or arrangement the main purpose or
one or more of the main purposes of which
was the avoidance of or a reduction in a
liability to taxation.
34
42
(b) The Company has not been a party to or
otherwise involved in any transaction,
scheme or arrangement to which any of the
following provisions could apply:
the TCGA: Sections 29-34;
the TA: Sections 37, 56, 404 and 410;
the CAA: Sections 42, 46, 47 75 and 159
(4), (5) and (6).
(c) The Company has not been a party to or
otherwise involved in any transaction to
which any of the following provisions have
been or could be applied other than
transactions in respect of which all
necessary clearances or consents have been
obtained:
the TCGA: Sections 135-139; and
the TA: Sections 703-709, and 776.
4.14 MIGRATION OF COMPANIES. The Company has not without the
prior consent of the Treasury entered into or agreed to
enter into any of the transactions specified in Section
765 of the TA.
4.15 VAT.
(a) The Company has duly registered and is a
taxable person for the purposes of VAT. It
has complied in all material respects with
all statutory requirements, orders,
provisions, directions or conditions
relating to VAT.
(b) The Company is not in arrears with any
payment or returns of VAT or liable to any
abnormal or non-routine payment or any
forfeiture or penalty or to the operation
of any penal provision.
(c) All input tax for which the Company has
claimed credit has been paid by the Company
in respect of supplies made to it relating
to goods or services used or to be used
wholly for the purpose of the Company's
business.
(d) No supplies have been made to the Company
to which the provisions of Section 8 of the
VATA might apply.
(e) The Company has not been required by the
Commissioners of Customs and Excise to give
security for VAT purposes.
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(f) The Company has not, during the period of
12 or 24 months respectively preceding
Closing, received a surcharge liability
notice under Section 59 of the VATA or a
penalty liability notice under Section 64
of the VATA.
(g) Neither the Company nor any "relevant
associate" (as defined in paragraph 3 of
Schedule 10 to the VATA) has elected to
waive exemption pursuant to Schedule 10 to
the VATA.
(h) All VAT returns and payments in respect of
any group of companies of which the Company
is or has been a member for VAT purposes
(calculated otherwise than by reference to
a supply by the Company) have been or will
have been duly made by the representative
of the group up to the time when the
Company ceased or will cease to be liable
for VAT under the group registrations
provisions in respect of such group or
groups.
(i) The Company does not hold any interest in
any building or work such as is referred to
in Item 1(a) Group 1 Part II Schedule 9 of
the VATA.
(j) The Company has not incurred any liability
under the provisions of Paragraph 6 of
Schedule 10 to the VATA and there are no
circumstances in existence at the date of
this Agreement whereby the Company would
become so liable on the occurrence of any
of the events mentioned in Paragraph
5(1)(a) or 5(1)(b) of Schedule 10 to the
VATA.
(k) There are no circumstances whereby the
Company is or could become liable to make
any payment or increased payment as a
result of another person having elected or
electing to waive exemption pursuant to
Schedule 10 to the VATA.
(l) The Company owns no assets to which Part XV
of The Value Added Tax Regulations 1995
applies.
4.16 STAMP DUTY AND STAMP DUTY RESERVE TAX.
The Company has not entered into any transaction,
contract or arrangement, whether verbal or written and
whether made within or outside the United Kingdom,
under which it has or may become liable to pay or to
account for stamp duty or stamp duty reserve tax and
which liability remains unsatisfied.
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44
4.17 INHERITANCE TAX.
(a) There is no outstanding Inland Revenue
charge under Section 237 of the Inheritance
Tax Xxx 0000 over the assets of or the
shares in the Company.
(b) No person has by virtue of Section 212 of
the Inheritance Tax Xxx 0000 any power of
sale, mortgage or charge in respect of any
share in or asset of the Company.
4.18 PURCHASE OF OWN SHARES. The Company has not purchased,
redeemed or repaid nor agreed to purchase redeem or
repay any of its own shares in circumstances to which
Section 219 of the TA applies.
4.19 GAINS ACCRUING TO NON-RESIDENT COMPANIES OR TRUSTS.
There has not accrued any gain in respect of which the
Company may be liable to corporation tax on chargeable
gains by virtue of the provisions of Schedule 5 of the
TCGA.
4.20 OFFSHORE FUNDS. The Company does not own and has never
owned a material interest in an offshore fund which is
or has at any material time been a non-qualifying
offshore fund as defined by Section 760 of the TA.
4.21 NO INTEREST IN A CONTROLLED FOREIGN COMPANY. The
Company does not have and has never had any interest in
a controlled foreign company as defined in Section 747
of the TA.
4.22 RESIDENCE. The Company is and has always been resident
only in the United Kingdom.
4.23 RETURNS, RECORDS AND PAYMENTS.
(a) The Company has maintained complete records
of all taxation matters where required to
do so including (but not limited to) in
relation to deductions made and/or
accounted for in relation to National
Insurance Graduated Pension Contributions
and sums deducted under the PAYE system.
(b) All returns, computations and payments
which should be, or should have been, made
by the Company for any taxation purpose
have been made and are on a proper basis
and none of them is the subject of any
dispute with any taxation authority.
(c) The Company is not and has not at any time
been liable to pay any penalty or interest
charged by virtue of the provisions of the
Taxes Management Act or other taxation
legislations.
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45
(d) The Company is not the subject of any
investigation or discovery by any taxation
authority.
(e) All payments made by the Company to
employees, ex-employees or to any other
person which ought to have been made under
deduction of taxation have been so made.
(f) All payments made by the Company to
employees, ex- employees or to any other
person which ought to have been made under
deduction of taxation have been so made.
(g) The Company has duly and properly accounted
to the relevant taxation authority for all
taxation deducted where required to do so.
(h) The Company has duly and properly accounted
to the Inland Revenue for all taxation
chargeable on benefits provided for
employees and ex-employees of the Company.
(i) All National Insurance, and sums payable to
the Inland Revenue under the PAYE system up
to the date of this agreement have been
duly and properly paid.
4.24 EMPLOYEE BENEFITS. The Company has not established any
share option, incentive and profit sharing schemes.
4.25 GROUP INCOME. The Company has not made an election
under Section 247 of TA and the Company has not paid
any dividend without accounting for advance corporation
tax or made any payment without deduction of income tax
in circumstances specified in subsection 6 of that
Section.
4.26 GROUP RELIEF AND SURRENDER OF ADVANCE CORPORATION TAX.
To the extent that the Company is or has been a party
to arrangements and agreements:
(a) relating to group relief (as defined by
Section 402 of the TA);
(i) all claims by the Company for
group relief were when made
and are now valid;
(ii) the Company has not made nor
is liable to make any payment
under any such arrangement or
agreement; and
(iii) the Company has received all
payments due to it under any
such arrangement or agreement
for surrender of group relief
made by it;
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46
(b) relating to the surrender of advance
corporation tax made or received by the
Company under Section 240 of the TA;
(i) the Company has not paid nor
is liable to pay for the
benefit of any advance
corporation tax which is or
may become incapable of
set-off against the Company's
liability to corporation tax;
and
(ii) the Company has received all
payments due to it under any
such arrangement or agreement
for all surrenders of advance
corporation tax made by it.
4.27 INTRA GROUP TRANSFER. The Company has not in the last
six years acquired any asset (past or present) from any
other company then or afterwards belonging to the same
group of companies as the Company within the meaning of
Section 170 of the TCGA.
4.28 LOSSES ETC. The Company has not received any written
notification from the Inland Revenue the effect of
which is to inform the Company that the Inland Revenue
will disallow the carry forward of any losses or excess
management charges or surplus advance corporation tax
under the provisions of Section 245, 245A, 393 or 768
of the TA.
ARTICLE V
---------
UK PENSIONS MATTERS
-------------------
5.1 APPLICABILITY. This Article V applies in respect of
Pension Schemes (as defined below) subject to the laws
of the United Kingdom and any subdivisions thereof.
5.2 PENSION SCHEME.
(a) "Pension Scheme" means the Sutcliffe
Xxxxxxxx Plc Group Pension and Life
Assurance Scheme.
(b) Other than as set forth in the Disclosure
Letter, none of Carbons, Croftshaw and,
Lakeland (the "UK Group") operate nor are
participants in any pension arrangements
other than the Pension Scheme. No member of
the UK Group has a legal obligation to
provide "relevant benefits" within the
meaning of Section 612(1) of the Income and
Corporation Taxes Act 1988 ("ICTA") other
than under the Pension Scheme. Further, the
Company does not operate or participate in
or have any legal obligation to contribute
to any permanent health insurance, private
health provision, accident benefit or any
other like ancillary schemes.
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47
(c) The Pension Scheme is an exempt approved
scheme within Section 592(1) ICTA or is
capable of receiving such exempt approval.
Seller is not aware of any matter which
could result in the withdrawal or refusal
of that approval.
(d) The Pension Scheme is a contracted-out
scheme for the purposes of Part III of the
Xxxxxxx Xxxxxxx Xxx 0000. Seller is not
aware of any matter which could result in
its contracted-out status being withdrawn.
(e) All contributions payable by any member of
the UK Group and all contributions due from
members to the Pension Scheme have been made
at the rate stipulated by the Actuary to the
Pension Scheme (the "Actuary")in the most
recent actuarial investigation of the
Pension Scheme. Seller warrants that the
Pension Scheme is sufficiently funded on the
basis of the actuarial assumptions contained
in the last valuation report as at 1 April
1995 to secure at least the benefits accrued
to members at and as of the Closing Date on
an ongoing basis. It is agreed by Seller
that any deficiency of assets as against
liabilities in the Pension Scheme as at the
Closing Date calculated as above will be
deemed to be a breach by Seller of the terms
of this warranty and the deficiency arising
will be deemed to be a direct loss sustained
by UK Purchaser or US Purchaser, as the case
may be, under the terms of this Agreement.
(f) Each member of the UK Group has fulfilled
all its obligations under the Pension
Scheme.
(g) There are no retrospective contributions
due from any member of the UK Group to the
Pension Scheme.
(h) True copies of the trust deeds and rules of
the Pension Scheme have been delivered to
US Purchaser and UK Purchaser together with
true copies of all relevant explanatory
booklets, announcements and other
communications to employees relating to the
Pension
Scheme.
(i) The Pension Scheme is governed solely by
these deeds and documents which have been
properly and validly brought into effect.
No member of the UK Group has an obligation
to the Pension Scheme in respect of any
present or former employees or directors
other than under these deeds and documents.
(j) True copies of the last actuarial report on
the Pension Scheme, the relevant extracts
from each member of the UK Group's latest
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48
statutory accounts in respect of the
application of SSAP 24 and the latest
accounts of the Pension Scheme have been
delivered to Purchaser.
(k) All insurance premiums in respect of the
Pension Scheme (whether payable by a member
of the UK Group or by the trustees or
administrator of the Pension Scheme) have
been paid.
(l) All lump sum death-in-service benefits
(other than refunds of contributions) which
may be payable under the Pension Scheme are
fully insured and so far as Seller is
aware, there are no and have not been in
existence any facts or circumstances by
virtue of which the insurer could avoid
liability under them.
(m) All actuarial, consultancy, legal and other
fees, charges or expenses in respect of the
Pension Scheme (whether payable by a member
of the UK Group or so far as Seller is
aware by the trustees of the Pension
Scheme) have been paid. There are, so far
as Seller is aware, no outstanding charges
for services rendered in respect of the
Pension Scheme.
(n) No augmentation of benefits has been
made under the Pension Scheme, no
additional benefits have been granted
and no payment of surplus funds has been
made to a member of the UK Group or
Seller without the Actuary's
confirmation that the augmentation or
addition or payment could be borne by
the Pension Scheme within the existing
funding rate without detriment to the
benefits of other members or the payment
of additional contributions.
(o) The Pension Scheme conforms with:
(i) the preservation requirements
specified in Chapter I of Part
IV of the Xxxxxxx Xxxxxxx Xxx
0000 and Sections 91 to 95 of
the Pensions Act 1995 ("xxx
0000 Xxx");
(ii) the provisions of the Xxxxxxxx
Xxxxxxxxxxx Xxx 0000 and the
requirements of Article 119 of
the Treaty of Rome;
(iii) the requirements with regard
to member nominated trustees
and directors as set out in
Section 16 to 21 of the 1995
Act;
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49
(iv) the provisions of Section 31
of the 1995 Act with regard to
the indemnity of the trustees
from the funds of the Scheme;
(v) the preparation of a statement
of investment principles as
required by Section 35 of the
1995 Act;
(vi) the restriction on employer
related investments as
required by Section 40 of the
1995 Act;
(vii) the requirement with regard to
the provision of documents for
members specified in Section
41 of the 1995 Act;
(viii) the requirements with regard
to the appointment of
professional advisers
specified in Section 47 of the
1995 Act;
(ix) the requirement on the
trustees to keep any money
received in a separate account
authorized under the Banking
Xxx 0000 in accordance with
Section 49 of the 1995 Act;
(x) the requirement to establish a
dispute resolution procedure
specified in Section 50 of the
1995 Act;
(xi) the preparation and
maintenance of a Schedule of
Contributions as required
under Section 58 of the 1995
Act;
(xii) the equal access requirements
specified in Sections 62 to 66
of the 1995 Act;
(p) So far as Seller is aware, the Pension
Scheme has been administered in accordance
with:
(i) the Xxxxxxx Xxxxxxx Xxx 0000;
(ii) the 1995 Act;
(iii) the trusts, powers and
provisions of the Pension
Scheme; and
(iv) the general requirements of
trust law and common law.
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50
(q) So far as Seller is aware, no claim has been
made against any member of the UK Group, the
trustees or administrator of the Pension
Scheme or against any other person whom any
member of the UK Group is or may be liable
to compensate or indemnify in respect of any
act, omission or other matter concerning the
Pension Scheme. Seller is not aware of any
circumstances which may give rise to such a
claim.
(r) The Pension Scheme has been registered with
and the appropriate levy has been paid to
the Registrar of Occupational and Personal
Pension Schemes in accordance with Section 6
of the Xxxxxxx Xxxxxxx Xxx 0000.
(s) So far as Seller is aware, the requirements
of the Data Protection Act 1984 have been
complied with in as far as they affect the
Pension Scheme.
(t) So far as Seller is aware, there is no
investigation in progress or pending either
by the Occupational Pensions Regulatory
Authority ("OPRA") into the Pension Scheme
and/or the benefits provided under it or by
the Pensions Ombudsman concerning any
employee.
(u) So far as Seller is aware, the trustees of
the Pension Scheme have not reported any
irregularities or wrong doings to OPRA, and
Seller is not aware of any circumstances
which would require them to make such a
report.
(v) No member of the UK Group participates in
any Retirement Benefit Scheme established
under or regulated by any jurisdiction
outside the United Kingdom.
(w) The sale and purchase of Seller's Shares and
consummation of the transactions
contemplated by this Agreement will not
cause any automatic immediate or contingent
amendments to the governing provisions of
the Pension Scheme whether as to the
identity of the person(s) entitled to
exercise any powers or discretions, employer
or member contribution rates, increases to
pensions in payment and/or deferment, the
benefit structure or otherwise.
(x) The Pension Scheme is not a small
self-administered scheme within the meaning
of the Retirement Benefit Schemes
(Restriction on Discretion to Approve)
(Small Self Administered Schemes)
Regulations 1991.
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51
(y) No member of the UK Group sponsors or
participates in any pension arrangement
(whether funded or unfunded) in respect of
any of its past or present directors,
officers or employees which is not approved
under either Section 590 or 591 of ICTA.
(z) No member of the UK Group has ever
participated in an occupational pension
scheme which has been closed to new
members.
5.3 Sutcliffe Xxxxxxxx Carbons Limited is a member of the
Xxxxxx Banner & Company Limited Pension Scheme, which
is closed to new members. Seller warrants that there
will be no liabilities in respect of the Xxxxxx Banner
Scheme to which Sutcliffe Xxxxxxxx Carbons Limited will
be subject following the Closing Date. In the event of
any such liability arising, Seller agrees to indemnify
the Buyer in respect of all losses arising from such
liability.
ARTICLE VI
----------
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
--------------------------------------------
Purchasers, jointly and severally, warrant and represent to, and
agree with, Seller as follows:
6.1 ORGANIZATION. Each of US Purchaser and UK Purchaser and
each of their subsidiaries is a corporation duly
organized, validly existing and in good standing under
the laws of the respective jurisdiction of its
organization and has all requisite corporate or other
power and authority and all necessary governmental
approvals to own, lease and operate its properties and
to carry on its business as now being conducted, except
where the failure to be so organized, existing and in
good standing or to have such power, authority and
governmental approvals would not have a material
adverse effect on Purchasers and their subsidiaries,
taken as a whole. Each of US Purchaser and UK Purchaser
and each of their subsidiaries is duly qualified or
licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary,
except where the failure to be so duly qualified or
licensed and in good standing would not have a material
adverse effect on Purchasers and their subsidiaries,
taken as a whole.
6.2 CORPORATE AUTHORIZATION; VALIDITY OF AGREEMENT;
NECESSARY ACTION. Purchasers have full corporate power
and authority respectively to execute and deliver this
Agreement and to consummate the transactions
contemplated hereby. The respective execution, delivery
and performance by Purchasers of this Agreement and the
consummation by Purchasers of
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52
the transactions contemplated hereby have been duly
and validly authorized by the respective Boards of
Directors and no other corporate action or
proceedings on the part Purchasers are necessary to
authorize the execution and delivery by Purchasers of
this Agreement and the consummation by Purchasers of
the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Purchasers,
and, assuming this Agreement constitutes valid and
binding obligations of Seller, constitutes valid and
binding obligations of Purchasers, enforceable
against each of them in accordance with its terms.
6.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for
filings, permits, authorization, consents and
approvals as may be required under, and other
appropriate requirements of the HSR Act, neither the
execution, delivery or performance of this Agreement
by Purchasers respectively nor the consummation by
Purchasers respectively of the transactions
contemplated hereby nor compliance by Purchasers
respectively with any of the provisions hereof will
(a) conflict with or result in any breach of any
provision of the Certificate of Incorporation or
By-laws of US Purchaser, or the Memorandum or
Articles of Association of UK Purchaser, (b) require
any filing with, or permit, authorization, consent or
approval of, any governmental entity (except where
the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would
not have a material adverse effect on Purchasers and
their subsidiaries, taken as a whole, or would not,
or would not be reasonably likely to, materially
impair the ability of Purchasers to consummate the
transactions contemplated hereby), (c) result in a
violation or breach of, or constitute (with or
without due notice or lapse of time or both) a
default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any
of the terms, conditions or provisions of any note,
bond, mortgage, indenture, guarantee, other evidence
of indebtedness, lease, license, contract, agreement
or other instrument or obligation to which Purchasers
or any of their respective subsidiaries is a party or
by which any of them or any of their properties or
assets may be bound, or (d) violate any order, writ,
injunction, decree, statute, rule or regulation
applicable to Purchasers, any of their respective
subsidiaries or any of their properties or assets,
except in the case of clauses (c) and (d) for
violations, breaches or defaults which would not have
a material adverse effect on Purchasers and their
subsidiaries, taken as a whole, or would not, or
would not be reasonably likely to, materially impair
the ability of Purchasers to consummate the
transactions contemplated hereby.
ARTICLE VII
-----------
COVENANTS
---------
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7.1 COVENANTS OF SELLER. Seller shall:
(a) as soon as practicable (and in any event
within seven (7) days) following the
execution of this Agreement, issue a
circular to its shareholders, which
circular shall contain:
(i) a notice of a general meeting
convening a general meeting of the
shareholders of Seller by 8th June
1998 at which a resolution in the
agreed form will be proposed; and
(ii) a recommendation by its directors
in favour of the passing of the
resolutions referred to in clause
(i), above save in circumstances
where an event occurs or a fact is
brought to the attention of the
directors of Seller prior to
posting which they have concluded
means that they should not make
such recommendation because doing
so would breach their fiduciary
duties as directors of Seller and
counsel to Seller advises Seller
that such withdrawal may be
necessary to enable the Directors
of Seller to comply with their
fiduciary duties;
(b) within Twenty (20) days of the posting of
the notice referred to in Section 7.1(a)(i)
above, hold a general meeting of the
shareholders of Seller for the purpose of
approving the transactions contemplated by
this Agreement;
(c) pay to Purchaser a sum equal to any payment
made by Xxxxxxxx to Ametek Corporation
("Ametek)" and Ecodyne Water Systems Inc
("Ecodyne") to satisfy the claims of
Ametek and Ecodyne referred to in the
Disclosure Letter less the amount
(approximately $180,000) provided in
respect of such claims in the Financial
Statements and less the amount of any
monies received in connection with such
claims from insurers of any of the Project
Buckeye Corporations; and
(d) after Closing cease to use the names
"Sutcliffe" or "Xxxxxxxx" for any business
or trade or products or for any subsidiary
company.
7.2. COVENANTS OF PURCHASERS.
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Each of Purchasers hereby declares that it has no
intention at the date hereof of making any claim
against Seller under the indemnity contained in Section
11.2, or under the Tax Deed.
ARTICLE VIII
------------
CONDITIONS PRECEDENT TO OBLIGATIONS OF
--------------------------------------
PURCHASERS AND SELLER
---------------------
8.1 The obligations of Purchasers under this Agreement are, at their
option, subject to satisfaction of the following conditions which the
Seller is obliged to satisfy at or prior to the Closing Date:
(a) Seller shall deliver to Purchasers:
(i) the resignations of Messrs Xxxxx and Xxxxxx as
directors or officers of each of the Project Buckeye
Corporations and the Subsidiaries of which he is a
director or officer in the agreed form;
(ii) in respect of Xxxxxxxx share certificates
representing all of Seller's Shares,with stock powers
covering such shares duly endorsed in blank (or an
indemnity for lost share certificates in the form as
may be requested by US Purchaser);
(iii) a general release of all claims of Seller against the
Project Buckeye Corporations, in the form of EXHIBIT
B to this Agreement;
(iv) duly executed stock transfer forms in respect of
those of Seller's Shares of the English Project
Buckeye Corporations, in favour of UK Purchaser or
its nominee;
(v) the written resignations of the auditors of the
English Project Buckeye Corporations in the agreed
form;
(vi) the ESCROW AGREEMENT DULY EXECUTED;
(vii) a deed of covenant in the agreed form relating to UK
taxation (the "TAX DEED") DULY EXECUTED;
(viii) an agreement in the agreed form relating to the
provisions of services by Seller to the Project
Buckeye Corporations and from such Corporations to
Seller (the "Services Agreement") duly executed;
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55
(ix) a deed of release in the agreed form
releasing Croftshaw Carbons and Lakeland
from all existing security granted by them
to Royal Bank of Scotland.
(x) or make available to Purchasers at the
properties or through operation of the
Services Agreement all books and records of
the Project Buckeye Corporations relating
to the operation of the businesses of the
Project Buckeye Corporations.
(xi) a certificate executed by Seller certifying
that to its knowledge no event has occurred
which would give Purchaser the right to
terminate this Agreement under the
provisions of Article X.
(xii) an agreement in the agreed form
transferring the "Protect" business to the
UK Purchaser (the "Business Transfer
Agreement") duly executed.
8.2 The obligations of Seller under this Agreement are, at
the option of Seller, subject to Purchasers delivering
(which Purchasers are obliged to do) the following to
Seller at or prior to the Closing Date:
(a) the Purchase Price as provided in
Section 1.1;
(b) a certificate executed by the Chief
Financial Officer of US Purchaser and the
company secretary of UK Purchaser
certifying as to the that to their
respective knowledges they would not be in
breach of the warranties given by them in
Article VI had they been repeated at
Closing;
(c) The ESCROW AGREEMENT duly executed;
(d) the Services Agreement duly executed;
(e) the Tax Deed duly executed; and
(f) the Business Transfer Agreement duly
executed
(g) indemnities in favour of Seller in the
agreed form relating to the properties duly
executed.
8.3 Purchaser shall procure that at Closing the Project
Buckeye Corporation repay the following amounts to
Seller in satisfaction of the indebtedness owed by them
to Seller Sutcliffe Xxxxxxxx Holdings Limited and
Xxxxxx Banner Limited:
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Xxxxxxxx $ 3,260,000;
Carbons $ 6,031,000; and
Croftshaw $ 247,760
8.4 Seller and UK Purchaser shall, so far as they are able,
procure that at Closing Carbons shall execute the Deed
in the agreed form ringfencing the surplus in the
Pension Scheme as at the Closing Date so that such
surplus is to be applied solely to provide benefits for
and in respect of the members of the Pension Scheme as
at the Closing Date.
ARTICLE IX
----------
CLOSING
-------
9. The closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the offices of Dibb Xxxxxx Xxxxx, 000
Xxxxxx Xxxx, Xxxxxx XX0X 0XX on June 5, 1998 at 11 a.m., or on such
other date mutually agreeable to the parties (the "Closing Date"). If
the Closing has not taken place by such date by reason of failure of
fulfilment of any condition or conditions contained in this Agreement,
then the non-fulfilling party may, by written notice to the other
party, extend the Closing Date for a period of fourteen (14) days to
permit fulfilment of such condition or conditions. If the Closing has
not taken place by such date because the shareholders vote has not been
taken in accordance with Section 7.1, then the Closing will take place
one (1) business day following such vote. Unless the parties otherwise
agree in writing, if the Closing has not occurred prior to 30th June,
1998, then this Agreement will be deemed to have been terminated and
abandoned, subject to the legal rights and remedies of either party
arising out of the other party's breach of any of the provisions of
this Agreement. The parties will in good faith use all reasonable
efforts to achieve the Closing.
ARTICLE X
---------
TERMINATION OF AGREEMENT
------------------------
10. This Agreement and the transactions contemplated under it may be
terminated and abandoned at any time prior to the Closing Date in
accordance with the provisions set out in this Article X;
(a) if after the date of this Agreement either (i) UK Purchaser or
US Purchaser becomes aware of a matter of which it previously
had no knowledge or (ii) an event occurs; and such matter or
event arises after the date hereof and would mean that there
would be a breach of the warranties if they were deemed
repeated at Closing and the matter or event that would be the
cause of such breach would have a material adverse affect on
the business or assets of the Project Buckeye Corporations
taken as a whole. In such
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57
event, termination pursuant to this Section 10(a)
will be the only remedy available to Purchasers save
in respect of violations of the Agreement prior
thereto. If any matter arises which would give
Purchasers the right to terminate this Agreement in
accordance with this Article X but Purchasers chooses
to proceed to Closing rather than exercise such right
(without prejudice to Purchaser's rights if any under
Section 11.2 hereof) they shall have no right or
remedy in respect of the matter giving rise to the
right to terminate and neither they nor any holding
company, subsidiary director or employee of them
shall bring any action whatsoever against Seller or
any holding company, subsidiary director or employee
of Seller in respect of such matter.
(b) by Purchasers if any warranty in Articles III IV or V
is untrue and the value of the Project Buckeye
Corporations taken together is materially less than
it would have been had the warranty been true or
there is a breach of any such warranty and the matter
or event that would be the cause of such breach would
have a material adverse effect on the business,
financial condition or assets of the Project Buckeye
Corporations taken as a whole. Upon any termination
pursuant to this Section 10(b) Purchasers shall be
entitled to indemnification pursuant to this
Agreement but subject to the limitations and
restrictions contained in this Agreement.
(c) by Purchaser, if any of the conditions contained in
Article VIII Clause 8.1, or by Seller, if any of the
conditions contained in Article VIII Clause 8.2 or
8.3, respectively, have not been fulfilled in all
respects in each case at or prior to the Closing
Date.
ARTICLE XI
----------
SURVIVAL OF
-----------
WARRANTIES; INDEMNIFICATION; DISPUTES : LIMITATIONS
---------------------------------------------------
11.1 SURVIVAL OF LIMITATIONS WARRANTIES. Notwithstanding the Closing of the
transactions contemplated under this Agreement, or any investigation
made by or on behalf of Seller or Purchasers, the warranties comprised
in Articles III, IV, V and VI of Seller and Purchasers contained in
this Agreement, will survive the Closing and continue with full force
and effect for eighteen (18) months following the Closing Date, except
that (i) the warranties of Seller contained in Sections 3.2, 3.3 and
3.4 shall have no expiration date (ii) those contained in Section 3.12
and 3.27(d) with respect any Title IV Plan shall survive for so long as
any applicable statute of limitations has not expired, been suspended
or been waived or extended, and for six (6) months thereafter and
Article IV shall survive for 7 years from the date hereof. However, as
to any breach of, or misstatement in, any such warranty as to which
either of Purchasers has given notice together with such reasonable
details as are available to Purchasers on or prior
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to the expiration of the applicable period, as above set forth, the
same will continue to survive beyond said period, but only as to the
matters contained in such notice.
11.2 SELLER INDEMNIFICATION. Seller shall indemnify Purchasers and the
Project Buckeye Corporations from any and all actual costs, expenses,
losses, damages and liabilities incurred or suffered by any of them
(including, without limitation, reasonable legal fees and expenses)
resulting from or attributable to the breach of any one or more of the
warranties of Seller made in or pursuant to Articles III IV and V of
this Agreement including any claims, demands, suits, investigations,
proceedings or actions by any third party containing or relating to
allegations that, if true, would constitute a breach of, or
misstatement in, any one or more of the warranties of Seller made in or
pursuant to Articles III, IV and V of this Agreement . This indemnity
shall be the sole basis on which Purchasers, the Project Buckeye
Corporations, any subsidiary of Purchasers, any holding company of
Purchasers or any employee or director of any such company may make a
claim against Seller for breach of the warranties and shall be in
substitution for any other basis of claim that may otherwise be
available. UK Purchaser and US Purchaser may not both recover for the
same loss. For the avoidance of doubt it is hereby declared and agreed
that Seller's liability pursuant to this Section 11.2 is to indemnify
Purchasers and the Project Buckeye Corporations only for the actual
losses they suffer and not in the case of Purchasers for any reduction
in the value of the Project Buckeye Corporations where the actual loss
has been or is otherwise reimbursed to the Project Buckeye Corporation
pursuant to this clause and nor shall any actual loss suffered by
Purchaser or any of the Project Buckeye Corporations entitle them to
recover any multiple of such loss but Seller will be liable to
Purchaser in respect of any costs relating to the discharge of any
encumbrance that attaches to Sellers Shares at Closing.
Notwithstanding any other provision hereof Seller may satisfy any
liability to the Project Buckeye Corporations pursuant to this Section
by making payment of the amount of such liability to Purchasers and
Purchasers shall procure that any claim is made in a manner so as to
permit this.
11.3 DEFENSE OF CLAIM. f US Purchaser or UK Purchaser, as the case may be
has received actual notice of any claim asserted or any action or
administrative or other proceeding commenced in respect of which claim,
action or proceeding indemnity properly may be sought against Seller
pursuant to this Agreement, US Purchaser or UK Purchaser as the case
may be will give notice in writing to Seller. At any time after receipt
of such notice or receipt of actual notice by Seller from sources other
than from one of Purchasers, Seller may give UK Purchaser or US
Purchaser as applicable written notice of its election to conduct or
take over the defense of such claim, action or proceeding at its own
expense (reimbursing the relevant
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Purchaser for its costs reasonably incurred if Seller makes such
election 15 days or more after such notice). If Seller has given UK
Purchaser or US Purchaser as the case may be notice of election to
conduct or take over the defense, Seller may conduct the defense at its
expense, but the relevant Purchaser will nevertheless have the right to
participate in the defense, but such participation will be solely at
the expense of the relevant Purchaser, without a right of further
reimbursement but Seller shall have the sole conduct of the defense. If
Seller has not so notified UK Purchaser or US Purchaser as the case may
be in writing of its election to conduct or take over the defense of
such claim, action or proceeding, such Purchaser may (but need not)
conduct (at Seller's expense) the defense of such claim, action or
proceeding keeping Seller reasonably informed of progress. UK Purchaser
or US Purchaser as the case may be may at any time notify Seller of its
intention to settle, compromise or satisfy any such claim, action or
proceeding (the defense of which Seller has not previously elected to
conduct) and may make such settlement, compromise or satisfaction (at
Seller's expense) unless Seller notifies such Purchaser in writing
(within seven (7) days after receipt of such notice of intention to
settle, compromise or satisfy) of its election to assume (at its sole
expense) the defense of any such claim, action or proceeding and
promptly take appropriate action to implement such defense. Anything to
the contrary in this Agreement notwithstanding if Seller has elected
under this Section 11.3 to conduct the defense of any claim, action or
proceeding, then Seller will be obligated to pay the amount of any
adverse final judgment or decree rendered with respect to such claim,
action or proceeding. Anything to the contrary in this Agreement
notwithstanding if Seller elects to settle, compromise or satisfy any
claim, action or proceeding defended by it, the cost of any such
settlement, compromise or satisfaction will be borne entirely by
Seller. UK Purchaser or US Purchaser as the case may be and Seller will
use all reasonable efforts to cooperate fully with respect to the
defense of any claim, action or proceeding covered by this Section
11.3.
11.4 PURCHASERS INDEMNIFICATION. Purchasers covenant and agree to indemnify
and save harmless Seller from any and all costs, expenses, losses,
damages and liabilities incurred or suffered by Seller (including
reasonable legal fees and costs) resulting from or attributable to the
breach of, or misstatement in, any one or more of the representations
or warranties of Purchaser made in or pursuant to this Agreement to the
same extent as provided in clauses (a) and (b) of Section 11.2, and in
the same manner as provided in Section 11.3, of this Article XI.
11.5 INDEMNIFICATION BASKET; CAP.
(a) (i) Any of the foregoing notwithstanding, neither
Purchasers nor any Project Buckeye Corporation
will have any right to indemnification under
Section 11.2
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unless and until the aggregate damages
indemnifiable by Seller exceed Two Hundred
Thousand Dollars ($200,000) (the "Basket")
and thereafter will be entitled to the full
extent of the damages in excess of the said
amount only.
(ii) In respect of any claim for indemnification
under Section 11.2 arising from a breach of
warranties in Section 3.28 in respect of any
matters relating to Xxxxxxxx and any of the
foregoing notwithstanding neither Purchasers
nor any Project Buckeye Corporation will
have any right to indemnification under
Section 11.2 unless and until the aggregate
damages indemnifiable by Seller under
Section 3.28 in respect of any matters
relating to Xxxxxxxx exceeds Three Hundred
Thousand Dollars ($300,000) and thereafter
will be entitled to the full extent of the
damages in excess of the said amount only.
(iii) With respect to any claim for
indemnification under Section 11.2 arising
from a breach of warranties in Section
3.27(d) and any of the foregoing
notwithstanding, in the event of any
examination, audit, or action by any United
States governmental agency, with respect to
any Title IV Plan (as that term is defined
in Section 3.27) that results in damages,
Seller shall indemnify the Purchaser and
Project Buckeye Corporation to the full
extent of the damages.
(b) Notwithstanding the foregoing, the Basket shall not
apply to the breach by Seller of Sections 3.12,
Article IV or the penultimate sentence of Section
3.7.
(c) The indemnification payable by Seller under this
Article XI in all events shall not exceed Five
Million Dollars ($5,000,000) in the aggregate (the
"Cap"); provided, however, that the Cap shall not
apply to Seller's breach of any of Sections 3.2, 3.3,
3.4, 3.12, or Article IV and any indemnification paid
with respect to a breach of Section 3.2, 3.3, 3.4,
3.12 or Article IV shall not be included in the
computation of the Cap amount.
11.6 LIMITATION ON REMEDIES. Anything in this Agreement to the contrary
notwithstanding, the remedies of Purchasers and the Project Buckeye
Corporation and Seller in connection with the breach of warranties and
agreements contained in Articles III, IV, V and VI shall be limited to
those
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provided in Sections 11.2 (in the case of Purchasers) and Section 11.4
(in the case of Seller).
11.7. Seller shall have no liability under the indemnification in
Section 11.2:
(a) to the extent that any provision, reserve or
allowance in respect of the matter giving rise to
that liability or other matter in question was made
in the Financial Statements; or
(b) to the extent that the claim in question arises, or
is increased as a result of any legislation not in
force at the date hereof, any increase in rates of
Taxation or any change in the law or published
practice of a Revenue authority in any jurisdiction,
in each case, made after the date of this Agreement
with retrospective effect.
11.8. If either Purchasers and/or any Project Buckeye Corporation is
or may be entitled to recover from some other person any sum
in respect of any matter giving rise to a claim under the
indemnity, Purchasers shall procure that all reasonable steps
are taken to enforce recovery and, if any sum is so recovered,
then the amount payable by Seller in respect of that claim
under the indemnification shall be reduced by an amount equal
to the sum recovered net of any tax if any and any cost of
collection. Nothing in this Section 11.8 shall prevent
Purchasers from pursuing a claim under Section 11.2 at the
same time as taking steps against any other person in relation
to the same subject matter.
11.9. If Seller pays at any time to either Purchaser or a Project
Buckeye Corporation an amount pursuant to a claim under the
indemnity and either Purchaser or a Project Buckeye
Corporation subsequently becomes entitled to recover from some
other person any sum in respect of any matter giving rise to
such claim, Purchaser shall, and shall procure that the
relevant Project Buckeye Corporation take all reasonable steps
to enforce such recovery, and shall forthwith repay to Seller
so much of the amount paid by Seller to Purchasers or Project
Buckeye Corporation as does not exceed the sum recovered from
such other person net of any tax if any and any cost of
collection.
11.10. Purchasers and any Project Buckeye Corporation shall have a
duty to mitigate its loss in respect of any indemnification
claim in all respects as though such indemnification claim was
a claim for breach of warranty in accordance with common law.
11.11. Neither Purchasers nor any Project Buckeye Corporation shall
be entitled to recover damages in respect of any claim
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under the indemnity or claim under the Tax Deed or otherwise obtain
reimbursement or restitution more than once in respect of the same fact
or subject matter to the extent recovery has already been made in
respect of such claim.
11.12. If and to the extent that, in respect of any matter which would give
rise to a claim under the indemnity, either of Purchasers or any
Project Buckeye Corporation is entitled to claim under any policy of
insurance, then no amount shall be recoverable by Purchasers or any
Project Buckeye Corporation under the indemnity unless and until
Purchasers or appropriate Project Buckeye Corporation shall have made a
claim against its insurers on such policy. The amount recoverable for
the relevant breach of the warranties shall be reduced by any amount
which is recovered under such policy.
11.13. The liability of Seller or any claim against Seller for indemnification
shall not be reduced on a current basis by the amount by which any
Taxation for which either Purchaser or any Project Buckeye Corporation
is now or in the future accountable or liable to be assessed is reduced
or extinguished as a result of the matter giving rise to such
liability; instead Seller shall be reimbursed such amount when such
accountability or liability is reduced or extinguished as determined by
Purchaser in their reasonable discretion as certified to Sellers by
Purchaser's Chief Financial Officer with sufficient documentation to
enable Seller to verify the accuracy of such reduction or
Extinguishment.
11.14. Subject to Article XXI (in relation to which the sole and exclusive
recourse of Purchasers and the Project Buckeye Corporations is provided
for in Article XXI) the warranties in Section 3.28 contain Purchasers'
and the Project Buckeye Corporations' only rights to claim against
Seller in respect of Contaminants, Environmental Laws, Releases or
Remedial Action and constitute the sole and exclusive recourse of
Purchasers and the Project Buckeye Corporations in respect of
Contaminants, Environmental Laws, Releases or Remedial Action. Save for
any claim under the warranties contained in Section 3.28. Purchasers
and the Project Buckeye Corporation release Seller, and save for any
claim under the warranties contained in Section 3.28 its officers,
directors and employees from any and all claims under any Environmental
Law including but not limited to CERCLA. The warranties in Section 3.10
contain Purchasers' and the Project Buckeye Corporations only rights to
claim against Seller in respect of Real Property matters.
11.15. Seller shall have no liability whatsoever under the Indemnity in clause
11.2 in respect of any matter, fact or circumstance to the extent that
they are disclosed in a letter in the agreed form of even date
containing disclosures against the warranties ("the Disclosure Letter")
and this notwithstanding
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that not all the warranties are expressly stated in this
Agreement to be qualified by matters set forth in the
Disclosure Letter.
11.16. When calculating the loss suffered by either of
Purchasers or any Project Buckeye Corporation for the
purpose of a claim under the indemnity Seller shall
be given credit for and the amount of such claim
shall be reduced by:
(a) an amount equal to any overstatement of
indebtedness owed by or borrowings of any
of the Project Buckeye Corporations;
(b) an amount equal to any understatement of
cash at bank or in hand of any of the
Project Buckeye Corporations;
(c) an amount equal to any understatement of
indebtedness owed to any of the Project
Buckeye Corporations measured against the
actual collection of such indebtedness,
in each case as shown in the consolidated balance sheet
as at March 31, 1998 of the Project Buckeye
Corporations.
(d) an amount equal to the amount by which any
line item shown in the consolidated balance
sheet as at March 31, 1998 of any of the
Project Buckeye Corporations is, where it
is an asset, more than or, where it is a
liability, less than the amount at which
such item is shown in the consolidated
balance sheet as at March 31, 1998 of any
of the Project Buckeye Corporations; and
(e) to the extent that Croftshaw receives any
deferred consideration for the sale of land
at Guest Street, Leigh under an agreement
between Croftshaw and Elite Homes (North)
Limited dated 22 July 1994 up to a maximum
of (pound)45,000 net of tax if any.
11.17.(i) For the purpose of this Section 11.17,
"Sellers Relief" shall mean any Relief (as
defined in the Tax Deed) or right to
repayment of Taxation which arises as a
consequence of or by reference to any act,
transaction or event occurring in a taxable
year ending before Closing.
(ii) Seller shall have no liability under the
Indemnity in Section 11.2 with respect to
breaches of the warranties in Articles IV
if and to the extent that any of the
Project Buckeye Corporation is able to
shelter the loss in question by the
utilisation of the Seller's Relief provided
that the aggregate amount of the Seller's
Relief available to Seller under this
Agreement and the Tax Deed shall be
(pound)4,000,000 and provided further that
the reduction in Sellers
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liability shall be limited to the actual
tax savings if and when utilized
11.18. (a) Purchaser's entitlement to be indemnified for losses
ceases in relation to breach of the warranties
contained in section 3.28 of this Agreement if such
losses result from or are increased as a result of
Purchasers or any Project Buckeye Corporation or any
person or body on behalf of either:
(i) making a notification or disclosing
information to any regulatory authority or
any other person; or
(ii) making any investigation or taking any other
steps (including without limitation
intrusive investigations or audits) in
respect of matters which may be the subject
of a claim for breach of the warranties
contained in section 3.28 of this Agreement;
unless either is:
(i) required by the law of the relevant
jurisdiction; or
(ii) required in order to avoid danger of injury
or death to any person.
(b) Purchaser shall only be entitled to claim any losses
in respect of Remedial Action as such is determined
on the basis set out below in this section ("Required
Remedial Action)"). Required Remedial Action in
respect of a claim for breach of warranties contained
in section 3.28 is:
a) the Remedial Action reasonably necessary to
comply with a Formal Notification; or
b) the Remedial Action which is determined to
be reasonably required under the terms of
the final decision or settlement of
Environmental Proceedings;
Where "Environmental Proceedings" means the issue of
legal proceedings under Environmental Law by a
regulatory authority, and a "Formal Notification"
means the issue by a regulatory authority of a
requirement under Environmental Law which if not
complied with is a criminal offence and in the event
of a disagreement as to what is reasonable the matter
shall be as determined by an expert appointed in
accordance with (e) below.
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(c) Without prejudice to the generality of the foregoing
Purchasers shall not be entitled to claim in respect
of any losses that result from or are increased by:
(i) any voluntary act or omission outside the
ordinary course of operations carried out by
the Project Buckeye Corporations after the
Closing Date;
(ii) the failure of Purchaser to take or procure
that the Project Buckeye Corporations take
all reasonable steps to avoid reduce and
mitigate any losses.
(iii) any development for use other than
industrial use of the Real Property or any
part of the Real Property; or
(d) Purchasers shall have conduct of any Environmental
Proceedings, Formal Notifications or Required
Remedial Action and any related negotiations or
agreements provided that:
(i) Purchasers shall allow Seller and its
accountants and advisors to investigate the
matter or circumstance alleged to give rise
to such claim and (subject to Seller
indemnifying Purchasers in respect of
Purchaser's reasonable costs of so doing)
shall give all assistance as Seller or their
accountants or professional advisors may
reasonable request;
(ii) Seller shall have the right to assume
conduct of the Environmental Proceedings,
Formal Notification or Required Remedial
Action. Seller may use such agents as they
decide. The exercise by Seller of their
rights under this subclause shall be subject
to Seller indemnifying Purchaser against any
reasonable liabilities costs or expenses
which such party may reasonably and directly
suffer or incur thereby;
(iii) the person having conduct of any
Environmental Proceedings, Formal
Notification or Required Remedial Action as
provided for above ("the Conduct Party")
shall ensure that:
(a) it shall consult fully and in good
faith with the other party on all
material matters and shall comply
with all reasonable
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instructions and requests of the
other party; and
(b) the Conduct Party shall permit a
representative of the other party
to attend as an observer at all
negotiations meetings and site
visits and all parties shall take
all commercially reasonable steps
to minimise the amount of
Purchaser's claim against Seller;
and
(iv) in relation to any Environmental
Proceedings, Formal Notification or Required
Remedial Action Purchaser shall make no
admission of liability, agreement,
settlement or compromise with any relevant
authority or third party without the prior
consent of Sellers, such consent not to be
unreasonably withheld or delayed.
(e) In the event of any disagreement between the parties
in relation to the Required Remedial Action either
party may request a "Certified Professional" pursuant
to Ohio Revised Code Chapter 3746.01(E) (with respect
to US matters) and the President for the time being
of the Association of Environmental Consultants (with
respect to UK matters) to appoint or act as an Expert
subject to the approval of the non-requesting party,
which approval will not be unreasonably withheld.
Such Expert shall be independent and experienced in
the matters in which the parties are in disagreement.
The Expert shall be instructed to give an opinion on
the matter that is the subject of the disagreement
and except in the case of manifest error, the parties
shall be bound by the opinion of such Expert who
shall act as an Expert and the costs of the Expert
shall be shared equally between the parties.
ARTICLE XII
-----------
CONDUCT PRIOR TO CLOSING DATE
-----------------------------
12.1 CONTINUATION OF BUSINESS. Until the Closing Date, Seller shall cause
the Project Buckeye Corporations to continue to conduct their
businesses in the ordinary and usual course and, without limiting the
generality of this undertaking, Seller will not in relation to the
Project Buckeye Corporations and the Subsidiaries, and shall cause the
Project Buckeye Corporations not to, do or suffer to be done any of the
following,
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whether or not in the ordinary and usual course unless specifically
excluded, without the prior written consent of UK Purchaser or US
Purchaser:
(a) dispose or contract to dispose of, or acquire or contract to
acquire, any Real Property or other assets (except for
inventory disposed of or acquired in the ordinary course of
business), or any interest in any Real Property or other
capital assets with a total value in excess of (pound)25,000;
(b) borrow any money, except in the ordinary course of business
for working capital purposes under existing credit facilities;
(c) enter into any lease with an annual payment of (pound)25,000;
(d) encumber any assets with a total value in excess of
(pound)25,000;
(e) enter into any contract, commitment or arrangement involving
expenditure by such Project Buckeye Corporation in excess of
(pound)100,000;
(f) declare or pay any dividend or declare or make any other
distribution to shareholders, other than the dividends set out
in Schedule 12.1(f);
(g) purchase or redeem any shares, notes or other securities;
(h) increase the rate or amount of compensation or the amount or
type of other remuneration to any of its directors, officers,
employees, agents or other representatives, or agree to do so
other than in accordance with agreements disclosed in the
Disclosure Letter;
(i) form or cause to be formed, or dispose or contract to dispose
of, any subsidiary, or any interest in any subsidiary or
acquire any stock or equity interest in any corporation or
other entity;
(j) reclassify, split or combine its shares, or issue, sell,
distribute or dispose of any shares, notes or other
securities, or issue or make any changes to any options,
warrants or rights with respect to its shares, or commit
itself to do so;
(k) make any new commitments or agree to make commitments for
capital improvements or significantly alter standing
commitments for capital improvements, in any case in excess of
Twenty Five Thousand Pounds ((pound)25,000);
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(l) negotiate with anyone other than Purchaser
for, or participate with anyone other than
Purchaser in, the acquisition of the
Shares;
(m) amend, or permit to be amended, in any way,
its constitutional documents or merge or
consolidate with any other corporation or
other entity or change the character of its
business; or
(n) make any material change in accounting
methods.
12.2 In carrying out its obligations under Section 12.1
Seller shall not knowingly permit any licences, leases,
permits, registrations or any patents, trademarks,
trade names, service marks or any applications
therefor, or any insurance policies and bonds to lapse
or fail to renew the same (where such renewal is
available on normal commercial terms).
12.3 ACQUISITION PROPOSALS. (a) Seller agrees that neither
it nor any of its subsidiaries nor any of the officers
and directors of it or its subsidiaries shall, and that
it shall direct and use its reasonable efforts to cause
its and its subsidiaries' employees, agents and
representatives (including any investment banker,
attorney or accountant retained by it or any of its
subsidiaries) not to, directly or indirectly, initiate,
solicit, encourage or otherwise facilitate (including
by way of furnishing information) any inquiries or the
making of any proposal, or offer with respect to a
merger, reorganisation, share exchange, consolidation,
transaction involving, or any purchase or sale of all
or any significant portion of the assets or twenty per
cent or more of the equity securities of Seller or any
of the equity securities of any Project Buckeye
Corporation that, in any such case, could reasonably
be expected to interfere with the completion of the
transactions contemplated by this Agreement (any such
proposal or offer being hereinafter referred to as an
"Acquisition Proposal"). Seller further agrees that
neither it nor any of its subsidiaries nor any of the
officers and directors of it or its subsidiaries
shall, and that it shall direct and use its
reasonable efforts to cause its and its subsidiaries'
employees, agents and representatives (including any
investment banker, attorney or accountant retained by
it or any of its subsidiaries) not to, directly or
indirectly, provide any confidential information or
data to any person or entity relating to an
Acquisition Proposal or engage in any negotiations
concerning an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement
an Acquisition Proposal or accept an Acquisition
Proposal.
12.4 Seller use its reasonable endeavours to procure the
transfer of the employment of Xx Xxxx and the accounts
and central services staff to Carbons prior to Closing
as referred to in the Disclosure Letter.
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ARTICLE XIII
------------
ASSIGNMENT, THIRD PARTIES, BINDING EFFECT
-----------------------------------------
13. The rights under this Agreement are not assignable nor are the duties
delegable by a party without the written consent of the other party
first having been obtained, and any attempted assignment or delegation
without such consent will be null and void provided, however, that
Purchaser's rights to indemnification hereunder shall be assignable to
its senior lender, subject to any defenses and rights of set-off that
Seller may have hereunder. Nothing contained in this Agreement is
intended to convey upon any person or entity, other than the parties
hereto and their successors in interest and permitted assigns, any
rights or remedies under or by reason of this Agreement unless
expressly stated. All covenants, agreements, representations and
warranties of the parties contained in this Agreement are binding on
and will inure to the benefit of Purchasers, on the one hand, and
Seller, on the other, and their respective successors and permitted
assigns.
ARTICLE XIV
-----------
EXPENSES
--------
14. Save where specifically provided for in this Agreement Purchasers, on
the one hand, and Seller, on the other, will bear their own respective
expenses, including, without limitation, counsel and accountants' fees,
in connection with the preparation and negotiation of, and transactions
contemplated under, this Agreement. Notwithstanding the foregoing, US
Purchaser and Seller agree to pay in equal proportions the finder's fee
potentially owed to Xxxxxxx Xxxxxxxx, provided Seller's share thereof
shall not exceed One hundred Thousand Dollars ($100,000).
ARTICLE XV
----------
NOTICES
-------
15. All notices, requests, demands and other communications under this
Agreement must be in writing and will be deemed duly given, unless
otherwise expressly indicated to the contrary in this Agreement, (i)
when personally delivered, (ii) three (3) days after having been posted
if sent, certified or registered, return receipt requested, postage
prepaid, to an addressee in the same country as that in which it is
posted or if it is sent by recognised overnight courier service or
(iii) six (6) business days after having been posted if it is sent by
air mail. Such delivery being effected by the US Mail, The Post Office
or a nationally recognised overnight courier service, addressed to the
parties at the following addresses (or at such other address or number
as is given in writing by either party to the other) as follows:
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To Purchasers: Waterlink, Inc.
0000 Xxxxxxx Xxxxxx, X.X.
Xxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxx Xxxxxxxx
Chief Financial Officer
With a copy to: Benesch, Friedlander,
Xxxxxx & Aronoff LLP
0000 XX Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxx X. Xxxxxx
To Seller: Sutcliffe Xxxxxxxx Plc
00/00 Xxxxxxxxx Xxxx
Xxxxxxxxx
X0 0XX
Attention: Xxxxxx Xxxxx
With a copy to: Dibb Xxxxxx Xxxxx
000 Xxxxxx Xxxx
Xxxxxx, Xxxxxxx XX0X 0XX
Attention: Xxxxx Xxxxx.
ARTICLE XVI
-----------
REMEDIES NOT EXCLUSIVE
----------------------
16. No remedy conferred by any of the specific provisions of this Agreement
is intended to be exclusive of any other remedy, and each and every
remedy will be cumulative and will be in addition to every remedy given
under this Agreement or now or subsequently existing, at law or in
equity, by statute or otherwise. The election of any one or more
remedies by either of Purchasers or Seller will not constitute a waiver
of the right to pursue other available remedies. Save that there shall
be no remedy for a breach in respect of the warranties in Articles III,
IV and V other than the indemnification set out in Section 11.2.
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ARTICLE XVII
------------
NON-COMPETITION
---------------
17.1 NON-COMPETITION AGREEMENT.
(a) For a period of three (3) years from and after the Closing
Date, but as to clauses (iv) and (v) at any time after the
Closing Date, Seller will not, directly or indirectly:
(i) except for the distribution by Seller or one of its
subsidiaries of a range of products similar to or
competing with the "Protect" product range to the
extent permitted under the Business Transfer
Agreement, engage in, carry on, be employed by or
have any interest in a business substantially similar
to the businesses as carried on by any Project
Buckeye Corporation on the Closing Date;
(ii) enter into, engage in, or be employed by or consult
with any business in competition with any Project
Buckeye Corporation on matters substantially similar
to the businesses as carried on by any Project
Buckeye Corporation on the Closing Date;
(iii) employ, assist in employing or otherwise associate in
business with any present, former or future employee
of any Project Buckeye Corporation now or
subsequently existing until a period of at least two
(2) years has expired since such employee was
employed by a Project Buckeye Corporation;
(iv) induce any person who is a present or future
employee, officer, agent, affiliate or customer of a
Project Buckeye Corporation now or subsequently
existing to terminate the relationship; and
(v) induce any customer, supplier or any other party with
whom any Project Buckeye Corporation does business to
refuse to do business with any Project Buckeye
Corporation on as favourable terms as previously done
with such Project Buckeye Corporation.
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The prohibitions in clauses (i) and (ii) will apply
only to any place or location in which Purchasers or
any of their subsidiaries or affiliates currently
does business or is actively contemplating doing
business. Seller acknowledges that the length of time
and geographic restriction pertaining to all
prohibitions in this Subsection (a) are both
reasonable and necessary for the legitimate
protection of Purchasers' business and interests.
(b) Seller expressly agrees and understands that the
remedy at law for any breach by Seller of this
Article XVII will be inadequate and that the damages
flowing from such breach are not readily susceptible
to being measured in monetary terms. Accordingly, it
is acknowledged that upon adequate proof of Seller's
violation of this Article XVII, Purchasers will be
entitled, among other remedies, to immediate
injunctive relief and may obtain a temporary
restraining order restraining any threatened or
further breach. Nothing in this subsection (b) will
be deemed to limit Purchasers' remedies at law or in
equity for any breach by Seller of any of the
provisions of this Agreement which may be pursued or
availed of by Purchasers.
(c) In the event any court of competent jurisdiction
determines that the specified time period or
geographical area set forth in this Section 17.1 is
unreasonable, arbitrary or against public policy,
then a lesser time period or geographical area that
is determined by the court to be reasonable,
non-arbitrary and not against public policy may be
enforced.
(d) In the event Seller violates any legally enforceable
provision of this Section 17.1 as to which there is a
specific time period during which Seller is
prohibited from taking certain actions or engaging in
certain activities, then, in such event the violation
will toll the running of the time period from the
date of the violation until the violation ceases.
(e) Nothing in this Section 17.1 shall prevent Seller
from acquiring any business or company which includes
as part of its business an operation which if engaged
in by Seller would breach the terms of this Section
provided that such operation does not at the time of
such acquisition account for more than (pound)5
million ((pound)5,000,000) of the total turnover of
such business or company.
17.2 DISCLOSURE OF CONFIDENTIAL INFORMATION. Except as may
be required by law or regulatory authority, from and
after the Closing Date, Seller will not disclose,
disseminate, divulge, discuss, copy or otherwise use or
suffer to be used, in competition with, or harmful to
the interests of, any Project
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Buckeye Corporation, any information (written or
oral), documents, lists or other data of or
respecting any aspect of the businesses being
acquired by Purchasers from Seller under this
Agreement. In the event that Seller, or prior to the
Closing, any Project Buckeye Corporation, is
requested pursuant to, or required by, applicable law
or regulation or by legal process to disclose any
such proprietary information, Seller will provide
Purchasers with prompt notice of such requests to
enable Purchasers to seek an appropriate protection
order. Any such disclosure shall be limited to the
minimum required by law.
ARTICLE XVIII
-------------
TERMINATION FEE
---------------
Seller acknowledges that in the event this Agreement is terminated
for any of the reasons set forth in that certain termination
agreement between Purchasers and Seller of even date herewith (the
"Termination Agreement"), a copy of which is attached hereto as
EXHIBIT C, Seller shall pay to US Purchaser the Termination Fee
(as defined in the Termination Agreement).
ARTICLE XIX
-----------
TAX MATTERS
-----------
19.1 COOPERATION IN TAX MATTERS. Purchaser, Seller and each of the Project
Buckeye Corporations shall cooperate fully as and to the extent
reasonably requested by any of the other above-named parties, in
connection with the filing of Tax Returns pursuant to this Article XIX
and any audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon request of any
of the above-named parties) the provision of copies of records and
information which are reasonably relevant to any such Tax Return,
audit, litigation or other proceeding and making employees available on
a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Seller agrees to, and
Purchasers agrees to cause each of the Project Buckeye Corporations to,
retain all books and records with respect to Tax matters pertinent to
each of the Project Buckeye Corporations relating to any taxable period
beginning before the Closing Date until the expiration of the statute
of limitations (including any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements
entered into with any taxing authority. Within sixty (60) days after
the Closing Date, Seller will provide Purchasers with a schedule of all
material tax elections made by Xxxxxxxx and each of its Subsidiaries
which will affect the Taxes of US Purchaser, Xxxxxxxx or any of its
Subsidiaries for all taxable years which end on or after the Closing
Date; provided, however, that any elections made with respect to
Xxxxxxxx or any of its Subsidiaries 1998 Tax Returns will be provided
upon filing of documents with the taxing authorities. So long as
taxable periods of, or related to any Project Buckeye
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Corporation ending on or before the Closing Date remain open,
Purchasers will, and will cause any Project Buckeye Corporation, as the
case may be, to promptly notify Seller in writing of any pending or
threatened Tax audits or assessments for which Seller has or may have
liability. Seller will promptly notify Purchasers and any affected
Project Buckeye Corporation, as the case may be, in writing of any
written or other notification received by Seller from the Internal
Revenue Service or any other taxing authority of any proposed
adjustment raised in connection with a Tax audit, examination,
proceeding or determination of a taxable period of any Project Buckeye
Corporation, as the case may be, ending on or before the Closing Date.
19.2 TAX PERIODS ENDING ON OR BEFORE THE CLOSING DATE. Seller and
Purchaser shall jointly prepare or cause to be prepared, and
file or cause to be filed, and negotiate and agreed or caused
to be negotiated and agree all Tax Returns for each Project
Buckeye Corporation for all periods ending on or prior to the
Closing Date which Tax Returns shall be prepared in accordance
with the past practice and customs of the Project Buckeye
Corporation unless such past practice and customers are
clearly erroneous. Purchasers shall cause each of the Buckeye
Corporations to sign any claim or election relating to any
such Tax Return as jointly agreed by Purchaser and Seller. The
Seller and the Purchaser shall use all reasonable endeavours
to agree on the form of the Tax Returns to be submitted to the
relevant tax authority and both parties agree that such
agreement or consent shall not be unreasonably withheld or
delayed. If the Seller and the Purchaser are unable to agree
to the form of a Tax Return within 30 days of it being
prepared, the dispute in question shall be referred to an
independent firm of Accountants, jointly selected, by the
parties or in the absence of such agreement by the President
of the Institute of Chartered Accountants of England and Wales
in the case of the Buckeye Corporations which are resident in
the United Kingdom for tax purposes and the President of the
American Institution of Certificate Public Accountants in the
case of the Buckeye Corporations which are resident in the
United States for taxation purposes. Such person shall act as
an expert and save in the case of manifest error his
determination shall be binding on both parties. In the event
that any dispute arises between Seller and Purchaser regarding
the negotiation and/or agreement of any Tax Return, such
dispute shall be settled in the same manner as that set out in
this clause . Seller shall pay to Purchasers all Taxes shown
to be due on such Tax Returns within fifteen (15) days after
receipt of a xxxx from relevant Purchaser for such Taxes to
the extent such Taxes are not reflected in the reserve for Tax
Liability shown on the Balance Sheet of each Project Buckeye
Corporation at and for the fiscal years ended March 31, 1998
as adjusted for operations and transactions in the ordinary
course of business through the Closing Date in accordance with
the past practice and custom of the Project Buckeye
Corporations.
19.3 TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING
DATE. Purchasers shall prepare or cause to be prepared, and
file or cause to be
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filed, all Tax Returns of each Project Buckeye Corporation for
Tax periods which begin before the Closing Date and end after
the Closing Date. Seller shall pay to Purchaser within fifteen
(15) days after the receipt of a xxxx from Purchaser the
portion of such Taxes which relates to the portion of such
taxable period ending on the Closing Date to the extent such
Taxes are not reflected in the reserve for Tax Liability
(rather than any reserve for deferred Taxes established to
reflect timing differences between book and Tax income) shown
on the Balance Sheet of each Project Buckeye Corporation at
and for the fiscal year ended March 31, 1998, as adjusted for
operations and transactions in the ordinary course of business
through the Closing Date in accordance with the past practice
and custom of the Project Buckeye Corporations. For purposes
of this Section 19.3, in the case of any Taxes that are
imposed on a periodic basis and are payable for a taxable
period that includes (but does not end on) the Closing Date,
the portion of such Tax which relates to the portion of such
taxable period ending on the Closing Date shall (a) in the
case of any Taxes other than Taxes based upon or related to
income, sales, gross receipts, wages, capital expenditures or
expenses, be deemed to be the amount of such Tax for the
entire taxable period multiplied by a fraction the numerator
of which is the number of days in the taxable period ending on
the Closing Date and the denominator of which is the number of
days in the entire taxable period, and (b) in the case of any
Tax based upon or related to income, sales, gross receipts,
wages, capital expenditures or expenses, be deemed equal to
the amount which would be payable if the relevant taxable
period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocation shall be made in a
manner consistent with the prior custom and practice of each
Project Buckeye Corporation and Purchaser shall permit Seller
to review and comment on such determinations and make any such
revisions to such determinations as are reasonably requested
by Seller.
19.4 DEFENSE OF TAX CLAIM.
(a) Notwithstanding any other provision in this Agreement
to the contrary, if any third party shall notify UK
Purchaser, US Purchaser or Xxxxxxxx or any of its
Subsidiaries (the "Indemnified Party") with respect
to any matter relating to Taxes (a "Tax Claim") which
may give rise to a claim for indemnification against
Seller (the "Indemnifying Party") pursuant to Article
XI hereof, then the Indemnified Party shall promptly
and in any event within 10 days notify the
Indemnifying Party thereof in writing provided
however that no delay on the part of the Indemnified
Party shall relieve the Indemnifying party from any
obligations hereunder unless (and then solely to the
extent) that the Indemnifying Party is thereby
prejudiced.
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(b) Subject to Sections 19.4(c) and (d) below, the
Indemnifying Party will have the sole right to defend
the Indemnified Party against the Tax Claim with
counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (i) the Indemnifying
Party notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has given
written notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified
Party from and against the entirety of any adverse
consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, or
caused by the Tax Claim, and (ii) the Indemnifying
Party conducts the defense of the Tax Claim actively
and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Tax Claim in accordance with (b)
above, (i) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and
participate in, but not control the defense of the
Tax Claim, and (ii) the Indemnifying Party will not
consent to the entry of any judgment or enter into
any settlement with respect to the Tax Claim if such
judgment or settlement is likely to establish a
precedential custom or practice materially adverse to
the continuing business of the Indemnified Party or
otherwise have a material adverse effect on the
Indemnified Party for periods (or portions thereof)
beginning on or after the Closing Date without the
prior written consent of the Indemnified Party which
consent shall not be unreasonably withheld.
(d) In the event that any of the conditions in (b) above
is or becomes unsatisfied, (i) the Indemnified Party
may defend against, and consent to the entry of any
judgment or enter into any settlement with respect
to, the Tax Claim in any manner it reasonably may
deem appropriate (and the Indemnified Party need not
consult with the Indemnifying Party in connection
therewith); provided, however, that the Indemnified
Party shall not consent to the entry of any judgment
or enter into any settlement with respect to a Tax
Claim without the consent of Indemnifying Party which
consent shall not be unreasonably withheld, (ii) the
Indemnifying Party will reimburse the Indemnified
Party promptly and periodically for the costs of
defending against the Tax Claim (including reasonable
attorneys' fees and expenses), and (iii) the
Indemnifying Party will remain responsible for any
adverse consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, or
caused by the Tax Claim to the fullest extent
provided in this section.
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ARTICLE XX
----------
GUARANTEE AND INDEMNITY
-----------------------
20 GUARANTEE AND INDEMNITY
20.1 In consideration of Seller entering into this Agreement
US Purchaser hereby unconditionally and irrevocably
guarantees to Seller the due and punctual performance
and observance by UK Purchaser of all its obligations,
commitments, undertakings, warranties, indemnities and
covenants under or pursuant to this Agreement and the
Ancillary Agreements to which UK Purchaser is a party
(together "the Guaranteed Agreements") and agrees to
indemnify Purchaser against all losses, damages, costs
and expenses (including legal costs and expenses) which
Seller may suffer or incur through or arising from any
breach by UK Purchaser of such obligations,
commitments, warranties, undertakings, indemnities or
covenants. The liability of US Purchaser under this
Section 20 shall not be released or diminished by any
rearrangement or alteration of terms (whether of this
Agreement or otherwise) or any forbearance, neglect or
delay in seeking performance of the obligations hereby
imposed or any granting of time for such performance
but shall be subject to any defenses claims or counter
claims that UK Purchaser may have against Seller and to
any limitations expressly provided for in the
Guaranteed Agreements.
20.2 Subject to the foregoing if and whenever UK Purchaser
defaults for any reason whatsoever in the performance
of any obligation or liability undertaken or expressed
to be undertaken by it under or pursuant to any of the
Guaranteed Agreements, US Purchaser shall forthwith
upon demand unconditionally perform (or procure
performance of) and satisfy (or procure the
satisfaction of) the obligation or liability in regard
to which such default has been made in the manner
prescribed by that relevant Guaranteed Agreement and so
that the same benefits shall be conferred on Seller as
it would have received if such obligation or liability
had been duly performed and satisfied by the UK
purchaser. US Purchaser hereby waives any rights which
it may have to require Seller to proceed first against
or claim payment from UK Purchaser to the intent that
as between Seller and US Purchaser the latter shall be
liable as principal debtor as if it has entered all
undertakings, agreements and other obligations jointly
and severally with UK Purchaser.
20.3 This guarantee and indemnity is to be a continuing
security to Seller for all obligations, commitments,
warranties, undertakings, indemnities and covenants on
the part of UK Purchaser under or pursuant to the
Guaranteed Agreements and shall not be satisfied,
discharged or affected by an intermediate payment or
settlement of account by, or change in the constitution
or control of, or the insolvency of or winding up or
analogous
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preceding relating to, UK Purchaser or by any other
matter or thing whatsoever.
20.4 US Purchaser's liability under Section 20 shall not be
affected by any arrangements which Seller may make with
UK Purchaser which (but for this Section 20) might
operate to diminish or discharge the liability of or
otherwise provide a defence to a surety.
20.5 This guarantee and indemnity is in addition to and
without prejudice to and not in substitution for any
rights or security which Seller may now or hereafter
have or hold for the performance and observance of the
obligations, commitments, undertakings, covenants,
indemnities and warranties of UK Purchaser under or in
connection with the Guaranteed Agreements.
20.6 As a separate and independent stipulation subject to
any defenses claims or counter-claims that UK Purchaser
may have against Seller, and to any limitations
expressly provided for in the Guaranteed Agreements, US
Purchaser agrees that any obligation expressed to be
undertaken by UK Purchaser under the Guaranteed
Agreements (including, without limitation, any monies
expressed to be payable under the Guaranteed
Agreements) which may not be enforceable against or
recoverable from UK Purchaser by reason of any legal
limitation, disability or incapacity or any other fact
or circumstance shall nevertheless be enforceable
against or recoverable from US Purchaser as though the
same has been incurred by US Purchaser and US Purchaser
were sole or principal obligor in respect thereof and
shall be performed or paid by US Purchaser on demand.
ARTICLE XXI
-----------
US PHASE II
-----------
In respect of the Xxxxxxxx Environmental Report he parties agree:-
21.1 On Closing, Seller shall commission Xxxxxxx to carry out the
Investigation Programme and such follow-up investigation as is
reasonably necessary. Seller shall bear the cost of the
Investigation Programme and any follow-up investigation to the
extent that the costs do not exceed $70,000. Any costs exceeding
$70,000 shall be treated as part of the costs of the Works
Programme.
21.2 On completion of the Investigation Programme, Seller and US
Purchaser shall jointly commission Xxxxxxx to produce a Works
Programme which specifies whichever of the following or a
combination of the following which can be completed at the least
cost:-
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(a) such works as are reasonably necessary to reduce the
Pollutants to meet the generic standards for industrial
property set out in Ohio Administrative Code ss. 0000-000-00
as at the date hereof; or
(b) works related to the production of a risk assessment pursuant
to the procedures and requirements of a property-specific risk
assessment as set out in Ohio Administrative
Code ss.0000-000-00 as at date hereof to demonstrate that the
Pollutants do not pose a public health and safety risk
satisfactory to support a "no further action" decision
pursuant to the requirements of Revised Code Chapter 3746 et
seq and Ohio Administrative Code ss.3745-300 et seq by a
Certified Professional.
21.3 The Works Programme shall be submitted to Seller and US Purchaser for
approval. In the event of any disagreement between the parties in
relation to the Works Programme either party may request a Certified
Professional to act as an Expert subject to the approval of the non
requesting party which approval will not be unreasonably withheld. Such
Expert shall be independent and experienced in the matters in which the
parties are in disagreement. The Expert shall be instructed to give an
opinion on the matter that is the subject of the disagreement and in
giving that opinion the Expert must have regard to the matters set out
at Section 21.2 above. Except in the case of manifest error, Seller and
US Purchaser shall be bound by the opinion of such Expert who shall act
as an Expert and the costs of the Expert shall be shared equally
between them. When the Works Programme has been approved by the parties
or a determination has been made by the Expert, US Purchaser, at its
sole discretion, shall commission environmental consultants to carry
out the Works Programme.
21.4 The costs of the Works Programme shall be borne by the parties on the
following basis:
(a) the first $150,000 shall be borne by US Purchaser;
(b) thereafter costs shall be borne equally by Seller and US
Purchaser except that Seller's share shall not in aggregate
with any claims under this Agreement exceed the Cap set out in
Section 11.5(c) in Article XI;
(c) and thereafter any further costs shall be borne solely by US
Purchaser.
US Purchaser shall make all reasonable efforts to expedite completion
of both the Investigation Programme and the Works Programme.
21.5 Anything in this Agreement notwithstanding, the claims of
Purchasers in connection with, or arising from the Xxxxxxxx
Environmental Report or Pollutants shall be limited to those
provided under this Article XXI and Purchasers or the Project
Buckeye Corporation shall not be able to claim under any other
provision in this Agreement or under any laws.
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21.6 Purchasers or any Project Buckeye Corporation or any person or body
on their behalf shall not make a notification or disclose
information on any matters that could be subject to a claim under
this Article XXI to any regulatory authority or any other person
(other than a person commissioned to carry out the Investigation
Programme or Works Programme who shall be required to keep such
matters confidential and not make any such notification or
disclosure) unless required by the law.
DEFINITIONS
"Investigation Programme" means the Investigation Programme in
the agreed form;
"Xxxxxxx" shall mean environmental consultants
at 000 Xxxxx Xxxx Xxxxxx, Xxxxx
0000, Xxxxx, Xxxx;
"Xxxxxxxx Environmental means the Phase II report prepared
Report" by Xxxxxxx in respect of the
Xxxxxxxx Real Property at Ohio on
May 14 1998 under reference number
ss. 35-98094.00;
"Pollutants" means:-
Nickel and Arsenic at the Real
Property owned by Xxxxxxxx at Ohio;
TCE, and any degradation products
related thereto, Vinyl Chloride and
Antimony in the area around
boreholes SB-15, SB-2 and XX-00
XXX, XXX and cis-1, 2-DCE and any
degradation products related thereto
in the area outside the Building 39
as such substances and areas are
identified in the Xxxxxxxx
Environmental Report
"Works Programme" means the programme to deal with the
Pollutants as provided for in
Clauses 21.2 and 21.3 above
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ARTICLE XXII
------------
MISCELLANEOUS
-------------
22.1 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be
an original but all of which together will constitute
one and the same document.
22.2 CAPTIONS AND SECTION HEADINGS. Captions and section
headings are for convenience only, are not a part of
this Agreement and may not be used in construing it.
22.3 WAIVERS. Any failure by any of the parties to comply
with any of the obligations, agreements or conditions
set forth in this Agreement may be waived by the other
party or parties, but any such waiver will not be
deemed a waiver of any other obligation, agreement or
condition contained herein.
22.4 RIGHT OF INSPECTION. From and after the date of this
Agreement to the Closing Date, Seller will give to
Purchasers and their counsel, accountants and other
representatives, full access during normal business
hours to the offices, properties, agreements, records
and affairs of Project Buckeye Corporations, and will
furnish copies of all Contracts and other instruments
as Purchasers or their counsel may reasonably request.
Such investigation will not affect the warranties of
Seller under this Agreement. All such information will
be treated confidentially and will be used only for the
purposes intended. If the transactions contemplated
under this Agreement do not take place, all documents
and other property of the Project Buckeye Corporations
or Seller will be returned and all disclosures and
information given to Purchaser as contemplated under
this Agreement will be treated as confidential and not
disclosed to others unless disclosed publicly by Seller
or other third parties without fault on the part of
Purchasers, or unless otherwise required by law.
22.5 AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS. Each of the
parties agrees to cooperate in the effectuation of
the transactions contemplated under this Agreement
and to execute any and all additional documents and
to take such additional action as is reasonably
necessary or appropriate for such purposes.
22.6 ENTIRE AGREEMENT. This Agreement, including any
certificate, schedule, exhibit or other document
delivered pursuant to its terms, constitutes the entire
agreement between the parties. There are no verbal
agreements, representations, warranties, undertakings
or agreements between the parties, and this Agreement
may not be amended or modified in any respect, except
by a written instrument signed by the parties to this
Agreement.
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22.7 GOVERNING LAWS. This Agreement is to governed by and
construed in accordance with the laws of England and
Wales. The parties hereto hereby irrevocably submit to
the exclusive jurisdiction of any English court over
any action or proceeding arising out of or relating to
this Agreement, and the parties hereto hereby
irrevocably agree that all claims in respect of such
action or proceeding may be heard and determined in
such court.
22.8 KNOWLEDGE. All references to "knowledge" of Seller or
"best knowledge" of Seller, or "known to" or so far as
Seller is aware or any similar expression which
qualifies any of the warranties means the actual
knowledge of Seller after making enquiries of the
following people in respect of the warranties noted
against their names.
NAME WARRANTIES
Xxxxxx Xxxxx ) All
Xxxxx Xxxxxx )
Xxxxx Xxxxxxx )
Xxxx Xxxxxxxx )
Xxxxxxxx Xxxxx )
Xxxx Xxxx ) All but only so far as they
) relate to Carbons Croftshaw
) Lakeland and Xxxxxxxx
Xxxx XxxxxXxxxx ) All (save for any relating to taxation)
Xxxx Xxxxxxx ) but only so far as they relate to
Xxxxx Xxxxxxx ) Xxxxxxxx
Xxxx Xxxxxxxxx ) All (save for any relating to taxation)
Xxxxxx Xxxxx ) but only so far as they relate to
) Carbons and Lakeland
Xxxxxx Xxxxxxx ) All (save for any matter relating to
Xxxxx Xxxx ) taxation) but only so far as they relate
) to Croftshaw
22.9 PRESS RELEASES. Prior to the Closing, neither party
will issue or cause the publication of any press
release or other public announcement with respect to
this Agreement or the transactions contemplated under
this Agreement without the prior consent of the other
party first obtained; provided, however, that nothing
in this Agreement will prohibit either party from
issuing or causing publication of any press release or
public announcement to the extent that such action is
required by law or any regulatory authority, in which
case the party making such determination will, if
practicable under the circumstances, use reasonable
efforts to allow the other party reasonable
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time to comment on such release or announcement in
advance of its issuance.
22.10 CURRENCY. Any references in this Agreement to
"dollars" shall mean U.S. Dollars.
22.11 AGENTS FOR SERVICE. Purchasers appoint Messrs Edge &
Xxxxxxx of Rutland House 000 Xxxxxx Xxxxxx Xxxxxxxxxx
X0 0XX to accept service of any proceedings (on
Purchaser's behalf) which may be commenced in the
Courts of England
22.12 AGREED FORM DOCUMENTS. Any document referred to in this
Agreement as being "in the agreed form" shall mean a
document which has been agreed between the parties at
the date of this Agreement and initialled by the
parties to confirm such agreement.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement
on the date first above written.
WATERLINK, INC.
By:
----------------------------------
Name:
------------------------------
Title:
-----------------------------
"US PURCHASER"
WATERLINK (UK) HOLDINGS LIMITED
By:
----------------------------------
Name:
------------------------------
Title:
-----------------------------
"UK PURCHASER"
-------------------------------------
By:
----------------------------------
Name:
------------------------------
Title:
-----------------------------
"SELLER"
77
