EXHIBIT 2.3
DATED January 22, 1998
(1) XXXXX INDUSTRIES PLC
(2) PRESTOLITE ELECTRIC INCORPORATED
(3) PRESTOLITE NEWCO, INC.
A G R E E M E N T
for the sale and purchase of the
entire issued share capital of Xxxxx Argentine Holdings, Inc. and shares in
Xxxxx Indiel Argentina S.A.
Eversheds
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx
X0 0XX
Tel: 0000 000 0000
Fax: 0000 000 0000
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THIS AGREEMENT is made on January 22, 1998
BETWEEN:-
(1) XXXXX INDUSTRIES PLC whose registered office is at Xxxxxxxxx Xxxx,
Xxxxxxxx X00 0XX
(2) PRESTOLITE ELECTRIC INCORPORATED whose principal place of business is at
0000 Xxxxxxxxxxxx Xxxxxxxxx, Xxx Xxxxx, XX 00000, XXX
(3) PRESTOLITE NEWCO, INC. whose principal place of business is at 0000
Xxxxxxxxxxxx Xxxxxxxxx, Xxx Xxxxx, XX 00000, XXX
1. INTERPRETATION
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In this Agreement:
1.1 the following expressions have the following meanings unless
inconsistent with the context:
Expression Meaning
"the Accounting Principles" The accounting policies and principles
as set out in Schedule 5
"the Ancillary Agreements" The meaning attributed to that
expression in the Umbrella Agreement
"the Associated Documents" The meaning attributed to that
expression in the Umbrella Agreement
"the Associated Company" Any person which is either a holding
company (whether direct or indirect) or
a
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subsidiary company of the relevant
party or a subsidiary company of any
such holding company or is otherwise
directly or indirectly controlled by or
is under the same control, direct or
indirect, or the relevant party
"the Auditors" The auditors for the time being of the
Group
"A$" Argentinean Pesos
"the Bank Debt" All monies due and outstanding from any
member of the Group to any bank
"Business Day" Any day (other than Saturday or Sunday)
on which Banks in Argentina are open
for a full range of banking
transactions
"the Company" Xxxxx Indiel Argentina S.A., T33, F248,
N25, Registro Publico de Commercio of
the Province of San Xxxx
"Completion" Completion of the sale and purchase
hereby agreed in accordance with clause
6 and the expression "the Completion
Date" shall be construed accordingly
"the Consideration" The consideration for the sale of the
Indiel Sale Shares and the Xxxxx Newco
Shares calculated in accordance with
clause 3
"consistently applied" With reference to any particular asset,
liability, income or expenditure, to
the extent not provided to the contrary
in the Accounting
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Principles, applied on the bases of
practices and methods consistent with
those used in the preparation of the
Accounts (as defined in Schedule 4
below)
"the Disclosure Letter" The letter having the same date as this
Agreement from the Vendor to the
Purchasers qualifying the Warranties
"the Distribution Agreement" The distribution agreement in the
agreed terms between Xxxxx Aftermarket
Operations a division of Xxxxx Limited
and the Company
"the "A" Loan Notes" The A$1.0 'A' Guaranteed Unsecured Loan
Notes in the agreed terms to be issued
by Prestolite Newco
"the 'B' Loan Notes" The A$1.0 'B' Guaranteed Unsecured Loan
Notes in the agreed terms to be issued
by Prestolite Newco
"the 'C' Loan Notes" The A$1.0 'C' Guaranteed Unsecured Loan
Notes in the agreed terms to be issued
by Prestolite Newco
"the Loan Notes" All or any of the 'A' Loan Notes, 'B'
Loan Notes or 'C' Loan Notes
"EBITDA" Profit before interest and tax but
adding back depreciation as calculated
and determined in accordance with the
provisions of the 'C' Loan Notes and
this Agreement
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"the English Sale Agreement" The meaning attributed to that
expression in the Umbrella Agreement
"Environment" The aggregate of surrounding objects
conditions and influences that
influence the life and habits of human
beings or any other organism or
collection of organisms and
"Environmental" shall have a
corresponding meaning
"the Environmental Claims" Save as set out in the Environmental
Indemnity Exceptions Letter any action,
demand, demand letter, claim, notice of
non-compliance or violation, notice of
liability, proceeding, consent order or
consent agreement (including
investigation, corrective and remedial
action costs for works required by any
competent authority or governmental
body of competent jurisdiction) in
respect of any act or omission of any
Group Member prior to Completion
relating in any way to any
Environmental Law, Environmental Permit
or Hazardous Substances or the
generation, transportation, placement,
storage, discharge, treatment, use
and/or disposal by the Company and/or
by any other person of any Hazardous
Substances or other materials the cause
of which arose prior to the Completion
Date in and/or on and/or from, as the
case may be, any site and/or facility
and/or at the
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Property SAVE THAT any Environmental
Claims arising from an Environmental
Law not in effect at the date of this
Agreement shall be limited to all costs
of remedial or clean-up action incurred
by the Purchasers or any Group Member
in order to meet the minimum
requirements of any competent authority
and arising in consequence of the
condition of the Property prior to or
at Completion or arising from the
activities of any Group Member or its
predecessors in title at the Property
prior to Completion; for the purposes
of this definition it is agreed that
the expression "remedial and clean-up
action" shall be limited to appropriate
treatment of contaminated material,
whether by destruction, removal,
containment or otherwise but shall not
include costs associated with the
continued operation of Environmental
Permits or the general operational
requirements of the business
"the Environmental Indemnity The letter from the Vendor to the
Exceptions Letter" Purchasers having the same date as this
Agreement setting out matters which are
relevant for the purposes of liability
under the Environmental Indemnity
"Environmental Law" Any statute, legislative or other
measure now in effect or in effect by
the fifth anniversary of
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this agreement as is and to the extent
(in accordance with current policy and
practice) or would be and to the extent
(in accordance with the policy and
practice prevailing at that time)
enforced by the relevant statutory
authority following judicial or
administrative interpretation including
any judicial or administrative order,
consent decree or judgment, relating to
pollution or protection of the
environment, health, safety or natural
resources or any other provincial or
local law, as is now in effect or as
may be amended, modified, enacted,
ratified or which otherwise may become
applicable by the fifth anniversary of
this Agreement and the expression
"Environmental Law" shall also include
any statute, legislative or other
measure not in effect by the fifth
anniversary of this Agreement but under
formal consideration at that time by
any competent authority or governmental
body of competent jurisdiction and
which in the light of the circumstances
then prevailing is reasonably likely to
be brought into effect and which is
subsequently brought into full force
and effect (to the intent and effect
that the relevant authorities are
implementing and enforcing the same) by
the sixth anniversary of this Agreement
("the Potential Legislation") AND IT IS
HEREBY AGREED that the Potential
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Legislation may only give rise to an
Environmental Claim if written notice
of such Potential Legislation is given
to the Vendor by the Purchasers on or
before the fifth anniversary of this
Agreement
"Environmental Permit" Any permit, approval, identification
number, license or other authorisation
required by any party under any
applicable Environmental Law, bylaws
and/or regulations, as the case may be
"the Environmental The indemnity as to environmental
Indemnity" issues contained in clause 8.1.1
"the Exchange Rate" The exchange rate applicable for
converting A$ into United States
dollars or, as the case may be, pounds
sterling calculated at the average of
the "bid" and "asked" exchange rate
quoted by Reuters (or a different
independent wire service providing
international spot exchange rates as
agreed by the parties) in New York at
1.00 p.m. on (unless the context
otherwise requires) the day which is
the Business Day before payment of the
amount in question is due or, in the
case of a claim under the Warranties or
Indemnities, on the date on which the
claim is made
"Fines" Fines and penalties which the Company
or
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any of its subsidiaries becomes liable
to pay, to any governmental or
regulatory authority or department as a
result of a violation by or other non-
compliance on the part of the Company
or any of its subsidiaries or any of
their respective agents for whose acts
or omissions the Company or the
relevant subsidiary is vicariously
liable (or where the Company or its
relevant subsidiary is liable to
indemnify such agent such amount for
which the Company or the relevant
subsidiary is liable to pay in
indemnification of such agent) of or
with any law (including any statutory
or regulatory provisions but excluding
any Environmental Law) applicable to
the Company or the relevant subsidiary
at Completion and any other payment in
the nature of a fine or penalty which
the Company or any of its subsidiaries
becomes liable to make to any such
authority or department as a result of
any such violation or non-compliance
where and to the extent that in either
or any such event such violation or
non-compliance occurred prior to the
Completion Date.
"the First Year" The year ending on 31st December 1998
"the Second Year" The year ending on 31st December 1999
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"the Third Year" The year ending on 31st December 2000
"the First Years Accounts" The profit and loss account of the
Group in respect of the First Year
prepared on a consolidated basis and in
accordance with clause 4
"the Second Years Accounts" The profit and loss account of the
Group in respect of the Second Year
prepared on a consolidated basis and in
accordance with clause 4
"the Third Years Accounts" The profit and loss account of the
Group in respect of the Third Year
prepared on a consolidated basis and in
accordance with clause 4
"the Fixed Asset Amount" A$18,922,000
"the Fixed Assets" The fixed assets, including property
plant equipment and being shown for the
purposes of illustration only in the
proforma statement which appears in
schedule 6
"the Group" Together the Company and each other
company details of which are set out in
Schedule 1 Part 2
"Group Member" Any company which is a member of the
Group
"Hazardous Substances" Any materials or substances defined or
regulated as toxic or hazardous or as a
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pollutant or contaminant or as a
hazardous waste in terms of the
hazardous substance laws and
regulations of Argentina which are
relevant to the location in question
and/or any other applicable national,
provincial and/or local legislation,
bylaws and/or regulations
"Incremental Cost" In relation to any repair or
replacement, the cost of performing
such repair or replacing such product
(which shall not for the avoidance of
doubt include an apportionment of any
fixed cost or overhead for which the
relevant Group Member would have been
liable or would have incurred had it
not been obliged to carry out such
repair or replacement) less the net
scrap or core value (as appropriate) of
the replaced product or as the case may
be materials actually recovered by the
relevant Group Member or the Purchasers
after allowing for all costs of
recovery
"the Capped Indemnities" All indemnities given by the Vendor
under this Agreement (other than the
Uncapped Indemnities)
"the Uncapped Indemnities The indemnities given by the Vendor in
clauses 7.1 and 8.1.3 of this
Agreement, the indemnities dealing with
expenses and the like contained in each
of clauses 5.5.4, 5.6,
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5.7, 6.6 and 7.8 and the Taxation
Indemnities
"the Indemnities" The Capped Indemnities and the Uncapped
Indemnities taken together
"the Indiel Option" The option agreement in the agreed
terms made between the Vendor and PEI
pursuant to which options are granted
over the Indiel Option Shares
"the Irrevocable Capital The sum of $3,500,000 provided by the
Contribution" Vendor to the Company by way of
irrevocable capital contribution (to
the intent and effect that the same
shall be and shall be treated as an
accretion to the amount standing to the
credit of the capital and reserves of
the Company)
"Labour Contingencies" i) Any payment made to or other costs
incurred in respect of employees (which
expression shall include persons who
are employees for the purposes of
Argentine Law where the Company has
entered into an agreement with an
independent third party whereby it has
created a labour relationship that
falls under the Argentine Labour
Contract Act, as construed and applied
under Argentine Law) of the Company
where the obligation to make such
payment or incur such costs falls on
the Company and arises directly from an
unlawful or negligent act or omission
by any
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Group Member prior to Completion (and
then only to the extent that the same
occurred prior to Completion) or from a
breach on the part of any Group Member
of its statutory obligations to
employees where such unlawful or
negligent act or omission or such
breach occurred prior to Completion
(and then only to the extent that the
same occurred prior to Completion) and
which, in any such case, leads to an
obligation to make a payment or to a
liability after Completion on the part
of any Group Member and in respect of
which the Purchaser is able to
demonstrate that, were it not for such
act omission or breach the obligation
or liability would not have arisen, or
would not have been so great; and
ii) any liability of any Group Member
arising in respect of the period prior
to Completion as a direct consequence
of the wrong classification of
personnel as independent contractors
"Xxxxx Competitor" Bosch, Magneti Marelli and Valeo and
any Associated Company of any such
entity
"the Xxxxx Group" LucasVarity and any subsidiary or
subsidiary undertaking of LucasVarity
for the time being but excluding the
Group and Xxxxx Newco
"the Xxxxx Loan" The sum of A$5million due from the
Group to
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the Vendor or another member
of the Xxxxx Group on loan account at
Completion
"Xxxxx Newco" Xxxxx Argentine Holdings, Inc. a
Delaware corporation. Further details
of Xxxxx Newco are set out in Schedule
2
"the Other Sale Agreements" The South African Sale Agreement, the
English Sale Agreement (as each such
expression is defined in the Umbrella
Agreement) and the LAO Sale and
Transition Agreement, one of the
Ancillary Agreements (as defined in the
Umbrella Agreement)
"the Other Warranties and The Warranties and Capped Indemnities
Other Capped Indemnities" on the part of the relevant vendor
contained in each of the Other Sale
Agreements
"PEI" Prestolite Electric Incorporated, a
Delaware Corporation
"Prestolite Newco" Prestolite Newco, Inc., a Delaware
Corporation
"the Property" The property specified in Schedule 3
(and, if more than one, each such
property) and each and every part of
such property
"the Provisional the sum of A$270,000
Consideration"
"the Purchasers" PEI and Prestolite Newco taken together
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"the Purchasers' Group" The Purchasers, any subsidiary or
subsidiary undertaking of either of
them, any holding company of either of
them and any subsidiary or subsidiary
undertaking of such holding company
"the Purchasers' Counsel" Xxxxxxx Xxxxxxx & Xxxxxxxx LLP of Xxx
Xxxxxx Xxxxx Xxxxx Xxxxxx Xxxxx Xxx
Xxxxxxxxx XX 00000 and Xxxxxxx & Xxxx
xx Xxxxx 0000, 0000 Xxxxxx Xxxxx,
Xxxxxxxxx
"Rights" Collectively a) the right to any
dividend declared by the Company in
cash or in kind that has not been
distributed on Completion b) all rights
arising from revocable or irrevocable
capital contributions made by the
Vendor to the Company prior to or on
Completion which at Completion have not
been capitalised (or the capitalisation
of which has not yet been approved by
the respective shareholders meetings of
the Company c) all the capital of the
Company subscribed to by the Vendor
before Completion and not issued at
Completion d) all credits and capital
of the Company and rights (whether
actual or contingent) convertible into
capital of the Company that the Vendor
may have against the Company at
completion e) all rights to subscribe
to capital increases of the Company
which may be
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outstanding at Completion and f) all
other rights relating to the Indiel
Sale Shares as of Completion
"the Sale Agreements" The meaning attributed to that phrase
in the Umbrella Agreement
"the Indiel Shares" The 7,739,663 shares in the capital of
the Company registered in the name of
the Vendor (as detailed in Schedule 1
part 1)
"the Indiel Sale Shares" 1,393,139 of the Indiel Shares to be
sold by the Vendor to PEI pursuant to
this Agreement
"the Indiel Option Shares" 6,346,524 of the Indiel Shares to be
the subject of the Indiel Option
"the Xxxxx Newco Shares" The entire issued share capital of
Xxxxx Argentine Holdings, Inc. such
shares being registered in the name of
the Vendor
"Shared IP" Except as specifically described in and
licensed to the Company or any Group
Member by any of the Ancillary
Agreements all intellectual property
rights (whether registered or
unregistered) other than trade marks
owned by the Vendor or any other member
of the Xxxxx Group and used by the
Company or any Group Member and also
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used by the Vendor or another member of
Xxxxx Group in relation to its
business, subsisting in any part of the
world including service marks, designs,
design rights, copyright (whether in
computer programs or not) patents (and
all applications in respect of any of
the foregoing);
"the Shareholders Funds" The aggregate (calculated at Completion
in accordance with clause 3 and shown
by the Final Completion Statement) of
the amount of the issued share capital
of the Company plus or minus the amount
standing to the credit or debit of the
Company's consolidated reserves
excluding the Tax Receivable as defined
in the 'A' Loan Note but including for
the avoidance of any doubt the sum of
A$7,000,000 capitalised as a
consequence of the shareholders meeting
held on 28th November 1997 which sum is
shown for illustration only as
"additional paid in capital in the
proforma balance sheet set out in
Schedule 6 and the Irrevocable Capital
Contribution
"the Taxation Indemnities" The Deed of Tax Indemnity in the agreed
terms
"the Taxation Warranties" The warranties contained in paragraph
18 of the Warranties
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"the Umbrella Agreement" An agreement dated the same date as
this Agreement relating to, inter alia,
the transaction contemplated by this
Agreement made between Xxxxx Industries
plc and others (1) Prestolite Electric
Limited and Others (2) and PEI Holding
Inc (3) in the agreed terms
"the Vendor" Xxxxx Industries plc , registered
number 54802
"the Vendor's Solicitors" Eversheds of 00 Xxxxxxx Xxxxxx,
Xxxxxxxxxx X0 0XX
"the Vendor's Argentine Xxxxx, Xxxxxxxx & Xxxxxx of Av.
Counsel" Corrientes 000, 0xx Xxxxx, 0000 Xxxxxx
Xxxxx, Xxxxxxxxx
"the Warranties" The warranties, representations and
undertakings set out or referred to in
clause 5 and Schedule 4;
1.2 references to any statute or statutory provisions will, unless the
context otherwise requires, be construed as Argentinean statutes or
statutory provisions and as including references to any earlier
statute or the corresponding provisions of any earlier statute,
whether repealed or not, directly or indirectly amended, consolidated,
extended or replaced by such statute or provisions, or re-enacted in
such statute or provisions, and to any subsequent statute or the
corresponding provisions of any subsequent statute in force at any
time prior to Completion directly or indirectly amending,
consolidating, extending, replacing or re-enacting the same, and will
include any orders, regulations, instruments or other subordinate
legislation made under the relevant statute or statutory provisions
which are in force prior to Completion;
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1.3 references to persons will be construed so as to include bodies
corporate, unincorporated associations and partnerships;
1.4 references to a document being "in the agreed terms" will be construed
as references to that document in the form agreed and initialled by or
on behalf of the Vendor and the Purchasers;
1.5 references to clauses and Schedules are to clauses of and Schedules to
this Agreement, and references to paragraphs are to paragraphs in the
Schedule in which such references appear;
1.6 the Schedules form part of this Agreement and will have the same force
and effect as if expressly set out in the body of this Agreement;
1.7 the headings to the clauses of this Agreement and to the paragraphs of
the Schedules (save for the headings in Schedules 1 and 2) will not
affect its construction;
1.8 all obligations of the Purchasers under this Agreement are joint and
several;
1.9 where in this Agreement there is an obligation in favour of the
Purchasers the same shall be an obligation owed to them together as if
they were one person (and accordingly an obligation to pay them a sum
of money shall be an obligation in favour of them together and not to
pay such sum to each of them);
1.10 for the purposes of this Agreement a company is a "subsidiary" of
another company, its "holding company" if that other company:-
1.10.1 holds a majority whether directly or indirectly of the
voting rights in it; or
1.10.2 is a member of it and has the right to appoint or remove a
majority of its board of directors; or
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1.10.3 is a member of it and controls whether directly or
indirectly alone or pursuant to an agreement with other
shareholders or members, a majority of the voting rights
in it; and
1.11 for the purposes of this Agreement the expression "subsidiary
undertaking" shall have the meaning attributed to that expression in
the Companies Xxx 0000 (legislation of England)
2. SALE AND PURCHASE
-----------------
2.1 The Vendor will sell and:
2.1.1 Prestolite Newco will buy the Xxxxx Newco Shares;
2.1.2 PEI will buy the Indiel Sale Shares; and
2.1.3 PEI will buy the Xxxxx Loan
2.2 Each of the Xxxxx Newco Shares and the Indiel Sale Shares will be sold
and bought with all Rights, including for the avoidance of doubt the
benefit of the Irrevocable Capital Contribution.
2.3 The Purchasers will not be obliged to complete the purchase of any of
the Xxxxx Newco Shares or the Indiel Sale Shares or the Xxxxx Loan
unless the purchase of all of them is completed simultaneously.
3. CONSIDERATION
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3.1 The purchase price for:
3.1.1 the Xxxxx Newco Shares is
3.1.1.1 A$1 (but subject to adjustment in accordance with
this clause 3 if clause 3.12.2 applies); and
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3.1.1.2 the issue and allotment to the Vendor of the 'A'
Loan Notes, the 'B' Loan Notes and the 'C' Loan
Notes;
3.1.2 the Indiel Sale Shares is A$270,000 (but subject to
adjustment in accordance with this clause 3); and
3.1.3 the Xxxxx Loan is A$3,587,000
3.2 On Completion the Purchasers shall pay to the Vendor in cash the
Provisional Consideration, shall pay the consideration for the Xxxxx
Loan as referred to in clause 3.1.3 and shall discharge or procure
that the Group discharges the Bank Debt.
3.3 The following provisions shall apply regarding the calculation of the
Shareholders Funds, namely:
3.3.1 The Vendor shall, in conjunction with local management of
the Group, and the Purchasers procure that
3.3.1.1 (unless the Vendor and the Purchasers agree to
the contrary) on the day of Completion there is
carried out a stock-take (in the manner set out
in the Accounting Principles); and
3.3.1.2 immediately following Completion there is
undertaken a review of the assets and liabilities
(excluding the Fixed Assets) of each Group
Member;
for the purposes of ascertaining the data to which the
Accounting Principles shall be consistently applied in
order to prepare the
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statements that are contemplated as being prepared in
accordance with this clause 3 and so as to determine the
Shareholders Funds.
3.3.2 Each of the Vendor and the Purchasers shall be entitled to
have several representatives present at any stock-take;
neither shall be entitled, in the absence of manifest
error, to raise any objection as to the correctness of any
data relating to the quantities and descriptions of the
items the subject of the stocktake if no representative of
the relevant party attends such stocktake.
3.3.3 The Purchasers will on and after Completion allow the
Vendor full access to all properties occupied by any Group
Member and occupied by any other member of the Purchaser's
Group for the purposes of the business carried on by the
Group all relevant employees and all records, information
and other documentation to enable the Vendor to carry out
and complete such stock-take, (if the same is not
completed before Completion) and review and to prepare the
draft Completion Statement defined and referred to in
clause 3.4. In particular but without limitation to the
foregoing the Purchasers will grant and procure that there
is granted to the Vendor access to and the services of
Xxxx Xxxxx for all purposes of this clause 3, including,
without limitation, the ascertainment of Shareholders
Funds pursuant to this clause 3.
3.3.4 The Shareholders Funds shall be determined in accordance
with the Accounting Principles consistently applied. If
and to the extent any matter arises which is not dealt
with in the Accounting Principles the same shall be
determined on a basis which is consistent with the
Accounts (as defined in schedule 4) or in the event of a
new issue not dealt with in the Accounts in accordance
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with generally accepted accounting principles in the UK;
in either event materiality shall be determined in
relation to the Group.
3.3.5 For the purposes of determining Shareholders Funds a sum
equal to the Fixed Asset Amount shall be attributed to the
Fixed Assets, and the Tax Receivable as defined in the 'A'
Loan Note shall not be treated as an asset of the Company.
For the avoidance of doubt the sum of A$7,000,000
capitalised as a consequence of the shareholders meeting
held on 28 November 1997 and the Irrevocable Capital
Contribution shall be shown as assets of the Company.
3.3.6 The provisions of clause 7.12 shall be reflected in the
Final Completion Statement with regard to pensions. No
other provision with regard to pensions shall be made.
3.4 Within 45 days following Completion the Shareholders Funds shall be
ascertained by the Vendor and the Vendor shall serve a written
statement ("the draft Completion Statement") on the Purchasers within
such period relating to the Group showing the amounts attributable to
Shareholders Funds calculated in accordance with clause 3.3. Such
draft Completion Statement shall also show the sum due to or from the
Purchaser having regard to the provisions of clauses 3.12 and 3.13
below and the amount of the Provisional Consideration paid by the
Purchaser on Completion. All sums in the draft Completion Statement
shall be expressed in A$.
3.5 Subject to the provisions of clause 3.3, the Completion Statement
shall adopt the format set out in the pro forma statement which
appears set out in Schedule 6.
3.6 Unless the Purchasers shall notify the Vendor within 30 days after its
receipt of the draft Completion Statement that it does not accept and
agree that its
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contents have been prepared in accordance with the provisions of this
Agreement then the Purchaser shall be deemed to have accepted and
agreed the contents of the draft Completion Statement for the purposes
of this Agreement. Unless the Vendor shall otherwise agree, any such
notification on the part of the Purchaser shall specify in reasonable
detail the matters in dispute.
3.7 If within the aforesaid period of 30 days the Purchasers shall notify
the Vendor in writing that they do not accept and agree that the
contents of the draft Completion Statement have been prepared in
accordance with the provisions of this Agreement then the Purchasers
and the Vendor shall endeavour to reach agreement upon adjustments to
the draft Completion Statement to meet the Purchasers' objections. For
the avoidance of any doubt any matters not objected to in writing
within the 30 day notice period referred to in clause 3.6 above shall
be deemed agreed by the Purchasers.
3.8 If the Vendor and the Purchasers are unable to reach agreement as
aforesaid within 21 days of receipt by the Vendor of the last
notification of objection validly served under clause 3.7 or within
such later time as the Vendor and the Purchasers may agree then any
matters not so resolved shall be submitted to an independent
accounting firm of international reputation mutually acceptable to the
Vendor and the Purchasers or in default of agreement between them
within 7 days after the expiration of such 21 day period or further
period agreed by the Vendor and the Purchasers to be selected at the
instance of either of them by the President for the time being of the
Institute of Chartered Accountants in England and Wales ('the
Independent Accountant') for final resolution in accordance solely and
exclusively with this Agreement, the Accounting Principles
consistently applied and the provisions of clause 3.3.4. Such
submission shall be in the form of written statements of position by
the Vendor and the Purchasers, as well as an opportunity to respond to
such written statements and any request for statements or information
from the Independent Accountant. The Vendor and the Purchasers shall
allow the Independent
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Accountant full access to all relevant accounting and other records of
the Group, the Property and all relevant employees as it shall require
for the purpose of giving its determination hereunder. The Vendor and
the Purchasers shall co-operate to procure that the Independent
Accountant is able to reach its decision as to any matter referred to
it as expeditiously as possible. If the Independent Accountant
determines that the resolution of a disputed item requires an
interpretation of law then the Independent Accountant may request an
independent law firm of national standing in Argentina chosen by it to
render a legal opinion as to such matter. Such opinion shall in the
absence of manifest error be final and binding. The Independent
Accountant shall act as an expert and not as an arbitrator and shall
be directed by the Vendor and the Purchasers to make its determination
as soon as possible after the matter in dispute is submitted to it and
such determination shall be final and binding upon the parties hereto.
In giving its determination the Independent Accountant shall also
adjust the draft Completion Statement if required to reflect the
decision of the Independent Accountant. The costs of such Independent
Accountant's review (including reasonable lawyer's fees, if any) shall
be borne by the party or parties in inverse proportion to their
success in the resolution of the dispute between them.
3.9 For the purposes of this Agreement the expression "the Final
Completion Statement" shall mean:
3.9.1 the draft Completion Statement which the Purchasers are
deemed to have accepted and agreed pursuant to clause 3.6
or with which the Purchasers indicate their acceptance and
agreement within the 30 day period referred to in clause
3.6 whereupon (in either event) the contents of the same
shall become and be final and binding on the Vendor and
the Purchasers for the purposes of this Agreement; or
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3.9.2 the draft Completion Statement bearing any adjustment made
pursuant to clause 3.7, if clause 3.7 applies and
agreement is reached between the Vendor and the Purchasers
as contemplated therein whereupon the contents of the same
shall become and be final and binding on the Vendor and
the Purchasers for the purposes of this Agreement; or
3.9.3 the draft Completion Statement as agreed by the
Independent Accountant or, as the case may be, any revised
Completion Statement produced by the Independent
Accountant as contemplated by clause 3.8 whereupon (in
either event) the contents thereof shall become and be
final and binding upon the Vendor and the Purchasers for
the purposes of this Agreement.
3.10 For the purposes of determining the Shareholders Funds and all other
matters contemplated as being determined in this Agreement by
reference to the Final Completion Statement, the Final Completion
Statement and the contents thereof shall (save in the case of manifest
error) be final and binding on the Vendor and the Purchasers.
3.11 Any costs incurred by the Purchasers, the Vendor, Xxxxx Newco or any
member of the Group in acting in the manner contemplated by this
clause 3 including, without limitation, any professional costs and
expenses shall be borne by the Purchasers or the Vendor as appropriate
save as contemplated by clause 3.8 if that clause applies. It is
agreed and declared that in any event no provision for such costs
(including any costs incurred by the Group) shall be contained in the
Final Completion Statement.
3.12 If the Shareholders Funds agreed or ascertained in accordance with
clause 3:
3.12.1 are less than A$28,556,000 the Vendor shall pay to or
otherwise reimburse the Purchasers the deficiency ("the
Deficiency") in
-26-
accordance with clause 3.13 together with interest under
clause 3.14;
3.12.2 are more than A$28,556,000 the Purchasers shall pay to the
Vendor the excess in cash within 5 days of such agreement
or ascertainment together with interest under clause 3.14
by way of further consideration for the Xxxxx Newco
Shares.
3.13 If clause 3.12.1 applies (to the intent and effect that the Vendor is
liable to pay to or otherwise reimburse the Purchasers the Deficiency)
the Vendor shall :
3.13.1 firstly agree that the monies payable to the Vendor
pursuant to the Indiel Option shall be reduced to the
extent of the Deficiency to the intent and effect that the
price of the shares referred to in the Indiel Option shall
be reduced accordingly but so that the price for the
shares referred to therein shall not be less than A$1; and
to the extent that the Deficiency has not been satisfied
3.13.2 secondly reimburse to PEI the Deficiency minus the sums
reimbursed or otherwise dealt with pursuant to clause
3.13.1 from the A$270,000 paid by PEI in respect of the
Indiel Sale Shares; and to the extent the Deficiency has
not been satisfied
3.13.3 finally pay to the Purchasers the balance in cash within 5
days of reaching agreement in respect of or otherwise
ascertaining the amount of the Shareholders Funds in
accordance with this clause 3
3.14 The Vendor shall pay to the Purchasers or the Purchasers shall pay to
the Vendor (as the case may be) interest on any sum due under clause
3.12 at the rate per annum which is 2% above Barclays Bank plc's base
lending rate from time to time, such interest to accrue from day to
day from the Completion Date until the due date for payment in
accordance with the foregoing provisions of
-27-
this clause 3 Provided always that to the extent that the Vendor is
liable under clause 3.12 in respect of the Deficiency and the amount
thereof is set off against and so reduces the price payable in
respect of the Indiel Option Shares (pursuant to clause 3.13.1) no
interest shall arise or be payable in respect of such amount.
3.15 The following provisions shall apply regarding the payments to be
made:
3.15.1 all sums due from the Purchasers to the Vendor under this
Agreement shall be paid in United States Dollars to the
Vendor by way of telegraphic transfer to the following
account:-
Name: Xxxxx Limited
Bank: Barclays Bank Plc
Branch: Northern Payment Centre
Salford
Sort Code: 20-54-78
Account No: 00000000
or to such other account as the Vendor may hereafter
nominate in writing to the Purchasers;
3.15.2 all sums due from the Vendor to the Purchasers under this
Agreement shall be paid in United States Dollars to the
Purchasers by way of telegraphic transfer to the following
account:
Name: Prestolite Electric Incorporated
Bank: Comerica Bank
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Branch: Detroit MI; USA
ABA: 000000000
Account No: 0000-00000-0
or to such other account as the Purchasers may hereafter
nominate in writing to the Vendor;
3.15.3 any sums due under this clause 3 expressed in A$ shall be
converted into United States Dollars at the Exchange Rate.
3.16 All payments which may be made or be due to or by the Vendor by or to
the Purchasers shall subject to the foregoing provisions of this
clause 3 be made free and clear of all rights of set-off, counterclaim
or any other withholding.
4. RELEVANT MATTERS FOR THE LOAN NOTES
-----------------------------------
4.1 The Purchasers covenant with the Vendor that during the period
commencing on Completion and ending on the date on which the Third
Years Accounts have been certified as fairly reflecting the situation
of the Group by the Auditors the Purchasers will procure that none of
the following will occur in respect of any Group Member:
4.1.1 any material change in its trade or business;
4.1.2 the sale or other disposal of the whole or any material
part of its undertaking or assets;
4.1.3 except in circumstances where the relevant company is
insolvent the presentation of a petition for its
liquidation or the passing of any resolution for its
winding-up where such petition is presented or resolution
passed by the Purchasers or any member of the Purchasers'
Group;
-29-
4.1.4 the transfer or other disposal of the legal or any other
interest in the whole or any part of its issued share
capital (apart from a nominee shareholding), or the
allotment or issue of any shares, or the grant of any
option or right to subscribe for shares, or any other
alteration or reorganisation in respect of its share
capital as a consequence of which the Company would cease
to be the holding company whether direct or indirect of
each Group Member;
4.1.5 the giving of any guarantee, indemnity or security in
respect of the obligations of any person other than the
Company or any Group Member or a member of the Purchasers'
Group;
4.1.6 any material transaction with any member of the Purchasers'
Group which is not at arm's length;
4.1.7 the taking of any action which may interfere with or be
detrimental to the ability of the Group to maximise EBITDA
Provided always that but without prejudice to any provision of either
the 'A' Loan Notes or 'B' Loan Notes (so that their provisions are and
will remain unaffected by the following provisions of this clause 4)
the restrictions contained in clauses 4.1.1, 4.1.2 and 4.1.7 shall not
apply if and only if the Purchasers are able to demonstrate to the
reasonable satisfaction of the Vendor that the overriding and principal
purpose of the act which would otherwise constitute a breach of such
provisions is in the best commercial interests of the Group and is
reasonably necessary to secure the financial position of the Group
going forward and that an incidental but unintentional result of the
same is a deleterious effect on EBITDA and, in the case of an act which
would otherwise be a breach of clause 4.1.2 only the purchaser of the
undertaking or assets concerned gives assurances to the reasonable
satisfaction of the Vendor to ensure that the Vendor's position in
respect of the Loan Notes is appropriately secured and protected
including without limitation the purchaser assuming the
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relevant obligations of Prestolite Newco under this Agreement and under
the 'C' Loan Notes
4.2
4.2.1 In light of the provisions of the Loan Notes but without
prejudice to any of their respective provisions, the
Purchasers shall, and shall procure that each Group Member
shall, treat the Vendor fairly and shall act in good faith
with regard to the interests of the Vendor;
4.2.2 Without prejudice to the generality of the foregoing and
without prejudice to any provision of either the 'A' Loan
Notes or 'B' Loan Notes (so that their provisions are and
will remain unaffected by the following provisions of this
clause 4) the Purchasers shall not and shall procure that
no Group Member shall participate in the implementation of
any scheme, arrangement or transaction or otherwise take
any steps the effect of which is to diminish EBITDA in any
year, reduce the amount which would otherwise be payable
under any of the Loan Notes or otherwise frustrate or
defeat the provisions of those Notes and the intent and
spirit which lies behind them provided always that the
Vendor accepts that nothing contained in this clause 4.2.2
shall prevent the taking of any steps the effect and the
only effect of which would be to diminish EBITDA thereby
reducing the amount which would otherwise be payable under
the 'C' Loan Notes if the Purchasers are able to
demonstrate to the reasonable satisfaction of the Vendor
that the overriding and principal purpose of the act which
would otherwise constitute a breach of this clause 4.2.2 is
in the best commercial interests of the Group and is
reasonably necessary to secure the financial position of
the
-31-
Group going forward and that an incidental but
unintentional result of the same is a deleterious effect on
EBITDA;
4.2.3 Without prejudice to any other provision of this Agreement
and the rights of the Vendor thereunder where the
Purchasers participate or any Group Member participates in
the implementation of any scheme, arrangement or
transaction the effect of which is to diminish EBITDA in
any year or reduce the amount which would otherwise be
payable under the 'C' Loan Notes or otherwise takes any
action which may interfere with or be detrimental to the
ability of the Group to maximise EBITDA the Vendor and the
Purchasers will negotiate in good faith with a view to
agreeing an appropriate adjustment to EBITDA or another
appropriate arrangement so that the Vendor is compensated
for any loss it suffers as a consequence of such
participation or action
4.3 The Purchasers indicate that it is planned to effect the merger of
Prestolite Newco with and into the Company on the basis that (a) the
Company is the survivor of such merger (b) the Company shall pursuant
to such merger assume the obligations of Prestolite Newco under the
Loan Notes and (c) the effects and/or costs of such merger are not
included in any determination of the Company's obligations under such
Notes (including any calculation of EBITDA). The Vendor agrees that,
subject to it being satisfied as to the final documentation produced by
the Purchasers to achieve such merger, that the effects thereof are as
set out above and that its interests are not otherwise prejudiced
(including without limitation receipt by the Vendor of confirmation
that the guarantee contained in the Umbrella Agreement in respect of
the Loan Notes remains in place and unaffected and the benefits of the
VAT promotional regime enjoyed by the Company will not be lost or
otherwise prejudiced), it will consent to such merger being implemented
but that consent shall be without prejudice to the Vendor's rights
under the 'A' Loan Notes and 'B'
-32-
Loan Notes whose provisions are and shall remain unaffected by the
provisions of this clause 4.3.
4.4 The Purchasers shall procure that as soon as reasonably practicable
following the end of each of the First Year, the Second Year and the
Third Year and in any event within 45 days of the end of each such year
the Company will prepare and deliver to the Vendor a draft of the First
Years' Accounts, the Second Years Accounts or the Third Years Accounts
as the case may be and in each case together with a calculation of
EBITDA in each such year extracted from the First, Second or Third
Years Accounts as relevant. All sums shall be expressed in A$. The
First Years Accounts, Second Years Accounts and Third Years Accounts as
the case may be shall be prepared except to the extent contemplated to
the contrary in the calculation of EBITDA (and the Purchasers shall
procure that the same shall be prepared) by the Company in respect of
the year in question in accordance with the Accounting Principles
consistently applied. If and to the extent that any matter arises which
is not dealt with in the Accounting Principles, the same shall be
determined on a basis consistent with the Accounts (as defined in
Schedule 4) or in the event of a new issue not dealt with in the
Accounts in accordance with generally accepted accounting principles in
the United Kingdom. In any event there shall be established and the
Purchasers shall procure that there is established the Restructuring
Reserve (as defined in the 'C' Loan Note).
4.5 Unless the Vendor shall notify the Purchasers within 30 days after its
receipt of the draft First Years Accounts, Second Years Accounts or
Third Years Accounts as the case may be (together with in each case the
calculation of EBITDA) that it does not accept and agree that the same
have been prepared in accordance with the provisions of this Agreement
(and in the case of the calculation of EBITDA with the 'C' Loan Note)
then the Vendor shall be deemed to have accepted and agreed the
contents of such Accounts and calculations for the purposes of this
Agreement. Unless the Purchasers shall
-33-
otherwise agree, any such notification on the part of the Vendor shall
specify in reasonable detail the matters in dispute.
4.6 If within the aforesaid period of 30 days the Vendor shall notify the
Purchasers in writing that it does not accept and agree that the
contents of the relevant Accounts and the calculation of EBITDA have
been prepared in accordance with the provisions of this Agreement (and
in the case of the calculation of EBITDA with the 'C' Loan Note) then
the Vendor and the Purchasers shall endeavour to reach agreement upon
adjustments to the relevant Accounts and calculations to meet the
Vendor's objections. For the avoidance of any doubt any matters not
objected to in writing within the 30 day notice period referred to in
clause 4.5 above shall be deemed agreed by the Vendor.
4.7 If the Vendor and the Purchasers are unable to reach agreement as
aforesaid within 21 days of receipt by the Purchasers of the last
notification of objection validly served under clause 4.6 or within
such later time as the Vendor and the Purchasers may agree then any
matters not so resolved shall be submitted to an independent accounting
firm of international reputation mutually acceptable to the Vendor and
the Purchasers or in default of agreement between them within 7 days
after the expiration of such 21 day period or further period agreed by
the Vendor and the Purchasers to be selected at the instance of either
of them by the President for the time being of the Institute of
Chartered Accountants in England and Wales ("the Independent
Accountant") for final resolution in accordance solely and exclusively
with this Agreement, the Accounting Principles consistently applied,
the provisions of clause 4.4 and the 'C' Loan Note. Such submission
shall be in the form of written statements of position by the Vendor
and the Purchasers, as well as an opportunity to respond to such
written statement and any request for statements or information from
the Independent Accountant. The Vendor and the Purchasers shall allow
the Independent Accountant full access to all relevant accounting and
other records of the Group, all relevant premises occupied by the Group
and all relevant
-34-
employees as it shall require for the purpose of giving its
determination hereunder. The Vendor and the Purchasers shall co-operate
to procure that the Independent Accountant is able to reach its
decisions as to any matter referred to it as expeditiously as possible.
If the Independent Accountant determines that the resolution of a
disputed item requires an interpretation of law then the Independent
Accountant may request an independent law firm of national standing in
Argentina chosen by it to render a legal opinion as to such matter.
Such opinion shall in the absence of manifest error be final and
binding, The Independent Accountant shall act as an expert and not as
an arbitrator and shall be directed by the Vendor and the Purchasers to
make its determination as soon as possible after the matter in dispute
is submitted to it and such determination shall be final and binding
upon the parties hereto. In giving its determination the Independent
Accountant shall also adjust, where relevant, the relevant Accounts and
calculation of EBITDA if required to reflect the decision of the
Independent Accountant. The costs of such Independent Accountant's
review (including reasonable lawyer's fees, if any) shall be borne by
the party or parties in inverse proportion to their success in the
resolution of the dispute between them.
4.8 For the purposes of this Agreement, EBITDA which shall be relevant for
the purposes of clause 3 of the 'C' Loan Note shall be:
4.8.1 the calculation of EBITDA which the Vendor is deemed to
have accepted and agreed pursuant to clause 4.5 or with
which the Vendor indicates its acceptance and agreement
within the 30 day period referred to in clause 4.5
whereupon (in either event) the contents of the same shall
become and be final and binding on the Vendor and the
Purchasers for the purposes of this Agreement; or
4.8.2 the calculation of EBITDA bearing any adjustment made
pursuant to clause 4.6 if clause 4.6 applies and agreement
is reached
-35-
between the Vendor and the Purchasers as contemplated
therein whereupon the contents of the same shall become and
be final and binding on the Vendor and the Purchasers for
the purposes of this Agreement; or
4.8.3 the calculation of EBITDA as agreed by the Independent
Accountant or, as the case may be, any revised calculation
of EBITDA produced by the Independent Accountant as
contemplated by clause 4.7 whereupon (in either event) the
contents thereof shall become and be final and binding upon
the Vendor and the Purchasers for the purposes of this
Agreement.
4.9 For the purposes of determining EBITDA and all sums due in respect
thereof under clause 3 of the 'C' Loan Note by reference to EBITDA,
EBITDA which is relevant ( as contemplated by clause 4.8 above) shall
(save in the case of manifest error) be final and binding on the
Vendor and the Purchasers.
4.10 Any costs incurred by the Purchasers, the Vendor, Xxxxx Newco or any
member of the Group in acting in the manner contemplated by this
clause 4 including, without limitation, any professional costs and
expenses shall be borne by the Purchasers or the Vendor as appropriate
save as contemplated by clause 4.7 if that clause applies. It is
agreed and declared that in any event no provision for such costs
(including any costs incurred by the Group) shall be contained in any
calculation of EBITDA.
4.11 The Vendor and its professional advisers shall have such access and
the Purchasers shall grant and procure that such access is granted to
the Vendor and its professional advisers to the books and accounts of
each Group Member and such other relevant information and at such
times as shall be requested by the Vendor to enable the Vendor to
assess the calculations referred to in the foregoing provisions of
this clause 4 or otherwise to assess the position
-36-
generally in respect of the Loan Notes (including compliance by the
Purchasers with their obligations under this clause 4).
4.12 The Purchasers shall cause the Company to comply with all its
obligations under the tax incentive regimes provided for by Laws
21,608 and 22,201 and their implementing regulations and shall carry
out and take all necessary steps and file all documentation which may
be necessary for the Company to obtain recognition of credits in the
amount of the Tax Receivable as defined in each of the 'A' Loan Notes
and 'B' Loan Notes by the Argentine tax authorities. The Purchasers
shall also cause the Group to appoint Deloitte Xxxxxxx and Sells as
its tax adviser and representative for the purposes of making any such
filings and will not change, and will procure that no member of the
Group changes, its tax adviser without the prior written consent of
the Vendor such consent not to be unreasonably withheld or delayed in
the case of a request to change (where such request is made no earlier
than twelve months after Completion) to Coopers & Xxxxxxx.
4.13 Whilst any of the Loan Notes shall remain in issue:
4.13.1 the Purchasers shall deliver, and shall procure that there
is delivered within 15 Business Days of the end of each
calendar quarter management accounts (prepared on a
consolidated basis) of the Group such management accounts
to be in the same form as delivered to the Purchasers or
any member of the Purchasers' Group; and
4.13.2 the Vendor shall be entitled to require the Purchasers to
deliver to it whatever information regarding the state of
affairs and financial position and prospects of the Group
as the Vendor may reasonably require.
5. WARRANTIES
----------
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5.1 The Vendor:-
5.1.1 warrants to the Purchasers in the terms of the Warranties,
provided however that the Vendor shall be released from
the effect of the Warranties to the extent of the
disclosures fairly disclosed in the Disclosure Letter;
5.1.2 agrees that the Purchasers are entering into this
Agreement in reliance on each of the Warranties;
5.1.3 undertakes that, in the event of any claim being made
against the Vendor whether under the Warranties or
otherwise in connection with the sale of either the Indiel
Sale Shares or the Xxxxx Newco Shares to the Purchasers,
or either of them the Vendor will not (save in the case of
fraud or wilful concealment) make any claim against any
Group Member or against any director or employee of any
Group Member, on which or on whom the Vendor may have
relied before agreeing to any term of this Agreement or
authorising any statement in the Disclosure Letter.
5.2 Each of the Warranties will be construed as a separate Warranty and
will not be limited or restricted by reference to, or inference from,
the terms of any other Warranty or any other term of this Agreement.
5.3 The Vendor shall be released from the effect of the Warranties (but
not the Indemnities) to the extent that the Purchasers or either of
them is aware at the date of this Agreement of any matters, events or
circumstances (whether the same are learned by any investigation or
enquiry made by or on behalf of the Purchasers into the Company or any
subsidiary of the Company) and which matters, events or circumstances
would but for this clause 5.3 constitute a breach of any of the
Warranties. For the purpose of this clause the Purchasers' awareness
shall be determined by reference only to the actual knowledge of Mr.
-38-
Xxx Xxxxxxx and Xx. Xxx Xxxxxxxxx of PEI and of the Purchasers'
professional advisers (including the Purchasers' lawyers, Coopers &
Xxxxxxx, pensions advisers and environmental consultants) in respect
of the matters the subject of this Agreement.
5.4 Any claim the Purchasers may have in respect of the Warranties or the
Indemnities shall sound in damages only, subject to the provisions of
this clause 5, and accordingly the Purchasers shall not have the right
to cancel this Agreement or treat it as having been repudiated by the
Vendor by reason of there having been any breach of such Warranties or
a claim by the Purchasers under any Indemnity.
5.5 The Purchasers hereby agree and acknowledge that notwithstanding
anything to the contrary contained in this Agreement the Warranties
and certain of the Indemnities (as defined below) are subject to the
following:
5.5.1 no claim shall be capable of being made unless it shall be
notified in writing to the Vendor
5.5.1.1 in the case only of a claim for breach of the
Environmental Indemnity on or by the seventh
anniversary of the date of this Agreement; or
5.5.1.2 in the case only of a claim for breach of any of
the Taxation Warranties and/or under the Taxation
Indemnities on or by the date on which the
relevant statute of limitations would apply so as
to prevent the making of the claim in question
against the relevant member of the Group which
would give rise to the obligation on the part of
the Vendor to indemnify hereunder; or
-39-
5.5.1.3 in the case only of a claim made under the
provisions of any of clauses 7.1, 7.2 or clause
8.1.3 on or by the sixth anniversary of the date
of this Agreement; or
5.5.1.4 in the case only of a claim made under clause
8.1.2 on or by the date on which the relevant
statute of limitations would apply so as to
prevent the making of the claim in question
against the relevant member of the Group which
would give rise to the obligation on the part of
the Vendor to indemnify hereunder; or
5.5.1.5 in the case of a claim for breach of any of the
remaining Warranties on or before 31 March 1999;
and any such claim which has been made shall (if it has
not been previously satisfied settled or withdrawn) be
deemed to have been withdrawn at the expiration of 6
months from the date on which the claim so notified when
aggregated with all other claims under this Agreement and
under the Other Sale Agreements exceeding (Pounds)5,000,
exceeds (Pounds)150,000 unless prior to such expiration
legal proceedings in respect thereof shall have been
issued and served on the Vendor;
5.5.2 the aggregate liability of the Vendor under this Agreement
and the Other Sale Agreements in respect of all breaches
of the Warranties and claims under the Capped Indemnities
shall not when aggregated with the liability of the
persons defined as the Vendor in each of the Other Sale
Agreements in respect of all breaches of
-40-
the Other Warranties and Other Capped Indemnities exceed a
sum equal to (Pounds)12 million;
5.5.3 the Vendor shall not be liable in respect of any single
claim brought by the Purchasers for a breach of the
Warranties, and claims under the Capped Indemnities, under
the Taxation Indemnities or under clause 8.1.3 arising out
of a single event (provided that for the purposes of this
clause 5.5.3 liability in respect of a series of claims
arising out of the same subject matter shall be aggregated
together as if such claims were one claim) if the
liability in respect of such claim would not exceed
(Pounds)5,000 (five thousand pounds). The Vendor shall be
liable in respect of each and any claim for a breach of
the Warranties or under the Capped Indemnities or under
the Taxation Indemnities or under clause 8.1.3 in respect
of which the liability of the Vendor exceeds (Pounds)5,000
(five thousand pounds) only if the liability of the Vendor
for that claim, all other such claims exceeding
(Pounds)5,000 and all other such claims made under the
Other Sale Agreements in respect of all breaches of the
Other Warranties and Other Capped Indemnities would in
aggregate exceed (Pounds)150,000 and in that event the
Vendor shall only be liable for the excess;
5.5.4 if any matter arises or gives rise to any claim under the
Warranties or the Indemnities the Purchasers shall as soon
as reasonably practicable (and in any event within such
time as shall enable the Vendor to lodge or answer any
appropriate appeal or claim ) give notice in writing to
the Vendor giving such details of the matter in respect of
which the claim is made as are at that time known to the
Purchasers or either of them and (on the basis of the
facts then known to the Purchasers or either of them) the
bona fide estimated liability in respect thereof and where
the claim arises by reason of
-41-
a claim made against the Purchasers or either of them
and/or the Company or any other Group Member by a third
party the Purchasers shall not seek to settle or
compromise the matter and shall (if relevant) procure that
the Company or relevant Group Member does not seek to
settle or compromise the same without the written consent
of the Vendor (which consent shall not be unreasonably
withheld or delayed) and shall take such reasonable action
as the Vendor may require to avoid, resist, contest and/or
compromise any such claim on the basis that the Vendor
shall be responsible for and shall bear all the reasonable
costs and expenses of the Purchasers or the Company or the
relevant Group Member in taking such action and in
addition shall to the extent that the same shall not have
been borne by the Vendor directly indemnify the Purchasers
against the same and against all legal costs incurred by
or awarded against the Purchasers as a direct result
thereof;
5.5.5 no claim in respect of any breach or breaches of any of
the Warranties or under the Indemnities shall be made to
the extent that provision or reserve in respect of the
subject matter thereof has been made or the subject matter
thereof is otherwise taken account of or reflected as part
of the calculations in
5.5.5.1 the preparation of the Final Completion
Statement; or
5.5.5.2 in the calculation of EBITDA and then in such
case only to the extent that in consequence of
such taking account or reflection the Vendor has
received no payment (or a reduced payment) under
the "C" Loan Notes in circumstances where
-42-
the Vendor would have received such a payment (or
an increased payment) had the claim in question
not arisen or the amount thereof not been
reflected in the calculation of EBITDA;
5.5.6 the Vendor shall not be liable for any claim arising as a
result of a breach of Warranties:
5.5.6.1 or under the Indemnities if such claim would not
have arisen but for anything voluntarily done or
omitted to be done by the Purchasers or either of
them, any member of the Purchasers' Group, the
Company or any subsidiary of the Company or any
of its or their employees, agents or successors
in title after Completion outside the ordinary
course of business and which the Purchasers or
either of them, any member of the Purchasers'
Group, the Company or any other member of the
Group or its or their employees agents or
successors in title were aware or ought
reasonably to have been aware could give rise to
a claim; or
5.5.6.2 or the Indemnities to the extent that such claim
relates to any loss for which the Purchasers or
either of them or any member of the Purchasers'
Group or the Company or any of its subsidiaries
is indemnified by insurance (but only to the
extent of the amount of the proceeds actually
received from any applicable insurance policy)
and the Purchasers agree to pursue and to procure
that there is pursued all and any claims which
-43-
there may be under or in respect of any policy of
insurance which relates or may relate to the
subject matter of the claim in question and to
provide to the Vendor such evidence as the Vendor
may reasonably require of having done so.
5.6 Where the Purchasers or either of them or any member of the
Purchasers' Group or the Company or any subsidiary of the Company is
at any time entitled to recover from a third party (other than as
contemplated in clause 5.5.6.2) any amount in respect of any matter
giving rise to a claim under the Warranties or the Indemnities or
under any other provisions of this Agreement the Purchasers shall take
and shall procure that there is taken all reasonable steps to enforce
any rights of recovery that the Purchasers or either of them or any
member of the Purchasers' Group or the Company or any of its
subsidiaries may have against any third party in respect of the
subject matter of the claim and the Purchasers or the Company or
relevant subsidiary or relevant member of the Purchasers' Group shall
be indemnified by the Vendor against all reasonable costs and expenses
including all legal costs incurred by it or them in doing so. In the
event that the Purchasers or either of them or the Company or any of
their subsidiaries or any member of the Purchasers' Group shall
receive any amount from such third party, the amount of the claim
against the Vendor shall be reduced by the amount recovered less where
not already paid all such reasonable costs and expenses incurred by
either Purchaser, the relevant member of the Purchasers' Group or the
Company or any relevant subsidiary Provided always that:-
5.6.1 any failure by the Purchasers to comply with such
undertaking in respect of any matter giving rise to a
claim under the Warranties or the Indemnities or otherwise
under this Agreement shall not affect in any way any
liability of the Vendor which liability shall
-44-
not be conditional upon the Purchasers' compliance with
this undertaking save that the Vendor shall be entitled
(to the extent that it is entitled as a matter of law so
to say) to say that the Purchasers have not mitigated
their or its loss or the Vendor shall have a right of
action or other claim against the Purchasers for breach of
the provisions of this clause 5.6; and
5.6.2 in respect of any matter giving rise to a claim under the
Warranties or the Indemnities or otherwise under this
Agreement if the Purchasers allege that any steps which
the Vendor requires it or either of them to take or to
procure are taken are unreasonable then the Purchasers
shall seek counsel's opinion (such counsel to be of at
least ten years standing and from a law firm of
international standing in Argentina) the identity of whom
shall be agreed upon by the Vendor and the Purchasers and,
failing such agreement, within three days after the date
on which the agreement is demanded shall be determined by
the President for the time being of the Centro Empresarial
de Mediacion y Arbitraje (who may be instructed by either
the Vendor or the Purchasers to make the nomination at any
time after the expiry of that three day period). In
respect thereof the Purchasers shall instruct counsel in
writing (or if such instructions are to be given orally
then the Vendor shall be entitled to be present at and to
contribute to the giving of such instructions) and provide
a copy of a draft of such instructions before submission
to counsel and incorporate the Vendor's comments thereon.
Counsel shall be asked to advise whether, on the basis of
the instructions given to him and the information then
made available to him the action sought by the Vendor
should be taken on the basis that, on the balance of
probabilities, the relevant claim against the third party
stands a
-45-
reasonable prospect of success and the parties shall
follow the advice given in such opinion save that nothing
herein shall prevent or otherwise restrict the ability of
the Vendor to argue (if such an argument is as a matter of
law open to it) that the Purchasers or the entity entitled
to the benefit of the claim have or has failed to mitigate
their or its loss.
5.7 If the Vendor pays at any time an amount pursuant to a claim in
respect of any Warranty or under any Indemnity or under any of the
other provisions of this Agreement and the Purchasers or either of
them or any member of the Purchasers' Group and/or the Company or any
of their subsidiaries subsequently becomes entitled to recover from
some other person any sum in respect of any matter giving rise to such
claim the Purchasers shall take and shall procure that there is taken
all reasonable steps to enforce such recovery subject to being
indemnified by the Vendor against all reasonable costs and expenses
including all legal costs incurred in doing so. The Purchasers shall
forthwith upon the making of any such recovery (whether by either of
them, any member of the Purchasers' Group or any member of the Group
and after deducting the costs incurred by the Purchasers or either of
them or the relevant member of the Purchasers' Group as contemplated
by this clause to the extent that the Vendor has not indemnified the
Purchasers and/or the relevant member of the Purchasers' Group and/or
the Company or relevant subsidiary for such costs) repay to the Vendor
so much of the amount paid by the Vendor in respect of the claim in
question as does not exceed the sum recovered from such other person.
5.8 Without prejudice to the foregoing provisions of this clause 5 before
the Purchasers or either of them or any Group Member makes any payment
or offers any other remedy or takes any other remedial or corrective
action in respect of any matter for which it is entitled to an
indemnity or to otherwise make a claim against the Vendor under or
pursuant to the provisions of this
-46-
Agreement or under the Taxation Indemnities, the Purchasers shall and
shall procure that the Company (and, if relevant, each of its
subsidiaries) gives a reasonable opportunity and reasonable assistance
to the Vendor to verify and, if appropriate, remedy the defect,
default or omission or other matter giving rise to the claim for
indemnity or other remedy in question.
5.9 For the purposes only of determining the applicability of the monetary
thresholds contained in sub-clauses 5.5.2 and 5.5.3 any claim under
the Warranties, the Capped Indemnities the Taxation Indemnities and/or
under clause 8.1.3 which is denominated in A$ shall be converted into
pounds sterling at the Exchange Rate prevailing at in the case of sub
clause 5.5.2 the date on which the claim is paid and in the case of
sub clause 5.5.3 at the date of claim.
5.10 Payment or satisfaction by the Vendor of any claim under any one
particular paragraph of the Warranties and/or under any Indemnity
shall to the extent of such payment or satisfaction satisfy and
preclude any other claim which is capable of being made in respect of
the same subject under another particular paragraph of the Warranties
or under another particular Indemnity. If and to the extent that the
Purchasers and/or any member of the Purchasers' Group and/or any Group
Member recovers any sum under any provision of this Agreement,
including under the Indemnities, the amount of any claim which the
Purchasers or any Group Member may have in respect of the same subject
matter shall be reduced or eliminated accordingly.
5.11 If any potential claim shall arise by reason of a liability of the
Company or any subsidiary of the Company being contingent only or is
otherwise not capable of being quantified then the Vendor shall not be
under any obligation to make any payment pursuant to such claim until
such time as the contingent liability ceases to be contingent and
becomes capable of being quantified as the case may be.
-47-
5.12 Notwithstanding any of the provisions contained in this clause 5 or
elsewhere in this Agreement, the Purchasers shall not be entitled to
cancel this Agreement as a consequence of any breach of any Warranty.
5.13 Save as specifically provided in this Agreement the Vendor gives no
warranties or representations whether express or implied.
5.14 Where under this Agreement the Vendor is liable to the Purchasers or
either of them or any Group Member under any of the Indemnities (other
than the Environmental Indemnity) the Vendor shall for the avoidance
of any doubt only be liable to the extent that the liability relates
directly to acts or omissions prior to Completion and not to the
extent that the liability relates directly to acts or omissions after
Completion
6. COMPLETION
----------
Subject to and on the basis contemplated by the Umbrella Agreement, the
sale and purchase of the Xxxxx Newco Shares and the Indiel Sale Shares
shall take place as provided for in the Umbrella Agreement at the offices
of the Vendor when:
6.1 the Vendor will produce and deliver to the relevant Purchasers with
respect to each Group Member (except where the context specifically
provides to the contrary):
6.1.1 duly executed transfers of the Xxxxx Newco Shares or as
the case may be the Indiel Sale Shares in favour of the
relevant Purchaser (or as it will direct) together with
all relevant share certificates in the possession of the
Vendor together with such waivers and consents as the
relevant Purchaser may require to enable the relevant
Purchaser and its nominee(s) to be registered as the
holders of the shares in question;
-48-
6.1.2 duly executed transfers of any shares in any Group Member
(other than the Company) not held by the Company;
6.1.3 the written resignations of Xxxx Xxxxxxx Xxxxx, Xxxxx
Xxxxxxx Xxxxxxxx, Xxxxx Xxxxxxxxx and Francisco Xxxxx
Xxxxx Xxxxxx as directors of the Company, Xxxxxxxxx Xxxxxx
de Achaval and Xxxxxxx Xxxx Xxxxx as alternate directors
of the Company and of Xxxxxxx Xxxxxx Xxxxx as syndic of
the Company and the written resignation of Francisco Xxxxx
Xxxxx Xxxxxx as alternate director of Equipos Originales
S.A. and Jovsa S.A.;
6.1.4 the certificates of incorporation, by-laws, all amendments
thereto, evidence of all filings and registrations with
the Office of Corporations -Public Registry of Commerce,
all receipts of annual corporate tax fees, change of name,
and the statutory books and registers (all entered up to
date) of each Group Member;
6.1.5 all deeds and documents relating to the title of the Group
to the Property (except where such deeds and documents are
held by any Bank);
6.1.6 all papers, books, records, keys, cheque books, credit
cards and other property (if any) of each member of the
Group which are in the possession or under the control of
the Vendor or any other person who resigns as an officer
of the Company in accordance with this clause 6;
6.1.7 a legal opinion issued by the Vendor's Argentine Counsel
as to the existence and good standing of each Group Member
in the agreed terms; and
6.1.8 appropriate resolutions to change the bank mandate of the
Company;
-49-
6.2 the Vendor will:
6.2.1 deliver to the Company (with a copy to PEI) the letter
notifying the transfer of the Indiel Sale Shares to PEI
pursuant to Article 215 of Law No 19,550;
6.2.2 procure the Company to enter the name of PEI in the
register of shareholders of the Company as the registered
holder of the Indiel Sale Shares;
6.2.3 deliver to PEI a resolution of the statutory syndics of
the Company which are in full force and effect as of
Completion appointing new members of the Board of
Directors nominated by the Purchaser as directors of the
Company;
6.2.4 deliver to Prestolite Newco all books and records relating
to Xxxxx Newco including all documentation relating to all
actions taken prior to Completion relating to the
restructuring of the Vendor's interest in the Company
which have involved Xxxxx Newco;
6.2.5 deliver certificates representing all the outstanding
shares of Xxxxx Newco together with duly executed stock
powers in proper form and any other documentation
reasonably requested by the Purchasers' Counsel in order
to evidence the transfer of such shares of Xxxxx Newco;
6.2.6 deliver to PEI the Tax Indemnities duly executed; and
6.2.7 procure that the Board of the Company revokes all existing
powers of attorney such revocation to become effective 45
calendar days after Completion;
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6.3 the Purchasers shall pay to the Vendor, in accordance with clause
3.15.1 a sum equal to the Provisional Consideration and the price for
the Xxxxx Loan (as contemplated by clause 3.1.3) and Prestolite Newco
shall issue and allot to the Vendor the Loan Notes; the Provisional
Consideration shall be paid on account of the Consideration but the
Provisional Consideration, the price for the Xxxxx Loan and the Loan
Notes shall be so paid or, as the case may be, issued and allotted
subject to the terms of the Umbrella Agreement (regarding Effective
Completion);
6.4 the Purchasers shall procure that as soon as possible after Completion
each member of the Group takes all steps as are legally required of it
to change its corporate name to a name which does not incorporate the
word or name 'Xxxxx' and the Purchasers shall provide to the Vendor
such evidence and give to the Vendor such undertakings in this regard
as the Vendor shall reasonably require;
6.5 the Purchasers will at or as soon as practicable after Completion use
reasonable endeavours to procure the release of the Vendor and any
other member of the Xxxxx Group from the guarantees specifically
identified in the Disclosure Letter for the purposes of this provision
and will indemnify and keep indemnified the Vendor (for itself and for
and as trustee for and/or as agent for and for the benefit of each
other member of the Xxxxx Group) and each other member of the Xxxxx
Group against any liability (including costs, damages and expenses)
which the Vendor or any other member of the Xxxxx Group may suffer
under or in relation to such guarantees; provided however that this
clause 6.6 shall be without prejudice to, and the indemnity so given
by the Purchasers shall not extend to any matter giving rise to, any
claim against the Vendor for breach of the Warranties; (i) where those
obligations or liabilities are reflected in the management accounts of
a Group Member or in the Final Completion Statement; or (ii) the
obligations or liabilities are or were incurred in the ordinary course
of business; and
-51-
6.6 subject to the provisions of clause 6.8 the Vendor will at or as soon
as practicable after Completion use its reasonable endeavours to
procure the release of each Group Member from all guarantees given by
any of them in respect of the obligations of other members of the
Xxxxx Group and will in the meantime indemnify and keep indemnified
the Purchasers against any liability which the Purchasers or any Group
Member may suffer or incur under or in relation to such guarantees;
6.7 the Vendor and PEI will enter into the Indiel Option;
6.8 the Purchasers shall provide to the Vendor in form and substance
satisfactory to the Vendor a full and effective release in favour of
the Vendor and each member of the Xxxxx Group from all of its or their
respective obligations howsoever arising with respect to the Bank Debt
or in the absence of such a release repay or procure that there is
repaid and discharged in full the Bank Debt;
6.9 the Purchaser will indemnify and keep the Vendor (for itself and for
and as trustee for and/or as agents for and for the benefit of each
other Member of the Xxxxx Group) indemnified against any liability
(including costs damages and expenses) which the Vendor or any other
member of the Xxxxx Group may suffer in respect of any claim which may
be made against the Vendor or any other Member of the Xxxxx Group
which, whether directly or indirectly relates to or otherwise arises
out of any obligations or liabilities of any Group; and
6.10 the Purchasers shall deliver to the Vendor certificates of the
Secretary of State of Delaware as to the good standing of each of PEI
and Prestolite Newco in such jurisdiction.
7. SPECIFIC INDEMNITIES AND OTHER SPECIAL PROVISIONS RELATING TO TAX AND
---------------------------------------------------------------------
PENSIONS
--------
7.1 The Vendor covenants to pay to the Purchasers an amount equal to the
amount of any relief or credit from or against value added tax which
was taken into
-52-
account in computing (and so reducing or eliminating) any provision
for value added tax which appears or which would have appeared but for
such provision in the accounts of the Group where:-
7.1.1 such relief or credit was made available to any Group
Member in respect of promotional incentives in the
Province of San Xxxx;
7.1.2 such relief or credit was utilised in either of the
financial periods or years of the Group ended on 31st
January 1997 and/or 1998;
7.1.3 such relief or credit is lost or withdrawn as a direct
consequence (and only as a direct consequence) of the
transaction the subject of this Agreement provided always
that the liability of the Vendor in respect of any claim
made by the Purchasers under this clause 7.1 shall be
limited:
7.1.3.1 in the case of a loss of relief or credit in
respect of the period which ended on 31st January
1997 to A$1.850m; and
7.1.3.2 in the case of a loss of relief or credit in
respect of the year which ends on 31st January
1998 to A$1.619m,
Provided always that the indemnity contained in this clause 7.1 shall
not apply if and to the extent that any relief or credit so lost or
withdrawn (and which would but for the proviso to this clause 7.1,
have been the subject of any indemnity in favour of the Purchasers)
shall reduce the amount of the Closing Date Tax Receivable as defined
in the 'B' Loan Note.
7.2 If the tax incentive regimes provided for by Laws 21,608 and 22,201
are withdrawn by the Argentine Government on or before 31 December
2000, the Vendor covenants with the Purchasers to pay to the
Purchasers an amount equal
-53-
to the amount of tax that would have been saved by the Company in
respect of the accounting years of the Company ending on 31 December
1998, 31 December 1999 and (if the condition in clause 7.3 is met) 31
December 2000 by utilising the tax credits available under such
regime.
7.3 The condition referred to in clause 7.2 is that the amount of
principal paid to the Vendor under the "A" Loan Notes and the "B" Loan
Notes exceeds A$6,300,000 at the date of withdrawal of the regimes.
7.4 The maximum liability of the Vendor under the covenant in clause 7.2
in respect of the accounting years of the Company ending 31 December
1998 and 31 December 1999 is A$3,600,000 in respect of the accounting
year of the Company ending on 31 December 1998, and A$2,700,000 in
respect of the accounting year of the Company ending on 31 December
1999.
7.5 The maximum liability of the Vendor under the covenant in clause 7.2
in respect of the accounting year of the Company ending on 31 December
2000 is the lesser of A$1,900,000 and the amount by which the
principal paid to the Vendor under the "A" Loan Notes, the "B" Loan
Notes and the "C" Loan Notes exceeds A$6,300,000.
7.6 The due date in respect of each payment to be made under clause 7.2 is
the later of twenty (20) Business Days following written notification
of the liability from the Purchasers to the Vendor and the last date
on which the Company is obliged to pay the tax that would have been
saved to the Argentine tax authorities, without incurring interest or
penalties for late payment.
7.7 Upon either of the Purchasers or any Group Member becoming aware of
any claim relevant for the purposes of this clause 7 the Purchasers
shall as soon as reasonably practicable (and in any event within such
time as shall enable the Vendor to lodge any appropriate appeal with
any relevant authority) give notice
-54-
of any such claim to the Vendor but such notice shall not be a
condition precedent to the liability of the Vendor for the purposes of
this clause 7.
7.8 Subject to the provisions of this clause 7 the Purchasers shall take
and shall procure that the Group and each relevant Group Member (at
the Vendor's expense and provided that the Vendor agrees to indemnify
the relevant Group Member to the reasonable satisfaction of the
Purchasers against all losses costs damages and expenses) including
interest on overdue taxation which may be incurred thereby) takes such
action and gives such information and assistance in connection with
its affairs as the Vendor may reasonably and promptly request to avoid
resist appeal against or compromise any notice or demand, assessment
letter or other document issued or action taken by or on behalf of any
taxation authority relevant for the purposes of this clause 7
including but not limited to applying to postpone (so far as legally
possible) the payment of any taxation and/or allowing the Vendor to
undertake at the Vendor's own expense the conduct of all or any
proceedings of whatsoever nature arising in connection with the claim
in question.
7.9 The Vendor shall keep the Purchasers fully informed of all matters
pertaining to any dispute, appeal, negotiations or other proceedings
conducted by or at the request of the Vendor pursuant to the foregoing
provisions of this clause 7 and shall provide the Purchasers with
copies of correspondence and other documents pertaining thereto.
7.10 The Purchasers shall not agree and shall procure that no Group Member
agrees any matter which is likely to affect the liability (whether
actual or contingent) of the Vendor under this clause 7 without the
prior written approval of the Vendor.
7.11 Without prejudice to any other provision of this Agreement the Vendor
and its professional advisers shall have such access and the
Purchasers shall grant and procure that the same is granted to the
Vendor and its professional advisers to
-55-
the books and accounts of each Group Member and such other information
and at such times during normal business hours as shall be requested
by the Vendor to enable the Vendor to assess and verify its potential
liability under the provisions of this clause 7.
7.12 The Final Completion Statement will include a liability of A$1,929,000
in respect of the nine (9) beneficiary Executive Pension Loan (the
"Special Pension Plan"). At any time prior to the third anniversary of
Completion, the Purchasers shall be entitled to request that the
Vendor assume all liability under the Special Pension Plan. Upon such
request, the Vendor shall assume such liability, and in consideration
for such assumption of liability by the Vendor, the Purchasers or
their designee shall pay to the Vendor an amount of money, based upon
an actuarial valuation by Mercers on a similar basis (including the
same interest rates) to that under which the above amount of A$1.929m
was calculated. The Purchasers hereby agree that they will not take,
and they will procure that no Group Member voluntarily takes, any
action which would increase the liability under the Special Pension
Plan without the Vendor's consent and, in particular, but without
limitation will not create a position similar to that formerly
occupied by Senor Xxxxxxxx Xxxxxx. The Purchasers agree that they will
take, and will procure there is taken, all reasonable steps requested
by the Vendor, to resist any increase in benefits or liability under
the Special Pension Plan.
7.13 The indemnities referred to in this clause 7 shall be limited in
accordance with, and shall be subject to, the provisions of clause 5
of this Agreement.
8. SPECIFIC INDEMNITIES - OTHER MATTERS
------------------------------------
8.1 The Vendor shall indemnify the Purchasers, the Company and each of its
subsidiaries and their respective officers, directors, employees,
agents, successors and assigns (each an "Indemnified Person") with
respect to and hold each of them harmless from and against any and all
liabilities, losses, damages,
-56-
claims, costs and expenses, interest, awards, judgments and penalties
(including, without limitation, attorney's, consultants' and
arbitration fees and expenses, and, in respect of Environmental Claims
only, any corrective or remedial action costs) directly suffered,
incurred or sustained by an Indemnified Person or to which an
Indemnified Person becomes subject resulting from, arising out of or
relating to any of the following:
8.1.1 Environmental Claims;
8.1.2 Fines;
8.1.3 Labour Contingencies.
8.2 The Environmental Indemnity shall be limited in accordance with, and
shall be subject to, the provisions of clause 5 of this Agreement.
8.3 Any sum due from the Vendor to the Purchasers or any Group Member
under the Environmental Indemnity or clause 9 of the Environmental
Indemnity Exceptions Letter shall be paid within twenty-eight days of
notice of:
8.3.1 completion of any remedial and clean-up action undertaken
by the Purchasers or any Group Member;
8.3.2 the Purchasers or any Group Member incurring the cost of
the remedial and clean-up action carried out by any person
other than the Purchasers or any Group Member; or
8.3.3 the date of payment of any liabilities to third parties,
fines or awards (and all expenses incurred in connection
therewith);
-57-
PROVIDED THAT:
any claim by the Purchasers or any Group Member under the
Environmental Indemnity or Clause 9 of the Environmental Indemnity
Exceptions Letter shall:
8.3.4 state which item of either the Environmental Indemnity or
the Environmental Indemnity Exceptions Letter it relates;
8.3.5 include such details and information as is reasonably
required by the Vendor of the nature and extent of the
claim;
8.3.6 include evidence that the expenditure to which the claim
relates has been properly and reasonably incurred by the
Purchasers, a Group Member or such third party contracted
by the Purchasers or a Group Member; and
8.3.7 be submitted as soon as possible after the date the
expenditure was incurred and in any event within 3 months
of the Purchasers or the relevant Group Member having
received an invoice in respect of such expenditure
incurred.
8.4 In respect of any claim under the Environmental Indemnity or clause 9
of the Environmental Indemnity Exceptions Letter the Purchasers shall
permit and shall procure that each Group Member permits the Vendor or
persons authorised by it to inspect the works and to inspect and take
copies of all reports, books, accounting records and vouchers which
are relevant in relation to the claim with the Purchasers or, as the
case may be, the relevant Group Member answering or procuring that
there are answered promptly and fully all reasonable questions raised
by Vendor.
8.5 Subject to the provisions of this Agreement (but only until a date
three years following the date of Completion), the Vendor agrees to
pay up to a maximum
-58-
of US $159,300 towards the cost of the items listed in Schedule 2 of
the Environmental Indemnity Exceptions Letter.
8.6 In the event of any circumstances arising which do or may give rise to
any Environmental Claims and which fall within the terms of the
Environmental Indemnity, the Purchasers shall not except as required
by any applicable law make any public statement regarding such
circumstances without the prior written consent of the Vendor such
consent not to be unreasonably withheld or delayed.
8.7 Before the Vendor (or as the case may be the Purchaser) ("the
Indemnified Party") makes any payment or offers any other remedy to a
third party in respect of matters for which the Indemnified Party is
entitled to an indemnity from the other of them ("the Indemnifier")
under the terms of this clause 8 or any other indemnity contained in
this Agreement the Indemnified Party shall give a reasonable
opportunity to the Indemnifier, to verify and, if appropriate, at the
Indemnifier's sole cost remedy the default, defect, omission or other
matters giving rise to the claim in question subject always to such
third party allowing the same.
9. PURCHASERS ASSURANCES
---------------------
9.1 The Purchasers warrant to the Vendor (for itself and in each case as
trustee for and/or as agent for and on behalf of each other member of
the Xxxxx Group) and, for the benefit of, each other member of the
Xxxxx Group that the Purchasers has or have the necessary corporate
power and authority and all authorisations approvals consents and
licences required by the Purchasers have been unconditionally and
irrevocably obtained and are in full force and effect to permit the
Purchasers to enter into and perform this Agreement and this
Agreement has been duly authorised by the Purchasers and constitutes a
valid and binding obligation of each of them.
-59-
9.2 The Purchasers acknowledge to and agree with the Vendor (both for
itself and in each case as trustee for and as agent for and for the
benefit of and on behalf of each other member of the Xxxxx Group and
for the benefit of each of their respective officers employees and
advisers and as trustee and agent for and for the benefit of such
officers employees and advisers) that:
9.2.1 the invitation to them by or on behalf of the Vendor to
consider the purchase of the Company (together with its
subsidiaries) and the provision of information relating to
it and them its and their respective financial positions
or prospects was made by or on behalf of the Vendor and
accepted by the Purchasers and this Agreement was entered
into on the basis that neither the Vendor nor any member
of the Xxxxx Group nor any of the Vendor's or any member
of the Xxxxx Group's officers employees and advisers has
or have made or makes any representation or warranty
(other than as set out in the Warranties) as to the
accuracy or completeness of such information or accepts
any duty of care in relation to the Purchasers in respect
of the provision of such information and save as
contemplated by the Warranties (as qualified by the
Disclosure Letter) or in the case of representations made
fraudulently by the Vendor or otherwise as is expressly
provided in this Agreement none of such person shall be
under any liability to the Purchasers in the event that,
for whatever reason, such information is or becomes
inaccurate incomplete or misleading in any particular; and
9.2.2 the Purchasers have had independent legal and financial
advice relating to the purchase of the Indiel Sale Shares
and the Xxxxx Newco Shares and to the terms of this
Agreement and the documents to be executed pursuant hereto
including the terms of this clause.
-60-
9.3 The Purchasers hereby warrant and represent to the Vendor that:
9.3.1 the Purchasers are both corporations duly organised and
validly existing and each of them has all requisite
corporate power and authority to own, lease and operate
its properties and business as presently conducted and to
enter into and perform its obligations under this
Agreement;
9.3.2 the execution, delivery and performance of this Agreement
by each Purchaser and the consummation by each Purchaser
of the transactions contemplated hereby has been duly
authorised by all requisite corporate action on the part
of each Purchaser. This Agreement has been duly executed
and delivered by each Purchaser, and constitutes the legal
valid and binding obligation of each Purchaser, is
enforceable against each Purchaser in accordance with its
terms except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency or similar
laws affecting the enforcement of creditors rights
generally and subject to general principles of equity;
9.3.3 each Purchaser is entitled to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction in which the conduct of its business or the
ownership of its assets requires such qualification except
where the failure so to qualify would not have a material
adverse effect on its business, assets or financial
condition;
9.3.4 neither the execution nor the delivery of this Agreement
by either Purchaser nor the consummation of the
transactions contemplated hereby will conflict with or
result in a breach of any of the provisions of or
constitute a default under the charter, bylaws or
memorandum or articles of association of either Purchaser
as
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amended to date or except as would not have a material
and adverse effect on its business assets or financial
condition constitute a breach or event of default under
any agreement, mortgage, indenture, lease or other
instrument to which each or either Purchaser is a party or
by which each or either Purchaser or its property is bound
or results in the violation of any law, rule, regulation,
order, judgment or decree to which either Purchaser or its
property is subject;
9.3.5 to the best of the knowledge of each Purchaser no consent,
approval or authorisation of or declaration of filing with
any governmental authority is required on the part of
either Purchaser in connection with the execution,
delivery or performance of this Agreement. No approval,
consent or authorisation of any lender, lessor or any
other person is required in order for either Purchaser to
consummate the transactions contemplated by this
Agreement.
9.4 Except to the extent contemplated by any other provision of this
Agreement the Purchasers undertake to the Vendor for itself and as
trustee for and as agent for and on behalf of each other member of the
Xxxxx Group that neither of them will and each will procure that
neither the Company nor any of its subsidiaries will at any time after
Completion hold itself out as a Subsidiary of or otherwise connected
with the Xxxxx Group (other than by virtue of having been so connected
prior to Completion save that any such holding out in this regard
shall cease on the first anniversary of this Agreement or at such time
as is contemplated by the Ancillary Agreements, if so contemplated)
and that except and to the extent contemplated by any of the Ancillary
Agreements forthwith following Completion there is deleted from all
printed material including (without limitation) stationery catalogues
brochures sales material and (if relevant) from electronic media such
as internet sites and telephone listings and (if relevant) from
signage at any property occupied for the purposes of the
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Group and from motor vehicles used by the Group all references to the
name or xxxx "Xxxxx" and/or "CAV" and/or "LucasVarity" and/or the
Xxxxx Group diagonal flash.
9.5 Without prejudice to the generality of the provisions of clause 9.4
but subject also to those provisions and except to the extent
contemplated by the Ancillary Agreements or any other provision of
this Agreement the Purchasers undertake to the Vendor (who for this
purpose contracts both for itself and for and on behalf of each other
member of the Xxxxx Group) and for the benefit of each other member of
the Xxxxx Group that neither of them will and each will procure that
no member of the Group whether directly or indirectly and in any
capacity whatsoever uses in connection with any business the name or
xxxx "Xxxxx" and/or "CAV" and/or "LucasVarity" and/or the Xxxxx Group
diagonal flash or any colourable imitation thereof.
9.6 The Purchasers hereby covenant with the Vendor and (as a separate and
independent covenant) with the Vendor as trustee and/or as agent for
and for the benefit of each other member of the Xxxxx Group that
except to the extent (if any) required by law neither of them will and
each will procure that no member of the Purchasers' Group will at any
time after Completion disclose or make public any secret or
confidential or professional or financial or commercial information
concerning the Xxxxx Group and not relating to the Company or any of
its subsidiaries which it has learned by reason of the Company or such
subsidiaries or any of them being owned by the Vendor and save as
aforesaid will not and will procure that no member of the Purchasers'
Group will use to the detriment of any member of the Xxxxx Group any
information which the Company or any subsidiary of the Company has
obtained in confidence in the course of or as a result of such
ownership provided always, however, that the provisions of this clause
9.6 shall cease to apply to any information which is already in or
which falls into the public domain otherwise than by reason of a
breach of this provision.
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9.7 The Purchasers acknowledge to the Vendor for itself and as trustee for
and as agent for and for the benefit of each member of the Xxxxx Group
the ownership by the Xxxxx Group of the names and/or xxxx "Xxxxx"
and/or "CAV" and/or "LucasVarity" and/or the Xxxxx Group diagonal
flash and hereby acknowledge that notwithstanding any arrangements
operating between the Vendor and the Purchasers in respect of the
period following Completion all and any goodwill in the names of Xxxxx
and/or CAV and/or LucasVarity and/or the Xxxxx Group diagonal flash
belongs to and remains vested in the Xxxxx Group.
9.8 The Vendor agrees that Xxxxx Newco shall be permitted to retain the
word "Xxxxx" as part of its corporate name (but Xxxxx Newco shall not
be permitted to use the name "Xxxxx" for any other purpose whatsoever)
for whichever is the shorter of a period of one month after the date
on which the Indiel Option Shares are acquired by the Purchaser (if
they are) and the date on which Xxxxx Newco first begins to trade. On
the expiry of such period or, as the case may be, on such date the
provisions of clause 6.4 shall mutatis mutandis apply as if Xxxxx
Newco were a member of the Group. Save to the extent and only to the
extent as aforesaid the preceding provisions of this clause 9 continue
to apply.
10. ENTIRE AGREEMENT
----------------
This Agreement, the Umbrella Agreement, the Other Sale Agreements, the
Ancillary Agreements and the documents referred to in it and them
(including without limitation the Associated Documents but excluding the
Memorandum as defined in the Umbrella Agreement) (collectively "the
Transaction Documents" and individually "a Transaction Document"), contain
the whole agreement between the parties relating to the transactions
contemplated by such Transaction Documents and any other transactions or
matters related to them and supersede all previous agreements between the
parties relating to these transactions. The Memorandum shall not
constitute a Transaction Document. Each of the parties to this Agreement
being also a party to any of the other Transaction Documents acknowledges
that it has not relied on any pre-contractual representations
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warranties or other assurances save for the Warranties (as defined in this
Agreement and the Other Sale Agreements) the Purchaser Assurances (as
contained in this Agreement, the Umbrella Agreement and the Other Sale
Agreements) and the Vendor Assurances (as contained in the English Sale
Agreement) and otherwise as expressly set out in any of the Transaction
Documents. Each party hereby agrees that it shall have no remedy against
any other party for any negligent or innocent misrepresentation made by
such other party in relation to such transactions prior to the Transaction
Documents being entered into except to the extent that the same shall have
been incorporated in any of such Transaction Documents as a warranty
representation or indemnity in which case any claim in relation to the same
shall be only on the basis of a breach of the relevant Transaction Document
or under the relevant indemnity provision. Nothing in this clause 10 shall
relieve any party from any liability for representations made fraudulently.
11. PRODUCT WARRANTY EPIDEMIC
-------------------------
11.1 In this clause 11:
11.1.1 "Product Liability" means liability in respect of death,
personal injury, physical damage to property (other than
to the products themselves) caused by a defect in any
product manufactured assembled or repaired refurbished
serviced sold or supplied (or caused by a failure to carry
out servicing properly) prior to the Completion Date by a
Group Member;
11.1.2 "Warranty Liability Claim" means a claim (other than a
claim in respect of Product Liability) asserting in
relation to a product manufactured, assembled, repaired,
refurbished, serviced, sold or supplied prior to the
Completion Date by a Group Member, that it is or was or
will become faulty or defective or does not or did not or
will not comply with any warranty or representation
expressly or impliedly made, or with any applicable
regulations, standards
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or requirements in respect thereof, and in respect of which
the following conditions are also satisfied namely :
(i) the claim is made within the contractual warranty
period applicable to the supply (or repair, service or
refurbishment) of the product in question and prior to 31st
March 1999, and the Purchasers bona-fide and reasonably
believe it to be a claim which the Group Member is legally
liable to meet; or
(ii) the claim is made either before or after the expiry of
the contractual warranty period applicable to the supply
(or repair, service or refurbishment) of the product in
question and prior to 31st March 1999 and the Purchasers
(having consulted with the Vendor) bona-fide and reasonably
believe applying the same or substantially the same
investigatory routines and judgmental criteria as were
applied by the relevant Group Member during the period of
one year before the Completion Date :
(a) that it is a claim which, because of the size of the
particular order, the importance of the customer to the
Group Member, or otherwise, it is necessary for the
relevant Group Member to meet in whole or in part in order
to preserve the goodwill of the Group Member; and
(b) that in the case where the particular customer or a
similar customer had previously made a similar claim of
comparable size against a Group Member whilst that Group
Member was part of the Xxxxx Group, that Group Member would
have dealt with the claim in substantially the same way;
11.1.3 "Notifiable Claim" means :
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(i) a series of Warranty Liability Claims (whether made
before or after or partly before and partly after the
Completion Date) resulting from substantially the same fault
(whether of design, manufacturing technique or process,
workmanship or materials) in relation to one or more
products (so that all such products are affected by
substantially the same fault) ("the affected products"); or
(ii) the existence of a state of affairs (whether before or
after the Completion Date) which is likely to lead to a
series of Warranty Liability Claims within (i), whether or
not a Warranty Liability Claim or Claims are actually made;
where in either case in relation to the affected products
the Warranty Cost in respect of the Warranty Liability
Claims met and to be met becomes and/or exceeds
(Pounds)40,000 calculated at the exchange rate applicable
from A$ to (Pounds)sterling (calculated at the average of
the 'bid' and 'asked' exchange rate quoted by Reuters in New
York at 1.00 pm on the date of the claim);
11.1.4 "Warranty Cost" means:
(i) in the case of affected products which are repaired
the Incremental Cost to the relevant Group Member of
performing the repair;
(ii) in the case of affected products which are replaced
the Incremental Cost to the relevant Group Member of the
replacement products and the installation thereof; and
(iii) all other customer costs which the relevant Group
Member, manufacturer or supplier (as the case may be) is
contractually obliged to meet under the warranty in
question.
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11.2 In the event that after the Completion Date but prior to 31st March
1999 a Group Member shall be notified in writing by a customer of a
new Warranty Liability Claim which when aggregated with all Warranty
Liability Claims previously made in respect of the affected products
(to the intent and effect that the product in respect of which the new
Warranty Liability Claim is made and the products in respect of which
all other Warranty Liability Claims are or have been made all suffer
from substantially the same fault) is also a Notifiable Claim, the
Purchasers shall promptly notify and procure that the relevant Group
Member promptly notifies the Vendor in writing of the relevant
circumstances insofar as these are known to the Purchasers or the
relevant Group Member and prior to accepting any such new Warranty
Liability Claim allow the Vendor to investigate the facts surrounding
the Warranty Liability Claims met and to be met by the Purchasers, the
cause thereof, the Warranty Cost incurred or likely to be incurred in
relation thereto and to make representations to the Purchasers and the
relevant Group Member thereon, all of which the Vendor will do
promptly. The Purchaser shall take into account such representations
in making its decision whether or not to accept such Warranty
Liability Claim, which decision shall be reasonable.
11.3 The Purchasers shall and shall procure that each Group Member shall
notify the Vendor on receipt of any Warranty Liability Claim(s) which
they reasonably believe may become Notifiable Claims. In respect of
such claims so notified the Purchaser shall and shall procure that the
relevant Group Member shall before accepting the Warranty Liability
Claim allow the Vendor to investigate the Warranty Liability Claim in
question, the cause thereof, the likely Warranty Cost in relation
thereto and to make representations to the Purchasers and the relevant
Group Member thereon. The Purchaser shall take into account such
representations in making its decision whether or not to accept such
Warranty Liability Claim, which decision shall be reasonable.
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11.4 The Vendor shall from time to time, subject to the Purchasers having
provided the Vendor with a fully detailed breakdown of its Warranty
Cost and allowing the Vendor to verify the same by all reasonable
means, pay promptly to the Purchasers an amount equal to the Warranty
Cost incurred by the relevant Group Member of meeting Notifiable
Claims, each such payment to be made within twenty one days.
11.5 The provisions of clause 11.4 shall not apply to the extent that
specific provision was made in the Final Completion Statement in
respect of the Notifiable Claims in question.
12. INTEREST
--------
Save where otherwise contemplated by any other provision of this Agreement
if any sum shall at any time be due and outstanding from any party to any
other party pursuant to the terms of this Agreement interest shall be
payable thereon at the rate per annum which is 2% above Barclays Bank
plc's base lending rate from time to time or 12% per annum, whichever is
the higher at the date on which such sum is due and payable such interest
to accrue from day to day and to be payable from the due date until payment
whether before or after judgment.
13. WAIVER
------
No waiver by any party to this Agreement of any of the requirements of this
Agreement or any of its rights hereunder shall have effect unless given in
writing and signed by or on behalf of the party giving the waiver and no
delay by any party in exercising any of its rights hereunder shall impair
the same. No single or partial exercise of any right or remedy shall
preclude any further exercise thereof or the exercise of any other right.
Any waiver of any breach of, or any default under any of the terms of this
Agreement will not be deemed a waiver of any subsequent breach or default
and will in no way affect the other terms of this Agreement.
14. NOTICES
-------
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14.1 The address for service of the parties to this Agreement shall be:
14.1.1 in the case of the Vendor its registered office in the
United Kingdom from time to time and shall be addressed
to:-
The Legal Director - Xxxxx
Electrical and Electronic Systems; and
14.1.2 in the case of each Purchaser - Prestolite Electric
Incorporated 0000 Xxxxxxxxxxxx Xxxxxxxxx, Xxx Xxxxx, XX
00000, XXX, attention Xxx Xxxxxxx.
14.2 Any notice will be deemed well served on the party to whom it is
addressed if it be served personally or by courier delivery addressed
to such party at its address for service and service shall be deemed
to be effective upon such personal or courier delivery taking place.
14.3 Any notices or statements to be served pursuant to this Agreement may
be sent by facsimile process:
14.3.1 in the case of notices to the Vendor to the Legal
Director -Xxxxx Electrical and Electronic Systems; fax
0121 627 4420 or to such other fax number as may be
notified to the Purchaser for the purposes of this clause
14.3; and
14.3.2 in the case of notices to the Purchasers to Xxx Xxxxxxx;
fax (000) 000-0000 or to such other fax number as may be
notified to the Vendor for the purposes of this clause
14.3.2.
14.4 Any notice or statement so sent by facsimile process shall be deemed
to have been served at the expiration of 2 hours after the time of
despatch if despatched before 3.00 pm (local time at the place of
destination) on any Business Day and in any other case at 10.00 am
(local time at the place of destination) on the
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Business Day following the date of despatch provided that it is
followed by a hard copy of the notice or statement served on the
recipient in accordance with clause 14.2.
14.5 For the purposes of this Agreement Prestolite Newco hereby irrevocably
authorises and instructs PEI to act for it and on its behalf in
respect of all matters required to be done by the Purchasers hereunder
and agrees that the Vendor may rely on any agreement reached with PEI
as being an agreement which binds Prestolite Newco. Accordingly where
in this Agreement there is a reference to the Purchasers such
reference shall be interpreted as meaning a reference to PEI for
itself and on behalf of Prestolite Newco.
15. COSTS
-----
Save as otherwise provided herein each party hereto shall bear its own
costs and expenses in connection with this Agreement and the negotiations
leading thereto.
16. SURVIVAL OF CERTAIN PROVISIONS
------------------------------
This Agreement shall remain in force and effect after the Completion Date
in respect of any matters covenants or conditions which shall not have been
done observed or performed prior thereto and all representations warranties
obligations of and indemnities given by the parties shall (except for any
obligations fully performed) continue in full force and effect
notwithstanding Completion.
17. ANNOUNCEMENTS
-------------
No announcement concerning the transactions contemplated by this Agreement
or any matter ancillary to it and no disclosure of the terms of this
Agreement shall (save as required by law or the regulations of the London
Stock Exchange or the New York Stock Exchange) be made by any party except
with the prior written approval of the Vendor and the Purchasers. The
Vendor and the Purchasers agree to procure that each of their
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respective advisers and representatives complies with the provisions of
this clause as if such person were party to this Agreement.
18. SHARED IP
---------
18.1 In relation to any Shared IP the Vendor shall procure that the member
of Xxxxx Group which is the owner of such Shared IP shall on or as
soon after Completion as shall be reasonably practicable grant to such
Group Member as uses the Shared IP a fully paid up licence in respect
of all and any such Shared IP to use and exploit the same for its
remaining life (where the same may in time expire) and otherwise
without limit in point of time but subject to the provisions of clause
18.4 and otherwise) on terms that:
18.1.1 such licence shall be non-exclusive, non-transferable
(other than to a successor in title to the business of the
Group Member), irrevocable, royalty-free and worldwide;
18.1.2 such Group Member may, in relation to the business carried
on by such Group Member, sub-licence any such Shared IP to
any member of the Purchasers' Group for so long as such
licensee remains a member of the Purchasers' Group;
18.1.3 if the Group Member (or any member of the Purchasers'
Group) wishes to sub-licence any such Shared IP to a party
outside the Purchasers' Group in relation to the business
carried on by such Group Member, it may only do so with
the consent of the Vendor (such consent not to be
unreasonably withheld).
18.2 Any actions against any third party for infringement of any Shared IP
shall be a matter for the Vendor on behalf of the member of the Xxxxx
Group being the owner thereof provided that the Purchasers and/or the
appropriate Group Member shall render such assistance (at the Vendor's
or other member of the Xxxxx Group's expense) as the Vendor on behalf
of such member of the Xxxxx
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Group may reasonably require for the purpose of bringing such action.
If the Purchasers shall agree in writing to share in the costs of any
such action (but not otherwise), the Purchasers shall be entitled to a
corresponding share of any damages or other compensation received. If
the Vendor decides not to take or within a reasonable time fails
itself to take infringement proceedings after written request by the
Purchasers, the Purchasers and/or the appropriate Group Member shall
be free to do so in its/their own name and the Vendor shall (at the
Purchasers' request and expense) render such assistance as the
Purchasers and/or the appropriate Group Member may reasonably require
(including subject to being appropriately indemnified by the
Purchasers against costs and any other damages or awards lending its
name) for the purpose of bringing such proceedings.
18.3 If the Vendor wishes to cease the prosecution or maintenance of any
Shared IP which is registered or the subject of a pending application,
it shall first give timely notice to the Purchasers offering to
transfer to the Purchasers and/or the appropriate Group Member the
Shared IP in question. If such offer is accepted, the parties shall
effect appropriate transfer documentation. Alternatively, if such
offer is not accepted within 7 days, the Vendor shall be at liberty to
cease such prosecution or maintenance and to abandon the registration
of relevant intellectual property.
18.4 The licence in respect of shared IP granted by this clause 18 shall
automatically determine and be of no further force or effect if at any
time:-
18.4.1 the business which enjoys the benefit of such licence (or
any part of such licence) or to which such licence (or
part of such licence) shall have been assigned or sub-
licensed; or
18.4.2 the corporate entity which owns (whether directly or
indirectly) the business which enjoys the benefit of such
licence (or any part
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of such licence) or to which such licence (or part of such
licence) shall have been assigned or sub-licensed
shall be or become part of a group of companies of which a Xxxxx
Competitor forms part or in which a Xxxxx Competitor is interested
whether directly or indirectly.
18.5 For the avoidance of doubt, this clause 18 shall not permit the
Purchasers or any Group Member to sub-licence or assign the Shared IP
or any part thereof to any Xxxxx Competitor.
19. COUNTERPARTS
------------
This Agreement and any other documents to be entered into in accordance
with its terms may be executed in any number of counterparts and by the
several parties hereto on separate counterparts each of which when so
executed and delivered shall be an original but all the counterparts shall
together constitute one document.
20. GENERAL
-------
20.1 This Agreement will be binding on and will enure for the benefit of
each party's successors and assigns (as the case may be).
20.2 The parties agree that they will do all such acts and things and
execute all such documents as may be required on or subsequent to
Completion to vest in the Purchasers legal and beneficial ownership of
the Indiel Sale Shares and the Xxxxx Newco Shares in accordance with
this Agreement and otherwise to give effect to its terms.
20.3 Save as otherwise expressly contemplated by this Agreement the rights
and remedies expressly provided for by this Agreement will not exclude
any rights or remedies provided by law.
20.4
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20.4.1 The Vendor and the Purchasers agree to make a good faith
effort to resolve any disagreement, dispute, controversy or
claim (for purposes of this clause 20.4, a "Legal Dispute")
arising out of or relating to this Agreement, its
existence, validity, the interpretation hereof, any
agreements relating hereto, or the breach, termination or
invalidity hereof. Failing such a resolution, such Legal
Dispute shall be resolved through mediation to be carried
out by a mediator during a period of thirty days, pursuant
to the Reglas de Procedimiento y Codigo de Etica del Centro
Empresarial de Mediacion y Arbitraje (Asociacion Civil)
("CEMA").
20.4.2 Any unresolved Legal Dispute shall be referred to and
finally settled by arbitration, in accordance with the
Rules of the CEMA.
20.4.3 Each party hereto hereby waives, to the fullest extent
permitted by law, its right to appeal or challenge the
validity of the arbitration award before any court of law,
or that the action, suit or proceeding is brought in an
inconvenient forum or that the venue of the action, suit or
proceeding is improper. Notwithstanding the above, the
party in whose favour the Legal Dispute is resolved may
request the enforcement of the arbitration award before a
court of law if the other party does not comply with what
is resolved.
20.4.4 Each party hereto agrees that service of process in any
action, suit or proceeding referred to in this clause 20.4
shall be deemed in every respect effective service of
process upon it if sent to it at the address for notice
purposes provided for in clause 14.
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20.5 The formation, existence, construction, performance, validity and all
aspects whatsoever of this Agreement or of any term of this Agreement
shall be governed by the laws of Argentina.
20.6 Where and to the extent that the Purchasers or any Group Member is
entitled to make a claim under this Agreement whether under the
Warranties the Indemnities or otherwise the loss or damage in respect
of which any such claim may be made shall be limited to direct loss or
damage to the intent and effect that indirect loss or damage
(including consequential loss or damage) shall be irrecoverable.
20.7 Where under this agreement the Vendor is liable to indemnify a Group
Member and any payment to be made by the Vendor under the indemnity is
taxable in the hands of such Group Member then in those circumstances
the Vendor shall pay to the Purchasers a sum equal to the amount of
the liability to the Group Member (before any upwards adjustment in
respect of any taxation payable by the Group Member) and the
Purchasers and the Group Member in question shall accept the same in
satisfaction of the claim in question.
21. ASSIGNMENT
----------
21.1 This Agreement shall not be assignable by the Vendor or the Purchasers
without the prior written consent of the other(s) (which consent shall
not be unreasonably withheld in the case of an internal group
reorganisation (without insolvency) intended to be made by either the
Vendor or the Purchasers provided always that any assignee shall be a
person of similar substance and standing as the assignor or a suitable
guarantee shall be provided). In cases where the assignee of this
Agreement is a member of the Xxxxx Group, upon their ceasing to be a
member of the Xxxxx Group, the Vendor shall procure that such assignee
shall, and such assignee shall be obliged to, re-assign this Agreement
to the Vendor. In cases where the assignee of this Agreement is a
member of the Purchasers' Group then, upon ceasing to be a member of
the
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Purchasers' Group, the Purchasers shall procure that such assignee
shall, and such assignee shall be obliged to, re-assign this Agreement
to the Purchasers.
21.2 The benefit of this Agreement may be assigned by the Purchaser by way
of security to any provider of secured financing to any member of the
Purchasers' Group.
22. STAMP DUTY
----------
If and to the extent that stamp duty arises in respect of the sale and
purchase of the Indiel Sale Shares hereunder or under the Indiel Option
the parties agree that the same shall be shared equally between the Vendor
and the Purchasers and the Vendor agrees to pay its portion thereof within
10 days of receipt of a notice from the Purchasers as to the amount of the
Vendor's share thereof or, if later, the date on which the same is due and
payable to the appropriate authorities.
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SCHEDULE 4
----------
THE WARRANTIES
--------------
1. INTERPRETATION
--------------
1.1 In this Schedule 3 the following expressions have the following
meanings:
Expression Meaning
"the Accounting Date" 31st January 1997
"the Accounts" The audited accounts of each Group
Member, including in the case of the
Company its audited consolidated
accounts, for the financial year which
ended on the Accounting Date, comprising
in each case a balance sheet, a profit
and loss account, notes and directors'
and auditors' reports
"Company" Notwithstanding the definition contained
in clause 1, each company individually
details of which are set out in Schedule
1 as if the Warranties were set out in
full in respect of each such company
provided that where used other than in
this Schedule "Company" shall have the
meaning given in clause 1
"Contract" Any agreement, arrangement or
understanding which is legally binding
-78-
"Intellectual Property Patents, trade marks, service marks,
Rights" registered designs, design rights,
copyright, know how and all other
intellectual property (of whatever
nature) and any applications for the
same
"Shares" The Indiel Shares and the Xxxxx Newco
Shares
"Stock" Stocks of the Company
"Taxation" (a) Any tax, duty, impost or levy, past
or present, anywhere in the world,
whether governmental, state, provincial,
local governmental or municipal, and (b)
Any fine, penalty, surcharge, interest
or other imposition relating to any tax,
duty, impost or levy mentioned in
paragraph (a) of this definition or to
any account, record, form, return or
computation required to be kept,
preserved, maintained or submitted to
any person for the purposes of any such
tax, duty, impost or levy
"Taxation Authority" Any authority, anywhere in the world,
competent to impose, assess or collect
Taxation,
"Taxation Statute" Any statute (and all regulations and
other documents having the force of law
under such statute) published, enacted,
issued or coming into force on or before
the date of this
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Agreement relating to Taxation
1.2 References in this Agreement to statutes or any statutory provision
shall include any statutory modification, re-enactment or extension
thereof for the time being in force and any orders, regulations,
instruments or other subordinate legislation made thereunder provided
always that this shall not operate to increase the liability of the
parties hereunder.
1.3 Where any of the Warranties is qualified by words such as "the Vendor
is not aware" or "the Vendor believes" or "to the best of the Vendor's
knowledge" or any similar qualification, the Vendor's awareness or
belief or knowledge shall be determined by reference only to the
awareness or belief or knowledge of the persons whose names are listed
in the left hand column below and whose position is stated opposite
his name in the right hand column below, of whom enquiry has been made
by the Vendor and the Vendor shall not be liable for breach of
warranty should the fact or circumstance which would otherwise be a
breach of the Warranties be known to any other employee or officer of
any member of the Xxxxx Group.
Name of Person Position Held
P Almond Legal Director - Xxxxx Electrical and
ElectronicSystems
E Xxxxx Group Property Manager
S Xxxxxxxx Group Patents Manager
C Long-Leather Programme Director-Business Development
X X XxXxxxxxx Group Director - Health Safety and Environment
X. Xxxxxx Consultant
Xxxx Xxxxx General Manager
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Xxxx Xxxxx Finance Manager
1.4 In relation to any of the Warranties which are qualified by reference
to ateriality, the materiality of any matter which may constitute a
breach of any such Warranty shall be determined by reference to and in
the context of the Group.
2. SCHEDULE 1 CAPITAL
------------------
2.1 The Company is a sociedad ananima duly organised, validly existing and
in good standing under the laws of Argentina. The Company has all
requisite power and authority to own, lease, hold and operate its
assets and properties and to conduct its business as and where owned,
leased, held, operated and/or conducted, as the case may be, and to
hold all franchises, licences and permits necessary or required
therefor.
2.2 The Company is duly qualified to do business as presently conducted
and is in good standing in every jurisdiction in which the property
owned, leased or operated by the Company, or the nature of the
business conducted by the Company, makes such qualification necessary.
2.3 The aggregate capital stock of the Company consists of 14,786,176
common, nominative, nonendorsable shares with a par value of A$1 each,
entitled to 1 vote per share, which shares are issued, outstanding and
fully paid in. There are no other shares of capital stock of the
Company, issued or outstanding. The Shares have been duly authorised
and validly issued, fully paid and nonassessable, and are owned
beneficially and of record by Vendor; free and clear from any liens of
any kind or nature whatsoever. Upon Completion, Purchaser shall be the
legal and beneficial owner of the Shares and of all irrevocable
contributions on account of future capital increases that might have
been made by Vendor or any other third party into the Company, free
and clear of any liens of any kind or nature whatsoever. Other than as
contemplated by
-81-
this Agreement there are no outstanding obligations, options,
warrants, puts, calls, rights to subscribe, agreements or other
commitments or rights of any kind or nature whatsoever to purchase the
Shares, nor are there any outstanding securities of the Company which
are convertible into or exchangeable for any Shares of the Company.
The Company has no obligations of any kind or nature whatsoever to
issue any additional shares or stock or other securities. Other than
as contemplated by this Agreement neither the Company nor Vendor has
agreed to issue, purchase, sell or transfer any securities of the
Company.
3. ACCOUNTS
--------
3.1 The Accounts have been prepared in accordance with the Accounting
Principles. The Accounts are in accordance with the books and records
of the Company as of the dates and periods indicated.
3.2 The Accounts fairly present the financial position of the Company at
the Accounting Date. The statements of income and cash flows in the
Accounts fairly present the results of operations of the Company and
the cash flows for the periods indicated and covered thereby.
3.3 The Disclosure Letter sets out a list and description of all
indebtedness whether or not matured or contingent or incurred as
principal, guarantor or surety, owed by the Company or to which any of
their respective properties or assets are subject ("Indebtedness"),
and a description of all material terms thereof and all assets pledged
or otherwise subject thereto. Other than as listed on Disclosure
Letter, the Company does not have any Indebtedness with Vendor. The
Company is not in default, nor has any event occurred which, with
notice of the lapse of time or both, would constitute a default, under
any Indebtedness.
4. ORGANISATION
------------
The Vendor is entitled, and has all requisite corporate power and
authority, to enter into and complete the Agreement and the signature,
execution and performance of the
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Agreement and all documents ancillary to it have been duly authorised by
all necessary acts of the Vendor and its board of directors.
ASSETS
------
5. UNENCUMBERED TITLE
------------------
Each asset reflected in the Accounts (save for current assets disposed of
by the Company in the ordinary course of its business since the Accounting
Date) and each asset treated as an asset of the Company and/or used by the
Company at the date of this Agreement is in the legal and beneficial
ownership of the Company, free from any third party right and from any
Contract to grant the same.
6. DEBTORS
-------
The Company has not factored or discounted any existing debt owed to it or
agreed to do so.
7. STOCK
-----
So far as the Vendor is aware, the Stock taken as a whole is sufficient for
the normal requirements of the Company and taken as a whole is at its
normal level and having regard to current orders and those orders
reasonably anticipated from customers of the Company.
8. PROPERTY
--------
8.1 Schedule 3 contains particulars of all real property owned by the
Company and all easements and rights of way (collectively "Real
Property").
8.2 With respect to all real property leased by the Company, including all
leasehold improvements (collectively, the "Leased Property") save as
disclosed in the Disclosure Letter:
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8.2.1 all leases are in writing and are duly executed and, where
required, witnessed, notarized, acknowledged and recorded
to make them valid and binding and in full force and
effect for their full term, and none have been modified,
amended, sublet or assigned;
8.2.2 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;
8.2.3 the Company is not in default and so far as the Vendor is
aware, there is no default on the part of any other party
under any Lease under which any Leased Property is held
which materially affects the Leased Property;
8.2.4 all surety bonds, insurance, security, and other deposits
required by such leases have been made and have not been
refunded or returned, or their forfeiture claimed, in
whole or in part, by any lessor
8.3 With respect to the Real Property and Leased Property, including all
leasehold improvements:
8.3.1 there are no outstanding variances or special use permits
affecting the Real Property or the Leased Property or
their respective uses;
8.3.2 the Company has not received any written notice of a
violation of any Laws and Ordinances, or of any covenant,
condition, easement, or restriction affecting the Real
Property or the Leased Property or relating to their use
or occupancy. The Vendor is not aware of any such
violation;
8.3.3 so far as the Vendor is aware there is no material
condemnation or eminent domain proceeding of any kind
pending or, to the
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knowledge of the Company and Vendor, threatened against
any of the Real Property and the Leased Property and for
the purposes of this clause 8.3.3 what is material shall
be determined in the context of the Group as a whole;
8.3.4 the Real Property and the Leased Property are occupied
under valid and current certificates of occupancy where
applicable, governmental authorisations, permits, or the
like, and the transactions contemplated by this Agreement
will not require the issuance of any new amended
certificates of occupancy, governmental authorisations,
permits or the like;
8.3.5 so far as the Vendor is aware, the Real Property and the
Leased Property do not violate, and all improvements have
been constructed in compliance with, any applicable
federal, provincial, state or municipal statutes, laws,
ordinances, regulations, rules, codes, orders, or
requirements, including, without limitation, any building,
land use, zoning, fire or environmental laws or codes
which in any such case have the force of law (the "Laws
and Ordinances"), and so far as the Vendor is aware, the
Company has obtained all material licences, permits,
building permits, occupancy permits and approvals required
to own, possess and operate its Real Property and the
Leased Property and conduct its business as it is
presently being conducted;
8.4 The Disclosure Letter contains particulars of all the leases executed
by the Company under which the Company has obligations which remain
outstanding. All Leases listed in the Disclosure Letter are so far as
the Vendor is aware valid and in full force and there is no event that
with notice or lapse of time, or both, would constitute an event of
default or event of acceleration under any of the Leases.
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9. INTELLECTUAL PROPERTY RIGHTS
----------------------------
9.1 The Company has no interest in any Intellectual Property Rights
(whether registered or not) relating to starters and alternators save
for the Intellectual Property Rights details of which are given in the
Disclosure Letter.
9.2 So far as the Vendor is aware the Company will be able to continue to
use in Argentina all intellectual property rights (relating to
starters and alternators) which it uses at the date of this Agreement.
9.3 So far as the Vendor is aware none of the goods and/or services
supplied in the course of the business carried on by the Company or
any of the processes employed in such business or any other aspect of
the carrying on of such business infringes any intellectual property
rights of any nature of any third party.
9.4 So far as the Vendor is aware no person is currently infringing any of
the Intellectual Property Rights details of which are given in the
Disclosure Letter.
9.5 So far as the Vendor is aware the Company has not entered into any
subsisting licence with any person under which:-
9.5.1 the Company licenses any of the Intellectual Property
Rights to that person; or
9.5.2 that person licenses any intellectual property rights to
the Company for the purpose of the business carried on by
the Company.
EMPLOYEES
---------
10. REMUNERATION AND EMPLOYEES
--------------------------
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10.1 The particulars contained in the Schedule annexed to the Disclosure
Letter relating to the employees of the Company are true and accurate.
10.2 The Company is not under any contractual obligation:
10.2.1 to make any increase in the rates of remuneration of or
other similar payment to any of such employees;
10.2.2 to make any change in the terms and conditions of
employment of any such employees.
10.3 The Disclosure Letter discloses all material agreements or
arrangements with trades unions, staff associations or other
associations of employees relating to the employees of the Company.
10.4 In relation to all employees of the Company a pro forma pack
incorporating standard form statements of particulars of employment
and other written statements of employment benefits is annexed to the
Disclosure Letter, the salary or wages of such employees being shown
in the Schedule referred to in paragraph 10.1 above.
10.5 No employee of the Company employed in a managerial or senior
technical or senior sales position has given or has been given notice
to terminate his employment.
10.6 There are no loans outstanding from the Company, the Vendor or any
other member of the Xxxxx Group to any employee of the Company or from
any of such employees to the Vendor, the Company or any other member
of the Xxxxx Group.
CONTRACTS
---------
11. INSURANCE
---------
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11.1 Brief particulars of all the Company's insurances are set out in the
Disclosure Letter.
11.2 There is no insurance claim made by the Company pending or
outstanding.
11.3 All such policies and /or bonds are currently in full force and effect
and neither the Company nor Vendor has received any notice of
cancellations with respect to any of the policies. All premiums due
and payable on such policies and/or bonds have been paid. Neither the
Company nor the Vendor is a co-insurer under any of the terms of any
such insurance policy.
11.4 The Company has not been refused any insurance otherwise available to
comparable companies in the same industry in Argentina related to its
assets and/or business by any insurance carrier during the last five
(5) years.
12. MATERIAL CONTRACTS
------------------
12.1 The Company is not a party to any of the following contracts which is
material:
12.1.1 any partnership, joint venture, consortium, joint
development or similar contract relating to the Company;
12.1.2 any contract requiring the Company to pay any royalty,
commission or like payment in relation to its business;
12.1.3 any contract for the supply of goods and/or services by or
to the Company on terms under which retrospective or
future discounts, price reductions or other financial
incentives are given by or to the Company dependent on the
level of purchases or any other criteria;
12.1.4 any written agency or written distributorship agreement.
-88-
12.2 None of the Contracts has been entered into or assumed other than on
an arm's length basis save those made with the Vendor or another
member of the Xxxxx Group . The extent to which any such Contract is
not on terms similar to those that could be expected to have been
agreed with an unaffiliated third party is set out in the Disclosure
Letter.
12.3 The Vendor is not aware of the invalidity of or grounds for rescission
avoidance or repudiation of any agreement to which the Company is
party.
12.4 The Contracts are enforceable in accordance with their terms save
where the fact that any such Contract is not enforceable would not
have a material and adverse effect on the Group.
12.5 The Disclosure Letter lists:
12.5.1 the top fifty suppliers (a "Major Supplier") by value (net
invoice value) to the Company in the twelve months from 1
November 1996 to 31 October 1997; and
12.5.2 those customers (a "Major Customer") who have purchased
from the Company in the twelve months from 1 November 1996
to 31 October 1997 goods and services having in the
aggregate a net invoice sales value of not less than
A$400,000.
COMPLIANCE; DISPUTES
--------------------
13. COMPANY LAW MATTERS AND GENERAL COMPLIANCE
------------------------------------------
13.1 Compliance has been made with all legal requirements in connection
with the formation of the Company and all issues and grants of shares
or other securities of the Company.
13.2 The copy of the memorandum and articles of association and by-laws of
the Company and all amendments thereto enclosed with the Disclosure
Letter are
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true and complete and have been duly filed registered and
approved by the Office of Corporations, Public Registry of Commerce.
13.3 The Company has conducted its business in all material respects in
accordance with all applicable laws and regulations of Argentina and
the laws of such other jurisdictions which are applicable to the
Company and its activities.
13.4 There is not pending, or in existence, any investigation or enquiry
which is known to the Vendor by, or on behalf of, any governmental or
other body in respect of the affairs of the Company nor to the
knowledge of the Vendor is any such investigation or inquiry
threatened.
14. LITIGATION/DISPUTES
-------------------
14.1 Neither the Company nor any person for whose acts or defaults it may
be liable is involved (whether as plaintiff, defendant or any other
party) in any civil, criminal, tribunal, labour or arbitration
proceedings.
14.2 There is no unsatisfied judgment or unfulfilled order outstanding
against the Company and neither the Company nor any person is party to
any undertaking or assurance given to a court, tribunal or any other
person in connection with the determination or settlement of any claim
or proceedings for which the Company would be directly or vicariously
liable.
14.3 The Company is not bound by, subject to or in default under any order,
judgment, award, writ, injunction, or other ruling of any court, or
administrative or governmental authority.
14.4 There are no outstanding material disputes between the Company and any
Major Customer or Major Supplier.
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15. DEFAULT
-------
The Company is not in breach of any Contract to which it is a party, and so
far as the Vendor is aware no other party to any such Contract is in breach
of it where in either such event such breach is material in the context of
the business of the Group taken as a whole.
16. EVENTS SINCE THE ACCOUNTING DATE
--------------------------------
Since the Accounting Date
16.1 the Company has not other than in the ordinary course of business
acquired, or agreed to acquire, any single asset having a value in
excess of A$100,000 or assets having an aggregate value in excess of
A$100,000 save for stock acquired in the ordinary course of business;
16.2 the Company has not disposed of, or agreed to dispose of, any material
asset other than finished goods other than in the ordinary course of
business;
16.3 the trade and business of the Company has been carried on in the
ordinary and normal course and on a basis consistent with past
practice;
16.4 no dividends have been paid;
16.5 the Company has not:
16.5.1 changed or entered into any obligation to change the terms
and conditions of employment of any senior employee of the
Company;
16.5.2 paid or become obliged to pay any severance or termination
payment;
16.5.3 made any loan or advance to any person, corporation, firm
or other entity other than credit extended to customers in
the ordinary course of business;
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16.5.4 entered into any sale, licence, assignment or transfer of
any patents, trademarks, trade names or other intellectual
property;
16.5.5 made any commitment (through negotiations or otherwise) or
incurred any liability to any labour organisation;
16.5.6 instituted any bonus, stock option, profit-sharing,
pension plan or similar arrangement or made any changes in
any such existing plans;
16.5.7 terminated , amended or revised any agreement, contract or
other commitment with any of its customers and/or
suppliers where such termination, amendment or revision is
material in the context of the business of the Company nor
has any Major Customer and/or key supplier terminated,
amended, or revised any agreement, contract or commitment
with the Company where such termination, amendment or
revision is material in the context of the business of the
Company, except where any of the same were in the ordinary
course of business, in accordance with the Company past
practices, and were consistent with the Company's
corporate policies and procedures; or
16.5.8 terminated, transferred or granted any rights, except in
the ordinary course of business consistent with past
practices, under any contract, lease, mortgage, indenture,
loan agreement, licence, deed of trust, order, arbitration
award, judgment, decree, instrument or other agreement;
17. EFFECTS OF AGREEMENT
--------------------
The execution, delivery and performance of this Agreement by the Vendor
does not:
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17.1 violate, conflict with or result in the breach of any provision of the
memorandum or articles of association of the Vendor;
17.2 violate any law to which the Vendor is subject;
17.3 give any other party to a Contract which is material the right to
terminate the same; or
17.4 result in a breach of, or constitute a default under any order,
judgment or decree of any court or governmental agency to which the
Company or the Vendor are party or by which, in either case, the
Vendor or the Company or any of the assets of either is bound or
subject.
TAXATION
--------
18. RETURNS AND DISPUTES
--------------------
18.1 All notices, returns, computations, registrations and payments which
should have been made by the Company for any Taxation purpose have
been made within the requisite periods and are up-to-date.
18.2 So far as the Vendor is aware the Company is not involved in any
dispute with any Taxation Authority which is material and which
concerns any matter which is reasonably likely to affect in any way
the liability of the Company to Taxation.
18.3 So far as the Vendor is aware the Taxation affairs of the Company are
not the subject of any investigation or enquiry by any Taxation
Authority (other than routine questions) and so far as the Vendor is
aware there are no such investigations or enquiries threatened.
19. BROKERS, FINDERS, ETC.
----------------------
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Neither the Vendor nor the Company has retained, and neither the Vendor nor
the Company is subject to any claim of, any broker, finder, consultant or
intermediary in connection with the sale and purchase of the Shares
contemplated by this Agreement who might be entitled to a fee or commission
from Purchaser or the Company upon consummation of the sale and purchase of
the Shares hereunder.
-94-
SCHEDULE 5
----------
THE ACCOUNTING PRINCIPLES
-------------------------
XXXXX INDIEL ARGENTINA S.A.
---------------------------
ACCOUNTING POLICIES
-------------------
Basis of consolidation
The consolidated accounts will include the figures of XXXXX INDIEL ARGENTINA
S.A., Jovsa S.A. and Equipos Originales S.A. Adjustments will be made to
eliminate the investment of Xxxxx Indiel Argentina S.A. in its subsidiaries,
inter company balances and other operations between companies.
1. FIXED ASSETS
------------
1.1 Determination of Cost
General
. Purchase price includes all consideration, cash or otherwise, in
respect of the asset and includes expenses incidental to the
acquisition.
. Improvement and Repair - expenditure is capitalised where it
increases the expected future benefits from the assets beyond its
previously assessed standard of performance.
Specific
. Plant and Machinery - cost includes all expense directly
attributable to bringing the asset into its working condition and
location eg.
. Invoice purchase price
. site preparation
. delivery and handling charges
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. installation cost
. professional fees
. Computer Hardware - capitalised amount comprises invoices cost.
. Computer Software - capitalised amount comprises invoiced cost.
. Motor vehicles - capitalised amount comprises invoiced cost.
1.2 Valuation
. Fixed assets balances as at the beginning of the year have been
revalued as at 31st July 1995 in accordance with the wholesale
prices indices, as from that date the price level restatement has
been discontinued. The differences between the restated cost and
its historical cost has been included in the line "S9844" Reserves
Revaluation.
1.3 Depreciation
. All assets are depreciated from the first day of the month in which
they are brought into service. The depreciation is charges to
Profit & Loss account on annual basis from the year of the
addition. The depreciation ceases on the year before the year in
which the asset is sold or scrapped.
. Depreciation is calculated on a straight line basis over the useful
economic life of the asset.
. Economic lives are as follows:
. Buildings 50 years
. Roads 10 years
. Plant and Equipment 10 years
-96-
. Computer Hardware 10 years
. Computer Software 3 years
. Furniture and Fixtures 10 years
. Vehicles 5 years
1.4 Profit/Loss on sale of Assets
Profit or loss on the sale of an asset is calculated as disposal
proceeds less the net value of the asset.
1.5 Leases
. Assets acquired under finance leases are capitalised and
depreciated as for purchased assets as above.
2. STOCK
-----
2.1 Definition
. Stocks comprise:
. goods or other assets purchased for resale
. raw material and components purchased for incorporation into
products for sale
. products in intermediate stages of completion
. finished goods
. materials in transit
. tooling
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2.2 Physical Stock Count
. A full physical count of work-in-progress is conducted at the end of
each quarter.
. A permanent Physical Inventory procedure is performed for raw
material and components and finished goods.
. Certificates are obtained for all stocks held by third parties,
including subcontractors.
2.3 Valuation
Definition
. Cost - that expenditure which has been incurred in the normal course
of business in bringing the product to its present location and
condition.
. Cost of Purchase - comprises purchase price including import duties,
transport and handling costs and any other directly attributable
costs, less trade discounts, rebates and subsidies.
. Cost of Conversion - comprises:
. costs specifically attributable to units of production e.g.
direct labour, direct expenses and subcontracted work.
. production overheads.
. other overheads attributable in the particular circumstances of
business to bring the product to its present location and
condition.
. Production Overheads - overheads incurred in respect of materials,
labours and production based on the normal level of activity
notwithstanding that they may accrue wholly or partly on the time
basis.
-98-
. Net Realisable Value - the actual or the estimated selling price net
of trade but before settlement discounts, less further costs to
completion and all costs incurred in marketing, selling and
distributing.
Determination of Cost
. With the exception of material in transit, valued at cost, and
tooling revalued as at 31st July 1995 in accordance with official
wholesale price indices, stocks are valued on the basis of standard
costs, which are substantially the same as replacement costs.
There is no significant difference between the replacement cost and
the F.I.F.O. method.
Where applicable, reserves are constituted on the basis of net
realisable values to cover possible losses in respect of redundancy,
excess and slow moving stock.
. The full provision rule for inactive/excess stock may be varied
where there is a reasonably degree of certainty that any stock which
is unprovided for will be sold in the foreseeable future.
. Work-in-progress - the cost is that appropriate to the last
completed operation, plus the value of any materials or components
used during the next operation(s) which are not been returned to
store.
. Non production overheads - overheads relating to service departments
are allocated between production and non production functions, only
these that are allocated to the production function are absorbed
into the costs of conversion.
. Absorption of overheads - overheads included in stock are allocated
on the basis of a normal level of activity which is established with
reference to the budgeted level of production for the current year
and the level of activity
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achieved in previous years. Abnormal costs such as the cost of the
excess facilities are charged to profit as incurred.
. Remanufacturing stocks - the amount recorded in the Final Completion
Statement for inventory in the remanufacturing department (A$1.1
million at 31 January 1997) shall not exceed the amount recorded at
31 January 1997 or 40% of sales of remaining products for the 12
months ending the month end prior to Completion.
3. MARKETABLE SECURITIES
---------------------
Marketable securities include Argentine government bonds and other highly
liquid investments in shares that are revalued to their quoted market price
as at the end of the year. The revaluation is credited to profit & loss
accounts.
4. GOODWILL (OTHER THAN CONSOLIDATION)
-----------------------------------
(Consolidation accounts for the year ended 31st January 1997)
During the year ended 31st July 1994 two other businesses were acquired.
On one hand Equipos Originales S.A. acquired the capital stock of a new
company called F.M.R. San Xxxx S.A. by means of which we increased
substantially the existing ceiling of tax exemption benefits according to
San Xxxx tax promotion regime.
On the other hand, and in order to obtain a significant increase in the
Company's market share, an agreement letter was signed by Equipos Originales
S.A. for the acquisition of Jovsa S.A. that owns the market share rights of
a local competitor business that operated under the name of Garef S.A.
As of 31st July 1995, the excess of the amounts paid for the acquisition
with regard to the fair value of its assets were written off against
reserves. Such differences were shown as a separate item in the note to the
movements of revaluation reserve.
-100-
As of 31st July 1996, such differences have been transferred to retained
earnings.
5. DEBTORS
-------
5.1 TRADE DEBTORS
-------------
. Trade debtors comprise all amounts due from external customers in
respect of goods sold and services provided in the ordinary course
of business. VAT invoiced to the customers is included in the
outstanding balance for each debtor.
5.2 PROVISIONS
----------
The provision for doubtful debts consists those debts considered to be
a risk at any point in time.
A specific provision is created where:
. the customer is in receivership/administration and no debt recovery
is anticipated
. there is specific knowledge which indicates payment is unlikely
. the debt is long overdue compared to the normal collection cycle of
the business
5.3 PREPAYMENTS AND ACCRUED INCOME
------------------------------
. Prepayments consisting of the unexpired portion of payment made in
respect of time related expenses are included on the balance sheet.
5.4 OTHER DEBTORS
-------------
. Other debtors comprise all amounts falling outside the definition of
trade debtors and are included on the balance sheet to the extent to
which they are determined as recoverable.
-101-
6. CREDITORS
---------
6.1 TRADE CREDITORS
---------------
Trade creditors comprise all amounts due to external suppliers in
respect to goods purchased and services provided in the ordinary course
of business. Provision is made for goods and services received for
which invoices have not been received by the balance sheet date.
. ACCRUALS AND DEFERRED INCOME
----------------------------
Accruals consist of the amounts payable in respect of benefits received
up to the balance sheet day, generally on a time apportioned basis. An
accrual is made for outstanding annual holiday entitlement for all
employees.
. No accrual shall be made in respect of the year audit.
6.2 CONTINGENT LIABILITIES
----------------------
. Contingent liabilities are only provided for if it is both probable
that a liability will occur and the amount is either known or can be
estimated with accuracy.
. An accrual for the costs of redundancies of up to 30 persons in the
amount of A$700,000 reduced by the amount of actual payments made by
the Company in respect of such redundancies prior to Completion shall
be included in the Final Completion Statement. No provision will be
made in respect of any proposed termination of employment of Xxxx
Xxxxx.
7. PROFIT AND LOSS ACCOUNT
-----------------------
7.1 MAINTENANCE STOCKS
------------------
. Expenditure on plant and machine spares is written off as incurred.
8. TAX ON PROFIT
-------------
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. In recent years, the Company has not paid any Income Taxes as taxable
losses have been incurred. These losses are available to offset profits
in future years but are not shown on the balance sheet.
9. PENSION PLAN
------------
The provision to be made shall be calculated in accordance with the provisions
of clause 7.12
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SIGNED BY XXXXX XXXX-LEATHER ) /S/ XXXXX XXXX-LEATHER
----------------------
as duly authorised attorney )
for and on behalf of )
XXXXX INDUSTRIES PLC )
Xxxxx Xxxx-Leather as attorney for Xxxxx
Industries plc
PRESTOLITE ELECTRIC INC.
By: /S/ P. XXX XXXXXXX
------------------
Name: P. Xxx Xxxxxxx
Title: President
By: /S/ XXXXXXX X. XXXXXXXXX
------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
PRESTOLITE NEWCO, INC.
By: /S/ P. XXX XXXXXXX
------------------
Name: P. Xxx Xxxxxxx
Title: President
By: /S/ XXXXXXX X. XXXXXXXXX
------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Vice President
-104-
