BUSINESS SALE AGREEMENT
SAMPLE – BUSINESS SALE AGREEMENT
THIS AGREEMENT is made on [ ] ….
BETWEEN:-
(1) [ ] whose registered office is at [ ] ("The Vendor") and
(2) [ ] a company incorporated in Malaysia and having a registered office at [ ] ("The Purchaser").
1. Interpretation
1.1 In this Agreement including the Schedule:-
(a) the following words and expressions have the following meanings, unless they are inconsistent with the context:-
"Act" means the Companies Act 1965.
"Account Date" means the date to which the Principal Accounts have been prepared.
"Assets" means the property, assets and rights of the Business to be purchased by the Purchaser as described in Clause 2.1.
"Book Debts" means the trade debts owed to the Vendor at the Effective Date in connection with the Business.
"Business" means the business of __________ carried on by the Vendor at the Effective Date.
"Cash Float" means any cash balances held at the Effective Date for the purpose of reimbursing out-of-pocket expenses in connection with the Business.
"Contracts" means the current contracts and engagements of the Vendor in relation to the Business [as listed in Appendix I], but excluding contracts with employees.
"Creditors" means the aggregate amount owed by the Vendor in connection with the Business to or in respect of trade creditors and accrued charges as recorded in the books of account of the Business at the Effective Date but not including liabilities for taxation of profits or chargeable gains.
"Disclosures" means the disclosures set out in a disclosure letter of today's date from the Vendor to the Purchaser relating to the warranties set out in Schedule 4.
"Effective Date" means the close of business on ___________ 200__.
"Employees" means the persons who at the Effective Date, were employed by the Vendor for the purposes of the Business.
"Excluded Assets" means the assets listed in Schedule 2 which are owned by the Vendor but are excluded from the sale to the Purchaser.
"Fixed Assets" means all plant, machinery, tools, equipment, vehicles and other chattels on the Properties or otherwise owned by the Vendor at the Effective Date for the purpose of the Business [as listed in Appendix 2].
"Goodwill" means the goodwill of the Vendor in relation to the Business, together with the exclusive right for the Purchaser or its assignee to represent itself as carrying on the Business in succession to the Vendor, and all trade names associated with the Business.
"Industrial Property Rights" means all industrial and intellectual property rights of the Vendor including, without limitation, the patents, trade marks, registered designs and copyrights in any part of the world [as listed in Appendix 3] and the copyright in all drawings, plans, specifications, designs and computer software owned by the Vendor and used in or for the purposes of the Business and all know-how and confidential information so owned and used.
"Leases" means the leases or underlease under which the Leasehold properties are held.
"Liabilities" means the liabilities of the Business (other than the Creditors) outstanding at the Effective Date.
"Principal Accounts" means the audited balance sheet as at ________ .. ___ and audited profit and loss account for the year ended _____________ …. ____ of the Vendor, including the directors' report and notes.
"Properties" means the premises owned by the Vendor as listed in Schedule 1.
"Regulations" means the Employment (Termination and Lay-Off Benefits) Regulations 1980.
"Stock Exchange" means the Kuala Lumpur Stock Exchange.
"Stocks" means the stocks, including raw materials, works in progress and finished goods, owned by the Vendor at the Effective Date for the purposes of or in connection with the Business, including items which, although subject to reservation of title by the sellers, are under the control of the Vendor.
"Subsidiary" means a subsidiary as defined in section 5 of the Act.
"Warranties" means the agreements, obligations, warranties, representations and undertakings of the Vendor contained in this Agreement.
"Warranty Claim" means any claim made by the Purchaser for breach of any of the Warranties.
1.2 In this Agreement, unless the context otherwise would require, the following shall be used as an aid to construction:
(a) words denoting the singular number include the plural number and vice versa; words denoting the masculine gender shall include the feminine and neutral genders and vice versa;
(b) reference to a "person" shall where the context so permits include a body corporate, an association or other combination of persons;
(c) reference to Clause, Schedules and Appendices are to clauses, schedules and appendices to this Agreement. The schedules and appendices to this Agreement form part of this Agreement and shall have the same full force and effect as if expressly set out in the body of this Agreement;
(d) references to any legislation or to any provision of legislation shall include any modification or re-enactment of that legislation or any legislative provision substituted for, and all regulations and statutory instruments issued under such legislation or provision;
(e) where a word or a phrase is defined, other parts of speech and grammatical forms of that word or phrase will have the corresponding meaning;
(f) references to "Ringgit Malaysia" or "RM" shall be taken as referring to amounts in the lawful currency of Malaysia.
(g) headings are for convenience only and shall not affect the construction of this Agreement; and
(h) if any event must occur on a stipulated day which is not a Business Day, then the stipulated day will be taken to be the next Business Day.
2. Agreement for Sale
2.1 Subject to the terms and conditions of this Agreement, the Vendor as beneficial owner shall sell to the Purchaser which shall purchase as at the Effective Date:-
(a) the Business as a going concern; and
(b) all the property, assets and rights of the Vendor used in the conduct of the Business including, but without limitation:-
(i) the Goodwill (ii) the Properties (iii) Fixed Assets; (iv) the Stocks; (v) the benefit of the Contracts (vi) the Industrial Property Rights; and (vii) the Cash Float;
but excluding the Excluded Assets.
3. Purchase consideration
3.1 The consideration for the sale by the Vendor of the Business and the Assets shall be a sum equal to the aggregate of the values of the Goodwill, the Properties, the fixed Assets, the Contracts and the Industrial Property rights and of the value of the Stocks and the amount of the Cash Float as determined in accordance with clause 6.
3.1 The consideration shall be paid as follows:-
(a) as to RM …./- in cash upon completion of the purchase in accordance with Clause 5;
(b) as to the value of the Stocks and the amount of the Cash Float, in accordance with Clause 6.
4. Vendor to Provide Management Services
Simultaneous with the execution of this Agreement, the Vendor shall enter into a Management Services Agreement with the Purchaser where, subject to the terms and conditions contained therein, the Vendor shall manage the business and operations of the Purchaser.
5. Completion
5.1 The sale and purchase shall be completed immediately upon exchange of this Agreement when all the matters set out in this Clause 5 shall be effected.
5.2 The Vendor shall deliver to the Purchaser, at the principal office of the Business, such of the Assets as are capable of being transferred by delivery.
5.3 The Vendor shall cause to be delivered or (if so requested by the Purchaser) made available to the Purchaser:-
(a) such documents as are required by the Purchaser's solicitors to complete the sale and purchase of the Assets and vest title to the Assets in the Purchaser, including (but without limitation) assignments of the Goodwill, Contract, Industrial Property Rights and Leases;
(b) all its books of account, payroll records, income records, stock and other records, information relating to customers and supplies (including without limitation a list of all the customers of the Business during the last two (2) years, a list of purchasers to which outstanding quotations have been given and a list of unfulfilled orders as at the Effective Date), relevant computer programmes and other books and documents which relate to the Business (other than minute books relating to directors' and shareholders' meetings and statutory books);
(c) all its designs and drawings, plans, instructional and promotional materials, sales publications, advertising materials, terms and conditions of sale and other technical material and sales matter which relate to the Business, together with any plates, blocks, negatives and similar material relating to them;
(d) a list of sales distributors, identifying sales by units and the territory served during the last twelve (12) months, and copies of all the current agreements with the distributors;
(e) all records of Employment Provident Fund and Social Security relating to all the Employees duly completed and up to date;
(f) all licences used by the Vendor in connection with carrying on the Business.
5.4 Upon completion of the matters referred to above the Purchaser shall deliver to the Vendor a banker's draft in respect of the part of the purchase consideration specified in clause 3.2.1.
5.5 The Purchaser shall not be obliged to complete the purchase of any of the Assets unless the purchase of all the Assets is completed in accordance with this Agreement.
5.6 The Purchaser may in its absolute discretion waive any requirement contained in clause 5.2 or 5.3.
5.7 If any or all of the transactions set out in clause 5.2 and 5.3 do not take place as provided, the Purchaser may promptly rescind this Agreement without prejudice to any other remedy it may have.
6. Stocks and cash float
6.1 The parties shall jointly procure that as soon as practicable and in any event within [21] days of today's date:-
(a) the value of the Stocks as at the Effective Date is determined upon the same basis as for the purposes of the Principal Accounts, but reduced by the amount of any prepayments or deposits received by the Vendor or payable to it under the Contracts prior to the Effective Date;
(b) the amount of the Cash Float is determined.
6.2 Any dispute with respect of the determination of the value of the Stocks or the amount of the Cash Float shall be referred for final settlement to a firm of public accountants nominated jointly by the Vendor and the Purchaser or, failing such nomination within fourteen (14) days after request by either the Vendor or the Purchaser, nominated at the request of either of them by the President for the time being of the Malaysian Institute of Accountants. The accountants shall be entitled to call for and inspect the working papers of the Vendor's auditors and such other documents as they may reasonably consider necessary. In making their determination, the accountants shall act as experts and not as arbitrators, their decision shall (in the absence of manifest error) be final and binding on the parties and their fees shall be borne and paid by the Vendor and the Purchaser in such proportions as the accountants determine.
6.3 The amounts agreed or determined under the foregoing sub-clauses shall ( to the extent agreed) be paid to the Vendor forthwith upon their being agreed and (as to any balance) upon the amount being determined. Interest shall be paid on such sums, computed on a daily basis from the Effective Date to the date of payment, at the rate of _ per cent above the base rate from time to time of ________Bank.
6.4 The Vendor shall be liable for the payment of all sums which were outstanding at the Effective Date in respect of items included in the Stocks.
6.5 If, prior to the Effective Date, the Vendor made a prepayment or paid a deposit under any of the Contracts for the purchase of an asset which is not included in the Assets, the Purchaser shall reimburse to the Vendor the amount of the prepayment or deposit within 28 days of delivery of the asset.
7. Debtors
7.1 The Vendor shall forthwith supply to the Purchaser full details of the Books Debts and the Purchaser shall:-
(a) as agent for the Vendor use all reasonable endeavours, but without being required to commence legal proceedings, to collect the Book Debts;
(b) account to the Vendor at monthly intervals for the amounts collected by it in respect of the Books Debts.
7.2 If it becomes apparent that recovery of any of the Book Debts is not likely to be possible within a reasonable period unless legal proceedings are instituted, the Purchaser will advise the Vendor in writing and furnish the Vendor with full particulars of the steps taken by the Purchaser to effect recovery. Where the debtor in question is a continuing debtor of the Business after the Effective Date, the Vendor shall consult with the Purchaser before instituting any legal proceedings.
7.3 Subject to any express intention to the contrary on the part of the debtor, any money received by the Purchaser in the course of collecting any Book Debts from a person who is also indebted to the Purchaser shall be deemed to have been paid in or towards discharge of the oldest debt, regardless of the identity of the creditor.
7.4 The Purchaser shall for a period of twelve (12) months give to the Vendor reasonable access to its books and records in relation to the collection of the Book Debts.
8. Creditors and liabilities
8.1 The Vendor shall forthwith supply to the Purchaser full details of the Creditors.
8.2 The Vendor shall promptly discharge the Creditors and Liabilities and notwithstanding completion of the purchase of the Business shall be responsible for all debts payable by and claims outstanding against it at the Effective Date including all wages, sums payable under taxation statutes, rent and other expenses.
8.3 In addition to clause 8.2:-
(a) the Vendor shall remain liable for claims by third parties in respect of any service supplied by the Vendor or any act or omission of the Vendor prior to the Effective Date or arising from defective products or parts of products manufactured by the Vendor, even if the defective products or parts were sold by the Purchaser;
(b) upon becoming aware of any such claim the Vendor will promptly give notice of it to the Purchaser and shall not take any steps which might reasonably be expected to damage the commercial interests of the Purchaser without prior consultation with the Purchaser;
(c) the Purchaser shall indemnify the Vendor against claims by third parties arising from defective products which may be brought against the Vendor in respect of sales occurring after the Effective Date which relate to the Business and are not covered by clause 7.3.1
8.4 The liability of the Vendor under clause 8.3.1 shall extend to any settlement of a claim (including costs) made with the approval of the Vendor.
8.5 If the Purchaser considers that it is desirable to take preventive action with a view to avoiding claims under clause 8.3.1 the Vendor shall bear the cost of that action.
8.6 The Purchaser shall take all reasonable steps to perform, in accordance with its normal business standards, the obligations of the Vendor to provide after-sales service or to meet warranty claims of customers arising in the normal course of the business as a result of transactions carried out by the Vendor prior to the Effective Date, insofar as the same are required by the Vendor's standard conditions of sale, copies of which have been produced to the Purchaser. The Vendor shall reimburse to the Purchaser on a monthly basis the direct costs incurred by it in carrying out its obligations under this sub-clause.
8.7 Nothing in this Agreement shall make the Purchaser liable in respect of anything done or omitted to be done prior to the Effective Date by the Vendor and the Vendor shall indemnify the Purchaser in respect of any liability (which liability shall include, without limitation, all losses, costs, claims, expenses, damages, legal and other professional fees and expenses on a party and party basis) which it may incur as a result of anything so done or omitted to be done.
9. Contracts
9.1 The Purchaser shall perform and discharge the outstanding obligations and liabilities of the Vendor under the Contracts, except for any obligations or liabilities attributable to a breach on the part of the Vendor.
10. Employees
10.1 The Purchaser warrants that it shall, on within seven (7) days from the Completion Date, offer to continue to employ the employees including the executive directors of the Vendor under terms and conditions of employment not less favourable than those under the which the employee and the executive directors were employed before the Completion Date as required under Regulation 8 of the Regulations.
11. Insurance
11.1 The Vendor undertakes to the Purchaser that it will notify the interest of the Purchaser to the relevant insurers and keep in force its existing insurance policies, [as listed in Appendix 4], in respect of the Assets for a period of thirty (30) days from today's date, the Purchaser paying the proportion of the insurance premiums from the Effective Date until the cancellation of the relevant policies.
12. Title and apportionments
12.1 Subject to the provisions of Schedule 1 relating to the Properties, the Vendor shall take all necessary steps and co-operate fully with the Purchaser to ensure that it obtains the full benefit of the Business and Assets and shall execute such documents and take such other steps (or procure other necessary parties so to do) as are necessary or appropriate for vesting in the Purchaser all its rights and interests in the Assets.
12.2 Insofar as the Assets comprise the benefit of contracts which cannot effectively be assigned to the Purchaser without the consent of a third party or except by an agreement of novation:-
(a) the Vendor and the Purchaser shall use all reasonable endeavours to obtain consent or to procure a novation;
(b) unless and until consent is obtained or the contracts are novated the Purchaser shall, for its own benefit and to the extent that the contracts permit, perform on behalf of the Vendor (but at the Purchaser's expense) all the obligations of the Vendor arising after the Effective Date (insofar as they have been disclosed to the Purchaser) and indemnify the Vendor against all costs, proceedings, claims, demands and expenses which may be incurred by the Vendor as a result of any act, neglect, default or omission on the part of the Purchaser to perform or comply with any such obligation of the Vendor which falls to be performed after the Effective Date.
12.3 All rents, rates, gas, water, electricity and telephone charges and other outgoings relating to or payable in respect of the Business up to the Effective Date shall be borne by the Vendor and as from the Effective Date shall be borne by the Purchaser and all rents, royalties and other periodical payments receivable respect of the Business up to that time shall belong to and be payable to the Vendor and as from that time shall belong to and be payable to the Purchaser. Such outgoings and payments receivable shall if necessary be apportioned accordingly, provided that any such outgoings or payments receivable which are referable to the extent of the use of any property or right shall be apportioned according to the extent of such use.
12.4 Where any amounts fall to be apportioned under this agreement, the Vendor shall provide the Purchaser with full details of the apportionments, together with supporting vouchers or similar documentation, and in the absence of dispute the appropriate payment shall be made by or to the Vendor forthwith. If the amount of any apportionment is in dispute, the provisions of Clause 5.2 shall apply for resolving the dispute and the amount determined in accordance with that clause shall be paid within fourteen (14) days of the determination, together with interest calculated on a daily basis (as well after as before judgment), from the Effective Date until the date of actual payment, at the rate of _______ per cent per annum above the base rate from time to time of ___________Bank Plc.
13. Warranties
13.1 The Vendor warrants to the Purchaser that:-
(a) save as set out in the Disclosures, the warranties and undertakings set out in Schedules 1, 4 and 5 are true and accurate in all respects;
(b) the Disclosures are true and accurate in all respects and fully, clearly and accurately disclose every matter to which they relate.
13.2 The rights and remedies of the Purchaser in respect of any breach of the Warranties shall not be affected by completion of the purchase of the Business, by any investigation made by or on behalf of the Purchaser into the affairs of the Vendor, by the Purchaser failing to exercise or delaying the exercise of any of its rights or remedies or by any other event or matter whatsoever except a specific and duly authorised written waiver or release.
13.3 Where any Warranty refers to the knowledge, information or belief of the Vendor, it undertakes that it has made full enquiry into the subject matter of the Warranty.
14. Future activities
14.1 For the purpose of assuring to the Purchaser the full benefit of the Business the Vendor agrees with the Purchaser that:-
(a) it shall not at any time after today's date disclose to any person or use for any purpose and shall use all reasonable endeavours to prevent the publication or disclosure of any information concerning the Business;
(b) it shall not for a period of two (2) years after today's date either on its own account or through any other person directly or indirectly solicit, interfere with or endeavour to entire away from the Purchaser any person who is now or has, during the two (2) years preceding today's date, been a client or customer of the Vendor in relation to the Business;
(c) it shall not for a period of five (5) years after today's date without the Purchaser's prior written consent directly or indirectly engage in Malaysia in any activity which is substantially the same as the Business or any material part thereof as it is now carried on.
14.2 The Vendor shall promptly refer to the Purchaser all enquiries relating to the Business and assign to the Purchaser all orders relating to the Business, including enquiries or orders for any stocks, spares, parts, accessories and other equipment manufactured or sold in connection with the Business, which the Vendor may in future receive.
15. Information
15.1 The Vendor shall preserve all information, records and other documents relating to the Excluded Assets for a period of less than three (3) years and upon reasonable notice by the Purchaser make such information, records and documents available for inspection by the Purchaser or its authorised agents at reasonable times during normal business hours. 16. NOTICES
16.1 All notices which are required to be given hereunder shall be in writing and shall be sent to the address of the recipient set out in this Agreement or such other address as the recipient may designate by notice given in accordance with the provisions of the sub-clause. Any notice may be delivered personally or by telex or facsimile transmission and shall be deemed to have been served if by personal delivery, when delivered, and if by telex or facsimile transmission, when despatched.
[Vendor]
Facsimile Number: [•] and marked for the attention of [ ]
[Purchaser]
Facsimile Number: [•] and marked for the attention of [ ]
17. Announcements
17.1 No announcement of any kind shall be made in respect of the subject matter of this agreement except as specifically agreed between the Vendor and the Purchaser, or if an announcement is required by the Stock Exchange. Any announcement by either party shall in any event be issued only after prior consultation with the other.
18. Costs
18.1 All expenses incurred by or on behalf of the parties, including all fees of agents, solicitors, accountants, [and actuaries] employed by either of the parties in connection with the negotiation, preparation and execution of this Agreement shall be borne solely by the party which incurred them.
19. Entire agreement and schedules
19.1 This agreement and the Schedules shall constitute the entire agreement and understanding between the parties with respect to all matters which are referred to.
19.2 All the Schedules form part of this Agreement.
19.3 This agreement shall be binding upon each party's successors and assigns.
20. Invalidity
20.1 If any term or provision of this Agreement shall in whole or in part be held to any extent to be illegal or unenforceable under any enactment or rule of law, that term or provision or part shall to that extent be deemed not to form part of this Agreement and the enforceability of the remainder of this Agreement shall not be affected.
22. Proper law
22.1 The construction, validity and performance of this Agreement shall be governed by the laws of Malaysia.
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SCHEDULE 1
Part 1
Properties
Part 2
Transfer of Properties
SCHEDULE 2
Excluded Assets
SCHEDULE 3
Warranties
1. Assets
1.1 Ownership of assets
1.1.1 Except for current assets subsequently acquired, sold or realised in the ordinary course of business the Vendor owned absolutely at the Accounts Date and still owns absolutely all the Assets.
1.1.2 The Vendor has not disposed of or agreed or dispose of or granted or agreed to grant any security or other encumbrance in respect of any of the Assets.
1.1.3 None of Assets is subject to, and there is no agreement or commitment to give or create, any option, lien or encumbrance.
1.1.4 None of the Assets has been purchased on terms that property does not pass to the Vendor under full payment is made by it to the Supplier.
1.1.5 There has been no exercise, purported exercise or claim for any charge, lien, encumbrance or equity over any of the Assets and there is no dispute directly or indirectly relating to any of the Assets.
1.2 Assets sufficient for the business.
1.2.1 The Assets comprise all assets now used in the Business and which are necessary for the continuation of the Business as now carried on.
1.2.2 The Stocks are sufficient for the normal requirements of the Business.
1.2.3 The work-in-progress included in the Stocks is at its normal level having regard to current orders included in the Contracts and to orders reasonably anticipated from customers of the Business.
1.2.4 The stocks of raw materials, packaging materials and finished goods included in the Stocks are not excessive and are adequate in relation to the current trading requirements of the Business.
1.3 Fixed Assets
1.3.1 [Appendix 2 contains full and accurate details of the Fixed Assets].
1.3.2 The plant, machinery,vehicles and other equipment comprised in the Fixed Assets:-
(a) are in a proper state of repair and condition and satisfactory working order;
(b) have been regularly and properly maintained;
(c) are adequate for and not surplus to the requirements of the Business; and
(d) would not be expected (if the sale of the Business did not take place) to require replacements or additions at a costs in excess of [RM ] within a period of six (6) months after the Effective Date.
1.4 Stocks
1.4.1 The Stocks are of merchantable quality and saleable at normal selling prices.
1.4.2 None of the Stocks is obsolete, unusable, unmarketable or inappropriate or of limited value in relation to the Business and none of the Contracts is likely to result in this being untrue.
1.5 Documents stamped
1.5.1 All documents which in any way affect the right, title or interest of the Vendor in or to any of the Assets and which attract stamp duty have been duly stamped within the requisite period for stamping.
2. Trading
2.1 Business and financial position.
2.1.1 Since the Accounts Date:-
(a) the Business has been continued in the ordinary and normal course as regards its nature, extent and manner of carrying it on;
(b) neither the turnover nor the financial or trading position of the Business has deteriorated;
(c) the Vendor has not borrowed or raised any money or taken any financial facility in relation to the Business except for the overdraft facilities from its bankers specified in the Disclosure;
(d) The Vendor has paid the creditors of the Business in accordance with their respect credit terms and there are no amounts owing by he Vendor which have been due for more than six (6) weeks.
2.1.2 So far as the Vendor is aware, the trading prospects of the Business have not been adversely affected as a result of any event or circumstance which has arisen since the Accounts Date.
2.1.3 Since the Accounts Date the vendor has not done or omitted to do anything which might prejudicially affect the Goodwill.
2.2 Existing suppliers and customers.
2.2.1 So far as the Vendor is aware:-
(a) no supplier of the Business has, in the past three (3) years, ceased or (as a result of the acquisition of the Business by the Purchaser or for any other reason) will cease supplying the Business or may substantially reduce its supplies to the Business;
(b) no customer of the Business has, in the past three (3) years terminated or materially reduced, or will (as a result of the acquisition of the Business by the Purchaser or for any other reason) terminate or material reduce, its relationship with the Business.
2.3 Licences and consents
2.3.1 The Vendor has obtained all necessary licences and consents from any person, authority or body for the proper carrying on of the Business and is not in breach of any of theirs terms or conditions.
2.3.2 Details of all of the licences and consents are set out in the Disclosures and the Vendor knows of no reason why they should not be capable of being transferred to or obtained by the Purchaser without the necessity for any special arrangement or expense.
2.4 Insurance
2.4.1 All the Assets of an insurable nature are and have at all material times been insured, in amounts representing their full replacement or reinstatement value. against fire and other risks normally insured against by persons carrying on business of the same class as the Business.
2.4.2 The Business an the Assets are and have at all material times been adequately covered against accident, damage, injury, third party loss, loss of profits and other risks normally covered by insurance.
2.4.3 All insurances relating to the Business or the Assets are currently in full force and effect and nothing has been done or omitted to be done which could make any policy of insurance void or voidable.
2.5 Joint ventures and partnerships
2.5.1 The Vendor:-
(a) is not and has not been a party to any joint venture or consortium or any partnership arrangement or agreement or to any agreement or arrangement or agreement for sharing commissions or other income relating to the Business;
(b) does not conduct and has not conducted any part of the Business through a branch, agency or permanent establishment outside Malaysia;
(c) is not a member of any partnership, trade association, society or other group, whether formal or informal and whether or not have a separate legal identity, in connection with the Business and no such body is relevant to or has any material influence over the Business as now carried on.
2.6 Agreements concerning the business
2.6.1 There have been no arrangements and understandings (whether legally enforceable or not) between the Vendor and any person who is, directly or indirectly, a shareholder or the beneficial owner of any interest in the Vendor or any company in which the Vendor is interested relating to the management of the Business or the ownership or transfer of ownership or the letting of any of the Assets or the provision of finance, goods, services or other facilities to or by the Vendor or otherwise in any way relating to the Business or the Assets.
2.6.2 The Vendor has not been a party to any agency, distributorship, marketing, purchasing, manufacturing or licensing agreement or arrangement or and restrictive trading or other agreement or arrangement pursuant to which any part of the Business has been carried on or which in any way has restricted its freedom to carry on the whole or any part of the Business or to use exploit any of the Assets in any part of the world in such manner as it thought fit.
2.6.3 Compliance with the terms of this Agreement does not and will not conflict with, result in the breach of or constitute a default under any of the terms, conditions or provisions of any agreement or instrument to which the Vendor is now a party relating to the Business.
2.7 Statutory restrictions
2.7.1 The Vendor has not committed or omitted to do any act or thing in relation to the Business which could give rise to any fine or penalty.
2.7.2 The Vendor is not and has not been a party in relation to the Business to any agreement practice or arrangement which in whole or in part contravenes the provisions of the Trade Descriptions Act;
2.7.3 No investigation or enquiries by or on behalf of any governmental or other body in respect of the Vendor, the Business or any of the Assets are pending or in existence.
2.7.4 Neither the Vendor nor any of its officers, agents or employees (during the course of their duties in relation to the Business) has committed or omitted to do any act or thing the commission or omission of which is or could be in contravention of any Act, Order, Regulation or the like giving rise to any fine, penalty, default, proceedings or other liability in relation to the Business or any of the Assets.
2.8 Litigation
2.8.1 The Vendor is not engaged in any litigation or arbitration proceedings as plaintiff or defendant, except for debt collection of sums not exceeding an aggregate of [RM ] , and there are no such proceedings pending or threatened either by or against the Vendor affecting the Business and there are no facts which are likely to give rise to any litigation or arbitration.
2.9 Vendors’ Activities.
2.9.1 The Vendor is entitled to enter into and carry out the provisions of this Agreement and has full power and authority to sell the Assets to the Purchaser without obtaining the consent of any third party.
2.9.2 Compliance with the terms of this Agreement, and any document entered into by the Vendor in accordance with it, does not and will not conflict with or result in a breach of any of the provisions of the Vendor's Memorandum or Articles of Association.
2.9.3 The Vendor has at all times carried on the Business in all respects in accordance wit its Memorandum and Articles of Association for the time being in force and any other documents to which it is or has been a party.
2.9.4 Neither the Vendor nor any of its members has any interest, directly or indirectly, in any company or business other than the Business which is or is likely to be or become competitive with the Business, save as registered holder or beneficial owner of not more than five per cent any class or securities of any company which is listed and/or dealt in on the Stock Exchange.
2.10 Guarantees and indemnities
2.10.1 There is not now outstanding in resect of the Business any guarantee or agreement for indemnity or for the suretyship given by or for the accommodation of the Business otherwise than by the Vendor.
3. Contracts
3.1 Disclosure of contracts
3.1.1 The Contracts and the Leases constitute all the contracts and other engagements, whether written or oral, referable to the Business to which the Vendor is now a party, apart from the contracts of employment of the Employees.
3.2 Nature of the Contracts
3.2.1 None of the Contracts:-
(a) is of an unusual, abnormal or onerous nature;
(b) is for a fixed term of more than six (6) months;
(c) is for a long-term nature (that is to say incapable of performance in accordance with its terms within six (6) months after the date on which it was entered into or undertaken);
(d) will be incapable of termination in accordance with its terms by the Purchaser on sixty (60) days' notice or less;
(e) is of a loss-making nature (that is to say known to have been likely to result in a loss to the Vendor on completion of performance if the Vendor had not sold the Business);
(f) will not be capable of being readily fulfilled or performed by the Purchaser on time without undue or unusual expenditure of money or personnel;
(g) will not involve payment by the Purchaser by reference to fluctuations in the index of retail prices or any other index;
(h) involves the supply of goods the aggregate sales value of which will represent in excess of 10 per cent of the anticipated turnover of the Business for the period of 12 months following the Effective Date;
(i) was entered into any way otherwise than in the ordinary and normal course of the Business.
3.2.2 The performance of this Agreement will not relieve any other party to any Contract from its obligations or enable it to determine any of them.
3.3 Defaults under agreements
3.3.1 The Vendor is not nor would it, if the sale of the Business did not take place, with the lapse of the time become:-
(a) in default under any of the Contracts or in respect of any other obligations or restrictions binding upon it in relation to the Business nor has it waived any rights or privileges under any of them;
(b) in default under any provisions existing by reason of membership of any association or body relating to the Business;
(c) liable in respect of any representation or warranty (whether express or implied) or matter giving rise to a duty of care on the part of the Vendor relating to the Business.
3.3.2 No threat or claim of default under any of the Contracts or any other agreement, instrument or arrangement to which the Vendor is a party relating to the Business or the Assets has been made and is outstanding against the Vendor and there is nothing whereby any of the Contracts or any other such agreement, instrument or arrangement may be terminated or rescinded by any other party or whereby the terms may be worsened as against the Vendor or the Purchaser or whereby the Business or the Assets may be prejudiced as a result of anything done or omitted or permitted to be done by the Vendor.
3.4 Outstanding Offers
3.4.1 No offer, tender or the like relating to the Business, which is capable of being converted into an obligation of the Business by an acceptance or other act of some other person, firm or corporation, is outstanding.
3.5 Defective products and service liabilities
3.5.1 The Vendor has not manufactured or sold products which were or are or will become in any material respect faulty or defective or which did not or do not comply in any material respect with any warranties or representations expressly or impliedly made by the Vendor or with all applicable regulations, standards and requirements.
3.5.2 The Vendor has not accepted any liability or obligation to service repair, maintain, take back or otherwise do or not do anything in respect of any goods or products that would apply after the goods or products have been delivered by it.
3.6 Purchases and sales from or to one party
3.6.1 Neither more than 25 per cent of the aggregate amount of all the purchases nor more than 25 per cent of the aggregate amount of all the sales of the Business are obtained or made from or to the same supplier or customer (including any person in any way connected with a supplier or customer) nor is any material source of supply to the Business or any material outlet for the sales of the Business in jeopardy or likely to be in jeorpardy.
4. Accounts
4.1 The Principal accounts.
4.1.1 The Principal Accounts have been prepared in accordance with (the historical cost convention].
4.1.2 The Principal Accounts:-
(a) give a true and fair view of the financial position of the Business in all respects;
(b) comply with the requirements of the Act and other relevant statutes;
(c) comply with current statements of standard accounting practice applicable to a Malaysian company;
(d) are not affected by any extraordinary or non-recurring item;
(e) fully disclose all the assets and liabilities (including contingent, unquantified or disputed liabilities) of the Business as at their date.
4.2 Management accounts
4.2.1 The Management accounts of the Vendor for the period from the Accounts Date until __________ 200__ are substantially correct insofar as they state the income arising in the Business during the period to which they relate and all expenses in that period directly relating to the Business and are not materially misleading in any respect.
4.3 Books and records
4.3.1 All the books and records of the Vendor which are to be delivered to the Purchaser in accordance with this agreement (including all invoices and other records required for service tax purposes):-
(a) have been fully, properly and accurately kept and completed;
(b) do not contain any material inaccuracies or discrepancies of any kind;
(c) give and reflect a true and fair view of the financial, contractual and trading position of the Business and of its plant and machinery, fixed and current assets and liabilities (actual and contingent), debtors and creditors and stock-in-trade and all other matters which would normally be expected to appear in them.
5. PROPERTIES
5.1 Use of properties
5.1.1 The Vendor is in occupation of the Properties for the purposes of the Business.
5.1.2 The Vendor does not use or occupy any property in connection with the Business other than the Properties.
5.2 Encumbrances
5.2.1 Save as specifically stated in Part 3 of Schedule 1, the Properties are free from any mortgage, debenture, charge, lien or other encumbrance.
5.2.2 The Properties are not subject to any outgoings other than general rates, water rates and insurance premiums.
5.2.3 The Properties are not subject to any restrictive covenants, restrictions, stipulations, easements, profits a prendre, wayleaves, licences, grants, reservations or other similar rights vested in third parties.
5.2.4 Where any such third party rights as are referred to in Clause 6.2.3 have been disclosed in the Disclosures, they have been fully observed and performed and any payments in respect of them due and payable have been duly paid.
5.3 Town and country planning matters
5.3.1 The use of the Properties is permitted under any relevant legislation or regulation.
5.3.2 Planning permission has been obtained or is deemed to have been granted with respect to the development of the Properties and no permission has been suspended or called in and no application for planning permission is awaiting decision.
5.3.3 Building regulation consents have been obtained with respect to the development of the Properties and any alterations and improvements to them.
5.3.4 The consent of the Department of Environment has been obtained with respect to the use of the site and the factory as a manufacturing site.
5.3.5 Compliance is being and has been made in all respects with planning permissions, orders and regulations and building regulation consents and bye-laws for the time being in force with respect to the Properties.
5.3.6 None of the Properties is listed as being of special historic or architectural importance or is located in a conservation area.
5.3.7 All development charges, monetary claims and liabilities under any legislation have been discharged and no liability, contingent or otherwise, is outstanding.
5.4 Statutory obligations
5.4.1 Compliance has been made with all applicable statutory and bye-law requirements with respect to the Properties.
5.4.2 There is no outstanding and unobserved or unperformed obligation with respect to the Properties necessary to comply with the requirements (whether formal or informal) of any competent authority exercising statutory or delegated powers.
5.5 Adverse orders
5.5.1 There are no compulsory purchase notice, orders, or resolutions affecting the Properties nor, to the best of the Vendor's knowledge, information and belief, are there any circumstances likely to lead to any being made.
5.5.2 There are no closing, demolition or clearance orders, enforcement notices or stop notices affecting the Properties nor, to the best of the Vendor's knowledge, information or belief, are there are circumstances likely to lead to any being made.
5.6 Condition of the Properties
5.6.1 The buildings and other structures on the Properties are in good and substantial repair and fit for the purpose for which they are presently used.
5.6.2 There are no disputes with any adjoining or neighbouring owner with respect to boundary walls and fences or with respect to any easement right or means of access to the Properties.
5.6.3 The principal means of access to the Properties are over roads which have been taken over by the local or other highway authority and which are maintainable at public expense and no means of access to the Properties is shared with any other party nor subject to rights of determination by any other party.
5.6.4 Each of the Properties enjoys the main services of water, drainage, electricity and gas.
5.6.5 None of the Properties is located in an area or subject to circumstances particularly susceptible to flooding.
5.6.6 No building or structure on the Properties has been affected by structural damage or electrical defects or by timber infestation or disease.
5.6.7 There are no rights of common or common rights appurtenant to or over the Properties.
5.6.8 None of the Properties is located in a coal mining area.
5.7 Leasehold properties
5.7.1 The Vendor has paid the rent and observed and performed the covenants on the part of the tenant and the conditions contained in the Leases and the last demand (or receipt for rent if issued) was unqualified.
5.7.2 All licences, consents and approvals required from the landlords and any superior landlords under the Leases have been obtained and the covenants on the part of the tenant contained in the licences, consents and approvals have been duly performed and observed.
5.7.3 There are no rent reviews under the Leases currently in progress.
5.7.4 There is no outstanding and unobserved or unperformed any obligation necessary to comply with any notice or other requirement given by the landlord under any of the Leases.
5.7.5 There is no obligation to reinstate any of the Leasehold Properties by removing or dismantling any alteration made to them by the Vendor or any predecessor-in-title to the Vendor.
5.7.6 In the case of Leases granted for more than twenty one (21) years and less than forty (40) years, the Lease is either registered at HM Land Registry or not registered because the reversion to it was not registered at the time of grant.
5.8 Tenancies
5.8.1 The Properties are held subject to and with the benefit of the tenancies (which expression includes sub-tenancies) as set out in Part 5 of Schedule 1 and none other.
5.8.2 With respect to such tenancies there have been disclosed in the Disclosures particulars of:-
(a) the rent and any rent reviews;
(b) the term and any rights to break or renew the term;
(c) the obligations of landlord and tenant in respect of outgoings, repairs, insurance services and service charges;
(d) any options, pre-emption or first refusal rights;
(e) the user required or permitted;
(f) any entitlement of a tenant of the whole or any part of the Properties to compensation on quitting the premises let to him in respect of disturbance, improvements or otherwise;
(g) any unusual provisions; and
(h) short particulars of any subtenancies derived out of the tenancies.
5.8.3 The Vendor is not aware of any material or persistent breaches of covenant (including the covenants to pay rent) by the tenants.
6. EMPLOYMENT
6.1 Employees
6.1.1 None of the Employees has given or received notice terminating his employment or will be entitled to give notice as a result of the provisions of this agreement.
6.2 Terms of employment
6.2.1 Full particulars of the terms and conditions of employment of all the Employees, including without limitation profit sharing or commission or discretionary bonus arrangements, are set out in the Disclosures.
6.2.2 There are no schemes in operation by or in relation to the Vendor whereunder any of the Employees is entitled to a commission or remuneration of any other sort calculated by reference to the whole or part of the turnover, profits or sales of the Business.
6.2.3 Since the Accounts Date no change has been made in the rate of remuneration, emoluments, pensions benefits or other terms of employment of any of the Employees.
6.2.4 No negotiations for any increase in the remuneration or benefits of any of the Employees are current or likely within a period of six (6) months after the Effective Date.
6.3 Industrial disputes and agreements
6.3.1 None of the Employees is involved in any industrial dispute and to the best of the Vendor's knowledge, information and belief there are no circumstances which may result in any industrial dispute involving any Employees and none of the provisions of this agreement, including the identity of the Purchaser, may lead to any industrial dispute.
6.3.2 The Vendor has not entered into any recognition agreement with a trade union nor has it done any act which might be construed as recognition.
6.4 Pensions
6.4.1 [Save for the pension scheme referred to in Schedule 5 ("the Scheme")] the Vendor is not under any legal or moral liability or obligation or ex-gratia arrangement or promise to pay pensions, gratuities, superannuation allowances or the like to any of the Employees.
6.4.2 Full particulars of the Scheme, of which the Employees are entitled to be or become members, have been disclosed in writing to the Purchaser including without limitation the trust deeds, assets, funding arrangements, rules, current membership and latest actuarial report.
6.4.3 The assets, investments or policies held by the trustees of the Scheme are sufficient to satisfy the liabilities and obligations (both current and contingent) which the Scheme has to its members at the date of this agreement.
7. INDUSTRIAL PROPERTY RIGHTS
7.1 Disclosure of industrial property rights
7.1.1 The Vendor is the beneficial owner, registered proprietor or licensee of the Industrial Property Rights.
7.2 Validity of industrial property rights
7.2.1 To the best of the Vendor's knowledge, information and belief, each of the Industrial Property Rights is valid and enforceable and no act has been done or omission permitted whereby any of them has ceased or might cease to be valid and enforceable.
7.3 Infringements
7.3.1 The Business does not and is not likely to infringe any patent, registered design, trade marl, copyright or other intellectual or industrial property right of any other person (or would not do so if the same were valid) or give rise to a liability to pay compensation.
7.3.2 The Vendor does not require and has not been granted any licence in relation to any intellectual or industrial property.
7.3.3 No right has been granted to any person to do anything which would or might otherwise infringe any of the Industrial Property Rights.
7.4 Disclosure of trade secrets
7.4.1 The Vendor has not (except in the ordinary and normal course of business) disclosed or permitted to be disclosed or undertaken or arranged to disclose to any person other than the Purchaser any of its know-how, trade secrets, confidential information, price lists or lists of customers or suppliers relating to the Business.
8. GENERAL
8.1 Material information
8.1.1 All information given by the Vendor, the Vendor's solicitors or the Vendor's accountants to the Purchaser, the Purchaser's solicitors or the Purchaser's accountants relating to the Business or Assets was when given and is true, accurate and comprehensive in all respects.
8.1.2 To the best of the Vendor's knowledge, information and belief, there are no material facts or circumstances in relating to the Business or Assets which have not been fully and fairly disclosed in writing to the Purchaser or the Purchaser's solicitors and which, if disclosed, might reasonably have been expected to affect the decision of the Purchaser to enter into this agreement.
DATED THIS DAY OF 200..
BETWEEN
[ ]
AND
[ ]
________________________________________
BUSINESS SALE AGREEMENT
_________________________________________
THIS AGREEMENT is made on [ ] ….
BETWEEN:-
(1) [ ] whose registered office is at [ ] ("The Vendor") and
(2) [ ] a company incorporated in Malaysia and having a registered office at [ ] ("The Purchaser").
1. Interpretation
1.1 In this Agreement including the Schedule:-
(a) the following words and expressions have the following meanings, unless they are inconsistent with the context:-
"Act" means the Companies Act 1965.
"Account Date" means the date to which the Principal Accounts have been prepared.
"Assets" means the property, assets and rights of the Business to be purchased by the Purchaser as described in Clause 2.1.
"Book Debts" means the trade debts owed to the Vendor at the Effective Date in connection with the Business.
"Business" means the business of __________ carried on by the Vendor at the Effective Date.
"Cash Float" means any cash balances held at the Effective Date for the purpose of reimbursing out-of-pocket expenses in connection with the Business.
"Contracts" means the current contracts and engagements of the Vendor in relation to the Business [as listed in Appendix I], but excluding contracts with employees.
"Creditors" means the aggregate amount owed by the Vendor in connection with the Business to or in respect of trade creditors and accrued charges as recorded in the books of account of the Business at the Effective Date but not including liabilities for taxation of profits or chargeable gains.
"Disclosures" means the disclosures set out in a disclosure letter of today's date from the Vendor to the Purchaser relating to the warranties set out in Schedule 4.
"Effective Date" means the close of business on ___________ 200__.
"Employees" means the persons who at the Effective Date, were employed by the Vendor for the purposes of the Business.
"Excluded Assets" means the assets listed in Schedule 2 which are owned by the Vendor but are excluded from the sale to the Purchaser.
"Fixed Assets" means all plant, machinery, tools, equipment, vehicles and other chattels on the Properties or otherwise owned by the Vendor at the Effective Date for the purpose of the Business [as listed in Appendix 2].
"Goodwill" means the goodwill of the Vendor in relation to the Business, together with the exclusive right for the Purchaser or its assignee to represent itself as carrying on the Business in succession to the Vendor, and all trade names associated with the Business.
"Industrial Property Rights" means all industrial and intellectual property rights of the Vendor including, without limitation, the patents, trade marks, registered designs and copyrights in any part of the world [as listed in Appendix 3] and the copyright in all drawings, plans, specifications, designs and computer software owned by the Vendor and used in or for the purposes of the Business and all know-how and confidential information so owned and used.
"Leases" means the leases or underlease under which the Leasehold properties are held.
"Liabilities" means the liabilities of the Business (other than the Creditors) outstanding at the Effective Date.
"Principal Accounts" means the audited balance sheet as at ________ .. ___ and audited profit and loss account for the year ended _____________ …. ____ of the Vendor, including the directors' report and notes.
"Properties" means the premises owned by the Vendor as listed in Schedule 1.
"Regulations" means the Employment (Termination and Lay-Off Benefits) Regulations 1980.
"Stock Exchange" means the Kuala Lumpur Stock Exchange.
"Stocks" means the stocks, including raw materials, works in progress and finished goods, owned by the Vendor at the Effective Date for the purposes of or in connection with the Business, including items which, although subject to reservation of title by the sellers, are under the control of the Vendor.
"Subsidiary" means a subsidiary as defined in section 5 of the Act.
"Warranties" means the agreements, obligations, warranties, representations and undertakings of the Vendor contained in this Agreement.
"Warranty Claim" means any claim made by the Purchaser for breach of any of the Warranties.
1.2 In this Agreement, unless the context otherwise would require, the following shall be used as an aid to construction:
(a) words denoting the singular number include the plural number and vice versa; words denoting the masculine gender shall include the feminine and neutral genders and vice versa;
(b) reference to a "person" shall where the context so permits include a body corporate, an association or other combination of persons;
(c) reference to Clause, Schedules and Appendices are to clauses, schedules and appendices to this Agreement. The schedules and appendices to this Agreement form part of this Agreement and shall have the same full force and effect as if expressly set out in the body of this Agreement;
(d) references to any legislation or to any provision of legislation shall include any modification or re-enactment of that legislation or any legislative provision substituted for, and all regulations and statutory instruments issued under such legislation or provision;
(e) where a word or a phrase is defined, other parts of speech and grammatical forms of that word or phrase will have the corresponding meaning;
(f) references to "Ringgit Malaysia" or "RM" shall be taken as referring to amounts in the lawful currency of Malaysia.
(g) headings are for convenience only and shall not affect the construction of this Agreement; and
(h) if any event must occur on a stipulated day which is not a Business Day, then the stipulated day will be taken to be the next Business Day.
2. Agreement for Sale
2.1 Subject to the terms and conditions of this Agreement, the Vendor as beneficial owner shall sell to the Purchaser which shall purchase as at the Effective Date:-
(a) the Business as a going concern; and
(b) all the property, assets and rights of the Vendor used in the conduct of the Business including, but without limitation:-
(i) the Goodwill (ii) the Properties (iii) Fixed Assets; (iv) the Stocks; (v) the benefit of the Contracts (vi) the Industrial Property Rights; and (vii) the Cash Float;
but excluding the Excluded Assets.
3. Purchase consideration
3.1 The consideration for the sale by the Vendor of the Business and the Assets shall be a sum equal to the aggregate of the values of the Goodwill, the Properties, the fixed Assets, the Contracts and the Industrial Property rights and of the value of the Stocks and the amount of the Cash Float as determined in accordance with clause 6.
3.1 The consideration shall be paid as follows:-
(a) as to RM …./- in cash upon completion of the purchase in accordance with Clause 5;
(b) as to the value of the Stocks and the amount of the Cash Float, in accordance with Clause 6.
4. Vendor to Provide Management Services
Simultaneous with the execution of this Agreement, the Vendor shall enter into a Management Services Agreement with the Purchaser where, subject to the terms and conditions contained therein, the Vendor shall manage the business and operations of the Purchaser.
5. Completion
5.1 The sale and purchase shall be completed immediately upon exchange of this Agreement when all the matters set out in this Clause 5 shall be effected.
5.2 The Vendor shall deliver to the Purchaser, at the principal office of the Business, such of the Assets as are capable of being transferred by delivery.
5.3 The Vendor shall cause to be delivered or (if so requested by the Purchaser) made available to the Purchaser:-
(a) such documents as are required by the Purchaser's solicitors to complete the sale and purchase of the Assets and vest title to the Assets in the Purchaser, including (but without limitation) assignments of the Goodwill, Contract, Industrial Property Rights and Leases;
(b) all its books of account, payroll records, income records, stock and other records, information relating to customers and supplies (including without limitation a list of all the customers of the Business during the last two (2) years, a list of purchasers to which outstanding quotations have been given and a list of unfulfilled orders as at the Effective Date), relevant computer programmes and other books and documents which relate to the Business (other than minute books relating to directors' and shareholders' meetings and statutory books);
(c) all its designs and drawings, plans, instructional and promotional materials, sales publications, advertising materials, terms and conditions of sale and other technical material and sales matter which relate to the Business, together with any plates, blocks, negatives and similar material relating to them;
(d) a list of sales distributors, identifying sales by units and the territory served during the last twelve (12) months, and copies of all the current agreements with the distributors;
(e) all records of Employment Provident Fund and Social Security relating to all the Employees duly completed and up to date;
(f) all licences used by the Vendor in connection with carrying on the Business.
5.4 Upon completion of the matters referred to above the Purchaser shall deliver to the Vendor a banker's draft in respect of the part of the purchase consideration specified in clause 3.2.1.
5.5 The Purchaser shall not be obliged to complete the purchase of any of the Assets unless the purchase of all the Assets is completed in accordance with this Agreement.
5.6 The Purchaser may in its absolute discretion waive any requirement contained in clause 5.2 or 5.3.
5.7 If any or all of the transactions set out in clause 5.2 and 5.3 do not take place as provided, the Purchaser may promptly rescind this Agreement without prejudice to any other remedy it may have.
6. Stocks and cash float
6.1 The parties shall jointly procure that as soon as practicable and in any event within [21] days of today's date:-
(a) the value of the Stocks as at the Effective Date is determined upon the same basis as for the purposes of the Principal Accounts, but reduced by the amount of any prepayments or deposits received by the Vendor or payable to it under the Contracts prior to the Effective Date;
(b) the amount of the Cash Float is determined.
6.2 Any dispute with respect of the determination of the value of the Stocks or the amount of the Cash Float shall be referred for final settlement to a firm of public accountants nominated jointly by the Vendor and the Purchaser or, failing such nomination within fourteen (14) days after request by either the Vendor or the Purchaser, nominated at the request of either of them by the President for the time being of the Malaysian Institute of Accountants. The accountants shall be entitled to call for and inspect the working papers of the Vendor's auditors and such other documents as they may reasonably consider necessary. In making their determination, the accountants shall act as experts and not as arbitrators, their decision shall (in the absence of manifest error) be final and binding on the parties and their fees shall be borne and paid by the Vendor and the Purchaser in such proportions as the accountants determine.
6.3 The amounts agreed or determined under the foregoing sub-clauses shall ( to the extent agreed) be paid to the Vendor forthwith upon their being agreed and (as to any balance) upon the amount being determined. Interest shall be paid on such sums, computed on a daily basis from the Effective Date to the date of payment, at the rate of _ per cent above the base rate from time to time of ________Bank.
6.4 The Vendor shall be liable for the payment of all sums which were outstanding at the Effective Date in respect of items included in the Stocks.
6.5 If, prior to the Effective Date, the Vendor made a prepayment or paid a deposit under any of the Contracts for the purchase of an asset which is not included in the Assets, the Purchaser shall reimburse to the Vendor the amount of the prepayment or deposit within 28 days of delivery of the asset.
7. Debtors
7.1 The Vendor shall forthwith supply to the Purchaser full details of the Books Debts and the Purchaser shall:-
(a) as agent for the Vendor use all reasonable endeavours, but without being required to commence legal proceedings, to collect the Book Debts;
(b) account to the Vendor at monthly intervals for the amounts collected by it in respect of the Books Debts.
7.2 If it becomes apparent that recovery of any of the Book Debts is not likely to be possible within a reasonable period unless legal proceedings are instituted, the Purchaser will advise the Vendor in writing and furnish the Vendor with full particulars of the steps taken by the Purchaser to effect recovery. Where the debtor in question is a continuing debtor of the Business after the Effective Date, the Vendor shall consult with the Purchaser before instituting any legal proceedings.
7.3 Subject to any express intention to the contrary on the part of the debtor, any money received by the Purchaser in the course of collecting any Book Debts from a person who is also indebted to the Purchaser shall be deemed to have been paid in or towards discharge of the oldest debt, regardless of the identity of the creditor.
7.4 The Purchaser shall for a period of twelve (12) months give to the Vendor reasonable access to its books and records in relation to the collection of the Book Debts.
8. Creditors and liabilities
8.1 The Vendor shall forthwith supply to the Purchaser full details of the Creditors.
8.2 The Vendor shall promptly discharge the Creditors and Liabilities and notwithstanding completion of the purchase of the Business shall be responsible for all debts payable by and claims outstanding against it at the Effective Date including all wages, sums payable under taxation statutes, rent and other expenses.
8.3 In addition to clause 8.2:-
(a) the Vendor shall remain liable for claims by third parties in respect of any service supplied by the Vendor or any act or omission of the Vendor prior to the Effective Date or arising from defective products or parts of products manufactured by the Vendor, even if the defective products or parts were sold by the Purchaser;
(b) upon becoming aware of any such claim the Vendor will promptly give notice of it to the Purchaser and shall not take any steps which might reasonably be expected to damage the commercial interests of the Purchaser without prior consultation with the Purchaser;
(c) the Purchaser shall indemnify the Vendor against claims by third parties arising from defective products which may be brought against the Vendor in respect of sales occurring after the Effective Date which relate to the Business and are not covered by clause 7.3.1
8.4 The liability of the Vendor under clause 8.3.1 shall extend to any settlement of a claim (including costs) made with the approval of the Vendor.
8.5 If the Purchaser considers that it is desirable to take preventive action with a view to avoiding claims under clause 8.3.1 the Vendor shall bear the cost of that action.
8.6 The Purchaser shall take all reasonable steps to perform, in accordance with its normal business standards, the obligations of the Vendor to provide after-sales service or to meet warranty claims of customers arising in the normal course of the business as a result of transactions carried out by the Vendor prior to the Effective Date, insofar as the same are required by the Vendor's standard conditions of sale, copies of which have been produced to the Purchaser. The Vendor shall reimburse to the Purchaser on a monthly basis the direct costs incurred by it in carrying out its obligations under this sub-clause.
8.7 Nothing in this Agreement shall make the Purchaser liable in respect of anything done or omitted to be done prior to the Effective Date by the Vendor and the Vendor shall indemnify the Purchaser in respect of any liability (which liability shall include, without limitation, all losses, costs, claims, expenses, damages, legal and other professional fees and expenses on a party and party basis) which it may incur as a result of anything so done or omitted to be done.
9. Contracts
9.1 The Purchaser shall perform and discharge the outstanding obligations and liabilities of the Vendor under the Contracts, except for any obligations or liabilities attributable to a breach on the part of the Vendor.
10. Employees
10.1 The Purchaser warrants that it shall, on within seven (7) days from the Completion Date, offer to continue to employ the employees including the executive directors of the Vendor under terms and conditions of employment not less favourable than those under the which the employee and the executive directors were employed before the Completion Date as required under Regulation 8 of the Regulations.
11. Insurance
11.1 The Vendor undertakes to the Purchaser that it will notify the interest of the Purchaser to the relevant insurers and keep in force its existing insurance policies, [as listed in Appendix 4], in respect of the Assets for a period of thirty (30) days from today's date, the Purchaser paying the proportion of the insurance premiums from the Effective Date until the cancellation of the relevant policies.
12. Title and apportionments
12.1 Subject to the provisions of Schedule 1 relating to the Properties, the Vendor shall take all necessary steps and co-operate fully with the Purchaser to ensure that it obtains the full benefit of the Business and Assets and shall execute such documents and take such other steps (or procure other necessary parties so to do) as are necessary or appropriate for vesting in the Purchaser all its rights and interests in the Assets.
12.2 Insofar as the Assets comprise the benefit of contracts which cannot effectively be assigned to the Purchaser without the consent of a third party or except by an agreement of novation:-
(a) the Vendor and the Purchaser shall use all reasonable endeavours to obtain consent or to procure a novation;
(b) unless and until consent is obtained or the contracts are novated the Purchaser shall, for its own benefit and to the extent that the contracts permit, perform on behalf of the Vendor (but at the Purchaser's expense) all the obligations of the Vendor arising after the Effective Date (insofar as they have been disclosed to the Purchaser) and indemnify the Vendor against all costs, proceedings, claims, demands and expenses which may be incurred by the Vendor as a result of any act, neglect, default or omission on the part of the Purchaser to perform or comply with any such obligation of the Vendor which falls to be performed after the Effective Date.
12.3 All rents, rates, gas, water, electricity and telephone charges and other outgoings relating to or payable in respect of the Business up to the Effective Date shall be borne by the Vendor and as from the Effective Date shall be borne by the Purchaser and all rents, royalties and other periodical payments receivable respect of the Business up to that time shall belong to and be payable to the Vendor and as from that time shall belong to and be payable to the Purchaser. Such outgoings and payments receivable shall if necessary be apportioned accordingly, provided that any such outgoings or payments receivable which are referable to the extent of the use of any property or right shall be apportioned according to the extent of such use.
12.4 Where any amounts fall to be apportioned under this agreement, the Vendor shall provide the Purchaser with full details of the apportionments, together with supporting vouchers or similar documentation, and in the absence of dispute the appropriate payment shall be made by or to the Vendor forthwith. If the amount of any apportionment is in dispute, the provisions of Clause 5.2 shall apply for resolving the dispute and the amount determined in accordance with that clause shall be paid within fourteen (14) days of the determination, together with interest calculated on a daily basis (as well after as before judgment), from the Effective Date until the date of actual payment, at the rate of _______ per cent per annum above the base rate from time to time of ___________Bank Plc.
13. Warranties
13.1 The Vendor warrants to the Purchaser that:-
(a) save as set out in the Disclosures, the warranties and undertakings set out in Schedules 1, 4 and 5 are true and accurate in all respects;
(b) the Disclosures are true and accurate in all respects and fully, clearly and accurately disclose every matter to which they relate.
13.2 The rights and remedies of the Purchaser in respect of any breach of the Warranties shall not be affected by completion of the purchase of the Business, by any investigation made by or on behalf of the Purchaser into the affairs of the Vendor, by the Purchaser failing to exercise or delaying the exercise of any of its rights or remedies or by any other event or matter whatsoever except a specific and duly authorised written waiver or release.
13.3 Where any Warranty refers to the knowledge, information or belief of the Vendor, it undertakes that it has made full enquiry into the subject matter of the Warranty.
14. Future activities
14.1 For the purpose of assuring to the Purchaser the full benefit of the Business the Vendor agrees with the Purchaser that:-
(a) it shall not at any time after today's date disclose to any person or use for any purpose and shall use all reasonable endeavours to prevent the publication or disclosure of any information concerning the Business;
(b) it shall not for a period of two (2) years after today's date either on its own account or through any other person directly or indirectly solicit, interfere with or endeavour to entire away from the Purchaser any person who is now or has, during the two (2) years preceding today's date, been a client or customer of the Vendor in relation to the Business;
(c) it shall not for a period of five (5) years after today's date without the Purchaser's prior written consent directly or indirectly engage in Malaysia in any activity which is substantially the same as the Business or any material part thereof as it is now carried on.
14.2 The Vendor shall promptly refer to the Purchaser all enquiries relating to the Business and assign to the Purchaser all orders relating to the Business, including enquiries or orders for any stocks, spares, parts, accessories and other equipment manufactured or sold in connection with the Business, which the Vendor may in future receive.
15. Information
15.1 The Vendor shall preserve all information, records and other documents relating to the Excluded Assets for a period of less than three (3) years and upon reasonable notice by the Purchaser make such information, records and documents available for inspection by the Purchaser or its authorised agents at reasonable times during normal business hours. 16. NOTICES
16.1 All notices which are required to be given hereunder shall be in writing and shall be sent to the address of the recipient set out in this Agreement or such other address as the recipient may designate by notice given in accordance with the provisions of the sub-clause. Any notice may be delivered personally or by telex or facsimile transmission and shall be deemed to have been served if by personal delivery, when delivered, and if by telex or facsimile transmission, when despatched.
[Vendor]
Facsimile Number: [•] and marked for the attention of [ ]
[Purchaser]
Facsimile Number: [•] and marked for the attention of [ ]
17. Announcements
17.1 No announcement of any kind shall be made in respect of the subject matter of this agreement except as specifically agreed between the Vendor and the Purchaser, or if an announcement is required by the Stock Exchange. Any announcement by either party shall in any event be issued only after prior consultation with the other.
18. Costs
18.1 All expenses incurred by or on behalf of the parties, including all fees of agents, solicitors, accountants, [and actuaries] employed by either of the parties in connection with the negotiation, preparation and execution of this Agreement shall be borne solely by the party which incurred them.
19. Entire agreement and schedules
19.1 This agreement and the Schedules shall constitute the entire agreement and understanding between the parties with respect to all matters which are referred to.
19.2 All the Schedules form part of this Agreement.
19.3 This agreement shall be binding upon each party's successors and assigns.
20. Invalidity
20.1 If any term or provision of this Agreement shall in whole or in part be held to any extent to be illegal or unenforceable under any enactment or rule of law, that term or provision or part shall to that extent be deemed not to form part of this Agreement and the enforceability of the remainder of this Agreement shall not be affected.
22. Proper law
22.1 The construction, validity and performance of this Agreement shall be governed by the laws of Malaysia.
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SCHEDULE 1
Part 1
Properties
Part 2
Transfer of Properties
SCHEDULE 2
Excluded Assets
SCHEDULE 3
Warranties
1. Assets
1.1 Ownership of assets
1.1.1 Except for current assets subsequently acquired, sold or realised in the ordinary course of business the Vendor owned absolutely at the Accounts Date and still owns absolutely all the Assets.
1.1.2 The Vendor has not disposed of or agreed or dispose of or granted or agreed to grant any security or other encumbrance in respect of any of the Assets.
1.1.3 None of Assets is subject to, and there is no agreement or commitment to give or create, any option, lien or encumbrance.
1.1.4 None of the Assets has been purchased on terms that property does not pass to the Vendor under full payment is made by it to the Supplier.
1.1.5 There has been no exercise, purported exercise or claim for any charge, lien, encumbrance or equity over any of the Assets and there is no dispute directly or indirectly relating to any of the Assets.
1.2 Assets sufficient for the business.
1.2.1 The Assets comprise all assets now used in the Business and which are necessary for the continuation of the Business as now carried on.
1.2.2 The Stocks are sufficient for the normal requirements of the Business.
1.2.3 The work-in-progress included in the Stocks is at its normal level having regard to current orders included in the Contracts and to orders reasonably anticipated from customers of the Business.
1.2.4 The stocks of raw materials, packaging materials and finished goods included in the Stocks are not excessive and are adequate in relation to the current trading requirements of the Business.
1.3 Fixed Assets
1.3.1 [Appendix 2 contains full and accurate details of the Fixed Assets].
1.3.2 The plant, machinery,vehicles and other equipment comprised in the Fixed Assets:-
(a) are in a proper state of repair and condition and satisfactory working order;
(b) have been regularly and properly maintained;
(c) are adequate for and not surplus to the requirements of the Business; and
(d) would not be expected (if the sale of the Business did not take place) to require replacements or additions at a costs in excess of [RM ] within a period of six (6) months after the Effective Date.
1.4 Stocks
1.4.1 The Stocks are of merchantable quality and saleable at normal selling prices.
1.4.2 None of the Stocks is obsolete, unusable, unmarketable or inappropriate or of limited value in relation to the Business and none of the Contracts is likely to result in this being untrue.
1.5 Documents stamped
1.5.1 All documents which in any way affect the right, title or interest of the Vendor in or to any of the Assets and which attract stamp duty have been duly stamped within the requisite period for stamping.
2. Trading
2.1 Business and financial position.
2.1.1 Since the Accounts Date:-
(a) the Business has been continued in the ordinary and normal course as regards its nature, extent and manner of carrying it on;
(b) neither the turnover nor the financial or trading position of the Business has deteriorated;
(c) the Vendor has not borrowed or raised any money or taken any financial facility in relation to the Business except for the overdraft facilities from its bankers specified in the Disclosure;
(d) The Vendor has paid the creditors of the Business in accordance with their respect credit terms and there are no amounts owing by he Vendor which have been due for more than six (6) weeks.
2.1.2 So far as the Vendor is aware, the trading prospects of the Business have not been adversely affected as a result of any event or circumstance which has arisen since the Accounts Date.
2.1.3 Since the Accounts Date the vendor has not done or omitted to do anything which might prejudicially affect the Goodwill.
2.2 Existing suppliers and customers.
2.2.1 So far as the Vendor is aware:-
(a) no supplier of the Business has, in the past three (3) years, ceased or (as a result of the acquisition of the Business by the Purchaser or for any other reason) will cease supplying the Business or may substantially reduce its supplies to the Business;
(b) no customer of the Business has, in the past three (3) years terminated or materially reduced, or will (as a result of the acquisition of the Business by the Purchaser or for any other reason) terminate or material reduce, its relationship with the Business.
2.3 Licences and consents
2.3.1 The Vendor has obtained all necessary licences and consents from any person, authority or body for the proper carrying on of the Business and is not in breach of any of theirs terms or conditions.
2.3.2 Details of all of the licences and consents are set out in the Disclosures and the Vendor knows of no reason why they should not be capable of being transferred to or obtained by the Purchaser without the necessity for any special arrangement or expense.
2.4 Insurance
2.4.1 All the Assets of an insurable nature are and have at all material times been insured, in amounts representing their full replacement or reinstatement value. against fire and other risks normally insured against by persons carrying on business of the same class as the Business.
2.4.2 The Business an the Assets are and have at all material times been adequately covered against accident, damage, injury, third party loss, loss of profits and other risks normally covered by insurance.
2.4.3 All insurances relating to the Business or the Assets are currently in full force and effect and nothing has been done or omitted to be done which could make any policy of insurance void or voidable.
2.5 Joint ventures and partnerships
2.5.1 The Vendor:-
(a) is not and has not been a party to any joint venture or consortium or any partnership arrangement or agreement or to any agreement or arrangement or agreement for sharing commissions or other income relating to the Business;
(b) does not conduct and has not conducted any part of the Business through a branch, agency or permanent establishment outside Malaysia;
(c) is not a member of any partnership, trade association, society or other group, whether formal or informal and whether or not have a separate legal identity, in connection with the Business and no such body is relevant to or has any material influence over the Business as now carried on.
2.6 Agreements concerning the business
2.6.1 There have been no arrangements and understandings (whether legally enforceable or not) between the Vendor and any person who is, directly or indirectly, a shareholder or the beneficial owner of any interest in the Vendor or any company in which the Vendor is interested relating to the management of the Business or the ownership or transfer of ownership or the letting of any of the Assets or the provision of finance, goods, services or other facilities to or by the Vendor or otherwise in any way relating to the Business or the Assets.
2.6.2 The Vendor has not been a party to any agency, distributorship, marketing, purchasing, manufacturing or licensing agreement or arrangement or and restrictive trading or other agreement or arrangement pursuant to which any part of the Business has been carried on or which in any way has restricted its freedom to carry on the whole or any part of the Business or to use exploit any of the Assets in any part of the world in such manner as it thought fit.
2.6.3 Compliance with the terms of this Agreement does not and will not conflict with, result in the breach of or constitute a default under any of the terms, conditions or provisions of any agreement or instrument to which the Vendor is now a party relating to the Business.
2.7 Statutory restrictions
2.7.1 The Vendor has not committed or omitted to do any act or thing in relation to the Business which could give rise to any fine or penalty.
2.7.2 The Vendor is not and has not been a party in relation to the Business to any agreement practice or arrangement which in whole or in part contravenes the provisions of the Trade Descriptions Act;
2.7.3 No investigation or enquiries by or on behalf of any governmental or other body in respect of the Vendor, the Business or any of the Assets are pending or in existence.
2.7.4 Neither the Vendor nor any of its officers, agents or employees (during the course of their duties in relation to the Business) has committed or omitted to do any act or thing the commission or omission of which is or could be in contravention of any Act, Order, Regulation or the like giving rise to any fine, penalty, default, proceedings or other liability in relation to the Business or any of the Assets.
2.8 Litigation
2.8.1 The Vendor is not engaged in any litigation or arbitration proceedings as plaintiff or defendant, except for debt collection of sums not exceeding an aggregate of [RM ] , and there are no such proceedings pending or threatened either by or against the Vendor affecting the Business and there are no facts which are likely to give rise to any litigation or arbitration.
2.9 Vendors’ Activities.
2.9.1 The Vendor is entitled to enter into and carry out the provisions of this Agreement and has full power and authority to sell the Assets to the Purchaser without obtaining the consent of any third party.
2.9.2 Compliance with the terms of this Agreement, and any document entered into by the Vendor in accordance with it, does not and will not conflict with or result in a breach of any of the provisions of the Vendor's Memorandum or Articles of Association.
2.9.3 The Vendor has at all times carried on the Business in all respects in accordance wit its Memorandum and Articles of Association for the time being in force and any other documents to which it is or has been a party.
2.9.4 Neither the Vendor nor any of its members has any interest, directly or indirectly, in any company or business other than the Business which is or is likely to be or become competitive with the Business, save as registered holder or beneficial owner of not more than five per cent any class or securities of any company which is listed and/or dealt in on the Stock Exchange.
2.10 Guarantees and indemnities
2.10.1 There is not now outstanding in resect of the Business any guarantee or agreement for indemnity or for the suretyship given by or for the accommodation of the Business otherwise than by the Vendor.
3. Contracts
3.1 Disclosure of contracts
3.1.1 The Contracts and the Leases constitute all the contracts and other engagements, whether written or oral, referable to the Business to which the Vendor is now a party, apart from the contracts of employment of the Employees.
3.2 Nature of the Contracts
3.2.1 None of the Contracts:-
(a) is of an unusual, abnormal or onerous nature;
(b) is for a fixed term of more than six (6) months;
(c) is for a long-term nature (that is to say incapable of performance in accordance with its terms within six (6) months after the date on which it was entered into or undertaken);
(d) will be incapable of termination in accordance with its terms by the Purchaser on sixty (60) days' notice or less;
(e) is of a loss-making nature (that is to say known to have been likely to result in a loss to the Vendor on completion of performance if the Vendor had not sold the Business);
(f) will not be capable of being readily fulfilled or performed by the Purchaser on time without undue or unusual expenditure of money or personnel;
(g) will not involve payment by the Purchaser by reference to fluctuations in the index of retail prices or any other index;
(h) involves the supply of goods the aggregate sales value of which will represent in excess of 10 per cent of the anticipated turnover of the Business for the period of 12 months following the Effective Date;
(i) was entered into any way otherwise than in the ordinary and normal course of the Business.
3.2.2 The performance of this Agreement will not relieve any other party to any Contract from its obligations or enable it to determine any of them.
3.3 Defaults under agreements
3.3.1 The Vendor is not nor would it, if the sale of the Business did not take place, with the lapse of the time become:-
(a) in default under any of the Contracts or in respect of any other obligations or restrictions binding upon it in relation to the Business nor has it waived any rights or privileges under any of them;
(b) in default under any provisions existing by reason of membership of any association or body relating to the Business;
(c) liable in respect of any representation or warranty (whether express or implied) or matter giving rise to a duty of care on the part of the Vendor relating to the Business.
3.3.2 No threat or claim of default under any of the Contracts or any other agreement, instrument or arrangement to which the Vendor is a party relating to the Business or the Assets has been made and is outstanding against the Vendor and there is nothing whereby any of the Contracts or any other such agreement, instrument or arrangement may be terminated or rescinded by any other party or whereby the terms may be worsened as against the Vendor or the Purchaser or whereby the Business or the Assets may be prejudiced as a result of anything done or omitted or permitted to be done by the Vendor.
3.4 Outstanding Offers
3.4.1 No offer, tender or the like relating to the Business, which is capable of being converted into an obligation of the Business by an acceptance or other act of some other person, firm or corporation, is outstanding.
3.5 Defective products and service liabilities
3.5.1 The Vendor has not manufactured or sold products which were or are or will become in any material respect faulty or defective or which did not or do not comply in any material respect with any warranties or representations expressly or impliedly made by the Vendor or with all applicable regulations, standards and requirements.
3.5.2 The Vendor has not accepted any liability or obligation to service repair, maintain, take back or otherwise do or not do anything in respect of any goods or products that would apply after the goods or products have been delivered by it.
3.6 Purchases and sales from or to one party
3.6.1 Neither more than 25 per cent of the aggregate amount of all the purchases nor more than 25 per cent of the aggregate amount of all the sales of the Business are obtained or made from or to the same supplier or customer (including any person in any way connected with a supplier or customer) nor is any material source of supply to the Business or any material outlet for the sales of the Business in jeopardy or likely to be in jeorpardy.
4. Accounts
4.1 The Principal accounts.
4.1.1 The Principal Accounts have been prepared in accordance with (the historical cost convention].
4.1.2 The Principal Accounts:-
(a) give a true and fair view of the financial position of the Business in all respects;
(b) comply with the requirements of the Act and other relevant statutes;
(c) comply with current statements of standard accounting practice applicable to a Malaysian company;
(d) are not affected by any extraordinary or non-recurring item;
(e) fully disclose all the assets and liabilities (including contingent, unquantified or disputed liabilities) of the Business as at their date.
4.2 Management accounts
4.2.1 The Management accounts of the Vendor for the period from the Accounts Date until __________ 200__ are substantially correct insofar as they state the income arising in the Business during the period to which they relate and all expenses in that period directly relating to the Business and are not materially misleading in any respect.
4.3 Books and records
4.3.1 All the books and records of the Vendor which are to be delivered to the Purchaser in accordance with this agreement (including all invoices and other records required for service tax purposes):-
(a) have been fully, properly and accurately kept and completed;
(b) do not contain any material inaccuracies or discrepancies of any kind;
(c) give and reflect a true and fair view of the financial, contractual and trading position of the Business and of its plant and machinery, fixed and current assets and liabilities (actual and contingent), debtors and creditors and stock-in-trade and all other matters which would normally be expected to appear in them.
5. PROPERTIES
5.1 Use of properties
5.1.1 The Vendor is in occupation of the Properties for the purposes of the Business.
5.1.2 The Vendor does not use or occupy any property in connection with the Business other than the Properties.
5.2 Encumbrances
5.2.1 Save as specifically stated in Part 3 of Schedule 1, the Properties are free from any mortgage, debenture, charge, lien or other encumbrance.
5.2.2 The Properties are not subject to any outgoings other than general rates, water rates and insurance premiums.
5.2.3 The Properties are not subject to any restrictive covenants, restrictions, stipulations, easements, profits a prendre, wayleaves, licences, grants, reservations or other similar rights vested in third parties.
5.2.4 Where any such third party rights as are referred to in Clause 6.2.3 have been disclosed in the Disclosures, they have been fully observed and performed and any payments in respect of them due and payable have been duly paid.
5.3 Town and country planning matters
5.3.1 The use of the Properties is permitted under any relevant legislation or regulation.
5.3.2 Planning permission has been obtained or is deemed to have been granted with respect to the development of the Properties and no permission has been suspended or called in and no application for planning permission is awaiting decision.
5.3.3 Building regulation consents have been obtained with respect to the development of the Properties and any alterations and improvements to them.
5.3.4 The consent of the Department of Environment has been obtained with respect to the use of the site and the factory as a manufacturing site.
5.3.5 Compliance is being and has been made in all respects with planning permissions, orders and regulations and building regulation consents and bye-laws for the time being in force with respect to the Properties.
5.3.6 None of the Properties is listed as being of special historic or architectural importance or is located in a conservation area.
5.3.7 All development charges, monetary claims and liabilities under any legislation have been discharged and no liability, contingent or otherwise, is outstanding.
5.4 Statutory obligations
5.4.1 Compliance has been made with all applicable statutory and bye-law requirements with respect to the Properties.
5.4.2 There is no outstanding and unobserved or unperformed obligation with respect to the Properties necessary to comply with the requirements (whether formal or informal) of any competent authority exercising statutory or delegated powers.
5.5 Adverse orders
5.5.1 There are no compulsory purchase notice, orders, or resolutions affecting the Properties nor, to the best of the Vendor's knowledge, information and belief, are there any circumstances likely to lead to any being made.
5.5.2 There are no closing, demolition or clearance orders, enforcement notices or stop notices affecting the Properties nor, to the best of the Vendor's knowledge, information or belief, are there are circumstances likely to lead to any being made.
5.6 Condition of the Properties
5.6.1 The buildings and other structures on the Properties are in good and substantial repair and fit for the purpose for which they are presently used.
5.6.2 There are no disputes with any adjoining or neighbouring owner with respect to boundary walls and fences or with respect to any easement right or means of access to the Properties.
5.6.3 The principal means of access to the Properties are over roads which have been taken over by the local or other highway authority and which are maintainable at public expense and no means of access to the Properties is shared with any other party nor subject to rights of determination by any other party.
5.6.4 Each of the Properties enjoys the main services of water, drainage, electricity and gas.
5.6.5 None of the Properties is located in an area or subject to circumstances particularly susceptible to flooding.
5.6.6 No building or structure on the Properties has been affected by structural damage or electrical defects or by timber infestation or disease.
5.6.7 There are no rights of common or common rights appurtenant to or over the Properties.
5.6.8 None of the Properties is located in a coal mining area.
5.7 Leasehold properties
5.7.1 The Vendor has paid the rent and observed and performed the covenants on the part of the tenant and the conditions contained in the Leases and the last demand (or receipt for rent if issued) was unqualified.
5.7.2 All licences, consents and approvals required from the landlords and any superior landlords under the Leases have been obtained and the covenants on the part of the tenant contained in the licences, consents and approvals have been duly performed and observed.
5.7.3 There are no rent reviews under the Leases currently in progress.
5.7.4 There is no outstanding and unobserved or unperformed any obligation necessary to comply with any notice or other requirement given by the landlord under any of the Leases.
5.7.5 There is no obligation to reinstate any of the Leasehold Properties by removing or dismantling any alteration made to them by the Vendor or any predecessor-in-title to the Vendor.
5.7.6 In the case of Leases granted for more than twenty one (21) years and less than forty (40) years, the Lease is either registered at HM Land Registry or not registered because the reversion to it was not registered at the time of grant.
5.8 Tenancies
5.8.1 The Properties are held subject to and with the benefit of the tenancies (which expression includes sub-tenancies) as set out in Part 5 of Schedule 1 and none other.
5.8.2 With respect to such tenancies there have been disclosed in the Disclosures particulars of:-
(a) the rent and any rent reviews;
(b) the term and any rights to break or renew the term;
(c) the obligations of landlord and tenant in respect of outgoings, repairs, insurance services and service charges;
(d) any options, pre-emption or first refusal rights;
(e) the user required or permitted;
(f) any entitlement of a tenant of the whole or any part of the Properties to compensation on quitting the premises let to him in respect of disturbance, improvements or otherwise;
(g) any unusual provisions; and
(h) short particulars of any subtenancies derived out of the tenancies.
5.8.3 The Vendor is not aware of any material or persistent breaches of covenant (including the covenants to pay rent) by the tenants.
6. EMPLOYMENT
6.1 Employees
6.1.1 None of the Employees has given or received notice terminating his employment or will be entitled to give notice as a result of the provisions of this agreement.
6.2 Terms of employment
6.2.1 Full particulars of the terms and conditions of employment of all the Employees, including without limitation profit sharing or commission or discretionary bonus arrangements, are set out in the Disclosures.
6.2.2 There are no schemes in operation by or in relation to the Vendor whereunder any of the Employees is entitled to a commission or remuneration of any other sort calculated by reference to the whole or part of the turnover, profits or sales of the Business.
6.2.3 Since the Accounts Date no change has been made in the rate of remuneration, emoluments, pensions benefits or other terms of employment of any of the Employees.
6.2.4 No negotiations for any increase in the remuneration or benefits of any of the Employees are current or likely within a period of six (6) months after the Effective Date.
6.3 Industrial disputes and agreements
6.3.1 None of the Employees is involved in any industrial dispute and to the best of the Vendor's knowledge, information and belief there are no circumstances which may result in any industrial dispute involving any Employees and none of the provisions of this agreement, including the identity of the Purchaser, may lead to any industrial dispute.
6.3.2 The Vendor has not entered into any recognition agreement with a trade union nor has it done any act which might be construed as recognition.
6.4 Pensions
6.4.1 [Save for the pension scheme referred to in Schedule 5 ("the Scheme")] the Vendor is not under any legal or moral liability or obligation or ex-gratia arrangement or promise to pay pensions, gratuities, superannuation allowances or the like to any of the Employees.
6.4.2 Full particulars of the Scheme, of which the Employees are entitled to be or become members, have been disclosed in writing to the Purchaser including without limitation the trust deeds, assets, funding arrangements, rules, current membership and latest actuarial report.
6.4.3 The assets, investments or policies held by the trustees of the Scheme are sufficient to satisfy the liabilities and obligations (both current and contingent) which the Scheme has to its members at the date of this agreement.
7. INDUSTRIAL PROPERTY RIGHTS
7.1 Disclosure of industrial property rights
7.1.1 The Vendor is the beneficial owner, registered proprietor or licensee of the Industrial Property Rights.
7.2 Validity of industrial property rights
7.2.1 To the best of the Vendor's knowledge, information and belief, each of the Industrial Property Rights is valid and enforceable and no act has been done or omission permitted whereby any of them has ceased or might cease to be valid and enforceable.
7.3 Infringements
7.3.1 The Business does not and is not likely to infringe any patent, registered design, trade marl, copyright or other intellectual or industrial property right of any other person (or would not do so if the same were valid) or give rise to a liability to pay compensation.
7.3.2 The Vendor does not require and has not been granted any licence in relation to any intellectual or industrial property.
7.3.3 No right has been granted to any person to do anything which would or might otherwise infringe any of the Industrial Property Rights.
7.4 Disclosure of trade secrets
7.4.1 The Vendor has not (except in the ordinary and normal course of business) disclosed or permitted to be disclosed or undertaken or arranged to disclose to any person other than the Purchaser any of its know-how, trade secrets, confidential information, price lists or lists of customers or suppliers relating to the Business.
8. GENERAL
8.1 Material information
8.1.1 All information given by the Vendor, the Vendor's solicitors or the Vendor's accountants to the Purchaser, the Purchaser's solicitors or the Purchaser's accountants relating to the Business or Assets was when given and is true, accurate and comprehensive in all respects.
8.1.2 To the best of the Vendor's knowledge, information and belief, there are no material facts or circumstances in relating to the Business or Assets which have not been fully and fairly disclosed in writing to the Purchaser or the Purchaser's solicitors and which, if disclosed, might reasonably have been expected to affect the decision of the Purchaser to enter into this agreement.
DATED THIS DAY OF 200..
BETWEEN
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AND
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BUSINESS SALE AGREEMENT
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