twin20180613_8ka.htm

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K/A

(Amendment No. 1)

 

Current Report Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

 

 

Date of Report (Date of Earliest Event Reported) June 13, 2018

 

 

TWIN DISC, INCORPORATED

 

(exact name of registrant as specified in its charter)

 

 

WISCONSIN

001-7635

39-0667110

(State or other jurisdiction

(Commission

(IRS Employer

of incorporation)

File Number)

Identification No.)

 

 

 

1328 Racine Street             Racine, Wisconsin 53403

 

(Address of principal executive offices)

 

Registrant's telephone number, including area code:     (262)638-4000

 

 


 

Check the appropriate box below if the Form 8-K/A filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

[  ]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[  ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[  ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[  ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company     ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.      ☐

 

 

 

 

EXPLANATORY NOTE

 

Twin Disc, Incorporated (the “Company”) is filing this Current Report on Form 8-K/A (Amendment No. 1) in order to amend its previously filed Current Report on Form 8-K, as filed with the Securities and Exchange Commission on June 13, 2018.  The sole purpose of this Form 8-K/A is to file a copy of the June 13, 2018 Share Purchase Agreement between Twin Disc NL Holding, B.V., a wholly-owned subsidiary of the Company, and Het Komt Vast Goed, B.V. to purchase all shares of capital stock of Veth Propulsion Holding, B.V.

 

Item 1.01

Entry into a Material Definitive Agreement

 

On June 13, 2018, Twin Disc NL Holding, B.V. (“Twin Disc NL”), a wholly-owned subsidiary of the Company, entered into a Share Purchase Agreement (the “Purchase Agreement”) with Het Komt Vast Goed, B.V. (“seller”) to purchase all shares of capital stock of Veth Propulsion Holding, B.V. (“Veth Propulsion Holding”). Veth Propulsion Holding holds all of the shares of capital stock of Exploitatiemaatschappij Veth B.V., Veth Diesel B.V., Veth Electra B.V., Veth Propulsion B.V. and Veth Thrusters B.V. (the “Veth Subsidiaries”).

 

Based in the Netherlands, the Veth Subsidiaries are global manufacturers of highly-engineered auxiliary propulsions and propulsion machinery for maritime vessels, including rudder propellers, bow thrusters, generator sets and engine service and repair. They have a strong presence in key European maritime markets, with deep and long-standing relationships with growing customers.

 

Under the terms of the Purchase Agreement, Twin Disc NL will pay €49,700,000 for the shares of Veth Propulsion Holding, increased by certain cash of Veth Propulsion Holding at closing (up to €2,000,000) and decreased by certain debt of Veth Propulsion Holding at closing. These amounts are subject to adjustment to the extent that the working capital of Veth Propulsion Holding at closing exceeds or is less than a target working capital to be determined based on the twelve-month average working capital as of June 30, 2018. The maximum increase in the purchase price based on the working capital adjustment is €2,000,000. Twin Disc NL will also pay an additional earn-out amount if the EBITDA of Veth Propulsion Holding (as defined in the Purchase Agreement) for fiscal 2018 exceeds €6,450,000. No earn-out will be owed if the EBITDA of Veth Propulsion Holding for fiscal 2018 falls below €6,450,000, and the maximum earn-out amount of €3,300,000 will be paid if the EBITDA of Veth Propulsion Holding for fiscal 2018 exceeds €6,800,000. The earn-out will be paid in the form of Company stock.

 

The Seller has also agreed to various customary covenants and agreements regarding the Veth Subsidiaries, including covenants to cause the Veth Subsidiaries, during the period between the execution of the Agreement and the closing of the Purchase Agreement, to conduct their business in the ordinary course of business, as budgeted, and in a manner most likely to preserve their value, keeping each such business and its properties substantially intact.

 

 

 

 

The closing of the Purchase Agreement and the transactions contemplated thereby is subject to certain conditions, including, among others, those relating to financing, the agreement to the terms of an employment agreement between Twin Disc NL and Mr. H.A. Veth, the accuracy of the parties’ representations and warranties, and other customary closing conditions.

 

The Share Purchase Agreement may be terminated by mutual agreement of the parties at any time prior to closing, or by Twin Disc NL if certain conditions are not satisfied or waived by September 1, 2018 (or such later date as may be agreed to by the parties).

 

The Purchase Agreement and the transactions contemplated by the Purchase Agreement have been approved by the Board of Directors of the Company. The foregoing description of the Purchase Agreement and the transactions contemplated thereby does not purport to be complete and is qualified in its entirety by reference to the Share Purchase Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K/A and incorporated by reference herein.

 

The above description of the Purchase Agreement has been included to provide investors with information regarding its terms. The Purchase Agreement contains representations and warranties made by and to the parties thereto as of specific dates. The statements embodied in those representations and warranties were made for the purpose of allocating risk between the parties rather than establishing matters as facts and are subject to qualifications and limitations agreed upon by the parties in connection with negotiating the terms of the Purchase Agreement. In addition, certain representations and warranties were made as of a specified date and may be subject to a contractual standard of materiality different from those generally applicable to investors. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company's public disclosures. Accordingly, investors should not rely on the representations and warranties as characterizations of the actual state of facts or condition of the Company or Veth Propulsion Holding, or any of their respective subsidiaries or affiliates.

 

Item 7.01     Regulation FD Disclosure

 

On June 13, 2018, the Company issued a press release announcing that Twin Disc NL has entered into the Purchase Agreement with Het Komt Vast Goed, B.V. . A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K/A and is incorporated herein by reference.

 

On June 13, 2018, the Company provided slides to accompany its investor presentation on the Purchase Agreement. A copy of the slides is furnished as Exhibit 99.2 to this Current Report on Form 8-K/A.

 

In accordance with General Instruction B.2 of Form 8-K/A, the information in this Item 7.01 of this Current Report on Form 8-K/A, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall either be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific references in such a filing.

 

 

 

 

Item 9.01     Financial Statements and Exhibits

 

(d)     Exhibits

 

EXHIBIT NUMBER DESCRIPTION
   

2.1*

Share Purchase Agreement dated June 13, 2018, between Twin Disc NL Holding, B.V., and Het Komt Vast Goed, B.V.

 

99.1

Press Release dated June 13, 2018 issued by Twin Disc, Incorporated

   

99.2

Investor presentation of Twin Disc, Incorporated, dated June 13, 2018

 

* Certain schedules attached to the Share Purchase Agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish the omitted schedules to the Securities and Exchange Commission upon request by the Commission.

 

 

FORWARD LOOKING STATEMENTS

 

The disclosures in this report on Form 8-K/A and in the documents incorporated herein by reference contain or may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believes,” “expects,” “intends,” “plans,” “anticipates,” “hopes,” “likely,” “will,” and similar expressions identify such forward-looking statements. Forward looking information in these materials includes, but is not limited to: the acquisition of Veth Propulsion Holding; the expected closing of the Purchase Agreement; expected 2018 sales, EBITDA, gross margins and capital expenditures of Veth Propulsion Holding; and expected cost synergies and earning per share accretion.

 

Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company (or entities in which the Company has interests), or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements. Certain factors that could cause the Company’s actual future results to differ materially from those discussed are noted in connection with such statements, but other unanticipated factors could arise. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s view only as of the date of this Form 8-K/A. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, conditions or circumstances.

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: June 13, 2018

Twin Disc, Incorporated

   
   
   
 

/s/ JEFFREY S. KNUTSON

 

Jeffrey S. Knutson

 

Vice President – Finance,

Chief Financial Officer,

Treasurer, and Secretary

 

ex_116287.htm

Exhibit 2.1

 

 

 

 

 

 

 

 

SHARE PURCHASE AGREEMENT

 
 

13 June 2018

 

relating to the sale and purchase of the entire issued share capital of

 

VETH PROPULSION HOLDING B.V.

 

between

 

HET KOMT VAST GOED B.V.

 

as Seller

 

TWIN DISC NL HOLDING B.V.

 

as Purchaser

 

 

 

share purchase agreement

 

 

 

 

TABLE OF CONTENTS

 

Clause

 

Page

     

1

DEFINITIONS AND INTERPRETATION

2

2

SALE, purchase and transfer

12

3

PURCHASE PRICE

12

4

Purchase Price determination

13

5

Earn-Out

15

6

Repayment of Intercompany debt

18

7

Conditions Precedent

19

8

PRE-COMPLETION UNDERTAKINGS

20

9

COMPLETION

22

10

POST-COMPLETION obligations

23

11

WARRANTIES

27

12

BREACH

28

13

Claims

28

14

LIMITATION OF LIABILITY

30

15

SPECIFIC INDEMNITIES

32

16

TAX

32

17

Confidentiality and announcements

33

18

TERMINATION

35

19

MISCELLANEOUS

35

 

share purchase agreement

 

 

 

SCHEDULES AND ANNEXES

 

Schedule (C)

Particulars of the Company and the Subsidiaries

Schedule 1.1(a)

Data Room index

Schedule 1.1(b)

EY/HVG Step Plan

Schedule 1.1(c)

Agreed Form Lease Agreement

Schedule 3.2(a)

Escrow Agreement

Schedule 4.1.1 (Part A)

Definitions of Cash, Debt and Working Capital

Schedule 4.1.1 (Part B)

Other Principles

Schedule 4.1.1 (Part C)

Determination of Target Working Capital

Schedule 4.1.1 (Part D)

Initial Purchase Price Notice

Schedule 4.2.3

Independent Expert Procedure

Schedule 5.1.2

EXAMPLE CALCULATION EARN-OUT AMOUNT

Schedule 5.2.1(a)

PRO FORMA ACCOUNTS

Schedule 5.3.1

CONDUCT OF BUSINESS DURING Earn-out Period

Schedule 9.3

Completion Actions

Annex 9.3(c) (Part A)

Particulars of resigning persons

Annex 9.3(c) (Part B)

Resignation letter

Annex 9.3(c) (Part C)

Shareholders resolution

Schedule 10.4

Customer Loans

Schedule 11.1.1

Seller’s Warranties

Schedule 11.2

Purchaser’s Warranties

Schedule 16

 

share purchase agreement

 

 

 

Tax

Schedule 17.3

Announcement

 

share purchase agreement

 

 

 

THIS SHARE PURCHASE AGREEMENT (this Agreement) is dated 13 June 2018 and made between:

 

(1)

HET KOMT VAST GOED B.V., a private company with limited liability incorporated under Dutch law, having its official seat in Papendrecht, the Netherlands, and its registered office address at Nanengat 17, 3356 AA Papendrecht, the Netherlands, registered with the Dutch trade register under number 23089528 (the Seller); and

 

(2)

TWIN DISC NL HOLDING B.V., a private company with limited liability incorporated under Dutch law, having its official seat in Papendrecht, the Netherlands, and its registered office address at Nanengat 17, 3356 AA Papendrecht, the Netherlands, registered with the Dutch trade register under number 71859950 (the Purchaser);

 

The Seller and the Purchaser are also jointly referred to as the Parties and individually as a Party.

 

WHEREAS:

 

(A)

the Seller and its group companies are engaged in the business of design, (product) development, production, sales, repair and service of auxiliary propulsions and propulsion machinery for (marine) vessels (the Business);

 

(B)

Twin Disc, Incorporated, a public corporation with a Nasdaq listing (TWIN), and its group companies are engaged in the business of design, manufacture and distribution of power transmission technology (Twin Disc);

 

(C)

Alnoseju Beheer B.V., Jaco B.V., DS Unctoh B.V. and Twin Disc entered into a letter of intent, dated 20 March 2018, in which the aforementioned parties set out the general terms under which Twin Disc may directly or indirectly, through the Purchaser or another entity controlled by Twin Disc, acquire Exploitatiemaatschappij Veth B.V., Veth Diesel B.V., Veth Electra B.V., Veth Propulsion B.V. and Veth Thrusters B.V., the particulars of which are set out in Schedule (C) (the Subsidiaries) from Alnoseju Beheer B.V., Jaco B.V. and DS Unctoh B.V.;

 

(D)

since 12 June 2018, the Seller holds the legal and beneficial title to 180 ordinary shares with a nominal value of EUR 100 (hundred euro) each (the Shares) in the capital of Veth Propulsion Holding B.V., a private company with limited liability incorporated under Dutch law, having its official seat in Papendrecht, the Netherlands, and its registered office address at Nanegat 17, 3356 AA, Papendrecht, the Netherlands, registered with the Dutch trade register under number 71870369 (the Company);

 

(E)

the Shares constitute 100% (one hundred per cent) of the issued and outstanding share capital of the Company;

 

(F)

Alnoseju Beheer B.V., Jaco B.V. and DS Unctoh B.V. hold the legal and beneficial title to the shares in the capital of the Seller;

 

(G)

following the restructuring as set forth in the EY/HVG Step Plan, the Company holds the legal and beneficial title to the shares the capital of the Subsidiaries;

 

(H)

the Purchaser and/or Twin Disc conducted a due diligence investigation into the Subsidiaries and its business by reviewing documents that the Seller made available to the Purchaser, amongst others on the basis of a due diligence questionnaire of Purchaser, through an electronic data room prepared for that purpose and by having had opportunity to ask questions, most of which questions have been answered by the Seller;

 

share purchase agreement

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(I)

each of the Parties obtained all necessary corporate and other internal approvals to enter into this Agreement and to consummate the transactions contemplated by this Agreement;

 

(J)

the Parties have, and the Seller confirms that the Group Companies have, to the extent required in relation to the Transaction, complied with the provisions of the Social and Economic Council Merger Regulations (SER-Fusiegedragsregels 2015) and the Act on the works councils (Wet op de ondernemingsraden); and

 

(K)

the Seller now wishes to sell and transfer and the Purchaser wishes to purchase and accept the Shares, on the terms and subject to the conditions of this Agreement;

 

IT IS AGREED AS FOLLOWS:

 

1

DEFINITIONS AND INTERPRETATION

 

1.1

Definitions

 

Capitalised words and expressions used in this Agreement have the meaning set out below, unless the context requires otherwise.

 

2018 EBITDA

has the meaning given in Clause 5.1.2;

   

2018 Financial Statement

has the meaning given in Clause 5.2.2;

   

2018 FS Disagreement Notice

has the meaning given in Clause 5.2.3;

   

2018 Reclassifications

has the meaning given in Clause 5.2.1(b);

   

Accounting Principles

means the accounting policies, bases, methods, practices and procedures as applied in the Accounts;

   

Accounts

means (i) the audited annual accounts of the Seller for the period ending on the Balance Sheet Date, comprising a balance sheet and a profit and loss account (each including the explanatory notes thereto) as well as a consolidated balance sheet and a consolidated profit and loss account (each including the explanatory notes thereto), reflecting the financial position of the Group Companies on a consolidated basis, (ii) the directors report regarding the Company (on a consolidated basis) for the period ending on the Balance Sheet Date, and (iii) the other information listed in Section 2:392 DCC, including the auditor’s statement in respect of the annual accounts and the directors report of the Company for the period ending on the Balance Sheet Date;

   

Affiliate

means (i) in relation to any person other than a natural person, any person which is Controlled by, Controls or is under common Control with, such person and with regard to the Seller: including but not limited to Mr. J. Veth, Mr. C.J. Veth, Mr. H.A. Veth; and (ii) in relation to a natural person, his first -degree relatives (whether by blood or marriage), the trustees, acting in their capacity as such, of any trust of which he or any of his first degree relatives is a beneficiary, or, in the case of a discretionary trust, is a potential beneficiary; and any person of which he or his first degree relatives have Control, in each case from time to time;

 

share purchase agreement

2

 

 

Agreement

has the meaning given in the introduction of this Agreement;

   

Anti-Corruption Law

means any Law which has the objective to prevent bribery and/or other corrupt practices;

   

Applicable Security Price

has the meaning given in Clause 5.2.5;

   

Associated Person

means a person who performs or has performed services for or on behalf of a Group Company, including any director, officer, employee or agent of a Group Company;

   

Balance Sheet Date

31 December 2017;

   

Breach

means a breach of any Seller’s Warranty;

   

Business

has the meaning given in Recital (A);

   

Business Day

means a day (other than a Saturday or a Sunday or a public holiday) on which banks are open for business in the Netherlands, other than for internet banking services only;

   

Cash

means any of the items listed under “Cash” in Part A of Schedule 4.1.1, including any cash at banks, cash in hand (to the extent in a currency other than euro converted into euro at the Exchange Rate) and any receivable of the Group Companies on the Seller (also referred to as the “current accounts”), including the aforementioned claims that form part of the Intercompany Debt, but excluding any Trapped Cash; 

   

Company 

has the meaning given in Clause (D);

   

Completion

means the transfer of the Shares and the payment of the Initial Purchase Price and the Intercompany Debt in accordance with this Agreement;

   

Completion Accounts

has the meaning given in Clause 4.2.1(b);

   

Completion Accounts Date

means the end of the reporting month immediately following Completion;

   

Completion Accounts Disagreement Notice

has the meaning given in Clause 4.2.2;

   

Completion Balance Sheet

has the meaning given in Clause 4.2.1(a);

 

share purchase agreement

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Completion Date

means the date on which Completion takes place;

   

Completion Statement

has the meaning given in Clause 4.2.1(b);

   

Conditions Precedent

has the meaning given in Clause 7.1;

   

Confidential Information

has the meaning given in Clause 17.1.1;

   

Control

means, with respect to the relevant person, (i) the direct or indirect ownership or control of more than 50% (fifty per cent) of the (a) ownership interests or (b) voting power at the general meeting or a similar body, of that person, or (ii) the right or ability to (a) appoint or remove or (b) direct the appointment or removal of, such number of the members of the management board or a similar body of that person with decisive voting power in such body;

   

Damage

means the amount of damages within the meaning of section 6:96 et seq. Dutch Civil Code, provided however that such amount shall be determined without giving effect to the multipliers or ratios that the Purchaser has used for purposes of calculating the Purchase Price;

   

Data Room

means the electronic data room prepared by the Seller for the purpose of facilitating the Due Diligence Investigation, the content of which is electronically stored on DVDs, a copy of which has been provided to the Purchaser and the Seller, respectively, as at the date of this Agreement, and listed in an index attached hereto as Schedule 1.1(a);

   

DCC

means the Dutch Civil Code;

   

Debt

means any of the items listed under “Debt” in Part A of Schedule 4.1.1 and, in respect of the Group Companies and expressed as a negative number, the aggregate amount of:

 

  (a) all long and short term interest bearing debt of the Group Companies (on a consolidated basis) including financial leases,
     
  (b) all long and short term related party debt (also referred to as the ‘current accounts’) of the Group Companies (on a consolidated basis), including the aforementioned debt that forms part of the Intercompany Debt,
     
  (c) all accrued and unpaid corporate income taxes and deferred tax payables,
     
  (d) any dividend payable;
     
  (e) all transaction costs (to be) incurred by the Group Companies, including all transaction bonuses payable by the Group Companies in connection with the Transaction; and
     
  (f) all interest or breakage fees accrued, due or otherwise payable on any of the aforementioned Debt-items,
     
  in each case converted into euro at the Exchange Rate as at the Completion Date to the extent in a currency other than euro;

 

share purchase agreement

4

 

 

Deed of Transfer

means the notarial instrument for the transfer of the Shares;

   

Difference 2018 EBITDA

has the meaning given in Clause 5.1.2;

   

Disclosed Information

means the information included in (i) this Agreement, (ii) the Data Room and (iii) the written information provided to the Purchaser or any of its professional advisers to the extent uploaded in the Data Room;

   

Due Diligence Investigation

means the due diligence investigations performed by and on behalf of the Purchaser as referred to in Recital (H);

   

Dutch GAAP

means the relevant provisions of the DCC and, to the extent applicable to the Group Companies, the prevailing guidelines for annual reporting in the Netherlands (Richtlijnen voor de Jaarverslaggeving) as published by the Dutch Accounting Standards Board (Raad voor de Jaarverslaggeving);

   

Earn-Out

has the meaning given in Clause 5.1.1;

   

Earn-Out Amount

has the meaning given in Clause 5.1.2;

   

Effective Time

means 23:59 local time on the Completion Accounts Date;

   

Employment Agreement

means the employment agreement to be entered into between Mr. H.A. Veth and Veth Propulsion B.V.;

   

Encumbrance

means any pledge, mortgage, right of usufruct, attachment, right of retention, reservation of title, leasehold interest, tenancy, easement, any right of first refusal, right of pre-emption or any other right to acquire, any arrangement concerning depositary receipts (certificering), restriction on voting or transfer, or any other third party right or security interest of any kind, or the commitment to create any of the foregoing; and Encumber shall be construed accordingly;

   

Environmental Law

means any Law concerning the environment, the protection of human health, the conditions of the workplace, or the generation, transportation, storage, treatment or disposal of dangerous substances;

   

Environmental License

means any authorization, consent, certificate, permission, permit or license required under or in relation to any Environmental Law;

   

Escrow Account

means the bank account maintained by the Escrow Agent; 

 

share purchase agreement

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Escrow Agent

means ABN AMRO Escrow & Settlement;

   

Escrow Agreement

means the escrow agreement to be entered into between the Purchaser, the Seller and the Escrow Agent in form as attached hereto as Schedule 3.2(a);

   

Exchange Rate

means, in relation to any currency to be converted into or from euro for the purposes of this Agreement, the average 5 (five) day spot rate of exchange (closing mid-point) for that currency into or, as the case may be, from euro, as published in the Dutch financial daily paper (Financieel Dagblad) on each of the 5 (five) Business Days immediately prior to the relevant date or, where no such rate is published on those dates, the average of the relevant rate quoted on the appropriate page of the Reuters screen as at the close of business in Amsterdam, the Netherlands, on each of the 5 (five) Business Days immediately prior to the relevant date;

   

EY/HVG Step Plan

means the step plan prepared by the advisors of the Seller in connection with the pre-completion restructuring of the Group attached hereto as Schedule 1.1(b);

   

Fundamental Warranties

means the Seller’s Warranties included in paragraphs 1 (Authority and capacity of the Seller) up to and including 4 (Shares) of Schedule 11.1.1, but excluding 1.3 of Schedule 11.1.1;

   

Governmental Entity

means any supranational, national or local body or authority exercising a legislative, judicial, executive, regulatory, administrative or other governmental function and with jurisdiction in respect of the relevant matter;

   

Group 

means the Company and the Subsidiaries;

   

Group Company

means any member of the Group;

   

Group Companies’ Insurance Policies

has the meaning given in Clause 16.1 Schedule 11.1.1;

   

Group Intellectual Property Rights

means all Intellectual Property Rights owned, used or licensed by the Group Companies as licensee or licensor;

   

Independent Expert

has the meaning given in Clause 4.2.3;

   

Initial Purchase Price

has the meaning given in Clause 3.1.2;

   

Initial Purchase Price Disagreement Notice

has the meaning given in Clause 4.1.1;

   

Initial Purchase Price Notice

has the meaning given in Clause 4.1.1;

 

share purchase agreement

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Intellectual Property Rights

means trademarks, service marks, logos, domain names, trade and business names, rights in designs, patents, copy right, database rights, and rights in know-how and other intellectual property rights in each case whether registered or unregistered and all rights or forms of protection having equivalent or similar effect to any of the foregoing which may subsist anywhere in the world;

   

Intercompany Debt

means the balance of (i) all amounts owed to the Group Companies by the Seller and any of Seller’s Affiliates and (ii) all amounts owed to the Seller and any of Seller’s Affiliates by the Group Companies;

   

IT Systems

means all computer hardware, including network infrastructure and communication systems and equipment, and all computer software, including related databases and documentation, used by the Group Companies;

   

Key Employees

means each of Ms. T Vergeer, Mr. P. Kalkhoven, Mr. M. Van der Jagt, Mr. H.A. Veth and Mr. M. Huisman;

   

Law

means, with respect to the relevant subject matter or person, all applicable legislation, regulations, judgements, decrees, orders, instruments, by-laws, and other legislative measures or decisions having the force of law, as well as treaties, conventions and other agreements between states, or between states and the European Union or other supranational bodies, rules of common law, customary law and equity, and all other laws of, or having effect in, any jurisdiction from time to time;

   

Lease Agreement

means the lease agreement to be entered into between the Group Companies and Seller and P. Groenendijk Scheepsreparatie B.V. in the form attached hereto as Schedule 1.1(c);

   

Long Stop Date

has the meaning given in Clause 7.1;

   

Material Adverse Effect

means any effect which occurs between the date of signing of this Agreement and the Completion Date which has a materially adverse effect to the business, assets, financial condition or results of the Group Companies taken as a whole and, where quantifiable, in aggregate amounts to at least EUR 1,000,000 (one million euro), other than any such effect that (i) is disclosed through the Disclosed Information prior to the date of this Agreement, (ii) is resulting from a change of applicable Laws or general economic or political conditions (including changes arising out of acts of terrorism, sabotage, armed hostilities or war) after the date of this Agreement, or (iii) directly results from a written instruction by or written approval of the Purchaser after the date of this Agreement, whereby in all events the adverse effect shall be balanced against any benefits arising to a Group Company as a result of the underlying facts that gave rise to the Material adverse Effect;

 

share purchase agreement

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Maximum 2018 EBITDA

has the meaning given in Clause 5.1.2;

   

NAI

has the meaning given in Clause 19.12.2;

   

Notary

means Mr. Pieter van Druten or another civil law notary (notaris) (or such notary’s substitute) of Loyens & Loeff N.V. in Amsterdam, the Netherlands;

   

Notary Account

means the third party account (derdengeldenrekening) in the name of “Loyens & Loeff Amsterdam Derdengelden Notariaat” with swiftcode ABNANL2A and IBAN NL62ABNA0557297133;

   

Other Principles

has the meaning given in Clause 4.1;

   

Party

has the meaning given in the introduction of this Agreement;

   

Practitioner

has the meaning given in Clause 13.3.1(c);

   

Purchase Price

has the meaning given in Clause 3.1.1;

   

Purchaser

has the meaning given in the introduction of this Agreement;

   

Purchaser’s Account

means the bank account of the Purchaser as specified by the Purchaser to the Notary, or the Seller, as the case may be, from time to time;

   

Purchaser’s Group

means the Purchaser and its Affiliates, including the Group Companies from Completion;

   

Purchaser’s Warranties

has the meaning given in Clause 11.2;

   

Relief

includes any loss, allowance, depreciation, amortisation, credit, relief, exemption, deduction or set-off or other relief of a similar nature granted by or available in relation to Tax, and any right to a repayment of or saving of Tax;

   

Representatives

means, in relation to a person, (i) any and all persons authorized to represent such person (whether or not such authority is subject to limitations), (ii) such person’s directors, officers and employees (whether or not authorized to represent such person) and (iii) any of the professional advisers of such person in each case from time to time;

   

Sanction Law

means any Law imposing economic sanctions such as trade barriers and restrictions, visa bans, asset freezes or restrictions on financial transactions, including the Sanctions Act 1977 (Sanctiewet 1977), any EU common foreign and security policy related to (financial) sanctions, any (financial) sanctions imposed by the United Nations Security Council and any sanctions administered by the U.S. Office of Foreign Asset Control;

 

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Seller

has the meaning given in the introduction of this Agreement;

   

Seller’s Account

means the bank account of the Seller as specified by the Seller to the Notary, or the Purchaser, as the case may be, from time to time;

   

Seller’s Group

means the Seller and its Affiliates, excluding the Group Companies from Completion;

   

Seller’s Warranties

has the meaning given in Clause 11.1.1;

   

Shares

has the meaning given in Recital (D);

   

Subsidiaries

has the meaning given in Recital (C);

   

Target Working Capital

means the level of the monthly average month-end Working Capital calculated over the period as from 1 July 2017 up to and including 30 June 2018 as further set forth and determined in accordance with Part C of Schedule 4.1.1;

   

Tax

means all forms of taxes, levies, duties, imposts, social security charges, health security contributions, any other contributions or charges and withholdings of any nature whatsoever, whether direct or indirect, including without limitation corporate income tax, wage withholding tax, social security premium, value added tax, premiums or other contributions, consumption taxes, environmental taxes, (real estate) transfer tax, property tax, capital tax, energy tax, waste tax, import, export, custom and other duties, including all penalties, additions, interest, damage, fines, costs and expenses relating to any of them, any repayment of unlawful state aid in relation thereto, any contract or other agreement in relation to taxation, and regardless of whether these items are chargeable directly or primarily against or attributable directly or primarily to any other person and of whether any amount in respect of any of them is recoverable from any other person;

   

Tax Authority

means any Governmental Entity or other authority competent to impose any liability in respect of Tax or responsible for the administration and/or collection of Tax or enforcement of any law in relation to Tax;

   

Tax Benefit

means any Tax refund actually received by a Group Company and any reduction of Tax actually due by a Group Company;

   

Tax Claim

means any claim of the Purchaser under the Tax Indemnity or a claim for a Breach of a Tax Warranty;

   

Tax Indemnity

means the indemnity set out in paragraph 2 of Schedule 16;

 

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Tax Return

means any return, (including any information return), report, statement, declaration, schedule, attachment, notice, form, or other document or information, including any amendment thereof, filed with or submitted to, or required to be filed with or submitted to, any Tax Authority in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any requirement relating to Tax;

   

Tax Warranties

means the Seller’s Warranties set out in paragraph Fout! Verwijzingsbron niet gevonden. of Schedule 11.1.1;

   

Threshold 2018 EBITDA

has the meaning given in Clause 5.1.2;

   

Third Party Claim

has the meaning given in Clause 13.3.1;

   

Transaction

means the sale, purchase and transfer of the Shares, on the terms and subject to the conditions of this Agreement;

   

Transaction Document

means this Agreement, the Deed of Transfer, the Escrow Agreement, and each other material document to be executed by one or more members of the Seller’s Group (excluding the Group Companies) and one or more members of the Purchaser’s Group (including the Group Companies) in connection with the Transaction;

   

Trapped Cash

means any cash that cannot be lawfully spent, distributed, loaned or released by the Group Companies from the jurisdiction in which they are situated without deduction or withholding or additional cost (other than costs of transfer from a bank account incurred in the ordinary course) and which is not accessible in the manner described above within a period of five (5) Business Days, including, but not limited to: (i) any cash securing rent deposits or any other cash held as collateral in respect of obligations to any party, (ii) any bank guarantees (other than bank guarantees for which cash is deposited on a blocked account of the Group Companies) and (iii) employee loans or bonuses etc.;

   

Twin Disc

has the meaning given in Recital (B);

   

VAT

means (i) within the European Union, such Tax as may be levied in accordance with (but subject to derogations from) the Directive 2006/112/EC and (ii) outside the European Union, any Tax levied by reference to added value, sales or consumption;

   

Working Capital

means the working capital as calculated in accordance with the definitions as set out under “Working Capital” in Part A of Schedule 4.1.1 and the accounting principles in Part B of Schedule 4.1.1; and

   

Wrong Pocket Item

has the meaning given in Clause 10.3.1.

 

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1.2

Interpretation

 

1.2.1

In this Agreement, unless the context requires otherwise:

 

 

(a)

the singular includes the plural and vice versa, and each gender includes the other genders;

 

 

(b)

except as otherwise provided in this Agreement, references to any time of day are to the time on that day in the Netherlands;

 

 

(c)

references to Recitals, Clauses, Schedules or Annexes are to recitals, clauses, schedules or annexes of this Agreement, and references to this Agreement include the Recitals, Schedules, Annexes and other attachments to this Agreement;

 

 

(d)

a reference to a person includes any natural person, corporate body, Governmental Entity or any other entity, whether or not having separate legal personality;

 

 

(e)

references to any Dutch legal term or concept shall in any jurisdiction other than the Netherlands be construed as a reference to the term or concept which most nearly corresponds to it in that jurisdiction;

 

 

(f)

English terms to which another language translation has been added in italics shall be interpreted in accordance with such other language translation, disregarding the English term to which such other language translation relates;

 

 

(g)

the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, unless the context clearly requires otherwise;

 

 

(h)

references to books and records are to the books and records (administratie) stored in any form;

 

 

(i)

where information is qualified by the expression “fairly disclosed”, the information concerned is limited to the information specifically disclosed in writing prior to the date of this Agreement, in such way and manner that after studying the relevant information on a prima facie basis and without it being necessary to cross-refer to other documents outside of the Disclosed Information, a diligent purchaser (assisted by professional advisors) is aware or should reasonably be expected to be aware of such facts, matters, circumstances and events;

 

 

(j)

references to “Seller’s knowledge” or words or expressions of a similar nature shall be deemed to refer to the actual knowledge of the Seller, Mr. H.A. Veth, Ms. T. Vergeer, Mr. M. Huisman, Mr. J. Veth and Mr. J.C. Veth as per the date of this Agreement;

 

 

(k)

references to “ordinary course” shall be deemed to be followed by the phrase “consistent with past practice during the last three years”.

 

1.2.2

Headings and sub-headings in this Agreement are inserted for convenience only and shall not affect the interpretation of this Agreement.

 

1.2.3

Except as otherwise provided in this Agreement, all periods of time set out in this Agreement shall start on the day following the day on which the event triggering the relevant period of time occurred. The expiration date shall be included in the period of time. If the expiration date is not a Business Day, the expiration date shall be the next Business Day.

 

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1.2.4

All interest accruing under this Agreement is to be calculated on the basis of the actual number of days elapsed and a year of 360 (three hundred sixty) days.

 

1.2.5

All notices, demands, requests, statements, certificates and other documents and communications related to this Agreement shall be in English.

 

1.2.6

No provision of this Agreement shall be interpreted against a Party solely as a result of the fact that such Party was responsible for drafting such a provision.

 

2

SALE, purchase and transfer

 

2.1

Sale and purchase

 

The Seller hereby sells the Shares to the Purchaser and the Purchaser hereby purchases the Shares, on the terms and subject to the conditions of this Agreement.

 

2.2

Transfer

 

2.2.1

On the Completion Date the Seller shall transfer its Shares it sells pursuant to clause 2.1 to the Purchaser and the Purchaser agrees to accept the Shares, on the Completion Date, free from Encumbrances and with all rights attached to them, on the terms and subject to the conditions of this Agreement and through the execution of the Deed of Transfer.

 

2.2.2

Subject to Completion and the terms and conditions of this Agreement, the Shares, the Group Companies and their respective businesses shall be for the benefit and risk of the Purchaser with effect from Completion.

 

3

PURCHASE PRICE

 

3.1

Purchase Price

 

3.1.1

The aggregate purchase price for the Shares (the Purchase Price) shall be:

 

 

(a)

an amount of EUR 49,700,000 (forty nine million seven hundred thousand euro);

 

plus

 

 

(b)

the Cash at Completion;

 

minus

 

 

(c)

the Debt at Completion;

 

plus

 

 

(d)

the amount, if any, by which the Working Capital at Completion exceeds the Target Working Capital, provided however that this amount shall never exceed an amount of EUR 2,000,000 (two million euro). For the avoidance of doubt, to the extent that the Working Capital at Completion exceeds the Target Working Capital with an amount of more than EUR 2,000,000 (two million euro), such amount shall for the purpose of the calculation of the Purchase Price be deemed EUR 2,000,000 (two million euro);

 

minus

 

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(e)

the amount, if any, by which the Target Working Capital exceeds the Working Capital at Completion; and

 

plus

 

 

(f)

the Earn-Out Amount (if any).

 

3.1.2

The Cash, Debt and Working Capital at Completion shall, prior to Completion, be estimated in accordance with Clause 4.1 and such pre-Completion estimates shall be binding for purposes of calculating the Purchase Price payable at Completion (the Initial Purchase Price).

 

3.1.3

The Cash, Debt and Working Capital at Completion shall, post Completion, be finally agreed or determined in accordance with Clause 4.2. The Initial Purchase Price shall be adjusted in accordance with Clause 4.4 if the Cash, Debt and/or Working Capital at Completion deviate from the abovementioned pre-Completion estimates.

 

3.2

Payment of the Purchase Price

 

The Purchase Price shall be paid as follows:

 

 

(a)

a portion of the Initial Purchase Price in an amount equal to 5% (five per cent) of the Initial Purchase Price shall be paid in full and in cash at Completion by the Purchaser into the Notary Account and, subject to Clause 9.2.3, paid by the Notary into the Escrow Account 1 (one) Business Days following Completion, and will be held in the Escrow Account in accordance with the provisions of the Escrow Agreement attached hereto as Schedule 3.2(a);

 

 

(b)

the balance of the Initial Purchase Price shall be paid in full and in cash at Completion by the Purchaser to the Seller via the Notary Account;

 

 

(c)

a further payment, if any, of the Purchase Price excluding the Earn-Out Amount shall be made as and when required pursuant to Clause 4.4; and

 

 

(d)

a further payment, if any, of the Earn-Out Amount shall paid by means of the issue of securities in the capital of Twin Disc, Incorporated to Seller as further set forth in Clause 5.2.5.

 

4

Purchase Price determination

 

4.1

Pre-Completion estimates

 

4.1.1

The Seller shall provide the Purchaser with a written notice in the form attached hereto as Part D of Schedule 4.1.1, setting out its good faith best estimate of the Debt, Cash and Working Capital at Completion (the Initial Purchase Price Notice) and its calculations of each estimate, together with the relevant supporting documents, by no later than 10 (ten) Business Days prior to the date on which Completion is envisaged to take place. Such estimates shall be made applying the Accounting Principles and the additional (or deviating) principles set out in Part B of Schedule 4.1.1 (the Other Principles). Such estimates shall be binding for purposes of calculating the Initial Purchase Price payable at Completion, unless the Purchaser notifies the Seller within 5 (five) Business Days after receipt of the Initial Purchase Price Notice that it disputes the Initial Purchase Price Notice, specifying the items of the Initial Purchase Price Notice it disputes and the basis upon which it disputes such items, and including its own good faith estimates of such disputed items (the Initial Purchase Price Disagreement Notice).

 

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4.1.2

Where the Initial Purchase Price Disagreement Notice is served in time, the following estimates shall be binding for purposes of calculating the Initial Purchase Price:

 

 

(a)

if the estimated Debt is disputed: the average of the Seller’s estimate thereof (as included in the Initial Purchase Price Notice) and the Purchaser’s estimate thereof (as included in the Initial Purchase Price Disagreement Notice);

 

 

(b)

if the estimated Cash is disputed: the average of the Seller’s estimate thereof (as included in the Initial Purchase Price Notice) and the Purchaser’s estimate thereof (as included in the Initial Purchase Price Disagreement Notice); and

 

 

(c)

if the estimated Working Capital is disputed: the average of the Seller’s estimate thereof (as included in the Initial Purchase Price Notice) and the Purchaser’s estimate thereof (as included in the Initial Purchase Price Disagreement Notice).

 

4.2

Post-Completion determination

 

4.2.1

The Purchaser shall provide the Seller with the following documents within 60 (sixty) Business Days after the Completion Date:

 

 

(a)

an unaudited balance sheet of the Company reflecting the financial position of the Group Companies on a consolidated basis at Completion as if Completion was at the end of an accounting reference period of the Company, prepared in conformity with the Accounting Principles and the Other Principles (the Completion Balance Sheet), accompanied by the relevant working papers, including a specification of the relevant line items (and sub-items) and bookkeeping codes; and

 

 

(b)

a written statement setting out the Cash, Debt and Working Capital at Completion, each as derived from the Completion Balance Sheet (the Completion Statement, and together with the Completion Balance Sheet, the Completion Accounts) and the underlying calculations.

 

4.2.2

The Completion Accounts shall be binding on the Parties, unless the Seller notifies the Purchaser within 20 (twenty) Business Days after receipt thereof that it disputes the Completion Accounts, specifying the items of the Completion Accounts it disputes and the basis upon which it disputes such items, including the adjustments it reasonably believes should be made to the Cash, Debt and/or Working Capital and the basis therefor, providing sufficient detail so as to enable the Purchaser to assess the proposed adjustments (the Completion Accounts Disagreement Notice).

 

4.2.3

Following receipt of the Completion Accounts Disagreement Notice in accordance with Clause 4.2.2, the Parties shall, in good faith, attempt to reach agreement on all disputed items within 20 (twenty) Business Days after such notification, failing which the items still in dispute shall be resolved, and the Cash, Debt and Working Capital at Completion shall be finally determined, by an independent expert (the Independent Expert) who shall be appointed and instructed by the Parties in accordance with Schedule 4.2.3.

 

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4.3

Access to information

 

The Purchaser shall ensure that the Seller and the Seller’s professional advisers and, if appointed, the Independent Expert shall be granted reasonable access, at reasonable times and on reasonable notice, to the books and records of the Group Companies, key personnel of the Group Companies and any other information in relation to the Group Companies which is required or conducive to enable them to verify and/or agree on or determine the Cash, Debt and Working Capital at Completion in accordance with this Clause 4.

 

4.4

Adjustment

 

Within 3 (three) Business Days from the Cash, Debt and Working Capital at Completion having been finally agreed or determined in accordance with Clause 4.2:

 

 

(a)

the Purchaser shall ensure that the amount, if any, by which the Purchase Price calculated on the basis of the Cash, Debt and Working Capital at Completion exceeds the Initial Purchase Price calculated on the basis of the pre-Completion estimates of the Cash, Debt and Working Capital at Completion is paid to the Seller; and

 

 

(b)

the Seller shall ensure that the amount, if any, by which the Initial Purchase Price calculated on the basis of the pre-Completion estimates of the Cash, Debt and Working Capital at Completion exceeds the Purchase Price calculated on the basis of the Cash, Debt and Working Capital at Completion is paid to the Purchaser.

 

4.5

Conflicts

 

4.5.1

If and to the extent there is a conflict between the Accounting Principles and the Other Principles, the Other Principles shall prevail for purposes of this Clause 4.

 

4.5.2

If and to the extent there is a conflict between the definition of Cash, Debt or Working Capital on the one hand, and the relevant parts of the Completion Balance Sheet or the accompanying working papers on the other hand, the definitions shall prevail, provided that if a Cash, Debt or Working Capital element is partly treated as cash or debt and partly as working capital in such balance sheet or working papers, that differentiation shall be adopted for purposes of this Clause 4. To illustrate this conflict rule, the following two examples have been added:

 

Example 1

 

Amounts prepaid by the Group Companies (EUR 100) partly qualify as Cash (EUR 40) as the relevant prepayments are one-off items) and partly qualify as Working Capital (EUR 60) as the relevant prepayments are recurring or otherwise form part of the business model.

 

Example 2

 

Amounts prepaid to the Group Companies (EUR 100) partly qualify as Debt (EUR 20) as the relevant prepayments are one-off items) and partly qualify as Working Capital (EUR 80) as the relevant prepayments are recurring or otherwise form part of the business model.

 

5

Earn-Out

 

5.1

Earn-out Amount

 

5.1.1

As an increase (if applicable) to the Purchase Price, the Seller is entitled to an earn out payment by the Purchaser (the Earn-Out) subject to the terms and conditions as set out in this Clause 5.

 

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5.1.2

If the EBITDA generated by the Company and its Group Companies for the 2018 financial year, as is apparent from the 2018 Financial Statement (the 2018 EBITDA) and taking account the calculation formula and adjustments set forth Clause 5.2.1, is in excess of EUR 6,450,000 (six million four hundred fifty thousand euro) (the Threshold 2018 EBITDA), the Purchase Price shall be adjusted upwards with an amount (the Earn-Out Amount) equal to the difference (the Difference 2018 EBITDA) between EUR 6,800,000 (the Maximum 2018 EBITDA) and the Threshold 2018 EBITDA multiplied with factor 9,4286, provided however that such Earn-Out Amount shall never exceed an amount of EUR 3,300,000 (three million three hundred thousand euro):

 

2018 EBITDA

Earn-Out Amount (in EUR)

˃EUR 6,800,000

EUR 3,300,000

≥EUR 6,450,000 - ≤EUR 6,800,000

9,4286 multiplied by the Difference 2018 EBITDA 

˂EUR 6,450,000

0

 

 

An example of the calculation of the Earn-Out is attached as Schedule 5.1.2.

 

5.2

Determination of the 2018 EBITDA and Earn-Out Amount

 

5.2.1

For the purpose of determining the Earn-Out Amount, the Parties agree to the following:

 

 

(a)

the 2018 EBITDA will be calculated as follows: EBIT (bedrijfsresultaat) plus depreciation and amortisation (afschrijvingen) as included in the 2018 Financial Statement prepared in accordance with the Accounting Principles;

 

 

(b)

as:

 

 

(i)

the threshold amount of EUR for the entitlement of Seller to the Earn-Out Amount is determined on the basis of the Accounts; and

 

 

(ii)

prior to the consummation and for the benefit of the Transaction a reorganization in accordance with the EY/HVG Step Plan of the group of companies included in the consolidation of the Accounts has taken place,

 

the Accounts no longer reflect the correct financial situation of the Subsidiaries as per the Balance Sheet Date. For this purpose Seller has provided for pro forma accounts as per the Balance Sheet Date attached as Schedule 5.2.1(a) (the Pro Forma Accounts) which include an overview of the implemented corrections on a line basis ensuing from (i) and (ii) above in comparison to the Accounts, including but not limited to rental income, housing costs (huisvestingskosten) and general expenses (the 2018 Reclassifications). The 2018 Financial Statement and consequently the 2018 EBITDA will be normalized for the 2018 Reclassifications.

 

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(c)

charges and costs imposed by Twin Disc (including Representatives of Twin Disc in the board of the Group Companies) or its Affiliates on the Group Companies, including inter alia (i) additional audit or consultancy fees imposed on the Group Companies (ii) any exploitation costs, marketing and sales expenses and development expenses of the Group outside of Group 2018 budget and/or (iii) costs in connection with the hiring of new employees not being employed with the Group Companies in the period 12 (twelve) months preceding the Completion Date after the Completion Date, but not those additional employees considered in the Group’s 2018 budget, will be eliminated;

 

 

(d)

any book profit or loss related to the sale of fixed assets will be eliminated;

 

 

(e)

costs in connection with the integration of (the business of) the Group Companies and Twin Disc will be eliminated;

 

 

(f)

one-off or non-recurring income and costs of the Group Companies outside the ordinary course of business, including any costs in relation to the Transaction as contemplated by this Agreement, will be eliminated;

 

 

(g)

any dividend, interest, tax or other non-operating or financial income or costs;

 

 

(h)

any losses or cash-out of the Group Companies which have been compensated by the Seller pursuant to the provisions of this Agreement shall be deemed to have been neutralised through such compensation; and

 

 

(i)

any non-cash reduction in a provision, accrual or liability set up on or prior to 31 December 2017 will be eliminated.

 

5.2.2

The Purchaser shall provide the Seller with the following documents within 4 (four) months after 31 December 2018:

 

 

(a)

the balance sheets of the Company reflecting the financial position of the Group Companies on a consolidated basis as per 31 December 2018, prepared by the Group Companies’ accountant at that time in conformity with the Accounting Principles and the Other Principles; and

 

 

(b)

a written statement setting out the 2018 EBITDA and the applicable Earn-Out Amount (if any) (the 2018 Financial Statement) together with the underlying calculations and a specific reconciliation per line item that has been normalized.

 

5.2.3

The 2018 Financial Statement shall be binding on the Parties, unless the Seller notifies the Purchaser within 60 (sixty) Business Days after receipt thereof that it disputes the 2018 Financial Statement, specifying the items of the 2018 Financial Statement it disputes and the basis upon which it disputes such items, including the adjustments it reasonably believes should be made to the 2018 EBITDA and the basis therefore, providing sufficient detail so as to enable the Purchaser to assess the proposed adjustments (the 2018 FS Disagreement Notice).

 

5.2.4

Following receipt of the 2018 FS Disagreement Notice in accordance with Clause 5.2.3, the Parties shall, in good faith, attempt to reach agreement on all disputed items within 60 (sixty) Business Days after such notification, failing which the items still in dispute shall be resolved, and the 2018 EBITDA and the Earn-Out Amount shall be finally determined, by the Independent Expert who shall be appointed and instructed by the Parties in accordance with Schedule 4.2.3.

 

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5.2.5

Within 10 (ten) Business Days after the 2018 Financial Statement (setting forth the 2018 EBITDA and the Earn-Out Amount) has been finally agreed or determined in accordance with Clause 5.2.4, the Purchaser shall ensure that such Earn-Out Amount (if any) is paid to the Seller by means of the issue or transfer of securities in the capital of Twin Disc, Incorporated, or, to the extent the Seller has assigned its right to receive such securities to Alnojesu Beheer B.V., Jaco B.V. and DS Unctoh B.V. in accordance with Clause 19.4.4, by means of the issue or transfer of securities in the capital of Twin Disc, Incorporated to Alnojesu Beheer B.V., Jaco B.V. and DS Unctoh B.V. in the proportion of their shareholdings held in the Seller on the date of this Agreement. To the extent the Seller wishes to assign this right to Alnojesu Beheer B.V., Jaco B.V. and DS Unctoh B.V., it will notify the Purchaser thereof in writing. The number of any such securities to be issued or transferred will be determined as follows:

 

    Earn-Out Amount
  Number of Twin Disc, Incorporated securities =                                  
    Applicable Security Price

 

whereby:

 

Applicable Security Price shall mean: the average of the daily closing price per Twin Disc, Incorporated security over the period of 10 (ten) Business Days immediately prior to the date of this Agreement as published on the Nasdaq website and converted into euro at the Exchange Rate as at the date of this Agreement.

 

For the avoidance of any doubt and taking into account that securities can only be obtained in whole, if the calculation of the number of securities in accordance with the formula above does not result in an exact number of securities (in whole), the number of securities to be issued or transferred to the Seller shall be rounded to the nearest exact number of securities (in whole).

 

The Seller shall, and shall procure that each of its Affiliates, including but not limited to Alnoseju Beheer, B.V., Jaco B.V. and DS Unctoh B.V. and their Affiliates shall, in respect of the Twin Disc, Incorporated securities acquired in connection with the Earn-Out comply with the volume limitations of Rule 144 promulgated under the Securities Act of 1933, regardless of whether Rule 144 applies to any such party or not. 

 

5.3

Other

 

5.3.1

The Purchaser covenants that as from Completion up to and including 31 December 2018 (the Earn-Out Period), it shall comply with the provisions in Schedule 5.3.1.

 

6

Repayment of Intercompany debt

 

The Purchaser shall ensure that the Intercompany Debt, if any, is paid to the Seller on behalf of the relevant Group Companies at Completion. The Intercompany Debt will, however, be deemed to be still outstanding at Completion for purposes of estimating and determining the Debt and Cash in accordance with Clause 4. The Seller shall provide the Purchaser with a detailed written statement setting out all items comprising the Intercompany Debt by no later than 5 (five) Business Days prior to the date on which Completion is envisaged to take place. To the extent upon Completion the Intercompany Debt contains any receivables of the Group Company against the Seller, such receivables will be set-off (verrekend) with the amount payable by the Purchaser upon Completion as set forth in Clause 3.2(b). The Seller shall ensure that the Group Companies shall, for the purpose of such set-off, assign (cederen) these receivables of the Group Company against the Seller to the Purchaser.

 

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7

Conditions Precedent

 

7.1

Conditions Precedent

 

Completion shall be subject to the following conditions precedent (opschortende voorwaarden) (the Conditions Precedent) being satisfied (or waived in accordance with Clause 7.3) by 1 September 2018 or such later date as the Parties may agree in writing (the Long Stop Date):

 

 

(a)

the Purchaser having reached agreement with Mr. H.A. Veth regarding his continued employment after Completion;

 

 

(b)

the Purchaser having availability to the funds necessary to consummate the Transaction from an external debt financing institution on arm’s length terms;

 

 

(c)

between the date of this Agreement and the date on which the Conditions Precedent set out in Clauses 7.1(a) and 7.1 are satisfied or waived in accordance with Clause 7.3, the Seller not having become aware of a material Breach or any fact, matter, circumstance or event which is reasonably expected to result in a material Breach, it being understood that for the purpose of this Clause 7.1(c), a Breach resulting in, or reasonably expected to result in, the Purchaser and/or the Group Companies suffering or incurring Damages in amount equal to at least EUR 1,000,000 is deemed to be a “material Breach”;

 

 

(d)

between the date of this Agreement the date on which the Conditions Precedent set out in Clauses 7.1(a) and 7.1(b) are satisfied or waived in accordance with Clause 7.3, no Party becoming aware of any fact, matter, circumstance or event that, individually or together with other facts, matters, circumstances or events that it has become aware of, has had, has a Material Adverse Effect;

 

 

(e)

between the date of this Agreement the date on which the Conditions Precedent set out in Clauses 7.1(a) and 7.1(b) are satisfied or waived in accordance with Clause 7.3, this Agreement nor the consummation of the Transaction or any other transaction contemplated by this Agreement having been prohibited or restricted permanently by or pursuant to any Law; and

 

 

(f)

between the date of this Agreement the date on which the Conditions Precedent set out in Clauses 7.1(a) up to and including 7.1(f) are satisfied or waived in accordance with Clause 7.3, no Governmental Entity having commenced any legal action or proceedings that may prevent or delay past the Long Stop Date.

 

7.2

Responsibility for satisfaction of the Conditions Precedent

 

7.2.1

The Purchaser shall use its best efforts to ensure satisfaction of each of the Conditions Precedent as soon as reasonably possible.

 

7.2.2

Each of the Parties shall, and the Seller shall procure that each Group Company shall, use its best efforts to ensure that each of the Conditions Precedent is satisfied as soon as reasonably possible.

 

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7.2.3

Each Party shall notify the other Party as soon as reasonably possible after becoming aware that any Condition Precedent has been satisfied.

 

7.2.4

If any Party becomes aware of anything that could reasonably be expected to prevent or delay the satisfaction of any Condition Precedent, it shall as soon as reasonably possible inform the other Party, providing appropriate details and clarification as to the reason why the relevant Condition Precedent will or may not be satisfied.

 

7.3

Waiver of Conditions Precedent

 

The Conditions Precedent may be waived as follows:

 

 

(a)

the Conditions Precedent set out in Clauses 7.1(e) and 7.1(f) may only be waived by written agreement between the Parties; and

 

 

(b)

the Conditions Precedent set out in Clauses 7.1(a), 7.1(b), 7.1(c) and 7.1(d) may only be waived by the Purchaser.

 

7.4

Non-satisfaction of any Condition Precedent

 

In the event that any Condition Precedent is not satisfied or waived in accordance with Clause 7.3, by the Long Stop Date or if it becomes clear that any Condition Precedent is incapable of satisfaction and will not (as evidenced by a written notice by the relevant Party to the other Party) be waived, the Parties hereby mutually agree that each Party entitled (whether solely or jointly) to waive such Condition Precedent pursuant to Clause 7.3 (or, if the relevant Condition Precedent cannot be waived, that each Party) may, subject to Clause 18, by written notice to the other Party, terminate this Agreement with immediate effect. The Party so terminating this Agreement will not incur any liability as a result thereof, and no Party will be obligated to consummate the Transaction or to continue negotiations. Such termination right shall, however, not be available to the Party who breached any of its material obligations under this Clause 7 or breached any of its other obligations under this Agreement if such breach contributed materially to the non-satisfaction of the relevant Condition Precedent.

 

8

PRE-COMPLETION UNDERTAKINGS

 

8.1

Conduct of business

 

8.1.1

Except as (i) otherwise provided in this Agreement, (ii) required by Law, or (iii) approved in advance by the Purchaser, the Seller and the Seller shall procure that Alnoseju Beheer B.V., Jaco B.V. and DS Unctoh B.V. shall, from the date of this Agreement until Completion ensure that:

 

 

(a)

each Group Company:

 

 

(i)

carries on its business as a going concern, in the ordinary course and in a manner most likely to preserve its value, maintaining its relations and goodwill with its suppliers, customers, landlords, creditors, employees and others having business relationships with it;

 

 

(ii)

refrains from assuming any obligation or making any changes concerning operational matters with a minimum value of EUR 200,000 (two hundred thousand euro), save for matters regarding customer contracts or tenders; and

 

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(iii)

immediately reports to the Purchaser on any fact, matter, circumstance or event outside the ordinary course which it should reasonably understand to be of material importance to the Business; and

 

 

(b)

notwithstanding Clause 8.1.1(a), none of the Group Companies:

 

 

(i)

enters into any transaction with, or makes any payment to, any member of the Seller’s Group (excluding the Group Companies), or any of their respective directors, officers or employees or any Affiliate of such directors, officers or employees other than in the ordinary course of business and on arm’s length terms;

 

 

(ii)

acquires (by merger, consolidation or acquisition of securities or assets) any corporation, partnership or other business organisation or division thereof or any interest therein;

 

 

(iii)

sells, transfers or otherwise disposes of any of its assets that has a fair market value or for which consideration shall be due in excess of EUR 200,000 (two hundred thousand euro);

 

 

(iv)

makes any material changes (other than those required by Law or by the applicable terms of employment) to the terms of employment or engagement, as the case may be, of any of its Key Employees, independent contractors or board members (or – in its capacity as shareholder – of any other Group Company’s board members), employs any new person in a management position or terminates (except for good cause) the employment of any Key Employee or sets up or amends any pension scheme or awards any pension rights, in each case except as (a) included in the budget of the relevant Group Company or as disclosed to the Purchaser as part of the Disclosed Information;

 

 

(v)

amends its or any other Group Company’s articles of association, enters into or authorises any transaction which affects its or any other Group Company’s corporate status or effects or authorises the restructuring or reorganisation of any Group Company, other than the restructuring as set out in the EY/HVG Step Plan;

 

 

(vi)

institutes or settles any legal proceedings or other disputes which results in a payment by or to any Group Company in excess of EUR 50,000 (fifty thousand euro), except in respect of debt collection in the ordinary course;

 

 

(vii)

cancels any debt or otherwise waives any claim or other right, except in the ordinary course or in excess of EUR 10,000 (ten thousand euro);

 

 

(viii)

amend, revoke or re-submit any Tax Return which has previously been submitted to a Tax Authority, or amend, disclaim or revoke any Relief relating to Tax or any claim, surrender or election relating to Tax which has previously been received or submitted or notified to any Tax Authority or otherwise given effect pursuant to applicable Law;

 

 

(ix)

settle, compromise, agree or materially negotiate any audit, enquiry, assessment, dispute or litigation relating to Tax with any Tax Authority, enter into any closing agreement or similar agreement with any Tax Authority, or consent to any extension or waiver of the limitation period relating to Tax;

 

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(x)

change its residence for Tax purposes;

 

 

(xi)

agrees or commits to any of the foregoing; and

 

 

(c)

no Shares are sold, transferred, otherwise disposed of, or Encumbered, and that no profit instruments relating to, or shares or options for shares or any other debt or equity securities in the capital of the Company are granted or issued; and

 

 

(d)

no shareholders’, partners’ or members’ resolution (or equivalent resolution) relating to any of the Group Companies will be passed (whether at or outside of any general meeting).

 

8.1.2

Notwithstanding Clause 8.1.1, any member of the Seller’s Group shall, without incurring any liability as a result thereof, be allowed to act immediately, without awaiting the Purchaser’s response to a request for prior approval or even without requesting the Purchaser’s prior approval, if the circumstances so required, in which case the Seller shall inform the Purchaser of any such situation and acts as soon as possible thereafter.

 

8.2

Access and information

 

The Seller shall, subject to confidentiality obligations as set forth in Clause 17, up to Completion, procure that the Purchaser and its relevant Affiliates and Representatives will, at their own cost and expense, be allowed to have access to the Data Room, the books and records of the Group Companies and, at reasonable times and on reasonable notice, the premises, other information with respect to the Group Companies, management and other relevant Representatives of the Group Companies as the Purchaser reasonably may request in connection with the Transaction, provided that this shall not have the sole nature of a continued due diligence investigation.

 

9

COMPLETION

 

9.1

Date and place

 

Completion shall take place ultimately on the 5th (fifth) Business Day after the date on which each of the Conditions Precedent was satisfied or waived in accordance with this Agreement, but not before 1 July 2018, or on such other date as the Parties may agree in writing, at the offices of Loyens & Loeff N.V. at Fred. Roeskestraat 100, 1076 ED Amsterdam, the Netherlands.

 

9.2

Payment of the Initial Purchase Price and the Intercompany Debt

 

9.2.1

The Purchaser shall procure that the Initial Purchase Price and the Intercompany Debt, if any, are paid, with value on the Completion Date, to the Notary Account under the reference “Project Ship - Initial Purchase Price” by no later than 13:00 on the Completion Date.

 

9.2.2

Subject to Clause 9.2.3, the Initial Purchase Price and the Intercompany Debt, if any, (or any relevant part thereof) shall remain for the benefit of the person who paid it into the Notary Account up to the moment the Deed of Transfer is duly executed.

 

9.2.3

If the Notary, on the first Business Day following Completion, as part of his Independent Investigation ascertains that the Seller or the Purchaser was declared bankrupt (failliet) or granted a moratorium of payment (surseance van betaling) in the Netherlands on or prior to the Completion Date, the Purchase Price (or any relevant part thereof) shall be deemed to always have remained for the benefit of the person who paid it into the Notary Account.

 

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9.3

Completion actions

 

Subject to receipt of the Initial Purchase Price and the Intercompany Debt in the Notary Account, on the Completion Date, each Party shall take (or have taken), or procure to be taken, the actions listed in relation to it or its Affiliates in Schedule 9.3 in the sequence set out therein, each such action up to Completion being conditional upon each of the preceding actions having been taken.

 

9.4

Failure to take Completion actions

 

9.4.1

If the Purchaser fails to fulfil any of its obligations pursuant to Clause 9.2, then the Seller may, in its absolute discretion, by notice to the Purchaser:

 

 

(a)

proceed to Completion to the extent reasonably practicable and permitted by Law;

 

 

(b)

defer Completion, in which event the provisions of this Clause 9.4 shall apply to Completion so deferred, provided that Completion cannot be deferred past the Long Stop Date; or

 

 

(c)

terminate this Agreement with immediate effect, without incurring any liability as a result of thereof and without any obligation on any Party to consummate the Transaction or to continue negotiations, in which case Clause 18 shall apply.

 

in each case without prejudice to any other rights or remedies available to the Seller.

 

9.4.2

If the Seller fails to fulfil any of its obligations pursuant to Clause 9.3, then the Purchaser may, in its absolute discretion, by notice to the Purchaser:

 

 

(a)

proceed to Completion to the extent reasonably practicable and permitted by Law, insofar as practicable having regard to the default(s) that has or have occurred and the Seller will be obliged to proceed to Completion to such extent;

 

 

(b)

defer Completion, in which event the provisions of this Clause 9.4 shall apply to Completion so deferred, provided that Completion cannot be deferred past the Long Stop Date; or

 

 

(c)

terminate this Agreement with immediate effect, without incurring any liability as a result of thereof and without any obligation on any Party to consummate the Transaction or to continue negotiations, in which case Clause 18 shall apply.

 

in each case without prejudice to any other rights or remedies available to the Purchaser.

 

10

POST-COMPLETION obligations

 

10.1

Books and records

 

10.1.1

The Purchaser acknowledges that the Seller may after Completion from time to time require access to certain information pertaining to the Group that is available to the Purchaser or the Group Companies. Accordingly:

 

 

(a)

the Purchaser and the Group Companies shall, for a period of 7 (seven) years from Completion or as much longer as required (i) by Law or (ii) in connection with any dispute under this Agreement, retain all books and records relating to any Group Company concerning the period up to Completion;

 

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(b)

the Seller and its respective Representatives shall, on reasonable notice and at Seller's costs, be granted reasonable access, at reasonable times, to such books, records, key personnel and premises relating to any Group Company; and

 

 

(c)

the Seller and its Representative shall, at Purchaser’s costs, be allowed to make copies of documents and files as they may reasonably require,

 

in each case only for accounting, compliance or tax purposes or in relation to an actual or alleged liability under this Agreement.

 

10.1.2

The Seller acknowledges that the Purchaser may after Completion from time to time require access to certain information pertaining to the Group Companies that is available to the Seller. Accordingly:

 

 

(a)

the Seller shall, for a period of 7 (seven) years from Completion or as much longer as required (i) by Law or (ii) in connection with any dispute under this Agreement, retain all books and records relating to any Group Company concerning the period up to Completion;

 

 

(b)

the Purchaser and its respective Representatives shall, on reasonable notice and at Purchaser's costs, be granted reasonable access, at reasonable times, to such books, records, key personnel and premises relating to any Group Company; and

 

 

(c)

the Purchaser and its Representative shall, at Seller’s costs, be allowed to make copies of documents and files as they may reasonably require,

 

in each case only for accounting, compliance or tax purposes or in relation to an actual or alleged liability under this Agreement.

 

10.2

Capital Maintenance

 

Seller hereby declares, agrees and commits itself vis-à-vis the Purchaser that, in order to provide opportunity for recovery to Purchaser in the event of a payment obligation of Seller towards the Purchaser pursuant to this Agreement, it shall not sell and transfer the real estate owned by the Seller as per the date of this Agreement to any person prior to the date falling 4 (four) years after the Completion Date.

 

10.3

Wrong pocket

 

10.3.1

If, following Completion, any member of the Seller’s Group owns any asset or right or is a party to any contract which should have been transferred to the Company in connection with the pre-Completion restructuring as set forth in the EY/HVG Step Plan (each, a Wrong Pocket Item) the Seller shall procure that the relevant member of the Seller’s Group shall notify the Purchaser of that fact as soon as reasonably possible.

 

10.3.2

Following notification pursuant to Clause 10.3.1, the Parties shall, in good faith, negotiate with a view to finding a solution reasonably acceptable to each of them, involving the relevant members of the Seller’s Group in such negotiations as applicable.

 

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10.3.3

Any solution pursuant to Clause 10.3.2 shall be effectuated at the Seller’s cost and expense, for nil consideration and, for the avoidance of doubt, without any amendment to the Purchase Price, and any Wrong Pocket Item shall be for the benefit and risk of the Purchaser with effect from the Completion Date, irrespective of the fact that its transfer takes place at a later date.

 

10.4

Customer loans

 

Veth Propulsion B.V. has granted the loans to customers as included in Schedule 10.4. Any repayment on these loans (including interest payments and profit sharing arrangements such as included in article 7 of the Samenweringsovereenkomst “Inruilgarantie Jules Verne” dated 21 April 2017), by these customers actually received in cash, in kind, by means of set-off by or otherwise paid to Veth Propulsion B.V. shall be forthwith paid in cash by Veth Propulsion B.V. to the Seller. The Purchaser shall ensure that Veth Propulsion B.V. shall satisfy this obligation. In addition to the information provision included in Clause 10.1.1, Purchaser or the relevant Group Company shall, upon a written request thereto by Seller, inform Seller promptly on the relevant requested information regarding the (repayment of) the customer loans.

 

10.5

Insurance

 

10.5.1

The Seller shall ensure that all insurance policies taken out at the level of the Seller’s Group (excluding the Group Companies) and providing cover for risks relating to any Group Company’s business remain in force after Completion on a month-by-month basis (but otherwise on the same terms), provided that the Seller shall not be obligated to ensure such continuation for a period longer than one month.

 

10.5.2

In respect of such continued insurance policies:

 

 

(a)

the Purchaser shall procure that the relevant Group Companies continue to pay to the relevant members of the Seller’s Group the usual related insurance premiums or the pro rata part thereof usually charged to them;

 

 

(b)

the Seller shall, to the extent the relevant Group Companies are not entitled to notify, make or pursue claims under such insurance policies, ensure that the relevant members of the Seller’s Group shall, at the costs of the relevant Group Companies, take such steps as the relevant Group Companies reasonably require in that respect; and

 

 

(c)

the Seller shall procure that the relevant members of the Seller’s Group as soon as reasonably possible pay to the relevant Group Companies any proceeds relating to claims made by or on behalf of any such Group Companies as well as any rebate of premium received as a consequence of such Group Companies ceasing to be insured under any such policies at any point in time after Completion.

 

10.5.3

The Purchaser shall ensure that all insurance policies taken out at the level of the Group Companies (excluding the Seller’s Group) providing cover for risks relating to the Seller’s Group business remain in force after Completion on a month-by-month basis (but otherwise on the same terms), provided that the Purchaser shall not be obligated to ensure such continuation for a period longer than one month.

 

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10.5.4

In respect of such continued insurance policies:

 

 

(a)

the Seller shall procure that the relevant members of the Seller’s Group continue to pay to the relevant Group Companies (excluding the Seller’s Group) the usual related insurance premiums or the pro rata part thereof usually charged to them;

 

 

(b)

the Purchaser shall, to the extent the relevant members of the Seller’s Group are not entitled to notify, make or pursue claims under such insurance policies, ensure that the relevant Group Companies (excluding the Seller’s Group) shall, at the costs of the relevant members of the Seller’s Group, take such steps as the relevant members of the Seller’s Group reasonably require in that respect; and

 

 

(c)

the Purchaser shall procure that the Group Companies as soon as reasonably possible pay to the relevant members of the Seller’s Group any proceeds relating to claims made by or on behalf of any such members of the Seller’s Group as well as any rebate of premium received as a consequence of such members of the Seller’s Group ceasing to be insured under any such policies at any point in time after Completion.

 

10.6

Termination of use of names

 

The Seller shall ensure that its statutory name will be changed within 20 (twenty) Business Days after Completion so that it does not contain the name “Veth Motoren” or any abbreviation thereof and shall not after Completion use in the course of its business in any other way whatsoever the words “Veth” in combination with 'Motoren', any trade mark, trade name, domain name, logo or design which, at or prior to Completion was used, owned or Licensed by any Group Company or any other mark, name, logo or design which is capable of being confused with such words or any combination thereof or (ii) bring any claim against any Group Company in connection with such words or any combination thereof, or any such trademarks, names, logos or designs. Purchaser acknowledges that the family name of the indirect ultimate beneficiaries of the Seller are named "Veth" and that continued use of that name in other instances or businesses may be continued.

 

10.7

Waiver liability regarding deed of transfer property

 

The Seller confirms that it has no rights or claims whatsoever vis-à-vis Exploitatiemaatschappij Veth B.V. and will not have any rights or claims vis-à-vis Exploitatiemaatschappij Veth B.V. and hereby irrevocably waives any and all rights and claims vis-à-vis Exploitatiemaatschappij Veth B.V. in connection with the statements in articles 7 (Bodemonderzoek/ondergrondse tanks/asbest) and Garanties as included on pages 5 and 6 of the deed of transfer between Exploitatiemaatschappij Veth B.V. and Seller dated 25 May 2018 numbered 2018034201 regarding the sale and purchase of real property.

 

10.8

Bonuses and retention payments

 

Seller is entitled to (i) offer bonuses to certain employees of the Group Companies which have made a special contribution to the Group Companies in the past or (ii) offer retention payments to certain employees of the Group Companies, payable if and when certain conditions are met following the Completion Date, payable from its proceeds of the Transaction, provided that any and all costs and Taxes (in)directly resulting from and/or relating to such bonuses or retention payments incurred or payable by the Group Companies will be for the account of the Seller.

 

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10.9

Protective covenants

 

10.9.1

The Seller hereby undertakes to the Purchaser that it shall not, and shall procure that neither any of the members of the Seller’s Group nor any of its Affiliates will, for a period of 2 (two) years after Completion, in any way (whether directly or indirectly and in whatever capacity), except with the Purchaser’s prior written consent:

 

 

(a)

have an interest in, be engaged in, or be financially concerned with, any business involving the development or production of, or the trading in, any products developed, produced or traded by, or the provision of services developed or provided by, the Group Companies as at the Completion Date or which competes therewith, in a country in which the Group Companies carry on their business at the Completion Date;

 

 

(b)

persuade, cause or attempt to persuade any distributor, commercial agent, employee or independent contractor of, or natural person engaged on the basis of a management or similar agreement by, any Group Company, to terminate its relationship with such Group Company, or employ or engage any such person within 1 (one) year after the effective termination of such person’s relationship with such Group Company;

 

 

(c)

persuade, cause or attempt to persuade any customer of any Group Company to terminate its relationship with such Group Company, including by seeking to obtain orders from, or offering goods or services to, any person who has been a customer of any Group Company within 12 (twelve) months immediately preceding the Completion Date;

 

 

(d)

persuade, cause or attempt to persuade any supplier of any Group Company to terminate its relationship with such Group Company, including by soliciting or enticing away from any Group Company any supplier who supplied goods or services to such Group Company within 12 (twelve) months immediately preceding the Completion Date; or

 

 

(e)

persuade, cause or attempt to persuade any other person doing business with any Group Company to terminate its relationship with such Group Company, or knowingly take any action that may result in the impairment of such relationship.

 

10.9.2

The Purchaser acknowledges and agrees that Clause 10.9 does not apply to any activities performed by Mr. H.A. Veth under the Employment Agreement or an employment agreement or other similar services agreement with a Group Company after Completion.

 

10.9.3

The consideration for the Seller’s obligations under Clause 10.9.1 is included in the Purchase Price.

 

10.9.4

In the event of a breach of Clause 10.9.1 which is not remedied within 5 (five) Business Days after the Purchaser has notified the Seller in writing of such breach, the Seller shall pay to the Purchaser an amount equal to EUR 25,000 (twenty-five thousand euro) per breach, to be increased by EUR 1,000 (one thousand euro) for each day such breach continues, as a penalty (and not in lieu of damages), without prejudice to any other rights or remedies available to the Purchaser, including a claim for damages.

 

11

WARRANTIES

 

11.1

Seller’s Warranties

 

11.1.1

The Seller hereby warrants to the Purchaser that each of the statements included in Schedule 11.1.1 (the Seller’s Warranties) is true and accurate on the date of this Agreement and each of the Fundamental Warranties and the statements included in paragraph 7 (Conduct of business) of Schedule 11.1.1 is true and accurate on the Completion Date.

 

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11.1.2

The Seller acknowledges that the Purchaser is entering into this Agreement on the basis of and in reliance on the Seller’s Warranties and that Clause 11.1.1 reflects a negotiated allocation of risks between the Parties.

 

11.1.3

The Seller's Warranties are the only representations and warranties given by the Seller or any other member of the Seller's Group (whether express or implied) in connection with the Transaction.

 

11.1.4

Any disclosure against or qualification of any of the Seller’s Warranties through the Disclosed Information, shall be deemed to be a disclosure against or qualification of all of the Seller’s Warranties.

 

11.2

Purchaser’s Warranties

 

The Purchaser hereby warrants to the Seller that each of the statements set out in Schedule 11.2 (the Purchaser’s Warranties) is true and accurate on the date of this Agreement and on the Completion Date.

 

12

BREACH

 

Except as expressly otherwise provided in this Agreement, in case of a Breach or a breach of any other provision of this Agreement by the Seller, the Seller shall be liable towards the Purchaser or the Group Companies, as the Purchaser may direct, for all Damage suffered or incurred by the Purchaser and the Group Companies (or to be suffered or incurred) and Seller shall by means of a sole remedy of the Purchaser compensate the Purchaser or the Group Companies, as the Purchaser may direct, for such Damages in accordance with this Agreement.

 

13

Claims

 

13.1

Notification of claims

 

If the Purchaser is notified or becomes aware of any fact, matter, circumstance or event which has given rise to a Breach, the Purchaser shall notify the Seller thereof within 30 (thirty) Business Days following the awareness of such Breach, providing, to the extent available and reasonably possible, the relevant facts, matters, circumstances or events and a reasonable estimate of the Damage suffered or incurred or reasonably expected to be suffered or incurred by it or any of the Group Companies, provided however, that, subject to Clause 14.3, the failure of the Purchaser to timely notify the Seller shall only limit the Seller’s liability in respect of such Breach (i) to the extent such failure has adversely affected or is reasonably likely to adversely affect the Seller’s position and (ii) with an amount equal to the amount of Damages incurred or increased after the 30 (thirty) Business Day period.

 

13.2

Claims capable of remedy

 

To the extent that a fact, matter, circumstance or event giving rise to a Breach is capable of remedy, the Seller shall not be liable in respect of such Breach if and to the extent it is remedied within 30 (thirty) Business Days after the date on which the Seller was notified pursuant to Clause 13.1, or in case the Seller has initiated the remediation of the Breach within 1 (one) week after the date on which the Seller has been notified in accordance with Clause 13.1 and there is a concrete view on the remedy of such Breach, the Seller shall not be liable in respect of such Breach if and to the extent it is remedied within 50 (fifty) Business Days after the date on which the Seller was notified pursuant to Clause 13.1.

 

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13.3

Third Party Claims

 

13.3.1

If the Purchaser is notified or becomes aware of any fact, matter, circumstance or event which has given rise to a claim against any member of the Purchaser’s Group (a Third Party Claim) and which, in turn, has given rise to a Breach, other than a Tax Claim in relation to which paragraph 5 of Schedule 16 shall apply instead:

 

 

(a)

the Purchaser shall and shall procure that the relevant Group Companies shall prior to any action to be conducted in connection with the Third Party Claim, notify the Seller thereof in accordance with Clause 13.1 and discuss with the Seller the most appropriate course of action to be taken and will negotiate in good faith to agree on the steps to be taken regarding the defense and control of the Third Party Claim;

 

 

(b)

in setting out their course of action for the defense and control of such Third Party Claim, the Purchaser and the Seller will use their reasonable endeavours to strike a fair balance between the interests of the Seller in keeping the Damages in connection with the Third Party Claim as low as possible and the interests of the Purchaser and the Group Companies to maintain good business relations with the third party concerned;

 

 

(c)

if the Parties do not agree on the course of action for defense of the Third Party Claim, the Seller shall be entitled to inform Purchaser that it wishes to pursue the conduct of the Third Party Claim within 10 (ten) Business Days following the conclusion of Parties on their disagreement on the course of action for the conduct of the Third Party Claim. If Seller does not wish to pursue the conduct of the Third Party Claim, Purchaser is entitled to do so. The Party that shall pursue the conduct of the Third Party Claim (the Practitioner), shall use its best efforts to strike a fair balance between the interests of the Seller in keeping the Damage in connection with the Third Party Claim as low as possible and the interests of the Purchaser and the Group Companies to maintain good business relations with the third party concerned;

 

 

(d)

in the conduct of the Third Party Claim, the Practitioner and the Group Companies shall always act in good faith and with reasonable prudence to minimize the Damages in connection with the Third Party Claim;

 

 

(e)

the Practitioner shall and shall procure that the Group Companies shall not (i) admit any liability or acknowledgement of standpoint or (ii) waive any defence, or (iii) reach any agreement, settlement or compromise, concerning such Third Party Claim, without Seller's prior written consent (which consent not to be unreasonably withheld); and

 

 

(f)

the Practitioner shall and shall procure that the Group Companies shall (i) keep the Parties promptly informed on the status and the progress of each aspect of the Third Party Claim throughout the process and development of the Third Party Claim, (ii) provide the Parties with copies or details (if not in writing) of communications and received information concerning the Third Party Claim which are reasonably required for the Parties, (iii) invite the other Party (or its own selected counsel or Representative) to participate in meetings and telephone conferences and the like and (iv) provide a draft of any prepared correspondence or documentation in connection with the conduct of the Third Party Claim to the other Party for input prior to sending or submitting the correspondence or documentation to the third party and incorporate the other Party’s input in those drafts.

 

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13.4

No claims against employees

 

With effect from Completion, the Seller hereby waives, and shall procure that each member of the Seller’s Group shall waive, by means of an irrevocable third-party stipulation, its right to bring any claim against any present director or employee of any Group Company in respect of any information, opinion or advice supplied or given (or omitted to be supplied or given) by him or her to the Purchaser or any of the Purchaser’s Affiliates or Representatives in connection with a claim for a Breach, in each case other than in the event of fraud (bedrog), intentional recklessness (bewuste roekeloosheid) or wilful misconduct (opzettelijk wanpresteren) of such person.

 

14

LIMITATION OF LIABILITY

 

14.1

Disclosures and knowledge

 

The Seller shall not be liable in respect of a Breach (excluding a Breach of the Fundamental Warranties) to the extent that any matter, fact, circumstance or event giving rise to such Breach was fairly disclosed as part of the Disclosed Information.

 

14.2

General exclusions

 

The Seller shall not be liable in respect of any Breach if and to the extent such breach has occurred as a result of, is attributable to, or is increased by:

 

 

(a)

any change after Completion in accounting policies, bases, practices, group structure or methods applied in preparing any accounts or valuing any assets or liabilities of any Group Company; or

 

 

(b)

any change or enactment of Law coming into effect after the Completion Date (whether or not taking effect retroactively).

 

14.3

Overall time limitation

 

The Seller shall not be liable in respect of a Breach or a Tax Claim unless it was notified thereof by the Purchaser:

 

 

(a)

before the 4th (fourth) anniversary of the Completion Date where any Breach of the Fundamental Warranties is concerned;

 

 

(b)

before the date that is 6 (six) months after the last day on which a Tax Authority can claim the underlying Tax from any Group Company where any Tax Claim is concerned; and

 

 

(c)

before the date that is 15 (fifteen) months after the Completion Date where any other Breach is concerned.

 

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14.4

Minimum claims

 

Except for Breaches pertaining to the Fundamental Warranties and the Tax Warranties, for which no threshold shall apply, the Seller shall not be liable in respect of any Breach, unless:

 

 

(a)

the amount of the claim concerned or of a series of related claims exceeds EUR 10,000 (ten thousand euro); and

 

 

(b)

the aggregate amount of all claims for Breach that are not excluded by Clause 14.4(a) exceeds EUR 50,000 (fifty thousand euro), in which case the Seller shall be liable for the full amount and not merely the excess.

 

14.5

Maximum liability

 

Except for Breaches pertaining to the Fundamental Warranties or claims under the Tax Indemnity, for which no maximum liability shall apply, the aggregate liability of the Seller under this Agreement shall not exceed 20% (twenty per cent) of the Purchase Price.

 

14.6

General reductions

 

When calculating the liability of the Seller in respect of a Breach, the following amounts shall be deducted:

 

 

(a)

any amount recovered (net of any Tax arising in respect thereof (or any Tax which would arise but for the availability of any Relief) by or benefit accruing to the Purchaser or any of the Group Companies from any third party, including an insurer, in respect of the matter that gave rise to such Breach;

 

 

(b)

the amount of any Tax Benefit arising to a Group Company that arises as a direct result of the underlying facts giving rise to the Breach;

 

 

(c)

the amount of any allowance, provision or reserve (other than in respect of deferred Tax) in respect of the fact, matter, circumstance or event giving rise to such Breach which has specifically been made in the Completion Accounts, as amended pursuant to Clause 4 finally agreed; and

 

 

(d)

the amount of the Damages that have increased as the result of any act or omission of the Purchaser or any of the Group Companies after Completion.

 

14.7

Obligation to mitigate

 

The Purchaser shall procure (as far as it is reasonably able) that the members of the Purchaser’s Group shall do all reasonable things to mitigate any Breach to the extent they are obligated to do so by Law.

 

14.8

No double recovery

 

The Purchaser shall not be entitled to recover from the Seller more than once in respect of the same loss or liability.

 

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14.9

No limitations of liability

 

None of the limitations included in this Clause 14 shall apply in case of fraud (bedrog), wilful misconduct (opzet) or intentional recklessness (bewuste roekeloosheid) has taken place on the part of the Seller or any of the following Representatives of the Seller: H.A. Veth, J. Veth, C.J. Veth, T. Vergeer and M. Huisman in respect of a claim under this Agreement that results directly from such fraud (bedrog), wilful misconduct (opzet) or intentional recklessness (bewuste roekeloosheid).

 

14.10

Termination of liability

 

The Purchaser’s right to pursue any claim in respect of a Breach shall lapse (vervallen) if the Purchaser fails to institute legal proceedings in respect of it within twelve (12) months after the date on which a notice in respect of such Breach in accordance with this Agreement has been served, unless the Parties are still attempting to resolve their difference in respect of such Breach amicably, which is to be confirmed by Seller on request thereto by Purchaser and which confirmation shall not unreasonably withheld by Seller. For the purpose of this Clause 14.10, proceedings shall be deemed to have instituted when an arbitration request has been served on the Seller as set out in Clause 19.12.

 

15

SPECIFIC INDEMNITIES

 

The Seller shall indemnify (schadeloosstellen) and hold harmless (vrijwaren) the Purchaser and/or, at the Purchaser’s sole discretion, any of the Group Companies, for and against all actions, claims, demands, liabilities, Tax or Tax Liability, losses, costs, fees (including fees of legal counsel and other external advisers) and expenses suffered or incurred by or imposed upon or instituted against any of the Group Companies directly or indirectly in connection with:

 

 

(a)

the transfer of the shares in the capital of the Subsidiaries to the Company;

 

 

(b)

the transfer of the real estate and other assets as listed in the EY/HVG Step Plan from Exploitatiemaatschappij Veth B.V. to an entity controlled by the Seller;

 

 

(c)

the part of the contribution by Veth Propulsion B.V. to Rederij Jules Verne B.V. in the amount of EUR 150,000 (one hundred and fifty thousand euro) for the purposes of funding the sale of the Partycruiser Jules Verne which is not repaid to Veth Propulsion B.V. by Rederij Jules Verne B.V. pursuant to article 7, second indent, Samenweringsovereenkomst “Inruilgarantie Jules Verne” dated 21 April 2017, from which amount EUR 60.000 will be subtracted in connection with the benefits obtained in the same amount by the Group Companies pursuant to the Samenweringsovereenkomst “Inruilgarantie Jules Verne” dated 21 April 2017; and

 

 

(d)

a claim from Seller to Exploitatiemaatschappij Veth B.V. pursuant to the statements in articles 7 (Bodemonderzoek/ondergrondse tanks/asbest) and Garanties as included on pages 5 and 6 of the deed of transfer between Exploitatiemaatschappij Veth B.V. and Seller dated 25 May 2018 numbered 2018034201 regarding the sale and purchase of real property.

 

No limitations of the Seller’s liability set out in this Agreement shall apply to this Clause 15, save for Clauses 14.2 and 14.6 of this Agreement which shall apply mutatis mutandis to this Clause 15.

 

16

TAX

 

Schedule 16 applies in respect of the Tax matters set out therein. If and to the extent there is a conflict between the provisions of Schedule 16 and any of the other provisions of this Agreement, Schedule 16 shall prevail.

 

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17

Confidentiality and announcements

 

17.1

Confidential Information

 

17.1.1

Subject to Clause 17.2, each Party shall, and shall procure that its Representatives and each other person to whom it discloses Confidential Information or to whom Confidential Information is disclosed at its request, shall keep confidential and not disclose or make available to anyone:

 

 

(a)

the existence or contents of the Transaction Documents, including this Agreement and any ancillary documents;

 

 

(b)

the subject matter or process of negotiations or any disputes between the Parties in connection with the Transaction;

 

 

(c)

in case of the Seller, Alnoseju Beheer B.V., Jaco B.V. or DS Unctoh B.V., any information of a secret, confidential or commercially sensitive nature or not generally known to the public with respect to Purchaser's Group received or held by the Seller, Alnoseju Beheer B.V., Jaco B.V. or DS Unctoh B.V. or any of their Representatives which relates to the Purchaser’s Group or, following Completion, any of the Group Companies or their respective businesses; or

 

 

(d)

in case of the Purchaser, any information of a secret, confidential or commercially sensitive nature received or held by the Purchaser or any of its Representatives which relates to the Seller’s Group or, prior to Completion, any of the Group Companies or their respective businesses;

 

(together, the Confidential Information);

 

unless and to the extent the Confidential Information is in or comes into the public domain other than as a result of a breach of any undertaking or duty of confidentiality by that Party, in which case such information shall no longer be deemed to form part of the Confidential Information.

 

17.1.2

Each of the Parties shall, or shall procure that each of its Representatives and other persons to whom it disclosed Confidential Information shall, on reasonable written demand from the other Party, immediately and at its own cost and expense, without keeping copies, (i) return to the other Party, all documents containing Confidential Information made available to it by (or on behalf of) the other Party or any of the other Party’s Representatives, (ii) destroy all reports, analyses, compilations, studies or other materials which contain or have been derived from or otherwise reflect any Confidential Information, (iii) expunge all Confidential Information from any of its computers or other devices containing Confidential Information, and (iv) upon request by the other Party, deliver to the other Party a certificate signed by it confirming that the obligations contained in this Clause 17.1.2 have been complied with, provided that each of the Parties may retain any Confidential Information as may be required by Law.

 

17.2

Permitted disclosures of Confidential Information

 

17.2.1

A Party may disclose Confidential Information only:

 

 

(a)

with the prior written approval of the other Party;

 

 

(b)

to the extent required by Law (including the regulations of any relevant stock exchange as applicable to either Party or its Affiliates) or pursuant to an order of a Governmental Entity;

 

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(c)

to any Tax Authority in connection with the Tax affairs of the Purchaser or any Group Company (or as otherwise required to be disclosed by any Tax Law);

 

 

(d)

to the extent required for the purposes of fulfilling its obligations under this Agreement, the Employment Agreement or any other Transaction Documents;

 

 

(e)

to the extent reasonably required to conduct the defence of a claim or to enforce any rights or to exercise any remedies under the Transaction Documents, including this Agreement or any related agreement;

 

 

(f)

to that Party’s Representatives or Affiliates, but only to the extent necessary and provided that before any such disclosure is made, the person to whom such disclosure will be made is informed of the terms of this Clause and instructed to adhere to those terms as if such person were bound by them;

 

 

(g)

to a person that has the intention to assume rights or obligations of such Party under and in accordance with this Agreement, but only to the extent necessary and provided that before any such disclosure is made, the person to whom such disclosure will be made is informed of the terms of this Clause and instructed to adhere to those terms as if such person were bound by them;

 

provided that if a Party is required by Law (including the regulations of any relevant stock exchange as applicable to either Party or its Affiliates) or pursuant to an order of a Governmental Entity to disclose any Confidential Information, it shall promptly and if reasonably possible and lawful before disclosure occurs notify the other Party. The Party required to disclose Confidential Information shall, if reasonably possible and lawful, co-operate with the other Party with regard to the timing and content of such disclosure, or any action which the other Party may reasonably elect to challenge such requirement.

 

17.2.2

The Parties acknowledge that the Purchaser (or any of its Affiliates) is required by Law to disclose the content of this Agreement as part of their 8K-filing as a result of which such disclosure is permitted under this Agreement. By signing this Agreement, the Parties agree that no further notifications in this respect are required to be made by the Purchaser to the Seller and the Purchaser will be entitled to disclose the content of this Agreement as part of their 8K-filing on the date of this Agreement.

 

17.3

Announcements

 

No announcement or press release regarding the Transaction or any element thereof shall be made or issued other than with the prior written approval of each of the Parties (it being understood that the Purchaser shall, post-Signing, be entitled to make such an announcement or press release in substantially the form attached hereto as Schedule 17.3). This shall not affect any announcement required by Law (including the regulations of any relevant stock exchange as applicable to either Party or its Affiliates), provided that the Party with an obligation to issue an announcement shall as soon as reasonably possible and if reasonably possible and lawful before disclosure occurs notify the other Party. The Party with an obligation to make an announcement shall, if reasonably possible and lawful, co-operate with the other Party with regard to the timing and content of such announcement, or any action which the other Party may reasonably elect, to challenge such requirement.

 

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18

TERMINATION

 

18.1

Events of termination

 

This Agreement may be terminated:

 

 

(a)

at any time by mutual agreement between the Parties with immediate effect; or

 

 

(b)

by the Purchaser in accordance with Clause 7.4 (Non-satisfaction of any Condition Precedent).

 

18.2

Consequences of termination

 

18.2.1

Termination of this Agreement shall not affect the accrued rights and obligations of the Parties at that time, nor the continued validity of the provisions of Clauses 1 (Definitions and interpretation) and 17 (Confidentiality and announcements), this Clause 18 (Termination), and Clauses 19.2 (Costs and expenses), 19.3 (Payments), 19.4 (Assignment), 19.5 (Entire agreement), 19.6 (Remedies), 19.7 (Waiver and variation), 19.8 (No third party beneficiaries), 19.9 (Severability), 19.10 (Notices), 19.11 (Notarial independence), 19.12 (Governing law and jurisdiction), and 19.13 (Counterparts).

 

18.2.2

To the extent any of the obligations under this Agreement were performed prior to termination of this Agreement, the Parties shall reverse any performance already received.

 

19

MISCELLANEOUS

 

19.1

Further assurances

 

Each Party shall, at its own cost and expense, execute such documents and do such things, or procure (as far as it is reasonably able) that another person executes such documents and does such things, as the other Party may from time to time reasonably require in order to give full effect to, and give each Party the full benefit of, this Agreement.

 

19.2

Costs and expenses

 

19.2.1

Except as otherwise provided in this Agreement or any other Transaction Documents, each Party shall pay its own costs and expenses relating to the negotiation, preparation and execution by it of this Agreement and any other Transaction Documents and the fulfilment of its obligations hereunder.

 

19.2.2

The costs and expenses of the Deed of Transfer and other notarial documents required to give effect to the transfer of the Shares shall be borne by the Purchaser.

 

19.3

Payments

 

19.3.1

Except as otherwise provided in this Agreement, all payments to be made hereunder shall be made in euro by way of electronic transfer in immediately available funds on or before the due date for payment and for the same day value:

 

 

(a)

if to the Seller, to the Seller’s Account;

 

 

(b)

if to the Purchaser, to the Purchaser’s Account

 

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(c)

if to the Escrow Agent, to the Escrow Account; and

 

 

(d)

if to the Notary, to the Notary Account.

 

19.3.2

Except as otherwise provided in this Agreement, if a Party defaults in the payment, when due, of any sum payable under this Agreement, it shall pay statutory interest on the basis of Section 6:119 DCC at the then applicable rate on that sum from the date on which payment is due up to and including the date of actual payment, which interest shall accrue from day to day and be compounded monthly.

 

19.3.3

Where any payment is made under this Agreement (other than the payment of the Purchase Price itself or of the Intercompany Debt, that payment shall, to the extent possible, be treated as an adjustment of the Purchase Price equal to any such amount and be treated accordingly by the Parties in all relevant respects.

 

19.3.4

Subject to Clause 19.2.2, all payments made by a Party under this Agreement shall be made free from any counterclaim or set-off and without deduction or withholding of any Tax other than Taxes to be deducted or withheld by Law. If a Party is required by Law to make a deduction or withholding in respect of any sum payable under this Agreement, such sum shall be increased to the extent necessary to ensure that, after the making of any such deduction or withholding, the other Party receives the full amount which would have been received but for such deduction or withholding.

 

19.3.5

If any payment to a member of the Purchaser’s Group under this Agreement is or becomes subject to Tax in the hands of the recipient, the amount paid shall be increased to ensure that the net amount received by the recipient after such Tax is equal to the amount which would have been received by the recipient had the payment not been subject to Tax.

 

19.4

Assignment

 

19.4.1

Subject to Clauses 19.4.2, 19.4.3 and 19.4.4 the rights and obligations of a Party under this Agreement cannot be assigned, otherwise transferred (whether directly or indirectly) or Encumbered, without the prior written consent of the other Party.

 

19.4.2

The Purchaser may assign its rights and transfer its obligations under this Agreement to:

 

 

(a)

any of its Affiliates, provided that the Purchaser shall remain liable on a joint and several (hoofdelijke) basis for the due and proper fulfilment by such Affiliate of all obligations under this Agreement; or

 

 

(b)

a purchaser of the Business (or any part thereof) or any of the Assets;

 

and the Seller hereby irrevocable grants its consent, in advance, to the Purchaser for purposes of any such assignment (or transfer). Any assignee (or transferee) may itself make an assignment (or transfer) as if it were the Purchaser under this Clause 19.4.2.

 

19.4.3

Any receivables (vorderingen) of the Purchaser under this Agreement, and for the avoidance of doubt only such receivables, can and may be assigned or pledged in connection with the financing of the Transaction. The Seller shall countersign any notice of pledge in this respect. The Seller hereby grants its prior written approval to the Purchaser to disclose this Agreement to any of the Purchaser’s financiers, provided that before any such disclosure is made, such financiers are informed of the terms of Clause 17.1 and instructed to adhere to those terms as if they were bound by them, it being understood that such financiers will be entitled to disclose the same to any office, registrar or Governmental Entity (including the Dutch tax authorities) in any jurisdiction for purposes of perfection or execution of such assignment or pledge.

 

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19.4.4

The Seller may assign its right in respect of the Earn-Out (if any) under this Agreement once the Earn-Out has become payable to Alnoseju Beheer B.V., Jaco B.V. and DS Unctoh B.V. in the proportions of their shareholdings held in the Seller on the date of this Agreement provided that the Seller shall notify the Purchaser thereof in writing and the Purchaser hereby irrevocably grants its consent, in advance, to the Seller for purposes of such assignment, provided that:

 

 

(a)

the Seller shall remain (i) up to the moment on which the securities in the capital of Twin Disc, Incorporated have been acquired by Alnoseju Beheer B.V., Jaco B.V. and DS Unctoh B.V. liable on a joint and several basis for the due and proper fulfilment by each of Alnoseju Beheer B.V., Jaco B.V. and DS Unctoh B.V. of all its obligations under this Agreement and (ii) the sole person of contact for the Purchaser under this Agreement; and

 

 

(b)

no change of Control in Alnoseju Beheer B.V., Jaco B.V. and DS Unctoh B.V, respectively, has occurred after the date of this Agreement.

 

19.4.5

Any purported assignment, transfer or Encumbrance in breach of this Clause 19.4 shall be null and void.

 

19.5

Entire agreement

 

This Agreement (together with the other Transaction Documents) represents the entire understanding, and constitutes the whole agreement, in relation to the Transaction and replaces any prior agreement including undertakings, arrangements, offer letters, understandings or statements of any nature (whether or not in writing) between the Parties with respect thereto, including, for the avoidance of doubt, the letter of intent dated 2 March 2018, which the Parties hereby terminate.

 

19.6

Remedies

 

Except as otherwise provided in this Agreement, each Party hereby excludes or irrevocably waives its rights arising out of Section 7:17 DCC, its right to invoke Section 6:228 or 6:230 DCC (as a consequence of which an error shall remain for the risk of the Party in error) and, with effect from Completion, its right to rescind (ontbinden) or nullify (vernietigen) this Agreement to the extent such would result in an obligation on the Parties to reverse the transfer of the Shares.

 

19.7

Waiver and variation

 

19.7.1

Except as otherwise provided in this Agreement, no omission or delay on the part of any Party in exercising any right or remedy under this Agreement or by Law shall be construed as a waiver thereof or of any other right or remedy, nor shall prejudice or impair any further exercise of such or any other right or remedy. Any single or partial exercise of any right or remedy under this Agreement or by Law shall not preclude the further or any future exercise thereof or of any other right or remedy.

 

19.7.2

A waiver of any right or remedy under this Agreement shall only be effective if given in writing and executed by or on behalf of the Party giving the waiver, and shall not be deemed a waiver of any right or remedy in respect of any subsequent breach or default.

 

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19.7.3

An amendment of or supplement to this Agreement shall only be valid if it is in writing and duly signed by or on behalf of the Parties.

 

19.8

No third party beneficiaries

 

This Agreement is concluded for the benefit of the Parties and their respective successors and permitted assigns, and nothing in this Agreement is intended to or implicitly confers upon any other person any right, benefit or remedy of any nature whatsoever, except to the extent explicitly stated in this Agreement. In the event that any third party stipulation contained in this Agreement is accepted by any third party, such third party will not become a party to this Agreement.

 

19.9

Severability

 

If any provision of this Agreement, or the application thereof to any Party or circumstance, is held to be illegal, invalid or unenforceable in whole or in part under any Law, then such provision shall to that extent be deemed not to form part of this Agreement and, to the extent reasonably possible, replaced by the Parties with a legal, valid and enforceable provision that, seen in the context of this Agreement as a whole, achieves as closely as possible the intention of the Parties under this Agreement, without affecting the legality, validity and enforceability of the remainder of this Agreement.

 

19.10

Notices

 

19.10.1

Any communication to be made under or in connection with this Agreement, including any notice to be given by a Party to the other Party, shall be in writing and in English, and unless otherwise provided in this Agreement, may be by letter or email.

 

19.10.2

The (email) address and the company, department or officer, if any, for whose attention the communication is to be made of each Party for purposes of any communication under or in connection with this Agreement is that identified in this Clause 19.10.2 or any substitute (email) address or company, department or officer as a Party may notify the other Party by not less than 5 (five) Business Days' notice.

 

The Seller

 

Alnoseju Beheer B.V.

 

Address:     Westeind 194

3351 AS Papendrecht

The Netherlands

Attention:   Mr. Erik Veth

Email:         e.veth@veth.net

 

Jaco B.V.

 

Address:     Elzenmeet 9

4325 GC Renesse

The Netherlands

Attention:   Mr. Jan Veth

Email:         e.veth@veth.net

 

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DS Unctoh B.V.

 

Address:     Iroko 291

3315 PV Dordrecht

The Netherlands

Attention:   Mr. Cornelis Veth     

Email:         e.veth@veth.net

 

For the Seller, with a copy by email to:

 

HVG Law LLP

 

Address:      Boompjes 258

3011 XZ Rotterdam

The Netherlands

Attention:   Mr. Sijmen de Lange

Email:        sijmen.de.lange@hvglaw.nl

The Purchaser

 

Twin Disc NL Holding B.V.

 

Address:     1328 Racine Street

Racine, Wisconsin 53403 

USA

Attention:   Mr. Tim Batten

Email:         batten.tim@twindisc.com

 

With a copy by email to:

 

Loyens & Loeff N.V.

 

Address:      Fred. Roeskestraat 100

1076 ED Amsterdam

The Netherlands

Attention:   Mr. Herman Kaemingk

Email:        herman.kaemingk@loyensloeff.com

 

 

19.10.3

Any notice shall be delivered by hand or courier, or sent by registered post, and shall be deemed to have been received:

 

 

(a)

in the case of delivery by hand or courier service, at the time of delivery;

 

 

(b)

in the case of registered post, on the 3rd (third) Business Day following the date of posting; and

 

 

(c)

in the case of email, on the date and time transmitted, as evidenced by confirmation of delivery by a delivery receipt.

 

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19.10.4

Any notice not received on a Business Day or received after 17:00 on any Business Day in the place of receipt shall be deemed to be received at the start of the following Business Day in the place of receipt.

 

19.11

Notarial independence

 

The Parties acknowledge that the Notary is associated with Loyens & Loeff N.V., the firm that advises the Purchaser in the Transaction. With reference to the Code of Conduct (Verordening beroeps- en gedragsregels) established by the Royal Notarial Professional Organisation (Koninklijke Notariële Beroepsorganisatie), the Parties hereby explicitly agree that:

 

 

(a)

the Notary shall execute any notarial deeds and other relevant Transaction Documents related to this Agreement; and

 

 

(b)

the Purchaser is and may in future be assisted and represented by Loyens & Loeff N.V. in relation to this Agreement and any documents that may be concluded, or disputes that may arise, in connection therewith.

 

19.12

Governing law and jurisdiction

 

19.12.1

This Agreement (for the avoidance of doubt including the provisions of Clause 19.12.2) and any non-contractual obligations arising out of or in connection with it are governed by and shall be construed in accordance with the laws of the Netherlands.

 

19.12.2

Except as expressly otherwise provided in this Agreement (e.g. in case the independent expert procedure pursuant to Clause 4.2.3 applies), any disputes arising out of or in connection with this Agreement, including regarding the existence or validity of this Agreement, and any non-contractual obligations arising out of or in connection with this Agreement, shall be referred to and finally resolved by arbitration under the rules of the Netherlands Arbitration Institute (Nederlands Arbitrage Instituut) (NAI), taking into account the following:

 

 

(a)

the number of arbitrators shall be 3 (three) of which at least one shall be a lawyer with a Dutch law degree or admitted to practice Dutch law, and shall be appointed in accordance with Section 13 of the NAI rules;

 

 

(b)

the seat of the arbitration shall be Amsterdam, the Netherlands;

 

 

(c)

the language of the arbitration shall be English;

 

 

(d)

the arbitrators shall decide according to the rules of law;

 

 

(e)

consolidation of the arbitral proceedings with other arbitral proceedings pending in the Netherlands, as provided for in Section 1046 of the Dutch Code of Civil Procedure (Wetboek van Burgerlijke Rechtsvordering) and in Section 39 of the NAI rules, is excluded; and

 

 

(f)

the arbitral award shall not be disclosed other than to the Parties to the arbitration proceedings, not even on an anonymous basis, and the Parties agree to take all action reasonably required to prevent any such disclosure.

 

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19.13

Counterparts

 

This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument.

 

THIS AGREEMENT has been entered into on the date stated at the beginning of this Agreement.

 

Signature pages, Schedules and Annexes to follow

 

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SIGNATURE PAGES

 

Seller

 

 
 
 
 

___________________________

Name:

Mr. H.A. Veth

Title:

Director

 

 

 

For the acknowledgement of and agreement with the clauses explicitly applicable to them, including but not limited to Clause 5.2.5 and Clause 10.9:

 

Signed for and on behalf of Alnoseju Beheer B.V. by,

 
   
   
   

___________________________

 

Name:

H.A. Veth

     

Title:

director

     
         

Signed for and on behalf Jaco B.V. by,

 
   
   
   

___________________________

 

Name:

J. Veth

     

Title:

director

     
       

Signed for and on behalf DS Unctoh B.V. by,

     
       
       

___________________________

     

Name:

C.J. Veth

     

Title:

director

     

 

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Purchaser

 

Signed for and on behalf of Twin Disc NL Holding B.V. by,

 

   
   
   

___________________________

 

Name:

J.H. Batten

   

Title:

Proxy holder

   

 

For acknowledgement of and agreement with Clause 10.9 by,

 

   
   
   

___________________________

___________________________

Name:

H.A. Veth

Name:

J. Veth

       

 

 

 

   

___________________________

   

Name:

C.J. Veth

   

 

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Schedule (C)

 

Particulars of the Company and the Subsidiaries

 

The Company

 

Company name 

Veth Propulsion Holding B.V.

   

Form of company

Dutch private limited liability company

   

Registered number 

71870369

   

Registered office

Nanegat 17, 3356 AA, Papendrecht

   

Date of incorporation

12 June 2018

   

Managing directors

H.A. Veth

   

Registered proxy holders

N/A

   

Authority to represent the company

The general managers individually

   

Share capital

Issued

EUR 18,000

     
 

Paid up

EUR 18,000

     

Shares

Nominal value

EUR 100

     
 

Classes

Ordinary shares

   

Shareholders and shares held

Het komt vast goed B.V. (100%)

   

Financial year

Calendar year

 

The Subsidiaries

 

Company name 

Exploitatiemaatschappij Veth B.V.

   

Form of company

Dutch private limited liability company

   

Registered number 

23071520

   

Registered office

Papendrecht

   

Date of incorporation

25 March 1993

   

Managing directors

●   Mr. Jan Veth; and

 

●   Mr. Erik Veth.

   

Registered proxy holders

Marco Gerrit Huisman (up to EUR 75,000)

   

Authority to represent the company

Each managing director individually

     

Share capital

Issued

EUR 18,152

     
 

Paid up

EUR 18,152

     

Shares

Nominal value

EUR 453.80

     
 

Classes

Ordinary shares

   

Shareholders and shares held

Het komt vast goed B.V.: 40 shares

   

Financial year

Calendar year

 

share purchase agreement 

44

 

 

Company name 

Veth Diesel B.V.

   

Form of company

Dutch private limited liability company

   

Registered number 

23072995

   

Registered office

Papendrecht

   

Date of incorporation

19 September 1993

   

Managing directors

●   Mr. Jan Veth; and

 

●   Mr. Erik Veth.

   

Registered proxy holders

N/A

   

Authority to represent the company

Each managing director individually

   

Share capital

Issued

EUR 18,152

     
 

Paid up

EUR 18,152

     

Shares

Nominal value

EUR 453.80

     
 

Classes

Ordinary shares

   

Shareholders and shares held

Het komt vast goed B.V.: 40 shares

   

Financial year

Calendar year

 

 

Company name 

Veth Electra B.V.

   

Form of company

Dutch private limited liability company

   

Registered number 

24414585

   

Registered office

Papendrecht

   

Date of incorporation

3 May 2007

   

Managing directors

Mr. Erik Veth

   

Registered proxy holders

N/A

   

Authority to represent the company

Each managing director individually

   

Share capital

Issued

EUR 32,400

     
 

Paid up

EUR 32,400

     

Shares

Nominal value

EUR 180

     
 

Classes

Ordinary shares

     

Shareholders and shares held

Het komt vast goed B.V.: 180 shares

   

Financial year

Calendar year

 

share purchase agreement

45

 

 

Company name 

Veth Propulsion B.V.

   

Form of company

Dutch private limited liability company

   

Registered number 

23071521

   

Registered office

Papendrecht

   

Date of incorporation

23 March 1993

   

Managing directors

●   Mr. Jan Veth; and

 

●   Mr. Erik Veth.

   

Registered proxy holders

●   Mr. Marco Huisman (up to EUR 500,000); and

 

●   Mr. Willem Clausing (signing export documents).

   

Authority to represent the company

Each managing director individually

   

Share capital

Issued

EUR 18,152

     
 

Paid up

EUR 18,152

     

Shares

Nominal value

EUR 453.80

     
 

Classes

Ordinary shares

     

Shareholders and shares held

Het komt vast goed B.V.: 40 shares

   

Financial year

Calendar year

 

 

Company name 

Veth Thrusters B.V.

   

Form of company

Dutch private limited liability company

   

Registered number 

24313395

   

Registered office

Papendrecht

   

Date of incorporation

30 November 2000

   

Managing directors

●   Mr. Jan Veth; and

 

●   Mr. Erik Veth.

   

Registered proxy holders

N/A

   

Authority to represent the company

Each managing director individually

   

Share capital

Issued

EUR 18,000

     
 

Paid up

EUR 18,000

     

Shares

Nominal value

EUR 100

     
 

Classes

Ordinary shares

     

Shareholders and shares held

Het komt vast goed B.V.: 180 shares

   

Financial year

Calendar year

 

share purchase agreement

46

 

 

Schedule 1.1(a)

 

Data Room index

 

[To be attached separately]

 

[Omitted pursuant to Item 601(b)(2) of Regulation S-K]

 

share purchase agreement

47

 

 

Schedule 1.1(b)

 

EY/HVG Step Plan

 

[To be attached separately]

 

[Omitted pursuant to Item 601(b)(2) of Regulation S-K]

 

share purchase agreement

48

 

 

Schedule 1.1(c)

 

Agreed Form Lease Agreement

 

[To be attached separately]

 

[Omitted pursuant to Item 601(b)(2) of Regulation S-K]

 

share purchase agreement

49

 

 

Schedule 3.2(a)

 

Escrow Agreement

 

[To be attached separately]

 

share purchase agreement

50

 

 

Schedule 4.1.1 (Part A)

 

Definitions of Cash, Debt and Working Capital

 

Cash:

 

Currency: EUR in millions

 

 

Illustrative
Dec-17

Completion

accounts

Account description (English translation)

 

Account description (GL)

 

 

Cash on hand

 

Kas

0.0

[ ]

Cash on hand FX

 

Kas Vreemde Valuta's

0.0

[ ]

ING bank (inz. Scylla Tours)

 

ING bank (inz. Scylla Tours)

- 

[ ]

ING bank (ST) 671.892.541 dep.

 

ING bank (ST) 671.892.541 dep.

- 

[ ]

ING bank (ST) 671.918.133 dep.

 

ING bank (ST) 671.918.133 dep.

- 

[ ]

Rabobank 1023.57.42.76

 

Rabobank 1023.57.42.76

- 

[ ]

Rabobank 3930 12.123 

 

Rabobank 3930 12.123 

0.0

[ ]

Suspense accounts Rabobank/ING

 

Tussenrekening rabobank/ING

- 

[ ]

Pledged bankguarantees

 

Verpanding bankgaranties

- 

[ ]

Rabobank savings accounts

 

Rabobank spaarrekening

- 

[ ]

Rabobank savings account 1334829756

 

Rabobank spaarr 1334829756

- 

[ ]

Rabobank deposito 123552540

 

Rabo depositorek 123552540

- 

[ ]

Deposits

 

Deposito's

- 

[ ]

Rabobank internet savingsaccounts

 

Rabobank internetsparen

- 

[ ]

ING bankguarantees

 

ING bankgaranties

- 

[ ]

USD Rabobank

 

$ rekening Rabobank

- 

[ ]

USD Rabobank FX diff

 

$ rekening Rabobank koersv.

- 

[ ]

USD ING bank

 

$ rekening ING

0.1

[ ]

RMB ING bank

 

Rmb rekening ING

0.1

[ ]

Postgiro bank

 

Postgiro

- 

[ ]

ING bank

 

ING bank 66.182.60

0.1

[ ]

ING savings account 6718

 

ING spaar zakelijk 6718

- 

[ ]

ING savings account 1666

 

ING spaar bonus 1666

- 

 [ ]

Investments

 

Beleggingen

- 

[ ]

Current accounts 

 

Current accounts due to/from Seller 

 [0.6 ] 

[ ]

Cash <c>

 

 

0.9 

[ ]

 

 

Debt:

 

Currency: EUR in millions

 

 

Illustrative
Dec-17

Completion

accounts

Account description (English translation)

 

Account description (GL)

 

 

Current accounts

 

Vorderingen VMH agv proforma opstelling

-

[ ]

Corporate income tax accured and unpaid

 

Vennootschapsbelasting

- 

[ ]

Dividend payables

 

 

 -

 [ ]

Transaction cost payable

 

 

 -

 [ ]

Any bonus payable in relation to the transaction

 

 

 -

 [ ]

Any interest or breakage fees 

 

 

 -

 [ ]

Financial debt <d>

 

 

-

[ ]

 

share purchase agreement

51

 

 

Working Capital:

 

Currency: EUR in millions

 

 

Illustrative
Dec-17

Completion

accounts

Account description (English translation)

 

Account description (GL)

 

 

Invoices to be received

 

Te ontvangen goederenfacturen

0.2

[ ]

Work in progress (inventory)

 

Onderhanden werk (voorraad)

0.5

[ ]

Unallocated internal projects

 

Te verdelen interne projecten

- 

[ ]

Veth-jet parts

 

Voorraad veth-jet onderdelen

1.5

[ ]

Compact-Jet parts

 

Voorraad compact-jet delen

0.5

[ ]

Z-drive parts

 

Voorraad z-drive onderdelen

5.2

[ ]

Additional scope spare parts

 

Voorraad scope extra artikelen

0.4

[ ]

Hydraulic parts

 

Voorraad hydrauliek onderdelen

0.3

[ ]

Mechanical seals

 

Voorraad lagers en seals

0.7

[ ]

Ballast pump parts

 

Voorraad ballastpomp onderd.

0.1

[ ]

Scania parts

 

Voorraad scania onderdelen

0.8

[ ]

Sisu-diesel parts

 

Voorraad sisu-diesel onderd.

0.3

[ ]

Capitol parts

 

Voorraad capitol onderdelen

0.0

[ ]

Electronic parts

 

Voorraad electra onderdelen

1.4

[ ]

Electronic nv parts

 

Voorraad electra nv

0.1

[ ]

Fitwerk' parts

 

Voorraad fitwerk

0.1

[ ]

Bow rudder parts

 

Voorraad onderdelen koproeren

0.0

[ ]

Spude pole parts

 

Voorraad spudpaal onderdelen

0.1

[ ]

Spare parts

 

Voorraad onderdelen

0.6

[ ]

Spare parts nv

 

Voorraad onderdelen nv

0.1

[ ]

Packaging material

 

Voorraad verpakkingsmateriaal

0.0

[ ]

Returnable parts

 

Statiegeld

0.0

[ ]

Obsolete stock provision

 

Voorz. incourante voorraad

(1.7)

[ ]

Projects to be capitalised

 

Te activeren tbv projecten

- 

[ ]

Purchases to be invoiced (projects)

 

Ntf inkopen voor projecten

(0.0)

[ ]

Purchases project diesel

 

Inkoop project diesel

- 

[ ]

Purchases electra

 

Inkoop project electra

- 

[ ]

Purchases veth-jet/vp/cj

 

Inkoop project veth-jet/vp/cj

 - 

[ ]

Purchases z-drive/tunnel

 

Inkoop project z-drive/tunnel

 - 

[ ]

Inventory adjustments

   

-

[ ]

Stock count differences

   

-

[ ]

Inventory

 

 

11.0

[ ]

 

 

 

   

Debtors (Netherlands)

 

Debiteuren binnenland

3.7

[ ]

Debtors (EU)

 

Debiteuren eu

0.9

[ ]

Debtors (export)

 

Debiteuren export

0.9

[ ]

Debtors to be invoiced

 

Nog te factureren goederen

0.0

[ ]

Provision for doubtful debtors

 

Reserv. dubieuze debiteuren

(0.1)

[ ]

Trade debtors

 

 

5.4

[ ]

 

share purchase agreement

52

 

 

Creditors (Netherlands)

 

Crediteuren binnenland

(1.2)

[ ]

Creditors (EU)

 

Crediteuren eu

(0.2)

[ ]

Creditors (export)

 

Crediteuren export

(0.1)

[ ]

Creditors in transit

 

Crediteurenbet. onderweg

- 

[ ]

Trade creditors

 

 

(1.5)

[ ]

 

 

 

   

VAT payable 19%

 

Af te dragen btw 19%

- 

[ ]

VAT receivable 19%

 

Te vorderen btw 19%

- 

[ ]

VAT payable 

 

Af te dragen btw

- 

[ ]

VAT payable low rate

 

Af te dragen btw laag

 - 

[ ]

VAT receivable

 

Te vorderen btw

- 

[ ]

VAT receivable low rate

 

Te vorderen btw laag

- 

[ ]

Received/paid VAT

 

Terug ontvangen/betaalde btw

0.6

[ ]

VAT EU

 

Verleggingsrekening btw eu

- 

[ ]

VAT EU 19%

 

Verleggingsrekening btw eu 19%

- 

[ ]

VAT payable 21%

 

Af te dragen btw 21%

- 

[ ]

VAT receivable 21%

 

Te vorderen btw 21%

0.0

[ ]

VAT doubtful accounts

 

Btw dubieuze debiteuren

0.0

[ ]

VAT personal spendings

 

Te verdelen btw prive

- 

[ ]

VAT balance

 

 

0.6

[ ]

 

 

 

   

Holliday money 

 

Reservering vakantietoeslag

(0.5)

[ ]

Social securities employee and employer

 

Sociale lasten wn+wg (ingeh)

 - 

[ ]

Pension premium paid

 

Betaalde premies mn

1.2

[ ]

Pension premium paid (withheld)

 

Ingehouden premies mn

(1.2)

[ ]

Wage taxes payable

 

Loonheffing tb

(0.1)

[ ]

Health insurance premium payable

 

Premie ziektekostenverzekering

0.1

[ ]

Suspense account wages payable

 

Tussenrek. te verr. met lonen

 0.0

[ ]

Suspense account pv

 

Tussenrekening pv

- 

[ ]

Wages payable

 

Uit te betalen lonen

- 

[ ]

Other wage amounts payable

 

Te verdelen tantieme

(0.1)

[ ]

Social securities balance

 

 

(0.6)

[ ]

 

 

 

   

Prepaid fiinscrew

 

Vooruitbetaald fiinscrew

0.0

[ ]

Prepaid duritcast

 

Vooruitbetaald duritcast

0.0

[ ]

Amounts in transit

 

Kruisposten

0.0

[ ]

General insurance receivable/payable

 

Te verdelen alg verzekering

0.1

[ ]

Car insurance receivable/payable

 

Te verdelen autoverzekering

0.0

[ ]

Ohc

 

Te verdelen ohc

0.0

[ ]

Other prepaid/receivables

 

Te ontv./vooruitbet. bedragen

0.0

[ ]

Other receivables

 

 

0.3

[ ]

 

share purchase agreement

53

 

 

Work in progress provision

 

Voorziening ohw

(0.2)

[ ]

Prepayments from customers

 

Vooruitbetaald van klanten

(43.3)

[ ]

Released revenue in P&L (WIP)

 

Ohw omzet in resultaat

34.6

[ ]

Work in progress 

 

Onderhanden werk algemeen

32.2

[ ]

Work in progress (corrections)

 

Onderhanden werk (correcties)

(26.5)

[ ]

Work in progress accrued costs

 

Ohw te betalen kosten

(2.0)

[ ]

Work in progress to be invoiced

 

Ohw nog te factureren

1.7

[ ]

Work in progress overhead coverage

 

Ohw dekking overhead

0.5

[ ]

Suspense account damage

 

tusserrekening schade

- 

[ ]

Management fee payable

 

Te verdelen managemntfee

(0.1)

[ ]

Accountant fees payable

 

Te verdelen accountant

(0.0)

[ ]

Rent cost payable

 

Te verdelen huur gebouwen

- 

[ ]

Other amounts payable

 

Te betalen bedragen

(0.0)

[ ]

Invoices recevied in advance

 

Vooruitgefactureerde bedragen

(0.0)

[ ]

Commission payable

 

Te verrekenen commissie amat

(0.0)

[ ]

Management fee J.C. Veth adjustment (to be excluded from WC)

   

-

[ ]

Warranty provision

 

Garantievoorziening

(0.6)

[ ]

Jubilee provision

 

Voorziening jubileumuitkering

(0.2)

[ ]

Other payables

 

 

(4.0)

[ ]

Completion Working Capital 

 

 

  11.2 

[ ]

 

 

Calculation example of the Initial Purchase Price

 

Currency: EUR in millions

 

 

Illustrative
Dec-17

Amount as per clause 3.1.1 (a)

 

 

49.7

Cash

 

 

0.9

Debt

 

 

- 

NWC surplus / (deficit)

 

 

1.8

Initial Purchase Price

 

 

52.4

Settlement of CA

 

 

(0.6)

Total proceeds Seller

 

 

51.8

 

 

 

 

Initial Purchase Price

 

 

52.4

Settlement of CA by the Seller

 

 

(0.6)

Net payment Buyer

 

 

51.8

 

share purchase agreement

54

 

 

Schedule 4.1.1 (Part B)

 

Other Principles

 

1.

ACCOUNTING AND ADJUSTMENT POLICIES

 

1.1

No account shall be taken of events taking place after the Effective Time, and only with regard to information available to the Parties up to the date of delivery of the draft Completion Accounts by the Purchaser to the Seller and only where such information provides additional evidence of conditions existing at the Completion Date and affecting amounts in the draft Completion Accounts.

 

1.2

The Completion Accounts will exclude any assets or liabilities in relation to deferred tax.

 

1.3 The Completion Accounts shall be prepared on the basis that the Effective Time represents a financial period end for the Company and each Subsidiary and that a full financial close of the accounting records shall be performed including detailed analysis of prepayments and accruals, reconciliation of inter-Group balances, cut-off procedures and other year-end adjustments but always subject to the requirements of the specific policies set out herein.
   
1.4 The Completion Accounts shall be prepared in a manner consistent with the business continuing as a going concern and shall exclude the effects of change of control or ownership.

 

1.5

The Completion Accounts shall be prepared on a consolidated basis by reference to the general ledgers of the Group Companies as at the Effective Time in the format set out in Part A of this Schedule and in accordance with:

 

 

(a)

the accounting and adjustment policies set out further in this Part B of Schedule 4.1.1;

 

 

(b)

subject to (a) above, the Accounting Principles; and

 

 

(c)

subject to (a) and (b) above, and to the extent not covered and not inconsistent with (a) and (b) above, Dutch GAAP as at the Balance Sheet Date.

 

For the avoidance of doubt, paragraph (a) shall take precedence over paragraphs (b) and (c), and paragraph (b) shall take precedence over paragraph (c).

 

1.6

The Completion Statement will be prepared in euros. Assets and liabilities in the Completion Statement denominated in a currency other than euros shall be converted into euro at the Exchange Rate.

 

1.7

Subject to any other specific policies in this part B of Schedule 4.1.1, where an accrual or provision was made in the Accounts, no reduction in the accrual is permitted in respect of non-cash adjustments.

 

1.8

A bad and doubtful debt provision will be recognised in the Completion Statement as follows:

 

 

(a)

100% provision will be made for any trade receivables outstanding more than 12 (twelve) months from the invoice date at the Completion Date, unless it is very likely that such receivable will be paid by the relevant party;

 

share purchase agreement

55

 

 

 

(b)

100% provision will be made in respect of trade receivables outstanding less than 12 (twelve) months from the invoice date at the Completion Date where:

 

(i)       notification of administration of that debt has been received by the date the Completion Accounts are delivered to the Purchaser by the Seller;          

 

(ii)      to the extent that there is evidence of a fee dispute and it is probable, having regard for the payment history of the client, evidence from discussions and correspondence between the fee surveyor and the client, and the extent of further measures available to procure payment of the trade receivable, that those amounts will not be fully received, a provision will be made based on the best estimate of the probable fee reduction of the fee surveyor responsible for delivery of the services to which the fee relates;                                             

 

in each case in respect of (a) and, (b) above, except to the extent that the trade receivable has been received in the period up to the date on which the Purchaser delivers the Completion Accounts to the Seller. No other provision or reserve will be made in respect of trade receivables.

 

1.9

WIP shall (i) exclude the value of projects (other than the yacht project as referred to under (ii)) for which there is not an associated sales order, or projects with a sales order of more than 18 (eighteen) months prior to the Completion Date and (ii) exclude the value of following yacht projects with Amels: EPRON004 (WIP EUR 47,000) and EPRON005 (WIP EUR 53,000), for which there is not an associated sales order, or projects with a sales order of more than 3 (three) years prior to the Completion Date. WIP shall also take account of any expected project losses.

 

1.10

Inventory shall include parts in stock required for Business’ operations (e.g. z-drive parts, Veth-jet parts), invoices to be received regarding purchased stock parts and be valued at the lower of cost or net realisable value. An inventory provision will be made for each SKU at the following rates:

 

 

(a)

100% where the SKU or product has been discontinued or damaged;

 

 

(b)

where it is improbable that finished goods not attached to existing orders will be resold; or

 

 

(c)

or any unaccounted for inventory based on a physical stocktake performed at the Completion Accounts Date.

 

1.11

Other receivables relate to prepaid assets for which there is a benefit to the Business.

 

1.12

Other liabilities shall include full accruals of estimated business expenses, insurances, social security, performance guarantees, supplier rebates, expected project losses, utilities, amounts in transit and jubilee obligations up until the Effective Time. The Purchaser retains the right to perform review procedures on the accrual balances, including requesting substantiation and test cut-off procedures performed by management.

 

1.13

Full accrual will be made of management fees and bonuses based on a straight line basis based on the proportion of the financial year between the Completion Date and the full year estimate.

 

1.14

The Completion Accounts shall contain provision for all income tax liabilities of the Group Companies resulting from or by reference to any income, profits or gains earned, accrued or received on or before the Effective Time or any event occurring on or before the Effective Time. Liabilities in respect of corporate income tax included in the Completion Accounts shall be limited to amounts which, as at the Completion Date, are due or payable or have accrued in respect of taxable income profits or gains earned or accrued on or before the Completion Date taking into account any payments made in respect of or on account of such corporation tax for the relevant period prior to the Completion Date.

 

share purchase agreement

56

 

 

1.15

Cash will be reduced for any unpaid monies related to monies owed and/or historical bonus entitlements to the Group’s Technical Director, being Mr. M. Huisman.

 

1.16

For the avoidance of doubt, Cash and Working Capital will exclude loans due from customers, third parties and/or related parties, except for intercompany receivables by the Company from the Seller.

 

share purchase agreement

57

 

 

Schedule 4.1.1 (Part C)

 

Determination of Target Working Capital

 

The Target Working Capital will be equal to the average Working Capital per month-end calculated over the period as from 1 July 2017 up to and including 30 June 2018, based on the numbers included in the table below.

 

Month

 

Working Capital
Currency: EUR in millions
 

July 2017

 

8.5 

August 2017

 

9.0 

September 2017

 

9.5 

October 2017

 

8.2 

November 2017

 

9.2 

December 2017

 

11.2 

January 2018

 

11.0 

February 2018

 

10.6 

March 2018

 

12.6 

April 2018

 

12.9

May 2018

 

[]

June 2018

 

[]

Target Working Capital (month-end average from July 2017 to June 2018)

 

[]

 

 

The Parties shall in good faith agree upon the Working Capital amount of [April, May and June] 2018 prior to the date on which the Initial Purchase Price is to be determined in accordance with this Agreement. To the extent the Working Capital amount of [April, May and/or June] 2018 has not yet been determined by the Parties in accordance with this Schedule at the date of the Initial Purchase Price Notice, the Working Capital amount of each of [April, May and] June] 2018 shall be deemed equal to the average Working Capital amounts of the last two relevant months preceding to the month concerned for purposes of calculating the Target Working Capital.

 

share purchase agreement

58

 

 

Schedule 4.1.1 (Part D)

 

Initial Purchase Price Notice

 

 

Twin Disc NL Holding B.V.

Attn. Management board

1328 Racine Street

Racine, Wisconsin 53403

USA

 

[●Place, date]

 

Dear Sirs,

 

Reference is made to the share purchase agreement relating to the sale and purchase of the entire issued share capital of Veth Propulsion Holding B.V. between you, as purchaser, and us, as Seller, dated ● 2018 (the Agreement). Capitalised words and expressions used in this letter have the meaning set out in the Agreement, unless otherwise defined in this letter.

 

This notice sets out our good faith estimate of the Debt, Cash and Working Capital at Completion pursuant to Clause 4.1.1 of the Agreement. Based on these estimates, the Initial Purchase Price amounts to EUR ●.

 

 

1.

Estimated Cash at Completion

 

 

Cash component

Amount in EUR

Account description (English translation)

 

Account description (GL)

 

Cash on hand

 

Kas

Cash on hand FX

 

Kas Vreemde Valuta's

ING bank (inz. Scylla Tours)

 

ING bank (inz. Scylla Tours)

ING bank (ST) 671.892.541 dep.

 

ING bank (ST) 671.892.541 dep.

ING bank (ST) 671.918.133 dep.

 

ING bank (ST) 671.918.133 dep.

Rabobank 1023.57.42.76

 

Rabobank 1023.57.42.76

Rabobank 3930 12.123 

 

Rabobank 3930 12.123 

Suspense accounts Rabobank/ING

 

Tussenrekening rabobank/ING

Pledged bankguarantees

 

Verpanding bankgaranties

Rabobank savings accounts

 

Rabobank spaarrekening

Rabobank savings account 1334829756

 

Rabobank spaarr 1334829756

Rabobank deposito 123552540

 

Rabo depositorek 123552540

Deposits

 

Deposito's

Rabobank internet savingsaccounts

 

Rabobank internetsparen

ING bankguarantees

 

ING bankgaranties

USD Rabobank

 

$ rekening Rabobank

USD Rabobank FX diff

 

$ rekening Rabobank koersv.

USD ING bank

 

$ rekening ING

RMB ING bank

 

Rmb rekening ING

Postgiro bank

 

Postgiro

ING bank

 

ING bank 66.182.60

ING savings account 6718

 

ING spaar zakelijk 6718

ING savings account 1666

 

ING spaar bonus 1666

Investments

 

Beleggingen

Current accounts 

 

Current accounts due to/from Seller 

 

Total

 

 

 

 

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2.

Estimated Debt at Completion

 

 

Debt component

Amount in EUR

Account description (English translation)

 

Account description (GL)

 

Current Accounts

 

Vorderingen VMH agv proforma opstelling

 

Corporate income tax accured and unpaid

 

Vennootschapsbelasting

Related party debt and intercompany debt

   

Dividend payables

   

Transaction cost payable

   

Any bonus payable in relation to the transaction

   

Any interest or breakage fees 

   

 

Total

 

 

 

 

 

3.

Estimated Working Capital at Completion

 

 

Working Capital component

 

Amount in EUR

Account description (English translation)

 

Account description (GL)

 

Invoices to be received

 

Te ontvangen goederenfacturen

Work in progress (inventory)

 

Onderhanden werk (voorraad)

Unallocated internal projects

 

Te verdelen interne projecten

Veth-jet parts

 

Voorraad veth-jet onderdelen

Compact-Jet parts

 

Voorraad compact-jet delen

Z-drive parts

 

Voorraad z-drive onderdelen

Additional scope spare parts

 

Voorraad scope extra artikelen

Hydraulic parts

 

Voorraad hydrauliek onderdelen

Mechanical seals

 

Voorraad lagers en seals

Ballast pump parts

 

Voorraad ballastpomp onderd.

Scania parts

 

Voorraad scania onderdelen

Sisu-diesel parts

 

Voorraad sisu-diesel onderd.

Capitol parts

 

Voorraad capitol onderdelen

Electronic parts

 

Voorraad electra onderdelen

Electronic nv parts

 

Voorraad electra nv

Fitwerk' parts

 

Voorraad fitwerk

Bow rudder parts

 

Voorraad onderdelen koproeren

Spude pole parts

 

Voorraad spudpaal onderdelen

Spare parts

 

Voorraad onderdelen

Spare parts nv

 

Voorraad onderdelen nv

Packaging material

 

Voorraad verpakkingsmateriaal

Returnable parts

 

Statiegeld

Obsolete stock provision

 

Voorz. incourante voorraad

Projects to be capitalised

 

Te activeren tbv projecten

Purchases to be invoiced (projects)

 

Ntf inkopen voor projecten

Purchases project diesel

 

Inkoop project diesel

Purchases electra

 

Inkoop project electra

Purchases veth-jet/vp/cj

 

Inkoop project veth-jet/vp/cj

Purchases z-drive/tunnel

 

Inkoop project z-drive/tunnel

Total Inventory

 

 

 

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Debtors (Netherlands)

 

Debiteuren binnenland

Debtors (EU)

 

Debiteuren eu

Debtors (export)

 

Debiteuren export

Debtors to be invoiced

 

Nog te factureren goederen

Provision for doubtful debtors

 

Reserv. dubieuze debiteuren

Total Trade debtors

 

 

 

 

 

 

Creditors (Netherlands)

 

Crediteuren binnenland

Creditors (EU)

 

Crediteuren eu

Creditors (export)

 

Crediteuren export

Creditors in transit

 

Crediteurenbet. onderweg

Total Trade creditors

 

 

 

 

 

 

VAT payable 19%

 

Af te dragen btw 19%

VAT receivable 19%

 

Te vorderen btw 19%

VAT payable 

 

Af te dragen btw

VAT payable low rate

 

Af te dragen btw laag

VAT receivable

 

Te vorderen btw

VAT receivable low rate

 

Te vorderen btw laag

Received/paid VAT

 

Terug ontvangen/betaalde btw

VAT EU

 

Verleggingsrekening btw eu

VAT EU 19%

 

Verleggingsrekening btw eu 19%

VAT payable 21%

 

Af te dragen btw 21%

VAT receivable 21%

 

Te vorderen btw 21%

VAT doubtful accounts

 

Btw dubieuze debiteuren

VAT personal spendings

 

Te verdelen btw prive

VAT balance

 

 

 

 

 

 

Holliday money 

 

Reservering vakantietoeslag

Social securities employee and employer

 

Sociale lasten wn+wg (ingeh)

Pension premium paid

 

Betaalde premies mn

Pension premium paid (withheld)

 

Ingehouden premies mn

Wage taxes payable

 

Loonheffing tb

Health insurance premium payable

 

Premie ziektekostenverzekering

Suspense account wages payable

 

Tussenrek. te verr. met lonen

Suspense account pv

 

Tussenrekening pv

Wages payable

 

Uit te betalen lonen

Other wage amounts payable

 

Te verdelen tantieme

Social securities balance

 

 

 

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Prepaid fiinscrew

 

Vooruitbetaald fiinscrew

Prepaid duritcast

 

Vooruitbetaald duritcast

Amounts in transit

 

Kruisposten

General insurance receivable/payable

 

Te verdelen alg verzekering

Car insurance receivable/payable

 

Te verdelen autoverzekering

Ohc

 

Te verdelen ohc

Other prepaid/receivables

 

Te ontv./vooruitbet. bedragen

Total other receivables

 

 

 

 

 

 

Work in progress provision

 

Voorziening ohw

Prepayments from customers

 

Vooruitbetaald van klanten

Released revenue in P&L (WIP)

 

Ohw omzet in resultaat

Work in progress 

 

Onderhanden werk algemeen

Work in progress (corrections)

 

Onderhanden werk (correcties)

Work in progress accrued costs

 

Ohw te betalen kosten

Work in progress to be invoiced

 

Ohw nog te factureren

Work in progress overhead coverage

 

Ohw dekking overhead

Suspense account damage

 

tusserrekening schade

Management fee payable

 

Te verdelen managemntfee

Accountant fees payable

 

Te verdelen accountant

Rent cost payable

 

Te verdelen huur gebouwen

Other amounts payable

 

Te betalen bedragen

Invoices recevied in advance

 

Vooruitgefactureerde bedragen

Commission payable

 

Te verrekenen commissie amat

Warranty provision

 

Garantievoorziening

Jubilee provision

 

Voorziening jubileumuitkering

Total other payables

 

 

Total (net) 

 

 

 

 

4.

Initial Purchase Price

 

Initial Purchase Price

Initial Purchase Price components

Amount (EUR)

Component set out in Clause 3.1.2(a) of the Agreement

Total estimated Cash at Completion

Total estimated Debt at Completion

(●)

Balance Target Working Capital and estimated net Working Capital at Completion*

[●/(●)]

Total

EUR

* expressed as a positive figure if estimated Working Capital exceeds Target Working Capital and expressed as a negative figure if less

 

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Yours sincerely,

 

Signed for and on behalf of Het komt vast goed B.V. by

 

   
   
   

___________________________

___________________________

Name:

Name:

 

Title:

director

Title:

director

 

 

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Schedule 4.2.3

 

Independent Expert Procedure

 

2.

Appointment of Independent Expert

 

2.1

The Parties will jointly appoint a Register Valuator associated with:

 

 

(a)

the Netherlands Institute for Register Valuators; and

 

 

(b)

one of the following accountancy firms: (i) Deloitte, (ii) PwC, (iii) KPMG or (iv) such other reputable firm in the Netherlands with international standing as they may mutually agree;

 

as Independent Expert, provided that such valuator and firm can be considered independent.

 

2.2

If the Parties fail to jointly appoint the Independent Expert within 10 (ten) Business Days, each of them shall be entitled to request the management board of the Netherlands Institute for Register Valuators to appoint one independent expert from that institute’s members, taking into account the parties’ instructions, if any.

 

3.

Terms of reference for Independent Expert

 

3.1

The terms of reference for the Independent Expert shall be to resolve the items of (i) the Completion Accounts, or (ii) 2018 Financial Statement, as applicable, still in dispute between the Parties and to determine, by means of a binding advice (bindend advies), as applicable:

 

 

(a)

the Cash, Debt and Working Capital (incorporating the items of the Completion Accounts which are agreed between the Parties and therefore not within the scope of its determination); or

 

 

(b)

the 2018 EBITDA (incorporating the items of the 2018 Financial Statement which are agreed between the Parties and therefore not within the scope of its determination);

 

within the period as set out in paragraph 4.3 below.

 

3.2

The Independent Expert shall act as an expert and not as an arbitrator and shall, subject to the terms of this Schedule, the relevant provisions of the Agreement and such other terms as may be agreed between the Parties and the Independent Expert, be entitled to determine the procedure applicable to its determination.

 

4.

Procedure

 

4.1

Each Party shall as soon as reasonably possible, and in any event within 10 (ten) Business Days after the referral of the dispute to the Independent Expert, submit a written statement on the items in dispute, specifying the related adjustments it reasonably believes should be made to (i) the Cash, Debt and/or Working Capital at Completion, or (ii) the 2018 EBITDA, as applicable and, if any, together with the relevant supporting documents, to the Independent Expert for determination and provide the other Party with a copy of the same.

 

4.2

Each Party shall be entitled to notify the Independent Expert of its comments on the other Party’s submission pursuant to paragraph 3.1 above, within 10 (ten) Business Days after receipt of a copy of the same.

 

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4.3

The Independent Expert shall provide its determinations (including motivation) of (i) the Cash, Debt and Working Capital at Completion or (ii) the 2018 EBITDA, as applicable, to the Parties in writing within 25 (twenty-five) Business Days after receipt of the statements and supporting documents pursuant to paragraph 3.1 above or as soon as possible thereafter, which determinations shall be final and binding on the Parties (in absence of manifest error, in which case the Parties will jointly appoint another Independent Expert in accordance with paragraph 2 of this Schedule and follow the Independent Expert procedure set out herein until final and binding determinations have been reached).

 

5.

Fees and expenses of Independent Expert

 

The fees and expenses (including VAT) of the Independent Expert shall be borne by the Party whose proposed adjustments to (i) the Cash, Debt and/or Working Capital at Completion or (ii) the 2018 EBITDA, as applicable, (as presented to the Independent Expert pursuant to paragraph 4.1 above) are furthest from the adjustments finally determined by the Independent Expert.

 

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Schedule 5.1.2

 

EXAMPLE CALCULATION EARN-OUT AMOUNT

 

 

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Schedule 5.2.1(a)

 

PRO FORMA ACCOUNTS

 

[To be attached separately]

 

[Omitted pursuant to Item 601(b)(2) of Regulation S-K]

 

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Schedule 5.3.1

 

CONDUCT OF BUSINESS DURING Earn-out Period

 

1

The Purchaser undertakes towards the Seller that, save with the written consent of the Seller (such consent not to be unreasonably withheld or delayed) during the Earn-Out Period it shall, and it shall procure that each of the Group Companies shall:

 

 

(a)

use its best endeavours to promote and support the business and maximise the gross margin of the Group Companies in order to assist the Seller in meeting the criteria for payment of the Earn-Out Amount;

 

 

(b)

procure that the Group Companies have sufficient working capital to carry on their business;

 

 

(c)

not, directly or indirectly, take any action, or cause or permit anything to be done or omitted that could distort or decrease the financial performance, including the gross margin, of the Companies;

 

 

(d)

not change their accounting reference date or make any material change to the accounting practices and principles applied in the Accounts;

 

 

(e)

not cause or permit the Companies to enter into any transaction other than in the ordinary course of business, at arm's length and on reasonable commercial terms;

 

 

(f)

not divert or redirect any trading, business opportunities or revenues from the Companies;

 

 

(g)

not cause or permit Purchaser, Purchaser’s Affiliates or the Group Companies to charge amounts to the other Group Companies, inter alia management fees, overhead fees or interest payments on intra-group borrowings, other than on arm's length terms;

 

 

(h)

not sell, transfer or otherwise dispose of, or grant any encumbrance over, any of the shares in the capital of the Group Companies (or enter into any agreement to do so);

 

 

(i)

not permit the Companies to sell or cease to carry on all or a material part of the Business, assets or undertaking (or enter into an agreement to do so);

 

 

(j)

not cause or permit the Group Companies to propose or pass a resolution to wind up/dissolve the Group Companies

 

 

(k)

not cause or permit the Group Companies to change the scope or nature of the business of the Group Companies, the manner in which any such business is carried on or the trading name of the Companies;

 

 

(l)

keep and properly maintain the books of accounts of the Group Companies in such a manner that at all times insight can be provided by Purchaser and/or the Group Companies on the entitlement of Seller on the Earn-Out Amount;

 

 

(m)

provide Seller and its Representatives access to the premises and the books and records of the Group Companies on the first request of Seller;

 

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