**EXHIBIT 4.18**

 

 

**AGREEMENT FOR THE SALEAND PURCHASE**

**OF THE PAPERMERCHANTING DIVISION OF**

**BUHRMANN N.V.**

** **

** **

**DATED 8 September 2003**

** **

** **

**BUHRMANN N.V.**

** **

** **

**and**

** **

** **

**PAPERLINX LIMITED**

 

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**CONTENTS**

 
| **Clause** | ** ** | ** **                          | ** ** |
|------------|------------|-------------------------------------|------------|
| ** ** | ** ** | ** **                          | ** ** |
| 1.         |       | Interpretation                      |       |
| 2.         |       | Sale And Purchase                   |       |
| 3.         |       | Conditions                          |       |
| 4.         |       | Completion                          |       |
| 5.         |       | Purchase Price                      |       |
| 6.         |       | Completion Balance Sheet            |       |
| 7.         |       | Deferred Consideration              |       |
| 8.         |       | Independent Accountants             |       |
| 9.         |       | Loans And Guarantees                |       |
| 10.        |       | Due Diligence  investigation        |       |
| 11.        |       | Warranties                          |       |
| 12.        |       | Warranties by Purchaser             |       |
| 13.        |       | Specific Indemnities                |       |
| 14.        |       | Pensions                            |       |
| 15.        |       | Taxation                            |       |
| 16.        |       | Protective Covenants                |       |
| 17.        |       | Confidentiality                     |       |
| 18.        |       | Notices                             |       |
| 19.        |       | Further Assurances                  |       |
| 20.        |       | Transfer of  rights and obligations |       |
| 21.        |       | Grossing-up of  Indemnity Payments  |       |
| 22.        |       | Payments                            |       |
| 23.        |       | Default Interest                    |       |
| 24.        |       | General                             |       |
| 25.        |       | No Rescission                       |       |
| 26.        |       | Whole Agreement                     |       |
| 27.        |       | Governing Law                       |       |
| 28.        |       | Arbitration                         |       |
| 29.        |       | Language                            |       |

 
| **Schedules** |   |                                                |   |
|---------------|--------|-----------------------------------------------------|--------|
|          |   |                                                |   |
| 1.            |   | Indirect Sellers                                    |   |
| 2.            |   | The Companies                                       |   |
| 3.            |   | The Subsidiaries of the Companies                   |   |
| 4.            |   | Competition Authorities                             |   |
| 5.            |   | Approvals                                           |   |
| 6.            |   | Pre-Completion Covenants                            |   |
| 7.            |   | Allocation of Purchase Price                        |   |
| 8.            |   | Guarantees and Indemnities                          |   |
| 9.            |   | Warranties                                          |   |
| 10.           |   | Warranty Limits                                     |   |
| 11.           |   | Pensions                                            |   |
| 12.           |   | Completion                                          |   |
| 13.           |   | Policies for preparation of the Completion Accounts |   |
| 14.           |   | Assets                                              |   |
| 15.           |   | Excluded Assets                                     |   |
| 16.           |   | Purchase price adjustment statement                 |   |
| 17.           |   | Properties                                          |   |

 

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| 18.         |   | Third Party Agreements                                                    |   |
|-------------|--------|---------------------------------------------------------------------------|--------|
| 19.         |   | Surplus Properties                                                        |   |
| 20.         |   | Form of deed of adherence                                                 |   |
| 21.         |   | Acquiring Entities                                                        |   |
| 22.         |   | Warranted Information                                                     |   |
| 23.         |   | Tax Covenant                                                              |   |
| 24.         |   | Protective Covenants                                                      |   |
| 25.         |   | Financial FaciliTies                                                      |   |
| 26.         |   | Insurance Claims                                                          |   |
| 27.         |   | Intellectual Property                                                     |   |
| 28.         |   | Retirement Benefit Arrangements                                           |   |
| 29.         |   | Capital Recognised for article 3 of the Dutch Dividend  Tax Act 1965 |   |
| 30.         |   | Goodwill on Tax Balance Sheet                                             |   |
| 31.         |   | Interpretation                                                            |   |
|        |   |                                                                      |   |
| Signatories |   |

 

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**THIS AGREEMENT** is made the 8 September, 2003

 

**BETWEEN**:

 

(1)           **Buhrmann N.V.** a public limited liability company incorporated underthe laws of The Netherlands whose principal place of business is in Amsterdam,The Netherlands (the **Seller**); and

 

(2)           **PaperlinX Limited**a public limited liability company incorporated underthe laws of Australia whose registered office is at 307 Ferntree Gully Road, MtWaverley, Victoria 3149, Australia (the **Purchaser**).

 

**WHEREAS**:

 

(A)          The Seller is the direct or indirect owner of all theshares (other than as otherwise indicated in the schedule headed “TheCompanies”) in the issued share capital of the companies set out in the schedule headed“The Companies” (the **Companies**) andof the assets set out in the schedule headed “Assets” (the **Assets**).

 

(B)           The Seller wishes to sell and the Purchaser wishes topurchase all the issued share capital of the Companies and all the Assets freeof any Encumbrance (as defined hereinafter), other than those Encumbrances setout in the schedule headed “Assets”, at Completion (as definedhereinafter) on the terms set out in this agreement.

 

(C)           The Indirect Sellers (as defined hereinafter) haveacknowledged and agreed to the relevant terms of this agreement by executingthe schedule headed “Indirect Sellers” (Execution Page).

 

**IT IS AGREED** as follows:

 

**1.**             INTERPRETATION

 

1.1           In addition to terms definedelsewhere in this agreement, the definitions and other provisions in the schedule headed“Interpretation” apply throughout this agreement unless the contrary intentionappears.

 

1.2           In this agreement, unless thecontrary intention appears, a reference to a clause, subclause or schedule isa reference to a clause, subclause or schedule of this agreement. Theschedules form part of this agreement.

 

1.3           The headings in this agreementdo not affect its interpretation.

 

**2.**             SALE ANDPURCHASE

 

2.1           By this agreement the Sellersells (or will procure the sale by the Indirect Sellers) and the Purchaser orits nominee listed in the schedule headed “Acquiring Entities” or otherAcceding Purchaser purchases the Shares and the Assets with full and good titlefree from any Encumbrance as at Completion.

 

2.2           On Completion the Shares andthe Assets shall be transferred (*geleverd*) freefrom Encumbrances together with all rights attaching to them at Completion.

 

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2.3           Those assets set out in the schedule headed“Excluded Assets” (the **Excluded Assets**)shall be excluded (together with any liabilities relating thereto) from thesale and purchase of the Shares and Assets pursuant to this agreement.

 

2.4           The price for the Shares andthe Assets shall be determined in accordance with the clause headed “PurchasePrice”.

 

2.5           The Seller hereby accepts fulland unconditional responsibility that the Indirect Sellers will on Completiontransfer to the Purchaser full ownership in the Shares and the Assets free fromEncumbrances subject to and on the terms and conditions set out in thisagreement. The Purchaser hereby accepts full and unconditional responsibilitythat the members of the Purchaser’s Group listed in the schedule headed “AcquiringEntities” or any other Acceding Purchaser will on Completion take transfer ofthe Shares and the Assets subject to and on the terms and conditions set out inthis agreement.

 

2.6           The Seller shall procure thaton or prior to Completion any and all rights of pre-emption, options or rightsof first refusal over the Shares or the Assets are waived irrevocably by thepersons entitled thereto.

 

**3.**             CONDITIONS

 

3.1           Completion is conditional on:

 

(a)           the approval by the general meeting ofshareholders of the Seller of the transactions contemplated by this agreement;

 

(b)           any competition authority referred to inthe schedule headed “Competition Authorities” (the **CompetitionAuthorities**):

 

(i)            taking a decision that the sale of all orany of the Shares or the Assets to the Purchaser does not give rise to aconcentration falling within the scope of the relevant competition laws; or

 

(ii)           taking a decision approving the sale of allor any of the Shares or the Assets to the Purchaser without imposing anyconditions or obligations that are not on terms satisfactory to the Purchaser;or

 

(iii)          not taking a decision to oppose or approvethe transaction within the time limits as set by the relevant competition laws;and

 

(c)           subject to clauses 4.2 and 4.4, thelicences, authorisations, orders, grants, confirmations, permissions,registrations, consents and other approvals referred to in the schedule headed“Approvals” (each an **Approval**)having been obtained (either unconditionally or subject to the fulfilment ofcertain conditions and commitments which the relevant party (acting reasonably)considers acceptable) from the appropriate bodies and such Approvals remainingin full force and effect at Completion.

 

The conditionsreferred to under paragraphs (a), (b) and (c) above are collectively referredto as the **Conditions**. Conditions 3.1(a) and3.1(b) are for the benefit of both parties and may not be waived without theconsent of both the Seller and the Purchaser. Condition 3.1(c) is for the benefit of the Purchaser and may not, subjectto clause 4.2, be waived (in whole or in part) without the consent of thePurchaser.

 

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3.2           With regard to Conditions3.1(a) and 3.1(c), each party shall use its best efforts to procure that theConditions are satisfied on or before the date falling two months after signingof this agreement.  Furthermore:

 

(a)           the Seller shall use all reasonableendeavours to obtain the approval of its ordinary shareholders as soon asreasonably practicable including, by convening a meeting of shareholders nolater than six weeks after signing this agreement and the giving by the membersof the Seller’s management and supervisory boards of positive recommendationsto the shareholders to vote in favour of the resolution approving the transactionscontemplated in this agreement, both at the time of convening the generalmeeting of the shareholders and at the meeting itself;

 

(b)           the Purchaser shall, with respect to theCondition contained in clause 3.1(b) make, or procure the making of, allfilings which it is obliged to make as soon as reasonably practicable afterexecution of this agreement and shall use reasonable efforts and take allreasonable steps to obtain:

 

(i)            in respect of the EU the approval of therelevant Competition Authorities as soon as practicable within the first phaseof the review by the Competition Authorities; and

 

(ii)           in respect of the Czech Republic andSlovakia the approval of the relevant Competition Authorities as soon aspracticable and within two months of signing of this agreement; and

 

(c)           the parties shall use all reasonableendeavours to obtain the approvals referred to in the schedule headed “Approvals”as soon as is reasonably practicable and the parties hereby agree that allrelated enquiries and requests from any government, governmental, supranationalor trade agency, court, regulatory body or party or parties to the relevantagreements shall be dealt with by the Seller and the Purchaser in consultationwith each other and the Seller and the Purchaser shall promptly co-operate withand provide all necessary information and assistance reasonably required bysuch government, agency, court, body or party or parties to the relevantagreements upon being requested to do so by the other.

 

3.3           The Purchaser may voluntarilymake one or more offers or commitments to the relevant Competition Authoritiesto remedy the concerns of such Competition Authorities, provided that suchoffers and commitments do not in any way affect the Seller’s Group or itsbusiness.

 

3.4           The Purchaser shall as soon asis reasonably practicable provide the Seller with copies of all materialrelevant correspondence, documents or other communications received from orsent to any Competition Authority relating to Condition 3.1(b). The Purchasershall also as soon as is reasonably practicable inform the Seller of thecontent of any meeting or material conversation which takes place between anysuch Competition Authority and the Purchaser or any of its employees,directors, officers or advisers in relation to Condition 3.1(b) and shall, ifrequested by the Seller, provide a written summary thereof.

 

3.5           The Purchaser’s or any PMDGroup Company’s compliance with any condition, obligation or other requirementimposed or contained in any decision by any relevant Competition Authority orthe implementation of any offer made by the Purchaser to any relevantCompetition Authority will not result in any change to the terms and conditions(including the Purchase Price) of this agreement.

 

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3.6           The Seller shall provide thePurchaser with any assistance reasonably requested by the Purchaser in relationto its filings with the Competition Authorities, including providing copies ofall relevant previous market analyses and any other relevant data which theSeller may have, together with copies of all relevant filings made by theSeller to such Competition Authorities, and shall make such submissions to theCompetition Authorities in favour of the transactions contemplated by thisagreement as reasonably requested by the Purchaser.

 

3.7           If any Condition contained inclause 3.1(b) or, if marked with a “à” in the schedule headed “Approvals”, clause 3.1(c), is notfulfilled or waived on or before the Long Stop Date, and provided that theSeller has not prevented, frustrated or interfered with the fulfilment of anyCondition, the Seller may resolve to terminate this agreement. If the Conditioncontained in clause 3.1(a) is not fulfilled or waived within four weeks afterthe date referred to in clause 3.2(a) or if a Condition contained inclause 3.1(c) and marked with an “à” is not fulfilled or waived on or before the Long Stop Date, andprovided that the Purchaser has not prevented, frustrated or interfered withthe fulfilment of any Condition, the Purchaser may resolve to terminate thisagreement. Upon termination of this agreement pursuant to this clause:

 

(a)           save as provided in clauses 3.7(b), 3.7(c)and 3.8 no party shall have any claim against any other party as a result ofsuch termination;

 

(b)           except for this clause, clause 3.8, theclauses headed “Confidentiality, Notices”, “Assignments”, “Payments”, “General”,“No Rescission”, “Whole Agreement”, “Governing Law”, “Arbitration” and “Language”,together with the provisions of the clause and schedule headed “Interpretation”,all the other clauses of this agreement shall lapse (*vervallen*)and cease to have effect; and

 

(c)           the termination and the lapsing (*vervallen*) of these provisions shall not affect any rightsor liabilities of any party in respect of any previous breach of thisagreement.

 

3.8           Where this agreement isterminated pursuant to a failure of a Condition contained in clause 3.1(a)or a failure to obtain any of the Approvals marked with an “à”, the Seller shall reimburse the Purchaser’sThird Party Costs, provided that the Purchaser has complied with itsobligations under clause 3.2. Where this agreement is terminated pursuant to afailure of a Condition contained in clause 3.1(b), the Purchaser shallreimburse the Seller’s Third Party Costs, provided that the Seller has compliedwith its obligations under clause 3.2.

 

**4.**             COMPLETION

 

4.1           Completion shall take place atthe offices of the Purchaser’s Dutch Lawyers on the last Business Day of themonth in which (subject to clause 4.2) all the Conditions (other than thosewhich will be satisfied on Completion) are satisfied or, where permitted,waived (provided that if all the Conditions are fulfilled or, where permitted,waived less than ten Business Days prior to the last Business Day of suchmonth, Completion shall be delayed until the last Business Day of the nextmonth) or at such other place, time, or on such other date as the Seller andthe Purchaser may agree in writing.

 

4.2           If the Conditions set out in clause3.1(a) and 3.1(b) have been satisfied and the Seller is reasonably capable ofproviding each Approval marked “à” in the schedule headed “Approvals” on Completion, the Sellermay, subject to the remainder of this clause 4.2 and clause 4.4, elect for theparties to proceed with Completion notwithstanding that the other Approvals maynot have been obtained (without prejudice to each party’s obligations underclause 3.2(c) to use reasonable endeavours to obtain the other Approvals notyet obtained

 

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after Completion). Whilst any Approval marked with a “*” in the schedule headed“Approvals” remains outstanding, the Seller may only elect to proceed withCompletion under this clause 4.2 on the earlier of the date being two monthsafter both conditions 3.1(a) and 3.1(b) have been fulfilled and all Approvalsmarked with a “à” have been, or are reasonablycapable of being, fulfilled, or 20 Business Days prior to the Long Stop Date.

 

4.3           On the Completion Date thePurchaser will pay a sum equivalent to the Estimated Purchase Price plus anamount equivalent to the net amount estimated to be owing to the Seller’sGroup, if any, under clauses 9.1 and 9.2, as the case may be, into the Notary’saccount in accordance with the clause headed “Payments”. The Notary will onlypay the applicable proportion of such amount to the Seller (or, at thediscretion of the Seller, the applicable Indirect Seller or any third partythat the Seller may direct) in accordance with this agreement after executionof the applicable Local Transfer Documents.

 

4.4           At Completion each party shalldo, or procure to be done, those things respectively listed in relation to itor its Group in the schedule headed “Completion” (save to the extent suchthings have been done prior to Completion). If and to the extent that (a) theSeller is unable to do or procure to be done those things marked “#” in the schedule headed“Completion” but nonetheless elects to proceed with Completion, or (b) theSeller has elected to proceed with Completion in accordance with clause 4.2,the parties will proceed to Completion and the Seller shall, until such time asany thing marked “#” in the schedule headed “Completion” is done orprocured or any outstanding Approval is obtained, indemnify the Purchaser andkeep the Purchaser fully indemnified against all Losses relating thereto orarising out of or in connection therewith respectively.

 

4.5           The parties agree that as soonas practicable following the obtaining of all Surplus Property Approvals inrelation to a Surplus Property, the Seller shall procure that such SurplusProperty is transferred to a member of the Seller’s Group by means of suchLocal Transfer Documents as may be required. In the event that any Surplus Property has not been transferred out ofthe PMD Group by Completion then the Purchaser shall or shall procure that therelevant PMD Group Company shall transfer and the Seller shall procure that amember of the Seller’s Group accepts the transfer of such Surplus Property uponthe earlier of:

 

(a)           the date on which the relevant SurplusProperty Approvals have been obtained; and

 

(b)           the date three months from the date of thisagreement (notwithstanding that such Surplus Property Approvals have not beenobtained).

 

4.6           At Completion the Seller willprovide the Purchaser with a bank guarantee in the amount of EUR25,000,000(twenty five million Euro) in the Agreed Form (the **BankGuarantee**). The Bank Guarantee shall be valid for 2 years from theCompletion Date unless no later than 25 Business Days after the firstanniversary of the Completion Date the Seller notifies the Purchaser, whichnotification shall include details of the underlying calculations, that theLeverage Ratio is less than 3.00.  Within5 Business Days of such notification, the Purchaser may instruct IndependentAccountants to review and confirm, within 5 Business Days of being instructed,the accuracy of the calculation of the Leverage Ratio. If the Purchaser doesnot require a review by the Independent Accountants, or, if such an instructionis given, the Independent Accountants confirm that the Leverage Ratio has beenproperly calculated, the Purchaser shall, within one Business Day of itsnotifying the Seller that no review by the Independent Accountants is requiredor, where the Independent Accountants have been instructed, of receipt ofconfirmation from the Independent Accountants of the calculation of

 

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the Leverage Ratio (failing which the Seller shall be entitled to)notify the bank issuing the Bank Guarantee that the Leverage Ratio is less than3.00 in which case the Bank Guarantee shall terminate on the fifth Business Dayafter the bank receives such notification and the Purchaser shall return theBank Guarantee to the bank issuing the Bank Guarantee. The Purchaser covenantsand agrees that any claim under the Bank Guarantee will be in accordance withand limited to any rights of recovery under this agreement including, but notlimited to, the rights and limitations specified in the clause headed “Grossing-Upof Indemnity Payments” and that the Purchaser will indemnify the Seller againstany recovery in excess of such rights and limits

 

4.7           The Notary is a civil lawnotary with the Purchaser’s Dutch Lawyers. The Seller acknowledges that it isaware of the provisions of the Ordinance Interdisciplinary Cooperation (*Verordening Interdisciplinaire Samenwerking*) of the RoyalProfessional Organisation of Civil Law Notaries (*KoninklijkeNotariële Beroepsorganisatie*). The Seller acknowledges and agreesthat the Purchaser’s Dutch Lawyers may advise and act on behalf of thePurchaser with respect to this agreement, and any agreements and/or anydisputes related to or resulting from this agreement.

 

4.8           Subject to clauses 4.2 and4.4, neither of the parties shall be obliged to proceed with Completion unlessall those things set out in the schedule headed “Completion” are done orbecome effective simultaneously or have been done prior to such Completion.This clause shall not, however, prejudice any rights or remedies available toany party in respect of any default on the part of any other party.

 

4.9           Prior to Completion (andwhether or not the Conditions are satisfied) the provisions of the schedule headed“Pre-Completion Covenants” shall apply in respect of each PMD Group Companyand/or the Assets.

 

4.10         The Evelyn Street Propertywill be sold at Completion with full title guarantee together with allbuildings and structures thereon.

 

4.11         If in respect of any Propertythe Seller is required under any agreement, legislation, regulation orotherwise to notify any person of a change of control of the relevant PMD GroupCompany, the Seller shall, following Completion, make such notification inaccordance with the relevant agreement, legislation, regulation or otherwise.

 

4.12         Subject to clause 4.13 below,prior to Completion the Seller shall use its best endeavours to transfer to thePurchaser or such PMD Group Company as the Purchaser directs the RelevantEmployees employed by the Seller’s Group who work wholly or mainly for theBusiness. To the extent that any Relevant Employee employed by the Seller’sGroup gives or is given notice of termination of employment prior toCompletion, the Seller shall procure that such Relevant Employee shall continueto be employed by the Seller’s Group following Completion.

 

4.13         If at Completion George Deanhas not executed a new employment services agreement or agreed otherarrangements with the Purchaser the Seller will procure that he will continueto be employed by the Seller’s Group.

 

**5.**             PURCHASEPRICE

 

5.1           The price for the Shares andthe Assets (the **Purchase****Price**)will be the total of:

 

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(a)           EUR706,000,000 (seven hundred and sixmillion Euro) (the **Base****Amount**);

 

(b)           plus a sum equal to the excess of the NetAsset Value as at Completion over EUR631,700,000 (six hundred and thirty onemillion, seven hundred thousand Euro) (provided that if the Net Asset Value atCompletion is less than EUR631,700,000 (six hundred and thirty-one million,seven hundred thousand Euro), the difference will be deducted from the BaseAmount);

 

(c)           less the aggregate of any outstanding Debtas at Completion (which aggregate for the purposes of this clause 5.1(c)comprises any outstanding Debt owed by the PMD Group Companies and any Debtowed by the Seller’s Group to the PMD Group);

 

(d)           less the aggregate NCLs as at Completion;

 

(e)           plus an amount equivalent to the Cash as atCompletion;

 

(f)            plus the Deferred Consideration.

 

5.2           The estimated price for theShares and the Assets (the **Estimated Purchase Price**)payable at Completion shall be calculated as follows:

 

(a)           the Base Amount;

 

(b)           less EUR30,600,000 or such other amount asthe parties may agree (provided that the parties shall use their bestendeavours to agree an amended amount to be added to or deducted from the BaseAmount and which more closely correlates with the final amount under clause 5.1(b) if Completion is delayed beyond the date anticipated by the parties);

 

(c)           less the estimated aggregate of anyoutstanding Debt as at Completion as agreed between the parties (whichaggregate for the purposes of this clause 5.2(c) comprises any outstanding Debtowed by the PMD Group Companies and any Debt owed by the Seller’s Group to thePMD Group);

 

(d)           less the estimated NCLs as at Completion asagreed between the parties;

 

(e)           plus the estimated Cash as at Completion asagreed between the parties.

 

5.3           The Seller shall deliver tothe Purchaser its estimate of the Debt, NCLs and Cash as at Completion, 5Business Days prior to the intended date of Completion.

 

5.4           The Purchase Price (other thanthe Deferred Consideration) shall be determined following Completion inaccordance with clause 5.1 on the basis of the Net Asset Value, Debt, NCLs andCash as determined in the Completion Balance Sheet. The Purchase Price and theEstimated Purchase Price shall be allocated between the Seller and the IndirectSellers in accordance with the schedule headed “Allocation of PurchasePrice”.

 

5.5           If the Purchase Price(excluding for these purposes the Deferred Consideration) is greater than theEstimated Purchase Price, the Purchaser shall pay to the Seller (or, at thediscretion of the Seller, the applicable Indirect Seller or any third partythat the Seller may direct) in cash, a sum equal to that increase together withinterest thereon calculated at a rate of 5 per cent. per annum from Completionuntil the date of actual payment. If the Purchase Price (excluding for thesepurposes the Deferred Consideration) is less than the Estimated Purchase Price,the

 

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Seller shall pay to the Purchaser in cash, a sum equal to thatreduction together with interest thereon calculated at a rate of 5 per cent.per annum from Completion until the date of actual payment. Any such paymentshall be made within 5 Business Days following the day on which the CompletionBalance Sheet is finally agreed or determined.

 

**6.**             COMPLETIONACCOUNTS

 

**6.1**           Preparation of Drafts

 

(a)           Within 20 Business Daysfollowing Completion, the Purchaser shall cause to be prepared and delivered tothe Seller Standard Hyperion Reports of the PMD Group Companies using theHyperion System of the Seller as it existed prior to Completion.

 

(b)           Within 40 Business Daysfollowing Completion, the Purchaser shall cause to be prepared and delivered tothe Seller the draft Completion Accounts of the PMD Group Companies as atCompletion (the **Draft Completion Accounts**). TheDraft Completion Accounts shall be prepared in accordance with the schedule headed“Policies for Preparation of the Completion Accounts”.

 

**6.2**           Notification of Disputed Items

 

(a)           Within 20 Business Daysfollowing delivery of the Draft Completion Accounts to the Seller, inaccordance with clause 6.1, the Seller shall notify the Purchaser of any itemor items it wishes to dispute. Such notification shall include the reasons forsuch dispute and a list of proposed adjustments, all substantiated insufficient detail so as to allow proper assessment thereof by the Purchaser.

 

(b)           If no such notice is receivedby the Purchaser or the Seller has notified the Purchaser that there are noitems it wishes to dispute, the Draft Completion Accounts shall constitute theCompletion Accounts for the purposes of this agreement and shall be binding onthe parties. The Net Asset Value, Debt, NCLs and Cash as determined byreference to the Completion Balance Sheet shall be utilised to determine thePurchase Price (other than the Deferred Consideration).

 

(c)           Only discrepancies with animpact of EUR100,000 or more on individual line items identified in the schedule headed“Purchase Price Adjustment Statement” or individual line items in theCompletion Balance Sheet may be disputed by the Seller.

 

**6.3**           Resolution of Disputed Items

 

(a)           If a notice complying with theprovisions of the clause headed “Notification of Disputed Items” is received bythe Purchaser, the parties shall use their best endeavours to agree in writingthe item or items disputed by the Seller. If such item or items are not agreedin writing between the parties within 20 Business Days following the deliveryof such notice the item or items in dispute shall be determined by theIndependent Accountants in accordance with the clause headed “IndependentAccountants”.

 

(b)           The Draft Completion Accountsadjusted to reflect the item or items as agreed between the parties in writingor as determined by the Independent Accountants shall constitute the CompletionAccounts for the purposes of this agreement. The Net Asset Value, Debt, NCLsand Cash as determined by reference to the Completion Balance Sheet shall beutilised to determine the Purchase Price (other than the DeferredConsideration).

 

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**6.4**           Provision of information

 

(a)           The Purchaser shall and shallprocure that the PMD Group Companies and the Purchaser’s Accountants shallprovide the Seller, the Seller’s Accountants and the Independent Accountantswith all information, assistance and access to management of the PMD GroupCompanies, books and records of account, documents, files and papers andinformation stored electronically which they reasonably require including forthe purpose of enabling the Seller’s Accountants to carry out the proceduredescribed in the Seller’s Accountants Audit Letter within the periods referredto in clauses 6.1 and 6.2, in respect of the Seller and the Seller’sAccountants, for the purposes of this clause and, in respect of the IndependentAccountants, for the purposes of this clause and the clause headed “IndependentAccountants”.

 

(b)           The Purchaser will execute onrequest of the Seller’s Accountant letters granting access to the PMD GroupCompanies in the form set out in attachment B of the Seller’s Accountants AuditLetter.

 

(c)           The Seller shall and shallprocure that the Seller’s Accountants shall provide the Purchaser and thePurchaser’s Accountants with all information, assistance and access to booksand records of account, documents, files and papers and information storedelectronically which they reasonable require, in respect of the Purchaser andthe Purchaser’s Accountants, for the purpose of this clause and, in respect ofthe Independent Accountants, for the purposes of this clause and the clauseheaded “Independent Accountants”.

 

(d)           In addition, the Purchaser andthe Seller shall respectively procure that the Purchaser’s Accountants and theSeller’s Accountants provide each other and, in respect of the CompletionAccounts, the Independent Accountants with the opportunity to review all oftheir working papers in relation to the Completion Accounts.

 

**7.**             DEFERREDCONSIDERATION

 

**7.1**           Deferred ConsiderationStatement

 

If Completionoccurs prior to the last day of the Deferred Consideration Period, thePurchaser shall procure that within 40 Business Days following the end of theDeferred Consideration Period, there shall be drawn up and delivered to theSeller a draft of the Deferred Consideration Statement (the **Draft Deferred Consideration Statement**) setting out theEBITA for the Deferred Consideration Period.

 

If Completionoccurs on or after the last day of the Deferred Consideration Period, theSeller shall procure that within 40 Business Days following the end of theDeferred Consideration Period, there shall be drawn up and delivered to thePurchaser the Draft Deferred Consideration Statement setting out the EBITA forthe Deferred Consideration Period.

 

The DraftDeferred Consideration Statement shall:

 

(a)           be prepared on a basis consistent with thatadopted for the preparation of the Completion Accounts;

 

(b)           include such adjustments as are required toensure that the financial impact of changes to the PMD Group on or afterCompletion outside the ordinary course of business (including, without limitation,changes in the capital structure of any PMD Group Company and acquisitions ordisposals by a PMD Group Company of any

 

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company,partnership, business or other venture and any reorganisation or restructuring)are excluded or reversed from the Draft Deferred Consideration Statement;

 

(c)           exclude any management charge in excess ofthe average monthly management charge charged by the Seller to the PMD GroupCompanies in the period between the Latest Relevant Accounts Date andCompletion insofar as it effects EBITA;

 

(d)           exclude exceptional items;

 

(e)           exclude Rhosili, the Evelyn StreetProperty, Berni and Expresso; and

 

(f)            exclude any financial impact related to thetransfer of the Surplus Properties.

 

**7.2**           Notification of Disputed Items

 

(a)           Within 10 Business Days following deliveryby (as the case may be) the Seller or the Purchaser (the **ProvidingParty**) of the Draft Deferred Consideration Statement to (as the casemay be) the Seller or the Purchaser (the **Receiving Party**),the Receiving Party shall notify the Providing Party of any item or items itwishes to dispute. Such notification shall include the reasons for such disputeand a list of proposed adjustments, all substantiated in sufficient detail soas to allow proper assessment thereof by the Providing Party and the ProvidingParty’s accountants.

 

(b)           If no such notice is received by theProviding Party or the Receiving Party has notified the Providing Party thatthere are no items it wishes to dispute, the Draft Deferred ConsiderationStatement shall constitute the Deferred Consideration Statement for thepurposes of this agreement and shall be binding on the parties. The EBITA asdetermined in the Deferred Consideration Statement shall be utilised todetermine the Deferred Consideration.

 

(c)           Only discrepancies with avalue of EUR100,000 or more in individual line items in the Draft DeferredConsideration Statement may be disputed by the Receiving Party.

 

**7.3**           Resolution of Disputed Items

 

(a)           If a notice complying with the provisionsof the clause headed “Notification of Disputed Items” is received by theProviding Party, the parties shall use their best endeavours to agree inwriting the item or items disputed by the Receiving Party. If such item oritems are not agreed in writing between the parties within 20 Business Daysfollowing the delivery of such notice the item or items in dispute shall bedetermined by the Independent Accountants in accordance with the clause headed “IndependentAccountants”.

 

(b)           The Draft Deferred Consideration Statementadjusted to reflect the item or items as agreed between the parties in writingor as determined by the Independent Accountants shall constitute the DeferredConsideration Statement for the purposes of this agreement and shall be bindingon the parties. The EBITA as determined in the Deferred Consideration Statementshall be utilised to determine the Deferred Consideration.

 

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**7.4**           Provision of Information

 

(a)           The Purchaser shall and, if applicable,shall procure that the PMD Group Companies and the Purchaser’s Accountantsshall provide the Seller, the Seller’s Accountants and the IndependentAccountants with all information, assistance and access to books and records ofaccount, documents, files and papers and information stored electronicallywhich they reasonably require, in respect of the Seller and the Seller’sAccountants, for the purposes of this clause and, in respect of the IndependentAccountants, for the purposes of this clause and the clause headed “IndependentAccountants”.

 

(b)           The Seller shall and, if applicable, shallprocure that the Seller’s Accountants shall provide the Purchaser and thePurchaser’s Accountants with all information, assistance and access to booksand records of account, documents, files and papers and information storedelectronically which they reasonable require, in respect of the Purchaser andthe Purchaser’s Accountants, for the purpose of this clause and, in respect ofthe Independent Accountants, for the purposes of this clause and the clauseheaded “Independent Accountants”.

 

(c)           The Purchaser and the Seller shallrespectively procure that the Purchaser’s Accountants and the Seller’sAccountants provide each other and the Independent Accountants with theopportunity to review all of their working papers in relation to the DraftDeferred Consideration Statement.

 

**7.5**           Deferred Consideration

 

(a)           Subject to clause 7.5(b), the DeferredConsideration will be calculated in accordance with the following formula:

 

DeferredConsideration = 10 multiplied by (EBITA for the Deferred Consideration Periodminus EUR63,000,000)

 

provided thatif the EBITA for the Deferred Consideration Period is less than EUR63,000,000,the Deferred Consideration shall be zero.

 

(b)           The maximum Deferred Consideration payableunder this agreement is EUR26,000,000.

 

(c)           The Purchaser shall pay the DeferredConsideration to the Seller on 1 July 2004.

 

**7.6**           Conduct of Business

 

(a)           If Completion occurs during the DeferredConsideration Period, the Purchaser covenants with the Seller that from theCompletion Date to 31 December 2003:

 

(i)            it will not take any action intended tofrustrate the payment of, or which is primarily or substantially intended toreduce the amount of, the Deferred Consideration;

 

(ii)           (with the intent of giving the Seller afair opportunity of receiving Deferred Consideration) the policy of each of thePMD Group Companies and of the Purchaser in respect of the PMD Group shall beto promote their profitability in that period consistent with sound commercialand financial management and to promote the orderly and profitable developmentof their business and

 

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thegeneration of new business and the Purchaser will procure that each of the PMDGroup Companies will not take any action to benefit the long term profitabilityof the PMD Group Companies primarily or substantially at the expense ofreducing the Deferred Consideration;

 

(iii)          none of the PMD Group Companies will carryon any business other than that carried on by that PMD Group Company atCompletion and each PMD Group Company shall carry on its business in theordinary and proper course in the same way as it was carried on prior to Completion;

 

(iv)          none of the PMD Group Companies will makeany substantial change to the nature or scope of its business as carried on bythat PMD Group Company at Completion.

 

(b)           The Seller covenants with the Purchaserthat, prior to Completion and in the Deferred Consideration Period:

 

(i)            it will not take any action which isprimarily or substantially intended to increase the amount of the DeferredConsideration;

 

(ii)           the Seller will procure that each of thePMD Group Companies will not take any action primarily intended to benefit theshort term profitability of the PMD Group Companies primarily or substantiallyfor the purpose of increasing the Deferred Consideration;

 

(iii)          none of the PMD Group Companies will makeany substantial change to the nature or scope of its business as carried on bythat PMD Group Company as at the date of this agreement.

 

**8.**             INDEPENDENTACCOUNTANTS

 

8.1           If and whenever any item indispute relating to the draft Completion Accounts or the Draft DeferredConsideration Statement falls to be referred, in accordance with the relevantprovision of this agreement, to Independent Accountants, it shall be referredto such firm of registered accountants (*registeraccountants*):

 

(a)           as the Seller and the Purchaser may agreein writing within 10 Business Days after expiry of the period allowed by therelevant provision of this agreement for the Seller and the Purchaser to reachagreement over the relevant item in dispute; or

 

(b)           failing such agreement, as shall beappointed for this purpose on the application of the Seller or the Purchaser(whichever applies first) by the President of the Dutch Institute forRegistered Accountants (*Nederlands Instituut voorRegister Accountants*(NIVRA)).

 

8.2           The Independent Accountantsshall act for the purposes of determining the Completion Accounts and theDeferred Consideration Statement, on the following basis:

 

(a)           the Independent Accountants shall determinethe dispute by means of a binding advice (*bindend advies*);

 

(b)           the items or items in dispute, which shallbe limited to the items notified pursuant to clause 6.2 or 7.2 (Notification ofDisputed Items) shall be notified to the Independent

 

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Accountantsin writing, with a copy to the other party, by the Seller and/or the Purchaserwithin 10 Business Days following the Independent Accountants’ appointment;

 

(c)           their terms of reference shall be todetermine the item or items in dispute and therefore the calculation of the NetAsset Value, the Debt, the NCLs, the Cash, the EBITA and the amounts of anyadjustment to be made as a result of such calculation and to render theirdecision within 25 Business Days of notice given under (b);

 

(d)           the Independent Accountants shall decidethe procedure to be followed in the determination, but shall allow the partiesto make written representations within a time period specified by theIndependent Accountants. Written representations made by either party shall besent to the other at the same time as the written representation is given tothe Independent Accountants; and

 

(e)           the costs of the determination, includingfees and expenses of the Independent Accountants shall be determined by theIndependent Accountants and be borne as the Independent Accountants direct.

 

8.3           The determination of theIndependent Accountants shall (i) be made in writing and made available forcollection by the parties at the offices of the Independent Accountants at suchtime as they shall determine and (ii) unless otherwise agreed by the partiesinclude reasons for each relevant determination.

 

**8.4**           TheIndependent Accountants shall act as experts and not as arbitrators and theirdetermination of any matter falling within their jurisdiction shall be finaland binding on the parties save in the event of manifest error (when therelevant part of their determination shall be void and the matter shall beremitted to the Independent Accountants for correction).

** **

8.5           Subject to clause 6.4, nothingin the clauses “Completion Accounts”, “Deferred Consideration” or “IndependentAccountants” shall entitle a party or the Independent Accountants access to anyinformation or document which is protected by legal professional privilege, orwhich has been prepared by the other party or its accountants and other professionaladvisers with a view to assessing the merits of any claim or argument.

 

8.6           Each party and the IndependentAccountants shall, and shall procure that its accountants and other advisersshall, keep all information and documents provided to them pursuant to clauses “CompletionAccounts”, “Deferred Consideration” or “Independent Accountants” confidentialand shall not use the same for any purpose, except for disclosure or use inconnection with the preparation of the Completion Accounts, the DeferredConsideration Statement or the proceedings of the Independent Accountants oranother matter arising out of this agreement or in defending any claim orargument or alleged claim or argument relating to this agreement or its subjectmatter.

 

8.7           Where the IndependentAccountants are called upon to confirm the Leverage Ratio under clause 4.6, theprovisions of clauses 8.1 (save that for the purposes of this clause 8.7, theSeller and Purchaser shall agree within 2 Business Days of the Purchaser’srequest, the identity of the Independent Accountants, failing which clause8.1(b) shall apply), 8.2(a), 8.3 (subject to the time limit set in clause 4.6),8.4, 8.5 and 8.6 shall *mutatis mutandis*apply.

 

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**9.**             LOANSAND GUARANTEES

 

9.1           On Completion the Seller shall(on behalf of the Seller’s Group) settle (by way of a payment to the Purchaseron behalf of each PMD Group Company) all Debt due from the Seller’s Group toeach PMD Group Company in full (subject to any subsequent adjustments underclause 9.7).

 

9.2           On Completion the Purchasershall settle all Debt due from each PMD Group Company to any member of theSeller’s Group in full (subject to any subsequent adjustments under clause 9.7)by way of a payment to the Seller (on behalf of the Seller’s Group).

 

9.3           The parties acknowledge thatthe Purchase Price has been agreed on the basis that following Completion noindebtedness of any kind (whether or not presently payable) is owed by anymember of the Seller’s Group to any PMD Group Company or by any PMD GroupCompany to any member of the Seller’s Group other than:

 

(a)           any amounts which may be due or become dueby way of trade credit in the ordinary course of trading as a result of goodsor services supplied on normal arm’s length terms;

 

(b)           any amounts which may fall to be paidpursuant to any express provision of this agreement or any of the documentsrequired to be executed or delivered pursuant to the provisions of thisagreement; or

 

(c)           any amounts provided for in the CompletionAccounts and due from any PMD Group Company under the Seller’s pension plan orlife assurance scheme in respect of contributions due in the ordinary way byreason of the participation of the PMD Group Company in those schemes up to theCompletion.

 

9.4           The Seller shall procure thaton Completion the relevant PMD Group Company is released from the mortgagelisted in Part 1 of the schedule headed “Guarantees and Indemnities” anduse reasonable endeavours to procure that the guarantee to Mr van Herk listedin Part 3 of the schedule headed “Guarantees and Indemnities”. The Sellershall use reasonable endeavours to procure that as soon as practicablefollowing Completion each PMD Group Company is released from all otherEncumbrances affecting it and/or its Assets or Business in respect of anyliability or obligation of any member of the Seller’s Group.

 

9.5           The Purchaser shall procurethat on Completion each member of the Seller’s Group is released from theguarantees and indemnities listed in Part 2 of the schedule headed “Guaranteesand Indemnities”. The Purchaser shall use reasonable endeavours to procure thatas soon as practicable following Completion, each member of the Seller’s Groupis released from all other Encumbrances affecting it and/or its Assets orBusiness in respect of obligations of any PMD Group Company.

 

9.6           To the extent that the Selleror the Purchaser is or will be unable to obtain any release required undereither clause 9.4 or clause 9.5, the Seller or the Purchaser (as the case maybe) shall use reasonable endeavours to procure that the underlying indebtednessis settled and shall fully indemnify the other party in respect of any suchunderlying indebtedness for the period commencing on the Completion Date. Inrespect of the guarantee to Mr Van Herk referred to in clause 9.4, thePurchaser shall (without derogation from any of its obligations under clause13.2) (a) only claim under any indemnity given by the Seller after having firstexhausted any claims it may have against Mr van Herk or Marflex B.V., and (b)where any

 

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indemnification claims is made, cede all rights of recourse againstthird parties to the Seller upon settlement of any indemnity claims. Sellershall also be entitled to use its best endeavours to procure an amendment tosuch guarantee and, following Completion, the Purchaser shall provide itsreasonable co-operation in this regard.

 

9.7           If the net amount paid atCompletion under clauses 9.1 and 9.2 (as required by clause 4.3) is differentfrom the net amount which should have been paid as determined by reference tothe Completion Balance Sheet, either the Purchaser shall pay to the Seller orthe Seller shall pay to the Purchaser (as appropriate) in cash, the sumnecessary to ensure that the correct net payment as required under clauses 9.1and 9.2 is made. Such amount shall be increased by interest thereon calculatedat a rate of 5 per cent. per annum from Completion until the date of actualpayment.

 

**10.**          DUEDILIGENCE INVESTIGATION

 

10.1         The Purchaser acknowledges andagrees that:

 

(a)           it has performed, with the assistance ofprofessional advisers, a due diligence investigation with respect to theShares, the Assets, the PMD Group Companies and their businesses on the basisof the information provided by the Seller, the senior management of the PMDGroup Companies, the PMD Group Companies and their advisers (the **Due Diligence Investigation**); and

 

(b)           the Purchaser has raised with the Sellerissues which the Purchaser considered relevant on the basis of the informationso provided in connection with the transactions contemplated hereby.

 

10.2         The Purchaser represents andwarrants to the Seller that as at the date of this agreement the Purchaser isnot actually aware of any matter (other than matters contained in theDisclosure Letter) which clearly constitutes or will at Completion clearlyconstitute a breach of any Warranty or which will after Completion clearly giverise to a breach of any Warranty.  With aview to identifying such matters, the Purchaser has prior to signing thisagreement considered (to the extent that the Purchaser at the date of thisagreement is able to appreciate the impact thereof on the Business or the PMDGroup Companies) all matters arising out of the Due Diligence Investigation(including matters contained in the due diligence reports prepared for it byits professional advisers) or contained in the Disclosure Letter.  The fact that certain matters have beenpresented or referred to by the Seller in draft versions of the DisclosureLetter does not create awareness as referred to in this clause 10.2.

 

**11.**          WARRANTIES

 

**11.1**         Incorporation of WarrantySchedule

 

(a)           The Seller warrants and represents (*garandeert)*to the Purchaser that each and every statementset out in the schedule headed “Warranties” is true and accurate on thedate hereof except to the extent properly and fairly disclosed in****the Disclosure Letter.

 

(b)           The Seller acknowledges that the Purchaserhas entered into this agreement in reliance upon, amongst other things, theWarranties and the Indemnities and on the undertakings contained in the clauseheaded “Protective Covenants”.

 

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**11.2**         Updating to Completion

 

(a)           The Seller further warrants and undertakesto and with the Purchaser that:

 

(i)            subject to matters properly and fairlydisclosed in the Disclosure Letter, unless expressly only given at a date otherthan Completion, the Warranties will be fulfilled down to, and will be true andaccurate at Completion as if they had been given again at Completion; and

 

(ii)           subject to clause 11.2(b), if after thesigning of this agreement and before Completion any event shall occur or mattershall arise which results or may result in any of the Warranties not being trueor accurate at Completion, the Seller shall immediately after having acquiredknowledge thereof notify the Purchaser in writing fully thereof and the Seller(at its own cost) shall make any investigation concerning the event or matterwhich the Purchaser may reasonably require.

 

(b)           The Seller is not required to notify thePurchaser pursuant to clause 11.2(a)(ii) of any event which results or mayresult in any of the Warranties not being true or accurate at Completion inrespect of which damages to which the Purchaser would be entitled do not exceedEUR100,000.

 

**11.3**         Allocation of Risk

 

The Seller acknowledges that the Warrantiesare material and the accuracy of the Warranties is relevant to the Purchaser’sdecision to enter into this agreement and pay the Purchase Price. TheWarranties (subject to the Disclosure Letter and any limitations thereon underthis agreement) and clause 10.2 allocate between the Seller and the Purchaserthe risks and costs relating to facts or circumstances which may cause any ofthe Warranties to be untrue or inaccurate.

 

**11.4**         Limitation of Liability

 

(a)           The liability of the Seller inconnection with a breach of Warranty shall be subject to the limitationscontained in, and to the other provisions of, the schedule headed “WarrantyLimits” and any Warranty Claim shall be subject to the provisions of thatschedule.

 

(b)           None of the limitationscontained in schedule headed “Warranty Limits” shall apply to any claimwhich arises or is increased, or to the extent to which it arises or isincreased, as a consequence of, or which is delayed as a result of any wilfulact or omission *(opzet*) or gross negligence (*grove**nalatigheid*) ofthe Seller or any officer or employee of any member of the Seller’s Group.

 

**11.5**         Effect of Completion

 

The Warranties and all other provisions ofthis agreement insofar as the same shall not have been performed at Completionshall not be extinguished or affected by Completion, or by any other event ormatter whatsoever (including, without limitation, any satisfaction and/orwaiver of any Condition), except by a specific and duly authorised writtenwaiver or release by the Purchaser.

 

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**11.6**         Right of Termination

 

(a)           The Purchaser shall beentitled (in lieu of the right to claim under any Indemnity or make anyWarranty Claim) by notice in writing to the Seller to terminate this agreement(other than the clauses specified in clause 3.7(b)), if between the date ofthis agreement and Completion:

 

(i)            it becomes apparent that priorto the date of this agreement Seller has failed to disclose any material breachof any Competition Rule; and

 

(ii)           the Seller was at the date ofthis agreement actually aware of such breach; and

 

(iii)          evidence (including anywritten declarations) in relation to such breach has been discovered or madeavailable to the Competition Authority concerned which evidence *prima facie* alone or in conjunction with other evidenceallows the Competition Authority to take a decision which frustrates fulfilmentof Condition 3.1(b); and

 

(iv)          as a result of such breach ofa Competition Rule, the Purchaser is unable to procure fulfilment of Condition3.1(b) of this agreement.

 

For the purposes of this clause 11.6(a) Seller’s awareness shall belimited to the actual awareness of the members of the PMD Group head officemanagement team based in Amsterdam, each managing director of those PMD GroupCompanies, and those employees of the Seller’s Group, listed in the schedule headed“Consulted Personnel” to the Disclosure Letter.

 

(b)           The Purchaser shall prior togiving a notice under clause 11.6 which terminates (or purports to terminate)this agreement consult with the Seller in good faith for a reasonable period inconnection with the taking by the Seller of all such steps as may be possible(and which cannot be or have not been taken by the Purchaser) to procure thefulfilment of Condition 3.1(b) and for this purpose the Seller and thePurchaser shall provide each other with such information as reasonablyrequested; and

 

(c)           A notice under clause 11.6(a)must be accompanied by a written legal opinion by an independent Queens Counselin the United Kingdom appointed by the Purchaser that due to the occurrence ofthe material breach referred to in clause 11.6(a)(i) and based on the evidencewhich has been discovered by or made available to the Competition Authority ascontemplated under clause 11.6(a)(iii) there is a reasonable chance that theCompetition Authority will take a decision which frustrates fulfilment ofcondition 3.1(b).

 

(d)           Any termination pursuant tosuch a notice shall become effective 10 Business Days after receipt of suchnotice by the Seller, unless prior to the end of such period, the Seller hasnotified the Purchaser in writing that it disputes the Purchaser’s right toterminate the agreement under this clause 11.6. Should parties be unable to agree any dispute in this regard within 10Business Days after the Seller’s notification of such dispute to Purchaser, theparties may refer the matter to arbitration under the provisions of the clauseheaded “Arbitration” of this agreement.

 

(e)           The Purchaser shall have noright to terminate this agreement by reason of, and this clause 11.6 shall notapply to, any investigations by Competition Authorities or other matters whichhave been disclosed to the Purchaser, which shall include those investigationsand matters disclosed in the Data Room or in discussions between the parties.

 

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A failure toexercise this right shall not constitute a waiver of any other rights of thePurchaser to claim under any Indemnity or make any Warranty Claim.

 

**11.7**         Waiver

 

The Seller undertakes to the Purchaser notto make or pursue any claim against any PMD Group Company or its respectiveofficers, employees or agents in connection with assisting the Seller in givingthe Warranties, preparing the Disclosure Letter and/or entering into thisagreement and the documents entered into pursuant to this agreement except inthe case of any criminal proceedings initiated by the Seller against theaforementioned.

 

**11.8**         Basis of Damages/Undertakingto Pay

 

(a)           The Seller agrees and undertakes with thePurchaser, in the case of a breach of any Warranty, to pay in cash to thePurchaser (or at the election of the Purchaser to any of the PMD GroupCompanies) a sum equal to the damages and losses suffered by the Purchaserand/or the PMD Group Companies attributable (*toerekenbaar*)to the Seller’s breach of Warranty. Such damages and losses shall be calculatedas the amount necessary to put the PMD Group Companies and the Purchaser intothe position which would have existed had the Warranty been true and accurate.In addition to such damages and losses, the Seller agrees and undertakes to payall reasonable costs incurred by the Purchaser and/or the PMD Companiesrelating to the prevention or limitation of any loss or damage resulting fromor arising as a result of the breach of the Warranty and in particular, butwithout limitation, shall include all reasonable legal and other similar costsincurred in instructing and retaining professional advisers. This clause doesnot limit the Purchaser’s rights in relation to any claim under this agreementwhich is not a breach of Warranty.

 

(b)           For the purpose of assessing the damagesfor any breach of Warranty, the Seller acknowledges that the Purchaser isentering into this agreement with the intention that each business comprisedwithin the PMD Group Companies will be continued as a going concern.

 

**11.9**         Reduction of Purchase Price

 

Any payment made by the Seller in respectof a Warranty Claim shall be deemed to be a reduction of that part of thePurchase Price that the Seller or an Indirect Seller has received hereunder.

 

**11.10**       Information

 

Without prejudice to the validity of theWarranty Claim in question, the Purchaser shall allow, and shall procure thatthe relevant PMD Group Companies allow, the Seller to investigate the matter orcircumstance alleged to give rise to a Warranty Claim and for such purpose thePurchaser shall give, and shall procure that the relevant PMD Group Companiesgive, subject to being paid all reasonable costs and expenses, all suchinformation and assistance as the Seller may reasonably request, provided that (i)the Seller shall not be permitted access to any information or document whichis protected by privilege or which has been prepared with a view to assessingthe merits or quantum of any Warranty Claim, and (ii) the Seller agrees to keepall information confidential and only to use it for the purpose of the WarrantyClaim in question.

 

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**12.**          WARRANTIESBY PURCHASER

 

**12.1**         ThePurchaser warrants and represents (*garandeert*) tothe Seller for itself and for each Acquiring Entity or other Acceding Purchaserthat as at the date of this agreement and at Completion each and every of thefollowing statements is true and accurate:

 

(a)           the Purchaser and each Acquiring Entity orother Acceding Purchaser has the legal right and full power and authority toenter into and perform this agreement and all other documents entered intopursuant to this agreement.

 

(b)           the Purchaser and each Acquiring Entity orother Acceding Purchaser has or will at Completion have the legal right andfull power and authority to enter into and perform any Local Transfer Documentto which it is a party and any other documents to be executed by it pursuant toor in connection with this agreement or any Local Transfer Document.

 

(c)           the Purchaser and each Acquiring Entity orother Acceding Purchaser has taken all corporate action required by it toauthorise it to enter into and to perform this agreement.  The Purchaser or where appropriate anAcquiring Entity or other Acceding Purchaser, has (or will prior to Completionhave) taken all corporate action required by it to authorise it to enter intoand to perform any Local Transfer Document to which it is a party and any otherdocuments to be executed by it pursuant to or in connection with this agreementor any Local Transfer Document.

 

(d)           the execution and delivery of and theperformance by the Purchaser or, where relevant, an Acquiring Entity or otherAcceding Purchaser of its obligations under this agreement, any Local TransferDocument to which it is a party and any other documents to be executed by itpursuant to or in connection with this agreement or any Local Transfer Documentwill not:

 

(i)            result in a breach of any provision of theconstitutional documents of the Purchaser or, where relevant, an AcquiringEntity or other Acceding Purchaser; or

 

(ii)           result in a breach of any order, judgmentor decree of any court, governmental agency or regulatory body to which thePurchaser or, where relevant, an Acquiring Entity or other Acceding Purchaseris a party or by which the Purchaser or, where relevant, an Acquiring Entity orother Acceding Purchaser.

 

**13.**          SPECIFICINDEMNITIES

 

13.1         The Seller shall indemnify thePurchaser as trustee for itself and the PMD Group Companies (together, the **Indemnified Parties**), and keep the Indemnified Parties fullyindemnified against, all Losses, relating to or arising out of or in connectionwith:

 

(a)           Reorganisation

 

(i)            implementing theReorganisation (including in relation to any act, matter or thing done oromitted to be done in relation thereto);

 

(ii)           breach of applicable laws orregulations or the constitutional documents of any Reorganisation Company inrelation to the Reorganisation;

 

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(iii)          the failure of any PMD GroupCompany to have absolute legal and beneficial ownership, free fromEncumbrances, of any of the shares and/or assets transferred (or purported tobe transferred) to it as part of the Reorganisation and which are now thesubject of this agreement;

 

(iv)          all assets and liabilitiestransferred or purported to be transferred out of any PMD Group Company as partof the Reorganisation;

 

(v)           breach of Warranties 1.1 (*The Shares and PMD Group Companies*), 1.2 (*Subsidiaries, Associates and Branches*) and 8.1 (*Ownership and Sufficiency of Assets)* arising in connectionwith the Reorganisation (and any disclosure against these Warranties in theDisclosure Letter shall be disregarded for these purposes);

 

(vi)          any attempted or actualchallenge or reversal of any of the transactions undertaken or to be undertakenpursuant to the Reorganisation.

 

(b)           Employees

 

(i)            the transfer (or purported transfer) ofemployment, prior to the date of this agreement, of any employee not employedby a PMD Group Company whose employment was so transferred (or purportedlytransferred) to a PMD Group Company and who did not prior to such transfer (orpurported transfer) wholly or mainly provide his services to a PMD GroupCompany and/or the failure of the Seller, at or prior to Completion to transferany employee not employed by a PMD Group Company but who otherwise wholly ormainly provides their services to a PMD Group Company;

 

(ii)           any claim or allegation by any person notemployed by a PMD Group Company that his or her employment transferred to a PMDGroup Company or to a member of the Purchaser’s Group by operation of law(including but not limited to, any claim for unfair dismissal, redundancy,continued employment, reinstatement or reengagement and any claim for a failureto inform and/or consult with such an employee);

 

(iii)          breach of any legallyenforceable obligation of the Seller, or, to the extent that this should havebeen completed prior to Completion, breach of any legally enforceableobligation of a PMD Group Company, to inform or consult with any RelevantEmployee, Consultant, works council, economic committee or other staffrepresentative organisation, arising out of or in connection with thetransaction contemplated by this agreement; and

 

(iv)          any claim or allegation arisingout of (i) any breach of paid holidays regulations, (ii) any breach ofregulations concerning collective redundancies and company restructuringincluding in the case of modification of the contracts of employment referredto in the minutes of the Works Council of Buhrmann France Image entitled “ProcesVerbal de la Reunion du 24 Juin 2003” and “Additif au Proces Verbal de laReunion du 24 Juin 2003” prepared at Croissy Beauborg on 30 June, 2003 and 28July, 2003 respectively.

 

(c)           Competition

 

(i)            any breach of any CompetitionRule (**Breach**) or any investigation, findingor action by any Competition Authority or a court, tribunal or arbitrator inrelation to the

 

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conduct of the Business prior to Completion (**Inquiry**),subject to the Purchaser taking reasonable steps to mitigate the liability ofthe Business;

 

(ii)           for the purposes of clause13.1(c)(i) and without prejudice to paragraph 2 of the schedule headed “WarrantyLimits”, the Purchaser shall give the Seller written notice of any such Breachor Inquiry or Loss as soon as possible and the Seller will indemnify thePurchaser within 10 Business Days of any Loss being paid by any PMD GroupCompany; and

 

(iii)          in relation to discussions andnegotiations with and investigations and proceedings by any CompetitionAuthority and further in relation to any proceedings before any court, tribunalor arbitrator and any discussions or negotiations with any party in connectionwith any actual or anticipated litigation (the **Procedure**):

 

(A)          any Procedure relating toactivities of the Business ongoing as at Completion shall be exclusivelycontrolled by the Purchaser and shall be compromised, disposed of or settled bythe Purchaser exclusively;

 

(B)           any Procedure relating toactivities of the Business discontinued prior to Completion or disclosed in theData Room shall be exclusively controlled by the Seller and shall becompromised, disposed of or settled by the Seller exclusively;

 

(C)           the party controlling anyProcedure shall be entitled at its own expense and discretion to take suchaction as shall in it’s exclusive judgement be necessary to avoid, contest,dispute, deny, defend, resist, appeal, admit or compromise any Procedure,liability or alleged liability relating to the Business, provided that (i) theSeller will not be entitled to make any undertakings in relation to the futureconduct of the Business without the Purchaser’s consent (such consent not to beunreasonably withheld or delayed) and (ii) the interests of the other party aretaken into account and (iii) the other party is consulted prior to and informedas soon as reasonably practicable of all material steps to be taken by theparty controlling proceedings in relation thereto and in relation to any appealsarising therefrom;

 

(D)          both parties will give andprocure that any member of their respective Groups will give, all suchreasonable information and assistance, including access to premises andpersonnel, and the right to examine and copy or photograph any assets,accounts, documents and records, for the purpose of any Procedure or any appealrelating thereto as the other party or its professional advisers reasonablyrequest; and

 

(E)           the indemnification given inclause 13.1(c)(i) shall be the exclusive remedy of the Purchaser and any PMDGroup Company in respect of the Losses which result directly or indirectly fromany Breach or Inquiry or related Procedure.

 

This clause13.1 (c) shall apply notwithstanding the provisions of paragraph 5 of the schedule headed“Warranty Limits”.

 

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(d)           Securitisation Release

 

(i)            implementing the Securitisation Release(including in relation to any act, matter or thing done or omitted to be donein relation thereto);

 

(ii)           the failure or partial failure of theSecuritisation Release to fully and effectively discharge and release each PMDGroup Company from all liabilities and obligations arising out of theSecuritisation;

 

(iii)          the failure of any PMD Group Company to haveabsolute legal and beneficial ownership, free from Encumbrances, of anyreceivables which, as at the date of the Securitisation Release, are thesubject of the Securitisation;

 

(iv)          breach of applicable laws or regulations orthe constitutional documents of any PMD Group Company in relation to theSecuritisation Release; and

 

(v)           any attempted or actual challenge orreversal of any of the transactions undertaken or to be undertaken pursuant tothe Securitisation Release.

 

(e)           Property

 

(i)            the Surplus Properties;

 

(ii)           the dispute with Marie Černákovárelating to the ownership of the following plots of land and buildings locatedin the registration area of Přízřenice in Brno:

 

(A)          plot no: 816/1;

 

(B)           plot no: 817;

 

(C)           plot no: 818;

 

(D)          plot no: 819/2;

 

(E)           plot no: 822;

 

(iii)          the fact that the main warehouse facilityin Prague does not enjoy rights of access or rights to run service media acrossthe lands of Čechofracht; and

 

(iv)          the fact that leaseholdProperties in Settimo Torinese, Ancona and Pescara are used for businesspurposes without the necessary permission (*Agibilita)*.

 

(f)            Litigation

 

the litigationor threatened litigation referred to in the following paragraphs of theDisclosure Letter:

 

(i)            Warranty 1.3.6;

 

(ii)           Warranty 10.1.3; and

 

(iii)          Warranty 10.3.

 

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(g)           Dormant or Liquidated PMDGroup Companies

 

all PMD GroupCompanies which are dormant (as defined in Section 249AA(4) of theCompanies Act 1985 (UK) or any corresponding provisions under the legislationor laws of any jurisdiction) and the following PMD Group Companies that are inliquidation or receivership:

 

(i)            Proost & Brandt EA; and

 

(ii)           Broadworth Limited.

 

(h)           IT

 

(i)            any material business disruption or loss ofdata resulting from the failure of Deutsche Papier Vertriebs GmbH, BuhrmannFrance Image SAS and Kelly Paper Company’s Business IT due to there not beingprocedures adequate to the risks facing such companies for back up of data,disaster recovery and security;

 

(ii)           the inability of Polyedra SpA to adequatelysupport and maintain SEAP because of the absence of technical documentation;

 

(iii)          the inability of Buhrmann France Image SASand the other PMD Group Companies which currently use the GINE and Magsimapplications because of the absence of documentation; and

 

(iv)          the reliability of the current automaticwarehouse system used by Buhrmann France Image SAS because of mechanical orsoftware problems.

 

(i)            Environment

 

any liabilityor obligation under or breach of Environmental Law as a result of the presenceof, or consequences of the presence of, Hazardous Substances in soil,groundwater or surface water in, on or under the Proost en Brandt B.V. propertyin the Netherlands as referred to in the paragraph in the Disclosure Letterrelating to Warranty 13.1.4 (the **Dutch Property**)prior to or at Completion including without limitation the off-site migrationof such Hazardous Substances prior to or after Completion.

 

**13.2**         Limitationsrelating to Indemnities

 

(a)           The Seller shall not be liable under theclause headed “Specific Indemnities” or under any other indemnity providedunder this agreement to the extent that:

 

(i)            specific adjustment, provision or reservefor such liability is made in the Completion Accounts;

 

(ii)           the Purchaser receives a payment from theSeller in respect of a Warranty Claim arising out of the same circumstancesthat give rise to a claim under this clause 13;

 

(iii)          it relates to a Loss under clause 13.1(h)which arose out of events which occurred more than 6 months after Completion orwhich could have been avoided through the compliance with the applicable orappropriate IT procedures; or

 

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(iv)          any liability for Loss which if it were aliability under a Warranty Claim would not be recoverable under paragraphs 3(other than 3(c)), 4, 6, 8 or 9 of the schedule headed “Warranty Limits”;

 

(v)           in relation to a Loss under clause 13.1(i)if it is caused or increased by:

 

(A)          any negligent act or omission of any of theIndemnified Parties;

 

(B)           any material change of use of the DutchProperty (or part thereof) after Completion to a materially different use, thatis a use which is not the continued operation of the Dutch Property as it wasoperated prior to Completion;

 

(C)           any construction, development or demolitionworks at the Dutch Property other than any works undertaken for the continuedoperation of the Dutch Property as it was operated prior to Completion; or

 

(vi)          in relation to the Indemnity in clause 13.1(i),any Loss arising after the tenth anniversary of Completion.

 

(b)           The Seller shall have no liability for anyLoss under the Indemnities in clauses 13.1(b)(iv), 13.1(e)(ii) and (iii),13.1(f) and 13.1(h)(i), (ii) and (iii) to the extent that a claim is less thanEUR150,000 (and claims relating to a series of connected matters shall beaggregated for this purpose).

 

13.3         Any payment made by the Sellerin respect of an Indemnity shall be deemed to be a reduction of that part ofthe Purchase Price that the Seller or Indirect Seller has received hereunder.

 

**14.**          PENSIONS

 

Subject toCompletion, the Seller and the Purchaser shall observe and perform thoseprovisions of the schedule headed “Pensions” as are expressed to beobserved and performed by each of them respectively.

 

**15.**          TAXATION

 

15.1         The provisions of the schedule headed“Tax Covenant” shall apply in respect of Taxation.

 

15.2         The Seller and, if Completionoccurs prior to the filing of the Seller’s 2003 Tax Return, the Purchaser willprocure that Buhrmann II B.V. (being the parent of the Seller’s Dutch taxgroup) and Motif Paper Company (Europe) B.V. execute a joint request to theRelevant Tax Authorities for the transfer of the tax loss carry forwardattributable to Motif Paper Company (Europe) B.V. to Motif Paper Company(Europe) B.V. to be filed together with the Seller’s 2003 Tax Return. Theamount of the tax loss carry forward to be transferred will be no less thanEUR930,000 which will, provided that the Business is conducted in the ordinarycourse, result in a tax gain of not less than EUR300,000.

 

**16.**          PROTECTIVECOVENANTS

 

The provisionsof the schedule headed “Protective Covenants” shall apply from Completion.

 

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**17.          CONFIDENTIALITY**

 

17.1         The parties acknowledge thatthe Confidentiality Agreement shall cease to have force or effect from the dateof this agreement.

 

17.2         Subject to clause 17.5,neither the Seller nor the Purchaser shall make (or permit any other member ofthe Seller’s Group or the Purchaser’s Group to make) any announcementconcerning this sale and purchase or any ancillary matter before, on or afterCompletion.

 

17.3         The Purchaser shall and shallprocure that:

 

(a)           each member of the Purchaser’s Group fromtime to time shall keep confidential all information provided to it by or onbehalf of the Seller or otherwise obtained by or in connection with thisagreement which relates to any member of the Seller’s Group or until Completionthe PMD Group Companies; and

 

(b)           if after Completion any PMD Group Companyholds confidential information relating to the Seller’s Group, it shall keepthat information confidential and, to the extent reasonably practicable, shallreturn that information to the Seller or destroy it, in each case without retainingcopies.

 

17.4         The Seller shall and shallprocure that:

 

(a)           the Seller’s Group from time to time shallkeep confidential all information provided to it by or on behalf of thePurchaser or otherwise obtained by or in connection with this agreement whichrelates to any member of the Purchaser’s Group; and

 

(b)           if after Completion the Seller holdsconfidential information relating to any PMD Group Company, it shall keep thatinformation confidential and, to the extent reasonably practicable, shall returnthat information to the Purchaser or destroy it, in each case without retainingcopies.

 

17.5         Nothing in this clauseprevents any announcement being made or any confidential information beingdisclosed:

 

(a)           with the written approval of the other party,which in the case of any announcement shall not be unreasonably withheld ordelayed;

 

(b)           to the extent required by law or anyapplicable regulation;

 

(c)           to the extent the disclosure or use isrequired for the purpose of any judicial proceedings arising out of thisagreement or any other agreement entered into under or pursuant to thisagreement or the disclosure is reasonably required to be made to a TaxAuthority in connection with the Taxation affairs of the disclosing party,

 

but a partyrequired to disclose any confidential information (except in the case ofdisclosure to a Tax Authority) shall promptly notify the other party, wherepracticable and lawful to do so, before disclosure occurs.

 

17.6         Nothing in this clauseprevents disclosure of confidential information by either party:

 

(a)           to the extent that the information is in orcomes into the public domain other than as a result of a breach of anyundertaking or duty of confidentiality by any person;

 

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(b)           to that party’s professional advisers,auditors or bankers, but before any disclosure to any such person the relevantparty shall procure that he is made aware of the terms of this clause and shalluse its best endeavours to procure that each such person adheres to those termsas if he were bound by the provisions of this clause; or

 

(c)           to the extent that the disclosure or use isrequired to vest the full benefit of this agreement in the Seller or thePurchaser, as the case may be.

 

**18.**          NOTICES

 

18.1         Any notice or other formalcommunication given under this agreement (which includes fax, but not email)must be in writing and may be delivered in person, or sent by post or fax tothe party to be served at as follows:

 

(a)           to the Seller at:

Buhrmann N.V.

Hoogoorddreef 62

1101 BE Amsterdam ZO

The Netherlands

Fax: +31 20 651 1011

marked for the attention of: Floris Wallerand Heidi van der Kooij

 

(b)           to the Purchaser at:

PaperlinX Limited

307 Ferntree Gully Road

Mt. Waverley

Victoria 3149

Australia

Fax: +613 8540 2255

marked for the attention of: DarrylAbotomey

 

with a copy to:

PaperlinX Investments (Europe) LimitedUnits 1 & 2Bricklayers Arms

Mandela Way

LondonSE1 5SP

Fax: +44 20 7394 3131

marked for the attention of: Mark Smitheram

 

or at suchother address or fax number as it may notify to the other party under thisclause.  Any notice or other documentsent by post shall be sent by recorded delivery post (*aangetekendepost met ontvangstbevestiging*) (if the place of destination is thesame as its country of origin) or by courier (if its destination is elsewhere).

 

18.2         Any notice or othercommunication shall be deemed to have been given:

 

(a)           if delivered in person, at the time ofdelivery; or

 

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(b)           if sent by post, at 10.00 a.m. on the fifthBusiness Day after it was put into the post or at 10.00 a.m. (local time at theplace of destination) on the third Business Day after it was put into the postby courier; or

 

(c)           if sent by fax, on the date and timereceived (local time at the place of destination) if that time falls between9am and 5pm on a Business Day in the place of receipt and if not, the nextBusiness Day.

 

18.3         In proving the giving of anotice or other communication it shall be sufficient to prove that delivery inperson was made or that the envelope containing the communication was properlyaddressed and posted, either by recorded delivery post or by prepaid airmail,as the case may be), or that the fax was properly addressed and transmitted, asthe case may be.

 

**19.**          FURTHERASSURANCES

 

19.1         On or after Completion eachparty shall, at its own cost and expense, execute and do (or procure to beexecuted and done by any other necessary party) all such deeds, documents, actsand things as the other party may from time to time require in order give fulleffect to this agreement.

 

19.2         Both parties will use allreasonable endeavours to promote the benefits of the transactions contemplatedin this agreement to all interested parties including employees, customers andsuppliers.

 

19.3         The Purchaser will procurethat within 90 days of Completion the PMD Group Companies cease all use of theBuhrmann name or logo and the Corporate Express name and any other intellectualproperty included in the schedule headed “Excluded Assets”, includingwithout limitation the use of any letterheads or other stationary includingsuch names, logo or other intellectual property. With regard to any vehicles,buildings or marketing brochures on which the Buhrmann name or logo or theCorporate Express name and any other intellectual property included in the schedule headed“Excluded Assets” is displayed, the Purchaser shall procure that such displayshall be removed within 12 months of Completion. This clause shall not apply toany intellectual property registered in the name of a PMD Group Company orwhich forms part of the Assets (including without limitation the nameBührmann-Ubbens B.V.).

 

19.4         The Purchaser shall procurethat each PMD Group Company whose registered name incorporates “Buhrmann” or “CorporateExpress” takes all necessary steps to remove reference to “Buhrmann” or “CorporateExpress” from its registered name (other than the name of Bührmann-Ubbens) assoon as possible following Completion and by no later than 90 days thereafter.

 

19.5         The Purchaser and the Sellershall use their best endeavours to develop:

 

(a)           a strategic relationship for the supply of 6000 tonnesof copy paper from the Purchaser’s Group to the Seller’s Group in Canada perannum in addition to any existing volumes as at the date of this agreement; and

 

(b)           a supply relationship for the supply of 5000 of tonnescopy paper from the Purchaser’s Group to the Seller’s Group in the UnitedStates per annum in addition to any existing volumes as at the date of thisagreement.

 

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19.6         Following the determination ofany reviewed rent in respect of a Property after Completion, if the CompletionAccounts have not already apportioned liability in accordance with theprinciples of this clause then the Seller and the Purchaser shall shareliability for all costs and expenses (including any increases of rent) inconnection with such review in proportion according to the relationship betweenthe length of that part of the relevant review period falling before Completionand the length of that part falling after Completion (the former being borne bythe Seller and the latter being borne by the Purchaser) and the Seller shallindemnify the Purchaser accordingly.

 

**20.**          TRANSFEROF RIGHTS AND OBLIGATIONS

 

20.1         If at any time after the dateof this agreement but before Completion, a member of the Purchaser’s Group(each an **Acceding Purchaser**) agrees with thePurchaser that in place of the Purchaser, it will accept the transfer of someor all of the Shares and/or the Assets, the Purchaser will notify the Sellerand upon such notice, the Seller and the Purchaser shall enter into, and thePurchaser shall procure that the member of the Purchaser’s Group enters into, adeed of adherence in the form as set out in the schedule headed “Form ofDeed of Adherence”.

 

20.2         None of the rights orobligations under this agreement may be assigned or transferred (by way ofsuccession or otherwise) to a third party by the Seller without the priorconsent of the Purchaser, or by the Purchaser without the prior consent of theSeller.  In the event any third partystipulation (*derdenbeding*) contained in thisagreement is accepted by any third party, such third party will not become aparty to this agreement.

 

20.3         The Seller acknowledges that if thePurchaser transfers Shares or Assets to a third party purchaser afterCompletion pursuant to a condition or obligation stipulated by a CompetitionAuthority to which notification has been made in compliance with clause 3.1(b),the Purchaser may be required to give representations, warranties and/orindemnities to the third party purchaser in relation to such Shares or Assetsand the PMD Group Company so transferred. The Seller acknowledges that any suchrepresentations, warranties and/or indemnities will be provided by the Purchaserin reliance upon the Warranties and Indemnities. The Seller’s defencesagainst any claim by the Purchaser arising pursuant to a claim against thePurchaser by a third party purchaser will not be diminished or increased byreason of such reliance or by reason of any difference between the Warrantiesand Indemnities and the representations, warranties and indemnities provided bythe Purchaser to that third party or by any difference in the knowledge of thePurchaser and a third party purchaser.

 

**21.**          GROSSING-UPOF INDEMNITY PAYMENTS 

 

21.1         Where any payment is madeunder this agreement pursuant to an Indemnity, compensation or reimbursementprovision (including, for the avoidance of doubt, the Tax Covenant) and thatsum is subject to a charge to Taxation in the hands of the recipient the sumpayable shall be increased to such sum as will ensure that after payment ofsuch Taxation (and after giving credit for any Taxation Benefit available tothe recipient in respect of the matter giving rise to the payment) therecipient shall be left with a sum equal to the sum that it would have receivedin the absence of such a charge to Taxation.

 

21.2         Where any sum (the **Indemnity Sum**) constituting an indemnity, compensation orreimbursement to any party to this agreement (the **Party**)is paid to a person other than the Party but is treated as taxable in the handsof the Party, the payer shall promptly pay to the

 

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Party such sum as shall reimburse the Party for all Taxation sufferedby it in respect of the payment (after giving credit for any Taxation Benefitavailable to the Party in respect of the matter giving rise to the payment).

 

**22.**          PAYMENTS

 

22.1         Unless otherwise expresslystated all payments to be made under this agreement shall be made in Euro tothe Seller, the Purchaser or, where required to be transferred into the Notary’sthird party account, as follows:

 
| (a)    | to  the Seller at: |   |                        |
|--------|--------------------|--------|-----------------------------|
|   | bank:              |   | Deutsche Bank Amsterdam     |
|   |               |   | Herengracht 450-454, 1017CV |
|   |               |   | Amsterdam, The Netherlands  |
|   | account number:    |   | 26.54.43.016                |
|   | IBAN:              |   | NL92DEUT0265443016          |
|   | BIC Code:          |   | DEUTNL2A                    |
|   |               |   |                        |

 

or suchother account as the Seller may specify; and

 
| (b)    | to  the Purchaser: |   |                         |
|--------|--------------------|--------|------------------------------|
|   | name:              |   | Paper Australia P/L          |
|   | bank:              |   | National Australia Bank Ltd. |
|   |               |   | 271 Collins Street           |
|   |               |   | Melbourne, Vic 3000          |
|   | sort code:         |   | PAPAUEURO1                   |
|   | IBAN:              |   | NATAAU3303M                  |

 

or such otheraccount as the Purchaser may specify;

 

(c)           to the third party bank account of theNotary at Deutsche Bank Amsterdam (which the Purchaser shall procure that theNotary open) to be notified by the Purchaser’s Dutch Lawyers following the dateof this agreement.

 

Payment ofsuch sum shall be a good discharge to the payer of its obligation to make suchpayment.

 

22.2         If any party is required bylaw to make a deduction or withholding in respect of any sum payable under thisagreement, such party shall, at the same time as the sum which is the subjectof the deduction or withholding is payable, pay to the receiving party suchadditional amount as shall be required to ensure that the net amount receivedby the receiving party will equal the full amount which would have beenreceived by the receiving party had no such deduction or withholding beenrequired to be made.

 

**23.**          DEFAULTINTEREST

 

Save asotherwise provided in this agreement, if the Seller or the Purchaser default inthe payment when due of any sum payable under this agreement (howsoeverdetermined) the liability of the Seller or the Purchaser (as the case may be)shall be increased to include interest on such sum from the date when suchpayment is due until the date of actual payment

 

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(as well afteras before judgment) at a rate of 5 per cent. per annum. Such interest shallaccrue from day to day.

 

**24.**          GENERAL

 

24.1         The receipt of the Seller’sLawyers or the Purchaser’s Lawyers of any sum or document to be paid ordelivered to the Seller or the Purchaser respectively shall discharge thePurchaser’s or the Seller’s obligation to pay or deliver it to the Seller orthe Purchaser.

 

24.2         Each of the obligations,Warranties and undertakings set out in this agreement (excluding any obligationwhich is fully performed at Completion) shall continue to be in force afterCompletion. 

 

24.3         Save as otherwise provided inthis agreement, or as otherwise specifically agreed in writing by the partiesafter the date of this agreement, each party will pay the Third Party Costsincurred by it (and, in the case of the Purchaser, incurred by each member ofthe Purchaser’s Group and, in the case of the Seller, incurred by each memberof the Seller’s Group including the PMD Group Companies), including withoutlimitation, in respect of their obligations in satisfying the Conditions andthe other requirements for transferring the Shares and the Assets which willinclude but not be limited to the payment of fees for the services of anybrokers, finders, financial advisers, lawyers and accountants engaged by theparties. If the parties agree any change to the Agreed Capital Structure priorto Completion, the party proposing such change shall bear any increase in ThirdParty Costs unless otherwise agreed.

 

24.4         All stamp and transfer taxesand duties attributable to the transfer of the Shares and the Assets to thePurchaser on Completion will be paid by the Purchaser other than:

 

(a)           the increase in stamp or transfer tax orduty arising from or attributable to the transfer of the Evelyn Street Propertyover the stamp or transfer tax or duty which would be payable on the transferof shares in Exploitatie Maatschappij Union B.V. (assuming that such companysole asset is the Evelyn Street Property); 

 

(b)           any stamp or transfer tax or duty inDenmark, France or Germany arising from or attributable to the assumption,transfer or capitalisation of debt on Completion; and

 

(c)           any stamp duty or transfer tax or dutyarising from or attributable to the Reorganisation.

 

24.5         The costs and expenses arisingor attributable to the transfer prior to Completion of Assets to theSubsidiaries or to new companies, and the stamp or transfer tax or dutyreferred to in clause 24.4 (a) and (b), will be paid by and shall be for theaccount of the Seller.

 

24.6         This agreement may be executedin any number of counterparts.  This hasthe same effect as if the signatures on the counterparts were on a single copyof this agreement.

 

24.7         The rights of each party underthis agreement:

 

(a)           may be exercised as often as necessary;

 

(b)           are cumulative and not exclusive of rightsand remedies provided by law; and

 

(c)           may be waived only in writing andspecifically.

 

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Delay inexercising or non-exercise of any such right is not a waiver of that right.

 

24.8         If at any time any provisionof this agreement is or becomes illegal, invalid or unenforceable in anyrespect under the law of any jurisdiction, this shall not affect or impair:

 

(a)           the legality, validity or enforceability inthat jurisdiction of any other provision of this agreement; or

 

(b)           the legality, validity or enforceabilityunder the law of any other jurisdiction of that or any other provision of thisagreement.

 

**25.**          NO RESCISSION

 

The partieswaive their rights, if any, to in whole or in part annul, rescind or dissolve(including any *gehele dan wel partiële ontbinding envernietiging*) this agreement. In the event of a breach of thisagreement, the only remedy shall be a claim for specific performance (*nakoming*) or damages.

 

**26.**          WHOLEAGREEMENT

 

26.1         This agreement contains thewhole agreement between the parties relating to the transactions contemplatedby this agreement and supersedes all previous agreements, whether oral or inwriting, between the parties relating to these transactions.

 

26.2         The Purchaser hereby excludesor (if incapable of exclusion) irrevocably waives (*afstand vanrecht*) the right to invoke any additional protection which may existunder Article 7:17 of the Dutch Civil Code, and the Seller hereby acceptssuch waiver.

 

26.3         Each party acknowledges thatin agreeing to enter into this agreement it has not relied on anyrepresentation, warranty, collateral contract or other assurance (except thoseset out in this agreement and any other agreement entered into on the date ofthis agreement between the parties) made by or on behalf of any other party beforethe signature of this agreement.  Eachparty waives all rights and remedies which, but for this subclause, mightotherwise be available to it in respect of any such representation, warranty,collateral contract or other assurance.

 

26.4         Nothing in the precedingsubclause limits or excludes any liability for fraud.

 

26.5         This agreement may only beamended in writing and where such amendment is signed by all the parties.

 

**27.**          GOVERNING LAW

 

27.1         This agreement is governed byand shall be construed in accordance with the laws of The Netherlands.

 

27.2         Any power of attorney or otherdocument executed in connection with this agreement or the transactionsprovided for in this agreement will be governed by and construed in accordancewith the laws of The Netherlands.

 

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**28.**          ARBITRATION 

 

28.1         Save as otherwise set out inthis agreement, any dispute arising out of or in connection with this agreement(including questions in respect of the authority of the arbitrators) will befinally settled by arbitration in accordance with the rules of The NetherlandsArbitration Institute (*Nederlands ArbitrageInstituut*).  The arbitraltribunal will be composed of three arbitrators appointed in accordance withthose rules.  The place of thearbitration will be Amsterdam, The Netherlands. The language of the arbitrationwill be English.  The arbitrators willdecide according to the rules of law. The arbitral tribunal shall not beentitled to publish any arbitrary judgment. This shall not preclude eitherparty from seeking injunctive or other interim relief. The parties submit tothe jurisdiction of the courts of Amsterdam, The Netherlands for such purposes.

 

28.2         This clause shall also applyto disputes arising in relation to agreements which are connected with thisagreement, unless the relevant agreement expressly provides otherwise.

 

**29.**          LANGUAGE

 

The languageof this agreement and the transactions envisaged by it is English and allnotices, demands, requests, statements, certificates or other documents orcommunications shall be in English unless otherwise agreed.

 

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**SIGNATORIES**

 

This agreementhas been signed by the parties (or their duly authorised representatives) onthe date stated at the beginning of this agreement.

 
| SIGNED BY: /s/ F.F. Waller              | )      |   |
|-----------------------------------------|--------|--------|
| For and on behalf of **the Seller**:    | )      |   |
| By: F.F. Waller                         | )      |   |
| Title: CFO                              | )      |   |
|                                    |   |   |
| SIGNED BY: /s/ D.G. Abotomey            | )      |   |
| For and on behalf of **the Purchaser**: | )      |   |
| By: D.G. Abotomey                       | )      |   |
| Title: CFO                              | )      |   |

 

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**SCHEDULE 9**

 

**WARRANTIES**

 

**1**             CorporateInformation

 

**1.1**         The Shares and PMD Group Companies

 

**1.1.1****     **EachIndirect Seller, in respect of the Shares set out under its name in the schedule headed“Indirect Sellers”, is:

 

(i)           the solelegal and beneficial owner of the applicable Shares; and

 

(ii)          has theright to exercise all voting and other rights of ownership over the applicableShares.

 

**1.1.2****     **TheShares comprise the whole of the issued and allotted share capital of eachCompany (other than as set out in the schedule headed “The Companies”),have been properly and validly issued and allotted and are each fully paid.

 

**1.1.3****     **Theshareholders specified in the schedule headed “The Companies”:

 

(i)           are thesole legal and beneficial owners of the shares in the Subsidiaries; and

 

(ii)          have theright to exercise all voting and other rights of ownership over such shares.

 

**1.1.4****     **Theshares in the Subsidiaries comprise the whole of the issued and allotted sharecapital of the Subsidiaries, have been properly and validly issued and allottedand each are fully paid.

 

**1.1.5****     **No person(other than the shareholders specified in the schedule headed “TheCompanies”) has the right (whether exercisable now or in the future and whethercontingent or not or direct or indirect) to call for the allotment, conversion,issue, registration, sale or transfer, amortisation or repayment of anyshare capital of any Company or Subsidiary under any option, agreement or otherarrangement (including conversion rights and rights of pre-emption).

 

**1.1.6****     **AtCompletion there will be no Encumbrances affecting any of the Shares or theshares of any Subsidiary.

 

**1.1.7****     **Save forthose consents, approvals and authorisations set out in the clause headed “Conditions”,all necessary consents, approvals and authorisations for the transfer of theShares have been obtained or will have been obtained by Completion.

 

**1.1.8****     **TheShares and the shares in the Subsidiaries are not listed on any stock exchangeor regulated market.

 

**1.1.9****     **Theparticulars contained in the schedules headed “The Companies” and “TheSubsidiaries of the Companies” are true and accurate.

 

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**1.2**         Subsidiaries, Associates and Branches

 

**1.2.1****     **No PMDGroup Company:

 

(i)           is theholder or beneficial owner of, or has agreed to acquire, any share or loancapital of any other company other than the Subsidiaries; or

 

(ii)          has anybranch, division or establishment outside the jurisdiction in which it is incorporated.

 

**1.3**         Corporate registers and minute books

 

**1.3.1****     **Theconstitutional documents delivered to the Purchaser are true and accuratecopies of the constitutional documents of each of the PMD Group Companies.  No PMD Group Company is currently in breachof its constitutional documents other than breaches which would have nosignificant effect on the PMD Group Company.

 

**1.3.2****     **Theregisters, minute books, books of account and other records of whatsoever kindof each PMD Group Company which are required to be maintained under applicablelaw:

 

(i)           areup-to-date; and

 

(ii)          aremaintained in accordance with applicable law on a proper and consistent basis,

 

otherthan where a failure to do so would have no significant effect on the PMD GroupCompany and no notice or allegation that any of such books and/or records areincorrect or should be rectified has been received.

 

**1.3.3****     **Allregisters and books referred to in Warranty 1.3.2 and all documents of titlewhich are the property of each PMD Group Company are in the possession or underthe control of the relevant PMD Group Company.

 

**1.3.4****     **Allcorporate filings, publications, registrations and other formalities requiredby applicable law to be delivered or made by each PMD Group Company in eachrelevant jurisdiction have been duly delivered or made on a timely basis otherthan where a failure to do so would have no significant effect on the PMD GroupCompany.

 

**1.3.5****     **At alltimes when a PMD Group Company has been a subsidiary of the Seller or anIndirect Seller, all resolutions of each PMD Group Company were, when adopted,valid and binding resolutions other than where a failure to be so would have nosignificant effect on the PMD Group Company.

 

**1.3.6****     **No PMDGroup Company has given a power of attorney or other authority (express,implied or ostensible) which is still outstanding or effective to any person toenter into any contract or commitment or to do anything on its behalf, otherthan any authority to Relevant Employees to enable them to exercise theirduties in the normal course.

 

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**2**             Authorityand Capacity

 

**2.1**         The Seller has the legal right and full power andauthority to enter into and perform this agreement and all other documentsentered into pursuant to this agreement.

** **

**2.2**         The Seller and each member of the Seller’s Group has orwill at Completion have the legal right and full power and authority to enterinto and perform any Local Transfer Document to which it is a party and anyother documents to be executed by it pursuant to or in connection with thisagreement or any Local Transfer Document.

** **

**2.3**         The Seller or, where relevant, the appropriate memberof the Seller’s Group, has taken all corporate action required by it toauthorise it to enter into and to perform this agreement, The Seller, or whererelevant, the appropriate member of the Seller’s Group, has (or will prior toCompletion have) taken all corporate action required by it to authorise it toenter into and to perform any Local Transfer Document to which it is a partyand any other documents to be executed by it pursuant to or in connection withthis agreement or any Local Transfer Document.

** **

**2.4**         The execution and delivery of and the performance bythe Seller or, where relevant, a member of the Seller’s Group of itsobligations under this agreement, any Local Transfer Document to which it is aparty and any other documents to be executed by it pursuant to or in connectionwith this agreement or any Local Transfer Document will not:

** **

**2.4.1****     **result ina breach of any provision of the constitutional documents of the Seller or,where relevant, the member of the Seller’s Group or any of the PMD GroupCompanies; or

 

**2.4.2****     **result ina breach or withdrawal of or is likely to result in a breach or withdrawal of,or give any third party a right to terminate or modify, or result in thecreation of any Encumbrance under, any agreement, licence or other instrumentto which the PMD Group Company is a party; or

 

**2.4.3****     **result ina breach of any order, judgment or decree of any court, governmental agency orregulatory body to which the Seller or, where relevant, a member of the Seller’sGroup or any of the PMD Group Companies is a party or by which the Seller or,where relevant, any member of the Seller’s Group or any of the PMD GroupCompanies is bound; or

 

**2.4.4****     **relieveany person from any material obligation to a PMD Group Company or providegrounds for the termination by any party of any agreement with a PMD GroupCompany.

 

**3**             Reorganisation

 

Withthe exception of the Reorganisation, no PMD Group Company or member of theSeller’s Group has been involved in any corporate or group restructuring,including by way of merger, sale of shares, demergers or hive-down of assets,during the last 6 years as a result of which any PMD Group Company will haveany liability or obligation following Completion to any person other thananother PMD Group Company except where any liability or obligation is providedfor in the Completion Accounts.

 

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**4**             Accuracyand Adequacy of Information Disclosed to the Purchaser

 

**4.1**         All information contained in the schedule headed “WarrantedInformation” was when and in the context in which it was given true andaccurate in all material respects and save for those emails listed at numbers10 (excluding the response provided to question 543, which is complete), 12,13, 14, 16 (excluding the response provided to the question regarding accountsreceivable, which is complete), 17 (excluding the response provided to thequestion regarding bad debts, which is complete) and 18, complete provided thatinsofar as the warranted information is a response to a question or forms partof any correspondence any related questions or correspondence shall be readtogether with the response for the purpose of this Warranty.

** **

**4.2**         The Seller is not aware of any material fact, matter orcircumstance not properly and fairly disclosed in writing to the Purchaserwhich renders the information contained in the schedule headed “Warranted Information”untrue or inaccurate in any material respect as at the date that it was given,or the disclosure of which might reasonably affect the willingness of areasonably experienced purchaser operating in the same industry and assisted byprofessional advisers to purchase the Shares and the Assets or the price at orterms upon which the Purchaser would be willing to purchase them.

 

**5**             Accounts

 

**5.1**         Relevant Accounts

 

The Relevant Accounts for the twelve monthperiod ended on the Relevant Accounts Date:

 

**5.1.1****     **have beenprepared:

 

(i)           inaccordance with applicable law;

 

(ii)          inaccordance with accounting principles, standards and practices generallyaccepted at the Relevant Accounts Date in the Netherlands;

 

(iii)         in accordance withthe accounting principles set out in the Buhrmann Group Finance Manual; and

 

(iv)         on a basisconsistent with that adopted for the previous twelve month period.

 

(Items(i) through (iv) are referred to collectively as the **AccountingMethod**).

 

**5.1.2****     **give atrue and fair view in accordance with the Accounting Method of the assets,liabilities, the liquidity and solvency and state of affairs of each of the PMDGroup Companies and of the PMD Group as a whole as at that date and of theprofits or losses of the PMD Group as a whole for the period concerned and asat that date make:

 

(i)           fullprovision for actual liabilities;

 

(ii)          properprovision (or note in accordance with good accountancy practice) for contingentliabilities;

 

(iii)         provision reasonablyregarded as adequate for bad and doubtful debts; and

 

(iv)         provision reasonablyregarded as adequate for obsolete or slow moving stock.

 

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**5.2**         Management Accounts

 

**5.2.1****     **TheManagement Accounts have been prepared in accordance with the accountingpolicies used in preparing the Relevant Accounts applied on a consistent basis.

 

**5.2.2****     **TheManagement Accounts are true and fair and do not materially misstate theaggregate assets and liabilities of the PMD Group Companies as at the RelevantManagement Accounts Date nor the aggregate profits and losses of the PMD GroupCompanies for the period ended on such date.

 

**5.3**         Valuation of Stock and Work-in-progress

 

The stock and work-in-progresswere included in the Relevant Accounts and Management Accounts at figures notexceeding the lower of cost and net realisable value or to the extent that thisis not the case, the Relevant Accounts and/or Management Accounts includeadequate provision for any losses which can reasonably be expected in respect ofsuch stocks and work-in-progress at the time of their preparation.

 

**5.4**         Depreciation of Fixed Assets

 

In the Relevant Accounts andManagement Accounts the depreciation methods and policies applied to the fixedassets of each PMD Group Company are in accordance with the Accounting Methodand are consistent with the methods and policies applied in the previous 24month period.

 

**5.5**         Exceptional Items etc.

 

The combined profits of the PMDGroup Companies for each of the 3 years ended on the Latest Relevant AccountsDate as shown by the Relevant Accounts (and by the Management Accounts for theperiod between the Latest Relevant Accounts Date and the Relevant ManagementAccounts Date) and the trend of profits thereby shown (but only until theRelevant Management Accounts Date) are calculated in accordance with theAccounting Method and have not (except as fairly disclosed in such accounts)been affected (in an aggregate amount of more than EUR150,000) by changes orinconsistencies in accounting treatment, by any exceptional items of income orexpenditure, by transactions of an abnormal or unusual nature or entered intootherwise than on normal commercial terms or by any other factors renderingsuch profits for all or any of such periods exceptionally high or low.

 

**5.6**         Taxation

 

**5.6.1****     **Allactual tax liabilities at the applicable dates have been included in theRelevant Accounts and the Management Accounts in accordance with the AccountingMethod.

 

**5.6.2****     **Except asdisclosed by the Relevant Accounts and save in so far as full provision is madein them in a deferred taxation account for Taxation in respect of any balancingcharges which would arise or accrue in respect of any such machinery and planton disposal thereof at the value at which the machinery and plant is includedin the Relevant Accounts, the machinery and plant is not included in theRelevant Accounts at such value that if it were obtained on the disposal ordeemed disposal of the machinery and plant as a whole a balancing charge wouldarise or accrue.

 

**5.6.3****     **Properprovision or reserve for deferred taxation in accordance with the AccountingMethod has been made in the Relevant Accounts and Management Accounts.

 

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**5.7**         Changes since Latest Relevant Accounts Date

 

Since the Latest Relevant AccountsDate (and, other than in respect of sub-clauses 5.7.1 and 5.7.3, until the dateof this agreement) as regards each PMD Group Company and save to the extentproperly and fairly disclosed in the Management Accounts or otherwise:

 

**5.7.1****     **there hasbeen no material adverse change in its financial or trading position orturnover, and no event, fact or matter has occurred which will give rise to anysuch change other than any event, fact or matter which has an impact on the papermerchanting industry in the territories in which the Business is currentlyconducted as a whole;

 

**5.7.2****     **itsbusiness has been carried on in the ordinary course, without any interruptionor alteration in its nature, scope or manner, and so as to maintain the same asa going concern;

 

**5.7.3****     **itsbusiness has not been materially and adversely affected by the loss of anyimportant customer or, other than a deliberate termination by the Seller or aPMD Group Company for a valid business reason, source of supply, or by anyabnormal factor not affecting similar businesses to a like extent and****there are no facts which are likely to give rise to anysuch effects. For these purposes, an important customer or source of supplymeans one which in either of the 2 financial periods immediately preceding theLatest Relevant Accounts Date accounted for 3 per cent. or more (in the case ofa customer) of the aggregate amount of all sales made by that PMD Group Companyduring such periods or 10 per cent. (in the case of a source of supply) of theaggregate amount of all purchases made by that PMD Group Company during suchperiods;

 

**5.7.4****     **there hasbeen no material increase or decrease in the level of its stock other thanincreases or decreases consistent with the prior annual trading cycles of thePMD Group Companies or required in the ordinary course of business;

 

**5.7.5****     **no shareor loan capital or any other security giving rise to a right over the capitalhas been allotted or issued or agreed to be allotted or issued;

 

**5.7.6****     **it hasnot redeemed or purchased or agreed to redeem or purchase any of its sharecapital;

 

**5.7.7****     **it hasnot made or received any surrender relating to group relief or any surrender ofa tax refund;

 

**5.7.8****     **noinsurance claims have been refused or settled below the amount claimed in amanner inconsistent with past practice; and

 

**5.7.9****     **allcreditors have been paid in a manner consistent with past practice.

 

**5.8**         Properties

 

All the freehold Properties areshown in the Relevant Accounts and Management Accounts at their original cost,or have been written down to a value, in either case which is an amount notexceeding an independent estimate of the open market value of the freeholdProperties (on the basis of a willing seller/willing buyer) and assuming thatthe buyer would use the property for a similar use to its current business useas at the date of this agreement.

 

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**6**             FinancialObligations

 

**6.1**         Financial Facilities

 

**6.1.1****     **Detailsof all financial facilities which remain in place on Completion (includingloans, debentures, overdrafts, obligations under finance leases, foreignexchange contracts, derivatives and hedging arrangements but excludingarrangements which are part of commercial agreements or arrangements and arenot in the nature of financial indebtedness) outstanding or available to thePMD Group Companies listed in the schedule headed “Financial Facilities”(the **Facilities**) are given in such schedule and,so far as Seller is aware, there are no circumstances, other than thetransaction contemplated by this agreement, whereby the continuation of anysuch Facilities might cease or be prejudiced, or which may give rise to anyalteration in the terms and conditions of any of the Facilities.

 

**6.1.2****     **There are,as at the date of this agreement, no liabilities of the PMD Group Companiesother than:

 

(i)           liabilitiesdisclosed or provided for in the Latest Relevant Accounts; or

 

(ii)          liabilitiesincurred in the ordinary course of business as a paper merchanting businesssince the Latest Relevant Accounts Date, none of which will result in amaterial adverse change in the financial or trading position or turnover of thePMD Group Companies.

 

**6.2**         Guarantees

** **

Other than in the ordinary course of business and save as disclosed inthe schedules headed “Assets” and “Guarantees and Indemnities” there is nooutstanding guarantee, indemnity, surety or security given:

 

**6.2.1****     **by anyPMD Group Company; or

 

**6.2.2****     **for thebenefit of any PMD Group Company.

 

**7**             Insolvency

 

Forthe purposes of this Warranty 7, references to each **PMD GroupCompany** shall be deemed to include references to each ReorganisationCompany.

 

**7.1**         No PMD Group Company is insolvent under the laws of itsjurisdiction of incorporation (save for any PMD Group Companies which may betechnically insolvent because their liabilities exceed their assets but arefinancially supported by the Seller’s Group) or unable to pay its debts as theyfall due.

** **

**7.2**         There are no proceedings in relation to any compromiseor arrangement with creditors or any winding up, bankruptcy or other insolvencyproceedings concerning any PMD Group Company and no events have occurred whichwould justify such proceedings.

** **

**7.3**         No steps have been taken to enforce any security overany assets of any PMD Group Company and, so far as the Seller is aware, noevent has occurred to give the right to enforce such security.

 

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**7.4**         There are no transactions capable of being set aside,stayed reversed, avoided or affected in whole or in part by any insolvencyproceedings in relation to any PMD Group Company whether as transactions at anundervalue, in fraud of or against the interest of creditors or preferences orPaulian actions or similar concepts or legal principles.

** **

**8**             Assets

 

**8.1**         Ownership and Sufficiency of Assets

 

**8.1.1****     **Allassets included in the Latest Relevant Accounts or acquired by any of the PMDGroup Companies since the Latest Relevant Accounts Date, other than theProperties (to which Warranty 12 applies), the Business IPR (to which Warranty14 applies) and any assets disposed of or realised in the ordinary and usualcourse of business:

 

(i)           are orwill at Completion be legally and beneficially owned by the PMD GroupCompanies;

 

(ii)          are,where capable of possession, in the possession or under the control of therelevant PMD Group Company; and

 

(iii)         are free fromEncumbrances other than those arising in the ordinary course of business.

 

**8.1.2****     **FollowingCompletion, the PMD Group Companies will own or licence or have other legalrights to all the property, rights and assets necessary (including theProperties, the Business IPR and Business IT, but other than the ExcludedAssets) for the carrying on of the business of the Group in the manner in, andto the extent to, which it is presently conducted.

 

**8.2**         Plant and Machinery

 

**8.2.1****     **The plantand machinery, vehicles and other equipment owned or used by the PMD GroupCompanies:

 

(i)           subjectto normal wear and tear, are in standard repair and condition and reasonableworking order taking into account ageing and write-off;

 

(ii)          have inthe ordinary course of business been adequately maintained; and

 

(iii)         are not in adangerous (with the exception of dangers inherent therein) or obsolete state orcondition.

 

**8.3**         Stock

 

**8.3.1****     **Save tothe extent that any specific allowance or provision has been made in the LatestRelevant Accounts or the Management Accounts, the stock-in-trade held by eachPMD Group Company is not excessive but is adequate in relation to the currenttrading requirements of that PMD Group Company, is in good, undamaged andmerchantable condition, is not obsolete, slow-moving or inappropriate and iscapable of being sold without incurring a loss in the ordinary and usual courseof business in accordance with current practice.

 

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**8.3.2****     **Thelevels of stock-in-trade are not materially different from those which each PMDGroup Company normally has at this stage in their trading year except wherethis is necessary to conduct the business in the ordinary course.

 

**8.4**         Debts

 

Save to the extent that specific provision has been made in theRelevant Accounts or Management Accounts:

 

**8.4.1****     **no PMDGroup Company has lent any money which has not been repaid, nor owns thebenefit of any debts (whether or not due for payment), other than trading debtswhich have arisen in the ordinary course of business;

 

**8.4.2****     **no PMDGroup Company has made any loan or quasi-loan contrary to applicablelegislation or its constitutional documents;

 

**8.4.3****     **none ofthe debts receivable or due to any PMD Group Company which are included in theRelevant Accounts or which have subsequently arisen:

 

(i)           have beenreleased on terms that the debtor has paid less than the full value of his debtother than in the ordinary course of business;

 

(ii)          have beendeferred, subordinated or written off or has proved to be irrecoverable to anyextent;

 

(iii)         are subject to anyset-off (or other right of retention) or counter-claim other than against or inrespect of any obligation included in the Relevant Accounts or the ManagementAccounts; or

 

(iv)         will at Completionbe factored or assigned;

 

and such debts have in aggregate realised or will in aggregate realisewithin 12 months their full value as included in the Latest Relevant Accountsor in the books of the relevant PMD Group Company after taking into account theprovision for bad and doubtful debts as provided for in accordance with theAccounting Method.

 

**8.5**         Diminution of Assets

 

There has been no impairment inthe values of the underlying assets of Rhosili, Berni and Expresso and theEvelyn Road Property shown in the schedule headed “Purchase PriceAdjustment Statement” as against the values set out against each of thoseAssets shown in such schedule other than depreciation.

 

**8.6**         Cash extraction

 

All cash held in bank accounts ofthe PMD Group Companies is capable of being paid by way of dividend or loanwithout any penalty being incurred, other than standard withholding or similartaxes (where applicable).

 

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**9**             Contracts

 

**9.1**         General

 

As at the date of this agreement,no PMD Group Company is a party to or subject to any contract, transaction,arrangement, understanding, obligation or liability which:

 

**9.1.1****     **is not inthe ordinary and usual course of a paper merchanting business (or an officeproducts business not significant in relation to the Business of the PMD GroupCompanies);

 

**9.1.2****     **is notwholly on an arm’s length basis;

 

**9.1.3****     **is of along term nature that is unlikely to have been fully performed, in accordancewith its terms, more than 12 months after the date on which it was entered intoor undertaken other than employment agreements, car leases, property leases orother agreements related to facility or equipment;

 

**9.1.4****     **restrictsits freedom to carry on its business in any part of the world in such manner asit thinks fit other than any restrictions contained in the standard terms andconditions of contractual counterparties; or

 

**9.1.5****     **involves,or is likely to involve, the supply of goods and services, the aggregate salesvalue of which (exclusive of VAT) will be more than 5 per cent. of turnover ofthe PMD Group Company (exclusive of VAT) for the preceding financial year.

 

For the purposes of this schedule,“arm’s length” shall mean commercial terms and conditions which couldreasonably be agreed between parties with no connection to one another otherthan a commercial relationship.

 

**9.2**         Substantial Dependence

 

In the 2 financial periods immediatelypreceding the Latest Relevant Accounts Date no person has:

 

(i)            purchased from any PMD Group Company more than 3 percent. of the aggregate amount of all sales made by that PMD Group Companyduring such periods; or

 

(ii)           sold to any PMD Group Company more than 10 per cent. ofthe aggregate amount of all purchases made by that PMD Group Company duringsuch periods.

 

**9.3**         Capital Commitments

 

As at the date of this agreementthere are no****material capital commitmentsentered into by any of the PMD Group Companies. For these purposes, a materialcapital commitment is one involving capital expenditure of over EUR500,000exclusive of VAT.

 

**9.4**         Joint Ventures etc.

 

As at the date of this agreement,no PMD Group Company is or has agreed (or proposes) to become a member of anyjoint venture, consortium, partnership, other unincorporated association or aparty to any arrangement or agreement in respect of any of which any profitsharing has been agreed or is proposed.

 

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**9.5**         Agreements with Connected Persons

 

**9.5.1****     **There areno existing contracts or arrangements between, on the one hand, any PMD GroupCompany and, on the other hand, the Seller, any member of the Seller’s Group orany director (or relative of a director) of the Seller or any member of theSeller’s Group other than normal trade contracts.

 

**9.5.2****     **Otherthan pursuant to employment contracts, there is no indebtedness (actual orcontingent) between, on the one hand, a PMD Group Company and, on the other hand,any current or former employee, director or Consultant of any such PMD GroupCompany or any relative of any of such persons.

 

**9.6**         Compliance with Agreements

 

**9.6.1****     **All thematerial contracts to which any of the PMD Group Companies are a party arevalid and binding obligations of the parties thereto and the relevant PMD GroupCompany and, so far as the Seller is aware, each other party to such contractsis in current material compliance with the terms of such contracts.

 

**9.6.2****     **No noticeof termination or of intention to terminate has been received in respect of anymaterial contracts and, so far as the Seller is aware, there are no grounds forrescission, avoidance or repudiation (or comparable rights arising in any otherjurisdiction) of any of such material contracts.

 

**9.6.3****     **For thepurposes of this Warranty, a contract is a **material contract**if it satisfies the criteria set out in Warranty 9.1.5 or is a materialBusiness IT agreement.

 

**10**          LegalCompliance and Litigation

 

**10.1**       Licences and Consents

 

**10.1.1****   **All licences,consents, authorisations, orders, warrants, confirmations, permissions,certificates, approvals, registrations and authorities necessary or appropriatefor carrying on the Business have been obtained, are in force, do not containconditions which would hinder the ordinary course of business, and are beingcomplied with in all material respects.

 

**10.1.2****   **There is noinvestigation, enquiry or proceeding outstanding or, so far as the Seller isaware, anticipated which is likely to result in the suspension, cancellation,material modification or revocation of any of the licences or other mattersreferred to in Warranty 10.1.1.

 

**10.1.3****   **None of the licencesor other matters referred to in Warranty 10.1.1 have been breached (other thana breach which has subsequently been rectified) or, so far as the Seller isaware, are likely to be suspended, cancelled, refused, materially modified orrevoked.

 

**10.2**       Compliance with Laws

 

**10.2.1****   **Each PMD GroupCompany is validly existing and is a company duly incorporated under applicablelaw.

 

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**10.2.2****   **The business of eachPMD Group Company is being carried on so that there are not any breaches ofapplicable laws and regulations in each country in which the business is or hasbeen carried on other than breaches which would have no significant effect onthe PMD Group Company.

 

**10.2.3****   **No PMD Group Companyhas received any notice or other communication (official or otherwise) from anycourt, tribunal, arbitrator, governmental agency or regulatory body withrespect to an alleged actual or potential violation and/or failure to complywith any such applicable law, regulation, bye-law or constitutional document,or requiring it to take or omit any action.

 

**10.2.4****   **None of the directors,officers, agents, employees or other persons acting on behalf of any PMD GroupCompany has been party to the use of any of the assets of the PMD GroupCompanies for unlawful contributions, gifts, entertainment or other unlawfulexpenses relating to political activity or to the making of any direct orindirect unlawful payment to government officials or employees from suchassets; to the establishment or maintenance of any unlawful or unrecorded fundof monies or other assets; to the making of any false or fictitious entries inthe books or records of any PMD Group Company or to the making of any unlawfulor undisclosed payment.

 

**10.3**       Litigation

 

**10.3.1****   **No PMD Group Company(or any person for whose acts or defaults a PMD Group Company may be vicariouslyliable) is involved whether as claimant or defendant or other party in anyclaim, legal action, proceeding, suit, litigation, prosecution, mediation,investigation or arbitration (other than as claimant in the collection of debtsarising in the ordinary course of its business) (together, **Proceedings**).

 

**10.3.2****   **No Proceedings arepending or, so far as the Seller is aware, threatened by or against any PMDGroup Company.

 

**10.3.3****   **There are nodisciplinary proceedings or, so far as the Seller is aware, investigations orother circumstances likely to lead to any Proceedings.

 

**10.3.4****   **No execution orother enforcement process has been levied in respect of a PMD Group Company andthere is no judgment or court order outstanding against a PMD Group Company.

 

**11**          Anti-CompetitiveAgreements and Practices

 

**11.1**       Anti-Competitive Acts

 

**11.1.1****   **Save as disclosed inthe Data Room no PMD Group Company or employee, director or officer of any PMDGroup Company is a party to any agreement, arrangement or, so far as the Selleris aware, concerted practice or is carrying or has carried on any practice:

 

(i)           which inwhole or in part may contravene or may be invalidated by any anti-trust, fairtrading, dumping, state and consumer protection or similar legislation in anyjurisdiction and in particular and without prejudice to the generality of theforegoing, which in whole or in part may contravene any Competition Rule;

 

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(ii)          inrespect of which any filing, registration, approval or notification may berequired or may be advisable pursuant to the legislation referred to inWarranty 11.1.1 (i) (whether or not the same has in fact been made);

 

(iii)         which is subject toany application (either pending or granted, whether formally or informally) fornegative clearance or exemption made to the Commission of European Communitiesor any competition authority under any applicable national competition law;

 

(iv)         which is void orunenforceable (whether in whole or in part) or may render any of the PMD GroupCompanies liable to proceedings under any such legislation as is referred to inWarranty 11.1.1(i) above.

 

**11.1.2****   **Save as disclosed inthe Data Room, no PMD Group Company, nor, so far as the Seller is aware, anyemployee, director or officer of any PMD Group Company, has received any formalor, so far as the Seller is aware, informal communication or notification thatany proceedings under any applicable anti-trust, fair trading, consumerprotection or similar legislation in any relevant jurisdiction have beeninitiated, nor are any such proceedings contemplated by any PMD Group Company,nor has any claim been made or, so far as the Seller is aware, threatenedalleging any contravention of any such legislation.

 

**11.1.3****   **No PMD Group Companyhas given any undertaking and no order has been made against or in relation toany such PMD Group Company pursuant to any anti-trust or similar legislation inany jurisdiction in which the PMD Group Company carries on business or hasassets or sales.

 

**12          Property**

 

**12.1**       The Properties

 

**12.1.1****   **As at the date ofthis agreement, the Properties comprise all of the premises and land owned,occupied or otherwise used in connection with the Business or in which the PMDGroup Companies have an interest;

 

**12.1.2****   **No PMD Group Companyhas any continuing liability in respect of any property other than theProperties;

 

**12.1.3****   **True and accuratedetails of the Properties have been completed in the schedule headed “Properties”.

 

**12.1.4****   **The SurplusProperties are not used in connection with the Business.

 

**12.2**       Title

 

In relation to each Property:

 

**12.2.1****   **the PMD GroupCompany or the relevant member of the Seller’s Group named in the schedule headed“Properties” as owner of the Property is the legal owner of and beneficiallyentitled to the whole of the proceeds of sale of and has a good and marketabletitle to the whole of the Property;

 

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**12.2.2****   **with the exceptionof the Surplus Properties and the Third Party Agreements set out in the schedule headed“Third Party Agreements” the relevant PMD Group Company or the relevant memberof the Seller’s Group is in physical possession and actual occupation of theProperty.

 

**12.2.3****   **the PMD GroupCompany or the relevant member of the Seller’s Group has in its possession, orunconditionally held to its order all the necessary documents to establishtitle to the Property;

 

**12.2.4****   **there are nomortgages, charges (whether legal or equitable and whether fixed or floating)or debentures, rent charges, liabilities to maintain roadways, liens (whetherfor costs or to an unpaid seller or otherwise), annuities or other unusualoutgoings, or trusts (or comparable instruments in other jurisdictions)(whether for securing money or otherwise), affecting the Property or theproceeds of sale thereof;

 

**12.2.5****   **save as to anymatter arising from applicable local legislation the Property is not subject toany adverse estate, right, interest, covenant, restriction, stipulation,easement, wayleave, licence or other right or informal arrangement in favour ofany third party (whether in the nature of a public or private right orobligation) which would affect the conduct of business at the Property in theordinary course nor is there any agreement to give or create any of theforegoing;

 

**12.2.6****   **the Property is notsubject to any option, right of pre-emption or sale contract nor is there anyagreement to give or create any of the foregoing;

 

**12.2.7****   **the Property enjoysaccess to and egress from roads over which there is a public right of way andthe Property has all facilities, easements and rights necessary for theenjoyment and present use of the Property on terms which do not entitle anyperson to terminate or curtail the same;

 

**12.2.8****   **there are nooutstanding actions, disputes, claims or demands between the PMD Group Companyor the relevant member of the Seller’s Group and any third party affecting theProperty or any neighbouring property which would affect the conduct ofbusiness at the Property in the ordinary course or the title to or the value ofthe Property;

 

**12.2.9****   **there has been nomaterial breach of any covenants, obligations, title conditions, restrictions,stipulations, easements, servitudes or other matters relating to the Property;

 

**12.2.10**** **there are no consentsrequired by or restrictions contained in any title document or elsewhere whichwould affect the Property as a result of a change in control of the PMD GroupCompany;

 

**12.2.11**** **where the Propertyis being transferred by way of asset sale, there are no consents required by orrestrictions contained in any title document or otherwise which would affectthe transfer of the Property.

 

**12.3**       Planning

 

In relation to each Property:

 

**12.3.1****   **All planningauthorisations:

 

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(i)           have beenobtained;

 

(ii)          are inforce;

 

(iii)         have been and arebeing complied with; and

 

(iv)         are capable of beingcomplied with in the future.

 

**12.3.2****   **So far as the Selleris aware, no circumstances exist which could result in a planning authorisationeither (i) being revoked, suspended, varied or limited or which may prejudiceits renewal or (ii) requiring variation or amendment to enable the continuedoperation of the business of any PMD Group Company or the relevant member ofthe Seller’s Group.

 

**12.4**       State and Condition of the Properties

 

In relation to each of the Properties:

 

**12.4.1****   **the buildings andother structures on the Property are not subject to any structural or materialother defects which could adversely affect the present use and enjoyment of theProperty;

 

**12.4.2****   **the buildings andother structures on the Property are fit for the purposes for which they arepresently used and all obligations relating to repair contained in anyagreement relating to the Property have been complied with save for fair wearand tear.

 

**12.5**       Leasehold Properties

 

Where the interest of the PMDGroup Company or the relevant member of the Seller’s Group in any Property isleasehold (including without limitation occupational leases) true and accuratedetails have been completed in the schedule headed “Properties” and otherthan as reflected in that schedule:

 

**12.5.1****   **any consentnecessary for the grant of the lease under which the PMD Group Company or therelevant member of the Seller’s Group holds its interest in the Property (the **Lease**) was duly obtained;

 

**12.5.2****   **there is no materialsubsisting breach, nor any material non-observance of any covenant, conditionor agreement contained in the Lease on the part of either the relevant landlordor the PMD Group Company or the relevant member of the Seller’s Group;

 

**12.5.3****   **there are norestrictions in the Lease which prevent the Property being used now or in thefuture for the present use;

 

**12.5.4****   **the Lease is notsubject to any rights of early termination except for non-payment of rent orbreach of covenant by the tenant;

 

**12.5.5****   **no alterations havebeen made to the Property at the expense of the PMD Group Company or therelevant member of the Seller’s Group without all necessary consents andapprovals;

 

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**12.5.6****   **the tenant can,subject to applicable local legislation, assign or underlet the whole of theProperty subject only to obtaining the landlord’s consent (such consent not tobe unreasonably withheld);

 

**12.5.7****   **as at the date ofthis agreement all steps in rent reviews have been duly taken and no rentreviews are outstanding; and

 

**12.5.8****   **the Lease does notcontain any unusual or objectionable covenants or agreements (including withoutprejudice to the foregoing any rent review provisions which are not inaccordance with standard market practice in the relevant jurisdiction) havingregard to the use to which the Property is currently put.

 

**12.6**       Properties subject to Third Party Agreements

 

Where any Property is as at thedate of this agreement subject to any lease or other occupational agreement (a **Third Party Agreement**) for the benefit of any person otherthan the PMD Group Company true and accurate details have been completed in theschedule headed “Third Party Agreements” and:

 

**12.6.1****   **there is no materialsubsisting breach or material non-observance of any covenant, condition oragreement contained in any such Third Party Agreement;

 

**12.6.2****   **there are noprovisions in any such lease or licence that entitle the undertenant tocompensation on leaving the Property at the end of the lease term;

 

**12.6.3****   **all consentsnecessary for the creation of such Third Party Agreement were obtained;

 

**12.6.4****   **the PMD GroupCompany or the relevant member of the Seller’s Group can terminate each suchThird Party Agreement in cases of bankruptcy or the liquidation or winding-upof the undertenant as well as for any breach of the undertenant’s obligations;

 

**12.6.5****   **as at the date ofthis agreement all steps in rent reviews have been duly taken and no rentreviews are outstanding; and

 

**12.6.6****   **no such Third PartyAgreement contains any unusual or objectionable covenants or agreements adverseto the interests of the PMD Group Company or the relevant member of the Seller’sGroup.

 

**12.7**       Specific Property Warranties

 

**12.7.1****   **No PMD Group Companyholds in perpetual usufruct any real property in Poland.

 

**12.7.2****   **In relation to anyfreehold Property located in Austria, the superstructure (*superädifikat*)on the Property is owned by the relevant PMD Group Company or the relevantmember of the Seller’s Group (as the case may be).

 

**13**          Environment

 

**13.1**       Environmental, Health and Safety and Products Liability

 

**13.1.1****   **Each PMD GroupCompany is conducting, and has conducted, its business in compliance withEnvironmental Law and any material permits or licences issued thereunder.

 

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**13.1.2****   **No PMD Group Companyhas received notice of any civil, criminal, regulatory or administrativeaction, claim, investigation or other proceeding or suit arising from orrelating to Environmental Law or in respect of any pollution or harm to theEnvironment and no such actions, claims, investigations, proceedings or suitsare pending or, so far as the Seller is aware, threatened.

 

**13.1.3****   **There is nopollution or contamination of soil, surface water or groundwater at oremanating from any of the Properties for which any PMD Group Company couldincur liability under Environmental Law.

 

**13.1.4****   **There is no asbestosin the fabric of any building or other man-made structure at any Property in acondition that constitutes a breach of or liability under Environmental Laws oris such as to require remedial works or other action to bring into compliancewith Environmental Laws.

 

**14**          IntellectualProperty and Information Technology

 

**14.1**       All rights in and to Business IPR (other than any whichforms part of the Excluded Assets) which have been, are, or are capable of,being used in or in relation to or which are necessary for the conduct andoperation of the Business are:

 

**14.1.1****   **legally andbeneficially owned by a PMD Group Company or lawfully used with the consent ofthe owner under a licence;

 

**14.1.2****   **valid, enforceablein the territories to which they relate and free from Encumbrances;

 

**14.1.3****   **not being infringedor attacked or opposed by any person;

 

**14.1.4****   **in the case ofmaterial rights in Registered Group IPR, listed and described in the schedule headed“Intellectual Property” and all renewal fees which are due and steps which arerequired for their maintenance, have been paid; and

 

**14.1.5****    **no claims have beenmade, which if pursued, might be material to the truth and accuracy of any ofthe above.

 

**14.2**       So far as the Seller is aware, the processes employedand the products dealt in by the PMD Group Companies at the date of thisagreement do not infringe any rights or interests of third parties inIntellectual Property and no claims of infringement of any such rights orinterests have been made by any third party.

 

**14.3**       All material Business IPR Licences:

 

**14.3.1****   **have been disclosedto the Purchaser, are in full force and effect and no notice has been given oneither side to terminate them;

 

**14.3.2****   **so far as the Selleris aware, have been fully complied with and no disputes have arisen or areforeseeable in respect of them.

 

**14.4**       Information Technology

 

**14.4.1****   **The Business IT isowned by or licensed to the relevant PMD Group Company.

 

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**14.4.2****   **In all materialrespects, the Business IT is in good working order. The present capacity andperformance of the Business IT is sufficient to satisfy the current andreasonably projected business requirements (including requirements as to datavolumes) of the PMD Group Companies.

 

**14.4.3****   **If the Business ITis operated in accordance with current projected requirements, it will notrequire investment in the 12 month period following the date of this agreementwhich would be materially disproportionate compared to the average investmentin the 36 months prior to the date of this agreement.

 

**14.4.4****   **There are, and inthe past two years there have been, no performance reductions or breakdowns of,or logical or physical intrusions to, any Business IT or loss of data whichhave had (or are having) a material adverse effect on the business of any PMDGroup Company and the Seller is not aware of any fact or matter which may giverise to such a material adverse effect.

 

**14.4.5****   **Each PMD GroupCompany has in place procedures which are reasonably adequate:

 

(i)           toprevent unauthorised access to and the introduction of viruses and othercontaminants into the Business IT;

 

(ii)          to takeand store on-site and off-site back-up copies of the software and data in theBusiness IT; and

 

(iii)         given the risksfacing such companies, to ensure that the business of the PMD Group Companiescan continue without material disruption in the event of breakdown of performancereduction of the Business IT or loss of data, whether due to natural disaster,power failure or otherwise.

 

**14.4.6****   **In the event thatthe persons providing maintenance or support services for the Business IT ceaseor are unable to do so, the PMD Group Companies have the necessary rights,expertise and information to continue to maintain and support or have a thirdparty maintain and support the Business IT in a manner which allows thebusiness to continue its ordinary course.

 

**14.4.7****   **The Business IT ofall PMD Group Companies incorporated in countries in which the Euro is theofficial currency or where it is planned to be adopted as such within the next2 years is capable in all material respects of handling operations in the Euroand accurately converting data in connection with the introduction of the Euroand complying with the rules on conversion and rounding set out in ECRegulation number 1103/97 or any legislation adopting or incorporating thatregulation.

 

**15**          Employeesand Employee Benefits

 

**15.1**       Employees and Terms of Employment

 

**15.1.1****   **The ManagementAccounts contain details, in relation to each PMD Group Company, of theapproximate total number of Relevant Employees employed by each PMD GroupCompany as at the date of this agreement (including those who are on maternityor paternity or parental leave or absent on the grounds of disability or otherlong-term leave of absence, and have or may have a statutory or contractualright to return to work in the PMD Group Company).

 

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**15.1.2****   **As at the date of this agreement there are noSenior Employees or Consultants who are subject to terms and conditions ofemployment or engagement (as the case may be), including amendments yet to takeeffect, other than terms and conditions disclosed to the Purchaser.

 

**15.1.3****   **As at the date of this agreement there are noRelevant Employees (other than Senior Employees) in Germany, the Netherlands,France and the UK who are subject to terms and conditions of employment thatare materially different from the specimen terms and conditions for employeesof the same grade or category which have been disclosed to the Purchaser.

 

**15.1.4****   **As at the date of this agreement there are noRelevant Employees (other than Senior Employees or Relevant Employees inGermany, the Netherlands, France and the UK) whose terms and conditions ofemployment are not standard industry terms and conditions in the particularjurisdiction in which such an employee is employed and which are such as tohave a material and adverse effect on a PMD Group Company (either in respect ofa term or condition of an individual Relevant Employee, or with respect to thecumulative effect of a term or condition which is common to more than oneRelevant Employee).

 

**15.1.5****   **As at the date of this agreement there are noemployees or contractors who wholly or mainly provide their services to a PMDGroup Company who are not themselves employed or engaged by a PMD Group Companyand who, if they were so employed or engaged, would be Senior Employees orConsultants (as the case may be).

 

**15.1.6****   **No legallyenforceable liability which remains undischarged (and which has a material andadverse effect on a PMD Group Company, either of itself or cumulative with anyother such liability of the same nature arising out of the same facts andcircumstances) has been or may be incurred by any PMD Group Company for anyobligation owed to any Relevant Employee, Consultant, Works Council, EconomicCommittee or other staff representative organisation.

 

**15.2**       Termination of Employment

 

As at the date of this agreementand except as detailed in the Data Room in respect of reorganisationredundancies:

 

**15.2.1****   **notice has not beengiven and since 31 March 2003 there have been no proposals to terminatethe employment or consultancy (as relevant) of:

 

(i)           anySenior Employee;

 

(ii)          more than20 Relevant Employees in any one location; or

 

(iii)         any Consultant.

 

**15.3**       Disputes

 

**15.3.1****   **No PMD Group Companyis, or has in the 2 years preceding the date of this agreement been involved inany industrial or trade dispute or any dispute or negotiation regarding a claimof material importance with any trade union or other body representingemployees or former employees of the Seller.

 

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**15.3.2****   **No PMD Group Companyis as at the date of this agreement involved in any dispute or negotiationregarding a claim of material importance with any Relevant Employee orConsultant, or with any former employee or consultant who, if still employed,would be a Relevant Employee or Consultant.

 

**16**          RetirementBenefit Arrangements

 

**16.1**       Retirement Benefit Arrangements

 

There are no arrangements or promises other than the Retirement BenefitArrangements listed in the schedule headed “Retirement BenefitArrangements” under which the PMD Group Companies make or could become liableto make payments for providing retirement, ill-heath or injury, death or lifeassurance benefits which would result in an economic loss for the PMD GroupCompanies, except for arrangements under public law, statute or regulation towhich any of the PMD Group Companies contribute in compliance with theapplicable law or regulations (the **State Schemes**).

 

**16.2**       Disclosure

 

**16.2.1****   **The Data Room, thefiles made available in the office of the Seller’s Human Resources Directorproviding employment contracts for a number of senior employees or provided tothe Purchaser contains copies of all material agreements, deeds, declarations,insurance contracts, employee booklets and announcement and other relevantdocuments creating or otherwise relating to the Retirement Benefit Arrangementsand necessary information to establish the entitlements to benefits.

 

**16.2.2****   **The documents anddata referred to in Warranty 16.2.1 are true and accurate in all materialrespects and contain material details of all benefits payable under theRetirement Benefit Arrangements and the circumstances in which such benefitsare payable.  No power to increase thosebenefits or to provide different benefits has been exercised and there are nocircumstances in which there is a practice of exercising such a power under theRetirement Benefit Arrangements to any material extent on the RetirementBenefit Arrangement. 

 

**16.2.3**    There is attached to the Disclosure Letter as schedule 7 a trueand complete copy of the most recent actuarial valuation in respect of each ofthe Retirement Benefit Arrangements where there is a legal requirement to havean actuarial valuation. Each actuarial valuation describes the financialposition of the relevant Retirement Benefit Arrangements at its effective date.Since that date contributions have been paid at the rate recommended by theactuary where such a recommendation is required by law or by the governingdocumentation of the Retirement Benefit Arrangement. No assets have beenwithdrawn (except to pay benefits) from the effective date of the actuarialvaluation. 

 

**16.3**       Regulations

 

Since inception, the Retirement Benefit Arrangements have been operatedin compliance with their terms and with all applicable laws, regulations andGovernment taxation or funding requirements other than those which would haveno significant effect on the Retirement Benefit Arrangement and all regulatoryapprovals necessary or desirable for tax purposes have been obtained. Inparticular, but without limitation, the Seller is not aware of any failure tocomply with any applicable law, regulation or

 

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requirement, or any other circumstance, which would or might result inthe loss of tax approval or qualification of any of the Retirement BenefitArrangements.

 

**16.4**       The Financial Status of the Retirement Benefit Arrangements

 

 

**16.4.1**    Each of theRetirement Benefit Arrangements (except the Robert Horne Group Pension Scheme(UK) and the Stichting Pensioenfonds Buhrmann (NL)) is fully funded or providedfor in accordance with GAAP.

 

**16.4.2**    If the RetirementBenefit Arrangements (except the Robert Horne Group Pension Scheme (UK) and theStichting Pensioenfonds Buhrmann (NL)) provide benefits calculated by referenceto a formula under which the amount of benefit is linked to the years ofservice of the employee to retirement and to salary of the employee at or nearto retirement or averaged over a period of his service (a **SalaryRelated Scheme**) the liabilities of such Salary Related Scheme forthe purposes of Warranty 16.4.1 above are estimated by reference to thecompleted service of the employee at Completion and an estimate of the futuresalary (to the extent required by GAAP) of the employee at the date of hisretirement based on assumptions consistent with GAAP.

 

**16.4.3****   **Except as providedfor in the Relevant Accounts of the relevant PMD Group Company or theCompletion Accounts, no PMD Group Company has any outstanding liability(including, without limitation, liability for unpaid benefits, contributions orinsurance premiums) with respect to any of the Retirement Benefit Arrangementsor the State Schemes.

 

**16.4.4****   **The Seller hasprovided to the Purchaser in the Data Room or otherwise the rate at which thecontributions to the Retirement Benefit Arrangements are being paid, the basison which they are calculated and whether they are paid in advance or inarrears. No PMD Group Company has announced proposals to cease makingcontributions to the Retirement Benefit Arrangements.

 

**16.5**       Termination Payments

 

The sale of the PMD Group contemplated by this agreement will nottrigger any termination or severance payment obligations to any employee of thePMD Group Companies.

 

**16.6**       Disputes

 

As at the date of this agreement there are no material disputes aboutthe benefits payable under the Retirement Benefit Arrangements and no materialclaim by or against the trustees or managers of the Retirement BenefitArrangements or any of the PMD Group Companies has been made or threatened.

 

**16.7**       Contribution Holidays

 

Contributions or premiums payable to the Retirement BenefitArrangements (except the Robert Horne Group Pension Scheme (UK) and theStichting Pensioenfonds Buhrmann (NL)) have been and are being paid at or abovethe full amount required by local law and in accordance with the governingdocumentation of the relevant Retirement Benefit Arrangement and are notdiscounted, either fully or partially due to surplus in that or

 

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any other Retirement Benefit Arrangement or otherwise. Thesecontributions or premiums are fully reflected in the Relevant Accounts

 

**16.8**       Risk Benefits

 

All risk benefits connected to death or disability payable by the PMDGroup Companies and/or the Retirement Benefit Arrangements (except the RobertHorne Group Pension Scheme (UK) and the Stichting Pensioenfonds Buhrmann(NL))are insured in accordance with standard industry practice, if any, in therelevant jurisdiction and no premiums in respect of such insurance areoutstanding.

 

**17**          Insurance

 

**17.1**       Existing Policies

 

**17.1.1****   **All the tangibleassets of each PMD Group Company which are capable of being insured (being thebuildings, machines, inventory, hardware and stocks) are at the date of thisagreement (and will immediately prior to Completion be) insured to their fullreplacement value (subject to reasonable industry standard deductibles) againstperils that are normally insured against by companies in similar types ofbusiness such as fire, lightning, explosion, aircraft, burglary and waterdamage (with restricted cover for flood damages).

 

**17.1.2****   **Each PMD GroupCompany is at the date of this agreement (and will immediately prior toCompletion be) adequately covered against accident, physical loss or damage,third party liability claims (including product liability), environmentalliability (to the extent that claims are the consequence of a sudden andaccidental incident not being the consequence of a gradual process) and againstbusiness interruption losses that are directly and immediately resulting frominsured property claims (subject to reasonable industry standard deductibles).

 

**17.2**       Further Details on Policies

 

In respect of the insurancesreferred to in Warranty 17.1 but only to the extent that such insurances arecontinued after Completion:

 

**17.2.1****   **all premiums havebeen duly paid to date;

 

**17.2.2****   **all the policies arein full force and effect and are in the name of the relevant PMD Group Company;

 

**17.2.3****   **no act, omission,misrepresentation or non-disclosure by or on behalf of any PMD Group Companyhas occurred which makes any of these policies voidable;

 

**17.2.4****   **no circumstanceshave arisen, so far as the Seller is aware, which would render any of thepolicies void or unenforceable for illegality or otherwise;

 

**17.2.5****   **there has been nobreach of the terms, conditions and warranties of any of the policies thatwould entitle insurers to decline to pay all or any part of any claim madeunder the policies or to terminate any policy;

 

**17.2.6****   **there are no specialor unusual limits, terms, exclusions or restrictions in any of the policies;and

 

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**17.2.7****   **the premiums payableare not in excess of the normal rates and, so far as the Seller is aware, nocircumstances exist which are likely to give rise to any increase in premiums.

 

**17.3**       Insurance Claims

 

**17.3.1****   **Details of allinsurance claims made during the period of 3 years preceding the date of thisagreement are contained in the schedule headed “Insurance Claims”.

 

**17.3.2****   **Save as detailed inthe schedule headed “Insurance Claims”, no material insurance claim isoutstanding as at the date of this agreement and, so far as the Seller isaware, no circumstances exist which are likely to give rise to any insuranceclaim.

 

**18**          TaxationMatters

 

**18.1**       Returns, Information and Clearances

 

**18.1.1****   **All returns,computations, notices and information which are or have been required to bemade or given by each PMD Group Company for any Taxation purpose (i) have beenmade or given within the requisite periods and on a proper basis and areup-to-date and correct and (ii) none of them is, or so far as the Seller shouldreasonably be aware is likely to be, the subject of any material dispute withany Tax Authority.

 

**18.1.2****   **Each PMD GroupCompany has paid or will provide for in the Completion Acounts all Taxationwhich it has become liable to pay and is under no liability to pay any penaltyor interest in connection with any claim for Taxation.

 

**18.1.3****   **Each PMD GroupCompany is in possession of sufficient information or has access to suchinformation to enable it to compute its liability to Taxation insofar as itdepends on any Transaction occurring on or before Completion.

 

**18.2**       Taxation Claims, Liabilities and Taxation Benefits

 

**18.2.1****   **No Taxation Benefithas been claimed and/or given to any PMD Group Company which could beeffectively withdrawn, postponed, restricted, clawed back or otherwise lost asa result of any act, omission, event or circumstance arising or occurring inthe ordinary course of business.

 

**18.2.2****   **No PMD Group Companyhas voluntarily taken any action which has had, or will have, the result ofaltering, prejudicing or in any way disturbing any arrangement or agreementwhich it has previously had with any Tax Authority.

 

**18.2.3****   **Each PMD GroupCompany has made and submitted each claim, disclaimer, election, notice andconsent assumed to have been made and submitted for the purposes of theCompletion Acounts.

 

**18.3**       Compliance with Regulations

 

**18.3.1****   **Each PMD GroupCompany has complied in all material respects with all relevant statutoryrequirements, orders, provisions, directions or conditions relating toTaxation, including (for the avoidance of doubt) the terms of any agreementreached with any appropriate Tax Authority.

 

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**18.3.2****   **No PMD Group Companyhas entered into any Transaction within the last 6 years which would requireany clearance, consent, ruling, licence or election from any Tax Authority,except where such clearance, consent, licence or election has been validlyobtained from the Tax Authority.

 

**18.3.3****   **If exemption fromany Taxation has been claimed by any PMD Group Company, such PMD Group Companyhas followed the correct procedure to obtain the exemption.

 

**18.4**       Special Regimes/Elections/Rulings

 

There are no agreements,arrangements or elections between any PMD Group Company and any Tax Authoritypermitting the non-compliance by the relevant PMD Group Company with itsstatutory obligations.

 

**18.5**       Tax Audits

 

No PMD Group Company has been thesubject of any audit or investigation by any Tax Authority during the 6 yearspreceding Completion which has resulted in a material adjustment to Taxationpayable by that PMD Group Company. So far as the Seller should reasonably beaware, no audit or investigation is planned in relation to any PMD GroupCompany which could result in a material adjustment to Taxation payable by thatPMD Group Company.

 

**18.6**       Company Residence

 

**18.6.1****   **Each PMD GroupCompany has been resident for tax purposes in its country of incorporation andhas not been resident anywhere else at any time since its incorporation andwill be so resident at Completion.

 

**18.6.2****   **No Tax Authority(other than a Tax Authority in the country of incorporation of the PMD GroupCompany) has claimed that a PMD Group Company is resident for tax purposes orhas a permanent establishment in its country.

 

**18.7**       Double Tax Treaties

 

Each PMD Group Company is aresident for the purposes of any double taxation agreement or conventionentered into between the jurisdiction in which it is resident and any otherrelevant jurisdiction.

 

**18.8**       Transactions not at Arm’s Length

 

**18.8.1****   **No PMD Group Companyhas entered into any Transaction otherwise than on an arm’s length basis.

 

**18.8.2****   **Without prejudice tothe generality of the preceding paragraphs, no PMD Group Company is or could betreated as thinly capitalised for any Tax purpose.

 

**18.9**       Deductible Payments

 

There are no circumstances whichcould cause any Tax Authority to deny relief for material payments of interest(or any other material tax deductible payment) paid by any PMD Group Company,and no such relief has been denied in fact.

 

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**18.10**     Tax Avoidance

 

No PMD Group Company has been aparty to or otherwise been involved in any transaction which may be disregardedor reconstructed or taxed in a way which is otherwise than as reported by thePMD Group Company in its financial statements by reason of a tax avoidancemotive.

 

**18.11**     Intragroup Transactions

 

None of the PMD Group Companieshas entered into any transaction with another company which at that time was amember of the same group either on a tax-neutral basis or otherwise prior toCompletion which could result in material Taxation payable by the PMD GroupCompanies.

 

**18.12**     Transfer Taxes and Capital Duty

 

**18.12.1**** **All documents towhich any PMD Group Company is a party, or which form part of the title to anyasset owned or possessed by any PMD Group Company, or which any PMD GroupCompany or the Purchaser may need to enforce or produce in evidence in anycourt of law, have been duly stamped and (where required by law) adjudicatedand any applicable stamp duties or similar duties or charges in respect of suchdocuments have been duly accounted for and paid.

 

**18.12.2**** **All duties, fees andpenalties payable in respect of the capital of each PMD Group Company(including any premium over nominal value at which any share was issued) havebeen duly accounted for and paid and there are no circumstances under which anyrelief obtained against payment of any such amount could be withdrawn.

 

**18.13**     VAT and Turnover Tax

 

Each PMD Group Company and anyother company which has been treated as a PMD Group Company for the purposes ofVAT and (where relevant) turnover taxes has complied fully with all statutoryrequirements, orders, provisions, directions or conditions relating to VAT orsuch turnover taxes, including (for avoidance of doubt) the terms of anyagreement reached with any appropriate Tax Authority.

 

**18.14**     Taxation of Employees

 

**18.14.1**** **Each PMD GroupCompany has complied with all requirements in relation to the Taxation ofemployees (including, without limitation, taxes on income and social securitytaxes) including by making such deductions as are required by law from allpayments made or deemed to be made by it or on its behalf, and duly accountingto the appropriate Tax Authority for all sums deducted and for all otheramounts for which it is required to account in respect of any Taxation relatingto employees.

 

**18.14.2**** **All payments toemployees are made through the payroll.

 

**18.14.3**** **All employee shareoptions have been administered through the payroll and are recorded at suchvalue as required by the relevant legislation.

 

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**18.15**     UK

 

**18.15.1**** **In respect of eachPMD Group Company marked with an “*” listed in the schedule headed “TheSubsidiaries of the Companies”:

 

(i)         each such PMD Group Company is dormant; and

 

(ii)        each such PMD Group Company has not received notice fromthe Inland Revenue regarding the returns and computations which have beenrequired to be made and these returns and computations are not subject to anydisputes which have not been resolved.

 

**18.15.2**** **Save for borrowingsto fund working capital, all debts owed by Group Companies resident in the UKfor Tax purposes are owed to companies which are not and have not at any timebeen a member of a group of which the PMD Group Company has at any time been amember.

 

**18.15.3**** **There has been nomaterial change to the nature, scope or conduct of the business of each PMDGroup Company resident in the UK for Tax purposes, since the date on which thePMD Group Company was acquired by the Seller’s Group.

 

**18.16**     The Netherlands

 

**18.16.1**** **The Dutch fiscalunities in which a PMD Group Company is included have not and will not file foran extension of two years of the old fiscal unity regime.

 

**18.16.2**** **Each PMD GroupCompany resident in the Netherlands for Tax purposes has paid the fixed expenseallowances in accordance with social security regulations.

 

**18.16.3**** **Each PMD GroupCompany resident in the Netherlands for Tax purposes has properly recorded inits VAT returns any VAT in relation to rebates.

 

**18.16.4**** **None of the PMDGroup Companies resident in the Netherlands for Tax purposes has acted duringthe last six years as contractor or subcontractor as defined in the ChainLiability Act (“**Wet Ketenaansprakelijkheid**”) ofthe Dutch Collection Act 1990 (“**Invorderingswet**”).

 

**18.16.5**** **The capitalrecognised for Tax purposes within the meaning of article 3a of the DutchDividend Tax Act 1965 (“**Wet op de dividendbelasting 1965**”) of each PMD Group Company resident in theNetherlands for Tax purposes is equal to the amounts stated in the schedule headed“Capital Recognised for article 3 of the Dutch Dividend Tax Act 1965”.

 

**18.16.6**** **None of the PMDGroup Companies resident in the Netherlands for Tax purposes has written offreceivables on affiliated entities (within the meaning of article 10a,paragraph 4 of the Dutch Corporate Income Tax Act 1969) against taxable income.

 

**18.16.7**** **None of the PMDGroup Companies resident in the Netherlands for Tax purposes has a shareholdingin another PMD Group Company to which the Dutch participation exemption appliesand which runs foreign business operations which were formerly operated byaffiliated entities within the meaning of article 10a, paragraph 4 of theDutch Corporate Income Tax Act 1969.

 

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**18.16.8**** **Velpa Enveloppen BV, Bührmann-Ubbens B.V. and Proost en Brandt B.V. willhave an amount of goodwill on their tax balance sheet on Completion as set outand allocated in schedule headed “Goodwill on Tax Balance Sheet” and, forDutch corporate income tax purposes, such amount of goodwill (i) will berecorded in its entirety as a separate balance sheet item for each such company(ii) shall not be allocable to any of the separate assets held or owned by eachsuch company. Notwithstanding any other provision of this agreement (includingthe Tax Covenant) the Purchaser shall have no claim under this Warranty 18.16.8unless the Loss suffered is greater than EUR250,000 per Bührmann-Ubbens B.V.and Proost en Brandt B.V.

 

**18.17**     Italy

 

All outstanding liabilities to Taxation of each PMD Group Companyresident in Italy for Tax purposes will be satisfied by amnesties from Tax.

 

**18.18**     France

 

There are no liabilities to Taxation arising from the failure of anyPMD Group Company resident in France for Tax purposes to submit the relevantdocumentation in respect of the Tax exempt treatment of the merger of PiogerDistribution SA into Carper ADP on 31 July 1999.

 

**18.19**     Germany

 

The transactions below, whether individually or in any combination,will not give rise to any profit or gain which is either subject to Tax in thehands of a PMD Group Company resident in Germany for Tax purposes or which willreduce the Tax losses available to such PMD Group Company.

 

**18.19.1**** **BuhrmannInternational B.V. contributes EUR27,000,000 to the share premium account(Kapital Rücklage) of Deutsche Papier Holding GmbH;

 

**18.19.2**** **Deutsche PapierHolding GmbH converts EUR18,000,000 of its receivable on Deutsche PapierVertriebs GmbH into share premium (Kapital Rücklage);

 

**18.19.3**** **Deutsche PapierHolding GmbH contributes EUR7,000,000 to the share premium account (KapitalRücklage) of Deutsche Papier Vertriebs GmbH;

 

**18.19.4**** **Deutsche PapierHolding GmbH converts EUR1,000,000 of its receivable on Deutsche adp WilhelmGmbH into share premium (Kapital Rücklage);

 

**18.19.5**** **Deutsche PapierHolding GmbH converts EUR500,000 of its receivable Klinger GmbH Handel fürSiebdruck und Werbetechnik into share premium (Kapital Rücklage);

 

**18.19.6**** **Deutsche PapierHolding GmbH converts EUR500,000 of its receivables on DirimexHandelsgesellschaft GmbH into share premium (Kapital Rücklage).

 

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**SCHEDULE 10**

 

**WARRANTY LIMITS**

 

**1.**             Acknowledgement

 

The Purchaseracknowledges and agrees that:

 

(a)           the Warranties are the only representations,warranties or other assurances of any kind given by or on behalf of the Selleror any member of the Seller’s Group, and, also in view of article 7:17Dutch Civil Code, collectively and exhaustively reflect all of thecharacteristics the Purchaser may reasonably expect the Shares, the Assets, thePMD Group Companies and the Business to have;

 

(b)           notwithstanding any other provision of this agreement,no other statement, promise or forecast (written or oral) made by or on behalfof the Seller or any member of the Seller’s Group may form the basis of, or bepleaded in connection with, any claim by the Purchaser under or in connectionwith this agreement, whether based on article 7:17 Dutch Civil Code orotherwise; and

 

(c)           the Seller does not, nor does any member of the Seller’sGroup (or any of the Seller’s advisers), make any representation or warranty asto the accuracy of, without limitation, forecasts, estimates, projections,statements of intent or statements of opinion provided to the Purchaser or itsadvisers on or prior to the date of this agreement (whether this constitutesdisclosed information or otherwise) or contained in the Disclosure Letter.

 

**2.**             Limits

 

The liabilityof the Seller in respect of any Warranty Claim shall be limited as follows:

 

(a)           the provisions of the schedule headed “TaxCovenant” shall apply to claims under the Tax Warranties as if such WarrantyClaim was a claim under paragraph 2 of the Tax Covenant and the remainder of schedule 10shall not apply to such claims or to claims under the Tax Covenant;

 

(b)           to the extent that thePurchaser receives a payment from the Seller in respect of a claim under anIndemnity arising out of the same circumstances that give rise to a WarrantyClaim;

 

(c)           there shall be disregarded for all purposesany breach of Warranty in respect of which the amount of the damages to whichthe Purchaser would otherwise be entitled is:

 

(i)            in respect of a Warranty Claim in relation to each ofthe PMD Group Companies marked with a “#” in the schedule headed the “TheCompanies” and the “The Subsidiaries of the Companies”, less than EUR250,000(and claims relating to a series of connected matters shall be aggregated forthis purpose);

 

(ii)           in respect of a Warranty Claim in relation to otherPMD Group Companies, less than EUR150,000 (and claims relating to a series ofconnected matters shall be aggregated for this purpose);

 

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(iii)          in respect of a Warranty Claim in relation to the lineitems in the Relevant Accounts relating to “inventory after provisions”, “accountsreceivable after provisions”, “accounts payable”, “tangible fixed assets” and “deferredtax”, irrespective of (i) and (ii) above, less than EUR500,000 (and claimsrelating to a series of connected matters shall be aggregated for thispurpose), provided that this threshold of EUR500,000 shall also apply toWarranty Claims in relation to line items called “Deferred Tax” in underlyingschedules which are included in the line items headed “Provisions” and “FinancialFixed Assets” in the Relevant Accounts (and claims relating to a series ofconnected matters shall be aggregated for this purpose).

 

(d)           the Purchaser shall not be entitled torecover any damages in respect of any one or more breach of Warranty unless theaggregate amount of damages in respect of such breach or breaches of Warrantyexceeds EUR7,000,000 in which case the excess over EUR5,000,000 may berecovered;

 

(e)           the maximum aggregate liability of theSeller in respect of all and any breaches of Warranty shall not exceedEUR350,000,000; and

 

(f)            save in respect of any claim of which thePurchaser gives written notice to the Seller before the relevant dates in (i)and (ii) below , the Seller shall cease to have any liability under or inrespect of the Warranties:

 

(i)            in relation to a claim under paragraph 13(Environmental) of the schedule headed “Warranties” 30 Business Days afterthe fifth anniversary of the end of the accounting period of the PMD GroupCompany concerned in which Completion occurs; and

 

(ii)           in respect of any other Warranties on 31 July 2005;

 

except thereshall be no time limit in relation to any claim under Warranties 1.1 (TheShares and PMD Group Companies), 1.2 (Subsidiaries, Associates and Branches), 2(Authority and Capacity), 3 (Reorganisation) or 7 (Insolvency) of the schedule headed“Warranties”.

 

(g)           The liability of the Seller in respect ofany Warranty Claim shall in any event terminate if proceedings in respect of ithave not been commenced within 9 months of service of notice of that WarrantyClaim unless the Seller shall have assumed conduct of a Third Party Claim (asdefined below) in question in accordance with the provision of this schedule (inwhich case the liability of the Seller in respect of any Warranty Claimrelating to the Third Party Claim conducted by the Seller shall only terminateif proceedings in respect of it have not been commenced within 9 months of theresolution of such Third Party Claim).

 

**3.**             Exclusions

 

The Sellershall not be liable in respect of a Warranty Claim if and to the extent that itrelates to any liability or obligation on the part of a PMD Group Company:

 

(a)           for which a specific provision, accrual, reserve orallowance is made or falls to be made, or of which the payment or discharge isreflected, in the Completion Acounts to the extent of the provision;

 

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(b)           subject to paragraph (c) below, which would not havearisen but for a change in legislation or regulations, or a change in theinterpretation or implementation thereof by any Governmental Body or by reasonof development in case law, made after Completion or any amendment to or thewithdrawal after Completion of any practice previously published by or anyextra-statutory concession previously made by a Tax Authority (whether or notthe change purports to be effective retrospectively in whole or in part);

 

(c)           solely for the purposes of determining the scope ofthe Purchaser’s obligations in respect of Condition 3.1(b), which would nothave arisen but for a change in legislation or regulations or a change in theinterpretation or implementation thereof by any Governmental Body or by reasonof development in case law, made after the date of this agreement;

 

(d)           which would not have arisen but for a change afterCompletion in the accounting bases on which any PMD Group Company values itsassets or a change in the tax structure or corporate structure of the PMD GroupCompanies;

 

(e)           which arises as a result of any change afterCompletion of the date to which a PMD Group Company makes up its accounts or inthe bases, methods or policies of accounting of the PMD Group Company;

 

(f)            occasioned by any act or omission of the Purchaser orany PMD Group Company after Completion otherwise than in the ordinary course ofbusiness;

 

(g)           which would not have arisen but for a cessation, orany change in the nature or conduct, of any trade carried on by any PMD GroupCompany at Completion, being a cessation or change occurring on or afterCompletion.

 

**4.**             Net Financial Benefit

 

The Sellershall not be liable in respect of any Losses suffered by the Purchaser or anyof the PMD Group Companies to the extent of any corresponding savings realisedor quantifiable net financial benefit received by the Purchaser or any PMDGroup Company arising from such Losses or the facts giving rise to such Losses(for example, without limitation, where the amount (if any) by which anyTaxation for which the Purchaser or any PMD Group Company would otherwise havebeen accountable or liable to be assessed is actually reduced or extinguishedas a result of the matter giving rise to such liability).

 

**5.**             Conduct of Third Party Claims

 

If the matteror circumstance that may give rise to a claim against the Seller under thisagreement is a result of or in connection with a claim by or liability to athird party (a **Third Party Claim**) and does notarise out of the ordinary course of business of the PMD Group, then, withoutprejudice to the rights of the insurers of the Purchaser’s Group, the Sellermay elect to assume the conduct of any appeal, dispute, compromise or defenceof the Third Party Claim and of any incidental negotiations on the followingterms:

 

(a)           the Seller shall indemnify the Purchaser or othermember of the Purchaser’s Group concerned, against all Losses connected withthe Seller’s conduct of such Third Party Claim;

 

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(b)           the Purchaser shall, or the Purchaser shall procurethat any other members of the Purchaser’s Group shall, take such action as theSeller may reasonably request to avoid, dispute, deny, defend, resist, appeal,compromise or contest such claim save that neither the Purchaser nor any othermember of the Purchaser’s Group shall be required to take any action which thePurchaser or other member of the Purchaser’s Group concerned reasonablyconsiders may be unduly onerous or materially prejudicial to it or to itsbusiness;

 

(c)           the Purchaser shall, or the Purchaser shall procurethat any other members of the Purchaser’s Group shall not admit, compromise,dispose of or settle such Third Party Claim; and

 

(d)           on request by the Seller, the Purchaser shall, and thePurchaser shall procure that any other members of the Purchaser’s Group shall,take all reasonable steps to procure that the Seller is provided on reasonablenotice with all material correspondence and documentation and other informationrelating to the Third Party Claim as the Seller**mayreasonably request subject to the Seller agreeing in such form as the Purchasermay reasonably require to keep all such correspondence and informationconfidential and to use it only for the purpose of dealing with the relevantThird Party Claim;

 

In all othercases or where the Seller does not elect to assume the conduct of the ThirdParty Claim, the Purchaser shall procure that the relevant PMD Group Companyconsult with the Seller in relation to the conduct of any appeal, dispute,compromise or defence of the Third Party Claim and the Purchaser shall, andshall procure that the relevant PMD Group Company shall, keep the Sellerinformed of the progress of the Third Party Claim. The Purchaser shall, andshall procure that the relevant PMD Group Company shall, before making anyadmission of liability, agreement, settlement or compromise with any thirdparty in relation to any such claim or adjudication first take into account thereasonable interests of the Seller (to the extent this does not unreasonablyprejudice the interests of the PMD Group Company).

 

Nothing inthis paragraph 5 shall affect the conduct of claims under clause 13.1(c) orunder the schedule headed “Tax Covenant”.

 

**6.**             Mitigation

 

Nothing inthis agreement shall be deemed to relieve the Purchaser or the Seller from anyduty under applicable law to mitigate any loss or damage incurred by it as aresult of any breach of Warranty.

 

Nothing inthis paragraph 6 shall oblige the Purchaser to take any action which may beunduly onerous or materially prejudicial to it or its business (including theBusiness).

 

**7.**             Recovery from third parties

 

If:

 

(a)           the Seller makes a payment in respect of a WarrantyClaim (the **Damages Payment**); and

 

(b)           any PMD Group Company or the Purchaser receives anysum (or makes any savings or receives any quantifiable financial benefit) whichwould not have been received

 

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but for thecircumstances which gave rise to that Warranty Claim (the **Third PartySum**); and

 

(c)           the receipt of that sum was not taken into account incalculating the Damages Payment; and

 

(d)           the aggregate of the Third Party Sum and the DamagesPayment exceeds the amount required to compensate the Purchaser in full for theloss or liability which gave rise to the Warranty Claim in question, suchexcess being the **Excess Recovery**;

 

then thePurchaser shall, promptly on receipt of the Third Party Sum by it or therelevant PMD Group Company, repay to the Seller an amount equal to the lower of(i) the Excess Recovery and (ii) the Damages Payment, after deducting (ineither case) all costs incurred by the Purchaser or the relevant PMD GroupCompany in recovering that sum and any taxation payable by the Purchaser or anyPMD Group Company by virtue of its receipt.

 

If, before theSeller pays any amount in respect of any claim under this agreement, thePurchaser or any PMD Group Company is entitled to recover (whether by payment,discount, credit, relief, insurance or otherwise) from a third party a sumwhich indemnifies or compensates the Purchaser or the PMD Group Company (inwhole or in part) in respect of the loss or liability which is the subjectmatter of the claim, the Purchaser shall procure that all reasonable steps aretaken to enforce recovery against the third party and any actual recovery shallreduce or satisfy, as the case may be, after deducting all costs incurred bythe Purchaser or the relevant PMD Group Company in receiving that sum and anyTaxation payable by the Purchaser or any PMD Company, such claim to the extentof such recovery. The Seller shall be subrogated to all rights that thePurchaser has or would otherwise have in respect of the claim against the thirdparty.

 

**8.**             Insurance

 

Withoutprejudice to the Purchaser’s duty to mitigate any loss in respect of any breachof Warranty, if in respect of any matter which would otherwise give rise to abreach of Warranty one of the PMD Group Companies is entitled to claim underany policy of insurance (or would have been so entitled had it maintained itsinsurance cover at the levels current at Completion), the amount of insurancemonies which that PMD Group Company recovers (or would have been entitled torecover had it maintained its insurance cover at the levels current at the dateof signing this agreement) (after taking account of Taxation on the insuranceproceeds but giving credit in calculating such Taxation for any tax reliefrealised) shall reduce *pro tanto*orextinguish the Warranty Claim.

 

**9.**             Double recovery

 

The Purchasershall not be entitled to recover damages from the Seller more than once inrespect of any one matter even if more than one Warranty is breached.

 

The Purchasershall not be entitled to make any Warranty Claim in relation to matters takeninto account in agreeing the reduction of the purchase price contained in theHeads of Terms dated 17/18 June 2003 to the purchase price as set out inthe Extension to the Heads of Terms dated 7 August 2003, which matters(and, in some cases, the related amounts) include: the Dutch pensions holiday(EUR4,500,000), the understatement of Non-Dutch pension costs (EUR800,000),salary bonuses (EUR1,500,000), the release of inventory provision (EUR700,000),recurring/non recurring items, the loss of Sericol and Kappa ink contracts and

 

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the RobertHorne Pension Fund. This paragraph shall not preclude any Warranty Claim inrespect of new information not taken into account in such price reduction.

 

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**SCHEDULE 24**

 

**PROTECTIVE COVENANTS**

 

**1**             Seller’sRestrictive Covenants

 

**1.1**         Non-compete

 

The Seller covenants andundertakes with and for the benefit of the Purchaser and each PMD Group Companythat neither the Seller nor any member of the Seller’s Group will during theRestricted Period:

 

(a)            carry on,or engage or become economically interested in any business which is of thesame or similar type to and is in competition with any part of the papermerchanting business of any PMD Group Company, except for the ordinary courseof business activities of an Existing Business (any such competing business,excluding an Existing Business, is referred to as a **CompetingBusiness**);

 

(b)           other than in course of carrying on anExisting Business, in competition with any part of the paper merchantingbusiness of any PMD Group Company, canvass or solicit the custom of any person,firm or company who has within 2 years prior to Completion been a customer ofany PMD Group Company.

 

**1.2**         Acquisition of business

 

The restrictions in clause 1.1shall not operate to prohibit the Seller or any member of the Seller’s Groupfrom:

 

(a)            subjectto paragraph 1.2(b) acquiring any business carrying on a business similar to anExisting Business as part of the aggregate business conducted; or

 

(b)            acquiringa business which includes a Competing Business provided that the Seller offers(or procures that the relevant member of the Seller’s Group offers) theCompeting Business to the Purchaser on terms and conditions (including asregards the purchase price) equivalent to those under which the Seller or anymember of the Seller’s Group acquired the entire business.

 

**1.3**         Preferred Supplier

 

Should the Seller acquire anyExisting Business pursuant to clause 1.2(a), the Seller will offer thePurchaser the option to have such Existing Business included in the preferredsupplier arrangements agreed under the Merchanting Agreement. Should such anoffer be accepted by the Purchaser, the Seller and the Purchaser will use theirbest endeavours to agree the terms of a preferred supplier arrangement,provided that these terms shall neither be materially different from thosecontained in the Merchanting Agreement nor be economically less attractive tothe Seller than the existing supplier arrangements at the acquired ExistingBusiness.

 

**1.4**         Employment Restriction

 

Neither the Seller nor any memberof the Seller’s Group will for 2 years following Completion induce or seek toinduce any Restricted Employee to become employed (whether as employee,consultant or otherwise) by the Seller or any member of the Seller’s Group,whether or not such Restricted Employee would thereby commit a breach of hiscontract of service. However, this restriction shall not operate to prohibitthe Seller or any member of the

 

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Seller’s Group from placing anadvertisement of a post available to a member of the public generally andrecruiting a person through an employment agency, provided that neither theSeller nor any member of the Seller’s Group shall be permitted to encourage oradvise such agency to approach any Restricted Employee.

 

**1.5**         Reasonableness of Restrictions

 

The Seller confirms that it hasreceived independent legal advice relating to all the matters provided for inthis agreement, including the provisions of this clause. The Seller agrees thatthe restrictions contained in this clause are no greater than are reasonableand necessary for the protection of the interest of the Purchaser, but if anysuch restriction shall be held to be void but would be valid if deleted in partor reduced in application, such restriction shall apply with such deletion ormodification as may be necessary to make it valid and enforceable.

 

**2**             Purchaser’sRestrictive Covenants

 

**2.1**         Restrictions on the Purchaser and members of the Purchaser’s Group

 

The Purchaser covenants andundertakes with and for the benefit of the Seller and each member of the Seller’sGroup that neither the Purchaser nor any member of the Purchaser’s Group, willfor a period of 2 years following Completion induce or seek to induce anyemployee of the Seller or any member of the Seller’s Group to become employed(whether as employee, consultant or otherwise) by the Purchaser or any memberof the Purchaser’s Group, whether or not such employee would thereby commit abreach of his contract of service. However, this restriction shall not operateto prohibit the Purchaser or any member of the Purchaser’s Group from placingan advertisement of a post available to a member of the public generally andrecruiting a person through an employment agency, provided that neither thePurchaser nor any member of the Purchaser’s Group shall be permitted toencourage or advise such agency to approach any such employee.

 

**2.2**         Access to people and information

 

Until the seventh anniversary ofCompletion, the Purchaser shall, and shall procure that the relevant member ofthe PMD Group Companies shall, make available to the Seller or any member ofthe Seller’s Group such persons and such information as the Seller or anymember of the Seller’s Group may reasonably require for the purposes of mattersrelating to taxation, merger control or law (in particular in relation toIndemnities or Warranty Claims in relation thereto).

 

Until the seventh anniversary ofCompletion, the Seller shall, and shall procure that each member of the Seller’sGroup shall, make available to the Purchaser or any member of the PMD GroupCompanies such persons and such information as the Purchaser or any member ofthe PMD Group Companies may reasonably require for the purposes of mattersrelating to taxation, merger control or law (in particular in relation toIndemnities or Warranty Claims in relation thereto).

 

**3**             Interpretation

 

The following terms shall have thefollowing meanings respectively in this clause 3:

 

**Existing Business** means any business conducted by a member of the Seller’sGroup in the 12 months preceding the date of this agreement where, by referenceto the product assortments, the services and the types of customers, there isan overlap with the business of any PMD

 

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Group Company provided thatthe parties agree that printers shall not constitute a customer of the ExistingBusiness for the purpose of this definition;

 

**Restricted Employee** means any Relevant Employee who (a) has access to tradesecrets or other confidential information of any PMD Group Company; (b) hasparticipated in discussions relating to the transaction pursuant to thisagreement; or (c) is a Senior Employee;

 

**Restricted Period** means 3 years commencing on Completion or such shorterperiod of time recognised by applicable law as being binding on the Seller orany member of the Seller’s Group or the Purchaser or any member of thePurchaser’s Group, as appropriate.

 

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**SCHEDULE 31**

 

**INTERPRETATION**

 

(1)           Terms Defined:

 

In this agreement and the schedules hereto, where the context admits:

 

**AccedingPurchaser**has the meaning given to it in clause 20.1;

 

**AcquiredRights Directive**means Council Directive 2001/23EC of 12 March 2001consolidating Directive 98/50/EC of 29 June 1998 which amended Directive77/187/EEC;

 

**Affiliate** means in relation to anyperson, any subsidiary or direct or indirect holding company of that person andany other subsidiary of that holding company;

 

**AgreedCapital Structure** means the capital structure in the Agreed Form;

 

**AgreedForm**means, in relation to any document, such document in the terms or form agreedbetween the Seller and the Purchaser which has been initialled for the purposeof identification by the Seller and the Purchaser with such alterations as maybe agreed in writing between the Seller and the Purchaser from time to time;

 

**AmsterdamLease Agreement**means a lease agreement in the Agreed Form to take effecton Completion between Buhrmann Stafdiensten B.V. and an Affiliate of thePurchaser whereby office space on the first floor of the Centerpoint officebuilding is leased to such Affiliate;

 

**Approval**hasthe meaning set out in clause 3.1(c);

 

**Assets** means the items in the schedule headed“Assets”;

 

**BalanceSheet**means the balance sheets as at the Relevant Accounts Date for the year ended onthat date of the PMD Group Companies (including the combined balance sheet asat that date);

 

**BankGuarantee**has the meaning set out in clause 4.6;

 

**BaseAmount**has the meaning set out in clause 5.1(a);

 

**Berni**meansAugusto Berni Carta Cancelleria A.B.C.C.D. S.p.A.;

 

**BITESystem**meansthe ecommerce system known as BITE produced by Cap Gemini Ernst and YoungNederland B.V. (including all software in object code and source code format)whether produced under the “Framework Agreement Informatics Service” withBuhrmann Nederland B.V. dated 13 March 2001 or otherwise;

 

**Breach**hasthe meaning set out in clause 13.1(c)(i);

 

**BuhrmannGroup Finance Manual** means the finance manual prepared by the Seller forthe purpose of preparing the Relevant Accounts on the basis of each GroupCompany’s audited accounts, as annexed to this agreement in the Agreed Form;

 

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**Business** means the business carried onby the PMD Group Companies;

 

**BusinessDay**means a day (other than a Saturday or Sunday) on which banks are generally openin The Netherlands, London and Australia for normal business;

 

**BusinessIPR**meansthe Group IPR and the Shared IPR;

 

**BusinessIPR Licences** means licences and agreements (including all amendments, novations,supplements or replacements to those licences and agreements) granted inrespect of Business IPR by or to the Seller’s Group and the PMD GroupCompanies;

 

**BusinessIT**means the computer systems, communications systems, software, hardware anddatabases used by the PMD Group Companies;

 

**Cash** means the cash held by thePMD Group Companies and included in the line item “Cash & Cash at Bank” inthe schedule headed “Purchase Price Adjustment Statement”;

 

**Claim** means a claim for damagesresulting from a breach of an obligation under this agreement, which includes aWarranty Claim;

 

**Companies** has the meaning set out inrecital (A) and Company means any of them;

 

**CompetitionAuthorities**has the meaning set out in the Conditions 3.1(b);

 

**CompetitionRule**means Article 81(1) or 82 of the Treaty of Rome or any correspondingprovisions under the domestic legislation of any jurisdiction;

 

**Completion** means completion of the saleand purchase of the Shares and the Assets in accordance with the clause headed “Completion”;

 

**CompletionAccounts**meansthe Completion Balance Sheet and any supporting hyperion balance sheetschedules, insofar as relevant to to the preparation of the Completion BalanceSheet, to be prepared in accordance with the clause headed “Completion Accounts”;

 

**CompletionBalance Sheet**means the balance sheet of the PMD Group drawn up in the form of andincluding the line items included in the schedule headed “Purchase PriceAdjustment Statement” and prepared in accordance with the schedule headed “Policiesfor Preparation of the Completion Accounts”;

 

**CompletionDate**means the date on which Completion is effected;

 

**Conditions** means the conditions (*opschortende voorwaarden*) to Completion of the sale andpurchase of the Shares and the Assets set out in the clause headed “Conditions”and **Condition** means any of them;

 

**ConfidentialityAgreement**means the confidentiality undertaking agreement dated 10 April, 2003 betweenthe Seller and the Purchaser;

 

**ConsultancyAgreement**means an agreement other than a contract of employment with a PMD Group Companypursuant to which an individual provides services (including any individualagency arrangement);

 

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**Consultant**meansan individual providing services to a PMD Group Company pursuant to aConsultancy Agreement on a fee which (if it were a full time consultancy) wouldbe in excess of EUR120,000 per annum or local equivalent;

 

**DamagesPayment**has the meaning set out in paragraph 7(a) of the schedule headed “WarrantyLimits”;

 

**DanishPartnership Agreement**means the agreement in the Agreed Form to take effecton Completion between Corporate Express Europe B.V. and CC&CO. Holdings ApSwhereby the parties establish a partnership for the distribution and/ordelivery of office supplies, computer supplies and related services tocustomers in Denmark;

 

**DataRoom**means the data room prepared by the Seller for the Purchaser located at TheAtrium, Strawinskylaan 3051, Amsterdam, between 30 June 2003 and 18 July 2003(inclusive) together with any subsequent agreed additions thereto, the contentsof which are contained in the data room index in the Agreed Form;

 

**Debt** means any inter-company orthird party financial indebtedness, other than indebtedness owed by any PMDGroup Company to another PMD Group Company, which is included in the line itemheaded “Debt” in the schedule headed “Purchase Price Adjustment Statement”;

 

**DeferredConsideration** means the amount (if any) calculated in accordance with the clauseheaded “Deferred Consideration”;

 

**DeferredConsideration Period** means the calendar year from the Latest RelevantAccounts Date until 31 December 2003;

 

**DeferredConsideration Statement** means the statement to be prepared by the Purchaserin accordance with the clause headed “Deferred Consideration”;

 

**DisclosureLetter**means the letter of the same date as this agreement from the Seller to thePurchaser disclosing information constituting exceptions to the Warranties;

 

**DraftCompletion Accounts** has the meaning set out in clause 6.1(b);

 

**DraftDeferred Consideration Statement** has the meaning set out in clause 7.1

 

**DueDiligence Investigation** has the meaning set out in clause 10.1;

 

**EBITA** means the combined earningsbefore exceptional items, interest, taxation, amortisation and impairment ofgoodwill of the PMD Group Companies calculated in accordance with the clauseheaded “Deferred Consideration Statement” and set out in the DeferredConsideration Statement;

 

**EBITDA** means operating result beforeexceptional items, depreciation of tangible fixed assets, amortisation andimpairment of goodwill, interest and taxation;

 

**Encumbrance**meansany claim, charge, mortgage, pledge, fees, option, equity, power of sale,hypothecation, usufruct, retention of title, right of pre-emption, right offirst refusal or other third party rights or security in interest of any kindor agreement to create any of the foregoing;

 

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**Environment** means all or any of the following media (alone or incombination): air (including the air within buildings and the air within othernatural or man-made structures whether above or below ground); water (includingwater under or within land or in drains or sewers); soil and land and anyecological systems and living organisms supported by these media, including manand his property;

 

**Environmental Law** means all European Union, national, federal, provincial,state or local statutes, the common law, codes of law (having legal effect),regulations, statutory guidance notes and final and binding court and othertribunal decisions of any relevant jurisdiction in force in the relevantjurisdiction at Completion concerning:

 

(i)            protection, or pollution of, or compensation of damage orharm to, the Environment; and/or

 

(ii)           emissions, discharges, or releases of HazardousSubstances into, or the presence in, the Environment, or the use, treatment,storage, burial, disposal, transport or handling of Hazardous Substances;and/or

 

(iii)          workers’ health and safety,

 

andall bye-laws, codes, regulations, decrees or orders issued or promulgated orapproved thereunder or in connection therewith;

 

**EstimatedPurchase Price** has the meaning set out in clause 5.2;

 

**ExcessRecovery**has the meaning set out in paragraph 7(d) of the schedule headed “WarrantyLimits”;

 

**Expresso** means Expresso Paper PlatformB.V.;

 

**ExcludedAssets**hasthe meaning set out in clause 2.3;

 

**EvelynStreet Property**means the Property marked with a “*” in the schedule headed“Properties”;

 

**GAAP** means generally acceptedaccounting principles and practices in The Netherlands;

 

**GovernmentalBody**means any: (a) nation, country, city, town, village, district, or otherjurisdiction of any nature; (b) federal, state, local, municipal, foreign, orother government; (c) governmental or quasi-governmental authority of anynature (including any governmental agency, branch, department, official, orentity and any court or other tribunal); (d) multinational organisation orbody; or (e) body exercising, or entitled to exercise any administrative,executive, judicial, legislative, police, regulatory, or taxing authority orpower of any nature;

 

**Group** means, in relation to anyperson, such person and its Affiliates;

 

**GroupIPR**meansall rights in and to Intellectual Property owned by the Seller’s Group and/orthe PMD Group Companies, and used exclusively in the Business;

 

**HazardousSubstances**means any wastes, pollutants, contaminants and any other natural orartificial substance of any nature whatsoever (whether in the form of a solid,liquid, gas or

 

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vapour, alone or in combination with any other substance) which iscapable of causing harm or damage to the Environment or a nuisance to anyperson;

 

**HyperionSystem**meansthe accounting systems known as the Hyperion Model that is currently used bythe Seller including in relation to the PMD Group Companies;

 

**IBMLicensing Agreement** means the trademark license agreement entered intobetween International Business Machines Corporation and the Seller with aneffective date of 1 April 1998 as amended by three amendment agreementsentered into between International Business Machines Corporation and theSeller;

 

**IndemnifiedParties**has the meaning set out in the clause headed “Specific Indemnities”;

 

**Indemnities** means the indemnities set outin the clause headed “Specific Indemnities”;

 

**IndemnitySum**shall have the meaning set out in clause 21.2;

 

**IndependentAccountants** means such firm of chartered accountants (*registeraccountants*)]as may be appointed under the clause headed “Independent Accountants”;

 

**IndirectSeller**means the companies listed in the schedule headed “Indirect Sellers”;

 

**Inquiry** shall have the meaning setout in clause 13.1(c)(i);

 

**IntellectualProperty**meanstrade marks, domain names, get-up, logos, patents, design rights, copyrights,database rights and all other similar rights in any part of the world(including Know-How) including any registration of such rights or applicationsand rights to apply for such registrations;

 

**IntellectualProperty Licence Agreement**means the licence in the Agreed Form to take effect onCompletion between the Seller and the Purchaser whereby the Seller licenses orprocures the license to the Purchaser of Intellectual Property rights andinterests owned by the Seller and/or the Seller’s Group and used on anon-exclusive basis in the Business;

 

**IntellectualProperty Assignment**means the agreement in the Agreed Form to take effecton Completion effecting the assignment of the Business IPR owned by the Seller’sGroup and used exclusively in the Business (but excluding any Registered GroupIPR);

 

**ITServices Assignment Agreement**means the agreement in the Agreed Form to take effecton Completion whereby Buhrmann Stafdiensten B.V. and other membersof the Seller’s Group agree to assign to Buhrmann Shared Services B.V. therights, title, interests and obligations of Buhrmann Stafdiensten B.V. which ariseunder an agreement dated 1 January 2002 for the provision of IT services;

 

**Know-How** means confidential andproprietary industrial and commercial information and techniques in any formincluding, without limitation, drawings, formulas, test results, reports,instruction and training manuals, market forecasts and particulars of customersand suppliers;

 

**LatestRelevant Accounts** means the Relevant Accounts of each PMD Group Companyfor the twelve month period ending on the Latest Relevant Accounts Date;

 

**LatestRelevant Accountants Date** means 31 December 2002;

 

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**LeverageRatio**means Net Debt at the end of the financial quarter which ends prior to or onthe first anniversary of the Completion Date, divided by EBITDA for the Sellerfor the preceding 12 month period;

 

**LocalTransfer Documents**means****suchagreements, transfers, conveyances, notarial deeds and other documents (subjectto the relevant local law and otherwise as may be agreed between the Seller andthe Purchaser) to implement the transfer of (i) the Shares or (ii) the Assetson Completion or (iii) the Surplus Properties, whether before or afterCompletion;

 

**LongStop Date**means 17 June 2004;

 

**Losses** means all losses,liabilities, fines, penalties, damages, costs (including without limitationlegal costs and experts’ and consultants’ fees), charges, expenses, actions,proceedings, claims and demands;

 

**ManagementAccounts**means the unaudited management accounts relating to each PMD Group Company forany period or drawn up as at any date since the Latest Relevant Accounts Date(the **Relevant Management Accounts Date**) andinitialled by the parties as in the Agreed Form;

 

**ManagementServices Termination Agreement**means the agreement in Agreed Form to take effect onCompletion whereby Buhrmann Stafdiensten B.V. and other members of the Seller’sGroup agree to terminate all versions of the management services agreementsthat exist between them;

 

**MerchantingAgreement**means an agreement in the Agreed Form to take effect on Completionbetween the Seller, Corporate Express Europe B.V. and the Purchaser in relationto the ongoing relationship between the Seller’s Group and the Purchaser’sGroup;

 

**MicrosoftAgreement**means the licences granted pursuant to the Microsoft Select Agreement (ref52S50349) between Buhrmann N.V. and Microsoft Ireland Operations Limited dated2 July 2002;

 

**NetAsset Value** means the value of the net assets of the PMD Group Companiescalculated in accordance with the calculation set out in the schedule headed“Purchase Price Adjustment Statement”;

 

**NetDebt**means in respect of the Seller’s Group, their long term liabilities plus loansplus amounts outstanding to credit institutions minus cash and deposits;

 

**NetstatAgreement**means the agreement between Buhrmann N.V. and Nedstat B.V. dated 23 August 2001;

 

**Notary** means a civil law notary (*notaris*) of Loyens & Loeff, Amsterdam;

 

**NCL** means any item included inthe items identified as “non-current liabilities” in the schedule headed “PurchasePrice Adjustment Statement”;

 

**Oracle****Agreement**means the licence agreement between Corporate Express Inc. and OracleCorporation dated 30 May 2003;

 

**Party** shall have the meaning setout in clause 21.2;

 

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**PMDGroup Companies** means the Companies and the Subsidiaries and **PMD Group**shall be construed accordingly;

 

**Procedure** has the meaning set out inclause 13.1(c)(iii);

 

**Proceedings** shall have the meaning setout in paragraph 10.3.1 in the schedule headed “Warranties”;

 

**Properties** means the freehold andleasehold properties, details of which are set out in the schedules headed “Properties”and “Third Party Agreements” and includes each and every part of them and **Property** means any one of them;

 

**ProvidingParty**has the meaning set out in clause 7.2(a);

 

**PurchasePrice**means the total price (taking account of any adjustments or further amountpayable following Completion) payable by the Purchaser to the Seller in respectof the Shares and the Assets under this agreement;

 

**Purchaser** means PaperlinX Limited andincludes all Acceding Purchasers to the extent of the Relevant Shares and/orAssets (as defined in the Deed of Adherence);

 

**Purchaser’sAccountants** means Ernst & Young of Becket House, 1 Lambert Palace Road, LondonSE1 7EU or such other accountants as the Purchaser may engage in relation tothis agreement;

 

**Purchaser’sGroup**means the Purchaser and its Affiliates;

 

**Purchaser’sLawyers**meansLinklaters of One Silk Street, London EC2Y 8HQ and **Purchaser’sDutch Lawyers**means Loyens & Loeff of Fred. Roeskestraat 100,1076 ED Amsterdam;

 

**RegisteredGroup IPR**means the Group IPR as is registered or the subject of an application forregistration with any patent, domain name, trade mark or other intellectualproperty registry anywhere in the world;

 

**RelevantAccounts**meansthe Hyperion accounts of each PMD Group Company, and the combined Hyperionaccounts of the PMD Group, in each case for the twelve month period ending on aRelevant Accounts Date and initialled by the parties as in the Agreed Form;

 

**RelevantAccounts Date** means 31 December 2000, 31 December 2001 and 31 December 2002respectively;

 

**RelevantEmployees**means those employees of the PMD Group Companies or a member of theSeller’s Group who are as at the date of this agreement engaged in the Business(other than any specifically excluded by agreement with the Purchaser);

 

**ReceivingParty**has the meaning set out in clause 7.2(a);

 

**Reorganisation** means the transactionsdescribed in the Reorganisation Steps Plan;

 

**ReorganisationCompanies**means any party to the Reorganisation;

 

**ReorganisationSteps Plan** means the plan in Agreed Form to effect the Reorganisation;

 

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**RetirementBenefit Arrangements** means the benefit schemes or arrangements (other thanstate or mandatory social security arrangements or mandatory collectivebargaining arrangements or mandatory industry wide arrangements) in respect ofRelevant Employees operated by the PMD Group Companies or in which a PMD GroupCompany participates which are in force at Completion and which providebenefits on retirement, ill-health or injury, death, voluntary withdrawal fromor involuntary termination of employment and post-retirement medical benefitsas listed in the schedule headed “Retirement Benefit Arrangements”;

 

**Rhosili** means Rhosili Amsterdam C.V.;

 

**RulingExchange Rate** means the exchange rate of the European Central Bank’s daily closingmid-rates (as downloaded from Reuters);

 

**Securitisation** means the EUR800,000,000 (eighthundred million) Asset-Backed Euro Medium Term Programme and all series issuedthereunder and Securitisation Programme relating to the trade receivables of aPMD Group Company;

 

**SecuritisationAmendment Documents**means the documents****effectingthe Securitisation Release to take effect on Completion;

 

**SecuritisationProgramme**means the Seller’s securitisation programme, established in September 2000for the securitisation of receivables arising from contracts for the sale andsupply of paper, office products and related services to which those PMD GroupCompanies listed in paragraph 8 of the schedule headed “Approvals” areparties;

 

**Securitisation****Release**means the repurchase by each PMD Group Company of any trade receivables thatare the subject of the Securitisation and the release of each such PMD GroupCompany from all liabilities and obligations arising out of the Securitisationwhich shall be conditional on and become effective on Completion;

 

**Seller** means Buhrmann N.V.;

 

**Seller’sAccountants** means PricewaterhouseCoopers of Amsterdam, Prins Bernhardplein 200 orsuch other accountants as the Seller may engage in relation to this agreement;

 

**Seller’sAccountants Audit Letter** means the letter of engagement of the Seller’sAccountants in the Agreed Form;

 

**Seller’sGroup**means the Seller, the Indirect Sellers and any and all of their Affiliates butexcluding the PMD Group Companies;

 

**Seller’sLawyers**means Allen & Overy of Apollolaan 15, 1077 AB Amsterdam, The Netherlands;

 

**SeniorEmployee**means (i) each member of the PMD Group head office management team based inAmsterdam; (ii) each managing director of each PMD Group Company; and (iii)each employee employed or engaged in relation to the PMD Group on an annualbase salary (on the basis of full-time employment) in excess of EUR120,000 orlocal equivalent;

 

**SharedIPR**means all rights in and to Intellectual Property owned by the Seller’s Groupand/or the PMD Group Companies, and used on a non-exclusive basis in theBusiness;

 

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**Shares**meansall the issued ordinary shares and all the issued preference shares in thecapital of the Companies identified as owned by the Seller’s group in the schedule headed“The Companies”;

 

**StandardHyperion Reports** means the financial reports of the PMD Group set outin the schedule headed “Policies for Preparation of the CompletionAccounts” prepared using the Hyperion System;

 

**Subsidiaries** means all the companiesmentioned in the schedule headed “The Subsidiaries of the Companies” andSubsidiary means any of them;

 

**SurplusProperties**means the properties, details of which are set out in the schedule headed“Surplus Properties” and includes each and every part of them;

 

**SurplusProperty Approval**means all licences, consents or approvals necessary totransfer a Surplus Property;

 

**Taxation** or **Tax**means all forms of taxation, whether direct or indirect and whether levied byreference to income, profits, gains, net wealth, asset values, turnover, addedvalue, any Transaction or other reference and statutory, governmental, state,provincial, local governmental or municipal impositions, duties (including,without limitation, all transfer and registration taxes and capital duties,contributions, rates and levies (including, without limitation, social securitycontributions and any other payroll taxes)), whenever and wherever imposed(whether imposed by way of a withholding or deduction for or on account of taxor otherwise) and whether chargeable directly or primarily against or attributabledirectly or primarily to a Group Company or any other person and in respect ofany person and all penalties, surcharges, charges, costs and interest relatingthereto (save to the extent such penalties, surcharges, charges, costs orinterest are attributable to unreasonable delay by the Purchaser);

 

**TaxAuthority**means any taxing or other authority competent to impose any liability inrespect of Taxation or responsible for the administration and/or collection ofTaxation or enforcement of any law in relation to Taxation;

 

**TaxationBenefit**means any Taxation benefit or advantage including any loss, relief, allowance,exemption, set-off, deduction, reduction, postponement, roll-over, hold-over,repayment or credit available in respect of any Taxation or in the computationof any liability to Taxation;

 

**TaxCovenant**has the meaning given to it in the schedule headed “Tax Covenant”;

 

**ThirdParty Claim** has the meaning set out in paragraph 5 of the schedule headed “WarrantyLimits”;

 

**TaxReturn**means any return, declaration, claim for refund, or information return orstatement relating to Taxation, including any schedule or attachmentthereto;

 

**ThirdParty Costs** means any fees, commissions, costs, expenses and disbursementsincurred by or on behalf of a party and payable to a third party (including,without limitation, advisory fees payable for legal, accounting and financialadvice, broking and underwriting fees and commissions, travel, accommodationand other out-of-pocket costs and expenses) in

 

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connection with the negotiation, financing, entering into andcompletion of this agreement and other documentation in relation thereto;

 

**ThirdParty Sum**has the meaning set out in paragraph 7(b) of the schedule headed “WarrantyLimits”;

 

**Transaction** means any transaction,circumstance, act, event or omission of whatever nature and includes withoutlimitation, any change in the residence of any person for Tax purposes;

 

**TransitionalServices Agreement**means the agreement in the Agreed Form to take effecton Completion whereby the Seller will provide or procure the provision ofcertain services to the PMD Group Companies;

 

**Warranty****Claim**means a claim by the Purchaser for any breach or alleged breach of any of theWarranties;

 

**Warranties** means the representations andwarranties made by the Seller contained in the schedule headed “Warranties”;

 

**Webmethods****Agreements**means the licence agreement (together with all relevant addenda) betweenCorporate Express Inc. and Webmethods Inc. dated 30 August 2000 togetherwith the professional services agreements between Corporate Express Inc. andWebmethods Inc dated August 2000;

 

**Winpac** shall have the meaning setout in clause 1.1 of the schedule headed “Approvals”.

 

(2)           Any express or implied reference to an enactment(which includes any legislation in any jurisdiction) includes references to:

 

(a)           that enactment as amended, extended or applied by orunder any other enactment before or after the date of this agreement;

 

(b)           any enactment which that enactment re-enacts (with orwithout modification); and

 

(c)           any subordinate legislation (including regulations)made (before or after signature of this agreement) under that enactment, asre-enacted, amended, extended or applied as described in paragraph (a) above,or under any enactment referred to in paragraph (b) above.

 

(3)           In this agreement references to a natural personinclude his estate and personal representatives.

 

(4)           References to a company shall be construed so as toinclude any company, corporation or other body corporate or other legal entity,wherever and however incorporated or established.

 

(5)           For the purposes of this agreement, a company is asubsidiary of another company, its holding company, if that other company:

 

(a)           holds a majority of the voting rights in it; or

 

(b)           has the right, either alone or pursuant to anagreement with other shareholders or members, to appoint or remove a majorityof its management board or its supervisory board (if any); or

 

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(c)           is a shareholder or member of it and controls alone ortogether with other persons, pursuant to an agreement with other shareholdersor members, a majority of the voting rights in it,

 

or if it is asubsidiary of a company which is itself a subsidiary of that other company.

 

(6)           For the purposes of this agreement, a company is awholly-owned subsidiary of another company if it has no members except thatother and that other’s wholly-owned subsidiaries.

 

(7)           References to a person shall be construed so as toinclude any individual, firm, company, government, governmental authority, taxauthority, state or agency of a state or any joint venture, association,partnership (whether or not having separate legal personality).

 

(8)           An action taken by a person will be deemed to havebeen taken in the ordinary course of business only where such action isconsistent with the past practices (if any) of such person and is taken in theordinary course of the normal day-to-day operations of such person.

 

(9)           Where any obligation is qualified or phrased byreference to use reasonable endeavours, best efforts or wording of a similarnature, it means the efforts that a person desirous of achieving a result woulduse in similar circumstances to ensure that such result is achieved asexpeditiously as possible and, regard shall be had, among other factors, to (i)the price, financial interest and other terms of the obligation; (ii) thedegree of risk normally involved in achieving the expected result; and (iii)the ability of an unrelated person to influence the performance of theobligation.

 

(10)         The singular shall include the plural and vice versaand references to words importing one gender will include both genders.  Notwithstanding the clause headed “Language”,where in this agreement a Dutch term is given in italics or in italics and inbrackets after an English term and there is any inconsistency between the Dutchand the English, the meaning of the Dutch term shall prevail.

 

(11)         All submissions made, notice given or documentsproduced pursuant to or in connection with this agreement shall be made inEnglish.

 

(12)         References to any Dutch legal term shall, in respectof any jurisdiction other than the Netherlands, be construed as references tothe term or concept which most nearly corresponds to it in that jurisdiction.

 

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