Exhibit
10.1


 


Asset sale agreement


 


AEP Industries
(Australia) Pty Limited and AEP Industries (NZ) Limited (Vendors)


 


Flexible Packaging
Operations Australia Pty Limited and Flexible Packaging Operations New Zealand
Limited (Purchasers)


 


AEP Industries Inc (Guarantor)


 





 


AURORA PLACE, 88
PHILLIP STREET, SYDNEY NSW 2000, DX 117 SYDNEY


TEL: +61 2 9921 8888  FAX +61 2 9921
8123


www.minterellison.com


 





















 


	
  Details

  	
  6

  
	
   

  	
   

  	
   

  
	
  Agreed terms

  	
  8

  
	
   

  	
   

  
	
  1.

  	
  Defined terms
  & interpretation

  	
  8

  
	
   

  	
   

  	
   

  
	
  1.1

  	
  Defined
  terms

  	
  8

  
	
  1.2

  	
  Interpretation

  	
  16

  
	
  1.3

  	
  Headings

  	
  16

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Conditions

  	
  17

  
	
   

  	
   

  	
   

  
	
  2.1

  	
  Conditions

  	
  17

  
	
  2.2

  	
  Waiver of Conditions

  	
  17

  
	
  2.3

  	
  Conduct of the parties

  	
  17

  
	
  2.4

  	
  Failure of Condition

  	
  18

  
	
  2.5

  	
  Effect of termination

  	
  18

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Sale and purchase

  	
  18

  
	
   

  	
   

  	
   

  
	
  3.1

  	
  Sale and purchase

  	
  18

  
	
  3.2

  	
  Excluded
  Assets and Excluded Liabilities

  	
  18

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Purchase Price

  	
  18

  
	
   

  	
   

  	
   

  
	
  4.1

  	
  Amount

  	
  18

  
	
  4.2

  	
  Adjustment
  of the Initial Purchase Price

  	
  18

  
	
  4.3

  	
  Payment

  	
  19

  
	
  4.4

  	
  Cleared funds

  	
  20

  
	
  4.5

  	
  Apportionment
  of Estimated Purchase Price

  	
  20

  
	
  4.6

  	
  Lowest Price

  	
  20

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Obligations before
  Completion

  	
  20

  
	
   

  	
   

  	
   

  
	
  5.1

  	
  Continuity of business

  	
  20

  
	
  5.2

  	
  Permitted acts

  	
  20

  
	
  5.3

  	
  Purchasers’ right of
  access

  	
  20

  
	
  5.4

  	
  Purchasers’
  right to be informed and copy material

  	
  21

  
	
  5.5

  	
  Purchasers to avoid
  disruption

  	
  21

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Completion

  	
  21

  
	
   

  	
   

  	
   

  
	
  6.1

  	
  Time and place

  	
  21

  
	
  6.2

  	
  Vendors’ obligations

  	
  21

  
	
  6.3

  	
  Purchasers’ obligations

  	
  22

  
	
  6.4

  	
  Simultaneous
  actions at Completion

  	
  22

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Stock

  	
  22

  
	
   

  	
   

  	
   

  
	
  7.1

  	
  Stocktake

  	
  22

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Completion Accounts

  	
  23

  
	
   

  	
   

  	
   

  
	
  8.1

  	
  Completion Accounts

  	
  23

  
	
  8.2

  	
  Basis of preparation

  	
  23

  
	
  8.3

  	
  Access to information

  	
  24

  
	
  8.4

  	
  Dispute notice

  	
  24

  
	
  8.5

  	
  Content of Dispute Notice

  	
  24

  
	
  8.6

  	
  Deemed acceptance

  	
  24

  



 


2





















 


	
  8.7

  	
  Independent Expert

  	
  24

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Title,
  risk and assumption of Assumed Liabilities

  	
  25

  
	
   

  	
   

  	
   

  
	
  9.1

  	
  Title

  	
  25

  
	
  9.2

  	
  Possession

  	
  25

  
	
  9.3

  	
  Assumed Liabilities

  	
  25

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Trading responsibilities

  	
  25

  
	
   

  	
   

  	
   

  
	
  10.1

  	
  Profits and Losses

  	
  25

  
	
  10.2

  	
  Liabilities

  	
  25

  
	
   

  	
   

  	
   

  
	
  11.

  	
  Assumed Contracts

  	
  26

  
	
   

  	
   

  	
   

  
	
  11.1

  	
  Assignment

  	
  26

  
	
  11.2

  	
  Consent
  to transfer of Assumed Contracts

  	
  26

  
	
  11.3

  	
  Performance of
  Assumed Contracts

  	
  26

  
	
  11.4

  	
  Use or occupation
  pending transfer

  	
  27

  
	
  11.5

  	
  Vendors to
  cooperate generally

  	
  27

  
	
  11.6

  	
  Vendors’ indemnity

  	
  27

  
	
  11.7

  	
  Purchasers’ indemnity

  	
  27

  
	
  11.8

  	
  Product Warranties

  	
  28

  
	
   

  	
   

  	
   

  
	
  12.

  	
  Employees

  	
  28

  
	
   

  	
   

  	
   

  
	
  12.1

  	
  Offers of employment

  	
  28

  
	
  12.2

  	
  Termination
  of employment of Transferring Employees

  	
  28

  
	
  12.3

  	
  Vendors’ payment
  obligations

  	
  28

  
	
  12.4

  	
  Prior Service

  	
  29

  
	
  12.5

  	
  Assumption of leave
  benefits

  	
  29

  
	
  12.6

  	
  Vendors’ indemnity

  	
  29

  
	
  12.7

  	
  Purchasers’ indemnity

  	
  29

  
	
   

  	
   

  	
   

  
	
  13.

  	
  Superannuation

  	
  30

  
	
   

  	
   

  	
   

  
	
  13.1

  	
  Industry Fund

  	
  30

  
	
  13.2

  	
  Other Funds

  	
  30

  
	
  13.3

  	
  Contributions

  	
  31

  
	
  13.4

  	
  Information

  	
  31

  
	
   

  	
   

  	
   

  
	
  14.

  	
  Book Debts

  	
  31

  
	
   

  	
   

  	
   

  
	
  14.1

  	
  List of Book Debts

  	
  31

  
	
  14.2

  	
  Loan

  	
  31

  
	
  14.3

  	
  Collection

  	
  31

  
	
  14.4

  	
  Notification to Book
  Debts

  	
  32

  
	
  14.5

  	
  Repayment of Loan

  	
  32

  
	
  14.6

  	
  End of Collection Period

  	
  32

  
	
   

  	
   

  	
   

  
	
  15.

  	
  Warranties
  by the Vendors and Claims by the Purchasers

  	
  32

  
	
   

  	
   

  	
   

  
	
  15.1

  	
  Warranties

  	
  32

  
	
  15.2

  	
  Application of the
  Warranties

  	
  32

  
	
  15.3

  	
  Qualifications

  	
  33

  
	
  15.4

  	
  Acknowledgments

  	
  33

  
	
  15.5

  	
  Financial
  limits on Claims for breach of Warranties

  	
  34

  
	
  15.6

  	
  Time limits on Claims

  	
  34

  
	
  15.7

  	
  Other limits on Claims

  	
  34

  
	
  15.8

  	
  Maximum
  aggregate liability for Warranty Claims

  	
  34

  
	
  15.9

  	
  Notice of potential
  Claim

  	
  35

  



 


3





















 


	
  15.10

  	
  Conduct of third
  party Claims

  	
  35

  
	
  15.11

  	
  Rights of the Purchasers

  	
  35

  
	
  15.12

  	
  Costs indemnity

  	
  36

  
	
  15.13

  	
  Warranty payments

  	
  36

  
	
  15.14

  	
  Benefits
  or credits received by the Purchasers

  	
  36

  
	
  15.15

  	
  Trade Practices Act

  	
  36

  
	
  15.16

  	
  Vendors’ awareness

  	
  36

  
	
   

  	
   

  	
   

  
	
  16.

  	
  After Completion

  	
  37

  
	
   

  	
   

  	
   

  
	
  16.1

  	
  Records and
  Vendors’ right of access

  	
  37

  
	
  16.2

  	
  Excluded
  Records and Purchasers’ rights of access

  	
  37

  
	
  16.3

  	
  Confidential Information

  	
  37

  
	
   

  	
   

  	
   

  
	
  17.

  	
  ‘AEP’,
  ‘MAPAC’, ‘AEP SAFETY SLIDE CUTTER’ and ‘ZIPSAFE’ marks

  	
  38

  
	
   

  	
   

  	
   

  
	
  17.1

  	
  Use of Vendors’ name
  and logo

  	
  38

  
	
  17.2

  	
  License

  	
  38

  
	
  17.3

  	
  Indemnity

  	
  38

  
	
  17.4

  	
  Acknowledgment

  	
  38

  
	
   

  	
   

  	
   

  
	
  18.

  	
  Restraint covenants

  	
  39

  
	
   

  	
   

  	
   

  
	
  18.1

  	
  Definitions

  	
  39

  
	
  18.2

  	
  Prohibited activities

  	
  39

  
	
  18.3

  	
  Exclusion to
  prohibited activities

  	
  39

  
	
  18.4

  	
  Duration of prohibition

  	
  40

  
	
  18.5

  	
  Geographic
  application of prohibition

  	
  40

  
	
  18.6

  	
  Interpretation

  	
  40

  
	
  18.7

  	
  Exceptions

  	
  41

  
	
  18.8

  	
  Acknowledgments

  	
  41

  
	
   

  	
   

  	
   

  
	
  19.

  	
  Confidentiality and
  publicity

  	
  41

  
	
   

  	
   

  	
   

  
	
  19.1

  	
  Confidentiality

  	
  41

  
	
  19.2

  	
  Confidential Information

  	
  41

  
	
  19.3

  	
  Announcements

  	
  42

  
	
   

  	
   

  	
   

  
	
  20.

  	
  GST - Supply of a
  going concern

  	
  42

  
	
   

  	
   

  	
   

  
	
  20.1

  	
  Going concern

  	
  42

  
	
  20.2

  	
  Undertakings

  	
  42

  
	
  20.3

  	
  Registered

  	
  42

  
	
  20.4

  	
  Liability

  	
  42

  
	
  20.5

  	
  Ruling

  	
  43

  
	
  20.6

  	
  Reduction

  	
  43

  
	
  20.7

  	
  Definitions

  	
  43

  
	
  20.8

  	
  Rights

  	
  43

  
	
   

  	
   

  	
   

  
	
  21.

  	
  Notices and other
  communications

  	
  43

  
	
   

  	
   

  	
   

  
	
  21.1

  	
  Service of notices

  	
  43

  
	
  21.2

  	
  Effective on receipt

  	
  43

  
	
   

  	
   

  	
   

  
	
  22.

  	
  Miscellaneous

  	
  44

  
	
   

  	
   

  	
   

  
	
  22.1

  	
  Alterations

  	
  44

  
	
  22.2

  	
  Approvals and consents

  	
  44

  
	
  22.3

  	
  Assignment

  	
  44

  
	
  22.4

  	
  Costs

  	
  44

  
	
  22.5

  	
  Stamp duty

  	
  44

  



 


4





















 


	
  22.6

  	
  Survival

  	
  44

  
	
  22.7

  	
  Counterparts

  	
  44

  
	
  22.8

  	
  No merger

  	
  44

  
	
  22.9

  	
  Entire agreement

  	
  44

  
	
  22.10

  	
  Further action

  	
  45

  
	
  22.11

  	
  Severability

  	
  45

  
	
  22.12

  	
  Waiver

  	
  45

  
	
  22.13

  	
  Relationship

  	
  45

  
	
   

  	
   

  	
   

  
	
  23.

  	
  Guarantor’s guarantee

  	
  45

  
	
   

  	
   

  	
   

  
	
  23.1

  	
  Guarantee and indemnity

  	
  45

  
	
  23.2

  	
  Extent of
  guarantee and indemnity

  	
  45

  
	
  23.3

  	
  Principal and
  independent obligation

  	
  46

  
	
  23.4

  	
  Enforcement against
  Guarantor

  	
  46

  
	
   

  	
   

  	
   

  
	
  24.

  	
  Environmental Indemnity

  	
  46

  
	
   

  	
   

  	
   

  
	
  24.1

  	
  Definitions

  	
  46

  
	
  24.2

  	
  Contamination
  Indemnity by the Vendor

  	
  46

  
	
  24.3

  	
  Limitation

  	
  46

  
	
   

  	
   

  	
   

  
	
  Schedule 1 - Apportionment of
  Purchase Price (clause 4.5)

  	
  Omitted

  
	
   

  	
   

  	
   

  
	
  Schedule 2 - Plant and Equipment
  (clause 1)

  	
  Omitted

  
	
   

  	
   

  	
   

  
	
  Schedule 3 - Completion Accounts -
  principles of preparation

  	
  Omitted

  
	
   

  	
   

  	
   

  
	
  Schedule 4 -
  Warranties (clause 15)

  	
  48

  
	
   

  	
   

  	
   

  
	
  Schedule 5 - Business Contracts
  (clause 2 and 11)

  	
  Omitted

  
	
   

  	
   

  	
   

  
	
  Schedule 6 - Equipment Leases
  (clause 11)

  	
  Omitted

  
	
   

  	
   

  	
   

  
	
  Schedule 7 - Properties (clause 11)

  	
  Omitted

  
	
   

  	
   

  	
   

  
	
  Schedule 8 - Employees (clause 12)

  	
  Omitted

  
	
   

  	
   

  	
   

  
	
  Schedule 9 - Vendor IP

  	
  Omitted

  
	
   

  	
   

  	
   

  
	
  Schedule 10 - Statutory Licences

  	
  Omitted

  
	
   

  	
   

  	
   

  
	
  Signing
  page

  	
  54

  



 


5





















 


	
  Details

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  19 April 2005

  
	
   

  	
   

  	
   

  
	
  Parties

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  AEP
  Industries (Australia) Pty Limited

  
	
  ABN

  	
   

  	
  60 075 939 614

  
	
  Short Name

  	
   

  	
  AEP (Aust)

  
	
  Notice details

  	
   

  	
  25 Phillips Avenue, South Hackensack, NJ 07606, USA

  
	
   

  	
   

  	
  Facsimile 1-201-807-6801

  
	
   

  	
   

  	
  Attention Paul Feeney

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  AEP
  Industries (NZ) Limited

  
	
  Company Number

  	
   

  	
  44 3596

  
	
  Short Name

  	
   

  	
  AEP (NZ)

  
	
  Notice details

  	
   

  	
  25 Phillips
  Avenue, South Hackensack, NJ 07606, USA

  
	
   

  	
   

  	
  Facsimile 1-201-807-6801

  
	
   

  	
   

  	
  Attention Paul Feeney

  
	
  (together the Vendors)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Flexible
  Packaging Operations Australia Pty Limited

  
	
  ACN

  	
   

  	
  113 833 748

  
	
  Short form name

  	
   

  	
  Australian
  Purchaser

  
	
  Notice details

  	
   

  	
  C/- Catalyst Investment
  Managers Pty Limited, Level 38, Tower Building,

  Australia Square, Sydney NSW 2000

  
	
   

  	
   

  	
  Facsimile (02) 9252
  5255

  
	
   

  	
   

  	
  Attention John Story

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  Flexible
  Packaging Operations New Zealand Limited

  
	
  Company No

  	
   

  	
  1622911

  
	
  Short form name

  	
   

  	
  NZ
  Purchaser

  
	
  Notice details

  	
   

  	
  C/- Catalyst Investment
  Managers Pty Limited, Level 38, Tower Building,

  Australia Square, Sydney NSW 2000

  
	
   

  	
   

  	
  Facsimile (02) 9252
  5255

  
	
   

  	
   

  	
  Attention John Story

  
	
  (together the Purchasers)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name

  	
   

  	
  AEP Industries, Inc

  
	
  Short form name

  	
   

  	
  Guarantor

  
	
  Notice details

  	
   

  	
  25 Phillips Avenue,
  South Hackensack, NJ 07606, USA

  
	
   

  	
   

  	
  Facsimile
  1-201-807-6801

  
	
   

  	
   

  	
  Attention Paul Feeney

  



 


6





















 


Background


 


A                                      The
Vendors conduct the Business and are the legal and beneficial owners of the
Assets.


 


B                                        The
Vendors have agreed to sell and the Purchasers have agreed to buy the Assets
according to the terms of this agreement.


 


C                                        The
Guarantor is the ultimate holding company of the Vendors and has agreed to
guarantee the obligations of the Vendors under this agreement. The Guarantor
has also agreed to give certain other commitments to the Purchasers in
accordance with the terms of this agreement.


 


7





















 


Agreed terms


 


1.                                      Defined
terms & interpretation


 


1.1                               Defined
terms


 


In this agreement:


 


Accounting
Standards means:


 


(a)                                  in
respect of AEP (Aust):


 


(i)                                     accounting standards approved under the Corporations Act and
its requirements about the preparation and contents of accounts; and


 


(ii)                                  generally accepted accounting principles, policies,
practices and procedures in Australia; and


 


(b)                                 in respect of AEP (NZ):


 


(i)                                     accounting standards approved under the Financial Reporting Act 1993 (NZ) and its
requirements about the preparation and contents of accounts; and


 


(ii)                                  generally accepted accounting principles, policies,
practices and procedures in New Zealand.


 


Accounts
means the following:


 


(a)                                  the audited balance sheet of each of the Vendors as at the
Accounts Date;


 


(b)                                 the audited profit and loss statement of each of the Vendors
for the financial year ending on the Accounts Date; and


 


(c)                                  the audited statement of cash flows for AEP (Aust) for the
financial year ending on the Accounts Date,


 


together
with the notes to those accounts and, in respect of AEP (Aust), the reports of
the directors in respect of those accounts.


 


AEP
(Aust) Assets means those Assets sold by AEP (Aust) to the
Australian Purchaser at Completion under this agreement that are, in accordance
with clause 8 and Schedule
3, included as
Assets of AEP (Aust) in the Completion Accounts.


 


AEP
(Aust) Assumed Liabilities means the Assumed Liabilities of
AEP (Aust) assumed by the Australian Purchaser at Completion pursuant to this
agreement that are, in accordance with clause
8 and Schedule 3,
included as Assumed Liabilities of AEP (Aust) in the Completion Accounts.


 


AEP (NZ) Assets means those Assets
sold by AEP (NZ) to the NZ Purchaser at Completion under this agreement that are,
in accordance with clause 8 and
Schedule 3, included as Assets of AEP (NZ) in the Completion
Accounts.


 


AEP (NZ) Assumed Liabilities means
the Assumed Liabilities of AEP (NZ) assumed by the NZ Purchaser at Completion
pursuant to this agreement that are, in accordance with clause 8 and Schedule 3, included as Assumed Liabilities of AEP (NZ) in the
Completion Accounts.


 


Accounts
Date means 31 October 2004.


 


8





















 


ASIC means
the Australian Securities and Investments Commission.


 


Assets means:


 


(a)                                  Goodwill;


 


(b)                                 Plant
and Equipment;


 


(c)                                  Stock;


 


(d)                                 Prepayments
and Other Current Assets;


 


(e)                                  Business
Contracts;


 


(f)                                    Equipment
Leases;


 


(g)                                 Property
Leases;


 


(h)                                 Vendor
IP;


 


(i)                                     Systems;


 


(j)                                     Statutory
Licences;


 


(k)                                  Records;


 


(l)                                     Land;
and


 


(m)                               all other property, rights and assets of the Vendors used in
the Business (including the assets described in Part B of Schedule 3 as being
assumed by the Purchasers),


 


but
does not include the Excluded Assets.


 


Assumed
Contracts means the Business Contracts, Equipment Leases,
Intellectual Property Licences and the Property Leases.


 


Assumed
Employee Entitlements means the entitlements of Transferring
Employees assumed by the Purchasers under clause
12.5 of this agreement, to the extent that the monetary value of such entitlements are fully set out in the
Completion Accounts.


 


Assumed
Liabilities means Trade Creditor Liabilities, the Assumed
Employee Entitlements, and Other Creditors and Accruals.


 


Australian
Assets and Australian Liabilities have the meaning
given in clause 3.1.


 


Australian
Employees means the Employees employed by AEP (Aust) in the
conduct of the Business at the Completion Date.


 


Book
Debts means the trade receivables and trade debts owing to
the Vendors at the Completion Date in respect of the Business (including any
bad or doubtful debts).


 


Business
means the business of manufacturing and supplying flexible
plastic packaging in Australia, New Zealand and the Asia Pacific conducted by
the Vendors at the Completion Date from the Properties and from the Chester
Hill Site using the Assets.


 


Business
Contracts means all agreements, arrangements, understandings
and orders entered into, made or accepted by or on behalf of one or both of the
Vendors in the conduct of the Business that are not fully performed at the
Completion Date including, without limitation, those listed in Schedule 5, and including the confidentiality agreements entered into by the
Vendors and the Guarantor in relation to the Project Midas Transaction but
excluding:


 


(a)                                  contracts with Employees;


 


(b)                                 contracts of insurance;


 


9





















 


(c)                                  Property
Leases, Equipment Leases and Intellectual Property Licences; and


 


(d)                                 any agreements to the extent they relate to Excluded Assets.


 


Business
Day means:


 


(a)                                  for receiving a Notice under clause 21, a (day that is not a Saturday, Sunday, public
holiday or bank holiday in the place where the Notice is received; and


 


(b)                                 for
all other purposes, a day that is not a Saturday, Sunday, public holiday or
bank holiday in New South Wales, Australia and Auckland, New Zealand.


 


Business
Hours means from 9.00am to 5.00pm on a Business Day.


 


Business
Names means the business names used by the Vendors in the
Business other than any name that is a Trade Mark.


 


Chester
Hill Employee means an Employee who works solely at the
Chester Hill Site.


 


Chester
Hill Lease means the lease between AEP (Aust) and the
Australian Purchaser in relation to the property located at 149 Orchard Road,
Chester Hill, Sydney NSW 2162, Australia, to be entered into on Completion, in
the form set out in Annexure A.


 


Chester
Hill Site means the site operated by AEP (Aust) at 149
Orchard Road, Chester Hill, Sydney NSW 2162, Australia.


 


Claim means
any claim, demand, action or proceeding whether based in contract, tort, statute or otherwise.


 


Companies
Act means the Companies Act 1993 (New Zealand).


 


Completion
means completion of the sale and purchase of the Assets
contemplated in this agreement.


 


Completion
Accounts means:


 


(a)                                  the
audited balance sheet of AEP (Aust) and AEP (NZ) as at the close of business on
the Completion Date; and


 


(b)                                 the
audited profit and loss statement of AEP (Aust) and AEP (NZ) for the period
from the Accounts Date to the close of business on the Completion Date,


 


to
be prepared in accordance with clause 8.


 


Completion
Date means the date on
which Completion occurs pursuant to clause
6.1.


 


Conditions
means the conditions precedent set out in clause 2.1.


 


Confidential
Information means the following, irrespective of its form or
medium and whether or not it comes into existence before, on or after the date
of this agreement:


 


(a)                                  all
information of, used by or related to or connected with the Business or its
transactions, operations and affairs including, without limitation, all past,
current and prospective financial, accounting, marketing, trading, technical and
business information, trade secrets, know-how, technology and operating
procedures, customer and supplier lists, data bases, source codes,
methodologies, manuals, artwork and advertising manuals;


 


(b)                                 all other information relating to the Business treated by
the Vendors as confidential;


 


(c)                                  all
notes, reports and other records based on, incorporating or derived from
information referred to in paragraphs (a) or (b);
and


 


10





















 


(d)                                 all copies of the information, notes, reports and records
referred to in paragraphs (a), (b) or
(c),


 


that
is not public knowledge.


 


Contamination
means, in relation to land, the presence in, on or under the
land of a substance at a concentration above the concentration at which the substance
is normally present in, on or under (respectively) land in the same locality.


 


Corporations
Act means the Corporations
Act 2001 (Cth).


 


Determination
Date means the fifth Business Day after the date on which the
Completion Accounts and the Net Assets Amount become final and binding on the
Vendors and the Purchasers under this agreement, pursuant to clause 8.6 or 8.7(d).


 


Disclosure
Letter means the letter from the Vendors to the Purchasers of
even date with this entitled ‘Disclosure Letter’ and containing disclosures to
the Warranties.


 


Domain
Names means the domain names used by the Vendors in the
Business.


 


Due
Diligence Material means:


 


(a)                                  all information set out in the Information Memorandum;


 


(b)                                 all
documentation contained in the data room maintained by either of the Vendors or
the Vendors’ advisers and listed in the data room index and any supplementary
data room index (as set out in Annexure B) and
the written responses to questions submitted by the Purchasers (attached as Annexure C), whether or not contained in
the data room; and


 


(c)                                  all
written information provided to the Purchasers prior to the date of this
agreement by the Vendors or their advisers as part of the Project Midas
Transaction, including without limitation, written information provided, during
management presentations and meetings, where such written information fairly
disclosed the extent to which a Warranty was incorrect.


 


Employees
means all of the persons employed by either of the Vendors in
the conduct of the Business at the Completion Date, including those persons listed in Schedule 8 who are employees of either of the Vendors at the
Completion Date.


 


Encumbrance
means any mortgage, lien, charge, pledge, claim, Security
Interest or other encumbrance or third party interest or power.


 


Environment
means the physical factors of the surrounds of human beings
including the land, waters, atmosphere, climate, sound, odours, place, the
biological factors of animal and plant and the social factors of aesthetics.


 


Environmental
Law means a law regulating or otherwise relating to the
Environment including, without limitation, land use, planning, pollution of the
atmosphere, water or land waste, the storage and handling of chemicals,
Hazardous Substances, or any other aspect of the protection of the Environment.


 


Environmental
Liability means, in respect of a Property or the Chester Hill
Site, any losses, costs, liabilities, expenses or damages incurred pursuant to,
or in relation to, or as a consequence of Contamination or Pollution at, of, or
emanating from, the Property or the Chester Hill Site.


 


Equipment
Leases means the equipment leases, hire purchase agreements,
conditional purchase agreements and other hiring arrangements entered into by
one of the Vendors in relation to assets used in the Business, including those
listed in Schedule 6, but
excluding the Property Leases.


 


11





















 


Excluded
Assets means
the assets described in Part B of Schedule 3 as being retained by the Vendors,
including the following assets of the Vendors:


 


(a)                                  cash in hand, on deposit or at bank;


 


(b)                                 security deposits;


 


(c)                                  the Book Debts;


 


(d)                                 the Excluded Records;


 


(e)                                  the freehold interest in the property located at 149 Orchard
Road, Chester Hill, Sydney NSW 2162, Australia;


 


(f)                                    the trade marks and names ‘AEP’, MAPAC’, ‘AEP SAFETY SLIDE
CUTTER’ and ‘ZIPSAFE’;


 


(g)                                 the shares in Duplas Pty Limited;


 


(h)                                 the shares in AEP Film & Laminates Pty Limited;


 


(i)                                     the following patent applications held by AEP Industries, Inc.
entitled ‘FILM CUTTER ASSEMBLY’:


 


(i)                                     Australian
patent application number 25845/01;


 


(ii)                                  New
Zealand patent application number PCT/US2002/31341; and


 


(iii)                               Australian
patent application number 2002337799;


 


(j)                                     insurance policies relating to the Business or owned by the
Vendors or any related body corporate and the benefit of any claims under those
policies including the benefit of any claims in relation to the Scholle Claims;


 


(k)                                  formation expenses of either Vendor;


 


(l)                                     deferred
Tax assets;


 


(m)                               agreement between AEP (NZ) and DS Smith UK Limited and the
Guarantor dated 14 May 2003;


 


(n)                                 management services agreement between the Guarantor and AEP
(NZ) dated 1 November 2001, and any management agreement between the Guarantor
and AEP (Aust); and


 


(o)                                 services agreement between AEP (NZ) and AEP (Aust) dated 1
November 2001.


 


Excluded
Liabilities means all debts, liabilities and obligations of
the Vendors or any other person in respect of the Business as at Completion in
whatever capacity and whether actual, prospective, contingent or otherwise and
whether or not ascertained, other than the Assumed Liabilities, and accordingly
the Excluded Liabilities include but are not limited to the following items as
are further described in Part B of Schedule 3:


 


(a)                                  payables to related parties;


 


(b)                                 amounts
owing to related entities;


 


(c)                                  interest bearing liabilities; and


 


(d)                                 income tax payable.


 


Excluded
Records means those Records which one or both of the Vendors
are required by law to retain, including without limitation documents
discovered by Scholle in relation to the Scholle Claims and supplied to one or
both of the Vendors.


 


12





















 


Funds means
the Industry Fund and the Other Funds, and Fund
means any of them.


 


Goodwill
means the goodwill of the Business including the exclusive
right to carry on the Business in succession to the Vendors.


 


Government
Agency means any government or any governmental,
semi-governmental, administrative, fiscal or judicial body, department, commission,
authority, tribunal, agency or entity in Australia (whether federal, state or
local) or any other part of the world.


 


Guarantor
Warranties means the Guarantor’s warranties and
representations set out in Part B of Schedule 4.


 


Hazardous
Substance means any substance which is, or may be hazardous,
toxic, dangerous or polluting or which is regulated by any Environmental Law.


 


Independent
Expert has the meaning given to that term in clause 8.7.


 


Industry
Fund means the Printing Industry Superannuation Fund ABN 49
432 159 037.


 


Information
Memorandum means the information memorandum in relation to
the Project Midas Transaction prepared by the Vendors and their advisers dated
December 2004.


 


Initial
Purchase Price means AUD$45,059,000.


 


Intellectual
Property Rights means all intellectual property and
proprietary rights (whether registered or unregistered) including:


 


(a)                                  business names;


 


(b)                                 trade or service marks;


 


(c)                                  any right to have information (including confidential
information) kept confidential; and


 


(d)                                 patents,
patent applications, drawings, discoveries, inventions, improvements, trade secrets,
technical data, formulae, computer programs, data bases, know-how, logos, designs,
design rights, copyright and similar industrial or intellectual property
rights.


 


Intellectual
Property Licences means all agreements under which either of
the Vendors has the right to use, but not ownership of, Intellectual Property
Rights used in connection with the Business, including those listed in Part 2 of
Schedule 9.


 


Key
Contracts means the following:


 


(a)                                  the agreement between Cadbury Schweppes Pty Limited, and
each of the Vendors dated 31 December 2001;


 


(b)                                 the agreement between Dairy Farmers and AEP (Aust) dated 5
December 2005;


 


(c)                                  the agreement between Tastie Products Ltd and AEP Flexipac
(a division of AEP (NZ)) dated 2 September 2004.


 


Know How
means the information or knowhow owned by, or in the
possession or control of the Vendors relating to the Business, its systems,
technology and affairs (and whether written or unwritten) including:


 


(a)                                  financial, technological, strategic or business information,
concepts, plans, strategies, directions or systems;


 


(b)                                 research, development, operational, legal, marketing or
accounting information, concepts, plans, strategies, directions or systems;


 


13





















 


(c)                                  technology,
inventions, discoveries, improvements, processes, formulae, techniques, manuals,
instructions, source and object codes for computer software, intellectual property
rights and technical and historical information relating to them; and


 


(d)                                 customer and supplier information.


 


Land means
the freehold property listed in Schedule 7.


 


Land
Sale Contracts means the contracts in the form attached as
Annexure D for the sale of the Land, which will be executed, and which will
settle on the Completion Date.


 


Liabilities
means all liabilities, losses, damages, outgoings,
costs and expenses of whatever description.


 


Lion
Nathan Claim means the claim made by Lion Nathan Queensland
Brewery Castlemaine Perkins in the sum of $96,892 regarding printed film
supplied by AEP (Aust) to Lion Nathan.


 


Moral
Rights means each right defined as a moral right in Part IX
of the Copyright Act 1968 (Australia)
or Part IV of the Copyright Act 1994 (New
Zealand), and any similar rights capable of protection under the laws of any
foreign jurisdiction.


 


NZ Assets and NZ Liabilities have
the meaning given in clause 3.1.


 


NX Employees means the
Employees employed by AEP (NZ) in the conduct of the Business at the Completion
Date.


 


Net
Assets Amount means:


 


(a)                                  in
relation to AEP (Aust) the amount, in Australian dollars, of the AEP (Aust)
Assets as at the close of business on the Completion Date less the AEP (Aust)
Assumed Liabilities as at the close of business on the Completion Date as set
out in the Completion Accounts, agreed by the parties or determined by the
Independent Expert, as the case may be; and


 


(b)                                 in
relation to AEP (NZ) the amount, in New Zealand dollars, of the AEP (NZ) Assets
as at the close of business on the Completion Date less the AEP (NZ) Assumed
Liabilities as at the close of business on the Completion Date as set out in
the Completion Accounts, agreed by the parties or determined by the Independent
Expert, as the case may be.


 


Nominated
Accountant means KPMG Australia in relation to the audit of
the Completion Accounts for AEP (Aust), and KPMG New Zealand, in relation to
the audit of the Completion Accounts for AEP (NZ).


 


Nominated
Persons means David Ward, Iain Campbell, Simon Penlington,
Lawrence Olsen and Geoff Turnbull.


 


Other
Creditors and Accruals means, as the Completion Date, the
capital expenditure accruals and expense accruals of the Vendors and other
Liabilities described in Part B of Schedule 3 as being assumed by the
Purchasers, to the extent that the monetary value of such amounts are fully set
out in the Completion Accounts.


 


Other
Current Assets means those assets identified as such in the
Completion Accounts.


 


Other
Funds means New Zealand Retirement Trust (operated by AMP
NZ), Tower Retirement Plan Trustees; Lighthouse Superannuation Nominees Ltd,
ING Life Limited ABN 33 009 657 176, Australian Retirement Fund ABN 83 808 454
270, Superannuation Trust of Australia ABN 65 714 394 898 and AMP
Superannuation Savings Trust ABN 76 514 770 399.


 


Plant
and Equipment means all plant, equipment, motor vehicles,
machinery, spare parts, furniture, fixtures, fittings, office machines,
computer equipment and other assets, fittings or


 


14





















 


chattels
owned by the Vendors and used in the conduct of the Business, including those
items listed in Schedule 2.


 


Pollution
means:


 


(a)                                  in
relation to air at, of or emanating from a Property: the presence in the air of
a substance at a concentration above the concentration at which the substance
is normally present in, on or under air in the same locality as the Property;


 


(b)                                 in relation to water at, of or emanating from a Property:
the presence in the water of a substance at a concentration above the
concentration at which the substance is normally present in water in the same
locality as the Property; and


 


(c)                                  in relation to noise at, of or emanating from a Property:
offensive noise.


 


Prepayments means those prepayments
identified as such in the Completion Accounts.


 


Product
Warranty means a guarantee, warranty, undertaking,
representation or promise made by a third party in connection with the quality,
performance, promotion, supply or repair of goods included in the Assets or
affixed or attached to the Properties.


 


Project
Midas Transaction means the sales process instituted by the
Guarantor in December 2004 in relation to the proposed sale of the Vendors.


 


Properties
means the Land and the land leased pursuant to the Property
Leases listed in Schedule 7.


 


Property
Leases means the property leases details of which are set out
in Schedule 7.


 


Purchase
Price means the Initial Purchase Price, as adjusted pursuant
to clause 4.2.


 


Records means
the records owned or used by the Vendors relating to the Business, the Assets,
the Transferring Employees and/or the Assumed Liabilities, including sales
brochures and catalogues, lists of clients, documents, books, files, reports,
accounts, plans and correspondence belonging to or used by either of the
Vendors in the conduct of the Business and whether kept in hard or electronic
form, and including a copy of the Excluded Records.


 


Resinite
Licence Agreements means:


 


(a)                                  the licence agreement in respect of the trade mark “Resinile”
between the Guarantor, and AEP (NZ) dated 1 November 1997; and


 


(b)                                 the licence agreement in respect of trade marks “Resinite”
and “Sealwrap” between the Guarantor and AEP (Aust) dated 1 November 1996.


 


Scholle
Claims means the claims brought by Scholle Industries Pty
Limited in proceedings numbers 216 and 217 of 2004 in the Supreme Court of
South Australia.


 


Security
Interest has the meaning set out in section 17(1)(a) of the Personal
Property Securities Act 1999 (NZ) (PPSA)
but does not include a security interest referred to in section 17(1)(b) of the
PPSA.


 


Statutory
Licences means all licences, approvals, consents, rights,
registrations, permits, certificates and other authorisations owned by or given
to either of the Vendors relating to any aspect of the Business issued or given
by any Government Agency, including those listed in Schedule 10.


 


Stock means
all stocks and inventory of raw materials, materials used in manufacture,
packaging materials, finished goods, goods under manufacture, work in progress,
components, consumables, and other stock in trade of the Business at the
Completion Date including goods in transit and


 


15





















 


stock
ordered by and paid for by either of the Vendors before the Completion Date but
not received by the Completion Date.


 


Systems means
all accounting systems (including all accounting, invoicing, debt control,
credit control, debt collection, computer records, software and all ancillary
data systems) used in the conduct of the Business and owned or licensed by either
of the Vendors other than corporate accounting and statutory records.


 


Tax means
all forms of taxes, duties, imposts, charges, withholdings, rates, levies or
other governmental impositions of whatever nature and by whatever authority
imposed, assessed or charged together with all costs, charges, interest,
penalties, fines, expenses and other additional statutory charges, incidental
or related to the imposition.


 


Tax
Authority means a government, semi-government,
administrative, municipal, statutory, fiscal or judicial body, department,
commission, authority, tribunal, agency, entity or person responsible for the
collection of any Tax or administration of any Tax Law.


 


Tax Law means
any law in relation to any Tax.


 


Trade
Creditor Liabilities means each and every amount due by the
Vendors to trade creditors of the Business as at the Completion Date to the
extent that the monetary value of such amounts are fully set out in the
Completion Accounts.


 


Trade
Marks means the registered and unregistered trade marks used
by the Vendors in the Business set out in Schedule
9 and all associated goodwill.


 


Transferring
Employees means Employees who accept a Purchaser’s offer of
employment referred to in clause 12.1.


 


Vendor
IP means all Intellectual Property Rights owned by, used by
or licensed to either of the Vendors in the conduct of the Business, including:


 


(a)                                  the Trade Marks;


 


(b)                                 any right to have information (including confidential
information) kept confidential;


 


(c)                                  patents,
patent applications, drawings, discoveries, inventions, improvements, trade secrets,
technical data, formulae, computer programs, databases, know-how, logos, designs,
design rights, copyright and similar industrial or intellectual property
rights;


 


(d)                                 the Know How; and


 


(e)                                  the Intellectual Property Licences,


 


excluding
the Business Names and the Domain Names and excluding any marks and names that
are Excluded Assets.


 


Warranties
means the representations and warranties set out in Part A of Schedule
4 and the
representations and warranties in the Land Sale Contracts.


 


Warranty
Claim means a Claim by the Purchasers against the Vendors
arising as a result of a breach of Warranty.


 


1.2                               Interpretation


 


In this agreement, except
where the context otherwise requires:


 


	
  (a)

  	
   

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

  
	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  another grammatical
  form of a defined word or expression has a corresponding meaning;

  
	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  a reference to a
  clause, paragraph, schedule or annexure is to a clause or paragraph of, or
  schedule or annexure to, this agreement, and a reference to this agreement
  includes any schedule or annexure;

  
	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  a reference to a
  document or instrument includes the document or instrument as novated,
  altered, supplemented or replaced from time to time;

  
	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  a reference to A$, $A,
  dollar or $ is to Australian currency and a reference to NZ$ or New Zealand
  dollars is to New Zealand currency;

  
	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  a reference to time is
  to New South Wales, Australia time;

  
	
   

  	
   

  	
   

  
	
  (g)

  	
   

  	
  a reference to a party
  is to a party to this agreement, and a reference to a party to a document
  includes the party's executors, administrators, successors and permitted
  assigns and substitutes;

  
	
   

  	
   

  	
   

  
	
  (h)

  	
   

  	
  a reference to a person
  includes a natural person, partnership, body corporate, association,
  governmental or local authority or agency or other entity;

  
	
   

  	
   

  	
   

  
	
  (i)

  	
   

  	
  a reference to a
  statute, ordinance, code or other law includes regulations and other
  instruments under it and consolidations, amendments, re-enactments or
  replacements of any of them;

  
	
   

  	
   

  	
   

  
	
  (j)

  	
   

  	
  a word or expression
  defined in the Corporations Act has the meaning given to it in the
  Corporations Act and a word or expression defined in the Companies Act has
  the meaning given to it in the Companies Act;

  
	
   

  	
   

  	
   

  
	
  (k)

  	
   

  	
  the meaning of general
  words is not limited by specific examples introduced by including, for
  example or similar expressions;

  
	
   

  	
   

  	
   

  
	
  (l)

  	
   

  	
  any agreement,
  representation, warranty or indemnity by two or more parties (including where
  two or more persons are included in the same defined term) binds them jointly
  and severally;

  
	
   

  	
   

  	
   

  
	
  (m)

  	
   

  	
  any agreement,
  representation, warranty or indemnity in favour of two or more parties
  (including where two or more persons are included in the same defined term)
  is for the benefit of them jointly and severally;

  
	
   

  	
   

  	
   

  
	
  (n)

  	
   

  	
  a rule of construction
  does not apply to the disadvantage of a party because the party was
  responsible for the preparation of this agreement or any part of it;

  
	
   

  	
   

  	
   

  
	
  (o)

  	
   

  	
  if a day on or by which
  an obligation must be performed or an event must occur is not a Business Day,
  the obligation must be performed or the event must occur on or by the next
  Business Day; and

  
	
   

  	
   

  	
   

  
	
  (p)

  	
   

  	
  a
  reference to except as disclosed is to something that is fairly disclosed in
  this agreement, the Disclosure Letter, the Due Diligence Material or the
  information referred to in clause 15.3(a)(iv).

  



 


1.3                               Headings


 


Headings are for
ease of reference only and do not affect interpretation.


 


 


16





















 


2.                                      Conditions


 


2.1                               Conditions


 


The sale of the Assets
and assumption of the Assumed Liabilities contemplated by this agreement and
Completion is conditional on the following conditions precedent.


 


	
  Condition

  	
   

  	
  Party entitled to benefit

  
	
   

  	
   

  	
   

  
	
  1.                                       The
  Vendors provide evidence to the Purchasers that:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (a)                                  Qenos
  Pty Limited has consented to the assignment of the Qenos Agreement to the
  Purchasers;

  	
   

  	
  Purchasers

  
	
   

  	
   

  	
   

  
	
  (b)                                 each
  counter party to a Key Contract has consented to the assignment of that Key
  Contract to the relevant Purchaser;

  	
   

  	
  Purchasers

  
	
   

  	
   

  	
   

  
	
  (c)                                  not
  less than 75% of the Employees located at the Chester Hill Site have accepted
  the Australian Purchaser’s offer of employment made in accordance with clause 12.1;

  	
   

  	
  Purchasers and Vendors

  
	
   

  	
   

  	
   

  
	
  (d)                                 not
  less than 90% of the Employees of AEP (Aust) (excluding for the purpose of
  this condition (d) the Employees located at the Chester Hill Site) have
  accepted the Australian Purchaser’s offer of employment made in accordance
  with clause 12.1; and

  	
   

  	
  Purchasers and Vendors

  
	
   

  	
   

  	
   

  
	
  (e)                                  not less than 90% of the Employees of AEP (NZ) have
  accepted the NZ Purchaser’s offer of employment made in accordance with clause 12.1.

  	
   

  	
  Purchasers and Vendors

  
	
   

  	
   

  	
   

  
	
  2.                                       The
  Purchasers have executed a facility agreement and ancillary documentation, on
  terms contemplated in the letter of offer of finance given to the Purchasers
  before the execution of this agreement (and signed by way of identification
  between the Purchasers and the Vendors), and any condition precedent to
  initial finding the subject of such facility agreement has been satisfied or
  waived, and the initial funding amount is available for drawdown under such
  facility agreement.

  	
   

  	
  Purchasers

  



 


2.2                               Waiver
of Conditions


 


A Condition may only be
waived in writing by each party entitled to the benefit of that Condition (as
set out in the table in clause 2.1).


 


2.3                               Conduct
of the parties


 


Each party must use all
reasonable endeavours within its own capacity to ensure that each Condition is
satisfied as soon as reasonably practicable after execution of this agreement.


 


17





















 


2.4                               Failure
of Condition


 


If a party has complied
with its obligations under clause 2.3, it
may terminate this agreement by giving notice in writing to the other parties
if:


 


(a)                                  a Condition is or becomes incapable of being satisfied; or


 


(b)                                 each Condition is not satisfied, or waived (in accordance
with clause 2.2) by each party entitled to
the benefit of that Condition, before 5.00pm on 31 May 2005 or another date agreed
by the parties in writing.


 


2.5                               Effect
of termination


 


On termination of this
agreement under clause 2.4:


 


(a)                                  clauses 19, 21 and 22 continue to apply;


 


(b)                                 accrued rights and remedies of a party are not affected; and


 


(c)                                  subject to clauses 2.5(a) and (b), the
parties are released from further performing their obligations under this
agreement.


 


3.                                      Sale
and purchase


 


3.1                               Sale
and purchase


 


The Vendors as legal and
beneficial owners agree to sell the Assets to the Purchasers and the Purchasers
agree to buy the Assets:


 


(a)                                  for the Purchase Price;


 


(b)                                 free from any Encumbrance; and


 


(c)                                  on the Completion Date,


 


and
the Purchasers agree to assume responsibility for the Assumed Liabilities on
and from the Completion Date, on the basis that:


 


(d)                                 the Australian Purchaser will acquire all of the Assets of
AEP (Aust) (Australian Assets), and will assume responsibility for the Assumed
Liabilities of AEP (Aust) (Australian Liabilities); and


 


(e)                                  the NZ Purchaser will acquire all of the Assets of AEP (NZ)
(NZ Assets), and will assume responsibility
for the Assumed Liabilities of AEP (NZ) (NZ Liabilities).


 


3.2                               Excluded
Assets and Excluded Liabilities


 


The sale and purchase
under this agreement does not include the Excluded Assets or the Excluded
Liabilities. Nothing in this agreement will pass to the Purchasers, or will be
construed as an acceptance of, any Excluded Liability.


 


4.                                      Purchase
Price


 


4.1                               Amount


 


The Purchase Price for
the Assets is A$45,059,000 (Initial Purchase Price),
as adjusted pursuant to clause 4.2.


 


4.2                               Adjustment
of the Initial Purchase Price


 


(a)                                  If
the Net Assets Amount for AEP (Aust) is:


 


18





















 


(i)                                     more than A$32,020,928,
then the Initial Purchase Price mast be increased by an amount equal to the
excess;


 


(ii)                                  less than A$32,020,928, then the Initial Purchase Price must
be reduced by an amount equal to the shortfall,


 


any
adjustment to be made pursuant to this clause
4.2(a) to be made in Australian
dollars.


 


(b)                                 If
the Net Assets Amount for AEP (NZ) is:


 


(i)                                     more
than NZ$30,952,780, then the Initial Purchase Price must be increased by an
amount equal to the excess;


 


(ii)                                  less
than NZ$30,952,780, then the Initial Purchase Price must be reduced by an
amount equal to the shortfall,


 


any adjustment to be made
pursuant to this clause 4.2(b) to be made in New Zealand dollars.


 


(c)                                  Following
the execution of this agreement and prior to Completion, the Vendors and the Purchasers
will procure that the senior management of the Business prepare and provide to
the Vendors and the Purchasers a draft of the Completion Accounts based on the estimated
balance sheet of the Vendors as at 30 April 2005, and the estimated profit and loss
statement of the Vendors for the period ending on 30 April 2005, such draft Completion
Accounts to be prepared in a manner consistent with the principles in clause 8.2, and the principles in Schedule 3 and to set out:


 


(i)                                     an estimated Net Assets Amount position for AEP (Aust) and
for AEP (NZ); and


 


(ii)                                  an estimate of the final Purchase Price using the draft Net
Assets Amounts set out in the draft Completion Accounts and applying the
provisions of clauses 4.2(a)
and 4.2(b) (such estimate of the
final Purchase Price the Estimated Purchase
Price). For the
purpose of calculating the Estimated Purchase Price the Australian dollar/NZS
exchange rate applying at the date the draft Completion Accounts are issued, as
set out in the Australian Financial Review dated the date the draft Completion
Accounts are issued, will be used.


 


4.3                               Payment


 


(a)                                  The
Purchasers must pay the Purchase Price to the Vendors,
or as the Vendors otherwise direct, as follows:


 


(i)                                     on Completion, the Estimated Purchase Price; and


 


(ii)                                  on the Determination Date, the balance of the Purchase Price
(if any) payable pursuant to clause 4.3(b).


 


(b)                                 If
following determination of the Completion Accounts, and the Purchase Price (by
way of application of the provisions of clauses 4.2(a)
and 4.2(b)), the Estimated Purchase Price:


 


(i)                                     is
less than the Purchase Price, on the Determination Date, the Purchasers must
pay an amount equal to the shortfall to the Vendors; or


 


(ii)                                  is
more than the Purchase Price, on the Determination Date, the Vendors must pay
an amount equal to the excess to the Purchasers.


 


(c)                                  The
parties acknowledge that by paying the Estimated Purchase Price under clause 4.3(a), the
Purchasers will have satisfied in full the obligations to pay the price payable
under the Land Sale Contracts at completion of those Land Sale Contracts.


 


19





















 


4.4                               Cleared
funds


 


Each payment under this clause 4 must be made by bank cheque or
telegraphic transfer to an account nominated by the Vendors or otherwise in
cleared funds.


 


4.5                               Apportionment
of Initial Purchase Price


 


The Initial Purchase
Price is apportioned as set out in Schedule
1.


 


4.6                               Lowest
Price


 


For New Zealand Tax
purposes, the Purchase Price does not include any capitalised interest and the
parties agree that the Purchase Price is the “lowest price” within the meaning
of section EW 32(3) and EW 34(2) of the Income Tax Act 2004 (New Zealand). The
parties agree that they will compute their Taxable income for the relevant
period on the basis that the Purchase Price includes no capitalised interest
and they will file their Tax returns accordingly.


 


5.                                      Obligations
before Completion


 


5.1                               Continuity
of business


 


(a)                                  Until
Completion, the Vendors must not do anything other than carry on the Business
in the ordinary and usual course.


 


(b)                                 Subject
to clause 5.2,
from the date of this agreement until Completion, the Vendors must not, without
the Purchasers’ prior written consent, such consent to not be unreasonably
withheld:


 


(i)                                     dispose
of, acquire, grant any option to acquire or use, licence or otherwise part with
any Asset, other than the sale and purchase of Stock in the ordinary course of
ordinary business;


 


(ii)                                  enter into any material contract or vary the terms of, or
terminate, any material contract, other than in respect of the sale and
purchase of Stock in the ordinary course of ordinary business;


 


(iii)                               knowingly permit or suffer any breach or default of its
obligations under any material contract to occur;


 


(iv)                              amend
the terms of engagement of, or terminate the employment of, any Employees
either through individual contract or through negotiations with a union, or
otherwise, or hire, or agree to hire, any person for a term of employment
greater than three months; or


 


(v)                                 incur or agree to incur any Liabilities other than in the
ordinary course of Business.


 


5.2                               Permitted
acts


 


Nothing in clause 5.1 restricts
the Vendors from doing anything:


 


(a)                                  which is expressly contemplated in this agreement; or


 


(b)                                 which is necessary for the Vendors to meet their legal or
contractual obligations.


 


5.3                               Purchasers’
right of access


 


The Vendors must
facilitate and ensure that the Purchasers, their officers, employees, advisers
and agents are authorised and provided with access to the Properties, the
Records and the Employees at all reasonable times before Completion to enable
the Purchasers to become familiar with the conduct of the Business and to make
informed decisions under clause 5.1.


 


20





















 


5.4                               Purchasers’
right to be informed and copy material


 


(a)                                  The
Vendors must, in the period prior to Completion, keep the Purchasers informed,
on a timely basis, of all material developments which arise in relation to the
Business.


 


(b)                                 In
exercise of the rights granted to the Purchasers under clause 5.3, the
Purchasers may, at their cost, make copies of the material examined.


 


5.5                               Purchasers
to avoid disruption


 


The Purchasers must use
their reasonable endeavours to ensure that any access under clause 5.3 is
exercised and conducted in a manner to avoid unreasonable and material
disruption to the conduct of the Business, its activities, operations and
employees.


 


6.                                      Completion


 


6.1                               Time
and place


 


Completion will take
place at 10.00am on 2 May 2005, or if the Conditions have not been satisfied or
waived by that date, on the third Business Day after the date on which all of
the Conditions have been satisfied (or waived under clause 2.2) at Minter
Ellison, 88 Phillip Street, Sydney NSW 2000 or on such other date and at such
other place or time as the parties agree.


 


6.2                               Vendors’
obligations


 


At Completion, the Vendors must deliver to the Purchasers:


 


(a)                                  all of the Assets, title to which passes by delivery, at the
Properties;


 


(b)                                 subject
to clause 11, and any relevant
consent having been obtained prior to Completion, duly executed transfers or
assignments of the Business Contracts (including the Resinite Licence
Agreements), the Equipment Leases and any other documents or agreements that the
Purchasers reasonably require to vest the Assets in the Purchasers;


 


(c)                                  all documents of title relating to the Assets, by leaving
them at the Properties where they are located;


 


(d)                                 confirmation that the Bath Road Property Lease, as listed in
Part B of Schedule 7, has been stamped;


 


(c)                                  duly executed assignments or transfers of the Vendor IP (in
registrable form if required to record a change of ownership) that the
Purchasers reasonably require;


 


(f)                                    releases
in respect of the registered charge numbers 980730 and 995226 in favour of St
George Bank Limited in relation to AEP (Aust)’s Assets, and ASIC forms 312
notifying ASIC of the release in full of such charges, duly executed by St
George Bank Limited;


 


(g)                                 a release in respect of the general security agreement dated
22 July 2002 in favour of Bank of New Zealand in relation to AEP (NZ)’s Assets;


 


(h)                                 duly executed discharges or releases of all other Encumbrances
over the Assets other than any Stock held in the ordinary course which is the
subject of a retention of title clause where such retention of title clause
relates to a Trade Creditor Liability;


 


(i)                                     the Records;


 


(j)                                     a list of the Book Debts pursuant to clause 14;


 


(k)                                  all documents (including certificates of title) necessary to
complete the Land Sale Contracts;


 


21





















 


(l)                                     duly executed counterparts of the Chester Hill Lease, and of
the Land Sale Contracts;


 


(m)                               all
keys and codes required to gain access to the Properties, the Systems, all
other computer systems and all other Assets sold under this agreement, by
making them available at the Properties;


 


(n)                                 subject
to obtaining any relevant consent required by Completion, a transfer of each Statutory
Licence in respect of the Business, the Properties and/or the Assets which are
capable of being transferred to the Purchasers; and


 


(o)                                 copies of letters sent to each of the bidders involved in
the Project Midas Transaction requesting such parties destroy or return all
confidential information provided to such parties by or on behalf of the
Vendors or the Guarantor in connection with such sales process.


 


Further at Completion the Vendors must give the Purchasers physical
possession of the Properties and all Assets.


 


6.3                               Purchasers’
obligations


 


At Completion, the Purchasers must:


 


(a)                                  pay to the Vendors the amount of the Estimated Purchase
Price;


 


(b)                                 deliver to the Vendors duly executed counterparts of the
Chester Hill Lease, and of the Land Sale Contracts;


 


(e)                                  deliver to the Vendors all necessary documents to complete
me Land Sale Contracts;


 


(d)                                 deliver to the Vendors duly executed counterparts of any
document to be delivered by the Vendors at Completion to which the Purchasers
or any Purchaser is party; and


 


(c)                                  pay
to the Vendors the amount of the Loan referred to in clause 14.2.


 


6.4                               Simultaneous
actions at Completion


 


In respect of Completion:


 


(a)                                  the obligations of the parties under this agreement and the
Land Sale Contracts are interdependent;


 


(b)                                 all actions required to be performed under this agreement
and the Land Sale Contracts will be taken to have occurred simultaneously on
the Completion Date; and


 


(c)                                  completion of the sale and purchase of each Asset under this
agreement and the Land under the Land Sale Contracts is dependent on the
completion of the sale and purchase of each other Asset and the Land.


 


7.                                      Stock


 


7.1                               Stocktake


 


As part of the
preparation of the Completion Accounts pursuant to clause 8, a Stocktake of the Stock must be conducted as at
close of business on the Completion Date as follows:


 


(a)                                  the Vendors must conduct the Stocktake and must allow the
Purchasers, their representatives and advisers to be present at the stocktake;


 


(b)                                 the Vendors must prepare stock sheets that list the
quantities of each item of Stock;


 


(c)                                  items of Stock must be valued in accordance with the
following valuation principles:


 


22





















 


(i)            subject
to clauses 7.1(c)(ii) to 7.1(c)(v)
below, items of Stock will be valued at the lower of cost on a weighted average
basis and net realisable value;


 


(ii)           the
cost of items of Stock which are work in progress and finished goods will include
the sum of direct labour, direct materials and an appropriate proportion of
fixed and variable production overheads;


 


(iii)          all
items of Stock which are raw materials and finished goods (other than consumables)
must be written down to 50% of their value after 12 months, and 100% of their
value after 24 months;


 


(iv)          items of Stock which are faulty or damaged will be valued at
market value;


 


(v)           items
of packaging material, other consumables, pallets and engineering spares will
be valued at cost, or if obsolete, at nil; and


 


(vi)          to
the extent not inconsistent with clauses 7.1(c)(i) to 7.1(c)(v) above, Stock will be valued in a manner
consistent with the accounting principles, policies and procedures used in
preparing the Accounts.


 


8.                                      Completion
Accounts


 


8.1                               Completion
Accounts


 


(a)                                  The
Purchasers must as soon as practicable and in any event within 20 Business Days
after the Completion Date, prepare and give the Vendors and the Nominated
Accountant the unaudited Completion Accounts.


 


(b)                                 As
soon as practicable after the unaudited Completion Accounts are prepared, the
Vendors must instruct the Nominated Accountant to audit the Completion
Accounts, within 15 Business
Days of receiving the unaudited Completion Accounts (for the benefit of the Vendors
and the Purchasers) and provide a copy of both sets of the Completion Accounts to
the Purchasers and the Vendors, together with a statement of the Net Assets
Amount for AEP (Aust) and AEP (NZ).


 


(c)                                  The
Vendors and the Purchasers will each pay one half of the Nominated Accountant’s
costs and expenses in respect of their preparation of the Completion Accounts.


 


8.2                               Basis
of preparation


 


(a)                                  The
Completion Accounts must be prepared, and the statement of the Net Assets
Amount must be calculated as follows:


 


(i)                                     in accordance with clause 7;


 


(ii)                                  in accordance with the other Completion Account principles
set out in Schedule 3. For the avoidance of doubt, the numbers for the Assets
and Liabilities of AEP (NZ) in Schedule 3 are
NZ$;


 


(iii)                               in
accordance with the same valuation principles and accounting principles,
policies, methodology and assumptions as have been adopted in preparing the
Accounts; and


 


(iv)                              to the extent not covered by the above, in accordance with
the Accounting Standards.


 


23





















 


8.3                               Access
to information


 


The Vendors will procure
that the Nominated Accountant consults with the Purchasers, and each party
must:


 


(a)                                  provide
or ensure the provision of all information and assistance which may be
reasonably requested by the Nominated Accountant in connection with the
preparation of the Completion Accounts; and


 


(b)                                 permit
the Nominated Accountant (or persons assisting the Nominated Accountant) to have
reasonable access to and take extracts from or copies of any books,
correspondence, accounts or other records relating to the Business in its
possession or control.


 


8.4                               Dispute
notice


 


If either the Purchasers
or the Vendors dispute:


 


(a)                                  the inclusion, omission or calculation of any item in either
set of the Completion Accounts; or


 


(b)                                 that the Completion Accounts have been drawn up in
accordance with clause 8.2; or


 


(c)                                  the calculation of the Net Assets Amount for AEP (Aust) or AEP
(NZ),


 


then
it must give notice of such dispute (Dispute
Notice) to the other party within 14 days after receipt of the
document referred to in clause 8.1(b).


 


8.5                               Content
of Dispute Notice


 


A Dispute Notice must
identify:


 


(a)                                  the item in the relevant set of the Completion Accounts in
respect of which the dispute exists;


 


(b)                                 insofar
as possible the amount in dispute;


 


(c)                                  the adjustment to the relevant set of Completion Accounts
and/or the Net Assets Amount for AEP (Aust) or AEP (NZ) (as applicable) if a
Dispute Notice were to be accepted.


 


8.6                               Deemed
acceptance


 


If a Dispute Notice is
not given within the 14 day period required by clause 8.4, the
Purchasers and the Vendors will be taken to have accepted the Completion
Accounts provided by the Nominated Accountant pursuant to clause 8.1 (b), and the Net Assets Amounts
set out in the statement of Net Assets Amounts provided by the Nominated
Accountant pursuant to clause 8.1(b), and
such Completion Accounts and Net Assets Amounts will be final and binding on
the Purchasers and the Vendors.


 


8.7                               Independent
Expert


 


(a)                                  If
a Dispute Notice has been given within the 14 day period required by clause 8.4, the Vendors and the Purchasers agree to
negotiate in good faith to resolve the dispute within 10 days.


 


(b)                                 If
the Vendors and the Purchasers are unable to resolve the dispute within 10 days
after the Dispute Notice has been given, the Vendors and the Purchasers may by
agreement, or failing that either party may, refer the matters in dispute to an
independent chartered accountant from a major reputable international firm
operating in New South Wales and Auckland (excluding the Purchasers’ and
Vendors’ auditors) nominated by the President for the time being of the
Institute of Chartered Accountants in Australia (Independent Expert), with
a request that the Independent Expert make a decision in respect of the


 


24





















 


dispute
(and any consequential change to the Completion Accounts or the Net Assets
Amounts) within 20 Business Days from receiving the reference.


 


(c)                                  The
Vendors and the Purchasers must promptly supply the Independent Expert with any
information, assistance or cooperation requested in writing by the Independent
Expert in connection with its determination. All correspondence between the
Independent Expert and a party must be copied to the other parties.


 


(d)                                 The
decision of the Independent Expert will, in the absence of manifest error, be conclusive
and binding on the Vendors and the Purchasers and the Completion Accounts and
Net Assets Amounts (as amended) shall be deemed to be final and binding on the parties.


 


(e)                                  The
Vendors and the Purchasers will each pay one half of the Independent Expert’s
costs and expenses in respect of such reference. The Independent Expert, in
acting in respect of any such reference, shall act as an Independent Expert and
not as an arbitrator.


 


9.                                      Title,
risk and assumption of Assumed Liabilities


 


9.1                               Title


 


Title to the
Australian Assets passes to the Australian Purchaser at Completion, and title
to the NZ Assets passes to the NZ Purchaser at Completion.


 


9.2                               Possession


 


Possession of the Assets
and risk related to the Assets is given and taken at Completion.


 


9.3                               Assumed
Liabilities


 


On and from Completion,
the Australian Purchaser shall assume responsibility for the satisfaction of
the Australian Liabilities, and the NZ Purchaser shall assume responsibility for
the satisfaction of the NZ Liabilities.


 


10.                               Trading
responsibilities


 


10.1                        Profits
and Losses


 


Subject to Completion
occurring, all profits and losses relating to the conduct of the Business:


 


(a)                                  in the period up to and including the Completion Date, belong
to the Vendors; and


 


(b)                                 in the period after the Completion Date, belong to the
Purchasers.


 


10.2                        Liabilities


 


Subject to Completion occurring, and subject to clauses
9.3, 10.1, 11.3, 11.6 11.7 and 15, all Liabilities relating to the conduct of the Business:


 


(a)                                  in
the period up to and including the Completion Date, are the responsibility of
the Vendors and the Vendors indemnify the Purchasers from and against those
Liabilities (irrespective of whether the Liability arises before or after the
Completion Date); and


 


(b)                                 in the period after the Completion Date, are the
responsibility of the Purchasers and the Purchasers indemnify the Vendors from
and against those Liabilities,


 


provided that paragraph (a)
above does not apply to the Assumed Liabilities which, pursuant to clauses 3.1 and 9.3 are the responsibility of, and must be paid by, the
Purchasers.


 


25





















 


11.                               Assumed
Contracts


 


11.1                        Assignment


 


(a)                                  Subject
to Completion, and on and with effect from the Completion Date, the Vendors assign
and the Purchasers accept an assignment of all of the Vendors’ rights under, benefits
of and interests in (Benefits) and assume the burden of
the Assumed Contracts in accordance with this clause
11. For the avoidance of doubt, the Australian Purchaser accepts an
assignment of AEP Australia’s Benefits and assumes the burden of the Assumed
Contracts that form part of the Australian Assets in accordance with this clause 11, and the NZ Purchaser accepts an
assignment of AEP NZ’s Benefits and assumes the burden of the Assumed Contracts
that form part of the NZ Assets in accordance with this clause 11.


 


(b)                                 This
agreement does not constitute an assignment or an attempted assignment of an Assumed
Contract if an assignment or attempted assignment requires the consent of the counter-party
to the Assumed Contract and would constitute a breach of that Assumed Contract
if an assignment were made without that consent.


 


(c)                                  Any
assignment of an Assumed Contract must be in the form of the pro forma
assignment deed in the form agreed between the Vendors and the Purchasers, each
acting reasonably.


 


11.2                        Consent
to transfer of Assumed Contracts


 


(a)                                  Other
than in respect of a Key Contract (in respect of which the provisions of clause 2 apply) (to the extent consent in relation to such Key Contract
has not been waived pursuant to clause 2.2), if the consent of any third party is required for the
transfer of an Assumed Contract to the Purchasers under clause 11.1, the Vendors and the Purchasers
must use their reasonable endeavours to obtain that consent by or as soon as
reasonably practicable after Completion.


 


(b)                                 Pending
the transfer of an Assumed Contract to the Purchasers under clause 11.1, the Vendors must:


 


(i)                                     hold
the Benefits of the Assumed Contract on trust for the Purchasers and account to
the Purchasers promptly after receipt by the Vendors for the value of any
Benefit of the Assumed Contract that arises (or relates to the period) after
the Completion Date;


 


(ii)                                  enforce the Assumed Contract against any counter-party to it
in the manner that the Purchasers direct (and promptly following such
direction) from time to time, at the expense of the Purchasers; and


 


(iii)                               not agree to any termination, amendment or variation of or
waiver of any of the Vendors’ rights under the Assumed Contract without the
prior written approval of the Purchasers.


 


11.3                        Performance of Assumed Contracts


 


(a)                                  The
Vendors must perform and observe all obligations of the Vendors under the
Assumed Contracts which are due to be performed (or relate to the period) on or
before the Completion Date.


 


(b)                                 The
Purchasers must, to the extent they lawfully can, assume, perform and observe
all obligations of the Vendors under the Assumed Contracts which are due to be
performed (or relate to the period) after Completion.


 


26





















 


(c)                                  The
Vendors must, at the request and expanse of and with the assistance of the
Purchasers, use their reasonable endeavours to perform any obligation of either
of them under the Assumed Contracts which arises (or relates to the period)
from Completion which the Purchasers cannot lawfully assume, perform or observe.


 


11.4                        Use
or occupation pending transfer


 


If an Equipment Lease,
Intellectual Property Licence or Property Lease has not been transferred to the
Purchasers by Completion under clause 11.1, the Vendors must, to the extent they
lawfully can, allow the Purchasers to use or occupy the property or
Intellectual Property Rights (as applicable) the subject of the Equipment
Lease, Intellectual Property Licence or Property Lease as licensee from
Completion until the transfer is completed.


 


11.5                        Vendors
to cooperate generally


 


Pending the transfer of
an Assumed Contract to the Purchasers under clause
11.1 and to give effect to the allocation of responsibility for
performance of and Liability for an Assumed Contract under clauses 11.3, 11.6 and 11.7,
the Vendors must fully cooperate with the Purchasers in any reasonable requests
of the Purchasers designed to provide for the Purchasers the Benefits of the
Assumed Contract subject to the Purchasers assuming the burden of the Assumed
Contract in accordance with clause 11.3(b), including:


 


(a)                                  for a Property Lease, the Vendors granting a sublease of the
Property Lease or granting a licence to occupy the relevant Property;


 


(b)                                 for
a Business Contract, the Vendors duly performing the Business Contract by subcontracting
the obligations involved to the Purchasers on the same terms as those in the Business
Contract or delegating management and performance of the Business Contract to the
Purchasers to the extent reasonably practicable to do so; and


 


(c)                                  for
an Equipment Lease, requiring the Vendors to terminate and pay out the
Equipment Lease and immediately after termination sell or procure that the
lessor transfers title to the equipment the subject of the Equipment Lease to
the Purchasers in consideration for the Purchasers paying to the Vendors on
transfer of the title to the Purchasers, an amount equal to the sum paid by the
Vendors to the lessor on termination of the Equipment Lease.


 


11.6                        Vendors’
indemnity


 


Subject to Completion
occurring, the Vendors indemnify the Purchasers from and against all
Liabilities suffered, paid or incurred by the Purchasers from:


 


(a)                                  any breach, non-performance or non-observance of any
obligation of the Vendors under an Assumed Contract which is due to be
performed (or relates to the period) on or before the Completion Date;


 


(b)                                 any
Claim made by a counter-party under an Assumed Contract arising from events,
acts or omissions occurring on or before the Completion Date;


 


(c)                                  any
breach, non-performance or non-observance of any obligation of the Vendors
under an Assumed Contract which is due to be performed (or relates to the
period) after the Completion Date incurred from acts, omissions or events
caused or contributed to by the Vendors, other than at the direction of the
Purchasers; and


 


(d)                                 any breach by either of the Vendors of clauses 11.2(b), 11.3 or 11.4.


 


11.7                        Purchasers’
indemnity


 


Subject to Completion
occurring, the Purchasers indemnify the Vendors from and against all
Liabilities suffered, paid or incurred by the Vendors from:


 


27





















 


(a)                                  any
breach, non-performance or non-observance of any obligation of the Purchasers
under an Assumed Contract which is due to be performed (or relates to the
period) after the Completion Date except, to the extent that any such Liability
is suffered, paid or incurred from acts, omissions of or events caused or
contributed to by the Vendors (other than at the direction of the Purchasers);


 


(b)                                 any
Claim made by a counter-party under an Assumed Contract arising from events,
acts or omissions occurring after the Completion Date except to the extent that
any such Liability is suffered, paid or incurred from acts, omissions of or
events caused or contributed to by the Vendors (other than at the direction of
the Purchasers); and


 


(c)                                  any breach by the Purchasers of clause 11.3.


 


11.8                        Product
Warranties


 


Subject to legal or
contractual constraints, the Vendors assign to the Purchasers, with effect on
and from Completion, each Product Warranty that is assignable. At the
Purchasers’ request (made at any time) the Vendors must give notice of the
assignment to the provider of the Product Warranty.


 


12.                               Employees


 


12.1                        Offers
of employment


 


(a)                                  Within
five Business Days after the date of this agreement the Australian Purchaser
must make offers to all of the Australian Employees, and the NZ Purchaser must
make offers to all of the NZ Employees (other than Mr David Ward). The offers
must be:


 


(i)                                     in
a form approved by the Vendors (provided that such approval is given within two
Business Days after that date of this agreement) which offers to each Employee
terms and conditions of employment that are the same as that Employee’s current
terms and conditions of employment recognising prior service with the Vendors
(including entitlement to superannuation contributions) and provide for the
continuation of the industrial instruments that currently apply to each
Employee;


 


(ii)                                  conditional on Completion occurring and on the Employee
agreeing to resign from his or her employment with the Vendors effective from
the Completion Date; and


 


(iii)                               expressed to take effect on the Completion Date.


 


(b)                                 If
an Employee advises a Vendor or a Purchaser that he or she accepts the relevant
Purchaser’s offer of employment, the Vendors or Purchasers (as the case may be)
must immediately advise the other of the acceptance.


 


12.2                        Termination
of employment of Transferring Employees


 


At Completion, the
Vendors must release from their employment (with effect from the Completion
Date) all Transferring Employees.


 


12.3                        Vendors’
payment obligations


 


On the Completion Date,
the Vendors must, in respect of each Transferring Employee, pay:


 


(a)                                  to
the Transferring Employee all wages, salary, commission, bonuses or allowances accruing
and payable in respect of the period up to and including the Completion Date
(other than in respect of annual leave and long service leave (including
applicable loadings) and sick pay entitlements); and


 


28





















 


(b)                                 all
employer superannuation contributions due to be made by the Vendors in respect
of the period of employment up to and including the Completion Date in respect,
of that Transferring Employee.


 


12.4                        Prior
Service


 


The Purchasers agree
that, subject to any relevant statute, industrial instrument, award or
agreement, for the purpose of calculating any benefit arising under any
statute, industrial instrument, award, agreement or contract of employment
between a Purchaser and a Transferring Employee, the period of service
(including any period of service deemed by law or contract) which a
Transferring Employee has had with the Vendors immediately before and
continuous with the commencement of employment with that Purchaser (Prior
Service) is to be deemed service with the Purchaser and the continuity of the
period of service of the Transferring Employee is to be deemed not broken
because the Transferring Employee ceases to be an employee of the Vendors and
becomes an employee of the Purchaser.


 


12.5                        Assumption
of leave benefits


 


(a)                                  The
Australian Purchaser will assume, recognise, and become solely responsible for
all accrued and untaken or pro rata entitlements of each Australian Employee
that becomes a Transferring Employee for annual leave (including loading), sick
leave and long service leave as at the Completion Date.


 


(b)                                 The
New Zealand Purchaser will assume, recognise, and become solely responsible for
all accrued and untaken or pro rata entitlements of each New Zealand Employee
that becomes a Transferring Employee for annual leave (including loading), sick
leave and long service leave as at the Completion Date.


 


12.6                        Vendors’
indemnity


 


Subject to Completion
occurring, the Vendors indemnify the Purchasers against all Liabilities
suffered, paid or incurred by the Purchasers from:


 


(a)                                  any
Claim by any Transferring Employee for any wages, salary, commission, bonuses
and other benefits or entitlements accruing and payable to the Transferring
Employee on or before the Completion Date (other than leave entitlements which
the Purchasers assume under clause 12.5); and


 


(b)                                 any
breach by the Vendors of their
statutory, contractual or other legal obligations to a Transferring Employee on
or prior to the Completion Date.


 


12.7                        Purchasers’
indemnity


 


(a)                                  Subject
to Completion occurring, the Purchasers indemnify the Vendors against all Liabilities
suffered, paid or incurred by the Vendors from:


 


(i)                                     any
Claim by any Transferring Employee for any wages, salary, commission, bonuses
and other benefits or entitlements accruing to the Transferring Employee in
respect of the period after the Completion Date; and


 


(ii)                                  any
breach by a Purchaser of its statutory, contractual or other legal obligations
to a Transferring Employee after the Completion Date.


 


(b)                                 Subject
to Completion occurring, the Australian Purchaser must pay to AEP (Aust), on demand,
an amount equal to 50% of all payments (including, without limitation, for severance,
redundancy, notice and leave (including leave loadings)) made to a Chester Hill
Employee by AEP (Aust) arising out of the termination of that Chester Hill Employee’s
employment as a result of the transaction contemplated in this agreement, provided
that:


 


29





















 


(i)                                     AEP
(Aust) has done all things reasonably required of it by the Australian
Purchaser to ensure that obligations to make payments to Chester Hill Employees
in respect of termination of employment do not arise; and


 


(ii)                                  the
total amount paid by the Australian Purchaser under this clause must not exceed
$1,000,000.


 


(c)                                  Where
an Employee is not a Transferring Employee and such person is subsequently employed
by a Purchaser (or any related body corporate of the Purchasers) within 3 years
after the Completion Date, that Purchaser must reimburse the Vendors, on
demand, all payments (including, without limitation, for severance, redundancy,
notice and leave (including leave loadings)) paid by the Vendors to such
Employee arising out of the termination of that Employee’s employment as a
result of the transaction contemplated in this agreement, less any amounts paid
by the Australian Purchaser to AEP (Aust) in respect of such Employee pursuant
to clause 12.7(b), provided that the obligation in this clause 12.7(c) will not
apply where an Employee is engaged by a Purchaser (or by a related body
corporate of the Purchasers) on a short term consultancy basis for periods not
exceeding three months per annum.


 


(d)                                 The
Purchasers must notify the Vendor if either Purchaser engages any Employee who
is not a Transferring Employee on a short term consultancy basis.


 


13.                               Superannuation


 


13.1                        Industry
Fund


 


Where a Transferring Employee is a member of the Industry Fund:


 


(a)                                  the
Purchaser that employs such Transferring Employee must apply to become a participating
employer in the Industry Fund no later than seven days after Completion; and


 


(b)                                 the
Vendors must, as soon as reasonably practicable, use reasonable endeavours to
procure that the trustee of the Industry Fund agrees to the relevant Purchaser
becoming a participating employer in the Industry Fund in place of the relevant
Vendor.


 


13.2                        Other
Funds


 


Where a Transferring Employee is a member of one of the Other Funds:


 


(a)                                  the
Purchaser that employs such Transferring Employee must, as soon as practicable after the Completion
Date, arrange for the Transferring Employee to either:


 


(i)                                     continue
in their membership in that Other Fund on the same terms as in force
immediately before the Completion Date; or


 


(ii)                                  be
offered membership of a superannuation fund (New Fund)
which will provide the Transferring Employee with benefits that are no less
favourable than those offered by the Other Fund; and


 


(b)                                 if
relevant, the New Fund must be a complying superannuation fund for the purposes
of the Superannuation Industry (Supervision)
Act 1993 and otherwise must comply with all applicable regulatory
requirements, including holding all relevant licenses, approvals and registrations.


 


30





















 


13.3                        Contributions


 


On or before Completion,
the Vendors must contribute to the Funds in respect of each Transferring
Employee so that the Vendors are not liable to pay a superannuation guarantee
charge in respect of a Transferring Employee in respect of the period before
Completion.


 


13.4                        Information


 


Subject to any
obligations of privacy and confidentiality, the Vendors must use reasonable
endeavours to ensure that the trustee’s of the Funds provide the Purchasers
with any information reasonably required by the Purchasers in connection with
this clause 13.


 


14.                               Book
Debts


 


14.1                        List
of Book Debts


 


The Vendors must provide
to the Purchasers at Completion a list (Book
Debt List) of the Book Debts (including any bad or doubtful debts)
as at the Completion Date selling out for each debtor:


 


(a)                                  the
name;


 


(b)                                 the
address;


 


(c)                                  the
amount owing;


 


(d)                                 the
due date for payment of the Book Debt; and


 


(e)                                  whether
the debt owing by such debtor is a bad or doubtful debt, applying the same principles
as applied in the Accounts.


 


14.2                        Loan


 


(a)                                  For
the purpose of this clause 14, the Net
Book Debts amount means the amount of the Book Debts set out
in the Book Debt List as adjusted for any bad or doubtful debts.


 


(b)                                 On
the Completion Date, the Purchasers must advance the Vendors, by way of
secured, (in the form of security over the Book Debts), interest free,
on-demand loan, an amount equal to the total of the Net Book Debts as set out
in the Book Debt List (Loan),
provided that the Loan will be capped at, and will not exceed A$33,500,000. For
the purpose of calculating the amount of the loan, the exchange rate determined
pursuant to clause 4.2(c) will apply.


 


14.3                        Collection


 


The Purchasers, as agent
for the Vendors, have the sole and exclusive right for 12 months after the
Completion Date (the Collection Period) to seek to collect the Book Debts
referred to in clause 14.1,
subject to the following:


 


(a)                                  the
Purchasers must use all reasonable endeavours to recover the Book Debts
provided that the Purchasers are not required to institute proceedings to
recover a Book Debt;


 


(b)                                 the
Purchasers must allocate any money they receive from a debtor firstly against outstanding
Book Debts owed by that debtor, before any money is allocated for any other reason,
such as for the payment of debts due to a Purchaser except where the customer,
in writing, disputes a debt included in the Book Debts and indicates that the
amount paid is in respect of a debt owing to a Purchaser, in which case such
amount will not be allocated against Book Debts;


 


(c)                                  the
Purchasers must provide the Vendors with monthly written updates as to the
progress of the recovery of the Book Debts; and


 


31





















 


(d)                                 after
the Collection Period, the Vendors are, subject to repayment of the Loan in
full, entitled to seek collection any of the Book Debts provided the Vendors
must act reasonably in all the circumstances, including without limitation,
having regard to the likelihood of success.


 


14.4                        Notification
to Book Debts


 


(a)                                  Within
five Business Days after Completion, the Vendors must provide a letter to each debtor
directing it to pay all relevant Book Debts to the Purchasers (on behalf of the
Vendors).


 


(b)                                 The
Vendors must provide the Purchasers any information in relation to the
collection of the Book Debts which the Purchasers reasonably require.


 


14.5                        Repayment
of Loan


 


(a)                                  Each
Book Debt, collected by the Purchasers, on behalf of the Vendors will be immediately
applied towards, and treated as, repayment by the Vendors to the Purchasers of
an amount of the Loan equal to that Book Debt. Therefore, the Purchasers will
be entitled to retain for themselves all money collected in respect of each
Book Debt.


 


(b)                                 Each
Book Debt paid to and received by the Vendors from a debtor who makes payment directly
to the Vendors (because, for example, the debtor makes payment before it is advised
that the Purchasers are collecting Book Debts as the Vendors’ agent) must be immediately
paid by the Vendors to the Purchasers in part repayment of the Loan. The Purchasers
will be entitled to retain all such Loan repayments.


 


14.6                        End
of Collection Period


 


On the last day of the
Collection Period, if and to the extent that the Loan has not been repaid in
full pursuant to clause 14.5, the
Vendors must immediately repay to the Purchasers the balance of the unpaid
Loan.


 


15.                               Warranties
by the Vendors and Claims by the Purchasers


 


15.1                        Warranties


 


(a)                                  The
Vendors represent and warrant to the Purchasers that each of the Warranties is
true and accurate at the date of this agreement and will be true and accurate
on the Completion Date.


 


(b)                                 The
Warranties given by the Vendors are given in relation to this agreement and the
Land Sale Contracts.


 


(c)                                  The
Vendors indemnify the Purchasers for any loss, claim, damage, expense or
liability suffered or incurred by the Purchasers arising out of or resulting
from a breach of a Warranty.


 


(d)                                 The
Guarantor represents and warrants to the Purchasers that each of the Guarantor Warranties
is true and accurate at the date of this agreement and will be true and accurate
on the Completion Date.


 


(e)                                  The
Guarantor indemnifies the Purchasers for any loss, claim, damage, expense,
liability or proceeding suffered or incurred by the Purchasers arising out of
or resulting from a breach of a Guarantor Warranty.


 


15.2                        Application
of the Warranties


 


Each of the Warranties:


 


32





















 


(a)                                  remains
in full force and effect after Completion;


 


(b)                                 is
separate and independent and is not limited by reference to any other Warranty.


 


15.3                        Qualifications


 


The Warranties (other
than the Warranties in Warranty 1 of Part A of Schedule 4) are given subject to
and qualified by, and the Purchasers are not entitled to claim that any fact,
matter or circumstance causes any of the Warranties to be breached if and to
the extent, but only to the extent, that:


 


(a)                                  the
fact, matter or circumstance is fairly disclosed in:


 


(i)                                     this
agreement;


 


(ii)                                  the
Disclosure Letter;


 


(iii)                               the
Due Diligence Materials; or


 


(iv)                              any
information available, on public registers maintained by:


 


(A)                              any
of the Intellectual Property Office of Australia, the High Court of Australia,
the Federal Court of Australia (throughout Australia), the New South Wales Land
Titles Office (and the equivalent office in Victoria) and the Australian Securities
and Investments Commission – on or before 18 April 2005;


 


(B)                                the
Supreme Court (throughout Australia) – on or before 24 February 2005;


 


(C)                                the
Ministry of Economic Development (which maintains the Personal Properties
Securities Register, Land Information New Zealand, the Intellectual Property
Office of New Zealand, any public register kept by the Companies Office
pursuant to the Companies Act 1993, or the High Court of New Zealand (in
Auckland or Christchurch) – on or before 18 April 2005; or


 


(D)                               the
Historic Places Trust – on or before 6 April 2005.


 


15.4                        Acknowledgments


 


The Purchasers
acknowledge and agree with the Vendors that:


 


(a)                                  they
have had the opportunity to, and have, conducted due diligence investigations
in relation to the Business before the date of this agreement and have had the
opportunity to raise such enquiries as they considered necessary with the
Vendors in relation to the Business;


 


(b)                                 the
Warranties and the Guarantor Warranties are the only warranties that the
Purchasers require, and on which the Purchaser have relied, in entering into
this agreement;


 


(c)                                  for
the avoidance of doubt, no warranty or representation, expressed or implied, is
given in relation to any expression of intention or expectation nor any
forecast, budget or projection contained or referred to in the Due Diligence
Material; and


 


(d)                                 other
than in respect of the Warranties and the Guarantor Warranties, to the extent permitted
by law, all warranties and representations (whether express or implied and whether
oral or in writing) made or given by either of the Vendors or their employees, customers,
agents or representatives are expressly excluded.


 


33





















 


15.5                        Financial
limits on Claims for breach of Warranties


 


The Vendors have no
liability for a Claim for a breach of any Warranty:


 


(a)                                  unless
the amount of the Claim (or all Claims relating to the same or substantially
similar facts, matters or circumstances) in respect of that breach is $500,000
or more; and


 


(b)                                 until
the aggregate of all Claims which may be recovered under clause
15.5(a) exceeds $3,500,000, in which event the Purchasers may claim
the whole amount.


 


15.6                        Time
limits on Claims


 


The Vendors have no
liability for any Claim for breach of any Warranty, unless:


 


(a)                                  the
Purchasers have given written notice of the Claim to the Vendors on or before
30 September 2006; and


 


(b)                                 unless
the Claim has been settled, or legal proceedings in a court of competent
jurisdiction in respect of the Claim have been commenced by the Purchasers
against the Vendors, within one year of the Claim being notified by the
Purchasers.


 


15.7                        Other
limits on Claims


 


The liability of the
Vendors in respect of any Claim for breach of a Warranty, is reduced or
extinguished (as the case may be) to the extent that:


 


(a)                                  the
subject matter of any Claim is provided for in the Accounts or in the
Completion Accounts;


 


(b)                                 the
Claim has arisen as a result of or in consequence of any voluntary act,
omission, transaction or arrangement of or on behalf of the Purchasers after
Completion, other than an act in reliance of this agreement, an act in the
ordinary course of business, or an act to satisfy an obligation under law or
any contract;


 


(e)                                  the
Claim occurs or is increased as a result of legislation not in force or in
effect at the date of this agreement;


 


(d)                                 the
Claim occurs as a result of a change after the date of this agreement in any
law, interpretation of law, the practice of a Tax Authority or an issue or
withdrawal or a ruling by a Tax Authority; or


 


(e)                                  other
than in respect of the Warranties in paragraph 1 of Part A of Schedule 4, the Purchasers
have, prior to the date of this agreement, received written information from the
Vendors or the Vendors’ advisers in connection with the Project Midas
Transaction which fairly disclosed the extent to which the Warranty was
incorrect.


 


15.8                        Maximum
aggregate liability for Warranty Claims


 


Notwithstanding anything
else express or implied in this agreement or otherwise, the maximum aggregate
liability of the Vendors for all Claims, for breach of Warranty, made by the
Purchasers shall be limited to:


 


(a)                                  in
respect of a Claim for breach of a Warranty in paragraph 1 of Part A of
Schedule 4 (Title and Solvency), or paragraph 2 of Part A of Schedule 4 (Accounts),
$77,500,000; and


 


(b)                                 in
respect of all other Claims for breach of Warranty, $30,000,000,


 


provided that in no
circumstances will the Purchasers be entitled to recover more than $77,500,000
in respect of Claims for breach of Warranty.


 


34





















 


15.9                        Notice
of potential Claim


 


If the Purchasers become
aware of anything which is or may be reasonably likely to give rise to a
Warranty Claim under this clause 15 they must notify the Vendors in writing, within 10
Business Days after it has first come to the Purchasers’ attention (Claim Notice), setting out the act, matter or thing relied on as giving rise to
the Warranty Claim, the Warranty the subject of the Warranty Claim and all
relevant details of the Warranty Claim in so far as they are available to the
Purchasers.


 


15.10                 Conduct
of third party claims


 


(a)                                  The
Vendors, subject to this clause 15.10, are
in respect of an act, matter or thing notified by the Purchasers under clause 15.9, where that act, matter or thing relates to an actual or
threatened claim from a third party, entitled to elect by written notice given
to the Purchasers within 10 Business Days of receipt of a Claim Notice to:


 


(i)                                     take
over the conduct of the claim; and


 


(ii)                                  take
such actions as the Vendors may decide about it, including the right to
negotiate, defend and/or settle the claim and to recover costs incurred as a
consequence of the claim from any person, provided that the Vendors must act
reasonably in all the circumstances, including without limitation, having
regard to the likelihood of success and the effect of proceedings or actions on
the goodwill or reputation of the Business or the Purchasers.


 


(b)                                 Where
the Vendors take over the conduct and/or defence of any claim under this clause 15.10, the Vendors must:


 


(i)                                     afford
the Purchasers the opportunity to consult with the Vendors on all matters of
significance for the goodwill of the Business; and


 


(ii)                                  at
reasonable and regular intervals provide the Purchasers with written reports concerning
the conduct, negotiation, control, defence and/or outcome or settlement of the
claim.


 


(c)                                  The
Purchasers must provide the Vendors with access to (with the right to take
copies) and make available to the Vendors all relevant personnel, relevant
documents, books and records reasonably required for the purpose of the conduct
of any claim under clause 15.10(a).


 


15.11                 Rights
of the Purchasers


 


If the Purchasers give
the Vendors a Claim Notice under clause 15.9 and
the Vendors do not elect to take over the control of a Claim under clause 15.10, the Purchasers may take such actions as the Purchasers may
decide about it, including the right to negotiate, defend and/or settle the
claim and to recover costs incurred as a consequence of the claim from any
person, provided that:


 


(a)                                  the
Purchasers at reasonable and regular intervals provide the Vendors with written
reports concerning the conduct, negotiation, control, defence and/or settlement
of the claim and must not settle the claim without the prior approval of the
Vendors which must not be unreasonably withheld or delayed;


 


(b)                                 the
Purchasers afford the Vendors the opportunity to consult with the Purchasers on
matters of significance in relation to the conduct, negotiation and settlement
of the claim;


 


(c)                                  the
Vendors render to the Purchasers, at the Purchasers’ expense, all such
assistance as the Purchasers may reasonably require in disputing any claim; and


 


35





















 


(d)                                 the
Purchasers must procure that anyone representing their interests in respect of
the claim complies with the requirements in clause 15.10
and this clause 15.11.


 


15.12                 Costs
indemnity


 


The Vendors indemnify the
Purchasers against all Liabilities reasonably incurred by, or awarded against,
the Purchasers arising out of the conduct of the Vendors under clause 15.10 or acts required or requested of the Purchasers
in respect of the same, as and when they fall due, including reasonable legal
costs and disbursements of the Purchasers’ lawyers.


 


15.13                 Warranty
payments


 


Any payment made in
respect of a Claim for breach of a Warranty is deemed to be a reduction in the
Purchase Price.


 


15.14                 Benefits
or credits received by the Purchasers


 


If any payment in respect
of a Claim under the Warranties is made to the Purchasers by or on behalf of
the Vendors and after the payment is made the Purchasers receive any amount in
relation to the subject matter of the Claim (including payment under any
insurance policy), then the Purchasers:


 


(a)                                  must
immediately notify the Vendors of the payment; and


 


(b)                                 pay
to the Vendors an amount equal to the lesser of the amount paid to the
Purchasers in respect of the Claim under the Warranties, by or on behalf of the
Vendors, and the amount subsequently received by the Purchasers in respect of
the subject matter of the Claim (net of any Tax payable by the Purchasers on
such amount subsequently received).


 


15.15                 Trade
Practices Act


 


To the extent permitted
by law, the Purchasers agree not to make, and waive any right they may have to
make, any claim against the Vendors or any Associate of the Vendors under
section 52 of the Trade Practices Act 1974 (Cth) or the corresponding provision
of any State or Territory enactment, or section 9 of the Fair Trading Act 1986
(New Zealand).


 


15.16                 Vendors’
awareness


 


Where a Warranty is
qualified by reference to the Vendors’ awareness or knowledge, the Purchasers
acknowledge that the Vendors’ awareness or knowledge is limited to matters as
at the date the relevant Warranty is given that is within the knowledge of the
Nominated Persons (or would have been within such Nominated Person’s knowledge
had such Nominated Person made all reasonable enquiries to ascertain the truth
and accuracy of the relevant Warranty).


 


15.17                 Consequential
damages


 


The Vendors will not be
liable in respect of a Claim for breach of Warranty for any special, indirect
or consequential loss, except where the Claim is for breach of a Warranty in paragraph 2 of Part A of Schedule 4 (Accounts),
or is for breach of a Warranty in paragraph 14 of
Part A of Schedule 4 (Information), in which case
the Vendors will, subject to this clause 15, be
liable for any loss suffered or incurred by the Purchasers, including any
special, indirect or consequential loss. Nothing in this clause 15.17
limits the rights of the Purchasers to recover any general loss or
general damages for breach of any Warranty.


 


36





















 


16.                               After
Completion


 


16.1                        Records
and Vendors’ right of access


 


(a)                                  After
Completion, the Vendors will have the right, at all reasonable times, on
reasonable notice and at its cost, to access, and to take copies of, any
Records reasonably necessary for it:


 


(i)                                     to
comply with any applicable law, including any applicable law relating to Tax;


 


(ii)                                  to
prepare Tax or other returns required of it by law; or


 


(iii)                               for
the purpose of dealing with the accounting, Taxation, financial or insurance
affairs of the Vendors or any related body corporate of them,


 


provided that any such
copies of Records or information obtained from such Records must be kept
confidential in accordance with clause 16.3 and
used solely for the above purposes.


 


(b)                                 In
addition to the rights pursuant to clause 16.1(a)
above, after Completion, the Vendors will have the right, on reasonable notice
and at its coat, to access to the Records and the Employees of the Business at
all reasonable times, as is reasonably necessary for the Vendors in relation to
the Scholle Claim or in relation to the Lion Nathan Claim, provided that:


 


(i)                                     any
such copies of Records or information obtained must be kept confidential in
accordance with clause 16.3 and used solely
for the above purpose; and


 


(ii)                                  the
Vendors use their reasonable endeavours to ensure that any access under this clause 16.1(b) is exercised and conducted in a manner to
avoid unreasonable and material disruption to the conduct of the Business, its
activities, operations and Employees.


 


16.2                        Excluded
Records and Purchasers’ rights of access


 


After Completion, the
Purchasers will have the right, at all reasonable times, on reasonable notice
and at their cost, to access, and to take copies of, any Excluded Records
reasonably necessary for either Purchaser:


 


(a)                                  to
comply with any applicable law, including any applicable law relating to Tax;


 


(b)                                 to
prepare Tax or other returns required of either Purchaser by law; or


 


(c)                                  for
the purpose of dealing with the accounting, Taxation, financial or insurance
affairs of either Purchaser or any of related body corporate of either
Purchaser,


 


provided that any such
copies of Excluded Records or information obtained from such Excluded Records
must be kept confidential in accordance with clause 19
and used solely for the above purposes.


 


16.3                        Confidential
Information


 


With effect from
Completion, the Vendors and the Guarantor must keep and must procure that any
related body corporate of it keeps the Confidential Information confidential in
accordance with clause 19.3.


 


37





















 


17.                               ‘AEP,
‘MAPAC’, ‘AEP SAFETY SLIDE CUTTER’ and ‘ZIPSAFE’ marks


 


17.1                        Use
of Vendors’ name and logo


 


Subject to clause 17.2, Following Completion the
Purchasers must not and must procure that:


 


(a)                                  the
Business ceases to use or display any trade or service marks, trade or service
names, registered designs or logos used or owed by the Vendors or any related
body corporate of it including (‘AEP’ ‘MAPAC’ ‘AEP SAFETY SLIDE CUTTER’ and
ZIPSAFE’ or any confusingly similar mark, design name or logo), other than any
trade or service mark, trade or service name, design or logo included in the
Vendor IP; and


 


(b)                                 the
Business ceases to use or display the Business Names.


 


17.2                        Licence


 


(a)                                  Subject
to clause 17.2(c), the Vendors license
the Purchasers, on a royalty free basis, the use of the names ‘AEP’, ‘MAPAC’, ‘AEP
SAFETY SLIDE CUTTER’ and ‘ZIPSAFE’ and any names, images or logos associated
with the names ‘AEP’, ‘MAPAC’, ‘AEP SAFETY SLIDE CUTTER’ and ‘ZIPSAFE’
(including any trade marks) in relation to the Business, for a period of six
months from the Completion Date.


 


(b)                                 On
the completion of the six month period referred to in clause 17.2(a), the Purchasers must not use the names ‘AEP’, ‘MAPAC’, ‘AEP
SAFETY SLIDE CUTTER’ and ‘ZIPSAFE’ and any names, images or logos associated
with the names ‘AEP’, ‘MAPAC’, ‘AEP SAFETY SLIDE CUTTER’ and ‘ZIPSAFE’
(including any trade marks).


 


(c)                                  The
Purchasers acknowledge that the licence granted under clause
17.2(a) does not extend to any new work for the Business after
Completion and the Purchasers warrant that they will not without the prior
consent of the Vendors, use the names ‘AEP’, ‘MAPAC’, ‘AEP SAFETY SLIDE CUTTER’
and ‘ZIPSAFE’ and any names, images or logos associated with the names and
words ‘AEP’, ‘MAPAC’, ‘AEP SAFETY SLIDE CUTTER’ and ‘ZIPSAFE’ (including any
trade marks) in relation to any new work for the Business or other activities
of the Purchasers which commence after Completion, PROVIDED
HOWEVER the Purchasers may use the name ‘ZIPSAFE’ after Completion
in relation to any ‘ZIPSAFE’ products that the Purchasers acquire from AEP
Industries Inc.


 


17.3                        Indemnity


 


The Purchasers indemnify
the Vendors from and against all costs, expenses, claims, demands, actions and
proceedings (including legal costs on a solicitor and known client basis) in
respect of any use by the Purchasers after Completion of the names ‘AEP’, ‘MAPAC’,
‘AEP SAFETY SLIDE CUTTER’ and ‘ZIPSAFE’ and any names, images or logos
associated with such names other than in accordance with this agreement or any
misleading or deceptive use of such names.


 


17.4                        Acknowledgment


 


The parties acknowledge
the following:


 


(a)                                  the
trade marks listed below will be transferred from AEP (NZ) to AEP Industries,
Inc. prior to Completion:


 


	
  Country

  	
   

  	
  No./Class

  	
   

  	
  Trade mark

  	
   

  	
  Status

  	
   

  
	
  New Zealand

  	
   

  	
  278444 (16)

  	
   

  	
  AEP

  	
   

  	
  Registered - 18/06/2018

  	
   

  
	
  New Zealand

  	
   

  	
  280176 (17)

  	
   

  	
  AEP

  	
   

  	
  Registered - 28/07/2018

  	
   

  



 


38





















 


(b)                                 the
trade mark listed below will be assigned from AEP (NZ) to AEP Industries, Inc.
prior to Completion:


 


	
  Country

  	
   

  	
  No./Class

  	
   

  	
  Trade mark

  	
   

  	
  Status

  	
   

  
	
  New Zealand

  	
   

  	
  673365 (8)

  	
   

  	
  AEP SAFETY SLIDE CUTTER

  	
   

  	
  Registered - 11/02/2010

  	
   

  



 


18.                               Restraint
covenants


 


18.1                        Definitions


 


In this clause 18:


 


engage
in means to carry on, participate in, provide finance or
services, or otherwise be directly or indirectly involved as a shareholder,
unitholder, director, consultant, adviser, contractor, principal, agent,
manager, employee, beneficiary, partner, associate, trustee or financier or in
any other capacity.


 


Prohibited
Persons means:


 


(a)                                  the
Vendors;


 


(b)                                 the
Guarantor;


 


(c)                                  any
related bodies corporate of either of the Vendors or of the Guarantor.


 


18.2                        Prohibited
activities


 


Subject to clause 18.3, the Vendors and the Guarantor
will not, and the Vendors and the Guarantor will procure that the other
Prohibited Persons will not, for the periods and the areas specified in clauses 18.3(d) and 18.5:


 


(a)                                  engage
in a business or an activity that is in competition with the Business or any
material part of the Business;


 


(b)                                 solicit,
canvass, approach or accept an approach from a person who was at any time
during the twelve months ending on the Completion Date a customer of one of the
Vendors with a view to obtaining their custom in a business that is in
competition with the Business or any material part of the Business;


 


(c)                                  interfere
with the relationship between the Purchasers and their customers, employees or
suppliers;


 


(d)                                 induce
or help to induce an employee of either Purchaser to leave their employment.


 


18.3                        Exclusion
to prohibited activities


 


(a)                                  Notwithstanding
clause 18.2,
the Vendors and the Guarantor acknowledge that the Prohibited Persons may
acquire a business that:


 


(i)                                     is
in competition with the Business or any material part of the Business; and


 


(ii)                                  has
subsidiaries in or otherwise carries on business in Australia and/or New
Zealand,


 


(together the New Business), provided that, within three months of a Prohibited Person
completing the acquisition of the New Business, the Vendors and the Guarantor
must


 


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procure that the
Prohibited Persons must offer to sell (Transfer
Notice) that part of the New
Business situated in Australia and/or New Zealand (Offending Business) to the Purchasers at the same purchase
price at which the Prohibited Person acquired the Offending Business.


 


(b)                                 The
Transfer Notice must provide
details of the following:


 


(i)                                     full
details of the assets and/ shares that constitute the Offending Business;


 


(ii)                                  the
most recent financial records of the Offending Business as are available to the
Vendors;


 


(iii)                               the
purchase price which the Prohibited Persons paid for the Offending Business and
full details of the terms on which the New Business was acquired; and


 


(iv)                              any
other reasonable terms arid conditions that apply to the sale of the Offending
Business.


 


(c)                                  Within
20 days after serving the Transfer Notice, the Purchasers must give notice to
the Vendors stating whether or not they agree to acquire the Offending Business.
If the Purchasers notify the Vendors that they elect to acquire the Offending
Business, the parties must promptly take all action as is reasonably necessary
to procure the completion of the sale of the Offending Business on the terms
set out in the Transfer Notice.


 


(d)                                 If
the Purchasers give notice to the Vendors of their rejection of the offer made
to them in the Transfer Notice or if the Purchasers are taken to have rejected
the offer pursuant to clause 18.3(e), the Prohibited Persons may continue to carry on the
Offending Business.


 


(e)                                  If
the Purchasers do not give notice to the Vendors within the period specified in
clause 18.3(c) of their acceptance
or rejection of the offer made to it in the Transfer Notice, the Purchasers are
taken to have rejected the offer.


 


18.4                        Duration
of prohibition


 


The undertakings in clause 18.2 begin on the Completion Date
and end:


 


(a)                                  on
the second anniversary of the Completion Date;


 


(b)                                 18
months after the Completion Date;


 


(c)                                  12
months after the Completion Date.


 


18.5                        Geographic
application of prohibition


 


The undertakings in clause 18.2 apply only if the activity
prohibited by clause 18.2 occurs within:


 


(a)                                  Australia
and New Zealand;


 


(b)                                 Australia,
Auckland and Christchurch;


 


(c)                                  New
South Wales, Victoria, Auckland and Christchurch.


 


18.6                        Interpretation


 


Clauses
18.2, 18.4 and 18.5 have effect together as if they consisted of separate
provisions, each being severable from the other. Each separate provision
results from combining each undertaking in clause
18.2, with each period in clause
18.4, and combining each of those combinations with each area in clause 18.5. If any of those separate provisions is invalid or unenforceable
for any reason, the invalidity or unenforceability does not affect the validity
or enforceability of any of the other separate provisions or other combinations
of the separate provisions of clauses 18.2, 18.4 and 18.5.


 


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18.7                        Exceptions


 


This clause 18 does not restrict a Prohibited
Person from:


 


(a)                                  holding
5% or less of the shares of a listed company; or


 


(b)                                 recruiting
a person through a recruitment agency (except if the agency targets employees
of either Purchaser) or in a response to a newspaper, web page or other public
employment advertisement.


 


18.8                        Acknowledgments


 


The Vendors and the
Guarantor acknowledge that:


 


(a)                                  all
the prohibitions and restrictions in this clause 18 are
reasonable in the circumstances and necessary to protect the goodwill of the
Business;


 


(b)                                 damages
are not an adequate remedy if a Prohibited Person breaches this clause 18; and


 


(c)                                  the
Purchasers may apply for injunctive relief if:


 


(i)                                     a
Prohibited Person breaches or threatens to breach this clause 18;
or


 


(ii)                                  it
believes a Prohibited Person is likely to breach this clause 18.


 


19.                               Confidentiality
and publicity


 


19.1                        Confidentiality


 


The Purchasers:


 


(a)                                  must
keep confidential any confidential information of either or both of the Vendors
and all Confidential Information disclosed to the Purchasers by or on behalf of
the Vendors, or of which the Purchasers become aware (whether before or after
the date of this agreement); and


 


(b)                                 may
disclose any confidential information in respect of which the Purchasers have
an obligation of confidentiality under clause 19.1(a)
only:


 


(i)                                     to
those of the Purchasers’ officers, employees, financiers or advisers who:


 


(A)                              have
a need to know for the purposes of this agreement and the transactions
contemplated by it; and


 


(B)                                undertake
to the Purchasers (and, where required by the Vendors, to the Vendors also) a
corresponding obligation of confidentiality to that undertaken by the
Purchasers under this clause 19.1;


 


(ii)                                  if
required to do so by law or the Listing Rules of ASX; or


 


(iii)                               with
the prior written approval of the Vendors.


 


19.2                        Confidential
Information


 


The provisions of clause 19.1 apply:


 


(a)                                  with
respect to Confidential Information:


 


(i)                                     until
Completion; or


 


(ii)                                  for
a period of three years after termination of this agreement,


 


whichever first
occurs; and


 


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(b)                                 with
respect to any other confidential information of the Vendors, until that
information is public knowledge (otherwise than as a result of a breach of
confidentiality by the Purchasers or any of their permitted disclosees).


 


19.3                        Announcements


 


A party must not make or
authorise a press release, public announcement, disclosure or filing relating
to the negotiations of the parties or the subject matter or provisions of this
agreement (Announcement) unless:


 


(a)                                  it
is required to be made by law or the Listing Rules of ASX and before it is made
that party has:


 


(i)                                     notified
the Purchasers and the Vendors; and


 


(ii)                                  given
the Purchasers and the Vendors a reasonable opportunity to comment on the
contents of, and the requirement for, the Announcement; or


 


(b)                                 it
is required to be made by the Vendors under laws, rules and regulations of the
United States Securities and Exchange Commission and Nasdaq market;


 


(c)                                  disclosure
is required by law or any governmental authority, or in order to comply with the
obligations under this agreement; or


 


(d)                                 it
has the prior written approval of the
Purchasers and the Vendors.


 


20.                               GST
- Supply of a going concern


 


20.1                        Going
concern


 


The Vendors and the
Purchasers agree that the sale of the Assets and the Business under this
agreement constitutes the supply of a going concern for the purposes of the A New Tax System (Goods and Services Tax) Act 1999 (Australia)
(the Australian GST Act) and the Goods and
Services Tax Act 1985 (New Zealand) (the New Zealand GST Act)
(together the GST Law)


 


20.2                        Undertakings


 


The Vendors undertake
that they will carry on the enterprise transferred under this agreement until
the day that the supply is made for the purposes of the GST Law and that they
intend that the supply of the Assets and the Business is the supply of a
taxable activity for the purposes of the New Zealand GST Act that is capable of
being carried on as a going concern by the Purchasers.


 


20.3                        Registered


 


The Purchasers warrant
that they will be registered for goods and services tax (GST)
for the purposes of the GST Law at the Completion Date. The Purchasers will
provide written evidence of their GST registrations to the Vendors prior to the
Completion Date. If the Purchasers do not provide evidence of registrations as
required, the Vendors may elect to treat the supply of the Assets and the
Business as a taxable supply and accordingly the Purchasers must pay the GST
Amount (calculated under clause 20.4(a))
to the Vendors on the Completion Date.


 


20.4                        Liability


 


If notwithstanding clause 20.1, the Vendors determine that they are liable to
pay GST on a supply made under or in connection with this agreement:


 


(a)                                  the
Purchasers must pay to the Vendors in addition to the Purchase Price and any
other consideration to be provided by the Purchasers to the Vendors for that
supply under this agreement (GST exclusive
consideration), an amount equal to the GST exclusive


 


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consideration
multiplied by the prevailing rate of GST for the relevant jurisdiction (GST Amount);


 


(b)                                 in
addition to the GST Amount, the Purchasers must pay to the Vendors an amount
equal to any interest, fines, penalties and additional tax payable by the
Vendors as a result of the supply of the Assets and the Business being incorrectly
treated as a supply of a going concern or otherwise resulting from the GST
payable on the supply being paid late or the GST Amount being paid late;


 


(c)                                  the
GST Amount and any amount payable under clause
20.4(b) must be paid by the Purchasers
to the Vendors within 2 Business Days of the Vendors issuing a tax invoice to the
Purchasers for the relevant taxable supply, except where the GST Amount is
payable on the Completion Date under clause
20.3; and


 


(d)                                 it
will not be a defence to any claim against the Purchasers pursuant to this clause 20.4 that the
Vendors did not pay the GST on the supply when it fell due under the GST Law.


 


20.5                        Ruling


 


For the purposes of this clause 20, the Vendors
may determine that they are liable to pay GST on the supply of the Assets and
the Business under this agreement if they obtain a private binding ruling in
respect of this agreement, or any similar arrangement, which confirms that the
supply does not constitute the supply of a going concern.


 


20.6                        Reduction


 


If a payment to a party
under this agreement (except for the Purchase Price) is a reimbursement or
indemnification, calculated by reference to a loss, cost or expense incurred by
that party, the payment will be reduced by the amount of any input tax credit
to which that party is entitled for that loss, cost or expense.


 


20.7                        Definitions


 


Words or expressions used
in this clause 20 which are defined in the Australian GST Act and the New
Zealand GST Act (as applicable) have the same meaning in this clause.


 


20.8                        Rights


 


Rights under this clause 20 continue
after the Completion Date, whether or not other rights continue.


 


21.                               Notices
and other communications


 


21.1                        Service
of notices


 


A notice, demand,
consent, approval or communication under this agreement (Notice)
must be:


 


(a)                                  in
writing, in English and signed by a person duly authorised by the sender; and


 


(b)                                 hand
delivered or sent by prepaid post or facsimile to the recipient’s address for
Notices specified in the Details, as varied by any Notice given by the
recipient to the sender.


 


21.2                        Effective
on receipt


 


A Notice given in
accordance with clause 21.1 takes
effect when taken to be received (or at a later time specified in it), and is
taken to be received:


 


(a)                                  if
hand delivered, on delivery;


 


(b)                                 if
sent by prepaid post, two Business Days after the date of posting (or seven
Business Days after the date of posting if posted to or from a place outside
Australia);


 


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(c)                                  it
sent by facsimile, when the sender’s facsimile system generates a message
confirming successful transmission of the entire Notice unless, within eight
Business Hours after the transmission, the recipient, informs the sender that
it has not received the entire Notice,


 


but if the delivery,
receipt or transmission is not on a Business Day or is after
5.00pm on a Business Day, the Notice is taken to be received at 9.00am on the
next Business Day.


 


22.                               Miscellaneous


 


22.1                        Alterations


 


This agreement may be
altered only in writing signed by each party.


 


22.2                        Approvals
and consents


 


Except where this
agreement expressly states otherwise, a party may, in its discretion, give
conditionally or unconditionally or withhold any approval or consent under this
agreement.


 


22.3                        Assignment


 


A party may only assign
this agreement or a right under this agreement with the prior written consent
of each other party, provided that the parties acknowledge and consent to the
Purchasers granting any Encumbrance over their rights under this document to
BWA Custodians Limited ACN 009 413 852 (and any successor or assign) in
connection with certain financial accommodation to be provided to the
Purchasers in connection with the purchase of the Assets under this agreement.


 


22.4                        Costs


 


Each party must pay its
own costs of negotiating, preparing and executing this agreement.


 


22.5                        Stamp
duty


 


Any stamp duty, duties or
other charges of a similar nature (including fines, penalties and interest) in
connection with this agreement or a transaction contemplated by this agreement,
must be paid by the Purchasers.


 


22.6                        Survival


 


Any indemnity or any
obligation of confidence under this agreement is independent and survives
termination of this agreement. Any other term by its nature intended to survive
termination of this agreement survives termination of this agreement.


 


22.7                        Counterparts


 


This agreement may be
executed in counterparts. All executed counterparts constitute one document.


 


22.8                        No
merger


 


The rights and
obligations of the parties under this agreement do not merge on completion of
any transaction contemplated by this agreement.


 


22.9                        Entire
agreement


 


This agreement
constitutes the entire agreement between the parties in connection with its
subject matter and supersedes all previous agreements or understandings between
the parties in connection with its subject matter.


 


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22.10                 Further
action


 


Each party must do, at
its own expense, everything reasonably necessary (including executing
documents) to give full effect to this agreement and the transactions
contemplated by it. To the extent to which an asset used by the Vendors in the
Business as at the date of this agreement is not transferred to the Purchasers
on Completion, other than an Excluded Asset, the Vendors must procure that such
asset is, following a request from the Purchasers, assigned to the Purchasers
for no consideration.


 


22.11                 Severability


 


A term or part of a term
of this agreement that is illegal or unenforceable may be severed from this
agreement and the remaining terms or parts of the term of this agreement
continue in force.


 


22.12                 Waiver


 


A party does not waive a
right, power or remedy if it fails to exercise or delays in exercising the
right, power or remedy. A single or partial exercise of a right, power or
remedy does not prevent another or further exercise of that or another right,
power or remedy. A waiver of a right, power or remedy must be in writing and
signed by the party giving the waiver.


 


22.13                 Relationship


 


Nothing in this agreement
creates a relationship of employment, trust, agency or partnership between the
parties.


 


23.                               Guarantor’s
guarantee


 


23.1                        Guarantee
and indemnity


 


The Guarantor
unconditionally and irrevocably;


 


(a)                                  guarantees
to the Purchasers the due and punctual performance and observance by the Vendors
of all of the obligations contained in or implied under this agreement that
must be performed and observed by the Vendors (Guaranteed
Obligations); and


 


(b)                                 indemnifies
the Purchasers against all losses, damages, costs and expenses which the Purchasers
may now or in the future suffer or incur consequent on or arising directly or indirectly
out of any breach or non-observance by the Vendors of a Guaranteed Obligation.


 


23.2                        Extent
of guarantee and indemnity


 


This clause 23 applies and
the obligations of the Guarantor remain unaffected despite:


 


(a)                                  an
amendment of this agreement, whether with or without the Guarantor’s knowledge
or consent; or


 


(b)                                 a
rule of law or equity to the contrary; or


 


(c)                                  an
insolvency event affecting a person; or


 


(d)                                 a
change in the constitution, membership, or partnership of a person; or


 


(e)                                  the
partial performance of the Guaranteed Obligations; or


 


(f)                                    the
Guaranteed Obligations not being enforceable at any time (whether by reason of
a legal limitation, disability or incapacity on the part of a Vendor and
whether this agreement is void ab initio or
is subsequently avoided) against a Vendor; or


 


45





















 


(g)                                 the
Purchasers granting any time or other indulgence or concession to, compounding
or compromising with, or wholly or partially releasing a Vendor or the
Guarantor of an obligation; or


 


(h)                                 another
thing happening that might otherwise release, discharge or affect the
obligations of the Guarantor under this agreement.


 


23.3                        Principal
and independent obligation


 


This clause
23 is:


 


(a)                                  a
principal obligation and is not to be treated as ancillary or collateral to
another right or obligation; and


 


(b)                                 independent
of and not in substitution for or affected by another security interest or guarantee
or other document or agreement which the Purchasers or another person may hold
concerning the Guaranteed Obligations.


 


23.4                        Enforcement
against Guarantor


 


The Purchasers may
enforce this clause 23 against the Guarantor without first having to resort to
another guarantee or security interest or other agreement relating to the
Guaranteed Obligations.


 


24.                               Environmental
Indemnity


 


24.1                        Definitions


 


In this clause 24, a reference to land includes a reference to water in, or under
the land.


 


24.2                        Contamination
Indemnity by the Vendors


 


Subject
to clause 24.3, the Vendors:


 


(a)                                  indemnify,
and agree to keep indemnified, the Purchasers against all Environmental Liability;
and


 


(b)                                 release,
and agree to continue to release, the Purchasers from any claim by the Vendors
in respect of Environmental Liability.


 


24.3                        Limitations


 


(a)                                  The
Vendors have an obligation under clause 24.2 only to the extent that any Environmental Liability
relates to Contamination, or Pollution, of or at a Property or the Chester Hill
Site which occurred before Completion (including where such Contamination or
Pollution emanates from any such Property or the Chester Hill Site before or
after Completion).


 


(b)                                 The
Vendors have no liability under clause 24.2, unless:


 


(i)                                     the
Purchasers has given written notice of the claim to the Vendors on or before
the third anniversary of the Completion Date; and


 


(ii)                                  unless
the claim has been settled, or legal proceedings in a court of competent
jurisdiction in respect of the claim have been commenced by the Purchasers
against the Vendors, within one year of the claim being notified by the
Purchasers.


 


(c)                                  The
Vendors have no liability for a claim under clause
24.2 unless the amount of the claim
exceeds $250,000, in which case the Vendors are liable for the entire amount
and not just the excess.


 


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(d)                                 The
Venders have no liability for any cost incurred by the Purchasers in removing
any asbestos cladding from any building at the Chester Hill Site, at the
property at 9-19 Rooks Road, Nunawading, Victoria, or at the property at 100
Carbine Road, Mount Wellington, Auckland, New Zealand.


 


(e)                                  The
Vendors have no liability for a claim under clause 24.2:


 


(i)                                     where
legislation, not in force or in effect at the date of this agreement, is
enacted, and as a result the Vendors are liable under clause 24.2 and the
Vendors would not have been liable under clause 24.2 prior to the enactment of
such legislation; or


 


(ii)                                  where
the claim occurs as a result of the redevelopment of a Property by the
Purchasers for use other than manufacturing of packaging or warehousing.


 


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Schedule 4 - Warranties (clause 15)


 


Part A


 


Warranty 1 - Title and Solvency


 


1.1                                 No:


 


(a)                                  meeting
has been convened, resolution proposed, petition presented or order made for
the winding up of either of the Vendors;


 


(b)                                 receiver,
receiver and manager, provisional liquidator, liquidator or other officer of
the Court has been appointed in relation to all or any material asset of either
of the Vendors; or


 


(c)                                  mortgagee
or chargee has taken, attempted or indicated an intention to exercise its
rights under any security of which either of the Vendors is the mortgagor or
chargor.


 


1.2                                 AEP
(Aust):


 


(a)                                  is
not insolvent within the meaning of section 95A of the Corporations Act;


 


(b)                                 has
not stopped paying its debts as and when they fall due; and


 


(c)                                  is
not subject to administration under Part 5.3A of the Corporations Act.


 


AEP(NZ):


 


(a)                                  is
not unable to pay its debts (other than as the result of a failure to pay a
debt or claim the subject of a good faith dispute); or


 


(b)                                 has
not stopped paying its debts as and when they fall due.


 


1.3                                 Each
of the Vendors:


 


(a)                                  has
the power to own its assets and carry on its business as it now being
conducted; and


 


(b)                                 is
registered and validly existing under its jurisdiction of incorporation or
registration.


 


1.4                                 The
Vendors have taken all necessary action to authorise the execution, delivery
and performance of this agreement in accordance with its terms.


 


1.5                                 The
Vendors have full power to enter into and perform their obligations under this
agreement (including, but not limited to, selling the Assets).


 


1.6                                 The
execution, delivery and performance by the Vendors of this agreement comply
with:


 


(a)                                  each
law, regulation, authorisation, ruling, judgement, order or decree of any
Government Agency;


 


(b)                                 the
constitution or other constituent documents of the Vendors; and


 


(c)                                  any
Encumbrance or document which is binding on the Vendors or any of the Assets.


 


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Warranty 2 - Accounts


 


2.1                                 The
Accounts for each of the Vendors:


 


(a)                                  were
prepared in accordance with the Accounting Standards;


 


(b)                                 give
a true and fair view of the financial position of the Business and the income, expenses
and results of the Business as at the Accounts Date.


 


2.2                                 Since
the Accounts Date:


 


(a)                                  the
Vendors have carried on the Business in the ordinary and usual course;


 


(b)                                 no
contracts or commitments differing from those ordinarily made in the conduct of
the Business have been entered into or incurred;


 


(c)                                  neither
of the Vendors has disposed of a material asset, other than the sale of stock
in the ordinary course of ordinary business;


 


(d)                                 the
Vendors have paid their respective creditors in accordance with their relevant
credit terms; and


 


(e)                                  there
has been no material adverse change in the assets, liabilities, financial
position or profitability of either of the Vendors.


 


Warranty 3 - Records


 


As far as each of the
Vendors is aware, the Records:


 


(a)                                  have
been fully, properly and accurately kept and completed in all material
respects;


 


(b)                                 do
not contain material inaccuracies or discrepancy of any kind; and


 


(c)                                  comply
with legal requirements in all material respects.


 


For the purpose of this
Warranty 3, Records does not include the Accounts.


 


Warranty 4 - Assets and the
Business


 


4.1                                 The
Assets are in the possession or under the control of the Vendors.


 


4.2                                 The
Vendors are the legal and beneficial owners of each Asset.


 


4.3                                 On
Completion, there will be no Encumbrances over or affecting any Asset and the
Vendors are not party to any agreement to grant any Encumbrance over any Asset.


 


4.4                                 The
Assets, the Excluded Assets and the assets the subject of the Equipment Leases
and Property Leases, comprise all of the assets used by the Vendors in the
Business.


 


Warranty 5 - Business contracts


 


5.1                                 There
are no agreements, arrangements or understandings affecting the Business and
not fully performed at the Completion Date that:


 


(a)                                  are
material to the operation of the Business and have not been disclosed in
writing to the Purchasers (and all material terms of such contracts have been
disclosed in writing);


 


(b)                                 are
outside the ordinary and proper course of business of the Business or otherwise
contain any unusual, abnormal or onerous provision; or


 


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(c)                                  are
incapable of being fulfilled or performed on time without undue or unusual
expenditure of money or effort.


 


5.2                                 With
respect to each contract which is material to the Business (including the
Business Contracts):


 


(a)                                  no
party to the contract is in
breach of the contract;


 


(b)                                 the
Vendors are not aware of any grounds for rescission or avoidance or repudiation
of the contracts;


 


(c)                                  no
party has given notice to terminate it or has sought to repudiate or disclaim
it or, so far as the Vendors are aware, intends to do so; and


 


(d)                                 so
far as the Vendors are aware, there are no facts or circumstances which are
likely to give rise to any of the above.


 


Warranty 6 - Employees


 


6.1                                 Schedule 8 sets out a complete, accurate
and up to date list of the following:


 


(a)                                  all
Employees of AEP (NZ) as at 15 April 2005 with an accurate statement of each Employee’s
length of service, business unit and position; and


 


(b)                                 all
weekly paid Employees of AEP (Aust) as at 23 January 2005 with an accurate statement
of each Employee’s rate per hour, year-to-date earnings to 23 January 2005, length
of service, job description, award of employment agreement, union, location and
redundancy entitlement policy; and


 


(c)                                  all
monthly Employees of AEP (Aust) as at 23 January 2005 and an accurate statement
of each Employee’s length of service, job description, location and redundancy
entitlement policy.


 


6.2                                 There
are no outstanding Claims, nor have there been any Claims within the 12 months
preceding the date of this agreement, by or on behalf of any past or present
employee or contractor of the Business (or any person or entity representing
them) against either of the Vendors.


 


6.3                                 In
connection with the Business or the Employees, neither of the Vendors is
involved in (or has been involved in the two years preceding this agreement):


 


(a)                                  any
labour, industrial or trade dispute; or


 


(b)                                 any
dispute with a union or labour organisation,


 


which may disrupt the
Business or cause it to incur financial expenditure and, so far as the Vendors
are aware, there are no facts or circumstances which may give rise to any such
dispute.


 


6.4                                 Neither
of the Vendors has given a commitment (whether legally binding or not) to
increase or supplement the remuneration, annual leave (including leave
loading), long service leave, sick leave or any other compensation, gratuities
or benefits of any Employee.


 


6.5                                 The
Vendors have disclosed in writing to the Purchasers before the date of this
agreement all of the terms of employment which apply to the Employees,
including an accurate statement of each Employee’s length of service,
entitlement to remuneration, annual leave (including leave loading), long
service leave, sick leave, superannuation and any other compensation,
gratuities or benefits as at the date set out in the documents disclosing such
information included in the data room materials listed in Annexure B.


 


50





















 


6.6                                 The
Vendors are not in breach of any statute, regulation, individual or collective
employment agreement or industrial award applicable to any of the Employees.


 


Warranty 7 - Superannuation


 


7.1                                 In
Warranty 7, Superannuation Arrangement means
any fund, plan, scheme, agreement or arrangement under which superannuation
benefits, retirement benefits, life assurance benefits, death or disability
benefits, pensions, annuities or other allowances, gratuities or benefits are
or may be provided to or in respect of any present or former employees of
either of the Vendors or their respective dependants.


 


7.2                                 With
respect to the Funds, there are no outstanding or unpaid contributions by
either of the Vendors and each of the Vendors has complied with its obligations
to make superannuation contributions in respect of the Employees.


 


7.3                                 The
Funds are the only Superannuation Arrangements in operation in relation to the
Employees and to which the Vendors contribute or are obliged to contribute.


 


7.4                                 Superannuation
contributions are made by the Vendors on an accumulation basis (and not on a defined
benefit basis) and the rate of contribution does not exceed the statutory
guaranteed amount.


 


Warranty 8 - Intellectual
property


 


8.1                                 In
this Warranty, Owned IP means Vendor IP other
than the Intellectual Property Licences.


 


8.2                                 Schedule 9 contains a complete and accurate list of all
material Intellectual Property Rights owned or used by the Vendors in the Business.


 


8.3                                 No
Vendor nor any related body corporate of it has licensed, granted any rights in
respect of, assigned or otherwise dealt with any of the Owned IP to any person.


 


8.4                                 So
far as the Vendors are aware, the Vendors’ conduct of the Business (including
the use of the Vendor IP) has not and is not infringing the Intellectual
Property Rights of any other person, and so far as the Vendors are aware, no
person has infringed or is presently infringing any of the Owned IP.


 


8.5                                 Other
than the Intellectual Property Rights subject to the Intellectual Property
Licences, there are no Intellectual Property Rights used in the Business which
is owned by a person other than the Vendors.


 


Warranty 9 - Property


 


General


 


9.1                                 The
particulars of the Properties set out in Schedule 7 are
true and correct in all respects.


 


9.2                                 The
Properties are the only land and buildings owned, used or occupied by the
Vendors.


 


9.3                                 AEP
(Aust) has exclusive occupation and right of quiet enjoyment of each of the
Properties in Australia.


 


9.4                                 AEP
(NZ) has exclusive occupation and right of quiet enjoyment of each of the
Properties in New Zealand.


 


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9.5                                 No
notices have been received by either of the Vendors and there is no order,
declaration, report, recommendation or approved proposal of a public authority
or government department which would materially affect the use of any Property.


 


Leasehold Property


 


9.6                                 The
Due Diligence Material contains copies of all documents and terms of each
Property Lease (excluding the Chester Hill Lease). In relation to each Property
Lease:


 


(a)                                  the
Vendors are not in breach of any of the Property Leases;


 


(b)                                 neither
of the Vendors has received a notice of any breach of the Property Leases.


 


9.7                                 Each
of the specified Vendors has exclusive occupation and quiet enjoyment of the
relevant Property and has not granted any sublease, licence or exclusive shared
right to occupy or use any part of such Properties.


 


9.8                                 The
Property Leases:


 


(a)                                  are
valid and subsisting; and


 


(b)                                 have
not been amended or modified.


 


Environmental


 


9.9                                 The
Properties located in Australia are:


 


(a)                                  not
subject to any order or notice issued under any Environmental Law; and


 


(b)                                 not
the subject of any charge in favour of any relevant environmental protection
authority as security for the clean up or other costs under any relevant
Environmental Law.


 


9.10                           The
Properties located in New Zealand are not subject to any order or notice issued
under any Environmental Law.


 


Warranty 10 - Compliance with
laws


 


10.1                           The
Vendors have complied with all applicable laws (whether applicable to the
conduct of the Business, the Employees, the use of any Property or the Assets)
and the Vendors have not received notice of any contravention or allegation of
any contravention of any applicable law in connection with the Business.


 


10.2                           Each
of the Vendors:


 


(a)                                  has
complied with all Statutory Licences; and


 


(b)                                 has
not received any notice that any Statutory Licence will be revoked, suspended, modified
or will not be renewed.


 


10.3                           There
are no outstanding notices or orders of a Governmental Agency affecting the
Business and the Vendors are not aware of any circumstance which may result in
the imposition of any such notice or orders.


 


Warranty 11 - Stock


 


11.1                           All
Stock is:


 


(a)                                  in
the physical possession or control of one or other of the Vendors; and


 


(b)                                 located
on the Properties or on off-site storage; and


 


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(c)                                  fit
for the purpose for which it is used.


 


11.2                           The
level of Stock is sufficient to meet and is not materially surplus to the
requirements of the Business.


 


11.3                           As
far as the Vendors are aware, the Vendors have not sold any product prior to
the Completion Date that may result in a product liability or other claim under
the laws of the country in which the product was sold, other than product
returns in the ordinary course of business, which historically have not
exceeded 1% of sales in any twelve month period.


 


Warranty 12 - Tax


 


Any Tax payable in
respect of any Asset, including but not limited to each Business Contract, Key
Contract, Equipment Leases, Intellectual Property Licence and Property Lease
has been paid.


 


Warranty 13 - Litigation


 


13.1                           There
is no material Claim threatened in writing or, so far as the Vendors are aware
or pending against either Vendor.


 


13.2                           As
far as the Vendors are aware, there is no material fact, matter or circumstance
likely to give rise to any Claim against either Vendor.


 


13.3                           There
are not material unsatisfied or outstanding judgements, orders or awards
affecting either Vendor.


 


13.4                           No
Vendor is currently involved in any material legal proceedings.


 


Warranty 14 - Information


 


14.1                           All
information contained in the Due Diligence Materials and the Disclosure Letter
is accurate and not misleading in any material respect.


 


14.2                           As
far as the Vendors are aware, no Vendor has withheld from inclusion in the Due
Diligence Materials or the Disclosure Letter any fact or document which would
render the Due Diligence Materials or the Disclosure Letter inaccurate or
misleading in any material respect.


 


Warranty 15 - Authorisations


 


As far as the Vendors are
aware, other than the Statutory Licences listed in Schedule 10, no
authorisations are required to conduct the Business or to own, use, operate or
receive the benefit of the Business Assets or to conduct the Business on the
Properties.


 


Part B –
Guarantor Warranties


 


Title and Solvency


 


(a)                                  No:


 


(i)                                     meeting
has been convened, resolution proposed, petition presented or order made for
the winding up of the Guarantor;


 


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Signing page


 


 


	
  EXECUTED as an
  agreement.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Executed on
  behalf of AEP INDUSTRIES (AUSTRALIA) PTY
  LIMITED by its attorney Leigh Brown who confirms that the power of attorney has not been
  revoked in the presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
  /s/ Leigh Brown

  	
   

  
	
  Signature of witness

  	
   

  	
  Signature of attorney

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [ILLEGIBLE]

  	
   

  	
   

  	
  Leigh Brown

  	
   

  
	
  Name of witness (print)

  	
   

  	
  Name of attorney
  (print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Executed
  on behalf of AEP
  INDUSTRIES (NZ) LIMITED by
  its attorney Leigh Brown who confirms
  that the power of attorney has not been revoked in the presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
  /s/ Leigh Brown

  	
   

  
	
  Signature of witness

  	
   

  	
  Signature of attorney

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [ILLEGIBLE]

  	
   

  	
   

  	
  Leigh Brown

  	
   

  
	
  Name of witness (print)

  	
   

  	
  Name of attorney (print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Executed by FLEXIBLE
  PACKAGING OPERATIONS AUSTRALIA PTY LIMITED

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
  /s/ John Story

  	
   

  
	
  Signature of director

  	
   

  	
  Signature of director 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please delete as
  applicable)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [ILLEGIBLE]

  	
   

  	
   

  	
  John Story

  	
   

  
	
  Name of director
  (print)

  	
   

  	
  Name of director
  (print)

  



 





















 


	
  Executed
  by FLEXIBLE PACKAGING

  OPERATIONS NEW ZEALAND LIMITED

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
  /s/ John Story

  	
   

  
	
  Signature of director

  	
   

  	
  Signature of director 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please delete as
  applicable)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [ILLEGIBLE]

  	
   

  	
   

  	
  John Story

  	
   

  
	
  Name of director
  (print)

  	
   

  	
  Name of director
  (print)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Executed
  on behalf of AEP INDUSTRIES
  INC by its attorney Leigh Brown who confirms that the power of attorney has not been
  revoked in the presence of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ [ILLEGIBLE]

  	
   

  	
   

  	
  /s/ Leigh Brown

  	
   

  
	
  Signature of witness

  	
   

  	
  Signature of attorney

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [ILLEGIBLE]

  	
   

  	
   

  	
  Leigh Brown

  	
   

  
	
  Name of witness (print)

  	
   

  	
  Name of attorney
  (print)