ICC Model Mergers and Acquisitions Contract - Model Contract PDF

Introduction
ICC Model Mergers and A

Acquisitions
cquisitions Contr
Contract
act - 2004
page 7
Introduction
1. THE PRESENT MODEL
This model contract is the first of a series of models of international "Merger and Acquisition" (M&A)
agreements.
Broadly speaking, M&A agreements refer to the transfer of a company or a business and cover a variety
of contracts, such as:
The first model of these ICC M&A Agreements is a Share Purchase Agreement (SPA) in its simplest form,
i.e., the acquisition of the entire issued share capital of one company. It does consequently not consider
the acquisition of a majority shareholding (where a number of additional issues arise due to the fact that
the position of the minority shareholders must be considered), nor the case where a group of companies
is acquired (which also gives rise to further issues). It also does not consider the case where there is more
than one seller. These situations, which imply a number of further issues, have been left aside in the
context of a simplified model, but may be considered in future model contracts.
This model is made to assist parties and lawyers who are not specialized in the field of M&A contracts to
draft a simple contract covering the most common issues involved. This means that the model may not
be appropriate for complex transactions, nor for acquisitions of public companies.
2. THE DRAFTING TECHNIQUE USED
The structure and contents of SPA's are strongly influenced by the models and forms developed within
common law jurisdictions. This has caused the parties to use, independently from the law governing the
contract, clauses and concepts which belong to these common law legal systems.
page 8
One example of this is the reference to "Representations & Warranties". It is difficult to imagine a Share
Purchase Agreement without "Representations and Warranties". However, these two terms have no
precise meaning outside the common law jurisdictions and may be misleading even within these legal
systems 1. Parties expect them to be in a Share Purchase Agreement, but it should be clear that these two
"magic words" have actually acquired within this type of contract an autonomous meaning, independent
of the legal meanings of "representations" and "warranties" within specific national legal systems 2.
In this case the task Force has chosen to make use of these terms, although they may be misleading,
because it felt that it could not go against such a well-established usage. But, as a general rule, the Task
Force has tried not to use terms which are too specific to any particular legal system, in order to make
the model compatible, as far as possible, with all applicable legal systems.
2
This result is obtained mainly by expressly providing in the contract what the legal consequences of a breach of representations and
warranties are, so that it becomes less important to know how the representations and warranties should be qualified under the applicable
law and which would consequently be, under such law, the consequences of a breach.
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1
3. THE NEGO
NEGOTIA
TIATION
TION AND CONCLUSION OF SP
SPA
A’S: ORDER OF E
EVENTS
VENTS
Buying a company is a complex deal which almost always requires a number of successive steps, and all
the more so in a cross border transaction when the purchaser is not familiar with the legal and business
environment of the target company. Although the steps leading up to the conclusion of an SPA may
vary substantially from case to case, it is customary to initiate the process with preliminary agreements
such as confidentiality agreements, letters of intent, and various descriptions of negotiation agreements
such as term sheets or heads of agreement, with or without exclusivity provisions and other advisable
provisions such as time schedule, time and scope of due diligence investigations, confidentiality, break
fee arrangements, etc.
If the due diligence investigations are satisfactory for the purchaser and the negotiation of the terms
of the acquisition breaks through, the parties enter into the Share Purchase Agreement which, in many
cases, is organised in two steps, i.e. signature and completion. While it is simpler to wrap up the deal in
one step, there may be practical advantages to proceeding in two steps, especially when the jurisdiction
of the target company is unfamiliar.
The downside of a lengthy process is to delay the take-over of the target business, but varied transfer of
management, risks and responsibility provisions can be inserted in the SPA to provide for the variable
concerns of the parties in terms of time and risk.
Once the SPA is signed and completed, a number of post-completion steps may continue to involve
both parties, such as on the one hand formalities and on the other hand performance of post-closing
obligations, including payment of the price in instalments with or without the involvement of an escrow
agent and non-compete provisions with or without performance bonds.
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4. POSSIBLE ADJUS
ADJUSTMENT
TMENT OF THE PRICE: CLOSING A
ACCOUNTS
CCOUNTS AND EARN-OUTS
In some circumstances the buyer and seller may agree that the purchase price should be made subject to
an adjustment (either upwards or downwards) after closing. The two most common forms of adjustment
are known as closing accounts and earn-outs.
Closing accounts are most commonly used when there is uncertainty about the financial condition of the
company at the point in time when closing takes place, for example if there are no-up-to date financial
data concerning the company, or the available data are regarded as unreliable. For instance, it may be
that closing takes place eleven months after the last audited accounts of the company were prepared, or
the company may have undergone a reorganisation, as a consequence of which the proper value of its
assets at closing is not precisely known.
Closing accounts will involve an adjustment to the purchase price based on the net assets of the company
at closing.
Earn-outs on the other hand involve the possible payment of an additional price based on the results
arising out of various indicators over a given period. Earn-out adjustments are therefore particularly
appropriate in the case of businesses with a variable level of profitability, for example a newly
established company which is growing quickly, and which is being valued principally for its potential to
generate profit in a given period following closing.
If the parties agree that the price should be adjusted as a result of a closing accounts exercise, the sale
and purchase agreement will need to provide that either the buyer or the seller prepare a first draft
of the closing accounts (it should be clearly stated what this should involve, for example, a full balance
sheet prepared in accordance with generally accepted accounting principles on a basis consistent with

2
prior balance sheets, and the time requirements applicable in relation to the production of the first
draft closing accounts). The agreement should then provide that the other party review the draft closing
accounts (and that it should have access to the necessary accounting information and personnel required
for this purpose if necessary).
The agreement should also provide that the parties should seek to agree the closing accounts or seek
to resolve any disagreement in relation to them, but should provide that in the absence of agreement,
the matter should be settled by an expert (usually an independent accountant appointed jointly by
the parties, but in the absence of agreement as to the identity of the expert, the agreement should
provide that an independent party, for example the president for the time being of the relevant country's
professional association representing accountants appoint the expert).
Once the closing accounts are agreed or resolved by expert determination, the agreement should provide
for a formula pursuant to which a portion of the purchase
page 10
price be repaid to the buyer or an additional amount paid by the buyer to the seller. For example, if
the net assets exceed a pre-agreed target, then an additional sum equal to the excess should be payable
by the buyer. If a repayment of the purchase price from the seller to the buyer is likely, then the buyer
should consider whether it requires a retention (of part of the price) to be made or payment of a
portion of the purchase price to be made into a jointly held (or jointly held solicitors') account until the
adjustment to the purchase price has been determined.
Earn-out mechanisms operate on a similar basis, but the agreement should instead require a profit and
loss account to be prepared in respect of certain pre-agreed periods following Closing. A formula should
require the repayment of a portion of the purchase price or the payment of additional consideration by
the buyer in the event of target earn-out values being exceeded or not.
Closing accounts and perhaps even more so, earn-out mechanisms, are areas where very careful drafting
is required as there is a serious risk of dispute after closing.
The agreement should provide in detail which accounting policies and principles will apply to the closing
accounts or earn-outs. Although this is a matter for agreement between the buyer and seller, the most
commonly adopted formula is that the usual accounting policies and principles of the company (for
example as adopted in its last audited accounts) will apply, except to the extent that such policies and
principles are not in accordance with generally accepted accounting principles, and that if a certain
policy or principle is not expressly provided for in the company's last audited accounts, then the matter
will be determined by reference to generally accepted accounting principles.
In relation to earn-outs, there is an obvious risk that in the absence of any restrictions being expressly
stated in the agreement, the buyer, who has control of the company after closing, may take steps
after closing which (deliberately or otherwise) may affect the amount of the earn-out adjustment to be
paid. Accordingly, detailed earn-out provisions should be included in the sale and purchase agreement,
restricting the ability of the buyer to take any steps which might prejudice the calculation of the earn-
out.
5. THE NEGO
NEGOTIA
TIATION
TION OF THE P
PA
AYMENT CONDITIONS
The model provides for payment of the purchase price at the time of the closing of the transaction (see
article 6). The transfer is mechanically straightforward, but there are some issues which need to be
considered when negotiating this clause.
Under the model, the buyer would be unprotected if the seller could not or did not want to honour

3
any subsequent claims based on a breach of the warranties or an adjustment of the purchase price
as discussed above in §4. Therefore, a bank guarantee from the seller in an amount and for a term to
be agreed should be considered. The duration could be linked to the warranty period, and the amount
would take into account the likelihood and probable size of any warranty claims, although no exact
page 11
calculations are of course possible. In certain countries it is more usual to retain part of the purchase
price in an account with an escrow agent. In jurisdictions where this is not standard practice the
negotiation of an escrow agreement with a bank is often so time-consuming and expensive that a bank
guarantee is the less costly solution. In some countries it is also practice to deposit part of the purchase
price in a special bank account under the control of the buyer and the seller whereby the release of any
money to the buyer requires the express consent of the seller. If the consent is not granted, the buyer will
have to sue the seller. It is crucial for this arrangement to work that any judgement obtained be easily
enforceable.
Alternatively the purchase price could be paid in instalments whereby the unpaid portion serves as
collateral for any claims of the buyer, but then the seller might want to receive protection for its payment
claims by way of a bank guaranty given on behalf of the buyer.
6. W
WARRANTIES
ARRANTIES AND DISCLOSURE LETTER
One of the main issues of the Share Purchase Agreement is the exact definition of the warranties 3
given
by the seller.
This issue is of particular importance in this type of agreement: by purchasing the shares the buyer
acquires the company, but the nominal value of the shares as such does not reflect the actual value of
the company, which depends on a number of factors such as the value of its assets, goodwill, etc. 4. The
purpose of warranties is therefore to define the critical factors in relation to the business upon which
the buyer is prepared to offer the purchase price. Any breach of a warranty will therefore be related to
a reduction of the value of the target business and may in short financially result in a reduction of the
Purchase Price.
The buyer will of course obtain information about all relevant aspects of the company (see §7 below).
However, the buyer has no certainty that the information received is true and accurate and this is why
the seller will be asked to give a number of warranties as to the truth and completeness of certain
information received by the buyer for the purpose of valuing the Company.
In this context a contractual technique has been developed over the years whereby each warranty states
a positive guarantee (e.g., all the taxes have been paid, all assets belong to the company) and then
possible exceptions are disclosed by the seller to the buyer (e.g., there is a problem with the taxes of the
year 2000, or certain equipment belongs to a third party).
3
The term “warranties” has been chosen for sake of simplicity. In some jurisdictions one would discuss “representations and warranties”,
and in still other jurisdictions “guarantees” or the like. It is essential to note that each of these terms might have a slightly different meaning.
The legal consequences of a breach should be carefully checked under applicable law.
4
The legal principles which would apply in the absence of specific contractual clauses may be very different from one domestic law to the
other and are far from being foreseeable. It should be considered that most national laws have no specific rules for this particular type of
contract, which means that the courts will need to apply general rules regarding the sales contract. However, the application of the rules on
the seller’s responsibility for non-conformity (or defects or “vices”) of the goods sold may give rise to surprising results if applied to an SPA,
considering that the goods sold are in principle the shares (and not the Company). In some countries the courts have worked out solutions
which take into account the particularities of a share purchase agreement, but such solutions are often unpredictable and may be very
different from country to country. This is one of the main reasons why it is essential to solve these problems (warranties and consequences of
their breach) at a contractual level. Of course the contractual solution of these problems will be effective only to the extent it is in accordance
with mandatory rules of the applicable law (see paragraph 9 of the Introduction). However, it is much better to have workable contractual
rules (and then to check if such rules conform to the applicable law) than to leave these problems to the domestic law.

4
These exceptions to the warranties can be contained in a separate document, the "disclosure letter" or in
a document more strictly connected to the representations and warranties.
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In order to facilitate a comprehensive view of these aspects the Task Force has preferred to put the
exceptions to the warranties (contained in Schedule A) in a parallel document (Schedule B) which follows
the same order and numbering.
Furthermore, the two schedules have been placed for the convenience of the reader in parallel on the
same page, so that the warranties and their exceptions can be seen together. Of course, this does not
prevent the parties from drafting the actual schedules separately.
7. KNO
KNOWLEDGE
WLEDGE OF THE BUYER AND BREA
BREACHES
CHES OF W
WARRANTIES
ARRANTIES
It is obvious that the buyer will need information about the main aspects of the Company before
purchasing it and negotiating the price. This information can be gathered in different ways.
Particularly where a due diligence investigation has been made, a problem may arise as to how and to
what extent the information available to the buyer can affect the buyer's right to be compensated for
breach of warranty. It is recommended to expressly deal with this problem in the contract.
The two extreme solutions are the following:
a strict rule whereby only those exceptions to the warranties which are expressly stated in the contract
(or in the disclosure letter, if any) will limit the warranties. This means that even if the buyer was
perfectly aware of certain facts, which imply a breach of warranty by the seller, he can rely on the
warranty for the purpose of obtaining compensation, to the extent that these exceptions are not
expressly set out in the contract (or disclosure letter).
a rule whereby any information which the buyer knows about or should know about (because it was
disclosed to him in some way) limits the warranties given by the seller. This means that if the buyer
has been unable to see or to understand the impact of any information available to him, he will not be
protected by the warranties for any damage arising out of the facts to which such information refers.
The model contract proposes a solution along the lines of the first alternative: in principle all information
that is relevant for limiting a warranty must be disclosed in the contract (in Schedule B, which is made
for the purpose of containing such information). The seller bears in principle the risk for not having
disclosed within the contract certain facts as a consequence of which the buyer will be entitled to seek
damages for breach of warranty, even if the seller can prove that the buyer knew of
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such facts already by some other means (but he can avoid this by accurately drafting the contract and in
truly extreme cases he might be protected by the principle of good faith).
Relevant date for correctness of warr

warranties
anties 5
The next issue to be addressed in transactions where signing and closing take place at different dates
is the definition of the relevant date on which the warranties must be true and correct to avoid any
5
This is only relevant where there is a split signing and completion.

5
claims for breach. This issue is normally discussed intensively in negotiations in such transactions. As
mentioned above, the warranties are to define the factors critical to determine the purchase price and
the value of the underlying business. If the parties agree on the date of signing as the relevant date, any
deterioration of the business after the signing will not have an effect on, and not result in a reduction
of, the purchase price. As a consequence, because the full purchase price remains payable even if the
condition of the business deteriorates, the risks associated with the business will pass to the buyer before
the transfer of both title to the shares and control over the business. This may appear unfair to the buyer,
and laws in certain jurisdictions would even give the buyer the right to withhold the purchase price or,
in case of a drastic change, to walk away from the contract. The seller, however, will often argue that it
was willing to close at signing and that any delay in the transfer of title was exclusively caused by the
buyer, perhaps because of some outstanding permission or finance. With this argument, if successful,
the seller would justify the premature transfer of the risk to the buyer.
By contrast, if the closing date is the relevant date, the seller might find himself in a situation of
breach because of an unexpected event that happened between signing and closing. In order to avoid a
reduction of the purchase price, the seller might wish to have the right to amend any disclosures against
the warranties. This appears to be fair only at first glance, and the buyer would be totally unprotected
because it would still have to close at the terms of the purchase agreement. Taking into account the
function of the warranties in the purchase agreement, it would only be fair that any negative impact on
the value of the business after the signing and before closing should trigger a reduction in the purchase
price. If the parties agree therefore on the closing date as the relevant date, a compromise may be found
in permitting the seller to refuse closing if as a consequence of any breaches the effective purchase price
is reduced below a certain threshold.
In certain situations, the seller might also have to accept a material adverse change clause entitling the
buyer to walk away even if there has been no breach of warranty before Closing, due to a dramatically
negative development affecting the target business or the market it operates in. (See Article 5)
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“Best knowledge” and similar expressions
In the current practice certain warranties are preceded by the words "So far as the seller is aware" or
"To the best knowledge of the seller". Since these clauses seek to limit the liability of the seller through
the reference to a vague concept like the knowledge of certain facts, it has been decided to limit their
use to circumstances where, for example, certain actions are threatened against the seller as the seller
should not be asked to warrant that there are no threatened actions which it does not know about. The
use of these expressions is limited because the function of the warranty clauses is to define the factors
relevant for the value of the business, and it is obvious that there can be no link to subjective facts like
knowledge or potential knowledge of a seller. This does not prevent the seller from limiting its liability
within Schedule B, by stating why and to what extent he is unable to assume a certain responsibility.
However, there are situations where the parties would sometimes use such expressions of this type
more frequently, for example in the areas of environmental matters, compliance with laws, validity and
renewals of permits and authorizations, intellectual property. If used, they reflect the understanding of
the parties that they are not fully aware of the facts covered by the warranty and that the parties share
the resulting risk in some way, which will most likely also have had an effect on, and be reflected in, the
agreed purchase price.
8. APPLICABLE LA
LAW
W
When deciding about the applicable law, parties should consider several circumstances.
In the first place, it is certain that a number of issues strictly connected to the target company are

6
necessarily governed by the law of the country where the target company is incorporated: see, for
example, the questions relating to the formalities of the transfer of shares.
Considering that the law governing the company may be relevant for many aspects of the share purchase
agreement, parties may choose to submit also such contract to the law of the country of the target
company. This is actually the most commonly used solution and has therefore been expressly foreseen
in Article 18A.
It should however be considered that, since this model has been drafted independently of any particular
national law, with the purpose of establishing a truly international standard, parties will first need to
check if and to what extent this model contract conforms to the domestic law they wish to apply.
If it appears impossible (or too onerous) to determine the content of the rules which would apply under
the domestic law of the target company, or if such rules prove to be inappropriate, parties may decide to
choose one of the following alternatives.
page 15
another domestic law, such as the law of one of the parties or the law of a third country (e.g. Swiss law),
or
principles of law generally recognised in international trade as applicable to cross- border SPA contracts
(also called "lex mercatoria").
If parties choose the first solution, they will indicate the country chosen in Article 18A. In such case
they should check carefully whether any provisions of this model violate mandatory provisions of the
national law they have chosen 6.
The second solution has the advantage of being more appropriate for a contract like this model, which
reflects international contract practice without being based on a particular domestic law. This solution
makes it possible to apply the rules of the model form in a uniform way to sellers and buyers of different
countries, without giving one party the advantage, and the other party the disadvantage, of applying one
party 's national law.
At the same time this solution, while avoiding the particularities of national laws, gives a wider
discretionary power to the arbitrators, since it is based (at least for matters not expressly governed by
the contract clauses) on very general principles. It should also be considered that a reference to general
principles instead of a national law may not be effective if the dispute is brought before a national court:
such a solution almost necessarily implies that possible disputes be submitted to arbitration, by choosing
Article 17.2A (Arbitration).
The Task Force is of the opinion that the possible disadvantage resulting from the application of rather
flexible and general rules can be overcome by the use of a sufficiently detailed contract (which expressly
addresses most of the critical problems that might arise) together with a set of general rules on contracts,
like the Unidroit Principles of International Commercial Contracts 7, which offer a reasonably
foreseeable legal framework for most issues of a more general nature, normally not envisaged in the
contract itself.
This is actually the solution proposed in Article 18.1.B, which states that any questions not expressly or
implicitly settled by the provisions contained in the agreement shall be governed, in the following order:
6
In any case (even if no choice of a national law has been made) according to Article 15.2 the arbitrators may consider domestic mandatory
rules which would be applicable independently from the applicable law (the “lois de police”).
7
The text of the Unidroit Principles can be found in Appendix (page 57).

7
by the principles of law generally recognised in international trade as applicable to international
mergers and acquisitions contracts,
by the relevant trade usages, and
by the Unidroit Principles of International Commercial Contracts.
It should be taken into account that under the above clause, which puts the various sources incorporated
by reference in a hierarchical order (contract clauses, general principles, trade usages, Unidroit
Principles), the Unidroit Principles will apply only to the extent they do not conflict with general
principles and trade usages 8.
This also implies that, even when the Unidroit Principles provide that certain of its rules are mandatory,
such rules will not prevail over the contractual clauses, general principles or trade usages.
page 16
FOOTNOTES
8
This solution takes into account that a limited number of provisions of the Unidroit Principles may not actually reflect the expectations of
international trade. This may be the case with respect to certain rules which protect the disadvantaged party to an extent which goes beyond
the standards which are usual in the business to business relations: see for instance, Article 3.10 on gross disparity (particularly as concerns
the end of the sentence in para 1(a), where reference is made to “the improvidence, ignorance, inexperience or lack of bargaining skill” of
a party in order to justify contract avoidance) and the rules on hardship contained in Articles 6.2.1-6.2.3 (particularly with regard to the
rule authorising courts to modify the contract terms). In such cases general principles of law and trade usages will prevail over the Unidroit
Principles in case of conflict. Of course, parties may also expressly exclude the application of specific provisions of the Unidtroit Principles
they consider inappropriate.

8
Foreword
Acquisitions
cquisitions Contr
Contract
act - 2004
By Maria Livanos Cattaui, Secretary General of ICC
The ICC Model Share Purchase Agreement is the first in a series of model contracts dealing with "mergers
and acquisitions" (the transfer of a company or business). It is a share purchase agreement in its simplest
form, covering the acquisition of the entire issued share capital of one company.
The publication assists business people and lawyers who are not specialized in mergers and acquisitions
to draft a simple contract covering the most common issues involved. The flexibility of the contract
allows parties to adapt it to meet their specific requirements.
The publication follows extensive discussion within ICC's Commission on Commercial Practice, and
particularly involving the Task Force on Mergers and Acquisitions, chaired by Prof. Fabio Bortolotti
(Italy). Other task force members were: Mr Ercument Erdem (Turkey), Mr Thomas Gasteyer (Germany),
Mr Philippe Lamy (France), Mr Hakan Osvald (Sweden), Mr Dharmasinh Popat (India), Mr Fabio Regoli
(Italy), Mr Julian Smith (United Kingdom), Mr Jeremy Cunningham (United Kingdom), Ms Isabelle Smith
Monnerville (France), and Mr Jelle Timmenga (The Netherlands).
April 2004

1
Share Purchase A
Agreement
greement
Acquisitions
cquisitions Contr
Contract
act - 2004
page 17
AR
ARTICLE
TICLE 1 – DEFINITIONS
In this Agreement, unless the context otherwise requires:
"Accounts" means the financial statements 1

of the Company with reference to the[……… ] 2
financial
years.
"Accounts Date
Date" means the date of reference of the last approved financial statements 3.
"Agreement" means this agreement and its annexes and schedules.
"Claim" and "Claim notice" have the meaning indicated in Article 10.1.
"Closing
"Closing" means completion of the sale and purchase of the Shares by the performance by the parties of
their respective obligations under Article 6.
"Closing Date" means the date on which the Closing takes place in accordance with Article 6.1.
"Compan
"Company"
y" ("Target Company") has the meaning set out in Annex 1.
"Da
"Day"
y" means a calendar day.
"Encumbr
"Encumbrances"
ances" shall mean any claims, interest, option or pre-emption right or other rights of any
parties, charges, pledges, mortgages, special or general privileges, security, actions, liens, or
encumbrances and the like of whatever nature.
"Environmental Law" means all laws, regulations, directives, codes of practice, circulars, guidance notes
and the like concerning the protection of human health or the environment or the conditions of the
workplace or the generation, transportation, storage, treatment or disposal of dangerous substances.
"Environmental License" means any permit, licence, authorization, consent or other approval required
under or in relation to any Environmental Law.
"Event" has the meaning defined in Article 10.1.
"Intellectual Property Rights" mean any trademarks, service marks, trade and business names (including
internet domain names), rights in designs, patents, copyrights, moral rights and rights in know-how,
software and database rights and other intellectual property rights, as related to the Company, in each
case whether registered or unregistered and including applications for the grant of any of the foregoing
and all rights or forms of protection having equivalent or similar effects to any of the foregoing which
may subsist anywhere in the world.
"Losses" has the meaning defined in Article 9.1.
1
Verify which documents form the financial statements of the Company in the Company’s jurisdiction
2
Fill in the years that you wish to consider
3
This model contract assumes that no closing financial statements will be prepared after closing.

1
"Purchase
Purchase Price" has the meaning set out in Article 4.
"Shares
"Shares" means all the shares held by the Seller in the Company as referred to in Annex 2.
"W
"Warr
arranty"
anty" and "W
"Warr
arranties"
anties" mean those warranties given by the Seller to the Buyer and contained in
schedule A.
"W
"Warr
arranty
anty Breach
Breach"" means any claim for breach of a Warranty as referred to in Schedule A.
page 18
AR
ARTICLE
TICLE 2 – GOOD F
FAITH
AITH AND F
FAIR
AIR DEALING
2 . 1 In carrying out their obligations under this Agreement the parties will act in accordance with the
principles of good faith and fair dealing.
2 . 2 The provisions of this Agreement, as well as any statements made by the parties in connection with
this Agreement, shall be interpreted in accordance with the principles of good faith and fair dealing.
AR
ARTICLE
TICLE 3 – OBJECT OF THE A
AGREEMENT
GREEMENT
3.1 The object of this Agreement is to set out the terms including the conditions to and the timing of the
sale and purchase of the Shares.
3.2 The Seller hereby agrees to sell and the Buyer agrees to purchase the Shares for the price set out in
Article 4 free and clear of all Encumbrances. The Shares shall be transferred at Closing with the benefits
of all rights attached to them as at the date of this Agreement, including all rights to dividends.
AR
ARTICLE
TICLE 4 – PRICE
The purchase price amounts to[………….], which shall be paid in accordance with Article 6.2 4
.
AR
ARTICLE
TICLE 5 – CONDUCT OF BUSINESS, AND MA
MATERIAL
TERIAL AD
ADVERSE
VERSE CHANGE 5
5.1 As from the date of execution of this Agreement and until Closing, the Seller shall conduct the
business of the Company or cause the business of the Company to be conducted in the ordinary course.
5.2 As from the date of execution of this Agreement and until Closing, the Seller shall notify the Buyer
of any material adverse change in the business, operations, properties, prospects, assets or condition,
(financial or other) of the Company, or of any event, development or circumstance that may result in
such a material adverse change.
5 3 In the event of a material adverse change, the Buyer shall be excused from his obligations under this
Agreement without prejudice to available remedies in the event of the material adverse change being
4
See also Introduction, §4, for possible means of price adjustments like closing accounts and earn-outs. Check whether any applicable taxes
apply
5
Material adverse change clauses (MACs) are more and more frequently discussed in M & A transactions as a result of a changing
international environment. Their purpose is to allow the Buyer to escape a deal when a number of circumstances which have been
determined in more or less detail in advance materially change. They can also be a protection for the Seller against a recalcitrant Buyer.
Although not found as a rule in all transaction documents, their increasing frequency is the reason for their inclusion in this model form.
There is not a great amount of experience in the effect of so-called MAC clauses in practice. The court decisions rendered up to now in several
jurisdictions tend to adopt a rather restrictive view of their scope and to require an adverse change of very considerable significance to
allow the parties to walk away from a binding contractual agreement. This model agreement chooses to limit the excuse in the event of a
material adverse change to the Buyer, which is the most frequent hypothesis. It also does not go into any detail as to the definition of what the
acceptable adverse changes would be, but the parties should give particular regard not only to the specificities of the transaction and business
at hand but also to the evolution of practice and judge-made law in the relevant jurisdiction

2
the result of an action or omission on the part of the Seller 6.
5.4 The parties agree that material adverse changes are defined as those changes in the business,
operations, properties, prospects, assets or condition (financial or other) of the Company, of a nature to
fundamentally alter the economics of this Agreement.
page 19
AR
ARTICLE
TICLE 6 – CLOSING 7
6 1 Closing shall occur 8 at the offices of ] on (date)], provided the conditions referred to in Annex 3 have
been fulfilled and subject to Article 5.3. If the conditions for the Closing have not satisfied by that date
then each party can terminate the Agreement with written notice with immediate effect. The right of
termination does not prevent any party from claiming possible damages.
6 2 At Closing, payment of the Purchase Price shall occur against transfer of title of the Shares 9
.
6 3 Closing is the effective date of the transfer of the Shares 10

.
AR
ARTICLE
TICLE 7 – POS
POST-CLOSING
T-CLOSING UNDER
UNDERTTAKINGS
The Seller undertakes to the Buyer in the terms of Annex 4.
AR
ARTICLE
TICLE 8 – W
WARRANTIES
ARRANTIES
8.1 The Seller warrants to the Buyer that as at the date of this Agreement:
except as fairly and specifically disclosed in Schedule B, each of the statements set out in Schedule A is
true and accurate in all respects;
neither the Seller nor any of the Seller's agents has deliberately withheld any information from the Buyer
which would be material to a prudent buyer for evaluating the Company 11.
8 2 Each of the warranties set out in the several paragraphs of Schedule A is separate and independent
and, except as expressly provided to the contrary in this Agreement, is not limited:
by reference to any other paragraph of Schedule A; or
7
If transfer of the legal title to the shares will be perfected only after closing, a provision should be included whereby the Seller undertakes
not to dispose of the shares and not to use the rights connected to them after the closing. A possible example could be the following:“The
Seller hereby undertakes to the Buyer for so long as it remains the registered holder of any of the Shares afterClosing:1. not to dispose of
the Shares or any interest therein.2. not to transfer any of the Shares nor to offer any new shares to a third party;3. to refrain from any acts
or omissions, the purpose or effect of which is or might be the material dilution of the value of the Shares;4. not to pass any shareholders’
resolution in relation to the Company;5. not to dispose of any assets or rights of the Company;6. not to do any act whereby any person is
entitled or empowered to terminate any agreement, arrangement or License, the benefits of which are enjoyed by the Company.”
8
In some jurisdictions it is either legally required or customary that certain documents or items be delivered by one party to the other,
typically by the Seller to the Buyer. The Parties should carefully review the checklist provided in Annex 4. It is not an exhaustive list.
9
In some cases, e.g. if the capital of the company is not represented by share certificates, this solution may not be appropriate. The parties
should in any case check very carefully the formalities for the transfer of title under the law of the target company
10
Particular regard should be given to this clause in jurisdictions where (i) there can be a lapse in time between the transfer of legal and
beneficial ownership of the shares as seen in footnote 15 or where (ii) by the effect of legal provisions governing the effect in time of the
satisfaction of conditions precedent there could be a retroaction of the transfer of ownership of the shares to the date of the signature of the
contract. In those latter cases, article 6.3. should be complemented as follows: “The Parties agree that the fulfilment of the conditions referred
to in Annex 3 shall not cause their agreement to sell and purchase the Shares to retroact at the date of this Contract but that the transfer of
title to and risk relating to the Shares shall take place at the date of Closing
11
As the Buyer is free to ask for specific warranties the Seller might consider refusing such a catch-all clause, in particular if the Buyer had an
opportunity to conduct a due diligence examination. Also, it is not unusual to exclude any claims not expressly provided for in the Agreement

3
by anything in Schedule B which is not expressly referenced to the Warranty concerned 12
.
8 3 The right to damages and/or any other available remedy for breach of any of the warranties,
covenants and obligations in this Agreement will not be affected by any investigation conducted with
respect to, or any knowledge acquired (or capable of being acquired at any time, whether before or
after the execution and delivery of this Agreement or the Closing Date) with respect to the accuracy or
inaccuracy of or compliance with any such warranty, covenant or obligation.
AR
ARTICLE
TICLE 9 – SELLER
SELLER’S
’S LIABILITY FOR W
WARRANTY
ARRANTY BREA
BREACH
CH 13
9.1 The Seller shall be liable to the Buyer for any liability, loss, damage, cost, expense (including
reasonable attorney fees, and other reasonable legal and internal costs and expenses relating to a suit,
action or other proceedings) 14 (collectively "Losses") which the Buyer or the Company may incur or
suffer as a result of any Warranty Breach.

4
Annex 1: Compan
Companyy Information
Acquisitions
cquisitions Contr
Contract
act - 2004

1
Annex 2: Shares
Acquisitions
cquisitions Contr
Contract
act - 2004
FOOTNOTES

1
Annex 3: Pre-closing Items
Acquisitions
cquisitions Contr
Contract
act - 2004
page 31
This is list is only an example. Parties should check if further information is needed for exactly
identifying the Company.
1.ANTITR
1.ANTITRUS
UST
T MA
MATTERS
TTERS
Merger clearance by the competent antitrust authorities.
2.CONSENT OF ALL REGULA

REGULAT
TOR
ORY
YAAUTHORITIES
UTHORITIES CONCERNED
[Insert clearance by the competent antitrust authorities]
3.THIRD-P
3.THIRD-PAR
ARTIES
TIES CONDITIONS PRECEDENT
3.1 Resolution of any work council or any equivalent labour or employee representing body of the
Company, approving the transaction.
3.2 Waiver of any third party to terminate an agreement because of the change of control brought about
by this Agreement.
3.3 Confirmation of the most important customers of the Company that they will not end their business
relationship with the Company following the change of control brought about by this Agreement.
3.4 Waiver of any third party to exercise option rights, rights of first refusal or any equivalent right.
3.5 Letters of resignation in the agreed form, stating that the relevant persons have no claims against the
Company and waving their rights to any such claims
3.6 Written statement by[………] bank in respect of the release of the[……………..] charge dated[………. ]
granted to[ ] bank by the Company, in a form satisfactory to the Buyer.
3.7 Employment agreements with managers (names)[………..] in the agreed form duly executed
by[…………] and[………].
3.8 Evidence in the agreed form that all sums owed by the Seller to the Company or any of its related
companies have been repaid 2.
page 32
3.9 Evidence in the agreed form that all parent company guarantees given by the Seller in favour of the
Company have been released 3.
3.10 Releases in the agreed form releasing the Company and any of its related companies from all debts
and other liabilities which may be owing to the Seller or to[………… (other companies of the Seller's
2
If there is, e.g., a current account on the basis of daily trading, another mechanism should be applied.2
3
Consider a reasonable endeavours clause that all parent Company guarantees will be released and an indemnity by the Buyer in favour of
the Seller to the extent that they are not.

1
group)].
4.OBLIGA
4.OBLIGATIONS
TIONS OF THE P
PAR
ARTIES
TIES
Prepare delivery of the following documents:
4.1 Certificate of incorporation and changes of name certificates.
4.2 Constitutional document(s).
4.3 Certificate or extract from a public commercial register.
4.4 Share register/list of the present shareholders/statutory books/all internal registers.
4.5 Completion minutes of the board meeting in which the transaction has been approved by the
Company.
4.6 [List of all members of the relevant board(s)].
4.7 Minutes of meeting of the directors of the Seller in which the transaction has been approved.
4.8 Minutes of the meetings of the directors of the Buyer in which the transaction has been approved.
4.9 Financial statements as of[ ].
4.10 Financial and tax confirmatory due diligence report.
companies have been repaid.
and other liabilities which may be owing to the Seller or to [(other companies of the Seller 's group)]
4.13 Certificate or extract from a public land register.
4.14 Deeds concerning any rights or obligations with respect to land.
4.15 Deeds and documents of title to the Real Estates.
4.16 Legal opinions.
4.17 Certificate of the Seller and the Company certifying that each document delivered by the Seller and
the Company is correct, complete and in full force and effect.
FOOTNOTES

2
Annex 4: Checklist Of Documents And/or Items T
To
o Be Delivered At Closing
Acquisitions
cquisitions Contr
Contract
act - 2004
page 34
The events that are listed below should take place at or before closing. They may or may not be
“conditions precedent” in the strict legal meaning of the term: they may also cover cases where a party
undertakes to perform and obligation before closing. Parties should check which of these items are
relevant for their specific situation
1.ANTITR
1.ANTITRUS
UST
T MA
MATTERS
TTERS
Merger clearance by the following antitrust authorities:
.........................................................................
.........................................................................
2.CONSENT OF ALL REGULA

REGULAT
TOR
ORY
YAAUTHORITIES
UTHORITIES CONCERNED
(e.g. stock exchange, foreign investment)
................................... (authority) ................................... (type of clearance)
................................... (authority) ................................... (type of clearance)
3. CORPORA
CORPORATE
TE MA
MATTERS
TTERS
3.1 Resolutions of the competent corporate body (i.e. management and/or supervisory board) of the
Company approving the transaction.
3.2 Resolutions of the competent corporate body (i.e. management and/or supervisory board) of the
Seller approving the transaction.
3.3 Duly executed transfers into the name of the Buyer or its nominee in respect of all of the Shares
together with the relevant share certificates in respect of the Shares, or any other suitable evidence
showing the title to the Shares.
3.4 Certificates of incorporation, common seal, share register and share certificate book (with any
unissued share certificates) and all minute books and other statutory books (accurately written up to
reflect the position immediately prior to Closing) of the Company 1.
4. THIRD-P
THIRD-PAR
ARTIES
TIES CONDITIONS PRECEDENT
4.1 Resolution of the work council or an equivalent labour- or employee-representing body of the
Company, approving the transaction.
page 35
1
N.B.: Article 3.3 and 3.4 are based on an Anglo-Saxon model. They would not be fit for, e.g., a Dutch transaction.

1
4.2 Waiver of any third party to terminate an agreement because of the change of control.
4.3 Confirmation of the most important customers of the Company that they will not end their business
relationship with the Company after the change of control.
4.4 Waiver of any third party to exercise option rights, rights of first refusal or any equivalent right.
4.5 Letters of resignation in the agreed form, stating that the relevant persons have no claims against the
Company and waiving any such claims:
4.6Written statement by] bank in respect of the release of the[ ………….] charge dated[………….] granted
to[ ] bank by the Company, in a form satisfactory to the Buyer(see clause 4.3.3 of the model contract)
4.7 Employment agreements with managers [(names)…………..] in the agreed form duly executed by]
and[………..].
5.OBLIGA
5.OBLIGATIONS
TIONS OF THE P
PAR
ARTIES
TIES
Prepare delivery of the following documents:
5.1 Certificate of incorporation and changes of name certificates.
5.2 Articles of association and Memorandum of Association constitutional documents] 3.
5.3 Certificate or extract from a public commercial register.
5.4 Share register/list of the present shareholders/statutory books/all internal registers.
5.5 Completion minutes of the board meeting in which the transaction has been approved by the
Company.
5.6 [List of all members of the supervisory board].
5.7 [List of all members of the management board] 4

.
5.8 Minutes of the meeting of the directors of the Seller in which the transaction has been approved.
5.9 Minutes of the meetings of the directors of the Buyer in which the transaction has been approved.
page 36
5.10 Financial statements as of[……….]
5.11 Financial and tax confirmatory due diligence report.
companies have been repaid.
and other liabilities which may be owing to the Seller or to[…………..(other companies of the Seller's
3
Companies incorporated in England and Wales have two constitutional documents. The articles of association govern the internal workings
of the Company between it and its shareholders, and the memorandum of association shows externally what the Company is and is not
empowered to do.
4
Companies incorporated in England and Wales only have one management board, its board of directors. A list of a company’s directors can
be obtained from an up-to-date company search.

2
group)].
5.14 Certificate or extract from a public land register.
5.15 Deeds concerning any rights or obligations with respect to land.
5.16 Deeds and documents of title to the Real Estates.
FOOTNOTES

3
Schedules
Acquisitions
cquisitions Contr
Contract
act - 2004
page 37
SCHEDULE A
REPRESENTATIONS AND WARRANTIES
Although the model form is intended to be a simplified “short form”, this Schedule A has been drafted
with the purpose reaching a sufficient degree of completeness. Some clauses may seem unnecessary or
too detailed for a smaller deal, but it has been thought that it was better to give an extensive view of all
(or most) problems the parties may have to face, also considering that clauses which are not needed can
be easily deleted.
All warranties and representations are subject to the exceptions and qualifications set forth in Schedule
B. Such Schedule will follow the same numbering (e.g.an exception to warranty A.3.2 regarding
accounting principles and practices will be under B.3.2).
Considering the strict link between the two schedules, it has been preferred to work out a system where
all exceptions and limitations to the warranties would be put as far as possible in Schedule B.
The ICC Task Force has tried to avoid wordings like “So far as the Seller is aware” or “To the best
knowledge of the Seller”. If the Seller feels that he must limit his responsibility with respect to matters
which are not totally under his control or with respect to which he has no precise information, he can
better do so by putting limitations and exceptions in the corresponding clause of Schedule B. This will
oblige the parties to define more precisely the extent of their respective rights and duties.
SCHEDULE B
EXCEPTIONS AND QUALIFICATIONS TO THE REPRESENTATIONS AND WARRANTIES
This Schedule has to be filled in case by case according to the situations of every specific deal.
The explanations and examples given here- after are of course non-exhaustive, but have only the
purpose of helping the user to focus on the main issues.
In Schedule B the Task Force has tried to give some explanations which may help the parties to better
understand the various warranties and the matters to check in order to correctly draft possible
exceptions or qualifications restricting the corresponding warranty.
Since the list hereunder covers all warranties under Schedule A, parties should delete the paragraphs
that are not needed and/or insert other items that have not been set out in the list hereunder.
page 38
SCHEDULE A (continued)
REPRESENTATIONS AND WARRANTIES
A.1 The Compan

Companyy

1
A.1.1
The facts stated in Annex 1 (Company Information) are correct.
A.1.2
The Company is validly existing and incorporated under the laws of [ ]. The Company is not insolvent and
is capable of paying its debts and no action has been brought or threatened so as to have the Company
declared insolvent or subjected to any insolvency, moratorium or other procedure involving a collective
treatment of creditors, nor are there any circumstances which exist which may cause the Company to
become insolvent or incapable of paying its debts.
A.1.3
The Seller has set out in B.1.3 true and accurate copies of the constitutional documents of the Company
incorporating all amendments made up to and including the date hereof.
A.1.4
The register of shareholders of the Company contains a true and accurate record of the current
shareholders and all former shareholders of the Company and their holdings of shares in the capital of
the Company.
A.1.5
All Encumbrances by or in favour of the Company have been registered in accordance with the
provisions of the relevant legislation.
A.1.6
All returns, particulars, resolutions and other documents required by the applicable laws to be filed with
or delivered to any official body by the Company have been properly prepared and so filed or delivered
in all material respect.
A.1.7
All the accounts, books, ledgers and financial and other records of the Company are held or stored in
means which are under the exclusive ownership and control of the Company and have at all times been
properly and accurately kept and completed in all material respects, record all matters required to be
entered therein by law, do not contain or reflect any material inaccuracies or discrepancies and give and
reflect a true and fair view of the financial, contractual and trading position of the Company.
SCHEDULE B (continued)
EXCEPTIONS AND QUALIFICATIONS TO THE REPRESENTATIONS AND WARRANTIES
B.1.1
Verify that all Company Information contained in Annex1 is correct and updated and conforms to the
information contained in public registers.
B.1.2
Verify that the Company is not de facto under liquidation due to circumstances as capital impairment,
government prohibitions to exercise its activity, etc.
B.1.3

2
Attach list made according to A.23.1
B.1.4
Verify compliance with A.1.4 1
B.1.5
Verify compliance with A.1.5 and list possible exceptions.
B.1.6
Verify compliance with A.1.6 and list possible exceptions.
page 39
A.2 The Shares
A.2.1
The Shares constitute the whole of the issued and outstanding share capital of the Company and are fully
paid.
A.2.2
No person is entitled or has claimed to be entitled to require the Company to issue any share or loan
capital either now or at any future date whether contingently or not.
A.2.3
There is no option, right of pre-emption, requirement for prior shareholder consent 2, right to acquire,
mortgage, charge, pledge, lien or other form of security or encumbrance on, over or affecting any of the
Shares, nor is there any commitment to give or create any of the foregoing, and no person has claimed
to be entitled to any of the foregoing.
A.2.4
The Seller is the full legal and beneficial owner of the shares and is entitled to sell and procure the
transfer of the full legal and beneficial ownership in the Shares to the Buyer on the terms set out in this
agreement.
A.2.5
The Company has not at any time:
repaid, redeemed or purchased any shares of any class of its share capital or otherwise reduced its issued
share capital; or
directly or indirectly provided any illegal financial assistance for the purpose of the acquisition of shares
of the Company or any holding company of the Company or for the purpose of reducing or discharging
any liability incurred in any such acquisition.
1
A seller may be reluctant to give this warranty in respect of all “former members” especially if it bought the company from someone else.
2
Verify whether or not the corporate documents provide for a prior shareholder consent

3
B.2.1
Verify that the share capital has been fully paid in. Verify the structure of the share capital under the
relevant jurisdiction. There is jurisdiction where there is no difference between issued and authorised
share capital.
B.2.2
Verify that the Company has issued no bonds or other instruments. Verify there are no share warrants
or bearer shares in existence.
B.2.3
Check the bylaws of the Company, agreements of the shareholder or the Company with third parties or
specific provisions of law (succession rights, mandatory pre– emption rights, etc.).
B.2.4
In addition to the circumstances described above, verify the share certificates, their endorsements, the
share register, the entries with the public registers, the adoption of possible resolutions from either the
shareholders’ meeting or the board of directors, voting rights.
B.2.5
Verify compliance with A.2.5
A.3 The Seller
A.3.1
The Seller has full power and capacity to enter into and perform this Agreement.
A.3.2
This Agreement does not constitute a breach on the part of the Seller in relation to any agreement or
commitment with a third party.
No consent, approval or filing with any governmental or other authority relating exclusively to the Seller
is required to authorise this Agreement or to permit the transactions contemplated herein.
B.3.1
Verify that no personal or family circumstances may affect the right to sell of the Seller (e.g. marital
status).
B.3.2
Ensure that the signature of this Agreement may not give rise to a claim by a third party against the
buyer for having caused the seller to breach previous commitments.
page 40
A.4 A
Accounts
ccounts
A.4.1

4
The Accounts comply in all material respects with all applicable laws and regulations.
A.4.2
The Accounts comply with and have at all times been prepared in accordance with the generally
accepted accounting principles and practices in the country where the Company is incorporated.
A.4.3
The accounting principles and practices (including methods of valuation) adopted for the Accounts and
all items therein are the same as those adopted in preparing the audited accounts of the Company for its
three preceding accounting reference periods.
A.4.4
The Accounts give a true and fair view of the assets and liabilities as at the Accounts Date, and of the
profits and losses throughout the financial period to which the Accounts relate 3.
B.4.2
Verify compliance with A.4.2. Verify whether the accounting principles adopted by the Company may be
considered as “generally accepted accounting principles and practices”. Verify that the accounts comply
with such principles.
B.4.4
Verify compliance with A.4.4.
A.5 Position since the A

Accounts
ccounts Date 4
A.5.1
Since the Accounts Date:
the Company has conducted its business in a normal and proper manner;
the Company has not entered into any unusual contract or commitment or otherwise departed from its
normal course of trading;
there has been no material deterioration in the order intake the order backlog, cash position including
working capital, or work in progress;
the Company has paid its creditors within the times agreed with them and in particular, without limiting
the foregoing, no debt owed by the Company has been outstanding for more than [ ] days from the date
of invoice;
save in the ordinary course of business, the Company has not given any Guarantee or indemnity or
entered into a contract or suretyship or agreement for the postponement of debt (or security therefore)
or for lien or set-off; and
the Company is not in default under the terms of any borrowing made by it.
B.5.1
3
Consider a similar warranty in relation to previous audited accounts of the Company
4
If a significant period of time has elapsed since the date of the last audited account, then consider an appropriate warranty in relation to the
management account or financial statements since that date

5
Verify compliance with A.5.1. Particular attention must be paid to possible new businesses undertaken,
and to agreements having a lower profitability entered into to maintain the level of turnover or to gather
new customers or to keep trading positions.
page 41
A.5.2
Since the Accounts Date, the Company has not:
agreed to acquire or sell any business; or
disposed of any of its assets except in the ordinary and normal course of business; or
incurred any capital commitment in excess of […………]
A.5.3
All payments, receipts and invoices of the Company since the Accounts Date have been accurately
recorded in the books of the Company in all material respects.
A.5.4
The Company since the Accounts Date has not declared, made or paid any dividends or other distribution
except as provided in the Accounts 5.
B.5.3
A.6 Receivables
A.6.1
All receivables have arisen from ordinary transactions and will be collected at their relevant payment
terms in the ordinary course of collection.
A.6.2
The Company has not factored or discounted any of its receivables.
A.6.3
The company is not owed any individual sum of money in excess of […………..] other than in the ordinary
course of business.
B.6.1
Verify the status of collection of receivables also with reference to the adequacy of the provisions for bad
and doubtful debts included in the Accounts.
B.6.2
5
If the Company being sold holds a lot of stocks, it could be worth putting in a warranty that stock has not materially changed.

6
B.6.3
A.7 T
Taxes
axes
A.7.1
All taxation of any nature whatsoever for which the Company has been liable or for which the Company
has been liable to account has been duly paid (insofar as such taxation ought to have been paid) and/
or adequate provisions and accruals have been accounted for. Without prejudice to the generality of the
foregoing, the Company has made all such deductions, withholdings and retentions as it was obliged or
entitled to make and all such payments as should have been made.
All necessary information, notices, accounts, statements, reports, computations, assessments and returns
which ought to have been made or given have been properly and duly submitted by the Company to the
competent authorities and all information, notices, computations, assessments and returns submitted by
the Company have been and are true and accurate in all material respects and are not the subject of any
material dispute, nor are likely to become the subject of any material dispute with such authorities.
B.7.1
page 42
A.7.2
The Company has not within the past 24 months received any notice of enquiry or suffered any enquiry,
investigation, audit or visit by the relevant tax authorities, and neither the Seller nor the Company is
aware of any such enquiry, investigation, audit or visit planned for the next 12 months.
A.7.3
The provision or reserve for tax in the Accounts is sufficient to cover all liabilities of the Company for tax
as at the Accounts Date and all tax for which the Company may after the Accounts Date become or have
become liable in respect of or by reference to:
any income profits or gains for any period which ended on or before the Accounts Date; or
any distributions made on or before the Accounts Date or provided for in the Accounts; or
any event occurring on or before the Accounts Date.
A.7.4
Full potential provision has been made and shown (or disclosed by way of note) in the Accounts for
deferred taxation.
A.7.5
The Company has not in the period of three years ending on the date of this Agreement been party to any
non- arm’s length transaction.

7
B.7.2
B.7.3
B.7.4
B.7.5
A.8 Subsidiaries
A.8.1
The Company:
has never had any subsidiary;
has not since its incorporation been a subsidiary of any company; and
holds no shares in the capital of any other company.
B.8.1
Verify compliance with B.8.1 and list possible exceptions.
A.9 Real Estates
A.9.1
The Company legitimately owns or uses the Real Estates, which are listed hereunder [fill in as
appropriate], is the legal and beneficial owner or occupier in possession of each of the Real Estates and is
in exclusive occupation of any of them. There are no circumstances that may prevent the Company, upon
Closing, from owning and using the Real Estates as they currently are. All Real Estates that are owned by
the Company are free of any Encumbrances.
B.9.1
Verify the title of each Real Estate, the absence of third parties’ rights, whether or not resulting from
public registries. Verify that there are no encumbrances, also with reference to possible rights claimed
by the tax authorities (e.g. due to succession). Verify that there are no limitations to the possibility for a
company owned by a foreign entity to maintain property on lands and buildings.
page 43
A.9.2
The Company has not received any notice or order affecting any Real Estates or their relevant use nor
is it aware of any circumstance which might form the basis for any such notice or order. There are no
proposals on the part of any authority which would adversely affect any Real Estates including, without

8
limitation, those relating to compulsory purchase or public utility works.
A.9.3
All Real Estates which are leased or licensed by the Company are held on the basis of validly and existing
agreements and there are no circumstances under which any such agreements may be terminated
before their term or declared null and void. The Company has always timely made all payments due
under the relevant agreements.
A.9.4
The Company has obtained all necessary permits, licenses and authorisations to use the Real Estates 6
as
they currently are. The Real Estates fully comply with all zoning or planning rules and regulations.
A.9.5
The Company does not use or occupy or have any interest in any land and/or buildings other than the
Real Estates.
B.9.2
B.9.3
Verify compliance with A.9.3. In particular, verify that the lease agreements do not provide for
termination clauses in case of change in control of the Company.
B.9.4
B.9.5
A.10Environmental Matters
A.10.1
The Company:
complies and has at all relevant times complied with all Environmental Laws and Environmental
Licences 7;
has obtained and maintained in full force and effect all Environmental Licences, and there are no
conditions, facts or circumstances which could endanger the continuance or renewal of such
Environmental License.
A.10.2
No claim in relation to environmental matters has been made in writing or so far as the Seller is aware
6
The parties should consider whether it would be appropriate to include specific warranties related to the physical conditions of the Real
Estates
7
This Warranty may be appropriate in some circumstances. However, the parties may agree to delete this warranty and to rely on an
environmental survey commissioned by the Buyer or Seller, especially if there are “dirty” sites involved.

9
threatened against the Company or any occupier of any property at any time owned or leased by the
Company.
page 44
A.10.3
There are attached details (including, where appropriate copies of relevant reports or other documents)
of any investigations, or analyses in relation to environmental matters relating to the Company or any
property now or previously owned, leased or occupied by the Company which are in the possession or
come to the notice of the Seller.
A.10.4
The company has complied with all its obligations with mandatory to required inspections, studies,
audits, tests, reviews, etc.
A.10.5
There are attached in B.10.5, a list of all Environmental Licences, orders, notices and reports and any
other materials, written communications relating to or in connection with any Environmental Licence.
A10.6
None of the Real Estates have been contaminated by any hazardous substance in breach of applicable
Environmental Law.
B.10.1
Verify compliance with A.10.1. Due to the possible difficulties in attributing the responsibility for actions
having an impact on these warranties, the parties will have to determine who will bear the risk of events
whose causes may not be clearly assessed. The parties may for example fix a special threshold for the
liability of the seller. They may also appoint an independent expert for analysing the environmental
conditions and determining the remedy costs: closing could then be conditional on the remedy cost not
exceeding a certain amount or on the Seller’s obligation to bear the difference.
B.10.2
B.10.3
Verify compliance with A.10.3. This clause has of course a considerable impact on the actions that the
parties may take within the framework of B.10.1.
B.10.4
B.10.5
B.10.6

10
A.11 Assets
A.11.1
The Company owns all the assets reflected in the Accounts, free and clear from any Encumbrance or
right of any third party.
A.11.2
All tangible assets used in connection with the business of the Company belong to or are legitimately
used by the Company and are in the possession and under the control of the Company.
A.11.3
All tangible assets used in connection with the business of the Company are free from any option,
lease, hire or hire purchase agreement, agreement for payment on deferred terms or Encumbrances
whatsoever and there are no agreements or arrangements restricting the freedom of the Company to use
or dispose of the same as it thinks fit.
A.11.4
All tangible assets with a book value in excess of [(amount) ] of the Company are in reasonable condition
given fair wear and tear 8. They comply with all environmental, safety, health and any other applicable
rules and regulations concerning their use and maintenance.
A.11.5
The assets, whether tangible or intangible, owned and lawfully used by the Company comprise all the
assets necessary to continue to operate the business of the Company in the same manner and to the same
extent as the operation of the business of the Company immediately prior to Closing.
B.11.1
Fill in as appropriate. Verify compliance with A.11.1.
B.11.2
Verify that no assets of the Company are at third parties’ premises, in which event the regular keeping of
appropriate ledgers should be verified.
B.11.3
Verify compliance with A.11.3 and provide a list of all the assets that are used by the Company under
lease agreements or other agreements. In addition verify that no securities have been granted on the
assets owned or used by the Company.
B.11.4
Verify compliance with A.11.4. This clause is connected with other warranties in relation to
environmental matters, health and safety at work and labour matters. The parties should therefore
check the consistency between the different warranties.
page 45
8
It may be sensible to delete the first sentence of A.11.4, for example if the business carried on by the Company is manufacturing it could be
industry practice to run certain equipment down to the ground.

11
B.11.5
A.12 Insur
Insurance
ance
A.12.1
All the assets and undertaking of the Company of an insurable nature are and have at all times been
insured in amounts representing their full replacement or reinstatement value against risks normally
insured against by persons carrying on the same classes of business as those carried on by the Company,
and the Company is now and has at all times been adequately covered against accident, damage, injury,
third-party loss, product liability, warranty claims, loss of profits and other risks normally covered by
insurance by persons carrying on the same classes of business as those carried on by the Company.
A.12.2
Summary particulars of all insurances maintained by the Company and details of all insurance claims
outstanding and which have been made within 12 months prior to Closing are set out in B.12.1.
A.12.3
All insurances maintained by the Company are and have at all relevant times been in force and no claims
have been made by the Company against its insurers or are contemplated or outstanding.
A.12.4
All insurance premiums in respect of all insurances maintained by the Company are fully paid and up-to-
date.
B.12.1
Verify compliance with A.12.1. In particular the seller must consider on the basis of the activity carried
output by the Company, and the risks that are of an insurable nature, and check whether these have been
adequately covered.
B.12.2
Attach list made according to A.12.2.
B.12.3
Verify compliance with A.12.3 and list all possible claims made on the insurers or other relevant matters
regarding A.12.3.
A.13Bank A
Accounts
ccounts
A.13.1
The Seller has set out in B.13.1 full details of all of the Company’s investment, deposit and bank accounts
and details of the banks and other financial institutions at which they are kept.
A.13.2
Seller has set out in B.13.2 full details of all overdraft,loan and other financial facilities available to the
Company and no person who provides any of those facilities has given any indication that they are
considering withdrawing or altering any of such facilities.

12
page 46
A.13.3
Neither the Seller nor the Company has done or omitted to do anything whereby the continuance of the
facilities referred to in B.13.2 above may be prejudiced or affected.
A.13.4
The Seller has set out in B.13.4 full details of all outstanding borrowings and other indebtedness of the
Company other than amounts owed to trade creditors.
A.13.5
There are no unpresented cheques drawn by the Company otherwise than in the normal course of
dealing.
A.13.6
The financial position of the Company as at three days preceding the date of this Agreement reflects the
existence of immediately disposable cash and items disposable at short term as follows:
Credit balance with banks: […]
Term deposit: […]
Cash accounts: […]
Short-term receivables: […]
Such amounts of cash or disposable items have not been modified other than as required in the ordinary
course of business since that date.
A.13.7
The Company, its directors, employees and agents have at all times complied with all material terms and
conducted business in accordance with all material requirements laid down by the banks and any other
sources of finance used by the Company (see A.14.2).
B.13.1
B.13.2
Attach list made according to A.13.2 and list possible exceptions.
B.13.3
Verify compliance with A.13.3 and list all possible claims made on the insurers or other relevant matters
regarding A.13.3.
B.13.4
Attach list made according to A.13.4 and list possible exceptions.

13
B.13.5
B.13.6
B.13.7
A.14Conduct of Business, Commercial Contr

Contracts
acts and Joint V
Ventures
entures
A.14.1
The Company is not a party to:
any agreements or arrangements (whether executed or executory) entered into by the Company
otherwise than by way of bargain at arm’s length or otherwise than in the ordinary course of business;
or
any contracts or transactions which involve obligations of an unusual, onerous or long-term nature.
A.14.2
The Seller has set out under B.14.2 full details of all powers of attorney given by the Company or any
other authority (express or implied) by which any person may enter into any contract or commitment on
behalf of the Company. There are no powers of attorney other than those listed thereunder.
page 47
A.14.3
The Company has never been and is not party to any joint venture, consortium or partnership agreement
or a member of any unincorporated association.
A.14.4
The Company is not in material breach of any arrangement or contract to which it is a party. No event
or omission has occurred which would entitle any third party to terminate prematurely any contract to
which the Company is a party or call in any money before the date on which payment thereof would
normally be due.
A.14.5
There is no claim against and there are no circumstances which may lead to a claim against the
Company for defective products, services, or breach of representation, warranty, condition, or for delays
in delivery, or completion of contracts, or for deficiencies of design or performance relating to liability
for products or services sold or supplied by the Company.
A.14.6
After Closing whether by reason of an existing agreement or arrangement or as a result of the acquisition
of the Shares by the Buyer or otherwise:

14
no material supplier of the Company will cease or be entitled to cease supplying the Company or
substantially to reduce its supplies to the Company;
no material customer, supplier or other third party with whom the Company deals will cease or be
entitled to cease to deal with the Company or substantially to reduce its existing level of business with
the Company;
no other contracts where the Company is a party to may be terminated by the other party.
A.14.7
Not more than 20 per cent in value of purchases by the Company are placed in any year with any one
supplier and not more than 20 per cent in value of sales by the Company are made in any year to any
one customer 10.
A.14.8
The Company’s stock and stock-in-trade is currently at a normal level, and is capable of being sold by the
Company in the ordinary course of its business. Slow- moving or obsolete items have been adequately
devaluated.
A.14.9
The Company has sufficient working capital for the purposes of continuing to carry on its business in
its present form and at its present level of turnover for the foreseeable future and for the purposes of
executing, carrying out and fulfilling in accordance with their terms all orders, projects and contractual
obligations which have been placed with or undertaken by it.
A.14.10
The Company has obtained all licences, permits and permissions required for the carrying on of its
business and such licences and permissions are in full force and effect and there are no conditions, facts
or circumstances which could endanger the continuance or renewal of such licences or permissions.
A.14.11
The Company has no branch, place of business or substantial assets outside the Company’s country of
registration or any permanent establishment in any foreign country that may give rise to taxation of
income or property of the Company in such foreign country or subject to regulatory supervision.
A.14.12
The Company has not given any gifts, bribes or inducements to any person during the period of one year
prior to the date hereof.
A.14.13
All material details and copies of contracts for all sources of current revenue of the Company in excess
of [ ] per annum are attached at B.14.13.
B.14.1
Verify compliance with A.14.1 and indicate possible exceptions.
10
The percentages in this Warranty will depend on the type of business.

15
B.14.2
B.14.3
Verify compliance with A.14.3 and indicate possible exceptions 9.
B.14.4
B.14.5
B.14.6
Verify compliance with A.14.7. Check in particular contracts with major suppliers and customers and
other contracts, for instance, agency, distributorship, licenses, etc.
B.14.7
B.14.8
Verify compliance with A.14.8 and check whether the Company has adopted consistent criteria in view
of depreciating slow-moving or obsolete items. The parties should agree on the accounting treatment of
slow- moving and obsolete stock.
B.14.9
page 48
B.14.10
B.14.11
B.14.12
B.14.13
A.15A
A.15Agency
gency and Distribution A
Agreements
greements
9
All clubs and trade associations need to be disclosed..

16
A.15.1
The Seller has set out in B.15.1 full details (including the relevant contracts, if made in writing) of all
commercial agency, distributorship, occasional intermediaries and other similar contracts.
A.15.2
The Company has complied in all material respects at all times with all obligations arising out of the
above agreements and any relevant provisions of the applicable law.
B.15.1
Attach list made according to A.15.1 with annexed the relevant contracts.
In this context parties should decide if the above contracts should continue or if they should be
terminated by the Company (e.g. if the buyer has an existing distribution network) and, in the latter case,
who should bear the respective costs. In this case, the parties should also check if the agreements contain
post-contractual non-competition obligations for the agent/distributor.
B.15.2
A.16 Personnel
A.16.1
The Company has in relation to each of its employees, managers and directors (and, so far as relevant, to
each of its former employees, managers and directors) complied with:
page 49
obligations imposed on it by all statutes, regulations, codes of conduct and practice relevant to the
relations between it and its employees, managers and directors (including without limitation any
obligation concerning social security, data protection, health and safety) or any trade union or employee
representatives;
all collective agreements, recognition agreements, customs and practices for the time being dealing with
such relations or the conditions of service of its employees; and
all relevant orders and awards made under any relevant statute, regulation or code of conduct and
practice affecting the conditions of service of its employees, managers and directors.
A.16.2
Full and accurate particulars 11 of the terms and conditions of employment of the employees, managers
and directors (including the relevant contracts, if made in writing) including without limitation
contractual terms of notice of the Company and a full list of all the employees of the Company including
names, dates of commencement of employment, dates of birth, annual holiday entitlement and gender
are set out by the Seller in B.16.2, and since the Accounts Date no change has been made nor agreed to
be made in such terms and conditions of employment by the Company of any person and in particular
since the Accounts Date no employee, manager or director of the Company has received or is entitled to
11
Consider altering Warranty so that just material particulars of employment terms need to be disclosed. Some employees may have unique
or unusual conditions.

17
receive from the Company any sum or any benefit greater than that received by him (or which he was
entitled to receive) in respect of the accounting period ended on the Accounts Date.
A.16.3
The Company has not offered, promised or agreed for the future any variation in the contract of
employment or contract for services of its employees, managers and directors (including but not limited
to any increase in remuneration or benefits) or collective agreement, recognition agreement and
customs and practices.
A.16.4
There are not in existence:
any service agreements or other contracts with employees, managers and directors of the Company
which cannot be terminated by six months’ notice or less without giving rise to any claim for damages
or compensation; or
any other contracts or arrangements of whatsoever kind (whether legally enforceable or not) between
the Company and existing or former employees, managers and directors of the Company for the benefit
of any existing or former employees, managers and directors; or
any consultancy agreements between the Company and any other person, firm or company; or
any arrangements by which any person has the use of any credit or charge card or account for which the
Company is responsible.
page 50
A.16.5
There are no arrangements to which the Company is a party involving share options, profit sharing or
bonus, incentive or other similar payments for employees, managers and directors.
A.16.6
There is no actual or threatened dispute between the Company and any of its current or former
employees, managers and directors, nor any circumstances likely to give rise to any such dispute; there
have been no strikes or industrial action (official or unofficial) by any of the Company’s employees,
managers and directors during the period of six years immediately preceding the Accounts Date.
A.16.7
There is no outstanding claim against the Company on the part of any person who has been or is its
employee, manager or director or any actual or known liability to make any payment to reinstate,
reengage or take or refrain from any action in relation to any person including under all the applicable
laws.
A.16.8
Within a period of three years preceding the date hereof the Company has not:
given notice of any redundancies to the competent authorities or started consultations with any trade
union or unions or employee representation under any applicable laws; or

18
failed to comply with any duty to inform and consult any trade unions or employee, manager and
director representatives.
A.16.9
The Company has not made any loan or advance to any of its employees, managers and directors, which
remains outstanding.
A.16.10
There are no arrangements, whether contractual or otherwise, entitling any of the employees, managers
and directors of the Company to any payments by the Company or other benefits from the Company
arising from the sale or disposal of the Sale Shares.
A.16.11
The Seller has set out in B.16.11 full particulars of any outstanding offer of employment made to any
person by the Company, and there is no person who has accepted such an offer in writing but whose
employment has not yet started.
A.16.12
No employee, manager or director has been given notice to terminate, or is under notice of termination
of, his contract of employment nor are there any grounds to believe that any employee, manager or
director may give, or may be given, notice to terminate his contract of employment with the Company.
A.16.13
The Company has no maternity, paternity or training schemes (whether legally enforceable or not) that
vary the rights granted to an employee by law.
A.16.14
No employee, manager or director has within 12 months of the date of this Agreement received an
increase or change in remuneration of more than 5 per cent.
A.16.15
The Seller has set out in B.16.15 a list of key employees, managers and directors together with their
relevant obligations not to leave the company for a period of [ ] years and not to render their services in
favour of an entity competing with the Company for a period of [ ] years after their legitimate leave.
A.16.16
All payments, bonuses and other forms of remuneration due to the employees and directors of the
Company have been paid and are up-to-date.
A.16.17
All part-time, temporary and fixed-term employees of the Company enjoy the same benefits as full-time
employees of the Company.
B.16.1
Verify compliance with B.16.1.
B.16.2

19
Attach list made according to A.16.1 with annexed the relevant contracts and indicate possible
exceptions. In case of standard contracts one copy will be sufficient.
B.16.3
B.16.4
As to the possibility of terminating the contracts, check if 16.4 (a) is consistent which the applicable
labour and company law (in certain countries termination without compensation is not permitted).
B.16.5
B.16.6
B.16.7
B.16.8
B.16.9
B.16.10
B.16.11
Attach list made according to A.16.11 with annexed the relevant offers (if made in writing).
page 51
B.16.12
B.16.13
B.16.14

20
B.16.15
The parties should assess whether there is any key personnel and in such event check whether the
commitments mentioned under A.16.5 are possible under the applicable law. A possible alternative is to
provide that the Seller prior to closing procures any such commitments.
A.17 Pensions
A.17.1
There are no agreements, customs or practices (whether legally enforceable or not) in operation at the
date hereof for the payment of or contribution towards any pensions, pension plans, allowances, or other
benefits on retirement or on death or during periods of sickness or disablement for the benefit of any of
the Company’s employees, managers or directors, or former employees, managers or directors nor has
any proposal to establish any such agreement been announced 12.
B.17.1
Verify compliance with A.17.1. In particular verify the nature and structure of contributions made by
the Company during the period of the employment agreements (e.g. payments to social security, differed
compensations, etc.), it being understood that this type of payments should be excluded.
In the event that pension plans are in force, specific and appropriate provisions should deal with the
matter.
A.18Intellectual Property Rights
A.18.1
The Seller has set out in B.18.1 full particulars of all Intellectual Property Rights owned by or licensed to
it.
page 52
A.18.2
The Company owns or is validly licensed to use all Intellectual Property Rights relating to products
manufactured by it or on its behalf or used by it in connection with its business free from all liens,
charges or other securities or Encumbrances whatsoever.
A.18.3
All the Intellectual Property Rights are valid and in full force and effect, and all relevant renewal or other
fees have been paid on their respective due dates.
A.18.4
There are no existing contracts under which the Company grants to any third party any rights in or over
the Intellectual Property Rights nor has the Company disclosed, save in the ordinary course of business,
any know-how or confidential information comprised in the Intellectual Property Rights.
A.18.5
12
If there are pension schemes then specialist advice should be sought.

21
The Company has not infringed and no person for whose acts or omission the Company is liable has
infringed the Intellectual Property Rights of any other person, firm or company, nor has any other party
claimed that any such infringement by the Company or any such person has occurred.
A.18.6
Neither the Seller nor the Company are party to any non- disclosure agreements and similar agreements
other than those disclosed as B.18.6 for the purposes of this Agreement which may restrict the use or
disclosure of the Intellectual or Industrial Property rights, confidential information or the Company’s
products.
B.18.1
Attach list made according to A.18.1 with annexed all certificates and agreements which exist in writing.
B.18.2
B.18.3
B.18.4
B.18.5
B.18.6
Verify compliance with A.18.6 and indicate possible exceptions 13

.
A.19 Litigation
A.19.1
The Company is not engaged in any litigation (whether criminal, civil, administrative or tax), arbitration,
alternative dispute resolution process and there are no facts or circumstances likely to give rise to such
litigation, arbitration, or any alternative dispute resolution process nor is there any litigation, arbitration
or dispute resolution process threatened against the Company. No injunction has been served against the
Company and the Company has given no undertaking to any Court or to any third party arising out of
any legal proceedings.
page 53
A.19.2
The Company has not received notification that it has violated any requirement of any applicable laws,
13
Potentially by disclosing such matters contractual obligations in confidential agreements will be breached. Consider this when advising on
the disclosure of such items as it is illegal under English law to encourage someone to break a contractual obligation/commit an illegal act. If
such acts are disclosed they should be disclosed at the last minute.

22
any ruling penalty or sanction which could adversely affect the business or financial condition of the
Company and in particular, no violation of any law or regulation relating to Tax, health and safety,
consumer protection, employment, industrial or labour relations, competition or the Environment.
A.19.3
No person for whose acts and defaults the Company may be vicariously liable is at present engaged
whether as claimant, defendant or otherwise in any legal action, proceeding or arbitration which is
either in progress, threatened or pending and relevant to the Company.
A.19.4
There is no outstanding enforceable arbitral award, judgment or Court Order in favour of or against the
Company.
B.19.1
Verify compliance with A.19.1 and indicate possible exceptions. It may be appropriate to exclude from
A.19.1 certain small claims (like routine debt collection), provided that their aggregate amount is not
material considering the size of the business.
B.19.2
B.19.3
For example, if an employee runs someone over in a Company vehicle the driver could be personally
liable and the Company could be vicariously liable.
B.19.4
A.20 Gr
Grants
ants
A.20.1
The Seller has set out in B.20.1 full particulars of all grants, subsidies, subsidised loans and other similar
facilities.
A.20.2
The Company has not done or omitted to do anything as a result of which any of such grants, subsidies,
subsidy loans and other similar facilities, as well as any payment (whether made on a provisional or final
basis and whether partial or in full) made or to be made to the Company, plans or other undertakings on
the part of the relevant entity may be terminated, cancelled or revoked, whether in full or in part, nor
there are any circumstances under which the Company may be obliged to reimburse, in whole or in part,
any sums or other facilities received.
B.20.1
Attach list made according to A.20.1 with annexed all relevant agreements and indicate possible
exceptions.
B.20.2

23
A.21Special Contr
Contracts
acts and Arr
Arrangements
angements
A.21.1
The Seller has set out in B.21.1 full particulars of all agreements, practices and arrangements to which
the Company is a party, which are registerable with any relevant authority. All these agreements have
been correctly registered and there are no further agreements that require a registration or any other
kind of filing with any authority or third party.
B.21.1
Attach list made according to A.21.1 with annexed all relevant agreements.
page 54
A.22Tr
A.22Transactions
ansactions with Shareholders or Directors
A.22.1
No transactions or contracts (with the exception of directors’ service agreements and employment con-
tracts) have been entered into during the three years prior to the date of this Agreement to which the
Company is a party in which a shareholder in or director of the Company or any person connected with
a shareholder in or director of the Company has been interested whether directly or indirectly.
A.22.2
No monies are owed by the Company to any director of the Company or to the Seller or to any person
connected with any such director or the Seller or to any company or partnership in which any of such
directors or the Seller (or their spouses) are directly or indirectly interested other than as holders of
listed securities.
A.22.3
The Company has no debts owed to any of its directors or the Seller (or a person connected with any
such director or the Seller) or by any company in which the directors of the Company or the Seller (or
any person connected with any of them) are directly or indirectly interested (other than as holders of
listed securities); nor do the Seller or any of the Company’s directors (or any person connected with any
of them) or any such company as aforesaid have any claims against the Company including claims for
compensation for loss of office or for unfair dismissal or redundancy payment.
B.22.1
Verify compliance with A.22.1. In particular, verify matters which may give rise to a conflict of interest
(e.g. agreements with companies where the directors or their relatives or spouses are shareholders or
have different kind of interests, are employees, consultants, directors, etc.).
B.22.2
Verify compliance with B.22.2. In particular, verify payments due under the agreements mentioned
under B.22.1 above, or outstanding amounts which are due to the directors with reference to their
respective offices and activities.
B.22.3

24
A.23Competition Matters
A.23.1
The Company has not received notification by any competent antitrust or competition authority that it is,
or has been party to, or concerned in any agreement, arrangement, understanding or concerted practice,
which:
infringes any competition rule including, without prejudice to the generality of the foregoing, any rule
relating to state aid, public procurement, or anti- dumping; or
constitutes a breach of any term or condition of any licence, authorisation, appointment, code or similar
instrument applicable to the Company and business.
A.23.2
The Company is not subject to any publication, order, condition, undertaking or similar measure or
obligation imposed by or under any of the laws referred to in A.23.1.
A.23.3
The Company has not received notification that it is, nor has been, subject to any investigation, request
for information, notice or other communication by any court, governmental or regulatory authority
pursuant to any of the laws referred to in A.23.1.
A.23.4
The Company has no reason to believe that any such action as is mentioned in A.23.1 will be taken against
it in relation to any of its current activities.
A.23.5
The Company is not a party to, nor has it entered into any kind of commitment or agreement which may
in any manner limit its activity.
B.23.1
B.23.2
page 55
B.23.3
B.23.4
A.23.5

25
Verify compliance with A.23.5 and list possible exceptions. In particular, verify possible provisions under
license, agency and distribution agreements, agreements with reference to grants or any other kind of
financial facilities, etc.
A.24Information T
Technology
echnology S
Systems
ystems
A.24.1
The Seller has set out in B.24.1 copies of all the agreements required to use, support, maintain and/
or develop all components of the computer systems (including all Licenses, development agreements,
software maintenance and support agreements, hardware maintenance agreements, source code escrow
agreements and disaster recovery agreements).
A.24.2
The Company has not breached any of its obligations under any of the agreements referred to in B.24.1;
those agreements all remain in full force and effect as at Closing and no notice has been served by any
party to terminate any of those agreements.
A.24.3
Save as stated in the agreements referred to in A.24.1, the Company is not restricted in any way in using
the computer systems (whether by way of a technical device or otherwise).
A.24.4
The use of the computer systems by the Company does not, and the continued use of the computer
systems by the Buyer after Closing will not, infringe the Intellectual Property rights of any third party.
page 56
A.24.5
The Company has exclusive control of the operation of the computer systems and of the storage,
processing and retrieval of all data stored on the computer systems, and solely the Company owns any
Intellectual Property rights in such data.
A.24.6
All Intellectual Property Rights in the developed software are owned by the Company and the Company
has in its possession an up-to-date, useable and complete copy of the source code for all developed
software together with copies of all programmers’ commentaries and technical documentation required
to allow the continuing maintenance and development of that software by the Buyer.
A.24.7
The computer systems have adequate functionality, capability and capacity for the present requirements
of the Company, and each part of the computer systems is compatible with each other part14.
A.24.8
The computer systems have not been used to hold or process data in any manner that contravenes the
applicable laws.
B.24.1

26
Attach list made according to B.45.1. It could be advisable to agree on a materiality threshold (e.g. by
matter or system), to avoid attaching irrelevant documents.
B.24.2
B.24.3
Verify compliance with A.24.2 and list possible exceptions. For instance, should the Company be a
manufacturer where the core business (or a significant part thereof) is represented by activities covered
under license agreements, the Seller should verify whether the relevant License agreements or other
relevant agreements set forth restrictions to the ability of the Company to use possible parts of the
computer systems in connection with the change in control of the Company.
B.24.4
B.24.5
B.24.6
B.24.7
B.24.8
A.25Effect of this A
Agreement
greement
A.25.1
Compliance with the terms of this Agreement does not and will not:
conflict with or result in a breach of or constitute a default under any of the terms, conditions or
provisions of any agreement or instrument to which the Company is a party or any provision of the
Memorandum or Articles of Association of the Company or any lease, contract, order, judgement, award,
injunction, regulation, encumbrance, restriction or obligation of any kind or character by which or to
which any asset of the Company is bound or subject; or
relieve any person from any obligation to the Company (whether contractual or otherwise) or enable any
person to determine any such obligation or any right or benefit enjoyed by the Company or to exercise
any right, whether under an agreement with or otherwise in respect of the Company; or
result in the creation, crystallisation or enforcement of any encumbrance whatsoever on any of the
assets of the Company; or
result in any present indebtedness of the Company becoming due or capable of being declared due and
payable prior to its stated maturity.

27
B.25.1
NO
NOTE:
TE: Change of control clauses in existing contr
contracts
acts will need to be disclosed.

28
Appendix: UNIDR
UNIDROIT
OIT Principles of international commercial contr
contracts
acts
Acquisitions
cquisitions Contr
Contract
act - 2004
page 57
PREAMBLE – PURPOSE OF THE PRINCIPLES
These Principles set forth general rules for international commercial contracts.
They shall be applied when the parties have agreed that their contract be governed by them.
They may be applied when the parties have agreed that their contract be governed by "general principles
of law", the "lex mercatoria" or the like.
They may provide a solution to an issue raised when it proves impossible to establish the relevant rule
of the applicable law.
They may be used to interpret or supplement international uniform law instruments.
They may serve as a model for national and international legislators.
CHAPTER 1 – GENERAL PR
PROOVISIONS
AR
ARTICLE
TICLE 1.1. (FREEDOM OF CONTRA
CONTRACT)
CT)
The parties are free to enter into a contract and to determine its content.
AR
ARTICLE
TICLE 1.2. (NO FORM REQUIRED)
Nothing in these Principles requires a contract to be concluded in or evidenced by writing. It may be

proved by any means, including witnesses.
AR
ARTICLE
TICLE 1.3. (BINDING CHARA
CHARACTER
CTER OF CONTRA
CONTRACT)
CT)
A contract validly entered into is binding upon the parties. It can only be modified or terminated in
accordance with its terms or by agreement or as otherwise provided in these Principles.
AR
ARTICLE
TICLE 1.4. (MAND
(MANDAATOR
ORY
YRRULES)
ULES)
Nothing in these Principles shall restrict the application of mandatory rules, whether of national,
international or supranational origin, which are applicable in accordance with the relevant rules of
private international law.
AR
ARTICLE
TICLE 1.5. (EX
(EXCLUSION
CLUSION OR MODIFICA
MODIFICATION
TION B
BY
Y THE P
PAR
ARTIES)
TIES)
The parties may exclude the application of these Principles or derogate from or vary the effect of any of
their provisions, except as otherwise provided in the Principles.
AR
ARTICLE
TICLE 1.6. (INTERPRET
(INTERPRETA
ATION AND SUPPLEMENT
SUPPLEMENTA
ATION OF THE PRINCIPLES)
In the interpretation of these Principles, regard is to be had to their international character and to their
purposes including the need to promote uniformity in their application.
Issues within the scope of these Principles but not expressly settled by them are as far as possible to be

1
settled in accordance with their underlying general principles.
AR
ARTICLE
TICLE 1.7. (GOOD F
FAITH
AITH AND F
FAIR
AIR DEALING)
Each party must act in accordance with good faith and fair dealing in international trade.
The parties may not exclude or limit this duty.
(*)
Reproduced with the permission of UNIDROIT. The integral version of the UNIDROIT Principles contains
not only the black letter rules here reproduced but also comments on each article and, where
appropriate, illustrations. The integral version of the UNIDROIT Principles is available on UNIDROIT
website (http://www.unidroit.org/english/principles/contents.htm).
page 58
AR
ARTICLE
TICLE 1.8. (US
(USAAGES AND PRA
PRACTICES)
CTICES)
The parties are bound by any usage to which they have agreed and by any practices which they have
established between themselves.
The parties are bound by a usage that is widely known to and regularly observed in international
trade by parties in the particular trade concerned except where the application of such usage would be
unreasonable.
AR
ARTICLE
TICLE 1.9. (NO
(NOTICE)
TICE)
Where notice is required it may be given by any means appropriate to the circumstances.
A notice is effective when it reaches the person to whom it is given.
For the purpose of paragraph 2 a notice "reaches" a person when given to that person orally or delivered
at that person's place or business or mailing address.
For the purpose of this article "notice" includes a declaration, demand, request or any other
communication of intention.
AR
ARTICLE
TICLE 1.10. (DEFINITIONS)
- In these Principles
- "court" includes an arbitral tribunal;
- where a party has more than one place of business the relevant "place of business" is that which has
the closest relationship to the contract and its performance having regard to the circumstances known
to or contemplated by the parties at any time before or at the conclusion of the contract;
- "obligor" refers to the party who is to perform an obligation and "obligee" refers to the party who is
entitled to performance of that obligation.
- "writing" means any mode of communication that preserves a record of the information contained
therein and is capable of being reproduced in tangible form.
CHAPTER 2 – FORMA
FORMATION
TION

2
AR
ARTICLE
TICLE 2.1. (MANNER OF FORMA
FORMATION)
TION)
A contract may be concluded either by the acceptance of an offer or by conduct of the parties that is
sufficient to show agreement.
AR
ARTICLE
TICLE 2.2. (DEFINITION OF OFFER)
A proposal for concluding a contract constitutes an offer if it is sufficiently definite and indicates the
intention of the offeror to be bound in case of acceptance.
AR
ARTICLE
TICLE 2.3. (WITHDRA
(WITHDRAW
WAL OF OFFER)
An offer becomes effective when it reaches the offeree.
An offer, even if it is irrevocable, may be withdrawn if the withdrawal reaches the offeree before or at
the same time as the offer.
AR
ARTICLE
TICLE 2.4. (RE
(REVVOCA
OCATION
TION OF OFFER)
Until a contract is concluded an offer may be revoked if the revocation reaches the offeree before it has
dispatched an acceptance.
However, an offer cannot be revoked
if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or
if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in
reliance on the offer.
if it indicates, whether by stating a fixed time for acceptance or otherwise, that it is irrevocable; or
if it was reasonable for the offeree to rely on the offer as being irrevocable and the offeree has acted in
reliance on the offer.
AR
ARTICLE
TICLE 2.5. (REJECTION OF OFFER)
An offer is terminated when a rejection reaches the offeror.
page 59
AR
ARTICLE
TICLE 2.6. (MODE OF A
ACCEPT
CCEPTANCE)
ANCE)
A statement made by or other conduct of the offeree indicating assent to an offer is an acceptance.
Silence or inactivity does not in itself amount to acceptance.
An acceptance of an offer becomes effective when the indication of assent reaches the offeror.
However, if, by virtue of the offer or as a result of practices which the parties have established between
themselves or of usage, the offeree may indicate assent by performing an act without notice to the
offeror, the acceptance is effective when the act is performed.
AR
ARTICLE
TICLE 2.7. (TIME OF A
ACCEPT
CCEPTANCE)
ANCE)
An offer must be accepted within the time the offeror has fixed or, if no time is fixed, within a reasonable
time having regard to the circumstances, including the rapidity of the means of communication
employed by the offeror. An oral offer must be accepted immediately unless the circumstances indicate

3
otherwise.
AR
ARTICLE
TICLE 2.8. (A
(ACCEPT
CCEPTANCE
ANCE WITHIN A FIXED PERIOD OF TIME)
A period of time for acceptance fixed by the offeror in a telegram or a letter begins to run from the
moment the telegram is handed in for dispatch or from the date shown on the letter or, if no such date
is shown, from the date shown on the envelope. A period of time for acceptance fixed by the offeror
by means of instantaneous communication begins to run from the moment that the offer reaches the
offeree.
Official holidays or non-business days occurring during the period for acceptance are included in
calculating the period. However, if a notice of acceptance cannot be delivered at the address of the
offeror on the last day of the period because that day falls on an official holiday or a non-business day at
the place of business of the offeror, the period is extended until the first business day which follows.
AR
ARTICLE
TICLE 2.9. (LA
(LATE
TE A
ACCEPT
CCEPTANCE.
ANCE. DELA
DELAY
Y IN TRANSMISSION)
A late acceptance is nevertheless effective as an acceptance if without undue delay the offeror so informs
the offeree or gives notice to that effect.
If a letter or other writing containing a late acceptance shows that it has been sent in such circumstances
that if its transmission had been normal it would have reached the offeror in due time, the late
acceptance is effective as an acceptance unless, without undue delay, the offeror informs the offeree that
it considers the offer as having lapsed.
AR
ARTICLE
TICLE 2.10. (WITHDRA
(WITHDRAW
WAL OF A
ACCEPT
CCEPTANCE)
ANCE)
An acceptance may be withdrawn if the withdrawal reaches the offeror before or at the same time as the
acceptance would have become effective.
AR
ARTICLE
TICLE 2.11. (MODIFIED A
ACCEPT
CCEPTANCE)
ANCE)
A reply to an offer which purports to be an acceptance but contains additions, limitations or other
modifications is a rejection of the offer and constitutes a counter-offer.
However, a reply to an offer which purports to be an acceptance but contains additional or different
terms which do not materially alter the terms of the offer constitutes an acceptance, unless the offeror,
without undue delay, objects to the discrepancy. If the offeror does not object, the terms of the contract
are the terms of the offer with the modifications contained in the acceptance.
AR
ARTICLE
TICLE 2.12. (WRITINGS IN CONFIRMA
CONFIRMATION)
TION)
If a writing which is sent within a reasonable time after the conclusion of the contract and which
purports to be a confirmation of the contract contains additional or different terms, such terms become
part of the contract, unless they materially alter the contract or the recipient, without undue delay,
objects to the discrepancy.
page 60
AR
ARTICLE
TICLE 2.13. (CONCLUSION OF CONTRA
CONTRACT
CT DEPENDENT ON A
AGREEMENT
GREEMENT ON SPECIFIC MA
MATTERS
TTERS OR IN
A SPECIFIC FORM)
Where in the course of negotiations one of the parties insists that the contract is not concluded until
there is agreement on specific matters or in a specific form, no contract is concluded before agreement
is reached on those matters or in that form.

4
AR
ARTICLE
TICLE 2.14. (CONTRA
(CONTRACT
CT WITH TERMS DELIBERA
DELIBERATEL
TELY
Y LEFT OPEN)
If the parties intend to conclude a contract, the fact that they intentionally leave a term to be agreed upon
in further negotiations or to be determined by a third person does not prevent a contract from coming
into existence.
The existence of the contract is not affected by the fact that subsequently
the parties reach no agreement on the term; or
the third person does not determine the term, provided that there is an alternative means of rendering
the term definite that is reasonable in the circumstances, having regard to the intention of the parties.
the parties reach no agreement on the term; or
the third person does not determine the term, provided that there is an alternative means of rendering
the term definite that is reasonable in the circumstances, having regard to the intention of the parties.
AR
ARTICLE
TICLE 2.15. (NEGO
(NEGOTIA
TIATIONS
TIONS IN B
BAD
AD F
FAITH)
AITH)
A party is free to negotiate and is not liable for failure to reach an agreement.
However, a party who negotiates or breaks off negotiations in bad faith is liable for the losses caused to
the other party.
It is bad faith, in particular, for a party to enter into or continue negotiations when intending not to reach
an agreement with the other party.
AR
ARTICLE
TICLE 2.16. (DUTY OF CONFIDENTIALITY)
Where information is given as confidential by one party in the course of negotiations, the other party is
under a duty not to disclose that information or to use it improperly for its own purposes, whether or
not a contract is subsequently concluded. Where appropriate, the remedy for breach of that duty may
include compensation based on the benefit received by the other party.
AR
ARTICLE
TICLE 2.17. (MER
(MERGER
GER CLA
CLAUSES)
USES)
A contract in writing which contains a clause indicating that the writing completely embodies the
terms on which the parties have agreed cannot be contradicted or supplemented by evidence of prior
statements or agreements. However, such statements or agreements may be used to interpret the
writing.
AR
ARTICLE
TICLE 2.18. (WRITTEN MODIFICA
MODIFICATION
TION CLA
CLAUSES)
USES)
A contract in writing which contains a clause requiring any modification or termination by agreement
to be in writing may not be otherwise modified or terminated. However, a party may be precluded by
its conduct from asserting such a clause to the extent that the other party has acted in reliance on that
conduct.
AR
ARTICLE
TICLE 2.19. (CONTRA
(CONTRACTING
CTING UNDER S
STTAND
ANDARD
ARD TERMS)
Where one party or both parties use standard terms in concluding a contract, the general rules on
formation apply, subject to Articles 2.20-2.22.
Standard terms are provisions which are prepared in advance for general and repeated use by one party
and which are actually used without negotiation with the other party.

5
AR
ARTICLE
TICLE 2.20. (SURPRISING TERMS)
No term contained in standard terms which is of such a character that the other party could not
reasonably have expected it, is effective unless it has been expressly accepted by that party.
In determining whether a term is of such a character regard shall be had to its content, language and
presentation.
page 61
AR
ARTICLE
TICLE 2.21. (CONFLICT BETWEEN S
STTAND
ANDARD
ARD TERMS AND NON-S
NON-STTAND
ANDARD
ARD TERMS)
In case of conflict between a standard term and a term which is not a standard term the latter prevails.
AR
ARTICLE
TICLE 2.22. (B
(BAATTLE OF FORMS)
Where both parties use standard terms and reach agreement except on those terms, a contract is
concluded on the basis of the agreed terms and of any standard terms which are common in substance
unless one party clearly indicates in advance, or later and without undue delay informs the other party,
that it does not intend to be bound by such a contract.
CHAPTER 3 – V
VALIDITY
ALIDITY
AR
ARTICLE
TICLE 3.1. (MA
(MATTERS
TTERS NO
NOTT CO
COVERED)
VERED)
These Principles do not deal with invalidity arising from
lack of capacity;
lack of authority;
immorality or illegality.
AR
ARTICLE
TICLE 3.2. (V
(VALIDITY
ALIDITY OF MERE A
AGREEMENT)
GREEMENT)
A contract is concluded, modified or terminated by the mere agreement of the parties, without any
further requirement.
AR
ARTICLE
TICLE 3.3. (INITIAL IMPOSSIBILITY)
The mere fact that at the time of the conclusion of the contract the performance of the obligation
assumed was impossible does not affect the validity of the contract.
The mere fact that at the time of the conclusion of the contract a party was not entitled to dispose of the
assets to which the contract relates does not affect the validity of the contract.
AR
ARTICLE
TICLE 3.4. (DEFINITION OF MIS
MISTTAKE)
Mistake is an erroneous assumption relating to facts or to law existing when the contract was concluded.
AR
ARTICLE
TICLE 3.5. (RELE
(RELEVVANT MIS
MISTTAKE)
A party may only avoid the contract for mistake if, when the contract was concluded, the mistake was of
such importance that a reasonable person in the same situation as the party in error would only have
concluded the contract on materially different terms or would not have concluded it at all if the true
state of affairs had been known, and

6
the other party made the same mistake, or caused the mistake, or knew or ought to have known of the
mistake and it was contrary to reasonable commercial standards of fair dealing to leave the mistaken
party in error; or
the other party had not at the time of avoidance acted in reliance on the contract.
However, a party may not avoid the contract if
it was grossly negligent in committing the mistake; or
the mistake relates to a matter in regard to which the risk of mistake was assumed or, having regard to
the circumstances, should be borne by the mistaken party.
the other party made the same mistake, or caused the mistake, or knew or ought to have known of the
mistake and it was contrary to reasonable commercial standards of fair dealing to leave the mistaken
party in error; or
the other party had not at the time of avoidance acted in reliance on the contract.
it was grossly negligent in committing the mistake; or
the mistake relates to a matter in regard to which the risk of mistake was assumed or, having regard to
the circumstances, should be borne by the mistaken party.
AR
ARTICLE
TICLE 3.6. (ERR
(ERROR
OR IN EXPRESSION OR TRANSMISSION)
An error occurring in the expression or transmission of a declaration is considered to be a mistake of the

person from whom the declaration emanated.
AR
ARTICLE
TICLE 3.7. (REMEDIES FOR NON-PERFORMANCE)
A party is not entitled to avoid the contract on the ground of mistake if the circumstances on which that
party relies afford, or could have afforded, a remedy for non-performance.
page 62
AR
ARTICLE
TICLE 3.8. (FRA
(FRAUD)
UD)
A party may avoid the contract when it has been led to conclude the contract by the other party's
fraudulent representation, including language or practices, or fraudulent non-disclosure of
circumstances which, according to reasonable commercial standards of fair dealing, the latter party
should have disclosed.
AR
ARTICLE
TICLE 3.9. (THREA
(THREAT)
T)
A party may avoid the contract when it has been led to conclude the contract by the other party's
unjustified threat which, having regard to the circumstances, is so imminent and serious as to leave
the first party no reasonable alternative. In particular, a threat is unjustified if the act or omission with
which a party has been threatened is wrongful in itself, or it is wrongful to use it as a means to obtain
the conclusion of the contract.
AR
ARTICLE
TICLE 3.10. (GR
(GROSS
OSS DISP
DISPARITY)
ARITY)
A party may avoid the contract or an individual term of it if, at the time of the conclusion of the contract,
the contract or term unjustifiably gave the other party an excessive advantage. Regard is to be had,

7
among other factors, to
the fact that the other party has taken unfair advantage of the first party's dependence, economic distress
or urgent needs, or of its improvidence, ignorance, inexperience or lack of bargaining skill; and
the nature and purpose of the contract.
Upon the request of the party entitled to avoidance, a court may adapt the contract or term in order to
make it accord with reasonable commercial standards of fair dealing.
A court may also adapt the contract or term upon the request of the party receiving notice of avoidance,
provided that that party informs the other party of its request promptly after receiving such notice and
before the other party has acted in reliance on it. The provisions of Article 3.13 (2) apply accordingly.
the fact that the other party has taken unfair advantage of the first party's dependence, economic distress
or urgent needs, or of its improvidence, ignorance, inexperience or lack of bargaining skill; and
the nature and purpose of the contract.
AR
ARTICLE
TICLE 3.11. (THIRD PERSONS)
Where fraud, threat, gross disparity or a party's mistake is imputable to, or is known or ought to be
known by, a third person for whose acts the other party is responsible, the contract may be avoided
under the same conditions as if the behaviour or knowledge had been that of the party itself.
Where fraud, threat or gross disparity is imputable to a third person for whose acts the other party is not
responsible, the contract may be avoided if that party knew or ought to have known of the fraud, threat
or disparity, or has not at the time of avoidance acted in reliance on the contract.
AR
ARTICLE
TICLE 3.12. (CONFIRMA
(CONFIRMATION)
TION)
If the party entitled to avoid the contract expressly or impliedly confirms the contract after the period of
time for giving notice of avoidance has begun to run, avoidance of the contract is excluded.
AR
ARTICLE
TICLE 3.13. (LOSS OF RIGHT T
TOOA
AV
VOID)
If a party is entitled to avoid the contract for mistake but the other party declares itself willing to
perform or performs the contract as it was understood by the party entitled to avoidance, the contract is
considered to have been concluded as the latter party understood it. The other party must make such a
declaration or render such performance promptly after having been informed of the manner in which
the party entitled to avoidance had understood the contract and before that party has acted in reliance
on a notice of avoidance.
After such a declaration or performance the right to avoidance is lost and any earlier notice of avoidance
is ineffective.
AR
ARTICLE
TICLE 3.14. (NO
(NOTICE
TICE OF A
AV
VOID
OIDANCE)
ANCE)
The right of a party to avoid the contract is exercised by notice to the other party.
page 63
AR
ARTICLE
TICLE 3.15. (TIME LIMITS)
Notice of avoidance shall be given within a reasonable time, having regard to the circumstances, after

8
the avoiding party knew or could not have been unaware of the relevant facts or became capable of
acting freely.
Where an individual term of the contract may be avoided by a party under Article 3.10, the period of
time for giving notice of avoidance begins to run when that term is asserted by the other party.
AR
ARTICLE
TICLE 3.16. (P
(PAR
ARTIAL
TIAL A
AV
VOID
OIDANCE)
ANCE)
Where a ground of avoidance affects only individual terms of the contract, the effect of avoidance is
limited to those terms unless, having regard to the circumstances, it is unreasonable to uphold the
remaining contract.
AR
ARTICLE
TICLE 3.17. (RETR
(RETROOACTIVE EFFECT OF A
AV
VOID
OIDANCE)
ANCE)
Avoidance takes effect retroactively.
On avoidance either party may claim restitution of whatever it has supplied under the contract or the
part of it avoided, provided that it concurrently makes restitution of whatever it has received under the
contract or the part of it avoided or, if it cannot make restitution in kind, it makes an allowance for what
it has received.
AR
ARTICLE
TICLE 3.18. (D
(DAMA
AMAGES)
GES)
Irrespective of whether or not the contract has been avoided, the party who knew or ought to have
known of the ground for avoidance is liable for damages so as to put the other party in the same position
in which it would have been if it had not concluded the contract.
AR
ARTICLE
TICLE 3.19. (MAND
(MANDAATOR
ORY
Y CHARA
CHARACTER
CTER OF THE PR
PROOVISIONS)
The provisions of this Chapter are mandatory, except insofar as they relate to the binding force of mere
agreement, initial impossibility or mistake.
AR
ARTICLE
TICLE 3.20. (UNILA
(UNILATERAL
TERAL DECLARA
DECLARATIONS)
TIONS)
The provisions of this Chapter apply with appropriate adaptations to any communication of intention
addressed by one party to the other.
CHAPTER 4 – INTERPRET
INTERPRETA
ATION
AR
ARTICLE
TICLE 4.1. (INTENTION OF THE P
PAR
ARTIES)
TIES)
A contract shall be interpreted according to the common intention of the parties.
If such an intention cannot be established, the contract shall be interpreted according to the meaning
that reasonable persons of the same kind as the parties would give to it in the same circumstances.
AR
ARTICLE
TICLE 4.2. (INTERPRET
(INTERPRETA
ATION OF S
STTATEMENTS AND O
OTHER
THER CONDUCT)
The statements and other conduct of a party shall be interpreted according to that party's intention if the
other party knew or could not have been unaware of that intention.
If the preceding paragraph is not applicable, such statements and other conduct shall be interpreted
according to the meaning that a reasonable person of the same kind as the other party would give to it
in the same circumstances.
AR
ARTICLE
TICLE 4.3. (RELE
(RELEVVANT CIR
CIRCUMS
CUMST
TANCES)

9
In applying Articles 4.1 and 4.2, regard shall be had to all the circumstances, including
preliminary negotiations between the parties;
practices which the parties have established between themselves;
the conduct of the parties subsequent to the conclusion of the contract;
page 64
the nature and purpose of the contract;
the meaning commonly given to terms and expressions in the trade concerned;
usages.
AR
ARTICLE
TICLE 4.4. (REFERENCE T
TOO CONTRA
CONTRACT
CT OR S
STTATEMENT AS A WHOLE)
Terms and expressions shall be interpreted in the light of the whole contract or statement in which they
appear.
AR
ARTICLE
TICLE 4.5. (ALL TERMS T
TOO BE GIVEN EFFECT)
Contract terms shall be interpreted so as to give effect to all the terms rather than to deprive some of
them of effect.
AR
ARTICLE
TICLE 4.6. (CONTRA PR
PROFERENTEM
OFERENTEM R
RULE)
ULE)
If contract terms supplied by one party are unclear, an interpretation against that party is preferred.
AR
ARTICLE
TICLE 4.7. (LINGUIS
(LINGUISTIC
TIC DISCREP
DISCREPANCIES)
ANCIES)
Where a contract is drawn up in two or more language versions which are equally authoritative there is,
in case of discrepancy between the versions, a preference for the interpretation according to a version
in which the contract was originally drawn up.
AR
ARTICLE
TICLE 4.8. (SUPPL
(SUPPLYING
YING AN OMITTED TERM)
Where the parties to a contract have not agreed with respect to a term which is important for a
determination of their rights and duties, a term which is appropriate in the circumstances shall be
supplied.
In determining what is an appropriate term regard shall be had, among other factors, to
the intention of the parties;
good faith and fair dealing,
reasonableness.
the intention of the parties;

10
good faith and fair dealing,
reasonableness.
CHAPTER 5 – CONTENT
AR
ARTICLE
TICLE 5.1. (EXPRESS AND IMPLIED OBLIGA
OBLIGATIONS)
TIONS)
The contractual obligations of the parties may be express or implied.
AR
ARTICLE
TICLE 5.2. (IMPLIED OBLIGA
OBLIGATIONS)
TIONS)
Implied obligations stem from
a) the nature and purpose of the contract;
b) practices established between the parties and usages;
c) good faith and fair dealing;
d) reasonableness.
AR
ARTICLE
TICLE 5.3. (CO-OPERA
(CO-OPERATION
TION BETWEEN THE P
PAR
ARTIES)
TIES)
Each party shall co-operate with the other party when such co-operation may reasonably be expected for
the performance of that party's obligations.
AR
ARTICLE
TICLE 5.4. (DUTY T
TOOA
ACHIE
CHIEVE
VE A SPECIFIC RESUL
RESULT
T. DUTY OF BES
BESTT EFFOR
EFFORTS)
TS)
To the extent that an obligation of a party involves a duty to achieve a specific result, that party is bound
to achieve that result.
To the extent that an obligation of a party involves a duty of best efforts in the performance of an activity,
that party is bound to make such efforts as would be made by a reasonable person of the same kind in
the same circumstances.
page 65
AR
ARTICLE
TICLE 5.5. (DETERMINA
(DETERMINATION
TION OF KIND OF DUTY INV
INVOL
OLVED)
VED)
In determining the extent to which an obligation of a party involves a duty of best efforts in the
performance of an activity or a duty to achieve a specific result, regard shall be had, among other factors,
to
the way in which the obligation is expressed in the contract;
the contractual price and other terms of the contract;
the degree of risk normally involved in achieving the expected result;
the ability of the other party to influence the performance of the obligation.
AR
ARTICLE
TICLE 5.6. (DETERMINA
(DETERMINATION
TION OF QU
QUALITY
ALITY OF PERFORMANCE)
Where the quality of performance is neither fixed by, nor determinable from, the contract a party
is bound to render a performance of a quality that is reasonable and not less than average in the

11
circumstances.
AR
ARTICLE
TICLE 5.7. (PRICE DETERMINA
DETERMINATION)
TION)
Where a contract does not fix or make provision for determining the price, the parties are considered,
in the absence of any indication to the contrary, to have made reference to the price generally charged
at the time of the conclusion of the contract for such performance in comparable circumstances in the
trade concerned or, if no such price is available, to a reasonable price.
Where the price is to be determined by one party and that determination is manifestly unreasonable, a
reasonable price shall be substituted notwithstanding any contract term to the contrary.
Where the price is to be fixed by a third person, and that person cannot or will not do so, the price shall
be a reasonable price.
Where the price is to be fixed by reference to factors which do not exist or have ceased to exist or to be
accessible, the nearest equivalent factor shall be treated as a substitute.
AR
ARTICLE
TICLE 5.8. (CONTRA
(CONTRACT
CT FOR AN INDEFINITE PERIOD)
A contract for an indefinite period may be ended by either party by giving notice a reasonable time in
advance.
CHAPTER 6 – PERFORMANCE
Section 1 – Performance in General
AR
ARTICLE
TICLE 6.1.1. (TIME OF PERFORMANCE)
A party must perform its obligations:
if a time is fixed by or determinable from the contract, at that time;
if a period of time is fixed by or determinable from the contract, at any time within that period unless
circumstances indicate that the other party is to choose a time;
in any other case, within a reasonable time after the conclusion of the contract.
AR
ARTICLE
TICLE 6.1.2. (PERFORMANCE A
AT
T ONE TIME OR IN INS
INSTTALMENTS)
In cases under Article 6.1.1(b) or (c), a party must perform its obligations at one time if that performance
can be rendered at one time and the circumstances do not indicate otherwise.
AR
ARTICLE
TICLE 6.1.3. (P
(PAR
ARTIAL
TIAL PERFORMANCE)
The obligee may reject an offer to perform in part at the time performance is due, whether or not
such offer is coupled with an assurance as to the balance of the performance, unless the obligee has no
legitimate interest in so doing.
Additional expenses caused to the obligee by partial performance are to be borne by the obligor without
prejudice to any other remedy.
AR
ARTICLE
TICLE 6.1.4. (ORDER OF PERFORMANCE)
To the extent that the performances of the parties can be rendered simultaneously, the parties are bound
to render them simultaneously unless the circumstances indicate otherwise.

12
page 66
To the extent that the performance of only one party requires a period of time, that party is bound to
render its performance first, unless the circumstances indicate otherwise.
AR
ARTICLE
TICLE 6.1.5. (EARLIER PERFORMANCE)
The obligee may reject an earlier performance unless it has no legitimate interest in so doing.
Acceptance by a party of an earlier performance does not affect the time for the performance of its own
obligations if that time has been fixed irrespective of the performance of the other party's obligations.
Additional expenses caused to the obligee by earlier performance are to be borne by the obligor, without
prejudice to any other remedy.
AR
ARTICLE
TICLE 6.1.6. (PLA
(PLACE
CE OF PERFORMANCE)
If the place of performance is neither fixed by, nor determinable from, the contract, a party is to
perform:
a monetary obligation, at the obligee's place of business;
any other obligation, at its own place of business.
A party must bear any increase in the expenses incidental to performance which is caused by a change
in its place of business subsequent to the conclusion of the contract.
a monetary obligation, at the obligee's place of business;
any other obligation, at its own place of business.
AR
ARTICLE
TICLE 6.1.7. (P
(PA
AYMENT B
BY
Y CHEQUE OR O
OTHER
THER INS
INSTR
TRUMENT)
UMENT)
Payment may be made in any form used in the ordinary course of business at the place for payment.
However, an obligee who accepts, either by virtue of paragraph (1) or voluntarily, a cheque, any other
order to pay or a promise to pay, is presumed to do so only on condition that it will be honoured.
AR
ARTICLE
TICLE 6.1.8. (P
(PA
AYMENT B
BY
Y FUNDS TRANSFER)
Unless the obligee has indicated a particular account, payment may be made by a transfer to any of the
financial institutions in which the obligee has made it known that it has an account.
In case of payment by a transfer the obligation of the obligor is discharged when the transfer to the
obligee's financial institution becomes effective.
AR
ARTICLE
TICLE 6.1.9. (CURRENCY OF P
PA
AYMENT)
If a monetary obligation is expressed in a currency other than that of the place for payment, it may be
paid by the obligor in the currency of the place for payment unless
that currency is not freely convertible; or
the parties have agreed that payment should be made only in the currency in which the monetary
obligation is expressed.

13
If it is impossible for the obligor to make payment in the currency in which the monetary obligation is
expressed, the obligee may require payment in the currency of the place for payment, even in the case
referred to in paragraph (1) (b).
Payment in the currency of the place for payment is to be made according to the applicable rate of
exchange prevailing there when payment is due.
However, if the obligor has not paid at the time when payment is due, the obligee may require payment
according to the applicable rate of exchange prevailing either when payment is due or at the time of
actual payment.
that currency is not freely convertible; or
the parties have agreed that payment should be made only in the currency in which the monetary
obligation is expressed.
AR
ARTICLE
TICLE 6.1.10. (CURRENCY NO
NOTT EXPRESSED)
Where a monetary obligation is not expressed in a particular currency, payment must be made in the
currency of the place where payment is to be made.
AR
ARTICLE
TICLE 6.1.11. (COS
(COSTS
TS OF PERFORMANCE)
Each party shall bear the costs of performance of its obligations.
page 67
AR
ARTICLE
TICLE 6.1.12. (IMPUT
(IMPUTA
ATION OF P
PA
AYMENTS)
An obligor owing several monetary obligations to the same obligee may specify at the time of payment
the debt to which it intends the payment to be applied. However, the payment discharges first any
expenses, then interest due and finally the principal.
If the obligor makes no such specification, the obligee may, within a reasonable time after payment,
declare to the obligor the obligation to which it imputes the payment, provided that the obligation is due
and undisputed.
In the absence of imputation under paragraphs (1) or (2), payment is imputed to that obligation which
satisfies one of the following criteria and in the order indicated:
an obligation which is due or which is the first to fall due;
the obligation for which the obligee has least security;
the obligation which is the most burdensome for the obligor;
the obligation which has arisen first.
an obligation which is due or which is the first to fall due;
the obligation for which the obligee has least security;
the obligation which is the most burdensome for the obligor;
the obligation which has arisen first.

14
If none of the preceding criteria applies, payment is imputed to all the obligations proportionally.
AR
ARTICLE
TICLE 6.1.13. (IMPUT
(IMPUTA
ATION OF NON-MONET
NON-MONETAR
ARY
Y OBLIGA
OBLIGATIONS)
TIONS)
Article 6.1.12 applies with appropriate adaptations to the imputation of performance of non-monetary
obligations.
AR
ARTICLE
TICLE 6.1.14. (APPLICA
(APPLICATION
TION FOR PUBLIC PERMISSION)
Where the law of a State requires a public permission affecting the validity of the contract or its
performance and neither that law nor the circumstances indicate otherwise
a) if only one party has its place of business in that State, that party shall take the measures necessary to
obtain the permission;
b) in any other case the party whose performance requires permission shall take the necessary
measures.
AR
ARTICLE
TICLE 6.1.15. (PR
(PROCEDURE
OCEDURE IN APPL
APPLYING
YING FOR PERMISSION)
The party required to take the measures necessary to obtain the permission shall do so without undue
delay and shall bear any expenses incurred.
That party shall whenever appropriate give the other party notice of the grant or refusal of such
permission without undue delay.
AR
ARTICLE
TICLE 6.1.16. (PERMISSION NEITHER GRANTED NOR REFUSED)
If, notwithstanding the fact that the party responsible has taken all measures required, permission is
neither granted nor refused within an agreed period or, where no period has been agreed, within a
reasonable time from the conclusion of the contract, either party is entitled to terminate the contract.
Where the permission affects some terms only, paragraph (1) does not apply if, having regard to the
circumstances, it is reasonable to uphold the remaining contract even if the permission is refused.
AR
ARTICLE
TICLE 6.1.17. (PERMISSION REFUSED)
The refusal of a permission affecting the validity ot the contract renders the contract void. If the refusal
affects the validity of some terms only, only such terms are void if, having regard to the circumstances, it
is reasonable to uphold the remaining contract.
Where the refusal of a permission renders the performance of the contract impossible in whole or in
part, the rules on non-performance apply.
Section 2 – Hardship
AR
ARTICLE
TICLE 6.2.1. (CONTRA
(CONTRACT
CT T
TOO BE OBSER
OBSERVED)
VED)
Where the performance of a contract becomes more onerous for one of the parties, that party is
nevertheless bound to perform its obligations subject to the following provisions on hardship.
page 68
AR
ARTICLE
TICLE 6.2.2. (DEFINITION OF HARDSHIP)
There is hardship where the occurrence of events fundamentally alters the equilibrium of the contract

15
either because the cost of a party's performance has increased or because the value of the performance
a party receives has diminished, and
the events occur or become known to the disadvantaged party after the conclusion of the contract;
the events could not reasonably have been taken into account by the disadvantaged party at the time of
the conclusion of the contract;
the events are beyond the control of the disadvantaged party; and
d) the risk of the events was not assumed by the disadvantaged party.
AR
ARTICLE
TICLE 6.2.3. (EFFECTS OF HARDSHIP)
In case of hardship the disadvantaged party is entitled to request renegotiations. The request shall be
made without undue delay and shall indicate the grounds on which it is based.
The request for renegotiation does not in itself entitle the disadvantaged party to withhold performance.
Upon failure to reach agreement within a reasonable time either party may resort to the court.
If the court finds hardship it may, if reasonable,
terminate the contract at a date and on terms to be fixed; or
adapt the contract with a view to restoring its equilibrium.
terminate the contract at a date and on terms to be fixed; or
adapt the contract with a view to restoring its equilibrium.
CHAPTER 7 – NON-PERFORMANCE
Section 1 – Non-Performance in Gener

General
al
AR
ARTICLE
TICLE 7.1.1. (NON-PERFORMANCE DEFINED)
Non-performance is failure by a party to perform any of its obligations under the contract, including
defective performance or late performance.
AR
ARTICLE
TICLE 7.1.2. (INTERFERENCE B
BY
Y THE O
OTHER
THER P
PAR
ARTY)
TY)
A party may not rely on the non-performance of the other party to the extent that such non-performance
was caused by the first party's act or omission or by another event as to which the first party bears the
risk.
AR
ARTICLE
TICLE 7.1.3. (WITHHOLDING PERFORMANCE)
Where the parties are to perform simultaneously, either party may withhold performance until the other
party tenders its performance.
Where the parties are to perform consecutively, the party that is to perform later may withhold its
performance until the first party has performed.
AR
ARTICLE
TICLE 7.1.4. (CURE B
BY
Y NON-PERFORMING P
PAR
ARTY)
TY)
The non-performing party may, at its own expense, cure any non-performance, provided that

16
without undue delay, it gives notice indicating the proposed manner and timing of the cure;
cure is appropriate in the circumstances;
the aggrieved party has no legitimate interest in refusing cure; and
cure is effected promptly.
The right to cure is not precluded by notice of termination.
Upon effective notice of cure, rights of the aggrieved party that are inconsistent with the non- performing
party's performance are suspended until the time for cure has expired.
The aggrieved party may withhold performance pending cure.
Notwithstanding cure, the aggrieved party retains the right to claim damages for delay as well as for any
harm caused or not prevented by the cure.
without undue delay, it gives notice indicating the proposed manner and timing of the cure;
cure is appropriate in the circumstances;
the aggrieved party has no legitimate interest in refusing cure; and
cure is effected promptly.
page 69
AR
ARTICLE
TICLE 7.1.5. (ADDITIONAL PERIOD FOR PERFORMANCE)
In a case of non-performance the aggrieved party may by notice to the other party allow an additional
period of time for performance.
During the additional period the aggrieved party may withhold performance of its own reciprocal
obligations and may claim damages but may not resort to any other remedy. If it receives notice from
the other party that the latter will not perform within that period, or if upon expiry of that period due
performance has not been made, the aggrieved party may resort to any of the remedies that may be
available under this Chapter.
Where in a case of delay in performance which is not fundamental the aggrieved party has given notice
allowing an additional period of time of reasonable length, it may terminate the contract at the end
of that period. If the additional period allowed is not of reasonable length it shall be extended to a
reasonable length. The aggrieved party may in its notice provide that if the other party fails to perform
within the period allowed by the notice the contract shall automatically terminate.
Paragraph (3) does not apply where the obligation which has not been performed is only a minor part of
the contractual obligation of the non-performing party.
AR
ARTICLE
TICLE 7. 1.6. (EXEMPTION CLA
CLAUSES)
USES)
A clause which limits or excludes one party's liability for non-performance or which permits one party
to render performance substantially different from what the other party reasonably expected may not
be invoked if it would be grossly unfair to do so, having regard to the purpose of the contract.
AR
ARTICLE
TICLE 7.1.7. (FOR
(FORCE
CE MAJEURE)

17
Non-performance by a party is excused if that party proves that the non-performance was due to an
impediment beyond its control and that it could reasonably be expected to have taken the impediment
into account at the time of conclusion of the contract or to have avoided or overcome it or its
consequences.
When the impediment is only temporary, the excuse shall have effect for such period as is reasonable
having regard to the effect of the impediment on the performance of the contract.
The party who fails to perform must give notice to the other party of the impediment and its effect on its
ability to perform. If the notice is not received by the other party within a reasonable time after the party
who fails to perform knew or ought to have known of the impediment, it is liable for damages resulting
from such non receipt.
Nothing in this article prevents a party from exercising a right to terminate the contract or to withhold
performance or request interest on money due.
Section 2 – Right to Performance
AR
ARTICLE
TICLE 7.2.1. (PERFORMANCE OF MONET
MONETAR
ARY
Y OBLIGA
OBLIGATION)
TION)
Where a party who is obliged to pay money does not do so, the other party may require payment.
AR
ARTICLE
TICLE 7.2.2. (PERFORMANCE OF NON-MONET
NON-MONETAR
ARY
Y OBLIGA
OBLIGATION)
TION)
Where a party who owes an obligation other than one to pay money does not perform, the other party
may require performance, unless
performance is impossible in law or in fact;
performance or, where relevant, enforcement is unreasonably burdensome or expensive;
the party entitled to performance may reasonably obtain performance from another source;
performance is of an exclusively personal character; or
the party entitled to performance does not require performance within a reasonable time after it has, or
ought to have, become aware of the non-performance.
page 70
AR
ARTICLE
TICLE 7.2.3. (REP
(REPAIR
AIR AND REPLA
REPLACEMENT
CEMENT OF DEFECTIVE PERFORMANCE)
The right to performance includes in appropriate cases the right to require repair, replacement, or other
cure of defective performance. The provisions of Articles 7.2.1 and 7.2.2 apply accordingly.
AR
ARTICLE
TICLE 7.2.4. (JUDICIAL PENAL
PENALTY)
TY)
Where the court orders a party to perform, it may also direct that this party pay a penalty if it does not
comply with the order.
The penalty shall be paid to the aggrieved party unless mandatory provisions of the law to the forum
provide otherwise. Payment of the penalty to the aggrieved party does not exclude any claim for
damages.
AR
ARTICLE
TICLE 7.2.5. (CHANGE OF REMED
REMEDY)
Y)

18
An aggrieved party who has required performance of a non-monetary obligation and who has not
received performance within a period fixed or otherwise within a reasonable period of time may invoke
any other remedy.
Where the decision of a court for performance of a non-monetary obligation cannot be enforced, the
aggrieved party may invoke any other remedy.
Section 3 – T
Termination
ermination
AR
ARTICLE
TICLE 7.3.1. (RIGHT T
TOO TERMINA
TERMINATE
TE THE CONTRA
CONTRACT)
CT)
A party may terminate the contract where the failure of the other party to perform an obligation under
the contract amounts to a fundamental non-performance.
In determining whether a failure to perform an obligation amounts to a fundamental non-performance

regard shall be had, in particular, to whether
the non-performance substantially deprives the aggrieved party of what it was entitled to expect under
the contract unless the other party did not foresee and could not reasonably have foreseen such result;
strict compliance with the obligation which has not been performed is of essence under the contract;
the non-performance is intentional or reckless;
the non-performance gives the aggrieved party reason to believe that it cannot rely on the other party's
future performance;
the non-performing party will suffer disproportionate loss as a result of the preparation or performance
if the contract is terminated.
In the case of delay the aggrieved party may also terminate the contract if the other party fails to perform
before the time allowed it under Article 7.1.5 has expired.
the non-performance substantially deprives the aggrieved party of what it was entitled to expect under
the contract unless the other party did not foresee and could not reasonably have foreseen such result;
strict compliance with the obligation which has not been performed is of essence under the contract;
the non-performance is intentional or reckless;
the non-performance gives the aggrieved party reason to believe that it cannot rely on the other party's
future performance;
the non-performing party will suffer disproportionate loss as a result of the preparation or performance
if the contract is terminated.
AR
ARTICLE
TICLE 7.3.2. (NO
(NOTICE
TICE OF TERMINA
TERMINATION)
TION)
The right of a party to terminate the contract is exercised by notice to the other party.
If performance has been offered late or otherwise does not conform to the contract the aggrieved party
will lose its right to terminate the contract unless it gives notice to the other party within a reasonable
time after it has or ought to have become aware of the offer or of the non-conforming performance.
AR
ARTICLE
TICLE 7.3.3. (ANTICIP
(ANTICIPA
ATOR
ORY
Y NON-PERFORMANCE)
Where prior to the date for performance by one of the parties it is clear that there will be a fundamental

19
non-performance by that party the other party may terminate the contract.
AR
ARTICLE
TICLE 7.3.4. (ADEQU
(ADEQUAATE ASSURANCE OF DUE PERFORMANCE)
A party who reasonably believes that there will be a fundamental non-performance by the other
party may demand adequate assurance of due performance and may meanwhile withhold its own
performance. Where this assurance is not provided within a reasonable time the party demanding it
may terminate the contract.
page 71
AR
ARTICLE
TICLE 7.3.5. (EFFECTS OF TERMINA
TERMINATION
TION IN GENERAL)
Termination of the contract releases both parties from their obligation to effect and to receive future
performance.
Termination does not preclude a claim for damages for non-performance.
Termination does not affect any provision in the contract for the settlement of disputes or any other term
of the contract which is to operate even after termination.
AR
ARTICLE
TICLE 7.3.6. (RES
(RESTITUTION)
TITUTION)
On termination of the contract either party may claim restitution of whatever it has supplied, provided
that such party concurrently makes restitution of whatever it has received. If restitution in kind is not
possible or appropriate allowance should be made in money whenever reasonable.
However, if performance of the contract has extended over a period of time and the contract is divisible,
such restitution can only be claimed for the period after termination has taken effect.
Section 4 – Damages
AR
ARTICLE
TICLE 7.4.1. (RIGHT T
TOOD
DAMA
AMAGES)
GES)
Any non-performance gives the aggrieved party a right to damages either exclusively or in conjunction
with any other remedies except where the non-performance is excused under these Principles.
AR
ARTICLE
TICLE 7.4.2. (FULL COMPENS
COMPENSAATION)
The aggrieved party is entitled to full compensation for harm sustained as a result of the non-
performance. Such harm includes both any loss which it suffered and any gain of which it was deprived,
taking into account any gain to the aggrieved party resulting from its avoidance of cost or harm.
Such harm may be non-pecuniary and includes, for instance, physical suffering or emotional distress.
AR
ARTICLE
TICLE 7.4.3. (CER
(CERTTAINTY OF HARM)
Compensation is due only for harm, including future harm, that is established with a reasonable degree
of certainty.
Compensation may be due for the loss of a chance in proportion to the probability of its occurrence.
Where the amount of damages cannot be established with a sufficient degree of certainty, the assessment
is at the discretion of the court.
AR
ARTICLE
TICLE 7.4.4. (FORESEEABILITY OF HARM)

20
The non-performing party is liable only for harm which it foresaw or could reasonably have foreseen at
the time of the conclusion of the contract as being likely to result from its non-performance.
AR
ARTICLE
TICLE 7.4.5. (PR
(PROOF
OOF OF HARM IN CASE OF REPLA
REPLACEMENT
CEMENT TRANS
TRANSAACTION)
Where the aggrieved party has terminated the contract and has made a replacement transaction within
a reasonable time and in a reasonable manner it may recover the difference between the contract price
and the price of the replacement transaction as well as damages for any further harm.
AR
ARTICLE
TICLE 7.4.6. (PR
(PROOF
OOF OF HARM B
BY
Y CURRENT PRICE)
Where the aggrieved party has terminated the contract and has not made a replacement transaction but
there is a current price for the performance contracted for, it may recover the difference between the
contract price and the price current at the time the contract is terminated as well as damages for any
further harm.
Current price is the price generally charged for goods delivered or services rendered in comparable
circumstances at the place where the contract should have been performed or, if there is no current price
at that place, the current price at such other place that appears reasonable to take as a reference.
page 72
AR
ARTICLE
TICLE 7.4.7. (HARM DUE IN P
PAR
ARTTT
TOOA
AGGRIE
GGRIEVED
VED P
PAR
ARTY)
TY)
Where the harm is due in part to an act or omission of the aggrieved party or to another event as to
which that party bears the risk, the amount of damages shall be reduced to the extent that these factors
have contributed to the harm, having regard to the conduct of each of the parties.
AR
ARTICLE
TICLE 7.4.8. (MITIGA
(MITIGATION
TION OF HARM)
The non-performing party is not liable for harm suffered by the aggrieved party to the extent that the
harm could have been reduced by the latter party's taking reasonable steps.
The aggrieved party is entitled to recover any expenses reasonably incurred in attempting to reduce the
harm.
AR
ARTICLE
TICLE 7.4.9. (INTERES
(INTERESTT FOR F
FAILURE
AILURE T
TOOP
PA
AY MONE
MONEY)
Y)
If a party does not pay a sum of money when it falls due the aggrieved party is entitled to interest upon
that sum from the time when payment is due to the time of payment whether or not the non-payment is
excused.
The rate of interest shall be the average bank short-term lending rate to prime borrowers prevailing for
the currency of payment at the place for payment, or where no such rate exists at that place, then the
same rate in the State of the currency of payment. In the absence of such a rate at either place the rate of
interest shall be the appropriate rate fixed by the law of the State of the currency of payment.
The aggrieved party is entitled to additional damages if the non-payment caused it a greater harm.
AR
ARTICLE
TICLE 7.4.10. (INTERES
(INTERESTT ON D
DAMA
AMAGES)
GES)
Unless otherwise agreed, interest on damages for non-performance of non-monetary obligations accrues
as from the time of non-performance.
AR
ARTICLE
TICLE 7.4.11. (MANNER OF MONET
MONETAR
ARY
Y REDRESS)

21
Damages are to be paid in a lump sum. However, they may be payable in instalments where the nature
of the harm makes this appropriate.
Damages to be paid in instalments may be indexed.
AR
ARTICLE
TICLE 7.4.12. (CURRENCY IN WHICH T
TOO ASSESS D
DAMA
AMAGES)
GES)
Damages are to be assessed either in the currency in which the monetary obligation was expressed or in
the currency in which the harm was suffered, whichever is more appropriate.
AR
ARTICLE
TICLE 7.4.13. (A
(AGREED
GREED P
PA
AYMENT FOR NON-PERFORMANCE)
Where the contract provides that a party who does not perform is to pay a specified sum to the aggrieved
party for such non-performance, the aggrieved party is entitled to that sum irrespective of its actual
harm.
However, notwithstanding any agreement to the contrary the specified sum may be reduced to a
reasonable amount where it is grossly excessive in relation to the harm resulting from the non-
performance and to the other circumstances..

22
ICC At A Glance
Acquisitions
cquisitions Contr
Contract
act - 2004
ICC is the world business organization. It is the only representative body that speaks with authority on
behalf of enterprises from all sectors in every part of the world.
ICC's purpose is to promote an open international trade and investment system and the market economy
worldwide. It makes rules that govern the conduct of business across borders. It provides essential
services, foremost among them the ICC International Court of Arbitration, the world's leading institution
of its kind.
Within a year of the creation of the United Nations, ICC was granted consultative status at the highest
level with the UN and its specialized agencies. Today ICC is the preferred partner of international and
regional organizations whenever decisions have to be made on global issues of importance to business.
Business leaders and experts drawn from ICC membership establish the business stance on broad
issues of trade and investment policy as well as on vital technical or sectoral subjects. These include
financial services, information technologies, telecommunications, marketing ethics, the environment,
transportation, competition law and intellectual property, among others.
ICC was founded in 1919 by a handful of far-sighted business leaders. Today it groups thousands of
member companies and associations from over 130 countries. National committees in all major capitals
coordinate with their membership to address the concerns of the business community and to put across
to their governments the business views formulated by ICC.
Some ICC Services
- The ICC Counterfeiting Intelligence Bureau
- The ICC Commercial Crime Bureau
- The ICC International Maritime Bureau
ICC Publishing S.A.
ICC Publishing, the publishing subsidiary of ICC, produces and sells the works of ICC commissions and
experts as well as guides and corporate handbooks on a range of business topics. Some 100 titles -
designed for anyone interested in international trade - are available from ICC Publishing.
For more detailed information on ICC publications and on the above-listed activities, and to receive the
programme of ICC events, please contact ICC Headquarters in Paris or the ICC national committee in your
country..

1
Selected ICC Publications
Acquisitions
cquisitions Contr
Contract
act - 2004
page 74
E:English F:French D:German S:Spanish I:Italian EF :bilingual edition EF separate editions in each
language
ICC MODEL CONTRA

CONTRACTS
CTS SERIES
ICC Model Contr

Contract
act for the Turnk
Turnkey
ey Supply of an Industrial Plant (with CD-R
CD-ROM)
OM)
This new title in the ICC series of model contracts covers a particular category of turnkey contract, one
that is limited to the plant or production line and does not extend to items which “surround” the plant,
such as buildings, supply of energy, etc. Turnkey contracts take a range of forms and at present no single
model contract covers them all. This ICC model has special characteristics: the supplier’s main obligation
is to supply the equipment and assist the purchaser during erection and start up; the supplier performs
its obligations within facilities that are under the purchaser’s control; this model contract is generally
governed by the rules on sale contracts. This model contract takes account of all of these specifics and
contains enough flexibility for the parties to work out special situations for themselves.
E 120pages ISBN 92-842-1323-1 No 653
ICC Model Commercial A

Agency
gency Contr
Contract,
act, 2nd edition (with CD-R
CD-ROM)
OM)
Fully revised edition of a tried and tested ICC model that takes into account recent developments in
the laws of agency, including Internet sales. Including a detailed introduction that explains the scope of
the contract and its uses, this edition includes the following new appendices: EC Directive 86/653; the
UNIDROIT Principles of International Commercial Contracts, plus a list of indications on national laws
on commercial agency.
E-F 68pages ISBN 92-842-1313-4 No 644
ICC Model International Sale Contr

Contract
act (with CD-R
CD-ROM)
OM)
A flexible and clear model contract providing directions to sellers and buyers of manufactured goods.
Allows users either to incorporate only the general conditions or to include the specific conditions, which
set out standard terms common to all contracts with the ICC General Conditions of Sale. A diskette
provides the text of the model, and useful annexes include the preambles of Incoterms 2000 and the
United Nations Convention for the International Sale of Goods. Easy to use for first-time traders, but also
providing the legal protection demanded by experienced practitioners. Electronic format also available
from www.iccbooks.com.
E-F 64pages ISBN 92-842-1210-3 No 556
ICC Model Distributorship Contr

Contract
act (sole importer-distributor)2nd edition (with CD-R
CD-ROM)
OM)
Distributorship contracts are one of the most frequently used means for organising the distribution of
goods in a foreign country. Almost every company engaged in international trade has at least some
agents abroad and so most exporters will at some stage be faced with drafting an international
distributorship agreement. The revised edition takes into account important changes since the
publication of the first model, particularly concerning the EC antitrust rules on vertical restraints, and
the need to harmonize with the ICC Short Form Model Contract, published in 2001 (ICC publication 518).

1
E-F 68pages ISBN 92-842-1315-0 No 646
page 75
Incoterms 2000
ICC’s standard definitions of trade terms. Incoterms 2000 describes and interprets the meaning of
the 13 basic terms used in international sales contracts. These terms are regularly incorporated into
sales contracts worldwide and have become part of the daily language of international trade. The
2000 edition contains many innovations in format and substance. It will provide importers, exporters,
bankers, lawyers, and transport officials with a modern text reflecting the latest changes in the trading
environment.
E-F 272pages ISBN 92-842-1199-9 No 560
ICC Guide to Incoterms 2000
Written by Professor Jan Ramberg, international expert, chair of the revision of Incoterms 2000 and
author of Guide to Incoterms 1990 , this clearly written and authoritative guide provides a term-by-
term review of the new Incoterms, with commentary on each obligation of the seller and the buyer. The
indispensable companion to the Incoterms 2000.
E-F 192pages ISBN 92-842-1269-3 No 620
Incoterms 2000 W
Wall
all Chart
A full-colour chart, ideal for hanging on the office wall or for slotting into a file. Thanks to the clear
illustration of the buyers’ and sellers’ responsibilities under each of the Incoterms, plus a list of the
critical points, traders will find this the ideal tool for quick reference at a glance.
E- 29.7 X 63cm No 614
Incoterms 2000 Multimedia Expert
Available in single-user or LAN version, the Incoterms 2000 Multimedia Expert is a lively, interactive
software designed to help you make sense of the 13 Incoterms 2000. Expert is not only an ideal visual tool
for teachers and trainers, it is also a valuable everyday reference in the work place for those needing a
detailed knowledge of Incoterms.
E- CD-ROM ISBN 92-842-1280-4 No 616
Incoterms 2000: a F
Forum
orum of Experts
Four experts who drafted Incoterms 2000 describe the ins and outs of the new rules in this word-
for-word transcript of the ICC conference held to launch them. Providing an in-depth view into the
changes in these important commercial terms, the experts discuss the following issues: an overview of
the terms and how they have changed (or haven’t); Incoterms, transport procedures and techniques;
Incoterms and customs clearance procedures; Incoterms and documentary practices. Each presentation
is followed by a series of questions and answers. The perfect complement to help you fully understand
the Incoterms.
E- 128pages ISBN 92-842-1270-7 No 617
page 76

2
A to Z of International Tr
Trade
ade
By Frank Reynolds
More than a dictionary, A to Z doubles as a reference book, developing terms in context and showing
how they interact. Including 2000 definitions and acronyms as well as website addresses, the dictionary’s
thorough cross referencing system enables you to define a word from start to finish. And A to Z takes you
further, with its nine “Focus on” sections, providing well-researched introductions on air transport, bank
collections, e-commerce, Incoterms, insurance, letters of credit, sales contracts, liner vessel shipping and
vessel chartering. A to Z helps you understand the language of international trade.
E 343pages ISBN 92-842-1277-4 No 623
Guide to Export-Import Basics (2nd edition)
A fully revised edition of this ICC bestseller. Providing clear explanations of the core mechanics of trade,
this guide takes a lucid look at the legal, financial, transport and e-commerce issues. Fully indexed, it also
includes a handy glossary of the principal terms and abbreviations.
E- 360pages ISBN 92-842-1309-6 No 641
Key W
Words
ords in International Tr
Trade
ade (4th edition)
Over 3000 translations of the terms and abbreviations most commonly used in international law and
commerce, taken from the fields of banking, transport, management, marketing, arbitration, trade,
telecommunications and international organizations.
EFSDI 408pages ISBN 92-842-1187-5 No 417

3

ICC Model Mergers and Acquisitions Contract - Model Contract PDF

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Introduction

ICC Model Mergers and A

1. THE PRESENT MODEL

2. THE DRAFTING TECHNIQUE USED

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The two extreme solutions are the following:

Relevant date for correctness of warr

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“Best knowledge” and similar expressions

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by the relevant trade usages, and

by the Unidroit Principles of International Commercial Contracts.

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By Maria Livanos Cattaui, Secretary General of ICC

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In this Agreement, unless the context otherwise requires:

"Accounts" means the financial statements 1

"Agreement" means this agreement and its annexes and schedules.

"Event" has the meaning defined in Article 10.1.

"Losses" has the meaning defined in Article 9.1.

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6 3 Closing is the effective date of the transfer of the Shares 10

The Seller undertakes to the Buyer in the terms of Annex 4.

by reference to any other paragraph of Schedule A; or

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Merger clearance by the competent antitrust authorities.

2.CONSENT OF ALL REGULA

[Insert clearance by the competent antitrust authorities]

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Prepare delivery of the following documents:

4.1 Certificate of incorporation and changes of name certificates.

4.2 Constitutional document(s).

4.3 Certificate or extract from a public commercial register.

4.4 Share register/list of the present shareholders/statutory books/all internal registers.

4.6 [List of all members of the relevant board(s)].

4.9 Financial statements as of[ ].

4.10 Financial and tax confirmatory due diligence report.

4.13 Certificate or extract from a public land register.

4.14 Deeds concerning any rights or obligations with respect to land.

4.15 Deeds and documents of title to the Real Estates.

4.16 Legal opinions.

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Merger clearance by the following antitrust authorities:

2.CONSENT OF ALL REGULA

(e.g. stock exchange, foreign investment)

................................... (authority) ................................... (type of clearance)

................................... (authority) ................................... (type of clearance)

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Prepare delivery of the following documents:

5.1 Certificate of incorporation and changes of name certificates.

5.2 Articles of association and Memorandum of Association constitutional documents] 3.

5.3 Certificate or extract from a public commercial register.

5.4 Share register/list of the present shareholders/statutory books/all internal registers.

5.6 [List of all members of the supervisory board].

5.7 [List of all members of the management board] 4