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Exhibit 2.01
STOCK PURCHASE AGREEMENT
AMONG
WATERLINK (SWEDEN) AB,
WATERLINK, INC.
AND THE
SHAREHOLDERS OF MELLAGARD V.A. MASKINER AB
LISTED HEREIN
SEPTEMBER 12, 1997
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TABLE OF CONTENTS
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ARTICLE I PURCHASE PRICE OF SHARES: MANNER OF PAYMENT........................................................1
1.1 Purchase Price of Shares....................................................................1
1.2 Manner of Payment...........................................................................2
1.3 Earn-Out....................................................................................2
1.4 Determination of Earn-Out Payments..........................................................4
ARTICLE II REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLERS...............................................5
2.1 Organization and Standing...................................................................5
2.2 Conflicts; Consents.........................................................................6
2.3 Capital Stock...............................................................................6
2.4 Title to Shares; Investments of the Company.................................................6
2.5 Outstanding Options and Warrants............................................................6
2.6 Business Relations..........................................................................7
2.7 Real Property...............................................................................7
2.8 Title to and Condition of Assets............................................................8
2.9 Financial Statements........................................................................8
2.10 Absence of Certain Changes..........................................................................9
2.11 Absence of Undisclosed Liabilities.................................................................10
2.12 Taxes..............................................................................................11
2.13 Indebtedness to Officers, Directors and Shareholders...............................................11
2.14 Corporate Minutes..................................................................................11
2.15 Brokerage and Finder's Fees........................................................................12
2.16 Accounts Receivable................................................................................12
2.17 Employment Matters.................................................................................12
2.18 No Defaults........................................................................................13
2.19 Material Contracts.................................................................................13
2.20 Purchase Orders....................................................................................13
2.21 Indebtedness.......................................................................................13
2.22 Litigation.........................................................................................14
2.23 Insurance..........................................................................................14
2.24 Transactions with Officers, Etc....................................................................14
2.25 Employees..........................................................................................15
2.26 Trademarks, Copyrights and Similar Matters.........................................................15
2.27 Environmental Matters..............................................................................16
2.28 Bank Accounts......................................................................................16
2.29 Compliance with Laws...............................................................................16
2.30 Powers of Attorney.................................................................................17
2.31 Licenses and Rights................................................................................17
2.32 Products...........................................................................................17
2.33 Casualty Occurrences...............................................................................17
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2.34 Inventory..........................................................................................18
2.35 Capital Expenditure Plans..........................................................................18
2.36 Representations and Warranties.....................................................................18
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER........................................................18
3.1 Organization and Good Standing of Purchaser................................................18
3.2 Authority and Financial Capability of Purchaser............................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT...........................................................19
4.1 Organization...............................................................................19
4.2 Capitalization.............................................................................19
4.3 Corporate Authorization; Validity of Agreement; Necessary Action...........................20
4.4 Consents and Approvals; No Violations......................................................20
4.5 SEC Reports and Financial Statements.......................................................20
4.6 Absence of Certain Changes.................................................................21
4.7 No Default.................................................................................21
ARTICLE V CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
AND PARENT.........................................................................................22
5.1 Representations True.......................................................................22
5.2 All Consents Obtained......................................................................22
5.3 Performance of Obligations.................................................................22
5.4 Receipt of Documents by Purchaser..........................................................22
5.5 No Litigation..............................................................................23
5.6 Delivery of Books and Records..............................................................23
5.7 Absence of Changes.........................................................................23
5.8 Purchaser's Review.........................................................................23
5.9 No Indebtedness............................................................................23
5.10 Employment Agreements..............................................................................23
5.11 Investment Letters.................................................................................23
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS.....................................................23
6.1 Representations True.......................................................................23
6.2 All Consents Obtained......................................................................24
6.3 Performance of Obligations.................................................................24
6.4 Receipt of Documents by Sellers............................................................25
6.5 No Litigation..............................................................................24
6.6 Employment Agreements......................................................................24
ARTICLE VII CLOSING............................................................................................24
ARTICLE VIII TERMINATION OF AGREEMENT...........................................................................25
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ARTICLE IX SURVIVAL OF REPRESENTATIONSAND WARRANTIES:
INDEMNIFICATION: DISPUTES..........................................................................25
9.1 Survival of Representations and Warranties.................................................25
9.2 Sellers' Indemnification...................................................................26
9.3 Defense of Claim...........................................................................26
9.4 Purchaser's Indemnification................................................................27
9.5 Limitation on Indemnification..............................................................27
ARTICLE X CONDUCT PRIOR TO CLOSING DATE......................................................................28
10.1 Continuation of Business...........................................................................28
10.2 Preservation of Business...........................................................................29
10.3 Consents and Approvals.............................................................................29
ARTICLE XI ASSIGNMENT, THIRD PARTIES, BINDING EFFECT..........................................................29
ARTICLE XII EXPENSES............................................................................................30
ARTICLE XIII NOTICES.............................................................................................30
ARTICLE XIV REMEDIES NOT EXCLUSIVE...............................................................................31
ARTICLE XV NON-COMPETITION......................................................................................31
15.1 Non-Competition Agreement..........................................................................31
15.2 Disclosure of Confidential Information.............................................................33
ARTICLE XVI MISCELLANEOUS........................................................................................33
16.1 Counterparts.......................................................................................33
16.2 Captions and Section Headings......................................................................33
16.3 Waivers............................................................................................33
16.4 Right of Inspection................................................................................33
16.5 Amendments, Supplements or Modifications...........................................................33
16.6 Entire Agreement...................................................................................33
16.7 Governing Law......................................................................................34
16.8 Knowledge and Best Efforts.........................................................................34
16.9 Press Releases.....................................................................................34
16.10 Arbitration........................................................................................34
16.11 Effective Date.....................................................................................34
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made this 12th day of
September, 1997, among Waterlink, Inc., a corporation organized under the laws
of the State of Delaware in the United States ("Parent"), WATERLINK (SWEDEN) AB,
a company organized under the laws of Sweden, registration number 556534-5401
(the "Purchaser"), and each of the Shareholders of Xxxxxxxxx V.A. Maskiner AB, a
company organized under the laws of Sweden, registration number 556399-8540 (the
"Company"), to wit: Xxxxxxx Xxxxxxxx, Xxxxx Xxxxxxxxx, and Per Xxxxxxxxx
(collectively, the "Sellers").
R E C I T A L S:
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A. Sellers own all the issued and outstanding shares of capital stock
of the Company.
B. Subject to the conditions of this Agreement, and subject to the
performance by the parties of their respective obligations under this Agreement,
Sellers desire to sell, and Parent and Purchaser desire to purchase, all the
issued and outstanding shares of capital stock of the Company for the
consideration and on the terms set forth in this Agreement.
NOW, THEREFORE, Parent, Purchaser and Sellers, intending to be legally
bound, agree as follows:
ARTICLE I
PURCHASE PRICE OF SHARES: MANNER OF PAYMENT
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1.1 PURCHASE PRICE OF SHARES. On the terms and subject to the
conditions of this Agreement, Sellers shall, with all transfer taxes of any kind
prepaid, convey, assign and transfer to Parent and Purchaser at the Closing (as
defined below) all the Shares (as defined in Section 2.3), free and clear of all
liens, charges, security interests, adverse claims, pledges, encumbrances and
demands whatsoever. Parent and Purchaser shall purchase all the Shares for an
aggregate purchase price (the "Purchase Price") of Forty Seven Million Nine
Hundred Eighty Thousand Swedish Krona (SEK 47,980,000) plus the Earn-Out
Payments (as defined below), if any. As between Parent and Purchaser, at the
Closing, Parent will purchase 38 Shares (representing the whole number of Shares
most closely approximating 19.2% of all the outstanding Shares) for the
aggregate purchase price of Twelve Million Nine Hundred Eighty Thousand Swedish
Krona (SEK 12,980,000) and Purchaser will purchase 162 Shares (representing the
whole number of Shares most closely approximating 80.8% of all the outstanding
Shares) for the aggregate purchase price of Thirty Five Million Swedish Krona
(SEK 35,000,000) plus the Earn-Out Payments (as defined below), if any.
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1.2 MANNER OF PAYMENT.
(a) Purchaser's portion of the Purchase Price will be paid by
Purchaser to Sellers as follows:
(i) Thirty Five Million Swedish Krona (SEK
35,000,000) will be paid by Purchaser at the Closing to
Sellers in the aggregate by certified or bank checks in
immediately available funds or by wire transfers to an account
or accounts designated by Sellers, at each Seller's option
(the "Cash Portion").
(ii) Purchaser will pay to Sellers the Earn-Out
Payments, if any, as set forth in Section 1.3 below.
(b) Parent's portion of the Purchase Price will be paid by
Parent to Sellers as follows: Parent will issue to each Seller its
convertible subordinated promissory note (the "Note") substantially in
the form of Exhibit A to this Agreement, dated as of the Closing Date
and payable to each Seller in the principal amount of Four Million
Three Hundred Twenty-Six Thousand Six Hundred Sixty-Seven Swedish Krona
(SEK 4,326,667). Each Note will be convertible into shares of Common
Stock, par value U.S. $.001 per share, of Parent ("Parent Common
Stock"), as provided for therein.
1.3 EARN-OUT.
(a) In addition to the Cash Portion and the Note referred to
in Section 1.2 above, Purchaser shall pay to Sellers in the aggregate
the amounts set forth below (the "Earn-Out Payments") based on the
"Adjusted Pre-Tax Income" (as more fully defined below) of the Company
for the twelve-month period ended August 31, 1997, the thirteen-month
period ending September 30, 1998 and the twelve-month period ending
September 30, 1999.
(b) "Adjusted Pre-Tax Income" for any period of determination
shall mean the net income after financial income and expenses but
before extraordinary income and expenses in accordance with Clause 18
of Bokforingslag (1976:125) determined in accordance with generally
accepted accounting principals used in Sweden ("Swedish GAAP") applied
in a manner consistent with the Company's past practices. In
determining Adjusted Pre-Tax Income for purposes of this Section 1.3,
no effect shall be given to (i) any expenses, including, without
limitation, depreciation expenses, repayments of intercompany
indebtedness and expenses relating to contributions to the capital of
other subsidiaries of Parent, incurred without the consent of Sellers
by the Company outside the normal course of business as operated prior
to the Closing including, but not limited to, (A) expenses allocated by
Parent or any other direct or indirect parent corporation of the
Company unless such expenses (x) are comparable to and replace expenses
incurred by the Company prior to the Closing or (y) are incurred for
sales, marketing, product development or similar purposes which provide
commensurate benefits in income during the same period to the Company's
operations, and (B) expenses incurred in connection with new projects
or ventures outside the normal course of business, (ii) any increased
or decreased expenses resulting from
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purchase accounting adjustments required, or permitted, by Swedish GAAP
or generally accepted accounting principals in the United States solely
as a result of the transactions contemplated by this Agreement, (iii)
losses made in connection with the sale of assets by the Company other
than goods or services to customers in the ordinary course of business,
and (iv) any revenues generated from and associated expenses incurred
in connection with, sales of the Company which individually exceed Two
Hundred Fifty Thousand Swedish Krona (SEK 250,000) and that are sales
to or referred by Parent or any subsidiary of Parent (other than the
Company). In addition, if the Company's cash is contributed or loaned
(without interest or with interest at an annual interest rate which is
lower than the XXXXXX rate then in effect) to another of Parent's
subsidiaries, then Adjusted Pre-Tax Income shall be increased by an
amount equal to the additional interest that would have been earned on
such cash during the applicable portion of the Earn-Out Period if such
cash was retained by the Company and earning interest at such XXXXXX
rate. For purposes of the preceding sentence, "XXXXXX rate" shall mean,
as of any given day, the Stockholm Interbank Offered Rate for deposits
in Swedish Kronor for a term of 360 days, as quoted at or around 11:00
a.m. (Swedish time) on the Reuters Screen SIOR (or such replacement
page on that service which displays the information or if that service
ceases to display the information, such other screen service). It is
the intent of the parties that Adjusted Pre-Tax Income, determined for
purposes of computing the Earn-Out Payments, be an equitable
measurement of the future performance of the business of the Company
being acquired hereby without giving effect to extraordinary revenues
and expenses associated with the operation of such business by the
Purchaser and Parent after the Closing and each party agrees to
cooperate in good faith toward the determination of Adjusted Pre-Tax
Income in a manner consistent with such intent. Purchaser will maintain
the separate corporate existence of the Company during each Earn-Out
Period.
(c) In accordance with the following table, Earn-Out Payments
shall be payable by Purchaser to Sellers in the aggregate, by certified
or bank checks in immediately available funds if the Adjusted Pre-Tax
Income for the twelve-month period ended August 31 1997, the
thirteen-month period ending September 30, 1998 and the twelve-month
period ending September 30, 1999 (the "Earn-Out Periods") equals or
exceeds the amounts set forth in the following table. The Earn-Out
Payments, if any, may be made, at Purchaser's and Parent's option, in
the form of One Hundred Percent (100%) cash, or Fifty Percent (50%) in
cash and Fifty Percent (50%) in the maximum number of shares of Parent
Common Stock having an aggregate value of not more than one-half (1/2)
of the Earn-Out Payment. For purposes of this Section 1.3(c), the value
of the Parent Common Stock shall be determined by the closing price of
the Parent Common Stock as quoted on the New York Stock Exchange, or
such other stock exchange or securities market on which the Parent
Common Stock is listed at such time, or, if the Parent Common Stock is
not listed on any securities exchange, as determined in good faith by
Parent's board of directors (the "Closing Price") on August 29, 1997
for the first Earn-Out Period and September 30 (or if such date is not
a trading day then on the trading day immediately preceding September
30) of the second and third Earn-Out Periods (i.e., for the Earn-Out
Period Ending September 30, 1998, the value of the Common Stock shall
be equal to the Closing Price on September 30, 1998). For purposes of
this Section 1.3, the Closing Price shall be converted into Swedish
Krona based on the exchange
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rate published in THE WALL STREET JOURNAL on the last business day of
the applicable Earn-Out Period.
Adjusted Pre-Tax Income for
the Twelve Months
Ended 8/31/97 Aggregate Earn-Out Payment
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SEK 12,000,000 or greater SEK 5,000,000
Adjusted Pre-Tax Income for
the Thirteen Months
Ending 9/30/98 Aggregate Earn-Out Payment
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SEK 15,000,000 or greater SEK 7,000,000
Adjusted Pre-Tax Income for
the Twelve Months
Ending 9/30/99 Aggregate Earn-Out Payment
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SEK 17,000,000 or greater SEK 7,600,000
1.4 DETERMINATION OF EARN-OUT PAYMENTS.
(a) Sellers shall deliver to Purchaser within ninety (90) days
of August 31, 1997 (i) the Company's audited financial statements for
the twelve-month period ended August 31, 1997 and (ii) a statement
setting forth the computation and amount of Adjusted Pre-Tax Income for
the first Earn-Out Period as reviewed and concurred to by the Company's
independent public accountants (the "First Earn-Out Statement").
Purchaser shall pay the Earn-Out Payment, if any, to Sellers within
five (5) days of the delivery of the First Earn-Out Statement unless
disputed by Purchaser. Purchaser must notify Sellers of any dispute
with the computation of Adjusted Pre-Tax Income set forth on the First
Earn-Out Statement, and any such dispute shall be resolved, in the same
manner as set forth in Section 1.4(c) below.
(b) Purchaser shall deliver to Sellers within ninety (90) days
of September 30, 1998 and 1999 (i) the Company's audited financial
statements covering the respective Earn-Out Period and (ii) a
statement setting forth the computation and amount of Adjusted Pre-Tax
Income for such Earn-Out Period (as reviewed and concurred to by the
Company's independent public accountants) (each, an "Earn-Out
Statement") and shall pay the Earn-Out Payment, if any, to Sellers
within five (5) days of the delivery of the Earn-out Statement unless
disputed by Sellers in accordance with Section 1.4(b) below.
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(c) Sellers shall have thirty (30) days from the date the
Earn-Out Statements are delivered to it to furnish Purchaser with a
letter requesting access to the books and records of the Company
necessary to compute the Adjusted Pre-Tax Income and upon receipt of
such request, Purchaser shall promptly make available such books and
records to Xxxxxx Xxxxxxx of Hemberg Advokatbyra, Gothenburg, Sweden,
as agent for the Sellers ("Sellers' Representative"). Sellers shall
have sixty (60) days after such access is granted to cause Sellers'
Representative to furnish Purchaser with a letter setting forth those
items with which Sellers disagree and the reasons for each such
disagreement. The parties shall promptly seek to reconcile any such
disagreement; if they fail to reach an agreement within thirty (30)
days of receipt by Purchaser of such letter, then an independent public
accounting firm shall be retained by the parties to settle any
remaining disagreement, and the decision of said firm shall be final
and binding on all parties to this Agreement. If Sellers'
Representative and Purchaser cannot agree on an accounting firm to
settle any remaining disagreement within such thirty (30) day period,
then Sellers' Representative and Purchaser shall each designate an
independent public accounting firm and the two (2) firms so designated
shall select an independent public accounting firm and the decision of
said firm shall be final and binding on all parties to this Agreement.
The fees of all accounting firms involved shall be borne equally by the
Seller, on the one hand, and Purchaser, on the other hand. The payment
of any Earn-Out Payment in dispute, ultimately determined (pursuant to
the procedures set forth in this paragraph) to be due the Sellers shall
be made within five (5) days of such determination.
ARTICLE II
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REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLERS
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Sellers, jointly and severally, represent and warrant to, and agree
with, Purchaser as follows:
2.1 ORGANIZATION AND STANDING.
(a) The Company is a company duly organized, validly existing
under the laws of Sweden. To the best of Sellers' knowledge, the
Company has full power and authority, and all necessary licenses,
permits and authorizations, to carry on its business as and where now
conducted and to own or lease and operate its assets and properties at
and where now owned or leased and operated by it, and is duly qualified
to do business in every jurisdiction in which the property owned,
leased or operated by it, or the nature of the business conducted by
it, makes such qualification necessary.
(b) Attached as Schedule 2.1(b) is an updated Registration
Certificate and the Articles of Association of the Company, each of
which is true and complete and fully and completely sets forth all
actions taken and/or required to be recorded therein.
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2.2 CONFLICTS; CONSENTS.
(a) The execution, delivery and consummation of this Agreement
by Sellers (i) is not contrary to the Articles of Association of the
Company, (ii) does not now and will not, with the passage of time, the
giving of notice or otherwise, result in a violation or breach of, or
constitute a default under, any term or provision of any indenture,
mortgage, deed of trust, lease, instrument, order, judgment, decree,
rule, regulation, law, contract, agreement or any other restriction to
which either Seller or the Company is a party or to which Sellers or
any of Sellers' assets is subject or bound or to which the Company or
any of its assets is subject or bound, (iii) will not result in the
creation of any lien or other charge upon any assets of the Company,
and (iv) will not result in any acceleration or termination of any loan
or security interest agreement to which the Company is a party or to
which the Company or any of its assets is subject or bound.
(b) No approval or consent of any person, firm or other entity
or governmental body is or was required to be obtained by Sellers for
the authorization of this Agreement or the consummation by Sellers of
the transactions contemplated by this Agreement.
(c) The execution, delivery and consummation of this Agreement
by Sellers has been duly authorized, and at the Closing Date, no
further action will be necessary on the part of Sellers or the Company
to make this Agreement valid and binding on Sellers and enforceable
against Sellers in accordance with its terms.
2.3 CAPITAL STOCK. The Company has issued Two Hundred (200) shares of
Common Stock, par value SEK 1,000 per share (the "Shares"). All of the Shares of
each are duly authorized, validly issued, fully paid and nonassessable and were
not issued in violation of preemptive or any other rights of any shareholder. No
other shares of capital stock of the Company are outstanding.
2.4 TITLE TO SHARES; INVESTMENTS OF THE COMPANY.
(a) Sellers own (beneficially and of record) all the Shares
free and clear of all liens, charges, security interests, adverse
claims, pledges, encumbrances and demands whatsoever. Sellers have good
and transferable title to the Shares and have the absolute right, power
and capacity to sell, assign and deliver the Shares to Purchaser in
accordance with the terms of this Agreement, free and clear of all
liens, charges, security interests, adverse claims, pledges,
encumbrances and demands whatsoever. Each Seller owns the number of
Shares set forth on Schedule 2.4.
(b) The Company has no direct or indirect equity, debt or
other interest in any entity, corporate or otherwise, or any right,
warrant or option to acquire any such interest.
2.5 OUTSTANDING OPTIONS AND WARRANTS. There are no subscriptions,
options, warrants, rights, puts, calls, commitments or agreements (respecting
issuance, redemption, repurchase, voting or otherwise) relating to, nor any
outstanding securities convertible into, any shares of capital stock or other
equity interest of the Company, or into any such convertible securities, and
neither Sellers
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nor the Company have agreed to issue, purchase, sell or transfer any of same,
except as provided in this Agreement.
2.6 BUSINESS RELATIONS. Other than as set forth on Schedule 2.6(a), the
Company is not required, in the ordinary course of business, to provide any
bonding or any other financial security arrangements in connection with any
transactions with any customers or suppliers. Neither Sellers nor the Company
have received any notice of any material disruption (including, without
limitation, delayed deliveries or allocations by suppliers) in the availability
of any materials or products used in any of the Company's businesses and have
reason to believe that any such material disruption will occur. Except as set
forth on Schedule 2.6, there are no sole source suppliers of goods, equipment or
services used by the Company (other than public utilities) with respect to which
practical alternative sources of supply are unavailable. Other than as set forth
on Schedule 2.6(b), no single customer of the Company accounted for greater than
Five Percent (5%) of the Company's gross revenues for either the most recently
completed fiscal year or the portion of the current fiscal year ended August 31,
1997.
2.7 REAL PROPERTY.
(a) Schedule 2.7(a) is a true and complete list of (i) all
real property leases to which the Company is a party and (ii) all
options, deeds of trust, deeds of declaration, mortgages and land
contracts pursuant to or in which the Company has any interest in any
real property (collectively, the "Real Property"). Sellers have
furnished to Purchaser or its counsel true and complete copies of each
written contract and a written description of each oral contract
relating to the list set forth on Schedule 2.7(a). The Company owns no
real property.
(b) With respect to the leased property comprising the Real
Property including all leasehold improvements (collectively, the
"Leased Property"):
(i) All leases are in writing and are duly executed
and, where required, witnessed, acknowledged and recorded to
make them valid and binding and in full force and effect for
their full term, and none have been modified, amended, sublet
or assigned;
(ii) The rental set forth in each such lease is the
actual rental being paid, and there are no separate agreements
or understandings with respect to the same;
(iii) There is no default by the Company or, to Sellers'
knowledge, any other party which materially affects the Leased
Property;
(iv) On performance by the Company of the terms of each
lease (all of which terms have been performed in all material
respects by the lessee as of the date of this Agreement and
will have been performed in all material respects as of the
Closing Date), the Company has the full right to enjoy the use
of the premises demised for the full term of the lease without
disturbance by any other party, and
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there are no written or oral contracts between the Company and
any third party relating to any claim by such third party of
any right to all or any part of the interest of the Company in
any leasehold estate or otherwise relating to the use and
occupancy by the Company of such estate;
(v) All security deposits required by such leases have
been made and have not been refunded or returned, or to
Sellers' knowledge, their forfeiture claimed, in whole or in
part, by any lessor;
(vi) All leasehold improvements are in good operating or
working condition and repair, after taking into account
ordinary wear and tear, and are adequate for the operation of
the business of the Company as presently conducted. All
contributions required to have been paid by any lessor of
property in respect of any leasehold improvements have been
paid.
(c) No Leased Property, including installations and
improvements thereon that are owned, leased or occupied by the Company,
is the subject of any official complaint or notice of violation of any
applicable zoning, building or environmental protection code, and no
such violation is known to exist. To the best of Seller's knowledge,
there is no zoning, building or environmental protection code, or any
other restrictions of whatever nature in regard of use or occupancy,
which is likely to preclude or impair the use and occupancy of the
Leased Property after the Closing Date, including installations and
improvements thereon, for the purposes for which they are presently
used.
2.8 TITLE TO AND CONDITION OF ASSETS. Except as set forth on Schedule
2.8, the Company owns and possesses all right, title and interest in and to its
assets, including, without limitation (i) valid and subsisting leasehold
interests in all leasehold estates comprising the Real Property and (ii) good
and merchantable title to all properties and assets other than the Real
Property, in each case free and clear of all conveyances, conditions, easements,
liens, charges, security interests, adverse claims, encumbrances, encroachments,
reservations, easements, limitations, servitudes, other title defects or
restrictions of any nature. All tangible assets of the Company are in the
Company's possession or under its respective control, and all equipment used by
the Company is in good operating condition and repair, subject only to routine
maintenance, and is fit and adequate for the purposes intended. The Company
enjoys peaceful and quiet possession of its assets pursuant to or by all of the
deeds, bills of sale, leases, licenses and other agreements under which it is
operating its business.
2.9 FINANCIAL STATEMENTS. Prior to the date of this Agreement, Sellers
have provided Purchaser with the financial statements of the Company listed
below (the "Financial Statements") and will provide to Purchaser monthly
financial statements for the months after August 31, 1997 (the "New Monthly
Financial Statements") as soon as practicable after the end of each month:
(a) Audited Balance Sheets at August 31, 1996, 1995 and 1994;
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(b) Audited Statement of Operations for the years ended August
31, 1996, 1995 and 1994; and
(c) Unaudited Balance Sheet and Statement of Operations at and
for the eleven-month period ended August 31, 1997.
The Financial Statements (and, with respect to the New Monthly
Statements, when delivered, will, or will be, as the context may require) (i)
have been prepared in accordance with the specific principles and rules set
forth on Schedule 2.9 attached hereto and are in conformity with law and Swedish
GAAP applied on a consistent basis during the periods, (ii) present fairly in
all material respects, the Company's financial position, results of its
operations and changes in its financial position at and for the periods therein
specified, (iii) are true and complete, (iv) are consistent with the books and
records of the Company, (v) with respect to all of the unaudited Financial
Statements, include all adjustments, consisting only of normal recurring
adjustments, required for a fair presentation, (vi) contain and reflect such
reserves as are or were necessary and required by the laws, principles and rules
referred to pursuant to (i) above to be reflected in such statements as of said
dates for all liabilities, actual, contingent or accrued, and for all reasonably
anticipated losses and costs (in excess of expected receipts) and for all
warranty claims, discounts or refunds with respect to services or products, or
both, already rendered or sold, such reserves being based upon events or
circumstances in existence or likely to occur in the future with respect to any
contracts or commitments of the Company. The Financial Statements will be deemed
to include any accompanying notes and schedules.
2.10 ABSENCE OF CERTAIN CHANGES. Since August 31, 1996, the Company has
actively conducted its business in the ordinary and regular course consistent
with past practice. Since such date, there has not been any material adverse
change in the business, condition (financial or otherwise), assets, liabilities
or results of operations. To Sellers' knowledge, there has not occurred any
event or governmental regulation or order which could cause such a change, nor,
to Sellers' knowledge, is the occurrence of any such event, regulation or order
threatened. Except as set forth on Schedule 2.10, without limiting the
generality of the foregoing, since August 31, 1996, there has not been (nor has
the Company agreed or arranged to do any of the following):
(a) Any increase made or promised in the compensation or other
remuneration payable or to become payable by the Company to any of its
employees, agents or partners;
(b) Any mortgage or pledge of, or any other lien, charge or
encumbrance of any kind, on any of the assets, tangible or intangible,
of the Company;
(c) Any sale or transfer of any assets, except for sales of
inventory or sales or replacements of obsolete equipment or other
capital assets, in the ordinary course of business, or settlement,
cancellation or release of any indebtedness owing to the Company or of
any other claims of the Company;
(d) Any sale, license, assignment or transfer by the Company
of any patents, trademarks, trade names or other similar intangible
assets;
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(e) Any amendments or termination of any material contract,
agreement or license to which the Company is a party or to which the
Company or any of its assets are subject or bound;
(f) Any commitment made (through negotiations or otherwise) or
any liability incurred to any labor organization by the Company;
(g) Any payment, declaration or setting aside by the Company
of dividends or a return of capital or any distribution by the Company
of any cash or other assets to any of its shareholders in redemption of
or as the purchase price for any of the Company's capital stock or
equity or in discharge or cancellation in whole or in part of any
indebtedness owing (whether in payment of principal, interest or
otherwise) to any of its shareholders;
(h) Any discharge or satisfaction by the Company of any lien,
encumbrance, obligation or liability (accrued, absolute, fixed or
contingent), other than those shown on the August 31, 1997 balance
sheet of the Financial Statements that have been discharged or
satisfied in the ordinary course without acceleration and other than
those incurred and discharged in the ordinary course of business
consistent with past practice;
(i) Any material transaction entered into by the Company other
than in the ordinary course of business consistent with past practice;
(j) Any institution by the Company of a bonus, stock option,
profit-sharing, pension plan or similar arrangement or any changes in
any such existing plans;
(k) Any incurrence by the Company (whether discharged or not)
of any obligation or liability (whether accrued, absolute, fixed or
contingent) other than current liabilities incurred, and obligations
entered into, in the ordinary course of business consistent with past
practice;
(l) Any adverse change in collection loss experience;
(m) Any material loss, damage or destruction to any of the
Company's properties (whether or not covered by insurance); or
(n) Except as required by the new Swedish law on Financial
Statements, any change in accounting principles or practices from those
utilized in the preparation of the Financial Statements.
2.11 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on the
August 31, 1997 balance sheet of the Financial Statements, the Company is not
obligated for, nor are any of its assets or properties subject to, any
liabilities or adverse claims or obligations, absolute or contingent, except for
product warranty obligations incurred in the ordinary course of business and
trade payables incurred in the ordinary course of business since August 31,
1997, and the Company is not in default with respect to any terms or conditions
of any liability or obligation.
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2.12 TAXES.
(a) The Company has filed, and will file, on a timely basis,
all income, vat, sales and other tax returns and reports of every
nature required to be filed by it (including any consolidated or
combined return required to be filed by it and any affiliated person or
entity) accurately reflecting all taxes owing to any taxing authority
("Tax Returns"), and has paid in full or made adequate provision in the
Financial Statements and the New Monthly Financial Statements for the
payment of all taxes (including penalties, additions to tax and
interest) for which it has or may have liability. All such Tax Returns
are true, correct and complete in all respects. Sellers have no
knowledge of any unassessed tax deficiency proposed or threatened
against the Company as a result of the operation of its business. There
are no liens on any of the Company's assets as a result of any tax
liabilities except for taxes not yet due and payable. There are, and
after the date of this Agreement will be, no tax deficiencies
(including penalties, additions to tax and interest) of any kind
assessed against or relating to the Company with respect to any taxable
period ending on or before the Closing Date. There are, and after the
date of this Agreement, will be no other tax deficiencies relating to
Tax Returns which include the Company for periods ending on or before
the Closing Date. As to all tax periods, or portions thereof, which end
prior to, or include, the Closing Date for which no Tax Returns are yet
due, the liability of the Company for taxes allocable to periods (or
portions thereof) ending on or before the Closing Date does not exceed
the amount accrued on the Financial Statements or the new monthly
Financial Statements for such taxes. The liability of the Company for
taxes has not increased since August 31, 1996, except in the ordinary
course of business.
(b) The Company is not subject to any tax audit or other
investigation by any tax authority, any tax litigation or other dispute
with any tax authority.
(c) The income tax returns for the Company have not been
audited by any taxing authority.
(d) "taxes" shall mean all direct and indirect taxes and
charges, social security fees, fees, duties and other assessments
including, but not limited to, any income (whether actual or deemed),
sales, use, transfer, transaction, investment, value added,
withholding, employment, asset holding or registration tax, preliminary
tax under Section 39 of the Swedish Tax Collection Act (1953:272) and
deferred taxes, together with any interest, penalties, residual tax
charges or additions to tax wherever arising.
2.13 INDEBTEDNESS TO OFFICERS, DIRECTORS AND SHAREHOLDERS. The Company
is not indebted to any of its shareholders, officers or directors (or to members
of their immediate families) in any amount whatever other than for compensation
and benefits payable or for expenses incurred on behalf of the Company in the
ordinary course of business. Sellers have not received any conditional
shareholders' contributions.
2.14 CORPORATE MINUTES. Sellers have furnished or made available to
Purchaser and its counsel the corporate record books of the Company and the same
are accurate and complete and
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reflect all resolutions adopted and all actions taken, authorized or ratified by
the shareholders and directors of the Company. Copies of all corporate minutes
of meetings held and of all written actions taken after the date of this
Agreement will be furnished to Purchaser promptly, and in all events, prior to
the Closing Date.
2.15 BROKERAGE AND FINDER'S FEES. Neither the Sellers nor any
shareholder, officer, director or agent of the Company has incurred any
liability to any broker, finder or agent for any brokerage fees, finder's fees,
or commissions with respect to the transactions contemplated by this Agreement.
2.16 ACCOUNTS RECEIVABLE. Sellers will deliver to Purchaser an aging
schedule as of a date not more than five (5) days prior to the Closing Date
which is true, correct and complete, of the accounts receivables, both trade and
non-trade, of the Company as of that date. The reserves for doubtful receivables
and uncollectible accounts that will be reflected on the books of the Company as
of the Closing Date will not exceed Three and One-half Percent (3.5%) of the
then aggregate accounts receivable, and will be sufficient to provide for any
losses that may arise in connection with the collection of the accounts
receivable. Except for the accounts receivables set forth on Schedule 2.16 which
have special payment terms (the "Extraordinary Accounts Receivable"), the
accounts receivable as reflected on the books of the Company as of the Closing
Date, net of such reserves, will be fully collectible in the ordinary course of
business within one hundred twenty (120) days after the Closing Date, without
resort to legal proceedings. The Extraordinary Accounts Receivable will be fully
collectible, without resort to legal proceedings, within the time periods set
forth on Schedule 2.16. All of such accounts receivable will represent valid
claims that have arisen in the ordinary course of business. If, after
Purchaser's commercially reasonable efforts to collect such accounts receivable,
accounts receivable in excess of such reserve are not collected after one
hundred twenty (120) days after the Closing, or, in the case of the
Extraordinary Accounts Receivable, within the time periods set forth on Schedule
2.16, and Purchaser is indemnified by the Sellers pursuant to the terms of
Article IX hereof as a result of the breach of this Section 2.16, then Purchaser
will assign to Sellers all such accounts receivable not collected within such
time period and for which such indemnification is made.
2.17 EMPLOYMENT MATTERS.
(a) The Company is not a party to any collective bargaining
agreement, union contract or employment, bonus, deferred compensation,
insurance, pension, severance pay or retirement plans, profit sharing
or similar personnel arrangement, any stock purchase, stock option or
other stock plans or programs or any employee termination or severance
arrangement. Full reservations have been made in the Financial
Statements for all present or future liabilities, or both, in respect
of pensions and other payments related to compensations to be paid to
employees.
(b) There are no active, pending or, to the best of Sellers'
knowledge, threatened administrative or judicial proceedings under any
foreign, national or local law, ordinance or regulation relating to
employees of the Company. The Company has not violated any labor
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law, regulation or agreement in any relevant jurisdiction including the
Swedish Act on Joint Regulation of Working Life (medbestammandelagen).
(c) The relation of each of the Company with its employees is
generally good and there are no pending or, to the best of Sellers'
knowledge, threatened, material labor difficulties.
2.18 NO DEFAULTS. Except as set forth on Schedule 2.18, the Company is
not in default (nor is any such default alleged to exist) under the terms of any
written or oral contract, agreement, lease, license, mortgage, deed of trust,
note, guaranty, instrument or understanding (collectively, "Contracts") to which
it is a party and which is required to be disclosed on Schedule 2.19(a) or the
default under which would have a material adverse effect on the Company. To
Sellers' knowledge, no such default, condition or event exists or is alleged to
exist with respect to the performance of any obligation of any other party to
any of such Contracts.
2.19 MATERIAL CONTRACTS.
(a) Schedule 2.19(a) is a true and correct list of each
Contract to which the Company is a party or by which any of its assets,
businesses or operations is bound or affected other than any Contract
that (i) may be canceled by the Company on thirty (30) days' notice or
less without incurring a liability or obligation on the part of the
Company for such cancellation, or (ii) involves or is reasonably
expected to involve the payment of consideration having an aggregate
value of less than One Hundred Fifty Thousand Swedish Krona (SEK
150,000). Schedule 2.19(a) includes a description of any consents or
approvals required of third parties under the terms of any Contracts
for the consummation of the transactions contemplated by this
Agreement. A true, correct and complete copy of each written, and a
description of each oral, Contract, so listed has been delivered to
Purchaser or its counsel.
(b) Schedule 2.19(b) is a true and correct list of each
Contract with a customer of the Company that contains provisions (i)
providing for payment terms to the Company of forty-five (45) days or
greater, (ii) permitting the customer to retain any portion of the
purchase price for the products or services to be provided thereby as
security for warranty claims or for any other purpose, or (iii)
providing for liquidated or stipulated damages.
2.20 PURCHASE ORDERS. Schedule 2.20 is a true and complete list of all
purchase orders under which the Company is or will become obligated to pay any
particular vendor an aggregate sum in excess of One Hundred Thousand Swedish
Krona (SEK 100,000).
2.21 INDEBTEDNESS. Schedule 2.21 is a true and complete list of all
indebtedness for borrowed money, owed or to be owed by the Company, including a
description of the terms of payment, and, if such indebtedness is secured, a
description of all properties or other assets pledged, mortgaged or otherwise
hypothecated (voluntarily or involuntarily) as security. As of the Closing, the
Company will not be obligated for any indebtedness other than trade payables
incurred in the ordinary course of business.
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2.22 LITIGATION. Schedule 2.22 is a true and complete list of all
administrative or judicial proceedings to which the Company is a party or, to
the knowledge of Sellers, to which it is threatened to be made a party which
relate, directly or indirectly, to any of the Company's assets, including,
without limitation, proceedings that could affect title to or interests in the
assets. Except as set forth on Schedule 2.22, there is no action, suit, claim,
demand, arbitration or other proceeding or investigation, administrative or
judicial, pending or, to the knowledge of Sellers, threatened against affecting
the Company or any of their assets, including, without limitation, any relating
to so-called product liability, which, if adversely determined or resolved,
would have a material adverse effect on the business, assets, condition
(financial or otherwise), results of operations or prospects of the Company, or
any provisions of, or the validity of, or rights under, any leases or other
operating agreements, licenses, permits or grants of authority of the Company.
Neither the Sellers nor the Company has received notice that the Company is the
subject of any governmental investigation. The Company is not subject to, nor is
it or has it been in default with respect to, any order, writ, injunction or
decree of any court, or of any federal, state, local or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign. Schedule 2.22 indicates which of the matters listed are covered by
valid insurance and the extent of such coverage.
2.23 INSURANCE. Schedule 2.23 is a true and correct list of all the
policies of insurance covering the business, properties and assets of the
Company presently in force (including as to each (i) risk insured against, (ii)
name of carrier, (iii) policy number, (iv) amount of coverage, (v) amount of
premium, (vi) expiration date and (vii) the property, if any, insured). All of
the insurance policies set forth on Schedule 2.23 are in full force and effect
and all premiums, retention amounts and other related expenses due have been
paid, and the Company has not received any notice of cancellations with respect
to any of the policies. All such insurance policies will remain in full force
through the Closing Date. The Company has not been refused any insurance by any
insurance carrier to which it has applied for insurance during the last five (5)
years.
2.24 TRANSACTIONS WITH OFFICERS, ETC.
(a) Schedule 2.24(a) is a true and correct list of the
ownership of Sellers in any entity that has any existing contractual
relationship, oral or written, or other business relationship with the
Company.
(b) Schedule 2.24(b) is a true and correct list of all
Contracts (oral or written), including, but not limited to, any loans
(other than those set forth on Schedule 2.13 of this Agreement or not
required to be set forth thereon) or leases, to which the Company is a
party and to which any of the officers, directors or other employees or
shareholders of the Company, or, to the best of Sellers' knowledge,
members of their immediate families or other corporations, partnerships
or other entities in which any of them has a material interest, is also
a party. Schedule 2.24(b) includes a list of indebtedness of any such
person or entity to the Company.
(c) Except as set forth on Schedule 2.24(c), neither the
Company nor any officer, director, employee or shareholder of the
Company, or, to the best of Sellers' knowledge, members of their
immediate families or other corporations, partnerships or other
entities in
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which any of them has a material interest, has any direct or indirect
interest in any competitor, supplier or customer of the Company or in
any person, firm or entity from whom or to whom the Company leases any
property, or in any other person, firm or entity with whom the Company
transacts business of any nature.
2.25 EMPLOYEES. Schedule 2.25 is a true and correct list of all
employees of the Company (as used in this Agreement, the term "employees"
includes employees, salesmen, sales agents, sales representatives and all other
persons associated with the Company) their accrued vacation and sick pay, the
nature of their duties and the date and amount of their last increase in
compensation. A true, correct and complete copy of each written employment
contract and a description of each oral employment agreement with any employee
has been delivered to Purchaser or its counsel.
2.26 TRADEMARKS, COPYRIGHTS AND SIMILAR MATTERS.
(a) Except as set forth on Schedule 2.26, the Company has not,
within the last five (5) years, been charged with infringement or
violation of any patent, trademark, service xxxx, trade name, copyright
or any other intellectual property right. The Company is not using nor
has it in any way made use of any patentable or unpatentable invention,
or any confidential information or trade secret, of any former employer
of any present or past employee of the Company. All patents,
trademarks, service marks, trade names, copyrights and other
intellectual property rights, including, without limitation, any
contractual rights (such as licenses) pursuant to which the Company
uses any intellectual property rights of another party (collectively,
the "Specified Items"), and all applications or registrations, owned or
used by the Company are listed on Schedule 2.26 and, to the extent
indicated, have been duly registered in, filed in or issued by the
Swedish Patent and Registration Authority Office or the corresponding
agency or office of each applicable jurisdiction and all renewal fees
for such registrations have been paid. Except as indicated on Schedule
2.26, the Company is the sole and exclusive owner of, or has the sole
and exclusive right to use, the Specified Items, except for the rights
of licensees (whose names and addresses are listed on Schedule 2.26).
Except as set forth on Schedule 2.26, the Company does not use any of
the Specified Items by consent of any other party and the same are free
and clear of any attachments, liens, claims, encumbrances or
agreements. Except as listed on Schedule 2.26, to the knowledge of
Sellers, there are no claims or demands of any other person, firm or
corporation pertaining to any of the Specified Items, and no
proceedings have been instituted, are pending or are threatened which
challenge the right of the Company with respect to any of the Specified
Items. None of the Specified Items infringes on, or is being infringed
on by others, and none of the Specified Items is subject to any
outstanding order, decree, judgment, stipulation or agreement
restricting the scope of its use.
(b) The Company is the sole and exclusive owner of its
corporate name. The Company does not use such name by consent of any
other person or entity, and owns such name free and clear of any
attachments, liens, claims, encumbrances or agreements. To the
knowledge of Sellers, there are no claims or demands of any other
person or entity pertaining to the use of the name and no proceedings
have been instituted or are threatened, which challenge the right of
the Company in respect of such name; and the use of such name by the
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Company does not infringe on or is not being infringed on by others,
and is not subject to any outstanding order, decree, judgment,
stipulation or agreement restricting the scope of its use. The Company
uses the name "MEVA" with the consent of MEVA AB, a Swedish corporation
owned by Sellers.
(c) True, correct and complete copies of all patents,
trademarks, service marks, trade names and copyrights, and of all
related applications or registrations, that are listed on Schedule 2.26
have been delivered to Purchaser or its counsel.
2.27 ENVIRONMENTAL MATTERS.
(a) The Company has obtained all necessary environmental
approvals, permits and consents for its operations.
(b) All environmental approvals, permits and consents are in
full force and effect and there are no facts or circumstances which may
lead to any approvals, permits or consents being revoked, cancelled or
modified.
(c) The operations of the Company have been carried out in
full compliance with all approvals, permits and consents as well as all
applicable environmental laws.
(d) All registrations and other information required to be
provided by the Company and all records and data required to be
maintained by the Company in accordance with environmental laws and
such approvals, permits and consents have been provided and maintained.
(e) No real property is being or has at any time been used by
the Company in a manner which will lead to or has lead to any real
property becoming contaminated.
(f) There are no actions, claims, complaints, investigations
or other proceedings currently pending or, to Sellers' knowledge,
threatened in connection with the operations of the Company and there
is no actual or contingent liability to make good, repair, restore or
clean up any real property and no act or omission of the Company will
give rise to any such liability.
2.28 BANK ACCOUNTS. Schedule 2.28 is a true and correct list of the
name of each bank, savings and loan, or other financial institution in which the
Company has an account or safe deposit box, the names of all persons authorized
to draw on each account or to have access to each box, the number of signatures
required to be given for a withdrawal and a description of the type of account.
All liquid assets, including but not limited to bank accounts, will be available
on the Closing Date free and clear of any restriction or condition and without
withholding or deduction for any taxes or other charges.
2.29 COMPLIANCE WITH LAWS. The Company has complied with all laws,
regulations, rules and orders of any governmental department or agency or any
other commission, board, agency or
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instrumentality, federal or local, or other requirements of law affecting its
business and operations and is not in default under or in violation of any
provision of any federal or local law, regulation, rule or order, except for any
such noncompliance that would not, individually, result in a claim, damage,
penalty or other cost to the Company in excess of One Hundred Thousand Swedish
Krona (SEK 100,000).
2.30 POWERS OF ATTORNEY. Except as set forth on Schedule 2.30, the
Company has not given any power of attorney (irrevocable or otherwise) that is
presently in effect to any person or entity for any purpose.
2.31 LICENSES AND RIGHTS. The Company possesses all franchises,
licenses, easements, permits and other authorizations from governmental or
regulatory authorities and from all other persons or entities that are necessary
to permit it to engage in its business as presently conducted in and at all
locations and places where it is presently operating, where the failure to
maintain any such franchises, licenses, easements, permits and other
authorizations would have a material adverse effect on the financial condition
of the Company. Such franchises, licenses, permits and other authorizations are
listed on Schedule 2.31.
2.32 PRODUCTS.
(a) The products sold by the Company conform to and meet or
exceed the standards required by all applicable laws, ordinances and
regulations in effect at the time of such sales and, to Sellers'
knowledge, there is no pending legislation, ordinance or regulation
which if adopted or enacted would have a material adverse effect on
such products or the Company's business.
(b) Schedule 2.32 contains a written statement accurately
describing the Company's warranties and customer service policies and
any recurring warranty problems. The Company has no outstanding
contracts or proposals that depart from the warranty and customer
service policy and practice described in such Schedule. Except as may
be listed on Schedule 2.32, no claims of customers or others based on
an alleged or admitted defect of material, workmanship or design or
otherwise in or in respect of the Company's products are presently
pending or, to the knowledge of Sellers, threatened other than product
warranty claims which, in the aggregate, do not exceed One Hundred
Thousand Swedish Krona (SEK 100,000). All liabilities of the Company
relating to any such claims, contingent or otherwise, have been set
forth on the appropriate Financial Statements or New Monthly Financial
Statements to the extent required by Swedish GAAP.
2.33 CASUALTY OCCURRENCES. Schedule 2.33 is a true and correct list of
occurrences of which the Company has received notice during the last five (5)
years of damages in excess of Seventy-Five Thousand Swedish Krona (SEK 75,000)
to persons or property involving any defects or alleged defects in any of the
Company's products or their respective designs. All such occurrences are fully
and adequately covered by paid-for insurance.
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2.34 INVENTORY. The inventory of the Company reflected on the August
31, 1997 balance sheet of the Company and acquired since the date of such
balance sheet consist only of items of a quality and quantity usable and
saleable in the ordinary course of business, consistent with past practice,
within the Company's normal inventory "turn" experience and do not include any
item of inventory which has previously been written off by the Company. Items of
below-standard quality and items not previously readily saleable in the ordinary
course of business have been written down in value in accordance with Swedish
GAAP to estimated net realizable market values. The value at which the
inventories are carried the Company's books reflects the lower of cost (on an
average cost basis) or estimated net realizable market value, and with respect
to the inventory reflected on the August 31, 1996 balance sheet of the Company
only, is based on quantities determined by physical count.
2.35 CAPITAL EXPENDITURE PLANS. Schedule 2.35 sets forth a description
of each capital expenditure program of the Company involving the expenditure of
at least Seventy-Five Thousand Swedish Krona (SEK 75,000) as to which the
expenditure of funds is incomplete, setting forth (i) the budgeted expenditures
and (ii) the actual amounts expended, if any.
2.36 REPRESENTATIONS AND WARRANTIES. The warranties and representations
given above are separate and independent. No representation or warranty of the
Sellers set forth in this Agreement shall be deemed waived or otherwise affected
by any commercial or financial analysis, or any inquiry or investigation which
the Purchaser, its advisors, auditors or representatives may make with respect
to the Company and its business.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Purchaser represents and warrants to, and agrees with, Sellers as
follows:
3.1 ORGANIZATION AND GOOD STANDING OF PURCHASER. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Sweden, has full power and authority to carry on its business as and where
now conducted and to own or lease and operate its properties at and where now
owned or leased and operated by it, and is duly qualified to do business.
3.2 AUTHORITY AND FINANCIAL CAPABILITY OF PURCHASER. The execution,
delivery and consummation of this Agreement by Purchaser has been duly
authorized by the board of directors of Purchaser in accordance with all
applicable laws and the Articles of Association of Purchaser, and at the Closing
Date no further corporate action will be necessary on the part of Purchaser to
make this Agreement valid and binding on Purchaser and enforceable against
Purchaser in accordance with its terms.
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ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF PARENT
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Parent represents and warrants to, and agrees with, Sellers as follows:
4.1 ORGANIZATION. Each of Parent and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization and has all requisite corporate or other
power and authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and governmental approvals would not have a material
adverse effect on Parent and its subsidiaries, taken as a whole. Parent and each
of its subsidiaries is duly qualified or licensed to do business and in good
standing in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification or
licensing necessary, except where the failure to be so duly qualified or
licensed and in good standing would not have a material adverse effect on Parent
and its subsidiaries, taken as a whole.
4.2 CAPITALIZATION.
(a) The authorized capital stock of Parent consists of
40,000,000 shares of Parent Common Stock and (b) 10,000,000 shares of
Preferred Stock, par value is US $.001 per share (the "Parent Preferred
Stock"). As of the date hereof, (i) 11,760,731 shares of Parent Common
Stock are issued and outstanding, (ii) no shares of Parent Preferred
Stock are issued and outstanding, and (iii) options and warrants to
purchase 1,635,300 shares of Parent Common Stock have been granted and
are outstanding. All of the outstanding shares of Parent's capital
stock are duly authorized, validly issued, fully paid and
nonassessable. There are no bonds, debentures, notes or other
indebtedness having voting rights (or convertible into securities
having such rights) ("Parent Voting Debt") of Parent issued and
outstanding. Except as set forth above or on Schedule 4.2 and except
for transactions contemplated by this Agreement, (i) there are no
shares of capital stock of Parent authorized, issued or outstanding and
(ii) there are no existing options, warrants, calls, preemptive rights,
subscriptions or other rights, convertible securities, agreements,
arrangements or commitments of any character, relating to the issued or
unissued capital stock of Parent or any of its subsidiaries, obligating
Parent or any of its subsidiaries to issue, transfer or sell or cause
to be issued, transferred or sold any shares of capital stock or Parent
Voting Debt of, or other equity interest in, Parent or any of its
subsidiaries or securities convertible into or exchangeable for such
shares or equity interests or obligations of Parent or any of its
subsidiaries to grant, extend or enter into any such option, warrant,
call, subscription or other right, convertible security, agreement,
arrangement or commitment. There are no outstanding contractual
obligations of Parent or any of its subsidiaries to repurchase, redeem
or otherwise acquire any shares of Parent Common Stock or the capital
stock of Parent or any subsidiary or affiliate of Parent or to provide
funds to make any investment (in the form of a loan, capital
contribution or otherwise) in any subsidiary or any other entity.
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(b) There are no voting trusts or other agreements or
understandings to which Parent or any of its subsidiaries is a party
with respect to the voting of the capital stock of Parent or its
subsidiaries. None of Parent or its subsidiaries is required to redeem,
repurchase or otherwise acquire shares of capital stock of Parent, or
any of its subsidiaries, respectively, as a result of the transactions
contemplated by this Agreement.
4.3 CORPORATE AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY ACTION.
Parent has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance by Parent of this Agreement and the consummation by
Parent of the transactions contemplated hereby have been duly and validly
authorized by its Board of Directors and no other corporate action or
proceedings on the part of Parent are necessary to authorize the execution and
delivery by Parent of this Agreement and the consummation by Parent of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent, and, assuming this Agreement constitutes valid and binding
obligations of the Company, constitutes valid and binding obligations of Parent,
enforceable against it in accordance with its terms. The shares of Parent Common
Stock that may be issued pursuant to this Agreement will be duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights.
4.4 CONSENTS AND APPROVALS; NO VIOLATIONS. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Securities Exchange Act of 1934 (the "Exchange
Act") and the Securities Act of 1933 (the "Securities Act"), neither the
execution, delivery or performance of this Agreement by Parent nor the
consummation by Parent of the transactions contemplated hereby nor compliance by
Parent with any of the provisions hereof will (i) conflict with or result in any
breach of any provision of the Articles of Incorporation or By-laws of Parent,
(ii) require any filing with, or permit, authorization, consent or approval of,
any Governmental Entity (except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings would not have a
material adverse effect on Parent and its subsidiaries, taken as a whole, or
would not, or would not be reasonably likely to, materially impair the ability
of Parent to consummate the transactions contemplated hereby), (iii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, guarantee, other evidence of
indebtedness, lease, license, contract, agreement or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which any
of them or any of their properties or assets may be bound or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Parent, any of its subsidiaries or any of their properties or assets, except in
the case of clauses (iii) and (iv) for violations, breaches or defaults which
would not have a material adverse effect on Parent and its subsidiaries, taken
as a whole, or would not, or would not be reasonably likely to, materially
impair the ability of Parent to consummate the transactions contemplated hereby.
4.5 SEC REPORTS AND FINANCIAL STATEMENTS. Parent has filed with the
Securities and Exchange Commission (the "SEC"), and has heretofore made
available to the Company, true and complete copies of, all forms, reports,
schedules, statements and other documents filed or required to be filed by it
and its subsidiaries since May 23, 1997 under the Exchange Act or the Securities
Act
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(as such documents have been amended since the time of their filing,
collectively, the "Parent SEC Documents"). As of their respective dates or, if
amended, as of the date of the last such amendment, the Parent SEC Documents,
including, without limitation, any financial statements or schedules included
therein (a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. Each of
the consolidated financial statements included in the Parent SEC Documents have
been prepared from, and are in accordance with, the books and records of Parent
and/or its consolidated subsidiaries, comply in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles in the applicable jurisdiction applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position and the consolidated results of operations and cash flows
(and changes in financial position, if any) of Parent and its consolidated
subsidiaries as at the dates thereof or for the periods presented therein.
4.6 ABSENCE OF CERTAIN CHANGES. Except to the extent disclosed in the
Parent SEC Documents filed with the SEC prior to the date of this Agreement,
from September 30, 1996 through the date of this Agreement, Parent and its
subsidiaries have conducted their respective businesses in the ordinary course
of business consistent with past practice. Except to the extent disclosed in the
Parent SEC Documents filed prior to the date of this Agreement, from September
30, 1996 through the date of this Agreement, there has not occurred (i) any
events, changes, or effects (including the incurrence of any liabilities of any
nature, whether or not accrued, contingent or otherwise) having or, which would
be reasonably likely to have, individually or in the aggregate, a material
adverse effect on Parent and its subsidiaries; (ii) any declaration, setting
aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to the equity interests of Parent or of any of its
subsidiaries other than regular quarterly cash dividends, distributions or
payments on account of indebtedness paid by subsidiaries to Parent or a
subsidiary of Parent; or (iii) any change by Parent or any of its Subsidiaries
in accounting principles or methods, except insofar as may be required by a
change in generally accepted accounting principles in the applicable
jurisdiction.
4.7 NO DEFAULT. The business of Parent and its subsidiaries is not
being conducted in default or violation of any term, condition or provision of
(a) its respective Articles of Incorporation or By-laws or similar
organizational documents, (b) any lease, license, contract, agreement or other
instrument or obligation to which Parent or any of its subsidiaries is a party
or by which any of them or any of their properties or assets may be bound and
which either has a term of more than one year or involves the payment or receipt
of money in excess of US $50,000 or (c) any federal, state, local or foreign
law, statute, regulation, rule, ordinance, judgment, decree, order, writ,
injunction, concession, grant, franchise, permit or license or other
governmental authorization or approval applicable to Parent or any of its
subsidiaries, excluding from the foregoing clauses (b) and (c), defaults or
violations that would not have a material adverse effect on Parent and its
subsidiaries, taken as a whole, or would not, or would not be reasonably likely
to, materially impair the ability of Parent to consummate the transactions
contemplated hereby. No investigation or review by any
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governmental entity with respect to Parent or any of its subsidiaries is pending
or, to the best knowledge of Parent, threatened, nor to the best knowledge of
Parent, has any governmental entity indicated an intention to conduct the same.
ARTICLE V
---------
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND PARENT
-----------------------------------------------------------
The obligations of Purchaser and Parent under this Agreement are, at
its option, subject to satisfaction of the following conditions at or prior to
the Closing Date:
5.1 REPRESENTATIONS TRUE. The representations, covenants and warranties
of Sellers contained in this Agreement are true, complete and accurate in all
material respects on and as of the Closing Date to the same extent and with the
same force and effect as if made on such date, except as affected by the
transactions contemplated under this Agreement.
5.2 ALL CONSENTS OBTAINED. All necessary approvals or consents required
to be obtained by Sellers or the Company have been obtained from all local and
national departments and agencies, from all other commissions, boards, agencies
and from any other person or entity whose approval or consent is necessary to
consummate the transactions contemplated under this Agreement including, without
limitation, such consents as may be listed or required to be listed on Schedule
2.2.
5.3 PERFORMANCE OF OBLIGATIONS. Sellers have duly performed all
obligations, covenants and agreements undertaken by them in this Agreement and
have complied with all terms and conditions applicable to them under this
Agreement to be performed and complied with on or before the Closing Date.
5.4 RECEIPT OF DOCUMENTS BY PURCHASER. Purchaser has received:
(a) a certificate executed by Sellers certifying as to the
fulfillment of the matters contained in Sections 5.1, 5.2, 5.3, 5.5 and
5.9;
(b) a true and correct copy of the Company's Articles of
Association certified by the Patent and Registration Office (PRV) and
the Company's Registration Certificate, both dated not more than seven
(7) days prior to the Closing Date;
(c) a written opinion from counsel for Sellers (who must be
satisfactory to Purchaser and its counsel), dated as of the Closing
Date, addressed to Parent and Purchaser, satisfactory to Parent,
Purchaser and their counsel;
(d) the resignations of such directors of the Company as may
be requested by Purchaser; and
(e) share certificates representing all of the Shares, duly
endorsed in blank.
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5.5 NO LITIGATION. No suit, action, or other proceeding is threatened
or pending before any court or governmental agency in which it will be or it is
sought to restrain or prohibit or to obtain material damages or relief in
connection with this Agreement or the consummation of this Agreement, or which
is likely to materially and adversely affect the value of the business or assets
of the Company, taken as a whole.
5.6 DELIVERY OF BOOKS AND RECORDS. Sellers have delivered or made
available to Purchaser all books and records of the Company relating to or
reasonably required for the operation of the business of the Company, including,
without limitation, copies of all Contracts, financial and accounting records,
files and records relating to employees, and all related correspondence.
5.7 ABSENCE OF CHANGES. There has been no material adverse change in
the business (financial or otherwise), assets, liabilities, results of
operations or prospects of the Company, taken as a whole, from that presented in
the Financial Statements dated at and for the twelve-month period ended August
31, 1997.
5.8 PURCHASER'S REVIEW. Purchaser has conducted a review of the
business, assets, books and records of the Company and has found the results of
such review to be satisfactory to Purchaser, in its sole discretion.
5.9 NO INDEBTEDNESS. The Company shall have no indebtedness, other than
trade payables incurred in the ordinary course of business.
5.10 EMPLOYMENT AGREEMENTS. Each of the Sellers shall have entered into
employment agreements with the Company substantially in the form of Exhibit B,
Exhibit C or Exhibit D, as appropriate (the "Employment Agreements").
5.11 INVESTMENT LETTERS. Each of the Sellers shall have executed and
delivered to Parent investment letters substantially in the form of Exhibit E.
5.12 MEVA TRANSACTION. The transaction contemplated by the Stock
Purchase Agreement of even date herewith providing for Purchaser's acquisition
of all the outstanding capital stock of MEVA AB shall have been consummated.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLERS
----------------------------------------------
The obligations of Sellers under this Agreement are, at the option of
Sellers, subject to satisfaction of the following conditions at or prior to the
Closing Date:
6.1 REPRESENTATIONS TRUE. The representations and warranties of
Purchaser and Parent contained in this Agreement are true, complete and accurate
in all material respects on and as of the
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Closing Date to the same extent and with the same force and effect as if made on
such date, except as affected by the transactions contemplated under this
Agreement.
6.2 ALL CONSENTS OBTAINED. All necessary approvals or consents required
to be obtained by Purchaser have been obtained from all local and national
departments and agencies, from all other commissions, boards, agencies and from
any other person or entity whose approval or consent is necessary to consummate
the transactions contemplated by this Agreement.
6.3 PERFORMANCE OF OBLIGATIONS. Purchaser has duly performed all
obligations, covenants and agreements undertaken by Purchaser in this Agreement
and has complied with all the terms and conditions applicable to Purchaser under
this Agreement to be performed or complied with on or before the Closing Date.
6.4 RECEIPT OF DOCUMENTS BY SELLERS. Sellers have received:
(a) the Cash Portion of the Purchase Price as provided in
Section 1.2(a);
(b) the Notes as provided in Section 1.2(b);
(c) a certificate executed by the President and Secretary or
Treasurer of each of Purchaser and Parent certifying as to the
fulfillment of the matters contained in Sections 6.1, 6.2 and 6.3 of
this Article; and
(d) a written opinion from counsel for Purchaser, dated as of
the Closing Date, addressed to Sellers, satisfactory to Sellers and
their counsel.
6.5 NO LITIGATION. No suit, action, or other proceeding is threatened
or pending before any court or governmental agency in which it will be or it is
sought to obtain material damages from Sellers in connection with this Agreement
or the consummation of this Agreement.
6.6 EMPLOYMENT AGREEMENTS. The Company shall have entered into the
Employment Agreements.
ARTICLE VII
-----------
CLOSING
-------
The closing of the transactions contemplated by this Agreement (the
"Closing") will take place at the Company's offices, located at Xxxxx Xxxxxxxxx
0, X-000 32 Vastra, Frolunda, Sweden, on the later of September 10, 1997, at
10:00 A.M. local time or five (5) business days after the fulfillment of the
last condition necessary to complete the transaction on such other date mutually
agreeable to the parties (the "Closing Date"). Unless the parties otherwise
agree in writing, if the Closing has not occurred by October 31, 1997, then this
Agreement will be deemed to have been terminated and abandoned, subject to the
legal rights and remedies of either party arising out of the other party's
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breach of any of the provisions of this Agreement. The parties will in good
faith use all reasonable efforts to achieve the Closing including the
fulfillment of all the conditions contained herein.
ARTICLE VIII
------------
TERMINATION OF AGREEMENT
------------------------
This Agreement and the transactions contemplated under it may be
terminated and abandoned at any time prior to the Closing Date (unless otherwise
specified below):
(a) by mutual consent in writing of Purchaser, the Company,
and Sellers;
(b) by Purchaser or Sellers if, in the case of Purchaser,
there has been a material misrepresentation or breach of warranty in
the representation and warranties of Sellers made under this Agreement
or if, in the case of Sellers, there has been a material
misrepresentation or breach of warranty in the representations and
warranties of Purchaser or Parent made under this Agreement; or
(c) by Purchaser if all or a material portion of the Company's
assets have been materially damaged or destroyed before the Closing.
Any termination pursuant to this Article VIII will not affect the obligations of
the parties under Article XII or Section 16.4, and will be without prejudice to
the terminating party's legal rights and remedies by reason of any breach of
this Agreement occurring prior to such termination. Notwithstanding anything in
this Agreement to the contrary, if, on the Closing Date, Purchaser (i) has
complied with all of the conditions to Closing contained in Article VI, (ii) has
notified Sellers of its intention to consummate the transactions contemplated
under this Agreement, and (iii) is ready and able to pay Sellers the Purchase
Price and furnishes evidence to that effect to Sellers, and if the Closing does
not then occur due to the refusal of Sellers to so consummate the transactions
contemplated under this Agreement, Purchaser will be entitled to specifically
enforce the terms of this Agreement in a court of competent jurisdiction, it
being acknowledged that monetary damages due Purchaser in such case cannot be
adequately determined at law.
ARTICLE IX
----------
SURVIVAL OF REPRESENTATIONS
---------------------------
AND WARRANTIES: INDEMNIFICATION: DISPUTES
-----------------------------------------
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding the
Closing of the transactions contemplated under this Agreement, or any
investigation made by or on behalf of Sellers or Purchaser, the representations
and warranties of Sellers, on the one hand, and Purchaser, on the other hand,
contained in this Agreement or in any certificate, Schedule, chart, list,
letter, compilation or other document furnished or to be furnished pursuant to
this Agreement, will survive the Closing
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for a period of fifteen (15) months, except that (a) the representations and
warranties of Sellers contained in Section 2.12 with respect to tax matters will
survive for so long as any applicable statute of limitations has not expired,
been suspended or been waived or extended, and for ninety (90) days thereafter,
(b) those contained in Section 2.27 with respect to Environmental Matters will
survive until any action brought by appropriate governmental authorities or
others is finally resolved, and for ninety (90) days thereafter, and (c) those
contained in Section 2.4 with respect to title to the Shares shall survive
forever. However, as to any breach of, or misstatement in, any such
representation or warranty as to which Purchaser or Parent has given notice to
Sellers or Sellers have given notice to Purchaser on or prior to the expiration
of the applicable period, as above set forth, the same will continue to survive
beyond said period, but only as to the matters contained in such notice.
9.2 SELLERS' INDEMNIFICATION.
(a) In the event of (i) a breach of, or misstatement in, any
one or more of the representations, warranties or covenants of Sellers
made in or pursuant to this Agreement, or (ii) any claims, demands,
suits, investigations, proceedings or actions by any third party
containing or relating to allegations that, if true, would constitute a
breach of, or misstatement in, any one or more of the representations,
warranties or covenants of Sellers made in or pursuant to this
Agreement, Sellers shall, jointly and severally, compensate Purchaser
and Parent and their respective subsidiaries, shareholders, directors,
officers, employees and agents, on demand, with an amount equal to the
costs, expenses, losses, damages and liabilities timely incurred or
suffered, directly or indirectly, by any of them (including, without
limitation, reasonable legal and accounting fees and expenses)
("Losses"). Any payment by Sellers pursuant to any claim for losses
shall be considered as a reduction of the Purchase Price.
(b) If any loss or losses is deducted by the Company for tax
purposes, the compensation to be paid by Sellers pursuant to Section
9.2(a) above shall be reduced by an amount equal to any tax savings
actually realized by the Company as a result of such deduction.
(c) No claim may be brought against Sellers under Section
9.2(a) above unless Purchaser or Parent provides written notice of any
such claim to one or more of the Sellers within a reasonable time after
Purchaser or Parent received actual notice of such breach. The notice
referred to in the preceding sentence shall contain reasonable
particulars of the nature of the breach and, to the extent then
determinable, the amount claimed thereby.
(d) Section 9.2(a) above provides the exclusive remedies
available to Purchaser for any losses. The parties agree that the
Swedish Sale of Goods Act shall not apply in this respect.
9.3 DEFENSE OF CLAIM. If Purchaser or Parent has received actual notice
of any claim asserted or any action or administrative or other proceeding
commenced in respect of which claim, action or proceeding indemnity properly may
be sought against Sellers pursuant to this Agreement,
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Purchaser will give notice in writing to Sellers. Within fifteen (15) days after
the earlier of (i) receipt of such notice or (ii) receipt of actual notice by
Sellers from sources other than Purchaser, Sellers may give Purchaser written
notice of their election to conduct the defense of such claim, action or
proceeding at its own expense. If Sellers have given Purchaser such notice of
election to conduct the defense, Sellers may conduct the defense at their
expense and Purchaser will nevertheless have the right to participate in the
defense, but such participation will be solely at the expense of Purchaser,
without a right of further reimbursement. If Sellers have not timely notified
Purchaser in writing of their election to conduct the defense of such claim,
action or proceeding, Purchaser may (but need not) conduct (at Sellers' expense)
the defense of such claim, action or proceeding. Purchaser may at any time
notify Sellers of Purchaser's intention to settle, compromise or satisfy any
such claim, action or proceeding (the defense of which Sellers have not
previously elected to conduct) and may make such settlement, compromise or
satisfaction (at Sellers' expense) unless Sellers notify Purchaser in writing
(within seven (7) days after receipt of such notice of intention to settle,
compromise or satisfy) of its election to assume (at its sole expense) the
defense of any such claim, action or proceeding and promptly take appropriate
action to implement such defense. Any settlement, compromise or satisfaction
made by Purchaser, or any such final judgment or decree entered in, any claim,
action or proceeding defended only by Purchaser, regardless of the amount or
terms, will be deemed to have been consented to by, and will be binding on,
Sellers as fully as though they alone had assumed the defense and a final
judgment or decree had been entered in such proceeding or action by a court of
competent jurisdiction in the amount of such settlement, compromise,
satisfaction, judgment or decree. If Sellers have elected under this Section 9.3
to conduct the defense of any claim, action or proceeding, then Sellers will be
obligated to pay the amount of any adverse final judgment or decree rendered
with respect to such claim, action or proceeding. If Sellers elect to settle,
compromise or satisfy any claim, action or proceeding defended by them, the cost
of any such settlement, compromise or satisfaction will be borne entirely by
Sellers and may be made only with the consent of Purchaser, such consent not to
be unreasonably withheld. Purchaser and Sellers will use all reasonable efforts
to cooperate fully with respect to the defense of any claim, action or
proceeding covered by this Section 9.3.
9.4 PURCHASER'S INDEMNIFICATION. Purchaser covenants and agrees to
compensate Sellers for any and all costs, expenses, losses, damages and
liabilities incurred or suffered by Sellers (including reasonable legal and
accounting fees and costs) resulting from or attributable to the breach of, or
misstatement in, any one or more of the representations or warranties of
Purchaser made in or pursuant to this Agreement to the same extent as provided
in Section 9.2(a), and in the same manner as provided in Section 9.3, of this
Article IX.
9.5 LIMITATION ON INDEMNIFICATION. Any of the foregoing
notwithstanding, Sellers shall not be obligated to indemnify Purchaser or Parent
unless and except to the extent that the aggregate Losses (when taken together
with any prior Losses) exceed Two Million Swedish Krona (SEK 2,000,000) (the
"Deductible") PROVIDED, HOWEVER, that the Deductible shall not apply to any
Losses arising out of or relating to a breach of the representations and
warranties contained in Section 2.4 (with respect to title to Shares), 2.12
(with respect to taxes), 2.22 (with respect to indebtedness) and 2.27 (with
respect to environmental matters) all of which shall be indemnifiable from the
first Swedish Krona of Loss. Notwithstanding anything in this Agreement to the
contrary, in no event shall Sellers' obligation to compensate Purchaser or
Parent for Losses pursuant to Section 9.2(a) exceed Eighty
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Percent (80%) of the Purchase Price (including any Earn-Out Payments paid before
or after any claim for compensation for Losses is made).
ARTICLE X
---------
CONDUCT PRIOR TO CLOSING DATE
-----------------------------
10.1 CONTINUATION OF BUSINESS. Until the Closing Date, Sellers will
cause the Company to continue to conduct its business in the ordinary and usual
course consistent with past practice, and, without limiting the generality of
this undertaking, Sellers will not, and will cause the Company not to, do or
suffer to be done any of the following, whether or not in the ordinary and usual
course, without the prior written consent of Purchaser:
(a) Dispose or contract to dispose of, or acquire or contract
to acquire, any assets (except for inventory or obsolete capital assets
disposed of or acquired in the ordinary course of business), or any
interest in any Real Property or other capital assets;
(b) Borrow any money;
(c) Enter into any lease except as a lessor in the ordinary
course of business;
(d) Encumber any assets;
(e) Enter into any contract, commitment or arrangement of the
type required by Section 2.20 above to be listed on Schedule 2.20;
(f) Declare or pay any dividend or declare or make any other
distribution to shareholders;
(g) Purchase or redeem any shares, notes or other securities;
(h) Increase the rate or amount of compensation or the amount
or type of other remuneration to any of its directors, officers,
employees, agents or other representatives, or agree to do so;
(i) Form or cause to be formed, or dispose or contract to
dispose of, any Subsidiary, or any interest in any Subsidiary or
acquire any stock or equity interest in any corporation or other
entity;
(j) Reclassify, split or combine its shares, or issue, sell,
distribute or dispose of any shares, notes or other securities, or
issue or make any changes to any options, warrants or rights with
respect to its shares, or commit itself to do so;
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(k) Make any new commitments or agree to make commitments for
capital improvements or significantly alter standing commitments for
capital improvements;
(l) Make any single expenditure or agree to make any single
expenditure, or series of expenditures in excess of Seventy-Five
Thousand Swedish Krona (SEK $75,000) in the aggregate;
(m) Negotiate with anyone other than Purchaser for, or
participate with anyone other than Purchaser in, the acquisition of
Sellers' Shares;
(n) Amend, or permit to be amended, in any way, its Articles
of Association or merge or consolidate with any other corporation or
other entity or change the character of its business; or
(o) Make any material change in accounting methods.
10.2 PRESERVATION OF BUSINESS. Sellers will cause the Company to use
reasonable efforts to (i) preserve intact its present business organization and
personnel, (ii) preserve its business, actual and potential, and its
advantageous relationships with all persons having business dealings with it,
and (iii) preserve and maintain in force all its material licenses,
certificates, leases, contracts, permits, registrations, franchises,
confidential information, patents, trademarks, trade names, service marks and
copyrights, and applications for any of the same, and other similar rights.
Sellers will cause the Company to maintain in force all property, casualty,
crime, life, directors, officers and other forms of insurance and bonds which it
presently carries.
10.3 CONSENTS AND APPROVALS. Sellers will use all reasonable efforts to
obtain all necessary consents and approvals of all persons, firms, entities and
governmental authorities to the consummation of the transactions contemplated by
this Agreement.
ARTICLE XI
----------
ASSIGNMENT, THIRD PARTIES, BINDING EFFECT
-----------------------------------------
The rights under this Agreement are not assignable nor are the duties
delegable by a party without the written consent of the other party first having
been obtained, and any attempted assignment or delegation without such consent
will be null and void, except that Purchaser or Parent may assign any or all
their rights hereunder to its senior lender or lenders as collateral. Nothing
contained in this Agreement is intended to convey upon any person or entity,
other than the parties hereto and their successors in interest and permitted
assigns, any rights or remedies under or by reason of this Agreement unless
expressly stated. All covenants, agreements, representations and warranties of
the parties contained in this Agreement are binding on and will inure to the
benefit of Purchaser, on the one hand and Sellers, on the other, and their
respective successors and permitted assigns.
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ARTICLE XII
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EXPENSES
--------
Purchaser, on the one hand, and Sellers, on the other, will bear their
own respective expenses, including, without limitation, counsel and accountants'
fees, in connection with the preparation and negotiation of, and transactions
contemplated under, this Agreement ("Transaction Expenses"). Notwithstanding the
preceding sentence or Article X of this Agreement, the Company shall be
permitted to pay the reasonable Transaction Expenses of Sellers in an amount not
to exceed One Hundred Ninety-Two Thousand Swedish Krona (SEK 192,000).
ARTICLE XIII
------------
NOTICES
-------
All notices, requests, demands and other communications under this
Agreement must be in writing and will be deemed duly given, unless otherwise
expressly indicated to the contrary in this Agreement, (i) when personally
delivered, (ii) upon receipt of a telephonic facsimile transmission with a
confirmed telephonic transmission answer back, (iii) seven (7) days after having
been deposited in first-class mail, certified or registered, return receipt
requested, postage prepaid, or (iv) one (1) business day after having been
dispatched by a nationally recognized overnight courier service,] addressed to
the parties or their permitted assigns at the following addresses (or at such
other address or number as is given in writing by either party to the other) as
follows:
To Purchaser: c/o Waterlink, Inc.
------------ 0000 Xxxxxxx Xxxxxx, X.X.
Xxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxx,
Chief Financial Officer
With a copy to: Benesch, Friedlander,
Xxxxxx & Aronoff LLP
2300 BP America Building
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx XXX 00000
Facsimile No.: (000) 000-0000
Attention: Xxx X. Xxxxxx
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To Sellers: c/o Mellagard V.A. Maskiner AB
---------- Sisjo Kullegata 0
X-000 00 Xxxxxx Xxxxxxxx
Xxxxxx
Facsimile No.: 00-00-00-00-00
Attention: Xxxxxxx Xxxxxxxx
With a copy to: Hemberg Advokatbyra
Sodra Vagen 1
Box 53151
400 15 Goteborg
Facsimile No.: 00-00-000000
Attention: Xxxxxx Xxxxxxx
ARTICLE XIV
-----------
REMEDIES NOT EXCLUSIVE
----------------------
Except as provided in Section 9.2(d), no remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive of any other
remedy, and each and every remedy will be cumulative and will be in addition to
every remedy given under this Agreement or now or subsequently existing, at law
or in equity, by statute or otherwise. The election of any one or more remedies
by Purchaser, on the one hand, or Sellers, on the other hand, will not
constitute a waiver of the right to pursue other available remedies.
ARTICLE XV
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NON-COMPETITION
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15.1 NON-COMPETITION AGREEMENT. In consideration of Purchaser's and
Parent's execution and delivery and consummation of the transactions
contemplated under this Agreement, each Seller agrees as follows:
(a) For a period of three (3) years from and after the Closing
Date, but as to clauses (iv) and (v) at any time after the Closing Date
in any state in the United States and any country, other than the
United States, where the Company has conducted or is currently
conducting business or actively contemplating conducting business, such
Seller will not, directly or indirectly, except as contemplated by this
Agreement or the other agreements to be executed in connection
herewith:
(i) engage in, carry on, be employed by or have any
interest in a business substantially similar to the business
as carried on by the Company on the Closing Date; provided,
however, that the ownership of not more than One Percent (1%)
of
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the outstanding shares of any class of capital stock of a
publicly held corporation shall not be deemed a violation of
this Section 15.1;
(ii) enter into, engage in, or be employed by or consult
with any business in, competition with the Company on matters
substantially similar to the business as carried on by the
Company on the Closing Date;
(iii) employ, assist in employing or otherwise associate
in business with any present, former or future employee of the
Company until a period of at least two (2) years has expired
since such employee was employed by the Company;
(iv) induce any person who is a present or future
employee, officer, agent, affiliate or customer of the Company
to terminate the relationship; and
(v) induce any customer, supplier or any other party
with whom the Company does business to refuse to do business
with the Company on as favorable terms as previously done with
the Company.
Each Seller acknowledges that the length of time and geographic restriction
pertaining to all prohibitions in this Subsection (a) both are reasonable and
necessary for the legitimate protection of Purchaser's business and interests.
For purposes of this Section 15.1(a), "the business as carried on by the Company
on the Closing Date" shall mean the mechanical separation of solid particles in
a liquid environment by means of screens.
(b) Each Seller expressly agrees and understands that the
remedy at law for any breach by them of this Article XV will be
inadequate and that the damages flowing from such breach are not
readily susceptible to being measured in monetary terms. Accordingly,
it is acknowledged that upon adequate proof of any Seller's violation
of this Article XV, Purchaser will be entitled, among other remedies,
to immediate injunctive relief and may obtain a temporary restraining
order restraining any threatened or further breach. Nothing in this
subsection (b) will be deemed to limit Purchaser's remedies at law or
in equity for any breach by Sellers of any of the provisions of this
Agreement which may be pursued or availed of by Purchaser.
(c) In the event any court of competent jurisdiction
determines that the specified time period or geographical area set
forth in this Section 15.1 is unreasonable, arbitrary or against public
policy, then a lesser time period or geographical area that is
determined by the court to be reasonable, non-arbitrary and not against
public policy may be enforced.
(d) In the event any Seller violates any legally enforceable
provision of this Section 15.1 as to which there is a specific time
period during which such Seller is prohibited from taking certain
actions or engaging in certain activities, then, in such event the
violation will toll the running of the time period from the date of the
violation until the violation ceases.
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15.2 DISCLOSURE OF CONFIDENTIAL INFORMATION. Except as may be required
by law or necessary in connection with any dealings with any public agency or
authority, from and after the Closing Date, Sellers will not, directly or
indirectly, disclose, disseminate, divulge, discuss, copy or otherwise use or
suffer to be used, in competition with, or harmful to the interests of, the
Company, any non-public information (written or oral), documents, lists or other
data of or respecting any aspect of the business being acquired by Purchaser
from Sellers under this Agreement.
ARTICLE XVI
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MISCELLANEOUS
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16.1 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same document.
16.2 CAPTIONS AND SECTION HEADINGS. Captions and section headings are
for convenience only, are not a part of this Agreement and may not be used in
construing it.
16.3 WAIVERS. Any failure by any of the parties to comply with any of
the obligations, agreements or conditions set forth in this Agreement may be
waived by the other party or parties, but any such waiver will not be deemed a
waiver of any other obligation, agreement or condition contained herein.
16.4 RIGHT OF INSPECTION. From and after the date of this Agreement to
the Closing Date, Sellers and the Company will give to Purchaser and its
counsel, accountants and other representatives, upon reasonable notice, full
access during normal business hours to the offices, properties, agreements,
records and affairs of the Company, and will furnish copies of all Contracts and
other instruments as Purchaser or its counsel may reasonably request. Such
investigation will not affect the warranties and representations of Sellers
under this Agreement. All such information will be treated confidentially and
will be used only for the purposes intended. If the transactions contemplated
under this Agreement do not take place, all documents and other property of the
Company or Sellers will be returned and all disclosures and information given to
Purchaser as contemplated under this Agreement will be treated as confidential
and not disclosed to others unless disclosed publicly by Sellers or the Company
or other third parties without fault on the part of Purchaser, or unless
otherwise required by law.
16.5 AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS. Each of the parties
agrees to cooperate in the effectuation of the transactions contemplated under
this Agreement and to execute any and all additional documents and to take such
additional action as is reasonably necessary or appropriate for such purposes.
16.6 ENTIRE AGREEMENT. This Agreement, including any certificate,
schedule, exhibit or other document delivered pursuant to its terms, constitutes
the entire agreement between the parties. There are no verbal agreements,
representations, warranties, undertakings or agreements between the
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parties, and this Agreement may not be amended or modified in any respect,
except by a written instrument signed by the parties to this Agreement.
16.7 GOVERNING LAW. This Agreement is to be governed by and construed
in accordance with the laws of Sweden without giving effect to the choice of law
principles thereof. The parties agree that the Swedish Sales of Goods Act
(1990:931) shall not apply to this Agreement.
16.8 KNOWLEDGE AND BEST EFFORTS. All references to "knowledge" or "best
knowledge", of a party or "known to" a party means the actual knowledge of a
party after reasonable inquiry. Actual knowledge of any officer or director of a
party will be imputed to, and deemed to be actual knowledge of, that party.
16.9 PRESS RELEASES. Prior to the Closing, no party will issue or cause
the publication of any press release or other public announcement with respect
to this Agreement or the transactions contemplated under this Agreement without
the prior consent of the other party first obtained; provided, however, that
nothing in this Agreement will prohibit either party from issuing or causing
publication of any press release or public announcement to the extent that such
party determines, on advice on counsel, that such action is required by law, in
which case the party making such determination will, if practicable under the
circumstances, use reasonable efforts to allow the other party reasonable time
to comment on such release or announcement in advance of its issuance.
16.10 ARBITRATION. Except for disputes relating to the Earn-Out
Statements which shall be resolved pursuant to Section 1.4(c), any dispute,
controversy or claim arising out of or in connection with this Agreement, or the
breach, termination or invalidity thereof, shall be settled by arbitration in
accordance with the Rules of the Arbitration Institute of the Stockholm Chamber
of Commerce. The arbitral tribunal shall be comprised of three (3) arbitrators.
All arbitrators shall be appointed by such Arbitration Institute. The place of
arbitration shall be Stockholm. The language to be used in the arbitral
proceedings shall be English.
16.11 EFFECTIVE DATE. The closing of the transactions contemplated
under this Agreement shall be deemed, for accounting purposes, to have occurred
as of September 1, 1997.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first above written.
WATERLINK (SWEDEN) AB
By: /s/ Xxxxxxx X. Xxxxxxxx
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Its: Chief Financial Officer
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WATERLINK, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
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Its: Chief Financial Officer
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/s/ Xxxxxxx Xxxxxxxx
---------------------------------
Xxxxxxx Xxxxxxxx
/s/ Xxxxx Xxxxxxxxx
---------------------------------
Xxxxx Xxxxxxxxx
/s/ Per Xxxxxxxxx
---------------------------------
Per Xxxxxxxxx
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