EXHIBIT 2.1
SHARE PURCHASE AGREEMENT
by and among
Metso Automation Holding B.V.
as "Metso Canada Seller"
Neles-Jamesbury, Inc.
as "Metso US Seller"
Telvent Sistemas y Redes, S.A.
as "Metso Canada Buyer"
Metso Automation SCADA Solutions Ltd.
as "Metso Canada"
Metso Automation SCADA Solutions Inc.
as "Metso US"
January 31, 2003
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (this "Agreement"), dated as of January 31, 2003,
is by and among Telvent Sistemas y Redes, S.A. ("Metso Canada Buyer"), Metso
Automation SCADA Solutions Ltd. ("Metso Canada"), Metso Automation Holding B.V.
("Metso Canada Seller"), Neles-Jamesbury, Inc. ("Metso US Seller") (collectively
with Metso Canada Seller, the "Sellers") and Metso Automation SCADA Solutions
Inc. ("Metso US") (collectively with Metso Canada, the "Companies") with the
intent it be effective as of January 31, 2003.
RECITALS
A. Metso Canada Seller owns all of the issued and outstanding shares of Metso
Canada;
B. Metso US Seller owns all of the issued and outstanding shares of Metso US;
C. Metso Canada Buyer desires to purchase from Metso Canada Seller, and Metso
Canada Seller desires to sell to Metso Canada Buyer, the shares of Metso
Canada representing 100% of the share capital owned by Metso Canada Seller
upon the terms and subject to the conditions of this Agreement; and
D. Upon the acquisition of the shares of Metso Canada by Metso Canada Buyer,
Metso Canada desires to purchase from Metso US Seller, and Metso US Seller
desires to sell to Metso Canada the shares of Metso US representing 100%
of the share capital owned by Metso US Seller upon the terms and
conditions of this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and promises contained
herein and for other good and valuable consideration, the receipt and adequacy
of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINED TERMS
As used herein, the terms below shall have the following meanings. Any of such
terms, unless the context otherwise requires, may be used in the singular or
plural, depending upon the reference.
1.1.1 "Affiliate" shall have the meaning set forth in Section 2(1) of the
Business Corporations Act (Alberta).
1.1.2 "Allowable Asbestos Claims" shall mean: (i) if any Action relating
to an Asbestos Claim (as those terms are defined in the Asbestos
Indemnity Agreement) is filed and the Indemnifying Parties (as that
term is defined in the Asbestos Indemnity Agreement) defaults under
its obligations contained in Section 2.4 of the Asbestos Indemnity
Agreement, (x) the amount claimed under such Action or, if no amount
is explicitly
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claimed, the amount being claimed as estimated by the Metso Canada
Buyer in good faith plus (y) the amount of fees and expenses
estimated by the Metso Canada Buyer in good faith to be incurred in
defending such Action; and (ii) if the Indemnifying Parties (as that
term is defined in the Asbestos Indemnity Agreement) defaults on any
payments due to Metso Canada Buyer or Metso Canada under the
Asbestos Indemnity Agreement, the amount of such payments.
1.1.3 "Asbestos Claims" shall mean all currently existing and future
Claims made against Metso US which relate to asbestos.
1.1.4 "Asbestos Indemnity Agreement" shall mean the agreement to be
entered into at the Metso US Closing among Metso US Seller, MAI,
Metso Canada and Metso Canada Buyer regarding certain matters
relating to asbestos, as set forth in Schedule 1.1.3.
1.1.5 "Benefit Arrangement" shall mean any employment, consulting,
severance or other similar contract, arrangement or policy and each
plan, arrangement (written or oral), program, agreement, or
commitment providing for insurance coverage (including without
limitation any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, life, health, disability or accident
benefits or for deferred compensation, profit sharing bonuses, stock
options, stock appreciation rights, stock purchases or other forms
of incentive compensation or post-retirement insurance, compensation
or benefits which (i) is not a Pension Plan, (ii) is entered into,
maintained, contributed to or required to be contributed to, as the
case may be, by a Company or under which a Company may incur any
liability, and (iii) covers any employee or former employee of
either of the Companies.
1.1.6 "Canadian Employee Plans" shall mean all Benefit Arrangements and
Pension Plans of Metso Canada.
1.1.7 "Canadian GAAP" shall mean generally accepted accounting principles
in Canada.
1.1.8 "Companies" shall mean, collectively, Metso Canada and Metso US.
1.1.9 "Confidential Information" shall mean all information that is not
generally known to the public, whether of a technical, business, or
other nature (including, without limitation, trade secrets,
know-how, and information relating to the technology, customers,
business plans, products, services, promotional and marketing
activities, finances, and other business affairs of such party),
that is or was disclosed by or on behalf of either of the Companies
to any of the Sellers, or the Sellers' Group prior to the Closing
Date, or that is or was otherwise learned by any of the Sellers, or
the Sellers' Group prior to the Closing Date in the course of its
discussions or business dealings with either of the Companies, and
that is sufficiently valuable to afford an actual or potential
economic advantage to the Companies. Confidential Information
includes, without limitation, software (including source code,
object code, executables, and scripts), data, inventions,
developments, algorithms, processes, products, documents, drawings,
diagrams, images, and recordings, embodied or carried in any
tangible or intangible medium.
1.1.10 "Contract" shall mean any agreement, contract, note, bond, mortgage,
indenture, loan, evidence of indebtedness, lease, sublease, purchase
order, letter of credit, franchise
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agreement, undertaking, covenant not to compete, employment
agreement, license, instrument, arrangement, obligation or
commitment to which the Companies (or either of them) are parties or
are bound, or to which their assets or properties are subject,
whether oral or written.
1.1.11 "Deferred Payment Deadline" shall mean January 30, 2004.
1.1.12 "Encumbrance" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, option, right
of first refusal, pre-emptive right, right-of-way, patent
reservation, encroachment, building or use restriction, conditional
sales agreement, encumbrance or other right of third parties,
whether voluntarily incurred or arising by operation of law, and
includes, without limitation, any agreement to give any of the
foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
1.1.13 "Environment" shall mean soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters, streams,
ponds, drainage basins, and wetlands), groundwaters, drinking water
supply, stream sediments, ambient air (including indoor air), plant
and animal life, and any other environmental medium or natural
resource.
1.1.14 "Environmental Law" shall mean any Legal Requirement that requires
or relates to the Environment, including:
(i) advising appropriate authorities, employees, and the
public of intended or actual releases of pollutants or
Hazardous Substances, violations of discharge limits, or
other prohibitions and of the commencements of
activities, such as resource extraction or construction,
that could have a significant impact on the Environment;
(ii) preventing or reducing to acceptable levels the release
of pollutants or hazardous substances or materials into
the Environment;
(iii) reducing the quantities, preventing the release, or
minimizing the hazardous characteristics of wastes that
are generated;
(iv) assuring that products are designed, formulated,
packaged, and used so that they do not present
unreasonable risks to human health or the Environment
when used or disposed of;
(v) protecting resources, species, or ecological amenities;
(vi) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil,
or other potentially harmful substances;
(vii) remediation of the environment and cleaning up
pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up
or prevention; or
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(viii)making responsible parties pay for damages done to
health or the Environment, or permitting self-appointed
representatives of the public interest to recover for
injuries done to public assets.
1.1.15 "Environmental Permits" shall mean all orders, permits,
certificates, approvals, consents, registrations and licences issued
by any authority of competent jurisdiction under Environmental Laws.
1.1.16 "ERISA" shall mean the United States Employee Retirement Income
Security Act of 1974, as amended or any successor law, and the
regulations and rules issued pursuant to ERISA or any successor law.
1.1.17 "Governmental Authorities" shall mean all applicable federal, state,
provincial and municipal agencies, boards, tribunals, ministries and
departments.
1.1.18 "Hazardous Substance" shall mean any waste or other substance that
is listed, defined, designated, or classified as, or otherwise
determined to be, hazardous, radioactive, or toxic or a pollutant or
a contaminant under or pursuant to any Environmental Law, including
any admixture or solution thereof, and specifically including
petroleum and all derivatives thereof or synthetic substitutes
therefor.
1.1.19 "including" shall mean including without limitation by reason of
enumeration.
1.1.20 "Leased Real Property" shall mean all real property and improvements
thereon leased, subleased or otherwise occupied under assignment or
sub-assignment of a lease by either of the Companies, including all
rights, easements and privileges appertaining or relating thereto.
1.1.21 "Legal Requirement" shall mean any applicable federal, state,
provincial, local, municipal, foreign, international, multinational,
or other administrative order, by-law, constitution, law, ordinance,
principle of common law, regulation, statute, or treaty.
1.1.22 "MAI" shall mean Metso Automation USA Inc., a corporation
incorporated pursuant to the laws of the State of Delaware, USA.
1.1.23 "Material Adverse Effect" or "Material Adverse Change" shall mean
any material adverse effect or change in the condition (financial or
other), business, results of operations, assets, liabilities or
operations of the Companies, taken as a whole, or on the ability of
the Sellers or the Companies to consummate the transactions
contemplated hereby, or any event or condition or state of facts
which could reasonably be expected, with the passage of time, to
constitute a "Material Adverse Effect" or "Material Adverse Change"
provided that a "Material Adverse Effect" or a "Material Adverse
Change" shall not include any fact, event, change, development,
circumstance or effect resulting from (i) the failure to obtain any
required approval from any Governmental Authority in connection with
a Special Contract, or (ii) any change in the general economic,
financial, currency exchange or securities market conditions in
Canada, the United States or elsewhere in the world.
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1.1.24 "Metso Canada" shall mean Metso Automation SCADA Solutions Ltd., a
corporation incorporated pursuant to the laws of Canada.
1.1.25 "Metso Canada Buyer" shall mean Telvent Sistemas y Redes, S.A., a
corporation incorporated pursuant to the laws of Spain.
1.1.26 "Metso Canada Seller" shall mean Metso Automation Holding B.V., a
corporation incorporated pursuant to the laws of the Netherlands.
1.1.27 "Metso Canada Shares" shall mean all of the issued and outstanding
shares of Metso Canada, consisting of 11,181,391 Common Shares and
5,000 Class A Shares, all of which are owned by Metso Canada Seller.
1.1.28 "Metso US" shall mean Metso Automation SCADA Solutions Inc., a
corporation incorporated pursuant to the laws of the State of Texas,
USA.
1.1.29 "Metso US Seller" shall mean Neles-Jamesbury, Inc., a corporation
incorporated pursuant to the laws of the State of Massachusetts,
USA.
1.1.30 "Metso US Shares" shall mean all of the issued and outstanding
shares of Metso US, consisting of 100 common shares, all of which
are owned by Metso US Seller.
1.1.31 "NMS Business" shall mean:
(a) the global business carried on by Metso Canada; and
(b) the global business carried on by Metso US and the
predecessor companies, including Valmet, Inc. and Valmet
Automation (USA), Inc., Remote Systems, Inc. and Tejas
Controls,
consisting of:
(i) the development of SCADA Software and advance
applications including pipeline simulation and
modeling software;
(ii) the supply of SCADA systems consisting of the
Company's SCADA and applications software, third
party systems and applications software, computer
hardware and related electronic equipment pursuant
to project contracts including design, assembly,
development, testing, installation, commissioning,
training, documentation and after sales warranty
and maintenance support;
(iii) the design, assembly, sales and service of remote
terminal units ("RTUs") from the Metso US
facilities in Houston, Texas; and
(iv) software engineering consulting services related
to SCADA systems.
1.1.32 "Pension Plan" shall mean any employee pension benefit plan which
(i) a Company maintains, administers, contributes to or is required
to contribute to, maintained,
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administered, contributed to or was required to contribute to, or
under which a Company may incur any material liability; and (ii)
covers any employee or former employee of a Company.
1.1.33 "Permits" shall mean all licenses, permits, franchises, approvals,
notifications, authorizations, consents or orders of, or filings
with, any governmental agency or authority, whether foreign,
federal, state, provincial or local, or any other person, necessary
or desirable for the past, present or presently anticipated conduct
of, or relating to the operation of, the Companies, their respective
businesses or their respective assets.
1.1.34 "Person" shall mean any natural person, corporation, general or
limited partnership, limited liability company, trust, sole
proprietorship, or other entity, organization or association of any
kind.
1.1.35 "Proven Claim" shall mean (i) a Claim, excluding Asbestos Claims
(except for Allowable Asbestos Claims), made by Metso Canada Buyer,
Metso Canada and/or Metso US against Metso Canada Seller and/or
Metso US Seller that has been acknowledged in writing by the party
against whom it is made, both as to liability and quantum, as a
valid Claim; or (ii) an award of a court or tribunal of competent
jurisdiction for a Claim made by Metso Canada Buyer, Metso Canada
and/or Metso US against Metso Canada Seller and/or Metso US Seller
for which all rights of appeal have expired or have been exhausted.
1.1.36 "Representative" shall mean any officer, director, principal,
partner, manager, member, attorney, agent, employee or other
representative.
1.1.37 "Securities Act" shall mean the United States Securities Act of
1933, as amended or any successor law, and the regulations and rules
issued pursuant to the securities law or any successor law.
1.1.38 "Sellers" shall mean, collectively, Metso Canada Seller and Metso US
Seller.
1.1.39 "Sellers' Group" shall mean the Sellers and all of their
Subsidiaries, all companies of which each of the Sellers is a
Subsidiary and all Subsidiaries of such companies, but excluding the
Companies.
1.1.40 "Shares" shall mean, collectively, the Metso Canada Shares and the
Metso US Shares.
1.1.41 "Special Claim" shall mean any claim made by the Metso Canada Buyer
or either of the Companies for any Damages with respect to a breach
of Section 4.6.3 or Section 4.17 (other than in respect of Asbestos
Claims).
1.1.42 "Standby Letter of Credit" shall mean a standby letter of credit
substantially in the form attached as Schedule 1.1.40 in the amount
of Five Million Six Hundred Thousand Dollars ($5,600,000) and any
replacement or amended letter or letters of credit permitted under
the Purchase Price Holdback Escrow Agreement.
1.1.43 "Subcontracts" shall mean the subcontracts described in Schedule
6.7.2.
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1.1.44 "Subsidiary" shall mean with respect to any Person, any corporation
or other Person ("Owner" for the purpose of this definition) of
which securities or other interests having the power to elect the
management of that corporation or other Person's board of directors
or similar governing body (other than securities or other interests
having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its
Subsidiaries.
1.1.45 "Transaction Bonus" shall mean the transaction bonus which is
payable by Metso Canada to the six senior executives of Metso Canada
within 60 days of completion of the sale of the shares of Metso
Canada as described in Schedule "A" attached to the employment
agreements, each dated June 17, 2002, between Metso Canada and each
of such executives (the "Employment Agreements"). Metso Canada has
agreed to amend Schedule "A" to the Employment Agreements so that
the employees shall be entitled to be paid the bonus if the sale of
the Shares is completed, as contemplated in this Agreement,
regardless of the date of completion.
1.1.46 "Unproven Claim" shall mean a Claim, excluding Asbestos Claims
(except for Allowable Asbestos Claims), made by Metso Canada Buyer,
Metso Canada and/or Metso US against Metso Canada Seller and/or
Metso US Seller which is not a Proven Claim.
1.1.47 "US Code" shall mean the United States Internal Revenue Code of
1986, as amended or any successor law, and the regulations issued by
the US IRS pursuant to the US Code and any successor law.
1.1.48 "US Employee Plans" shall mean all Benefit Arrangements and Pension
Plans that provide benefits to employees or former employees of
Metso US.
1.1.49 "US GAAP" shall mean generally accepted accounting principles in the
United States of America.
1.1.50 "US IRS" shall mean the United States Internal Revenue Service or
any successor agency, and, to the extent relevant, the United States
Department of Treasury.
1.1.51 "WARN Act" shall mean the United States Worker Adjustment and
Retraining Notification Act, as amended.
1.2 OTHER DEFINED TERMS
The following terms shall have the meanings ascribed to them in the Sections set
forth below:
Term Section
---- -------
Actions 4.10
Agreement Preamble
Canadian Group Plans 4.14.1
Claim 9.2.4
Claim Notice 9.2.4
Closing 3.1
Closing Date 3.1
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Term Section
---- -------
Copyrights 4.19.1
Damages 9.2.1
ERISA Affiliate 4.15.1
Financial Statements 4.6.1
Intellectual Property 4.19.1
Interim Trademark License Agreement 8.1.4
January Operating Loss 2.2.6.1
January Operating Profit 2.2.6.1
Material Contracts 4.18.1
Metso Canada Closing 3.1
Metso Canada Closing Date 3.1
Metso Canada Deferred Payment 2.2.3.3
Metso Canada Financial Statements 4.6.1
Metso Canada Purchase Price 2.2.1
Metso Group Insurance 6.10
Metso US Closing 3.1
Metso US Closing Date 3.1
Metso US Deferred Payment 2.2.4.2
Metso US Financial Statements 4.6.1
Metso US Purchase Price 2.2.2
Owned Software 4.19.6
Patents 4.19.1
Purchase Price Holdback Escrow Agreement 2.2.5
Qualified Plan 4.15.2
Released Contracts 6.7.1
Software 4.19.1
Special Contracts 6.7.2
Tax Holdback Escrow Agreement 2.2.3.2
Third Party Software 4.19.6
Trade Secrets 4.19.1
Trademarks 4.19.1
US Group Plans 4.15.1
1.3 BEST OF KNOWLEDGE
Any reference herein to "the best of the knowledge" of a party hereto will be
deemed to mean the actual knowledge of such party without any inquiry or
investigation and, with respect to the Companies, will be deemed to mean the
actual knowledge of only Xxxxx Xxxxxxx, Xxxxx Xxxxx, Xxxxxx Xxxxx, Xxxxxxx
Xxxxxx, Xxxxx Xxxxx, Xxxx Xxxxxx and Xxxxx Xxxxx.
1.4 APPENDICES AND SCHEDULES
The Appendices and Schedules attached to this Agreement are incorporated into
this Agreement by reference and are deemed to be part hereof.
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ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1 TRANSFER OF SHARES
2.1.1 Metso Canada. Upon the terms and subject to the conditions contained
herein, at the Metso Canada Closing, Metso Canada Seller will sell,
convey, transfer, assign and deliver to Metso Canada Buyer, and
Metso Canada Buyer will acquire from Metso Canada Seller, the Metso
Canada Shares, free and clear of all Encumbrances, for the
consideration specified in Section 2.2.1.
2.1.2 Metso US. Upon the terms and subject to the conditions contained
herein, at the Metso US Closing, Metso US Seller will sell convey,
transfer, assign and deliver to Metso Canada, and Metso Canada will
acquire from Metso US Seller, the Metso US Shares, free and clear of
all Encumbrances, for the consideration specified in Section 2.2.2.
2.1.3 Concurrent Closings. The Metso US Closing shall occur immediately
following the Metso Canada Closing. The Metso Canada Closing shall
not occur unless and until all conditions to the Metso US Closing
have been satisfied or waived and the Metso US Closing is able to
occur immediately following the Metso Canada Closing.
2.2 PURCHASE PRICE
2.2.1 Purchase Price for Metso Canada. The purchase price for the Metso
Canada Shares shall be Twenty-Four Million Nine Hundred Sixteen
Thousand Three Hundred Forty-Nine Dollars ($24,916,349) (the "Metso
Canada Purchase Price").
2.2.2 Purchase Price for Metso US. The purchase price for the Metso US
Shares shall be Ten Million One Hundred Forty-Three Thousand Dollars
($10,143,000) (the "Metso US Purchase Price"). The Metso Canada
Purchase Price and the Metso US Purchase Price are sometimes
collectively referred to herein as the "Purchase Price").
2.2.3 Metso Canada Payment. The Metso Canada Purchase Price shall be paid
by the Metso Canada Buyer as follows:
2.2.3.1 Fourteen Million Four Hundred Eighty-Seven Thousand Two
Hundred Sixty-Two Dollars ($14,487,262) to the Metso
Canada Seller or its order by bank transfer on the Metso
Canada Closing;
2.2.3.2 Six Million Two Hundred Twenty-Nine Thousand
Eighty-Seven Dollars ($6,229,087) to Xxxxxxx Xxxxx LLP
in trust by bank transfer on the Metso Canada Closing
for the benefit of the Metso Canada Seller on the terms
and conditions of the Tax Holdback Escrow Agreement in
the form attached as Schedule 2.2.3.2 (the "Tax Holdback
Escrow Agreement"); and
2.2.3.3 Four Million Two Hundred Thousand Dollars ($4,200,000),
less the amounts of Proven Claims and Unproven Claims
Metso Canada Buyer elects to deduct in accordance with
Section 9.4, to the Metso Canada Seller or its
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order on or before the Deferred Payment Deadline (the
"Metso Canada Deferred Payment").
2.2.4 Metso US Payment. The Metso US Purchase Price shall be paid by Metso
Canada as follows:
2.2.4.1 Eight Million Seven Hundred Forty-Three Thousand Dollars
($8,743,000) to the Metso US Seller or its order by bank
transfer on the Metso US Closing; and
2.2.4.2 One Million Four Hundred Thousand Dollars ($1,400,000),
less the amounts of Proven Claims and Unproven Claims
Metso Canada elects to deduct in accordance with Section
9.4, to the Metso US Seller or its order on or before
the Deferred Payment Deadline (the "Metso US Deferred
Payment").
2.2.5 Deferred Payment. Metso Canada Buyer on its own behalf and on behalf
of Metso Canada will cause the Standby Letter of Credit to be
delivered to Xxxxxxx Xxxxx LLP in trust on the Metso US Closing on
the terms and conditions of the Purchase Price Holdback Escrow
Agreement in the form attached as Schedule 2.2.5 (the "Purchase
Price Holdback Escrow Agreement") as security for the payment of the
Metso Canada Deferred Payment and the Metso US Deferred Payment.
2.2.6 Post-Closing Adjustments
2.2.6.1 Within seven (7) days following the Closing Date, Metso
Canada Seller shall deliver to Metso Canada Buyer and
the Companies a statement (the "Adjustment Statement"),
signed by a duly authorized representative of Metso
Canada Seller, stating the aggregate operating profit
for the Companies, taken together (the "January
Operating Profit") or the aggregate operating loss for
the Companies, taken together (the "January Operating
Loss"), as the case may be, for the month ended January
31, 2003, which statement shall include true copies of
the unaudited financial statements for the Companies for
the such period, which financial statements shall be
prepared in a manner consistent with current practices.
Provided, however, that for the purpose of the
calculation of "January Operating Profit" and "January
Operating Loss" shall be made without taking into
account the effect of the cancellation of the $148,798
owing from Metso Canada Buyer to Metso Canada pursuant
to Xxxxxxxx Xxxxxxxx 000000.
2.2.6.2 The Adjustment Statement shall be final and binding upon
the parties for the purposes of this Section 2.2.6.
2.2.6.3 Within seven (7) days following the receipt by Metso
Canada Buyer of the Adjustment Statement, a cash payment
shall be made as follows: (i) if the January Operating
Profit, if any, is greater than $200,000, Metso Canada
Seller shall pay Metso Canada Buyer an amount equal to
the amount by which the January Operating Profit exceeds
$200,000; and (ii) if the January Operating Loss, if
any, is greater than $200,000, Metso Canada Buyer shall
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pay Metso Canada Seller an amount equal to the amount by
which the Operating Loss exceeds $200,000.
2.2.6.4 All payments made under this Section 2.2.6 shall be made
by wire transfer and shall bear interest calculated from
the Closing Date to the date of payment at the Royal
Bank of Canada prime rate.
2.2.6.5 The determination and payment of any amounts due
pursuant to the provisions of this Section 2.2.6 shall
not limit or affect any other rights or causes of action
any of the parties hereto may have hereunder with
respect to the representations, warranties, covenants
and indemnities in its favour contained herein.
ARTICLE 3
CLOSING
3.1 CLOSING
The closing of the purchase and sale of the Metso Canada Shares (the "Metso
Canada Closing") shall take place at the offices of Xxxxxxx Xxxxx LLP,
solicitors for the Sellers, 0000 Xxxxxxx Xxxx Xxxx, 000 - 0xx Xxxxxx XX,
Xxxxxxx, Xxxxxxx, Xxxxxx, X0X 0X0, at 2:00 p.m. (Calgary time) on January 31,
2003 or at such other place, time and date as the parties shall mutually agree
(the "Metso Canada Closing Date") and the closing of purchase and sale of the
Metso US Shares (the "Metso US Closing") (the Metso Canada Closing and the Metso
US Closing are sometimes collectively referred to as the "Closing") shall take
place at the offices of Xxxxxxx Xxxxx LLP, solicitors for Sellers, at the
aforesaid address, immediately following the Metso Canada Closing or at such
other place, time and date as the parties shall mutually agree (the "Metso US
Closing Date") (the Metso Canada Closing Date and the Metso US Closing Date are
sometimes collectively referred to as the "Closing Date").
3.2 DELIVERIES AT CLOSING
3.2.1 Metso Canada Seller's Delivery Obligations. To effect the sale and
transfer of the Metso Canada Shares, Metso Canada Seller will, at
the Metso Canada Closing, execute (or cause to be executed by any
other party thereto other than the Metso Canada Buyer) and deliver
to the Metso Canada Buyer:
3.2.1.1 certificates evidencing the Metso Canada Shares, duly
endorsed in blank for transfer or accompanied by stock
powers duly executed in blank; and
3.2.1.2 all certificates and other documents described in
Section 8.1.
3.2.2 Metso Canada Buyer's Delivery Obligations. To effect the sale and
transfer referred to in Section 2.1 hereof, Buyer will, at the Metso
Canada Closing, execute and deliver to Sellers:
3.2.2.1 the portion of the Metso Canada Purchase Price due on
the Metso Canada Closing as set out in Section 2.2.3;
and
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3.2.2.2 all certificates and other documents described in
Section 7.1.
3.2.3 Metso US Seller's Delivery Obligations. To effect the sale and
transfer of the Metso US Shares, Metso US Seller will, at the Metso
US Closing, execute (or cause to be executed by any other party
thereto other than the Metso Canada Buyer or Metso Canada) and
deliver to Metso Canada:
3.2.3.1 certificates evidencing the Metso US Shares, duly
endorsed in blank for transfer or accompanied by stock
powers duly executed in blank; and
3.2.3.2 all certificates and other documents described in
Section 8.2.
3.2.4 Metso Canada's Delivery Obligations. To effect the sale and transfer
referred to in Section 2.1 hereof, Metso Canada Buyer will, at the
Metso US Closing, execute and deliver to Metso US Seller:
3.2.4.1 the portion of the Metso US Purchase Price due on the
Metso US Closing as set out in Section 2.2.4; and
3.2.4.2 all certificates and other documents described in
Section 7.2.
3.2.5 Form of Instruments. To the extent that a form of any document to be
delivered hereunder is not attached as a Schedule hereto, such
document shall be in form and substance, and shall be executed and
delivered in a manner, reasonably satisfactory to the recipient.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
Metso Canada Seller (with respect to itself and Metso Canada only), Metso US
Seller (with respect to itself and Metso US only), Metso Canada (with respect to
itself only) and Metso US (with respect to itself only) hereby jointly and
severally, with respect to Sections 4.6.3 and 4.17, and otherwise severally and
not jointly, represent and warrant for the benefit of the Metso Canada Buyer and
the Companies as follows:
4.1 ORGANIZATION
Each of the Companies is a corporation duly incorporated, organized and validly
subsisting and, in the case of Metso US and Metso US Seller, in good standing,
under the laws of the jurisdiction of its incorporation, and is duly licensed,
registered and qualified as a corporation to do business in each jurisdiction in
which the nature of its business makes such qualification necessary.
4.2 SUBSIDIARIES
The Companies have no Subsidiaries. Metso US has a branch office and a liaison
office in Turkey.
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4.3 AUTHORIZATION
Except for the approval of the board of directors of Metso Canada to the
acquisition of the Metso US Shares, each of the Sellers and each of the
Companies has full power and authority (corporate, fiduciary or other) to enter
into this Agreement and to carry out the transactions contemplated hereby, and
each of the Sellers and each of the Companies has taken all action required by
law, its charter or other governing documents, as the case may be, or otherwise,
to be taken by it to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement is the legal, valid and binding obligation of each of the Sellers and
each of the Companies enforceable against each of them in accordance with its
terms, except as limited by: (a) bankruptcy, insolvency, reorganization
resulting from said bankruptcy or insolvency, moratorium or other such laws
concerning the rights of creditors or other obligees generally; and (b) the fact
that equitable remedies, including the remedies of specific performance and
injunction, may only be granted in the discretion of a court.
4.4 NO VIOLATION; CONSENTS
None of the execution, delivery and performance of this Agreement nor the
consummation of the transactions contemplated hereby will (i) violate any
provision of the Articles of Incorporation, Bylaws or other governing documents
of any of the Sellers or the Companies, (ii) violate, conflict with, result in a
breach of or constitute a default (or an event which, with the giving of notice
or lapse of time or both, would constitute a default) or, except as set forth in
Schedule 4.4, require any consent under, or give to others any right of
termination, amendment, acceleration, suspension, revocation or cancellation
with respect to, any Contract to which either of the Companies is a party or by
which any of the Shares, or any of the assets or properties of the Companies are
bound or affected, (iii) result in the creation or imposition of any Encumbrance
upon any of the Shares or (iv) violate, conflict with or result in the breach of
any statute or law or any judgment, decree, order, regulation or rule of any
court or Governmental Authority to which any of the Sellers or the Companies or
any of their properties or assets are subject. Except as set forth in Schedule
4.4, no action, consent, approval or authorization by or filing with any person
or entity, including, without limitation, any Governmental Authority, is
required in connection with the execution, delivery and performance by each of
the Sellers and the Companies of this Agreement or the consummation by each of
the Sellers and the Companies of the transactions contemplated by each of them
herein.
4.5 CAPITALIZATION
4.5.1 The authorized capital stock of Metso Canada consists of an
unlimited number of Class A Shares without par value and an
unlimited number of Common Shares without par value of which
11,181,391 Common Shares and 5,000 Class A Shares (and no more) are
issued and outstanding. Metso Canada Seller is, of record and
beneficially, the owner and holder of the Metso Canada Shares, free
and clear of all Encumbrances.
4.5.2 There are no shares of capital stock of Metso Canada issued and
outstanding or agreed or committed to be issued other than the Metso
Canada Shares. All Metso Canada Shares: (i) are duly authorized,
validly issued, fully paid and nonassessable; (ii) were issued in
compliance with all legal requirements; and (iii) are free of
Encumbrances. There are no
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outstanding (i) securities convertible into or exchangeable or
exercisable for any of the capital stock of Metso Canada; (ii)
options, warrants, calls or other rights, including, without
limitation, rights to demand registration or to sell securities in
connection with any registration by Metso Canada under applicable
securities legislation, with respect to the capital stock of Metso
Canada or to purchase or subscribe for capital stock of Metso Canada
or securities convertible into or exchangeable or exercisable for
capital stock of Metso Canada; (iii) contracts, commitments,
agreements, understandings or arrangements of any kind relating to
the issuance, sale, transfer, or assignment of any capital stock,
any convertible or exchangeable securities or any options, warrants
or rights of Metso Canada; or (iv) Metso Canada Shares or other
securities of Metso Canada pledged as collateral to secure any
agreement or obligation of Metso Canada. There are no outstanding
obligations of Metso Canada to redeem or otherwise acquire any of
its securities. There are no voting trust agreements, unanimous
shareholder agreements or other contracts, agreements, arrangements,
commitments, plans, proxies or understandings restricting or
otherwise relating to conveyance, voting or dividend rights with
respect to the Metso Canada Shares.
4.5.3 The authorized capital stock of Metso US consists of 1000 common
shares with a par value of $10 per share, of which 100 common shares
(and no more) are issued and outstanding. Metso US Seller is, of
record and beneficially, the owner and holder of the Metso US
Shares, free and clear of all Encumbrances.
4.5.4 There are no shares of capital stock of Metso US issued and
outstanding or agreed or committed to be issued other than the Metso
US Shares. All Metso US Shares: (i) are duly authorized, validly
issued, fully paid and nonassessable; (ii) were issued in compliance
with all legal requirements; and (iii) are free of Encumbrances.
There are no outstanding (i) securities convertible into or
exchangeable or exercisable for any of the capital stock of Metso
US; (ii) options, warrants, calls or other rights, including,
without limitation, rights to demand registration or to sell
securities in connection with any registration by Metso US under
applicable securities legislation, with respect to the capital stock
of Metso US or to purchase or subscribe for capital stock of Metso
US or securities convertible into or exchangeable or exercisable for
capital stock of Metso US; (iii) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the issuance,
sale, transfer, or assignment of any capital stock, any convertible
or exchangeable securities or any options, warrants or rights of
Metso US; or (iv) Metso US Shares or other securities of Metso
pledged as collateral to secure any agreement or obligation of Metso
US. There are no outstanding obligations of Metso US to release or
otherwise acquire any of its securities. There are no voting trust
agreements, unanimous shareholder agreements or other contracts,
agreements, arrangements, commitments, plans, proxies or
understandings restricting or otherwise relating to conveyance,
voting or dividend rights with respect to the Metso US Shares.
4.6 FINANCIAL STATEMENTS
4.6.1 Attached hereto as Schedule 4.6 are the balance sheet and statement
of income of Metso Canada for the year ended December 31, 2002 (the
"Metso Canada Financial Statements") and the balance sheet and
statement of income of Metso US for the year ended December 31, 2002
(the "Metso US Financial Statements") (the Metso Canada
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Financial Statements and the Metso US Financial Statements are
collectively referred to as the "Financial Statements"). To the best
of the knowledge of Sellers, the Financial Statements (i) are true,
correct and complete in all material respects as at and for the
periods then ended, (ii) are in accordance with the underlying books
and records of the Companies, (iii) have been prepared in accordance
with Canadian GAAP or US GAAP, as the case may be, consistently
applied throughout the periods covered thereby, and (iv) fairly and
accurately present the assets, liabilities and financial position of
the Companies as of the respective dates thereof and the results of
operations and changes in cash flows for the periods then ended.
4.6.2 No Undisclosed Liabilities.
Except as set forth in Schedule 4.6.2, the Companies have no
liabilities or obligations of any nature (whether absolute, accrued,
contingent or otherwise) except for liabilities or obligations
reflected or reserved against in the Financial Statements and
liabilities and obligations not required by Canadian GAAP or US
GAAP, as the case may be, to be disclosed in the Financial
Statements.
4.6.3 No Non-NMS Business Liabilities.
Excluding any matters relating to asbestos, neither of the Companies
has any liabilities or obligations of any nature (whether absolute,
accrued, contingent or otherwise) that do not relate to the NMS
Business except for liabilities or obligations reflected in the
Financial Statements.
4.7 NO CHANGE IN THE ASSETS
Since December 31, 2002:
4.7.1 There has been no Material Adverse Change in the Companies;
4.7.2 Except in the ordinary course of business, there has not been any
sale or other disposition of any material assets of the Companies or
any Encumbrance placed on their assets; and
4.7.3 Each of the Companies has operated its business in the ordinary
course consistent with its past practice.
4.7.4 Except in the ordinary course of business, there has been no payment
or increase by the Companies of any bonuses, salaries, or other
compensation to any director, officer, or (except in the ordinary
course of business) employee or entry into any employment,
severance, or similar Contract with any director, officer, or
employee.
4.7.5 There has been no adoption of, or increase in the payments to or
benefits under, any US Employee Plan.
4.7.6 Except in the ordinary course of business, there has been no damage
to or destruction or loss of any asset or property of either of the
Companies or any of their Subsidiaries, whether or not covered by
insurance, that has had a Material Adverse Effect.
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4.7.7 There has been no cancellation or waiver of any claims or rights
with a value to either of the Companies or any of their Subsidiaries
in excess of $100,000 except Metso Canada has agreed in principle
with Egyptian Natural Gas Company (GASCO) to waive Metso Canada's
claim for compensation for delays caused by GASCO in exchange for
GASCO releasing any potential claims for penalties for delays (which
are limited to approximately $700,000, being 5% of the Contract
value).
4.7.8 There has been no change in the accounting methods used by either of
the Companies, except as requested by the Metso Canada Buyer in
writing.
4.7.9 There has been no agreement, whether oral or written, by either of
the Companies or any of their Subsidiaries to do any of the
foregoing.
4.8 REAL PROPERTY
Schedule 4.8 sets forth a complete and accurate list of all real property,
leaseholds or other interests in real property owned by the Companies. All
leases are in good standing and the Companies have not received any notice of
termination or default under any lease nor do they know of any fact that would
cause the lessor to terminate any lease or issue a notice of default. Each
Company owns (with good and marketable title in the case of real property,
subject only to the matters permitted by the following sentence) all the
properties and assets (whether real, personal, or mixed and whether tangible or
intangible) that it purports to own, including all of the properties and assets
reflected in the Financial Statements (except for assets held under capitalized
leases disclosed or not required to be disclosed in Schedule 4.8 and personal
property sold or used since the date of the Financial Statements in the ordinary
course of business), and all of the properties and assets purchased or otherwise
acquired by such Company since the date of the Financial Statements (except for
personal property acquired and sold or used since the date of the Financial
Statements in the ordinary course of business and consistent with past
practice).
4.9 BOOKS AND RECORDS
4.9.1 Metso Canada. The minute books of Metso Canada have been made
available to the Metso Canada Buyer, and do not contain any
misstatements (for the purposes of the foregoing statement,
omissions are not misstatements). To the extent that there are
records of meetings held and of corporate actions or written
consents by the shareholders, board of directors and committees of
the board of directors of Metso Canada, they are accurate records.
The registers of shareholders and directors of Metso Canada is each
an accurate and complete record showing the current shareholders of
Metso Canada and the shares each shareholder owns and the directors
of Metso Canada, respectively.
4.9.2 Metso US. The minute books of Metso US have been made available to
the Metso Canada Buyer, and, to the extent that such minute books
contain minutes of meetings of the shareholders, board of directors
and any committees of the board of directors of Metso US, they
contain accurate and materially complete records of all corporate
actions or written consents by the shareholders, board of directors
and committees of the board of directors of Metso US and no meeting
has been held for which minutes have not been prepared and are not
contained in such minute books. The stock books of Metso US
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contain accurate and complete records of all transactions effected
in the stock of Metso US through and including the date hereof.
4.10 LITIGATION
Except as set forth in Schedule 4.10, there is no action, order, writ,
injunction, judgment or decree outstanding or any claim, suit, litigation,
proceeding, labor dispute, arbitral action, administrative proceeding,
governmental audit or investigation (collectively, "Actions") which has been
served upon either of the Companies or of which any of the Sellers or the
Companies has knowledge, or, to the best of the knowledge of the Sellers and the
Companies, threatened:
(i) against, related to or affecting the Companies or their
respective assets; or
(ii) seeking to delay, limit or enjoin the transactions
contemplated by this Agreement,
which may have a Material Adverse Effect on the Companies (or either of them) or
either of their respective businesses or assets.
4.11 COMPLIANCE WITH LAW; PERMITS
To the best of the knowledge of the Sellers and the Companies, the Companies and
the conduct of their respective businesses have not violated and are in
compliance with all Legal Requirements and all Permits. The Companies have all
Permits necessary for the operation of their businesses.
4.12 NO OTHER AGREEMENTS TO SELL THE COMPANIES
None of the Sellers or the Companies has any commitment or legal obligation,
absolute or contingent, to any Person other than the Metso Canada Buyer and
Metso Canada to sell, assign, transfer or effect a sale of any of the Shares or
any other shares of the Companies' capital stock (authorized or unauthorized),
or to effect any merger, consolidation, liquidation, dissolution or other
reorganization of the Companies, or to effect any sale of the Companies' assets
(other than in the ordinary course of business of the Companies).
4.13 TAX MATTERS
4.13.1 United States. Appendix 4.13.1 sets forth the tax-related
representations, warranties and covenants with respect to Metso US.
4.13.2 Canada. Appendix 4.13.2 sets forth the tax-related representations,
warranties and covenants with respect to Metso Canada.
4.14 CANADIAN EMPLOYEES AND EMPLOYEE BENEFITS
4.14.1 Disclosure. Schedule 4.14.1 contains a complete list of all Canadian
Employee Plans for the benefit of Metso Canada employees. In
addition, Schedule 4.14.1 identifies those Canadian Employee Plans
which are group plans (the "Canadian Group Plans").
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4.14.2 Delivery of Copies of Relevant Documents. Metso Canada Seller has
made available to the Metso Canada Buyer current, accurate and
complete copies of all Canadian Employee Plans (including any
amendments thereto), and all summary plan descriptions, and other
material agreements, documents or instruments relating thereto.
4.14.3 All Remuneration Paid. Except as set forth in Schedule 4.14.3, to
the best of the knowledge of Metso Canada Seller and Metso Canada,
all staff salaries, remuneration, benefits, deductions,
contributions, holiday or vacation pay (including sick leave) and
workers' compensation payments for all employees of Metso Canada
have been fully accrued or paid and satisfied as at the date of this
Agreement.
4.14.4 Employees and Consultants. All employees have, and all former
employees of Metso Canada since 1996 had, written employment
contracts or written and accepted offers of employment in the forms
provided on a compact disc delivered to Xxxxxxx, Xxxxx & Xxxx on or
around December 16, 2002. All consultants, dependant and independent
contractors have and all former consultants, dependant and
independent contractors of Metso Canada since 1996 had written
contracts in the forms provided on a compact disc delivered to
Xxxxxxx, Xxxxx & Xxxx on or around December 16, 2002. There have
been no amendments or changes to the provisions relating to the
inventions and confidentiality in such agreements. Except for the
foregoing and as set forth in Schedule 4.18, Metso Canada is not a
party to any written contract: (i) for the employment of any officer
or individual employee; or (ii) for consulting services on an
ongoing basis which cannot be terminated without penalty or
additional compensation within thirty (30) days of the Metso Canada
Closing Date.
4.14.5 Pension Plans. Metso Canada does not have any Pension Plans.
4.14.6 Compliance with Law. Except as set forth in Schedule 4.14.6, to the
best of the knowledge of Metso Canada Seller and Metso Canada, each
Canadian Employee Plan has been established, qualified, invested and
maintained in compliance with its terms and with the requirements
prescribed by any and all Legal Requirements.
4.15 US EMPLOYEE AND EMPLOYEE BENEFITS
4.15.1 Disclosure. Schedule 4.15.1 contains a complete list of all US
Employee Plans (including all US employee benefit plans, whether or
not within the meaning of ERISA Section 3(3)) sponsored or
maintained by (or to which contributions are made by) either (1)
Metso US, or (2) any other organization which together with Metso US
is treated as a single employer under US Code Sections 414(b) or (c)
(an "ERISA Affiliate"), for the benefit of Metso US employees. There
are no individuals who are entitled to retiree medical benefits
and/or retiree life insurance under a US Employee Plan or otherwise
by virtue of an employee's retirement from, or other employment
with, Metso US or predecessor company of Metso US. In addition,
Schedule 4.15.1 identifies those US Employee Plans which are
sponsored by an ERISA Affiliate and in which employees of Metso US
participate (the "US Group Plans").
4.15.2 Delivery of Copies of Relevant Documents. Metso US Seller has made
available to the Metso Canada Buyer (i) current, accurate and
complete copies of all US Employee Plans
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(including any amendments thereto), and all summary plan
descriptions, and other material agreements, documents or
instruments relating thereto; (ii) the most recent audited financial
statement with respect to each US Employee Plan required to have an
audited financial statement; (iii) copies of the most recent
determination letters with respect to any US Employee Plan which is
intended to qualify under US Code Section 401(a) (a "Qualified
Plan"); and (iv) copies of the most recent annual reports (Forms
5500) with respect to each Employee Plan required to file an annual
report.
4.15.3 Employees and Consultants. No employees have and no former employees
of Metso US had written employment contracts. All employees have,
and all former employees of Metso US had, signed written
confidentiality and invention agreements in the forms provided on a
compact disc delivered to Xxxxxxx, Xxxxx & Xxxx on or around
December 16, 2002. All consultants, dependant and independent
contractors have and all former consultants, dependant and
independent contractors of Metso US had written contracts in the
forms provided on a compact disc delivered to Xxxxxxx, Xxxxx & Xxxx
on or around December 16, 2002. There have been no amendments or
changes to the provisions relating to the inventions and
confidentiality in such agreements. Except for the foregoing and as
set forth in Schedule 4.18, Metso US is not a party to any written
contract: (i) for the employment of any officer or individual
employee; or (ii) for consulting services on an ongoing basis which
cannot be terminated without penalty or additional compensation
within thirty (30) days of the Metso US Closing Date.
4.15.4 Compliance with Law. Except as set forth in Schedule 4.15.4, to the
best of the knowledge of Metso US Seller and Metso US, with respect
to each US Employee Plan:
(i) Metso US and each ERISA Affiliate has complied in all
material respects with all provisions of such plan, all
contributions that are required to have been paid to
such plans on or before the Metso US Closing Date have
been paid to such plans in a timely fashion and with
ERISA, the US Code and other applicable statutes,
orders, rules and regulations, and no act or omission by
Metso US, each ERISA Affiliate, or any fiduciary of any
such plan has occurred, no event has occurred and no
condition exists that will or could reasonably be
expected to give rise to material liability for a breach
of fiduciary responsibilities under ERISA, or to any
material fines, penalties, excise taxes, corrective
payments, fees, sanctions or other payments under ERISA,
the US Code or other applicable statutes, orders, rules
and regulations;
(ii) each such plan which is intended to be tax-qualified
under Section 401(a) of the US Code has received from
the US IRS a favorable determination letter as to its
qualification under the US Code, and no event has
occurred that could reasonably be expected to give rise
to disqualification or loss of tax-exempt status of any
such plan or related trust;
(iii) other than routine applications, filings and amendments
and modifications, there is no matter pending with
respect to any of the plans before the US IRS, the US
Department of Labor or the Pension Benefit Guaranty
Corporation or any other federal, state or local
governmental agency;
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(iv) there are no actions, investigations, suits or claims
(other than routine claims for benefits in the ordinary
course) pending or threatened, which could subject Metso
US to any material liability; and
(v) none of Metso US Seller, Metso US, any ERISA Affiliate
or any other person is engaged in a prohibited
transaction (within the meaning of US Code Section 4975
or ERISA Section 406) which would subject Metso US to
any material Taxes (as such term is defined in Appendix
4.13.1), penalties or other liabilities resulting from
prohibited transactions under US Code Section 4975 or
under ERISA Sections 409 or 502(i).
4.15.5 No ERISA Material Liability. To the best of the knowledge of Metso
US Seller and Metso US, there does not now exist, nor do any
circumstances exist that could reasonably be expected to result in,
any material liability that could be imposed on Metso US under Title
IV of ERISA, or US Code section 412.
4.15.6 Metso US Seller 401(k) Plan. Effective as of the Metso US Closing
Date, Metso US and employees of the Companies will cease
participation in the Metso US Seller 401(k) plan and Metso US Seller
will fully vest all employees of the Companies in their account
balances. As soon as is practicable after the Metso US Closing Date
(or as the parties otherwise mutually agree), Metso US Seller will
cause to be transferred to a retirement plan maintained by Metso US
that is intended to be tax-qualified under Section 401(a) of the US
Code, the respective account balances (including any related loans
and qualified domestic relations orders) and related assets of the
Companies' employees and former employees who maintain an account
balance in the Metso US Seller 401(k) plan. Upon such transfer, the
retirement plan of Metso US will assume the related liabilities.
Employees who have outstanding participant loans under the Metso US
Seller 401(k) plan will be permitted to continue making loan
payments to the Metso US Seller 401(k) plan until such time as the
loans are transferred to the retirement plan of Metso US.
4.15.7 Right to Amend US Employee Plans. With respect to each US Employee
Plan, including, without limitation, plans that provide severance
benefits, Metso US has the right to terminate any such plan, at any
time, without the incurrence of any additional liability or any
obligation to provide for benefits past the date of termination.
4.16 LABOR RELATIONS
No collective bargaining or similar agreement is being negotiated by either
Company or any member of the Sellers' Group in respect of either Company, there
is no pending or, to the best of the knowledge of the Seller and the Companies,
threatened labor dispute, strike, slowdown, lockout or work stoppage against
either Company, no member of the Sellers' Group is a party to or bound by any
collective bargaining or similar agreement with any union or work rules or
practices agreed to with any labor organization or employee association
applicable to employees of either Company and none of the employees of either
Company are represented by any labor organization and, to the best of the
knowledge of the Seller and the Companies, there are no current union organizing
activities among the employees of any member of the Sellers' Group. Metso US has
not (i) failed to comply in any material respect with the notice and other
requirements of the WARN Act, effectuated (1) a "plant closing" (as defined in
the WARN Act)
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affecting any site of employment or one or more facilities or operating units
within any site of employment or facility of Metso US covered by the WARN Act or
(2) a "mass layoff" (as defined in the WARN Act) affecting any site of
employment or facility of Metso US covered by the WARN Act; or (ii) engaged in
layoffs or employment terminations sufficient to imply application of any
foreign, state or local laws or regulations relating to plant closing or mass
layoffs and requiring notice to employees in the event thereof without complying
with such laws and regulations in each case with respect to which Metso US could
reasonably be expected to have any liability.
4.17 ENVIRONMENTAL MATTERS
4.17.1 Compliance with Environmental Laws. Except as set out in Schedule
4.17: (i) each of the Companies and the operation of their
respective businesses have been and are in compliance with all
Environmental Laws; (ii) each of the Companies has complied in all
material respects with all reporting and monitoring requirements
under all Environmental Laws; and (iii) neither of the Companies has
received any notice of any non-compliance with any Environmental
Laws, and neither of the Companies has ever been convicted of an
offence for non-compliance with any Environmental Laws or been fined
or otherwise sentenced or settled such prosecution short of
conviction.
4.17.2 Environmental Permits. Each of the Companies has obtained all
Environmental Permits necessary to conduct its business.
4.18 CONTRACTS AND COMMITMENTS
4.18.1 Contracts. Schedule 4.18 sets forth a list of all Contracts of the
Companies of the following categories:
4.18.1.1 Contracts not made in the ordinary course of either of
the Companies' conduct of their respective businesses
which involve expenditures or receipts of either of the
Companies in excess of $100,000 or which otherwise are
material to either of the Companies or which provide for
an express undertaking by either of the Companies to be
responsible for consequential damages;
4.18.1.2 Franchise agreements;
4.18.1.3 Agreements or indentures relating to the borrowing of
money or to mortgaging, pledging or otherwise placing an
Encumbrance on any of the assets of the Companies
relating to liabilities in excess of $25,000 or, in the
case of liabilities arising from equipment leases,
$50,000;
4.18.1.4 Guarantees of any obligation for borrowed money or
otherwise, other than endorsements made for collection;
4.18.1.5 Contracts, purchase orders or groups of related
Contracts or purchase orders with the same party for the
sale of products or services under which the undelivered
balance of such products or services has a sales price
in excess of $100,000;
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4.18.1.6 Contracts involving expenditures or liabilities, actual
or potential, by either Company, in excess of $100,000
and not cancelable (without liability) within 30
calendar days;
4.18.1.7 Leases of real property not cancelable (without
liability) within 30 calendar days;
4.18.1.8 Contracts containing covenants restricting the business
activity or limiting the freedom of either of the
Companies to engage in any line of business or compete
with any Person;
4.18.1.9 License, reseller and OEM agreements made with
third-party suppliers for the resale or sub-licensing by
either of the Companies of third-party products;
4.18.1.10 Sales, marketing, distributorship, agency,
representative and value-added reseller agreements made
with any third party with respect to the sale or
sublicensing by the third party of any of the products
of the Companies;
4.18.1.11 Software licenses and other agreements granted by either
of the Companies to third parties to use software
developed or licensed by either of the Companies;
4.18.1.12 Agreements and closing books with respect to
reorganizations, acquisitions or the purchase or sale of
assets or capital stock of either of the Companies
completed within the last 5 years;
4.18.1.13 Management and employment agreements;
4.18.1.14 Related party agreements;
4.18.1.15 Joint venture, partnership and any other contracts
involving a sharing of profits, losses, costs or
liabilities or either of the Companies with any other
Person;
4.18.1.16 Except for Powers of Attorney related to specific
projects, all outstanding Powers of Attorney that are
material to the Companies or that are not in the
ordinary course of the conduct of their respective
businesses; and
4.18.1.17 Amendments, supplements and modifications in excess of
$100,000 (whether oral or written) in respect of any of
the foregoing,
(collectively referred to as the "Material Contracts").
Sellers and the Companies have made available to Metso Canada Buyer
true, correct and complete copies of all of the Material Contracts
listed on Schedule 4.18.
4.18.2 Good Standing of Agreements. Except as set out in Schedules 4.10 and
4.18.2, to the best of the knowledge of Sellers and the Companies:
(i) neither Company is in default or
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in breach of any of its obligations under any Material Contract and
there exists no state of facts which, after notice or lapse of time
or both, would constitute such a default or breach; (ii) all
Material Contracts are in full force and effect and the Companies
are entitled to all material benefits thereunder and the other
parties to such Material Contracts are not materially in default or
in breach of any of their obligations thereunder; (iii) each other
Person that has or had any obligation or liability under any
Material Contract under which either of the Companies has or had any
rights is, and at all times has been, in full compliance with all
material applicable terms and requirements of such Material
Contract; and (iv) neither the Sellers nor the Companies has given
to or received from any other Person, at any time, any written
notice or other written communication, or to the best of the
knowledge of the Sellers and the Companies, any oral notice or
communication, regarding any actual, alleged, possible, or potential
violation or breach of, or default under any material Contract.
4.18.3 Bank Guarantees and Surety Bonds. Schedule 4.18.3 lists all bid,
advance payment, performance and warranty bonds, bank guarantees and
standby letters of credit currently in place, issued by any bank or
surety company at the request of either of the Companies in favour
of any customer of the Companies as beneficiary which are material
to the Companies.
4.19 INTELLECTUAL PROPERTY
4.19.1 For purposes of this Agreement, "Intellectual Property" shall mean:
(a) all inventions (whether patentable or unpatentable and whether
or not reduced to practice) and all patent rights in same including
patents and patent applications, together with all rights of
priority and all reissuances, continuations, continuations-in-part,
divisions, revisions, extensions and re-examinations thereof
("Patents"); (b) all trademarks, service marks and other marks,
trade dress, corporate names, business names, trade names, and other
trade rights, all whether or not registrable or the subject of
applications for registration(s), including all goodwill associated
therewith and all applications, registrations and renewals in
connection therewith ("Trademarks"); (c) all copyrights in the Works
(defined below), and all applications, registrations, and renewals
in connection therewith ("Copyrights"); (d) all confidential
information including as may relate to any of the following:
improvements thereto, trade secrets and confidential business
information, ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and
marketing plans and proposals ("Trade Secrets"); (e) all computer
software programs, scripts, interfaces, program specifications,
charts, procedures, source codes (including annotations), object
codes, diagnostic and other routines and report layouts and formats,
record file layouts, diagrams, functional specifications and
narrative descriptions and flow charts ("Software"); (f) all domain
names, uniform resource locators and other names and locators
associated with the Internet; (g) all databases, database layouts
and data collections including all rights therein ("Databases"); (h)
all works, including literary, artistic, musical, dramatic and audio
visual works, performer's performances, sound recordings and
broadcast signals, all whether or not registered or registrable
(collectively, with Software and Databases, herein and hereinafter
"Works"); (i) all moral rights or the benefits of all waivers of
moral rights, in the Works ("Moral Rights") (j) all
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mask works and mask work rights; (k) all industrial designs, whether
or not patentable or registrable, patented or registered or the
subject of applications for registration or patent, including all
design patents, design registrations, pending applications and
rights to file applications, including all rights of priority and
rights in continuation, continuations-in-part, divisions,
re-examinations, and reissues ("Design Rights"); (l) all integrated
circuit topographies and integrated circuit topography products,
whether or not registrable, registered or pending, including
registrations, pending applications, and rights to file for any of
same ("Topography Rights"); (m) all other intellectual and
industrial property including all rights to enforce rights in the
foregoing (a) to (l) ("Other Intellectual Property Rights").
4.19.2 (a) Except as set forth separately on Schedule 4.19.2 or Schedule
4.19.4, the Companies are the exclusive owners of all right, title
and interest in and to, and have good and marketable title to, the
specific Intellectual Property listed on Schedule 4.19.2 free and
clear of any Encumbrances. (b) Except as set forth separately on
Schedule 4.19.2 all licenses or other rights or permission to use
and which are material for the business of the Companies have been
obtained by the Companies to any Third Party Intellectual Property
(defined below) used by either of the Companies in their businesses.
(c) Except as set forth separately on Schedule 4.19.2 each item of
Intellectual Property owned or used by either or both of the
Companies immediately prior to the Closing hereunder will be owned
or available for use by such Companies on substantially the same
terms and conditions immediately subsequent to the Closing
hereunder. (d) Except as set forth separately on Schedule 4.19.2,
Schedule 4.19.2 sets forth all registrations and applications
therefore currently issued or pending in any jurisdiction for the
Intellectual Property owned by either of the Companies, including
registration or application numbers therefor and the jurisdiction in
which registration or application has been obtained or made
(collectively referred to herein and hereinafter as "Registered
Intellectual Property"). (e) To the best knowledge of the Companies
and except as set forth separately on Schedule 4.19.2, Schedule
4.19.2 sets forth a true and complete list of all Registered
Intellectual Property that is owned by the Companies and the
Registered Intellectual Property is valid, subsisting, and
unexpired. (f) For the purposes of this Agreement "Third Party
Intellectual Property" means any intellectual property rights of any
Person other than either of the Companies, such intellectual
property rights including any patent, industrial design, copyright,
moral right, trademark or service xxxx (including any logo, design,
business name, trade name or the like), mask work, trade secret,
confidential information, right of privacy, data right, or any other
analogous intangible proprietary right, whether registered or
unregistered, anywhere in the world.
4.19.3 (a) Except as set forth on the attached Schedule 4.19.3 and to the
best of the knowledge of the Sellers, each Company, the Companies
have not, separately or together, infringed upon or misappropriated
any Third Party Intellectual Property. (b) Except as set forth
separately on Schedule 4.19.3 none of the Companies or the Sellers
has ever received any written complaint, claim, demand, or notice
that remains unresolved and that (i) alleges that either Company has
infringed or misappropriated any Third Party Intellectual Property;
or (ii) seeks to restrict in any manner the use, transfer, or
licensing of any of any Intellectual Property owned by such Company.
(c) To the best of the knowledge of the Sellers and each Company and
except as provided separately in Schedule 4.19.3 no
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third party to either of the Companies has infringed upon or
misappropriated any Intellectual Property rights owned by either of
the Companies.
4.19.4 Except as otherwise set forth separately on Schedule 4.19.2, with
respect to each item of Intellectual Property identified on Schedule
4.19.2:
(i) where the item is Registered Intellectual Property, the
item remains pending or in force (as the case may be)
with all maintenance fees and renewal fees that have
fallen due on or prior to the Closing Date have been
paid in a timely fashion;
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, or ruling by a Court of
competent jurisdiction limiting its use by the
Companies, (except for Registered Intellectual Property
to the extent pending or registered in any government
patent or trademark office, as the case may be); and
(iii) no action, suit, proceeding, hearing, complaint, written
claim, or written demand is pending or, to the best of
the knowledge of Sellers and each Company, is threatened
which challenges the subsistence, existence, validity,
enforceability, use, or ownership of the item provided
that nothing in this term extends to the prosecution of
any Registered Intellectual Property to the extent
pending or registered in any government patent or
trademark office, as the case may be.
4.19.5 Except as set forth separately on Schedule 4.19.5, Schedule 4.19.5
identifies each license, sublicense, agreement or permission to use
any Third Party Intellectual Property which is material for the
business of the Companies other than off the shelf or similar
Software and to the best of the knowledge of the Companies Schedule
4.19.5 identifies each license, sublicense, agreement or permission
to use any Third Party Intellectual Property which are material for
the business of the Companies for off the shelf or similar Software.
With respect to each such license, sublicense, agreement or
permission:
(i) the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable
against the respective Company, and in full force and
effect;
(ii) the license, sublicense, agreement, or permission will
continue to be legal, valid, binding, enforceable
against the respective Company, and in full force and
effect on essentially the same terms following the
Closing;
(iii) none of the Companies, and to the best of the knowledge
of Sellers, and each Company, no other party to the
license, sublicense, agreement, or permission is in
breach or default, and, to the best of the knowledge of
Sellers and each Company, no event has occurred which
with notice or lapse of time would constitute a material
breach or material default or permit termination,
modification, or acceleration thereunder; and
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(iv) except as permitted by the applicable agreement, neither
Company has granted any sublicense or similar right with
respect to the listed license, sublicense, agreement, or
permission.
4.19.6 Except as set forth separately on Schedule 4.19.6, Schedule 4.19.6
sets forth all material products that are licensed or sold by the
Companies to unrelated third parties and which are or include either
Software and/or Databases owned by either of the Companies and
identifies specifically under separate headings in respect of the
foregoing (1) Software as to which the source code is owned by
either or both of the Companies ("Owned Software"), (2) third party
Software which is licensed to each or either Company and as to which
such Company is in possession of the source code; (3) third party
Software which is licensed to each or either Company but as to which
such Company does not have possession of the source code and which
is bundled with or embedded in the Owned Software pursuant to
reseller agreements; (4) third party Software purchased by or
licensed to each or either Company solely for resale or sublicense
to its customers other than off the shelf or similar Software; (5)
third party Software not owned by either Company but in which each
or either Company has any use, possessory or proprietary rights
other than as set forth in clauses (1) through (4), above (such
material Software described in the foregoing subsections (2) through
(5) being referred to collectively as the "Third-Party Software");
and (6) all material Software development projects undertaken by
either or both of the Companies, in whole or in part, within the
past two years with persons other than employees, together with an
identification of the persons undertaking such projects. In this
Section 4.19 a reference to "source code" means a human readable
version of any Software owned by one or both of the Companies that
is not routinely or regularly provided to end users. With respect to
the Owned Software and except as set forth separately on Schedule
4.19.6:
(i) such Company has the sole and exclusive right to use the
Owned Software, free and clear of any Encumbrances,
except rights to market and/or use the Owned Software
granted by such Company to customers of such Company
pursuant to license agreements or sales, marketing,
distributorship, agency, representative and value-added
reseller agreements made with third parties with respect
to the sale or sublicensing by the third party of any of
the products of the Companies and which were entered
into in the normal course of business;
(ii) the source code with respect to the Owned Software is
not in the possession of any party other than such
Company and has been maintained as confidential by the
Company and its Subsidiaries; and
(iii) no contractual rights in favour of any party to any
Software owned by the Companies (including Software
which is the subject of escrow, payment terms or similar
arrangements) will be immediately triggered or otherwise
immediately materially adversely affected by the
transactions contemplated hereby.
4.19.7 Except as set forth on the attached Schedule 4.19.7, neither Company
has granted any exclusive license with respect to, any Intellectual
Property of such Company to any third
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party. Except as set forth on the attached Schedule 4.19.7, to the
best knowledge of the Companies neither Company has in the past 365
days immediately preceding the Closing Date (the "Quiet Period"), by
way of agreement or assignment made, entered into, prepared or
executed in said Quiet Period, transferred ownership to any
Intellectual Property that was owned by the Company to a third
party.
4.19.8 Except as set forth on the attached Schedule 4.19.8, to the best
knowledge of the Companies no material Trade Secrets are in the
possession of any party other than such Company except pursuant to
license or confidentiality agreements signed by such other party and
all material Trade Secrets have been maintained as confidential by
the Company and its Subsidiaries.
4.20 INSURANCE
4.20.1 Schedule 4.20 sets forth, by year, for the current policy year and
each of the three (3) preceding policy years, a statement describing
each claim under an insurance policy for an amount in excess of
$25,000, which sets forth:
(i) the name of the claimant;
(ii) a description of the policy by insurer, type of
insurance, and period of coverage; and
(iii) the amount and a brief description of the claim; and
(iv) a statement describing the loss experience for all
claims that were self-insured, including the number and
aggregate cost of such claims.
4.21 EMPLOYEES
Schedule 4.21.1 contains a complete and accurate list of the following
information for each employee or director of each Company and its Subsidiaries,
including each employee on leave of absence, layoff status, or otherwise absent
from employment because of sickness or accident, short or long term disability,
vacation, military service, or any other reason: employer; name; job title;
current compensation paid or payable and date and amount of most recent
compensation adjustment; vacation accrued; and service credited for purposes of
vesting and eligibility to participate under any US Employee Plan or Canadian
Employee Plan.
4.22 COMPETITION ACT (CANADA)
As at December 31, 2001, Metso Canada, together with its affiliates (as defined
in the Competition Act (Canada)), did not either have assets in Canada or have
gross revenues from sales in, from or into Canada that exceed Three Hundred
Twenty Million Canadian Dollars ($320,000,000CDN) in aggregate value, as
determined in accordance with the Notifiable Transactions Regulations
promulgated under the Competition Act (Canada). Since December 31, 2001, neither
Metso Canada nor any of its affiliates (as defined in the Competition Act
(Canada)) has been a party to and has not otherwise been affected by a
transaction or event the consequence of which, if taken into account, would
affect the determination of whether notification is required
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to be given under Part IX of the Competition Act (Canada) with respect to the
transactions contemplated by this Agreement.
4.23 NEGATION
Sellers make no representation or warranty except as and to the extent set forth
in this Agreement and any Appendices and Schedules attached hereto and any
certificate or other document required to be delivered pursuant to Section 3.2.
Except to the extent provided for in this Agreement and any Appendices and
Schedules attached hereto or any certificate or other document required to be
delivered pursuant to Section 3.2, Sellers shall not be liable (whether in
contract, in tort or otherwise howsoever) for any covenant, representation,
warranty, opinion, advice or statement which may have been made in any document
or instrument relative hereto, or otherwise communicated to the Metso Canada
Buyer or Metso Canada in any manner. The Metso Canada Buyer and Metso Canada
confirm that they have only relied on the representations and warranties
contained in this Agreement and any certificate or other document required to be
delivered pursuant to Section 3.2 and any Appendices and Schedules attached
hereto and not on any other covenants, representations or warranties. The Metso
Canada Buyer and Metso Canada acknowledge and confirm that they have performed
their own due diligence and, except for reliance on the representations and
warranties contained in this Agreement and any Appendices and Schedules attached
hereto and any certificate or other document required to be delivered pursuant
to Section 3.2, have relied, and will continue to rely, upon their own analysis
and investigations.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF METSO CANADA BUYER AND METSO CANADA
The Metso Canada Buyer and, in its capacity as buyer of the Metso US Shares,
Metso Canada, hereby severally, and not jointly, represent and warrant for the
benefit of Sellers as follows:
5.1 ORGANIZATION
The Metso Canada Buyer is a corporation duly incorporated, organized and validly
subsisting under the laws of the jurisdiction of its incorporation, and is duly
licensed, registered and qualified as a corporation to do business in each
jurisdiction in which the nature of its business makes such qualification
necessary.
5.2 AUTHORIZATION
Each of the Metso Canada Buyer and Metso Canada has full power and authority
(corporate, fiduciary or other) to enter into this Agreement and to carry out
the transactions contemplated hereby, and each of the Metso Canada Buyer and
Metso Canada has taken all action required by law, its charter or other
governing documents, or otherwise, to be taken by it to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby. This Agreement is the legal, valid and binding
obligation of each of the Metso Canada Buyer and Metso Canada enforceable
against it in accordance with its terms, except as limited by: (a) bankruptcy,
insolvency, reorganization resulting from said bankruptcy or insolvency,
moratorium or other such laws concerning the rights of creditors or
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other obligees generally; and (b) the fact that equitable remedies, including
the remedies of specific performance and injunction, may only be granted in the
discretion of a court.
5.3 NO VIOLATION; CONSENTS
None of the execution, delivery and performance of this Agreement nor the
consummation of the transactions contemplated hereby will (i) violate any
provision of the Articles of Incorporation, Bylaws or other governing documents
of the Metso Canada Buyer, or (ii) violate, conflict with or result in the
breach of any statute or law or any judgment, decree, order, regulation or rule
of any court or Governmental Authority to which the Metso Canada Buyer is
subject. Except as set forth in Schedule 5.3, no action, consent, approval or
authorization by or filing with any person or entity, including, without
limitation, any Governmental Authority, is required in connection with the
execution, delivery and performance by the Metso Canada Buyer and Metso Canada
of this Agreement or the consummation by the Metso Canada Buyer and Metso Canada
of the transactions contemplated herein.
5.4 LITIGATION
No legal action is pending or, to the best of the knowledge of the Metso Canada
Buyer, threatened against the Metso Canada Buyer which seeks to delay, limit or
enjoin the transactions contemplated hereby.
5.5 INVESTMENT PURPOSE ONLY
The Metso Canada Buyer and Metso Canada are acquiring the Shares for the purpose
of investment only and not with a view to, or for sale in connection with, the
distribution thereof within the meaning of the Securities Act. The Metso Canada
Buyer and Metso Canada understand and agree that the Shares may not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise disposed of
without registration under the Securities Act except pursuant to an exemption
from such registration available under the Securities Act, and with compliance
with state and local securities laws, in each case, to the extent applicable.
The Metso Canada Buyer and Metso Canada acknowledge that any sale or other
disposition of the Shares can only be done in compliance with all applicable
securities laws in Canada.
5.6 COMPETITION ACT (CANADA)
As at December 31, 2001, the Metso Canada Buyer, together with its affiliates
(as defined in the Competition Act (Canada)), did not have any assets in Canada
or any gross revenues from sales in, from or into Canada. Since December 31,
2001, neither the Metso Canada Buyer nor any of its affiliates (as defined in
the Competition Act (Canada)) has been a party to and has not otherwise been
affected by a transaction or event the consequence of which, if taken into
account, would affect the determination of whether notification is required to
be given under Part IX of the Competition Act (Canada) with respect to the
transactions contemplated by this Agreement.
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ARTICLE 6
COVENANTS
The Metso Canada Buyer and Metso Canada (in its capacity as buyer of the Metso
US Shares) covenant for the benefit of the Sellers; the Sellers covenant for the
benefit of the Metso Canada Buyer, the Companies and Metso Canada (in its
capacity as buyer of the Metso US Shares); Metso Canada covenants for the
benefit of Metso Canada Buyer; and the Seller and Metso US covenant for the
benefit of Metso Canada as follows:
6.1 FURTHER ASSURANCES
Upon the terms and subject to the conditions contained herein, each of the
parties hereto agrees, both before and after both the Metso Canada Closing and
the Metso US Closing, (i) to use all commercially reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, (ii) to execute any documents, instruments or
conveyances of any kind which may be reasonably necessary or advisable to carry
out any of the transactions contemplated hereby, and (iii) to cooperate with
each other in connection with the foregoing, including using their respective
commercially reasonable efforts (A) to obtain all necessary Permits as are
required to be obtained under any federal, state, provincial, local or foreign
law or regulations, (B) to effect all necessary registrations and filings,
including, without limitation, submissions of information requested by
Governmental Authorities, and (C) to fulfill all conditions to this Agreement.
6.2 SELLERS' COVENANTS
Sellers shall (i) comply in all material respects with all covenants applicable
to them in this Agreement and shall use commercially reasonable efforts to cause
the conditions to closing applicable to them to be satisfied, and (ii) use
commercially reasonable efforts to ensure compliance by the Companies of their
covenants and agreements hereunder and to cause them to satisfy the conditions
to closing applicable to them, on or prior to the Closing Date.
6.3 METSO CANADA BUYER'S COVENANTS
The Metso Canada Buyer shall comply in all material respects with all covenants
applicable to it in this Agreement and shall use commercially reasonable efforts
to cause the conditions to closing applicable to it to be satisfied on or prior
to the Metso Canada Closing Date.
6.4 METSO CANADA'S COVENANTS
Metso Canada, in its capacity as buyer of the Metso US Shares, shall comply in
all material respects with all covenants applicable to it in this Agreement and
shall use commercially reasonable efforts to cause the conditions to closing
applicable to it to be satisfied on or prior to the Metso US Closing Date.
6.5 PUBLIC ANNOUNCEMENTS
The parties hereto shall not issue any press release or public announcement,
including announcements by any party for general reception by or dissemination
to employees, agents, or
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customers, with respect to this Agreement and the other transactions
contemplated by this Agreement without the prior written consent of the other
parties hereto (which consent shall not be unreasonably withheld); provided,
however, that any party may make any disclosure or announcement of information
it is obligated to make pursuant to applicable law or stock exchange rules,
provided such party shall, to the extent possible, provide the other parties
with notice (and the proposed text) of such press release or announcement prior
to its release. Notwithstanding the foregoing, the Sellers and the Metso Canada
Buyer shall be entitled to make a public announcement and issue a press release
(without the prior consent of the other or the Companies) which indicates that
the sale of the Companies has been completed, without specifying the Purchase
Price (provided that for the purposes of any required stock exchange
notifications with respect to this Agreement, Metso Canada Buyer, or its
Affiliates, and Metso Corporation shall be entitled to disclose the Purchase
Price).
6.6 CONFIDENTIALITY
6.6.1 Except as may be required pursuant to the Subcontracts, from and after the
Metso Canada Closing Date, the Sellers shall not, and shall ensure that
the Sellers' Group shall not, all for the benefit of the Companies and the
Metso Canada Buyer, directly or indirectly disclose or otherwise
communicate any Confidential Information to any Person without the prior
written consent of the Companies or the Metso Canada Buyer.
6.6.2 Except as may be required pursuant to the Subcontracts, on and after the
Metso Canada Closing Date, the Sellers shall not use or permit any Person
to use, and shall ensure that the Sellers' Group shall not use or permit
any Person to use, all for the benefit of the Companies and the Metso
Canada Buyer, any Confidential Information without the prior written
consent of the Companies or the Metso Canada Buyer which consent may be
withheld in the sole discretion of Metso Canada Buyer.
6.6.3 The obligations in Sections 6.6.1 and 6.6.2 shall not apply to particular
information that the Sellers can show: (a) is, or becomes, generally
available to the public other than through a breach of this Agreement; (b)
is disclosed after the Metso Canada Closing Date, lawfully and not in
breach of any contractual or other legal obligation, to the Sellers on a
non-confidential basis by a third party; or (c) is independently developed
by the Sellers or any of their Affiliates after the Closing Date without
any reference to or use of Confidential Information. Any combination of
features shall not be deemed to be generally available to the public
merely because individual features are separately in the public domain,
unless the entire combination itself is in the public domain, without any
breach of the terms or conditions of this Agreement.
6.6.4 The provisions of Section 6.6.3 shall not be construed to grant the
Sellers or any of the Sellers' Group any intellectual property rights
owned or controlled by or in the possession of either of the Companies on
and after the Metso Canada Closing Date, and all such intellectual
property rights are reserved by the Companies.
6.6.5 The Sellers agree that from and after the Closing Date, they shall, and
shall cause each member of the Sellers' Group to, destroy or deliver to
the Companies any discrete Confidential Information in tangible form
relating solely to the Companies (or either of
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them) that either of the Sellers or any member of the Sellers' Group may
discover and possess from time to time.
6.7 TRANSITIONAL ARRANGEMENTS
6.7.1 Released Contracts. Metso Canada Buyer and Sellers shall use their
respective commercially reasonable efforts to procure, as soon as
reasonably practicable following the Closing Date, and in any event not
later than 30 days following the Closing Date:
(i) the release of all members of the Sellers' Group from all
guarantees, indemnities, bonds, letters of comfort,
undertakings, licenses, standby letters of credit and other
arrangements to which any of them is a party in respect of the
Companies as identified in Schedule 6.7.1;
(ii) the release of all members of the Sellers' Group from all
guarantees, letters of guarantee, bonds and standby letters of
credit issued by any bank or other financial institution to
which any of them is a party in respect of the Companies as
identified in Schedule 6.7.1; and
(iii) the release of all members of the Sellers' Group from all
surety bonds (including without limitation, bid, performance,
advance payment and labor and materials payment bonds) issued
by any surety or insurance company to which any of them is a
party in respect of the Companies as identified in Schedule
6.7.1;
(the "Released Contracts") and to indemnify and to keep indemnifying on a
continuing basis the Sellers and/or any of their Affiliates from all
claims, liabilities, costs and expenses arising in respect or by reason
thereof.
6.7.2 Special Contracts. The contracts described in Schedule 6.7.2 (the "Special
Contracts") shall be dealt with in accordance with the provisions set out
in Schedule 6.7.2.
6.7.3 Zug Research and Development Office. The Sellers shall, as soon as
reasonably practicable following the Closing Date, close their research
and development office located in Zug, Switzerland and shall be
responsible for all expenses and obligations in connection with such
closing.
6.7.4 Employee in Brazil. Metso Canada Buyer agrees to reimburse Metso
Automation Brazil Ltd. ("Metso Brazil") for all employment costs and
expenses incurred by Metso Brazil following the Closing Date with respect
to the employment of Metso Brazil's engineer in Brazil until such
employment is transferred to Metso Canada Buyer or its Affiliates or the
employee otherwise ceases to be an employee of Metso Brazil.
6.8 DEBT
Metso Canada Buyer and Sellers agree that all loans, debt and accounts payable
between the Companies and any of their Affiliates, as well as all loans payable
by the Companies to any third parties (excluding those advance payments
described in Schedule 4.6.2), shall be paid in full prior to the Closing.
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6.9 CHANGE OF NAME
Metso Canada Buyer and Metso Canada agree that not later than 14 days following
the Metso US Closing Date, they shall change the names of the Companies to names
that do not include the word "Metso" or any part thereof or any similar words.
The Metso Canada Buyer and Metso Canada agree that from and after the Metso US
Closing Date, neither the Metso Canada Buyer, the Companies, nor any of their
Affiliates will use the name "Metso" or any part thereof or any similar words.
Notwithstanding the foregoing, it is agreed the Companies shall have limited
rights to use the tradename "Metso DNA" for a period of six months following the
Metso US Closing Date in accordance with the provisions of the Interim Trademark
License Agreement.
6.10 INSURANCE
The Sellers will, on the request of the Metso Canada Buyer, use reasonable best
efforts to extend until February 7, 2003 the current insurance policies covering
the insurable risks of the Companies with respect to property, business
interruption, extended all risk and workers' compensation only, and for such
period will make the beneficiaries of such policies the Companies at the sole
cost and expense of the Companies. Except as stated above, the Metso Canada
Buyer and Metso Canada acknowledge that all insurance policies which cover the
Companies are part of the corporate group insurance policies which cover the
Companies and certain of their Affiliates ("Metso Group Insurance") and that the
Metso Group Insurance shall cease to cover the Companies on the Metso Canada
Closing and the Metso US Closing, respectively. Accordingly, the Metso Canada
Buyer and Metso Canada agree that they must acquire, or cause the Companies to
acquire, as at the Metso Canada Closing and the Metso US Closing, as
appropriate, such policies of insurance as they deem appropriate for the
Companies from and after the Metso Canada Closing and the Metso US Closing, as
appropriate. Except as stated above and except for insurance claims which have
been commenced prior to the Metso Canada Closing, the Metso Canada Buyer and
Metso Canada covenant and agree that neither they, the Companies, nor any of
their Affiliates, shall be entitled to make any claims against the Metso Group
Insurance after the Metso Canada Closing or the Metso US Closing, as
appropriate.
6.11 GROUP PLANS
The Metso Canada Buyer and Metso Canada acknowledge that on the Metso Canada
Closing Date and the Metso US Closing Date, respectively, the Canadian Group
Plans and the US Group Plans will terminate with respect to the Companies and
the Metso Canada and Metso US employees.
6.12 COMPUTER NETWORK
The Metso Canada Buyer agrees that it shall cause the Companies to be severed
from the computer network of the Sellers' Group at Closing or as soon as
practicable after the Closing Date, and in any event not later than June 30,
2003, and the Metso Canada Buyer agrees that it shall, following receipt from
the Sellers of itemized invoices from time to time, reimburse the Sellers for
all reasonable costs incurred by them relating to the inclusion of the Companies
in the computer network of the Sellers' Group during the period commencing on
the day following the Closing Date and ending on the date on which the Companies
are severed from such network. The Sellers agree that they will and will cause
the Sellers' Group to delete all references to the
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NMS Business from their respective web sites as soon as practicable after the
Metso US Closing Date and will refer all enquiries regarding the NMS Business to
the Companies.
6.13 TRANSACTION BONUS
Sellers represent and warrant that the amount of the Transaction Bonus is Eight
Hundred Ninety-Three Thousand Six Hundred Thirty-One Canadian Dollars
($893,631.00CDN).
6.14 DUTCH FILINGS
The Metso Canada Seller shall, following the Metso Canada Closing, make
the necessary filings with the Dutch Central Bank in accordance with the
requirements of External Financial Relations Act 1994 (Netherlands) and the
regulations promulgated thereunder.
6.15 BANK ACCOUNTS
As of the close of business on January 31, 2003, all of the US dollar and
Canadian dollar bank accounts of the Companies will be disconnected from the
Metso cash pool and all cash balances in these accounts as at the close of
business on January 31, 2003 ("Cash Balances") will be transferred to the Metso
Master Account. At the opening of business on Monday, February 3, 2003, Metso US
Seller shall cause all the Cash Balances (except for $3,255,549 (the "Retained
Amount")) to be transferred back to the accounts of the Companies. The Retained
Payment shall be considered payment of part of the Metso US Purchase Price
required to be paid pursuant to section 2.2.4.1.
6.16 PATENT ASSIGNMENT
Sellers shall cause GSE Process Solutions, Inc. to deliver to Metso Canada
as soon after the Closing Date as practicable as assignment in recordable form
of (i) U.S. utility patent 5,568,402. "Communication Server for communicating
with a remote device" issued October 22, 1996; and (ii) U.S. utility patent,
5,583,793, "Communication Server for communicating with a remote device" issued
December 10, 1996.
ARTICLE 7
CONDITIONS TO SELLERS' OBLIGATIONS
7.1 CONDITIONS PRIOR TO METSO CANADA CLOSING
Except as otherwise provided herein, the obligations of Sellers to consummate
the transactions provided for hereby are subject to the satisfaction, on or
prior to the Metso Canada Closing Date, of each of the following conditions, any
of which may be waived by Sellers.
7.1.1 Representations, Warrants and Covenants. The representations and
warranties of the Metso Canada Buyer contained in this Agreement or in any
documents delivered in order to carry out the transactions contemplated
hereby shall be true and accurate on the date hereof and of the Metso
Canada Closing Date with the same force and effect as though such
representations and warranties had been made as of the Metso Canada
Closing Date (regardless of the date as of which the information in this
Agreement or in any Schedule
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or other document made pursuant hereto is given). In addition, the Metso
Canada Buyer shall have complied with all covenants and agreements herein
agreed to be performed or caused to be performed by it on or prior to the
Metso Canada Closing Date.
7.1.2 Consents. All consents required to be obtained in order to carry out the
transactions contemplated hereby in compliance with all laws and
agreements binding upon the parties hereto shall have been obtained.
7.1.3 No Proceedings, Litigation or Laws. No Action by any Governmental
Authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby
and which could reasonably be expected to materially damage Sellers if the
transactions contemplated hereunder are consummated. There shall not be
any statute, rule or regulation that makes the purchase and sale of the
Shares contemplated hereby illegal or otherwise prohibited.
7.1.4 Closing Documents. The Sellers shall have received from the Metso Canada
Buyer the following documents:
(i) a notarized copy of resolutions of the board of directors of
the Metso Canada Buyer approving the execution and delivery of
this Agreement and the completion of the transactions
contemplated hereby and the power of attorney appointing an
officer of Metso Canada Buyer as its attorney and if the
original Certificate is not written in English, a translation
of such certified to be a true and accurate translation;
(ii) legal opinions of the Metso Canada Buyer's Canadian and
Spanish counsel in form satisfactory to the Sellers;
(iii) the Tax Holdback Escrow Agreement, duly executed by authorized
signing officers of the Metso Canada Buyer;
(iv) the Purchase Price Holdback Escrow Agreement, duly executed by
the authorized signing officers of the Metso Canada Buyer;
(v) confirmation that Xxxxxxx Xxxxx LLP has received the Standby
Letter of Credit;
(vi) the Subcontracts; and
(vii) such other documents as are reasonably required by the Metso
Canada Seller to complete the Metso Canada Closing.
7.2 CONDITIONS PRIOR TO METSO US CLOSING
Except as otherwise provided herein, the obligations of Sellers to consummate
the transactions provided for hereby are subject to the satisfaction, on or
prior to the Metso US Closing Date, of each of the following conditions, any of
which may be waived by Sellers.
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7.2.1 Representations, Warrants and Covenants. The representations and
warranties of the Metso Canada Buyer contained in this Agreement or in any
documents delivered in order to carry out the transactions contemplated
hereby shall be true and accurate on the date hereof and of the Metso US
Closing Date with the same force and effect as though such representations
and warranties had been made as of the Metso US Closing Date (regardless
of the date as of which the information in this Agreement or in any
Schedule or other document made pursuant hereto is given). In addition,
the Metso Canada Buyer shall have complied with all covenants and
agreements herein agreed to be performed or caused to be performed by it
on or prior to the Metso US Closing Date.
7.2.2 No Proceedings, Litigation or Laws. No Action by any Governmental
Authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby
and which could reasonably be expected to materially damage Sellers if the
transactions contemplated hereunder are consummated. There shall not be
any statute, rule or regulation that makes the purchase and sale of the
Shares contemplated hereby illegal or otherwise prohibited.
7.2.3 Closing Documents. The Sellers shall have received from Metso Canada the
following documents:
(i) a certified copy of resolutions of the board of directors of
Metso Canada ratifying and confirming the entering into of
this Agreement and the acquisition of the Metso US Shares;
(ii) a legal opinion of Metso Canada's counsel in form satisfactory
to the Metso US Seller;
(iii) the Purchase Price Holdback Escrow Agreement, duly executed by
the authorized signing officers of the Metso Canada Buyer and
Metso Canada;
(iv) the Asbestos Indemnity Agreement, duly executed by the
authorized signing officers of the Metso Canada Buyer, Metso
Canada, the Metso US Seller and MAI;
(v) confirmation that Xxxxxxx Xxxxx LLP has received the Standby
Letter of Credit; and
(vi) such other documents as are reasonably required by the Metso
US Seller to complete the Metso US Closing.
7.3 WAIVER OR TERMINATION BY SELLERS
The conditions contained in Sections 7.1 and 7.2 are inserted for the exclusive
benefit of Sellers and may be waived in whole or in part by Sellers at any time.
The Metso Canada Buyer and Metso Canada acknowledge that the waiver by Sellers
of any condition or any part of any condition shall constitute a waiver only of
such condition or such part of such condition, as the case may be, and shall not
constitute a waiver of any covenant, agreement, representation or warranty made
by the Metso Canada Buyer herein that corresponds or is related to such
condition or such part of such condition, as the case may be.
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ARTICLE 8
CONDITIONS TO METSO CANADA BUYER'S OBLIGATIONS
8.1 CONDITIONS PRIOR TO METSO CANADA CLOSING
Except as otherwise provided herein, the obligations of the Metso Canada Buyer
to consummate the transactions provided for hereby are subject to the
satisfaction, on or prior to the Metso Canada Closing Date, of each of the
following conditions, any of which may be waived by the Metso Canada Buyer.
8.1.1 Representations, Warranties and Covenants. The representations and
warranties of Sellers contained in this Agreement or in any documents
delivered in order to carry out the transactions contemplated hereby shall
be true and accurate on the date hereof and of the Metso Canada Closing
Date with the same force and effect as though such representations and
warranties had been made as of the Metso Canada Closing Date (regardless
of the date as of which the information in this Agreement or in any
Schedule or other document made pursuant hereto is given). In addition,
Sellers shall have complied with all covenants and agreements herein
agreed to be performed or caused to be performed by them on or prior to
the Metso Canada Closing Date.
8.1.2 Consents. All consents required to be obtained in order to carry out the
transactions contemplated hereby in compliance with all laws and
agreements binding upon the parties hereto shall have been obtained.
8.1.3 No Proceedings, Litigation or Laws. No Action by any Governmental
Authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby
and which could reasonably be expected to damage the Metso Canada Buyer if
the transactions contemplated hereby are consummated, including, without
limitation, any limitation or restriction on the right or ability of the
Metso Canada Buyer to own the Metso Canada Shares after the Metso Canada
Closing. There shall not be any statute, rule or regulation that makes the
purchase and sale of the Shares contemplated hereby illegal or otherwise
prohibited.
8.1.4 Closing Documents. The Metso Canada Buyer shall have received from the
Sellers the following Documents:
(i) a Certificate of Compliance issued by Industry Canada for
Metso Canada and a Certificate of Good Standing issued by the
Registrar of Corporations for the Province of Alberta for
Metso Canada as an extra-provincially registered corporation
in such province, each dated not later than two days prior to
the Metso Canada Closing Date;
(ii) certified copies of resolutions of the board of directors of
Metso Canada and of Metso Canada Seller and a power of
attorney for Metso Canada Seller approving the execution and
delivery of this Agreement and the completion of the
transactions contemplated hereby;
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(iii) a certified copy of resolutions of the shareholder of the
Metso Canada Seller approving the sale of the Metso Canada
Shares contemplated hereby;
(iv) a certified copy of the organizational or constating documents
of each of the Companies;
(v) a certificate of incumbency for each of the Sellers and the
Companies;
(vi) documentation satisfactory to the Metso Canada Buyer, acting
reasonably, evidencing the consents described in Section
8.1.2;
(vii) legal opinions of Metso Canada Seller's counsel and Metso
Canada's counsel in form satisfactory to the Metso Canada
Buyer;
(viii) the Tax Holdback Escrow Agreement, duly executed by
authorized signing officers of each of Metso Canada Seller,
Metso Canada and Xxxxxxx Xxxxx LLP;
(ix) the Purchase Price Holdback Escrow Agreement, duly executed by
the authorized signing officers of each of the Sellers and
Metso Canada;
(x) the interim transitional trademark license agreement dated
January 31, 2003 (the "Interim Trademark License Agreement")
among Metso Corporation, Metso Canada and Metso US, duly
executed by authorized signing officers of each of Metso
Corporation, Metso Canada and Metso US;
(xi) the Subcontracts;
(xii) the amending agreement dated January 31, 2003 between Metso
Canada and Metso Automation Canada Ltd. amending certain of
the terms of asset purchase agreement dated December 27, 1999
between such parties; and
(xiii) such other documents as are reasonably required by the Metso
Canada Buyer to complete the Metso Canada Closing.
8.2 CONDITIONS PRIOR TO METSO US CLOSING
Except as otherwise provided herein, the obligations of Metso Canada to
consummate the transactions provided for hereby are subject to the satisfaction,
on or prior to the Metso US Closing Date, of each of the following conditions,
any of which may be waived by the Metso Canada Buyer.
8.2.1 Representations, Warranties and Covenants. The representations and
warranties of Sellers contained in this Agreement or in any documents
delivered in order to carry out the transactions contemplated hereby shall
be true and accurate on the date hereof and of the Metso US Closing Date
with the same force and effect as though such representations and
warranties had been made as of the Metso US Closing Date (regardless of
the date as
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of which the information in this Agreement or in any Schedule or other
document made pursuant hereto is given). In addition, Sellers shall have
complied with all covenants and agreements herein agreed to be performed
or caused to be performed by them on or prior to the Metso US Closing
Date.
8.2.2 No Proceedings, Litigation or Laws. No Action by any Governmental
Authority or other person shall have been instituted or threatened which
questions the validity or legality of the transactions contemplated hereby
and which could reasonably be expected to damage Metso Canada if the
transactions contemplated hereby are consummated, including, without
limitation, any limitation or restriction on the right or ability of Metso
Canada to own the Metso US Shares after the Metso US Closing. There shall
not be any statute, rule or regulation that makes the purchase and sale of
the Metso US Shares contemplated hereby illegal or otherwise prohibited.
8.2.3 Closing Documents. Metso Canada shall have received from the Metso US
Seller the following Documents:
(i) a Certificate of Good Standing for Metso US issued by the
Secretary of State for each state in which Metso US is
registered;
(ii) certified copies of resolutions of the board of directors of
each of Metso US Seller and Metso US approving the execution
and delivery of this Agreement and the completion of the
transactions contemplated hereby;
(iii) a certified copy of resolutions of the shareholder of the
Metso US Seller approving the sale of the Metso US Shares
contemplated hereby;
(iv) legal opinions of Metso US Seller's counsel and Metso US'
counsel in form satisfactory to Metso Canada;
(v) the Purchase Price Holdback Escrow Agreement, duly executed by
the authorized signing officers of the Sellers and by Xxxxxxx
Xxxxx LLP;
(vi) the Asbestos Indemnity Agreement, duly executed by the Metso
US Seller, the Metso Canada Buyer, Metso Canada and MAI;
(vii) the Interim Trademark License Agreement, duly executed by
authorized signing officers of each of Metso Corporation,
Metso Canada and Metso US;
(viii) a non-foreign affidavit dated as of the Metso US Closing
Date, sworn under penalty of perjury and in form and substance
required under Treasury Regulations issued pursuant to Section
1445 of the US Code stating that the Metso US Seller is not a
"Foreign Person" as defined in Section 1445 of the US Code;
and
(ix) such other documents as are reasonably required by the Metso
Canada Buyer to complete the Metso US Closing.
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8.3 WAIVER OR TERMINATION BY METSO CANADA BUYER
The conditions contained in Sections 8.1 and 8.2 are inserted for the exclusive
benefit of the Metso Canada Buyer and may be waived in whole or in part by the
Metso Canada Buyer at any time. Sellers acknowledge that the waiver by the Metso
Canada Buyer of any condition or any part of any condition shall constitute a
waiver only of such condition or such part of such condition, as the case may
be, and shall not constitute a waiver of any covenant, agreement, representation
or warranty made by Sellers or the Companies herein that corresponds or is
related to such condition or such part of such condition, as the case may be.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
9.1 SURVIVAL OF REPRESENTATIONS, ETC.
All statements contained in any certificate, Appendix, Schedule, exhibit,
instrument or conveyance delivered by or on behalf of the parties pursuant to
this Agreement shall be deemed to be representations and warranties by the
parties hereunder. Except for Asbestos Claims and for the representations,
warranties, covenants and agreements contained in Sections 4.6.3, 4.13.1, 4.13.2
and 4.17 and Articles 6, 9 and 10, the representations, warranties, covenants
and agreements of Sellers, the Companies and the Metso Canada Buyer contained
herein shall survive the completion of the transactions contemplated hereby, the
Metso Canada Closing Date and the Metso US Closing Date, without regard to any
investigation made by any of the parties hereto and, notwithstanding such
completion, will continue in full force and effect for the benefit of Sellers,
the Companies or the Metso Canada Buyer, as the case may be, for a period of one
year following the Metso Canada Closing Date. The representations, warranties,
covenants and agreements of Sellers and the Companies contained in Sections
4.13.1 and 4.13.2 shall survive the completion of the transactions contemplated
hereby, the Metso Canada Closing Date and the Metso US Closing Date, without
regard to any investigation made by Metso Canada Buyer and, notwithstanding such
completion, will continue in full force and effect for the benefit of the
Companies and the Metso Canada Buyer for a period commencing on the Closing Date
and ending on the date that is 30 days following the expiry of the applicable
statutory limitation period. The representations, warranties, covenants and
agreements of Sellers and the Companies contained in Section 4.17 shall survive
the completion of the transactions contemplated hereby, the Metso Canada Closing
Date and the Metso US Closing Date, without regard to any investigation made by
Metso Canada Buyer and, notwithstanding such completion, will continue in full
force and effect for the benefit of the Companies and the Metso Canada Buyer for
a period of five years following the Metso Canada Closing Date. The
representations, warranties, covenants and agreements contained in Section 4.6.3
and Articles 6, 9 and 10 shall survive the completion of the transactions
contemplated hereby, the Metso Canada Closing Date and the Metso US Closing
Date, and shall continue in full force and effect for the benefit of Sellers,
the Companies or the Metso Canada Buyer, as appropriate, without any limitation
in time prescribed by this Agreement. If notice of a claim to be made against a
party for (i) any breach of a representation or warranty, or the inaccuracy of
any representation or warranty made by such party in or pursuant to this
Agreement, or (ii) any breach of any covenant or agreement made by such party in
or pursuant to this Agreement, is not received by such party prior to the expiry
of the periods stated above, such party shall have no further liability under
this Agreement with
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respect to such representation, warranty, covenant or agreement. A notice of
claim shall be sufficient if it is the form set out in Section 9.2.4.
9.2 INDEMNIFICATION
9.2.1 By Sellers. Subject to Section 9.3, Sellers shall indemnify, defend, save
and hold harmless Metso Canada Buyer, its Affiliates and Subsidiaries
(including the Companies), and its and their respective Representatives
from and against any and all claims, damages, costs, losses, Taxes (as
such term is defined in Appendices 4.12 and 4.13.2, as applicable),
liabilities, judgments, penalties, fines, obligations, lawsuits,
deficiencies, demands and expenses (whether or not arising out of
third-party claims), including, without limitation interest, penalties,
costs of mitigation, reasonable lawyers' fees (on a solicitor/client
basis), reasonable experts' fees and all reasonable amounts paid in
investigation, defense, audit or settlement of any of the foregoing
(herein, "Damages"), incurred in connection with, arising out of,
resulting from or incident to (i) any breach of any representation or
warranty, or the inaccuracy of any representation or warranty, made by the
Sellers or the Companies in or pursuant to this Agreement, (ii) any breach
of any covenant or agreement made by the Sellers in or pursuant to this
Agreement or (iii) any Special Claims. The Sellers indemnity shall be
several (proportionate to their respective share allocation of the
Purchase Price except with respect to subclause (iii) above, in respect of
which the Sellers' indemnity shall be joint and several. The Sellers
indemnity set forth in this Section 9.2.1 shall not apply to any matters
relating to Asbestos Claims (which matters shall be dealt with exclusively
by the Asbestos Indemnity Agreement).
9.2.2 By Metso Canada Buyer. Subject to Section 9.3, Metso Canada Buyer shall
indemnify and save and hold harmless Sellers, their Affiliates and
Subsidiaries (other than the Companies) and their Representatives from and
against any and all Damages incurred in connection with, arising out of,
resulting from or incident to (i) any breach of any representation or
warranty, or the inaccuracy of any representation or warranty, made by
Metso Canada Buyer in or pursuant to this Agreement, or (ii) any breach of
any covenant or agreement made by Metso Canada Buyer in or pursuant to
this Agreement.
9.2.3 Cooperation. In connection with third-party lawsuits or actions, the
indemnified party shall cooperate in all reasonable respects with the
indemnifying party and such lawyers in the investigation, trial and
defense of such lawsuit or action and any appeal arising therefrom;
provided, however, that the indemnified party may, at its own cost (except
as provided in Section 9.2.5 hereof), participate in the investigation,
trial and defense of such lawsuit or action and any appeal arising
therefrom. The parties shall cooperate with each other in any
notifications to insurers.
9.2.4 Defense of Claims. If a claim for Damages (a "Claim") is to be made by a
party entitled to indemnification hereunder against the indemnifying
party, the party claiming such indemnification shall give written notice
(a "Claim Notice") to the indemnifying party as soon as practicable after
the party entitled to indemnification becomes aware of any fact, condition
or event which may give rise to Damages for which indemnification may be
sought hereunder. The Claim Notice shall include the amounts the
indemnified party believes in good faith are subject to indemnification
and a brief basis of the claim. The indemnified party may revise its
estimate of any claim by notice to the other party.
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9.2.5 Third-Party Claims. If any Action is filed against any party entitled to
the benefit of indemnity hereunder, written notice thereof shall be given
to the indemnifying party as promptly as practicable (and in any event
within fifteen (15) calendar days after the service of the citation or
summons). The failure of any indemnified party to give timely notice
hereunder shall not affect rights to indemnification hereunder, except to
the extent that the indemnifying party demonstrates actual damage caused
by such failure. After such notice, if the indemnifying party shall
acknowledge in writing to the indemnified party that the indemnifying
party shall be obligated under the terms of its indemnity hereunder in
connection with such lawsuit or action, then the indemnifying party shall
be entitled, if it so elects, (i) to take control of the defense and
investigation of such lawsuit or action, (ii) to employ and engage lawyers
of its own choice (which shall be reasonably acceptable to the indemnified
party) to handle and defend the same, at the indemnifying party's cost,
risk and expense (unless the named parties to such Action or proceeding
include both the indemnifying party and the indemnified party and the
indemnified party has been advised in writing by counsel that there may be
one or more legal defenses available to such indemnified party that are
different from or additional to those available to the indemnifying party,
in which case the indemnified party shall be able to retain its own
counsel at the reasonable expense of the indemnifying party), and (iii) to
compromise or settle such Claim, which compromise or settlement shall be
made only with the written consent of the indemnified party, such consent
not to be unreasonably withheld; provided, however, if the remediation or
resolution of any such Claim could adversely affect or interrupt the
indemnified party's ongoing business operations, then, notwithstanding the
foregoing, the indemnified party shall be entitled to control such
remediation or resolution, including, without limitation, to take control
of the defense and investigation of such lawsuit or action, to employ and
engage lawyers of its own choice to handle and defend the same, at the
indemnifying party's cost, risk and expense, and to compromise or settle
such Claim. If the indemnifying party fails to assume the defense of such
Claim within fifteen (15) calendar days after receipt of the Claim Notice,
the indemnified party against which such Claim has been asserted will
(upon delivering notice to such effect to the indemnifying party) have the
right to undertake, at the indemnifying party's cost and expense, the
defense, compromise or settlement of such Claim on behalf of and for the
account and risk of the indemnifying party. In the event the indemnified
party assumes the defense of the Claim, the indemnified party will keep
the indemnifying party reasonably informed of the progress of any such
defense, compromise or settlement. The indemnifying party shall be liable
for any settlement of any action effected pursuant to and in accordance
with this Section 9.2.5 and for any final judgment (subject to any right
of appeal), and the indemnifying party agrees to indemnify and hold
harmless an indemnified party from and against any Damages by reason of
such settlement or judgment.
9.2.6 No Legal Proceedings Against Companies. The Sellers acknowledge and agree
that, following the Closing Date, neither they nor any of their Affiliates
shall commence, continue or extend any legal proceedings against either of
the Companies as a result of or in connection with (i) any breach of any
representation or warranty, or the inaccuracy of any representation or
warranty, made by either of the Companies in or pursuant to this
Agreement, or (ii) any breach of any covenant or agreement made by either
of the Companies in or pursuant to this Agreement, except for any covenant
or agreement made by Metso Canada in connection with its acquisition of
the Metso US Shares.
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9.3 LIMITATIONS
9.3.1 Limitation. Except for Special Claims, Asbestos Claims and Claims relating
to the representations and warranties set forth in Section 4.13, none of
the parties hereto shall be required to indemnify any other party pursuant
hereto in respect of any matter or circumstance:
(i) unless the Damages suffered by such party in respect of such
matter or circumstance equal or exceed $50,000, but such
indemnification shall then apply to all Damages suffered by
such party in respect of such matter or circumstance; or
(ii) to the extent that the Damages suffered by a party in respect
of such matter or circumstance are caused by the party's
negligence or willful misconduct.
9.3.2 Aggregate Limitation. Except for Special Claims, Asbestos Claims and
Claims relating to the representations and warranties set forth in Section
4.13, a party hereto shall only be required to indemnify another party
pursuant to this Agreement in respect of Damages suffered by the other
party in the event that the aggregate of all of the Damages suffered by
the other party to which the indemnification provisions of this Article 9
are applicable exceed $750,000, but such indemnification shall then apply
to all Damages suffered by such party to which the indemnification
provisions of this Article 9 are applicable.
9.3.3 Maximum Liability. Except for Special Claims, Asbestos Claims and Claims
relating to the representations and warranties set forth in Section 4.13,
which shall be excluded from the calculation of the total aggregate
liability, the total aggregate liability of the Sellers or the Metso
Canada Buyer for claims for indemnification arising under Sections 9.2.1
or 9.2.2, respectively, shall not in any event exceed $5,600,000.
9.3.4 No Consequential Damages. No party shall be liable to any other party for
any loss of profits or any consequential damages suffered by the other
howsoever caused or arising under this Agreement, even if the party that
would otherwise be liable has been advised of the possibility of such
damages or such damages were reasonably foreseeable.
9.4 SET OFF
9.4.1 Proven Claims. Metso Canada Buyer shall be entitled to set off the amount
of any Proven Claim of Metso Canada Buyer, Metso Canada or Metso US
against the Metso Canada Deferred Payment. Metso Canada shall be entitled
to set off the amount of any Proven Claim of Metso Canada Buyer, Metso
Canada or Metso US against the Metso US Deferred Payment. To the extent
that a Proven Claim has been set off against one of the Metso Canada
Deferred Payment or the Metso US Deferred Payment, it may not be set off
against the other.
9.4.2 Unproven Claims. Metso Canada Buyer shall be entitled to deduct the amount
of any Unproven Claim of Metso Canada Buyer, Metso Canada or Metso US from
the Metso Canada Deferred Payment. Metso Canada shall be entitled to
deduct the amount of any Unproven Claim of Metso Canada Buyer, Metso
Canada or Metso US from the Metso
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US Deferred Payment. To the extent that an Unproven Claim has been
deducted from one of the Metso Canada Deferred Payment or the Metso US
Deferred Payment, it may not be deducted from the other.
9.4.3 Payment of Unproven Claims. To the extent that Metso Canada Buyer and/or
Metso Canada have deducted Unproven Claims, they shall pay the amount of
the Unproven Claims to Xxxxxxx Xxxxx LLP (in trust pending the eventual
disposition of such Claims) as escrow agent under the Purchase Price
Holdback Escrow Agreement on or before the Deferred Payment Deadline.
9.5 REMEDIES
Without limiting the generality of Section 10.8, the parties agree that none of
the Metso Canada Deferred Payment, the Metso US Deferred Payment, the Purchase
Price Holdback Escrow Agreement or the Standby Letter of Credit:
9.5.1 limits the maximum liability of the Seller's, except as specifically set
out in Sections 9.3.1 to 9.3.4;
9.5.2 limits the rights or remedies of Metso Canada Buyer, Metso Canada or Metso
US to the set off rights set out in Section 9.4 or limits the rights to
money held pursuant to the Purchase Price Holdback Escrow Agreement or
implies that any such party must exercise its set off rights or any remedy
under the Purchase Price Holdback Escrow Agreement prior to exercising any
other rights or remedies in respect of this Agreement; or
9.5.3 implies that a Claim Notice or any other claim which may be made under
this Agreement must be made within the time specified in the Purchase
Price Holdback Escrow Agreement.
ARTICLE 10
MISCELLANEOUS
10.1 NOTICES
All notices, requests, demands and other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when received if personally delivered; when transmitted if
transmitted by telecopy, electronic or digital transmission method; the day
after it is sent, if sent for next day delivery to a domestic address by
recognized overnight delivery service (e.g., Federal Express); and upon receipt,
if sent by certified or registered mail, return receipt requested. In each case
notice shall be sent to:
- 45 -
If to Metso Canada addressed to:
Metso Automation SCADA Solutions Ltd.
Suite 200, 10333 Southport Road S.W.
Calgary, Alberta, Canada
T2W 3X6
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
Email: xxxxxxxxx.xxxxxx@xxxxxx.xxxxxxx.xxx
and to:
Telvent Sistemas y Redes, S.A.
Xxxxxxxxx, 0
00000 Xxxxxxxxxx
Xxxxxx
Xxxxx
Attention: Xxxxxx Xxxxxxx
Facsimile: 34 91 714 70 01
Email: xxxxxx.xxxxxxx@xxxxxxx.xxxxxxx.xxx
and with a copy to:
Xxxxxx Xxxxxxx & Xxxxxxx LLP
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx
00000-0000
XXX
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Email: xxxxxxx@xxx.xxx
and to:
Xxxxxx Xxxxxxx & Xxxxxxx Abogados
Xxxxx Xxxxxxxxx 000-000
00000 Xxxxxx
Xxxxx
Attention: Xxxx Xxxxx
Facsimile: 34 91 590 24 20
Email: xxxxxx@xxx.xxx
- 46 -
and to:
Xxxxxxx, Xxxxx & Xxxx
19th Floor 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Email: xxxxxxxx@xxx.xxx
If to Metso US addressed to:
Metso Automation SCADA Solutions Inc.
c/o Suite 200, 10333 Southport Road S.W.
Calgary, Alberta, Canada
T2W 3X6
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
Email: xxxxxxxxx.xxxxxx@xxxxxx.xxxxxxx.xxx
and to:
Telvent Sistemas y Redes, S.A.
Xxxxxxxxx, 0
00000 Xxxxxxxxxx
Xxxxxx
Xxxxx
Attention: Xxxxxx Xxxxxxx
Facsimile: 34 91 714 70 01
Email: xxxxxx.xxxxxxx@xxxxxxx.xxxxxxx.xxx
and with a copy to:
Xxxxxx Xxxxxxx & Xxxxxxx LLP
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx
00000-0000
XXX
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Email: xxxxxxx@xxx.xxx
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and to:
Xxxxxx Xxxxxxx & Xxxxxxx Abogados
Xxxxx Xxxxxxxxx 000-000
00000 Xxxxxx
Xxxxx
Attention: Xxxx Xxxxx
Facsimile: 34 91 590 24 20
Email: xxxxxx@xxx.xxx
and to:
Xxxxxxx, Xxxxx & Xxxx
19th Floor 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Email: xxxxxxxx@xxx.xxx
If to Metso Canada Seller, addressed to:
Metso Automation Holding B.V.
x/x Xxxxxxxxx 0
X.X. Xxx 000
Xxx-00000 Xxxxxxxx
Attention: Eeva-Xxxxx Xxxxxxxx
Facsimile: 358 20 483 5888
Email: xxxx-xxxxx.xxxxxxxx@xxxxx.xxx
with a copy to:
Xxxxxxx Xxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
000 - 0xx Xxxxxx XX
Xxxxxxx, Xxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxx X. Xxxxxxxxxxx
Facsimile: (000) 000-0000
Email: xxxxxxxxxxxx@xxxxxxxxxxxx.xx
and to:
Xxxxxx Xxxx & Priest LLP
000 Xxxxxxxxxxxx Xxxxxx XX
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8th Xxxxx
Xxxxxxxxxx XX
00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
Email: xxxxxx@xxxxxxxxxx.xxx
If to Metso US Seller, addressed to:
Neles-Jamesbury Inc.
x/x Xxxxxxxxx 0
X.X. Xxx 000
Xxx-00000 Xxxxxxxx
Attention: Eeva-Xxxxx Xxxxxxxx
Facsimile: 358 20 483 5888
Email: xxxx-xxxxx.xxxxxxxx@xxxxx.xxx
with a copy to:
Xxxxxxx Xxxxx LLP
0000 Xxxxxxx Xxxx Xxxx
000 - 0xx Xxxxxx XX
Xxxxxxx, Xxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxx X. Xxxxxxxxxxx
Facsimile: (000) 000-0000
Email: xxxxxxxxxxxx@xxxxxxxxxxxx.xx
and to:
Xxxxxx Xxxx & Priest LLP
000 Xxxxxxxxxxxx Xxxxxx XX
0xx Xxxxx
Xxxxxxxxxx XX
00000
Attention: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
Email: xxxxxx@xxxxxxxxxx.xxx
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If to Metso Canada Buyer, addressed to:
Telvent Sistemas y Redes, S.A.
c/o Suite 200, 10333 Southport Road S.W.
Calgary, Alberta, Canada
T2W 3X6
Attention: Xxxx X. Xxxxxx
Facsimile: (000) 000-0000
Email: xxxxxxxxx.xxxxxx@xxxxxx.xxxxxxx.xxx
and to:
Telvent Sistemas y Redes, S.A.
Xxxxxxxxx, 0
00000 Xxxxxxxxxx
Xxxxxx
Xxxxx
Attention: Xxxxxx Xxxxxxx
Facsimile: 34 91 714 70 01
Email: xxxxxx.xxxxxxx@xxxxxxx.xxxxxxx.xxx
and with a copy to:
Xxxxxx Xxxxxxx & Xxxxxxx LLP
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx
00000-0000
XXX
Attention: Xxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Email: xxxxxxx@xxx.xxx
and to:
Xxxxxx Xxxxxxx & Xxxxxxx Abogados
Xxxxx Xxxxxxxxx 000-000
00000 Xxxxxx
Xxxxx
Attention: Xxxx Xxxxx
Facsimile: 34 91 590 24 20
Email: xxxxxx@xxx.xxx
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and to:
Xxxxxxx, Xxxxx & Xxxx
19th Floor 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx
X0X 0X0
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
Email: xxxxxxxx@xxx.xxx
or to such other place and with such other copies as any party may designate as
to itself by written notice to the others.
10.2 CHOICE OF LAW
This Agreement and the rights and duties of the parties hereunder shall be
governed by, and construed in accordance with, the laws of the Province of
Alberta. In addition, each of the parties hereto, (i) consents to submit itself
to the non-exclusive personal jurisdiction of the courts of Alberta in the event
any dispute arises out of this Agreement or any transaction contemplated hereby,
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court and (iii)
waives any right to trial by jury with respect to any action related to or
arising out of this Agreement or any transaction contemplated hereby.
10.3 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS
This Agreement, together with all Appendices and Schedules hereto and the
agreements contemplated by this Agreement, constitutes the entire agreement
among the parties pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto. No
amendment, supplement, modification or waiver of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (whether or not similar), nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
10.4 MULTIPLE COUNTERPARTS
This Agreement may be executed by facsimile and in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
10.5 EXPENSES
Except as otherwise specified in this Agreement, including without limitation
Section 6.13, each party hereto shall pay its own legal, accounting,
out-of-pocket and other expenses incident to this Agreement, including any
commissions referred to in Section 10.6, and to any action taken by
- 51 -
such party in preparation for carrying this Agreement into effect. Metso Canada
Buyer shall pay all fees, costs and expenses of the issuing and advising banks
relating to the Standby Letter of Credit and any replacements or substitutes
therefor, as well as any fees payable to the issuing and advising banks listed
in the Standby Letter of Credit.
10.6 BROKERAGE AND FINDER'S FEES
Except for the Transaction Bonus, Sellers agree to indemnify Metso Canada Buyer
hold it harmless in respect of any claim for brokerage or other commissions
relating to this Agreement or the transactions contemplated hereby which is
caused by actions of either of the Sellers or any of their Affiliates. Metso
Canada Buyer will indemnify Sellers and hold them harmless in respect of any
claim for brokerage or other commissions relating to this Agreement or to the
transactions contemplated hereby which is caused by actions of Metso Canada
Buyer or any of its Affiliates.
10.7 TITLES
The titles, captions or headings of the Articles, Sections and subsections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
10.8 CUMULATIVE REMEDIES
All rights and remedies of either party hereto, whether under or in respect of
this Agreement or any document or instrument delivered pursuant to this
Agreement (including the Purchase Price Holdback Escrow Agreement), are
cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
- 52 -
10.9 CURRENCY
All references to currency herein (except where otherwise specified) are to
lawful money of the United States of America.
IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to
be duly executed, all as of the day and year first above written.
TELVENT SISTEMAS Y REDES, S.A. METSO AUTOMATION SCADA SOLUTIONS LTD.
By: /s/ Xxxxxx Xxxxxxx By: /s/ Eeva-Xxxxx Xxxxxxxx
-------------------------------- --------------------------------
Xxxxxx Xxxxxxx Eeva-Xxxxx Xxxxxxxx
-------------------------------- --------------------------------
(Name) (Name)
Power of Attorney Director
-------------------------------- --------------------------------
(Title) (Title)
By: /s/ Antti Kaunonen
--------------------------------
Antti Kaunonen
--------------------------------
(Name)
Power of Attorney & Senior Vice
President Tech & Bus Dev.
--------------------------------
(Title)
METSO AUTOMATION SCADA SOLUTIONS INC.
By: /s/ Eeva-Xxxxx Xxxxxxxx
--------------------------------
Eeva-Xxxxx Xxxxxxxx
--------------------------------
(Name)
Director
--------------------------------
(Title)
By: /s/ Antti Kaunonen
--------------------------------
Antti Kaunonen
--------------------------------
(Name)
Power of Attorney & Senior Vice
President Tech & Bus Dev.
--------------------------------
(Title)
By: /s/ Xxxxx Xxxxx
--------------------------------
Xxxxx Xxxxx
--------------------------------
(Name)
Vice President Business Controls
--------------------------------
(Title)
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Xxxxx X. Xxxxx
--------------------------------
(Name)
Vice President Marketing &
Technology
--------------------------------
(Title)
METSO AUTOMATION HOLDING B.V.
By: /s/ Eeva-Xxxxx Xxxxxxxx
--------------------------------
Eeva-Xxxxx Xxxxxxxx
--------------------------------
(Name)
Director
--------------------------------
(Title)
By: /s/ Antti Kaunonen
--------------------------------
Antti Kaunonen
--------------------------------
(Name)
Power of Attorney & Senior Vice
President Tech & Bus Dev.
--------------------------------
(Title)
NELES-JAMESBURY, INC.
By: /s/ Eeva-Xxxxx Xxxxxxxx
--------------------------------
Eeva-Xxxxx Xxxxxxxx
--------------------------------
(Name)
Director
--------------------------------
(Title)
By: /s/ Antti Kaunonen
--------------------------------
Antti Kaunonen
--------------------------------
(Name)
Power of Attorney & Senior Vice
President Tech & Bus Dev.
--------------------------------
(Title)
APPENDIX 4.13.1
METSO US TAX MATTERS
1.1 In this Appendix 4.13.1,
(i) "Applicable Tax Legislation" means any legislation pursuant to which
Taxes are imposed by any Taxation Authority.
(ii) "Assessment" means an assessment, reassessment or any other formal
claim for, or in respect of, Taxes, which is made by any Taxation
Authority.
(iii) "Metso Canada Buyer Tax Indemnity Event" means an event deemed
hereby to occur when a covenant of the Metso Canada Buyer in Section
1.3 of this Appendix 4.13.1 has been breached or has not been
performed, but excludes any event which was directly caused by any
action of the Seller.
(iv) "Post-Closing Tax Period" shall mean any taxable period (or portion
thereof) beginning after the Closing Date.
(v) "Pre-Closing Tax Period" shall mean any taxable period (or portion
thereof) ending on or before the Closing Date.
(vi) "Seller Tax Indemnity Event" means an event deemed hereby to occur
when a representation or warranty of Metso US Seller in Section
1.2.1 or 1.2.2 of this Appendix 4.13.1 is untrue, inaccurate or
otherwise breached or a covenant of the Seller in Section 1.3 of
this Appendix 4.13.1 has been breached or has not been performed,
but excludes any event which was directly caused by any action of
the Tax Indemnified Party.
(vii) "Straddle Period" shall mean any period for which Taxes must be
reported and paid by the Companies that includes (but does not end
on) the Closing Date.
(viii) "Tax Indemnified Party" means Metso US or Metso Canada Buyer, as
the context requires.
(ix) "Tax Indemnity Amount" means the amount determined in accordance
with Section 1.5.4 of this Appendix 4.13.1.
(x) "Tax Report" shall mean all returns, estimates, information
statements and reports relating to Taxes.
(xi) "Taxation Authority" means the United States federal government and
any state, county, municipal or other governmental subdivision
within the United States.
-2-
(xii) "Taxes" shall mean (i) any and all federal, state, provincial,
local, foreign and other taxes, assessments and other governmental
charges, duties, impositions and liabilities, including taxes based
upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, gains, franchise,
capital stock, severance, withholding, payroll, recapture,
employment, excise, unemployment insurance, social security,
business license, occupation, business organization, stamp,
environmental and property taxes, together with all interest,
penalties and additions imposed with respect to such amounts; (ii)
any liability for the payment of any amounts described in clause (i)
as a result of being a successor to or transferee of any Person or a
member of an affiliated, consolidated or unitary group for any
period (including pursuant to US Treasury Regulation Section
1.1502-6 or comparable provisions of state, provincial, local or tax
law of any applicable Governmental Authority); and (iii) any
liability for the payment of amounts described in clause (i) or
clause (ii) as a result of any express or implied obligation to
indemnify any Person or as a result of any obligations under
agreements or arrangements with any Person.
1.2 Tax Matters
1.2.1 Taxes. Except as set forth in Schedule 4.13.1(a), to the best of the
knowledge of Metso US Seller and Metso US, Metso US has filed on a timely
basis with the appropriate taxing authorities all Tax Reports required to
be filed in the current year through the date hereof. The Tax Reports are
complete and accurate in all material respects and were prepared and filed
in accordance with applicable law. Except as set forth in Schedule
4.13.1(a), all Taxes owed by or with respect to Metso US (whether or not
shown on any Tax Report) with respect to Tax Reports the due date of which
precedes the date hereof have been paid.
1.2.2 US Tax Matters. Except as set forth in Schedule 4.13.1(b),
(i) except for Sellers' affiliated group for US federal income tax
purposes, Metso US is not and has not been a member of an affiliated
group of corporations filing a consolidated US federal income tax
return (or a group of corporations filing a consolidated, combined
or unitary income tax return under comparable provisions of state,
provincial, local or foreign tax law);
(ii) Metso US has no obligation under any agreement or arrangement with
any other person or entity with respect to Taxes of such other
person or entity (including pursuant to US Treasury
Regulation Section 1.1502-6 or comparable provisions of state,
provincial, local or foreign tax law) and including any liability
for Taxes of any predecessor entity; and
(iii) Metso US Seller, with respect to Metso US, is not a "foreign person"
within the meaning of Section 1445 of the US Code.
-3-
1.3 Special Tax Covenants Relating to Allocation of Current Year Tax Costs;
Preparation of Tax Reports
1.3.1 Allocation of Straddle Period Tax Costs.
(iv) During the Pre-Closing Tax Period, Metso US Seller shall pay all
Taxes attributable to the operations of Metso US. During the
Post-Closing Tax Period, Metso Canada Buyer shall pay all Taxes
attributable to Metso US' operations. If any party pays a Tax that
another party has agreed to pay, the other party shall reimburse the
paying party promptly after receipt of evidence of the payment.
(v) For the purposes of any Tax based on receipts or income, the
receipts or net income of Metso US during any tax period ending on
the Closing Date will be determined by a closing of Metso US' books
as of the close of business on the Closing Date, provided that any
tax item resulting from any action not in the ordinary course of
business taken by Metso US at the direction of the Metso Canada
Buyer on the Closing Date after the time of the Closing but before
the close of business shall be treated as occurring in the
Post-Closing Tax Period.
(vi) Real, personal, and intangible property Taxes of Metso US for the
Pre-Closing Tax Period shall equal the amount of such property Taxes
for the entire Straddle Period multiplied by a fraction, the
numerator of which is the number of days during the Straddle Period
that are in the Pre-Closing Tax Period and the denominator of which
is the number of days in the Straddle Period.
(vii) Metso US Seller's obligation to pay any amount owed by it pursuant
to this Section 1.3.1 shall be conditional upon its right to
withdraw the corresponding amount of income from Metso US for which
such tax is due.
1.3.2 Tax Report Filings.
(viii) For any Straddle Period of Metso US, Metso Canada Buyer shall
timely prepare and file with the appropriate authorities all Tax
Reports required to be filed and shall pay all Taxes due with
respect to such Tax Reports; provided, however, that Metso US Seller
shall reimburse Metso Canada Buyer for any amount owed by it
pursuant to Section 1.3.1 with respect to the taxable periods
covered by such Tax Reports.
(ix) For all Pre-Closing Tax Periods, Metso US Seller shall include the
tax items of Metso US in Metso US Seller's consolidated federal
income tax return, and Metso US Seller or its representative shall
timely prepare any other Tax Reports required to be filed, and Metso
US Seller shall pay all Taxes due with respect to such Tax Reports.
Any Tax Report described in the preceding sentence, including the
portion of Metso US Seller's
-4-
consolidated federal income tax return relating to Metso US, shall
be prepared on a basis consistent with Section 1.3.1 and the past
practices of Metso US and in a manner that does not distort taxable
income (e.g., by deferring income or accelerating deductions).
Holdco US shall deliver to Metso Canada Buyer the original of each
such Tax Report (other than Metso US Seller's consolidated federal
income tax return) together with the amount of Tax shown as due
thereon (by the Metso Canada Buyer or, after the Closing, Metso US)
at least five business days prior to the due date for the filing of
such Tax Report and upon receipt thereof the Metso Canada Buyer
shall cause Metso US to file timely such Tax Report (as prepared by
Metso US Seller) and pay the Tax shown as due thereon.
1.3.3 Cooperation. Metso Canada Buyer and Metso US Seller shall cooperate,
and Metso Canada Buyer agrees to cause Metso US to cooperate with
Metso US Seller with respect to amending any Tax Report or claiming
any refund of Taxes payable by or with respect to Metso US. Metso US
Seller, Metso US, and Metso Canada Buyer shall reasonably cooperate,
and shall cause their respective Affiliates, officers, employees,
agents, auditors and representatives to cooperate, in preparing,
filing and amending all Tax Reports, including maintaining and making
available to each other all records necessary in connection with
Taxes and in resolving all disputes and audits with respect to all
taxable periods relating to Taxes.
1.3.4 Refunds and Credits. Any refund or credit of Taxes of Metso US for
any Pre-Closing Tax Period shall be for the account of Metso US
Seller. Furthermore, Metso Canada Buyer shall waive the carryback
from a taxable period beginning after the Closing Date of any items
of loss, deductions, or other Tax items of Metso US, any subsidiary,
or any of their respective Affiliates, including Metso Canada Buyer.
Any refund or credit of Taxes of Metso US for any Post-Closing Tax
Period shall be for the account of Metso Canada Buyer. Any refund or
credit of Taxes of Metso US for any Straddle Period shall be
equitably apportioned between Metso US Seller and Metso Canada Buyer.
1.3.5 Rights of Access Granted to Metso Canada Buyer. Metso US Seller shall
grant to Metso Canada Buyer (or its designees) access at all
reasonable times to all of the information, books and records
relating exclusively to Metso US within the possession of Metso US
Seller (including work papers and correspondence with taxing
authorities), shall afford Metso Canada Buyer (or its designees) the
right (at Metso Canada Buyer's expense) to take extracts therefrom
and to make copies thereof, and shall provide Metso Canada Buyer
reasonable access to Metso US Seller's employees who are
knowledgeable regarding the relevant Tax matters to the extent
reasonably necessary to permit Metso Canada Buyer (or its designees)
to prepare Tax Reports and to conduct negotiations with taxing
authorities, provided, however, that Metso Canada Buyer shall have no
rights under this Section 1.3.5 to any information, books or records
relating to Metso US Seller or its Affiliates (other than Metso US).
1.3.6 Rights of Access Granted to Metso US Seller. Metso Canada Buyer and
its Affiliates shall grant, or cause Metso US to grant, to Metso US
Seller (or its designee) access at all reasonable times to all of the
information, books and records relating to Metso US
-5-
within the possession of Metso Canada Buyer or Metso US (including
work papers and correspondence with taxing authorities), shall
afford Metso US Seller (or its designee) the right (at Metso US
Seller's expense) to take extracts therefrom and to make copies
thereof, and shall provide Metso US Seller reasonable access to
Metso Canada Buyer's employees who are knowledgeable regarding the
relevant Tax matters to the extent reasonably necessary to permit
Metso US Seller (or its designee) to prepare Tax Reports and to
conduct negotiations with taxing authorities. Metso Canada Buyer
shall, or shall cause Metso US to, accurately complete on a timely
basis any reasonable or customary tax information package or
questionnaire submitted to it by Metso US Seller for the purpose of
enabling Metso US Seller to complete any Tax Report that it is
required to prepare pursuant to this Agreement.
1.3.7 Audits and Assessments. Each of Metso Canada Buyer Metso US Seller
shall promptly notify the other in writing within 10 days from its
(or its affiliates') receipt of notice of any pending or threatened
federal, state or local Tax audits or assessments of, or with
respect to, any tax item of Metso US for which Metso US Seller is
responsible under this Agreement. In the case of any tax audit or
administrative or court proceeding for any taxable period ending on
or prior to the Closing Date that relates to any Tax of Metso US for
which Metso US Seller is responsible under this Section 1.3, Metso
US Seller shall have the right to control the conduct and
disposition of such audit or proceeding and to employ counsel of its
choice at its expense and Metso Canada Buyer shall have the right to
consult with Metso US Seller during such audit or proceeding at its
own expense; provided that Metso US Seller shall not dispose of any
such audit or proceeding in a manner that would purport to bind
Metso US for taxable periods ending after the Closing Date without
the prior written consent of Metso Canada Buyer, which consent shall
not be unreasonably withheld. In the case of any tax audit or
administrative or court proceeding for any taxable period beginning
before the Closing Date and ending after the Closing Date that
relates to any Tax for which Metso US Seller is responsible under
this Section 1.3, Metso Canada Buyer shall have the right to control
such audit or proceeding, provided that Metso Canada Buyer shall not
accept any proposed adjustment or enter into any settlement or
agreement in compromise which would result in a claim for
indemnification against Metso US Seller pursuant to this agreement
without the prior written consent of Metso US Seller, which consent
shall not be unreasonably withheld. Metso Canada Buyer shall
cooperate fully, and cause Metso US to cooperate fully, with Metso
US Seller and its counsel in the defense against or compromise of
any claim in any proceeding controlled by Metso US Seller pursuant
to this Section 1.3.7.
1.3.8 Transfer Taxes, Etc. Metso Canada Buyer shall be responsible for the
payment of all state, provincial and local transfer, sales, use or
other similar Taxes resulting from the transactions contemplated by
this Agreement.
1.3.9 Section 338(h)(10) Election. If requested by Metso Canada Buyer,
Metso Canada Buyer and Metso US Seller shall make and shall cause
their respective affiliates to make a joint election pursuant to
Section 338(h)(10) of the US Code (and any corresponding provision
of state or local law) with respect to the purchase and sale of
-6-
Metso US (the "SECTION 338(H)(10) ELECTIONS") in the manner
described in this Section 1.3.9:
(i) Except as otherwise provided in Section 1.3.9(iii), Metso
Canada Buyer shall be responsible for the preparation of
drafts of the Section 338 Forms. The "SECTION 338 FORMS" shall
mean all forms and schedules required to be filed in
connection with the Section 338(h)(10) Elections, including,
without limitation, IRS Form 8023 and all attachments required
to be filed therewith pursuant to the applicable Treasury
Regulations.
(ii) At least 90 days prior to the latest date for the filing of
each Section 338 Form, Metso Canada Buyer shall furnish Metso
US Seller with a draft of such Section 338 Form. Metso US
Seller shall notify Metso Canada Buyer of any objection Metso
US Seller may have to such draft Section 338 Form within 30
days after the receipt thereof from Metso Canada Buyer. At
least 30 days prior to the latest date for the filing of each
Section 338 Form, Metso Canada Buyer and Metso US Seller shall
agree upon the final form and content of such Section 338
Form, Metso Canada Buyer shall deliver to Metso US Seller
three copies of such agreed upon Section 338 Form, and each
party shall execute such Form. If Metso Canada Buyer and Metso
US Seller are unable so to agree, any matter of disagreement
shall be resolved prior to 2 days before the due date of such
Section 338 Forms by the third party accountants. Metso Canada
Buyer shall file the agreed upon Section 338 Forms with the
applicable taxing authority on or before the due date thereof.
(iii) On or before the last day of the fourth month beginning after
the month that includes the Closing Date, Metso Canada Buyer
shall provide to Metso US Seller a proposed allocation of the
"aggregate deemed sales price" for the deemed sale of assets
resulting from the making of the Section 338(h)(10) Elections.
If Metso Canada Buyer's proposed allocation for the deemed
sale of assets is based on an appraisal by an independent
appraiser, then the proposed allocation shall be treated as
the agreed final allocation. If the proposed allocation is not
based on an independent appraisal, Metso US Seller may object
to the proposed allocation. However, if Metso US Seller does
not object within 10 business days after its receipt of Metso
Canada Buyer's proposed allocation, such allocation shall be
treated as the agreed final allocation. If Metso US Seller
objects in writing to Metso Canada Buyer's proposed allocation
within 10 business days after the receipt thereof, Metso
Canada Buyer and Metso US Seller shall use their best efforts
to agree on an allocation. If the parties cannot, within 5
business days, agree to an allocation, such disagreement shall
be resolved by third party accountants, provided that any such
dispute shall be resolved in favor of Metso Canada Buyer
unless the third party accountants determine that there is no
reasonable basis for Metso Canada Buyer's position. Following
the
-7-
resolution of any such dispute, such allocation shall be the
final agreed allocation.
(iv) Metso Canada Buyer and Metso US Seller agree that neither of
them shall take any action to modify the Section 338 Forms
following the execution thereof, or to modify or revoke the
Section 338(h)(10) Elections following the filing of the
Section 338 Forms, without the written consent of Metso US
Seller or Metso Canada Buyer, as the case may be.
(v) Metso Canada Buyer and Metso US Seller shall file all Tax
Reports in a manner consistent with the information contained
in the Section 338 Forms as filed and the final allocation.
1.4 Tax Sharing Agreements
All Tax sharing agreements or similar agreements between Metso US and Metso US
Seller or any of Metso US Seller's Affiliates shall be terminated not later than
the Closing Date, and after the Closing Date Metso US shall not be bound or have
any liability pursuant to any such agreement.
1.5 Seller Indemnifications.
1.5.1 Tax Indemnity. Metso US Seller hereby indemnifies and agrees to save
harmless the Tax Indemnified Party from and against all losses,
damages or expenses (including all professional fees incurred with
respect to the enforcement by the Tax Indemnified Party of its
rights under this Section 1.5.1), to the extent and on the basis
hereinafter set forth, which are suffered by the Tax Indemnified
Party as a result of the occurrence of a Seller Tax Indemnity Event.
Metso US Seller shall have no liability in respect of the matters
covered by this Appendix 4.13.1 except in respect of a Seller Tax
Indemnity Event and except on the basis provided for in this
Article.
1.5.2 Pre-Assessment Procedure. If the Tax Indemnified Party receives a
notice or other communication (whether written or oral) from any
Taxation Authority after the Closing Date to the effect that such
Taxation Authority proposes to issue an Assessment to the Tax
Indemnified Party, the basis of which is a Seller Tax Indemnity
Event, the Tax Indemnified Party shall forthwith forward a copy of
such notice to Metso US Seller, or otherwise notify Metso US Seller
of the contents of such communication, and Metso US Seller shall
have the right, at its own expense, including all legal fees, costs
and expenses, to require the Tax Indemnified Party to make
representations with respect to such proposed Assessment through
counsel retained for this purpose by Metso US Seller. The Tax
Indemnified Party shall be obligated to cooperate fully at all times
with Metso US Seller and counsel so appointed, and to act in a
timely manner, and in good faith, to make available all documents
and records necessary to enable Metso US Seller to make
representations with respect to, or otherwise contest, the proposed
Assessment. If Metso US Seller, having received notice of, or other
-8-
communication in respect of, a proposed Assessment, as contemplated
herein, decides not to require the Tax Indemnified Party to make
representations with respect to such proposed Assessment, Metso US
Seller shall promptly so inform the Tax Indemnified Party and
thereafter the Tax Indemnified Party may do so on its own behalf,
and at its own expense. Any decision by the Tax Indemnified Party
not to make representations or any lack of success by the Tax
Indemnified Party in such action shall not, in such event, relieve
Metso US Seller of its obligation to indemnify the Tax Indemnified
Party pursuant to the terms and conditions of this Article, except
that such indemnity shall not, in such instance, extend to legal and
other costs incurred by the Tax Indemnified Party in connection with
such proposed Assessment at any time prior to the actual issuance of
an assessment.
1.5.3 Procedure on Assessment. If any Taxation Authority should at any
time issue an Assessment to the Tax Indemnified Party the basis of
which is, in whole or in part, a Seller Tax Indemnity Event, Metso
US Seller shall pay the Tax Indemnity Amount in relation to the
Assessment to the Tax Indemnified Party, within thirty (30) days
after the Tax Indemnified Party has received the assessment, the
amount (including any interest and/or penalty) specified in such
Assessment.
1.5.4 Tax Indemnity Amount. The Tax Indemnity Amount in relation to an
Assessment shall mean the aggregate of:
(i) the amount (including any interest and/or penalty) specified
in such Assessment insofar as such amount is attributable to a
Seller Tax Indemnity Event;
(ii) an amount of interest from the date of mailing of such
Assessment to the date of the payment by the Seller to the Tax
Indemnified Party of the amount specified in Section 1.5.4 of
this Appendix 4.13.1 calculated on the amount specified in
Section 1.5.4 of this Appendix 4.13.1 at a rate equal to the
prescribed interest rate for the purposes of the Applicable
Tax Legislation pursuant to which the Assessment has been
issued; and
(iii) the amount necessary to compensate the Tax Indemnified Party
for any tax payable in respect of the receipt of the Tax
Indemnity Amount, subject to the duty of the Tax Indemnified
Party to mitigate such tax amount payable.
After Metso US Seller has paid the Tax Indemnity Amount in respect
of an Assessment, the Tax Indemnified Party shall forthwith pay an
amount (not exceeding the amount received from Metso US Seller) to
the Taxation Authority sufficient to satisfy the obligation of the
Tax Indemnified Party in respect of the Assessment to the Taxation
Authority.
1.5.5 Objection/Appeal Procedure. The Tax Indemnified Party shall, within
ten (10) working days after the receipt of an Assessment, send a
copy of such Assessment
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to Metso US Seller. Metso US Seller shall be entitled to undertake
the carriage of any objection or appeal from such Assessment. Metso
US Seller shall be entitled to retain its own counsel for that
purpose and shall be responsible for all expenses, including legal
fees and other costs associated therewith. The Tax Indemnified Party
shall cooperate with Metso US Seller to the extent reasonably
necessary if Metso US Seller wishes to object to or appeal any such
Assessment. Metso US Seller shall be responsible for all expenses,
including legal fees and costs, incurred by the Tax Indemnified
Party in so cooperating. If such objection or appeal is successful
in whole or in part, the Tax Indemnified Party shall pay to Metso US
Seller within twenty (20) days of receipt, the amount of any refund
received in respect of such Assessment (not exceeding the portion of
the Tax Indemnity Amount in respect of such Assessment that Metso US
Seller has paid to the Tax Indemnified Party as herein provided)
together with the applicable portion of interest received on such
refund, determined on an after-tax basis, and all legal costs to
which the Tax Indemnified Party becomes entitled as a result of such
successful objection or appeal. The Tax Indemnified Party shall join
in and pursue any objection to or appeal of any such Assessment in a
timely manner and in good faith, shall cooperate fully, at all
times, with Metso US Seller and counsel that Metso US Seller retains
and shall make available to Metso US Seller and such counsel all
documents and records which may reasonably be necessary to enable
Metso US Seller to contest such Assessment.
1.6 Metso Canada Buyer Indemnifications. Metso Canada Buyer hereby indemnifies
and agrees to save harmless Metso US Seller, on an after-tax basis, from and
against all losses, damages or expenses (including all professional fees
incurred with respect to the enforcement by Metso US Seller of its rights under
this Section 1.6), which are suffered by Metso US Seller as a result of the
occurrence of a Metso Canada Buyer Tax Indemnity Event.
APPENDIX 4.13.2
CANADIAN TAX MATTERS
1.1 Definitions. In this Appendix 4.13.2:
(i) "Applicable Tax Legislation" means any legislation pursuant to
which Taxes are imposed by any Taxation Authority;
(ii) "Assessment" means an assessment, reassessment or any other
formal claim for, or in respect of, Taxes, which is made by
any Taxation Authority;
(iii) "Company" means Metso Canada;
(iv) "Deemed Year End" means the time that is immediately before
the time that control of the Company is acquired by the Metso
Canada Buyer, as more particularly described in paragraph
249(4)(a) of the Tax Act;
(v) "GST" means goods and services tax imposed under the GST
Legislation;
(vi) "GST Legislation" means the Excise Tax Act (Canada);
(vii) "Metso Canada Buyer Tax Indemnity Event" means an event deemed
hereby to occur when a covenant of the Metso Canada Buyer in
Section 4.1 of this Appendix 4.13.2 has been breached or has
not been performed, but excludes any event which was directly
caused by any action of the Seller;
(viii) "Seller" means Metso Canada Seller;
(ix) "Seller Tax Indemnity Event" means an event deemed hereby to
occur when a representation or warranty of the Seller in
Section 2.1 of this Appendix 4.13.2 is untrue, inaccurate or
otherwise breached or a covenant of the Seller in Section 3.1
of this Appendix 4.13.2 has been breached or has not been
performed, but excludes any event which was directly caused by
any action of the Tax Indemnified Party;
(x) "Tax Act" means the Income Tax Act (Canada), as amended to the
Closing Date;
(xi) "Tax Indemnified Party" means the Company or the Metso Canada
Buyer, as the context requires;
(xii) "Tax Indemnity Amount" means the amount determined in
accordance with Section 5.1.4 of this Appendix 4.13.2;
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(xiii) "Tax Returns" means all returns, reports, declarations,
statements, bills, schedules or written information of, or in
respect of, Taxes which are required to be filed with, or
supplied to, any Taxation Authority;
(xiv) "Taxation Authority" means the federal government of Canada
and any provincial, county, municipal or other governmental
subdivision within Canada; and
(xv) "Taxes" means all taxes, including any interest, penalties, or
other additions thereto, that are imposed by a Taxation
Authority, and shall for greater certainty include, but not be
limited to, federal and provincial income and capital taxes,
payroll and employee withholding taxes, employment insurance
premiums, Canada pension plan contributions, GST, sales and
use taxes, ad valorem taxes, excise taxes, franchise taxes,
gross receipts taxes, business licence taxes, occupation
taxes, real and personal property taxes, stamp taxes,
environmental taxes, transfer taxes, workers' compensation
premiums, and all other amounts of the same or of a similar
nature to any of the foregoing, whether or not such amounts
are described as taxes, which are imposed by a Taxation
Authority.
2.1 Seller's Representations. Except as set forth in Schedule 4.13.2, the Seller
represents and warrants to the Metso Canada Buyer that, to the best of the
knowledge of the Seller:
2.1.1 Filings. The Company has, or will have, duly, and in a timely
manner, filed all Tax Returns which were required to be filed by it
with any Taxation Authority on or before the Closing Date. Each such
Tax Return has or will have been prepared in accordance with the
Applicable Tax Legislation pursuant to which each such Tax Return is
required to be filed and is, or will be, true, complete and correct
in all material respects.
2.1.2 Withholdings. The Company has withheld, and will continue until the
Closing Date to withhold, any Taxes which are required by any
Applicable Tax Legislation to be withheld and has paid or remitted,
and will continue until the Closing Date to pay and remit, on a
timely basis, the full amount of any Taxes which have been or will
be withheld, to the applicable Taxation Authority.
2.1.3 Payment and Accrual of Taxes. The Company has paid, on a timely
basis, all Taxes, including any installments or prepayments of
Taxes, which are required to have been paid to any Taxation
Authority pursuant to any Applicable Tax Legislation or has recorded
such amounts in the Metso Canada Financial Statements as a reserve
for taxes payable, or taxes recoverable as the case may be. No
deficiency with respect to the payment of any Taxes has been
asserted against the Company by any Taxation Authority.
2.1.4 Outstanding Assessments. There are no outstanding Assessments
against the Company.
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2.1.5 Extensions. The Company is not a party to any agreement, waiver or
arrangement with any Taxation Authority which relates to any
extension of time with respect to the filing of any Tax Return, any
payment of Taxes or any Assessment.
2.1.6 Taxation Year End. The taxation year of the Company, for the
purposes of the Tax Act, ends on December 31st in each year.
2.1.7 Residence. The Seller is a non-resident of Canada, for the purposes
of the Tax Act, and a resident of the Netherlands, for the purposes
of the Canada-Netherlands Income Tax Convention (1986).
2.1.8 Taxable Canadian Corporation. The Company is a taxable Canadian
corporation, within the meaning of subsection 89(1) of the Tax Act.
2.1.9 Acquisition of Control of the Company. There has been no acquisition
of control, for the purposes of the Tax Act, of the Company within
the last six taxation years of the Company.
2.1.10 GST. The Company is duly registered under the GST Legislation and
its GST registration number is 121751283.
3.1 Covenants of the Seller. The Seller covenants and agrees with the Buyer as
follows:
3.1.1 Filing of Returns. The Seller will cause the preparation of all Tax
Returns which relate to any period prior to the Closing Date but
which are not required to be filed with the applicable Taxation
Authority until after the Closing Date. For greater certainty, this
covenant shall apply to the Tax Returns which are required by the
Tax Act in respect of the fiscal period of the Company which ends on
the Deemed Year End.
4.1 Covenants of the Metso Canada Buyer. The Metso Canada Buyer covenants and
agrees with the Seller as follows:
4.1.1 Tax Return Filing. The Metso Canada Buyer shall ensure that all Tax
Returns of the Company for any period ending after the Closing Date
are prepared and filed on a basis consistent with the provisions of
this Appendix 4.13.2 and shall further ensure that no Tax Returns of
the Company for any period ending on or before the Closing Date are
amended without obtaining the prior written consent of the Seller.
The Metso Canada Buyer shall ensure that all Tax Returns prepared by
Seller pursuant to Section 3.1.1 of this Appendix 4.13.2 will be
filed on a timely basis, and will pay or cause to be timely paid all
taxes of the Company shown as due on such Tax Returns.
4.1.2 Final Tax Return Filing. The Metso Canada Buyer will, or will cause
the Company to, make available to the Seller such information as the
Seller may
-4-
reasonably request in order to enable the Seller to comply with its
obligations under Section 3.1.1 of this Appendix 4.13.2.
4.1.3 Refund of Taxes. If the Company receives or becomes entitled to
receive a refund for, or in respect of, any taxation year ending
prior to the Closing Date, other than any such refund which results
from the carryback of a loss from a taxation year ending after the
Closing Date, then the amount of such refund, inclusive of interest
thereon, shall be applied to reduce the amount of any Tax Indemnity
Amount that may become payable by the Seller hereunder. If any such
Tax Indemnity Amount has been paid by the Seller hereunder, then the
Tax Indemnified Party which has received such Tax Indemnity Amount
shall, forthwith after the receipt of such refund, inclusive of
interest thereon, by the Company, repay the amount which the Tax
Indemnified Party has received from the Seller, to the extent of the
amount of such refund, inclusive of interest thereon, together with
interest on the amount so repaid at a rate equal to the Royal Bank
of Canada prime rate on the date that such refund, inclusive of
interest, is received by the Company.
5.1 Seller Indemnifications.
5.1.1 Tax Indemnity. The Seller hereby indemnifies and agrees to save
harmless the Tax Indemnified Party from and against all losses,
damages or expenses (including all professional fees incurred with
respect to the enforcement by the Tax Indemnified Party of its
rights under this Section 5.1.1), to the extent and on the basis
hereinafter set forth, which are suffered by the Tax Indemnified
Party as a result of the occurrence of a Seller Tax Indemnity Event.
The Seller shall have no liability in respect of the matters covered
by this Appendix 4.13.2 except in respect of a Seller Tax Indemnity
Event and except on the basis provided for in this Article.
5.1.2 Pre-Assessment Procedure. If the Tax Indemnified Party receives a
notice or other communication (whether written or oral) from any
Taxation Authority after the Closing Date to the effect that such
Taxation Authority proposes to issue an Assessment to the Tax
Indemnified Party, the basis of which is a Seller Tax Indemnity
Event, the Tax Indemnified Party shall forthwith forward a copy of
such notice to the Seller, or otherwise notify the Seller of the
contents of such communication, and the Seller shall have the right,
at its own expense, including all legal fees, costs and expenses, to
require the Tax Indemnified Party to make representations with
respect to such proposed Assessment through counsel retained for
this purpose by the Seller. The Tax Indemnified Party shall be
obligated to cooperate fully at all times with the Seller and
counsel so appointed, and to act in a timely manner, and in good
faith, to make available all documents and records necessary to
enable the Seller to make representations with respect to, or
otherwise contest, the proposed Assessment. If the Seller, having
received notice of, or other communication in respect of, a proposed
Assessment, as contemplated herein, decides not to require the Tax
Indemnified Party to make representations with respect to such
proposed Assessment, the Seller shall
-5-
promptly so inform the Tax Indemnified Party and thereafter the Tax
Indemnified Party may do so on its own behalf, and at its own
expense. Any decision by the Tax Indemnified Party not to make
representations or any lack of success by the Tax Indemnified Party
in such action shall not, in such event, relieve the Seller of its
obligation to indemnify the Tax Indemnified Party pursuant to the
terms and conditions of this Article, except that such indemnity
shall not, in such instance, extend to legal and other costs
incurred by the Tax Indemnified Party in connection with such
proposed Assessment at any time prior to the actual issuance of an
assessment.
5.1.3 Procedure on Assessment. If any Taxation Authority should at any
time issue an Assessment to the Tax Indemnified Party the basis of
which is, in whole or in part, a Seller Tax Indemnity Event, the
Seller shall pay the Tax Indemnity Amount in relation to the
Assessment to the Tax Indemnified Party, within thirty (30) days
after the Tax Indemnified Party has received the assessment, the
amount (including any interest and/or penalty) specified in such
Assessment.
5.1.4 Tax Indemnity Amount. The Tax Indemnity Amount in relation to an
Assessment shall mean the aggregate of:
(i) the amount (including any interest and/or penalty) specified
in such Assessment insofar as such amount is attributable to a
Seller Tax Indemnity Event;
(ii) an amount of interest from the date of mailing of such
Assessment to the date of the payment by the Seller to the Tax
Indemnified Party of the amount specified in Section 5.1.4 of
this Appendix 4.13.2 calculated on the amount specified in
Section 5.1.4 of this Appendix 4.13.2 at a rate equal to the
prescribed interest rate for the purposes of the Applicable
Tax Legislation pursuant to which the Assessment has been
issued; and
(iii) the amount necessary to compensate the Tax Indemnified Party
for any tax payable in respect of the receipt of the Tax
Indemnity Amount, subject to the duty of the Tax Indemnified
Party to mitigate such tax amount payable.
After the Seller has paid the Tax Indemnity Amount in respect of an
Assessment, the Tax Indemnified Party shall forthwith pay an amount
(not exceeding the amount received from the Seller) to the Taxation
Authority sufficient to satisfy the obligation of the Tax
Indemnified Party in respect of the Assessment to the Taxation
Authority.
5.1.5 Objection/Appeal Procedure. The Tax Indemnified Party shall, within
ten (10) working days after the receipt of an Assessment, send a
copy of such Assessment to the Seller. The Seller shall be entitled
to undertake the carriage of any objection or appeal from such
Assessment. The Seller shall be entitled to retain its own counsel
for that purpose and shall be responsible for all expenses,
-6-
including legal fees and other costs associated therewith. The Tax
Indemnified Party shall cooperate with the Seller to the extent
reasonably necessary if the Seller wishes to object to or appeal any
such Assessment. The Seller shall be responsible for all expenses,
including legal fees and costs, incurred by the Tax Indemnified
Party in so cooperating. If such objection or appeal is successful
in whole or in part, the Tax Indemnified Party shall pay to the
Seller within twenty (20) days of receipt, the amount of any refund
received in respect of such Assessment (not exceeding the portion of
the Tax Indemnity Amount in respect of such Assessment that the
Seller has paid to the Tax Indemnified Party as herein provided)
together with the applicable portion of interest received on such
refund, determined on an after-tax basis, and all legal costs to
which the Tax Indemnified Party becomes entitled as a result of such
successful objection or appeal. The Tax Indemnified Party shall join
in and pursue any objection to or appeal of any such Assessment in a
timely manner and in good faith, shall cooperate fully, at all
times, with the Seller and counsel that the Seller retains and shall
make available to the Seller and such counsel all documents and
records which may reasonably be necessary to enable the Seller to
contest such Assessment.
6.1 Metso Canada Buyer Indemnifications. The Metso Canada Buyer hereby
indemnifies and agrees to save harmless the Seller, on an after-tax basis, from
and against all losses, damages or expenses (including all professional fees
incurred with respect to the enforcement by the Seller of its rights under this
Section 6.1), which are suffered by the Seller as a result of the occurrence of
a Metso Canada Buyer Tax Indemnity Event.
TABLE OF CONTENTS
PAGE
ARTICLE 1
INTERPRETATION
1.1 Defined Terms......................................................... 1
1.2 Other Defined Terms................................................... 7
1.3 Best of Knowledge..................................................... 8
1.4 Appendices and Schedules.............................................. 8
ARTICLE 2
PURCHASE AND SALE OF SHARES
2.1 Transfer of Shares.................................................... 9
2.2 Purchase Price........................................................ 9
ARTICLE 3
CLOSING
3.1 Closing............................................................... 11
3.2 Deliveries at Closing................................................. 11
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLERS
4.1 Organization.......................................................... 12
4.2 Subsidiaries.......................................................... 12
4.3 Authorization......................................................... 13
4.4 No Violation; Consents................................................ 13
4.5 Capitalization........................................................ 13
4.6 Financial Statements.................................................. 14
4.7 No Change in the Assets............................................... 15
4.8 Real Property......................................................... 16
4.9 Books and Records..................................................... 16
4.10 Litigation............................................................ 17
4.11 Compliance with Law; Permits.......................................... 17
4.12 No Other Agreements to Sell the Companies............................. 17
4.13 Tax Matters........................................................... 17
4.14 Canadian Employees and Employee Benefits.............................. 17
4.15 US Employee and Employee Benefits..................................... 18
4.16 Labor Relations....................................................... 20
4.17 Environmental Matters................................................. 21
4.18 Contracts and Commitments............................................. 21
4.19 Intellectual Property................................................. 23
4.20 Insurance............................................................. 27
4.21 Employees............................................................. 27
4.22 Competition Act (Canada).............................................. 27
4.23 Negation.............................................................. 28
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PAGE
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF METSO CANADA BUYER AND METSO CANADA
5.1 Organization.......................................................... 28
5.2 Authorization......................................................... 28
5.3 No Violation; Consents................................................ 29
5.4 Litigation............................................................ 29
5.5 Investment Purpose Only............................................... 29
5.6 Competition Act (Canada).............................................. 29
ARTICLE 6
COVENANTS
6.1 Further Assurances.................................................... 30
6.2 Sellers' Covenants.................................................... 30
6.3 Metso Canada Buyer's Covenants........................................ 30
6.4 Metso Canada's Covenants.............................................. 30
6.5 Public Announcements.................................................. 30
6.6 Confidentiality....................................................... 31
6.7 Transitional Arrangements............................................. 32
6.8 Debt.................................................................. 32
6.9 Change of Name........................................................ 33
6.10 Insurance............................................................. 33
6.11 Group Plans........................................................... 33
6.12 Computer Network...................................................... 33
6.13 Transaction Bonus..................................................... 34
6.14 Dutch Filings......................................................... 34
6.15 Bank Accounts......................................................... 34
6.16 Patent Assignment..................................................... 34
ARTICLE 7
CONDITIONS TO SELLERS' OBLIGATIONS
7.1 Conditions prior to Metso Canada Closing.............................. 34
7.2 Conditions prior to Metso US Closing.................................. 35
7.3 Waiver or Termination by Sellers...................................... 36
ARTICLE 8
CONDITIONS TO METSO CANADA BUYER'S OBLIGATIONS
8.1 Conditions prior to Metso Canada Closing.............................. 37
8.2 Conditions prior to Metso US Closing.................................. 38
8.3 Waiver or Termination by Metso Canada Buyer........................... 40
ARTICLE 9
REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
9.1 Survival of Representations, Etc...................................... 40
9.2 Indemnification....................................................... 41
9.3 Limitations........................................................... 43
9.4 Set Off............................................................... 43
9.5 Remedies.............................................................. 44
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PAGE
ARTICLE 10
MISCELLANEOUS
10.1 Notices............................................................... 44
10.2 Choice of Law......................................................... 50
10.3 Entire Agreement; Amendments and Waivers.............................. 50
10.4 Multiple Counterparts................................................. 50
10.5 Expenses.............................................................. 50
10.6 Brokerage and Finder's Fees........................................... 51
10.7 Titles................................................................ 51
10.8 Cumulative Remedies................................................... 51
10.9 Currency.............................................................. 52
APPENDICES
Appendix 4.13.1 Metso US Tax Matters
Appendix 4.13.2 Metso Canada Tax Matters
SCHEDULES
Schedule 1.1.3 Asbestos Indemnity Agreement
Schedule 1.1.40 Standby Letter of Credit
Schedule 2.2.3.2 Tax Holdback Escrow Agreement
Schedule 2.2.5 Purchase Price Holdback Escrow Agreement
Schedule 4.4 Consents
Schedule 4.6 Financial Statements
Schedule 4.6.2 Undisclosed Liabilities
Schedule 4.8 Real Property
Schedule 4.10 Litigation
Schedule 4.13.1(a) Tax Reports
Schedule 4.13.1(b) Consolidated US Tax Returns
Schedule 4.13.2 Canadian Tax Matters
Schedule 4.14.1 Canadian Employee Plans
Schedule 4.14.3 Metso Canada Remuneration
Schedule 4.14.4 Metso Canada Employment Contracts
Schedule 4.14.6 Canadian Employee Plan Compliance
Schedule 4.15.1 US Employee Plans
Schedule 4.15.3 Metso US Employment Contracts
Schedule 4.15.4 US Employee Plans Compliance
Schedule 4.15.6 Former Employees
Schedule 4.17 Environmental Matters
Schedule 4.18 Contracts
Schedule 4.18.2 Good Standing of Agreements
Schedule 4.18.3 Bank Guarantees and Surety Bonds
Schedule 4.19.2 Intellectual Property Rights
Schedule 4.19.3 Infringement or Misappropriation of Intellectual
Property
Schedule 4.19.5 Third Party Owned Intellectual Property
Schedule 4.19.6 Software
-iv-
Schedule 4.19.7 Transfer of Ownership of Intellectual Property and
Exclusive Licensing Arrangements
Schedule 4.19.8 Disclosure of Trade Secrets
Schedule 4.20 Insurance Obligations
Schedule 4.21.1 Employee and Director Information
Schedule 5.3 Buyer's Consents
Schedule 6.7.1 Released Contracts
Schedule 6.7.2 Special Contracts
Schedule 6.9 Terms of Use of Trademark
