SHARE PURCHASE AGREEMENT EXHIBIT 2.2
DATED
24 March 2000
AMONG
JOHAN XXXXXX XXXXXXXX ET AL
AS SELLERS
AND
XXXXX PET CARE COMPANY
AS BUYER
TABLE OF CONTENTS PAGE 1
ARTICLE 1 DEFINITIONS AND INTERPRETATION 1
1.1 Definitions 1
1.2 Certain Interpretive Matters and Definitions 5
1.3 Governing Language. 5
ARTICLE 2 THE PURCHASE PRICE 6
2.1 Purchase Price 6
ARTICLE 3 FINANCING 6
3.1 Financing 6
3.2 Break-up Fee 6
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE SELLER 7
4.1 Authorisation of Transaction 7
4.2 Noncontravention 7
4.3 Brokers Fees 8
4.4 Title to Sale Shares. 8
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE SELLERS (OTHER THAN KP AND PKA)
REGARDING THE COMPANY AND ITS SUBSIDIARIES 8
5.1 Organisational Matters. 8
5.2 Authorisation of Transaction 9
5.3 Noncontravention. 9
5.4 Brokers Fees. 9
5.5 Subsidiaries. 10
5.6 Financial Statements. 10
5.7 Taxes. 12
5.8 Real Property. 12
5.9 Environmental. 13
5.10 Operating Equipment. 13
5.11 Stock. 14
5.12 Volume of Orders. 14
5.13 Receivables. 14
5.14 Intellectual Property. 14
5.15 Employee Matters. 15
5.16 Contractual Matters 16
5.17 Insurances. 17
5.18 Compliance With Laws. 18
5.19 Litigation. 18
5.20 Operations. 19
5.21 Certain Payments 19
5.22 Bank Accounts 19
5.23 Information 19
5.24 Full Disclosure 19
TABLE OF CONTENTS PAGE 2
5.25 Lovens Agreements. 19
5.26 Liability To the Company Under the Merger Agreement. 20
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE BUYER 20
6.1 Organisation of the Buyer 20
6.2 Authorisation of Transaction 20
6.3 Noncontravention 20
6.4 Brokers' Fees. 21
ARTICLE 7.. CONFIDENTIALITY PROVISIONS AND NON-COMPETITION 22
7.1 Nondisclosure of Confidential Information. 22
7.2 Notice Preceding Compelled Disclosure. 22
7.3 Definition of "Confidential Information". 23
7.4 Return of Information. 24
7.5 Existing Confidentiality Agreement. 24
7.6 Non-Compete Agreement. 24
ARTICLE 8.. COVENANTS OF THE PARTIES 24
8.1 Further Actions. 24
8.2 Press Releases 25
8.3 Injunctions 25
8.4 Exclusivity 25
8.5 Cash Out of Share Options 25
8.6 De-Registration of Certain Trade Names. 26
8.7 Transition of Assets in Vejen 26
ARTICLE 9.. COVENANTS OF THE SELLER 26
9.1 Information and Access 26
9.2 Notices and Consents. 26
9.4 Operation of Business. 27
9.4 Notice of Developments 27
9.5 Board Approval. 27
ARTICLE 10. COVENANTS OF THE BUYER 27
10.1 Notices and Consents 27
10.2 Notice of Developments 27
ARTICLE 11. CONDITIONS TO OBLIGATION TO COMPLETE 28
11.1 Conditions to Obligation of the Buyer 28
11.2 Conditions to Obligation of the Sellers 29
ARTICLE 12. COMPLETION AND POST-COMPLETION ESCROW 30
12.1 Completion 30
12.2 Extension of Completion Date 30
12.3 Deliveries at Completion 31
12.4 Post-Completion Escrow 31
ARTICLE 13. TERMINATION 31
13.1 Termination 31
13.2 Effect of Termination 32
ARTICLE 14. INDEMNIFICATION 33
14.3 Independent Application 33
TABLE OF CONTENTS PAGE 3
14.2 Indemnification for Benefit of the Seller Indemnitees. 33
14.3 Indemnification for Benefit of the Buyer Indemnitees. 33
14.4 Limitation on Indemnification For Certain Representation and Warranties 34
14.5 Claims. 36
14.6 Additional Limitations on Liability; Mitigation 37
ARTICLE 15. TAX 37
15.1 Liability for Certain Taxes 37
ARTICLE 16. MISCELLANEOUS PROVISIONS 37
16.1 Notices 37
16.2 Expenses 39
16.3 Assignment 39
16.4 Successors and Assigns 40
16.5 Entire Agreement 40
16.6 Amendments, Supplements, Etc 40
16.7 No Third-Party Beneficiaries Effect on L vens-Arovit Merger Agreement. 40
16.8 Further Assurances 40
16.9 Applicable Law 41
16.10 Execution in Counterparts 41
16.11 Severability 41
16.12 Arbitration. 41
16.13 Litigation in Certain Circumstances 42
LIST OF EXHIBITS AND SCHEDULES
SCHEDULES
Schedule 1 Non-Compete Agreement
Schedule 2 Escrow Agreement
Schedule 3 List of Shareholders and Sale Shares
Schedule 4.4 List of agreements affecting Sale Shares
Schedule 5.1a Transcript from the Danish Commerce and Companies Agency
of 14 January 2000
Schedule 5.1b List of rights, including pre-emption rights, options,
warrants and the like granted by the Company to
third parties
Schedule 5.3a Consents and approvals received from the Governmental
Authorities in relation to the Company and its
Subsidiaries
TABLE OF CONTENTS PAGE 4
Schedule 5.3b List of agreements which the execution and the delivery
of this Agreement, or the consummation of the
transactions will conflict with,result in a breach of,
constitute a default under, result in the acceleration
of, create in any party the right to accelerate,
terminate,modify or cancel, or require any notice under
such agreements
Schedule 5.5a List of the Company's Subsidiaries
Schedule 5.6a Budget of the Company
Schedule 5.6b Material deviations from the Budget
Schedule 5.7 Special tax exemptions, tax exceptions or tax preferences
that can be changed as a result of matters arising from
the Company's activities before or as a result of the
Agreement
Schedule 5.8a List of all Real Properties owned by the Company and its
Subsidiaries
Schedule 5.8b List of claims, liens and charges by third parties on the
Real Properties
Schedule 5.8c List of all leases of Real Properties under which the
Company or its Subsidiaries lease property to or
from third parties
Schedule 5.8d List of easements or possible unregistered rights which
rest upon the Real Properties which (i) prevent the free
disposal or use of the Real Properties for future
unchanged operation of the Company and its
Subsidiaries' business or (ii) are unusually
burdensome
Schedule 5.8e List of proposals, plans or the like by public
authorities which (i) prevent the free disposal or use
of the Real Properties for the future unchanged operation
of the Company's or Subsidiaries' business or(ii) are
unusually burdensome
Schedule 5.9a List of contaminated Real Properties
Schedule 5.9b List of pending or threatened actions by Governmental
Authorities under Environmental Law
Schedule 5.9c List of written requests for information, written
notices, demand letters, written administrative inquiries
or formal or written complaints or written claims or
suits from any Governmental Authority with respect to
any violation of Environmental Law received in the past
two years
Schedule 5.10 List of operating equipment covered by lease and/or lease
agreements
Schedule 5.12 List of customers or related groups of customers who
intend to discontinue their relationship with the
Company
Schedule 5.14a List of Intellectual Property of the Company and its
Subsidiaries
Schedule 5.14b Third party objections to the Company's and its
Subsidiaries'use of Intellectual Property
Schedule 5.14c List of the Intellectual Property rights belonging to
third parties
Schedule 5.15a List of agreements on employment terms which apply to the
Company's management and other executives
TABLE OF CONTENTS PAGE 5
Schedule 5.15b List of the Company's and the Subsidiaries' employees who
are not employed on usual terms
Schedule 5.15c List of pension and benefit plans of the Company and
its Subsidiaries
Schedule 5.15d List of key employees
Schedule 5.15e List of collective labor agreements and material
local agreements of a collective employment nature
(including those presently being negotiated)
Schedule 5.15f List of industrial disputes and lawful and unlawful
strikes since 1 January 1998
Schedule 5.16a List of the Company's and its Subsidiaries Material
Contracts and contracts with Affiliates
Schedule 5.16b List of contracts with suppliers according to which
the Company and its Subsidiaries are obliged to
purchase from such suppliers or preventing them from
purchasing similar or competing goods from other suppliers
Schedule 5.16c List of pending negotiations to acquire direct or
indirect interest in a company or other business
Schedule 5.16d List of contracts entered into by the Company with
its shareholders or its present or former employees,
directors or members of the Board of Directors granting
rights and advantages which are not on arms length
Schedule 5.17a List of the Company's and its Subsidiaries
insurances
Schedule 5.17b List of damage cases and related notifications to
insurance companies
Schedule 5.18 Competition law objections from third parties against
agreements to which the Company is a party
Schedule 5.19a List of litigation and arbitration proceedings to which
the Company and its Subsidiaries are a party
Schedule 5.19b List of work injury cases to which the Company and
its Subsidiaries are a party
Schedule 5.19c List of bankruptcy or dissolution proceedings filed
or threatened to be filed by a third party against the
Company and its Subsidiaries
Schedule 5.20 List of extraordinary transactions or transactions of
material importance to the future operations of the
Company and its Subsidiaries
Schedule 5.22 List of banks, savings and other financial institutions
with which the Company and its Subsidiaries have an
account or a safe deposit box
Schedule 5.24 List of information disclosed during the due diligence
investigation
Schedule 5.25 List of agreements between the Company and its
Subsidiaries and L vens kemiske Fabrik
Produktionsaktielselskab
TABLE OF CONTENTS PAGE 6
Schedule 5.26 List of outstanding obligations and liabilities arising
under the representations and warranties made by the
parties to the Merger Agreement dated 16 March 1999
relating to the merger of the Company and L ven
Petfood A/S
Schedule 6.3 Consents and approvals received from the Governmental
Authorities in relation to the Buyer
PAGE 1
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement (this "Agreement") is made and entered into
as of the 24 day of March, 2000, among the parties named on the signature page
hereof as Sellers (collectively "Sellers" and individually a "Seller") whose
address for purposes hereof are set out in Schedule 3 hereto, and Xxxxx Pet Care
Company, a company incorporated under the laws of the State of Delaware, U.S.A.,
whose principal office is at 000 Xxxxxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxxx 00000, U.S.A. ("Buyer") (the Buyer and the Sellers are sometimes
herein collectively referred to as the "Parties", and individually as a
"Party").
RECITALS:
A. A/S Arovit Petfood, a company incorporated in Denmark, whose
principal office is at Esjberg, Denmark (the "Company"), and the Company's
Subsidiaries as identified and defined below are engaged in the ownership and
operation of various properties and facilities in various countries in Europe
for the development, production, distribution, sales, resale and marketing of
pet products in various countries including those located in Europe, Asia and
North America (the "Business").
B. The Buyer desires to purchase from Sellers all of the issued and
outstanding shares of the Company owned by Sellers as described herein for the
considerations and on the terms and conditions of this Agreement.
Now, therefore, for and in consideration of the mutual benefits derived and
to be derived from this Agreement by each of the Parties, as well as other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
ARTICLE 1.
DEFINITIONS AND INTERPRETATION
1.1 Definitions. The following terms shall have the following meanings
when used in this Agreement:
"Affiliate" (whether capitalised or not) shall mean when used with respect
to a Person, any other Person:
(a) that directly or indirectly (through one or more intermediaries)
controls, or is controlled by, or is under common control with, such first
mentioned Person; or
(b) that beneficially owns, holds or controls fifty percent (50%) or
more of the equity interests or voting control of such first mentioned Person;
or
PAGE 2
(c) of which such first mentioned Person owns, holds or controls fifty
(50%) per cent or more of the equity interests or voting control;
"Agreement" shall have the meaning specified in the introduction to this
Agreement;
"Budget" means the existing budget for the Company and its Subsidiaries
for the fiscal year 1 July 1999 to and including 30 June 2000, which Budget has
been adopted by the Board of Directors of the Company as reflected by the
Minutes of the Meetings of the Board of Directors, a copy of which Budget is
attached hereto as Schedule 5.6a.
"Business" shall have the meaning specified in the Recitals;
"Business Day" shall mean a day (other than a Saturday or Sunday) on which
commercial banks are open for business in New York and Copenhagen;
"Buyer" shall have the meaning specified in the introduction to this
Agreement;
"Buyer Indemnitees" means the Buyer, its Representatives, and their
respective successors and permitted assigns;
"Claim" shall have the meaning specified in Clause 14.5(a);
"Completion" shall have the meaning specified in Clause 12.1;
"Completion Date" shall have the meaning specified in Clause 12.1;
"Confidential Information" shall have the meaning specified in Clause 7.3;
"Confidentiality Agreement" shall mean that certain agreement dated July
14, 1999 between the Company and Xxxxx Pet Care Company relating to the
confidentiality of information and other matters relating to the transaction
contemplated by this Agreement.
"Environmental Laws" means all laws, regulations, rules, directives,
decrees, or instructions, including any amendments thereto, of all Governmental
Authorities as in effect on the relevant date indicated, and as interpreted by
court decisions or administrative orders, relating to pollution or protection of
human health or the environment, including all laws and regulations relating to
releases or threatened releases of Hazardous Materials or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials and all laws and regulations with
respect to record keeping, notification, disclosure and reporting requirements
in respect of Hazardous Materials;
PAGE 3
"Escrow Agreement" shall have the meaning specified in Clause 12.4;
"Financial Statements" shall have the meaning specified in Clause 5.6;
"Financing Commitment" means a written undertaking from a third party bank,
financial institution, underwriter or other source of funds or funding
evidencing such institution's undertaking to loan, advance or procure funds
which, taken together with other sources of funds of Buyer, would enable Buyer
to complete the transaction contemplated by this Agreement, which undertaking
may be subject to conditions placed by the institution on its undertaking and
otherwise be in form and substance reasonably acceptable to Buyer and such
institution;
"GAAP" means Danish generally accepted accounting principles as in effect
from time to time;
"Governmental Authority" means any international, national, European Union,
federal, regional, state, local or other court, arbitral tribunal,
administrative agency or commission or other governmental, administrative or
regulatory body, authority, agency or instrumentality;
"Hazardous Materials" means all hazardous substances, pollutants, wastes or
toxic or carcinogenic substances, that are regulated as of the date hereof under
or pursuant to any applicable Environmental Laws;
"ICC Court" shall have the meaning specified in Clause 16.12;
"ICC Rules" shall have the meaning specified in Clause 16.12;
"Including" (whether capitalised or not) shall mean "including without
limitation";
"Indemnified Party" shall have the meaning specified in Clause 14.5(a);
"Indemnifying Party" shall have the meaning specified in Clause 14.5(a);
"Intellectual Property" shall mean: (a) all patents and patent applications
(including all extensions, revisions and reissuances thereof); (b) all
trademarks (registered and unregistered), service marks (registered and
unregistered), trade dress, logos, trade names (registered and unregistered) and
corporate names, together with the goodwill associated therewith; (c) all
copyrights (registered and unregistered), and all applications, registrations
and renewals in connection therewith; (d) all trade secrets and confidential
business information (including research and development, know-how, formulas,
manufacturing and production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, and business and
marketing plans); and (e) all other proprietary intellectual property rights;
PAGE 4
"Interim Statement" shall have the meaning specified in Clause 5.6;
"Knowledge" (whether capitalised or not) when used in reference to a Party
shall mean the actual or constructive knowledge of such Party.
"Licence Agreement" shall have the meaning specified in Clause 5.14;
"Losses" shall mean all demands, damages, penalties, fines, liabilities,
obligations, taxes, liens, losses, costs and expenses (including, without
limitation, court costs and reasonable attorneys' and other professional fees
and all other expenses related thereto), as such item(s) are valued or
determined in monetary amounts, including amounts that may be determined by
reference to the Purchase Price paid under this Agreement;
"Material Adverse Effect" means a material adverse effect on either: (a)
the business, operations, financial condition or prospects of a Person; or (b)
the ability of the Parties to consummate the transactions contemplated by this
Agreement;
"Material Agreements" shall have the meaning specified in Clause 5.16;
"Non-Compete Agreement" shall have the meaning specified in Clause 7.6;
"Party" and "Parties" shall have the meanings specified in the introduction
to this Agreement;
"Person" means any natural person, a partnership, a corporation, a limited
liability company or partnership, an association, a joint stock company, a
trust, a joint venture, an unincorporated organisation or a Governmental
Authority;
"Representatives" shall have the meaning specified in Clause 7.1;
"Sale Shares" means all of the shares of capital stock or other equity
interests in the Company owned directly or indirectly by the Sellers, as listed
on Schedule 3;
"Seller" and "Sellers" shall have the meaning specified in the introduction
to this Agreement;
"Seller Indemnitees" means the Sellers, their respective Representatives
and their successors and permitted assigns;
"Subsidiary" means any Person with respect to which another specified
Person (or a Subsidiary thereof) owns or controls, directly or indirectly, a
majority of the equity or other ownership interests therein;
PAGE 5
"Tax" or "Taxes" shall mean any and all international, national, European,
federal, regional, state, local or other taxes, assessments, fees, levies,
duties, penalties and other charges imposed by any Governmental Authority,
including income, gross receipts, net proceeds, alternative or minimum, ad
valorem, value added, turnover, sales, use, property, personal property, stamp,
leasing, lease, user, excise, duty, franchise, transfer, licence, withholding,
payroll, employment, unemployment, fuel, excess profits, occupational,
severance, estimated and other taxes, and shall include any interest, penalties
or additional amounts imposed by any Governmental Authority; and
"Termination Date" shall have the meaning specified in Clause 12.2.
1.2 Certain Interpretive Matters and Definitions.
(a) All references to Clauses, Articles or Schedules are to Clauses,
Articles or Schedules to this Agreement. The Schedules identified in this
Agreement are incorporated herein by reference and made a part hereof for all
purposes.
(b) The Parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favouring or
disfavouring any Party by virtue of the authorship of any of the provisions of
this Agreement.
(c) Titles and headings to Articles, Clauses and Schedules 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.
1.3 Governing Language. The governing language of this Agreement shall
be the English language. Except as otherwise required by applicable law, all
notices and correspondence required under this Agreement shall be in the English
language.
PAGE 6
ARTICLE 2.
THE PURCHASE PRICE
2.1 Purchase Price. Subject to the terms and conditions of this
Agreement, the total consideration to be paid by Buyer for the sale, transfer,
assignment, conveyance and delivery of the Sale Shares and the other agreements
contained herein shall be the amounts set forth opposite each Seller's name in
this Clause 2.1, adjusted as set forth in Clause 8.5, less those amounts to be
deposited by Buyer pursuant to the Escrow Agreement. The consideration to be
paid at Completion shall be paid by wire transfer into the respective bank
accounts of each Seller on the Completion Date in immediately available funds.
Subject to the foregoing, the purchase price to be paid to each of the Sellers
shall be as follows:
Johan Xxxxxx Xxxxxxxx DKK 106,969,604
Xxxxxxxx Esbjerg Holding A/S DKK 640,343,875
Xxxxxxx Uth DKK 26,773,105
Lovens kemiske Fabrik Produktionsaktieselskab
(herein sometimes referred to as "L ven") DKK 336,751,612
Kommunernes Pensionsforsikring A/S ("KP") DKK 44,580,902
Diverse pensionskasser under: PKA A/S
(on behalf of those parties shown on
Schedule 3 hereto(collectively "PKA") DKK 44,580,902
Each of the Sellers shall provide notice to Buyer at least 10 days prior to
Completion of the relevant details of the bank accounts to which each of them
wish to have their consideration paid upon Completion.
ARTICLE 3.
FINANCING
3.1 Financing. It is understood by all Parties that in order for
Buyer to achieve Completion of the transaction contemplated hereby, Buyer must
obtain financing from third party sources. Buyer believes that it can obtain
financing for such purpose and agrees to use its reasonable endeavours to secure
a Financing Commitment by 28 April 2000. Sellers agree to cooperate, and agree
to cause the Company, its Subsidiaries and their respective Representatives to
cooperate in all reasonable respects with Buyer's efforts to secure a Financing
Commitment by the date set forth above and the financing necessary for Buyer to
achieve Completion.
3.2 Break-up Fee. In the event Buyer is unable to secure a Financing
Commitment by 28 April 2000, and this Agreement has not been otherwise
terminated by any Party pursuant to any of the remaining provisions hereof,
then Buyer or Sellers shall have the option to terminate this Agreement by
delivering a notice in writing of such fact
PAGE 7
to the other Party(s), following which this Agreement shall terminate, and it
shall be deemed for all purposes that this Agreement shall have been terminated
in accordance with Article 13 hereof; provided that should either Party exercise
the option to terminate set out in this Clause 3.2, Buyer shall immediately pay
to a single account designated by Sellers an amount of DKK 10 million without
withholding or deduction as Buyer's full and final obligation to Sellers in
respect of this Agreement for its failure to satisfy the obligations of Clause
3.1.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers, severally and not jointly or collectively, with respect to the Sale
Shares owned by each of them, hereby represent and warrant to the Buyer that the
statements contained in this Article 4 are true and correct as of the date of
this Agreement and will be true and correct as of the Completion Date:
4.1 Authorisation of Transaction. The Sellers have full power and
authority (including full corporate power and authority for each Seller who is a
corporation or other entity, and including the power and authority of PKA to
execute this Agreement on behalf of the parties on whose behalf it is executing
this Agreement as indicated in Schedule 3 hereto) to execute and deliver this
Agreement and to perform their obligations hereunder. The execution, delivery
and performance by the Sellers of this Agreement and the consummation by them of
the transactions contemplated hereby have been duly and validly authorised by
all other necessary corporate or other necessary action, and all necessary
authority and approvals have been obtained by the Sellers for such
authorisation. This Agreement has been duly executed and delivered by the
Sellers and, assuming due execution and delivery by the Buyer, constitutes the
valid and legally binding obligation of the Sellers, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganisation,
moratorium and other similar laws affecting creditors' rights generally and to
principles of equity. The Sellers need not give any notice to, make any filing
with, or obtain any authorisation, consent or approval of any Governmental
Authority in order to consummate the transactions contemplated by this
Agreement.
4.2 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will:
(a) conflict with or result in any breach or violation of any provision of the
articles of association or any other governing document of any corporate Seller;
(b) violate any constitution, statute, regulation, rule, injunction, judgement,
order, decree, ruling, charge or other restriction of any Governmental Authority
to which the Sellers or the Company or its Subsidiaries are subject; or (c)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any agreement, contract, lease, licence,
instrument or other arrangement to which the Seller are parties or by which they
are bound
PAGE 8
or to which any of their assets are subject and which would prevent the
transactions contemplated by this Agreement or would result in a claim to
invalidate or set aside such transactions.
4.3 Brokers' Fees. None of the Sellers nor any of their Affiliates nor
any of their respective Representatives has employed or made any arrangement
with any broker or finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement for which the Buyer could become liable or obligated.
4.4 Title to Sale Shares. Except for the agreement set forth on
Schedule 4.4 (which agreement shall terminate at Completion), each Seller
directly or indirectly holds and owns beneficially the Sale Shares as set forth
on Schedule 3, free and clear of any restrictions on transfer (other than any
restrictions under applicable securities or other laws), encumbrances, liens,
pledges, charges, security interests, options, warrants, purchase rights, rights
of first refusal, contracts, commitments, claims and demands. Upon Completion,
Buyer will have acquired (either directly or indirectly) good and valid title
and ownership to such Sale Shares free and clear of all encumbrances, liens,
pledges, charges, security interests, adverse claims, restrictions and demands.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
(OTHER THAN KP AND PKA)
REGARDING THE COMPANY AND ITS SUBSIDIARIES
The Sellers (other than KP and PKA who make no representations and warranties
under this Article 5), severally and not jointly or collectively, represent and
warrant to the Buyer that the statements contained in this Article 5 are true
and correct as of the date of this Agreement and will be true and correct as of
the Completion Date.
5.1 Organisational Matters. The Company is duly incorporated, validly
existing and registered. The transcript from the Danish Commerce and Companies
Agency attached as Schedule 5.1a is accurate and complete, and all matters
regarding the Company required to be notified to the Danish Commerce and
Companies Agency according to applicable legislation have been notified timely
and correctly. There are no unregistered matters concerning the Company pending
with the Danish Commerce and Companies Agency.
The Company's minute books for general meetings and board meetings contain
minutes of all general meetings and board meetings, ordinary as well as
extraordinary, and the minutes reflect the decisions made at the meetings.
PAGE 9
All of the issued and outstanding shares of the Company and each of its
Subsidiaries have been duly authorised, are validly issued and fully paid, and
none of the Company or any of its Subsidiaries has any right to call for
additional capital contributions in respect of such shares. Except for the
options that are to be dealt with pursuant to Clause 8.5, there are no
outstanding or authorised options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other contracts or commitments
that could require the Company or any of its Subsidiaries to issue, sell or
otherwise cause to become outstanding any of its share capital.
Subject to the approval of the Company's Board of Directors (which approval
will be obtained by Sellers), the Company's shares are freely transferable, and
the Company's shares are free and clear of all liens, encumbrances, security
interests, claims and rights of others. No third party has been granted any
rights, including pre-emption rights, options, warrants or the like, except as
set forth in Schedule 5.1b.
5.2 Authorisation of Transaction None of the Company or any of its
Subsidiaries needs to give any notice to, make any filing with, or obtain any
authorisation, consent or approval of any Governmental Authority in order for
the Parties to consummate the transactions contemplated by this Agreement.
5.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will:
(a) conflict with or result in any breach or violation of any provision of the
articles of association or any other governing document of the Company or any of
its Subsidiaries; (b) assuming receipt of the consents and approvals of
Governmental Authorities set forth on Schedule 5.3a, violate any constitution,
statute, regulation, rule, injunction, judgement, order, decree, ruling, charge
or other restriction of any Governmental Authority to which the Company or any
of its Subsidiaries are subject; or (c) except as set forth in Schedule 5.3b,
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice under any agreement, contract, lease, licence,
instrument or other arrangement to which the Company or any of its Subsidiaries
is a party or by which any of them are bound or to which any of their assets are
subject.
5.4 Brokers' Fees. None of the Company or any of its Subsidiaries nor
any of their respective Representatives has employed or made any arrangement
with any broker or finder or incurred any liability for any brokerage fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement for which the Buyer, the Company or any of its Subsidiaries could
become liable or obligated.
PAGE 10
5.5 Subsidiaries. Schedule 5.5a contains a complete list of the
Company's subsidiaries and/or affiliated companies (the "Subsidiaries"),
including (i) name; (ii) jurisdiction of organisation; (iii) the number of
issued and outstanding shares; and (iv) the number of issued and outstanding
shares owned as of the date of this Agreement by the Company; and, to the extent
less than 100% of the shares of any of the Subsidiaries are owned by the
Company, the names and shares in such Subsidiaries owned by third parties.
The Subsidiaries are all duly incorporated, validly existing and duly
registered with the registration or corporate authorities in the countries where
such Subsidiaries are organised and domiciled.
All of the issued and outstanding shares of the Subsidiaries have been duly
authorised, are validly issued and fully paid, and none of the Subsidiaries has
any right to call for additional capital contributions in respect of such
shares. There are no outstanding or authorised options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights or other
contracts or commitments that could require the Subsidiaries to issue, sell or
otherwise cause to become outstanding any of its share capital.
The Subsidiaries' shares are freely transferable and the Subsidiaries'
shares are free and clear of all liens, encumbrances, security interests, claims
and rights of others. No third party has been granted any rights, including
pre-emption rights, options, warrants or the like.
5.6 Financial Statements. The Sellers have provided the Buyer copies of
the audited income statements and balance sheets for the Company for the
financial years ending on 30 June 1997, 1998 and 1999 (the "Financial
Statements") and a copy of the unaudited income statement and balance sheet for
the interim period ended 31 December 1999 (the "Interim Statement"). The
Financial Statements and the Interim Statement give a true and fair view of the
financial position and the results of operations of the Company for the periods
covered. The Financial Statements are prepared in accordance with GAAP,
consistently applied, and accounting manuals of Foreningen af Statsautoriserede
Revisorer (the Association of State Authorised Accountants) and are correctly
accrued. The Company's audit reports for the financial years ending 30 June
1997, 1998 and 1999 do not contain material remarks from the Company's auditor.
The Company's books are kept in a proper and diligent manner in accordance
with the Danish book-keeping legislation as in effect from time to time and
contain complete information about the Company's business and assets.
Since 31 December 1999 there has not been any event having or likely to
have a Material Adverse Effect on the Company's position. There have been no
material deviations from the Budget, except as set forth in Schedule 5.6b.
PAGE 11
Except for the aggregate dividend of DKK 15 million as shown on the
Financial Statements which was paid during calendar year 1999, there has been no
declaration or payment of any dividend on, or any other distribution with
respect to, the shares or any other capital stock of the Company and its
Subsidiaries;
Except for such assets as may have been disposed of in accordance with
Clause 9.3, the Company has good title to the assets included in the Interim
Statement.
None of the Company's and its Subsidiaries' assets are acquired or leased
on terms that materially diverges from market terms at the time of the
acquisition or lease, respectively.
The Company and its Subsidiaries have no debt, surety, guarantee, service
or other contingent liabilities, except as set forth in the Financial Statements
or as explicitly mentioned in this Agreement. It is understood that Den Danske
Bank has issued a guaranty on behalf of the Company dated 5 August 1999 in
favour of the European Union Directorate.
The Company's and its Subsidiaries' liabilities can be paid before maturity
without incurring costs, penal interest or similar costs as a result hereof.
The risks that formed the basis for the provisions for liabilities in the
Interim Statement have not increased. The Company's operations since 31 December
1999 do not give reason for further provisions for liabilities beyond what
follows from the Company's ordinary business.
Neither the Sellers nor any third party are liable for the obligations of
the Company or have pledged any security for the Company or hold rights or
assets that have been used or shall be used by the Company.
5.7 Taxes. Taxes for all prior periods that were or should have been
due and payable by the Company or any of its Subsidiaries have been paid or
provided for in the Financial Statements or the Interim Statement. All tax
returns, filings, assessments or other documents relating thereto have been
filed by the Company and its Subsidiaries for all tax periods ending prior to
the Completion Date for which such filings are due. There are no pending tax
disputes against the Company and its Subsidiaries and there is no basis for tax
claims against the Company and its Subsidiaries for previous financial years,
except as set forth in the Financial Statements and the Interim Statement and
with respect to the current financial year.
No special tax exemptions, tax exceptions or tax preferences that the
Company enjoys can be changed as a result of matters arising from the Company's
activities before or as a result of this Agreement, except as set forth in
Schedule 5.7.
PAGE 12
5.8 Real Property. Schedule 5.8a contains a list of all real property
owned by the Company and its Subsidiaries (the "Real Properties"), and except as
set forth in Schedule 5.8b, the Company and its Subsidiaries have good and valid
title to the Real Properties free of all claims, liens and charges by third
parties.
Schedule 5.8c contains a list of all leases on the Real Properties under
which the Company or its Subsidiaries leases property to third parties, all such
leases being valid, binding, enforceable and in full force and effect. Schedule
5.8c further contains a list of all leases under which the Company or its
Subsidiaries leases property from third parties, all such leases being valid,
binding, enforceable and in full force and effect.
The buildings and other structures or improvements, including the
installations therein, are lawfully constructed and in all material respects
lawfully fitted and used and in compliance with the requirements in the
legislation for future use. Such buildings, structures and improvements have
been maintained in accordance with normal industry standards and practices
customary in the country in which the same buildings are located and are in
reasonable operating condition and repair (subject to normal wear and tear and
taking into consideration the age of such buildings). Subject only to the
foregoing, the Real Properties, the buildings, structures and improvements
thereon and the installations therein, are taken over "as is".
Except as set forth on Schedule 5.8d, no easements or possible unregistered
rights rest upon the Real Properties preventing the free disposal or use of the
Real Properties for future unchanged operation of the Company's and its
Subsidiaries' Business or which are unusually burdensome.
To the best knowledge of the Sellers and the Company, there are no
proposals, plans or the like from public authorities preventing the free
disposal or use of the Real Properties for future unchanged operation of the
Company's and its Subsidiaries' Business or which are unusually burdensome,
except as set forth in Schedule 5.8e.
5.9 Environmental. Except as set forth on Schedule 5.9a, to the best
knowledge of the Sellers and the Company, none of the Real Properties are
contaminated. To the best knowledge of the Sellers and the Company, no condition
has at any time existed or exists at the Real Properties with respect to
storage, use, handling or discharge of any liquid, solid or gaseous substances
on the Real Properties which would cause any owner or operator of the Real
Properties to be liable for damages, fines and penalties under any applicable
Environmental Law. To the best knowledge of the Sellers and the Company, the
Company and its Subsidiaries are not subject to any obligations to dispose,
clean or carry out other actions with respect to contamination and to the best
knowledge of the Sellers and the Company no conditions exist affecting the Real
Properties which would restrict, interrupt or terminate the continued possession
or occupation of any of the Real Properties or their continued unchanged use.
PAGE 13
The Company and its Subsidiaries are in all material respects in compliance
with applicable Environmental Laws and any permits, licenses, authorisations and
permissions issued thereunder, including laws, regulations and permissions
concerning noise and odour relating to the Company's and its Subsidiaries'
Business. The Company and its Subsidiaries have all necessary permits,
licences, authorisations and permissions under all Environmental Laws to
continue to carry out the activities related to the Business as presently
conducted and to undertake and complete any changes to the Business now being
implemented as contemplated by the Budget.
None of the Company nor any of its Subsidiaries is to the best knowledge of
the Sellers and the Company subject to any pending or threatened action or order
of any Governmental Authority under any Environmental Law, except as set forth
in Schedule 5.9b.
None of the Company or any of its Subsidiaries has: (i) entered into or
been subject to any consent decree, compliance order or administrative order
under any Environmental Laws; or (ii) within the past two years received any
written request for information, written notice, demand letter, written
administrative inquiry, or formal or informal written complaint or written claim
or suit from any Governmental Authority with respect to any violation of
Environmental Laws, except as set forth in Schedule 5.9c.
5.10 Operating Equipment. The Company and its Subsidiaries own all
operating equipment used in connection with the business of the Company and its
Subsidiaries or which is necessary to carry out the business in accordance with
past practice, except for operating equipment covered by the lease and/or
leasing agreements mentioned in Schedule 5.10.
The operating equipment of the Company and its Subsidiaries is in all
material respects in compliance with the requirements of the legislation for
future unchanged use. The operating equipment regularly used and necessary for
the business of the Company and its Subsidiaries has been maintained in
accordance with normal industry standards and practices customary in the country
in which such equipment is located and is in reasonable operating condition and
repair (subject to normal wear and tear and taken into consideration the age of
such equipment). Subject only to the forgoing, such operating equipment, owned
as well as leased, is taken over "as is".
5.11 Stock. The Company's stock and inventory in the Interim Statement
is valued in accordance with GAAP. The stock has an ordinary rate of turnover
and size and all goods in the stock can as a minimum be traded at the value at
which they have been booked in the Company's Internal Accounts for the period 1
July 1999 through 31 January 2000 which have been furnished to Buyer.
PAGE 14
5.12 Volume of Orders. The Company's and Subsidiaries' orders are
entered into on usual terms in accordance with current agreements with their
respective customers.
The Company has not within the previous 12 months lost single customers or
co-operative groups of customers, which in the latest financial year represented
more than 5% of the turnover, nor is there to the best knowledge of the Sellers
and the Company any present intent of such significant customer or co-operative
group of customers to discontinue their relationship with the Company, except as
set forth in Schedule 5.12.
5.13 Receivables. The Company and its Subsidiaries has a valid claim on
the booked receivables in the Interim Statement. None of the Company's and its
Subsidiaries' receivables has the nature of subordinated loans or the like nor
are they covered by letters of subordination. The Company's and its
Subsidiaries' booked receivables in the Interim Statement will be paid at the
latest 6 months after due time, except if a provision has been made in the
Interim Statement.
5.14 Intellectual Property. Schedule 5.14a contains a list of the
Company's and its Subsidiaries' Intellectual Property. The Company and its
Subsidiaries have valid title to the Intellectual Property used by the Company
and its Subsidiaries and necessary for the Company's and its Subsidiaries'
operations.
To the best knowledge of the Sellers and the Company, the Company holds
such Intellectual Property rights as are necessary for the future operations of
the Company in accordance with past practice or as may be anticipated.
Except as set forth on Schedule 5.14b, to the best knowledge of the Sellers
and the Company, none of the Intellectual Property infringe the rights of any
third party; and to the best knowledge of the Sellers, no third party has made
objections to the Company's and its Subsidiaries' use of the Intellectual
Property; and, to the best knowledge of the Sellers and the Company, no third
party has infringed the rights of the Company, and the Company has not infringed
on the intellectual property rights of others.
The Company and its Subsidiaries have paid necessary fees and yearly duties
to maintain the registration of the Intellectual Property.
Except for usual licenses and copyrights in connection with IT software and
other than the current arrangements pursuant to which L ven is making certain IT
assets available for the Company's operations at Vejen, Denmark, the Company's
operations are not depending on permits from a third party for the use of any IT
software.
The Company and its Subsidiaries are not depending on Intellectual Property
rights belonging to a third party, except as set forth in Schedule 5.14c. With
respect to each written licence agreement (including all amendments thereto)
between the Company or any of its Subsidiaries, as the licencee, and any other
Person, as the licensor, regarding the
PAGE 15
licence to the Company or any of its Subsidiaries of any Intellectual Property
that is necessary for the conduct of the Business as presently conducted (each,
a "Licence Agreement") (i) such Licence Agreement is legal, valid, binding,
enforceable and in full force and effect in all material respects; (ii) none of
the Company or any of its Subsidiaries is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach default by
any of the Company or any of its Subsidiaries, of such Licence Agreement; (iii)
to the best knowledge of the Sellers and the Company, no Person other than the
Company or any of its Subsidiaries is in breach or default, and to the best
knowledge of the Sellers and the Company no event has occurred which with notice
or lapse of time would constitute a breach or default by such Person, of such
Licence Agreement; and (iv) none of the Company or any of its Subsidiaries has
repudiated such Licence Agreement and, to the best knowledge of the Sellers and
the Company, no Person other than the Company or any of its Subsidiaries has
repudiated such Licence Agreement.
The Company and its Subsidiaries have not granted licenses or otherwise
given third party permission to use its Intellectual Property. Further, the
Company and its Subsidiaries have made reasonable efforts to secure itself
against unauthorised persons obtaining knowledge of the Company's business
secrets and know-how and to the best knowledge of the Sellers and the Company no
unauthorised third party has such knowledge.
5.15 Employee Matters. The employment terms, except actual salary,
applying to the Company's management and other executives are correctly stated
in the agreements set out in Schedule 5.15a. The Company's other employees are
employed on usual terms, except as set forth in Schedule 5.15b. The
Subsidiaries' employees are employed in accordance with applicable labour laws
and regulations in their respective jurisdiction.
The total compensation packages for the employees of the Company and its
Subsidiaries is in accordance with the Budget. None of the Company's or its
Subsidiaries' employees has special rights to the Company's developing results,
including production methods and designs or has a right to special remuneration
therefor.
No former nor present employee has rights or other economical claims
against the Company or any of its Subsidiaries, except as follows from the
Danish Salaried Employees Act and the Danish Holiday Act, or similar labour laws
and regulations applicable to the Subsidiaries, and collective labour agreements
and local agreements entered into by the Company or any of its Subsidiaries.
Schedule 5.15c contains a complete list of the pension and benefit plans of
the Company and its Subsidiaries. Neither the Company nor any of its
Subsidiaries is in default under any of these plans.
PAGE 16
None of the employees in the Company or any of its Subsidiaries mentioned
as key employees in Schedule 5.15d has been discharged as of the date of this
Agreement or has terminated their position or expressed that such termination is
expected.
No discharged employee has made claims of compensation or damages in
connection with or arising from the termination of his employment.
The Company and its Subsidiaries have not entered into collective labour
agreements with employee organisations and material local agreements of a
collective employment law nature regarding employees, except for those set forth
in Schedule 5.15e.
Since 1 January 1998 the Company and its Subsidiaries have not been party
to any industrial dispute and since 1 January 1998 the Company and its
Subsidiaries have not been affected by lawful or unlawful strikes, except as set
forth in Schedule 5.15f.
The Company and its Subsidiaries are in all material respects in compliance
with applicable law and regulations regarding labour and employment practices.
5.16 Contractual Matters . Schedule 5.16a contains a list of the
Company's contracts with Affiliates and its contracts and agreements that are
material to its current and ongoing operations ("Material Agreements"). There
are no oral agreements or understandings that would modify or amend any of such
relationships in any material respect.
The contractual obligations of the Company and its Subsidiaries have been
undertaken as a part of the Company's and its Subsidiaries' ordinary operations
and are on an arm's-length terms.
The Company and its Subsidiaries are not in breach of their contractual
obligations, and the Sellers and the Company have no knowledge of any threatened
breach of contract, including liability of defects, claims following delay or
product liability.
The trade of the Company and its Subsidiaries has not resulted in material
payments of damages for operating loss, consequential damages or product
liability or material claims for damages for a further guarantee liability than
normal liability according to the relevant legislation and case law.
The Company and its Subsidiaries have not entered into contracts with
suppliers according to which the Company and its Subsidiaries are obliged to
purchase with them or is prevented from purchasing similar or competing goods or
services from other suppliers, except for as set forth in Schedule 5.16b.
PAGE 17
The Company has not issued guarantees in connection with sale of the
Company's products that are more burdensome than what follows from the Danish
Sale of Goods Act, except as follows from the Company's standard sale and
delivery conditions.
This Agreement can not be used by any third party to terminate, terminate
without notice, dissolve or modify any of the contractual relationships
evidenced by the Material Agreements.
Except as stated in Clause 5.5 above, neither the Company nor its
Subsidiaries has directly or indirectly any interests in companies or other
business, including partnerships or joint ventures. Except as set forth in
Schedule 5.16c, the Company and its Subsidiaries are not under negotiations
regarding such nor have they obliged themselves to obtain such interests.
The Company and its Subsidiaries have not entered into any agreements nor
is the Company and its Subsidiaries party to arrangements where the Company's
shareholders or any of the Company's or the Subsidiaries' present or former
employees, directors or members of the Board of Directors is granted rights or
advantages not being on arm's-length terms. All contracts with such persons are
listed in Schedule 5.16d.
5.17 Insurances. Schedule 5.17a contains a list of the Company's and
its Subsidiaries insurances. The Company is adequately insured including
against fire, theft, vandalism, operating loss, liability, product liability and
other normal business risks for the type of business and the locations where
such businesses are carried out. The Company's coverage is adequate and the
insurances are in full force and there are no notices of cancellation nor to the
best knowledge of the Sellers and the Company is there any threat or intention
by any insurance carriers to cancel any such insurances. Within the last 3
financial years, the Company has not had any damage cases or related
notifications to insurance companies, except as set forth in Schedule 5.17b.
5.18 Compliance With Laws. The Company and its Subsidiaries are in all
material respects in compliance with applicable laws.
Public law has not been preventing the Company's and its Subsidiaries'
operations and the Company and its Subsidiaries have complied with prohibitions
and orders issued against the Company and its Subsidiaries, unless an exemption
was granted or the order in question did not have a Material Adverse Effect.
The Company and its Subsidiaries have all permits, licenses or similar
authorisations (other than environmental permits, licenses and similar
authorisations which are covered by Clause 5.9 above) necessary for the
operation of the Company's and its Subsidiaries' business in accordance with
past and existing practice.
PAGE 18
The Company's and its Subsidiaries' assets and activities are in all
material respects approved by the relevant authorities to the extent approval is
necessary for the operations of the Company and its Subsidiaries. The Company
and its Subsidiaries have in all material respect reported to authorities to the
extent required.
There are no pending matters under which public authorities have raised
questions as to whether the Company's and its Subsidiaries' operations comply
with legislation, regulations/executive orders or other legal orders, including
EU regulations. Except as set forth in Clause 5.9, there are no outstanding
unfulfilled claims from public authorities according to such legislation
regulations or orders.
To the best knowledge of the Sellers and the Company, the Company and its
Subsidiaries are not subject to investigations, claims or demands by public
authorities, including EU authorities (other than with respect to matters
arising under applicable Environmental Laws, which matters are covered by Clause
5.9 above).
The Company and its Subsidiaries are not party to any agreement or
understanding, whether written or oral, which restrains trade in violation of
any applicable law, rule, regulation or order. Except as set forth on Schedule
5.18, competition law objections from third parties against activities of the
Company have not been raised.
The working condition and the working places are in all material respect
lawfully fitted in relation to security and health.
5.19 Litigation. The Company and its Subsidiaries are not party to
litigation or arbitration proceedings, except as set forth in Schedule 5.19a. To
the best knowledge of the Sellers and the Company no such litigations,
arbitration proceedings, damage cases, cases involving complains or public
investigations concerning the Company's and its Subsidiaries' business are
threatened. To the best knowledge of the Sellers and the Company, the Company
and its Subsidiaries are not in actual or anticipated breach of any contractual
relationship of material importance.
The Company and its Subsidiaries are not party to work injury cases, except
as set forth in Schedule 5.19b.
Except as set forth in Schedule 5.19c, no filing for bankruptcy or filing
for dissolution or the like of the Company and its Subsidiaries have been made
nor has any third party threatened to do so. The Company and its Subsidiaries
have not entered into negotiations with its creditors involving composition,
moratorium, arrangement of respite or the like.
5.20 Operations. Since 31 December 1999, the Company and its
Subsidiaries have been operated in accordance with sound business practices.
Except for as set forth in Schedule 5.20, no extraordinary transactions or
transactions of material importance to
PAGE 19
the Company's and its Subsidiaries' future operations have taken place.
5.21 Certain Payments. None of the Company and its Subsidiaries nor
any director, officer, agent, employee or other person associated with or acting
on behalf of the Company and its Subsidiaries has used any corporate funds for
any unlawful contribution or other unlawful payment relating to political
activity or the activities of the Company and its Subsidiaries.
5.22 Bank Accounts. Schedule 5.22 sets forth each bank, savings
institution and other financial institution with which the Company and its
Subsidiaries has an account or safe deposit box, the names of all persons
authorized to draw thereon or have access thereto and the balances as of the
close of business on 31 December 1999.
5.23 Information. Neither this Agreement, nor any of the information
or data furnished by Sellers to Buyer in connection with this Agreement,
contains any statement of material fact that is or was untrue when made or omits
to state a material fact necessary in order to make the statements herein and
therein not misleading.
5.24 Full Disclosure. The Sellers have disclosed to the Buyer in
writing all facts known to it which might reasonably be expected to have a
Material Adverse Effect after the Completion. Schedule 5.24 contains a list of
the information disclosed in writing to the Buyer and its Representatives prior
to this Agreement.
5.25 L ven Agreements. The only agreements, written or oral, with or
between the Company and its Subsidiaries, on the one hand, and L ven or it
affiliates, on the other hand, are set forth on Schedule 5.25, and there are no
other understandings or arrangements that would modify, amend or qualify such
agreements.
5.26 Liability To the Company Under the Merger Agreement. Other than
the obligations arising under the agreements mentioned in Clause 5.25 and except
for those matters set forth on Schedule 5.26, there are no outstanding
unfulfilled obligations or liabilities known to the Sellers arising under any of
the representations and warranties made by the parties to the Merger Agreement
dated March 16, 1999 relating to the merger of the Company and L ven Petfood;
and any liabilities that have arisen thereunder that would adversely affect the
Company or its Subsidiaries have been fully satisfied and discharged.
PAGE 20
ARTICLE 6.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Sellers that the statements
contained in this Article 6 are true and correct as of the date of this
Agreement and will be true and correct as of the Completion Date.
6.1 Organisation of the Buyer. The Buyer is a corporation duly
organised under the laws of the State of Delaware, U.S.A.
6.2 Authorisation of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. The execution,
delivery and performance by the Buyer of this Agreement and the consummation by
it of the transactions contemplated hereby have been duly and validly authorised
by all necessary corporate action, and all necessary corporate authority and
approvals have been obtained by the Buyer for such authorisation. This
Agreement has been duly executed and delivered by the Buyer and, assuming due
execution and delivery by the Sellers, constitutes the valid and legally binding
obligation of the Buyer, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganisation, moratorium and other similar
laws affecting creditors' rights generally and to principles of equity. Buyer
need not give any notice to, make any filing with, or obtain any authorisation,
consent or approval of any Governmental Authority in order to consummate the
transactions contemplated by this Agreement.
6.3 Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will:
(a) conflict with or result in any breach or violation of any provision of the
articles of association or any other governing document of the Buyer; (b)
assuming the receipt of the consents and approvals of Governmental Authorities
set forth on the Schedule 6.3, violate any constitution, statute, regulation,
rule, injunction, judgement, order, decree, ruling, charge or other restriction
of any Governmental Authority to which the Buyer is subject, or (c) subject to
the financing arrangements described in Article 3, conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify or cancel, or require any
notice under any agreement, contract, lease, licence, instrument or other
arrangement to which the Buyer is a party or by which it is bound or to which
any of its assets is subject.
6.4 Brokers' Fees. None of the Buyer nor any of its Affiliates nor any
of their respective Representatives has employed or entered into any arrangement
or understanding with any broker or finder or incurred any liability for any
brokerage fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement for which the Sellers or any of their Affiliates
could become liable or obligated.
PAGE 21
ARTICLE 7.
CONFIDENTIALITY PROVISIONS AND NON-COMPETITION
7.1 Nondisclosure of Confidential Information. Until the earlier of
Completion or two (2) years from the date of this Agreement, Confidential
Information will not be used by Buyer or Sellers, or their Affiliates or any of
their respective Representatives other than in connection with the transaction
contemplated hereby, and will be kept confidential by them. The Confidential
Information may be disclosed to each Party's Representatives, but only if and to
the extent that such Representatives need to know the Confidential Information
for the purpose described above. It is understood (a) that Buyer and Sellers
shall inform their respective Representatives of the confidential nature of the
Confidential Information and the requirement that it not be used other than for
the purpose described above, (b) that each of Buyer and Sellers shall cause
their respective Representatives not to disclose the other party's Confidential
Information on the same basis as if such Representatives were a party hereto as
a condition of receiving the Confidential Information; and (c) that, in any
event, Buyer and Sellers shall each be responsible for any breach of this
Agreement by any of their respective Representatives. Neither Buyer nor Sellers
will disclose the Confidential Information to any Person other than as permitted
hereby, and Buyer and Sellers will safeguard the Confidential Information from
unauthorized disclosure. For purposes of this Agreement, a person's
"Representatives" shall include its Affiliates, Subsidiaries, and its and their
respective directors, officers, employees, agents, attorneys, accountants,
financial advisors, potential financing sources, as well as any employees,
agents and attorneys of any of the foregoing. Without limiting the generality of
the foregoing, in no event shall the Confidential Information be utilized in any
legal, administrative, governmental or other proceedings between Buyer and
Sellers.
7.2 Notice Preceding Compelled Disclosure. During the period described
in Clause 7.1, if either Buyer or Sellers or their respective Representatives
become compelled by applicable law to disclose any Confidential Information, the
Party so compelled will (a) promptly notify the owner of such Confidential
Information (i.e. Buyer in the case of Confidential Information of Buyer, and
Seller in the case of Confidential Information of Seller) and (b) exercise all
reasonable efforts to obtain a protective order or other reliable assurance that
confidential treatment will be accorded to the Confidential Information. In the
absence of a protective order or the receipt of the other Party's waiver of the
obligations hereunder, the Party so compelled to disclose the Confidential
Information, or else stand liable for contempt or suffer other censure or
penalty, may disclose only such of the Confidential Information to the Person
compelling disclosure as is required by law. Nothing herein contained shall
prevent either Party from disclosing the fact of these discussions or any of the
Confidential Information in connection with any legal process to protect its
rights hereunder.
PAGE 22
7.3 Definition of "Confidential Information". As used herein,
"Confidential Information" means:
(a) with respect to Sellers' obligations under this Agreement, all
information which concerns the transactions contemplated by this Agreement,
either oral or written, that is furnished to the Company, the Sellers or their
Representatives by Buyer or any of its Representatives, and which is either
confidential, proprietary, or otherwise not generally available to the public,
as well as any reports, analyses, compilations, data, studies, or other
documents developed or prepared by the Company, or by Sellers or their
Representatives that include, incorporate, refer to, reflect or are based in
whole or in part on any such information. Any information furnished to the
Company or Sellers or their Representatives by a Representative of Buyer shall
be deemed for the purpose of this Agreement furnished by Buyer; provided,
notwithstanding the foregoing, the following will not constitute Confidential
Information for purposes of this Agreement: (i) information which is or becomes
generally available to the public other than as a result of a disclosure by the
Company, or by Sellers or their Representatives, (ii) information which was
already known to Sellers on a nonconfidential basis prior to being furnished to
Sellers or the Company by Buyer or its Representatives; and (iii) information
which becomes available to Sellers on a nonconfidential basis from a source
other than Buyer or a Representative of Buyer if such source was not subject to
any confidentiality obligation or other prohibition against transmitting the
information; and
(b) with respect to Buyer's obligations under this Agreement, all
information which concerns the transactions contemplated by this Agreement,
either oral or written, that is furnished to Buyer or its Representatives by
Sellers or the Company, or any of their Representatives, and which is either
confidential, proprietary, or otherwise not generally available to the public,
as well as any reports, analyses, compilations, data, studies, or other
documents developed or prepared by Buyer or its Representatives that include,
incorporate, refer to, reflect or are based in whole or in part on any such
information. Any information furnished to Buyer or its Representatives by a
Representative of the Company or Sellers shall be deemed for the purpose of this
Agreement furnished by Sellers; provided, notwithstanding the foregoing, the
following will not constitute Confidential Information for purposes of this
Agreement: (i) information which is or becomes generally available to the public
other than as a result of a disclosure by Buyer or its Representatives, (ii)
information which was already known to Buyer on a nonconfidential basis prior to
being furnished to Buyer by the Company or Sellers or their Representatives; and
(iii) information which becomes available to Buyer on a nonconfidential basis
from a source other than the Company or Sellers or a Representative of the
Company or Sellers if such source was not subject to any confidentiality
obligation or other prohibition against transmitting the information.
7.4 Return of Information. In the event this Agreement is terminated
pursuant to the provisions hereof, except upon advice of counsel, to the extent
required by law or to evidence a party's Board of Directors' discharge of its
fiduciary duties, the Confidential
PAGE 23
Information will be returned to the owner thereof (Buyer, Sellers or the
Company, as applicable) within 10 days of the owner's request, and no copies
shall be retained by the recipient or its Representatives; provided, however,
that, notwithstanding the foregoing, any portion of the Confidential Information
that consists of reports, analyses, compilations, data, studies or other
documents developed or prepared by or for the recipient of such information or
its Representatives that include, incorporate, refer to, reflect or are based in
whole or in part on any Confidential Information will be destroyed immediately
upon request from the owner of such information.
7.5 Existing Confidentiality Agreement. Nothing in this Agreement
shall affect, impair or terminate the obligations of the Company and Xxxxx Pet
Care Company under the Confidentiality Agreement.
7.6 Non-Compete Agreement. Except for any liability that has accrued
hereunder, at Completion, the provisions of this Article 7 shall terminate and
be of no further force and effect as to all Parties other than KP and PKA as to
whom this Article 7 shall continue in effect for all purposes. At Completion, as
to the Sellers other than KP and PKA, the provisions of this Article 7 shall be
superseded and replaced by the execution by certain Sellers (as named therein)
of an agreement substantially in the form attached hereto as Schedule 1 (the
"Non-Compete Agreement") evidencing the obligations of such Sellers and its
respective Affiliates to refrain from engaging in any business similar to the
Business and to keep information relating to the Buyer, the Business or the
Company confidential in accordance with the terms thereof, all as more
specifically described in the Non-Compete Agreement.
ARTICLE 8.
COVENANTS OF THE PARTIES
8.1 Further Actions. Each Party will use its reasonable endeavours to
take, or cause to be taken, all such actions and do, or cause to be done, all
things necessary, proper or advisable (including action to cause the
satisfaction of the conditions to Completion) as may be necessary or appropriate
in order to effectuate the transactions contemplated by this Agreement.
Specifically, Buyer shall use its reasonable endeavours to obtain a Financing
Commitment by 28 April 2000.
8.2 Press Releases. Neither Party will issue or cause the publication
of any press release or other public announcement with respect to this Agreement
or the transactions contemplated hereby without the prior notification to the
other Party(s); provided, however, that nothing herein will prohibit any Party
from issuing or causing publication of any such press release or public
announcement to the extent such Party determines such action to be required by
law or the rules of any national stock exchange applicable to it or its
Affiliates, in which event the Party making such determination will, if
practicable in the circumstances, use reasonable efforts to allow the other
Party
PAGE 24
reasonable time to comment on such press release or public announcement in
advance of its issuance. The Buyer and the Sellers shall cooperate to prepare
mutually acceptable press releases to be issued upon the execution of this
Agreement and upon Completion.
8.3 Injunctions. If any court or authority having jurisdiction over
any Party issues or otherwise promulgates any injunction, decree or similar
order prior to Completion which prohibits or materially hinders or impairs the
consummation of the transactions contemplated hereby, the Parties will use their
respective reasonable endeavours to have such injunction dissolved or otherwise
eliminated as promptly as possible and, prior to (and to the extent necessary,
after) Completion, to pursue the underlying litigation diligently and in good
faith.
8.4 Exclusivity. From the date of this Agreement until termination
pursuant to Article 13, the Sellers shall not, and Sellers shall cause the
Company and its Subsidiaries and their respective Representatives not to,
directly or indirectly solicit in any manner, encourage the submission of,
respond to or discuss inquiries, proposals or offers, whether solicited or
unsolicited, with respect to the sale or transfer of all or any portion of the
Business, whether as a stock transaction, asset transaction, merger or
otherwise. Subject to any restrictions imposed upon Sellers by third parties
(which through the exercise of reasonable diligence Sellers are unable to avoid
or eliminate), Sellers shall promptly inform Buyer of any such inquiries,
proposals or offers, including the material terms thereof and the identity of
the inquirer or offeror. Any breach of this Clause 8.4 shall be subject to the
provisions of Clause 16.13.
8.5 Cash Out of Share Options. It is understood that certain
executive officers of the Company have the benefit of options to subscribe for
shares of the Company. Prior to Completion, Sellers shall cause the Company to
repurchase all of such outstanding options or similar rights to purchase shares
of the Company, and to terminate any share option plan or scheme in its
entirety. The repurchase by the Company shall be for no greater amount than as
currently allowed by the written share option plan or agreement in effect. The
actual cash purchase price paid by Buyer for the Sale Shares shall be reduced by
the amount of cash utilised by the Company to repurchase or cash out such option
plan and to eliminate the share option rights pursuant to this Clause 8.5.
8.6 De-Registration of Certain Trade Names. Each Party shall take, and
shall cause the Company to take, such steps as may be reasonably necessary to
withdraw and/or de-register any product names that are owned or used by the
Company containing the word "L ven", including L ven Petfood A/S and L ven Foods
A/S; and to ensure that following Completion the Company shall not use any such
names or any deceptively similar forms thereof.
8.7 Transition of Assets in Vejen. It is understood that the Company
is using certain software data assets of L ven in connection with its business
at Vejen, Denmark. The Buyer shall cause the Company to effect an orderly
transition to its own software data
PAGE 25
systems and to cease using such assets of L ven by 31 December 2000. During
such period, L ven shall cooperate in allowing the continued use of such assets
on the same basis as such use was made prior to Completion, but without the
payment of any further consideration.
ARTICLE 9.
COVENANTS OF THE SELLERS
9.1 Information and Access. During the period of time from the date
hereof to the Completion Date, the Sellers shall permit (and will cause the
Company and its Subsidiaries to permit) Representatives of the Buyer to have
access, at all reasonable times and in a manner so as not to interfere with the
normal business operations of the Company or any of its Subsidiaries, to all
premises, properties, personnel, books, records (including Tax records),
contracts and documents of or pertaining to the Company and its Subsidiaries.
The Buyer agrees to hold, and to cause its Representatives who receive
information as a result of such access to hold, such information as Confidential
Information in accordance with the terms of this Agreement.
9.2 Notices and Consents. The Sellers will, and will cause the Company and
its Subsidiaries to, give any notices to, make any filings with, and use its
reasonable endeavours to obtain any authorisations, consents and approvals of
Governmental Authorities, if any, necessary for consummation by the Sellers of
the transactions contemplated by this Agreement. The Sellers will also take all
action reasonably requested by the Buyer to assist the Buyer to obtain any
authorisations, consents and approvals pursuant to Clause 10.1. Without
limiting the generality of the foregoing, the Sellers will file (and will cause
the Company and its Subsidiaries to file) any filings that it (or they) may be
required to file with the European Commission Competition Authority and the
Danish or other applicable Competition or Monopoly Authorities, and will pursue
with all diligence any action as may be required to obtain any permissions or
authorisations necessary to consummate the transactions contemplated by this
Agreement.
9.3 Operation of Business. Except as contemplated or prohibited by
this Agreement, the Sellers will not cause or permit the Company or any of its
Subsidiaries to engage in any practice, take any action, or enter into any
transaction outside of the ordinary course of business consistent with past
custom and practice (including with respect to quantity and frequency). Except
as contemplated by this Agreement and other than disposals or sales of assets in
the ordinary course of the business of the Company and its Subsidiaries that are
obsolete, surplus or are otherwise not required for the ongoing business of the
Company and its Subsidiaries consistent with past practice, the Sellers will
cause the Company and each of its Subsidiaries to keep its business and
properties substantially intact, including its present operations, physical
facilities, working conditions, and relationships with customers, lessors,
licensors, suppliers and employees. Sellers shall cause the Company and its
Subsidiaries to conduct the Business in the manner necessary
PAGE 26
to cause the representations and warranties contained in Article 5 to be true
and correct at Completion.
9.4 Notice of Developments. The Sellers shall immediately notify the
Buyer of any development or other matter causing or that is likely to cause a
breach of any of the representations and warranties in Article 4 or Article 5.
9.5 Board Approval. If required by applicable law or governing
documents in effect, Sellers will cause the Board of Directors of the Company
(and to the extent required by law, its Subsidiaries) to convene and to approve
the transaction contemplated by this Agreement by the Completion Date.
ARTICLE 10.
COVENANTS OF THE BUYER
10.1 Notices and Consents. The Buyer will give any notices to, make
any filings with, and use its reasonable endeavours to obtain any
authorisations, consents and approvals of Governmental Authorities, if any,
necessary for consummation by the Buyer of the transactions contemplated by this
Agreement. The Buyer will also take all action reasonably requested by the
Sellers (but without the obligation to incur any costs or expenses in connection
therewith) to assist the Sellers, the Company and its Subsidiaries to obtain any
authorisations, consents and approvals pursuant to Clause 9.2.
10.2 Notice of Developments. The Buyer shall immediately notify the
Sellers of any development or other matter causing or that is likely to cause a
breach of any of the representations and warranties in Article 6
ARTICLE 11.
CONDITIONS TO OBLIGATION TO COMPLETE
11.1 Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in connection with
Completion is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Article 4 and
Article 5 (in each case as qualified by the Disclosure Schedules) above shall be
true and correct in all material respects at and as of the Completion Date;
(b) the Sellers shall have performed and complied with all of its
covenants and agreements under this Agreement through Completion;
PAGE 27
(c) there shall not be any injunction, judgement, order, decree, ruling
or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement;
(d) the Buyer and the Sellers shall have entered into the Non-Compete
Agreement and the Escrow Agreement;
(e) the Sellers shall have delivered to the Buyer:
(i) share certificates for the Sale Shares duly endorsed to Buyer and the
original share register of the Company duly updated to reflect that Buyer is the
owner of the Sale Shares;
(ii) evidence of the approval by the Board of Directors of the Company of
the transactions covered hereby (including the authorisation of the keeper of
the Company's share register to make the entry mentioned in subparagraph (i)
above), together with the resignations from all of the Sellers' Representatives
to the Board of Directors of the Company wherein such Board members shall
release the Company and any of its Affiliates from any and all liability;
(iii) evidence satisfactory to Buyer to confirm that any persons who are not
designated by Buyer to sign or draw on bank or other accounts of the Company
have been removed from any responsibility or rights with respect to such
accounts; and
(iv) any other agreements, documents, certificates or other instruments
reasonably necessary to consummate the transactions contemplated by this
Agreement;
(f) the Parties, the Company and its Subsidiaries shall have received
all necessary authorisations, consents and approvals of the European Commission
and any other Governmental Authorities, if any, required for the consummation of
the transactions contemplated by this Agreement;
(g) the Buyer shall not have elected to terminate this Agreement pursuant to
the provisions of Clause 13.1;
(h) the Buyer shall have arranged financing for the completion of the
transaction contemplated hereby on terms that are satisfactory to Buyer in
Buyers sole discretion; and
PAGE 28
(i) the arrangement evidenced by the Memo of KPMG regarding the meeting
between Xxxxx Xxxxxxxx and Xxxxxxx Uth on 24 June 1998 has been terminated and
no further payments will be made thereunder following Completion.
The Buyer may waive any condition specified in this Clause 11.1 if it executes a
written waiver at or prior to Completion.
11.2 Conditions to Obligation of the Sellers. The obligation of the
Sellers to consummate the transactions to be performed by it in connection with
Completion is subject to satisfaction of the following conditions:
(a) the representations and warranties set forth in Article 6 above
shall be true and correct in all material respects at and as of the Completion
Date;
(b) the Buyer shall have performed and complied with all of its
covenants and agreements under this Agreement through Completion;
(c) there shall not be any injunction, judgement, order, decree, ruling
or charge in effect preventing consummation of any of the transactions
contemplated by this Agreement;
(d) the Buyer and the Sellers shall have entered into the Non-Compete
Agreement and the Escrow Agreement;
(e) the Buyer shall have delivered to the Sellers
(i) the consideration set forth in Clause 2.1, as adjusted, and less the
amount deposited by Buyer pursuant to the Escrow Agreement;
(ii) evidence that the amount to be deposited by Buyer pursuant to the
Escrow Agreement has been deposited in accordance herewith;
(iii) evidence of the appointment by the Buyer of the Buyer's
Representatives to the Board of Directors of the Company; and
(iv) any other agreements, documents, certificates or other instruments
reasonably necessary to consummate the transactions contemplated by this
Agreement; and
(f) the Parties, the Company and its Subsidiaries shall have received
all necessary authorisations, consents and approvals of the European Commission
and any other Governmental Authorities, if any, required for the consummation of
the transactions contemplated by this Agreement.
PAGE 29
The Sellers may waive any condition specified in this Clause 11.2 if they
execute a written waiver at or prior to Completion.
ARTICLE 12.
COMPLETION AND POST-COMPLETION ESCROW
12.1 Completion. Subject to the fulfilment or waiver of the conditions
precedent specified in Article 11, the consummation of the transactions
contemplated by this Agreement (the "Completion") will take place on or before
28 April 2000 or such other date as provided in Clause 12.2 (the "Completion
Date"). Completion will take place at a location as may be mutually agreed by
the Parties; provided that the physical place of Completion shall not affect
Buyers obligations pursuant to Clause 2.1.
12.2 Extension of Completion Date. Subject to Clause 13.1, if
Completion has not occurred by the date specified in Clause 12.1, then the
Completion Date will be extended to the earlier of: (a) the second Business Day
after the conditions precedent set forth in Article 11 have been satisfied or
waived; or (b) such other date on or prior to 19 May 2000 (the "Termination
Date"), to which the Buyer and the Sellers mutually agree.
12.3 Deliveries at Completion. At Completion:
(a) the Sellers will deliver to the Buyer the various certificates,
instruments and documents referred to in Clause 11.1(e); and
(b) the Buyer will deliver to the Sellers the consideration and the
various certificates, instruments and documents referred to in Clause 11.2(e).
12.4 Post-Completion Escrow. As a security for the payment by the
Sellers of any amounts in respect of damages for the breach of any
representation, warranty, covenant or other undertaking in this Agreement, at
Completion an amount equal to DKK 60 million (the "Warranty Escrow Amount") out
of the total cash consideration payable hereunder shall be paid by Buyer into an
interest bearing account (the "Escrow Account"), which Escrow Account shall be
governed by the terms and conditions of an agreement (the "Escrow Agreement")
substantially in the form attached hereto as Schedule 2. Each Seller's
consideration for the Sale Shares shall be reduced by a proportionate amount to
make up the DKK 60 million. The Escrow Account shall remain in place for a
period of twelve (12) months after the Completion Date. Except where the Escrow
Agreement provides for amounts to continue to be held in the Escrow Account, the
remaining balance in the Escrow Account shall be released to the Sellers after
twelve (12) months from the Completion Date. Notwithstanding the fact that the
Warranty Escrow Amount shall be held in the Escrow Account, the Sellers'
responsibility for their obligations under this Agreement shall not be limited
to the Warranty Escrow Amount, it being understood that the Warranty Escrow
Amount represents security toward Sellers' obligations but shall not
PAGE 30
be deemed as a limitation thereon.
ARTICLE 13.
TERMINATION
13.1 Termination. Notwithstanding anything contained in this Agreement
to the contrary, the Parties may terminate this Agreement as provided below:
(a) the Buyer and the Sellers may terminate this Agreement by mutual
written consent at any time prior to Completion;
(b) the Buyer may terminate this Agreement by giving written notice to
the Sellers at any time prior to Completion in the event the Sellers have within
the then previous 10 Business Days given the Buyer any notice pursuant to Clause
9.4 and the development that is the subject of such notice has had or is likely
to have a Material Adverse Effect;
(c) the Sellers may terminate this Agreement by giving written notice
to the Buyer at any time prior to Completion in the event the Buyer has within
the previous 10 Business Days given the Sellers any notice pursuant to Clause
10.2 and the development that is the subject of such notice has had or is likely
to have a Material Adverse Effect;
(d) the Buyer may terminate this Agreement by giving written notice to
the Sellers at any time prior to Completion: (i) in the event Sellers have
breached any representation, warranty, covenant or agreement contained in this
Agreement in any material respect, the Buyer has notified Sellers of the breach,
and the breach has continued without cure for a period of 15 days after the
notice of breach; or (ii) if pursuant to Clause 3.2 if Buyer has not obtained a
Financing Commitment by 28 April 2000; or (iii) if by 14 April 2000 Buyer is not
satisfied in any respect with the results of its due diligence; or (iv) if by 21
April 2000 the Buyer shall not have entered into agreements or otherwise made
arrangements satisfactory to Buyer with the key employees of Arovit regarding
their continued employment by Arovit; or (v) if Completion shall not have
occurred on or before the Termination Date by reason of the failure of any
condition precedent under Clause 11.1 (unless the failure results primarily from
the Buyer itself breaching any representation, warranty, covenant or agreement
contained in this Agreement in any material respect);
(e) the Sellers, or any of them, may terminate this Agreement by giving
written notice to the Buyer at any time prior to Completion: (i) in the event
the Buyer has breached any representation, warranty, covenant or agreement
contained in this Agreement in any material respect, the Sellers have notified
the Buyer of the breach, and the breach has continued without cure for a period
of 15 days after the notice of breach; or (ii) pursuant to Clause 3.2 if the
Buyer has not obtained a Financing Commitment by 28 April 2000; or (iii) if
Completion shall not have occurred on or before the Termination Date by reason
of
PAGE 31
the failure of any condition precedent under Clause 11.2 (unless the failure
results primarily from the Sellers breaching any representation, warranty,
covenant or agreement contained in this Agreement in any material respect); and
(f) the Buyer or the Sellers may terminate this Agreement if the
Completion has not occurred on or before the Termination Date unless, in each
case, such failure shall be due to the action or omission of the Party seeking
to effect such termination where such action or omission constitutes a breach of
this Agreement.
13.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Clause 13.1 above, then this Agreement shall be of no further force
and effect, all rights and obligations of the Parties hereunder shall terminate
without any liability of any Party to any other Party, except for (a) any
liability of any Party then or previously in breach, (b) any provisions of this
Agreement that by their express terms survive beyond any such termination, (c)
the payments, if any, required by Clause 3.2, and (d) the provisions of the
Confidentiality Agreement.
ARTICLE 14.
INDEMNIFICATION
14.1 Independent Application. The Parties acknowledge and agree that
any of the subsections of this Article 14 may be relied upon independently of
and without regard to any other of such subsections more specifically or
generally covering the same subject matter.
14.2 Indemnification for Benefit of the Seller Indemnitees. Subject to
the other provisions of this Article 14, from and after Completion the Buyer
shall indemnify, defend and hold harmless the Seller Indemnitees from and
against any and all Losses incurred by any of the Seller Indemnitees as a result
of, or arising out of any breach or inaccuracy of any of the representations,
warranties, covenants, or agreements of the Buyer contained in this Agreement.
14.3 Indemnification for Benefit of the Buyer Indemnitees. Subject to
the other provisions of this Article 14, from and after Completion the Sellers
shall, severally and not jointly (provided that for purposes of this Article 14,
Johan Xxxxxx Xxxxxxxx and A/S Xxxxxxxx Esbjerg Holding shall be considered a
single Seller and their liability in all cases shall be considered joint and
several; and further provided that PKA and KP are only joining in this Article
14 for the purpose of the representations and warranties given by them in
Article 4 of this Agreement), indemnify, defend and hold harmless the Buyer
Indemnitees from and against any breach or inaccuracy of any of the
representations, warranties, covenants, or agreements of the Sellers contained
in this Agreement. The Sellers shall have no liability with respect to the
inaccuracy of any representation or breach of any such representation or
warranty to the extent such inaccuracy or breach that has
PAGE 32
been disclosed to Buyer in this Agreement, or in the Schedules attached hereto,
forms the basis for an exclusion under sub-paragraph (c) below. Furthermore,
the Sellers shall have no liability for indemnification with respect to the
inaccuracy of any representation or breach of any warranty
(a) if and to the extent that any provision or reserve was made for the
specific matter giving rise to indemnification and is reflected as such in the
Financial Statements or the Interim Statement; or
(b) in respect of any matter, act, omission or circumstances caused by any
act, omission, transaction or arrangement (or any combination of the same) of
the Buyer, the Company or any of its Subsidiaries after Completion, but
excluding any matter caused by the continuation of the normal operation of the
Business by the Buyer or the Company in accordance with past practice or
otherwise undertaken in good faith; or
(c) if and to the extent that Buyer, upon the execution of this Agreement,
has actual knowledge (for this purpose the definition of "knowledge" shall be
inapplicable) of any facts, circumstances or events that would permit Buyer to
make a claim against Sellers under this Article 14 for a Loss that has accrued
prior to the date of this Agreement and arises out of a breach or inaccuracy of
the representations and warranties contained in Articles 4 and 5 of this
Agreement.
PAGE 33
14.4 Limitation on Indemnification For Certain Representations and
Warranties
(a) There shall be no time limits on the liability of the Sellers under
the representations and warranties set out in Article 4, in Clauses 5.1 through
5.4, inclusive, and in Clause 5.7. The right of Buyer to make a Claim for
indemnification under Clause 14.5 for a Loss under the representations and
warranties given in Clause 5.9 (Environment) shall cease at midnight on the date
that is exactly 4 years following the Completion Date. Except as set forth
immediately above, the right of Buyer to make a Claim under Article 14.5 for
Losses under the remaining representations and warranties in this Agreement
shall cease at midnight on the date that is exactly 2 years following the
Completion Date. For purposes of the foregoing time limitations, Buyer and
Seller agree and stipulate that Article 54 of the Danish Sale of Goods Act shall
not apply. In order to assert liability for such matters, Buyer shall make
Claims attributable to the respective matters set forth above within the
respective time limits; and as to the matters which have been the subject of a
written Claim made before the end of the respective time periods set forth above
(such Claim containing particulars then available of the matters giving rise
thereto sufficient to identify the nature of the Claim), Buyer shall be required
to issue proceedings against Seller no later than six months following the
incurrence of the Loss related thereto; provided, however, that if the liability
arising under the representations and warranties is a result of a third party
demand or claim, Buyer shall not be obligated to initiate proceedings against
any third party. For these purposes, notice of a contingent claim shall
constitute sufficient notice.
(b) The following monetary limitations of this subclause (b) shall
apply in respect of Sellers' liability for the representations and warranties
given by Sellers in this Agreement, other than the representations and
warranties set out in Article 4 and Clauses 5.1 through 5.4, inclusive as to
which none of such limitations shall apply
(i) The Sellers shall not have any liability in respect of any Claim by
Buyer in respect of any individual breach of the representations and warranties
unless the Loss in respect thereof shall exceed DKK 100,000.
(ii) The Sellers shall not have any liability in respect of any Claim
for breach of any of the representations and warranties unless and until the
aggregate liability of the Sellers in respect thereof, when aggregated with the
liability of the Sellers in respect of all other Losses that exceed the amount
set forth in subparagraph (i) above, shall equal or exceed DKK 3,000,000, in
which case the Sellers shall be liable for the entire amount of all such Losses
and not merely the excess.
(iii) In addition to the time and monetary limits set forth above for
Claims by Buyer against Sellers under the representations and warranties, the
aggregate amount of each individual Seller's liability (for purpose of liability
to Buyer under this Agreement, including this clause (iii), Johan
PAGE 34
Xxxxxx Xxxxxxxx and Xxxxxxxx Esbjerg Holding A/S shall be considered a single
Seller and their liability in all cases as such shall be joint and several) for
Losses arising under this Agreement for a breach of the representations and
warranties shall be as follows:
(aa) during the term of the Escrow Agreement, the Sellers shall be
liable, severally and not jointly or collectively as provided in Articles 4 and
5, for any Losses in respect of breaches of the representations and warranties
up to the Warranty Escrow Amount;
(bb) in respect of Losses that are not covered by the Warranty
Escrow Amount, the Sellers' liability under the representations and warranties
shall be limited as follows:
(1) for amounts up to 120 million DKK, the liability shall be
borne as follows:
Lovens kemiske Fabrik Produktionsaktieselskab 27.42%
Xxxxxxx Uth 2.18%
Johan Xxxxxx Xxxxxxxx and
Xxxxxxxx Esbjerg Holding A/S, jointly 70.40%
(2) for amounts exceeding 120 million DKK, up to 300
million DKK, the liability shall be borne as follows:
Johan Xxxxxx Xxxxxxxx and
Xxxxxxxx Esbjerg Holding A/S, jointly 97.82%
Xxxxxxx Uth 2.18%
(3) there shall be no liability for amounts exceeding
300 million DKK
(c) If at any time any amount shall be paid by the Sellers to the Buyer
in satisfaction of a Claim under the representations and warranties and the
Buyer recovers any sum from proceeds of insurance as a direct result of the
matter giving rise to such Claim, then the Buyer shall give notice of that fact
to the Sellers as soon as practicable following the Buyer's receipt of such
proceeds and, as soon as possible after receipt of any monies recovered by the
Buyer from any insurance company, the Buyer shall promptly account to the Seller
for the amount (net of the costs of exercising the entitlement) so recovered;
provided however that Buyer shall only take action or proceedings to enforce
recovery against any insurance carrier if in the good faith opinion of the Board
of Directors of the Company, it should do so.
PAGE 35
(d) The Buyer undertakes to the Sellers that it will notify the Sellers
in writing of any claim against the Buyer or the Business which may give rise to
a Claim by the Buyer against the Sellers under the representations and
warranties as soon as reasonably practicable after becoming aware of the same
and shall consult with the Sellers with regard to the action to be taken in
response thereto.
14.5 Claims.
(a) If any third party shall notify either Party (the "Indemnified
Party") with respect to any matter (a "Claim") which may give rise to a Claim
for indemnification against the other Party (the "Indemnifying Party") under
this Article 14, then the Indemnified Party shall promptly (and in any event
within thirty days after receiving notice of the Claim, if the Claim arises from
a notification from a third party) notify the Indemnifying Party thereof in
writing.
(b) The Indemnifying Party will have the right to assume and thereafter
conduct the defence of the Claim with counsel of its choice; provided, however,
that the Indemnifying Party will not consent to the entry of any judgement or
enter into any settlement with respect to the Claim without the prior written
consent of the Indemnified Party (not to be withheld unreasonably) unless the
judgement or proposed settlement involves only the payment of money damages and
does not impose an injunction or other equitable relief upon the Indemnified
Party.
(c) Unless and until an Indemnifying Party assumes the defence of the
Claim as provided in Clause 14.5(b), the Indemnified Party may defend against
the Claim in any manner it reasonably may deem appropriate.
(d) In no event will the Indemnified Party consent to the entry of any
judgement or enter into any settlement with respect to the Claim without the
prior written consent of the Indemnifying Party (not to be withheld
unreasonably).
PAGE 36
14.6 Additional Limitations on Liability; Mitigation Notwithstanding
anything to the contrary in this Agreement, in no event shall any Party be
liable to the other Party(s) for any exemplary, punitive, special, indirect,
consequential, remote or speculative damages. If the Company or any of its
Subsidiaries is entitled to recover from some other person any damage, loss,
liability or expense which gives rise to indemnification, or if the Company or
its Subsidiaries is entitled to a reduction in taxes or a tax rebate or refund
as a direct result of a Loss for which Sellers have reimbursed to Buyer
hereunder, the Buyer shall take and shall procure that reasonable steps to
mitigate any damage, loss, liability and expenses are taken by the Company and
its Subsidiaries, including steps to reduce or recover taxes to which they are
entitled. If the Loss is mitigated, or if taxes are reduced or a tax refund or
rebate is obtained, the Buyer (or the Company as the case may be) shall reduce
or refund to Sellers the amount by which the instant Loss is mitigated or such
tax is reduced or refunded to Buyer or the Company, less all costs and expenses
(including legal fees and court costs) incurred by Buyer in connection with such
efforts to mitigate Losses or reduce taxes. The Buyer, the Company and its
Subsidiaries shall not be required to bring a legal action or incur an
unreasonable expense, unless in the good faith opinion of the Board of Directors
of the Company they should do so.
ARTICLE 15.
TAX
15.1 Liability for Certain Taxes. All sales, use, documentary,
recording, stamp, transfer and similar taxes, assessments and fees arising from
the transactions contemplated by this Agreement shall be borne and paid by the
Sellers, except for any such taxes arising in the United States or any state
thereof which taxes shall be paid by Buyer or its Affiliates.
ARTICLE 16.
MISCELLANEOUS PROVISIONS
16.1 Notices. All notices and other communications required or
permitted hereunder will be in writing to the appropriate Party at the address
specified below:
(a) If to the Buyer to:
Xxxxx Pet Care Company
000 Xxxxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
U.S.A
Attention: Xxx Xxxxxxxxxx
Phone: 0-000-000-0000
Fax: 0-000-000-0000
PAGE 37
With a copy to:
Xxxxxxx X. Xxxxxx Xx.
Xxxxx Pet Care Company
000 Xxxxxxxx Xxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
X.X.X.
Phone: 0-000-000-0000
Fax: 0-000-000-0000
and
Xxxxxxx X. Xxxxx
Xxxxxx & Xxxxxx
Xxxxx House
00 Xxxx Xxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Phone: 00-00-0000-0000
Fax: 00-00-0000-0000
(b) If to the Sellers, to the respective addresses set forth on
Schedule 3 hereto.
with a copy to:
Xxxxxx Xxxxxxxxx
Kromann Reumert
Xxxxxxxxxxxxx 00
0000 Xxxxxxxxx X
Xxxxxxx
Phone: 00-00-00-00-00
Fax: 00-00-00-00-00
PAGE 38
and
Nina S lver Xxxxxxx
Xxxxxx Kemiske Fabrik
Produktionsaktieselskab
Xxxxxxxxxxxxxx 00
0000 Xxxxxxxx
Xxxxxxx
Phone: 00-00-00-00-00
Fax: 00-00-00-00-00
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above by mail,
personal delivery, expedited or overnight courier, messenger service or
telecopy, but no such notice, request, demand, claim or other communication
shall be deemed to have been duly given unless and until it actually is received
by the intended recipient. Any Party may change the address to which notices,
requests, demands, claims and other communications hereunder are to be delivered
by giving the other Party notice in the manner herein set forth.
16.2 Expenses. Except as specifically provided in this Agreement, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby will be paid by the Party incurring such costs
and expenses. Specifically, the costs and expenses of the Sellers relating to
this Agreement shall be borne by them and none of such transaction costs shall
be borne by or charged to the Company or any of its Subsidiaries.
16.3 Assignment. Neither Party may assign or delegate any of its
rights or duties hereunder without the prior written consent of the other Party;
provided it is understood by the Parties that Buyer intends to assign this
Agreement to a newly formed Danish Affiliate of Buyer before Completion, which
Affiliate of Buyer shall assume and become liable for all of Buyer's duties,
liabilities and obligations under this Agreement. Any other assignment or
delegation made in violation of the foregoing provisions shall be void.
16.4 Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the Parties hereto and their respective permitted
successors and permitted assigns.
16.5 Entire Agreement. This Agreement (including the documents delivered in
connection herewith or contemplated hereby) constitutes the entire agreement
among the Parties and supersedes any prior understandings, agreements or
representations by or among the Parties, written or oral, to the extent they
related in any way to the subject matter hereof, except for any other agreement
executed by the Parties at Completion as contemplated hereby.
PAGE 39
16.6 Amendments, Supplements, Etc. This Agreement may be amended or
supplemented at any time only by a written agreement signed by duly authorised
Representatives of the Buyer and the Sellers.
16.7 No Third-Party Beneficiaries; Effect on L ven-Arovit Merger
Agreement.
(a) This Agreement shall not confer any rights or remedies upon any person
or entity other than the Parties and their respective successors and permitted
assigns, provided, however, that the provisions of Clauses 14.2 and 14.3 shall
inure to the benefit of the Seller Indemnitees and the Buyer Indemnitees,
respectively.
(b) The execution and delivery of this Agreement and the performance by the
Parties of their obligations hereunder shall not affect, impair, waive or
otherwise diminish the obligations of the Parties to that certain Merger
Agreement dated March 16, 1999 among the Parties hereto involving the
combination of the business of the Company and L ven Petfood, to which reference
is hereby made. To the extent that any of the Parties have obligations or
liabilities arising under the representations and warranties thereunder that
would result in any benefits to the Company, such obligations shall not be
released and the Company shall have the right to enforce such obligations in its
own name. To the extent necessary to give effect to the foregoing, the Parties
hereby assign to the Company their rights to enforce the representations and
warranties given in the Merger Agreement against the other Parties so that the
Company may benefit from such obligations to the full extent provided in the
Merger Agreement.
16.8 Further Assurances. From time to time, as and when requested by
either Party hereto, the other Party will execute and deliver, or cause to be
executed and delivered, all such documents and instruments as may be reasonably
necessary to consummate the transactions contemplated by this Agreement.
16.9 Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the Kingdom of Denmark.
16.10 Execution in Counterparts. This Agreement may be executed in one
or more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same agreement.
16.11 Severability. In the event that any provision of this Agreement
shall be determined to be unenforceable for any reason, every other provision of
this Agreement shall remain in full force and effect. Notwithstanding the
foregoing, the Parties shall thereupon negotiate in good faith in order to agree
to the terms of a mutually satisfactory provision, achieving as nearly as
possible the same legal and commercial effect, to be substituted for the
provisions so found to be unenforceable.
PAGE 40
16.12 Arbitration.
(a) All disputes arising out of or in connection with this Agreement,
or the breach thereof, shall be finally settled by binding arbitration under the
Rules of Arbitration of the International Chamber of Commerce (the "ICC Rules").
(b) The place of arbitration shall be London, England. The arbitral
proceedings shall be conducted in the English language.
(c) The arbitral panel shall be composed of three arbitrators appointed
in accordance with the ICC Rules; provided that, following their confirmation by
the ICC International Court of Arbitration (the "ICC Court"), the arbitrators
nominated on behalf of each of the Parties shall agree on a nomination for the
third arbitrator, who shall chair the arbitral panel. If such nomination is not
made within 20 days from the date on which the appointment of both of them have
been confirmed, then the third arbitrator shall be appointed by the ICC Court.
(d) The arbitrators are not empowered to award damages in excess of
compensatory damages, and each party hereby irrevocably waives any right to
recover such excess damages with respect to any dispute resolved by arbitration.
(e) Any determination or award rendered in an arbitration conducted
hereunder:
(i) shall be implemented in accordance with its terms, and shall contain
findings of fact and appropriate conclusions of law, stating the legal reasoning
behind each such conclusion;
(ii) may be entered as a judgement by any court of competent jurisdiction;
and
(iii) if a monetary award, shall be made and promptly payable, free of any
tax, deduction, or offset, and the arbitral panel may grant pre-award and
post-award interest at commercial rates. Any costs, fees, or taxes incident to
enforcing the award shall be charged against the Party resisting enforcement.
16.13 Litigation in Certain Circumstances. The Parties agree that the
only circumstances in which disputes among them will not be subject to the
provisions of Clause 16.12 are those situations where a Party makes a good faith
determination that a breach or potential breach of this Agreement by the other
Party may result in irreparable injury or harm that can only be prevented by
immediate injunctive relief. In such cases, a Party may seek to enjoin the
potential activity in the court having jurisdiction of such matter.
PAGE 41
In witness whereof, the parties hereto have executed this Agreement as of
the day and year first above written.
SELLERS
/s/ Johan Xxxxxx Xxxxxxx
Johan Xxxxxx Xxxxxxxx
/s/ Xxxxxxx Uth
Xxxxxxx Uth
Xxxxxxxx Esbjerg Holdings A/S
By: /s/ Johan Xxxxxx Xxxxxxx
Name: Johan Xxxxxx Xxxxxxx
Title: Director
Lovens kemiske Fabrik Produktionsaktieselskab
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Director
Kommunernes Pensionsforsikring A/S
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxx Xxxxxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx Name: Xxxx Xxxxxxxx Xxxxxxxx
Title: Head of Investment Title: Head of Equities
PAGE 42
Signature Page to that certain Share Purchase Agreement
among Johan Xxxxxx Xxxxxxx et al. aated 24 March 2000
[Signatures Continued on Next Page]
PKA A/S, for the entities listed
on Schedule 3 attached hereto, for which it has
the power to sign this Agreement
By: /s/ Troels Gunnergaard By: /s/ Xxxx Xxxxxxxxxxx
Name: Troels Gunnergaard Name: Xxxx Xxxxxxxxxxx
Title: Director Title: Director
BUYER
Xxxxx Pet Care Company
By: /s/ Xxxxxx X. Xxxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxxx
Title: Sr. VP and CFO
PAGE 43
Final Signature Page to that certain Share Purchase Agreement
among Johan Xxxxxx Xxxxxxx et al. dated 24 March 2000
[Additional Signatures on Previous Page]
