1
EXHIBIT 10.2
SHARE PURCHASE AGREEMENT
11 January 2001
between
Xxxxxxx Strong-Tie(R) International, Inc.
or its designee or affiliate
and
BMF Holding A/S
2
CONTENTS
1. Definitions.................................................................... 2
2. Purchase Price................................................................. 4
3. Incorporation of the company................................................... 6
4. Subsidiaries................................................................... 7
5. Authorised share capital, shares, distributions................................ 7
6. Financial statements........................................................... 8
7. Net equity..................................................................... 10
8. Assets......................................................................... 10
9. Receivables and debts.......................................................... 11
10. Depreciations and provisions................................................... 12
11. Off balance sheet commitments, guarantees, endorsements, security interests.... 12
12. Disputes....................................................................... 12
13. Bankruptcy proceedings......................................................... 12
14. Product claims................................................................. 13
15. Insurance...................................................................... 14
16. Environmental Matters.......................................................... 14
17. Intellectual property rights (IPR) and IT...................................... 15
18. Taxes, social security contributions, customs.................................. 16
19. Real estate.................................................................... 18
20. Contracts...................................................................... 18
21. Outstanding amounts............................................................ 19
22. Employees/management........................................................... 19
23. Competition law and legal regulations.......................................... 21
24. Due diligence.................................................................. 22
25. Confidentiality and press release.............................................. 22
26. Interim period................................................................. 23
27. Powers......................................................................... 23
28. Indemnification of the buyer and remedies...................................... 24
29. Buyer's intentions, representations and warranties............................. 25
30. The future business of the company............................................. 26
i
3
31. Non-competition clause......................................................... 27
32. Closing........................................................................ 27
33. Expenses....................................................................... 28
34. Competition authorities........................................................ 28
35. Governing law and arbitration.................................................. 28
36. Counterparts................................................................... 28
37. Schedules...................................................................... 29
ii
4
SHARE PURCHASE AGREEMENT
BETWEEN
Xxxxxxx Strong-Tie(R) International, Inc.
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxx Xxxxxxxxxx 00000
XXX
or its designee or affiliate
("the Buyer")
AND
BMF Holding A/S
Hedegardsvej 11
Boulstrup
XX-0000 Xxxxx
Xxxxxxx
("the Seller")
regarding the shares in BMF Bygningsbeslag A/S
WHEREAS, BMF Bygningsbeslag A/S ("the Company") is a public limited liability
company (in Danish "aktieselskab") having its registered office at Xxxxxxxxxxxx
00, Xxxxxxxxx, XX-0000 Xxxxx, Xxxxxxx.
WHEREAS, the Seller is the owner of A-shares of a nominal value of DKK 300,000
and B-shares of a nominal value of DKK 3,200,000 or in total a share capital of
DKK 3,500,000. The differ-
1
5
ence between the A-shares and the B-shares is that the A-shares have tenfold
voting rights compared to the B-shares;
WHEREAS, the Company's business is to produce and manufacture structural timber
metalwork;
WHEREAS, the Seller has the intention to sell to the Buyer and the Buyer has the
intention to buy from the Seller 100 percent of the shares of the Company (the
"Shares"), consisting of in total DKK 300,000 A-shares and DKK 3,200,000
B-shares;
WHEREAS, the Parties have signed a Letter of Intent on November 12, 2000;
WHEREAS, the Parties have agreed on the terms and conditions of such sale;
WHEREAS, the Buyer has had access to carry through a due diligence on the
Company in the period from the end of November 2000 to January 11, 2001.
NOW, THEREFORE, on the basis of the representations, warranties and agreements
contained in this Agreement, the Parties hereinafter agree as follows:
1. DEFINITIONS
1.1 In this Agreement the following expressions are defined as follows,
unless the context requires otherwise:
a) "Additional Purchase Price (1)" shall mean the additional
purchase price for the Shares as set out in Clause 2.4.
b) "Additional Purchase Price (2)" shall mean the additional
purchase price for the Shares as set out in Clause 2.5.
c) "Agreement" shall mean this Share Purchase Agreement.
2
6
d) "Assets" shall mean
(i) all assets figuring or reflected in the Interim Balance
(ii) the IPR belonging to the Company and the Subsidiaries
(iii) other assets owned by the Company and the Subsidiaries and
which are not shown in the Interim Balance including
Assets which have been written of or expensed.
e) "Audited Financial Statements" shall mean the annual accounts of
the Company for the financial years 1997, 1998 and 1999 (Schedule
1) and the reviewed annual accounts of BMF Holzverbinder GmbH,
Germany, for the financial years 1997, 1998 and 1999 and the non
audited annual accounts for 1998 and 1999 for BMF Jutor SP.z.o.o.
cf. Schedule 2.
f) "Closing" shall mean the completion of the sale and purchase of
the Shares.
g) "Closing Date" shall mean 11 January 2001.
h) "Company" shall mean BMF Bygningsbeslag A/S, company reg. no. 65
65 38 18.
i) "GADAP" shall mean Generally Accepted Danish Accounting
Principles.
j) "Interim Balance" shall mean an interim balance sheet and profit
and loss account of the Company and the Subsidiaries as at 30
September 2000 reviewed by the Company's auditor
(PricewaterhouseCoopers) including report on review of interim
financial statements of 13 December 2000 on interim accounts
prepared by the Company's auditor, cf. Schedule 3.
k) "IPR" shall mean intellectual property rights, including patents,
utility patents, trademarks, registered design rights, copyright
and know-how.
3
7
l) "Net equity" shall mean the aggregate amount of the share capital
and the retained profit as shown in the balance sheet of the
Interim Balance.
m) "Party" or "Parties" shall mean the Buyer and the Seller or one
of them individually.
n) "Purchase Price" shall mean the sum of the basic Purchase Prise,
Additional Purchase Price (1) and Additional Purchase Price (2).
o) "Seller Represents" shall mean that the Seller informs the Buyer,
based upon what the Seller knows or ought to have known upon due
inquiry into the affairs of the Company. Seller's knowledge shall
include any knowledge which Xxxx Xxxxxxx and Xxxxxx Xxxxxxx
personally may have and shall also include knowledge of any
material matters which Xxxxxx Xxxxxxx and Xxxx Xxxxxxx normally
ought to have had as managers, and knowledge which they normally
would have obtained upon due inquiry if any matters of the
Company or of this Agreement would give reasonably cause for such
inquiry.
p) "Shares" shall mean all shares of the Company at a nominal value
of DKK 3.5 million in the Company and being the entire share
capital of the Company.
q) "Subsidiaries" shall mean BMF Holzverbinder GmbH and BMF Jutor
Spz.o.o.
2. PURCHASE PRICE
2.1 The Purchase Price for the Shares consists of the basic purchase price,
the Additional Purchase Price (1) and the Additional Purchase Price (2).
2.2 The Purchase Price shall be payable in three instalments.
4
8
2.3 At Closing Date the basic purchase price DKK 100,000,000 (in writing
Danish kroner one hundred million) shall be paid in cash by wire
transfer to Sellers bank, account no. 5494 689377 (reg. no. 2191), in
Unibank A/S, Copenhagen K.
2.4 If the profit before tax according to the financial statement for the
financial year 2000 in the audited consolidated accounts for the Company
is equal to or exceeding DKK 8,200,000 the Buyer shall pay Additional
Purchase Price (1), DKK 10,000,000 (in writing Danish kroner ten
million). The Additional Purchase Price (1) shall be paid 14 days after
the financial statement is audited. If the profit before tax according
to the financial statement for the financial year 2000 in the audited
consolidated accounts is less than DKK 8,200,000 the Additional Purchase
Price (1) shall be DKK 0 (in writing Danish kroner zero). The principles
for calculating the profit before tax is outlined in Schedule 3 A.
The Additional Purchase Price (1) shall be placed in an escrow account
with Lett & Co. in the name of the Seller to be released to the Buyer or
the Seller as applicable subject to the joint instruction from the Buyer
and the Seller or an arbitration decision to this effect.. Interest
accrued on the escrow account shall be released to the Buyer
2.5 If the operating profit according to the financial statement for the
financial year 2001 in the audited consolidated accounts for the Company
is equal to or exceeding DKK 12,000,000 the Buyer shall pay Additional
Purchase Price (2), DKK 10,000,000 (in writing Danish kroner ten
million). The Additional Purchase Price (2) shall be paid 14 days after
the financial statement is audited, and with a 4% p.a. interest from the
signing of this Agreement. If the operating profit according to the
financial statement for the financial year 2001 in the audited
consolidated accounts for the Company is less than DKK 12,000,000 the
Additional Purchase Price (2) shall be DKK 0 (in writing Danish kroner
zero). The principles for calculating the operating profit is outlined
in Schedule 3 B.
5
9
2.6 The audited consolidated accounts for the Company shall include the
Company and the Subsidiaries and other subsidiaries, if any, that the
Company may control.
2.7 If Xxxxxxx Strong-Tie International Inc. transfers the Agreement to a
designee or affiliate Xxxxxxx Strong-Tie International Inc. guarantees
the payment of the Additional Purchase Price (2).
2.8 Resolution regarding dividend for the Company for the accounting year
1999 has been validly passed at the ordinary shareholders' meeting on 23
May 2000 as reflected in the Audited Financial Statement of 1999 and
paid to the Seller in the fall of 2000. Dividend, if any, for the fiscal
year 2000 will not be decided until after the Closing Date and shall be
decided by and for the benefit of the Buyer.
3. INCORPORATION OF THE COMPANY
3.1 Seller warrants ("garanterer") that the Company has been duly
incorporated and is lawfully established and existing in accordance with
Danish law. Seller warrants that the copy of the Company's Articles of
Association and the transcript from the Danish Commerce and Companies
Agency (in Danish "Erhvervs-og Selskabsstyrelsen") attached as Schedule
4 are true, correct and complete.
3.2 Seller warrants that the Company's Shareholders' Register and all other
records which must be drawn up or kept by the Company in accordance with
current laws and regulations are in good order, complete and exact and
up to date on the date of signature of this Agreement with the only
exception that minutes of the general meeting held in 1998 for the
financial year 1997 have not been prepared.
3.3 Seller warrants that there are no reportable corporate changes regarding
the Company that have not yet been registered with the Danish Commerce
and Companies Agency.
6
10
4. SUBSIDIARIES
4.1 Seller warrants that the Company has the subsidiaries BMF Holzverbinder
GmbH, Germany and BMF Jutor Sp.z.o.o, Poland.
4.2 Seller warrants that the Company owns shares of a nominal value of Euro
150,000 of the shares in BMF Holzverbinder GmbH, company reg. no. HR.B.
2587 representing the entire issued and outstanding share capital of the
Company.
4.3 Seller warrants that the Company owns shares of a nominal value of PLZ
130,500 of the shares in BMF Jutor Sp.z.o.o., company reg. no. DZ IAL B.
53884 representing the entire issued and outstanding share capital of
the Company.
4.4 Seller warrants that the Subsidiaries has been duly incorporated and are
lawfully established and existing in accordance with German and Polish
law respectively.
4.5 Seller warrants that the Shareholders Register for the Subsidiaries and
all other records which must be drawn up or kept by the Company in
accordance with current laws and regulations are in good order, complete
and exact and up to date on the date of signature of this Agreement.
5. AUTHORISED SHARE CAPITAL, SHARES, DISTRIBUTIONS
5.1 Seller warrants that the Company has an outstanding share capital of DKK
3,500,000. Seller warrants that the Shares and the shares in the
Subsidiaries are validly issued. Seller warrants that the Seller has a
valid, unrestricted and transferable title to the Shares representing
100 per cent of the share capital of the Company and 100 percent of the
voting power in the Company, and that the Company has valid and
unrestricted title to the shares in the Subsidiaries and all voting
rights in the Subsidiaries. Seller warrants that the Shares and the
shares in the Subsidiaries are free of all liens, beneficial interests,
co-ownership, options, guarantees, appropriations, security inter-
7
11
ests, pledges, distraint, escrow, protective measures, encumbrances,
priority rights, pre-emptive rights, prior consents or other rights,
requests, claims or other restrictions whatsoever to the free
transferability thereof.
5.2 Seller warrants that the Company has not at present issued any share
certificates due to the fact that the Company in 1996 decided to
withdraw the issued share certificates and such share certificates have
been destroyed.
5.3 Seller warrants that BMF Holzverbinder GmbH has not at present issued
any share certificates.
5.4 Seller warrants that BMF Jutor Sp.z.o.o. has not at present issued any
share certificates.
5.5 Seller warrants that neither the Company nor the Subsidiaries have
issued any debt convertible into shares and that neither the Company nor
the Subsidiaries have issued any warrants or other rights to any person
to subscribe for or acquire new shares in the Company and/or the
Subsidiaries or granted any third party right to the profits of the
Company and/or the Subsidiaries.
6. FINANCIAL STATEMENTS
6.1 Seller warrants that the Audited Financial Statements (Schedule 1) and
the Interim Balance (Schedule 3) give a true and fair view of the
Company's and the Subsidiaries' operation and financial position as well
as a true and fair view of the profit and losses of the Company and the
Subsidiaries, and in the period from the Interim Balance to the signing
of the Agreement there has been no indication that the Interim Balance
does not give a true and fair view of the Company's and the
Subsidiaries' operation and financial position. Seller warrants that
from the date of the Interim Balance and to the signing of this
Agreement, the Company and the Subsidiaries have acted in the ordinary
course of business only, and that there has been no material changes in
the financial position of the Company and/or the Subsidiaries at the
signing of this
8
12
Agreement compared to the date of the Interim Balance. Seller informs
that the fourth quarter of the year 2000 will result in a seasonal
deficit of approx. DKK 2-4 million, which in light of the Company's past
history is not out of the ordinary for the season.
6.2 Seller warrants that the Audited Financial Statements and Interim
Balance have been prepared in accordance with the books and records of
the Company and for the Company in accordance with the Danish Companies
Account Act (in Danish "Arsregnskabsloven") and with GADAP and in
accordance with the accounting principles specified in the Audited
Financial Statements and the Interim Balance. Seller warrants that the
Audited Financial Statements and the Interim Balance have been prepared
using the same accounting principles throughout the period, unless
otherwise expressly stated in the Audited Financial Statements or in the
Interim Balance, and that the Company from the date of The Interim
Balance has followed and throughout the period until payment mentioned
in Clause 2.4 and 2.5 has been made will follow the same accounting
principles.
6.3 Seller Represents that no liabilities, known or anticipated, exist as pr
30 September 2000 except those fully disclosed to the Buyer or
sufficiently provided for in the Interim Balance. Seller Represents that
no further liabilities except for liabilities relating to the ordinary
course of business have arisen since 30 September 2000.
6.4 Seller warrants that the annual accounts of the Company have since the
incorporation of the Company in 1981 been certified by the Company's
statutory auditors without qualifications.
9
13
6.5 The Company's and the Subsidiaries' budget for the financial year 2001
is attached as Schedule 5. The budget is based on a stand alone-scenario
for the Company and the Subsidiaries. Seller warrants that the budget is
based on the same accounting principles as the last of the Audited
Financial Statements and the Interim Balance. The Seller Represents that
the budget for the financial year 2001 (Schedule 5) in the Seller's
opinion is realistic and should be reasonably obtainable.
7. NET EQUITY
7.1 The Company is having a Net Equity of minimum DKK 60 million as at 30
September 2000 according to the Interim Balance. Seller warrants that
there has been no material reduction of the Net Equity from 30 September
2000 to the signing of this Agreement except for the ordinary fourth
quarter, cf. Clause 6.1 i.f.
8. ASSETS
8.1 Seller warrants that all Assets are owned by the Company and the
Subsidiaries and are free of liens or mortgages except as otherwise
provided in Clause 19.2 and Schedule 22 and are in existence on the date
of signature of this Agreement except otherwise provided in Schedule 6
and all obsolete or deteriorated stocks have been fully written down in
accordance with the accounting principles stipulated in the Interim
Balance.
10
14
8.2 Subject to Clause 16, Seller warrants that the Assets in all major
aspects are legal, in legal use and in fair and good working condition,
except normal wear and tear, and in general comply with all regulations
for continued legal use. However, Seller Represents that at present
there are eight machines for internal production use which are not
CE-marked, due to the fact that there is no sufficient documentation to
fulfil the requirements of the CE-marking directives. Seller Represents
that it is possible to XX-xxxx the machines, and that this will involve
external costs in the amount of DKK 100,000 as a maximum as well as
internal costs, which have been accounted for in the Company's Budget
for 2001(Schedule 5).
8.3 Seller warrants that the Assets comprise all the assets necessary for
the continued conduct of the business of the Company and the
Subsidiaries, except for the assets listed in Schedule 7 which are
leased.
8.4 Seller warrants that the Assets in the Interim Balance are and will
until Closing be recorded in accordance with the Danish Company Accounts
Act (Arsregnskabsloven) and GADAP.
9. RECEIVABLES AND DEBTS
9.1 Seller warrants that the Company does not owe any sum whatsoever and has
not undertaken to pay any sum whatsoever to any of its shareholders,
directors, employees, sales representatives, agents or distributors,
whether past or present, or to any of their spouses, children or
relatives or any person acting on their behalf or any legal entity in
which the Seller, directly or indirectly, holds more than 10% of the
shares or the voting rights, otherwise than in payment for services
provided on arm's length terms.
Buyer is aware of the pension amounts to be paid in for Poul and Xxxxxx
Xxxxxxx for the year 2000 which amounts have been taken into account in
the Interim Balance, cf. Schedule 3.
11
15
10. DEPRECIATIONS AND PROVISIONS
10.1 Seller warrants that the depreciations and provisions in the Audited
Financial Statements and in the Interim Balance are adequate and have
been determined in accordance with applicable laws, regulations and
trade practices and with GADAP and the principles of conservatism and
sound management.
11. OFF BALANCE SHEET COMMITMENTS, GUARANTEES, ENDORSEMENTS, SECURITY
INTERESTS
11.1 Seller Represents that there are at the signing of this Agreement no off
balance sheet commitments not included or mentioned in the Interim
Balance.
11.2 Seller warrants that the Company and the Subsidiaries have not given and
will not give before Closing, unless as accepted in writing by the
Buyer, any guarantee (except from product guarantees given in the
ordinary course of business) security interest or endorsement relating
to the fulfilment of obligations contracted by third parties (including
by its shareholders, directors or employees).
12. DISPUTES
12.1 Seller warrants that except as set forth in Schedule 8, neither the
Company nor the Subsidiaries are currently involved in any litigation or
disputed claims in court or in any administrative or arbitration
proceedings and Seller Represents that no claims that may entail such
litigation or proceedings are threatened.
12.2 Seller warrants that neither the Company nor the Subsidiaries are in
default under any judgement or order of any court, arbitrator or
administrative authority.
13. BANKRUPTCY PROCEEDINGS
12
16
13.1 Seller warrants that the Company and the Subsidiaries are not insolvent
and are not concerned by any receivership or liquidation subject to
court supervision or any conciliation, voluntary settlement or other
bankruptcy proceedings provided for under current law.
The Seller has informed the Buyer that the equity of BMF Jutor Sp.z.o.o.
is negative according to the Interim Balance, cf. Schedule 3 and that
the Company has planned to convert a part of the Company's outstanding
amount in BMF Jutor Sp.Z.o.o. to share capital which decision will be
made in connection with the financial reporting for 2000.
13.2 Subject to Clause 13.1 Seller warrants that there is nothing, at the
date hereof, to lead one to believe that the Company or the Subsidiaries
may subsequently be insolvent or be concerned by any bankruptcy
proceedings.
14. PRODUCT CLAIMS
14.1 Seller warrants that there are no current, known product claims with
regard to products manufactured, assembled or sold by the Company and/or
the Subsidiaries, and that Seller is not aware of facts on which such a
claim could be based except as shown in Schedule 9.
14.2 With regard to the Munch Stal A/S case (as described in Schedule 9,
Articles A and C), Seller warrants that the Company shall not incur
further costs as a result of the defective steel supply from Munch Stal
A/S, except for costs related to the Company's own risk deductible under
the product liability insurance, in-company time spent by the Company's
employees and legal expenses for the Company's attorneys which shall be
borne by the Company.
14.3 With regard to the problem with the defective "cantilevers", in Danish
"Gerberbeslag" (as described in Schedule 9, Article A) Seller warrants
that the Company shall not incur further costs as a result of the
defective cantilevers, except for costs related to
13
17
the Company's own risk deductible under the product liability insurance,
in-company time spent by the Company's employees and legal expenses for
the Company's attorneys which shall be borne by the Company.
14.4 With regard to the case with Tibnor A/S regarding defective
galvanization (as described in Schedule 9 Article D), Seller warrants
that the Company shall not incur further costs, except for cost related
to the Company's own risk deductible under the product liability
insurance, in-company time spent by the Company's employees and legal
expenses for the Company's attorneys which shall be borne by the
Company.
14.5 Seller Represents that a spot test procedure of the existing stock of
screws, in Danish "beslagskruer", has been performed. Seller finds that
the spot test has been a sufficient test of the supply of defective
screws.
14.6 Schedule 10 shows a transcript from the Company's insurance company
showing the product claims raised by the Company and the Subsidiaries
against the insurance company. Seller warrants that there have been no
material product claims for the last 5 years except as listed in
Schedule 9-10.
15. INSURANCE
15.1 Seller warrants that the Company and the Subsidiaries are insured under
the insurance policies shown in Schedule 11. Seller Represents that such
insurance is normal based on the Company's and the Subsidiaries
operations and in Seller's opinion and in the opinion of the Board of
Directors of the Company is adequate and normal.
16. ENVIRONMENTAL MATTERS
16.1 Seller Represents that the Company and the Subsidiaries have complied
and are in compliance with all the relevant environmental laws and
regulations in all material respects.
14
18
16.2 Seller Represents that there are no judicial or administrative
proceedings or investigations pending regarding environmental matters
relating to the Company and/or the Subsidiaries and threatened against
the Company and/or the Subsidiaries.
16.3 Seller Represents that there is no pollution on the properties of the
Company and the Subsidiaries or resulting from their activities, and
that no environmental works or cleaning up are required, apart from
pollution (if any) expressly mentioned in the environmental
investigation report by Xxxx Bro A/S of 18 December 2000 and the
Technical note by Xxxx Bro A/S of 8 January 2001, Schedule 12.
16.4 Seller informs and Buyer accepts that for a short period galvanization
has been made on the premises of the Company, cf. Schedule 13.
16.5 Buyer accepts that Buyer cannot claim proportionate reduction in the
Purchase Price ("forholdsmaessigt afslag") due to environmental matters
and that Buyer may only raise any claims related to environmental
matters if such claim is based on breach of any of Seller's
representations.
17. INTELLECTUAL PROPERTY RIGHTS (IPR) AND IT
17.1 Seller warrants that the IPR listed in Schedule 14 has been registered.
The Seller Represents that the Company has the sufficient IPR to carry
out the current production and sale in the Company and the Subsidiaries.
Seller warrants that IPR owned by the Company are free of any liens,
mortgages and license rights, except as disclosed in Schedule 15.
17.2 Seller warrants that the Company is not bound by any contract or any
agreement concerning IPR or by any contract entered into with one or
more employees concerning their inventions.
17.3 Seller Represents that the Company has made contracts with suppliers of
software and hardware as described in Schedule 16 and has a license to
use all software used
15
19
by the Company at present.
17.4 Seller Represents that the Company and the Subsidiaries do not infringe
any third party IPR except as provided in Schedule 17.
17.5 Seller Represents that the IPR belonging to the Company and the
Subsidiaries is not violated by third party except as provided in
Schedule 18.
17.6 Seller Represents that neither the Company nor the Subsidiaries are
parties to any claims or disputes regarding IPR except as described in
Schedule 19.
17.7 The name of the Company shall continue to be BMF Bygningsbeslag A/S
until 31 January 2003 unless otherwise agreed between the Buyer and the
Seller.
17.8 Seller accepts that BMF Holzverbinder GmbH shall be named BMF Xxxxxxx
GmbH and thus both the logo of the Company and the Buyer shall be used.
17.9 Seller Represents that the management information system of the Company
is running and no new investment is necessary to the basic system at the
current level except if the Company decides to have extra
functionalities.
18. TAXES, SOCIAL SECURITY CONTRIBUTIONS, CUSTOMS
18.1 Seller warrants that the Company and the Subsidiaries have duly paid to
the relevant government authorities within the required time limits all
the taxes, contributions, duties, other tax, special tax, social
security or customs expenses owed by it. It does not owe any fine or
interest on late payments.
However, Seller has informed Buyer that there might be a problem with
regard to Polish stamp duty.
16
20
18.2 Seller warrants that the Company and the Subsidiaries have duly filed
all information required under Danish tax law.
18.3 Seller warrants that the provisions for taxes, contributions, duties
including Polish stamp duties and fines for not paying in due time,
other tax, special tax, social security and customs expenses, such as
they are included in the Interim Balance and in the Audited Financial
Statements for the years up to 30 September 2000, are exact and
cumulatively sufficient for that period, except as disclosed in Schedule
20 and except the item DKK 523,000 for tax owed mentioned in
PricewaterhouseCoopers' report included in the Interim Balance (Schedule
3).
18.4 Seller warrants that the Company is not the subject of any tax
assessment, any request or investigation by the tax authorities and
Seller represents that no such assessment, request or investigation is
threatened. Seller warrants that no proceeding by any court or
administrative or governmental body is pending and Seller Represents
that no proceedings are threatened with respect to any taxes due from or
relating to the Company.
18.5 If the authorities intend to change the tax assessment of the Company
and the Subsidiaries (or other assessment comprised by Clause 18) the
Buyer shall procure the Company to contest at the Company's expense such
proposed change by the authorities' assessment, provided that such
procedure in the opinion of the Company's lawyer or auditor is likely to
be won by the Company and/or the Subsidiaries.
18.6 Seller warrants that the Company and the Subsidiaries are not jointly
taxed at present. However, Seller warrants that the Company and BMF
Holzverbinder GmbH have been jointly taxed in the period 1 January 1993
up to and including 31 December 1998 and that the cessation of the joint
taxation has not and will not affect the Company or the Subsidiaries in
any way which has not already been reflected in the Audited Financial
Statements, the Interim Balance or in Schedule 20.
17
21
18.7 Seller warrants that the Company and its subsidiary BMF Holzverbinder
GmbH have no corporate or other tax exposures arising from the
resolution to increase the share capital of BMF Holzverbinder GmbH by
DEM 1,000,000 that was approved on 2 July 1999 and that has not yet been
finally registered.
19. REAL ESTATE
19.1 Seller warrants that the Company's and the Subsidiary's real estate (cf.
Schedule 21) is used legally and is in good condition, except normal
wear and tear.
19.2 Seller warrants that the real estate is free from liens and mortgages
except as provided in Schedule 22 and the Audited Financial Statements
and the Interim Balance.
19.3 Seller warrants that neither the Company nor the Subsidiaries' are party
to any lease agreements as lessee or lessor except as listed in Schedule
23.
19.4 The Company owns some farm land. The Company shall be obliged to have
the farm land transferred from the rural zone into the urban zone (which
can take place as soon as the local development plan has been finalized)
or otherwise sell the land, cf. Schedule 24.
19.5 Buyer has been informed that the Company is preparing the purchase of a
site in Poland with a view to building its own office and storage
facilities. The Buyer is aware of these preparations and the Seller
acknowledges that a final purchase must be approved by the Board of
Directors of the Company.
20. CONTRACTS
20.1 Seller warrants that all major contracts of the Company and the
Subsidiaries are listed in Schedule 25.
18
22
20.2 Seller Represents that all contracts and agreements not listed in
Schedule 25 have been entered into on normal terms in the ordinary
course of business.
20.3 Seller Represents that neither the Company nor the Subsidiaries are in
breach of any term or obligation under any contract or agreement to
which the Company or the Subsidiaries are a party.
20.4 Seller Represents that there are no change of control clause in any of
the Company and/or the Subsidiaries' contracts and that the transfer of
the Shares will not cause any breach under or termination of any
material contract or agreement of the Company or the Subsidiaries.
21. OUTSTANDING AMOUNTS
21.1 Seller warrants that outstanding amounts have been and will until
Closing be posted in the Interim Balance in line with GADAP and in
accordance with the usual accounting principles and has been recorded in
line with past practice. The composition of the outstanding amounts does
not differ from past practice.
22. EMPLOYEES/MANAGEMENT
22.1 Seller warrants that all the Company's and the Subsidiaries' employees
as at 1 December 2000 are listed in Schedule 26 which includes date of
employment. Other relevant information regarding the terms and
conditions upon which they are employed with the Company and the
Subsidiaries including salary and pension obligations, terms of notice
and other important salary accessories is listed in Schedule 27-29 .
Employees considered as key employees are identified in Schedule 27 and
Schedule 29. The Buyer is aware that due to seasonal variations in the
turnover there are more employees in the Company in the summer period
than in the winter period.
22.2 Except as set forth in Schedule 27 and Schedule 29 Seller warrants that
the Company has not granted any benefits to its employees which go
beyond what follows
19
23
from applicable collective bargaining agreements (Schedule 28) and/or
the Danish Salaried Employees Act (in Danish "Funktionaerloven").
22.3 The Buyer is under an obligation to employ the present managing
directors Xx Xxxx Xxxxxxx and Xx Xxxxxx Xxxxxxx on the terms stipulated
in the service agreements, cf. Schedule 29.
Xx Xxxx Xxxxxxx and Xx Xxxxxx Xxxxxxx shall be a key part of the Buyer's
European management team.
In this connection the Buyer recognizes that Xx Xxxxxx Xxxxxxx'x interest
in factory automation and product development could have real benefits
and involvement with all of the Buyer's European operations. In
addition, the Buyer recognizes that Xx Xxxx Xxxxxxx will have a valuable
insight into other possible sales opportunities and assistance with the
Xxxxxxx Group's strategic plans for the European market.
22.4 Seller warrants that the Company has not received any notice of any key
employee to leave the Company and/or the Subsidiaries and the Seller
Represents that it is not aware of any intention of them to give such
notice.
22.5 Seller warrants that no present or previous employee of the Company
and/or the Subsidiaries has any claim against the Company arising out of
any breach by the Company of any of its obligations towards such
employee, except the claims mentioned in Schedule 30. Seller warrants
that no previous employee has submitted any claim for redundancy
payment, damages or other compensation as a result of the termination of
his/hers employment with the Company and/or the Subsidiaries.
22.6 Seller warrants that all provisions for pension contributions, holiday
payments or allowances or other compensation or payments owed by the
Company or the Subsidiaries to past or present employees as at 30
September 2000 have been included in the Interim Balance. Seller
warrants that a list of provisions for pension contributions, holiday
payments or allowances or other compensation or payments owed by the
20
24
Company or the Subsidiaries to past or present employees as at 30
November 2000 is enclosed as Schedule 31, and that since this date and
until signing of this Agreement there has been no material change in the
amounts owed except in the ordinary course of business and in accordance
with past practice.
22.7 An extraordinary general meeting shall be convened in the Company
without delay after Closing to appoint a new Board of Directors of the
Company. It is agreed between the Parties that the Board in the first
two years after Closing shall be appointed by the Buyer and in such a
way that three persons shall be appointed in accordance with the
nomination by the Seller which appointment shall not be unreasonably
withheld and two persons shall be appointed in accordance with the
nomination by the Buyer. In addition, according to Danish rules, up to
three employees shall be Board members.
After Closing the Board of Directors for the first term shall consist of
the persons listed in Schedule 32.
Board meetings shall be held at least three times a year. Xxxxxxx'x
agreement will be required on the Board of Directors for certain major
and specific board matters as budget and budget procedure and salary
level and strategic decisions for the Company and the Subsidiaries which
would include as a minimum: Proposed business and real estate
acquisitions, lease or debt obligations in excess of 1/2 million DKK,
capital expenditures in excess of 1/2 million DKK, director and key
management compensation.
23. COMPETITION LAW AND LEGAL REGULATIONS
23.1 Subject to Schedule 33 Seller warrants that the Company and the
Subsidiaries have not entered into agreements with any third party and
is not engaged in any practice violating any provisions of applicable
competition law. However, the Company rebate system as described in
Schedule 33 is structured as usual within the business.
21
25
23.2 The Parties agree that the Company and the Subsidiaries shall in the
future in accordance with the instructions given by the Board of
Directors of the Company comply with the competition law if this is not
already the case. It is also agreed that the members of the Board of
Directors of the Company appointed by the Seller shall be under an
obligation to vote in the same manner as board members appointed by the
Buyer in matters regarding competition law issues.
23.3 Seller warrants that, the Company and the Subsidiaries are in compliance
with all applicable legal regulations in all material respects.
24. DUE DILIGENCE
24.1 The Buyer has made a comprehensive due diligence review. Seller
Represents that the information disclosed in the due diligence process
has been for the information disclosed accurate, complete and precise in
all major aspects and the information passed on by the Seller gives a
fair and accurate picture of the Company's affairs.
24.2 A copy of all documents submitted by the Seller to the Buyer in the due
diligence process will at the signing of the Agreement be placed in
boxes under common seal of the Parties and shall be kept, seal unbroken,
by Kromann Reumert for at least five years following Closing. Either
Party shall upon due notification of the other Party be allowed access
to the documentation in case of any dispute between the Parties related
to this Agreement. See Schedule 33a.
25. CONFIDENTIALITY AND PRESS RELEASE
25.1 Except if required by law, no public announcement or other disclosure to
any third party concerning the contents of this Agreement and the
negotiations between the Parties shall be made without the prior written
approval of the other Party. Such approval shall not be unreasonably
withheld. However, the Seller accepts that the Buyer is obliged to
announce the proposed transaction to the SEC after the Agreement has
been signed. Therefore, after the Agreement has been signed both Parties
will issue a
22
26
press release and for the Company customer information as well. Each
Party's press release and the Company's customer information shall be
approved by the other Party and such approval shall not be unreasonably
withheld.
26. INTERIM PERIOD
26.1 Seller warrants that the Company and the Subsidiaries have since 30
September 2000 carried out and will carry out until the Closing Date its
activities solely in the normal and usual course of business, with care
and responsibility, so as to protect its relations and reputation
vis-a-vis third parties, the public authorities and any other persons
maintaining business relations with the Company and the Subsidiaries.
26.2 All warranties and representations of the Seller under this Agreement
shall be deemed given or reiterated at Closing, and in so far as a
warranty or representation is made with respect to the situation at the
date of the signing of this Agreement it shall be deemed to apply also
at Closing Date, unless the Seller no later than the day before Closing
Date at 6.00 p.m. local Danish time informs the Buyer in writing that a
certain warranty or representation due to facts of which the Seller was
not aware at the signing cannot be given or apply at Closing Date. If
the Buyer receives such notice, the Buyer shall at its discretion be
entitled to terminate this Agreement forthwith, and neither Party shall
be liable to the other due to such termination. However the Buyer shall
not be entitled to terminate this Agreement due to subjects of
insignificant nature.
27. POWERS
27.1 Schedule 34 lists the names and addresses of each person who has
received a general or special power of attorney from the Company or its
legal representatives, including any power concerning the Company's bank
accounts.
The Company's bank accounts are listed in Schedule 35.
23
27
28. INDEMNIFICATION OF THE BUYER AND REMEDIES
28.1 Seller shall not be liable for the breach of this Agreement to the
extent that the facts which would result in the breach are disclosed in
any of the Appendices to this Agreement or Seller proves that the
information has come to the Buyer's knowledge as a result of the
discussions and negotiations from June 2000 up to signing the Letter of
Intent and in the period from signing the Letter of Intent to signing
this Agreement, provided that such disclosure is sufficiently detailed
and comprehensive in order to enable the Buyer to reliably assess the
risk and the possible damage or loss which may result from such facts.
28.2 No liability shall arise in respect of any breach of any warranties or
otherwise
(i) if and to the extent that any claim occurs as the result of any
legislation not in force at the time hereof, or which takes
effect retrospectively or occurs as a result of any increase in
the rate of tax in force on the date hereof or any change in the
legal practice of the relevant tax authorities;
(ii) which will not have arisen but for the intentional negligent act
or omission carried out by the Buyer, or any other person
deriving title from the Buyer, after Closing Date;
(iii) in respect of any deficiency or cost which is recoverable under a
policy of insurance in force on the Closing Date for the Company
and/or the Subsidiaries, provided that the Company shall be
reimbursed any capital value of the potential increase in the
premium and own risk deductible, if any;
(iv) if any individual claim raised by the Buyer against the Seller
has the value of less than DKK 250,000;
(v) if the aggregated amount of claims raised by the Buyer against
the Seller is less than DKK 2.15 million.
24
28
The limitations of indents (iv) and (v) shall not apply to any claim
under Clause 18 of this Agreement. Such claims may be raised regardless
of individual size or aggregate amounts and without any time bar.
28.3 For product claims according to Clause 14.2-14.4 Clause 28.2 (iv) shall
mean that with respect to a specific product defect the Buyer shall be
entitled to combine claims raised on the basis of the same product
defect and consider such claims as one claim as regards the amount of
money claimed.
28.4 Any claim under the Agreement shall be raised within three years after
the Closing Date, except for tax claims. If a claim has not been raised
within three years after the Closing Date (except for tax claims) such
claim cannot be validly raised against the Seller.
28.5 The limitations according to Clause 28.2(iv) and (v) and Clause 28.4
shall not apply with respect to any claim relating to Seller's title to
the Shares or in case of any act or information of Seller which is
fraudulent or intentionally misleading.
28.6 The time bar according to Clause 28.4 shall not apply with respect to
product claims according to Clause 14.2-14.4. Any such product claims
shall be raised within five years after the Closing Date. If a product
claim according to Clause 14.2-14.4 has not been raised within five
years after the Closing Date such claim cannot be validly raised against
Seller.
29. BUYER'S INTENTIONS, REPRESENTATIONS AND WARRANTIES
25
29
29.1 The Parties agree that there are favourable advantages to maintain
production in Denmark. Therefore, there is no intention to move
production from Boulstrup. It is the Buyer`s intention to have the
production facilities in Boulstrup operate as a key production unit for
the Buyer's activities in North and Central Europe. Bulldog-Xxxxxxx'x
long term relationship with production in Norway is an exception.
29.2 The Buyer warrants that it will maintain production in Boulstrup at
least until December 31, 2005, except, if due to deteriorating market
and competitive conditions, the Company incurs losses at the operating
profit level (excluding goodwill and interest from the acquisition) for
two consecutive years. It is also agreed that this warranty does not
prevent the Buyer from moving a product/production line to another
country (e.g. Poland) if it is the most advantageous for the Xxxxxxx
Group as a whole. If market conditions make it necessary, the Company
will make redundancies to reduce production.
29.3 The Buyer shall provide a statement from the Board of Xxxxxxx
Manufacturing Company Inc. stating that the Xxxxxxx group of companies
intends to maintain its European activities at least until December 31,
2005.
30. THE FUTURE BUSINESS OF THE COMPANY
30.1 It is agreed that where practicable and where it is for the best
advantage for the overall European operations of the Xxxxxxx Group, any
current and future activities within the part of Europe listed in the
enclosed Schedule 36 within the product area of standard connectors for
timber and masonry (hangers, brackets, straps, etc.) will within the
limits of the competition law be carried out by the Company and/or the
Subsidiaries.
30.2 The future strategy of the Company is focused on continued growth and
development of both existing and new markets through both organic growth
and acquisition of competing and/or related companies.
26
30
30.3 The Buyer agrees subject to Buyer's purchase of the remaining shares in
Bulldog-Xxxxxxx GmbH to consolidate Bulldog-Xxxxxxx GmbH, Xxxxxxx'x
sales company in Germany, with the Company's and/or the Subsidiaries'
sales activities in Germany in a single operation, provided that this is
in the best interest of the Xxxxxxx Group from a legal and financial
point of view.
30.4 The Parties agree that if the Company takes over
GH-Baubeschlage-Xxxxxxxx GmbH, the German company shall be merged with
BMF Holzverbinder GmbH (or coordinated in a similar way). If the Buyer
takes over GH-Baubeschlage-Xxxxxxxx GmbH, GH-Baube-schlage-Xxxxxxxx
GmbH's future activities shall be consolidated with the activities of
the Company and/or the Subsidiaries provided that this is in the best
interest of the Xxxxxxx Group from a legal and financial point of view.
30.5 The provisions of this Clause 30 shall be subject to further review in
the light of competition law. If this review shows that the proposed
provisions conflict with competition law, the Parties shall agree on
terms which are as close as possible to the provisions of this Clause 30
and which may be validly agreed upon according to competition law.
31. NON-COMPETITION CLAUSE
31.1 For a period of two years after Closing Date the Seller undertakes not
to have any direct or indirect financial or business interest whether in
any form of business in Europe (except for passive investment in stocks
listed on a public stock exchange) which competes with the current
activities of the Company.
32. CLOSING
32.1 The Closing shall take place at the offices of Kromann Reumert, Arhus on
Closing Date or such other place or time as the Parties may agree.
32.2 At the Closing,
27
31
a) Buyer shall cause the basic purchase price to be paid to the
Seller in accordance with Clause 2.1 above,
b) Seller shall deliver to Buyer a resolution of the Board of
Directors of the Company approving the transfer of the Shares to
the Buyer;
c) Seller shall deliver to Buyer (i) duly updated Shareholders'
Register for the Company; (ii) the Company's Minutes Book,
Auditing Protocol, and all other corporate books.
33. EXPENSES
33.1 Each Party shall bear its own expenses with respect to this transaction.
34. COMPETITION AUTHORITIES
34.1 Seller is of the opinion that it is not necessary to notify the Danish
and German competition authorities about this transaction whereas the
Buyer shall bear the responsibility for handling any notification to or
approval from competition authorities in any other countries, except
from Norway which is handled by Seller.
35. GOVERNING LAW AND ARBITRATION
35.1 This Agreement shall be governed by and construed in accordance with
Danish law.
35.2 Any dispute or claim arising out of or in connection with this Agreement
shall be settled by arbitration in accordance with the "Rules of
Procedure of the Danish Institute of Arbitration (Copenhagen
Arbitration)". The arbitration tribunal shall be composed by three
arbitrators. The place of arbitration shall be Copenhagen and the
language of the proceedings, including any written pleadings, shall be
English.
36. COUNTERPARTS
28
32
36.1 This Agreement is signed in two original copies, one for each of the
Parties.
37. SCHEDULES
Schedule 1: Annual Accounts
Schedule 2: Accounts for the Subsidiaries
Schedule 3: Interim Balance
Schedule 3A: Definition of profit before tax
Schedule 3B: Definition of operating profit
Schedule 4: The Company's Articles of Association and transcript from
the Danish Commerce and Companies Agency
Schedule 5: The Company's Budget for 2001
Schedule 6: Assets sold etc. Schedule 7: Leased equipment
Schedule 8: Litigation
Schedule 9: Product claims
Schedule 10: Insurance claims
Schedule 11: Insurance policies
Schedule 12: Report by Xxxx Bro A/S of 18 December 2000 and Technical
note of 8 January 2001
Schedule 13: Memorandum on galvanization
Schedule 14: Registered IPR
Schedule 15: IPR rights to which third party has restricted rights
Schedule 16: Contracts with software and EDP-equipment suppliers
Schedule 17: Potential infringement of third party IPR
Schedule 18: Infringement by third party
Schedule 19: IPR disputes
Schedule 20: Changes in tax assessment for the income years 1996-1998
Schedule 21: Deeds of real estate
Schedule 22: Mortgages etc.
Schedule 23: Lease agreements
Schedule 24: The Company's farm land
29
33
Schedule 25: Major contracts
Schedule 26: List of employees
Schedule 27: Employment contracts
Schedule 28: Collective Bargaining Agreements and Local Agreements.
Schedule 29: Service Agreements for Xxxx Xxxxxxx and Xxxxxx Xxxxxxx
Schedule 30: Claims from employees
Schedule 31: List over payments owed by the Company as at 30 November
2000
Schedule 32: Board members
Schedule 33: The Company's rebate system
Schedule 34: List of persons who have received a general or special
power of attorney
Schedule 35: The Company's bank accounts
Schedule 36: The Company's main territory
Place and date: Place and date:
For Xxxxxxx Strong-Tie(R)
International, Inc.: For BMF Holding A/S:
(Buyer) (Seller)
By: /s/XXXXXX X XXXXXXXXX By: /s/XXXXXX XXXXXXX
-------------------------------- --------------------------------------
Name: Xxxxxx X Xxxxxxxxx Name: Xxxxxx Xxxxxxx
Title: Chairman Title: Manager
/s/XXXXXXX X. XXXXXX /s/XXXX XXXXXXX
-------------------------------- --------------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxx Xxxxxxx
Title: President Title: Manager
30
