EXHIBIT 10.01
THIS AGREEMENT is made on 23rd December, 1998 BETWEEN:
(1) THE PERSONS whose names and addresses are set out in column (A) of Schedule
1 (each a "Seller" and together the "Sellers");
(2) MERIFIRE OY (registered number 744.174) whose registered office is at
Xxxxxxxxxx 00X, 00000 Xxxxxxxx, Xxxxxxx (the "Purchaser"); and
(3) XXXXXXX INTERNATIONAL PLC (registered number 02798239) whose registered
office is at Masters House, 000 Xxxxxxxxxxx Xxxx, Xxxxxx X00 0XX (the
"Guarantor").
WHEREAS:
(A) Lokomec Oy (the "Company") is a private limited liability company short
particulars of which are set out in Schedule 2 having a registered share
capital of FIM250,000 represented by 405 ordinary shares of FIM500, each of
which has been issued fully paid or credited as fully paid (the "Shares").
(B) The Sellers are the owners of the Shares in the proportions set out against
their respective names in Schedule 1.
(C) The Sellers wish to sell and, in reliance upon (inter alia) the
representations, warranties, indemnities and undertakings set out in this
agreement, the Purchaser wishes to purchase the Shares on the terms set out
in this agreement.
(D) The Company has declared a dividend regarding the fiscal year ending 31st
August, 1998 of FIM4,106,700 payable on 5th January, 1999 to the Sellers in
accordance with the decision of the shareholders' meeting of 7th December,
1998.
IT IS AGREED as follows:
1. INTERPRETATION
(1) In this agreement:
"Accountants" means Ernst & Young of Helsinki, or such other firm of
internationally reputable accountants appointed by or at the direction of
the Purchaser;
"Accounting Standards" means in accordance with generally accepted
accounting principles and practices in Finland and, subject to the
foregoing, the accounting policies, practices, principles and treatments
(including, for the
avoidance of doubt, depreciation) consistently applied by the Company for
annual statutory reporting purposes as at the Accounts Date;
"Accounts" means the statutory audited profit and loss statement for the
year ended on the Accounts Date and the balance sheet as at the Accounts
Date of the Company;
"Accounts Date" means 31st August, 1998;
"Additional Cash Consideration" means the amount payable by the Purchaser
to the Sellers under subclause 3(2);
"1999 Accounts" means the accounts of the Company for the period 1st
September, 1998 to 31st August, 1999, to be prepared by the Accountants in
accordance with the Accounting Standards;
"2000 Accounts" means the accounts of the Company for the period 1st
September, 1999 to 31st August, 2000, to be prepared by the Accountants in
accordance with the Accounting Standards;
"2001 Accounts" means the accounts of the Company for the period 1st
September, 2000 to 31st August, 2001, to be prepared by the Accountants in
accordance with the Accounting Standards;
"Business Day" means a day (excluding Saturday) on which banks are open for
business in New York, London and Finland;
"Completion" means completion of the sale and purchase of the Shares in
accordance with clause 6;
"Completion Date" means the date Completion takes place;
"Deferred Consideration" means any amount payable by the Purchaser to the
Sellers under clause 4;
"Disclosure Letter" means the letter of the same date as this agreement
from the Sellers to the Purchaser;
"EBIT Statement" means a statement of the 1999 EBIT, 2000 EBIT or 2001 EBIT
(as the case may be);
"1999 EBIT" means such sum (whether positive or negative) as is the profits
or the losses (as the case may be) of the Company as shall be ascertained
from the 1999 Accounts before deducting any taxation on profits, and
excluding any management charges payable to the Purchaser's Group,
directors fees, other costs incurred by the Company in connection with the
services of personnel not directly involved in the day to day business of
the Company assigned to the Company by the Purchaser, the costs incurred by
the
-2-
Company in connection with the preparation and finalisation of the EBIT
Statements, interest and other charges on borrowings payable by the Company
and interest income payable to the Company;
"2000 EBIT" means such sum (whether positive or negative) as is the profits
or the losses (as the case may be) of the Company as shall be ascertained
from the 2000 Accounts before deducting any taxation on profits and
excluding any management charges payable to the Purchaser's Group,
directors fees, other costs incurred by the Company in connection with the
services of personnel not directly involved in the day to day business of
the Company assigned to the Company by the Purchaser, the costs incurred by
the Company in connection with the preparation and finalisation of the EBIT
Statements, interest and other charges on borrowings payable by the Company
and interest income payable to the Company;
"2001 EBIT" means such sum (whether positive or negative) as is the profits
or the losses (as the case may be) of the Company as shall be ascertained
from the 2001 Accounts before deducting any taxation on profits and
excluding any management charges payable to the Purchaser's Group,
directors fees, other costs incurred by the Company in connection with the
services of personnel not directly involved in the day to day business of
the Company assigned to the Company by the Purchaser, the costs incurred by
the Company in connection with the preparation and finalisation of the EBIT
Statements, interest and other charges on borrowings payable by the Company
and interest income payable to the Company;
"Escrow Agreement" means the agreement in the form of that attached as
Schedule 5 to be entered into between the Sellers, the Purchaser and Xxxxxx
Bank Oyj contemporaneously with the signing of this agreement;
"Initial Cash Consideration" means the amount payable by the Purchaser to
the Sellers under subclause 3(l);
"Intellectual Property Rights" means trade marks, trade and business names,
rights in designs, patents, copyright, database rights, moral rights and
rights in know-how and other intellectual property rights in each case
whether registered or unregistered and including applications for the grant
of any of the foregoing and all rights or forms of protection having
equivalent or similar effect to any of the foregoing which may subsist
anywhere in the world;
"Key Person" means each of the Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxx Xxxxxx,
Xxxxx Xxxxx and Xxxxx Xxxxxx, together the "Key Persons";
-3-
"Properties" means the immovable properties shortly described in Schedule 3
and "Property" means any of them and includes every part of each of them;
"Purchaser's Group" means the Purchaser, its subsidiaries and subsidiary
undertakings from time to time, the Guarantor and all subsidiaries or
subsidiary undertakings, of the Guarantor (other than the Company) from
time to time;
"Taxation" means all direct and indirect taxes (including value added tax),
social security contributions and other similar charges levied from or to
be withheld and/or paid by the Company, as well as all interest or fines on
any of them;
"Warranties" means the representations and warranties on the part of the
Sellers contained in clause 5(l).
(2) In this agreement any reference, express or implied, to an enactment
includes references to:
(a) that enactment as re-enacted, amended, extended or applied by or
under any other enactment before or after the signature of this
agreement;
(b) any enactment which that enactment re-enacts (with or without
modification); and
(c) any subordinate legislation made (before or after the signature
of this agreement) under that enactment, as re-enacted, amended,
extended or applied as described in paragraph (a) above, or under
any enactment referred to in paragraph (b) above;
and "enactment" includes any legislation in any jurisdiction.
(3) Where any statement is qualified by the expression "so far as the
Sellers are aware" or "to the best of the Sellers' knowledge,
information and belief" or any similar expression that statement shall
be deemed to include an additional statement that it has been made
after due and careful enquiry.
(4) Words denoting persons shall include bodies corporate and
unincorporated associations of persons.
(5) Subc1auses (1) to (4) above apply unless the contrary intention
appears.
(6) The headings in this agreement do not affect its interpretation.
-4-
2. SALE AND PURCHASE OF THE SHARES
(1) The Sellers hereby sell and the Purchaser hereby purchases the Shares
together with all rights attaching to them other than the dividend
rights pertaining to the fiscal year ending on the Accounts Date
approved in the shareholders' meeting of 7th December, 1998 and
payable to the Sellers.
(2) The Sellers covenant with the Purchaser as follows:
(a) that they have the right to sell and transfer the full legal and
beneficial interest in the Shares to the Purchaser on the terms
set out in this agreement; and
(b) that on Completion they will, at their own cost and expense,
execute and do (or procure to be executed and done by any other
necessary party) all such deeds, documents, acts and things as
the Purchaser may from time to time require in order to vest any
of the Shares in the Purchaser or its assignee or as otherwise
may be necessary to give full effect to this agreement.
(3) The Shares shall be sold free from all liens, charges, equities and
encumbrances and other rights exercisable by third parties.
(4) The Sellers and the Purchaser agree that the risk and reward of the
Company shall be for the account of the Purchaser from 1st September,
1998.
(5) The total consideration of the sale of the Shares shall be the
aggregate of the Initial Cash Consideration, the Additional Cash
Consideration and the Deferred Consideration (if any), payable by the
Purchaser in accordance with clauses 3 and 4. The aggregate amount of
the Initial Consideration and the Additional Cash Consideration is
FIM81,000,000.
3. INITIAL CASH CONSIDERATION AND ADDITIONAL CASH CONSIDERATION
(1) The initial consideration for the sale of the Shares shall be the sum
of FIM70,000,000 payable in cash on Completion (the "Initial Cash
Consideration").
(2) The additional consideration for the sale of the Shares shall be the
sum of FIM11,000,000 (the "Additional Cash Consideration") which shall
be paid on Completion into the Seller's account in the name of the
Sellers (the "Escrow Account") with Xxxxxx Bank Oyj in accordance with
the terms of the Escrow Agreement. Subject to subc1ause 4(10), payment
of the Additional Cash
-5-
Consideration shall be made from the Escrow Account in three
installments in accordance with the terms of the Escrow Agreement:
(a) the sum of FIM5,000,000 on the date 12 months following the
Completion Date;
(b) the sum of FIM3,000,000 on the date 18 months following the
Completion Date; and
(c) the sum of FIM3,000,000 together with interest earned on the
Escrow Account on the date 24 months following the Completion
Date.
(3) The Sellers shall be entitled to the Initial Cash Consideration and
Additional Cash Consideration in the proportions shown in columns C
and D of Schedule 1.
4. DEFERRED CONSIDERATION
(1) As further consideration for the sale of Shares the Purchaser shall
(subject to the terms of this agreement) pay to the Sellers such sums
(if any) as shall be payable pursuant to subclauses 4(6), 4(7) and
4(8).
(2) Within 3 months of the end of the relevant period the Purchaser shall
prepare and instruct the Accountants to audit the 1999 Accounts, the
2000 Accounts and the 2001 Accounts and to deliver a copy, together
with a draft of the 1999 EBIT, 2000 EBIT or 2001 EBIT Statement (as
the case may be) to the Purchaser and the Sellers.
(3) Within 30 days of delivery of each draft EBIT Statement the Sellers
shall notify the Purchaser in writing of any item or items they wish
to dispute, failing which the relevant draft EBIT Statement shall be
deemed to have been accepted. All costs incurred by the Accountants in
the preparation of the 1999 EBIT, the 2000 EBIT and the 2001 EBIT
Statements shall be borne by the Company.
(4) If the item or items disputed in accordance with subclause 4(3) are
not agreed in writing between the Sellers and the Purchaser within 45
days of delivery in accordance with subclause 4(2) above the item or
items in dispute shall be determined by:
(a) such firm of accountants as the parties shall agree in writing;
or
(b) failing agreement of the identity of the firm of accountants
within a further 10 days from the expiry of the period of 45 days
referred to above, such firm of internationally reputable
accountants
-6-
as may be appointed for this purpose on the application of any
party to this agreement by the Arbitration Board of the Finnish
Central Chamber of Commerce.
(5) The accountants appointed under subclause 4(4) above (the "Independent
Accountants") shall act on the following basis:
(a) their terms of reference shall be to determine an amount which in
their opinion represents the item or items in dispute, as
notified to them in writing by either the Sellers or the
Purchaser within 10 days of their appointment and confirm the
EBIT Statement following such determination which shall be final
and binding between the parties;
(b) the Sellers and the Purchaser shall each provide the Independent
Accountants with all information which they reasonably require
and the Independent Accountants shall be entitled (to the extent
they consider it appropriate) to base their opinion on such
information and on the accounting and other records of the
Company;
(c) the determination of the Accountants shall (in the absence of
manifest error) be conclusive and final without recourse to
arbitration; and
(d) their costs shall be borne by the Company.
(6) On determination of the 1999 EBIT the Purchaser shall pay to the
Sellers, as further consideration for the sale of the Shares, a sum
(which may be nil) which shall be calculated as follows (the "1999
Payment"):
[OBJECT OMITTED]
(7) On determination of the 2000 EBIT the Purchaser shall pay to the
Sellers, as further consideration for the sale of the Shares, a sum
(which may be nil) which shall be calculated as follows (the "2000
Payment"):
[OBJECT OMITTED]
-7-
(8) On determination of the 2001 EBIT the Purchaser shall pay to the
Sellers, as further consideration for the sale of the Shares, a sum
(which may be nil) which shall be calculated as follows (the "2001
Payment"):
[OBJECT OMITTED]
(9) The 1999 Payment, the 2000 Payment and the 2001 Payment shall be made
by the Purchaser to the Sellers within one month of the relevant EBIT
Statement being finally determined in accordance with sub-clauses
4(3), 4(4) and 4(5).
(10) Subject to the terms of clause 5, the Purchaser may deduct from any
amount of Additional Cash Consideration due and payable any sum due to
it in respect of any breach of the obligations, Warranties and
undertakings on the part of the Sellers in this agreement. If the
amount claimed exceeds the amount of Additional Cash Consideration
deposited in the Escrow Account at that date, the Purchaser may deduct
the balance from any amount of Deferred Consideration due and payable
or which becomes due and payable.
(11) The Sellers shall be entitled to the Deferred Consideration (if any)
in the proportions shown in column E of Schedule 1.
(12) In the period from Completion to 31st August, 2001:
(a) the Purchaser shall not require that the Company buys products
manufactured or distributed by the Purchaser's Group unless such
products are competitive in terms of price, quality and delivery
time with similar products manufactured or distributed by third
party suppliers, in which case the Company may be required to
purchase the product manufactured or distributed by the
Purchaser's Group unless a customer of the Company specifies
otherwise;
(b) subject to the restrictions in subclause 4(12)(a) above, the
Purchaser shall not restrict the Company from purchasing products
and services from suppliers which are not members of the
Purchaser's Group;
(c) any decision concerning:
(i) the price of goods or services sold to members of the
Purchaser's Group;
(ii) the employment of new personnel the aggregate annual costs
of which is in excess of FIM 500,000;
-8-
(iii) the appointment of a new Managing director;
(iv) individual investments exceeding FIM 100,000;
(v) changing the nature of or relocating the business as it is
currently carried on;
(vi) division of the Company or its business; and
(vii) changing the bookkeeper of the Company,
shall require the approval of both the Purchaser's representatives and
at least one of the Seller's representatives on the board of directors
of the Company, each such representative having been appointed in
accordance with subclause 4(12)(g), it being acknowledged and agreed
by the Sellers that they shall not act unreasonably in obstructing the
Purchaser's management of the Company;
(d) the Purchaser shall not cease or assign the business currently
carried on by the Company or any part thereof without the prior
consent of the Sellers, such consent not to be unreasonably
withheld, and the Purchaser shall not reduce the operations of
the business currently carried on by the Company, except in
response to a decline in production requirements caused by market
conditions;
(e) The Purchaser shall not restrict the Company from selling to
customers of the Company as at the Completion Date or new
customers in Finland and Norway on terms and conditions
consistent with past practice, including the use of any trade or
business name currently used by the Company. The Company shall
also be permitted to sell its products to new customers in
Sweden, having first consulted with Xxxxxxx Hydraulik Svenska AB
and, if no agreement is reached with Xxxxxxx Hydraulik Svenska
AB, subject to the approval of the Guarantor.
The Purchaser shall not and the Guarantor shall procure that members
of the Purchaser's Group do not establish competing organisations in
Norway or Finland, it being agreed that members of the Purchaser's
Group may continue to do business in Norway or Finland on the same
basis as business is carried on at Completion.
The Purchaser represents and warrants to the Sellers that existing
distribution agreements in Finland and Norway are not in respect of
products similar to those currently produced by the Company and the
Company will
-9-
not be liable to pay any costs pursuant to such distribution
agreements nor will the business of the Company be restricted in
Finland or Norway following Completion for any reason due to the
aforementioned distribution agreements;
(f) the Purchaser shall not restrict the Company from borrowing money
from its bankers for working capital and capital expansion
purposes as set out in the business plan approved by the board of
directors of the Company (provided that such loans shall be
without recourse to the Purchaser or members of the Purchaser's
Group);
(g) the board of directors of the Company shall consist of four
members, two of whom shall be nominated by each of the Purchaser
(Anders C H Brag and Xxxxx X Xxxx) and the Sellers respectively;
(h) the Purchaser shall nominate the chairman of the board of
directors (Anders C H Brag), the chairman to have a casting vote;
and
(i) board meetings of the Company shall be held once each calendar
year at Tampere, and if held more than once each calendar year,
at a venue to be agreed.
5. WARRANTIES
(1) Each of the Sellers represents and warrants to the Purchaser that:
(a) except as fully and fairly disclosed to the Purchaser in the
Disclosure Letter or this agreement, each of the statements set
out in Schedule 4 is true and accurate;
(b) all information relating to the Company or its assets or affairs
which would be material for value of the shares, undertakings or
assets of the Company as a whole is contained in this agreement
and the Disclosure Letter; and
(c) all information contained or referred to in the Disclosure Letter
is true and accurate and fairly presented and nothing has been
omitted from the Disclosure Letter which renders any of that
information incomplete or misleading.
(2) Each of the Warranties set out in the several paragraphs of Schedule 4
is separate and independent and except as expressly provided to the
contrary in this agreement is not limited by reference to any other
-10-
paragraph of Schedule 4 and none of the Warranties shall be treated as
qualified by any actual or constructive knowledge on the part of the
Purchaser or any of its agents.
(3) Disclosures in the Disclosure Letter or otherwise in this agreement
shall be deemed as disclosure against all the Warranties.
(4) Subject to the terms of this clause 5 the Sellers shall indemnify (and
keep indemnified) the Purchaser from and against any direct damages,
costs (including legal costs), liabilities and expenses incurred by
the Company and members of the Purchaser's Group by reason of any
breach of the Warranties or any of the Warranties being untrue or
misleading.
(5) In the absence of fraud, dishonesty or wilful concealment on the part
of the Sellers or their agents or advisers the liability of the
Sellers in respect of the Warranties:
(a) shall not exceed the aggregate of the Initial Cash Consideration,
the Additional Cash Consideration, and the Deferred Consideration
actually paid by the Purchaser and shall be limited in the case
of each individual Seller to the amount received by that Seller;
(b) shall not arise unless the amount of all claims made in respect
of the Warranties (or which would have been made but for the
operation of this paragraph) exceeds FIM450,000 in which case the
Purchaser shall be entitled to claim for all such breaches and
not merely the excess over FM450,000; and
(c) shall terminate:
(i) on the fifth anniversary of Completion in respect of those
matters set out in Part D (Taxation) and Part C.6
(Anti-competitive Arrangements) of Schedule 4 and any other
matters so far as they relate to taxation;
(ii) on the third anniversary of Completion in respect of those
matters set out in Part A.11 (Environmental Matters) of
Schedule 4; and
(iii) on the second anniversary of Completion in respect of all
other matters contained in Schedule 4;
except in respect of any claim of which notice in writing is given to
the Sellers before that date.
-11-
(6) If a Seller or Sellers are in breach of the Warranties set out in
paragraphs A.3, A.4(3), A.4(5), A.13(l), A.13(2) or A.13(3)(a)(i) of
Schedule 4 or any other covenant or undertaking in this agreement only
the Seller or Sellers who are in breach of such Warranties,
covenant(s) or undertaking(s) shall be liable to indemnify the
Purchaser in respect of any such breach.
(7) The Purchaser shall be entitled to be indemnified for the full amount
of direct damages, loss, liability or expense suffered by the
Purchaser in respect of a breach of this agreement (including a breach
of Warranty). However, the Purchaser shall have no right to invoke a
breach of this agreement if the breach is covered by an insurance
payment to the Purchaser or a member of the Purchaser's Group.
(8)
(a) In the event the Purchaser or the Company receives a claim from
a third party which may result in the Purchaser having a claim
against the Sellers under the Warranties, the Purchaser shall
not defend or settle the claim without first consulting with the
Sellers and when settling any such claim the Purchaser shall
take the reasonable commercial interests of the Sellers into
account.
(b) In the event the Company or the Purchaser has a claim against a
third party in relation to any matter which constitutes a breach
of this agreement by the Sellers, upon payment of any
indemnification or compensation by the Sellers to the Purchaser,
the Sellers shall be subrogated in respect of all rights to
reimbursement or indemnification against such third party to the
extent of the amount paid to the Purchaser. The parties agree
that they will take all such steps as may be necessary or
appropriate to effect such subrogation.
(9) Any payment made by the Sellers in respect of a breach of the
Warranties shall be deemed to be a reduction in the consideration for
the sale and purchase of the Shares.
6. COMPLETION
(1) Completion shall take place at the offices of the Company immediately
after the signature of this agreement.
(2) At Completion the Sellers shall procure:
(a) the delivery to the Purchaser of:
-12-
(i) duty executed transfers in favour of the Purchaser of all
the Shares;
(ii) a certified copy of the Accounts;
(iii) the share certificate(s) representing the Shares (or an
express indemnity in a form satisfactory to the Purchaser in
the case of any found to be missing);
(iv) an extract from the trade register including the articles of
association, the share register and shareholders' register
of the Company;
(v) the documents of the title registration in respect of the
immovable Properties;
(vi) proof in a form satisfactory to the Purchaser that the
Company has filed a tax return for the financial year ending
31st August, 1998 with the competent authorities;
(vii) the resignations of such directors of the Company as the
Purchaser may request, in each case acknowledging that he
has no claim against the Company whether for loss of office
or otherwise; and
(viii) evidence in a form satisfactory to the Purchaser that the
minor, Xxxx Xxxxxx, is entitled to transfer his Shares.
(b) that a general meeting of the Company is held at which it is
resolved that:
(i) such persons as the Purchaser and the Sellers nominate in
accordance with subclause 4(12)(g) are appointed as
directors of the Company;
(ii) Ernst & Young of Helsinki are appointed as auditors and the
appointment of Tilintarkastustoimisto Idman & Xxxxx Oy is
terminated; and
(iii) its bank mandates are revised in such manner as the
Purchaser requires.
(3) Simultaneously with completion of all the matters referred to in
subclause (2) above the Purchaser shall pay (i) the Initial Cash
Consideration to the Sellers; and (ii) the Additional Cash
Consideration into the Escrow Account.
-13-
(4) If for any reason the provisions of subclause (2) above are not fully
complied with the Purchaser may elect (in addition and without
prejudice to all other rights or remedies available to it) to rescind
this agreement or to fix a new date for Completion.
7. GUARANTEE
(1) The Guarantor guarantees to each Seller the due and punctual payment
and performance of all the obligations of the Purchaser arising under
this agreement.
(2) The obligations of the Guarantor under this clause:
(a) constitute a direct, primary and unconditional liability to pay
on demand to each Seller any sum which the Purchaser is liable to
pay under this agreement without the need for any recourse on the
part of a Seller against the Purchaser;
(b) will not be affected by any time or indulgence granted to the
Purchaser by a Seller;
(c) will not be affected by any legal limitation, disability or other
circumstances relating to the Purchaser; and
(d) is a continuing guarantee and shall remain in force until all
obligations of the Purchaser under this agreement have been
satisfied.
(3) The Sellers shall procure that prior to Completion the Company is
released from all (if any) guarantees and indemnities given by it in
favour of the Sellers.
8. PROTECTIVE COVENANTS
(1) The Purchaser undertakes to procure that the Company enters into and
Xxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxx Xxxxx and Xxxxx Xxxxxx undertake to
enter into employment agreements for a fixed period of three (3) years
on terms and conditions no less favourable than under these Key
Persons' current agreements. The Purchaser undertakes to procure that
the Company enters into and Xxxxxx Xxxxxxx undertake to enter into a
Managing Director's Agreement for a fixed period of three (3) years on
terms and conditions no less favourable than under Xxxxxx Xxxxxxx'x
current agreement. The Key Persons and the Purchaser on behalf of the
Company undertake to negotiate such agreements by the end of January
1999. If any of such agreement(s) is not entered into by the end of
January 1999, sub-clause 8(5) shall apply concerning such Key
Person(s) until such agreement(s) are entered into.
-14-
(2) Each of the Sellers (excluding Xxxx Xxxxxx) separately covenants with
the Purchaser that he or she will not, either alone or jointly or as
manager, agent for or consultant or employee of any person directly or
indirectly, unless acting for or on behalf of the Company:
(a) for a period of five years from Completion be concerned in any
business carrying on business in Finland, Norway or Sweden which
is competitive or likely to be competitive with any of the
businesses carried on by the Company at Completion; or
(b) for a period of five years from Completion canvass or solicit
orders for goods of similar type to those being manufactured or
dealt in or for services similar to those being provided by the
Company at Completion from any person who is at Completion or has
been at any time within the year prior to Completion a supplier
or customer of the Company; or
(c) for a period of five years from Completion induce or attempt to
induce any supplier of the Company to cease to supply, or to
restrict or vary the terms of supply, to the Company; or
(d) for a period of five years from Completion induce or attempt to
induce any employee of the Company to leave the employment of the
Company; or
(e) make use of or (except as required by law or any competent
regulatory body) disclose or divulge to any third party any
information of a secret or confidential nature relating to the
business or affairs of the Company or its customers or suppliers;
or
(f) use or (insofar as it can reasonably do so) allow to be used
(except by the Company) any trade name used by the Company at
Completion or any other name intended or likely to be confused
with such a trade name.
(3) For the purposes of subclause (1) above:
(a) a Seller is concerned in a business if it carries it on as
principal or agent or if:
(i) it is a partner, director, consultant or agent in, of or to
any person who carries on the business; or
-15-
(ii) it has any direct or indirect financial interest (as
shareholder or otherwise) in any person who carries on the
business; or
(iii) it is a partner, director, consultant or agent in, of or to
any person who has a direct or indirect financial interest
(as shareholder or otherwise) in any person who carries on
the business
disregarding any financial interest of a person in securities which
are listed on any recognised stock exchange if that person and the
Sellers are interested in securities which amount to less than 5 per
cent. of the issued securities of that class and which, in all
circumstances, carry less than 5 per cent. of the voting rights (if
any) attaching to the issued securities of that class; and
(b) references to the Company include its successors in business.
(4) If on the date 3 years from Completion a Key Person is no longer
employed by the Company, the restrictions set out in subclauses
8(l)(a), (b) and (c) shall not prevent the relevant Key Person from
being employed in any business and the restrictions in subclauses
8(l)(a), (b) and (c) shall be deemed to be released to the extent
necessary to permit the relevant Key Person to provide his or her
services as an employee.
(5) If the employment of a Seller (not being a Key Person) is terminated
before the date 3 years from Completion against his or her will by the
Company for reasons other than those set out in section 43 of the
Finnish Employment Contracts Act, the restrictions set out in
subc1auses 8(l)(a) and (b) shall be deemed to be released to the
extent necessary to permit the relevant Seller to provide his or her
services as an employee. If such a Seller is no longer employed by the
Company after the date 3 years from Completion then the restrictions
set out in subclauses 8(l)(a) and (b) shall be deemed to be released
to the extent necessary to permit the relevant Seller to provide his
or her services as an employee.
(6) Each of the restrictions in each paragraph or subc1ause above shall be
enforceable by the Purchaser independently of each of the others and
its validity shall not be affected if any of the others is invalid; if
any of those restrictions is void but would be valid if some part of
the restrictions were deleted the restriction in question shall apply
with such modification as may be necessary to make it valid.
-16-
(7) The Sellers acknowledge that the above provisions of this clause are
no more extensive than is reasonable to protect the Purchaser as the
purchaser of the Shares.
9. ANNOUNCEMENTS
No party shall make any announcement concerning this sale and purchase or
any ancillary matter before, on or after Completion except as required by
law or any competent regulatory body (including the Nasdaq National Market)
or with the written approval of Xxxxxx Xxxxxxx on behalf of the Sellers and
the Purchaser (as the case may be), such approval not to be unreasonably
withheld or delayed.
10. NOTICES
(1) Any notice or other document to be served under this agreement may be
delivered, sent as a registered letter or by facsimile process to the
party to be served at the address and number appearing below or at
such other address or number as it may have notified to the other
party in accordance with this clause:
(a) to each of the Sellers at the addresses set out in Schedule 1;
(b) to the Purchaser:
Xxxxxxx International plc
00000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxx 00000
Xxxxxx Xxxxxx of America
Fax: 00 0 000 000 0000
Marked for the Attention of: Chief Financial Officer
(2) Any notice or document shall be deemed to have been served:
(a) if delivered, at the time of delivery; or
(b) if posted, at 10.00 a.m. on the fifth business day after it was
put into the post; or
(c) if sent by facsimile process, at the expiration of 2 hours after
the time of despatch, if despatched before 3.00 p.m. on any
business day, and in any other case at 10.00 a.m. on the business
day following the date of despatch.
(3) In proving service of a notice or document it shall be sufficient to
prove that delivery was made or that the envelope containing the
notice or document was properly addressed and posted as a registered
air mail letter or that the facsimile message was properly addressed
and despatched as the case may be.
-17-
11. RESOLUTIONS AND WAIVERS
(1) In relation to the Company the Sellers shall procure the convening of
all meetings, the giving of all waivers and consents and the passing
of all resolutions as are necessary under the law, its articles of
association or any agreement or obligations affecting it to give
effect to this agreement.
(2) Each of the Sellers waives (and shall procure the waiver by its
nominee(s) of) all rights of pre-emption which it (or such nominee(s))
may have (whether under the Company's articles of association or
otherwise) in respect of the transfer to the Purchaser or its
nominee(s) of the Shares or any of them.
12. GENERAL
(1) Each of the obligations, Warranties and undertakings set out in this
agreement which is not fully performed at Completion will continue in
force after Completion.
(2) The Purchaser shall indemnify the Sellers for any loss or damage
resulting from the failure by the Company to pay dividends to the
Sellers declared in the general meeting of the shareholders of the
Company on 7th December, 1998 for payment on or before 5th January,
1998.
(3) Unless otherwise expressly stated all payments to be made under this
agreement shall be made in Finnish Marks to the party to be paid as
follows:
(a) to the Sellers by delivery to them in immediately available funds
to the account at:
bank: Xxxxxx Bank
swift code: XXXXXXXX
account number: 114650-125 8641
or such other account as the Sellers may specify; and
(b) to the Purchaser by delivery to it in immediately available funds
to the account at:
bank: Provident Bank
0 Xxxx 0xx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Xxxxxx Xxxxxx of America
sort code: 042000424
account number: 0697-063
or such other account as the Purchaser may specify.
-18-
If any payment under this agreement denominated in Finnish Marks
cannot be effected in that currency, the payment shall be effected in
any equivalent currency.
(4) The receipt of Xxxxxx Xxxxxxx on behalf of the Sellers for any sum or
document to be paid or delivered to the Sellers will discharge the
Purchaser's obligation to pay or deliver it to the Sellers.
(5) If the Shares are sold or transferred after Completion, the benefit of
each of the obligations, Warranties and undertakings undertaken or
given by the Sellers may be assigned to the purchaser or transferee of
the Shares who may enforce them as if it had been named in this
agreement as the Purchaser.
(6) Subject to subclause (5) above none of the rights or obligations under
this agreement may be assigned or transferred without the prior
written consent of all the parties.
(7) If any warranty or indemnity payments due under this agreement from
the Sellers are liable to Taxation (whether in the hands of the
Purchaser or the Company) the Sellers shall be liable under the
subclause to pay to the Purchaser or the Company such further sums as
will ensure that the aggregate of the sums paid or payable under this
agreement shall, after deducting therefrom all liabilities for
Taxation in respect of such sums, leave the Purchaser and the Company
with the same amount as they would have been entitled to receive under
this agreement in the absence of any such liability for Taxation.
(8) Time is of the essence in relation to this agreement.
(9) With the exception of:
(a) transfer tax assessed in Finland in connection with the transfer
of the Shares to the Purchaser, which shall be borne by the
Purchaser; and
(b) costs payable to Xxxxxx Bank Oyj in connection with the opening
and running of the Escrow Account, which shall be borne by the
Sellers,
each party shall pay the costs and expenses incurred by it in connection
with the entering into and completion of this agreement.
(10) This agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same agreement and
any party may enter into this agreement by executing a counterpart.
-19-
13. WHOLE AGREEMENT
(1) This agreement and the documents referred to in it contain the whole
agreement between the parties relating to the transactions
contemplated by this agreement and supersede all previous agreements
between the parties relating to these transactions.
(2) Each of the parties acknowledges that in agreeing to enter into this
agreement it has not relied on any representation, warranty,
collateral contract or other assurance (except those set out in this
agreement and the documents referred to in it) made by or on behalf of
any other party before the signature of this agreement. Each of the
parties waives all rights and remedies which, but for this subclause,
might otherwise be available to him in respect of any such
representation, warranty, collateral contract or other assurance,
provided that nothing in this subclause shall limit or exclude any
liability for fraud.
14. GOVERNING LAW
(1) This agreement is governed by and shall be construed in accordance
with the laws of Finland.
(2) Any dispute, controversy or claim arising out of or relating to this
agreement (other than the determination of an EBIT Statement, which
shall be dealt with in accordance with clause 4) or the termination,
breach or invalidity thereof shall be finally settled by arbitration
in accordance with the Arbitration Rules of the Finnish Central
Chamber of Commerce. Any arbitration hearing shall be held in
Helsinki.
AS WITNESS the hands of the duly authorised officers of the Sellers and of the
Purchaser on the date which appears first on page 1.
-20-
