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Exhibit 2.0
SALE AND PURCHASE AGREEMENT
BY AND BETWEEN
TAMROCK OY
AND
XXXXXXX DENVER OY
DATED AS OF JUNE 30, 1997
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Table of Contents
1. SALE OF SHARES
2. PURCHASE PRICE; PAYMENT
2.1 Purchase Price
2.2 Basis for Purchase Price
2.3 Payment
2.4 Adjustment Payment
2.5 Inventory Accounts
2.6 Delay Interest
3. TITLE TO SHARES
4. OTHER AGREEMENTS
4.1 Inter-company accounts
4.1.1 Overdue Payables and Trade Payables
4.1.2 Inter-company Debt
4.2 Release of Guaranties, Indemnities, and Like Arrangements; GDMI's
undertaking
4.3 Discharge of Directors' and Officers' Liabilities
4.4 Objects of Art
4.5 Supply and/or Licence Agreement
4.6 Lease Agreement
4.7 Confidentiality; Non-competition
4.8 Intellectual Property
4.9 Transition Services
4.10 Bearer Notes
4.11 No Claims
5. CONDITIONS PRECEDENT FOR CLOSING
5.1 Conditions Precedent of the Buyer
5.2 Conditions Precedent of the Seller
5.3 Lump Sum Payment
6. CLOSING
7. REPRESENTATIONS AND WARRANTIES OF THE SELLER
7.1 Ownership
7.2 Litigation
7.3 Financial Statements; Books and Records
7.4 Absence of Certain Changes
7.5 Agreements; Orders
7.6 Guarantees
7.7 Intangible Assets
7.8 Taxes
7.9 Assets and Properties
7.10 Environmental Matters
7.11 Compliance
7.12 Employment and Pension Agreements
7.13 Product Warranty and Liability
8. REPRESENTATIONS AND WARRANTIES OF THE BUYER
8.1 Due Diligence Review and Full Access
8.2 No Knowledge of Breach
9. INDEMNITIES
9.1 The Seller's Indemnity
9.2 The Buyer's Indemnity
9.3 Third Party Claims; Notification
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9.4 Breach Discovered Prior to Closing
9.5 Claims
9.6 Limitations on the Seller's Liability.
9.7 Repayment
9.8 Subrogation.
9.9 Exclusive Remedy.
10. RELIANCE
11. MISCELLANEOUS
11.1 Survival of Representations and Warranties.
11.2 Stamp Duty
11.3 Confidentiality
11.4 Public Announcements
11.5 Entire Agreement; Amendment
11.6 Arbitration
11.7 Notices
11.8 Further Assurances
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Exhibit 2.2 Financial Information 6
Exhibit 2.4 Xxxx of Sale 6
Exhibit 4.5 Supply Agreement 9
Exhibit 7.5.a Significant Agreements 15
Exhibit 7.6 Loans and liabilities 16
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THIS SALE AND PURCHASE AGREEMENT is made on this 30 day of June, 1997
BY AND BETWEEN
1. Tamrock Oy, a Finnish corporation, whose registered address is at X.X.
Xxx 000, XXX-00000 Xxxxxxx, Xxxxxxx, hereinafter referred to as the
"Seller"; and
2. Xxxxxxx Denver Oy, a Finnish corporation, whose registered address is
x/x Xxxxxxxx-Xxxxxxxx & Xxxxxxxx, Xxxxxxxxxx 0, XXX-00000 Xxxxxxxx,
Xxxxxxx, hereinafter referred to as the "Buyer".
WHEREAS:
(i) The Seller owns all of the issued and outstanding capital stock of
Oy Tamrotor Ab, a joint stock company engaged in the manufacture
and sale of screw compressors and registered in Finland,
hereinafter referred to as the "Company".
(ii) The Seller wishes to sell and transfer and the Buyer wishes to buy
and acquire on or before June 30, 1997, all 9,000 shares of a par
value of FIM 1,000 each of the capital stock of the Company;
(iii) Both parties desire that the Company continues its operations and
business as a viable and growing corporation; and
(iv) The Seller and Xxxxxxx Denver Machinery Inc. ("GDMI") have signed
a Letter of Intent dated June 3, 1997 containing certain terms and
conditions under which the transaction contemplated by this
Agreement shall be consummated.
NOW, THEREFORE, the parties hereto agree as follows:
1. SALE OF SHARES
At the Closing, and on the terms and conditions hereinafter set
forth, the Seller undertakes to sell and transfer, and the Buyer
undertakes to purchase and accept the entire issued capital stock of
the Company, consisting of 9,000 shares, numbers 1 - 9,000, each of
a par value of FIM 1,000 (hereinafter referred to as the "Shares").
2. PURCHASE PRICE; PAYMENT
2.1 Purchase Price
The purchase price shall be FIM 95.114.440 (the "Purchase
Price"). The Purchase Price shall further be subject to
possible adjustments as provided for in Sub-Clauses 2.4. and
2.5 and the amount of the actual tax liability of the Company,
which shall be verified as of June 30, 1997. The tax liability
has been estimated to be FIM 2,600,000 as of June 30, 1997.
Any difference between the estimated and actual tax liability
shall be paid to the Seller or the Buyer as the case may be,
on a xxxx for xxxx basis.
In addition to the Purchase Price the Buyer shall pay to the
Seller all short term financial debt and long term financial
debt (the "Inter-company Accounts") of the Company to the
Seller group. As of June 27, 1997 the amount of the
Inter-company Accounts was FIM 33.710.444.
2.2 Basis for Purchase Price
The Seller has furnished to the Buyer and GDMI certain
financial information including the
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Company's statutory accounts as of December 31, 1996 and interim
accounts as of March 31, 1997 and Rush Report as of April 30, 1997
attached as EXHIBIT 2.2, based on which the parties have signed
the Letter of Intent and agreed upon the Purchase Price. The
Purchase Price is based on actual figures in this financial
information including provisions for income and other taxes, and
not on estimated, budgeted or otherwise calculated figures.
2.3 Payment
On the Closing Date the Buyer shall pay the Seller by wire
transfer the Purchase Price and the Inter-company Accounts.
The parties shall further execute a Xxxx of Sale for purposes
of stamp duty payment by the Buyer in accordance with EXHIBIT 2.4
2.4 Adjustment Payment
Following the verification of the actual tax liability of the
Company, the due diligence review conducted by the Buyer and
GDMI, and the completion of the inventory procedure as
pursuant to Sub-Clause 2.5, the Purchase Price may be adjusted
under the terms and conditions set forth in Sub-Clauses 2.1,
2.4 and 2.5.
1. The Purchase Price may be adjusted only if the material
furnished to the Buyer prior to the signing of the Letter of
Intent is materially inaccurate as compared to the information
furnished to the Buyer and GDMI for purposes of the Buyer's and
GDMI's due diligence review ("Material Inaccuracy"). For purposes
of determining the Material Inaccuracy, such materially
inaccurate material shall have an effect of at least FIM
1,000,000 on the interim account to be made as of June 30, 1997.
The Purchase Price may then be increased or decreased as the case
may be ("Adjustment Payment") for the total amount of the
Material Inaccuracy.
2. The party claiming the Adjustment Payment shall deliver to the
other party, within thirty five (35) calendar days after the
Closing, the detailed basis in writing for the Material
Inaccuracy and the amount of the subsequent Adjustment Payment.
3. If the other party has no objection to the Material Inaccuracy
that other party shall make the Adjustment Payment by wire
transfer within thirty (30) calendar days after receipt of the
deliveries described in paragraph 2.4.2.
4. If the other party objects to the Material Inaccuracy that other
party shall within thirty (30) calendar days after receipt of the
deliveries specified in paragraph 2.4.2 notify the claiming party
in writing of such objection, and deliver to the claiming party
the other party's particulars forming the basis for the
objections.
5. If the parties thereafter agree on the Purchase Price, the
appropriate party shall within five (5) calendar days after such
agreement make the Adjustment Payment by wire transfer. If the
claiming party does not agree with the other party's objection
of the Adjustment Payment, then the claiming party shall, within
thirty (30) calendar days after receipt thereof, notify the other
party in writing of such fact.
6. Any disagreement about the Material Inaccuracy and the Adjustment
Payment between the parties remaining after the procedures set
out above shall then be submitted by either party for resolution
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to Ernst & Young or any other firm of independent certified
public accountants of international standing as is agreed to in
writing by the Buyer and the Seller (the "Independent
Accountants"). Each party shall furnish, at its own expense,
the Independent Accountants and the other party with such
documents and other written information as the Independent
Accountants may request or deemed relevant by either party. The
Independent Accountants shall have the right to ask such
questions and conduct such examination as they deem necessary.
7. The Independent Accountants shall, within thirty (30) days after
completion of the proceedings set forth in paragraph 2.4.6 above,
render their decision on the question and their determination of
the Purchase Price in writing and such decision shall be final
and binding on the parties. The Buyer or the Seller, as
appropriate, shall within five (5) calendar days after such
decision, make the Adjustment Payment by wire transfer as
determined by the Independent Accountants. The fees for the
Independent Accountants shall be shared equally between the
parties.
2.5 Inventory Accounts
The Company and its accountants shall on the Buyer's request
undertake a physical inventory of the Company as of June 30,
1997, and the Buyer and its accountants shall be given the
possibility to participate in such physical inventory. The
Buyer shall within thirty five (35) days from June 30, 1997
prepare and deliver to the Seller an accounting of the value
of the Inventory prepared in accordance with the accounting
principles applied in the statutory accounts of the Company as
of December 31, 1996 (the "Inventory Accounts"), based on
which the Purchase Price may be adjusted as provided for
herein. The parties acknowledge, that the costs for conducting
the inventory and for the Inventory Accounts shall be borne by
the Company.
The Buyer shall have the right to dispute the Inventory
Accounts and both the Seller and the Buyer shall have the
right to claim an adjustment to the Purchase Price to the
extent that the inventory value as shown in the Inventory
Accounts or corrected Inventory Accounts differs in excess of
FIM 500,000 from the amount of the inventory in the interim
accounts of the Company as of June 30, 1997. The adjustment,
if any, shall be on xxxx for xxxx basis for the part in excess
of FIM 500,000.
2.6 Delay Interest
Any payment described in this Clause shall not bear interest
until a date which is five (5) business days after the final
agreement or award concerning the Adjustment Payment. From
that date the Adjustment Payment shall bear interest until the
date paid in full at an annual interest rate equal to eleven
(11) per cent. (%).
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3. TITLE TO SHARES
The title to the Shares shall pass to the Buyer at Closing,
when the Purchase Price has been paid and duly received by the
Seller.
4. OTHER AGREEMENTS
4.1 Inter-company accounts
4.1.1 Overdue Payables and Trade Payables
At or prior to the Closing, the Company shall pay to the Seller,
and the Seller shall pay to the Company all their respective
ordinary course trade payables owing to the Company or the
Seller, as the case may be, which are past due (the "Overdue
Payables"). Any ordinary course trade payables of the Company
owing to the Seller, and of the Seller to the Company, which
are not past due shall be and remain as obligations of the
Company and the Seller, as the case may be, payable in
accordance with their terms (the "Trade Payables").
4.1.2 Inter-company Debt
As used in this Agreement, "Inter-company Debt" shall mean all
amounts (whether due or not) owing by the Company to the
Seller or by the Seller to the Company other than the Overdue
Payables and the Trade Payables.
At or prior to the Closing, the Company and the Seller shall pay the
Inter-company Debt owing to the other, as the case may be, inclusive
of the Deductible Debt owing to the Seller.
4.2 Release of Guaranties, Indemnities, and Like Arrangements; GDMI's
undertaking
1. Within sixty (60) days after the Closing the Buyer agrees
to (i) arrange for the release of the Seller from all
guaranties, indemnities, letters of comfort, liens and other
obligations which the Seller has granted to third parties
for the benefit of the Company and to (ii) complete all
necessary action to cause the relevant agreements and
undertakings to be assigned to the Buyer in order for the
Buyer to assume liability therefor.
2. The Seller shall assist, to the extent possible, the Buyer
in assigning the relevant contracts and undertakings and in
obtaining the consents, approvals and authorities that may
be necessary in connection therewith.
3. The Buyer and GDMI hereby jointly and severally agree to
indemnify and hold the Seller harmless from and against any
liabilities or responsibilities as well as any costs,
damages or expenses (including attorney's fees) which the
Seller may incur as a consequence of any claim pursuant to
guaranties, indemnities, letters of comfort, liens and other
obligations of the Company and its subsidiaries as set forth
in paragraph 4.2.1. Such undertaking shall be valid and
effective until the Seller has been released from all such
commitments and has been notified in writing by the Buyer of
such release.
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4.3 Discharge of Directors' and Officers' Liabilities
At a meeting of Shareholders of each of the Company and its
subsidiaries to be held at the Closing, the Buyer shall cause
to be adopted resolutions replacing all former Board Members
of the Company and its subsidiaries not employed by the same
with new members nominated by the Buyer. Such replaced members
shall be released from liability in respect of the
individual's capacity as a Board Member.
4.4 Objects of Art
All paintings, statues or other objects of art in possession
of the Company are excluded without any charges from the
Company's assets and retained by the Seller, not, however,
including such objects of art which the Company has acquired
during three years preceding the Closing Date. All paintings,
statues or other objects of art in possession of the Company
and retained by the Seller shall be returned to the Seller by
August 31, 1997.
4.5 Supply and/or Licence Agreement
The Buyer on behalf of the Company and the Seller shall agree
on terms and conditions for the continuance of delivery to the
Seller or its designates compressor screw elements, parts and
spares for use in the Seller's rock drilling equipment, on
normal commercial terms as agreed between the Seller and the
Company as set forth in EXHIBIT 4.5.
4.6 Lease Agreement
With respect to the lease agreement entered into between the
Company and Tampellan Elakesaatio s.r., the parties
acknowledge, that nothing contained in this Agreement or in
the transactions contemplated hereby shall impair the rights
of Tampellan Elakesaatio s.r. towards the Company under the
lease agreement.
4.7 Confidentiality; Non-competition
For a period of five (5) year the parties and GDMI hereby
undertake, and the GDMI shall procure that the Buyer and
Company undertakes, not to divulge or use whether directly or
indirectly, for its own benefit or for the benefit of any
person, corporation or business entity other than the Seller,
the Buyer or the Company, as the case may be, any information
or knowledge concerning the operations of the Seller or the
Company, not in the public domain or generally known without
the written consent of the other party. The Seller, the Buyer
and GDMI shall, however, have a right to include information
relating to the Company and its business operations in any
public announcements as described in Sub-Clause 11.4.
Furthermore the Seller shall not be bound by the undertaking
herein concerning technical data and performance of the
Company's products when directly or indirectly promoting the
sales of the Company's products in the Seller's ordinary
course of business.
The Seller hereby undertakes for a period of five (5) year
from the Closing not without the written consent of the Buyer
to directly or indirectly engage in, assist or have any active
interest in, own any assets or shares in or act as an agent or
as an advisor or consultant to any person, corporation or
business entity, which is or is about to become engaged in any
business competing with the Company. However, nothing in this
paragraph shall interfere with any right the Seller may have
pursuant to the Supply Agreement to be entered into between
the Company and the Seller.
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4.8 Intellectual Property
Except as provided herein, the Buyer and the Company shall not
use the name "Tamrock" or "Tampella" with respect to the
Company or the Buyer. For a period of two years from the
Closing Date, the Company shall, however, be entitled to use
existing advertisements, brochures, literature, packaging
materials and other business supplies that use the name
"Tamrock" or "Tampella".
The Seller shall be entitled to use existing advertisements,
brochures, literature and other business material that use or
include the Company's name for a period of two years from the
Closing Date.
After the Closing the Company shall retain the right to use
the name "TAMROTOR". The name "TAMROTOR" shall, however after
a period of twelve (12) months from the Closing be used in a
distinctly different manner concerning its typography,
logotype, colour and perception as compared to the Seller and
the Seller's group of companies.
With respect to any intangible assets Which are used by the
Seller and the Company and which are not transferred to the
Buyer or the Company pursuant to this Agreement, the parties
may agree on a License Agreement, which shall set forth the
agreement of the parties concerning the use by the Buyer or
the Company of such intangible assets. With respect to such
intangible assets used by the Company which are licensed by a
third party to the Seller or any of its subsidiaries, and
which license precludes the transfer or use of such intangible
assets by the Buyer or the Company, it is agreed by the
parties that the Buyer shall not acquire any rights to such
intellectual property.
With respect to the patent concerning compressor capacity
control (a copy of which regarding the US patent has been
furnished to the Buyer) if owned by the Seller, the Seller
shall grant a royalty free license concerning such patent. At
the request of the Buyer the parties shall arrange for, as
soon as practicable after such request, the transfer of such
patent to the Company. All costs for such a transfer shall be
borne by the Buyer.
The parties acknowledge, that the Company is a party to a
license agreement with Svenska Rotor Maskiner AB, under the
terms of which royalty payments are due, and which has been
shown to the Buyer.
4.9 Transition Services
The Seller shall provide the Buyer such legal, accounting,
tax, treasury, information services, computer, and human
resources services relating to the Company for such a period
as the Buyer may need not, however, longer than one hundred
and eighty (180) days, on present terms and conditions as
applied between the Seller and the Company. The Company shall
pay to the Seller all reasonable costs for such services
against invoice.
4.10 Bearer Notes
The bearer notes in the total amount of FIM 20.000.000
registered on the Company's assets shall be transferred to the
Company at the Closing.
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4.11 No Claims
The Seller confirms by the signing of this Agreement that the
Board members of the Company and its subsidiaries have no
claims for fees or other payments towards the Company or its
subsidiaries.
5. CONDITIONS PRECEDENT FOR CLOSING
The obligations of the parties to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the
Closing of the conditions precedent specified in this Clause 5
unless waived by the party in favour of which the condition
concerned has been agreed upon.
5.1 Conditions Precedent of the Buyer
1. The Seller shall have performed and complied in all material
respects with its obligations under this Agreement which
are to be performed or complied with by it prior to or on
the Closing Date.
2. The Seller and, as applicable, the Company shall have taken
all necessary corporate action to approve and authorise
this Agreement and all the transactions and undertakings
required or contemplated under this Agreement.
3. The representations and warranties made by the Seller in
this Agreement shall be true and correct in all respects
as of the date of execution of this Agreement and as of
the Closing Date.
4. The Seller shall have delivered to the Buyer
(i) stock certificates representing all of the Shares,
which certificates shall be duly endorsed in blank;
(ii) the share and shareholders' registers of the Company;
and
(iii) the bearer notes in the total amount of FIM
20.000.000 registered on the Company's assets.
5. The Seller and the Company shall have executed the Supply
Agreement referred to in Sub-Clause 4.5.
6. The Company and the Seller shall have paid the Overdue
Payables and Inter-company Accounts to each other.
5.2 Conditions Precedent of the Seller
1. The Buyer shall have performed and complied in all material
respects with all of its obligations under this Agreement
which are to be performed or complied with by it prior to
or on the Closing Date.
2. The Buyer shall have furnished to the Seller a parent
company guarantee as set forth in Sub-Clause 4.2.
3. The Seller and the Company, shall have executed the Supply
Agreement referred to in Sub-Clause 4.5.
4. The Buyer shall have taken all necessary corporate action to
approve and authorise this Agreement and all transactions
and undertakings required or contemplated under this
Agreement.
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5. The representations and warranties made by the Buyer in
this Agreement shall be true and correct in all respects as of
the Closing Date.
5.3 Lump Sum Payment
If all conditions referred to in Sub-Clause 5.1 have been
fulfilled timely and the Buyer refuses to close the Buyer will
pay the Seller a lump sum of USD one million (1,000,000) as
compensation for all and any damages and disturbances caused
to the Seller. The Parties confirm that this provision
supersedes and replaces in all respects the obligations of the
Buyer under the Letter of Intent.
6. CLOSING
Subject to the fulfilment of the conditions precedent set
forth in Clause 5 herein, the Closing shall take place on June
30, 1997 (the "Closing Date"). As used in this Agreement,
"Closing" shall mean the conference to be held at 15:00 P.M.,
Finnish Time, on the Closing Date at the offices of
Xxxxxxxx-Xxxxxxxx & Waselius in Helsinki, (or such other time
and place as the parties may mutually agree to in writing), at
which the transactions contemplated by this Agreement shall be
consummated and become effective.
At the Closing the following shall take place:
1. The Buyer shall pay to the Seller the Purchase Price by wire
transfer in accordance with Sub-Clause 2.3.
2. The Buyer shall deliver to the Seller the parent company
guarantee as set forth in Sub-Clause 4.2.
3. The Buyer shall deliver to the Seller certified copies of
all appropriate resolutions, consents and other
instruments required in connection with the execution and
delivery of this Agreement by the Buyer.
4. The Seller shall deliver to the Buyer a certificate
certified by the Board's secretary Mr. Kai Miesmaki, that
the Board of Directors of the Seller has made all
appropriate resolutions required in connection with the
execution and delivery of this Agreement by the Seller.
5. Simultaneously with the receipt of the Purchase Price the
Seller shall assign and deliver to the Buyer the share
certificates relating to the Shares, duly endorsed by the
Seller and free and clear of any encumbrances as well as
the share and shareholders' registers of the Company.
7. REPRESENTATIONS AND WARRANTIES OF THE SELLER
For purposes of this Agreement the "Seller's knowledge" shall
mean the actual knowledge of Mr Kai Miesmaki, Xx Xxxxx Xxxxx,
Xx Xxxx Xxxxxxxxx and concerning the bookkeeping and closing
of accounts and interim accounts of the Company and its
subsidiaries Xx Xxxx Xxxxxxxx.
The Seller represents and warrants to the Buyer that
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7.1 Ownership
The Seller is the owner of good and marketable title to all of
the Shares, which represents all of the issued and outstanding
capital stock of the Company. The Seller has full right, power
and authority to sell and assign the Shares to the Buyer, and
there are no pledges, charges or other encumbrances relating
to the Shares which might limit the Seller's right to sell and
assign the Shares to the Buyer. The Shares are free and clear
of all restrictions on the ability to vote the Shares. Upon
delivery of the certificates for the Shares by the Seller, the
Buyer will acquire good and marketable title to the Shares.
There are no outstanding options or other rights to acquire
any capital stock of the Company. The Company is a corporation
validly organised and existing under Finnish law.
7.2 Litigation
There is no litigation or arbitration proceeding of any kind
pending or to the Seller's knowledge threatened against the
Company or its subsidiaries, which might have a materially
adverse effect on the Company's or the subsidiaries' business.
7.3 Financial Statements; Books and Records
The financial information of the Company furnished to the
Buyer and referred to in Sub-Clause 2.2 have been prepared in
compliance with the current legislation and according to
generally accepted accounting practice applicable in Finland
as consistently applied by the Seller. The financial
information is correct and complete and fairly reflects the
assets, liabilities and operations of the Company and have
been maintained in accordance with sound business practices.
The information relating to the Company and its subsidiaries
as disclosed to the Buyer is true and correct in all material
respects, and the Seller has not omitted to disclose any
information which could materially affect the Buyer's decision
to enter into this Agreement.
The Buyer has received or will receive any and all documents
which are necessary for the continuance of the business of the
Company.
7.4 Absence of Certain Changes
Since the annual accounts as of December 31, 1996 of the
Company there has not been, nor will there from the date
hereof until the Closing without the written consent of the
Buyer be
(i) any material adverse deviation by or within the
Company or its subsidiaries from the ordinary course of the
day to day business carried on by the same in accordance
with good and sound business practice;
(ii) any material adverse change in the financial conditions,
assets, liabilities or prospects or the Company or its
subsidiaries;
(iii) any material adverse change in the relationship with
the customers, suppliers or employees of the Company or its
subsidiaries;
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(iv) any material adverse destruction or loss of or damage
to any property of the Company or its subsidiaries whether
or not covered by insurance;
(v) any agreement or transaction for the sale or
acquisition of material assets required by the Company or
its subsidiaries for the conduct of their business,
except in the ordinary course of business or normal
commercial terms or conditions (including in particular,
any material deviation from pricing terms consistently
applied heretobefore);
(vi) any material change in the accounting systems,
policies, principles or practices of the Company or its
subsidiaries; or
(vii) any declaration or payment of dividend or group
contribution by or to the Company or its subsidiaries.
7.5 Agreements; Orders
(a) All significant agreements (including in particular
all distribution agreements) entered into by the Company or
its subsidiaries including any orders involving the Company or
its subsidiaries are listed in EXHIBIT 7.5.A. The
significant agreements are to the Seller's knowledge valid and
binding in accordance with their respective terms and do not
contain any extraordinary terms or conditions outside the
ordinary practice of the Company's or its subsidiaries
business. The Company and its subsidiaries are not, to the
Seller's knowledge, in default in any material respect in the
performance of any of their respective obligations under any
agreement or contract and to the Seller's knowledge no event
has occurred (whether with or without notice, laps of time, or
both) which would constitute a default thereunder by the
Company or its Subsidiaries).
(b) Other than the agreements where the Company or its
subsidiaries is a party, and which have been furnished to the
Buyer for its due diligence review, there are to the Seller's
knowledge no material contracts or commitments made with any
third party which cannot be terminated on less than a twelve
(12) months notice.
7.6 Guarantees
To the Seller's knowledge the Company is a guarantor or
indemnitor of no other person except in the ordinary course of
business. Other than disclosed to the Buyer in EXHIBIT 7.6
and in this Agreement there are no loans, guarantees or
undertakings given to or other agreements made with any third
parties for which the Buyer might become liable or which could
have a materially adverse effect on the business of the
Company, and since December 31, 1996 until Closing there has
not been any additional debt or liabilities incurred by the
Company except for in the ordinary course of business.
7.7 Intangible Assets
Except the patent referred to in Sub-Clause 4.8 the Company
and/or its subsidiaries own all intellectual property
necessary to manufacture the products presently manufactured
and produce the services presently produced, and to distribute
and sell such products and services in any country where
business presently in conducted.
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To the Seller's knowledge, there is no claim or infringement,
violation or breach by the Company of any domestic or foreign
patents, trade marks, copyrights or any other intellectual
property rights owned or controlled by others (collectively
"Others' Intellectual Property"). There is to the Seller's
knowledge no basis upon which a claim can successfully be asserted
against the Company or its subsidiaries for infringement,
violation or breach of any part of Others' Intellectual Property.
7.8 Taxes
All tax and information returns required have been filed by
the Company with the appropriate authorities. The tax
liabilities for the relevant periods and provision in full has
been made for any tax liability in the accounts of December
31, 1996 and in the interim accounts as of June 30, 1997.
There are no tax audits currently pending against the Company
or its subsidiaries.
The Company and its subsidiaries are not and will not be
subject to any liability, including but not limited to back
taxes ("jalkiverot") or penalty pertaining to the time prior
to June 30, 1997 directly or indirectly imposed or assessed
under any fiscal, withholding, social security, customs or
revenue collecting or similar authority which has not been
fully paid for or reserved for in the financial information
furnished to the Buyer, and to the Seller's knowledge (i) no
matters are known or disputes exist, or (ii) will be
forthcoming, with any such authority, which may result in the
payment of any such liability or penalty by the Company or its
subsidiaries or in the increase of any of their taxation
liability.
7.9 Assets and Properties
The Company and its subsidiaries have exclusive title to all
assets recorded in the accounts of December 31, 1996, and the
interim accounts as of April 30, 1997, except for such assets
which have been sold at ordinary market terms in the ordinary
course of business after December 31, 1996. None of the assets
are subject to any liens, mortgages, charges or other
encumbrances, except as noted in such accounts.
The Company and its subsidiaries own or lease, and will to the
Seller's knowledge, following the consummation of the
transactions contemplated by this Agreement continue to own
and lease all the assets and rights including the Intellectual
Property with which the business of the Company has been
conducted.
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7.10 Environmental Matters
The Company and its subsidiaries are in compliance with all
environmental and health and safety laws, regulations and
ordinances ("Environmental Laws") and all environmental
permits and other permits or licenses issued by any
governmental authority charged with the administration of
Environmental Laws ("Environmental Permits"). The Company and
its subsidiaries have not made or committed any act, nor has
the Company or its subsidiaries failed to take any act when
legally required to do so which, with or without notice or
passage of time, or both, would constitute a violation of any
Environmental Law. All toxic and hazardous substances,
products or waste ("Hazardous Substances") generated by the
Company or its subsidiaries have always been and currently are
disposed of in compliance with applicable Environmental Laws
in effect now or at the time of such disposal, and, where
applicable, pursuant to and in accordance with all
Environmental Permits.
The Company is in possession of all Environmental Permits
required for the conduct or operation of its businesses (or
any part thereof) and is in compliance with all of the
requirements and limitations included in such Environmental
Permits. All such Environmental Permits are in full force and
effect.
7.11 Compliance
1. All authorisations and approvals necessary for the due
conduct of the business of the Company and its subsidiaries
have been duly obtained and are in full force and effect,
and the entry into and the consummation of this Agreement
will, to the Seller's knowledge, not cause any termination,
revocation, suspension or revocation thereof, nor has there
to the Seller's knowledge been any violation of any such
authorisations or approvals of any terms thereof.
2. The Company and its subsidiaries have been and are in
full compliance with all laws and regulations applicable to
it, including terms and conditions set in any
authorisations and approvals, and with the requirements of
all applicable agencies and authorities, and the Company
and its subsidiaries have obtained all applicable
authorisations and approvals which are required by such
laws.
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7.12 Employment and Pension Agreements
1. To the Seller's knowledge no key employees of the Company
and its subsidiaries ("Key Employees") have announced his
or her termination of his or her position or employment
with the Company or its subsidiary.
2. Full provision has been made in the accounts as of
December 31, 1996 and the interim accounts of June 30, 1997
for the full amount of all present and future liabilities
in respect of the employment or pension undertakings to be
paid to current or former directors, officers, or other
employees of the Company. The pension liability of the
Company and its subsidiaries is fully paid and the Company
and its subsidiaries will not incur any costs in respect of
any pension liability out of employment before the Closing
Date.
3. There are no pending or to the Seller's knowledge
threatened labour claims or litigation in respect of the
Company or its subsidiaries.
4. To the Seller's knowledge no negotiations are required to
be held by the Company or its subsidiaries with trade
unions or collective bargaining agreements or under any
statutory requirements as a result of the transaction
contemplated by this Agreement and no information relating
thereto is, to the Seller's knowledge required to be
conveyed to such trade unions under collective bargaining
agreements or under statutory requirements.
7.13 Product Warranty and Liability
To the Seller's knowledge no claims in respect of any product,
manufactured or sold or any service delivered by the Company
or its subsidiaries is unsettled or is subject to any dispute
between the Company, its subsidiaries and any third party and
there are to the Seller's knowledge no pending or threatened
product liability claims with respect to any such product or
service, nor is the Company or its subsidiaries to the
Seller's knowledge aware of any grounds for any material
product liability claims.
8. REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby agrees and represents and warrants to the
Seller that
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8.1 Due Diligence Review and Full Access
The Buyer has been granted access to the Seller's and the
Company's employees, auditors, facilities and records
(including auditors' reports, memoranda and letters) to
conduct the due diligence as the Buyer has deemed necessary or
appropriate, and the Seller has permitted representatives of
the Buyer to have access to premises, properties, books,
records, contracts and documents of or pertaining to the
Company as deemed necessary by the Buyer. The parties
acknowledge, that the Buyer has had full access to material in
relation to the Company as well as opportunity to interview,
ask questions and receive answers from the Company and the
Seller as well as their auditors, for the Buyer's due
diligence review.
The Buyer has received and reviewed the Company's audited
financial statements and other financial information as set
forth in Sub-Clause 2.2, which have included the Company's
loan and liability status.
8.2 No Knowledge of Breach
The Buyer hereby acknowledges and represents and warrants to
the Seller that, on the basis of its due diligence review of
the Company and its subsidiaries, as of the Closing Date, the
Buyer has not gained knowledge of any facts that it believes
that would constitute a breach of any of the representations
and warranties of the Seller contained in this Agreement.
Nothing contained in the preceding sentence shall serve as a
waiver of any rights the Buyer may have to indemnification in
accordance with the provisions in Clause 9 of this Agreement.
9. INDEMNITIES
9.1 The Seller's Indemnity
The Seller hereby indemnifies and holds the Buyer harmless
from and against, and agrees to reimburse the Buyer for any
damages and expenses which the Buyer or the Company may incur
or become subject to as a result of or in connection with any
breach of any of the representations and warranties made by
the Seller in this Agreement or any failure by the Seller or
its Subsidiaries to perform or honour, any of its covenants,
agreements, or liabilities under this Agreement.
In addition to the Seller's representations and warranties
regarding environmental matters set forth in Sub-Clause 7.10,
the Seller hereby indemnifies and holds the Company and the
Buyer harmless, and agrees to reimburse the Buyer for any
damages and expenses which the Buyer and the Company may incur
or become subject to, as a result of violations of any
Environmental Law, including any materials or conditions which
are regulated or addressed under any Environmental Law and
required to be effected by a competent environmental
authority, or liabilities arising under any Environmental Law
based on any events, occurrences or conditions in existence
prior to the Closing (including any spreading or
contamination).
Events, occurrences, or liabilities shall be deemed to exist
prior to Closing only based upon the procedure set forth in
this paragraph. The Buyer shall cause to be conducted a Phase II
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environmental audit on the Company's and its subsidiaries'
premises and shall furnish the written report on such Phase II
audit forthwith to the Seller. The Seller may then at its
discretion elect to comply with the suggestions of the Phase
II report or not to comply with them. If the Seller does not
comply with suggestions in the Phase II report, and if any
relevant authority later makes any notification or demand
regarding an environmental event, occurrence or condition that
is referenced in the Phase II report, then it shall be the
Seller's responsibility to the extent that environmental
event, occurrence or condition is referenced in the Phase II
report and with the limitations set forth in this Clause 9, to
take appropriate remedial action in response to such
notification or demand, or to indemnify the Buyer under the
preceding paragraph if the Buyer has incurred any cost or
expense in that regard. Nothing herein shall prevent the Seller
from defending, at its expense, against any such notification
or demand if it desires to do so, it being understood and
agreed that the Buyer shall not have any obligation to so
defend and, as between the Seller and the Buyer, shall not be
responsible for any costs of any such defensive action.
9.2 The Buyer's Indemnity
The Buyer hereby indemnifies and holds the Seller harmless
from and against, and agrees to reimburse the Seller for any
damages and expenses, which the Seller may incur or become
subject to as a result of, or in connection with any breach of
any of the representations and warranties made by the Buyer in
this Agreement, or any failure by the Buyer to perform or
honour any of its covenants, agreements, or liabilities under
this Agreement.
9.3 Third Party Claims; Notification
The indemnified party shall forthwith upon having become aware
of all relevant particulars in order to make a reliable
assessment of the matter concerned give the other party a
written notice in reasonable detail of any claim, ("Claim")
for which indemnification will be sought under Sub-Clauses 9.1
or 9.2. If the Claim is a third party Claim, the indemnifying
party will have the right at its expense to assume, control
and direct the defence thereof using counsel selected by the
indemnifying party.
The indemnified party shall have the right to monitor, at its
own expense, any third party Claim. In connection with any
third party Claim, the parties shall co-operate with each
other and provide each other with access to relevant books and
records in their possession. No third party Claim shall be
settled without the prior written approval of the indemnified
party.
If a firm written offer is made to settle any third party
Claim and the indemnifying party proposes to accept such
settlement and the indemnified party refuses to consent to
such settlement, then:
1. The indemnifying party shall be excused from, and the
indemnified party shall be solely responsible for, all
further defence of such third party Claim;
2. The maximum liability of the indemnifying party relating
to such third party Claim shall be the amount of the
20
proposed settlement if the amount thereafter recovered
from the indemnified party on such third party Claim is
greater than the amount of the proposed settlement; and
3. The indemnified party shall pay all attorneys' fees and
legal costs and expenses incurred after rejection of such
settlement by the indemnified party, but if the amount
thereafter recovered by such third party from the indemnified
party is less than the amount of the proposed settlement, the
indemnified party shall be reimbursed by the indemnifying party
for such attorneys, fees and legal costs and expenses up to a
maximum amount equal to the difference between the amount
recovered by such third party and the amount of the proposed
settlement.
9.4 Breach Discovered Prior to Closing
The Buyer shall notify the Seller prior to the Closing, of
any facts that it believes would constitute a breach of
the warranties, representations, undertakings and
obligations of the Seller under this Agreement of which
the Buyer has actual knowledge prior to the Closing.
9.5 Claims
Any and all Claims shall be made in writing as follows:
(a) Claims regarding title to the Shares and
taxes under Sub-Clauses 7.1 and 7.8 shall be made within
sixty (60) days after the final assessment of such taxes
and/or liabilities; and
(b) all other Claims shall be made within nine
(9) months after the Closing Date, except that any Claims
concerning environmental liabilities may be made within
three (3) years after the Closing Date.
Any claim not made and notified as required under
Sub-Clause 9.5 (a) - (b) shall be conclusively and finally
deemed to be waived.
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9.6 Limitations on the Seller's Liability.
The Seller shall not be liable for any Claim for
indemnification under this Agreement:
1. unless the Claim is in excess of FIM 250,000;
2. unless and only to the extent the aggregate amount of
all Claims exceeds FIM one and one half (1,500,000)
million in the aggregate, in which event the liability of
the Seller shall be limited to the amount in excess of FIM
one and one half (1,500,000) million;
3. to the extent the aggregate amount of all Claims exceeds
FIM fifteen million five hundred thousand (15,500,000);
4. in respect of any Claim if and to the extent that such
Claim is provided for, reserved against or otherwise
reflected or noted in the financial information or any
exhibits to this Agreement furnished to the Buyer;
5. in respect of any Claim that is contingent, unless and
only to the extent such contingent Claim becomes an actual
liability and is due and payable;
6. in respect of any Claim for loss or damage to the extent
such loss or damage is caused by any act, omission or
transaction of the Buyer, its subsidiaries or affiliates,
employees or assistants after the date hereof, including a
change in the nature of, or in the manner of conducting,
the business of the Company or a change in any accounting
policy or practice of the Buyer or any of its subsidiaries
after the Closing;
7. if and to the extent such loss or damage is covered by a
policy of insurance;
8. if and to the extent that a Claim arises from (or is
increased by virtue of) any new law not in force at the
date hereof or any change of a law or administrative
practice which takes effect retroactively, or any decision
of the courts of any jurisdiction altering the accepted
interpretation of the law (including the interpretation of
any legislation), or any increase in the rates of any
taxes (in either case whether retrospective or otherwise);
9. if and to the extent that a Claim gives rise to any tax
relief or other similar benefit to the Buyer, the Buyer's
group or affiliated companies or the Company;
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9.7 Repayment
If the Seller has made a payment in respect of a Claim under
this Clause 9 and subsequent to such payment, the Buyer or the
Company shall recover from a third party, including any tax
authority or insurance company, any sum or benefit which is
referable to the circumstances giving rise to such payment,
then the Buyer shall pay, or procure that the Company pays, to
the Seller the amount so recovered (less expenses incurred
acquiring such payment), but not exceeding the amount of the
Seller's payment.
9.8 Subrogation.
If a third party may be liable for any claim in respect of
which the Seller shall have made payment or may be obligated
to make payment to the Buyer under this Clause 9 the Buyer
shall provide all reasonable assistance to the Seller to
enable it to pursue such Claim against such person and, to the
extent the Seller shall have made payment to the Buyer in
respect of such Claim, the Seller shall be entitled to full
subrogation to the rights of the Buyer and/or the Company to
the extent of such payment.
9.9 Exclusive Remedy.
Except for the rights to indemnification specified in this
Clause 9, each party specifically waives any other rights it
may have to claim monetary or other compensation from the
other party for any breach of any of the representations,
warranties, undertakings, obligations or covenants of such
party under this Agreement.
10. RELIANCE
The Buyer hereby confirms that, apart from the representations
and warranties of the Seller contained in this Agreement, it
has not relied upon or been induced to enter into this
Agreement by any other representation or warranty (whether
expressed or implied, and whether oral or written) given (or
purported to be given) by or on behalf of the Seller, and
accordingly all such other representations and warranties by
or on behalf of the Seller, other than those set forth in this
Agreement, are hereby excluded. Without prejudice to the
generality of the foregoing, the Buyer expressly acknowledges
that it is not entering into this Agreement in reliance upon
any forecast, budget or estimate provided by the Seller or the
Company relating to any profits, turnover, expenses, cash
flows, assets, or liabilities of the Company, whether past or
future. The Buyer furthermore acknowledges that it is an
23
industrial buyer experienced in its business and as such well
experienced in making investments in the nature of the
transactions contemplated hereby.
11. MISCELLANEOUS
11.1 Survival of Representations and Warranties.
All representations, warranties, obligations, covenants,
undertakings and promises of the parties contained in this
Agreement or made pursuant to this Agreement shall survive the
Closing Date and the Closing and the consummation of the
transactions contemplated by this Agreement, and shall remain
in force for a period of nine months after the Closing Date
with the exception of Sub-Clauses 7.1, 7.8 and 7.10 which
shall remain in force as set forth in Sub-Clause 9.5.a and
9.5.b.
11.2 Stamp Duty
The stamp duty payable in connection with the sale and
transfer of the Shares shall be paid by the Buyer.
11.3 Confidentiality
Save as required for the payment of stamp duty or otherwise by
law, governmental decree, applicable stock exchange rules, any
other applicable regulations or any official action or by
Sub-Clause 11.4 the contents of this Agreement, except for the
transfer of the title to the Shares from the Seller to the
Buyer, shall remain secret indefinitely.
11.4 Public Announcements
Subject to each party's disclosure obligations imposed by law,
the Buyer, GDMI and the Seller shall agree with each other
regarding the development and distribution of all news
releases and other public information disclosures with respect
to this Agreement or any of the transactions contemplated by
this Agreement and shall not issue any public announcement or
statement with respect thereto prior to agreeing thereon with
the other party. The parties acknowledge, that regardless of
whether the parties agree on such news releases and other
public information, the Seller and the Buyer have certain
disclosure obligations under the Finnish Securities Market and
the United States securities laws, respectively which limit
the undertaking by the parties herein.
11.5 Entire Agreement; Amendment
This Agreement and the documents referred to in this Agreement
constitute the entire agreement among the parties pertaining
to the subject matter of this Agreement, and supersede all
prior agreements, understandings, negotiations and discussions
of the parties, whether oral or written, and there are no
warranties, representations or other agreements between the
parties in connection with the subject matter of this
Agreement, except as specifically set forth in or referenced
by this Agreement. No amendment, supplement, modification,
waiver or termination of this Agreement or such other
documents shall be binding unless executed in writing by the
Buyer and the Seller. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of
any other
24
provision of this Agreement, whether or not similar,
nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
11.6 Arbitration
In the event that any dispute, controversy or claim arises out
of or in relation to this Agreement or with respect to the
breach, termination or invalidity thereof, the parties shall
seek to solve the matter amicably through discussions between
the parties. If the parties fail to resolve such dispute,
controversy or claim by amicable written arrangement within
thirty (30) days of a written notice of such controversy,
claim or breach, then either party is entitled to initiate
arbitration proceedings as set forth below.
Any dispute, controversy or claim arising out of or relating
to this Agreement or the breach, termination or invalidity
thereof and which cannot be amicably settled between the
parties, other than those disputes to be submitted to the
Independent Accountants pursuant to the provision of Clause 2,
shall be settled by arbitration in accordance with the Rules
of the Board of Arbitration of the Central Chamber of Commerce
of Finland.
The arbitral tribunal shall be composed of three (3)
arbitrators, one arbitrator appointed by each party and a
third arbitrator, who shall act as the chairman of the
arbitral tribunal, appointed by the Board of Arbitration of
the Central Chamber of Commerce of Finland. The arbitration
shall be held in Tampere and the arbitration proceedings
(including all legal briefs and arguments) shall be conducted
in the English language. Any decision and award of the
arbitrators shall be final and binding upon the parties.
By this arbitral clause the parties expressly exclude the
competence of any court of law of any instance, whether
national, federal, regional, supranational or other, in any
matter relating to this Agreement as well as any judicial
review of any decision or award rendered under this arbitral
clause; provided, however, any decision or award issued by the
arbitral tribunal shall, at the request of either party, be
entitled to enforcement in any court having jurisdiction. The
party in whose favour an award is made shall be granted
interest thereon at the rate of eight percent per annum from
the date of initiation of arbitration proceedings until paid.
Any fees or costs incurred during arbitration shall be shared
equally by the Seller and the Buyer, with the exception of any
fees or costs incurred in enforcing an arbitral award which
shall be charged against the party resisting enforcement.
11.7 Notices
All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to
have been given at the earlier of the date when actually
delivered to the designated recipients of a party as set
forth below (or their successors) by personal delivery, or
by the postal services of Finland or the USA (by certified
or registered mail, postage prepaid, return receipt
requested), or by telephonic facsimile transmission
confirmed by mail and addressed as follows, unless and
until any of such parties notifies the others in
accordance with this Sub-Clause 11.7 of a change of
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address:
If to the Buyer: Xxxxxxx Denver Machinery Inc.
0000 Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxxxxx 00000 XXX
telefax: (000) 000-0000
Attention: Xx. Xxxx X. Xxxxxxxx
If to the Seller: Tamrock Corp.
X.X. Xxx 000 (Kelloportinkatu 1 B)
XXX-00000 Xxxxxxx Finland
telefax (000) 00 000 0000
Attention: Kai Miesmaki, Esq.
11.8 Further Assurances
From time to time after the Closing Date, upon the reasonable
request and at the expense of the Buyer and without any
additional consideration, the Seller shall execute and deliver
such further instruments of conveyance, assignment and
transfer and take such further action as the Buyer may
reasonably request in order to obtain the benefits and
properties to be realised from this Agreement and to more
effectively sell, assign, convey, transfer, reduce to
possession and record title to any of the Company.
IN WITNESS WHEREOF, the parties have caused this Purchase and Sale Agreement to
be duly executed as of the day and year first above written.
TAMROCK OY XXXXXXX DENVER OY
XXXXXXX DENVER MACHINERY INC.
