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Exhibit 10.19
SHARE PURCHASE AGREEMENT
among
GIGANTISSIMO 2061 AB under change of name to
WATERLINK (SWEDEN) AB
PROVISTA EINHUNDERTSECHSUNDFUNFZIGSTE
VERWALTUNGSGESELLSCHAFT MBH under change of name to
WATERLINK (GERMANY) GMBH
AWPE SVENSKA AB
ANGLIAN WATER HOLDING GMBH
Concerning the acquisition of shares in
NORDIC WATER PRODUCTS AB
and
▇▇▇▇ ▇▇▇▇▇▇▇ ENGINEERING GMBH
DATED MARCH 4, 1997
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SHARE PURCHASE AGREEMENT
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This SHARE PURCHASE AGREEMENT is made this 4th day of March, 1997, between, on
the one hand, GIGANTISSIMO 2061 AB under change of name to WATERLINK (SWEDEN)
AB, a corporation organized under the laws of Sweden ("Sweden Sub"), and
PROVISTA EINHUNDERTSECHSUNDFUNFZIGSTE VERWALTUNGSGESELLSCHAFT MBH under change
of name to WATERLINK (GERMANY) GmbH, a company organized under the laws of
Germany ("Germany Sub" and together with Sweden Sub, the "Buyers"), and, on the
other hand, AWPE SVENSKA AB, a company organized under the laws of Sweden
("AWPE") and ANGLIAN WATER HOLDING GmbH, a company organized under the laws of
Germany ("Holding") (AWPE and Holding are collectively referred to as
"Sellers.") Buyers and Sellers are each a "Party" and collectively the
"Parties".
1. BACKGROUND
WHEREAS, NORDIC WATER PRODUCTS AB, a company organized under the laws
of Sweden with Swedish corporate registration number 556027-6155 ("Nordic") and
▇▇▇▇ ▇▇▇▇▇▇▇ ENGINEERING GmbH, a company organized under the laws of Germany,
registered in the Commercial Register of the local court in Neuss under the
registration number HRB 6260 and having a total nominal share capital of DEM
50,000 ("▇▇▇▇ ▇▇▇▇▇▇▇") (collectively the "Companies") are both engaged
principally in business related to the sale and licensing of proprietary water
and wastewater treatment equipment; and
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WHEREAS, Sellers own all of the issued and outstanding capital stock of
the Companies, which consists with respect to Nordic of 40,000 shares, each
having a par value of SEK 100, and with respect to ▇▇▇▇ ▇▇▇▇▇▇▇, one control
with another person or entity. For purposes of this definition the term
"control" (including the terms "controlling" and "controlled") shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a person or entity, whether through
the ownership of voting securities, by contract, or otherwise.
"Agreement" shall mean this share purchase agreement between Buyers and
Sellers, including all exhibits and schedules hereto, all as may be amended from
time to time as provided herein.
"Anglian Water" shall mean Anglian Water International Limited.
"Audited Financial Statements" shall mean the audited financial
statements, including the balance sheets and profit and loss statements, and the
notes and schedules, if any, thereto, of each of the Companies and the
Subsidiaries, for the years ended March 31, 1994, 1995 and 1996 prepared in
accordance with the Accounting Principles and certified by the present external
auditors of each of the Companies.
"Authorizations" shall have the meaning set forth in Section 4.4(b)
hereof.
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"Buyers" shall have the meaning set forth in the introductory paragraph
hereof.
"Closing" shall mean the closing of the sale and the purchase of the
Shares in accordance with Section 3.4 hereof.
"Closing Date" shall mean the date of signing of this Agreement.
"Confidential Information" shall mean any and all information of any
kind or nature whatsoever, written or oral, including, without limitation,
financial information, trade secrets, client or customer or supplier lists and
other proprietary business information regarding Buyers, Sellers, the Companies
or any Subsidiary, which information is not known to the general public or to
persons unaffiliated with Buyers, Sellers, the Companies or the Subsidiaries, as
the case may be (unless such information was lawfully in the possession of
Buyers, Sellers, the Companies or the Subsidiaries, as the case may be, as
evidenced by written records, and was not acquired directly or indirectly from
Buyers, Sellers, the Companies or the Subsidiaries, as the case may be) .
"Debt" shall have the meaning set forth in Section 3.3(a) hereof.
"Deductible" shall have the meaning set forth in Section 8.2(c) hereof.
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"Domination Agreements" shall mean the domination agreement between
Nordic Water Services GmbH and the former ▇▇▇▇ ▇▇▇▇▇▇▇ Engineering GmbH dated
June 30, 1992, the domination and profit transfer agreement between ▇▇▇▇ ▇▇▇▇▇▇▇
and Purac GmbH Gesellschaft fur ▇▇▇▇▇▇ - und Abwasserreinigung dated June 30,
1992, and the domination agreement between Holding and ▇▇▇▇ ▇▇▇▇▇▇▇ dated August
10, 1993.
"Environmental Laws" shall have the meaning set forth in Section 4.18
hereof.
"Governmental Authority" shall have meaning set forth in Section 4.4(b)
hereof.
"Group Companies" shall mean the Companies and each of the Subsidiaries
collectively and/or individually.
"Intellectual Property" shall have the meaning set forth in Section
4.17 hereof.
"Losses" shall have the meaning set forth in Section 8.1(a) hereof.
"Lien" shall mean any lien, security interest, charge, mortgage,
option, encumbrance or other restriction or right of any third party of any kind
or nature whatsoever.
"material [sic]" shall mean material to the assets, liabilities,
operations or result of operations of the Companies and the Subsidiaries, taken
as a whole.
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"Material Adverse Effect" shall mean a material adverse effect on the
assets, liabilities, operations or result of operations of the companies and the
Subsidiaries, taken as a whole.
"Nordic Group Shares" shall have the meaning set forth in Section 1
hereof.
"Party" and "Parties" shall have the meanings set forth in the
introductory paragraph hereof.
"Purac Engineering" shall mean Purac Engineering Inc.
"Purchase Price" shall have the meaning set forth in Section 3.2(a)
hereof.
"Qualified Losses" shall have the meaning set forth in Section 8.2 (c)
hereof.
"Receivables" shall have the meaning set forth in Section 4.10 hereof.
"Representatives" shall mean any and all of the following affiliates of
any of the Parties and their respective Affiliates: directors, officers,
employees, partners or potential partners, agents or Representatives, including
(but not limited to) financial advisors, business advisors, scientific advisors,
technical advisors, bankers, consultants, independent accountants and counsel.
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"Sellers" shall have meaning set forth in the introductory paragraph
hereof.
"Shares" shall have the meaning set forth in Section 1 hereof.
"Subsidiaries" shall mean the directly or indirectly owned subsidiaries
of the Companies, listed in Schedule 1 attached hereto.
"Taxes" shall mean taxes and other governmental fees and assessments,
including any interest, costs, late payment charges, late filing charges and
comparable obligations.
"Unaudited Financial Statements" shall mean the unaudited financial
statements for each of the Group Companies for the nine-month period ended
December 31, 1996.
3. THE TRANSACTION
3.1 Purchase and Sale of the Shares
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Subject to the terms and conditions set forth in this Agreement, on the
Closing Date Sellers agree to sell, assign, transfer and deliver the
Shares to Buyers and Buyers agree to purchase the Shares from Sellers.
Consummation of the transactions contemplated herein including the
transfer of the title to the Shares and all rights vested therein,
shall be effected on the Closing Date.
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3.2 Purchase Price
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(a) The purchase price payable by Buyers to Sellers for the Shares
at the Closing shall be the amount of Six Million One Hundred
Two Thousand US dollars (USD 6,102,000) (the "Purchase
Price"). Of the Purchase Price, an amount of Four Million
Three Hundred Twenty One Thousand US dollars (USD 4,321,000)
is payable by Sweden Sub and attributable to the shares in
Nordic, while an amount of Three Million Fifteen Thousand Nine
Hundred Forty Five marks Forty pfennig (DEM 3,015,945.40) is
payable by German Sub and attributable to the interest share
in ▇▇▇▇ ▇▇▇▇▇▇▇.
(b) The Purchase Price shall be paid as follows:
(i) the amount of Two Million Three Hundred Twenty One
Thousand US dollars (USD 2,321,000) by wire transfer
to a bank account to be designated by Sellers;
(ii) the amount of Three Million Fifteen Thousand Nine
Hundred Forty Five marks Forty pfennig (DEM
3,015,945.40) by wire transfer to a bank account to
be designated by Sellers;
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(iii) One Million US dollars (USD 1,000,000) by wire
transfer to a bank account to Svenska Handelsbanken
as escrow agent in connection with the escrow account
established pursuant to an Escrow Agreement
substantially in the form attached to this Agreement
as EXHIBIT A; and
(iv) a promissory note from Sweden Sub in favor of Anglian
Water in the amount of One Million US Dollars (USD
1,000,000) plus an annual interest on the said amount
of Seven (7) percent, calculated on a compounded
basis, in the form attached hereto as EXHIBIT B.
3.3 Payment of Debt
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(a) Buyers shall at the Closing pay the principal amount of all
debts, other than any amounts owing under ordinary commercial
business transactions, carried by the Companies and/or the
Subsidiaries on the Closing Date which are owed to Sellers,
Anglian Water or Anglian Water's Affiliates, as the case may
be, all of which are set forth on SCHEDULE 3.3(a), (the
"Debt").
(b) No later than three (3) business days before the Closing Date,
Sellers shall have provided notice to Buyers of the amount of
the Debt. Payment of the Debt shall be made on the Closing
Date by wire transfer of Five Million Six Hundred Nineteen
Thousand US dollars (USD 5,619,000) to the account or accounts
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designated by Sellers, Anglian Water or Anglian Water's
Affiliates, as the case may be, representing the total amount
of Debt as set forth in Section 3.3(a).
(c) Sellers, Anglian Water or Anglian Water's Affiliates, as the
case may be, shall at the Closing execute and deliver to the
Group Companies releases, in form and substance reasonably
satisfactory to Sellers, evidencing the payment in full of,
and release from, the Debt.
3.4 Closing
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(a) At the Closing, Sellers shall deliver to Buyers all share
certificates representing the Shares duly endorsed in blank.
With respect to the shares in ▇▇▇▇ ▇▇▇▇▇▇▇, Sellers and Buyers
shall enter into an Assignment Agreement in the form of
EXHIBIT C to this Agreement in front of a German notary
public.
In exchange for the Shares, Buyers shall (i) pay the Purchase
Price to Sellers in immediately available funds to Sellers in
accordance with Section 3.2(b), and (ii) pay the Debt to
Sellers the amount set forth in Section 3.3(b) above.
(b) Upon the delivery by Sellers to Buyers of all share
certificates representing the Shares, duly endorsed in blank
and the execution of the Assignment Agreement in front of a
German notary public as provided for in Section 3.4(a) hereof
and the
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payment of the Purchase Price, Buyers shall have and Sellers
shall deliver full title to and ownership of the Shares, free
and clear of any and all Liens, other than any Liens created
by Buyers.
(c) Sellers will on the Closing Date terminate all their
liabilities and undertakings in connection with the existing
banking facilities of the Group Companies, as set forth on
SCHEDULE 3.4(c), including the bank guarantee supporting the
lease of ▇▇▇▇ ▇▇▇▇▇▇▇'▇ offices, and Buyers shall cause the
Group companies to release Anglian Water and its Affiliates
from the guarantee commitments and other guarantees, as set
forth in Schedule 3.4(c).
(d) Concurrently with the Closing and with respect to ▇▇▇▇
▇▇▇▇▇▇▇, after notarization and payment of the portion of the
Purchase Price attributable to the interest share in ▇▇▇▇
▇▇▇▇▇▇▇ have been made, Buyers shall cause shareholders'
meetings of the Companies and the Subsidiaries, if applicable,
to be held at which, INTER ALIA, the existing directors of the
Companies representing Sellers shall be forthwith removed from
office.
(e) The Parties shall at the Closing enter into an Escrow
Agreement as set forth in Exhibit A.
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(f) With respect to the guarantees and bonds which have been issued by
banks up to the Closing Date relating to completed projects and/or for
projects where the work is in progress as set forth in SCHEDULE 3.4(f),
Anglian Water undertakes to maintain such commitments in place and to
not revoke such specific guarantee commitments and will fulfill such
financial guarantee commitments vis-a-vis the principal, provided,
however, that:
(i) with respect to completed projects, Buyers will cause
Group Companies to make every endeavor consistent
with past practice to resolve problems and disputes
on the projects and thereby avoid claims being made
against the guarantees and bonds in Schedule 3.4(f).
In the event of a claim being made and Anglian Water
being required to fulfill the financial guarantee
commitments vis-a-vis the principal, then Buyers
will:
(a) cause Group Companies to continue to make
every endeavor consistent with past practice
to resolve the problems and disputes;
(b) pay to Sellers the value of any contract
reserves, provisions etc. relating to the
project and provided for in the Unaudited
Financial Statements, AND SET FORTH IN
SCHEDULE 3.4(f)(i)(b).
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(ii) with respect to work in progress contracts, Anglian
Water will not accept any commercial responsibility
for the fulfillment of such projects. In the event of
a claim being made and Anglian Water being required
to fulfill the financial guarantee commitments
vis-a-vis the principal, then Buyers will indemnify
Anglian Water for such claim and reasonable costs and
expenses related thereto.
Buyers shall on the Closing Date give an absolute counter
indemnity in respect of their obligations in (i)(b) and (ii)
above and the promissory note set forth in Exhibit B, and will
in connection herewith issue a counter indemnity in the form
of an on-demand bank guarantee of Five Hundred Thousand US
dollars (USD 500,000) by a bank reasonable satisfactory to
Sellers. Before exercising their right to draw on the
on-demand bank guarantee, Sellers undertake to notify Buyers
of their intention to draw on such guarantee. Upon request by
Sellers, Buyers undertake to provide Sellers with information
on the status of the relevant projects and the guarantees
given by Sellers or their Affiliates and to assist Sellers in
the recovery of these guarantees upon termination/expiry.
(g) No later than on the Closing Date, Sellers shall pay all
accounts receivables of the Group Companies owed by Anglian
Water or any of its Affiliates, other than any amounts owed
under ordinary commercial business transactions on an arm's
length basis not yet due and payable.
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(h) Sellers have offset against the Purchase Price one half (1/2)
of the Group Companies' pension liabilities set forth on
SCHEDULE 3.4(h) (the "Pension Liabilities") representing an
amount of Five Hundred Twenty Nine Thousand US dollars (USD
529,000).
Buyers shall on the Closing Date release Sellers from any
commitments, undertakings or guarantees (parent company
guarantees) in connection with the Pension Liabilities, as set
forth in Schedule 3.4(h).
(i) As soon as possible after the Closing Date, Buyers shall cause
appropriate Nordic Group Company to enter into a distribution
agreement with Aquafine Engineering Services Ltd ("AES"),
providing AES with a three year continued non-exclusive right
to market and sell the DynaSand, ▇▇▇▇▇▇▇ Scraper and NWP
Lamellas within the European Economic Area ("the EEA"), on
terms mutually agreeable to the parties.
In addition, as soon as possible after the Closing Date Buyers
shall cause each of Great Lakes Environmental Inc. ("Great
Lakes"), Aero-Mod Incorporated ("Aero-Mod"), and Water
Equipment Technologies Inc. ("WET") to enter into
non-exclusive distribution agreements for AES to market and
sell certain products of Great Lakes, Aero-Mod and WET within
the European Economic Area ("the EEA"), on terms mutually
agreeable to the parties. In addition, on the Closing
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Date, Buyers will deliver a letter agreement setting forth the
commitment of Great Lakes, Aero-Mod and WET to negotiate in
good faith toward the execution of a definitive license
agreement granting AES a license to manufacture certain
licensed products of Great Lakes, Aero-Mod and WET on terms
satisfactory to the parties substantially in the form of
Exhibit D.
(j) As soon as possible after the Closing Date, Buyers shall cause
▇▇▇▇▇▇▇ Products AB to enter into an agreement with Purac
Engineering Inc. ("Purac Engineering") concerning the mutual
termination of license agreement relating to Purac
Engineering's license with respect to the ▇▇▇▇▇▇▇ Scraper,
substantially in the form of EXHIBIT E. Notwithstanding the
foregoing, Purac Engineering shall be entitled to continue to
use, on unchanged terms and conditions, ▇▇▇▇▇▇▇ Scraper
products in order for Purac Engineering to complete any
outstanding bids and inquiries as per the Closing Date.
(k) At the Closing, Buyers shall receive:
(i) legalized copies of an extract from the Commercial
Register in respect of ▇▇▇▇ ▇▇▇▇▇▇▇ and the presently
valid version of the Statutes of ▇▇▇▇ ▇▇▇▇▇▇▇ of a
date not more than ten (10) days prior to the Closing
Date;
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(ii) a true and correct copy of Nordic's Articles of
Association and a Registration Certificate as of a
date not more than seven (7) days prior to the
Closing Date.
(l) Except for the notarization of the Assignment Agreement
contemplated by Section 3.4(c), the Closing shall take place on the
Closing Date at the offices of White & Case, Stockholm.
4. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby make the following representations and warranties to and
for the benefit of Buyers, each of which is made on and as of the Closing Date.
4.1 Organization
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Sellers and each of the Group Companies are limited liability companies
duly organized and validly existing under the laws of their respective
jurisdictions of organization and has power and authority to carry on
their businesses as presently being conducted. Other than the
Subsidiaries, the Group companies do not own or control, whether
directly or indirectly, any capital stock or other equity or ownership
interest in any business, corporation, joint venture, partnership or
other entity. Sellers and each of the Group Companies are in compliance
with their respective articles of association. All
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documentation of each of the Group Companies including the share
register, minutes of board of directors' meetings and shareholders'
meetings, accounting records and contracts exists and are properly
kept, correct and complete, PROVIDED, HOWEVER, that this does not apply
with respect to ▇▇▇▇ ▇▇▇▇▇▇▇ regarding its share register, minutes of
board of directors' meetings and shareholders' meetings, as such
records are not required by applicable laws to be maintained. To the
best of Sellers' knowledge, all minutes from shareholders' meetings of
▇▇▇▇ ▇▇▇▇▇▇▇ since 1993 have been delivered to Buyers and are true and
correct.
Copies of the following documents are attached to this Agreement as
appendices:
- up-to-date extracts from the commercial register of the Neuss
local court relating to ▇▇▇▇ ▇▇▇▇▇▇▇ showing all matters
requiring registration (Appendix A); and
- the Articles of Association of ▇▇▇▇ ▇▇▇▇▇▇▇ as last amended
(Appendix A).
▇▇▇▇ ▇▇▇▇▇▇▇ is not a party to, and has not committed itself to
entering into, an enterprise, partnership, domination or profit
transfer agreement. The Domination Agreements have been terminated
prior to the Closing Date.
4.2 Authorization, Execution and Delivery
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Sellers have full corporate power and authority to enter into this
Agreement and to perform the transactions contemplated hereby. The
execution of this Agreement and each other document delivered in
connection herewith by Sellers and the performance by Sellers of the
transactions contemplated herein have been duly and validly executed
and authorized by all necessary corporate action on the part of
Sellers. This Agreement and each other document delivered in connection
herewith by Sellers constitutes a legal, valid and binding obligation
of Sellers, enforceable against Sellers in accordance with its terms.
4.3 Sellers' Title to the Shares; Subsidiaries
------------------------------------------
(a) Sellers solely own and have title to all the Shares, free and
clear of all Liens. The Shares are fully transferable to
Buyers. The Shares represent all the outstanding capital stock
of the Companies.
(b) Nordic owns and has title, directly or indirectly, to all the
authorized and outstanding Nordic Group Shares, free and clear
of all Liens.
(c) The shares in Nordic and the Nordic Group Shares have been
duly authorized and validly issued, fully paid and
non-assessable and are, except as set forth on SCHEDULE
4.3(c), free of any preemptive rights and rights of
redemption. With respect to ▇▇▇▇ ▇▇▇▇▇▇▇, the registered
share-interest capital amounts to DEM 50,000. It is fully paid
and has not been repaid to the shareholder, and is
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free of any preemptive rights and rights of redemption. Except
as set forth on Schedule 4.3(c), there are no outstanding
obligations, warrants, calls, commitments, conversion rights,
rights of exchange, options, subscriptions or preemptive
rights or other agreements of any character providing for the
purchase, issuance or sale of any shares of the capital stock
of the Group Companies or by which Sellers are bound to
provide for the sale or issuance of any additional shares of
the Group Companies and no other convertible debentures,
warrants or other securities of the Group Companies
convertible into or exchangeable for shares are issued and
outstanding.
4.4 No Conflicts; Consents; Filings, etc.
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Except as set forth in SCHEDULE 4.4 attached hereto, the execution of
this Agreement by Sellers does not, and the consummation of the
transactions contemplated hereby will not:
(a) violate any law, regulation, order or judgment applicable to
Sellers or any of the Group Companies,
(b) violate or conflict with or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute
a default) under, or give rise to a right of termination or
modification, or acceleration of the performance required by
(i) any license, permit, approval or other authorization of
any Group Companies issued
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by any governmental authority or agency (each, a "Governmental
Authority") (the "Authorizations"), or (ii) any material
agreement, contract, undertaking or other commitment to which
any of the Group Companies is a party or may be bound or to
which any of the Group Companies' assets are subject;
(c) result in the creation of any Liens upon any of the assets of
the Group Companies;
(d) require Sellers or any of the Group Companies to file for
approval by a Governmental Authority; or
(e) require Sellers or any Group Company to obtain the approval or
consent of any person, firm or other entity.
4.5 Compliance with applicable law
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Neither Sellers nor the Group Companies have received any written
notice of any violation of, and the Group Companies are not in any
material violation of any applicable law or regulation promulgated by
any supranational, state or court or Governmental Authority.
4.6 Authorizations
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Each of the Group Companies has received all material Authorizations
necessary in order to enable it to own and conduct its businesses as
presently conducted. Each such material Authorization is in full force
and effect. Each of the Group Companies is, and has during the last
three (3) years been, complying with such material Authorizations.
Except as set forth in SCHEDULE 4.6, to the best of Sellers' knowledge,
neither of the Group Companies is subject to an investigation by a
Governmental Authority.
4.7 Financial Statements; No Material Adverse Change; Conduct of Business
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(a) Prior to the date of this Agreement, Sellers have provided
Buyers with:
(i) the Audited Financial Statements;
(ii) the Unaudited Financial Statements;
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(iii) since September 1996, monthly reports of the
operations of the Companies.
The Audited Financial Statements (x) have been prepared in
accordance with the Accounting Principles, (y) fairly present
in all material respects ▇▇▇▇ ▇▇▇▇▇▇▇'▇, Nordic's or each of
the Subsidiaries, as the case may be, financial position,
results of its operations and changes in its financial
position at and for the period specified therein, and (z) are
consistent with the books and records of ▇▇▇▇ ▇▇▇▇▇▇▇, Nordic
or each of the Subsidiaries, as the case may be. As of the
relevant accounts date, no Group Company had any liabilities,
actual and known, other than those shown in the Audited
Financial Statements.
The Unaudited Financial statements and the reports mentioned
in (iii) above have been prepared in consistency with the
reporting principles applied by the management of the
companies within the Anglian Water group. Except as set forth
on SCHEDULE 4.7, the Unaudited Financial Statements (i) fairly
present in all material respects, ▇▇▇▇ ▇▇▇▇▇▇▇'▇, Nordic's or
each of the Subsidiaries', as the case may be, financial
position, results of its operation and changes in its
financial position at and for the periods specified therein,
(ii) are consistent with the books and records of ▇▇▇▇
▇▇▇▇▇▇▇, Nordic or each of the Subsidiaries, as the case may
be, and (iii) include all adjustments, consisting only of
normal recurring adjustments, required for a fair
presentation. With respect to contingent
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liabilities, such liabilities have been accounted for to the
extent required by the Accounting Principles. As of December
31, 1996, the Group Companies taken as a whole have no
liabilities, actual and known, other than those shown in the
Unaudited Financial Statements.
(b) Since December 31, 1996, except as contemplated by this
Agreement and accounted for in the Unaudited Financial
Statements, there has not occurred or arisen:
(i) any Material Adverse Effect,
(ii) any payment, declaration or setting aside by any of
the Group Companies of dividends or a return of
capital or any distribution by any of the Group
Companies of any cash or other assets to any of its
shareholders in redemption of or as the purchase
price for any of the Group Companies' capital stock
or equity or in discharge or cancellation in whole or
in part of any indebtness owing (whether in payment
of principal, interest or otherwise) to any of its
shareholders, except, in the case of the discharge or
cancellation of any indebtness only, for ordinary
commercial transactions;
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(iii) any institution by any of the Group Companies of a
bonus, stock option, profit-sharing, pension or
similar arrangement or any changes in any such
existing plans;
(iv) any material loss, damage or destruction to any of
the Group Companies' properties (whether or not
covered by insurance);
(v) any increase made or promised in the compensation or
other remuneration payable or to become payable by
any of the Group Companies to any of its employees,
agents or partners outside the ordinary course of
business;
(vi) any material commitment made (through negotiations or
otherwise) or any material liability incurred to any
labor organization or works council by any of the
Group Companies; or
(vii) any changes in accounting or reporting principles or
practices from those utilized in the preparation of
the Audited Financial Statements and the Unaudited
Financial Statements, respectively.
(c) Since March 31, 1996 each of the Group Companies has conducted
its business in the ordinary course and in a manner consistent
with prior business practice.
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4.8 Liabilities
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Except for the liabilities or obligations that (i) are included in the
balance sheet included in the Unaudited Financial Statements of such
Group Company; or (ii) were incurred since December 31, 1996 in the
ordinary course of business, there are no material liabilities of any
nature (whether or not accrued or otherwise) of the Group Companies.
None of the Group Companies are presently in default under and, to the
best of Sellers' knowledge, there does not exist an event which, with
notice or lapse of time or both would constitute a default under, or
give rise to acceleration of any of the liabilities of the Group
Companies.
4.9 Title to Assets and Properties; Liens
-------------------------------------
SCHEDULE 4.9(a) lists all leases and licenses pursuant to which the
Companies lease or are licensed to use real estate or other material
personal property. Each of the Group Companies has good title to all of
the assets and properties owned (but not leased) by it which are used
in the conduct of its business, and such assets and properties are
reflected in the Audited Financial Statements, other than assets and
properties purchased or sold since March 31, 1996 in the ordinary
course of business. Such assets and properties are free and clear of
any Liens, other than (i) reservations of title provided for in
contracts for the purchase of goods (or the relevant invoices) entered
into in the ordinary course of business; and (ii) Liens reflected in
the Audited Financial Statements.
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4.10 Accounts Receivable
-------------------
All accounts receivable ("Receivables") of the Group Companies as per
the Closing Date are set forth on SCHEDULE 4.10, and have arisen from
bona fide transactions of the Group Companies and represent valid
obligations due to the applicable Group Company(ies) which have been
accounted for in a manner consistent with the Accounting Principles.
Reserves for such Receivables have been calculated in accordance with
Accounting Principles and in a manner consistent with past practice.
All Receivables have been, or will be, collected according to their
respective terms by the applicable Group Company(ies) in the ordinary
course of its business (assuming collection efforts will be made in a
manner consistent with past practice), except for an aggregate amount
of Receivables that shall not exceed the aggregate of the reserves for
Receivables as of the Closing Date for the Group Companies taken as a
whole, as set forth on Schedule 4.10.
4.11 Material Agreements
-------------------
(a) SCHEDULE 4.11(a) lists the contracts to which any of the Group
Companies is a party or by which any of its assets, businesses
or operations is bound or affected other than any contract
that (i) may be canceled by such Group Company on thirty (30)
days' notice or less without incurring a liability or
obligation caused by such cancellation, or (ii) involves or is
reasonably expected to involve the payment of consideration
having an aggregate value of less than Seven Hundred Thousand
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Swedish Kronor (SEK 700,000) with respect to Nordic, and One
Hundred Fifty Thousand German Marks (DEM 150,000) with respect
to ▇▇▇▇ ▇▇▇▇▇▇▇. A true, correct and complete copy of each
written, and a description of each oral contract listed on
Schedule 4.11(a) has been delivered to Buyers or its counsel.
(b) Neither of the Group Companies has received any written notice
of breach by it and, to the best of Sellers' knowledge, they
are not currently in breach of any material agreement,
contract or commitment to which any of the Group Companies is
a party or to which it is bound.
(c) SCHEDULE 4.11(c) lists all outstanding purchase orders as of 5
days prior to Closing under which any of the Group Companies
is or will become obligated to pay any particular vendor an
aggregate sum in excess of the equivalent of Three Hundred
Fifty Thousand Swedish Kronor (SEK 350,000). All purchase
orders subsequently entered into by the Group Companies have
been entered into in the ordinary course of business,
consistent with past practice.
4.12 Insurance
---------
(a) Except as set forth on SCHEDULE 4.12(a) attached hereto, the
Group Companies' assets and properties (whether owned or
leased) are insured against fire, damage and loss in
accordance with customary practice in the industry.
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(b) The Group Companies maintain normal and customary liability
insurance and normal and customary insurance against
operational interruption;
(c) The insurance policies under subsections (a) - (b) above have
been valid and in effect since March 31, 1996; and
(d) all insurance premiums due have been paid.
A list of the insurance policies for the Group Companies is set forth
in Schedule 4.12(b) attached hereto. Sellers will maintain certain
insurance policies until March 31, 1997, unless requested to be earlier
terminated by Buyers, as indicated on Schedule 4.12(b) and the Group
Companies shall reimburse Sellers for the reasonable costs thereof.
Buyers and the Group Companies shall not be entitled to put forward any
claims vis-a-vis Rutland Insurance Ltd. under insurance policies issued
by Rutland Insurance Ltd. as set forth in Schedule 4.12(b).
4.13 Employment and Pension Agreements
---------------------------------
(a) Except as (i) set forth on SCHEDULE 4.13(a) attached hereto,
(ii) expressly provided for in collective bargaining
agreements applicable to any of the Group Companies and their
respective employees and delivered to Buyers, (iii) expressly
provided
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for in employment agreements between any of the Group
Companies and their respective employees and delivered to
Buyers, or (iv) established or required by law in the
jurisdiction in which the Group Companies are organized or do
business, there are no deferred compensation agreements, bonus
plans (other than discretionary payments of annual bonuses),
profit-sharing plans, pension plans, severance pay or
retirement plans, employee stock option or purchase plans,
private life insurance plans or hospitalization insurance
plans (collectively referred to as the "Employment and Pension
Agreements") in effect with respect to any director, officer
or other employee of any of the Group Companies.
(b) There is no pending and, to Sellers' best knowledge, no
threatened claim by any current or former director, officer or
employee working for any of the Group Companies against any of
the Group Companies or Sellers.
(c) The relation of each of the Group Companies with its employees
is generally good, and there are no pending or, to the best of
Sellers' knowledge, threatened material labor difficulties.
(d) All obligations of the Group Companies incurred in connection
with the Employment and Pension Agreements has been and is
properly reflected in the Audited Financial Statements and the
Unaudited Financial Statement, respectively, to the extent
required by the Accounting Principles.
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4.14 Taxes
-----
(a) All returns and reports regarding Taxes required to be filed
prior to the Closing Date by or on behalf of any of the Group
Companies have been filed with the appropriate authority, and
all such Tax returns and reports were true, correct and
complete in all respects, and all contingent information
required to be filed for correct Tax assessment has been
filed. Sellers have no knowledge of any unassessed tax
deficiency proposed or threatened against any of the Group
Companies as a result of the operation of their business. All
Taxes assessed against any Group Company up to December 31,
1996, have either been paid or reserved for in the Unaudited
Financial Statements for such Group Company. There is no tax
audit or other investigation being conducted by a Governmental
Authority against any Group Company. It is the Parties
intention that Sellers shall be responsible for all Taxes,
unless already paid or reserved for on such Group Company's
balance sheet contained in the Unaudited Financial Statements,
which Taxes are (i) incurred by or assessed or levied against
any Group Company on the basis of the financial year-end
accounts up to and including March 31, 1996; and (ii) assessed
or levied against any Group Company on an on-going basis and
due prior to December 31, 1996.
(b) Except as reserved for in the relevant balance sheet contained
in the Unaudited Financial Statements, none of the Group
Companies will be required to repay (in
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full or in part), other than as a result of a change in
business or other measure after Closing Date, any investment
grants or subsidies or any other financial support given by
public bodies which have been received by such Group Company
prior to the Closing Date.
4.15 Litigation
----------
Except as set forth in SCHEDULE 4.15 attached hereto, there is no suit,
claim, action, arbitration, inquiry, administrative or other proceeding
pending, or to the best of Sellers' knowledge, threatened, by or before
any court or Governmental Authority or arbitral panel against any of
the Group Companies.
4.16 Dividends; Payments; Material Agreements With Sellers
-----------------------------------------------------
Since March 31, 1996, no Group Company has declared any dividends or
made any other distribution of its profits or unrestricted equity to
its shareholders, other than to other Group Companies. None of the
Group Companies has any obligation to make such payments or
distributions (other than to other Group Companies), nor has any Group
Companies made any material transactions or dealings with Sellers or
any Affiliate of Sellers since March 31, 1996 that has been outside the
ordinary course of business. No Group Company has any liability,
obligation or debt to any current or former shareholder, officer or
director of any of the Group Companies, Seller or any Affiliate of
Seller.
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4.17 Intellectual Property
---------------------
(a) Each of the Group Companies owns, or has valid licenses or
other right to use (i) all of its patents, copyrights, trade
marks and service marks, all of which are set forth in
SCHEDULE 4.17(i), and (ii) all trade secrets, know-how and any
other intellectual property. The intellectual property in (i)
and (ii) is jointly referred to as the "Intelletctual
Property". All Intellectual Property has been duly registered
in, filed in or issued by the appropriate Governmental
Authority, and such registrations remain in force as of this
day and all renewal fees due for such registrations have been
paid. To the best of Sellers' knowledge, the conduct by each
of the Group Companies does not infringe upon or violate any
proprietary rights or related rights of any third party.
Except as set forth on SCHEDULE 4.17(ii), there has not been
during the last three (3) years and there is currently no
claim by any third party or any proceeding pending, or, to the
best of Sellers' knowledge, threatened against any of the
Group Companies relating to the Intellectual Property. To the
best of Sellers' knowledge, no third party is presently
infringing upon any Intellectual Property, except as set forth
on SCHEDULE 4.17(iii).
(b) Each of Group Companies has the right to use its present
corporate name for the business presently conducted by such
Company.
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4.18 Environmental Matters; Health & Safety
--------------------------------------
(a) All permits of environmental character or required by any
Environmental Law of any Group Company are in full force and
effect and no Group Company is in violation of such permit.
Except as set forth on SCHEDULE 4.18 hereto, there is no
material order or instruction from any court or Governmental
Authority directed to any Group Company regarding
non-compliance with environmental laws or health and safety
laws for its employees (collectively referred to as the
"Environmental Laws"). The Group Companies are in compliance
with, all permits, licenses, authorizations and concessions
regarding Environmental Laws necessary for the conduct of the
business.
(b) No real property is being or has been used by any of the Group
Companies in such a way which may lead to or have led to any
such real property becoming contaminated in a manner resulting
in any liability under Environmental Laws.
Notwithstanding the foregoing in this Section 4.18, Sellers
shall not be responsible for any obligations, losses or costs
resulting from more restrictive standards of any and all
Environmental Laws enacted subsequent to the date of this
Agreement.
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(c) With respect to the operations at ▇▇▇▇▇▇▇ Products AB
("▇▇▇▇▇▇▇"), Sellers hereby undertake to indemnify Buyers for
any costs and expenses incurred by ▇▇▇▇▇▇▇ or Buyers caused by
an order from a Governmental Authority or required under any
Environmental Laws in relation to clean up measures, fines,
costs and expenses required as a result of waste disposal or
other non-compliance with Environmental Laws by ▇▇▇▇▇▇▇ prior
to the Closing Date and while owned by Nordic, PROVIDED,
HOWEVER, that Buyer shall cause ▇▇▇▇▇▇▇ to comply with the
written approval, attached hereto in SCHEDULE 4.18, granted by
the Governmental Authority by completing the investments
required in this respect prior to January 1, 1998, unless such
deadline is extended by the Governmental Authority. Sellers
have informed Buyers that the estimated cost for such
investment will be approximately SEK 350,000 in the aggregate.
4.19 Bank Accounts etc.
-----------------
SCHEDULE 4.19 is a list of the name of each bank, savings and loan, or
other financial institution in which each of the Group Companies has an
account or safe deposit box, the names of all persons authorized to
draw on each account or to have access to each box, the number of
signatures required to be given for a withdrawal and a description of
the type of account.
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4.20 Powers of Attorney
------------------
None of the Group Companies has given any power of attorney that is
presently in effect to any person or entity for any material purpose.
4.21 Capital Expenditure Plans
-------------------------
SCHEDULE 4.21 sets forth a description of each capital expenditure plan
of each of the Group Companies involving the expenditure of at least an
amount equivalent to Fifty Thousand US dollars (USD 50,000) as to which
the expenditure of funds is incomplete, setting forth (i) the budgeted
expenditure and (ii) the actual amounts expended, if any.
4.22 Business Relations
------------------
Other than as set forth on SCHEDULE 4.22, no Group Company is required,
in the ordinary course of business, to provide any bonding or any other
financial security arrangements in connection with any customers or
suppliers.
4.23 Real Property
-------------
SCHEDULE 4.23 contains a list of all real property leases to which any
of the Group Companies is a party (the "Real Property"). All leases are
in writing and are duly
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executed and are valid for their full term and none have been modified,
amended, sublet or assigned. There is no default by any Group Company,
or to the best of Sellers' knowledge, any other party which materially
affects the Real Property. No Group Company owns any real property.
4.24 Transactions with Officers, etc.
-------------------------------
Sellers and its Affiliates have no ownership or other forms of
controlling interest in any entity (other than an Affiliate) that has
any existing material relationship, oral or written, or other business
relationship with any of the Group Companies.
4.25 Products
--------
To the best of Sellers' knowledge, the products sold by each of the
Group Companies conformed to and met or exceeded the standards required
by all applicable laws, ordinances and regulations in effect at the
time of such sales. To the best of Sellers' knowledge, there is no
pending legislation, ordinance or regulation which if adopted or
enacted would have a Material Adverse Effect on such products or any of
the Group Companies business as presently conducted.
Except as set forth on SCHEDULE 4.25, no claims of customers or others
based on an alleged or admitted defect of material, workmanship or
design or otherwise in or in
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respect of any of the Group Companies' products are presently pending,
or to the best of Sellers' knowedge, threatened, other than product
warranty claims reserved for on the balance sheets contained in the
Unaudited Financial Statements or which in the aggregate do not exceed
Fifteen Thousand US Dollars (USD 15,000).
4.26 Casualty Occurrences
--------------------
None of the Group Companies has received notice of any occurrences
during the last five (5) years which has resulted in damages in excess
of One Hundred Thousand US Dollars (USD 100,000) (or the equivalent
thereof in any other currency) to persons or property involving any
defects or alleged defects in any of such Group Company's products or
their respective designs. All such occurrences are fully and adequately
covered by paid-for insurance.
4.27 Inventory
---------
The inventories of each of the Group Companies reflected on the
Unaudited Financial Statements and acquired since December 31, 1996
consist only of items of a quality and quantity usable and saleable in
the ordinary course of business, consistent with past practice and do
not include any item of inventory which has previously been written off
by such Group Company. Items of below-standard quality and items not
previously readily saleable in the ordinary course of business have
been written down in value in
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accordance with Accounting Principles to estimated net realizable
market values. The value at which the inventories are carried on each
of the Group Companies' books reflects the lower of cost (on a FIFO
basis) or estimated net realizable market value. The inventory
reflected on the March 31, 1996 balance sheet of each of the Group
Companies, is based on quantities determined by physical count.
4.28 Work in Progress Projects
-------------------------
To the best of Sellers' knowledge, there is no occurrence in relation
to any work in progress project that is likely to give rise to a claim
against any existing guarantee, as set forth on Schedule 3.4(f), by any
principal due to any fraudulent or negligent acts outside professional
standard of any Group Company prior to the Closing Date.
5. REPRESENTATIONS AND WARRANTIES OF BUYERS
Buyers hereby make and agree to the following representations and
warranties to and for the benefit of Sellers, each of which is made on
and as of the Closing Date.
5.1 Organization
------------
Sweden Sub is a corporation duly organized and validly existing under
the laws of Sweden. Germany Sub is a corporation duly organized and
validly existing under the
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laws of Germany, and registered in the Commercial Register of the local
court in Hamburg under the registration number HRB 626 96.
5.2 Authorization, Execution and Delivery
-------------------------------------
(a) Buyers have all requisite corporate power and authority to
enter into, execute and deliver this Agreement and each other
document delivered in connection herewith and to perform all
of their obligations hereunder.
(b) The execution of this Agreement and each other document
delivered in connection herewith by Buyers and the performance
by Buyers of the transactions contemplated herein have been
duly authorized and executed by all necessary corporate action
on the part of the Buyers.
(c) This Agreement constitutes a legal, valid and binding
obligation of Buyers, enforceable against Buyers in accordance
with its terms.
5.3 No Conflicts
------------
The execution and performance of this Agreement and the fulfillment of
the terms hereof will not result in a breach of any applicable law,
judgment, decree or order of any court or
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Governmental Authority or of Buyers' respective articles of association
or any of their other organizational documents.
5.4 Consents, Filings, etc.
----------------------
Buyers have made all necessary filings and obtained any and all
necessary approvals including, but not limited to, approvals in the
European Community, Germany or Sweden pursuant to all relevant and
applicable competition legislation.
6. COVENANTS BY SELLERS AND BUYERS
6.1 Publicity
---------
None of the Parties shall issue any press releases or make any other
public statements, in each case relating to, connected with or arising
out of this Agreement or any matters contained herein, without
obtaining prior approval from the other Party with respect to the
contents and the manner of presentation and publication thereof,
PROVIDED, however, that nothing herein shall prevent any Party from
making any announcement or filing required by (i) any applicable law or
regulation or (ii) the rules and regulations of any stock exchange or
an agreement with any stock exchange on which it or any Affiliate is
listed.
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6.2 Confidentiality
---------------
Buyers and Sellers shall not, and shall cause each of their respective
Affiliates not to, disclose any of the other Parties' Confidential
Information of the other Parties to any person except:
(a) those directors or employees of Buyers, Sellers or their
respective Affiliates that are likely to be directly concerned
with the transactions contemplated herein and who need to know
the Confidential Information (or any part of it) for the
purpose of conducting such transactions, and
(b) those Representatives of Buyers, Sellers or their respective
Affiliates engaged to advise with respect to the transactions
contemplated herein and who need to know the Confidential
Information (or any part of it) in order to advise upon such
transactions; PROVIDED, HOWEVER, that Buyers and Sellers shall
ensure that such directors, employees and Representatives to
whom Confidential Information is to be disclosed are made
aware of and agree to adhere to the terms of this
confidentiality provision as if each were a party to it,
unless such disclosure (i) is required under any applicable
law or regulation, (ii) is required under any applicable stock
exchange regulation or an agreement with any stock exchange,
(iii) is made in connection with the ordinary course of
business of the Group Companies, or (iv) has been consented to
by the other Parties, which consent shall
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not be unreasonably withheld. This Section 6.2 shall be valid
for a period of two (2) years from the date of the signing of
this Agreement.
6.3 Breach of Undertaking etc.
-------------------------
(a) Buyers shall hold Sellers harmless for all costs and expenses
incurred by Sellers as a result of a breach by Buyers of their
undertakings stated in this Agreement. In addition, Sellers
shall be entitled to set off such costs and expenses against
Losses under Section 8 below. Further, Sellers shall hold
Buyers harmless for all costs and expenses incurred by Buyers
or any of the Group Companies as a result of a breach by
Sellers of their undertakings stated in this Agreement. In
addition, Buyers shall be entitled to set off such costs and
expenses and Qualified Losses (as defined below) against
amounts in the escrow pursuant to the Escrow Agreement
referred to in Section 3.2(b)(ii) and the promissory note
referred to in Section 3.2(b)(iii).
(b) Buyers shall hold Sellers harmless for all liabilities, costs
and expenses incurred by Sellers as of the Closing Date in
connection with the banking facilities, as set forth in
Section 3.4(c) and in Schedule 3.4(c).
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6.4 Non-competition
---------------
(a) As from the Closing Date and for a period of two (2) years
from the Closing Date, neither Sellers, Anglian Water nor any
of their Affiliates shall commence or, directly or
intentionally indirectly through a significant interest,
engage in business competing with the business of the Group
Companies relating to the manufacture and sales of products or
services sold or provided by the Group Companies as per the
Closing Date. Notwithstanding the above, Sellers, Anglian
Water and all their Affiliates shall be entitled to market and
sell the GEWE Lamella separator for their own design and build
contracts for treatment plants. Moreover, Purac Engineering is
entitled to continue to sell the GEWE Lamella separator
without territorial restrictions or otherwise. If Affiliates
of Anglian Water are required to procure and sell products for
its own design and build contracts or build-own-operate
projects or similar contracts, then such procurement and sales
shall not be deemed to be in breach of this Section 6.4(a). To
the extent possible under applicable regulations issued by the
relevant Government Authority, Anglian Water and its
Affiliates will use their best efforts to source such products
from the Group Companies, if requested by such Group
Companies, provided their products are deemed by Anglian Water
or any of its Affiliates in good faith to be appropriate for
use in the relevant project and competitive in price and
function.
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In the event that Sellers, Anglian Water or any Affiliate of
Anglian Water should commit a breach of the undertaking stated
herein, Buyers shall not be entitled to terminate this
Agreement.
Each Seller acknowledges that the length of time of the
prohibitions in this Subsection (a) both are reasonable and
necessary for the legitimate protection of Buyers' and the
Group Companies' businesses and interests.
(b) Sellers and Anglian Water expressly agree and understand that
the remedy at law for breach of this Agreement is not entirely
adequate for breach of Section 6.4 and that damages may not be
susceptible to being measured in monetary terms. Accordingly,
it is acknowledged that upon adequate proof of any of Sellers
or Anglian Water's or its Affiliates' violation of this
Section 6.4, Buyers will be entitled, in addition, to any
other remedies available at law, to immediate injunctive
relief and may obtain a temporary restraining order
restraining any further breach.
(c) In the event any court of competent jurisdiction determines
that the specified time period set forth in this Section 6.4.
is unreasonable, arbitrary or against public policy, then a
lesser time period or geographical area that is determined by
the court to be reasonable, non-arbitrary and not against
public policy be enforced.
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(d) In the event either Sellers or Anglian Water violates any
legally enforceable provision of this Section 6.4 as to which
there is a specific time period during which such Sellers are
prohibited from taking certain actions or engaging in certain
activities, then, in such event the violation will toll the
running of the time period from the date of the violation
until the violation ceases.
6.5 The name "Anglian Water"
------------------------
Buyers undertake to use all reasonable efforts not to and to cause
their Affiliates to cease to use or make any references to the trade
▇▇▇▇ or corporate name Anglian Water in their operations as soon as
possible and in no event as from six (6) months after the Closing Date.
During this six month period, the Group Companies are entitled to
continue to use the name Anglian Water in any literature or brochure
existing on the Closing Date. Buyers hereby waive any rights whatsoever
to the name "Anglian Water" or any derivatives thereof.
6.6 The name of the Group Companies
-------------------------------
Sellers undertake to use all reasonable efforts not to and to cause
their Affiliates to cease to use or make any references to the trade
▇▇▇▇ or corporate name of any of the Group Companies in their
operations as soon as possible and in no event as from six (6) months
after the Closing Date. During this six month period, Sellers and their
Affiliates are
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entitled to continue to use the name of any of the Group Companies in
any literature or brochure existing on the Closing Date. Sellers hereby
waive any rights whatsoever to any of the corporate names of the Group
Companies as per the Closing Date.
7. DISCHARGE OF DIRECTOR LIABILITY
At the annual general meetings of shareholders of the Companies and
each Subsidiary for the fiscal year 1996/1997, Buyers shall cause the former
directors and managing directors of the Companies and each Subsidiary to be
discharged from liability for their administration of the Companies and the
Subsidiaries up to and including the Closing Date, PROVIDED that the respective
external auditors of the Companies and the Subsidiaries recommend such discharge
from liability.
8. INDEMNIFICATION BY SELLERS
8.1 Sellers' Indemnification Obligation
-----------------------------------
(a) Subject to the terms of this Section 8, Sellers hereby agree
to indemnify and hold Buyers harmless from and against any and
all losses, damages, liabilities or expenses incurred by
Buyers or any of the Group Companies as a result of an
incorrectness, misstatement or breach of any representations
and warranties under this Agreement ("Losses"), which shall be
Buyers' exclusive remedy for such
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breach. Prior to the signing of this Agreement, Buyers have
been provided by Sellers and the Group Companies with the
information and documentation set forth in SCHEDULE 8.1.
Buyers shall be deemed to have had actual knowledge of the
facts and circumstances set forth in Schedule 8.1 provided and
to the extent that such schedule contains reasonably specified
particulars. NOTWITHSTANDING THE FOREGOING, Sellers shall not
be liable under this Section 8 with respect to any claim
arising out of facts or circumstances which Buyers or their
Representatives had actual knowledge of prior to the execution
of this Agreement as described in Schedule 8.1 with such
reasonably specific particulars. This limitation does not
apply to claims by Buyers for any untruth or breach of
Sections 4.3 (ownership to shares), 4.14 (taxes), 4.8
(liabilities) and 4.18 (environmental matters).
(b) Sellers shall pay to Buyers any and all amounts it owes to
Buyers pursuant to this Section 8 indemnification as soon as
practicable and in any event no later than thirty (30) days
after a claim for such indemnification has been submitted in
writing by Buyers to Sellers, except if such claim is disputed
by Sellers, in which case Sellers shall pay said amounts no
later than thirty (30) days after a valid and final judgment
(including any appeal as of right therefrom) has been
rendered.
(c) The amount of any Loss shall be calculated by taking into
account as a deduction therefrom of (i) any corresponding
saving or net benefits from any payment to any of Buyers, any
affiliate of Buyers or the Group Companies on account of the
Loss,
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including any payment under any insurance policy, taking into
account the cost for any increase in insurance premium due to
such payment, and (ii) any actual tax benefits realized under
any applicable law by any of the Group Companies on account of
the Loss OR fifty (50) percent of the discounted present value
(using a discount rate of LIBOR 90 days plus one (1)
percentage unit) of any possible tax benefits on a net basis,
which can be realized in accordance with sound business
judgment during the period covered by such tax claim under any
applicable law by any of the Group Companies an account of the
Loss, whichever is the highest.
(d) A payment by Sellers under this Section 8 shall be deemed to
be in the nature of a reduction of the Purchase Price and not
a penalty. Such reduction of the Purchase Price shall be
Buyers' sole and exclusive remedy for any Loss incurred in
connection with any and all transactions arising out of,
relating to or in connection with this Agreement. Buyers
hereby waive any rights they may have arising under the
Swedish Sale of Goods Act of 1990.
(e) Unless taken in good faith or for a valid business reason as
determined in good faith by Buyers, Buyers will not take any
action other than in the ordinary course of business that
results in Losses giving rise to a claim for indemnification
under this Section 8.1. In the event that Buyers take any
action in contravention of the preceding sentence that results
in Losses and but for the taking of such action, such Losses
would not have been incurred, Buyers shall not be entitled to
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indemnification for such Losses under this Agreement. All
actions taken by Buyers shall be presumed to have been taken
in good faith and for a valid business reason unless
established to the contrary by Sellers.
8.2 Indemnification Limitations
---------------------------
(a) Except as provided in Section 8.2(b), any and all claims for
indemnification hereunder shall be made by Buyers in writing
as soon as practicable after Buyers become aware of such
claim, and shall describe in reasonable detail the nature of
the claim and provide a good faith estimate of the amount
claimed; PROVIDED that the failure to provide such notice
shall not prejudice Buyers' rights hereunder except to the
extent that such failure prejudices Sellers with respect to
the Losses. Sellers' obligation to indemnify Buyers pursuant
to this Section 8 shall terminate twelve (12) months following
the Closing Date; PROVIDED, however, that all claims for which
a claim has been submitted to Sellers within such twelve (12)
month period shall terminate only upon resolution of Sellers'
obligation to indemnify Buyers' for such claims in accordance
with this Section 8; and PROVIDED further that Sellers'
obligation to indemnify Buyers with respect to liabilities for
Taxes and environmental matters shall terminate pursuant to
Section 8.2(b) and with respect to liabilities for a breach of
Section 4.3 shall not terminate.
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(b) Any and all claims for indemnification hereunder with respect
to liabilities for Taxes shall be made by Buyers in writing as
soon as possible after such liability has been established by
any competent Governmental Authority; PROVIDED that the
failure to provide such notice shall not prejudice Buyers'
right hereunder except to the extent that such failure
prejudices Sellers with respect to the Losses. Sellers'
obligation to indemnify Buyers with respect to such liability
shall survive as long as applicable statute of limitations has
not expired and for three (3) months thereafter. Sellers'
obligation to indemnify Buyers with respect to a claim for
breach of Section 4.18 (environmental matters) shall terminate
on January 1, 2000.
(c) Notwithstanding the above, Sellers shall not be obligated to
indemnify Buyers for the first USD 200,000 in Losses under
this Section 8 (the "Deductible"), except for losses under
Sections 8.2(b) and 4.3 as to which, in each case, the
Deductible shall not apply. Sellers shall be obligated to
indemnify Buyers pursuant to Section 8.1 hereof only when such
Losses, except for losses under Section 8.2(b), exceed, in the
aggregate, the amount of the Deductible and with respect to
Losses under Sections 8.2(b) and 4.3 upon any occurrence
thereof ("Qualified Losses").
(d) Notwithstanding anything herein to the contrary, the aggregate
amount of Losses for which Sellers may be liable to indemnify
Buyers pursuant to this Agreement
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shall not exceed Three Million US dollars (USD 3,000,000);
PROVIDED that such limitation shall not apply to losses
demanded under Section 8.2(b) and 4.3.
8.3 Third Party Claims
------------------
Upon Buyers becoming aware of any claim, suit, action or proceeding by
a third party against any of the Group Companies which may give rise to
a Loss which may be indemnifiable under this Section 8, Buyers shall:
(a) Subject to Section 8.3(c) below, make no admission of
liability, agreement or compromise of any kind to or with any
person or entity with respect thereto without the prior
written consent of Sellers, which consent shall not be
unreasonably withheld;
(b) Permit Sellers and their Representatives to (i) have access to
any of the Group Companies' personnel, (ii) have access to any
relevant accounts, documents and/or records within the
possession or control of any of the Group Companies so that
Sellers and their Representatives may assess the merits and
potential liability with respect to such claims, suits,
actions or proceedings, and (iii) take copies or photographs
of such relevant accounts, documents and records at their own
expense. Notwithstanding the foregoing, Sellers shall have no
rights under this Section 8.3(b) if Buyers discharge and
release Sellers from their indemnification
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obligations under this Section 8 with respect to Losses
relating to, arising out of or in connection with such claims,
suits, actions or proceedings;
(c) Upon the request of Sellers, tender the defense of any such
claim, suit, action or proceeding to Sellers, in which event
Sellers shall assume all liabilities and obligations with
respect to such claim, suit, action or proceeding and shall be
relieved of their indemnification obligations under this
Section 8 for any and all Losses resulting from such claim,
suit, action or proceeding which are incurred after Sellers
have assumed such defense. In the event Sellers do not assume
such defense, Buyers shall have the right to decide whether or
not and in what manner to settle or compromise such claim or
otherwise accept liability for such claim, suit or proceeding.
With respect to Losses under or in connection with Section
4.14, Sellers undertake to communicate with Buyers any
proposals for settlement or compromise of any such claim, and
to use their best reasonable efforts to reach an understanding
with Buyers prior to settling or compromising such claim. If
Buyers do not accept Sellers' proposal concerning the
settlement or compromise of such claim, Buyers shall assume
defense of such claim, suit, action or proceeding, and
Sellers' obligation to indemnify Buyers for Losses in
connection with Section 4.14 shall be limited to the amount of
the proposal presented by Sellers to Buyers. If, Sellers do
not assume the defense, Buyers shall have the corresponding
obligation as Sellers have to communicate with Sellers in
order to reach an understanding prior to settling or
compromising such claim.
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8.4 Receivables
-----------
Twelve (12) months after the Closing Date, Sellers shall assume any
outstanding Receivables, except for Receivables within and between the
Group Companies, at face value from Buyers net of the reserves
applicable thereto as of the Closing Date, provided that such
Receivables are deemed Qualified Losses. Buyers will cause the Group
Companies to notify each debtor of the assignment and will cause any
payment received for the Receivables thus assigned to be transferred to
Sellers. If Buyers prior to the end of the twelve month period have
obtained a settlement offer in connection with the collection of
Receivables exceeding in the aggregate the total corresponding face
value of Ten Thousand US Dollars (USD 10,000), Buyers are required to
obtain the prior written approval from Sellers before accepting such
offer. Sellers shall respond to such request within five (5) working
days after having received notice of such offer. If such approval is
not granted by Sellers, Buyers shall have the right to settle such
claim. However, Sellers shall in such case not be obliged to assume
liability for the remaining amount of such Receivable at the end of the
twelve month period.
Following assignment of Receivables to Sellers, Sellers shall be
entitled to take all measures considered necessary by Sellers to
recover such Receivables. Buyers undertake to assist Sellers in
pursuing such proceedings by providing Sellers with the necessary
information and access to the relevant Group Companies and their books
in order to pursue these proceedings.
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8.5 Claims Against Holding
----------------------
(a) Sellers will indemnify Buyers in full for any liability of
Holding incurred by Buyers in accordance with Section 419 of
the German Civil Code (BGB) as a result of a claim against
Holding following Holding's divestiture of the interest share
in ▇▇▇▇ ▇▇▇▇▇▇▇, as envisaged by this Agreement.
(b) In the event Holding will be required to contribute any funds
to ▇▇▇▇ ▇▇▇▇▇▇▇ as a result of the Domination Agreement and
following the audited financial statements for ▇▇▇▇ ▇▇▇▇▇▇▇ as
per financial year ending December 31, 1996, Holding
undertakes to pay the full amount of such contribution to ▇▇▇▇
▇▇▇▇▇▇▇ within five (5) days after having been notified of
such claim. Buyers undertake to simultaneously reimburse
Holding for the full corresponding amount that Holding will
pay to ▇▇▇▇ ▇▇▇▇▇▇▇ as set forth in this paragraph of
subsection (b).
Correspondingly, in the event ▇▇▇▇ ▇▇▇▇▇▇▇ will be required to
contribute any funds as a result of any of the Domination
Agreements, ▇▇▇▇ ▇▇▇▇▇▇▇ undertakes to pay the full amount of
such contribution within five (5) days after having been
notified of such claim. Sellers undertake to simultaneously
reimburse ▇▇▇▇ ▇▇▇▇▇▇▇ for the full corresponding amount that
▇▇▇▇ ▇▇▇▇▇▇▇ will pay as set forth in this paragraph of
subsection (b).
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8.6 Escrow Agreement
----------------
If, as of the date twelve (12) months after the Closing Date, Buyers
have presented claims for indemnification in accordance with Section 8
herein which do not exceed the Escrow Amount (as defined in the Escrow
Agreement) and having notified Svenska Handelsbanken (the "Escrow
Agent") in accordance with Section 6.2(a) of the Escrow Agreement,
Buyers undertake to jointly with Sellers sign a notice instructing the
Escrow Agent to release the remaining, undisputed part of the Escrow
Amount to Sellers, in accordance with Section 6.2(b)(i) of the Escrow
Agreement.
9. MISCELLANEOUS
9.1 Entire Agreement
----------------
This Agreement, including all the other documents referred to herein
which form a part hereof and all other documents delivered at the
Closing contemplated hereby contain the entire agreement and
understanding of the Parties with respect to the subject matter
contained herein and therein. This Agreement supersedes all other prior
agreements and understandings between the Parties, whether oral or
written, with respect to such subject matter. The Parties agree that:
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(i) none of them has entered into this Agreement in reliance on
any representation, warranty or undertaking by any other Party
or any other person which is not expressly set out in this
Agreement or a document which is expressly referred to in this
Agreement;
(ii) no Party shall have any remedy in respect of misrepresentation
or untrue statement made by the other Parties except and to
the extent that a claim lies for breach of a warranty under
this Agreement; and
(iii) for the avoidance of doubt, nothing in this clause shall
exclude any liability for fraud or fraudulent
misrepresentation.
9.2 Amendments
----------
This Agreement may only be amended pursuant to a written instrument
signed and duly executed by the Parties.
9.3 Assignment
----------
This Agreement may not be assigned by any Party without the prior
written consent of the other Parties; PROVIDED, that Buyers may assign
their rights to indemnification hereunder to their, Waterlink's or any
of Waterlink's Affiliate's lender(s) subject to any
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defense available to Sellers hereunder, which assignment shall be in
form and substance reasonably satisfactory to Sellers.
9.4 Expenses; Fees
--------------
Sellers and Buyers shall each bear their own fees and expenses
including, but not limited to legal fees and expenses, in connection
with this Agreement and in connection with the transactions
contemplated hereby including the fees and expenses of their own
Representatives.
9.5 Notices
-------
Any and all notices or other communications hereunder shall either be
delivered personally, sent by registered mail or sent by facsimile
(followed by immediate letter sent by registered mail or delivered
personally) to the following respective addresses or to such other
addresses as may be notified in said manner by one Party to the other
Party:
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If to Sellers, to:
Anglian Water International Ltd.
Anglian House
Ambury Road
Huntingdon, Cambs. ▇▇▇▇ ▇▇▇
England
Attention: Company Secretary
If to Buyers, to:
Waterlink Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
with a copy to:
Benesch, Friedlander, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.L.L.
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
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A notice shall be served as follows:
(i) if personally delivered, at the time of delivery;
(ii) if by registered mail, seven (7) days after the envelope
containing the notice was posted; and
(iii) if by facsimile, at the time the facsimile has been sent,
provided such facsimile is followed by immediate letter sent
by registered mail or delivered personally.
9.6 Press Release
-------------
The Parties agree that a special press release concerning the
transactions contemplated herein shall be worked out jointly by the
Parties and shall be released on the Closing Date.
9.7 Governing Law and Jurisdiction
------------------------------
Except for the Assignment Agreement in Exhibit C, which shall be
governed by and construed in accordance with the laws of the Federal
Republic of Germany, this Agreement shall be governed by and construed
in accordance with the laws of the Kingdom of Sweden. Any dispute,
controversy or claim arising out of or in connection
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with this Agreement, or the breach, termination or invalidity thereof,
shall be finally settled by arbitration in accordance with the Rules of
the Arbitration Institute of the Stockholm Chamber of Commerce;
provided that nothing contained herein shall prevent Buyers or Sellers
from obtaining or seeking to obtain injunctive relief in connection
with any violation of Sections 6.1, 6.2 and 6.4 of this Agreement
before any court of competent jurisdiction. The arbitral tribunal shall
be composed of three arbitrators, who all shall be appointed by the
Arbitration Institute. The place of arbitration shall be Stockholm. The
language of the arbitration shall be English.
9.8 Severability
------------
In case any provision in this Agreement shall be held invalid or
unenforceable, in whole or in part, the other provisions of this
Agreement shall remain in force. The Parties shall replace the invalid
or unenforceable provisions, according to the intent and purpose of
this Agreement, with such valid provisions which in their economic
effect come as close as legally possible to that of the invalid or
unenforceable provisions.
------------------------------
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the day and year first above written.
GIGANTISSIMO 2061 AB PROVISTA EINHUNDERTSECHS-
under change of name to UNDFUNFZIGSTE VERWALTUNGS-
WATERLINK (SWEDEN) AB GESELLSCHAFT MBH under change
of name to WATERLINK
(GERMANY) GMBH
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------- -------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Director Title: Attorney-in-fact for ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, Managing Director
AWPE SVENSKA AB ANGLIAN WATER HOLDING GMBH
By /s/ Goran Widjmark By /s/ Goran Widjmark
--------------------------- -------------------------------------
Name: Goran Widjmark Name: Goran Widjmark
Title: Title:
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GUARANTEE
Anglian Water International Ltd hereby guarantees as for its own debt (sasom for
egen skuld) the due performance of the obligations of AWPE Svenska AB and
Anglian Water Holding GmbH under this Agreement and all side-letters delivered
in connection herewith. Anglian Water International Ltd hereby accepts the
undertakings set forth in Sections 6.1, 6.2 and 6.4.
ANGLIAN WATER INTERNATIONAL LIMITED
By /s/ Goran Widjmark
-------------------------
Name: Goran Widjmark
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GUARANTEE
Waterlink Inc. hereby guarantees as for its own debt (sasom for egen skuld) the
due performance of the obligations of Gigantissimo 2061 AB under change of name
to Waterlink (Sweden) AB and Provista Einhundertsechsundfunfzigste
Verwaltungsgesellschaft mbH under change of name to Waterlink (Germany) GmbH
under this Agreement, the promissory note attached hereto as Exhibit B and all
side-letters delivered in connection herewith. Waterlink Inc. hereby accepts the
undertakings set forth in Sections 6.1 and 6.2.
WATERLINK INC.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chief Financial Officer
